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Professional Fluid Services, LLC v. Norsk Bronnservice As

Court of Appeals of Louisiana, Third Circuit

April 25, 2018



          Michael J. Remondet, Jr. Jeansonne & Remondet Counsel for Plaintiff/Appellee: Professional Fluid Services, LLC

          David J. Schexnaydre Schexnaydre Law Firm, LLC, Counsel for Defendants/Appellants: Norsk Bronnservice AS NBS Solutions AS

          Court composed of Phyllis M. Keaty, John E. Conery, and Van H. Kyzar, Judges.


         This is a breach of contract case. The parties filed opposing motions for summary judgment concerning a liquidated damages clause in a contract between them. The trial court denied the defendants' motion for summary judgment, granted partial summary judgment in favor of the plaintiff, struck the liquidated damage clause from the contract, and dismissed the defendants' counterclaim. The defendants took an appeal from the judgment granting the plaintiff's motion. For the following reasons, we affirm.[1]


         Plaintiff, Professional Fluid Services, LLC (PFS), is a Louisiana corporation that develops and manufactures products used in the oil industry. In November 2011, PFS entered into an Exclusive Marketing Agreement (2011 EMA) with Norsk Bronnservice AS (NBS), a Norwegian corporation, to market PFS's products in the Russian Federation.[2] On February 10, 2012, PFS signed a second EMA (2012 EMA) with NBS, which unlike the 2011 EMA, included a liquidated damages clause.[3]

         By email dated June 3, 2015, PFS terminated the EMAs with NBS citing "unresolvable business disputes." In response, NBS sent PFS an invoice seeking $663, 267.97 in liquidated damages that it calculated under Section 7(d) of the 2012 EMA. Several weeks later, PFS filed suit against NBS, seeking a declaratory judgment plus damages based upon NBS's breach of the 2011 EMA. More specifically, PFS asserted that NBS breached the 2011 EMA by failing to pre-pay orders, maintain inventory, and sell any PFS products in 2015. PFS sought injunctive relief to prevent NBS from carrying out its written threat to defame PFS to its worldwide business partners. Finally, PFS requested that a declaratory judgment be issued declaring the 2012 EMAs it purportedly signed with NBS invalid.

         NBS filed an answer and counterclaim against PFS, seeking an award of damages from PFS for its failure to perform under the contracts. In March 2017, NBS filed a motion for summary judgment, asserting that because it had not "materially breached" the 2012 EMAs, PFS's cancellation of the agreements was improper, thereby triggering Section 7(d) of those agreements and entitling NBS to the liquidated damages provided for therein. As such, NBS sought summary judgment on its counterclaim, along with dismissal of all PFS's claims against it. Thereafter, PFS filed a motion for partial summary judgment, seeking to have the trial court declare the liquidated damages clause incalculable as written, and, thus, unenforceable. In its brief to the trial court and to this court on appeal, PFS stated that "for the sake of argument only, " it will assume that "the February 2012 Agreements are valid."[4]

         After a hearing, the trial court found as a matter of law that "Paragraph 7(d) of the 2012 [EMAs] is ambiguous." By judgment dated August 1, 2017, the trial court granted PFS's motion for partial summary judgment, severed and struck Paragraph 7(d) from the 2012 EMAs, and dismissed NBS's counterclaim that was based on the liquidated damages clause; the judgment was designated as final for purposes of appeal.[5] By separate judgment, the trial court denied NBS's motion for summary judgment after finding that genuine issues of material fact remained.

         NBS appealed [6] and is now before this court asserting the following assignments of error:

1. The trial court was legally incorrect in finding clause 7(d) of the 2012 Agreements ambiguous as a matter of law simply because common business terms in the clause were not specifically defined, and further erred in failing to address the available extrinsic evidence to determine the intent of the parties so as to overcome any alleged ambiguity.
2. The trial court erred in striking the entirety of 7(d) from the 2012 Agreements. Striking a clause deemed ambiguous was not the proper remedy because a clause deemed ambiguous as a matter of law requires the trier of fact to address extrinsic evidence to determine the intent of the parties, or to instruct the trier of fact to simply construe the ambiguity against the drafter, not strike it altogether.
3. In the alternative, the trial court erred in striking the entirety of clause 7(d) from the 2012 Agreements because, at best, only the multiplier portion of the clause could be legally deemed ambiguous (an issue that Norsk/NBS conceded for purposes of the Motion for Summary Judgment.)
4. The trial court erred in deeming the calculations in support of Invoice No. 0113.2015 improper and denying Norsk/NBS recovery of the liquidated damages set forth therein.


         "Appellate review of the granting of a motion for summary judgment is de novo, using the identical criteria that govern the trial court's consideration of whether summary judgment is appropriate." Smitko v. Gulf S. Shrimp, Inc., 11-2566, p. 7 (La. 7/2/12), 94 So.3d 750, 755. "The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action. . . . The procedure is favored and shall be construed to accomplish these ends." La.Code Civ.P. art. 966(A)(2). On de novo review, "there is no deference to the trial judge's legal findings, and we make an independent review of the evidence in determining whether there is no genuine issue of material fact and whether the mover is entitled to judgment as a matter of law under La.Code Civ.P. art. 966." Bridges v. Cepolk Corp., 13-1051, p. 10 (La.App. 3 Cir. 2/12/14), 153 So.3d 1137, 1145, writ denied, 14-901 (La. 8/25/14), 147 So.3d 1117. "A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate." Smitko, 94 So.3d at 755.

         According to La.Code Civ.P. art. 966(D)(1):

The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law.

         Recently, in Van Mol v. Beasley, 15-869, p. 4 (La.App. 3 Cir. 2/3/16), 184 So.3d 280, 284 (alteration in original), this court discussed the law regarding the interpretation of contracts, writing:

         The Louisiana Supreme Court has stated:

"[W]hen a contract can be construed from the four corners of the instrument without looking to extrinsic evidence, the question of contractual interpretation is answered as a matter of law." Sims v. Mulhearn Funeral Home, Inc., 07-0054, p. 10 (La.5/22/07), 956 So.2d 583, 590. "Interpretation of a contract is the determination of the common intent of the parties." La.Civ.Code art. 2045. The reasonable intention of the parties to a contract is to be sought by examining the words of the contract itself, and not assumed. Sims, 07-0054 at p. 7, 956 So.2d at 589; McConnell v. City of New Orleans, 35 La. Ann. 273 (1883). "When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La.Civ.Code art. 2046. Common intent is determined, therefore, in accordance with the general, ordinary, plain and popular meaning of the words used in the contract. Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 93-0911, p. 5 (La.1/14/94), 630 So.2d 759, 763.

         Prejean v. Guillory, 10-740, pp. 6-7 (La.7/2/10), 38 So.3d 274, 279.

To determine the meaning of words used in a contract, a court should give them their generally prevailing meaning.[7] If a word is susceptible to different meanings, it must be interpreted as having the meaning that best conforms to the object of the contract.[8]A provision susceptible of different meanings must be interpreted with a meaning that renders the provision effective, and not with one that renders it ineffective.[9]Furthermore, each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.[10]
St. Mary Operating Co. v. Guidry, 06-1495, p. 6 (La.App. 3 Cir. 4/4/07), 954 So.2d 397, 402, writ denied, 07-962 (La.6/29/07), 959 So.2d 520, quoting Claitor v. Delahoussaye, 02-1632 (La.App. 1 Cir. 5/28/03), 858 So.2d 469, writ denied, 03-1820 (La.10/17/03), 855 So.2d 764 (internal citations omitted).

         "Interpretation of a contract and, specifically the issue of whether a contract is ambiguous, is a question of law properly determined at the summary judgment stage." Semco, LLC v. Grand Ltd., 16-342, p. 43 (La.App. 5 Cir. 5/31/17), 221 So.3d 1004, 1035, writ denied, 17-1291 (La. 11/6/17), 229 So.3d 475. "In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text. A contract executed in a ...

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