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Guidry v. Allstate Fire and Casualty Insurance Co.

United States District Court, E.D. Louisiana

March 1, 2019

RONALD C. GUIDRY, SR., ET AL.
v.
ALLSTATE FIRE CASUALTY INSURANCE COMPANY, ET AL.

         SECTION “R” (4)

          ORDER AND REASONS

          SARAH S. VANCE UNITED STATES DISTRICT JUDGE

         Before the Court is defendants' motion to dismiss five of the nine claims asserted by plaintiffs.[1] The Court finds that plaintiffs have failed to state a claim upon which relief can be granted for retaliation, unfair trade, breach of contract, and tortious interference with contract. These claims are dismissed with prejudice, except for plaintiffs' breach of contract claim, which is dismissed without prejudice. The Court finds that plaintiffs have adequately pleaded a claim for conversion.

         I. BACKGROUND

         This case arises out of defendant Allstate Fire Casualty Insurance Company's alleged termination of plaintiff Ronald C. Guidry's employment.[2] Guidry and plaintiff Ronald C. Guidry, Sr., Agency Corporation (the Guidry Agency) allege that on December 1, 2000 they entered into an Exclusive Agency Agreement with Allstate.[3] The agreement was between Allstate and the Guidry Agency, and executed by Guidry on behalf of the Agency.[4] Guidry is named in the agreement as a “Key Person.”[5] The agreement authorized the Guidry Agency to receive and accept applications for Allstate insurance coverage in Louisiana.[6] The agreement further authorized the Guidry Agency to sell Allstate insurance products on Allstate's behalf.[7]

         In April 2009, Guidry was allegedly diagnosed with prostate cancer.[8]He alleges that he underwent prostate surgery on October 8, 2009.[9]Plaintiffs also allege that as a result of Guidry's medical condition and surgery, he has been “plagued with a myriad of symptoms including frequent urination, ” which “requires him to leave his desk multiple times throughout the day to relieve himself.”[10] On October 31, 2017, defendant Eric Stone, Guidry's “territorial sales leader, ”[11] notified Guidry via letter that the agency agreement was to be terminated, effective January 31, 2018.[12] In the letter, Stone states that Allstate was taking this action “for reasons that include lack of office availability.”[13] Plaintiffs contest the factual basis of Allstate's alleged explanation for his termination.[14] Plaintiffs assert that Guidry maintained office hours beyond the 9 a.m. to 5 p.m. hours that are required of Allstate's agents.[15] Allstate allegedly refused to provide any additional information regarding its finding that Guidry's “lack of office availability” justified his termination.[16] On December 4, 2017, Guidry filed a formal grievance with the Equal Employment Opportunity Commission (EEOC).[17]

         Upon Guidry's termination, the Guidry Agency was allegedly given the opportunity to either accept a termination payment from Allstate or sell its economic interest in its book of business to a buyer that was to be preapproved by Allstate.[18] In addition, the Guidry Agency was told that it could sell any insurance policies it may own, or retain them and receive the commission on the retained policies after the agency agreement was terminated.[19] Guidry allegedly “opted to retain” the insurance policies he owned.[20] In January 2018, prior to his termination date, Guidry allegedly attempted to sell his book of business to another insurance agent that Stone had “previously approved.”[21] Guidry's request was allegedly denied.[22] Finally, the policies that Guidry had intended to maintain were allegedly transferred to other Allstate agents without his authorization.[23] Plaintiffs have accordingly not received any of the commissions allegedly due to them under the policies they intended to retain.[24]

         On February 21, 2018, the EEOC issued Guidry a Notice of Right to Sue.[25] Plaintiffs then timely filed this lawsuit in state court on May 18, 2018, against Allstate, Stone, and Eric Caminita, Guidry's sales manager who was appointed by Stone.[26] Plaintiffs initially asserted claims for (1) discrimination under the Americans with Disabilities Act (ADA); (2) discrimination under Title VII of the Civil Rights Act of 1964; (3) derivation of civil rights and conspiracy under 42 U.S.C. § 1981; (4) conspiracy to interfere with civil rights under 42 U.S.C. § 1985; (5) retaliation; (6) breach of contract; (7) unfair trade practices; and (8) tortious interference with contract.[27] On September 13, 2018, plaintiffs filed a supplemental and amended complaint adding a claim for conversion.[28] Plaintiffs seek compensatory and punitive damages, as well as attorneys' fees and costs.[29]On October 10, 2018, defendants moved to dismiss plaintiffs' claims for retaliation, breach of contract, unfair trade, tortious interference with contract, and conversion.[30] Defendants have not moved to dismiss the other four claims.[31]

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when the plaintiff pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. See Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).

         A legally sufficient complaint must establish more than a “sheer possibility” that the plaintiff's claim is true. Iqbal, 556 U.S. at 678. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Id. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal relevant evidence of each element of the plaintiff's claim. Lormand, 565 F.3d at 257. The claim must be dismissed if there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (2007).

         III. DISCUSSION

         A. Retaliation

         Plaintiffs do not specify in their complaint whether they bring their retaliation claim under state or federal law.[32] In plaintiffs' opposition to defendants' motion to dismiss, plaintiffs cite law relevant only to a retaliation claim under Title VII.[33] But plaintiffs' freestanding retaliation claim in their complaint could also encompass claims under the ADA, the Louisiana employment discrimination statute, and the Louisiana whistleblower statute. The Court will thus address whether plaintiffs have plausibly alleged a claim for retaliation under any of these statutes.

         First, to the extent the complaint states a claim for retaliation on behalf of both plaintiffs, that claim fails as to the Guidry Agency because the Agency is not an “individual” that can sue for retaliation. See, e.g., 42 U.S.C. § 2000e(f) (explaining that Title VII's protections extend only to “employees, ” which are defined as “individual[s] employed by an employer”).

         Guidry's retaliation claim also fails because any of the statutes under which his claim could be cognizable do not recognize a cause of action if the plaintiff is an independent contractor, rather than an employee. See id.; Craft-Palmer v. State Farm Ins. Co., 157 F.3d 903, 1998 WL 612388, at *1 (5th Cir. Aug. 27, 1998) (insurance agent designated as independent contractor could not state a claim for retaliation under Title VII); Burton v. Freescale Semiconductor, Inc., 798 F.3d 222, 227 n.2 (5th Cir. 2015) (viewing the employer/employee analysis as interchangeable between Title VII and the ADA because of the “substantial overlap in the analytical framework among the employment discrimination statutes”); Montgomery v. Lobman, Carnahan, Batt & Angelle, 729 So.2d 1075, 1077 (La.App. 4 Cir. 1999) (noting that Louisiana courts consider federal interpretations of Title VII when determining whether an individual is an “employee” under the state employment discrimination statute); Delahoussaye v. Livingston Parish, Louisiana, No. 12-481, 2014 WL 4538074, at *3 (M.D. La. Sept. 11, 2014) (finding that an independent contractor could not state a claim under the Louisiana whistleblower statute).

         In determining whether an employment relationship exists, the Fifth Circuit applies a “hybrid economic realities/common law control test.” Deal v. State Farm Cty. Mut. Ins. Co. of Tex., 5 F.3d 117, 118-19 (5th Cir. 1993).[34]The most important component of this analysis is whether the employer had the “right to control the employee's conduct.” Id. at 119. Whether an employer had this requisite control turns on “whether the alleged employer ha[d] the right to hire and fire the employee, the right to supervise the employee, and the right to set the employee's work schedule.” Id. The “economic realities component” of the analysis focuses on “whether the alleged employer paid the employee's salary, withheld taxes, provided benefits, and set the terms and conditions of employment.” Id.

         Here, the agency agreement explicitly stated that the relationship between Allstate and the Guidry Agency-and thus the Agency's members- was “that of an independent contractor, ” not an employer/employee relationship.[35] The agreement further provided that the Guidry Agency had

sole and exclusive control over its labor and employee relations policies, and its policies relating to wages, hours, and working conditions of its employees. [The Guidry Agency] has the sole and exclusive right to hire, transfer suspend, lay off recall promote, assign, discipline, and discharge its employees.[36]

         This contractual relationship is nearly identical to the facts in Craft-Palmer, where the Fifth Circuit held that an insurance agent designated as an independent contractor in an agency contract was not an “employee” under Title VII. See 1998 WL 612388, at *1. The Fifth Circuit emphasized that not only was the plaintiff designated as an independent contractor, but also that the defendant insurance company controlled “no details of the manner or means in which [the plaintiff] execute[d] her business, [ran] her office, determine[d] her work schedule or clients, or hire[d] or fire[d] employees.” Id. Like the contract in Craft-Palmer, the agreement here contemplates that the Guidry Agency has the “sole and exclusive control” over how it manages its office.[37] Guidry was therefore not an employee of Allstate, and he cannot maintain a claim for retaliation. See Id. (citing Oestman v. Nat'l Farmers Ins. Co., 958 F.2d 303 (10th Cir. 1992), and Knight v. United Farm Bureau Mut. Ins. Co., 950 F.2d 377 (7th Cir. 1991)).

         Plaintiffs concede that Guidry was solely responsible for operating the business.[38] But plaintiffs argue that Guidry nonetheless “would likely qualify” as an employee under Title VII because (1) he did not have control of his schedule or “complete autonomy in his workspace;” (2) the Guidry Agency's telephone number was Allstate's property; (3) the agency agreement contained a provision restricting him for a period of one year after his termination from soliciting services in competition with Allstate's products within a certain geographical area; and (4) the Guidry Agency could not sell any other type of insurance during the pendency of the agreement without Allstate's approval.[39] But none of these requirements or restrictions renders Guidry an employee of Allstate rather than an independent contractor, as the agreement provides. See Id. (“[T]hat State Farm furnishes insurance forms, provides life insurance and major medical insurance, can accept or reject a prospective policy holder, and required [the plaintiff] to be an exclusive agent are minor matters and not determinative.”). The Court's inquiry is not whether Allstate placed some restrictions on Guidry, but whether Allstate controlled the “means and manner” of how he performed his work. Mares v. Marsh, 777 F.2d 1066, 1067 (5th Cir. 1985) (quoting Spirides v. Reinhardt, 613 F.2d 826 (D.C. Cir. 1979)). Because the agency agreement makes clear that the Guidry Agency had sole control over the operations of its office, Guidry cannot be considered an “employee.” The Court thus finds that dismissal of plaintiffs' retaliation claim with prejudice is warranted.

         B. Breach of Contract

         1. Standing

         Plaintiffs allege in conclusory fashion that defendants breached the terms of the agency agreement.[40] Defendants contend that (1) Stone and Caminita are not parties to the agency agreement, which requires the breach of contract claim to be dismissed as it relates to them; and (2) Guidry does not have standing to assert a breach of the agreement because he was not a party to it.[41] Because Stone and Caminita were not parties to the agency agreement, plaintiffs cannot assert a breach of contract claim against them. Plaintiffs' claim is thus dismissed with respect to them.

         But Guidry does have standing to assert a claim for breach of contract. The Guidry Agency, not Guidry himself, is the party to the agency agreement, [42] although Guidry can maintain a breach of contract claim if he is considered a third-party beneficiary of the agreement. See Joseph v. Hosp. Serv. Dist. No. 2 of Par. of St. Mary, 939 So.2d 1206, 1212 (La. 2006). Under Louisiana law, there are three criteria for determining whether the contracting parties provided a benefit to a third party entitling the third party to bring a claim for breach of contract: (1) the contract must contain a stipulation for the third party that is “manifestly clear;” (2) “there is certainty as to the benefit provided” to the third party; and (3) the benefit is not a mere incident of the contract between the promisor and the promise. Id. Additionally, a third-party beneficiary relationship “is never presumed. The party claiming the benefit bears the burden of proof.” Id. (citing La. Civ. Code art. 1831).

         Here, the agency agreement refers to Guidry directly many times, and identifies him as a “Key Person.”[43] The agreement provides that Allstate was entering into the agreement “in reliance upon and in consideration of the skills, qualifications, and representations of Ronald Guidry.”[44] The Guidry Agency promised to “employ [Guidry] to provide services under th[e] Agreement, ” and that Guidry will “remain actively involved in the conduct of business at [the Guidry Agency's] sales location.”[45] The agreement also stipulates that it would terminate upon Guidry's death, his permanent incapacity, if Guidry left the Guidry Agency, or if Guidry were to lose his agent license.[46] Finally, the agreement provides that if the Guidry Agency were to dissolve, Allstate is authorized to pay any money owed to the Agency to Guidry directly.[47]

         Guidry was thus not merely incidental to the agreement; his engagement with the Guidry Agency was the explicit reason Allstate entered into the agreement, and it lasted only as long as Guidry was with the Agency.[48] The agreement entirely depended upon Guidry's participation in the Agency. Any benefits conferred on the Agency during the lifetime of the agreement would thus necessarily benefit Guidry as well. Even more, the agreement explicitly contemplates that monetary benefits owed to the Guidry Agency could be paid to Guidry directly in the event the Agency dissolved.[49] This provision expresses a clear intent to benefit Guidry individually, and not merely the Agency. Navarrete v. Gen. Ins. Co. of Am., No. 07-4865, 2008 WL 659477, at *2 (E.D. La. Mar. 7, 2008) (insurance contract manifested intent for plaintiff to benefit by stating that “amounts payable in excess of [contracting party's] interest will be paid to the [plaintiff]”). Guidry therefore has standing to assert a claim for breach of contract.

         This determination is consistent with the Louisiana Supreme Court's holding in Joseph. See 939 So.2d at 1214-15. In Joseph, the defendant hospital entered into a contract with St. Mary Anesthesia Associates, Inc. (SMAA) for the purposes of obtaining general anesthesia services for the hospital's patients. Id. at 1209. The court ultimately found that the individual doctors who comprised SMAA did not have standing to sue the hospital for a breach of the agreement, even though the terms of the contract recognized some of the plaintiff doctors as medical specialists capable of providing anesthesia services. Id. at 1214-15. The court reached this conclusion because the contract did not provide that the plaintiff doctors themselves had the exclusive right to provide the hospital the services contemplated in the contract. Id. at 1214. That right was instead granted to SMAA itself; in other words, the contract did not depend on the participation of the plaintiff doctors. Here, Guidry's participation in the Guidry Agency is the explicit reason Allstate entered into the agreement, and his departure from the Agency would terminate the agreement. There is thus no daylight in the agreement between any benefit conferred on the Gudiry Agency and the benefit conferred on Guidry individually. And unlike in Joseph, the agreement here confers an additional benefit on Guidry by stipulating that Allstate can pay Guidry money owed under the agreement in the event the Agency dissolves.

         2. Failure to State a Claim

         Defendants also argue that plaintiffs' breach of contract claim should be dismissed in its entirety because plaintiffs fail to identify in the complaint a contractual provision that Allstate allegedly breached.[50] In their complaint, plaintiffs allege in conclusory fashion that “[d]efendants, all of them, breached the Allstate R3001C exclusive agency agreement.”[51] To state a claim for breach of contract, “a plaintiff must allege a breach of a specific provision of the contract.” Blackstone v. Chase Manhattan Mortg. Corp., 802 F.Supp.2d 732, 738 (E.D. La. 2011) (citing Louque v. Allstate Ins. Co., 314 F.3d 776, 782 (5th Cir. 2003)); see also Smoothie King Franchises, Inc. v. Southside Smoothie & Nutrition Ctr., Inc., No. 11-2002, 2012 WL 1698365, at *9 (E.D. La. May 15, 2012) (rejecting breach of contract affirmative defense because defendants did not “allege a breach of a specific provision of the contract”). Plaintiffs fail to identify in their complaint how defendants breached the agency agreement. They do not allege which specific provision of the agreement was breached. As a result, plaintiffs' claim must be dismissed. Louque, 314 F.3d at 782.

         In their opposition brief, plaintiffs assert that Allstate breached a provision contained in the supplement to the agency agreement.[52] The agency agreement expressly incorporates the terms of the supplement as part of the agreement.[53] This new information in plaintiffs' opposition brief constitutes new factual allegations that were left out of their complaint. Unlike new claims or legal theories that are included in an opposition to a dispositive motion, the Court is not obligated to treat new factual allegations as a request for leave to amend the complaint, unless plaintiffs explicitly request leave to amend and state the particular grounds upon which the amendment is sought. Pierce, 600 Fed.Appx. at 200 n.6. Plaintiffs do not explicitly request leave to amend their complaint in their opposition brief, nor do they state why they would have grounds to amend. Accordingly, the Court will not consider the new factual allegations contained in plaintiffs' opposition brief. Plaintiffs' breach of contract claim is thus dismissed without prejudice. Plaintiffs may seek leave of the Court to file a second amended complaint with a revised claim for breach of contract.

         C. Unfair Trade

         Plaintiffs allege that defendants' actions violate the “unfair trade provision of Louisiana law.”[54] The Court construes this allegation as stating a claim under the Louisiana Unfair Trade Practice and Consumer Protection Act (LUTPA). See La. R.S. 51:1401, et seq. Defendants have moved to dismiss this claim, and plaintiffs do not defend the claim in their opposition to defendants' motion.

         LUTPA prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” La. R.S. 51:1405(A). The statute provides a cause of action to “any person, natural or juridical, who suffers an ascertainable loss” as a result of another person's violation of the statute. Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So.3d 1053, 1057 (La. 2010); Iberia Bank v. Broussard, 907 F.3d 826, 839 (5th Cir. 2018). Standing to state a claim under LUTPA is not limited to consumers or business competitors of the defendant. Id.

         To recover, the plaintiff “must prove some element of fraud, misrepresentation, deception or other unethical conduct.” IberiaBank, 907 F.3d at 839 (internal quotations omitted). A practice is unfair under LUTPA only when “the practice offends established public policy and is immoral, unethical, oppressive or unscrupulous.” Id. (internal quotations omitted); see also Monroe v. McDaniel, 207 So.3d 1172, 1180 (La.App. 5 Cir. 2016) (“[T]he range of prohibited practices under LUTPA is extremely narrow and includes ‘only egregious actions involving elements of fraud, misrepresentation, deception, or other unethical conduct.'” (quoting Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 35 So.3d 1053, 1060 (La. 2010))). “What constitutes an unfair trade practice is determined by the courts on a case-by-case basis.” IberiaBank, 907 F.3d at 839.

         Plaintiffs do not specify in their complaint the factual basis for their LUTPA claim. The Court reads the complaint as asserting that defendants' alleged refusal to allow Guidry to retain his interest in certain insurance policies constitutes a violation of LUTPA.[55] But this allegation is derivative of plaintiffs' breach of contract claim, as that claim is described in plaintiffs' opposition to defendants' motion.[56] Under this reading of the complaint, plaintiffs assert that defendants engaged in unfair trade practices because they refused to honor their obligations in the agency agreement. These alleged actions are not sufficiently egregious to state a claim under LUTPA, because the statute ...


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