United States District Court, E.D. Louisiana
SMITTY'S SUPPLY, INC.
LINDSAY MORGAN HEGNA
ORDER AND REASONS
ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE
IS HEREBY ORDERED that Smitty's Supply,
Inc.'s ("Smitty's") Motion in
Limine to Strike Kelley and Hegna's New Claims of
Recovery (Rec. Doc. 313) is
has filed the instant motion arguing that Kelly and Hegna
(hereinafter, sometimes collectively
"plaintiffs") have impermissibly sought to expand the
pleadings in this case by arguments contained within their
opposition motion to several of Smitty's motions.
Specifically, Smitty's contends that while in all of
their complaints, amended complaints, and counterclaims,
plaintiffs have claimed to be owed 5% of Smitty's Phantom
Stock Plan and Stock Appreciation Rights Plan (collectively,
the “Stock Plans”) in a memorandum filed on
January 24, 2019, for the first time, they have added a claim
that they are entitled to a 5% in the entire Smitty's
company and its affiliates.
further contends that the new theory of recovery is not
trivial because since the inception of this case, it has
proceeded on the basis that plaintiffs' were seeking to
recover amounts owed them under the Stock Plans, and that it
would be prejudiced if it had to generate an entirely new
defense at this late date.
contrast, Kelly and Hegna argue that while not mentioning
common stock in their complaints and counterclaims, their
deposition testimony and breach of contract claims put
Smitty's fairly on notice that they sought a 5% ownership
interest in Smitty's under the notice pleading standard
codified in Federal Rule of Civil Procedure 8.
outset, the court notes that it has reviewed every complaint,
amended complaint, and counterclaim filed by Kelley and Hegna,
and they have never pled they are entitled to or were
promised a 5% equity ownership in Smitty's and its
related companies. Rather, Kelley and Hegna have always
maintained that they were entitled to a 5% interest in the
Stock Plans. As reflected in the pleadings, the essence of
Kelley and Hegna's breach of contract claims is that
Smitty's promised to adopt the Stock Plans and designate
them as participants, and failed to do so.
instance, Hegna alleged that "Pursuant to the oral
emplyment contract with the Defendants, Ms. Hegna had a
vested interest in the Company's Phantom Stock Plan and
SARs Plan." And, "The Defendants' refusal to
pay Ms. Hegna the value of her vested stock the Company's
Phantom Stock Plan and SARs Plan constitutes a breach of
contract." Similarly, Kelley's complaint alleges
that "defendant breached its agreements to provide
plaintiff with the stock. . . ."
their January 2019 opposition memorandum, for the first time,
Kelly and Hegna made specific allegations that they each
claim 5% of the value of Smitty's and its affiliates. The
opposition memorandum in question includes the following
As discussed more fully below, Hegna and Kelley claim that
Smith, as a sole shareholder, promised each of them a 5%
equity interest in Smitty's and its affiliated companies
as a form of incentive compensation. This promise was made
before the stock plans were even drafted, and the plans were
simply established as one possible method of fulfilling
Smith's promise. The promise could also be fulfilled
through other means, such as cash bonuses or common stock.
However, Smith told Kelley and Hegna they could not
participate in the annual incentive compensation plan because
they would each be given a 5% equity interest in the
companies as part of their compensation for continuing to
work and grow the companies.
Kelley and Hegna continued working for Smitty's for all
of 2015 and part of 2016 with the understanding that they
were participating in the stock plans that were set up to at
least partially fulfill Smith's promise to ...