Opinion
CIVIL ACTION NO. 03-1743, SECTION "A"(4)
January 22, 2004
ORDER AND REASONS
Before the Court is defendant Edie Sicuro's Motion for Dismissal Under Federal Rule of Civil Procedure 12(b)(6) . (Rec. Doc. 15). Defendant Hartford Fire Insurance Company does not oppose this motion. Plaintiff Morris Kirschman Company, L.L.C., opposes the motion. The motion, set for hearing on December 3, 2003, is before the Court on the briefs without oral argument. For the reasons that follow, the motion is GRANTED.
Background In September 2001, Plaintiff, Morris Kirschman Company, L.L.C. ("Kirschman") discovered that employee Edie Sicuro ("Sicuro"), a collections manager, had manipulated Kirschman's credit accounts by forgiving aged balances of Kirschman's customers. Kirschman contends that as a result of forgiving such balances, it lost in excess of five million dollars. Kirschman further states that Sicuro received merit salary raises and bonuses based on her collection efforts. Kirschman contends that the manipulation of accounts resulted in other employees receiving bonuses totaling $95,540 and salary increases totaling $107,686. Defendant, Hartford Fire Insurance Company ("Hartford") issued a "crimeshield" policy to Kirschman which insured Kirschman for losses due to theft by an employee.
On June 2, 2003, Kirschman filed a petition in Orleans Parish seeking to recover the salary increases and bonuses from Sicuro and the policy proceeds from Hartford. Hartford removed the case to this Court asserting that the Court has diversity jurisdiction over Kirschman's claim notwithstanding that Kirschman and Sicuro are both citizens of Louisiana. Kirschman moved for remand, which was denied by this Court. Defendant Sicuro now seeks a dismissal based on the argument that Kirschman's claim against Sicuro has prescribed and therefore Kirschman has failed to state a claim upon which relief can be granted.
This is not the first lawsuit involving the parties. Kirschman filed a prior petition in the same state court in December 2002 which named only Hartford as defendant, though Sicuro was prominently mentioned. Hartford removed to this Court. In April 2003, Kirschman moved to dismiss the case without prejudice, and with Hartford's consent, the motion was granted. The instant case was filed on May 28, 2003, and this time Kirschman named Sicuro as an additional defendant.
The Parties' Contentions
Sicuro asserts that Kirschman's claim against her is prescribed under Louisiana law, and further argues that Kirschman's claim against her is delictual in nature and therefore, the applicable prescriptive period is one year, thus Kirschman's claim against her is prescribed and should be dismissed pursuant to Fed. Rule Civ. Pro. 12(b)(6).In opposition, Kirschman argues that its claim against Sicuro is not prescribed because the applicable prescriptive period is three years pursuant to Louisiana Civil Code article 3494. Additionally, Kirschman asserts that Sicuro acknowledged her debt to Kirschman, which under state law constitutes an interruption of the prescriptive period.
Analysis
A motion to dismiss under Federal Rules of Civil Procedure 12(b)(6)" is viewed with disfavor and is rarely granted." Gregson v. Zurich American Insurance Company, 322 F.3d 833 (5th Cir. 2003) ( Quoting Kaiser Aluminum Chem. Sales v. Avondale Shipyards, 677 F.2d 1045 (5th Cir. 1982)). A Rule 12(b)(6) motion to dismiss effectively admits the properly pleaded factual allegations of the complaint, but denies that such allegations are legally sufficient to state a claim upon which the court may grant relief. Accordingly, a motion to dismiss will not be granted unless it is clear that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-6 (1957). The Court accepts as true the well-pleaded factual allegations in the complaint and construes the complaint in the light most favorable to the plaintiff. ABC Arbitage Plaintiffs Group v. Tchuruk, 291 F.3d 336, 357-58 n. 104 (5th Cir. 2002). In considering a motion to dismiss, the court must accept as true both the allegations of the complaint and "any reasonable inferences that may be drawn therefrom."Tuchman v. DSC Communications Corp. 14 F.3d 1061 (5th Cir. 1994). However, the court does not have to accept as true "conclusory allegations or unwarranted deductions of fact" maintained in the complain: Id. at 1067.
Kirschman discovered Sicuro's wrongdoing in September 2001. Kirschman did not file suit in this Court until May 2003. Thus, the only way Kirschman can recover from Sicuro is if the three year prescriptive period from Civil Code article 3494 applies. Louisiana Civil Code article 3494 provides "the following actions are subject to a liberative prescript on period of three years: (1) An action for the recovery of compensation for services rendered, including payment of salaries, wages, commissions, tuition fees, professional fees, fees and emoulments of public officials, freight, passage, money, lodging and board." La. Civ. Code art. 3494 (West 1994). Most courts have read the language in the article to give a cause of action to an employee who has rendered services and has gone uncompensated to attempt to recover such amounts.See, e.g., Boseman v. Orleans Parish Sch. Bd., 727 So.2d 1194, 1196 (La.App. 4th Cir. 1999) (determining that an employee's claim for payment of back sick leave was governed by Article 3494(1)); Grabert v. Iberia Parish Sch. Bd., 638 So.2d 645, 647 (La. 1994) (Article 3494 applied to plaintiff's actions to recover past due salaries from employer); Parry v. Adm'rs of Tulane Educ. Fund. 828 So.2d 30, 40 (La.App. 4th Cir. 2003) (noting that article 3494 was "the specific prescriptive period" provided by the Legislature to cover the specific claim in the case which was a claim for additional compensation).
Kirschman contends that the language contained in article 3494 is reciprocal, thus allowing either an employee or an employer to sue for "wages or the recovery of wages paid erroneously." Rec. Doc. 11, at 2. Though Kirschman cites no legal authority in support of its proposition, numerous authorities exist which support the opposite of Kirschman's interpretation of the article. See, e.g., Ledoux v. City of Baton Rouge, 755 So.2d 877, 879 (La., 2000) (finding that former employee suing employer for past wages is appropriately considered as compensation for services rendered under article 3494(1)); Groom v. Energy Corp. of America, Inc., 650 So.2d 324, 326 (La.App. 5th Cir. 1995) (noting that an action for the recovery of wages by employees against employer is governed by article 3494); Rice v. Felterman, 814 So.2d 696, 698 (La.App. 1st Cir. 2002) (finding that former employee's claims against employer for failure to pay additional wages, salary and commissions are properly characterized as claims for additional compensation and are therefore actionable under Article 3494 as recovery of compensation for services rendered). Furthermore, Kirschman's argument would give to the employer a benefit that the article seems to reserve exclusively for the employee — the party in the weaker bargaining position.
In Louisiana, "the character of an action disclosed in the pleadings determines the prescriptive period applicable to that action."Parry, 828 So.2d 30, 35 ( quoting Starns v. Emmons, 538 So.2d 275, 277 (La. 1989)). Kirschman's complaint sounds in tort, which under applicable Louisiana law is considered a delictual action governed by a prescriptive period of one year. La. Civ. Code art. 3492. The Court therefore concludes that the three year prescription period provided by article 3494 does not apply in the instant case. One year prescription applies.
Kirschman argues that even if the one-year prescriptive period applies, the period was interrupted by Sicuro's acknowledgment of her debt to Kirschman. Kirschman alleges that a telephone conversation occurred between Kirschman's counsel and Sicuro in June 2003 wherein Sicuro acknowledged the debt she owed to Kirschman. Rec. Doc. 5 at App. "A."
Article 3464 of the Louisiana Civil Code provides: "Prescription is interrupted when one acknowledges the right of the person against whom he had commenced to prescribe." Louisiana Civil Code article 3464 (West 1994). However, it is well-settled that such an interruption of prescription can only occur during the prescriptive period.Settoon Marine, Inc. v. Great Lakes Dredge Dock Co., 657 So.2d 537, 539 (La.App. 4th Cir. 1995), Prescription may not be interrupted once it has accrued. Id.
Kirschman offers no proof that Sicuro acknowledged her debt before prescription had accrued. The only evidence offered in support of acknowledgment is a letter from Kirschman's counsel to Sicuro which refers to a June 19, 2003, conversation in which Sicuro is alleged to have acknowledged her debt. Assuming arguendo that this letter is proof of acknowledgment, it came too late because prescription had already accrued in September 2002.
Prescription can be renounced as a defense after it has accrued. La. Civ. Code art. 3449 (West 1994). The evidence of record does not suggest that Sicuro intended to renounce prescription. In her Answers and Defenses, Sicuro asserted that Kirschman's claim against her had prescribed. Rec. Doc. 8 at ¶ 5. Also, when counsel for Kirschman had the June 19, 2003, conversation with Sicuro, she was not represented by counsel.
In sum, the one-year prescriptive period governs Kirschman's claim against Sicuro. That claim prescribed in September 2002. Because Kirschman's claim against Sicuro has prescribed, Kirschman has failed to state a claim against Sicuro upon which relief can be granted.
Accordingly;
IT IS ORDERED that the Motion for Dismissal Under Federal Rule of Civil Procedure 12(b)(6) (Rec. Doc. 15) filed by defendant Edie Sicuro should be and is hereby GRANTED.