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discussing limits on delictual liability for interference with contracts
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Civil Action No. 04-2451, Section "N" (3).
December 14, 2004
ORDER AND REASONS
Before the Court is a Motion to Remand filed by plaintiff Spillway Investments, L.L.C. (Rec. Doc. No. 7). For the reasons stated herein, plaintiff's motion is DENIED.
I. BACKGROUND
On July 24, 2004, Spillway Investments L.L.C. ("Spillway"), a Louisiana limited liability company, brought suit in the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana, against three defendants: Pilot Travel Centers, LLC ("Pilot"), a Delaware limited liability company with its principal place of business in Knoxville, Tennessee; Harold L. Rosbottom, Jr. ("Rosbottom"), a Louisiana resident; and "John Doe," a Pilot executive. See generally First Supplemental Petition for Damages and Injunctive Relief and Request for Expedited Consideration. (Pl.'s Ex. E). Spillway asserted claims for "actual and enhanced damages" suffered as a result of the defendants' "breach of contract, breach of a duty of good faith and fair dealing, unfair and deceptive trade practices pursuant to the Louisiana Unfair Trade Practices Act, La.R.S. 51:1401, et seq. ("LUTPA"), tortious interference with a contract and violations of Louisiana Civil Code Article 2315," as well as "a claim for attorney's fees in connection with defendant Rosbottom's violation of LUTPA." First Supplemental Petition at ¶ 3.
Plaintiff Spillway is a wholly owned subsidiary of Metro Gaming and Amusement Company ("Metro"). First Supplemental Petition at ¶ 5; Pl.'s Mem., p. 1. Metro, in turn, is an owner and operator of video poker gaming devices and video poker parlors in the State of Louisiana. Id. In the original petition filed in state court, Spillway alleged that, in early March 2004, Arthur Lawson, Jr. ("Lawson"), an authorized Spillway representative, contacted representatives of Pilot to inquire about purchasing certain land, building and a commercial operation (the "truck stop") located in LaPlace, Louisiana, and owned and operated by Pilot. First Supplemental Petition at ¶ 5. On or about March 30, 2004, via facsimile, Lawson sent a written offer to purchase the truck stop to Pilot. Id. at ¶ 6. It is further alleged that, on or about April 5, 2004, Lawson spoke with Mark Hazelwood ("Hazelwood"), Pilot's Executive Vice President, by telephone, at which time Hazelwood offered to sell the truck stop to Spillway for $5.8 million. Id. at ¶ 8. Subsequent to this verbal offer, an in-person meeting between Spillway and Pilot representatives, including Lawson and Hazelwood, occurred on or about April 21, 2004. Id. It is alleged that, at that meeting, Hazelwood confirmed and agreed that the truck stop would be sold to Spillway for $5.8 million. Id. On the following day, Hazelwood confirmed the offer in writing, and Lawson accepted Pilot's offer to sell the truck stop for $5.8 million. Id.
Spillway further alleges that, during the following weeks, the parties worked diligently towards finalizing the sale, which was to be completed on or before July 15, 2004. First Supplemental Petition at ¶ 12. For example, the attorneys for both Spillway and Pilot conferred to draw up the documents relative to the sale. Id. at ¶ 10. Also, as required by Pilot and with Pilot's approval, assistance and cooperation, Lawson applied, tested, qualified for and was approved as a Subway franchisee. Id. at ¶ 11.
According to plaintiff, a "Subway" restaurant franchise operates at the truck stop and was to be transferred as part of the sale.
Spillway then alleges that, on or about July 3, 2004, Harold Rosbottom, a business competitor of Spillway, contacted Lawson and expressed an interest in a joint venture with Spillway in purchasing and/or operating the truck stop and/or video poker devices at the truck stop. First Supplemental Petition at ¶¶ 13 and 15. Lawson refused Rosbottom's offer. Id. at ¶ 13. Spillway avers that Lawson thereafter began to experience difficulty in getting Pilot representatives to return his telephone calls. Id. at ¶ 14. Then, on or about July 8, 2004, it is alleged that Pilot's Sherry Blake initiated a conference call between Blake, Hazelwood, Lawson, and Manuel Licciardi (another Spillway representative). Id. at ¶ 16. During that conference call, Hazelwood allegedly advised Lawson and Licciardi that the truck stop was being sold to Rosbottom and not to Spillway. Id. Hazelwood further stated that Rosbottom had "gone over his head" to acquire the truck stop. Id.
This action for specific performance and damages ensued soon thereafter. Specifically, Spillway claims that Pilot breached its contract to sell the truck stop to Spillway and that Pilot breached its duty of good faith and fair dealings owed to Spillway. Petition at ¶ 18. Spillway further alleges that Rosbottom's conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in trade or commerce in violation of LUTPA. Id. at ¶ 19. Spillway also avers that Rosbottom is liable to it for having intentionally induced or caused Pilot to breach its contract with Spillway when Rosbottom knew that a contract existed between Spillway and Pilot. Id. at ¶ 20. On August 13, 2004, Spillway supplemented its Petition to add a request for injunctive relief. See First Supplemental Petition for Damages and Injunctive Relief and Request for Expedited Consideration. (Pl.'s Mtn., Ex. E).
On August 26, 2004, Pilot timely removed the action from state court to this Court. In its Notice of Removal, Pilot avers that Rosbottom was fraudulently joined and that, with his citizenship disregarded, this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 over the dispute. See generally Notice of Removal (Rec. Doc. No. 1). On September 21, 2004, Spillway filed the instant motion, in which it argues that this matter should be remanded to state court as Spillway does have a reasonable possibility of recovery against the non-diverse defendant Rosbottom for his violation(s) of the Louisiana Unfair Trade Practice and Consumer Protection Act and for tortious interference with business relations. Pilot opposes plaintiff's motion.
Pilot also correctly states in its Notice of Removal that the third defendant "John Doe" is considered a fictitious defendant whom the Court need not consider for purposes of determining whether complete diversity exists. See 28 U.S.C. § 1441(a) ("[f]or purposes of removal under this chapter, the citizenship of defendants sued under fictitious names shall be disregarded"). See also Alexander v. Electronic Data Syst., 13 F.3d 940, 948 (6th Cir. 1994) (disregarding "Jane Doe" for purposes of determining diversity jurisdiction).
III. LAW AND ANALYSIS
A. Improper Joinder
In a September 10, 2004 en banc decision, the Fifth Circuit departed from its use of the term "fraudulent joinder" and instead adopted the term "improper joinder." See Smallwood v. Illinois Central Railroad Co., 385 F.3d 568, 571-72 (5th Cir. 2004) (noting that the term "improper joinder" is more consistent with the language of 28 U.S.C. § 1359 which reads in full: "A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has beenimproperly or collusively made or joined to invoke the jurisdiction of such court") (emphasis added). The Fifth Circuit added that, "[a]lthough there is no substantive difference between the two terms, 'improper joinder' is preferred." 385 F.3d at 571, n. 1.
Generally, a defendant may remove a civil action filed in state court if a federal court would have had original jurisdiction. See 28 U.S.C. § 1441(a). The removing party bears the burden of establishing that federal jurisdiction exists at the time of removal. DeAguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995); see also Allen v. RH Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). The Court must remand the matter, however, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c).
Once a case has been removed from state court, the removing party bears the burden of proving that jurisdiction is proper in federal court. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). If the removing party alleges jurisdiction on the basis that non-diverse parties have been improperly, or fraudulently, joined, the removing party must prove it. Id. The party seeking removal carries a heavy burden in establishing improper joinder. Smallwood v. Illinois Central Railroad Co., 385 F.3d 568, 574 (5th Cir. 2004). "[T]he focus of the inquiry must be on the joinder, not the merits of the plaintiff's case." Id. at 573.
Given this focus, the Fifth Circuit has recognized "two ways to establish improper joinder: '(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.'" Smallwood, 385 F.3d at 573 (quoting Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). In the present case, there is no issue of fraud as to the jurisdictional facts, so the question, according to the Travis standard, is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against the non-diverse defendant, which stated differently means that there is no reasonable basis for the district court to predict that the state law might impose liability on the facts involved. See id. (citing Travis, 326 F.3d at 648).
In Smallwood, the Fifth Circuit stated that the district court may resolve this inquiry in one of two ways.
The court may conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder. That said, there are cases . . . in which a plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder. In such cases, the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry.Id. (citations omitted). The Fifth Circuit, however, cautioned "that a summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant." Id. at 573-74. Thus, the Court must take all unchallenged factual allegations, including those alleged in the petition, in the light most favorable to plaintiff. McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 334 (5th Cir. 2004); Travis, 326 F.3d at 648-49. Any contested issues of fact and any ambiguities of state law are to be resolved in plaintiff's favor. McKee, 358 F.3d at 334; Travis, 326 F.3d at 649. Finally, "[i]f the right to remove is doubtful, the case should be remanded." Sullivan v. Gen-Corp, Inc., 1995 WL 321743, at *2 (E.D.La. 1995) (quoting Ryan v. Dow Chemical Co., 781 F.Supp. 934, 939 (E.D.N.Y. 1992).
As an initial matter, the Court finds that there are two issues that must be decided before the Court can determine whether plaintiff improperly joined the non-diverse defendant Rosbottom. First, throughout its opposition memorandum and its sur-reply, defendant Pilot refutes the existence of any contract between Spillway and Pilot to sell the truck stop at issue. In light of the Fifth Circuit's recent pronouncement in Smallwood v. Illinois Central Railroad Company, supra, Pilot's arguments on this basis raise an interesting issue not addressed by the parties. In Smallwood, the Fifth Circuit, en banc, concluded that "when a nonresident defendant's showing that there is no reasonable basis for predicting that state law would allow recovery against an in-state defendant equally disposes of all defendants, there is no improper joinder of the in-state defendant," 385 F.3d at 571; rather, "there is only a lawsuit lacking in merit." Id. at 574. In such cases, the district court must remand the case to state court. Id.
In the instant matter, defendant often focuses on the asserted non-existence of a contract between Spillway and Pilot. However, because a denial of the remand on the basis of the non-existence of a contract alone would likely be followed by a dismissal of the claims against the nonresident defendant Pilot, the Court would be compelled to remand this matter to the state court. Further, in arguing that no enforceable contract to sell exists, Pilot repeatedly references its motion to dismiss plaintiff's claims filed with the Court. However, a cursory review of the materials submitted in support of the motion to dismiss reveals that Pilot has gone beyond the four corners of plaintiff's petitions. The Court's review of the motion to dismiss would therefore be converted to a motion for summary judgment, Fed.R.Civ.P. 12(b), and the Fifth Circuit has cautioned that, in deciding improper joinder, "any piercing of the pleadings should not entail substantial hearings." Smallwood, 385 F.3d at 574. Accordingly, for purposes of the instant motion, the Court will resolve all contested issues of fact in plaintiff's favor and assume the existence of a properly executed contract to sell the truck stop at issue.
In addition, plaintiff contends that the sale contemplated more than just the sale of immovable property and its component parts; it also contemplated the sale of the inventory, which, according to plaintiff, constitutes movable property. See unsigned Contract of Purchase and Sale between Metro and Pilot (Ex. B) Because Louisiana law governing the sale of movable property is less strict than the law governing the sale immovable property, cf. La.C.C. arts. 2438 and 1927 with La.C.C. art. 2440, and resolving the contested issues of fact in plaintiff's favor, the Court finds for purposes of this motion that, at the very least, a properly executed contract to sell movable property was entered into by Spillway and Pilot.
The second issue for the Court to decide is whether the plaintiff's claim of "intentional/tortious interference with business relations" and plaintiff's invocation of the "abuse of right" doctrine should be considered in the Court's determination of plaintiff's Motion to Remand.
In its Motion to Remand, plaintiff insists that its claims against Rosbottom involve tortious interference with business relations and not the narrowly-recognized intentional interference with contract. Defendant correctly points out that plaintiff has not alleged tortious interference with contract. Indeed, a review of the record reveals that the term "interference with business relations" appears nowhere in the Petition or First Supplemental Petition. Instead, plaintiff generally alleged claims for damages suffered as a result of the defendants' "breach of contract, breach of a duty of good faith and fair dealing, unfair and deceptive trade practices pursuant to the Louisiana Unfair Trade Practices Act, La.R.S. 51:1401, et seq. ("LUTPA"), tortious interference with a contract and violations of Louisiana Civil Code Article 2315. See First Supplemental Petition at ¶ 3. With respect to defendant Rosbottom, plaintiff specifically alleged (i) that Rosbottom's conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in trade or commerce in violation of LUTPA, id. at ¶ 19; and (ii) that Rosbottom is liable to Spillway for having intentionally induced or caused Pilot to breach its contract with Spillway when Rosbottom knew that a contract existed between Spillway and Pilot. Id. at ¶ 20.
In opposing plaintiff's motion, Pilot contends that this is a post-removal amendment which, under Cavallini v. State Farm Mutual Auto Insurance, 44 F.3d 256 (5th Cir. 1995), cannot be considered by the Court. Plaintiff has responded by stating that this Court is allowed to pierce the pleadings and find facts on its own.
The Court disagrees with plaintiff. It is well-settled that jurisdiction is determined at the time of removal. See Cavallini, 44 F.3d at 264. See also Oiler v. Biomet Orthopedics, Inc., 2003 WL 22174285 (E.D.La. Sept. 17, 2003) (Africk, J.) (stating that, "[i]n determining whether this Court has jurisdiction over the removal, the Court looks to the claims in the state court petition as it exists at the time of removal"). For reasons unknown to this Court, plaintiff failed to mention "intentional interference with contract" in its motion to remand, despite having alleged in its Petition that defendant Rosbottom intentionally induced or caused Pilot to breach its contract with Spillway. First Supplemental Petition ¶ 20. Plaintiff instead only referred to "tortious interference with business relations." See Pl.'s Mem., p. 11. While plaintiff is correct in its statement that the Court, in evaluating a claim of fraudulent joinder, is allowed to pierce the pleadings to consider summary-judgment-type evidence such as affidavits and deposition testimony, see Travis, 326 F.3d at 648-49, the Fifth Circuit has held that such evidence cannot be relied upon to determine whether a claim has been stated against a defendant under a legal theory not alleged in the state court complaint. Cavallini, 44 F.3d at 263. Contrary to plaintiff's position that it is "simply provid[ing] the Court the facts underlying the allegations contained in its Petition, as amended," Pl.'s Reply, p. 4, the Court finds that plaintiff has instead advanced two new causes of action in its motion for remand.
Plaintiff's argument that the Court can pierce the pleadings would be applicable had plaintiff pleaded any facts sufficient to state a cause of action under those theories of recovery. A review of the Petition and First Supplemental Petition, however, reveals that the only allegations made against Rosbottom are as follows:
On or about July 3, 2004, Arthur Lawson was contacted by defendant Rosbottom who expressed an interest in joining Spillway in purchasing and/or operating the truck stop and/or video poker devices at the truck stop. Mr. Lawson refused the offer.
* * * * *
Subsequent to Arthur Lawson's telephone call from Rosbottom, Arthur Lawson began having difficulty getting his telephone calls to Pilot returned.
* * * * *
On or about July 8, 2004, Sherry Blake of Pilot set up a conference call between herself, Mark Hazelwood, Arthur Lawson, and Manuel Licciardi. In that conference call, Mark Hazelwood advised Mr. Lawson and Mr. Licciardi that the truck stop was being sold not to Spillway but rather to Rosbottom. According to Mr. Hazelwood, Rosbottom had "gone over his head" to acquire the property being sold to Spillway. Based on information and belief, Doe is the Pilot executive who agreed with Rosbottom to sell the truck stop to Rosbottom despite Pilot's prior and existing agreement to sell the truck stop to Spillway.
* * * * *
On July 23, 2004, Mark Hazelwood spoke by telephone to Arthur Lawson and again confirmed that the truck stop was being sold to Rosbottom.
* * * * *
The actions on the part of Rosbottom described hereinabove constitute unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce in violation of LUTPA and for which plaintiff is entitled to compensable and exemplary damages.
* * * * *
Plaintiff also asserts that Rosbottom, knowing that a contract existed between plaintiff and Pilot, intentionally induced or caused Pilot to breach its contract with plaintiff.See First Supplemental Petition at ¶¶ 13, 14, 16, 17, 19 and 20.
To recover under a theory of tortious interference with business relations, Spillway must show that Rosbottom "improperly and maliciously . . ." influenced Pilot not to deal with Spillway. Muslow v. A.G. Edwards and Sons, Inc., 509 So.2d 1012, 1020 (La.App. 2 Cir. 1987), writ denied, 512 So.2d 1183 (La. 1987); McCoin v. McGehee, 498 So.2d 272, 274 (La.App. 1 Cir. 1986). Glaringly absent from the allegations set forth in the petitions and from the memoranda submitted by plaintiff is any allegation that Rosbottom acted with malice. Furthermore, of the exhibits submitted by plaintiff, there is no documentation, in the from of an affidavit from Arthur Lawson or Manuel Licciardi or otherwise, supporting the arguments raised in plaintiff's memoranda that Rosbottom in fact made threats of litigation against Pilot.
Indeed, plaintiff has submitted very little evidence to support any claims it may have against Rosbottom. Plaintiff has attached the following documents as exhibits to its Motion to Remand: (i) the Master Video Poker Participation Agreement entered into between Pilot and Nitro Gaming, Inc., Rosbottom's company, on May 1, 2000 (Ex. A); (ii) an unsigned Contract of Purchase and Sale between Metro and Pilot (Ex. B); (iii) correspondence from Mark Hazelwood to Arthur Lawson dated April 22, 2004 (Ex. C); (iv) the state court Petition (Ex. D); (v) the First Supplemental Petition filed in state court (Ex. E) (attached thereto is an Affidavit of Lawson; and (vi) a copy of the Louisiana First Circuit's decision in Jarrell v. Carter, 577 So.2d 120 (La.App. 1 Cir. 1991) (Ex. F). Through its Reply, plaintiff did not supplement its exhibits.
The same applies to the new assertions of Rosbottom's alleged abuse of contractual rights conferred to his company Nitro through its Master Video Poker Participation Agreement with Pilot. See Pl.'s Reply, p. 2. Under Louisiana law, the "abuse of rights" doctrine may provide a remedy to a plaintiff if one of the following conditions is met: (1) rights were exercised for the exclusive or predominant purpose of harming another; (2) rights were exercised in the absence of a serious and legitimate interest that is worthy of judicial protection; (3) rights were used in violation of moral rules, good faith, or elementary fairness; or (4) rights were exercised for a purpose other than that for which they were granted. See Deus v. Allstate Ins. Co., 15 F.3d 506, 520 (5th Cir. 1994) (citing Illinois Cent. Gulf Railroad Co. v. Int'l Harvester Co., 368 So.2d 1009, 1014-15 (La. 1979)).
In the instant matter, plaintiff again has made, in its memoranda, factual allegations based on a cause of action not plead in the petitions and for which plaintiff has not attached any supporting evidence. Plaintiff has not alleged the occurrence of any condition listed above. Rather, plaintiff has only alleged that Rosbottom contacted Lawson to inquire about a joint venture; that Rosbottom "went over [Hazelwood's] head" to acquire the truck stop; and that Rosbottom, knowing that a contract existed between plaintiff and Pilot, intentionally induced or caused Pilot to breach its contract with plaintiff. See First Supplemental Petition at ¶¶ 13, 16 and 20.
Plaintiff states it has "simply provided the Court the facts underlying the allegations contained in the Petition, as amended," i.e., that Rosbottom made unfounded threats of litigation to a Pilot executive based on contractual rights arising out of the Master Video Participation Agreement. Pl.'s Reply, p. 4. According to plaintiff, "[t]hose facts and evidence can be taken into consideration to determine whether recovery against the non-diverse defendant is possible." See id. Plaintiff, however, overlooks the fact that there have been no factual allegations of any abuse of rights or tortious interference with a business relation made against Rosbottom. Instead, plaintiff has submitted only a Petition and a First Supplemental Petition which would barely pass muster under the federal notice pleading requirements. Again, plaintiff is correct in its statement that the Court may pierce these pleadings and determine facts on its own. However, this Court is limited in that respect. Specifically, this Court may pierce the pleadings to consider summaryjudgment-type evidence. The Court cannot simply convert unsupported assertions made in a memorandum into factual allegations.
The Court therefore finds that its inquiry is limited to whether plaintiff has stated a reasonable possibility of recovery based upon the pleaded claims of intentional interference with contract and violations of LUTPA.
B. Whether a Reasonable Possibility of Recovery Exists Against Rosbottom
1. Intentional Interference with Contract
With respect to intentional interference, plaintiff apparently has conceded that it has no possibility of recovery based on this claim. Indeed, plaintiff states: "Spillway has stated a cause of action for Tortious Interference with Business Relations," and "Louisiana recognizes a cause of action for Tortious Interference with Business Relation, not to be confused with its limited cause of action for Intentional Interference with a Contract." Pl.'s Mem., p. 11 (emphasis added). Nonetheless, because this is what plaintiff has alleged, the Court has reviewed the record and the parties' submissions to determine whether a cause of action exists for intentional interference with contract.
Historically, a cause of action for tortious interference with contract was not available in Louisiana. See Kline v. Eubanks, 33 So. 211 (1902). However, in 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La. 1989), the Louisiana Supreme Court recognized a narrowly defined cause of action for the breach of duty by a corporate officer to refrain from intentionally and unjustifiably interfering with the contractual relationship between his employer and a third person. In so holding, the Court expressed its intention not "to adopt whole and undigested the fully expanded common law doctrine of interference with contract." 538 So.2d 234-35. Accordingly, Louisiana courts generally have limited the application of Spurney to its facts. See Spears v. American Legion Hosp., 00-865 (La.App. 3 Cir. 1/31/01), 780 So.2d 493 (no cause of action when defendant is not a corporate officer); Accredited Sur. and Cas. Co. v. McElveen, 93-678 (La.App. 3 Cir. 2/2/94), 631 So.2d 563 (no expansion of Spurney to non-corporate officers), writ denied, 95-0915 (La. 5/20/94), 637 So.2d 483, cert. denied, 513 U.S. 963, 115 S.Ct. 424 (1994). See also Great Southwest Fire Ins. Co. v. CNA Ins. Co., 557 So.2d 966 (La. 1990) (declining to recognize a cause of action for negligent interference with contract). Likewise, the Fifth Circuit has recognized the limitations of Spurney and has failed to extend it beyond its facts. See America's Favorite Chicken Co. v. Cajun Enterprises, Inc., 130 F.3d 180, 185 (5th Cir. 1997); see also American Waste Pollution Control Co. v. Browning-Ferris, Inc., 949 F.2d 1384 (5th Cir. 1991).
The Spurney Court further recognized that this limited cause of action against a corporate officer has five separate elements: (1) the existence of a contract or a legally protected interest between the plaintiff and the corporation; (2) the corporate officer's knowledge of the contract; (3) the officer's intentional inducement or causation of the corporation to breach the contract or his intentional rendition of its performance impossible or more burdensome; (4) the absence of justification on the part of the officer; and (5) causation of damages to the plaintiff by the breach of the contract or difficulty of its performance brought about by the officer. Spurney, 538 So.2d at 234.
In the instant matter, the Court finds that there is no reasonable basis for predicting that state law might impose liability on Rosbottom given the facts involved. This conclusion is simple: even if Rosbottom did in fact "interfere" with the contract between Spillway and Pilot, he is not a corporate officer of any party to that contract.
2. LUTPA
Louisiana law provides a private cause of action for any person who suffers damages as a result of unfair or deceptive acts or practices in the conduct of any trade or commerce where the actions constitute a violation of the Louisiana Unfair Trade Practice and Consumer Protection Act. See La.R.S. 51:1405, 1409. The purpose of LUTPA is to protect consumers and business competitors only, and to deter injury to competition. Schenk v. Living Centers-East, Inc., 917 F.Supp. 432 (E.D.La. 1996). It is not disputed that Spillway and Rosbottom are business competitors.
Section 1409(A) provides in pertinent part:
Any person who suffers any ascertainable loss of money or movable property, corporeal or incorporeal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice . . . may bring an action individually but not in a representative capacity to recover damages.
Louisiana has left the determination of what is an "unfair trade practice" largely to the courts to decide on a case-by-case basis. Marshall v. Citicorp Mortg. Inc., 601 So.2d 669, 670 (La.App. 5 Cir. 1992). Cases decided under the statute have defined the range of prohibited practices quite narrowly. An "unfair trade practice" is "a practice that is unethical, oppressive, unscrupulous, or substantially injurious." Bolanos v. Madary, 609 So.2d 972, 977 (La.App. 4 Cir. 1992) (internal quotations omitted), writ denied, 615 So.2d 339 (La. 1993). Fraud, misrepresentation, deception and similar conduct is prohibited; mere negligence is not. Marshall, 601 So.2d at 670. Further, Section 1409 of the Act, which provides for damages, fees and costs, "is penal in nature and is subject to reasonably strict construction." Coffey v. Peoples Mortg. Loan of Shreveport, 408 So.2d 1153, 1156 (La.App. 2 Cir. 1981).
In arguing that remand is appropriate here, Spillway directs the Court's attention to Jarrell v. Carter, 577 So.2d 120 (La.App. 1 Cir.), writ denied, 582 So.2d 1311 (1991). In Jarrell, the Louisiana First Circuit considered whether the plaintiff had stated a cause of action under the Act. There, the plaintiff had offered to purchase a distributorship for Anheuser-Busch, Inc. The prospective seller agreed to sell the distributorship to plaintiff for $16,500,000, conditioned upon the approval of Anheuser. 582 So.2d at 121. Anheuser, however, allegedly wanted to acquire the distributorship. Id. at 122. To discourage the sale to plaintiff and other prospective purchasers, Anheuser allegedly undervalued the distributor, disapproved the sale to plaintiff because plaintiff's offer was excessive, and threatened to disclose the low valuation to plaintiff's financial backers. Id. at 121-22. Plaintiff also alleged that the prospective purchaser refused to finalize any of the arrangements because of a professed fear of retaliation by Anheuser. Id. at 121. The petition averred that the distributorship was eventually transferred to an Anheuser subsidiary, allegedly for an amount substantially above the value reported to the plaintiff as the maximum worth of the distributorship. Id. at 121-22. The First Circuit found that the allegations of plaintiff's petition were sufficient to state a cause of action for unfair trade practices against Anheuser.
Spillway claims that the events at issue in the matter at hand are similar to those at issue in Jarrell v. Carter. For instance, Spillway asserts that "the allegations against Rosbottom show [that] he has used an inapplicable agreement and his position as to the holder of contractual rights, with the unfounded threat of litigation, to usurp Spillway's opportunity to purchase the truck stop in an attempt to convert that opportunity for himself, thus injuring Spillway, and, more importantly, injuring competition," Pl.'s Mem., p. 10. Spillway likens this to the allegations made by the plaintiff in Jarrell that "demands were made of [the prospective seller] and pressure exerted by Anheuser that would force [the seller] to reject other offers and agree to sell to Anheuser," resulting in Anheuser's "tak[ing] advantage of its superior negotiating position to remove any competition for the distributorship." Jarrell, 582 So.2d at 123-24. Because the Louisiana First Circuit in Jarrell found that the allegations of the plaintiff's petition were sufficient to survive an exception of no cause of action and based on the asserted similarities between Jarrell and the matter at hand, plaintiff contends that this Court must find that there is a reasonable possibility of recovery against Rosbottom for the alleged violations of LUTPA.
In opposing plaintiff's motion, Pilot contends that the only allegation Spillway makes to support its unfair trade practice claim is that Rosbottom contacted a Pilot executive about acquiring the property and that Rosbottom interfered with the alleged Spillway-Pilot contract and induced Pilot to breach that alleged contract. Citing American Waste Pollution Control Company v. Browning-Ferris, Inc., 949 F.2d 1384 (5th Cir. 1991), Pilot then argues that plaintiff has no claim against Rosbottom for a violation of LUTPA as the Fifth Circuit has held that interference with contract that is otherwise not actionable cannot form the basis of an unfair trade practice claim under Louisiana law. American Waste, 949 F.2d at 1392 (reasoning that "[e]ven though the [LUTPA] is broadly written, it cannot apply to activity which is not actionable under Louisiana law"). Pilot contends that the facts in the matter at hand are strikingly similar to the facts in American Waste, where the Court dismissed the LUTPA claim on a Rule 12(b)(6) motion.
Because the factual allegations in American Waste are important to the Court's determination, the Court will outline such in detail. In that case, the plaintiff American Waste alleged that, in early 1987, the Jefferson Davis Parish Sanitary Landfill Commission began the process of receiving bids for the operation of the landfill which was under construction. 949 F.2d at 1385. Although bid specifications were sent to several operators, including plaintiff and BFI, plaintiff was the only bidder. Id. In November 1987, the Commission entered into a conditional long-term agreement with plaintiff. Id. The parties also entered into an interim agreement to allow plaintiff to operate the landfill, pending implementation of the long-term agreement, and after entering this interim agreement, plaintiff developed and otherwise operated the landfill. Id.
American Waste further alleged that BFI, with knowledge of the contract between plaintiff and the Commission, submitted proposals to the Commission for operation of the landfill; and that in 1989, while plaintiff and the Commission were negotiating amendments to their agreements and while plaintiff was operating the landfill, BFI also "offered substantial sums of money and other incentives to the Commission in order to induce the Commission to completely repudiate its agreement and contractual relations with American Waste." 949 F.2d at 1385. In July 1989, after American Waste was removed from the project as a result of state court litigation, the Commission entered into an agreement with BFI to operate the landfill. Id.
The long-term and interim agreements allegedly were the subject of litigation. 949 F.2d at 1385. In May 1989, a Louisiana court held that the agreements were invalid. Id. In its petition, however, plaintiff alleged that the state ruling was contrary to the agreements. Id.
In count one of its complaint, plaintiff alleged that BFI's actions "constitute[d] an intentional, unjustified and improper interference with contractual relations," which caused the Commission to breach its agreements with plaintiff, thus causing injury to plaintiff. 949 F.2d at 1385. American Waste further alleged that BFI was unjustly enriched as a result of the intentional interference. Id. In the second count, plaintiff alleged that, during the pendency of the state litigation, plaintiff and the Commission had reached an informal settlement agreement in January 1989; and that BFI, with full knowledge of those negotiations, "intentionally offered substantial sums of money and other incentives to the Commission in order to induce the Commission to completely repudiate its agreement and contractual relations with American Waste," causing the settlement to fail. Id. at 1385-86. Count three alleged that BFI's conduct violated the LUTPA. Id. at 1386. Pursuant to Rule 12(b)(6), BFI moved to dismiss the complaint for failure to state a claim upon which relief can be granted. Id. The district granted BFI's motion. Id. at 1386.
In reviewing the 12(b)(6) dismissal, the Court first addressed the claim asserted in count one: "Intentional, unjustified and improper interference with contractual relations." 949 F.2d at 1385. After examining 9 to 5 Fashions, Inc. v. Spurney, supra, and its progeny, and viewing the allegations of the complaint in the light most favorable to American Waste, the Fifth Circuit held that Louisiana would not allow a claim against BFI for tortious interference with contract based on the facts presented to the Court. Id. at 1390. The Court reasoned that, in light of Louisiana's narrowly drawn holdings addressing interference with contract claims, BFI had no relationship with American Waste upon which to base the requisite duty. Id. In reviewing dismissal of the LUTPA claim, the Court first stated that the LUTPA claim was based on the same facts as the claim for tortious interference with contract. Id. at 1391. Thus, the Court was faced with the question of whether tortious interference with contract can constitute an unfair trade practice, an issue not previously decided by any Louisiana court. Id. Exercising its Erie role, the Court held that Louisiana would not recognize tortious interference with contract as violative of the LUTPA and affirmed the district court's order of dismissal. Id. The Court reasoned: "Even though the [LUTPA] is broadly written, it cannot apply to activity which is not actionable under Louisiana law." Id. at 1392.
In the instant matter, as the Court stated earlier, the only factual allegations that Spillway has made against Rosbottom are: (i) that Rosbottom, according to Pilot's Mark Hazelwood, had "gone over his head" to acquire the truck stop, First Supplemental Petition at ¶ 16; (ii) that Rosbottom's conduct constitutes unfair methods of competition and unfair or deceptive acts or practices in trade or commerce in violation of LUTPA, id. at ¶ 19; and (iii) that Rosbottom intentionally induced or caused Pilot to breach its contract with Spillway when Rosbottom knew that a contract existed between Spillway and Pilot, id. at ¶ 20. Except for certain unsupported assertions made in plaintiff's memoranda, which the Court earlier stated it would not consider, there is nothing else in the record to support any other alleged conduct which may form the basis of a LUTPA violation. Because plaintiff's LUTPA claim is based on the same facts underlying the alleged intentional interference with contract, it seems clear that Spillway has no possibility of recovery on its LUTPA claim against Rosbottom in light of the Fifth Circuit's holding in American Waste.
Nevertheless, plaintiff attempts to distinguish its case from that before the Fifth Circuit in American Waste. Plaintiff relies again on Jarrell v. Carter, supra, and also on Monroe Medical Clinic, Inc. v. Hospital Corporation of America, 522 So.2d 1362 (La.App. 2 Cir. 1988). Those two cases, however, are distinguishable from the matter at hand. First, in Jarrell, the allegations were not grounded entirely in tortious interference with contract. Rather, the plaintiff there made detailed allegations of conduct on the part of Anheuser. In his petition, the plaintiff alleged that Anheuser had committed unfair trade practices by the following specific actions: (i) misrepresenting to plaintiff that the distributorship was not worth the price offered by him; (ii) stating that Anheuser would not approve the sale because the business would fail due to the excessive price that would be paid by plaintiff; (iii) advising plaintiff that it would disclose that information to any bank that had agreed to finance the purchase; (iv) intimidating the prospective seller from renegotiating the agreements by threats of retaliation; and (v) Anheuser's purchasing the distributorship for a price substantially above the value represented by Anheuser to plaintiff as the maximum worth of the distributorship. Jarrell, 577 So.2d at 121-22. See also American Waste, 949 F.2d at 1392, n. 7 (noting that the Jarrell holding did not alter the Court's analysis as the Jarrell court did not decide whether the petition stated a cause of action for tortious interference with a contract and further noting that "it appears that the early tortious interference claim in Jarrell has been dropped and that it is also proceeding, inter alia, on a claim of misrepresentation").
Monroe Medical, which was decided prior to 9 to 5 Fashions, Inc. v. Spurney, supra, is even more readily distinguished as there was no claim made for tortious interference with contract. See American Waste, 949 F.2d at 1391-92 (distinguishing Monroe Medical as the claim there was not for tortious interference with contract).
Having reviewed the record, the Court agrees with Pilot that plaintiff's claims against Rosbottom for violations of the Louisiana Unfair Trade Practices and Consumer Protection Act are based solely on allegations that Rosbottom intentionally induced or caused Pilot to breach its contract with Spillway. Guided by the Fifth Circuit's decision in American Waste, supra, the Court concludes that plaintiff herein has no reasonable possibility of recovery against defendant Rosbottom under the Act, as interference with contract that is otherwise not actionable cannot form the basis of an unfair trade practice claim under Louisiana law. See American Waste, 949 F.2d at 1392. Rosbottom's Louisiana citizenship must therefore be disregarded for purposes of determining jurisdiction. Because diversity of citizenship exists between plaintiff, a Louisiana limited liability company, and defendant Pilot, a Delaware limited liability corporation with its principal place of business in Tennessee, and because it is undisputed that the matter in controversy exceeds $75,000, the Court finds that it has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Accordingly, plaintiff's motion to remand this action to the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana, must be denied.
III. CONCLUSION
For the foregoing reasons, IT IS ORDERED that the Motion to Remand filed by Spillway Investments, L.L.C., is DENIED.