Articles Posted in Business Dispute

agreement-blur-business-261621-1024x768Louisiana citizens interact with contract law every day, in many cases without even realizing it. Whether buying groceries at a supermarket with a credit card or installing a new iPhone app, countless purchases are governed by consumer agreements. What may be even less known to purchasers is that many of these agreements include an arbitration clause, which provides that any disputes arising out of that agreement must be handled by an arbitrator rather than a court. Arbitration is a form of “alternative dispute resolution” in which an arbitrator — typically a certified attorney —  evaluates the parties’ claims and renders a binding decision as to who should prevail. In general, companies prefer arbitration because it costs less than litigation. But because the rules of arbitration can vary significantly from the rules of court, the consumer does not always benefit from being kept away from the courthouse. The validity of arbitration clauses is a common point of contention. Although Louisiana generally favors arbitration, the legislature has enacted the Louisiana Arbitration Act (“LLA”) (see La. R.S. 9:4201) to ensure that arbitration proceeds fairly.

Arbitration is also common in commercial agreements. In 2013, a sales representative of UniFirst Corporation (“UniFirst”) approached the shop foreman at the Homer, Louisiana location of Fluid Disposal Specialties, Inc. (“FDS”). The shop foreman’s job title was Manager of Transportation Logistics. The purpose of the meeting was to discuss FDS’s entering into a contract with UniFirst to provide uniforms to FDS employees. After nearly six months of negotiation, a price was agreed upon and the FDS shop foreman executed a contract with UniFirst. The contract contained an arbitration clause. Later, FDS attempted to void the contract, citing that the shop foreman did not have the authority to bind the company. Unifirst argued that, based on the arbitration clause in the agreement, the matter should be settled by an arbitrator. FDS, preferring to avail itself of the court, argued that because the contract itself was invalid, any clauses within it — including the arbitration clause — could not be valid either.

The case eventually made its way to Louisiana’s Second Circuit Court of Appeal, which applied a two-step analysis commonly relied upon by the courts. The first step is to determine whether there is a valid agreement to arbitrate between the parties; the second is to determine whether the dispute in question falls within the scope of that arbitration agreement. In applying the first step, the Court determined that the agreement was invalid because the FDS shop foreman lacked the authority to enter into a contract with UniFirst. In response to UniFirst’s argument that the foreman had apparent authority, a doctrine in which an innocent third party (Unifirst) could rely on the representations of an agent (the FDS shop foreman) when entering an agreement (see American Zurich Insurance Co. v. Johnson, 850 So. 1112 (La. Ct. App. 2003)), the Court found that both the shop foreman’s job title and the six-month negotiation period should have indicated to UniFirst that the foreman was not in a position to enter into a contract for uniform services. For these reasons, the Court found that no agreement existed between the parties and therefore there was no need to apply the second step of the analysis. Arbitration cannot be compelled under an agreement that never came into being. The Court went on to note, however, that UniFirst could still proceed against FDS for any obligation or damages arising from FDS’s use of the uniforms that UniFirst provided the shop.

competition-1024x683A non-compete clause is a common feature in many employment agreements in Louisiana. The clause is a way for an employer to restrict an employee from going to work for a competitor and thus potentially harming the original employer. Most non-compete clauses, in order to be enforceable, must contain some limitation as to time and geographical location.

Katie Urban-Kingston was hired by Billedeaux Hearing Center (“Billedeaux”) in Lafayette in May of 2014. Urban-Kingston and Billedeaux entered into an employment agreement containing a non-compete clause that applied to certain areas of Louisiana, Arkansas, Texas, and Mississippi, and allowed for the collection of any costs incurred by Billedeaux for legal enforcement of the clause. Less than a year later, Urban-Kingston left Billedeaux and became employed by Williamson Hearing Center (“Williamson”), just outside of Baton Rouge. Billedeaux sought and was granted a temporary restraining order in February 2015 to enjoin Urban-Kingston from working for Williamson, and a show-cause hearing for a preliminary injunction was set for early March.

At the hearing, the parties stipulated that Urban-Kingston was trained by Billedeaux, that she left Billedeaux’s employ and worked for Williamson at the time of the trial, and that Williamson is in direct competition with Billedeaux. Urban-Kingston claimed as a defense against the issuance of a preliminary injunction, however, that the non-compete clause in her employment agreement with Billedeaux was too broad. The trial court determined that the only issue to decide based on Urban-Kingston’s defense was whether the two hearing centers were actually in competition. But since the parties had already stipulated that point, the court rejected the defense, issued the preliminary injunction in Billedeaux’s favor, and ordered Urban-Kingston to pay Billedeaux’s attorney fees of approximately $6,000.

tax-1501475-1-1024x768The old saying goes:  nothing is certain but death and taxes. In the case of property taxes on real, or immovable, property, failure of payment can permit the sheriff of the parish in which the property is located to hold a “tax sale.” In a tax sale, the delinquent property taxes are paid out of the proceeds of the property’s sale. Removing a homeowner from his residence in order to pay overdue taxes is a very serious and potentially damaging action — both financially and emotionally — for the homeowner. For this reason, under Louisiana law, property owners who lose their homes due to a tax sale have options for reclaiming their property after a tax sale if they can obtain sufficient funds to make good on what they owe. This process is known as redemption of the property. If redemption is not feasible, a homeowner can still seek an annulment of the tax sale if certain conditions are met. A case that came before Louisiana’s Fifth Circuit Court of Appeal illustrates how these procedures operate.

Mark Manganello owned a condominium on Avant Garde Circle in Kenner, Louisiana. He failed to pay property taxes for the condo in 2009. In April 2010, the Jefferson Parish Sheriff’s Office notified Manganello of his property tax delinquency by certified mail. Two months later, the Sheriff’s Office advertised a tax sale of the property, and the property was purchased by Virtocon Financial Services. A Tax Sale Certificate in favor of Virtocon was recorded in the immovable property records of Jefferson Parish. Virtocon subsequently assigned its rights to the Tax Sale Certificate to Philnola, LLC.

Four years later, Philnola filed a lawsuit against Manganello to confirm the tax title of the property. Philnola asserted that Manganello was properly notified of the tax sale, but that he neither paid the taxes due nor redeemed the property within the three year period provided by Louisiana law. Phinola’s motion for summary judgment was denied by the trial court, however, because the court found genuine issues of material fact existed in relation to whether Mangenello sought redemption of the property. Then Phinola filed a second motion for summary judgment, arguing that Manganello failed to begin a proceeding to annul the tax sale within the six-month service notice of sale as required by Article 7 of the State Constitution. Philnola argued that because Manganello failed to seek an annulment of the tax sale, the property should belong to Phinola. Manganello argued that because the 2009 taxes had either been paid or because he had begun the redemption process within the statutory redemption period, there was no reason to seek an annulment of the tax sale. The trial court granted the second motion for summary judgment and confirmed Philnola’s tax title to the property. Manganello appealed to the Fifth Circuit.

money-money-money-1241634-1-1024x768Have you ever heard the maxim “be careful what you wish for?” This phrase applies almost savagely to Robert Alvarez, a New Orleans financial advisor who sought relief on appeal from an order to pay attorney’s fees and costs in a dispute with his former employer.

Robert Alvarez was associated with Ameriprise Financial Services. After a dispute with the company, Alvarez left Ameriprise and sold his book of business to another Ameriprise advisor, Rufus Cressend. In August 2014, Alvarez filed a petition for a temporary restraining order (“TRO”) and an injunction against Cressend and Ameriprise, seeking to enjoin them from soliciting his former clients and other actions that allegedly damaged his professional reputation. The trial court granted Alvarez’s motion for a TRO on the condition that Alvarez pays a $25,000 security deposit.

Approximately a month later, Cressend and Ameriprise filed a motion to dissolve the temporary restraining order, as well as for the award of attorney’s fees. They asserted that Alvarez failed to prove irreparable harm and failed to provide justification for lack of notice required by La. C.C.P. art. 3603. The trial court denied Alvarez’s motion for a preliminary injunction, found that the TRO had been improperly issued, and granted Cressend’s and Ameriprise’s motion to dissolve the TRO. On the issue of attorney’s fees, Cressend submitted an invoice of fees and costs of about $9,000, and was awarded about $2,500; Ameriprise submitted invoices in the amount of roughly $56,000 and was awarded approximately $20,000. Alvarez appealed the award of attorney’s fees. He settled with Ameriprise, leaving the only issue for the appellate court to consider the $2,500 fee award to Cressend.

architecture-2-1446689-1024x681It really does go without saying, but lawsuits tend to progress slowly.  Delays abound and the realities of finite court resources mean that lawsuits can take years to complete.  As an alternative to using this system, some parties will agree to arbitrate disputes. Arbitration takes place outside the court system before a contractually agreed upon third party who hears evidence and renders a final decision (much like a judge). Although it is sometimes successful, arbitration can often result in court litigation anyway. After a dispute arose over the quality of some condo construction in Biloxi, Mississippi, the New Orleans Glass Company attempted to litigate rather than arbitrate.  

The New Orleans Glass Company (“NOG”) was a subcontractor for the Roy Anderson Corporation (“RAC”) on a project building condos in Mississippi.  The parties executed a subcontract which required any subcontractors to participate in arbitration proceedings between RAC and a third-party when the subcontractor had claims against RAC arising out of the same general subject matter as the already-pending proceeding. NOG interpreted the contractual provisions to mean that arbitration was only required in regards to that third-party and not for disputes between NOG and RAC.      

Predictably, a dispute did arise between RAC, the condo developer, and the condo owner’s association over the quality of the construction. Developer and owners initiated arbitration proceedings.  RAC determined that many of the claims for damages involved work performed by subcontractors and subsequently filed a demand requiring NOG to participate in the arbitration proceedings. NOG filed a complaint before the United States District Court for the Southern District of Mississippi requesting the District Court to issue a judgment stating that NOG and RAC did not agree to arbitrate but to litigate.  

machine-2-1426327-662x1024The majority of banking regulations are in place to protect you and your privacy. But some regulations are created to make it easier for law enforcement to obtain information about suspicious banking activity. For the most part, this is a good thing; it enables law enforcement to more effectively combat social ills such as terrorism and the drug trade. At times, however, a bank’s attempt to cooperate with law enforcement could put your personal information, or even your property, in jeopardy. Here, an inaccurate tip to the police lead to the confiscation of a Metairie couple’s belongings, namely the contents of their safety deposit box. And they soon discovered that they had no viable legal recourse.  

In December 2015, the Fifth Circuit Court of Appeals for the state of Louisiana upheld a ruling which absolved Gulf Coast Bank of liability after the bank surrendered a safe deposit box and its contents to police, even though the box was erroneously identified as the property of a different party. The laws at issue were two federal laws which regulate the bank’s action in reference to customers’ accounts: the Right to Financial Privacy Act (“RFPA”) 12 U.S.C. §3401, et seq. and the Annunzio-Wylie Anti-Money Laundering Act (“the Act”). 31 U.S.C. §5318.

Salvadore Marino, owner of Toker’s, a head shop in Metairie, was arrested for drug charges and tax fraud. During the investigation of Toker’s bank holdings, an employee of the bank mistakenly told police a certain safe deposit box belonged to the business. In fact, the box in question, which contained over $127,000 in cash, was the personal property of Marino and his parents, Julia and Martin Marino. Mr. and Mrs. Marino sued the bank for damages arising from the seizure of the box, asserting Gulf Coast disclosed the information in violation of state and federal law, as well as negligent misrepresentation. The bank claimed protection from the lawsuit, asserting that the anti-money laundering laws gave them safe harbor from liability in such matters.

more-apartments-1451930-1024x672In contracts for the sale of land and property, parties typically execute a Purchase Agreement before the Contract of Sale. The purchase agreement may be incorporated with the contract of sale, or it may be a preliminary document that is not included in the final contract. It is important that a good attorney draft both of these documents, because issues may arise when the documents conflict or are not clear in intent.

In Woodlands Development v. Regions Bank & Johnson Property Group, Woodlands, a development company, bought land on Sandra Drive in New Orleans for the purpose of building an apartment complex. Woodlands fell on hard times and defaulted on the loan for the mortgage. After some extensions and agreements, Woodlands agreed to assign the property to a third party, Johnson Property Group (“JPG”). A Purchase Agreement, and then a Contract of Sale, between Woodlands and Johnson Property Group followed. When Hurricane Katrina caused extensive damage to the property in question, the insurance company paid the settlement to Regions Bank. Woodlands claimed it was entitled to receive these proceeds, while JPG claimed the proceeds should go toward its balance.  

After an epic battle which consisted of three appeals, and multiple motions, the Louisiana Fifth Circuit Court of Appeals affirmed the grant of a partial summary judgment motion for Woodlands Development. Summary judgment is appropriate when there is “no genuine issue of material fact,” meaning all the facts presented clearly show one party deserves to win. La. C.C.P. art. 966. Here, the party moving for summary judgment only had sufficient facts to convince a judge that some of the issues required dismissal, so a motion for partial summary judgment was put forth. JPG appealed the Trial Court’s finding in favor of Woodlands’ motion, which is the issue in the present case.

writing-kiddo-1432496-1024x683The worst thing that could happen if you are in a bad situation is for that situation to get worse. A New Orleans, Louisiana, resident found himself in that exact scenario when he was in legal trouble and subsequently found himself in even deeper legal trouble.

MT, the defendant, owned with his partners, a construction contracting company, Garner Services. When MT was the Chief Operating Officer, he and his brother-in-law, DF, created fictitious invoices for work never performed, amounting to $925,000 to a company that MT himself controlled.

After his fraud was discovered, MT was criminally charged with conspiracy to commit mail fraud, which he pled guilty to in exchange for no additional charges filed. The Government also informed MT that he would be indicted for concealing financial information to block the forfeiture of certain assets. Before the plea deal was signed, MT hired a private investigator, Tim Wilson, who spoke with two of the Assistant United States Attorney’s (“AUSAs”) for the Eastern District of Louisiana on MT’s behalf. Wilson stated the AUSAs promised not to execute on the forfeiture indictment. This “secret deal” was later contested by the AUSAs, who denied having made such a promise.

men-shaking-hands-1024x683A contract creates a level of trust between two businesses or individuals, but what happens when one individual fails to uphold their end of the bargain? Or worse yet, what happens when an individual purposefully misrepresents their ability to uphold their end of the bargain? These are issues the Louisiana Third Circuit Court of Appeal recently addressed in a lawsuit between Meyer & Associates, Inc. (“Meyer & Associates”) and the Coushatta Tribe of Louisiana.

The Coushatta Tribe of Louisiana is a federally recognized Indian tribe composed of an elected four-member Tribal Council and a separately elected Tribal Council spokesperson. The Tribe conducts all of its governmental and business matters from the offices in Allen Parish, Louisiana. In July 2001, the Tribe decided to enter into an agreement in order to better manage the Tribe’s casino facility in Kinder, Louisiana. The Coushatta Tribe agreed to enter into a consulting services contract with Meyer & Associates, a Louisiana corporation that provides professional engineering services to its clients.

In early 2002, the members of the Tribal Council and the vice president of Meyer & Associates, Richard Meyer, began discussions concerning the possibility to design and construct a facility for the casino’s general electricity, the individuals of the Coushatta Tribe, and potentially outside customers. Because Meyer’s & Associates did not have specific experience in this area, Mr. Meyer began assembling a team of experts to assist him. For the next several months, the project team began exploring the possibilities of developing the electric program. During the Tribal Council meeting on December 17, 2002, Mr. Meyer presented the most up-to-date study on the feasibility of the electrical project – this presentation gave the Tribal Council enough confidence to accept the project on the January 14, 2003 meeting. With this acceptance, a second agreement was written. This second agreement gave the Chairman of the Tribal Council the ability to negotiate and execute any new agreements with Meyer & Associates, and also stated that that the Tribe’s financial obligation to the project was $10,000,000 in addition to the $3,375,000 that was necessary for all the preliminary work.

writing-1238365-1024x768Plaintiffs cannot litigate multiple lawsuits brought over the same cause of action. For example, if a company wrongfully terminates someone’s employment, the employee can traditionally bring only one lawsuit addressing this issue and not a second or third after a court decides the first. This barring is called res judicata. Former Southern University System President Dr. Ralph Slaughter’s lawsuit against the Board of Supervisors of Southern University A&M in Baton Rouge, Louisiana, was dismissed because of this bar.

Dr. Slaughter and the Board settled a case in 2007 where Dr. Slaughter was fired after bringing workplace sexual harassment claims in federal court. Dr. Slaughter then dropped these claims because the Board signed him to a two-year employment contract running from July 1, 2007, to June 30, 2009. The Board reserved the right to terminate his employment on or before April 1, 2009, and on March 27, 2009, The Board exercised this right, voting not to extend Dr. Slaughter’s employment past the contract’s expiration.

Dr. Slaughter brought his first lawsuit addressing this termination on April 2, 2009, in a Baton Rouge District Court. He claimed that his employment termination was void because the Board did not adhere to Open Meetings Law. The Board filed to dismiss for no cause of action, and Dr. Slaughter himself also filed a motion to dismiss, which the trial court granted with prejudice on May 26, 2009.

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