Articles Posted in Litigation

A case arising out of the State of Louisiana First Circuit Court of Appeal considers whether defendants should have been permitted to raise certain peremptory contractual exceptions in the trial court: namely, objections of prescription, peremption, no cause of action, no right of action, and a dilatory exception of vagueness. See LA. C.C.P. Art. 927.  Unfortunately for the Plaintiffs, the trial court sustained all of defendant’s exceptions, and dismissed their case.

The case involved two plaintiffs Ryan and Vicki Williams—who entered a contractual agreement with Genuine Parts Company to reopen and operate a previously closed NAPA Auto Parts store in Ponchatoula, Louisiana. The Plaintiffs invested approximately $60,000 to start up the store, and obtained a six-year loan guaranteed by the Genuine Parts Company for the remainder of the costs. Plaintiffs were later offered the chance to operate another NAPA Auto Parts store in Hammond, Louisiana, but when plaintiffs declined that opportunity, Genuine Parts Company contracted with Jeffrey Boone to operate that Hammond store instead. After that, plaintiffs were told their financing would not be renewed, because of their NAPA store’s declining performance. When plaintiff’s loan matured, Genuine Parts Company acquired it, and liquidated plaintiff’s store inventory. Plaintiffs then filed a lawsuit for damages, because of the alleged unfair and deceptive practices by Genuine Parts company and Jeffrey Boone. In its response, Genuine Parts Company filed the peremptory exceptions mentioned above. Mr. Boone also adopted the same exceptions in his response. The trial court granted all exceptions and dismissed plaintiff’s case, so plaintiffs appealed.

Defining the Exceptions

Summary judgments are procedural devices used when no genuine issue of material fact exist that should be litigated in a full trial. The burden of proving that there is no issue as to material facts is on the party who is seeking the summary judgment. Once the moving party establishes that no genuine issue of material fact exists, the burden then shifts to the opposing party to present evidence that indicates that there is in fact a dispute as to material facts.  A recent lawsuit arising from Ascension Parish Louisiana discusses the standards used by courts to evaluate summary judgment motions.

In 2006, First American Bank and Trust (“the Bank”) issued a loan to Commerce Centre, LLC, (“Commerce Centre”), with an interest rate of 7.75%. The loan was secured by the guarantees of ten individuals and companies. Soon after the original 2006 loan, the Bank and Commerce Centre negotiated a subsequent 2007 loan, which included a lower interest rate, and was secured by only six of the ten original guarantors.

The 2007 loan ultimately defaulted, and the Bank filed a lawsuit seeking repayment. The lower court granted the Bank’s motion for summary judgment. The remaining six individuals and companies that were secured guarantors on the loan, appealed the summary judgment asserting that material issues of fact as to the Bank engaging in fraud existed. The main contention of the opposing parties was that the Bank did not disclose that some of the original individuals and companies that were guarantors on the 2006 loan, were no longer guarantors on the 2007 loan.

If a person defaults on student loan payments, the loan issuer can obtain a order from the court, directing an employer to withhold money from the person’s earnings until the defaulted loan has been paid in full. A Bossier Parish School Board (“BPSB”) employee stopped paying her student loans. In order to recover the default amount, the student loan company hired a collection agency, Pioneer Credit Recovery Inc. (“Pioneer”) top. Pioneer sent BPSB an order from a court (making them a garnishee) requiring it to deduct the employee’s earnings to a sufficient amount to make payments on the loan. BPSP complied, taking money out of the employee’s paycheck monthly, until the default amount was completely satisfied.

Once the loan was paid off in full, Pioneer sent BPSB notice stating it could stop the deductions from the employees wages. BPSB complied with the release order and ceased deducting any further funds from the employee’s paycheck; however, BPSB continued sending Pioneer money as a result of a clerical error. The error went on for some time, so long that BPSB overpaid over five thousand dollars of its own funds. Upon discovering the error, BPSB demanded a refund from Pioneer in the amount it had overpaid. Pioneer replied that since they already sent the overpayments to the employee they had no further obligation to pay BPSB back. Based on a belief that Pioneer still had an obligation to refund the money, BPSB filed a lawsuit to recover the overpayment and the case proceeded to trial.

In support of its claim, BPSB presented an argument based on a theory of payment for a thing not owed. See La. C.C. arts. 2299  and 2300. Pioneer did not deny that it received the money; however, they argued BPSB was at fault for failing to comply with the rules for withholding and further they ignored the order stating they no longer had to make the payments. Furthermore, Pioneer argued that all overpayments had been refunded to the employee under the mistaken belief that it was hers. The trial court agreed with BPSB holding that Pioneer had received a payment it was not owed and was bound by law to refund BPSB. The trial court based its decision on a finding that BPSB had made the payments, not the employee, and restoring the overpayment to the employee did not amount to restoring it to BPSB.

Antitrust laws protect competition and prevent monopolies. Ultimately, they are meant to protect consumers by ensuring healthy competition. Yet it is a common misconception that antitrust laws protect individual competitors in the marketplace; that each unique competitor is itself the competition that antitrust laws seek to protect. False. Antitrust laws are designed to protect competition – the integrity of the marketplace in which competition occurs – not individual competitors. See Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962). This is a lesson that Felder’s Collision Parts, Inc., a Louisiana company learned the hard way.

Felder’s is a Baton Rouge based dealer of after-market auto body parts. It sells body parts that are congruent with a major auto makers (“GM”) vehicles, but are not manufactured by GM. Felder’s filed an antitrust lawsuit against All Star dealers and GM alleging that GM’s “Bump the Competition” program was an illegal predatory pricing program which violated Louisiana and federal antitrust law. This GM program allowed competitors who purchase genuine GM parts for resale to sell those parts at a price designed to be lower than the local competitor’s price for the after-market equivalent of the same part. This bottom-line price was often lower than what All Star paid GM. The program subsequently allowed All Star to not only recoup the loss, but also recover a 14% profit.

The District Court ruled against Felder in his antitrust claims, reasoning that he fell short in his attempts to sufficiently delineate the relevant geographic market and to allege below-cost pricing. Because the Louisiana law claims were dependent on the federal antitrust claims, these claims were also dismissed. Felder’s appealed, alleging that the District Court erred in adding the payback amount to the price at which All Star sold its parts to customers.