* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-30906

Summary Calendar

K P’S AUTO SALES INC; KENNETH J PHIPPS

Plaintiffs-Appellants

v.

GENERAL MOTORS CORP

Defendant-Appellee

Appeal from the United States District Court 

for the Western District of Louisiana 

USDC No. 2:07-CV-31

Before JOLLY, DENNIS, and PRADO, Circuit Judges.

PER CURIAM:*

The alleged disclosure of confidential information, while the Plaintiffs

attempted to buy a car dealership, drives this appeal. Plaintiffs-Appellants K.P.

Auto Sales Inc. (“K.P.”) and Kenneth J. Phipps (“Phipps”) (collectively,

“Plaintiffs”) argue that Defendant-Appellee General Motors Corporation (“GM”)

improperly disclosed confidential information while the Plaintiffs sought to

United States Court of Appeals

Fifth Circuit

F I L E D

October 15, 2008

Charles R. Fulbruge III

Clerk
No. 07-30906

1 GM asserts that it gave Navarre only a copy of the purchase agreement between the

Plaintiffs and ADG, as allowed under the GM-ADG dealer agreement, because GM was

considering whether to assign its right of first refusal to Navarre.

2

purchase a Cadillac dealership. The district court granted summary judgment

in favor of GM. For the following reasons, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Plaintiffs owned a successful GM franchise in Jennings, Louisiana.

They then sought to enter the Cadillac business. On February 28, 2005, K.P.

and Phipps executed a purchase agreement with ADG, Inc. (“ADG”) to buy

ADG’s Lake Charles Cadillac franchise. Before the parties could finalize the

sale, however, GM needed to approve the transfer of the dealership to K.P. and

Phipps. As part of the approval process, Phipps submitted to GM confidential

business and financial information.

The Plaintiffs allege that sometime between February 28, 2005, and April

11, 2005, GM disclosed K.P.’s and Phipps’s confidential information to William

Navarre (“Navarre”), a rival auto dealer who operated in the same marketplace.1

Navarre then submitted a purchase proposal with more favorable terms. GM

notified the Plaintiffs thatit might exercise its right of first refusal, which would

have blocked the sale of ADG’s dealership to the Plaintiffs. Subsequently, the

Plaintiffs withdrew their purchase agreement with ADG.

Having lost entry into the Cadillac market, the Plaintiffs turned to

litigation, bringing suit in Louisiana state court against both GM and Navarre.

They alleged that GM improperly disclosed confidential information to Navarre,

in violation of ADG’s dealer agreement with GM. Specifically, they argued that

they are third-party beneficiaries of the dealer agreement, and that GM

breached the implied covenant of good faith and fair dealing and that GM

tortiously interfered with their business relations. GM and Navarre removed

the case to federal court based on diversity jurisdiction, asserting that the
No. 07-30906

3

Plaintiffs had improperly joined Navarre, the only nondiverse defendant. The

Plaintiffs did not challenge this removal.

Both defendants filed a motion to dismiss pursuant to Federal Rule of Civil

Procedure 12(b)(6). The district court converted the motion into a motion for

summary judgment under Federal Rule of Civil Procedure 56 and invited the

parties to submit additional evidence. The court then granted summary

judgmentin favor of both GM and Navarre, concluding thatthePlaintiffs are not

third-party beneficiaries under the GM-ADG dealership agreement and thatthe

claim for tortious interference with business relations is time barred. The

Plaintiffs appeal only the ruling in favor of GM.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over the district court’s order granting summary

judgment to GM pursuant to 28 U.S.C. § 1291.

This court reviews de novo a district court’s summary judgment order.

Richardson v. Monitronics Int’l, Inc., 434 F.3d 327, 332 (5th Cir. 2005). We will

affirm the district court’s decision to grant summary judgment if “there is no

genuine issue as to any material fact and . . . the movant is entitled to judgment

as a matter of law.” FED. R. CIV. P. 56(c); see also Richardson, 434 F.3d at 332.

Because this case is in federal court based on diversity jurisdiction, we must

follow Louisiana’s substantive law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64,

78 (1938); Ashland Chem. Inc. v. Barco Inc., 123 F.3d 261, 265 (5th Cir. 1997).

III. DISCUSSION

A. Third-Party Beneficiary

In Louisiana, a contract that benefits a third party includes a “stipulation

pour autrui.” See Joseph v. Hosp. Serv. Dist. No. 2, 939 So. 2d 1206, 1208 (La.

2006). The Louisiana Supreme Court, in Joseph, articulated a three-part test

to determine if a contract contains a stipulation pour autrui and thereby confers

rights in favor of a third party. Id. at 1212. First, the stipulation for a third
No. 07-30906

4

party must be “manifestly clear.” Id. Second, there must be “certainty as to the

benefit provided the third party.” Id. Finally, the benefit must not be a “mere

incident” of the agreement between the contracting parties. Id. “In applying

these criteria, we ultimately rely on the words of [LA. CIV. CODE ANN. art. 1978]

that the contract must ‘stipulate a benefit for a third person.’” Id. Expounding

upon this requirement, the court noted that 

[t]he most basic requirement of a stipulation pour autrui is that the

contract manifest a clear intention to benefitthe third party; absent

such a clear manifestation, a party claiming to be a third party

beneficiary cannot meet his burden of proof. A stipulation pour

autrui is never presumed. The party claiming the benefit bears the

burden of proof.

Id. (internal citations omitted).

Here, the Plaintiffs argue that two provisions in the GM-ADG dealer

agreement stipulate a benefit in favor of those seeking to purchase ADG’s

dealership. Section 12.2 of the agreement states that “[i]f Dealer proposes . . . a

change in ownership, . . . [GM] will consider Dealer’s proposal and not arbitrarily

refuse to approve it . . . .” Section 11.4 states that “[GM] agrees not to furnish

any personal or financial data submitted to it by Dealer to any non-affiliated

entity unless authorized by Dealer . . . .” Contrary to the Plaintiffs’ assertion,

neither provision manifests a clear intention to benefit a third party.

First, Section 12.2 benefits a Dealer—here ADG—who asks GM to approve

a change in ownership, assuring the Dealer that GM will not arbitrarily refuse

to approve the sale. The provision does not contemplate potential buyers, such

as the Plaintiffs. Second, Section 11.4 states that GM will protect the

confidential information that the Dealer submits. The provision does not provide

any protection to a third party. Finally, another provision of the GM-ADG

dealer agreement, Section 17.9, directly undercuts the Plaintiffs’ argument.

That section, titled “No Third Party Benefit Intended,” states, “This agreement
No. 07-30906

2 We also reject the Plaintiffs’ argument that they are entitled to additional discovery

on this issue, as the Plaintiffs did not seek a continuance from the district court under Federal

Rule of Civil Procedure 56(f). See Potter v. Delta Air Lines, 98 F.3d 881, 887 (5th Cir. 1996)

(“If Mrs. Potter needed more discovery in order to defeat summary judgment, it was up to her

to move for a continuance pursuant to rule 56(f). Because she did not, she is foreclosed from

arguing that she did not have adequate time for discovery.”).

3 On appeal, the Plaintiffs also assert that they timely filed their claims for violations

ofthe Louisiana Unfair Trade Practices Act, butthey filed this claim only against Navarre, not

5

is not enforceable by any third parties and is not intended to convey any rights

or benefits to anyone who is not a party to this Agreement.” 

Thus, the language of the dealer agreement demonstrates that it fails to

meet the test from Joseph for a stipulation pour autrui. See LA. CIV. CODE ANN.

art. 2046 (“When the words of a contract are clear and explicit and lead to no

absurd consequences, no further interpretation may be made in search of the

parties’ intent.”). The contract does not provide a benefit that is “manifestly

clear,” and there is no “certainty as to the benefit provided.” Joseph, 939 So. 2d

at 1212; see also Tallo v. Stroh Brewery, Co., 544 So. 2d 452, 454-55 (La. Ct. App.

1989) (holding that a provision in a beer distributorship contract that the beer

provider “will not unreasonably withhold its approval of a proposed control

change” of the distributorship did not create a stipulation pour autrui in favor

of the would-be purchaser of the distributorship). In fact, the dealer agreement

does just the opposite, specifically averring that the contract does not provide

any benefits to a third party. Additionally, because the Plaintiffs are not parties

to the contract and are notthird-party beneficiaries, there is no implied covenant

of good faith and fair dealing between the Plaintiffs and GM that GM could have

breached. Accordingly, the district court properly granted summary judgment

in favor of GM on this basis.2

B. Tortious Interference with Business Relations

The district court held that the Plaintiffs’ claim for tortious interference

with business relations is time barred.3 The prescription period for delictual or
No. 07-30906

GM, and they did not appeal the district court’s dismissal of Navarre.

4 Just as we rejected the Plaintiffs’ argument for additional discovery on the third-party

beneficiary claim, we also reject their argument for discovery on the tortious interference

claim, as they did not seek discovery with the district court under Rule 56(f).

5 The Plaintiffs raise a new argument on appeal, asserting that GM violated the

Automobile Dealer’s Day in Court Act, 15 U.S.C. § 1222. As the Plaintiffs did not present this

argument to the district court, it is waived. See, e.g., Lemaire v. Louisiana, 480 F.3d 383, 387

(5th Cir. 2007) (“[A]rguments not raised before the district court are waived and cannot be

raised for the first time on appeal.”). 

6

tort actions under Louisiana law is one year. LA. CIV. CODE ANN. art. 3492. This

one-year period commences on the date of the injury. Id. Here, the Plaintiffs

alleged in their complaint that GM disclosed the confidential information to

Navarre sometime between February 28, 2005, and April 11, 2005. They also

asserted that GM notified them that GM was considering exercising its right of

first refusal around the same time that Navarre received the information,

causing them to withdraw their offer to purchase ADG’s Cadillac dealership.

Therefore, the one-year prescriptive period began, at the latest, on April 11,

2005, and expired on April 10, 2006. The Plaintiffs filed their claim on

November 30, 2006, over six months too late. Thus, the district court properly

granted summary judgment in favor of GM on this claim.4

IV. CONCLUSION

The district court was correct to conclude that the Plaintiffs’ argument

had, metaphorically speaking, run out of gas. The Plaintiffs failed to

demonstrate that they are third-party beneficiaries of the GM-ADG contract.

Additionally, their claim for tortious interference is time-barred. Accordingly,

we AFFIRM the district court’s grant of summary judgment in favor of GM.5

AFFIRMED.