Court Opinion

ID: 8212476
Source: CourtListenerOpinion
Date Created: 2022-10-07 00:00:24.148047+00
Date Added: 2024-06-11T16:42:10.556437
License: Public Domain

Case: 22-30052     Document: 00516500169         Page: 1     Date Filed: 10/06/2022

              United States Court of Appeals
                   for the Fifth Circuit
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
                                                                          October 6, 2022
                                  No. 22-30052                             Lyle W. Cayce
                                                                                Clerk

   Inspire Up, L.L.C., formerly known as Inspire, L.L.C.,

                                                           Plaintiff—Appellant,

                                       versus

   B R F Hospital Holdings, L.L.C., doing business as
   University Health System,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                           USDC No. 5:21-CV-2043

   Before Jones, Southwick, and Ho, Circuit Judges.
   Per Curiam:*
          Plaintiff Inspire Up brought suit for breach of contract. The suit
   alleges that Defendant University Health terminated the contract with less
   than six months notice but failed to pay the fees required under the contract
   for such terminations. The district court granted Defendant’s motion to

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 22-30052      Document: 00516500169            Page: 2   Date Filed: 10/06/2022

                                     No. 22-30052

   dismiss because it found that Plaintiff’s claim was untimely under
   Louisiana’s three-year prescription period for actions based on
   compensation for services rendered. We disagree. This breach of contract
   suit does not concern compensation for services rendered, so the three-year
   prescription period does not apply. We accordingly reverse and remand for
   further proceedings.
                                          I.
          Plaintiff provided consulting services to Defendant under a
   Professional Services Management Agreement (“Agreement”), which
   allowed either party to terminate the Agreement without cause. The parties’
   respective obligations upon termination turned on whether the terminating
   party provided six months notice. If Defendant provided six months notice,
   Plaintiff was required to furnish, for pay, “a minimum of twenty (20)
   consulting dates per month” during the six-month “notice period.” If
   Defendant provided less than six months notice, Defendant was required to
   pay “a sum equal to consulting services over a six-month period” but
   Plaintiff did not have a reciprocal obligation.
          On March 27, 2015, Defendant terminated the Agreement “effective
   immediately.” Since Defendant provided less than six months notice, it
   owed Plaintiff six months’ worth of consulting fees. However, Defendant
   refused to pay. Plaintiff filed suit six years later, on July 15, 2021, and
   Defendant moved to dismiss the complaint as untimely under Louisiana’s
   three-year prescriptive period for claims for past due wages, see LA. CIV.
   CODE art. 3494(1). Plaintiff responded that Louisiana’s general ten-year
   prescriptive period for personal actions applied instead. The district court
   found that Plaintiffs’ claim was a claim for severance payments and that
   severance payments fall within Article 3494(1). Accordingly, the district
   court granted Defendant’s motion to dismiss. Plaintiff timely appealed.

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                                     No. 22-30052

                                          II.
          We review de novo dismissals based on prescription. Brown v. Slenker,
   220 F.3d 411, 419 (5th Cir. 2000). The parties agree that Louisiana law
   provides the relevant prescriptive period.
          Under Louisiana law, “[u]nless otherwise provided by legislation, a
   personal action is subject to a liberative prescription of ten years.” LA. CIV.
   CODE art. 3499. One exception to this general rule is Article 3494, which
   provides a “liberative period of three years” for “[a]n action for the recovery
   of compensation for services rendered, including payment of salaries, wages,
   commissions, professional fees, fees and emoluments of public officials,
   freight, passage, money, lodging, and board.” Id. art. 3494(1).
          Plaintiff argues that the district court erred in finding that Article
   3494’s three-year prescription period governed Plaintiff’s claim. Instead,
   Plaintiff contends that Article 3494(1) unambiguously applies only to claims
   of compensation “for services rendered.” And according to Plaintiff, its
   breach of contract claim did not seek compensation for any services that it
   rendered. Plaintiff argues that it instead sought a severance payment that was
   unrelated to any service it had rendered and was owed only because
   Defendant terminated the Agreement with less than six months notice.
          We agree.        Article 3494(1) unambiguously applies only to
   “compensation for services rendered.” Plaintiff does not seek compensation
   for any services that it rendered. As a straightforward textual matter,
   Plaintiff’s argument is convincing.
          Defendant disagrees and would have us equate “compensation for
   services rendered” with “compensation for no services rendered.” We
   reject this atextual interpretation of Article 3494.

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          Defendant argues—and the district court agreed—that (1) Minor v.
   Monroe Surgical Hosp., LLC, 49,367 (La. App. 2 Cir. 11/19/14), 154 So. 3d
   665, holds that Section 3494 applies to independent contractors, and (2)
   Louisiana courts have held that Section 3494 applies to claims for payments
   due upon the termination of a contract irrespective of whether that payment
   is compensation for services rendered. Red Br. at 11, 14.
          Neither argument is convincing. First, Minor is not relevant here.
   The district court addressed the applicability of Section 3494 to independent
   contractors because Plaintiff disputed it before the district court. Plaintiff
   does not dispute that issue on appeal. The only question here is whether
   Section 3494 applies to Plaintiff’s severance claim. Second, the Louisiana
   state court cases that the district court relied on relied on, Assaleh v. Sherwood
   Forest Country Club, Inc., 2007-1939 (La.App. 1 Cir. 5/2/08), 991 So.2d 67,
   and Raborn v. Gulf States Pipeline Corp., 41,974 (La.App. 2 Cir. 4/4/07), 954
   So.2d 353, did not extend Article 3494 to claims for payments due upon the
   termination of a contract where the payments are not compensation for
   services rendered.
          Defendant argues that Article 3494 applies to Plaintiff’s claim for
   severance payments because Assaleh applied Article 3494’s three-year
   prescriptive period to “a claim for additional salary or additional severance
   pay.” 991 So.2d at 72 (quotations omitted). However, the “additional
   severance pay” at issue in Assaleh was not a typical severance payment due
   upon termination without any reciprocal obligation on the non-terminating
   party. Rather, because of Assaleh’s unique facts, the “additional severance
   pay” was actually compensation for services already rendered by the
   plaintiff. This explains why the Assaleh court also characterized the payment

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   as “additional salary” and applied Article 3494, which the court described as
   governing claims “based on the recovery of wages.”1 Id.
           Raborn does not help Defendant either. Although Raborn affirmed the
   trial court’s holding that Article 3494 governed the plaintiff’s claims, which
   included a severance claim, the only issue on appeal was whether the
   Defendant’s contractual obligation to issue stock was compensation for the
   plaintiff’s services. 954 So.2d at 355. Accordingly, Raborn did not affirm the
   district court’s holding as to the severance claim and did not even discuss the
   severance claim. At the very least, Raborn does not support the district court
   and Defendant’s interpretation of Article 3494 as including claims for
   severance payments for which no services were rendered.
           At best, Assaleh and Raborn offer an alternative interpretation of
   Article 3494. But Louisiana law clearly instructs that “where there are two
   permissible interpretations of a prescriptive statute, the courts must adopt
   the one that favors maintaining rather than barring the action.” In re Woods,
   02-685 (La. App. 5 Cir. 12/30/02), 836 So. 2d 512, 514; see also Price v.
   Stranco, Inc., 2003-1762 (La. App. 1 Cir. 9/8/04), 887 So. 2d 82, 84
   (“Statutes providing for prescriptive periods are to be strictly construed in

           1
              In Assaleh, the plaintiff’s employment contract required the employer to give the
   plaintiff ninety-days’ notice before terminating the contract. Id. at 69. The employer gave
   the plaintiff his ninety-days’ notice on December 10, 2003, id., which meant that he was
   technically employed until March 9, 2004. However, the employer applied the notice and
   termination retroactively to November 18, 2003 and gave him “severance pay” for ninety
   days from November 18, 2003 until February 16, 2004. Id. This meant the employer either
   did not pay the plaintiff the wages he was due for the services he rendered between
   November 18 and December 10 or gave him a “severance pay” that included those wages,
   resulting in a “severance pay” for less than ninety days. Thus, the court described the
   plaintiff’s claim as “a claim for additional salary or additional severance pay.” Id. at 72.
   But since it does not appear from the court’s decision that the plaintiff was contractually
   entitled to severance pay, the plaintiff’s “severance” claim was really a claim for
   compensation for the services he rendered between November 18, and December 10.

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   favor of maintaining a cause of action.”). Moreover, “prescriptive statutes
   are stricti juris and will not be extended beyond the letter of the law.” Gulf
   Oil Corp. v. State Min. Bd., 317 So. 2d 576, 578 (La. 1974). Even under the
   most charitable reading of Defendant’s argument, we must err on the side of
   allowing Plaintiff’s claim to proceed.
                                       ***
          For the foregoing reasons, we reverse and remand for further
   proceedings.

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