Court Opinion

ID: 4861
Source: CourtListenerOpinion
Date Created: 2010-04-25 04:59:55+00
Date Added: 2024-06-11T12:03:24.178838
License: Public Domain

United States Court of Appeals,

                                           Fifth Circuit.

                                           No. 91–4849

                                        Summary Calendar.

                    SMP SALES MANAGEMENT, INC., Plaintiff–Appellant,

                                                 v.

                    FLEET CREDIT CORPORATION, Defendant–Appellee.

                                           May 15, 1992.

Appeal from the United States District Court for the Western District of Louisiana.

Before JONES, DUHÉ, and WIENER, Circuit Judges.

       EDITH H. JONES, Circuit Judge:

       Plaintiff-appellant SMP Sales Management, Inc. (SMP) sued Fleet Credit Corporation (Fleet)

for Fleet's alleged interference with SMP's contract with Wonderline, Inc. (Wonderline), or

alternatively for amounts due under a theory of unjust enrichment. Upon submission of the case on

written evidence, the district court found for Fleet. Finding no error, we affirm.

                                                 I.

       On or about June 30, 1986, SMP entered into a three-year contract with Wonderline to be

its exclusive sales representative. On June 30, 1986, Fleet and Fleet National Bank made certain

loans to Wonderline which were secured by most, if not all, of the assets of Wonderline. Fleet's

collateral included an assignment of accounts receivable of Wonderline. By September, 1987,

Wonderline had defaulted on the repayment of these loans from Fleet, which, at the time of default,

carried a principal balance of approximately $6,500,000.

       By petition for executory process filed on October 5, 1987, in the 26th Judicial District Court

for Bossier Parish, Louisiana, Fleet and Fleet National Bank foreclosed on certain of the assets of

Wonderline. By order signed by the Bossier Parish Clerk of Court, the sheriff of Bossier Parish was
directed to seize and sell certain assets of Wonderline and Fleet was appointed, pursuant to

La.Rev.Stat. 9:5138, as the "keeper" of the seized assets.

        On March 30, 1988, the assets of Wonderline were sold at Sheriff's Sale to Rotocast Plastic

Products, Inc. for the sum of $2,500,000. On March 31, 1988, Wonderline, Fleet and Fleet National

Bank transferred Wonderline's remaining accounts receivable to Rotocast.

        SMP was never employed by Fleet and never had a contractual relationship with Fleet. Fleet

never assumed the obligations of Wonderline under the contract and no one at Fleet ever gave SMP

any indication that Fleet would pay the expenses or commissions owed to SMP by Wonderline under

the contract. Mr. Pollack, the President of SMP, admitted that the sole basis of SMP's claim against

Fleet was its contention that Fleet interfered with the contract by coercing, advising or otherwise

instructing Wonderline not to pay the sums due to SMP under the contract. He admitted that these

claims were based entirely on statements made by Wonderline officers to Mr. Pollack, and not on his

own personal knowledge.

        Mr. Pollack admitted that by August of 1987, SMP became aware of the facts which formed

the basis for its contention that Fleet interfered with the contract. He also admitted that SMP was

aware that the assets of Wonderline were sold to Rotocast on March 30, 1988. Also, SMP never

made a claim against Wonderline or sued Wonderline for the amounts allegedly due under the

contract. SMP filed suit against Fleet in Louisiana state court on November 10, 1989; Fleet removed

the action to federal district court based on diversity of citizenship.

                                                   II.

         The trial court's findings based on depositions and stipulations are entitled to the same

standard of review that they would receive if based on oral, courtroom testimony. The findings must

be upheld unless they are clearly erroneous. See Fed.R.Civ.Proc. 52(a). The district court's
application of law is reviewed de novo.

                                                 III.

        SMP contends that Fleet interfered with its contract by coercing, advising or otherwise

instructing Wonderline not to pay the amounts due thereunder. This is a "tortious interference with

contractual relationships" claim, a newly recognized theory of liability in the state of Louisiana. See

9 to 5 Fashions, Inc. v. Spurney, 538 So. 2d 228 (La.1989). Tortious interference with contract is

a tort, based on duties arising from La.Civ.Code Art. 2315. Id. at 231–34. Actions in tort are

delictual actions, subject to a one year liberative prescription. La.Civ.Code Art. 3492. This

prescription commences to run from the day injury or damage is sustained. Id. Louisiana courts

maintain that prescription on the tort claim begins to run "on the date the injured party discovers or

should have discovered the facts upon which its cause of action is based." Griffen v. Kinberger, 507
So. 2d 821, 823 (La.1987).

        SMP knew of the interference as early as August 1987, and was aware of the sheriff's sale

when it happened on March 30, 1988. It did not file suit until November 10, 1989, over one year

from its knowing of its cause of action. The ending date of the contract is of no importance.

Therefore, the plaintiff's cause of action for tortious interference with contract has prescribed.1 The

district court's factual determination of when SMP knew of the alleged tortious interference is not

clearly erroneous, and it was correct in finding the claim prescribed.

                                                 IV.

       Due to the absence of an express, written contract between SMP and Fleet Credit, SMP

sought recovery in the court below on quasi contractual theories--unjust enrichment, quantum meruit,

   1
    Because we find that the action has prescribed, we need not not address whether the "tortious
interference with contractual relationships" cause of action would even apply here, which is
doubtful. 9 to 5, 538 So. 2d at 234 (court did not adopt the fully expanded common law doctrine
of interference with contract).
and negotiorum gestor. The Louisiana Civil Code recognizes only two nominate types of quasi

contracts2: the transaction of another's business (negotiorum gestor) and the payment of a thing not

due (money had and received). La.Civ.Code Art. 2294. Appellant sought recovery in the court

below on theories of negotiorum gestor and "unjust enrichment" and claims error by the district court

in denying relief.

           First, SMP claims that the district court wrongly denied its claim for "unjust enrichment."

Louisiana does recognize an action for "unjust enrichment." Oil Purchasers, Inc. v. Kuehling, 334
So. 2d 420, 425 (La.1976); Edmonston v. A–Second Mortgage Co., 289 So. 2d 116 (La.1974);

Minyard v. Curtis Products, Inc., 251 La. 624, 205 So. 2d 422, 427 (1968). In order to establish a

claim of unjust enrichment, the plaintiff must pro ve five elements: (1) an enrichment, (2) an

impoverishment, (3) a connection between the enrichment and the impoverishment, (4) an absence

of justification or cause for the enrichment or impoverishment, and (5) no other remedy at law.

Edmonston, 289 So. 2d at 120. Appellant also sought recovery on a quantum meruit3 basis.

Although both the district court and the parties relied on quantum meruit as a substantive basis of

recovery, it is not recognized as such in Louisiana but is only used as a measure of compensation or

price in quasi-contract or when none is stated in a contract. Morphy, Makofsky & Masson v. Canal

Place 2000, 538 So. 2d 569, 574–75 (La.1989).4

   2
       Art. 2293. Quasi contracts, definition

                 Quasi contracts are the lawful and purely voluntary act of a man, from which there
                 results any obligation whatever to a third person, and sometimes a reciprocal
                 obligation between the parties.
   3
    Quantum meruit is an equitable doctrine based on the principle that one who benefits from
another's labor and materials should not be unjustly enriched thereby. Wilkins v. Hogan Drilling
Co., Inc., 471 So. 2d 863, 867 (La.App. 2d Cir.1985).
   4
    Quantum meruit as a substantive law claim is "geared to equity and unjust enrichment,
something of a counterpart to the civilian actio de rem verso. Morphy, Makofsky & Masson v.
Canal Place 2000, 538 So. 2d 569, 574 (La.1989). Quantum meruit is only recognized in
Louisiana as a descriptive term of the measure of compensation or price which is unstated in
action on a contract or quasi-contract. Id. (citations omitted).
        The district court denied recovery because it found that Fleet had not been unjustly enriched.

As noted by the district court,

       The actions taken by Fleet are indistinguishable from those taken by any secured creditor, in
       that the labor of unsecured creditors renders the secured creditor's position more attractive
       than it would have been absent the actions of the unsecured creditor. It does not follow,
       however, that by enjoying the status as a secured creditor one has been enriched.... Fleet
       obviously suffered a loss in this case, but because of the efforts of many unsecured creditors
       suffered less of a loss than it might have. This does not mean that all such unsecured
       creditors are therefore entitled to bring an unjust enrichment action."

Memorandum Opinion at 7. We agree with the findings of the district court. As noted by one

Louisiana court:

       Not every unjust enrichment warrants usage of equity. Courts may resort to equity only in
       cases of unjust enrichment for which there is no justification in law or contract. In other
       words, an enrichment is justified if it is the result of, or finds its explanation in, the term of a
       valid juridical act between the impoverishee and the enrichee or between a third party and the
       enrichee.

Carter v. Flanagan, 455 So. 2d 689, 692 (La.App. 2d Cir.1984) (citing Edmonston v. A–Second

Mortgage Co., 289 So. 2d 116 (La.1974)). In the instant case, there is a justification in law. There

was a contractual relationship between Fleet and Wonderline and, as a secured creditor of

Wonderline, Fleet would be entitled to be paid first. Allowing unsecured creditors to recover on a

theory of unjust enrichment would render the secured creditor status useless. The secured creditor

is entitled to be paid first. Here, Fleet loaned over $6,500,000 to Wonderline and received in return

only $2,500,000. Fleet was not unjustly enriched, and this is not a case in which equity would apply.

There has been no enrichment of Fleet in this circumstance. The district court was correct in so

holding.

                                                   V.

        Second, SMP claims that the district court misapplied La.Civ.Code Art. 2295—negotiorum

gestor. This article provides that when one takes of his own accord to manage the affairs of another,
he assumes the payment of expenses attending the business.5 The district court was correct in holding

the article inapplicable or that SMP simply failed in its burden of proof.

          First, SMP failed to prove that Fleet, prior to October 5, 1987, undertook to m anage the

affairs of Wonderline. The evidence consists of hearsay and inadmissible evidence. SMP admitted

that Fleet did not assume Wonderline's obligations under the SMP contract. Second, from October

5, 1987, t hrough March 30, 1988, Fleet became the court-appointed "keeper" of certain of

Wonderline's assets. Therefore, this undertaking would neither be "unauthorized" nor "of Fleet's own

accord" as required under the statute. There is no authority for holding a "keeper" responsible for

the debts of the person when his assets have been seized. Therefore, SMP's theory of recovery based

on negotiorum gestor would also fail.6 The decision of the district court based on negotiorum gestor

is affirmed.

                                                   VI.

          For the foregoing reasons, the judgment of the district court is AFFIRMED.

   5
       Art. 2295. Unauthorized management of another's affairs; negotiorum gestor.

                        When a man undertakes, of his own accord, to manage the affairs of
                 another, ... the person assuming the agency contracts the tacit engagement to
                 continue it and to complete it, until the owner shall be in a condition to attend to it
                 himself; he assumes also the payment of the expenses attending the business.
   6
    Actually, the theory of negotiorum gestor would not appear to apply here. "[T]he Supreme
Court of Louisiana has held that before anyone can be considered a negotiorum gestor he must
have intended to act in the interest of another and not for himself." De Blanc v. Texas Co., 121
F.2d 774 (5th Cir.1941) (citations omitted). It is undisputed that Fleet did not intend to act in the
interest of Wonderline. Fleet acted as keeper and took over the business to protect its own
interest. Therefore, negotiorum gestor would not apply.