Court Opinion

ID: 37529
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:54:21+00
Date Added: 2024-06-11T17:15:43.331015
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT                December 22, 2004
                       _______________________
                                                          Charles R. Fulbruge III
                             No. 04-30141                         Clerk
                       _______________________

                           COURTNEY ROGERS,

                        Plaintiff - Appellant

                                  v.

                  ROBERT E. BROOKS, DAVID M. BROOKS,
                         and LYNDA K. BROOKS,

                       Defendants - Appellees,

                      _______________________
           Appeal from the United States District Court
               for the Middle District of Louisiana
                      _______________________

Before WIENER and PRADO, Circuit Judges, and KINKEADE, District
Judge.*

PER CURIAM:**

     In this case, one party to contract negotiations alleges

that those negotiations led to a final agreement for the sale of

an oil company.    Because the district court correctly concluded

that these negotiations never resulted in an enforceable contract

and that there are no alternative ways to enforce the alleged

promise, we affirm.

     *
      District Judge of the Northern District of Texas, sitting
by designation.
     **
       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that this opinion should not be published and is not precedent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.

                                  1
Background Facts and Procedural History

     Appellees Robert Brooks (“Brooks”), his wife Lynda Brooks,

and their son David Brooks own Oracle Oil, L.L.C., a Louisiana

oil company.    In the fall of 2002, Appellant Courtney Rogers

offered $100,000 to buy Oracle’s leases, which Brooks had placed

for sale at an auction.     Brooks rejected this offer.   Later,

Rogers offered $150,000 for the leases and some equipment (such

as a backhoe and a tractor) that had been excluded from the

original auction package.     This offer, too, was rejected.   Rogers

then made a second $150,000 offer for the leases, this time

excluding the equipment.1    Brooks agreed to this price.

According to Brooks, Rogers then discovered that transferring the

leases would cause him to incur significant regulatory fees.

Rogers asked Brooks to consider selling him all the membership

interest in the company, instead of the leases, to avoid these

fees.    Brooks agreed to consider this request.   The parties

continued to negotiate, but the negotiations fell apart over a

dispute concerning December operating expenses.     Finally, in

December 2002, Rogers offered Brooks $141,0002 for all the

     1
      At various points, Rogers contended that these $150,000
offers were for all the membership interest in Oracle itself.
This position contradicts some of Rogers’s other statements.
Regardless of the specifics, the parties both agree that the
original offer was for the leases, that several different offers
were made, and that at some point the offer became for the sale
of Oracle.
     2
      Brooks’s statement of facts indicates that this amount was
$140,000.

                                   2
interest in Oracle, minus a tractor and mower.   Brooks agreed to

this price, and the parties agreed that Rogers’s lawyers would

draft written sale documents.

     Rogers’s lawyers forwarded the written agreement, called the

Unit Purchase Agreement, to Brooks.    Brooks found several of the

terms unreasonable.   In particular, Brooks objected to the

warranties3 contained in the written agreement because the

parties had discussed an as-is sale.   Claiming that his decision

was due to these warranties, Brooks did not sign the Unit

Purchase Agreement and refused to negotiate further with Rogers.4

     Following this refusal, Rogers sued Brooks, Lynda Brooks,

and David Brooks in the Middle District of Louisiana.   The suit

included claims for breach of the written Unit Purchase

Agreement, along with claims for detrimental reliance, negligent

misrepresentation, wrongful conduct, unjust enrichment, and

unfair trade practices.   Notably, the complaint did not refer to

an oral contract.   Almost immediately, the Brooks Defendants

     3
      Rogers contends that the contract did not contain
warranties. According to Rogers, the terms were merely requests
for disclosure, not warranties. Yet the section in question is
titled “Representations, Warranties and Covenants of Seller” and
requires the seller to “jointly and severally, represent[],
warrant[] and covenant[]” that Oracle has good title that is
clear of all liens, that Oracle has complied with all leases, and
that there are no conditions that would give rise to litigation.
     4
      Rogers, on the other hand, contends that Brooks backed out
of the deal because the price of oil rose dramatically and Brooks
could make more money by not selling the company. Rogers
emphasizes that Brooks has not since placed the leases for
auction or attempted to sell Oracle.

                                 3
moved for summary judgment.    In his response, Rogers contended

for the first time that Brooks had breached an oral agreement to

sell the Oracle interest for $141,000.

     The district court granted the Brooks Defendants’ motion,

ruling that “no valid contract was entered into between the

parties in this case.”   Further, the court determined that “there

is no dispute that a contract was never agreed upon or reduced to

writing.”    The district court entered judgment, and Rogers timely

filed a notice of appeal.

     Because the district court decided this case on a motion for

summary judgment, we review its decision de novo.        Am. Home

Assurance Co. v. United Space Alliance, LLC, 378 F.3d 482, 486

(5th Cir. 2004).   Summary judgment is appropriate when no genuine

issues of material fact remain and the movant is entitled to

judgment as a matter of law.    FED. R. CIV. P. 56(c).

Breach of Contract

     Although Rogers originally sued to enforce the Unit Purchase

Agreement, he now contends that Brooks breached an oral

agreement.   Because of this contention, we must first address

whether an oral contract would be enforceable.     Here, the

enforceability of an oral contract depends upon two issues.         The

first is whether, under Louisiana law, this general type of

contract must be in writing.    The second issue is whether this

particular contract had to be written because the parties

                                  4
intended it to be in writing.

     Rogers contends that, although a sale of an oil and gas

lease must be in writing, the sale of interest in a limited

liability company (“L.L.C.”) does not require a writing.     In

general, this contention is true––the sale of an oil and gas

lease must be in writing, whereas the sale an L.L.C. does not

necessarily have to be in writing.5   All that would normally be

required for the sale of membership interests would be an

agreement about “[t]he thing, the price, and the consent of the

parties.” LA. CIV. CODE ANN. art. 2439 (West 1996).   Essentially

conceding this point, Appellees do not contend that, in general,

a sale of the interest in an L.L.C. must be in writing.

     Instead, Appellees emphasize the second issue and argue that

their contract must be in writing because, to the extent that the

parties reached any agreement,6 they anticipated a written

contract.   Louisiana Civil Code article 1947 states “[w]hen, in

the absence of a legal requirement, the parties have contemplated

     5
      A membership interest in a L.L.C. is an “incorporeal
movable” under Louisiana law. LA. REV. STAT. ANN. 12:1329 (West
1994). Unless other specific rules apply, a contract for a sale
of movable property generally does not need to be in writing. See
LA. CIV. CODE ANN. art. 1846 (West 1987); Dupuy v. Riley, 557 So.
2d 703, 707 (La. App. 4th Cir. 1990)(“Since the alleged oral
agreement between [the parties] concerned the transfer of stock,
a movable, there is no requirement that it be in writing.”).
     6
      Appellees dispute this point. They argue that the parties
never reached an agreement––oral or otherwise––and that at most,
they were engaged in negotiations, which fell apart over the
proposed warranties.

                                 5
a certain form, it is presumed that they do not intend to be

bound until the contract is executed in that form.”   Under this

article, for example, if parties intend to enter into a written

contract, they are presumed not to be bound until the contract is

signed.

     Several Louisiana courts have applied this rule.   For

example, in Baldwin v. Bass, the court concluded that a

prospective homeowner did not intend to be bound by a contract

with a builder when that contract was mailed to her but she

intentionally refrained from signing it.   Baldwin, 685 So. 2d 436

(La. Ct. App. 1996).   Similarly, in Carter v. Huber & Heard,

Inc., an employee could not enforce a two-year employment term

when the parties anticipated entering into a written employment

contract but never finalized its terms.7   657 So. 2d 409 (La. Ct.

App. 1995).

     Here, the parties clearly anticipated entering into a

written contract.   In fact, Rogers asked his own lawyers to draft

the agreement.   Although Rogers contends that this written

contract was merely to “memorialize” the deal, this distinction

is not significant.8   Under article 1947, the contract had to be

     7
      Carter was primarily a detrimental reliance case. Carter,
657 So.2d at 411. The court ruled against the employee on this
claim but used the contract’s failure under article 1947 as an
alternative basis for its decision. Id. at 412.
     8
      Furthermore, Rogers’s complaint only requests enforcement
of the written, unsigned contract with all its provisions, not an

                                 6
in writing to be enforceable.   For this reason, the district

court properly granted summary judgment on Rogers’s breach of

contract claims.

Detrimental Reliance

     The first of his noncontractual claims, Rogers’s detrimental

reliance claim is based on Louisiana Civil Code article 1967,

which provides in part: “A party may be obligated by a promise

when he knew or should have known that the promise would induce

the other party to rely on it to his detriment and the other

party was reasonable in so relying.”   To recover for detrimental

reliance, a plaintiff does not need to establish an enforceable

contract as he would under a breach of contract claim.     Newport

Ltd. v. Sears, Roebuck & Co., 6 F.3d 1058, 1069 (5th Cir. 1993).

Nevertheless, a plaintiff must show that he detrimentally relied

on a promise and that his reliance was reasonable.   Id.

     Rogers contends that he relied on Brooks’s promise to sell

Oracle by taking several actions that cost him over $60,000.

These actions included hiring his own field supervisor, selling

interests to new partners, and having detailed meetings with Earl

McNutt, Oracle’s supervisor at the time.   Rogers also states that

he received logs, asked Oracle’s existing insurer whether

coverage would extend after the transfer, found new equipment,

and analyzed costs.

oral agreement.

                                 7
     Appellees challenge the reasonableness of this reliance.

They contend that Rogers was unreasonable to rely on oral

promises before executing a written contract, particularly since

his own lawyers were the ones drafting the proposed contract.

     This court is not the first to analyze detrimental reliance

when the parties planned to enter into a written contract.        In

Carter, the Louisiana Third Circuit Court of Appeal faced an

analogous situation.   In Carter, a former employee agreed to

return to manage the defendant’s motel.     657 So. 2d at 411.        The

employee insisted on a two-year employment term and had his

lawyers draft a contract.     Id.   Although they exchanged drafts,

the parties never signed a formal employment agreement.         Id.

Nevertheless, the employee began work.      Id.   Before two years

passed, the employer sold the hotel, thereby ending the

employment.   Id.   The employee sued, claiming detrimental

reliance.   Id.   The trial judge found that the employer had never

made a promise, and that, even if it had, the employee’s reliance

on that promise would be unreasonable.      Id. at 412.   The

appellate court agreed.     Id.

     Similarly, here the parties anticipated entering into a

written agreement, and the proposed written agreement contained

terms that were not mutually agreeable.     Given the amount of on-

and-off negotiation that the parties had gone through in the

past, any reliance on an alleged promise to sell Oracle was

                                    8
unreasonable.   Thus, summary judgment was proper on Rogers’s

detrimental reliance claim.

Negligent Misrepresentation/Wrongful Conduct

     Rogers further alleges that Brooks engaged in negligent

misrepresentation by canceling their deal.    “A person commits the

tort of negligent misrepresentation when (1) he has a legal duty

to supply correct information; (2) he breaches that duty; and (3)

his breach causes damages to the plaintiff.”     Soc. of the Roman

Catholic Church of the Diocese of Lafayette, Inc. v. Interstate

Fire & Cas. Co., 126 F.3d 727, 742 (5th Cir. 1997).     The tort can

be committed with misinformation or with nondisclosure.       Id.

     For this claim, Rogers merely alleges that Brooks permitted

Rogers to “tak[e] actions and incur[] expenses with Robert

Brooks’ knowledge and encouragement.”    Rogers does not explain,

however, how this is actionable misrepresentation.     Nor do we

perceive it to be misrepresentation.    Appellees were entitled to

summary judgment on this claim.

Unfair Business Practice

     Rogers next claim is for unfair business practice under the

Louisiana Unfair Trade Practices Act, Louisiana Revised Statute

51:1405(A).   This statute prohibits “unfair methods of

competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce”.    LA. REV. STAT. ANN. §

51:1405(A)(West 2003).   Under this law, “a practice is unfair

                                  9
when it offends established public policy and when the practice

is unethical, oppressive, unscrupulous, or substantially

injurious.”   Jarrell v. Carter, 577 So. 2d 120, 123 (La. App. 1st

Cir. 1991).

     The only unfair business practice Rogers alleges is that

“Robert Brooks canceled the deal after the increased price of oil

made Oracle more valuable.”   Breach of a contract, without more,

is not actionable: “the statute does not provide an alternate

remedy for simple breaches of contract. . . .    There is a great

deal of daylight between a breach of contract claim and the

egregious behavior the statute proscribes.”     Turner v. Purina

Mills, Inc., 989 F.2d 1419, 1422 (5th Cir. 1993)(citation

omitted).   Because Rogers has not pointed to any other unfair or

deceptive act, summary judgment was appropriate on this claim.

Unjust Enrichment

     Rogers’s final noncontract claim is for unjust enrichment.

Under Louisiana law, an unjust enrichment claim contains the

following elements: “(1) there must be an enrichment, (2) there

must be an impoverishment, (3) there must be a connection between

the enrichment and resulting impoverishment, (4) there must be an

absence of ‘justification’ or ‘cause’ for the enrichment and

impoverishment, and (5) there must be no other remedy at law

available to plaintiff.”   Baker v. Maclay Props. Co., 648 So. 2d

888, 897 (La. 1995); see also Edmonston v. A-Second Mortgage Co.

                                10
of Slidell, Inc., 289 So. 2d 116 (La. 1974).

      Rogers contends that the Brooks family was unjustly

enriched by the actions he took in reliance on their deal.

Nowhere does Rogers explain, however, how his actions enriched

anyone.   These actions primarily involve Rogers’s efforts to

transfer Oracle’s business to himself.   They include hiring his

own field supervisor, selling interests to new partners, holding

meetings, receiving logs, and checking on the continuation of

Oracle’s insurance coverage.   These actions do not benefit Brooks

or Oracle in any way.   Because Rogers has not presented any

evidence of enrichment, summary judgment on this claim was

proper.

Conclusion

     For these reasons, we affirm the district court’s grant of

summary judgment on all of Rogers’s claims.

AFFIRMED.

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