Threadgill, et al v. Orleans Parish Sch, et al

Filing 249

ORDER granting 192 Motion for Summary Judgment; granting 207 Motion to Dismiss for Failure to State a Claim. Party Orleans Parish School Board dismissed. Signed by Chief Judge Sarah S. Vance on 10/7/2012. (Reference: 02-1122)(mmm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BUTCH THREADGILL, ET AL.

CIVIL ACTION

VERSUS

NO: 02-1122

ORLEANS PARISH SCHOOL BOARD, ET AL.

SECTION: R(1)

ORDER AND REASONS
Before the Court is the Orleans Parish School Board's
("OPSB") unopposed Rule 12 (b)(6) motion to dismiss the original
complaint of plaintiffs Butch Threadgill, Tom Weems, and General
Contracting and Consulting Services, LLC.

Also before the Court

is OPSB's Rule 56 motion for summary judgment of plaintiffs'
First Amended Complaint.

For the following reasons, the Court

grants OPSB's motion to dismiss the original complaint, as well
as OPSB's motion for summary judgment.

I. BACKGROUND
On January 23, 2000, a severe hail storm caused significant
roof damage to Orleans Parish schools.

The OPSB contracted with

Mitchell Crusto, d/b/a Angelic Asset Management, Inc., to provide
damage assessments for hail damage to City buildings.

The

agreement required that the assessments "be supported by at least
one licensed professional roofer's estimate for proposed repair
or replacement of the damage."1
1

R. Doc. 83-1 at 3.

The agreement also provided that

Crusto would "assist in the selection of appropriate contractors
to perform the work . . . ."2

OPSB "agree[d] to allow and accept

in general recommendations as to contractors to make all repairs
to said property."3

As compensation, Crusto would receive 5.5%

of any proceeds OPSB obtained from its insurer.4
Crusto had no experience in the areas of insurance claim
adjusting, construction estimating, or construction.5
Approximately one month after entering the agreement with OPSB,
but three months before that agreement was memorialized, Crusto
entered into a Marketing Agreement with Butch Threadgill and Tom
Weems through their business, General Contracting and Consulting
Services, LLC ("GCCS").6

Under the terms of the Agreement, the

plaintiffs were to prepare estimates for damage to and repair of
the OPSB properties.

Plaintiffs were to receive no compensation

for their services under the Agreement.

Rather, the quid pro quo

was the right to be assigned at least some work by Crusto in the
future.7

The Agreement provided, however, that "Angelic

expressly reserves the right to use other contractors and is not

2

Id.

3

Id.

4

Id.

5

Id.

6

Id. at 3-4.

7

Id. at 4.
2

providing [plaintiffs] with an exclusive agreement."8

Plaintiffs

allege that Crusto "was to use his influence to assign the repair
work" to them9 and that they expected to earn a 30-35% profit on
the repairs.10

The Agreement obligated plaintiffs to pay Crusto

a "sales commission" of 10% of the amount they received from CNA
to perform the repair work.11
Plaintiffs performed dozens of damage assessments of OPSB
properties, as well as of properties owned by the City of New
Orleans under a similar Marketing Agreement, incurring total
costs of $154,609.25.12

On August 2, 2001, after an inquiry to

the Louisiana Attorney General, OPSB learned that it, and by
extension Crusto, would have to comply with Louisiana's public
bid laws in awarding the vast majority of the repair work.13

Two

months later, the agreement between OPSB and Crusto was amended
to require Crusto to comply with the public bid procedures.14
Crusto terminated both Marketing Agreements with the plaintiffs

8

R. Doc. 214-19 at 16.

9

R. Doc. 213-2 at 2.

10

R. Doc. 166 at 3.

11

R. Doc. 83-1 at 4.

12

Id. at 4-5.

13

Id. at 5-6.

14

Id. at 6.
3

by letter on December 13, 2001.15

Plaintiffs allege that they

demanded return of the damage and repair estimates but that
Crusto refused.16

Plaintiffs received only a "negligible amount"

of OPSB repair work before Crusto terminated the Marketing
Agreement.17
In 2002, plaintiffs sued Crusto and the OPSB18 and later
sued Crusto, the City, and the City’s insurers.19
were consolidated.20

The two suits

Plaintiffs alleged that they submitted

repair estimates and bid proposals to Crusto that were
copyrighted to Tom Weems, all rights reserved.21 Plaintiffs also
alleged that they negotiated damage estimates with OPSB's
insurers.22

They claimed that Crusto did not pay them for the

work done and that he posted the bid estimates, proposals, and
photographs on Angelic's web site as examples of Crusto's own
work and bid preparation.23

Finally, plaintiffs alleged that

15

Id. at 6.

16

R. Doc. 166 at 4.

17

R. Doc. 83-1 at 7.

18

R. Doc. 1.

19

No. 02-1460, R. Doc. 1.

20

R. Doc. 31.

21

R. Doc. 1 at 3.

22

Id.

23

Id. at 3-4.
4

Crusto distributed the bids to the City as his own for approval
and payment.24

As to OPSB, the plaintiffs' only allegation was

that it should have known that the work being used by Crusto was
copyrighted material belonging to plaintiffs.25
Plaintiffs asserted claims under federal copyright law, the
Louisiana Unfair Trade Practices Act ("LUTPA"), and state tort
and contract law.

Plaintiffs brought their tort claim under

Louisiana Civil Code Article 2315, Louisiana's general negligence
provision, alleging conversion and misappropriation of their
privileged and copyrighted material.26 Plaintiffs sought treble
damages and attorneys fees under LUTPA, actual damages plus loss
of profits or statutory damages under the federal copyright laws,
and damages for loss of business, loss of profits, loss of
income, exemplary damages, attorneys' fees, and interest under
the state tort and property laws.27
In 2003, plaintiffs and Crusto entered into an arbitration,
and the Court stayed the litigation.

The arbitrator determined

that both Crusto and the plaintiffs had entered into the OPSB
Marketing Agreement with the mistaken belief that Crusto had the

24

Id. at 4.

25

Id. at 6.

26

Id. at 5.

27

Id. at 5-7.
5

right to assign work to the plaintiffs.28

The arbitrator found

that the parties' consent to the OPSB Marketing Agreement was
vitiated by bilateral error regarding the principal cause of the
contract.29

He also determined that the Marketing Agreement for

the City properties was vitiated due to the plaintiffs'
unilateral error, because Crusto knew or should have known that
he never had the right to assign the City's repair work.30

The

arbitrator awarded the plaintiffs their out-of-pocket expenses in
preparing the City and OPSB bids.

Notably, the arbitrator

commented that additional damages may be awarded in certain cases
of rescission due to error, but the plaintiffs had presented no
evidence of damages, "an essential claim element.

In dismissing

plaintiffs' copyright claim, the arbitrator again commented on
plaintiffs' failure to present evidence of actual damages or
profits of the infringer attributable to the alleged
infringement.31
The Court entered a judgment confirming the arbitration
award on June 17, 2009.32

Plaintiffs then sought to lift the

stay to allow the case to proceed among the remaining parties,

28

R. Doc. 83-1 at 8.

29

Id.

30

Id.

31

Id.

32

R. Doc. No. 84.
6

which the Court granted.33

As the parties prepared for trial,

they discovered that the City had never been notified that the
stay had been lifted and trial set.

Once served, the City moved

to dismiss plaintiffs’ claims in the original complaint.

The

Court granted that motion but gave plaintiffs leave to amend the
complaint.34
On April 3, 2013, Threadgill and GCCS filed a Consolidated
Amended Complaint against both the City and OPSB.

In the Amended

Complaint, plaintiffs abandoned their copyright, LUTPA,
conversion, and misappropriation claims against the City and OPSB
and asserted only a claim of unjust enrichment.35

The plaintiffs

argue that the City and OPSB knew that the plaintiffs prepared
the damage and repair estimates and were negotiating with the
insurers.36

They claim that the OPSB and the City obtained

substantially higher insurance payments than were originally
quoted as a direct result of the plaintiffs' damage estimates,
yet they still were never paid.37

On August 19, 2013, OPSB filed

this motion seeking summary judgment against the plaintiffs'

33

R. Doc. No. 106.

34

R. Doc. No. 156.

35

R. Doc. No. 166. Weems failed to file an amended
complaint and is no longer a party to this litigation.
36

Id. at 4-5.

37

Id. at 5.
7

unjust enrichment claim.38

In an abundance of caution, OPSB also

filed a motion to dismiss the original complaint as to it,
because it was not a party to the City's successful motion to
dismiss the original complaint.

II. STANDARD
To survive a Rule 12 (b) (6) motion to dismiss, the
plaintiff must plead enough facts to “state a claim to relief
that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible “when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.”

Id.

A court must accept all well-pleaded facts as

true and must draw all reasonable inferences in favor of the
plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239 (5th
Cir. 2009). But the Court is not bound to accept as true legal
conclusions couched as factual allegations. Iqbal, 556 U.S. at
678.
A legally sufficient complaint need not contain detailed
factual allegations, but it must go beyond labels, legal
conclusions, or formulaic recitations of the elements of a cause
of action. Id. In other words, the face of the complaint must
38

R. Doc. 200.
8

contain enough factual matter to raise a reasonable expectation
that discovery will reveal evidence of each element of the
plaintiff’s claim. Lormand, 565 F.3d at 257. If there are
insufficient factual allegations to raise a right to relief above
the speculative level, or if it is apparent from the face of the
complaint that there is an insuperable bar to relief, the claim
must be dismissed. Twombly, 550 U.S. at 555.
Summary judgment is warranted when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
When assessing whether a dispute as to any material fact exists,
the Court considers “all of the evidence in the record but
refrains from making credibility determinations or weighing the
evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins.
Co., 530 F.3d 395, 398 (5th Cir. 2008). The Court must draw all
reasonable inferences in favor of the nonmoving party, but
“unsupported allegations or affidavits setting forth ultimate or
conclusory facts and conclusions of law are insufficient to
either support or defeat a motion for summary judgment.” Galindo
v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985)
(internal quotation marks omitted).

9

If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence that would entitle it to a directed
verdict if the evidence went uncontroverted at trial.” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
Cir. 1991)(citation omitted). The nonmoving party can then defeat
the motion by either countering with sufficient evidence of its
own, or “showing that the moving party’s evidence is so sheer
that it may not persuade the reasonable fact-finder to return a
verdict in favor of the moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The
burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists. See id. at 324.
The nonmovant may not rest upon the pleadings, but must
identify specific facts that establish a genuine issue for trial.
Id. at 325. See also Little, 37 F.3d at 1075 (“Rule 56 ‘mandates
the entry of summary judgment, after adequate time for discovery
and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to

10

that party’s case, and on which that party will bear the burden
of proof at trial.’”) (citing Celotex, 477 U.S. at 332).

III. DISCUSSION
Because OPSB was not a party to the City's motion to dismiss
the plaintiffs' original complaint, OPSB now moves to have those
claims dismissed against it as well.
oppose the motion.

The plaintiffs do not

The deficiencies that prompted this Court to

grant the City's motion to dismiss the original complaint applied
equally to the claims against OPSB, as they were identical in
nature.

Plaintiffs' First Amended Complaint, in which it

abandoned all but the unjust enrichment claim it now brings,
named both OPSB and the City as defendants.

Therefore, for the

reasons articulated in the Court's order granting the City's
motion to dismiss,39 which the Court incorporates here by
reference, the Court dismisses the claims against OPSB as well.
With only the unjust enrichment claim remaining, the Court now
turns to OPSB's motion for summary judgment on that claim.
Louisiana Civil Code article 2298 is Louisiana's unjust
enrichment statute.

It provides:

A person who has been enriched without cause at the expense
of another person is bound to compensate that person. The
term "without cause" is used in this context to exclude
39

R. Doc. 156.
11

cases in which the enrichment results from a valid
juridical act or the law. The remedy declared here is
subsidiary and shall not be available if the law provides
another remedy for the impoverishment or declares a
contrary rule.
La. Civ. Code art. 2298.

Louisiana courts have interpreted the

provision to require a five-part showing in order to recover. To
succeed on an unjust enrichment claim:
(1) there must be an enrichment, (2) there must be an
impoverishment, (3) there must be a connection between the
enrichment and the resulting impoverishment, (4) there must
be an absence of "justification" or "cause" for the
enrichment and impoverishment, and finally (5) the action
will only be allowed when there is no other remedy at law,
i.e., the action is subsidiary or corrective in nature.
Richard v. Wal-Mart Stores, Inc., 559 F.3d 341, 346 (5th Cir.
2009)(quoting Minyard v. Curtis Prods., Inc., 205 So.2d 422, 432
(La. 1968)).
Here, plaintiffs' claim for unjust enrichment fails because
(1) there was no impoverishment, and (2) the plaintiffs had other
remedies at law available to them.
A person is impoverished when his patrimonial assets
diminish or his liabilities increase. La. Civ. Code Ann. art.
2298 revision comments.

Plaintiffs acknowledge that the

arbitrator awarded them compensation for the expenses they
incurred in preparing the estimates.40

However, they now demand

a percentage of the increase in OPSB's insurance proceeds over

40

R. Doc. 213 at 21.
12

its insurers original estimate.

Plaintiffs contend that they

"did not assemble a team of professionals from Texas and other
parts of the country to spend nine-months [sic] mobilized in New
Orleans intensively inspecting and estimating the OPSB's haildamaged properties only to break even on their costs . . . ."41
If plaintiffs experienced an impoverishment beyond their
out-of-pocket costs, it would be the result of lost profits from
their failure to obtain the repair work, not from OPSB's refusal
to pay them for the estimates.

Neither Crusto nor OPSB ever

promised the plaintiffs payment for the estimates, as a
percentage of the insurance proceeds or otherwise.

As for the

repair work, Crusto's agreement with OPSB initially (and
unlawfully) stated that OPSB would accept Crusto's
recommendations for contractors, giving the plaintiffs what the
arbitrator characterized as a "reasonable expectation that the
provision of 'free estimates' to Crusto would result in paying
work."42

However, Crusto's contract with the plaintiffs

explicitly stated that Crusto "expressly reserve[d] the right to
use other contractors and [was] not providing [plaintiffs] with
an exclusive agreement."43

As a result, the plaintiffs never had

a guarantee that Crusto would select them over another

41

Id.

42

R. Doc. 83-1 at 7.

43

R. Doc. 214-19 at 16.
13

contractor.

Any measure of impoverishment would therefore be

purely speculative.44
Plaintiffs' claim also fails because there were other legal
remedies available to them.

The remedy of unjust enrichment "is

subsidiary and shall not be available if the law provides another
remedy for the impoverishment or declares a contrary rule."
Civ. Code art. 2298.

La.

For this reason, "unjust enrichment is a

remedy of 'last resort' and is available only to fill a gap in
the law.

See Port of S. Louisiana v. Tri-Parish Indus., Inc.,

927 F. Supp. 2d 332, 341 (E.D. La. 2013) (citing Hall v. James,
986 So.2d 817, 820 (La. Ct. App. 2008).

44

This Court has expressed its doubt as to the legality of
the Marketing Agreement's 10% "sales commission" provision in a
related case brought by the OPSB against the plaintiffs and
Crusto. No. 03-1064, R. Doc. 118 at 12. An Investigative
Auditor's Report released by the Office of the Legislative
Auditor for the State of Louisiana concluded that Crusto violated
state public bid law and OPSB policy by entering into a
confidential "kickback" scheme with another contractor, Horizon
Group. Id. at 3. The agreement between Crusto and the Horizon
Group contained the same language as the Marketing Agreements
between Crusto and the plaintiffs in this case, except as to the
percentage of profits Crusto would receive in exchange for
awarding the repair work. Id. at 12. Although the legality of
the Marketing Agreement is not at issue in this litigation, the
Court notes that a party to a contract that has been nullified
for illegality is precluded from recovering lost profits, even in
the absence of bad faith. See Trade-Winds Envtl. Restoration,
Inc. v. Stewart, CIV.A. 06-3299, 2008 WL 3551705 (E.D. La. Aug.
11, 2008) (quoting Boxwell v. Dep't of Highways, 14 So.2d 627,
632 (La. 1943)).

14

Here, plaintiffs initially sought damages–including lost
profits–against Crusto on a number of theories, including
copyright infringement, breach of contract, conversion,
misappropriation, and violations of the Louisiana Unfair Trade
Practices Act.

For whatever reason, the plaintiffs failed to

produce evidence in the arbitration of the damages they claim to
have suffered.

Plaintiffs now claim that they have no available

remedy at law because (A) the arbitrator found that plaintiffs'
consent to the Marketing Agreement was vitiated by bilateral
error and thus no contract ever existed between Crusto and the
plaintiffs on which they could recover, and (B) whether or not
the plaintiffs had a remedy against Crusto, they have no other
remedy against OPSB.
The first argument fails because even if the plaintiffs had
no remedy in contract for lost profits, they potentially could
have recovered in tort, copyright, or under LUTPA had they
provided the arbitrator with evidence of their damages.

To

recover for the tort of conversion, for example, plaintiffs
needed to show only that Crusto committed a wrongful act of
dominion over their property, in denial of or inconsistent with
their rights in the property.

See Aymond v. State, Dept. of

Revenue & Taxation, 672 So.2d 273, 275 (La. Ct. App. 1996).
Similarly, LUPTA prohibits "any unfair or deceptive acts or
practices in the conduct of any trade or commerce."

15

Cheramie

Servs. v. Shell Deepwater Prod., 35 So.3d 1053, 1059 (La. 2010)
(quoting La. Rev. Stat. § 51:1409(A)).

The statute permits "any

person who suffers any ascertainable loss" to recover in the case
of "egregious actions involving elements of fraud,
misrepresentation, deception, or other unethical conduct . . . ."
Id. at 1060.

Whether plaintiffs ultimately would have recovered

after a full examination of the facts is immaterial, for "it is
not the success or failure of other causes of action, but rather
the existence of other causes of action, that determine [sic]
whether unjust enrichment can be applied."

Garber v. Badon &

Ranier, 981 So.2d 92, 100 (La. Ct. App. 2008) (emphasis in
original).
That plaintiffs either failed to present evidence of their
other claims, or the claims were rejected by the arbitrator, does
not matter; all that matters is that they existed.

See Walters

v. MedSouth Record Mgmt., LLC., 38 So.3d 245, 246 (La. 2010) (per
curiam) ("Having pled a delictual action, we find plaintiff is
precluded from seeking to recover under unjust enrichment.")
(citation omitted); Gallant Invs., Ltd. v. Illinois Cent. R.R.
Co., 7 So.3d 12, 18 (La. Ct. App. 2009) ("[W]e conclude that any
equitable action for unjust enrichment is precluded by the

16

availability of the unambiguously-pleaded delictual action . . .
.").45
Plaintiffs second argument also fails.

The inquiry is

whether the plaintiff had another potential remedy available;
against whom that remedy existed is immaterial.

In II Fire

Records, L.L.C. v. Clouden, 951 So.2d 1272 (La. Ct. App. 2007),
the plaintiff, a recording company, sued a competing company for
unjust enrichment after Derren Clouden, an artist with whom the
plaintiff held an exclusive recording contract, recorded a number
of albums and movies with the defendant.

Louisiana's Fourth

Circuit held:
In the instant case, it is clear that the fifth requirement
for proving unjust enrichment cannot be met, because II Fire
had a remedy against Mr. Clouden. In fact, II Fire has a
final judgment against Mr. Clouden. We need not determine
whether Forefront and Inner City were unjustly enriched at
the expense of II Fire, because II Fire's remedy was against
Mr. Clouden. It is clear that Mr. Clouden was the party who
was contractually obligated to II Fire. Had he complied with
the II Fire Contract, Forefront and Inner City would not
even be involved in this lawsuit. If Mr. Clouden breached
his contract with II Fire, then Mr. Clouden, not Forefront
and Inner City, is the responsible party. He caused the
situation that is the subject of the instant case to exist,
and II Fire's remedy was against him.
Id. at 1280.

Here, plaintiffs likewise had a potential remedy,

and ultimately a final judgment, against Crusto.

45

The Court need

Moreover, the arbitrator indicated the plaintiffs might
have been able to recover damages other than their out-of-pocket
costs, but that their complete failure to provide evidence of
damages precluded recovery.
17

not determine whether OPSB was enriched at the expense of the
plaintiffs, because their remedy was against Crusto.

Had Crusto

not misled the plaintiffs into believing he would procure the
repair work for them, and had he not continued to use the
plaintiffs' estimates even after cancelling the Marketing
Agreement, the plaintiffs and OPSB would not be involved in this
litigation.

OPSB was never obligated to the plaintiffs in any

way; nor is it now.

Like the plaintiff in II Fire, Threadgill

and GCCS did not recover the profits they had hoped to obtain in
their suit against the true party at fault.

See id. at 1274

(noting that II Fire had recovered only $75,000 from Clouden when
its estimated profit loss was between $200,000 and $500,000).
The Court emphasizes once again, however, that the ultimate
success or failure of the alternative legal remedy is irrelevant.
Because the plaintiffs had a remedy against the true party at
fault, their unjust enrichment claim against OPSB fails.

IV. Conclusion
For the foregoing reasons, the Court GRANTS OPSB's motion to
dismiss the claims against OPSB contained in the original
complaint, and GRANTS OPSB's motion for summary judgment of the
plaintiffs' unjust enrichment claim.

7th
New Orleans, Louisiana, this _______ day of October, 2013.
______________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
18