Global Oil Tools, Inc. v. Barnhill et al
Filing
193
ORDER & REASONS: granting in part and denying in part 176 Motion to Dismiss; ORDERED that Counts I, II, and V of the Counterplaintiff's claim in 12-1507 are DISMISSED WITH PREJUDICE. Signed by Judge Carl Barbier on 9/23/13. (Reference: 12-1507)(sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLOBAL OIL TOOLS, INC.
CIVIL ACTION
VERSUS
NO: 12-1507
WILFRED J. BARNHILL ET AL.
SECTION: "J” (4)
ORDER AND REASONS
Before the Court is Counterclaim and Third Party Defendants'
("Counter-defendants") Motion to Dismiss the Barnhills' Amended
Counterclaim in 12-1507 and Amended Complaint in 12-3041 (Rec.
Doc. 176), Counter-plaintiffs' opposition (Rec. Doc. 179), and
Counter-Defendants'
reply
thereto
(Rec.
Doc.
186).
Counter-
Defendants' motion was set for hearing on August 28, 2013 on the
briefs. The Court, having considered the motions and memoranda of
counsel, the record, and the applicable law, finds that Counterdefendants' motion should be GRANTED IN PART and DENIED IN PART
for the reasons set forth more fully below.
1
PROCEDURAL HISTORY AND BACKGROUND FACTS
A. Background Facts
The
following
factual
summary
is
compiled
from
Counter-
plaintiffs' Wilfred J. Barnhill ("Barnhill"), Brian Barnhill, and
Diane
Barnhill,
(collectively,
"the
Barnhills")'s
Amended
Counterclaim and Amended Complaint. Though many of these facts
are contested, they will be taken as true for the purposes of the
instant motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6).
Barnhill started Global Oil Tools, Inc. ("Global Oil Tools")
in 1979, operating it on his own, as a family business, for
decades.
In
representing
December
Lyamec,
2004,
Inc.
Ray
Ghariani
("Lyamec"),
("Ghariani"),
approached
Barnhill
concerning a possible partnership that would allow Global Oil
Tools to expand into the African market, especially in Ghariani's
home
country
of
Libya.
As
a
result,
Barhnhill
entered
into
several agreements to transfer certain information to Ghariani in
April and May of 2005.
Barnhill alleges that, concurrently, James Dial ("Dial"),
CEO of Grifco International, Inc. ("Grifco") approached Barnhill
about Grifco purchasing Global Oil Tools. At this time, Ghariani
intervened
to
facilitate
negotiations
2
between
Global
Oil
Tools/Barnhill
and
Grifco/Dial.
During
these
negotiations,
Ghariani assured Barnhill that Ghariani and Lyamec would "take
care to protect [Barnhill] and Global [Oil Tools] correctly."
Rec. Doc. 174, p. 4, ¶ 14. Barnhill further alleges that, during
this time, Lyamec/Ghariani and Grifco/Dial were negotiating a
hidden side deal that would allow Dial to participate in the
Libya partnership.
Barnhill
Agreement
alleges
Between
that
Global
Ghariani
Oil
drafted
Tools,
a
Inc.
"Definitive
And
Grifco,
International" wherein:
Grifco promised to pay Barnhill $4,500,000.00 in cash
and stock for the purchase of Global Oil Tools. The
consideration was to be paid in phases, which included:
(a) a $500,000.00 deposit; (b) $500,000.00 in cash and
$1,250,000.00 in stock at closing; (c) $500,000.00 in
cash and $750,000.00 in stock on the first anniversary
date; and (d) $500,000.00 in cash and $500,000.00 in
stock on the second anniversary date.
Rec. Doc. 174, p. 4, ¶ 16. In addition to the sums above, there
was also a promise that Grifco would pay an additional $1.5
million, which was to be paid directly to Barnhill by Libyan
investors. Barnhill alleges that, in reliance on these promises,
the Barnhills sold their stock in Global Oil Tools to Grifco on
August 5, 2005 pursuant to a "Definitive Acquisition Purchase
Agreement"
million
("DAPA").
dollars
but
Barnhill
never
asserts
received
3
that
he
received
the
balance
of
one
the
consideration promised, and that Dial never intended to honor
the terms of the DAPA. Following the DAPA, Barnhill, his wife,
Diane, and his son, Brian, continued to be employed by Global
Oil Tools; however, Dial replaced Barnhill as the President,
Director, and CEO of Global Oil Tools.
In
2005,
unbeknownst
to
Barnhill,
and
while
Ghariani
purported to represent his best interests, Lyamec acquired over
three
million
dollars
in
Grifco
stock,
significant interest in Grifco. Then,
which
in
gave
March
Lyamec
a
2006, Grifco
refused to close the deal to purchase Global Oil, which resulted
in a renegotiation of the purchase price. Lyamec/Ghariani once
again
offered
to
mediate
the
negotiations,
eventually
negotiating an Addendum to the DAPA that was signed on May 31,
2006.
Under the terms of the Addendum, the price that Grifco
paid for Global Oil Tools was reduced to $ 2.2 million plus $
3.7 million in Grifco stock. The Addendum provided that "half of
the Grifco stock issued to W. J. Barnhill became free and clear
to exchange at a guaranteed strike price of a minimum of 0.35
cents per share and the remaining half became free and clear to
exchange on the same terms on the second anniversary date." Rec.
Doc. 174, p. 7, ¶ 38.
Over the course of 2006, Ghariani gradually took control of
4
Global Oil Tools, despite the fact that Grifco owned Global Oil
Tools and Dial was the President and Director of Global Oil
Tools. In September 2006, Ghariani announced a merger of Global
Oil Tools and Global Libya so that Lyamec would have "complete
and full control for the unified oversight on Global Oil Tools
(Houma) and Global Oil Tools (Libya)." Rec. Doc. 174, p. 8, ¶
41.
A few days later, Dial appointed Lyamec, represented by
Ghariani, as the Director of Global Oil Tools.
Once
Ghariani
officially
assumed
control
of
Global
Oil
Tools, Ghariani and Lyamec conspired with Grifco to convince the
Barnhills to exchange their stock in Grifco, which was acquired
under the Addendum to the DAPA, for stock in Global Libya.
Barnhill claims that Lyamec and Grifco, through Ghariani, made
several misrepresentations, including: (1) that Ghariani would
fulfill Grifco's obligation to pay off some of Global Oil Tools'
debts that Barnhill had personally guaranteed, (2) that Ghariani
would pay Brian Barnhill a deficiency to which he was entitled
because he could not sell his Grifco stock for the minimum
strike price in the Addendum, (3) that Barnhill would get 10% of
all royalties for Global Libya products sold, (4) that Global
Libya was Global Oil Tools' parent company, thus giving the
Barnhills an indirect interest in Global Oil Tools if they were
5
to exchange their Grifco stock, (5) that their Grifco stock was
worthless because of Dial's stock fraud investigation, and (6)
that Global Libya was capitalized by millions of dollars from
Libyan investors. On December 14, 2006, allegedly based on these
representations,
Barnhill
entered
into
a
Voluntary
Stock
Assignment Agreement ("VSAA") with Global Libya, under which he
obtained 901,000 shares in Global Libya at a guaranteed price of
$1.50 per share. Barnhill alleges that this price was false,
that neither Dial nor Ghariani had any intention to honor the
VSAA, and that the stock proved to be worthless.
In 2007, while Dial was under investigation by the Harris
County District Attorney's Office, and eventually the Federal
Bureau
of
Investigation,
as
well
as
by
the
United
States
Securities and Exchange Commission, Dial resigned as President
and CEO of Global Oil Tools, officially appointed Ghariani as
Global
Oil
Tools'
sole
Director,
President,
and
CEO,
and
transferred ownership of Global Oil Tools to Lyamec. Barnhill
alleges that, on information and belief, Lyamec did not pay
Grifco when it acquired Global Oil Tools. Ghariani thereafter
severely
mismanaged
Global
Oil
Tools,
depleting
its
cash
reserves and funneling its assets into Global Libya.
Barnhill
remained
employed
6
by
Global
Oil
Tools
until
January 2012 when he and Diane Barnhill resigned. On September
13, 2012, Barnhill sent a written request to Global Libya for
redemption of his shares as permitted by the VSAA, but never
received a response. Moreover, Barnhill alleges that he has only
received a fraction of any consideration that he was promised in
the sale of Global Oil to Grifco.
B. Procedural History
Global Oil Tools, Inc. filed suit on June 13, 2012 against
the
Barnhills,
Denise
LeBlanc
("LeBlanc"),
Daniel
Triche
("Triche"), Downhole-Surface Manufacturing ("DSM"), and Barnhill
Industries, Inc. d/b/a Global International Tools, ("GIT"). The
Complaint alleged violations of 18 U.S.C. § 1962 ("RICO"), 15
U.S.C. § 1125 (the "Lanham Act"), and various Louisiana state law
claims. This matter will be referred to as matter number 121507.1
On
November
14,
2012,
after
matter
number
12-1507
had
already commenced, the Barnhills filed suit in the 32nd Judicial
District Court for the Parish of Terrebone against Global Oil
Tools, Lyamec, and Global Libya. The Complaint demanded specific
1
The underlying facts of these claims are not related to the claims at
issue in the instant motion and are fully set out in the Court's Order and
Reasons dated November 10, 2012 (Rec. Doc. 108), thus will not be summarized.
7
performance due to an alleged breach of the VSAA, return of stock
due
to
a
breach
of
the
DAPA,
unpaid
wages,
vacation
pay,
statutory penalties, and attorneys' fees, all under Louisiana
state law. Defendants removed the matter to the Eastern District
of Louisiana, and it was assigned matter number 12-3041. This
Court then consolidated cases 12-3041 and 12-1507 on January 4,
2013.
On
January
10,
2013,
once
12-3041
was
transferred
and
consolidated, the Barnhills filed a Counterclaim and Third Party
Demand in matter number 12-1507 against Global Libya, Global Oil
Tools,
Lyamec
defendants").
and
The
Ghariani
(collectively,
Counterclaim
and
Third
the
"Counter-
Party
Demand
incorporated the allegations from the Barnhills' Complaint in 123041 and added Count V, which alleged fraud in relation to the
DAPA Addendum and the VSAA.
Counter-defendants
seeking
dismissal
of
filed a 12(b)(6)
all
of
the
counts
motion to dismiss,
in
the
Barnhill's
Counterclaim in 12-1507 and Counts I, II, and IV of the Complaint
in 12-3041. On June 17, 2013, the Court issued two separate
Orders and Reasons in which the Court (a) severed Counts III and
IV in 12-3041 and remanded the claims to state court (Rec. Doc.
173), and (b) granted the Counter-defendants' motion to dismiss
8
in part (Rec. Doc. 172). Specifically, the Court (1) dismissed
Ghariani from the suit with prejudice, (2) dismissed Count V in
the
Counterclaim
in
12-1507
without
prejudice,
(3)
dismissed
Counts I and II in the Counterclaim in 12-1507 without prejudice
conditioned
on
the
dismissal
of
Count
V,
and
(4)
dismissed
Lyamec without prejudice from Counts I and II in 12-3041.2
The Court granted the Barnhills leave to amend all claims
that were dismissed without prejudice. On July 3, 2013, the
Barnhills filed an Amended Complaint in 12-3041, wherein they
only asserted Count I for breach of the DAPA against Lyamec and
Count II for breach of the VSAA against Lyamec and Global Libya.
(Rec. Doc. 174) On the same day, the Barnhills filed an Amended
Counterclaim in 12-1507, which alleged the same counts against
the same parties as did the original Counterclaim. (Rec. Doc.
175) The Counter-defendants filed the instant motion to dismiss
on
July
22,
2013,
seeking
dismissal
of
both
the
Amended
Counterclaim in 12-1507 and the Amended Complaint in 12-3041, and
the Barnhills filed their opposition on August 20, 2013. (Rec.
Docs. 176, 179).
The Counter-defendants filed a reply memorandum
2
Note that earlier in the proceedings, the Barnhills filed a motion to
dismiss in 12-1507. (Rec. Doc. 21) The Court granted the motion in part but
gave the plaintiffs leave to amend (Rec. Doc. 108). Plaintiffs filed an
Amended Complaint (Rec. Doc. 116), and the Barnhills have not challenged the
amended pleadings.
9
on August 27, 2013. (Rec. Doc. 188).
PARTIES’ ARGUMENTS
The Counter-defendants seek dismissal of both the Amended
Counterclaim in 12-1507 and the Amended Complaint in 12-3041.
Specifically, they seek: (1) the dismissal of all Counterclaims
against Lyamec, Global Libya, and Ghariani, (2) the dismissal of
Lyamec,
Global
Libya,
and
Ghariani
from
12-1507,
(3)
the
dismissal with prejudice of Count I in both the Amended Complaint
and the Amended Counterclaim, and (4) the dismissal of Lyamec
with prejudice from Count II in the Amended Complaint and the
Amended Counterclaim.
Counter-defendants argue that the Barnhills' amendments are
insufficient
to
avoid
dismissal.
Specifically,
Counter-
defendants argue that the Barnhills improperly attempt to add
Ghariani as a third party defendant in 12-1507 when the Court has
already dismissed Ghariani with prejudice. Initially, Counterdefendants claim that res judicata bars this claim, but then
retreat from that assertion in their reply memorandum, simply
noting that, though res judicata may not bar the claim, the new
claim against Ghariani cannot be brought because he was dismissed
with prejudice from the suit.
10
As to Count V of the Amended Counterclaim, wherein Barnhill
alleges
fraud
Ghariani,
against
Global
Counter-defendants
Oil,
assert
Lyamec,
that
Global
the
claim
Libya,
and
should
be
dismissed because: (a) the claim is insufficiently pled under
Federal Rule of Civil Procedure 9(b), (b) the fraud claims are
prescribed, and (c) the Counterclaim fails to state a claim for
fraud.
Further, Counter-defendants argue that, even if Counts I and
II of the Amended Counterclaim state a claim against any of the
Counter-defendants,
Lyamec,
Global
Libya,
and
Ghariani
must
nonetheless be dismissed from matter number 12-1507. Counterdefendants argue that Global Oil is not implicated in Count V of
the Amended Counterclaim, which was originally the only claim
that involved all of the Counter-defendants. With the dismissal
of Global Oil from Count V, the only parties remaining in the
Counterclaim are those who are not part of the original Complaint
filed by Global Oil Tools.
Therefore, these three parties are
improperly joined under Federal Rules of Civil Procedure 13 and
20 and must be dismissed.
As to Counts I and II in 12-3041's Complaint, which demand a
return of stock pursuant to the DAPA and breach of the VSAA,
Counter-defendants essentially argue that the Barnhills may only
11
assert Count I against Grifco and Count II against Global Libya,
because these entities were parties to the contract. The Counterdefendants argue that the Barnhills cannot assert either of these
claims
against
contract.
Lyamec
because
Moreover,
it
was
not
Counter-defendants
a
party
argue
to
either
that
the
Counterclaim fails to plead sufficient facts to show that Lyamec
was an alter ego or successor-in-interest of Global Libya or
Grifco
under
Texas
law,
thus
the
claim
fails
in
regards
to
Lyamec. Therefore, as Grifco is not part of the suit, Count I
must be dismissed and Count II may only be maintained against
Global Libya.
Barnhill opposes the motion, arguing that his amendments
have remedied any issues present in his original Complaint and
Counterclaim. Barnhill clarifies that his Amended Counterclaim
asserts
five
counts
Lyamec, and Ghariani.
against
Global
Oil
Tools,
Global
Libya,
As to Count Five, which alleges fraud and
was dismissed without prejudice by this Court, Barnhill argues
that he added sufficient allegations, such as who committed fraud
and when it was committed, so as to survive the instant motion.
Barnhill avers that he asserts two specific claims, one for
fraudulent concealment of material facts in connection with the
Addendum
to
the
DAPA,
and
one
12
for
fraudulent
inducement
in
connection with the VSAA. He further contends that his newly pled
allegations are sufficient under Federal Rule of Civil Procedure
9(b) and show a prima facie case for each claim. In their reply,
Counter-defendants
contend
that
Barnhill
does
not
allege
sufficient facts to create a prima facie showing on either of
these
claims.
argue
that
obtained
As
to
the
Barnhill
an
unjust
did
inducement
not
claim,
allege
advantage,
how
whether
Counter-defendants
Counter-defendants
Barnhill
would
have
executed the VSAA regardless of the events that occured, and what
damage Barnhill obtained as a result of the inducement. Moreover,
Counter-defendants aver that Barnhill's concealment claim must
fail because the allegedly concealed information was set forth in
published documents available to Barnhill.
As to Count V, Barnhill further notes that he makes these
claims individually against Ghariani and Lyamec, thus there is no
need to implicate Texas Business Organizations § 21:223, which
implicates
alter
ego
claims.
Moreover,
Barnhill
refutes
the
Counter-defendants' assertion that Count V does not implicate
Global
Oil.
Though
Barnhill
agrees
that
he
focuses
his
allegations on the conduct of Lyamec and Ghariani, he reminds the
Court
that
Lyamec
and
Ghariani
controlled
Global
Oil
at
the
relevant time periods, and thus are necessarily implicated in
13
Count V. In their reply, Counter-defendants argue that, when
comparing the original Complaint and the Amended Complaint, it is
clear
that
Global
Oil
is
no
longer
implicated
in
Count
V.
Further, even if it is implicated, fraud is insufficiently pled
because Global Oil is only mentioned in passing.
Barnhill also opposes the Counter-defendants' assertion that
Count V is prescribed. Barnhill argues that either contra non
valentem or the continuing tort doctrines operates to interrupt
the running of liberative prescription on his claim. Furthermore,
Barnhill claims that he has sufficiently pled his prescription
arguments,
and
that
the
arguments
advanced
by
the
Counter-
defendants speak to the merits of prescription, and thus should
be denied at this time. In their reply, Counter-defendants assert
that any facts referred to in their motion that come from outside
of the pleadings were referenced by Barnhill, thus can be relied
on for equitable reasons. Moreover, even without such references,
Counter-defendants
assert
that,
based
on
the
pleadings,
prescription is clear. Counter-defendants claim that, contrary to
Barnhill's assertions, it is proper to make legal arguments about
prescription based on the facts alleged in the pleading.
As to Counts I and II, Barnhill asserts that he sufficiently
pled facts to support an alter ego theory under Federal Rule of
14
Civil Procedure 8, thus Lyamec should not be dismissed as to
those
claims.
In
their
reply,
Counter-defendants
claim
that
Barnhill's alter ego theory fails because he has failed to allege
actual fraud and facts showing unity between Lyamec and Global
Libya or Lyamec and Grifco. Moreover, Counter-defendants contend
that Barnhill's assertion that Lyamec expressly assumed Grifco's
liabilities and obligations would be sufficient if a factual
basis was asserted, but as it stands, the allegation is merely a
threadbare recital of the law.
Finally,
Barnhill
urges
the
Court
to
allow
him
another
chance to amend his pleadings in the event that the Court grants
any part of the instant motion. Barnhill argues that the parties
are still in the pleading stages and do not have a trial date,
thus there would be no prejudice or undue delay in allowing him
leave to amend. In their reply, Counter-defendants assert that
leave to amend should not be granted because Barnhill has had
four "shots" to get his pleading right: the original and Amended
Complaints in 12-3041 and the original and Amended Counterclaim
in 12-1507.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a Complaint must
contain “a short and plain statement of the claim showing that
15
the pleader is entitled to relief.”
FED. R. CIV. P. 8(a)(2).
The
Complaint must “give the defendant fair notice of what the claim
is and the grounds upon which it rests.”
Broudo, 544 U.S. 336, 346 (2005).
simple, concise, and direct.”
Dura Pharm., Inc. v.
The allegations “must be
FED. R. CIV. P. 8(d)(1).
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, 547
(2007)).
A claim is facially plausible when the plaintiff pleads
facts that allow 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, 232-33 (5th Cir. 2009); Baker
v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
The court is not,
however, bound to accept as true legal conclusions couched as
factual allegations.
Iqbal, 556 U.S. at 678.
DISCUSSION
Counter-defendants'
motion
is
captioned
as
a
motion
to
dismiss all claims in both matters, but the parties only address
Counts I, II, and V in the Counterclaim to 12-1507 and Counts I
16
and
II
in
12-3041.
Therefore,
the
Court
will
restrict
its
analysis to these issues.
A. Count V in the Barnhill's Amended Counterclaim to 12-1507
1. Prescription of Count V of the Amended Counterclaim to
12-1507
"A Rule 12(b)(6) motion to dismiss for failure to state a
claim
is
an
appropriate
method
for
raising
a
statute
of
limitations defense." Mann v. Adams Realty Co., Inc., 556 F.2d
288, 293 (5th Cir. 1977). "In Louisiana,3 the prescriptive period
for delictual actions, which include actions for fraud, is one
year from the date injury or damage is sustained." In re Ford
Motor Co. Bronco II Prod. Liab. Litig., 982 F. Supp. 388, 394
(E.D. La. 1997) (Sear, J.) When the issue of prescription is
raised,
“[t]he
burden
of
proof
generally
rests
on
the
party
asserting prescription. However, when a Complaint reveals on its
face that the prescriptive period has lapsed, the plaintiff bears
the burden of establishing a suspension or interruption of the
prescriptive period.” Frank v. Shell Oil Co., 828 F. Supp. 2d
835, 842 (E.D. La. 2011) on reconsideration in part, No. 11-871,
3
Given that the reasoning is sound and the Counter-plaintiff does not
dispute the choice of law issue, the Court accepts Counter-defendants'
assertion that "although Texas law applies to whether the corporate veil can
be pierced, Louisiana law applies to the underlying cause of action for
fraud." Rec. Doc. 176-1, p. 10, n. 3.
17
2012
WL
1230736
(E.D.
La.
Apr.
12,
2012)(internal
citations
omitted).
The actionable events alleged in Barnhill's Counterclaim
occurred no later that December 13, 2006 (the date when the VSAA
was
executed),
face.4
making
Therefore,
Barnhill's
Barnhill
bears
claims
the
prescribed
burden
of
on
their
establishing
interruption of the prescriptive period. To meet this burden,
Barnhill asserts that prescription was interrupted because the
alleged
fraud
constitutes
a
continuing
tort,
or,
in
the
alternative, because the doctrine of contra non valentem applies.
The
Court
finds
that
a
continuing
tort
theory
is
not
applicable in this case. "A continuing tort is occasioned by
continual unlawful acts, not the continuation of ill effects of
an original, wrongful act." Crump v. Sabine River Auth., 98-2326,
(La. 6/29/99), 737 So.2d 720,728); Young v. U.S., No. 13-30094,
2013 WL 4458876 *3 (5th Cir. Aug. 21, 2013). Here, it is clear
that the alleged unlawful acts ceased long ago. Barnhill alleges
that he was fraudulently induced into entering into the VSAA and
4
The "actionable" fraud referred to concerns Barnhill's claims that he
was fraudulently induced into entering into the VSAA and that certain
defendants worked in concert to reduce the consideration paid to Barnhill
pursuant to the Addendum to the DAPA. The fraud allegations arising from
events after the signing of the VSAA are all claims of mismanagement which
this court has already held are derivative claims that cannot be brought by
Mr. Barnhill in this suit. Rec. Doc. 172, pps. 29-30.
18
that
certain
defendants
worked
in
concert
to
reduce
the
consideration paid to Barnhill pursuant to the Addendum to the
DAPA. Thus, the alleged fraud necessarily ceased once each of
these contracts was signed. W & T Offshore, Inc. v. Apache Corp.,
918 F. Supp. 2d. 601, 618 (S.D. Tex. 2013) (refusing to apply the
continuing tort doctrine when "the tortious conduct stopped in
2007, when Apache stopped processing WTI's oil," and noting that
the plaintiffs only alleged that the cover up was ongoing.) Thus,
because the Addendum to the DAPA was signed on May 31, 2006 and
the VSAA was signed in December 2007, Barnhill's continuing tort
theory will not apply to interrupt prescription beyond those
dates.
Barnhill also asserts interruption of prescription due to
contra non valentem. The Louisiana Supreme Court recognizes four
bases for the application of contra non valentem:
(1) Where there was some legal cause which prevented
the courts or their officers from taking cognizance of
or acting on the plaintiff's action; (2) Where there
was some condition coupled with the contract or
connected with the proceedings which prevented the
creditor from suing or acting; and (3) Where the debtor
himself has done some act effectually to prevent the
creditor from availing himself of his cause of action
[...(4)] Where the cause of action is not known or
reasonably knowable by the plaintiff, even though his
ignorance is not induced by the defendant.
19
Corsey v. State, Through Dep't of Corr., 375 So. 2d 1319,
1321-22 (La. 1979)
Here, it appears that Barnhill relies on the third or fourth
category. The Court finds that the third category does not apply
to this matter. The Louisiana Supreme Court has declined to find
that the third category applies when a plaintiff was "lulled"
into inaction, but not affirmatively kept from investigating the
situation. Marin v. Exxon Mobil Corp., 2009-2368 (La. 10/19/10),
48 So. 3d 234, 252 ("[w]hile [Defendant] misled plaintiffs by not
disclosing the extent of the contamination when they learned of
it,
they
certainly
did
nothing
to
prevent
plaintiffs
from
investigating the cause of the sugarcane loss for themselves.")
In the instant matter,
Barnhill simply alleges that "until
September 2012, Counter-plaintiffs did not know that Global Libya
was a worthless company."
statement
does
not
Rec. Doc. 174, p. 20, ¶ 73.
indicate
why
Barnhill
did
not
know
This
this
information, nor does it indicate what the Counter-defendants did
to
prevent
him
from
Counter-plaintiff's
fraudulently
induce
discovering
Complaint
this
focuses
Barnhill
into
information.
on
the
entering
Instead,
scheme
into
to
certain
agreements, but does not allege any facts concerning the Counterdefendants'
actions
after
the
20
signing
of
the
agreements.
Therefore, Barnhill's allegations, taken as true, do not meet his
burden of proving that prescription was interrupted by the third
type of contra non valentem.
As
to
the
fourth
category,
the
Louisiana
Supreme
Court
cautions that it will not apply where the plaintiff's "ignorance
is attributable to his own willfulness or neglect; that is, a
plaintiff will be deemed to know what he could by reasonable
diligence have learned." Corsey 375 So. 2d. at 1321-22. As noted
above, Barnhill merely states that contra non valentem applies
and that he did not know that he had a claim for fraud until
September 2012. Such concise and conclusory statements provide
the Court with very little basis for deciding whether or not
Barnhill's ignorance of his claim stems from his own neglect or
true ignorance.
With regard to the DAPA negotiations, Barnhill's assertion
that he was ignorant of his claim is certainly at odds with the
rest of the alleged facts. For example, Barnhill claims he did
not know that Lyamec/Ghariani had an interest in Grifco during
negotiations of the DAPA, yet he alleges in his Counterclaim that
Dial put Lyamec/Ghariani in charge of Global Oil Tools while
Barnhill was working there and that, in 2007, Dial appointed
21
Ghariani to succeed him as the Director of Global Oil Tools. Rec.
Doc.
174,
pps.
6,
8,
11.
Moreover,
Barnhill
cites
to
an
announcement made by Dial wherein Dial refers to Lyamec and
Ghariani as Global Libya's "significant partner." Rec. Doc. 174,
p. 8. Barnhill also states in his pleading that Dial was being
investigated
for
wrongdoing
while
these
negotiations
were
ongoing, and public record shows that Dial pled guilty in March
2011.
Even
though
these
events
occurred
after
the
DAPA
negotiations, it is very difficult for the Court to believe that
Barnhill, a successful business owner of over thirty years, did
not realize that wrongdoing could have occurred during the DAPA
and DAPA Addendum negotiations with Dial and Ghariani, until
September 2012.5
5
In the cases where the fourth category was found to interrupt
prescription, the facts were more severe. In Nathan, the Court applied contra
non valentem when the "defendants threatened [plaintiff] with termination of
her compensation benefits if she ever contacted an attorney." Nathan v.
Carter, 372 So.2d 560 (La. 1979). In Corsey, a prisoner was so severely
injured by the alleged tortfeasors that he suffered brain injuries and was
mentally incapable of understanding that he had a claim until after
prescription had expired. Corsey, 375 So. 2d at 1320. These cases are extreme
when compared to the instant matter. Though it is certain that all of the
parties involved in the instant matter engaged in some questionable and
perhaps unethical behavior, the Court must recognize that all allegations of
fraud will involve allegations of lies and deceit, as that is the nature of a
fraud claim, but not all fraud claimants may avail themselves of the doctrine
of contra non valentem. Let us not forget that Mr. Barnhill is a successful
business owner, not a duped widow, as was Nathan, or brain damaged prisoner,
as was Corsey. Certainly it seems that a sophisticated businessman such as
Barnhill would reasonably know to proceed into such transactions with caution.
See Dufrene v. Tracy, 94 So. 2d 297, 303 (La. 1957) (applying contra non
22
As to the allegations of fraud regarding the VSAA, the Court
cannot
determine
from
the
face
of
the
pleadings
whether
Barnhill's ignorance was reasonable. There are fewer facts with
which to work concerning whether Barnhill ever knew that the
Global Libya stock was worthless or that there was no intent to
perform.
Therefore,
Barnhill
failed
to
meet
his
burden
to
establish interruption of prescription as to the fraud relating
to
the
VSAA.
Accordingly,
the
Court
finds
that
Count
V
is
prescribed. Generally, the Court would grant leave to amend in
this situation; however, as the Court has determined that Count V
will be dismissed on other grounds, which will be discussed
below, leave to amend would be futile.
2.
Is Global Oil Tools Implicated in Count V as Amended?
Barnhill clearly focuses the allegations in his Counterclaim
on Ghariani, Lyamec, Dial, and Grifco. Any mention of Global Oil
Tools indicates that it at most played a passive role in the
alleged
scheme
to
defraud
Barnhill.
Counter-defendants
argue
that, for this reason, Global Oil Tools must be dismissed from
valentem when dealing with an "officer of the Court dealing with clients
ignorant of legal procedure."); and compare Hendrick v. ABC Ins. Co., No. 002403 (La. 5/15/01), 787 So. 2d 283, 293 (refusing to apply contra non valentem
where the plaintiff "was a sophisticated businessman who had managed a large
car dealership, who had a doctorate, and who once taught college courses.")
23
Count V. Barnhill argues that Global Oil Tools is very much
implicated
in
the
fraud
claim,
specifically
in
the
claim
involving the VSAA. Barnhill alleges that "Ghariani and Lyamec
had already taken over control of Global Oil Tools when the VSAA
was executed and used Global to further their fraudulent scheme."
Rec. Doc. 179, p. 12. Barnhill further alleges that Ghariani made
misrepresentations that he would pay off Global Oil Tools' debt
when negotiating the VSAA.
It is clear that the role that Global Oil Tools had in the
alleged fraud scheme, if it had any role at all, was that of a
pawn. Thus, the issue here is whether Global Oil Tools' passive
role is sufficient to make Global Oil Tools potentially liable
for a fraud scheme allegedly perpetrated by its Director. The
Court answers this question in the negative. Global Oil Tools may
not be implicated in this scheme to defraud simply because its
director allegedly committed fraud for his own personal gain
and/or the gain of one of his other companies, namely, Lyamec.6
6
As Barnhill alleges that Ghariani was the Director of Global Oil
Tools, the Court recognizes that this is not a situation in which vicarious
liability is at issue. However, the Court finds that the case law on vicarious
liability is instructive and bears mentioning. Courts have noted that, in
situations where the owner of a corporate entity is also the alleged
tortfeasor, “[t]he line between ‘business’ and ‘personal’ activity is often a
hazy one,” and “there is no black letter rule on when liability should attach
in such situations.” Ermert v. Hartford Ins. Co., 559 So. 2d. 467, 477 (La.
1990). Courts often impose vicarious liability, however, when “the conduct in
24
This conclusion is supported by Barnhill's own statement in a
different section of his opposition, wherein he asserts that
"Count V is a direct claim against Lyamec and Ghariani for their
own tortious conduct. Count V does not seek to hold Lyamec or
Ghariani liable for the tortious conduct of another corporation.
It seeks to hold them liable for their own conduct." Rec. Doc.
179,
p.
20.
Therefore,
upon
the
determination
that
the
allegations, even when taken as true, do not implicate Global Oil
Tools as a defendant to the fraud claim, Global Oil Tools must be
dismissed from Count V.
3. Must Lyamec, Global Libya, and Ghariani be Dismissed
pursuant to Rules 13 and 19?
Having determined that Global Oil Tools must be dismissed
with prejudice from Count V, the Court now turns to the issue of
whether Lyamec, Global Libya, and Ghariani must also be dismissed
pursuant to Federal Rules of Civil Procedure 13 and 19. The Court
already determined that, without Global Oil Tools, these parties
question was at least partially motivated by an intent to serve the interests
of the business.” Ermert, 559 So. 2d at 477. The discretion to find vicarious
liability is broad in such circumstances; however, it must be born in mind
that “[o]ne of the advantages of creating a separate entity for the operation
of the enterprise is that the business enterprise is not liable for all of the
torts of its owner.” Though this authority is not directly on point with the
current issue, the Court finds that, under this standard, Global Oil Tools
would not be subject to liability because Ghariani was not acting to benefit
Global Oil Tools in anyway. Thus, even if Ghariani were the owner of Global
Oil Tools, which he was not, Global Oil Tools would not be a proper defendant.
25
must be dismissed.
The Court stated that:
Having found that Count V is insufficient, the Court is
faced with an interesting dilemma. Count V is the only
claim which includes an existing party, Global Oil, as
well as the new parties that the Barnhills joined via
the CC/TP DEMAND, namely, Lyamec and Global Libya.
Accordingly, without Count V, there is no basis for
either Lyamec or Global Libya to remain joined to this
suit. As the Court discussed in its related Order and
Reasons regarding subject matter jurisdiction, Counts I
and II are wholly separate from any claims against
Global Oil and pose no joint or several liability.
While they may be an early precursor to the R.I.C.O.
and Lanham Act claims alleged in case No. 12-1507, they
do not arise out of those claims; they do not relate to
them; and they do not meet the rules for permissive
joinder under Rule 20. Therefore, Lyamec and Global
Libya are not proper counter claimants or cross
claimants in case No. 12-1507.
Rec. Doc. 172, pps. 11-12.
The same may be said for Ghariani.
Thus, the Court must dismiss Lyamec, Global Libya, and Ghariani
from the Counterclaim.7 Consequently, Counts I and II must also
7
As was explained in the Court's previous Order and Reasons:
Under Rule 21, where a party has been misjoined, the court
“may at any time, on just terms, add or drop a party.” Fed. R.
Civ. Proc. 21. Because these claims could not have been
brought absent Count V, and because the Court has found that
Count V is insufficient, the Court finds that it is
appropriate to drop both Lyamec and Global Libya from the
instant action. Furthermore, although the Barnhills have
argued that the proper action is not dismissal, but rather,
severance with the opportunity to be afforded a separate suit,
the Court notes that the Barnhills will not be prejudiced if
the Court drops their claims against Lyamec and Global Libya
from suit No. 12-1507. The Barnhills have asserted these exact
claims against Lyamec and Global Libya in case No. 12-3041;
thus, the Barnills may pursue their claims in that suit.
Furthermore, dismissing these parties, even without the
26
dismissed
because
they
are
brought
against
Global
Libya
and
Lyamec.
4. Leave to Amend
As to Barnhill's request for leave to amend, the request
is denied. The Court has already afforded Barnhill the chance
to amend his fraud claim, and, upon Barnhill's addition of
facts, it became clear that Global Oil Tools had no role in
the
alleged
discussed
fraud.
above,
is
Further,
Barnhill's
prescribed.
Thus,
fraud
amendment
claim,
would
as
be
futile at this stage.
B. Counts I and II in 12-3041
Though
Counts
I
and
II
were
dismissed
in
12-1507,
the
dismissal was based on procedural defects that do not apply in
12-3041; therefore, the Court must address the merits of Counts I
and II.
Barnhill asserts Count I against Lyamec despite the fact
that the contract at issue, the DAPA, is between Barnhill and
Grifco. Similarly, Barnhill asserts Count II against Lyamec and
existence of case No. 12-3041, does not violate Rule 21
because it is not a complete dismissal of the action, i.e. the
entirety of case No. 12-1507.
Rec. Doc. 172, p. 28.
27
Global Libya despite the fact that the contract at issue, the
VSAA, is only between Barnhill and Global Libya. In its prior
Order and Reasons (Rec. Doc. 172), the Court dismissed Count I
entirely and Count II as it pertains to Lyamec upon a finding
that
Barnhill's
successor-in-interest,
alter
ego,
and
same
enterprise theories were insufficiently pled. The Court stated
that, to succeed on a successor-in-interest claim under Texas
law, Barnhill would need to allege that Lyamec expressly assumed
Grifco's
and/or
Global
Libya's
liabilities,
which
he
did
not
sufficiently plead in his original Complaint. Rec. Doc. 172, p.
36. With respect to Barnhill's alter ego theory, the Court found
that he would have to allege actual fraud on the part of Lyamec.
Thus, based on its finding that Count V was not alleged with
sufficient
particularity
under
FRCP
Rule
9(b),
the
Court
dismissed Counts I and II inasmuch as Barnhill asserted an alter
ego
theory.
pleading
on
The
the
Court
granted
Barnhill
successor-in-interest
and
leave
alter
to
amend
his
ego
theories
the
Counter-
only.
Barnhill
has
now
amended
these
claims,
and
defendants argue that they are still insufficient. The Counterdefendants contend that Barnhill's allegation that Lyamec is the
28
assignee/and or successor-in-interest to Grifco and Global Libya
is merely based on information and belief, and does not provide
any factual basis for this belief. As such, these statements are
mere recitals of the required elements of a claim and are not
entitled to be taken as true. As to the alter ego theory, the
Counter-defendants argue that the Rule 9(b) heightened pleading
standard applies, and the allegations are insufficient under this
standard.
1. Successor-in-Interest
The Court recognizes that, in regards to the successor-ininterest claim, Barnhill amended his Complaint to essentially
recite
verbatim
Complaint
the
lacked.
element
While
this
that
the
Court
normally
would
determined
not
his
suffice
to
survive a motion to dismiss, the Court is also cognizant of the
fact that more information on this issue may not be available to
Barnhill
liability
at
to
this
time.
Lyamec
by
Documentation
Grifco
of
and/or
any
Global
assignment
Libya
of
would
necessarily be in the hands of those entities, thus the Court
cannot require Barnhill to produce this evidence before discovery
has even commenced. See U.S. ex rel. Grubbs v. Kanneganti, 565
F.3d 180, 190-91 (5th Cir. 2009) ("alleged scheme to submit false
29
claims and details leading to a strong inference that those
claims submitted—-such as dates and descriptions of recorded, but
unprovided, services and a description of the billing system that
the records were likely entered into—-gives defendants adequate
notice of the claims. In many cases, the defendants will be in
possession
liberal
of
the
pleading
Counter-defendants
most
relevant
standards
have
of
been
records.")
Rule
8,
the
sufficiently
Thus,
Court
put
on
under
finds
the
that
notice
of
Barnhill's allegations, and that proof of further support of this
theory is best left for discovery. Id. at 191. ("Discovery can be
pointed and efficient, with a summary judgment following on the
heels of the Complaint if [relevant evidence can] discredit the
Complaint's particularized allegations.")
2. Alter Ego
Under Texas Law, an entity cannot be liable for contractual
claims on an alter ego theory unless that entity "caused the
corporation to be used for the purpose of perpetrating and did
perpetrate
direct
an
actual
personal
fraud
benefit
on
of
the
the
obligee
holder,
primarily
beneficial
for
the
owner,
subscriber, or affiliate." TX BUS ORG § 21.223(b). Therefore, to
assert an alter ego theory as a basis for recovery, Barnhill must
30
allege that (1) Lyamec is an alter ego of Grifco and/or Global
Libya and (2) Lyamec committed actual fraud.
a. Alter Ego Status
Entites are alter egos when there is "unity between the
corporation
and
corporation's
the
individual
separateness
has
to
the
ceased
extent
that
the
and
holding
only
the
corporation liable would be unjust." In re Ryan, 443 B.R. 395,
406 (Bankr. N.D. Tex. 2010)
The traditional factors that courts
would use to determine whether this unity exists are:
(1) the payment of alleged corporate debts with
personal checks or other commingling of funds; (2)
representations that the individual will financially
back the corporation; (3) the diversion of company
profits to the individual for personal use; (4)
inadequate capitalization; and (5) other failures to
keep corporate and personal assets separate
Id., n. 11.
The
Court
finds
that
Barnhill
sufficiently
alleges
that
Lyamec is an alter ego of Global Libya. Barnhill alleges that in
inducing him to entered into the VSAA, Ghariani, as the CEO of
Lyamec,
made
several
representations
that
Ghariani
would
pay
certain amounts to Barnhill and Global Oil. Barnhill also alleges
that Global Libya is essentially a worthless company without any
bank accounts. Rec. Doc. 175, p. 8 at
31
¶ 44, 45 &
p. 16 ¶ 85,
86.
At this early stage of litigation, these allegations are
sufficient.
Conversely, Barnhill fails to allege enough facts to show
that Lyamec is an alter ego of Grifco as the Complaint does not
allege a single fact that would support this allegation. Further,
the
Court
will
not
grant
Barnhill
leave
to
amend
as
he
has
already had a chance to remedy his Complaint, and because he will
be able to proceed against Grifco under a successor-in-interest
theory.
b. Actual Fraud
Having determined that Barnhill alleged sufficient facts as
to Lyamec's status as an alter ego of Global Libya, the Court must
now turn to whether there are sufficient facts to state a claim
for
actual
fraud.
Thrift
v.
Hubbard,
44
F.3d
348,
353
(5th
Cir.1995). "Any actual fraud must relate to the transaction at
issue;" therefore, as Global Libya is the only alter ego, the only
transaction that may be considered here is the VSAA.
Ocram, Inc.
v. Bartosh, 2012 WL 4740859 *3 (Tex.App.-Hous. (1 Dist.) 2012) To
determine
if
actual
fraud
was
committed,
the
parties
cite
to
Louisiana law, as it is the law that would govern the substantive
32
fraud claim.8 Counter-defendants have laid out the elements of a
fraud claim:
Fraud is a misrepresentation or a suppression of the
truth made with the intention either to obtain an
unjust advantage for one party or to cause a loss or
inconvenience to the other. La. Civ.Code art. 1953. The
two essential elements of fraud are the intent to
defraud or gain an unfair advantage and actual or
probable damage. Dutton & Vaughan, Inc. v. Spurney, 600
So.2d 693, 698 (La.App. 4 Cir. 1992). Reliance is an
element of a claim for fraud in Louisiana. See Abbott
v. Equity Group, Inc., 2 F.3d 613, 624 (5th Cir.1993);
Sun Drilling Products Corp. v. Rayborn, 2000-1884 (La.
App. 4 Cir.10/3/01), 798 So.2d 1141, 1153. Moreover,
for fraud or deceit to have caused plaintiff's damage,
he must at least be able to say that had he known the
truth, he would not have acted as he did to his
detriment. Rayborn, 798 So.2d at 1153. Whether this
element is labeled reliance, inducement, or causation,
it is an element of a plaintiff's case for fraud. Id.
Rec. Doc. 176-1, p. 13. Further, the Fifth Circuit has explained
that, "generally, there is no inference of fraudulent intent not
to perform from the mere fact that a promise made is subsequently
8
Under Texas law, to state a claim for fraud, a party must allege: (1)
a material representation, (2) that was false, (3) that was either known to be
false when made or was asserted without knowledge of the truth, (4) that was
intended to be acted upon, (5) was relied upon, and (6) that caused injury.
Concept Clothing Co., Inc. v. Dabney, CIV.A. 302CV1838M, 2003 WL 23208272
(N.D. Tex. Aug. 14, 2003) (citing Dunbar Med. Systems, Inc. v. Gammex Inc. 216
F.3d 441, 453 (5th Cir.2000) (citing Formosa Plastics Corp. USA v. Presidio
Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex.1998)). “A promise of
future performance constitutes an actionable misrepresentation if the promise
was made with no intention of performing at the time it was made. Dunbar Med.
Sys. Inc., 216 F.3d at 453. Thus, even if Texas law were to apply, it is
similar enough to Louisiana law that the result would be the same.
33
not performed." U.S. ex rel. Willard v. Humana Health Plan of
Texas Inc., 336 F.3d 375, 386 (5th Cir. 2003) (internal citation
omitted).
Rather
"the
requisite
intent
must
be
coupled
with
prompt, substantial nonperformance to demonstrate fraud in the
inducement. It must be shown that the defendant promptly followed
through on its intent not to perform by substantially failing to
carry out its obligations under the contract." U.S. ex rel.
Willard, 336 F.3d at 386
Based on the principles of Willard, the Court finds that
Barnhill does not state a claim for fraud in relation to the
VSAA. There are no facts alleged that would allow the Court to
find that this is not merely a breach of contract claim that
Barnhill attempts to disguise and re-plead as a fraud claim. Many
factors changed between the time of the entering into the VSAA
and
Global
Libya's
refusal
to
comply–-most
notably
that
the
parties entered into litigation wherein each side accuses the
other of improper conduct. Even taking the allegations of the
Complaint as true, the Court does not find it reasonable to infer
that Global Libya or Lyamec entered into the VSAA with no intent
to honor it, but rather that they just did not honor it, making
34
this a breach of contract claim and not a fraud claim. Therefore,
Barnhill may not rely on an alter ego theory in this litigation.
Accordingly,
Counter-defendants' Motion to Dismiss (Rec. Doc. 176) is
GRANTED IN PART and DENIED IN PART.
IT IS ORDERED that Counts I, II, and V of the Counterplaintiff's claim in 12-1507 are DISMISSED WITH PREJUDICE.
New Orleans, Louisiana this 23rd day of September, 2013.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
35
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