Waste Management of Louisiana, L.L.C. v. Jefferson Parish
Filing
113
ORDER & REASONS denying 71 Motion for Summary Judgment on liability & granting in part and denying in part 72 Motion for Partial Summary Judgment on damages, as stated herein. Signed by Judge Martin L.C. Feldman on 12/10/2014. (caa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WASTE MANAGEMENT
OF LOUISIANA, L.L.C.
CIVIL ACTION
v.
NO. 13-226
THE PARISH OF JEFFERSON
THROUGH THE JEFFERSON PARISH COUNCIL
SECTION "F"
ORDER AND REASONS
Before the Court are Jefferson Parish's motion for summary
judgment on liability and, in the alternative, its motion for
partial summary judgment on damages. For the reasons that follow,
the motion for summary judgment on liability is DENIED and the
motion for partial summary judgment on damages is GRANTED in part
and DENIED in part.
Background
This
malicious
prosecution
lawsuit
arises
from
earlier
litigation in which Jefferson Parish sued Waste Management in an
effort to early terminate the parties' Landfill Contract, so that
Jefferson
Parish
could
contract
services provider, River Birch.
with
another
waste
disposal
Waste Management now contends
before this Court that Jefferson Parish pursued the prior lawsuit
for years, even though it knew that its claims against Waste
Management were factually and legally baseless.
The record facts
of this case, including prior litigation history, are necessarily
presented here in detail.
1
Pursuant to a "Time Contract to Provide Services to Operate,
Manage, and Maintain the Jefferson Parish Sanitary Landfill Site"
(the Landfill Contract), Waste Management of Louisiana, L.L.C.1 was
to receive and dispose of waste for Jefferson Parish and also
manage a portion of the Jefferson Parish Sanitary Landfill Site
defined as the Expansion Area.
In exchange, Jefferson Parish paid
Waste Management a per-ton "tipping fee".2
Additionally, Waste
Management was also tasked with paying for the construction of all
cells,3 as well as paying for placing a final cover on all the
cells when they were filled and the contract had reached its term.
Based on the Expansion Area's capacity, the term of the Landfill
Contract
was
to
expire
when
certain
permitted
areas
of
the
landfill, known as Phase IIIA and IIIB, were filled with waste.
1
In 1998 the Parish authorized John Sexton Sand & Gravel
Corp. to assign the Landfill Contract to Waste Management.
2
The Parish paid Sexton $2,000,000 for the initial cell
development and the Landfill Contract provided that the remaining
compensation was not to exceed the tipping fee multiplied by
240,000 tons per year for the long term construction, operation and
maintenance of the remaining portions of Phase III. The tipping
fee was to be adjusted annually based on the consumer price index,
or five percent, whichever is less.
In addition to disposing of Parish residential waste at
the landfill, Waste Management was allowed to dispose of Parish
industrial and commercial waste and certain out-of-Parish waste,
with the Parish's approval; for disposing of this waste, Waste
Management was paid a separate tipping fee by those waste
suppliers. From the separate tipping fee, Waste Management was
required to pay the Parish a royalty.
3
"Cells" are waste units constructed within the permitted
areas where waste is disposed.
2
Continuation of the Landfill Contract was contingent upon
annual appropriation of the requisite funds by the Parish, as set
forth in the Annual Appropriation Dependency Clause (ADC), a key
provision in the context of this lawsuit:
The continuation of this Agreement is contingent
upon the appropriation of funds by the Jefferson Parish
Council for the continued operation and maintenance of
the Expansion Area. If the Council fails to appropriate
sufficient monies to provide for the continuation of this
Agreement, the Agreement shall terminate on the last day
of the fiscal year for which funds were appropriated.
Such termination shall be without penalty or expense to
the Parish except for the payments which have been earned
prior to the termination date.
Upon termination of this Agreement prior to the end
of its term, the Parish shall be relieved of its
obligations under this Agreement except for payment of
Service/Work already performed and [Waste Management]
shall be relieved of its obligations to maintain and
operate the Landfill.
Termination of this Agreement by the Parish under
the provisions of this section shall not constitute an
event of default. However, the Parish hereby consents to
submit to the Parish the necessary appropriation language
to be adopted to allow payment by the Parish.
The Parish may effect such termination by giving
[Waste Management] a written notice of termination.
It is Waste Management's position that the contours of this
provision first became of interest to Parish officials in 2004
because Parish officials wished to divert the Parish's waste
disposal business from Waste Management to its competitor, River
Birch.
In early 2004, James "Dutch" Connick, who at the time was a
consultant and lobbyist for Waste Management, says he was contacted
by then-Jefferson Parish Chief Administrative Officer Tim Whitmer.
3
According to Connick, Whitmer said that then-Parish President Aaron
Broussard
was
unhappy
with
Waste
Management,4
had
met
with
representatives of River Birch, and that he wanted River Birch to
operate the Parish landfill.5
According to Connick, Whitmer told
him that Broussard wanted him (Connick) to know that River Birch
would
hire
him
(Connick)
as
its
consultant
October
11,
2004
and
registered
lobbyist.6
Months
later,
on
then-Jefferson
Parish
Attorney Tom Wilkinson wrote a nine-page opinion letter to the
Council7 regarding the use of the ADC.
The Parish Attorney wrote:
[I]t is the reasoned opinion of this office that the
Annual Appropriation Dependency clause gives the Parish
Council the discretion not to fund the [Landfill]
Contract for fiscal years following the current fiscal
year, at no cost or penalty to the Parish, as long as the
Parish Council has a "good faith" basis for exercising
its right not to fund the [Landfill] Contract. Should
4
Connick testified that Whitmer told him that Broussard
was unhappy with the way Waste Management treated a friend of his,
former Waste Management employee Bobby Bourgeois, and that River
Birch would be a good partner. (During his deposition, Whitmer
denied that Broussard expressed to him an interest in contracting
with River Birch in 2004).
5
Whitmer did not convey to Connick any suggestion that
the Parish residents would save money if the Parish diverted its
waste disposal business to River Birch. And, according to Connick,
Whitmer indicated that the Parish "would let...Waste Management
finish their contract."
6
(And, indeed, River Birch did hire Connick in early 2005
to be its consultant and registered lobbyist).
7
The letter was addressed to Councilman Byron E. Lee;
other councilmembers, as well as Broussard and Whitmer, were copied
on the letter.
4
the Parish Council decide not to appropriate funds to
provide for the continuation of the [Landfill] Contract
for the next fiscal year, the [Landfill] Contract
terminates on the last day of the fiscal year for which
funds were appropriated.
Interpreting the language of the ADC, Wilkinson wrote:
Clearly, the Agreement only requires the administration
to submit the necessary appropriation language for
consideration by the Council, which then decides whether
to fund the contract.
The Parish Council has the
unfettered discretion to decide whether to fund the
contract for the next fiscal year, or to not fund the
contract and thereby evoke the [ADC]. [A]ny other
interpretation of the [ADC] would create an illegal,
unapproved future debt of the Parish, rendering the
entire Agreement void and unenforceable ab initio.
In so opining, Wilkinson acknowledged that, absent an unqualified
non-appropriations clause, multi-year service contracts such as the
Landfill Contract constitute a debt that must be approved by the
State Bond Commission.8 In support of his conclusion that a duty of
good faith is imposed on a public entity choosing to exercise a
non-appropriations clause, Wilkinson cited "the only reported
Louisiana decision", All American Assurance Co. v. State, 621 So.2d
1129 (La. App. 1 Cir. 1993), summarizing the case as follows:
[T]he state entered into a five year lease for
office space with RJV. The State terminated the lease
early after notifying RJV that public funding was
inadequate to meet the rental obligations of the lease.
[Paragraph] 28 of the lease [provided]: "In the event
8
Wilkinson quotes La.R.S. 39:1410.60, which provides that
no parish may incur debt without consent and approval of the State
Bond Commission. Wilkinson further observes in the letter that
"[t]he Louisiana Attorney General has consistently opined that a
contract containing a non-appropriations clause does not constitute
a debt requiring Bond Commission approval." (emphasis in original).
5
that public funding by either federal or state governing
is inadequate to meet the rental obligations of this
lease, lessee may terminate the lease upon 60 days
written notice."
The State asserted that funds were unavailable due
to the financial crisis experienced in 1988 and that in
terminating the lease it acted in good faith. RJV argued
that the State failed to make a good faith effort to
appropriate funds for the lease. Testimony established
that in late 1997 the governor in an attempt to put the
State on sound financial footing began to identify and
recommend budget cuts. One of the proposals presented as
a cost-saving measure was to identify unused or under
utilized state-owned space for agencies currently leasing
space. The decision was made to move the Dept. of Civil
Service to state-owned property to eliminate costs of the
RJV lease. The testimony established that the legislature
was faced with a fiscal crisis and that massive budget
cuts were viewed as part of the solution. Reduction of
costs by consolidating offices and agencies and by
utilizing state-owned property were believed to be
appropriate and necessary.
The court ruled that the
state acted in good faith when, after recognizing a
financial crisis and adopting cost-saving measures, it
terminated the lease with RJV.
Notably, applying this good faith requirement, Wilkinson opined:
If a change in the financial condition of the Garbage
District occurs, such a change in financial status may
justify exercise of the non-appropriations clause. On
the other hand, attempting to exercise the nonappropriations clause under circumstances which simply
result in a change in the identify of the contractor
providing services, with no savings to the Parish, could
open the Parish to legal challenges on the grounds no
good faith basis existed for exercising the nonappropriations clause.
(emphasis added).
Wilkinson also mentions in his opinion letter a
non-binding writ opinion in which the Louisiana Fifth Circuit Court
of Appeals, enforcing an identical ADC in a Parish contract,
6
rendered judgment in favor of the Parish.9
Wilkinson emphasizes,
in
indisputably
that
case,
"budgetary
concerns
were
at
the
forefront of the Council's decision not to fund the contract."
Summing up:
While we cannot predict how a court might rule if
budgetary concerns are not the motivating factor for the
exercise of the right not to appropriate funds to
continue a multi-year service contract, it is our
reasoned opinion that the Council must have the
unfettered discretion as long as it acts in good faith,
not to fund the next fiscal year of the contract for any
reason.
(emphasis in original).
At the Council's meeting two days later on October 13, 2004,
a resolution to advertise a Request for Proposals for the Parish's
waste disposal business was placed on the Council's agenda for the
meeting, and Wilkinson made a presentation as to how the Waste
Management contract could be terminated under the ADC.
At the
meeting, Council Chairman John Young expressed his skepticism at
the use of the ADC under the circumstances; he was concerned that
using the ADC would subject the Parish to a breach of contract
lawsuit by Waste Management. Given his reservations, Young said he
would expect Wilkinson to defend any such litigation that would
9
There, the Parish early terminated a contract with SFS
for the operation and maintenance of a Fire Training Center. After
the Parish invoked the ADC, it operated the training center with
Parish personnel at substantial savings to the Parish. SFS sued
and argued that termination of the contract was for political
rather than budgetary reasons, but the state appellate court held
that a non-appropriation based on the lack of funds in the
operating budget fell within the ADC.
7
result, rather than pass it off to outside counsel.
The Council
voted to defeat the proposed resolution.
Meanwhile, sometime in 2005, Tim Whitmer's insurance company,
Lagniappe Industries, began doing work for Shadow Lake Management
Co.,
Inc.,
the
umbrella
corporation
connection was not publicly disclosed.10
for
River
Birch.
This
Broussard and Wilkinson
also had connections to Lagniappe Industries: Broussard was a
consultant for Lagniappe in 2009 and Lagniappe insured some of
Wilkinson's rental properties.
In fact, the Parish would later select River Birch to provide
waste disposal services. The circumstances and motivation giving
rise to this selection are in dispute. In 2008, a Parish recycling
committee recommended that the Parish issue a Request for Proposal
for the disposal of "yard and woody waste" to preserve capacity at
the Parish Landfill. The Parish Council approved the "woody waste"
RFP 176.
But then the RFP was expanded to include all household
and other waste.
176
was
The parties dispute how and why the scope of RFP
expanded.
Waste
Management
submits
that
Broussard
intervened behind the scenes and edited the RFP; an unusual level
10
Whitmer testified that, in 2005, he was unaware of the
connection to River Birch; that is, when his company "wrote the
insurance ... for Shadow Lake, which is apartment buildings owned
by Fred Heebe...[u]nbeknownst to me, River Birch fell under that
umbrella for health insurance purposes." Whitmer testified that
when he learned in 2009 that River Birch was connected to Shadow
Lake, he did not immediately disclose it.
8
of involvement for a Parish president.11
Waste Management also
submits that the edits were in fact authored by River Birch and
provided to Broussard by Dutch Connick.12
The River Birch-edited
RFP 176 solicited bids for the diversion of all waste; not just
woody waste.13
Waste Management submits that because River Birch
owned the only other landfill in the Parish permitted to handle the
waste contemplated by the RFP, the RFP was tailored to River Birch,
the only company which could possibly respond.
Two responses to the expanded RFP were received on December 9,
2008: one from River Birch, which proposed to accept all Parish
waste at its facility, and one from Concrete Busters, which
proposed
to
accept
only
woody
waste.
Whitmer
assembled
an
evaluation committee,14 which had no input from the Environmental
11
Whitmer testified that Broussard "did do some changes
to" the RFP and that it was "unusual" for Broussard to edit an RFP.
12
Wilkinson testified that "at some point the River Birch
people ... approached Mr. Broussard about expanding the RFP to
include a comprehensive look at the entire landfill"; he also
stated "I know River Birch provided us a proposed RFP, that I
believe was given to Mr. Whitmer....."
13
Waste Management points out that Finance Director Gwen
Bolotte testified that, inexplicably, she was asked by Whitmer to
"push it through".
14
Waste Management submits that the committee was
assembled by Whitmer in violation of a Parish ordinance by stacking
the committee with three attorneys (chaired by Wilkinson) and
excluding any member of Environmental Affairs, Purchasing, or
anyone with waste disposal experience. Wilkinson scored the bids
and consulted no one other than the other two attorneys on the
evaluation committee.
9
Affairs and Finance Departments. The evaluation committee performed
no analysis comparing the cost to the Parish of the River Birch
proposal versus the cost of the Waste Management Landfill Contract,
and no cost analysis was requested by the Council.
Nor was any
analysis performed to address how the Parish could early terminate
its contract with Waste Management.
Nevertheless, on January 14,
2009 the Parish Council selected River Birch to provide waste and
other disposal pursuant to RFP 176.
Pursuant to Resolution No.
111491, the Administration was to negotiate a contract with River
Birch to be submitted to the Council in complete form, including
all terms and conditions, for ratification by Council Resolution
prior to the execution of the contract.
The Parish began contract negotiations with River Birch.
Between January and June 2009, the Parish also sought to obtain an
agreement from Waste Management to terminate the Landfill Contract.
Michael Peytavin and the law firm of Gaudry, Rason, Higgins &
Gremillion, L.L.C. were selected to negotiate the contract with
River
Birch
Management.
as
well
as
to
resolve
the
contract
with
Waste
Wilkinson and Peytavin conducted negotiations with
Waste Management through its attorney Gerald Walter.
During the course of negotiating the River Birch contract,
Peytavin and Wilkinson attended meetings with Marnie Winter, head
of
Parish
Environmental
Affairs,
10
and
Rick
Buller,
Landfill
Engineer.15
With respect to negotiated terms, River Birch demanded
a higher tipping fee ($21.50 per ton) than the tipping fee Waste
Management was paid ($20.66 per ton).
River Birch insisted that
its own contract not include an ADC, and also insisted that its
contract include a covenant that would completely bar the Parish
from using its own landfill to accept any waste through the 25-year
contract term.
It was Peytavin's view that some of these proposed
contract terms for River Birch would render the River Birch
contract legally invalid; he advised Wilkinson of his concerns by
letter dated March 4, 2009.
On March 27, 2009, by letter to the Parish Council, Wilkinson
explained the progress of the proposed River Birch contract and its
impact on the existing Landfill Contract with Waste Management.
Wilkinson
represented
that
the
Landfill
Contract
could
be
terminated under the ADC, but that Waste Management would likely
argue that it had no obligation to place final cover.
"The Parish
does not want to place itself in the position of having to bear the
cost of installing final cover on Phase IIIA and IIIB because of a
breach of the contract with Waste Management," Wilkinson advised.
Meanwhile, on April 16, 2009 Parish Landfill Engineer Buller
had
emailed
Peytavin
and
Wilkinson
15
the
first
cost
analysis
Waste Management disputes this, suggesting that
"voluminous evidence calls into question the testimony of Mr.
Wilkinson and Mr. Peytavin regarding the meetings they allege took
place."
11
comparing the cost of continuing the Waste Management Landfill
Contract to the cost of the Parish contracting with River Birch.
(Waste Management submits that Mr. Buller testified that the
Landfill Budget Scenario analysis was not a comparison of the costs
to the Parish of the Waste Management contract to the costs to the
Parish of the River Birch contract). The Landfill Budget Scenario
spreadsheets,
which
were
prepared
at
Wilkinson's
request
and
finalized May 5, 2009, showed three years of cost savings to the
Parish if it contracted with River Birch instead of continuing to
use the Parish Landfill.
Whether or not the Parish actually would
enjoy cost savings if it contracted with River Birch instead of
Waste Management is vehemently disputed.
On June 5, 2009 Wilkinson again wrote to Broussard and the
Parish Council to update them on the negotiations with River Birch
and Waste Management.
Wilkinson notes that the Parish and River
Birch would like their contract to commence on January 1, 2010, but
that early termination of the existing Landfill Contract with Waste
Management would be required to effect the January 1, 2010 start
date.
After
summarizing
the
Parish
and
Waste
Management's
positions on negotiating a termination, Wilkinson explains that
litigation may be required with Waste Management because the
parties are "at an impasse" and "[t]he only way to resolve the
impasse without exposing the Parish to potential liability for lost
profits, or relieving Waste Management of responsibility for the
12
final cap, is to seek a judicial determination of the rights and
obligations of the parties."
As a result, Wilkinson advises the
Council that he had drafted a Petition for Declaratory Judgment and
Damages16 and he recommended immediately filing the petition as an
additional
impetus
termination,
or
so
for
Waste
that
the
Management
Parish
could
to
agree
obtain
to
a
early
judicial
resolution in advance of the preferred January 1, 2010 contract
date with River Birch.
On June 17, 2009 Mr. Peytavin wrote to then-Councilman At
Large, John Young, explaining that the ADC would be included in the
River Birch contract as a matter of law and explaining that "the
commencement date of the River Birch Time Contract is suspended
until such time as there is a ... final judgment in favor of the
Parish
or
a
voluntary
termination
of
the
existing
[Landfill
Contract]."
Several days later on June 22, 2009 Wilkinson sent a letter to
the Council, explaining the status of negotiations with Waste
Management, advising that the ADC may be used to terminate the
Landfill Contract without penalty to the Parish, and also advising
why contracting with River Birch would be in the Parish's best
interest.
From a cost-saving standpoint, Wilkinson submitted a
16
Among other things, Wilkinson explained that Waste
Management may be liable to the Parish for penalties of
approximately $80,000,000.00 because it failed to resume twice
weekly collections after Hurricane Katrina until October 24, 2005.
13
version of Buller's Landfill Budget Scenarios analysis, which
compared costs to the Parish of "no change" (that is, continuing to
use the Parish Landfill and keeping the contract with Waste
Management) versus contracting with River Birch.
The spreadsheet
estimated that, if it contracted with River Birch, the Parish would
save money in the amount of $1,485,633 in 2010; $1,427,340 in 2011;
and $413,902 in 2012.
Waste Management submits that, by providing
this "cost-savings" analysis to the Council, Wilkinson presented a
knowingly and blatantly incorrect17 analysis in that: (a) cell
construction costs were improperly included as a cost to the Parish
and removing those costs as a cost to the Parish negated any
alleged savings to the Parish;18 (b) the analysis accounted for only
a $700,000 royalty owed to the Parish under the Waste Management
contract, whereas the royalty averaged $2,000,000 between 2002 and
2005 and had never been below $1,000,000 for any given year; and
(c) Wilkinson represented in the letter to the Council that
extrapolated savings projected over 22 years with River Birch were
"conservatively projected" at $18,000,000 to $21,000,000, despite
Landfill Engineer Buller telling Wilkinson that "that wasn't a
17
Buller testified that the Environmental Affairs
Department told Wilkinson about the flaws with his analysis.
18
The "no change" analysis utilizes the Waste Management
tipping fee and also includes all cell construction costs
($1,500,000 in 2010 and $1,600,000 in 2011) as additional costs to
the Parish. However, pursuant to the Landfill Contract, all cell
construction costs were paid by Waste Management and were built
into the tipping fee.
14
valid extrapolation."19
Wilkinson opined that "significant cost
savings are possible under the River Birch scenario."
Not only did Mr. Buller advise Wilkinson about the flaws of
his extrapolation over 22 years, he also advised that more time was
needed to analyze the impact of contracting with River Birch.
Notably, Parish Finance Director Bollette testified neither she nor
anyone in her department was ever consulted in any way regarding
the financial analysis purporting to show savings to the Parish.20
In fact, during the Council meeting in which Wilkinson announced
the alleged savings, she was "startled, surprised" by the numbers;
she raised her hand and said "The Finance Director had ... no
involvement [with] these calculations at all."
Two days later on June 24, 2009 the Parish Council passed a
resolution ratifying the River Birch contract.
Among its terms,
19
Waste Management submits that the record calls into
question the method used to project savings, as well as Wilkinson's
representation that the Parish would save millions by not having to
pay to locate a drainage canal: the projected savings figure for
2013 to 2025 was arrived at by simply multiplying the projected
savings over the next 22 years of the River Birch contract; and,
Wilkinson's representation in the letter to the Council that the
Parish would save an additional $5.5 million with River Birch by
not having to pay to locate a drainage canal was not a true savings
because the Parish must bear that expense if it ever used its
landfill again.
20
The Parish submits that Young testified that he was
advised by Whitmer that the Parish would save $25 million over the
course of a long-term contract and save the landfill asset for
future generations; Young says he was told that Whitmer had run the
numbers with Marnie Winter and Rick Buller and that neither (Winter
nor Buller) controverted the savings figures until after a federal
investigation had begun.
15
the
River
Birch
contract:
included
the
servitude
agreement
prohibiting the Parish from disposing of any waste at (and thus
closing) the Parish Landfill for 25 years; did not include an ADC;
and included a provision that, if Waste Management refused to early
terminate
the
Landfill
Contract,
the
Parish
would
seek
a
declaratory judgment that it may terminate the contract pursuant to
the ADC.
Negotiations with Waste Management continued,21 but ultimately
failed
to
result
in
a
voluntary
resolution
of
the
21
Landfill
By letter dated July 27, 2009, Wilkinson updated the
Council regarding the Parish's negotiations with Waste Management.
He also offered this opinion:
This office believes that the Parish has a
solid claim that Waste Management breached the
disposal contract and thus will be precluded
from claiming lost future profits.
Waste
Management is undoubtedly aware that if the
Court finds that it did breach the disposal
contract the Court can declare that the
contract is terminated for cause and assess
damages against Waste Management.
These
damages are in addition to the penalties of
approximately $80,000,000.00 which may be
assessed against Waste Management under the
collection contract. This office is confident
that the Court could assess a substantial
percentage of the penalty sought by the Parish
for post-Katrina violations of the collection
contract....
In the opinion of this office
the proposed concessions to be made by the
Parish with respect to waiving overpayments
under the Landfill Contract ($3,000,000.00)
and stipulated damages under the Collection
Contract ($80,600,000.00) have not been
appropriately taken into account by Waste
Management....
16
Contract.22
On August 21, 2009 the Parish sued Waste Management in
state court, seeking a declaratory judgment as well as liquidated
damages and recovery for overcharges. Jefferson Parish sought,
among other things,23 a declaration as to its right to early
terminate the contract under the ADC. Invoking the funding clause,
the Parish sought a declaratory judgment that "in the event the
Parish Council decides not to appropriate funds for the fiscal year
2010 for continuation of the Landfill Contract, the Landfill
Contract shall be deemed terminated without penalty or expense to
the Parish...."
Also named as defendants, because they had each
issued performance bonds guaranteeing the obligations of Waste
Management under the Collection Contract and the Landfill Contract,
22
By letter dated August 6, 2009 Wilkinson gave Walter the
Parish's "final offer" subject to the Council's approval. A few
days later, it appeared that Waste Management was agreeable to
those terms. Wilkinson followed up with an August 12, 2009 letter,
noting that a June 30, 2010 termination date would not be
agreeable; that "the Parish insists on termination as of December
31, 2009 in order to take full advantage of savings available under
the River Birch scenario...." On August 21, 2009 Wilkinson wrote
Walter again:
[Y]ou confirm that Waste Management agrees to
all of the proposed terms and conditions set
forth in my letter of August 12, with the
exception of the closing date.... As I made
it clear to you yesterday, I have no intention
of presenting Waste Management's August 20,
2009 proposal to the Council.
Further, as
discussed today, please find enclosed a copy
of the suit filed on behalf of the Parish....
23
Jefferson Parish also alleged that Waste Management
breached the Landfill Contract.
17
were Travelers Casualty and Surety Company of America and Evergreen
National Indemnity Company.
The Parish asserted that the sureties
were liable in solido with Waste Management for amounts claimed by
the Parish under those contracts (up to the amounts stated in the
performance
bonds).24
Travelers
removed
the
early
termination
lawsuit to another Section of this Court on September 14, 2009.25
Meanwhile, in late 2009, it was reported that Tim Whitmer's
insurance company, Lagniappe Industries, had been doing undisclosed
business with numerous Parish contractors, including Shadow Lake
Management Co., Inc., the umbrella corporation for River Birch.
Broussard and Wilkinson, who also had ties to Lagniappe, recused
themselves from the Parish investigation into Whitmer.
2010
Whitmer
then
Broussard
resigned
amidst
In January
allegations
corruption and impropriety; Wilkinson resigned in March 2010.
federal criminal investigation began in January 2010.
of
A
Thereafter,
Wilkinson, Whitmer, and Broussard entered guilty pleas to federal
criminal charges.26
24
Waste Management was contractually obligated to pay any
attorney's fees that Travelers and Evergreen incurred. James C.
Gulotta, Jr. of Stone Pigman represented the sureties and sent the
legal bills directly to Waste Management for payment. Waste
Management paid Stone Pigman for all work performed by Stone Pigman
in defending the sureties.
25
While Gerald Walter of Taylor Porter represented Waste
Management prior to initiation of litigation, Waste Management
hired Frilot, L.L.C. to represent it in the termination lawsuit.
26
The Parish takes issue with Waste Management's
submission of newspaper articles as the backdrop for the Parish
18
Nevertheless,
Jefferson
Parish
continued
its
termination
litigation against Waste Management and, unsurprisingly, settlement
talks stalled in December 2009.
On July 22, 2010 Jefferson Parish
filed an amended complaint, in which it admitted that it had a
pending contract with a competing waste services provider, River
Birch, Inc., which, the Parish said, would result in "substantial
savings". It was for this stated reason that the Parish claimed it
sought to terminate the Landfill Contract and instead contract with
River
Birch.
By
the
amended
complaint,
the
Parish
sought
a
declaration that:
if the Parish Council does not appropriate funds for
fiscal year 2011 for continuation of the Landfill
Contract with Waste Management in order to take advantage
of the substantial annual savings available to the Parish
by contracting with River Birch, Inc. and Highway 90, LLC
to provide disposal services in lieu of continuing to
operate the Parish landfill under contract with Waste
Management, then the Landfill Contract between the Parish
and Waste Management is terminated effective January 1,
2011 without penalty or expense to the Parish except for
tipping fees earned by Waste Management prior to the
termination date.
The Parish submits that it added this request for a declaration of
rights as to funding the landfill budget for 2011 because the
request for a declaration of rights with respect to the 2010 budget
had been declared moot by another Section of this Court on the
scandal. The Parish does not controvert the facts as submitted by
Waste Management, however.
Rather, the Parish emphasizes that
there is no evidence of any illegal activity by Parish officials
with respect to the underlying litigation or the River Birch
contract.
19
basis that the landfill had already been funded for 2010.27
Even after it filed its amended complaint in mid-2010, in
which Jefferson Parish disclosed its contractual relationship with
River
Birch
and
that
relationship
to
the
Waste
Management
litigation, and even after it had approved a budget that included
funding for the 2010 Landfill Contract with Waste Management,
Jefferson Parish continued to press the appropriateness of its use
of the ADC on the basis of funding and cost savings to terminate
Waste Management.
Up to that point, the only financial analysis
that had been undertaken comparing the competing waste disposal
contracts was the Landfill Budget Scenarios analysis, which showed
three years of cost savings.28
27
In fact, Waste Management submits that it was
problematic to the Parish that the landfill budget was over-funded
for 2010. Because the funding existed for the 2010 budget, during
the process of drafting the 2010 budget in late October 2009,
Whitmer intervened by calling the Parish's Finance Director and
asking her to move the funding for the Waste Management Landfill
Contract from the Landfill Disposal Fees line item of the budget
(the line item used to pay the Parish's waste disposal contractor)
to the Professional Services line item (the line item associated
with other types of fees, but never at amounts paid to the Parish's
waste disposal contractor). This would have supported a position
of non-appropriation. Landfill Engineer Rick Buller testified that
he was "mystified" by this maneuver; he testified that, at the
time, he told Winter "this is screwy", and that he did not know why
at the time the waste was budgeted like that. Later, after scandal
erupted in the Parish Administration, Whitmer told Bolette to
reverse the line item flip-flop, and the funds for the Waste
Management contract were included in the 2010 budget.
28
As noted, Waste Management contends that the methodology
underlying the finding of any cost savings was, at best,
misleading, and also notes that Wilkinson's savings extrapolation
20
River Birch had commissioned an "Analysis of Proposed Contract
Between Parish of Jefferson and River Birch, Incorporated", which
was completed by LSU Professor Emeritus of Economics Loren C. Scott
in July 2010.
Dr. Scott concluded that the Parish would save
$206,220,000 to $253,520,000 over 25 years by contracting with
River Birch and closing the Parish Landfill.29
But in light of the
questions
conduct
that
officials,
the
arose
Parish
with
regard
to
Administration
the
wanted
to
of
Parish
retain
an
independent expert to conduct a financial analysis comparing the
cost of continuing the Landfill Contract to the cost of entering
the
River
Birch
contract.
On
July
7,
2010
the
Parish
hired
Postlethwaite & Netterville to perform a landfill option financial
analysis; it took several months to complete.
In late 2010 Waste Management continued to defend against
Jefferson Parish's lawsuit, including taking depositions of Parish
officials.30 In January 2011 the P&N study was completed; contrary
to the opinion commissioned by River Birch, the results of the P&N
for 20+ years was inaccurate.
29
Waste Management submits that an impartial economist
could not have reached a conclusion that the Parish would save
money with River Birch.
30
John Young testified that he relied on Interim Parish
Attorney and outside counsel to review the Waste Management
litigation; however, Interim Parish Attorney Peggy Barton testified
that she was not asked to review the lawsuit against Waste
Management after the scandal broke, nor did she ask Peytavin to
review it.
21
study concluded that the River Birch contract would in fact cost,
not save, the Parish money.31
Specifically, the P&N report stated
that the River Birch contract would cost the Parish between $6
million and $39 million more than if the Parish continued to
dispose of its waste at the Parish Landfill.
Even with this turn
of events, Jefferson Parish continued to press its termination
lawsuit for nearly another year.32
Meanwhile,
the
Parish
continued
to
juggle
Contract litigation with the River Birch contract.
the
Landfill
It was the
Parish's position that the Waste Management litigation could not be
dismissed because River Birch maintained that it still had a valid
contract. For his part, Young stated that he instructed the Parish
Attorney to prioritize looking for a way to cancel the River Birch
contract.
On January 26, 2011 Assistant Parish Attorney Jeremy
Dwyer sent a memo to Parish Attorney Deborah Fosheee outlining the
options discussed during a January 21, 2011 meeting concerning the
River Birch contract.
Among the options, Dwyer discussed "the 'do
nothing' approach", which would "let everything play out on its
31
On March 16, 2011, at River Birch's request, the Parish
Council held a public meeting at which Dr. Scott presented his
findings on behalf of River Birch and P&N presented its findings.
32
Parish President John Young publicly acknowledged the
veracity of the report and in particular the report's conclusion
that contracting with River Birch would cost the Parish money. In
response to the report, Mr. Young also publicly directed the
Parish's attorney to investigate options for cancelling the River
Birch contract.
22
own" given that "Waste Management has already begun to lead the
charge to have the River Birch contract cancelled by the courts."33
A fourth option was that the Parish could pursue yet another
declaratory judgment, this time with respect to its contract with
River Birch. Dwyer noted that the Parish could advance "two strong
arguments" toward having the River Birch contract declared null and
void: (1) because the Parish entered into an exclusive agreement
for landfill purposes, it was required to use the public bidding
process, which it did not; (2) because the River Birch contract is
a
multi-year
debt-inducing
contract,
it
must
contain
a
non-
appropriations clause, which it does not.
In April 2011 the Parish and Waste Management entered into a
partial settlement agreement in which the parties released certain
pending damage claims.34
But the Parish specifically reserved its
33
On February 23, 2011 Waste Management filed its first
amended and supplemental counterclaim, seeking a declaration
invalidating the River Birch contract based on information obtained
from the Parish in discovery (regarding the alleged improper
influence of River Birch and the improprieties with RFP 176).
34
Paragraph 12 provided:
The Parish of Jefferson ... and Waste
Management hereby direct their respective
counsel to file appropriate motions to dismiss
with prejudice all pending claims for damages,
costs, expenses and attorneys fees in the
action in USDC for the Eastern District of
Louisiana ... [Civil Action] No. 09cv6270,
pursuant to Rule 54(b) of the Federal Rules of
Civil Procedure, with each party to bear its
own costs.
23
right
to
pursue
its
ADC
claim;
Waste
Management,
by
its
counterclaim, maintained its pending request for a declaration that
the River Birch contract is invalid.
And then, two and a half years after the River Birch contract
was signed, on November 29, 2011, Jefferson Parish filed suit for
declaratory judgment against River Birch in state court, in which
it sought to void the River Birch contract.
voiding
the
contract
included
those
before
The grounds for
mentioned
by
Mr.
Peytavin in his March 4, 2009 letter, as well as those options
mentioned by the Assistant Parish Attorney in the January 26, 2011
memo: the contract is an exclusive franchise required to be bid
pursuant to Louisiana law; the contract is void as it incurs a debt
without the consent of the State Bond Commission; the contract is
void for lack of consent.
Shortly thereafter on December 15, 2011
Jefferson Parish and River Birch entered into a consent judgment in
the state court lawsuit, which voided the River Birch contract.
Specifically, the state court consent judgment provides:
The Contract among Jefferson Parish, River Birch
Incorporated, and Hwy-90, LLC was signed by the Parish on
June 30, 2009, by River Birch Incorporated on September
15, 2009, and by Highway-90, LLC on September 15, 2009.
The Covenant was signed on September 23, 2009, and was
recorded in the Jefferson Parish Conveyance Book as
Instrument Number 1046573. The Contract is not in effect
because a suspensive condition contained in Paragraph 36
of the Contract has not been met.
The parties
acknowledge that the suspensive condition cannot be met.
Considering the foregoing, the Contract is hereby
declared null, void, and of no effect.
24
(emphasis added).35
Finally, in January 2012, after the Parish made both public
and judicial acknowledgments that its ADC claim against Waste
Management
could
not
succeed,
Jefferson
Parish
asked
for
a
voluntary dismissal with prejudice of its lawsuit against Waste
Management.
At first, Waste Management opposed the request.
However, on February 6, 2012 Waste Management joined in the request
for voluntary dismissal; by this motion, Jefferson Parish and Waste
Management jointly understood the federal court could dismiss the
Parish termination lawsuit; they acknowledged that the Jefferson
Parish/River Birch contract had been declared null and void by the
state court; and the parties agreed that the Parish's request for
declaratory relief was rendered moot by the Parish/River Birch
consent judgment; in fact, the motion for voluntary dismissal
attached a copy of the consent judgment.
The Parish and Waste
Management also stipulated that
Waste Management has neither pled nor asserted in any of
its pleadings in this litigation including counterclaims,
a claim of malicious prosecution or bad faith litigation
against the Parish in connection with this litigation,
and the Parish agrees that it shall at no time assert a
35
Paragraph 36 of the River Birch contract, entitled
Suspension of the Commencement Date of Time Contract, provided that
the parties acknowledged that the River Birch Time Contract could
not commence unless and until the Parish succeeded in obtaining a
declaratory judgment that the Landfill Contract with Waste
Management could be terminated by the Parish by utilizing the ADC
or because of breaches by Waste Management, or unless and until
Waste Management and the Parish voluntarily agreed to terminate the
Landfill Contract.
25
defense based on res judicata as to any [such] claim,
which Waste Management may assert in future litigation.36
It was not until February 7, 2012, approximately two and a half
years after Jefferson Parish originally sued Waste Management, that
another Section of this Court granted the joint request, and
dismissed Jefferson Parish's case with prejudice.
It is against this bloated backdrop that on February 6, 2013
Waste
Management
filed
the
pending
lawsuit
against
Jefferson
Parish, alleging malicious prosecution and seeking to recover, as
damages, attorney's fees and costs.
Waste Management now charges
in this Court that Jefferson Parish maliciously initiated and
pursued its claims against Waste Management for early termination
of the Landfill Contract, all the while knowing that its claim was
factually flawed and baseless in law.
Jefferson Parish at first
requested dismissal of Waste Management's initial complaint for
36
Waste Management alleges that its agreement to join the
Parish's request for voluntary dismissal
was not the result of any sort of settlement
or
compromise.
To
the
contrary,
Waste
Management only agreed to jointly move for
voluntary dismissal of Jefferson Parish's
appropriation dependency clause claim because
the motion was for dismissal with prejudice
and it contained the acknowledgment by
Jefferson Parish that the Consent Judgment ...
in which Jefferson Parish acknowledged that it
could not succeed in its appropriation
dependency
clause
claim
against
Waste
Management ... was fatal to Jefferson Parish's
claim.
In fact, Waste Management expressly
reserved its right to bring a malicious
prosecution claim against Jefferson Parish....
26
failure to state a claim upon which relief can be granted.
But on
March 27, 2013 the Court denied without prejudice the motion to
dismiss,
and
complaint.
permitted
Waste
Management
to
file
an
amended
On April 3, 2013 Waste Management filed its amended
complaint, in which it alleges that the dismissal of the Parish's
claim on February 7, 2012 was a dismissal based on and reflecting
the lack of merit of the Parish's claim, and that the dismissal
constituted a bona fide termination of the Parish's appropriation
dependency clause claim against Waste Management; all in Waste
Management's favor.
Jefferson Parish again sought dismissal of Waste Management's
amended complaint for malicious prosecution on the ground that it
failed to state a claim upon which relief may be granted.
3, 2013 the Court denied the motion.
On June
The Parish now seeks summary
judgment on liability and, if the motion is denied, it seeks
partial summary judgment on damages.
I.
Federal Rule of Civil Procedure 56 instructs that summary
judgment is proper if the record discloses no genuine dispute as to
any material fact such that the moving party is entitled to
judgment as a matter of law.
No genuine dispute of fact exists if
the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party.
See Matsushita Elec. Indus. Co.
v. Zenith Radio., 475 U.S. 574, 586 (1986).
27
A genuine dispute of
fact exists only "if the evidence is such that a reasonable jury
could return a verdict for the non-moving party."
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The Court emphasizes that the mere argued existence of a
factual dispute does not defeat an otherwise properly supported
motion.
See
id.
Therefore,
"[i]f
the
evidence
is
merely
colorable, or is not significantly probative," summary judgment is
appropriate.
Id. at 249-50 (citations omitted).
Summary judgment
is also proper if the party opposing the motion fails to establish
an essential element of his case.
477 U.S. 317, 322-23 (1986).
See Celotex Corp. v. Catrett,
In this regard, the non-moving party
must do more than simply deny the allegations raised by the moving
party.
See Donaghey v. Ocean Drilling & Exploration Co., 974 F.2d
646, 649 (5th Cir. 1992).
Rather, he must come forward with
competent evidence, such as affidavits or depositions, to buttress
his claims.
Id.
Hearsay evidence and unsworn documents that
cannot be presented in a form that would be admissible in evidence
at trial do not qualify as competent opposing evidence.
Martin v.
John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir.
1987); Fed.R.Civ.P. 56(c)(2).
Finally, in evaluating the summary
judgment motion, the Court must read the facts in the light most
favorable to the non-moving party.
28
Anderson, 477 U.S. at 255.
II.
A.
To
succeed
on
a
claim
for
malicious
prosecution
under
Louisiana law, a plaintiff must prove by a preponderance of the
evidence these essential elements:
(1)
(2)
(3)
(4)
(5)
(6)
the commencement or continuance of an original
criminal or civil judicial pleading;
its legal causation by the present defendant
against plaintiff who was defendant in the original
proceeding;
its bona fide termination in favor of the present
plaintiff;
the absence of probable cause for such proceeding;
the presence of malice therein; and
damages conforming to legal standards resulting to
plaintiff.
Hibernia Nat'l Bank of New Orleans v. Bolleter, 390 So.2d 842, 843
(La. 1980).37
The Parish submits that there is no evidence of
malice and, therefore, it is entitled to summary relief dismissing
Waste Management's lawsuit. Although ordinary summary judgment
principles
apply,
summary
judgment
is
seldom
appropriate
for
determinations concerning subjective intent issues such as motive,
good faith, and malice.
See Smith v. Our Lady of the Lake Hosp.,
Inc., 639 So.2d 730, 751 (La. 1994)(citation omitted).
"Malice can be inferred when the evidence shows that 'the
37
Because Louisiana public policy guarantees that people
acting in good faith shall have access to courts to redress wrongs,
malicious prosecution lawsuits are disfavored; indeed, "in order to
sustain them, a clear case must be established, where the forms of
justice have been perverted to the gratification of private malice
and the willful oppression of the innocent." Johnson v. Pearce,
313 So.2d 812, 816 (La. 1975)(quotation omitted).
29
claimant acted with absence of caution and inquiry that a person
should employ before filing suit'"; and "malice exists when there
is 'knowledge that is false or a reckless disregard for the
truth.'"
Wiley v. Wiley, 800 So.2d 1106, 1110 (La.App. 3 Cir.
2001)(citations
omitted).
The
Louisiana
Supreme
Court
has
cautioned:
[M]alice does not submit readily to definition.... Any
feeling of hatred, animosity, or ill will toward the
plaintiff, of course, amounts to malice.... But it is
not essential to prove such ill will. Malice is found
when the defendant uses the prosecution for the purpose
of obtaining an unfair advantage, for instance, as a
means to extort money, to collect a debt, to recover
property, to compel performance of a contract, ...or as
an experiment to discover who might have committed the
crime....
Miller v. East Baton Rouge Parish Sheriff's Department, 511 So.2d
446, 453 (La. 1987)(internal quotations and citations omitted).
Thus, although the mere negligent institution of a lawsuit is
insufficient to establish malice, Dupre v. Marquis, 467 So.2d 65
(La.App.
3d
Cir.
1985),
showing
improper
motive
suffices
to
establish malice. See Johnson v. Fairmont Roosevelt Hotel, 286
So.2d 177, 179 (La.App. 4 Cir. 1973).
"[I]t is not necessary to
prove any actual spite, ill-will or grudge, for one having no illwill
against
another
may,
notwithstanding,
malicious prosecution of him."
be
guilty
of
the
Buisson v. Prestia, 45 So.2d 531,
533 (La.App. 1950).
As a defense to a malicious prosecution claim, a defendant may
invoke its good faith reliance on the advice of counsel, which
30
negates the presence of malice.
This advice of counsel defense
applies only if (1) the advice was relied upon in good faith, (2)
the advice relied on was legal advice, and (3) the advice was given
"after a full and fair statement of all the facts." See McClanahan
v. McClanahan, 82 So.3d 530, 537 (La.App. 5 Cir. 2011); see also
Brooks v. Bank of Acadia, 138 La. 657 (1916)(holding that "[a]dvice
of counsel, even though erroneous, on questions of law, is a shield
against charges of malice and bad faith").
B.
The Parish submits that there is no evidence in the record
supporting a finding of malice; it also seeks safe harbor by
invoking
the
good
faith
reliance-on-counsel
defense.
Waste
Management counters that genuine disputes concerning the material
fact of the Parish's motives in instigating and pursuing the
termination lawsuit preclude summary judgment; the controversies in
the record, Waste Management submits, are sufficient to withstand
the
Parish's
request
for
summary
relief.
Having
carefully
considered the voluminous record, the Court agrees.
The Parish submits that "[t]here is ample evidence that Parish
Attorney Wilkinson, together with outside counsel Mr. Peytavin,
advised the Council as to the law concerning the Appropriation
Dependency Clause[], based upon the cost savings analysis prepared
by the Parish Landfill Engineer" and that the Council acted on this
advice
and
chose
to
institute
31
the
underlying
litigation.
By
oversimplifying the bulky record and glossing over circumstantial
evidence that could permit an inference of bad faith, the Parish
fails to establish beyond factual dispute that it did not act with
malice
in
instigating
the
underlying
litigation,
or
that
it
indisputably relied in good faith on its counsel.38
Among the many unresolved factual controversies, the parties
continue to debate: whether the personal agendas or business
relationships of Administration officials tainted the Parish's
decision to attempt to divert its waste disposal contract to River
Birch and its later lawsuit against Waste Management; whether the
Parish's reliance on the lone 2004 opinion letter drafted by
Wilkinson advising the Parish under what circumstances it could
utilize the ADC is sufficient to establish its good faith reliance
on counsel defense;39 whether the Parish in good faith believed that
it would enjoy "significant savings" by contracting with River
38
The Court notes that the ADC opinion was written in
2004, the in-Parish cost-analysis completed in 2005, and the
termination litigation was initiated in mid-2009.
39
Waste Management submits that Wilkinson's dual role as
attorney and as the business representative with respect to issues
relating to River Birch muddies the factual waters and undermines
the Parish's position that it has a clear-cut defense of good faith
reliance on counsel. As Waste Management points out, this is not
a typical application of the defense; client did not approach
attorney and provide his attorney with complete and accurate
financial information leading the attorney to submit a reasoned (if
erroneous) legal opinion. Indeed, even if the Parish could show
that it relied on Wilkinson's advice, Waste Management submits that
some of Wilkinson's advice was not legal advice and that the advice
was not given after a full and fair statement of all the facts.
All issues for trial.
32
Birch based on a cost-saving analysis that Waste Management submits
was, at least, misleading; whether Parish officials were advised
that the cost analysis was flawed; whether the Parish's budgetary
status
supported
instigation
of
the
ADC
termination
lawsuit;
whether the Parish's willingness to waive its $83 million damage
claim against Waste Management to allegedly achieve $18 to $21
million in cost savings by contracting with River Birch supports an
inference of improper motive; whether the Parish acted in good
faith in continuing to pursue the termination litigation after the
cost-saving reason was confronted by the P&N study.40
Because the
record exposes genuine disputes as to the material fact of malice,
summary judgment on liability is patently unwarranted.
III.
A.
Having failed to show on this record entitlement to summary
relief on liability, the Parish, alternatively, seeks partial
judgment as a matter of law that Waste Management is precluded from
recovering certain damages: (1) attorney's fees and costs incurred
prior
to
the
institution
of
the
underlying
litigation;
(2)
attorney's fees and costs incurred after the August 21, 2009
lawsuit that were related to claims that were settled pursuant to
40
Waste Management submits that the Parish recklessly and
intentionally disregarded the lack of merit underlying its claims
and continued to pursue the termination litigation for reasons
(fear of litigation by River Birch) other than its belief in the
merits of its claim. Unavoidably, a disputed material fact issue.
33
the April 6, 2011 settlement agreement; (3) attorney's fees for the
defense of claims against Waste Management's sureties; and (4)
attorney's fees related to the counterclaims advanced by Waste
Management.
At the outset, the Court observes that the many of the
arguments advanced by the Parish appear to be grounded upon this
legal premise: that attorney's fees are not recoverable by a
prevailing party except where authorized by statute or contract.
This may be a correct statement of the traditional legal principle,
but it is not applicable here; the Parish misunderstands the nature
of recovery of attorney's fees in a malicious prosecution claim.
As Waste Management points out, when a malicious prosecution tort
claim is pursued, a claim for attorney's fees is a claim for
compensatory damages, of which attorney's fees incurred in the
underlying litigation are a component.
See Ross v. Sheriff of
Lafourche Parish, 479 So.2d 506 (La.App. 1 Cir. 1985).
threshold
As a
matter, if Waste Management succeeds in proving the
liability elements of its claim, it may recover compensatory
damages, which includes attorney's fees it incurred in defending
whatever claim(s) were pursued in bad faith.
B.
1.
Attorney's fees and costs incurred prior
institution of the underlying litigation.
to
the
The Parish submits that, as a matter of law, Waste Management
is not entitled to recover attorney's fee incurred prior to August
34
21, 2009, the date it filed suit against Waste Management.
Waste
Management counters that a genuine issue of material fact (as to
whether the work performed by Taylor Porter prior to the filing of
the underlying lawsuit was in defense of the Parish's ADC claim and
was used by Waste Management after the underlying suit was filed in
its defense of the Parish's ADC claim) precludes summary judgment.41
The
Parish
submits,
quite
simply,
that
no
malicious
prosecution plaintiff may recover as damages attorney's fees for a
time period before the underlying lawsuit was filed.
This line
advanced by the Parish is logically drawn, and the Court endorses
it.42
Waste
Management
is
precluded
from
recovering
those
attorney's fees it incurred during its pre-suit negotiations with
the
Parish.43
Accordingly,
the
request
for
summary
relief
dismissing this category of damages is GRANTED.
41
Waste Management submits that Taylor Porter's work
between late 2008 and August 21, 2009 was essential to Waste
Management's defense of the Parish's ADC claim prior to the filing
of the underlying lawsuit and that the work was used by the Frilot
firm after the lawsuit was filed.
42
Indeed, the first element of a malicious prosecution
claim requires the commencement or continuance of an original
criminal or civil judicial pleading.
43
Waste Management points out that the Parish does not
address or seek dismissal of Waste Management's claim to recover
the fees paid to its pre-litigation counsel after the underlying
lawsuit was filed.
35
2.
Attorney's fees and costs incurred after August 21, 2009
that were related to claims that were settled pursuant to
the April 6, 2011 settlement agreement; and
3.
Attorney's fees for the defense of claims against Waste
Management's sureties.
These two components of damages will be considered together
because
the
settlement
recoverable.
agreement
speaks
to
whether
they
are
The Parish submits that Waste Management is not
permitted to recover fees and expenses related to claims that were
settled, and that the parties' settlement agreement extinguished
their claims for costs, expenses and attorney's fees during the
pendency of the litigation, except for those claims specifically
reserved.
Construing the Parish's argument as an attempt to
circumvent the parties' stipulation that it never asserted a
malicious prosecution claim in the underlying litigation, Waste
Management counters that, according to the clear terms of the
settlement
agreement
and
the
parties'
subsequent
motion
for
voluntary dismissal, it did not release, nor could it have settled,
any claim for malicious prosecution damages. The Court agrees that
Waste Management did not settle its malicious prosecution claim,
which was not pending at the time the settlement agreement was
executed.
However, Waste Management may not recover as damages
those attorney's fees incurred in connection with claims that were
settled; the sureties' attorney's fees.
Louisiana law provides:
36
A compromise is a contract whereby the parties, through
concessions made by one or more of them, settle a dispute or
an uncertainty concerning an obligation or other legal
relationship.
La. Civ. Code art. 3071.
Compromises are favored in the law and
the burden of proving the invalidity of such an agreement is on the
party attacking it.
Elder v. Elder & Elder Enterprises, Ltd., 948
So.2d 348, 351 (La.App. 4 Cir. 2007), writ denied, 956 So.2d 616
(La. 5/4/07)(citation omitted). Essential elements of a compromise
include: (1) mutual intent to put an end to the litigation; and (2)
reciprocal concessions of the parties in adjustment of their
differences.
Rivett v. State Farm Fire and Casualty Company, 508
So.2d 1356, 1359 (La. 1987).
A compromise “shall be made in
writing or recited in open court” (La.Civ.Code art. 3072), and
“settles only those differences that the parties clearly intended
to
settle.”
La.Civ.
Code
art.
3076.
The
Court’s
role
in
interpreting contracts is to determine the common intent of the
parties.
La. Civ. Code art. 2045.
In determining common intent,
pursuant to Civil Code article 2047, words and phrases are to be
construed using their plain, ordinary and generally prevailing
meaning, unless the words have acquired a technical meaning.
See
Henry v. South Louisiana Sugars Co-op., Inc., 957 So.2d 1275, 1277
(La. 2007)(citing Cadwallader v. Allstate Ins. Co., 848 So.2d 577,
580 (La. 2003)).
explicit
and
“When the words of a contract are clear and
lead
to
no
absurd
consequences,
no
further
interpretation may be made in search of the parties’ intent” (La.
37
Civ. Code art. 2046), and the agreement must be enforced as
written.
Hebert v. Webre, 982 So.2d 770, 773-74 (La. 2008).
The
Court’s approach to a contract’s meaning is driven by simple common
sense principles.
Paragraph 12 of the settlement agreement provided:
The Parish of Jefferson ... and Waste Management hereby
direct their respective counsel to file appropriate
motions to dismiss with prejudice all pending claims for
damages, costs, expenses and attorneys fees in the action
in USDC for the Eastern District of Louisiana ... [Civil
Action] No. 09cv6270, pursuant to Rule 54(b) of the
Federal Rules of Civil Procedure, with each party to bear
its own costs.
(emphasis added).
But when the parties later agreed to voluntary
dismissal of the remaining claims, the Parish and Waste Management
stipulated that there was never a malicious prosecution claim
pending in the underlying litigation:
Waste Management has neither pled nor asserted in any of
its pleadings in this litigation including counterclaims,
a claim of malicious prosecution or bad faith litigation
against the Parish in connection with this litigation,
and the Parish agrees that it shall at no time assert a
defense based on res judicata as to any [such] claim,
which Waste Management may assert in future litigation.
It is clear that the parties agreed to settle "pending" claims, and
it is undisputed that the malicious prosecution claim was not a
pending claim at the time the settlement agreement was executed.
Thus, the parties did not settle Waste Management's malicious
prosecution
claim
and
Waste
Management
is
entitled
to
seek
attorney's fees and costs as damages for its now-pending malicious
prosecution claim.
38
However, to the extent that the Parish seeks a ruling as a
matter of law that Waste Management is not entitled to recover
attorney's fees and expenses for claims that were in fact settled
(i.e., damage or contract claims unrelated to the later-asserted
malicious prosecution claim) -- the Parish's argument is framed in
a confusing manner -- the settlement agreement speaks directly to
this issue and will be enforced as written.
Waste
Management
proves
its
liability
case
In other words, if
at
trial,
Waste
Management must then prove its malicious prosecution damages case.
Insofar as it seeks to recover damages for settled claims, it will
not be permitted to do so.
This resolves the issue concerning
whether Waste Management may recover the attorney's fees it paid to
Stone Pigman for work performed on behalf of its sureties.
It may
not. Waste Management concedes: "The Parish's claims against Waste
Management, which resulted in the addition of the sureties and the
claims against the sureties, were released in the Settlement
Agreement."44
Accordingly, the Parish's request to dismiss those
"attorney's fees and costs incurred after August 21, 2009 that were
related to claims that were settled pursuant to the April 6, 2011
settlement agreement" is GRANTED in part (as to the sureties'
attorney's fees, which were settled) and DENIED in part (as to
those attorney's fees and costs that were not "pending" at the time
44
Indeed, as to the settled claims, there is no bona fide
termination in Waste Management's favor.
39
of the settlement agreement; i.e., the attorney's fees and costs
that Waste Management seeks to recover as its compensatory damages
as related to the ADC claim, which was not settled but rather later
dismissed).
4.
Attorney's fees related to the counterclaims advanced by
Waste Management.
The Parish submits that Waste Management is not permitted to
recover
attorney's
fees
related
to
the
counterclaims
Management pursued in the underlying litigation.
Waste
Waste Management
counters that it does not seek to recover attorney's fees incurred
in connection with its original or third amended counterclaim, only
those incurred in connection with its first and second amended
counterclaims, the counterclaims that dealt explicitly with the
River Birch and ADC issue; the issue giving rise to this malicious
prosecution lawsuit.
To the extent the Parish again rests its argument on the
traditional attorney's fees rule, the Court again notes that that
rule is not applicable to Waste Management's attorney's fees
component of compensatory damages it may recover if it proves its
malicious prosecution claim.
Although as a general matter it
appears counterintuitive to permit recovery for attorney's fees
incurred in connection with the prosecution of counterclaims (as
opposed to fees incurred strictly in mounting a defense), Waste
Management submits that a genuine dispute as to the material fact
of whether its first and second amended counterclaims, although
40
styled as counterclaims, were in fact necessary for its defense of
the Parish's ADC claim.
Therefore, the Parish's request for a
ruling that Waste Management as a matter of law may not recover
attorney's fees incurred in connection with its counterclaims is
GRANTED in part (insofar as Waste Management concedes that it may
not
recover
fees
incurred
in
connection
with
its
original
counterclaim and its third amended counterclaim) and DENIED in part
(insofar as a fact issue is presented respecting whether Waste
Management may recover attorney's fees incurred in connection with
its first and second amended counterclaims).45
Accordingly, the Parish's motion for summary judgment on
liability is DENIED, and its motion for partial summary judgment on
damages is GRANTED in part and DENIED in part as set forth in this
Order
and
Reasons.
The
following
damages
issues
are
hereby
dismissed: (a) any claim to recover attorney's fees and costs that
were
incurred
prior
to
the
institution
of
the
underlying
litigation; (b) any claim to recover attorney's fees and costs
incurred after the underlying lawsuit was filed that relate to
then-pending claims that were settled pursuant to the April 2011
settlement
agreement,
which
includes
attorney's
fees
for
the
defense of claims against Waste Management's sureties; and (c) any
45
The Parish insists, and this Court agrees, that Waste
Management will bear the burden at trial to establish what portion
of attorney's fees incurred was attributable to its defense of the
Parish's ADC suit.
41
claim to recover attorney's fees incurred by Waste Management in
connection
with
its
original
and
third
advanced in the underlying litigation.
issues
remain
pending
for
trial:
amended
counterclaim
And the following damages
(a)
any
claim
to
recover
attorney's fees and costs incurred after the underlying lawsuit was
filed that relate to claims in the underlying litigation that were
not settled pursuant to the April 2011 settlement agreement; (b)
any claim for attorney's fees incurred in connection with Waste
Management's pursuit of its first and second amended counterclaims
in the underlying litigation insofar as the work performed on those
counterclaims was necessary for Waste Management's defense of the
Parish's ADC claim.
New Orleans, Louisiana, December 10, 2014
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
42
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