Bodenheimer v. Williams et al

Filing 68

ORDER AND REASONS DENYING 46 Motion to Dismiss or, in the Alternative, ForSummary Judgment and the 62 Motion to Disqualify Counsel. IT IS FURTHER ORDERED that answers shall be filed on behalf of Luther C. Speight,III, individually, and Luther S peight and Company, LLC, Certified Public Accountants Consultants no later than May 31, 2016. Thereafter, a telephonic status conference to set this case for trial shall be set by the Case Manager to occur no later than June 8, 2016. Signed by Judge Stanwood R. Duval, Jr on 5/18/2016. (my)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

GREGORY BODENHEIMER

CIVIL ACTION

VERSUS

NO. 14-740

TERRY WILLIAMS, ET AL.

SECTION “K”(4)

ORDER AND REASONS
Pending before the Court are the following motions:
a)

Second Motion to Dismiss or, in the Alternative, For Summary Judgment (Rec.
Doc. 46) filed by Luther Speight & Company, LLC; and

b)

Motion to Disqualify Counsel (Rec. Doc. 62) filed by Gregory Bodenheimer.

Having reviewed the pleadings, memoranda and the relevant law, the Court finds no merit in
these motions at this time for the reasons that follow.

BACKGROUND
Gregory Bodenheimer filed a First Amended Complaint in which he sued Terry Williams
("Williams"), individually, Luther Speight, III, ("Speight") individually and Luther Speight &
Company, LLC, Certified Public Accountants Consultants ("Speight, LLC") for the breach of a
Transfer of Interest agreement for their alleged failure to pay to plaintiff the consulting
payments, interest reimbursements and principal reimbursements contained therein, as well as
other misdeeds.
The agreement in question is styled "Transfer of Interest in Luther Speight & Company,

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LLC by Luther Speight & Company to Greg Bodenhiemer1, Inc." (Rec. Doc. 1-1) and was
executed by all of the parties involved in this suit on August 7th, 2003 in New Orleans,
Louisiana. The document details in the preamble that:
(1)

Speight and Williams appeared in their individual capacity and representing
Speight LLC;

(2)

Greg Bodenhiemer, Inc., ("Bodenhiemer, Inc.") was a Texas Corporation
represented by Greg Bodenhiemer ("Bodenhiemer");

(3)

Speight owned 58% and Williams owned 32% of Speight, LLC;

(4)

an understanding had been reached that Bodenheimer, Inc. desired to make a
capital contribution to Speight, LLC in the amount of $200,000.00 in exchange
for an ownership interest in Speight, LLC.;

(5)

an agreement that Bodenhiemer, Inc. was to "be engaged by [Speight, LLC] to
provide consulting services to and for [Speight, LLC] at an annual rate of
compensation not less than" $60,000, and "that [Speight LLC] was to pay to
Bodenheimer, Inc."in quarterly installments a sum not to exceed $2500; the
aforesaid described sums not to exceed" $10,000 "on an annual basis; the actual
amount pad on a quarterly basis to be equivalent to the interest cost borne by
[Bodenheimer, Inc.] with respect to the capital contribution set forth herein;"

6)

Speight and Williams personally declared that it was in the best interest of
Speight, LLC to secure the cash infusion; they ratified Speight LLC's issuance of

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The Court notes that in the Complaint, the plaintiff's name is spelled "Bodenheimer"; however, in the
Agreement, it is spelled "Bodenhiemer." When citing the Agreement, the Court has used the spelling used in the
contract.

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a 10% membership interest to Bodenheimer, Inc. in exchange for the capital
infusion; and acknowledged that the 10% share of the company would come from
their respective shares.
The Agreement then states:
[Speight, Williams and Speight, LLC] declares that in consideration of a
capital contribution of Two Hundred Thousand and No/100ths ($200,000.00)
Dollars, the assumption of all terms, conditions, liabilities, capital class, and all
other provisions of the Articles of Organization, as hereafter amended, and the
Operating Agreement for the Company, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledge,
[Speight LLC] does hereby sell, transfer, convey, assign, deliver and set over unto
[Bodenhiemer, Inc.], One Hundred units; a ten(10) percent membership interest in
the Company, as well as the right to receive any and all distributions of income or
gain, to which Transferee may hereinafter be entitled pursuant to the Articles of
Organization as amended and the Operating Agreement.
Rec. Doc. 1-1 at 2of 3.
In the Complaint (Rec. Doc. 1), at paragraph 10, plaintiff Bodenheimer stated that the
agreement erroneously described the party in interest as "Greg Bodenheimer, Inc.", "but at all
times the parties understood and acted as though the "Transferee" was Greg Bodenehimer
personally. In the First Amended Complaint, plaintiff further alleged that in addition to the
Speight LLC investment, plaintiff invested an additional $150,000 with Williams in a real estate
development and purchased tax credits through Williams in the amount of $30,000.00 (Rec. Doc.
42, ¶14 at 3 of 10).
In the Amended Complaint, plaintiff outlined the course of dealing with Mr. Williams
concerning all of these investments and outlined the fraud which was allegedly practiced upon
plaintiff. Specifically as to the real estate investment, plaintiff alleged that it was not until
sometime in late 2012, that Williams confessed to plaintiff that he had not invested that money

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in that endeavor.
Thus, Bodenheimer contends that Speight, LLC is liable to Bodenheimer for breach of
contract for "failure to make the $60,000 per year payments that are required by the Transfer of
Interest agreement , and for failure to make the interest cost reimbursement required by the
Transfer of Interest agreement." (Rec. Doc. 42, ¶ 39 at 8 of 10). In addition, plaintiff contends
that "Williams committed fraud upon Bodenheimer by intentionally inducing him to give
Williams $180,000 under false pretenses that the money would be used for plaintiff's benefit."
(Id. at ¶ 40).

Legal Standards
In considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6),
the complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the
original complaint must be taken as true. Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440,
442 (5th Cir.1980). In Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 563, 127 S.Ct. 1955,
1969 (2007), the Supreme Court “retired” the Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
101-102, 2 L.Ed.2d 80 (1957), standard for analyzing a motion to dismiss under Rule 12(b)(6)
which held that a district court may not dismiss a complaint for failure to state a claim “unless it
appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would
entitle him to relief.” Noting that the Conley pleading standard “is best forgotten as an
incomplete, negative gloss on an accepted pleading standard,” the Supreme Court announced
that “once a claim has been stated adequately, it may be supported by showing any set of facts
consistent with the allegations of the complaint. Id. at 563, 127 S.Ct. at 1969.

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“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.’ “ In Re: Katrina Canal Breaches Litigation,
495 F.3d 191, 205 (5th Cir.2007) quoting Bell Atlantic Corp. v. Twombly, 550 U.S. at 570, 127
S.Ct. at 1974. Factual allegations must be enough to raise a right to relief above the speculative
level, on the assumption that all the allegations in the complaint are true (even if doubtful in
fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. at 556, 127 S.Ct. at 1965 (internal citations
omitted). “The question therefore is whether in the light most favorable to the plaintiff and with
every doubt resolved in his favor, the complaint states any valid claim for relief.” Lowery v.
Texas A & M University System, 117 F.3d 242, 247 (5th Cir.1997) quoting 5 Charles A. Wright
& Arthur R. Miller, Federal Practice and Procedure, § 1357, at 601 (1969).
As to a motion for summary judgment, Rule 56 of the Federal Rules of Civil Procedure
provides that a "court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.
R. Civ. Pro. 56(a). Given these standards, the Court will now address the motions.

Second Motion to Dismiss and the Motion to Disqualify
Defendant Speight LLC filed the instant motion seeking to dismiss all of the plaintiff's
claims against it under Fed. R. Civ. P. 12(b)(6) for failure to state a claim or, in the alternative,
for summary judgment under Fed. R. Civ. P. 56. As noted, in the First Amended Complaint,
plaintiff seeks to recover the sum of at least $600,000.00 relating to a provision in a contract
wherein the defendant agreed to pay to the plaintiff $60,000.00 a year for consulting and other
services. Plaintiff is also claiming that the defendant failed to reimburse the plaintiff for his

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interest cost for the $200,000 Bodenheimer borrowed to invest in the Speight, LLC.
Speight, LLC seeks dismissal under Fed. R. Civ. Pro. 12(b)(6) and in the alternative,
summary judgment under Fed. R. Civ. Pro. 56 as to plaintiff's claims against it. Speight LLC
maintains that article 1993 of the Louisiana Civil Code concerning reciprocal obligations
states"in the case of reciprocal obligations, the obligor of one may not be put in default unless
the obligor of the other has performed or is ready to perform his own obligation." Thus, in
essence, Speight LLC contends that because plaintiff has not alleged that he provided consulting
services or that he was ready and available to provide such services, such payment cannot be due
as he has not performed any work. This argument clearly ignores the allegations as previously
set forth and verges on the disingenuous, and certainly absolutely contrary to the terms of the
contract.
Clearly, the contract itself makes no mention of work to be performed or as work being a
condition of compensation. The consideration and obligations involved were Bodenheimer
providing a capital infusion to Speight, LLC, and Speight, LLC was to pay as compensation
certain amounts set forth in the contract. The contract specifically states "Whereas, it is agreed
that GREG BODENHEIMER, INC, be engaged by the Company to provide consulting services
to and for the Company at an annual rate of compensation not less than Sixty thousand and
no/100ths ($60,000.00) Dollars and that the Company should pay unto Transferee, in quarterly
installments a sum not to exceed Two thousand Five Hundred and No/100th ($2,500.00) Dollars
. . . ." At worst, the contract may be found to be vague which may or may not require parole
evidence. Clearly, this motion is premature.
As to the money to be paid in lieu of interest, i.e., the $10,000.00 per year or less

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depending on what the equivalent interest would be on the $200,000.00, defendant contends that
there was really no capital contribution; it was in truth and in fact a loan; therefore, the plaintiff
owns no interest in the Company. As such, Speight LLC contends that there was no
consideration for this obligation on behalf of the company. This contention flies in the face of
the very name of the document in question, "Transfer of Interest in Luther Speight & Company,
LLC by Lurther Speight & Company, LLC to Greg Bodenhiemer, Inc." Again, this position
appears spurious and frankly, the motion as a whole appears to the Court to be dilatory in nature.
The defendant also contends that the course of dealing of the parties clearly shows that it
was intended to be a loan and not a capital infusion. It argues that the plaintiff so characterized
it in his original pleading. Even though this characterization was superseded by the amended
complaint, the moving defendant argues that it can at least be used inferentially to support the
motion for summary judgment. Defendant further argues there is a three-year prescriptive period
applicable as the money was in reality a loan. To the degree that the defendant maintains that
somehow their course of dealing resulted in some kind of tacit amendment of the contract at
issue, making the money involved a loan than a capital infusion, that issue would be a question
of fact that is not ripe for summary judgment or a 12(b)(6) motion.
As to the Motion to Disqualify Defense Counsel of Record, Mr. Jerome J. Pellerin,
plaintiff maintains that since Mr. Pellerin drafted the agreement to reflect Speight, LLC's
intentions, Mr. Pellerin will be required to be a witness in the case and as such must be
disqualified. However, given the status of this matter, such a motion is premature as well.
The Court notes that the initial complaint in this matter was filed over two years ago.
The First Amended Complaint was filed on July 15, 2015. Defendant Williams filed an

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Amended Answer to the First Amended Complaint on February 11, 2016. It appears that to date
Luther C. Speight, III, individually and Speight, LLC have not filed answers to date.
Considering the foregoing,
IT IS ORDERED that the Second Motion to Dismiss or, in the Alternative, For
Summary Judgment (Rec. Doc. 46) and the Motion to Disqualify Counsel (Rec. Doc. 62) are
DENIED.
IT IS FURTHER ORDERED that answers shall be filed on behalf of Luther C. Speight,
III, individually, and Luther Speight and Company, LLC, Certified Public Accountants
Consultants no later than May 31, 2016. Thereafter, a telephonic status conference to set this
case for trial shall be set by the Case Manager to occur no later than June 8, 2016.
New Orleans, Louisiana, this 18th day of May, 2016.

STANWOOD R. DUVAL, JR.
UNITED STATES DISTRICT COURT JUDGE
.

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