CG & JS Enterprises L.L.C. et al v. H&R Block, Inc.

Filing 112

ORDER granting 72 H&R Block Tax Services, LLC's Motion for Summary Judgment. Signed by Judge Jay C. Zainey on 11/14/17. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CG & JS ENTERPRISES, LLC, ET
AL.

CIVIL ACTION

VERSUS

NO: 14-1322

H&R BLOCK, INC., ET AL.

SECTION: "A" (1)

ORDER AND REASONS
The following motion is before the Court: Motion for Summary Judgment (Rec.
Doc. 72) filed by defendant H&R Block Tax Services, LLC. Plaintiffs CG & JS
Enterprises, LLC, Christopher Gibbens, and Johnny Shaw oppose the motion. The
motion, submitted for consideration on November 1, 2017, is before the Court on the
briefs without oral argument. For the reasons that follow, the motion is GRANTED.
I.

BACKGROUND
Plaintiffs Christopher Gibbens and Johnny Shaw own the legal entity, CG & JS

Enterprises, LLC, also a plaintiff herein. Both Gibbens and Shaw were employed by
H&R Block Tax Services, LLC (“HRB”) as district managers. Gibbens resigned his
employment with HRB in January 2013 under amicable circumstances. (Rec. Doc. 72-2,
Def. Exhibit 1, Gibbens 1/23/13 email to Ricks).
In April 2013, HRB franchisee David Sewell contacted HRB to advise that he and
his wife wished to terminate their HRB franchise (DAP Technologies, LLC) due to
financial burdens. (Rec. Doc. 72-8, Def. Exhibit 7, Sewell 4/28/13 email to Casey).
Shaw contends that Sewell approached him about purchasing the franchise and he
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became immediately interested due to the economic potential of DAP’s location. (Rec.
Doc. 101-3, Pla. Exhibit 1, Shaw Affidavit). According to Shaw, he and Sewell reached
an agreement but Sewell couldn’t simply transfer his franchise agreement to a
purchaser; HRB had a contractual right of first refusal to purchase the franchise and any
new franchisee would have to be approved by HRB.
Meanwhile, Shaw had continued his employment with HRB but apparently not
without difficulty. In May 2013 Shaw received an unfavorable performance appraisal
from his supervisor. (Rec. Doc. 72-3, Def. Exhibit 2, Johnson 5/30/13 email to Shaw).
Shaw had also filed a charge of racial discrimination and harassment against his
immediate supervisor, Calvin Ricks, and HRB.1
In late May and early June 2013, Ms. Stacy Tyler with HRB was working with
Sewell to assist him in completing the steps necessary to sell the franchise. (Rec. Doc.
101-5, Pla. Exhibit 4, Tyler emails to Sewell). The record contains an HRB Letter of
Intent (LOI) to Transfer Franchise dated May 30, 2013, which was executed in part by
Sewell and in part by Shaw. (Rec. Doc. 72-10, Def. Exhibit 9).
On June 8, 2013, Tyler emailed Shaw directly to ask him to confirm that he was
going to move forward with purchasing the franchise from Sewell so that the paperwork
could be sent to legal. (Rec. Doc. 101-6, Pla. Exhibit 5, Tyler 6/8/13 email to Shaw).
Shaw responded in the affirmative, and within minutes Tyler replied: “I do not believe

The copy of the EEOC charge attached to Plaintiffs’ opposition as Exhibit 19 is illegible so the
Court does not know when the charge was filed. (Rec. Doc. 101-20). The filing date is not
material, however. The salient fact pertaining to the charge is that it was pending when Shaw
ultimately resigned his employment.
1

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you can be both a franchise owner and employed by the company. Is this something
you are aware of?” (Rec. Doc. 101-22, Pla. Exhibit 21, Tyler 6/9/13 email to Shaw).
Shaw replied, “yes.”2 (Id.). Less than one hour later Ms. Tyler emailed:
Just sn [sic] FYI, your resignation is contingent upon approval.
Therefore, it is important that your field leader be aware of your desire to
become a franchisee and that if you are approved you would want to
coordinate a transition plan, etc.
If we’re in the same page, I’ll proceed with the LOI so company can look at
FROR.
(Rec. Doc. 101-7, Pla. Exhibit 6, Tyler 6/9/13 email to Shaw) (emphasis added).
On June 28, 2013, Ms. Lori K. Potts-Wisner sent Shaw numerous documents to
be completed as a potential buyer of the DAP franchise. (Rec. Doc. 72-11, Def. Exhibit
10, Potts-Wisner 6/28/13 email to Shaw). The transmittal states that the documents
were needed “to prepare the final approval package for review by the Market VP.” (Id.).
On July 1, 2013, an employee with HRB advised Shaw that HRB would not be
pursuing its right of first refusal to purchase the DAP franchise. (Rec. Doc. 101-9, Pla.
Exhibit 8, High 7/1/13 email to Shaw).
Apparently Shaw had decided to voluntarily resign because on July 29, 2013, Ms.
Geri Sutter sent Shaw a Confidential Separation and Release Agreement for his
consideration and approval. (Rec. Doc. 72-7, Def. Exhibit 6). Shaw executed the

In his affidavit Shaw suggests that he found Tyler’s comment confusing because he knew that
other HRB employees had been allowed to own a franchise. Shaw attributed Tyler’s statement
to the fact that he had filed an EEOC complaint. (Rec. Doc. 101-3, Pla. Exhibit 1, Shaw affid. ¶¶
8-11). The Court cannot discern from the email chain how much time elapsed between Tyler’s
question and Shaw’s unequivocal “yes” response. The Court notes that there is no evidence in
the record to suggest that Tyler knew about the EEOC complaint when she emailed Shaw.
2

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Release and his termination date was going to be August 2, 2013. The Release, which
has been filed under seal, details the mutual promises that HRB and Shaw agreed to,
including that Shaw would voluntarily resign from HRB and settle his pending EEOC
claim in exchange for a significant lump sum monetary payment. (Rec. Doc. 72-4, Def.
Exhibit 3). Shaw received the monetary consideration. (Rec. Doc. 72-5, Def. Exhibit 4,
Pay Summary). The detailed Release contains no promise related to or reference
whatsoever to Shaw’s efforts to purchase the DAP franchise.3
The record demonstrates that during September 2013, communications between
Christopher Gibbens and Potts-Wisner continued (Rec. Docs. 72-12 & 72-13, Def.
Exhibits 11 & 12), and on September 13, 2013, Potts-Wisner emailed Gibbens and
Sewell that she had received final approval for the franchise transfer and would begin to
prepare the contract documents.4 (Rec. Doc. 72-14, Def. Exhibit 13). On September 18,
2013, Potts-Wisner mailed the contract documents to Shaw at a Denham Springs
address. (Rec. Doc. 72-16, Def. Exhibit 15). The transmittal letter contains the following
admonition:
We are required by law to provide you with these documents no less than
seven calendar days prior to closing. Therefore, if you receive this package
on September 19, 2013, the first date which you may return the original
signed documents it [sic] to me is September 27, 2013, but not before that
date.

3

On July 29, 2013, Shaw emailed the release to Gibbens and asked him to have one of his
attorney friends review the document. (Rec. Doc. 101-19, Pla. Exhibit 18, Shaw 7/29/13 email to
Gibbens).
4

On September 5, 2013, Mr. Robert Moretti of HRB approved the transfer. (Rec. Doc. 101-21
SEALED, Pla. Exhibit 20, Moretti 9/5/13 email to Potts-Wisner).
In his deposition Gibbens attaches much significance to the use of the term “final” in this
email. (Rec. Doc. 72-9, Def. Exhibit 8, Gibbens depo at 125).
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(Id.).
The transmittal letter also contained a reminder that a $2500 deposit check would
be due along with the executed documents.
The Transfer Closing Checklist sheet contains the following annotation:

CLOSING ON (or) AFTER: SEPTEMBER 27, 2013.
(Id. at PL PROD EX 7 0008). None of the closing documents had been signed by HRB.
On September 26, 2013, Mr. Brant Wilson with HRB sent a letter/email to Shaw
and Gibbens stating that
Upon further consideration, H&R Block has decided to withdraw its approval
of the transfer and hereby withdraw its indication of interest in entering into
a franchise agreement with you or your company for that location.
(Rec. Doc. 72-18, Def. Exhibit 17). This bad news was preceded by a telephone call
from Chris Lewis with HRB who told Shaw and Gibbens about HRB’s change of heart.5
(Rec. Doc. 72-6, Def. Exhibit 5, Shaw depo at 89). It is undisputed that the withdrawal
occurred before either Shaw or Gibbens received the closing documents in the mail.6
Plaintiffs filed this lawsuit against HRB and although their pleading does not
specify specific causes of action, HRB has identified four potential legal theories: 1)
breach of contract; 2) detrimental reliance; 3) tortious interference with a contract; and
Although the reasons for the revocation are not material to any issue presented by HRB’s
motion, Plaintiffs suggest that Calvin Ricks, Shaw’s former supervisor and the subject of the
prior EEOC complaint, killed the deal. (Rec. Docs. 101-13-14, Pla. Exhibits 12-14, Ogle/Ricks
9/13/13 email chain). HRB suggests that the deal was cancelled when it learned that Plaintiffs
were trying to solicit HRB employees to work for them. (Rec. Doc. 72-17, Def. Exhibit 16,
Ogle/Fasullo/Smith email chain).
5

The documents were mailed to Shaw but at Gibbens’ Denham Springs address. Gibbens had
been out of town at the time so neither Shaw nor Gibbens had received the closing documents
before the withdrawal occurred. (Rec. Doc. 72-6, Def. Exhibit 5, Shaw depo at 88).
6

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4) impermissible use of EFIN codes.7 Plaintiffs’ claims are for the most part grounded
on two contentions—that the September 18, 2013 transmittal of the closing documents
constituted an irrevocable offer, and that Shaw resigned his position based on the
assurance that he would receive his own franchise.
This matter is scheduled to be tried to the bench on May 22, 2018. HRB now
moves for summary judgment on all of Plaintiffs’ claims.
II.

DISCUSSION
Summary judgment is appropriate only if "the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any," when viewed
in the light most favorable to the non-movant, "show that there is no genuine issue as to
any material fact." TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002)
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A dispute about a
material fact is "genuine" if the evidence is such that a reasonable jury could return a
verdict for the non-moving party. Id. (citing Anderson, 477 U.S. at 248). The court must
draw all justifiable inferences in favor of the non-moving party. Id. (citing Anderson, 477
U.S. at 255). Once the moving party has initially shown "that there is an absence of
evidence to support the non-moving party's cause," Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986), the non-movant must come forward with "specific facts" showing a
genuine factual issue for trial. Id. (citing Fed. R. Civ. P. 56(e); Matsushita Elec. Indus.
Co. v. Zenith Radio, 475 U.S. 574, 587 (1986)). Conclusional allegations and denials,
speculation, improbable inferences, unsubstantiated assertions, and legalistic

7

Plaintiffs do not dispute HRB’s characterization of the claims.
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argumentation do not adequately substitute for specific facts showing a genuine issue
for trial. Id. (citing SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993)).
When faced with a well-supported motion for summary judgment, Rule 56 places
the burden on the non-movant to designate the specific facts in the record that create
genuine issues precluding summary judgment. Jones .v Sheehan, Young, & Culp, P.C.,
82 F.3d 1334, 1338 (5th Cir. 1996). The district court has no duty to survey the ` record
in search of evidence to support a non-movant’s position. Id. (citing Forsyth v. Barr, 19
F.3d 1527, 1537 (5th Cir. 1992); Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1307
(5th Cir. 1988)).
Breach of Contract
Plaintiffs’ breach of contract claim fails as a matter of law. It is undisputed that the
franchise documents were never executed. Louisiana Civil Code article 1947, entitled
Form Contemplated by Parties, states:
When, in the absence of a legal requirement, the parties have
contemplated a certain form, it is presumed that they do not intend to be
bound until the contract is executed in that form.
The numerous emails and transmittals from the summer of 2013 demonstrate
that neither party would be bound until the final contract document was executed by the
parties. In fact, the contract package expressly refers to a “closing.” Nothing suggests
that the written contract documents were a mere flourish. And perhaps most damaging
to Plaintiffs’ position is that the franchise contract itself specifically provides that it shall
not be binding on either HRB or the franchisee “unless and until this Agreement has
been executed by Franchisee and by an executive officer of [HRB].” (Rec. Doc. 72-16,

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Def. Exhibit 15, FLA ¶ 32).
Further, Plaintiffs misread Rainey v. Entergy Gulf States, Inc., 35 So. 3d 215 (La.
2010), when they suggest that HRB’s signature on the contract was superfluous simply
because HRB drafted the document. The contract in this case clearly contemplated that
it would be executed by Plaintiffs and HRB.8 This case does not involve a situation as in
Rainey where a document is drafted by one party but contains a single signature space
for the receiving party.9
Plaintiffs argue that HRB lost the right to revoke the offer of a franchise when it
placed the closing documents in the mail. Plaintiffs contend that the offer remained
irrevocable until at least September 27, 2013, the first day that the closing documents
could be executed after allowing for the seven day forbearance period imposed by
federal law.10 Under Louisiana law, an offer that specifies a period of time for
acceptance is irrevocable during that time. La. Civ. Code art. 1928. When the offeror
manifests an intent to give the offeree a delay within which to accept, without specifying
a time, the offer is irrevocable for a reasonable time. Id. An offer not irrevocable under

8

In fact, the record does not suggest that Plaintiffs actually manifested their intent to enter into
the contract by executing it and forwarding the $2500 deposit check to HRB. In their briefing
Plaintiffs make reference to a fee that was wrongly deducted from their bank account for several
months but that appears to be something other than the $2500 check due on signing.
9

An example of a document of this nature would be the Release that Shaw signed. HRB
drafted the document and while the agreement is a contract between Shaw and HRB, the
Release contains a signature space for Shaw only. No one from HRB signed the bilateral
contract but HRB is clearly bound by it. Again, the franchise document contemplates and
expressly requires execution by all parties.
The September 27, 2013, was simply Potts-Wisner’s estimation of when the seven day
forbearance period would expire if Plaintiffs had received the closing documents in the mail on
September 19, 2013.
10

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Civil Code article 1928 may be revoked before it is accepted. La. Civ. Code art. 1930.
Nothing in any of the communications or the closing documents manifests an
intent by HRB to create an irrevocable offer by specifying a time period for acceptance.
Plaintiffs’ suggestion that the offer was irrevocable until at least September 27 th based
on the forbearance period is unpersuasive because the forbearance period leading up
to September 27th was the timeframe during which the offer could not be accepted
under any circumstances. HRB (as required by law) gave Plaintiffs a time period during
which the offer could not be accepted and therefore made the offer acceptable
beginning on September 27, 2013. But this does not equate to specifying a time period
or delay after September 27th during which the offer would stand open.11 Simply, the
offer was revocable on September 26, 2013.
For the foregoing reasons, HRB is entitled to judgment as a matter of law on the
breach of contract claim.
Detrimental Reliance
On the basis of the same facts giving rise to their breach of contract claim,
Plaintiffs contend that they are entitled to relief under the doctrine of detrimental
reliance. To establish a claim for detrimental reliance, a party must prove three
elements by a preponderance of the evidence: 1) a representation by conduct or word;
2) justifiable reliance; and 3) a change in position to one’s detriment because of the

11

Another insurmountable problem for Plaintiffs is that even as to an irrevocable offer, the
acceptance is only effective when received by the offeree. La. Civ. Code art. 1934. Thus,
regardless of what Plaintiffs did or did not receive in the mail, and regardless of what they did or
did not execute on their own, until the executed documents along with the $2500 deposit check
had been received by HRB during the “reasonable period” of irrevocability, no contract would be
formed. Plaintiffs, understandably believing it to be a futile gesture, did not do this.
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reliance. Suire v. Lafayette City-Par. Consol. Gov’t, 907 So. 2d 37, 59 (La. 2005) (citing
Lakeland Anesthesia, Inc. v. United Healthcare of La. Inc., 871 So. 2d 380, 393 (La.
App. 4th Cir. 2004)); La. Civ. Code art. 1967. Proof of an enforceable contract is not
necessary to the claim. Id. (citing Babkow v. Morris Bart, PLC, 726 So. 2d 423, 429 (La.
App. 4th Cir. 1998)).
Shaw’s contention is that he was promised a franchise and that he resigned his
position with HRB based upon this promise. None of the evidence of record even
remotely suggests that Shaw was promised a franchise as a quid pro quo for his
resignation. And while Shaw’s October 17, 2017 affidavit states that Ms. Geri Sutter
assured him in no uncertain terms that once he resigned and settled the [EEOC] claim,
he would be approved as a franchisee,” (Rec. Doc. 101-3, Pla. Exhibit 1, Shaw affid. ¶
13), his deposition testimony given under oath on June 7, 2016, belies that assertion.
When questioned during his deposition about when and how the promise of a franchise
was made, Shaw was far less certain about any of the facts surrounding the alleged
assurance. (Rec. Doc. 72-6, Def. Exhibit 5, Shaw depo at 56-58).
Shaw places much emphasis on Tyler’s June 9, 2013 email to him, which is
quoted in full earlier in this opinion. Shaw contends that Tyler’s statement that “your
resignation is contingent upon approval” means that if he were to resign, he would be
approved for a franchise. The sentence may mean that approval for a franchise is
contingent upon resignation—an interpretation that would be consistent with the rest of
Tyler’s emails. While the phrase, which Tyler emailed from a mobile device, makes little
sense as written, it does not suggest that resignation guarantees a franchise, which is

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the construction Shaw is urging.
But even assuming that Ms. Sutter had the apparent authority to promise Shaw a
franchise if he resigned,12 the Release agreement that Shaw signed when he voluntarily
resigned deprives his reliance of any indicia of reasonableness. The Release is
comprehensive and it details the consideration that Shaw would receive for voluntarily
resigning. (Rec. Doc. 72-4, Def. Exhibit 3, Release). The Release does not allude to a
franchise and it specifically precludes claims based on promises not contained in the
document (Id. ¶ I). The Release specifically states that its written terms are the “entire
agreement” between HRB and Shaw. (Id. ¶ H). Considering the importance that Shaw
now claims to have placed on the alleged promise of a franchise, it would have been
patently unreasonable to execute the Release, which included no references to a
potential franchise opportunity. The express terms of the Release defeat Shaw’s
detrimental reliance claim.
Gibbens has no claim for detrimental reliance. Gibbens has not demonstrated
how he detrimentally changed his position in light of the franchise offer. Gibbens had
resigned his position with HRB well before Sewell decided to sell the franchise. Gibbens
has likewise failed to demonstrate that he sustained damages as a result of the
withdrawn offer.
HRB is entitled to judgment as a matter of law on the detrimental reliance claims.

12

The Court does not know what position Ms. Sutter held with HRB so the Court cannot judge
one way or the other whether reliance on any promise that she made regarding a franchise
would be reasonable.
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Tortious Interference With Contract
Plaintiffs do not dispute that Louisiana law does not recognize a claim for tortious
interference with a contract by a corporate entity like HRB. HRB is entitled to judgment
as a matter of law on this claim.13
Impermissible Use of EFIN Code
Plaintiffs claim that HRB continued to use IRS-assigned EFIN numbers linked to
their names even after they left HRB.14 Plaintiffs have failed to demonstrate that any
aspect of federal or state law gives them a cause of action related to EFIN numbers.
HRB is entitled to judgment as a matter of law on this claim.
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Motion for Summary Judgment (Rec. Doc. 72) filed
by defendant H&R Block Tax Services, LLC. Is GRANTED. Plaintiffs’ claims are
dismissed with prejudice.
November 14, 2017

_______________________________
JAY C. ZAINEY
UNITED STATES DISTRICT JUDGE
13

Plaintiffs assert that they made a tortious interference claim against other individual
defendants in their second amended complaint. (Rec. Doc. 101-1, Opposition at 21). They go on
to state that the complaint has not yet been answered, and that once the Court rules on “the
motion regarding the efficacy of plaintiffs’ filing of the second amended complaint, plaintiffs will
revisit this portion of the motion.” The Court notes that no motion has been filed to address the
efficacy of the second amended complaint, which Plaintiffs attempted to file in November 2015.
(Rec. Doc. 55). This pleading purports to add new parties to this lawsuit, which is scheduled to
be tried on May 22, 2018.
14

Anyone who files a tax return with the IRS must have an EFIN. (Rec. Doc. 72-9, Def. Exhibit
8, Gibbens depo at 116).
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