Alack Refrigeration Company, Inc. v. W.C. Zabel Company et al

Filing 53

ORDER AND REASONS granting 11 Motion to Dismiss for Lack of Jurisdiction - Party Robert A. Zabel, Andrew L. Zabel and Lee Zabel dismissed without prejudice; granting in part and denying in part 12 Motion to Dismiss for Failure to State a Cla im; denying 28 Motion for Partial Summary Judgment; denying 38 Motion to Strike Exhibits ; granting 39 Motion for Leave to File Additional Affidavit of Correctness of Account in Support of Motion for Partial Summary Judgment. Signed by Judge Helen G. Berrigan on 12/7/2015. (kac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ALACK REFRIGERATION CO., INC.
D/B/A ALACK CULINARY

CIVIL ACTION

VERSUS

NO. 15-756

THE W.C. ZABEL CO. D/B/A ZABEL’S
CULINARY EQUIPMENT & SUPPLIES
SUPERSTORES, LEE ZABEL, ROBERT
A. ZABEL AND ANDREW L. ZABEL

SECTION “C” (2)

ORDER AND REASONS1
Before the Court are: (1) Lee Zabel’s, Robert A. Zabel’s, and Andrew L. Zabel’s Motion
to Dismiss Under Rule 12(b)(2) for lack of personal jurisdiction (Rec. Doc. 11); (2) The W.C.
Zabel Company’s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6)
plaintiff’s claims against it for fraud and collusion, tortious interference with a contract, breach
of a non-compete covenant, and interest due on an open account (Rec. Doc. 12); (3) Plaintiff’s
Motion for Partial Summary Judgment on its claim against The W.C. Zabel Company for the
balance due on an open account, including interest (Rec. Doc. 28); (4) The W.C. Zabel
Company’s Motion to Strike Exhibits 1, 2, and 3 to Plaintiff’s Motion for Partial Summary
Judgment (Rec. Doc. 38); and, (5) Plaintiff’s Motion for Leave to File an Additional Affidavit of
Correctness of Account in Support of Motion for Partial Summary Judgment (Rec. Doc. 39).
The motions are before the Court on the briefs and without oral argument. Considering the
record, the law, and the submissions of the parties,
IT IS HEREBY ORDERED that Lee Zabel’s, Robert A. Zabel’s, and Andrew L. Zabel’s
Motion to Dismiss Under Rule 12(b)(2) for lack of personal jurisdiction (Rec. Doc. 11) is
GRANTED, and plaintiff’s claims against them are DISMISSED WITHOUT PREJUDICE.

1

Andrew Lombardo, a second year student at Tulane Law School, assisted with the preparation of this order.

IT IS FURTHER ORDERED that The W.C. Zabel Company’s Motion to Dismiss
Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rec. Doc. 12) is GRANTED IN PART as
to plaintiff’s claim for tortious interference with a contract and, that claim is DISMISSED WITH
PREJUDICE. The motion is DENIED IN PART as to plaintiff’s claims for fraud and collusion,
breach of a non-compete covenant, and interest due on an open account.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Partial Summary Judgment on
its claim against The W.C. Zabel Company for the balance due on an open account, including
interest (Rec. Doc. 28), is DENIED.
IT IS FURTHER ORDERED that The W.C. Zabel Company’s Motion to Strike Exhibits
1, 2, and 3 to Plaintiff’s Motion for Partial Summary Judgment (Rec. Doc. 38) is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File an Additional
Affidavit of Correctness of Account in Support of Motion for Partial Summary Judgment (Rec.
Doc. 39) is GRANTED.
I. Background
Plaintiff, Alack Refrigeration Company, Inc. d/b/a Alack Culinary (“Alack”), sells
equipment and provides other services to restaurants. Alack is incorporated in Louisiana and
maintains its principal place of business in Hammond, Louisiana. Rec. Doc. 1. It has divisions in
New Orleans, Louisiana; Sarasota, Florida; and, Cincinnati, Ohio. Defendant, The W.C. Zabel
Company (“Zabel”), also sells restaurant equipment. It is incorporated in Ohio and maintains its
principal place of business in Youngstown, Ohio. Id. Defendants, Lee, Robert, and Andrew
Zabel are Zabel’s owners and shareholders. Id. Lee Zabel is domiciled in Venice, Florida, and
Robert and Andrew Zabel are both domiciled in Youngstown, Ohio. Id.

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On January 7, 2010, Alack and Zabel entered into a licensing agreement under which
Alack licensed to Zabel for use in the Youngstown, Ohio geographical area certain trade names,
trademarks, service marks, and trade secrets and confidential information related to business
models, marketing materials, and color schemes. Rec. Doc. 1-1. Alack’s fees under the licensing
agreement “were determined by purchases of preferred vendor partners and vendors of the
NAFED2 Buying Group” and were “automatically debited from rebate disbursement of NAFED
and preferred vendor and forwarded to” Alack. Id. Alack agreed to use Zabel’s “[a]ssignment of
all Marketing dollars from preferred vendor partners and vendors of the NAFED Buying Group”
“to have costs reduced so as to allow [Zabel] to obtain Benefits” of discounts on certain items
and access to certain marketing material, documents and software. Id. The licensing agreement
contained a non-compete clause. Id.
Alack filed this suit against Zabel and Lee, Robert and Andrew Zabel in the Twenty-First
Judicial District Court, Parish of Tangipahoa, State of Louisiana alleging that Zabel and the
individual defendants owe it $417,347.75 for restaurant and kitchen equipment and supplies
provided to Zabel by Alack, plus $365,589.91 in interest, as of January 22, 2015. Id. Alack
contends that contractual interest at a rate of 18% per annum continues to accrue daily, and that
all of the defendants are “severally and in solido” liable for the debt because Lee, Robert and
Andrew Zabel “are individual guarantors of The W.C. Zabel Company open account.” Id.
Alack filed an amended petition in which it alleged that the defendants owe it $115,000
in fees, plus interest, attorneys’ fees and the costs of these proceedings under the licensing
agreement. Id. Alack alleged that NAFED owed Zabel money, and Alack had “ownership and/or

2
“NAFED” stands for National Association of Food Equipment Dealers, Incorporated. It is a non-profit
buying cooperative of food equipment dealers whose members buy products through the cooperative to
obtain better prices with volume discounts, rebates and other monetary disbursements that are based on a
member’s purchases. Rec. Doc. 1-1.
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right of possession of the ‘funds’” pursuant to the licensing agreement. Id. Alack sought a Writ
of Sequestration, which was granted, and the funds were placed in the registry of the TwentyFirst Judicial District Court, Parish of Tangipahoa, State of Louisiana. Id.
Alack also filed a second amended petition in which it alleged that the defendants
violated the licensing agreement by engaging in a business that directly competed with Alack
within seventy-five miles of an Alack location. Id. Specifically, Alack alleges that, at the time
the licensing agreement was signed and for some time thereafter, Lee Zabel was employed by
SRE Culinary Equipment & Supplies Superstore (“SRE”), which is operated by Alack in
Sarasota, Florida. Id. Alack alleges that Lee Zabel used proprietary and confidential information
and trade secrets gained through the licensing agreement and his employment at SRE to operate
a competing business, Zabel’s South, within seven miles of SRE. Id. Also, in the second
amended petition, Alack alleges claims for violations of the Louisiana Unfair Trade Practices
Act (“LUTPA”), La. Rev. Stat. § 51:1401, et seq., tortious interference with business and
conspiracy to tortiously interfere with business, tortious interference with contract, detrimental
reliance, unjust enrichment, fraud and collusion, and misappropriation of trade secrets and other
confidential and proprietary information.3 Id.
Defendants removed the suit to the United States District Court for the Eastern District of
Louisiana alleging diversity subject-matter jurisdiction under 28 U.S.C. §1332.4 Rec. Doc. 1.
Thereafter, the individual defendants, Lee, Robert and Andrew Zabel, filed a motion to dismiss

3
  In the second amended complaint, Alack sought a temporary restraining order preventing defendants
from violating the non-compete agreement. Rec. Doc. 1-1. On March 9, 2015, the state district court
issued the temporary restraining order, which expired on March 19, 2015. Id.
4

    Section 1332 provides that this Court has subject-matter jurisdiction over any action that is between
citizens of different states where more than $75,000 is in controversy. 28 U.S.C. § 1332. Alack is a citizen
of Louisiana, and the defendants are citizens of Ohio and Florida. Rec. Doc. 1. Alack alleges on the face
of the complaint that more than $75,000 is in controversy. Rec. Doc. 1-1. Therefore, this court has
diversity subject-matter jurisdiction under 28 U.S.C. § 1332.

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for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil
Procedure. Rec. Doc. 11. Zabel filed a motion to dismiss for failure to state a claim under Rule
12(b)(6) of the Federal Rules of Civil Procedure, which seeks dismissal of Alcak’s claims for
fraud and collusion, tortious interference with a contract, breach of a non-compete covenant, and
interest due on an open account. Rec. Doc. 12. Alack filed a motion for partial summary
judgment regarding its claim for balance due on an open account, including interest payments.
Rec. Doc. 28. Also, Zabel filed a motion to strike exhibits 1, 2, and 3 to Alack’s motion partial
summary judgment, and Alack filed a motion to supplement its motion for partial summary
judgment with an additional affidavit. Rec. Docs. 38 and 39, respectively.
II.

Lee, Robert and Andrew Zabel’s Motion to Dismiss under Rule 12(b)(2)
A.

Standard of Review

Rule 12(b)(2) of the Federal Rules of Civil Procedure permits a motion to dismiss for
lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). When a defendant makes a motion under
Rule 12(b)(2), the plaintiff bears the burden of establishing personal jurisdiction. Pervasive
Software, Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214, 219 (5th Cir. 2012). If the court rules
on the motion without an evidentiary hearing, it “must accept as true the uncontroverted
allegations in the complaint and resolve in favor of the plaintiff any factual conflicts.” Stripling
v. Jordan Prod. Co., LLC, 234 F.3d 863, 869 (5th Cir. 2000) (quotation omitted). Thus, “the
plaintiff need only present a prima facie case of personal jurisdiction to satisfy its burden.” Id.
(citation omitted).
B.

Law and Analysis

Two requirements must be satisfied before a federal court sitting in diversity can exercise
personal jurisdiction over a non-resident defendant. Pervasive Software, 688 F.3d at 220. First,

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the exercise of personal jurisdiction must satisfy the Due Process Clause of the Fourteenth
Amendment to the Constitution of the United States. Id. Second, the forum state’s “long-arm
statute,” which can place additional jurisdictional limitations on courts, must also permit the
exercise of personal jurisdiction. Id. Because Louisiana’s long-arm statute extends the state’s
jurisdictional reach to the federal constitutional limit, the two requirements merge in this case.
See La. Rev. Stat. §13:3201(B); Luv n’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir.
2006).
Under the Due Process Clause of the Fourteenth Amendment, jurisdiction is proper over
any non-resident defendant that has “minimum contacts” with the forum state such that
“maintenance of the suit [would] not offend traditional notions of fair play and substantial
justice.” Int’l. Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)
(quotations omitted). Courts have explained that this standard is more difficult to satisfy where
the claims at issue do not arise from the defendant’s contacts with the forum state. Goodyear
Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853, 180 L.Ed.2d 796 (2011). Thus,
courts have essentially split International Shoe’s “minimum contacts” standard into two substandards. Id.
Whenever the plaintiff’s claims arise out of the non-resident defendant’s contacts with
the forum state, the case is in the realm of “specific jurisdiction.” Id. To establish personal
jurisdiction in this context, the plaintiff must show that: “(1) there are sufficient (i.e. not
‘random, fortuitous or attenuated’) pre-litigation connections between the non-resident defendant
and the forum; (2) the connection has been purposefully established by the defendant; and (3) the
plaintiff’s cause of action arises out of or is related to the defendant’s forum contacts.” Pervasive
Software, 688 F.3d at 221 (citations omitted). If the plaintiff clears this bar, the defendant then

6 

has the opportunity to show that maintenance of a suit would be unreasonable or unfair. Id. at
221-22.
Where the claims in the suit are unrelated to the defendant’s contacts with the forum
state, the plaintiff must satisfy a more stringent standard of “general jurisdiction.” See id. 230-31.
In this context, a non-resident defendant is only subject to the court’s jurisdiction where it has
such “continuous and systematic” contacts with the forum state so as to be “essentially at home”
in the state. Goodyear Dunlop, 131 S. Ct. at 2581.
A corporate defendant is not “essentially at home” in a forum state simply because it sells
products there. Id. at 2855-56, 57 n.6 (“Even regularly occurring sales of a product in a state do
not justify the exercise of jurisdiction over a claim unrelated to those sales.”). Under such a
“sprawling view” of jurisdiction, “any substantial manufacturer or seller of goods would be
amenable to suit . . . wherever its products are distributed.” Id. at 2856. Additionally, purchases
of products are not dispositive in this regard either. Id. (citing Helicópteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)).
Lee, Andrew and Robert Zabel argue that they are not subject to either specific or general
personal jurisdiction in Louisiana. Rec. Doc. 11. They argue that Alack has not alleged any
actions by them individually that would give rise to specific jurisdiction in Louisiana, and that
their signing a contract with Alack on Zabel’s behalf is not sufficient. Id. Further, they argue that
they have not engaged in continuous or systematic contacts with Louisiana in their individual
capacities sufficient to confer general jurisdiction. Id. Specifically, they point out that they do
not own any businesses in Louisiana, do not have any assets in Louisiana, have never solicited
business in Louisiana, do not have any employees in Louisiana, and have never paid taxes in
Louisiana. Id. They point out that their only connection with Louisiana is that a business that

7 

they own entered into a contract with a Louisiana business. Id. Lee, Andrew and Robert Zabel
also contend that requiring them to litigate this case in Louisiana would be unreasonable and
unfair due to the “burden and expense of travel.” Id.
Alack argues that Lee, Andrew and Robert Zabel are individually subject to specific
jurisdiction in Louisiana by virtue of the “defendants[’] . . . conduct in purchasing millions of
dollars in equipment from Alack over a four-year period, execution of a Louisiana licensing
agreement with a Louisiana choice of law provision, and extensive email to [Alack] in Louisiana
ordering additional purchases and agreeing to pay for its purchases establishing minimum
contacts.” Rec. Doc. 26.

Essentially, Alack argues that under either specific or general

jurisdiction, Lee, Andrew and Robert Zabel have failed to make a compelling case that the
exercise of jurisdiction is unreasonable or unfair. Id. Alack contends that Lee, Andrew and
Robert Zabel purposefully availed themselves of the benefits of doing business in Louisiana as
evidence by their signing the licensing agreement, and the “defendants” purchases from Alack
and emails agreeing to pay for those purchases. Id.
Alack has not established a prima facie case for the exercise of either specific or general
personal jurisdiction over Lee, Andrew and Robert Zabel. This case arises from the business
dealings between Alack and Zabel. Alack’s central asserted grievance is that it sold restaurant
equipment on credit to and entered into a licensing agreement with Zabel, and now Alack seeks
payment for the restaurant equipment and damages for breach of the licensing agreement. Rec.
Doc. 1-1. Throughout its opposition to defendants’ motion to dismiss, Alack confuses Zabel
with the individual defendants by using the ambiguous phrase “the Zabel defendants” in an
attempt to impute the actions of Zabel, the company, to the individual owners, Lee, Andrew and
Robert Zabel. Rec. Doc. 26. In fact, much of Alack’s memorandum addresses Zabel rather than

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then individual defendants. Id. All of the actions that Alack contends provide the minimum
contacts for the exercise of personal jurisdiction against the individual defendants, purchasing
equipment from Alack, entering into the licensing agreement with the Louisiana choice-of-law
provision, and emailing Alack to make purchases and agreeing to pay for them, were undertaken
on behalf of Zabel, not by the individual defendants in their personal capacities. Further, neither
Lee, Andrew nor Robert Zabel negotiated or signed the licensing agreement in Louisiana. Alack
has not shown any provision of the licensing agreement, or evidence in the emails or purchase
orders that obligates Lee, Andrew or Robert Zabel in their individual capacities, as opposed to
their official capacities as officers and shareholders of Zabel. See e.g. Howell v. Orleans Reg’l
Hosp. LLC, 217 F.3d 379, 385 (5th Cir. 2000) (“Corporations function as distinct legal entities,
separate from the individuals who own them, and their shareholders are not generally liable for
the debts of the corporation”). The court may not impute a Zabel’s contacts with Louisiana to
the individual defendants unless the court disregards the corporate entity. However, Alack has
not raised or proved any of the theories that would permit the court to disregard the separateness
of Zabel and the individual defendants. Further, all of the actions that Alack alleges that Lee
Zabel undertook occurred in Florida, and do not give rise to personal jurisdiction in Louisiana.
Because Alack has not established that Lee, Andrew or Robert Zabel, in their individual
capacities, had any contacts with Louisiana, this court cannot exercise either specific or general
personal jurisdiction over those defendants. Therefore, Lee, Andrew and Robert Zabel’s motion
to dismiss for lack of personal jurisdiction is GRANTED, and Alack’s claims against them are
DISMISSED WITHOUT PREJUDICE.

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III.

Zabel’s Motion to Dismiss under Rule 12(b)(6)
A.

Standard of Review

To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient
factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). On the other hand, a “pleading that
offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action will
not do.’” Id. (quoting Twombly, 550 U.S. at 556). If it is apparent from the face of the complaint
that there is an insuperable bar to relief, the claim must be dismissed. Jones v. Bock, 549 U.S.
199, 215, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007).
In considering a motion to dismiss for failure to state a claim, a district court may
consider only the contents of the pleading and the attachments thereto. Collins v. Morgan
Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citing FED. R. CIV. P. 12(b)(6)).
However, “[d]ocuments that a defendant attaches to a motion to dismiss are considered part of
the pleadings if they are referred to in the plaintiff’s complaint and are central to her claim.” Id.
at 498-99 (internal citations omitted).
B.

Fraud and Collusion

Complaints alleging fraud must comply with the particularity requirement under Rule
9(b) of the Federal Rules of Civil Procedure. To comply with Rule 9(b), “a party must state with
particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “Malice,
intent, knowledge, and other conditions of a person’s mind may be alleged generally.” Id. The

10 

objectives of Rule 9(b) are to ensure a complaint “provides defendants with fair notice of the
plaintiffs’ claims, protects defendants from harm to their reputation and goodwill, reduces the
number of strike suits, and prevents plaintiffs from filing baseless claims then attempting to
discover unknown wrongs.” U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th
Cir.2009). “Rule 9(b) requires, at a minimum, that a plaintiff set forth the ‘who, what, when,
where and how’ of the alleged fraud.” U.S. ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262,
266 (5th Cir.2010) (citation omitted). Rule 9(b) is applied with “bite” and “without apology,”
but it “ought not be read to insist that a plaintiff plead the level of detail required to prevail at
trial.” Grubbs, 565 F.3d at 185–86, 189.
In the Second Supplemental and Amending Petition, Alack alleges that Zabel committed
fraud and collusion as follows:
Defendants entered into the Licensing Agreement and Lee Zabel
gained employment with Alack in a concerted effort to commit
fraud upon Alack, and colluded with one another with the intent,
by misrepresentations and/or suppression of the truth, to obtain an
unjust advantage for them, and cause loss of inconvenience to
Alack.
Rec. Doc. 1-1.

Zabel argues that this paragraph is insufficient to allege fraud with the

particularity required by Rule 9(b). Rec. Doc. 12-1.
Alack argues that its fraud claim is not confined to the one paragraph, but encompasses,
by reference, all of the allegations contained in all three of the petitions. Rec. Doc. 27. Alack
argues that all of the allegations taken together plead fraud with enough specificity to satisfy
Rule 9(b). Id.
Alack’s fraud claim against Zabel relates to the licensing agreement. Under Louisiana
law, pleading a claim for fraud related to a contract requires: “(1) a misrepresentation,
suppression, or, omission of true information; (2) the intent to obtain an unjust advantage or to
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cause damage or inconvenience to another; and (3) the error induced by a fraudulent act must
related to a circumstance substantially influencing the victim’s consent to (a cause of) the
contract.” Shelton v. Standard/700 Assocs., 798 So.2d 60, 64 (La. 2001). In paragraphs 54
through 64 of the Second Supplemental and Amending Petition, Alack alleges Lee Zabel’s
employment relationship with it, that it did not know that Lee Zabel was CEO of Zabel until the
licensing agreement was signed, the competing business Zabel established thereafter, and that
part of the contract was that Zabel would receive confidential information. Rec. Doc. 1-1. These
allegations are sufficient to allege fraud under Louisiana law and Rule 9(b). Therefore, Zabel’s
motion to dismiss Alack’s fraud claim is DENIED.
C.

Tortious Interference with a Contract

In 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228, 234 (La. 1989), the Supreme Court of
Louisiana recognized a limited cause of action for tortious interference with contractual relations
that pertains “only a corporate officer’s duty to refrain from intentional and unjustified
interference with the contractual relation between his employer and a third person.” Generally,
the claim must be made against a corporate officer rather than a corporate entity in order to draw
a distinction between tort and contract liability. Id.; Tech. Control Sys., Inc. v. Green, 809 So.2d
1204, 1209 (La. Ct. App. 2002) (concluding that tortious interference with a contract should not
be expanded to include corporate entity defendants).
In its Second Supplemental and Amending Petition, Alack alleges that Lee Zabel caused
Zabel to breach the licensing agreement by engaging in a competing business, and that “[a] cause
of action lies against [Zabel] and its officers” for tortious interferences with a contract. Rec.
Doc. 1-1. Zabel moved to dismiss this claim against it, arguing that the claim does not lie
against the corporation itself.

Rec. Doc. 12-1.

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In its opposition memorandum, Alack

acknowledged that its tortious interference with a contract claim is brought against Lee Zabel,
not Zable. Rec. Doc. 27. Because the claim cannot be maintained against Zabel, Zabel’s motion
to dismiss Alack’s tortious interference with a contract claim is GRANTED, and that claim is
DISMISSED WITH PREJUDICE.
D.

Breach of a Non-Compete Covenant

The licensing agreement contains a non-compete provision which provides, in pertinent
part:
RESTRICTIVE COVENANTS; NON-COMPETION COVENANTS
A. The term “Competitor” shall refer to any person, firm,
corporation, partnership or other business entity engaged in or
about to become engaged in the production, licensing, sale or
marketing of any product or service;
(i) which is similar to or directly competitive with Licensor’s
proprietary work, computer software, or any product or
service of Licensor with which Licensee has been directly
concerned through its activities under this Agreement; or
(ii) with respect to which the Licensee has acquired Trade
Secret/Confidential Information.
B. As a material inducement to Licensor to enter into this
Agreement, Licensee acknowledges he shall receive valuable
information, benefits and specialized training by Licensor, and
therefore covenants and agrees that, for a period of two years
following the termination of this Agreement, whether such
termination be with or without cause, he shall not enter in a
contract or the employ of any competitor, nor (itself) himself
engage during that period, directly or indirectly as principal,
agent, officer, employee or otherwise, in any such business in
competition with Licensee, within a 75-mile radius of any area
in which Licensor is itself carrying on business at the time of
such termination of this Agreement or recruit or attempt to
recruit any of Licensor’s other employees. . .
Rec. Doc. 1-1. Alack alleges that Zabel violated this provision by operating a business in
competition with SRE in Florida. Id.
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Zabel argues that Alack’s claim for breach of this non-compete covenant must be dismiss
because Zabel did not violate its terms.

Rec. Doc. 12-1.

Zabel points to the language

highlighted above and argues that the non-compete agreement prohibits it from engaging in
business that competes with itself, the licensee, not Alack, the licensor. Id. In response, Alack
argues that the contract obviously contains a typographical error, and the rest of the non-compete
provision evidences the intent that Zabel would be prohibited from engaging in a business that
competes with Alack. Rec. Doc. 27. Zabel contends that Alack seeks reform of the contract that
Alack drafted, and Alack has not pleaded any facts demonstrating that it is entitled to reform of
the contract. Rec. Doc. 35.
Louisiana law provides the equitable remedy of contract reformation when “‘the
instrument recites terms to which neither party agreed.’” Phillips Oil Co. v. OKC Corp., 812
F.2d 265, 274 (5th Cir. 1987) (quoting Valhi, Inc. v. Zapata Corp., 365 So.2d 867, 870 (La. Ct.
App. 1978)). The error or mistake must be mutual, and the remedy “lies only to correct mistakes
or errors in the written instrument when such instrument, as written, does not express the true
contract or agreement of the parties.” Id. at 274-75 (quotations and citations omitted). The party
seeking reformation of the contract must establish mutual error or mistake by clear and
convincing proof, and parol evidence is admissible for this purpose. Id. at 275 (citations
omitted). The “critical period” for analyzing whether a mutual mistake was made “is the period
during which the proposed agreement at issue was reduced to writing and reviewed prior to the
signing.” Id. (citations omitted). In determining whether a mutual mistake was made, the court
should consider who wrote the agreement, who the parties were, whether the provision at issue
was central to the agreement and the efforts undertaken by the parties to review the written

14 

agreement. Id. Whether a mutual mistake was made so as to justify reforming the contract is a
fact question that must be resolved by reviewing the evidence in the record. Id.
In this case, there is no evidence in the record demonstrating whether or not reforming
the contract is warranted. Indeed, the question is before the court on a motion to dismiss before
any discovery has been conducted. Therefore, Zabel’s motion to dismiss Alack’s claim that
Zabel breached the non-compete clause based on the typographical error in the contract is
DENIED.
Zabel also argues that Alack’s claim that Zabel breached the non-compete clause should
be dismissed because non-compete clauses are void under Louisiana law. Rec. Doc. 12-1. Alack
argues that the law Zabel cites is not applicable to businesses dealing on equal footing. Rec. Doc.
27.
Louisiana Revised Statutes § 23:921 voids non-compete agreements unless they fall
under a number of exceptions enumerated in the statute. La. R.S. § 23:921. The Supreme Court
of Louisiana has held that § 23:921 applies only to employer-employee contracts, and that noncompetition and non-solicitation agreements are permitted “between two corporations on equal
footing.” La. Smoked Prods., Inc. v. Savoie’s Sausage and Food Prods., Inc., 696 So.2d 1373
(La. 1997). Zabel and Alack are two corporations on equal footing. Therefore, § 23:921 does
not apply, and Zabel’s motion to dismiss Alack’s claim that Zabel breached the non-compete
clause § 23:921 is DENIED.
E.

Interest Due on an Open Account

Zabel argues that Alack’s claim for interest due on an open account should be dismissed
because there is no evidence that Zabel agreed to pay 18% interest. Rec. Doc. 12-1. Zabel
contends that the licensing agreement does not provide for such interest and purports to be the

15 

entire agreement between the parties, thus there is no basis for Alack’s assessing 18% interest on
an open account. Id. Alack argues that the invoices it sent to Zabel regarding the goods Zabel
purchased state that such interest would be assessed, and that these invoices created an open
account that is separate from the licensing agreement. Rec. Doc. 27. In response, Zabel argues
that there is no evidence that it consented to the interest, that the relevant documents were sent to
Zabel or that Zabel received the products allegedly sold to it by Alack. Rec. Doc. 35.
Alack filed a motion for summary judgment5 regarding its open account claim. Rec.
Doc. 28. Alack argues that the affidavit of its president confirms the amount due as of January
22, 2015, is $782,931.66, and that interest continues to accrue at the rate of 1.5% per month.
Rec. Doc. 28-1 and 28-4 Alack also supports its motion with a list of invoices it sent to Zabel
indicating which were paid and which are outstanding. Rec. Doc. 28-5. Zabel opposes the
motion arguing that there is no agreement between Alack and Zabel for payment in accordance
with the terms and conditions set out on the invoices, and there is a genuine dispute as to the
amount Zabel owed related to the purchases. Rec. Doc. 41. Zabel also points out that some of
the invoices were sent to Zabel by SRE, which is not a party to this case, and that Alack has
failed to credit its account with rebates from NAFED, which would reduce any amount Zabel
may owe. Id. Further, Zabel argues that there is no evidence that it agreed to the 18% interest

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  The 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. P. 56(a). An issue is
material if its resolution could affect the outcome of the action, and a genuine issue 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, 106 S.Ct. 2502, 2510, 91 L.Ed.2d 202 (1986); Wyatt v. Hunt
Plywood Co., Inc., 297 F.3d 405, 408-09 (5th Cir. 2002). When considering a motion for summary
judgment, “the court must view the facts in the light most favorable to the non-moving party and draw all
reasonable inferences in its favor.” Deville v. Marcantel, 567 F.3d 156, 163-64 (5th Cir. 2009). Summary
Judgment cannot be defeated by “conclusory allegations, unsubstantiated assertions, or ‘only a scintilla of
evidence.’” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 399 (5th Cir.
2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).

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because the invoices are not signed, and that the interest is usurious, and thus forfeited under
Louisiana law. Id.
The arguments made by Zabel seeking to dismiss Alack’s claim for interest on the open
account claim, and Alack’s motion for partial summary judgment regarding the open account
claim are fact-intensive inquiries. Because the parties have not engaged in discovery, both
motions are DENIED as premature.
IV.

Conclusion
Accordingly,
IT IS HEREBY ORDERED that Lee Zabel’s, Robert A. Zabel’s, and Andrew L. Zabel’s

Motion to Dismiss Under Rule 12(b)(2) for lack of personal jurisdiction (Rec. Doc. 11) is
GRANTED, and plaintiff’s claims against them are DISMISSED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that The W.C. Zabel Company’s Motion to Dismiss
Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rec. Doc. 12) is GRANTED IN PART as
to plaintiff’s claim for tortious interference with a contract and, that claim is DISMISSED WITH
PREJUDICE. The motion is DENIED IN PART as to plaintiff’s claims for fraud and collusion,
breach of a non-compete covenant, and interest due on an open account.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Partial Summary Judgment on
its claim against The W.C. Zabel Company for the balance due on an open account, including
interest (Rec. Doc. 28), is DENIED.
IT IS FURTHER ORDERED that The W.C. Zabel Company’s Motion to Strike Exhibits
1, 2, and 3 to Plaintiff’s Motion for Partial Summary Judgment (Rec. Doc. 38) is DENIED.

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IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File an Additional
Affidavit of Correctness of Account in Support of Motion for Partial Summary Judgment (Rec.
Doc. 39) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File an Additional
Affidavit of Correctness of Account in Support of Motion for Partial Summary Judgment (Rec.
Doc. 39) is GRANTED.

New Orleans, Louisiana, this 7th day of December, 2015.

______________________________________
HELEN G. BERRIGAN
UNITED STATES DISTRICT JUDGE

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