Andretti Sports Marketing Louisiana, LLC v. NOLA Motorsports Host Committee, Inc. et al

Filing 40

ORDER granting in part and denying in part 23 Motion to Dismiss for Failure to State a Claim; granting 23 Motion for More Definite Statement. Signed by Judge Nannette Jolivette Brown. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ANDRETTI SPORTS MARKETING LOUISIANA,
LLC

CIVIL ACTION

VERSUS

NO. 15-2167

NOLA MOTORSPORTS HOST COMMITTEE,
INC., NOLA MOTOR CLUB, LLC, and LANEY
CHOUEST

SECTION: “G”(3)

ORDER
In this litigation, Plaintiff Andretti Sports Marketing Louisiana, LLC (“Andretti”) alleges
that it is owed money under a contract it entered into with Defendant NOLA Motorsports Host
Committee, Inc. (“NMHC”).1 Andretti alleges that Defendants NOLA Motor Club, LLC (“NOLA
Motor”) and Laney Chouest (“Chouest”) are also liable to it under Louisiana’s single-business
enterprise and alter-ego doctrines.2 Pending before the Court is NOLA Motor and Chouest’s “Rule
12(b)(6) Motion to Dismiss, and Alternative 12(e) Motion for More Definite Statement.”3 Having
reviewed the motion, the memoranda in support, the memorandum in opposition, the record, and the
applicable law, the Court will grant the motion in part and deny it in part.
I. Background
A.

Factual Background
In its complaint, Andretti alleges that this action arises out of a Racing Services Agreement

entered into by Andretti and NMHC, a non-profit formed on June 26, 2014.4 In 2014, Andretti

1

Rec. Doc. 1 at p. 1.

2

Id.

3

Rec. Doc. 23.

4

Rec. Doc. 1 at pp. 1, 10.

entered into negotiations with Chouest to bring the Verizon IndyCar Series to NOLA Motorsports
Park for the first ever Indy Grand Prix of Louisiana (“Event”).5 NOLA Motor owns and operates
NOLA Motorsports Park, which is a racing and events facility located outside of New Orleans.6
Chouest is the sole member of NOLA Motor.7
Andretti alleges that Chouest represented, on numerous occasions during the negotiations,
that he “personally stood behind the Event” and would make sure that its obligations were fully
funded for the first year of the Event.8 On July 6, 2014, Andretti and NMHC entered into the Racing
Services Agreement.9 Andretti alleges that it was advised that NMHC was formed because the State
of Louisiana had agreed to help fund the Event and the State required grant money to be received
by a non-profit.10 According to Andretti, NMHC agreed to pay Andretti $1,322,050 annually for its
management fee as well as for the event and service costs, regardless of the success of the race.11
Under the Agreement, Andretti was to provide management services for races to take place in the
years 2015, 2016 and 2017.12

5

Id. at p. 4.

6

Id.

7

Id. at p. 3.

8

Id. at p. 7.

9

Id. at p. 13.

10

Id. at p. 7.

11

Id. at p. 14.

12

Id. at p. 8.

2

On August 19, 2014, NMHC entered into a Cooperative Endeavor Agreement with the State
of Louisiana to allocate $4.5 million of state funds for the Event.13 Andretti alleges that
approximately $3.4 million of the money provided by the State of Louisiana went to capital
improvements in NOLA Motorsports Park and that this “deprived NMHC of needed capital to fulfill
its financial obligations.”14 The Event took place on April 10-12, 2015.15 It is alleged that there are
no funds to pay the balance of Andretti’s management fees or the event and service costs.16
B.

Procedural Background
On June 16, 2015, Andretti filed a complaint against NMHC, NOLA Motor, and Chouest

(collectively “Defendants”), alleging claims of breach of contract, unfair and deceptive trade
practices, unjust enrichment, and fraud.17 Andretti alleges that NOLA Motor and its sole member,
Chouest, are liable under Louisiana’s single business enterprise, alter-ego, unjust enrichment, and
fraud doctrines.18 On June 24, 2015, Andretti filed its “First Amended Complaint” to allege the
citizenship of parties identified in its original complaint.19
On July 30, 2015, Defendants NOLA Motor and Chouest together filed a “Rule 12(b)(6)
Motion to Dismiss, and Alternative 12(e) Motion for More Definite Statement.”20 The same day,

13

Id. at pp. 5–6.

14

Id. at p. 6.

15

Id. at p. 9.

16

Id.

17

Id. at p. 1.

18

Id.

19

Rec. Doc. 12.

20

Rec. Doc. 23.

3

Defendant NMHC filed a “Motion to Dismiss Under Rule 12(b)(6) for Failure to State a Claim.”21
On August 25, 2015, Andretti filed oppositions to both motions.22 NOLA Motor and Chouest filed
a reply memorandum, with leave of Court, on September 2, 2015.23 The Court heard oral argument
on both motions on September 2, 2015. Here, the Court considers only NOLA Motor and Chouest’s
motion to dismiss.
II. Parties’ Arguments
A.

NOLA Motor and Chouest’s Arguments in Support of Their Motion to Dismiss
NOLA Motor and Chouest move to dismiss Andretti’s claims for breach of contract, unfair

and deceptive trade practices, unjust enrichment and fraud.24
1.

Breach of Contract

NOLA Motor and Chouest first move to dismiss Andretti’s breach of contract claim,
asserting that Andretti is precluded from making the argument that NOLA Motor and Chouest are
liable under a single business enterprise or alter ego theory due to the terms of the Racing Services
Agreement.25 NOLA Motor and Chouest contend that, in the Agreement, Andretti conceded that
NMHC is “not an affiliate of NOLA Motor Club, LLC or any entity associated with the NOLA
Motorsports Park.”26 Furthermore, they contend that Andretti likewise sought its own provision that

21

Rec. Doc. 25.

22

Rec. Doc. 29; Rec. Doc. 30.

23

Rec. Doc. 35.

24

Rec. Doc. 23.

25

Rec. Doc. 23-1 at p. 7.

26

Id.

4

Andretti is not an affiliate of other entities with which it has some association and, therefore, the
provisions should be enforced for both parties.27
NOLA Motor and Chouest additionally argue that although Andretti claims that it relied
upon verbal statements by Chouest that he would “back” or “guarantee” the Event, the Racing
Services Agreement specifically states that by entering the agreement, Andretti was doing so without
relying on any other written or oral assurances or course of conduct.28 NOLA Motor and Chouest
also assert that the Agreement provides that it constitutes the complete agreement between the
parties.29 Furthermore, NOLA Motor and Chouest contend that Andretti stipulated in the “integration
provisions” of the Agreement that it would not consider the Agreement amended or modified in any
way by any other written or oral statement, assurance or course of practice, unless the modification
was in writing and signed by each duly authorized representative of Andretti and NMHC.30
NOLA Motor and Chouest assert that this claim is “clearly a contrivance after Andretti failed
to make the Event a financial success, which left [NMHC] unable to make the payments Andretti
desires.”31 They contend that Andretti recognized and accepted that the Event may not turn a profit
from which Andretti could be paid and that the Agreement, in fact, had a provision precluding
NMHC from terminating the Agreement if Andretti ran a deficit during the Event’s first two years.32

27

Id. at p. 5.

28

Id. at pp. 5–6.

29

Id. at p. 6.

30

Id.

31

Id. at p. 8.

32

Id.

5

NOLA Motor and Chouest contend that it was Andretti’s responsibility to manage the cash flow and
ensure that there would be sufficient money to timely pay all costs.33
Furthermore, NOLA Motor and Chouest argue that Andretti’s claim must fail because the
single business entity and alter ego theories require proof of a legal relationship, and no legal
relationship exists between themselves and NMHC as neither NOLA Motor nor Chouest are
shareholders, members, directors, or officers of the committee.34 NOLA Motor and Chouest
additionally maintain that the single business enterprise theory only applies to corporations and,
therefore, the breach of contract claim against Chouest should be dismissed.35
Finally, NOLA Motor and Chouest contend that Andretti has failed to plead sufficient facts
under either the single business enterprise or alter ego theories.36 They assert that the general rule
is that a “member of a corporation shall not be personally liable for any obligation of the
corporation.”37 They contend that the Supreme Court of Louisiana has established five factors for
courts to consider when determining whether to apply the alter ego doctrine: “(1) commingling of
corporate and shareholder funds; (2) failure to follow statutory formalities for incorporating and
transacting corporate affairs; (3) undercapitalization; (4) failure to provide separate bank
accounts and bookkeeping records; and (5) failure to hold regular shareholder and director
meetings.”38 NOLA Motor and Chouest argue that Andretti has only pled one of the factors,

33

Id.

34

Id. at p. 9.

35

Id. at pp. 9–10.

36

Id. at p. 10.

37

Id. (citing La. Rev. Stat. § 12:219.A).

38

Id. (citing Riggins v. Dixie Shoring Co., 590 So. 2d 1164, 1168 (La. 1992)).

6

undercapitalization, and that the allegation is “totally belied” by the agreement itself.39 They assert
that NMHC fulfilled its obligation to have $1 million in funds available to it in order to fund the
Event and even taking Andretti’s allegations as true that $3.4 million was used on track
modifications, NMHC still complied under the agreement to have $1 million available for the
Event.40 Furthermore, they argue that despite Andretti’s claims that Chouest undercapitalized
NMHC, it has not alleged any duty Chouest had to capitalize NMHC at all.41
Addressing Andretti’s claim under the single business enterprise theory, NOLA Motor and
Chouest argue that courts have listed 18 factors that will support a finding of a single business
enterprise:
(1) corporations with identity or substantial identity of ownership, that is, ownership
of sufficient stock to give actual working control; (2) common directors or officers;
(3) unified administrative control of corporations whose business functions are
similar or supplementary; (4) directors and officers of one corporation act in the
interest of the corporation; (5) corporation financing another corporation; (6)
inadequate capitalization; (7) corporation causing the incorporation of another
affiliated corporation; (8) corporation paying the salaries and other expenses or
losses of another corporation; (9) receiving no business other than that given to it
by its affiliated corporations; (10) corporation using the property of another
corporation as its own; (11) noncompliance with corporate formalities; (12) common
employees; (13) services rendered by the employees of one corporation on behalf of
another corporation; (14) common offices; (15) centralized accounting; (16)
undocumented transfers of funds between corporations; (17) unclear allocation of
profits and losses between corporations; and (18) excessive fragmentation of a single
enterprise into separate corporations.42

39

Id.

40

Id. at pp. 10–11.

41

Id. at p. 11.

42
Id. at p. 12 (citing Lee v. Clinical Research Ctr. of Fla., L.C., 2004-CA-0428 (La. App. 1 Cir. 11/17/04); 889
So. 2d 317, 322; Green v. Champion Ins., 577 So.2d 249, 257–58 (La. App. 1 Cir. 1991)).

7

NOLA Motor and Chouest assert that Andretti has pled “precious few” of the 18 factors that would
support the application of that theory.43
NOLA Motor and Chouest also address allegations made by Andretti regarding various
connections between the Defendants. NOLA Motor and Chouest contend that the fact that
Defendants lobbied for the involvement and financial contribution of the State of Louisiana provides
no basis for liability to be imposed.44 In addition, they argue that Andretti’s allegation that Chouest
“appointed” the five principals of NMHC is “nonsensical” because officers are appointed by a
company’s Board of Directors, and Andretti fails to allege that Chouest is even a director on the
Board.45 NOLA Motor and Chouest also maintain that, contrary to Andretti’s assertion, the fact that
Frank Csaki served as an accountant for NMHC and also holds the position of accountant for NOLA
Motor cannot serve as the basis for liability because “[i]f volunteering was the basis for liability
because it led to piercing corporate veils, host committees would cease to exist and the city would
never host another major sporting event.”46 NOLA Motor and Chouest also assert that the
connections alleged by Andretti that NMHC and NOLA Motor share the same lobbyist and real
estate agent are “quite remote.”47 NOLA Motor and Chouest finally address Andretti’s contention
that Chouest and Chouest-related entities benefitted from the Event, stating that “substantial rent is
overdue by [NMHC] to NOLA Motor,” which is “hardly a benefit.”48

43

Id.

44

Id. at p. 13.

45

Id.

46

Id. at p. 14.

47

Id.

48

Id. at p. 15.

8

2.

LUTPA

NOLA Motor and Chouest also move to dismiss Andretti’s claim under the Louisiana Unfair
Trade Practices and Consumer Protection Law (“LUTPA”), arguing that Andretti’s actual claim is
simply a breach of contract claim and that the case law is clear that LUTPA is not a substitute for
such a claim.49 NOLA Motor and Chouest argue that neither the breach of contract, nor Chouest’s
alleged unfulfilled promise to provide a guarantee of payments to Andretti, rise to the level of
egregiousness necessary to constitute a claim under LUTPA.50 In support, they cite a case from
another section of the Eastern District of Louisiana, Administrators of the Tulane Educational Fund
v. Biomeasure, Inc.,51 a Middle District of Louisiana case, Shaw Industries, Inc. v. Brett,52 and a
Louisiana First Circuit Court of Appeal case, Belle Pass Terminal, Inc. v. Jolin, Inc.53 Second, citing
Nursing Enterprises, Inc. v. Marr,54 a Second Circuit Court of Appeal case, they contend that to state
a claim under LUTPA, Defendants’ actions must have been taken with the specific purpose of
harming competition, which Andretti does not allege.55 Third, NOLA Motor and Chouest contend
that Andretti does not plead the special relationship required for a LUTPA claim.56

49

Id.

50

Id. at pp. 16, 18.

51

No. 08-5096, 2011 WL 3268108 (E.D. La. 2011) (Vance, C.J.).

52

884 F. Supp. 1054 (M.D. La. 1994)

53

618 So. 2d 1076 (La. App. 1 Cir. 1993).

54

No. 30, 776 (La. App. 2 Cir. 8/19/98); 719 So. 2d 524.

55

Rec. Doc. 23-1 at p. 15.

56

Id.

9

NOLA Motor and Chouest also move to dismiss the claim for treble damages, arguing that,
under LUTPA, treble damages are only awarded in cases where the party engages in an unfair or
deceptive method, act, or practice after being put on notice by the Attorney General.57 They contend
that those requirements are not met in this case.
3.

Unjust Enrichment

NOLA Motor and Chouest also move to dismiss Andretti’s claim for unjust enrichment.
First, citing II Fire Records, L.L.C v. Clouden,58 a Louisiana Fourth Circuit Court of Appeal case,
and Threadgill v. Orleans Parish School Board, a case from another section of the Eastern District
of Louisiana,59 they assert that unjust enrichment is not available when Plaintiff has another remedy,
here a breach of contract claim.60 Second, they contend that Andretti cannot allege the essential
element of unjust enrichment that defendants were “enriched without cause.”61
4.

Fraud

NOLA Motor and Chouest move to dismiss Andretti’s fraud claim on the grounds that
Andretti cannot plead the two essential elements of “duty to accurately disclose the information” and
proximate cause.62 Citing Becnel v. Grodner,63 a Louisiana Fourth Circuit Court of Appeal case, they
contend that Andretti has not pled a duty that Chouest had to guarantee the Racing Services

57

Id. at p. 20 (citing La. Rev. Stat. § 51:1409).

58

2006-0763 (La. App. 4 Cir 1/31/07); 951 So. 2d 1272.

59

No. 02-1122, 2013 WL 5560906 (E.D. La. Oct. 7, 2013) (Vance, C. J.).

60

Rec. Doc. 23-1 at p. 21.

61

Id.

62

Id. at p. 22.

63

2007-1041 (La. App. 4 Cir. 4/2/08); 982 So. 2d 891, 894–95.

10

Agreement.64 They assert that, even if Chouest at one time stated he would guarantee the Racing
Services Agreement, which he denies, “negotiations obviously changed” and Andretti signed the
Racing Services Agreement without that guarantee.65 Furthermore, they assert that the loss alleged
by Andretti is NMHC’s alleged failure to pay Andretti under the Racing Services Agreement, a loss
they contend was not caused by Chouest in any way.66
In the alternative, NOLA Motor and Chouest aver that Andretti should be required to
supplement its allegations with more specific facts as required by Federal Rule of Civil Procedure
9(b).67 They assert that Andretti has only stated that Chouest misrepresented his promise to
guarantee the Racing Services Agreement, but Andretti has not pled the time, place, the specific
content of each alleged misrepresentation, and the person to whom the misrepresentations were
made.68 They further aver that Andretti must also plead “malice, intent, knowledge, and other
conditions of the person’s mind” who made each misrepresentation.69
B.

Andretti’s Arguments in Opposition
1.

Breach of Contract

In opposition, Andretti argues that the contract provisions do not bar its argument that
Chouest and NOLA Motor acted as a single business entity and/or alter-ego.70 Andretti argues that

64

Rec. Doc. 23-1 at p. 23.

65

Id.

66

Id.

67

Id. at p. 24.

68

Id.

69

Id.

70

Rec. Doc. 30 at pp. 6–7.

11

the Racing Agreement provides that NMHC is not “an affiliate of NOLA Motor Club, LLC or any
entity associated with the NOLA Motorsport Park.”71 However, Andretti contends that it is not
claiming that Defendants acted as “affiliates,” but rather that they acted as one.72 Furthermore,
Andretti asserts that the integration clause does not preclude it from introducing evidence of fraud
and that many of the misrepresentations by Chouest occurred after the parties entered into the
Racing Services Agreement.73 Andretti also contends that it never agreed that it would be paid only
if the Event was profitable, and the Racing Services Agreement itself provided for payment in full,
regardless of the success of the event.74
Next, Andretti asserts that the failure to allege a legal relationship between NOLA Motor,
Chouest, and NMHC is not a bar to its claim because courts have held that no legal relationship is
necessary to extend the alter-ego theory or single business enterprise doctrine to individuals.75 In
addition, Andretti contends that the allegations are sufficient to support the application of these
doctrines.76 Andretti asserts that the factors to be considered in determining the existence of an alter
ego and whether two entities are a “single business enterprise” are similar and they include:
“common ownership, directors and officers, employees, and offices; unified control; inadequate
capitalization; noncompliance with corporate formalities, centralized accounting; unclear allocation
of profits and losses between corporations; one corporation paying the salaries, expenses or losses

71

Id.

72

Id.

73

Id. at p. 7.

74

Id.

75

Id. at p. 8.

76

Id. at p. 9.

12

of another corporation; and undocumented transfers of funds between entities,” with no one factor
being dispositive.77
Andretti asserts that it has made the following allegations in support of the application of the
single business enterprise and alter-ego doctrines: (1) NHMC and its offices and members were
controlled by NOLA Motor and Chouest; (2) during negotiations leading up to the execution of the
agreement and in subsequent dealings, NOLA Motor and Chouest controlled all of the named
entities and handled and/or controlled the dealings with Andretti; (3) NOLA Motor and Chouest
formed and undercapitalized NMHC with the intention of sheltering themselves from liability; (4)
the negotiations regarding the Event involved Chouest, his companies, and his agents, including
Michael Sherman (“Sherman”), who acted as Chouest’s representative and later served as a member
of NMHC; (5) Sherman and Kristen Engeron, President of NOLA Motorsports Park, were described
by Chouest to Andretti as “equity partners” in the Event; (6) NOLA Motor and Chouest allocated
$3.4 million of the money provided by the State of Louisiana for capital improvements to NOLA
Motorsports Park that was in excess of the amounts disclosed to Andretti; (7) Chouest was
personally involved in negotiating the terms of the Racing Services Agreement; (8) Chouest verbally
represented to Andretti that he personally stood behind the event and would insure that its
obligations were fully funded in the first year; (9) prior to the execution of the Agreement, Chouest
represented on multiple occasions that payment for Andretti’s services would be guaranteed through
the State of Louisiana’s appropriation and through Chouest’s own private investment; and (10) the
funds received from the State of Louisiana were instead set aside by Chouest to pay vendors who

77

Id. (citing Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 587 (5th Cir. 2010)).

13

performed capital improvements on the track in order to prevent the vendors from placing a lien on
the track.78
Furthermore, Andretti asserts that almost every officer of NMHC was a member of NOLA
Motor or acting as an agent of NOLA Motor and/or Chouest, NMHC had the same corporate office
as Chouest-related entities, and NMHC shared an accountant with Chouest-related entities.79
Andretti asserts that discovery will bear out that Chouest put personal funds into NMHC and/or
NOLA Motor to offset Event expenses and that money flowed between the Chouest-related entities
with poor financial discipline such that funds eventually landed into Chouest’s personal accounts.80
Finally, Andretti contends that NMHC was undercapitalized and that the Racing Services
Agreement was specifically premised on the promise that NMHC would receive an additional $4.5
million from the State, and that these funds would be used to pay Andretti rather than for the benefit
of NOLA Motor.81
2.

LUTPA

Andretti asserts that although LUTPA does not provide an alternative remedy for simple
breaches of contract, its LUTPA claim against NOLA Motor and Chouest “is not simply an
alternative to its breach of contract claim.”82 Andretti contends that NOLA Motor and Chouest were
not signatories to the Racing Services Agreement and the allegations are not limited to the

78

Id. at p. 10.

79

Id. at p. 11.

80

Id.

81

Id.

82
Rec. Doc. 30 at p. 13 (citing Tubos de Acero de Mexico, S.A. v. Am. Int’l Inv. Corp, Inc., 292 F.3d 471 (5th
Cir. 2002)).

14

contractual provisions of the Agreement.83 Nor is this “simply a case of Defendant Laney Chouest
failing to keep his promise to provide a guarantee of payments to [Andretti].”84
First, Andretti contends that Chouest and NOLA Motor engaged in deceptive, unethical,
oppressive and unscrupulous conduct sufficient to plead a claim under LUTPA. Andretti avers that,
prior to the execution of the Racing Services Agreement, Chouest represented that Andretti would
be compensated in full from the $4.5 million appropriated to NMHC by the State of Louisiana and
from Chouest’s personal investment.85 It contends that, after execution of the Agreement, Andretti
learned that NMHC did not have the funds to pay Andretti under the Agreement and Chouest had
no intention of personally covering the amounts owed to it as he had previously represented.86 In
addition, Andretti avers that Chouest used the state funds to benefit his race track rather than pay
Andretti.87 Andretti also contends that the assertion that the State of Louisiana required that funds
be distributed only to a non-profit corporation was inaccurate.88
Second, Andretti challenges NOLA Motor and Chouest’s assertion that in order to state a
claim under LUTPA, Chouest’s motive must have been “harm to competition.”89 Andretti contends
that the cases cited by NOLA Motor and Chouest are all distinguishable and, with the exception of
one case, all predate the Louisiana Supreme Court’s decision in Chemarie Services, Inc. v. Shell

83

Id.

84

Id. (internal quotations omitted).

85

Id. at p. 14.

86

Id.

87

Id.

88

Id.

89

Id.

15

Deepwater Production, which Andretti claims explicitly recognized standing under LUTPA for all
persons, not just business competitors.90
Third, citing J.M. Smith Corporation v. Ciolino Pharmacy Wholesale Distributors, LLC,91
a case from another section of the Eastern District of Louisiana, Andretti denies that a “special
relationship” is required under LUTPA.92 Andretti asserts that the Louisiana Supreme Court in
Cheramie Services, Inc. promulgated a two-prong test that did not require a special relationship.93
Andretti claims that the test requires that: “1) the person must suffer an ascertainable loss; and 2)
the loss must result from another’s use of unfair methods of competition and unfair or deceptive acts
or practices.”94 Andretti asserts that even if a special relationship is required, such a relationship
exists in this case because Andretti “was at the mercy of Chouest, who, because he controlled
[NMHC] was able to meddle and unduly interfere with [Andretti’s] rendering of services, and who
deceptively guaranteed he would personally fund the race to ensure [Andretti] would be paid.”95
Finally, Andretti contends that a challenge to its entitlement to treble damages is premature
because a determination of whether Defendants have continued to engage in unfair trade practices
since the date Andretti filed its complaint will be further developed during discovery and therefore
is not an appropriate issue for a 12(b)(6) motion.96

90

Id. (citing Cheramie Servs., Inc. v. Shell Deepwater Prod., 09-1633, p. 6 (La. 4/23/10); 35 So.3d 1053, 1057).

91

Nos. 10-1483; 10-786, 2012 WL 5493853 (E.D. La. Nov. 13, 2012) (Zainey, J.).

92

Rec. Doc. 30 at p. 17.

93

Id. at p. 16.

94

Id. at p. 17.

95

Id.

96

Id. at. pp. 17–18.

16

3.

Unjust Enrichment

Andretti asserts that its unjust enrichment claim is properly pled in the alternative under
Federal Rule of Civil Procedure 8, as the Court may find that no privity of contract exists between
Andretti, NOLA Motor, and Chouest under the Racing Services Agreement, “or because the contract
may be declared void due to fraud or error in the inducement.”97
4.

Fraud

In opposition to the motion to dismiss the fraud claim, Andretti asserts that it has pled both
duty and proximate cause.98 Andretti contends that a duty was created at the time Chouest
represented that payments due to Andretti under the Agreement would be met by allocation of funds
by the State and that “he, personally, would ensure the Event’s viability such that these funds from
the State grant were not otherwise spent to the detriment of [Andretti].”99 Andretti claims that
despite Chouest’s representations, “Chouest at all times intended to use this funding to protect
himself and his investment in [NOLA Motor].”100 Andretti contends that it was induced to enter into
the Racing Services Agreement directly by all of the defendants’ misrepresentations.101 Furthermore,
Andretti asserts that its loss was directly caused by Chouest’s misallocation of funds for his benefit
and to Andretti’s detriment and his failure to abide by his representation that he would personally
ensure the viability of the first year of the race.102

97

Id. at p. 21.

98

Id. at p. 22.

99

Id.

100

Id.

101

Id. at pp. 22–23.

102

Id.

17

In addition, Andretti asserts that it has sufficiently alleged the time, place, and identity of the
speakers of the alleged misrepresentations.103 Andretti contends that, in its complaint, it identified
the timing of the misrepresentation as “days prior to July 6, 2014,” and identified the people who
made the representations as Michael Sherman, Laney Chouest, and Kristin Engeron.104 Andretti
further contends that these representations were also made after the Racing Services Agreement was
executed.105
C.

NOLA Motor and Chouest’s Arguments in Further Support of Their Motion
In their reply, NOLA Motor and Chouest assert that Andretti “seriously misconstrues” the

Racing Services Agreement in its argument that NMHC was undercapitalized.106 NOLA Motor and
Chouest contend that although Andretti represented in its opposition that the Agreement specified
that the $4.5 million from the State would be used to pay Andretti, there was no such requirement
in the Agreement.107 Furthermore, NOLA Motor and Chouest assert that the “overwhelming weight
of the case law recognizes that for alter ego/[single business enterprise] claims, the individual
defendant must have some legal relationship with the company for which the plaintiff is seeking to
hold him liable . . . .”108
NOLA Motor and Chouest also assert that none of the paragraphs cited by Andretti in
support of their fraud claim state who the misrepresentations were made to, which is a clear

103

Id. at p. 24.

104

Id.

105

Id.

106

Rec. Doc. 35 at p. 2.

107

Id. at pp. 2–3.

108

Id. at p. 7.

18

requirement for pleading fraud.109 Finally, NOLA Motor and Chouest contend that the “vast weight
of the case law calls for dismissing the unjust enrichment claim because there are other claims
available to Andretti . . . .”110
IV. Law and Analysis
A.

Legal Standard on a Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) provides that an action may be dismissed “for

failure to state a claim upon which relief can be granted.”111 A motion to dismiss for failure to state
a claim is “viewed with disfavor and is rarely granted.”112 “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is
plausible on its face.’”113 “Factual allegations must be enough to raise a right to relief above the
speculative level.”114 A claim is facially plausible when the plaintiff has pleaded facts that allow the
court to “draw a reasonable inference that the defendant is liable for the misconduct alleged.”115
On a motion to dismiss, asserted claims are liberally construed in favor of the claimant, and
all facts pleaded are taken as true.116 However, although required to accept all “well-pleaded facts”

109

Id. at p. 2.

110

Id. at p. 7 (citing J.P. Mack Indus., LLC v. Mosaic Fertilizer, LLC, 970 F. Supp. 2d 516, 521 n.2 (E.D. La
2013) (Feldman, J.).
111

Fed. R. Civ. P. 12(b)(6).

112

Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

113

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2008)).

114

Twombly, 550 U.S. at 556.

115

Id. at 570.

116
Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993); see
also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007).

19

as true, a court is not required to accept legal conclusions as true.117 “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”118 Similarly,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements”
will not suffice.119 The complaint need not contain detailed factual allegations, but it must offer
more than mere labels, legal conclusions, or formulaic recitations of the elements of a cause of
action.120 That is, the complaint must offer more than an “unadorned, the defendant-unlawfullyharmed-me accusation.”121 From the face of the complaint, there must be enough factual matter to
raise a reasonable expectation that discovery will reveal evidence as to each element of the asserted
claims.122 If factual allegations are insufficient to raise a right to relief above the speculative level,
or if it is apparent from the face of the complaint that there is an “insuperable” bar to relief, the claim
must be dismissed.123
It is well-established that, in deciding whether to grant a motion to dismiss pursuant to Rule
12(b)(6), a district court may not “go outside the complaint.”124 There is one recognized exception
to that rule: a district court may consider documents attached to the motion to dismiss if they are

117

Iqbal, 556 U.S. at 677–78.

118

Id. at 679.

119

Id. at 678.

120

Id.

121

Id.

122

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009).

123

Moore v. Metro. Human Serv. Dep’t, No. 09-6470, 2010 WL 1462224, at * 2 (E.D. La. Apr. 8, 2010)
(Vance, C.J.) (citing Jones v. Bock, 549 U.S. 199, 215 (2007)); Carbe v. Lappin, 492 F.3d 325, 328 n. 9 (5th Cir. 2007).
124
Rodriguez v. Rutter, 310 F. App’x. 623, 626 (5th Cir. 2009); Carter v. Target Corp., 541 F. App’x. 413,
416–17 (5th Cir. 2013).

20

referred to in the complaint and are central to the claim.125 “In so attaching, the defendant merely
assists the plaintiff in establishing the basis of the suit, and the court in making the elementary
determination of whether a claim has been stated.”126 If, however, a district court considers other
information outside the complaint, it must treat the motion to dismiss as a motion for summary
judgment.127
B.

Applying Louisiana Law
When a federal court interprets a state law, it must do so according to the principles of

interpretation followed by that state’s highest court.128 In Louisiana, “courts must begin every legal
analysis by examining primary sources of law: the State’s Constitution, codes, and statutes.”129
These authoritative or primary sources of law are to be “contrasted with persuasive or secondary
sources of law, such as [Louisiana and other civil law] jurisprudence, doctrine, conventional usages,
and equity, that may guide the court in reaching a decision in the absence of legislation and
custom.”130 To make a so-called “Erie guess” on an issue of Louisiana law, the Court must “employ
the appropriate Louisiana methodology” to decide the issue the way that it believes the Supreme
Court of Louisiana would decide it.131 Although federal courts should not disregard the decisions

125

Id.; see also In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).

126

Carter, 541 F. App’x at 416.

127

Fed. R. Civ. P. 12(d); Rodriguez, 310 F. App’x at 626.

128

Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010); Gen. Elec.
Capital Corp. v. Se. Health Care, Inc., 950 F.2d 944, 950 (5th Cir. 1991).
129

Shaw Constructors v. ICF Kaiser Eng’rs, Inc., 395 F.3d 533, 547 (5th Cir. 2004).

130

Id. (quoting La. Civ. Code. art. 1 rev. cmt. b).

131

Id. (citation omitted).

21

of Louisiana’s intermediate courts unless they are “convinced that the Louisiana Supreme Court
would decide otherwise,” they are not strictly bound by them.132
C.

Breach of Contract Claim
NOLA Motor and Chouest argue that Andretti’s breach of contract claim should be

dismissed on four grounds: (1) the single business enterprise doctrine may not be applied to impose
liability on an individual; (2) there was no legal relationship between NOLA Motor, Chouest, and
NMHC and therefore there can be no single business enterprise; (3) the Racing Services Agreement
precludes Andretti’s claims; (4) Andretti has not pled sufficient facts to support an application of
either a single business enterprise or an alter ego theory; and (5) there was no legal relationship
between NOLA Motor, Chouest, and NMHC and therefore the defendants cannot be liable under
the alter ego doctrine.133 The Court will address each of these arguments in turn.
1.

Whether the Single Business Enterprise Doctrine May Be Applied to Impose
Liability on an Individual

In Brown v. ANA Insurance Group, the Louisiana Supreme Court explained that the single
business enterprise doctrine is “a theory for imposing liability where two or more business entities
act as one. Generally under the doctrine, when corporations integrate their resources in operations
to achieve a common business purpose, each business may be held liable for wrongful acts done in
pursuit of that purpose.”134 NOLA Motor and Chouest contend that the single business enterprise
doctrine applies only to corporations and therefore it may not be applied to Chouest individually.135

132

In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007).

133

Rec. Doc. 23-1 at pp. 9–10.

134

2007-2116 (La. 10/14/08); 994 So. 2d 1265, 1266 n.2 (citing Green v. Champion Ins. Co., 577 So. 2d 249
(La. App. 1 Cir. 1991)).
135

Rec. Doc. 23-1 at p. 9.

22

In support, they quote the Louisiana Fourth Circuit Court of Appeal in Lee v. Clinical Research
Center of Florida, L.C., explaining that “[w]hen a group of corporations integrate their resources
to achieve a common business purpose and do not operate as separate entities, each affiliated
corporation may be held liable for debts incurred in pursuit of the general business purpose.”136
Andretti does not respond to NOLA Motor and Chouest’s argument that the single business
enterprise cannot be applied to an individual.
The Louisiana Supreme Court has explained the single business enterprise is “a theory for
imposing liability where two or more business entities act as one.”137 Accordingly, as Chouest is an
individual, not a business entity, the Court finds that the single business enterprise doctrine may not
be applied to Chouest in order to hold him liable for the breach of contract.
2.

Whether There Can Be a Single Business Enterprise When There was No Legal
Relationship Between NOLA Motor, Chouest, and NMHC

NOLA Motor and Chouest also assert that they cannot be liable for NMHC’s debts under
the single business enterprise doctrine because in order for corporations to constitute a single
business enterprise there must be a legal relationship between the two corporations, and no such
relationship exists in this case.138 In opposition, Andretti contends that a claim premised on the
single business enterprise doctrine can survive absent any legal relationship.139

136

2004-0428 (La. App. 4 Cir. 11/17/04); 889 So. 2d 317, 323.

137

Brown v. ANA Ins. Grp., 2007-2116 (La. 10/14/08); 994 So. 2d 1265, 1266 n.2 (citing Green v. Champion
Ins. Co., 577 So. 2d 249 (La. App. 1 Cir. 1991)).
138

Rec. Doc. 23-1 at p. 9.

139

Rec. Doc. 30 at p. 9.

23

In support of their argument, NOLA Motor and Chouest cite Lee v. Clinical Research Center
of Florida, L.C.,140 a Louisiana Fourth Circuit Court of Appeal case.141 NOLA Motor and Chouest
do not explain how this case supports their assertion, stating, in a parenthetical, only that the “single
business enterprise theory would pierce corporate veil to impose corporate liability on parent
corporation.”142 In Lee, the court observed that the single business enterprise has been recognized
“as a vehicle for holding a group of affiliated entities responsible for the obligations of one of the
entities.”143 Although the court used the term “affiliated,” it did not further define or explain that
term. The court evaluated the connections between the several corporations alleged to constitute a
single business enterprise using the eighteen factors identified by the Louisiana First Circuit Court
of Appeal in Green v. Champion Ins. Co.144 as relevant to a determination of whether corporations
constitute a single business enterprise.145 The court in Lee found that although some of the factors
established in the Green case may have been present, including shared offices and the corporations
having a non-controlling member in common, “based on the totality of the evidence in the record,
there clearly were not enough factors present to create a genuine issue of material fact as to whether
the defendant entities constituted a single business enterprise.”146

140

2004-0428 (La. App. 4 Cir. 11/17/04); 889 So. 2d 317.

141

Rec. Doc. 23-1 at p. 9.

142

Id.

143

889 So. 2d at 323.

144

577 So.2d 249 (La. App. 1 Cir. 3/5/91).

145

Lee, 889 So. 2d at 322–27.

146

Id. at 328.

24

In opposition, Andretti cites a Louisiana First Circuit Court of Appeal case, Grayson v. R.B.
Ammon and Associates, Inc.,147 asserting that, in Grayson, the court found that, “[i]f one corporation
is wholly under the control of another, the fact that it is a separate entity does not relieve the latter
from liability. In such an instance, the former corporation is merely an alter ego or business conduit
of the latter.”148 In Grayson, Richard Ammon (“Ammon”) incorporated R.B. Ammon & Associates,
Inc. in order to supply temporary clerical and labor employees.149 Because the workers’
compensation coverage for the labor employees affected the overall workers’ compensation rates,
Ammon decided to separate its clerical and labor business and encouraged his nephew, Chevis
Comeaux (“Comeaux”), to form a new corporation to provide temporary labor employees.150
Comeaux formed CBC Temporary Staffing Services, Inc. (“CBC”) and was the sole stockholder.151
The court found that there was sufficient evidence to support the jury’s factual determination that
the two corporations constituted a single business enterprise.152 The court noted that the evidence
demonstrated that Ammon handled all the day-to-day operations for CBC, the two corporations
operated under the same trade name, they shared the same office and computer system, all of the
daily operations were handled by R.B. Ammon employees, and R.B. Ammon billed CBC’s clients
without CBC directly reimbursing R.B. Ammon for any of these services.153

147

1999-2597 (La. App. 1 Cir. 11/3/00); 778 So. 2d 1.

148

Rec. Doc. 30 at p. 8.

149

778 So.2d at 21.

150

Id.

151

Id.

152

Id. at 22.

153

Id.

25

Andretti also cites a case from another section of the Eastern District of Louisiana, Bona
Fide Demolition and Recovery, LLC v. Crosby Construction Company of Louisiana, Inc.154 Andretti
asserts that in Bona Fide Demolition and Recovery, LLC, the court noted that courts have “even
extended the [single business enterprise] theory to unaffiliated corporations that lack common
ownership . . . .”155 In Bona Fide Demolition and Recovery, LLC, the court found that although no
common ownership existed and there was no business relationship between the corporations,
considering the Green factors, the corporations constituted a single business enterprise.156 The court
noted that the two corporations used the same office space and shared the same resources, the
president of one of the corporations controlled the financial operations of both corporations, the
finances of the two corporations were intermingled, and one of the corporations did not observe
many corporate formalities that might indicate its separateness.157
Although, in Lee, the Louisiana Fourth Circuit Court of Appeal found that the single business
enterprise applies to “affiliated entities,” other courts have recognized that the doctrine can apply
to unaffiliated corporations.158 Furthermore, the cases cited by Andretti demonstrate that no formal
legal relationship, such as that of a parent corporation and its subsidiary, is required in order for a
single business enterprise to exist. Accordingly, NOLA Motor and Chouest’s motion to dismiss
Andretti’s breach of contract claim is denied on the grounds that a legal relationship is required
between NOLA Motor and NMHC in order for them to constitute a single business enterprise.

154

690 F. Supp. 2d 435 (E.D. La. 2010) (Vance, C.J.).

155

Rec. Doc. 30 at pp. 8–9 (citing Bona Fide Demolition and Recovery, LLC, 690 F. Supp. 2d at 445).

156

Bona Fide Demolition and Recovery, LLC, 690 F. Supp. 2d at 446.

157

Id. at 446–47.

158

Bona Fide Demolition and Recovery, LLC, 690 F. Supp. 2d at 445 (quoting Grayson, 778 So.2d at 14).

26

3.

Whether the Racing Services Agreement Precludes Andretti’s Breach of
Contract Claim

NOLA Motor and Chouest also assert that Andretti’s breach of contract claim must be
dismissed because the Racing Services Agreement precludes the claim.159 In support, NOLA Motor
and Chouest point to contractual provisions of the Racing Services Agreement.160 A district court
may consider documents attached to a motion to dismiss if they are referred to in the complaint and
are central to the claim.161 As the Racing Services Agreement was attached to NOLA Motor and
Chouest’s motion to dismiss and was referenced in Andretti’s complaint, the Court may consider
it in evaluating NOLA Motor and Chouest’s motion to dismiss.
In the Racing Services Agreement, the parties agreed that “NMHC is an independent nonprofit corporation” and that “NMHC is not an affiliate of [NOLA Motor] or any entity associated
with the Nola Motorsports Park.”162 The Agreement defined “affiliate(s)” as “(1) all business units
and divisions of a party or its parent entities, and (2) any entity controlled by, controlling, or under
common control with such party.”163 The Agreement provided that “[t]he board members, officers,
and agents of NMHC may, from time to time, serve in another capacity for [NOLA Motor] but such
service shall not create an affiliate relationship between NMHC and [NOLA Motor] or Nola
Motorsports Park.”164 In opposition, Andretti asserts that the Agreement does not preclude its breach
of contract claim against NOLA Motor and Chouest because “[Andretti] is not claiming that [NOLA
159

Rec. Doc. 23-1 at p. 6.

160

Rec. Doc. 23-2.

161

Id.; see also In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007).

162

Rec. Doc. 23-2 at p. 2.

163

Id. at p. 1.

164

Id. at p. 2.

27

Motor] and Chouest acted as ‘affiliates.’ [Andretti] claims that they acted as a single business entity
and/or alter-ego. In other words, they were not just associated or affiliated, they acted as one.”165
A contract has the effect of law for the parties and the words of a contract must be given their
generally prevailing meaning.166 “When the words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in search of the parties’ intent.”167
Where a contract is unambiguous, the interpretation of the contract becomes a matter of law.168
Andretti asserts that agreeing that NMHC and NOLA Motor are not affiliates is not the same
as agreeing that they are not a single business enterprise. However, by signing the Racing Services
Agreement, which provided that NMHC is not an affiliate of NOLA Motor, Andretti was agreeing
that NMHC was not controlled by NOLA Motor because “affiliate” was defined, in part, as “any
entity controlled by . . . such party.” Accordingly, the Racing Services Agreement precludes Andretti
from arguing, as Andretti does in its complaint, that NMHC and NOLA Motor constituted a single
business enterprise because “NMHC and its officers and members, were controlled by Defendants,
[NOLA Motor] and Chouest.”169
The Agreement also states that the fact that board members, officers, and agents of NMHC
may serve in another capacity for NOLA Motor will not create an affiliate relationship between

165

Rec. Doc. 30 at pp. 6–7.

166

La. Civ. Code arts. 1983, 2047.

167

La. Civ. Code art. 2046.

168

Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483, 486 (5th Cir.1983).

169

Rec. Doc. 1 at p. 3.

28

NMHC and NOLA Motor.170 Therefore, Andretti may not rely upon the commonality of directors,
officers, or employees as the basis for arguing that NMHC was controlled by NOLA Motor either.
There are several factors that may be considered in a determination of whether a single
business enterprise exists and no one factor is dispositive.171 Therefore the Racing Services
Agreement’s provision that NMHC is not an affiliate of NOLA Motor, as has been defined by the
parties as “all business units and divisions of a party or its parent entities” and “any entity controlled
by, controlling, or under common control with such party,” does not necessarily preclude a finding
that the two constituted a single business enterprise. Accordingly, the Court will turn to NOLA
Motor and Chouest’s argument that Andretti has failed to plead sufficient facts to support an
application of the single business enterprise doctrine.
4.

Whether Andretti Has Pled Sufficient Facts to Support an Application of the
Single Business Enterprise Doctrine

The single business enterprise doctrine was first applied in Louisiana in Green v. Champion
Insurance Co.172 In Green, the court identified eighteen factors to be used to determine whether a
group of entities constitute a “single business enterprise,” noting that no one factor is dispositive of
the issue.173 These factors are:
1. corporations with identity or substantial identity of ownership, that is, ownership
of sufficient stock to give actual working control; 2. common directors or officers;
3. unified administrative control of corporations whose business functions are similar
or supplementary; 4. directors and officers of one corporation act independently in
the interest of that corporation; 5. corporation financing another corporation; 6.
inadequate capitalization (“thin incorporation”); 7. corporation causing the

170

Rec. Doc. 23-2 at p. 2.

171

Green v. Champion Ins. Co., 577 So. 2d 249 (La. App. 1 Cir. 1991).

172

577 So. 2d 249 (La. App. 1 Cir. 1991).

173

Id. at 257.

29

incorporation of another affiliated corporation; 8. corporation paying the salaries and
other expenses or losses of another corporation; 9. receiving no business other than
that given to it by its affiliated corporations; 10. corporation using the property of
another corporation as its own; 11. noncompliance with corporate formalities; 12.
common employees; 13. services rendered by the employees of one corporation on
behalf of another corporation; 14. common offices; 15. centralized accounting; 16.
undocumented transfers of funds between corporations; 17. unclear allocation of
profits and losses between corporations; and 18. excessive fragmentation of a single
enterprise into separate corporations.174
Andretti treats the single business enterprise and alter ego doctrines as one. Citing the Fifth
Circuit in Jackson v. Tanfoglio Giuseppe, S.R.L,175 Andretti asserts that the factors to be considered
in determining the existence of an alter ego and whether there is a single business enterprise are
similar.176 Andretti asserts that the factors “include, but are not limited to[:] common ownership,
directors and officers, employees, and offices; unified control; inadequate capitalization; noncompliance with corporate formalities; centralized accounting; unclear allocation of profits and
losses between corporations; one corporation paying the salaries, expenses, or losses of another
corporation; and undocumented transfers of funds between entities” but that “[n]o one factor is
dispositive.”177 Andretti contends that its allegations are sufficient to support the application of the
single business enterprise and alter-ego doctrines.178 Although Andretti identifies several allegations
in its complaint in support of its application of these doctrines, Andretti has failed to identify, in
either its opposition to the motion to dismiss or at oral argument, how its allegations support the
factors it asserts are to be considered in determining the existence of a single business enterprise.

174

Id. at 257–58.

175

615 F.3d 579, 587 (5th Cir. 2010).

176

Rec. Doc. 30 at p. 9.

177

Id. (quoting Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 587 (5th Cir. 2010)).

178

Rec. Doc. 30 at p. 9.

30

Andretti first points to several allegations it made in its complaint that appear to fall within
the category of “common ownership, directors and officers, employees, and offices.”179 Andretti
contends that “almost every officer of NMHC was, in fact, a member of [NOLA Motor] or acting
as an agent of [NOLA Motor] and/or Chouest in their dealings, NMHC had the same corporate
office as the other Chouest related entities, including [NOLA Motor], and that NMHC shared an
accountant with [NOLA Motor] and the Chouest related entities.”180 Andretti specifically alleges that
Chouest appointed three of the officers of NMHC, the President of NOLA Motor, Kristen Engeron,
a lobbyist for Chouest, Michael Sherman, and a real estate listing agent for NOLA Motor, Delisha
Boyd.181 Andretti also alleges that Michael Sherman acted as Chouest’s representative during the
negotiations and later served as a member of NMHC and that both Sherman and Engeron “were
described by Chouest to [Andretti] as ‘equity partners’ in the Event.”182 Andretti further asserts that
“[d]iscovery will also reveal that any distinction between Michael Sherman and Kristen Engeron’s
roles as directors of NMHC and their roles as employees of [NOLA Motor] and/or Chouest is a legal
fiction.”183
Next, Andretti appears to assert that there was “unified control” of NMHC by NOLA Motor
and Chouest.184 Andretti alleged in its complaint that “NMHC and its officers and members, were

179

Id. at p. 10.

180

Rec. Doc. 30 at p. 11 (citing Rec. Doc. 1 at pp. 10–11).

181

Rec. Doc. 1 at p. 10.

182

Id. at pp. 4–5.

183

Rec. Doc. 30 at p. 11.

184

Id.

31

controlled by Defendants, [NOLA Motor] and Chouest.”185 Andretti also alleges that NOLA Motor
and Chouest “controlled all of the named entities and handled and/or controlled the dealings with
[Andretti]” during the negotiations for Racing Services Agreement and in subsequent dealings.186
On a motion to dismiss, the Court is required to take all well-pleaded facts as true, but “mere
conclusory statements” are not sufficient.187 Andretti has not provided any factual support for its
conclusion that NMHC and its members were “controlled” by either NOLA Motor or Chouest. Nor
has Andretti provided factual support for its assertion that the “distinction between Michael Sherman
and Kristen Engeron’s roles as directors of NMHC and their roles as employees of [NOLA Motor]
and/or Chouest is a legal fiction.”188 Furthermore, as discussed above, Andretti agreed in the Racing
Services Agreement that NMHC was not controlled by NOLA Motor. Therefore, the Court finds that
Andretti has failed to plead sufficient facts to demonstrate that there was “unified control.”
Andretti also alleges that “NMHC was undercapitalized, inadequately capitalized, and thinly
incorporated such that it was insufficiently funded, and had insufficient capital to support its
operations.”189 In its opposition, Andretti contests NOLA Motor and Chouest’s claim that the
Agreement set forth NMHC’s capitalization requirement at $1 million.190 It appears that Andretti’s
argument as to undercapitalization is based upon its assertion that “the Racing Services Agreement
was specifically premised on the agreement that NMHC would receive an addition [sic] $4.5 million

185

Rec. Doc. 1 at p. 3.

186

Id.

187

Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009).

188

Rec. Doc. 30 at p. 11.

189

Rec. Doc. 1. at p. 12.

190

Rec. Doc. 30 at p. 11.

32

dollars from the State, and that these funds would be used to pay [Andretti] and not for the benefit
of [NOLA Motor].”191 At oral argument, however, Andretti acknowledged that the contract was
silent as to how the $4.5 million was to be spent. Accordingly, the Court finds that Andretti has
failed to plead sufficient facts to demonstrate that NMHC was undercapitalized.
Andretti also asserts that “discovery will bear out that Chouest put personal funds into
NMHC and/or [NOLA Motor] to offset Event expenses, and that money flowed between the
Chouest-related entities with poor financial discipline such that the funds eventually landed in the
accounts of most importance to Chouest personally, and his Motorsports Park – into which Chouest
has sunk a king’s ransom.”192 However, Andretti does not make any factual allegations in its
complaint to support this assertion. If such factual allegations existed, perhaps they could support
the factor that “one corporation [was] paying the salaries, expenses, or losses of another
corporation.” Although Andretti asserts that it can obtain this information in discovery, Andretti
does not provide any further explanation regarding how it believes that discovery will bear this out.
Furthermore, Andretti’s assertion that Chouest put his own personal funds into NMHC cannot
support a finding of single business enterprise between NMHC and NOLA Motor. Therefore, the
Court finds that Andretti has failed to plead sufficient facts to show that there was an unclear
allocation of profits and losses between NMHC, NOLA Motor, and Chouest.
Andretti also alleges that Chouest was actively involved in negotiating the terms of the
Racing Services Agreement and that he verbally represented to Andretti that he personally stood

191

Id.

192

Id.

33

behind the event and would insure that its obligations were fully funded in the first year.193
Furthermore, Andretti alleges that Chouest represented that payment for Andretti’s services would
be guaranteed through the State of Louisiana’s appropriation and Chouest’s own private investment,
but that the funds received from the State were instead set aside by Chouest to pay vendors who
performed capital improvements to the track.194 Andretti does not explain how these allegations
support any of the factors or how these allegations support a finding that NOLA Motor and NMHC
together constitute a single business enterprise.
Considering Andretti’s allegations and the factors to be considered in determining the
existence of a single business enterprise, the Court finds that the only factor that Andretti has
sufficiently pled is that NMHC and NOLA Motor had in common certain directors, officers,
employees, and offices. The significance of this factor, however, is undermined by the fact that
NMHC is a non-profit corporation staffed on a volunteer basis.195 NOLA Motor and Chouest assert,
and Andretti does not contest, that NMHC performed its work with “100% volunteerism.”196
Therefore, this is not a case where one corporation was paying the salaries of another corporation’s
employees. Nor can this factor be used to support any inference of control of NMHC by NOLA
Motor, pursuant to the provisions of the Racing Services Agreement.
In Lee v. Clinical Research Center of Florida, L.C.,197 a case from the Louisiana Fourth
Circuit Court of Appeal, the plaintiff filed suit against several entities for breach of an employment

193

Rec. Doc. 1 at p. 7.

194

Id. at p. 8.

195

Rec. Doc. 23-2 at p. 1.

196

Rec. Doc. 23-1 at p. 13.

197

2004-0428 (La. App. 4 Cir. 11/17/04); 889 So. 2d 317.

34

contract, alleging that the entities were operating as a single business enterprise.198 On the motion
for summary judgment, in evaluating the relationship between the companies CRC Florida and
Florida Medical Management, the court found that Florida Medical Management’s acquisition of
a non-controlling interest in the company and documented, interest-accruing loans to CRC Florida
were not sufficient to establish that CRC Florida and Florida Medical Management were operating
as a single business enterprise.199 The court also looked to the relationship between the companies
CRC Mississippi and CRC Florida, which shared a member with a non-controlling interest in both
companies.200 The court found that the evidence showed that CRC Mississippi had maintained its
own bank accounts, paid its own expenses and taxes, and that there was no evidence other than the
common member of any of the other factors identified in Green as relevant to a single business
enterprise analysis. As in Lee, here, the only factor Andretti has sufficiently pled in support of its
assertion that NOLA Motor and NMHC constituted a single business enterprise is common
directors, officers, employees, and office.
Andretti urges the Court to deny the motion to dismiss, arguing that in considering the
factual allegations, the Court must “draw on [its] judicial experience and common sense, to analyze
whether those facts, which need not be detailed and specific, allow the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged [under the single business
enterprise/alter ego doctrine].”201 Andretti contends that in Diamond Services Corporation v.

198

Id. at 322.

199

Id. at 327.

200

Id. at 326.

201
Rec. Doc. 30 at p. 9 (quoting Diamond Servs. Corp. v. Oceanografia, S.A. DE C.V., No. 10-cv-00177, 2011
WL 938785, at *3 (W.D. La. Feb. 9, 2011)).

35

Oceanografia, S.A. DE C.V., an unpublished case from the Western District of Louisiana, the
magistrate judge denied the motion to dismiss a claim based upon the application of the single
business enterprise doctrine.202 Andretti avers that the court reasoned that if specific details
regarding accounting, allocation and corporate governance issues were required to be specifically
pled at the motion to dismiss stage, essentially no case of this type could ever survive a motion to
dismiss, because the necessary facts would be in the sole possession of the defendant.203 In that case,
however, the court had found that the plaintiff had sufficiently pled several of the factors recognized
by the Fifth Circuit in Jackson v. Tanfoglio Giuseppe, S.R.L.204 as factors to be considered in
determining whether a single business enterprise existed, including the existence of common
ownership, directors, and officers, unified control, and that one of the companies had paid some
debts and expenses owed by the other.205 Here, the Court finds that Andretti has only sufficiently
pled, at most, one of these factors.
Accordingly, the Court finds that Andretti has failed to sufficiently plead that NOLA Motor
and NMHC constitute a single business enterprise. Next, the Court will address whether Andretti
has stated claims for breach of contract against NOLA Motor and Chouest pursuant to the alter ego
doctrine.

202

Id.

203

Diamond Servs. Corp., 2011 WL 938785 at *6.

204

615 F.3d 579 (5th Cir. 2010).

205

Diamond Servs. Corp., 2011 WL 938785 at *5.

36

5.

Whether the Alter Ego Doctrine May Be Applied to Impose Liability When
There is No Legal Relationship Between NOLA Motor, Chouest, and NMHC

NOLA Motor and Chouest contend that they cannot be held liable for breach of contract
under the alter ego doctrine because in order for the doctrine to apply, Andretti must allege a legal
relationship between NMHC, NOLA Motor, and Chouest and no such relationship exists.206 NOLA
Motor and Chouest assert that they are not shareholders, members, directors, or officers of
NMHC.207 In opposition, Andretti asserts that no legal relationship is necessary to apply the alter ego
doctrine.208
In Riggins v. Dixie Shoring Company, Inc., the Louisiana Fourth Circuit Court of Appeal
found that the purpose behind the “piercing the corporate veil” and “alter ego” doctrines is to
“protect a creditor in his dealings with a shareholder who fails to distinguish, in transactions,
between the corporation and his identity as a shareholder.”209 In Riggins, the plaintiffs originally
filed suit against Dixie Shoring Company, Inc. (“Dixie”), with which they had contracted to have
their house leveled.210 During the litigation, however, Dixie filed bankruptcy pleadings and the
plaintiffs subsequently amended their petition to include as defendants O.P. Bajoie, a major
shareholder in Dixie, along with his son, Reginald Bajoie, an employee and officer at the
company.211 The Fourth Circuit Court of Appeal held that the alter ego doctrine was applicable only

206

Rec. Doc. 23-1 at p. 9.

207

Id.

208

Rec. Doc. 30 at p. 8.

209

577 So. 2d 1060, 1065 (La. App. 4 Cir. 1991), rev’d on other grounds, 590 So. 2d 1164.

210

Id. at 1061.

211

Id.

37

against shareholders of a corporation, and therefore found that Reginald Bajoie, who was an
employee and officer of the company, but not a shareholder, could not be held liable under the alter
ego doctrine.212 The court found that the trial court had not erred, however, in piercing the corporate
veil and finding O.P. Bajoie, Dixie’s major shareholder, individually liable to the plaintiffs.213 The
case was appealed to the Louisiana Supreme Court.
The Louisiana Supreme Court noted that the Fourth Circuit Court of Appeal had
“exonerated” Reginald Bajoie, but the court analyzed only the Fourth Circuit Court of Appeal’s
affirmation of the district court ruling that O.P. Bajoie could be held individually liable to the
plaintiffs under the alter ego doctrine.214 The Louisiana Supreme Court noted that under Louisiana
law, “[t]he general rule [is] that corporations are distinct legal entities, separate from the individuals
who comprise them.”215 However, where a corporation is simply the “alter ego” of the shareholder,
the Louisiana Supreme Court stated, the corporate veil may be pierced.216 The court noted that the
alter ego doctrine “usually involved situations where fraud or deceit has been practiced by the
shareholder acting through the corporation;” however, “[a]nother basis for piercing the corporate
veil is when the shareholders disregard the requisite corporate formalities to the extent that the
corporation ceases to be distinguishable from its shareholders.”217 The court stated that “[b]ecause
of the beneficial role of the corporate concept, the limited liability attendant to corporate ownership

212

Id. at 1065.

213

Id.

214

Riggins v. Dixie Shoring Co., 590 So. 2d 1164, 1166 (La. 1991).

215

Id. at 1167.

216

Id. at 1168.

217

Id.

38

should be disregarded only in exceptional circumstances.”218 The Louisiana Supreme Court
identified several factors that courts may consider when determining whether to apply the alter ego
doctrine: “1) commingling of corporate and shareholder funds; 2) failure to follow statutory
formalities for incorporating and transacting corporate affairs; 3) undercapitalization; 4) failure to
provide separate bank accounts and bookkeeping records; and 5) failure to hold regular shareholder
and director meetings.”219 The Louisiana Supreme Court reversed the Fourth Circuit Court of
Appeal, holding that O.P. Bajoie could not be individually liable under the alter ego doctrine.220 The
court reasoned that there was no evidence that O.P. Bajoie had used the corporate form to perpetrate
fraud, and that although some corporate formalities were not strictly followed, the Bajoies had
followed most of the essential corporate formalities for the twenty-three years of the corporation’s
existence.221
In opposition, Andretti cites Middleton v. Parish of Jefferson, a Louisiana Fifth Circuit Court
of Appeal case.222 At issue in Middleton was “whether a corporate official can avoid an exception
of res judicata by bringing, in his individual capacity, a suit already litigated on behalf of the
corporation.”223 The court found that “[a]lthough it is alleged that Mr. Middleton is not a shareholder
of [the corporation], shareholder status is not the only element used in determining if veil piercing

218

Id.

219

Id.

220

Id. at 1172.

221

Id. at 1169.

222

97-324 (La. App. 5 Cir. 1/14/98); 707 So. 2d 454.

223

Id. at 455.

39

is appropriate.”224 The court held that veil piercing “must be used in this instance not to impose
personal liability on Mr. Middleton but to prevent his use of subversive tactics to take an unjust
advantage of a legal distinction. Allowing a corporate official to bring suit in his individual capacity,
solely for the purpose of avoiding an exception to res judicata, would be an unjust result.”225 As
NOLA Motor and Chouest, correctly assert, however,226 Middleton was the president of the
corporation and therefore a legal relationship existed in that case.227 The court in Middleton
referenced the Fourth Circuit Court of Appeal decision in Riggins, but noted that in Withers v.
Timber Products, Inc., another case cited by Andretti, the Louisiana Third Circuit Court of Appeal
also pierced the corporate veil to hold liable a person who was not formally a shareholder in the
pierced corporation.228
In Withers, the trial court had held that defendant John Makar (“Makar”) was acting as the
alter ego of defendant Timber Products, Inc.229 On appeal, the Third Circuit Court of Appeal noted
that Makar was the sole stockholder and officer at the time of Timber Products, Inc.’s incorporation,
but that Makar had testified that he had “swapped” one hundred percent of the stock of Timber
Products, Inc. to a judgment-proof individual in exchange for property.230 Therefore, at the time the
plaintiff sought to pierce the corporate veil, Makar was no longer a stockholder of Timber Products,

224

Id. at 456.

225

Id. at 457.

226

Rec. Doc. 35 at p. 6.

227

Middleton, 707 So. 2d at 455.

228

Id. (citing Withers v. Timber Prods., Inc., 574 So. 2d 1291 (La. App. 3 Cir. 2/6/91)).

229

Withers, 574 So. 2d at 1293.

230

Id. at 1295.

40

Inc. The Third Circuit Court of Appeal noted that the trial judge had found that the alleged transfer
of stock was “nothing more than a sham transfer in an attempt by Makar to avoid exposure for
worker’s compensation liability” and held that the trial judge had not clearly erred in finding Timber
Products, Inc. to be the alter ego of Makar.231
The Louisiana Supreme Court has noted that “[p]iercing the corporate veil is largely a
jurisprudential doctrine.”232 In Ogea v. Merritt, the Louisiana Supreme Court noted that
Louisiana courts have allowed a piercing of the corporate veil under two exceptional
circumstances, namely, where the corporation is an alter ego of the shareholders and
the shareholders have used the corporation to defraud a third party (the “alter ego”
doctrine) and where the shareholders have failed to conduct a business on a
“corporate footing” to such an extent that the corporation ceases to be
distinguishable from its shareholders.233
None of the cases cited by Andretti support its contention that the alter ego doctrine may be applied
to an individual or entity who, as the facts here present, has never been a shareholder or officer of
the company whose veil the plaintiff seeks to pierce. The Court will not extend the alter ego doctrine
beyond its application in Louisiana courts. Accordingly, in light of the decisions of the Louisiana
Supreme Court and the Louisiana Circuit Courts of Appeal, the Court finds that the alter ego
doctrine may not be applied to NOLA Motor and Chouest, who are not alleged to have been officers,
directors, or shareholders of NMHC, in order to pierce the corporate veil in this case.
Having found that Andretti has failed to state claims for breach of contract against Chouest
and NOLA Motor pursuant to either the alter ego or the single business enterprise doctrines, the
Court grants NOLA Motor and Chouest’s motion to dismiss Andretti’s breach of contract claims.
231

Id. at 1295–96.

232

Ogea v. Merritt, 2013-1085 (La. 12/10/13); 130 So. 3d 888, 895.

233
Id. at 895 n.4 (emphasis added) (quoting Charming Charlie, Inc. v. Perkins Rowe Assocs., 2011-2254 (La.
App. 1 Cir. 7/10/12); 97 So. 3d 595, 598).

41

D.

LUTPA Claim
NOLA Motor and Chouest assert that Andretti’s claim under LUTPA should be dismissed

because: (1) Andretti does not allege, as it must under LUTPA, that NOLA Motor and Chouest took
the alleged wrongful actions with the specific purpose of harming competition; (2) Andretti has not
alleged the special relationship required for a claim under LUTPA; and (3) Andretti’s claim is
simply for breach of contract and LUTPA does not provide a substitute for a breach of contract
claim.234 The Court will address each of these arguments in turn.
LUTPA, Louisiana Revised Statute § 51:1401, declares unlawful “[u]nfair methods of
competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
LUTPA affords a cause of action to any natural or juridical person “who suffers any ascertainable
loss of money or moveable property, corporeal or incorporeal, as a result of the use or employment
by another person of an unfair or deceptive method, act or practice declared unlawful by [Louisiana
Revised Statute] 51:1405.”235 The Louisiana Supreme Court has stated that the goals of LUTPA
include “halting unfair business practices and sanctioning the businesses which commit them,
preserving and promoting effective and fair competition, and curbing business practices that lead
to a monopoly and unfair restraint of trade within a certain industry.”236 What constitutes an unfair
trade practice is to be determined by the courts on a case-by-case basis.237 Under LUTPA, a business
action is deemed “unfair” when it offends established public policy and when it is “immoral,

234

Rec. Doc. 23-1 at p. 15.

235

Cheramie Serv., Inc. v. Shell Deepwater Prod., Inc., 2009-1633, p. 6 (La. 4/23/10); 35 So. 3d 1053 (quoting
La. Rev. Stat. 51:1409).
236

Quality Envtl. Processes, Inc. v. I.P. Petrol. Co., Inc., 2013-1582 (La. 5/7/14); 144 So. 3d 1011, 1025.

237

Cheramie Serv., Inc., 2009-1633 at p. 10.

42

unethical, oppressive, unscrupulous, or substantially injurious to consumers.”238 A business action
is “deceptive” when it amounts to fraud, deceit, or misrepresentation.239 Ultimately, however, “the
range of prohibited practices under LUTPA is extremely narrow.”240
1.

Whether the LUTPA Claim Must Be Dismissed Because Andretti Has Not Pled
that Defendants’ Actions Were Committed for the Purpose of Harming
Competition

NOLA Motor and Chouest contend that an intention to harm competition is “an essential
element to a claim under [LUTPA].”241 They assert that Andretti’s LUTPA claim should be
dismissed because “Andretti has not pled, and could not plead, that the alleged promise by Mr.
Chouest to guarantee the payments to Andretti was done for the purpose of harming competition”
and that such a pleading would not make sense in this context.242 In opposition, Andretti contends
that none of the cases cited by NOLA Motor and Chouest are analogous to Andretti’s claim and that
all except one predate the Louisiana Supreme Court’s decision in Cheramie, where the court
recognized standing under LUTPA for all persons, not solely business competitors.243
The Fifth Circuit has observed that “[t]he real thrust of the LUTPA, modeled after the
Federal Trade Commission Act, 15 U.S.C. § 45, is to deter injury to competition.”244 In support of
its motion to dismiss, NOLA Motor and Chouest cite Nursing Enterprises, Inc. v. Marr, a case from

238

Omnitech Int’l, Inc. v. Clorox Co., 11 F.3d 1316, 1332 (5th Cir. 1994).

239

Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 553 (5th Cir. 2015).

240

Quality Envtl. Processes, Inc., 144 So. 3d at 1025.

241

Rec. Doc. 23-1 at p. 18.

242

Id. at pp. 18–19.

243

Rec. Doc. 30 at p. 14 (citing Cheramie Serv., Inc., 2009-1633 at p. 6).

244

Omnitech Int’l, Inc. v. Clorox Co., 11 F.3d 1316, 1331 (5th Cir. 1994).

43

the Louisiana Second Circuit Court of Appeal.245 In Marr, defendant Susan Marr was alleged to have
acquired trade secrets while working for her employer and then starting a new company in direct
competition with her former employer.246 A jury found that she had committed an unfair trade
practice and rendered judgment in favor of the plaintiff.247 The Louisiana Second Circuit Court of
Appeal reversed, holding that the plaintiff had not shown that Susan Marr was attempting to
intentionally harm her former employer in any way and that “[a] defendant’s motivation is a critical
factor; the actions must have been taken with the specific purpose of harming the competition.”248
However, NOLA Motor and Chouest have not pointed to any factually analogous cases
where courts have dismissed LUTPA claims for failure to allege that the acts were committed with
the purpose of causing harm to competition. The cases cited by NOLA Motor and Chouest involve
a claim that former employees misappropriated trade secrets and engaged in unfair competition,249
a claim that a nursing home failed to treat a resident with dignity and respect,250 and a claim that a
hospital attempted to stifle competition by preventing a competing hospital from entering the fullservice hospital market.251 In those cases, the courts found intent to harm the competition to be a

245

No. 30, 776 (La. App. 2 Cir. 8/19/98); 719 So. 2d 524.

246

Id. at 527–28.

247

Id. at 530.

248

Id. at 528, 530.

249

See Nursing Enters., Inc., 719 So. 2d at 528–29; SDT Indus., Inc. v. Leeper, 34-655, p. 1 (La. App. 2 Cir.
6/22/01); 793 So. 2d 327.
250

Schenck v. Living Centers-East, Inc., 917 F. Supp. 432, 435 (E.D. La. Feb. 21, 1996) (Berrigan, J.).

251

Monroe Surgical Hosp., LLC v. St. Francis Med. Ctr., Inc., 49,600, p. 2 (La. App. 2 Cir. 8/21/14); 147 So.

3d 1234.

44

critical factor. However, in the more factually analogous cases, discussed infra, courts have not
discussed a “critical factor” or “essential element” of intent to harm competition.252
Furthermore, in Industrias Magromer Cueros y Pieles S.A. v. Louisiana Bayou Furs Inc.,253
the Fifth Circuit analyzed the defendants’ argument that a jury’s finding of liability under LUTPA
was inconsistent with the jury’s finding that the defendants did not act “with the intention to obtain
an unjust advantage over [the plaintiff].”254 The Fifth Circuit agreed with the district court that
“LUTPA does not require a misrepresentation or unethical conduct to be engaged in with the intent
to obtain an unjust advantage or to cause a loss or inconvenience.”255 Rather, the Fifth Circuit
asserted that the statute “merely requires a showing of ‘some element of fraud, misrepresentation,
deception or other unethical conduct on [a] defendant’s part.’”256 The court held that “[b]ecause
LUTPA does not require an intent to obtain an advantage or to cause a loss, there is no inconsistency
in the jury verdict.”257
The Fifth Circuit in Louisiana Bayou Furs did not find that there was any essential element
of an intent to harm competition, and in fact, rejected an argument that LUTPA required an intent
to obtain an unjust advantage or cause a loss or inconvenience to the other party. The LUTPA statute
provides only that “[u]nfair methods of competition and unfair or deceptive acts or practices in the

252

Admins. of the Tulane Educ. Fund v. Biomeasure, Inc., No. 08-5096, 2011 WL 3268108 (E.D. La. 2011)
(Vance, C.J.); Shaw Indus., Inc. v. Brett, 884 F. Supp. 1054 (M.D. La. 1994); Belle Pass Terminal, Inc. v. Jolin, Inc.,
618 So. 2d 1076 (La. App. 1 Cir. 1993); NOLA Fine Art, Inc. v. Ducks Unlimited, Inc., 88 F. Supp. 3d 602 (E.D. La
2015) (Vance, C.J.)).
253

293 F.3d 912 (5th Cir. 2002).

254

Id. at 921.

255

Id. at 921–22.

256

Id. at 922.

257

Id.

45

conduct of any trade or commerce are hereby declared unlawful.”258 The statute does not provide
that in order for there to be a violation under LUTPA there must be an intent to harm competition.
Accordingly, the Court denies the motion to dismiss Andretti’s LUTPA claim on the grounds that
Andretti has not pled a specific intent to harm competition.
2.

Whether the LUTPA Claim Must Be Dismissed Because There Was No Special
Relationship Between NOLA Motor, Chouest, and Andretti

NOLA Motor and Chouest contend that “a ‘special relationship,’ akin to a fiduciary
relationship, is important in finding a violation of [LUTPA].”259 In opposition, Andretti asserts that
after the Louisiana Supreme Court’s decision in Cheramie, granting a right of action under LUTPA
to all persons, natural or juridical, a special relationship between the parties is not required.260
Andretti contends that, even if a special relationship is required, one existed in this case because
“[Andretti] was at the mercy of Chouest, who, because he controlled the Host Committee was able
to meddle and unduly interfere with [Andretti’s] rendering of services, and who deceptively
guaranteed he would personally fund the race to ensure [Andretti] would be paid.”261
In its opposition to the motion to dismiss, Andretti cites to a case from another section of the
Eastern District of Louisiana, J.M. Smith Corporation v. Ciolino Pharmacy Wholesale Distributors,
LLC.262 In J.M. Smith Corporation, Smith, a pharmaceutical wholesaler, brought suit regarding

258

La. Rev. Stat. 51:1405.

259

Rec. Doc. 23-1 at p. 19 (citing Clark v. Am.’s Favorite Chicken Co., 916 F. Supp. 586, 593 (E.D. La. Feb.
8, 1996); Shaw Indus., Inc. v. Brett, 884 F. Supp. 1054, 1058 (M.D. La. Nov. 3, 1994)).
260

Rec. Doc. 30 (citing Cheramie Serv., Inc. v. Shell Deepwater Prod., Inc., 2009-1633 (La. 4/23/10); 35 So.

3d 1053).
261

Rec. Doc. 30 at p. 17.

262

Nos. 10-1483; 10-786, 2012 WL 5493853 (E.D. La. Nov. 13, 2012) (Zainey, J.).

46

unpaid balances it alleged it was owed.263 Defendant Ciolino Entities filed a counterclaim, alleging
breach of contract and a violation of LUTPA.264 On a motion for summary judgment on the LUTPA
counterclaim, Smith argued, inter alia, that it was entitled to summary judgment because the Ciolino
Entities could not establish a special relationship between the Ciolino Entities and Smith.265 In
opposition, the Ciolino Entities disputed the contention that a special relationship or fiduciary duty
must be proven to maintain a claim under LUTPA.266 The court held that the line of cases that
established the need to prove a special relationship or fiduciary duty involved competitors, not
consumers and, were therefore inapplicable because the Ciolino Entities were better described as
consumers rather than business competitors.267 The instant case, however, cannot be described as
a consumer case.
In NOLA Fine Art, Inc. v. Ducks Unlimited, Inc.,268 another case from another section of the
Eastern District of Louisiana, the court stated that “‘only egregious actions involving elements of
fraud, misrepresentation, deception, or other unethical conduct will be sanctioned based on LUTPA’
and this ‘egregiousness’ often involves ‘the breach of a special relationship of trust.’”269
The Court is not persuaded that Andretti’s LUTPA claim must be dismissed because there
was no special relationship between the parties. In Cheramie, the Louisiana Supreme Court held that

263

Id. at *1.

264

Id.

265

Id. at *4.

266

Id.

267

Id.

268

88 F. Supp. 3d 602 (E.D. La. 2015) (Vance, C.J.).

269

Id. at *8 (internal citation omitted).

47

“LUTPA grants a right of action to any person, natural or juridical, who suffers an ascertainable loss
as a result of another person’s use of unfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce.”270 Although the Court does not find that Andretti
has demonstrated that such a relationship existed through its assertion that it was “at the mercy of
Chouest,” the Court is not convinced that a LUTPA violation cannot occur without the presence of
a special relationship. The LUTPA statute does not state that a special relationship is required
between the parties in order for there to be a LUTPA violation. Furthermore, the Louisiana Supreme
Court in Cheramie held that any person who suffers an ascertainable loss as a result of another’s
unfair method of competition and unfair or deceptive act or practice has standing under LUTPA.
Therefore, the Court declines to dismiss Andretti’s LUTPA claim on the grounds that Andretti has
not pled a special relationship between the parties.
3.

Whether Andretti’s Allegations Rise to the Level of a LUTPA Violation

NOLA Motor and Chouest also contend that Andretti’s LUTPA claim should be dismissed
because LUTPA does not provide a substitute for a breach of contract claim.271 In support, they cite
Administrators of the Tulane Educational Fund v. Biomeasure, Inc., a case from another section of
the Eastern District of Louisiana.272 In Biomeasure, Inc., the plaintiffs brought suit alleging that the
defendants had deprived them of their rights pursuant to multiple agreements regarding the invention
of a drug.273 Plaintiffs then brought a claim pursuant to LUTPA alleging that the defendants had
“knowingly and willfully led Plaintiffs to believe that the dispute had been settled” and that the
270

09-1633 (La. 4/23/10); 35 So.3d 1053, 1057.

271

Rec. Doc. 23-1 at p. 16.

272

No. 08-5096, 2011 WL 3268108 (E.D. La. 2011) (Vance, C.J.).

273

Id. at *1.

48

parties had memoralized their agreement to settle the case, but then later failed to execute the
agreement.274 The plaintiffs alleged that the defendants’ failure to execute the settlement agreement
rendered their conduct surrounding the agreement an unfair method of competition and unfair and
deceptive act and practice.275 The court found that there were no allegations of fraud or
misrepresentation in the complaint and the plaintiffs therefore relied solely upon the ultimate failure
to execute the settlement agreement as support for their claim under LUTPA.276 The court held that
the defendants’ decision not to execute the final settlement agreement, even following extensive
negotiations, could not be distinguished from a simple breach of contract.277 Quoting the Fifth
Circuit in Turner v. Purina Mills, Inc.,278 the court stated that “[t]here is a great deal of daylight
between a breach of contract claim and the egregious behavior [LUTPA] proscribes.”279 Although
both cases involve an alleged failure to do something that one promised, here there are allegations
of fraud and misrepresentation, unlike in Biomeasure, Inc.
NOLA Motor and Chouest also cite Shaw Industries, Inc. v. Brett, a case from the Middle
District of Louisiana.280 In Brett, plaintiff Nass obtained the brokerage services of the defendants to
locate a potential joint venture partner.281 According to the contract, if the defendants located a

274

Id. at *5, 7.

275

Id. at *7.

276

Id.

277

Id.

278

989 F.2d 1419 (5th Cir. 1993).

279

Id. at 1422.

280

884 F. Supp. 1054 (M.D. La. 1994)

281

Id. at 1055.

49

partner, they would be compensated pursuant to terms mutually agreed upon in the future.282 When
the defendants located a potential partner, the defendants proposed that the terms of their
compensation be a lump sum amount and an indefinite participation in the profits.283 The new
partner rejected the proposal and stated that it would not form a joint venture if the defendants
insisted on being included in the joint venture as partners.284 The defendants subsequently stated that
they would accept a lump sum payment as their entire brokerage commission.285 In reliance upon
the defendants’ concession, the new partner signed a letter of intent to form the joint venture with
plaintiff Nass.286 Later, defendant Brett contacted the plaintiffs and requested an interest in the
profits, despite his earlier statement that he would accept the lump sum alone as payment.287 Brett
admitted that he had entered into a secret agreement with plaintiff Nass to allow him to share in the
profits and that he had misrepresented this fact.288 The plaintiffs brought suit under LUTPA, arguing
that the defendants had “acted in bad faith and/or in a manner intended to deceive and coerce
plaintiffs into paying exorbitant brokerage fees.”289
The court found that the plaintiffs were not members of the class of plaintiffs sought to be
protected by LUTPA and that the “suit is more analogous to a breach of contract dispute than one

282

Id.

283

Id.

284

Id.

285

Id.

286

Id.

287

Id.

288

Id.

289

Id. at 1057.

50

involving unfair or deceptive acts.”290 Brett is more factually analogous to the instant case than
Biomeasure, Inc. because in Brett, there was evidence of deception where one of the defendants
admitted to having misrepresented his previous agreement. However, this case was pre-Cheramie,
before which courts had limited standing under LUTPA to consumers and business competitors. In
Brett, the court held that the case was more analogous to a breach of contract, but relied not only
upon the conduct at issue but also on the nature of the relationship between the parties and the fact
that they were not in competition with the defendants.291
NOLA Motor and Chouest also cite Belle Pass Terminal, Inc. v. Jolin, Inc.,292 a Louisiana
First Circuit Court of Appeal case, in support of their argument that the allegations at issue in this
case do not rise to a LUTPA violation. In that case, the action arose out of a sale and mortgage of
property as well as transfer of leases.293 The defendants filed a counterclaim pursuant to LUTPA.294
The conduct alleged to form the basis of the LUTPA claim was that the plaintiffs had
“misrepresented their true intent by seeking the inclusion of language in the documents that would
give them the right to go onto the leased property to operate their business;” misrepresented that they
had, in fact, purchased the leased property in question; tried to influence a cancellation of the lease;
and failed to disclose that they had agreed to abide by the terms of the lease.295 The court held that
there was no allegation of any conduct that offends established public policy or conduct that would

290

Id. at 1058.

291

Id.

292

618 So. 2d 1076 (La. App. 1 Cir. 1993).

293

Id. at 1077–78.

294

Id. at 1078–79.

295

Id.

51

be unethical, oppressive, or substantially injurious as applied to a consumer or business
competitor.296 Furthermore, the court stated that none of the allegations implied that there was an
imbalance in negotiating power.297 Here, Andretti alleges that NMHC was formed by Chouest
“solely to capitalize on the race and to accept the state grant for his benefit, while avoiding any
financial liability for the Racing Event and sheltering other Chouest-related entities and Chouest,
individually, from financial liability therefor”298 and that Chouest “falsely assured [Andretti] its fees
would be fully paid” when he never intended to pay Andretti.299 These allegations contain conduct
that could be characterized as unethical.
The Court observes that this case is factually analogous to a case from another section of the
Eastern District of Louisiana, NOLA Fine Art, Inc. v. Ducks Unlimited, Inc.300 In that case, the
parties entered into an agreement intending to raise money for the restoration of Cat Island, a small
island located off the coast of Southeast Louisiana.301 Plaintiff NOLA Fine Art, Inc. agreed to paint,
sell, and ship a “Cat Island Poster” and donate 20% of the proceeds to the restoration project.302
Defendant Ducks Unlimited, Inc. permitted NOLA Fine Art, Inc. to use the Ducks Unlimited logo
on select editions of the Cat Island Poster in exchange for a 20% licensing fee.303 According to the
plaintiffs, Ducks Unlimited’s State Chairman also agreed to donate a portion of the licensing
296

Id. at 1081.

297

Id.

298

Rec. Doc. 1 at p. 16.

299

Id. at p. 12.

300

No. 13-4904, 2015 WL 631244 (E.D. La. Feb. 12, 2015) (Vance, C.J.).

301

Id. at *1.

302

Id.

303

Id.

52

revenues to the Cat Island project and send “email blasts” advertising the prints to its members.304
However, the parties did not execute a written contract to this effect.305 In a later meeting, the Ducks
Unlimited Chairman indicated that the licensing fees would instead go to general coastal restoration
rather than the Cat Island restoration project in particular and Ducks Unlimited would not send any
national emails advertising the Cat Island poster.306 Plaintiff sued Ducks Unlimited for breach of
contract, detrimental reliance, unfair trade practices, and fraud under Louisiana law.307 The court
held that “absent contemporaneous intent not to perform, Ducks Unlimited’s failure to fulfill the
alleged promises is ‘merely a breach of contract which must be enforced by an action on the
contract.’”308
This case is at the motion to dismiss stage, where the Court must take all well-pleaded facts
as true. “Malice, intent, knowledge, and other conditions of a person’s mind may be alleged
generally.”309 Andretti alleges in its complaint that there was contemporaneous intent not to pay
Andretti.310 Andretti alleges that although Chouest asserted that Andretti would be fully paid from
Chouest’s investments, Chouest “actually intended to only fully pay those contractors who made
improvements to his race track or who had ongoing relationships with Chouest or who had the

304

Id.

305

Id.

306

Id.

307

Id. at *2.

308

Id. at *10 (quoting Hanover Modular Homes of N. La., Inc. v. Scottish Inns of Am., 443 F. Supp. 888, 892
(W.D. La. 1978)).
309

Fed. R. Civ. P. 9(b).

310

See Rec. Doc. 1 at p. 12.

53

ability to place a lien on NOLA Motorsports Park.”311
In opposition to the motion to dismiss its LUTPA claim, Andretti cites Creative Choice
Home, Inc. v. Historic Restoration, Inc., a case from another section of the Eastern District of
Louisiana.312 In that case, the plaintiff alleged that defendant Historic Restoration, Inc. (“HRI”) had
improperly submitted a substantially revised proposal in a bid to obtain a contract as developer of
a housing development, despite an order by the housing authority prohibiting the revision of any
proposals.313 The court found that “[g]iven the broad interpretation by Louisiana courts of LUTPA,
this allegation is sufficient to withstand HRI’s motion to dismiss under Rule 12(b)(6).”314 Creative
Choice Home, Inc. is not factually analogous to this case; however, it supports Andretti’s assertion
that violations of LUTPA are to be determined on a case by case basis.
Andretti also cites the Fifth Circuit’s decision in Tubos de Acero de Mexico, S.A. v. American
International Investment Corp, Inc.315 In that case, Tubos de Acero de Mexico, S.A. (“TAMSA”)
and American International Investment Corp. (“American”) had entered into a lease agreement
regarding ultrasonic testing pipe inspection equipment.316 The lease terms stated that the lease was
contingent upon TAMSA buying new or used equipment from American, American renovating any
inspection equipment needed by TAMSA while the equipment was being leased, and the condition

311

Id.

312

No. CIV. A. 99-1569, 1999 WL 1009810 (E.D. La. Nov. 5, 1999).

313

Id. at *1–2.

314

Id. at *2.

315

292 F.3d 471 (5th Cir. 2002).

316

Id. at 474.

54

that all spare parts must be purchased from American.317 American provided evidence on the motion
for summary judgment that at the time TAMSA entered into the lease agreement, TAMSA knew that
it was no longer going to purchase the equipment from American and that eventually TAMSA
purchased equipment from another company, not American.318 In addition, American provided
evidence that TAMSA undertook renovation of its existing equipment through contractors other than
American and that TAMSA “manufactured and/or purchased from parties other than American spare
or replacement parts.”319 The Fifth Circuit held that “considering the deceptive and unethical
undertones of TAMSA’s alleged behavior during the 1997 lease period,” the LUTPA counterclaim
was not properly characterized as a mere breach of contract claim and the court affirmed the district
court’s denial of summary judgment.320
The Court finds that the instant case is analogous to Tubos de Acero de Mexico, S.A. in that
the instant case also cannot be properly characterized as a mere breach of contract claim. In this
case, Andretti alleges that “Chouest falsely assured [Andretti] its fees would be fully paid through
the State appropriations or through his personal investment, when he actually intended to only fully
pay those contractors who made improvements to his race track or who had ongoing relationships
with Chouest or who had the ability to place a lien on NOLA Motorsports Park. Chouest provided
false assurances to [Andretti] throughout its performance until they were ultimately informed they
would not be paid.”321 Andretti contends that Chouest and NOLA Motor were not signatories to the

317

Id. at 476.

318

Id.

319

Id.

320

Id. at 482.

321

Rec. Doc. 1 at p. 12.

55

Racing Services Agreement and the allegations forming the basis of the LUTPA claim are not
limited to the contractual provisions of the Agreement.322 Andretti asserts that Chouest personally
led Andretti to believe that it would be fully compensated from either the $4.5 million appropriated
to NMHC and from Chouest’s personal investment.323 According to Andretti, Andretti relied upon
those representations in executing the Racing Services Agreement and it only learned afterwards that
NMHC did not have the funds to pay Andretti and that Chouest had no intention of personally
covering the amounts owed to Andretti.324 Additionally, Andretti alleges that NMHC was formed
by Chouest “solely to capitalize on the race and to accept the state grant for his benefit, while
avoiding any financial liability for the Racing Event and sheltering other Chouest-related entities
and Chouest, individually, from financial liability therefor.”325
This case is also factually analogous to Industrias Magromer Cueros y Pieles S.A. v.
Louisiana Bayou Furs, Inc., a Fifth Circuit case in which the court found that there was sufficient
evidence of a LUTPA violation to withstand a motion for judgment as a matter of law.326 In
Louisiana Bayou Furs, the plaintiff and defendant Bayou Furs had entered into a contract for the sale
of unprocessed nutria skins.327 The plaintiff alleged that during the negotiations, it expressed
concerns about entering into an agreement with Bayous Furs, which was a newly formed

322

Rec. Doc. 30 at p. 13.

323

Id. at p. 14.

324

Id.

325

Rec. Doc. 1 at p. 16.

326

293 F.3d 912, 922 (5th Cir. 2002).

327

Id. at 915.

56

company.328 Defendant Berry represented that there was no need for concern because another
company, Louisiana Land & Exploration Company, “stood behind Bayou Furs’s agreement.”329 At
trial, the jury found that both defendants had violated LUTPA and that the plaintiff had detrimentally
relied upon the representations made by the defendants.330 On appeal, the Fifth Circuit addressed
Bayou Furs’s argument that there is insufficient evidence to support a finding that Bayou Furs and
Berry engaged in the type of “egregious” conduct that forms the basis of a LUTPA violation.331 The
Fifth Circuit upheld the district court’s denial of Bayou’s motion for judgment as a matter of law,
holding that “[t]he jury could have found that [defendant] Berry’s representations, on behalf of
[defendant] Bayou Furs, that the contract was backed by [another company], and the refusal of
Bayou Furs to perform under the contract due to changed market conditions, [was] unethical.”332
LUTPA provides a cause of action to “[a]ny person who suffers an ascertainable loss of
money or movable property . . . as the result of the use or employment by another person of an unfair
or deceptive method, act or practice . . . .”333 Andretti alleges that Chouest represented that it would
be paid all the sums it was owed under the Agreement from the state funds and from Chouest’s
personal investment and that Chouest formed NMHC to avoid financial liability for the Event.334
Taking all well-pleaded facts as true, as the Court must on a motion to dismiss, the Court finds that

328

Id. at 916.

329

Id.

330

Id. at 917.

331

Id. at 921.

332

Id.

333

La. Rev. Stat. § 51:1409.

334

Rec. Doc. 1 at p. 16.

57

Andretti has stated sufficient facts to state a claim under LUTPA against Chouest. Therefore, the
Court denies the motion to dismiss Andretti’s LUTPA claim against Chouest. However, Andretti
has not alleged any facts regarding a LUTPA violation committed by NOLA Motor. All of the
LUTPA allegations concern Chouest’s representations that Andretti would be fully compensated
from Chouest’s personal investments. Accordingly, the Court finds that Andretti has failed to state
a LUTPA claim against NOLA Motor and therefore grants the motion to dismiss Andretti’s LUTPA
claim against NOLA Motor.
E.

Treble Damages Claim under LUTPA
NOLA Motor and Chouest also move to dismiss Andretti’s claim for treble damages under

LUTPA.335 In opposition, Andretti asserts that a challenge to Andretti’s entitlement to treble
damages is premature.336 According to Andretti, on July 1, 2015, which it asserts was the same day
that Andretti filed its complaint,337 Andretti provided notice to the Louisiana Attorney General of
its LUTPA claim against Defendants.338 Andretti asserts that “[w]hether the Chouest Defendants
have continued to engage in unfair trade practices since that date, which [Andretti] believes is the
case . . . will be further developed during discovery and is not appropriate for a 12(b)(6) motion.”339
Under LUTPA, “[i]f the court finds the unfair or deceptive method, act, or practice was
knowingly used, after being put on notice by the attorney general, the court shall award three times

335

Rec. Doc. 23-1 at p. 19.

336

Rec. Doc. 30 at p. 17.

337

In fact, Andretti filed its complaint on June 16, 2015. Rec. Doc. 1.

338

Id.

339

Id.

58

the actual damages sustained.”340 Although Andretti asserts that it provided notice of its LUTPA
claim to the attorney general, Andretti does not allege anywhere in its complaint or in any amended
complaint that the attorney general has put the defendants on notice of a LUTPA violation, as
required by the statute in order to be entitled to treble damages. Accordingly, the Court finds that
Andretti has failed to state a claim for treble damages. Therefore, the Court grants the motion to
dismiss the claim for treble damages under LUTPA.
F.

Unjust Enrichment Claim
Andretti alleges that NMHC, NOLA Motor and Chouest were enriched through Andretti’s

provision of services under the Racing Services Agreement and that the track itself benefitted from
the “advertisement, global recognition and awareness” that resulted from the Andretti’s “successful
management of the Race.”341 NOLA Motor and Chouest move to dismiss Andretti’s claim for unjust
enrichment on the grounds that: (1) Andretti has other claims available, and therefore may not assert
an unjust enrichment claim and (2) Andretti cannot allege the essential element of the claim that
NOLA Motor or Chouest were “enriched without cause.”342 In opposition, Andretti asserts that the
unjust enrichment claim is properly pled in the alternative under Federal Rule of Civil Procedure
8 “as this Court may find that no privity of contract exists between [Andretti], [NOLA Motor], and
Chouest under the Racing Services Agreement at issue or because the contract may be declared void
due to fraud or error in the inducement.”343 Andretti does not address NOLA Motor and Chouest’s
argument that it cannot show that NOLA Motor or Chouest were enriched without cause.
340

La. Rev. Stat. § 51:1409(A).

341

Rec. Doc. 1 at p. 16.

342

Rec. Doc. 23-1 at p. 21.

343

Rec. Doc. 30 at p. 21.

59

Louisiana Civil Code Article 2298 provides that
A person who has been enriched without cause at the expense of another person is
bound to compensate that person. The term “without cause” is used in this context
to exclude cases in which the enrichment results from a valid juridical act or the law.
The remedy declared here is subsidiary and shall not be available if the law provides
another remedy for the impoverishment or declares a contrary rule.
The requisite elements of a claim for unjust enrichment are: (1) an enrichment; (2) an
impoverishment; (3) a connection between the enrichment and the impoverishment; (4) an absence
of justification or cause for the enrichment and impoverishment; and (5) no other remedy at law.344
The existence of another remedy at law will preclude an unjust enrichment claim. In Walters
v. MedSouth Record Management, LLC, the Louisiana Supreme Court held that a plaintiff was
precluded from seeking to recover under unjust enrichment because in his original petition he
alleged that he had suffered harm as a “direct result of the negligent and tortious conduct” of the
defendant.345 The court found that it was of no consequence that the plaintiff’s tort claims had
prescribed and held that “[b]ecause the law provided plaintiff with another remedy,” the plaintiff
had failed to state a cause of action for unjust enrichment.346
NOLA Motor and Chouest argue that because Andretti has a breach of contract claim against
NMHC, Andretti has another remedy and therefore may not assert an unjust enrichment claim.347
In support, NOLA Motor and Chouest cite a Louisiana Fourth Circuit Court of Appeal case, II Fire
Records, L.L.C v. Clouden.348 In that case, the plaintiff, II Fire, entered into an exclusive contract

344

Baker v. Maclay Props. Co., 94-1529, p. 18 (La. 1/17/95); 648 So.2d 888.

345

2010-0352, p. 2 (La. 6/4/10); 38 So. 3d 241.

346

Id.

347

Rec. Doc. 23-1 at pp. 20–21.

348

2006-0763 (La. App. 4 Cir 1/31/07); 951 So. 2d 1272.

60

with the defendant, Clouden, who subsequently signed another contract with Forefront and Inner
City, in violation of his contract with II Fire.349 The trial court found that II Fire was entitled to
recover from Forefront and Inner City on the basis of unjust enrichment.350 On appeal, the
defendants argued that the trial court had erred in allowing the unjust enrichment claim and the
Fourth Circuit Court of Appeal agreed.351 The court held that the fifth requirement for proving unjust
enrichment, whether there was no other remedy at law available to plaintiff, had not been met.352 The
court held that “II Fire’s remedy was against Mr. Clouden. It is clear that Mr. Clouden was the party
who was contractually obligated to II Fire. Had he complied with the II Fire Contract, Forefront and
Inner City would not even be involved in the lawsuit.”353
In support of Andretti’s unjust enrichment claim, Andretti alleges that it has not been paid
in full for its services under the Racing Service Agreement and that NOLA Motor and Chouest were
unjustly enriched through Andretti’s provision of services under the Agreement.354 Andretti has
brought a breach of contract claim against all Defendants. As discussed supra, Andretti has failed
to state a claim for breach of contract against NOLA Motor and Chouest. However, Andretti has also
alleged a breach of contract claim against NMHC.355 Therefore, this case is analogous to II Fire
Records, L.L.C. Andretti may recover what it is allegedly owed under the Racing Services

349

Id. at p. 1.

350

Id. at p. 13.

351

Id. at pp. 13, 15.

352

Id. at p. 15.

353

Id.

354

Rec. Doc. 1 at pp. 16–17.

355

Id. at pp. 13–15.

61

Agreement through its breach of contract claim against NMHC. Like in II Fire, here, if Andretti’s
allegations are true, had NMHC complied with the Racing Services Agreement, NOLA Motor and
Chouest would not be involved in this lawsuit.
NOLA Motor and Chouest also cite a case from another section of the Eastern District of
Louisiana, Threadgill v. Orleans Parish School Board.356 In Threadgill, defendants Orleans Parish
School Board (“OPSB”) and Mitchell Crusto (“Crusto”) entered into a contract in which Crusto was
to provide damage assessments for hail damage.357 Crusto subsequently entered into a contract with
the plaintiffs under which the plaintiffs were to prepare estimates for damage to and repair of OPSB
properties in exchange for the right to be assigned some work by Crusto in the future.358 OPSB later
learned that it would have to comply with Louisiana’s public bid law in awarding the majority of
the repair work.359 Crusto subsequently terminated its contracts with the plaintiffs who demanded
return of the damage and repair estimates they had performed, but Crusto refused.360 The plaintiffs
sued both Crusto and OPSB, asserting claims under federal copyright law, LUTPA, and state tort
and contract law.361 The plaintiffs and Crusto entered into an arbitration and the Court entered a
judgment confirming the arbitration award.362 After the stay that had been put in place during the
pendency of the arbitration was lifted, the plaintiffs filed an amended complaint in which they

356

No. 02-1122, 2013 WL 5560906 (E.D. La. Oct. 7, 2013) (Vance, J.).

357

Id. at *1.

358

Id.

359

Id.

360

Id.

361

Id. at *2.

362

Id.

62

asserted a claim of unjust enrichment against OPSB.363 The court granted OPSB’s motion for
summary judgment on the unjust enrichment claim, holding that “[t]he inquiry is whether the
plaintiff had another potential remedy available; against whom that remedy existed is immaterial.”364
The court found that the plaintiffs’ remedy was against Crusto and that OPSB was never obligated
to the plaintiffs in any way.365
In this case, Andretti argues that NOLA Motor and Chouest are liable to Andretti for
payment and lost profits under the single business enterprise and alter ego doctrines.366 As in
Threadgill, however, here, Andretti asserts a claim for breach of contract against NMHC and
therefore has another remedy at law.
In opposition, Andretti cites several cases from the Eastern District of Louisiana and the
Middle District of Louisiana in which the courts held that an unjust enrichment claim could be pled
alongside other claims because Federal Rule of Civil Procedure 8 allows for alternative pleading.367
However, in Ferrara Fire Apparatus, Inc. v. JLG Industries, Inc., the Fifth Circuit held that the
availability of a claim for breach of contract precludes a claim of unjust enrichment.368 The court
found that “because [the plaintiff] could have brought a claim for breach of contract for any damages
it incurred during the time the contract was still in effect, [the plaintiff] [could not] maintain a cause

363

Id. at *2–3.

364

Id. at *6.

365

Id. at *7.

366

Rec. Doc. 1 at p. 15.

367

Rec. Doc. 30 at pp. 21–22 (citing Prop. One, Inc. v. USAgencies, L.L.C., 830 F. Supp. 2d 170 (M.D. La.
2011); McCullum v. McAlister’s Corp. of Miss., No. 08-5050, 2010 WL 1489907 (E.D. La. Apr. 13, 2010) (Lemmon,
J.); ORX Res., Inc. v. Autra, No. 09-4451, 2009 WL 3447256 (E.D. La. Oct. 20, 2009) (Africk, J.); Mayer v. Lamarque
Ford, Inc., No. 00-1325, 2001 WL 175232 (E.D. La. Feb. 16, 2001) (Clement, J.)).
368

581 F. App’x 440, 444 (5th Cir. 2014).

63

of action for unjust enrichment during that time.”369 The Fifth Circuit found that “[t]he important
question is whether another remedy is available, not whether the party seeking a remedy will be
successful.”370 Furthermore, as discussed above, the Louisiana Supreme Court and Louisiana Circuit
Courts of Appeal have held that the existence of another remedy at law will preclude an unjust
enrichment claim, even if the other claim is prescribed.
In this case, Andretti has pleaded a breach of contract claim against NMHC. Although
Andretti asserts that it pleads unjust enrichment in the alternative in the event that the “contract may
be declared void due to fraud or error in the inducement,”371 and in cases in which the contract is an
absolute nullity a plaintiff may have a remedy in unjust enrichment,372 there has been no assertion
made by any party that the contract is a nullity. Since Andretti has pled a breach of contract claim
against NMHC, it has another remedy at law and as such is precluded from seeking recovery against
NOLA Motor and Chouest on a claim of unjust enrichment.
Andretti also alleges, however, that NOLA Motor and Chouest allocated approximately $3.4
million of state funds to Chouest and NOLA Motor’s NOLA Motorsports Park “measurably in
excess of the amounts disclosed to [Andretti]” and that this use of funds “deprived NMHC of needed
capital to fulfill its financial obligations to various vendors and contractors . . . including
[Andretti].”373 Accordingly, it appears possible that Andretti may be able to state a claim for unjust
enrichment on these grounds. The Court is unable to determine from the pleadings, however,

369

Id.

370

Id. at 443–444.

371

Rec. Doc. 30 at p. 21.

372

See Baker v. Maclay Props., 94-1529 (La. 1/17/95); 648 So. 2d 888.

373

Rec. Doc. 1 at p. 6.

64

whether there exists “an absence of justification or cause for the enrichment and impoverishment.”
Accordingly, the Court finds that Andretti has failed to state a claim for unjust enrichment. The
Court grants NOLA Motor And Chouest’s motion for a more definite statement pursuant to Federal
Rule of Civil Procedure 12(e) and orders Andretti to amend its complaint to address the last two
elements of an unjust enrichment claim, whether there was an absence of justification or cause for
the enrichment and impoverishment and whether there is no other remedy at law, by December 18,
2015.
G.

Fraud Claim
NOLA Motor and Chouest also move to dismiss Andretti’s fraud claim on the grounds that

Andretti does not plead the two essential elements of duty and proximate cause.374 In the alternative,
they seek a more definite statement of Andretti’s fraud claim.375 In opposition, Andretti asserts that
“a duty was created at the time Chouest represented . . . that the payments due under the Racing
Services Agreement would be met by allocation of funds by the State of Louisiana and that he,
personally, would ensure the Event’s viability . . . .”376 Andretti also contends that its loss was
“directly caused by Chouest’s misallocation of funding for his benefit and to [Andretti’s]
detriment.”377
“The elements of a Louisiana delictual fraud or intentional misrepresentation cause of action
are: (a) misrepresentation of a material fact, (b) made with the intent to deceive, and (c) causing

374

Rec. Doc. 23-1 at p. 22.

375

Id. at p. 24.

376

Rec. Doc. 30 at p. 22.

377

Id.

65

justifiable reliance with resultant injury.”378 In Louisiana “[a]lthough a party may keep absolute
silence and violate no rule of law or equity, . . . if he volunteers to speak and to convey information
which may influence the conduct of the other party, he is bound to [disclose] the whole truth.”379
1.

Duty

Citing Becnel v. Grodner,380 a Louisiana Fourth Circuit Court of Appeal case, NOLA Motor
and Chouest first contend that Andretti must allege that the defendants had a duty to accurately
disclose the information which Andretti alleges was misrepresented.381 NOLA Motor and Chouest
contend that “Andretti pleads no duty that Mr. Chouest had to guarantee the Racing Services
Agreement.”382 At issue in Becnel, however, was a failure to disclose, not an affirmative
misrepresentation, which is alleged in this case.383 The court in Becnel stated that “[u]nder Louisiana
law, to state a cause of action in fraud from silence or suppression of the truth, there must be a duty
to speak or disclose information.”384 Finding that the defendants did not owe a duty of any kind to
disclose the information, the court upheld the trial court’s dismissal of the claim.385
However, as noted above, if an individual “volunteers to speak and to convey information

378

Guidry v. U.S. Tobacco Co., Inc., 188 F.3d 619, 627 (5th Cir. 1999).

379

Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., 527 F.3d 412 (5th Cir. 2008) (quoting Am. Guar. Co. v.
Sunset Realty & Planting Co., Inc., 23 So. 2d 409, 455–56 (La. 1944)).
380

2007-1041 (La. App. 4 Cir. 4/2/08); 982 So. 2d 891, 894–95.

381

Rec. Doc. 23-1 at pp. 22–23.

382

Id. at p. 23.

383

982 So. 2d at 894–95.

384

Id. at 894.

385

Id. at 895–896.

66

which may influence the conduct of the other party, he is bound to [disclose] the whole truth.”386
Accordingly, the duty to disclose the truth arises when an individual volunteers to speak and convey
information which may influence another party’s conduct. In this case, Andretti alleges that Chouest
verbally represented to Andretti that he “personally stood behind the Event and would insure that
its obligations were fully funded for the first year of the Event.”387 Andretti alleges that “[i]n
reasonable reliance on the misrepresentations and/or omissions by NMHC, Chouest, and [NOLA
Motor] [(who Andretti claims together constitute a single business enterprise)], [Andretti] entered
into the Racing Services Agreement and, as a result, suffered harm.”388 In order to state a claim for
fraud, Andretti must show that, in making these statements, NOLA Motor and Chouest “(a) [made
a] misrepresentation of a material fact, (b) made [the representation] with the intent to deceive, and
(c) caus[ed] justifiable reliance with resultant injury.”389 Contrary to NOLA Motor and Chouest’s
assertion, Andretti need not show that NOLA Motor and Chouest had an independent duty outside
of their representations to guarantee the Racing Services Agreement in order to state a claim for
fraud. Therefore, the Court finds that a duty to “[disclose] the whole truth”390 arose at the time that
any statements were allegedly made.
2.

Proximate Cause

In order to state a claim for fraud, a plaintiff must show that the alleged misrepresentation

386

Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., 527 F.3d 412 (5th Cir. 2008) (quoting Am. Guar. Co. v.
Sunset Realty & Planting Co., Inc., 23 So. 2d 409, 455–56 (La. 1944)).
387

Rec. Doc. 1 at p. 7.

388

Id. at p. 18.

389

Guidry v. U.S. Tobacco Co., Inc., 188 F.3d 619, 627 (5th Cir. 1999).

390

Kadlec Med. Ctr., 527 F.3d at 419 (quoting Am. Guar. Co., 23 So. 2d at 455–56).

67

“caus[ed] justifiable reliance with resultant injury.”391 NOLA Motor and Chouest contend that
Andretti’s alleged loss was proximately caused by NMHC’s alleged failure to pay Andretti under
the Racing Services Agreement, and was not caused by Chouest in any way.392 Andretti asserts, on
the other hand, that it was induced to enter the Racing Services Agreement directly by Defendants’
misrepresentations and its loss was “directly caused by Chouest’s misallocation of funding for his
benefit and to [Andretti’s] detriment, and his failure to abide by his representation that he,
personally, would ensure the viability of the first year of the race.”393
In support of their motion to dismiss the fraud claim, NOLA Motor and Chouest again cite
Becnel v. Grodner.394 In Becnel, an attorney who represented a plaintiff that entered into a settlement
sued his co-counsel and the opposing counsel after the settlement, claiming that he was not informed
of the settlement and therefore did not receive his share of the attorney’s fees.395 The attorney,
Daniel Becnel, claimed that opposing counsel had committed fraud when they refused to disclose
to him the amount of the settlement and instead advised him to contact his co-counsel for that
information.396 The court dismissed the fraud claim, holding that the opposing counsel had no duty
to disclose the settlement amount.397 The court noted that even if opposing counsel had owed the
attorney a duty, opposing counsel’s refusal to disclose the settlement amount was not the legal cause

391

Guidry, 188 F.3d at 627.

392

Rec. Doc. 23-1 at p. 23.

393

Rec. Doc. 30 at p. 22.

394

Id.

395

Becnel v. Grodner, 2007-1041, pp. 1–2 (La. App. 4 Cir. 4/2/08); 982 So. 2d 891.

396

Id.

397

Id. at p. 4.

68

of the attorney’s injuries, but rather the injuries were instead caused by his co-counsel’s alleged
breach of their fee-sharing agreement.398
The Court finds this case inapposite. In Becnel, the alleged fraud occurred after the breach
of the fee-sharing agreement. Here, Andretti alleges that the fraud committed by Defendants
occurred prior to the parties entering into the Racing Services Agreement and that Andretti relied
upon Chouest’s representations that he would ensure that there were adequate funds available to pay
Andretti when it entered into the Agreement with NMHC.399 Andretti alleges that it was harmed as
a result of Chouest’s alleged fraudulent statements that he would pay Andretti from his own private
investment and from his subsequent failure to pay.400 Accordingly, the Court finds that Andretti has
sufficiently pled that Defendants’ alleged misrepresentations were the proximate cause of Andretti’s
alleged injuries.
3.

Motion for More Definite Statement

In the alternative to their motion to dismiss, NOLA Motor and Chouest assert that Andretti
should be required to supplement its allegations because it has failed to plead the specifics of the
misrepresentation alleged.401 In opposition, Andretti contends that it has adequately alleged the time,
place, and identity of the speakers.402
Pursuant to Federal Rule of Civil Procedure 9(b), “[i]n alleging fraud or mistake, a party
must state with particularity the circumstances constituting fraud or mistake. Malice, intent,

398

Id. at p. 5.

399

Rec. Doc. 1 at pp. 7–8.

400

Rec. Doc. 30 at p. 22.

401

Rec. Doc. 23-1 at p. 24.

402

Rec. Doc. 30 at p. 23.

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knowledge, and other conditions of a person’s mind may be alleged generally.” “What constitutes
‘particularity’ will necessarily differ with the facts of each case . . . .”403 The Fifth Circuit has held,
however, that “[a]t a minimum, Rule 9(b) requires allegations of the particulars of time, place, and
contents of the false representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby.”404 In cases involving an omission of facts, Rule
9(b) “typically requires the claimant to plead the type of facts omitted, the place in which the
omissions should have appeared, and the way in which the omitted facts made the representations
misleading.”405 In addition, “[a]lthough scienter may be ‘averred generally,’ . . . [t]o plead scienter
adequately, a plaintiff must set forth specific facts that support an inference of fraud.”406
In Andretti’s complaint, Andretti asserts that Chouest, NOLA Motor, and NMHC made false
and misleading statements to Andretti, including:
a. [i]ntentionally misrepresenting to [Andretti] that NMHC was adequately
capitalized such that [Andretti] would receive full payment regardless of the event’s
profitability; b. [i]ntentionally misrepresenting that Chouest himself stood behind the
venture and intended to invest his own money, if necessary, to ensure the venture
would not fail financially and remain viable for the future for NMHC to fulfill the
terms of the Racing Services Agreement and that [Andretti] would be fully
compensated under the Racing Services Agreement; and c. [f]ailing to inform
[Andretti] that [NOLA Motor] would operate as an instrumentality of Chouest and
[NOLA Motor] for the benefit of Chouest and [NOLA Motor] and the detriment of
[Andretti].407
NOLA Motor and Chouest contend that Andretti is required to plead the time, place, and specific
403

Guidry v. Bank of LaPlace, 954 F.2d 278, 288 (5th Cir. 1992).

404

Tel-Phonic Servs., Inc. v. TBS Int’l, 975 F.2d 1134, 1139 (5th Cir. 1992) (internal quotations and citation

omitted).
405

United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370, 381 (5th Cir. 2004) (internal
quotations and citation omitted).
406

Tuchman v. DSC Commc’ns Corp., 14 F.3d 106, 1068 (5th Cir. 1994).

407

Id.

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content of the alleged misrepresentation each time it took place, it must identify the person(s) to
whom the misrepresentation was made, and plead “[m]alice, intent, knowledge and other conditions
of [the] person’s mind” who made the misrepresentation.408 In opposition, Andretti cites to several
paragraphs of its complaint and contends that it has identified the timing of the misrepresentations
as the “days prior to July 6, 2014,” and identified the people who made the misrepresentations as
Michael Sherman, Laney Chouest, and Kristen Engeron.409
Andretti appears to assert that it has stated the time the misrepresentations took place because
it stated in one paragraph that representations were made “[i]n the days prior to July 6, 2014.”
However, Andretti asserted that those dates were when Andretti was advised that NMHC was being
formed to execute the Agreement, not the dates that anyone represented that Chouest would
personally ensure the Event’s viability or that Andretti would be paid from the state funds. The
paragraphs pertaining to allegations that Andretti was informed that it would be paid by funds from
the State or by Chouest’s personal investment do not contain any dates.410 Andretti does not
specifically allege when or where these representations were made, or specifically to whom the
representations were made.
In its opposition, Andretti also cites to paragraph 23 of its complaint in which it alleges that
“[i]n the days prior to July 6, 2014,” Andretti representatives were advised by Michael Sherman,
Laney Chouest and Kristen Engeron that NMHC was being formed specifically to execute the
Agreement with Andretti because the State of Louisiana required that NOLA Motorsports Park and

408

Rec. Doc. 23-1 at p. 24.

409

Rec. Doc. 30 at p. 24.

410

Rec. Doc. 1 at pp. 7–10.

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Chouest form a non-profit to accept the NGO grant money.411 Andretti contends in its opposition to
the motion to dismiss that this representation was inaccurate.412 However, in Andretti’s complaint,
Andretti does not allege that this statement was false, Andretti does not allege the conditions of the
speaker’s mind at the time the representation was made, nor is the alleged statement included in
Andretti’s list of Chouest, NOLA Motor, and NMHC’s “false and misleading statements” in the
complaint.413 Lastly, Andretti does not allege the place of the alleged fraudulent statement.
Therefore, it is unclear to the Court whether Andretti asserts that this statement also constitutes a
fraudulent misrepresentation.
Accordingly, the Court finds that Andretti has failed to plead its fraud claims with the
particularity required by Federal Rule of Civil Procedure 9(b). Therefore, the Court grants NOLA
Motor and Chouest’s motion for a more definite statement pursuant to Federal Rules of Civil
Procedure 9(b) and 12(e) and it hereby orders Andretti to amend its complaint consistent with this
Order by December 18, 2015.
IV. Conclusion
For the foregoing reasons, the Court concludes that Andretti has failed to state a claim
against NOLA Motor and Chouest for breach of contract. The Court finds that Andretti has stated
a claim against Chouest under LUTPA but has failed to state a claim against NOLA Motor under
LUTPA. Furthermore, the Court finds that Andretti has failed to state a claim for treble damages
under LUTPA. Finally, the Court finds that Andretti has failed to state its fraud and unjust
enrichment claims against NOLA Motor and Chouest with sufficient particularity. Accordingly;
411

Id. at p. 7.

412

Rec. Doc. 30 at p. 14.

413

Rec. Doc. 1 at pp. 17–18.

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IT IS HEREBY ORDERED that NOLA Motor and Chouest’s “Rule 12(b)(6) Motion to
Dismiss, and Alternative 12(e) Motion for More Definite Statement”414 is GRANTED IN PART
AND DENIED IN PART.
IT IS FURTHER ORDERED that the motion is GRANTED to the extent that it moves for
dismissal of: (1) Andretti’s claims against NOLA Motor and Chouest for breach of contract; (2)
Andretti’s claims against NOLA Motor and Chouest for treble damages under LUTPA; and (3)
Andretti’s claim against NOLA Motor under LUTPA.
IT IS FURTHER ORDERED that the motion is GRANTED to the extent that it moves for
a more definite statement regarding Andretti’s fraud and unjust enrichment claims against NOLA
Motor and Chouest. Andretti is ordered to amend its complaint by December 18, 2015.
IT IS FURTHER ORDERED that the motion is DENIED to the extent that it moves to
dismiss: (1) Andretti’s LUTPA claim against Chouest; (2) Andretti’s fraud claims against NOLA
Motor and Chouest; and (3) Andretti’s unjust enrichment claims against NOLA Motor and Chouest.
NEW ORLEANS, LOUISIANA, this24th day of November, 2015.
___

_________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

414

Rec. Doc. 23.

73