M C M G Capital Advisors Inc v. Food-N-Fun Inc et al

Filing 62

MEMORANDUM RULING re 30 MOTION for Summary Judgment filed by Todd Street. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, this Court grants the motion and dismisses the plaintiff's claims against Todd Street with prejudice. Signed by Magistrate Judge Patrick J Hanna on 1/30/2018. (crt,Alexander, E)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
MCMG CAPITAL ADVISORS, INC.

CIVIL ACTION NO. 6: 17-cv-00614

VERSUS

MAGISTRATE JUDGE HANNA

FOOD-N-FUN, INC., ET AL

BY CONSENT OF THE PARTIES

MEMORANDUM RULING
Currently pending is the motion for summary judgment [Rec. Doc. 30], which
was filed by defendant, Todd Street. The motion is opposed and oral argument was
held on January 25, 2018. Considering the evidence, the law, and the arguments of
the parties, and for the reasons fully explained below, this Court grants the motion
and dismisses the plaintiff’s claims against Todd Street with prejudice.
BACKGROUND
On February 12, 2016, the plaintiff, MCMG Capital Advisors, Inc. (“MCMG”)
entered into a Merger & Acquisition Financial Services Agreement (“Agreement”)
with defendants Food-N-Fun, Inc. (“Food-N-Fun”) and Todd Street. In the
Agreement, MCMG agreed to provide certain financial consulting as well as merger
and acquisition advisory services for the sale of the equity and assets of Food-N-Fun.
In exchange for these services, MCMG would be compensated with a transaction fee
if a closing occurred during the term of the Agreement or if a closing occurred within
1

fifteen months of the termination of the Agreement and the buyer was identified or
had contact with MCMG, Food-N-Fun, or Todd Street during the term of the
Agreement. Section 3.2 contains the Agreement’s compensation provision, which
states in pertinent part1:
“Seller and Company shall, jointly and severally, compensate Matrix
for the Services in an amount equal to the sum of One Hundred
Thousand Dollars ($100,000), plus three percent (3.0%) of the
Transaction Value up to and including Thirty Million Dollars
($30,000,000), plus four percent (4.0%) of all Transaction Value in
excess of Thirty Million Dollars ($30,000,000) (the “Transaction
Fee”)... The Transaction Fee of $100,000 plus the commission
percentage shall be paid at closing.”
“... The Company acknowledges and agrees that, during the Term or as
provided in Section 4 below, the compensation due Matrix shall be paid
as provided in this Agreement whether or not any buyer has been
introduced to the Company by Matrix.”
Section 4 provides the Term of the Agreement, which states:
"This Agreement shall remain in full force and effect for a period of
one hundred eighty days (180) from the execution date of this
Agreement and shall continue thereafter for three (3) successive thirty
(30) day renewal periods unless terminated by either Party, in writing,
ten (10) days prior to the termination of the original term or any
renewal period ("Term"). However, in the event a Closing occurs
within fifteen (15) months following the date of termination of this
Agreement and such transaction involves a Buyer which Matrix,
Company or Seller had identified and had any contact with during the
Term of this Agreement for the purpose of attempting to sell the equity
or assets of the Company, or otherwise perform Matrix's obligations

1

In the Agreement, MCMG is referred to as Matrix, Food-N-Fun is referred to as
Company, and Todd Street is referred to as Seller.
2

herein, then Company shall compensate Matrix under the same terms
and conditions of this Agreement as if this Agreement were in full
force and effect.”
The Agreement expired by its own terms on or about November 11, 2016 and
Food-N-Fun was sold to Retif Oil & Fuel, LLC, a buyer that the parties to the
Agreement had contact with during the terms of the Agreement, on or about March
17, 2017. As a result, MCMG filed a complaint against the defendants, jointly and
severally, for breach of contract, recovery of contractual attorney’s fees, and to
revoke the transfer of the proceeds of the sale of Food-N-Fun’s assets to Todd Street.
Then, Todd Street filed the present motion for summary judgment arguing that he is
not obligated to compensate MCMG for a closing that occurs after the expiration of
the Agreement.
ANALYSIS
A. The Summary Judgment Standard
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment
is appropriate when there is no genuine dispute as to any material fact, and the
moving party is entitled to judgment as a matter of law. A fact is material if proof of
its existence or nonexistence might affect the outcome of the lawsuit under the

3

applicable governing law.2 A genuine issue of material fact exists if a reasonable jury
could render a verdict for the nonmoving party.3
The Court applies substantive state law in a diversity action.4 In addition,
Section 6.3 provides that the Agreement “shall be construed and enforced under the
laws of the State of Louisiana.” Therefore, the Agreement will be interpreted in
accordance with Louisiana law.
In Louisiana, "contracts have the effect of law for the parties and the
interpretation of a contract is the determination of the common intent of the parties."5
"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."6
In such cases, the meaning and intent of the parties to the written contract must be
sought within the four corners of the instrument and cannot be explained or

2

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Sossamon v. Lone
Star State of Tex., 560 F.3d 316, 326 (5th Cir. 2009); Hamilton v. Segue Software, Inc., 232 F.3d
473, 477 (5th Cir. 2000).
3

Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008), citing Anderson v. Liberty
Lobby, Inc., 477 U.S. at 252; Hamilton v. Segue Software, Inc., 232 F.3d at 477.
4

Erie v. Railroad Co. v. Tompkins, 304 U.S. 64 (1983); see ACS Construction CO.,
Inc. of Mississippi v. CGU, 332 F.3d 885, 888 (5th Cir. 2003). (“We look to state law for rules
governing contract interpretation.”).
5

Clovelly Oil Co., LLC v. Midstates Petroleum, 112 So.3d 187, 192 (La. 2013),
citing Marin v. Exxon Mobil Corp., 48 So. 3d 234 (La. 2010); La. C.C. arts. 1983 and 2045.
6

La. C.C. art. 2046.
4

contradicted by parole evidence.7 “Moreover, when a contract can be construed from
the four corners of the instrument without looking to extrinsic evidence, the question
of contractual interpretation is answered as a matter of law and summary judgment
is appropriate.”8
B. Interpretation of the Agreement
The parties do not contend and this Court does not find that the Agreement is
ambiguous. Accordingly, the Agreement will be interpreted based on the four corners
of the document and the parties’ exhibits that contain parole evidence will not be
considered.
The rules of contract interpretation establish that “when a clause in a contract
is clear and unambiguous, the letter of that clause should not be disregarded under the
pretext of pursuing its spirit, as it is not the duty of the courts to bend the meaning of
the words of a contract into harmony with a supposed reasonable intention of the
parties."9 “Most importantly, a contract must be interpreted in a common-sense
fashion, according to the words of the contract their common and usual

7

See La. C.C. art. 1848.

8

Sims v. Mulhearn Funeral Home, Inc., 956 So.2d 583, 590 (La. 2007).

9

Clovelly Oil Co., LLC v. Midstates Petroleum, 112 So.3d at 192, citing Prejean v.
Guillory, 38 So.3d at 279).
5

significance."10 Furthermore, “each provision in the contract must be interpreted in
light of the other provisions so that each is given the meaning suggested by the
contract as a whole.”11
Todd Street contends that the last phrase of Section 4 of the Agreement, which
states “Company shall compensate Matrix under the terms and conditions of this
Agreement as if this Agreement were in full force and effect,” establishes that only
Food-N-Fun shall compensate MCMG for a closing that occurs after the expiration
of the Agreement. In opposition, MCMG argues that Section 4 of the Agreement,
which states “under the terms and conditions of this Agreement as if this Agreement
were in full force and effect” should be interpreted in light of Section 3.2 which
states, “Seller and Company shall, jointly and severally, compensate Matrix...” such
that the two provisions provide that Food-N-Fun and Todd Street, joint and severally,
shall compensate MCMG for a closing that occurs after the termination of the
Agreement. Therefore, the issue before the Court is whether the interpretation of the
Agreement provides that Todd Street and Food-N-Fun should compensate MCMG
for a closing that occurs after the termination of the Agreement or if only Food-N-Fun

10

Clovelly Oil Co., LLC v. Midstates Petroleum, 112 So.3d at 192, citing Prejean v.
Guillory, 38 So.3d at 279).
11

Richard v. Anadarko Petroleum Corp., 850 F.3d 701, 713 (5th Cir. 2017); La.

C.C. art. 2050.
6

should compensate MCMG.
The Agreement was drafted by MCMG and contains numerous sections that
reference both the Company and Seller in the same phrase. However, the Agreement
also contains references to only the Company without mention of the Seller. Notably,
Section 3.1 provides that only the Company shall pay the Valuation fee, Section 3.2
provides that the Company acknowledges and agrees that the compensation due shall
be paid as provided in the Agreement, and most importantly Section 4 states that “the
Company shall compensate Matrix under the same terms and conditions of this
Agreement as if this Agreement were in full force and effect.” The parties use of both
the Company and Seller in certain sections of the Agreement and the use of only the
Company in other sections leads to the reasonable interpretation that the parties
intended to specifically identify the provisions that applied only to the Company and
the provisions that applied to the Company and Seller.
Based on the parties use of only the Company in Section 4, the Court finds that
the parties intended for only Food-N-Fun to compensate MCMG for a closing that
occurred after the termination of the Agreement. Therefore, Todd Street is entitled to
summary judgment in his favor.
CONCLUSION
Because the reasonable interpretation of the Agreement does not establish that
7

Todd Street shall compensate the plaintiff for a closing that occurs after the expiration
of the Agreement, Todd Street’s motion for summary judgment [Rec. Doc. 30] is
GRANTED, and the plaintiff’s claims against him are dismissed with prejudice.
Signed at Lafayette, Louisiana on this 30th day of January 2018.

___________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE

8