Fortune et al v. Taylor Fortune Group, LLC
Filing
43
ORDER denying 37 Motion to Alter Judgment. Signed by Magistrate Judge Jane M. Virden on 12/08/2014. (lec)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION
BOB AND ELIZABETH FORTUNE
PLAINTIFFS
VS.
CIVIL ACTION NO.: 3:14-cv-105-JMV
TAYLOR FORTUNE GROUP, LLC
DEFENDANT
ORDER
This matter is before the court on Plaintiffs’ motion to alter judgment pursuant to Federal
Rule of Civil Procedure 59. For the reasons explained hereafter, the court finds the motion is not
well taken and should be denied.
Procedural Background
This matter arises from an alleged oral agreement by Defendant to assume the debt of a
person who is not a party to this action. Specifically, in the original May 16, 2014, complaint,
Plaintiffs asserted they were third party beneficiaries of their son’s alleged oral agreement with
the Defendant. In this oral agreement, the Defendant agreed to pay to Plaintiffs the sums owing
them from their son as a result of a sale of their business to him years earlier. In the original
complaint, Plaintiffs sought to proceed on a breach of contract claim. See Compl. [1]. On
August 4, 2014, Defendant moved to dismiss the original complaint for failure to state a claim,
arguing Louisiana substantive law applied to this contract dispute and a claim for breach of an
alleged oral agreement does not state a claim under Louisiana law. See Def.’s Mot. to Dismiss
[8]. Plaintiff responded, arguing first that the complaint stated a cause of action under either
Mississippi law or Louisiana law. See Resp. to Def.’s Mot. to Dismiss [14] at 3-5. Regarding a
choice of law analysis, Plaintiffs correctly noted: “The Fifth Circuit has stated that ‘Mississippi’s
choice-of-law test1 includes three steps: (1) determine whether the laws at issue are substantive
or procedural; (2) if substantive, classify the laws as either tort, property or contract; and (3) look
to the relevant section of the Restatement (Second) of Conflict of Laws.’ Ellis v. Trustmark
Builders, Inc., 625 F.3d 222, 225-26 (5th Cir. 2010).” Id. at 4. Plaintiffs further represented:
The first two steps are not at issue. The laws at issue are
substantive and the laws are contractual in nature.
The third step is more cumbersome. The Restatement
(Second) of Conflict of Laws § 188 Section (2) states that “In the
absence of an effective choice of law by the parties (see § 187), the
contacts to be taken into account in applying the principles of § 6
to determine the law applicable to an issue include: (a) the place of
contracting,(b) the place of negotiation of the contract, (c) the
place of performance, (d) the location of the subject matter of the
contract, and (e) the domicile, residence, nationality, place of
incorporation and place of business of the parties. These contacts
are to be evaluated according to their relative importance with
respect to the particular issue.” The place of contracting and
negotiation favor the use of Louisiana law while the place of
performance favors Mississippi. The location of the subject matter
of the contract is in Mississippi as well because the contract
revolves around the debt from the sale of a Mississippi business.
The final factor is split as the Plaintiffs reside in Mississippi and
the Defendant is incorporated in Louisiana.
The Fifth Circuit in previous cases has determined that ‘the
place of contracting and place of negotiation [Louisiana in this
case] are often relevant to disputes involving contract
interpretation.’ … The Plaintiffs submit this is not the case in this
matter. The question presented here is one of contract formation
and the Defendant’s conduct that should invoke the exceptions to
the Statute of Frauds. For these reasons, Plaintiffs feel that
Mississippi law should govern the contract.
See id. at 4-5 (emphasis added). In its September 30, 2014, order on the motion to dismiss, this
court engaged in a full choice of law analysis under the Mississippi choice of law test as well as
determined whether the existing claims would survive the motion to dismiss under the applicable
state’s substantive laws. This court ruled Louisiana substantive law was applicable in this case
1
To determine which state’s substantive laws apply, the court must apply the choice of law rules of the forum state. Trinity Yachts, LLC v.
Thomas Rutherford, Inc., No. 1:11CV507–LG–JMR, 2013 WL 820231, at *3 (S.D. Miss. 2013) (citing Ellis v. Trustmark Builders, Inc., 625 F.3d
222, 225 (5th Cir. 2010)).
and the original complaint did not state a cognizable cause of action under that law. Specifically
regarding the applicable substantive law, the court explained:
“Mississippi courts, in analyzing a case for choice of law purposes,
seek to determine the center of gravity of a dispute and apply the
law of the place which has the most significant relationship to the
event and parties or which … has the greatest concern with the
specific issues.” Hartford Underwriters Ins. Co. v. Foundation
Health Servs. Inc., 524 F.3d 588, 593-94 (5th Cir. 2008). For
contract disputes such as this one, the factors most relevant to this
decision are the place of contract negotiation and contract
formation. Id.
In the instant case, the place of contracting was Louisiana.
The place of negotiation was Louisiana. The place of performance
was also Louisiana in as a much as the alleged obligor is a
company with its principal place of business in Louisiana – the
apparent location from which any alleged payment obligations are
satisfied. Plaintiffs’ assertion that the subject matter of the contract
is in Mississippi “because the contract revolves around the debt
from the sale of a Mississippi business” is suspect. Though the
original debt allegedly arose in connection with the sale of stock of
a Mississippi corporation to a Tennessee company, the subject oral
agreement arose most immediately from the sale of assets of a
Tennessee company to a Louisiana company. Finally, while the
Mississippi-resident Plaintiffs claim to be third party beneficiaries
of the alleged oral contract, the actual parties to the contract at
issue are neither from Mississippi and at least one is a citizen of
Louisiana. Therefore, Louisiana substantive law will govern this
case.
See Order on Mot. to Dismiss [31] at 4-5. However, the court permitted Plaintiffs an opportunity
to move to amend their complaint to frame a legally cognizable action under substantive
Louisiana law. See id. at 7; see also Great Plains Trust Co. v. Morgan Stanley Dean Witter &
Co., 313 F.3d 305, 329 (5th Cir. 2002) (“When a plaintiff's complaint fails to state a claim, the
court should generally give the plaintiff a chance to amend the complaint under Rule 15(a)
before dismissing the action with prejudice….”).
Plaintiffs initially filed an amended complaint rather than a motion to amend the
complaint. See Second Am. Compl. [33]. The court reminded Plaintiffs the previous order of the
court did not instruct them to file an amended complaint but, rather, gave them the opportunity to
file a motion to amend. See Text Order dated October 6, 2014. Such motion to amend was filed
on October 7, 2014. Despite the court’s earlier ruling that the original claim for breach of oral
contract did not state a cause of action under Louisiana law, Plaintiffs nevertheless re-alleged (1)
the original claim for breach of an oral contract and alleged (2) a new claim for detrimental
reliance under Louisiana Civil Code Article 1967. See First Mot. to Amend Compl. [34].
The court’s prior order on the motion to dismiss already held the breach of oral contract
claim failed to state a cognizable claim under applicable Louisiana law. See Order on Mot. to
Dismiss [31]. Therefore, the court’s order on Plaintiffs’ motion to amend the complaint pointed
out it was only necessary to address whether Plaintiffs’ new detrimental reliance claim based on
Louisiana law stated a claim. See Order Den. Mot. to Amend Compl. [36]. To decide whether
to allow the amendment, the court applied the Rule 12(b)(6) standard for legal sufficiency and
found the claim for detrimental reliance asserted pursuant to Louisiana Code § 1967 to be futile.
Id. at 1-3. Accordingly, the motion to amend was denied, and the case was dismissed. Id.
The Instant Motion
On November 19, 2014, Plaintiffs filed a motion to alter judgment, requesting the court
alter or amend its previous order based on Federal Rule of Civil Procedure Rule 59(e). See Pl.’s
Mem. in Supp. of Mot. to Alter J. [38] at 1. Plaintiffs asserted the court’s previous order of
September 30, 2014, was “devoid of any discussion on why the Court chose Louisiana
substantive law as the controlling law in the case.” Id. at 4. Plaintiffs further submitted the
court’s error in applying Louisiana substantive law in the present case was based on a “manifest
error of law or fact.” Id. But, the argument in support was primarily verbatim from the
Plaintiffs’ prior response to the Defendants’ motion to dismiss. Indeed, to the extent there are
differences, the Rule 59 motion to alter judgment concedes more contacts with Louisiana than
the earlier response. See Pl.’s Resp. to Def.’s Mot. to Dismiss [14] at 4-5 (asserting the contract
at issue was performed in Mississippi); but see Pl.’s Mem. in Supp. of Mot. to Alter J. [38] at 7
(conceding the contract at issue was to be performed in Louisiana as well). Moreover, Plaintiffs’
counsel asserts the location of the subject matter of the contract is in Mississippi “because the
contract revolves around the debt from the sale of a Mississippi business.” Pl.’s Mem. in Supp.
of Mot. to Alter J. [38] at 5. However, the affidavit attached in support explicitly states the
original sale of the business giving rise to the debt occurred “[o]n February 13, 2006, [when] I
[Bob Fortune] sold my restaurant equipment business located in Memphis, Tennessee to my son
… under the name of Fortune Equipment Company of Nashville, LLC.” See Aff. in Supp. of
Mem. in Supp. of Mot. to Alter J. [38-1] at 1. Further, it is undisputed that the more recent sale
of the business was by a Tennessee limited liability company to a Louisiana limited liability
company.
As for the rule 59 relief requested, Plaintiffs asserted:
The Plaintiffs would request that this Court alter or amend its
Order of October 23, 2014 (Docket No. 36), ordering the
allowance of the amended complaint or to state that Mississippi
substantive law controls the case at bar based on the arguments set
forth below. In the alternative, The Plaintiffs request the Court
amend the prior orders to include the relevant facts and law used
by the Court to come to the conclusion that Louisiana substantive
law controls.
Pl.’s Mem. in Supp. of Mot. to Alter J. [38] at 4.
Analysis
As explained hereafter, Plaintiffs’ assertions in support of the Rule 59 relief requested are
demonstratively flawed. First, as noted, Plaintiffs’ claim that the September 30 order was
“devoid of any discussion of why the court chose Louisiana law” is simply inaccurate as
demonstrated above. See also Order on Mot. to Dismiss [31] at 4-5. Secondly, though the
motion asserts the court’s application of Louisiana substantive law is based on a manifest error
of law or fact, no such erroneous law or erroneous fact is clearly identified. Further, to the extent
the error of fact or law is – as Plaintiffs’ reply brief might suggest – the court’s earlier finding
that the contract was performed in Louisiana, the court directs Plaintiffs’ counsel to their own
brief representing that to be true (though they also contend some performance was in
Mississippi). Thirdly, Plaintiffs’ request for the court to amend the October 23, 2014, order to
allow the amended complaint makes no practical sense. The only new claim the amended
complaint seeks to assert is one under Louisiana Code § 1967 – a law which Plaintiffs argue in
their instant motion should not apply. Finally, as had already been expressly pointed out to
Plaintiffs, the court’s September 30, 2014, order did not order Plaintiffs to file an amended
complaint with causes of action based on Louisiana law. See Order Den. Pl.’s Mot. to Amend
Compl. [36] at 1-2. Instead, the court merely allowed Plaintiffs an additional opportunity to
move to amend the complaint to assert a claim under Louisiana substantive law. Id.
The balance of Plaintiffs’ Rule 59 memorandum is addressed to Mississippi’s long arm
statue. However, there is no argument that this court lacks jurisdiction in this matter.
Conclusion
For the foregoing reasons, Plaintiffs’ Motion to Alter Judgment is hereby DENIED.
SO ORDERED this, the 8th day of December, 2014.
/s/Jane M. Virden
UNITED STATES MAGISTRATE JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?