Helia Tec Resources Inc. v. GE&F CO LTD et al
Filing
227
OPINION and ORDER DENYING EF&Gs motion for partial summary judgment 213 . EF&Gs objections to the affidavits of Hughes and Gallagher 217 are OVERRULED.(Signed by Judge Melinda Harmon) Parties notified.(rvazquez)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
HELIA TEC RESOURCES, INC.,
§
§
Plaintiff,
§
§
VS.
§
§
GE&F CO., LTD., and PACIFIC LNG §
OPERATIONS LTD., CLARION FINANZ §
AG AND INTEROIL CORPORATION,
§
§
Defendants, AND §
§
GE&F CO., LTD., Individually and§
as Assignee of Helia Tec
§
Resources, Inc.,
§
§
Third Party Plaintiff, §
§
VS.
§
§
CARY E. HUGHES and TIMOTHY R.
§
GALLAGHER,
§
§
Third Party Defendants. §
CIVIL ACTION H-09-1482
OPINION AND ORDER
Pending before the Court in the above referenced cause are (1)
a motion for partial summary judgment pursuant to Federal Rule of
Civil Procedure 56(a)(instrument #213) filed by Defendant and
Third-Party Plaintiff HSC Holdings Co. f/k/a GE&F Co. Ltd. (“GE&F”)
regarding GE&F’s third party complaint over ownership and control
of Helia Tec Resources, Inc. (“HTR”), and (2) GE&F’s objections and
motion to strike the affidavits of
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Third-Party Defendants Cary E.
Hughes (“Hughes”) and Timothy R. Gallagher (“Gallagher”) filed in
response to #131 (#217).
The Court hereby incorporates into this Opinion and Order its
most recent Opinion and Order summarizing the procedural history of
this case and the claims of the parties.
After reviewing the record, the briefing, and the applicable
law, the Court finds that there are numerous material issues of
fact in dispute, including whether Hughes and Gallagher were
fraudulently induced into joining in the Settlement, Release of
Claims and Indemnity Agreement (the “Agreement”) by GE&F, whether
GE&F
materially
breached
the
Agreement,
thereby
excusing
performance by Hughes and Gallagher, whether Hughes and Gallagher
ratified the Agreement by retaining the benefits they gained under
it or used the monies to pay off GE&F’s debts, or whether Hughes
and Gallagher rescinded the Agreement.
Therefore the motion for
partial summary judgment is denied.
Defendant and Third-Party Plaintiff GE&F, individually and as
assignee of HTR, moves to strike Hughes and Gallagher’s affidavits
(Exs. A and B to #214) in their entirety on the grounds that they
are self-serving, conclusory, unsubstantiated, speculative, contain
inadmissible hearsay, purport to state legal opinions, and are
contrary to undisputed summary judgment evidence, because the two
affiants were not competent to testify on behalf of HTR after April
1
The affidavits are found as Exhibits A and B in #214.
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24, 2009 when they relinquished all positions with HTR pursuant to
the March 2009 Settlement Agreement, nor as shareholders of HTR
since they were obligated under the March 2009 Settlement agreement
to redeem all stock certificates in their possession, and because
the affidavits were manufactured to create issues of material fact
to defeat GE&F’s motion for partial summary judgment. GE&F further
contends that the statements violated the best evidence rule, Fed.
R. Evid. 1002, regarding the March 2009 Settlement Agreement, and
Federal
Rules
testimony.
of
Evidence
701(c)
and
702
regarding
expert
Alternatively GE&F seeks to strike portions of the
affidavits.
An affidavit is a “voluntary declaration of facts sworn before
an officer authorized to administer oaths.” Black’s Law Dictionary
66 (9th ed. 2009);
Silver Dream, LLC v. 3MC, Inc., No. 11-30968,
2013 WL 1153431, *2 & n.4 (5th Cir. Mar. 18, 2013).
Before December 2, 2010 the appropriate method to attack an
affidavit was by filing a motion to strike.
Cutting Underwater
Technologies USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 515
(5th Cir. 2012), citing inter alia Rushing v. Kansas City S. Ry.
Co., 185 F.3d 496, 506 (5th Cir. 1999), superseded on other grounds
by Fed. R. Evid. 103(a), and 10B Charles Alan Wright & Arthur
Miller, Federal Practice and Procedure § 2738 (3d ed. 2004). Under
the new Rule 56(c)(2) a party may simply object to the affidavit.
Id., citing Advisory Committee’s Note to 2010 amendments of Rule 56
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(“There is no need to make a separate motion to strike.”).
Thus
the Court treats EF&G’s challenges to the affidavits as objections.
Cutting Underwater, 671 F.3d at 515.
Rule 56(c)(2) provides that
a party may object to summary judgment evidence submitted “to
support or dispute a fact that cannot be presented in a form that
would be admissible in evidence.”
Federal
Rule
of
Civil
Procedure
56(c)(4)
provides,
“An
affidavit or declaration used to support or oppose a motion must be
made on personal knowledge, set out facts that would be admissible
in evidence, and show that the affiant or declarant is competent to
testify on matters stated.”
“[U]ltimate or conclusory facts and conclusions of law, as
well as statements made on belief or ‘on information and belief,’
cannot be utilized on a summary judgment motion.
Similarly, the
mere reargument of a party’s case or the denial of an opponent’s
allegations will be disregarded . . . .” Wright and Miller, supra,
§
2738.
Indeed,
conclusory
allegations
and
unsubstantiated
assertions are not competent summary judgment evidence.
Warfield
v. Byron, 436 F.3d 551, 559 )5th Cir. 2006).
The
Fifth
Circuit
has
concluded
that
“an
affidavit
can
adequately support a motion for summary judgment when the affiant’s
personal knowledge “is based on a review of her employer’s business
records and the affiant’s position with the employer renders her
competent to testify on the particular issue which the affidavit
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concerns.”
Carson v. Perry, 91 F.3d 138 (Table), No. 95-40551,
1996 WL 400122, *1 (5th Cir. June 6, 1996), citing FDIC v. Selaiden
Builders, Inc., 937 F.2d 1249, 1254-55 n.12 (5th Cir. 1992).
See
also Bittinger v. Wells Fargo, N.B., Civ. A. No. H-10-1745, 2011 WL
5415664, *3 (S.D. Tex. Nov. 8, 2011)(quoting Carson for same
proposition). “Personal knowledge may be demonstrated by showing
that the facts stated ‘reasonably’ fall within the ‘sphere of
responsibility’ of the affiant as a corporate employee.”
Cutting
Underwater, 671 F.3d at 516, quoting DIRECTV, Inc. v. Budden, 420
F.3d 521, 530 (5th Cir. 2005)(citation omitted), and Rutledge v.
Liab. Ins. Indus., 487 F. Supp. 5, 7 (W.D. La. 1979)(“An official
title alone is enough to indicate the basis of personal knowledge
. . . .”).
based
on
An affiant does not need to state that his affidavit is
personal
knowledge
as
long
as
such
reasonably be inferred from the affiant’s position.
knowledge
can
Id. at 530.
Stating that the affidavit is based on “information and belief”
only is not sufficient to meet the requirements of summary judgment
evidence.
Id. at 530 and n. 40.
Furthermore,
personal
knowledge
does
not
have
to
be
contemporaneous knowledge; Hughes and Gallagher’s statements that
they only learned after entering into the Agreement that HTR’s main
asset had been transferred without their knowledge at the time to
Pacific is admissible.
Dalton v. FDIC, 987 F.2d 1216. (5th Cir.
1002)(“We recently held that an affidavit of an FDIC account
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officer is not defective solely because the officer did not have
personal knowledge of the loan transaction when it occurred, and
only learned about the loan after the bank went into receivership.
. . “[A]ppellants would have us hold [the receiver] to a standard
so strict that summary judgment would be all but impossible for
plaintiffs in cases such as these.”), citing and quoting RTC v.
Camp, 965 F.2d 25, 29 (5th Cir. 1992).
A party’s affidavit is often self-serving, but the Fifth
Circuit does not exclude such an affidavit as incompetent for that
reason by itself.
C.R. Pittman Const. Co. v. National Fire Ins.
Co. of Hartford, 453 Fed. Appx. 439, 443 (5th Cir. Oct. 24,
2011)(“[A]n affidavit based on personal knowledge and containing
factual assertions suffices to create a fact issue even if the
affidavit is arguably self-serving.”), citing inter alia Payne v.
Pauley, 337 F.3d 767, 773 (7th Cir. 2003)(“Provided that the
evidence meets the usual requirements for evidence presented on
summary judgment--including the requirements that it be based on
personal knowledge and that it set forth specific facts showing
that there is a genuine issue for trial--a self-serving affidavit
is an acceptable method for non-moving party to present evidence of
disputed material facts.”), and Santiago-Ramos v. Centennial P.R.
Wireless Corp., 217 F.3d 46, 53 (1st Cir. 2000)(“[A] ‘party’s own
affidavit, containing
relevant information of which he has first-
hand
be
knowledge,
may
self-serving,
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but
it
is
nonetheless
competent to support or defeat summary judgment.’”).
A party’s
self-serving and unsupported statement in an affidavit will not
defeat summary judgment where the evidence in the record is to the
contrary.
In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000)(“A
party’s self-serving and unsupported statement that she lacked the
requisite intent is not sufficient to defeat summary judgment where
the evidence otherwise supports a finding of fraud.”).
There is substantiating evidence throughout the record that
Hughes was the president and sole director of HTR after its
formation, even though if those positions ended is in dispute.
Hughes’ corporate positions justify an inference that the facts
stated in his affidavit reasonably fall within the sphere of his
corporate roles and that he had personal knowledge of them.
The
same is true of Gallagher’s position as Director of Finance and
subsequently Vice President of HTR.
Moreover both men state in
their sworn affidavits that they have “personal knowledge of each
fact
stated
herein.”
Hughes
attest
that
he
is
one
of
the
custodians of records for HTR and that the exhibits attached to
their response are business records maintained in the ordinary
course of business.
The fact that Hughes has signed most of them
evidences his personal knowledge not only of the documents but
facts underlying their existence.
Furthermore both men state that
the facts in their response to GE&F’s partial summary judgment “are
within [their] personal knowledge and are true and correct.”
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In
addition,
personal
litigation
revolves
knowledge
can
around
be
Hughes
and
inferred
because
Gallagher
and
this
their
relationship to EF&G. While the Court concedes that the affidavits
do contain some conclusory facts and conclusions of law, the Court
is capable of disregarding those incompetent portions of the
affidavits for purposes of summary judgment evidence.
Hughes and
Gallagher do state facts as they perceived them to be.
For
example, both testify as to their primary purpose of entering into
the Agreement, i.e., “(1) to resolve all claims and (2) ensure that
HTR’s outstanding liabilities would be satisfied, in full, so that
neither myself nor Tim Gallagher would have any risk of personal
liability to HTR’s creditors.
Both Mr. Gallagher and I were
acutely aware that we were HTR’s only representatives in the United
States and, therefore, it was of paramount importance to us that
all of HTR’s creditors, including the Texas Railroad Commission,
the IRS, and other State of Texas taxing authorities, were paid, in
full, so that we would not face any future liability.”
Hughes’
affidavit, ¶ 5, Ex. A to #214; parallel in Gallagher’s affidavit,
Ex. B, ¶ 6.
Moreover Hughes and Gallagher show that documents
submitted by GE&F in support of its motion for partial summary
judgment were incomplete and misleading and that the missing parts
were material to issues in litigation by submitting their own
complete copies of relevant documents.
Accordingly for the reasons stated above, the Court
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ORDERS that EF&G’s motion for partial summary judgment (#213)
is DENIED.
The Court further
ORDERS that EF&G’s objections to the affidavits of Hughes and
Gallagher
(#217) are OVERRULED.
SIGNED at Houston, Texas, this
19th
day of
June , 2013.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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