Pierce v. Fondren Orthopedic Group LLP et al
Filing
43
MEMORANDUM OPINION AND ORDER denying 9 MOTION for Partial Summary Judgment ON TWO OF HER BREACH OF CONTRACT CLAIMS, denying 19 MOTION to Intervene, denying 20 MOTION for Leave to File Defendants Fondren Orthopedic Group LLP and Fondren Orthopedic Ltd.'s Second Amended Answer and Counterclaim, denying 21 MOTION for Leave to File Third-Party Complaint, denying 32 Cross MOTION for Partial Summary Judgment (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PEGGY PIERCE,
Plaintiff,
v.
FONDREN ORTHOPEDIC GROUP, LLP
and FONDREN ORTHOPEDIC LTD.,
Defendants.
§
§
§
§
§
§
§
§
§
§
ENTERED
November 28, 2018
David J. Bradley, Clerk
CIVIL ACTION NO. H-18-1686
MEMORANDUM OPINION AND ORDER
Plaintiff,
defendants,
Ltd.
Peggy
Pierce
("Pierce"
or
"Plaintiff"),
sued
Fondren Orthopedic Group, LLP and Fondren Orthopedic
(collectively,
"Defendants") , in this court for federal and
state employment claims and state breach of contract claims.
Pending before the court are
Pierce,s Motion for Partial Summary Judgment on Two of
Her Breach of Contract Claims ("Plaintiff,s MPSJ")
(Docket Entry No. 9);
Defendants, Objections to Pierce, s Evidence in Support of
Her Motion for Partial Summary Judgment ("Defendants,
Objections to Plaintiff 1 s Evidence")
(Docket Entry
No. 15);
Fondren Orthopedic Ltd.,s Cross-Motion for Partial
Summary Judgment ( "FOLTD, s Cross-MPSJ") (Docket Entry
No. 32) ;
Fondren Orthopedic,
Ltd.,s Objections to Pierce,s
Evidence in Response to Fondren Orthopedic, Ltd. , s CrossMotion for Partial Summary Judgment ("FOLTD,s Objections
to Plaintiff,s Evidence") (Docket Entry No. 40);
Snow Goose Corporation, s
EntryNo. 19);
Motion to
Intervene
(Docket
Defendants' Motion for Leave to File a Second Amended
Answer and Counterclaim (Docket Entry No. 20); and
Fondren Orthopedic Ltd. 's Motion for Leave to File a
Third-Party Complaint ("FOLTD's Motion for Leave to File
Third-Party Complaint") (Docket Entry No. 21).
For the reasons stated below, the court will deny Plaintiff's
MPSJ,
FOLTD's
Cross-MPSJ,
Snow
Goose
Corporation's
Motion
to
Intervene, Defendants' Motion for Leave to File a Second Amended
Answer and Counterclaim,
and FOLTD' s
Motion for Leave
to File
Third-Party Complaint. 1
I.
Factual Background
Pierce's First Amended Complaint arises from her termination
as CEO and Administrator of Fondren Orthopedic Group, LLP ("FOG").
Pierce's Complaint alleges a federal claim for age discrimination
under the Age Discrimination in Employment Act and state law claims
for
disability
discrimination,
age
discrimination,
sex
discrimination, and retaliation under the Texas Commission on Human
Rights Act. 2
of contract. 3
Plaintiff also alleges state law claims for breaches
Plaintiff's MPSJ addresses only two of Plaintiff's
1
The court need not rule on Defendants' Objections to
Plaintiff's Evidence, Docket Entry No. 15, or FOLTD's Objections to
Plaintiff's Evidence, Docket Entry No. 40, because the court did
not rely on the disputed paragraphs in ruling on Plaintiff's MPSJ
or FOLTD's Cross-MPSJ.
2
See Plaintiff's First Amended Complaint ("Complaint") , Docket
Entry No. 36, pp. 14-27.
-2-
pending breach of contract claims.
FOLTD's Cross-MPSJ addresses
all three of Plaintiff's pending breach of contract claims.
Defendants
are
two
of
a
series
of
interrelated
entities with common management and officers.
employer,
is a Texas
business
FOG, Pierce's former
limited liability partnership composed of
physicians engaged in providing medical services.
FOLTD is a Texas
limited partnership formed for the purpose of investing in Texas
Orthopedic Hospital, where the physician partners of FOG and FOLTD
perform medical services.
partnership,
partners.
FOLTD
is
FOLTD has no employees. 3
composed
of
both
general
As a limited
and
limited
The general partner of FOLTD is Snow Goose Corporation
("Snow Goose") . 4
The limited partners of FOLTD are many of the
same physicians who are partners in FOG. 5
is a holding corporation, which
Snow Goose Corporation
at the time of the events at
issue -- was operated by persons who were also partners in both FOG
and FOLTD. 6
See Declaration of James B.
Bennett,
M.D.
("Bennett
Declaration") , Attachment 1 to Defendants' Response to Pierce's
Motion for Partial Summary Judgment ("Defendants' Response to
Plaintiff's MPSJ"), Docket Entry No. 14-1.
3
4
See id.
5
Compare Amendment No. 2 to the Amended and Restated Limited
Partnership Agreement of Fondren Orthopedic Ltd.
("Amendment
No.
2"),
Exhibit 0 to Affidavit of Peggy Pierce
("Pierce
Affidavit"), Docket Entry No. 9-1, pp. 160-61 (listing the limited
partners of FOLTD with their accompanying signatures), with Letter
to Peggy Pierce from Mufaddal Gombera, MD, Exhibit B to Plaintiff's
Original Complaint, Docket Entry No. 1-2 (listing in its letterhead
the then partners of FOG) .
6
Compare Exhibit C to Amended and Restated Limited Partnership
Agreement of FOLTD, Exhibit 0 to Pierce Affidavit, Docket Entry
(continued ... )
-3-
Pierce
was
terminated
under
disputed
working for FOG and its related entities
circumstances
after
for nearly 30 years.
Pierce alleges that she was terminated because of her age and her
disability,
7
and in retaliation for discovering what Pierce alleges
were illegal practices on the part of FOG partners. 8
assert
that
Pierce
was
terminated
for
misconduct
Defendants
and
poor
performance. 9
The motions pending before the court relate only to Pierce's
breach of contract claims.
terminated,
Pierce alleges
that after she was
FOLTD failed to honor an agreement that she entered
into with FOLTD in 2014 ("the Agreement")
The Agreement provides,
in relevant part, as follows:
[T]his will confirm that as long as you are
the Administrator of [FOG] , an affiliate of [FOLTD] , and
continue to handle the day-to-day business affairs of
[FOLTD], and then continuing for a period of five (5)
years
after you are no
longer performing those
responsibilities, whether due to retirement, death,
disability or termination, you will continue to be paid
( • • • continued)
No. 9-1, pp. 148-49 (listing James B. Bennett, C. Craig Crouch, and
G. William Woods as partners in FOLTD), with Snow Goose Corporation
Bylaws, Exhibit 1 to Bennett Declaration, Docket Entry No. 14-1,
p. 7 (listing Dr. G. William Woods, Dr. C. Craig Crouch, and
Dr. James B. Bennett as the initial directors of Snow Goose).
6
7
Pierce claims that her termination was based on her medical
diagnosis of Multiple Sclerosis, her age (57 years-old), and her
sex. See Complaint, Docket Entry No. 36, p. 1.
8
See Complaint, Docket Entry No. 36, pp. 7-11.
9
See Defendants Fondren Orthopedic Group LLP and Fondren
Orthopedic Ltd. 's Original Answer and Counterclaim ("Defendants'
Original Answer and Counterclaim"), Docket Entry No. 8, pp. 17-21.
-4-
a gross amount equal to what a limited partner in the
Partnership receives from operating income distributions
based on him then owning 10 Units of limited partner
[FOLTD] Interests.
You have done an excellent job for [FOLTD] and after
these many years of dedicated service deserve not only to
continue sharing in the success of [FOLTD] , but to
benefit past the point when you are no longer working for
[FOG] and [FOLTD] . 10
The
Agreement
was
signed
by
Dr.
G.
William
Woods,
M.D.
("Dr. Woods") in his capacity as the president of FOLTD's general
partner,
Snow Goose.
Dr.
Woods was also a
limited partner in
FOLTD. 11
The Agreement was on Snow Goose letterhead.
The enforce-
ability of the Agreement, and Dr. Woods' authority to sign it, are
at issue in this action.
II.
Pierce's Motion for Partial Summary Judgment and
FOLTD's Cross-Motion for Partial Summary Judgment
In her MPSJ Pierce argues that she is entitled to summary
judgment
on
two
of
her
breach
of
Defendants' breach of the Agreement.
contract
claims
based
Defendants argue in response
that the Agreement is unenforceable for three reasons:
consideration;
because Dr.
because Plaintiff was
on
terminated for
lack of
cause;
and
Woods did not have actual or apparent authority as
10
See Letter to Peggy J. Pierce from Fondren Orthopedic, Ltd.
Re: Fondren Orthopedic, Ltd. Unit Compensation Distributions
("Pierce Letter from FOLTD re Unit Compensation Distributions"),
Exhibit E to Pierce Affidavit, Docket Entry No. 9-1, pp. 24-25.
11
See Amendment No. 2, Exhibit 0 to Pierce Affidavit, Docket
Entry No. 9-1, pp. 160-61.
-5-
President of Snow Goose to enter into the Agreement on FOLTD's
behalf.
In FOLTD's Cross-MPSJ, FOLTD argues that FOLTD is entitled
to summary judgment on Pierce's breach of contract claims because
Dr. Woods lacked actual or apparent authority to enter into the
Agreement as a matter of law.
A.
Standard of Review
Summary judgment is authorized if the movant establishes that
there is no genuine dispute about any material fact and the law
entitles it to judgment.
Fed. R. Civ. P. 56(c)
Disputes about
any material facts are "genuine" if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2511 (1986).
reviewing
the
evidence
"the
court
must
draw
inferences in favor of the nonmoving party,
credibility determinations
Sanderson Plumbing Products,
or weigh the
Inc.,
all
In
reasonable
and it may not make
evidence."
Reeves
120 S. Ct. 2097, 2110
v.
(2000).
Factual controversies are to be resolved in favor of the nonmovant,
"but only when
both parties have
contradictory facts."
Little v. Liquid Air Corp.,
1075 (5th Cir. 1994)
B.
submitted evidence of
37 F.3d 1069,
(en bane).
Consideration
A written instrument is prima facie proof of consideration.
Taylor v. Fred Clark Felt Co., 567 S.W.2d 863, 867 (Tex. Civ. App.
Houston
[14th Dist.]
1978,
writ
-6-
ref'd
n.r.e.).
It
is
the
defendant's burden to offer evidence to defeat this prima facie
proof.
Thigpen v. Thigpen, 563 S.W.2d 868, 870 (Tex. Civ. App. --
San Antonio 1978, writ ref'd n.r.e.).
consideration
is
a
question
of
The existence (or lack of)
law.
Brownwood
Ross
Co.
v.
Maverick County, 936 S.W.2d 42, 45 (Tex. App. -- San Antonio 1996,
writ denied)
(citing Williams v. Hill, 396 S.W.2d 911,
Civ. App.
Dallas 1965, no writ).
agreement
in
this
case,
913
(Tex.
Because there is a written
Defendants
must
demonstrate
that
the
unless
the
Agreement is not supported by consideration.
In
Texas
employments
are
terminable
employer and employee contract otherwise.
Chronicle
Under
the
Publishing Co.,
employment
795
See Winters v. Houston
S.W.2d 723,
at-will
doctrine
at-will
723-24
either
the
(Tex.
1990).
employer
or
employee can terminate the employment relationship for any reason
or no reason at all, at any time.
See East Line & R.R.R. Co. v.
Scott, 10 S.W. 99, 102 (Tex. 1888)
Defendants
consideration
argue
that
because
the
Agreement
Plaintiff
employment with FOG at any time.
could
is
not
have
supported
terminated
by
her
However, if "a promise to grant
a raise to a terminable-at-will employee is necessarily illusory
. why is an employer's original promise to pay a certain wage
to an at-will employee enforceable when the employee performs?"
Vanegas v. American Energy Services, 302 S.W.3d 299, 303-304 (Tex.
2009)
(citing 1 John E.
CONTRACTS
§
1.17
(Supp.
Murray,
Jr.
Fall 2009))
-7-
&
Timothy Murray,
Defendants'
CoRBIN oN
argument would
render many compensation agreements between at-will employees and
their employers unenforceable.
While past services alone may not serve as consideration for
a promise, a contract created both to reward an employee for past
services and to compensate the employee for future services is
supported by consideration.
In Pasant v.
Jackson National Life
Insurance Co., 52 F.3d 94, 97 (5th Cir. 1995), the court evaluated
a contract to compensate an employee for "valuable services" he had
rendered to his employer in the past, as well as future services
that the employee continued to render until he was terminated.
at 97-98.
the
Id.
The court held that the employee's continued work for
company
consideration.
until
he
was
terminated
provided
adequate
Id.
The court is persuaded that the Agreement is supported by
consideration.
The Agreement does reward Plaintiff for previously
performed services to FOG and FOLTD.
It states:
You have done an excellent job for [FOLTD] and after
these many years of dedicated service deserve not only to
continue sharing in the success of [FOLTD] , but to
benefit past the point when you are no longer working for
[FOG] and [FOLTD] . 12
But the Agreement also states that it is contingent on Pierce's
continuing to serve as the administrator of FOG and "continu[ing]
to handle the day-to-day business" of FOLTD. 13
12
Plaintiff continued
See
Pierce
Letter
from
FOLTD
re
Unit
Compensation
Distributions, Exhibit E to Pierce Affidavit, Docket Entry No. 9-1,
p. 25.
-8-
to
provide
services
to
FOG
and
FOLTD
in
compliance
with
the
Agreement until her termination in 2018 -- over three years after
the Agreement was executed. 14
The court therefore concludes that
the Agreement is supported by consideration.
C.
Good Cause
Plaintiff argues that the Agreement is enforceable as a matter
of law regardless of the reason she was terminated because the
Agreement contains no exception for a
Defendants argue
Plaintiff,
termination "for cause."
that because FOG had good cause
Defendants
have
to terminate
no obligation to pay Plaintiff
the
5-year post-termination payments guaranteed by the Agreement.
circumstances of Plaintiff's termination are disputed,
The
and fact
issues exist as to whether Plaintiff was terminated for cause.
The Agreement does not contain any language excusing FOLTD's
performance
in
the
event
Plaintiff
was
terminated
for
cause.
Furthermore, the Agreement expressly contemplates that five years
of payments would be made to Plaintiff regardless of whether she
left
FOG and
FOLTD
"due
to
retirement,
death,
disability,
cause"
exception
or
termination. " 15
One
Texas
court
has
read
a
"for
performance of an employment contract by an employer.
14
into
See Gorbet
See Plaintiff's MPSJ, Docket Entry No. 9, p. 10.
15
See
Pierce
Letter
from
FOLTD
re
Unit
Compensation
Distributions, Exhibit E to Pierce Affidavit, Docket Entry No. 9-1,
p. 24 (emphasis added).
-9-
v. Northwood Lincoln-Mercury, No. 14-04-00813-CV, 2005 WL 2875283,
at
*1-2
denied)
(Tex.
App.
(unpublished) .
Houston
[14th Dist.]
Nov.
3,
2005,
pet.
In Gorbet an employee demanded performance
from his employer on his 12-month term employment contract, which
required that even if Gorbet was terminated, he was to be paid for
the full 12-month period.
Id. at *1.
Gorbet was terminated for
cause under undisputed circumstances -- the only dispute between
the parties was whether the employment agreement was enforceable in
spite of the fact Gorbet was terminated for cause.
The court noted
that if an employer is warranted in discharging an employee, the
employee is not entitled to "collect the salary accruing to him"
after the date of his termination.
Id.
(emphasis added) .
The
court held that because the circumstances of Gorbet's termination
were uncontested and Gorbet was terminated for cause as a matter of
law, Gorbet was not entitled to the rest of his salary under the
contract.
Id. at *2.
Plaintiff argues that Gorbet does not apply for three reasons.
First, Plaintiff argues that Gorbet's holding is limited to term
employment contracts.
Second, Plaintiff argues that the employer
in Gorbet did not specifically promise to make payments to the
employee after termination.
Third,
Agreement
the
is
distinct
from
Plaintiff contends that the
employment
contract
in
Gorbet
because the Agreement was designed in part to reward Plaintiff for
her work for FOLTD and FOG, not solely to compensate Plaintiff for
future work she would perform for FOLTD and FOG.
-10-
Defendants argue that Gorbet applies because the Agreement was
between Plaintiff and her employer.
Defendants also argue that the
promise in Gorbet to pay the plaintiff's salary for the remainder
of his employment term if he were terminated is indistinguishable
from the promise in the Agreement to pay Pierce for five years
post-termination.
Defendants also argue that FOLTD's motive for
entering into the Agreement is irrelevant to this analysis.
The contract in Gorbet is distinguishable from the Agreement
at issue in this case in key respects. First, the contract at issue
in Gorbet was for employment for a specified term, rather than an
agreement to compensate an at-will employee.
importantly,
the
Agreement
specifically
Second,
and most
contemplated
paying
Plaintiff for five years after her termination in addition to any
salary she was receiving through her at-will employment with FOG
and FOLTD.
There is a difference between continuing to pay an
employee a salary for the remainder of an employment term, as in
Gorbet,
and paying an employee separate severance-like payments
promised by the employer in the event the employee was terminated,
as in this case.
As a general rule, in evaluating a contract courts should not
read
in
additional
terms
but
should
according to its plain meaning.
Insurance Co.
v.
Schaefer,
interpret
the
contract
American Manufacturers Mutual
124 S.W.3d 154,
157-59
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).
(Tex.
2003);
In the absence of
applicable, controlling Texas authority, the court declines to read
-11-
in a "for cause" exception to the Agreement between Plaintiff and
FOLTD.
The Agreement plainly requires FOLTD to pay Plaintiff five
years of payments after her termination.
The Agreement does not
excuse FOLTD's performance in the event of a for-cause termination.
The
Agreement
is
therefore
enforceable,
regardless
of
whether
Plaintiff was terminated for cause.
D.
Dr. Woods' Authority to Execute the Agreement
Both Plaintiff and FOLTD argue
summary judgment regarding Dr.
Agreement.
that
Woods'
they are entitled to
authority to execute the
Plaintiff argues that the Agreement is enforceable
because Dr. Woods had actual authority to sign the Agreement on
behalf of Snow Goose and FOLTD.
argues that Dr.
either
Agreement,
Plaintiff
Woods had apparent authority to enter into the
Agreement on FOLTD' s
lacked
In the alternative,
behalf.
actual
and that
or
Defendants argue
apparent
the Agreement
authority
is
that Dr.
to
Woods
execute
the
therefore not binding on
FOLTD.
1.
Actual Authority
It is undisputed that Dr. Woods signed the Agreement while he
was
President
of
Snow Goose
Corporation.
Dr.
required two levels of authority to be valid:
needed authority
to
execute
the
contract
Woods'
actions
First, Snow Goose
on behalf
of
FOLTD.
Second, because Dr. Woods signed the Agreement as President of Snow
Goose, he needed authority to act on behalf of Snow Goose.
-12-
Snow
Goose had the authority to enter into contracts on behalf of FOLTD
under FOLTD's limited partnership agreement, which expressly vests
Snow Goose with such authority. 16
The authority contested by the
parties, and the issue before the court, is whether Dr. Woods had
authority to act on behalf of Snow Goose.
Absent either actual or apparent authority, an agent cannot
bind a principal.
597 (Tex. 2007)
IRA Resources, Inc. v. Griego, 221 S.W.3d 592,
Actual and apparent authority are created through
conduct of the principal communicated either to the agent (actual
authority)
or to a third party (apparent authority) .
Kelly, 235 S.W.3d 179, 182
either express or implied.
(Tex. 2007).
Gaines v.
Actual authority can be
Express actual authority exists when
the principal has made clear to the agent that he wants the agent
to act on the principal's behalf.
Pasant, 52 F.3d at 97.
Implied
actual authority exists when there is only circumstantial proof of
actual authority.
Id.
Implied actual authority may arise from
(1) some indication from the principal to the agent that the agent
has such authority i
( 2)
authorized acti or (3)
a necessary implication of an expressly
from a previous course of dealing between
the principal and agent.
Id.
16
Amended and Restated Limited Partnership Agreement of Fondren
Orthopedic Ltd. , Exhibit 0 to Pierce Aff ida vi t, Docket Entry
No. 9-1, p. 103 ("12.2 The General Partner may take the following
actions if, as, and when it deems any such action to be necessary,
appropriate or advisable, at the sole cost and expense of the
Partnership:
(a) execute any and all documents, contracts,.
[etc.]
. ") .
-13-
Defendants argue that Dr.
Woods lacked actual authority to
enter into the Agreement because Pierce was an officer of Snow
Goose,
which required that the Agreement
Snow Goose
Board of
Directors
under
(1)
be approved by the
Snow Goose's
Bylaws 18
and
(2) comply with provisions of Texas law regarding contracts between
corporations and their officers. 19 Defendants also argue that while
the Agreement may have created an obligation between Plaintiff and
FOLTD, any agreement between Plaintiff and FOLTD is also a contract
between Plaintiff and Snow Goose because Snow Goose is FOLTD's
general partner.
Plaintiff argues that her status as a Snow Goose officer is
irrelevant
to
the
enforceability of
the Agreement
because
the
Agreement was executed between Plaintiff and FOLTD, not Plaintiff
and Snow Goose.
Plaintiff
and
involvement
in
The
FOLTD
the
The Agreement
court agrees.
and
has
nothing
management
of
to
Snow
do
Goose.
with
is between
Plaintiff's
The
court
is
therefore not persuaded by Defendants' arguments that the Agreement
required approval of the Snow Goose Board because of Plaintiff's
alleged status as an officer of Snow Goose.
The court is also not persuaded by Defendants' argument that
because Snow Goose is FOLTD's general partner, all FOLTD contracts
are necessarily Snow Goose contracts.
18
In its Cross-MPSJ,
See Snow Goose Corporation Bylaws, Exhibit 1
Declaration, Docket Entry No. 14-1, pp. 10-11 ~ 5.02.
19
to Bennett
See FOLTD's Cross-MPSJ, Docket Entry No. 32, pp. 8-13.
-14-
FOLTD
cites Peterson Group, Inc. v. PLTQ Lotus Group, L.P., 417 S.W.3d 46
(Tex. App. --Houston [1st Dist.] 2013, pet. denied), and Pinebrook
Properties,
Ltd.
v.
Brookhaven Lake
Property Owners Ass'n,
77
S.W.3d 487 (Tex. App. -- Texarkana 2002, pet. denied), in support
of its argument that Texas law considers limited partnerships to be
"one and the same"
with their general partners . 19
These cases
merely held that the doctrine of alter ego does not apply to the
general partners of limited partnerships because there is no need
to
"veil pierce"
general
partners
partnership
in order
are
already
obligations.
Pinebrook Properties,
to hold general partners
jointly and
Peterson
severally
Group,
77 S.W.3d at 499-500.
417
liable
liable
S.W.3d
at
on
57;
The fact that Snow
Goose could ultimately be held liable on one of FOLTD's obligations
does
not
contracts.
mean that
Snow Goose
was
a
party to all
of
FOLTD' s
The Agreement was between Plaintiff and FOLTD; it did
not purport to create a Snow Goose obligation.
The Agreement did
not need to conform to the requirements of the Snow Goose Bylaws or
Texas
law
regarding
contracts
between
corporate
officers
and
corporations.
Snow Goose's Bylaws are only relevant to determining whether
Dr. Woods had actual authority to act on behalf of Snow Goose as
its President. 20 The president of a corporation has no inherent
19
See FOLTD's Cross-MPSJ, Docket Entry No. 32, p. 8.
20
In Pierce's Response to Fondren Orthopedic Ltd. 's CrossMotion for Partial Summary Judgment, she argues that even if the
(continued ... )
-15-
authority by virtue of his office.
See Franco-Texan Land Co. v.
McCormick, 23 S.W. 123, 124 (Tex. 1893); Fitzhugh v. Franco-Texan
Land Co., 16 S.W. 1078, 1079 (1891).
authority
from
the
corporation has
board
of
Civ.
App.
directors,
no authority to
American Bank & Trust Co. v.
Beaumont
1977,
In the absence of specific
contract
Freeman,
writ
the
for
president
the
a
corporation.
560 S.W.2d 444,
ref'd
of
n.r.e.).
446
(Tex.
"[A]ctual
authority of the president to contract on behalf of the corporation
must be found either in specific statutes, in the organic law of
the corporation, or in a delegation of authority from the board of
directors formally expressed, or must be implied from the nature of
his position or from custom or habit of doing business."
Templeton
v. Nocona Hills Owners Ass'n, Inc., 555 S.W.2d 534, 537 (Tex. Civ.
App.
-- Texarkana 1977,
no writ).
The burden is on the party
claiming authority to demonstrate that the president had actual
authority to act on the corporation's behalf.
See In re Westec
Corp., 434 F.2d 195, 200 (5th Cir. 1970).
20
( • • • continued)
restrictions in Snow Goose's Bylaws are applicable, fact questions
concerning waiver, quasi-estoppel, ratification, and apparent
authority preclude summary judgment for FOLTD.
Pierce's Response
to Fondren Orthopedic Ltd. 's Cross -Motion for Partial Summary
Judgment ("Plaintiff's Response to FOLTD' s Cross-MPSJ"), Docket
Entry No. 37, pp. 6-13.
Because the Agreement was not for Snow
Goose officer compensation and Snow Goose is not a party to the
Agreement, the restrictions in Snow Goose's Bylaws on contracts
between Snow Goose and its officers do not apply.
FOLTD's CrossMPSJ ultimately fails on other grounds because FOLTD cannot prove
as a matter of law that Dr. Woods lacked authority (be that
authority actual or apparent)
The court therefore need not
address issues of waiver, quasi-estoppel, and ratification.
-16-
Plaintiff presents no evidence that the Snow Goose Board of
Directors expressly approved the Agreement signed by Dr.
Woods.
Because Dr. Woods has no inherent authority as President of Snow
Goose under Texas Law and the Snow Goose Board did not approve the
Agreement, the court must look to Snow Goose's Bylaws to determine
whether
Dr.
Woods
had
express
signatory for Snow Goose.
actual
authority
to
act
as
a
Snow Goose's Bylaws provide that "[t]he
President [of Snow Goose] shall have general and active management
and control of the business and affairs of the Company .
"22
Texas courts faced with identical language in corporate bylaws
have reached different conclusions as to what authority it gives to
the
corporation's
In
president.
Fortenberry
v.
Cavanaugh,
No. 03-07-00310-CV, 2008 WL 4997568, at *13-16 (Tex. App. -- Austin
Nov. 26, 2008, pet. denied), the court evaluated identical language
and concluded that
corporate
specific
president
the bylaws
to
act
as
on
board authorization,
a
whole did not authorize a
behalf
despite
of
the
the
company
language's
without
seemingly
broad grant of authority, because of other delegations to the board
of directors in the bylaws.
Another court concluded that the same
language authorized the president to act as a general manager, and
that under Texas law the general manager has authority to act as an
agent for the corporation and bind the corporation by contract.
22
See Snow Goose Corporation Bylaws,
Declaration, Docket Entry No. 14-1, p. 11
-17-
~
Exhibit
5.07.
1
to Bennett
Holman v.
Dow,
467 S.W.2d 547,
552
(Tex.
Civ.
App.
-- Beaumont
1971, writ ref'd n.r.e.).
The Snow Goose Bylaws have seemingly conflicting grants of
authority to the President and Board of Directors, with broad and
somewhat overlapping grants of power to each. 23
that the description of Dr. Woods'
The court concludes
responsibilities in the Snow
Goose Bylaws is not sufficient, standing alone, to support a grant
of actual authority to enter into contracts of all types for FOLTD.
In the absence of an express grant of actual authority, the court
must look to the conduct of Snow Goose and Dr. Woods to determine
if Dr. Woods had implied actual authority to sign FOLTD contracts
on behalf of Snow Goose.
Dr. Woods acted as a signatory for Snow Goose on documents
presented as exhibits by both Plaintiff and Defendants. 24
affidavit
Pierce states
that
"[o] n
behalf of
FOLTD,
Dr.
In her
Woods
unilaterally negotiated, entered into, and signed contracts without
a
vote
of
approval." 25
the
partners
or
any
prior
specific
partnership
Dr. Woods also acted as a signatory for Snow Goose on
a 2005 compensation agreement between Pierce and FOLTD, 26 and there
23
Compare id. at 11-12
~
5.07, with id. at 7
~
3.01.
24
See, e.g., Amendment No. 2, Exhibit 0 to Pierce Affidavit,
Docket Entry No. 9-1, p. 159; Snow Goose Corporation Bylaws,
Exhibit 1 to Bennett Declaration, Docket Entry No. 14-1, p. 17.
25
See Pierce Affidavit, Exhibit 1 to Plaintiff's MPSJ, Docket
Entry No. 9-1, p. 12.
26
See Pierce Letter from FOLTD Re Compensation Distributions,
Exhibit D to Pierce Affidavit, Docket Entry No. 9-1, p. 22.
-18-
is
no
evidence
that
the
Snow
Goose
Board
contested
the
2005
agreement during the nine-year period between 2005 and 2014, when
the Agreement challenged in this action was executed.
Neither Plaintiff nor Defendants have presented definitive
evidence demonstrating the scope of authority Dr. Woods was given
by Snow Goose to manage the affairs of FOLTD.
For summary judgment
for Plaintiff to be appropriate, Plaintiff must prove that, based
on the evidence presented, reasonable minds could not differ as to
whether Dr. Woods had authority.
For summary judgment for FOLTD to
be appropriate, FOLTD must show that Dr. Woods lacked authority to
execute the Agreement as a matter of law.
While no evidence has
been presented
to
documents
for
that
Snow Goose
Snow Goose
in
objected
Snow Goose's
Dr.
Woods
signing
capacity as
FOLTD' s
general partner, Plaintiff has failed to prove as a matter of law
that Dr.
Woods had direct authorization from Snow Goose,
that
Dr. Woods' authority to enter into the Agreement was implied from
an act expressly authorized by Snow Goose's Board of Directors,
that Snow Goose indicated to Dr. Woods that he had authority, or
that a previous course of dealing between Snow Goose and Dr. Woods
led Dr. Woods to believe he had authority.
Therefore, in spite of
considerable evidence tending to show that Dr. Woods had actual
authority, either express or implied, to execute the Agreement, the
court cannot conclude as a matter of law that Dr. Woods either had
or lacked actual authority.
-19-
2.
Apparent Authority
Plaintiff argues in the alternative that FOLTD should be bound
by
the
Agreement
because
Dr.
execute such an agreement.
Woods
had apparent
authority
to
Defendants argue that there are fact
issues as to whether a reasonably prudent person in Plaintiff's
position would believe Dr. Woods had authority to bind Snow Goose.
In FOLTD's Cross-MPSJ, FOLTD argues that Dr. Woods lacks apparent
authority as a matter of law.
Apparent authority arises "'either from a principal knowingly
permitting an agent to hold [himself] out as having authority or by
a principal's actions which lack such ordinary care as to clothe an
agent with the indicia of authority,
thus leading a
reasonably
prudent person to believe that the agent has the authority
purports to exercise.'"
elements
Gaines, 235 S.W.3d at 182.
[he]
The essential
required to establish apparent authority are:
( 1)
a
reasonable belief in the mind of the third party of the agent's
authority,
( 2)
generated by some holding out or neglect of the
principal, and (3) a justifiable reliance on the authority.
2616
South Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349,
356 (Tex. App. --Houston [14th Dist.] 2006, no pet.).
To be bound
on an apparent authority theory the principal must have had full
knowledge of all material facts.
To prove Dr.
Woods
Gaines, 235 S.W.3d at 182.
had apparent
authority
Plaintiff must
establish that Snow Goose created a reasonable belief in her mind
that Dr. Woods had authority to act for Snow Goose.
-20-
While Pierce
points to instances in which Dr. Woods acted as a signatory for
Snow Goose in negotiations for FOLTD, she has presented no evidence
that Snow Goose's Board held Dr. Woods out as authorized to execute
agreements on behalf of FOLTD.
Pierce also argues that the actions
of Dr. Woods' successor, Dr. Elkousy, are consistent with Dr. Woods
having apparent authority because Dr.
aware
of
the
Agreement,
did
not
Elkousy,
object
upon being made
to
its
validity. 27
Defendants have presented evidence that James Bennett, one of the
three members of Snow Goose's
then Board of Directors,
had no
knowledge of the Agreement between FOLTD and Pierce. 28
In its Cross-MPSJ, FOLTD argues that Dr. Woods lacked apparent
authority as a matter of law because Plaintiff was an insider, and
therefore could not have formed a reasonable belief of Dr. Woods'
apparent authority.
FOLTD cites In re Westec Corp., 434 F.2d at
195,
Fifth
in
which
the
Circuit
held
that
an
officer
of
a
corporation could not rely on apparent authority of another officer
of
the
same
corporation to
corporation's behalf.
by FOLTD's argument.
at
issue
in
Westec
create
a
Id. at 196-200.
binding agreement
on the
The court is not persuaded
The Agreement is distinguishable from the one
because
the
Agreement
did
not
impose
an
obligation on Snow Goose.
27
See Plaintiff's Response to FOLTD's Cross-MPSJ, Docket Entry
No. 37, p. 12.
28
See Bennett Declaration, Attachment 1 to Defendants' Response
to Plaintiff's MPSJ, Docket Entry No. 14-1.
-21-
The court concludes
that
Plaintiff has presented evidence
sufficient to create a fact issue on apparent authority based on
her knowledge of prior, similar contracts executed by Dr. Woods and
Snow Goose's acquiescence to such contracts. 28
As discussed above,
while there is a substantial amount of evidence that Dr. Woods had
some
form
implied)
of
authority,
or apparent,
be
that
authority actual
(express
to act for Snow Goose to bind FOLTD,
or
the
court cannot conclude as a matter of law that Dr. Woods either had
or lacked apparent authority to act as a signatory for Snow Goose
to bind FOLTD to the Agreement.
III.
Snow Goose Corporation's Motion to Intervene
Snow Goose, the general partner of FOLTD, filed a motion to
intervene pursuant to Federal Rule of Civil Procedure 24(b).
Goose
argues
Dr. Woods,
that
it
has
claims
against
both
Plaintiff
Snow
and
the former President of Snow Goose and the person who
signed the disputed Agreement, that share common questions of law
and fact with the existing claims in this action.
Plaintiff argues
that Snow Goose's motion should be denied because Snow Goose's
claims are meritless and unlikely to contribute significantly to
the development of the facts in this action.
28
See Pierce Affidavit, Exhibit 1 to Plaintiff's MPSJ, Docket
Entry No. 9-1, pp. 12-13 ~~ 3 7, 3 8 (citing other agreements
executed by Dr. Woods, including an instance where Dr. Woods
authorized a bonus to an FOLTD employee without a prior vote or
approval) .
-22-
Under Federal Rule of Civil Procedure 24(b)
the court may
permit anyone to intervene who "has a claim or defense that shares
with the main action a common question of law or fact."
Ci v. P. 24 (b) ( 1) (B) .
A motion for permissive intervention must not
only meet the requirements of Rule 24 (b)
timely filed.
Cir. 1977).
Fed. R.
Stallworth v. Monsanto Co.
1
but it must also be
I
558 F.2d 257 1 263
(5th
Plaintiff does not contest that Defendants/ motion is
timely/ only whether Snow Goose
1
S
claims share common issues of law
and fact such that permissive intervention is warranted.
"Permissive intervention
[district]
law or
court
fact
satisfied.'"
1
or
'is wholly discretionary with the
. even though there is a common question of
the
requirements
of
Rule
24 (b)
are
otherwise
New Orleans Public Service, Inc. v. United Gas Pipe
Line Co., 732 F.2d 452, 470-71 (5th Cir. 1984).
Appellate review
of denials of permissive intervention are reviewed under an abuse
of discretion standard.
When evaluating a
Id. at 471.
request
for permissive
intervention/
district court should consider 1 among other factors/
"a
whether the
intervenors are adequately represented by other parties and whether
they are likely to contribute significantly to the development of
the underlying factual issues.
When a proposed intervenor
possesses the same ultimate objectives as an existing litigant/ the
intervenor
absent
a
1
S
interests are presumed to be adequately represented
showing
of
adversity
-23-
of
interest,
collusion/
or
nonfeasance."
League of United Latin American Citizens, Council
#4434 v. Clements, 884 F.2d 185, 189 (5th Cir. 1989).
Snow Goose's proposed breach of fiduciary duty claims against
Plaintiff
stem
from
authority to sign it.
the
challenged
Agreement
and
Dr.
Woods'
Snow Goose alleges that Plaintiff breached
her fiduciary duty to Snow Goose because Plaintiff was an officer
of Snow Goose who knowingly received unauthorized payments from
Snow Goose through the Agreement and allowed unauthorized payments
to be made to Dr. Woods. 29
Snow Goose also argues that Plaintiff
"aided and abetted" a breach of fiduciary duty by Dr. Woods, who
signed the challenged Agreement.
Plaintiff responds that she was
not an officer of Snow Goose and that even if she were an officer
of Snow Goose,
the Agreement was between Plaintiff and FOLTD and
had nothing to do with her activities for Snow Goose.
As
discussed above,
the
court
is
not
persuaded
that
the
Agreement provided for compensation to Plaintiff as an officer of
Snow Goose.
The Agreement was executed by FOLTD to compensate
Plaintiff for her work for FOLTD and FOG.
Merely because Snow
Goose was FOLTD's general partner and Snow Goose acted as FOLTD's
signatory does not make Snow Goose a party to the Agreement.
Most
of Snow Goose's proposed breach of fiduciary duty claims against
Plaintiff are predicated on the false premise that the Agreement
29
See Snow Goose Corporation's Complaint in Intervention,
Exhibit 1 to Snow Goose Corporation's Motion to Intervene, Docket
Entry No. 19-1, pp. 9-10 ~~ 38-44.
-24-
was
improper
officer
compensation
officer of Snow Goose. 31
for
Plaintiff's
work
as
an
Snow Goose has no right to assert such a
claim because the Agreement did not provide for Snow Goose officer
compensation to Plaintiff.
Because the Agreement did not provide for compensation to
Plaintiff as an officer of Snow Goose, Snow Goose's only remaining
breach of
fiduciary
duty claim against
Plaintiff
alleges
that
Plaintiff caused unauthorized payments to be made to Dr. Woods,
breaching her fiduciary duties to Snow Goose.
Snow Goose alleges
that Dr. Woods authorized improper payments to himself from Snow
Goose funds.
Snow Goose refers to these payments as "similar" to
the payments received by Plaintiff, which the court has concluded
were not Snow Goose officer compensation,
work Plaintiff did for FOLTD and FOG.
but were payments for
Merely because an individual
is an officer of a corporation does not make all income received by
that individual "officer compensation"
approval.
The
court
is
not
that would require Board
persuaded
that
the
challenged
compensation to Dr. Woods is distinguishable from the compensation
to Plaintiff in any significant respect.
In determining whether to allow Snow Goose to intervene, the
court must evaluate not only whether Snow Goose's proposed claims
share common issues of law and fact with the claims already pending
in
this
action,
but
also
whether
-25-
Snow
Goose's
interests
are
adequately represented by FOLTD and FOG.
The partners of FOG and
FOLTD were often partners in both entities.
Some of the partners
of FOG and FOLTD were also involved in Snow Goose's management.
All three members of Snow Goose's Board of Directors at the time of
the challenged Agreement were also partners in FOG and FOLTD. 31
Plaintiff's
claims
fall
into
two
categories:
breach of
contract claims and employment claims -- both stemming from her
termination from FOG.
Snow Goose has
failed to show that its
interests differ from FOLTD or FOG's interests in this case.
Any
breach of fiduciary duty claims against Plaintiff stemming from the
Agreement may be asserted by FOLTD.
The breach of fiduciary duty
claims Defendants assert in their proposed amendments to their
counterclaims against Pierce are nearly identical to those asserted
by Snow Goose. 32
The court concludes that the interests of Snow
Compare Amended and Restated Limited Partnership Agreement
of Fondren Orthopedic Ltd., Exhibit 0 to Pierce Affidavit, Docket
Entry No. 9-1, pp. 148-49 (listing C. Craig Crouch, James B.
Bennett, and G. William Woods as partners in FOLTD), with Snow
Goose Corporation Bylaws, Exhibit 1 to Bennett Declaration, Docket
Entry No. 14-1, p. 7 (listing Dr. G. William Woods, Dr. C. Craig
Crouch, and Dr. James B. Bennett as the initial directors of Snow
Goose).
31
32
FOLTD and FOG contend that Pierce breached fiduciary duties
to them by both "causing unauthorized payments to be made from
FOLTD funds" and "receiving unauthorized payments from FOLTD
funds." FOLTD and FOG further argue that Pierce aided a breach of
fiduciary duty by Dr. Woods by causing payments to be made both to
herself and Dr. Woods. See Defendants Fondren Orthopedic Group LLP
and
Fondren
Orthopedic
Ltd. 's
Second Amended Answer
and
Counterclaim ("Defendants' Second Amended Answer & Counterclaim") ,
Exhibit 1 to Defendants' Motion for Leave to File a Second Amended
Answer and Counterclaim, Docket Entry No.
20-1,
pp.
23-26
(continued ... )
-26-
Goose are adequately represented by FOLTD because the Agreement was
between Plaintiff and FOLTD.
Intervention by Snow Goose would not
contribute
the
significantly
to
factual issues in this action.
development
of
the
underlying
Snow Goose Corporation's Motion to
Intervene will therefore be denied.
IV.
FOLTD's Motion for Leave to File
a Third-Party Complaint
FOLTD argues that it should be granted leave to file a thirdparty complaint against Dr. Woods pursuant to Federal Rule of Civil
Procedure 14(a)
Plaintiff,
on the ground that if FOLTD is found liable to
Dr. Woods would be liable to FOLTD because Dr. Woods
breached his fiduciary duty to FOLTD in executing the Agreement.
Plaintiff argues that leave should not be granted because FOLTD's
proposed claims against Dr. Woods have no merit.
Federal Rule of Civil Procedure 14 (a)
provides that,
"[a]
defending party may, as a third-party plaintiff, serve a summons
and complaint on a nonparty who is or may be liable to it for all
or part of the claim against it.
But the third-party plaintiff
must, by motion, obtain the court's leave if it files the thirdparty complaint
answer."
more
than
14
days
Fed. R. Civ. P. 14(a) (1).
32
after
serving
its
original
A third-party claim need not
( • • • continued)
(contending that Pierce breached her fiduciary duties to FOLTD and
FOG by "causing unauthorized payments to be made to her from FOLTD
funds" and "concealing the .
. unauthorized payments" from FOG
and FOLTD).
-27-
be based on the same theory as the main claims in the lawsuit.
Southern Railway Co. v.
Fox,
339 F.2d 560,
563
(5th Cir.
1964).
The district court is given "wide discretion in determining whether
to permit such third-party procedure to be resorted to."
Id.
For
a third-party complaint to be proper under Rule 14(a), the thirdparty plaintiff (or original defendant) must allege that the thirdparty defendant
is secondarily
(or derivatively)
liable to the
third-party plaintiff for an obligation it incurs in the litigation.
Charles Alan Wright, Arthur R. Miller, Mary Kay Kane, & Richard L.
Marcus, FEDERAL PRACTICE & PROCEDURE § 1446 (3d ed. 2011).
Rule 14(a) does not compel a defendant to bring third parties
into an action; it simply permits the addition of anyone who meets
the standard set forth by Rule 14(a).
City of Gretna v. Defense
Plant Corp., 159 F.2d 412, 413 (5th Cir. 1947).
"In many instances
tactical considerations will lead a party to pursue an independent
action
against
a
possible
resorting to impleader."
Mary Kay Kane,
&
third-party
defendant
rather
than
Charles Alan Wright, Arthur R. Miller,
Richard L. Marcus, FEDERAL PRACTICE
&
PROCEDURE§ 1446
(3d ed. 2011).
A corporate
general
limited partnership.
737 S.W.2d 375,
writ).
377
partner owes
fiduciary
duties
to
the
Grierson v. Parker Energy Partners 1984-I,
Houston
(Tex. App.
[14th Dist.]
1987, no
Not only is the corporation itself liable, but an officer
of a corporate general partner who is entrusted with the management
of a limited partnership and who exercises control over the limited
-28-
partnership owes a fiduciary duty to the limited partnership as
well.
See In re Harwood, 637 F.3d 615, 622 (5th Cir. 2011).
Goose owes fiduciary duties to FOLTD.
(and exercised)
Snow
If Dr. Woods was vested with
control over FOLTD by virtue of his position as
President of Snow Goose, Dr. Woods owed fiduciary duties to FOLTD.
Therefore, FOLTD may seek to hold Dr. Woods liable for breaching
fiduciary duties he owed directly to FOLTD.
But that does not mean that FOLTD's proposed claims against
Dr.
Woods are appropriate for impleader under Rule 14 (a) .
For
impleader to be proper under Rule 14(a), the third-party plaintiff
(or original defendant) must allege that the third-party defendant
is
secondarily
obligation
Arthur R.
PRACTICE
&
it
liable
incurs
Miller,
PROCEDURE
to
in
the
Mary Kay
§
the
third-party
litigation.
Kane,
&
1446 (3d ed. 2011).
liability is central to Rule 14(a)
plaintiff
Charles
Richard
L.
Alan
Marcus,
for
an
Wright,
FEDERAL
The notion of derivative
and thus "impleader has been
successfully utilized when the basis of the third-party claim is
indemnity, subrogation, contribution, express or implied warranty,"
or the like.
Id.
A claim that is not derivative of or dependent
on the main claim cannot be brought into the controversy under
Rule 14(a), no matter how factually analogous it is to the main
claim.
Id.
§
1442.
The court is not persuaded by FOLTD's argument
that its claims against Dr. Woods are derivative in nature.
Merely
because FOLTD's proposed breach of fiduciary duty claims against
-29-
Dr. Woods arise from the same factual transaction as this action
does not make FOLTD's claims against Dr. Woods "derivative" in the
sense contemplated by Rule 14(a).
FOLTD
argues
that
in
executing
breached his fiduciary duty to FOLTD.
of-fiduciary-duty claim
the
Agreement,
Dr.
Woods
"The elements of a breach-
[under Texas law]
are:
(1)
a fiduciary
relationship existed between the plaintiff and defendant;
(2) the
defendant breached its fiduciary duty to the plaintiff; and (3) the
defendant's breach resulted in injury to the plaintiff or benefit
to the defendant."'
Neese v. Lyon, 479 S.W.3d 368, 386 (Tex. App.
Dallas 2015, no pet.).
Dr. Woods' liability to FOLTD for breach
of fiduciary duty is not contingent on the outcome of this case.
Even if Dr. Woods had general authority to act for Snow Goose in
executing
contracts
Agreement valid)
on behalf
of
FOLTD
(which
would make
the
he could still be found liable to FOLTD if the
Agreement was not in FOLTD's best interests.
If FOLTD is correct
that Dr. Woods breached his fiduciary duties to FOLTD in entering
into the Agreement with Plaintiff, FOLTD may have a claim against
Dr. Woods regardless of how the court resolves Plaintiff's claims.
Any breach of fiduciary duty claim that FOLTD has against Dr. Woods
may be pursued in a separate action between FOLTD and Dr. Woods.
Because FOLTD's proposed claim is not appropriate for Rule 14(a)
impleader, FOLTD's Motion for Leave to File a Third-Party Complaint
will be denied.
-30-
V.
Defendants' Motion for Leave to Amend
Defendants
seek
leave
to
file
an
amended
answer
and
counterclaim that adds "additional bases to support [Defendants']
breach of fiduciary duty claim, an additional claim for aiding and
abetting breach of fiduciary duty, and the remedy of constructive
trust." 33
Defendants recently filed Defendants Fondren Orthopedic
Group LLP and Fondren Orthopedic Ltd.'s Third Amended Answer and
Counterclaim ("Defendants' Third Amended Answer
(Docket Entry No.
38),
&
Counterclaim")
which acknowledged that their Motion for
Leave to Amend their counterclaims was still pending before the
court. 34
Answer
It appears to the court that Defendants'
Third Amended
Counterclaim contains the same proposed amendments as
&
Defendants' proposed Second Amended Answer & Counterclaim (Docket
Entry No.
futility.
20-1),
to
which
Plaintiff
objects
on
the
basis
of
35
Under Rule 15 of the Federal Rules of Civil Procedure a party
may amend its pleading once as a matter of course within 21 days of
33
Defendants' Motion for Leave to File a Second Amended Answer
and Counterclaim, Docket Entry No. 20, p. 1.
34
See Defendants' Third Amended Answer & Counterclaim, Docket
Entry No. 38, p. 1.
35
Compare Defendants' Second Amended Answer & Counterclaim,
Exhibit 1 to Defendants' Motion for Leave to File a Second Amended
Answer and Counterclaim, Docket Entry No. 20-1, ~~ 28-37, 40, 43,
47-55, with Defendants' Third Amended Answer & Counterclaim, Docket
Entry No. 38, ~~ 28-37, 40, 43, 47-55.
-31-
service.
Fed.
R.
Civ.
P.
15 (a) (1) (A).
After the window for
amendment as a matter of course closes,
"a party may amend its
pleading only with the opposing party's written consent or the
court's leave.
requires."
The court should freely give leave when justice so
Fed. R. Civ.
P. 15(a) (2).
The decision to grant or
deny leave to amend "'is entrusted to the sound discretion of the
Pervasive Software, Inc. v. Lexware GmbH & Co.
district court.'"
KG, 688 F.3d 214, 232 (5th Cir. 2012).
"Courts
within the
Fifth Circuit
examine
five
determine whether leave to amend should be granted:
factors
1)
to
undue
delay, 2) bad faith or dilatory motive, 3) repeated failure to cure
deficiencies by previous amendments,
opposing party,
America,
futility of
undue prejudice to the
the amendment."
Petrobras
Inc. v. Vicinay Cadenas, S.A., 921 F. Supp. 2d 685, 689
(S.D. Tex. 2013)
590,
and 5)
4)
595
(citing and quoting Smith v. EMC Corp., 393 F.3d
(5th Cir.
2004))
Factors one through three
(internal
quotation marks
(undue delay,
failure to cure deficiencies)
bad faith,
do not apply.
omitted).
and repeated
Nor does Plaintiff
allege that Defendants' proposed amendment would cause her undue
prejudice.
Plaintiff contests only the futility of Defendants'
proposed amendment.
Plaintiff argues that Defendants should not be
granted leave to amend because Dr. Woods did not commit a breach of
fiduciary duty.
Plaintiff could therefore not have
abetted" such a breach.
-32-
"aided and
The amendments proposed by Defendants rely on the premise that
the Agreement
(and any additional
challenged payments made
to
Dr. Woods from FOLTD funds) was improper because Dr. Woods lacked
authority to unilaterally compensate another Snow Goose officer. 36
While Defendants may have other grounds to support a counterclaim
against
Plaintiff,
Defendants'
current
proposed amendments
are
predicated on the incorrect premise that Dr. Woods lacked authority
to execute the Agreement because the Agreement provided Snow Goose
officer compensation to Plaintiff.
Defendants' Motion for Leave to
File a Second Amended Answer and Counterclaim will therefore be
denied.
VI.
Conclusion and Order
For the reasons stated above,
Pierce's Motion for Partial
Summary Judgment on Two of Her Breach of Contract Claims
(Docket
Entry No. 9) is DENIEDi Fondren Orthopedic Ltd.'s Cross-Motion for
Partial Summary Judgment
(Docket Entry No.
32)
is DENIEDi
Snow
Goose Corporation's Motion to Intervene (Docket Entry No. 19)
DENIED i
Fondren Orthopedic
Ltd. 's
Motion
for
Leave
to
File
is
a
See Defendants'
Second Amended Answer & Counterclaim,
Exhibit 1 to Defendants' Motion for Leave to File a Second Amended
Answer and Counterclaim, Docket Entry No. 20-1, pp. 21-23 (arguing
that Dr. Woods did not have the authority as President of Snow
Goose to promise payments to Plaintiff, who was also an officer of
Snow Goose, without prior approval from the Snow Goose Board of
Directors) .
36
-33-
Third-Party
Complaint
(Docket
Entry
No.
21)
is
DENIED;
and
Defendants' Motion for Leave to File a Second Amended Answer and
Counterclaim (Docket Entry No. 20) is DENIED.
SIGNED at Houston, Texas, on this 28th day of November, 2018.
SIM LAKE
UNITED STATES DISTRICT JUDGE
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