MARTIN L.C. FELDMAN, District Judge.
Before the Court are two motions: (1) a motion for summary judgment by BG
This breach of contract action arises out of an oral agreement in which Gulf Coast Facilities Management, L.L.C. contends that BG breached its obligation to pay 10 percent of all revenue and material benefits that Gulf Coast facilitated for BG, even after BG fired it.
For years BG has shipped liquefied natural gas through the Turnbasin at the Port of Lake Charles. In 2005 BG decided to lease about 80 acres of land surrounding the Port; BG did not need the land for its own operations, but it wanted to have some measure of control over what activities took place there. Because activities of other companies in the Turnbasin had interfered with BG's shipping, BG wished to sublease the property only to those tenants that could operate without hindering BG's access to the Turnbasin.
BG worked with outside counsel, David Hunter, who provided a model form sublease to use in negotiating potential subleases. BG hired a maintenance company, TSI, but also decided to hire a property manager, who would be tasked with negotiating potential subleases with interested parties found by Trunkline, market the property to other potential sublessees, and collect rent.
Kent Morrison, a local attorney, learned through BG's general counsel, Bowe Daniels, who was a contact from law school, that BG was looking for a property manager; in February 2006 Morrison submitted a written proposal to BG. In the proposal, Morrison described Gulf Coast Facilities Management, LLC as a property management firm with "extensive experience managing and leasing port facilities similar to that held by BG"; that might or might not have been true. Gulf Coast, it has been suggested, was not formed until some six or seven months after the proposal to BG—in September 2006.
Although Morrison represented to BG that the people behind Gulf Coast had significant experience in commercial real estate and in the maritime and port facilities industry, Morrison himself had never before owned or managed any port properties.
After some back-and-forth between Howard Candelet (BG's Vice President of
Morrison performed most of the work that Gulf Coast did for BG; it is undisputed that whatever work he did for BG he did in his spare time from his work as a full-time attorney in a city law firm.
No one at BG ever inquired into whether Gulf Coast or its principals had a real estate license. In fact, neither Morrison nor Phillips had a real estate license at the time Gulf Coast was formed or while Gulf Coast was working for BG LNG.
Using the model sublease form provided by BG LNG's outside counsel, Gulf Coast helped negotiate with potential sublessees already found by BG or Trunkline; some
During the time that Gulf Coast was associated with BG, the revenue from the Turnbasin property increased impressively, from approximately $1,000 per month to more than $160,000 per month. According to Gulf Coast, BG's ability to offset the cost of its strategic goals in acquiring control of the Turnbasin was directly attributable to Gulf Coast's expertise.
At some point after Gulf Coast began working for BG, the parties tried unsuccessfully to negotiate a written contract to govern their relationship. BG provided Gulf Coast with a standard contract form or outline that BG used with its vendors and asked Gulf Coast to fill in the relevant terms. Consistent with the oral agreement, Gulf Coast filled in a provision in which it would be paid a 10 percent commission on rent paid to BG. But then Gulf Coast also included in the proposed written agreement that it be paid its 10 percent commission for the life of any sublease BG LNG entered during the time Gulf Coast served as property manager, as well as for the life of any renewals of those subleases. The parties never executed a written agreement.
In early March 2009, BG fired Gulf Coast.
BG now moves for summary judgment, contending that the undisputed facts show that the plaintiff lacks a real estate license and that Louisiana law bars an unlicensed person from receiving compensation for real estate services. In its counterclaim, BG seeks a declaration that Gulf Coast is liable to return funds it received and retained for work it performed for BG without a license. Gulf Coast, for its part,
Federal Rule of Civil Procedure 56 instructs that summary judgment is proper if the record discloses no genuine issue as to any material fact such that the moving party is entitled to judgment as a matter of law. No genuine issue of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine issue of fact exists only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The Court emphasizes that the mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. See id. Therefore, "[i]f the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50, 106 S.Ct. 2505 (citations omitted). Summary judgment is also proper if the party opposing the motion fails to establish an essential element of his case. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In this regard, the non-moving party must do more than simply deny the allegations raised by the moving party. See Donaghey v. Ocean Drilling & Exploration Co., 974 F.2d 646, 649 (5th Cir.1992). Rather, he must come forward with competent evidence, such as affidavits or depositions, to buttress his claims. Id. Hearsay evidence and unsworn documents do not qualify as competent opposing evidence. Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir.1987). Finally, in evaluating the summary judgment motion, the Court must read the facts in the light most favorable to the non-moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.
"It is well established that statutes are to be construed in such a manner as to effectuate their purpose." Smith v. Cajun Insulation, Inc., 392 So.2d 398, 400 (La.1980) (citations omitted). As the state high court has observed, statutes must be construed in accordance with the standard rules for statutory construction:
ABL Mgmt., Inc. v. Bd. of Supervisors of Southern Univ., 773 So.2d 131, 135 (La.2000)(internal citations omitted).
These motions raise issues concerning the scope of the Louisiana Real Estate
Louisiana's Real Estate License Law, it is said, "was founded on the strong public policy to regulate the real estate business and it cannot be set aside by contract." Towne Center, Ltd. v. Keyworth, 618 So.2d 467, 470 (La.App. 4th Cir.1993) (citations omitted). The broad goal of the law seems to be to enable state regulation of how and who can conduct the comprehensive span of real estate activity in this state. La. R.S. 37:1430, et seq. Under the law, the Louisiana Real Estate Commission is empowered to, among other things, regulate the issuance of real estate licenses, censure licensees, suspend or revoke licenses, and impose certain requirements on licensees, such as professional competency. La.R.S. 37:1435.
BG contends that the Real Estate License Law bars Gulf Coast's recovery as a matter of law because, while Gulf Coast never had a real estate license, it performed real estate activities in violation of the statute. Various provisions of the statute are implicated. The Real Estate License Law first defines the regulated activities and relevant terms, such as:
La.R.S. 37:1431.
The licensing law is meant to be rigorous.
In requiring that one must first obtain a license before engaging in the conduct or activities of a real estate broker or salesperson,
Thus, anyone engaging in the business of real estate salesperson or broker for even one time must be licensed. La.R.S. 37:1436. That is, unless they are exempt: the statute provides for certain exemptions from the licensing requirement; for example, a person or company that sells or leases its own property can do so without first obtaining a license.
Another provision of the statute mandates that "[n]o person engaged in real estate activity without a currently valid license shall have the right to receive any compensation for services so rendered." La.R.S. 37:1459(D). Among the civil remedies and penalties that the Commission may impose on anyone engaging in real estate activity without a current license, "the commission may require that any person engaged in real estate activity without a license return any fees collected for engaging in real estate activity." La.R.S. 37:1459(D).
Finally, pursuant to yet another section of the licensing law, courts are forbidden from enforcing contracts for brokerage charges in favor of unlicensed persons. It is this section of the law that the parties most contentiously dispute and which runs amok of an otherwise understandable statutory scheme
Mindful of the statutory scheme, the Court must determine whether the Real Estate License Law bars the plaintiff's claim. The optimum way for BG to prevail would be to convince the Court that the parties' oral arrangement falls within the scope of La.R.S. 37:1445. However, Section 1445, as amended, makes it difficult to conclude post-1989 that the particular provision applies beyond the context of its own internal limitations.
As Gulf Coast reads Section 1445, the 1989 amendment limited the statute's scope so that now it merely prohibits an unlicensed person from receiving compensation for real estate activity he performs on behalf of a licensed broker; Section 1445, insists Gulf Coast, no longer bars, as it once did, an unlicensed person from receiving compensation directly from an unlicensed client.
Section 1445 makes Gulf Coast's position more credible but at the same time adds a portion of irrationality to an otherwise clear statutory policy.
It is clear that BG's leasehold interest in the 80 acres at the Turnbasin constitutes "real estate" as defined by La.R.S. 37:1431(6). Leasing this "real estate" constitutes a "real estate transaction" as defined by La.R.S. 37:1431(20). Pursuant to La.R.S. 37:1431(7), any work by a person or limited liability company "relating to any portion of a real estate transaction", including the leasing or negotiation of leases, constitutes broadly defined "real estate activity." Further, to the extent the record reflects that Gulf Coast also engaged in property management such as "marketing, leasing, or overall management of real property" (La.R.S.37:1431(31)) for BG, Gulf Coast was a "property manager" insofar as it managed BG's real estate and collected rents. La.R.S. 37:1431(18).
Because the licensing law makes it illegal for any person who lacks a current real estate license to "offer[], attempt[], or agree[] to perform, or perform[] any single act" encompassed by the Real Estate License Law (La.R.S.37:1436), the defendants
Gulf Coast does not dispute that it lacked a real estate license or that it performed at least a "single act" covered by the Real Estate License Law. Indeed, it seems clear that much of Gulf Coast's work, including attempting to market BG's leasehold interest to potential sublessees, negotiating subleases, and collecting rent, falls within the scope of the requirements of the licensing law. Accordingly, pursuant to La.R.S. 37:1436 and 1459, Gulf Coast has violated the Real Estate License Law and is statutorily barred from claiming compensation for its services.
Gulf Coast compartmentalizes what it did, so as to salvage some of its claims and also raises technical pleading issues: first, it attempts to avoid the application of the statute by suggesting that BG has the burden of raising the illegality of Gulf Coast's conduct. This contention is undermined by Schexnayder, 948 So.2d 1259. Even if BG has the burden of raising illegality of Gulf Coast's conducting real estate activity without a license,
Gulf Coast also seeks to avoid application of the Real Estate License Law by contending that at least some of the types of services provided to BG by Gulf Coast fall outside the scope of the statute. That is, Gulf Coast suggests that it served as a consultant (and not a broker or salesperson) and performed other discrete tasks not covered by the license law. Without clear support that the Court could compartmentalize Gulf Coast's recovery, Gulf Coast elevates mere semantics over substance. While Gulf Coast concedes that it negotiated with sublessees, saw to the eviction of non-paying tenants, attended hearings, provided planning to BG to secure its strategic interests, drafted and revised subleases, and performed activities that fall within the broad parameters of a property manager, Gulf Coast insists that it never did the type of tasks that are the real estate agents' and brokers' reason for existence—the marketing of and solicitation of tenants (although apparently it was supposed to). Gulf Coast provides no support for its assertion that it may recover for those tasks it argues fall outside the scope of the statute even though it admittedly performed many tasks that fall within its reach. Nor does Gulf Coast suggest how the Court would be tasked with segregating how much each activity was worth in the mix of the 10 percent commission.
Gulf Coast alternatively contends that, because BG benefitted from Gulf Coast's work, Gulf Coast can still recover
Finally, there is the issue of the defendants' counterclaim: whether Gulf Coast must repay part of the commissions because much of Gulf Coast's work was "real estate activity" which was performed contrary to law. BG contends that Gulf Coast is obligated to reimburse BG for the compensation it previously received, with the quantum to be determined at trial. BG insists that the Louisiana Civil Code supports its argument that one can be reimbursed if he pays something that was not owed. The Court agrees. La. Civ.Code art. 2299 provides that "A person who has received a payment or a thing not owed to him is bound to restore it to the person from whom he received it." La. Civ.Code art. 2300 provides that "A thing is not owed when it is paid or delivered for the discharge of an obligation that does not exist." Indeed, requiring an unlicensed person engaging in real estate activity to return fees collected has textual support: among the civil remedies and penalties that may be imposed on anyone engaging in real estate activity without a current license, "the commission may require that any person engaged in real estate activity without a license return any fees collected for engaging in real estate activity." La. R.S. 37:1459(D). Thus, Louisiana law clearly provides BG a theory of recovery.
Accordingly, the defendants' motion is GRANTED and the plaintiff's motion is DENIED. A determination as to the quantum of BG's counterclaim must await trial.
Before the Court is the plaintiff's motion to certify this Court's August 2nd Order for immediate appeal pursuant to 28 U.S.C. § 1292(b), or in the alternative, as final pursuant to Rule 54(b) and to stay further proceedings. For the reasons that follow, the plaintiff's motion is DENIED.
This breach of contract action arises out of an oral property management agreement in which Gulf Coast Facilities Management, L.L.C. contends that BG
The plaintiff now requests that the Court certify its August 2, 2010 Order for immediate appeal or (alternatively) as final, and further requests that the Court stay these proceedings pending appeal.
The certification of interlocutory orders for appeal is governed by 28 U.S.C. § 1292(b), which provides:
To certify an issue for interlocutory appeal, the appealable issue must involve: (1) a controlling issue of law; (2) a substantial ground for a difference of opinion; and (3) a question whose immediate appeal from the order will materially advance the ultimate termination of the litigation. See Aparicio v. Swan Lake, 643 F.2d 1109, 1110 n. 2 (5th Cir.1981).
Interlocutory appeals are "exceptional," the Fifth Circuit cautions, and "assuredly do not lie simply to determine the correctness" of a ruling. Clark-Dietz & Associates-Engineers, Inc. v. Basic Constr. Co., 702 F.2d 67, 67-69 (5th Cir. 1983); see also Tolson v. United States, 732 F.2d 998, 1002 (D.C.Cir.1984) (citing Wright & Miller for the proposition that Section 1292(b) "is meant to be applied in relatively few situations and should not be read as a significant incursion on the traditional federal policy against piecemeal appeals").
The issue presented is whether the Louisiana Real Estate License Law bars Gulf Coast's recovery of commissions because Gulf Coast did not have a real estate license. This is a question of law. To be a controlling question of law, courts require that it have "some impact on the course of the litigation." Ryan v. Flowserve Corp., 444 F.Supp.2d 718, 723 (N.D.Tex.2006). Assuming, without deciding, that the issue presented is a controlling one, the Court finds that the plaintiff fails to show a substantial ground for difference of opinion and, thus, certification of the issue for interlocutory appeal is unwarranted.
Courts have held that a substantial ground for difference of opinion exists where
Ryan, 444 F.Supp.2d at 723-24 (quoting 4 Am.Jur.2d Appellate Review § 128 (2005)). In its August 2, 2010 Order, this Court relied on the text of the real estate licensing law to conclude that Gulf Coast was statutorily barred from claiming compensation for its services. While the Fifth Circuit has not taken up the issue of whether Louisiana bars an unlicensed person from recovering commissions for real estate work, this Court noted that Louisiana state court cases have held as such. See Schexnayder v. Gish, 948 So.2d 1259 (La.App. 2 Cir.2007); Towne Center, Ltd. v. Keyworth, 618 So.2d 467 (La.App. 4 Cir.1993); Rainey v. Riley, 388 So.2d 110 (La.App. 1 Cir.1980); Brumfield v. Brumfield, 450 So.2d 1019 (La.App. 1 Cir.1984). On the other hand, Gulf Coast cited no case law in support of its position that unlicensed persons may recover commission for real estate activity, or that other courts have reached a different result, such that the Court could conclude that there is a substantial ground for difference of opinion.
Having found that the plaintiff has failed to establish that substantial grounds for disagreement with this Court's determination, the Court need not determine whether immediate appeal would advance the termination of the litigation. However, the Court notes its agreement with the defendants that—even if the Fifth Circuit reversed this Court's August 2nd summary judgment and determined that the real estate license law does not bar Gulf Coast from recovering commissions—the evidence that would be submitted in support of Gulf Coast's claim would not be duplicative of the narrow issue remaining for trial on October 4th (the quantum of the defendants' counterclaim for reimbursement) and, thus, an immediate appeal would not materially advance the litigation towards termination.
Gulf Coast alternatively urges the Court to enter a final judgment as to its determination that Louisiana law bars Gulf Coast from recovering commissions it earned without a real estate license.
When a court ruling resolves one or more, but fewer than all claims, Federal Rule of Civil Procedure 54(b) provides an avenue to appeal part of the suit; it provides:
Pursuant to this rule, the Court may permit an interlocutory appeal by expressly certifying that there is "no just reason for delay", and directing entry of a final judgment on the issue. In determining whether there is no just reason for delay, the Court should "take into account judicial administrative interests as well as the equities involved." Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8, 100 S.Ct. 1460,
Gulf Coast insists that its claim to recover for the work it did for BG is a discrete claim that should be made final for immediate appeal. Gulf Coast suggests that requiring the parties to proceed with trial in October prior to appellate review of its claim would compromise judicial administrative interests and be inequitable for the parties because it could result in duplicative appeals. Gulf Coast further contends that the threat of piecemeal appeals is small. Gulf Coast invokes cases in which courts designated as final and certified for immediate appeal jurisdictional determinations and insists that the applicability of the real estate license law to its claims is a unique question of law that is ripe for immediate appeal.
The defendants counter that there is no danger of hardship or injustice that would be alleviated by an immediate appeal because trial is only one month away and, once it is concluded, Gulf Coast may appeal all of the issues in the case. Moreover, because there is only the narrow issue of quantum of the defendants' counterclaim remaining for trial—regardless of the ruling on appeal—the parties will not have to retry the same factual issues in a second trial. On the other hand, the defendants contend, allowing an immediate appeal of this Court's summary judgment ruling will likely result in piecemeal appeals: if Gulf Coast appeals immediately, regardless of the outcome of the appeal, there will likely be another appeal after the trial of the remaining issues in the case. Accordingly, the defendants maintain that the plaintiff has failed to show that there is "no just reason for delay." The Court agrees. Discovery is complete and most of the case has already been litigated; only the trial remains and it involves only one narrow issue of resolving the quantum of the defendants' counterclaim and any defense that Gulf Coast may have. There is no suggestion that Gulf Coast will suffer hardship or injustice by waiting one more month to appeal this Court's summary judgment ruling.
Accordingly, the plaintiff's motion is DENIED.
The parties agree that BG had the power to fire Gulf Coast but they disagree on the consequences of termination: Howard Candelet, who negotiated on behalf of BG LNG, understood that BG could fire Gulf Coast at anytime, and that no further commission would be owed; Morrison and Phillips, on behalf of Gulf Coast, do not recall specifically what was said in negotiations regarding termination, but both state that it was assumed that the 10 percent commission survived termination. That it was an agreement essentially for life.
According to Morrison, Gulf Coast was to be paid 10 percent "[f]or whatever we put in place . . . [t]hat's the extensions on the lease, the life of the lease. . . ." Phillips testified that Gulf Coast was to be paid "ten percent of the value that we created in the property." How that was to be assigned monetary worth, they say, was tied to rents. Independent proof seems nonexistent or scant at best.
(1) Any person, partnership, limited liability company, association, or corporation, foreign or domestic, which has not been granted a real estate license in Louisiana and which, as owner of lessor, either individually or through an employee or representative and performs acts of ownership with reference to the property owned by him. . . .
(2) The service rendered by an attorney at law on behalf of a client which may be required in the normal course of other legal representation.
. . .
(5) Any individual, corporation, partnership, trust, limited liability company, joint venture, or other entity which sells, exchanges, leases, or manages its own property. . . .
(6) Any salaried person employed by a licensed real estate broker for and on behalf of the owner of any real estate which the licensed broker has contracted to manage for the owner, if the salaried employee is limited in his employment to [e.g., delivering a lease application; providing information about a rental unit, a lease, an application for lease, or the status of a security deposit or the payment of rent; or assisting in the performance of property management functions by carrying out administrative, clerical, or maintenance tasks.]
. . . .
