Louisiana v. Guidry

Decision Date15 June 2007
Docket NumberNo. 06-30641.,06-30641.
Citation489 F.3d 692
PartiesState of LOUISIANA, Plaintiff-Appellant, v. Robert GUIDRY, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Joel E. Gooch (argued), Blaise Michael Sonnier (argued), Allen & Gooch, Lafayette, LA, for State of LA.

Arthur A. Lemann, III (argued), New Orleans, LA, for Guidry.

Appeal from the United States District Court for the Middle District of Louisiana.

Before KING, WIENER, and OWEN, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant State of Louisiana (the "State") sued Defendant-Appellee Robert Guidry in Louisiana state court, alleging (1) tortious acquisition of a riverboat license, (2) conspiracy to breach a fiduciary duty, and (3) breach of fiduciary duty. All those claims arose from Guidry's participation in an extortion/bribery scheme involving former Louisiana Governor Edwin Edwards. After the state court denied Guidry's motion to dismiss the State's action, he filed a third-party complaint against the United States, seeking to enforce the terms of a cooperation agreement that he had entered into with federal prosecutors which purported to limit Guidry's total financial obligation for his criminal wrongdoing. The United States removed the case to the district court, and Guidry again filed a motion to dismiss, which was converted to a motion for summary judgment. The district court granted Guidry's summary judgment motion, and the State now appeals. We affirm.

I. FACTS & PROCEEDINGS
A. The Extortion Scheme

Having been awarded a Certificate of Preliminary Approval for a riverboat gaming license in June 1993, Robert Guidry met with Andrew Martin, an aide to then-Louisiana governor Edwin Edwards, to lobby for assistance in completing the next step in the approval process, a suitability review before the Riverboat Gaming Division of the Louisiana State Police. Martin demanded that, for Guidry to even receive a suitability hearing, he must pay $100,000 monthly (the "extortion payments") to Martin, Edwin Edwards, and Stephen Edwards. Guidry agreed and received a suitability hearing and a gaming license about a year later. After Governor Edwards left office in 1996, Guidry began making the extortion payments.

B. The Various State and Federal Investigations

Sometime in 1993, Doug Moreau, the District Attorney of East Baton Rouge Parish, had begun to investigate the way that particular riverboat gaming licenses had been awarded. At about the time in May 1994 that he was awarded his license, Guidry was called to testify before a state grand jury that Moreau had assembled; Guidry denied any wrongdoing. In December 1996, federal investigators, who were also probing the awarding of riverboat licenses, learned of the extortion scheme involving Guidry from wiretapped conversations of Edwin Edwards. In June 1997, Guidry appeared before a federal grand jury and invoked his Fifth Amendment right against self-incrimination. The following month, the U.S. Attorney requested and received from Moreau transcripts of the state grand jury proceedings. Shortly thereafter, the chairman of the Louisiana Gaming Control Board1 met with an Assistant U.S. Attorney, who laid out the government's evidence of the extortion scheme. Despite this evidence, the Gaming Board did not revoke Guidry's license, instead approving his October 1997 sale of that license for approximately $170 million.

C. The Immunity Agreement

After receiving a "target letter" from the government and again being called before a federal grand jury, Guidry decided to negotiate a plea agreement with federal prosecutors. Before reaching a deal, however, Guidry sought full immunity from state prosecution. The State, through Moreau, agreed to defer to the federal government and grant Guidry full state immunity. Guidry successfully negotiated a plea agreement under which he pleaded guilty in federal court to one count of conspiracy to commit extortion in violation of 18 U.S.C. §§ 371 and 1951 and agreed to pay $3.5 million in fines, restitution, and forfeiture. Guidry also agreed to cooperate fully in the federal prosecution of his alleged co-conspirators. In exchange for his cooperation, federal prosecutors agreed not to pursue any other charges or forfeiture actions against Guidry.

D. The State's Civil Action

In June 1999, Guidry was subpoenaed by the Louisiana Attorney General to testify in an administrative hearing related to the renewal of the riverboat gaming license that Guidry had sold in October 1997. Believing his testimony to be required by his immunity agreement, which provided that he would "at all times in the future cooperate in any state investigations or prosecutions in related matters, and at all times provide truthful information and testimony," Guidry testified at the administrative hearing as to the circumstances surrounding his procurement of the original riverboat gaming license. Several months later, the State initiated the instant action against Guidry in Louisiana state court, alleging Guidry's (1) tortious acquisition of a riverboat license, (2) conspiracy, with Edwards and Martin, to breach their fiduciary duties, and (3) breach of the fiduciary duty he owed to the State as the holder of a riverboat gaming license. At the request of federal prosecutors, the district court stayed the state-court proceedings pending the resolution of the criminal prosecution of the Edwardses and Martin.

E. Guidry Testifies, Receives Sentence; State Denied Criminal Restitution

In accordance with his plea agreement, Guidry testified at the federal trial of his co-conspirators for six days in January and February 2000. The following January, Guidry was sentenced to three years probation, five-months of which were to be served in a "halfway house," and ordered to pay a total of $3.5 million in fines, restitutions, and forfeitures. At the federal sentencing hearing, the State sought, but was denied, restitution under the federal victim restitution law.2 The district court ruled that (1) restitution for property loss was not appropriate, because the State of Louisiana did not part with "property" when it issued Guidry's riverboat gaming license,3 and (2) restitution for any loss suffered from Guidry's conspiracy to breach fiduciary duty (his own and that of state officials) was not appropriate, because the harm alleged by the State was not the kind of direct harm that warrants compensation under criminal restitution statutes.

F. The District Court Proceedings

The federal stay of the state-court proceedings automatically expired at the conclusion of the federal criminal proceedings, and the instant case resumed. Guidry first raised peremptory exceptions of no cause of action and no right of action, contending that the State suffered no compensable damages. In denying Guidry's exceptions, the state court (1) adopted the rationale of Continental Mgmt, Inc. v. United States,4 which recognized that a civil tort exists for bribery of a public official resulting in loss of loyal service of a government official, and (2) held that Plaquemines Parish Commn. Council v. Delta Dev. Co.5 supported the State's claim that Guidry assumed a fiduciary duty to the State when he accepted his riverboat gaming license.

Guidry applied for supervisory review in the Louisiana First Circuit Court of Appeal. The court of appeal denied the writ, stating simply that "[w]e find no error in the trial court's denial of the exceptions of no cause of action and no right of action." Guidry then applied to the Louisiana Supreme Court for supervisory writs, which the court denied without comment.

Guidry returned to the state trial court in which he filed an answer and reconventional demand, seeking a preliminary injunction to bar the State from pursuing the instant case. He based this demand on his immunized testimony from the federal criminal proceedings. The state court denied Guidry's request for a preliminary injunction, ruling that District Attorney Moreau never intended Guidry's immunity agreement to extend to civil claims that the State may have against him. Guidry again appealed to the Louisiana First Circuit Court of Appeal; but while that appeal was pending, Guidry filed a third-party demand against the United States, grounded in his reliance on assurances made by state and federal prosecutors that the aggregate $3.5 million in fines, penalties, and restitution would be the maximum financial sanction imposed on him as the result of his wrongdoing. The United States removed the entire action to federal court before Guidry's state-court appeal was resolved.

After removal, Guidry filed a motion to dismiss, which was converted, by sua sponte order of the court, to a motion for summary judgment. In his motion, Guidry argued, inter alia, that the State's allegations of (1) tortious acquisition of a riverboat gaming license, (2) civil conspiracy to breach fiduciary duty, and (3) breach of fiduciary duty, did not establish any legitimate cause of action under Louisiana law. The district court granted Guidry's motion on this issue,6 and the State initiated the instant appeal.

II. ANALYSIS
A. Preliminary Issues
1. Erie Doctrine

The State first contends that the district court, in granting Guidry's summary judgment motion, "disregarded Louisiana's substantive law" in contravention of the Erie doctrine. The State does not contend that the district court applied the wrong law (e.g., federal), but rather that it misinterpreted Louisiana law or made an improper "Erie guess." As the district court's grant of summary judgment is subject to our de novo review, we shall address whether the district court incorrectly interpreted or predicted Louisiana law when we review each of the bases for the court's ruling. Accordingly, we need not treat the district court's alleged failure to comply with the Erie doctrine as a separate issue on appeal.

2. Law-of-the-Case Doctrine

The State also contends that the district court...

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