Brees v. Kevin Houser, Sec. Am., Inc.
| Decision Date | 21 July 2014 |
| Docket Number | CIVIL ACTION NO. 13-4760 |
| Parties | DREW BREES and DAVID PATTEN v. KEVIN HOUSER, SECURITIES AMERICA, INC. and AMERICAN INTERNATIONAL SPECIALTIES LINES INSURANCE CO. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is the Renewed Motion for Dismissal under Federal Rules of Civil Procedure 12(6)(b), or in the alternate, Motion for Summary Judgment, submitted collectively by the defendants, Kevin Houser, Securities America, Inc., and American International Specialties Lines Insurance Co. (the "defendants"). Plaintiffs, Drew Brees ("Brees") and David Patten ("Patten"), oppose this motion. Rec. Doc. 43.
Having considered the memoranda of counsel, the record, and the applicable law, the Court will PARTIALLY GRANT and PARTIALLY DENY defendants' motion, granting plaintiffs leave to amend to further articulate their bad faith breach of contract claim.
The plaintiffs, Drew Brees and David Patten (collectively, the "plaintiffs") filed a complaint against defendant Kevin Houser ("Houser"), a licensed securities broker with Securities America, Inc ("SAI"), and a former professional football player with the New Orleans Saints, for breach of contract and bad faith dealings, breach of fiduciary duty, fraud, detrimental reliance, and unjust enrichment for a transaction involving the sale ofLouisiana Infrastructure Tax Credits. Rec. Doc 6 at ¶¶4-8. Plaintiffs claim that, in December of 2008, Houser offered to sell Louisiana Film Tax Credits to his teammates and coaches in order to raise funds for Louisiana Film Studios, LLC ("LFS"). Rec. Doc. 43 at 1. Plaintiffs further alleged that Houser, who has experience selling Louisiana Film Tax Credits, Rec. Doc. 43-4 at 5, claimed that the tax credits were available as part of the Louisiana Motion Picture Incentive Program as a way to support the production of motion pictures in the State and could be used to offset income taxes owed to the State of Louisiana. Exhibit 1, Rec. Dec. 43-2 at 1-2. Plaintiff, Drew Brees, claims he personally gave a check to Houser for $160,000 to purchase Louisiana Film Tax Credits from LFS, for which he expected a $200,000 return. Brees Aff. Rec. Doc. 43-5 at 2, ¶¶ 1-2. Plaintiff, David Patten, claims he personally gave Houser a check for $116,000 in tax credits from LFS and that he expected a return of $136,470. Id. at 1, ¶¶1-2. Plaintiffs claim that Houser led them to believe that the money would be kept in an escrow account until the tax credits had been certified by the state. Rec. Doc. 6 at 4, ¶¶11-12. Instead, the money was allegedly deposited directly into the LFS operating fund and was dissipated before the tax credits could be purchased. Id. Neither plaintiff received the promised tax credits from Houser or LFS. Rec. Doc. 43-1 at 2, ¶8.
In March 2010, the president of LFS, Wayne Read ("Read") was charged with wire fraud and transportation of stolen property in a scheme to sell fictitious 2008 Louisiana Film Tax Credits to persons, including the plaintiffs, thus violating 18 U.S.C. §§1343 and 2314, respectively. Rec. Doc. 37-1 at 3. He plead guilty and was sentenced in October of 2011. Id. Following Read's indictment, LFS filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court, Eastern District of Louisiana. Id. In March 2011, plaintiffsseparately filed proofs of claims against LFS for the amount of their investments in the tax credits. Rec. Doc 37-3 at 1; Rec. Doc. 37-4 at 1.
Defendants argue that, because the events in question occurred in December of 2008, the plaintiffs' tort claims relating to that event are time-barred by the applicable prescription period under Louisiana Civil Code article 3492, which states that "delictual actions are subject to a liberative prescription of one year" that commences on "the day injury or damage is sustained." La. Civ. Code Ann. art. 3492. Defendants further argue that the plaintiffs have failed to state a claim for breach of contract, because they have failed to show that a contract ever existed between the plaintiffs and Houser. Without establishment of a contract between the plaintiffs and defendants, plaintiffs cannot move forward with their claim of bad faith breach of contract. Additionally, defendants contend that plaintiffs have failed to state a claim for breach of professional or fiduciary duty and that Houser owed no such duty to the plaintiffs.
To survive a motion to dismiss under the Federal Rule of Civil Procedures 12(b)(6), " a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, (2007)). The plausibility standard requires plaintiff to allege more than a sheer possibility that a defendant has acted unlawfully. Id. Rather, "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Generally, the court accepts all well-pleaded facts as true and views those facts in the light most favorable to theplaintiffs." Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). However, "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678.
Summary judgment is proper when there are no genuine issues of material fact in dispute. Fed. R. Civ. P. 56(a). A genuine issue of material fact exists when there is sufficient evidence favoring the non-moving party such that a jury could return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). When reviewing the facts for summary judgment, the court will draw all inferences most favorable to the non-moving party. Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court should grant summary judgment against the party "who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The party seeking summary judgment bears the initial burden of justifying its motion and demonstrating an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). However, "if the moving party meets this initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24). The alleged existence of a factual dispute will not defeat an otherwise properly supported motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Rather, thenon-moving party must "go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324.
Defendants first seek dismissal and/or summary judgment based on the argument that several of plaintiffs' claims have prescribed. In general, "the party asserting a peremptory exception of prescription bears the burden of proof." Ames v. Ohle, 11-1540 (La. App. 4 Cir. 5/23/12) 97 So. 3d 386, 390; decision clarified on reh'g (July 11, 2012), reh'g denied (July 11, 2012), writ denied, 100 So. 3d 837 (La. 11/9/12), citations omitted. The burden of showing that a claim has not prescribed switches to the plaintiff only when prescription is evident from the face of the pleading. Id. When courts review a peremptory exception of prescription, they examine all the possible constructions of a prescriptive statute, and courts strictly construe the statutes against prescription and in favor of the claim. Id. at 391. The nature of a cause of action, as described in the pleadings, determines which prescriptive period applies. Id.
Defendants argue that the plaintiffs' claims of fraud, detrimental reliance, and unjust enrichment are delictual actions with a one-year prescription under Louisiana Civil Code Article 3492, which governs actions in tort. Rec. Doc. 37-1 at 5. Plaintiffs, on the other hand, maintain that these claims all arise from a contractual obligation and therefore have a ten-year prescription governed by Louisiana Civil Code Article 3499. Rec. Doc. 43 at 4. In order to establish whether the claim arises out of a personal action with a ten-year prescriptive period or a delictual action with a one-year proscriptive period, the courtlooks to the nature of the duty that was violated. Strahan v. Sabine Ret. & Rehab. Ctr., Inc., 2007-1607 (La. App. 3 Cir. 4/30/08), 981 So. 2d 287, 291. Contractual damages, generally considered personal actions, arise out of the breach of a special obligation contractually assumed between individuals, while a delictual action stems from the violation of a duty owed to all persons. Id.
The first claim asserted in the pleadings is "tortious and/or negligent mishandling of the purchase proceeds and/or tax credits" constituting "a breach of contractual, professional and fiduciary duties and fraud." Rec. Doc 6 at 6, ¶20. The courts of Louisiana have distinguished breaches of fiduciary duty caused by negligence from breaches of fiduciary duty involving fraud. See Ames, 97 So. 3d at 392; Young v. Adolph, 02-67 (La. App. 5 Cir. 5/15/02), 821 So. 2d 101, 106; Beckstrom v. Parnell, 97-1200 (La. App. 1 Cir. 11/6/98), 730 So. 2d 942, 947. While negligent breaches of fiduciary duty are considered delictual actions with a one-year prescriptive period, breaches of fiduciary duty involving deliberate actions, such as fraud, are personal actions and have a ten-year prescriptive...
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