Opinion
Civil Action No. 03-1875 Section "T".
September 7, 2004
Before this Court is the Plaintiff's, Fort James Operating Company ("Fort James"), Motion for Partial Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The motion came for hearing on June 2, 2004, and was heard with oral argument. The Court, having reviewed the memoranda submitted by the parties, the exhibits, the record, and the applicable law, is fully advised on the premises of this case and ready to rule.
ORDER AND REASONS
I. BACKGROUND:
Fort James is a manufacturer of consumer products, which include, but are not limited to disposable dinnerware and bath products. As part of its global sales and marketing efforts, Fort James sells its products to numerous distributors across the country, who in turn sell them to end users. AL Sales ("AL") allegedly acted as a distributor of Fort James's various products and purchased the products on an open account. The plaintiff's complaint set forth two causes of action: (1) a claim on an open account and (2) an action for damages. It is the status and balance of the aforementioned "open account" that is in question in this motion.
II. LAW AND ANALYSIS:
A. The Law on Summary Judgment
The Federal Rules of Civil Procedure provide that a court should grant a motion for summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. Civ. P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Stults v. Conoco, Inc., 76 F.3d 651, 655-56 (5th Cir. 1996) (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)), cert. denied, 506 U.S. 832 (1992)). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis supplied); Tubacex, Inc. v. M/V RISAN, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, when the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Indus. Co., 475 U.S. at 588. Finally, the Court notes that substantive law determines the materiality of facts, and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
B. Arguments of the Parties:
i. Plaintiff Arguments in Support of Summary Judgement:
The plaintiff's central contention in this motion is that the defendant has failed to pay for goods which were delivered to and accepted by them on an open account. The plaintiff's initial support of said contention is the delivery of, and failure to answer the plaintiff's first requests for admission to and by the defendant. The plaintiff argues that in accordance with Federal Rules of Civil Procedure Rule 36, the defendant has failed to timely reply to the plaintiff's requests for admission and, therefore they must be deemed admitted. If the requests for admission are deemed admitted then the plaintiff alleges that he has established a prima facie case on an open account in accordance with Gulf States Asphalt Co. v. Baton Rouge Servs., Inc., 572 So. 2d 148, 149 (La.App. 1st Cir. 1990), which states that a plaintiff establishes a prima facie case on an open account by providing the business record of the account and supplying an affidavit or testimony verifying the correctness thereof.
The plaintiff also contends that irrespective of relying on AL's default admissions they have presented sufficient evidence to justify summary judgement. The plaintiff alleges that they have established, through the affidavit of Colette Ricord, that they delivered conforming products to the defendant from February through April 2003 in accordance with a valid contract between the two parties. The plaintiff alleges that the governing contract between the two parties provides that full payment is due within thirty (30) days of delivery. If the full balance on the open account is not rendered within thirty days of delivery then the plaintiff is entitled under the contract to a finance charge of 1½% per month or 18% per annum.
The plaintiff lastly alleges that pursuant to L.S.A. 9:2781 they are entitled to attorney's fees and in addition that the contract provides that if any legal action is initiated to enforce the terms of the agreement, AL agrees "to pay (Fort James) such costs and expenses, including attorneys' fees" relating to the enforcement of the agreement. The plaintiff therefore claims that they are entitled to reasonable attorneys' fees under both statutory law and the governing contract.
The plaintiff in concluding prays that this Court grant partial summary judgement in their favor in an amount of $257,764.50 in damages and finance charges, plus attorneys' fees.
ii. Defendant's Arguments in opposition to Summary Judgement
AL begins by contending that they owe no amounts to Fort James, but if any amounts are owed, they are substantially less than that alleged by the plaintiff. AL alleges that the invoices supplied by the plaintiff do not provide a complete and accurate representation of the business relationship between AL and Fort James. AL's main contention is that they are owed certain "credits" which the plaintiff's invoices do not reflect and that Fort James' allowance of such credits in the past precludes them from withholding such credits in this case.
The defense claims that throughout the many years AL has been a distributor of paper products in the New Orleans area a consistent method of invoicing and crediting has been followed by the suppliers of said products. (Most recently, the method has been given the name, the "ROS Program"). AL alleges that through the ROS Program they purchase products from the supplier at an established price. AL would then sell those products to its customers, known as end users. After selling the products to the end users, AL would report said sales to Fort James. Fort James would then issue a "credit" to AL, which credit was the difference between the price AL purchased the products from Fort James and the amount set forth in the pricing contracts. The above-mentioned "credit" is the central issue in question in this matter. This credit would allegedly reduce Fort James invoice amounts and consequently the amount owed by AL.
The defense alleges that it was common practice for Fort James to permit AL to use pricing contracts for end users not designated in the pricing contract and that in the past AL was allowed the described credits for these transactions, irrespective of the fact that these particular end users were not included in the pricing contracts. The defense argues that AL not only knew of, but approved the application of ROS sales and the corresponding credits to entities not included in the pricing contracts and that this knowledge now estops Fort James from refusing to provide these credits to AL.
The defense also contends that issues of material fact exist as to whether Fort James in fact has a contract with AL and in the alternative if Fort James is entitled to assert the claims on the open account. The credit application was allegedly executed by AL in favor of James River Corporation and not Fort James and the documents of record identify three different entities(Fort James, James River, and Georgia Pacific) whose rights Fort James are attempting to assert. The defense contends that Fort James has not submitted evidence to show that it is entitled to assert the claims of James River or Georgia Pacific.
The Defense also opposes the plaintiff's request for attorney's fees, citing that the plaintiff is not entitled to such a remedy under either the terms of the credit application or L.R.S. § 9:2781. The defense alleges that it has shown that Fort James is not entitled to assert any right flowing from the credit application and that the amount demanded by the plaintiff is incorrect and therefore under the terms of the statute, they are not entitled to attorney's fees.
iii. Fort James's Reply
First, Fort James asserts that they are the proper plaintiff in this action. James River changed its name to Fort James on August 14, 1997 and shortly after Fort Howard company merged into Fort James. Fort James is the legal successor to James River and Fort Howard and as such has assumed all of their contractual rights and obligations.
Secondly, Fort James asserts that AL is not entitled to any set-offs or credits. Fort James in addition to seeking this payment on an open-account is also seeking damages for rebates wrongfully paid to AL. Fort James's ROS system is allegedly used to issue rebates for deliveries to certain qualified end users including schools and hospitals. In order to qualify for these rebates, distributors must submit detailed sales and delivery information to Fort James showing all deliveries made to qualified end users. Fort James will randomly audit the aforementioned information. During a random audit, it became clear that AL had submitted fraudulent sales information. In Count II of it's complaint, which is not at issue in this matter, the plaintiff seeks damages for these allegedly fraudulently received credits and or rebates.
Lastly, the governing invoices clearly and unambiguously state that "payment is due net thirty (30) days from the date of invoice in U.S. Dollars in immediately available funds, without set-off or deduction.
C. Court's Analysis
In order to prevail in an action on an open account, the plaintiff must establish the existence of a contract between the parties. See, e.g., Montgomery Stire partners, Inc. v. London Livery, Ltd., 769 So. 2d 703 (La.App. 4th Cir. 2000); Builders Supply of Ruston, Inc. v. Qualls, 750 So.2d 427 (La.App. 2d Cir. 2000); Beiber-Guillory v. Aswell, 723 So. 2d 1145 (La.App. 3d Cir. 1998). In Louisiana, parties are free to contract for any object that is lawful, possible, and determined or determinable. Sunrise Construction Development Corp. v. Coast Waterworks, Inc., 806 So.2d 1, 5 (La.App. 1st Cir. 2001). Contracts are the law between the parties, and no further interpretation may be made in search of the party's intent where the words of the contract are clear, explicit, and lead to no absurd consequences. Weeks v. T.L. James Co., Inc., 626 So.2d 420, 424 (La.App. 3rd Cir. 1993). Where the language of a contract is clear and unambiguous, the contract must be interpreted by reference to the four corners of that document. Id.
In the instant action, there is no dispute that the parties were contractually obligated to each other and as such, each party undertook to fulfill certain obligations. Further, Fort James has proven that they delivered conforming goods as required by the contract and that all related invoices were delivered to AL. The defense has not controverted the receipt of the goods nor the receipt of the invoices; but instead argues that this Court should find that there was a modification of the contract due to the alleged ongoing business practices of Fort James and that they were therefore entitled to certain credits or in the alternative that Fort James is not the proper plaintiff. The Court, however is not persuaded by either of these arguments.
The clear and unambiguous verbiage of the contract states that payment was due in net thirty days from the date of invoice in US dollars in immediately available funds, without set off or deduction. As this Court stated in Commercial Capital Holding Corp. v. Team Ace Joint Venture, et al. 2000 WL 72688 (E.D. La. June 2, 2000) "[T]his is in no way ambiguous and clearly provides that upon acceptance the plaintiff is entitled to payment without any set off, recoupment, defense of counterclaim as to that particular invoice." Fort James is entitled to payment according to the contract with out set off, unless AL could prove that they were entitled to the set offs as required under the Federal Rules of Civil Procedure. See, e.g., Crossland v. Canteen Corp., 711 F.2d 714, 724 (5th Cir. 1983); FDIC v. Louisiana National Bank, 484 F. Supp. 111, 113 (M.D. La. 1980), rev'd on other grounds, 653 F.2d 927 (5th Cir. 1981). The allegations of certain past credits by AL simply is not enough to carry that burden.
The defense's second argument, that Fort James is not the proper plaintiff to this action, was easily refuted by the plaintiff in its reply as stated above and this Court has found no reason to believe that Fort James Operating Company is not the proper plaintiff in this action.
The Court having found that there was a valid, enforceable, and unambiguous contract is of the opinion that there is no genuine issue of material fact and that therefore partial summary judgement in favor of the plaintiff is proper.
The Court is also of the opinion that an award of attorneys' fees is proper in this case in accordance with the parties' contract since this Court has already determined that Fort James Operating Company is the proper plaintiff.
Accordingly,
IT IS ORDERED that the Plaintiff's Motion for Partial Summary Judgment as to Count I of the Complaint be and the same is hereby GRANTED. IT IS FURTHER ORDERED that Plaintiff is awarded attorneys' fees and related costs associated with bringing this Motion.
IT IS FURTHER ORDERED that the plaintiff submit his Application for Attorney's Fees on or before October 6, 2004 and the defense is to submit their Opposition on or before October 27, 2004.