Opinion
Civ. No. 99-1663, SECTION: "R" (5).
February 7, 2000.
ORDER AND REASONS
Before the Court is the motion of defendant, Michael M. Benoit, to stay this matter pending the resolution of bankruptcy proceedings filed by Offshore Consultants U.S.A., Ltd. Also before the Court is the motion for summary judgment filed by defendant, Express Welding Fabrication, Inc., seeking to dismiss all of plaintiffs' claims against it. For the following reasons, the Court grants Benoit's motion to stay and Express Welding's motion for summary judgment.
I. BACKGROUND
On November 4, 1997, plaintiffs, SAS Overseas Consultants and Asia Trading Contracting, Ltd., filed suit in this Court against Offshore Consultants U.S.A., Ltd. SAS-ATAC sought to recover damages for the purported breach of an Agreement executed on September 12, 1996 between Offshore and SAS-ATAC. Pursuant to the Agreement, SAS-ATAC was to recruit foreign-national workers and arrange for their transportation to the United States. ( See Opp'n Mot. Stay Ex. A art. VI, at 3.) Offshore was then to employ the foreign-national workers and provide their services to third-party customers in return for compensation. SAS-ATAC and Offshore pledged to divide equally the net profits from the third-party customers. ( See id. art. VII, at 7-8.) The Agreement also required Offshore to render to SAS-ATAC a contemporaneous accounting for its receipts with respect to each payroll for the foreign workers. ( See id. at 8.) In their suit against Offshore, SAS-ATAC argued that Offshore failed to pay after employing these workers. When Offshore filed for relief under Chapter 11 of the Bankruptcy Code after nearly two years of litigation, this Court stayed that action on May 17, 1999.
Two weeks after Offshore filed under Chapter 11, SAS-ATAC filed this suit against Michael M. Benoit, Offshore's president and majority stockholder, and Express Welding Fabrication, Inc., on May 27, 1999. SAS-ATAC asserts that Benoit caused Offshore not to pay any funds or render any accountings to SAS-ATAC on the contract. ( See Compl. § 17.) As of September 30, 1998, Offshore claimed to have realized a net profit on the Agreement of only $513. ( See id. § 20.) SAS-ATAC claims that this slim profit margin resulted when Benoit caused Offshore to deduct $1,567,139 of expenses that either did not exist, or were unlawful or improper. ( See id. 26.) By this suit, SAS-ATAC seeks to recover one-half of the amounts of these wrongful deductions. The complaint asserts the following theories of liability against Benoit: tortious interference with contract; breach of personal duties owed to SAS-ATAC under Louisiana Civil Code article 2315; and fraud. ( See Compl. Counts 1-2, 4-6.) SAS-ATAC also claims that Benoit is Offshore's alter ego, which justifies piercing the corporate veil to impose liability on Offshore's shareholders, including Benoit, for Offshore's breach of contract. ( See id. Count 7.)
Formerly known as Express Manpower, Inc.
Additionally, SAS-ATAC alleges that Benoit caused Offshore to assign or transfer its contract with SAS-ATAC to Express Welding, a company in which Benoit purportedly owns a controlling interest. ( See id. ¶¶ 10, 37.) The transaction is allegedly subject to revocation pursuant to Louisiana Civil Code article 2036, et seq. ( See id. ¶ 38.) As a result of the assignment, SAS-ATAC contends that Express Welding became obligated to carry out the Agreement's provisions and therefore owes them payments due under the Agreement. ( See id. Count 3.)
Benoit now moves to stay this action pending a resolution of the bankruptcy proceedings filed by Offshore. Express Welding moves for summary judgment on the grounds that SAS-ATAC has proffered no evidence that Offshore assigned the Agreement to Express Welding, and therefore no genuine issue of material fact exists as to plaintiffs' claims against it. The Court held oral argument on these motions on February 2, 2000.
II. DISCUSSION
A. Motion to Stay
Benoit requested a stay of this matter pending the outcome of Offshore's bankruptcy proceedings under either the automatic stay provided in Bankruptcy Code section 362 or under Bankruptcy Code section 105. See 11 U.S.C. § 105(a), 362(a). The Court observes that Benoit's argument for an automatic stay has merit with regard to SAS-ATAC's alter ego claims against him. See Schimmelpenninck v. Byrne, 183 F.3d 347 (5th Cir. 1999) (applying Texas law and finding creditor's alter ego claim belongs to "property of the estate," entitling curators to automatic stay under section 362(a)(3)); In re S.I. Acquisition, 817 F.2d 1142 (5th Cir. 1987) (same); St. Paul Fire and Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688 (2nd Cir. 1989) (same, Ohio law); Steyr-Daimler-Puch of America Corp. v. Pappas, 852 F.2d 132 (4th Cir. 1988) (same, Virginia law); Koch Refining v. Farmers Union Central Exch., Inc., 831 F.2d 1339 (7th Cir. 1987) (same, Illinois and Indiana law). The Court does not reach the applicability of the automatic stay, however, because it finds that the facts here clearly warrant a discretionary stay under section 105(a)
This Court has the inherent power to stay any matter pending before it in the interests of justice and "economy of time and effort for itself, for counsel and for litigants." Laitram Machinery, Inc. v. Carnitech A/S, 908 F. Supp. 384, 387 (E.D.La. 1995) ( quoting Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 166 (1936)). To determine whether to grant a discretionary stay of this matter pending the outcome of Offshore's bankruptcy proceedings, the Court will look to the standard used by the bankruptcy courts to resolve this issue.
A bankruptcy court has broader authority under section 105 of the Bankruptcy Code to grant a stay than it does under the automatic stay provisions of section 362, and may use its equitable powers to ensure the orderly resolution of reorganization proceedings. See In re Baldwin-United Corp. Litigation, 765 F.2d 343, 348 (2nd Cir. 1985); In re Ionosphere Clubs, Inc., 111 B.R. 423, 430 (Bankr. S.D.N.Y. 1990), aff'd in part, 124 B.R. 635 (S.D.N.Y. 1991). See also In re Neuman, 71 B.R. 567, 571 (S.D.N.Y. 1987) ("The fact that the automatic stay may not apply does not mean that the Bankruptcy Court is without power to issue an injunction."). In pertinent part, section 105 allows a bankruptcy court to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." 11 U.S.C. § 105(a). The Fifth Circuit has held that a court may temporarily enjoin actions against a nondebtor under "unusual circumstances." See In re Zale Corp., 62 F.3d 746, 761 (5th Cir. 1995). Stays under section 105(a) are also subject to the usual rules for the issuance of an injunction under Federal Rule of Civil Procedure 65. See id. at 765. See also In re Eagle-Picher Indus., Inc., 963 F.2d 855, 858 (6th Cir. 1992); In re Commonwealth Oil Refining Co., 805 F.2d 1175, 1188-89 (5th Cir. 1986). Accordingly, the Court must examine whether both "unusual circumstances" and the prerequisites to issuance of an injunction exist so as to stay this litigation against Benoit.
1. "Unusual Circumstances"
As referenced above, this Court may issue a temporary stay of the action against Benoit, a nondebtor, if "unusual circumstances" exist.
These circumstances include 1) when the nondebtor and the debtor enjoy such an identity of interests that the suit against the nondebtor is essentially a suit against the debtor, and 2) when the third-party action will have an adverse impact on the debtor's ability to accomplish reorganization.In re Zale Corp., 62 F.3d at 761. The test is disjunctive and an injunction may be warranted under either set of circumstances. See id. Here, the suit against Benoit is clearly a suit against Offshore for breach of the Agreement. SAS-ATAC filed this action against Offshore's president and controlling shareholder less than two weeks after this Court stayed the action against Offshore as a result of its bankruptcy filing. Although SAS-ATAC has recast their allegations against Benoit personally, they ultimately seek to pierce the corporate veil and to hold Benoit liable for breach of a contract by Offshore. Additionally, the rights and liabilities of SAS-ATAC under the Agreement with Offshore will necessarily have to be determined before SAS-ATAC can prevail on their claims against Benoit. The facts here are analogous to those in In re Eagle-Picher, in which the Sixth Circuit enjoined a creditor from pursuing a separate civil action against the debtor's officers after the debtor had filed for bankruptcy and the case against it had been automatically stayed. 963 F.2d at 862. The creditor's claims included breach of fiduciary duty, conspiracy to divert corporate assets, and tortious interference with the creditor's customer relationships. See id. at 857. Because the court found the individual officers were "inextricably intertwined" with the debtor, it affirmed the stay for the protection of the debtor's creditors. See id. at 862. Following In re Eagle Picher, the Court finds that because Benoit's identity as president and controlling shareholder is so intertwined with Offshore and because the breach of contract claim is at the heart of both actions, this suit is essentially one against Offshore.
Furthermore, permitting this action to continue will have an adverse impact on Offshore's ability to accomplish reorganization. Offshore has the right to have the bankruptcy court adjudicate claims to its corporate assets, including the Agreement in this case. Nothing in the record indicates that Offshore misused the bankruptcy process or that it is not entitled to the normal considerations of a debtor in bankruptcy. Proceeding with this action would divert Offshore's president and controlling shareholder from assisting in his company's reorganization efforts. See In re Venzke Steel Corp., 142 B.R. 183 (Bankr. N.D.Ohio 1992) (enjoining tort plaintiffs from pursuing state court action against debtor's president and sole stockholder when suit would divert debtor's energies and resources from reorganization). Moreover, the suit against Benoit, if successful, might prejudice Offshore's future defense against identical claims based upon identical facts. See In re Ionosphere Clubs, Inc., 111 B.R. at 434. See also In re MacDonald/Assocs., Inc., 54 B.R. 865, 869 (Bankr. D.R.I. 1985) ("Since the contract with DCI Marketing is the debtor's most meaningful asset, it would be difficult to administer the estate here, while another court determines the rights of the debtor, its principals, and Stillwagon, with respect to that asset. The resolution of the rights and obligations of the parties under the DCI Marketing, Inc. contract are central to the success or failure of this Chapter 11 case."). For the foregoing reasons, the Court finds that this case meets the "unusual circumstances" identified by In re Zale Corp., and the Court may therefore temporarily stay the proceedings against the nondebtor, Benoit, provided the prerequisites for issuance of a preliminary injunction are met.
2. Merits of Injunctive Relief
The four prerequisites to issuance of a preliminary injunction are: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction is not granted; (3) that the threatened injury to the movant outweighs the threatened harm an injunction may cause the party opposing the motion; and (4) that the granting of the injunction will not disserve the public interest. See In re Zale Corp., 62 F.3d at 764 ( citing In re Commonwealth Oil Refining Co., 805 F.2d at 1189). The Fifth Circuit employs a sliding scale when analyzing the degree of "success on the merits" a movant must demonstrate to justify injunctive relief. In re Hunt, 93 B.R. 484, 492 (N.D.Tex. 1988) ( citing Canal Authority v. Callaway, 489 F.2d 567, 576 (5th Cir. 1974)). This involves "balancing the hardships associated with the issuance or denial of a preliminary injunction with the degree of likelihood of success on the merits." Id. at 492 ( quoting Florida Medical Ass'n v. United States, 601 F.2d 199, 203 n. 2 (5th Cir. 1979)). Moreover, when the other factors weigh in favor of an injunction, a showing ofsome likelihood of success on the merits will justify temporary injunctive relief. See Productos Carnic, S.A. v. Central American Beef and Seafood Trading Co., 621 F.2d 683, 686 (5th Cir. 1980) (citations omitted). Bankruptcy courts have defined success on the merits as "the probability of a successful plan or reorganization." In re Otero Mills, Inc., 21 B.R. 777, 779 (Bankr. D.N.M.), aff'd, 25 B.R. 1018 (D.N.M. 1982). See also In re Lazarus Burman Assocs., L.B., 161 B.R. 891, 901 (Bankr. E.D.N.Y. 1993); In re Arrow Huss, Inc., 51 B.R. 853, 858 (Bankr. D.Utah 1985). At the outset, the Court finds it more likely that Offshore will successfully reorganize if this action is stayed and Benoit is permitted to give his full attention to developing and implementing a viable plan of reorganization. The Court now examines the potential harms to the debtor, creditor and the public to determine if this showing of success on the merits is sufficient.
If success on the merits is measured by reference to the underlying claims against Benoit, the Court finds that Benoit has shown some likelihood of successfully defending these claims. See In re Matter of Commonwealth Oil. Refining Co., 805 F.2d at 1189. The alter ego claim almost certainly belongs exclusively to the debtor, not to SAS-ATAC. See In re Schimmelpenninck, 183 F.3d at 361; In re S.I. Acquisition, 817 F.2d at 1153. Moreover, the Court questions whether SAS-ATAC's tortious interference claim falls within the narrow confines of 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La. 1989). Spurney involved a corporate officer's knowing and intentional commission of acts "against the best interest of the corporation." Id. at 231. By contrast, SAS-ATAC does not allege that Benoit stole a corporate opportunity. Indeed, SAS-ATAC admits that the corporation benefited by Benoit's actions. The facts and the applicable law thus reveal substantial questions as to the merits of SAS-ATAC's claims, creating some likelihood that Benoit will prevail in this Court.
When assessing the nature of irreparable harm in a proceeding against a nondebtor, as is the case here, the Court focuses on whether the debtor will suffer irreparable harm if the proceedings against the nondebtor go forward. See In re Electronic Theatre Restaurants Corp., 53 B.R. 458, 462 (Bankr. N.D.Ohio 1985) ("It is the debtor's interests, and not the interests of the nondebtors which the extraordinary powers of § 105 are designed to protect."). Bankruptcy courts have repeatedly found irreparable harm warranting a stay under section 105(a) when actions brought against nondebtor officers and principals would distract them from the debtor's daily business affairs and divert resources from the debtor's reorganization efforts. See In re Lazarus Burman Assocs., L.B., 161 B.R. at 901; In re Ionosphere Clubs, Inc., 111 B.R. at 435; In re MacDonald/Associates, Inc., 54 B.R. at 870; In re Johns-Manville Corp., 26 B.R. 420 (Bankr. S.D.N.Y. 1983), aff'd, 40 B.R. 219 (S.D.N.Y.), vacated in part by 41 B.R. 926 (S.D.N.Y. 1984). As discussed above, the Court finds that Offshore's reorganization efforts would be seriously impaired if its president and controlling shareholder were forced to defend himself in ancillary proceedings in this Court. Additionally, because the rights and liabilities of Offshore and SAS-ATAC under the Agreement will also be addressed by the bankruptcy court, proceeding with the Benoit case could produce inconsistent results on the same issues. See In re Johns-Manville Corp., 26 B.R. at 423 (granting temporary injunction under section 105(a) when true object of litigation against officers and employees was debtor corporation itself and action, if sustained, would expose estate to claims for contribution and indemnity). SAS-ATAC have also directed discovery at Benoit, much of which involves records of Offshore. As the In re Johns-Manville Corp. observed on similar facts, the privileges applicable to these materials are Offshore's, and such discovery may force Offshore to intercede to protect its interests. See id. at 429-30. Based on all of these facts, the Court concludes that the reorganization efforts of the debtor, Offshore, will suffer irreparable harm if this action is not stayed.
Furthermore, there is no evidence that SAS-ATAC will suffer any harm if this litigation is stayed. SAS-ATAC is a creditor in the bankruptcy proceeding by virtue of the Agreement with Offshore. The bankruptcy court will determine the rights and liabilities of the parties under that Agreement. The resolution of those issues are central to this case. The Court also notes that no discovery has been conducted to date. A temporary stay will not prejudice SAS-ATAC's ability to proceed against Benoit in this Court but merely delays the litigation temporarily.
Finally, it is clear that the public interest will be served by promoting Offshore's successful reorganization. See In re Venzke Steel. Corp., 142 B.R. 183, 185 (Bankr. N.D.Ohio 1992); In re Lazarus Burman Assocs., L.B., 161 B.R. at 901.
After reviewing all of the foregoing considerations, the Court finds that Benoit has satisfied all of the elements necessary for the Court to issue a stay of. SAS-ATAC's action against him. The facts of this case demonstrate that continuation of this litigation would adversely effect the debtor's estate and interfere with the debtor's ability to formulate and implement a plan of reorganization. The Court notes that granting a stay here also comports with the general policies underlying the Bankruptcy Code. In particular, a stay of this litigation will give the debtor and its control persons the breathing room necessary to reorganize its finances. See Schimmelpenninck, 817 F.2d at 1153. For the foregoing reasons, the Court hereby grants Benoit's motion to stay this litigation pending the outcome of the bankruptcy proceedings involving Offshore Consultants U.S.A., Ltd.
B. Motion for Summary Judgment
1. Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. p. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990) ( citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986)). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one for which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Summary judgment is mandated if the nonmovant fails to make a showing sufficient to establish the existence of an element essential of her case on which she bears the burden of proof at trial. See id. at 322, 106 S.Ct. at 2552. The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue exists for trial. See id. at 325, 106 S.Ct. at 2553-54; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1996).
2. Existence of an Assignment
Express Welding argues that the Court must dismiss SAS-ATAC's claims against it because SAS-ATAC has failed to produce any evidence that Offshore assigned its rights and liabilities under the Agreement to Express Welding. This motion has been the subject of multiple opposition and reply memoranda. In support of summary judgment, Express Welding initially proffered the affidavit of Donald Rhodes who stated that he owns 100% of Express Welding. ( See Mot. Summ. J. Ex. 1 ¶ 62.) Rhodes further averred that Benoit does not own any interest in Express Welding, has never been an employee, officer or director of Express Welding, and has never been authorized to perform any acts on behalf of Express Welding. ( See id. 6 ¶¶ 3, 4, 5.) SAS-ATAC opposed the motion, asserting that the Rhodes affidavit failed to state a material fact because Benoit's potential interest in Express Welding is irrelevant to whether Express Welding assigned the Agreement. SAS-ATAC then responded with the allegation that disputed issues of material fact exist as several third-party customers of Offshore informed counsel for SAS-ATAC in the summer of 1998 that they had begun to receive invoices from Express Welding for the services of foreign national workers provided to them by Offshore.
Express Welding responded to SAS-ATAC's opposition with an additional affidavit from Rhodes stating that "[Offshore] did not assign to Express Welding the rights and liabilities under an Agreement executed on September 12, 1996 between [Offshore] and [SAS-ATAC]." (Reply Mem. Summ. J. Ex. 1.) SAS-ATAC then filed the Rule 56(f) affidavit of its attorney Charles C. Coffee, in which SAS-ATAC claims that it needs more time to conduct discovery to respond to Express Welding's affidavit. In support of SAS-ATAC's argument that such discovery might be fruitful, Coffee states that Jennifer Crochet of CE Marine/SMATCO, one of Offshore's third-party customers, telephoned him on or about September 28, 1998 in response to a trial subpoena. ( See Pls.' Surreply Mem. Summ. J., Rule 56(f) Aff. ¶ 4.) During their conversation, Crochet informed Coffee that Express Welding had recently begun to invoice her company for the services of foreign national workers previously provided by Offshore. ( See id.) When Coffee telephoned the Louisiana Secretary of State's office, he learned that (1) there was no record of a name change by Offshore, but (2) Express Welding was a corporation having its registered office in the Benoit's accounting office. ( See id. ¶ 5.) Coffee also learned that Express Welding's registered agent for service of process and one of only two of its directors was Nolan Prejeant, whom Offshore represented to be its employee. ( See id. ¶ 5.) Finally, Coffee states that representatives of other customers of Offshore "confirmed generally that Express [Welding] had begun without explanation to invoice them for the services of workers theretofore provided by Offshore, at about the same time indicated by Jennifer Crochet." ( See id. ¶ 6.)
Federal Rule of Civil Procedure 56(f) provides that a court may deny a motion for summary judgment, grant a continuance to permit further discovery, or make such other order as is just, if a party opposing the motion cannot for reasons stated present facts essential to justify his opposition. The disposition of a Rule 56(f) motion falls within the district court's discretion. See Paul Kadair, Inc. v. Sony Corp. of America, 694 F.2d 1017, 1029-30 (5th Cir. 1983). Accord United States Fidelity Guaranty Co. v. Lipsmeyer Construction Co., 754 F. Supp. 81, 84 (M.D.La. 1990). To obtain a continuance under Rule 56(f), the nonmovant must present "specific facts explaining its inability to make a substantive response as required by Rule 56(e)" and specifically demonstrate how discovery will provide the means to rebut the movant's showing of the absence of a material fact. Washington v. Allstate Insurance Co., 901 F.2d 1281, 1285 (5th Cir. 1990). "The nonmovant may not simply rely on vague assertions that discovery will produce needed, but unspecified facts." Id. (quoting Gossett v. Du-Ra-Kel Corp., 569 F.2d 869, 873 (5th Cir. 1978)).
In Kadair, the Fifth Circuit stated that a plaintiff's entitlement to discovery prior to a summary judgment ruling is not unlimited and that discovery for a summary judgment motion may be limited if dilatorily sought. 694 F.2d at 1031 (citations omitted). See also Washington, 901 F.2d at 1285 ("Rule 56 does not require that any discovery take place before summary judgment can be granted."). A court considers the following factors in assessing dilatory motive:
(1) the length of the pendency of the case prior to the Rule 56(f) request; (2) whether and when plaintiff could have anticipated its need for the requested discovery; (3) the previous efforts, if any, made by plaintiff to obtain the needed information either through Rule discovery or otherwise; (4) the degree and nature of discovery already undertaken; (5) any limitations placed upon discovery previously by the trial court; (6) any prior solicitations of or provisions for discovery by the trial court; (7) any warning which plaintiff might have had that, absent a speedier request, discovery might be denied and his claim be dismissed; and (8) whether the requested information was inaccessible to plaintiff, e.g. as when within defendant's exclusive control, or whether alternative, accessible sources existed but were foregone.Id.
As the Court noted, SAS-ATAC contends that the filing on November 19, 1999 of Express Welding's affidavit to the effect that no assignment took place did not allow it enough time to obtain affidavits or depositions to substantiate the assignment before the November 24, 1999 summary judgment hearing date. The Court finds, however, that SAS-ATAC has had ample opportunity to obtain evidence to substantiate its assignment claim. SAS-ATAC admits that it has had information about customers being invoiced by Express Welding since September 1998, when it received information of this nature in response to its subpoenas of customers in its earlier contract case against Offshore. Further, SAS-ATAC certainly should have known when it filed suit against Express Welding in May 1999 that it would have to prove that an assignment or transfer occurred. During the period between filing the suit against Express Welding in May 1999 and February 2, 2000, SAS-STAC conducted no discovery. Moreover, SAS-ATAC has also had nearly two months since Express Welding filed its motion in November 1999 to discover specific facts to defeat summary judgment. SAS-ATAC has nevertheless failed to do so or to provide the Court with details on how it plans to secure this information in the near future.
Furthermore, the Court has placed no limits on discovery in this case. SAS-ATAC in fact concedes that it chose not to conduct discovery prior to the Court's ruling on this motion. Neither party suggests that the testimony sought is in Express Welding's exclusive control. All of these factors weigh heavily in favor of denying SAS-ATAC the opportunity to "open the discovery net to allow a fishing expedition." Kadair, 694 F.2d at 1028.
Furthermore, the Rule 56(f) affidavit submitted by SAS-ATAC is a hearsay statement by counsel which alludes to evidence that would not establish a material fact issue, even if SAS-ATAC obtained the evidence. That third-party customers began to receive invoices from Express Welding does not mean that Offshore assigned its contract with SAS-ATAC to Express Welding. Express Welding has denied the assignment under oath, and its counsel explained at oral argument that Express Welding essentially held a subcontract with Offshore, under which Express Welding supplied labor to Offshore's customers.
Finally, the Court notes that the debtor, Offshore, has not been named as a defendant in this proceeding. Under Louisiana law relating to revocatory actions, the creditor/obligee must join the debtor/obligor in an action to annul the obligor's act. See La. Civ. Code art. 2042; Opelousas Production Credit Assoc. v. B.B. H., Inc., 525 So.2d 91, 93 (La.App. 3rd Cir. 1988). Thus, to the extent that SAS-ATAC seeks to recover from Express Welding on the grounds that Benoit fraudulently conveyed the Agreement under article 2036 of the Louisiana Civil Code, their claim must fall for failure to join Offshore.
Because Express Welding has demonstrated the absence of a material fact, namely, an assignment of the Agreement to Express Welding, the Court hereby grants Express Welding's motion for summary judgment. SAS-ATAC has had ample opportunity to discover evidence to defeat this motion and has offered no compelling reason for the Court to continue this matter.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Benoit's motion to stay and temporarily enjoins SAS-ATAC from proceeding against Benoit pending the outcome of bankruptcy proceedings involving Offshore Consultants U.S.A., Ltd. The Court also GRANTS Express Welding's motion for summary judgment and orders SAS-ATAC's claims against it dismissed with prejudice.
New Orleans, Louisiana, this 7th day of February, 2000.