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Balder v. Lavin

United States District Court, S.D. Mississippi, Eastern Division

June 13, 2018




         This matter is before the Court on the Motion for Summary Judgment [73] filed by Defendant Surgical Specialists of Louisiana, LLC (“SSL”), the Motion for Summary Judgment [75] filed by Defendant Thomas E. Lavin (“Lavin”), and the Motion for Summary Judgment [77] filed by Plaintiff Donald A. Balder (“Plaintiff”). After considering the submissions of the parties, the record, and the applicable law, the Court finds that

1. SSL's Motion for Summary Judgment [73] is well taken and should be granted;
2. Lavin's Motion for Summary Judgment [75] is well taken and should be granted; and
3. Plaintiff's Motion for Summary Judgment [77] is not well taken and should be denied.

         I. BACKGROUND

         Plaintiff filed the current suit on August 30, 2016, against Defendants SSL, Lavin, Surgical Specialists of Mississippi, LLC (“SSM”), Michael Thomas, and Clark Warden, asserting numerous causes of actions. SSL, Lavin, and SSM are the only defendant who remain in the case. SSL is a limited liability company (“LLC”), whose members include Lavin. SSM is an LLC whose sole owning member is SSL.

         Plaintiff and Lavin met in 2011, and Plaintiff eventually expressed an interest in opening a bariatric surgery practice on the Mississippi Gulf Coast. Plaintiff came to an agreement with Lavin, whereby SSL would create SSM to employ Plaintiff and his staff and SSL would provide certain managerial services for SSM. For Plaintiff's first year of employment, it was agreed that he would be paid a fixed salary. After this year was up, Plaintiff was presented with different compensation model options, but ultimately decided to enter into the same partner compensation model that other physicians in the practice used.

         This employment arrangement began to break down in 2015, and in early 2016, Plaintiff's employment with SSM and his affiliation with SSL was terminated. The claims in this suit stem from that break down and termination.

         II. CHOICE OF LAW

         A federal court sitting in diversity is bound to follow the substantive law of the forum state, including that state's conflict of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co, 313 U.S. 487, 496, 313 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); see also Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 114 A.L.R. 1487 (1938). In Mississippi, a choice of law analysis is only appropriate where there is a true conflict between the laws of two or more states having an interest in the litigation. Zurich Am. Ins. Co. v. Goodwin, 920 So.2d 427, 487 (Miss. 2006) (citing Boardman v. United Servs. Auto. Ass'n, 470 So.2d 1024, 1038 (Miss. 1985)). Once a true conflict is found to exist, Mississippi then employs a three-step choice of law analysis: (1) determine whether the conflicting laws are substantive or procedural; (2) classify the area of substantive law, whether tort, property, or contract; and (3) look at the relevant section of the Restatement (Second) of Conflict of Laws. Id. at 488.

         Parties assume without argument that there is a conflict of laws issue in this case. Defendants argue in their motions that Louisiana law should be applied, and Plaintiff argues in his motion that the laws of Mississippi apply. However, both sides concede in their responses to the other side's motion that an analysis under either state's law would reach the same result, which would mean there is no true conflict of law. Mississippi's choice of law rules, then, bind this Court to apply the substantive law of Mississippi. The Court will, however, apply Louisiana law to those specific instances where the Complaint [1] invokes Louisiana statutory law as the basis of Plaintiff's claim.[1] For claims where parties have cited only one state's law, the Court will accept that state's law as controlling for that claim for purposes of these motions.


         Federal Rule of Civil Procedure 56 provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “Where the burden of production at trial ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary support in the record for the nonmovant's case.” Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010) (citation and internal quotation marks omitted). The nonmovant must then “come forward with specific facts showing that there is a genuine issue for trial.” Id. “An issue is material if its resolution could affect the outcome of the action.” Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010) (quoting Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001)). “An issue is ‘genuine' if the evidence is sufficient for a reasonable [fact-finder] to return a verdict for the nonmoving party.” Cuadra, 626 F.3d at 812 (citation omitted).

         The Court is not permitted to make credibility determinations or weigh the evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009) (citing Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007)). When deciding whether a genuine fact issue exists, “the court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.” Sierra Club, 627 F.3d at 138. However, “[c]onclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not adequately substitute for specific facts showing a genuine issue for trial.” Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002) (citation omitted). Summary judgment is mandatory “against a 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.” Brown v. Offshore Specialty Fabricators, Inc., 663 F.3d 759, 766 (5th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).


         A.Single Business Enterprise

         The Court first addresses Plaintiff's contention that SSL can be liable for the claims against SSM through the single-enterprise doctrine under Louisiana law. Putting aside the fact that this is a doctrine that applies under Louisiana law and Plaintiff has repeatedly argued that Mississippi law applies, [2] Plaintiff asserts this theory of liability for the first time in response to SSL's motion. Plaintiff acknowledges that this is a new theory of liability but contends that he was not required to specifically plead this theory in his complaint. In support, he cites this Court's previous opinion in Wells v. Healthcare Financial Servs., LLC. No. 2:13-CV-256-KS-MTP, 2014 WL 5339377 (S.D.Miss. Oct. 20, 2014), opinion withdrawn on reconsideration on other grounds, 2014 WL 6474276 (S.D.Miss. Nov. 19, 2014). However, in Wells, the Court specifically held that “Plaintiff has not altered the theory of liability underlying her claims” and “[a]ll that has changed is the factual basis for the claim.” Id. at *3. Furthermore, the Fifth Circuit has held that, because “[a] properly pleaded complaint must give ‘fair notice of what the claim is and the grounds upon which it rests, '” it is not proper for a district court to consider new theories of liability first raised in response to a motion for summary judgment. De Franceschi v. BAC Home Loans Servicing, L.P., 447 Fed.Appx. 200, 204 (5th Cir. 2012) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 698-99, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)) (emphasis added); see also Montgomery v. Housby Mack, Inc., No. 3:15-CV-95-DPJ-FKB, 3:16-CV-23-DPJ-FKB, 2016 WL 6427275, at *5 (S.D.Miss. Oct. 28, 2016). The Court therefore will not consider this theory of liability.

         B. Count I - Accounting

         Plaintiff's claim for accounting invokes Louisiana Revised Statute § 12:1319(B)(3), which gives members of an LLC a right to demand a formal accounting of the LLC's affairs. Plaintiff, however, does not dispute that he is not a member of SSL. Instead, without citation to any authority, he asserts that the Court “has the equitable power to order an accounting.” (Memo. in Response [87] at p. 20.) Whether this bald assertion of the Court's authority is true is of no consequence. Plaintiff's demand for accounting is brought specifically under § 12:1319(B)(3), which does not apply to non-members. Therefore, summary judgment will be granted as to this claim, and it will be dismissed with prejudice.

         C. Counts V-VII, XII[3] - Contract Claims and Equitable Estoppel

         SSL argues that there was no contract between it and Plaintiff and, as a result, his claims of breach of contract, tortious breach of contract, and breach of good faith and fair dealing must fail. Plaintiff argues that SSL's argument that there is no contract between them amounts to an affirmative defense of “lack of privity, ” which was not pleaded and therefore waived. This argument is unpersuasive because the existence of a contract is a necessary element of his breach of contract claim under Mississippi law. See Favre Prop. Mgmt., LLC v. Cinque Bambini, 863 So.2d 1037, 1044 (Miss. Ct. App. 2004) (listing the elements for breach of contract). An affirmative defense is a defense that “assumes the plaintiff proves everything he alleges and asserts, even so, the defendant wins.” Ashburn v. Ashburn, 970 So.2d 204, 213 (Miss. Ct. App. 2007) (quoting Hertz Commercial Leasing Div. v. Morrison, 567 So.2d 832, 835 (Miss. 1990)). Because Plaintiff must prove there is a contract between himself and SSL before he can succeed on a breach of contract claim against SSL, the defense that no such contract exists is not an affirmative defense.

         It is uncontroverted that the two contracts referenced in the Complaint [1], the Operating Agreement of SSL and the Employment Agreement, are not contracts between SSL and Plaintiff. First, Plaintiff is not a member of SSL and is therefore not a party to the Operating Agreement of SSL. Second, the Employment Agreement specifically states that it is between SSM and Plaintiff, and therefore SSL is not a party to it. (See Employment Agreement at p. 1.) Because there is no contract to which both SSL and Plaintiff are parties, there exists no contract between them.[4], [5] Plaintiff's claims for breach of contract, tortious breach of contract, and breach of good faith and fair dealing therefore fail and must be dismissed with prejudice.

         SSL also contends that Plaintiff's claim for equitable estoppel must be dismissed as a matter of law. Plaintiff makes no argument or reference to his equitable estoppel claim. The Court therefore considers this claim waived, and it will be dismissed with prejudice. See Keenan v. Tejeda, 290 F.3d 252, 262 (5th Cir. 2002) (quoting Grenier v. Cyanamid Plastics, Inc., 70 F.3d 667, 678 (1st Cir. 1995)) (“If a party fails to assert a legal reason why summary judgment should not be granted, that ground is waived and cannot be considered or raised on appeal.”)

         D.Counts IX-X - Negligence and Gross Negligence

         With no citation to any authority, Plaintiff asserts that he was in a business relationship with SSL and “[a]ll corporate and individual persons who are in business relationship have a duty of due care to each other.” (Memo. in Response [87] at p. 23.) This is not enough to establish that SSL had a duty to Plaintiff, which is Plaintiff's burden to prove at summary judgment. Even if he could establish SSL owed him a duty, though, Plaintiff has also not adduced evidence of breach of duty, causation, or injury.

         Plaintiff lists seven specific instances of negligence attributable to SSL that caused him injury, most of which assume SSL is Plaintiff's employer despite Plaintiff being employed by SSM.

         1. Failure to provide and explain financial documents

         Plaintiff has not established by evidence or legal authority that SSL had a duty to provide financial documents to him, nor has he shown that any such failure caused him injury. Furthermore, though Plaintiff has submitted a self-serving affidavit stating that “the financial documents were never adequately explained to [him]” and that “the partnership compensation model was never meaningfully explained to [him] especially in relation to the payment of general and direct overhead expenses, ” (Plaintiff Affidavit [86-42] at ¶ 12), this contradicts his own deposition testimony, during which he stated that he explained to Beth Bacon[6] and Lavin why he felt the compensation model was treating him unfairly, demonstrating his understanding of the documents, and went on to admit that he had a meeting with Lavin, along with Beth Bacon, Laura Boyer, and Tia Riche, to go over the financials and to modify the arrangement to be more fair. (See Plaintiff Depo. [92-1] at 219:2-221:23.) Therefore, even if SSL was found to have a duty towards Plaintiff with regards to these documents, the evidence shows that the financial documents were gone over with Plaintiff and that he understood them. SSL cannot, then, be liable for negligence or gross negligence on this basis.

         2. Failure to address his compensation concerns

         Plaintiff argues that SSL was also negligent in failing to address his compensation concerns. First, Plaintiff has not shown by evidence or argument that SSL, who was not his employer, had a duty to address his compensation concerns. Second, Plaintiff admitted in his deposition that his compensation concerns were addressed in a meeting that included himself, Beth Bacon, Laura Boyer, and Lavin. (See Plaintiff Depo. [92-1] at 219:2-221:23.) Therefore, Plaintiff has not adduced evidence to support this theory of negligence and gross negligence against SSL.

         3. Failing to adequately explain his compensation formula

         Plaintiff contends that SSL was negligent in failing to adequately explain his compensation formula. Again, Plaintiff has not established that SSL had a duty to explain his compensation to him. Also, Plaintiff's testimony shows that he had an understanding of the compensation formula and that Lavin, the agent of his employer, SSM, did in fact go over the formula with him. (See Plaintiff Depo. [92-1] at 219:2-221:23.)

         4. Failing to adequately explain expense determinations

         Plaintiff argues that SSL failed to explain general overhead expenses and direct expense determinations, which resulted in unfair compensation. Because these expenses were built into the compensation model, this is the same argument as his other arguments dealing with his compensation, and fails for the same reasons.

         5. Failure to properly assign patients

         Plaintiff also claims SSL was negligent in failing to properly assign patients to him. Even if Plaintiff could establish that SSL had some sort of duty to him in assigning patients when he was not its employee, the only evidence that Plaintiff points to is vague allegations in his own affidavit. This is not sufficient, as the Fifth Circuit has held that “a self-serving affidavit, without more evidence, will not defeat summary judgment.” Sanchez v. Dallas/Fort Worth Int'l Airport Bd., 438 Fed.Appx. 343, ...

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