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Serna v. Gcsg Holdings, LLC

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

February 8, 2019




         BEFORE THE COURT are cross-motions for summary judgment filed by the parties in this breach of employment contract case. Additionally, Plaintiff Serna has filed two motions to strike certain documents attached as exhibits to Defendant GCSG Holdings, LLC's summary judgment motion. Each motion has been fully briefed. The Court concludes that Defendant GCSG Holdings, LLC terminated Serna without “Good Cause” as defined in the employment contract because it did not provide written notice. In reaching this conclusion, it was not necessary to consider most of the evidence objected to by Serna in his motions to strike. However, the Court did refer to the affidavit of Dina Galiano in examining the issue of unpaid vacation pay. Serna's objections to Galiano's affidavit have been considered and rejected. Accordingly, Serna's [108] Motion for Summary Judgment will be granted in part and denied in part, and his [117, 123] Motions to Strike will be denied. Defendant GCSG Holdings, LLC's [110] Motion for Summary Judgment will be denied.


         This case was removed from state court on the basis of diversity jurisdiction.[1]Plaintiff Serna entered into a contract with GCSG Holdings, LLC (“GCSG”) to provide services as Gulf Coast Shipyard Group, Inc's Chief Operating Officer. However, the contract was terminated early for reasons that GCSG contends constituted good cause, thereby relieving it from any further obligation to Serna. Serna objects to that characterization and seeks the severance package for early termination without cause promised in the contract. His claims are for breach of contract, breach of duty of good faith and fair dealing, and bad faith breach of contract. The parties agree that Louisiana law applies to these claims because of the contract's choice of law provision.

         GCSG's grounds for summary judgment are that it terminated Serna for good cause, and so Serna was not entitled to severance or benefits. GCSG argues that because Serna was terminated for “good cause, ” it did not breach the employment contract or its duty of good faith and fair dealing, or act in bad faith.

         Serna argues the opposite - that he was not terminated with “good cause.” He contends 1) he was not given the written notice required; and 2) there is no evidence he had any performance issues before termination. Additionally, Serna argues that he has not been paid for accrued vacation time, even though GCSG agreed he was owed this benefit at the time of termination.


         1. Breach of Contract

In Louisiana, a breach-of-contract claim has three essential elements: (1) the obligor's undertaking an obligation to perform, (2) the obligor failed to perform the obligation (the breach), and (3) the failure to perform resulted in damages to the obligee. The first two elements of a breach-of-contract claim, obligation and breach, involve issues of both contractual interpretation as a matter of law, as well as questions of fact regarding whether the actions of the parties actually constituted the alleged breach under the applicable contractual terms. The third element, damages, is a question of fact.

IberiaBank v. Broussard, 907 F.3d 826, 835 (5th Cir. 2018) (citations and internal marks omitted). The burden of proof in an action for breach of contract is on the party claiming rights under the contract. Green Acres Landscape & Maintenance, LLC v. Nottoway Plantation, Inc., 2018-0825, p.4 (La.App. 1 Cir. 1/9/19); 2019 WL 13981, at *2.

         “Interpretation of the contract will often be necessary to determine whether there has been a breach.” Tabor v. Madison Par. Hosp. Serv. Dist., No. CV 14-2374, 2017 WL 2569525, at *5 (W.D. La. June 13, 2017). “The goal of contract interpretation is to discover the common intent of the parties.” Id. (citing La. Civ.Code art. 2045). The contract language is the starting point for determining common intent. Id. (citing Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 954 (5th Cir. 2009)). “The words of a contract must be given their generally prevailing meaning.” Id. (citing La. Civ. Code art. 2047). “When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent.” Id. (citing La. Civ. Code art. 2048).

         The parties' contract provides that termination for good cause “will relieve the Company of any further liability for payment of salary, commissions and/or bonuses under this Agreement save that which was earned prior to the date of the termination.” (Def. Mot. Ex. A, at 4, ECF No. 108-1.) The provision at the center of the parties' dispute begins with the sentence “This Agreement may be terminated by the Company at any time for good cause.” The next sentence defines good cause:

“Good Cause” is defined herein as:
(1) If Employee should breach any of the provisions of this Agreement, then immediately upon written ...

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