Thomas W. Ferrara v. Louisiana Elastomer, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

12-1141

THOMAS W. FERRARA

VERSUS

LOUISIANA ELASTOMER, LLC

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APPEAL FROM THE
SEVENTH JUDICIAL DISTRICT COURT
PARISH OF CONCORDIA, DOCKET NO. C-11-46756
HONORABLE LEO BOOTHE, PRESIDING

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SYLVIA R. COOKS
JUDGE

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Court composed of Sylvia R. Cooks, John D. Saunders, and Jimmie C. Peters,
Judges.

AFFIRMED.

Bernard S. Johnson
Kristina B. Gustavson
Cook, Yancey, King & Galloway, APLC
333 Texas Street, Suite 1700
P.O. Box 22260
Shreveport, LA 71120-2260
COUNSEL FOR PLAINTIFF-APPELLEE:
Thomas W. Ferrara

D. Scott Landry
Jonathan C. McCall
Kurt D. Duncan
Chaffe McCall, L.L.P.
103 Two United Plaza
8550 United Plaza Blvd.
Baton Rouge, LA 70809
COUNSEL FOR DEFENDANT-APPELLANT:
Louisiana Elastomer, L.L.C.

COOKS, Judge.

Plaintiff, Thomas W. Ferrara, began working for Defendant, Louisiana

Elastomer, LLC (hereafter LAEL), in June 2007 as Executive Vice President. On

April 20, 2010, Plaintiff entered into an Employment Agreement with LAEL to

serve as its Executive Vice President, Chief Financial Officer, and member of the

Board of Directors for a term of three years. Under the provisions of the

agreement, LAEL agreed it would compensate Plaintiff under Section 3 of the

agreement (which provided for an annual base salary of $175,000.00) as long as

he, his wife, or his estate remained subject to a guaranty of any present or future

loans made to LAEL. Section 9 of the Employment Agreement provided as

follows:

9. Guarantor Rights. Notwithstanding any provision or language
in Section 4 or Section 5 of this Employment Agreement, as long as
the Employee, the Employee’s Spouse, or the Employee’s estate is
subject to a guarantee of any of the current or future loans to the
Company, the Company shall be [sic] compensate the Employee of
the Employee’s estate pursuant to Section 3 of this agreement as long
as the Employee, the Employee’s spouse, or the Employee’s estate are
subject to the loan guarantee(s).

In accordance with the agreement, Plaintiff and his wife, Linda Ferrara, executed

and are personally subject to several continuing obligations guaranteeing loans for

LAEL.

According to Plaintiff, on September 20, 2011, LAEL informed him it

wished to terminate his employment because “[h]is position was not needed.” The

following day, Plaintiff contends LAEL attempted to alter the terms of the

Employment Agreement by amendment. Plaintiff did not accept the new terms and

refused to sign the amendment. LAEL then ceased paying Plaintiff the agreed

upon salary.

Plaintiff then filed suit against LAEL, alleging LAEL breached the contract

and Plaintiff was entitled to damages in the form of all compensation due pursuant

to Sections 3 and 9 of the employment agreement, as well as attorney fees under

Section 8 of the employment agreement.

LAEL filed an answer and reconventional demand, generally denying the

main allegations and specifically listing the affirmative defense that the

Employment Agreement of April 20, 2010, had not been properly authorized by

LAEL.

On February 1, 2011, Plaintiff filed a Motion for Partial Summary Judgment,

asserting that he was entitled to enforce the provisions of Sections 3 and 9 of the

Employment Agreement which set forth that Plaintiff should continue to be

compensated provided he and his wife are guarantor’s of LAEL’s debt.

LAEL opposed Plaintiff’s Motion for Partial Summary Judgment on the

following grounds: (1) the Employment Agreement was not properly authorized

by LAEL; (2) the Employment Agreement did not accurately reflect the parties’

understanding concerning termination for cause; (3) Plaintiff failed to perform his

obligations under the Employment Agreement thereby causing “dissolution” of

said agreement; and (4) in a separate agreement, the parties decided Plaintiff could

not draw compensation after termination.

A hearing on the Motion for Partial Summary Judgment was held on April

23, 2012. The trial court took the matter under advisement, and on May 23, 2012,

entered the following Written Reasons for Judgment:

There does not exist a genuine dispute. The defendant’s answer
to the lawsuit states in paragraph 2 and 3 to wit:

“The employment agreement is a written document, which
itself is the sole and best evidence of its contents.”

There is no dispute of the fact that Thomas W. Ferrara and/or
his wife are guarantors on outstanding loans made to the company.

The three claims in opposition are without merit.

Defendant seeks to reform a written contract by anticipated oral
testimony which is not admissible. Parol evidence is only acceptable

to negate or vary the terms of a written document in circumstances of
vice of consent, error, fraud, duress, or a subsequent valid, oral
agreement.

The exhibits do not present any valid basis to receive parol
evidence to vary the terms of the written contracts. In fact, Provision
12 amendment governs any amendments to wit:

“This agreement may be amended or modified only by a written
instrument executed by both the company and employee.”

Thomas W. Ferrara is entitled to a partial summary judgment in
accord with the motion.

In accordance with this, Judgment granting Plaintiff’s Partial Motion for Summary

Judgment was entered in the record. LAEL appealed.

ANALYSIS

LAEL first contends, as it did below, that the Employment Agreement is

unenforceable because it was never properly authorized by LAEL. We disagree.

Plaintiff points out to this Court that LAEL attempts to argue, among other

failures in his job performance, that Plaintiff failed to properly act as a fiduciary,

did not carry out the wishes of LAEL’s Board of Managers, and did not pay taxes

owed by the company. However, in the same breath, LAEL argues Plaintiff is not

entitled to his compensation under the Employment Agreement as he was never

properly employed because the agreement was not properly authorized. Plaintiff

notes the hypocrisy of LAEL’s attempts to accuse Plaintiff of behavior justifying

termination when it also argues Plaintiff was never properly employed because the

Employment Agreement was not authorized.

The record establishes the Employment Agreement was prepared by LAEL,

and was presented to Plaintiff for his signature. Plaintiff signed the agreement on

his behalf, and Michael Wells, LAEL’s President, signed the agreement on LAEL’s

behalf. In its Answer and Reconventional Demand, LAEL specifically stated “the

Employment Agreement is a written document, which is itself the sole and best

evidence of its contents.” We have found no genuine issue of material fact in the

record regarding LAEL’s authority to enter into the Employment Agreement. This

assignment of error has no merit.

In its other assignments of error, LAEL argues parol evidence, in the form of

the affidavits of Ronald Lane and Michael Wells (who were both, at different

times, President and CEO of LAEL and members of the Board of Managers),

should be received to vary the terms of the Employment Agreement. We find the

trial court did not err in finding parol evidence was not admissible in this case.

LAEL argues the Employment Agreement “does not reflect the parties’ true

intent and should not be enforced but should be reformed to reflect that intent.” To

establish this alleged “true intent of the parties,” LAEL attempted to introduce the

affidavits of Lane and Wells. Essentially, LAEL argues Plaintiff was terminated

from his position for cause and, as a result, the Employment Agreement should be

reformed to reflect that the parties intended a different outcome would result were

Plaintiff to be terminated for cause. There are several problems with this

argument.

Initially, there is no basis in the record for LAEL’s self-serving contention

that Plaintiff was terminated for cause. Plaintiff notes LAEL neither pled

termination for cause as a fact nor offered any proof of it in opposition to the

motion for partial summary judgment. In the Answer and Reconventional Demand

filed by LAEL, it stated that Plaintiff was “currently the Executive Vice President

and CEO” of LAEL. Further, during the hearing before the trial court, LAEL did

not maintain Plaintiff was terminated for cause, stating to the trial court “[i]f

Ferarra was terminated, as he contends. . .” The record is clear LAEL did not

allege, prior to the hearing on the motion for summary judgment, that Plaintiff was

terminated, much less for cause. Thus, such allegations now made on appeal

cannot create a genuine issue of material fact to preclude summary judgment.

Moreover, we also disagree that the affidavit of Ronald Lane creates an issue

of material fact as to whether Plaintiff was terminated for cause. Lane stated in in

his affidavit that “[a]ccording to Ferrara, he has been terminated as an officer,”

and “[s]ubstantial grounds existed for the termination of Ferrara with cause.”

Neither of these statements is a declaration that Plaintiff was in fact terminated for

cause and cannot serve to create a genuine issue of fact to thwart Plaintiff’s motion

for summary judgment.

LAEL also argues a “mistake was made in the drafting of the Employment

Agreement,” which would entitle it to reform the contract. We note at the hearing

on Plaintiff’s Motion for Partial Summary Judgment, LAEL acknowledged it

prepared the Employment Agreement and “made a mistake” by “fail[ing] to

include [a] for-cause provision in the employment agreement that was issued.”

However, despite the apparent contention that a “mistake” was made in the drafting

of the Employment Agreement, no such allegation was made in LAEL’s Answer

and Reconventional Demand. As Plaintiff notes, reformation of a contract is an

equitable remedy which must be affirmatively sought by the party claiming the

relief, and that party must bear the burden of establishing mutual error and must

establish it by clear and convincing evidence. See Walker v. Jim Austin Motor

Company, 162 So.2d 135 (La.App. 1 Cir.1983). LAEL failed to seek such relief,

and did not mention any allegation of mistake until the filing of the opposition to

the motion for partial summary judgment.

LAEL also contends in brief that the Employment Agreement includes terms

it did not contend for it to contain. Louisiana Civil Code Article 2046 provides,

“[w]hen 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.” However, as LAEL acknowledged in its answer, the “Employment

Agreement is a written document, which is itself the sole and best evidence of its

contents.” The agreement clearly sets forth that LAEL will pay Plaintiff the

compensation due as long as he or his wife are guaranteeing any loans to LAEL.

There is no dispute that Plaintiff and his wife have continued to guarantee several

loans on LAEL’s behalf.

Lastly, as Plaintiff notes, the Employment Agreement provides by its own

terms that termination of the employee can only occur by providing “written notice

by the Company to the Employee.” The record indicates no such notice was ever

provided, nor does LAEL allege any such notice was given. Thus, under the terms

of the Employment Agreement, no termination for cause occurred in this case.

LAEL also argues because Plaintiff allegedly failed to perform his

obligations under the Employment Agreement, LAEL has the right to consider the

agreement dissolved. Paragraph 10 of the Employment Agreement specifically

provides that the provisions of Paragraph 9, which provide that as long as the

Employee, his spouse, or estate continue to guaranty the loans, he shall receive his

compensation, “shall survive” even if the remainder of the agreement is

terminated. The sole issue of Plaintiff’s Motion for Partial Summary Judgment

was his entitlement to post-employment compensation. Thus, even assuming

LAEL’s factual allegations had any merit, they do not create a genuine issue of

material fact relative to the relief sought by Plaintiff in his Motion for Partial

Summary Judgment.

In conclusion, we find the trial court correctly determined no genuine issues

of material fact existed which prevented it from rendering summary judgment in

Plaintiff’s favor. By the clear and explicit provisions of the Employment

Agreement, Plaintiff was entitled to receive the agreed upon compensation

provided he and his wife continued to guarantee loans on LAEL’s behalf. The

record is unequivocal that Plaintiff and his wife are currently guarantors on

outstanding loans made to LAEL. The trial court did not err in finding parol

evidence was inadmissible to vary the terms of the Employment Agreement, as the

terms of the agreement were clear.

DECREE

For the foregoing reasons, we affirm the trial court’s grant of Plaintiff’s

Motion for Partial Summary Judgment. All costs of this appeal are assessed to

appellant, LAEL.

AFFIRMED.