147 F. Supp. 3d 537
E.D. La.2015Background
- Andretti Sports Marketing contracted with NOLA Motorsports Host Committee, Inc. (NMHC) to provide racing services for the Indy Grand Prix of Louisiana and alleges NMHC agreed to pay $1,322,050 annually for 2015–2017. NMHC is a nonprofit formed in 2014; NOLA Motor Club, LLC (NOLA Motor) owns NOLA Motorsports Park and Laney Chouest is NOLA Motor’s sole member.
- Andretti alleges Chouest repeatedly told it he would personally “stand behind” and guarantee funding for the Event and that state grant funds and Chouest’s personal investment would pay Andretti.
- After the Event (April 2015) Andretti says NMHC lacked funds to pay balances; approximately $3.4 million of state-appropriated funds allegedly went to capital improvements at the track instead of Andretti’s fees.
- Andretti sued NMHC, NOLA Motor, and Chouest for breach of contract, LUTPA (Louisiana Unfair Trade Practices), unjust enrichment, and fraud; it alleged NOLA Motor and Chouest are liable under single-business-enterprise and alter-ego theories.
- NOLA Motor and Chouest moved under Rule 12(b)(6) (and alternatively 12(e)) to dismiss or for a more definite statement; court considered whether Andretti sufficiently pleaded veil-piercing, LUTPA, unjust enrichment, and fraud (Rule 9(b) particularity).
Issues
| Issue | Andretti’s Argument | NOLA Motor / Chouest’s Argument | Held |
|---|---|---|---|
| Whether NOLA Motor and Chouest can be liable on Andretti’s breach claim via single-business-enterprise | NOLA Motor and Chouest acted as one with NMHC (shared officers, offices, control, undercapitalization, fund transfers) | Agreement disclaims affiliate/control; Andretti conceded NMHC not an affiliate; insufficient Green factors pleaded | Dismissed as to breach under single-business-enterprise—court finds only common officers/offices sufficiently pleaded and contract language undercuts control inference; breach claim dismissed against NOLA Motor and Chouest |
| Whether alter-ego doctrine can pierce NMHC’s veil to reach NOLA Motor or Chouest | Alter-ego applies; individual liability may follow where entity is sham or used to avoid liability | Alter-ego in Louisiana applies to shareholders/officers with legal relationship to the entity; defendants are not alleged officers/shareholders of NMHC | Dismissed: alter-ego cannot be applied to NOLA Motor/Chouest here because they are not alleged to be officers, directors, or shareholders of NMHC |
| Whether Andretti pleaded a LUTPA claim | Chouest’s pre-contract and post-contract misrepresentations and diversion of state funds were deceptive and caused ascertainable loss; Cheramie broadened standing | LUTPA is not a substitute for contract claims and (defendants assert) requires intent to harm competition or special relationship | Partially denied: LUTPA claim survives against Chouest (sufficiently pleaded fraudulent/deceptive conduct); LUTPA claim dismissed as to NOLA Motor; intent-to-harm-competition and special-relationship requirements not fatal here |
| Whether fraud and unjust enrichment were pleaded with required particularity; entitlement to treble damages under LUTPA | Fraud alleged (misrepresentations by Chouest, Sherman, Engeron) induced contract; unjust enrichment pled alternatively; treble damages notice provided | Fraud lacks Rule 9(b) particularity (time/place/specific content, to whom); unjust enrichment precluded where other remedies exist; treble damages require Attorney General notice to defendants | Court: Fraud and unjust enrichment claims lack required particularity — granted motion for more definite statement; treble damages dismissed (no AG notice allegation); unjust enrichment dismissed unless amended to allege absence of other remedy and lack of justification (Court ordered amendment) |
Key Cases Cited
- Brown v. ANA Ins. Grp., 994 So.2d 1265 (La. 2008) (single-business-enterprise doctrine scope)
- Riggins v. Dixie Shoring Co., 590 So.2d 1164 (La. 1991) (alter-ego and piercing corporate veil factors)
- Green v. Champion Ins. Co., 577 So.2d 249 (La. App. 1 Cir. 1991) (eighteen-factor Green test for single business enterprise)
- Cheramie Servs., Inc. v. Shell Deepwater Prod., 35 So.3d 1053 (La. 2010) (LUTPA grants standing to any person who suffers ascertainable loss)
- Tubos de Acero de Mexico, S.A. v. Am. Int'l Inv. Corp., 292 F.3d 471 (5th Cir. 2002) (LUTPA claims can allege deceptive conduct distinct from a mere contract breach)
- Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579 (5th Cir. 2010) (similarity of factors for alter-ego and single-business-enterprise analyses)
- Ogea v. Merritt, 130 So.3d 888 (La. 2013) (piercing corporate veil doctrine is jurisprudential and limited to exceptional circumstances)