Tubos De Acero De Mexico, S.A., Plaintiff-Appellant-Cross-Appellee v. American International Investment Corp., Inc., Defendant-Appellee-Cross-Appellant, George Sfeir, Tubos De Acero De Mexico, S.A. v. American International Investment Corp., Inc. George SfeirTubos De Acero De Mexico, S.A., Plaintiff-Appellant-Cross-Appellee v. American International Investment Corp., Inc., Defendant-Appellee-Cross-Appellant, George Sfeir, Tubos De Acero De Mexico, S.A. v. American International Investment Corp., Inc. George Sfeir
Gerald C. deLaunay (argued), Jean Ouellet, Perrin, Landry, deLaunay, Dartez & Ouellet, Lafayette, LA, for American Intern. Inv. Corp. and Sfeir.
Appeals from the United States District Court for the Western District of Louisiana.
Before BARKSDALE and STEWART, Circuit Judges, and DUVAL, District Judge.*
CARL E. STEWART, Circuit Judge:
1 In this consolidated appeal, Tubos de Acero de Mexico, S.A. (TAMSA) seeks reversal of the district court‘s order granting summary judgment for George Sfeir (“Sfeir“) on its fraud and conversion claims against him personally. TAMSA also appeals the denial of its motion for summary judgment on American International Investment Corp., Inc.‘s (“American“) unfair trade practices and trade secrets counterclaims. American cross-appeals the district court‘s order granting summary judgment for TAMSA on its counterclaims for breach of contract and punitive damages. For the reasons that follow, we affirm the decision of the district court in part, reverse in part, and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
2 This case involves a commercial dispute between TAMSA and American and its vice president and chief executive officer, Sfeir, arising from a lease of ultrasonic testing pipe inspection equipment (“UT unit“). TAMSA is a Mexican corporation engaged in the business of manufacturing and selling steel pipe for various applications in the offshore petrochemical industry. As part of its quality control program, TAMSA uses UT units to test the manufactured pipe at its manufacturing plant in Veracruz, Mexico. American is a Louisiana corporation, with its principal place of business in Lafayette, Louisiana. American is an international marketing agent for Technical Industries, Inc. (“Technical“), a Houston-based company that designs and manufactures UT units. In this capacity, American performed the following functions for Technical: (1) international marketing; (2) ensuring Technical‘s customers received its products; (3) guaranteeing customers’ payment to Technical; and (4) service and technical support for Technical‘s UT units placed with customers. American does not design or manufacture any UT units, nor possess any patent or trademark protection as to such equipment.
3 American supplied TAMSA with UT units manufactured by Technical on two separate occasions: a 1995 sale and a 1997 lease. In December of 1995, American sold TAMSA a UT unit and this purchase was memorialized by a purchase agreement dated December 12, 1995. The 1995 purchase agreement was silent as to the confidentiality or proprietary nature of any alleged trade secrets, contained no restrictions that prevented TAMSA from making design changes to the UT unit, and did not require TAMSA to purchase spare parts for the UT unit from American. In conjunction with this sale, American provided TAMSA with the unit‘s operation manual, electrical wiring diagram, and mechanical drawings. A separate lease agreement was also signed on December 12, 1995, whereby TAMSA rented a UT unit from American for a four month period, while the new UT unit that it agreed to purchase was being manufactured. Sfeir drafted each of these agreements. The purchased unit was completed and ultimately was delivered to TAMSA in the summer of 1996.
5 Technical‘s UT equipment was built primarily through the efforts of Technical employees, John Krajewski (“Krajewski“) and Joe Rose. According to Krajewski, the UT unit purchased in 1995 was “extremely similar” to the UT unit leased in 1997. The only major difference between the two UT units was the addition of a data acquisition package to the 1995 purchased UT unit.1 However, the 1997 leased UT unit contained a ET-26A board, which was a slightly different, allegedly upgraded version of the ET-26 board installed on the 1995 purchased UT unit.
6 Sfeir testified during his deposition that he did not know whether Technical required confidentiality of other parties with whom it did business. At his deposition, Krajewski testified that while he worked for Technical, its customers were allowed to photograph, inspect, and examine Technical‘s UT units, including the 1997 leased UT unit. Additionally, photographs of Technical‘s UT units, and their component parts, were available on Technical‘s web page. Although Sfeir testified that he tried to “[k]eep it short,” American‘s competitors were permitted to view photographs of Technical‘s UT units at trade shows.
7 In conjunction with the 1995 lease and when discussions began between TAMSA and American that lead to the 1997 lease, Sfeir made it clear that the rental of a UT unit was contingent upon TAMSA purchasing a new UT unit from American, and TAMSA acknowledged this rental offer. On October 29, 1997, American again advised TAMSA that the rental unit “is to help our clients when they buy new equipment from us or have us renovate old equipment,” and TAMSA again acknowledged this rental proposal. TAMSA‘s Chief Executive Officer, Martin Berardi, testified that if TAMSA had not been able to lease American‘s UT unit in November of 1997, TAMSA would have lost revenues and it would have been detrimental to their commercial objectives. Further, TAMSA‘s internal e-mails on November 6th revealed that it had conducted a worldwide search which showed that American‘s UT unit was the only one available, that TAMSA was in need of a UT unit, and that American‘s UT unit needed to be acquired without delay. Sfeir‘s affidavit indicates that during negotiations for the 1997 lease, TAMSA represented to Sfeir that it intended to purchase its UT unit from American.
8 The 1997 lease provided for the rental of a UT unit for twelve months at a rate of $31,500 per month. Pursuant to the 1997 lease, TAMSA‘s obligations under the lease were secured by a letter of credit (LOC) in the amount of $650,000 that TAMSA established with Banco Santander (issuing bank) and Hibernia National Bank (“Hibernia“) (confirming bank). According to the 1997 lease and the LOC, the purpose of the LOC was to ensure the return of the UT unit, the payment of all money owed to American and its contractors, and compliance with the terms of the lease. The lease agreement and the LOC were negotiated and drafted by Sfeir and accepted by TAMSA. In September of 1998, the parties agreed to extend the lease through May of 1999 at a rate of $34,000 per month and to extend the expiration date of the LOC to July 30, 1999.
10 There is also evidence that as of October of 1997, internal requests were being made by Arnulfo Ruiz to allow expenditures of $425,000 for renovation of the electronic equipment on TAMSA‘s existing UT units. During the term of the 1997 lease, Sfeir made numerous inquiries into, and expressed desire to perform, any renovations of TAMSA‘s equipment and TAMSA‘s professed its intent to comply with its lease obligations. However, American was never offered an opportunity to bid on any renovations. American provided evidence that TAMSA undertook renovation of its existing equipment through other contractors. Furthermore, there is evidence that TAMSA manufactured and/or purchased from parties other than American spare or replacement parts for the 1997 leased UT unit, which TAMSA left on the unit when it was returned to American. Near the end of the 1997 lease, Sfeir also discovered that TAMSA copied the electronic circuitry from the ET-26A board in the 1997 leased UT unit.
11 In May of 1999, TAMSA returned the leased UT unit from Veracruz to Technical‘s facility in Houston, as designated by American. On May 29, 1999, following an inspection of the 1997 leased UT unit, a TAMSA representative acknowledged damage to the UT unit, as well as the presence of reproduced and replacement parts on the UT unit. On July 7, 1999, American faxed two invoices dated July 1, 1999 to TAMSA for amounts allegedly due under the lease, charging $68,000 for “downtime” and $130,925 for replacement parts and alleged physical damage to the UT unit. Sfeir also notified TAMSA by letter of claims for alleged breach of contract. This letter, dated July 7th, made a “formal demand” for four separate categories of damages and stated that Technical was still repairing the unit. On July 12, 1999, Sfeir submitted an “invoice” to Hibernia for payment under the LOC, representing that “[a]ll money owed was not paid in full,” that “[n]ot all the terms of the lease were followed,” and that American was entitled to the entire $650,000. On its face, the invoice conformed to the terms of the LOC, and Hibernia paid the entire sum to American.
12 TAMSA filed breach of contract, fraud, and conversion claims against American and Sfeir in the Western District of Louisiana, alleging that they wrongfully drew down the entire $650,000 irrevocable LOC. American counterclaimed, seeking damages for alleged breach of contract, violations of the Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA),
13 American and Sfeir filed motions for partial summary judgment, seeking dismissal of TAMSA‘s fraud and conversion claims. TAMSA filed four motions for summary judgment, seeking dismissal of American‘s counterclaims for (1) punitive damages, (2) breach of contract under paragraph VI of the lease, (3) unfair trade practices, and (4) violations of trade secret law.
14 The district court denied American‘s motion, but granted Sfeir‘s motion. Further, the court granted TAMSA‘s motions on American‘s punitive damages and breach of contract counterclaims and denied TAMSA‘s motions on American‘s unfair trade practices and trade secrets counterclaims. The district court gave no explanation for its ruling on the parties’ motions for summary judgment and partial summary judgment.
16 In this appeal, TAMSA challenges the district court‘s grant of partial summary judgment, dismissing its fraud and conversion claims against Sfeir. TAMSA also appeals the district court‘s denial of its motion for summary judgment on American‘s LUTPA and LUTSA counterclaims. American cross-appeals the dismissal of its counterclaims for breach of contract and punitive damages.
DISCUSSION
I. Standard of Review
17 This Court reviews a grant or denial of summary judgment de novo. Mowbray v. Cameron County, Tex., 274 F.3d 269, 278 (5th Cir.2001). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
II. Grant of Summary Judgment for Sfeir on TAMSA‘s Fraud and Conversion Claims
18 TAMSA argues that the district court erred by granting Sfeir‘s motion for partial summary judgment on its fraud and conversion claims. We agree.
19 Although the district court did not assign reasons for its ruling, our review of the transcript of the motion hearing proceedings leads us to conclude that the court‘s dismissal of TAMSA‘s claims against Sfeir must have rested on a belief that he could not be held personally liable because he was protected by his capacity as a corporate officer. First, the court seemed to be concerned that TAMSA did not plead piercing the corporate veil under the “alter ego” doctrine by alleging commingling of corporate and officer funds. Second, the court concluded, “If Mr. Sfeir was the president of the corporation and he went to the bank and the bank issued the money to the corporation, and it went into a corporate account, then you sue the corporation.... And then you pierce the corporate veil to go after the corporate owner who may have commingled or used those funds.” Third, the court also expressed concern with the fact that TAMSA had no proof that the money drawn down on the LOC personally benefitted Sfeir. Because the transcript had little detail on the evidence of fraud and conversion in this case, the district court‘s decision is best viewed as based upon categorical rules regarding when a corporate officer can be held individually liable under Louisiana law. Thus, we review these conclusions of law de novo. Halloran v. Veterans Admin., 874 F.2d 315, 320 (5th Cir.1989). As to each of the district court‘s conclusions, we disagree. Based upon Louisiana law, we find that Sfeir may be held personally liable if he committed fraud or conversion on behalf of the corporation.2
21 The general rule is that a corporation is a distinct legal entity, separate from those who comprise it, and unless directors or officers purport to bind themselves individually, they do not incur personal liability for corporate debts. Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164, 1168-69 (La.1991). The exception to this rule is when there is a justification for piercing the corporate veil. Id. Under Louisiana law, the corporate veil may be pierced under the “alter ego” doctrine, where the corporate entity is disregarded to such an extent that the affairs of the corporation are indistinguishable from the affairs of the officer or director. First Downtown Dev. v. Cimochowski, 613 So.2d 671, 676 (La.Ct.App.1993). Indicia of this disregard include commingling of corporate and officer funds. Id. Another basis for piercing the corporate veil, which applies in this case, is where “[a] director or officer who has practiced fraud upon any person, may be held personally liable for the resultant damages.” Id. Louisiana specifically preserves by statute “any rights which any person may by law have against a ... director or officer [of a corporation] because of any fraud practiced upon him by any of such persons.”
23 TAMSA argues that the district court erred in granting Sfeir‘s motion for partial summary judgment because it presented evidence sufficient to create a genuine issue of material fact regarding whether Sfeir, acting through American, committed fraud and conversion in drawing down the entire $650,000 irrevocable LOC. Fraud is defined as “a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to another.”
24 The district court found that there were genuine issues of material fact pertaining to fraud and conversion on the part of American, and thus denied American‘s motion for partial summary judgment on TAMSA‘s claims against American. American did not appeal the denial of its motion. We can conceive of no reason, other than the district court‘s erroneous belief that Sfeir was protected by his status as a corporate officer, for this inconsistent ruling. The allegations underlying TAMSA‘s fraud and conversion claims against American and Sfeir would be identical because Sfeir was acting for American. As such, we conclude that the district court‘s summary judgment ruling as to Sfeir was erroneous.
III. Denial of Summary Judgment for TAMSA on American‘s LUTPA Counterclaim
25 TAMSA contends that it is entitled to summary judgment on American‘s LUTPA counterclaim because American lacks standing to assert the counterclaim. It also argues that the counterclaim is preempted under Louisiana law. Additionally, TAMSA contends that the evidence is insufficient to raise a genuine issue of material fact that TAMSA engaged in the type of “egregious” conduct that forms the basis of a LUTPA violation. The district court correctly rejected the three arguments asserted by TAMSA.
26 LUTPA prohibits “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
27 TAMSA argues that American lacks standing to bring a LUTPA claim because there is insufficient evidence that TAMSA and American are “competitors,” as required to find a party liable under LUTPA. LUTPA confers a private right of action on “[a]ny person who suffers any ascertainable loss of money or movable property ... as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by R.S. 51:1405.”
28 With regard to the peremption argument, the summary judgment hearing transcript indicates that the district court agreed with American‘s argument that its LUTPA counterclaim was not time-barred because TAMSA‘s conduct during the lease was a “continuing violation” that did not abate until the termination of the 1997 lease, and thus extended the period for filing the LUTPA claim. We agree. American‘s LUTPA counterclaim was filed on August 11, 1999 and alleged conduct in continuing violation of LUTPA by TAMSA through May of 1999; only at that time did the one-year LUTPA limitations period begin to run.4
29 Although this Court has not previously addressed whether the continuing violation doctrine applies to the LUTPA peremptive period, we have noted the tension between the Louisiana appellate court and federal district court decisions within this circuit. America‘s Favorite Chicken Co. v. Cajun Enters., Inc., 130 F.3d 180, 185 (5th Cir.1997). Three Louisiana Court of Appeal cases have found that where a violation of LUTPA is continuing, the peremptive period does not begin to run until the violation ceases. Capitol House Preservation Co. v. Perryman Consultants, Inc., 725 So.2d 523 (La.Ct.App.1998) (holding that the defendant successful applicants for riverboat gaming licenses engaged in a continuing tort by allegedly failing to disclose fraudulent and misleading material information submitted to the Gaming Enforcement Division, in violation of the continuing statutory duty to disclose violations of the Riverboat Act, and thus the LUTPA peremptive period began to run anew each day the successful applicants continued to withhold information); Benton, Benton & Benton v. La. Pub. Facilities Auth., 672 So.2d 720, 723 (La.Ct.App.1996) (holding that the LUTPA peremptive period cannot begin to run as long as violations of LUTPA continue); Fox v. Dupree, 633 So.2d 612 (La.Ct.App.1993) (holding that the LUTPA peremptive period could not begin to run until the defendant loan broker complied with the bond filing and disclosure requirements of the Louisiana Loan Brokers’ statute because every day the loan broker was in violation gave rise to a new right of action for an unfair trade practice). Each of these state court decisions were rendered after the federal district court decisions in Neill v. Rusk, 745 F.Supp. 362, 365 (E.D.La.1988), and Cason v. Texaco, Inc., 621 F.Supp. 1518, 1523 (M.D.La.1985), which held that the continuing violation doctrine does not apply to the LUTPA peremptive period. Because we find these recent Louisiana appellate court opinions persuasive, and the federal district courts did not have the benefit of these cases, we hold that the continuing violation doctrine applies to the LUTPA peremptive period.
31 We now turn to TAMSA‘s argument that American‘s counterclaim is not actionable under LUTPA because it alleges mere breach of contract, which does not rise to the level of “egregious” behavior that LUTPA proscribes. While TAMSA correctly points out that LUTPA “does not provide an alternative remedy for simple breaches of contract,” Turner v. Purina Mills, Inc., 989 F.2d 1419, 1422 (5th Cir.1993), considering the deceptive and unethical undertones of TAMSA‘s alleged behavior during the 1997 lease period, we conclude that American‘s LUTPA counterclaim is not properly characterized as a mere breach of contract claim. Thus, we affirm the district court‘s denial of summary judgment on American‘s LUTPA counterclaim.
IV. Denial of Summary Judgment for TAMSA on American‘s LUTSA Counterclaim
32 TAMSA next argues that it is entitled to summary judgment on American‘s LUTSA counterclaim because American did not own the alleged trade secrets and thus lacks standing to assert the counterclaim. It also contends that American waived its LUTSA counterclaim by failing to maintain the secrecy of the alleged “trade secrets.” Further, TAMSA asserts that the evidence is insufficient to raise a genuine issue of material fact that TAMSA misappropriated any trade secrets. The trial court rejected the three arguments asserted by TAMSA. The court determined that there were genuine issues of material fact, stating during the motion hearing that the LUTSA counterclaim raised “serious issues.” Even if we assume that American has standing5 and that there is a genuine issue of material fact as to whether TAMSA misappropriated the alleged “trade secrets,” we hold that the summary judgment evidence demonstrates an absence of genuine issue of material fact as to whether American used reasonable efforts under the circumstances to maintain the secrecy of the alleged “trade secrets.”
33 To recover damages under LUTSA, a plaintiff must prove (1) the existence of a trade secret, (2) a misappropriation of the trade secret, and (3) actual loss caused by the misappropriation. Reingold v. Swiftships, Inc., 126 F.3d 645, 648 (5th Cir.1997). Under LUTSA, a “trade secret” is defined as:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(a) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of efforts that are reasonable under the circumstances to maintain secrecy.
34 American primarily points to the 1997 lease agreement as evidence that it used reasonable efforts to maintain the secrecy of alleged “trade secrets” with respect the 1997 leased UT unit. Specifically, the 1997 lease contained a confidentiality provision; provided that “[s]elected [TAMSA] personnel authorized by [American] will be allowed in, and around the unit“; prohibited TAMSA from hiring American‘s employees; and required all replacement parts to be purchased from American. Further, American notes that Krajewski testified that the diagrams of circuitry provided by American to TAMSA contained the following: “Proprietary Notice: This document contains proprietary information and is loaned to the receiver in confidence. Its contents may not be disclosed without the prior written permission of Technical Industries, Inc.” As TAMSA points out, the confidentiality provision of the 1997 lease agreement required only that the parties keep the terms of the lease itself confidential, not any information pertaining to the design of the UT unit.7 Further, Krajewski‘s testimony was referring to the manual and diagrams that American provided TAMSA in conjunction with 1995 sale so that TAMSA would be able to make repairs on that UT unit; specifically, there was a “proprietary notice” stamped on two drawings of the E-26 board installed on the 1995 purchased UT unit. There is no evidence that any diagrams of the E-26A board accompanied the 1997 leased UT unit, much less that they contained a similar “proprietary notice.”
35 Although Louisiana law does not provide us with the precise contours of what constitutes relative secrecy, our decisions in Reingold and Sheets are instructive. In Reingold, which involved the commercial lease of a boat mold used in constructing hulls for fiberglass boats, this Court held that genuine issues of material fact existed to preclude summary judgment on the lessor‘s LUTSA claim against the lessee. We found that the summary judgment record indicated that the lessor used reasonable efforts under the circumstances to maintain the secrecy of the boat mold. Prior to leasing the boat mold, the lessor “maintained exclusive control and did not disclose it to or allow its use by anyone.” 126 F.3d at 650. The lessor and lessee entered into a written lease which provided as follows:
[T]he mold would be used exclusively by [lessee], any movement of the mold from lessee‘s shipyard would be contingent upon [lessor‘s] prior approval, the lessee would give advance written notice to lessor before using the mold in the construction of each vessel hull, the lessee would have exclusive non-transferable use of the mold, the lessee would not assign or transfer any interest in the mold, and the lessee, at the conclusion of the lease, would turn over all copies of the design data for any modifications made to the mold.
36 Id. Sheets involved the alleged misappropriation of a purported inventor‘s modification to the Yamaha tri-motorcycle. The district court dismissed the inventor‘s LUTSA claim under
V. Grant of Summary Judgment for TAMSA on American‘s Breach of Contract Counterclaim
38 We first must address whether the district court‘s ruling on American‘s counterclaim for breach of contract concerning paragraph VI of the lease agreement was suitable for entry as a final judgment under
39 When some of the same facts form the basis for several claims, the existence of separate claims for purposes of Rule 54(b) depends on an analysis of their distinctness.8 Id. at 740-42. For this Court to have jurisdiction under Rule 54(b), the district court‘s ruling that the “contingent upon” clause constituted a resolutory condition must have resolved a distinct “claim for relief” against TAMSA, as contemplated in Rule 54(b). This Court has not expressly adopted a method for determining what constitutes a distinct “claim for relief” under Rule 54(b). We have recognized, however, that various courts have looked to the possibility of separate recoveries, have concentrated on the underlying facts, and have invoked claim-preclusion rules. Id. at 741.
40 American argues that because the district court‘s ruling in this case runs afoul of each of these competing methods, it was not appropriate for designation for a Rule 54(b) final judgment. Further, American contends that because it is unclear from the district court‘s partial summary judgment ruling whether the court precluded its entire breach of contract claim or merely part of its claim, the ruling will create confusion at trial. Specifically, the district court made no factual findings and drew no conclusions as to the parties’ intent with respect to the “contingent upon” clause or as to whether TAMSA acted in good faith when it entered into the lease and in its effort to perform under the lease.
41 It was American, however, that requested Rule 54(b) certification of the district court‘s grant of partial summary judgment pertaining to the resolutory condition. In making this request, American told that court that paragraph VI was the “heart and soul” of its contract case against TAMSA. Thus, the district court‘s order granted “the Motion for Summary Judgment in regard to the Resolutory Condition in the Lease Agreement as a bar to Defendant‘s Counterclaim under Paragraph VI of the Lease Agreement,” dismissed American‘s counterclaim “for contract damage claims under Paragraph VI of the lease,” and granted Rule 54(b) certification. In ruling on American‘s Motion to Reconsider or Alternatively to Clarify Ruling, the district court stated that “the issues of good faith are still before the jury.” American responded as follows: “I guess the bottom line is if the good faith/bad faith issues are still alive, that tells me what I need to know. I think the rest of it becomes clear.”
43 American next challenges the district court‘s holding that the “contingent upon” clause created a resolutory condition under Louisiana law. The disputed clause states, “This lease is contingent upon Lessee buying their new or used Ultrasonic Inspection Units from Lessor, and having Lessor renovate any inspection equipment needed by Lessee while the unit is being leased.” American asserts that rather than creating a condition to the 1997 lease, the “contingent upon” clause constituted an unconditional promise on the part of TAMSA. TAMSA counters that American‘s interpretation is contrary to the plain language of the 1997 lease.
44 In Louisiana, the construction of an unambiguous contract is a question of law. Tex. E. Transmission Corp. v. Amerada Hess Corp., 145 F.3d 737, 741 (5th Cir.1998). We review the construction of an unambiguous contract de novo. Id. Under Louisiana statutory law, a court interpreting a contract shall determine the “common intent” of the parties.
45 The “contingent upon” clause clearly and unambiguously creates a condition. See Black‘s Law Dictionary 315 (7th ed.1999) (defining “contingent” as “[d]ependent on something else; conditional“); 13 Richard A. Lord, Williston on Contracts § 38.16, at 442 (4th ed. 2000) (“Although no particular words are necessary for the existence of a condition, such terms as `if,’ `provided that,’ `on condition that,’ or some other phrase that conditions performance usually connote an intent for a condition rather than a promise.“). As this interpretation does not produce any absurd consequences, it must be given effect without resort to parol evidence. Accordingly, we reject American‘s arguments that the parties’ intended the “contingent upon” clause to obligate TAMSA to purchase a UT unit from American or allow American to renovate its UT units. If such a promise was the parties’ true intent, the parties could have established a purchase agreement similar to the one that accompanied that 1995 lease agreement. It is undisputed that Sfeir drafted the 1997 lease agreement and we will not remedy Sfeir‘s failure to draft this lease provision to reflect such an obligation.
46 Louisiana Civil Code article 1767 provides as follows:
A conditional obligation is one dependent on an uncertain event.
If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.
If the obligation may be immediately enforced but will come to an end when the uncertain event occurs, the condition is resolutory.
48 American also argues that even if the “contingent upon” clause creates a resolutory condition, summary judgment was improper because it presented evidence which creates a genuine issue of material fact as to whether TAMSA (1) acted in good faith with respect to the Louisiana Civil Code articles 1770 and 1983, and (2) was at fault in preventing the fulfillment of the resolutory condition as contemplated in Louisiana Civil Code article 1772. These provisions of the Louisiana Civil Code are inapplicable to the issue of whether American can base a breach of contract claim on the resolutory condition. Article 17709 is not applicable because, if anything, it is concerned with whether TAMSA, as the obligor entitled to terminate the lease,10 exercised its right to terminate in good faith.11 TAMSA never exercised its right to terminate the 1997 lease. Similarly, article 177212 is inapplicable because in this case, the resolutory condition was fulfilled when TAMSA purchased a new UT unit from a party other than American. Further, although article 1983 required TAMSA to perform its obligations under the lease in good faith, the “contingent upon” clause did not create a performance obligation on the part of TAMSA. We therefore affirm the ruling of the district court granting summary judgment on American‘s breach of contract claim regarding the “contingent upon” clause.
VI. Grant of Summary Judgment for TAMSA on American‘s Punitive Damages Counterclaim
49 The district court granted summary judgment for TAMSA on American‘s punitive damages counterclaim without providing reasons for its decision. From the transcript of the summary judgment hearing, however, it is evident that the district court applied Louisiana‘s choice of law rules and concluded that Louisiana law did not authorize punitive damages. American does not challenge the district court‘s application of Louisiana‘s choice of law rules; however, it contends that under Louisiana choice of law provisions, summary judgment should not have been rendered on its punitive damages counterclaim.
50 In determining the appropriate substantive law, the district court correctly looked to Louisiana choice of law rules because a federal court exercising diversity jurisdiction applies the choice of law rules of the forum state. See Marchesani v. Pellerin-Milnor Corp., 269 F.3d 481, 485 (5th Cir.2001). The specific article dealing with a conflict of law determination in relation to punitive damages is Louisiana Civil Code article 3546, which provides:
Punitive damages may not be awarded by a court of this state unless authorized:
(1) By the law of the state where the injurious conduct occurred and by either the law of the state where the resulting injury occurred or the law of the place where the person whose conduct caused the injury was domiciled.
(2) By the law of the state in which the injury occurred and by the law of the state where the person whose conduct caused the injury was domiciled.
51
53 American does not dispute that Mexican law prohibits punitive damages or that Louisiana law generally prohibits punitive damages. However, American suggests that we embark on a conflict of laws exercise to determine whether this is an “exceptional case” as contemplated in Louisiana Civil Code article 3547. This argument is meritless. American, a Louisiana corporation, entered into a lease with TAMSA, a Mexican corporation with its headquarters in Veracruz. The lease, which was drafted by American, contained a Louisiana forum selection clause. American‘s remaining LUTPA counterclaim seeks redress for the harm caused by TAMSA, whose actions were centered in Mexico. The primary connection to Texas in this case is that the leased UT unit was physically located in Texas before it was shipped to TAMSA in Mexico and then returned from Mexico to Texas at the expiration of the lease. It is not “clearly evident” that there are exceptional circumstances present that would trigger the application of article 3547. Thus, we conclude that the district court‘s dismissal of American‘s punitive damages claim was proper.
CONCLUSION
54 We AFFIRM the denial of TAMSA‘s motion for summary judgment on American‘s LUTPA counterclaim. In addition, we AFFIRM the grant of summary judgment for TAMSA on American‘s counterclaims for breach of contract and punitive damages. However, we REVERSE the district court‘s grant of summary judgment in favor of Sfeir on TAMSA‘s fraud and conversion claims against him personally. We also REVERSE the district court‘s summary judgment ruling on American‘s LUTSA claim. Accordingly, we remand for further proceedings not inconsistent with this opinion
55 AFFIRMED in part, REVERSED in part, and REMANDED.
Notes
283 U.S. 643, 649, 51 S.Ct. 587, 75 L.Ed. 1324 (1931).It is obvious that the word `competition’ imports the existence of present or potential competitors, and the unfair methods must be such as injuriously affect or tend thus to affect the business of these competitors — that is to say, the trader whose methods are assailed as unfair must have present or potential rivals in trade whose business will be, or is likely to be lessened or otherwise injured.
Reasonable efforts to maintain secrecy have been held to include advising employees of the existence of a trade secret, limiting access to a trade secret on a “need to know basis“, and controlling plant access. On the other hand, public disclosure of information through display, trade journal publications, advertising, or other carelessness can preclude protection.... Reasonable use of a trade secret including controlled disclosure to employees and licensees is consistent with the requirement of relative secrecy.
In order to comply with the requirement of good faith, a party exercising his right to terminate a contract at will should consider not only his own advantage, but also the hardship to which the other party will be subjected.... If termination is improper under this article, the court may order either continuation of performance for the other party to overcome the hardship, or may grant damages to the party harmed by the termination.
The law applicable under Articles 3543-3546 shall not apply if, from the totality of the circumstances of an exceptional case, it is clearly evident under the principles of Article 3542, that the policies of another state would be more seriously impaired if its law were not applied to the particular issue. In such event, the law of the other state shall apply.