In a dispute over the amount the utility company owed to the Town of Haynesville pursuant to a franchise agreement, Entergy Louisiana, Inc. (ELI, formerly Louisiana Power and Light or LPL) and Entergy Corporation
Haynesville's Petition for Damages
In June 2000 the Town of Haynesville sued Entergy Louisiana, Inc. (ELI) and Entergy Corporation seeking damages for higher franchise fees under a "most favored nation" provision of the town's contract with the utility provider. The town alleged in its petition:
ELI's and Entergy's answer was filed August 1, 2000. Attached thereto was a June 21, 1999, letter from Entergy to the Town of Haynesville which stated:
Haynesville's Motion for Summary Judgment
Haynesville filed a Motion for Summary Judgment (MSJ) on July 11, 2001, and
In addition to the Haynesville contract, MFN letter, Haynesville ordinances and minutes of the town council concerning the franchise agreement, Haynesville supported its MSJ with the depositions of Norman Colvin, an ELI representative, and John Grantham, retired ELI district manager of the West Monroe district. Haynesville also supplied ELI's responses to its requests for production and affidavits from an economist which projected Haynesville's damages.
According to Haynesville, the 3% payments along with the nine payments of $20,000 each to West Monroe beginning in 1989 replaced the free and discounted services under the 1966 franchise agreement and were a "franchise fee" under the 1989 ELI franchise agreement with West Monroe. By virtue of its MFN clause, Haynesville contended it should have begun receiving 3% of its gross revenues plus $180,000 beginning January 1, 1989.
ELI/Entergy's Motion for Summary Judgment
ELI/Entergy sought a summary judgment dismissing Haynesville's claim for an additional 1% franchise fee plus $180,000 based upon ELI's 1989 agreement with West Monroe. Further, Entergy sought a summary judgment dismissing Haynesville's action for an increased franchise fee based upon any franchise agreement by EGS under the "single business entity" theory. ELI/Entergy's MSJ was negative; i.e., that Haynesville was not entitled to recover under either theory.
Concerning Haynesville's claim based upon the West Monroe franchise, the defendants stated that on May 30, 1925, ELI entered into a contract to provide West Monroe electricity and to purchase the town's light and power facilities. The contract was amended and supplemented in February 1929. According to ELI/Entergy:
Taking the position that the 2% franchise fee is completely separate from the settlement of the prior contractual obligations, ELI/Entergy argued that Haynesville's claim that ELI pays West Monroe a 3% franchise fee is unfounded. In other words, the defendants urged that the 1% and $180,000 payments were not franchise fees but settlement of a dispute over whether the utility company had to supply West Monroe with free and discounted electricity. Based on the foregoing, ELI/Entergy urged that Haynesville's motion for summary judgment was erroneously granted, and ELI/Entergy's motion for summary judgment incorrectly denied.
ELI/Entergy also urged there was no legal authority for binding ELI/Entergy based upon the franchise agreements of EGS which was not acquired by Entergy for a number of years after the Haynesville MFN agreement was reached with ELI. Therefore, ELI/Entergy sought to have summary judgment granted on this issue also.
ELI/Entergy supported its MSJ with the Haynesville MFN letter from ELI, the 1925 contract between the utility and West Monroe along with the 1925 West Monroe ordinance and a 1929 amendment to the 1925 contract. ELI/Entergy also supplied the same deposition of John Grantham, a 1988 ELI letter seeking a renewal of the 1966 West Monroe contract, the 1988 West Monroe ordinances, contract and agreement with ELI, 1984 Haynesville town council minutes along with a letter from the town attorney concerning the MFN clause, the Kenner and Harahan agreements, the deposition of Haynesville's mayor, and a 1985 organizational chart of Mid South Utilities, Inc. (later, Entergy, Inc.).
Trial Court Action
A hearing was conducted on August 16, 2001. On August 29, 2001, the trial court signed a judgment granting Haynesville's MSJ and denying ELI/Entergy's MSJ. On September 19, 2001, ELI/Entergy also filed an exception of prescription and a motion for reconsideration of quantum figures supplied by Haynesville in support of its MSJ.
The trial court conducted a hearing on November 12, 2001, at which ELI/Entergy's motion for reconsideration and exception of prescription were heard. The parties signed and filed stipulations stating:
On November 30, 2001, the trial court entered reasons for judgment which delineated two issues for decision: (1) In Haynesville's MSJ, did ELI's West Monroe franchise agreement effective January 1, 1989, trigger Haynesville's MFN clause? (2) In ELI/Entergy's MSJ, in addition to the foregoing issue, did ELI establish that Haynesville was not entitled to recover under the "single business entity" theory because other Entergy companies were paying more than 2% franchise fees? Finding that Haynesville had established there was no genuine issue of material fact, the trial court granted Haynesville's MSJ. The trial court found genuine issues of material fact as to the energy defendants' MSJ, which was denied.
The final judgment signed on December 27, 2001, granted Haynesville's MSJ based upon ELI's franchise agreement with West Monroe. The trial court granted the defendants' motion for reconsideration of quantum calculations and awarded Haynesville $629,458.75 "plus legal interest to accrue on the principal balance due of $364,763.38 from August 16, 2001, until paid." In all other respects, ELI/Entergy's motion to reconsider the summary judgment previously granted in favor of Haynesville was denied. The trial court also overruled ELI/Entergy's exception of prescription. Further, the order denied ELI/Entergy's MSJ seeking rejection of Haynesville's action (1) based upon the West Monroe franchise agreement and (2) under 5% franchise fees paid by EGS under the "single business entity" theory.
Thereafter, ELI/Entergy filed a supervisory writ seeking review of the denial of its MSJ on both grounds. In denying the writ as moot (No. 36,484-CW), this court noted that the appeal of the partial summary judgment designated as final for purposes of immediate appeal brought with it for review the related interlocutory orders of the trial court. ELI/Entergy suspensively appealed the December 27, 2001, judgment. In its argument and briefs on appeal, ELI/Entergy made no complaint about the prescription ruling and neither side objected to the quantum award.
Appellate review of the grant or denial of a motion for summary judgment is de novo. Green v. State Farm General Ins. Co., 35775 (La.App.2d Cir.4/23/2002), 835 So.2d 2. La. C.C.P. art. 966 provides that the plaintiff or defendant may move for a
The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require it to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that it will be able to satisfy its evidentiary burden of proof at trial, there is no genuine issue of material fact. A summary judgment can dispose of a particular issue, theory of recovery, cause of action, or defense, in favor of one or more parties, even though the granting of the summary judgment does not dispose of the entire case. La. C.C.P. art. 966.
In Merlin B. Smith, Inc. v. Travelers Property Cas., 35695 (La.App.2d Cir.2/27/02), 811 So.2d 1097, this court explained that the likelihood that a party will be unable to prove his allegations at trial does not constitute a basis for rendering summary judgment. The function of the court on summary judgment is not to determine the merits of the issues involved, but only whether or not there is a genuine and material factual issue. Merlin B. Smith, Inc., supra.
Summary Judgment in Favor of Haynesville Based upon West Monroe Contract
On appeal, the defendants maintained the 1% and $180,000 were not franchise fees but settlement of any dispute arising from the earlier contracts with West Monroe to provide free and discounted services. Haynesville's position was that ELI's agreement to pay West Monroe 3% plus $180,000 in franchise fees triggered Haynesville's MFN clause.
Included in the filings in support of its MSJ, Haynesville filed the deposition of John Grantham, retired LPL district manager of the West Monroe district. Both Haynesville and ELI/Entergy referred to Grantham's statements to support their positions. According to Grantham:
Specifically, the defendants maintained that the 1989 agreement negotiated in 1988 with West Monroe was embodied in West Monroe Ordinance No. 2268, which authorized the 25-year franchise, and West Monroe Ordinance No. 2269, which authorized the standard 2% franchise fee and the Municipal Contract. ELI/Entergy relied upon the separate contract and ordinance, No. 2271, the stated consideration for which was the termination of any obligation on ELI to continue the free and discounted services found in "all previous Franchises and related Agreements" along with the resolution and termination of any claims arising out of "any and all previous Franchises and related Agreements" for free electricity or electricity billed under non-standard rates. In the defendants' view, the foregoing language was not limited to the renewal of the 1966 franchise agreement but covered all other agreements.
The trial court rejected ELI's argument that the 1% plus $180,000 (above the standard 2% of gross revenues) was paid to West Monroe in settlement of claims because one document provided for the standard 2% while another separate written document provided for the additional 1%. Specifically, the trial court found that the 2%, the 1% and the payment of $180,000 were all franchise fees for the right to supply electricity to the City of West Monroe. After reviewing all the documents, the trial court noted that the 1966 agreement (Ordinance 1355) stated that ELI agreed to provide enumerated free and discounted services as consideration for the franchise rights. Moreover, Ordinance 2271 of 1988 stated that in the 1966 ordinance, the consideration for franchise rights was free and discounted electricity. The 1966 ordinance did not mention the 1925 agreement. The trial court concluded that the free and discounted services from 1966 through 1988 were given solely as consideration for the franchise fees. In order to cease providing free and discounted services, ELI apparently calculated that 3% franchise fees were necessary to replace the value of the free and discounted services paid under the 1966 agreement for franchise rights. The $180,000 payment was to compensate West Monroe for entering into the new franchise agreement on January 1, 1989 instead of the 1991 expiration of the 1966 agreement. While ELI/Entergy characterizes the 1% plus $180,000 as settlement of its obligation to provide free and discounted services, the free and discounted services were, in fact, payment of franchise fees to West Monroe.
The documents in the record belied ELI/Entergy's contention that the 1% payment over the course of the 25-year franchise and $180,000 payment were continued compensation for property sold to the utility in 1925. In 1925, the West Monroe system served only 844 customers. Moreover, the 1925 contract stated the company provided West Monroe electrical service as the purchase price for the equipment and as consideration for franchise rights. The 1925 contract required that, if the town declined to renew the franchise at the end of the 25-year term, then West Monroe was to purchase all of the utility lines and property owned by the utility at the current appraised value. If during the term of the 25-year agreement, the utility chose to sell the lines, wires and other property, the utility was required to give West Monroe the right of first refusal.
Next, ELI/Entergy pointed out that Ordinance No. 2271 was enacted after the West Monroe city council had already passed Ordinance Nos. 2268 and 2269 related to the term and the 2% franchise fee. We find the sequence in which West Monroe enacted its ordinances to be a somewhat misleading argument. All of the West Monroe ordinances were passed on December 13, 1988, and are an integral part of the franchise arrangement.
ELI/Entergy's argument is refuted by the deposition of Norman Colvin, a ELI representative, who explained that agreements aside from the standard 2% were typically placed in other documents. According to Colvin, all municipalities signed the same 2% municipal contract form that had been in use for 30 to 40 years. Concerning Haynesville, Colvin stated the MFN letter was part of the consideration for Haynesville granting ELI the right to supply the town's electricity. Colvin explained that the MFN clause was separate from the franchise agreement because ELI was very particular about not changing its standard 2% franchise agreement form. In the 25-year franchise agreement signed January 15, 1985, ELI agreed to pay Haynesville 2%. To protect the town, the town council sought a MFN clause which was granted in the letter to the Haynesville Mayor and Town Council signed January 8, 1985, by D.E. Knowles, another ELI official. At the deposition of Christopher Screen of ELI Services, counsel for ELI/Entergy and Haynesville stipulated that the MFN letter constituted part of the Haynesville franchise agreement. By the same token, the various documents enacted by ELI and West Monroe in 1988 are all part of the franchise agreement.
Moreover, the defendants relied upon a 1985 cover letter from Haynesville's town attorney transmitting the MFN letter to the council. The attorney stated that the MFN clause was limited to the 2% franchise fee and "would not cover any other agreements [ELI] may make with any other municipality." ELI/Entergy contended that letter was an acknowledgment by Haynesville that ELI had the full right and authority to contract with any other town to pay additional fees other than franchise fees without implicating the MFN clause. What the Haynesville MFN clause specifically required was that ELI pay Haynesville the equivalent of any franchise fees above 2% should ELI pay more than 2% to another municipality. In this case, the 1988 agreement reached between ELI and West Monroe was for payment of franchise fees in excess of 2%.
Our de novo review of the material filed in support of and in opposition to Haynesville's MSJ based on ELI's franchise agreement with West Monroe shows that the trial court did not err in finding no genuine issue of material fact and in granting Haynesville's summary judgment predicated upon ELI's West Monroe contract.
In seeking a summary judgment that Haynesville was not entitled to recover under the "single business entity" theory, ELI/Entergy stated that Entergy was
In opposing ELI/Entergy's MSJ, Haynesville acknowledged that the "single business entity" issue is res nova, that ELI was acquired by Entergy's predecessor in 1949, that Haynesville's MFN agreement was made in 1985, and that Entergy did not acquire EGS until 1993. Haynesville supported its opposition with the deposition of Christopher Screen, an Entergy Services, Inc., employee who stated that Entergy owned 100% of the stock of ELI and EGS which shared common offices and directors. Via deposition, Nathan Langston, Chief Accounting Officer for Entergy, Entergy Services, Inc., ELI and EGS, explained that Entergy Services was the service company for various Entergy-owned companies including ELI and EGS. Entergy Services paid franchise fees to municipalities for both ELI and EGS. Each company had separate payrolls, federal tax ID numbers and separate filings with the federal government for withholding. As further support of its opposition to the utilities' MSJ, Haynesville submitted copies of 1999 through 2001 checks issued by Entergy Services to West Monroe, all stubbed "franchise tax."
In addition, Haynesville supplied a newspaper advertisement which ran May 9, 1996, in the Homer, Louisiana, newspaper stating that LPL was now Entergy which had unified "five separate power companies into one cohesive whole." The advertisement extolled various advantages to the citizens by having one "world class energy company" supply its electricity. After stating that Entergy was putting 12,000 employees and 80 years of experience to work for the customers, the ad concluded with "
Citing Green v. Champion Ins. Co., 577 So.2d 249 (La.App. 1st Cir.1991), writ denied, 580 So.2d 668 (La.1991), the trial court noted the courts may disregard the concept of corporate separateness to extend liability to affiliated corporations to achieve equity. The Green court stated that whether an affiliated group of entities is a "single business enterprise" is a question of fact. In determining whether a corporation is an "alter ego" or part of a "single business entity," the court must look at the substance of the corporation rather than the form. The Green court supplied a non-exclusive list of considerations similar to those used to "pierce the corporate veil."
The bottom line is that West Monroe historically had a great deal for free and discounted services. This advantageous arrangement negotiated by the leaders of West Monroe was burdensome for the utility. In order to entice the city fathers of West Monroe to depart from the long-standing and favorable arrangement, the utility calculated the monetary value of the free and discounted services provided to the city. The standard 2% franchise fee was insufficient to insure that the city continued to receive the same rate of benefit from the utility franchise. Therefore, the utility and the city agreed to the additional 1% over the 25-year term of the franchise plus the $180,000 payments to compensate the city for value it lost by renewing the contract in 1989 instead of at its expiration in 1991. ELI's 1989 franchise agreement to pay West Monroe 3% plus $180,000 in franchise fees triggered the 1985 MFN clause in Haynesville's franchise agreement. A deal is a deal.
Based upon our de novo review of the pleadings, depositions, documents, answers to interrogatories, and admissions on file, together with the affidavits filed, the trial court did not err in granting the Town of Haynesville's MSJ based upon the West Monroe franchise agreement and in denying the defendants' MSJ on the West Monroe issue and the "single business entity" issue.
The judgment of the trial court is affirmed at the defendants' costs. The matter is remanded for further proceedings.
AFFIRMED AND REMANDED.