A Confidential Limousine Service, Inc. v. London Livery, Ltd.
612 So. 2d 875, 1993 WL 2722, 1993 La. App. LEXIS 22 (1993)
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Rule of Law:
An unliquidated tort claim for damages cannot be pleaded as compensation or setoff against a liquidated claim on an open account, and partial summary judgment may be granted on the liquidated portion of the debt.
Facts:
- In January 1990, London Livery, Ltd. contracted with A Confidential Limousine Service, Inc. to provide limousine services.
- A Confidential provided the limousine services as agreed upon.
- During this time, a former dispatcher for London Livery, Carl Bennett, began working part-time for A Confidential while still employed by London Livery.
- London Livery alleged that Bennett revealed its trade secrets and diverted business to A Confidential.
- A Confidential billed London Livery $13,565 for the services rendered.
- London Livery refused to pay for the services, alleging it had suffered damages from A Confidential's actions.
- London Livery's president also identified what he believed were $1,410 in billing errors on A Confidential's invoices, stemming from a dispute over the interpretation of the term 'daily rental rate'.
Procedural Posture:
- A Confidential Limousine Service, Inc. (plaintiff) filed suit against London Livery, Ltd. (defendant) in trial court for $13,565 on an open account.
- London Livery filed an answer and a reconventional demand (counterclaim) alleging violations of the Louisiana Unfair Trade Practices Act and Uniform Trade Secrets Act.
- A Confidential filed an exception of no cause of action to the reconventional demand, which the trial court overruled.
- During discovery, London Livery sought production of original 'trip sheets,' which A Confidential resisted, claiming they contained trade secrets.
- A Confidential filed a motion for summary judgment on its open account claim.
- The trial court granted partial summary judgment in favor of A Confidential in the amount of $10,835.
- London Livery (appellant) appealed the trial court's judgment to the Court of Appeal of Louisiana, Fourth Circuit, with A Confidential as the appellee.
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Issue:
Does a defendant's unliquidated tort claim, raised in a reconventional demand, legally offset a plaintiff's liquidated claim on an open account, thereby creating a genuine issue of material fact that precludes partial summary judgment on the liquidated portion of the debt?
Opinions:
Majority - Armstrong, J.
No. A defendant's unliquidated tort claim does not legally offset a plaintiff's liquidated claim on an open account and does not preclude partial summary judgment on the liquidated portion of that debt. Under Louisiana Civil Code art. 1893, compensation (setoff) requires two distinct debts that are equally liquidated and contemporaneously demandable. A liquid debt is one whose existence is certain and its quantity determined. London Livery's reconventional demand for unfair trade practices is a tort claim, which is unliquidated until a judgment determines its value. Therefore, it cannot be pleaded in compensation against A Confidential's liquidated claim for services rendered. The trial court correctly determined that $10,835 of the debt was liquid, as it was ascertainable by mere calculation and not genuinely disputed, and properly granted summary judgment for that amount, leaving the disputed $1,410 and the tort claim for future litigation.
Dissenting - Plotkin, J.
Yes. Summary judgment was improper because genuine issues of material fact remain regarding the true amount of the debt. The dissent argues that the debt was not truly liquidated because A Confidential failed to produce the 'original trip sheets,' which are the best objective evidence of the services rendered. A Confidential instead produced a compilation of data created long after the services, which could be fabricated. London Livery alleged billing errors based on this compilation, which is sufficient to create a dispute over the entire quantum of the debt. Therefore, the trial court should not have granted partial summary judgment in a piecemeal fashion and should have required the production of the best evidence to resolve the factual dispute.
Analysis:
This case reinforces the strict requirements for the defense of compensation, or setoff, in Louisiana law, particularly the principle that both debts must be liquidated. The court's decision provides a significant advantage to creditors by allowing them to obtain partial summary judgment on the undisputed portion of a debt, even when the debtor files a complex, unliquidated counterclaim in tort. This prevents debtors from using tactical, unproven tort claims as a shield to delay payment on clear contractual obligations. The ruling solidifies the separation between contract and tort claims in the context of debt collection and summary judgment proceedings.
