     Case: 17-30769         Document: 00514757724        Page: 1     Date Filed: 12/12/2018




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                    Fifth Circuit

                                                                              FILED
                                                                      December 12, 2018
                                        No. 17-30769
                                                                            Lyle W. Cayce
                                                                                 Clerk
PAN AMERICAN LIFE INSURANCE COMPANY, individually and as a
partner in Panacon,

                 Plaintiff – Appellant,

v.

LOUISIANA ACQUISITIONS CORP.; INTER-CONTINENTAL HOTELS
CORPORATION,

                 Defendants – Appellees.




                     Appeal from the United States District Court
                        for the Eastern District of Louisiana
                               USDC No. 2:13-CV-5027


Before REAVLEY, ELROD, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       Pan American Life Insurance Company (Pan Am) 1 and Louisiana
Acquisition Corporation (LAC) formed a partnership to build and operate a
luxury New Orleans hotel.             The two partners developed bad blood while
contemplating the breakup of the partnership and the sale of the hotel, which



       * Pursuant to Fifth Circuit Rule 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited circumstances set forth
in Fifth Circuit Rule 47.5.4.
       1   The parties’ briefs and the record refer to Pan Am as “PALIC.”
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led to this protracted lawsuit. Pan Am appeals from the district court’s grants
of summary judgment in LAC’s favor, first partially in 2016 and again in 2017.
We AFFIRM.
                                        I.
        Pan Am and LAC formed a partnership called PANACON in 1981 to
build and operate a hotel in downtown New Orleans. Pan Am is a multibillion-
dollar insurance company that, until 2005, invested in real estate and
hospitality assets. LAC is a wholly owned subsidiary of Inter-Continental
Hotels Corporations (IHC), and these two companies operated as a commonly
controlled business entity. Pan Am owned a two-thirds interest in PANACON,
and LAC the remaining one-third. The Partnership Agreement contained a
non-compete provision stating that “no Partner shall, directly or indirectly,
acquire, own or hold an interest in a hotel in the New Orleans Metropolitan
Area which is competitive with the [h]otel without the prior written consent of
the other Partners.” PANACON entered into an Operating and Management
Agreement with IHC to operate the hotel, which IHC assigned to LAC. In
2005, Pan Am, as part of an effort to divest non-insurance assets from its
portfolio, decided to sell the hotel. Although Pan Am’s plans stalled because of
Hurricane Katrina and the 2008 recession, the parties resumed deliberating in
2010.
        Pan Am and LAC disagreed on how to proceed with the sale. Three
letters—dated April 26, 2011, April 27, 2011, and May 10, 2011—reveal two
points of disagreement:        a new long-term management contract and
renovation. First, LAC and IHC wanted the hotel to remain under the “Inter-
Continental” brand and “insist[ed] upon a new long-term management
contract for the hotel [from a potential buyer] as a condition for agreeing to sell
LAC’s interest in the hotel.”     Pan Am believed that the hotel should be
unbranded and unencumbered by any management contract to maximize the
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hotel’s value. Second, Pan Am wanted the partnership to invest $6 million
toward “soft renovation” to maximize the hotel’s value. LAC considered soft
renovation to be imprudent in light of the coming sale. When LAC refused to
begin renovation, Pan Am issued a notice of default. LAC ultimately agreed to
the sale and to simply seek a franchise agreement from the purchaser, and Pan
Am withdrew its notice of default.
      During this period, Pan Am and LAC had an additional conflict. In April
2012, Pan Am contended that LAC had been overcharging the partnership for
13 years. LAC responded with a summary of intercompany charges from the
first quarter of 2012. Based on that summary, Pan Am extrapolated that LAC
had overcharged PANACON approximately $2 million, which LAC disputed.
LAC conducted an internal review of the disputed charges for three months
and kept Pan Am apprised of its progress.       On December 20, 2012, LAC
informed Pan Am that LAC owed the partnership $651,804 ($434,536 for Pan
Am). LAC offered to show Pan Am the documents from internal review, but
Pan Am declined to see them.
      On December 21, 2012, Pan Am and LAC signed a Side Letter
Agreement and approved the sale. The Side Letter Agreement also reflected
LAC’s agreement to pay PALIC $434,636 “in resolution of outstanding
disputes” and for “claims related to the Management Agreement . . . including
without limitation those related to (a) matters referenced in [the three]
letters . . . , and (b) the categories of intercompany charges” discussed above.
The partnership sold the hotel for $60 million in January 2013.
      Following the sale, Pan Am sued LAC and IHC on July 9, 2013 for,
among others, breach of the Partnership Agreement, breach of fiduciary duty,
fraud, conversion, and unfair trade practices.       LAC moved to dismiss,
contending that the Side Letter Agreement contains a release of claims. The
district court denied the motion to dismiss on the grounds that although “it
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[was] clear that [Pan Am] compromised something,” discovery was necessary
as Pan Am alleged fraud in the inducement. On August 2, 2016, the district
court granted partial summary judgment in LAC’s favor, holding that LAC did
not breach the non-compete provision. After additional discovery, on August
21, 2017, the district court granted summary judgment on all remaining claims
in LAC’s favor after determining that the Side Letter Agreement contains a
compromise that bars Pan Am’s claims.
                                       II.
      We review a grant of summary judgment de novo. United States v.
Nature’s Way Marine, L.L.C., 904 F.3d 416, 419 (5th Cir. 2018). “Summary
judgment is appropriate when ‘the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law.’” Id. (quoting Fed. R. Civ. P. 56(a)).
                                       III.
                                       A.
      We hold that the Side Letter Agreement bars Pan Am’s claims against
LAC. Under Louisiana law, “[a] compromise is a contract whereby the parties,
through concessions made by one or more of them, settle a dispute or an
uncertainty concerning an obligation or other legal relationship.” La. Civ. Code
art. 3071. “A compromise precludes the parties from bringing a subsequent
action based upon the matter that was compromised.” Id. art. 3080
      The Side Letter Agreement clearly and unambiguously contains a
compromise. Paragraph 6 of the Side Letter Agreement states:




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      The termination of the Existing Management Agreement would be
      subject to the resolution of any disputes between PALIC and LAC
      (and its affiliates), and a release of LAC and its affiliates pursuant
      to a voluntary termination agreement. PALIC and LAC agree that
      LAC will pay PALIC the amount of $434,636 on or prior to sale of
      the [h]otel in resolution of outstanding disputes and such release
      of LAC and its affiliates will be for claims related to the
      Management Agreement and operation of the [h]otel, including
      without limitations those related to (a) matters referenced in
      letters from PALIC to LAC and its Affiliate dated April 26, 2011,
      April 27, 2011, and May 10, 2011, and (b) the categories of
      intercompany charges listed in a spreadsheet provided by PALIC
      to LAC on December 19, 2012, and such release shall specifically
      exclude any fraud by LAC and its affiliates, provided that such
      exclusion for fraud will not apply to claims based upon the
      intercompany charges referred to in (b) above. * * *

In no uncertain terms, LAC agreed to pay Pan Am $434,636 “in resolution of
outstanding disputes.” Pan Am agreed to release its “claims related to the
Management Agreement and operation of the [h]otel,” which covers the
entirety of Pan Am and LAC’s relationship.
      We reject Pan Am’s futile contention that the Side Letter Agreement
does not contain a compromise. In Pan Am’s view, the Side Letter Agreement
merely reflects the parties’ intent to enter into a separate agreement called the
“voluntary termination agreement” that contains a compromise in the future,
but, Pan Am asserts, the Side Letter Agreement does not contain a compromise
in itself. Because it was not a party to the Voluntary Termination Agreement,
Pan Am asserts that it compromised and released nothing. To support this
contention, Pan Am heavily relies on the district court’s order denying LAC’s
motion to dismiss, which stated that the overall impression of reading the Side
Letter Agreement was that the parties agreed to enter into a future agreement.
      Pan Am’s contention is unavailing because the Voluntary Termination
Agreement was between PANACON and LAC, and this agreement bars the
partnership—a separate legal entity—from asserting its own legal claims
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against LAC, and vice versa. Therefore, the Voluntary Termination Agreement
affects neither the relationship between Pan Am and LAC’s relationship nor
the existence of the compromise in the Side Letter Agreement. 2 If Pan Am is
correct, it cannot explain why LAC would pay Pan Am $434,636—if not to
resolve the outstanding disputes, as the Side Letter Agreement states.
       Pan Am’s reliance on the district court’s order denying LAC’s motion to
dismiss as a silver bullet is misplaced. We are reviewing the district court’s
summary judgment orders, not its Rule 12(b)(6) order. At this juncture, it
matters little what the district court had said at the motion-to-dismiss stage.
Moreover, Pan Am’s brief cherry-picks favorable quotes from the district
court’s denial of the dismissal motion—“The overall impression . . . is that it
commits the parties to do certain things at some point in the future”—to
support the contention that the Side Letter Agreement does not contain a
compromise, while omitting those that are fatal to its argument—“On the other
hand, [Pan Am] did receive the $434,636 . . . so it is clear that [it] compromised
something.”      The district court, in its second summary judgment order,
rebuked Pan Am’s counsel for mischaracterizing the court’s order. During oral
argument before us, Pan Am’s counsel was similarly less than candid with his
characterization of the district court’s order. 3 We are unpersuaded and hold
that the Side Letter Agreement unambiguously contains a compromise.



       2  Reference to the Voluntary Termination Agreement hurts Pan Am’s contention more
than it helps. The termination of the existing Management Agreement first required not
only a release between PANACON and LAC, but also “resolution of any disputes between
PALIC and LAC.” Because Pan Am accepts that the Voluntary Termination Agreement
exists, it must also accept that a condition precedent (i.e., the resolution of Pan Am and LAC’s
disputes) has occurred.
        3 In one instance, Pan Am’s counsel attempted to improperly submit to us a one-page

exhibit during oral argument without first showing it to LAC’s counsel. Oral Argument 2:07–
2:38, 38:24–39:10, Pan Am. Life Ins. Co. v. La. Acquisitions Corp. (No. 17-30769). The exhibit
contained a lengthy quote from the district court’s order denying LAC’s motion to dismiss,
while omitting the unfavorable portion with an ellipsis.
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      The Side Letter Agreement has a broad and sweeping reach. See La. Civ.
Code art. 3071 (“A compromise settles only those differences that the parties
clearly intended to settle, including the necessary consequences of what they
express.”). Pan Am and LAC agreed to resolve outstanding disputes and to
release any potential claims arising out of the management and operation of
the hotel. The Side Letter Agreement specifically explains that such claims
“includ[e] without limitations” those related to (a) the parties’ disagreement
over renovation and long-term management contract, as referenced in Pan
Am’s three letters; and (b) the parties’ dispute over the propriety and amount
of intercompany charges. Apart from a narrow exception for potential fraud
unrelated to intercompany charges, the Side Letter Agreement bars all
potential claims.
      The implication of this broad language is clear as well: All of the claims
that Pan Am has appealed are barred. As the district court persuasively
summarized in its second summary judgment order:
      Paragraph 6 is broadly worded to encompass all claims related to
      the Management Agreement and the operation of the [h]otel
      regardless of the legal theory relied upon. Moreover, consideration
      was paid to resolve the parties’ “outstanding” disputes; every claim
      asserted in this lawsuit was “outstanding” when PALIC executed
      the [Side Letter Agreement]. Therefore, regardless of the legal
      theory being used (breach of fiduciary duty, conversion, or [unfair
      trade practices]), all of PALIC’s claims are foreclosed by the
      compromise memorialized in Paragraph 6 of the [Side Letter
      Agreement].

We likewise conclude that the Side Letter Agreement bars breach-of-fiduciary-
duty, conversion, and unfair-trade-practices claims.
      As to Pan Am’s claims of fraud and breach of the Partnership Agreement,
although the district court resolved them in LAC’s favor for other reasons, we
hold that the broad language of the Side Letter Agreement bars them as well.
Pan Am’s fraud claim stems from LAC’s reluctance to renovate the hotel. The
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district court ultimately determined that Louisiana’s two-year prescription
statute bars such a claim because Pan Am—as the author of the notice of
default for LAC’s failure to begin renovation—knew about any alleged fraud,
if any, as early as April 2011 but filed its complaint in July 2013. In addition
to this time bar, Pan Am’s fraud claim is barred because, notwithstanding the
general exception for fraud unrelated to intercompany charges, the Side Letter
Agreement specifically mentions Pan Am’s notice of default as one of the
disputes that the parties agreed to resolve.
       Pan Am’s breach-of-Partnership-Agreement claim is similarly barred.
The breach claim stems from LAC’s alleged, indirect ownership of competing
hotels that were owned by LAC’s parent-company, IHC, in violation of the non-
compete clause in the Partnership Agreement. The district court resolved this
claim in LAC’s favor because Pan Am (1) failed to provide any legal support for
the proposition that a subsidiary can indirectly hold an interest through its
parent 4 and (2) consented to IHC’s merger, and LAC’s affiliation, with the
competing hotels. 5 In addition to these reasons, we hold that the Side Letter
Agreement bars this claim, because it broadly covers all claims relating to the
operation of the hotel, including any violations of the non-compete provision.
       Because the Side Letter Agreement contains a compromise that bars Pan
Am’s claims, the district court properly granted summary judgments in LAC’s
favor. Because Pan Am’s claims against IHC depend on the viability of its
claims against LAC, the district court properly granted summary judgment in
IHC’s favor as well.



       4 Pan Am’s failure to offer controlling Louisiana authority implicates the Erie doctrine.
As a federal court sitting in diversity jurisdiction, we are not free to expand Louisiana’s
substantive law as we see fit. See Gulf & Miss. River Transp. Co., Ltd. v. BP Oil Pipeline Co.,
730 F.3d 484, 488 (5th Cir. 2013).
       5 Pan Am’s brief makes no mention of the clear evidence in the record that Pan Am

consented to IHC’s merger and LAC’s affiliation with other New Orleans hotels.
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                                       B.
      Pan Am next contends that the Side Letter Agreement is vitiated by
fraud. Namely, it asserts that LAC misrepresented the actual amount of
intercompany charges—allegedly over $2 million—and fraudulently induced
Pan Am into signing the Side Letter Agreement. We disagree.
      “Consent may be vitiated by error, fraud, or duress.” La. Civ. Code. Ann.
art. 1948. “Fraud is 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 of inconvenience to the other. Fraud may also result from silence
or inaction.” Id. art. 1953. Fraud, however, “does not vitiate consent when the
party against whom the fraud was directed could have ascertained the truth
without difficulty, inconvenience, or special skill.” Id. art. 1954. We see no
genuine issue of material fact as to whether LAC fraudulently induced PALIC
into signing the Side Letter Agreement. Nothing in the record suggests that
LAC “misrepresent[ed]” or “suppress[ed]” the amount of intercompany
charges. La. Civ. Code. Ann. art. 1953. After Pan Am raised its concern that
LAC had been overcharging the partnership, LAC conducted a thorough and
transparent review of the charges for three months. LAC updated Pan Am on
the progress of the review, presented its determination that it owed Pan Am
$434,636, and offered to show its supporting documentation.
      Even if LAC had misrepresented the amount of intercompany charges,
Pan Am’s fraudulent-inducement argument fails because it “could have
ascertained the truth without difficulty, inconvenience, or special skill.” La.
Civ. Code Ann. art. 1954. Pan Am could have ascertained the true amount on
its own without much difficulty as it was the first to raise its concern that LAC
has overcharged the partnership for over $2 million. When LAC presented its
conclusion that it owed $434,636, Pan Am also could have ascertained the true
amount by reviewing LAC’s documents. But it declined to do so. Although Pan
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Am contends that the review of the documents would have been difficult as
LAC’s own internal review took three months, it did not even bother to examine
the most accessible data.     We reject Pan Am’s fraudulent-inducement
argument.
                                     IV.
      For the foregoing reasons, we AFFIRM.




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