UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-30359
TRANSIT MANAGEMENT OF SOUTHEAST LOUISIANA, INC.; TRANSIT
MANAGEMENT OF SOUTHEAST LOUISIANA EMPLOYEE HEALTH AND WELFARE
TRUST,
Plaintiffs - Appellants
and
TENET HEALTH SYSTEMS HOSPITALS, INC., formerly known as NME
Hospitals, Inc.
Intervenor - Appellant
VERSUS
GROUP INSURANCE ADMINISTRATION, INC.; ET AL.,
Defendants
BANKERS LIFE & CASUALTY COMPANY; ATLANTA LIFE INSURANCE COMPANY;
MAXICARE LIFE AND HEALTH INSURANCE COMPANY; BANKERS LIFE &
CASUALTY COMPANY/GROUP INSURANCE ADMINISTRATION, INC., A Joint
Venture; ATLANTA LIFE INSURANCE COMPANY/GROUP INSURANCE
ADMINISTRATION, INC., A Joint Venture; MAXICARE LIFE AND HEALTH
INSURANCE COMPANY/GROUP INSURANCE ADMINISTRATION, INC., A Joint
Venture
Defendants - Appellees
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WILBUR J. BABIN, JR., also known as Bill
Plaintiff-Appellant
VERSUS
BANKERS LIFE & CASUALTY COMPANY; MAXICARE LIFE AND HEALTH
INSURANCE COMPANY; ATLANTA LIFE INSURANCE COMPANY
Defendants - Appellees
1
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WILBUR J. BABIN, JR.
Plaintiff - Appellant
VERSUS
BANKERS LIFE AND CASUALTY COMPANY; MAXICARE LIFE AND HEALTH
INSURANCE COMPANY; ATLANTA LIFE INSURANCE COMPANY
Defendants - Appellees
Appeals from the United States District Court
for the Eastern District of Louisiana
August 31, 2000
Before POLITZ, SMITH, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The principal question of Louisiana law presented by this
appeal is whether the life insurance companies which provided life
and stop loss insurance for an employees’ health and welfare plan
may be held vicariously liable to the employer, the employees’
trust, and the plan’s health care providers, for the third party
plan administrator’s wrongful misappropriation of the plan’s funds,
because the life insurers became joint venturers or solidary
obligors with the plan administrator by virtue of the written
contracts and course of dealings between the parties. The district
court granted the life insurers’ motions for partial summary
judgment and dismissal of the plaintiffs’ claims on the grounds
that the insurance companies had not participated in the wrongful
conduct, entered joint ventures, or otherwise subjected themselves
2
to joint or solidary liability for the plan administrator’s
misappropriation of funds. We affirm. The evidence educed for
purposes of the motions for partial summary judgment and dismissal
demonstrates that the life insurance companies did not expressly or
impliedly agree to become joint venturers or solidary obligors with
the plan administrator. We also dismiss for lack of appellate
jurisdiction an appeal involving one insurer.
I. Facts and Procedural History
Transit Management of Southeast Louisiana, Inc., operator of
the New Orleans Transit System, and the Transit Management of
Southeast Louisiana Employee Health and Welfare Trust provide
health and welfare benefits to employees of the transit system.
(hereinafter we refer to the employer and the employees’ trust
collectively as “Transit”). In May of 1988, Transit solicited
proposals for the services and insurance necessary to provide the
transit employees with certain health and welfare benefits. Group
Insurance Administration, Inc., (GIA) and Bankers Life & Casualty
Company (Bankers) submitted a joint proposal representing
themselves to be partners in a joint venture (Bankers/GIA). On
September 1, 1988, Transit contracted with Bankers and GIA for a
health and welfare benefits plan. Under the contract, GIA was to
operate as the third party administrator to administer Transit’s
self-insured preferred provider organization (PPO) health program,
and Bankers was to provide the requisite life insurance and stop
3
loss insurance for the plan. Transit agreed to pay $11.90 per
employee per month as an administrative services fee, $6 of which
was payable to GIA and the remaining $5.90 was payable to Bankers.
GIA would also receive four percent of the insurance premiums
charged by Bankers.
In return for its fixed fee, GIA agreed to administer the
health plan by processing medical claims and paying health care
providers from a GIA bank account into which Transit would deposit
funds after notification by GIA that claims had been processed.
GIA also agreed to negotiate discounts with the plan’s preferred
providers so that Transit could offer the medical benefits at the
lowest possible cost, saving an average of ten percent in medical
discounts and five percent in dental discounts. Transit’s medical
benefits were self-insured as Transit funded their direct costs
subject to the stop loss insurance coverage for claims that reached
certain high levels.
GIA administered the health plan from 1988 to 1995. In
September of 1991, Atlanta Life Insurance Company (Atlanta) was
substituted for Bankers as the life and stop loss insurer, and in
September of 1993, Maxicare Life and Health Insurance Company
(Maxicare) took over from Atlanta in this capacity. Bankers,
Atlanta and Maxicare each signed “joint venture” instruments with
GIA.1 Atlanta also signed an agreement to be bound by the contract
1
The Atlanta/GIA “joint venture” instrument was identical in
relevant respects to that between Bankers and GIA, except that the
4
to the same extent as had been Bankers. Maxicare did not sign an
amendment to the contract, but it did forward its joint venture
agreement with GIA to Transit and provided the same insurance
coverage as had Bankers and Atlanta.
GIA agreed in its contract with Transit to administer
Transit’s PPO for a fixed monthly fee per Transit employee and to
provide all services at the least possible cost to Transit and its
employees. However, GIA negotiated with hospitals and physicians
for discounts ranging from fifteen to thirty-three percent and,
without making disclosures to Transit of the true discounts
obtained, retained as its own profit funds representing the
discounts exceeding the estimated ten percent.2 Transit alleges
that GIA wrongfully misappropriated such funds in the amount of
$4,712,024 over the life of the contract pursuant to the
undisclosed discounts scheme. Additionally, GIA was authorized to
draw upon the Transit Loss Fund Account only for the purpose of
paying the processed invoices of health care providers.
entire $11.90 per employee administration fee was payable to GIA
together with five percent of the insurance premiums earned by
Atlanta. The Maxicare/GIA joint venture instrument included the
same compensation scheme but significantly reduced Maxicare’s
responsibilities.
2
The contract and the joint venture instruments identify GIA
as the third party administrator of the plan, but the preferred
provider organization was actually administered by another
corporation, GIA of Louisiana, Inc., which is now insolvent and in
Chapter 7 bankruptcy proceedings in the Eastern District of
Louisiana. Robert H. Carter, III, was the majority (90-95%)
shareholder of both GIA and GIA of Louisiana, Inc., at the time the
contract was executed.
5
Apparently, however, GIA paid the invoices of providers who were
not in the preferred provider organization, deliberately failed to
pay PPO providers, and improperly transferred funds due the PPO
providers into GIA’s general operating account and commingled them
with its own funds. Large sums of money were transferred from this
account to affiliates of GIA. As a result, many providers of
health care services in the Transit benefits plan were not paid.
Transit contends that approximately $665,000 of dedicated funds
were improperly diverted under this scheme. Significantly,
however, Transit does not contend that the insurance companies
participated in GIA’s wrongful conduct or scheme, had any knowledge
of them, or received any benefit therefrom.
Transit filed suit in federal court (No. 96-1445) to recover
funds paid to GIA under the contract and asserted claims under
Louisiana state law, the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001, et seq. (ERISA), and the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68
(RICO). In addition to suing GIA, its holding company, and other
affiliates (GIA, U.S.A., Inc.; Robert H. Carter, III and
Associates, Inc.; and Robert H. Carter, III), Transit named as
defendants each of the three life insurers (Bankers, Atlanta, and
Maxicare) as well as each of the three purported joint ventures:
Bankers/GIA; Atlanta/GIA; and Maxicare/GIA. Tenet HealthSystem
Hospitals, Inc. (Tenet), as an unpaid PPO healthcare provider
6
operating several hospitals, intervened as plaintiff, adopted by
reference Transit’s allegations in the complaint, and argued that
under Louisiana Civil Code article 1978, it was a third party
beneficiary to the contracts. Tenet averred that it had provided
over $225,000 of uncompensated medical services to Transit
employees and their beneficiaries under the health plan.
Three other suits were consolidated with the one brought by
Transit: (1) an adversary proceeding filed by Wilbur J. “Bill”
Babin, Jr., Trustee in Bankruptcy, in the bankruptcy proceedings of
Group Insurance Administration of Louisiana, Inc. (GIA/LA) in the
United States Bankruptcy Court for the Eastern District of
Louisiana (No. 96-3165),3 (2) an adversary proceeding filed by
Babin, as Trustee, against Carter, GIA/USA, and GIA of Illinois,
Inc., asserting claims under the Bankruptcy Code (No. 97-1310); and
(3) a separate suit by Transit against certain GIA insurers (No.
97-1736).4
3
Babin claimed that the insurer defendants-appellees are liable
to the creditors of GIA/LA for debts arising out of the
administration of the Transit health plan, and he included a claim
against Bankers regarding a very similar arrangement with GIA/LA
relating to a purported joint venture to administer and provide
insurance for a health care plan contracted with the Orleans Parish
School Board (OPSB). Babin’s brief on appeal concedes that his
legal arguments regarding the appellees’ liability are the same
with respect to both the Transit and the OPSB contracts, and he
adopts by reference the legal arguments advanced by Transit on
appeal.
4
Transit does not appeal the district court’s grant of summary
judgment to these defendants and, thus, this matter forms no part
of this appeal.
7
The district court, on October 1, 1998, entered an Order and
Reasons ruling on 17 dispositive motions. Among these rulings, the
court denied Transit’s motion for partial summary judgment against
the three life insurers and the three alleged joint ventures on
claims relating to GIA’s improper retention of medical provider
discounts and diversion of funds advanced on provider invoices.
None of the parties asserted that ERISA preempted the state law
claims. Considering the plaintiffs’ claims to be Louisiana breach
of contract claims, the district court found that the insurance
companies had not formed any joint venture under Louisiana law and
denied Transit’s motion for partial summary judgment against them.
The district court granted Transit’s partial summary judgment
motion as to GIA after concluding that GIA had breached the
contract. However, the district court’s ruling encompassed only a
finding of liability and did not address damages. Accordingly, the
district court denied GIA’s motion for partial summary judgment
against Transit, and it also denied as moot motions to dismiss the
three purported joint ventures. Likewise, considering Transit’s
RICO claims against the insurers to be based solely on their
alleged vicarious liability as joint venture partners of GIA, the
district court granted the insurers’ motions to dismiss the RICO
claims.
Concluding that Babin, as Trustee of GIA/LA’s bankruptcy
estate, could only prevail against the life insurers if they had
8
formed true joint ventures with GIA, the district court granted
motions to dismiss under Rule 12(c), brought by Bankers and Atlanta
regarding Babin’s claims against them.
At this point, Transit and Bankers entered a settlement.
Transit moved again for partial summary judgment against Atlanta
and Maxicare – this time seeking to impose joint or solidary
liability on them based directly on their express and implied
contracts rather than as joint venturers with GIA. Babin filed a
similar motion against all three life insurers. On December 12,
1998, the district court denied these motions based primarily on
that court’s previous conclusion that no party had ever represented
that the insurance companies would share responsibility for GIA’s
administration of the health plan. The district court granted
Atlanta and Maxicare’s motions for summary judgment rejecting the
claims of Transit and Tenet. Bankers, however, did not file such a
motion with respect to Tenet’s claims. Finally, the district court
dismissed Babin’s claims against the life insurers.
Transit, Tenet, and Babin each filed a timely notice of appeal
from the Federal Rule of Civil Procedure 54(b) final judgment.5
Although the district court, by a minute entry on February 26,
1999, ordered that Tenet’s claims against Bankers be dismissed,
5
GIA, GIA/USA, Carter, and Carter Associates are now in
bankruptcy proceedings in the Northern District of Illinois, and
the claims against them have been stayed. As a result, this appeal
does not include any claims against these parties.
9
the Rule 54(b) final judgment entered on March 2, 1999, did not
explicitly dismiss those claims or incorporate by reference the
minute entry. As a result, Bankers contends that there is no final
judgment on the claims and that Tenet’s appeal, as to Bankers, must
be dismissed for lack of appellate jurisdiction.
II. Analysis
1. Appellate Jurisdiction over Tenet’s Claim Against Bankers.
“The courts of appeal...have jurisdiction of appeals from all
final decisions of the district courts of the United States.” 28
U.S.C. § 1291. Typically an order is final only when it “‘ends the
litigation on the merits and leaves nothing for the court to do but
execute the judgment.’” Nagle v. Lee, 807 F.2d 435, 438 (5th Cir.
1987) (citing and quoting Catlin v. United States, 324 U.S. 229,
233 (1945)). Where, as here, an action involves multiple parties,
a disposition of the action as to only some of the parties does not
result in a final appealable order absent a certification by the
district court under Federal Rule of Civil Procedure 54(b).6 See
6
Fed.R.Civ.P. 54(b) provides:
When more than one claim for relief is presented in
an action, whether as a claim, counterclaim, cross-claim,
or third-party claim, or when multiple parties are
involved, the court may direct the entry of a final
judgment as to one or more but fewer than all of the
claims or parties only upon an express determination that
there is no just reason for delay and upon an express
direction for the entry of judgment. In the absence of
such determination and direction, any order or other form
of decision, however designated, which adjudicates fewer
than all the claims or the rights and liabilities of
fewer than all the parties shall not terminate the action
10
id. (citing Thompson v. Betts, 754 F.2d 1243, 1245 (5th Cir. 1985);
Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371, 1374 (5th
Cir. 1980)).
In pertinent part, Rule 4(a)(1)(A) of the Federal Rules of
Appellate Procedure provides that a notice of appeal “must be filed
with the district clerk within 30 days after the judgment or order
appealed from is entered.” Rule 4(a)(7) makes clear that “[a]
judgment or order is entered within the meaning of this Rule 4(a)
when it is entered in compliance with Rules 58 and 79(a) of the
Federal Rules of Civil Procedure.” Rule 58 requires, inter alia,
that “[e]very judgment shall be set forth on a separate document.
A judgment is effective only when so set forth and when entered as
provided in Rule 79(a).” Fed.R.Civ.P. 58 (in pertinent part). In
turn, Rule 79(a) requires that all judgments and orders be entered
on the civil docket kept by the clerk of the district court. See
Fed.R.Civ.P. 79(a). “The import of these appellate and civil
procedure rules, taken together, is that to be appealable, any
decree or order must be set forth in a separate document and
entered on the clerk’s civil docket.” Theriot v. ASW Well Service,
Inc., 951 F.2d 84, 87 (5th Cir. 1992).
In this case, as Tenet concedes, the March 2, 1999, Rule 54(b)
as to any of the claims or parties, and the order or
other form of decision is subject to revision at any time
before the entry of judgment adjudicating all the claims
and the rights and liabilities of all the parties.
11
final order expressly dismissed Tenet’s claims against Atlanta and
Maxicare and did not address Tenet’s claims against Bankers. Tenet
nevertheless maintains that we enjoy appellate jurisdiction over
its claims against Bankers because a previous minute entry dated
February 26, 1999, had ordered the dismissal of those claims,
thereby signifying the district court’s intention to include that
dismissal within its subsequent Rule 54(b) determination and
certification. Tenet errs in three respects. First, when, as
here, “the record clearly indicates that the district court failed
to adjudicate the rights and liabilities of all parties, the order
is not and cannot be presumed to be final, irrespective of the
district court's intent.” Witherspoon v. White, 111 F.3d 399, 402
(5th Cir. 1997)(citing Patchick v. Kensington Publishing Corp., 743
F.2d 675, 677 (9th Cir.1984). Accordingly, as to Bankers there is
not yet a final judgment dismissing Tenet’s claims. Second, the
district court’s failure to explicitly include those claims within
the Rule 54(b) final judgment, even if accidental, operates to
preclude a final appealable order under 28 U.S.C. § 1291 since, as
to those claims, there has been no express certification by the
district court. See Lee, 807 F.2d at 438.7 Finally, “[a] minute
7
Because Rule 54(b) certification is jurisdictional, an appeal
from a judgment that does not address an intervenor’s claim
resolves less than all of the claims asserted and without the
certification, the appeal must be dismissed. See Borne v. A & P
Boat Rentals No. 4, Inc., 755 F.2d 1131, 1133 (5th Cir. 1985); see
also Mathews v. Ashland Chem., Inc., 703 F.2d 921, 922 (5th Cir.
1983) (appeal dismissed as premature where the judgment dismissing
12
entry, although it is a record of the court’s final decision in a
case or of an appealable interlocutory decision, cannot constitute
a ‘separate document’ for the purposes of meeting the Rule 58
requirement.” Theriot, 951 F.2d at 87 (citing Jones v. Celotex
Corp., 857 F.2d 273, 275 (5th Cir. 1988)).8 Accordingly, we dismiss
as premature this appeal taken from the district court’s minute
entry order dismissing Tenet’s claims against Bankers.
2. Insurers’ Liability.
The appellants base their claims against the appellee life
insurers on three alternate grounds: (1) each life insurer, as a
joint venturer with GIA, is liable for its virile share of the
plaintiff’s claim against one of multiple defendants was not
entered with the certification required by Rule 54(b)); 10 Charles
Alan Wright et. al., Federal Practice and Procedure § 2660 (3d ed.
1998). As the Rule 54(b) final judgment did not encompass Tenet’s
claims against Bankers, we cannot conclude that the certification
therein vests jurisdiction in this court to review those claims.
8
While, unlike Rule 54(b) certification, the separate document
requirement of Rule 58 is not jurisdictional and may be waived, see
Cook v. Powell Buick, Inc., 155 F.3d 758, 761 n.8 (5th Cir. 1998)
(citing Barnhardt Marine Ins. v. New England Int’l Sur. of America,
961 F.2d 529 (5th Cir. 1992)), in this case we cannot conclude that
Bankers has waived the requirement since, while acknowledging the
minute entry dismissal, it premised its motion to dismiss this
appeal on the Rule 54(b) final judgment’s failure to expressly
dismiss Tenet’s claims against Bankers. See Theriot, 951 F.2d at
88 (“[U]nder [Bankers Trust Co. v. Mallis, 435 U.S. 381, 385 n.6
(1978) ([per curiam] a decision may be appealed without the benefit
of a separate document if, but only if, the district court and the
parties, without objection, intended that the ruling be a final
decision.”); Hanson v. Town of Flower Mound, 679 F.2d 497, 501 (5th
Cir. 1982) (“We conclude that we are free to hold that we may take
jurisdiction of an appeal from a ‘final decision under [28 U.S.C.]
§ 1291, even though no separate judgment has been entered, when the
parties fail to raise the issue.”) (citations omitted).
13
damages caused by GIA, according to the principles of Louisiana
partnership law; or (2) if not a joint venturer in fact, each life
insurer, by virtue of Transit’s justified detrimental reliance upon
the life insurers’ representations of the existence of a joint
venture, is estopped to deny the formation of such a juridical
entity; and (3) each life insurer is jointly or solidarily liable
for the damage caused by GIA because of the obligations assumed
directly in the contracts.
a) Standard of Review.
“We review a grant of summary judgment de novo, applying the
same standard as the district court.” Kapche v. City of San
Antonio, 176 F.3d 840, 842 (5th Cir. 1999) (citing Melton v.
Teachers Ins. & Annuity Ass'n of America, 114 F.3d 557, 559 (5th
Cir.1997)). “Summary judgment is appropriate when the evidence,
viewed in the light most favorable to the nonmoving party, presents
no genuine issue of material fact and shows that the moving party
is entitled to judgment as a matter of law.” Id. (citing River
Prod. Co., Inc. v. Baker Hughes Prod. Tools, Inc., 98 F.3d 857, 859
(5th Cir.1996) (in turn citing Fed.R.Civ.P. 56(c)).
b) Joint Venture and Joint Venture By Estoppel.
Under Louisiana jurisprudence the fundamental elements of a
joint venture are generally the same as those of partnership, and,
accordingly, joint ventures are governed by the law of
14
partnership.9 See, e.g., Ault & Wiborg Co. of Canada v. Carson
Carbon Co., 160 So. 298, 300 (La. 1935); Kelly v. Boh Bros. Constr.
Co., Inc., 694 So.2d 463, 468 (La.App. 5th Cir.), writ denied, 700
So.2d 507 (La. 1997), and writ denied, 700 So.2d 509 (La. 1997);
Cajun Elec. Power Coop., Inc. v. McNamara, 452 So.2d 212, 215
(La.App. 1st Cir.), writ denied, 458 So.2d 123 (La. 1984); Marine
Services, Inc. v. A-1 Industries, 355 So.2d 625,627 (La.App. 4th
Cir. 1978); see also 7 Glenn G. Morris & Wendell H. Holmes,
Louisiana Civil Law Treatise: Business Organizations § 109 and n.2
(1999).
“A partnership as principal obligor is primarily liable for
its debts. A partner is bound for his virile share of the debts of
the partnership but may plead discussion of the assets of the
partnership.” La. Civ. Code art. 2817.10 However, neither the
9
“The principal difference between a partnership and a joint
venture is that while a partnership is ordinarily formed for the
transaction of a general business of a particular kind, a joint
venture is usually, but not necessarily, limited to a single
transaction, although the business of conducting it to a successful
termination may continue for a number of years.” Riddle v.
Simmons, 589 So.2d 89, 92 (La.App. 2nd Cir. 1991).
10
To the extent that Babin, as Trustee, has asserted claims
belonging to the estate and that are not personal to its creditors,
he has standing to pursue this appeal. See Schimmelpenninck v.
Byrne, 183 F.3d 347, 359 (5th Cir. 1999)(claims of generalized
injury to the debtor’s estate ultimately affecting all creditors).
However, his claims against the insurers fail on their merits since
GIA/LA actively devised and executed the wrongful schemes without
the knowledge or participation of the insurers. This is true
whether the insurers would otherwise be liable for their virile
share of the losses under partnership law, see La. Civ. Code art.
2809, or solidarily liable for the losses under the law of
15
“Joint Venture Agreement” label nor its reference to GIA and the
insurers as “partners” is dispositive of the inquiry into whether
or not the appellees were joint venturers. “[T]he legal
relationship of parties will not be conclusively controlled by the
terms which the parties use to designate their relationship,
especially with regard to third parties. Courts look to the
totality of evidence and not just to the written agreement between
the parties to determine whether a joint venture was entered into.”
Cajun Elec. Power Coop., Inc., 452 So.2d at 216 (citing Guilbeau v.
Liberty Mut. Ins. Co., 324 So.2d 571 (La.App. 1st Cir. 1975)); see
also Morris & Holmes, supra, at § 112 (“Despite the rule that the
existence of a partnership depends on the intention of the parties,
it is also well established, perhaps to a fault, that the label
attached by the parties to their relationship will not control
whether it is to be treated, legally, as a partnership.”). Rather,
“[a] partnership is a juridical person, distinct from its partners,
created by contract between two or more persons to combine their
efforts or resources in determined proportions and to collaborate
at mutual risk for their common profit or commercial benefit.” La.
Civ. Code art. 2801.11 While this article reflects the 1980
conventional obligations, see La. Civ. Code art. 1800. In short,
GIA/LA cannot hold liable the insurers for their alleged failure to
implement procedures to safeguard against GIA/LA’s wrongful
conduct.
11
The Louisiana First Circuit developed the following seven
element test following requisites of article 2801:
16
revision to the partnership title of the Civil Code, it generally
accords with the three-element partnership test set forth by the
Louisiana Supreme Court in Darden v. Cox, 123 So.2d 68 (La. 1960):
First, the parties must have mutually consented to
form a partnership and to participate in the profits
which may accrue from property, skill, or industry,
furnished to the business in determined proportions by
them. Secondly, all parties must share in the losses as
well as the profits of the venture. Thirdly, the
property or stock of the enterprise must form a community
of goods in which each party has a proprietary interest.
Id. at 71 (citations omitted). Indeed, the “overwhelming majority
of the partnership formation decisions reported since 1960 have
recited some version of the Darden test.” Morris & Holmes, supra,
at § 106 (citing authorities). Typical of such recitations is
Riddle v. Simmons, 589 So.2d 89, 92 (La.App. 2nd Cir. 1991): “There
must be a sharing of profits and losses with each party having some
right of control over the business.”
(1) A contract between two or more parties;
(2) A juridical entity or person is established;
(3) Contribution by all parties of either efforts or
resources;
(4) The contribution must be in determinate proportions;
(5) There must be joint effort;
(6) There must be mutual risk vis-a-vis losses;
(7) There must be a sharing of profits.
Cajun Elec. Power Coop., Inc., 452 So.2d at 215; see also Rester v.
Aetna Cas. and Sur. Co., 598 So.2d 673, 676 (La.App. 3rd Cir. 1992)
(same).
17
While Louisiana law at least nominally recognizes the
possibility that a person may be estopped to deny the existence of
a partnership that he has represented to exist when he holds
himself out as a partner to the justified detrimental reliance of
a third party, Louisiana courts have refused to apply the estoppel
theory where the alleged partners have not shared in the profits
and losses of a common enterprise.12 See Gravois v. New England
Ins. Co., 553 So.2d 1034, 1039 (La.App. 4th Cir. 1989) (“even in
[partnership by estoppel] cases, the intent to share profits and
losses is an indispensable element.”); Butler v. Atwood, 420 So.2d
742, 747 (La.App. 4th Cir. 1982) (same); see also Morris & Holmes,
supra, at § 1.10.
Applying these principles, we conclude that, because GIA did
not agree to share profits and losses with any of the life insurers
related to any of the contracts between them, none of the life
insurers became a joint venturer with GIA either by agreement or
estoppel. The contract consisted of five separate documents
12
The latest case to so hold was reversed summarily by the
Louisiana Supreme Court, see Hartwick v. Hartley, 598 So.2d 1241,
1242 (La.App. 4th Cir.), rev., 604 So.2d 957 (1992)( “Judgment of
the court of appeal is reversed. There is a genuine issue of
material fact. Motion for summary judgment denied. Case remanded
to the district court for further proceedings.”). Thus, while the
concurring opinion in the court of appeal would have premised
application of the estoppel theory only on justified detrimental
reliance upon representations of the existence of a partnership,
see Hartwick, 598 So.2d at 1243-44, this approach has yet to be
applied in a majority decision and does not represent current
Louisiana jurisprudence. See Morris & Holmes, supra, at § 1.10.
18
totaling 400 pages. It incorporated by reference the instruments
designated “Joint Venture Agreement,” which were sequentially
entered into by Bankers and Atlanta with GIA. As noted
previously, Bankers was a signatory to the contract, Atlanta signed
a letter agreement substituting itself as the life insurer under
the contract, and Maxicare forwarded to Transit a copy of its
“joint venture agreement.” Each “joint venture agreement”
explicitly provided for the distribution of the monthly per
employee fee of $11.90 to be paid by Transit (GIA $6.00, Bankers
$5.90; GIA $11.90, Atlanta $0; GIA $11.90, Maxicare $0) and for the
insurance premiums to be paid to the life insurers with GIA
receiving a four percent brokerage fee from Bankers and a five
percent brokerage fee from Atlanta and Maxicare. Under these
agreements, GIA would provide all PPO and administrative services,
and the life insurers would provide life and stop loss insurance
coverage at specified rates. Thus it was entirely possible that
GIA could have profited while the insurers lost money, or vice
versa. In sum, there was no agreement to share in profits or
losses, and no evidence was adduced that profits and losses were
actually shared.
The present case is analogous to Payton v. Aetna Life and Cas.
Co., 299 So.2d 489 (La.App. 4th Cir.), writ. denied, 302 So.2d 617
(La. 1974). In Payton, the Louisiana Fourth Circuit considered
whether a roofing contractor and a sheet metal contractor formed a
19
joint venture to perform a construction contract entered into with
a general contractor. See id. at 492. The roofing contractor was
injured while working on a job on which he had jointly bid with the
sheet metal contractor, and the sheet metal contractor sought to
avoid paying worker’s compensation by arguing that the injured
party was a joint venturer and not its employee or subcontractor.
See id. at 492-93. The court held:
Nevertheless, we cannot conclude that the
relationship between [the sheet metal contractor] and
[the roofing contractor] constituted a partnership or
joint venture. They did not agree to share profits or
losses, but simply agreed that each would perform a
specific portion of the contract at a fixed remuneration
to each party. Apparently, if [the roofing contractor’s]
cost of roofing materials increased, this cost would come
out of his portion of the calculated contract price; and
if [the sheet metal contractor’s] cost of sheet metal
decreased, [he] would receive the entire windfall.
Thus, it was possible that [the roofing contractor]
could lose money on the venture, while [the sheet metal
contractor] made a profit. This is contrary to the
essence of a partnership, which contemplates that all
partners will lose or all partners will profit [, and it]
is fatal to [the sheet metal contractor’s] contention of
the existence of a partnership.
Id. at 493-94.
We agree with and adopt the district court’s well-stated
conclusions: “There is no indication in the contracts or indeed
from the facts of this case that this endeavor was truly a ‘common
20
endeavor’ with a common sharing of risks. Each party had
completely separate functions with separate risks: GIA administered
the Plan and the insurance companies provided insurance coverage
for the plan. The insurance companies earned premiums, and GIA
earned the service fee, as such the funds were not paid to the
alleged joint venture but to GIA and the respective insurer
separately. For instance, GIA paid nothing and risked nothing with
respect to the insurance companies’ provision of stop-loss coverage
for medical insurance or life insurance.” The district court
likewise concluded that under Gravois v. New England Ins. Co., 553
So.2d at 1039, as there was no intent to share profits and losses,
an indispensable element of joint venture by estoppel was lacking.
For the foregoing reasons, under Louisiana law GIA and the
life insurers were not joint venturers and the life insurers are
not estopped to deny the existence of joint ventures.
c) Joint or Solidary Liability Provided by the Contract.
Multiple obligations contained within a single agreement or
contract may be solidary, joint, or several. See La. Civ. Code
art. 1786. “An obligation is solidary for the obligors when each
obligor is liable for the whole performance.” La. Civ. Code art.
1794 (in pertinent part); see also Narcise v. Illinois Central R.R.
Co., 427 So.2d 1192, 1194 (La. 1983) (“Coextensive obligations for
the ‘same thing’ create the solidarity of the obligations.”).
However, solidary liability is never presumed; “[a] solidary
21
obligation arises from a clear expression of the parties’ intent or
from the law.” La. Civ. Code art. 1796. As the contracts herein
at issue contain no such clear expression of intent, liability is
only solidary for the insurers if they were liable on the contract,
along with GIA, for the whole performance as a matter of law.
The ultimate test of whether an obligor may be held
for the whole or for only a proportionate part of the
obligation is essentially whether the two obligors each
promised the same or full performance or whether each
promised only a different performance, that is to pay a
proportionate part of the liability. Wilks v. Allstate
Insurance Company, La.App., 195 So.2d 390; 4 Corbin on
Contracts, sec. 925. When several persons obligate
themselves to the obligee by the terms 'in solido' or use
any other expressions which clearly show that they intend
that each one shall be separately bound to perform the
whole of the obligation it is called an obligation in
solido on the part of the obligors. Wilks v. Allstate
Insurance Company, supra; LSA-C.C. art. 2082.
Several obligations are produced when what was
promised by one of the obligors is not promised by the
other, but each one promises separately for himself to do
a distinct act; such obligations, although they may be
contained in the same contract, are considered as much
individual and distinct as if they had been in different
contracts and made at different times. LSA-C.C. art.
2087. Nothing more is effected by such contracts than if
each one of the obligors had entered into separate and
distinct contracts and the relationship between the
parties is kept as separate and distinct as if each had
made a different contract for himself on a different
22
date.
Flintkote Co. v. Thomas, 223 So.2d 676, 678 (La.App. 4th Cir. 1969).
Additionally, joint liability obtains when the obligors are
obligated for the same performance, but none is bound for the
whole. See La. Civ. Code art. 1788 (“When different obligors owe
together just one performance to one obligee, but neither is bound
for the whole, the obligation is joint for the obligors.”).
Appellants rely primarily upon Payton, 299 So.2d at 494, in
which the court held that, while the roofing subcontractor and a
sheet-metal contractor were not joint venturers, they were
solidarily liable on a construction contract. In Payton, all sheet
metal and roofing work was to be provided for one set price, the
contractor made all checks payable to both subcontractors, and each
subcontractor intended that they not be paid unless both portions
of the contract were performed satisfactorily; thus it was
immaterial that as between themselves the subcontractors agreed to
perform only specified portions of the contract. See id. at 492-
94. In short, each party was obligated for the entire performance
due under the contract. See id. at 494. In contrast, in the
present case, each of the “joint venture agreements” delineated the
separate responsibilities assumed by the life insurers and GIA in
satisfying all of the contractual obligations owed to Transit.
Assuming arguendo that, as contended by appellants, the “joint
venture instruments” between GIA and Bankers, Atlanta, and Maxicare
23
were each incorporated into the contracts with Transit, none of the
instruments requires that the whole, or even the same part, of the
obligations due to Transit and its employees be performed by either
GIA or the insurer. The GIA/Bankers “joint venture agreement”
contained a “statement of work” which assigned 22 duties to
Bankers, all of which were related to the provision of the
requisite life and stop loss insurance coverage, whereas GIA
assumed 41 duties, including, among other things, providing all
required PPO administrative services. The GIA/Atlanta “joint
venture agreement” contained a “statement of work” wherein eighteen
duties were assigned to the insurer regarding insurance coverage
and related matters, and a different forty-two duties were assigned
to GIA, including providing PPO services. Finally, the
GIA/Maxicare “joint venture agreement” listed only three duties for
Maxicare, all related solely to insurance coverage.13 On the other
hand, this agreement assigned forty-two duties to GIA related to
its role as third party administrator of the PPO.
Under the contracts, the life insurers were not obligated to
perform the administrative services required of GIA, and GIA was
not required to provide the requisite insurance coverage.
13
The duties were to: (1) provide actuarial services; (2)
provide fully insured coverage to Transit members including group
life, accidental death and dismemberment, medical conversion, and
stop loss policies; and (3) provide group life certificates and all
insurance forms for use in administering the life and accidental
death and dismemberment programs.
24
Accordingly, as the insurers were obligated to provide certain
insurance coverage for a certain amount of money in premiums and
GIA was obligated to perform totally separate administrative
services for a certain amount of money, each to be paid directly by
Transit even if the other failed to perform, and because neither
was obligated to perform the obligations of the other, liability
for the respective obligations of the insurers and GIA is several
rather than solidary. See La. Civ. Code art. 1787 (“When each of
different obligors owes a separate performance to one obligee, the
obligation is several for the obligors. . . . A several obligation
produces the same effects as a separate obligation owed . . . by
each obligor to an obligee”).
Thus, our conclusion that the insurers and GIA were not each
obligated to render the whole performance due to Transit forecloses
joint liability and solidary liability, and instead mandates
several liability. Because it is not alleged or argued that the
life insurers participated, aided, or abetted GIA in its breach of
the contract, they cannot be held liable for the wrongful
misappropriation of funds by GIA which related exclusively to GIA’s
duties to provide all PPO administrative services, including the
payment of claims, at the least possible cost to Transit.
Accordingly, we conclude that the district court did not err in
granting the life insurers’ motions for partial summary judgment
and dismissal of the solidary liability claims.
25
III. Conclusion
For the foregoing reasons, the appeal of Tenet as to its
claims against Bankers is DISMISSED AS PREMATURE, and the judgments
of the district court included in its Rule 54(b) final judgment are
AFFIRMED.
26
Transit Management of Southeast Louisiana, Inc. v. Group Insurance Administration, Inc.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2000-08-31
Citations: 226 F.3d 376
Copy CitationsCombined Opinion