NEW ORLEANS — A federal judge in Louisiana will not end a legal dispute between two businesses.
The underlying issue is an October state court breach of contract claim in which B&S Equipment Company accused Central States Underwater Contracting of failing to pay more than $200,000 for its work on a pipeline abandonment project worth more than $350,000.
According to an April 23 opinion from U.S. District Judge Barry Ashe, of the Eastern District of Louisiana, CSU filed a counterclaim in December in which it levied its own breach of contract allegations, saying B&S failed to arrive to the job site on time and contributed to ongoing delays resulting in two attempts to mobilize the equipment needed to complete the work.
Notably, that counterclaim further alleged Scott Ryals, of B&S, made “defamatory and disparaging statements” to Enterprise Products and Marathon Petroleum about CSU’s payment history. CSU said Ryals “contacted both companies to inform them that ‘CSU does not pay its bills’ and to demand that they ‘stop working with CSU,’ ” leading those firms to cancel 2019 contracts.
CSU removed the action to federal court. Ashe denied a request from B&S to remand the matter to state court, saying CSU did not waive its right to removal despite filing a permissive counterclaim for tortious interference with contract. B&S moved to dismiss that claim, noting Ashe himself said it might not be valid because Louisiana law only allows such actions “against a corporate officer for interference with the contractual relations between his or her corporate employer and a third person or entity,” not against another individual or company.
While conceding that point, Ashe explained, CSU contended it should be allowed to continue its action “because it is actually a claim for tortious interference with business relations.” And since “the nature of a claim is determined from the substance of the allegations, not the name it is given,” Ashe continued, the allegations Ryals contacted CSU’s clients “with malicious intent” that ultimately led to contract cancellation fit the elements of the intended claim.
In order to avoid future confusion, Ashe granted CSU 15 days to amend its counterclaim to properly label the nature of its argument while also adding “any pertinent factual allegations.”