Galiano v. Harrah's Oprt Co Inc

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
May 14, 2003
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
No. 02-30578
JANE GALIANO; GIANNA, INC.,
Plaintiffs-Appellants,
VERSUS
HARRAH’S OPERATING COMPANY INC., HARRAH’S ENTERTAINMENT, INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
00-CV-0071
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Before SMITH and BARKSDALE, Circuit Judges, and DUPLANTIER, District Judge
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PER CURIAM:
Jane Galiano and Gianna, Inc. (collectively "Gianna") filed suit against Harrah’s Entertainment
Company, Inc. and Harrah’s Operating Company, Inc. (collectively "Harrah’s")
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District Judge for the Eastern District of Louisiana, sitting by designation.
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Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published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 5th Cir. R. 47.5.4.
asserting various claims, including claims arising out of a "Design Consulting Agreement" entered
into between Gianna and Harrah’s. The district court entered partial summary judgment against
Gianna on one of those claims, which seeks to enforce a settlement entered into between the parties,
related to the Design Consulting Agreement. Gianna appeals; we affirm.
In September 1995, Gianna and Harrah’s entered into a "Design Consulting Agreement,"
under which Gianna agreed to create a national costume design collection for Harrah’s casinos. As
compensation Harrah’s agreed to pay Gianna a monthly fee as well as a design royalty on Gianna-
designed garments. In December 1995, when negotiations to extend that agreement failed, the
agreement expired. A dispute arose concerning the fees and the royalties owed to Gianna under the
Design Consulting Agreement.
On May 6, 1996, a meeting was held to attempt to settle the dispute. The meeting was
attended by Connie Albright and Jan Starnes on behalf of Harrah’s and by Scott Buhrer, Gianna’s
vice president, and Jane Galiano, Gianna’s president, on behalf of Gianna. A settlement was reached
at the meeting. Galiano left the meeting before it ended; it is not clear from the record whether the
settlement was reached prior to the time Galiano left the meeting.
The settlement agreement provided that Harrah’s would pay Gianna $7,500 before May 20,
1996, listed the garments for which no past or future royalties would be paid, and identified the
garments for which Harrah’s would pay royalties to Gianna. The agreement contained a mutual
release of all claims arising under the Design Consulting Agreement. The agreement required no
further services by Gianna. Buhrer signed the agreement on behalf of Gianna.
On May 15 Harrah’s sent Gianna a check in the amount of $7,500 which Gianna negotiated.
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Approximately two weeks thereafter, Galiano, on behalf of Gianna, wrote the president of
Harrah’s, stating that Buhrer had no authority to enter into the settlement agreement and that the
settlement was "absolutely void." Sho rtly thereafter Harrah’s responded to Galiano’s letter,
assert ing that the settlement agreement was valid. On September 18 Gianna’s attorney wrote
Harrah’s, reiterating that the settlement agreement was void because Buhrer lacked authority to
execute it and proposing a new settlement of Gianna’s claims, which would have required Harrah’s
to pay an additional $500,000. Harrah’s attorney responded promptly that the May 6 settlement
agreement was valid and that Harrah’s would make no other settlement proposal. Nearly four years
elapsed before Gianna filed this suit, asserting claims against Harrah’s for damages for copyright
infringement, breach of the Design Consulting Agreement, unfair trade practices, and unjust
enrichment, and seeking to enforce the settlement agreement which it had earlier repudiated.
The parties filed cross-motions for partial summary judgment on the settlement agreement
claim. The district court grant ed Harrah’s motion, concluding that there was no valid settlement
agreement because Buhrer lacked the requisite express authority to enter into it on behalf of Gianna.
The district court also concluded that Gianna, having repudiated the settlement agreement by taking
the position that Buhrer was not authorized to execute it, could not thereafter enforce it. The
district court granted Gianna’s motion to enter a final appealable judgment pursuant to Federal Rule
of Civil Procedure 54(b).
We review the district court’s grant of a motion for summary judgment de novo; in doing so
we apply the same standards applicable to the district court. Roberts v. Energy Development
Corporation, 235 F.3d 935, 938 (5th Cir. 2000). Summary judgment is properly granted only when
there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter
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of law. Fed. R. Civ. Pro. 56(c). The evidence is viewed in the light most favorable to the non-
moving party. Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). There is no dispute
with respect to any material fact related to the claim dismissed by the district court; hence summary
judgment is appropriate.
It is undisputed that Louisiana law applies to this diversity case. The parties and the district
court discuss at length whether Article 2997 of the Louisiana Civil Code, which requires that a
mandatary have express authority to compromise a claim, applies in this case, and if so, whether
Buhrer had express authority to execute the settlement agreement. We need not address that issue;
assuming arguendo that the settlement agreement was valid Gianna cannot enforce it.
A compromise is "an agreement between two or more persons, who, for preventing or putting
an end to a lawsuit, adjust their differences by mutual consent, in the manner in which they agree on,
and which every one of them prefers to the hope of gaining, balanced by the danger of losing." La.
Civ. C. art. 3071. Clearly, one of the primary purposes of a settlement agreement is to put an end to
litigation. See Rivett v. State Farm Fire and Cas. Co., 508 So. 2d 1356, 1359 (La. 1987). "A
contract which does not put an end to the dispute through mutual concessions cannot constitute a
compromise." Id. at 1361.
A compromise is abrogated by a breach of the agreement and cannot thereafter be enforced.
Midlo & Lehmann v. Katz, 195 So. 2d 383, 385 (La. App. 4th Cir. 1967); Smith Construction Co. v.
Brechtel, 51 So. 2d 643, 644 (La. App. Orleans 1951). The settlement agreement imposed upon
Gianna a primary obligation, to refrain from asserting thereafter any claims against Harrah’s under
the Design Consulting Agreement. Almost immediately, Gianna not only disavowed Buhrer’s
authority to enter the agreement, but also failed to comply with the one obligation imposed upon it
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by the settlement agreement. Within one month after the settlement agreement was entered into, in
a letter t o Harrah’s Gianna began to assert further claims under the consulting agreement: "the
lingering issue of Harrah’s debt s and obligations owed to Gianna, Inc. pursuant to the terms and
conditions of the . . . Design Consulting Agreement remains unresolved." Thereafter Gianna’s
lawyer wrote to Harrah’s again repudiating the May 6 settlement agreement and again asserting
claims under the Design Consulting Agreement: "[i]n the spirit of compromise and settlement and
in an attempt to avoid the normal cost and unpleasant aspects of litigation, Gianna, Inc. is now
tendering two proposals for settlement of all claims by Gianna, Inc. against Harrah’s arising from the
. . . Design Consulting Agreement." As previously noted, both proposals required Harrah’s to pay
to Gianna an additional $500,000.
Because Gianna breached t he settlement agreement by continuing to urge claims against
Harrah’s under the Design Consulting Agreement, Gianna cannot enforce the settlement agreement.
We affirm the district court’s judgment.
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