Opinion
No. 96-CA-0415.
December 27, 1996.
APPEAL FROM THE CIVIL DISTRICT COURT FOR THE PARISH OF ORLEANS, NO. 95-7968, STATE OF LOUISIANA, HONORABLE MICHAEL G. BAGNERIS, J.
Yvonne Chalker, Jerry F. Palmer, Scott D. Morgan, Elkins Associates, New Orleans, for Appellee.
Clarence F. Favret, III, Favret, Demarest, Russo Lutkewitte, New Orleans, for Appellants.
Before SCHOTT, C.J., and BARRY and LANDRIEU, JJ.
At issue in this case is whether the arbitration clause of an agreement between the parties is enforceable. The trial court granted appellee's petition to enforce arbitration and we affirm.
FACTS
In 1993, Charles Grabert formed and incorporated Prestige Yachts, Inc., a Louisiana corporation. That year, Clarence A. Greco purchased a fifty (50%) percent ownership in the company and Grabert retained the other fifty (50%) percent. Greco and Grabert then expanded into the Florida market and formed Prestige Yachts, Inc., a Florida corporation.
On December 16, 1994, Grabert and Greco entered into an agreement regarding future management, control, and operations of Prestige Yachts, Inc. (Prestige). The agreement was approved and accepted by the Board of Directors of Prestige the following day. At the December 24, 1994, meeting of the Board of Directors, new officers were elected and Greco obtained control of the Board.
During the next few months, various disagreements arose between Greco and Grabert resulting in Grabert's termination as president of Prestige. Grabert sought to arbitrate his termination, as per their agreement, but Greco refused.
On June 2, 1995, Charles Grabert filed a Petition to Enforce Arbitration Clause and in response, Greco filed a Declinatory Exception of Lis Pendens based on Bryon Grabert's Petition to Enforce Arbitration Clause. After a hearing on July 28, 1995, the trial court denied Greco's exception of lis pendens and ordered him to answer Grabert's petition. A hearing was scheduled for August 25, 1995, but was cancelled when Greco's attorney notified Grabert and the Civil District Court Clerk that Greco would consent to judgment. However, Greco's attorney never signed the consent judgment submitted by Grabert's attorney.
Bryon Grabert, Charles's father, was vice-president and manager of operations of Prestige Florida. The agreement between Charles Grabert and Greco, dated December 16, 1994, provided for the negotiation of terms under which Bryon Grabert would be employed. When his employment was later terminated, he attempted to enforce the arbitration clause in the agreement. The trial court denied his petition and this Court affirmed because Bryon Grabert was neither a party to the agreement nor a third party beneficiary. Grabert v. Greco, 95-CA-1781 (La.App. 4th Cir. 2/29/96, 670 So.2d 571).
A hearing was held on December 15, 1995, for Greco to show cause why the consent judgment drafted by Grabert should not be enforced. The trial court granted Grabert's Petition to Enforce Arbitration.
Greco appeals and cites the following assignments of error:
1. The law of the case prohibited the trial court from forcing Greco into arbitration;
2. The trial court granted judgment without requiring evidence; and
3. Greco and Prestige Florida did not have an employment contract with Grabert and Prestige Louisiana.
ASSIGNMENT OF ERROR NO. 1
Greco argues that the holding cited in Grabert v. Greco, 95-CA-1781 (La.App. 4th Cir. 2/29/96), 670 So.2d 571 is the law of this case. In Grabert, the Court found that the arbitration clause in the agreement, which is at issue in the present case, was not binding as to Bryon Grabert, Charles's father, because he was not party to or signatory of the agreement.
However, Greco's argument is misplaced because the law of the case doctrine "applies only to issues decided earlier in the same proceeding involving the same parties." Safeco Ins. Co. of Amer. v. Palermo, 422 So.2d 1375, 1376 (La.App. 1st Cir. 1982), aff'd, 436 So.2d 536 (La. 1983). Not only are the parties different in the two suits, but Bryon Grabert was in a completely different posture than Charles Grabert is in the present case. In Grabert, the Court had to decide whether the arbitration agreement could be enforced by a person who was not a party to the agreement. In the case at hand, at issue is whether the arbitration clause is binding between the two signatories of the agreement. Accordingly, this assignment of error is without merit.
ASSIGNMENT OF ERROR NO. 2
Greco argues that because the plaintiff presented no evidence, either documentary or testimonial, at the hearing on the motion to enforce arbitration, the trial court erred in enforcing the arbitration clause. La.Rev.Stat. Ann. § 9:4203 (West 1991) states in pertinent part:
The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply herewith is not an issue, the court shall issue an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.
Greco contends that the letter of agreement attached to Grabert's petition to enforce arbitration was not entered into evidence at the hearing. We find this argument without merit. The agreement had been presented to and was before the trial court. Both the trial court and Greco referred to the letter and recited verbatim from the letter throughout the proceeding. At no time during the hearing did Greco contest the authenticity of the agreement, argue that it was not before the court, or object that the document had not been formally introduced. Although no formal tender was made, the court by its action admitted the document and considered it as competent evidence.
Greco further asserts that the trial court erred because the plaintiff offered no testimony as to the intent of the letter. La.Civ. Code. Ann. art. 1836 (West 1987) states that "an act under private signature is regarded prima facie as the true and genuine act of a party executing it when his signature has been acknowledged, and the act shall be admitted in evidence without further proof." The parties acknowledged to the trial court the authenticity of the signatures so the agreement is prima facie as the true and genuine act of the parties.
Under La.Civ. Code Ann. art. 1848 (West 1987), "[t]estimonial or other evidence may not be admitted to negate or vary the contents of an authentic act or an act under private signature." (Emphasis added). Because this is an agreement under private signature, parole evidence was inadmissible to negate its contents.
The trial judge obviously believed that the letter in question is not one of intent, but of agreement. We concur. The language in the letter is very clear: "This letter sets forth the agreement . . . Greco and Grabert hereby agree as follows . . . [t]hey further agree . . . ." In fact, the words agree, agreed, and agreement occur 33 times in the seven page letter.
We find no merit in this assignment of error.
ASSIGNMENT OF ERROR NO. 3
Greco argues that, if there was an agreement, it was between Grabert and Prestige Louisiana and that he is not a proper party of the agreement. We disagree. The agreement that Greco signed states in its opening paragraph:
This letter sets forth the agreement between my client, Clarence A. Greco ("Greco") and your client, Charles S. Grabert ("Grabert") with respect to the ownership, management, and operation of Prestige Yachts, Inc., a Louisiana Corporation ("Prestige Louisiana"), and Prestige Yachts, Inc., a Florida Corporation ("Prestige Florida").
Additionally, Greco was in control of the board of directors of Prestige Louisiana and Prestige Florida. Accordingly, Greco is a proper party to this litigation.
Greco also asserts that Prestige Florida is not a proper party. The letter agreement states that "Greco and Grabert agree to cause Prestige Louisiana to enter into an employment contract with Grabert . . . ." However, Prestige Louisiana and Prestige Florida were operating as a single entity, Prestige Yachts, at the time of this agreement.
The December 17, 1994, minutes of the board of directors meeting that adopted the agreement at the heart of this suit is headed "Board of Directors Meeting Called to Order" and lists both New Orleans and Pensacola addresses. The minutes of the meeting state:
The purpose of this meeting is to bring the shareholders of Prestige Yachts, Inc., together. For the continued operations of Louisiana and Florida a written agreement is presented to the shareholders for review and signatures.
Clarence and Chuck reviewed the agreement they were to enter into between themselves as officers of Prestige Yachts, Inc. This agreement is to restructure Prestige Yachts, Inc., organization. It further sets out and defines petitions of parties and the future operation of Prestige Yachts, Inc.
Clarence signed as shareholder and officer of the company . . . .
Chuck and Clarence agreed to all provisions in the agreement formally and verbally, therefore said agreement was adopted by officers and members of the board.
Therefore, this assignment of error is without merit.
Accordingly, the judgment of the trial court is affirmed.
AFFIRMED .
Greco maintains that the December 16, 1994 agreement "to cause Prestige Louisiana to enter into an employment contract with Grabert" does not constitute an employment contract and (n)o employment agreement or contract was entered into between Prestige Louisiana and Grabert. Greco argues that Grabert v. Greco, 95-1781 (La.App. 4th Cir. 2/29/96), 670 So.2d 571 (the prior appeal) decided that issue and is the law of the case. I disagree. However, this court should address Greco's argument concerning the employment contract.
Grabert states that it is "axiomatic that when the sole shareholders and directors of a corporation enter into an agreement stating that they will 'cause' the corporation to do or perform certain acts, once that Agreement is executed and adopted, it is the agreement . . . and the shareholders/directors have fulfilled their obligation 'to cause'." Grabert cites no authority.
Where parties intend to reduce their negotiations to a written contract, neither party is bound until the contract is reduced to writing and signed by both parties. Baker v. Maclay Properties Co., 94-1529 (La. 1/17/95), 648 So.2d 888, 896. That is because
it is a part of the bargain that the contract shall be reduced to writing. . . . (T)he final consent is suspended; the contract is inchoate, incomplete, and it cannot be enforced until it is signed by all the parties.
Breaux Brothers Construction Co. v. Associated Contractors, Inc., 226 La. 720, 77 So.2d 17, 20 (1954).
That is distinguishable from a complete verbal contract (which the law does not require to be reduced to writing) and a subsequent agreement that it shall be reduced to writing. The original verbal contract is not impaired by the failure to complete the subsequent agreement to reduce the contract to writing. Breaux Brothers Construction Co. v. Associated Contractors, Inc., 77 So.2d at 20.
In this case, the terms were reduced to a letter agreement signed by Grabert and Greco, and a future written contract was referenced.
Newport Ltd. v. Sears, Roebuck Co., 6 F.3d 1058 (5th Cir. 1993), cert. den. ___ U.S. ___, 114 S.Ct. 2710, 129 L.Ed.2d 836 (1994), applied Louisiana law and held that when parties intend to be bound, a preliminary written agreement is enforceable even though it refers to a future written agreement.
The settled jurisprudence of this State is that an agreement between parties, where their minds have met upon all essentials, constitutes a contract between them and binds them at once although they may have agreed that they would thereafter execute a formal instrument containing the terms of their present agreement.
Newport Ltd. v. Sears, Roebuck Co., 6 F.3d at 1065, quoting Mermelstein v. Schwab, 64 So.2d 37, 38 (La.App.Orl. 1953). See also Chevron U.S.A. Inc. v. Martin Exploration Co., 447 So.2d 469 (La. 1984), which held that a written "preliminary" agreement which referenced a future "written agreement . . . finalizing the points listed above" was not an agreement to agree, but an actual contract. Id. at 473.
The parties' intent in Newport Ltd. was inferred from their actions subsequent to the agreement in dispute. Newport Ltd. v. Sears, Roebuck Co., 6 F.3d at 1065.
Mermelstein, Chevron, and Newport are in concert that a letter agreement is binding.
This assumes that the letter agreement, signed by Grabert and Greco, is binding on Prestige Louisiana. The majority says it was approved by the board the next day, but the record doesn't show whether the board's minutes (attached to Grabert's brief), were admitted into evidence.
As to the third assignment, Prestige Florida is a separate legal entity and was not bound. The letter agreement provides the terms of the employment contract between Prestige Louisiana and Grabert. Although the letter agreement states that Grabert shall be employed as President of Prestige Louisiana and Prestige Florida, and Grabert shall be entitled to a bonus of 10% of the profits of Prestige Louisiana ("which shall include Prestige Florida if it is not merged into Prestige Louisiana . . ."), there is no showing that the companies merged. Even if the board of Prestige Florida approved the contract for Prestige Florida, the arbitration clause provides for arbitration of "any disputes concerning Grabert's employment contract with Prestige Louisiana . . . ."
I respectfully dissent.