Opinion
NO. 2011 CA2253
09-21-2012
GERALD GULOTTA v. UNITED SCAFFOLDING, INC., XSERVE, INC., NEIL WOODS AND DAVID STARKEY
Byard "Peck" Edwards, Jr. Hammond, La. Attorneys for Plaintiff/Appellant, Gerald Gulotta Charles V. Genco D. Mark Valentine Amite, La. Andrew W. Blanchfield Stephen M. Whitlow Kimberly D. Higginbotham Baton Rouge, La. Attorneys for Defendants/Appellees, United Scaffolding, Inc., XServe Services, Inc., and David Starkey
NOT DESIGNATED FOR PUBLICATION
On Appeal from the
21st Judicial District Court,
In and for the Parish of Tangipahoa,
State of Louisiana
Trial Court No. 2007-0002706
The Honorable Zorraine Waguespack, Judge Presiding
Byard "Peck" Edwards, Jr.
Hammond, La.
Attorneys for Plaintiff/Appellant,
Gerald Gulotta
Charles V. Genco
D. Mark Valentine
Amite, La.
Andrew W. Blanchfield
Stephen M. Whitlow
Kimberly D. Higginbotham
Baton Rouge, La.
Attorneys for Defendants/Appellees,
United Scaffolding, Inc., XServe
Services, Inc., and David Starkey
BEFORE: CARTER, C.J., GUIDRY AND GAIDRY, JJ.
CARTER , C.J.
Plaintiff/Appellant, Gerald Gulotta, appeals the judgment of the district court granting an involuntary dismissal in favor of Defendants/Appellees, United Scaffolding, Inc., Xserve Services, Inc., and David Starkey. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
United Scaffolding, Inc. (United) was established in 1992 with fourteen original investors. Gerald Gulotta and David Starkey were among the fourteen original investors. As an original investor, Gulotta contributed $30,400.00 and received 6,080 shares of United stock. Xserv Services, Inc. (Xserv) was later formed as a holding company for United, and Gulotta's stock in United was transferred to Xserv.
Starkey served as the chief executive officer and president of United and as the president of Xserv.
Gulotta sold his shares of Xserv stock in 2003 for $60,800.
In April 2000, Xserv's board of directors voted to award stock options to a number of individuals for their service to United. In May 2000, a letter was sent to Xserv's compensation committee requesting approval to award the stock options to the listed employees. Gulotta's name appeared on the list along with some of the other original founders of United. In October 2000, another letter was sent from Xserv's chief executive officer, Neil Woods, to Xserv's compensation committee listing the employees who were presented for review and approval to award stock options; Gulotta was not listed. United was later sold to Brock Scaffolding (Brock).
Brock is also referred to as "Brock Company" in the record.
Gulotta filed a petition for damages and specific performance, alleging that Woods and Starkey fraudulently removed his name from the list of employees presented to the compensation committee so that he would not receive stock options when United was sold to Brock.
Woods was dismissed pursuant to the district court's grant of an exception of lack of personal jurisdiction.
Gulotta filed an amended petition alleging that he failed to receive Xserv common stock due to defendants' wrongful actions, and that he was defrauded out of the fair value of his stock when he sold it in 2003. However, those claims were not raised on appeal.
--------
A bench trial was held on July 19, 2011. At trial, Gulotta argued that he had a right to remain on the list of employees presented to the compensation committee pursuant to Title 12 of the Louisiana Revised Statutes. He further argued that Starkey acted wrongfully by omitting his name from the list, and in order to remove his name, there had to be a valid business reason. In response, the defendants argued that Title 12 did not apply to the issuance of stock options, and the options were a gratuity from XServ. According to defendants, because Gulotta had no ownership rights to the stock options, his allegations of breach of fiduciary duty, fraud, and theft failed as a matter of law.
At the close of evidence, the defendants moved for an involuntary dismissal pursuant to Louisiana Code of Civil Procedure article 1672B. The district court granted defendant's motion, finding that Gulotta failed to show a right to relief. Gulotta now appeals.
DISCUSSION
Louisiana Code of Civil Procedure article 1672B provides for a motion for involuntary dismissal of a plaintiff's action in the course of a bench trial and states:
In an action tried by the court without a jury, after the plaintiff has completed the presentation of his evidence, any party, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal of the action as to him on the ground that upon the facts and law, the plaintiff has
shown no right to relief. The court may then determine the facts and render judgment against the plaintiff and in favor of the moving party or may decline to render any judgment until the close of all the evidence.
In determining whether involuntary dismissal should be granted, the appropriate standard is whether the plaintiff has presented sufficient evidence on his case-in-chief to establish his claim by a preponderance of the evidence. Thornton ex rel. Laneco Const. Systems, Inc. v. Lanehart, 97-2871 (La. App. 1 Cir. 12/28/98), 723 So. 2d 1127, 1130, writ denied, 99-0177 (La. 3/19/99), 740 So. 2d 115. The district court is free to evaluate the evidence and render a decision based upon a preponderance of the evidence without any special inferences in favor of the party opposed to the motion. Thornton, 723 So. 2d at 1130. Proof by a preponderance of the evidence simply means that, taking the evidence as a whole, the evidence shows the fact or cause sought to be proved is more probable than not. Id.
The district court's grant of an involuntary dismissal is subject to the well-settled manifest error standard of review. Broussard v. Voorhies, 06-2306 (La. App. 1 Cir. 9/19/07), 970 So. 2d 1038, 1041, writ denied, 07-2052 (La. 12/14/07), 970 So. 2d 535. Accordingly, in order to reverse the district court's grant of involuntary dismissal we must find, after reviewing the record, that there is no factual basis for the district court's finding or that the finding is clearly wrong or manifestly erroneous. Broussard, 970 So. 2d at 1042. The issue is not whether the district court was right or wrong, but whether its conclusion was reasonable. Id.
At trial, the district court pointed out that stock and stock options are "two separate things," and that Louisiana Revised Statutes section 12:92 "applies to stock; not to stock options." Section 12:92B provides:
Any officers or directors who knowingly, or without the exercise of reasonable care and inquiry, consent to the issuance ofWe agree with the district court that Section 12:92 applies to shares of stock rather than stock options.
shares in violation of the provisions of this Chapter or of prior statutes, shall be liable jointly and severally to the corporation and any person who suffers any loss or damage as a result thereof. (Emphasis added).
Gulotta argues that the district court erred in finding that he had no right of relief under Title 12, which governs Louisiana corporations and associations. He cites various sections of Title 12 that he claims "together provide a cause of action." However, we have found no legal authority in support of this conclusion nor has Gulotta directed us to any.
Gulotta also argues that the defendants breached their fiduciary duty. He argues that the defendants violated a statutorily-imposed fiduciary duty by "enrich[ing] themselves . . . for no valid business purpose" and cites Louisiana Revised Statutes section 12:91, which provides, in pertinent part:
A. Officers and directors shall be deemed to stand in a fiduciary relation to the corporation and its shareholders, and shall discharge the duties of their respective positions in good faith, and with that diligence, care, judgment, and skill which ordinary prudent men would exercise under similar circumstances in like positions; however, a director or officer shall not be held personally liable to the corporation or the shareholders thereof for monetary damages unless the director or officer acted in a grossly negligent manner as defined in Subsection B of this Section, or engaged in conduct which demonstrates a greater disregard of the duty of care than gross negligence, including but not limited to intentional tortious conduct or intentional breach of his duty of loyalty. Nothing herein contained shall derogate from any indemnification authorized by [Louisiana Revised Statutes section] 12:83.The legal authority cited by Gulotta does not support his contention that corporate officers and directors have a duty to offer stock options to employees or founding members of a corporation. Moreover, Gulotta put forth no evidence at trial that he had a right to receive stock options, and the record contains no evidence of any agreements granting Gulotta the right to receive stock options.
After reviewing the record, we find that the district court's conclusion that Gulotta failed to show a right to relief was a reasonable one. We likewise find no manifest error in the district court's judgment ordering the involuntary dismissal of Gulotta's action, considering the totality of the evidence presented.
DECREE
For the foregoing reasons, the judgment of the district court is affirmed. All costs of this appeal are assessed to Plaintiff/Appellant, Gerald Gulotta.
AFFIRMED.