Opinion
2022 CA 0130.
09-26-2022
Pahna KEO v. Maline HENG.
WELCH, J.
The defendant, Maline Heng, appeals a judgment in favor of the plaintiff, Pahna Keo, that granted specific performance of a contract between Mr. Heng and Ms. Keo by ordering Mr. Heng to transfer full ownership of a business, including possession of the business's leased premises, to Ms. Keo and awarded Ms. Keo damages for Mr. Heng's breach of contract. For reasons that follow, we affirm in part and reverse in part.
FACTUAL AND PROCEDURAL HISTORY
On July 2, 2018, Mr. Heng and Ms. Keo entered into two agreements regarding the business known as "Delicious Donuts," which was operated out of a leased building located at 25765 Louisiana Highway 16 in Denham Springs, Louisiana, The agreements were initially drafted by Mr. Heng in the Cambodian language—the native language of both Mr. Heng and Ms. Keo. Mr. Heng had the agreements translated and typed into English, and the agreements were then sent to Ms. Keo for approval. The agreements were executed by Mr. Heng and Ms. Keo before a notary public. Mr. Heng's wife, Linda Sineth, and Ms. Keo's fiancé, Makara Khem, were present when the agreements were executed.
Throughout Ms. Keo's testimony, she refers to Makara Khem as Makara Keo, her husband. However, Mr. Khem's testimony reflects that he is Ms. Keo's fiancé and that his name is Makara Khem. Therefore, we will refer to him as Ms. Keo's fiancé and by the surname Khem.
The first agreement, the Business Lease Agreement ("the lease agreement"), set forth that Mr. Heng, the seller, owned and operated Delicious Donuts and that he was leasing to Ms. Keo, the buyer, "all rights, title[,] and interest of the business involving all inventory, equipment, trademarks, licenses[,] and other assets necessary for operating the business for 1 year." The lease agreement further provided that "[a] payment of $8,000 must be made to the seller each month starting on September 26, 2018 until August 26, 2019. If the buyer does not make payments to the seller on time and exceeds more than 60 days, the buyer loses all rights to the business [] back to the seller."
The second agreement, the Business Purchase Agreement ("the purchase agreement"), contained terms similar to the lease agreement, except it provided that Mr. Heng was selling and that Ms. Keo was buying "all rights, title[,] and interest of the business involving all inventory, equipment, trademarks, licenses[,] and other assets necessary for operating the business." With respect to price, the purchase agreement provided that "[a] payment of $8,000.00 must be made to the seller each month starting on September 26, 2019 until August 26, 2020 for a total sum of $96,000.00. If the buyer does not make payments to the seller on time and exceeds more than 60 days, the buyer loses all rights to the business back to the seller."
On the date the parties executed the two agreements, Ms. Keo gave Mr. Heng a check in the amount of $40,000.00 from her personal bank account and Mr. Heng negotiated the check. As detailed hereinbelow, the purpose of this $40,000.00 payment is one of the disputes that arose between Mr. Heng and Ms. Keo.
Following the execution of the two agreements, Ms. Keo, along with Mr. Khem, began operating Delicious Donuts. They took possession of the leased premises, including all equipment and inventory; received all income from Delicious Donuts; controlled its bank accounts; and paid the operating expenses from its bank accounts, including an insurance premium for a business owner's policy with State Farm Fire and Casualty Insurance Company ("State Farm"). According to the policy, the named insured was "HENG, MALINE & SINETH, LINDA DBA DELICIOUS DONUTS." Ms. Keo also utilized the income from the business to pay Mr. Heng the sum of $8,000 per month pursuant to the lease agreement from September 2018 through July 26, 2019.
On August 22, 2019, just four days prior to the due date of Ms. Keo's final lease payment, a different suite located in the same building as Delicious Donuts caught fire, which forced all businesses located on the premises to close, including Delicious Donuts. In response, Mr. Khem, on behalf of Ms. Keo, filed a claim with State Farm. Ms. Keo and Mr. Khem provided State Farm with all of the necessary information to adjust the claim. Thereafter, State Farm issued four claims checks relating to the costs for clean-up services, property losses, and loss of business income. The documentation from State Farm regarding the claim for loss of business income provided that the claim was for the insured identified as "Delicious Donuts." These four claims checks from State Farm form the basis for the main dispute between the parties.
The first check State Farm issued was in the amount of $6,516.87. This check was deposited into the bank account of Delicious Donuts by Ms. Keo; however, those funds were directly used to pay "Servpro," the company that performed clean-up services in the leased premises following the fire. The next check, dated October 8, 2019, was in the amount of $5,686.99, was made payable to "Linda Sineth & Maline Heng & Delicious Donuts," and was for personal property lost or damaged by the fire. This check was deposited into the bank account of Delicious Donuts by Ms. Keo. The third check, dated October 17, 2019, in the amount of $19,028.65, was issued to "Delicious Donuts; Maline Heng; Linda Sineth." This check represented the sum of $18,974.17 for loss of business income through October 31, 2019, plus an additional $54.48 supplemental payment for personal property loss. This check was deposited into the bank account of Delicious Donuts by Ms. Keo.
Ms. Keo utilized the funds from the second and third checks to pay Mr. Heng the sum of $8,000 on October 11, 2019, representing the final lease payment that was due August 26, 2019; the sum of $8,000 on October 24, 2019, representing the purchase agreement payment that was due on September 26, 2019; and the sum of $8,000 on November 25, 2019, representing the purchase agreement payment that was due on October 26, 2019.
The fourth check, dated November 6, 2019, was in the amount of $41,926.42, was made payable to "Maline Heng & Linda Sineth & Delicious Donuts," and was for business interruption/loss of income through April 8, 2020. These funds were not deposited into the account of Delicious Donuts. Rather, Mr. Heng obtained this check and used the funds personally. Mr. Heng then closed the bank accounts for Delicious Donuts.
A dispute between Ms. Keo and Mr. Heng then arose as to the ownership of Delicious Donuts and the remaining sums of money owed to Mr. Heng by Ms. Keo. Ms. Keo believed that she was entitled to ownership of the business and that the terms of the purchase agreement had been satisfied because Mr. Heng had received funds in excess of the $96,000.00 to which he was entitled under the purchase agreement. More specifically, she claimed that she directly paid Mr. Heng the sum of $40,000.00 toward the purchase price on the date the two agreements were executed and the sum of $16,000.00 by virtue of the two $8,000.00 payments on October 24, 2019 and November 25, 2019. Additionally, Ms. Keo claimed that, since she was exclusively entitled to all income from Delicious Donuts pursuant to the lease agreement and the purchase agreement, the final claim check from State Farm to Delicious Donuts for its loss of business income in the amount of $41,926.42, which Mr. Heng took possession of and utilized personally, satisfied the remainder of the sum that she owed under the purchase agreement.
$40,000.00 + $16,000.00 + $41,926.42 = $97,926.42.
However, Mr. Heng continued to demand monthly payments from Ms. Keo. Mr. Heng claimed that the $40,000.00 he received from Ms. Keo on the date the parties executed the two agreements was a "security deposit" for the business's equipment and that all of the funds received from the State Farm claims checks belonged solely to him. Therefore, Mr. Heng refused to transfer ownership of the business to Ms. Keo, claiming that ownership of the business reverted back to him because Ms. Keo failed to pay all sums due under the two agreements within sixty days. As a result of Mr. Heng's refusal to transfer ownership of the business to Ms. Keo, she leased a building located at 216 Lee Drive in Baton Rouge, Louisiana and opened a new Delicious Donuts shop in January 2020.
On March 2, 2020, Ms. Keo commenced these proceedings against Mr. Heng, seeking specific performance of the purchase agreement. Therein, Ms. Keo asserted that Mr. Heng had received all sums due to him under the purchase agreement and desired to be recognized as its owner. Ms. Keo claimed that, although she was in possession of some of the movable property, she sought to be placed into possession of all remaining movable property of the business. She also sought to have Mr. Heng transfer to her all leases, licenses, trademarks, and other assets of the business, as contemplated by the purchase agreement.
Ms. Keo also sought a temporary restraining order and injunction against Mr. Heng, prohibiting him from treating the business as if it were his own, running the business, selling or leasing the business, and disposing of its assets. The trial court granted the temporary restraining order, as well as a subsequent expansion of that order. The temporary restraining order was continued by stipulation of the parties until a trial on the merits. There are no issues on appeal regarding the temporary restraining order.
In response, Mr. Heng filed an answer and reconventional demand, generally denying the allegations of Ms. Keo's petition, claiming that Ms. Keo had breached both the lease agreement and the purchase agreement by failing to timely pay the monthly lease payments and failing to pay any sums toward the total purchase price. Therefore, he claimed that under the terms of both agreements, he remained the owner and Ms. Keo lost all rights to the business. Mr. Heng sought the immediate return of all movables of the business in the possession of Ms. Keo.
Mr. Heng also sought and obtained a temporary restraining order and injunction against Ms. Keo, prohibiting her from disposing, encumbering, hiding, concealing, donating, transferring, damaging, destroying or alienating movable property belonging the Mr. Heng and Delicious Donuts and prohibiting her from using Mr. Heng's licenses, permits, trademarks, service marks, trade names, trade dress, logos, copyrights, trade secrets, websites, social media sites, and internet domain name registrations. There are no issues on appeal relating to this temporary restraining order.
A trial on the merits was held on July 27, 2021. At trial, the testimony and the evidence focused on the following issues: (1) whether Ms. Keo's final lease payment of $8,000 to Mr. Heng on October 10, 2019, was timely under the terms of the lease agreement; (2) the purpose of the $40,000 payment Ms. Keo made to Mr. Heng on July 2, 2018, the date the parties executed both agreements; (3) the insurance proceeds received from State Farm; (4) whether Ms. Keo had satisfied her obligations under the purchase agreement such that she was entitled to specific performance; and (5) Ms. Keo's request for damages for Mr. Heng's failure to perform his obligations under the purchase agreement. In addition, at the end of trial, Mr. Heng argued that, even if Ms. Keo was entitled to specific performance, she was only entitled to 50% ownership because Delicious Donuts was a community enterprise; Mr. Heng's wife, Ms. Sineth, was not a party to either agreement; and Mr. Heng did not have the right to lease or sell Ms. Sineth's 50% interest in the business.
As noted above, Ms. Keo made a lease payment of $8,000 on July 26, 2019, and she made the final lease payment, which was due on August 26, 2019, on October 11, 2019, which was less than sixty days from August 26, 2019. Mr. Heng claimed that the final payment was late because it was paid more than sixty days from the July 26, 2019 payment, thereby constituting a breach of the lease agreement.
At the conclusion of trial, the trial court took the matter under advisement, and thereafter, issued written reasons for judgment, rendering judgment therein in favor of Ms. Keo and against Mr. Heng. In its written reasons for judgment, the trial court found that, based on the language of the lease agreement and the conduct of the parties, Ms. Keo's final lease payment was due on August 26, 2019, and since she made the final payment within sixty days of that due date, her final lease payment was timely under the terms of the lease agreement. The trial court also found that Ms. Keo had paid all sums due to Mr. Heng under the terms of the lease agreement; therefore, Ms. Keo did not breach the terms of the lease agreement.
On appeal, Mr. Heng has not challenged any of the trial court's rulings relative to the lease agreement.
The trial court further found that the $40,000.00 check from Ms. Keo to Mr. Heng on the date the parties executed the two agreements was a down payment on the purchase agreement, which was never returned to Ms. Keo, and that Ms. Keo made two additional $8,000.00 payments to Mr. Heng pursuant to the purchase agreement. The trial court noted that, following the execution of the two agreements, Ms. Keo was solely responsible for operating the business, received all income from the business, and used the income from the business to make payments to Mr. Heng pursuant to the two agreements. The trial court also found that following, the fire, the business became inoperable and that State Farm, the insurer of Mr. Heng and Delicious Donuts, made payments for the business losses to Delicious Donuts, the named insured on the policy. The trial court noted that while the business received the first three checks, Mr. Heng began intercepting the insurance checks for his personal use rather than allowing the amounts to be paid to the business and its operators.
The trial court noted that Mr. Heng received the $41,926.42 from State Farm for Delicious Donuts' loss of business income, which he did not remit to the business, which resulted in Ms. Keo being unable to make any further payments under the purchase agreement. Since both parties testified that the arrangement was for Ms. Keo to receive all income from Delicious Donuts and that Ms. Keo would use that income to make payments to Mr. Heng, Mr. Heng's failure to remit the $41,926.42 State Farm insurance check for loss of income payments to the business was a breach of the purchase agreement. Applying that sum of money to the sums of money already paid by Ms. Keo, the trial court found that Mr. Heng received the requisite $96,000.00 under the business agreement for the purchase of Delicious Donuts. Thus, the trial court concluded that Ms. Keo was entitled to specific performance, ordering Mr. Heng to transfer 100% of the business to Ms. Keo. In doing so, the trial court found no merit to Mr. Heng's argument that Ms. Keo was only entitled to 50% ownership of the business because Mr. Heng's wife was not a party to the agreement.
In addition, the trial court found that Ms. Keo was entitled to damages. More specifically, the trial court found that Ms. Keo was entitled to loss of income in the amount of $20,388.24 for the months of November 2019, December 2019, and January 2020, representing the time during which Ms. Keo was unable to operate the business prior to opening a new donut shop. The trial court also awarded Ms. Keo the $2,340.00 for moving expenses she incurred when she moved into the new donut shop location, along with $4,866.94 for the cost of installing the sign at the new location.
The trial court signed a judgment on March 24, 2022, in conformity with its written reasons, ordering Mr. Heng to specifically perform on the purchase agreement by transferring 100% of the business to Ms. Keo and awarding Ms. Keo damages in the amount of $20,388.24 for lost income, $2,340 for moving expenses, and $4,866.94 for the cost of installing a sign at the new location. From this judgment Mr. Heng has appealed.
The trial court's award of $20,388.24 was for loss of income for the months of November 2019, December 2019, and January 2020—the time during which Ms. Keo was unable to operate the business prior to opening a new location—and these sums were based on the monthly business loss supplied by State Farm in adjusting the claim.
The March 24, 2022 judgment on appeal is an amended judgment. The original judgment was signed by the trial court on October 12, 2021. However, on March 14, 2022, after Mr. Heng's appeal was lodged with this Court and the record was examined, this Court issued a rule to show cause why the appeal should not be dismissed because the October 12, 2021 judgment was defective in that it referenced a document that was not attached to the judgment. Thereafter, the amended judgment was signed and supplemented into the record. Therefore, Mr. Heng's appeal was maintained. See Pahna Keo v. Maline Heng, 2022-0130 (La. App. 1st Cir. 4/22/22)( unpublished action).
On appeal, Mr. Heng raises five assignments of error. Essentially, Mr. Heng argues that the trial court erred in: granting specific performance in favor of Ms. Keo and against Mr. Heng, ordering Mr. Heng to transfer ownership of 100% of the business to Ms. Keo, and awarding damages to Ms. Keo for moving expenses and installation of a new sign.
We note that Mr. Heng argues on appeal that the trial court erred in finding that Ms. Keo was a named insured or an additional insured on the State Farm policy and erred in finding that Ms. Keo was entitled to 100% ownership of the State Farm insurance proceeds. However, the trial court's judgment makes no such finding and contains no references to a named insured, additional insured, or ownership of the insurance proceeds. Notably, the trial court's reasons for judgment reflect that it found that Delicious Donuts was a named insured, that State Farm made claims payments for Delicious Donuts' loss of business income, that Mr. Heng's failure to remit the $41,962.42 check from State Farm to Delicious Donuts for loss of business income was a breach of the purchase agreement and further, that his receipt and personal use of said sum constituted part of the requisite $96,000 required for Ms. Keo's purchase of Delicious Donuts.
It is well settled that appeals are taken from judgments, not reasons for judgment. Wooley v. Lucksinger, 2009-0571 (La. 4/1/11), 61 So.3d 507, 572. However, a trial court's reasons for judgment may elucidate the trial court's thought process when reaching factual findings. Therefore, we will address the State Farm insurance proceeds, and the trial court's reasons for judgment when addressing the issue of whether Ms. Keo was entitled to specific performance under the contract, as set forth in the judgment on appeal.
On appeal, Mr. Heng does not challenge the trial court's award of damages in the amount of $20,388.24 for lost income. Therefore, we will not address this portion of the damage award herein.
LAW AND DISCUSSION
Entitlement to Specific Performance— Purchase Agreement
On appeal, Mr. Heng contends that the trial court erred in granting specific performance of the purchase agreement. He claims that Ms. Keo failed to fulfill her obligation under the purchase agreement to timely pay the purchase price, and consequently, under the terms of the purchase agreement, ownership of the business reverted back to him. Thus, he maintains that Ms. Keo was not entitled to specific performance.
In general, the remedy of specific performance for a contract is set forth in La. C.C. art. 1986, which provides, in pertinent part:
Upon an obligor's failure to perform an obligation to deliver a thing, or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands. If specific performance is impracticable, the court may allow damages to the obligee.
In a contract of sale, the buyer is bound to pay the price, which must be fixed by the parties in a sum certain or determinable through a method agreed by them, and to take delivery of the thing. La. C.C. arts. 2464; 2549. When the seller fails to deliver or to make timely delivery of the thing sold, the buyer may demand specific performance of the obligation of the seller to deliver, or may seek dissolution of the sale; in either case, and also when the seller has made a late delivery, the buyer may seek damages. La. C.C. art. 2485.
As set forth above, with respect to price, the purchase agreement provided that "[a] payment of $8,000.00 must be made to the seller each month starting on September 26, 2019 until August 26, 2020 for a total sum of $96,000.00." It further provided that "[i]f the buyer does not make payments to the seller on time and exceeds more than 60 days, the buyer loses all rights to the business back to the seller.
The trial court found that Mr. Heng had received funds in excess of the purchase price of $96,000.00; therefore, Ms. Keo was entitled to specific performance. More particularly, the trial court found that Mr. Heng received the sum of $40,000.00 when the parties executed the two agreements and he received the sum of $16,000.00, represented by two $8,000.00 payments on October 24, 2019 and November 25, 2019. The trial court also applied Mr. Heng's receipt of $41,926.42 from State Farm for loss of business income towards the purchase price. Mr. Heng challenges the applicability of each of these payments towards the purchase price. Therefore, we will address each of these payments.
First, with respect to the $40,000.00 payment Ms. Keo made to Mr. Heng on the date the parties executed the two agreements, at trial, Mr. Heng claimed that this payment was a security deposit on the restaurant equipment, whereas Ms. Keo maintained that it was a down payment on the purchase price. The trial court agreed with Ms. Keo and found that the payment was a down payment on the purchase price. Based on our review of the record, we find no error in the trial court's conclusion in this regard.
Louisiana Civil Code article 2624 provides that "[a] sum given by the buyer to the seller in connection with a contract to sell is regarded to be a deposit on account of the price, unless the parties have expressly provided otherwise." The lease agreement provided that Ms. Keo would pay the sum of $8,000.00 each month, starting on September 26, 2018 through August 26, 2019. The trial court determined that Ms. Keo made all payments under the lease agreement and this ruling has not been challenged on appeal. Next, the purchase agreement provided that Ms. Keo would pay the sum of $8,000.00 each month, starting on September 26, 2019, until August 26, 2020, for a total sum of $96,000.00. Notably, neither the lease agreement nor the purchase agreement provides for the payment of a security deposit on the equipment in addition to the lease payments and purchase price. In the absence of an express provision in the contract that the $40,000.00 that Ms. Keo gave to Mr. Heng on the date the parties entered into the agreements was anything other than "a deposit on account of the price," those funds must be applied towards the purchase price. Accordingly, the trial court's determination that the sum of $40,000.00 received by Mr. Heng on July 2, 2018, was a down payment towards the purchase price is both legally correct and supported by the record.
Next, with respect to the two $8,000 payments and the $41,962.42 check, Mr. Heng contends that the source of both the two payments and the insurance check itself belonged to him and those funds could not be used to satisfy Ms. Keo's obligation to pay him the purchase price. First, we note that contrary to Mr. Heng's assignments of error, the trial court did not determine that Ms. Keo was a named insured. Rather, the trial court found that the testimony of both Ms. Keo and Mr. Heng were consistent in that, following the execution of the two agreements, Ms. Keo was entitled to receive all income from Delicious Donuts, was solely responsible for operating the business, and would use the income from the business to make payments to Mr. Heng pursuant to the agreements. The trial court then found that when the business became inoperable due to the fire in August 2019, State Farm made payments for the business losses to Delicious Donuts and Mr. Heng, who was the named insured on the policy. Based on our review of the record, we find no manifest error in this determination.
The evidence in the record establishes that Delicious Donuts and Mr. Heng was the named insured, that the claims paid were for various losses sustained by Delicious Donuts, including loss of income, and that the first three claims checks were deposited into the bank account of Delicious Donuts. Thus, pursuant to the agreement of the parties, Ms. Keo was entitled to use those funds for operating the business, for paying the expenses of the business, and for paying Mr. Heng pursuant to the lease and purchase agreements. Accordingly, we also find no manifest error in the trial court's determination that Ms. Keo's made two payments of $8,000.00 on October 24, 2019 and November 25, 2019 to Mr. Heng towards the purchase price.
With respect to the $41,962.42 check, the trial court found that when Mr. Heng received the check for loss of business income and did not remit the check to the business, Ms. Keo was unable to make any further payments under the purchase agreement. The trial court again noted that the parties' consistent testimony that their arrangement was for Ms. Keo to receive all income from Delicious Donuts, and, from that income, she was to pay Mr. Heng pursuant to both agreements. The trial court then found that Mr. Heng's action in withholding the loss of income payments from the business was a breach of the purchase agreement, as those funds should have been remitted to the business. Consequently, the trial court attributed those funds towards the purchase price and found that Mr. Heng received the requisite $96,000.00 under the business agreement for the purchase of Delicious Donuts. Based on our review of the record, we find no manifest error in this determination.
Having found no manifest error in the trial court's factual determination that Mr. Heng received all funds owed under the purchase agreement, the trial court was well within its discretion in ordering Mr. Heng to specifically perform on the purchase agreement and to transfer ownership of the business to Ms. Keo.
Transfer of 100% Ownership
Mr. Heng next contends that the trial court erred in ordering him to transfer 100% ownership of the business to Ms. Keo because the business was a community enterprise and Mr. Heng's wife, Ms. Sineth, was not a party to either agreement. He argues that under Louisiana's community property laws, he could only lease or sell his undivided 50% interest in the business—not that of his wife. Thus, he maintains that Ms. Sineth remains a co-owner of an undivided 50% interest in business.
First and foremost, we note that there was no evidence presented at trial to affirmatively establish that Delicious Donuts was a community enterprise, or even that a community of acquets and gains exists between Mr. Heng and Ms. Sineth. Mr. Heng's testimony establishes that he started the business in 2016, and the State Farm insurance policy provided that the named insureds were Mr. Heng and Ms. Sineth d/b/a Delicious Donuts. While Mr. Heng testified that Ms. Sineth was his wife, the date of their marriage is not set forth in the record, and Ms. Sineth did not testify at trial and is not a party to this proceeding—either as a defendant or as intervenor. Thus, the record does not establish whether Delicious Donuts was started prior to or after their marriage, and thus, whether it is Mr. Heng's separate enterprise or a community enterprise. Further, other than the State Farm insurance policy, all of the other evidence and documents in the record regarding Delicious Donuts, i.e., the sales and use tax registration certificate, the food safety certification, the occupational license, and the lease for the building in which Delicious Donut operated, provided that only Mr. Heng was the owner of Delicious Donuts.
Notwithstanding the lack of evidence as to whether Delicious Donuts was a community enterprise, we recognize that Mr. Heng's testimony establishes that Ms. Sineth was his wife and that La. C.C. art. 2340 provides in pertinent part that "[t]hings in the possession of a spouse during the existence of a regime of community of acquets and gains are presumed to be community." Therefore, solely for the purpose of addressing Mr. Heng's contentions on appeal, we will presume that Delicious Donuts was a community enterprise.
As to Mr. Heng's argument that under Louisiana's community property laws, he could only lease or sell his 50% interest in the business—not that of his wife—we find no merit. Louisiana Civil Code article 2337 provides that "[a] spouse may not alienate, encumber, or lease to a third person his undivided interest in the community or in particular things of the community prior to the termination of the regime." Thus, during the existence of the community, Mr. Heng could only lease or alienate the full community interest, i.e., 100%; he could not lease or encumber his undivided 50% interest in the business. Therefore, the issue is whether Mr. Heng, acting alone, could lease and alienate 100% of the ownership interest in the business.
The trial court, in its written reasons, found no merit to Mr. Heng's arguments regarding Ms. Sineth's failure to sign either agreement, citing La. C.C. art. 2346. Louisiana Civil Code article 2346 provides that "[e]ach spouse acting alone may manage, control, or dispose of community property unless otherwise provided by law." (Emphasis added). Notably, La. C.C. art. 2347(A) provides, in part, that the "concurrence of both spouses is required for the alienation, encumbrance, or lease of... all or substantially all of the assets of a community enterprise." However, the lack of concurrence creates only a relative nullity, and a relative nullity can be cured by tacit confirmation, which is the voluntary performance of the obligation. See La. C.C. arts. 1842, 1844, and 2353; see also Harp v. Succession of Bryan, 2019-0062 (La. App. 1st Cir. 9/3/20), 313 So.3d 284, 296 (wherein this Court found that the relative nullity was cured by the non-signing spouse's tacit confirmation of the agreement, as among other things, the non-signing spouse was physically present when the other spouse signed the agreement). Nevertheless, the spouse who is the sole manager of a community enterprise, which is a business that is not a juridical person, has the exclusive right to alienate, encumber, or lease its movables unless the movables are issued in the name of the other spouse or the concurrence of the other spouse is required by law. La. C.C. art. 2350. Herein, although Ms. Sineth did not sign either the lease agreement or the purchase agreement, the testimony of Mr. Khem and Mr. Heng establish that she was present when the documents were executed by the parties and there was no evidence presented that she objected to either document, as Ms. Sineth did not testify at trial. Additionally, all of the evidence overwhelmingly suggests that Mr. Heng was the sole manager of the business. Mr. Heng testified that the lease with the owner of the building where Delicious Donuts operated was in his name. In addition, the sales and use tax registration certificate, the food safety certification, and the occupational license were exclusively in Mr. Heng's name. As the sole manager of the business, Mr. Heng had the exclusive right to alienate or lease the business.
Thus, although there is no evidence establishing that Delicious Donuts was a community enterprise of Mr. Heng and Ms. Sineth, the evidence establishes that that Ms. Sineth was aware of the agreements (having been present when they were executed) and that Mr. Heng was the sole manager of the business, and consequently, had the exclusive right to lease or sell the business. Therefore, the trial court, having determined that specific performance was warranted, was within its discretion in ordering Mr. Heng to transfer 100% ownership of the business to Ms. Keo, and that portion of the judgment of the trial court is affirmed.
Damages
Lastly, on appeal, Mr. Heng challenges the trial court's award of damages for the moving expenses incurred by Ms. Keo in relocating her business and for the cost of and installation of the sign at her new location. The trial court found that Ms. Keo was entitled to damages because she was entitled to use of the leased premises under the purchase agreement and was forced to relocate the business. Therefore, the trial court awarded Ms. Keo the sum of $2,340.00 for her moving expenses, along with $4,866.94 for the cost and installation of the sign at the new location.
Mr. Heng does not challenge the actual amounts awarded by the trial court; rather, he contends that Ms. Keo was not entitled to those damages at all. Mr. Heng contends that he did not prevent Ms. Keo from occupying the leased premises or operating the business, and that the reason and cause that Ms. Keo opened the new location was centered on the fact that the fire and resulting damages to the building prevented all businesses, including Delicious Donuts, from occupying the premises and resuming their business operations.
As previously noted, La. C.C. art. 1986 provides that "[u]pon an obligor's failure to perform an obligation to deliver a thing, or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands" and "if specific performance is impracticable, the court may allow damages to the obligee," (Emphasis added). See also La. C.C. art. 1994 (providing "[a]n obligor is liable for the damages caused by his failure to perform a conventional obligation [,]" and "[a] failure to perform results from nonperformance, defective performance, or delay in performance.")
In Ms. Keo's petition, she sought, and the trial court granted, specific performance of the purchase agreement. However, Ms. Keo did not request or demand any damages in her petition. Ms. Keo's first claim for damages was set forth in her "Memorandum of Quantum," wherein she alleged that she suffered damages due to Mr. Heng's failure to perform in a timely manner and demanded recompense for same. In the memorandum, Ms. Keo then set forth the specific damages she was seeking and the exact amounts thereof, including her moving expenses and the cost and installation of the sign.
Special damages are those that have a "ready market value" or can be determined with relative certainty. Cox, Cox, Filo, Camel & Wilson, LLC v. Louisiana Workers' Compensation Corporation, 2021-00566 (La. 3/25/22), 338 So.3d 1148, 1157. Special damages must be specifically pled. See La. C.C.P. art. 861. Furthermore, a memorandum is not a pleading recognized by the Louisiana Code of Civil Procedure; the pleadings allowed in civil actions are petitions, exceptions, written motions, and answers. See La. C.C.P. art. 852; Meaux v. Galtier, 2007-2474 (La. 1/25/08), 972 So.2d 1137, 1138. Consequently, a memorandum is not a proper method for making a demand for special damages.
As Ms. Keo failed to demand damages —in either her petition or any other pleading—for Mr. Heng's failure to perform, we must conclude that her claim for special damages for moving expenses and the cost and installation of the new sign were not properly before the trial court. Therefore, we reverse the trial court's judgment insofar as it awarded Ms. Keo damages in the amount of $2,340.00 for moving expenses and $4,866.94 for the cost of and installation of the sign at the new location.
Because we find that Ms. Keo was not entitled to these special damages because she failed to demand such damages in a pleading, we pretermit discussion of the arguments raised by Mr. Heng, i.e., whether these expenses were incurred as a result of Mr. Heng's failure to perform or whether they were incurred because of the fire and the resulting damage to the building, which precluded occupation of the leased premises and resumption of business operations.
As previously set forth herein, the trial court also awarded Ms. Keo damages in the amount of $20,388.24 for loss of income. Loss of income is also a special damage which must be specifically pled. See Cox, Cox, Filo, Camel & Wilson, LLC, 338 So.3d at 1157. However, as previously noted in footnote 10, Mr. Heng did not challenge this damage award on appeal. Therefore, we decline to address the correctness of this award.
CONCLUSION
For all of the above and foregoing reasons, the March 24, 2022 judgment of the trial court is affirmed insofar as it granted specific performance in favor of Pahna Keo and ordered Maline Heng to transfer 100% of the ownership of the business to Pahna Keo. The judgment is reversed insofar as it awarded damages in favor of Pahna Keo in the amount of $2,340.00 for moving expenses and $4,866.94 for cost and the installation of the sign at the new location. All costs of this appeal are assessed equally to the parties—one half to the defendant/appellant, Maline Heng, and one-half to the plaintiff/appellee, Pahna Keo.
AFFIRMED IN PART; REVERSED IN PART.
Penzato, J. concurs.