Opinion
No. 2011–CA–0406.
2011-12-7
André J. ROBERT, Randall G. Mourot, and J. Storey Charbonnet v. ROBERT MANAGEMENT COMPANY, LLC, Claiborne Fresh Market, LLC, Harrison Fresh Market, LLC, Marc L. Robert, II, and Darlene P. Robert, and MarketFare, L.L.C.
Andrew R. Lee, Avery B. Pardee, Brett S. Venn, Jones Walker Waechter Poitevent Carrere & Denegre, New Orleans, LA, for Andre J. Robert, Randall G. Mourot, J. Storey Charbonnet, and MarketFare, L.L.C. Philip A. Franco, Ronald J. Sholes, Leslie A. Lanusse, Raymond P. Ward, Lauren L. Tafaro, Adams and Reese LLP, New Orleans, LA, for Robert Management Company, LLC, Claiborne Fresh Market, LLC, Marc L. Robert, II, Darlene P. Robert, and MarketFare, LLC.
Andrew R. Lee, Avery B. Pardee, Brett S. Venn, Jones Walker Waechter Poitevent Carrere & Denegre, New Orleans, LA, for Andre J. Robert, Randall G. Mourot, J. Storey Charbonnet, and MarketFare, L.L.C. Philip A. Franco, Ronald J. Sholes, Leslie A. Lanusse, Raymond P. Ward, Lauren L. Tafaro, Adams and Reese LLP, New Orleans, LA, for Robert Management Company, LLC, Claiborne Fresh Market, LLC, Marc L. Robert, II, Darlene P. Robert, and MarketFare, LLC.
(Court composed of Judge TERRI F. LOVE, Judge MAX N. TOBIAS, JR., Judge PAUL A. BONIN).
TERRI F. LOVE, Judge.
The plaintiffs filed a petition alleging that the defendants intentionally breached a fiduciary duty to the plaintiffs by utilizing a new limited liability company to lease and open a grocery store without the plaintiffs' involvement. The defendants filed a peremptory exception of peremption asserting that the plaintiffs' petition was filed more than three years after the alleged intentional breach of fiduciary duty. The trial court concluded that the alleged intentional breach of fiduciary duty occurred on the date the new limited liability company was formed and held that the plaintiffs' claims were perempted. We find that the trial court legally erred in finding that the plaintiffs' claims were perempted because La. R.S. 12:1502 is not a peremptive statute. Therefore, we reverse and remand for further proceedings consistent with this opinion.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
MarketFare, L.L.C. (“MarketFare”), was formed prior to Hurricane Katrina for the operation of a chain of grocery stores. André J. Robert, Randall G. Mourot, and J. Storey Charbonnet (collectively referred to as the “Plaintiffs”) allege that they own 32.2% of the membership interest in MarketFare. Marc and Darlene Robert (“Roberts”) were also members of MarketFare. However, the Plaintiffs aver that the Roberts intentionally breached their fiduciary duty by utilizing Claiborne Fresh Market, L.L.C. (“CFM”), formed on September 13, 2006, to lease and operate a grocery store without the inclusion of MarketFare and/or the Plaintiffs in the business dealings.
One of the Plaintiffs subsequent supplemental and amended petitions added MarketFare as an additional party plaintiff.
I subsume the original petition and its three pre-hearing amendments under the term “petition.”
The Plaintiffs filed a verified petition against Robert Management Company, L.L.C. (“RMC”), CFM, Harrison Fresh Market, L.L.C. (“HFM”), the Roberts, and MarketFare (collectively, the “Defendants”) asserting that leasing and operating a grocery store without giving MarketFare an opportunity to partake demonstrated an intentional violation of a fiduciary duty. The Defendants filed a peremptory exception of peremption and/or prescription stating that the alleged usurpation occurred on September 13, 2006, the date of the formation of CFM. The Plaintiffs' petition was not filed until April 23, 2010, which was over three years after the formation of CFM. The Defendants claimed that the Plaintiffs' claims were perempted pursuant to La. R.S. 12:1502.
The Plaintiffs named MarketFare as a nominal party defendant.
The substance of Article 1853 was previously contained in former Article 2291, which was referenced in the original quote, and Article 1893 does not change the law from former Article 2291. See Revision Comments (a)—1984.
The Plaintiffs filed several supplemental and amending petitions that added Cecilia Poché Bono and Josephine L. Poché as additional parties defendants.
The individual plaintiffs also assert a similar claim regarding another grocery store location on Harrison Avenue in the Lakeview neighborhood of New Orleans. But there is no dispute regarding the timeliness of the lawsuit with respect to acquisition and development of that store.
Following a hearing on the motions, the trial court granted the Defendants' exception of peremption, denied their exception of no cause of action, and denied the Plaintiffs' motion to disqualify counsel. The trial court found that the operative date for calculating peremption was September 13, 2006, the date of CFM's formation. Therefore, the trial court held that the Plaintiffs' petition was filed more than three years after the formation of CFM and was perempted pursuant to La. R.S. 12:1502.
The denial of the Defendants' no cause of action is not before this Court in the appeal.
The Plaintiffs filed a notice of intent to apply for supervisory writs with this Court to address the denial of their motion to disqualify and the peremption issue. However, prior to filing an application for supervisory review, the Plaintiffs filed a motion to designate the judgment granting the peremptory exception as final, which the trial court granted. The Plaintiffs' devolutive appeal followed.
The Plaintiffs filed an application for supervisory review with this Court on January 3, 2011. This Court's writ disposition addressed the Plaintiffs' issues regarding their motion to disqualify. However, this Court declined to exercise its discretionary jurisdiction as to the exception of peremption due to cognizance that the trial court designated that portion of its judgment final and appealable. Robert v. Robert Mgmt. Co., LLC, 11–0003 (La.App. 4 Cir. 4/25/11), unpub., writ denied, 11–1108 (La.9/16/11), 69 So.3d 1148.
The Plaintiffs aver that the trial court erred as a matter of law in holding that their claims were perempted and that the trial court erred “in relying solely on the date of the formation of Claiborne LLC in determining when peremption/prescription commenced” because “the injurious act giving rise to the cause of action for breach of fiduciary duty occurred months after the formation of the paper LLC and within three years of filing suit.”
STANDARD OF REVIEW
Peremption is an objection that “may be raised through a peremptory exception.” La. C.C.P. art. 927. This exception involves the interpretation of a statute, which is a legal question. Legal questions are reviewed utilizing the de novo standard of review. Cleco Evangeline, LLC v. Louisiana Tax Comm'n, 01–2162, p. 3 (La.4/3/02), 813 So.2d 351, 353. However, we review any factual conclusions made by the trial court with the manifestly erroneous or clearly wrong standard of review. Dahan Novelties & Co., LLC v. Ohio Cas. Ins. Co., 10–0626, p. 2 (La.App. 4 Cir. 10/20/10), 51 So.3d 129, 132.
PEREMPTION
The Plaintiffs allege that their claims are not perempted because La. R.S. 12:1502 is not a peremptive statute. The Defendants assert that the categorization of the statute is irrelevant and that the Plaintiffs' claims are time-barred whether La. R.S. 12:1502 is peremptive or prescriptive. Plaintiffs' assertion has merit.
“Peremption is a period of time fixed by law for the existence of a right” and “[u]nless timely exercised, the right is extinguished upon the expiration of the peremptive period.” La. C.C. art. 3458. “Peremption may not be renounced, interrupted, or suspended.” La. C.C. art. 3461. This Court described the differences between peremption and prescription as follows:
Conceptually, there may not be much difference between prescription and peremption since both have the effect of terminating litigation. However, it is undisputed that the two theories differ in their operation. Prescription prevents the enforcement of a right by legal action, but does not terminate the natural obligation. La. C.C. art. 3447. Therefore, as an inchoate right, it may be interrupted, suspended, and renounced. Prescription is subject to the suspensive principle of contra non valentem, a judicially created doctrine that is applied to prevent the running of prescription in instances where good cause results in a plaintiff's inability to exercise his cause of action at accrual. Reeder v. North, [97–0239 (La.10/21/97) ] 701 So.2d [1291] at 1298. In stark contrast, public policy dictates that peremption extinguish or destroy a right to legal action after passage of a specified period. La. C.C. art. 3458. As such, nothing may interfere with the running of a peremptive period. Therefore, it may not be interrupted, suspended, or renounced. La. C.C. art. 3461. Unlike prescription, exceptions suspending the running of time delays, such as contra non valentem, are inapplicable. Hebert v. Doctors Memorial Hospital, 486 So.2d 717, 723 (La.1986). Brumfield v. McElwee, 07–0548, p. 9 (La.App. 4 Cir. 1/16/08), 976 So.2d 234, 241.
The outcome depends upon whether La. R.S. 12:1502 is peremptive or prescriptive in nature. The statute in the case sub judice, La. R.S. 12:1502, provides in pertinent part:
A. The provisions of this Section shall apply to all business organizations formed under the laws of this state and shall be applicable to actions against any officer, director, shareholder, member, manager, general partner, limited partner, managing partner, or other person similarly situated.
B. The term “business organization” includes any entity formed under the laws of this state engaged in any trade, occupation, profession, or other commercial activity including but not limited to professions licensed by a state or other governmental agency. This Section shall apply without limitation to corporations, incorporated or unincorporated associations, partnerships, limited liability partnerships, partnerships in commendam, limited liability companies, or cooperative associations or other entities formed under the laws of this state.
C. No action for damages against any person described in Subsection A of this Section for an unlawful distribution, return of an unlawful distribution, or for breach of fiduciary duty, including without limitation an action for gross negligence, but excluding any action covered by the provisions of Subsection D of this Section, shall be brought unless it is filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered, but in no event shall an action covered by the provisions of this Subsection be brought more than three years from the date of the alleged act, omission, or neglect.
D. No action for damages against any person listed in Subsection A of this Section for intentional tortious misconduct, or for an intentional breach of a duty of loyalty, or for an intentional unlawful distribution, or for acts or omissions in bad faith, or involving fraud, or a knowing and intentional violation of law, shall be brought unless it is filed in a court of competent jurisdiction and proper venue within two years from the date of the alleged act or omission, or within two years from the date the alleged act or omission is discovered or should have been discovered, but in no event shall an action covered by the provisions of this Subsection be brought more than three years from the date of the alleged act or omission.
E. The time limitations provided in this Section shall not be subject to suspension on any grounds or interruption except by timely suit filed in a court of competent jurisdiction and proper venue. After the trial court's ruling in the case sub judice, this Court held that La. R.S. 12:1502 is a “prescriptive statute that is subject to time limitations that have peremptive attributes.” Suhren v. Gibert, 10–0767, pp. 9–10 (La.App. 4 Cir. 1/12/11), 55 So.3d 941, 947. However, this Court further espoused that “the time limitations contained within this statute do not allow for plaintiffs, such as Mr. Suhren, to levy claims under the continuous tort doctrine.” Suhren, 10–0767, p. 10, 55 So.3d at 947. Finally, this Court held that because “La. R.S. 12:1502 is a prescriptive statute with peremptive time limitations, Mr. Suhren would be entitled to pursue claims ... that have not prescribed.” Suhren, 10–0767, p. 11, 55 So.3d at 948. Suhren is the law of this circuit. Therefore, because La. R.S. 12:1502 is prescriptive in nature, we find that the trial court committed legal error in granting the Defendants' exception of peremption and reverse. Based on the facts and circumstances of this case, we remand the matter to the trial court to distinguish which of the Plaintiffs' claims are not prescribed pursuant to La. R.S. 12:1502. See Suhren, 10–0767, p. 12, 55 So.3d at 948.
DECREE
For the above mentioned reasons, we find that the trial court erred by granting the Defendants' exception of peremption. We reverse and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED
BONIN, J., concurs and assigns reasons.
BONIN, J., concurs and assigns reasons.
I respectfully concur in the reversal and remand.
The petition 1 describes in detail a course of conduct among the individual plaintiffs, the individual Robert defendants, a limited liability company of which they all are the members, which is MarketFare, MarketFare's numerous wholly-owned subsidiary limited liability companies, each of which owns a separate grocery store location and operation, and a couple of limited liability companies of which the individual Robert defendants are the sole members and which companies provide managerial and administrative services to MarketFare and its subsidiaries. Essentially, since 1998 at least, the individual plaintiffs supplied the cash funds for the acquisition and operation of grocery stores through the New Orleans area which Marc Robert and Darlene Robert operated through the business organizations. The arrangement was apparently successful and profitable, or at least mutually beneficial, until the storm in 2005.
Because of the storm many of the store locations were destroyed and MarketFare prosecuted lawsuits for the collection of insurance proceeds. While the parties were in this lawsuit-mode, Marc began to scout out other opportunities for grocery stores in New Orleans as well as in suburban areas. One of those possible opportunities was the location of South Claiborne and South Carrollton Avenues in New Orleans.
According to the petition, around August 2006, Marc developed some site plans for that location which were shared with his usual MarketFare investors, the plaintiffs. Unbeknownst to them at the time, Marc and Darlene during the following month, on September 13, 2006, organized a new limited liability company, Claiborne Fresh Market, LLC, and became its sole members. Claiborne Fresh Market was not, then, a wholly-owned subsidiary of MarketFare and, of course, the individual plaintiffs had no obvious interest in this new organization.
The trial court considered the original, unamended petition to be a judicial confession that the trigger date for the defendants' tortious conduct was September 13, 2006. I agree with the majority's implicit view that it was error to conclude that the allegations of that original petition prior to amendment constituted a judicial confession on the part of the plaintiffs. See La. Civil Code art. 1853; see also Guidry v. Barras, 368 So.2d 1129, 1132 (La.App. 3d Cir.1979) (“We conclude that a judicial confession under Article [1853 2] should not stop a curative amendment under C.C.P. Article 934, absent a showing that the adversary was misled or deceived.”)
The following year, the petition states, Marc and Darlene became aware of advantageous government programs, such as GoZone bonds, which would allow their acquisition or development of grocery stores without the financial investments of the plaintiffs. Yet, all the while, Marc and Darlene both concealed the availability of these programs, reported on the progress of the insurance lawsuits and the need to re-invest the proceeds to avoid burdensome tax consequences, and implied that new acquisitions would be done through MarketFare or a wholly-owned subsidiary of MarketFare, as in the past. This course of conduct continued through at least June 24, 2008.
In July or August 2008, Claiborne Fresh Market opened a grocery store at the South Claiborne location. Financing was accomplished through GoZone bonds, and Marc and Darlene's cash contribution of $750,000. MarketFare, its wholly-owned subsidiaries, and the individual plaintiffs were no part of the ownership of this grocery store. In my view, this is the date which the petition establishes as the “the date of the alleged act or omission” for the triggering purposes of La. R.S. 12:1502.
“On the trial of the peremptory exception pleaded at or prior to the trial of the case, evidence may be introduced to support or controvert any of the objections pleaded, when the grounds thereof do not appear from the petition.” La. C.C.P. art. 931. Ordinarily, the exceptor bears the burden of proof at the trial of the peremptory exception. Spott v. Otis Elevator Co., 601 So.2d 1355, 1361 (La.1992). If, however, the action is prescribed on its face, the plaintiff bears the burden of showing that the action has not prescribed. Wimberly v. Gatch, 93–2361 (La.4/11/94), 635 So.2d 206.
The lawsuit was filed in a court of competent jurisdiction and venue on April 23, 2010. The individual plaintiffs' sole claim,3 as far as I can determine, is one for the defendants' (excluding MarketFare) intentional breach of a duty of loyalty. The liberative prescriptive period for that claim is two years “from the date of the alleged act or omission, or within two years from the date the alleged act or omission is discovered or should have been discovered”. La. R.S. 12:1502 D. Therefore, on the face of the petition, the suit is not prescribed. See La. C.C.P. art. 931. See also Denoux v. Vessel Management Services, Inc., 07–2143 (La.5/21/08), 983 So.2d 84.
Nothing, however, in the remand this date would prevent the defendants from proving with evidence that their act or omission which constituted an intentional breach of their duty of loyalty either occurred and/or was discovered before April 23, 2008. But, in the absence of such proof, the