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Kelly v. Smith

Court of Appeal of Louisiana, Fourth Circuit

February 26, 2014

JOHN F. KELLY, III
v.
ANGELA DISCON SMITH

Released for Publication March 19, 2014.

Page 645

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH. NO. 2005-02319, DIVISION " H-12" . HONORABLE MICHAEL G. BAGNERIS, JUDGE.

AFFIRMED; EXCEPTION DENIED.

WILLIAM PATRICK KLOTZ, KLOTZ & EARLY, New Orleans, Louisiana, Counsel for Plaintiff/Appellee.

MICHAEL B. DEPETRILLO, JONES, WALKER, LLP., New Orleans, Louisiana, Counsel for Defendant/Appellant.

(Court composed of Chief Judge James F. McKay III, Judge Terri F. Love, Judge Roland L. Belsome, Judge Joy Cossich Lobrano, Judge Rosemary Ledet). LOVE, J., DISSENTS. LOBRANO, J., DISSENTS WITH REASONS.

OPINION

Page 646

JAMES F. MCKAY III, Judge.

[2013-0280 La.App. 4 Cir. 1] In this case, involving the disposal of assets of a former limited liability company, the defendant, Angela Discon Smith, appeals the trial court's judgment in favor of the plaintiff, John F. Kelly, III. Ms. Smith also raises the peremptory exception of no right of action for the first time in this Court. For the following reasons, we affirm the judgment of the trial court and deny the exception.

FACTS AND PROCEDURAL HISTORY

In August of 2002, Angela Discon Smith and John F. Kelly, III entered into a business relationship and formed two limited liability companies, 741 Lang Street, L.L.C. and Rent to Own Properties, L.L.C.[1] The purpose of these companies was to purchase residential properties in the New Orleans metropolitan area and have interested persons enter into a lease purchase agreement for a rental fee.

At the time the companies were formed and during their existences, Ms. Smith was employed by Keller Williams as a licensed real estate agent. Mr. Kelly [2013-0280 La.App. 4 Cir. 2] invested $35,000.00 of his personal funds as seed money for the businesses. The parties agreed that all profits derived from the businesses were to be split equally between them, including, but not limited to, the commissions that Ms. Smith received from her employment with Keller Williams.

While Mr. Kelly and Ms. Smith were both members of Rent to Own Properties, the company acquired several pieces of property that were leased to tenants. The company also paid a $5,000.00 deposit for the purchase of a property located at 956-958 Robert E. Lee Boulevard in New Orleans, but Ms. Smith allegedly caused the company to default on the contract for the purchase of that property by failing to timely apply for an extension, which resulted in the loss of the deposit. Mr. Kelly also alleges that Ms. Smith never deposited any of her sales commissions from Keller Williams into the company's bank account.

On February 21, 2003, the articles of organization of Rent to Own Properties were amended to allow Ms. Smith to surrender her interest and transfer her rights in the company to Mr. Kelly. This was done because Ms. Smith no longer wanted to be involved in the company. On May 20, 2003, Ms. Smith's name was removed from the Rent to Own Properties bank account. However, Ms. Smith retained the right as agent to collect rental payments

Page 647

from lessees currently renting properties from Rent to Own Properties but relinquished any future involvement with that company's business.

After Ms. Smith left Rent to Own Properties, Mr. Kelly alleges that she engaged in in a number of improper actions. These included receiving rental [2013-0280 La.App. 4 Cir. 3] payments, which were to be deposited into the 741 Lang Street, L.L.C. bank account in order to satisfy mortgage notes, insurance and other expenses associated with the properties but failing to actually deposit those monies into said bank account or accounting to Mr. Kelly for those funds. Mr. Kelly further alleges that Ms. Smith misappropriated funds in the Rent to Own Properties bank account to satisfy mortgage ...


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