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Louisiana State University System Research & Technology Foundation v. Qyntessa Biologics, L.L.C.

Court of Appeal of Louisiana, First Circuit

December 12, 2014

LOUISIANA STATE UNIVERSITY SYSTEM RESEARCH & TECHNOLOGY FOUNDATION AND LAETC MANAGEMENT COMPANY, L.L.C.
v.
QYNTESSA BIOLOGICS, L.L.C

APPEALED FROM THE NINETEENTH JUDICIAL DISTRICT COURT. IN AND FOR THE PARISH OF EAST BATON ROUGE, STATE OF LOUISIANA. DOCKET NUMBER C572458, SECTION 26. HONORABLE KAY BATES, JUDGE.

Page 469

Lee C. Kantrow, Richard F. Zimmerman, Jr., Randal J. Robert, W. Scott Keaty, Baton Rouge, Louisiana, Attorneys for Plaintiff/Appellee Louisiana State University System Research & Technology Foundation and LAETC Management Company, L.L.C.

John Dale Powers, Steven H. Watterson, Baton Rouge, Louisiana, Attorneys for Defendants/Appellants Qyntessa Biologics, L.L.C. and Steve E. Moye.

Rodney A. Ramsey, John P. Murrill, Baton Rouge, Louisiana, Attorneys for Defendant/Appellee Board of Supervisors of Louisiana State University Agricultural & Mechanical College, including the Louisiana State University System and its Office of Internal Audit, P. Raymond Lamonica, Dr. Carolyn Hargrave and Carla Fishman.

BEFORE: PARRO, McDONALD, AND CRAIN, JJ. Crain, J. concurs and assign reason.

OPINION

Page 470

[2014 0311 La.App. 1 Cir. 2] McDONALD, J.

In this appeal, Qyntessa Biologics, L.L.C. (Qyntessa), and its sole member, Steve E. Moye, challenge a summary judgment against them and in favor of the Louisiana State University System Research and Technology Foundation (Foundation) and its subsidiary, LAETC Management Company, L.L.C. (LAETC). In rendering the summary judgment, the trial court determined the Foundation and LAETC were entitled to rescission of four consulting services agreements to which the Foundation, LAETC, and Qyntessa were parties, because Mr. Moye had fraudulently enticed the Foundation and LAETC into entering the agreements. For the following reasons, we affirm and remand.

FACTUAL AND PROCEDURAL BACKGROUND

The Foundation is a nonprofit Louisiana corporation with its principal office located at the Louisiana Emerging Technology Center (LETC) on the campus of Louisiana State University in Baton Rouge, Louisiana. The LETC serves small and start-up businesses focused on developing and commercializing university technologies. LAETC is a wholly-owned subsidiary of the Foundation and the property manager of LETC. From 2005 through 2008, pursuant to cooperative endeavor agreements (CEAs), the Louisiana Department of Economic Development (LDED) provided funds to LAETC to operate LETC and to subcontract with Qyntessa for the start up and operation of a clinical manufacturing facility (CMF) within the LETC. In turn, from July 2005 through June 2008, pursuant to four consulting services agreements (CSAs), the Foundation and LAETC paid Qyntessa $4,810,000 of the LDED funds for Qyntessa's services in the design and construction of the CMF.[1] Qyntessa is a

Page 471

limited liability company and Mr. Moye is its sole member. Additionally, from some time in 2002 through March 1, 2008, Mr. Moye was also a member of the Foundation's board of directors.

In August of 2008, with concerns as to whether the LDED funds had been properly used, and after receiving less than full disclosure from Qyntessa, the Foundation and LAETC initiated a formal audit of Qyntessa's records. Dissatisfied with [2014 0311 La.App. 1 Cir. 3] Qyntessa's level of cooperation, in November 2008, the Foundation and LAETC filed a petition for audit and declaratory judgment against Qyntessa. Qyntessa answered the petition and filed a reconventional demand against LAETC for amounts allegedly due under the 2007 CSA.[2] Ultimately, the trial court issued a judgment declaring that the Foundation and LAETC were entitled to audit the records and accounts of Qyntessa as expressly authorized by the four CSAs. This court affirmed that judgment on appeal. Louisiana State University System Research and Technology ...


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