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Khoobehi Properties, LLC v. Baronne Development No. 2, L.L.C.

Court of Appeals of Louisiana, Fifth Circuit

March 29, 2017

KHOOBEHI PROPERTIES, LLC
v.
BARONNE DEVELOPMENT NO. 2, L.L.C. KAILAS FAMILY LIMITED PARTNERSHIP, AND KAILAS PROPERTIES, L.L.C. KHOOBEHI PROPERTIES, L.L.C.
v.
BARONNE DEVELOPMENT NO. 2, L.L.C., KAILAS FAMILY LIMITED PARTNERSHIP, AND KAILAS PROPERTIES, L.L.C. KHOOBEHI PROPERTIES, L.L.C.
v.
BARONNE DEVELOPEMENT NO. 2, L.L.C., ET AL

         ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 733-258, DIVISION "P" HONORABLE LEE V. FAULKNER, JR., JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, KHOOBEHI PROPERTIES, LLC George D. Fagan Anton L. Hasenkampf.

          COUNSEL FOR DEFENDANT/APPELLEE, BARONNE DEVELOPMENT NO. 2, L.L.C. KAILAS FAMILY LIMITED PARTNERSHIP, AND KAILAS PROPERTIES, L.L.C. Philip A. Franco Jeffrey E. Richardson David C. Coons.

          Panel composed of Susan M. Chehardy, Fredericka Homberg Wicker, and Robert A. Chaisson

         DISMISSED IN PART; AFFIRMED IN PART; REVERSED IN PART; WRITS DENIED; REMANDED

         RAC

         SMC

         FHW

          ROBERT A. CHAISSON JUDGE.

         Plaintiff, Khoobehi Properties, L.L.C. ("Khoobehi Properties"), appeals a May 13, 2016 judgment of the district court that sustained various exceptions filed by co-defendants Baronne Development No. 2, L.L.C. ("Baronne Development"), 210 Baronne, L.L.C. ("210 Baronne"), and Kailas Properties, L.L.C. ("Kailas Properties"). Khoobehi Properties also attempts to appeal a July 25, 2014 judgment of the district court that sustained an exception of peremption filed by defendant Kailas Family Limited Partnership ("KFLP"), and further seeks this Court's supervisory review of a ruling of the district court that denied its motion to compel discovery.[1] Additionally, defendant Chandra Mohan Kailas seeks this Court's supervisory review of a ruling of the district court that denied his motion to compel discovery and also denied his motion to quash Khoobehi Properties' discovery requests served on a non-party accountant.[2]

         For the following reasons, we dismiss that portion of Khoobehi Properties' appeal that seeks review of the July 25, 2014 judgment sustaining KFLP's exception of peremption; we reverse that portion of the district court's May 13, 2016 judgment that sustained Kailas Properties' exception of discussion, and in all other respects we affirm the judgment of the district court. Additionally, we deny the writ applications of both Khoobehi Properties and Mr. Kailas regarding discovery issues and remand this matter to the district court for proceedings consistent with this opinion.

         FACTS AND PROCEDURAL HISTORY

         This case comes before us on a second appeal, the first appeal having been dismissed on the grounds that the judgment at issue was interlocutory rather than final in nature. Khoobehi Props., L.L.C. v. Baronne Dev. No. 2, L.L.C., 15-117 (La.App. 5 Cir. 11/19/15), 178 So.3d 647, writ denied, 16-0048 (La. 2/26/16), 187 So.3d 1002. Though Khoobehi Properties has amended its petition, the alleged facts remain essentially the same as those set forth in this Court's previous opinion.

         This case arises from a contract for the sale of Khoobehi Properties' membership interest in Baronne Development, a limited liability company whose primary asset consisted of a high rise building located at 210 Baronne Street in downtown New Orleans. In the contract of sale, Khoobehi Properties sold its 13% membership interest in Baronne Development to KFLP. The sale was negotiated and executed by Dr. Kamran Khoobehi, the managing member of Khoobehi Properties, and Mr. Kailas, the managing member of Kailas Properties, which is the managing general partner of KFLP. At the time of the 2013 sale, KFLP owned a greater than 50% controlling interest in Baronne Development. The sale of Khoobehi Properties' membership interest was initially memorialized in an "Agreement for Sale of a Limited Liability Interest" on May 9, 2013, and was completed on June 17, 2013, with the execution of a "Sale, Assignment, and Transfer of Membership Interests." Both of these documents were signed by Dr. Khoobehi and Mr. Kailas. Following the sale, in August of 2013, Dr. Khoobehi learned of plans to redevelop the upper floors of the 210 Baronne building into luxury condominiums. He claims that these development plans were being made and negotiated without his knowledge, prior to the sale of Khoobehi Properties' membership interest.

         On November 25, 2013, Khoobehi Properties filed a petition against Baronne Development, KFLP, and Kailas Properties wherein it alleged the facts stated above regarding the sale of its membership interest to KFLP, and also that it had never received an asset distribution from Baronne Development at any time while it was a member from 2005 to 2013. It also alleged that during that same time period, Dr. Khoobehi made repeated requests of Mr. Kailas for a full and complete accounting of Baronne Development's business and financial records, but that this accounting was never provided. Though acknowledging that it had sold and transferred its interest in Baronne Development and was therefore no longer a member, Khoobehi Properties nevertheless demanded an accounting from Baronne Development and the other defendants from that time period for which it was a member, pursuant to La. R.S. 12:1319. Damages were not sought as part of this initial petition.

         On January 24, 2014, Baronne Development, KFLP, and Kailas Properties filed a peremptory exception of no right of action pursuant to La. C.C.P. art. 927(A)(6), wherein they argued that under the statutes governing Louisiana limited liability companies, the sale agreement between the parties, and the principles of subrogation, Khoobehi Properties no longer has a right to an accounting of the business of Baronne Development. After a hearing on the matter, the district court issued a judgment on February 19, 2014, sustaining the defendants' exception of no right of action. Subsequently, on March 7, 2014, Khoobehi Properties filed a motion for a new trial requesting the right to amend the petition to state a right of action as allowed for pursuant to La. C.C.P. art. 934. On April 15, 2014, the district court granted the motion for new trial for the purpose of allowing Khoobehi Properties leave to amend its petition to address the previously urged peremptory exception of no right of action.

         On April 28, 2014, Khoobehi Properties filed its first amended, supplemental, and restated petition wherein it restated the allegations against the three corporate defendants, repeated its request for an accounting from Baronne Development, and made new allegations under theories of breach of contract, breach of fiduciary duty, negligent misrepresentation, alter ego/single business enterprise, conspiracy, and fraud. In its prayer for relief in this amended petition, Khoobehi Properties also requested damages and any other equitable relief, in addition to its request for an accounting. In response to this petition, the corporate defendants filed various exceptions: Baronne Development filed a peremptory exception of no cause of action, contending that Khoobehi Properties had failed to allege facts sufficient under any theory to constitute a cause of action against Baronne Development; KFLP filed a peremptory exception of peremption in which it sought to bar all of Khoobehi Properties' claims that arose prior to November 25, 2010, which was three years prior to the time of filing of the suit; Kailas Properties filed a dilatory exception of discussion in which it argued that Khoobehi Properties should be required to enforce its rights against KFLP before pursuing Kailas Properties because, as a partner in KFLP, Kailas Properties is only secondarily liable for KFLP's debts. On July 25, 2014, after a hearing on these exceptions (as well as some discovery related motions), the district court issued a judgment sustaining all of the defendants' exceptions.

         On August 8, 2014, Khoobehi Properties filed a motion for new trial from the July 25, 2014 judgment with respect to Baronne Development's exception of no cause of action and Kailas Properties' exception of discussion, but not with respect to KFLP's exception of peremption.[3] Khoobehi Properties also filed a second amended, supplemental, and restated petition wherein it named as additional defendants Mr. Kailas, individually, and 210 Baronne, which was organized in September 2013 and is the current owner of the 210 Baronne Street property. This amended petition also included additional allegations that, on or prior to June 17, 2013, Mr. Kailas, in his personal capacity and as an agent for Baronne Development, KFLP, and Kailas Properties, made misstatements and failed to disclose material facts to Dr. Khoobehi about the plans and intentions regarding the development, exchange, leasing, marketing, transfer, and use of the 210 Baronne Street property. Khoobehi Properties alleged that Mr. Kailas took these actions in order to wrongfully induce Khoobehi Properties to sell its interest for substantially less than it would have sold for had the misrepresentations not been made and the material information disclosed, and to obtain an unjust advantage over, and to cause damage and inconvenience to, Khoobehi Properties.[4]

         On October 8, 2014, KFLP and Mr. Kailas filed an answer to Khoobehi Properties' second amended and supplemental petition in which they denied that material information was withheld from, or misrepresentations were made to, Dr. Khoobehi. In their answer, KFLP and Mr. Kailas also stated as affirmative defenses that, inter alia, Khoobehi Properties failed to state a claim against the defendants upon which relief can be granted, that pursuant to La. R.S. 12:1502, Khoobehi Properties' claims pre-dating November 25, 2010, are perempted, and that Khoobehi Properties has no cause of action for any acts allegedly occurring after June 17, 2013, the date of the sale. Additionally, 210 Baronne filed a peremptory exception of no cause of action, and Kailas Properties filed another dilatory exception of discussion.

         The district court rendered judgment on November 10, 2014, denying Khoobehi Properties' motion for new trial on the issues of Baronne Development's peremptory exception of no right of action and Kailas Properties' dilatory exception of discussion.[5] Khoobehi Properties appealed the November 10 judgment; however, this Court dismissed the appeal on the grounds that the judgment, which did not address Khoobehi Properties' claim for an accounting by Baronne Development, was an interlocutory judgment rather than a final appealable judgment. Khoobehi Props., L.L.C., supra.

         In response to this Court's dismissal of its appeal, Khoobehi Properties filed an ex parte motion in the district court seeking a ruling as to all of its causes of action against Baronne Development, and entry of a final judgment dismissing all of its causes of action against Baronne Development, with prejudice, reserving unto Khoobehi Properties the right to appeal that judgment. Additionally, various parties filed discovery related motions: Khoobehi Properties filed a motion to compel complete responses to interrogatories, requests for production and admissions, and a motion for award of reasonable expenses, directed to all defendants; in response, Mr. Kailas filed a motion to quash Khoobehi Properties' notice of deposition for production of records held by a third party accountant and a motion to compel discovery responses from Khoobehi Properties for questions relating to the fee agreement between Khoobehi Properties and its counsel.

         At a hearing on April 12, 2016, the district court considered the outstanding exceptions filed in the defendants' answer, the motion for an entry of a final judgment, and the various discovery motions, and on May 13, 2016, entered a ruling wherein it: granted Kailas Properties' dilatory exception of discussion; granted 210 Baronne's peremptory exception of no cause of action and dismissed 210 Baronne from the case with prejudice at Khoobehi Properties' cost; granted Khoobehi Properties' ex parte motion for entry of a final judgment, thereby dismissing Baronne Development from the case with prejudice for failure to state any cause of action or right of action against Baronne Development; denied Khoobehi Properties' motion to compel responses to interrogatories, requests for production and admission, and for an award of reasonable expenses; denied Mr. Kailas's motion to compel discovery responses; and denied Mr. Kailas's motion to quash.

         Khoobehi Properties timely filed an appeal of the May 13, 2016 judgment. The parties also timely sought supervisory review of the district court's interlocutory rulings on the discovery motions, and these writs have been consolidated with Khoobehi Properties' appeal. In its appeal, Khoobehi Properties raises the following assignments of error:

1. The district court erred by determining that Khoobehi Properties lacks standing to request an accounting from Baronne Development under La. R.S. 12:1319;
2. The district court erred in sustaining Baronne Development's exception of no cause of action and dismissing Baronne Development;
3. The district court erred in sustaining 210 Baronne's exception of no cause of action to the second amended petition and dismissing 210 Baronne;
4. The district court erred in sustaining KFLP's exception of peremption;
5. The district court erred in sustaining Kailas Properties' exception of discussion; and
6. The district court abused its discretion or clearly erred by denying ...

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