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Andersen v. Succession of Bergeron

Court of Appeals of Louisiana, First Circuit

April 12, 2017

MARY BETH ANDERSEN[1], INDIVIDUALLY AND ON BEHALF OF LONE OAK FARM, L.L.C.
v.
SUCCESSION OF RUFFIN LEON BERGERON, JR. AND IN HIS CAPACITY AS SECRETARY OF STATE, THE STATE OF LOUISIANA[2]

         Appealed from the 18th Judicial District Court in and for the Parish of Pointe Coupee, Louisiana Trial Court No. 45, 850 Honorable J. Robin Free, Judge.

          JAMES C. DEWEY NEW ROADS, LA ATTORNEY FOR PLAINTIFFS-APPELLANTS MARY BETH ANDERSEN, INDIVIDUALLY, AND ON BEHALF OF LONE OAK FARM, L.L.C. AND THIRD-PARTY DEFENDANT-DEFENDANT IN RECONVENTION GREGORY BERGERON

          SHARON S. WHITLOW BATON ROUGE, LA ATTORNEY FOR INTERVENORS-APPELLEES MICHAEL K. BERGERON, PAUL D. BERGERON, AND LEAH B. JONES

          C. JEROME D'AQUILA NEW ROADS, LA ATTORNEY FOR INTERVENOR-APPELLEE LEAH BERGERON JONES

          STEPHEN P. JEWELL NEW ROADS, LA ATTORNEY FOR INTERVENOR-APPELLEE MICHAEL BERGERON.

          BEFORE: PETTIGREW AND McDONALD, JJ., AND CALLOWAY, [3] J. Pro Tern.

          PETTIGREW, J.

         This matter involves a family-owned limited liability company (LLC) that was formed in 2002, and later dissolved in 2009, by Ruffin Leon Bergeron, Jr. (RLB), the initial managing member. Over four years after the dissolution, the plaintiff, Mary Beth Andersen (Ms. Andersen), one of RLB's six children and a member of the LLC, filed a petition for declaratory judgment seeking to have the dissolution of the LLC declared null and void; to order that certain property that had been transferred from the LLC to RLB, allegedly in violation of the LLC operating agreement, be transferred back to the LLC; and to order that the LLC be reinstated. However, during the trial on the matter, the district court granted a motion for involuntary dismissal of Ms. Andersen's claims and signed a judgment to that effect on October 13, 2015. Ms. Andersen, as plaintiff, and Gregory Bergeron, as third-party defendant/defendant in reconvention, jointly appeal that judgment.

         FACTUAL BACKGROUND

         On November 12, 2002, RLB formed Lone Oak Farm, LLC, a company he envisioned for himself and his six children - Ms. Andersen, Gregory G. Bergeron, Paul D. Bergeron, Leah Ann Bergeron Jones, Michael Bergeron, and Amy Claire Bergeron Lindsly. One of RLB's children, Michael, opted out of participation in the business. On November 14, 2002, RLB executed the Articles of Organization of Lone Oak Farm, LLC, designating himself as the initial managing member. On that same date, RLB, together with five of the children (excluding Michael) and a son-in-law, James A. Andersen, executed the Operating Agreement for the company.[4]

         By two separate acts of transfer, executed on October 31, 2003, and on March 10, 2005, RLB contributed certain immovable and movable property that he owned to the LLC. These acts were signed by RLB in his individual capacity as the transferor and in his representative capacity as the manager of the LLC. No other capital contributions to the company were made.

         Sometime in 2009, RLB approached the members of the LLC to discuss adding his son, Michael, as a member of the company, or alternatively, creating a new limited liability company that would include Michael. When some members of the company expressed disagreement and refused to allow Michael to be added as a member, RLB told the members that he was going to dissolve the company. By two acts of transfer executed by RLB alone, in his individual capacity and in his representative capacity as the managing member of the LLC, on November 9, 2009, and on December 11, 2009, the immovable and movable property that had been transferred to the LLC by RLB were transferred back to RLB by the LLC. The November 9, 2009 transfer of immovable property contained specific property descriptions followed by a provision stating that the described property was "the same property" acquired by the LLC from RLB as his capital contributions on October 31, 2003, and March 10, 2005. That act also provided that it was made without any consideration and was accepted by RLB as a charge against his capital interest in the company.

         Also, on December 11, 2009, RLB, acting under the authority of La. R.S. 12:1335.1, executed an Affidavit of Dissolution of Lone Oak Farm, LLC, representing that he, and no one else, held all membership interests in the company, and that the company was no longer doing business and had no debts. RLB sought to have the LLC dissolved by execution of the affidavit. The Secretary of State issued a Certificate of Dissolution, which was filed and recorded in the public records on December 18, 2009.

         Approximately two and a half years later, on April 26, 2012, the notary public before whom the November 9, 2009 transfer of immovable property by the LLC to RLB was passed, Ralph B. Chustz (Mr. Chustz), executed a notarial act of correction pursuant to La. R.S. 35:2.1, stating that he made a clerical error in that act of transfer. He attested that the purpose and intention of the November 9, 2009 transfer was for Lone Oak Farm, LLC to convey back to RLB all of the immovable property it owned, but through a clerical error made by him, the act erroneously contained a section entitled "Less and Except" under which two lots of property that were intended to be transferred to RLB were erroneously listed, appearing to be excepted from the transfer. The act of correction changed the description of the property conveyed in 2009 from 15 acres to approximately 160 acres. Shortly thereafter, RLB died on July 4, 2012.

         PROCEDURAL BACKGROUND

         Almost two years after RLB's death, on April 11, 2014, Ms. Andersen filed the aforementioned petition for declaratory judgment in which she sought to have the dissolution declared invalid and the LLC reinstated, the 2009 transfers of property declared invalid and the property returned to the LLC, and the 2012 act of correction by Mr. Chustz declared null. The petition named as defendants the "Succession of Ruffin Leon Bergeron, Jr., " through its independent executor, Gregory G. Bergeron, "and In His Capacity as Secretary of State, the State of Louisiana." Gregory G. Bergeron, in his capacity as executor of the defendant, Succession of RLB, filed an answer to the petition. We note that service was requested on both, Gregory G. Bergeron, and Tom Schedler, in his capacity as Secretary of State, thus clarifying the intended name of the defendant in the petition.[5] The Secretary of State did not appear throughout the litigation and, given the ultimate findings by the district court, is not involved or implicated in the final judgment.

         Although the Succession of RLB was also named as a defendant, there are, likewise, no allegations directed at the succession. The record reflects that at the time this litigation began, the succession of RLB was under judicial administration in the 18thJudicial District Court. RLB's last will and testament was filed in that suit record by Mr. Chustz, who prepared and notarized the document. After certain individual bequests, the testament bequeaths RLB's residual estate to all six of his children, to be shared equally. At that time, RLB's residual estate included the property that is the subject of the act of transfer that the plaintiff seeks to invalidate. That testament named Gregory Bergeron as executor, and he was appointed as such in the succession proceedings. The parties indicate that a motion was filed in the succession proceeding to remove Gregory Bergeron as executor and that he resigned as executor on April 8, 2014. (Ms. Andersen's petition naming the succession as a defendant in this matter was filed three days later, on April 11, 2014.)

         A petition for intervention opposing Ms. Andersen's demands was filed on behalf of the true defendants implicated by Ms. Andersen's allegations, "intervenors, " Paul D. Bergeron and Leah Bergeron Jones (members of the LLC), and Michael Bergeron, the child of RLB who had declined participation in the company. The intervenors also filed an answer including affirmative defenses and a reconventional demand.

         As plaintiffs in reconvention, the intervenors asserted the act of correction was valid and that RLB had authority to transfer property from the LLC back to himself and to dissolve the company. Further, in the alternative, should the court find RLB acted without authority, the intervenors alleged that RLB's actions were approved and/or ratified by a majority of the members of the LLC, thus, validating the dissolution and RLB's actions in transferring property from the company back to himself.[6] Finally, in the alternative, should the court find the dissolution was invalid, the intervenors sought to have the LLC judicially dissolved. At the end of the pleading, intervenors assumed the role of third-party plaintiffs, naming as third-party defendants, Gregory Bergeron, individually and in his capacity as executor of the estate of RLB, and Amy Claire Bergeron Lindsly, and reasserted all of the claims alleged in the reconventional demand against them as well. Ms. Andersen and Gregory Bergeron filed a joint pleading in answer and opposition to the petition of intervention, the reconventional demand, and the third-party demand.[7]

         On April 10, 2015, a trial of the matter began. The plaintiff presented the testimony of Ms. Andersen and Gregory Bergeron, the parties jointly introduced several exhibits, and plaintiff rested. The defendants/intervenors then moved for a directed verdict.[8] A discussion was held at the bench, and a decision was reached to allow the defendants to put on a couple of witnesses, so that the district court, in ruling on the motion, would have sufficient evidence from which to resolve all of the issues presented by plaintiff's case: whether RLB had the authority to execute the November 9, 2009 act of transfer; whether the notarial act of correction executed by Mr. Chustz was valid and effective; and whether the dissolution of the LLC was invalid such that it should be reinstated.[9]

         The defendants/intervenors elicited the testimony of Mr. Chustz, who had served as RLB's attorney since 2004, and was the attorney who drafted and notarized most of the documents relevant to the issues raised in this matter, and executed the notarial act of correction at issue. The defendants/intervenors also presented the testimony of James A. Laurent, Jr., who took office as the tax assessor for Pointe Coupee Parish in January 2010, with regard to tax notices sent on some of the property at issue. After the defendants/intervenors re-urged their motion for directed verdict, the trial was recessed for briefing, and the district court took the motion for directed verdict under advisement.

         ACTION BY THE DISTRICT COURT

         On September 15, 2015, the trial resumed for argument and a ruling from the court on the defendants/intervenors' motion for directed verdict. After hearing arguments from all parties, the district court found that the clear language of the Articles of Organization and, apparently, the operating agreement granted RLB, as the initial sole manager of the LLC, the authority to act unilaterally on behalf of the company. Therefore, RLB had the authority to transfer immovable property on behalf of the LLC without obtaining the consent of any other member. As such, the district court held the November 9, 2009 act of transfer was valid. Further, the district court found the error made in the act of transfer, which was later corrected by the act of correction executed by Mr. Chustz, was a clerical error and that the act of correction was the proper and valid channel by which to correct such an error. Finally, the district court, having found that the transfer of all immovable property out of the LLC was valid and that the LLC was validly dissolved, declined to reinstate the LLC. The plaintiff, Ms. Andersen, joined by defendant in reconvention, Gregory Bergeron (hereinafter referred to as appellants), appeal that judgment.

         ASSIGNMENTS OF ERROR

         Appellants assign error to all three of the district court's findings: (1) in deciding that RLB had authority to transfer the LLC property to himself without the consent of the LLC membership, when the transfer was violative of the operating agreement and the statutory fiduciary duty provisions; (2) in determining the act of transfer contained a clerical error and that the notarial act of correction was valid; and (3) in refusing to reinstate the LLC, which was improperly dissolved.

         STANDARD OF REVIEW

         The district court's grant of an involuntary dismissal is subject to the manifest error standard of review. Accordingly, in order to reverse, we must find, after reviewing the record, that there is no factual basis for its finding or that the finding is clearly wrong or manifestly erroneous. The issue is not whether the trial court was right or wrong, but whether its conclusion was reasonable. Broussard v. Voorhies, 2006-2306 (La.App. 1 Cir. 9/19/07), 970 So.2d 1038, 1041-42, writ denied, 2007-2052 (La. 12/14/07), 970 So.2d 535.

          RLB'S AUTHORITY TO ACT ON BEHALF OF THE LLC

         RLB acted alone in executing the Articles of Organization of Lone Oak Farm, LLC on November 14, 2002. In those Articles, RLB designated himself as the "initial Managing Member of the Company" and provided that all "[p]ersons dealing with the Company may rely upon a certificate issued by [RLB] to establish the membership status of any member, the authenticity of any records of the Company, and/or the authority of any person designated to act for the Company, including but not limited to the authority to take action as specified in [La. R.S. 12:1318(B)]." That same provision authorized third parties to conclusively rely on the authority given to RLB. Notably, these Articles contain the following statement: "The said Ruffin L. Bergeron, Jr. is authorized to sell, partition, donate, encumber, mortgage, lease[, ] or otherwise deal with immovable property of the company without further authorization from the members of the company." (Emphasis added.) RLB also executed the "Initial Report" of the company, again, designating himself as the first managing member and the company's registered agent. This report further listed ...


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