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Dooley v. Branch Banking & Trust Co.

Court of Appeals of Louisiana, Third Circuit

October 25, 2017

DAVID M. DOOLEY, SR., ET AL.
v.
BRANCH BANKING & TRUST CO., ET AL.

         APPEAL FROM THE FIFTEENTH JUDICIAL DISTRICT COURT PARISH OF ACADIA, DOCKET NO. 2016-10436 HONORABLE PATRICK MICHOT, PRESIDING

          Gerald C. deLaunay Oscar E. Reed, Jr. Perrin, Landry, deLaunay ATTORNEY FOR PLAINTIFFS/APPELLANTS David M. Dooley, Sr. and Gerald deLaunay

          W. Michael Adams Robert W. Johnson Timothy R. Wynn Blanchard, Walker, O'Quin & Roberts, APLC ATTORNEY FOR DEFENDANTS/APPELLEES Branch Banking & Trust Co., Hallwood Financial Limited, Hallwood Modular Buildings, LLC and Frederick J. Gossen, Jr.

          Michael J. Remondet Jill B. Wade Jeansonne & Remondet ATTORNEY FOR DEFENDANTS/APPELLEES: Branch Banking & Trust Co., Hallwood Financial Limited, Hallwood Modular Buildings, LLC and Frederick J. Gossen, Jr.

          Court composed of Sylvia R. Cooks, Shannon J. Gremillion, and Van H. Kyzar, Judges.

          SYLVIA R. COOKS JUDGE

         From 1999 to 2014, MB Industries, L.L.C. (MBI) was in the business of manufacturing and selling blast-resistant buildings. MBI's affiliate, MBI Leasing, L.L.C. (MBI Leasing), leased blast-resistant buildings. Up until October of 2011, Frederick Gossen, Jr., served as the president of both MBI and MBI Leasing. David M. Dooley, Sr., served as the CEO of both companies. Gossen and Dooley also served as the companies' managers and they both owned equity in the companies either directly or through their family trusts and holding companies.

         MBI and MBI Leasing suffered significant financial losses in 2010 and 2011, and were in default on a $17 million debt to Capital One Bank. Dooley negotiated a deal with Hallwood Financial Limited (HFL) whereby HFL agreed to purchase an eighty percent (80%) interest in MBI Leasing, L.L.C. in a contract styled the Membership Interest Purchase Agreement. The parties agreed that Dooley would retain a nine percent (9%) membership interest in MBI Leasing. Further, HFL agreed to help refinance the debts of MBI and MBI Leasing. To assist with the debt owed to Capital One, HFL arranged for Branch Banking & Trust Company (BB&T) to provide a $20 million line of credit to MBI Leasing.

         At a closing in October 2011, the parties signed various closing documents, including a MBI Leasing Operation Agreement, a Pledge Agreement, and a Carmel Companies Realignment Agreement (Realignment Agreement). Pursuant to the Realignment Agreement, Dooley sold all of his interest, with the exception of the aforementioned nine percent (9%) interest in MBI Leasing, in a group of companies known as the Carmel Companies. In the Pledge Agreement, MBI Leasing's equity owners pledged to BB&T their membership interests in MBI Leasing as security for the line of credit which BB&T had provided. Thus, Dooley's nine percent interest in MBI Leasing was pledged to BB&T. As consideration, Dooley received a $2.75 million promissory note from MBI, $250, 000.00 in cash, and salary and benefits for Dooley's wife, son and son-in-law.

         On February 15, 2013, Dooley filed a "Suit on Promissory Note" in the Fifteenth Judicial District Court for Acadia Parish, seeking payment from MBI Leasing, which has now become Hallwood Modular Buildings, LLC (HMB), on the $2.75 million promissory note. Nearly one year from the filing of that suit (hereafter referred to as the "First State Court Action"), Dooley amended the petition adding numerous defendants, including Gossen and HFL. In the amended petition Dooley claimed the agreements entered into should be rescinded because he and his family were not paid pursuant to the Realignment Agreement. Dooley also asserted his consent to the Realignment Agreement was vitiated due to fraud or error. Specifically, it was asserted that after Dooley signed the Realignment Agreement, various defendants secretly altered the language in the agreement such that Dooley's claims under the promissory note were made subordinate to other indebtedness owed by MBI Leasing. A second amending petition was filed adding Dooley's family members and family trusts as plaintiffs (hereafter the Dooley plaintiffs).

         On October 2, 2014, MBI Leasing was placed into involuntary bankruptcy in the United States Bankruptcy Court, Western District of Louisiana (hereafter Bankruptcy Court), and the First State Court Action was automatically stayed pursuant to 11 U.S.C. § 362. The Dooley plaintiffs then filed a Motion to Sever their claims against MBI Leasing (now HMB), so they could proceed against the remaining defendants. The Dooley plaintiffs then filed a Motion for Partial Summary Judgment against all defendants (except MBI Leasing), seeking rescission of the Realignment Agreement. In response, HFL and HMB filed a motion to strike both the Motion to Sever and the Motion for Partial Summary Judgment. They also requested the court "stay the matter pending the outcome of the bankruptcy proceedings of [MBI Leasing]."

         On April 28, 2015, the trial court rendered judgment granting HFL's and HMB's motion to strike the Dooley plaintiffs' motions. The court also specifically held the "matter is stayed until further notice from the Bankruptcy Court." This court, finding "no error in the trial court's ruling, " denied the Dooley plaintiffs' writ application. David M. Dooley, Sr. v. MB Industries, LLC, 15-460 (La.App. 3 Cir. 2015).

         Meanwhile in Bankruptcy Court, on January 21, 2015, the Dooley plaintiffs filed a Motion for Relief from Stay in the MBI Leasing bankruptcy case, requesting the automatic stay be lifted to allow them to proceed with the state district court suit. They maintained this would allow them to "prosecute claims pending in state court in which [MBI] is a party and obtain relief." On March 10, 2015, the Bankruptcy Court denied the Motion for Relief from Stay. On that same day, the Dooley plaintiffs filed a "Complaint to Rescind and Dissolve Contract, and for Damages" in Bankruptcy Court. This commenced the currently pending adversary proceeding, David M. Dooley, Sr., et al. v. MB Industries, L.L.C., et al., in the United States Bankruptcy Court, Western District of Louisiana. On April 8, 2015, the Dooley plaintiffs also filed four Proofs of Claim covering the claims for damages and rescission.

         Several months later, a Writ of Mandamus and/or Writ of Quo Warranto was filed by some of the Dooley plaintiffs in the Fifteenth Judicial District Court. In this state court action, a determination was sought as to whether the transaction had been "extrajudicially" rescinded. The Bankruptcy Court enjoined the state court action, finding it was an "attempt to impermissibly collaterally attack ...


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