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Consolidated Grain & Barge, Inc. v. Anny

United States District Court, E.D. Louisiana

June 14, 2018

CONSOLIDATED GRAIN & BARGE, INC.
v.
RANDY ANNY, ET AL.

          SECTION "B"(1)

          ORDER AND REASONS

         The instant proceeding regarding satisfaction of American River Transportation Company's (ARTCO) Judgment (Rec. Doc. 376) against Randy Anny and Barbara Falgoust is the most recent, and hopefully the last, chapter in this long-running dispute over the use of land along the Mississippi River.

         For the reasons discussed below, IT IS ORDERED that Randy Anny and Barbara Falgoust pay ARTCO eight thousand dollars ($8, 000.00) as reasonable attorney's fees, plus the costs of the judgment debtor examination, as financial sanctions for failure to comply with the Court's Order (Rec. Docs. 413, 409-3) that they produce documents for the judgment debtor examination.

         IT IS FURTHER ORDERED that, if the original Judgment (Rec. Doc. 376) and award of sanctions are not satisfied by July 15, 2018, payments owed by Consolidated Grain & Barge (CGB) to Randy Anny, Anny's Inc., and Ainey's, LLC under the Work Agreement (see Rec. Doc. 502-1) shall be paid to ARTCO until the Judgment (Rec. Doc. 376) and award of sanctions are satisfied.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         In November 2017, ARTCO initiated a garnishment proceeding to satisfy the outstanding portion of the Judgment against Randy Anny and Barbara Falgoust. See Rec. Docs. 468-471. At that time, Randy Anny and Barbara Falgoust owed ARTCO $264, 926.65 (inclusive of costs and interest). See Rec. Doc. 468-4. One garnishee, CGB, responded affirmatively to ARTCO's garnishment interrogatories, indicating that it possessed money belonging to Randy Anny. See Rec. Doc. 502 at 1-4. Specifically, CGB stated that:

[A]s of January 1, 2018, CGB owed (a) “Anny” (a defined term in the Work Agreement meaning, collectively, “Randy Anny, Ainey's LLC, Anny's Inc., or any entity with which each has any affiliation”) (i) $100, 000.00 pursuant to the Work Agreement, and (ii) $2, 482.00 pursuant to that part of the Work Agreement requiring CGB to pay “Anny” $2.00 per barge per day for barges fleeted in specified “additional fleeting areas, ” and (b) Randy Anny $516.00 for his undivided 25% interest in the leased property described in the Lease referred to in and attached to CGB's Original Response (Rec. Doc. 494).

Id. at 4. But CGB's interrogatory response also stated that Anny's Inc. and Ainey's, LLC claim ownership of the $100, 000.00 annual payment and the $2, 482.00 barge fleeting payment. See Id. at 3-4; Rec. Doc. 502-6. ARTCO argues that these competing claims to the garnished funds are invalid because Anny's Inc. and Ainey's, LLC are alter egos of Randy Anny. See Rec. Doc. 503. Therefore, the Court ordered CGB to (1) pay to ARTCO the $516.00 owed to Randy Anny individually and (2) deposit the $102, 482.00 of contested funds into the registry of the Court. See Rec. Doc. 506 at 3.

         The Court also took steps to resolve the competing claims to the garnished funds that were deposited into the registry of the Court. See Id. at 3-4. Specifically, the Court ordered Randy Anny and Barbara Falgoust to “substantiate claims that they are distinct from Ainey's, LLC and Anny's Inc. using sworn documentary evidence, including evidence (1) of who owns Ainey's, LLC and Anny's Inc. and (2) that Ainey's, LLC and Anny's Inc. truly in fact and law fully and actively observe corporate formalities.” Id. The Court also allowed Anny's Inc. and Ainey's, LLC fourteen days “to duly file using qualified counsel a motion to intervene with sworn documentary evidence of their ownership, control, and related claim over funds at issue.” Id. at 4.

         Neither Randy Anny and Barbara Falgoust, nor Anny's Inc. and Ainey's, LLC, fully complied. Randy Anny and Barbara Falgoust filed a declaration with two exhibits, a far cry from the extensive list of documents that have been due to ARTCO since September 2016.[1] The declaration states that Anny's Inc. and Ainey's, LLC are validly formed under Louisiana law and observe all corporate formalities. See Rec. Doc. 508. The exhibits are the articles of incorporation for Anny's Inc. (Rec. Doc. 508-1) and a stock transfer agreement dated March 2015 (Rec. Doc. 508-2) that purports to transfer all shares in Anny's Inc. from Randy Anny to his son, John Anny.

         Anny's Inc. and Ainey's, LLC filed a motion to intervene to assert their claims to the garnished funds. See Rec. Doc. 507. They attached a declaration and various real estate records as exhibits. See Rec. Docs. 507-1; 507-5; 507-6. The declaration is from Randy Anny and describes how the annual rent payment from CGB is allegedly divided between Anny's Inc. and Ainey's, LLC. See Rec. Doc. 507-1. The real estate records are not explained, but purport to document how Anny's Inc. and Ainey's, LLC acquired control of the land along the Mississippi River that CGB currently pays rent to access.[2] See Rec. Docs. 507-5; 507-6.

         The Court granted the motion to intervene and set a hearing on the question of whether Anny's Inc. and Ainey's, LLC are alter egos of Randy Anny. See Rec. Doc. 511. The Court also ordered ARTCO, Randy Anny, Anny's Inc., and Ainey's, LLC to file memoranda discussing (1) the alter ego question and (2) whether Randy Anny, Barbara Falgoust, Anny's Inc., and Ainey's, LLC should be sanctioned for failing to provide the documentary evidence necessary to properly evaluate the alter ego question. See id.

         ARTCO's memorandum argues that sanctions should be imposed and that Anny's Inc. and Ainey's, LLC are alter egos of Randy Anny. See Rec. Doc. 513. ARTCO argues that the appropriate sanction for the discovery violations is to “find[] [that] all funds payable by CGB under the Work Agreement belong to Randy Anny and that Anny's Inc. and Ainey's, LLC are the alter egos of Anny and Falgoust.” Id. at 6. ARTCO further argues that “there has been a complete failure to show any legitimate corporate existence for Anny's Inc. and Ainey's, LLC separate and apart from Randy Anny and Barbara Falgoust.” Id. at 7.

         The memorandum filed by Anny's Inc. and Ainey's, LLC addresses the issue of sanctions and the alter ego question. See Rec. Doc. 514. It argues that sanctions should not be imposed against Anny's Inc. and Ainey's, LLC because (1) counsel did not understand what type of documentary evidence was supposed to be attached to the motion to intervene and (2) counsel was “unable to obtain sworn documentary evidence within the relatively brief time established by the Court[, ]” in part because Anny's Inc. and Ainey's, LLC “lack comprehensive document retention policies . . . .” Id. at 2-5. Anny's Inc. and Ainey's, LLC also argue that they are not alter egos of Randy Anny because “[s]eparate bank accounts and financial records were maintained for each of the companies and Anny[, ]” and “ARTCO cannot establish co-mingling of funds or a disregard for statutory formalities for organization, or transacting business.” Id. at 6-7. No. bank, financial, or management records were attached to the memorandum.

         Randy Anny's memorandum largely relies on his previously-filed declaration (Rec. Doc. 508) and adopts the memorandum filed by Anny's Inc. and Ainey's, LLC. See Rec. Doc. 516. None of the documents previously requested as part of the judgment debtor examination were attached to the motion, nor does Randy Anny meaningfully discuss the propriety of imposing sanctions for his refusal to produce said documents. See id.

         On May 16, 2018, the Court held a hearing at which all parties were afforded the opportunity to introduce exhibits substantiating their various claims to the garnished funds and explain any deficiencies in the documents produced for the judgment debtor examination. See Rec. Doc. 519. The next day, the parties (including Anny's Inc. and Ainey's, LLC) filed a Joint Status Report stating their “agree[ment] that the [garnished] funds . . . held in the registry of the Court should be immediately disbursed to ARTCO.” Rec. Doc. 521. In light of the parties' agreement, the Court ordered that the $102, 482.00 of garnished funds be paid to ARTCO and that the parties attend a settlement conference with the Magistrate Judge regarding satisfaction of the remaining part of the Judgment. See Rec. Docs. 522, 525. That settlement conference was unsuccessful so the parties filed a Joint Memorandum (Rec. Doc. 529) setting out ...


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