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LLC v. R4 MCNO Acquisition, LLC

Court of Appeals of Louisiana, Fourth Circuit

November 14, 2018

CCNO MCDONOUGH 16, LLC
v.
R4 MCNO ACQUISITION, LLC; RIVERSIDE DRIVE PARTNERS, LLC; AND JACK T. HAMMER, ET AL

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2016-05291, DIVISION "B-1" Honorable Rachael Johnson

          James M. Garner John T. Balhoff, II Emily E. Ross Melissa R. Harris SHER GARNER CAHILL RICHTER KLEIN & HILBERT, COUNSEL FOR PLAINTIFFS/APPELLEES

          Laura F. Ashley Pauline Hardin JONES WALKER WAECHTER POITEVENT CARRERE & DENEGRE, LLP COUNSEL FOR THIRD PARTY PLANTIFF/APPELLEES

          Stephen H. Kupperman Stephen R. Klaffky BARRASSO USDIN KUPPERMAN FREEMAN & SARVER, LLC COUNSEL FOR THIRD PARTY DEFENDANT/APPELLANT

          Court composed of Judge Terri F. Love, Judge Edwin A. Lombard, Judge Tiffany G. Chase

          EDWIN A. LOMBARD JUDGE

         The defendant, Riverside Drive Partners, LLC ("Riverside") appeals the district court judgment denying its motion for a new trial related to its order of January 8, 2018, dismissing all pending claims against three parties in this multiparty litigation: (1) CCNO McDonough 16, LLC ("CCNO"); (2) R4 MCNO Acquisition LLC ("R4"); and (3) Joseph A. Stebbins, II. After review of the record in light of the applicable law and arguments of the parties, the district court judgment is affirmed.

         Relevant Facts and Procedural History

         This litigation arises out of a dispute among partners in a real estate development related to the conversion of an existing historic building into an affordable housing complex. Pursuant to the Operating Agreement signed on September 30, 2013, McDonough 16, LLC, was formed to acquire, rehabilitate, and ultimately lease and operate a multi-family apartment project consisting of the historic building and a new construction building. In turn, McDonough 16, LLC had two members, also limited liability entities: (1) the "Managing Member," CCNO and (2), the "Investor Member," R4, a Delaware limited liability company with its principal place of business in New York. Likewise, CCNO had two limited liability partnerships as members: (1) CCNO Partners 2, LLC, which was formed by two members who were residents of and domiciled in Orleans Parish: Mr. Stebbins and Michael Mattax; and (2) the appellant, Riverside, a Florida limited liability company with its principal place of business in Florida whose sole member, Jack Hammer, is a resident of and domiciled in Georgia. Iberia Bank was lender for the project.[1]

         Work on the project proceeded, but on May 25, 2016, a petition for a temporary restraining order and preliminary and permanent injunctive relief was filed by CCNO (the managing member of the project) against R4[2] (the investor member of the project) to prohibit its removal as manager of the project. On May 24, 2017, R4 filed an amended answer and a reconventional demand against CCNO, a cross-claim against Riverside, and a third-party claim against CCNO Development, LLC ("CCNO Development").

         On October 10, 2017, the parties involved in the litigation (CCNO, R4, Mr. Stebbins, and, initially, Mr. Hammer on behalf of Riverside) converged for a mediation conducted by John Perry. Mr. Hammer subsequently left and a settlement agreement was executed between CCNO, CCNO Development, R4, and Mr. Stebbins. Based on this settlement agreement, an ex parte motion to dismiss with prejudice was filed by the settling parties, informing the district court that the claims between them had been amicably resolved and seeking dismissal of the lawsuit while reserving "any and all claims and rights" any of the settling parties "may" have against Riverside. Accordingly, on January 8, 2018, the district court signed an order dismissing with prejudice the claims between CCNO, R4, CCNO Development, and Mr. Stebbins, but reserving any and all claims and rights the settling parties may have against Riverside.

         On January 16, 2018, Riverside filed a "Motion for a New Trial on the Ex Parte Partial Motion to Dismiss with Prejudice," arguing that CCNO lacked the authority to enter into any settlement without Riverside's consent under the terms of the CCNO operating agreement.[3] After a hearing, the district court denied the motion on March 29, 2018. This devolutive appeal follows.

         Applicable Law

         La. Code Civ. Proc. art.1971 provides that "[a] new trial may be granted, upon contradictory motion of any party . . . to all or any of the parties and on all or part of the issues, or for reargument only." Peremptory grounds for a new trial include a judgment clearly contrary to the law and the evidence, newly discovered evidence, or jury improprieties. La. Code Civ. Proc. art. 1972. The district court has the discretionary authority to grant a new trial "in ...


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