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Henry v. Henry

Court of Appeals of Louisiana, Fourth Circuit

December 19, 2018


          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2011-01516, DIVISION "K" Honorable Bernadette D'Souza, Judge



          Court composed of Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins, Judge Regina Bartholomew-Woods

          Rosemary Ledet Judge

         This is a community property partition case. The parties are Troy Henry, the appellant, and Marcia Henry, the appellee. The narrow issue is whether a community-owned corporation is responsible for the debts of its subsidiary, absent an express assumption or guaranty.


         The parties married in 1971. During the marriage, the community acquired a 100% interest in Henry Consulting, LLC ("Henry Consulting").[1] After the parties divorced in February 2011, but before the partition of the community, Henry Consulting acquired a 50% interest in Sterling Fresh Foods, LLC ("Sterling").[2]

         In the partition proceeding, the parties agreed, by consent judgment, to the court's appointment of Chaffe & Associates, Inc. ("Chaffe") to value their interest in Henry Consulting.[3] The parties agreed that they would use Chaffe's valuation for purposes of partitioning the community property and that Chaffe would be the only expert used to value Henry Consulting.

         Thereafter, the trial court, with the parties' consent, appointed a special master, who conducted the trial on the valuation of the parties' interest in Henry Consulting. At trial, the special master accepted Vanessa Claiborne, Chaffe's President and Chief Executive Officer, as a business-valuation expert. Ms. Claiborne valued Henry Consulting, as of the December 31, 2013 valuation date, at $205, 744.[4] Chaffe, however, expressly conditioned that valuation on its assumption that Henry Consulting was a corporate guarantor of certain of Sterling's debts because Troy Henry personally had guaranteed those debts.[5] Thus, in presenting its expert opinion, Chaffe couched its conclusion in the following language: "[v]alue of 100% of the outstanding equity of Henry Consulting, LLC (if Company is responsible for repaying [Sterling's] Debt Obligation)."[6]

         The special master recommended to the trial court that the Sterling debts should be excluded from the valuation of Henry Consulting.[7] The trial court rendered judgment adopting the special master's recommendation.[8] On the parties' previous appeal, this court reversed the trial court's adoption of the special master's recommendation; in all other respects, this court affirmed. Henry v. Henry, 17-0282, p. 8 (La.App. 4 Cir. 10/18/17), __ So.3d__, 2017 WL 4700385 ("Henry I"). The record was insufficient for this court to determine whether the trial court had applied the correct legal standard in evaluating the court-appointed expert's opinion. Accordingly, we remanded this matter to the trial court for further proceedings.

         On remand, the trial court, after supplemental briefing, issued an amended judgment, decreeing as follows:

IT IS ORDERED, ADJUDGED, AND DECREED that the Special Master's Opinion, which excluded the debts of Sterling Foods from the valuation of Henry Consulting, LLC is adopted in its entirety, pursuant to La. R.S. 13:4165(C)(3). In support of this determination, the Court finds that the valuation of Chaffe & Associates, insofar as it included the debts of Sterling Foods in its valuation, is unreasonable and not well-founded in accordance with the law.
This appeal by Troy Henry followed.


         The facts in this case are undisputed.[9] Thus, the question presented- the obligation of a community-owned corporation for the debts of its subsidiary-is purely a legal one, which we review de novo. See Neivens v. Estrada-Belli, 17-0225, p. 4 (La.App. 4 Cir. 9/27/17), 228 So.3d 238, 242-43 (citing Felix v. Safeway Ins. Co., 15-0701, p. 6 (La.App. 4 Cir. 12/16/15), 183 So.3d 627, 632) (observing that "[i]n a case involving no dispute regarding material facts, but only the determination of a legal issue, a reviewing court must apply the de novo standard of review, under which the trial court's legal conclusions are not entitled to deference"); see also Mendoza v. Mendoza, 17-0070, p. 5 (La.App. 4 Cir. 6/6/18), 249 So.3d 67, 71, writ denied, 18-1138 (La. 8/31/18), 251 So.3d 1083 (observing that a trial court's legal determinations in a community property partition action are reviewed under the de novo standard).


         Troy Henry asserts five assignments of error, which we consolidate and rephrase as the following two issues: (i) whether the trial court erred in relying on La. C.C. art. 2356[10] in finding the Sterling debts were not community obligations; and (ii) whether the trial court erred in relying on the lack of an express corporate guarantee in excluding the Sterling debts.

         Relevance of La. C.C. art. 2356

         Troy Henry contends that the trial court implied, by citing La. C.C. art. 2356 in its written reasons for judgment, that the creation of Sterling in November 2011, several months after the termination of the community in February 2011, made that entity and, thus, that entity's debts, a non-community asset. He contends that the trial court erred in failing to recognize the Sterling debts were obligations of the community entity, Henry Consulting, and that the entire community entity, including the entity's liabilities, must be valued at the time of partition. La. R.S. 9:2801(4)(a). Marcia Henry counters that the trial court's ...

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