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Giles v. Oak Lane Memorial Park, LLC

Court of Appeals of Louisiana, First Circuit

November 15, 2019

KAREN SUE GILES
v.
OAK LANE MEMORIAL PARK, LLC & NATIONAL INFORMATION SERVICES, INC.; ET AL

          Appealed from the 23rd Judicial District Court In and for the Parish of Ascension State of Louisiana Case No. 111, 255, The Honorable Jessie M. LeBlanc, Judge Presiding

          Jill L. Craft W. Brett Conrad, Jr. Baton Rouge, Louisiana Counsel for Defendant/Appellant National Information Services, Inc.

          Robert Ryland Percy, III Anna Quintero Skias Gonzales, Louisiana, Counsel for Plaintiff/Appellee Karen Sue Giles

          BEFORE: McDONALD, THERIOT, AND CHUTZ, JJ.

          THERIOT, J.

         In this case involving a contract dispute over the purchase of a family burial garden, a defendant appeals a trial court judgment in favor of the plaintiff, ordering rescission of the contracts and return of the purchase price and awarding damages. For the reasons set forth herein, we amend the judgment and affirm as amended.

         FACTS AND PROCEDURAL HISTORY

         Oak Lane Memorial Park, LLC ("OLMP") formerly owned and operated a perpetual care cemetery[1] on approximately 32.21 acres in Ascension Parish, Louisiana. A large portion of the OLMP property was subject to a multiple indebtedness mortgage in favor of United Community Bancshares, Inc. ("UCB"). This mortgaged portion of the property was not developed for cemetery purposes, but from time to time, OLMP obtained partial releases of the mortgage from UCB in order to develop additional parts of the property for cemetery use.[2]

         In 2010 and 2011, Bobby and Karen Sue Giles contracted with OLMP for the purchase of a family burial plot known as the Giles Family Burial Garden. According to Mrs. Giles, the Giles Family Burial Garden was built because her husband loved the setting of the OLMP property and "wanted to build something special for him and I, his parents, and our kids and grandkids."

         OLMP Manager/Member George Bonfanti testified that the land intended for the Giles Family Burial Garden was subject to the UCB mortgage and had not yet been developed for cemetery purposes. For this reason, when Mr. and Mrs. Giles signed the purchase agreements for the Giles Family Burial Garden, OLMP actually temporarily assigned them a number of burial plots in other developed parts of the cemetery, which were then swapped for the Giles Family Burial Garden once OLMP secured a release of the mortgage on that property[3] and the property had been developed and approved by the Cemetery Board. Mr. Bonfanti testified that as far as he knew, this process would have been explained to Mr. and Mrs. Giles, but he was not a part of the negotiations for the sales with the Gileses and had no firsthand knowledge of what they were told.

         The Gileses executed a number of contracts regarding the Giles Family Burial Garden. On June 9, 2010, the Gileses executed OLMP Purchase Agreement No. 1261 for the purchase of 36 "Developed" Adult Spaces, plus certain materials and construction work. The purchase agreement stated that the specific plots purchased were located in the "Garden of Mount Hope" and referenced an attached addendum. The attached addendum cross-referenced agreement No. 1261 and listed each plot purchased. The total cost of this purchase, including construction materials and labor and the 10% perpetual care fee, was $80, 270.00. The Gileses also executed a separate OLMP document on June 9, 2010, which stated that "Bobby & Karen Sue Giles has [sic] the right to change to the Lake Garden when those spaces become available. This change will be made at no additional charge."

         Subsequently, on April 20, 2011, Mr. and Mrs. Giles executed OLMP Purchase Agreement No. 1571 for 54 "Developed" Adult Spaces. The total cost of this purchase, including the perpetual care fee, was $59, 400.00. Agreement No. 1571 identified the selected plots as "Mount Hope (To Be Traded - To Giles Family Garden)," and attached to the purchase agreement was a document[4] that stated:

Listed below is the description of burial spaces purchased by the Giles family. These spaces are to be traded for the equal amount of spaces[5]in the newly developed Giles Family Burial Garden. These burial spaces are currently located in the Garden of Mount Hope.

         Following a listing of various spaces, the document stated:

These spaces are to be traded for the equal amount of burial spaces in the Giles Family Burial Garden.
This Garden will be 40" [sic] (feet) wide at the top and the bottom and 70' (seventy) long on each side. This linear foot measurement is equal to the 84 burial spaces.

         On June 22, 2011, Mr. Giles executed Purchase Agreement No. 1573 for 28 "Developed" Adult Spaces. The cost of these 28 spaces, including the perpetual care fee, totaled $23, 100.00. This contract did not identify the property selected, either in the contract itself or in an addendum. On that same date, Mr. Giles also executed Purchase Agreement No. 1049 for additional construction materials, for a total price of $5, 600.00.

         Construction of the Giles Family Burial Garden was completed in accordance with the contracts, and Mr. Giles was buried in the Giles Family Burial Garden following his death in March 2013. Shortly after Mr. Giles's death, Mrs. Giles approached OLMP about constructing a second family burial garden (referred to herein as the "Giles Addition"), to be located behind and contiguous to the existing Giles Family Burial Garden. The specifications for the Giles Addition were similar to and were designed to complement the original Giles Family Burial Garden. According to Mrs. Giles, the purpose of the Giles Addition was so that additional family members could be laid to rest near immediate family members who were laid to rest in the Giles Family Burial Garden. She explained that Mr. Giles had a sister who had predeceased him and was buried in Buras, Louisiana. Over the years, flooding had caused the tombs in that area to float up, and Mr. Giles "was really bothered by that, and he wanted to bring her over and put her behind him in that second garden. And ... he wanted to have a place for whatever family needed it."

         In furtherance of this plan for the Giles Addition, on April 10, 2013, Mrs. Giles executed Special Projects Purchase Agreement No. SP-1054. This purchase agreement provided for 108 burial spaces with perpetual care, as well as construction materials and labor for construction of a 179 linear foot wall and four corner posts.[6] The location of the 108 burial spaces in Purchase Agreement No. SP-1054 was listed as "Giles Family Garden Extended," but there was no attachment listing the specific spaces assigned. The total price for Agreement No. SP-1054, including perpetual care, was $158, 450.00. On May 9, 2013, Mrs. Giles executed a second contract to correct a "math mistake" in Agreement No. SP-1054 concerning how many burial spaces would make up the Giles Addition. This Purchase Agreement No. 1412 conveyed 4 "Developed" Adult Spaces at no charge, plus perpetual care for those spaces for $300.00. Agreement No. 1412 states that these spaces are to be located in the "Giles Extended Family Garden," but no addendum listing the specific burial spaces purchased was attached to the agreement.[7]

         At some point, Mrs. Giles executed an undated document entitled "Giles Extended Family Garden Addendum," which states that "The undersigned agrees to transfer, without charge, all their spaces listed on Oak Lane Memorial Park Contract number SP-1054 in Oak Alley Garden to the following spaces in Giles Extended Family Garden: 108[8] Spaces/See Attached Listing." According to Mr. Bonfanti, the land intended for the Giles Addition was still subject to the UCB mortgage and was undeveloped; thus, the plan was to handle this project in the same manner as the original Giles Family Burial Garden, i.e., OLMP would assign Mrs. Giles an equivalent number of spaces in one of the cemetery's existing developed gardens until the land intended for the Giles Addition was released from the mortgage and developed and approved by the Cemetery Board, at which time these spaces would be swapped for the intended spaces. Although Mr. Bonfanti testified that it was OLMP's policy to provide the purchaser with a list of the burial plots purchased, he could not say for certain whether Mrs. Giles was given a list of the assigned plots at the time of purchase.

         Following Mrs. Giles's execution of the April 10, 2013 and May 9, 2013 purchase agreements, OLMP began work on the improvements for the Giles Addition, including installation of the concrete foundation around the perimeter and the footings for the corner pedestals on the mortgaged, undeveloped property intended for the Giles Addition and purchasing of additional materials, such as stone and pedestals. However, construction of the improvements was never completed. Furthermore, OLMP failed to deposit the amounts collected from Mrs. Giles for perpetual care into the trust fund, instead spending that money on other business expenses, including payment of a commission to Michael Miller, OLMP's sales manager. Mr. Bonfanti claimed that OLMP attempted to obtain a release of the mortgage on the land intended for the Giles Addition from UCB but was not able to do so.

         OLMP was notified by the Louisiana Cemetery Board on February 5, 2014, following an on-site inspection, that it was in violation of Title 8 of the Louisiana Revised Statutes governing cemeteries. The alleged violations concerned perpetual care and merchandise trust funds and the development, solicitation, and sale of mortgaged property. The notice allowed OLMP a period of time in which to provide proof of compliance, failing which an administrative hearing would be held for the purpose of adjudicating the alleged violations. Stacey Fackrell Sklarski, OLMP's bookkeeper, testified that the inspector from the Louisiana Cemetery Board instructed her, following the January 2014 on-site inspection, to prepare the deed for conveyance of interment rights for Mrs. Giles's 2013 purchase, and she did so at that time, attaching the list of the 112 substitute burial plots being temporarily conveyed.

         On July 30, 2013, UCB filed suit on the OLMP notes secured by the mortgage, alleging that OLMP had failed to make required payments. On April 10, 2014, just prior to a scheduled hearing on UCB's suit, OLMP sold all of its land, together with all buildings and improvements thereon, to National Information Services, Inc. ("NIS") for the sum of $3, 040, 000.00. The purchase price was to be paid in the form of $40, 000.00 in cash on the date of the sale and delivery of a promissory note payable to OLMP for $200, 000.00.[9] The sale price further consisted of the existing UCB multiple indebtedness mortgage, which had an outstanding balance of $2, 800, 000.00. According to Lawrence Dodd, president and owner of NIS, the purpose of the sale was to protect the cemetery property from seizure by the bank by transferring it out of the hands of OLMP. Mr. Dodd admitted that the deal was put together quickly and the closing of the sale was held on April 10, 2013, because the parties were aware that rendition of a judgment on UCB's suit was imminent.

         Contemporaneously with the execution of the sale of the property, OLMP and NIS entered into a Cemetery Management Contract. The Cemetery Management Contract was for an initial term of twenty-five years, with an option for OLMP to renew for five additional ten-year terms if not in default under the contract at renewal. The Cemetery Management Contract provided that OLMP would maintain all licenses required to own and operate a cemetery; have the exclusive right to manage and conduct all at-need and pre-need sales of burial rights, burial merchandise (provided by OLMP), and burial services (provided by OLMP); provide, train, and supervise all personnel; file all reports and returns and maintain all records required by any governmental authority with jurisdiction over the cemetery; collect amounts due from purchasers and remit such ...


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