308 Decatur-New Orleans, LLC v. the Rouge House, LLC

• Court: Louisiana Court of Appeal
• Decided: December 23, 2020
• Docket: 2020-CA-0358
• Status: Published

Opinion

308 DECATUR-NEW * NO. 2020-CA-0358 ORLEANS, LLC * VERSUS COURT OF APPEAL * THE ROUGE HOUSE, LLC FOURTH CIRCUIT * STATE OF LOUISIANA *******

CONSOLIDATED WITH: CONSOLIDATED WITH:

308 DECATUR-NEW ORLEANS, NO. 2020-CA-0359 LLC

VERSUS

THE ROUGE HOUSE, LLC

ROUGE HOUSE, LLC NO. 2020-CA-0360

308 DECATUR-NEW ORLEANS, LLC

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2013-09718, DIVISION “G-11” Honorable Robin M. Giarrusso, Judge ****** Judge Daniel L. Dysart ****** (Court composed of Chief Judge James F. McKay, III, Judge Daniel L. Dysart, Judge Sandra Cabrina Jenkins)

Amanda Howard Lowe R. Chauvin Kean David J. Halpern Jill Anne Gautreaux KEAN MILLER LLP 909 Poydras Street, Suite 3600 New Orleans, LA 70112 COUNSEL FOR PLAINTIFF/APPELLEE Desherick J. W. Boone THE BOONE LAW FIRM, L.L.C. 2213 Gentilly Boulevard New Orleans, LA 70122

Michelle Charles ATTORNEY AT LAW 1901 Manhattan Blvd., Suite 106 Harvey, LA 70058 COUNSEL FOR DEFENDANT/APPELLANT

AFFIRMED

DECEMBER 23, 2020 DLD JFM SCJ

The Rouge House, LLC, filed a Motion for Devolutive Appeal of an order

dated February 21, 2020, dismissing its appeal of an adverse judgment on an

Exception of Res Judicata and No Right of Action filed on behalf of 308 Decatur-

New Orleans, LLC. For the reasons that follow, we affirm the ruling of the trial

court.

BACKGROUND:

This case began in 2013 as an eviction suit brought by plaintiff-appellee, 308

Decatur-New Orleans, LLC, against defendant-appellant, The Rouge House, LLC.

Tracy Riley, as a member of The Rouge House, LLC (hereinafter “The Rouge

House), signed a lease to rent the premises at 308 Decatur for $25,000 per month.

The Rouge house paid the first and last month rent, but, according to 308 Decatur-

New Orleans, LLC (hereinafter “308 Decatur”), The Rouge House did not pay

anything further. On October 14, 2013, 308 Decatur filed a Petition for Possession

of Premises and Declaratory Relief Due to Breach of Contract. On November 22,

1 2013, the trial court granted the petition and entered a Judgment of Eviction, which

judgment became executory on December 16, 2013.

On January 16, 2014, counsel for The Rouge House filed an Answer, a

Petition to Annul Judgment and for a Temporary Restraining Order, and for

Specific Performance. The petition sought to prevent the eviction and damages

caused by 308 Decatur. Ms. Riley separately applied for, but was denied, pauper

status. In response to The Rouge House’s pleadings, 308 Decatur filed an

Exception of Improper Cumulation. It argued that the answer filed by The Rouge

House was tantamount to a reconventional demand, which is improper in a

summary proceeding. Further, the answer sought to annul a judgment from 2013,

which must be brought in a separate proceeding. On February 27, 2014, the trial

court denied The Rouge House’s request for a preliminary injunction and granted

308 Decatur’s Exception of Improper Cumulation.

On February 13, 2014, 308 Decatur filed a Petition for Damages and

Declaratory Judgment against The Rouge House seeking to recover the unpaid

rents and other damage incurred as a result of the breach of the lease.

Counsel for The Rouge House answered the petition, and filed a

reconventional demand seeking rescission of the lease claiming that the signing of

the lease was induced by fraud and error. Numerous discovery documents were

served upon counsel for The Rouge House, but no responses or incomplete

responses were all that 308 Decatur received. In October of 2015, 308 Decatur

filed a motion to compel. The Rouge House subsequently submitted incomplete

2 responses. In December of 2015, after 308 Decatur attempted to schedule Tracy

Riley’s deposition, 308 Decatur was informed that current counsel was

withdrawing. In April of 2016, new counsel enrolled.

308 Decatur thereafter moved to have the matter set for trial. The trial court

set a trial date and discovery and pre-trial deadlines. The Rouge House failed to

meet every deadline. After new counsel for The Rouge House moved to withdraw,

the trial court granted the motion, but ordered that The Rouge House had forty-five

days to retain counsel and, after that time, 308 Decatur would be allowed to move

forward with the litigation.

At a hearing on February 13, 2017, Tracy Riley appeared in proper person to

challenge a motion to correct a previous order of the trial court, which order had

stricken The Rouge House’s answer and cancelled a previously filed Notice of Lis

Pendens filed by The Rouge House. The “corrected” order added the recordation

information for the notice.

On October 26, 2017, 308 Decatur filed a Motion for Summary Judgment on

the claim for damages and a separate Motion for Summary Judgment to dismiss the

claims of fraud and/or misrepresentation, negligent misrepresentation, detrimental

reliance, and unfair trade practices brought by The Rouge House in its

Reconventional Demand. A hearing was set, and Ms. Riley, as a member of The

Rouge House, requested that the hearing be continued to allow her time to retain

counsel. The trial court granted a continuance and the hearing on the motions for

summary judgment was held on February 2, 2018. Tracy Riley appeared without

3 counsel. The trial court noted that this was not the first time Ms. Riley appeared in

an attempt to represent The Rouge House. The court allowed Ms. Riley to speak.

After considering the arguments made by counsel for 308 Decatur, as well as the

evidence presented, the trial court ruled in favor of 308 Decatur. The court granted

both motions from the bench, and signed a summary judgment dismissing The

Rouge House’s Reconventional Demand in open court. A second summary

judgment was signed April 9, 2018, granting 308 Decatur’s claim for damages.

Ms. Riley thereafter filed a motion to recuse the trial court, which was

denied by another section of court.

On June 8, 2018, Tracy Riley, in proper person, filed a Motion for

Intervention to intervene as a party plaintiff to appeal the summary judgment

granting 308 Decatur’s petition for damages. The record does not indicate that she

was seeking to appeal the summary judgment dismissing The Rouge House’s

Reconventional Demand. The motion was signed by a duty judge. No further

action was taken to pursue this appeal.

In a separate suit, The Rouge House filed a Petition for Possession of

Premises and Declaratory Relief Due to Breach of Contract on September 14,

2018, more than five months after its Reconventional Demand was dismissed by

summary judgment in the first lawsuit. 308 Decatur filed Exceptions of Res

Judicata and No Right of Action on March 20, 2019, which were granted after

contradictory hearing on October 11, 2019. The Rouge House was represented by

counsel.

4 Thereafter, counsel for The Rouge House filed its first Motion for

Devolutive Appeal. The Order was signed and on December 11, 2019, the clerk of

court issued a notice of estimated costs of appeal due by December 31, 2019. No

costs were paid to date.

On January 8, 2020, 308 Decatur moved to dismiss the above appeal. After

hearing, the trial court granted the judgment on February 21, 2020.

Motion to Dismiss:

Appellee, 308 Decatur, filed a motion to dismiss in part The Rouge House’s

appeal in this Court. As this issue concerns the jurisdiction of this Court to

consider The Rouge House’s appeal, we will address it first.

308 Decatur argues that the February 21, 2020 judgment dismissing The

Rouge House’s appeal of the October 11, 2019 judgment granting 308 Decatur’s

Exceptions of Res Judicata and No Right of Action is the only valid appeal before

this Court. 308 Decatur argues that all prior judgments challenged in The Rouge

House’s current appeal are final and no longer appealable.

In its appeal, The Rouge House makes several arguments about the nullity of

judgments rendered by the trial court. The first judgment challenged is the

judgment evicting The Rouge House from the premises. The only argument as to

why that judgment should be declared null is that Stacey Riley, one of two

members of the limited liability company, was on active duty at the time the

judgment was rendered. Therefore, pursuant to the Service Members Civil Relief

5 Act, the judgment of eviction entered against The Rouge House is an absolute

nullity.

The Service Members’ Civil Relief Act, 50 U.S.C.App. Section 520, et seq.,

applies to active service members. Its purpose is to protect service members from

having default judgments entered against them without their knowledge. It does

not prevent entry of a judgment when there has been notice of the pendency of an

action and adequate opportunity to appear and defend. See Guerrero v. Guerrero,

10-930, p. 10 (La.App. 5 Cir. 5/10/11), 65 So.3d 737, 743.

The record in this case indicates that Ms. Riley, as agent for service of

process for The Rouge House, was served personally on October 22, 2013.

Further, she retained counsel who was present at the eviction proceedings. Thus, it

is clear that the Service Members’ Civil Relief Act is not applicable to this case.

As such, the judgment of eviction is not an absolute nullity.

The record also indicates that The Rouge House filed an Answer, Petition to

Annul Judgment for Temporary Restraining Order, Preliminary and Permanent

Injunction for Specific Performance and Damages for Breach of Contract on

January 16, 2014. Louisiana Code of Civil Procedure art. 4735 provides that “[a]n

appeal does not suspend execution of a judgment of eviction unless the defendant

has answered the rule under oath, pleading an affirmative defense entitling him to

retain possession of the premises and the appeal has been applied for and the

appeal bond filed within twenty-four hours after the rendition of the judgment

of eviction.”

6 Thus, the record does not support The Rouge House’s argument that the

proceedings against The Rouge House were improper, or that the answer filed on

behalf of The Rouge House served as a valid appeal of the judgment of eviction.

The second judgment challenged by The Rouge House is the summary

judgment granted in favor of 308 Decatur relative to its petition for damages

seeking to recover the unpaid rents due. Ms. Riley was served as the agent for

service of process for The Rouge House, and indeed requested that the hearing on

the motion be continued to allow her to seek counsel for The Rouge House. The

trial court granted the motion and allowed forty-five days in which to find new

counsel. As stated previously, the order also cautioned that the proceedings would

proceed against The Rouge House after forty-five days had elapsed. However,

rather than retain counsel, Ms. Riley filed a pro se opposition to the motion, and on

the day of hearing appeared pro se. The trial court allowed Ms. Riley to speak, but

admonished her that it was unwise to do so as she was not an attorney. Finding no

genuine issue of material fact, the trial court granted the motion. Ms. Riley filed a

Motion to Intervene in the proceedings to allow her to appeal the ruling. She also

filed a Motion for Appeal. She, however, never followed up on the appeal, nor did

she hire counsel to perfect an appeal for The Rouge House.

Now in this appeal, The Rouge House wishes to argue that genuine issues of

material fact existed and it was improper for the trial court to grant summary

judgment to 308 Decatur. It argues that the summary judgment is not a valid and

final judgment because it was rendered against a person not represented by

7 counsel. The “person” to which The Rouge House refers is Ms. Riley. However,

at all times that The Rouge House was not represented by counsel, Ms. Riley, as

agent for service of process for The Rouge House, was served with notice of all

proceedings. Additionally, she was cautioned by the trial court on numerous

occasions that she needed to retain counsel for The Rouge House. Despite the

advice of the trial court to hire counsel, Ms. Riley appeared without counsel

ostensibly to represent the interests of The Rouge House.

A limited liability company is an entity to which the law attributes

personality and is, therefore, a juridical person. See La. R.S. 12:1301. As a

general rules, the law considers a limited liability company and its member(s) to be

wholly separate persons. See La. Civ. Code art. 24. The purpose of establishing a

limited liability company is to protect its members from personal liability for the

debts of the company, not to protect the limited liability company from being sued.

While it is true that only a duly licensed attorney may represent a limited liability

company, the repeated failure to obtain counsel despite warnings by the trial court,

cannot serve to make a limited liability company judgment proof.

In Streiffer v. Deltatech Const., L.L.C., this Court affirmed the trial court’s

ruling that a member of the limited liability company, albeit an attorney whose

license was suspended, could not represent the limited liability company in a suit

against it. 18-0155, pp. 2-3 (La.App. 4 Cir. 10/10/18), ___ So.3d ___, 2018 WL

4923559. However, we held that as the limited liability company had been

properly served, its members were present at trial, and no objection was made to

8 proceeding, the court did not err in proceeding against the limited liability

company. Id., 18-0155 at p. 6.

In this case, The Rouge House was on notice that 308 Decatur filed a Motion

for Summary Judgment that would, if granted, dismiss all of its claims against 308

Decatur. Ms. Riley was cautioned to retain counsel or the case against The Rouge

House would proceed. The Rouge House’s argument that it was unrepresented by

counsel must fail, as its agent for service of process was properly served and failed

to obtain legal counsel. Moreover, Ms. Riley was present at the hearing and did

not object to the proceeding going forward.

Counsel for The Rouge House also argues that the trial court erred in

granting 308 Decatur’s Exceptions of Res Judicata and No Right of Action.

Again, the judgment granting the exceptions was rendered on October 11, 2019,

and The Rouge House failed to comply with the rules to perfect an appeal. Newly

retained counsel filed a proper motion for appeal seeking a return date, but the

costs due were not paid and the record was not lodged by December 31, 2019.

Louisiana Code of Civil Procedure art. 2126 E specifically provides that:

If the appellant fails to pay the estimated costs … within the time specified, the trial judge, on his own motion or upon motion by the clerk or by any party, and after a hearing shall: (1) Enter a formal order of dismissal on the grounds of abandonment; or (2) Grant a ten day period within which costs must be paid in full, in default of which the appeal is dismissed as abandoned.

9 The Rouge House argues that it was improper for the trial court to dismiss

the appeal for non-payment of costs, as Ms. Riley had filed an Affidavit to Proceed

in Forma Pauperis, which was granted by a duty judge.

The flaw in The Rouge House’s argument is that Ms. Riley’s pauper status

has no bearing on the proceedings against The Rouge House. Louisiana Code of

Civil Procedure 5182 restricts the privilege of proceeding without payment of costs

to individuals, not to corporations or other juridical persons. See, Stuart v. Capri

Const. Co., Inc., 285 So.2d 306, 307 (La. 4th Cir. 1973). The personalities of a

limited liability company and its members are wholly separate by law. Nunez v.

Pinnacle Homes, L.L.C., 15-0087, p.5 (La. 10/14/15), 180 So.3d 285, 289.

Based on the above, we cannot say that the trial court abused its discretion in

granting 308 Decatur’s motion to dismiss the appeal of the exceptions.

On January 28, 2020, 308 Decatur again moved to dismiss the appeal of the

ruling dismissing the appeal of the ruling on the exceptions. A contradictory

hearing was held on February 21, 2020, after which the trial court dismissed the

appeal as abandoned.

On April 21, 2020, The Rouge House filed a Second Motion and Order for

Devolutive Appeal of the ruling dismissing its previous appeal.

After careful consideration of the timeline of events and the lack of merit to

The Rouge House’s arguments on appeal, we find that the only judgment before

this Court is the February 21, 2020, ruling dismissing The Rouge House’s appeal

of the judgment granting 308 Decatur’s Exceptions of Res Judicata and No Right

of Action.

10 Appeal of February 21, 2020 judgment:

The Rouge House again argues that the trial court erred in granting 308

Decatur’s motion to dismiss the previous appeal because The Rouge House had

applied for and was granted pauper status. As we discussed above, a limited

liability company is not entitled to the privilege of proceeding without the payment

of costs.

The Rouge House argues that appeals are favored and one should not be

dismissed for a “mere technicality.” The technicality to which The Rouge House

refers is the non-payment of costs of the appeal, and again argues that it was

granted pauper status, and therefore does not have to pay the costs.

Article 2126 of the Code of Civil Procedure sets forth the rules for payment

of costs of appeal. Section E provide that if costs are not timely paid, the court on

its own motion, the motion of the clerk, or of any party may dismiss the appeal as

abandoned. Considering that counsel for The Rouge House continues to argue it

does not have to pay costs, which is incorrect, we cannot say that the trial court

erred in granting 308 Decatur’s motion to dismiss.

Accordingly, we affirm the February 21, 2020 judgment of the trial court.