Judgment rendered February 5, 2020. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 53,205-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
BILLY AND EDNA FOSTER Plaintiffs-Appellants
versus
ADRIAN FISHER, LATONDRA Defendants-Appellees FISHER, AND COGNITIVE DEVELOPMENT OF MONROE, INC.
***** Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 2006-3488
Honorable Marcus Lamar Hunter, Judge
ROUNTREE LAW OFFICES Counsel for Appellants, By: James A. Rountree Billy and Edna Foster Michael G. Renneisen
BREITHAUPT, DUBOS & WOLLESON Counsel for Appellees By: Robert Alan Breithaupt Adrian Fisher, LaTondra Michael Lee DuBos Fisher, and Cognitive James R. Close Development of Monroe, K. Lamar Walters III Inc.
PIERRE & PIERRE, L.L.C. Counsel for Appellee By: James Rodney Pierre The Macro Group, L.L.C.
Before STONE, COX, and STEPHENS, JJ. STEPHENS, J.
Plaintiffs, Billy and Edna Foster, husband and wife, appeal a
judgment of the Fourth Judicial District Court, Parish of Ouachita, State of
Louisiana, in favor of defendants, Adrian and LaTondra Fisher, husband and
wife, and Cognitive Development Center of Monroe, Inc., dismissing
plaintiffs’ claims with prejudice. Defendants answered and appeal the denial
of their exceptions of peremption and prescription and counterclaims against
plaintiffs. For the following reasons, we affirm in part and reverse in part
the trial court’s judgment.
FACTS AND PROCEDURAL HISTORY
This matter arises out of Billy Foster’s and Adrian Fisher’s corporate
ownership in Cognitive Development Center of Monroe, Inc. (“CDCMI”),
which was formed in 2003 with third owner, Kerry Scott. According to
CDCMI’s articles of incorporation, each owner was subscribed 33⅓ shares.
CDCMI began as a mental health rehabilitation service and expanded in
2005 to include personal care attendant services. Kerry left CDCMI in 2004
to form another company. Both Billy and Adrian testified their families
once had a close personal relationship, which included Billy serving as a
father figure and mentor to Adrian. However, discord between the two men
developed regarding the management and finances of CDCMI and its two
distinct areas of practice—mental health rehabilitation services and personal
care attendant services. Tension culminated at a meeting on or about Friday,
June 16, 2006. The following week, Billy, who typically opened the
CDCMI office for business each day, arrived to find the office locks had
been changed. Billy neither performed further work nor provided further
services for CDCMI after this date. Six weeks later, defendants filed an amended articles of incorporation for CDCMI, removing Billy as a
shareholder.
Plaintiffs filed a petition for damages on August 11, 2006, seeking
recognition of Billy’s ownership of 50% of CDCMI, damages for breach of
fiduciary duty, and liquidation of the corporation under the supervision of
the court. Extensive litigation ensued, including multiple motions, hearings,
supplemental and amended petitions, reconventional demands, and answers.
Notably, plaintiffs amended their petition to claim damages for unfair trade
practices and racketeering, while defendants reconvened with claims for
breach of contract in bad faith, racketeering, unfair trade practices,
detrimental reliance, unjust enrichment, and breach of fiduciary duty. The
trial on the merits finally began in January 2015, and continued over several
days throughout the year into 2016. After the close of evidence, the trial
court denied defendants’ exception of prescription as to plaintiffs’
racketeering claims, finding the motion was moot upon its determination that
there was no criminal act or intent on the part of defendants. The trial court
never ruled on an exception of peremption filed by defendants in relation to
plaintiffs’ unfair trade practices.
On August 18, 2017, the trial court issued its final oral ruling, finding
Billy effectively quit CDCMI in June 2006, and Adrian owed Billy
compensation for his share of the value of the business as of that date. The
trial court appointed an expert witness to aid the court in determining the
value of CDCMI as of June 20, 2006, based on the evidence adduced in the
case. Defendants objected to the trial court’s ruling at the time, and
plaintiffs ultimately sought supervisory review by this court, requesting the
trial court be directed to render a final judgment. Plaintiffs’ writ was
2 granted and remanded with instruction. Foster v. Fisher, 51,927-CW (La.
App. 2 Cir. 12/1/17). The writ order stated in part, “Since the parties rested
their case and submitted this matter to the judge for decision, and because
the parties object to the reopening of evidence by the appointment of an
expert, this court grants the writ.” It was further ordered that the “matter be
submitted for decision on the evidence tendered by the parties at the trial on
the merits.” Following the writ order, the trial court judge who had presided
over the trial subsequently retired without rendering a final judgment.
The new trial court judge assigned to the case filed written reasons for
judgment on January 19, 2019, in which he noted the findings of fact and
reasons for judgment issued orally by the prior trial court judge. The trial
court determined the previous ruling of the court was that plaintiffs were
entitled to 50% of the value of CDCMI on or about June 2006, and all other
claims and causes of actions asserted by plaintiffs as well as claims by the
defendants in their reconventional demand were either explicitly or
implicitly denied. Accordingly, the trial court issued the following ruling:
Therefore, in accordance with the Second Circuit’s instructions, this court has reviewed the record with an eye toward making a finding as to the value of CDCMI in June 2006. The court finds there was no evidence offered at trial with which to make such a determination. Since the burden of proof as to the element of damages rests with plaintiffs, the court is constrained to find plaintiffs have failed to meet their burden. For this reason, no damages will be awarded herein.
Final judgment denying all claims of both plaintiffs and defendants was
signed by the trial court and filed on February 7, 2019. This appeal by
plaintiffs ensued followed by an answer filed by defendants.
3 DISCUSSION
Ownership of CDCMI
Plaintiffs assert in an assignment of error that the trial court erred by
ignoring Billy’s ownership of CDCMI and his right to the profits which have
been attributable to his interest since 2006. First, plaintiffs claim Billy still
owns 50% of the company because there is no legal way his ownership
interest could be divested without his affirmative act. We agree.
A contract is an agreement by two or more parties whereby
obligations are created, modified, or extinguished. La. C.C. art. 1906.
Contracts have the effect of law for the parties. La. C.C. art. 1983.
Interpretation of a contract is the determination of the common intent of the
parties. La. C.C. art. 2045; BRP LLC (Delaware) v. MC Louisiana Minerals
LLC, 50,549 (La. App. 2 Cir. 5/18/16), 196 So. 3d 37. When the words of a
contract are clear and explicit and lead to no absurd consequences, no further
interpretation may be made in search of the parties’ intent. La. C.C. art.
2046; BRP LLC (Delaware), supra. Parol or extrinsic evidence is generally
inadmissible to vary the terms of a written contract, unless the written
expression of the common intention of the parties is ambiguous. BRP LLC
(Delaware), supra.
The evidence presented at trial showed Billy’s ownership shares were
not sold, donated, or otherwise transferred in compliance with corporate
documents. In 2005, CDCMI filed amended articles of incorporation (the
“2005 Amended Articles”) to reflect Kerry’s departure from the company.
Article IX provides 50 shares of stock were subscribed to each LaTondra
McCoy Fisher and Billy Foster. Article X of the 2005 Amended Articles
governs the terms for the transfer of stock. Article XV of the 2005
4 Amended Articles governs the terms for amending the articles and provides
in pertinent part:
Changes in the rights of holders of shares of any class shall be made by a majority vote or written consent of the shareholders given voting power by these articles; and in addition, by a majority vote or written consent of the class or classes of shareholders affected, whether they are otherwise entitled to vote or not.
However, on July 27, 2006, subsequent amended articles of
incorporation of CDCMI were filed with the Louisiana Secretary of State
(the “2006 Amended Articles”). Article IX of these articles provides the
subscription of shares as follows: Adrian Fisher, 49 shares, and LaTondra
McCoy Fisher, 51 shares. It is undisputed that Billy, a 50% shareholder
pursuant to the 2005 Amended Articles, never voted or gave written consent
to reduce his ownership interest or remove himself from CDCMI, regardless
of the ownership interest articulated in the 2006 Amended Articles.
Nonetheless, defendants argue the 2006 Amended Articles accurately
reflect the current ownership of CDCMI. They claim that by virtue of an
oral pre-incorporation agreement, Billy’s ownership in CDCMI ceased in
June 2006 when he refused to return to work or perform services for
CDCMI. They assert this oral agreement must be considered in conjunction
with the “Corporate Business Agreement” (the “CBA”) the parties entered
into when forming CDCMI. Adrian and Kerry both testified they, together
with Billy, reached a verbal agreement in August 2003 that ownership in
CDCMI would be conditioned on the performance of allocated duties, i.e.
those enumerated in the CBA. In support of this assertion, defendants point
to the essential disappearance of Kerry’s ⅓ ownership interest in CDCMI.
The testimonial and documentary evidence confirm there was no offer or
5 conveyance of Kerry’s ownership interest to Billy or CDCMI preceding the
2005 Amended Articles. However, both Billy and Adrian testified that upon
Kerry’s departure from the company, CDCMI assisted Kerry in starting his
new company by giving him clientele, staff money, and paying his expenses
for several months. Defendants further assert the terms of the CBA itself
condition continued ownership on continued performance. Adrian testified
at trial the articles of incorporation was simply a document used to organize
the corporation to operate in Louisiana and it was, instead, the CBA that
dictated the operation of CDCMI.
The CBA provides as follows in the paragraph entitled “Explanatory
Statement”:
This document represents the [CDCMI] The following parties each shall own 33⅓% of Cognitive Development: (1) Adrian Fisher, (2) Billy Foster, (3) Kerry Scott. Now, therefore, in consideration of their mutual covenants and promises, the parties agree as follows: Profits and Expenses shall be divided at 33⅓% amongst the owners of [CDCMI].
The language in the Explanatory Statement clearly and
unambiguously states that the parties’ agreement regarding division of
“profits and expenses,” not ownership, was made in consideration of the
mutual covenants and promises. The CBA then proceeds to articulate the
specific mutual covenants and promises of the parties, wherein Article V
lists duties for each of the original incorporators: Adrian, Billy, and Kerry.
The CBA addresses ownership in Article VI, which provides: “Neither the
incorporators of this business or any subsequent owners thereof shall sale
[sell] any ownership interest in [CDCMI] without first offering said
ownership to the owners herein.” Notably, this provision does not conflict
6 with Article X of the 2005 Amended Articles governing the terms for the
transfer of stock.
In its oral reasons, the trial court specifically found Billy’s ownership
in CDCMI did not cease after Billy’s “breach of the CBA” in June 2006.
We agree. The words of both the 2005 Amended Articles and the CBA are
clear and explicit, and the intent of the parties regarding the transfer of
ownership or stock is unambiguous. Any parol evidence in the form of
testimony offered by the defendants about an oral pre-incorporation
agreement regarding the forfeiture of ownership would vary the terms of
these documents and is, therefore, precluded from consideration. See BRP
LLC (Delaware), supra. Likewise, we find Billy’s ownership in CDCMI did
not cease by virtue of the 2006 Amended Articles, which unilaterally and
without the authority required by the previous articles removed Billy as a
shareholder of CDCMI. Accordingly, the trial court erred. Plaintiffs’ claim
has merit—Billy continues to be a 50% shareholder of CDCMI.
Profits of CDCMI
In connection with this assignment of error, plaintiffs additionally
argue that by virtue of his continued ownership in CDCMI, Billy is entitled
to 50% of CDCMI’s net profits from the year 2006 to present. We disagree.
The articles of the CBA clearly encompass the mutual covenants and
promises among the parties, including agreements regarding the parties’
work capacity, reimbursement to Adrian for his initial investment in
CDCMI, company-provided life insurance, and most notably, as found in
Article V, the individual duties of each incorporator. The “Explanatory
Statement” of the CBA is likewise clear that profits are to be divided
amongst the owners “in consideration of their mutual covenants and
7 promises.” Therefore, the CBA unequivocally allocates profits in
consideration for the performance of duties, not by virtue of mere passive
ownership. This design does not conflict with the 2005 Amended Articles,
which other than the subscription of shares, is silent as to the terms of
distribution of profits to shareholders.
Article V (5.2) of the CBA, entitled “Billy Foster Duties,” provides:
Billy Foster shall have the following duties:
1. Provide ongoing clinical direction, oversight and coordination of services for all Clinical Managers in the mental health services;
2. Provide ongoing training assistance/training for all clinical managers;
3. Provide monthly supervision for all licensed individuals who are providing clinical direction;
4. Staff continuous problematic cases and employee with Clinical Managers;
5. Direct marketing services to recruit consumers;
6. Participate in economic development for Cognitive Development Center;
7. Review all quarterlies and reports by licensed professionals;
8. Coordinate all marketing meeting with referral sources;
9. Provide monthly marketing report i.e. verbally or written to office personnel for written report to the management team;
10. Monitor the mix of services;
11. Provide additional services as recommended by the management team;
12. Report to the management team of Cognitive Development Center.
The CBA clearly provides Billy is entitled to profits only commensurate
with his performance. Billy did not perform any of the enumerated duties
8 for CDCMI after June 2006. Accordingly, Billy’s right to the profits of
CDCMI ceased in June 2006, when he stopped providing services to
CDCMI in accordance with the Article V (5.2) of the 2005 Amended
Articles.
However, plaintiffs submit Billy’s dereliction was not by choice.
Specifically, they argue his performance of the duties was prevented by his
literally being locked out of CDCMI and the overall hostility Adrian
exhibited toward him. Adrian testified the locks were changed due to the
dismissal of a disgruntled employee, not to keep Billy out. He further
testified that after Billy stopped coming to work, he made multiple attempts
to contact Billy by both phone and written correspondence, but Billy refused
to respond. In fact, Billy specifically testified he could have returned to
work and continued performance of his duties but elected not to. Edna
testified she continued to go to work at CDCMI until her resignation in
August 2006. Furthermore, prior to the supposed “lockout,” Billy was
already in the process of creating another company—Another Chance
Enterprises, Inc. (“ACE”), a personal care attendant services and a day
rehabilitation program. As discussed above, Billy committed no act and
gave no consent to divest himself of ownership in CDCMI. However, his
actions clearly indicate his intent to be no longer employed at CDCMI or to
perform the duties required of him by the CBA after June 2006. Therefore,
we find Billy willingly forfeited his rights to any profits (and responsibility
for any expenses) after that time.
Plaintiffs also assert in this assignment of error that by virtue of
Billy’s continued right to a portion of CDCMI’s profits, he is additionally
entitled to those profits generated by Cognitive Development Center of
9 Monroe Personal Care Services, Inc. (“PCS”), which was formed by
defendants in June 2006, following Billy’s departure from CDCMI. For the
reasons stated above regarding Billy’s right to 50% of CDCMI’s profits
since 2006, this argument is without merit.
Liquidation of CDCMI
In another assignment of error, plaintiffs assert the trial court erred by
ignoring defendants’ gross and persistent ultra vires acts justifying the
appointment of a receiver and a liquidator. Based on the facts discussed
above and our determination that Billy is still a 50% shareholder in CDCMI,
we agree with plaintiffs that CDCMI should be liquidated.
The law regarding involuntary proceedings for dissolution at the time
this suit was instituted was found in La. R.S. 12:143 (repealed 2015), which
provided in pertinent part:
A. The court may entertain a proceeding for involuntary dissolution under its supervision when it is made to appear that: ... (4) The directors are deadlocked in the management of the corporate affairs, and the shareholders are unable to break the deadlock; or ... (5) The shareholders are deadlocked in voting power, and have failed, for a period which includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election of their successors, but only if irreparable injury to the corporation is being suffered or is threatened by reason thereof, or if irreparable injury to the shareholders is being suffered or is threatened by reason thereof and the court shall determine that such irreparable injury warrants dissolution after giving due regard to the interests of the other shareholders, the employees, and the public; or ... (7) The corporation has been guilty of gross and persistent ultra vires acts[.]
While Louisiana’s statutory grounds for the relatively drastic remedy of
judicial dissolution of a domestic corporation are limited and specific, the
10 legislature intended that the words “ultra vires” as used in Section A(7) be
given a fairly broad application. Gooding v. Millet, 430 So. 2d 742 (La.
App. 5 Cir. 1983). In Gooding, supra, the court found borrowing funds
from a bank and mortgaging company assets without proper corporate
authorization, and the payment of a salary to a person not employed by the
corporation, amounted to ultra vires acts in the narrow sense.
Here, defendants unequivocally exceeded their authority and legal
power and committed ultra vires acts when they filed the 2006 Amended
Articles without adhering to the provisions of Articles X and XV of the 2005
Amended Articles, which pertain to the transfer of stock and amendment of
the articles of incorporation. Furthermore, considering our above
determination that Billy and LaTondra each remain 50% shareholders of
CDCMI, we find the shareholders of CDCMI are clearly deadlocked—an
enumerated cause for liquidation. We recognize involuntary dissolution is
permissible rather than mandatory. However, we also recognize the parties’
disagreement regarding corporate affairs is so extensive that they have been
opponents in litigation concerning the corporation for 13 years. Multiple,
serious accusations were made by the parties, with both Billy and Adrian
testifying regarding the general lack of trust they have for one another. The
massive record generated by this litigation clearly establishes the
relationship between the shareholders is irreparable and CDCMI cannot
operate in a manner advantageous to both of them. Accordingly, the trial
court was in error by failing to liquidate CDCMI. The trial court, in
accordance with this decision, shall have the discretion to make the
necessary appointments to facilitate dissolution of CDCMI in accordance
with the law.
11 Breach of Fiduciary Duty and Unfair Trade Practices
Plaintiffs assert in another assignment of error that the trial court erred
in ignoring defendants’ breach of fiduciary duty to CDCMI and Billy, which
breach was so persistent and egregious that it amounted to an unfair trade
practice. Plaintiffs concede they did not use the words “unfair trade
practices” in their petition, but claim the facts constituting unfair trade
practices were sufficiently pled. Specifically, plaintiffs allege defendants’
formation of PCS to divert business from CDCMI was a blatant breach of
fiduciary duty that amounted to theft for which Billy is entitled to damages.
Similarly, defendants, in their answer to appeal, assert the trial court erred in
denying their counterclaim alleging Billy breached his fiduciary duty to
defendants. They argue Billy breached his fiduciary duty when he formed
ACE, recruited CDCMI employees and clients to work at ACE and operated
ACE in direct competition with CDCMI. Defendants likewise assert the
breach of fiduciary duty alleged constitutes an unfair trade practice.
According to the applicable law in effect at the time, officers and
directors shall be deemed to stand in a fiduciary relation to the corporation
and its shareholders. La. R.S. 12:91(A) (repealed 2015). In order to
establish a claim for breach of fiduciary duty, plaintiffs had the burden of
proving gross negligence or intentional tortious conduct or intentional
breach. La. R.S. 12:91 (repealed 2015).
The Louisiana Unfair Trade Practices Act (“LUTPA”) is set forth in
La. R.S. 51:1401, et seq. Unfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce are
unlawful. La. R.S. 51:1405(A). Acts constituting unfair or deceptive trade
practices are not specifically defined in LUTPA, but are determined by the
12 courts on a case-by-case basis. Cheramie Services, Inc. v. Shell Deepwater
Prod., Inc., 2009-1633 (La. 4/23/10), 35 So. 3d 1053. In general, acts which
comprise unfair trade practices involve fraud, deception, misrepresentation,
breach of fiduciary duty, or other unethical conduct. Walker v. Hixson
Autoplex of Monroe, L.L.C., 51,758 (La. App. 2 Cir. 11/29/17), 245 So. 3d
1088. To succeed on a LUTPA claim, the plaintiff must show the alleged
conduct offends established public policy and is immoral, unethical,
oppressive, unscrupulous, or substantially injurious. Id. The span of
prohibited practices under LUTPA is extremely narrow. Cheramie, supra;
Walker, supra.
Whether a defendant has violated LUTPA is a factual determination.
Walker, supra. An appellate court may not set aside a trial court’s finding of
fact in the absence of manifest error or unless it is clearly wrong. Id. Where
there is more than one allowable view of the evidence, the fact finder’s
choice among them cannot be manifestly erroneous or clearly wrong. Id.
Even though an appellate court may feel its own evaluations and inferences
are more reasonable than the fact finder’s, reasonable evaluations of
credibility and reasonable inferences of fact should not be disturbed upon
review where conflict exists in the testimony. Cole v. Department of Public
Safety & Corr., 2001-2123 (La. 9/04/02), 825 So. 2d 1134.
Here, there are factors that mitigate the alleged unscrupulous actions
of the parties. Notably, Adrian formed PCS after Billy discontinued
performance of his duties at CDCMI. Adrian’s testimony established his
belief—albeit erroneous, as we established above—that Billy’s failure to
perform his obligations under the CBA divested him not only of the right to
the distribution of profits from CDCMI, but also of any ownership in
13 CDCMI. This eliminated, in Adrian’s mind, any fiduciary duty he owed to
Billy after June 2006. In contrast, Billy began forming ACE while he was
still actively working for CDCMI. Billy notably testified ACE was
originally intended to be a basic social service agency, not a mental health
rehabilitation agency, and would, therefore, not be in direct competition with
CDCMI. He also testified Adrian was aware of his formation of ACE and
did not voice an objection, whereas Adrian testified he was not aware of
Billy’s formation of ACE. However, Adrian testified there was no
prohibition against Billy performing work outside of CDCMI and stated he
had been aware and had no objection to the sex offender rehabilitation work
Billy performed on the side, for which Billy permissibly used CDCMI’s
resources and facility.
Considering the totality of the circumstances, the actions of either
party simply do not arise to the egregiously fraudulent, immoral, or
substantially injurious level required to prevail on a claim for unfair trade
practices. Furthermore, to the extent the actions alleged by each party
amounted to an intentional breach of fiduciary duty, this breach was
committed by both parties. The trial court heard extensive testimony
regarding CDCMI, PCS, and ACE, yet declined to award either party
damages for breach of fiduciary duty or LUTPA violations arising out of the
formation or conduct of these three entities. We cannot say that decision
was manifestly erroneous or clearly wrong. Accordingly, the assignments of
error by both parties regarding damages for the breach of fiduciary duty and
unfair trade practices are without merit.1
1 In further answering, defendants assert the trial court erred in failing to grant their exception of peremption. They argue plaintiffs’ unfair trade practices claims are
14 Racketeering
In an additional assignment of error, plaintiffs assert the trial court
erred by ignoring the pattern of racketeering activities through which
defendants acquired an interest in and operated CDCMI. They claim
defendants’ racketeering activity includes theft, filing false public records,
and money laundering, and argue they are, therefore, entitled to recover
three times actual damages and reasonable attorney fees. We disagree.
The Louisiana Racketeering Act is set forth in La. R.S. 15:1351, et
seq. Louisiana R.S. 15:1352 provides, in part:
A. As used in this Chapter, “racketeering activity” means committing, attempting to commit, conspiring to commit, or soliciting, coercing, or intimidating another person to commit any crime that is punishable under the following provisions of Title 14 of the Louisiana Revised Statutes of 1950, the Uniform Controlled Dangerous Substances Law, or the Louisiana Securities Law: ... (10) R.S. 14:67 (Theft) ... (17) R.S. 14:230 (Money laundering) ... (38) R.S. 14:133 (Filing or maintaining false public records)
Any person injured by a pattern of racketeering shall have a cause of
action against any person who violates La. R.S. 15:1535, which provides in
pertinent part: “B. It is unlawful for any person, through a pattern of
racketeering activity, knowingly to acquire or maintain, directly or
indirectly, any interest in or control of any enterprise or immovable
property.”
perempted because they did not assert the claim in their August 2007 petition but, instead, first made the claim seven years later in their amended petition. In light of the above determination regarding the plaintiffs’ LUTPA claims, this assignment of error is pretermitted.
15 Here, each of the crimes constituting racketeering activity which
plaintiffs allege were committed by defendants have a required element of
criminal intent. As discussed above, the extent of any misconduct by
defendants could be characterized as a breach of fiduciary duty and ultra
vires acts. However, in order to prevail on their civil racketeering claim,
plaintiffs had the additional burden of proving defendants’ underlying
criminal intent. The record establishes Adrian’s belief that Billy’s
ownership in CDCMI ceased when he discontinued performance of his
duties. It further shows Adrian attempted to facilitate an amenable parting
between the parties. Adrian sent Billy a letter, dated August 4, 2006 (the
“August 4 letter”), in which Adrian notes Billy’s refusal to return his calls
and “formally invite[s]” Billy to a meeting with a CPA to “discuss the
financial position and net worth of Cognitive Development Center of
Monroe as of June 30, 2006 . . . to determine what you and I are due from
the assets of the company.” Plaintiffs offered no evidence proving the
contrary—that Adrian, instead, acted with the underlying criminal purpose
of stealing Billy’s ownership interest in CDCMI from him. Thus, plaintiffs
failed to establish any criminal intent. We therefore cannot find the trial
court was clearly wrong in declining to award plaintiffs damages for a
pattern of racketeering activity committed by defendants. Accordingly, this
assignment of error is without merit.2
2 Defendants assert in their answer that plaintiffs’ racketeering claim is prescribed because neither the claim nor allegations of the purported predicate acts were made until more than seven years after the original petition, surpassing the five-year prescriptive period. In light of the above determination regarding the plaintiffs’ racketeering claim, this assignment of error is pretermitted.
16 Mental Anguish, Pain, and Suffering
In their final assignment of error, plaintiffs assert the trial court erred
by ignoring their mental anguish, pain, and suffering. They claim Adrian
intentionally inflicted pain upon them as “part of his scheme to take
everything and bring them to their knees so they would accept a fraction of
their damages to survive.”
The basis for the tort of intentional infliction of emotional distress is
La. C.C. art. 2315. In order to recover for intentional infliction of emotional
distress, a plaintiff must establish that (1) the conduct of the defendant was
extreme and outrageous; (2) the emotional distress suffered by the plaintiff
was severe; and (3) the defendant desired to inflict severe emotional distress
or knew that severe emotional distress would be certain or substantially
certain to result from his conduct. White v. Monsanto Co., 585 So. 2d 1205,
1209 (La. 1991). Louisiana courts have staunchly adhered to the standard
established in White, supra. LaBove v. Raftery, 2000-1394 (La. 11/28/01),
p. 17, 802 So. 2d 566, 578. This court subsequently elaborated on the
applicable standard for the first element:
It is not enough that the defendant acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by “malice” or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and leave him to exclaim, “Outrageous.” (Citations omitted.)
Fletcher v. Wendelta, Inc., 43,866 (La. App. 2 Cir. 1/14/09), 999 So.
2d 1223, writ denied, 2009-0387 (La. 4/13/09), 5 So. 3d 164.
17 Here, plaintiffs allege the following acts committed by defendants
caused them severe emotional distress: depriving Billy of his 50%
ownership of CDCMI; restricting Billy’s access to the office and bank
accounts; turning the staff against Billy, terminating the CDCMI-subsidized
health insurance plan that covered plaintiffs and their two children; and,
taking Billy’s company car. Applying the standard in White, we find the
record simply does not support plaintiffs’ recovery for the intentional
infliction of emotional distress. While the tumultuous business dealings and
relationships between the parties was undoubtedly distressing at times, the
defendants’ alleged conduct was far from so extreme and outrageous as to
prove that defendants intended their conduct to bring about severe emotional
distress or should have realized their conduct would do so. Notably, in the
August 4 letter, Adrian specifically invited Billy to discuss Billy’s company
car, healthcare coverage, life insurance, and Billy’s personal belongings at
the office. Billy refused to attend the meeting and instead filed this lawsuit a
week later. Plaintiffs also failed to prove any specific emotional distress—
the record is devoid of any evidence that either Billy or Edna had to seek
treatment for stress, anxiety, or mental anguish caused by any action by
defendants. Accordingly, this assignment of error is without merit.
CONCLUSION
For the foregoing reasons, we reverse that portion of the judgment
refusing to recognize Billy Foster as a 50% owner of Cognitive
Development Center of Monroe, Inc. We also reverse that portion of the
judgment refusing to liquidate CDCMI. All other portions of the trial
court’s judgment are affirmed. The matter is remanded to the trial court for
further proceedings in accordance with this opinion. Costs of appeal are
18 assessed one-half to Billy Foster and Edna Foster and one-half to Adrian
Fisher, LaTondra Fisher, and Cognitive Development Center of Monroe,
Inc.
REVERSED IN PART; AFFIRMED IN PART; REMANDED
FOR FURTHER PROCEEDINGS.