Bryan D. Scofield, Inc. v. Susan A. Daigle, Ltd.

999 So. 2d 311, 8 La.App. 3 Cir. 798, 2008 La. App. LEXIS 1624, 2008 WL 5160853
Louisiana Court of Appeal·Decided December 10, 2008·No. CA 08-798·Published·Cited by 1 cases

Opinion

999 So.2d 311 (2008)

BRYAN D. SCOFIELD, INC., et al.
v.
SUSAN A. DAIGLE, LTD., et al.

No. CA 08-798.

Court of Appeal of Louisiana, Third Circuit.

December 10, 2008.

*312 Edwin Gustav Preis, Jr., Richard J. Hymel, Preis, Kraft & Roy, Lafayette, LA, for Plaintiffs/Appellants, Bryan D. Scofield, Inc., Rivera, Ltd.

Randall Kurt Theunissen, Neil Gregory Vincent, Alan Meche, Allen & Gooch, Lafayette, LA, for Defendants/Appellees, Susan A. Daigle, Ltd., Daigle, Jamison & Rayburn, LLC.

Court composed of JOHN D. SAUNDERS, BILLY HOWARD EZELL, and J. DAVID PAINTER, Judges.

EZELL, Judge.

This case arises out of a dispute between three former members of a law firm which was doing business as a limited liability company. After separating from the firm, two of the members filed the present suit against the third member. The trial court granted an exception of no cause of action filed by the third member. Following a denial of a motion for a new trial, the two suing members filed the present appeal claiming that they have stated a cause of action.

FACTS

The following facts are presented in the pleadings. Susan Daigle, Bryan Scofield, and Jim Rivera formed the law firm of Daigle, Scofield & Rivera, LLC on March 15, 2000. The members of the firm were identified as Susan A. Daigle, Ltd., Bryan D. Scofield, Inc., and Rivera, Ltd.[1] Both briefs state that by oral agreement the parties agreed that Daigle would receive fifty percent of the equity of the firm with Scofield and Rivera dividing the remaining half.

According to the petition, it appears that the relationship between the parties began to deteriorate in late 2004. On March 14, 2005, Daigle advised Scofield that she no longer wanted Rivera as a member of the firm and proposed a buy out of Rivera's interest in the firm. Scofield did not agree with this decision. On March 16, 2005, Daigle advised Rivera that she would pay for his ownership interest over a three-year period. She also informed him that he could remain at the firm as a nonequity *313 attorney under the same compensation plan as the non-equity attorneys. Rivera had to make a decision by the following Friday at 10:00 a.m., less than forty-eight hours from the offer. Otherwise, Daigle would send correspondence to the firm clients advising that Rivera left the firm for unspecified reasons. Rivera requested documentation to support the offer and more time to consider it, but Daigle declined. Rivera told her that no decision would be made by that time, which Daigle viewed as a rejection of the proposal. Correspondence was sent to firm clients advising of Rivera's departure.

Based on Daigle's actions, Scofield decided to leave the firm around April 1, 2005. Upon advising Daigle of his decision, Daigle requested that Scofield and Daigle agree that adjusters of firm clients for which Scofield was handling files not be advised by either of them of his decision to leave until after she returned from a multi-day trip to Dallas, Texas. An agreement was reached between Daigle and Scofield that neither would discuss his departure with those firm clients or adjusters until after her return from Dallas. Scofield claims that Daigle breached this agreement because before or very soon after she left for her trip to Dallas, she discussed Scofield's departure with numerous adjusters supervising files being handled by Scofield.

On September 25, 2006, Scofield and Rivera filed a lawsuit against Susan Daigle, individually, and against the limited liability company, called Daigle, Crawford & Jamison, LLC at the time of the suit. The lawsuit was dismissed on an exception of no cause of action finding that there was no cause of action against Susan Daigle in her individual capacity, in that she was not a member or manager of the LLC.

An exception of prematurity based on the last sentence of the operating agreement was also filed. The last sentence read: "Calculation & financial distribution is done after pending [plaintiff] cases are resolved." There was still a pending plaintiff case, so the exception of prematurity was granted, and the case against the firm was dismissed with prejudice.

Thereafter, the present suit was filed by members Bryan D. Scofield, Inc. and Rivera, Ltd. against the third member Daigle, Ltd. on March 15, 2007. Daigle filed exceptions, including an exception of no cause of action. A hearing on the exceptions was held on October 29, 2007. Just prior to the hearing, the firm's last plaintiff case resolved. The Plaintiffs then filed a supplemental and amending petition against the limited liability company and Daigle. However, this petition was not at issue at the hearing on the exceptions.

The trial court granted the exception of no cause of action in favor of Susan A. Daigle. The judgment dismissing the claims of Scofield and Rivera against Daigle was designated a partial final judgment pursuant to La.Code Civ.P. art. 1915. Scofield and Rivera filed the present appeal arguing that the trial court erred in granting the exception of no cause of action.

EXCEPTION OF NO CAUSE OF ACTION

Scofield and Rivera argue that they have pled causes of action on three different basis. First, they allege a cause of action against Daigle for breach of fiduciary duties pursuant to the laws governing limited liability companies. The second cause of action Scofield and Rivera allege they have pled is for breach of the operating agreement. Lastly, they argue that Scofield has stated a cause of action for fraudulent breach of an oral agreement.

*314 Breach of Fiduciary Duty

In sustaining the exception of no cause of action, the trial court recognized that members of a limited liability company owe reciprocal duties to one another. However, it then ruled that an action for breach of fiduciary duty against a member must be brought by a derivative suit. We observe that this finding by the trial court is essentially a finding that Scofield and Rivera do not have a right of action to file the suit as opposed to having no cause of action. La.Code Civ.P. art. 927(5); See Glod v. Baker, 02-988 (La.App. 3 Cir. 8/6/03), 851 So.2d 1255, writ denied, 03-2482 (La.11/26/03), 860 So.2d 1135; Roger Boc, L.L.C. v. Weigel, 99-570 (La.App. 3 Cir. 11/3/99), 744 So.2d 731, writ not considered, 00-176 (La.3/17/00), 756 So.2d 316; Van Meter v. Gutierrez, 04-706 (La.App. 4 Cir. 2/16/05), 897 So.2d 781.

The written judgment itself stated that the exception of no cause of action was granted and that the exception of no right of action and res judicata were now moot. However, out of an abundance of caution, we feel it necessary to address the trial courts remarks about the necessity of a derivative action in this case. As explained below, we find that Scofield and Rivera have a right of action to bring individual claims against another member under certain circumstances.

The Limited Liability Company Law specifically provides that members with management responsibilities have fiduciary obligations, including a duty of care and duty of loyalty, not only to the limited liability company but to the other members as individuals also. Pursuant to La. R.S. 12:1314(A)(1)(emphasis supplied), a member who has management responsibilities "shall be deemed to stand in a fiduciary relationship to the limited liability company and its members and shall discharge his duties in good faith, with the diligence, care, judgment, and skill which an ordinary prudent person in a like position would exercise under similar circumstances."

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Bryan D. Scofield, Inc. v. Susan A. Daigle, Ltd., 999 So. 2d 311, 8 La.App. 3 Cir. 798, 2008 La. App. LEXIS 1624, 2008 WL 5160853 (La. Ct. App. 2008).

999 So. 2d 311 (Bryan D. Scofield, Inc. v. Susan A. Daigle, Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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