STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
22-349
DEWAYNE DOUGLAS DOWD, SR., INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF CORA LEE DOWD (DECEASED)
VERSUS
HELENA EMERGENCY PHYSICIANS, PLLC, ET AL.
********** ON APPEAL FROM THE FIFTEENTH JUDICIAL DISTRICT COURT PARISH OF LAFAYETTE, NO. 2021-2719 HONORABLE LAURIE A. HULIN, DISTRICT JUDGE
**********
JONATHAN W. PERRY JUDGE
Court composed of Candyce G. Perret, Jonathan W. Perry, and Charles G. Fitzgerald, Judges.
AFFIRMED. Kriste T. Utley Ross A. Ledet BOYKIN & UTLEY 400 Poydras Street, Suite 1540 New Orleans, Louisiana 70130 (504) 527-5450 COUNSEL FOR PLAINTIFF/APPELLANT: Dewayne Douglas Dowd, Et Al.
Gary McGoffin John S. Cook DURIO, MCGOFFIN, STAGG & GUIDRY 220 Heyman Boulevard P. O. Box 51308 Lafayette, Louisiana 70505 (337) 233-0300 COUNSEL FOR DEFENDANT/APPELLEE: Hospital Physician Partners, Inc. and The Schumacher Group of Delaware, Inc.
Nicholas Sigur GACHASSIN LAW FIRM 400 East Kaliste Saloom Road, Suite 6100 P. O. Box 80369 Lafayette, Louisiana 70598-0369 (337) 235-4576 COUNSEL FOR DEFENDANT/APPELLEE: Schumacher Group of Louisiana, Inc.
Cliff A. Lacour NEUNER PATE 1001 West Pinhook Road, Suite 200 Lafayette, Louisiana 70503 (337) 237-7000 COUNSEL FOR DEFENDANT/APPELLEE: Helena Emergency Physicians, PLLC
James H. Gibson Stacy N. Kennedy GIBSON LAW PARTNERS, LLC 2448 Johnston Street P. O. Box 52124 Lafayette, Louisiana 70505 (337) 761-6023 COUNSEL FOR DEFENDANT/APPELLEE: TSG Resources, Inc. PERRY, Judge.
At issue in this appeal are judgments which denied the enforcement of a
foreign, out of state, judgment against parties not named in those judgments and the
dismissal of separate fraud-based tort claims against these parties on the basis of
prescription. We affirm.
FACTS AND PROCEDURAL HISTORY
On September 22, 2009, Helena Emergency Physicians, PLLC (“HEP”), an
Arkansas business entity, entered into a Physician Independent Contractor
Agreement (“the Agreement”) which governed the work of Dr. Arthur Levy (“Dr.
Levy”) at Helena Regional Medical Center (“Helena Regional”), an Arkansas
hospital.
As part of the Agreement, HEP was required to obtain medical malpractice
insurance which met the requirements of Helena Regional. Pursuant to that
obligation, HEP obtained insurance from Oceanus Insurance Company (“Oceanus”).
On October 6, 2010, Cora Lee Dowd (“Mrs. Dowd”) went to the emergency
room at Helena Regional with complaints of a stomachache, vomiting, fever, and
severe pain. Dr. Levy treated Mrs. Dowd and sent her home with pain medication.
Two days later, Mrs. Dowd returned to Helena Regional and underwent an
emergency appendectomy. At the time of her surgery, Mrs. Dowd’s appendix had
ruptured and spread infection throughout her body. She died six days later on
October 15, 2010.
In 2012, Mrs. Dowd’s surviving spouse, Dwayne Douglas Dowd, Sr. (“Mr.
Dowd”) filed suit individually and on behalf of Mrs. Dowd’s estate against various
defendants,1 none of whom are involved in the present action.
1 The two other defendants, Phillips Hospital Corporation d/b/a Helena Regional Medical Center and Dr. James Major, were found free from fault, and no fault was assessed to Mrs. Dowd. A jury found Dr. Levy 100% at fault and liable for Mrs. Dowd’s death. It
awarded damages individually to Mr. Dowd and to Mr. Dowd as Administrator of
the Estate of Mrs. Dowd in the sum of $2,806,053.86. On June 14, 2016, the
Arkansas court memorialized the jury verdict against Dr. Levy and awarded interest
of 10% per annum until paid.
After the judgment was rendered, Dr. Levy filed for bankruptcy protection.
While the bankruptcy proceedings progressed, Mr. Dowd was granted permission
from the Bankruptcy Court to seek recovery directly from Oceanus. In September
2017, Oceanus was placed into liquidation. Mr. Dowd filed a claim in Oceanus’s
receivership. On October 31, 2017, Dr. Levy was granted a full discharge in
bankruptcy.
On May 28, 2021, Mr. Dowd, individually and as Administrator of Mrs.
Dowd’s estate, filed suit in Lafayette Parish against HEP, Hospital Physician
Partners, Inc. (“HPP”), The Schumacher Group of Louisiana (“Schumacher-LA”),
TSG Resources, Inc. (“TSG”), The Schumacher Group of Delaware (“Schumacher-
DE”), and Certain Underwriters at Lloyds (collectively, “the Defendants”). In that
suit, Mr. Dowd sought to make the Arkansas judgment executory and requested a
declaratory judgment finding the Defendants liable for Dr. Levy’s debts under
various theories of “corporate successor liability, successor liability based upon a
fraudulent scheme to escape liability, single business enterprise, alter ego/piercing
the corporate veil, and third party beneficiary doctrine.” In response, the Defendants
filed various exceptions of no cause of action, prescription, failure to join necessary
parties, vagueness, and collateral attack on the bankruptcy judgment.
2 After conducting a hearing, the trial court granted the Defendants’ exception
of collateral attack on the bankruptcy judgment and dismissed Mr. Dowd’s request
for declaratory relief as well as the demand to execute the Arkansas judgment.
Additionally, the trial court granted the Defendants’ exception of prescription
regarding Mr. Dowd’s alleged claims of fraud.2 After the trial court denied Mr.
Dowd’s motion for new trial, this appeal followed.
APPELLANT’S ASSIGNMENTS OF ERROR
In his brief to this court, Mr. Dowd has assigned the following two errors:
1. The trial court erred in holding that Dr. Levy’s debt to Appellant, as evidenced by the Levy Judgment, cannot be collected, and enforced against Appellees based on Dr. Levy’s Chapter 7 Bankruptcy discharge, even though none of the Appellees were parties to the bankruptcy, and the discharge order specifically preserves the right to collect debts from liable third parties.
2. The trial court erred in dismissing the tort claims as prescribed whenever those claims were not known or knowable until less than one year prior to when suit was filed, and Appellees presented insufficient evidence to carry their burden of proof.
LAW AND DISCUSSION
The trial court granted the Defendants’ exception of collateral attack on the
bankruptcy judgment and dismissed all claims related to the Arkansas judgment.
Rulings by the trial court on exceptions to the petition are reviewed de novo in the
appellate court as they present questions of law. Dixon v. City of Alexandria, 16-
880 (La.App. 3 Cir. 5/31/17), 222 So.3d 739. “The appellate court shall render any
judgment which is just, legal, and proper upon the record on appeal.” La.Code
Civ.P. art. 2164. “[T]he phrase Upon the record on appeal has major significance.
It means that the court can render any judgment supported by the pleadings and the
2 As noted in Mr. Dowd’s appellate brief, there are two claims that are not at issue in this appeal—separate contract claims and claims against potential insurers of Dr. Levy and the Schumacher defendants. 3 evidence.” Morgavi v. Mumme, 258 La. 587, 270 So.2d 540, 542 (La.1972) (citing
Summerell v. Phillips, 247 So.2d 542 (La.1971)). Finding it unnecessary to delve
into the exception based on collateral attack on the bankruptcy judgment, we do not
discuss that exception, and we will address the enforcement of the Arkansas
judgment and matters related to that judgment in another manner.
Overview—No Cause of Action
The failure to disclose a cause of action may be noticed by either the trial or
appellate court on its own motion. La.Code Civ.P. art. 927(B).
“The function of the peremptory exception of no cause of action is to question
whether the law extends a remedy to anyone under the factual allegations of the
petition.” Fink v. Bryant, 01-987, p. 3 (La. 11/28/01), 801 So.2d 346, 348. It “is
designed to test the legal sufficiency of the petition by determining whether plaintiff
is afforded a remedy in law based on the facts alleged in the pleading.” Id. at 348-
49. “The exception is triable on the face of the papers, and . . . the court must
presume that all well-pleaded facts in the petition are true” with “[a]ll reasonable
inferences . . . made in favor of the nonmoving party[.]” City of New Orleans v. Bd.
of Dirs. of La. State Museum, 98-1170, p. 9 (La. 3/2/99), 739 So.2d 748, 755.
The burden of proof is on the exceptor. Id. The parties may not introduce any
evidence in support of or to controvert the exception. La.Code Civ.P. art. 931. “An
exception of no cause of action is likely to be granted only in the unusual case in
which the plaintiff includes allegations that show on the face of the petition that there
is some insurmountable bar to relief . . . or when its allegations show the existence
of an affirmative defense that appears clearly on the face of the pleadings.” City of
New Orleans, 739 So.2d at 756.
4 In McCalmont v. McCalmont, 19-738, p. 7 (La.App. 3 Cir. 4/29/20), 297
So.3d 1057, 1063-64, we stated:
“An exception is a means of defense, other than a denial or avoidance of the demand, used by the defendant, whether in the principal or an incidental action, to retard, dismiss, or defeat the demand brought against him.” La.Code Civ.P. art. 921. “The function of the peremptory exception is to have the plaintiff’s action declared legally nonexistent, or barred by effect of law, and hence this exception tends to dismiss or defeat the action.” La.Code Civ.P. art. 923. . . . If the grounds of the peremptory exception cannot be removed by amending the petition, the claims shall be dismissed. La.Code Civ.P. art. 934.
APPELLANT’S ARGUMENT
Mr. Dowd argues that although the Arkansas judgment sought to be enforced
in Louisiana does not cast any of the Defendants in judgment, he may nonetheless
seek to enforce the judgment against them. Relying on Berg v. Zummo, 03-281
(La.App. 4 Cir. 7/02/03), 851 So.2d 1223, writ denied, 03-2209 (La. 11/21/03), 860
So.2d 546, and Dishon v. Ponthie, 05-659 (La.App. 3 Cir. 12/30/05), 918 So.2d
1132, he contends that Louisiana courts have allowed a judgment to be enforced
against an affiliated entity not named in the original judgment.
APPELLEES’ ARGUMENT
The Defendants contend that the judgment sought to be enforced is a foreign
judgment and that its enforcement is governed by La.Code Civ.P. art. 2541. As such,
it can only be enforced against the judgment debtor. None of the Defendants are
judgment debtors. Thus, they contend that Mr. Dowd has failed to state a cause of
action to have the Arkansas judgment made executory against them, and the
judgment cannot form the basis for declaratory judgment on the issues of vicarious
and solidary liability.
5 ANALYSIS
In the present case, the foundation of Mr. Dowd’s action is a petition to make
the Arkansas judgment of June 14, 2016, executory in this state against all named
defendants and a petition for declaratory judgment seeking to have the Defendants
liable under that judgment.
From the outset, we find Mr. Dowd’s reliance on Berg and Dishon
distinguishable. Neither case involved the enforcement of a foreign judgment.
The supreme court stated in Schultz v. Doyle, 00-926, pp. 9-10 (La. 1/17/01),
776 So.2d 1158, 1164:
The Full Faith and Credit Clause, Article IV, Section 1, of the Constitution of the United States, mandates that a judgment of a state court should have the same credit, validity, and effect in every other court of the United States that it has in the state where it is pronounced. Hampton v. McConnel, 16 U.S. (3 Wheat.) 234, 4 L.Ed. 378 (1818). The Supreme Court of the United States has continuously interpreted the Full Faith and Credit Clause to mean that full faith and credit is to be accorded only when the jurisdiction of the court in another state is not impeached, either as to the subject matter or the person. Thompson v. Whitman, 85 U.S. (18 Wall.) 457, 21 L.Ed. 897 (1873); Williams v. North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577 (1945). Therefore, a state court judgment can be made a judgment in a sister state “only if the court purporting to render the original judgment has power to render such a judgment.” Williams, 325 U.S. at 229, 65 S.Ct. 1092. That is to say, the court that rendered the judgment must have had jurisdiction over both the subject matter and the person.
The general rule is that “a judgment is entitled to full faith and credit—even as to questions of jurisdiction—when the second court’s inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judgment.” Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 11 L.Ed.2d 186 (1963). Public policy dictates that there be an end to litigation; “that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties.” Id. (citing Baldwin, 283 U.S. at 525, 51 S.Ct. 517). This doctrine should apply in every case where one voluntarily appears, presents his case and is fully heard. He should, in the absence of fraud, be bound thereafter by the judgment of the court to which he has submitted his cause. Id.
6 In the present case, the jurisdiction of the Arkansas court has not been
questioned and no fraud has been urged in obtaining the judgment against Dr. Levy.
Mr. Dowd has presented the judgment of the Arkansas court and requested that it be
made executory in Louisiana. This judgment, which is attached to the petition,
determined Dr. Levy to be solely at fault and cast him alone in judgment.
A party seeking recognition or execution by a Louisiana court of a judgment or decree of a court of the United States . . . may bring an ordinary proceeding against the judgment debtor in the proper Louisiana court, to have the judgment or decree recognized and made the judgment of the Louisiana court.
La.Code Civ.P. art. 2541.
The only judgment debtor specified in the Arkansas judgment is Dr. Levy.
None of the Defendants in the petition to make the Arkansas judgment executory
were party to or designated as judgment debtors in that judgment. Accordingly, Mr.
Dowd has failed to state a cause of action against any of the Defendants to make the
Arkansas judgment executory or to hold these Defendants liable for the Arkansas
judgment as sought in the petition for declaratory relief. Therefore, because the
grounds for the peremptory exception cannot be removed, we grant the peremptory
exception of no cause of action and dismiss Mr. Dowd’s petition to make the
Arkansas judgment executory as well as the demand for declaratory relief premised
on that judgment.
PRESCRIPTION ON FRAUD-BASED TORT CLAIMS
The trial court found that Mr. Dowd’s fraud-based tort claims filed on May
25, 2021, were prescribed because they were filed more than a year after he knew or
should have known of the fraud. It reasoned that the tort claims were prescribed
because Mr. Dowd had facts available to him that should have provoked further
7 investigation as of October 4, 2017, the date Mr. Dowd made a claim in Oceanus’s
liquidation.
Mr. Dowd argues that the fraud claims are partially based on the contention
that the Defendants acted in concert to underfund Oceanus so that it could not satisfy
its obligation to pay the judgment against Dr. Levy. He contends that neither Dr.
Levy’s bankruptcy nor the liquidation of Oceanus gave rise to the fraud committed
by the Defendants. To the contrary, he asserts that he did not become aware of the
concealed insurance information until September of 2021 and filed suit within one
year of that date.
The Defendants brief mirror the trial court’s reasoning. Additionally, they
contend that even as early as 2013, when Dr. Levy was deposed, information came
to light about Oceanus’s participation in a “risk pool” which should have provoked
Mr. Dowd to further investigate the financial viability of Oceanus.
In Arton v. Tedesco, 14-1281, p. 3 (La.App. 3 Cir. 4/29/15), 176 So.3d 1125,
1128, writ denied, 15-1065 (La. 9/11/15), 176 So.3d 1043, this court stated:
The exception of prescription is governed by La.Code Civ.P. art. 927. The standard of review of a grant of an exception of prescription is determined by whether evidence was adduced at the hearing of the exception. If evidence was adduced, the standard of review is manifest error; if no evidence was adduced, the judgment is reviewed simply to determine whether the trial court’s decision was legally correct. Allain v. Tripple B Holding, LLC, 13-673 (La.App. 3 Cir. 12/11/13), 128 So.3d 1278. The party pleading the exception of prescription bears the burden of proof unless it is apparent on the face of the pleadings that the claim is prescribed, in which case the plaintiff must prove that it is not. Id.
In the present case, there was evidence reviewed by the trial court. Thus, the
applicable standard of review is manifest error.
It is well accepted that under the manifest error standard of review, “a factual
finding cannot be set aside unless the appellate court finds that it is manifestly
erroneous or clearly wrong.” Smith v. La. Dep’t of Corrs., 93-1305 (La. 2/28/94), 8 633 So.2d 129, 132. “To reverse a fact finder’s determination of fact, an appellate
court must review the record in its entirety and (1) find that a reasonable factual basis
does not exist for the finding, and (2) further determine that the record establishes
that the fact finder is clearly wrong or manifestly erroneous.” Stobart v. State Dep’t
of Transp. and Dev., 617 So.2d 880, 882. In making this determination, “[t]he
appellate court must be cautious not to re-weigh the evidence or to substitute its own
factual findings just because it would have decided the case differently.”
Pinsonneault v. Merchants & Farmers Bank & Trust Co., 01-2217, p. 11 (La.
4/3/02), 816 So.2d 270, 279. If there are two permissible views of the evidence, the
fact finder’s choice between them cannot be manifestly erroneous or clearly wrong.
Id.
“Liberative prescription is a mode of barring of actions as a result of inaction
for a period of time.” La.Civ.Code art. 3447. “Delictual actions are subject to a
liberative prescription of one year. This prescription commences to run from the
day injury or damage is sustained.” La.Civ.Code art. 3492. As defined in
La.Civ.Code art. 1953:
Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.
Fraud is a delictual action subject to the one-year prescriptive period set out in
La.Civ.Code art. 3492. Cerullo v. Heisser, 16-558 (La.App. 5 Cir. 2/8/17), 213
So.3d 1232.
In his petition, Mr. Dowd alleged that HEP, HPP, Schumacher-LA, TSG, and
Schumacher-DE (collectively, “the “Schumacher Defendants”), took specific and
directed action for the purpose of rendering Oceanus insolvent and unable to satisfy
its obligations[,]” “directed the transactions which left Oceanus insolvent and unable 9 to pay their creditors[,]” and that “[t]hese transitions were directed by or with
approval from Dr. David Schillinger, HPP’s founder/CMO, HEP’s
incorporator/organizer, and Chairman of the Board of Directors of Oceanus.” And,
in conclusion, he alleged that “[t]hese actions were taken for the purpose of
defrauding Plaintiff.”
In its oral reasons for judgment, the trial court recognized that it was not clear
from Mr. Dowd’s petition that the fraud-based claim had prescribed. Recognizing
that the burden then shifted to the Defendants, the trial court stated:
All I have is the petition in front of me, and I have the evidence of the deposition [of Dr. Levy] which includes information about all of the named defendants here. And I have a September 21, 2017 order declaring Oceanus insolvent. And October 4, 2017, the plaintiff submitted a proof of claim in the liquidation.
So we know that, as of October 4, 2017, the plaintiff was on notice that Oceanus was insolvent. And then I – for whatever reason, I wrote down that plaintiff became aware of facts arising to present litigation during the bankruptcy proceedings [of Dr. Levy], which the doctor was discharged from bankruptcy, October 31, 2017.
So it tends to suggest to me that the plaintiff should have known something back in the fall of 2017. To me, I am inclined to think that prescription began to run, back in the fall of 2017.
....
And the defendant produced evidence to the Court to suggest that, yes, it has prescribed because there was knowledge that came about at the latest of October 4th of 2017 which would have put the plaintiff on notice that there was [sic] issues with the fulfillment of the judgment that is now null and void.
Our review of the record shows that Mr. Dowd’s petition which, in part, raised
a fraud-based tort claim, was not prescribed on its face. Thus, the burden of proof
shifted to the Defendants to negate that these claims were timely filed. Bailey v.
Khoury, 04-620 (La. 1/20/05), 891 So.2d 1268. The trial court considered evidence
that included Dr. Levy’s deposition taken on May 22, 2013, Dr. Levy’s Voluntary
10 discharge in bankruptcy, the Oceanus liquidation order, and Mr. Dowd’s proof of
claim in Oceanus’s liquidation.
In his deposition, Dr. Levy provided the following facts: (1) at the time of his
malpractice, he was under contract with HPP to provide emergency room services
to Helena Regional; (2) his contract required HEP to obtain malpractice insurance
for him; (3) his medical malpractice insurer was Oceanus,3 and it provided coverage
in the amount of one million dollars; (4) there could have been other insurance
policies at the various other hospitals where he worked which were organization
specific and the emergency room staffing companies have the policies; and (5) he
disclosed the Schumacher Group4 as his staffing company prior to HPP.
The record further shows that Mr. Dowd received a favorable judgment on
June 14, 2016, and Dr. Levy filed a Chapter 7 Voluntary Petition for bankruptcy on
November 7, 2016. On April 12, 2017, well before Dr. Levy was discharged in
bankruptcy on October 31, 2017, Mr. Dowd was granted relief from the automatic
stay to pursue Dr. Levy’s insurance provider to satisfy the Arkansas judgment. On
September 21, 2017, Oceanus, identified as a Risk Retention Group,5 was placed in
3 The transcript refers to Oceanics. In is undisputed that this is a typographical error, and the insurer should be Oceanus. 4 Dr. Levy did not differentiate between Schumacher Group-LA and Schumacher Group- DE nor did he reference TSG. 5 In the liquidation order, the following detailed information is provided in part, as follows:
[Oceanus] is a South Carolina Industrial Insured Captive (stock) Corporation formed as a risk retention group, organized and licensed pursuant to Chapters 87 and 90 of Title 38 of the South Carolina Code, and is owned and capitalized by its insured physician and physician group members.
[Oceanus] issues non-assessable medical malpractice professional insurance policies with primary coverage up to $1,000,000 per occurrence with $3,000,000 in the aggregate. Excess limits are provided above the primary coverage and are full reinsured. 11 liquidation. Shortly thereafter, on October 4, 2017, Mr. Dowd filed a proof of claim
for $3,173,291.80 in the matter of “Oceanus Insurance Company, a Risk Retention
Group, (Oceanus) in liquidation.”
Prescription commences when a plaintiff obtains actual or constructive knowledge of facts indicating to a reasonable person that he or she is the victim of a tort. A prescriptive period will begin to run even if the injured party does not have actual knowledge of facts that would entitle him to bring a suit as long as there is constructive knowledge of same. Constructive knowledge is whatever notice is enough to excite attention and put the injured party on guard and call for inquiry. Such notice is tantamount to knowledge or notice of everything to which a reasonable inquiry may lead. Such information or knowledge as ought to reasonably put the alleged victim on inquiry is sufficient to start [the] running of prescription.
Campo v. Correa, 01-2707, pp. 11-12 (La. 6/21/02), 828 So.2d 502, 510-11
(citations omitted).
After reviewing the jurisprudence and the facts of this case, we find the trial
court was not manifestly erroneous when it concluded that Mr. Dowd’s fraud-based
tort claims filed on May 25, 2021, were prescribed because they were filed more
than a year after he knew or should have known of the fraud. Although Dr. Levy’s
bankruptcy or Oceanus’s liquidation, taken alone, may have been insufficient to
provide notice to commence prescription, as of October 2017, Mr. Dowd had or
should have had sufficient knowledge to begin the running of prescription. He knew
of the possibility of other insurance, that Dr. Levy had a connection with the
Schumacher Group, that Dr. Levy had filed and was discharged in bankruptcy, and
that Oceanus was underfunded requiring it to be placed in liquidation. A reasonable
course of investigation at that time would have garnered information sufficient to
commence this tort action. Mr. Dowd’s lawsuit filed on May 25, 2021, comes too
late to urge these fraud-based claims. Therefore, we affirm the trial court’s factual
findings and uphold its ruling on the issue of prescription.
12 DECREE
For the reasons stated, we affirm the judgment of the trial court. Costs of this
appeal are assessed to Dwayne Douglas Dowd, Sr., individually and as
Administrator of the Estate of Cora Lee Dowd.
AFFIRMED.