Rick M. Sutton, Individually and Derivatively on Behalf of Rjano Holdings, Inc. and Maison Royale, LLC v. Jack Adams, Maison Royale, LLC and Rjano, Inc.

• Court: Louisiana Court of Appeal
• Decided: October 12, 2022
• Docket: 2019-CA-0992
• Status: Published

Opinion

RICK M. SUTTON, * NO. 2019-CA-0992 INDIVIDUALLY AND DERIVATIVELY ON BEHALF * OF RJANO HOLDINGS, INC. COURT OF APPEAL AND MAISON ROYALE, LLC * FOURTH CIRCUIT VERSUS * STATE OF LOUISIANA JACK ADAMS, MAISON ******* ROYALE, LLC AND RJANO, INC.

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2014-10709, DIVISION “N-8” Honorable Ethel Simms Julien, Judge ****** JUDGE SANDRA CABRINA JENKINS ****** (Court composed of Judge Edwin A. Lombard, Judge Roland L. Belsome, Judge Joy Cossich Lobrano, Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins)

Robert G. Harvey, Sr. LAW OFFICE OF ROBERT G. HARVEY, SR., APLC 600 North Carrollton Avenue New Orleans, LA 70119 Donald C. Douglas, Jr. THE DOUGLAS LAW FIRM, LLC 1070 West Causeway Approach Suite B Mandeville, LA 70471 COUNSEL FOR PLAINTIFF/APPELLANT Kim M. Boyle Rebecca Sha PHELPS DUNBAR LLP 365 Canal Street, Suite 2000 New Orleans, LA 70130 Gregory W. Kehoe GREENBERG TRAURIG, P.A. 101 E. Kennedy Blvd., Suite 1900 Tampa, FL 33602 COUNSEL FOR DEFENDANTS/APPELLEES MOTIONS DENIED; JUDGMENT AFFIRMED

OCTOBER 12, 2022 SCJ EAL RLB JCL RML This appeal arises from one of several lawsuits involving Jack Adams and

Rick Sutton, in a protracted dispute over their failed business relationship and the

control of two business entities, RJANO Holding, Inc. and Maison Royale, LLC.1

In the suit underlying this appeal, Sutton filed an individual claim for breach of

contract and a derivative claim, on behalf of Maison Royale and RJANO, against

Adams, Maison Royale, and RJANO.

1 The Adams/Sutton litigation includes six civil suits filed in Orleans Parish Civil District Court,

all but two of which were allotted to different divisions of the district court. As explained in further detail below, four appeals and four writ applications, arising from four of the underlying civil suits, were lodged in this Court in 2019. In January 2020, this Court sua sponte consolidated all four appeals and four writ applications. Oral arguments for the consolidated matter were set for April 28, 2020, but continued without date due to the COVID-19 pandemic. Thereafter, the resetting of this consolidated matter was continued and delayed three more times due, respectively, to a stay of the matter, the closure of the Court due to Hurricane Ida, and a continuance requested on account of the health of lead counsel for Sutton. Oral arguments for the consolidated appeals and writs were held before the five-judge panel on May 20, 2022. After submission, upon further consideration, this Court ordered that the appeals be unconsolidated to address the issues presented in each with more precision and clarity.

1 Sutton now appeals the April 26, 2019 judgment, rendered by Orleans Parish

Civil District Court Div. N,2 granting Adams’ exceptions of no right of action and

res judicata, and dismissing all claims against defendants, Adams, Maison Royale,

and RJANO, with prejudice. Upon review of the record, and based on applicable

law, we affirm the April 26, 2019 judgment rendered by Div. N.

FACTUAL AND PROCEDURAL BACKGROUND

In June 2011, Sutton and Adams entered into a business relationship for the

purpose of leasing property at 501 Royal Street (the “Property”) and operating a

fine jewelry store and art gallery at that location. Sutton and Adams did not have a

written partnership agreement or business plan, but the parties agreed to form two

entities: RJANO, a corporation to lease the Property; and Maison Royale, an LLC

created to operate the store. By October 2014, the business relationship between

Sutton and Adams had deteriorated; and, since then, Sutton and Adams have been

locked in a series of lawsuits stemming from their failed business relationship.

For purposes of understanding the procedural posture and the issues in this

appeal, we provide the following background of two of the suits in the

Adams/Sutton litigation.3

“Breach of Contract” suit (Div. N)

The instant appeal originates from the first suit filed by Sutton against

Adams. In November 2014, Sutton, individually and derivatively on behalf of

RJANO and Maison Royale, filed a petition for breach of contract and damages,

2 We note the Division of Orleans Civil District Court to which this case was allotted, because

there are overlapping proceedings and conflicting judgments in the Adams/Sutton litigation. 3 A synopses of all Adams/Sutton suits is provided in the related opinion of Adams v. Sutton, 19-

0247 (La. App. 4 Cir. 10/12/2022), -- So.3d –, (hereinafter “Adams I”) rendered on the same date as the instant appeal.

2 naming Adams, RJANO, and Maison Royale as defendants.4 The Breach of

Contract suit was allotted to Div. N.

In his original petition, Sutton alleged that he and Adams agreed to form

RJANO and Maison Royale; that “[u]nder the terms of the agreement entered into

prior to incorporation” Adams would put up the financial cash needed and be

permitted to take tax credits for the first year; and that “Adams was to handle all of

the corporate and LLC paperwork.” Sutton alleged that the agreement was for

RJANO to lease the Property and for Maison Royale to operate the jewelry and

fine art store. In the first year after their agreement, Sutton alleged that he worked

at the Maison Royale store without pay and later became a salaried employee.

According to Sutton, in October 2014, Adams breached their agreement and

effectively froze Sutton out of the business, causing him financial losses. Sutton

also alleged that Adams had engaged in ultra vires acts constituting intentional

breach of fiduciary duties, a lack of good faith and fair dealing, gross negligence,

and reckless disregard for the interests of RJANO, Maison Royale, and the

owners/members.

Sutton, individually, sought damages for breach of contract. He also sought

injunctive relief, preventing Adams from acting unilaterally on behalf of RJANO

and Maison Royale.

After several years of litigation without trial or resolution in this suit, on

January 23, 2019, Adams filed peremptory exceptions of no right of action and res

judicata, seeking dismissal of all claims against all defendants with prejudice.

Adams argued that adjudication of Sutton’s Breach of Contract suit is precluded by

4 Rick M. Sutton, Individually and Derivatively on behalf of RJANO Holdings, Inc. and Maison

Royale, LLC v. Jack Adams, Maison Royale, LLC and RJANO, Inc., CDC No. 2014-10709.

3 a final judgment, determinative of the issues in this case, rendered by Div. D on

October 25, 2017, and affirmed on appeal by this Court on December 19, 2018.

Adams also argued that Sutton had no right of action to pursue a derivative suit on

behalf of Maison Royale.

“RICO” suit (Div. D)

While the Breach of Contract suit was ongoing in Div. N, in November

2016, Sutton filed another petition for damages against Adams, as well as Adams’

father, Charles Adams, and Polly Point Imports Corp.5 Sutton alleged that Adams,

his father, and Polly Point impermissibly sold jewelry in the Maison Royale store

at “fire sale” prices, through fraudulent means, and in breach of fiduciary duty to

Sutton, thereby causing damages to Sutton. Sutton asserted claims against all

defendants for (1) violations of the Louisiana Racketeering Act (“RICO”); (2)

violations of the Louisiana Unfair Trade Practices Act (“LUTPA”); (3) fraud and

misrepresentation; (4) breach of fiduciary duty; and (5) detrimental reliance. The

RICO suit was allotted to Div. D.

In October 2017, defendants filed exceptions of no cause of action, no right

of action, vagueness, peremption and lack of personal jurisdiction. At the

conclusion of the hearing on the exceptions, Div. D granted defendants’ exceptions

of no cause of action and no right of action as to Sutton’s RICO claims, LUTPA

claims, and breach of fiduciary duty claims; granted defendants’ exception of no

cause of action as to Sutton’s claims of fraud and misrepresentation and

detrimental reliance; and dismissed all of Sutton’s claims against all defendants

5 Rick Sutton v. Jack Adams, Charles Adams and Polly Point Imports Corp., CDC No. 2016-

11427.

4 with prejudice. Div. D rendered its written judgment in the RICO suit on October

25, 2017 (“the RICO judgment”).

On appeal, this Court affirmed the RICO judgment, including Div. D’s

dismissal of Sutton’s claims with prejudice. Sutton v. Adams, 18-0196 (La. App. 4

Cir. 12/19/18), 318 So.3d 776 (hereinafter “Sutton I”). Thereafter, the Louisiana

Supreme Court denied writs and Sutton’s application for reconsideration. Sutton v.

Adams, 19-346 (La. 4/22/19), 267 So.3d 1112, reconsideration denied, 19-00346

(La. 9/6/19), 278 So.3d 362.

Hearing on Adams’ exceptions in Div. N

After this Court affirmed the RICO judgment, Adams filed the exceptions of

no right of action and res judicata in the Breach of Contract case in Div. N.

Regarding the exception of no right of action, Adams argued that, based upon the

holding in Sutton I, Sutton lacks standing to bring a derivative action in the Breach

of Contract suit. Moreover, Adams argued that Sutton’s claims in the Breach of

Contract suit involve the same parties and arose from the same transaction or

occurrence as in the RICO case and, under the doctrine of res judicata, the RICO

judgment precludes litigation of the claims in the Breach of Contract suit. Thus,

Adams argued that all of Sutton’s claims must be dismissed with prejudice.

Div. N held a hearing on Adams’ exceptions on March 22, 2019, and, on

April 26, 2019, Div. N rendered judgment granting Adams’s exceptions of no right

of action and res judicata and dismissing all claims against defendants.6 Sutton

filed a timely motion for new trial of Div. N’s April 26, 2019 judgment, which was

denied on August 21, 2019.

This appeal of Div. N’s April 26, 2019 judgment followed.

6 At Sutton’s request, Div. N issued written reasons for judgment on May 20, 2019.

5 JURISDICTIONAL MOTIONS

Before addressing the merits of this appeal, we review two motions filed by

Sutton. As noted previously by this Court, the submission of this appeal was

delayed by more than two years. Then, just days prior to the oral arguments and

submission of this matter on May 20, 2022, Sutton filed two motions seeking

expedited relief. First, on May 9, 2022, Sutton filed an expedited motion to

dismiss appeal for lack of subject matter jurisdiction. Second, on May 19, 2022,

Sutton filed an expedited motion to vacate the April 26, 2019 judgment as

absolutely null for lack of notice. This Court issued orders denying the requests

for expedited consideration and referring the motions to the merits. We now

review these motions and deny both.

Motion to Dismiss for Lack of Subject Matter Jurisdiction

Sutton argues that the April 26, 2019 judgment rendered by Div. N should

be vacated for lack of sufficient, decretal language. See Urquart v. Spencer, 15-

1354, p. 3 (La. App. 4 Cir. 12/1/16), 204 So.3d 1074, 1077 (“In the absence of the

necessary decretal language, the judgment is not final and appealable.”). More

specifically, Sutton argues that the judgment fails to specify the relief granted

because it does not delineate the claims—the individual claims of Sutton or the

derivative claims filed on behalf of Maison Royale and RJANO—that were

dismissed. See id. (quoting Bd. of Supervisors of Louisiana State Univ. v. Mid City

Holdings, L.L.C., 14-0506, p. 3 (La. App. 4 Cir. 10/15/14), 151 So.3d 908, 910)

(“[I]n order for the language of a judgment to be considered ‘decretal’ it ‘must

name the party in favor of whom the ruling is ordered, the party against whom the

ruling is order, and the relief that is granted or denied.’”).

The judgment at issue states, in pertinent part, as follows:

6 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED, that Defendant, Jack Adams’ Peremptory Exception of No Right of Action and Peremptory Exception of Res Judicata are hereby GRANTED; such that all claims against Defendants, Jack Adams, Maison Royale, LLC, and RJANO, INC. are hereby DISMISSED WITH PREJUDICE.

Accordingly, because the merits of this case have been determined in whole and in Defendants’ favor, …

Upon review of Div. N’s April 26, 2019 judgment, we find no lack of

definitive, decretal language. The judgment requires no reference to extrinsic

sources to understand that all of the claims raised in this action are dismissed

against all named defendants, with prejudice, and the merits of the case have been

determined in whole and in favor of those defendants. Therefore, we find Div. N’s

April 26, 2019 judgment to be final and appealable, and we find no merit to

Sutton’s motion to dismiss for lack of subject matter jurisdiction.

Motion to Vacate Absolutely Null Judgment for Lack of Notice

Raising the argument for the first time on appeal, Sutton argues that Div. N’s

April 26, 2019 judgment granting Adams’ exceptions of no right of action and res

judicata is absolutely null due to Adams’ failure to request service of his

exceptions on Maison Royale and RJANO, independently from service requested

on Sutton.7 Here, Sutton asserts the absolute nullity of the judgment pursuant to

La. C.C.P. art. 2002, which states in pertinent part, “a final judgment shall be

annulled if it is rendered … [a]gainst a defendant who has not been served with

process as required by law and who has not waived objection to jurisdiction”.

Generally, a question regarding the sufficiency of service of process cannot

be raised for the first time on appeal and should be raised in a suit to annul. Corte

v. Cash Technologies, Inc., 02-0846, p. 7 (La. App. 1 Cir. 4/2/03), 843 So.2d 1162,

7 Sutton does not dispute that he was properly served with Adams’ exceptions.

7 1166; State, Dept. of Social Services v. Matthews, 96-711, p. 5 (La. App. 5 Cir.

1/28/97), 688 So.2d 137, 140. “The justification for requiring a separate suit is so

that a hearing can be held to ascertain facts regarding whether defendants were

properly served.” Corte, supra.

We find this question of insufficiency of service is not properly raised for

the first time in this appeal.8 Accordingly, we now turn to discuss the merits of the

appeal.

DISCUSSION

In his appeal of Div. N’s April 26, 2019 judgment, Sutton argues that Div. N

erred in granting Adam’s exceptions of res judicata and no right of action and in

dismissing all of Sutton’s claims against defendants in this Breach of Contract

suit.9 10

Res Judicata

In reviewing a judgment sustaining an exception of res judicata, the

appellate court must determine whether the trial court’s decision is legally correct

8 The record reflects Sutton did not raise a declinatory exception of insufficiency of service at

any time in response to any pleadings filed by Adams in the trial court. In addition, we note that there are multiple pleadings indicating Adams is the agent for service of process for Maison Royale, and that the attorneys representing Adams are the attorneys representing Maison Royale and RJANO. 9 Sutton raises five assignments of error as follows:

1. The trial court erred in denying Sutton’s motion for new trial because the judgment on which the two exceptions were based was found to be an absolute nullity. 2. The trial court erred in granting the exception of res judicata on the merits. 3. The trial court erred in granting the exception of no right of action on the merits. 4. The trial court erred in including the dismissal of claims brought by parties who did not file any exceptions. 5. The trial court erred in including additional relief in the judgment that was not prayed for or litigated by the parties. 10 In Sutton’s first assignment of error, he argues that Div. N erred in granting Adams’

exceptions and denying his motion for new trial, because the RICO judgment rendered by Div. D, on which the exceptions were based, was found to be an absolute nullity in a September 3, 2019 judgment rendered by Div. L in another Adams/Sutton suit. In consideration that Div. N’s judgment on the motion for new trial was rendered several months before Div. L’s September 3, 2019 judgment, and in further consideration of this Court’s decision vacating Div. L’s September 3, 2019 judgment annulling the RICO judgment, we find no merit in this argument. Adams v. Sutton, 19-1105 (La. App. 4 Cir. 10/12/2022), -- So.3d – (hereinafter “Adams II”).

8 or incorrect. Schiff v. Pollard, 16-0801, p. 8 (La. App. 4 Cir. 6/28/17), 222 So.3d

867, 874.

In general, the doctrine of res judicata precludes the re-litigation of claims

arising out of the same facts and circumstances between the same parties of a

previous suit in which there is a valid, final judgment. Id.; Ins. Co. of North

America v. La. Power & Light Co., 08-1315, p. 5 (La. App. 4 Cir. 3/4/09), 10

So.3d 264, 267. Res judicata is designed to “promote judicial efficiency and final

resolution of disputes.” Avenue Plaza, L.L.C. v. Falgoust, 96-0173, p. 4 (La.

7/2/96), 676 So.2d 1077, 1079.

The requirements that must be met for Louisiana courts to determine that a

matter is res judicata are set forth in La. R.S. 13:4231, as follows:

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:

(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.

(2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.

(3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

Under the res judicata statute, a second action is precluded when all of the

following five elements are satisfied: (1) the judgment is valid; (2) the judgment is

final; (3) the parties are the same; (4) the cause or causes of action asserted in the

9 second suit existed at the time of final judgment in the first litigation; and (5) the

cause or causes of action asserted in the second suit arose out of the transaction or

occurrence that was the subject matter of the first litigation. Burguieres v.

Pollingue, 02-1385, p. 8 (La. 2/25/03), 843 So. 2d 1049, 1053. “[T]he chief

inquiry is whether the second action asserts a cause of action which arises out of

the transaction or occurrence that was the subject matter of the first action.” Id.;

see also, La. R.S. 13:4231 Cmt. (a) (1990) (“For purposes of res judicata it would

not matter whether the cause of action asserted in the second action was the same

as that asserted in the first or different as long as it arose of the transaction or

occurrence that was the subject matter of the first action.”).

In this case, Div. N found that all five of the required elements of res

judicata were satisfied. Div. N concluded that the RICO judgment was a valid,

final judgment between the same parties arising out of the same transaction or

occurrence as the Breach of Contract suit; thus, Div. N found that the Breach of

Contract suit was precluded by the RICO judgment. We agree.

We find the first two elements of res judicata are clearly satisfied. A valid

judgment is one rendered by a court with jurisdiction over both the subject matter

and the parties after proper notice was given. Burguieres, 02-1385, p. 8, 843 So.2d

at 1053. A final judgment is one that disposes of the merits in whole or in part. La.

C.C.P. art. 1841. The RICO judgment was rendered by Div. D, a court of

competent jurisdiction, after proper notice was given to all parties. In addition,

that judgment, affirmed by this Court on appeal, is final. Sutton I, 18-0196, 318

10 So.2d 776, writ denied, 19-346, 267 So.3d 1112, reconsideration denied, 19-

00346, 278 So.3d 362.11

The third element of res judicata is also clearly satisfied, because both suits

involve the same parties in the same capacities. Sutton filed both the Breach of

Contract suit and the RICO suit against Adams. The fact that there were additional

defendants—Charles Adams and Polly Point Imports—in the RICO suit, and that

Sutton named Maison Royale and RJANO in the Breach of Contract suit, does not

negate this element of res judicata. See Dean v. Delacroix Corp., 12-0917, p. 5

(La. App. 4 Cir. 12/26/12), 106 So.3d 283, 287 (finding the addition of defendants

in the second action “is of no moment” in the determination of res judicata); Austin

v. Markey, 08-381, p. 5 (La. App. 5 Cir. 11/25/08), 2 So.3d 438, 441 (holding that

the exception of res judicata cannot be defeated by the naming of additional

defendants).12

We find the fourth and fifth requirements of res judicata are evident in the

timeline, petitions, and pleadings in the two cases. The record reflects that the

facts and allegations stated in the Breach of Contract suit, filed in 2014, were

11 In his opposition to Adams’ exception of res judicata, Sutton argued that this Court’s opinion

in Sutton I, affirming the October 25, 2017 judgment, was not final and definitive, pursuant to La. C.C.P. art. 2166, which provides in pertinent part as follows:

E. When an application for certiorari to the supreme court is timely filed, a judgment of the court of appeal becomes final and definitive after a delay of five days, exclusive of legal holidays, commencing to run on the day after the clerk has mailed the denial by the supreme court of the application for certiorari.

The Louisiana Supreme Court denied writs in Sutton I on April 22, 2019. Div. N rendered its judgment on Adams’ exceptions on April 26, 2019, and denied Sutton’s motion for new trial on August 21, 2019. As of the filing of Sutton’s motion for new trial, Sutton I was final and definitive pursuant to La. C.C.P. art. 2166(E). 12 As discussed infra, we also find that Sutton had no right of action to institute a derivative

action. In Sutton I, this Court found that the documents presented to Div. D “plainly showed that Mr. Sutton was not a member of Maison Royale and therefore he had no right of action for breach of fiduciary duty.” 18-0196, p. 9, 318 So.3d at 783. In addition, Sutton’s Breach of Contract petition does not explicitly allege that he was a shareholder of RJANO.

11 restated in the RICO suit, filed in 2016. The causes of action in both suits arose

out of the same failed business relationship, which Sutton details in both petitions.

Sutton alleges that he and Adams agreed to form Maison Royale and RJANO and

to lease the Property at 501 Royal Street in order to operate a fine jewelry and art

gallery; Sutton further alleges that Adams breached the agreement, fired Sutton,

and effectively froze Sutton out of the business partnership.

In the first filed Breach of Contract suit, Sutton sued in his individual

capacity for breach of contract, and he asserted derivative claims on behalf of

Maison Royale and RJANO. Sutton also asserted that Adams engaged in ultra

vires acts constituting intentional breach of fiduciary duties, a lack of good faith

and fair dealing, gross negligence, and reckless disregard for the interests of

RJANO, Maison Royale, and the owners/members.

In the RICO suit, Sutton again sued Adams, as well as additional defendants,

Charles Adams and Polly Point Imports. The factual allegations in this petition are

virtually identical. Sutton added further allegations against Adams and Charles

Adams, related to an alleged “fire sale” at the fine jewelry and art gallery, and

against Adams and Polly Point Imports for an alleged transfer of interest in Maison

Royale by Adams. Sutton then asserted causes of action for RICO and LUTPA

violations, fraud and misrepresentation, breach of fiduciary duty, and detrimental

reliance. These causes of action arose out of the same failed business relationship

as the Breach of Contract suit. Moreover, the causes of action asserted in the

Breach of Contract suit existed before the RICO suit was filed and, certainly, at the

time the RICO judgment was rendered.

12 Based on our review, we find all five requirements for res judicata are met.

Therefore, we find Div. N’s judgment granting the exception of res judicata is

legally correct.

No Right of Action

Sutton also argues on appeal that Div. N erred in granting Adams’ exception

of no right of action as to the derivative claims of Maison Royale and RJANO in

this Breach of Contract suit. Sutton asserts that the RICO suit cannot preclude the

derivative action of Maison Royale and RJANO.

The peremptory exception of no right of action presents a question of law

that is reviewed de novo on appeal. Zeigler v. Housing Authority of New Orleans,

15-0626, p. 4 (La. App. 4 Cir. 3/23/16), 192 So.3d 175, 178. “An exception of no

right of action assumes the petition states a valid cause of action, and questions

whether the plaintiff in the particular case has a legal interest in the subject matter

of the litigation.” Bruzeau v. Wells Fargo Bank, N.A., 12-0075, p. 5 (La. App. 4

Cir. 8/22/12), 99 So.3d 1010, 1014 (citations omitted). “An action can only be

brought by a person having a real and actual interest, which he asserts.” Howard v.

Admin. of Tulane Educ. Fund, 07-2224, p. 8 (La. 7/1/08), 986 So.2d 47, 54 (citing

La. C.C.P. art. 681).

In the Breach of Contract suit, Sutton filed suit in his individual capacity and

derivatively on behalf of Maison Royale and RJANO. In Louisiana, a shareholder

of a corporation or a member of an LLC may bring a derivative action to enforce a

right on behalf of the corporation or LLC, or to recover losses to the entity. La.

C.C.P. art. 611; see Paul Piazza and Son, Inc. v. Piazza, 11-548, p. 6 (La. App. 4

Cir. 12/28/11), 83 So.3d 1066, 1070. The petition in a derivative action must

13 allege that the plaintiff is a shareholder or member at the time of the occurrence or

transaction of which he complains. La. C.C.P. art. 615(1).

First, we consider Sutton’s right of action on behalf of Maison Royale. In

the Breach of Contract petition, Sutton alleged that he was a member of Maison

Royale, “a subsidiary of RJANO”. As discussed supra, the allegations against

Adams include that he breached a fiduciary duty owed to members of Maison

Royale. Sutton also raised breach of fiduciary duty as a cause of action in the

RICO suit. In the RICO judgment, Div. D determined, through its examination of

the corporate documents, that “Sutton was not a member of Maison Royale and

therefore he had no right of action for breach of fiduciary duty because he was

claiming an alleged duty not owed to him but to Maison Royale and its members.”

Sutton I, 18-0196, p. 9, 218 So.3d at 783. In Sutton I, this Court affirmed the

RICO judgment, specifically in granting the exception of no right of action as to

the breach of fiduciary duty asserted by Sutton. Based on the valid, final judgment

in the RICO suit, in light of the applicable law of La. R.S. 13:4231(3), we find the

RICO judgment rendered by Div. D and affirmed by this Court conclusively

determined that Sutton is not a member of Maison Royale.13

We now consider Sutton’s right of action on behalf of RJANO. In our

review of the Breach of Contract petition, we find that Sutton does not explicitly

allege that he was a shareholder of RJANO. Sutton alleges that he and Adams

agreed to form RJANO and “[u]nder the agreement the corporate stock was to be

13 La. R.S. 13:4231(3) states, “[a] judgment in favor of either the plaintiff or the defendant is

conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.” “Under ‘issue preclusion or collateral estoppel, once a court decides an issue of fact or law necessary to its judgment, that decision precludes relitigation of the same issue in a different cause of action between the same parties.’” Cunningham v. City of New Orleans, 21-0532, p. 14 (La. App. 4 Cir. 3/30/22), 336 So.3d 977, 988 (quoting Williams v. City of Marksville, 02-1130, p. 3 (La. App. 3 Cir. 3/5/03), 839 So.2d 1129, 1131).

14 split 50/50”; then, he alleges that “Adams was to handle all of the corporate and

LLC paperwork.” However, Sutton only alleges that there was an agreement, not

that he owns stock or shares in RJANO. See Christopher v. Liberty Oil & Gas

Corp., 94-2280 (La. App. 1 Cir. 10/6/95), 666 So.2d 410, 411 (holding that

plaintiffs in derivative actions in Louisiana must allege to be a shareholder at the

time of the complained occurrence and must be a current shareholder). We do not

find allegations sufficient to establish by what authority he claims to bring the

derivative suit on behalf of RJANO.14

Accordingly, we find no error in Div. N’s judgment granting Adams’

exception of no right of action.

CONCLUSION

For the foregoing reasons, we affirm the April 26, 2019 judgment rendered

by Div. N, in the Breach of Contract suit, granting Adams’ peremptory exceptions

of res judicata and no right of action and dismissing all claims against all

defendants with prejudice.

MOTIONS DENIED; JUDGMENT AFFIRMED

14 We also note this Court’s recent opinion in RJANO Holdings Inc. and Maison Royale, LLC v.

Phelps Dunbar, LLP, et al., 22-0058, p. 23 (La. App. 4 Cir. 9/21/22), -- So.3d --, in which this Court concluded that “Sutton has not established that he has the legal capacity to sue on behalf of RJANO or Maison Royale.”