Sacco v. Paxton

133 So. 3d 213, 2012 La.App. 4 Cir. 1595, 2014 WL 528755, 2014 La. App. LEXIS 224
CourtLouisiana Court of Appeal
DecidedJanuary 30, 2014
DocketNo. 2012-CA-1595
StatusPublished
Cited by5 cases

This text of 133 So. 3d 213 (Sacco v. Paxton) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sacco v. Paxton, 133 So. 3d 213, 2012 La.App. 4 Cir. 1595, 2014 WL 528755, 2014 La. App. LEXIS 224 (La. Ct. App. 2014).

Opinions

JAMES F. McKAY III, Chief Judge.

1 defendants, Karyl Pierce Paxton (“Ms. Paxton”), Pierce Paxton Design Studios, L.L.C. (“PPDS”), and Karyl Paxton Design, Inc. (“KPD”), appeal the trial court’s April 16, 2012 judgment in favor of plaintiff, Christopher J. Sacco (“Mr. Sacco”), awarding him damages for breach of fiduciary duty, and breach of partnership agreement and/or joint venture agreement.1

The main dispute in this lawsuit is whether a partnership or joint venture agreement existed between Mr. Sacco and Ms. Paxton. A written partnership agreement was never executed. Mr. Sacco contends that he entered into an oral partnership agreement with Ms. Paxton in 1997, in which he agreed to help grow her original business, Pierce Paxton Collections, in exchange for an equity partnership. He alleges that the agreement was that he would contribute time and labor, or in his words, “sweat equity,” in exchange for a partnership interest, which Ms. Paxton offered because she could not afford to pay him at the time. He further contends that this alleged partnership agreement extended to companies formed later by Ms. Pax-ton, i.e., PPDS (created in 2000), and KPD (created in 2003). Conversely, Ms. Paxton contends that Mr. Sacco was an employee or contractor [¡¡who worked for her and her companies. She alleges that she compensated Mr. Sacco for all of his work but never offered him a partnership interest in any of her businesses.

In the 1990’s, Ms. Paxton operated an interior design business called Pierce Pax-ton Collections, first in Jackson, Mississippi, and later in New Orleans, Louisiana, where she met Mr. Sacco. In late 1997, Ms. Paxton asked Mr. Sacco to work with her at Pierce Paxton Collections. At that time, Ms. Paxton and Mr. Sacco were involved in a romantic relationship. They never married so no community property regime was ever established.

Ms. Paxton created PPDS in 2000. Mr. Sacco’s name was not included in the documents forming this business entity. Through PPDS, lighting fixture designs were to be marketed to stores on a wholesale basis. The designs were successful, and as a result, PPDS generated significantly more revenue than Pierce Paxton Collections.

In 2003, Ms. Paxton created KPD, which engaged in the licensing of lighting fixture designs. Mr. Sacco’s compensation increased as PPDS and KPD became more profitable. However, the relationship between Ms. Paxton and Ms. Sacco deteriorated as Mr. Sacco asserted his alleged status as an equity partner in PPDS and KPD. Attempts to resolve the issue of Mr. [216]*216Sacco’s role in Ms. Paxton’s companies were unsuccessful. In late 2003, when Ms. Paxton was out of the country, Mr. Sacco allegedly downloaded computer files, took Ms. Paxton’s design sketchbooks from the office, and wrote several PPDS checks to himself in excess of $40,000.00. When Ms. Paxton discovered Mr. Sacco’s actions, she fired him.

Shortly thereafter, on January 9, 2004, Mr. Sacco filed the instant lawsuit against Ms. Paxton, PPDS and KPD. The petition alleges that when Mr. Sacco and |sMs. Paxton first discussed working together in late 1997, Ms. Paxton suggested that they join as partners in her business, Pierce Paxton Collections, and pool resources, time and energy to grow and expand Pierce Paxton Collections. He further alleged that his business partnership with Ms. Paxton extended to the new business entities, PPDS and KPD. Mr. Sacco alleged that from 1998 until the filing of his lawsuit, the two worked together to develop the design businesses. He alleged that he provided computer graphics, handled all accounting and checking accounts and most of the business documents. He further alleged that he was designated “managing partner” of the businesses, dealt with customers and operated the manufacturing process. He stated that during this time, he and Ms. Paxton pooled their time and resources “in hopes of splitting future profits.” According to Mr. Sacco, it was only after the businesses started becoming more profitable and the parties’ personal romantic relationship ended that Ms. Pax-ton attempted to force Mr. Sacco out of the businesses, insisting that he change his status from partner to employee and threatening to deny him profits of the businesses if he refused to do so. He asked for a declaratory judgment ruling that he and Ms. Paxton had a partnership or joint venture, and that he was entitled to 50% ownership interest in all profits, “insofar as Sacco and Paxton have no contrary agreement to split profits unevenly.” He also asked that Ms. Paxton be held liable to him for breach of contract and breach of fiduciary duty for her efforts to harm his rights to revenues generated by their alleged partnership.

Ms. Paxton, PPDS and KPD answered the petition, denying that Ms. Paxton ever offered Mr. Sacco a partnership in any of her businesses or that he ever worked with her in the capacity of a partner. She also specifically denied that they had an agreement to split profits or to grant Mr. Sacco joint ownership and control |4of PPDS. She stated that she discussed working with him, but with Mr. Sacco working on a salaried basis only. While she admitted entrusting Mr. Sacco with the internal accounting of the businesses, including his authority to sign on certain accounts, she denied that he was ever charged with the overall management of the businesses, and stated that his listing himself as “partner” or “managing partner” on any document relating to her businesses was unauthorized. She stated that she formed PPDS as a limited liability company and was its sole member.

In addition to the answer, the defendants filed a reconventional demand against Mr. Sacco, alleging that shortly before Ms. Paxton terminated Mr. Sacco’s employment in January 2004, he removed checking account statements, cancelled checks, and invoices of PPDS without authority. Additionally, Mr. Sacco withdrew a significant amount of funds from the PPDS accounts without authority. She further alleged that in addition to improperly withdrawing funds from PPDS, Mr. Sacco attempted to disrupt and interfere with contractual relationships that PPDS had with certain vendors and customers. Ms. Paxton alleged that Mr. Sacco’s actions constituted conversion and trespass. [217]*217She asked for damages, and also asked for injunctive relief for the actual or threatened misappropriation of trade secrets pursuant to the Louisiana Uniform Trade Secrets Act.

Following a trial on the merits, the jury concluded that Ms. Paxton entered into a partnership or joint venture agreement with Mr. Sacco, breached that agreement and knowingly breached her fiduciary duty to him. Judgment was rendered in favor of Mr. Sacco and against Ms. Paxton, PPDS, and KPD in the amount of $1,153,673.00 for breach of fiduciary duty, and breach of a partnership agreement and/or joint venture agreement, plus interest from date of judicial demand and costs of the proceedings. The jury also found that Mr. Sacco |ficommitted a conversion of property that belonged to Ms. Paxton, PPDS and/or KPD. The trial court adopted the jury’s verdict on the issue of conversion, and rendered judgment in favor of Ms. Paxton, PPDS and KPD, and against Mr. Sacco, in the amount of $22,000.00, plus interest from date of judicial demand. The defendants’ motions for new trial and judgment notwithstanding the verdict were denied.

The defendants now appeal the portion of the trial court judgment awarding Mr. Sacco, damages for the defendants’ breach of fiduciary duty and breach of partnership agreement and/or joint venture agreement. The portion of the judgment regarding the award to the defendants for Mr.

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133 So. 3d 213, 2012 La.App. 4 Cir. 1595, 2014 WL 528755, 2014 La. App. LEXIS 224, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sacco-v-paxton-lactapp-2014.