Sanders Family, LLC No. 1 v. Sanders

82 So. 3d 434, 2011 WL 6183570, 2011 La. App. LEXIS 1544
CourtLouisiana Court of Appeal
DecidedDecember 14, 2011
DocketNo. 46,476-CA
StatusPublished
Cited by9 cases

This text of 82 So. 3d 434 (Sanders Family, LLC No. 1 v. Sanders) 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
Sanders Family, LLC No. 1 v. Sanders, 82 So. 3d 434, 2011 WL 6183570, 2011 La. App. LEXIS 1544 (La. Ct. App. 2011).

Opinions

CARAWAY, J.

_jjln this action, a family-owned limited liability company seeks to rescind four sales of the company’s immovable property. The plaintiff claims that the company manager was improperly influenced and induced by her son to convey to him the properties for prices significantly less than the fair market value. The company asserts that the manager’s execution of each sale was from the advice and within the confidence of her son, thus vitiating her consent by fraud. The trial court dismissed the limited liability company’s claims for rescission of the sales contracts on the exception of prescription. Finding that the claims regarding three of the four sales have not prescribed, we affirm in part and reverse in part.

Facts

After the death of Zack Sanders, the assets of the former community between [438]*438Zack and Ethel Sanders1 were placed into three limited liability companies wholly owned by Ethel Sanders (“Ethel”) and her children, Colton, Galen and Linda Sue. Specifically, the Sanders Family, LLC No. 1 (the “LLC”) was established on January 3, 1997, and it owned various real estate of the former community, the ownership of which is now contested. Ethel was listed as managing partner and owned 50% of the LLC membership interest, and the children each owned a one-third membership in the remaining one-half interest. Colton Sanders was named as registered agent.

|gOn November 19, 2007, the LLC and Larry L. Taylor, as agent for Linda Sue Sanders, individually and derivatively, filed suit against Colton Sanders, Deborah Sanders, Claiborne Timber, LLC (collectively the “Defendants”), and as a nominal defendant, the LLC, seeking rescission of four sales of the LLC’s property to the Defendants based upon claims of lesion beyond moiety, fraud and breach of fiduciary duty. Beginning in 2001, when Ethel was approximately 76 years old, the sales began. The following four deeds, executed by Ethel on behalf of the LLC, were placed at issue:

1) July 30, 2001 sale to Claiborne Timber, LLC, of six tracts of land located in Bienville Parish for the sum of $110,000 (“Claiborne Timber Sale”)2
2) September 5, 2003 sale to Colton and Deborah Sanders of a tract of land with a home in Bienville Parish for the sum of $100,000 (“Bienville Parish Sale”)
3) June 22, 2005 sale to Deborah Sanders of lots 15 and 16 of Waller Subdivision for the sum of $60,000 (“Waller Subdivision Sale”)
4) November 30, 2005 sale to Deborah Sanders of property in Whittington Subdivision for the sum of $100,000 (“Benton Road Property Sale”). On May 31, 2005, the LLC had granted an option to purchase the property to Deborah Sanders for the stated consideration of $10.00 and other valuable consideration. The term of the option extended to June 2008.

On November 18, 2008, the trial court dismissed the case with prejudice after sustaining the defendants’ exception of peremption/ prescription. After an appeal by plaintiffs, this court reversed the judgment and remanded to allow the plaintiffs to amend their petition “to allege fraud lswith greater particularity” in Sanders Family, L.L.C. v. Sanders, 44,632 (La. App.2d Cir.9/23/09), 21 So.3d 433 (hereinafter “Sanders I ”).

On remand, the plaintiffs supplemented their petition. The common thread of their claims attacking each sale was that Colton (or his company, Claiborne Timber, or his wife) had acquired the properties for values far less than the fair market value and had prompted each sale by false information and nondisclosures intended to deceive his mother.

Defendants again filed the exception of prescription challenging the timeliness of the action contesting the four transactions. At the hearing on the peremptory excep[439]*439tion, the court heard testimony from Ethel and Colton regarding the facts surrounding the subject property transactions. Additionally, many documents of Ethel’s various business transactions were submitted by Defendants to demonstrate her business savvy and understanding of the subject transactions. Finally, the two witnesses and notary for the Claiborne Timber Sale testified.

On April 26, 2010, the trial court rendered a written ruling and final judgment granting Defendants’ exception of prescription regarding each of the four transactions. A signed final judgment followed on April 5, 2011, which dismissed “all of the claims of Plaintiffs.” This appeal ensued.

Discussion

We will review each of the four transactions in detail below. However, we must first identify the cause of action which has been attempted to be alleged for the rescission of each sale and determine the applicable prescriptive period. From our review of the record and the |4arguments, we conclude that the remedy of rescission for the specific fraud identified in Civil Code Article 1954 is sought by plaintiffs. The heading for that article indicates that the fraud involves a breach of “confidence between the parties.” The article states:

Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill.
This exception does not apply when a relation of confidence has reasonably induced a party to rely on the other’s assertions or representations.

La. C.C. art. 1954.

Article 1954 is contained in the Civil Code’s chapter for vices of consent in the formation of the contract. Consent may be vitiated by error, fraud or duress. La. C.C. art. 1948. 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. La. C.C. art. 1958.

The plaintiffs’ cause of action under La. C.C. art. 1954 concerns a breach of a relationship of confidence between a trusted party (for this discussion, “trustee”) and his confidante who gives her consent to a contract in reliance upon the trustee. The cause of action consists of (1) the trustee/confidante relationship; (2) the confidante’s reasonable reliance upon the trustee despite the fact that the confidante “could have ascertained the truth” of the flaw in the contract “without difficulty, inconvenience, or special skill;” (3) assertions or representations by the trustee made with the intention to obtain an unjust advantage for the trustee (see La. C.C. art) ñ 1958); and (4) the confidante’s later discovery that her consent to the contract was induced by the trustee’s misrepresentation or his suppression of material facts. Where a party has charged as fraudulent an action involving close relatives, either by blood or marriage, the courts have deemed the relationship, in itself, a highly suspicious circumstance. Perot v. Perot, 46,431 (La.App.2d Cir.8/10/11), 2011 WL 3477028; George A. Broas Co. v. Hibernia Homestead & Sav. Ass’n., 134 So.2d 356 (La.App. 4th Cir.1961); see also, Todd v. Mule, 19 La.App. 230, 140 So. 50 (La.App. 1st Cir.1932).

Notably, within the cause of action itself is the essential element for the later discovery by the confidante after the date of the contract. This discovery element of the cause of action is then expressly acknowledged in the applicable five-year rule [440]

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Bluebook (online)
82 So. 3d 434, 2011 WL 6183570, 2011 La. App. LEXIS 1544, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sanders-family-llc-no-1-v-sanders-lactapp-2011.