Travcal Properties, LLC, Etc. v. Gregory J. Logan

• Court: Louisiana Court of Appeal
• Decided: October 6, 2010
• Docket: CA-0010-0323
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

10-323

TRAVCAL PROPERTIES, LLC

VERSUS

GREGORY J. LOGAN, ET AL.

**********

APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2009-2231 HONORABLE DAVID ALEXANDER RITCHIE, DISTRICT JUDGE

JOHN D. SAUNDERS JUDGE

Court composed of John D. Saunders, Marc T. Amy, and Elizabeth A. Pickett, Judges.

AFFIRMED.

Rudie Ray Soileau, Jr. Lundy, Lundy, Soileau & South, LLC P. O. Box 3010 Lake Charles, LA 70602 (337) 439-0707 Counsel for Defendant Appellee: Gregory J. Logan

Kenneth Warren DeJean Attorney at Law P. O. Box 4325 Lafayette, LA 70502 (337) 235-5294 Counsel for Defendant Appellee: Hit or Miss, LLC Francis X. Neuner, Jr. Laborde & Neuner P.O. Box 52828 Lafayette, LA 70505-2828 (337) 237-7000 Counsel for Defendant Appellee: William E. Logan Jr. (Trustee for Sa-Jes)

Michael Reese Davis Hymel Davis & Petersen, LLC 10602 Coursey Blvd. Baton Rouge, LA 70816 (225) 298-8118 Counsel for Plaintiff Appellant: Travcal Properties, LLC

Camille Bienvenu Poche+ Babineaux, Poche+, Anthony & Slavich P. O. Box 52169 Lafayette, LA 70505-2169 (337) 984-2505 Counsel for Defendant Appellee: Gregory J. Logan

Tim P. Hartdegen Hymel Davis & Petersen, LLC 10602 Coursey Blvd. Baton Rouge, LA 70816 (225) 298-8118 Counsel for Plaintiff Appellant: Travcal Properties, LLC

Daniel J. Poolson, Jr. Laborde & Neuner P. O. Box 52828 Lafayette, LA 70505-2828 (337) 237-7000 Counsel for Defendant Appellee: William E. Logan Jr. (Trustee for Sa-Jes) SAUNDERS, Judge.

Herein, we address whether the Calcasieu Parish court abused its discretion in

sustaining an exception of lis pendens in favor of the Appellees, Gregory Logan and

William Logan. For the following reasons, we find that it did not and affirm the trial

court’s ruling.

FACTS AND PROCEDURAL HISTORY:

At issue before this court is an exception of lis pendens sustained by the trial

court in favor of the Appellees, Gregory Logan and William Logan. The matter arises

out of a dispute over the management and operation of Hit or Miss, L.L.C.

(hereinafter referred to as “Hit or Miss”), a Wyoming limited liability

company—specifically, Gregory Logan’s status as manager of the company and the

authority with which the position carries.

Hit or Miss is owned in equal parts by Travcal Properties, L.L.C. (hereinafter

referred to as “Travcal”) and The Sa-Jes Trust (hereinafter referred to as “Sa-Jes”).

Travcal is a single member Louisiana limited liability company that is owned by

Texada Trust and managed by Edwin K. Hunter. Gregory Logan is the initial income

beneficiary of Sa-Jes.

The dispute between the parties began when Gregory Logan was notified that

he would no longer continue to serve in the role as manager of Hit or Miss. The

company’s operating agreement stated that Gregory Logan would serve as the initial

manager of the company until such time as his successor was elected and qualified.

Legal action commenced on April 9, 2009, when Gregory Logan filed a

petition in Lafayette Parish seeking a declaratory judgment confirming his authority

to continue to serve as manager of Hit or Miss until such time as a successor manager

is elected and qualified. Gregory Logan named Hit or Miss and its two members, Travcal and William Logan (as trustee of Sa-Jes), as defendants in the original

petition.

On May 7, 2009, Travcal filed a derivative suit in Calcasieu Parish alleging

various acts of mismanagement and breaches of fiduciary duties by Gregory Logan.

On June 11, 2009, Gregory Logan filed an amended petition in the Lafayette

Parish proceeding. In the amended petition, Gregory Logan expanded on the original

claim by seeking specific rulings confirming his authority as manager of Hit or Miss

and relating to certain actions taken by him in that capacity. Included in the amended

petition are requested rulings on the following: (i) that no person other than the duly-

appointed manager of Hit or Miss has the right to act for, or on behalf of Hit or Miss,

or to take any action enumerated in Section 3.1(b) of the Operating Agreement for or

on behalf of Hit or Miss; (ii) that Travcal has no right or authority to take any action

by or on behalf of Hit or Miss; and specifically that Travcal had no right or authority

to register Hit or Miss to do business in the State of Louisiana, to designate a

principal business address in the State of Louisiana or to appoint a registered agent

for Hit or Miss in the State of Louisiana; (iii) that Appellee, as the manager of Hit or

Miss has authority under the Operating Agreement to establish a working capital

reserve for Hit or Miss and to withhold such amounts from distributions to the

members of Hit or Miss; and, (iv) that Appellee, as manager of Hit or Miss, properly

classified payments made by certain Mexican entities to Hit or Miss as ordinary

income on the tax filings of Hit or Miss and on the K-1s issued to the members of Hit

or Miss.

William Logan, on June 19, 2009, in response to Gregory Logan’s amended

petition, filed an answer and cross-claim against Travcal in the Lafayette Parish

-2- proceeding. Among other things, the cross-claim sought a declaratory judgment (i)

confirming Gregory Logan as manager of Hit or Miss and confirming that Gregory

Logan will continue to serve as manager of Hit or Miss until such time as his

successor may be elected and qualified, (ii) declaring that no person other than the

duly appointed and qualified manager of Hit or Miss has a right to act for or on behalf

of Hit or Miss, (iii) declaring that Gregory Logan, as manager of Hit or Miss, is the

sole person to act for and on behalf of Hit or Miss, (iv) declaring that the members

of Hit or Miss, in their capacity as members, do not have the authority to act for or on

behalf of Hit or Miss.

Travcal responded to the amended petition and cross-claim by filing an

exception of lis pendens in the Lafayette parish court. A hearing on the exception

was held on August 17, 2009, and the court overruled the exception on August 24,

2009. Thereafter, Travcal requested supervisory writs with this court regarding the

August 24, 2009 overruling of its exception of lis pendens. Writs were denied by this

court and subsequently by the supreme court.

Gregory Logan and William Logan filed exceptions of lis pendens in Calcasieu

Parish related to the May 7, 2009, derivative suit filed by Travcal. A hearing on that

exception was held on September 4, 2009, and on September 25, 2009, the Calcasieu

Parish court sustained the exception. It is from this ruling that Travcal now appeals.

APPELLANT’S ASSIGNMENT OF ERROR:

The trial court abused its discretion in granting [Appellees’], Hit or Miss, L.L.C.’s, and William Logan, Jr.’s exceptions raising the objection of lis pendens.

LAW AND DISCUSSION ON THE MERITS:

At issue before this court is whether the Calcasieu Parish trial court was correct

-3- in sustaining an exception of lis pendens in favor of Appellees, Gregory Logan and

William Logan.

The basis for the exception of lis pendens lies in La.Code Civ.P. art. 531. It

reads as follows:

When two or more suits are pending in a Louisiana court or courts of the same transaction or occurrence, between the same parties in the same capacities, the defendant may have all but the first suit dismissed by excepting thereto as provided in Article 925. When the defendant does not so except, the plaintiff may continue the prosecution of any of the suits, but the first final judgment rendered shall be conclusive of all.

The article lays out three requirements that must be satisfied in order for a lis pendens

exception to be properly sustained. First, there must be two or more suits pending.

Second, the suits must involve the same transaction or occurrence. Third, the suits

must involve the same parties in the same capacities.

In Coury Moss, Inc. v. Coury, 07-1578, p. 4 (La.App. 3 Cir. 4/30/08), 981

So.2d 936, 939-40, writ denied, 08-1174 (La. 9/19/08), 992 So.2d 944, this court

stated that, “[t]he test for ruling on an exception of lis pendens is to inquire whether

a final judgment in the first suit would be res judicata in the subsequently filed suit.

Domingue v. ABC Corp., 96-1224, p. 3 (La.App. 4 Cir. 6/26/96), 682 So.2d 246,

248.”

Looking to the three requirements laid out by La.Code. Civ.P. art. 531, there

is no dispute between the parties that two suits are pending in Louisiana courts and

that the Lafayette Parish suit was instituted prior to the Calcasieu Parish suit, nor is

there a dispute that Gregory Logan’s amended petition relates back to the filing of the

original petition. There is also no dispute that the same parties exist in the same

capacities in both suits. Thus, the issue comes to rest on whether the two proceedings

involve the same transaction or occurrence.

-4- Before we begin our discussion on the transactions or occurrences at the root

of the suits at issue, we will address Travcal’s argument in brief that the Calcasieu

Parish court’s sustaining of the lis pendens exception was improper because the initial

suit filed was a declaratory judgment. Travcal asserts that because the Lafayette

Parish proceeding was a declaratory judgment, as a matter of law, it cannot be res

judicata as to the instant suit. We find no merit in this argument and direct attention

to this court’s decision in Spallino v. Monarch Sign Co., 00-447 (La.App. 3 Cir.

10/11/00), 771 So.2d 784, wherein we found that an eviction suit was barred by an

exception of lis pendens because of the existence of a suit seeking declaratory

judgment on the ownership of the property.

We now turn our attention to the remaining unresolved prong of La.Code

Civ.P. art. 531—whether the two suits arise out of the same transaction or occurrence.

There is no one test to determine what constitutes the same “transaction or

occurrence.” The idea that the expression carries a broad meaning was addressed by

this court in Hy-Octane Investments, Ltd. v. G & B Oil Products, Inc., 97-28 (La.App.

3 Cir. 10/29/97), 702 So.2d 1057.

The term “transaction or occurrence” is used in seven articles of the Code of Civil Procedure. In addition to its use in Article 1061, it is found in Article 425, which deals with preclusion by judgment; it is used in Articles 531 and 532, both dealing with lis pendens; in Article 891, the term enumerates one of the required formalities of a petition; in Article 1071 it defines the parameters of a cross-claim; and in Article 4845, the term helps define the jurisdictional limits of city and parish courts. Another provision, Article 1153, uses the slightly different expression “conduct, transaction, or occurrence” as part of the formula for when an amendment to a pleading relates back for prescription purposes.

Although none of these articles specifically define the expression “transaction or occurrence,” they variously equate the term with “the subject matter of the litigation” (Articles 425 & 891), “the subject matter of the principal action” or “principal demand” (Article 1061 & 4845),

-5- and “the subject matter either of the original action or a reconventional demand or relating to any property that is the subject matter of the original action” (Article 1071). What the transaction or occurrence is that is the subject matter of the litigation, or the principal demand or action, or the original action, has been determined on a case-by-case basis, according to the annotations under these articles.

Some definitions are available, however. Black's Law Dictionary defines “transaction” as, inter alia, “a broader term than ‘contract,’ ” and “a group of facts so connected together as to be referred to by a single legal name; as a crime, a contract, a wrong.” Among the definitions of “transaction or occurrence” found in 42 Words and Phrases, Supp. p. 201 (1997), is “whether pertinent facts of different claims are so logically related that issues of judicial economy and fairness mandate that all issues be tried in one suit.” The federal courts have given the words “transaction or occurrence” a broad and liberal interpretation in order to avoid a multiplicity of suits. All logically related events entitling a person to institute legal action against another generally are regarded as comprising a “transaction or occurrence.” Lasa Per L’Industria Del Marmo Soc. Per Azioni v. Alexander, 414 F.2d 143 (6th Cir.1969).

Id. at 1060.

In Hy-Octane, the court ultimately decided that the transaction or occurrence

must be determined on a case-by-case basis. In that case, the court was addressing

whether a claim for a breach of contract was a compulsory reconventional demand

to a claim for wrongful termination of the same contract. G & B Oil products entered

into a motor fuel supply agreement with Hy-Octane Investments. The agreement

stated that G & B would be the sole supplier for all of Hy-Octane’s motor fuels.

Subsequently, Hy-Octane leased its store to another company that ultimately

terminated the agreement with G & B. G & B filed suit against Hy-Octane for

wrongful termination of the contract. Hy-Octane responded by filing a separate suit

against G & B for breach of contract. Ultimately, the court found that the two suits

clearly originated from the same transaction or occurrence, the contract.

-6- In the instant case, the Calcasieu Parish court based its ruling, in large part, on

the court’s holding in Hy-Octane. We agree, and we find that the two suits at issue

each find their basis rooted in the interpretation of the Hit or Miss operating

agreement, the genesis of Gregory Logan’s authority as manager of Hit or Miss.

Travcal argues that the material facts and the evidence required in its suit

against Gregory Logan are not consistent with those in the Lafayette Parish

proceeding and that there is no logical relation between the suits. We disagree. In

its suit against Gregory Logan, Travcal asserts various breaches of fiduciary duties,

mismanagement and abuse of control of Hit or Miss, wasting of Hit or Miss assets,

and breach of contract. Specifically, they argue that the Hit or Miss operating

agreement generally prohibits the payment of management fees and that Gregory

Logan, in violation of the agreement, paid himself and Edwin K. Hunter such fees.

Travcal also makes allegations of improper payments made to Hunter as non-

employee compensation, unpaid loans lent to Gregory Logan by Travcal, and failure

to make periodic distributions to the members of Hit or Miss.

The Appellees, Gregory and William Logan, argue and we agree that the Hit

or Miss operating agreement, specifically section 3.1, creates a logical relationship

in the subject matter of the two suits such that there can be little doubt that the two

proceedings result from the same transaction or occurrence.

Section 3.1 of the Hit or Miss operating agreement reads as follows:

Section 3.1. Management by Manager(s). (a) The Company shall be managed by one or more Managers. Gregory J. Logan shall serve as initial Manager of the Company and shall serve until his successor is elected and qualified. (b) Except for situations in which the approval of the Members is required by this Operating Agreement or by non- waivable provisions of applicable law, (i) the powers of the Company shall be exercised by or under the authority of, and the business and

-7- affairs of the company shall be managed under the direction of, the Manager(s); and (ii) the Manager(s) may make all decisions and take all actions for the Company not otherwise provided for in this Operating Agreement, including, without limitation, the following:

(i) entering into, making, and performing contracts, agreements, and other undertakings binding the Company that may be necessary, appropriate, or advisable in furtherance of the purposes of the Company and making all decisions and waivers thereunder;

(ii) opening and maintaining bank and investment accounts and arrangements, drawing checks and other orders for the payment of money, and designating individuals with authority to sign or give instructions with respect to those accounts and arrangements;

(iii) maintaining the assets of the Company in good order;

(iv) collecting sums due the Company;

(v) to the extent that funds of the Company are available therefor, paying debts and obligations of the Company;

(vi) acquiring, utilizing for Company purposes, and disposing of any asset of the Company;

(vii) borrowing money or otherwise committing the credit of the Company for Company activities and voluntary prepayments or extensions of debt;

(viii) selecting, removing, and changing the authority and responsibility of lawyers, accountants, and other advisers and consultants;

(ix) obtaining insurance for the Company;

(c) Notwithstanding the provisions of Section 3.1(b), the Manager(s) may not cause the Company to do any of the following without complying with the applicable requirements and procedures set forth in the Act:

-8- (i) sell, lease, exchange or otherwise dispose of (other than by way of a pledge, mortgage, deed or trust or trust indenture) all or substantially all the Company’s property and assets (with or without good will), other than in the usual and regular course of the Company’s business;

(ii) be a party to a merger or conversion, and

(iii) amend or restate the Articles.

The Hit or Miss operating agreement, particularly Section 3.1, establishes the

authority of the manager of the company; and, the trial court’s requested

interpretation of the authority vested in that agreement should resolve the principal

issues presented in both proceedings, including the propriety of the actions taken by

Gregory Logan as manager of Hit or Miss. We also note that a number of Travcal’s

claims against Gregory Logan are directly addressed in Logan’s amended petition in

prayers for relief numbers 4 and 5. Specifically addressed therein is a requested

judicial declaration as to the authority of Gregory Logan to establish working capital

reserves and to withhold such amounts from distributions and a declaration as to the

propriety of the classification on K-1 tax documents of payments made to Hit or Miss

by certain Mexican entities. Accordingly, we find that the suits at issue arose out of

the same transaction or occurrence and, thus, that the Calcasieu Parish court did not

abuse its discretion in sustaining the exception of lis pendens.

CONCLUSION:

For the foregoing reasons, we find that the two proceedings at issue arose from

the same transaction or occurrence and that the Calcasieu Parish court did not abuse

its discretion is sustaining the exception of lis pendens. Accordingly, the judgment

of the court is affirmed. All costs of this appeal are to be assessed to the Appellant.

-9- AFFIRMED.

-10-