Cureton v. Cureton

362 So.3d 461

James B. "Blake" CURETON v. James H. "Jimmy" CURETON and Custom Metal Fabricators, Inc.

20-520

Court of Appeal of Louisiana, Third Circuit.

October 13, 2021

Rehearing Granted January 5, 2022

James A. Watson, 3403 Patrick Street, Suite B, Lake Charles, LA 70605, (337) 474-4886, COUNSEL FOR DEFENDANTS/APPELLANTS: James H. "Jimmy" Cureton, Custom Metal Fabricators, Inc.

Todd Samuels Clemons, Todd Clemons And Associates, 1740 Ryan Street, Lake Charles, LA 70601, (337) 477-0000, COUNSEL FOR PLAINTIFF/APPELLEE: James B. "Blake" Cureton

Timothy O'Dowd, Jared W. Shumaker, 924 Hodges Street, Lake Charles, LA 70601, (337) 310-2304, COUNSEL FOR DEFENDANTS/APPELLANTS: James H. "Jimmy" Cureton, Custom Metal Fabricators, Inc.

Richard Dale Moreno, PO Box 149, Lake Charles, LA 70602-0149, (337) 433-9535, COUNSEL FOR DEFENDANTS/APPELLANTS: James H. "Jimmy" Cureton, Custom Metal Fabricators, Inc.

Philip A. Franco, Courtney C. Miller, Jeffrey E. Richardson, Kellen J. Mathews, Adams and Reese, LLP, 701 Poydras Street, Suite 4500, New Orleans, LA 70139, (504) 581-3234, COUNSEL FOR PLAINTIFF/APPELLEE: James B. "Blake" Cureton

Court composed of Billy Howard Ezell, D. Kent Savoie, and J. Larry Vidrine, Judges. ^*

EZELL, Judge.

James H. "Jimmy" Cureton and Custom Metal Fabricators, Inc. appeal a trial court judgment in favor of James B. "Blake" Cureton, recognizing his 50% ownership interest in Custom Metal, a Louisiana partnership (the Partnership), him as a shareholder of 50% of the outstanding shares in Custom Metal Fabricators, Inc. (the Corporation), and his entitlement to all the rights that Louisiana law affords in connection with those ownership rights. For the reasons that follow, we vacate the judgment in part, reverse the judgment in part, and affirm the judgment in part.

FACTS

Custom Metal Fabricators provides metal fabrication for refineries and businesses around the Lake Charles area. It also provides HVAC services. According to Jimmy, Custom Metal Fabricators started as a proprietorship in 1972, escalated to a partnership, and then became a corporation. Custom Metal Fabricators, Inc. was cofounded by Jimmy and Walter Lee in 1994, with each owning 50% of the shares in the corporation.

Around 2016, Jimmy and Walter talked about selling their interests in the companies. Blake expressed an interest in becoming a part owner. The minutes of the Corporation from September 14, 2016, indicate that there was discussion about the possibility of Blake purchasing Walter's interest in the Corporation. Blake was working with two banks to secure a loan. Walter was putting together a buy/sell agreement. In addition to Blake buying Walter out, there was also a discussion of Blake buying Jimmy out at a later date.

In 2017, Walter and Blake entered into a "SALES AGREEMENT." Walter agreed to sell his 1,000 shares of the total 2,000 shares of the Corporation and his 50% ownership in the Partnership. The agreement noted that the Corporation "operates primarily a metal fabrication and air conditioning business" and the "Partnership owns real property, improvements, personal property, and provides support for the Corporate activities." The agreement was signed by Blake on June 7, 2017, and signed by Walter on June 8, 2017.

On November 26, 2019, Blake received a text message from Jimmy. The text message contained a picture of a letter written by Jimmy informing Blake that his employment with the Corporation was terminated. Blake was also informed that he was to return corporate property and that his pay, benefits, and charge accounts were cancelled.

On January 22, 2020, Blake filed a petition for writ of mandamus and writ of quo warranto. By way of mandamus, he demanded the right to inspect and copy the records of the Corporation and the Partnership. Pursuant to the quo warranto, Blake sought a declaration that Jimmy had no legal right to any office in the Corporation and therefore, had no right to terminate his employment.

A hearing was held on February 13, 2020. Following the hearing, the trial court rendered judgment in favor of Blake, recognizing his 50% ownership interest in Custom Metal, a Louisiana partnership, him as a shareholder of 50% of the outstanding shares in Custom Metal Fabricators, Inc., and his entitlement to all the rights that Louisiana law affords in connection with those ownership rights. The trial court also ordered Jimmy, the Corporation, and the Partnership to make the records of the Corporation and the Partnership available for inspection and copying. Additionally, the judgment ordered that Blake be reinstated in his employment with the business with full back pay and benefits, including health insurance. It was also ordered that Blake be allowed full access to the business facilities, and that he be reinstated as a signatory on all bank or financial institution accounts of both businesses. Blake was awarded attorney fees and costs. Judgment was signed on February 24, 2020.

Jimmy and the Corporation filed a motion for suspensive appeal. The trial court denied the motion, finding that the judgment was not a final judgment and was, therefore, not subject to appeal. Jimmy and the Corporation sought supervisory review with this court. On March 19, 2020, this court granted the writ finding the trial court was without jurisdiction to determine whether Jimmy and the Corporation were entitled to an immediate appeal, citing Morris v. State/Attorney General , 05-508 (La.App. 3 Cir. 4/21/05), 909 So.2d 1. We reversed the trial court ruling and remanded the matter for further proceedings. Cureton v. Cureton , 20-188 (La.App. 3 Cir. 3/19/20) (unpublished opinion).

On remand, the trial court granted Jimmy's and the Corporation's motion for suspensive appeal. Blake filed a motion to dismiss the appeal on November 12, 2020. Blake argued that this court already determined that Jimmy and the Corporation did not have a right to appeal and the legislature did not provide the right to an appeal from an order making a writ of mandamus peremptory. In an unpublished opinion, this court denied the motion to dismiss the appeal, relying on more recent jurisprudence to find that the mandamus and quo warranto judgment was an appealable judgment. Cureton v. Cureton , 20-520 (La.App. 3 Cir. 12/16/20), 2020 WL 7393425 (unpublished opinion).

On appeal, Defendants, Jimmy and the Corporation, assert several assignments of error. Jimmy claims that as director and president of the Corporation, he had authority to manage the business affairs of the Corporation, which included termination of Blake's employment. The Defendants also claim that the Partnership was never named as a defendant and service was never perfected on the Partnership, so the trial court was without jurisdiction to render a judgment against the Partnership.

Jimmy and the Corporation also +allege that Blake failed to prove that a contract of sale occurred regarding the corporate shares. Jimmy claims that La.R.S. 12:1-1602 does not authorize the court to order inspection of his personal records. Finally, the Defendants claim that the law does not provide for attorney fees, so the trial court was without authority to award attorney fees.

THE PARTNERSHIP

We will first determine whether the trial court properly entered a judgment against the Partnership. Jimmy and the Corporation argue that the trial court did not have jurisdiction over the Partnership pursuant to La.Code Civ.P. art. 6 because the Partnership was never named as a defendant and there was no service of process on the Partnership. Furthermore, they argue the Partnership neither submitted to the jurisdiction of the court nor waived its objection.

Pursuant to La.Code Civ.P. art. 737, "[a] partnership has the procedural capacity to be sued in its partnership name." Citation and service of process are essential in all civil actions except summary and executory proceedings. La.Code Civ.P. art. 1201(A).

Pursuant to La.Code Civ.P. art. 2592(6), mandamus and quo warranto proceedings are summary proceedings. Therefore, citation and service of process were not necessary. However, the fact of the matter remains that the Partnership was not named as a defendant.

"A judgment rendered against a party who is not named as a defendant is absolutely void." Wilson v. Champion Ins. Co. , 607 So.2d 1079 (La.App. 3 Cir. 1992). Citing La.Code. Civ.P. art. 1841, which provides that "[a] judgment is the determination of the rights of the parties in an action." The court in In re Succession of Sims , 15-1904 (La.App. 1 Cir. 12/28/16), 210 So.3d 394, held that a judgment could not declare rights as to a church that was not a party to the proceedings.

The only two named defendants in Blake's petition are Jimmy and the Corporation. The Partnership was never named. The fact that Jimmy was personally named as a defendant does not impute his status as a partner who was served on behalf of the Partnership, a distinct entity, when the Partnership was not named as a Defendant in the case. The trial court erred in ruling on an issue involving the Partnership when the Partnership was not a party to the action. Therefore, that part of the judgment is vacated which declared Blake to be a partner in the Partnership and further ordered Jimmy to produce the records of the Partnership for inspection.

OWNERSHIP OF THE CORPORATION

In his petition for a writ of mandamus, Blake sought to examine the Corporation's records as a shareholder pursuant to La.R.S. 12:1-1602. Jimmy answered the petition and claimed that Blake did not own any shares in the Corporation. Jimmy argues that Blake failed to establish that an act of sale of 50% of the corporate shares occurred.

Pursuant to La.Code Civ.P. art. 3864, a writ of mandamus may be directed to a corporation or officer compelling the corporation to perform its duties as required by law or for the recognition of the rights of its members or shareholders. Louisiana Revised Statutes 12:1-1602(C)...