Favrot v. Favrot

115 So.3d 1190

T. Semmes FAVROT

v.James P. FAVROT.

No. 2012–CA–1573.

Court of Appeal of Louisiana, Fourth Circuit.

May 1, 2013.

Opinion Modified on Rehearing May 22, 2013.

Rehearing Denied June 19, 2013.

Philip A. Franco, Christine S. Fortunato, Diana C. Surprenant, Adams and Reese LLP, New Orleans, LA, for Defendant/Appellant.

Jack M. Alltmont, Sessions Fishman Nathan & Israel, L.L.P., Alicia M. Bendana, Lowe Stein Hoffman Allweiss & Hauver, L.L.P., New Orleans, LA, for Plaintiff/Appellee.

(Court composed of Judge MAX N. TOBIAS, JR., Judge ROSEMARY LEDET, Judge SANDRA CABRINA JENKINS).

MAX N. TOBIAS, JR., Judge.

[4 Cir. 1]In this declaratory judgment action, T. Semmes Favrot (“Semmes”) appeals the trial court's granting of summary judgmentin favor of his brother, James Favrot (“James”), as trustee of the H.M. Favrot, Jr. Trust # 3 (the “Trust”).¹ The judgment (1) assesses all attorney's fees and costs incurred by the Trust in this litigation solely against Semmes' beneficial interest in the Trust, and (2) authorizes the distribution of the Trust's assets to the Trust beneficiaries, but more particularly, the distribution of Semmes' beneficial interest in the Trust to him, thereby severing his interest in the Trust. Semmes also appeals the trial court's dismissal of his motion to compel discovery as moot. For the reasons that follow, we affirm the trial court's judgment in part, reverse in part, amend in part, and render a decision in this matter.

FACTS AND PROCEDURAL BACKGROUND

The Trust was established by Mr. Favrot and his wife, Kathleen Gibbons Favrot, in favor of their four children, Semmes, James, Kathleen, and Caroline, [4 Cir. 2]bestowing each child with a 25% beneficial interest therein.² James is the trustee of the Trust.³ In March 2008, following his dismissal from the family business, Semmes filed an action to remove James as the trustee, alleging breaches of his fiduciary duties.⁴ By way of a supplemental and amending petition, Semmes further sought damages against James for losses he purportedly sustained as a result of James' alleged improper acts as trustee. Kathleen, Caroline, Mr. Favrot, and William Henry Shane, Jr. (“Shane”) intervened in the lawsuit for purposes of supporting James' position that he had not violated any fiduciary duties owed, and also seeking to have him remain as trustee of the Trust.

During the course of the litigation, James filed a reconventional demand ⁵ requesting: (1) a declaratory judgment that would, in effect, partition the Trust assets equally among the four beneficiaries and remove James as the trustee over Semmes' portion of the Trust's assets, and (2) a judgment assessing the entirety of the Trust's defense costs, including attorney's fees, against Semmes' beneficial [4 Cir. 3]interest in the Trust; Semmes was responsible for creating the expense to the Trust and it would be unfair to charge the other beneficiaries' shares with that expense.

Prior to a bench trial in 2010, the parties stipulated that the sole issue to be tried was Semmes' claim to remove James as trustee. All other claims, including Semmes' claim for damages and the reconventional demand, were severed and reserved for another day. On 24 November 2010, the trial judge rendered judgment with reasons in favor of James, finding that Semmes failed to prove that James breached any fiduciary duty he may have owed as trustee. Additionally, although the issue was not before the trial court per the pre-trial stipulation of the parties, the judgment granted the requested declaratory relief declaring that the trustee was authorized by law and under the Trust to (1) charge all of the fees and costs incurred in the litigation against Semmes' beneficial interest in the Trust, and (2) “distribute the Trust assets to the beneficiaries, including distribution of all of the assets of the Trust so as to in effect severe the beneficiaries' joint interests as Trust beneficiaries.” Semmes appealed the entire judgment to this court.

On appeal, we affirmed the trial court's dismissal of Semmes' petition to remove James as trustee but, finding the trial court was bound by the pre-trial stipulations of the parties, vacated its granting of declaratory relief, and remanded the matter to the trial court for further proceedings.⁶See [4 Cir. 4]Favrot v. Favrot, 11–0495, unpub. (La.App. 4 Cir. 11/16/11), 2011 WL 9160400. Following remand, James filed a motion for summary judgment on the reconventional demand seeking the above-mentioned declaratory relief. Semmes opposed the motion, and filed a motion to compel discovery that sought to further substantiate his opposition.

Both James' motion for summary judgment and Semmes' motion to compel came for hearing on 24 August 2012. Finding no material facts to be in dispute and that James was entitled to the declaratory relief sought as a matter of law, the trial court rendered judgment on 6 September 2012, granting James' motion for summary judgment and declaring as moot Semmes' motion to compel discovery.

It is from this judgment that Semmes timely appealed.

STANDARD OF REVIEW

A trial court has broad discretion in handling discovery matters and an appellate court should not upset a ruling absent an abuse of discretion. Sercovich v. Sercovich, p. 5 (La.App. 4 Cir. 6/13/12), 96 So.3d 600, 603. Under this abuse of discretion standard of review, “[a]n appellate court must balance the information sought in light of the factual issues involved and the hardships that would be caused by the court's order when determining whether the trial court erred in ruling on a discovery order.” Id., citing Wollerson v. Wollerson, 29,183, p. 2 (La.App. 2 Cir. 1/22/97), 687 So.2d 663, 665.

An appellate court reviews summary judgments de novo using the same criteria that governs a trial court's consideration of whether summary judgment is [4 Cir. 5]appropriate. John C. Bose Consulting Engineer, LLC v. John T. Campo & Associates, Inc., 07–1001, p. 2 (La.App. 4 Cir. 2/20/08), 978 So.2d 1033, 1034.

DISCUSSION

Motion to Compel Additional Discovery

In his first assignment of error, Semmes argues that the trial court erred by granting James' motion for summary judgment because the court failed to permit adequate discovery relating to the distribution of the Trust's assets. Specifically, Semmes contends that, in dismissing his motion to compel as moot, the trial court denied him access to facts relating to the distribution of all of the Trust's assets that were essential to his being able to justify his opposition to the motion for summary judgment. Consequently, he claims that he was not afforded the opportunity to discover pertinent information to fully present his opposition; he claims the trial court deprived him of the ability to prove the potential adverse effects that termination of the Trust by distribution of all of the assets would have upon the best interests of all of the beneficiaries, including himself. In particular, Semmes avers that he lacked possession of all loan agreements and/or other loan documentation relating to the Trust and its assets, which he claims might have shown that distribution of the Trust's assets could adversely impact the beneficiaries' relationships with lenders, possibly resulting in defaults under loan agreements and/or other credit facilities. Additionally, he contends the requested documentation could establish that distribution of the Trust's assets might result in all beneficiaries (including himself) having to personally guarantee loans in the future. (The Trust currently guarantees the loans.)

[4 Cir. 6]La. C.C.P. art. 1422 states, in part, that “[p]arties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.” La. C.E. art. 401 defines relevant evidence as “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probably than it would be without the evidence.” The discoverability test under La. C.C.P. art. 1422 entails first asking whether answering the discovery is feasible and practicable. If that answer is in the affirmative, then the court determines whether an answer to the discovery would “expedite the litigation by either narrowing the area of controversy or avoiding unnecessary testimony or providing a lead to evidence.” Industrial Pipe, Inc. v. Plaquemines Parish Council, 12–1348, pp. 7–8 (La.App. 4 Cir. 9/14/12), 100 So.3d 896, 900.

In the case sub judice, the parties had previously participated in a week-long trial on Semmes' petition for removal of James as trustee, prior to which the loan agreements and/or other relevant loan documentation regarding the Trust and its assets were made available to Semmes for his review and copying. The record indicates that Semmes also received detailed monthly accountings for all of the Trust's activities with supporting and explanatory documentation. Moreover, the instant motion for summary judgment was filed on 16 December 2011, and the matter was not heard by the trial court until 24 August 2012. Semmes chose not to avail himself of the opportunity to review the requested documentation for the more than eight-month period that it was made available to him.

La. C.C.P. art. 1460 provides that a party upon whom discovery is propounded has the right to respond to the discovery by making available the relevant records available in such form as they are kept in the normal course of [4 Cir. 7]business. The record reflects that this is how the information was made available to Semmes. Semmes was provided with an itemized inventory of the files segregated by box. Having worked as an executive at Favrot & Shane where the records were located for more than a year, Semmes was personally familiar with the company's filing system and how the files were maintained, providing him with the necessary experience to personally locate the specific information...