Marshall v. Marshall

376 So.3d 891

2023-0193 (La.App. 1 Cir. 9/28/23)

Ronnie Roy MARSHALL

v.Milton MARSHALL and FRM Properties, LLC

NO. 2023 CA 0193

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: September 28, 2023

Appealed from the 22nd Judicial District Court, In and for the Parish of St. Tammany, State of Louisiana, Case No. 2021-10995, Division I, The Honorable Reginald T. Badeaux, III, Judge Presiding

Richard A. Richardson, Covington, Louisiana, Counsel for Defendant/Appellant Milton Marshall

Jane L. Triola, Pearl River, Louisiana, Counsel for Plaintiff/Appellee Ronnie Roy Marshall

BEFORE: THERIOT, PENZATO, AND GREENE, JJ.

THERIOT, J.

₂This appeal arises from a judgment revoking an act of capital contribution executed by Milton Marshall. For the following reasons, we reverse the August 16, 2022 judgment.

FACTS AND PROCEDURAL HISTORY

Prior to the institution of this action, Appellant, Milton Marshall, was one of two defendants in a suit filed by Appellee, Ronnie Roy Marshall.¹ Milton was aware of the existence of the previous lawsuit, but alleges that he did not know of any court dates. Milton further alleges that Ronnie informed him that he planned to drop his claims against Milton.²

On February 26, 2020, Ronnie’s previous case against Milton came before the Slidell City Court in the Parish of St. Tammany for a confirmation of preliminary default. After considering the testimony of Ronnie and his witnesses, the exhibits, and the record, the court rendered judgment in favor of Ronnie and against Milton. The court ordered Milton to pay to Ronnie $25, 389.94 for reimbursement of expenditures made by Ronde and $4,500.00 for the value of Ronnie’s uncompensated labor. The total award was $29,889.94 plus costs. A written judgment, to that effect was signed on March 9, 2020.

On March 10, 2020, Milton’s attorney, Richard Richardson, accepted service of a notice of Judgment and a copy of the March 9, 2020 judgment on Milton’s behalf. On the same date, Mr. Richardson organized FRM Properties, LLC ("FRM") naming Milton and Milton’s daughter, Samantha Gifford, as members. Mr. Richardson is also FRM’s registered agent.

Also on March 10, 2020, Milton executed an Act of Capital Contribution in which he transferred all of his rights to his personally-owned immovable properties ₃in St. Tammany Parish to FRM. The Act of Capital Contribution specifically states that toe transfer at issue is made unto FRM "through its Organizer, Richard A. Richardson," FRM was officially registered as an LLC by the Louisiana Secretary of State on March 11, 2020.

Per the Act of Capital Contribution, the transferred immovable properties appear to be made up, of three parcels of land in St. Tammany Parish.³ The parties stipulated that the transferred properties have a total fair market value of $1,154,500.00. The Act of Capital Contribution was recorded on March 10, 2020, the same date it was executed, as Instrument No, 2197890 in toe land records of St. Tammany Parish.

On March 8, 2021, Ronnie filed a "Petition in Revocatory Action," against Milton and FRM wherein he alleged that Milton had transferred his immovable properties to FRM in order to prevent Ronnie from recording the March 9, 2020 judgment lien against those properties and to defeat Ronnie’s rights as a judgment creditor. Ronnie sought to have the transfers declared null and to have the Act of Capital Contribution declared legally fraudulent and revoked. On March 31, 2021, Milton answered toe petition denying the allegations and asserting that Ronnie had failed to state a cause of action against him.

A trial on the merits was heard on June 15, 2022. The trial court rendered judgment on August 2, 2022, finding that the Act of Capital Contribution was a purely gratuitous contract and revoking same. The August 2, 2022 judgment was vacated on August 16, 2022, due to a clerical error. The trial court signed an amended judgment on the same date.

In its written reasons for judgment, the trial court states that the transfer of Milton’s immovable properties to the newly-formed FRM on the same date that he obtained a copy of the previous judgment against him was designed to obtain an ₄unjust advantage by preventing Ronnie from recording a valid judgment lien and mortgage in the public records of St. Tammany Parish. The trial court stated that the transfer increased Milton’s insolvency by removing 100% ownership of the immovable properties from his own personal assets in exchange for "a supposed 50% interest in a newly-formed LLC" owned with his daughter. The trial court noted that Milton had executed two separate "Memorandum of Lease Agreements" on the same property, with no mention of FRM, in the year after FRM was formed. The trial court concluded that the transfer of ownership was a clear attempt to shield the property from being subject to the February 26, 2020 judgment obtained by Ronnie against Milton. Accordingly, the trial court found that the transfer was a purely gratuitous contract which may be revoked and declared the contract to be a nullity. Milton appealed.

ASSIGNMENTS OF ERROR

Milton assigns the following as error:

(1) The trial court erred by finding the transfer of the immovable property as described in the Act of Capital Contribution was done to obtain an "unjust advantage" by Appellant "by preventing the plaintiff from recording a valid judgment lien and mortgage in the public records of St. Tammany Parish, Louisiana."

(2) The trial court erred by finding the Act of Capital Contribution was a "purely gratuitous contract,"

(3) The trial court erred by finding the transfer as reflected in the Act of Contribution increased the insolvency of Appellant.

(4) The trial court erred by admitting trial Exhibits 8 and 9 offered by Appellee despite Appellant’s timely objection of the same because of their irrelevance and because they expanded Appellee’s pleadings.

(5) The trial court erred in relying upon the comments to La. Civ. Code art. 2039, and in particular that part which provides "regardless of the proportion of his assets to his liabilities," to support its findings.

(6) The trial court erred by finding the Act of Capital Contribution was "purely gratuitous" and thus "may be attacked and revoked by the plaintiff obligee and is therefore declared a nullity."

(7) The trial court erred by revoking the Act of Capital Contribution.

₅STANDARD OF REVIEW

[1] The standard of review for evidentiary rulings of a trial court is abuse of discretion. Questions of law are reviewed utilizing the de novo standard of review. Chandler v. Cajun Ready Mix Concrete, 2019-1650 (La. App. 1 Cir. 7/7/21), 328 So.3d 1189, 1193.

[2, 3] As a reviewing court, we may not set aside a trial court’s finding of fact in the absence of manifest error or unless it is clearly wrong. To reverse a fact finder’s determination, the appellate court must find from the record that a reasonable factual basis does not exist for the finding of the trial court and that the record establishes that the finding is clearly wrong. In re D.D.D., 2006-2274 (La. App. 1 Cir. 5/4/07), 961 So.2d 1216, 1224, citing Stobart v. State, Dep’t of Transp. and Dev., 617 So.2d 880, 882 (La. 1993).

DISCUSSION

Evidentiary Issues - Assignment of Error #4

[4–6] If a trial court commits an evidentiary error that interdicts its factfind- ing process, this court must conduct a de novo review. Thus, any alleged evidentiary errors must be addressed first on appeal, inasmuch as a finding of error may affect the applicable standard of review. Accordingly, we first address the evidentiary challenges raised by Milton in Assignment of Error # 4. See Spann v. Gerry Lane Enterprises, Inc., 2016-0793 (La. App. 1 Cir. 8/24/18), 256 So.3d 1016, 1022; see also Penton v. City of Hammond Police Dep’t, 2007-2352 (La. App. 1 Cir. 5/2/08), 991 So.2d 91, 95.

[7] In his fourth assignment of error, Milton argues that the trial court erred by admitting Exhibits 8 and 9 at trial, despite his objections to same. Milton specifically alleges that Exhibits 8 and 9 are irrelevant and improperly expanded Ronnie’s pleadings. Generally, the trial court is granted broad discretion, in its evidentiary rulings and its determinations will not be disturbed on appeal absent a ₆clear abuse of that discretion. Wright v. Bennett...