Opinion
NO. 2023-CA-0462
02-28-2024
Jasmijn BOL v. BREDA, LLC
Abid Hussain, HUSSAIN LAW LLC, 3445 N. Causeway Blvd., Suite 706, Metairie, LA 70002, COUNSEL FOR PLAINTIFF/APPELLEE Michael G. Bagneris, BAGNERIS, PIEKSEN & ASSOCIATES, LLC, 935 Gravier Street, Suite 2110, New Orleans, LA 70112, COUNSEL FOR DEFENDANT/APPELLANT
APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH, NO. 2021-03245, DIVISION "M", Honorable Paulette R. Irons, Judge
Abid Hussain, HUSSAIN LAW LLC, 3445 N. Causeway Blvd., Suite 706, Metairie, LA 70002, COUNSEL FOR PLAINTIFF/APPELLEE
Michael G. Bagneris, BAGNERIS, PIEKSEN & ASSOCIATES, LLC, 935 Gravier Street, Suite 2110, New Orleans, LA 70112, COUNSEL FOR DEFENDANT/APPELLANT
(Court composed of Judge Joy Cossich Lobrano, Judge Tiffany Gautier Chase, Judge Dale N. Atkins)
Judge Tiffany Gautier Chase
1Appellant, Michael Schexnayder (hereinafter "Mr. Schexnayder"), seeks review of the trial court’s March 23, 2023 judgment which granted the motion for dissolution filed by Appellee, Jasmijn Bol (hereinafter "Ms. Bol"). After consideration of the record before this Court, and the applicable law, we deny the stay, reverse the judgment of the trial court and remand the matter for further proceedings consistent with this opinion.
Facts and Procedural History
Ms. Bol and Mr. Schexnayder were co-owners of Breda, LLC. On April 14, 2021, Ms. Bol filed a petition for damages seeking judicial dissolution of Breda, LLC pursuant to La. R.S. 12:1335. Ms. Bol only named Breda, LLC as a defendant and noted that she and Mr. Schexnayder were the sole members of the company. In her petition for damages, Ms. Bol also asserted claims for breach of contract and unjust enrichment. Specifically, Ms. Bol argued that Breda, LLC, through Mr. Schexnayder, failed to repay loans she made to the company and that the parties could not amicably dissolve the business. Mr. Schexnayder answered the petition for damages on behalf of Breda, LLC.
2On July 22, 2022, Ms. Bol filed a motion for partial summary judgment on the issue of her membership status in Breda, LLC and seeking dissolution of the business. By judgment dated September 12, 2022, the trial court granted the motion for summary judgment in part confirming Ms. Bol’s status in Breda, LLC. However, the trial court denied the summary judgement as to the dissolution of the business.
On October 13, 2022, Ms. Bol filed a "Motion for Dissolution, Reimbursement and Appointment of Liquidator." She maintained that judicial dissolution, under La. R.S. 12:1334(4), reimbursement and appointment of a liquidator were warranted due to the state of affairs of Breda, LLC. Ms. Bol asserted that continuation of the business was not reasonably practical because Mr. Schexnayder failed to provide a proper accounting of Breda, LLC’s earnings and mismanaged the rental properties’ utility bills, taxes and fines. Mr. Schexnayder opposed the motion for dissolution arguing that Ms. Bol was not entitled to dissolution because under La. R.S. 12:1335 liquidation of a business is only allowed if it is impractical to cany on the business in conformity with the articles of organization or operating agreement. Mr. Schexnayder pointed out that there was no means by which to determine if the business was in conformity as Breda, 3LLC did not file articles of organization with the Louisiana Secretary of State, nor did it have an operating agreement. Thus, according to Mr. Schexnayder, Ms. Bol failed to show that she was entitled to judicial dissolution of the business under the applicable statutory provisions.
La. R.S. 12:1334(4) provides:
Except as provided in the articles of organization or a written operating agreement, a limited liability company is dissolved and its affairs shall be wound up upon the first to occur of the following:
(4) Entry of a decree of judicial dissolution under [La.] R.S. 12:1335.
La. R.S. 12:1337 provides:
A. Upon the winding up of a limited liability company, any assets remaining after paying or adequately providing for the payment of all debts and liabilities of the limited liability company, including all costs and expenses of the liquidation and any and all contingent liabilities of which the members or liquidator has knowledge, shall be distributed as follows:
(1) Except as provided in the articles of organization or a written operating agreement, to members or former members in satisfaction of liabilities for distributions under R.S. 12:1324 or 1325.
(2) Except as provided in the articles of organization or a written operating agreement, to members and former members, first, for the return of their capital contributions, and secondly, respecting their membership interests, in the proportions in which the members share in distributions. B. In the event that there are contingent liabilities for which provision has been made as above, the members conducting the dissolution or liquidator shall not be dismissed until the contingent liabilities and debts have been paid or settled in full.
La. R.S. 12:1335 provides
On application by or for a member, any court of competent jurisdiction may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.
The matter was deemed submitted to the trial court on March 2, 2023. The record does not reflect that a hearing was held, nor was any testimony submitted. By judgment dated March 23, 2023, the trial court granted Ms. Bol’s motion for dissolution. The judgment provided for an appointment of a liquidator to dissolve Breda, LLC’s assets, pay off all debts and distribute remaining assets to Ms. Bol and Mr. Schexnayder. The judgment also ordered Mr. Schexnayder to provide a full accounting of all income, expenses and assets of Breda, LLC and ordered Ms. Bol to produce all financial records in her possession. This appeal followed.
Timeliness of Appeal
[1] As a threshold matter, this case warrants consideration of two issues relative to the timeliness of the appeal: (1) notice of appeal and (2) payment of appeal costs. Mr. Schexnayder noticed his intent to "appeal" the trial court’s March 23, 2023 judgment on April 22, 2023 and the trial court provided him a return date "as provided by law." Thereafter, Mr. Schexnayder filed a motion requesting an extension of the return date which the trial court granted, extending the return date to June 5, 2023. However, instead of filing an "appeal" of the March 23, 2023 4judgment, Mr. Schexnayder filed an application for supervisory review with this Court on June 5, 2023.
Mr. Schexnayder was not allowed to seek an extension of the return date to file his appeal. Extension of a return date relates only to the preparation and timely lodging of the record on appeal. Davidge v. Magliola, 346 So.2d 177, 180 (La. 1977). Extension of a return date is to be requested by the clerk of court and only relates to the lodging of the record on appeal, not to extend the time for taking an appeal. Id
This Court denied the application for supervisory review "on the showing made." Jasmijn Bol v Breda, LLC, 2023-C-0369 (La App. 4 Cir. 6/6/23).
La. C.C.P. art. 2087(A)(1) provides
Except as otherwise provided in this Article or by other law, an appeal which does not suspend the effect or the execution of an appealable order or judgment may be taken within sixty days of any of the following:
(1) The expiration of the delay for applying for a new trial or judgment notwithstanding the verdict, as provided by [La. C.C.P. art. 1974] and [La. C.C.P. art. 1811], if no application has been filed timely.
The notice of signing of judgment is dated March 23, 2023. Mr, Schexnayder thus had until March 30, 2023 to file a motion for new trial. Since Mr. Schexnayer did not file a motion for new trial, he had until May 30, 2023 to appeal the trial court’s judgment. The "Notice of Intent to Appeal" was filed April 22, 2023; therefore, Mr. Schexnayder timely noticed his intent to appeal the March 23, 2023 judgment.
[2] La. C.C.P. art. 2126 provides that an appellant shall pay the appeal costs within twenty days of the mailing of notice of appeal. La. C.C.P. art. 2126(B). The notice of appeal was mailed on May 3, 2023; therefore, Mr. Schexnayder had until June 6, 2023 to pay the appeal costs. Although Mr. Schexnayder did not pay the appeal costs until Juno 8, 2023, this Court has previously found that untimely payment of appeal costs are not fatal to an appeal. Succession of Brown, 2020-0518, p. 7 (La.App. 4 Cir. 4/21/21), 318 So.3d 348, 353 ("Lu. C.C.P. art. 2126[(F)] further provides that if the appellant pays the costs then the appeal may not be dismissed even If the time to pay has tolled"); See Maradiaga v. Doe, 2015-0450, p. 3 (La.App. 4 Cir. 11/25/15), 179 So.3d 954, 956. Likewise, "[a]ppeals are 5favored under our law and jurisprudence." Argence, L.L.C. v. Box Opportunities, Inc., 2007-0765, p. 6 (La.App. 4 Cir. 3/13/08), 980 So.2d 786, 790. Although the appeal costs were untimely paid, Mr. Schexnayder ultimately paid the appeal costs. Once Mr. Schexnayder complied and paid the appeal costs, the only remaining issue was the lodging of the record with this Court.
La. C.C.P. art. 2125 provides that the return date for an appeal, when there is testimony to be transcribed, is forty-five days from the date appeal costs are paid. Thus, the clerk of court had until July 23, 2023, to lodge the record with this Court. The record in this matter was lodged on July 20, 2023. Accordingly, we find the appeal timely.
The notice of appeal issued by Civil District Court, Parish of Orleans, indicates that there were transcripts from September 1, 2022 and November 17, 2022.
Jurisdiction
[3, 4] This Court has a duty to determine whether subject matter jurisdiction exists. Urquhart v. Spencer, 2015-1354, p. 3 (La.App. 4 Cir. 12/1/16), 204 So.3d 1074, 1077. In the case sub judice, Ms. Bol asserts that the March 23, 2023 judgment is interlocutory as her petition for damages asserts three causes of action: (1) breach of contract; (2) unjust enrichment; and (3) dissolution of Breda, LLC. She contends that the trial court's judgment only disposed of the dissolution of Breda, LLC and does not resolve the breach of contract or unjust enrichment claims. Ms. Bol further argues that Mr. Schexnayder's appeal cannot be converted to an application for supervisory writ because he previously sought supervisory review of the March 23, 2023 judgment by this Court, which was denied "on the showing made."
"A judgment that does not determine the merits but only preliminary matters in the course of the action is an interlocutory judgment." La. C.C.P. art. 1841. "A 6judgment that determines the merits in whole or in part is a final judgment." Id. The March 23, 2023 judgment grants Ms. Bol’s motion for dissolution to the extent that it orders dissolution of Breda, LLC and distribution of its assets. Although the March 23, 2023 judgment does not address Ms. Bol’s breach of contract or unjust enrichment claims, the judgment is determinative of the merits of the dissolution issue. Accordingly, we find the March 23, 2023 judgment is a final appealable judgment.
Assignments of Error
Mr. Schexnayder asserts three assignments of error challenging the trial court’s ruling on the motion for dissolution. Specifically, he argues that Ms. Bol does not have the legal right to seek dissolution of Breda, LLC; that the company remains a profitable business; and the trial court’s grant of dissolution was premature.
Standard of Review
[5] "A trial court’s finding that it is not reasonably practical for the parties to carry on business is a question of fact reviewable under the manifest error/clearly wrong standard of review." S. Louisiana Ethanol L.L.C., v. CHS-SLE Land, 2014-0127, p. 20 (La.App. 4 Cir. 2/4/15), 161 So.3d 83, 95.
However, in reviewing this appeal, the Court determined a procedural error committed by the trial court which prevents review of the merits of the trial court’s ruling. Namely, we find the trial court procedurally erred in failing to conduct a contradictory hearing prior to ordering dissolution of Breda, LLC.
Motion for Dissolution
The matter was deemed submitted on March 2, 2023. Ms. Bol attached her affidavit and documentation regarding outstanding payments owed by Breda, LLC 7for various bills to the motion for dissolution. Mr. Schexnayder opposed the motion for dissolution and filed an affidavit contradicting her claims. La. C.C.P. art. 963 provides, in pertinent part:
A. If the order applied for by written motion is one to which the mover is clearly entitled without supporting proof, the court may grant the order ex parte and without hearing the adverse party.
B. If the order applied for by written motion is one to which the mover is not clearly entitled, or which requires supporting proof, the motion shall be served on and tried contradictorily with the adverse party.
C. The rule to show cause is a contradictory motion.
We acknowledge that "[o]ral argument is a privilege, not a right, and is within the court’s discretion." Viering v. Liberty Mut. Ins. Co., 2017-0204, p. 9 (La.App. 1 Cir. 9/27/17), 232 So.3d 598, 604 (quoting La. Dist. Court Rule 9.18). Nonetheless, La. C.C.P. art. 963 mandates a contradictory hearing on a motion when the relief to the mover is not clear. La. C.C.P. art. 963(B). "The word ‘shall’ is mandatory." La. C.C.P. art. 5053; See generally Make v. LCMC Health Holdings, LLC, 2023-00025, pp. 1-2 (La. 3/14/23), 357 So.3d 322 -23 (finding that use of the word "shall" indicates that limits within the code articles are mandatory). Whether Ms. Bol is entitled to judicial dissolution of Breda, LLC is not "clear." The parties dispute whether it remains reasonably practical to carry on the business. Further, the documentation submitted by both parties does not clearly establish that dissolution is warranted. Both Ms. Bol and Mr. Schexnayder attached opposing affidavits regarding the current state of Breda, LLC. A review of jurisprudence reveals that judicial dissolution under La. R. S. 12:1335 occurs after a full contradictory hearing after the submission of evidence on the record. See S. Louisiana Ethanol L.L.C., 2014-0127, p. 7, 161 So.3d at 88 (granting plaintiff's 8petition for dissolution after a trial on the merits of defendant’s motion for summary judgment); In re Cat Island Chib, L.L.C., 2011-1557, p. 3 (La.App. 3 Cir. 5/2/12), 94 So.3d 75, 77 (filing of a petition to dissolve which was granted based on a subsequently filed motion for summary judgment seeking dissolution, which was heard and granted); In re Tufts Oil & Gas-III, 2003-1296, p. 5 (La.App. 5 Cir. 3/30/04), 871 So.2d 476, 478 (hearing conducted on exceptions of no right of action, or alternatively, lack of procedural capacity and prematurity, filed in response to request for judicial dissolution sought through reconventional demand).
We find the trial court erred in not conducting a full contradictory hearing on the merits and granting dissolution of Breda, LLC. Accordingly, the matter is remanded for the trial court to conduct a full contradictory hearing, with testimony and introduction of evidence into the record, on the issue of dissolution. Additionally, Ms. Bol’s requests for a stay and cost of appeal are denied.
Ms. Bol asks this Court for costs of this appeal without providing any supporting jurisprudence that she is entitled to such costs. As such, we will not consider her request for costs of this appeal.
Decree
For the foregoing reasons, we deny the stay, reverse the March 23, 2023 trial court judgment and remand the matter for further proceedings consistent with this opinion.
STAY DENIED; JUDGMENT REVERSED; REMANDED
On Application for Rehearing
1Appellee, Jasmijn Bol (hereinafter "Ms. Bol"), petitions this Court for a rehearing of our January 31, 2024 decision, reversing the trial court’s March 23, 2023 judgment granting the motion for dissolution filed by Ms. Bol. This Court’s decision to reverse the trial court was procedural and based on a lack of evidentiary support in the record that the trial court held a contradictory hearing prior to granting the motion for dissolution. We grant rehearing based upon newly provided information.
Facts and Procedural History
The facts are set forth in our original opinion. Bol v. Breda, LLC, 2023-0462, pp. 1-3 (La.App. 4 Cir. 1/31/24), 382 So.3d 439, 440–42. On February 5, 2024, Ms. Bol filed an application for rehearing asserting that the trial court conducted a contradictory hearing on March 2, 2023. Ms. Bol attached correspondence from the trial court judge confirming that a contradictory hearing was held. The correspondence further details that the hearing was held by Zoom but because the court reporter did not stamp the physical record, it was not properly reflected. Upon receipt of the application for rehearing, this Court ordered 2supplementation of the record with the transcript from the hearing on the motion for dissolution. On February 16, 2024, the record was supplemented with the March 2, 2023 hearing transcript.
Our original opinion reversed the trial court’s judgment finding a procedural error occurred which necessitated a remand to the trial court to conduct a contradictory hearing. As a result of the supplementation of the record, we will now consider the merits of Michael Schexnayder’s (hereinafter "Mr. Schexnayder") appeal of the trial court’s March 23, 2023 judgment granting dissolution of Breda, LLC.
Standard of Review
As stated in our original opinion, we review a trial court’s finding that judicial dissolution is warranted, because it is not reasonably practicable to carry on the business, under a manifest error/clearly wrong standard of review. S. Louisiana Ethanol L.L.C., v. CHS-SLE Land, 2014-0127, p. 20 (La.App. 4 Cir. 2/4/15), 161 So.3d 83, 95.
Discussion
"The formation and operation of limited liability companies in Louisiana is governed by La. R.S. 12:1301, et seq." Pocket Billiards & Bar, LLC v. Fast & Affordable Coll. Student Movers, Inc., 2022-0109, p. 4 (La.App. 4 Cir. 8/10/22), 346 So.3d 399, 402 (quoting In re Cat Island Chib, L.L.C., 2011-1557, p. 4 (La.App. 3 Cir. 5/2/12), 94 So.3d 75, 78. "[U]pon dissolution the members [of a limited liability company] shall wind up the limited liability company’s affairs. The windup … may be conducted by appointment of one or more liquidators…." 3La. R.S. 12:1336. After settlement of debts, any remaining assets shall be distributed in accordance with La. R.S. 12:1337.1a
On appeal, Mr. Schexnayder challenges the trial court’s judgment granting dissolution of Breda, LLC. Mr. Schexnayder argues that there are factual questions, surrounding the company’s viability and Ms. Bol’s legal right to seek dissolution, which makes judicial dissolution improper. We will address each issue in turn.
Viability of the Company
[6] Mr. Schexnayder contends that Breda, LLC remains a viable company because of its assets, which consists of four rental units. However, the codal articles do not explicitly outline factors for dissolution and we do not find that Mr. Schexnayder’s assertion constitutes sufficient grounds to compel the parties to remain business partners. See S. Louisiana Ethanol L.L.C., 2014-0127, p. 22, 161 So.3d at 96 (Noting that "factors considered for dissolution of a limited liability company are not delineated…."); See also 4 Weinmann v. Duhon, 2001-1267, p. 7 (La.App. 5 Cir. 3/26/02), 818 So.2d 206, 2.10 ("While the defendants assert that the dealership is viable and should not bo destroyed by dissolution, that will not bo the effect of terminating the company. The dealership is simply an asset owned by the company and that asset can be sold or otherwise transferred to different ownership upon dissolution of the limited liability company…."). Although the company assets continue to be profitable, that has no bearing on whether judicial dissolution is warranted. La. R.S. 12:1335, does not require viability as a prerequisite to judicial dissolution if it is no longer reasonably practicable to carry on the business. Upon dissolution of Breda, LLC, the rental units may be transferred to either Ms. Bol or Mr. Schexnayder without diminution of the assets. We therefore find Mr. Schexnayder’s argument unpersuasive.
Right to Dissolution
[7] Ms. Bol seeks dissolution under two statutes, La. R.S. 12:1334(4) and 12:1335. La. R.S. 12:1334(4) provides:
Except as provided in the articles of organization or a written operating agreement, a limited liability company is dissolved and its affairs shall be wound up upon the first to occur of the following:
(4) Entry of a decree of judicial dissolution under R.S. 12:1335.
La. R.S. 12:1335, provides:
On application by or for a member, any court of competent jurisdiction may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.
Mr. Schexnayder avers that the only mechanism by which Ms. Bol can seek judicial dissolution is through the provisions contained in a limited liability company’s articles of incorporation or under the terms of an operating agreement.
[8] 5La. R.S. 12:1335 provides for dissolution when it is not reasonably practicable to continue a limited liability company. Although the statute does not define "reasonably practicable," we apply and consider the general prevailing meaning within the context in which the phrase is used and the law as a whole. La. C.C. arts. 11 and 12. S. Louisiana Ethanol L.L.C., 2014-0127, p. 23, 161 So.3d at 96 (This Court’s agreement with the trial court’s general prevailing meaning of "reasonably practicable," which the trial court defined as "capable of being put into practice or of being done or accomplished; feasible."). At the hearing, the trial court astutely noted that the acrimony between the parties created an unattainable working relationship. The parties disagree about critical financial matters regarding the company including each party's financial contribution towards property taxes; the amount of debt; and delinquent utility bills. Applying a manifest error standard of review, this Court does not reverse the factual findings of a trial court unless a reasonable basis does not exist for the trial court’s factual determinations and the trial court’s findings are clearly wrong. Waters v. Oliver, 2016-1262, p. 6 (La.App. 4 Cir. 6/22/17), 223 So.3d 37, 43. "When two permissible views of the evidence exist, the fact finder’s choice cannot be clearly wrong or manifestly erroneous." Causey v. New Orleans Reg’l Transit Auth., 2018-0983, p. 6 (La. App. 4 Cir. 3/20/19), 267 So.3d 187, 191 (citation omitted). The trial court made a factual determination, based upon the evidence presented and determined that the parties’ acrimonious relationship will continue to create disagreements; thus, making continuation of the business not rea- sonably practicable. We find no error in the factual determination of the trial court.
6 Conclusion
Based upon the record before this Court, the trial court did not err in granting Ms. Bol’s motion for dissolution nor is it statutorily required. The viability of Breda, LLC is not sufficient grounds to prohibit dissolution. Further, we find that Ms. Bol has the legal right to seek judicial dissolution under La. R.S. 12:1334(4) and La. R.S. 12:1335. Accordingly, we grant rehearing and affirm the trial court’s March 23, 2023 judgment.
REHEARING GRANTED; TRIAL COURT MARCH 23, 2023 JUDGMENT AFFIRMED