Opinion
No. CA-3073.
November 14, 1985. Rehearings Denied January 27, 1986. Writ Denied March 21, 1986.
APPEAL FROM THIRTY-FOURTH JUDICIAL DISTRICT COURT, PARISH OF ST. BERNARD, STATE OF LOUISIANA, HONORABLE THOMAS M. McBRIDE, III, J.
George N. Bischof, Jr., Chalmette, for plaintiff-appellee.
Walter R. Fitzpatrick, Jr., New Orleans, for defendant-appellant.
Before SCHOTT, GARRISON, BYRNES, WARD and WILLIAMS, JJ.
This is an appeal from a decision of the district court awarding Ronald J. Vega damages against defendant Off The Wall Racquet and Health Club, Inc.
Plaintiff Vega and Cliff Zeairs became interested in forming a racquet ball club. Zeairs was an experienced player, and plaintiff had met him through contact with his [plaintiff's] son. Because neither Zeairs nor plaintiff had the financial means to start such a venture, they approached Jules V. Gaffney and Joseph P. Barreca with their idea. The parties agreed orally that each would initially invest $50,000.00 in the project. Zeairs and plaintiff's investment were deferred for at least one year. Gaffney and Barreca donated the land on which the club was built. This land was carried on the books at a value of $200,000.00. Gaffney and Barreca, therefore, each contributed what amounted to $100,000.00, and the extra $100,000.00 was carried as a debt owing to them on the books of the racquet ball club. In addition, Gaffney and Barreca, with their wives, signed notes personally guaranteeing $500,000.00 which they borrowed from the bank. It should be noted that eventually, Gaffney and Barreca were required to sign additional notes, thereby incurring additional liability and incumbering additional property. As compensation for taking these risks, their ownership interest was increased to 30% and Zeairs and plaintiff's were reduced to 20%. All parties agreed to this amendment of the original agreement.
The contract existing between the parties indicated that stock would be issued in the corporation, Off The Wall, once the company was out of debt. Furthermore, no individual was to receive any compensation for the promotion and forming of the club and all the parties to the agreement were to try to sell memberships. Zeairs was an employee of the club in charge of the racquet ball program, and the plaintiff was the manager of the club for all other areas.
Eventually Zeairs paid his $50,000.00 which entitled him to receive 20% of the stock as soon as the club was out of debt. Within the prescribed year, plaintiff only paid $14,640.00 into the club's account. Approximately six weeks after the club's opening, plaintiff terminated his position with the club. Plaintiff later filed suit against the club, and Gaffney and Barreca individually in an attempt to pierce the corporate veil. At trial, the lower court dismissed the suit against Gaffney and Barreca. The court held that Vega was entitled to recover $39,153.75 for his work in obtaining the memberships, under a theory of unjust enrichment. He was also allowed to recover $22,115.42, the remainder of money owed him under his employment contract with Off The Wall because the trial court found that he was forced to leave because of the actions of Gaffney and Barreca. Furthermore, the trial court found that the agreement was based upon a potestative condition and void as to Vega and awarded him the approximately $14,640.00 that he had placed in the club. Finally, Vega was awarded $500.00 in damages for humiliation that he received as a result of a letter from the corporate attorney.
It is from this judgment that defendant now appeals now asserting basically three errors as bases therefor: (1) the use of unjust enrichment by the trial court as a means to award damages; (2) the trial court's finding that the contract contained a potestative condition; and (3) the trial court's determination that plaintiff quit with cause.
UNJUST ENRICHMENT
The trial court awarded plaintiff damages based on a theory of unjust enrichment. The trial court held that plaintiff had worked in order to obtain a large number of life memberships for the club, and that he should be rewarded for those. The full requirements for recovery of unjust enrichment are set forth in Vandervoort v. Levy, 396 So.2d 480 (La.App. 4th Cir. 1981). The requirements are: "(1) Enrichment; (2) Impoverishment; (3) a connection between the enrichment and the impoverishment; (4) an absence of justification of cause for enrichment and impoverishment; and (5) the inability of any other remedy at law to plaintiff." Id. at 484 citing La.Civ. Code art. 21 1965, 2292 et seq; Minyard v. Curtis Products, Inc., 251 La. 624, 205 So.2d 422 (1968); Capitano v. Huber, Hunt and Nichols, Inc., 359 So.2d 308 (La.App. 4th Cir. 1978). We also note that the court held that absence of a contract is one of the prerequisites to recover an unjust enrichment. Id. at 484-85.
The facts presented at trial do not require the application of unjust enrichment. We find that there has been no impoverishment to the plaintiff. Any benefit accruing by Off The Wall eventually would accrue to plaintiff. All of plaintiff's efforts expended on behalf of Off The Wall were contemplated within the agreement entered into by the parties. Each of the investors contributed to the program in a non-monetary way. Furthermore, as defendant points out in brief to this court, the plaintiff has a legal remedy under contract law. This would preclude his use of unjust enrichment which is an equitable remedy.
The trial court, therefore, was in error in applying the doctrine of unjust enrichment, and the award of $39,153.75 is vacated.
POTESTATIVE CONDITION
The trial court held that the portion of the contract which allowed for the issuance of stock once the corporation was free from debt was a potestative condition, and therefore void as to plaintiff. The trial court based its decision on testimony from accountants who said that the provision, taken literally, was an impossible condition, because a corporation would always be incurring debts in its normal operation.
The parties indicated that the intention of the provision was to mean free from pre-business commencement mortgages. The trial court said that because this was not the language which was contained in the contract and it could have been easily added, the agreement was void. Therefore, Vega was entitled to return of money he had placed in the corporation.
According to Article 2024 of the Louisiana Civil Code which existed at the time, a potestative condition is: "that which makes the execution of the agreement depend upon an event which it is in the power of the other of the contracting parties to bring about or to hinder." See Palmer Poche Potestative Condition, 47 Tul.L. Rev. 284 (1973). In interpreting agreements between parties, the trial court was required to follow the rules of interpretation of agreements as set forth at that time in Louisiana Civil Code Article 1945, et seq. Civil Code Article 1950 requires that whenever there is any doubt in an agreement, the court must try to find out what was the common intention of the parties rather than to adhere to the literal sense of the terms contained in the agreement. Article 1951 mandates us to interpret a clause which is susceptible to two interpretations in such a way that would give the agreement validity. See Franks Petroleum, Inc. v. Mayo, 438 So.2d 696 (La.App. 2d Cir. 1983).
Because the testimony presented at trial indicated that it would be impossible for a corporation to ever be completely out of debt, the trial court should have looked to the common sense meaning of the terms contained in the agreement. It is clear from its reasons for judgment, the trial court was aware of the parties' intentions when they drafted the agreement. The issue is not whether the contract contained a postestative condition, but simply that it contained an ambiguous term, the meaning of which was supplied at trial. We hold that the trial court should have interpreted the passage in question in such a manner as to give effect to the contract. This interpretation would mean that stock should be issued once the pre-commencement debts were paid.
EMPLOYMENT CONTRACT
The trial court awarded plaintiff $22,115.42 which represented the balance of payments he would have received during the duration of his contract had he not resigned.
Vega's resignation apparently came as a result of increased hostility and a breakdown of relations between plaintiff and Gaffney. Plaintiff had wished to hire his own son, an accomplished racquet ball player, in some position at the club, but could not because of a prohibition agreed to among the parties against the hiring of relatives. Later, Gaffney requested that plaintiff hire his son as a bartender. Plaintiff then requested that his son be allowed to become an employee, and Gaffney refused. Further incidents between the men only increased the hostility.
The issue on appeal is whether plaintiff quit or was fired. If he were fired for no "serious ground of complaint," then he is entitled to damages. La.Civ. Code art. 2749. Because the trial court is granted discretion in its determination of facts, we cannot find it manifestly erroneous that the trial court found that plaintiff was either fired or was forced to resign by the actions of Gaffney and Barreca. The trial court, therefore, was correct in its determination that plaintiff was entitled to be paid the remainder of his contract.
For the foregoing reasons, the decision of the trial court awarding plaintiff $39,153.75 on the basis of quantum meruit and awarding him $14,153.75 which he had made as a contribution is reversed. The decision of the trial court allowing Vega to recover the remainder of his employment contract is hereby affirmed.
AFFIRMED IN PART; REVERSED IN PART.
SCHOTT and GARRISON, JJ., dissent with reasons.
I dissent.
The majority opinion cites the "manifest error" standard of Canter v. Koehring Co., 283 So.2d 716 (La., 1973) and Arceneaux v. Domingue, 365 So.2d 1330 (La., 1978) in affirming that portion of the judgment dealing with the employment contract, but fails to give the rule of Canter due consideration in the rest of the opinion. In the section entitled "Potestative Condition," the opinion discusses expert testimony, and testimony dealing with the intention of the parties. These are credibility determinations.
The opinion states at pages 155-156 "It is clear from its reasons for judgment, the trial court was aware of the parties' intentions when they drafted the agreement." While the trial judge was aware of what the testimony indicated as to intention, there is no reason to assume that he believed that testimony. His judgment on credibility controls, not ours, in the absence of manifest error. Just because we do not agree with his credibility call, it does not give us the power under Canter and Arceneaux to overturn his credibility determination, absent manifest error.
In defense of the trial court judge, I note that minority-shareholder squeezeout attempts appear so routinely before this court that we cannot ignore the possibility that such a thought may have occurred to the trial judge as well. I find no manifest error.
In conclusion, I would uphold the credibility determinations of the trial court judgment and affirm the judgment of the district court in its entirety.
SCHOTT, Judge, dissenting:
From a number of conversations among the four parties to this racquet club venture and some vague documents executed by them I find the facts to be as follows:
Plaintiff bargained to gain a number of benefits in exchange for a number of commitments. He expected to become the owner of one-fourth interest in the club, later reduced to one fifth, and to have a one year contract as its manager for $25,000. He would benefit by the capital and credit contributed by Gaffney and Barreca to produce a club worth over $700,000 while his financial commitment would be but $50,000 which he need not pay until a year following the opening of the club. Gaffney and Barreca were willing to risk their capital on the hope of getting a financial return on their investment. They were willing to make plaintiff and Zeairs substantial stock holders since they had the ability to run the club and thereby assure the success of Gaffney's and Barreca's investment.
Against this background the four worked together through the construction phase and to the day when the club opened with each contributing his own efforts and talent to make the venture a success. One of plaintiff's achievements was the sale of memberships, which would inure to the benefit of the corporation and its stockholders including himself.
However, the plan was thwarted when plaintiff either quit or was fired by the corporation just six weeks after the club opened. The trial court found as a fact that plaintiff was justified in resigning because of mistreatment by Gaffney and Barreca and wrong doing on their part. I agree with the majority that this finding is not manifestly erroneous.
By breaching the contract when they caused plaintiff to lose his position as manager, Gaffney and Barreca also eliminated plaintiff's incentive to be a stockholder. He had been given one year to pay for the stock and was terminated long before the balance was due and before any stock was issued. He is entitled to recover the payment he had made on the stock's account.
Finally, the motive for plaintiff's efforts in selling memberships in the club was his expectation to be the manager and a stockholder. The club may not reap the benefits of his labor by causing him to forfeit his job and his stock ownership without compensating him for his efforts. The measure of compensation fashioned by the trial court is reasonable and supported by the evidence.
I do not agree with the trial court that the contract was based on a potestative condition under C.C. Arts. 2034-2035. (All references are to the codal articles as written prior to the revision of the code by Art. 331 of 1984.) This was a commutative contract in which Gaffney and Barreca failed to comply with their engagements. As a result plaintiff was entitled to sue for a dissolution of the contract with damages. Arts. 1768, 2046. Since the remedy provided by the trial judge is equivalent to that which is authorized by these articles, I would affirm the judgment.