Angelo & Son, LLC v. Piazza

• Decision Date: 10 December 2008
• Docket Number: No. CA 08-370.,CA 08-370.
• Citation: 1 So.3d 705
• Court: Court of Appeal of Louisiana — District of US
• Parties: ANGELO & SON, LLC, et al. v. Angelo PIAZZA, Jr., et al.

1 So.3d 705

ANGELO & SON, LLC, et al. v. Angelo PIAZZA, Jr., et al.

No. CA 08-370.

Court of Appeal of Louisiana, Third Circuit.

December 10, 2008.

Writ Denied February 20, 2009.

Richard E. Lee, Attorney at Law, Gregory Norman Wampler, Lemoine & Wampler, Pineville, LA, for Defendants/Appellants, Angelo Piazza, Jr. and Patricia Piazza.

Jeremy C. Cedars, Attorney at Law, Alexandria, LA, for Plaintiffs/Appellees, Angelo & Son, L.L.C., Charles Tobey and Christine Tobey.

Court composed of OSWALD A. DECUIR, MICHAEL G. SULLIVAN, and BILLY HOWARD EZELL, Judges.

DECUIR, Judge.

Christine and Charles Tobey, along with the limited liability company they organized, Angelo & Son, L.L.C., filed suit alleging damages as a result of the purchase of Christine's parents' used car dealership and house. The suit was filed against Christine's parents, Patricia and Angelo Piazza; Christine's brother, Sam Piazza; and Sam's used car business. Christine and Charles sought rescission of the sale of the used car business and house alleging failure of cause, fraudulent inducement, detrimental reliance, unfair trade practices, and defamation. The trial court rescinded the sale of the house and business based on failure of cause and detrimental reliance. The trial court also found the Tobeys had proven defamation and awarded them $50,000.00 in damages. Only Patricia and Angelo Piazza were found liable, and they appeal the judgment of the trial court.

FACTS

As they began to approach retirement age, Angelo and Patricia discussed the sale of their used car business with all of their children. Charles and Christine became interested in running the business because Charles wanted to quit working overseas and stay at home with his family. The Piazzas wanted to retire from the used car business and spend more time at their camp. Angelo wanted to do other things such as raise hogs and host benefits. After a year of discussions and planning, Charles and Christine decided to purchase the house and five acres of surrounding property. The used car business located on the property of the family home was not included in the sale documents but was effectively transferred to the Tobeys at the same time. The parties agreed that Angelo would help the Tobeys get started and Patricia would help with the book work as needed. Charles quit his job where he was making $90,000 a year, and Christine quit her job as a nurse making $30,000 a year.

The house and 5.68 acres appraised for $260,000.00. An act of cash sale from Patricia and Angelo to Charles and Christine was executed on February 4, 2005, for $260,000.00. Testimony revealed that the Piazzas gave the Tobeys a check for $10,000.00 to help with the closing costs. Christine testified that her parents did not want the business mentioned in the sale for tax reasons.

The Tobeys went to Evangeline Bank and Trust Company to obtain floor plan financing for the purchase of cars. The initial floor plan was for $150,000.00. The Tobeys bought most of the Piazzas' current inventory of used cars except for two or three that had been on the lot for over a year, which the bank did not want them to purchase. A total of eleven cars was purchased.

Charles was still overseas when Christine initially got the business up and running. By the time Charles returned in March 2005, the relationship between Christine and her father had turned sour. From the record, it appears that Angelo disagreed with the way Christine wanted to run things, specifically her decision not to purchase more cars when she had reached her credit limit. A heated discussion ensued, involving both business and family concerns, and Christine told Angelo not to come back.

After that, the Tobeys testified, Angelo set out to ruin their business. Charles testified that Angelo would bid against him at car auctions. The Piazzas placed an advertisement in the classified section of the local newspaper wherein they publicly distanced themselves from the business. Angelo made negative comments to third parties about the Tobeys' inventory which had no basis in fact. At the same time, however, Angelo helped his youngest son, Sam, set up a used car business, Sam's Auto Sales, just down the road from the Tobeys' business. Angelo became the salesman at the new business, while Sam continued working at his previous job.

In August 2006, the Tobeys filed the present lawsuit. Trial in the matter was held on July 17, 18, and August 23, 2007. The trial court found the "principal cause in purchasing the Piazza property was the understanding that Piazza would retire but aid Tobey in the operation of the business," and the Tobeys would not have purchased the business otherwise. The court found that the evidence established both a failure of cause and detrimental reliance and ordered the contract rescinded. While the allegations of fraud and unfair trade practices were rejected, the trial court did find that Angelo defamed the Tobeys in that he made statements to third parties to harm the business and reputation of the Tobeys and to deter potential customers from dealing with the Tobeys. Damages in the amount of $50,000.00 were awarded. Both Patricia and Angelo appeal this decision.

FAILURE OF CAUSE AND DETRIMENTAL RELIANCE

The trial court wrote extensive reasons for judgment. In finding a failure of cause and detrimental reliance, the trial court stated:

In the case at bar the cause for the contract was clearly the decision by Piazza to retire from the used car business, with the exception of aiding Toby [sic] in the operation of the business. Piazza was clearly aware that this was the cause without which the Tobey's [sic] would not have entered into the contract to purchase the home and business. The principal cause in purchasing the Piazza property was the understanding that Piazza would retire but aid Tobey in the operation of the business. This is abundantly clear through the testimony of the parties and all witnesses, which testimony confirms that the contract was completed as originally agreed upon even to the extent that Piazza aided Tobey in the acquisition of a floor plan/credit line and did initially aid Tobey in the operation of the business. Piazza was to "do the buying and give Tobey the benefit of his experience." Once the contract was completed, these terms were followed. Unfortunately, change occurred.

. . . .

In the case at bar it is clear that Tobey relied on Piazza's assertions and promises that they would not only retire but would aid Tobey in the operation of the business.

. . . .

This Court is absolutely convinced that Angelo Piazza, Jr. convinced Sam Piazza to secure a license and open a business with the understanding that his father, Angelo Piazza, Jr. would run the business and Sam would simply receive the profits. It is also abundantly clear, from all of the evidence referenced hereinabove, that Angelo Piazza, Jr. began a calculated attempt to sink the Tobey's [sic] and ruin their business. This is gross and distasteful in the course of regular business, much less in the course of family affairs. Angelo Piazza, Jr.'s continued statement during his testimony that he would "help any of his children if they asked" is not borne out by the evidence and by the actions he undertook.

The evidence therefore proves, more probable than not, that based on failure of cause and detrimental reliance, the contract is to be rescinded.

Failure of Cause

"Cause is the reason why a party obligates himself." La.Civ.Code art. 1967. In "A Refresher Course on Cause," 12 La. L.Rev. 2 (1951), Professor J. Denson Smith explained:

Without giving more detailed consideration to the function of cause in characterizing contractual obligations, the concept plays an important role also in the resolution of questions involving the effect of error, duress, or illegality. In this respect it is well to recall to mind the emphasis placed by the French on the legal efficacy of the will, the great scope given to it and its elevation to the status of law made by the parties for themselves. As a necessary corollary to the principle that an individual should have the utmost freedom to bind himself by willing to do so, it follows that he should not be bound without having so willed. This results in the principle that where consent is given in error — which covers also cases involving consent secured through fraud, or duress, a real will to bind is lacking and the expression of consent is thereby vitiated. Hence the rule that error as to the principal cause of a contract destroys the validity of the consent. Although different categories of error are dealt with, such as error as to the object, or the person, or the cause, it has been said, and with good reason, that error as to the cause comprehends all kinds of error.

Error can vitiate consent, so that a contract may be rescinded based upon error. La.Civ.Code art. 1948. Article 1950 of the Civil Code describes an error which may concern cause as anything which the parties "should in good faith have regarded, as a cause of the obligation." The jurisprudence upholds the principle that a contract may be rescinded once a failure of cause is shown:

[W]e find that there was error as to the nature of the contract. Consequently, a party may rescind a contract when the error of cause is on the nature of the contract, on the thing that is the contractual object or on a substantial quality of that thing. La.C.C. Arts.1950, 1952; Matter of Adoption of Smith, 578 So.2d 988 (La.App. 4 Cir.1991), writ denied, 581 So.2d 687 (La.1991).

Dugas v. Adoption of Dugas, 614 So.2d 228, 232 (La.App. 3 Cir.1993). Further, "[e]rror vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party." La.Civ.Code art.1949.

In the case before us, the Tobeys showed that the cause of their contract with the Piazzas, i.e., the reason without which...