CAPITOL HOUSE Pres. Co. v. CONSULTANTS

• Decision Date: 06 November 2009
• Docket Number: No. 2008 CA 0367.,2008 CA 0367.
• Parties: CAPITOL HOUSE PRESERVATION COMPANY, L.L.C. v. PERRYMAN CONSULTANTS, INCORPORATED; Mr. M. Ray Perryman, XYZ Insurance Company and TUV Insurance Company.
• Court: Court of Appeal of Louisiana — District of US

47 So.3d 408

CAPITOL HOUSE PRESERVATION COMPANY, L.L.C.

v.PERRYMAN CONSULTANTS, INCORPORATED; Mr. M. Ray Perryman, XYZ Insurance Company and TUV Insurance Company.

No. 2008 CA 0367.

Court of Appeal of Louisiana,First Circuit.

Aug. 28, 2009.

Writ Denied Feb. 12, 2010.

Rehearing Denied Nov. 6, 2009.

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Charles S. Lambert, Jr., Daniel D. Holliday, III, Jeffrey T. Nichols, Baton Rouge, LA, for Plaintiff–Appellee/Appellant, Capitol House Preservation Company, L.L.C.

Fredrick R. Tulley, Marc S. Whitfield, Edward D. Hughes, Tom S. Easterly, Taylor, Porter, Brooks & Phillips LLP, H. Alston Johnson, III, Phelps Dunbar LLP, Baton Rouge, LA, for Defendants–Appellants/Appellees, Argosy Gaming Co., Argosy of Louisiana, Inc., Catfish Queen Partnership in Commendam, and Jazz Enterprises, Inc.

Before PARRO, PETTIGREW, and WELCH, JJ.

PARRO, J.

Defendants, Argosy Gaming Company, Argosy of Louisiana, Inc., Catfish Queen Partnership in Commendam, and Jazz Enterprises, Inc., appeal the final judgment entered in conformity with a jury verdict awarding damages to Capitol House Preservation Company, L.L.C. (Capitol House) arising from the defendants' alleged misrepresentations and omissions made in pursuit of a riverboat gaming license. Capitol House has answered the appeal, asserting that the trial court erred in denying recovery to it for lost profits and in striking the damages the jury awarded to it for the cost of money it had borrowed in furtherance of its proposed riverboat gaming project. For the following reasons, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

In 1993, the Riverboat Gaming Enforcement Division of the Gaming Enforcement Section of the Office of State Police (the Division) had issued all but two of the 15 riverboat casino licenses authorized by the Louisiana Riverboat Economic Development and Gaming Control Act (Riverboat Gaming Act). ¹ Three groups filed applications for the two remaining licenses, which were earmarked for Baton Rouge: 1) Lady Luck Baton Rouge, Inc. (sometimes referred to as “Lady Luck” or “Lady Luck Baton Rouge”); 2) Jazz Enterprises, Inc. (Jazz) and Argosy Gaming Company (sometimes referred to collectively as “Jazz/Argosy”), which formed Catfish Queen Partnership in Commendam (Catfish Queen) ² and submitted a joint application as Jazz/Catfish Queen; and 3) Louisiana Casino Cruises, Inc. (LCC). The Division ultimately determined that all three applicants were suitable for a license.

The Division hired Perryman Consultants, Inc. to rank the applicants according to the economic impact that each would have on the local and state economies if awarded a license. It ranked the Jazz/Argosy project first by a considerable margin, the LCC project second, and the Lady Luck project third. On July 18, 1994, after conducting hearings on July 7, 8, and 11, 1994, in which each applicant was afforded an opportunity to make a separate presentation, the Division awarded the licenses to Jazz/Argosy and LCC and denied Lady Luck's application for a license. ³ The Division subsequently issued supplemental reasons for the denial of Lady Luck's license. Lady Luck, which was owned by Lady Luck Gaming Corporation and Capitol House, did not appeal the Division's denial of its license.

On July 10, 1995, Capitol House, as the successor-in-interest to Lady Luck, filed the instant suit in the 19th Judicial District Court against Perryman Consultants, Inc., and its president, Dr. Ray Perryman (sometimes collectively referred to as “Perryman”), alleging that Perryman committed numerous errors and omissions in ranking the applicants. On November 26, 1997, Capitol House amended its petition to name Jazz, Catfish Queen, Argosy Gaming Company, Argosy of Louisiana, Inc., and shareholders and principals of Jazz, including Steve Urie, Lodging Systems, Inc., Ronald Johnson, Mark Bradley, and Paula Bradley, as defendants. Capitol House asserted claims of negligence and violations of the Louisiana Unfair Trade Practices and Consumer Protection Law (UTPL), LSA–R.S. 51:1401, et seq. See LSA–R.S. 51:1409(A). Specifically, Capitol House alleged that Jazz and its principals made false and misleading statements to persons involved in the selection process regarding, among other things, the true ownership of Jazz and Jazz's ability to finance and complete various landside improvements it promised.

Capitol House averred that Jazz's material misrepresentations to the Division violated the Riverboat Gaming Act and disqualified Jazz from consideration for a license. Moreover, Capitol House asserted that the City of Baton Rouge's support for the Jazz project, the issuance of a certificate by the Louisiana Riverboat Gaming Commission (the Commission), the Perryman rankings, and the Division's decision to issue a license were all based on Jazz's fraudulent and deceptive practices and representations. Capitol House alleged that Jazz, as a result of these representations, obtained an unfair and undue competitive advantage. Capitol House sought to recover the loss of its investments spent pursuing the license, the value of a gaming license, lost profits, and future lost profits of its business and riverboat project, as well as attorney fees and costs.

This case has an extensive procedural history and this court has written four prior opinions on appeal in this matter. In Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 98–1514 (La.App. 1st Cir.12/10/98), 725 So.2d 523, writ denied, 99–0548 (La.4/9/99), 740 So.2d 637 ( Capitol House I ), this court upheld the trial court's denial of a prescription exception as to the individual defendants, finding that the Riverboat Gaming Act imposed a continuing duty to report violations of the Act, and that each day the defendants, as licensees or applicants, failed to disclose the alleged misrepresentations, a new violation of the statutory duty arose and could constitute an unfair trade practice should the court so find. In Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 98–2216 (La.App. 1st Cir.11/5/99), 745 So.2d 1194, writ denied, 99–3446 (La.2/11/00), 754 So.2d 937 ( Capitol House II ), this court reversed the granting of prescription exceptions, applying the continuing tort principle to find that the claims were not time barred against the remaining defendants.

In Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 01–2524 (La.App. 1st Cir.12/31/02), 836 So.2d 680, writs denied, 03–0323 and 0324 (La.4/21/03), 841 So.2d 794 and 795 ( Capitol House III ), this court upheld the trial court's denial of defendants' exceptions raising the objections of lack of subject matter jurisdiction and no cause of action. With regard to the exception raising the objection of lack of subject matter jurisdiction, the defendants had asserted that the trial court could not award damages to Capitol House, because it lacked original jurisdiction and authority to review the alleged misconduct and to determine whether applicants should have been awarded a riverboat license. This court disagreed, reasoning that the allegations in Capitol House's petition asserted a civil claim for monetary damages arising from the alleged misconduct of defendants. Id. at 684. As no gaming agency had been granted the authority to award money damages, this court found that the case fell within the adjudicative sphere of the trial court. Id. at 685. With regard to the exception raising the objection of no cause of action, the defendants had argued that Capitol House was precluded from contesting the Division's decision, because Capitol House had failed to exhaust administrative remedies provided for in the gaming law with respect to the denial of its license application. This court noted that the exhaustion doctrine applies only when exclusive jurisdiction exists in an administrative agency, and concluded that the doctrine did not apply to Capitol House's claims for monetary damages. Id.

Following this court's ruling in Capitol House III, the defendants filed exceptions raising the objection of res judicata, contending that Capitol House's claims were barred because all issues raised by Capitol House had been previously litigated and determined by the Division during the licensing process. Because Capitol House's predecessor, Lady Luck, had failed to appeal the Division's rulings, the defendants submitted that those rulings were final and definitive and could not be collaterally attacked in court. In support of their assertion that all of Capitol House's claims of misconduct were raised and addressed by the Division, the defendants introduced complaints lodged with the Division by Capitol House's predecessor, Lady Luck, the Division's final order, and its reasons for ruling, as well as the transcripts of the hearings held before the Division. The trial court granted the res judicata exceptions, which judgment was affirmed by this court. Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 03–1983, 03–1984 (La.App. 1st Cir.11/3/04), 889 So.2d 304, 312 ( Capitol House IV ).

On writs, the Louisiana Supreme Court reversed this court's ruling, adopting the “reasons assigned by the dissenting judge.” Capitol House Preservation Co., L.L.C. v. Perryman Consultants, Inc., 05–0090, 05–0091 (La.3/24/05), 897 So.2d 584. The dissent reasoned:

First, although some of the issues in this lawsuit were raised at the licensing hearing before the Division, they were not litigated there. There was no opportunity for discovery, no filing of motions or exceptions, no cross-examination of witnesses for one party by representatives of another party, nor any of the other procedural aspects of a trial. Nor could there have been, as this court has previously held that at least some of the claims were in the nature of a continuing tort and, since no gaming agency was granted the authority to...