Coleman v. Querbes Co. No. 1
| Decision Date | 15 February 2017 |
| Docket Number | No. 51,159–CA,51,159–CA |
| Citation | 218 So.3d 665 |
| Parties | U.L. COLEMAN, III, et al., Plaintiff–Appellants v. QUERBES COMPANY NO. 1, et al., Defendant–Appellees |
| Court | Court of Appeal of Louisiana — District of US |
ADAMS & REESE, LLP, By: Richard B. Eason, II, Martin A. Stern, E. Gregg Barrios, Raymond P. Ward, Counsel for U.L. Coleman, III, et al.
LAW OFFICES OF JOSEPH LOONEY, By: Joseph Looney, Counsel for U.L. Coleman, III, et al.
McMICHAEL, MEDLIN, D'ANNA, WEDGEWORTH & LAFARGUE, LLC, By: James C. McMichael, Counsel for U.L. Coleman, III, et al.
PHELPS DUNBAR, LLP, By: Randy Roussel, Gregory Stevens, Amanda W. Messa, Counsel for U.L. Coleman, III, et al.
Before WILLIAMS, DREW and MOORE, JJ.
U.L. Coleman III ("Coleman") and other plaintiffs appeal a judgment that sustained peremptory exceptions of no cause of action, no right of action and prescription and dismissed virtually all claims against the defendants, Querbes Company No. 1 ("Querbes # 1") and its constituent partners ("the Querbes parties"). For the reasons expressed, we affirm.
The Querbes parties owned a 21.6–acre tract of land in southeast Shreveport, to the east of Youree Drive and north of East 70th Street. Coleman is a realtor and land developer. In 1985 and 1986, they discussed plans to develop the tract, beginning with the 6.7–acre northern portion of the tract. The Querbes parties formed a partnership, Querbes # 1, to effectuate the project. On April 30, 1986, they executed four contracts. The first three pertained to the 6.7–acre tract, which was to be developed as One Bellemead Centre, 6425 Youree Drive:
Articles of Partnership. Coleman and Querbes # 1 formed a partnership called Querbes–Coleman No. 1 (). The purpose was to develop One Bellemead Centre. Coleman's interest was 25% and he was designated managing partner; Querbes # 1's interest was 75%.
Development Agreement. Querbes # 1, as owner, contracted with one of Coleman's business entities, U.L. Coleman Company Ltd. ("ULCC"), as manager, to manage, control, supervise, etc., the building that became One Bellemead Centre. The Development Agreement was to terminate "on the later of the substantial completion of construction or upon completion and occupancy of 90% of the rentable area of the building."
Management Agreement. Querbes–Coleman—the partnership formed that day—hired another of Coleman's business entities, U.L. Coleman Properties Ltd. ("ULCP"), as agent, to be the exclusive manager for the operation, management and leasing of One Bellemead Centre. ULCP was to receive 5% of monthly gross receipts from the operation of the property.
The fourth contract pertained to the 14.9–acre tract adjacent to One Bellemead Centre, also owned by Querbes # 1. It is labeled simply:
Agreement. Noting its need for "technical assistance," Querbes # 1 agreed with Coleman to enter "such agreements as may be necessary" to develop the adjacent tract, which "may include a joint venture of partnership * * *, development agreement, management agreement, and property management agreement." If Querbes # 1 elected to develop the adjacent tract, it would form a partnership, joint venture or corporation with Coleman; if not, and Querbes # 1 decided simply to sell the adjacent tract, then Coleman would be paid a real estate commission in an amount to be agreed on at the time of the sale.
The crucial issue in this appeal is Coleman's contention that the Agreement created a joint venture with respect to the adjacent tract, and the defendants' contention that it did not.
As a result of these four contracts, One Bellemead Centre was owned 25% by Coleman and 75% by Querbes # 1. Construction began on the five-story brick-and-glass modern-style suburban office building in late 1986 and was completed in 1987, effectively terminating the Development Agreement. As stated in the three documents, Coleman served as managing partner; his company, ULCP, served as property manager. Coleman arranged an $8.6 million loan from First National Bank to finance the project. Apparently, the operation of One Bellemead Centre went smoothly until the mid–1990s, when its principal tenant, IBM, downsized, drastically reducing the building's occupancy. By 1998, rent was no longer sufficient to service the debt.
According to Coleman, the defendants embarked on an intricate course of "secret" conduct to oust him from the enterprise:
• In November 1998, the partners of Querbes # 1 formed a new company, Querbes Company No. 2 LLC ("Querbes # 2") and transferred the adjacent tract to Querbes # 2, for no consideration. Coleman felt this was a bald attempt to shut him out of the future development of the adjacent tract, even though he believed that under the contracts he was entitled to a 25% interest.
• Days later, the partners of Querbes # 1 attempted to refinance the debt, paying off the loan to First National and borrowing $4.6 million from GECC. George Nelson, one of Querbes # 1's managing partners (also president of First National's successor bank, Bank One), advised GECC that Querbes # 1 intended to terminate Coleman as managing partner of Querbes–Coleman, remove ULCP as property manager, and install its own managers, Nelson and Ms. Joseph, as managers of the property. GECC, however, replied that it would not honor its loan commitment if these changes were made. At this time, Querbes–Coleman converted to an LLC and executed an Operating Agreement that retained the same ownership ratio as before and retained Coleman as the managing member. In late November, GECC refinanced, specifying that Coleman would remain on as managing partner and ULCP as property manager.
• In April 2004, Querbes # 2 sold part of the adjacent tract, paying $46,430 to a company owned by Nelson. Coleman later uncovered a string of emails showing that the buyer was concerned that Coleman would exercise his rights under the Operating Agreement and thus "hamper" the development of the property, but Nelson replied that they were trying to "get rid of" Coleman.
• In May 2008, the Querbes parties made a cash call of $4 million to pay off the debt to GECC. Their stated purpose was to make One Bellemead Centre debt-free and to perform maintenance work; however, Coleman felt the ulterior motive was to force him to sell his 25% interest in Querbes–Coleman and thereby oust ULCP from the Management Agreement.
Nevertheless, Coleman was able to meet the capital call; he retained his 25% interest. Querbes–Coleman paid off the GECC loan. Querbes # 1, using its 75% interest in Querbes–Coleman, terminated the latter's Management Agreement with ULCP on May 28, 2008.
Coleman, ULCP and Querbes–Coleman filed this suit for injunctive relief and damages in July 2008. Defendants were Querbes # 1 and the Querbes parties. Discovery and incidental actions proceeded over the next 6 ½ years (consuming over 3,200 pages of transcript).
By reconventional demand, filed in February 2014, the defendants alleged various reasons for wanting Coleman and ULCP out of the project, such as using a business in which he held a financial interest, Sequoia Construction Co., to perform maintenance on One Bellemead Centre, resulting in a double payment; they also joined Sequoia as a defendant in reconvention.
A fourth supplemental and amending petition, filed in July 2015, identified 11 separate causes of action (called "counts"):
The defendants filed numerous exceptions to the original and each supplemental and amending petition. As applied to the fourth supplemental and amending petition, these specified:
A hearing on the exceptions was held over four days between September 21 and October 23, 2015. The parties stipulated that any judgment rendered against Querbes # 1 would be enforced against the partnership before the partners, and that Querbes–Coleman's claims were derivative. They also stipulated that the exception of prescription would be sustained as to conduct occurring before July 3, 2007, and withdrawn as to conduct after that date on Counts 1 and 2; a similar cutoff date of July 3, 1998, applied to Count 4; a similar cutoff date of July 3, 2006, applied to Counts 8 and 9; and the exception of prescription was withdrawn as to Count 10. The parties introduced some 180 exhibits and called, over three days' time, three witnesses. George Nelson, the lead partner in Querbes # 1, and U.L. Coleman, the lead plaintiff, recounted the events surrounding the formation of Querbes–Coleman, their respective understandings of the nature of their agreement, and the long business relationship that followed. William Comegys III, the attorney who drafted the 1986 contracts, also testified, concerning his understanding of the agreement. After the parties rested and gave extensive arguments on the...
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