Contogouris v. Ocean Therapy Solutions, LLC

• Decision Date: 27 January 2016
• Docket Number: No. 2015–CA–0472.,2015–CA–0472.
• Parties: Spyridon C. CONTOGOURIS, et al. v. OCEAN THERAPY SOLUTIONS, LLC, et al.
• Court: Court of Appeal of Louisiana — District of US

187 So.3d 18

Spyridon C. CONTOGOURIS, et al.
v.
OCEAN THERAPY SOLUTIONS, LLC, et al.

No. 2015–CA–0472.

Court of Appeal of Louisiana, Fourth Circuit.

Jan. 27, 2016.

187 So.3d 19

Jack E. Truitt, Pamela S. Chehardy, Alexandra Schultz, The Truitt Law Firm, Covington, Louisiana, and Timothy S. Madden, Benjamin E. Gonsoulin, King Krebs & Jurgens, PLLC, New Orleans, LA, and Leo J. Palazzo Jason John Markey Mario A. Arteaga, Jr. Michael J. Monistere Palazzo Law Firm, APLC, Gretna, LA, and Zachary T. Mayer, Pro Hac Vice, Kane Russell Coleman & Logan, for Plaintiffs/Appellants.

William E. Wright, Jr. Charlotte C. Meade Deutsch Kerrigan & Stiles, L.L.P., New Orleans, LA, for Defendants/Appellees.

(Court composed of Chief Judge JAMES F. McKAY III, Judge DENNIS R. BAGNERIS, SR., Judge TERRI F. LOVE ).

JAMES F. McKAY III, Chief Judge.

This is a contract case, which deals with claims of breach of fiduciary duty and legal malpractice. The plaintiffs, Spyridon C. Contogouris and Stephen A. Baldwin, seek review of the trial court's decision to maintain an exception of res judicata filed by the defendants, John W. Houghtaling, II and the law firm of Gauthier, Houghtaling & Williams LLP. For the following reasons, we affirm the judgment of the trial court.

FACTS AND PROCEDURAL HISTORY

During the early 1990's, Spyridon Contogouris worked with Kevin Costner to market a centrifuge technology developed by Mr. Costner. Theoretically, this technology could be used in the cleanup of oil spills. Following the Deepwater Horizon drilling rig explosion in the Gulf of Mexico on April 17, 2010, Mr. Contogouris saw an opportunity to market the centrifuge technology to British Petroleum (BP), the party responsible for cleaning up the oil spill.

Mr. Contogouris, John W. Houghtaling, II and Franco Valobra entered into a joint venture agreement, creating Ocean Therapy

187 So.3d 20

Solutions, LLC, (OTS) for the purpose of marketing the centrifuge technology. Mr. Houghtaling was named the chief executive officer of OTS. Additional members were also brought into OTS. These included: Westpac Resources, LLC, owned by Mr. Costner and Patrick Smith; oil executive Frank Levy; and Stephen Baldwin.

On May 13, 2010, OTS was registered with the Louisiana Secretary of State and an exclusive marketing contract was signed with C.I.N.C. Industries (CINC), the company that had acquired the centrifuge technology from Mr. Costner. However, soon thereafter, the members began to have disagreements about the OTS business plan. Some of the members, such as Mr. Contogouris and Mr. Levy, wanted the company to use a business model which would ensure recurring business and the possibility of marketing the technology to other major oil companies, while other members, such as Mr. Houghtaling and Mr. Smith, wished to make a one-time sale of the technology to BP at a higher price.

On June 7, 2010, Mr. Houghtaling, Mr. Smith and Mr. Costner met with Doug Suttles, BP'?s point man for overseeing the cleanup operations. Mr. Suttles committed to order $52 million worth of centrifuge units from OTS and signed a letter of intent indicating that BP would make an advance deposit of $18 million with the order. Mr. Contogouris and Mr. Baldwin allege that they were excluded from this meeting and that Mr. Houghtaling advised them that there was no deal with BP.

On June 11, 2010, Mr. Contogouris and Mr. Baldwin signed a transfer, withdrawal, release and indemnity agreement, transferring their collective 38% interest in OTS to Mr. Smith upon the payment of $1.9 million.¹ Mr. Smith paid 10% of the price on that date with the remainder paid on June 18, 2010. The transfer agreement called for an effective date of when executed by Signing Members who own in the aggregate 60% or more Percentage of Interest in OTS," and further reflected the current percentage of ownership in OTS as of that date: Contogouris—28%; Baldwin—10%; Valobra—5%; Houghtaling—37% and Westpac—20%. Smith, on behalf of Westpac, and Houghtaling also executed the transfer agreement on June 11, 2010.

On June 12, 2010, BP issued a purchase order for $52 million to OTS, including a commitment to make an $18 million advance deposit. On June 16, 2010, BP made the advance deposit. Mr. Contogouris and Mr. Baldwin allege that they did not learn of the agreement between BP and OTS until July of 2010.

On December 22, 2010, Mr. Contogouris and Mr. Baldwin filed suit against Westpac, Mr. Smith, Mr. Costner and Rabobank, N.A. in a lawsuit styled Contogouris, et al v. Westpac Resources, LLC, et al. (2:10–cv–4609) in the United States District Court for the Eastern District of Louisiana, seeking to invalidate the transfer agreement based upon fraud. However, prior to the trial on the merits in the federal case, Mr. Contogouris and Mr. Baldwin filed the lawsuit that is the subject of the instant appeal on June 17, 2011, naming OTS, Mr. Houghtaling and Gauthier, Houghtaling and Williams LLP (GHW) as defendants and alleging: (1) conversion, conspiracy, abuse of rights, abuse of process, and detrimental reliance against OTS, Mr. Houghtaling and GHW; (2) recovery of sales commissions and recovery of distributions made after plaintiffs transferred their interest in OTS; and

187 So.3d 21

(3) breach of fiduciary duty and legal malpractice against Mr. Houghtaling and GHW.² In response, the defendants raised a number of exceptions, including: prescription, res judicata, no cause of action and no right of action.

These exceptions came for hearing before the trial court on March 27, 2012. On May 10, 2012, the trial court sustained in part and overruled in part a number of the exceptions. However, the trial court did not rule on the exception of res judicata at this time. Thereafter, on June 4, 2012, the federal Contogouris lawsuit was tried by jury and resulted in a verdict in favor of the defendants and against the plaintiffs. This verdict...