Ernst Cafe, Inc. v. Landry
| Decision Date | 05 September 2007 |
| Docket Number | No. 2007-CA-0126.,2007-CA-0126. |
| Citation | 966 So.2d 1080 |
| Parties | ERNST CAFE, INC. v. Jeffrey LANDRY. |
| Court | Court of Appeal of Louisiana — District of US |
Henry L. Klein, New Orleans, LA, for Plaintiff/Appellant.
Kyle Schonekas, Andrea V. Timpa, Schonekas, Winsberg, Evans & McGoey, L.L.C., New Orleans, LA, for Defendant/Appellee.
(Court composed of Judge MICHAEL E. KIRBY, Judge MAX N. TOBIAS, JR., and Judge Roland L. Belsome).
The plaintiff/appellant, Ernst Café, Inc.("Ernst Café"), has appealed from a judgment ordering it to pay costs and fees to receiver/appellee, Claude C. Lightfoot, Jr. ("Lightfoot"), and his attorneys, Schonekas, Winsberg, Evans, and McGoey, L.L.C. (collectively referred to as "Schonekas"). The judgment equally divides the amount due between Ernst Café and Jeffrey Landry ("Landry"), who did not appeal the trial court's judgment. For the reasons that follow, we affirm.
This case arose out of a dispute between Landry, the minority shareholder, and James M. Besselman, Jr. ("Besselman"), the majority shareholder of Ernst Café. Suit was filed by Ernst Café against Landry on 22 October 2004 seeking damages from Landry for mismanagement of the business and a declaration that the shareholder agreement, which purportedly sold 200 shares of the company to Landry, was null and void. On 3 February 2005, Landry answered the petition and requested the appointment of a temporary receiver. Ernst Café did not oppose, and actually consented to, the appointment of the receiver.
Lightfoot was appointed as the temporary receiver of Ernst Café by the trial court pursuant to La. R.S. 12:151(C)1 to oversee the business pending a trial of the disputes between Ernst Café and Landry. In addition to appointing Lightfoot, the trial court prohibited Besselman and anyone else associated with Ernst Café from changing the affairs of the business or to control the company's finances and accounts in any way without further order of the court.
When appointed, Lightfoot informed the court and the parties that his hourly rate was $250.00. Ernst Café did not object to this amount. Ernst Café initially cooperated with Lightfoot's requests for information regarding its finances and business operations.
Despite repeated demands, complete financial records and accountings were not provided to Lightfoot. Lightfoot found questionable transactions for which he could not obtain adequate explanations. Accordingly, Lightfoot employed counsel to compel the production of documents and records and to pursue possible causes of action Ernst Café might have in connection with misappropriation of funds and property since his appointment. Lightfoot was authorized by statute to retain counsel.2 However, in an abundance of caution, Lightfoot sought and received court approval for the appointment of Schonekas as his counsel on 28 June 2005. Ernst Café never challenged the appointment.
Schonekas made written demand on Ernst Café for financial records, accountings, and other information related to the café's operations. The records provided indicated that there may have been a misappropriation of funds from the café in violation of the court's previous order. A status conference was held on 2 August 2005 to discuss the problems Lightfoot was having in obtaining the documents necessary to protect Ernst Café.
Shortly after the status conference, Besselman purchased Landry's shares in Ernst Café. Once the transaction was completed, ownership in the corporation was no longer in dispute and the receivership was not needed. The parties agreed to a termination of the receivership and discharge of Lightfoot as receiver by unopposed motion; Lightfoot was discharged on 4 November 2005. The agreement also relieved Lightfoot of any obligation to file reports of his receivership.
Lightfoot filed an application for fees and costs for himself and his counsel on 13 December 2005, seeking $7,750.00 for himself, and a total of $7,790.55 for Schonekas. The application for fees and costs was accompanied by detailed invoices and statements from the applicants.
After the application for fees and costs was filed, Ernst Café sought the production of Lightfoot's entire file, to which Lightfoot, through counsel, objected. Ernst Café also sought to take Lightfoot's deposition and filed a motion to compel discovery, which Lightfoot opposed. A hearing on the motion took place on 10 March 2006. The trial court, noting that Ernst Café did not timely object to the appointment of either Lightfoot or his counsel, denied the request for production of Lightfoot's entire file, and limited Lightfoot's deposition to two hours and to questions regarding his invoices and bills. Ernst Café noticed, and then cancelled, Lightfoot's deposition. Lightfoot and his counsel supplemented and increased the application for costs and fees to totals of $9,731.00 for Lightfoot and $18,965.43 for Schonekas.
The application for fees and costs was heard by the trial court on 31 May 2006. A judgment with written reasons was rendered on 26 June 2006, awarding $7,700.00 to Lightfoot and $5,917.55 to his counsel and against Ernst Café and Landry. In its reasons for judgment, the trial court stated that Lightfoot admitted that the stock ownership dispute was resolved in August 2005; Lightfoot was discharged as temporary receiver on 4 November 2005. Thus, the trial court found that the fees and costs incurred by Lightfoot and Schonekas after August 2005 were not related to the proper operation of the corporation. On 7 July 2006, the judgment was clarified and amended to hold that the obligation was divisible between Ernst Café, with each party to bear 50% of the total amount due.
Ernst Café has assigned three errors for review. First, it contends that the trial court erred in awarding fees and costs because Lightfoot failed or refused to file his receivership report as mandated by La. R.S. 12:152(C).3 Second, it argues that Ernst Café should not be assessed with any fees or costs because it was not the party responsible for causing an unnecessary receivership, but was responsible for having the receivership dismissed. Lastly, Ernst Café...
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