Gerdes v. Brisco

• Court: Court of Appeal of Louisiana
• Writing for the Court: FREDERICKA HOMBERG WICKER JUDGE
• Docket Number: 22-CA-561
• Decision Date: 07 June 2023
• Citation: Gerdes v. Brisco, 22-CA-561 (La. App. Jun 07, 2023)
• Parties: CARLA F. GERDES v. MONIQUE BRISCO WIFE OF/AND CARL A. ROUEGE, JR.

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CARLA F. GERDES v. MONIQUE BRISCO WIFE OF/AND CARL A. ROUEGE, JR.

No. 22-CA-561

Court of Appeals of Louisiana, Fifth Circuit

June 7, 2023

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 802-480, DIVISION "A" HONORABLE RAYMOND S. STEIB, JR., JUDGE PRESIDING

COUNSEL FOR PLAINTIFF/APPELLEE, CARLA F. GERDES

Sean R. Dawson

COUNSEL FOR DEFENDANT/APPELLANT, MONIQUE ROUEGE

Miles G. Trapolin

Panel composed of Judges Fredericka Homberg Wicker, Marc E Johnson, and Cornelius E. Regan, Pro Tempore

FREDERICKA HOMBERG WICKER JUDGE

This matter arises out of a contractual dispute between Carla Gerdes and Monique Rouege, for the purchase of a daycare business, Carlie Care, Inc., and a related bond for deed-subsequently canceled by agreement of the parties-to purchase the immovable property where the business was located. After a trial on the merits, the trial court found that the 2011 Agreement at issue, which included the note to purchase the daycare and the related bond for deed, was a valid agreement between the parties that novated a prior 2009 stock sale agreement for Carlie Care, Inc. between Ms. Gerdes and Ms. Rouege. The trial court rendered judgment in favor of Ms. Gerdes for the balance of the 2011 note in the amount of $352,809.72.^[1] As to the canceled bond for deed contract, the Court further rendered judgment in favor of Ms. Gerdes in the amount of $552,955.07 for past due rent and repairs, but also rendered judgment in favor of Ms. Rouege for reimbursement of paid property taxes and insurances in the amount of $206,954.42, which resulted in a net judgment in favor of Ms. Gerdes in the amount of $346,000.65 related to the bond for deed contract.

Ms. Rouege, the purchaser, has appealed the trial court judgment, assigning multiple assignments of error surrounding the validity of the contract at issue. For the following reasons, we find that the trial court was not manifestly erroneous in its factual determination that the parties intended to novate the prior 2009 Agreement and that the 2011 Agreement was properly and legally executed.

Accordingly, we affirm the trial court's judgment insofar as it enforces the terms and conditions of the 2011 Agreement between the parties. However, because we find the trial court erred in awarding past due rent in a monthly amount in excess of that previously negotiated and agreed upon by the parties as the "fair market value" rent due under the bond for deed, we amend the judgment as to the amount it awards to Ms. Gerdes for the past due fair market value of rent due. In all other respects, we affirm.

Factual and Procedural Background

This matter arises out of a contract dispute for the sale of a daycare business and a related bond for deed for immovable property. The trial judge issued extensive Reasons for Judgment, which set forth the facts established at trial as follows:

In 2009, Ms. Gerdes approached Ms. Rouege, an employee of Carlie Care, Inc. ("Carlie Care"), regarding the potential sale of Carlie Care stock. On July 31, 2009, Ms Rouege signed a one-year Lease of Commercial Property ("Lease") for the rental of 2032 Carol Sue Avenue in Terrytown, one of the buildings [owned by Mrs. Rouege] that housed Carlie Care. Ms. Rouege agreed to pay $5,000.00 per month rent, with the first six months of rent due on October 30, 2009. Under the lease, Ms. Rouege was responsible for building maintenance and repair, including the plumbing, sewerage and airconditioning systems. Ms. Rouege was also charged with obtaining and paying for general liability, fire and extended insurance for the building.

On August 3, 2009, a few days after the Lease was signed, Ms. Gerdes sold one hundred (100%) of the Carlie Care, Inc. stock to Ms. Rouege for $300,000.00. Ms. Rouge signed a $331,000.00 promissory note payable to Carla Gerdes with a balloon payment due within ninety (90) days of August 1, 2009. Ms. Gerdes testified that the $331,000 represented the $300,000 purchase price for the Carlie Care stock plus the $30,000 Ms. Rouege had agreed to pay for six months of rent for the buildings. The difference of $1,000 represents the difference between the $6,000 loaned by Ms. Gerdes to Ms. Rouege for the $5,000 downpayment.

Both parties testified that Ms. Rouege was working at Carlie Care in June of 2009, two months before she purchased the stock in August and that Ms. Rouege was aware she had to secure her own licenses. However, the testimony also established Ms. Rouege [who earned an undergraduate degree in Business Administration and a Master's degree in Business Management and Finance] did not obtain appraisals or valuations of the business, and she accepted the price suggested by Ms. Gerdes in 2009.

The undisputed testimony adduced at trial was that Ms. Rouege paid nothing at all on the $331,000.00 note and very little in rent to Ms. Gerdes. Ms. Rouege testified she did not recall an exchange of physical stock certificates, and no evidence of transfer on the books of the corporation was presented. Although Defendants claimed Ms. Rouege was named President of Carlie Care, Inc. and Ms. Gerdes had no ownership interest and was not a board member or officer after August 3, 2009, Ms. Rouege did not register her name with the Louisiana Secretary of State as an owner, officer or director of Carlie Care. Ms. Gerdes also filed at least one Annual Report with the Secretary of State in 2010, after the stock sale to Ms. Rouege.

On April 12, 2011, Ms. Gerdes, her husband Leo Heymann, Jr. ("Mr. Heymann"), and the Roueges entered into another transaction entitled, "Agreement," whereby Ms. Gerdes represented herself to be the owner of Carlie Care, Inc. and Mr. Heymann asserted that Carlie Care was his wife's separate property. All parties acknowledged that while they had begun the process of transferring Carlie Care's assets in 2009, no consideration had actually changed hands other than minimal rent. In the 2011 Agreement, Ms. Gerdes sold Carlie Care's assets, but not its stock, to Defendants. Defendants executed the Agreement, and significantly, they did not claim that they, and not Ms. Gerdes, owned the Carlie Care stock. In addition to the sale of Carlie Care's assets, the 2011 Agreement also included a Bond for Deed for 2028-30 and 2032-34 Carol Sue Avenue.

Ms. Rouege acknowledged she signed the Agreement and a bearer promissory note for the sum of $357,865.00 for the sale of Carlie Care's assets on April 12, 2011. The April 12, 2011 note was payable in two installments of $2,300.00 each, commencing on February 8, 2011, and then 57 equal monthly installments of $2,000.00 each, commencing on April 8, 2011, due on the eighth of each succeeding month, with a final balloon installment of all unpaid interest and principal on January 8, 2016. The note provided that failure to pay an installment constituted a default. It also provided that if it became necessary to employ an attorney to enforce or recover [] all or part of the note, attorneys' fees were recoverable at twenty-five (25%) percent of the amount then due with interest and all costs.

The Roueges assert defenses of fraud, mutual error and duress. Defendants argue Ms. Gerdes did not own the assets of Carlie Care, Inc. in 2011, and she could not have sold the assets because Ms. Gerdes sold 100% of the stock to Ms. Rouege in 2009. Conversely, Ms. Gerdes contends the April 12, 2011 Agreement and promissory note constituted a novation of the 2009 stock sale and note and that the 2011 Agreement itself refers to the parties' 2009 attempt at a sale, with both parties acknowledging that no consideration was paid in 2009 other than minimal rent.

On June 23, 2020, Ms. Gerdes [and Ms. Rouege] executed a Cancellation of Bond for Deed, acknowledging Defendants had surrendered the keys to the building subject of the Bond for Deed, and the parties mutually agreed to cancel same. At the time the Bond for Deed was canceled, Ms. Rouege had occupied the Carol Sue property for almost eleven (11) years.^[2] Ms. Gerdes later sold 2028-30 and 2032-34 Carol Sue Avenue to Da Village Eats, LLC for $440,000.

At the conclusion of trial, the trial judge took the matter under advisement. On June 29, 2022, the trial court rendered judgment in favor of Ms. Gerdes for the balance of the April 12, 2011 note for the sale of Carlie Care's assets in the amount of $352,809.72, in addition to attorneys' fees and interest pursuant to the terms of the 2011 Agreement.^[3] As to the canceled bond for deed contract, the Court further rendered judgment in favor of Ms. Gerdes in the amount of $552,955.07 for past due rent and repairs^[4], but also rendered judgment in favor of Ms. Rouege for reimbursement of paid property taxes and insurances in the amount of $206, 954.42, which resulted in a net judgment in favor of Ms. Gerdes in the amount of $346,000.65 related to the failed bond for deed. The judgment declined to award any attorney fees or costs related to the cancelled bond for deed.

In his extensive Reasons for Judgment, the trial judge determined that, by entering into the 2011 Agreement, the parties intended to novate or extinguish the 2009 stock sale agreement. The court found:

The Court finds that the parties intended to novate the original 2009 obligations with the 2011 transactions. This is not the case of a mere rollover of unpaid interest from an earlier note to a later note or the case of a re-arranged but substantially similar, set of transactions.

In this case, the entire set of transactions changed and additional parties were added. The original Sale of Stock involved only Ms. Gerdes and Ms. Rouege and effected the sale of Carlie Care stock, not merely its assets. The 2009 transaction did not contain a Bond For Deed

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