Hannie v. Colonial Oaks Al Lafayette Emp'r, LLC

• Court: Court of Appeal of Louisiana
• Writing for the Court: KYZAR, Judge.
• Citation: Hannie v. Colonial Oaks Al Lafayette Emp'r, LLC, 334 So.3d 17 (La. App. 2022)
• Decision Date: 09 February 2022
• Docket Number: 21-349
• Parties: Nicol Edward HANNIE v. COLONIAL OAKS AL LAFAYETTE EMPLOYER, LLC, et al.

334 So.3d 17

Nicol Edward HANNIE

v.COLONIAL OAKS AL LAFAYETTE EMPLOYER, LLC, et al.

21-349

Court of Appeal of Louisiana, Third Circuit.

February 9, 2022

Gregory J. Logan, The Logan Law Firm, P. O. Box 52704, Lafayette, LA 70505, (337) 406-9685, COUNSEL FOR PLAINTIF/DEFENDANT IN RECONVENTION/APPELLANT/APPELLEE: Nicol Edward Hannie

Eric R. Miller, Elizabetbh Bailly Bloch, The Kullman Firm, APLC, 4605 BlueBonnet Boulevard, Suite A, Baton Rouge, LA 70809, (225) 906-4250, COUNSEL FOR DEFENDANT/PLAINTIFF IN RECONVENTION/APPELLEE/APPELLANT: Colonial Oaks AL Lafayette Employer, LLC Colonial Oaks Senior Living Employer, LLC

Court composed of Sylvia R. Cooks, Chief Judge, Van H. Kyzar, and J. Larry Vidrine,^* Judges.

KYZAR, Judge.

Both the plaintiff/defendant in reconvention, Nicol Edward Hannie, and the defendant/plaintiff in reconvention, Colonial Oaks AL Lafayette Employer, LLC, appeal from the trial court judgment awarding Mr. Hannie his unpaid accrued vacation/sick leave pay, together with penalty wages and attorney fees pursuant to La.R.S. 23:631 and La.R.S. 23:632. For the reasons set forth, we reverse in part and render judgment and affirm in part.

FACTS AND PROCEDURAL HISTORY

The background of this dispute stems from the sale of two assisted-living facilities located in Lafayette, Louisiana: Rosewood Retirement & Assisted Living Community (Rosewood) and Cedar Crest Memory Care (Cedar Crest). Mr. Hannie was a minority shareholder of Hannie Development, Inc. (Hannie Development), the owner and operator of Rosewood, as well as Cedar Crest, LLC, the owner and operator of Cedar Crest. Mr. Hannie had also been employed as Rosewood's director since its inception.

The buyers and subsequent operators of these facilities were all companies owned and operated by Carl Mittendorff: Seniors Investments II, LLC (Seniors Investments); Colonial Oaks Assisted Living Lafayette, LLC; Colonial Oaks Memory Care Lafayette, LLC; Colonial Oaks Senior Living, LLC; Colonial Oaks AL Lafayette Employer, LLC (Colonial Oaks AL); Colonial Oaks MC Lafayette Employer, LLC (Colonial Oaks MC); and Colonial Oaks Senior Living Employer, LLC (Colonial Oaks SL). In the proceedings below, the parties were not clear as to the exact involvement of each of these entities in the transactions and subsequent operations of these facilities. Adding to the confusion is the fact that the names of six of these entities began with "Colonial Oaks."

On March 31, 2016, Seniors Investments entered into an asset purchase agreement (APA) with Hannie Development for the purchase of Rosewood for $10,642,500.00. It entered into a similar agreement with Cedar Crest, LLC for the purchase Cedar Crest for $5,857,500.00. As part of the APAs, the parties agreed to enter into "holdback escrow agreements" (HEAs), whereby Hannie Development and Cedar Crest, LLC (collectively referred to as "the sellers") would deposit four percent of the gross purchase price into an escrow account, which funds were to be held for a period of one year from the date of closing, a period known as the survival period.

These funds were to be held as security against any breach of a survival-period obligation by the sellers that was raised by the buyers. In addition to the outlined procedures for accessing the escrow funds, the HEAs provided that the parties would resolve any disputes through non-binding mediation or, if unsuccessful, through final, binding arbitration.

Although Seniors Investments executed the APAs as the buyer in both agreements, it is not clear whether it remained the buyer in both transactions at the December 1, 2016 closing. In the federal litigation spawned by these transactions, Colonial Oaks Assisted Living Lafayette, LLC and Colonial Oaks Memory Care Lafayette, LLC sued the sellers and their representatives, alleging claims for breach of contract and breach of representations or warranties under the terms of the APAs. Colonial Oaks Assisted Living Lafayette, L.L.C. v. Hannie Dev., Inc. , 972 F.3d 684 (5th Cir. 2020). In the fifth circuit opinion, Colonial Oaks Assisted Living Lafayette, LLC was identified as the buyer of Rosewood, and Colonial Oaks Memory Care Lafayette, LLC was identified as the buyer of Cedar Crest. Moreover, in a prior arbitration proceeding,¹ the parties stipulated that Seniors Investments assigned its rights as buyer under the Rosewood APA to Colonial Oaks Assisted Living Lafayette, LLC, and its rights under the Cedar Crest APA to Colonial Oaks Memory Care Lafayette, LLC. Thus, we will refer to Colonial Oaks Assisted Living Lafayette, LLC and Colonial Oaks Memory Care Lafayette, LLC, collectively, as the buyers.

The instant appeal arises from a suit filed by Mr. Hannie on June 11, 2020, against Colonial Oaks AL and Colonial Oaks SL (referred to collectively as Colonial Oaks AL/SL). The action was brought as a summary proceeding pursuant to the Louisiana Wage Payment Act, La.R.S. 23:631, et seq., which authorizes the use of summary proceedings to enforce claims for unpaid wages. In his petition, Mr. Hannie alleged that his employment as Rosewood's director continued after its acquisition by Colonial Oaks AL/SL,² but that he was reassigned to the position of community relations director two months later. He alleged that he resigned as community relations director on May 31, 2017, and requested a transfer to another position within the company. He asserted that rather than reassign him, Colonial Oaks AL/SL terminated his employment. Mr. Hannie alleged that pursuant to the employee handbook that governed his employment, he was owed accrued sick leave and vacation pay upon his termination.

Mr. Hannie further alleged that Colonial Oaks AL/SL had "filed a claim against its predecessor owner and claimed an offset reimbursement for a substantial amount related to [his] accrued sick leave and vacation time." He asserted that as a result of Colonial Oaks AL/SL's failure to pay him the amounts due, he retained legal counsel and incurred legal fees and expenses. Thus, he asserted that he was entitled to payment for his accrued sick leave and vacation time, penalty wages, attorney fees, costs, judicial interest, and any other legal and equitable relief found just and proper.

In response, Colonial Oaks AL/SL filed multiple exceptions, an answer, and a reconventional demand. The exceptions included peremptory exceptions of res judicata and no cause of action and dilatory exceptions of unauthorized use of summary proceedings and arbitrability.³ In its answer, Colonial Oaks AL/SL admitted that Mr. Hannie was previously an employee of Colonial Oaks AL, but denied that he was employed by Colonial Oaks SL. It further admitted that Mr. Hannie was terminated from his employment on May 31, 2017.

The matter was heard on November 2, 2020. Following the hearing on the exceptions, the trial court denied Colonial Oaks AL/SL's exceptions of res judicata, unauthorized use of summary proceeding, no cause of action, and arbitrability. Thereafter, the matter proceeded to a trial on the merits, after which the trial court took the matter under advisement. On November 23, 2020, the trial court rendered written reasons for judgment, granting judgment in favor of Mr. Hannie and against Colonial Oaks AL⁴ and awarding Mr. Hannie $18,153.44 in accrued vacation/sick leave, $35,517.60 in penalty wages, and $9,000.00 in attorney's fees for a total award of $62,671.04. A written judgment was rendered on December 29, 2020. Both parties have appealed from this judgment.

In its appeal, Colonial Oaks AL asserts the following assignments of error:

1. [T]he trial court err[ed] in overruling Colonial Oaks AL's peremptory exception of res judicata under Louisiana Code of Civil Procedure Article 927(A)(3) and Louisiana Revised Statute 13:4231 [.]

2. [T]he trial court err[ed] in overruling Colonial Oaks AL's dilatory exception of unauthorized use of summary proceeding under La. C.C.P. art. 926(A)(3) [.]

3. [T]he trial court err[ed] in overruling Colonial Oaks AL's declinatory exception of arbitrability under La. C.C.P. art. 925(A)(6) [.]

4. [T]he trial court err[ed] in awarding judgment in favor of [Mr.] Hannie for unpaid wages under La. R.S. 23:631 [.]

5. [T]he trial court err[ed] in awarding judgment in favor of [Mr.] Hannie for penalty wages under La. R.S. 23:632(A) [.]

6. [T]he trial court err[ed] in awarding judgment in favor of [Mr.] Hannie for attorney's fees under La. R.S. 23:632(C) [.]

On appeal, Mr. Hannie asserts three assignments of error, as follows:

1. The district court made an erroneous factual determination in determining that [Colonial Oaks SL] was not an employer of [Mr.] Hannie.

2. The district court erred as a matter of law in attempting to cast an unnamed defendant, [Colonial Oaks MC,] in place of named defendant [Colonial Oaks SL] when the named defendant had sent an employment offer and had issued the majority of the paychecks representing the majority of [Mr. Hannie's] salary during his employment with Colonial Oaks.

3. The district court erred in omitting a named party from the Judgment, [Colonial Oaks SL], from solidary liability when it and the other defendants acted as a single business enterprise, and it paid [Mr.] Hannie[’s] wages.

Res Judicata

We will first address Colonial Oak AL's appeal as several of its assignments of error, if found to be meritorious, would result in a reversal of the trial court's judgment, mooting all other issues.

In its first assignment of error, Colonial Oaks AL argues that the trial court erred in overruling its peremptory exception of res judicata because the prior arbitration dispute involving the sellers and the buyers resolved the dispute between Mr. Hannie and Colonial Oaks AL/SL as to his entitlement to his accrued vacation/sick leave benefits.

Louisiana Revised Statutes 13:4231 provides for the doctrine of res judicata and forms the basis for the peremptory exception thereof in a subsequent action between the parties.

Except as otherwise provided by law, a valid

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