Holloway Drilling Equip., Inc. v. Bodin

• Decision Date: 19 December 2012
• Docket Number: No. 12–355.,12–355.
• Citation: 107 So.3d 699
• Parties: HOLLOWAY DRILLING EQUIPMENT, INC., et al. v. Danielle BODIN, et al.
• Court: Court of Appeal of Louisiana — District of US

107 So.3d 699

HOLLOWAY DRILLING EQUIPMENT, INC., et al.

v.Danielle BODIN, et al.

No. 12–355.

Court of Appeal of Louisiana, Third Circuit.

Nov. 7, 2012.

Rehearing Denied Dec. 19, 2012.

William E. Wright, Jr., Charlotte C. Meade Deutsch, Kerrigan & Stiles, L.L.P., New Orleans, LA, for Defendant/Appellee, Inzarella, Feldman, and Pourciau, A Professional Corporation.

Steven Charles Lanza, Onebane Law Firm, Lafayette, LA, for Defendant/Appellee, Iberia Bank Corporation.

L. Clayton Burgess, Lafayette, LA, for Plaintiffs/Appellants, Holloway Drilling Equipment, Inc., Holloway Rentals, Inc.

John Kevin Stockstill, Lafayette, LA, for Defendants/Appellees, Kyle Bodin, Butterfly Bodies.

Court composed of JOHN D. SAUNDERS, MARC T. AMY, and J. DAVID PAINTER, Judges.

AMY, Judge.

[3 Cir. 1]The plaintiffs brought this action alleging that their former bookkeeper embezzled approximately 1.7 million dollars from company accounts. As relevant to this appeal, the plaintiffs amended their suit to name their former accounting firm and one of the accounting firm's employees as defendants, alleging that the employee participated in the fraud. The plaintiffs also contended that the accounting firm knew about the embezzlement. The accounting firm brought exceptions of res judicata and prematurity, contending that the plaintiffs had previously signed a release of all claims against the firm and that the matter had not been submitted to a public accountant review panel. The trial court granted the exception of res judicata and found that the exception of prematurity was moot. This appeal followed. For the following reasons, we affirm.

Factual and Procedural Background

According to the record, one of the defendants, Danielle Bodin,¹ was employed by the plaintiffs, Holloway Drilling Equipment, Inc. and Holloway Equipment Rentals,Inc. (collectively, “Holloway”), for many years as their bookkeeper. In 2010, Holloway discovered that Ms. Bodin embezzled approximately 1.7 million dollars from company accounts. The record indicates that Ms. Bodin was prosecuted criminally for the theft, and that, as of the date of her sworn statement, she pled guilty to at least one count and was awaiting sentencing.

Holloway subsequently brought this suit against Ms. Bodin and several other defendants. Holloway also amended its suit to add additional defendants, including its former accounting firm, Inzarella, Feldman, and Pourciau, A Professional Corporation (the “Inzarella Firm”), and one of the Inzarella Firm's former employees, Eric Broussard. Holloway alleges that Mr. Broussard participated in the [3 Cir. 2]embezzlement scheme by assisting Ms. Bodin in covering up her theft, as well as profiting personally by receiving cash advances and other funds from Ms. Bodin's credit card. Further, Holloway contends that Mr. Broussard sent inflated invoices from the Inzarella Firm to Holloway. Additionally, Holloway alleges that the Inzarella Firm is liable for damages because Mr. Broussard was acting in the course and scope of his employment.

The Inzarella Firm filed exceptions of res judicata and, alternatively, prematurity. In support of this contention, the Inzarella Firm produced a receipt and release which purports to “acquit and forever discharge each other party, ... from any and all actions, causes of action, or claims of every character, nature and kind whatsoever, known or unknown, past, present and future and all related expenses in connection with or arising from the relationship previously existing between the parties.” The Inzarella Firm argues that the receipt and release precludes Holloway from pursuing the pending action against it. Alternatively, the Inzarella Firm contends that this action is premature because it has not been submitted to a public accountant review panel, as required by La.R.S. 37:102 and La.R.S. 37:105. Holloway objects, contending that the release was only intended to address a single disputed bill. Further, Holloway alleges that the Inzarella Firm knew of Mr. Broussard's fraud and that therefore the release should be vitiated. Holloway does not contest the exception of prematurity.

At a hearing, the parties introduced evidence concerning the intent of the parties with regard to the release and receipt and concerning the Inzarella Firm's knowledge of Ms. Bodin and Mr. Broussard's alleged criminal activities. The trial court found that the disputed bill is what precipitated the release and receipt. However, the trial court determined that it could not discount the broad release language found in the document. Because the trial court did not find that Holloway had proven that the [3 Cir. 3]receipt and release was vitiated by fraud, the trial court granted the Inzarella Firm's exception of res judicata. Further, the trial court held that the exception of prematurity was moot.

Thereafter, Holloway filed a motion for new trial, alleging that since the hearing on the exception of res judicata, they had obtained the sworn statement of Ms. Bodin. According to Holloway, that statement indicated that Gregory Inzarella, the president of the Inzarella Firm, knew about the embezzlement scheme. After a hearing, the trial court denied the motion for new trial on the basis that Holloway did not establish that the new evidence was unavailable before the original hearing or that the new information would have changed the result of the hearing on the exceptions.

The plaintiffs appeal, asserting as error that:

1. The judge committed legal error in dismissing the exception of prematurity because the claim against Inzarella was not subject to judicial determination yet, as it has not previously been presented to a Certified Public Accountant Review Panel as required by Louisiana law.

2. The judge committed legal error in granting the exception of res judicata pursuant to the Receipt and Release despite the fact that the parties testified that it was not executed with the intent [to] put an end to all future litigation for all matters.

3. The judge committed legal error in dismissing the motion for new trial in this matter despite the fact that new information was identified that could not have been discovered at the time of the trial.

Discussion

Res Judicata

The peremptory exception of res judicata is based on the conclusive legal presumption of a thing previously adjudged between the same parties. Labiche v. Louisiana Patients' Comp. Fund Oversight Bd., 98–2880 (La.App. 1 Cir. 2/18/00), 753 So.2d 376. Although the exception of res judicata typically contemplates the existence of a final judgment on the merits, it also applies where there is a transaction [3 Cir. 4]or settlement of a dispute that has been entered into by the parties. Ortego v. State, Dept. of Transp. & Dev., 96–1322 (La.2/25/97), 689 So.2d 1358. “A release of claim or claims, when given in exchange for consideration, is a compromise and constitutes the basis for a plea of res judicata.” Labiche, 753 So.2d at 380.

The burden of proof is on the party asserting the exception to establish that the plaintiffs' claims are res judicata. Reyes–Ramirez v. Progressive Sec. Ins. Co., 08–374 (La.App. 3 Cir. 11/5/08), 996 So.2d 1213,writ denied,08–2877 (La.2/6/09), 999 So.2d 784. Further, the doctrine is interpreted stricti juris; therefore, any doubt with regard to whether its requirements have been met must be resolved in favor of maintaining the action. Id. Where the exception is raised before submission of the case and evidence is received from both parties, an appellate court should review a judgment sustaining an exception of res judicata under the manifest error standard of review. Steckler v. Lafayette Consol. Gov't, 11–427 (La.App. 3 Cir. 11/2/11), 76 So.3d 161,writs denied,11–2639, 11–2677 (La.2/10/12), 80 So.3d 477, 487.

“A compromise is a contract whereby the parties, through concessions made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship.” La.Civ.Code art. 3071. “A release executed in exchange for consideration is a compromise.” Randall v. Martin, 03–1311, p. 4 (La.App. 5 Cir. 2/23/04), 868 So.2d 913, 915. In Ortego, 689 So.2d at 1363–64, the supreme court addressed the interpretation of compromises, stating:

A compromise instrument is the law between the parties and must be interpreted according to the parties' intent. Ritchey v. Azar, 383 So.2d 360, 362 (La.1980). It follows that the compromise instrument is governed by the same general rules of construction applicable to contracts. Brown [ v. Drillers, Inc., 93–1019 (La.1/14/94), 630 So.2d 741,] 748.

When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. [La.Civ.Code] art. 2046. Article 2046 emphasizes that the process involvesno further interpretation, as opposed to no [3 Cir. 5]interpretation at all. Expose' Des Motifs of the Project of Titles III and IV of Book III of the Civil Code of Louisiana, p. 67 (1984); R. MacLean, Judicial Discretion in the Civil Law, 43 La. L.Rev. 45, 55–56 n. 28 (1982). Because a compromise extends only to those matters the parties intended to settle, the scope of the transaction cannot be extended by implication. [La.Civ.Code] art. 3073;[ ²] see Comment, Compromise in Louisiana, 14 Tul. L.Rev. 282, 283 (1940). In applying this rule of construction, courts are guided by the general principle “that the contract must be considered as a whole and in light of attending events and circumstances.” Brown, 630 So.2d at 748 (citing Succession of Teddlie, 385 So.2d 902, 904 (La.App. 2d Cir.), writ refused,393 So.2d 742 (La.1980)).

The meaning and intent of the parties to a written instrument, including a compromise, is ordinarily determined from the instrument's four corners, and extrinsic evidence is inadmissible either to explain or to contradict the instrument's terms. Dixie Campers, Inc. v. Vesely Co., 398 So.2d 1087, 1089 (L...