Meadaa v.
| Citation | 756 F.3d 875 |
| Decision Date | 01 July 2014 |
| Docket Number | No. 12–30918.,12–30918. |
| Parties | Reymond MEADAA; Harry Hawthorne; Jose Mathew; Dinesh Shaw; Navtej Rangi; Naja Holdings, L.L.C.; Hulenci, L.L.C., Plaintiffs–Appellees, v. K.A.P. ENTERPRISES, L.L.C.; Arun K. Karsan; Versha Patel Karsan; SaiNath, L.L.C., Defendants–Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
OPINION TEXT STARTS HERE
Nancy Scott Degan, Esq. (argued), Matthew Aaron Woolf, Esq., Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA, for Plaintiffs–Appellees.
George Andrew Veazey, Esq. (argued), Huval, Veazey, Felder & Renegar, L.L.C., Lafayette, LA, for Defendants–Appellants K.A.P. Enterprises, L.L.C., Arun K. Karsan and Versha Patel Karsan.
Stephen Mark Whitlow (argued), Virginia Jordan McLin, Esq., Keogh, Cox & Wilson, Ltd., Baton Rouge, LA, George Andrew Veazey, Esq., Huval, Veazey, Felder & Renegar, L.L.C., Lafayette, LA, for Defendant–Appellant SaiNath, L.L.C.
Appeal from the United States District Court for the Western District of Louisiana.
Before OWEN, SOUTHWICK, and GRAVES, Circuit Judges.
In this interlocutory appeal, Arun K. Karsan, Versha Patel Karsan, K.A.P. Enterprises, L.L.C., and SaiNath, L.L.C. (defendants) appeal the district court's grant of partial summary judgment in favor of seven investors. Defendants challenge both the district court's conclusion that there was a failure of consideration because the investors did not receive the agreed upon consideration in return for their investment and the district court's order holding all of the defendants jointly and solidarily liable. We affirm in part and vacate in part.
Dr. Arun K. Karsan and Versha Patel Karsan (the Karsans) formed K.A.P. Enterprises, L.L.C. (K.A.P.), as a holding company for their personal investments. Five months later, K.A.P. executed a letter of intent to purchase the Louisiana Hotel and Convention Center (the hotel) out of bankruptcy. To finance the purchase, K.A.P. obtained a $6.7 million loan from Red River Bank (the Bank), which the Karsans personally guaranteed. The loan agreement required K.A.P. to raise an additional $2.75 million to renovate the hotel.
The Karsans thereafter invited some of Dr. Karsan's medical colleagues, including the plaintiffs (the investors),1 to an investment presentation on November 22, 2006 at Copeland's restaurant. The presentation, titled “Louisiana Hotel & Convention Center,” described the hotel and the Karsans' plans for its renovation. Additionally, it offered the investors two different investment options: a “private debt” offering and an “equity” offering. The latter permitted investors to become “Share Certificate Holder [s]” and “Participate in [the] Profits or Dividends” for $125,000 per share. The presentation, however, did not identify the entity from which shares were being offered. Nor did the presentation mention K.A.P. or discuss what entity owned or would own the hotel.
About a week after the presentation, Mrs. Karsan formed SaiNath, L.L.C. (SaiNath), and designated Dr. Karsan and herself as the company's members and managers. Shortly thereafter, each of the investors signed a “Letter of Interest,” agreeing to purchase “share units” of SaiNath for “$125,000 per share unit.” Although the letters of interest did not say that SaiNath was to own the hotel, the words “(Louisiana convention center and hotel)” appeared at the top of the page in large font, immediately below the “Letter of Interest” title. Additionally, the letter stated that “[t]he date of this confidential private offering memorandum began on 11/22/2006 during a presentation of the business at the Copeland's Restaurant in Alexandria, LA.” Collectively, the investors purchased 28 equity shares for $3.5 million. It is undisputed that the Karsans and each of the investors intended for SaiNath to own the hotel.
The investors' funds ultimately were deposited into a bank account in SaiNath's name. The money was used to renovate the hotel and pay down K.A.P.'s loan from the Bank. Title to the hotel, however, has not been transferred to SaiNath. Instead, for accounting purposes at least, SaiNath has paid “rent” to K.A.P. in exchange for the hotel's revenues. Additionally, the Karsans remain the sole record members and managers of SaiNath. Nonetheless, the Karsans have treated the investors as members of SaiNath when preparing both tax and financial documents.
Almost three years after SaiNath was formed, the investors filed suit against the Karsans, K.A.P., and SaiNath. In their complaint, the investors alleged various causes of action against K.A.P. and the Karsans, including breach of contract and violations of the Securities Exchange Act of 1934. They did not assert any causes of action against SaiNath, except to demand a formal accounting pursuant to Louisiana corporate law. The district court initially granted a motion for partial summary judgment filed by the investors (the May 2010 order), holding all of the defendants liable for breach of contract and ordering them to return the $3.5 million paid by the investors. Subsequently, however, the district court granted in part a motion by K.A.P. and the Karsans to alter or amend the judgment (the August 2010 order). The court reaffirmed its holding that there had been a breach of contract but determined that its decision to hold the Karsans personally liable “rest[ed] upon unclear grounds” because there was “at least some argument that the Karsans, as members of Sainath, may have been operating under ... the ‘corporate veil.’ ” The court therefore withdrew its grant of partial summary judgment and ordered supplemental briefing on the issue of which defendants should be held liable.
In their supplemental brief, the Karsans and K.A.P. included an affidavit by Kurt Oestriecher. Finding some of Oestriecher's conclusions not based on personal knowledge, the district court granted the investors' motion to strike the affidavit (the September 2011 order). After further consideration, the district court issued a supplemental ruling holding each of the defendants liable for the return of the $3.5 million (the December 2011 order). The court held that SaiNath was obligated to return the money it had received because there had been a failure of consideration. The court found K.A.P. liable on the ground of unjust enrichment and that the Karsans were liable “through a piercing of the [corporate] veil of SaiNath.” After the court denied defendants' motion to alter or amend the judgment (the March 2012 order), it certified the December 2011 judgment pursuant to Federal Rule of Civil Procedure 54(b). This appeal followed.
Prior to examining the merits of the parties' dispute, we must determine the scope of our jurisdiction.2 In their notice of appeal, defendants state that they are appealing five orders: (a) the May 2010 order initially granting partial summary judgment; (b) the August 2010 order granting in part and denying in part the Karsans' and K.A.P.'s motion to alter or amend; (c) the September 2011 order granting plaintiffs' motion to strike the affidavit of Kurt Oestriecher; (d) the December 2011 order reinstating partial summary judgment in favor of plaintiffs and holding defendants jointly and solidarily liable; and (e) the March 2012 order denying defendants' motions to alter the December 2011 order. The district court, however, did not certify all of these judgments in its Rule 54(b) order. It listed only the December 2011 order in the certification. In light of this discrepancy, plaintiffs have moved this court to dismiss defendants' appeal of the other four orders for lack of jurisdiction.
Plaintiffs argue that this court lacks jurisdiction to review the four orders because “Rule 54(b) only grants an appellate court jurisdiction to review final judgments that are explicitly designated as such under the Rule.” This is a misstatement of the law. “A proper Rule 54(b) judgment is a final judgment for all purposes on the adjudicated claims.” 3 When such a judgment is appealed, therefore, “all interlocutory orders of the district court leading up to the judgment merge into the final judgment and become appealable at that time.” 4 On appeals from Rule 54(b) judgments, this court has reviewed discovery and other interlocutory orders that underlie those judgments.5 Three of the four non-certified orders listed in defendants' notice of appeal (all but the March 2012 order) are non-final orders that led up to the December 2011 judgment and merge into it. We therefore have jurisdiction to review those decisions.
The March 2012 order, however, came after the December 2011 order. The parties have not pointed to a case from this circuit that addresses whether courts of appeals possess jurisdiction to review a denial of a Rule 59 motion to alter or amend a certified judgment, and our independent research has not revealed any. At least one of our sister circuits, however, has considered the issue and concluded that such judgments are subject to review.6 Such a conclusion is eminently sensible. An order affirming a prior judgment is just as much an integral part of that judgment as the evidentiary rulings that paved the way to the judgment. Furthermore, it would be a needless waste of judicial resources to require the parties to return to the district court to certify the same essential judgment and then appeal it anew. 7 We therefore conclude that we possess jurisdiction to review all of the orders listed in defendants' notice of appeal.
Turning to the merits, we review “a grant of summary judgment de novo, applying the same standards as the district court.” 8 Under those standards, summary judgment is appropriate if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 9 “On review of a grant of summary judgment, all facts and inferences must be construed in the light most favorable to the non-movant,” in this case the...
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