Meadows v. Adams

• Citation: 316 So.3d 5
• Decision Date: 09 November 2020
• Docket Number: 2018 CA 1544R
• Parties: Jason MEADOWS, Individually and Jason Meadows On Behalf of Southern Cross Marine Services, LLC v. Christy ADAMS
• Court: Court of Appeal of Louisiana — District of US

316 So.3d 5

Jason MEADOWS, Individually and Jason Meadows On Behalf of Southern Cross Marine Services, LLC
v.
Christy ADAMS

2018 CA 1544R

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: NOVEMBER 09, 2020

Jason R. Anders, Mandeville, Louisiana, Counsel for Plaintiff/Appellant, Jason Meadows

David C. Spinner, Galen M. Hair, New Orleans, Louisiana, Counsel for Defendant/Appellee, Christy Adams

BEFORE: WHIPPLE, C.J., McCLENDON, AND HIGGINBOTHAM, JJ.

McCLENDON, J.

Former husband and limited liability company (sometimes collectively "Plaintiffs") brought suit against former wife. Former wife filed a Motion to Enforce Settlement Agreement contending that Plaintiffs' claims were precluded by the terms of the Consent Judgment on Partition of Community Property previously executed in connection with the divorce proceedings of former husband and former wife. The trial court rendered judgment granting the Motion to Enforce Settlement Agreement, and dismissing Plaintiffs' claims with prejudice. Plaintiffs appealed. For the reasons set forth below, we affirm in part, reverse in part, and remand.

FACTS AND PROCEDURAL HISTORY

Jason Meadows ("Meadows") and Christy Adams ("Adams") were married in 2011 and separated in 2014. Prior to, during, and after the parties' marriage, Meadows was the sole member of Southern Cross Marine Services, LLC ("Southern Cross"). During the parties' marriage, Adams was employed by Southern Cross for a brief period of time to assist in bookkeeping and administrative matters.

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Adams initiated divorce proceedings on June 5, 2014 ("domestic proceedings").¹ Material to this appeal, the parties executed a Consent Judgment on Partition of Community Property ("Consent Judgment") on August 29, 2014. The Consent Judgment set forth terms under which the parties each received full ownership of certain property; agreed to indemnify the other from any and all debts associated with the property received in the partition; and, further agreed to hold the other harmless from responsibility for debts arising from the former community. Meadows received one hundred percent (100%) right, title, and interest in and to Southern Cross pursuant to the terms of the Consent Judgment.

On July 17, 2015, during the pendency of the domestic proceedings, Meadows and Southern Cross² filed a Petition for Damages naming Adams as defendant ("instant proceedings"). Plaintiffs alleged that during Adams' employment with Southern Cross, she failed to pay various creditors, dishonored contracts, incurred liability on behalf of the business, and misappropriated funds from Southern Cross for personal use. Meadows asserted claims in his individual capacity under LSA-C.C. art. 2354 for loss or damage caused by fraud or bad faith in the management of community property. Southern Cross asserted claims for conversion, unjust enrichment, and breach of fiduciary duty.

Adams answered the Petition for Damages. Adams asserted that she was only employed by Southern Cross for approximately three weeks and disputed the allegations of wrongdoing. More specifically, Adams denied incurring unauthorized debts; conceded that some of Southern Cross's bills were left unpaid, but maintained that was through no fault of her own; and admitted that she had taken funds from Southern Cross accounts, but explained that she had taken the funds to pay household bills which were community obligations. Adams further argued that any and all claims asserted by Plaintiffs were resolved and barred by the Consent Judgment.

The domestic proceedings and the instant proceedings were allotted to the same division of the trial court. During an October 11, 2016 hearing in the domestic proceedings, the parties announced their intent to resolve certain matters by stipulation. Accordingly, the trial court memorialized the terms agreed to at the October 11, 2016 hearing in a Stipulated Judgment executed on December 21, 2016, ("Stipulated Judgment"). The first two provisions of the Stipulated Judgment read as follows:

1. All open and/or pending contempt motions and sanctions motion filed by both parties are dismissed with prejudice, with each party to bear its own costs; 2

2. All outstanding issues in Judge Penzato's Division concerning pending matters between the parties are dismissed, with each party to bear its own costs.

On May 11, 2017, Plaintiffs filed a Motion for Contempt of Court ("Motion for Contempt") in the instant proceedings, asserting that Adams failed to comply with a trial court order to respond to Plaintiffs'

316 So.3d 9

discovery requests. On June 15, 2017, Adams filed a Motion to Dismiss with Prejudice ("Motion to Dismiss") seeking dismissal of Plaintiffs' claims. In support of her Motion to Dismiss, Adams attached the Consent Judgment, portions of the transcript of the October 11, 2016 hearing, and the Stipulated Judgment. Adams, then unrepresented by counsel, failed to serve the Motion to Dismiss on counsel for Plaintiffs, and instead mailed a copy of the Motion to Dismiss to Meadows. Adams also failed to set the Motion to Dismiss for hearing. Plaintiffs filed an opposition to the Motion to Dismiss, arguing that the October 11, 2016 hearing and the resulting Stipulated Judgment concerned the domestic proceedings, and therefore had no effect on the instant proceedings. Although the Motion to Dismiss was not properly filed or served, the trial court permitted Adams to state her position "in the interest of justice" during a June 29, 2017 hearing on the Motion for Contempt. The Clerk of Court notified the parties by letter dated July 3, 2017, that the Motion to Dismiss had been denied.³ The litigation continued.

On November 6, 2017, Adams filed a Peremptory Exception raising the Objections of No Cause of Action, No Right of Action, and Prescription, together with a Motion to Enforce Settlement Agreement ("Motion to Enforce Consent Judgment"). In the Motion to Enforce Consent Judgment, Adams argued that Plaintiffs were precluded from asserting the claims set forth in the Petition for Damages by the terms of the Consent Judgment. Plaintiffs opposed Adams' filings. Following a March 23, 2018 hearing, the trial court took the matter under advisement. On May 8, 2018, the trial court executed a written judgment granting the Motion to Enforce Consent Judgment and dismissing Plaintiffs' claims with prejudice.⁴

Plaintiffs filed a Motion for New Trial, which was denied without a hearing on May 29, 2018. Plaintiffs then filed a Petition for Devolutive Appeal on July 13, 2018. Adams filed a Motion to Dismiss Appeal with this court, which was referred to the panel considering the merits of the appeal by an interim order dated December 7, 2018. This court dismissed the appeal in Meadows v. Adams, 2018-1544 (La.App. 1 Cir. 8/7/19), 285 So.3d 1101, 1103. The Supreme Court reversed that decision in Meadows v. Adams, 2019-1724 (La. 1/22/20), 287 So.3d 718 (per curiam), and ordered "[t]he case is remanded to the court of appeal for consideration on the merits." Meadows, 287 So.3d at 720. We proceed accordingly.⁵

In this appeal, Plaintiffs challenge the trial court's judgment granting the Motion to Enforce Consent Judgment on four⁶ grounds. Specifically, Plaintiffs argue:

1. The trial court had previously decided the question of whether the Consent Judgment precluded Plaintiffs'

316 So.3d 10

claims when it denied the Motion to Dismiss. The trial court therefore erred by not applying the law of the case doctrine.

2. The Consent Judgment is null due to fraud. Consequently, the trial court erred by enforcing the Consent Judgment.

3. Southern Cross was not a party to the Consent Judgment. The trial court thus erred by enforcing the Consent Judgment against Southern Cross.

4. The Consent Judgment reserved Plaintiffs' right to assert claims based on Adams' own acts. Accordingly, the trial court erred in ruling that the Consent Judgment precluded Plaintiffs' claims.

DISCUSSION

Having thoroughly reviewed the Consent Judgment and the applicable law, we find that the trial court properly granted the Motion to Enforce Consent Judgment against Meadows, and therefore, properly dismissed Meadows' claims against Adams. However, the trial court erred in granting the Motion to Enforce Consent Judgment as to Southern Cross, and in dismissing the claims asserted by Southern Cross. Thus, for the reasons that follow, we affirm in part and reverse in part.

Law of the Case Doctrine

Plaintiffs argue that the trial court erred by not applying the law of the case doctrine because the previous denial of the Motion to Dismiss formally adjudicated the issue of whether the Consent Judgment precluded the claims Plaintiffs assert in the instant proceedings. Plaintiffs conclude that the denial of the Motion to Dismiss became the law of the case when Adams did not seek appellate review. In response, Adams argues that the denial of the Motion to Dismiss was an interlocutory ruling to which the law of the case doctrine does not apply. Adams further contends that even if the law of the case doctrine was applicable, the trial court did not abuse its discretion in choosing not to...