text:
    AMOCO PRODUCTION COMPANY v. TEXACO, INC., et al.
    No. 02-240.
    Court of Appeal of Louisiana, Third Circuit.
    Jan. 29, 2003.
    Rehearing Denied March 19, 2003.

      J. Michael Veron, Patrick D. Gallaugher, Jr., Scofield, Gerard, Veron, Singletary & Pohorelsky, Lake Charles, LA, Anthony J. Fontana, Jr., Abbeville, LA, James A. Gillespie, BP Amoco Corporation, Legal Group, Houston, TX, for PlaintiffiAppel-lee/Cross-Appellant, Amoco Production Company.
    Silas B. Cooper, Jr., Cooper & Wood-ruff, Abbeville, LA, Reginald J. Ringuet, William H. Collier, Ringuet, Daniels & Collier, Lafayette, LA, for Defendant/Appellant/Cross-Appellee, IMC Exploration Company.
    P.J. Laborde, Jr., The Laborde Law Firm, Lafayette, LA, for Defendant/Appellant/Cross-Appellee, Mallinckrodt, Inc.
    Court composed of SYLVIA R. COOKS, GLENN B. GREMILLION and ELIZABETH A. PICKETT, Judges.
   I, COOKS, Judge.

This appeal arose from a suit filed in 1994 by Amoco Production Company against IMC Exploration Company and its corporate parent, Mallinckrodt, Inc., for deliberately violating a reassignment clause contained in mineral subleases that had been executed by the parties’ predecessors-in-title. Prior to trial, the trial court denied IMC’s exception of prescription, and granted a directed verdict in favor of Amoco on the issue of liability finding IMC had breached the reassignment clause. The trial court also granted summary judgment in favor of Amoco “piercing the corporate veil” and holding Mallinckrodt liable for any judgment rendered against IMC. The jury eventually rendered a damage award of $30,000,000.00 in favor of Amoco. IMC and Mallinckrodt have appealed numerous aspects of the judgment and proceedings below. Amoco filed a cross-appeal arguing the trial court erred in granting Defendants’ motion in limine which prevented Amoco from presenting to the jury evidence of the “present value” of the production income it lost because of the breach.

FACTS

In the 1950’s Amoco, then known as Stanolind Oil & Gas Company, acquired five mineral leases located in the Maurice Field of Vermilion Parish. Stanolind subleased the mineral leases to Charles Wrightsman and Seaboard Oil Company (predecessor-in-title to Texaco) in 1955. The subleases contained the following “reassignment” provision:

In the event that the Assignee should elect to surrender, let expire, ^abandon or release any or all rights in said lease acreage, or any part thereof, the Assign-ee shall notify the Assignor not less than sixty (60) days in advance of such surrender, expiration, abandonment or release, and if requested to do so by the Assignor, the Assignee immediately shall reassign such rights in said lease acreage, or such part thereof, to the Assignor.

The leases were granted for a primary term of five years but would continue in effect so long thereafter as oil, gas or other minerals were produced in paying quantities or drilling operations were being continuously conducted, without the lapse of more than 90 days. Amoco retained a one-sixteenth overriding royalty interest in the leases.

In February of 1976, IMC was formed. In March of 1976, IMC acquired hundreds of mineral leases from Wrightsman, including the above mentioned subleases. In 1976, production on one of the five leases (the Jenkins lease) fell drastically because of mechanical problems. After attempting repairs, IMC and Texaco abandoned the unit well and allowed the Jenkins lease to expire. A formal release of the Jenkins lease was filed in the conveyance records of Vermilion Parish in March of 1977. Amoco maintained it was not notified of the expiration of the Jenkins Lease as required by the reassignment clause. Amoco presented testimony that had it been notified it would have kept the lease alive by beginning new drilling operations. According to Amoco, “the motive for this breach later became apparent when IMC and Texaco subsequently took new leases in their own names on this property. In this fashion, IMC and Texaco ‘washed out’ Amoco’s lease and obtained a new lease directly from the landowner.”

In 1981, the remaining four leases were still in production and formed part of the “Miogyp Unit.” Earlier, in 1980, several of Texaco’s and IMC’s lessors |3complained they were not receiving proper royalties under the leases and filed suit. In settlement of these demands, Texaco and IMC released the non-unitized portions of these leases and the landowners granted new, three year term leases to IMC and Texaco. These leases were recorded in the Vermilion Parish records. Amoco alleged it was not notified of the release in violation of the reassignment clause and, as a result, its leases were extinguished in part and it lost overriding royalties on the released acreage. Amoco noted because only non-producing parts of Amoco’s leases were canceled, there was no sharp decrease in royalty receipts to alert it that the leases had been compromised.

Amoco further alleged IMC participated in a “scheme in which the leases were either allowed to expire or were canceled behind Amoco’s back and then new leases were acquired by IMC in its own name.” Shortly after IMC acquired the leases covering the released acreage, new gas deposits were discovered, which generated million of dollars in production revenue.

In 1993, Amoco hired John Coalson, a landman, to conduct an audit of Amoco’s properties which were operated by outside companies. Coalson discovered that Nor-cen Explorers, who in 1989 began operating the Marg-Tex units in the Maurice Field, sent division orders to everyone with an interest in the field, which included Amoco. Amoco was receiving division orders from Norcen because it had a small interest in the Marg-Tex units from other non-released portions of leases which were situated in the area of the units. Upon reviewing the division orders, Coalson determined Norcen’s calculations of Amoco’s share of production was less |4than what Amoco’s records indicated it should have been. Coalson asked representatives of Amoco to send a letter to Norcen questioning its calculations and noting that “Amoco’s royalty and overriding royalty have been maintained by production from various units from the 1950’s to the present.” Coalson then sent a contract abstractor to examine the Vermilion Parish records, who informed him of the lease cancellations.

Months after the discovery of the lease cancellations, Amoco filed this suit on April 29, 1994, alleging Texaco and IMC breached the reassignment clause of the 1955 subleases in 1981, when they released the non-unitized portions of the leases maintained by the Miogyp unit production without giving notice to Amoco. Eventually, Amoco dismissed Texaco from the litigation and proceeded solely against IMC. In June of 1998, Amoco amended its Petition to join IMC’s parent, Mallinekrodt, Inc., as an additional defendant.

In 1986, IMC was sold to Wintershall. After the sale, the Board of Directors of IMC declared a dividend of approximately $97 million in favor of its sole shareholder, Mallinekrodt. Amoco sought to “pierce the corporate veil” and hold Mallinekrodt liable for any judgment rendered against IMC. It filed a motion for summary judgment on this issue. On the day trial was to begin, Amoco amended its petition to assert a claim stemming from the Jenkins lease, which was released in 1976.

Before trial on the merits was held, the trial court held a hearing on an exception of prescription filed by IMC and Mallinck-rodt. Defendants urged the ten Ryear prescriptive period applicable to breach of contract claims had expired because suit was filed by Amoco eighteen years after the first alleged breach (1976) and thirteen years after the second (1981). At the hearing, Amoco maintained prescription did not begin to run until it discovered the breach in 1993. Countering, defendants argued Amoco had sufficient facts at least by late 1983, which should have alerted it to the breach. The trial court denied the exception, finding Amoco proved it was never notified that defendants breached their notification obligation in the sublease. The trial court specifically held any information Amoco had of the breaches did not manifest itself with “reasonable certainty.”

Prior to submission of the case to the jury, the trial court also made the following rulings:

(1) Granted summary judgment in favor of Amoco and against Mallinekrodt, piercing the corporate veil and holding Mallinekrodt liable for any judgment rendered against IMC. The trial court found IMC was “the agent, tool, or instrumentality” of Mallinekrodt;
(2) Granted a directed verdict in Amoco’s favor on whether a breach occurred. The trial court found “reasonable minds could [not] come to any other conclusion but that no notice was given, definitely not written notice, nor oral notice.”

The only remaining issue before the jury related to damages. After a five day trial, the jury returned a $30,000,000.00 award in favor of Amoco.

Mallinckrodt appealed the trial court’s judgment, asserting the trial court erred in granting Amoco’s motion for summary judgment, piercing the corporate veil, and holding it solidarity hable with IMC for any judgment in favor of Amoco. IMC lodged its own appeal, asserting the following assignments of error:

1. The trial court erred in applying the doctrine of contra non valentón to suspend the running of the ten-year libera-tive prescription 1 ¡^applicable to breach of contract actions under La.Civ.Code art. 3499 for alleged breaches that occurred eighteen years and thirteen years before the filing of suit.
2. The Verdict was erroneous as a matter of law in awarding damages for breach of the reassignment clause of the 1955 Sublease that allegedly occurred in 1976 and 1981 based upon production from the Marg-Tex Units that did not begin until 1989 rather than on the value of the leasehold interest on the dates of the alleged breaches; further the trial court erred in permitting Amoco to introduce evidence of such production as it was not relevant to the issue of damages.
3. The trial court erred in prohibiting Defendants from introducing evidence as to (a) the value of the leasehold on the dates of the alleged breaches and (b), alternatively, the sums Amoco would have received from its overriding royalty if there had been no breach.
4. The Verdict was manifestly erroneous in awarding damages allegedly arising from the hypothetical “farmout leases” since (a) the “farmout leases” were not covered by the 1955 Sublease, and there is no legal basis for awarding damages for breach of a sublease allegedly arising from leases not covered by the sublease; (b) such damage was an item of special damages that was not specifically pleaded; (c) Amoco offered no evidence other than its expert’s speculation that it would have sought a farmout or a farmout would have been granted; and (d) Amoco offered no evidence other than its expert’s speculation that Amoco would have drilled the Marg-Tex wells seven years before the wells were actually drilled by third parties, and at entirely different locations; further, the trial court erred in refusing to grant a Directed Verdict or a Judgment Notwithstanding the Verdict against Amoco on this issue.
5. The Verdict was manifestly erroneous in awarding damages allegedly arising from an assumed “new” Jenkins lease since (a) any such assumed new lease was not covered by the 1955 Sublease, and there is no legal basis for awarding damages for breach of a sublease as to a lease not covered by the sublease; (b) Amoco offered no evidence other than its expert’s speculation that it would have sought or that the landowners would have granted a new lease to Amoco on the Jenkins tract in 1976; and (c) Amoco offered no evidence other than its expert’s speculation that Amoco would have drilled the Marg-tex wells seven years before the wells were actually drilled by third parties, and at entirely different locations; further, the trial court erred in refusing to grant a Directed Verdict or a Judgment Notwithstanding the Verdict against Amoco on this issue.
6. |7The trial court erred in allowing Amoco’s expert to speculate to the jury, without any supporting evidence and contrary to the requirements on Dau-bert v. Merrell and Rome v. State Farm, that Amoco (a) would have acquired a new lease on the Jenkins tract in 1976; (b) would have acquired by hypothetical farmout Texaco’s and IMC’s other leases in the area that were not covered by the sublease; and (c) would have drilled the Marg-tex wells seven years before the wells were actually drilled by third parties, and at entirely different locations.
7. The trial court erred in prohibiting Defendants from introducing evidence of Amoco’s failure to mitigate its damages.
8. The Verdict was manifestly erroneous in that the award of damages was excessive and was not supported by and was contrary to te evidence.
9. The trial court erred in Directing a Verdict in favor of Amoco on the issue of liability, finding that IMC breached the sublease by failing to give the required written or verbal notice, where there was no evidence as to verbal notice and reasonable persons could have reached a contrary verdict.

Amoco filed a cross-appeal arguing the trial court erred in not allowing it to present evidence of the “present value” of its lost production revenues.

PRESCRIPTION

Breach of contract claims are subject to a liberative prescriptive period of ten years as provided by La.Civ.Code art. 3499. Defendants note the alleged breaches occurred in 1976 and 1981. Suit was not filed until April 29, 1994, eighteen years after the first breach and thirteen years after the second breach. Therefore, defendants argued the claims prescribed on the face of the petition. The trial court denied the exception, finding any information Amoco had of the breaches “never manifested itself with reasonable certainty.” Defendants have appealed this finding.

Prescriptive statutes are strictly construed against prescription and in favor of the claim sought to be extinguished by it. Bouterie v. Crane, 616 So.2d 657 |s(La.l993); Bustamento v. Tucker, 607 So.2d 532 (La.1992). The burden of proof on the prescription issue lies with the party asserting it; however, where the petition shows on its face that the claim has prescribed, the burden shifts to the plaintiff to prove that the prescriptive period has been interrupted or suspended.

In Louisiana law, under the doctrine of contra non valentem agere nulla currit praescriptio, prescription does not run against a party unable to act. Wim-berly v. Gatch, 93-2361 (La.4/11/94), 635 So.2d 206. Contra non valentem halts the running of prescription when the circumstances of the case fall into one of the following four categories: “(1) where there was some legal cause which prevented the courts or their officers from taking cognizance of or acting on the plaintiffs action; (2) where there was some condition coupled with the contract or connected with the proceedings which prevented the creditor from suing or acting; (3) where the debtor himself has done some act effectually to prevent the creditor from availing himself of his cause of action; and (4) where the cause of action is not known or reasonably knowable by the plaintiff even though his ignorance is not induced by the defendant.” Id. The principles of contra non valentem do not halt the running of prescription if the plaintiffs ignorance is the result of his own willfulness or neglect. Id.; Picard v. Vermilion Parish School Bd., 00-1222 (La.App. 3 Cir. 4/4/01), 783 So.2d 590, writ denied, 01-1346 (La.6/22/01), 794 So.2d 794; Matthews v. Sun Exploration & Prod. Co., 521 So.2d 1192 (La.App. 2 Cir.1988).

Although contra non valentem is a legal principle, and a determination as to whether or not the plaintiff was indeed prevented from filing its claim under one of the four circumstances is an issue of fact. Therefore, the trial court’s finding of fact on this issue is subject to the manifest error, clearly wrong standard of review. | .¡Picard, 783 So.d 590.

The trial court determined that the third category of contra non valentem, i.e., whether the debtor performed some act which prevented the creditor from availing itself of its cause of action, was not applicable in this case. The trial court based its denial of the exception on the fourth category, commonly referred to as the discovery rule. It provides that prescription runs from the date plaintiff discovers or should have discovered facts upon which its cause of action is based. In other words, prescription does not accrue against a party ignorant of its rights provided that ignorance is not willful, negligent or unreasonable. Wimberly, 635 So.2d at 206. For purposes of determining when a plaintiff knew or should have known of its cause of action, the plaintiff will be deemed to know what it could have learned through reasonable diligence. Renfroe v. State ex rel. DOTD, 01-1646 (La.2/26/02), 809 So.2d 947; Corsey v. State Dept, of Corrections, 375 So.2d 1319 (La.1979); Touchet v. Baker Hughes, Inc., 98-749 (La.App. 3 Cir. 2/3/99), 737 So.2d 821.

IMC contends the trial court’s denial is premised on the rule established in Cole v. Celotex Corp., 620 So.2d 1154 (La.1993). In that case, the court held “[djamage is considered to have been sustained, within the meaning of the article, only when it has manifested itself with sufficient certainty to support accrual of a cause of action.” Id. At 1156. The article referred to was La.Civ.Code art. 3492, which provides a one year prescriptive period for delictual actions. IMC contends this rule “is and has always been limited” to delictual actions and does not apply to breach of contract actions. The proper inquiry, argues IMC, is whether the plaintiff knew or should have learned of the cause of action by exercising reasonable diligence. The trial court’s erroneous reliance on the Cole holding, according to |1flIMC, mandates we not apply the manifest error standard in reviewing its ruling, but make our own independent de novo review.

IMC suggests Coalson discovered the breaches from his review of Amoco’s records alone without resort to any other information. Thus, it contends “[o]n the basis of its own records alone, Amoco must be charged with knowledge of its cause of action more than ten years prior to the filing of suit.” Coalson, however, stated he noticed there was a problem when Amoco’s records did not match with Nor-cen’s division orders for the new Marg-Tex units. These units were not created until 1989. Further, Coalson did not become aware of the breaches until after he corresponded with Norcen and then sent a contract abstractor to examine the Vermilion Parish records.

Amoco notes that it is impossible to determine precisely when assigned leases may be lost. Unlike obligations that arise on a certain date, no exact date can be set when a lease may expire. Also, leases may be continued in a number of ways, including redrilling operations, productions from different units in the same field or the granting of extensions. The record establishes reliance on the lease reassignment provisions is the primary vehicle by which an assignor learns that his lease is in danger of being lost. All the experts admitted it is customary for oil and gas companies to honor reassignment clauses. However, in this case neither IMC nor Texaco provided Amoco with notice as required by the reassignment clause.

Nonetheless, IMC argues Amoco should have discovered the lease cancellations earlier because they were duly recorded in the Vermilion Parish public records. IMC cites a number of cases in support of this contention: Three Rivers Farm Supply, Inc. v. Webber, 617 So.2d 1220 (La.App. 3 Cir.1993); Ellender v. In Goldking Production Co., 99-69 (La. App. 1 Cir. 6/23/00), 775 So.2d 11, unit denied, 00-2587 (La.2/16/01), 786 So.2d 96; Robin E. Owens & Assocs., Inc. v. Booth, 98-613 (La.App. 4 Cir. 2/24/99), 729 So.2d 1096, writ denied, 99-1233 (La.6/18/99), 745 So.2d 26; La Plaque Corp. v. Chevron USA, Inc., 93-1597 (La.App. 4 Cir. 5/26/94), 638 So.2d 354, writ denied, 94-2125 (La.11/11/94), 644 So.2d 395; Matthews v. Sun Exploration and Production Co., 521 So.2d 1192 (La.App. 2 Cir.1988). In all these cases, the court found the plaintiff had a duty to investigate the public records because it was clearly placed on notice of a possible injury. Amoco argues these cases do not apply to an unsuspecting plaintiff, who has no notice of the potential claim as a direct result of defendant’s failure to provide information it was required by contract to furnish. We find Amoco’s argument persuasive in this instance. Tom Lee, a senior landman for Amoco, testified that requiring a continuous search of the public records would place an unreasonable burden on a company:

[T]o police every single release, like the ones that were taken here, of every override in all of the parishes of Louisiana and all of the eastern half of the United States that Amoco’s New Orleans office was in charge of, we would have had to have sent an army of people into every courthouse, looking for the thousands of leases and overriding royalty interests out there, just to verify that each and every one of those leases or any one of them had not been released. And we had thousands of overrides, not just this one.

We have found nothing in the jurisprudence which places such a heavy burden on a company without some prior notification of a possible problem. IMC’s own experts testified ordinarily oil companies will not send employees to canvass the public records without some specific reason.

We note, as well, when the lease cancellations and the new leases were recorded in the public records only the names of the original lessor (the owner of the Inland) and the parties canceling the lease (IMC and Texaco) were listed. Amoco’s name did not appear anywhere in the indices pertaining to the lease cancellations.

On January 6, 1992, Nancy Tessone, an Amoco representative sent a letter to Nor-cen Explorer questioning the amount of overriding royalty interest Amoco had been credited with in Norcen’s division order. The letter stated, according to Amoco’s files, “the above listed leases [the Baudoin Lease, the Broussard Lease, and the Desormeaux Lease] are presently held by production from the MAU MIOGYP RA SU. Our records also reflect the Edith G. Badouin and Broussard leases [are] held by production from the ALNC RA VU A.” On September 24, 1993, at the request of Coalson, W.D. Fisher (a Resource Manager of Outside Operations for Amoco) sent a letter to Norcen questioning its calculations and noting that “Amoco’s royalty and overriding royalty have been maintained by production from various units from the 1950’s through present.... By notice of this letter Amoco is asserting its ownership of these mineral interests and requesting that you prepare a corrected division order and make the necessary revenue adjustment.”

These letters by their plain wording expressly indicate Amoco believed it still possessed leases covering the disputed property as late as September 1993. The law of prescription references what a plaintiff

knew or should have known about his potential cause of action not what he could have known. While IMC maintains Amoco could have known of the lease cancellations prior to 1992, we cannot conclude from the record that it knew or should have known of them prior to that year. We also find no basis in the record for IMC’s contention that Amoco would have learned of the lease cancellations but for its failure to exercise reasonable diligence.

J^PIERCING THE CORPORATE VEIL

Mallinckrodt seeks a review of the partial summary judgment rendered against it piercing the corporate veil and holding it liable for any judgment rendered against IMC. On appeal, summary judgments are reviewed de novo. Magnon v. Collins, 98-2822 (La.7/7/99), 739 So.2d 191; Garcia v. John Deere Ins. Co., 01-0561 (La.App. 3 Cir. 11/7/01), 799 So.2d 1260. The appellate court asks the same questions the trial court asks in determining whether summary judgment is appropriate, i.e., whether any genuine issues of material fact exist and whether the movant is entitled to judgment as a matter of law. La.Code Civ.P. art. 966(B) and (C). Summary judgment procedure is favored and designed to secure the just, speedy, and inexpensive determination of every action. La. Code Civ.P. art. 966(A)(2).

The trial court denied Amoco’s original motion for partial summary judgment on this issue. Mallinckrodt then filed its own motion for summary judgment, seeking dismissal on the grounds that it could not be held liable for any alleged wrongdoing on IMC’s part. A hearing on this motion was delayed in order to allow the parties time to conduct additional discovery. After inspecting IMC’s records and deposing several IMC and Mallinckrodt executives, Amoco re-urged its earlier motion. Mal-linckrodt specifically requested this issue be resolved on summary judgment rather than by jury. Mallinckrodt conceded in its pre-hearing memorandum that there was “no issue of material fact and that the determination of this issue is a matter of law.”

The trial court made the following findings of fact regarding the relationship between IMC and Mallinckrodt:

1. IMC was incorporated by International Minerals (now 1 uMallinckrodt) in February of 1976 and was its sole shareholder throughout the existence of IMC, with the exception of a short period of time in which another subsidiary company owned three (3) shares of stock.
2. The first acquisition by IMC Exploration was the purchase of all oil, gas and mineral assets of Wrightsman Investment Co. for the approximate sum of $37,000,000.00. (Note: This included the leases in the “Maurice Field” which are the subject of Amoco’s suit.)
3. [Mallinckrodt] advanced the total sum of $37,000,000.00 to IMC for the purchase of the Wrightsman assets. It was not carried on the books of IMC as a capital contribution by [Mallinckrodt].
4. IMC maintained several bank accounts, including a depository account, an operating account and an account for the payment of lease bonuses and rentals. However, it was the almost daily practice of [Mallinckrodt] to “sweep” the depository account of IMC whenever IMC deposited any funds into it.
5. [Mallinckrodt] would then transfer money back into IMC’s operating account when IMC needed funds to pay off any of its creditors.
6. The employees of IMC were allowed to participate in the retirement plans and health insurance plans [Mallinck-rodt] had set up for its employees and the same committee managed the plans for both.
7. [Mallinckrodt] referred to and considered IMC as its “oil and gas division”.
8. IMC’s annual oil and gas exploration and development budget was approved by [Mallinckrodt] prior to its being presented to the board of directors of IMC for approval. IMC was not allowed to undertake any projects in excess of $1.5 million in any given year, without the prior approval of its parent company. Further, [Mallinckrodt] gave prior authorization for IMC to sell a natural gas plant in Perry Point, Louisiana.
9. In the 1986 annual report of [Mal-linckrodt] there is a statement to the effect that in June of that year [Mal-linckrodt] “signed letters of intent to sell its gas and oil segment” which was a referral to the sale of IMC Exploration to Wintershall in the latter part of 1986.
10. After the sale of IMC to Winters-hall, the board of directors of |1SIMC declared a dividend in favor of its sole shareholder, [Mallinckrodt], in the approximate amount of $97 million. This was not an actual cash transfer but had the effect of canceling a debt in the same amount that was carried on the books of [Mallinckrodt] as an accounts payable to IMC.

The trial court concluded from these facts that IMC was the “agent, tool, or instrumentality” of Mallinckrodt, and thus, Mal-linckrodt could not avail itself of the corporate benefit of limited liability.

The general rule that corporations are distinct legal entities is well supported by jurisprudence and statute. La.R.S. 12:93(B); La.Civ.Code arts. 435-37; Rig-gins v. Dixie Shoring Co., Inc., 590 So.2d 1164 (La.1991). This court has held that only exceptional circumstances warrant the radical remedy of piercing the corporate veil. Sparks v. Progressive Am. Ins. Co., 517 So.2d 1036 (La.App. 3 Cir.1987), writ denied, 519 So.2d 106 (La.1987); Chefs Fried Chicken, Inc. v. Bull McWood, Inc., 459 So.2d 1371 (La.App. 3 Cir.1984).

The courts have recognized two exceptional circumstances where the rule of non-liability of shareholders for the debts of the corporation will be disregarded. The first is where the shareholders acting through the corporation commit fraud or deceit on the third party. The second is where the shareholders disregard the corporate formalities to such an extent that the shareholders and the corporation become indistinguishable, or “alter egos.” Riggins, 590 So.2d 1164; Smetherman v. Wilson, 626 So.2d 71 (La.App. 3 Cir.1993). Shareholder fraud was not at issue in this case; with the trial court’s ruling in favor of Amoco based on a finding that IMC was the “agent, tool, or instrumentality” of Mallinckrodt.

Five factors are considered by courts when determining whether to apply the “alter ego” doctrine: (1) commingling of corporate and shareholder funds; (2) failure |1fito follow statutory formalities for incorporating and transacting corporate affairs; (3) undercapitalization; (4) failure to maintain separate bank accounts and bookkeeping records; and (5) failure to hold regular shareholder and director meetings. Riggins, 590 So.2d 1164; Haywood v. Louisiana Sugar Cane Products, 96-1151 (La. App. 3 Cir. 3/5/97), 692 So.2d 524; Smeth-erman, 626 So.2d 71. The totality of the circumstances is considered when determining whether the “alter ego” doctrine applies. Riggins, 590 So.2d 1164; Smeth-erman, 626 So.2d 71.

The initial burden is on the shareholders to show the existence of the corporation. Once that burden is met, the burden is shifted to the challenger or third party to show the exceptional circumstances that must exist to warrant disregard of the corporation’s separate identity. Shoemaker v. Giacalone, 34,809 (LaApp. 2 Cir. 6/20/01), 793 So.2d 230, writ denied, 01-2614 (La.12/14/01), 804 So.2d 632.

The jurisprudence has held if one corporation is wholly under the control of another, the fact that it is a separate entity does not relieve the latter from liability. Hamilton v. AAI Ventures, L.L.C., 99-1849 (LaApp. 1 Cir. 9/22/00), 768 So.2d 298; Green v. Champion Ins. Co., 577 So.2d 249 (LaApp. 1 Cir.1991), writ denied, 580 So.2d 668 (La.1991). When corporations represent precisely the same single interest, the court is free to disregard their separate corporate identity. Id. Where a single corporation has been fragmented into branches that are separately incorporated and are managed by a dominant or parent entity, the courts have held the dominant or parent corporation liable for the obligations of its branches. Id.

In its written reasons, the trial court found IMC was indistinguishable from Mallinckrodt. This factual finding is subject to the manifest error-clearly wrong standard. See Smetherman, 626 So.2d 71; Henry J. Mills Co., Inc. v. Crawfish Capitol Seafood, \Mnc., 569 So.2d 1108 (La. App. 3 Cir.1990); Hamilton, 768 So.2d 298, McDonough Marine Serv. v. Doucet, 95-2087 (LaApp. 1 Cir. 6/28/96), 694 So.2d 305. Therefore, the trial court’s finding that Mallinckrodt was liable for the debts of IMC, based on IMC’s breach of contract, can be reversed only if the record does not establish a reasonable factual basis to support the court’s ruling.

Mallinckrodt argues the trial court failed to address the five-factor test to determine whether it was the “alter ego” of IMC. Specifically, Mallinckrodt contends that “no funds of the two corporations were ever commingled.” It argues because accurate records were kept there was no commingling of funds. However, after creating IMC in 1976 as a wholly-owned subsidiary, Mallinckrodt invested $37,000,000 to buy oil and gas properties from Charles Wrightsman, which it put into IMC’s name. IMC did not pay any interest for this cash donation. Danny Crawford, IMC’s chief operating officer, also revealed that when IMC had any incoming money or profits, Mallinckrodt “had it all transferred into an account where they had discretion over it.” He further stated “whenever it was time to— to pay a bill or write a check for our own business, we would write that check and then they would fund it back.”

The record also established Mallinck-rodt’s annual shareholder reports referred to IMC as a “segment” of its’ “world-wide operations.” The record revealed members of IMC’s board of directors were authorized to vote Mallinckrodt’s shares at IMC shareholder meetings, essentially representing both the parent company and IMC simultaneously. Crawford testified as follows:

Q: Now, does this document indicate that Mr. Roark was authorized to represent the parent company and sole shareholder, International Minerals & Chemical Corporation [now Mallinckrodt], at | isthe IMC Exploration Company November 21st, 1978, stockholder meeting?
A. Yeah, it looks like it gives him the proxy to do that.
Q. Okay. Now, at this time, Mr. Roark was a director of IMC Exploration Company, wasn’t he?
A. I’m sure he was.
Q. Okay. So he was a director of IMC Exploration Company, but he was also authorized to represent the parent company, International Minerals & Chemical Corporation, at the stockholders meeting; is that correct?
A. That’s what it says.
Q. Mr. Crawford, would you agree that since International Minerals & Chemical Corporation was the sole stockholder of IMC Exploration Company, that International Minerals could elect or determine who would serve as a director of IMC Exploration Company in any given year?
A. That’s the way I understand it.

In 1986, Mallinckrodt sold the assets of IMC to Wintershall Corporation for $63,800,000.00, plus interest. The funds from the sale of IMC’s assets were paid directly to Mallinckrodt. Crawford testified, although Mallinckrodt owed approximately $100 million, this “debt” was wiped off the books when the directors of IMC declared a $97 million “dividend” in favor of IMC. As the trial court noted, the dividend was not an actual cash transfer, but “had the effect of canceling a debt in the same amount that was carried on the books of [Mallinckrodt] as an accounts payable to IMC.” No consideration was given to IMC, and it became insolvent. All of its operations were ceased and its employees were terminated. Mallinckrodt maintained IMC’s corporate existence only on paper.

|iaThe Louisiana Supreme Court has held a corporation that absorbs the assets of a subsidiary must stand good for its debts. In Roddy v. Norco Local 4-750, Oil, Chemical, Etc., 369 So.2d 957, 960 (La.1978), the court stated as follows:

When one corporation has literally absorbed another, as Local No. 4-750 has in effect taken over Independent, which donated all its assets to Local No. 4-750, and when the “new” corporation has absorbed the membership of the old, adopted its purposes and is ruled by the same officers and directors, the transactions in no manner affect the rights of the creditors of the “old” corporation. Creditors may nevertheless proceed for the recovery of the amount due them against either corporation, or both.

In light of the record before us, we cannot say the trial court was clearly wrong in “piercing the corporate veil” and finding Mallinckrodt liable for the breach of contract debt of IMC. In 1986, Mallinck-rodt divested IMC of all its assets and funds, totaling approximately $97.5 million, terminated all of its employees, and ceased all operations. Since that time, IMC has existed only on paper and has been unable to respond to its creditors. Under the circumstances the parent corporation is liable for the debts of its subsidiary. Accordingly, we find the trial court did not err in granting summary judgment in favor of Amoco on this issue.

DIRECTED VERDICT ON ISSUE OF LIABILITY

Defendants contend the trial court erred in ruling that Amoco met its burden of proving no notification was given it as required by the reassignment clause. Defendants note the reassignment clause allows for both written and/or verbal notice. They assert Amoco, which has the burden of proving it did not receive notice, produced no evidence that verbal notice was not given.

A motion for directed verdict is only granted where, after considering all evidentiary inferences in the light most favorable to the mover’s opponent, it is clear Lnthe facts and inferences are so overwhelmingly in favor of the moving party that reasonable people could not arrive at a contrary verdict. Hebert v. Bell-South Telecommunications, Inc., 01-223 (La.App. 3 Cir. 6/6/01), 787 So.2d 614, writ denied, 01-1943 (La.10/26/01), 799 So.2d 1145.

We find the trial court did not err in granting the directed verdict. IMC stipulated that no written notice was given. Mark Turman, IMC’s vice-president, testified he could not recall forwarding any notice of the lease cancellations to Amoco. Texaco executed an affidavit acknowledging it had no record that notice, either written or verbal, was ever given to Amoco. Numerous witnesses testified it was against standard industry practice to give such notice verbally. At the prescription hearing, IMC stipulated it breached the sublease. After a thorough review of the record, we find reasonable people could not have arrived at a contrary verdict on this issue.

DAMAGES

Following the trial court’s directed verdict against Defendants on the issue of liability, the only issue before the jury was that of damages. The jury awarded Amoco $30,000,000.00. Defendants have assigned numerous errors attacking the award. We will address each assignment accordingly.

I. Legal Measure of Damages.

Defendants argue the correct legal measure of damages is the market value of the canceled leases on the date of the breach. They contend Amoco’s damages should be limited to the “signing bonus” given to leases in that area at the time of the breach without any consideration given for the value of production later obtained from the areas covered by the leases.

la,In a Motion in Limine filed in the trial court, Defendants asked the trial judge to hold the “measure of damages for the breach of an obligation to reassign a mineral lease is the value of the leasehold interest at the time of the breach.” Defendants also requested the trial court exclude the introduction of any “[ejvidence as to the quantity and value of production that occurred years after [the] alleged breach.” The trial court issued a ruling denying “the defendants’ motion in limine seeking to exclude evidence of production from the Maurice Field, evidence of potential farmout agreements, and evidence of production commencing in 1981.” Defendants filed a writ with this court seeking reversal of the ruling. We denied the writ, specifically finding “no error in the trial court’s ruling.”

Amoco now urges our ruling on the writ application bars us from reconsidering the issue. In support of this contention, Amoco cites Tsatsoulis v. City of New Orleans, 99-2544 (La.App. 4 Cir. 8/30/00), 769 So.2d 137, writ not considered, 01-684 (La.5/4/01), 791 So.2d 647. In Tsatsoulis, the fourth circuit held “the law of the case doctrine applies to all prior decisions of an appellate court, including decisions rendered on supervisory writ applications, and not just to decisions on prior appeals.” Id. at 139.

However, we have reviewed the previous writ application and find the ruling on the motions in limine did not specifically address the legal measure of damages. Although the motion requested the trial court hold that the measure of damages for the breach was the market value at the time of the breach, its ruling did not reach this issue. The trial court simply denied Amoco’s request to exclude “evidence of the production from the Maurice Field, evidence of potential farmout agreements, and evidence of production commencing in 1981.” Thus, we did not consider this issue lachen reviewing the merits of the writ application. We, therefore, turn to consider whether the trial court erred in not instructing the jury that the legal measure of damages is the market value of the canceled leases on the date of the breach.

IMC relies on Friedman Iron & Supply Co. v. J.B. Beaird Co., 222 La. 627, 63 So.2d 144 (1952). In Friedman the defendant breached a sales contract by refusing to accept a shipment of steel and paying the agreed purchase price. The court wrote:

It is presumed, in the sale of personal property, that the parties contemplated the difference between the contract price of the thing sold and the market value at the time and place at which it was to be delivered when they entered into the contract, [citation omitted.] This court has on numerous occasions pointed out that the measure of damages for the breach of a contract of sale, where no fraud is shown, is the difference between the contract price and the market price of the goods on the date of the breach.

Id. at 149.

Defendants also cite Womack v. Stern-berg, 247 La. 566, 172.So.2d 683 (1965), which involved the breach of an agreement to exchange residences when the defendant refused to carry out the agreement, and Vallot v. Champagne, 583 So.2d 549 (La.App. 3 Cir.), writ denied, 588 So.2d 108 (La.1991), where the defendant failed to comply with his obligation under an agreement to purchase a supermarket. We note that the cases cited by Defendants do not involve mineral leases, which have the obvious potential of creating substantial amounts of income if successfully developed.

La.Civ.Code art.1995 states “[D]amages are measured by the loss sustained by the obligee and the profit of which he has been deprived.” (Emphasis added.) The plain language of this article requires that damages include whatever profit the plaintiff may have lost due to the inaction of the defendant. In Gibbs Const. Co., Inc. v. Thomas, 500 So.2d 764, 770 (La.1987), the Louisiana Supreme Court stated:

| «¡The proper measure of damages ... is ... the amount necessary to place [the plaintiff] in the same position he would have been in had [the defendant] completely fulfilled [its obligation].

This court in Dixie Roofing Co. of Pine-ville, Inc. v. Allen Parish School Board, 95-1526, p. 6 (La.App. 3 Cir. 5/8/96), 690 So.2d 49, 56, writs denied, 96-2084, 96-2100 (La.11/8/96), 683 So.2d 276, 277, stated the “measure of damages for a breach of contract is the sum that will place plaintiff in the same position as if the obligation had been fulfilled. Meltzer v. Roof Coatings, Inc., 536 F.2d 663 (5th Cir.1976).”

These cases are in accord with the plain language of La.Civ.Code art.1995, and support the trial court’s holding that the proper measure of damages was not the market value of the canceled leases on the date of the breach.

II. Exclusion of Defendants’ Evidence.

Defendants also argued the trial court did not allow them to present evidence of the market value of the leases at the time of the breach. However, Defendants presented the testimony of its abstractor, Madeleine Kimball, who stated that leases in the Maurice Field in the early 1980’s were granted for approximately $250 to $300 per acre.

Defendants also argued the jury was not allowed to hear their evidence as to the amounts of the one-sixteenth overriding royalties Amoco would have received had there been no breach. Defendants assert Amoco would have received overriding royalties of only $584,187.00 from the Jenkins lease and $597,764.00 from the other leases. However, Amoco presented expert testimony that it would have taken new leases if Defendants had complied with the reassignment clause. Amoco maintain it then would have had a full lessee’s working interest in the leases, rather than just a |?4one-sixteenth overriding royalty. Defendants argue Amoco would have only had the override if IMC had not canceled the leases. However, it is undisputed that IMC did cancel the leases, and did so without informing Amoco beforehand and offering to reassign the leases.

A trial court’s evidentiary rulings will not be overturned absent a showing of an abuse of discretion. Johnson v. First Nat. Bank of Shreveport, 00-870 (La.App. 3 Cir. 6/20/01), 792 So.2d 33, writ denied, 01-2770, 02-2783 (La.1/4/02), 805 So.2d 212, 213; Belle Pass Terminal, Inc. v. Jolin, Inc., 92-1544, 92-1545 (La.App. 1 Cir. 3/11/94), 634 So.2d 466, writ denied, 94-0906 (La.6/17/94), 638 So.2d 1094. We find no abuse of discretion in this instance.

Defendants contend the trial court erred in refusing to allow evidence of Amoco’s alleged failure to mitigate its damages. Despite this claim, the jury heard the testimony of Kimball who testified there was a substantial period of time in the 1980’s where Amoco could have acquired new leases on land in the Maurice Field. In its closing argument, IMC’s counsel stated Amoco “could have gone into Maurice ... bought some leases, drilled some wells, but they didn’t. They had lots of opportunities.” Amoco’s witnesses testified it would have been “unethical” to acquire leases in the same field where it had farmed out its leases to IMC and Texaco.

III. Failure to Mitigate.

Defendants also argue the trial court did not allow it to formally amend its pleadings before trial to plead “failure to mitigate.” Amoco argues “IMC’s attempt to amend was simply an obvious ploy to reargue prescription.... IMC sought to amend its pleadings to allege that Amoco “was aware or should have been aware of li>sthe alleged breach’ and, thus ‘failed to mitigate’ it’s damages by filing suit earlier.” Whether this was the trial court’s reason for not allowing Defendants to formally amend its pleadings is not clear. However, we find it irrelevant in this case. As noted, Defendants presented evidence of Amoco’s alleged failure to mitigate, and argued it to the jury in closing arguments. The jury obviously chose to disregard this testimony.

IV. Amount of Damages.

Defendants argue the jury’s award of damages was manifestly erroneous for a number of reasons. First, they argue the verdict was based on speculation rather than facts. They contend Bill Griffin, Amoco’s petroleum engineering expert, offered nothing more than unsupported assumptions and consistent with Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), his testimony should not have been admitted as expert testimony.

Daubert requires that the trial court ensure all such testimony which is admitted “is not only relevant, but reliable.” Id., at 589, 113 S.Ct. at 2795. To be reliable, such testimony requires more than “subjective belief or unsupported speculation.” Id., at 589,113 S.Ct. at 2795. La.Code Evid. art. 702, as does its federal counterpart, requires that expert testimony be based on “scientific, technical, or other specialized knowledge.” Even then, such “testimony must rise to a threshold level of reliability in order to be admissible.” State v. Foret, 628 So.2d 1116, 1123 (La.1993).

On appeal, we will not disturb the trial court’s vast discretion in determining the admissibility of expert testimony unless it is clearly erroneous. Mistich v. Volkswagen of Germany, Inc., 95-0939 (La.1/29/96), 666 So.2d 1073; Budget Rent-A-Car of New Orleans v. Gradnigo, 611 So.2d 147 (La.App. 3 Cir.1992). In | j>fimaking this determination, the trial court must determine whether the trier of fact will receive appreciable help from the testimony of the expert witness. Daubert, 509 U.S. 579, 118 S.Ct. 2786, 125 L.Ed.2d 469; Foret, 628 So.2d 1116.

We find the trial court did not abuse its discretion in qualifying Griffin as an expert in petroleum engineering. Griffin was a registered professional engineer with nearly thirty years of experience in the petroleum industry. We also find the trial court did not err in rejecting Defendants’ Daubert objections. “As a general rule, the factual basis for an expert’s opinion goes to the credibility of the testimony, not its admissibility, and it is up to the opposing party to examine the factual basis of the opinion in cross-examination.” Loudermill v. Dow Chemical Co., 863 F.2d 566, 570 (8th Cir.1988). Griffin’s testimony was lengthy and detailed. He was cross-examined extensively by Defendants. We do not find his opinions and calculations were mere speculation and cannot say that the jury’s acceptance of his testimony was unreasonable:

When [a jury’s] findings are based on determinations regarding the credibility of witnesses, the manifest error — clearly wrong standard demands great deference to the trier of fact’s findings; for only the fact finder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener’s understanding and belief in what is said.

Lirette v. State Farm Ins. Co., 563 So.2d 850, 852-53 (La.1990) (citations omitted). We find no error with the jury’s acceptance of Griffin’s testimony on this issue.

Defendants also argue the jury improperly awarded damages arising from the “hypothetical farmout leases.” Defendants argue no one, other than Griffin, testified |CTthat Amoco would have sought farmouts in 1981. This is not correct. Tom Lee testified if Amoco had been reassigned its Maurice Field leases, Amoco would have attempted to “farm in” other leases in the area. Both Lee and Griffin testified at the time it was Amoco’s standard practice to obtain “farm ins” in the Maurice Field. William Rodan, Amoco’s Exploration Manager in the early 1980’s, testified Amoco was actively seeking new gas discoveries to satisfy a gas contract it had with Florida Power and Light. Griffin also testified by 1980, Amoco had the highest exploration budget in its history, due in part to its need for gas and rapidly increasing gas prices. Alford Turman, IMC’s vice-president, testified in the late 1970’s and early 1980’s, it was common for IMC to look for companies to take farm-outs of its Maurice Field leases. He specifically testified that IMC had invested in a “couple of expensive, unsuccessful wells” and was reluctant to take the risk of drilling any more deep wells. Thus, the evidence established that IMC was actively seeking to farmout its leases in the Maurice Field and Amoco was seeking to farm-in as many leases as possible. The jury was not clearly wrong in accepting Griffin’s testimony that Amoco would have accepted a reassignment of its Maurice Field leases and actively pursued farmouts.

Defendants further argue, while the Marg-Tex wells were actually drilled by Norcen and others in 1989, the jury’s damage award is based on Griffin’s testimony that Amoco would have begun drilling in 1981 and there would have been identical production from these hypothetical wells. Defendants note, in 1984 and 1986, wells were drilled in the Marg-Tex reservoir, but came up dry. They assert there was no basis to simply assume that Amoco would have drilled in 1981 and immediately struck gas.

Amoco introduced a plat which established all of the canceled leases were Isiswithin the Marg-Tex reservoir that was eventually discovered. Griffin testified as follows:

A. Okay. Again, you can see the outline of the field. We would have most likely drilled the wells where our leases are because, of course, you can’t drill on other people’s property unless you farm in, of course; so under that option we could have drilled elsewhere. But you can see on this map that the gas was right beneath our feet. We could have drilled just about anywhere on our property and found that gas.
Q. Now are you aware of the testimony from Mr. Veazey that he went back and charted all of the wells ever drilled in the Maurice field and found that more than half of them, no matter where they were drilled in the Maurice field, found gas?
A. Yes, sir. I think the chances were — the smallest chance of finding gas was 55 percent or better than half of a fifty-fifty chance of finding gas in the Maurice field.
Q. What were the chances, in your opinion, from those tracts of land; were they at 55 percent or better or worse or what?
A. A hundred percent (100%), because the gas was right beneath us. Another indicator that the gas would have been there, even before the Office of Conservation found it, was about 4,000 feet shallower a field had been discovered in the mid 60’s. So these fields generally stack up like pancakes....

Mike Veazey, who testified for Defendants, admitted it was a “good possibility” Amoco would have discovered gas had it drilled on the Jenkins lease in 1981. We find the evidence presented at trial was sufficient to satisfy a jury that it was more “probable than not” Amoco would have discovered gas by drilling on the canceled leases.

Defendants also claim Griffin assumed Amoco would “not have accepted a reassignment of the Jenkins lease in 1976 since it was expiring” and instead Amoco “would have acquired an entirely new lease on the Jenkins tract.” Amoco argues this was not what Griffin stated. The record revealed the following testimony from | ^Griffin: •

Q. And, in fact, when you did your damage calculations you assumed that the Jenkins lease had died and that you assumed a new lease, didn’t you?
A. No. There was a — well, you could possibly look at it that way, but what that assumption is is that we went to the landowner and we made him the same deal that the next guy actually made. We increased his royalty in my calculations from one-eighth to I think it was one-sixth. That’s what’s in my calculations. That could have been a renewal of an existing lease, it could have been an extension of an existing lease or whatever. All I did was I moved what would have satisfied that royalty owner based on actual events, and apparently he was satisfied by increasing his royalty from one-eighth to one-sixth, and that’s what I did.
Q. And that’s because in 1976, another party bought leases on the Jenkins property; isn’t that correct?
A. That’s what I used to calibrate my model.

Griffin’s testimony revealed the landowner had granted a new lease on the property in 1976. There was ample support for the jury to assume the landowner would have granted Amoco a lease extension for similar terms.

Lastly, Defendants contend the jury’s award of $30,000,000 was excessive and an abuse of its discretion. Their argument on this issue is essentially the same as addressed above: That the award was based on unsupported assumptions and contrary to the evidence. We disagree. In making his estimations, Griffin simply calculated the production figures from the Office of Conservation and used the average gas prices for the years in question. He concluded Amoco lost $70,000,000 in production, for which IMC was liable for half, or $35,000,000. We cannot say the jury abused its discretion in rendering a damage award of $30,000,000.

lanAMOCO’S APPEAL

Defendants filed a motion in li-mine to exclude Amoco’s evidence of the “present value” of its lost production revenues. The trial court granted the motion, which Amoco contends was erroneous. Amoco argues the function of the law of damages is to make the injured party whole, and the only way it can be restored to the “same position” it would have occupied, but for the breach of the contract, is to adjust the dollars it would have earned in the past to “present value.” Amoco presented proffered testimony that “the most appropriate method to adjust Amoco’s past losses to present value would be to use Amoco’s historical ‘return on equity’ as reported in its annual reports for the years 1981 to 1997.” Under this theory, Amoco concludes its present value of lost income was approximately $175,000,000, with Defendants’ half share approximately $87,500,000. We find no merit in Amoco’s argument. Amoco is only entitled to the legal interest rate for judgments provided in La.Civ.Code art. 2000.

DECREE

For the foregoing reasons, we find no basis to overturn the judgments of the lower court and jury. All costs of this appeal are assessed to Defendants, IMC Exploration Company and Mallinckrodt, Inc.

AFFIRMED.

      . The five mineral leases are referred to as (1) the "Jenkins Lease,” (2) the "Baudoin Lease,” (3) the "Broussard Lease,” (4) the "Desor-meaux Lease” and (5) a fifth lease not involved in this litigation.

      . A division order is the unit operator's calculation of each lease owner's share of production from the unit.

      . Mallinekrodt, Inc., was originally called International Minerals & Chemicals Corporation before it changed its name in the 1990's.

      . A “farmout'' is a negotiated contract assigning a lease to a party that wishes to explore it for production. Essentially, a party who owns or leases land will often seek to "farm-out” the lease rather than spend its own money to drill on it. The party "farming out” the lease retains an interest in any minerals discovered on the property.


source: Caselaw Access Project

author: JiCOOKS, Judge.

license: Public Domain

text:
    STATE of Louisiana v. James Danny JACKSON.
    No. 02-1250.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 5, 2003.

      Paula C. Marx, Louisiana Appellate Project, Region 2 & 3, Lafayette, LA, for Appellant: James Danny Jackson.
    Earl Taylor, District Attorney, 27th Judicial District, Opelousas, LA, for Appel-lee: State of Louisiana.
    Court composed of SYLVIA R. COOKS, JIMMIE C. PETERS, and GLENN B. GREMILLION, Judges.
   STATEMENT OF THE CASE

JiCOOKS, Judge.

James Danny Jackson was charged by bill of information with the second degree battery of Randy Tomlinson. Jackson entered a plea of not guilty, waived his right to a jury trial and was tried by the judge on July 31, 2002. He was found guilty of second degree battery and sentenced to serve four years at hard labor. The sentence was to run concurrently with any other sentence Jackson was serving.

The facts are as follows. Tomlinson owns a self-serve, coin-operated carwash on Union Street in Opelousas. On numerous occasions, Tomlinson has asked Jackson to leave the carwash. Tomlinson felt Jackson was hurting his business by bucket washing vehicles and harassing customers. On January 21, 2002, Jackson arrived at the carwash with a bucket full of cleaning supplies and attempted to hide behind the equipment room. Tomlinson approached Jackson and told him to leave the carwash. From that point the testimony differs. Tomlinson testified he did not touch or push Jackson prior to being hit. He was bending down to pick up the bag of cleaning supplies when Jackson struck him three times on the left jaw with his fist. Jackson testified Tomlinson reached down to pick up the bag of cleaning supplies, lost his balance and pushed Jackson back. At that point, Jackson hit him twice on the right jaw. Jackson testified he is right-handed.

Tomlinson sought medical attention at the Opelousas General Hospital emergency room. Medical records indicated Tomlin-son had redness and edema on the left and right sides of his face and an abrasion to the left lip. He also reported pain on the left and right sides of his jaw and difficulty swallowing. The emergency room physician prescribed Lortab for pain. Tomlin-son was referred to Dr. Robin C. Ardoin, an oral surgeon. An examination by Dr. Ardoin indicated swelling of and pain in the right temporomandibular joint and the external auditory canal. Panorex | ¡.x-ray revealed an anterior dislocated right temporomandibular joint with probable derangement of the jaw. Dr. Ardoin recommended surgery with a steroid injection to clear the possible blood in the joint. On January 22, 2002, Dr. Ardoin performed arthrocentesis surgery on Tomlinson’s right temporomandibular joint to relieve pain and swelling. Brackets with elastic traction were placed on Mr. Tomlinson’s teeth which were not removed until February 6, 2002. Tomlinson testified he was in pain for “a good three weeks” and he could not chew or bite down and had problems eating for four to six weeks following the incident.

The trial court found the evidence supported a conviction for second degree battery. The court stated:

I’ve listened to the testimony of the witnesses and I’ve judged the credibility of the witnesses under the circumstances. The burden is on the State to prove its case beyond a reasonable doubt. I find that the State has met [its] burden in this case. I believe the story of Mr. Tomlinson and I don’t believe the story of the defendant in this case. Therefore, he’s found guilty of second degree battery.

For the reasons assigned below, we affirm the decision of the trial court.

LAW AND DISCUSSION

Defendant, Jackson, contends the State failed to prove, beyond a reasonable doubt, the elements required for a conviction under the second degree battery statute. Louisiana Revised Statute 14:34.1 provides in relevant part:

Second degree battery is a battery committed without the consent of the victim when the offender intentionally inflicts serious bodily injury.
For purposes of this article, serious bodily injury means bodily injury which involves unconsciousness, extreme physical pain or protracted and obvious disfigurement, or protracted loss or impairment of the function of a bodily member, organ, or mental faculty, or a substantial risk of death.

To prove second degree battery, the State must show the defendant: (1) committed a battery upon another; (2) without his consent and; (3) intentionally 1Jnflicted serious bodily injury. State v. Young, 2000-1437 (La.11/28/01); 800 So.2d 847. Jackson does not dispute he used force or violence upon Tomlinson without his consent. However, Jackson contends he did not intend to inflict serious bodily injury upon Tomlinson and further, the injuries sustained by Tomlinson do not meet the definition of serious bodily injury.

SPECIFIC INTENT

Specific intent is defined in La.R.S. 14:10(1) as “that state of mind which exists when the circumstances indicate that the offender actively desired the prescribed criminal consequences to follow his act or failure to act.” In State v. Robertson, 98-883 (LaApp. 3 Cir. 12/9/98); 723 So.2d 500, writ denied, 99-0658 (La.6/25/99); 745 So.2d 1187, this court discussed proof of specific intent, stating:

[S]pecific criminal intent need not be proven as fact but may be inferred from the circumstances of the case and actions of the defendant. State v. Mackey, 96-817 (LaApp. 3 Cir. 12/11/96); 687 So.2d 465, writ denied, 97-1814 (La.3/13/98); 712 So.2d 865; State v. Clark, 93-1470 (LaApp. 3 Cir. 10/5/94); 643 So.2d 463.

Id. at p. 6, 723 So.2d at 504.

Tomlinson testified Jackson struck him when he was bending down to grab Jackson’s bag of cleaning supplies. Tom-linson had no warning he was going to be hit and no opportunity to protect himself. In State v. Johnson, 602 So.2d 310 (La. App. 1 Cir.1992), the court held the defendant desired the consequences of his actions when he struck the victim on his blind side and the victim had no warning he was going to be struck and no opportunity to protect himself. We find the trial court correctly concluded the facts support a finding that Jackson had the requisite specific intent to inflict serious bodily injury when he struck Tomlinson three times in the face.

SERIOUS BODILY INJURY

Defendant, Jackson, contends the injuries he inflicted upon Tomlinson do not |4rise to the level of serious bodily injury within the definition of La.R.S. 14:34.1. To sustain a conviction for second degree battery under the statute, the State must prove beyond a reasonable doubt the injury inflicted “involved unconsciousness, extreme physical pain or protracted and obvious disfigurement, or protracted loss or impairment of the function of a bodily member, organ, or mental faculty, or a substantial risk of death.” Id. The term extreme physical pain refers to a condition which most people of common intelligence can understand. State v. Thompson, 399 So.2d 1161, 1168 (La.1981). It is considered subjective in nature and susceptible to interpretation. Id.

Medical records indicate Tomlinson had swelling on the left side of his face, an abrasion to his lip and difficulty swallowing. He suffered a dislocated temporo-mandibular joint and required surgery to repair the injury inflicted by Jackson. Tomlinson testified he was in pain for “a good three weeks” and could not chew or bit down. He testified he had problems eating for four to six weeks.

In State v. Hernandez, 96-0115 (La.App. 4 Cir. 12/18/96); 686 So.2d 92, the court upheld the defendant’s conviction for second degree battery when the victim’s injuries consisted of a cut to her right eye and nose area, a cut on her shoulder and a cut on her finger. The victim testified the injuries burned.

In State v. Accardo, 466 So.2d 549 (La. App. 5 Cir.1985), writ denied, 468 So.2d 1204 (La.1985), the defendant, a twenty-one year old male struck a seventeen year old female on the head with either his fist or a blackjack. The blow caused pain and swelling to the victim’s head. The court found the evidence was sufficient to establish the victim suffered serious bodily injury within the meaning of the second degree battery statute even though the victim did not lose consciousness and she did not testify she was in extreme physical pain.

In State v. Helou, 2002-77 (La.App. 3 Cir. 6/5/02); 822 So.2d 647, this court Isheld the State proved the victim suffered serious bodily injury to his nose even though the victim did not have a broken nose nor did the injury require stitches. The evidence indicated the victim received medical treatment and was given pain medication.

In Young, 00,1437, 800 So.2d 847, the supreme court affirmed a jury verdict finding the jury could reasonably have concluded the defendant intended to inflict serious bodily injury when he choked the victim. The victim testified he coughed frequently, cleared his throat and had trouble talking. The court found the State proved the defendant intended to cause “impairment of the function of a bodily member.”

Mr. Tomlinson’s medical records reflect he had a dislocated jaw for which he received various pain medications. Surgery was required to repair the injury and he experienced pain and was unable to chew or bite down for several weeks following the incident. Although Tomlinson was not rendered unconscious, the record supports the conclusion that he did suffer extreme physical pain and protracted impairment of a bodily function within the meaning of the statute. We conclude the State proved the elements of second degree battery and, therefore, affirm the Defendant’s conviction.

DECREE

Based on the foregoing review of the evidence, we affirm the conviction of the defendant, James Danny Jackson.

AFFIRMED.


author: J^EZELL, J.

text:
    Katherine and Larry LAVERGNE, et al. v. AMERICA’S PIZZA COMPANY, LLC, et al.
    No. 02-889.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 5, 2003.

      Alan K. Breaud, Timothy Wayne Bas-den, Breaud & Lemoine, Lafayette, LA, for Defendant/Appellant: America’s Pizza Company, L.L.C.
    Horace Arthur Thompson III, Watkins, Ludlam, et al., New Orleans, LA, for Plaintiffs/Appellees: Louisiana Restaurant Association.
    George Stubbs Bourgeois Jr., Attorney at Law, Opelousas, LA, for Plaintiffs/Ap-pellees: Katherine and Larry Lavergne.

      Court composed of ULYSSES GENE THIBODEAUX, MICHAEL G. SULLIVAN, and BILLY HOWARD EZELL, Judges.
   J^EZELL, J.

In this appeal, America’s Pizza claims that the trial court erred in finding them liable for an injury caused to Sean Lav-ergne, the minor child of the Plaintiffs, Katherine and Larry Lavergne. America’s Pizza also challenges the amount of the award, the allocation of fault, and the finding that the suit should not have been dismissed under the Louisiana Products Liability Act (LPLA). For the following reasons, we affirm the decision of the trial court.

On May 12, 2000, the Lavergnes and their three children went to the Pizza Hut restaurant in Ville Platte. The restaurant is owned by America’s Pizza. After being seated in a booth, the family placed their order. As an appetizer, the Lavergnes ordered breadsticks with two extra cups of dipping sauce. Their waitress first brought out the breadsticks and only one cup of the sauce. After being reminded about their request for extra sauce, the waitress walked to the kitchen and obtained the additional two cups of the dipping sauce. When she returned, she placed one of the extra cups of heated sauce within the reach of the then three-year-old Sean. Within seconds, Sean had spilled the sauce on his legs, resulting in a severe second-degree burn.

The Lavergnes filed this suit, claiming that the waitress was negligent in placing the sauce she knew to be hot within the reach of a three-year-old child. The Lav-ergnes also initially brought claims under the LPLA, claiming a failure by the waitress to warn of the high temperature of the sauce. After the close of the Plaintiffs evidence, the trial court granted America’s Pizza’s request for involuntary dismissal of the LPLA claims, finding the Lavergnes had failed to prove any cause of action under the LPLA. At the close of all the evidence, the trial court found that the waitress breached her duty to protect the patrons from harm by placing the hot sauce within the reach of the child and that the breach was a cause of Sean’s injuries. | ^However, the trial court further found that the Lavergnes were also at fault, based on a lack of due diligence in their supervision of Sean. The trial court assessed America’s Pizza with 70% liability for the accident and the parents with 30%. The trial court awarded the Lavergnes $15,000 in general damages and $152.44 in medical expenses. It is from this decision that America’s Pizza appeals.

America’s Pizza asserts four assignments of error on appeal. They claim the trial court erred in finding liability on their part, in assessing 70% of the fault to them, in refusing to dismiss all claims in this case under the exclusivity clause of the LPLA, and finally, in awarding the Lavergnes $15,000 in general damages. We will deal with the LPLA claims first.

Louisiana Revised Statutes 9:2800.52 states in pertinent part that the LPLA “establishes the exclusive theories of liability for manufacturers for damage caused by their products.” The LPLA contains an exclusive remedy provision limiting a plaintiffs theories of recovery against a manufacturer of an allegedly defective product to those established by the LPLA. Stahl v. Novartis Pharmaceuticals Corp., 283 F.3d 254 (5th Cir.2002). In the judgment on appeal, the Lavergnes do not claim that the product was defective in construction or design, nor do they make any other claim under the LPLA that the sauce itself was unreasonably dangerous. They do not even claim that the temperature at which the sauce was stored was so excessively high as to be unreasonably dangerous. Rather, they claim that the injury was caused by the negligent placement of the heated sauce within reach of a three-year-old child, not by any defect in the sauce itself.

|4Here, America’s Pizza wears two hats; one as the supposed manufacturer of the sauce, and another as an employer of a potentially negligent employee. While the LPLA’s exclusivity provision eliminates a general negligence cause of action for damages caused by a product, it does not eliminate the liability of a manufacturer for damages caused by the negligent use of its product by one of its employees. Thus, America’s Pizza cannot escape its liability for the negligence of its employee by claiming to be the manufacturer of the sauce, even if it was, in fact, the manufacturer. This is a simple negligence claim, not one under the LPLA. We agree with the trial court’s disposition of this issue.

America’s Pizza’s other assignments of error deal with the finding of liability, the apportionment of fault, and the amount of damages awarded. The trial court’s factual findings are subject to review under the manifest error analysis. Stobart v. State Through DOTD., 617 So.2d 880 (La.1993). In order to determine whether liability exists, a duty-risk analysis is used. Syrie v. Schilhab, 96-1027 (La.5/20/97), 693 So.2d 1173. Under this analysis, the plaintiff must prove that the conduct in question was a cause-in-fact of the resulting harm, the defendant owed a duty of care to the plaintiff, the defendant breached the duty, and the risk of harm was within the scope of protection afforded by the duty breached. Id.

It is clear that America’s Pizza owed a duty to its patrons to protect them from harm. It is the duty of every “restaurant operator to use reasonable care in the protection of his patrons and guests.” Saucier v. Players Lake Charles, L.L.C., |R99 — 1196, p. 10 (La.App. 3 Cir. 12/22/99), 761 So.2d 312, 319 (quoting Matranga v. Travelers Ins. Co., 55 So.2d 633, 636 (La. App.Orl.1951)). The waitress testified that she was aware that the sauce was hot enough to burn someone. Yet, she still placed the hot sauce within reach of a three-year-old child. The trial court found that this act was a breach of America’s Pizza’s duty to protect its customers and that this breach was a cause-in-fact of Sean’s burn. There is nothing in the record that shows this finding to be manifestly erroneous or clearly wrong. Accordingly, the finding that America’s Pizza was liable for Sean’s injuries will not be disturbed.

A trial court’s allocation of fault is also a finding of fact and is subject to the manifest error standard of review. Adkinson v. Brookshire Grocery Co., Inc., 95-1021 (La.App. 3 Cir. 1/31/96), 670 So.2d 453, writ denied, 96-514 (La.4/8/96), 671 So.2d 339. In comparing the fault of the parties, various factors may influence the degree of fault assigned, including:

(1) whether the conduct resulted from inadvertence or involved an awareness of the danger, (2) how great a risk was created by the conduct, (3) the significance of what was sought by the conduct, (4) the capacities of the actor, whether superior or inferior, and (5) any extenuating circumstances which might require the actor to proceed in haste, without proper thought.

Watson v. State Farm Fire & Cas. Ins. Co., 469 So.2d 967, 974 (La.1985).

Our consideration of these factors suggest that the majority of the fault must rest with America’s Pizza. As noted above, the waitress knew the sauce was hot enough to cause burns. This knowledge put her in a superior capacity to the Lavergnes. Even if she had warned the Lavergnes about the sauce, they had no way of knowing that the sauce was at a high enough temperature to cause the severe damage it did. Again, the waitress knew of this risk and still placed the sauce within the reach of a young child. The record indicates no manifest error in the trial court’s allocation of fault.

| ^Finally, we consider the amount of damages awarded. In reviewing an award of general damages, the initial inquiry is “whether the [trier of fact] abused its discretion in assessing the amount of damages.” Cone v. National Emergency Serv., Inc., 99-934 (La.10/29/99), 747 So.2d 1085,1089. “[T]he role of an appellate court in reviewing general damages is not to decide what it considers to be an appropriate award, but rather to review the exercise of the discretion by the trier of fact.... [T]he adequacy or inadequacy of the award should be determined by the facts or circumstances particular to the case under consideration.” Youn v. Maritime Overseas Corp., 623 So.2d 1257, 1260 (La.1993), cert, denied, 510 U.S. 1114, 114 S.Ct. 1059, 127 L.Ed.2d 379 (1994). In this case, Sean suffered severe second-degree burns. Immediately after the sauce spilled, Mr. Lav-ergne took Sean to the restroom to inspect his leg and clean off the sauce. When he removed the wet paper towel used to clean the wound, the child’s skin came off, attached to the paper towel. Sean’s bandages had to be changed two to three times a day for over a month. For the first two weeks of this process, old skin had to be removed to prevent scarring. Each time Sean’s bandages were changed, the experience was a painful one. In light of these facts and the above standards, we find that the trial court’s award of general damages in the amount of $15,000 was not excessive or an abuse of its vast discretion.

For the above reasons, the judgment of the trial court is affirmed. Costs of this appeal are assessed against America’s Pizza.

AFFIRMED.

      . In brief and in all its memoranda to the trial court, America's Pizza correctly notes that tomato sauce is a manufactured product, as opposed to raw tomatoes. However, there is no evidence in the record which shows that America's Pizza is the manufacturer of the sauce it uses. On the contrary, the only evidence contained in the record on the subject, a Pizza Hut handbook, shows that Pizza Hut employees merely heat up pre-made sauce without exercising "control over or influ-enc[ing] a characteristic of the design" as required by 9:2800.53(l)(b).


author: hEZELL, J.

text:
    Sharon ROGERS v. STATE of La., through DOTD.
    No. 02-809.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 5, 2003.
    Writ Denied May 2, 2003.

      James Earl Calhoun, Victoria R. Murry, Anselm Nnaemeka Nwokorie, Asst. Attorney General, Alexandria, LA, for Defendant/Appellant, State of LA., thru DOTD.
    Jimmy Roy Faircloth Jr., Mark Felipe Vilar, Faircloth & Davidson, L.L.C., Alexandria, LA, for Plaintiff/Appellee, Sharon Rogers.
    Court composed of ULYSSES GENE THIBODEAUX, MICHAEL G. SULLIVAN, and BILLY HOWARD EZELL, Judges.
   hEZELL, J.

This appeal arises out of an auto accident. The plaintiff, Calem Rogers, was severely injured when the car in which she was riding struck another car at the intersection of Horseshoe Drive and Masonic Drive in Alexandria. At trial, the jury found that the intersection created an unreasonable risk of harm, but that the defendant, the (DOTD), did not have actual or constructive knowledge of the unreasonably dangerous condition. The trial judge granted a judgment notwithstanding the verdict (JNOV) to Calem, ruling that the DOTD had knowledge of the condition. The DOTD appeals the JNOV. For the following reasons, we affirm.

On April 27, 1998, Calem was a passenger in a vehicle driven by her friend, Jerry Larwood. She was 16 years old at the time. As they drove west along Horseshoe Drive, they came to Masonic Drive, also known as Highway 165. Masonic is a five-lane highway running north and south, and it intersects Horseshoe Drive skewed at roughly a 60 degree angle. The width of Masonic is 54 feet, 9 inches. However, due to the angle, someone crossing Masonic from Horseshoe must travel approximately 100 feet to cross it. Prior to 1991, the intersection was controlled by a fixed red light (red-amber-green) during the entire day. However, in 1991, the DOTD modified the signal, making it a flashing red light from 10:15 p.m. to 6:00 a.m. Masonic, the major road, has a flashing yellow caution light, and Horseshoe has a flashing red stop light.

Larwood approached the intersection at 10:47 p.m., in the rain. He came to a stop at the flashing light, then eased out onto Masonic to better see oncoming traffic. He stopped again before proceeding into the intersection. He failed to see another | ¡¡.vehicle driven by Pamela Kees traveling down Masonic. He struck Ms. Kees in the fifth lane of Masonic Drive. At the scene, Larwood was cited for failure to yield. Calem was severely injured in the accident and was hospitalized for one month. She suffered several fractures of her legs, severe head trauma resulting in memory loss, and nerve damage which prevents her from controlling her bladder and bowels.

Calem sued the DOTD, claiming that the flashing light created an unreasonable risk of harm at the intersection. At trial, the jury agreed. However, the jury found that the DOTD did not have actual or constructive knowledge of the defect. Ca-lem moved for a JNOV on the notice issue, which was granted by the trial judge. In his reasons for judgment, the trial judge stated that the jury’s finding as to notice was “contrary to the undisputed facts and Louisiana law” and that the jury “misapplied the appropriate legal standard for proof of actual and constructive notice as required under La. R.S. 9:2800(B).” The trial judge assessed liability at 50 percent to Larwood and 50 percent to the DOTD, then ordered a new trial to consider Ca-lem’s damages, which were not considered by the jury due to the finding of no liability on the part of the DOTD. From the grant of the JNOV, the DOTD appeals.

The DOTD does not dispute the jury’s finding that the intersection created an unreasonable risk of harm. In this appeal, the DOTD challenges only the granting of the JNOV on the issue of notice. Therefore, that is all we must address.

Louisiana Code of Civil Procedure Article 1811 establishes the authority for a JNOV. As noted in Davis v. Walr-Mart Stores, Inc., 00-445 pp. 4-5 (La.11/28/00), 774 So.2d 84, 89 quoting in part Smith v. Davill Petroleum. Co. Inc., 97-1596, p. 4 (LaApp. 1 Cir. 12/9/98), 744 So.2d 28, 26-27.

A JNOV is warranted when the facts and inferences point so strongly and overwhelmingly in favor of one party that the court believes that reasonable | ¿jurors could not arrive at a contrary verdict. The motion should be granted only when the evidence points so strongly in favor of the moving party that reasonable men could not reach different conclusions, not merely when there is a preponderance of evidence for the mover. If there is evidence opposed to the motion which is of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motion should be denied. In making this determination, the court should not evaluate the credibility of the witnesses and all reasonable inferences or factual questions should be resolved in favor of the non-moving party.
The standard of review for a JNOV on appeal is a two part inquiry. In reviewing a JNOV, the appellate court must first determine if the trial court erred in granting the JNOV. This is done by using the aforementioned criteria just as the trial judge does in deciding whether or not to grant the motion. After determining that the trial court correctly applied its standard of review as to the jury verdict, the appellate court reviews the JNOV using the manifest error standard of review.

Accordingly, that is the standard we will use in reviewing this appeal.

The DOTD claims that the jury’s finding that it had no notice of the dangerous condition was correct and should not have been overruled by the JNOV. We disagree. The standard of proof for notice is established by La. R.S. 9:2800, which states, in pertinent part:

B. Except as provided for in Subsection A of this Section, no person shall have a cause of action based solely upon liability imposed under Civil Code Article 2317 against a public entity for damages caused by the condition of things within its care and custody unless the public entity had actual or constructive notice of the particular vice or defect which caused the damage prior to the occurrence, and the public entity has had a reasonable opportunity to remedy the defect and has failed to do so.
C. Constructive notice shall mean the existence of facts which infer actual knowledge.

In Faucheaux v. Terrebonne Consol. Gov’t, 615 So.2d 289, 293 (La.1993), the supreme court noted that a “public body charged with maintaining a public route cannot claim lack of knowledge of the need to provide warnings where the danger is obvious and inherent in the design and construction of the facility.” Furthermore, in a case dealing with DOTD changing stop signs at an intersection, this court stated |4“(s)ince it configured the design and signing of this intersection, DOTD cannot now contend that it did not have notice of the dangers inherent in its choice.” Newsom v. State, Dept, of Transp. and Dev., 93-815, p. 4 (La.App. 3 Cir. 3/30/94), 640 So.2d 374, 378 mi denied, 94-1118 (La.6/24/94), 641 So.2d 207.

Here, the DOTD designed the intersection at a skewed angle. They were well aware of the special dangers the intersection presented due to the angle and the high speeds of those traveling on Masonic, which is a highway. For this reason, the DOTD knew a traffic signal was required to control traffic at the intersection and placed one there accordingly. It was the DOTD that changed the fixed light at the intersection to a flashing red light. It was this modification that created a dangerous condition. Under Newsom, the DOTD cannot, therefore, claim that it did not have notice of the dangers created by this choice. Furthermore, the jury found the flashing red light itself to be the hazard at this intersection, and it is clear that the DOTD knew it was there, as they are the ones who put it there.

Additionally, the DOTD also had constructive knowledge of the threat posed by the flashing light. As stated above, constructive notice is the existence of facts which infer actual knowledge. La.R.S. 9:2800(0). The intersection has a lengthy accident history. There were 70 total accidents near the intersection from 1991 until the accident date. Eleven of these accidents involved collisions occurring while the light was flashing. In Ford v. State ex rel. DOTD, 99-1297 (La.App. 3 Cir. 4/12/00), 760 So.2d 478, writs denied, 00-1935 (La.9/27/00), 769 So.2d 1214, 00-1864, 00-1938 (La.9/29/00), 770 So.2d 350, this court dealt with the risk posed by trees growing within ten feet of a curve. This court held that the DOTD was aware of the risk, given that there had been three earlier accidents where vehicles left the | Rroad and hit the trees. Here, eleven accidents occurred while the light was flashing. This is substantially more than the three accidents used to impart knowledge to the DOTD in Ford. The extensive accident history of the intersection is a fact which infers knowledge to the DOTD.

The facts and law clearly show that the DOTD had knowledge of the flashing light and the hazard it imposed. The evidence points so strongly in favor of Calem on this issue that reasonable men could not reach a different conclusion. Accordingly, the trial judge did not err in granting a JNOV.

Having determined that the trial court correctly applied its standard of review as to the jury verdict, we now review the JNOV using the manifest error standard of review, in accordance with Davis.

In order to reverse a trial court’s findings of fact, an appellate court must, after reviewing the record in its entirety, find that 1) a reasonable factual basis does not exist for the finding of the trial court, and 2) the appellate court must further determine that the record establishes that the finding is clearly wrong or manifestly erroneous. Stobart v. State Through DOTD, 617 So.2d 880 (La.1998). The issue to be resolved by a reviewing court is not whether the trier of fact was right or wrong, but whether the fact finder’s conclusion was a reasonable one. Cosse v. Allen-Bradley Co., 601 So.2d 1349, (La.1992); Housley v. Cerise, 579 So.2d 973 (La.1991).

Here, there is clearly a reasonable basis for the trial judge’s decision. As stated above, the DOTD made the choice to change the light from fixed to flashing and had constructive knowledge of the defect due to the high number of accidents at the intersection. Furthermore, Richard Bruce, the District Traffic Operations Engineer for the eight-parish district encompassing Alexandria, testified that he drove through the intersection thousands of times, hundreds of times at night under conditions |fisimilar to the accident. Mr. Bruce described his job responsibilities by stating he was “responsible for the use of all traffic control devices on our state highway system.” He stated that this includes traffic signals, signing, and striping of the roads in his district. He even testified that the intersection did not need reevaluation in accordance with the Manual on Uniform Traffic Control, as his frequent observations of the intersection, combined with his engineering knowledge were sufficient for these purposes. Clearly, Mr. Bruce was a corporate officer or employee of the DOTD, and his knowledge of the flashing light at the intersection is imparted to the DOTD due to his high status within the Department. These facts clearly give a reasonable basis for the trial judge’s conclusion that the DOTD had notice of the defect at the intersection. Accordingly, the decision of the trial judge is not manifestly erroneous and will not be disturbed.

The decision of the trial judge is affirmed. Costs of this appeal are assessed against the DOTD. This case is hereby remanded for further proceedings in accordance with the trial court’s order for new trial.

AFFIRMED AND REMANDED.

      . Sharon Rogers originally filed suit on behalf of her minor child, Calem. Calem was substituted as the proper party when she turned 18 years old.

      . As stated above, the jury found that the intersection created an unreasonable risk of harm and the DOTD does not challenge this finding.