author: JOAN BERNARD ARMSTRONG, Chief Judge.

text:
    Ralph J. HYMEL and Linda Hymel v. EAGLE, INC., et al.
    No. 2008-CA-1287.
    Court of Appeal of Louisiana, Fourth Circuit.
    March 18, 2009.

      Lawrence G. Gettys, Brent Coon & Associates, Baton Rouge, LA, Andrew A. Lemmon, Lemmon Law Firm, LLC, Hahnville, LA, for Plaintiffs/Appellants.
    Samuel M. Rosamond, III, Adam D. De-mahy, Crawford Lewis PLLC, New Orleans, LA, for Defendant/Appellee, Commercial Union Insurance Company.
    C.J. Hebert, New Orleans, LA, for Defendant/Appellee, J.D. Roberts.

      (Court composed of Chief Judge JOAN BERNARD ARMSTRONG, Judge DENISE R. BAGNERIS and Judge PAUL A. BONIN).
   JOAN BERNARD ARMSTRONG, Chief Judge.

IxThe plaintiff-appellant, Ralph Hymel, appeals a judgment of July 21, 2008, granting the exception of res judicata of the defendants-appellees, J.D. Roberts and Commercial Union Insurance Company, and dismissing plaintiffs claims with prejudice. For the reasons that follow, we affirm.

The trial court judgment recognized and enforced the “Release, Discharge and Indemnity Agreement” executed by the plaintiff on January 5, 1998 in the matter entitled In Re Asbestos Plaintiffs, Flight 6, No. 93-17362 of the Civil District Court for the Parish of Orleans. It is undisputed, that the proper procedural mechanism for interposing the defense of settlement or compromise (formerly also referred to as “transaction”) is the peremptory exception of res judicata. Rivett v. State Farm Fire and Casualty Co., 508 So.2d 1356 (La.1987). Therefore, the plaintiff assigns no procedural errors to the proceedings below.

This was an asbestos claim and the settlement and release specifically included release of any and all future asbestos related mesothelioma and cancer claims. Plaintiff claims that he was exposed to asbestos while he worked at Avondale Shipyards from 1958-1972 . Plaintiff was diagnosed with asbestosis | ¿(but not meso-thelioma or any other form of cancer) in 1993, and he filed suit the same year against Avondale’s executives and insurers, a suit that was settled in 1998 for $15,000.00 when the plaintiff executed the aforementioned “Release, Discharge and Indemnity Agreement.” It is undisputed that the release encompassed the executive officers of Avondale and their insurers and it is only in that alleged capacity that the defendants-appellees are parties to this appeal. Unfortunately, it turns out that the plaintiff is one of those tragically unlucky victims whose exposure to asbestos eventually evolved into mesothelioma. As may be seen by reference to the many asbestos cases from this and other jurisdictions, mesothelioma can be expected to eventuate in a certain number of asbestos exposure cases. While it is impossible to predict which cases of asbestos exposure will progress to mesothelioma, it is predictable that at least some cases will do so. Undoubtedly, that is why the settlement included specific language releasing future claims for mesothelioma. The settlement was signed by the plaintiff in the presence of a notary and it is undisputed that the plaintiff was represented by Steven Murray of the Murray Law Firm and William Roberts Wilson, who are known to have substantial experience in the field of asbestos claims.

The plaintiff takes the position that he was unaware of the possibility that he could eventually develop mesothelioma. In brief, the plaintiff set forth the basis of this second asbestos exposure related suit that is the subject of the instant appeal:

Mr. Hymel never understood that the Agreement was intended to eliminate his right to bring a future personal injury suit in the event that he developed a second asbestos-related disease, even though Louisiana law would otherwise have permitted him to bring such a claim. He did not know why the Agreement contained a reference to mesotheli-oma, but thought that this disease [ 3was mentioned because some of the other workers in the group being settled suffered from that disease.... Neither Ap-pellees nor his own lawyer ever explained the release terms to Mr. Hymel. And neither Appellees nor anyone else ever told Mr. Hymel that Article 2004 of the Louisiana Code barred enforcement of contractual agreements [] that “in advance, excludes or limits the liability of one party for causing physical injury to the other party.” .... Unaware of the possibility that he could still develop a second asbestos-related disease and in need of money to pay medical expenses [] and other bills, Mr. Hymel signed the Agreement in exchange for the $15,000 payment. [Emphasis added.]

Therefore, in spite of having executed this settlement agreement in 1998 and receiving a substantial payment of $15,000.00 as an inducement, the plaintiff filed the instant claim on February 25, 2008, for mesothelioma which was dismissed with prejudice by the trial court on an exception of res judicata.

When an exception of res judicata is raised, as it was in the instant case before the case is submitted by trial on the merits, the standard of review is manifest error. Medicus v. Scott, 32,326 (La.App. 2 cir. 9/22/99); 744 So.2d 192, 196, citing Ortego v. State, 96-1322 (La.2/25/97), 689 So.2d 1358 and Tarver v. Oliver Van Horn Co., 591 So.2d 1366 (La.App. 4 Cir.1991); See also, Ellison v. Michelli, 513 So.2d 336, 339 (La.App. 4 Cir.1987).

Public policy favors compromises and the finality of settlements. Brown v. Drillers Inc., 93-1019 (La.1/14/94), 630 So.2d 741; Rivett v. State Farm Fire & Cas. Co., 508 So.2d 1356 (La.1987). Compromises are favored in the law and the burden of proving the invalidity of a compromise is on the party attacking the agreement. Ellison, supra.

The release contains the following language:

It is further understood and agreed that the aforementioned provisions are intended to release and forever discharge the released parties from any and all liability on account of or in any way growing out of occupational diseases or conditions attributable to exposure to asbestos ... including ... any future or consequential condition or injury, including but not limited to death, mesothelio-ma, cancer, shortness of breath, fear of cancer or increased risk of cancer ... [Emphasis added.]

This Court’s analysis in Bulot v. Intracoastal Tubular Services, Inc., 04-398, (La.App. 4 Cir. 11/3/04), 883 So.2d 1146, is equally applicable to the instant case. Bu-lot concerned a suit that was settled, followed by a second suit arising out of basically the same circumstances. In the first suit filed by one of the plaintiffs, Exxon-Mobil, among others, was sued. The plaintiff alleged certain respiratory conditions arising out of exposure to certain substances. The settlement of that suit included a full and general release encompassing all claims “he now has” or which he “may hereafter acquire.” He later filed a second suit against ExxonMobil for certain other lung conditions arising out of exposure to certain substances. This Court made the following observation with which we still agree and find applicable to the instant case:

We find that Kenneth Craft’s second lawsuit stems from the same juridical or material facts as the first lawsuit. The legal obligation of ExxonMobil was to protect Kenneth Craft from harm. Thus, the duty owed by ExxonMobil is the same in both lawsuits. Further, it is undisputed that Kenneth Craft compromised all claims against ExxonMobil by signing the receipt and release in 1988. Accordingly, we find no error in the trial court’s 1 ..¡sustaining ExxonMobil’s exception of res judicata in the Kenneth Craft suit. [Emphasis added.]

Id., 04-398, p. 7, 883 So.2d at 1150-1151.

There is ample jurisprudence in this area as may be seen by this Court’s analysis in Robbert v. Carroll, 97-0854 (La.App. 4 Cir. 9/10/97), 699 So.2d 1103, and cases cited therein:

The Louisiana Civil Code expressly provides that a transaction or compromise between two or more parties, who by mutual consent adjust their differences to prevent or resolve a lawsuit, carries force equal to the authority of adjudicated disputes. La. C.C. art. 3071; Brown v. Simoneaux, 593 So.2d 939 (La.App. 4 Cir.1992). The subsequent discovery by a claimant that an injury was more serious than initially believed does not entitle the claimant to rescind the settlement and release agreement. La. C.C. arts. 3071, 3079, 3083; Jurado v. State Farm Mut. Ins. Co., 557 So.2d 266 (La.App. 4 Cir.1990). Article 3083 specifically provides that when parties settle disputes, issues that arise subsequent to the settlement do not give rise to grounds for rescission, unless the issues were purposely concealed by one of the parties to the settlement agreement.
Although this Court invalidated a settlement and release agreement in Saunders v. NOPSI, 387 So.2d 603 (La.App. 4 Cir.1980), writ denied, 394 So.2d 614 (La.1980), Saunders is inapplicable to this case. In Saunders, this Court invalidated a settlement and release agreement based on the fact that both the claimant and the insurer mistakenly believed that the claimant had properly been examined by a physician, when in fact no thorough examination had occurred. [Emphasis added.]

Robbert v. Carroll, 97-0854 (La.App. 4 Cir. 9/10/97), 699 So.2d 1103, 1104-1105.

When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. La. C.C. art.2046. It is not the province of the courts to relieve a party of a bad bargain, no matter how harsh. Capone v. Kenny, 94-0888 (La.App. 4 Cir. 11/30/94), 646 So.2d 510; The Board of Com’rs of the Port of New Orleans v. Turner Marine Bulk, Inc., 629 So.2d 1278, (La.App. 4 Cir.1993); Kenny v. Oak Builders, Inc., 256 La. 85, 235 So.2d 386, 390 (1970).

The plaintiff has cited no cases in which a court has invalidated a settlement where the future claim arose out of the original alleged dereliction of duty and was specifically mentioned in the release and the plaintiff was represented by counsel. In Breaux v. Mine Safety Appliances Co., 98-133 (La.App. 5 Cir. 8/25/98), 717 So.2d 1255, cited by the plaintiff, the release did not include mesothelioma as a released claim. In fact, the court in Breaux specifically notes that, “the release does not use the words “cancer” or “mesothelioma.” The Breaux court went on to explain that:

[I]t is not logical to expect that plaintiff intended to release defendant for the future manifestation of this type of cancer for $500. This is a terrible disease. If the agreement intended to include mesothelioma, defendant would surely have included it in the listed diseases. As plaintiff argues, this settlement was a nuisance settlement. Thus, we find that the language of the agreement does not include the contraction of this type of cancer which would not manifest for many years, nor did plaintiff intend to include it in the settlement. Plaintiff signed the agreement expressly because he did not have any of the asbestos related diseases at that time. Thus, we find that the trial judge erred in granting the exception of res judicata.

Id., 98-133, p. 6, 717 So.2d at 1257. Thus, following the reasoning in Breaux we would reach a very different result in the instant case where the following facts are completely opposite those set forth in Breaux: (1) the settlement specifically covered both mesothelioma and cancer by name, (2) the plaintiff had an asbestos related disease at the time he signed the settlement (asbestosis); (3) it was for a 17sum thirty time greater than the settlement in Breaux and, therefore, cannot be characterized as a “nuisance settlement”; and (4) there is no indication in Breaux that the plaintiff had the potential to recover additional sums from other defendants as there is in the instant case.

Another factor to consider in this case is that the defendant sued over fifty defendants in addition to those involved in this appeal. As defendant is hardly in a position to argue that he was not serious when he named those other parties as defendants, as that would involve an admission that his suit against those other defendants was frivolous, we may assume that plaintiff must believe he has a reasonable expectation of additional recovery from those other defendants. Therefore, the amount he received in settlement from the defendants involved in the instant appeal cannot represent the total of what he expects to collect from the defendants in the aggregate in this case. Therefore, he is not in a position to argue that he traded away his whole claim for mesothelioma for $15,000.00, although it would not have made any difference had he done so as long as the record shows that he did so, as it does.

Moak v. American Auto. Ins. Co., 242 La. 160, 134 So.2d 911 (1961), cited by the plaintiff, involved a collision between an automobile in which Mrs. Moak, the plaintiff, was a passenger, and a train. Mrs. Moak sustained serious injuries. In Moak, when the plaintiff executed the settlement in question she was unrepresented and believed that she and her husband were receiving the $242.00 payment for property damage only and were reserving their rights for her personal injury claim. The court specifically noted that the amount paid equaled exactly the amount of property damage, less the deductible, and the adjuster for the insurance company admitted that the personal injury claim was not discussed during the ^negotiations. Unlike the Moak case, in the instant case, the plaintiff does not argue that the $15,000 was intended to act as compensation for property damage only, leaving no consideration for the compromise and release of his present and future personal injury claims. Thus, in Moak, there was objective factual evidence as well as disinterested third-party testimony supporting the plaintiffs assertion that the settlement was not intended to encompass her tort claim. In the instant case we have only the plaintiffs self-serving assertion that the settlement was not intended to cover mesothelioma in spite of the clear language of the document he signed to the contrary.

In Dimitri v. Dimitri, 00-2641 (La.App. 4 cir. 1/30/02), 809 So.2d 481, also cited by the plaintiff, the plaintiff was injured in a slip and fall accident in a nightclub. The plaintiff was unrepresented and believed he was settling his medical expenses claim only. The plaintiffs position was supported by the fact that the amount of the settlement equaled exactly the amount of outstanding medical expenses and because the insurance adjuster admitted that he told the plaintiff that more funds would be forthcoming and there was no discussion regarding the personal injury claim at a time when the plaintiff was obviously still far from full recovery from serious injuries (his left wrist was still in a cast and his right arm was in a sling), and he was still undergoing treatment. The plaintiff had insufficient funds to pay his medical expenses and he believed that he was required to execute the form presented to him if he wished to be reimbursed for his current outstanding medical expenses. Moreover, when the check arrived, it was for $600.00 less than the amount called for in the written settlement agreement. The plaintiff returned the check to the insurer. The facts in Dimitri are clearly inapplicable to the instant case.

InThe plaintiff also contends that under La. C.C. art.2004 the settlement agreement is unenforceable against injuries that only manifest themselves subsequent to the execution of the agreement and, therefore, could not have been claimed at the time of the settlement. La. C.C. art.2004 provides that:

Any clause is null that, in advance, excludes or limits the liability of one party for intentional or gross fault that causes damage to the other party.
Any clause is null that, in advance, excludes or limits the liability of one party for causing physical injury to the other party.

It is obvious that the purpose of this article is to express the principle that it is against public policy to permit a pai’ty to obtain a license for the commission of future bad acts, i.e., if a party, in effect, were to receive in advance forgiveness for the commission of a future bad act, then it would act as an invitation, as it were, to commit the bad act. Society does not wish parties to do acts that cause injury to each other. Therefore, it is against public policy to enforce contracts that would allow parties to so. This has always been the case in Louisiana. It is manifestly inconsistent with public policy that a man should be permitted to stipulate a partial impunity for the commission of a future immoral act. Hayes v. Hayes, 8 La. Ann. 468 (1852). However, where the bad act has already been committed the public policy is not the same. It is then too late to prevent the bad act. It is then time for another public policy to govern, the policy that favors settlement and compromise. Settlements are especially effective in situations where there is uncertainty for where there is certainty there is no reason to compromise. Where a party has performed an allegedly negligent act that has or could result in damage to another, then the uncertainty surrounding litigation, liability and extent of damages provides Infertile soil for compromise. In addition to the uncertainty of the success of litigation, is the uncertainty of what the seque-lae to personal injury might be. Personal injury claims would be impossible to settle were this Court to hold that, as a matter of law, every new post settlement symptom would give rise to a new claim regardless of the express language of the settlement to the contrary.

A compromise may not be rescinded for lesion, i.e., a compromise may not be rescinded because it is later determined that the bargain struck was a poor one. La. C.C. art. 3082. Therefore, the implication in plaintiffs argument that the $15,000.00 settlement for what eventuated into meso-thelioma was not legally sufficient is not persuasive.

La. C.C. art. 3082 also states that “a compromise cannot be rescinded on grounds of error of law.” Therefore, any misunderstanding on the part of the plaintiff as to the law of settlements is no basis for invalidating this settlement.

The subsequent discovery by a claimant that an injury was more serious than initially believed does not entitle the claimant to rescind the settlement and release agreement. Robbert v. Carroll, 97-0854 (La.App. 4 Cir. 9/10/97), 699 So.2d 1103, 1104.

The plaintiff contends that the burden is on the defendants “to establish the requisites for a valid compromise, including the parties’ intent to settle the differences being asserted in the action in which it is interposed,” citing Brown v. Drillers, Inc., 93-1019 (La.1/14/94)630 So.2d 741. As in Brown, the “Plaintiff [in the instant case] does not attack the validity of the release instrument; rather, [he] contends that it does not extend to the wrongful death claims asserted.” Id., 630 So.2d at 748. However, the Brown decision goes on to explain that:

|nIt also follows that the compromise instrument is governed by the same general rules of construction applicable to contracts.
LSA-C.C. Art.2046 sets forth a general rule of construction, providing that “[w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent.”
LSA-C.C. Art. 3073 provides that a compromise agreement extends only to those matters that the parties expressly intended to settle and that the scope of the transaction cannot be extended by implication.

Id. In the instant case, the written agreement expressly includes mesothelioma. Therefore, as the defendant does not contend that he was induced to sign the agreement on the basis of fraud or duress, the burden shifts to the defendant to show that the parties did not intend to settle the mesothelioma claim.

The fact that mesothelioma was specifically mentioned in the release now before this court distinguishes it from the release in Brovm, a distinction which the Brown court indicated was determinative:

Neither the district court nor the court of appeal considered this contractual intent issue, relying instead on Schiffman [v. Service Truck Lines, Inc., 308 So.2d 824 (La.App. 4th Cir.1974)], and Daigle v. Clemco Industries, 613 So.2d 619 (La.1993), respectfully. In both of those cases, however, the release instrument expressly referred to death claims.

Brown was a wrongful death claim brought after the death of the tort victim who, prior to his death, had signed a general release making no mention of future wrongful death claims. The Louisiana Supreme Court makes it clear in more than one place in Brown that there is no public policy against releasing future claims that arise out of a tortuous incident. First, the Court states that:

| ^We agree with Defendants’ contention that Daigle disposes of Plaintiffs argument that anticipatory releases of wrongful death actions should be treated differently than releases of other future actions, and thus decline Plaintiffs invitation to adopt an express waiver requirement.

Brown, supra, at p. 753. The Court follows up with the following statement:

While Daigle puts to rest the public policy concern raised by the release of such future actions, Daigle does not even consider the other concern of whether the parties adverted to the specific future cause of action allegedly released, which is the pivotal issue here.

Id., at p. 754.

The plaintiff cites Brumfield v. Avondale Industries, Inc., 95-2260 (La.App. 4 Cir. 5/8/96), 674 So.2d 1159 and a concurring opinion by Justice Dennis in Cole v. Celotex, 599 So.2d 1058 (La.1992), but neither case involve a settlement and, consequently, neither case has any bearing on the instant case.

Houston Exploration Co. v. Halliburton Energy Services, 269 F.3d 528 (5th Cir.La.2001), is distinguishable on several grounds. It involves an indemnity agreement, not a settlement and release; and, most importantly, the fault of the alleged tort feasor occurred after the agreement was executed, whereas in the instant case, the alleged fault of the defendants occurred many years prior to the execution of the settlement and release; and, finally, the agreement was upheld by the court.

Occidental Chemical Corp. v. Elliott Turbomachinery Co., 84 F.3d 172 (5th Cir.La.1996), also involves an indemnity clause and not a settlement and release. In Occidental Chemical Corp., the court refused to apply the indemnity clause to the gross negligence of the tort feasor that occurred after the agreement was entered in to.

| tilt is easy to see why a court would not want to enforce an agreement that, in effect would give a prospective tort feasor a license to commit grossly negligent or intentional bad acts in the future. It would be an invitation to commit such acts. However, the same public policy considerations do not exist where parties negotiate a settlement and release that encompasses unknown consequences in the future of alleged fault that occurred in the past To do so does not encourage future bad acts. Bear in mind, that the last breach of duty alleged against the defendants-appellees that could have occurred in the instant case was in 1972, over twenty years prior to the filing of the original suit, over twenty-five years prior to the settlement, and over thirty-five year’s prior to the filing of this second asbestos related suit. There is no question that any breach of duty in the instant case occurred in the distant past.

Where a settlement and release refer expressly to the claim sought to be released by the party seeking to enforce the settlement, that alone is sufficient to shift the burden to the party seeking to oppose the enforcement of the settlement and release to prove that there was no meeting of the minds or that there was fraud or ill practices. It is not sufficient to raise the issue to merely make the self-serving allegation that there was no meeting of the minds. A party represented by counsel may not defeat a written settlement and release that is unambiguous on its face by merely alleging that he did not understand it. Otherwise, no settlement would be enforceable without more litigation which defeats the whole public policy favoring settlements. Signatures on documents are not mere ornaments. Tweedel v. Brasseaux, 433 So.2d 133 (La.1983); In re Succession of Berman, (La.App. 4 Cir. 7/26/06), 937 So.2d 437. If a party can read, it behooves him to examine an instrument before signing it. Id., 05-0641 at pp. 11-12, 937 So.2d at 443:

114A person who signs a written instrument is presumed to know its contents and cannot avoid its obligations by contending that he did not read it, or that it was not explained or that he did not understand it. Smith v. Leger, 439 So.2d 1203 (La.App. 1st Cir.1983).

First South Farm Credit, ACA v. Gailliard Farms, Inc., 38,731, p. 3 (La.App. 2 Cir. 08/18/04); 880 So.2d 223, 225. There is little incentive to settle if a party to the settlement agreement may later seek to void it based merely on his self-serving statements, without more, and in the absence of any evidence of fraud or ill practices, that he misunderstood what he signed or that he did not intend to sign what he signed.

We conclude this analysis with a statement by the Louisiana Supreme Court from Ortego v. State, 96-1322 (La.2/25/97), 689 So.2d 1358 which restates what has already been said earlier in this opinion:

A compromise instrument is the law between the parties and must be interpreted according to the parties’ intent. Ritchey v. Azar, 383 So.2d 360, 362 (La.1980). It follows that the compromise instrument is governed by the same general rules of construction applicable to contracts. Brown, 630 So.2d at 748.
When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. LSA-C.C. art.2046. Article 2046 emphasizes that the process involves no further interpretation, as opposed to no interpretation at all. Expose’ Des Motifs of the Project of Titles III and IV of Book III of the Civil Code of Louisiana, p. 67 (1984); R. MacLean, Judicial Discretion in the Civil Law, 43 La. L.Rev. 45, 55-56 n. 28 (1982).

Id., 689 So.2d at 1363.

Pursuant to this analysis, we find that the settlement agreement clearly and unambiguously compromised any prospective claim that the plaintiff might have |1Rfor mesothelioma or cancer and that the trial court did not err in granting the defendants’ exception of res judicata.

For the foregoing reasons, the judgment of the trial court is affirmed.

AFFIRMED.

      . The plaintiff sues J.D. Roberts in his capacity as an alleged executive officer of Avondale Shipyards. Mr. Roberts apparently does not admit to having acted in that capacity during the relevant time period.

      . A compromise may not be rescinded on grounds of error of law. La. C.C. art. 3082.

      . The implication that a party may have been induced by financial distress to enter into a compromise was specifically rejected by this Court in Hoover v. Boucvalt, 99-0867, pp. 6-7 (La.App. 4 Cir. 11/24/99), 747 So.2d 1227, 1231, as a basis for overturning a settlement:
      Finally, the third pressure implied was that of financial duress. However, this court has already held that “the claim of financial straits does not give rise to duress.” Shepherd v. Allstate Insurance Co., 562 So.2d 1099, 1101 (La.App. 4 Cir.1990).


source: Caselaw Access Project

author: PETERS, J.

license: Public Domain

text:
    Michael L. YOUNG, et ux. v. PEASLEE CAPITAL GROUP, LLC and Steven M. Peaslee.
    No. 08-1298.
    Court of Appeal of Louisiana, Third Circuit.
    April 1, 2009.

      Louis Wellan, Attorney at Law, Alexandria, LA, for Plaintiffs/Appellees, Michael L. Young, et ux.
    W. Alan Pesnell, The Pesnell Law Firm, Shreveport, LA, for Defendants/Appellants, Peaslee Capital Group, LLC and Steven M. Peaslee.
    Court composed of OSWALD A. DECUIR, JIMMIE C. PETERS, and MARC T. AMY, Judges.
   PETERS, J.

| )The defendants, Peaslee Capital Group, LLC and Steven M. Peaslee, appeal the trial court judgment confirming an arbitration award in favor of the husband and wife plaintiffs, Michael L. Young and Donna H. Young. For the following reasons, we affirm the trial court judgment.

DISCUSSION OF THE RECORD

The arbitration award stems from a suit filed by the Youngs against the defendants on April 27, 2005, seeking damages for breach of contract. The petition asserted that, in December of 2001, Mr. Young paid Steven M. Peaslee $10,000.00 for an option to purchase a ten percent interest in Peas-lee Capital Group, LLC (Peaslee, LLC), and that approximately one year later Mr. Young exercised the option by paying Mr. Peaslee an additional $140,000.00 for the stated interest. Subsequent to the purchase, according to the petition, Mr. Young discovered that Mr. Peaslee had misrepresented the value of Peaslee, LLC; had misrepresented the source and nature of its profits and losses; had failed to disclose his personal gambling habits; and had breached his fiduciary duty to Mr. Young as set forth in the organization’s Operating Agreement and as required under the “Louisiana Limited Liability Company Act.” The Youngs sought recovery of them purchase price; general damages for emotional distress and humiliation, as well as loss of business reputation; attorney fees; and costs of court.

The defendants responded with a dilatory exception of prematurity, asserting that the Operating Agreement governing the ownership of Peaslee, LLC required that all disputes be submitted to binding arbitration. Without further argument, the trial court matter was dismissed and the issues were submitted to arbitration.

12This matter returned to the trial court on May 15, 2008, when the Youngs filed a motion to have the arbitrator’s decision confirmed, attaching as an exhibit to the motion the arbitrator’s written award. The arbitrator awarded the Youngs the sum of $75,978.00, together with judicial interest from date of demand in arbitration until paid in full and twenty-five percent of the principal and interest as attorney fees. The award further assessed costs of the arbitration process between the two parties.

The defendants responded to the Youngs’ trial court motion by filing a cross-motion to have the award vacated. In then’ cross-motion, the defendants asserted that the arbitrator was arbitrary and capricious (1) in awarding the Youngs attorney fees and (2) in requiring a lump sum payment rather than payment in installments as provided by the Operating Agreement.

At the hearing on the motion and cross-motion, the defendants offered into evidence the record of the original proceedings in the trial court, as well as various exhibits filed in the arbitration proceedings. Counsel for the Youngs did not object to the introduction of the records as exhibits, but pointed out that the exhibits were incomplete in that they did not contain the complete record. Specifically, the records submitted did not contain deposition testimony used at the arbitration hearings or testimony taken at the hearings.

In arguing the matter to the trial court, counsel for the defendants suggested that despite all the allegations of the Youngs’ original petition, all claims were | ^dismissed before the arbitration except the claims for reimbursement of the initial investment and the 401K contribution issue. According to counsel for the defendant, the arbitrator rejected the claim for 401K contributions and awarded the exact amount that had been offered to the Youngs by Mr. Peaslee within thirty days after Mr. Young had terminated the business relationship. That being the case, the defendants argued to the trial court, they were the “prevailing parties” in the arbitration and, pursuant to the terms of the Operating Agreement, should have been the party to be awarded attorney fees.

In response to this argument, counsel for the Youngs again pointed out that, not only was there no record of the arbitration proceedings, but that the parties had agreed that written reasons for the arbitration award were not necessary. That being the case, counsel argued, both sides of the arbitration process were not before the trial court and the trial court could only speculate “as to what the arbitrator was thinking or not thinking.” Besides, counsel argued, it was the defendants who insisted on arbitration, not the Youngs.

Following the argument of counsel, the trial court granted the Youngs’ motion to confirm the arbitration award in full. The trial court rendered judgment without issuing oral or written reasons for its judgment. The defendants perfected this appeal, arguing that the trial court erred as a matter of law by denying its motion to vacate and in confirming the arbitration award.

OPINION

The law pertaining to arbitration matters was discussed exhaustively in Webb v. Massiha, 08-226, pp. 4-5 (La.App. 5 Cir. 9/30/08), 993 So.2d 345, 347-48, writs denied, 08-2834, 08-2845 (La.2/6/09), 999 So.2d 780, 781 (citations and footnotes omitted):

Arbitration proceedings are governed by La.R.S. 9:4201 et seq., and the statutory grounds for vacating or modifying an arbitration award in whole or in part are provided in La.R.S. 9:4210 and 4211. In addition, a litigant may attack the arbitration award on the basis of “a manifest disregard of the law,” a judicially created ground for vacating an arbitration award recognized by several courts of appeal. Arbitration is favored in Louisiana. Furthermore, an arbitration award is res judicata. Unless grounds for vacating, modifying or correcting the award are established, the award must be confirmed, and the burden of proof is on the party attacking the award. Absent the existence of any of the statutory or jurisprudential grounds for vacating or modifying an arbitration award, a reviewing court is prohibited from reviewing the merits of the arbitration judge’s decision. Further, a reviewing court may not substitute its own conclusions for that of the arbitration judge.

Furthermore, as a general rule, there is a presumption that the arbitrator’s award is correct in the absence of a record. Oliver v. Cal Dive Int’l, Inc., 02-1122 (La.App. 1 Cir. 4/2/03), 844 So.2d 942, writs denied, 03-1230, 03-1796 (La.9/19/03), 853 So.2d 638, 648. We only have a partial record before us as no transcript of the testimony presented in the arbitration proceedings exists and no narrative of the facts presented by testimony has been submitted.

The documents offered before the trial court are certified to by the Central Case Management Center Assistant Vice President of the American Arbitration Association (AAA) as “true and exact copies of the [Young/Peaslee] administrative file, with the exception of internal AAA financial and administrative forms, telephone log, and privileged communication between the AAA and its arbitrator(s).” In agreeing to arbitration, the parties agree to be bound by the AAA’s Commercial Arbitration Rules and Mediation Procedures (Arbitration Rules), a copy of which is Rin the documents presented to the trial court. Of significance in this litigation, Rule R^t3, entitled “Scope of Award,” of the Arbitration Rules provides in pertinent part:

(a) The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract.
(c) In the final award, the arbitrator shall assess the fees, expenses, and compensation provided in Sections R-49, R-50, and R-51. The arbitrator may apportion such fees, expenses, and compensation among the parties in such amounts as the arbitrator determines is appropriate.
(d) The award of the arbitrator(s) may include:
(i) interest at such rate and from such date as the arbitrator(s) may deem appropriate; and
(ii) an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.

The defendants do not rely on the statutory grounds for vacating the award, but they complain that the award should be vacated on the judicially created ground — that the award is a manifest disregard for the law in that it failed to follow the binding provisions of the Operating Agreement, particularly Articles 8.02(e) and 10.02.

Article 8.02(e) provides in pertinent part:

If the Company purchases the Redemption Member’s Membership Interest, then not later than ninety (90) days after the date on which the CPA has completed his determination of the Redemption Price ... the Company shall make a distribution of property ... however, that at the election of the Company such distribution to the Redemption Member may be made in five (5) equal annual installments, the first of which shall be made on the ninetieth (90th) day after the Appraisal Date[.]

| ^Additionally, Article 10.02 provides:

Attorneys’ Fees. In the event any Member brings an action to enforce any provisions of this Operating Agreement against the Company or any other Member, whether such action is at law, in equity or otherwise, the prevailing party shall be entitled, in addition to any other rights or remedies available to it, to collect from the non-prevailing party or parties the reasonable costs and expenses incurred in the investigation preceding such action and the prosecution of such action, including but not limited to reasonable attorney’s fees and court costs.

The defendants do not dispute the principal award to the Youngs, but argue that they should be allowed to take advantage of Article 8.02(e) of the Operating Agreement and pay the award in five equal annual installments rather than a lump sum. They also argue that they, not the Youngs, should be awarded attorney fees. They base this latter argument on the assertion that they, not the Youngs, prevailed in the arbitration — because the arbitrator awarded the Youngs the exact amount they had offered the Youngs when provided with the notice of the Youngs’ intent to withdraw from the business, $75,978.00.

In attempting to review the incomplete record before us, we first note that the initial arbitration complaint filed by the defendants admits the purchase agreement, but denies the existence of a 401K plan for Mr. Young. It further denies that Mr. Peaslee ever violated any fiduciary duty owed to Mr. Young and denied the other allegations of the trial court petition. The defendants identified the issues as follows:

• whether the misrepresentations alleged in the state court petition are true;
• whether [Mr. Peaslee] committed a breach of fiduciary duty with regard to the allegations concerning the alleged 401(k) contributions;
• how much Young is entitled to be paid for his membership interest, according to the provisions of the Operating Agreement;
17* whether Peaslee had any duty to disclose unto Young any of his personal information; and
• if any misrepresentations are proved, or if [Mr. Peaslee] is found to be in breach of his fiduciary duties, the damages associated therewith (there are no damages at issue with regard to the valuation matter, except, perhaps, an interest calculation).

In their response to the initial arbitration complaint, the Youngs generally denied the defendants’ assertions and made numerous factual assertions concerning Mr. Peaslee’s alleged fiduciary duty breaches, including specifically his failure to comply with the specifics of the Operating Agreement, his use of the business funds for his personal affairs, and his violation of security regulations.

We also note that the defendants list six individuals as potential witnesses in their pre-hearing memorandum submitted to the arbitrator, one of whom is described in the memorandum as an expert, although his expertise is not identified. The trial exhibits also include a December 4, 2007 order of the arbitrator, wherein he identifies two different formulas for the calculation of the amount required to be paid to a retiring partner, one of which had previously been on a web site, but was no longer in existence and which the litigants had not been able to reconstruct. The order then instructed the litigants to, by December 21, 2007, either identify the missing formula or agree to a substitute formula.

Given the record before us and the content of the pleadings made available for review by this court, we can only apply the presumption found in Oliver, 844 So.2d 942, that the arbitrator’s award is correct. Accordingly, we affirm the trial court judgment in all respects.

1 «DISPOSITION

For the foregoing reasons, we affirm the judgment of the trial court confirming the arbitration award in favor of Michael L. Young and Donna H. Young. We assess all costs of this appeal to Peaslee Capital Group, LLC and Steven M. Peaslee.

AFFIRMED.

      . Mrs. Young’s interest in the litigation arises by virtue of her position as owner of community property used for the transactions at issue.

      . The arbitration award set the administrative fees due the American Arbitration Association at $2,250.00 and the compensation and expenses of the arbitrator at $10,088.55. Despite some comments concerning the expensive nature of arbitration and the extensive delays associated with the process, cost assessment is not at issue in this litigation.

      . The exhibits from the arbitration proceedings are extensive, are not indexed, and contain numerous administrative documents not related to the issues before us. That being the case, they are extremely difficult to assimilate and use in this review.

      . While we recognize that this is an arbitration record controlled by the procedural rules applicable to arbitration proceedings, we also note that no effort was made by the defendants to obtain a narrative of the facts as allowed by La.Code Civ.P. art. 2131.

      . These sections relate to the administrative expenses and arbitrator fees.

      . The Operating Agreement is one of the documents before us as an exhibit presented to the trial court.

      . At an earlier time, the list contained only five potential witnesses, and did not include die expert as a potential witness.


author: SULLIVAN, Judge.

text:
    Jacqueline MORRELL v. Alton FISHER and Allstate Insurance Company.
    No. 08-1260.
    Court of Appeal of Louisiana, Third Circuit.
    April 1, 2009.
    Rehearing Denied May 13, 2009.

      Maurice L. Tynes, Attorney at Law, Lake Charles, Louisiana, for Defendants/Appellants, Allstate Insurance Company Alton Fisher.
    Thomas E. Townsley, Attorney at Law, Lake Charles, Louisiana, for Plaintiff/Ap-pellee, Jacqueline Morrell.
    Rudie R. Soileau, Jr., Attorney at Law, Lake Charles, Louisiana, for Plaintiff/Ap-pellee, Jacqueline Morrell.
    Court composed of JOHN D. SAUNDERS, MICHAEL G. SULLIVAN, and JAMES T. GENOVESE, Judges.
   SULLIVAN, Judge.

| plaintiff, Jacqueline Morrell (Morrell) was injured when the car she was driving struck a young bull that had gotten loose on the roadway. She filed suit against Alton Fisher (Fisher), the owner of the bull, and his insurer, Allstate Insurance Company (Allstate). Following a jury trial, judgment was rendered in favor of Morrell. The defendants filed a Motion for Judgment Notwithstanding the Verdict or, in the alternative, Motion for New Trial, which the trial court denied. The defendants appeal both judgments. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

The facts are not in dispute. On March 30, 2006, at approximately 4:00 a.m., Mor-rell was driving her 1998 Nissan Maxima on Royer Loop, a rural roadway in Calca-sieu Parish, when she struck a bull standing in her lane of travel. Because of fog, visibility was limited, and Morrell was unable to avoid colliding with the bull. The force of the impact killed the bull and caused significant injuries to Morrell. She was rendered unconscious and suffered a herniated disc in her neck and a bulging disc in her back. Her vehicle was totaled.

At approximately 6:00 p.m. on the evening before the accident, Fisher and his sixteen-year-old son, Colt, had attempted to move the bull from a pasture and into a pen with the assistance of their neighbor, Nathan Areno. Colt had gotten on a horse and was trying to rope the bull. The bull resisted their efforts, however, and eventually broke through a fence to avoid capture. The bull ended up loose on the roadway at around 7:30 p.m. The defendants searched for the errant bull until 1:00 a.m., at which time they gave up their search for the night. Although Fisher spoke to several of his neighbors about the loose bull, it is undisputed that he did not |2alert the authorities that one of his bulls had escaped its enclosure. This accident occurred three hours later when Morrell was traveling to work.

The matter was tried before a jury on December 3-7, 2007. Prior to trial, the parties stipulated that Fisher was the owner of the bull in question and “that this [, where the accident occurred,] was a closed range area” on the date of the accident. On February 22, 2008, a final judgment was rendered in accordance with the jury verdict in favor of Morrell and against the defendants. Fisher was found to be 100% at fault in causing the March 30, 2006 accident. Morrell was awarded $173,475.77 in damages, which included amounts for past and future physical and mental pain and suffering, loss of enjoyment of life, past and future medical expenses, and property damage. Morrell was awarded $7,000.00 in penalties for Allstate’s bad faith handling of her loss adjustment. In addition, the defendants were cast with all costs of the proceeding, including Morrell’s expert witness fees.

On March 14, 2008, the defendants filed a Motion for Judgment Notwithstanding the Verdict (JNOV) or, in the alternative, Motion for New Trial, which, following a hearing, the trial court denied. The defendants now appeal both the final judgment and the judgment denying their post-trial motions, assigning the following errors:

I.The trial court committed manifest error and abused its discretion when it instructed the jury as follows:
Where an owner of livestock is sought to be held liable for damage sustained by the presence of his livestock on a public roadway, the owner must not only show he has taken all reasonable precautions to enclose his livestock but must also explain the presence of the livestock on the roadway by showing how the animal escaped if he is to overcome the presumption of negligence and prove freedom of | ¡¡fault in the slightest degree; general evidence as to reasonable precautions is not sufficient.
The defendants claim that the effect of this incorrect jury instruction regarding the law was to cause the jury verdict on fault to be in error.
II. The jury committed error when it found defendant Fisher guilty of the “slightest degree of fault.”
III. The trial court committed manifest error and abused its discretion when it denied the defendants’ Motion for JNOV and/or Motion for New Trial.
IV. The trial court committed manifest error and abused its discretion when it found defendant Allstate Insurance Company in bad faith and awarded $7,000.00 to plaintiff as a penalty.

DISCUSSION

“[A] court of appeal may not set aside a trial court’s or a jury’s finding of fact in the absence of ‘manifest error’ or unless it is ‘clearly wrong.’” Rosell v. ESCO, 549 So.2d 840, 844 (La.1989) (citations omitted). “[I]f the trial court or jury findings are reasonable in light of the record reviewed in its entirety, the court of appeal may not reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently.” Id.

Defendants’ Assignment of Error No. 1

The defendants contend that the trial court erred in its instruction to the jury of the liability of an owner of livestock when the presence of his livestock on a public roadway causes damage to another. The jury instruction was based upon La. R.S. 3:2803, which provides that “[n]o person owning livestock shall knowingly, willfully, or negligently permit his livestock to go at large upon [certain enumerated] public highways of this state[.]” The defendants insist that the jury instruction should have, instead, been based upon Cal-casieu Parish Ordinance No. 3247, which provides in |4Section 5-26, that “[i]t shall be unlawful for the owner [of livestock] to knowingly and/or willfully allow any livestock to rove, roam, or be at large on any of the parish road rights-of-way in the parish.... ”

In support of their arguments, the defendants rely on Bolzoni v. Theriot, 95-1233 (La.App. 3 Cir. 3/6/96), 670 So.2d 783, writ denied, 96-718 (La.4/26/96), 672 So.2d 908, wherein the trial court applied Cameron Parish Ordinance 4-42 in a suit involving a collision between a vehicle and a cow. The ordinance at issue in Bolzoni contained language similar to the Calcasieu Parish Ordinance that the defendants contend should have applied to the facts at issue in this matter in that it “prohibit[ed] owners of livestock from knowingly and/or willfully allowing livestock to roam on the unclassified public highways within the parish.” Id. at 784. This court affirmed the trial court’s having dismissed on summary judgment Bolzoni’s suit against the defendant, the owner of the cow, agreeing that there was no genuine issue that the defendant was not guilty of knowingly and willingly allowing his livestock to roam on a public highway. We rejected Bolzoni’s claim that the Cameron Parish Ordinance was unconstitutional, reasoning that because the highway at issue was not included in La.R.S. 3:2803, the Cameron Parish Police Jury had the authority, pursuant to La.R.S. 3:30o!, to regulate livestock on public highways within the parish.

In Johnson v. State ex rel. DOTD, 06-898, pp. 6-7 (La.App. 3 Cir. 12/13/06), 946 So.2d 682, 688, writ denied, 07-510 (La.4/27/07), 955 So.2d 693, this court discussed the appellate standard of review with regard to jury instructions:

Louisiana jurisprudence is well established that an appellate court must exercise great restraint before it reverses a jury verdict because of erroneous jury instructions. Melancon v. Sunshine Const., Inc., 97-1167 (La.App. 1 Cir. 5/15/98), 712 So.2d 1011. The basis for this rule of law is that trial courts are given broad discretion in formulating jury instructions and it is well accepted that a trial court judgment will not be reversed so long as the charge correctly states the substance of the law. United States v. L’Hoste, 609 F.2d 796, 805 (5 Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 104, 66 L.Ed.2d 39 (1980). However, when a jury is erroneously instructed and the error probably contributed to the verdict, an appellate court must set aside the verdict. Smith v. Travelers Ins. Co., 430 So.2d 55 (La.1983). In the assessment of an alleged erroneous jury instruction, it is the duty of the reviewing court to assess such impropriety in light of the entire jury charge to determine if they adequately provide the correct principles of law as applied to the issued framed in the pleadings and evidence and whether they adequately guided the jury in its deliberation. Kaplan v. Missouri-Pacific R.R. Co., 409 So.2d 298, 304-05 (La.App. 3 Cir.1981). Ultimately, the determinative question is whether the jury instructions misled the jury to the extent that it was prevented from dispensing justice. Brown v. White, 405 So.2d 555, 560 (La.App. 4 Cir.1981), aff'd, 430 So.2d 16 (La.1982).
Nicholas v. Allstate Ins. Co., 99-2522, p. 8-9 (La.8/31/00), 765 So.2d 1017, 1023.

In Willis v. Lecompte, 93-167, p. 3 (La.App. 3 Cir. 2/9/94), 640 So.2d 304, 306, writ denied, 94-562 (La.4/22/94), 641 So.2d 203, this court stated:

It is well settled that when an automobile strikes a horse or cow in a closed range area, the burden of proof rests upon the owner of the animal to exculpate himself from “even the slightest degree of negligence.” Abshire v. Dubois, 422 So.2d 611, 613 (La.App. 3 Cir.1982); Young v. Sentry Insurance Company, 315 So.2d 93 (La.App. 3 Cir.), writ denied, 319 So.2d 419 (La.1975).

|(iWe find Bolzoni distinguishable from the matter at hand. The accident in Bol-zoni occurred on an “open range” highway. Here, the defendants stipulated that the accident occurred in a closed range area. Accordingly, under La.R.S. 3:2803, Fisher was presumed negligent and was required to prove that he had taken reasonable precautions to keep his livestock in an enclosed area and to additionally prove how the bull escaped from its enclosure. Willis, 640 So.2d 304. Given the circumstances surrounding his attempt to capture the bull the evening before the accident, we cannot say that the trial court erred in its instruction to the jury. The defendants’ first assignment of error is without merit.

Defendants’ Assignment of Error No. 2

The defendants next contend that the jury committed error when it found defendant Fisher guilty of the “slightest degree of fault.” This argument is based entirely on the defendants’ contention that the instruction given to the jury by the trial court as to what would constitute fault on the part of Fisher was improper in that it placed him “under such a heavy burden as to be almost subject to a directed verdict.”

Because we have found that the trial court properly instructed the jury as to law governing the liability of an owner of livestock when an automobile strikes that livestock in a closed range area, the defendants’ second assignment of error is likewise without merit.

Defendants’ Assignment of Error No. 3

The defendants next argue that trial court committed manifest error and abused its discretion when it denied their Motion for JNOV and/or Motion for New Trial. Again, this argument is based on the defendants’ assertion that the trial court should have instructed the jury that Calcasieu Parish Ordinance No. 3247 applied to the |7situation rather than La.R.S. 3:2803. They submit that “one error by the court createfd] a cascade of errors by the judge and jury,” and that the trial court should have corrected its error by granting a JNOV in favor of the defendants or by allowing a new trial.

Again, because we have found that the trial court properly instructed the jury on the law applicable to the matter under their consideration, this assignment of error has no merit.

Defendants’ Assignment of Error No. 4

In their final assignment of error, the defendants contend that the trial court committed manifest error when it found that Allstate had acted in bad faith in its handling of Morrell’s claim and in awarding her an additional $7,000.00 penalty. The defendants claim that they were justified in relying on Calcasieu Parish Ordinance No. 3247 and in basing Allstate’s defense on what they determined to be the law applicable to this matter. As such, they contend that the trial court’s finding that Allstate acted in bad faith was contrary to the law and evidence. No jurisprudence is cited in support of this argument.

Louisiana Revised Statutes 22:1892(A)(3) requires that an “insurer shall initiate loss adjustment of a property damage claim ... within fourteen days after notification of loss by the claimant” and that “[fjailure to comply with the provisions of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1973.” That statute, in turn, provides that “[i]n addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times |sthe damages sustained or five thousand dollars, whichever is greater.” La. R.S. 22:1220(C).

Fisher testified that he called Allstate within a couple of days of the accident to notify it that one of his bulls had been involved in an accident that caused damage to a vehicle. In addition, Morrell introduced a letter from her attorney to an Allstate agent dated May 11, 2006, wherein he requested that Allstate inspect Mor-rell’s vehicle to get an estimate of the property damage that she incurred as a result of the accident with its insured’s bull. Morrell testified that she was never contacted by Allstate regarding her property damage claim. She added that she was forced to borrow money from her parents to buy another vehicle. At trial, the defendants failed to offer any proof to indicate that Allstate took any steps to evaluate Morrell’s claim.

Given the foregoing facts, we cannot say that the trial court erred in finding that Allstate acted in bad faith in its handling of Morrell’s property damage claim and in awarding Morrell a penalty of $7,000.00. The defendants’ fourth assignment of error is without merit.

DECREE

For the foregoing reasons, the judgment of the trial court in favor of Jacqueline Morrell and against Alton Fisher and Allstate Insurance Company is affirmed in its entirety. The defendants are cast with all costs of this appeal.

AFFIRMED.

      . Louisiana Revised Statutes 3:3001 provides that:
      There is hereby found and declared a necessity for providing a means whereby each ward of every parish in the state shall have the right, by local option election, to prohibit livestock from roaming at large in each said ward on those public highways other than those provided for in R.S. 3:2803.

      . Louisiana Revised Statutes 22:1892 and 22:1973 were renumbered from 22:658 and 22:1220, respectively, by 2008 La. Acts No. 415, § 1, effective January 1, 2009.


author: STEWART, J.

text:
    Laurence SOLOW, Jack Stolier and Allan Katz, Plaintiffs-Appellants, v. HEARD McELROY & VESTAL, L.L.P. and Curtis A. Swanson, Defendants-Appellees.
    No. 44,042-CA.
    Court of Appeal of Louisiana, Second Circuit.
    April 8, 2009.

      See also 937 So.2d 875.

      Barrasso Usdin Kupperman, Freeman & Sarver by Stephen H. Kupperman, Stephen L. Miles, New Orleans, for Appellants, Laurence Solow and Allan Katz.
    Cook, Yancey, King & Galloway by Bernard S. Johnson, Shreveport, for Appellee, Heard McElroy & Vestal.
    Before WILLIAMS, STEWART and MOORE, JJ.
   STEWART, J.

LThe plaintiffs, Laurence Solow and Allan Katz, appeal a summary judgment dismissing their claims of gross negligence, recklessness, and misrepresentation related to accounting malpractice and violations of the Louisiana Securities Law against Heard, McElroy & Vestal, L.L.P. (hereafter “HMV”), the defendant. Finding that there is no genuine issue of material fact and that summary judgment is warranted as a matter of law, we affirm.

FACTS

This dispute stems from the parties’ dealings with RTIN Holdings, Inc., (hereafter “RTIN”), formerly a publicly-traded corporation based in Longview, Texas. HMV, which is a firm of certified public accountants (“CPA’s”) headquartered in Shreveport, began its involvement with RTIN in August 2002, when it accepted an engagement to audit RTIN’s financial statements for the period ending December 31, 2002. Tim Nielsen was the CPA who performed the audit. HMV replaced Michael Killman of Killman, Murrell & Co., P.C., (“Killman”) as RTIN’s auditor. Solow’s involvement with RTIN goes back to 2001, when he sold two businesses, Me-dEx Systems, Inc., and Pegasus Pharmacy, Inc., to RTIN. According to Solow, RTIN did not abide by the payment schedule, so he sued to rescind the sale, and he regained ownership of the two businesses. Allan Katz had no direct dealings with RTIN. He was merely a recipient of shares in RTIN through a deal between Solow and RTIN.

|2On March 26, 2003, RTIN filed its annual report, also referred to as its 10-K, with the Securities and Exchange Commission (“SEC”). The 10-K included Kill-man’s audit opinion for the 2001 fiscal year and an unidentified audit opinion for the 2002 fiscal year.

Killman contacted RTIN and had his audit opinion pulled from the 10-K. He explained in his deposition that he had questions regarding the financial statements, particularly concerning the recognition of franchise fees as revenue. Killman and Nielsen discussed the revenue recognition issue during a phone call that occurred sometime in late February or early March of 2003. Killman was of the opinion that some of the franchise fees should be deferred, while Nielsen believed that the fees could be recognized as revenue.

On March 27, 2003, RTIN filed an amended 10-K without Killman’s 2001 audit. However, the amended 10-K again included an audit opinion for the 2002 fiscal year. Nielsen explained in his deposition that the audit opinion for the 2002 fiscal year was a draft provided by HMV at RTIN’s request. The draft did not have HMV’s name on it. Moreover, Nielsen had not given it final approval for release, and it should not have been included by RTIN in the 10-K.

HMV received a letter from the SEC dated March 26, 2003, regarding an “informal inquiry” into RTIN. The SEC requested that HMV retain and produce all documents relating to RTIN. The letter stated that the inquiry ^should not be construed as an indication that RTIN had violated the law. The SEC also requested documents relating to RTIN from Killman.

On April 2, 2003, RTIN representatives met with Michael Killman and Tim Nielsen in Longview, Texas. They discussed the revenue recognition issue about which Kill-man and HMV disagreed. Killman refused to release his 2001 audit opinion and turned over his work papers. Nielsen agreed that HMV would go back and conduct an audit for the 2001 fiscal year. Nielsen also learned that HMV’s draft audit opinion for the 2002 fiscal year had been included in RTIN’s March 10-K filings.

On April 3, 2003, Nielsen wrote to Curtis Swanson of RTIN about the inclusion of its draft audit opinion in the March 10-K filings. According to the letter, HMV had not yet issued its opinion but had provided at Curtis Swanson’s request “an unsigned, form audit opinion letter for the 2002 financial statements” on March 25, 2003. Nielsen explained that HMV could not release its audit opinion until he reviewed RTIN’s finalized 2002 financial statements and until RTIN resolved issues concerning a stock conversion of its Class C shares. Nielsen requested that RTIN amend its March filings to remove the audit opinion relating to the 2002 financial statements and to inform RTIN’s shareholders that neither HMV nor Nielsen had issued an opinion on the 2002 financial statements. Nielsen indicated in his deposition that a copy of the letter was sent to the SEC through HMV’s attorney.

On April 4, 2003, RTIN and Solow met in Longview and signed a letter of intent for the sale of MedEx and Pegasus. RTIN paid Solow L$100,000. Solow also received two interim payments prior to the sale’s closing of $100,000 and $156,000, and he was paid an additional $900,000 at closing. As other consideration for the sale, shares in RTIN were issued to Solow and a number of his creditors, including Allan Katz.

Solow recalled that Steve Cavender of RTIN showed him 30 to 40 pages of documents at the meeting on April 4, 2003, including financial statements for 2001 and 2002 and an audit opinion. He did not recall whether the audit opinion was signed, but he described it as looking better than one he had seen the previous year. However, he did not recall specific details about the documents, and he did not indicate that his decision to sell MedEx and Pegasus was based on his reliance on any specific document. Solow had no contact or communication with HMV and he had no information to support the allegation that HMV was involved in negotiations of his sale of MedEx and Pegasus to RTIN.

Nielsen first learned of Solow’s prior dealings with RTIN when he began reviewing financial statements for the audit. He recalled hearing about a new deal between RTIN and Solow sometime in March or April 2003. Nielsen denied any involvement in the negotiations between RTIN and Solow. However, he recalled being asked a question about how the transaction might be booked, and he spent 2.75 hours on June 26, 2003, reviewing due diligence reports on MedEx and Pegasus and the sales agreement to gather information to help RTIN with its note disclosure on the transaction for the July 2003 SEC filing.

| sThe sale was completed on June 27, 2003. HMV issued its audit opinion on the 2002 financial statements on July 3, 2003. Nielsen stated that it was substantially the same as the draft opinion released without authorization by RTIN in its March 2003 10-K filings.

In January 2004, Nielsen learned of the SEC’s finding of fraud by RTIN. By letter to Ed Dymtryk, identified as Chief Executive Officer of RTIN, HMV withdrew as RTIN’s auditor. Due to learning that RTIN had likely made materially false and misleading statements or omissions in connection with its 2001 and 2002 financial statements, HMV informed RTIN that it was withdrawing its audit opinion of June 30, 2003, and demanded that RTIN immediately amend is July 2003 10-K filing to redact all references to HMV and the audit opinion. The letter also related that HMV had learned of RTIN’s failure to comply with its request of April 3, 2003, to amend its 10-K filings of March 26 and 27, 2003, to remove the audit opinion letters as HMV had not issued an opinion at that time.

The exhibits in opposition to summary judgment indicate that the SEC informed Nielsen of its intent to recommend the institution of administrative proceedings against him in regard to his involvement with RTIN. However, there is no indication that the matter proceeded any further or that either HMV or Nielsen was found culpable in any of RTIN’s wrongdoing. On March 19, 2004, RTIN filed for Chapter 11 bankruptcy, following the SEC’s institution of civil litigation against it for fraud.

\fíPROCEDURAL HISTORY

Asserting that RTIN’s shares are now worthless and seeking to recover damages, Solow along with Allan Katz and Jack Stolier, two of Solow’s creditors who received RTIN shares as part of his sale agreement with RTIN, filed suit on February 3, 2005, in Orleans Parish against HMV and Curtis Swanson, identified as a former officer and director of RTIN. Pursuant to exceptions of improper venue and improper cumulation of actions, the claims of Solow and Katz were transferred to the First Judicial District Court in Caddo Parish; Stolier’s claims remained in Orleans. See Solow v. Heard, McElroy & Vestal, L.L.P., 2005-1028 (La.App. 4th Cir.4/12/06), 937 So.2d 875, writ denied, 2006-1680 (La.10/06/06), 938 So.2d 80.

The petition delineates three specific claims against HMV, which are set forth as Count 1 (Misrepresentation and Omission), Count 3 (Louisiana Securities Law), and Count 4 (Professional Malpractice and Negligence).

Count 1 alleges that HMV “knew or was reckless, grossly negligent and/or negligent” in not knowing that RTIN’s financial statements and SEC filings contained material misstatements; that HMV knew and intended that the plaintiffs would rely on its audit opinion in connection with the transaction; and that the sale would not have been completed if HMV had disclosed that the March 2003 SEC filings were false and misleading or if it had included a “going concern qualification” in its audit opinion.

17Count 3 alleges that HMV made material misstatements and omissions in connection with the sale that “operated as a fraud or deceit” upon the plaintiffs.

Count 4 alleges recklessness, gross negligence and negligence on the part of HMV in failing to comply with professional auditing standards and the duty of care owed to investors in RTIN knowing they would rely on the services provided.

In its motion for summary judgment, HMV argued that the claims alleged in Count 1 and Count 4 are subject to the privity requirement set forth in La. R.S. 37:91 of the Louisiana Accountancy Act. HMV also argued that plaintiffs would not be able to prove liability for the alleged violations of securities laws, because HMV was neither a “seller” of securities nor a “control person” as to RTIN.

In opposition, the plaintiffs argued that La. R.S. 37:91 applies only to claims of negligence and not to allegations of HMV’s intentional, reckless, and grossly negligent acts. In support of the securities law claims, plaintiffs argued that HMV was a substantial factor in bringing about the sale and that it exercised control over RTIN due to its audit opinion included in the March 2003 10-K. Plaintiffs also argued that a fraud claim under La. R.S. 51:712(D) does not require HMV to be either a seller or control person.

The trial court granted summary judgment in favor of HMV. It determined that plaintiffs would be unable to prove privity, an essential element in establishing liability against an accounting firm. As to the alleged violations of the securities laws, the trial court found that HMV was |snot shown to be a party liable under La. R.S. 51:714(B). Lastly, the trial court found the plaintiffs’ remaining claims to be of insufficient merit to defeat summary judgment.

The plaintiffs filed a motion for a new trial, which the trial court denied. In doing so, the trial court rejected the notion that plaintiffs’ petition alleged fraud by HMV, noting that the only mention of fraud in the pleadings “is very brief and not definitive.”

In this appeal, the plaintiffs seek review of the trial court’s application of the privity requirement of La. R.S. 37:91 to their multiple claims; the rejection of their fraud claim; and the denial of the claims based on violations of the securities law.

DISCUSSION

The summary judgment procedure is favored and is designed to secure the just, speedy, and inexpensive determination of all but specifically excepted actions. La. C.C.P. art. 966(A)(2). We exercise de novo review on appeal using the same criteria that govern the trial court’s consideration of a motion for summary judgment. Suire v. Lafayette City-Parish Consolidated Government, 2004-1459 (La.4/12/05), 907 So.2d 37. If the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law, then summary judgment shall be rendered. La. C.C.P. art. 966(B).

[ aiMisrepresentations, Gross Negligence and Recklessness

The plaintiffs argue that the trial court erred in applying La. R.S. 37:91 to claims other than negligence. The interpretation of La. R.S. 37:91 appears to be a matter of first impression.

La. R.S. 37:91 states:

A. This Section shall apply to all causes of action specified in this Section filed on or after June 18,1999.
B. No action based on negligence brought against any licensee, or any employee or principal of a licensee by any person or entity claiming to have been injured as a result of their justifiable reliance upon financial statements or other information examined, compiled, reviewed, certified, audited, or otherwise reported or opined on by the defendant licensee or in the course of an engagement to provide other services may be brought unless either of the following conditions exist:
(1) The plaintiff is the issuer or successor of the issuer of the financial statements or other information examined, compiled, reviewed, certified, audited, or otherwise reported or opined on by the defendant, and has engaged the defendant licensee to examine, compile, review, certify, audit, or otherwise report or render an opinion on such financial statements or to provide other services.
(2) The defendant licensee was aware at the time the engagement was undertaken that the financial statements or other information were to be made available for use in connection with a specified transaction by the plaintiff who was specifically identified to the defendant licensee, was aware that the plaintiff intended to rely upon such financial statements or other information in connection with the specified transaction, and had direct contact and communication with the plaintiff and expressed by words and conduct the defendant licensee’s understanding of the reliance on such financial statements or other information.

No action may be brought against a CPA unless one of the conditions under the statute is met. Plaintiffs did not engage HMV to provide |Klservices, so the first condition set forth in La. R.S. 37:91(B)(1) is not met. The exhibits establish that HMV was not aware when it accepted the engagement with RTIN that the financial statements to be audited were to be available for use in connection with the sale of MedEx and Pegasus by Solow. There was also no direct contact or communication between the plaintiffs and HMV. The evidence shows that no basis for liability exists under the condition set forth in La. R.S. 37:91(B)(2).

Because plaintiffs cannot satisfy the privity requirements of La. R.S. 37:91, they argue that it does not apply to their “fraudulent, intentional, reckless and grossly negligent misrepresentation and omission claims that arise from HMV’s actions with respect to RTIN’s financial statements and audit report, and in connection with representations in the Sale Agreement.”

As previously mentioned, the plaintiffs’ claims are set forth in Count 1, Count 3, and Count 4 of their petition. Fraud is alleged in Count 3 in connection with violations of the Louisiana Securities Law; fraud is not alleged in connection with any action that may be covered under the Louisiana Accountancy Act. Therefore, whether La. R.S. 37:91 applies to claims of fraud is not at issue.

Claims involving the violation of professional standards are set forth in Count 1 and Count 4, which allege recklessness, gross negligence and negligence by HMV with regard to misrepresentations and omissions in its audit opinion on RTIN’s financial statements and HMV’s alleged violation of its professional duty of care. These claims stem from the plaintiffs’ |n alleged reliance on the financial statements audited by HMV. If La. R.S. 37:91 applies to these claims, then summary judgment is proper.

Plaintiffs argue that the plain language of the statute limits application of the privity requirement to negligence claims. HMV contends that the statute is not limited to ordinary negligence.

Discerning the intent of the legislature in enacting a statute is the purpose of statutory construction. SWAT 24 Shreveport Bossier, Inc. v. Bond, 2000-1695 (La.6/29/01), 808 So.2d 294. A law whose language is clear and unambiguous and whose application does not lead to absurd consequences shall be applied as written without further search for the legislative intent. La. C.C. art. 9; La. R.S. 1:4. However, if the language is susceptible of different meanings, then “it must be interpreted as having the meaning that best conforms to the purpose of the law.” La. C.C. art. 10.

We determine the meaning and intent of the law by considering the law in its entirety along with other laws on the same subject matter. SWAT 24, supra. A statute should be construed in a manner that is logical and consistent with its express terms, its presumed purpose, and the intent of the legislature in enacting it. Id. The construction should give effect to all parts of the statute and render no part superfluous or meaningless. Id. When a literal interpretation of the statute would lead to absurd consequences, its letter must give way to the spirit so that the statute is construed to produce a reasonable result. Id.

| ^Jurisprudence defines gross negligence as follows:

Gross negligence has a well-defined legal meaning distinctly separate, and different, from ordinary negligence. Gross negligence has been defined as the “want of even slight care and diligence” and the “want of that diligence which even careless men are accustomed to exercise.” It has also been termed the “entire absence of care” and the “utter disregard of the dictates of prudence, amounting to complete neglect of the rights of others.” Additionally, gross negligence has been described as an “extreme departure from ordinary care or the want of even scant care.” [Internal citations omitted.]

Roton v. Vernon E. Faulconer, Inc., 42,452, p. 9 (La.App.2d Cir.10/3/07), 966 So.2d 790, 795, writ denied, 2007-2165 (La.1/7/08), 973 So.2d 724. See also Rabalais v. Nash, 2006-0999 (La.3/9/07), 952 So.2d 653.

Recklessness or reckless disregard is the same as gross negligence. Rabalais v. Nash, supra; State v. Ritchie, 590 So.2d 1139 (La.1991). Ordinary negligence and gross negligence are distinguished by the degree of lack of care on the part of the tortfeasor. Foshee v. Louisiana Farm Bureau Cas. Ins. Co., 41,842 (La.App.2d Cir.1/31/07), 948 So.2d 1171, writ denied, 2007-0483 (La.4/20/07), 954 So.2d 169.

Though gross negligence and ordinary negligence have distinct meanings, they are both forms or different degrees of negligence. The lack of care on the part of the tortfeasor distinguishes ordinary negligence from gross negligence. La. R.S. 37:91 refers to actions “based on negligence.” The statute does not distinguish between the degrees of negligence or limit itself to ordinary negligence.

Plaintiffs argue that the legislature purposely limited the privity requirement to acts of negligence thereby imposing broader liability for more culpable conduct. They analogize La. R.S. 37:91 to La. R.S. 11S9:2796(A), which holds Mardi Gras krewes liable for “loss or damage caused by the deliberate or wanton act or gross negligence of the krewe ...,” while limiting liability for ordinary negligence. The Mardi Gras statute is but one in a line of statutes, La. R.S. 9:2791 et seq., addressing limitations on liability. A survey of these statutes shows that the legislature was explicit in imposing liability for willful or wanton acts, intentional acts, and gross negligence, while generally limiting liability for ordinary negligence.

In crafting La. R.S. 37:91, the legislature did not explicitly carve out an exception to allow liability for gross negligence or recklessness. It did not distinguish ordinary negligence from gross negligence or recklessness. We find that the privity requirement of La. R.S. 37:91 applies equally to claims of ordinary negligence, gross negligence and recklessness as asserted by plaintiffs in Count 1 and Count 4 of their petition.

Our interpretation is supported by the legislative history of Acts 1999, No. 473, which indicates that the intent was to specify that all causes of action would be governed by the privity of contract provisions and to provide for the conditions under which an action based on negligence could be brought against an accountant. (See House Bill No. 1810.) This intent is evident in La. R.S. 37:92, which states, in part, “The scope of the duty of a licensee or an employee or principal of a licensee to clients and nonclients |, 4shall be determined exclusively by R.S. 37:91, regardless of the domicile of the parties involved.” We interpret this as meaning that an accountant who is licensee under the Louisiana Accountancy Act owes a duty only to persons who engage the licensee to provide services as expressed in La. R.S. 37:91(B)(1) and to persons who meet the criteria of La. R.S. 37:91(B)(2). The plaintiffs are neither. Whether a duty is owed is a question of law. Barrie v. V. P. Exterminators, 625 So.2d 1007 (La.1993); Harris v. Pizza Hut of Louisiana, Inc., 455 So.2d 1364 (La.1984). Therefore, under the applicable laws, HMV owed no duty to the plaintiffs who were neither clients nor nonclients who meet the criteria of La. R.S. 37:91(B)(2). Absent any duty to plaintiffs and based upon our finding that the privity requirement applies to causes of action alleging gross negligence and recklessness, HMV is entitled to summary judgment on the claims asserted in Count 1 and Count 4 of their petition.

Having thoroughly reviewed this nine-volume record, we also find that summary judgment on the claims asserted in Count 1 and Count 4 is proper for the reasons that the plaintiffs will not be able to meet the evidentiary burden of proving that HMV’s actions were grossly negligent, reckless, or intentional.

In Roton, supra, the following definition was given for an intentional act:

The meaning of “intent” is that the person who acts either (1) consciously desires the physical result of his act, whatever the likelihood of that result happening from his conduct; or (2) knows that result is substantially certain to follow from his conduct, whatever his desire may be as to that result. Thus, intent has reference to the consequences of an act | ^rather than to the act itself. Only where the actor entertained a desire to bring about the consequences that followed or where the actor believed that the result was substantially certain to follow has an act been characterized as intentional.
“Substantially certain to follow” requires more than a reasonable probability that an injury will occur and “certain” has been defined to mean “inevitable” or “incapable of failing.” Further, mere knowledge and appreciation of a risk does not constitute intent, nor does reckless or wanton conduct by an employer constitute intentional wrongdoing.

Roton, 42,452, p. 9-10, 966 So.2d at 795. See also White v. Monsanto Company, 585 So.2d 1205 (La.1991). Intentional misrepresentation is essentially fraud-a misrepresentation or suppression of the truth made with the intention of obtaining an unjust advantage for one party or causing a loss or inconvenience to the other. La. C.C. art.1953.

Plaintiffs’ complaints begin with HMV’s failure to talk to Killman, RTIN’s former auditor, before accepting the engagement. While there was no communication prior to accepting the engagement, Nielsen did have two discussions with Killman before completing the audit. They spoke prior to RTIN’s March 2003 10-K filing and met in Longview, Texas on April 2, 2003. They discussed Killman’s concerns, including the recognition of franchise fees as revenue. The two accountants had a professional difference of opinion. Though plaintiffs complain that HMV failed to heed Kill-man’s warning about the SEC investigation, HMV had already learned of the SEC’s inquiry into RTIN by a letter dated March 26, 2003.

Killman’s deposition does not support the claim that HMV violated professional standards in conducting the 2002 audit or otherwise. Plaintiffs complain that HMV should have included a “going concern” qualification in its audit opinion just as Killman had included in the opinion on RTIN’s |1(⅞2001 financial statements. There is no evidence to support this claim. Killman explained that the “going concern” qualification in his 2001 audit was based on losses sustained by RTIN’s restaurant operations. The aspects that led to the qualification in 2001 were not present in 2002. RTIN had entered the pharmacy business, was no longer involved in restaurants, and had “morphed” into something else.

The depositions of Killman and Nielsen do not demonstrate that HMV acted with recklessness, gross negligence or intent to misrepresent with regard to the failure to have initial contact with Killman or to include a going concern qualification in the draft audit opinion.

Plaintiffs’ other claims are based on their purported reliance on the draft audit opinion included by RTIN in its 10-K filings for March 2003. HMV did not authorize the draft audit opinion for inclusion in the 10-K. The draft opinion was not signed and did not identify the auditor. When HMV learned that the draft opinion had been included in RTIN’s 10-K, Nielsen wrote to RTIN on April 3, 2003, requesting removal of the draft opinion from the filing. Nielsen also spoke to Steve Cavender of RTIN, who indicated that the draft had been included by mistake. Because HMV had not authorized RTIN to include the draft opinion in its filing and because HMV requested removal of the opinion from the 10-K, there is no factual support for the claim that HMV intended for plaintiffs to rely on the draft opinion in agreeing to the sale. Even the language in the sale agreement warranting that all required documents had been filed with the SEC and that they contained no untrue statement of material fact cannot | nprove intent to misrepresent on the part of HMV. The fact that HMV did not authorize inclusion of the draft opinion in the 10-K and that it asked RTIN to remove it belies the claim that it intended plaintiffs to rely on its contents. Nor is there factual support to show that Nielsen knew the March 2003 10-K filings otherwise included misrepresentations and omissions regarding RTIN’s financial position. Like Solow, HMV was unaware of the fraud being perpetrated by RTIN. Nothing in the record suggests that HMV’s failure to detect the fraudulent conduct through its audit was grossly negligent, reckless, or intentional.

Plaintiffs’ main complaint about the purported audit opinion is that it did not include a “going concern” qualification. As previously addressed, there is a lack of evidentiary support for the claim that HMV was grossly negligent, reckless, or guilty of intentional misrepresentation in failing to include the going concern qualification. Moreover, the exhibits show that the purported audit opinion included in the amended 10-K filed on March 27, 2003, addressed the going concern issue and the replacement of Killman by HMV. The draft opinion notes that the financial statements were presented on the basis that RTIN would continue as a going concern. However, it explains that RTIN incurred operating losses in 2001 and that the “continuance of such losses creates an uncertainly (sic) as to the Company’s ability to continue as a going concern.” It makes clear that RTIN’s ability to continue as a going concern was dependent on the success of steps taken to reduce expenses and increase revenue. It also explains that HMV replaced Killman and that Killman’s audit included the going concern | ^qualification, whereas HMV’s did not. Even though the draft opinion did not include a “going concern” qualification, it did provide notice that the qualification had been included in the 2001 audit and that issues remained regarding RTIN’s ability to continue operating as a going concern. Therefore, if Solow indeed reviewed the 2002 audit opinion, that did not even identity the auditor, in agreeing to sell his businesses for the second time to RTIN, then he would have been informed of potential problems concerning RTIN’s prospects.

For these reasons, we find that plaintiffs will not be able to meet their evidentiary burden at trial of proving that HMV acted with gross negligence, recklessness or intent as alleged in Count 1 and Count 4 of the petition. Although summary judgment is seldom appropriate for determining subjective facts of motive, intent, good faith, knowledge, or malice, it may be granted on such issues when there is no issue of material fact concerning the pertinent intent. Jones v. Estate of Santiago, 2003-1424 (La.4/14/04), 870 So.2d 1002. The evidence does not create an issue of material fact as to whether HMV acted with a total absence of care or utter disregard for the rights of others. Nor does it show that HMV either consciously desired to harm plaintiffs or knew that they would sustain losses as a result of its actions. Considered in light of the evidence on summary judgment, the claims of gross negligence, recklessness, and intentional misrepresentation appear as attempts to circumvent the privity requirement of La. R.S. 37:91. Summary judgment was properly granted on these claims.

h¡^Louisiana Securities La%e Claims

Plaintiffs argue that the trial court erred in granting summary judgment on their claims based on the Louisiana Securities Law, La. R.S. 51:701 et seq. They assert that the trial court did not recognize that HMV may be directly liable under La. R.S. 51:712(A) and (D) and indirectly liable as a “control” person under La. R.S. 51:714(B).

The plaintiffs’ first claim is based on La. R.S. 51:712(A)(2), which addresses the fraudulent sale of securities by making it unlawful:

(2) To offer to sell or to sell a security by means of any oral or written untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, the buyer not knowing of the untruth or omission, if such person in the exercise of reasonable care could not have known of the untruth or omission.

As an initial point, we note that under the terms of the sale agreement between So-low and RTIN, Solow is the seller of the shares in MedEx and Pegasus; RTIN is the buyer. Shares in RTIN make up some consideration for the sale in addition to cash payments to Solow of over $1 million. Even if RTIN is considered a seller for purposes of this statute, HMV is not.

In support of its argument that HMV is a seller of securities for purposes of La. R.S. 51:712(A)(2), plaintiffs cite the substantial factor test set forth in Pharo v. Smith, 621 F.2d 656 (5th Cir.1980). This case does not address the statute at issue. Most importantly, it does not support the plaintiffs’ argument. The Pharo court explained that a seller for purposes of the federal securities provision at issue in that case included one in privity with the purchaser and one whose participation in the transaction was a insubstantial factor in causing it to take place. Pharo, supra. The court explained that merely participating in the events leading up to the transaction is not enough to make one a seller. Id.

Plaintiffs argue that HMV was a substantial factor in causing the sale to take place because it prepared the “false 2002 financial statements and audit reports, and knew they were included in the public filings.” This argument overlooks the facts that HMV had not completed its audit, had not authorized RTIN to include the draft opinion in its March 2003 10-K filings, and had asked RTIN to amend the filings to remove the draft audit opinion. There is no evidence to support the claim that HMV offered to sell or sold securities or was a substantial factor in the sale involving RTIN and Solow. HMV had no contact with Solow and was not involved with the negotiations between Solow and RTIN. HMV’s participation in the sale was limited to Nielsen’s review on June 26, 2003, of the sale agreement and the due diligence reports on MedEx and Pegasus to assist RTIN in preparing its note disclosures on the transaction and his response to a question by a person with RTIN seeking guidance on how to book the transaction. This limited participation in the events leading up to the transaction does not create an issue of fact as to whether HMV was a substantial factor in causing the sale to take place.

Plaintiffs argue that even if HMV is not directly liable as a seller, it is liable as a “control” person under La. R.S. 51:714(B), which states:

B. Every person who directly or indirectly controls a person liable under Subsection A of this Section, every general partner, executive, officer, or director of such person liable under Subsection A of this Section, every person occupying a |ai similar status or performing similar functions, and every dealer or salesman who participates in any material way in the sale is liable jointly and severally with and to the same extent as the person liable under Subsection A of this Section unless the person whose liability arises under this Subsection sustains the burden of proof that he did not know and in the exercise of reasonable care could not have known of the existence of the facts by reason of which liability is alleged to exist. There is contribution as in the case of contract among several persons so liable.

Subsection A of La. R.S 51:714 provides for civil liability for any person who violates La. R.S. 51:712(A). The term “control” is defined as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.” La. R.S. 51:702(4).

Plaintiffs claim that HMV controlled RTIN’s actions with respect to the sale and that it had the power to halt the sale. This argument is based on HMV’s power as auditor to authorize the release of its opinion on RTIN’s financial statements and its failure to ensure that its draft opinion was withdrawn from the March 2003 10-K filings. Again, we note that plaintiffs’ argument is mistakenly framed as though RTIN was the seller rather than Solow. Nevertheless, there is no evidence to indicate that HMV exercised control over RTIN as required under La. R.S. 51:714(B). There is no showing that HMV had the power to direct the management and policies of RTIN. The language of La. R.S. 51:714(B) indicates that a person who exercises control refers to a general partner, executive, officer, director, or a person occupying a similar status or performing a similar function. HMV occupied no such status and performed no such function in relation to RTIN. There is no support for this seemingly frivolous claim.

122Lastly, plaintiffs assert a claim based on La. R.S. 51:712(D), which provides that it is unlawful for any person, in connection with the offer, sale, or purchase of any security, to directly or indirectly employ a device, scheme or artifice to defraud or to engage in any transaction, act, practice, or course of business that operates as a fraud or deceit upon the purchaser or seller.

La. R.S. 51:714, which provides for civil liability arising from the sale of securities, makes no provision for liability based on a violation of La. R.S. 51:712(D). Rather, civil liability is based on the fraudulent sale of securities under La. R.S. 51:714(A). Moreover, we have already addressed the claim of intentional misrepresentation and found that plaintiffs have not shown that they will be able to meet the burden of proving intent to defraud at trial. HMV cannot be held liable for fraud where it did not authorize the release of the draft opinion purportedly relied upon by Solow in agreeing to the sale, and where it asked RTIN to remove the draft opinion from its March 2003 10-K filings.

For these reasons, we find that the trial court was correct in granting summary judgment on the securities law claims.

CONCLUSION

Because there is no genuine issue of material fact and because summary judgment is warranted as a matter of law, we affirm the trial court’s judgment dismissing the claims of Laurence Solow and Allan Katz against Heard, McElroy & Vestal, L.L.P.

AFFIRMED.

      . The SEC requires the filing of an annual report with audited financial statements to give a comprehensive overview of a company's business and financial condition. The form used to file the report is the 10-K. See http://www.sec.gov; answers/form! Ok. him.

      . A licensee under La. R.S. 37:91 refers to the holder of a license in the form of an active certificate of certified public accountant or a CPA firm’s permit to practice issued in accordance with the Louisiana Accountancy Act. La. R.S. 37:73(7) and (8).

      . For example, see La. R.S. 9:2796.1 (no cause of action against organizations presenting St. Patrick's Day parades or other parades in connection with ethnic celebrations, except for loss caused by deliberate and wanton act or gross negligence); La. R.S. 9:2799(A)(1) (no cause of action against food bank for damages caused by condition of food, except for damages from intentional act or omission or gross negligence); and La. R.S. 9:2799.5 (no cause of action relating to gratuitous services by healthcare provider in community clinic, except for acts of gross negligence and willful or wanton misconduct.)