author: McClendon, j. WHIPPLE, C.J.,

text:
    ACADIAN CYPRESS & HARDWOOD INC. v. Joy STEWART.
    No. 2012 CA 1425.
    Court of Appeal of Louisiana, First Circuit.
    March 22, 2013.
    Rehearing Denied Sept. 3, 2013.

      Glen R. Galbraith, Patrick K. Reso, Frank J. DiVittorto, Hammond, LA, for Plaintiff/Appellee, Acadian Cypress & Hardwood, Inc.
    G. Andrew Veasey, Bradford H. Felder, Lafayette, LA, for Defendant/Appellant, Joy Stewart.
    Before WHIPPLE, C.J., McClendon, and Higginbotham, jj.
   McClendon, j.

|gThe defendant appeals from a trial court judgment granting a preliminary injunction in favor of the defendant’s former employer based on a noncompetition agreement. For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

Joy Stewart was employed by Acadian Cypress & Hardwood, Inc. (Acadian) from May 2004 through April 2012 as a sales representative and was an at-will employee at all times in which she worked for Acadi-an. Acadian is a supplier of domestic and imported hardwood lumber and plywood, hardware, and specialty items, as well as a manufacturer of hardwood moldings. Because of the amount of training that employees received and their exposure to confidential information, Acadian presented a non-competition and non-solicitation agreement to their key employees, mainly those in upper management and sales. Ms. Stewart signed the Non-Competition/Non-Solicitation Agreement (Agreement) in September of 2009. She continued employment with Acadian until April of 2012, when she began employment with Deano Hardwoods, LLC, a competitor of Acadian.

Acadian filed a petition for injunctive relief and damages against Ms. Stewart for her breach of the Agreement. On May 21, 2012, after an evidentiary hearing, the trial court granted Acadian’s request for preliminary injunction. A judgment was signed on June 1, 2012 and provided, in pertinent part:

IT IS HEREBY ORDERED, ADJUDGED AND DECREED that a preliminary injunction issue herein effective until the further Order of this Court, but in no event for a period to exceed two years from April 27, 2012 and enjoining defendant, Joy Stewart, from soliciting current or former, customers or suppliers, of Acadian Cypress & Hardwoods, Inc.; and from carrying on or engaging in a business directly or indirectly, as an employee, independent contractor, owner, principal, or otherwise, that competes with Acadian Cypress & Hardwoods, Inc., specifically including, but not limited to Deano Hardwoods, LLC, where such business provides any of the following products and services: domestic and imported hardwood sales, domestic and imported plywood sales, milling services, cypress propriety products, cabinets and millwork accessories, drying services and distribution of those products. Said restrictions shall only apply within the following parishes and counties:
| ^Louisiana: St. Tammany Parish, Livingston Parish, Tangipahoa Parish, St. Helena Parish, Iberville Parish, East Baton Rouge Parish, West Baton Rouge Parish, Ascension Parish, East Feliciana Parish, West Feliciana Parish, Orleans Parish, Jefferson Parish, Jefferson Davis Parish, St. Charles Parish, St. John the Baptist Parish, St. Bernard Parish, Evangeline Parish, St. Landry Parish, Lafayette Parish, Iberia Parish, Washington Parish, Cameron Parish, Vermilion Parish, and Acadia Parish;
Mississippi: Pearl River County, Hancock County, Harrison County, Hinds County, Forrest County, Pike County, Stone County, and Jackson County;
Alabama: Mobile County and Baldwin County; and
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that a preliminary injunction issue herein enjoining defendant, Joy Stewart, from disclosing names and contact information of current or former customers, names and contact information of current or former suppliers, costs, pricing, or other confidential information of Acadian Cypress & Hardwoods, Inc. (confidential information being defines as any information not freely distributed to the public by Acadian Cypress & Hardwoods, Inc. and/or information that cannot be acquired independently, without resort to confidential information that Acadian Cypress shared with Joy Stewart during her employment.) until the further Orders of this Court[.]

In her appeal, Ms. Stewart urges that the trial court erred in granting the preliminary injunction. Ms. Stewart asserts that the Agreement is void and unenforceable because: (1) the Agreement does not contain a clear and unequivocal definition for when the non-competition provisions are triggered; (2) there was no valid cause in the Agreement; and (3) the Agreement did not contain a “severability” clause which would validate otherwise valid provisions.

LAW AND DISCUSSION

Historically, Louisiana has disfavored noncompetition agreements. SWAT Shreveport Bossier, Inc. v. Bond, 00-1695 (La.6/29/01), 808 So.2d 294, 298. Such agreements are deemed to be against public policy, except under the limited circumstances delineated by statute. J4H, L.L.C. v. Derouen, 10-0319 (La.App. 1 Cir. 9/10/10), 49 So.3d 10, 13.

Louisiana Revised Statutes 23:921A(1) provides:

|4Every contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void. However, every contract or agreement, or provision thereof, which meets the exceptions as provided in this Section, shall be enforceable.

The exceptions are found in Subsection C, which provides, in pertinent part:

Any person, including a corporation and the individual shareholders of such corporation, who is employed as an agent, servant, or employee may agree with his employer to refrain from carrying on or engaging in a business similar to that of the employer and/or from soliciting customers of the employer within a specified parish or parishes, municipality or municipalities, or parts thereof, so long as the employer carries on a like business therein, not to exceed a period of two years from termination of employment.

Thus, to be valid, a noncompetition agreement may limit competition only in a business similar to that of the employer, in a specified geographic area and for up to two years from termination of employment. Cellular One, Inc. v. Boyd, 94-1783 (La.App. 1 Cir. 3/3/95), 653 So.2d 30, 33, writ denied, 95-1367 (La.9/15/95), 660 So.2d 449. Because Subsection C is an exception to Louisiana’s public policy against non-competition agreements, it must be strictly construed. Vartech Systems, Inc. v. Hayden, 05-2499 (La.App. 1 Cir. 12/20/06), 951 So.2d 247, 255.

Generally, a party seeking the issuance of a preliminary injunction must show that he will suffer irreparable injury if the injunction does not issue and must show entitlement to the relief sought; this must be done by a prima facie showing that the party will prevail on the merits of the case. Vartech Systems, 951 So.2d at 255. However, in the event an employee enters into an agreement with his employer not to compete, pursuant to LSA-R.S. 23:921, and fails to perform his obligation under such an agreement, the court shall order injunctive relief even without a showing of irreparable harm, upon proof by the employer of [¿¡the employee’s breach of the non-competition agreement. See LSA-R.S. 23:921H.

In determining whether the employer has met his burden of proof, the courts have been called on to consider the validity and enforceability of the agreement sought to be enforced by the employer, Vartech Systems, 951 So.2d at 255. Where the actions sought to be enjoined pursuant to a noncompete agreement do not fall within the exception found in LSA-R.S. 23:921C or where the non-compete agreement is found to be unenforceable for failure to conform to LSA-R.S. 23:921, the employer is unable to establish that it is entitled to the relief sought. Vartech Systems, 951 So.2d at 255-56.

Typically, a trial court enjoys considerable discretion in determining whether a preliminary injunction is warranted, and the issuance of a preliminary injunction by the trial court will not be disturbed on appeal absent a clear abuse of discretion. Vartech Systems, 951 So.2d at 256. However, the underlying issue in this case is whether the noncompetition agreement falls within the exception found in LSA-R.S. 23:921C. The proper interpretation of a statute is a question of law that we review on a de novo basis. J4H, L.L.C., 49 So.3d at 14.

In the matter sub judice, Ms. Stewart argues that the Agreement does not contain a clear and unequivocal definition for when the non-competition provisions begin. Ms. Stewart argues that instead of tying the non-competition provisions to a date certain such as the termination of employment, the Agreement states that its provisions are triggered when her “relationship” ends. The Agreement provides, in pertinent part: “This agreement shall only restrain competition or solicitation by Employee for a period of two (2) years after Employee’s relationship with Company terminates” (Emphasis added). Ms. Stewart argues that “relationship” is never defined in the Agreement, and this |fiterm can be construed multiple ways. Ms. Stewart avers that she still maintains personal relationships with employees of Aca-dian, and therefore it can be argued that her “relationship” has not terminated. Therefore, Ms. Stewart argues, because the triggering mechanism is susceptible of two or more reasonable interpretations, this Agreement is overly broad and not enforceable against her. We disagree.

The words of a contract must be given their generally prevailing meaning. LSA-C.C. art.2047. Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract. LSA-C.C. Art. 2048. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. LSA-C.C. art.2050.

In this case, the term “relationship” is not susceptible to two or more reasonable interpretations. Ms. Stewart’s relationship with Acadian was clearly one of employment. The word “relationship” must be interpreted as having the meaning that best conforms with the object of the contract. See LSA-C.C. art.2048. The Agreement is clearly a non-competition agreement between an employee and an employer. Ms. Stewart is referred to as “Employee” throughout the Agreement. To interpret “relationship” as a possible personal relationship with co-workers does not conform with the object of the contract.

Furthermore, the Agreement also provides: “The nature of the employment relationship of Employee to Company as an at-will employee is not modified by this agreement.” (Emphasis added). This language illustrates that Ms. Stewart’s relationship, as used in this Agreement, was one of employment. The only reasonable interpretation of the Agreement is that the non-competition provisions were triggered when Ms. Stewart’s employment with Aca-dian ended. Thus, the Agreement is not overly broad as argued by Ms. Stewart, and this assignment of error is without merit.

Ms. Stewart next argues that there was no valid cause for execution of the Agreement. She maintains that because the terms of her employment did not 17change after signing the Agreement, she was in the same position as she was prior to signing the Agreement, and; therefore, there was no mutuality of obligation.

An obligation cannot exist without a lawful cause. LSA-C.C. art.1966. Cause is defined as the reason why a party obligates himself. LSA-C.C. art.1967. The cause need not have any economic value. Mapp Const., LLC v. Southgate Penthouses, LLC, 09-0850 (La.App. 1 Cir. 10/23/09), 29 So.3d 548, 565, writ denied, 09-2743 (La.2/26/10), 28 So.3d 275; Aaron & Turner, L.L.C. v. Ferret, 07-1701 (La.App. 1 Cir. 5/4/09), 22 So.3d 910, 915 (on rehearing), writ denied, 09-1148 (La.10/16/09), 19 So.3d 476.

In Cellular One, 653 So.2d at 34, this Court held that any person, including an at-will employee, may enter into a non-competition agreement as long as the agreement complies with LSA-R.S. 23:921. In Cellular One, the defendants, who signed non-competition agreements as conditions of employment, asserted that such agreements should be unenforceable in at-will employment situations because of a lack of mutuality and an insufficiency of cause. The majority disagreed and held:

[W]e do not find that the agreement is unenforceable for lack of cause. The Civil Code defines a contract as “an agreement by two or more parties whereby obligations are created, modified, or extinguished.” No obligation can exist without a lawful cause, which is defined as “the reason why a party obligates himself.” The defendants signed the agreements as a condition of continued employment. Employment was the valid cause of the contract.

Id. (Internal citations omitted and emphasis added).

Ms. Stewart argues that this matter is distinguishable from Cellular One. She asserts that, unlike the present case, in Cellular One, the employer agreed to provide employees with “non-competition payments” for a three-year period following termination of employment. However, the “non-competition payments” in Cellular One did not influence the court’s decision that continued employment alone is a valid cause for a contract. In this matter, the Agreement provides: “In consideration for Employer’s continued employment with Company, the parties hereby agree as follows....” (Emphasis added). The Agreement | ^clearly states that the cause of this contract is Ms. Stewart’s continued employment with Acadian. While we recognize the inequities that may arise where at-will employment is sufficient valid cause for a non-competition agreement, we find Cellular One to be controlling. Therefore, we reject Ms. Stewart’s argument that the Agreement is unenforceable for a lack of cause.

Accordingly, we conclude that the trial court did not err in granting the preliminary injunction against Ms. Stewart.

CONCLUSION

For the foregoing reasons, we affirm the June 1, 2012 judgment of the trial court. Costs of this appeal are assessed against Ms. Stewart.

AFFIRMED.

WHIPPLE, C.J., concurs and assigns reasons.

WHIPPLE, C.J.,

concurring.

|,In considering this matter de novo, as we must, I note that the contract at issue (and the resulting injunction) restricts defendant from “carrying on or engaging in” a competing business in a significant geographic area, i.e., in 34 parishes spanning a huge geographic area across three states. Thus, although not raised as error, I am troubled by the extensive geographic area set forth in the agreement, which I find comes perilously close to rendering such a contract unenforceable as an overly broad restriction on the interests of free enterprise. However, this issue was not specifically challenged on appeal. Nonetheless, I recognize that the legislature has not included any limitation on the geographic scope of a non-compete agreement — only that the time specified in a non-compete agreement can not exceed two years. Accordingly, the result reached by the majority in this regard is correct.

Moreover, while I am sympathetic to the issue of fundamental fairness impacted by upholding such agreements, even where no additional economic consideration has been given, as noted and set forth in the well-reasoned dissenting opinion by Judge Shortess in this court’s Cellular One decision, I am nonetheless bound to follow this circuit’s prior published opinion. Thus, I concur in the result, which is legally correct.

      . Louisiana’s strong public policy restricting non-competition agreements is based on an underlying state desire to prevent an individual from contractually depriving himself of the ability to support himself and consequently becoming a public burden and also based on the fundamental right of individuals to seek success in our free-enterprise society. Vartech Systems, Inc. v. Hayden, 05-2499 (La. App. 1 Cir. 12/20/06), 951 So.2d 247, 254.

        . Louisiana Revised Statutes 23:921H provides, in relevant part:
      H. Any agreement covered by ... this Section shall be considered an obligation not to do, and failure to perform may entitle the obligee to recover damages for the loss sustained and the profit of which he has been deprived. In addition, upon proof of the obligor’s failure to perform, and without the necessity of proving irreparable injury, a court of competent jurisdiction shall order injunctive relief enforcing the terms of the agreement.

      . Because we find that Ms. Stewart's first two assignments of error are without merit, we need not address her third assignment of error.


source: Caselaw Access Project

author: MOORE, J. CARAWAY, J.,

license: Public Domain

text:
    Ruby Frederick Renter YATES and Son Hui Yates, Plaintiff-Appellants v. Randall MARSTON, Randolph F. Marston, Jr. and Lisa Marston, Defendant-Appellees.
    No. 48,009-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 22, 2013.
    Rehearing Granted June 20, 2013.

      Wiener, Weiss & Madison, Shreveport, LA, by John M. Madison, Jr., Michael Allyn Stroud, Donald Baron Wiener, for Appellants Ruby Frederick Renter Yates, et al.
    Gordon Arata McCollam, et al., by Lou-lan Joseph Pitre, Jr., Aimee Williams Hebert, New Orleans, LA, Julie Deshotels Jardell, Lafayette, LA, Paul B. Simon, for Appellant Petrohawk Properties, L.P.
    Davidson, Jones & Summers APLC, Shreveport, LA, by Randall Stephen Davidson, Grant Ernest Summers, William Lake Hearne, Jr., for Appellees.
    Before CARAWAY, DREW and MOORE, JJ.
   MOORE, J.

| j Ruby and Son Hui Yates, their assign-ee WJD Carbon (collectively, “Yates”) and Petrohawk Properties LP each appeal a partial summary judgment in favor of Randy and Lisa Marston and Rex and Sandra Young, declaring that Marston owns one-half of the mineral servitude, and Young owns the other half subject to a one-quarter royalty interest in favor of Yates, affecting a tract of land in Red River Parish. For the reasons expressed, we affirm.

Factual Background

The tract, the 1,581-acre Ashland-Cres-cent Plantation, had been in Marston’s family for several generations. Pursuant to a testamentary trust, Premier Bank held legal title to the tract in the 1990s. In January 1995, the trust sold the tract to Young, but reserved one-half mineral rights. In 1996, the trust terminated, conveying its one-half mineral servitude to Marston. In 1997, Young sold the tract to Yates, reserving (on top of Marston’s one-half mineral servitude) one-half of executive rights and one-fourth of royalty rights. All these sales were matters of public record.

Yates sold most of the tract to the Nature Conservancy in December 2002 for $1.5 million (“the Conservancy deed”). The Conservancy deed recited:

Grantors [Yates] hereby expressly reserve unto themselves, and their heirs, successors and assigns, in perpetuity pursuant to and will the benefit of La. R.S. 31:149.1 * * * all of the subsurface oil, gas and liquid hydrocarbons in, on or under the property, including all executive rights and reversionary rights related thereto[.] To evidence compliance with the requirements of La. R.S. 31:149.1, attached hereto * * * is a certificate * * * certifying that Grantee [the Nature Conservancy] is a national, nonprofit land conservation ^organization.

In August 2003, the Nature Conservancy sold the tract to the United States by general warranty deed. At this time, there was no mineral exploration or operation either on the tract or on units that included it.

In March 2008, Yates granted an oil, gas and mineral lease to Delta Lands; two months later, Delta Lands assigned lessee’s rights to Petrohawk. Later, Yates transferred whatever mineral rights he might have had to his subsidiary, WJD Carbon. In late 2008, Petrohawk began drilling seven wells in the Haynesville Shale, on units that included the tract. Apparently, Petrohawk paid all bonuses and royalties to Yates.

Yates filed this suit against Marston in October 2009, in essence to quiet title and obtain judgment declaring that Yates owned the mineral rights to the tract. Marston reconvened, asserting the servitude rights he reserved in the 1995 deed. In early 2010, Marston amended his recon-vention to join WJD, Yates’s assignee, and Petrohawk, Yates’s lessee, as defendants in reconvention. Then Young intervened, aligning himself with Marston, asserting the servitude rights he reserved in the 1997 deed.

The Statutes and Motion for Summary Judgment

Marston and Young filed the instant motion for partial summary judgment on the issue of imprescriptibility. At the time of the Conservancy deed (2002) and the U.S. warranty deed (2003), an article of the Mineral Code, La. R.S. 81:149.1, provided (in pertinent part, with emphasis added):

§ 149.1. Mineral rights imprescrip-tible when reserved in transfers of land to state or national, nonprofit land conservation organization
IsA. (1) When land is acquired from any person by an organization certified by the secretary of the Department of Natural Resources to be a state or national, nonprofit land conservation organization by conventional deed, donation, or other contract and by the act of acquisition, a mineral right otherwise subject to the prescription of nonuse is reserved, the prescription of nonuse shall not run against the mineral right so long as title to the land remains with the state or national, nonprofit land conservation organization.
(2) The state or national, nonprofit land conservation organization is only authorized to convey the property involved to another state or national, nonprofit land conservation organization, to the state, or to the federal government. If the land, or any part thereof, is transferred by the state or national, nonprofit land conservation organization, the state, or the federal government, the prescription of nonuse shall not apply.

The legislature repealed Art. 149.1 in 2004; simultaneously it amended La. R.S. 31:149, providing (in pertinent part, with emphasis added):

§ 149. Mineral rights reserved from acquisition of land by governments or agencies thereof imprescriptible
B. When land is acquired from any person by an acquiring authority through act of sale, exchange, donation, or other contract, * * * and a mineral right subject to the prescription of non-use is reserved in the instrument * * * by which the land is acquired, prescription of the mineral rights is interrupted as long as title to the land remains with the acquiring authority, or any successor that is also an acquiring authority. The instrument * * * shall reflect the intent to reserve or exclude the mineral rights from the acquisition and their impres-criptibility as authorized under the provisions of this Section and shall be recorded in the conveyance records of the parish in which the land is located.
D. If a mineral right subject to prescription has already been established over land at the time it is acquired by an acquiring authority, the mineral right shall continue to be subject to the prescription of nonuse to the same extent as if the acquiring authority had not acquired the land. Upon the prescription or other extinction of such mineral right, the transferor of the land shall without further action or agreement become vested with a mineral right identical to that ^extinguished, if (1) the instrument * * * by which the land was acquired expressly reserves or purports to reserve the mineral right to the trans-feror, whether or not the transferor then acqually owns the mineral right that is reserved, and (2) the land is still owned by an acquiring authority at the time of extinguishment.

Marston and Young argued that by a plain reading, Art. 149.1 A(l) (hereinafter, “Subsec. A(l)”) created a special rule for conveyances to conservation organizations whereby all outstanding mineral rights were made imprescriptible. Also, the Nature Conservancy’s later transfer of the tract to the U.S. activated the final clause of Subsec. A(2), “the prescription of non-use shall not apply.” They argued that the 2004 amendment to Art. 149 could not be applied retroactively as this would divest them of a substantive right, specifically, the imprescriptibility of a mineral right as recognized in Heirs of Viator v. TriParish Investors Ltd., 618 So.2d 36 (La. App. 3 Cir.), writ denied, 625 So.2d 167 (1993). Alternatively, they argued that if the 2004 amendment revoked their impre-scriptible' right, it restarted a 10-year period of nonuse during which Petrohawk’s operations began. They sought judgment declaring that (1) Marston owned a one-half mineral servitude in the tract, inclusive of royalty and executive rights, (2) Young owned the other one-half of executive rights, and one-fourth of royalty rights, (3) the Delta lease was null and void, and (4) Yates’s conveyance to WJD Carbon was null and void except as to the one-fourth mineral royalty retained by Yates. They also demanded an accounting for their proportionate share of all mineral production attributable to the tract.

Petrohawk and Yates opposed the motion. Petrohawk contended that Art. 149.1 conferred the benefit of imprescriptibility only on the person ^transferring the land to a conservation organization, not on anyone else. It showed that the Conservancy deed expressly reserved the mineral servitude “unto themselves,” meaning only Yates; and Subsec. A(l) referred to “the mineral right,” meaning only the particular right expressly reserved. Further, revised Art. 149 applied retroactively, as it changed only a prescriptive period and did not affect any substantive right. Producers Oil & Gas Co. v. Nix, 488 So.2d 1099 (La.App. 2 Cir.), writ denied, 493 So.2d 641 (1986); Anadarko Prod. Co. v. Caddo Parish School Bd., 455 So.2d 699 (La.App. 2 Cir.), writ denied, 460 So.2d 610 (1984). The only case to find a substantive right, Heirs of Viator, was not really apposite and has been criticized as “troublesome.” Patrick Martin, Recent Developments: Mineral Rights, 54 La. L.Rev. 747, 755 (1994). Finally, amended Art. 149 did not interrupt prescription but only suspended it from the date of the Conservancy deed until the 2004 repeal; nonuse had accrued by the time Petrohawk began drilling in 2008.

Yates reiterated many of Petrohawk’s points, adding that Marston and Young’s position disregarded the policy of former Art. 149.1, which was to encourage donations of land to conservation organizations by allowing the immediate transferor to retain ,Jhis minerals without risk of nonuse. Prior transferors had no surface rights to donate, and hence should not reap the benefit of imprescriptibility.

Action of the District Court

After a hearing in February 2012, the court rendered an opinion quoting the Conservancy deed and citing Art. 149.1. The court conceded that had Yates not made the reservation in the Conservancy deed, Marston | fiand Young’s mineral interest would have prescribed. At the time of the reservation, however, Yates did not own all the mineral interest. The court concluded that Art. 149.1 “cannot be construed to give Yates more of an interest than they had at the time of the execution of the deed,” and thus the reservation made all mineral owners’ rights impre-scriptible. The court rendered partial summary judgment as prayed for.

Petrohawk and Yates have appealed separately.

The Parties’ Positions

Yates urges, by one assignment of error, that the court erred in holding that the 2002 mineral reservation by Yates in the Conservancy deed rendered imprescrip-tible the 1995 and 1997 mineral servitudes of Marston and Young, respectively. First, Yates argues that Art. 149, not Art. 149.1, should apply: Art. 149 B makes any reserved mineral right imprescriptible as long as the land remained with the acquiring authority, the Nature Conservancy, and Art. 149 D vests in Yates the servi-tudes of Marston and Young when they prescribed. Even if Art. 149.1 applies, Yates argues, it refers only to “a mineral right otherwise subject to the prescription of nonuse” that is “reserved” in the “act of acquisition,” and can thus affect only Yates’s specific reservation in the Conservancy deed. Yates contrasts Art. 149.1 with a previous statute, La. R.S. 9:5806 A, which established imprescriptibility of mineral rights “subject to a prior sale or reservation” when property is transferred to the U.S., but argues that no subsequent statute, including Art. 149.1, has applied such a sweeping rule of 17imprescriptibility. Yates also argues that extending impres-criptibility to prior transferors is an “absurd” consequence; the goal of Art. 149.1 was to promote sales and donations to conservation organizations by promising the transferor that he could retain a valuable mineral interest, and this goal is not served by extending the promise to prior owners who are not selling at reduced prices for conservation purposes. Yates also argues that even though he did not own, and could not transfer, full mineral rights when he conveyed the tract to the Nature Conservancy, he still could reserve his reversionary interest in the minerals, i.e., that interest that would revert to him when Marston and Young’s servitudes prescribed for nonuse. Yates concludes that Art. 149.1, properly interpreted, mandates reversal, and that Art. 149, applied retroactively, also mandates reversal.

Petrohawk concedes that this is a case of first impression, as no jurisprudence interprets Art. 149.1, but argues with Yates that the article exempts from prescription only the mineral right reserved in the act of acquisition. Notably, the Conservancy deed contained no reservation in favor of Marston or Young, only in favor of Yates. Petrohawk urges that Subsec. A(2)’s unrestricted reference to “the prescription of nonuse” did not confer endless exemption from prescription but merely addressed which entities may receive property without defeating the exemption. With Yates, Petrohawk argues it makes “no sense to extend the mineral interest of one who has nothing to do with the transfer and even less so if the land is subsequently transferred to the government.” With Yates, Petrohawk also argues that Art. 149 governs the case, applies retroactively, and mandates reversal.

|sMarston and Young respond that at the time of the Conservancy and U.S. warranty deeds, they “unquestionably” held a majority of the mineral rights, which were not prescribed; Art. 149.1 barred these rights from prescribing after the Conservancy and U.S. acquired title. In effect, the 2002 and 2003 deeds “froze” their mineral rights, and nothing in repealed Art. 149.1 or in revised Art. 149 excludes the rights of prior servitude owners from imprescriptibility in this situation. Further, the 2004 amendment does not specify retroactive application, and it cannot be applied to divest prescriptive rights, as statutory imprescriptibility of a mineral lease is indeed a vested right, Heirs of Viator v. Tri-Parish Investors, supra. In the alternative, even if Art. 149 applies, it merely started a new 10-year period which was interrupted by Petrohawk’s exploration activities. Marston and Young conclude that the court should not resort to equity, as a plain reading of Art. 149.1 will suffice, but if equity is considered, it flows in their own direction: both Yates and Petrohawk are charged with knowing the law and what is contained in the public records; both received ample cash consideration; Yates’s position is a “naked desire to appropriate all mineral rights to himself’; and Petrohawk is always entitled to recoup its investment under La. R.S,. 31:10 A(2)(b)(iii). They urge affirmance.

General Principles

The starting point for interpretation of any statute is the language of | ¡¡the statute itself. Rando v. Anco Insulations Inc., 2008-1163 (La.5/22/09), 16 So.3d 1065. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. La. C.C. art. 9; Succession of Faget, 2010-0188 (La.11/30/10), 53 So.3d 414. The words of a law must be given their generally prevailing meaning. La. C.C. art. 11; Rando v. Anco Insulations, supra. When the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law. La. C.C. art. 10; Rando v. Anco Insula-tions, supra. Courts assume that in enacting a new law, the legislature was aware of existing law on the same subject. Succession of Faget, supra; Council v. FedEx Custom Critical Inc., 46,558 (La.App. 2 Cir. 9/21/11), 73 So.3d 461, writ denied, 2011-2332 (La.12/2/11), 76 So.3d 1178.

When summary judgment is granted in the context of statutory interpretation, there are no material issues of fact in dispute and the sole issue before the court is a question of law as to the correct interpretation of the statute at issue. State v. Louisiana Land & Exploration Co., 2012-0884 (La.1/30/18), 110 So.3d 1088.

The owner of land burdened by a mineral right or rights and the owner of a mineral right must exercise their respective rights with reasonable regard for those of the other. La. R.S. 31:11; Walton v. Burns, 47,388 (La.App. 2 Cir. 1/16/13), — So.3d-, 2013 WL 163739. The expectancy of a landowner in the extinction of an outstanding mineral servitude cannot be conveyed or reserved directly or indirectly. La. R.S. 31:76; Hicks v. Clark, 225 La. 133, 72 So.2d 322 (1954). The provisions of the Mineral Code apply to all mineral rights, including those existing on its effective date, but no provision may be applied to divest already vested rights or to impair the obligation of contracts. La. R.S. 31:214; Producers Oil & Gas v. Nix, supra.

No section of the Revised Statutes is retroactive unless it is expressly so stated. La. R.S. 1:12. If the legislature expressed in the enactment its intent regarding retroactive or prospective application, judicial inquiry is at an end. M.J. Farms Ltd. v. Exxon Mobil Corp., 2007-2371 (La.7/1/08), 998 So.2d 16. Absent legislative expression, procedural and interpretive laws apply both prospectively and retroactively, while substantive laws apply prospectively only. La. C.C. art. 6. However, even a substantive law may not be applied retroactively if so doing would impair contractual obligations or disturb vested rights. M.J. Farms Ltd. v. Exxon Mobil, supra, and citations therein.

Discussion

On close examination, we find that Sub-sec. A(l) was indeed ambiguous. It provided that when land is acquired by a conservation organization, and “by the act of acquisition, a mineral right otherwise subject to the prescription of nonuse is reserved, the prescription of nonuse shall not run against the mineral right ” as long as title remains with the conservation organization. In the second instance, the mineral right (definite article) appears to relate to the first, a mineral right (indefinite), but is not necessarily restricted to the first only; this would have been achieved by using a modifying clause, “the mineral right so reserved.” In |nother words, Subsec. A(l) suggested that only the mineral right specifically reserved in the act of acquisition was exempt from the prescription of nonuse, but did not mandate this reading. It must therefore be interpreted as having the meaning that best conforms to the purpose of the law.

Other provisions of the Mineral Code express the purpose of the law. According to R.S. 31:11, the owner of land burdened by a mineral right or rights (such as Yates) and the owner of a mineral right (such as Marston and Young) must exercise their respective rights with reasonable regard for those of the other. Yates conveyed the tract to the Nature Conservancy, purporting to reserve only his own mineral servitude, and yet at the time Marston and Young still owned significant mineral interests in the tract. The reservation appears to be without reasonable regard for Marston and Young’s rights. Moreover, R.S. 31:76 provides that the expectancy of a landowner (such as Yates) in the extinction of an outstanding mineral servitude (such as the interests held by Marston and Young) cannot be reserved directly or indirectly. This principle negates Yates’s position that he could reserve this “reversionary right” in the tract. If such was his unstated intent, then it would be an impermissible attempt to reserve the expectation that Marston and Young’s rights would prescribe for nonuse. Hicks v. Clark, supra. These provisions, Arts. 11 and 76, support the view that when Subsee. A(l) exempted “the mineral right” from the prescription of nonuse, it was exempting not only the right expressly reserved by the seller but any outstanding mineral interest affecting the property.

Moreover, the legislative history of Art. 149.1 supports this reading. Starting in 1938, Louisiana law declared that if a landowner transferred his 112Iand to a governmental entity for flood control purposes, he could retain his mineral interest in the land and such interest was not subject to the prescription of nonuse. Guy E. Wall, Imprescriptible Mineral Interests in Louisiana, 42 La. L.Rev. 123 (1981), and citations therein. The Mineral Code, which took effect on January 1, 1975, replaced prior statutes with Articles 149, 150 and 151, applicable to “condemnation or appropriation proceedings.” Of these, Art. 150 expressly excluded “then outstanding mineral rights subject to such prescription” from the special rule of imprescriptibility. However, in 1983, the legislature added Art. 149.1, which, pertinent to the instant case, made two major changes: it extended the exemption from prescription of non-use to acquisitions by conservation organizations, and it stated that this form of prescription shall not run “so long as title to the land remains with” the conservation organization. Notably, Art. 149.1 did not replicate Art. 150’s reference to “then outstanding mineral rights” which would remain subject to the prescription of nonuse. This critical omission from Art. 149.1 shows a legislative intent to protect outstanding mineral interests when land is acquired by a conservation organization.

Article 149.1 remained on the books until 2004, when the legislature repealed it, along with Arts. 150 and 151, and replaced them with a revised Art. 149. La. Acts 2004, No. 191. Notably, revised Art. 149 D retains Art. 150’s general idea by stating that if a mineral right has “already been established over the land” at the time of the acquisition, then “the mineral right shall continue to be subject to the prescription of nonuse[J” For this reason, Revision Comment (a) notes that revised Art. 149 is “like its | ^predecessors,” but we find it significant that the legislature chose language that suppressed the special concept of imprescriptibility that it had previously extended in Art. 149.1. This supports the view that prior to 2004, outstanding mineral rights were entitled to protection when the land was acquired by a conservation organization.

Finally, we note that Subsec. A(2) stated that if the land was later transferred by the conservation organization to another conservation organization or to a governmental entity, “the prescription of nonuse shall not apply.” This provision supports the broad concept of exemption from prescription that the legislature suppressed in 2004.

In short, we find that Art. 149.1 provided that prescription of nonuse did not apply to outstanding mineral rights when the property was acquired by a conservation organization by an act that reserved mineral rights.

Yates and Petrohawk strongly contend that even if Art. 149.1 exempted outstanding mineral rights like Marston and Young’s from the prescription of nonuse, the 2004 repeal of that article and enactment of revised Art. 149 abolished the exemption. Marston and Young concede that if the case were governed by revised Art. 149, their interests would have prescribed. Thus, the issue is whether the 2004 amendments were retroactive.

We note initially that La. Acts 2004, No. 919, which repealed Art. 149.1 and revised Art. 149, states that its provisions “shall become effective on August 1, 2004,” with no indication of retroactivity. At first glance, Act 919 appears to affect only a prescriptive period, thus making it procedural and subject to both retroactive and prospective application. However, the | prescription of nonuse extinguishes a real right other than ownership. La. C.C. art. 3448. Thus it is distinct from the liberative prescriptive, which merely bars actions as a result of inaction for a period of time. La. C.C. art. 8447. On the strength of Art. 149.1, Marston and Young had the absolute right to produce the minerals on the tract. Heirs of Viator v. Tri-Parish Investors, supra. A change from statutory imprescriptibility of a mineral right to the standard 10-year period of nonuse is a substantial destruction, without due process of law, of their vested right. Id.; Froebel E. Lee, Imprescriptible Mineral Reservations in Sales of Land to the State and Federal Governments, 22 Tul. L.Rev. 496, 502 (1948). We distinguish our prior opinion of Anadarko Prod. Co. v. Caddo Parish School Bd., supra, which addressed the retroactive application of a statute that imposed imprescriptibility on unexpired and previously prescriptible mineral rights. We decline to apply the 2004 amendment retroactively to this action.

Conclusion

For the reasons expressed, the partial summary judgment is affirmed. Ruby and Son Hui Yates, WJD Carbon and Petro-hawk Properties LP are to pay all costs.

AFFIRMED.

CARAWAY, J., dissents with written reasons.

CARAWAY, J.,

dissenting.

hi respectfully dissent. The majority’s statutory construction of former Article 149.1 of the Mineral Code jumbles the Civil Code principles for statutory interpretation, La. C.C. arts. 9, et seq. Ambiguity exists when the statute’s language is fairly susceptible of different meanings. La. C.C. art. 10. Two different meanings for Part A(l) are never actually explained from the statute’s language by the majority. The opinion identified only one “reading” that is “suggested” in Part A(l). Nevertheless, the ruling implies that the two possibilities for a conveyance to a conservation organization contemplated by Part A(l) are the following:

(1) The landowner conveys the land intending imprescriptibility for “a mineral right” “reserved” unto himself, the vendor;
and/or
(2) The landowner conveys the land intending imprescriptibility for any existing mineral rights burdening his land and owned by others.

On its face, with no attempt to place construction # 2 within the language of the statute, such intent by a benevolent landowner borders on the “absurd consequences” measure for statutory construction. La. C.C. art. 9. The broad objective of Article 149.1 is to direct a landowner’s conveyance of land to a conservation organization and allow him imprescriptible mineral rights. As the landowner contemplates a voluntary sale to a conservation organization, he has no self-interest or obligation to make imprescriptible the mineral rights of others who contracted for their rights under the prescriptive regime of nonuse. They received their bargained-for mineral rights without any expectancy that some future landowner, with whom they may never have been in privity, might | ^benevolently place their servitude under a new, more favorable prescriptive regime.

According to the trial court, had Yates made no expression of reservation about mineral rights in the Conservancy deed, Marston’s and Young’s mineral servitudes would have continued subject to the prescription of nonuse and prescribed. The majority appears to agree. Thus, if Yates had made the sale of the land to the Conservancy subject to the existing mineral servitudes, adding “which shall continue under the prescriptive regime of nonuse,” could Marston and Young complain? Yet, Yates actually did intend that Marston’s and Young’s mineral servitudes continue under the prescription of nonuse. The Conservancy deed shows that if those pri- or mineral rights prescribed, Yates expressly purports to reserve the “reversion-ary rights” related to those servitudes.

In my opinion, Article 149.1(A)(1) was never intended to protect the rights of prior mineral servitude owners who long since had acquired their mineral rights subject to the prescription of nonuse. The statute would certainly be unusual, if not absurd, to turn on the whim of the landowner as he sells the land to a conservation organization and contemplates the measure of his benevolence to the owners of existing mineral rights.

Most importantly, construction #2 as recognized by the majority cannot be found within the clear and unambiguous language of Article 149.1(A)(1). The majority confusingly examines the wrong language of Part AQL). The meaning of the concept of reservation (“reserved”) is the substantive focal point for statutory construction in this case. “A mineral right ... reserved” (a mineral reservation) is the landowner/vendor’s intended |sact of creation of a new mineral right. The legislature’s focus on a mineral right “reserved” (or created) in a conservation deed is the statutory predicate for this impre-scriptible right allowance in Part A(l) and is clearly understood from the established jurisprudential meaning for a mineral reservation. The Louisiana Supreme Court makes it clear:

There is a difference between the sale of a tract of land with a reservation of the minerals and the sale of land subject to existing mineral rights in it. The former is accomplished with language of reservation and indicates that something new is being created. A vendee under such mineral reservation is led to believe that the servitude created by it will prescribe at the end of ten years unless there is mineral development within that time on the land sold. On the other hand, the latter form of conveyance, accomplished with language of exception, puts the vendee on notice that there is a pre-existing mineral servitude on the land which may extend beyond the limits of the land purchased, and that prescription on any such servitude may have been interrupted, or may in the future be interrupted, by mineral development on land other than his own. Hence, language of reservation will suffice to declare one type of charge against the land, but language of exception is necessary to declare the other.

Hodges v. Long-Bell Petroleum Co., 240 La. 198, 121 So.2d 831, 839 (1960) (Emphasis added). With this accepted understanding in Louisiana law of a landowner/vendor’s mineral reservation for the creation of “something new,” a new mineral right, the language employed by the legislature in 1983 with the addition of Article 149.1 into the Mineral Code is not ambiguous. It is only the vendor’s reserved mineral right that is created under the imprescriptibility regime. That alone is the subject matter of Part A(l).

Additionally, the legislative history for the Mineral Code and pre-code legislation is instructive. The legislature had previously demonstrated pre-code that it could write an imprescriptibility statute protecting 1 outstanding minerals. It did that with former La. R.S. 9:5806 for convey-anees to the United States prior to the Mineral Code. The statute reflects a clear understanding of the Hodges distinction between new mineral rights created by-reservation and prior mineral rights to which the sale of land is made subject. The former statute provided:

When land is acquired by conventional deed or contract, condemnation or expropriation proceedings by the United States of America, or any of its subdivisions or agencies from any person, firm or corporation, and by the act of acquisition, order or judgment, oil, gas or other minerals or royalties are reserved, or the land so acquired is by the act of acquisition conveyed subject to a prior sale or reservation of oil, gas or other minerals or royalties, still in force and effect, the rights so reserved or previously sold shall be imprescriptible.

Former La. R.S. 9:5806.

Pre-code, this statute allowing protection for existing mineral rights in sales to the United States was contrary to the rules governing imprescriptibility for sales of land to the state or state agency. See Official Comment, Article 150 of Mineral Code, La. R.S. 81:150. The laws for state acquisition of lands allowed the seller of the land to reserve the expectancy of the extinction of any outstanding mineral right and receive a new imprescriptible mineral right upon such extinction. With adoption of the uniform rule of Article 150, this disparity was eliminated by the redactors of the Mineral Code who rejected any need to provide protection to the owners of outstanding mineral rights. La. R.S. 31:150. Instead, the chosen policy to promote the sale of property to governmental entities was to provide the incentive to the landowner to make the sale to the government with the assurance that even the existing mineral rights outstanding against his property may revert and fall into his ownership as imprescriptible mineral | .^ownership. That policy has never been changed since 1974. It was simply overlooked in the later addition of Article 149.1 in 1983, when the prevailing principle of Article 150 was not expanded to include a sale to a conservation organization. Nevertheless, Yates can make the argument against the United States that the rule of Article 150 applied after the acquisition of the land by the United States in 2003 and before Marston’s and Young’s rights prescribed since the United States’ acquisition was made subject to the Yates’ reservation of the reversionary rights. Likewise, the amendment to the law in 2004 with the enactment of new Article 149 of the Mineral Code arguably protects the Yates’ prior reservation of the reversionary rights. Anadarko Production Co. v. Caddo Parish School Bd., 455 So.2d 699 (La.App. 2d Cir.1984), writ denied, 460 So.2d 610 (La.1984).

The passage of the Mineral Code also addressed and clarified the effect of a later transfer of the land by the governmental entity upon imprescriptibility. La. R.S. 31:151 and former Mineral Code Article 149. In short, such transfer from governmental ownership to private ownership would start the prescription of nonuse against the formerly imprescriptible mineral right. Nevertheless, the possible transfer from a private conservation organization to the state or federal government did not fit that mold, and such conservation entities were likely to make transfers to public ownership. Hence, Part A(2) of Article 149.1 was necessary to address this different transfer situation and its effect on the imprescriptible mineral right previously reserved. It does so in the context of the entire statute where Part A(l) has already made imprescrip-tible only that mineral right “reserved” or | (¡created in the deed to the conservation organization. Such imprescriptible mineral right allowed by operation of Part A(l) remains imprescriptible after the transfer to the state or federal government and “the prescription of non-use shall not apply.” The text of both sections of the statute has the single focus upon the mineral right “reserved” and created in the initial sale of the land to a conservation organization.

As a final matter, the present owner of the land, the United States, cannot be made a party in this state court proceeding. Nevertheless, under Code of Civil Procedure Article 642, this court has determined that the action may proceed as a real action between the present parties who claim ownership of competing mineral rights of the same land. La. C.C.P. art. 642; La. C.C.P. arts. 3664, et seq. Yates and their mineral lessee have not only demonstrated mineral titles but have established possession of the mineral estate through the unit operations of Petrohawk affecting the property. Thus, as between the parties to this action, Yates and Petro-hawk as possessors are “considered provisionally as the owners of the thing ... until the true owner is established.” La. C.C. art. 3423. The United States may be the true owner. Nevertheless, Marston’s and Young’s own claims to imprescriptible mineral servitudes find no legal support in any weakness in Yates’ mineral title which may be asserted by the present landowner. Clearly, the present landowner’s argument against Marston’s and Young’s mineral servitudes is the same as presented in this dissent without regard to any weakness in Yates’ different claim for imprescriptibility. Article 150 of the Mineral Code was not amended and expanded in 1983 to allow a seller to a conservation organization to reserve the expectancy of the extinction of 17outstanding mineral rights. Nevertheless, it is a leap in logic to conclude that because Article 150 was not amended, Article 149.1 must have somehow made the Marston and Young mineral servitudes im-prescriptible. That hollow conclusion is unsupported by the clear* and unambiguous language of Article 149.1.

APPLICATION FOR REHEARING

Before BROWN, CARAWAY, DREW, MOORE and PITMAN, JJ.

Rehearing granted. Case dismissed by joint motion of the parties.

BROWN and MOORE, JJ., would deny rehearing.

      . La. R.S. 9:5806 was repealed by La. Acts 1974, No. 50, the same legislation that adopted the Mineral Code.

      . The surface owner, the United States, is not a party to this suit, and none of the litigants has suggested that the U.S. is a party necessary for just adjudication under La. C.C.P. art. 641. In that the warranty deed was subject to a reservation of all minerals, it would appear that the claimants of the mineral rights may litigate their claims without the joinder of the U.S. La. C.C.P. art. 3664.


author: PITMAN, J.

text:
    Jeffrey K. STEGALL, Plaintiff-Appellee, v. ORR MOTORS OF LITTLE ROCK, INC., d/b/a Sparks Nissan Kia Real Estate, LLC, Defendant-Appellant.
    No. 48,241-CA.
    Court of Appeal of Louisiana, Second Circuit.
    June 26, 2013.
    Rehearing Denied Aug. 1, 2013.

      McNew, King, Mills, Burch & Landry, LLP, Monroe, LA, by Brady D. King, II, Jennifer H. Johnson, for Appellant.
    Anthony J. Bruscato, Monroe, LA, for Appellee.
    Before BROWN, MOORE & PITMAN, JJ.
   PITMAN, J.

| TDefendant, Orr Motors of Little Rock, Inc., d/b/a Sparks Nissan Kia Real Estate, LLC, appeals a judgment from the Monroe City Court awarding Plaintiff, Jefferey K. Stegall, back wages in the amount of $30,000, penalty wages for 90 days at his daily pay rate totaling $25,439, attorney fees in the amount of $15,000 and legal interest on all said amounts. For the following reasons, we amend the judgment to reduce the amount of the penalty wages award to $10,226.70 and to reduce the amount of the attorney fees award to $10,861.21, and affirm the judgment in all other respects.

FACTS

Defendant is the owner of the Sparks Nissan Kia dealership (“Sparks”) in Monroe, Louisiana, where Plaintiff was hired in January 2005 as the service manager. At the time of his hire, Plaintiff was presented with a “pay plan” which detailed the manner in which his salary would be calculated. The pay plan contained no elements other than salary calculation and did not provide for a term of employment. The pay plan was in writing and signed by both parties. The parties agree that Plaintiff was an at-will employee.

A few months later, in July 2005, Plaintiff was given the additional job of serving as parts manager. Sparks modified Plaintiffs pay plan to include a percentage of the parts department’s gross profit to be paid to Plaintiff. This modification was reduced to writing and signed by both parties.

Plaintiffs January and July 2005 pay plans regained in effect for several years with only occasional bonuses or incentives. Incentive^ and | ^bonuses are common practice for /ar dealerships to help motivate employees. Plaintiff admitted at trial that he would- have felt entitled to any bonus offered'¡without a formal, signed agreement between the parties. A bonus offer by email was common practice.

In September 2007, Plaintiff approached William,Sparks, the owner of Sparks, and requested that one of the service technicians aij Sparks, Keith Branch, be granted a guaránteed weekly salary, rather than a typical ¡salary based on the profits of the service: department. Mr. Sparks sent Plaintiff an email agreeing to the guaranteed weekly salary, but with the understanding that it was Plaintiffs responsibility to make sure that Mr. Branch produced enough work to cover the base salary.

Mr. Branch did not produce the required: amount of work to cover his guaranteed salary and Plaintiff did not fire or replace him, resulting in a loss of profits for the Sparks service department. Sparks held Plaintiff responsible and deducted the loss from his wages beginning in September 2007.

In August 2008, the service department accepted a car for service without confirming that the repairs would be covered by warranty. The warranty on the car had expired because of a previous accident. The ear was serviced and returned to the owner without verifying warranty coverage, which cost Sparks more than $5,300. Sparks deducted this loss from Plaintiffs wages, attributing the loss to his own neglect.

Plaintiff testified that he was not directly responsible for the warranty problem that cost the dealership over $5,300. He did not write the job ticket |sand cannot be held responsible for every mistake made by the 16-18 employees under his supervision. Mr. Sparks testified at trial that holding the service manager responsible for unpaid customer bills was industry practice, but Plaintiffs testimony contradicted that. At the time of the incident, Plaintiff testified that he was informed he could either pay for the loss or he could resign. Plaintiff agreed that Sparks could deduct $500 from each of his paychecks to cover the loss from the warranty issue. Sparks was not consistent in its withdrawal of the money, sometimes taking more than was agreed upon.

Plaintiff was made aware, in September 2008, via email from Mr. Sparks, that the profit margins for the parts and service departments were low in comparison to other dealerships. Mr. Sparks set sales requirements for the parts department and advised that failing to meet the requirements would result in a one percent deduction in commissions from the parts department.

Sparks unilaterally modified Plaintiffs pay plan in writing in January 2009, but it was unsigned by the parties. The new pay plan removed Plaintiffs base salary provision and set out that his compensation would be based solely on commissions from exceeding net profit goals, as well as the opportunity to earn other commissions based on certain benchmark sales numbers. Although Plaintiff continued working at Sparks under the modified pay plan, he was dissatisfied with the modifications and resigned on June 30, 2009.

14Plaintiff filed suit in Monroe City Court seeking unpaid wages, attorney fees and penalties. Since the litigation was filed in city court, Plaintiff reduced his claim to $30,000 to stay within the court’s jurisdictional limits. During the bench trial, Plaintiff, Mr. Sparks and Judy Bradford, Sparks’ office manager, testified. Due to Ms. Bradford’s medical condition and her inability to appear at trial, the court allowed her deposition transcript to be admitted as testimony. The testimony of Plaintiff and Mr. Sparks was contradictory, with Plaintiff describing the deductions from his paycheck being made arbitrarily and unilaterally. The trial court entered a judgment in favor of Plaintiff awarding him back wages in the amount of $30,000, penalty wages for 90 days at his daily pay rate totaling $25,439, attorney fees in the amount of $15,000 and legal interest on all amounts granted.

DISCUSSION

Modifications to Plaintiff’s pay plan

In its first assignment of error, Defendant argues that it established at trial that valid modifications were made to Plaintiffs compensation plan and that Plaintiff did not sufficiently establish that additional wages were due upon his resignation from Sparks. At trial, Plaintiff argued that his salary from September 2007 through June 2009 was not paid in accordance with the July 2005 pay plan. Defendant contends that sufficient notice was given to Plaintiff before every modification was made and Plaintiff failed to Rmake any objections to the modifications and continued to accept and negotiate his paychecks during that time. Defendant states that evidence of the modifications was presented at trial and that modifications such as those made by Sparks are recognized under Louisiana law. Defendant further contends that Plaintiff does not disagree that pay plans can be modified by Sparks, only that he did not believe his plan would be modified in a negative way.

Defendant also argues that Sparks is free to modify its employees’ pay plans and that modifications are frequently made in order to increase productivity and sales. Defendant states that a written contract can be modified by oral contracts and by the conduct of the parties. Defendant further states that Plaintiffs continuing to work at Sparks and to accept paychecks despite modifications in his pay plan amount to his consent to the changes.

The parties agree that Plaintiff was an at-will employee; however, Plaintiff asserts that status comes with various contractual and statutory rights, including:

1) The employer must notify the employee “at the time of hire” of the rate at which he would be paid for his services. Once the employee has performed services, the employee is entitled to be paid at the agreed-upon rate. La. R.S. 23:633(A).
2) The employer has a legal obligation to provide the employee with “notice, reasonable in time and form” if the employer desired to terminate or modify the contract. La. C.C. art.2024.
3) The employer’s right to deduct amounts from the employee’s paycheck is limited by La. R.S. 23:635, which prohibits an employer from deducting amounts from an employee’s paycheck as a penalty for perceived errors or policy violations by the employee.

| fiPlaintiff asserts that characterizing an employee as “at will” does not dispose of an employee’s claims for breach of the employment contract or violation of the employee’s statutory rights. Plaintiff further asserts that Sparks violated his legal rights at various times throughout his employment.

An appellate court may not set aside a trial court’s or jury’s findings of fact in absence of manifest error or unless it is clearly wrong. Stobart v. State, Through DOTD, 617 So.2d 880 (La.1993); Rosell v. ESCO, 549 So.2d 840 (La.1989).

It is undisputed that the parties entered into a written contract of employment in July 2005, which set forth the terms of Plaintiffs pay plan. The pay plan, introduced into evidence at trial, provided that Plaintiff was guaranteed a base salary of $2,500 per month and that he would receive a percentage of the gross profits of the service and parts departments. Defendant did not introduce any document evidencing a subsequent written agreement signed by the parties to establish any change in those terms. Thus, it had the burden of proving an oral modification to Plaintiffs compensation plan. Kern v. River City Ford, Inc., 98-0407 (La.App. 1st Cir.2/19/99), 754 So.2d 978.

Notice of modification of a contract that is reasonable in time and form is a basic right of any party. La. C.C. art. 2024. The burden of proving an alteration in the terms of a written employment agreement lies with the party alleging the change. Scallan v. Mark Petroleum Corp., 303 So.2d 498 (La.App. 2d Cir.1974), writ denied, 307 So.2d 370 (La.1975). Here, that burden was with Defendant. The trial court weighed the [7evidence and testimony and did not believe that Defendant met its burden of proving a modification of the contract.

The trial court heard the conflicting testimony of the Plaintiff and Mr. Sparks and determined that Plaintiffs testimony was more credible. The trial court chose to believe Plaintiffs testimony that pay plans in his line of work are reduced to writing and any modifications should be handled in the same manner. Sparks applied modifications unilaterally, sometimes without notice and not in a formal, written contract. The January 2009 pay plan was unsigned by the parties and the trial court therefore found that the July 2005 pay plan should remain the controlling document. The finding by the trial court that Sparks improperly modified Plaintiffs pay plan was not manifestly erroneous or clearly wrong. Without a finding of manifest error by the trial court, this assignment of error is without merit.

Back wages

In its second and third assignments of error, Defendant argues that no back wages were due to Plaintiff and that any deductions taken from his paycheck were not for fines, but for his negligence, a common industry practice. Defendant argues in the alternative that, if it is determined that Plaintiff is owed back wages, the trial court’s calculation of those wages is incorrect.

Defendant argues that, as Plaintiffs pay plans were appropriately modified, no back wages were due to Plaintiff. Plaintiff was paid regularly and he accepted and negotiated his paychecks without complaint.

|sThe trial court did not set forth any specific calculation to determine the back wages and reimbursement of any improper deductions owed to Plaintiff. Defendant asserts that the trial court’s calculations fail to account for any wages that were actually paid to Plaintiff during his employment term. Defendant continues to point out that Plaintiff wishes to be paid under the July 2005 pay plan, but the calculations did not take into account any extra commissions Plaintiff was paid that were not included in the original plan.

Plaintiff counters with the argument that an employee is entitled to know the rate of pay applicable to his services. Sparks did not notify Plaintiff of his pay rate change before he began work in September 2007. Plaintiff argues that he had a right to be informed, with reasonable notice, before any modifications to his employment contract were applied. Plaintiff submits that, after 20 years in the automotive service business, he has found that pay plans are always reduced to writing— oral modifications are rare and are offered only when the dealership intends to increase rather than reduce the manager’s pay. This point was corroborated by Ms. Bradford’s deposition testimony.

Plaintiff argues that he never agreed or expected to be held responsible for other employees’ unpaid bills or mistakes. Neither of his pay plans mentions such a responsibility and it is not noted in Sparks’ employee handbook. While Mr. Sparks testified at trial that “backflagging” is common practice in dealerships, Plaintiff asserts that the practice amounts |flto a fine, which is prohibited by Louisiana law, is against public policy and is never acceptable.

If reasonable notice is not given, then the existing contract remains in force and continues to govern the parties’ relationship. Harrison v. CD Consulting, Inc., 05-1087 (La.App.lst Cir.5/5/06), 934 So.2d 166. The court in Harrison determined that an existing contract remains in effect until proper notice is given. Based on Harrison, the only way Defendant could terminate or modify the contract was by giving reasonable notice, and, without this, the July 2005 pay plan remained in effect. The unilateral decisions of Defendant after Plaintiff had provided work are not sufficient notice to be considered a modification of Plaintiff’s pay plan.

The unilateral changes made to Plaintiffs pay plan were improper and Plaintiff is owed wages in accordance with the July 2005 pay plan. Any payment that was made to Plaintiff which is less than what he was owed under that pay plan was improper and should be repaid.

According to La. R.S. 23:631(A)(l)(a), it is the duty of the employer to pay the employee the amount then due under the terms of employment no later than 15 days after the employment ends.

The trial court also determined that the deductions taken from Plaintiff for various things, including the mistake of warranty coverage and failure of Mr. Branch to produce enough work to cover his guaranteed salary, are actually fines and are prohibited by Louisiana law. An employer may not legally require an employee to pay a “fine” in the form of a financial penalty for an error or perceived breach of the employer’s work 11nrules or policies. Since “fines” are against public policy, the employer may not deduct a “fine” even if the employee consents to the deduction. La. R.S. 23:635; Brown v. Navarre Chevrolet, Inc., 91-1133 (La.App. 3d Cir.12/9/92), 610 So.2d 165. Despite the testimony that deductions such as these are standard within the industry, we agree that these deductions from Plaintiffs paychecks are “fines” under La. R.S. 23:635 and must be repaid.

Based on the foregoing, we find that the trial court did not commit manifest error in its determination that Plaintiff is owed back wages as calculated by the trial court and reimbursement for any and all fines improperly deducted during his employment. This assignment of error is without merit.

Penalty wages

Defendant’s fourth assignment of error argues that the trial court erred in determining that Plaintiff is entitled to penalty wages, or, in the alternative, that the calculation of the penalty wages is excessive.

To recover penalty wages under La. R.S. 23:632, the employee must prove: 1) that wages were due and owing, 2) a demand for payment was made at the place where the employee was usually paid and 3) the employer failed to pay upon demand. La. R.S. 23:632; Schuyten v. Superior Systems, Inc., 05-2358 (La. App.1st Cir.12/28/06), 952 So.2d 98. As this statute is penal in nature, it must be strictly construed. Moore v. Fleming Subway Restaurants, 28,543 (La.App.2d Cir.8/21/96), 680 So.2d 78. In order for an employee to recover penalty wages, the employer must be found to have acted in an arbitrary or unreasonable manner. If the amount owed to the |nempIoyee is subject to a bona fide dispute, courts will not consider the failure to pay as arbitrary or unreasonable and will refuse to award penalties.

In Coco v. Winston Industries, Inc., 341 So.2d 332 (La.1976), the supreme court clarified the standard of review in instances in which an appellate court questions the adequacy of the trial court’s monetary award. See also Farmer v. Patrician SLP, L.L.C., 43,601 (La.App.2d Cir.10/1/08), 997 So.2d 578, writ denied, 08-2606 (La.1/9/09), 998 So.2d 724, and writ denied, 08-2613 (La.1/9/09), 998 So.2d 725. When an appellate court finds that the lower court abused this discretion, the appellate court may only raise or lower the award to the highest or lowest point which is reasonably within the discretion of that court.

Based on the evidence and the law as set out in La. R.S. 23:632, Plaintiff is entitled to 90 days of penalty wages. However, we believe that the trial court’s calculation of penalty wages is excessive and not supported by the record. This court has recalculated those penalty wages using Plaintiffs daily pay rate under the controlling July 2005 pay plan. Plaintiffs base salary in July 2005 was $2,500 a month, which this court then divided by a 22-working day average to establish a daily rate of $113.63. The daily rate of $113.63, multiplied by 90 days, as granted by statute, brings the penalty wage award amount to $10,226.70. No commissions were included in the calculation, as commissions are not generally utilized in determining the employee’s daily rate of pay for calculating penalty wages. Schuyten v. Superior Systems, Inc., supra; Potvin v. Wright's Sound Gallery, 568 So.2d 623 (La.App. 2d Cir.1990); Hess v. Pembo, 422 So.2d 503 (La.App. 4th Cir.1982). We find that the trial court committed manifest error in awarding penalty wages in the amount of $25,439 and reduce that award to $10,226.70.

Attorney fees

Defendant asserts in its final assignment of error that the trial court erred in awarding attorney fees to Plaintiff, claiming that it did not improperly withhold wages at the time of Plaintiffs resignation.

Plaintiff argues that Plaintiffs counsel handled the case on a contingency basis and, therefore, did not keep contemporaneous hourly records. At the conclusion of the trial, Plaintiffs counsel prepared a rough estimate of the time expended on the case by reviewing the file. There were numerous pretrial issues, discovery requests, depositions, pleadings, court hearings, writ applications, arguments and a two-day bench trial. Plaintiff claims that an award of $15,000 is reasonable in light of the work required to properly present the case. Plaintiff also points out that the attorney fees are actually only 27 percent of the total award, which includes the back wages and penalty wages.

La. R.S. 23:632 provides that “reasonable attorney fees” shall be awarded to Plaintiff in the event the court finds a just suit has been filed by Plaintiff. Plaintiffs counsel submitted a report of hours spent on Plaintiffs case; but, after a reduction of the penalty fee award, we find the attorney fee award to be excessive.

11sThis court does not agree completely with the contents of the billing time line that was produced by Plaintiffs attorney. Some menial tasks were clearly over-billed; but, based on the record, this matter did require a generous amount of work and the attorney should be justly and fairly compensated for his labors. As stated above, La. R.S. 23:632 provides for an award of attorney fees under these circumstances. We find, however, that the trial court’s calculation of attorney fees is now excessive in light of the reduction in the penalty wages award. Accordingly, the attorney fees have been recalculated using the same percentage (27 percent) of the total award of $40,226.70, which includes back wages and the amended penalty wages. The amended attorney fee award is $10,861.21.

CONCLUSION

For the foregoing reasons, the judgment of the trial court awarding Plaintiff, Jeffrey K. Stegall, back wages in the amount of $30,000 is affirmed. The trial court’s judgment is amended to reflect a reduction in the penalty wages award to Plaintiff to $10,226.70 and a reduction in the attorney fee award to $10,861.21 and, as amended, is affirmed. Costs of this appeal are assessed to Defendant, Orr Motors of Little Rock, d/b/a Sparks Nissan Kia Real Estate, LLC.

AFFIRMED IN PART, AMENDED IN PART AND, AS AMENDED, AFFIRMED.

APPLICATION FOR REHEARING

Before BROWN, C.J., and STEWART, CARAWAY, MOORE & PITMAN, JJ.

| Rehearing denied.

BROWN, C.J., would grant rehearing.

      . The award of back wages collectively includes the back wages owed to Plaintiff and reimbursement of any deductions determined to be "fines” and improperly withheld from Plaintiff's paychecks by Sparks.