author: KYZAR,J.

text:
    Ali FAHED, et al. v. Fayz AYESH, et al.
    16-748
    Court of Appeal of Louisiana, Third Circuit.
    02/15/2017

      Jonathan D. Stokes, Max S. Antony, Gold, Weems, Bruser, Sues & Rundell, P. 0. Box 6118, Alexandria, LA 71307-6118, (318) 445-6471, COUNSEL FOR PLAINTIFF/APPELLANT: ALI FAHED
    Howard B. Gist, III, The Gist Firm, A Professional Law Corporation, P. 0. Box 13705, Alexandria, LA 71315, (318) 473-2501, COUNSEL FOR DEFENDANT/APPELLEE: ASM Food, Inc.
    Court composed of Marc T. Amy, David Kent Savoie, and Van H. Kyzar, Judges.
   KYZAR,J.

LThe plaintiff, Ali Fahed, appeals from a trial court judgment awarding him $11,000.00 in unpaid wages, denying his claim for penalties, and awarding him $1,500.00 in attorney fees. For the following reasons, we affirm the judgment.

DISCUSSION OF THE RECORD

Fahed and his wife, Amena Safi, filed suit against the defendants, ASM Food, Inc. (ASM) and Fayz Ayesh, alleging causes of action under the Louisiana Wage Payment Act, the Fair Labor and Standards Act, the Louisiana Unfair Trade Practices and Consumer Protection Law, and for causes of action sounding in contract and tort. However, the appeal before us is limited to Fahed’s claims under the Louisiana Wage Payment Act, which was tried by the trial court separately via summary proceedings.

Fahed’s claims arise from an agreement between himself and Ayesh to incorporate ASM for the purpose of operating a fast-food restaurant, PoBoy Express, in Pine-yille, Louisiana. The two parties were brothers-in-law, as Fahed was married to Ayesh’s sister. Fahed claimed that Ayesh promised that he would be a . co-owner of ASM and manager of PoBoy Express, for which he would earn $8,000.00 per month, plus a percentage of the net profits, He further claimed that Ayesh promised that his job duties would only be supervisory in nature and that he would work no more than forty hours per week.

In October 2014, ASM was incorporated, and the corporation assumed ownership of PoBoy Express. Fahed started working at the restaurant in November 2014, and within a couple of weeks, he claimed he was working fifty to sixty hours per week and his work duties had expanded to run the gambit of food preparation, shopping, cleaning, making deposits, and closing the registers each night. He further claimed that he received only $250.00 per week in wages. When |2he failed to receive the amount promised him by Ayesh, Fahed terminated his employment with ASM on March 31, 2015.

On July 13, 2015, Fahed mailed a written demand to ASM and Ayesh, stating that Ayesh promised that in exchange for his involvement in the enterprise, his monthly salary would be $8,000.00, plus a percentage of the net profits. He said that during his five months’ employmenti he only received $5,000.00 of the $40,000.00 he should have received; thus, he claimed that ASM and Ayesh owed him $35,000.00 in unpaid wages and his share of the net profits for the five months.

At the start of the February 17, 2016 trial on the wage issue, the parties stipulated that Fahed’s claim for wages was solely against ASM. After taking the matter under advisement, the trial court rendered written reasons for judgment on March 15, 2016, awarding Fahed $11,000.00 in unpaid wages and $1,500.00 in attorney fees, but denying his request for penalty wages. Judgment was rendered on March 22, 2016. Thereafter, Fahed filed a motion for new trial or, in the alternative, a motion for reconsideration. Following a May 9, 2016 hearing, the trial court denied Fahed’s motion for new trial on the penalty and attorney fee issues, but granted it to designate the March 22, 2016 judgment as a final judgment. The trial court then ordered the parties to resubmit a judgment containing the final judgment language. The resubmitted judgment was rendered by the trial court on May 16, 2016. It is from this judgment that Fahed has appealed.

Fahed raises two assignments of error on appeal:

1. The Trial Court clearly erred when it declined to award Fahed penalty wages.
2. The Trial Court clearly erred when it awarded Fahed only $1,500.00 in attorneys fees without permitting him the [¡¡opportunity to introduced [sic] evidence to show that he was entitled to $27,112.00 in attorneys fees.

OPINION

Under the Louisiana Wage Payment Act, an employer must pay the wages owed a terminated or resigned employee either on or before the next payday or within fifteen days of his resignation, whichever occurs first. La.R.S. 23:631(A). That statute further provides, in part:

In the event of a dispute as to the amount due under this Section, the employer shall pay the undisputed portion of the amount due as provided for in Subsection A of this Section. The employee shall have the right to file an action to enforce such a wage claim and proceed pursuant to Code of Civil Procedure Article 2592.

La.R.S. 23:631(B).

Failure to comply with the provisions of La.R.S. 23:631 subjects an employer to possible penalties and the assessment of reasonable attorney fees pursuant to La. R.S. 23:632, which provides:

A. Except as provided for in Subsection B of this Section, any employer who fails or refuses to comply with the provisions of R.S. 23:631 shall be liable to the employee either for ninety days wages at the employee’s daily rate of pay, or else for full wages from the time the employee’s demand for payment is made until the employer shall pay or tender the amount of unpaid wages due to such employee, whichever is the lesser amount of penalty wages.
B. When the court finds that an employer’s dispute over the amount of wages due was in good faith, but the employer is subsequently found by the court to owe the amount in dispute, the employer shall be liable only for the amount of wages in dispute plus judicial interest incurred from the date that the suit is filed. If the court determines that the employer’s failure or refusal to pay the amount of wages owed was not in good faith, then the employer shall be subject to the penalty provided for in Subsection A of this Section.
C. Reasonable attorney fees shall be allowed the laborer or employee by the court which shall be taxed as costs to be paid by the employer, in the event a well-founded suit for any unpaid wages whatsoever be filed by the laborer or employee after three days shall have elapsed from time of making the first demand following discharge or resignation.

|4In Winkle v. Advance Products & Systems, Inc., 98-694, pp. 14-15 (La.App. 3 Cir. 10/28/98), 721 So.2d 983, 990-91, this court stated the following with regards to the award of penalties pursuant to La.R.S. 23:632:

Under the provisions of La.R.S. 23:632, to recover penalty wages, the claimant must show that “(1) wages were due and owing; (2) demand for payment thereof was made where the employee was customarily paid; and (3) the employer did not pay upon demand.” Hebert [v. Ins.Ctr., Inc. ], 97-298, p. 9 [ (La.App. 3 Cir. 1/7/98]; 706 So.2d [1007,] 1013. Although equitable defenses are not expressly provided for in the statute, the Louisiana Supreme Court has interpreted the statute as a “coercive means” to compel an employer to pay an employee within the time limits set forth in La.R.S. 23:631. Beard v. Summit Inst. for Pulmonary Med. & Rehab., Inc., 97-1784, p. 7 (La. 3/4/98), 707 So.2d 1233, 1236. Accordingly, the court has held “that the penalty must be strictly construed and may yield to equitable defenses.” Id. If there is “ ‘a good-faith non-arbitrary defense to liability for unpaid wages, i.e., a reasonable basis for resisting liability’ ”, the court may refrain from imposing penalty wages upon the employer. Id. quoting Carriere v. Pee Wee’s Equipment Co., 364 So.2d 555, 557 (La.1978). “Reliance on an unlawful company policy does not constitute a good faith non-arbitrary defense to liability for unpaid wages.” Beard, 97-1784, p. 9; 707 So.2d at 1237. “ ‘Where there is a bona fide dispute over the amount of wages due, courts will not consider failure to pay as arbitrary refusal and generally will refuse to award penalties.’ ” Hebert, 97-298, p. 9; 706 So.2d at 1013 (quoting Barrilleaux v. Franklin Found. Hosp., 96-0343 (La.App. 1 Cir. 11/8/96), 683 So.2d 348, writ denied, 96-2885 (La. 1/24/97), 686 So.2d 864). The issue of [the employer’s] bad faith is a question of fact. Accordingly, it is subject to the manifest error standard of review. Hebert, 97-298; 706 So.2d 1007; Domite v. Imperial Trading Co., Inc., 94-16 (La.App. 3 Cir. 8/3/94), 641 So.2d 715.

PENALTY WAGES

In his first assignment of error, Fahed argues that the trial court clearly erred in denying his request for penalty wages because it found that although ASM admitted he was owed $750.00 per week, it only proved that he was paid $250.00 per week. It is noted that Fahed does not appeal the $11,000.00 awarded by the trial court as opposed to his demand of over $35,000.00, including profits from the business. Thus, this portion of the trial court’s judgment remains in force and undisturbed.

| aOther than his claim regarding the promised salary of $8,000.00 per month, which he admits was an oral agreement not reduced to writing, Fahed testified that he only received $250.00 per week the entire time he worked at PoBoy Express. He stated that he was paid in cash, except for the last month of his employment, when he was paid by check. No written receipts were produced by either party during the trial as to any of the cash payments. Fahed testified that his 2014 W-2 reports that he received $1,500.00 in wages for November and December 2014, and his 2015 W-2 reports that he received $3,150.00 for January, February, and March 2015. Although admitted into evidence, he stated that he never received the IRS Form 1099s from ASM for the years 2014 and 2015, reporting that it paid him $4,000.00 and $6,000.00, respectively, in non-employment compensation. Fahed did, however, admit that both he and his wife signed off on their joint 2014 income tax return, which included the $4,000.00 as business income received by them. He further stated that he had not yet filed his 2015 income tax return due to this litigation.

Ayesh admitted that Fahed was paid $750.00 per week during his employment at PoBoy Express, but denied that he promised to pay him the claimed $8,000.00 monthly salary plus profits. He testified that Fahed was paid by both cash and check each week: $500.00 in cash and a $250.00 check for a total of $750.00. Ayesh stated that the weekly cash payments of $500.00 equaled the $4,000.00 and $6,000.00 amounts shown on Fahed’s 2014 and 2015 1099s. Although he admitted that he could not prove the weekly $500.00 cash payments to Fahed, he claimed that Patricia Terrell, PoBoy Express’s manager, knew and could verify the payments. Ayesh further admitted that a check listed in ASM’s December payroll journal, showing that Fahed was paid $1,500.00 on December 31, 2014, was made up by his accountant on his instructions, to represent the | ^weekly $250.00 paid to Fahed by check. Ayesh also admitted that in his verified answers to interrogatories, this check was paid to Fahed on December 31, 2014. Moreover, he admitted that by paying its employees both cash and checks, ASM knowingly and willingly underreported their incomes to the federal and state governments.

Ayesh further testified that it was not possible that Fahed received only $250.00 per week in wages. He explained that when Fahed filed his 2014 tax return, he called to complain that his income tax was so low that he would not receive a refund. Ayesh said that he told Fahed that because he had paid him the $4,000.00 in 2014, he would give him a 1099. Again, Fahed claimed the $4,000.00 sum in his 2014 income tax filing with the IRS. According to Ayesh, this boosted Fahed’s 2014 refund to approximately $1,500.00.

Patricia Terrell testified that she handled PoBoy Express’s payroll. However, she stated that she did not handle Fahed’s wages nor had she ever been involved in or observed the manner in which Fahed was paid.

Alfred Huthnance, an Alexandria, Louisiana accountant, testified that he has prepared all of ASM’s tax documents and weekly payroll since its incorporation, but he admitted that he has no independent knowledge of its operation. He stated that all of the information he utilizes in keeping its books and in the preparation of its tax documents is provided by Ayesh. Although he was initially approached by both Fahed and Ayesh about incorporating ASM, he said that once it was incorporated he dealt strictly with Ayesh.

Huthnance testified that the total reported wages paid by ASM in 2014 amounted to $12,724.00, as reported in its 2014 federal tax return, its 2014 annual federal unemployment tax return, its fourth quarter 2014 federal tax return, and its 2014 W-3 transmittal of wage and tax statements to the Social Security 17Administration. In regards to Fahed, he stated that ASM’s payroll journal indicates that he was paid wages of $1,500.00 on December 31, 2014, by Check 1090, which amount was included in its $12,724.00 total wage amount for 2014. However, Huth-nance admitted that he created Check 1090 to account for the cash payment of wages Ayesh reported to him as having been paid to Fahed, but that he had no check stub to document the payment.

Huthnance also testified that ASM’s 2015 payroll journal shows that Fahed received six checks in 2015: Check 1129 for $1,200.00 on January 31, 2015; Check 1185 for $800.00 on February 28, 2015; Check 5007 for $300.00 on March 2, 2015; Check 5011 for $300.00 on March 9, 2015; Check 5014 for $300.00 on March 16, 2015; and Check 5019 for $250.00 on March 23, 2015. As he also did for 2014, he stated that the first two checks were made up because the amounts were based on statements made by Ayesh about cash payments to Fahed for wages.

Huthnance testified that Fahed also received 1099s from ASM in 2014 and 2015, indicating that he received non-employment compensation from it in the amounts of $4,000.00 and $6,000.00 respectively. He stated that these amounts were based solely on statements by Ayesh, and he had no proof that these amounts were actually paid to Fahed. Huthnance explained that the compensation listed on a 1099-Miscel-laneous Income Tax Form differs from that shown on a W-2 because it has no taxes deducted from its amount. He agreed that an employer is required to report any income an' employee earns through the performance of services on a W-2, whereas non-employment compensation is reported on a 1099. Additionally, he stated that an employer would not include any amounts paid via a 1099 in its reported amount of paid salaries and wages on its corporate tax return. Rather, he said that it would be listed as a deduction, such as for business expenses or contract labor. Huthnance admitted that Fahed’s $4,000.00 1099 income was not reported] s on ASM’s 2014 corporate tax return; however, he said that it should have been included and that the failure to do so lay with his office and was not the fault of Ayesh.

Huthnance testified that his office also prepared Fahed and his wife’s 2014 joint personal tax return. He stated that the return was prepared based on information received from the couple and included both Fahed’s W-2 wages and the $4,000.00 1099 income he received from ASM. He said that Fahed and his wife both signed and received a copy of the tax return, but neither questioned him about the reported 1099 income. Huthnance testified that the $4,000.00 from the 1099 was reported as business profit or loss on Schedule C, based on information he received from both Fahed and Ayesh. The form, which lists “delivery” as Fahed’s principal business or profession, reports the $4,000.00 as gross income. It further lists $1,600.00 in expenses: $400.00 for repair and maintenance and $1,200.00 as other expenses. Huthnance said that he assumed, based on the nature of Fahed’s business, that the $400.00 repair and maintenance expense was related to his vehicle and that the $1,200.00 other expense was for fuel. Finally, he stated that due to this litigation, his office had not yet prepared the 2015 income tax return for Fahed and his wife and that Fahed was issued a 1099 from ASM, which reported non-employment compensation in the amount of $6,000.00.

Huthnance agreed that it was common for employers in the restaurant field to pay their employees both cash and checks. He further agreed that although he cautions them against paying wages in cash, the decision ultimately rests with his clients. He stated that Ayesh reported to him that Fahed’s wages were paid both in cash and check, and he assumed that ASM was paying some of its employees in cash.

In its reasons for judgment, the trial court held that Ayesh admitted that | ¡ASM owed Fahed weekly wages of $750.00 during the approximately twenty-two weeks he was employed. In finding that ASM failed to prove that it actually paid Fahed $750.00 per week, the trial court stated:

ASM failed to provide documentation showing proof of paying Fahed $750 a week (cancelled checks, etc.). Their claim is unsupported by the amount of wages reported on ASM’s tax documents. The W-2s issued by ASM to Fahed show only that he was paid $1,500 for “wages, tips, and other compensation” for about nine weeks of work in 2014 and $3,150 for “wages, tips, and other compensation” for about thirteen weeks of work in 2015. Likewise, ASM’s W-3s, its income tax return, its payroll records, and the testimony of its accountant, A.H. Huthnance, all support the same amount in wages reported on ASM’s W-2s issued to Fahed and do not support ASM’s claim that it paid Fahed $750 a week. The evidence of the amounts ASM paid to Fahed for his employment services is the tax documents filed with the IRS and the Louisiana Department of Revenue. Given the fact that ASM Food only offered evidence that Fahed was paid $250 a week, this means that ASM still owes Fahed $11,000 in past due wages.

(Footnote omitted.)

However, in denying Fahed’s claim for penalty wages, the trial court stated:

The burden of proof rests upon plaintiff to establish by a preponderance of the evidence the facts upon which he relies to support his claim for an award of penalties under La.R.S. 23:632. Two of these essential elements of proof are that wages actually are owed to plaintiff and that such wages have not been paid. Harrison v. First Nat. Funeral Homes, Inc., 244 So.2d 102 (La. Gt. App.1971). A good-faith non-arbitrary defense to liability for unpaid wages, i.e., a reasonable basis for resisting liability permits a court to decline to impose penalty wages on an employer.
Here, there are clear disputes as to the oral agreement between Fahed and Ayesh and Fahed failed to meet his burden of proof regarding the terms of their oral agreement. The Court finds this enough to justify ASM Food resisting the demands of Fahed and declines to award any penalty wages.

Pursuant to La.R.S. 23:631, ASM was obligated to pay Fahed any undisputed wages owed to him by the next payday or within fifteen days of his resignation, whichever occurred first. In this instance, the amount disputed between the parties was the $8,000.00 monthly salary plus profits claimed by |inFahed. Ayesh acknowledged that ASM agreed to pay Fahed $750.00 per week. This court notes that this admission by Ayesh is the only evidence upon which the trial court could have concluded that Fahed was owed that amount in weekly wages. After accepting that Fahed’s weekly wages were $750.00, but further finding that he was only paid $250.00 per week, the trial court concluded that he was owed $11,000.00 in unpaid wages by ASM. However, based on Fahed’s claim that he was owed $8,000.00 per month rather than $750.00 per week, the trial court held that there was a bona fide dispute regarding the amount of wages owed him; thus, it denied his request for penalty wages.

Based on our review of the record, we find that the trial court was not clearly wrong in denying Fahed’s request for penalty wages. The trial court concluded, as a matter of fact, that a bona fide dispute existed between the parties as to the amount of wages owed and refused to award penalty wages. Fahed offered no written proof of the agreement for the $8,000.00 per month salary plus profits from the business. This amount differs significantly from the $750.00 per week wage the trial court concluded was owed based on Ayesh’s admission. Indeed, the evidence at trial revealed a secretive and disorganized relationship between-Fahed, Ayesh, and ASM due to the manner in which they chose to conduct business. No receipts were created or demanded for cash payments, while other written documents, such as check entries and 1099s, were created after the fact in an attempt to document prior cash payments. The trial court was presented with a situation remarkably similar to that presented in a wage and penalty claim under a precursor to La.R.S. 23:631 and 23:632 in Bridges v. McClenaghan, 14 So.2d 652 (La.App. 2 Cir. 1943). Therein, the second circuit noted the difficulty experienced by the trial court in making its factual determinations by stating, “The Intrue facts of this ease are most difficult to determine, due to the unbusiness-like method—if there was any method at all—in which plaintiff and defendant conducted their relations.” Id. at 653. In upholding the trial court’s denial of penalty wages and attorney fees, the court stated, “The loose, haphazard manner in which plaintiff and defendant kept the records of their affairs is such as to always end in litigation. Plaintiff had no record or knowledge of what amount was due him when he resigned on September 20, 1941, and defendant was in no better position than he was.” Id. at 654. The trial court in this matter was in an equally difficult situation, and it cannot be concluded that it was clearly wrong in denying penalty wages given the relative difficulty it had in determining the actual wages owed to Fahed at the time of his resignation. As in Bridges, there was indeed a bona fide dispute as to the amount ASM owed Fahed, such that this litigation was inevitable.

This court further notes that there was evidence to support Ayesh’s claim that ASM paid Fahed more than the claimed $250.00 per week, as evidenced by the $4,000.00 reported in his 2014 1099, which Fahed acknowledged in his tax return that year. The evidence supports the trial court’s decision to deny penalty wages pursuant to La.R.S. 23:631, which decision is not to be disturbed absent a showing of manifest error. Accordingly, we find no error in the trial court’s denial of Fahed’s request for penalty wages, and the judgment of the trial court is affirmed on this issue.

ATTORNEY FEES

In his second assignment of error, Fahed argues that the trial court erred by awarding him only $1,500.00 in attorney fees. We disagree.

Louisiana Revised Statutes 23:632 provides that an employee, who brings a well-founded suit for unpaid wages, is entitled to reasonable attorney fees. A well-| 1 ¿founded suit is one in which the employee prevails in the award of unpaid wages. Beard v. Summit Inst. for Pulmonary Med. & Rehab., Inc., 97-1784 (La. 3/4/98), 707 So.2d 1233. In Stanley v. Crowell & Owens, LLC, 15-395, pp. 3-4 (La.App. 3 Cir. 10/7/15), 175 So.3d 1204, 1207-08, unit denied, 15-2035 (La. 1/8/16), 184 So.3d 694, this court reviewed the law regarding appellate review of an attorney fee award:

This court reviews the trial court’s award of attorney fees under the abuse of discretion standard. Covington v. McNeese State Univ., 12-2182 (La. 5/7/13), 118 So.3d 343. In Covington, the supreme court stated that in applying that standard, “the role of the reviewing court is not to determine what it considers to be an appropriate award, but rather it is to review the exercise of discretion by the trier of fact.” Id. at 351. Still,. we review the trial court’s factual findings in reaching the award at issue pursuant to the manifest error/clearly wrong standard. Stobart v. State, Dep’t of Trans. & Dev., 617 So.2d 880 (La.1993); Cottonport Bank v. Keller Prop. Mgmt. LLC, 13-649 (La.App. 3 Cir. 12/11/13), 128 So.3d 668.
Additionally, the trial court has discretion in determining the amount of an attorney fee based upon its own knowledge, the evidence, and its observation of the case and the record. Custom-Bilt Cabinet & Supply, Inc. v. Quality Built Cabinets, Inc., 32,441 (La.App. 2 Cir. 12/8/99), 748 So.2d 594. In fact, a court does not have to hear evidence concerning the time spent or hourly rates charged in order to make an award since the Record will reflect much of the services rendered. Burford v. Burford, 95-2318 (La.App. 1 Cir. 6/28/96), 677 So.2d 722. When the nature and extent of the services of an attorney are shown by the record, it- is the duty of the court to bring to bear its knowledge of the value of the services óf counsel and to fix the value even in the absence of expert testimony. Mitchell v. Turner, 588 So.2d 1305 (La.App. 2 Cir.1991).

The factors to be considered in determining the reasonableness of an attorney fee award on appeal include:

(1) the ultimate result obtained; (2) the responsibility incurred; (3) the importance of the litigation; (4) amount of money involved; (5) extent and character of the work performed; (6) legal knowledge, attainment, and skill of the attorneys; (7) number of appearances made; (8) intricacies of the facts involved; (9) diligence and skill of counsel; and (10) the court’s own knowledge.

State, Dep’t of Transp. & Dev. v. Williamson, 597 So.2d 439, 442 (La.1992).

|1sIn awarding Fahed attorney fees, the trial court was not required.to set a hearing in order to determine what amount would be reasonable. In making such determinations, the trial court is entitled to much discretion, and a review of the record reveals, as noted by the trial court in its reasons for judgment, that the wage claim was part and parcel of the much broader claims alleged by Fahed in his petition. This particular aspect of his claim was separated from the others and tried summarily, leaving the remaining claims to be litigated at a later date. The issue in this part of the dispute was not difficult, and while the amount set may be on the low side, based on the outcome obtained, we do not find that it was an abuse of the trial court’s discretion. Accordingly, the judgment of the trial court is affirmed.

DISPOSITION

Based on the foregoing, we affirm the trial court’s denial of Ali Fahed’s claim for penalty wages against ASM Food, Inc. and the award of $1,500.00 in attorney fees. The costs of appeal are assessed to Ali Fahed.

AFFIRMED,

      . 1936 La. Acts No, 138, § 1.


source: Caselaw Access Project

author: HIGGINBOTHAM, J.

license: Public Domain

text:
    FAUSSE RIVIERE, L.L.C. v. John K. SNYDER, Jr., John River Cartage Inc., John River Aggregate, LLC, and Synthetic Aggregates of Louisiana, LLC
    NO. 2016 CA 0633
    Court of Appeal of Louisiana, First Circuit.
    FEBRUARY 15, 2017

      Daniel D. Holliday, III, Baton Rouge, LA, Attorney for Defendants-Appellants, John K. Snyder, Jr., John River Cartage Inc., John River Aggregate LLC, and Synthetic Aggregates of Louisiana, LLC
    Michael E. Parks, New Roads, LA, Attorney for Plaintiff-Appellee, Fausse Rivi-ere, LLC
    BEFORE: HIGGINBOTHAM, THERIOT, AND CHUTZ, JJ.
   HIGGINBOTHAM, J.

| .¿The defendants, John River Cartage, Inc., John River Aggregate, LLC, Synthetic Aggregates of Louisiana, LLC, and John K. Snyder, Jr., appeal a judgment piercing the corporate veils of John River Cartage, Inc., John River Aggregate, LLC, Synthetic Aggregates of Louisiana, LLC and finding Mr. Snyder personally liable to the plaintiff, Fausse Riviere, LLC (Fausse Riviere), for damages due in accordance with a lease agreement.

FACTUAL AND PROCEDURAL HISTORY

In January 2009, Fausse Riviere, appearing through its sole member and manager, James A. Laurent, leased approximately forty acres of land located in Pointe Coupee Parish to John River Cartage, Inc., appearing through its president, Mr. Snyder, for John River Cartage, Inc.’s aggregate business. The initial term of the lease agreement was from February 1, 2009, until January 31, 2011. On January 21, 2011, the lease was extended for one year by agreement of the parties. On January 31, 2012, Fausse Riviere sent a letter addressed to “John River Aggregate of Louisiana” that again offered to extend the lease for a year. Mr. Snyder, as president of John River Aggregate of Louisiana, accepted the offer and the lease was again extended for a year, until January 31, 2013. During that time, Mr. Snyder filed personal bankruptcy, and in August 2012, Fausse Riviere stopped receiving rental payments. Thereafter, around September 2013, by way of an oral agreement between the parties, Synthetic Aggregates of Louisiana, LLC was substituted as the lessee and the rent was increased so that Synthetic Aggregates of Louisiana, LLC could catch up on rental payments.

Ultimately, Synthetic Aggregates of Louisiana, LLC ran into business difficulties and stopped paying the agreed upon rental payments. Due to the non-payment of rent, Fausse Riviere terminated the lease, and on June 26, 2014, filed a petition seeking back due rent, all cost of restoration of the property, attorney fees, and a writ of sequestration directing the sheriffs office to seize and hold all movables located on the leased premises until further orders of the court.

| sIn its petition, Fausse Riviere named John River Cartage, Inc., John River Aggregate, LLC, Synthetic Aggregates of Louisiana, LLC, and John K. Snyder, Jr., individually, as defendants. The defendants answered the petition and the matter came before the trial court on September 29, 2015. After trial, on October 30, 2015, the trial court rendered judgment in favor of Fausse Riviere and against Synthetic Aggregates of Louisiana, LLC and Mr. Snyder in solido in the amount of $14,000.00 for past due rental payments, and against all defendants in solido in the amount of $80,000.00 to restore the property to the condition it was before the lease, $5,000.00 for attorney fees, and all costs of the proceedings. Additionally, the trial court rendered judgment decreeing that Fausse Riviere “can declare all of the movable property left on the leased property as forfeited by defendants, and therefore become the property of [Fausse Riviere], all as specifically provided in the lease contract.” It is from this judgment that the defendants appeal citing the following assignments of error:

1. The trial court erred in disregarding the protection against the liability of a member for the debts of the limited liability company afforded by La. R.S. 12:1320 by “piercing the corporate veil” and holding Mr. Snyder, personally liable for the debts of the limited liability company.
2. The trial court erred in finding that the property of the defendants located on the leased premises, which had previously been seized by virtue of a writ of sequestration issued at the request of Fausse Riviere, had been abandoned by the defendants.
3. The trial court erred in failing to require Fausse Riviere to formally exercise its landlord’s lien against the defendant’s movable property located on the leased premises so that the defendants will receive the appropriate credit for the value of the movable property.

LAW AND ANALYSIS

Assignment of Error No. 1: Personal Liability of Mr. Snyder

In its petition, Fausse Riviere contends that John River Cartage, Inc., John River Aggregate, LLC, and Synthetic Aggregates of Louisiana, LLC operated as the alter ego of Mr. Snyder, and therefore, the corporate veils of these business entities should be pierced and Mr. Snyder should be held personally liable for the damages due to Fausse | ¿Riviere. This case involves piercing the corporate veils of John River Cartage, Inc., John River Aggregate, LLC, and Synthetic Aggregates of Louisiana, LLC.

A corporation is a separate entity from its shareholders and a Louisiana limited liability company (LLC) is a separate legal entity from its members. See La. Civ. Code art. 24; Jones v. Briley, 593 So.2d 391, 394 (La. App. 1st Cir. 1991); Charming Charlie, Inc. v. Perkins Rowe Associates, L.L.C., 2011-2254 (La.App. 1 Cir. 7/10/12), 97 So.3d 595, 598. Corporations and LLCs are recognized juridical persons. See La. Civ. Code art. 24. The role of the corporate identity is perceived as beneficial to business and industry. See Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164, 1167-1168 (La. 1991).

In narrowly defined circumstances, when individual member(s) of a juridical entity, such as an LLC, mismanage the entity or otherwise thwart the public policies justifying treating the entity as a separate juridical person, the individual member(s) have been subjected to personal liability for obligations for which the LLC would otherwise be solely liable. When individual membér(s) are held liable under such circumstances, it is said that the court is piercing'the corporate veil. See e.g. Charming Charlie, Inc., 97 So.3d at 598. In Ogea v. Merritt, 2013-1085 (La. 12/10/13), 130 So.3d 888, 895 the supreme court acknowledged that personal liability could be imposed on an LLC member under the jurisprudential doctrine of piercing the corporate veil. However, in that case, the supreme court did not further address the piercing the corporate veil doctrine, because it was neither relied upon by the lower courts nor invoked by the plaintiff. See Ogea, 130 So.3d 895. Only exceptional circumstances warrant disregarding the concept of a corporation or LLC as a separate entity. Riggins, 590 So.2d at 1168; Jones, 593 So.2d at 394. Moreover, the same policy considerations relevant to a determination of piercing the veil of a corporation also apply to an LLC. Charming Charlie, Inc., 97 So.3d at 598.

The court may pierce the corporate veil under two exceptional circumstances. First, where the shareholders, acting through the corporation, commit fraud or deceit on a third | Bparty, the court will look to the shareholders for justice. Secondly, the court may disregard the corporate identity where shareholders fail to conduct the business on a corporate footing. Such a failure can occur if the shareholder disregarded the corporate formalities to such an extent that the shareholder and the corporation became indistinguishable, or such unity existed that separate individual-ities ceased and the corporation was operated as the “alter ego” of the shareholder. See Riggins, 590 So.2d at 1168.

The determination of whether to allow piercing of the corporate veil is made by considering the totality of the circumstances. Riggins, 590 So.2d at 1169; Jones, 593 So.2d at 394. Some of the circumstances that may point to a disregard of the corporate identity are: (1) commingling of corporate and shareholder funds; (2) failure to follow statutory formalities for incorporating and transacting corporate activities; (3) under-capitalization; (4) failure to provide separate bank accounts and bookkeeping records; and (5) failure to hold regular shareholder and director meetings. Riggins, 590 So.2d at 1168; Jones, 593 So.2d at 395. The involvement in the corporate business of the sole or majority shareholder is insufficient alone to establish a basis for disregard of the corporate entity. See Riggins, 590 So.2d at 1168; See Chin v. Roussel, 456 So.2d 673, 678 (La. App. 5th Cir.), writ denied, 459 So.2d 540 (La. 1984).

The initial burden is on the shareholders to show the existence of a corporation. Once that burden is met, the burden shifts to the challenger or third party to show the exceptional circumstances that must exist to warrant disregard of the corporation’s separate identity. Jones, 593 So.2d at 394. Whether an LLC is an alter ego of its members or whether individual liability should be assigned to a corporation’s shareholder are primarily factual findings subject to the manifest-error standard of review. McDonough Marine Serv. v. Doucet, 95-2087 (La.App. 1 Cir. 6/28/96), 694 So.2d 305, 309-10; Dishon v. Ponthie, 2005-659 (La.App. 3 Cir. 12/30/05), 918 So.2d 1132, 1135 writ denied, 2006-0599 (La. 5/5/06), 927 So.2d 317.

|fiIn Stobart v. State through Dept. of Transp. and Development, 617 So.2d 880, 882 (La. 1993), the Louisiana Supreme Court enunciated a two-part test for the reversal of a factfinder’s determinations: (1) the appellate court must find from the record that a reasonable factual basis does not exist for the finding of the trial court, and (2) the appellate court must further determine that the record establishes that the finding is clearly wrong (manifestly erroneous). This test dictates that a reviewing court must do more than simply review the record for some evidence which supports or controverts the trial court’s finding. The reviewing court must review the record in its entirety to determine whether the trial court’s finding was clearly wrong or manifestly erroneous. Id. The issue to be resolved by a reviewing court is not whether the trier of fact was right or wrong, but whether the factfinder’s conclusion was a reasonable one. Id.

In the instant case, the defendants established the corporate existence of John River Cartage, Inc., and that John River Aggregate of Louisiana, Synthetic Aggregates of Louisiana, and John River Aggregate were LLCs. The documents of registration with the Louisiana Secretary of State and other documents demonstrated the existence of the corporation and LLCs. The burden then shifted to Fausse Riviere to show that exceptional circumstances exist warranting disregard of the corporation and LLCs’ separate identity.

In support of the theory that the corporation and LLCs in question were alter egos of Mr. Snyder, Fausse Riviere relies on the manner in which Mr. Snyder commingled the assets and debts of his businesses, and the lack of formality by which Mr. Snyder operated his businesses. Additionally, Fausse Riviere relies on the second extension of the leased property, which was in the name of John River Aggregate of Louisiana and not an LLC or corporation.

During trial, Fausse Riviere’s managing partner, Mr. Laurent, testified that Mr. Snyder sometimes paid the rent owed to Fausse Riviere by personal check. Mr. Snyder acknowledged that he might have paid the rent one time with a personal check, but otherwise he paid with checks of one of his LLCs.

_jjMr. Snyder testified that he did not transfer or sell any of the materials belonging to John River Cartage, Inc. to any of the other entities that were named in the extensions of the lease term. He simply changed the name of the lessee and continued to use the equipment and materials on the leased property without a transfer in any form. There was no lease agreement between the entities over the use of the equipment and there was no transfer or sale of the materials that were used in making the products that Mr. Snyder was selling. Mr. Snyder testified that he had several companies and “all of the companies ran together and [he] ran all of them.” During cross examination, Mr. Snyder did not remember that John River Aggregate, LLC and John River Aggregate of Louisiana, LLC were two distinct entities, and he thought they were the same entity. "Mr. Snyder acknowledged that because he had so many different entities he was not aware of whether they were in good standing. Additionally, he was not aware that John River Aggregate of Louisiana, LLC was inactive because of action by the Secretary of State. Clearly, the evidence supports a finding that these businesses were not operated as separate entities from each other or from Mr. Snyder, and there was significant commingling of assets.

In the second offer and acceptance of an extension of the lease prepared by Mr. Laurent, the letter was addressed to John River Aggregate of Louisiana and was also identified in that way by Mr. Snyder’s acceptance of the extension. There was conflicting testimony as to why this extension was not made through an LLC. Mr. Laurent testified that Mr. Snyder gave him the name of the entity for the extension and did not state whether it was an LLC or corporation. Mr. Snyder testified that he told Mr. Laurent that the entity was an LLC and did not add LLC to the extension before signing it because he and Mr. Laurent were good friends and he did not look closely at the lease extension before accepting it. The trial court apparently believed the testimony of Mr. Laurent and stated that it presumed John River Aggregate was a sole proprietorship.

At the end of the hearing, the trial court observed that Mr. Snyder:

[H]as various companies out there which are also proprietors and he seems to use them haphazardly and use their assets interchangeably amongst themselves without the necessity of following normal accounting and/or | «legal methodology. He just jumps back and forth between whatever name he decides to use at a particular point in time, whether the assets he’s using are not the assets he’s using. He’s even paid rent due with a personal check.

After reviewing the entire record in the instant case and considering the totality of the circumstances, we find that there is a reasonable basis in the record for the trial court’s finding that exceptional circumstances existed to pierce the corporate veils of John River Cartage, Inc., John River Aggregate, LLC, and Synthetic Aggregates of Louisiana, LLC, and find Mr. Snyder personally liable to Fausse Riviere for the debts incurred. As such, we cannot say that the trial court’s finding is manifestly erroneous or clearly wrong.

Assignment of Error Nos. 2 and 3: The Movable Property

In the judgment, the trial court ordered that Fausse Riviere could declare all of the movable property left on the leased property as forfeited by the defendants, and therefore the property of Fausse Riviere as specifically provided in the lease contract. The original lease provided:

At the end of the lease, Lessee shall also immediately remove any equipment or other movable items located on the leased premises which are not the property of Lessor. If Lessee fails to do so, Lessor may have the equipment or other movable items removed from the leased premises at Lessee’s expense, or, at the sole option of Lessor, declare said equipment and other movable items abandoned and forfeited to Lessor, in which case Lessor may sell or dispose of the equipment or other items and retain all payments or proceeds received therefor. Each extension entered into by the parties was made on the “same terms and conditions” as the original lease. The defendants argued that the movable property was not abandoned, because they were prevented from removing the property, as it had been seized under the writ of sequestration. Fausse Riviere contended that the lease expired at the end of December 2013 and therefore, Mr. Snyder had nearly six months to remove the property before it filed for the writ of sequestration on June 24, 2014.

Initially we note, because of the oral nature of the lease extension, that the record was not immediately clear regarding when the lease was terminated or that the defendants had an opportunity to remove the movable items prior to the issuance of the writ of sequestration. -However, Fausse Riviere repeatedly indicated that the lease was continued Rafter the expiration of the oral lease extension in December of 2013. In paragraph six of its petition, Fausse Riviere alleged: “By agreement in September of 2013 ... the parties extended the Lease Agreement to December of 2013, at a monthly rental of $2,000.00 per month, and then the parties agreed to reduce the monthly rental amount [to] $1,500.00 per month. In its appellate brief, Fausse Riviere maintains: “Then, in September of 2013, by oral agreement ... the lease agreement - was extended to December of 2013, at a monthly rental of ... [$2,000.00] per month, and later the parties to this letter agreement extension, agreed to reduce the monthly rental to ... [$1,500.00] per month.”

Furthermore, there is significant evidence in the record tending to establish that the lease could not have been terminated before the end of April of 2014. Most notably, the sole member and manager of Fausse Riviere, Mr. Laurent, testified at trial that Mr. Snyder leased the property at issue in order to put an aggregate plant on the property, and stated that Mr. Snyder used the property to produce and sell aggregate until April of 2014. The following colloquy concerning the use of the leased property took place on cross-examination:

[Defense counsel]: And then that’s what he would sell, that was the product that he sold—
[Mr. Laurent]: Correct, sir.
[Defense counsel]:—to the public and he did that from the date of this lease?
[Mr. Laurent]: 2009 to April of 2014.

Following the conclusion of the trial on the merits, the trial court ultimately awarded Fausse Riviere, amongst other things, $14,000.00 in past due rent. The trial court’s award of past due rent is equal to the prayer for relief and amounts to the sum of | m$2,000.00 per month for September, October, November, and December of 2013, and $1,500.00 per month for January, February, March, and April of 2014.

Thus, the evidence in the record does not support Faussé Riviere’s assertion that the lease was terminated in December of 2013 or that the defendants had six months to remove their movable property from the leased premises.

Notwithstanding our conclusion regarding the date of the termination of the lease, the defendants did not immediately remove all equipment or other movable property located on the leased premises at the end of the lease. Thus, the operative question remains whether the trial court properly interpreted and applied the forfeiture clause of the original lease contract under the facts of this case.

The forfeiture clause of the original lease contract, as quoted above, provided Fausse Riviere with the option to declare any equipment and other movable items remaining on the leased premises at the end of the lease as abandoned and forfeited, in which case Fausse Riviere was entitled to sell or dispose of the property and retain all payments and proceeds. The record clearly establishes that Fausse Riviere did not exercise its option to sell or dispose of the equipment and other movable property left on the leased premises, but instead elected to have the movable property seized pursuant to a writ of sequestration in order to preserve its lessor’s lien and privilege.

The relevant provisions of the Louisiana Civil Code and Louisiana Code of Civil Procedure governing the lessor’s privilege and writs of sequestration are as follows:

To secure the payment of rent and other obligations arising from the lease of an immovable, the lessor has a privilege on the lessee’s movables that are found in or upon the leased property....
La. Civ. Code art. 2707.
The lessor may seize the movables on which he has a privilege while they are in or upon the leased property, and for fifteen days after they have been removed if they remain the property of the lessee and can be identified.
The lessor may enforce his privilege against movables that have been seized by the sheriff or other officer of the court, without the necessity of a further seizure thereof, as long as the movables or the proceeds therefrom remain in the custody of the officer.
|nLa. Civ. Code art. 2710.
When one claims the ownership or right to possession of property, or a mortgage, security interest, lien, or privilege thereon, he may have the property seized under a writ of sequestration, if it is within the power of the defendant to conceal, dispose of, or waste the property or the revenues therefrom, or remove the property from the parish, during the pendency of the action.
La. Code Civ. P. art. 3571.
A writ of attachment or of sequestration shall issue only when the nature of. the claim and the amount thereof, if any, and the grounds relied upon for the issuance of the writ clearly appear from specific facts shown by the petition verified by, or by the separate affidavit of, the petitioner, his counsel or agent.... La. Code Civ. P. art. 3501.
A writ of sequestration to enforce a lessor’s privilege shall issue without the furnishing of security.
La. Code Civ. P. art. 3575.

The writ of sequestration is an extremely harsh remedy. Burton v. Jardell, 589 So.2d 610, 613 (La. App. 2d Cir. 1991) (addressing same in the context of a writ of sequestration obtained to protect lessor’s lien). The writ of sequestration can only be maintained when the formalities of the law have been strictly complied with by the party seeking the writ. Id. (citing Matherne v. Estate of Matherne, 341 So.2d 1254, 1257 (La. App. 1st Cir. 1976), writ denied, 343 So.2d 1072 (La. 1977)). It is a prerequisite to the issuance of the writ of sequestration that the proper grounds be alleged in the petition. Matherne, 341 So.2d at 1257 (addressing same in the context of a writ of sequestration obtained to protect a claim against a succession).

In the case at bar, Fausse Riviere did not seek invocation of the forfeiture clause of the original lease contract or claim that the defendants had abandoned movable property on the leased premises in its petition for back due rent and writ of sequestration. Rather, Fausse Riviere submitted that a writ of sequestration should be issued to enforce its lessor’s privilege on grounds that the movable property at issue remained in the possession and control of the defendants. In' paragraph thirteen of its petition, Fausse Riviere stated:

| i2Plaintiff has a lessor’s lien and privilege on all the movables located in and on the leased premises to secure plaintiffs claims for rent, cost of restoration of the property as well as all other sums due, together with attorney’s fees and costs due to petitioner under the said lease. All of these movables are in the . possession of the defendants; and it is within the defendants^] power to, and plaintiff has good reason to believe that the defendants will, conceal, dispose- of, or remove these movables from the parish during the pendency of the suit. To protect plaintiffs rights, it is necessary that a writ of sequestration issue, without bond, directing the sheriff to seize all of the movables affected by plaintiffs privilege, and to hold them subject to the further order of the court.

Moreover, in its prayer for relief, Fausse Riviere did not seek to have the movable property at issue declared forfeited and abandoned, but instead requested the trial court issue and maintain the writ, of sequestration to enforce its lessor’s privilege. In its prayer for relief, Fausse Riviere stated, in pertinent part, as follows:

WHEREFORE, PETITIONER ... PRAYS that a Writ of Sequestration issue herein, without bond and according to law, directing the sheriff to seize, and to hold subject to the further order of the court, all of the movables located on the leased premises.
PETITIONER FURTHER PRAYS for judgment maintaining the Writ of Sequestration, and recognizing plaintiffs lessor’s lien and privilege on the property sequestered.

On June 24, 2014, the date the petition for back due rent and writ of sequestration was filed, the trial court signed the order granting the writ of sequestration and directing the sheriff to hold all of the movables located on the leased premises subject to further order of the court.

The testimony introduced at trial concerning the writ of sequestration and the forfeiture clause confirms that Fausse Riv-iere elected to have the movables seized pursuant to a writ of sequestration in order to protect its lessor’s lien and privilege. For example, Mr. Laurent testified that Fausse Riviere requested the writ of sequestration in order to have the value of the movables applied to the amounts due to Fausse Riviere under the lease agreement. The following colloquy concerning the forfeiture clause and the writ of sequestration took place during direct-examination:

| ^[Plaintiff s counsel]: Under the provisions of the lease it also provided that should any claims be made that you would be reimbursed for attorney’s fees and costs, is that not correct?
[Mr. Laurent]: Correct.
[Plaintiffs counsel]: Okay. Also under Paragraph 4 of the lease I believe it also stated that if any moveable [sic] items were left on the leased premises that you could basically just go in and have them declared forfeited to you, is that correct?
[Mr. Laurent]: Well, I had to put a sequestration on what was out there to protect myself, yes.
[Plaintiffs counsel]: Yes, sir. But under the provisions of the lease if it was left out there the leased provided that those items were abandoned and forfeited to the lessor, is that correct?
[Mr. Laurent]: Well, as far as I know, yes, sir.
[Plaintiffs counsel]: And you’re here today asking the Court to award you all of the damages that you’re entitled to, is that not correct?
[Mr. Laurent]: Yes, sir.
[Plaintiffs counsel]: Including attorney’s fees and costs?
[Mr. Laurent]: Yes, sir.
[Plaintiffs counsel]: And you’re asking the Court to keep in effect the writ of sequestration and allow it to apply to your lessor’s lien and privilege for the amounts due under the lease agreement, is that correct?
[Mr. Laurent]: Yes, sir.

In sum, Fausse Riviere sought and obtained a writ of sequestration to protect and preserve its lessor’s privilege, to secure the payment of rent and other obligations arising from the lease agreement, and on grounds that the movable property at issue remained in the possession and control of the defendants. The writ of sequestration was issued and maintained, without the necessity of the furnishing of security, based upon the specific facts alleged in the petition. See La. Code Civ. P. arts. 3501, 3571, and 3575.

Fausse Riviere did not pursue the remedy of abandonment, nor was any evidence presented to establish that the defendants abandoned the movables located on the leased premises. Consequently; Fausse Riviere is judicially estopped from post factum invocation of the forfeiture clause of the original lease contract, and the defendants are | uentitled to a credit equal to the value of the movable property seized pursuant to the writ of sequestration.

Thus, we reverse the portion of the judgment ordering that Fausse Riviere could declare all of the movable property left on the leased property as forfeited by the defendants, and therefore the property of Fausse Riviere. The defendants are entitled to a credit equal to the value of the movable property seized pursuant to the writ of sequestration.

CONCLUSION

For the foregoing reasons, the portion of the judgment of the trial court ordering that Fausse Riviere could declare all of the movable property left on the leased property as forfeited by the defendants, and therefore the property of Fausse Riviere, is reversed, and the defendants are entitled to a credit equal to the value of the movable property seized pursuant to the writ of sequestration. In all other respects, the judgment of the trial court is affirmed. All costs of this proceeding are to be divided between plaintiff-appellee, Fausse Rivi-ere, LLC and defendant-appellants, John River Cartage, Inc., John River Aggregate, LLC, Synthetic Aggregates of Louisiana, LLC, and John K. Snyder Jr.

AFFIRMED IN PART AND REVERSED IN PART.

      . Unlike in this matter, in Ogea v. Merritt, 130 So.3d at 895 n.5, the supreme court did not further address the piercing of the corporate veil doctrine, because it was neither relied upon by the lower courts nor invoked by the plaintiff.

      . Although the oral lease extension expired at the end of December of 2013, a lease with a fixed term may be extended beyond the expiration of the term if the lessee remains in possession of the leased property for a certain amount of time. Louisiana Civil Code art. 2721 states that a lease with a fixed term is extended, i.e„ “reconducted,” if, after the expiration of the term, and without notice to vacate or terminate or other opposition by the lessor or the lessee, the lessee remains in possession: 1) for thirty days in the case of an agricultural lease; 2) for one week in the case of other leases with a fixed term longer than a week; or 3) for one day in the case of a lease with a fixed term that is equal to or shorter than a week.

      . There is also evidence indicating that the lease may not have been terminated until the end of May of 2014. For example, in its post-trial memorandum, Fausse Riviere stated: "Due to the non-payment of rent, the lease and the extensions were terminated as of May 31, 2014, [and] [p]etitioner proved that at the time of termination, May 31, 2014, the amount of the past due rentals totaled ... $14,000,00[J”


author: CRAIN, J. HOLDRIDGE, J.,

text:
    Joshua PETROZZIELLO and Jennifer Petrozziello v. THERMADYNE HOLDINGS CORPORATION, Thermadyne Industries, Inc., Victor Equipment Company, Noway, Inc., and Employers Fire Insurance Company
    NO. 2015 CA 1525
    Court of Appeal of Louisiana, First Circuit.
    FEBRUARY 17, 2017

      Louis L. Plotkin, Rodney P. Vincent, Mark E. Jaffe, Metairie, Louisiana, and Steve C. Thompson, Baton Rouge, Louisiana, Attorneys for Plaintiffs/Appellees, Joshua Petrozziello and Jennifer Petroz-ziello
    Richard J. Petre Jr., Lafayette, Louisiana, and John T. Brooks, San Diego, California, Attorneys for Defendant/Appellant, Employers Fire Insurance Company
    BEFORE: GUIDRY, MCCLENDON, WELCH, CRAIN, AND HOLDRIDGE, JJ.
   CRAIN, J.

12An insurer appeals a summary judgment finding coverage for the plaintiffs’ claims under an excess general liability policy. Finding that coverage is unambiguously excluded under the policy, we reverse and render judgment in favor of the insurer.

FACTS AND PROCEDURAL HISTORY

Joshua Petrozziello is a professional stunt performer who was employed by Flypaper Productions, LLC. While attempting a stunt during a movie production, Joshua suffered injuries when a piece of equipment allegedly malfunctioned. He and his wife, Jennifer Petrozziello, sued several parties, including Noway, Inc., the manufacturer and operator of the piece of equipment, and Employers Fire Insurance Company, an insurer that issued primary and excess general liability policies to Flypaper. The Petrozziellos alleged that Noway is an additional insured under the Employers policies by .virtue of a lease agreement between Noway and Flypaper.

The parties eventually settled all of the claims except for the Petrozziellos’ claim against Employers under the excess liability policy. As to that claim, the sole issue is the applicability of an endorsement to the policy that excludes coverage for injuries sustained by an “employee of any insured” arising out of and in the course of the employment. That issue was presented to the trial court for determination in motions for summary judgment filed on behalf of each party.

The parties stipulated that at the time of the accident, Joshua was an employee of Flypaper, the named insured in the excess policy, and that his injuries occurred in the course of that employment. Based upon those undisputed facts, | (¡Employers asserted that the following provision, sometimes referred to as the “employee-injury exclusion,” precludes coverage for the Pe-trozziellos’ claims:

This insurance does not apply to any liability arising out of any:
a. ‘Bodily injury’ ... to any current or former ‘employee’ of any insured arising out of and in the course of:
(1) Employment by any insured; or
(2) Performing duties related to the conduct of any insured’s business ....
This exclusion' applies to all claims and ‘suits’ by any person or organization for damages because of such injury or liability .... It applies whether any insured may be held liable as an employer or in any other capacity. ...

Employers argued that the exclusion applies because Joshua was an “employee of any insured,” meaning Flypaper, and his injuries occurred in the course of that employment.

' The Petrozziellos countered that the employee-injury exclusion must be construed in harmony with a policy provision captioned “Separation of Insureds,” which provides:

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first named insured, this insurance applies:
a. As if each named insured were the only named insured; and
b. Separately to each insured against whom claim is made or ‘suit’ is brought.

Focusing on subpart b., the Petrozziellos maintained that the employee-injury exclusion, and particularly the phrase “employee of any insured,” must be applied to Noway separately. When applied in that manner, according to the Petroziellos, the sole issue is whether Joshua was an employee of Noway. Joshua was not an employee of Noway, so, under this interpretation, the exclusion does not apply.

|/The trial court agreed with the Petroz-ziellos and, in a judgment signed on May 21, 2015, granted summary judgment in their favor, declaring that the employee-injury exclusion does not apply. In the same judgment, the trial court denied Employers’ motion for summary judgment. Employers appeals and seeks review of both the granting of the Petrozziellos’ motion for summary judgment and the denial of its motion for summary judgment.

DISCUSSION

A motion for summary judgment shall be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, admitted for purposes of the motion for summary judgment, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La. Code Civ. Pro. art. 966B(2). In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court’s determination of whether summary judgment is appropriate. In re Succession of Beard, 13-1717 (La.App. 1 Cir. 6/6/14), 147 So.3d 753, 759-60.

Interpretation of an insurance policy usually involves a legal question that can be resolved properly in the framework of a motion for summary judgment. Bonin v. Westport Insurance Corporation, 05-0886 (La. 5/17/06), 930 So.2d 906, 910. An insurance policy is a contract between the parties and should be construed fusing the general rules of interpretation of contracts set forth in the Civil Code. Bonin, 930 So.2d at 910. Interpretation of a contract is the determination of the common intent of the parties. La. Civ. Code art. 2045. 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. Civ. Code art. 2046. Words and phrases used in an insurance policy are to be construed using their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning. See La. Civ. Code art. 2047; Bonin, 930 So.2d at 910.

An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Bonin, 930 So.2d at 910-11. Unless a policy conflicts with statutory provisions or public policy, it may limit an insurer’s liability and impose and enforce reasonable conditions upon the policy obligations the insurer contractually assumes. Bonin, 930 So.2d at 911. If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the insurer and in favor of coverage. Bonin, 930 So.2d at 911.

The employee-injury exclusion in Employers’ excess policy plainly states that the insurance does not apply to any liability for bodily injury to an “employee of any insured” arising out of the course of the employment. This provision is not ambiguous. The words “any insured” mean just that—any insured. See Bonin, 930 So.2d at 914 (“ ‘any INSURED’ refers to any unspecified insured”); Osbon v. National Union Fire Insurance Company, 632 So.2d 1158, 1160 (La. 1994) (recognizing that “a majority of courts interpret ‘any insured’ as applying to all insureds as defined by the policy”). Thus, the exclusion applies to any liability ^arising out of injuries sustained by Joshua during the course of his employment with any insured under the policy.

We find that the scope of the exclusion is not limited by the separation-of-insureds provision, which, in relevant part, states only that the insurance applies “[sjeparately to each insured against whom claim is made or ‘suit’ is brought.” Courts have recognized that such a provision is intended to clarify which insured is “the insured” when that phrase appears in a policy. See Stewart Title, Guaranty Co. v. Kiefer, 984 F.Supp. 988, 997 n.7 (E.D. La. 1997); Michael Carbone, Inc. v. General Accident Insurance Co., 937 F.Supp. 413, 419 (E.D. Pa. 1996). However, a thorough review of the history and intent of this provision is not necessary to dispose of the issues on this appeal, because we conclude that the provision cannot reasonably be construed in the manner suggested by the Petrozziel-los.

The plaintiffs propose that, under a reasonable construction of the provision, the insured who has been sued, in this instance Noway, becomes the only insured under the policy. Under this rationale, when the employee-injury exclusion is interpreted, the phrase “employee of any insured” is necessarily limited to an employee of Noway, as no other insureds exist under' the policy. The flaw in this reasoning is that the separation-of-insureds provision contains no language suggesting that Noway, once sued, becomes the only insured under the policy.

The first subpart of the separation-of-insureds provision is directed at named insureds and states that the insurance applies “[a]s if each named insured were the only named insured.” In contrast, the second subpart, which Noway relies upon, provides that the insurance applies “[s]ep-arately to each insured against whom claim is made or ‘suit’ is brought.” That subpart does not declare that such insureds are the only insureds under the policy; it simply directs that the |7insurance applies separately to each insured. Applying the insurance “separately’ to Noway does not, as suggested by the Petrozziellos, render Noway the ■ only insured under the policy. Flypaper, at all times, remains the named insured under the policy.

For support, the plaintiffs cite Sanders v. Ashland Oil, Inc., 94-1469 (La.App. 1 Cir. 5/5/95), 656 So.2d 643, 648, writ denied, 95-1797 (La. 11/3/95), 661 So.2d 1389. In that case, the court initially had to determine whether a defendant was as an insured under a policy issued to his employer, a matter that is not an issue in the present case. See Sanders, 656 So.2d at 647. The court, relying on a definition of “insured” that included executive officers and directors of the named insured, found that the employee was an insured under the policy. See Sanders, 656 So.2d at 647-48. The court also observed that the employee was entitled to coverage up to the policy limits, and cited a policy provision identical to the separation-of-insureds clause in the present policy. The court stated that the provision “makes it clear that, subject to the limits of the policy, each insured has separate coverage as if each were separately insured with a distinct policy of insurance.” Sanders, 656 So.2d at 648.

The Sanders court utilized the separation-of-insureds provision to buttress its finding that the employee was separately insured under the policy up to the policy limits. The Petrozziellos seize on the quoted statement as authority for their assertion that the provision mandates that Noway be considered the only insured under the policy. But, at no point did the Sanders court suggest that for purposes of interpreting other policy conditions, the defendant-insured should be considered the only insured under the policy. Such an approach is wholly incompatible with ^multiple provisions in the present policy, particularly endorsements that anticipate the existence of multiple insureds,

One such endorsement is the “Cross Suits” provision that excludes coverage for suits “by any insured against any other insured.” If, as argued by the Petrozziel-los, the insured seeking coverage is considered the only insured under the policy, this exclusion could never be applicable because it would contemplate the insured suing himself. Similarly, the use of the phrase “any insured” in the employee-injury exclusion acknowledges the possibility of multiple insureds; however, under the Petrozziellos’ proposed policy interpretation, the exclusion would always be limited to employees of only one insured, i,e., the insured seeking coverage. The language of the exclusion would effectively be changed from “any insured” to “the insured,” two phrases that are substantially different. See Bonin, 930 So.2d at 912-13; Osbon, 632 So.2d at 1159-60.

A similar argument was raised in Oaks v. Dupuy, 26,729 (La.App. 2 Cir. 4/5/95), 653 So.2d 165, 168, writ denied, 95-1145 (La. 6/16/95), 655 So.2d 335, wherein the plaintiffs asserted that a separation-of-insureds provision limited an exclusion applicable to the use of automobiles owned by “any insured,” arguing that the provision confined the exclusion to automobiles owned by the insured seeking coverage. Rejecting the argument, the court explained:

The use exclusion, however, refers to automobiles owned by “any insured.” That unambiguous language, then, should not be misshaped through an overreading of the provision noted by plaintiffs. Such tortured constructions, seizing on every word as a possible source of 19confusion, fail to demonstrate ambiguity and will be dismissed as mere sophistry.

Oaks, 653 So.2d at 168.

We agree. The phrase “any insured” in the employee-injury exclusion is clear and explicit. It is neither modified nor rendered ambiguous by any reasonable interpretation of the separation-of-insureds provision in the present policy. When applied to the undisputed facts of this case, the employee-injury exclusion precludes coverage for any liability arising out of the injuries sustained by Joshua during the course of his employment with Flypaper. See Oaks, 653 So.2d at 168; Spell v. Mallett, Inc., 06-1477 (La.App. 3 Cir. 5/2/07), 957 So.2d 262, 267 (holding that exclusion applicable to “employee of any insured” precluded coverage for claims filed by named insured’s employee against additional insureds); see also Petticrew v. ABB Lummus Global, Inc., 53 F.Supp.2d 864, 871 (E.D. La. 1999) (holding that exclusion applicable to “employee of any insured” barred coverage for claims by named insured’s employee and rejecting argument that the exclusion was rendered ambiguous by a similar separation-of-insureds provision).

The trial court erred in granting summary judgment in favor of the Petrozziel-los and in denying the motion for summary judgment filed on behalf of Employers.

CONCLUSION

11flThe May 21, 2015 judgment is reversed to the extent it granted summary judgment in favor of Joshua and Jennifer Petrozziello and denied the motion for summary judgment filed on behalf of Employers Fire Insurance Company. Judgment is hereby rendered in favor of Employers Fire Insurance Company, granting its motion for summary judgment and dismissing with prejudice the remaining claims of the Petrozziellos. All costs of this appeal are assessed to Joshua and Jennifer Petrozziello.

REVERSED AND RENDERED; MOTION TO STRIKE GRANTED.

Holdridge, J., agrees in part and dissents in part for reasons assigned.

HOLDRIDGE, J.,

agreeing in part and dissenting in part.

hAs correctly noted by the majority, the granting of the plaintiffs motion for summary judgment should be reversed. However, Employers Fire Insurance Company failed to prove that there are no genuine issues of material fact and that it is entitled to a judgment as a matter of law. It appears that the law as to the proper interpretation of the insurance provision in question is uncertain, there are issues of fact that are missing, and that the motion for summary judgment filed by Employers Fire Insurance Company was properly denied by the trial court and the matter should be remanded to the trial court for further evidentiary proceedings.

      . Because the record reflects that the parties have agreed upon a certain sum to be paid by Employers if the excess liability policy is applicable, resolution of this issue will end the case.

      . Employers waived all other policy defenses and, for purposes of the cross-motions, agreed that Noway is an additional insured under the excess policy.

      . The denial of a motion for summary judgment is an interlocutory judgment and is ap-pealable only when expressly provided by law. However, where there are cross-motions for summary judgment raising the same issues, this court can review the denial of a summary judgment in addressing the appeal of the granting of the cross-motion for summary judgment. See Crowe v. Bio-Med. Application of Louisiana, LLC, 14-0917 (La.App. 1 Cir. 6/3/16), 208 So.3d 473, 478 n.6, 2016 WL 3126425; MP31 Investments, LLC v. Harvest Operating, LLC, 2015-0766 (La.App. 1st Cir. 1/22/16), 186 So.3d 750, 755.

      . Louisiana Code of Civil Procedure article 966 was amended and reenacted by Acts 2015, No. 422, § 1, with an effective date of January 1, 2016. The amended version of article 966 does not apply to any motion for summary judgment pending adjudication or appeal on the effective date of the Act; therefore, we refer to the former version of the article in this case. See Acts 2015, No. 422, §§ 2 and 3.

      . We note that Sanders subsequently addressed an employee-injury exclusion that was limited to employees of "the Insured,” holding the exclusion did not apply to the plaintiff's claim against an additional insured who was not the plaintiff’s employer. Sanders, 656 So.2d at 648-49, The court did not rely on the separation-of-insureds clause to reach that conclusion, and the case is distinguishable based on the policy language of "the insured.” See Bonin, 930 So.2d at 912-13; Osbon, 632 So.2d at 1159-60 (contrasting exclusions applicable to "the insured” rather than “any insured”),

      . For additional jurisprudence from other jurisdictions addressing similar provisions, see Nautilus Insurance Company v. K. Smith Builders, Ltd., 725 F.Supp.2d 1219, 1229-30 (D. Haw. 2010); Argent v. Brady, 386 N.J.Super. 343, 354-55, 901 A.2d 419, 426-27 (App. Div. 2006); Bituminous Casualty Corporation v. Maxey, 110 S.W.3d 203, 212-14 (Tex. App. 2003); Michael Carbone, Inc. v. General Accident Insurance Co., 937 F.Supp. 413, 418-20 (E.D. Pa. 1996); contra Evanston Insurance Company v. Design Build Interamerican, Inc., 569 Fed.Appx. 739, 742-44 (11th Cir. 2014).

      . Employers filed a motion in this court seeking to strike certain documents from the appellate record and to supplement the record to include certain other information. Shortly thereafter, the trial court signed an order directing the record be supplemented to include much of the information identified in Employers’ motion. The record was supplemented accordingly. As to any documents not addressed in the trial court’s order, Employers' motion to strike is granted.


author: WHIPPLE, C.J.

text:
    George R. TRELLES v. CONTINENTAL CASUALTY CO.
    NUMBER 2016 CA 0894
    Court of Appeal of Louisiana, First Circuit.
    FEBRUARY 17, 2017

      Lee H. des Bordes, Jr., Baton Rouge, LA, Counsel for Plaintiff/Appellant, George R. Trelles
    Mary K. Cryar, Dallas, TX, Counsel for Defendant/Appellee, Continental Casualty Co.
    BEFORE: WHIPPLE, C.J., GUIDRY and McClendon, jj.
   WHIPPLE, C.J.

|2In this appeal, plaintiff challenges the judgment of the trial court, granting the defendant insurer’s motion for summary judgment, dismissing plaintiffs claim under a lawyer’s professional liability policy for attorney’s fees and costs incurred in a disciplinary proceeding instituted against plaintiff. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

By letter dated October 28, 2010, on the letterhead of the Louisiana Attorney Disciplinary Board, Office of the Disciplinary Counsel, plaintiff, George Trelles, an attorney practicing in Louisiana, was advised that a complaint of professional misconduct had been made against him, requiring the Office of the Disciplinary Counsel to obtain from him a written response to each allegation of misconduct pursuant to Louisiana Supreme Court Rule XIX, sections 4(B)(2) and ll. Over a year and a half later, plaintiff received a letter Rated May 26, 2012, on the letterhead of the Louisiana Attorney Disciplinary Board, advising him that formal charges of misconduct had been filed with the Louisiana Disciplinary Board. Plaintiff was insured by a Lawyers Professional Liability Policy, issued by Continental Casualty Company (“Continental”) through Gilsbar, Inc., for the policy period of March 29, 2012 through March 29, 2013. The policy provided coverage of up to $20,000.00 for attorney’s fees, costs, expenses, or fees incurred by the insured resulting from a “Disciplinary Proceeding,^[¿where notice of the Disciplinary Proceeding was both received by the insured and reported in writing during the policy period or within 60 days after termination of the policy period. A “Disciplinary proceeding” is defined in the policy as “any pending matter, including an initial inquiry, before a state or federal licensing board or a peer review committee to investigate charges alleging a violation of any rule of professional conduct in the performance of legal services.” (Original emphasis removed.)

After receiving the May 26, 2012 notification of formal charges, plaintiff notified Gilsbar of the formal charges on July 9, 2012. Thereafter, by a letter dated August 30, 2012, Continental denied coverage. In denying coverage, Continental explained that the policy required that notice of the proceeding múst both be received by the insured and reported to Continental during the policy period and concluded that because plaintiff had received notice of the disciplinary proceeding on or about October 4, 2010, prior to the effective date of the policy period, the policy’s provisions did not apply to plaintiffs claim.

Plaintiff then instituted this suit against Continental, seeking payment under the policy of his attorney’s fees and costs incurred as a result of the disciplinary proceeding, as well as penalties for Continental’s alleged arbitrary and capricious denial of coverage. The parties filed cross motions for summary judgment on the coverage issue. Plaintiff contended that the October 28, 2010 letter from the Office of the Disciplinary Counsel did not constitute notice of “any pending matter ... before a state or federal licensing board or peer review panel” because the Office of the Disciplinary Counsel is not a “state licensing board or peer review committee” and, thus, |4that he was not required to give Continental notice of the October 28, 2010 letter. Rather, he contended that it was not until the May 26, 2012 notification of formal charges was sent by the Louisiana Attorney Disciplinary Board that a “Disciplinary Proceeding” was instituted under the policy language and that his subsequent July 9, 2012 notification to Gilsbar of the formal charges was timely and triggered coverage under the Continental policy.

Continental contended that the October 28, 2010 letter constituted “an initial inquiry” before a state licensing board, such that it met the definition of “Disciplinary Proceeding” under the policy. Thus, Continental contended that because this “Disciplinary Proceeding” began prior to the effective date of the Continental policy, plaintiffs claim for attorney’s fees and costs related to the disciplinary proceeding was not covered under the policy.

Following a hearing on the cross motions, the trial court rendered judgment denying plaintiffs motion for summary judgment, granting Continental’s motion for summary judgment, and dismissing with prejudice plaintiffs claims against it. From this judgment, plaintiff appeals contending that the trial court erred in granting Continental’s motion for summary judgment and thereby finding that the October 28, 2010 letter from the Office of the Disciplinary Counsel was notice of a “disciplinary proceeding” as defined in the Continental policy.

DISCUSSION

A motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue |fias to material fact and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. Art. 966(A)(3). The burden of proof rests with the mover. However, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover’s burden does not require him to negate all essential elements of the adverse party’s claim, action, or defense. Rather, the. mover must point out to the court the absence of factual support for one or more elements essential to the advérse party’s claim, action, or defense. LSA-C.C.P. Art. 966(D)(1).

Thereafter, the adverse party must produce factual evidence sufficient to establish that a genuine issue of material fact exists or that the mover is not entitled to judgment as a matter of law. LSA-C.C.P. Art. 966(D)(1). If the adverse party fails to meet this burden, the mover is entitled to summary judgment as a matter of law. See Temple v. Morgan, 2015-1169 (La.App. 1 Cir. 6/3/16), 196 So.3d 71, 76, writ denied, 2016-1255 (La. 10/28/16), 208 So.3d 889, 2016 WL 6777472.

In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court’s determination of whether summary judgment is appropriate. Willig v. Pinnacle Entertainment, Inc., 2015-1998 (La.App. 1 Cir. 9/16/16), 202 So.3d 1169, 1172. An appellate court thus asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is | (¡entitled to judgment as a matter of law. Kirby v. Ashford, 2015-1852 (La.App. 1 Cir. 12/22/16), 208 So.3d 932, 936, 2016 WL 7407368.

Interpretation of an insurance policy usually involves a legal question that can properly be resolved in the framework of a motion for summary judgment. An insurance policy is a contract belween the parties arid should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code. Chauncy v. Allen, 2015-0874 (La.App. 1 Cir. 2/26/16), 191 So.3d 25, 29.

The court’s responsibility in interpreting insurance contracts is to determine the parties’ common intent. When the language of the insurance policy is clear and unambiguous, no further interpretation may be made in search of the parties’ intent. LSA-C.C. Arts. 2045 and 2046. Words and phrases used in an insurance policy should be construed using their plain, ordinary, and generally prevailing meaning, unless the words have acquired a technical meaning. LSA-C.C. Art. 2047. An insurance policy should not be interpreted in an. unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Unless an insurance policy conflicts with statutes or public policy, it may limit an insurer’s liability. Chauncy, 191 So.3d at 29.

Ambiguous policy provisions are generally construed against the insurer and in favor of coverage. See LSA-C.C. Art. 2056. Moreover, equivocal provisions seeking to narrow an insurer’s obligation are strictly construed against the insurer. However, this strict construction principle applies only if the ambiguous policy provision is susceptible to two or more reasonable interpretations. Thus, for the rule of strict construction to apply, the insurance policy must be not only susceptible to two or more | ./interpretations, but each of the alternative interpretations must be reasonable. Kirby, 208 So.3d at 937.

The policy provision regarding “supplementary payments” for “Disciplinary Proceedings” provides, in pertinent part, as follows:

The Company will reimburse the Named Insured up to $20,000. for each Insured and all Insureds in the aggregate, for attorney fees and other reasonable costs, expenses or fees (the “Disciplinary Fees”) paid to third parties (other than an Insured) resulting from any one Disciplinary Proceeding incurred as the result of a notice of such Disciplinary Proceeding both first received by the Insured and reported in writing to the Company either during the policy period or within 60 days after termination of the policy period, arising out of an act or omission in the rendering of legal services by such Insured. (Original emphasis removed; emphasis added).

As stated above, “Disciplinary Proceeding” is defined in the policy as “any pending matter, including an initial inquiry, before a state or federal licensing board or a peer review committee to investigate charges alleging a violation of any rule of professional conduct in the performance of legal services.” (Original emphases removed.)

In contending that the trial court erred in finding no coverage under the policy, plaintiff focuses on the definition of “Disciplinary Proceeding” in the policy. Relying on that definition, he argues that the Office of the Disciplinary Counsel is not “a state ... licensing board” or “a peer review committee” and, thus, that the October 28, 2010 letter from the Office of the Disciplinary Counsel could not have constituted notice of a “Disciplinary Proceeding” within the meaning of the policy. Rather, he contends that the May 26, 2012 letter from the Louisiana Attorney Disciplinary Board, which he received during the policy period, constituted notice that a Disciplinary Proceeding was now pending “before the Disciplinary Board and the Louisiana Supreme Court, which is the only licensing body for attorneys in |sLouisiana,” and that accordingly, he thereafter timely gave notice to Continental within the policy period, thus triggering coverage.

We disagree with plaintiffs contention that his first notice of a “Disciplinary Proceeding” was when he received the May 26, 2012 letter from the Louisiana Attorney Disciplinary Board, informing him that formal charges had been filed against him. As noted by Continental, a “Disciplinary Proceeding” is more broadly defined in the policy to include an “initial inquiry” from a state licensing board or a peer review committee. Moreover, the October 28, 2010 letter, which informed plaintiff of an initial inquiry, was sent to him by the Louisiana Attorney Disciplinary Board, through its Office of the Disciplinary Counsel division.

Article V, Section 5(B) of the Louisiana Constitution provides that the Louisiana Supreme Court has “exclusive original jurisdiction of disciplinary proceedings against a member of the bar.” Pursuant to this constitutional authority and responsibility, the Louisiana Supreme Court adopted Louisiana Supreme Court Rule XIX, establishing the Louisiana Attorney Disciplinary Board, which consists of a statewide board, hearing committees, disciplinary counsel, and staff, as “one unitary entity” and “one permanent statewide agency’ and delegated to the Board the duty “to administer the lawyer discipline and disability system.” La. Supreme Court Rule XIX, § [n2(A). Thus, the Louisiana Attorney Disciplinary Board, as the “one unitary entity” and “one permanent statewide agency” responsible for administering lawyer discipline at the direction of the Louisiana Supreme Court, includes the Office of the Disciplinary Counsel. As such, a letter from the Office of the Disciplinary Counsel, informing plaintiff of an initial inquiry into attorney misconduct, constitutes notice from the Louisiana Attorney Disciplinary Board.

Additionally, we note that regardless of the recommendation of the Disciplinary Board, the Louisiana Supreme Court has held that it is the ultimate duty of the Court to determine what action, if any, is to be taken against an attorney charged with misconduct. See In re Laudumiey, 2003-0234 (La. 6/27/03), 849 So.2d 515, 523, cert. denied, 540 U.S. 1048, 124 S.Ct. 814, 157 L.Ed.2d 697 (2003). Thus, the Louisiana Supreme Court has held that Supreme Court Rule XIX does not delegate its original jurisdiction over disciplinary proceedings to the Disciplinary Board, but rather “foster[s] the exercise of this jurisdiction.” In re Laudumiey, 849 So.2d at 523-524. As such, we conclude that a disciplinary proceeding pending before the Louisiana Attorney Disciplinary Board, including an initial inquiry by its Office of the Disciplinary Counsel, is an extension of the Louisiana Supreme Court’s exercise of its exclusive jurisdiction over attorney disciplinary matters.

Accordingly, we find no merit to plaintiffs contention that an initial inquiry into attorney misconduct by the Louisiana Attorney Disciplinary Board through the Office of the Disciplinary' Counsel does not constitute an |T (/‘initial inquiry” from “a state ... licensing board” within the policy definition of a “Disciplinary Proceéding.” Rather, we find that plaintiffs suggested interpretation of the definition of “Disciplinary Proceeding” in the policy at issue is an unreasonable or strained interpretation in an attempt to restrict the provisions requiring the attorney to notify Continental of a Disciplinary Proceeding, including an initial inquiry, solely for the purpose of expanding coverage to situations beyond what is reasonably contemplated by the terms of the policy.

Accordingly, we conclude that the policy provision defining a “Disciplinary Proceeding” has only one reasonable interpretation, which encompasses within that definition an initial inquiry by the Louisiana Attorney Disciplinary Board through its Office of the Disciplinary Counsel. Thus, we find no error in the trial court’s conclusion that the October 28, 2010 letter from the Louisiana Attorney Disciplinary Board through its Office of the Disciplinary Counsel, informing plaintiff of an initial inquiry of attorney misconduct, constituted notice of a Disciplinary Proceeding within the meaning of the policy. Furthermore, because the Continental policy at issue did not become effective until March 29, 2012, approximately seventeen months after plaintiff received notice of a Disciplinary Proceeding against him, the trial court correctly ruled that there was no coverage afforded under the policy.

JjjCONCLUSION

For the above and foregoing reasons, the March 4, 2016 judgment, granting Continental Casualty Company’s motion for summary judgment and dismissing with prejudice plaintiffs claims against it, is hereby affirmed. Costs of this appeal are assessed to plaintiff George R. Trelles.

AFFIRMED.

      . Section 4(B)(2) of Rule XIX provides, in part, that Disciplinary Counsel shall have the power and duty to "investigate all information coming to the attention of the agency which, if true, would be grounds for discipline or transfer to disability inactive status. ...”
      Section 11(A) of Rule XIX provides, in part, that "[t]he disciplinary counsel shall evaluate all information coming to his or her attention by complaint or from other sources alleging lawyer misconduct or incapacity” and that "[t]he disciplinary counsel may conduct a pre-screening investigative inquiry to determine if a complaint merits investigation, dismissal or referral to the Practice Assistance and Improvement Program .... ”

      . The August 30, 2016 letter refers to plaintiff having received notice of the disciplinary proceeding on October 4, 2010, rather than October 28, 2010.

      . In his motion for summary judgment, plaintiff also sought a determination that Continental had been arbitrary and capricious in denying his claim, thus entitling him to penalties.

      . Louisiana Code of Civil Procedure Article 966 was amended and reenacted by 2015 Acts, No. 422, § 1, effective January 1, 2016. The amended version of article 966 does not apply to any motion for summary judgment pending adjudication or appeal on the effective date of the Act. While plaintiff's motion for summary judgment was filed on November 4, 2015, prior to the effective date of the 2015 amendment, Continental's motion was filed on January 27, 2016, after the effective date. Thus, in addressing the trial court’s granting of Continental’s motion for summary judgment, we refer to the amended version of the article. See 2015 Acts, No. 422, §§ 2 and 3.

      . Rule XIX, Section 2(A) of the Louisiana Supreme Court Rules, provides as follows:
      Section 2. The Attorney Disciplinary Board.
      A. Agency. There is hereby established one permanent statewide agency to administer the lawyer discipline and disability system. The agency consists of a statewide board as provided in this Section 2, hearing committees as provided for in Section 3, disciplinary counsel as provided for in Section 4, and staff appointed by the board and counsel. The agency is a unitary entity. While it performs both prosecutorial and adjudicative functions, these functions shall be separated within the agency insofar as practicable in order to avoid unfairness. The prosecutorial functions shall be directed by a lawyer employed full-time by the agency and performed, insofar as practicable, by employees of the agency. The adjudicative functions shall be performed by practicing lawyers and public members. [Emphasis added.]

      . Indeed, we note that to interpret the policy language in the manner suggested by plaintiff would allow an attorney to obtain coverage "after the fact,” by allowing the attorney to seek coverage from Continental after receiving a letter of initial inquiry from the Louisiana Attorney Disciplinary Board, through its Office of the Disciplinary Counsel, without giving any notice to Continental of the pending initial inquiry.

      . Because we find no error in the trial court’s judgment dismissing all of plaintiff's claims against Continental, we pretermit discussion of any other issues raised by plaintiff.