author: KYZAR, Judge.

text:
    Joshua J. FOSTER, et al. v. The CITY OF LEESVILLE
    17-1106
    Court of Appeal of Louisiana, Third Circuit.
    June 13, 2018
    Michael D. Hebert, Stuart R. Breaux, Becker & Hebert, LLC, 201 Rue Beauregard, Lafayette, LA 70508, (337) 233-1987, COUNSEL FOR DEFENDANT/APPELLANT: City of Leesville
    Aaron L. Green, Vilar & Green, LLC, P. O. Box 12730, Alexandria, LA 71315-2730, (318) 442-9533, COUNSEL FOR PLAINTIFFS/APPELLEES: Joshua J. Foster, Leonard R. Edwards, Horace C. Condon, Amanda G. Lawrence, Stacy B. Dixon, Ronald K. Bush, Michael D. Allen, William Tibbits, Dennis Doherty, Eric J. Baker, Brandon Strickland
    Court composed of Marc T. Amy, Van H. Kyzar, and Candyce G. Perret, Judges.
   KYZAR, Judge.

The City of Leesville appeals from trial court judgments denying its peremptory exception of lack of a needed party and granting summary judgment in favor of current and former firefighters for the City of Leesville Fire Department. For the following reasons, we reverse, vacate, and remand for further proceedings.

DISCUSSION OF THE RECORD

The plaintiffs, Joshua J. Foster, Leonard R. Edwards, Horace C. Condon, Amanda G. Lawrence, Stacy B. Dixon, Ronald K. Bush, Michael D. Allen, William Tibbits, Dennis Doherty, Eric J. Baker, and Brandon Strickland, are all current or former firefighters with the City of Leesville Fire Department. On November 21, 2012, they filed suit against the City of Leesville (the City) seeking an accounting and/or payment for annual vacation time they alleged was owed to them under the City's employment leave policy.

The plaintiffs alleged that despite the City unilaterally adopting a policy assigning them to work a twenty-four hour, fifteen minute tour of duty, with a sixteen hour, fifteen minute shift, it routinely debited sixteen hours and twenty-five minutes per shift for any vacation, sick leave, or compensatory time taken by them. Thus, they claimed that they were entitled to an accounting from the City and payment for the ten minutes per shift for all time taken off for vacation, sick leave, or compensatory time for which they had not been paid, together with legal interest on all such amounts from the time due until paid.

The plaintiffs further alleged that the City unilaterally changed its vacation pay policy on October 21, 2011, to accrue vacation time weekly, rather than annually. Thus, it alleged that the City deleted from its books the accrued vacation time earned by the plaintiffs between January 1 and September 30, 2011. The plaintiffs claimed that this deletion constituted a prohibited violation of La.R.S. 33:1996, which provided, in part:

Firemen in municipalities, parishes and fire protection districts to which this Subpart applies, after having served one year, shall be entitled to an annual vacation of eighteen days with full pay. This vacation period shall be increased one day for each year of service over ten years, up to a maximum vacation period of thirty days, all of which shall be with full pay. The vacation privileges herein provided for shall not be forfeited by any member of the department for any cause.

After answering the plaintiffs' petition, the City filed a motion for partial summary judgment, arguing that La.R.S. 33:1996 was not applicable to the City because its population was less than 13,000. The City based its argument on La.R.S. 33:1961, which states, "This Subpart applies to any paid fire department operated by a municipality which has a population of thirteen thousand or more and also to firemen paid by any parish or fire protection district." It also cited numerous Attorney General Opinions, which held that La.R.S. 33:1996 was inapplicable to municipalities with populations of fewer than 13,000 residents. In response, the plaintiffs filed a cross motion for summary judgment, arguing that La.R.S. 33:1996 applied to the City as a matter of law. Following a hearing, the trial court took the matter under advisement. Thereafter, it rendered written reasons on January 9, 2014, in which it held as follows:

In addressing the Plaintiff's Crossmotion [sic] for Summary Judgment, we must first look at the interpretation of statute 33:1996. The starting point for interpretation of any statute is the language of the statute itself. Touchard v. Williams , 617 So.2d 885 (La.1993). When read literally, the statute appears to be clear with little or no ambiguity. It also does not appear evident that the application of statute 33:1996 would lead to absurd consequences. Therefore, the statute shall be applied as written, with no further interpretation made in search of the legislative intent; and this court finds there is no genuine issue of material fact regarding the application of statute 33:1996 to the Defendant, THE CITY OF LEESVILLE. Louisiana Civil Code art. 9 ; Daigrepont v. Louisiana State Racing Comm'n , 95-0539 (La. App. 4 Cir. 10/26/95), 663 So.2d 840.
This court, after considering the foregoing motions, evidence presented, arguments of counsel, applicable law, and for reasons stated above, DENIES Motion for Summary Judgment filed by Defendant, THE CITY OF LEESVILLE.
Furthermore, this court GRANTS , Crossmotion [sic] for Summary Judgment filed by Plaintiff, JOSHUA J. FOSTER, ET AL.

A written judgment formalizing the trial court's written reasons was signed on February 18, 2014.

Thereafter, the plaintiffs moved for the trial court to order the City to provide them with "an accounting that corrects each employee's vacation time to comply with applicable law and the Court's February 18, 2014 Judgment." Following an April 7, 2016 hearing, the trial court granted the plaintiffs' motion and ordered the City to provide a draft accounting to counsel for the plaintiffs on or before April 26, 2016.

Once the City submitted the requested draft accounting, the plaintiffs filed a motion for summary judgment, arguing that although it contained accurate factual information, the City's accounting was "incorrect, insofar as it's [sic] methodology fails to comply with the applicable law[.]" The plaintiffs claimed that "the City continued to incorrectly calculate and place a ceiling on the vacation time owed to its employees in violation of Louisiana Revised Statutes 33:1996. The City has no basis for such a limitation." Thus, the plaintiffs sought summary judgment "(1) confirming the proper amount of vacation time each Plaintiff should have; (2) determining that the City's ceiling on 'carry over' vacation time is not proper; and (3) issuing a Monetary Judgment against the City for the amounts set forth" in its exhibit.

In response, the City filed a cross-motion for partial summary judgment and an opposition to the plaintiffs' motion for summary judgment, arguing that there was no genuine issue of material fact "as to Plaintiffs' lack of entitlement to vacation day carryover rights and the absence in this case of any purported vacation day forfeitures[.]" In opposition to the City's motion for partial summary judgment, the plaintiffs argued that the City's vacation policy, effective June 2013, expressly excluded firemen; thus, "there is no City policy that places a 'ceiling' or 'cap' on the amount of vacation time firemen are allowed to accrue." Additionally, the plaintiffs argued that the exclusive authority for establishing vacation leave policies for the City's firemen was vested in the Leesville Municipal Fire and Police Civil Service Board (the Board) and that no such rule existed. Thus, they argued that they were entitled to summary judgment on this issue for the following reasons:

(1) there is no Civil Service Board rule that establishes a "ceiling" or "cap" on the vacation leave firemen may accrue ...; (2) the City also has no policy that establishes such a "ceiling" or "cap" ...; and finally (3) even if the City had such a policy, it would not be valid, because the City lacks the power to establish a vacation leave policy-such power is vested with the Civil Service Board.

As a result of the plaintiffs' argument regarding the Board, the City filed a peremptory exception of nonjoinder of a party needed for just adjudication, stating that joinder of the Board was necessary for complete adjudication of this matter. The plaintiffs opposed this exception, contending that the City's exception was merely an attempt to delay the outcome of this matter. Following a March 9, 2017 hearing, the trial court denied the City's exception.

The matter then proceeded to a hearing on the motion for summary judgment and the cross-motion for partial summary judgment on April 13, 2017. At the start of the hearing, the parties introduced into evidence a stipulation, which contained the regular hourly rates of the plaintiffs on specified dates; the three latest versions of the City's vacation policies, effective December 2011 to May 2012, May 2012 to June 2013, and effective June 2013 through the present; and the Board's rules, which have been in effect at all times pertinent to this litigation. The stipulation further stated that "[t]here is no contract or collective bargaining agreement between: (1) the [City], its Fire Department, and/or any other representative of the City and (2) the firemen employed by the [City], including the named plaintiffs in this suit, any Union, and/or other representative of said firemen." Finally, the stipulation stated that the only other evidence to be considered by the trial court, in addition to the stipulation, were the proposed accountings of both the City and the plaintiffs. At the close of argument, the trial court ruled that it was granting summary judgment in favor of the plaintiffs and denying the City's cross-motion for summary judgment. The trial court further held that it was adopting the accounting provided by the plaintiffs and, based on that accounting, was rendering a monetary judgment in favor of those plaintiffs no longer employed by the City. A written judgment formalizing these rulings was rendered by the trial court on May 19, 2017.

Thereafter, the City perfected appeals from both judgments rendered against it by the trial court. On appeal, it raises two assignments of error:

1. The [trial court] erred in failing to require that the Leesville Municipal Fire and Police Civil Service Board be added as a party.
2. The trial court erred in including an unlimited "carryover" of unused vacation days in the cumulative amount of vacation owed to Leesville firefighters under La.R.S. 33:1996.

Louisiana Code of Civil Procedure Article 641, with regard to joinder of parties needed for just adjudication, provides:

A person shall be joined as a party in the action when either:
(1) In his absence complete relief cannot be accorded among those already parties.
(2) He claims an interest relating to the subject matter of the action and is so situated that the adjudication of the action in his absence may either:
(a) As a practical matter, impair or impede his ability to protect that interest.
(b) Leave any of the persons already parties subject to a substantial risk of incurring multiple or inconsistent obligations.

However, "[i]f a person described in Article 641 cannot be made a party, the court shall determine whether the action should proceed among the parties before it, or should be dismissed." La.Code Civ.P. art. 642. The factors to be considered pursuant to La.Code Civ.P. art. 642 are, as follows:

(1) To what extent a judgment rendered in the person's absence might be prejudicial to him or those already present.
(2) The extent to which the prejudice can be lessened or avoided by protective provisions in the judgment, by the shaping of relief, or by other measures.
(3) Whether a judgment rendered in the person's absence will be adequate.
(4) Whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

On appeal from the grant or denial of a peremptory exception based on the non-joinder of a party needed for just adjudication, the appellate court "review[s] the findings of the trial court in accordance with the 'abuse of discretion' standard of review." Rayford v. Nat'l R.R. Passenger Corp. , 05-1273, p. 7 (La.App. 4 Cir. 4/13/07), 962 So.2d 5, 9, writ denied , 07-1021 (La. 8/31/07), 962 So.2d 439.

As stated previously, La.R.S. 33:1996 provides the annual vacation that firemen are statutorily entitled to:

Firemen in municipalities, parishes and fire protection districts to which this Subpart applies, after having served one year, shall be entitled to an annual vacation of eighteen days with full pay. This vacation period shall be increased one day for each year of service over ten years, up to a maximum vacation period of thirty days, all of which shall be with full pay. The vacation privileges herein provided for shall not be forfeited by any member of the department for any cause. Firemen employed on January 6, 1969 shall have their present longevity considered as a factor in the computation of their vacation benefits as provided herein.
The provisions of this section shall in no way be construed to affect in any manner any presently existing system of computing vacation periods under which greater vacation benefits are granted than those provided for herein and the same shall continue in full force and effect.

This statute was previously addressed by the supreme court in New Orleans Firefighters Local 632 v. City of New Orleans , 00-1921, 00-2041 (La. 5/25/01), 788 So.2d 1166 ( Firefighters I ), in a matter in which the firefighters contested, among other issues, a rule which capped their accumulated annual leave at forty-five or ninety days, depending on their date of hire. The firefighters argued that this cap violated La.R.S. 33:1996, which, in addition to specifying the number of vacation days they were entitled to annually, mandated that "[t]he vacation privileges herein provided for shall not be forfeited by any member of the department for any cause." La.R.S. 33:1996. Thus, they argued that they were entitled to "accumulate an unlimited number of days of annual leave which may not be forfeited." Firefighters I , 788 So.2d at 1170. However, the City of New Orleans argued that La.R.S. 33:1996 was silent on the issue of accumulated vacation days.

In addressing the issue before it, the supreme court stated:

Commission Rule VIII, § 1.2 does not violate the terms or the intent of the statute. The statutory guarantee is that firemen be allowed to earn and to use a minimum number of vacation days each year. The Rule, while allowing earned vacation days to be carried forward to a succeeding year, simply places a reasonable limitation on the period of time within which earned vacation days must be used. The Rule thus denies a fireman the right to earn vacation days in one year at one salary and then to demand payment for those vacation days fifteen years later at a higher salary, but the Rule does not require forfeiture of earned vacation days which the fireman has been given a reasonable opportunity to use. A ceiling on the number of vacation days a fireman may carry forward is not, in itself, a forfeiture of earned vacation days, unless the fireman was denied the opportunity to use those earned vacation days.
Moreover, the Rule does not violate this court's 1982 decision in New Orleans Firefighters [Association v. Civil Service Commission of the City of New Orleans , 422 So.2d 402 (La.1982) ], which held that enforcement of the statute providing for supplemental salary for firemen in combination with their minimum wages did not conflict with the Civil Service Commission's constitutional rulemaking authority. Nor does the Rule create a labor condition for firemen that is "injurious to the safety and welfare of the public as well as detriment to the health, efficiency and morale of the firefighters," which was a significant concern of the 1982 decision. Id. at 412. Indeed, the stockpiling of vacation days not only is a right on which the terms of the statute are silent, but also runs counter to the rest, renewal and recreation purpose of vacation days as an employment practice.
We conclude that La.Rev.Stat. 33:1996 does not either grant or deny firemen the right to carry forward earned vacation days to future years. The statute simply is silent on the issue and therefore is not in conflict, on its face, with Commission Rule VIII, § 1.2.
Nevertheless, the City arguably cannot require work conditions or undermanned schedules for firemen that prevent them from using their accrued leave each year, as such conduct by the City could constitute an impermissible forfeiture of vacation privileges.

Id. at 1170-71 (footnote omitted).

Thus, as held by the supreme court, La.R.S. 33:1996 is silent on the issue of accrued vacation leave; it neither grants nor denies firemen the right to accrue their vacation leave from year to year.

During the hearing on the exception, counsel for the plaintiffs stated that the issue before the trial court was "the issue of quantum or the amount of hours these firemen are entitled to under 1996 [sic] and the appropriate relief that should come from that." He further stated that this issue did not involve the Board and cited in support of his argument New Orleans Firefighters Association Local 632 v. Civil Service Commission of City of New Orleans , 485 So.2d 1017 (La.App. 4 Cir.), writ denied , 489 So.2d 921 (La.1986) ( Firefighters II ). In that opinion, the fourth circuit affirmed the trial court's ruling that the Civil Service Commission was not an indispensable party to the firefighters' suit against the City. In doing so, the court held:

[W]e do not believe the Commission was an indispensable party to the Firefighters Association's motion. That motion and the prior contempt rule were filed to secure a court order requiring the City of New Orleans to make payments of overtime salary due the firefighters. The motion did not seek action by the Civil Service Commission; the Commission had already acted and revised the uniform pay plan in conformity with the 1982 Supreme Court decree. All the Firefighters Association sought from the District Court in 1985 was, in effect, execution of the portion of the 1983 judgment which ordered the computation and payment of the back overtime pay, functions of the City Finance Department, not of the Civil Service Commission. We, therefore, reject the City's assertion that the participation of the Commission was required at the hearing.

Id. at 1019.

However, after review, we find that Firefighters II actually supports the City's position rather than the plaintiffs. This is based on the Board's Annual Leave policy, which governs the leave of firemen, as provided in Subsection "J." of Section "1." of Rule XII, of which we take judicial notice. La.Code Evid. art. 202(B). Subsection "J." provides, with regard to annual leave for Fire and Police:

Each full-time employee of the classified service shall accrue vacation leave at the rate of ten (10) working days each year for the first five (5) years of service; fifteen (15) working days each year from five (5) to ten (10) years of service; twenty (20) working days each year from ten (10) to fifteen (15) years of service; twenty-five (25) days each year from (15) to twenty (20) years of service; and thirty (30) working days each year from twenty (20) years of service and thereafter.

This clearly conflicts with the statutorily mandated annual leave provided by La.R.S. 33:1996, which entitles firemen, "after having served one year[,]" to "an annual vacation of eighteen days with full pay. This vacation period shall be increased one day for each year of service over ten years, up to a maximum vacation period of thirty days, all of which shall be with full pay." This fact was noted by counsel for plaintiffs in his argument to the trial court and even by the trial court itself which, in ruling from the bench, stated, "The unfortunate situation is the Board is-from our discussion in the side chamber, is they may not have some rules that are compliance [sic] with the law and there's a worry on the part of the City that unless the Board changes things that it may-there may be other problems that may arise."

We note that Subsection "J." of Section "1." of Rule XII of the Board has no provision which would otherwise permit or prohibit the carryover of unused vacation leave from year to year by the plaintiffs. During argument in opposition to the exception, plaintiffs' counsel urged that while the City's employment policies provided for limited carryover as to certain City employees, the plain wording of Rule XII did not prohibit carryover and that the plaintiffs were governed by the Board's rules. Despite the omission of any carryover provision in Rule XII, the plaintiffs argued that carryover was allowed because the rule was silent on the issue. However, silence as to the right to carryover unused vacation leave from year to year does not, in and of itself, grant the right to carryover unused leave time. Firefighters I , 788 So.2d 1166. As to the plaintiffs, the Board, while restricted from providing less vacation time than established by La.R.S. 33:1996, is free to grant more and can provide for carryover of such unused time from year to year. Id. Thus, it is glaringly apparent that the Board is indeed a needed party herein concerning the intent and interpretation of its own rules, which clearly apply to the plaintiffs and their claims for an accounting of their unused vacation leave time.

Considering the necessity of its involvement, we find that joinder of the Board is necessary so that complete relief can be accorded to the plaintiffs in this matter and that the trial court abused its discretion by denying the City's peremptory exception of non-joinder. Accordingly, the judgment of the trial court denying the City's peremptory exception of non-joinder of a party needed for just adjudication is reversed; the trial court's May 19, 2017 judgment granting summary judgment in favor of the plaintiffs and denying the City's cross-motion for partial summary judgment is vacated; and the matter is remanded for further proceedings in accordance with this opinion.

DISPOSITION

For the foregoing reasons, the judgment of the trial court denying the City of Leesville's peremptory exception of non-joinder of a party needed for just adjudication is reversed; the trial court's May 19, 2017 judgment granting summary judgment in favor of the plaintiffs and denying the City of Leesville's cross-motion for partial summary judgment is vacated; and the matter is remanded for further proceedings in accordance with this opinion. The costs of this appeal are assessed to the plaintiffs, Joshua J. Foster, Leonard R. Edwards, Horace C. Condon, Amanda G. Lawrence, Stacy B. Dixon, Ronald K. Bush, Michael D. Allen, William Tibbits, Dennis Doherty, Eric J. Baker, and Brandon Strickland.

REVERSED; VACATED; AND REMANDED.


source: Caselaw Access Project

author: Judge Rosemary Ledet

license: Public Domain

text:
    Robert ARMBRUSTER, Nicole Armbruster, F.I.N.S. Construction, LLC, and Cambrie Celeste Developer, LLC v. Steven ANDERSON, Cambrie Celeste, LLC, Cambrie Partners I, LLC, Cambrie Celeste Commercial Tenant, LLC, Avalon Re: Partners, LLC
    NO. 2018-CA-0055
    Court of Appeal of Louisiana, Fourth Circuit.
    JUNE 27, 2018
    Ryan E. Beasley, Sr., LAW OFFICE OF RYAN BEASLEY, SR., LLC, 400 Poydras Street, Suite 900, New Orleans, LA 70130, COUNSEL FOR PLAINTIFF/APPELLANT.
    Julie U. Quinn, Justin E. Alsterberg, QUINN ALSTERBERG, LLC, 855 Baronne Street, New Orleans, LA 70113, COUNSEL FOR DEFENDANT/APPELLEE.
    (Court composed of Chief Judge James F. McKay, III, Judge Edwin A. Lombard, Judge Rosemary Ledet )
   Judge Rosemary Ledet

This is a complex commercial litigation dispute. Robert and Nicole Armbruster, a married couple, and two companies controlled by Mr. Armbruster-F.I.N.S. Construction, LLC ("FINS"); and Celeste Developer, LLC ("Developer")-are the Plaintiffs. Steven Anderson and four companies controlled by Mr. Anderson-Cambrie Celeste, LLC ("Celeste"); Cambrie Partners I, LLC ("Partners"); Cambrie Celeste Commercial Tenant, LLC ("Tenant"); and Avalon Re: Partners, LLC ("Avalon")-are the Defendants. From the trial court's judgment granting the Defendants' peremptory exception of res judicata and dismissing the suit, the Plaintiffs appeal. For the reasons that follow, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Mr. Anderson is a property developer who specializes in the use of tax credits to develop properties. Mr. Armbruster is a contractor. Together, Mr. Armbruster and Mr. Anderson, through various companies that they respectively control, have engaged in numerous real estate and construction ventures. The ventures jointly entered into by Mr. Anderson and Mr. Armbruster have spawned much litigation. The joint venture that gave rise to the instant litigation involved a project to rehabilitate property located at 621 Celeste Street in New Orleans, Louisiana (the "Property").

Briefly summarized, the factual background of the venture is as follows. On March 21, 2006, pursuant to an act of cash sale, Religious and Celeste, LLC ("R & C"), an entity co-owned by the Armbrusters, acquired the Property for $1,480,000. R & C ultimately intended to develop the Property, in multiple phases, into mixed used commercial, retail, and residential space. The first phase of R & C's development plans was to rehabilitate the building located on the Property, which at the time of acquisition was a three-story shell in poor condition. R & C used FINS-Mr. Armbruster's construction company-to perform the work. R & C also began the process of applying for historic tax credits ("HTC") for the rehabilitation project.

R & C financed the rehabilitation project by obtaining from Omni Bank ("Omni") two loans, totaling $2,872,000, which the Armbrusters personally guaranteed. R & C defaulted on the Omni loans, and Omni commenced a foreclosure action on June 10, 2009. To avoid foreclosure, Mr. Armbruster, acting as R & C's representative, entered into a deal with Mr. Anderson and two of his companies, Avalon and Celeste. The deal, as ultimately closed, encompassed two steps. Collectively, these two steps are referred to as the "Transaction."

The first step of the Transaction was an act of cash sale, executed on December 29, 2009, by which R & C transferred title to the Property to Celeste subject to the Omni mortgage. The second step of the Transaction occurred on March 22, 2010, when Celeste assumed R & C's Omni debt. As part of the Transaction, Mr. Armbruster and Mr. Anderson, through their respective companies, also entered into various other agreements, including a lease (the "Lease").

The Lease was an integral part of the second step of the Transaction. According to the Defendants, the parties entered into a New Markets Tax Credit ("NMTC") transaction to obtain a low market loan to refinance the existing debt on the Property. In order for the NMTC transaction to close, the Property had to be leased. On March 22, 2010, Celeste leased to Tenant the commercial component of the Property. On that same date, Celeste, Tenant, and Starboard Management, LLC ("Starboard"), a company owned by the Armbrusters, entered into the Lease. Under the Lease, Starboard rented the residential component of the Property from Celeste and the commercial component from Tenant. Contemporaneously, the Armbrusters, FINS, and Developer (collectively the "Guarantors") executed an agreement to guarantee Starboard's obligations under the Lease (the "Guaranty").

About three months after the second step of the Transaction, on June 2, 2010, R & C filed a petition for relief under Chapter 11 of the Bankruptcy Code. On March 1, 2012, Celeste and Tenant (the lessors) filed in Louisiana state court a cumulated action for eviction and breach of contract against Starboard and the Guarantors.

In response, on March 29, 2012, R & C filed an adversary proceeding in the Bankruptcy Case against Mr. Anderson, Celeste, Partners, and Avalon (the "Adversary Proceeding"). The gist of R & C's claims in the Adversary Proceeding was that the documents executed in connection with the Transaction did not accurately memorialize the deal it had made with Mr. Anderson and that instead Mr. Anderson had defrauded R & C with respect to the Transaction. The relief R & C requested was to have the Bankruptcy Court void the Transaction.

In March and April 2013, a seven-day trial was held in the Adversary Proceeding. On April 11, 2014, the Bankruptcy Court's Judgment was issued, dismissing R & C's claims. On August 11, 2014, the United States District Court for the Eastern District of Louisiana affirmed the Bankruptcy Court's Judgment, stating: "[i]nsofar as the core proceedings are concerned, the Court finds that the ruling of the Bankruptcy Court is not clearly erroneous; as to all other claims, the Court finds no error of fact or law on this record, and accepts the Bankruptcy Court's proposed findings of fact and conclusions of law, overruling objections to the same."

After the conclusion of the trial in the Adversary Proceeding, the stay of the Eviction case was lifted in July of 2013. During the following three years of litigation of the Eviction Case, Starboard was summarily evicted and held in contempt. On July 27, 2016, the trial court granted a motion for summary judgment filed by Celeste and Tenant and rendered judgment against Starboard and the Guarantors in the amount of $1,614,941.69, representing past due rent and damages. Starboard and the Guarantors appealed. On November 6, 2017, this court affirmed the trial court's judgment granting summary judgment as to Starboard only; however, as to the Guarantors, this court reversed the trial court's judgment granting summary judgment and remanded for further proceedings. Cambrie Celeste LLC v. Starboard Mgmt., LLC , 16-1318 (La. App. 4 Cir. 11/6/17), 231 So.3d 79, writ denied , 17-2041 (La. 2/2/18), 235 So.3d 1110 (hereinafter " Starboard ").

Meanwhile, on October 27, 2016, while the appeal in the Eviction Case was still pending, the Plaintiffs filed in Louisiana state court the instant suit, styled a petition for declaratory judgment. In their petition, the Plaintiffs set forth in detail the facts of the Transaction and alleged that Mr. Anderson and the other defendants-companies owned and controlled by Mr. Anderson-drafted and fraudulently induced Mr. Armbruster, on behalf of the other plaintiffs, to execute six specific agreements (the "Anderson Documents") in a complex scheme to enable the Defendants to obtain lucrative tax credits. Through the petition, the Plaintiffs sought to rescind the Anderson Documents. In the alternative to rescinding the Anderson Documents, the Plaintiffs sought damages for bad faith breach of contract and unfair trade practices. In response, the Defendants filed an exception of res judicata. On June 7, 2017, the trial court rendered judgment granting the Defendants' exception of res judicata and dismissing with prejudice the Plaintiffs' claims. This appeal followed.

DISCUSSION

Although the Defendants assert multiple assignments of error, the dispositive issue is whether the trial court erred in granting the Defendants' peremptory exception of res judicata. This court has noted that it reviews factual issues relating to an exception of res judicata under a manifest error-clearly wrong standard and that it reviews legal issues relating to an exception of res judicata under a de novo standard.

Countrywide Home Loans Servicing, LP v. Thomas , 12-1304, p. 3 (La. App. 4 Cir. 3/20/13), 113 So.3d 355, 357 ; Ames v. Ohle , 16-0612, p. 6 (La. App. 4 Cir. 4/26/17), 219 So.3d 396, 402.

"Res judicata is an issue preclusion device found both in federal law and in state law." Terrebonne Fuel & Lube, Inc. v. Placid Ref. Co ., 95-0654, 95-0671, p. 11 (La. 1/16/96), 666 So.2d 624, 631 ; BBCL Enterprises, LLC v. Am. Alternative Ins. Corp ., 15-0469, p. 3 (La. App. 4 Cir. 2/3/16), 187 So.3d 65, 67 (citing Terrebonne , supra ). "The purpose of both federal and state law on res judicata is essentially the same; to promote judicial efficiency and final resolution of disputes by preventing needless relitigation." Terrebonne , 95-0654, 95-0671 at p. 12, 666 So.2d at 631. "Under federal precepts, 'claim preclusion' or 'true res judicata' treats a judgment, once rendered, as the full measure of relief to be accorded between the same parties on the same 'claim' or 'cause of action.' " Reeder v. Succession of Palmer , 623 So.2d 1268, 1271 (La. 1993).

Since 1991, res judicata under Louisiana law, akin to federal law, applies to "all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished." La. R.S. 13:4231. The res judicata doctrine, in Louisiana, is stricti juris ; "any doubt regarding the application of the doctrine must be resolved against its application." Bd. of Sup'rs of Louisiana State Univ. v. Dixie Brewing Co., Inc ., 14-0641, p. 6 (La. App. 4 Cir. 11/19/14), 154 So.3d 683, 688 (collecting cases).

Here, the Defendants premised their res judicata exception on two judgments-one federal and one state. The federal judgment was rendered on August 11, 2014, by the United States District Court for the Eastern District of Louisiana, which affirmed the Bankruptcy Court's Judgment in the Adversary Proceeding (the "Bankruptcy Court's Judgment"). The state judgment was issued on July 27, 2016, by the trial court in the Eviction Case (the "State Court's Judgment").

After the trial court rendered its decision granting the Defendants' res judicata exception in this case, however, this court rendered its decision in Starboard , reversing the State Court's Judgment as it pertains to all parties in that case except for Starboard. As a result of our decision in Starboard , any res judicata effect of the State Court's Judgment was lost. See La. R.S. 13:4231 cmt. (d) (stating that "the preclusive effect of a judgment attaches once a final judgment has been signed by the trial court and would bar any action filed thereafter unless the judgment is reversed on appeal"). The State Court Judgment thus can no longer have any res judicata effect. The narrow issue before us is whether the Bankruptcy Court's Judgment has res judicata effect.

"A prior federal court judgment in a case involving the same facts ... may support a plea of res judicata in a Louisiana court." 1 Frank L. Maraist and Harry T. Lemmon, LOUISIANA CIVIL LAW TREATISE: CIVIL PROCEDURE § 6.7 (1999) (citing Reeder , 623 So.2d at 1271 ). Louisiana courts " 'have repeatedly confirmed that federal law is applicable to consideration of whether a federal court judgment has res judicata effect.' " Jones ex rel. Jones v. GEO Grp., Inc. , 08-1276 p. 5 (La. App. 3 Cir. 4/1/09), 6 So.3d 1021, 1025 (quoting Green v. Iberia Parish Sch. Bd ., 06-1060, p. 3 (La. App. 3 Cir. 12/20/06), 945 So.2d 940, 943 ).

"A bankruptcy judgment, just as any judgment under federal res judicata law, bars a subsequent suit if all of the following tests are satisfied: 1) both cases involve the same parties; 2) the prior judgment was rendered by a court of competent jurisdiction; 3) the prior decision was a final judgment on the merits; and 4) the same cause of action is at issue in both cases." Terrebonne , 95-0654, 95-0671 at p. 15, 666 So.2d at 633 (citing Matter of Baudoin , 981 F.2d 736, 740 (5th Cir. 1993) ; Eubanks v. F.D.I.C. , 977 F.2d 166, 169 (5th Cir. 1992) ).

Contrary to the Plaintiffs' contention, we find all four federal res judicata requirements are satisfied here. The second and third requirements are easily met. The Bankruptcy Court's ruling in the Adversary Proceeding was affirmed by the federal district court; hence, the Bankruptcy Court's Judgment is a final judgment rendered by a court of competent jurisdiction. See Stern v. Marshall , 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011). The first and the fourth requirements, however, require more detailed analysis.

For purposes of federal res judicata, the contours of the requirement that the parties be the same have been defined as follows:

"[P]arties" for purposes of res judicata does not mean formal, paper parties only, but also includes " 'parties in interest, that is, that persons whose interests are properly placed before the court by someone with standing to represent them are bound by the matters determined in the proceeding.' " (quoting 1B J. Moore, Moore's Federal Practice , P.O. 411[1] at 390-391 (2d ed. 1983) ) (emphasis supplied). A non-party is in privity with a party for res judicata purposes in three instances. First, if he has succeeded to the party's interest in property, he is bound by prior judgments against the party. Second, if he controlled the prior litigation, he is bound by its result. Third, he is bound if the party adequately represented his interests in the prior proceeding.

Latham v. Wells Fargo Bank, N.A., 896 F.2d 979, 983 (5th Cir. 1990).

The Plaintiffs emphasize that the debtor, R & C, was the sole plaintiff in the Adversary Proceeding and thus the sole party to whom the Bankruptcy Court could grant relief. They emphasize that, in this case, four other parties are named as plaintiffs and that none of the Plaintiffs was a debtor in the Bankruptcy Case. The Plaintiffs further contend that "[w]hile the contracts and documents at issue (the Anderson Documents) in [the Plaintiffs'] Petition for Declaratory Relief are also mentioned in the R & C bankruptcy proceeding, R & C was not a party to those contracts."

The Defendants counter that the Armbrusters were the principals and the only members of the debtor, R & C; that Mr. Armbruster controlled the prior litigation; and that the Plaintiffs' interests were adequately represented in the Adversary Proceeding. The Defendants thus contend that the Plaintiffs are privies of R & C. We agree.

Our finding that the Plaintiffs are privies of R & C and that the identity of parties requirement is thus met is buttressed by the following statement in a footnote to the Bankruptcy Court's Judgment: "[d]espite the many entities and the sometimes multiple interests in the limited liability companies, the basic conflict in this case is between Robert Armbruster as the real plaintiff in interest and Steven Anderson as the real defendant in interest." The Plaintiffs' argument to the contrar y is unpersuasive. We thus find the identity of parties requirement is met.

For purposes of federal res judicata, the contours of the requirement that the causes of action be the same have been defined as follows:

"Whether two cases implicate the same cause of action turns on whether they share the same 'nucleus of facts.' " Drake [v. FAA ,] 291 F.3d [59,] 66 [ (D.C. Cir. 2002) ] (quoting Page v. United States , 729 F.2d 818, 820 (D.C. Cir. 1984) ). In pursuing this inquiry, the court will consider " 'whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.' " I.A.M. Nat'l Pension Fund v. Indus. Gear Mfg. Co ., 723 F.2d 944, 949 n. 5 (D.C. Cir. 1983) (quoting 1B J. Moore, MOORE'S FEDERAL PRACTICE ¶ 0.410[1] (2d ed.1983) ).

Apotex, Inc. v. Food & Drug Admin ., 393 F.3d 210, 217 (D.C. Cir. 2004).

The claims R & C asserted in the Adversary Proceeding involve the same transaction and occurrence at issue here. As the Defendants contend, the Plaintiffs are asserting, in this case, the same argument-that the actual "deal" involved in the Transaction was different than what is reflected in all the documents that they actually executed. The Plaintiffs also are seeking the same relief that R & C sought in the Adversary Proceeding-to void the Transaction.

The Plaintiffs' attempt to divorce the Anderson Documents from the Transaction addressed by the Bankruptcy Court's Judgment is unpersuasive. In the Bankruptcy Court's Judgment, the contours of the Transaction were expressly noted to include all the documents executed in connection with both steps of the Transaction-all the December 2009 and March 2010 closing documents. The Bankruptcy Court, in its judgment, expressed this point as follows: "[b]ecause the [T]ransaction consisted of both these steps, the use of [the] terms 'transfer' or 'transaction' in this opinion shall be construed [to] include all of the documents executed on December 29, 2009 and on March 22, 2010, unless otherwise specified." The Bankruptcy Court's Judgment thus encompassed the entire Transaction, including the Anderson Documents executed on those dates. The requirement that both actions involve the same cause of action is thus met.

In sum, all four federal res judicata requirements are met here. Nonetheless, the Plaintiffs contend-implicitly relying on a jurisprudential exception to res judicata -that the Bankruptcy Court was without subject matter jurisdiction over their claims. In support, the Plaintiffs cite Stern , supra ., for the proposition that a bankruptcy court lacks subject matter jurisdiction over claims that "do not relate to the bankruptcy estate." The Plaintiffs' reliance on the Stern case is misplaced.

The Plaintiffs' argument generally conflates a bankruptcy court's subject matter jurisdiction with its constitutional authority to hear and decide cases. The Supreme Court, in the Stern case, however, observed that whether a bankruptcy court has subject matter jurisdiction over a matter is a different issue than whether a bankruptcy court has the statutory authority to decide a matter and to enter a final order and judgment on that matter. Stern , 564 U.S. at 480, 131 S.Ct. at 2607-08 (observing that "allocation [of core and non-core proceedings] does not implicate questions of subject matter jurisdiction").

Here, the Plaintiffs, in their petition for declaratory judgment, seek to rescind the Anderson Documents, which would, in effect, rescind the Transaction. The Plaintiffs' contention that their claims are not related to the Bankruptcy Case and that the Bankruptcy Court thus lacked subject matter jurisdiction over their claims is unpersuasive. As the federal district court's judgment in the Adversary Proceeding demonstrates, the Bankruptcy Court had subject matter jurisdiction over all matters related to the Transaction. The Plaintiffs' implicit attempt to invoke an exception to the federal res judicata doctrine is unpersuasive.

In summary, all the requirements for res judicata are met; none of the exceptions to the res judicata doctrine apply. We thus find no error in the trial court's judgment granting the Defendants' peremptory exception of res judicata and dismissing the Plaintiffs' case.

DECREE

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

AFFIRMED

      In March 2006, R & C was formed as a Louisiana limited liability company. When it was formed, R & C had two members-ABNA, LLC and CNRT, LLC. In late 2007 or early 2008, CNRT ceased to be a member, leaving ABNA as the only remaining member. ABNA was owned by the Armbrusters, who each were 50% members.

      Although originally a single lot known only as "Lot Q," the Property is subdivided into Lot Q, on which the building bearing the municipal address 621 Celeste Street is situated; and Lot Q-2, which is an adjacent, vacant lot.

      After R & C's work, the building contained a mix of ten residential units and two commercial units.

      In re: Religious and Celeste, LLC , Docket No. 2010-11958, United States Bankruptcy Court for the Eastern District of Louisiana (the "Bankruptcy Case").

      Cambrie Celeste LLC v. Starboard Mgmt., LLC , Docket No. 2012-1997 in the Civil District Court for the Parish of Orleans, (the "Eviction Case").

      As a result of a consent agreement between the parties in the Adversary Proceeding, the Eviction Case was stayed.

      In its complaint, R & C asserted the following seven causes of action: (1) fraudulent transfers under § 548 of the Bankruptcy Code ; (2) recovery of the transfers or the value of the transfers under § 550 of the Bankruptcy Code ; (3) avoidance of the transfers under the Louisiana revocatory action and other fraudulent transfer laws under § 544(b) of the Bankruptcy Code ; (4) unjust enrichment under state law; (5) fraud under state law; (6) piercing the corporate veil or single business enterprise under state law; and (7) recovery of unlawful distributions under state law.

      As noted elsewhere in this opinion, the Eviction Case was stayed for about one year as a result of the Bankruptcy Case. After the trial in the Adversary Proceeding but before that court rendered a decision, the Guarantors and Starboard, filed, in the Eviction Proceeding, a reconventional demand and an amended reconventional demand asserting the same claims they assert in this case (hereinafter the "Reconventional Demand").

      The Anderson Documents are as follows:
      • Historic Tax Credit Guaranty, executed December 29, 2009, between the Armbrusters and Mr. Anderson;
      • Development Agreement, executed December 28, 2009 between Cambrie Celeste and Cambrie Developer;
      • Security and Pledge Agreement, executed March 22, 2010, by the Armbrusters, FINS, Cambrie Developer, and Starboard in Mr. Anderson's favor;
      • Environmental and Hazardous Substances Indemnity Agreement, executed March 22, 2010, by the Armbrusters in Mr. Anderson's favor;
      • Deposit Account Control and Pledge Agreement, executed March 22, 2010, by Omni, Mr. Anderson, and Cambrie Developer;
      • Operating Agreement of Cambrie Partners, executed March 22, 2010, between Avalon and Mr. Armbruster.
      Although in the petition the Plaintiffs refer once to the Lease Agreement as one of the Anderson Documents, elsewhere in the petition the Plaintiffs specifically enumerate the Anderson Documents as those six documents set forth above. Moreover, Starboard (the lessee) is not a party to this litigation.

      The Defendants also requested sanctions, which the trial court denied. The ruling denying sanctions is not contested.

      As discussed elsewhere in this opinion, this court rendered its decision in Starboard, supra, reversing, in part, the trial court's decision in the Eviction Case on November 6, 2017, which was after the trial court's judgment granting the Defendants' res judicata exception was rendered.

      The plaintiffs assert the following five assignments of error:
      1) The Trial Court improperly granted Defendants/Appellees' Exception of Res Judicata dismissing all of Plaintiffs/Appellants' claims with prejudice.
      2) The Trial Court improperly applied the holding of Middleton [v. Parish of Jefferson , 97-324 (La. App. 5 Cir. 1/14/98), 707 So.2d 454 ] to Plaintiff's claims, resulting in the improper dismissal of Plaintiffs/Appellants' claims with prejudice.
      3) The Trial Court improperly applied the holding of Middleton to the Bankruptcy Judgment, a judgment issued by a court of limited jurisdiction, namely the United States Bankruptcy Court for the Eastern District of Louisiana.
      4) The Trial Court failed to recognize the constitutional restraints imposed upon the jurisdiction of federal bankruptcy courts in allowing a federal bankruptcy judgment relating to a non-party debtor to support Defendant/Appellees' Exception of Res Judicata.
      5) The Trial Court improperly applied the State Judgment to Appellants' claims even though those claims were never considered by the Court.

      In Louisiana, res judicata is implemented through a framework of code articles and statutes; effective January 1, 1991, "that framework was amended by the Legislature to be more akin to federal and common law." Bd. of Sup'rs of Louisiana State Univ. v. Dixie Brewing Co., Inc ., 14-0641, p. 6 (La. App. 4 Cir. 11/19/14), 154 So.3d 683, 688 (quoting M. David Kurtz and Mark W. Frilot, Res Judicata in Louisiana: A Synthesis of Competing Interests , 53 LA. B.J. 445 (2006) ). Since 1991, the Louisiana Supreme Court has considered the " 'chief inquiry' to be 'whether the second action asserts a cause of action which arises out of the transaction or occurrence that was the subject matter of the first action.' " Chevron U.S.A. Inc. v. State , 07-2469, p. 10 (La. 9/8/08), 993 So.2d 187, 194 (quoting Burguieres v. Pollingue , 02-1385, p. 7 (La. 2/25/03), 843 So.2d 1049, 1053 ). This change in the law "serves the purpose of judicial economy and fairness by requiring the plaintiff to seek all relief and to assert all rights which arise out of the same transaction or occurrence." La. R.S. 13:4231, cmt. (a).

      In Louisiana, the governing statutory provision setting forth the requirements for res judicata is La. R.S. 13:4231, which provides as follows:
      Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
      (1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
      (2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
      (3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

      The Defendants point out that the Plaintiffs' petition in this case is virtually identical to the reconventional demand that the Plaintiffs filed in the Eviction Case.

      The Defendants, as the Plaintiffs emphasize, cited Middleton , supra , in the trial court in support of their exception. In that case, the issue presented was "whether a corporate official can avoid an exception of res judicata by bringing, in his individual capacity, a suit already litigated on behalf of the corporation." Id., 97-324 at p. 3, 707 So.2d at 455. Answering that question in the negative, the court observed that "veil piercing must be used in this instance not to impose personal liability on Mr. Middleton but to prevent his use of subversive tactics to take an unjust advantage of a legal distinction. Allowing a corporate official to bring suit in his individual capacity, solely for the purpose of avoiding an exception to res judicata, would be an unjust result." Id. , 97-324 at p. 7, 707 So.2d at 457. Given our finding that the only judgment relevant for res judicata purposes here is the Bankruptcy Court's Judgment coupled with the controlling law being federal res judicata principles, we pretermit discussing the Middleton case, involving Louisiana state law.

      In Stern , the Supreme Court explained the authority of bankruptcy judges as follows:
      Bankruptcy judges may hear and enter final judgments in "all core proceedings arising under title 11, or arising in a case under title 11." § 157(b)(1). "Core proceedings include, but are not limited to" different types of matters, including "counterclaims by [a debtor's] estate against persons filing claims against the estate." § 157(b)(2)(C). Parties may appeal final judgments of a bankruptcy court in core proceedings to the district court, which reviews them under traditional appellate standards. See § 158(a); Fed. Rule Bkrtcy. Proc. 8013.
      When a bankruptcy judge determines that a referred "proceeding ... is not a core proceeding but ... is otherwise related to a case under title 11," the judge may only "submit proposed findings of fact and conclusions of law to the district court." § 157(c)(1). It is the district court that enters final judgment in such cases after reviewing de novo any matter to which a party objects. Ibid.
      564 U.S. at 474-75, 131 S.Ct. at 2603-04.
      The Supreme Court, in Stern , observed that "Section 157 allocates the authority to enter final judgment between the bankruptcy court and the district court. See §§ 157(b)(1), (c)(1). That allocation [of core and non-core proceedings] does not implicate questions of subject matter jurisdiction." 564 U.S. at 480, 131 S.Ct. at 2607. The distinction between "core" and "non-core" proceedings is addressed in In re Wood , 825 F.2d 90 (5th Cir. 1987). The court in Wood observed that "a proceeding is core under section 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case."Id. at 97. Contrasting core and non-core proceedings, the court in Wood stated that "[i]f the proceeding does not invoke a substantive right created by the federal bankruptcy law and is one that could exist outside of bankruptcy it is not a core proceeding; it may be related to the bankruptcy because of its potential effect, but under section 157(c)(1) it is an 'otherwise related' or non-core proceeding." Id. (emphasis in original).
      In its judgment, the Bankruptcy Court stated that "[t]his adversary proceeding is a core proceeding.... To the extent that this court lacks the power to enter a final decision as to the state law claims raised in this adversary proceeding because of the decision of the United States Supreme Court in Stern v. Marshall , [564 U.S. 462,] 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), this memorandum opinion constitutes the court's proposed findings of fact and conclusions of law." As noted elsewhere in this opinion, the federal district court affirmed the Bankruptcy Court's decision as to the core proceedings and, as to any non-core proceedings, accepted the Bankruptcy Court's proposed findings of fact and conclusion of law and entered judgment.

      The Plaintiffs included a similar argument in a footnote to the Reconventional Demand in the Eviction Case, which stated as follows:
      Religious has been reorganized pursuant to Chapter 11 of the United States Bankruptcy Code and has filed its own lawsuit against certain of the Defendants in the United States Bankruptcy Court for the Eastern of Louisiana. Those claims asserted by Religious include claims for avoidance of the transfer of property to Cambrie Celeste under the United States Bankruptcy Code and for fraud upon Religious itself. Counterclaimants herein assert their own, independent causes of action over which the Bankruptcy Court has no jurisdiction and which it did not adjudicate. However, to the extent the Bankruptcy Court determines that a claim asserted on behalf of Religious is not property of Religious or can be asserted only by a party other than Religious, Counterclaimants assert all such claims on their own behalf together with the relief prayed for herein, and this pleading should be construed accordingly.

      The Bankruptcy Court's finding is supported by the following statements in the Joint Pre-Trial Order in the adversary proceeding, identifying and defining the parties:
      • R & C is a Louisiana limited liability company formed on March 15, 2006 whose sole member is ABNA, LLC. When formed, R & C had an additional member, CNRT, LLC. That entity has since withdrawn from R & C. The Armbrusters are the members of ABNA, LLC.
      • Cambrie Celeste is a Louisiana limited liability company formed on December 14, 2009 whose members are Mr. Steven Anderson and Cambrie Celeste State Credit, LLC ("Cambrie State Credit"). Mr. Anderson has a 99% ownership interest in Cambrie Celeste and Cambrie State Credit has a 1% ownership interest in Cambrie Celeste. Mr. Anderson is the manager of Cambrie Celeste.
      • Cambrie Partners is a Louisiana limited liability company formed on March 19, 2010, whose members are Avalon RE Partners LLC ("Avalon") and Mr. Armbruster. Avalon has a 99.9% ownership interest in Cambrie Partners and Mr. Armbruster has 0.1 % ownership interest in Cambrie Partners. Avalon is the Manager of Cambrie Partners. Avalon is a Florida limited liability company formed on March 23, 2009. Mr. Anderson is the Manager of Avalon.
      • Cambrie Developer is a Louisiana limited liability company formed on December 21, 2009 whose sole member is Mr. Armbruster.
      • Cambrie State Credit is a Louisiana limited liability company formed on December 14, 2009 whose members are Anderson and Cambrie STCI. Mr. Anderson has a 99% ownership interest in Cambrie State Credit, and Cambrie STCI has a 1% ownership interest in Cambrie State Credit. Mr. Anderson is the manager of Cambrie State Credit.
      • FINS is a Louisiana limited liability company whose members are Mr. Armbruster and Mrs. Armbruster.
      • Religious Q2, LLC ("Religious Q2") is a Louisiana limited liability company formed on March 5, 2010 whose sole member is Mr. Anderson.

      In Terrebonne , supra , the Louisiana Supreme Court acknowledged the existence of exceptions to res judicata under exceptional circumstances, observing:
      Although rarely mentioned, exceptions exist to the common law theory of res judicata, as noted in the Restatement (Second) of Judgments, § 26 (1982). These exceptions involve "exceptional circumstances" as where (a) the parties have agreed that the plaintiff may split his claim, or the defendant has acquiesced therein; (b) the court in the first action has expressly reserved the plaintiff's right to maintain the second action; (c) there are restrictions on the subject matter jurisdiction of the courts; (d) the judgment in the first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme; (e) for policy reasons; or (f) it is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason. Restatement (Second) of Judgments, § 26 (1982), pg 233-234.
      95-0654, 95-0671 at p. 13, 666 So.2d at 632. The Louisiana Supreme Court noted in Terrebonne that the 1990 amendments enacting La. R.S. 13:4231 included a companion statute, La. R.S. 13:4232, which enumerated similar exceptions, including "[w]hen exceptional circumstances justify relief from the res judicata effect of the judgment." Terrebonne , 95-0654, 95-0671 at p. 13, n. 4, 666 So.2d at 632.

      The Plaintiffs made the same argument in their Reconventional Demand in the Eviction Case-that the Bankruptcy Court had jurisdiction over only the debtor's (R & C's) claims and lacked jurisdiction over their claims.

      Even in the context of a non-core proceeding claim, a similar argument regarding the exceptions to the res judicata doctrine has been rejected. In CoreStates Bank, N.A. v. Huls Am., Inc ., 176 F.3d 187, 198 (3d Cir. 1999), the court reason as follows:
      We think the exceptions set forth in section 26(1)(c) of the Restatement are inapplicable to the case at bar. A bankruptcy judge's jurisdiction over a non-core "related" claim is not limited in the sense of that section. Section 26(1)(c) applies to limitations on the types of theories, remedies, or relief available if a claim is brought in a particular forum. But bringing a non-core "related" claim before a bankruptcy judge does not in any way limit the available theories, remedies, or relief. Cf. Celotex Corp. v. Edwards , 514 U.S. 300, 309 n. 7, 115 S.Ct. 1493, 131 L.Ed.2d 403 (1995) (rejecting the argument that a bankruptcy judge does not have the power to issue an injunction barring an action in a different district court). A bankruptcy judge is perfectly capable of recommending, and the district court of awarding, judgment based on any theory, remedy, or relief, just as if the claim had been brought originally before a district court, or even a state court of general jurisdiction, outside of a bankruptcy proceeding.


text:
    WHITNEY NATIONAL BANK v. Gary C. LANDRIEU and Maria Cortes Landrieu
    NO. 2018-C-0357
    Court of Appeal of Louisiana, Fourth Circuit.
    JUNE 27, 2018
    Justin A. Zitler, 4819 Constance Street, New Orleans, LA 70115, COUNSEL FOR RELATOR /DEFENDANT
    Clay J. LeGros, Newman, Mathis, Brady and Spedale LLC, 433 Metairie Road, Suite 600, Metairie, LA 70005, COUNSEL FOR RESPONDENT/PLAINTIFF
    Gus A. Fritchie III, Irwin, Fritchie, Urquhart, & Moore, LLC, 400 Poydras Street, Suite 2700, New Orleans, LA 70130, COUNSEL FOR RESPONDENT/THIRD-PARTY DEFENDANT
    (Court composed of Judge Daniel L. Dysart, Judge Sandra Cabrina Jenkins, Judge Paula A. Brown )
    Judge Paula A. Brown The instant dispute arises from a petition for a deficiency judgment.
    Respondent/Plaintiff, Whitney National Bank ("Whitney Bank") held two promissory notes in favor of Relators/Defendants, Gary C. Landrieu and Maria Cortes Landrieu (collectively referred to as the "Landrieus"). Whitney Bank alleges that the Landrieus executed a collateral mortgage note as security for the promissory notes and the Landrieus encumbered their property, which included "a developed parcel on the 300 block of Chartres" (the "Property") located in New Orleans, Louisiana. Respondents/Third-Party Defendant, H.O.D.C., L.L.C., d/b/a Keller Williams Realty of New Orleans ("Keller Williams") was hired by the Landrieus to sell the Property.
    Before the Landrieus could sell the Property, Whitney Bank foreclosed on it. The Property was sold in 2010 at a sheriff's sale pursuant to a writ of seizure and sale. In 2017, Whiney Bank filed a "Petition for Deficiency Judgment" and a supplemental petition, against the Landrieus alleging that the sales proceeds from the Property were insufficient to satisfy the Landrieus' obligations. In response, the Landrieus filed, collectively, an answer to the petition, exceptions, and affirmative defenses; a reconventional demand arising in tort against Whitney Bank; and a third-party demand arising in tort and breach of contract against Keller Williams.
    Keller Williams filed a peremptory exception of prescription as to claims asserted by the Landrieus' in their Third-Party Demand. A hearing was held, and a judgment was rendered on November 9, 2017 in favor of Keller Williams, in part, and against the Landrieus. The judgment dismissed, with prejudice, all tort claims asserted in the Landrieus' third-party demand. The Landrieus filed a motion for new trial requesting the district court to reconsider that portion of the November 9, 2017 judgment granting the exception of prescription. A hearing was held on December 15, 2017. On December 28, 2017, the district court rendered judgment and denied the Landrieus' motion. On March 13, 2018, the Landrieus filed, in the district court, a notice of intent to seek review in this Court.
    Whitney Bank filed peremptory exceptions of no cause of action and prescription as to the Landrieus' reconventional demand. A hearing was held on December 15, 2017, and a judgment was rendered on December 22, 2017. In this judgment, the district court denied both exceptions. On January 4, 2018, Whitney Bank filed a motion for new trial. Whitney Bank requested the district court to reconsider the December 22, 2017 judgment only as to the exception of prescription. A hearing on the motion for new trial was held on April 6, 2018. On April 18, 2018, the district court rendered a judgment dismissing with prejudice all tort claims asserted against Whitney Bank. The Landrieus timely sought review by this Court.
    The Landrieus seek review of both judgments-the December 28, 2017 judgment denying the Landrieus' motion for new trial and the April 18, 2018 judgment granting Whitney Bank's motion for new trial. We will address each judgment separately.
    Denial of motion for new trial (Landrieus)
    The Landrieus argue the district court erred in denying their motion for new trial to reconsider the granting of Keller Williams' exception of prescription as to all tort claims. The Landrieus contend these claims, although prescribed, can be urged as defenses pursuant to La. C.C.P. art. 424 ; and, the claims should not be dismissed.
    The district court's judgment that granted partial relief to Keller Williams was an interlocutory judgment, which the district court did not certify as a final judgment. La. C.C.P. art. 1915 ; Wells Fargo Fin. Louisiana, Inc. v. Galloway , 17-0413, pp. 4-5 (La. App. 4 Cir. 11/15/17), 231 So.3d 793, 798. Thus, the motion for new trial was not the proper procedural device for the Landrieus to seek review of the November 9, 2017 judgment. Instead, the Landrieus should have sought review via a timely filed supervisory writ application pursuant to Uniform Rules-Courts of Appeal, Rule 4-3. The Landrieus, however, filed the notice of intent in the district court on March 17, 2018, well over thirty days of the November 9, 2017 judgment. Uniform Rules-Courts of Appeal, Rule 4-3. Further, "[t]he filing of a motion for new trial seeking reconsideration of an interlocutory judgment cannot interrupt the 30-day period for filing an application for supervisory writs established by Rule 4-3 of the Uniform Rules-Courts of Appeal." Carter v. Rhea , 01-0234, p. 5 (La. App. 4 Cir. 4/25/01), 785 So.2d 1022, 1025. Accordingly, we find the Landrieus untimely sought supervisory review of the November 9, 2017 judgment, and this portion of the writ application is dismissed.
    Grant of motion for new trial (Whitney Bank )
    The Landrieus argue the district erred in granting Whitney Bank's motion for new trial to reconsider the denial of Whitney Bank's exception of prescription as to the tort claims alleged by the Landrieus. The Landrieus contend these claims, although prescribed, can be urged as defenses pursuant to La. C.C.P. art. 424 ; and, the claims should not be dismissed.
    This Court explained in Spencer v. U.S. Fid. & Guar. Co. , 454 So.2d 340, 341-42 (La. App. 4 Cir. 1984) (citations omitted) that the denial of an exception of prescription is an interlocutory judgment. In Llopis v. State , 16-0041(La. App. 4 Cir. 12/14/16), 206 So.3d 1066, this Court held that a party's recourse to seek review of an interlocutory judgment is to file an application for supervisory writ, not a motion for new trial. The Llopis Court found the trial court erroneously considered and granted the motion for new trial and explained that "there is no procedure by which a party may apply for a new trial following the denial of an interlocutory judgment." Id. , 16-0041, p. 4, 206 So.3d at 1069. As a result, this Court vacated the trial court's judgment and remanded the matter for further proceedings. Id. , 16-0041, p. 7, 206 So.3d at 1070.
    As in Llopis , the denial of Whitney Bank's exception of prescription, which was not certified as a final judgment, was an interlocutory judgment; thus, the district court improperly considered Whitney Bank's motion for new trial. Accordingly, the December 22, 2017 judgment granting the motion for new trial in favor of Whitney Bank is vacated, and the matter is remanded to the district court for further proceedings.
    CONCLUSION
    The Landrieus untimely sought review of the November 9, 2017 judgment in favor of Keller Williams. Accordingly, this portion of the Landrieus' writ application is dismissed.
    The district court erroneously reconsidered the December 22, 2017 judgment denying Whitney Bank's exception of prescription via a motion for new trial. Accordingly, the December 22, 2017 judgment is vacated, and the matter remanded to the district court for further proceedings.

      The judgment denied Keller Williams' peremptory exception of prescription as to the breach of contract claims.

      The exceptions and motions were resolved on the face of the pleadings.

      La. C.C.P. art. 424 provides in part:
      A person who has a right to enforce an obligation also has a right to use his cause of action as a defense.
      Except as otherwise provided herein, a prescribed obligation arising under Louisiana law may be used as a defense if it is incidental to, or connected with, the obligation sought to be enforced by the plaintiff.

      Uniform Rules-Courts of Appeal, Rule 4-3 provides:
      The judge who has been given notice of intention as provided by Rule 4-2 shall immediately set a reasonable return date within which the application shall be filed in the appellate court. The return date in civil cases shall not exceed 30 days from the date of notice, as provided in La. C.C.P. art. 1914....
      Upon proper showing, the trial court or the appellate court may extend the time for filing the application upon the filing of a motion for extension of return date by the applicant, filed within the original or an extended return date period. An application not filed in the appellate court within the time so fixed or extended shall not be considered, in the absence of a showing that the delay in filing was not due to the applicant's fault. The application for writs shall contain documentation of the return date and any extensions thereof; any application that does not contain this documentation may not be considered by the appellate court.

      In Carter, supra (quoting Clement v. American Motorists Insurance Co., 98-504, p. 3 (La. App. 3 Cir. 2/3/99), 735 So.2d 670, 672 ), this Court explained that a motion for new trial filed before the signing of a final judgment is "premature and without legal effect."

      Cf . La. C.C.P. art. 928(B) ; Landry v. Blaise , Inc ., 02-0822, p. 3 (La. App. 4 Cir. 10/23/02), 829 So.2d 661, 664 (citations omitted) (wherein this Court explained that "[a] party may re-urge a peremptory exception after a denial of the exception").

   WRIT GRANTED; DISMISSED, IN PART; VACATED, IN PART, AND REMANDED.


author: HIGGINBOTHAM, J.

text:
    STATE of Louisiana IN the INTEREST OF K.N. 03/12/2012 (Now K.B.)
    NO. 2017 CJ 1586
    Court of Appeal of Louisiana, First Circuit.
    Judgment Rendered: April 13, 2018 Rehearing Denied June 4, 2018
    Leslie N. Bankston, A. Casey Desselles, Albany, LA, Attorneys for Defendant-Appellant, K.T.
    William R. Aaron, II, Baton Rouge, LA, Attorney for Plaintiffs-Appellees, J.Z. and R.Z.
    Wyman E. Bankston, Livingston, LA, Attorney for Plaintiff-Appellee, State of Louisiana In the Interest of K.N. 03/12/2012 (Now K.B.)
    BEFORE: HIGGINBOTHAM, HOLDRIDGE, AND PENZATO, JJ.
   HIGGINBOTHAM, J.

Appellant, KT, the biological mother of the minor child (KB) appeals from the trial court judgment granting the intrafamily adoption of KB by his paternal aunt and her husband (Mr. and Ms. Z).

FACTS AND PROCEDURAL HISTORY

On March 12, 2012, KB was born to appellant, and KB lived with her and her boyfriend. When appellant was arrested and incarcerated in October of 2013, KB was in the care of appellant's sister and appellant maintained some contact with KB. Around July 2014, the child, KB was removed from the care of appellant's sister by the Louisiana Department of Children and Family Services, and placed in the custody of his paternal grandparents, the parents of KB's biological father, MB. A judgment was signed on September 23, 2014, granting custody of KB to his paternal grandparents. In August 2016, KB began to reside with his biological father's sister, Mrs. Z, and her husband, Mr. Z. KB's paternal grandparents voluntarily transferred custody of KB to Mr. and Mrs. Z by a consent judgment signed on November 16, 2016.

On February 24, 2017, Mr. and Mrs. Z filed a petition for intrafamily adoption of KB. Attached to their petition were: (1) KB's birth certificate that showed appellant was married at the time of KB's birth and listed SN as his father; (2) a judgment of filiation and paternity signed on September 20, 2016 ordering that "the filiation and paternity of [KB] shall be established in favor of [MB] and that [SN] is hereby adjudged not to be the father of [KB]"; (3) the judgment voluntarily transferring custody of [KB] to Mr. and Mrs. Z; and (4) an act of consent signed by MB giving his consent to the adoption of KB by Mr. and Mrs. Z. The petition of Mr. and Mrs. Z was served to appellant at the Louisiana Correctional Institute for Women. Appellant opposed the adoption, and the matter came before the trial court on July 27, 2017.

At the hearing on the matter, the trial court heard from various witnesses, and ultimately determined that the adoption by Mr. and Mrs. Z did not require appellant's consent and was in KB's best interest. After the hearing, the trial court signed a judgment on August 7, 2017, finding that the proposed adoption was in the best interest of the child and granting Mr. and Mrs. Z's request to adopt KB.

It is from this judgment that appellant appeals assigning the following assignments of error: (1) the trial court erred in granting the intrafamily adoption because the petitioners, who are the biological father's sister and her husband, were not authorized to petition for intrafamily adoption of KB since the biological father was never legally filiated to the child, and (2) the trial court erred in deciding that appellant's consent was not necessary for the adoption.

LAW AND ANALYSIS

Under La. Ch. Code art. 1243, a sibling of a father who is filiated to the child in accordance with the Civil Code is authorized to petition the court for an intrafamily adoption. Louisiana Children's Code article 1243(A) provides in pertinent part:

A stepparent, stepgrandparent, great-grandparent, grandparent, or collaterals within the twelfth degree may petition to adopt a child if all of the following elements are met:
(1) The petitioner is related to the child by blood, adoption, or affinity through the mother of the child or through a father who is filiated to the child in accordance with the Civil Code.
(2) The petitioner is a single person over the age of eighteen or a married person whose spouse is a joint petitioner.
(3) The petitioner has had legal or physical custody of the child for at least six months prior to filing the petition for adoption.

Generally, a parent's consent is required for an intrafamily adoption. However, La. Ch. Code art. 1245 provides that the consent of a parent may be dispensed with upon proof by clear and convincing evidence that a petitioner authorized by article 1243 has been granted custody of the child by a court of competent jurisdiction and "[t]he parent has refused or failed to visit, communicate, or attempt to communicate with the child without just cause for a period of at least six months." The party petitioning the court for adoption carries the burden of proving a parent's consent is not required under the law. In re J.A.B. , 2004-1160 (La. App. 1st Cir. 9/17/04), 884 So.2d 678, 681, writ denied, 2004-2963 (La. 12/14/04), 888 So.2d 848.

In her first assignment of error as well as in a separate exception filed in this court on January 31, 2018, appellant contends that Mr. and Mrs. Z had no right of action for intrafamily adoption because the first element necessary for an intrafamily adoption, a father who is filiated to the child in accordance with the Civil Code, is not met since the judgment of filiation and paternity of [KB] established in favor of [MB] is null. Appellant argues that under La. Civ. Code art. 198, MB's filiation action was not timely because KB was over one year old and presumed to be the child of SN, her husband at the time of KB's birth. Article 198 provides in pertinent part:

A man may institute an action to establish his paternity of a child at any time except as provided in this Article. The action is strictly personal.
If the child is presumed to be the child of another man, the action shall be instituted within one year from the day of the birth of the child. Nevertheless, if the mother in bad faith deceived the father of the child regarding his paternity, the action shall be instituted within one year from the day the father knew or should have known of his paternity, or within ten years from the day of the birth of the child, whichever first occurs.

Additionally, article 197 provides in pertinent part: "A child may institute an action to prove paternity even though he is presumed to be the child of another man. If the action is instituted after the death of the alleged father, a child shall prove paternity by clear and convincing evidence." The one-year time limit for bringing a paternity action under this Article is limited to succession matters only. See La. Civ. Code art. 197, 2005 Official Revision Comment (e).

Louisiana Code of Civil Procedure article 2163 provides "[t]he appellate court may consider the peremptory exception filed for the first time in that court, if pleaded prior to a submission of the case for a decision, and if proof of the ground of the exception appears of record." Appellant did not attack the validity of the filiation judgment in the trial court and therefore did not submit any proof in the record that the filiation judgment was null. The usual procedure to annul a judgment is to bring a direct action in the trial court.

La. Code Civ. P. art. 2006 ; G R Constr. & Renovation, LLC v. White, 2014-62 (La. App. 5th Cir. 5/21/14), 142 So.3d 207, 209. However, where the judgment at issue is an absolute nullity, it may be attacked in direct or collateral proceedings at any time and before any court. Id. In order for an appellate court to consider the merits of a collateral attack based on a vice of form, the defect raised must be apparent on the face of the record. See Fouchi v. Fouchi, 442 So.2d 506, 508 (La. App. 5th Cir. 11/9/83), writ denied, 445 So.2d 1235 (La. 2/27/84). Additionally, the appellate court cannot grant a peremptory exception of no right of action unless proof of the grounds of the exception appears of record. See La. Code Civ. P. art. 2163.

There is nothing on the face of the record that discloses the judgment of filiation and paternity to be an absolute nullity. Although it is discussed in the appellate briefs, the record before us does not indicate when the action for filiation was filed, whether it was MB or KB that filed the filiation action, and if it was MB whether his action was timely filed, whether there was any alleged bad faith on the part of appellant, or when MB discovered that he was the biological father of KB. Therefore, we cannot conclude that the first element for intrafamily adoption was not met, and overrule appellant's exception of no cause of action.

In her second assignment of error, appellant contends that the trial court erred in concluding that her consent was not necessary for the adoption, because under La. Ch. Code art. 1245 her consent cannot be dispensed with since the judgment awarding physical custody of KB in favor of Mr. and Mrs. Z is invalid. Specifically, she contends that the voluntary transfer of custody of KB from his paternal grandparents to Mr. and Mrs. Z was an improper mechanism for grandparents to transfer legal custody of KB, because the article provides the purpose of a voluntary transfer is to provide "for juvenile court procedure to govern a voluntary transfer of custody of a child by parents to other responsible adults."

KB's paternal grandparents were awarded legal custody of him in a judgment signed on September 23, 2014. At the time of the voluntary transfer of custody, KB's paternal grandparents were the only legal custodians of KB, and the judgment noted the transfer of custody appeared to be in the best interest of KB. After review of the judgment awarding custody of KB to Mr. and Mrs. Z, we find the judgment attached to the petition of Mr. and Mrs. Z satisfies the requirements of La. Ch. Code art. 1245 that the petitioners have "been granted custody of the child by a court of competent jurisdiction."

Appellant also argued that the voluntary transfer of custody was invalid because she was not served with notice of the proceedings. Like the judgment of filiation, whether the voluntary transfer of custody judgment was null was not apparent from the record; therefore, we cannot consider that issue on appeal. See Fouchi, 442 So.2d at 508.

In the alternative, appellant argues that even if the custody transfer was valid, her consent was required because she had not refused to visit, communicate, or attempt to communicate with the child for a period of at least six months. Since October 13, 2013, appellant has been incarcerated. During that time, KB's paternal grandmother who had custody of KB from July 2014 until August 2016, testified that she was contacted by appellant two times regarding KB; (1) right after she had custody of KB, she was given some paperwork so that KB could see appellant, and (2) she once received a letter and birthday card for KB from appellant. She testified that she never received any emails or calls from appellant. Mrs. Z testified that since KB began living with her in 2016, appellant has made no contact with her or her husband. Appellant said she wrote letters, and sent cards and pictures to the address of KB's paternal grandparents.

After listening to the witnesses' testimony and reviewing the evidence submitted, the trial court concluded "I don't find that parental consent is necessary in this case. I don't think that ... [appellant] has communicated or attempted to communicate with the child for a period of six months." We find no error in the trial court's conclusion that appellant's consent to the adoption was not necessary based on her failure to communicate with KB for a period of at least six months.

CONCLUSION

For the foregoing reasons, the judgment of the trial court granting the intrafamily adoption of KB by his paternal aunt and her husband Mr. and Mrs. Z is affirmed, and appellant's exception of no right of action is overruled. All costs of the appeal are assessed to appellant.

AFFIRMED; EXCEPTION OF NO RIGHT OF ACTION OVERRULED.