B & P Restaurant Group, LLC, D/B/A the Rum House of New Orleans, LLC, Highlights Catering and Gourmet Shop, LLC, Island Time Management, LLC, and the Red Dog Diner, LLC Versus Delta Administrative Services, LLC and David Lawrence

B & P RESTAURANT GROUP, LLC, ET AL NO. 18-CA-442

VERSUS FIFTH CIRCUIT

DELTA ADMINISTRATIVE SERVICES, LLC, COURT OF APPEAL
ET AL
STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 767-037, DIVISION "C"
HONORABLE JUNE B. DARENSBURG, JUDGE PRESIDING

September 04, 2019

STEPHEN J. WINDHORST
JUDGE

Panel composed of Judges Fredericka Homberg Wicker,
Jude G. Gravois, and Stephen J. Windhorst

REVERSED AND REMANDED
SJW
JGG

CONCURS WITH REASONS
FHW

COUNSEL FOR PLAINTIFF/APPELLANT,
B & P RESTAURANT GROUP, LLC, ET AL
Richard B. Ehret
Ross A. Ledet

COUNSEL FOR DEFENDANT/APPELLEE,
DAVID LAWRENCE
Norman A. Mott, III
Michael S. Blackwell

WINDHORST, J.

Appellants/plaintiffs, B & P Restaurant Group, LLC, d/b/a the Rum House of

New Orleans, LLC, Highlights Catering & Gourmet Shop, LLC, Island Time

Management, LLC, The Rum House of Baton Rouge, LLC, and the Red Dog Diner,

LLC (“appellants”) appeal the district court’s granting of the motion for summary

judgment filed by David Lawrence, appellee/defendant (“appellee” or “Lawrence”)

and the dismissal with prejudice of all appellants’ claims against him. For the

following reasons, we reverse the district court’s judgment and remand for further

proceedings.

FACTS AND PROCEDURAL HISTORY

Appellee, Lawrence, is the sole owner and manager of Delta Administrative

Services, LLC (“DAS”), which provides administrative services, including payroll,

tax administration, workers’ compensation administration, risk management and

human resource issues. Appellants each entered into a contract for services with

DAS entitled “Service Agreement,” which Lawrence signed on behalf of DAS.

Pursuant to this agreement, DAS was responsible for withholding and remittances

of pay-roll related taxes, including those taxes under FICA, FUTA, and SUTA.1

Under Administrative Fees, each service agreement states the “CLIENT

agrees to pay a fee to DAS for services” and that “[t]hese fees will be charged on

each payroll, as applicable.” The fee schedule attached to the service agreement

reflects that the administrative fee (also referred to herein as the “service fee”) is

1.50% of gross payroll. The fee schedule also states the following:

This rate is on gross payroll only. These rates include the additional
charges for FICA, FUTA, SUTA, and Workers Compensation. The
only additional charges will be any company paid benefits you choose
to offer your employees. There is no reduction upon reaching the cut-
offs for FUTA and SUTA.

1 FICA stands for Federal Insurance Contributions Act. FUTA stands for Federal Unemployment Tax Act.
SUTA stands for State Unemployment Tax Act.

18-CA-442 1

On December 1, 2016, appellants filed a petition for damages against DAS

and Lawrence, asserting claims based on breach of contract, intentional

misrepresentation, and violation of the Professional Employer Organizations (PEO)

statute, La. R.S. 23:1761 et seq. The only claim asserted against Lawrence

individually is the intentional misrepresentation claim. Appellants allege that after

maximum SUTA and FUTA tax thresholds had been met, DAS continued to charge

appellants for SUTA and FUTA taxes as if they were still owed, and did not pay this

collected money to the appropriate taxing authorities but instead wrongfully retained

the overcharged amounts for itself.

Under the intentional misrepresentation claim, appellants allege that DAS and

Lawrence misrepresented or suppressed material facts to obtain an unjust advantage

over appellants by failing to advise them or state in the service agreements that DAS

would continue charging appellants FUTA and SUTA taxes after the maximum

thresholds were met and would keep those funds as additional, hidden fees.

Appellants assert that if they had known DAS and Lawrence would continue

charging FUTA and SUTA after the maximum thresholds were met and would retain

those amounts as additional, hidden fees, Plaintiffs would never have agreed to do

business with them.

On November 7, 2017, appellants filed a first supplemental petition for

damages, asserting a claim against DAS and Lawrence individually alleging

overcharges involving workers’ compensation premiums. The supplemental

petition was filed after the May 31, 2017 motion for summary judgment at issue

here. On May 31, 2017, Lawrence filed a motion for summary judgment, seeking

dismissal of appellants’ claims against him personally based on La. R.S. 12:1320,

arguing that the statute frees him from individual liability for the debts, obligations

or liability of DAS, as the owner and sole member of DAS. Lawrence asserted that

he is not liable for DAS’s alleged breach of the agreement because he is not a party

18-CA-442 2

to the agreement; he is not liable for the alleged intentional misrepresentation

because he is shielded from liability under La. R.S. 12:1320 and appellants cannot

prove fraud; and he is not liable for alleged breaches under La. R.S. 23:1763 because

this statute creates a duty for the employer (DAS), not its member. After Lawrence

filed his motion for summary judgment, the parties participated in written discovery

and depositions were taken. Lawrence filed a second summary judgment motion

with DAS on March 20, 2018.1 In this second summary judgment motion, DAS and

Lawrence sought dismissal of all of appellants’ claims.

In their opposition to the motion for summary judgment, appellants attached

excerpts of depositions from multiple individuals who were involved with hiring

DAS to provide payroll services and/or worked with Lawrence relative to the

services DAS provided appellants, DAS invoices, DAS detailed cost reports,

correspondence with Lawrence and the fee schedule. In the depositions, the

appellant representatives asserted that they had conversations with Lawrence

regarding the DAS rates and he never disclosed that the FUTA and SUTA taxes

continued after thresholds were met, or that these amounts were converted to

administrative fees for DAS. The appellant representatives also testified that

Lawrence did not disclose to them during negotiations or contract discussions that

any part of the FUTA or SUTA taxes were actually service fees.

An appellant representative of Island Time Management, LLC stated in her

deposition that, in January 2014, Island Time informed DAS that it needed taxes

broken out from administrative fees on its invoices.2 Thereafter, Island Time

believed that the invoices separated the two from each other but later learned that

they were not.

1 The pleadings related to the second motion for summary judgment are not part of the designated appeal
record.
2
Although Island Time is only one of the appellant entities involved in this matter, it is referred to specifically
herein because the opposition to the summary judgment motion contained evidence specifically referencing
this appellant.

18-CA-442 3

In opposition, appellants also asserted that each invoice constituted a

misrepresentation because even when the FUTA and SUTA taxes were converted to

administrative fees, on the invoices, the amount was still represented as FUTA and

SUTA taxes. Specifically, on the invoices, the administrative fee is separated out

from the other payments, such as gross payroll, hourly employee, salary employee

and workers’ compensation. The invoices do not state that excess FUTA and SUTA

taxes convert to an administrative fee after cutoffs are satisfied.

Another exhibit to appellants’ opposition is an email dated January 29, 2015,

in which Lawrence as president of DAS informed one of the appellants, Island Time,

that DAS would reduce Island Time’s rate to 1.0% as of February 1, 2015. A series

of emails dated August 19, 2016 through August 22, 2016 indicates that Island Time

had recently learned that DAS continued to charge FUTA and SUTA taxes beyond

the cutoff and that DAS retained these amounts as part of its administrative fee. The

emails also show that Island Time was having difficulties reconciling the amounts

paid to DAS with the amounts Island Time had calculated as owing DAS for its

services. Island Time requested clarification on multiple occasions before learning

the truth.

Appellants further rely on Lawrence’s deposition testimony in their

opposition. Appellants questioned him regarding detailed cost reports DAS

generated and sent to its clients. Lawrence testified that every report has a different

function, and that a company’s costs can be broken down by department. When

asked why a report did not reflect what is being charged for FUTA and SUTA,

Lawrence stated that “it does. It’s included in the fee.” When asked where this is

reflected, Lawrence responded “Um, I’ll have to look at the numbers to break it out.”

Lawrence was specifically asked “does this [detailed cost report] show an

itemization of the actual federal and state unemployment taxes owed by the PEO

client and then equally paid by Delta on behalf of that client to the taxing

18-CA-442 4

authorities?” Lawrence responded “It may be in another report.” Lawrence’s

testimony indicates that it is unlikely a client could understand from a DAS report

the breakdown of fees from taxes, and that to obtain this information, a client would

have to specifically request it from DAS.

Both Lawrence’s summary judgment motion and Lawrence and DAS’s

summary judgment motion were argued before the district court on May 2, 2018.

The district court rendered judgment on both in one judgment dated May 2, 2018.

The district court granted Lawrence’s first summary judgment motion and dismissed

all claims against Lawrence. The court found that appellants had not provided any

proof to suggest that Lawrence is individually liable for his actions as a member of

DAS. It also granted the second summary judgment motion as to Lawrence, but

denied that motion as to DAS. Appellants have only appealed the judgment on the

first summary judgment motion and designated the record to include the pleadings

related to that motion but not the second summary judgment motion.

On September 11, 2018, appellee filed a motion to dismiss this appeal as moot,

asserting that appellants’ failure to also appeal the trial court’s granting of the second

motion for summary judgment (the March 20, 2018 motion) and designation of a

limited record excluding evidence related to the second motion results in an

abandonment of the issue. More specifically, appellee argues that because the trial

court dismissed appellants’ claims against him based on two different summary

judgment motions and appellants’ did not appeal the granting of both motions, the

judgment on the second motion is a final judgment between the parties, and thus this

appeal is moot. In opposition to the motion to dismiss, appellants assert that the

ruling on the second summary judgment motion (which is in the same judgment as

the ruling on the first summary judgment motion) is an absolute nullity because

Lawrence had already been dismissed when the trial court rendered that judgment.

18-CA-442 5

ASSIGNMENTS OF ERROR

On appeal, appellants assert that (1) the trial court erred in finding there was

no evidence submitted in the memorandum in opposition to the motion for summary

judgment to support a misrepresentation claim; and (2) the trial court erred in

granting summary judgment on a misrepresentation claim that involves the

intentional acts and omissions of the movant.

MOTION TO DISMISS

We first address appellee’s motion to dismiss. We deny this motion for the

following reasons. Although the one May 2, 2018 judgment grants the first motion

for summary judgment and the second motion for summary judgment as to

Lawrence, the judgment expressly only dismisses all claims against Lawrence after

the language granting the first summary judgment. There is no additional decretal

language, i.e., an express dismissal of Lawrence, with regard to the second summary

judgment motion. Notably, when ruling on the second motion in open court, the

district court recognized that although both Lawrence and DAS had filed the second

summary judgment motion, Lawrence had already been dismissed by the granting

of the first motion. Thus, appellants properly appealed the granting of the first

summary judgment motion.

In addition, because appellants’ claim against Lawrence was expressly

dismissed pursuant to granting of the first summary judgment motion, a ruling on

the second summary judgment as to Lawrence was unnecessary. According to

Louisiana jurisprudence, an issue is “moot” when a judgment or decree on that issue

has been “deprived of practical significance” or “made abstract or purely academic.”

Cat’s Meow, Inc. v. City of New Orleans Through Dep’t of Fin., 98-0601 (La.

10/20/98), 720 So.2d 1186, 1193. A case is “moot” when a rendered judgment or

decree can serve no useful purpose and give no practical relief or effect. Id. Thus,

we find the judgment on the second motion for summary judgment as to Lawrence

18-CA-442 6

was moot. Therefore, appellants’ failure to appeal that judgment does not affect

their appeal of the granting of the first motion for summary judgment. Accordingly,

we deny appellee’s motion to dismiss.

STANDARD OF REVIEW

Appellate courts review summary judgments de novo, while considering the

record and all reasonable inferences drawn from the record in the light most

favorable to the non-movant. G.A. Lotz Co. v. Alack, 13-674 (La. App. 5 Cir.

4/9/14), 140 So.3d 94, 98. The Court must consider whether summary judgment is

appropriate under the circumstances of the case and whether there is a genuine or

triable issue on which reasonable minds could disagree. Id.

LAW AND ANALYSIS

La. C.C.P. art. 966 provides that “[a]fter an opportunity for adequate

discovery, a motion for summary judgment shall be granted if the motion,

memorandum, and supporting documents show that there is no genuine issue as to

material fact and that the mover is entitled to judgment as a matter of law.” The

movant bears the burden of proof. Bourgeois v. Allstate Ins. Co., 15-451 (La. App.

5 Cir. 12/23/15), 182 So.3d 1177. If, however, the movant will not bear the burden

of proof at trial on the matter that is before the court on the motion for summary

judgment, the movant’s burden on the motion does not require him to negate all

essential elements of the adverse party’s claim, action, or defense. Instead, the

movant must establish that there is an absence of factual support for one or more

elements essential to the adverse party’s claim, action, or defense. Id.

A “material fact” is one which, the existence or nonexistence of, may be

essential to a plaintiff's cause of action under the applicable theory of recovery.

When a motion for summary judgment is made and supported, the adverse party may

not rest on the allegations or denials of his pleadings, but must set forth specific facts

showing that there is a genuine issue for trial. If he does not so respond, summary

18-CA-442 7

judgment, if appropriate, shall be rendered against him. La. C.C.P. art. 967(B).

Bourgeois, 182 So.3d at 1181-82. Although summary judgment is seldom

appropriate for determinations based on subjective facts of motive, intent, good faith,

knowledge, or malice, “summary judgment may be granted on subjective intent

issues when no issue of material fact exists concerning the pertinent intent.”

Bourgeois, 182 So.3d at 1180.

Lawrence asserts that he is not liable to appellants because he is shielded from

liability under La. R.S. 12:1320. This statute states as follows:

A. The liability of members, managers, employees, or agents, as such,
of a limited liability company organized and existing under this
Chapter shall at all times be determined solely and exclusively by
the provisions of this Chapter.

B. Except as otherwise specifically set forth in this Chapter, no
member, manager, employee, or agent of a limited liability
company is liable in such capacity for a debt, obligation, or
liability of the limited liability company.

C. A member, manager, employee, or agent of a limited liability
company is not a proper party to a proceeding by or against a
limited liability company, except when the object is to enforce
such a person’s rights against or liability to the limited liability
company.

D. Nothing in this Chapter shall be construed as being in derogation
of any rights which any person may by law have against a member,
manager, employee, or agent of a limited liability company
because of any fraud practiced upon him, because of any breach of
professional duty or other negligent or wrongful act by such
person, or in derogation of any right which the limited liability
company may have against any such person because of any fraud
practiced upon it by him.

Appellants assert that Lawrence is liable under the fraud exception in La. R.S.

12:1320(D). They allege Lawrence misrepresented or suppressed material facts with

the intention of obtaining an unjust advantage over appellants and caused them

monetary loss by failing to inform them that they continued to charge FUTA and

SUTA taxes after the thresholds had been met, and continued to list these FUTA and

SUTA taxes on invoices despite that the funds were not paid to these taxing

18-CA-442 8

authorities, but were instead retained by DAS. Lawrence asserts that appellants have

failed to present any evidence Lawrence committed fraud. As fraud is not defined

in La. R.S. 12:1320, the provisions on fraud in the Louisiana Civil Code govern. La.

C.C. art. 1953 defines fraud as “a misrepresentation or a suppression of the truth

made with the intention either to obtain an unjust advantage for one party or to cause

a loss or inconvenience to the other. Fraud may also result from silence or inaction.”

Ogea v. Merritt, 13-1085 (La. 12/10/13), 130 So.3d 888, 897-98. A party may

recover damages when he has suffered a loss due to intentional fraudulent

misrepresentation. Shields v. Par. of Jefferson, 13-481 (La. App. 5 Cir. 12/27/13),

131 So.3d 1048, 1052. The two elements necessary to establish fraud are an intent

to defraud or gain an unfair advantage, and a resulting loss or damage. Mooers v.

Sosa, 01-286 (La. App. 5 Cir. 9/25/01), 798 So.2d 200, 207. Pursuant to La. C.C.

art. 1954, fraud does not vitiate consent when the party against whom a fraud is

directed could have ascertained the truth without difficulty, inconvenience or special

skill. Autin v. Autin, 617 So.2d 229, 233 (La. App. 5th Cir. 1993), writ denied, 620

So.2d 846 (La. 1993). Fraud need only be proved by a preponderance of the

evidence and may be established by circumstantial evidence. La. C.C. art. 1957.

Considering the following facts together and summary judgment law on fraud

determinations, we find that genuine issues of material fact exist regarding

appellants’ intentional misrepresentation claim against Lawrence, namely whether

Lawrence intended to defraud appellants. First, the various service agreements

represent the administrative fee as a fee on total wages. The agreements do not refer

to any other additional administrative fees, or the conversion of any tax payments or

workers compensation premiums to fees.

In addition to other claims of fraud arguably supported by deposition

testimony, in her March 8, 2018 1442 deposition of Island Time [Exhibit 1], Terri

18-CA-442 9

Savoie testified that David Lawrence “misrepresented the whole thing. I think he

conned me.” (Record, p. 394, ll. 23-24). She went on to state:

“Because we sat several times, several times, and talked about the
rate of workmen’s comp and the rate of his administrative fee, and
how it equaled my workers’ comp and my rate at another payroll
company, and how it was a wash, and how he gave me more
service for the same price. And that is why I moved.
“That was continual. That was a continual, continual
representation all through my relationship with David. That was
all we spoke of.” [Emphasis added.] (Record, p. 395, ll. 1-12)

This or similar testimony, if believed by the trier of fact, may provide sufficient

evidentiary support for misrepresentation or for the fraud claim. Regardless, for the

purposes of summary judgment, it creates a genuine issue of material fact.

Second, Lawrence was involved in the negotiation of this agreement with

appellants and signed the agreement on behalf of DAS. The deposition testimony

suggests that despite Lawrence’s contract negotiations and meetings with various

members of appellants’ management team regarding DAS’s administrative fees,

Lawrence never disclosed to any of the appellant clients involved in this matter that

the FUTA and SUTA taxes converted to an administrative fee at any point.

Third, members of appellants’ management testified that several times they

requested clarification specifically regarding the continued charges of FUTA and

SUTA taxes after the cutoffs had been satisfied. This raises a genuine issue of

material fact as to whether Lawrence evaded the issue in order to defraud appellants

of the excess FUTA and SUTA taxes and workers’ compensation premiums.

Fourth, in a January 29, 2015 email, Lawrence represented to one appellant,

Island Time, that DAS was reducing its rate to a 1% administrative fee of the gross

profit as of February 1, 2015, without any mention of other administrative fees being

collected from excess FUTA and SUTA taxes and workers’ compensation

premiums. Here, Lawrence represented that DAS was reducing appellants’

administrative fee but still did not disclose or discuss with appellants the truth

18-CA-442 10

regarding excess FUTA and SUTA taxes. This document raises a genuine issue of

material fact as to whether Lawrence intended to defraud appellants of excess FUTA

and SUTA taxes and workers’ compensation premiums. If reasonable persons could

disagree after considering the evidence, a genuine issue exists. Shields v. Par. of

Jefferson, 13-481 (La. App. 5 Cir. 12/27/13), 131 So.3d 1048, 1052. In determining

whether an issue is genuine, courts cannot consider the merits, make credibility

determinations, evaluate testimony or weigh evidence. Id.

In light of the foregoing, although the Fee Schedule states that there is no

reduction of FUTA and SUTA taxes upon reaching cut-offs, we find a genuine issue

of material fact exists at this time as to appellants’ fraud and/or intentional

misrepresentation claim. Accordingly, we reverse the district court’s granting of

Lawrence’s motion for summary judgment and the dismissal of all of appellants’

claims against him and remand for further proceedings.

REVERSED AND REMANDED

18-CA-442 11

NO. 18-CA-442 B & P RESTAURANT GROUP,
LLC, ET AL
FIFTH CIRCUIT
VERSUS
COURT OF APPEAL
DELTA ADMINISTRATIVE
STATE OF LOUISIANA SERVICES, LLC, ET AL

WICKER, J. CONCURS WITH REASONS

While I agree with the outcome in this case, respectfully I write separately to
emphasize that we find only that there are genuine issues of material fact which
preclude summary judgment. It is not our intention to opine in any manner with
regard to the merits of the case.

18-CA-442 1

SUSAN M. CHEHARDY MARY E. LEGNON

CHIEF JUDGE INTERIM CLERK OF COURT

FREDERICKA H. WICKER
CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON SUSAN BUCHHOLZ
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
HANS J. LILJEBERG
JOHN J. MOLAISON, JR. FIFTH CIRCUIT
MELISSA C. LEDET
JUDGES 101 DERBIGNY STREET (70053)
DIRECTOR OF CENTRAL STAFF
POST OFFICE BOX 489
GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX
www.fifthcircuit.org

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY
I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED
IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY
SEPTEMBER 4, 2019 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES
NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

18-CA-442
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE JUNE B. DARENSBURG (DISTRICT JUDGE)
RICHARD B. EHRET (APPELLANT) MICHAEL S. BLACKWELL (APPELLEE)

MAILED
MICHAEL E. PONDER (OTHER) ROSS A. LEDET (APPELLANT) NORMAN A. MOTT, III (APPELLEE)
ATTORNEY AT LAW ATTORNEY AT LAW ATTORNEY AT LAW
1342 SOUTH COLUMBINE STREET 400 POYDRAS STREET 650 POYDRAS STREET
BATON ROUGE, LA 70808 SUITE 1540 SUITE 2600
NEW ORLEANS, LA 70130 NEW ORLEANS, LA 70130