Helen Lopez Languirand and L. Lopez's Sons, Inc. Versus John Magruder Lopez, Shawn L. Lopez, and John Michael Lopez

HELEN LOPEZ LANGUIRAND AND L. NO. 19-CA-559
LOPEZ'S SONS, INC.
FIFTH CIRCUIT
VERSUS
COURT OF APPEAL
JOHN MAGRUDER LOPEZ, SHAWN L.
LOPEZ, AND JOHN MICHAEL LOPEZ STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 778-739, DIVISION "K"
HONORABLE ELLEN SHIRER KOVACH, JUDGE PRESIDING

May 27, 2020

MARC E. JOHNSON
JUDGE

Panel composed of Judges Susan M. Chehardy,
Fredericka Homberg Wicker, and Marc E. Johnson

AFFIRMED
MEJ
SMC
FHW

COUNSEL FOR PLAINTIFF/APPELLEE,
HELEN LOPEZ LANGUIRAND
James F. Willeford
Reagan L. Toledano

COUNSEL FOR DEFENDANT/APPELLANT,
JOHN MAGRUDER LOPEZ, SHAWN L. LOPEZ, JOHN MICHAEL LOPEZ,
AND L. LOPEZ'S SONS, INC.
George I. Pivach, II
Timothy Thriffiley

JOHNSON, J.

Appellants/Defendants, John Magruder Lopez, Shawn M. Lopez, John

Michael Lopez, and L. Lopez’s Sons, Inc., appeal the partial summary judgment

rendered from the 24th Judicial District Court, Division “K”, in favor of

Appellee/Plaintiff, Helen Lopez Languirand, concerning the preemptive rights to

purchase shares of a corporation. Ms. Languirand answered the appeal, seeking

amendment of the judgment. For the following reasons, we affirm the partial

summary judgment of the trial court and deny Ms. Languirand’s request to amend

the judgment.

FACTS AND PROCEDURAL HISTORY

This is the second appeal for this matter. L. Lopez’s Sons, Inc. (hereinafter

referred to as “the corporation”) is a family-owned corporation that was

incorporated on May 10, 1950. It was started by John B. Lopez, Florian S. Lopez,

Eurilda Lopez, and Florian Seal. The articles of incorporation created on May 1,

1950 included a provision in Article X that shareholders could not transfer or

assign any shares held by them without first offering the shares to the board of

directors to purchase. However, no other reference to a shareholder’s preemptive

right to shares was mentioned.

Over the years, the corporation’s articles of incorporation had been revoked

and reinstated twice by the Louisiana Secretary of State. The corporation’s articles

of incorporation were amended and restated on December 23, 2013 by the

shareholders and directors. Specific articles of the original articles of

incorporation were deleted or revised and substituted with newer articles. The new

Article VI authorized 2,000 common shares of the corporation and the issuance of

1,000 shares from the treasury. No provision in the amended and restated articles

referenced shareholder’s preemptive rights. The corporation was last reinstated by

the Louisiana Secretary of State on December 27, 2013.

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Ms. Languirand and defendants, John Magruder Lopez (hereinafter referred

to as “John”), Shawn M. Lopez (hereinafter referred to as “Shawn”), and John

Michael Lopez (hereinafter referred to as “John Michael”), are shareholders of the

corporation. Defendants, John, Shawn and John Michael, were selected as the

members of the board of directors on January 29, 2017; however, Ms. Languirand

was not present at that meeting of the shareholders. On April 7, 2017, Defendants

held a board meeting and passed a resolution that sold 176 treasury shares to

Shawn at the price of $205/share, totaling $36,080. An additional resolution sold

John Michael 24 treasury shares at the price of $205/share, totaling $4,920. On

December 15, 2017, Ms. Languirand filed an action against Defendants—in her

capacity as a shareholder and on behalf of the corporation—that sought to have the

January 2017 election of the directors and officers for the corporation declared null

and void and to have the April 2017 sale and transfer of the treasury shares

declared null and void.

In Lopez Languirand v. Lopez, 18-245, (La. App. 5 Cir. 12/12/18); 261,

So.3d 1054, this Court reviewed the trial court’s judgment that sustained

Defendants’ exceptions of no right of action, no cause of action, prematurity, and

improper cumulation of parties and dismissed all of the asserted claims with

prejudice. The judgment was reversed in part on the exception of prematurity as it

related to Ms. Languirand’s direct action claim for violation of her preemptive

rights. The portion of the judgment that dismissed Ms. Languirand’s claim for

violation of her preemptive rights was also reversed, and the judgment was

amended to allow Ms. Languirand time to amend her petition to allege a valid

cause of action. The other rulings of the trial court were affirmed.1

Upon remand, Ms. Languirand filed an “Amended and Restated Petition” on

December 27, 2018. In her amended petition, Ms. Languirand sought the

1
See, Lopez Languirand, supra, for the underlying facts of that appeal.

19-CA-559 2

declaration that the resolutions for the election of directors and officers, and the

actions taken by Defendants on January 28 and 30, 2017, be declared null and

void. In the alternative, she sought enforcement of her preemptive rights to the

corporation’s shares under La. R.S. 12:1-630 by being allowed to purchase her

proportionate shares of the treasury stock to maintain a controlling interest in the

corporation.

On March 29, 2019, Ms. Languirand filed a “Motion for Summary

Judgment” to enforce her shareholder preemptive rights. She alleged that, pursuant

to La. R.S. 12:1-630, the shareholders had preemptive rights to purchase

proportionate shares of the treasury stock offered for sale because the corporation

was incorporated prior to January 1, 1969. Ms. Languirand asserted she was

entitled to summary judgment that voided the sale of the treasury shares to Shawn

and John Michael or, in the alternative, offered proportionate shares to her and the

other shareholders according to law.

In their opposition to the motion for summary judgment, Defendants argued

that the shareholders did not have any preemptive rights to the additional 1,000

authorized shares created in the amended and restated articles of incorporation.

They contended those shares were created for a potential claim by Henry Regus, a

former secretary and bookkeeper for the corporation, to shares in the corporation.

They further contended there was no contemplation by the shareholders that they

would have the ability to purchase those shares from the corporation before they

would be transferred to Mr. Regus. Defendants also argued that, although the

corporation was incorporated in 1950, the amended and restated articles were

adopted after 1969, and Ms. Languirand does not enjoy preemptive rights under

La. R.S. 12:1-630.

The hearing on Ms. Languirand’s motion was held on August 21, 2019. In a

judgment rendered on September 11, 2019, the trial court granted Ms.

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Languirand’s motion for summary judgment in part. The court found that Ms.

Languirand holds preemptive rights under La. R.S. 12:1-630(A); the corporation

failed to give her the required notice and reasonable time to exercise those rights as

required by La. R.S. 12:1-630(B)(1); and, she is entitled to acquire her

proportionate amount of shares issued by the corporation. In its “Reasons for

Judgment,” the court held that, if the shareholders did not desire to hold

preemptive rights, the amended articles of incorporation were required to “opt

out,” as required by the statute.

The trial court then denied Ms. Languirand’s motion insofar as it sought to

nullify the treasury shares sold to Shawn and John Michael pursuant to La. R.S.

12:1-304. The court reasoned that Ms. Languirand did not meet her burden for

summary judgment to void the sale of the treasury shares to Shawn and John

Michael under La. R.S. 12:1-304(C), and she failed to establish that nullifying the

sale was an equitable remedy. The trial court certified the partial summary

judgment as a final, appealable judgment on September 13, 2019. The instant

suspensive appeal of Defendants followed.

ASSIGNMENTS OF ERROR

On appeal, Defendants allege that: 1) the trial court erred in granting partial

summary judgment in favor of Ms. Languirand because there were genuine issues

of material fact remaining; 2) the trial court was manifestly erroneous in finding

that Ms. Languirand, as a shareholder of the corporation, has preemptive rights to

purchase her proportionate share of treasury shares in the corporation; 3) the trial

court was manifestly erroneous in determining that Ms. Languirand timely

exercised any preemptive rights she may have; and, 4) the trial court was

manifestly erroneous by allowing Ms. Languirand to acquire her proportionate

19-CA-559 4

amount of shares in the corporation.

LAW AND ANALYSIS

General Summary Judgment Law

The summary judgment procedure is designed to secure the just, speedy, and

inexpensive determination of every action and is favored. La. C.C.P. art.

966(A)(2). Appellate courts review summary judgments de novo under the same

criteria that govern the trial court’s consideration of whether summary judgment is

appropriate. Stogner v. Ochsner Clinic Foundation, 18-96 (La. App. 5 Cir.

9/19/18); 254 So.3d 1254, 1257, citing Batiste v. United Fire & Casualty Co., 17-

485 (La. App. 5 Cir. 3/14/18); 241 So.3d 491, 496. Summary judgment shall be

granted “if the motion, memorandum, and supporting documents shows that there

is no genuine issue as to material fact and that the mover is entitled to judgment as

a matter of law.” Id., quoting La. C.C.P. art. 966(A)(3).

A material fact is one that potentially insures or prevents recovery, affects a

litigant’s ultimate success, or determines the outcome of the lawsuit. Populis v.

State Department of Transportation and Development, 16-655 (La. App. 5 Cir.

5/31/17); 222 So.3d 975, 980, quoting Pouncy v. Winn-Dixie La., Inc., 15-189 (La.

App. 5 Cir. 10/28/15); 178 So.3d 603, 605. An issue is genuine if it is such that

reasonable persons could disagree. If only one conclusion could be reached by

reasonable persons, summary judgment is appropriate as there is no need for trial

on that issue. Id. Whether a particular fact in dispute is material for purposes of

summary judgment can only be determined in light of the substantive law

applicable to the case. Stogner, 254 So.3d at 1257, citing Jackson v. City of New

Orleans, 12-2742 (La. 1/28/14); 144 So.3d 876, 882, cert. denied, --- U.S ----, 135

S.Ct. 197, 190 L.Ed.2d 130 (2014).

The party moving for summary judgment bears the burden of proof.

Stogner, supra, citing La. C.C.P. art. 966(D)(1). However, if the mover will not

19-CA-559 5

bear the burden of proof at trial, the moving party must only point out that there is

an absence of factual support for one or more elements essential to the adverse

party’s claims. Id. Thereafter, the burden shifts to the adverse party to produce

factual support sufficient to establish that he will be able to satisfy his evidentiary

burden of proof at trial. Id. If the adverse party fails to meet this burden, there is

no genuine issue of material fact, and the mover is entitled to summary judgment

as a matter of law. Id. Once the motion for summary judgment has been properly

supported by the moving party, the failure of the adverse party to produce evidence

of a material factual dispute mandates the granting of the motion. Id., citing Babin

v. Winn Dixie La., Inc., 00-78 (La. 6/30/00); 764 So.2d 37, 40.

Granting of Partial Summary Judgment and Preemptive Rights2

Defendants allege the trial court erred in granting partial summary judgment

in favor of Ms. Languirand. They argue that genuine issues of material fact remain

concerning whether the shareholders of the corporation have preemptive rights to

the treasury shares. They contend that the shareholders of the corporation made a

conscious decision in 2013 to create entirely new articles of incorporation; and, if

the shareholders and directors wanted to provide for preemptive rights, they could

have done so by placing such a statement in the amended and restated articles of

incorporation. Defendants further argue that this Court should look to the intent of

the shareholders in the adoption of the completely new articles of incorporation,

rather than apply La. R.S. 12:1-630, as the affidavit of John Lopez shows that the

shareholders did not contemplate the allowance of preemptive rights with respect

to the 1,000 authorized treasury shares of stock. Defendants contend that, instead,

the 1,000 treasury shares were intended to be reserved for Mr. Regus. As a result,

Defendants assert that these issues of fact preclude the granting of a partial

summary judgment on Ms. Languirand’s preemptive rights to the shares of stock at

2
The first two assignments of error will be jointly discussed because they are interrelated.

19-CA-559 6

issue.

Ms. Languirand maintains that, because the corporation was incorporated

prior to January 1, 1969, the articles of incorporation are deemed to include

preemptive rights for the shareholders pursuant to La. R.S. 12:1-630. She argues

that the revocation of the charter and reinstatement and adoption of restated articles

do not change the date of incorporation because the corporation never ceased to

exist. She notes the restated articles of incorporation state that the corporation was

reinstated retroactively, as if the corporation had never been terminated. Because

the articles and bylaws are silent on the subject of preemptive rights, she avers the

restated articles are presumed to include the provision for shareholder preemptive

rights as a matter of law.

Ms. Languirand further maintains that the August 23, 2013 corporate

resolution expressly stated that the 1,000 common shares were unissued shares to

be held as treasury shares; and, there was no evidence supporting Defendants’

argument that the 1,000 shares were reserved for and/or offered to Mr. Regus or

that the 1,000 shares were issued prior to the sale to Shawn and John Michael. She

argues that whether Shawn or any other shareholder intended for the corporation to

exclude shareholder preemptive rights is not “material” for summary judgment

purposes because the provisions of the articles of incorporation and La. R.S. 12:1-

630(A) control whether the shareholders have preemptive rights.

La. R.S. 12:1-630 provides, in pertinent part:

A. The shareholders of a corporation do not have a preemptive right to
acquire the corporation’s unissued shares except to the extent the
articles of incorporation so provide. The articles of incorporation of
a corporation that was incorporated before January 1, 1969, shall be
deemed to contain a statement that “the corporation elects to have
preemptive rights,” unless the articles of incorporation contain a
specific provision enlarging, limiting, or denying preemptive rights.

B. A statement included in the articles of incorporation that “the
corporation elects to have preemptive rights”, or words of similar
import, means that the following principles apply except to the extent

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the articles of incorporation expressly provide otherwise:

(1) The shareholders of the corporation have a preemptive right, granted
on uniform terms and conditions prescribed by the board of directors
to provide a fair and reasonable opportunity to exercise the right, to
acquire proportional amounts of the corporation’s unissued shares
upon the decision of the board of directors to issue them.
Shareholders have a fair and reasonable opportunity to exercise the
right to acquire shares if they are given at least forty-five days to
purchase the shares after notice to them of that right, but shorter
periods of time may be fair and reasonable under the circumstances in
which the shares are being issued.

(Emphasis added).

In the instant matter, the corporation was incorporated in 1950. The

articles of incorporation filed with the Louisiana Secretary of State at that time did

not contain a specific provision enlarging, limiting, or denying preemptive rights of

the shareholders. Thus, because of the corporation was incorporated prior to

January 1, 1969 and there was no specific reference to preemptive shareholder’s

rights in the articles of incorporation, the original articles of incorporation were

deemed to contain the statement that “the corporation elects to have preemptive

rights” pursuant to La. R.S. 12:1-630(A). The amended and restated articles of

incorporation do not contain any specific provision enlarging, limiting, or denying

the preemptive right of the shareholders that were deemed to be contained in the

original articles of incorporation. Furthermore, the changes to the articles of

incorporation in 2013 did not change the incorporation date of the corporation;

thus, the intent of the shareholders in the drafting of the amended articles of

incorporation is inconsequential to the applicability La. R.S. 12:1-630(A).

Accordingly, we find that La. R.S. 12:1-630 applies to the amended and

restated articles of incorporation for the corporation, and the articles are deemed to

contain preemptive rights because there was no specific provision stating

otherwise.3

3
The Comment (a) for La. R.S. 12:1-630 explains the preemptive rights inclusion by stating:

19-CA-559 8

Time Period to Exercise Preemptive Rights

Defendants allege the trial court committed manifest error in determining

that Ms. Languirand timely exercised any preemptive rights that may have existed.

They argue that the sale of the treasury shares to Shawn and John Michael

occurred in April 2017, and Ms. Languirand was aware of the sale by September

2017, which was evident from her September 21, 2017 letter.4 They contend Ms.

Languirand only objected to the sale of the shares and made no attempt to exercise

her purported preemptive rights until March 26, 2018, when her attorney sent a

letter demanding her right to purchase the treasury shares. Thus, Defendants assert

that Ms. Languirand’s 45-day period to exercise or demand to exercise her

purported preemptive rights expired well before she made any demand to purchase

the treasury shares purchased by Shawn and John Michael.

Ms. Languirand maintains that she could not waive her preemptive rights

because the directors never gave her notice of her preemptive rights and the right

to purchase the treasury shares prior to their sale. She contends that the only

restriction on her exercise of her preemptive rights is found in La. R.S. 12:1-

630(D), which requires that an action to enforce preemptive rights be filed within

one year from the sale of the shares. Since the sale at issue occurred on April 7,

Before January 1, 1969, the effective date of the 1968 business corporation law,
Louisiana provided an “opt out” form of preemptive rights; the earlier corporation statute
supplied preemptive rights automatically unless a corporation’s articles of incorporation
provided otherwise. The 1968 statute reversed the rule, and made preemptive rights “opt
in;” shareholders did not have preemptive rights unless the articles affirmatively
approved them. To prevent the change in the default rule from eliminating preemptive
rights in corporations whose articles were silent on the subject, the 1968 statute contained
a provision that deemed the articles of pre-1969 corporations to contain a statement
approving of preemptive rights, except to the extent that the articles actually enlarged,
limited or denied those rights. Because this section retains the opt-in approach of the
1968 statute, and the Model Act, some pre-1969 corporations may still need the statutory
transition rule that was provided in the 1968 statute. That rule has been added to
Subsection A of this Section. (Internal citations omitted).
4
In her September 21, 2017 letter, Ms. Languirand questioned the purpose of sale of the treasury
shares to Shawn and John Michael and the price of the shares. She stated,
I would like to know why these shares were not offered to all the shareholders. It is my
understanding that under Louisiana law[,] the company must first offer the sale of the
company[-]owned shares to all of the stockholders. I did not receive notice of the intent
to sell the shares, and I object to the sale.

19-CA-559 9

2017, and the petition seeking enforcement of the preemptive rights was filed on

December 15, 2017, Ms. Languirand avers that she did not waive her preemptive

rights, and the claim is not prescribed.

In reference to the time limitations for enforcing preemptive rights claims,

La. R.S. 12:1-630(D) states,

On or after January 1, 2016, no action to enforce a preemptive right of
a shareholder shall be brought unless filed in a court of competent
jurisdiction and proper venue within one year of the date of the
issuance of the share to which the shareholder had the preemptive
right, or within one year of the date that the issuance of the share is
discovered or should have been discovered. Such an action is
perempted three years after the date of the issuance of the share.

Here, the sale of the treasury shares to Shawn and John Michael occurred on

April 7, 2017. Although Defendants’ claim that Ms. Languirand failed to assert

her preemptive rights prior to March 28, 2018, that assertion is false. Ms.

Languirand filed her petition asserting her preemptive rights on December 12,

2017.5 She filed her action within one year of the sale to Shawn and John

Michael. Therefore, we find that Ms. Languirand timely asserted her preemptive

rights to the 1,000 treasury shares.

Furthermore, as previously mentioned, La. R.S. 12:1-630(B)(1) provides that

shareholders have a fair and reasonable opportunity to exercise the right to acquire

shares if they are given, at least, 45 days to purchase the shares after notice to them

of that right, but shorter periods of time may be fair and reasonable under the

circumstances in which the shares are being issued. In this case, there was no

evidence presented that the other shareholders were given the required 45-day

notice of the board of director’s decision to issue any of the 1,000 treasury shares.

Even though Ms. Languirand obtained knowledge of the sale of the treasury shares

to Shawn and John Michael after the sale occurred, her knowledge of the event

5
Ms. Languirand specifically alleged she, as a shareholder of the corporation, has a preemptive
right to acquire the corporation’s unissued shares because the corporation was incorporated prior to
January 1, 1969.

19-CA-559 10

does not alleviate the board of director’s statutory requirement to give the

shareholders a fair and reasonable opportunity to exercise their preemptive rights.

Consequently, we find that the 45-day time period for Ms. Languirand to exercise

her preemptive rights to the treasury shares never commenced to run against her

claims.

Acquisition of Proportionate Amount of Shares and Answer to Appeal

Defendants allege the trial court was manifestly erroneous in allowing Ms.

Languirand to acquire her proportionate amount of shares issued by the

corporation. They argue that if Ms. Languirand is entitled to exercise any

preemptive rights, then a reading of La. R.S. 12:1-630(B)(1) limits her acquisition

to her proportionate shares of unissued shares from the corporation, and she is not

entitled to acquire any of the shares issued to Shawn and/or John Michael.

Defendants request that the trial court’s judgment be modified to clarify Ms.

Languirand’s entitlement pursuant to her purported preemptive rights.

Ms. Languirand also alleges the trial court erred in ordering that she be

allowed to acquire her proportionate amount of shares issued by the corporation.

She asserts that the trial court should have granted her requested remedy and

voided the corporation’s sale of the treasury shares to Shawn and John Michael

because the sale breached a fiduciary duty and constituted an ultra vires act. In the

alternative, Ms. Languirand asserts that the trial court should have ordered Shawn

and John Michael to offer and, if accepted, sell to the shareholders of the

corporation the proportionate percentage of shares that should have been offered in

advance of the sale of the treasury shares.

At this juncture in the proceeding, we find that it would be inappropriate to

grant either of the parties’ requests to amend the judgment. While La. R.S. 12:1-

630 allows for a shareholder to acquire proportional amounts of the corporation’s

unissued shares, there is still a genuine issue of material fact as to how many of the

19-CA-559 11

corporation’s 1,000 treasury shares should be considered “unissued.” La. R.S.

12:1-304 allows a shareholder to challenge a corporation’s power to act in an

action against the corporation. In a shareholder’s proceeding to enjoin an

unauthorized corporate act, the court may enjoin or set aside the act, if equitable.

We find that the trial court is not only limited to allowing Ms. Languirand acquire

to her proportionate shares of unissued treasury shares currently available, and the

court has the option of nullifying the sales to Shawn and John Michael after a trial

on the merits and awarding Ms. Languirand her proportionate amount from the

1,000 treasury shares. Accordingly, we deny the requests of the parties to amend

the judgment.

DECREE

Upon de novo review, we find that Ms. Languirand is entitled to partial

summary judgment finding that she is entitled to preemptive rights pursuant to La.

R.S. 12:1-630(A). For the foregoing reasons, we affirm the trial court’s judgment

that found Ms. Languirand holds preemptive rights; the corporation failed to give

her the required notice and reasonable time to exercise these rights as required by

La. R.S. 12:1-630(B)(1); and, she is entitled to acquire her proportionate amount of

shares issued by L. Lopez’s Sons, Inc. Defendants are assessed the costs of this

appeal.

AFFIRMED

19-CA-559 12

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

MARY E. LEGNON
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
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19-CA-559
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE ELLEN SHIRER KOVACH (DISTRICT JUDGE)
JAMES F. WILLEFORD (APPELLEE) NICHOLAS A. HOLTON (APPELLEE) TIMOTHY THRIFFILEY (APPELLANT)

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