Carla F. Gerdes Versus Monique Brisco Wife of/and Carl A. Rouege, Jr.

CARLA F. GERDES NO. 22-CA-561

VERSUS FIFTH CIRCUIT

MONIQUE BRISCO WIFE OF/AND COURT OF APPEAL
CARL A. ROUEGE, JR.
STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 802-480, DIVISION "A"
HONORABLE RAYMOND S. STEIB, JR., JUDGE PRESIDING

June 07, 2023

FREDERICKA HOMBERG WICKER
JUDGE

Panel composed of Judges Fredericka Homberg Wicker,
Marc E. Johnson, and Cornelius E. Regan, Pro Tempore

AFFIRMED AS AMENDED
FHW
MEJ
CER

COUNSEL FOR PLAINTIFF/APPELLEE,
CARLA F. GERDES
Sean R. Dawson

COUNSEL FOR DEFENDANT/APPELLANT,
MONIQUE ROUEGE
Miles G. Trapolin

WICKER, J.

This matter arises out of a contractual dispute between Carla Gerdes and

Monique Rouege, for the purchase of a daycare business, Carlie Care, Inc., and a

related bond for deed—subsequently canceled by agreement of the parties—to

purchase the immovable property where the business was located. After a trial on

the merits, the trial court found that the 2011 Agreement at issue, which included

the note to purchase the daycare and the related bond for deed, was a valid

agreement between the parties that novated a prior 2009 stock sale agreement for

Carlie Care, Inc. between Ms. Gerdes and Ms. Rouege. The trial court rendered

judgment in favor of Ms. Gerdes for the balance of the 2011 note in the amount of

$352,809.72.1 As to the canceled bond for deed contract, the Court further

rendered judgment in favor of Ms. Gerdes in the amount of $552,955.07 for past

due rent and repairs, but also rendered judgment in favor of Ms. Rouege for

reimbursement of paid property taxes and insurances in the amount of

$206,954.42, which resulted in a net judgment in favor of Ms. Gerdes in the

amount of $346,000.65 related to the bond for deed contract.

Ms. Rouege, the purchaser, has appealed the trial court judgment, assigning

multiple assignments of error surrounding the validity of the contract at issue. For

the following reasons, we find that the trial court was not manifestly erroneous in

its factual determination that the parties intended to novate the prior 2009

Agreement and that the 2011 Agreement was properly and legally executed.

Accordingly, we affirm the trial court’s judgment insofar as it enforces the

terms and conditions of the 2011 Agreement between the parties. However,

because we find the trial court erred in awarding past due rent in a monthly amount

in excess of that previously negotiated and agreed upon by the parties as the “fair

1
The judgment awarded costs and 25% in attorney’s fees pursuant to the contract as well as $25,414.94 in
interest, in addition to 6.5% per annum interest from April 1, 2020 until paid.

22-CA-561 1

market value” rent due under the bond for deed, we amend the judgment as to the

amount it awards to Ms. Gerdes for the past due fair market value of rent due. In

all other respects, we affirm.

Factual and Procedural Background

This matter arises out of a contract dispute for the sale of a daycare business

and a related bond for deed for immovable property. The trial judge issued

extensive Reasons for Judgment, which set forth the facts established at trial as

follows:

In 2009, Ms. Gerdes approached Ms. Rouege, an employee of
Carlie Care, Inc. (“Carlie Care”), regarding the potential sale of Carlie
Care stock. On July 31, 2009, Ms. Rouege signed a one-year Lease of
Commercial Property (“Lease”) for the rental of 2032 Carol Sue Avenue
in Terrytown, one of the buildings [owned by Mrs. Rouege] that housed
Carlie Care. Ms. Rouege agreed to pay $5,000.00 per month rent, with the
first six months of rent due on October 30, 2009. Under the lease, Ms.
Rouege was responsible for building maintenance and repair, including
the plumbing, sewerage and airconditioning systems. Ms. Rouege was
also charged with obtaining and paying for general liability, fire and
extended insurance for the building.

On August 3, 2009, a few days after the Lease was signed, Ms.
Gerdes sold one hundred (100%) of the Carlie Care, Inc. stock to Ms.
Rouege for $300,000.00. Ms. Rouge signed a $331,000.00 promissory
note payable to Carla Gerdes with a balloon payment due within ninety
(90) days of August 1, 2009. Ms. Gerdes testified that the $331,000
represented the $300,000 purchase price for the Carlie Care stock plus the
$30,000 Ms. Rouege had agreed to pay for six months of rent for the
buildings. The difference of $1,000 represents the difference between the
$6,000 loaned by Ms. Gerdes to Ms. Rouege for the $5,000 down-
payment.

Both parties testified that Ms. Rouege was working at Carlie Care
in June of 2009, two months before she purchased the stock in August and
that Ms. Rouege was aware she had to secure her own licenses. However,
the testimony also established Ms. Rouege [who earned an undergraduate
degree in Business Administration and a Master’s degree in Business
Management and Finance] did not obtain appraisals or valuations of the
business, and she accepted the price suggested by Ms. Gerdes in 2009.

The undisputed testimony adduced at trial was that Ms. Rouege
paid nothing at all on the $331,000.00 note and very little in rent to Ms.
Gerdes. Ms. Rouege testified she did not recall an exchange of physical
stock certificates, and no evidence of transfer on the books of the
corporation was presented. Although Defendants claimed Ms. Rouege
was named President of Carlie Care, Inc. and Ms. Gerdes had no

22-CA-561 2

ownership interest and was not a board member or officer after August 3,
2009, Ms. Rouege did not register her name with the Louisiana Secretary
of State as an owner, officer or director of Carlie Care. Ms. Gerdes also
filed at least one Annual Report with the Secretary of State in 2010, after
the stock sale to Ms. Rouege.

On April 12, 2011, Ms. Gerdes, her husband Leo Heymann, Jr.
(“Mr. Heymann”), and the Roueges entered into another transaction
entitled, “Agreement,” whereby Ms. Gerdes represented herself to be the
owner of Carlie Care, Inc. and Mr. Heymann asserted that Carlie Care was
his wife’s separate property. All parties acknowledged that while they had
begun the process of transferring Carlie Care’s assets in 2009, no
consideration had actually changed hands other than minimal rent. In the
2011 Agreement, Ms. Gerdes sold Carlie Care’s assets, but not its stock,
to Defendants. Defendants executed the Agreement, and significantly,
they did not claim that they, and not Ms. Gerdes, owned the Carlie Care
stock. In addition to the sale of Carlie Care’s assets, the 2011 Agreement
also included a Bond for Deed for 2028-30 and 2032-34 Carol Sue
Avenue.

Ms. Rouege acknowledged she signed the Agreement and a bearer
promissory note for the sum of $357,865.00 for the sale of Carlie Care’s
assets on April 12, 2011. The April 12, 2011 note was payable in two
installments of $2,300.00 each, commencing on February 8, 2011, and
then 57 equal monthly installments of $2,000.00 each, commencing on
April 8, 2011, due on the eighth of each succeeding month, with a final
balloon installment of all unpaid interest and principal on January 8, 2016.
The note provided that failure to pay an installment constituted a default.
It also provided that if it became necessary to employ an attorney to
enforce or recover [] all or part of the note, attorneys’ fees were
recoverable at twenty-five (25%) percent of the amount then due with
interest and all costs.

The Roueges assert defenses of fraud, mutual error and duress.
Defendants argue Ms. Gerdes did not own the assets of Carlie Care, Inc.
in 2011, and she could not have sold the assets because Ms. Gerdes sold
100% of the stock to Ms. Rouege in 2009. Conversely, Ms. Gerdes
contends the April 12, 2011 Agreement and promissory note constituted a
novation of the 2009 stock sale and note and that the 2011 Agreement
itself refers to the parties’ 2009 attempt at a sale, with both parties
acknowledging that no consideration was paid in 2009 other than minimal
rent.

On June 23, 2020, Ms. Gerdes [and Ms. Rouege] executed a
Cancellation of Bond for Deed, acknowledging Defendants had
surrendered the keys to the building subject of the Bond for Deed, and the
parties mutually agreed to cancel same. At the time the Bond for Deed
was canceled, Ms. Rouege had occupied the Carol Sue property for almost
eleven (11) years.2 Ms. Gerdes later sold 2028-30 and 2032-34 Carol Sue
Avenue to Da Village Eats, LLC for $440,000.

2
The record on appeal reflects that Ms. Rouege continued to operate the daycare under the new name
Carlie Care Kids, Inc. in the same location.

22-CA-561 3

At the conclusion of trial, the trial judge took the matter under advisement.

On June 29, 2022, the trial court rendered judgment in favor of Ms. Gerdes for the

balance of the April 12, 2011 note for the sale of Carlie Care’s assets in the amount

of $352,809.72, in addition to attorneys’ fees and interest pursuant to the terms of

the 2011 Agreement.3 As to the canceled bond for deed contract, the Court further

rendered judgment in favor of Ms. Gerdes in the amount of $552,955.07 for past

due rent and repairs4, but also rendered judgment in favor of Ms. Rouege for

reimbursement of paid property taxes and insurances in the amount of $206,

954.42, which resulted in a net judgment in favor of Ms. Gerdes in the amount of

$346,000.65 related to the failed bond for deed. The judgment declined to award

any attorney fees or costs related to the cancelled bond for deed.

In his extensive Reasons for Judgment, the trial judge determined that, by

entering into the 2011 Agreement, the parties intended to novate or extinguish the

2009 stock sale agreement. The court found:

The Court finds that the parties intended to novate the original
2009 obligations with the 2011 transactions. This is not the case of a
mere rollover of unpaid interest from an earlier note to a later note or
the case of a re-arranged, but substantially similar, set of transactions.

In this case, the entire set of transactions changed and additional
parties were added. The original Sale of Stock involved only Ms. Gerdes
and Ms. Rouege and effected the sale of Carlie Care stock, not merely
its assets. The 2009 transaction did not contain a Bond For Deed or
other purchase of the property; instead, there was a separate one-year
lease, but no sale, of Carlie Care’s premises.

The 2011 Agreement, on the other hand, involved new parties to
the transaction, Mr. Heymann and Mr. Rouege. It involved only the
purchase of Carlie Care’s assets - but not the transfer of Carlie Care’s
liabilities or its stock to the Roueges. The 2011 Agreement referred to
the 2009 transaction but all parties acknowledged that in 2009, no
consideration actually changed hands other than “minimal rental
payments” despite the existence of the written documents. The

3
The judgment awarded costs and 25% in attorney’s fees pursuant to the contract as well as $25,414.94 in
interest, in addition to 6.5% per annum interest from April 1, 2020 until paid.
4
Ms. Gerdes sought reimbursement for repairs to the property performed that she alleged were Ms.
Rouege’s responsibility pursuant to the parties’ agreement. That portion of the judgment is not at issue on
appeal.

22-CA-561 4

Roueges did not contend when they executed the 2011 Agreement that
they owned the Carlie Care stock, and not Ms. Gerdes, by virtue of the
2009 transaction. Instead, they acquiesced in the 2011 asset sale. The
2011 Agreement also incorporated a Bond for Deed for the purchase of
2028-30 and 2032-34 Carol Sue Avenue for $650,000, the same Bond
for Deed that was later canceled.

The trial court found that the 2011 Agreement was a valid contract that was

not vitiated by error, fraud, or duress under the facts of the case, pointing to “Ms.

Rouege’s educational background, her retention of legal counsel, and

her employment at Carlie Care before engaging in the 2011 transactions, all of

which militate against a finding of fraud, duress or excusable error.” The trial court

further determined that the contract was a divisible or conjunctive contract, as

evidenced by the parties’ consent to cancel the bond for deed but to continue to

litigate the remaining note in the 2011 Agreement.

Ms. Rouege has appealed the trial court judgment, assigning multiple

assignments of error surrounding the 2011 Agreement at issue, contending that (1)

the 2011 Agreement should be vitiated for error, fraud, or duress; (2) Ms. Gerdes

did not have capacity to sign the 2011 Agreement on behalf of Carlie Care, Inc. in

her personal capacity and after she sold the stock to Ms. Rouege in the 2009

Agreement; (3) the 2011 Agreement is an indivisible contract and the cancellation

of the bond for deed by the parties also by operation of law canceled the sale of

assets within the 2011 Agreement; (4) the trial court erred in its finding that the

parties intended to novate the 2009 Agreement by entering into the 2011

Agreement at issue; and (5) the trial court erred in awarding an amount of monthly

rental payments due under the bond for deed contract higher than the amount

negotiated and agreed upon by the parties. We will address each assignment of

error in turn below.

22-CA-561 5

Law and Analysis

The 2011 Sale of Assets

On appeal, Ms. Rouege complains that the 2011 Agreement should be

vitiated based on mutual error, fraud, or duress. A contract is defined as “an

agreement by two or more parties whereby obligations are created, modified, or

extinguished.” La. C.C. art. 1906. Interpretation of a contract is the determination

of the common intent of the parties, and courts are obligated to give legal effect to

contracts according to the true intent of the parties. La. C.C. art. 2045; Semco, LLC

v. Grand Ltd., 16-342 (La. App. 5 Cir. 5/31/17), 221 So.3d 1004, 1028-29, writ

denied, 17-01291 (La. 11/6/17), 229 So.3d 475. Consent to a contract may be

vitiated by error, fraud, or duress. Hawkins v. Willow Inc., 15-71 (La. App. 5 Cir.

11/19/15), 181 So.3d 210, 217, writ denied, 15-2326 (La. 2/19/16), 187 So.3d 463,

citing Salassi v. Salassi, 08-510 (La. App. 5 Cir. 5/12/09), 13 So.3d 670, 676 and

La. C.C. art. 1948.

Consent is vitiated when it has been obtained by duress of such a nature as to

cause a reasonable fear of unjust and considerable injury to a party's person,

property, or reputation. Age, health, disposition, and other personal circumstances

of a party must be taken into account in determining reasonableness of the fear. La.

C.C. art. 1959. Duress is to be considered in light of the subjective characteristics

of the person whose consent is in question; however, Article 1959 also provides

that the duress must be of such a nature as to cause a “reasonable fear” of unjust

and considerable injury to a party's property or reputation in order to constitute

legal duress. See Broyles v. Ducote, 21-0852 (La. App. 1 Cir. 6/14/22), 343 So.3d

902, 909-10; Monterrey Ctr., LLC v. Education Partners, Inc., 08-0734 (La. App.

1st Cir. 12/23/08), 5 So.3d 225, 230.

22-CA-561 6

“Fraud is 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.” La.

C.C. art. 1953. “Error induced by fraud need not concern the cause of the

obligation to vitiate consent, but it must concern a circumstance that has

substantially influenced that consent.” La. C.C. art. 1955. Nevertheless, fraud does

not vitiate consent when the party against whom the fraud was directed could have

ascertained the truth without difficulty, inconvenience, or special skill. Shelton v.

Standard/700 Assocs., 01-0587 (La. 10/16/01), 798 So.2d 60, 64. However, this

exception does not apply when a relation of confidence has reasonably induced a

party to rely on the other’s assertions or representations. La. C.C. art. 1954.

In pleading fraud, the circumstances constituting fraud must be alleged with

particularity. La. C.C.P. art. 856. However, fraud need only be proven by a

preponderance of the evidence and may be established by circumstantial evidence.

La. C.C. art. 1957. In sum, there are three basic elements to an action for fraud

against a party to a contract: (1) a misrepresentation, suppression, or omission of

true information; (2) the intent to obtain an unjust advantage or to cause damage or

inconvenience to another; and (3) the error induced by a fraudulent act must relate

to a circumstance substantially influencing the victim's consent to (a cause of) the

contract. Shelton, 798 So.2d at 64.

The Louisiana Supreme Court has stated that error vitiates consent in one of

two ways: mutually, where both parties are mistaken, or unilaterally, where only

one party is mistaken. Louisiana courts have often refused relief when the mistake

is unilateral; such error will vitiate consent only if the other party knew or should

have known that “the matter affected by the error was the cause of the obligation

for the party in error, that is, that it was the reason he consented to bind himself.”

22-CA-561 7

La. C.C. art. 1949, Rev. Cmt. 1984, cmt. (c); Semco, LLC, 221 So.3d at 1029-30;

see also Broyles v. Ducote, 21-0852 (La. App. 1 Cir. 6/14/22), 343 So.3d 902, 912.

Therefore, while rescission is permitted if the error is unilateral, the error

must be excusable, meaning “the party in error did not fail to take elementary

precautions that would have avoided his falling into error[.]” Semco, LLC, 221

So.3d at 1029, quoting Peironnet v. Matador Res. Co., 12-2292 (La. 06/28/13),

144 So.3d 791, 810. Whether a unilateral error is excusable is determined

according to the particular circumstances surrounding each case. Contractual

negligence, such as failure to read a contract one signed, is not excusable and, thus,

rescission is not an appropriate remedy. Id. Further, an error made by a

professional, concerning a matter directly within his field of expertise, would be

regarded as inexcusable error and, thus, rescission for such unilateral error is not

appropriate. Id. at 130 (quotations omitted).

On appeal, Ms. Rouege contends that the trial court erred in failing to find

that the 2011 Agreement should be vitiated for error, fraud, or duress, asserting

that Ms. Gerdes fraudulently withheld information concerning the value of Carlie

Care prior to the sale or that she only entered into the agreement under duress by

Ms. Gerdes. Ms. Rouge further contends that the error reflects mutual error

because neither party understood that Ms. Gerdes had already transferred the

Carlie Care stock in 2009 and, thus, was not able to enter into the 2011 Sale of

Assets. Concerning these arguments, the trial court found:

The Court finds no evidence that Ms. Gerdes caused Defendants
to have a reasonable fear of unjust injury to their persons, property or
reputation. Ms. Rouege testified that the only threat to her is that she
“would have to get out.” A threat of doing a lawful act or exercising a
right - such as evicting Ms. Rouege for her failure to timely pay rent
under the original lease or filing suit for Ms. Rouege’s failure to make
any payments under the 2009 promissory note - is not duress sufficient
to vitiate the Defendants’ consent to the 2011 Agreement.5

5
The trial court further pointed to a trial exhibit, which contained notes from Ms. Rouege to Ms. Gerdes
apologizing for delayed payments, and thanking Ms. Gerdes by stating, “thank you for everything” and “I
really appreciate you and everything you have done for me.”

22-CA-561 8

* * *

[T]he Roueges did not prove that Ms. Gerdes misrepresented,
suppressed or omitted any information. Ms. Rouege had worked for
Carlie Care for 21 months before engaging in the aforesaid transactions
in 2011. Thus, she was aware of the number of children enrolled at the
facility and the status of day care licenses. Ms. Rouege also participated
in the 2009 transactions and was aware of their contents. Ms. Rouege
acknowledged she worked in the daycare for two months before the
2009 transactions, as well as afterward, so she was aware of the
operations of the business and its licensing. Ms. Rouege had also
previously earned an undergraduate degree in Business Administration
and a Masters degree in Business Management and Finance, and she
also had consulted with an attorney before executing the 2011
Agreement.

Fraud does not vitiate consent when the party against whom the
fraud was directed could have ascertained the truth without difficulty,
inconvenience or special skill. The Court finds that the Roueges could
have ascertained the truth - namely that, according to Defendants, Ms.
Gerdes allegedly did not own the stock but rather Ms. Rouege did
(despite her failure to pay the note), and that Carlie Care allegedly had
no licenses, children or employees - without difficulty, inconvenience
or special skill. Therefore, the Court finds that due to the Roueges’
ability to easily ascertain the truth prior to the execution of the 2011
Agreement, there was no fraud which vitiates the parties' consent to the
2011 Agreement.

* * *

In addition to Ms. Rouege’s educational background, her retention of
legal counsel, and her employment at Carlie Care before engaging in
the 2011 transactions, all · of which militate against a finding of fraud,
duress or excusable error, the Court notes that Ms. Rouege made
multiple payments toward the April 12, 2011 Agreement and
promissory note, one as late as December 5, 2019, within days of the
filing of the Petition in this matter.

Upon review of the record, we find that the trial court was not manifestly

erroneous in its determination that Ms. Rouege freely and voluntarily entered into

the 2011 Agreement for the sale of Carlie Care Inc.’s assets and, thus, in

determining that the 2011 Agreement could not be vitiated based on error, fraud, or

duress.

Ms. Rouege on appeal further contends that the 2011 Agreement cannot be

enforced, asserting that when the parties voluntarily canceled the bond for deed

22-CA-561 9

contract, it necessarily canceled the sale of assets as well. Ms. Rouege argues that

the 2011 Agreement is an indivisible contract that cannot be partially canceled or

enforced.

A contract or obligation is divisible when the object of the performance is

susceptible of division. Gloria’s Ranch, L.L.C. v. Tauren Expl., Inc., 17-1518 (La.

6/27/18), 252 So.3d 431, 443. An obligation is indivisible when the object of the

performance, because of its nature or because of the intent of the parties, is not

susceptible of division. La. C.C. art. 1815. An obligation is indivisible when the

performance of the obligation cannot be divided or when partial performance

would be of little or no use to the obligee. Id.; Sweet Lake Land & Oil Co. LLC v.

Exxon Mobil Corp., 9-1100, 2011 WL 5825791 (W.D. La. 11/16/11), citing 5 Saul

Litvinoff, Louisiana Civil Law Treatise, Law of Obligations § 9.2 (2011). An

obligation is conjunctive when it binds the obligor to multiple items of

performance that may be separately rendered or enforced. In that case, each item is

regarded as the object of a separate obligation. The Civil Code provides that “[a]n

obligation is conjunctive when it binds the obligor to multiple items of

performance that may be separately rendered or enforced. In that case, each item is

regarded as the object of a separate obligation.” La. C.C. art. 1807; HDRE Bus.

Partners Ltd. Grp., L.L.C. v. RARE Hosp. Int’l, Inc., 834 F.3d 537, 541-42 (5th

Cir. 2016).

Concerning the divisibility of the contract, the trial court found that the 2011

Agreement containing the bond for deed and the sale of assets is a divisible

obligation. The 2011 Agreement contains two separate titled provisions, one

provision titled the “Sale of Assets of Carlie Care, Incorporated” and a second

provision titled, “Bond for Deed Related to Immovable Property.” The sale of the

assets of Carlie Care, Inc. and the sale of the immovable property are obligations

that can be separately rendered or enforced. The record reflects that the parties in

22-CA-561 10

fact voluntarily consented to the cancellation of the bond for deed contract,

reserving with the cancellation the right to proceed with remaining claims in this

litigation. We find no error in the trial court’s finding that the 2011 Agreement is a

divisible contract.

Ms. Rouege further assigns as error the trial court’s holding that the 2011

Agreement was a novation that extinguished the previous 2009 stock sale.

Novation is the extinguishment of an existing obligation by the substitution of a

new one. La. C.C. art. 1879. “Novation takes place when, by agreement of the

parties, a new performance is substituted for that previously owed, or a new cause

is substituted for that of the original obligation. La. C.C. art. 1881. Comment (c) to

Article 1881 explains that, “[n]ovation takes place when a new obligation is

substituted for an old one, which is thus extinguished. Such a substitution occurs

whenever at least one of the basic elements of the original obligation is changed.

The basic elements of an obligation are the parties to it, its object, and its cause.”

For a novation to occur, the parties’ intention to extinguish the original

obligation must be clear and unequivocal. La. C.C. art. 1880. Novation may not be

presumed, and the burden of proving novation falls on the party who seeks its

protection. La. C.C. art. 1880; Ciolino v. First Guaranty Bank, 12-2079, 12-2080

(La. App. 1 Cir. 10/30/13), 133 So.3d 686, 691. The determining factor is the

intention of the parties. The intention to novate may be shown by the character of

the transaction, the facts and circumstances surrounding it, as well as by the terms

of the agreement itself. Schillace v. Channell Shopping Partnership, 623 So.2d 45,

47 (La. App. 1st Cir. 1993); GE Com. Fin. Bus. Prop. Corp. v. Louisiana Hosp.

Ctr., L.L.C., 10-1838 (La. App. 1 Cir. 6/10/11), 69 So.3d 649, 656; Atl. Pac.

Equip., Inc. v. Gulf S. Servs., Inc., 21-0438 (La. App. 1 Cir. 5/18/22), 342 So.3d

898, 902.

22-CA-561 11

The trial court, after considering the evidence presented at trial, made the

following factual determinations and findings:

The Court finds that the parties intended to novate the original
2009 obligations with the 2011 transactions. This is not the case of a
mere rollover of unpaid interest from an earlier note to a later note or
the case of a re-arranged, but substantially similar, set of transactions.

In this case, the entire set of transactions changed and additional
parties were added. The original Sale of Stock involved only Ms. Gerdes
and Ms. Rouege and effected the sale of Carlie Care stock, not merely
its assets. The 2009 transaction did not contain a Bond For Deed or
other purchase of the property; instead, there was a separate one-year
lease, but no sale, of Carlie Care's premises. The 2011 Agreement, on
the other hand, involved new parties to the transaction, Mr. Heymann
and Mr. Rouege. It involved only the purchase of Carlie Care’s assets -
but not the transfer of Carlie Care’s liabilities or its stock to the
Roueges.

The 2011 Agreement referred to the 2009 transaction but all
parties acknowledged that in 2009, no consideration actually changed
hands other than “minimal rental payments” despite the existence of the
written documents. The Roueges did not contend when they executed
the 2011 Agreement that they owned the Carlie Care stock, and not Ms.
Gerdes, by virtue of the 2009 transaction. Instead, they acquiesced in
the 2011 asset sale. The 2011 Agreement also incorporated a Bond for
Deed for the purchase of 2028-30 and 2032-34 Carol Sue Avenue for
$650,000, the same Bond for Deed that was later canceled.

Upon review of the record and considering the testimony presented at trial

concerning the parties’ actions and intent surrounding the 2011 Agreement, we

find that the trial court was not manifestly erroneous in his finding that the parties’

intent in executing the 2011 Agreement was to extinguish the 2009 stock sale and

enter into a new agreement for the sale of Carlie Care’s assets as well as the bond

for deed to sell immovable property.6

Ms. Rouege further challenges the trial court judgment, contending that the

trial court erred in applying the concept of agency by estoppel to find that Ms.

6
Compare U.S. Bank Tr. Nat’l Ass’n, as Tr. of Lodge Series III Tr. v. Parks, 22-56 (La. App. 5 Cir.
11/2/22), 353 So.3d 228, 234 (wherein the court held that a novation didn’t exist when the Loan
Modification Agreement clearly showed an intent to simply modify a former agreement and the
modification specifically stated, “‘[n]othing in this Agreement shall be understood or construed to be a
satisfaction or release in whole or in part of the Note and Security Instrument.’”)

22-CA-561 12

Rouege could not challenge Ms. Gerdes’ legal capacity or authority to enter into

the 2011 Agreement after she had already sold Carlie Care’s stock to Ms. Gerdes

in the 2009 stock sale. Ms. Rouege contends that because Ms. Gerdes sold the

Carlie Care stock in 2009, she did not have capacity or authority to sell Carlie

Care’s assets in 2011. Ms. Rouege seeks to rescind the 2011 Agreement on this

basis.

The theory of agency by estoppel allows a third party to recover against a

principal for the action of one who acted as the principal’s agent despite lacking

the necessary authority to do so. The Louisiana Supreme Court has explained the

grounds for agency by estoppel as “based on tort principles of preventing loss by

an innocent person.” Tedesco v. Gentry Dev., Inc., 540 So.2d 960, 964 (La. 1989);

Biever Realty-Benjamin, L.L.C. v. Royal Alice Properties, L.L.C., 16-0080 (La.

App. 4 Cir. 8/31/16), 200 So.3d 968, 972, writ denied, 16-1780 (La. 11/29/16), 211

So.3d 387. The third person not only must show reliance on the conduct of the

principal, but also must show such a change of position on his part that it would be

unjust to allow the principal to deny the agency. Tedesco, supra. A contract made

by a person without legal capacity is relatively null and may be rescinded only at

the request of that person or his legal representative. La. C.C. art. 1919; see also In

re Interdiction of Gambino, 21-00267 (La. 4/20/21), 313 So.3d 1239, 1240, reh’g

denied, 21-00267 (La. 6/22/21), 318 So.3d 46.

We find the trial court correctly determined that Carlie Care, Inc., not Ms.

Rouege, would be the proper party to complain of Ms. Gerdes’ capacity to enter

into the 2011 Agreement. The doctrine of agency by estoppel may be applicable to

allow Ms. Rouege to bind or enforce the 2011 Agreement at issue, which is not

what Ms. Rouege seeks to do in this case. We find that the trial court did not err in

22-CA-561 13

finding that Ms. Rouege could not seek to rescind the 2011 Agreement by

challenging Ms. Gerdes’ capacity. This assignment of error lacks merit.7

Bond for Deed

The only assignment of error related to the bond for deed on appeal concerns

the amount awarded to Ms. Gerdes for past due rental payments. Specifically, Ms.

Rouege assigns as error: “The Trial Court erred when it did not enforce the

stipulated fair market rent for the property in the even[t] of default by Rouege.”

Ms. Rouege explains that, “[i]n the event of breach of the bond for deed, the

parties negotiated a fair market rental price for the property. The trial court erred

when it ignored the clear language of the contract and the testimony of the

parties that the rental amount was stipulated.” We agree.

The trial court in its thorough Reasons for Judgment found:

In this case, the parties consented to the cancellation of the Bond
for Deed contract on July 7, 2020. Thus, as confirmed by her testimony,
Ms. Rouege occupied the Carol Sue buildings for almost eleven (11)
years before ceding possession back to Ms. Gerdes.

Jurisprudence has established the appropriate adjustments to be
made in the event of a failed Bond for Deed transaction. Regardless of
penalty or forfeiture clauses actually contained in the Bond for Deed
contract, the vendor in a Bond for Deed contract is not entitled to retain
all monies paid by the purchaser. The law is clear that such forfeiture
clauses should be regarded as null and void as they are inequitable,
unreasonable, and represent an illegal attempt to recover punitive,
rather than compensatory, damages. The purchaser is entitled to the
return of all monies paid on the purchase price, including the down
payment and all monthly installments, the insurance premiums and the
taxes paid. Concomitantly, the seller is entitled to an allowance for the
fair rental value of the property during the period of the purchaser’s
occupancy.

The testimony established that Ms. Rouege obtained the Sandoz
appraisal on the buildings. It provided that the gross building and
finished area of the Carol Sue property was approximately 6,544 square

7
Relatedly, Ms. Rouege complains that Ms. Gerdes did not have the authority to enter into the 2009 stock
sale, contending that she did so in her personal capacity. First, we find that because the trial court
correctly determined that the 2011 Agreement novated and extinguished the 2009 stock sale agreement—
and that the parties freely and voluntarily entered into a new, 2011 Agreement—we need not reach the
issue of Ms. Gerdes’ authority to enter into the 2009 sale. Nevertheless, Ms. Gerdes testified at trial that
she was 100% owner of Carlie Care, Inc. and that she did not ever transfer any physical stock certificates
for Carlie Care, Inc. to Ms. Rouege pursuant to the 2009 contract.

22-CA-561 14

feet. Mr. Sandoz opined that the lease comparables of day cares (or
office facilities with day care potential) ranged from $8.00 to $12.22
per square foot annually, but all were smaller than the subject property.
Taking a median figure of $10 per square foot, Mr. Sandoz estimated
potential annual income for the subject property to be $65,440 (or
$5,453.33 per month).

The Affidavit of Kenneth Kopecky, a licensed professional real
estate agent and owner of NOLA Property Managers, Inc., was
introduced as Trial Exhibit No. 32. Mr. Kopecky established
the square footage of the subject premises at 6,560 square feet, and he
opined the fair market rent under a triple net lease for the subject
property would be $5,576 per month.

The Affidavit of G. Geoffry Lutz, another licensed general real
estate appraiser, was admitted as Trial Exhibit No. 31. Mr. Lutz
established a fair market triple net rental value of $4,000 per month for
the subject property. Mr. Lutz explained that the market rental value
was reduced due to several factors including that the property was two
buildings, not one, and the property was used as a day care facility
which is a specialized and limited rental market.

The Court will accept $9 per square foot as a fair rental value
times 6,544 square feet for a total of $58,896 per year, or $4,908 per
month, for 112.5 months, or a total of $552,150.00.

In this case, the bond for deed contract executed between the parties

specifically provided for a fair market rental value in the event of default. The

contract provided that, “[t]he parties further agree that the monthly payments of

$3,500.00 are a fair rental value of the premises when also taking into

consideration the payments of $2,000.00 per month being made for the assets of

the business known as Carlie Care, Incorporated.” Both parties testified at trial

that they discussed a fair market rental value and that Ms. Gerdes initially sought

$5,000.00 per month, but that the parties negotiated the amount to a fair market

monthly rental value of $3,500.00.8

Contracts have the effect of law upon the parties, and the courts are bound to

give legal effect to all contracts according to the common intent of the parties. This

intent is determined by the words of the contract when they are clear and explicit

8
The negotiations between the parties also considered the monthly payment due toward the sale of Carlie
Care’s assets, which the trial court also enforced and found Ms. Rouege liable to pay.

22-CA-561 15

and lead to no absurd consequences. Lamar Contractors, LLC v. SRF Grp.

Consulting, LLC, 22-213 (La. App. 5 Cir. 2/1/23), 358 So.3d 907, 912, writ denied,

23-00305 (La. 5/23/23), 2023 WL 3595237, and writ denied, 23-00308 (La.

5/23/23), 2023 WL 3595239.

Upon review of the language as provided in the contract and further

considering the testimony and evidence presented at trial, we find that the trial

court erred in calculating an award based on a monthly fair market rental payment

in an amount in excess of the $3,500.00 amount negotiated and agreed upon by the

parties in the bond for deed contract. The Court calculated the award with a

monthly rental value of $4,908 per month, for 112.5 months, or a total of

$552,150.00. Accordingly, we vacate that portion of the trial court judgment, and

amend the judgment to reflect the agreed upon fair market rental value of

$3,500.00 per month, for 112.5 months, or a total of $393,750.00. This decreases

the final net judgment in favor of Ms. Gerdes by $158,400.00, resulting in a total

net judgment in favor of Ms. Gerdes of $187,600.65.

Conclusion

Accordingly, for the reasons provided herein, the trial court judgment is

amended to correct the amount awarded in past due rental payments to

$393,750.00, resulting in a total net judgment in favor of Ms. Gerdes and against

Ms. Rouege in the amount of $187,600.65. In all other respects, the judgment is

affirmed.

AFFIRMED AS AMENDED

22-CA-561 16

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

SUSAN S. BUCHHOLZ
FREDERICKA H. WICKER
CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON LINDA M. WISEMAN
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
JOHN J. MOLAISON, JR.
CORNELIUS E. REGAN, PRO TEM FIFTH CIRCUIT
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JUNE 7, 2023 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES NOT
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22-CA-561
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HON. RAYMOND S. STEIB, JR. (DISTRICT JUDGE)
SEAN R. DAWSON (APPELLEE) MILES G. TRAPOLIN (APPELLANT)

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