Patrick Grayson, Graygull Holdings, L.L.C., and Class Act Transit, L.L.C. v. Alan Jefferey Gulledge, Kelly Aldy, and J&K Operations, L.L.C.

Judgment rendered September 27, 2023.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 55,214-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

PATRICK GRAYSON, Plaintiffs-Appellees
GRAYGULL HOLDINGS, L.L.C.,
AND CLASS ACT TRANSIT,
L.L.C.

versus

ALAN JEFFEREY GULLEDGE, Defendants-Appellants
KELLY ALDY, AND J&K
OPERATIONS, L.L.C.

*****

Appealed from the
Second Judicial District Court for the
Parish of Jackson, Louisiana
Trial Court No. 36,055

Honorable Charles Glenn Fallin, Judge

*****

THE PESNELL LAW FIRM, APLC Counsel for Appellants
By: J. Whitney Pesnell

LAW OFFICES OF RUSSELL A. Counsel for Appellees
WOODARD, JR. LLC
By: Russell A. Woodard, Jr.

*****

Before COX, ROBINSON, and MARCOTTE, JJ.

COX, J.

This case arises out of the Second Judicial District Court, Jackson

Parish, Louisiana. Patrick Grayson, individually and on behalf of Class Act

Transit, LLC (“CAT”) and Graygull Holdings, LLC (“GGH”) (collectively

referred to as the “Plaintiffs”), filed suit against Alan Jefferey Gulledge,

Kelly Aldy, and J&K Operations, L.L.C. (“J&K”) (collectively referred to as

the “Defendants”). The trial court granted the Plaintiffs’ motion for partial

summary judgment against Gulledge on the issue of breach of fiduciary

duty. Defendants now appeal the trial court’s judgment. For the following

reasons, we affirm the trial court’s judgment.

FACTS

On August 30, 2018, Grayson and Gulledge formed CAT and GGH in

order to operate a commercial trucking business. They each have 50 percent

ownership in CAT, which is registered in Nebraska. Grayson owns 85

percent of GGH and Gulledge owns the remaining 15 percent. GGH is

registered in Louisiana. CAT and Reserve Equipment, Inc. (“Reserve”)

entered into a transportation services agreement on September 13, 2018.

On October 15, 2019, Grayson filed a criminal complaint against

Gulledge with the Jackson Parish Sheriff’s Office alleging that Gulledge had

embezzled or stolen funds or property from CAT/GGH. On July 9, 2020,

Grayson filed a criminal complaint with the Louisiana State Police making

the same allegations of embezzlement/stolen funds and adding allegations of

drug trafficking. Criminal charges were never filed against Grayson.

On December 9, 2019, Gulledge resigned as manager of CAT/GGH.

On December 10, 2019, Gulledge was employed by Steven White to manage

SS7, LLC (“SS7”).

On January 6, 2020, Grayson, individually and on behalf of CAT and

GGH, filed a petition for damages against Gulledge. The Plaintiffs asserted

that Gulledge breached his fiduciary duties of trust, loyalty, and candor

owed to them through various acts and omissions, including but not limited

to self-dealing and mismanagement. According to the Plaintiffs, from June

2018 through November 2019, Gulledge incurred between $128,000 and

$400,000 in expenses that were not reasonably attributable to CAT/GGH

and grossly mismanaged the companies. They alleged that Gulledge’s

expenses were used for his personal benefit in the following ways: Gulledge

withdrew over $70,000 in cash without receipts; Gulledge spent over

$17,000 at Wal-Mart, Sam’s Club, sporting goods stores, clothing stores,

restaurants, liquor stores, and a strip club; Gulledge transferred $16,500

from CAT/GGH to his personal account and $14,650 from CAT/GGH to

another business owned by Gulledge; Gulledge used company funds for

dog-sitting fees, PayPal transfers, and CashApp transfers to individuals not

associated with CAT/GGH; Gulledge used a CAT/GGH account to purchase

a boat; Gulledge purchased approximately $10,000 in unleaded fuel, but the

company vehicles do not use unleaded fuel; Gulledge wire-transferred large

sums of money to a ComData1 account without receipts to explain why the

funds were disbursed; CAT/GGH accounts were overdrawn when Gulledge

resigned; and, Gulledge spent CAT/GGH money on himself, his family, and

friends, which caused multiple overdraft and insufficient funds fees.

The Plaintiffs alleged that Gulledge mismanaged CAT/GGH in the

following ways: Gulledge failed to properly hire, train, and supervise

1
ComData provides cash payments to drivers.
2

employees; Gulledge exhibited purposeful lack of upkeep on federally

mandated electronic log equipment; Gulledge failed in multiple federal and

state reporting requirements, including the federally mandated International

Fuel Tax Agreement (“IFTA”); when Gulledge resigned, all company

equipment loans were past due; Gulledge did not submit quarterly IRS

payments or reports timely; Gulledge withdrew approximately $4,400 on his

last day as “a portion of his capital investment,” but Gulledge had not put

any capital investment into the companies; Gulledge left all trucks dirty and

with empty fuel tanks; Gulledge removed necessary chains, straps, and

binders from the trucks; Gulledge switched good front tires from one truck

with old, bald, dangerous tires; televisions and microwaves were missing

from the large trucks; Gulledge left one Peterbilt 579 tractor sitting near

Orlando, Florida, and one reefer trailer sitting outside Birmingham,

Alabama, unattended and with no plan on returning them to the Quitman,

Louisiana, area; Gulledge retained one Volvo tractor and a 3-car “wedge”

trailer until “an appropriate arrangement has been made for his portion of the

business to be negotiated”; and, Gulledge left the Plaintiffs’ remaining

vehicles on a lot owned by White in Simsboro, Louisiana, who was going to

have the equipment impounded if it was not removed.

The Plaintiffs claimed that Gulledge concealed his self-dealing and

mismanagement from Grayson; therefore, Grayson did not suspect any

problems until August 2019. They stated that as a result of Gulledge’s

actions, Grayson’s credit score has dropped from the high 800s to the 600s,

which directly affects his personal and professional ability to obtain credit.

They listed their damages as stolen funds, lost profits and earning capacity,

attorney fees as authorized by law, court costs and legal interest, bad-faith
3

damages, and any other relief to which they may be entitled. The Plaintiffs

asserted that they have causes of action against Gulledge for breach of

fiduciary duty, fraud, unfair trade practices under LUTPA, conversion/theft,

and breach of contract.

On February 25, 2020, Gulledge filed a separate action to dissolve and

liquidate CAT and GGH in Jackson Parish. On February 26, 2016, Gulledge

filed exceptions of vagueness and ambiguity, no right of action, no cause of

action, and prescription. He asserted that the Plaintiffs’ petition was vague

and ambiguous because they did not plead the times or places where the

alleged acts of malfeasance or breach of fiduciary duties occurred. He also

stated that they did not distinguish between CAT and GGH, which are

located in different states. He argued that the Plaintiffs do not clearly state

who was defrauded, with whom the self-dealing occurred, the substance of

the misrepresentations, and when the misrepresentations were made.

Gulledge argued that the petition does not state a right of action in

favor of Grayson individually because a shareholder has no separate or

individual right of action against third persons, including directors and

officers of a corporation, for wrongs committed against or causing damage

to the corporation. He stated that for a member to sue another member

individually for breach of fiduciary duty, the breach must be grossly

negligent and damage the suing member directly; he contended that Grayson

did not allege any damage directly to himself that was caused by a breach of

fiduciary duty.

Gulledge argued the petition did not state a cause of action against

him because the Plaintiffs do not allege any contracts between the Plaintiffs

and Gulledge and do not allege he was authorized to issue and sign checks
4

on the accounts of CAT/GGH. He pointed out that LUTPA limits private

actions to customers and business competitors, and the Plaintiffs did not

allege that they were customers or business competitors. Gulledge asserted

that La. R.S. 51:1409 does not allow Grayson to bring representative claims

on behalf of CAT/GGH. He argued that the Plaintiffs did not allege facts to

show gross negligence. Gulledge asserted that although the Plaintiffs did

not allege dates in which the self-dealing occurred, all actions arising more

than one year prior to the filing of the suit have prescribed under La. R.S.

51:1409 and 12:1502.

On August 26, 2020, the Plaintiffs filed their opposition to

Gulledge’s exceptions. They argued that the vagueness exception was not

well-founded because the petition did contain specific details, and the facts

were beyond sufficient to support the claims asserted. They argued that

Gulledge misstated the law by not quoting the portion of La. R.S.

12:1502(D), which provides for a two-year prescriptive period. They assert

that their claims had not prescribed because the earliest date stated is June

2018 and their petition was filed January in 2020, which is within the two-

year prescriptive period.

On September 23, 2020, the trial court signed its order denying all of

Gulledge’s exceptions. On October 2, 2020, Gulledge filed an answer and

recoventional demand. He generally denied the allegations made against

him. He stated that he submitted receipts for cash withdrawals and the

purchases were made for business purposes. He admitted that he did transfer

money from CAT/GGH to his personal or other business accounts, but those

were for payments on loans he made to CAT/GGH. He explained that he

used the CAT/GGH account to pay dog-sitting fees when he was out of town
5

on business and did not have anyone else to care for his dogs. He stated that

he also used PayPal and CashApp to pay business-related expenses on behalf

of CAT/GGH; one payment on PayPal or CashApp was made to an

employee of his other business, but those funds were placed in the CAT

account in advance of the transfer. Gulledge responded that he did use

$411.90 from CAT to buy a boat, but those funds were part of a

reimbursement to Gulledge for funds previously loaned to CAT for business

operations.

In response to the unleaded fuel purchases, Gulledge stated that

vehicles used by him, Justin Dailey, Patrick C. Grayson, Jimmy Culpepper,

Damond Allen, and Ed Roddy did use unleaded fuel and these vehicles were

used in connection with the business operations of CAT/GGH. He stated

that money transferred to ComData was used to provide the drivers with

money for fuel, truck washes, tolls, lumpers (load and unload reefer trailers),

motel rooms, repairs, parts, and/or compensation. Gulledge stated that the

receipts for ComData transfers have been and are still available. Gulledge

admitted to charging one vacation trip to CAT/GGH with the permission of

Grayson, and he charged CAT/GGH for personal expenses (gasoline, hotel,

etc.) incurred while on business trips.

Gulledge admitted that he hired and supervised all employees of

CAT/GGH, including an employee who he alleged embezzled funds and

pawned company equipment. He stated that the pawned equipment was

returned and the employee was arrested on drug charges. Gulledge

explained that the E-log equipment had numerous defects and malfunctions,

causing inaccurate reports. He stated that all IFTA reporting was completed

every quarter except the last quarter of 2019, and Sharon Lee’s Fuel Tax
6

Services was paid on September 25, 2019. Gulledge stated that to the best

of his knowledge, only one loan was past due at the time of his resignation.

He stated that he was unaware that quarterly payments to the IRS were

required and was not instructed to send payments. He further stated that

when he received the IRS notice to seize property, he informed Grayson that

the operating account had insufficient funds to cover the bill.

Gulledge admitted to withdrawing $4,400 from the CAT account

before his resignation for a partial repayment of the loans made by him to

CAT. Gulledge denied that he was personally responsible for maintaining

the cleanliness of the equipment and stated that was the responsibility of the

truck driver. He stated that the televisions and microwaves were located in

the truck at the time it was parked on White’s lot. Gulledge admitted that

one truck was left in Orlando, Florida, because the driver had been

medically disqualified from driving and was working to get his license back.

He explained that two trailers were parked at a dealership in Alabama

because they were not in use. Gulledge stated he picked up one trailer and

the other was waiting to be picked up by Grayson.

Gulledge stated that four of the five trucks he purchased for GGH

were defective and GGH has filed suit against General Motors, LLC in East

Baton Rouge Parish under docket number 688148.

Gulledge’s reconventional demands against CAT and GGH are for the

recovery of reasonable compensation for services rendered by him as Chief

Executive Manager in the amount of $115,000. He asserted that he used one

room in his home as an office and is entitled to recover the fair rental value

of the space used for the benefit of the companies. He also asserted that he

used his personal truck for business purposes while acting as Chief
7

Executive Manager and is entitled to recover the reasonable rental value of

his truck.

Gulledge’s reconventional demand against Grayson is for defamation.

He asserted that in October 2019, Grayson began publishing false and

defamatory statements to at least ten people, stating that Gulledge stole from

CAT/GGH and converted assets from CAT/GGH for his personal benefit.

He stated that Grayson falsely accused him of criminal activity and made

reports to the Jackson Parish Sheriff’s Office and Louisiana State Police.

Gulledge claims that these defamatory communications were made with

actual malice—knowledge of their falsity and reckless disregard for the

truth. Gulledge alleged that he sustained injury and damage to his reputation

and suffered severe mental anguish and pain as a result of the defamatory

publications. Gulledge attached the certificate of organization for CAT and

articles of incorporation for GGH.

On October 26, 2020, the Plaintiffs filed their answer, affirmative

defenses, and exceptions to Gulledge’s reconventional demands. They

denied the allegations and asserted the following affirmative defenses:

estoppel, unclean hands and fraud, failure to mitigate, extinguishment, failure

of consideration, fault of others, and immunities. They pled the exceptions of

vagueness, lack of procedural capacity, prescription/peremption, no cause of

action, and no right of action.

On September 20, 2021, the Plaintiffs filed their first supplemental

and amended petition. They added Kelly Aldy,2 SS7, and J&K as

defendants. They asserted that on November 6, 2019, Gulledge emailed a

2
Aldy is later stated to be Gulledge’s wife.
8

business plan to Reserve outlining his plans for a competing trucking

company to obtain Reserve’s business. They alleged that from late October

2019 through December 9, 2019, Gulledge met with White and SS7’s

bankers, insurance agency, and fuel providers to discuss his joining SS7.

Grayson asserted that all of these communications were intentionally

concealed from him. The Plaintiffs asserted that on December 8, 2019,

Gulledge assumed SS7’s tax liability and the following day worked on plans

to get Reserve to move its business to SS7 before resigning from CAT/GGH

in the afternoon. They stated that Gulledge admitted in his deposition that

the December 9, 2019, email at 4:19 p.m. from himself to Grayson was the

moment he resigned as “manager” from both CAT and GGH.

The Plaintiffs stated that based on information from the Louisiana

Secretary of State, Gulledge now owns 49 percent of SS7 and Aldy owns 51

percent, and any acts or omissions of Gulledge are imputed equally to Aldy

and SS7. They alleged:

[O]n or about April of 2021, Gulledge and Aldy created a new
entity- J&K - which they use to carry out the illicit activities
described above. Specifically, once Gulledge and Aldy learned
that Plaintiffs had identified SS7 as a culprit in diverting
Reserve’s business, they created J&K in effort to create another
artificial layer of separation between themselves and SS7 while
continuing to haul freight for Reserve.
The Plaintiffs claimed that they have suffered past damages of $2

million from the Defendants’ wrongful solicitation of Reserve, and the

damages continue to increase with every load that is hauled by SS7 instead

of CAT/GGH. In addition, the actions of the Defendants have forced GGH

into bankruptcy proceedings, and those damages are owed and payable from

the Defendants. The Plaintiffs alleged they have claims for RICO violations,

9

fraud and breach of contract/fiduciary duty, reckless disregard and

interference with contract, and conspiracy.

On November 3, 2021, the Defendants responded to the supplemental

and amended petition by reiterating their exceptions of vagueness and

ambiguity, no right of action, and no cause of action.

The Plaintiffs moved for partial summary judgment on the issue of

liability against Gulledge. They argued that there was no genuine issue of

material fact as to whether Gulledge owed a fiduciary duty to the Plaintiffs

and whether Gulledge breached that fiduciary duty. The Plaintiffs attached

copies of CAT/GGH operating agreements; Gulledge’s deposition; the

business plan sent from Gulledge to SS7; Gulledge’s text messages as he

made his move from CAT/GGH to SS7; the transportation services

agreement between Reserve and CAT; and the transportation services

agreement between Reserve and SS7.

The Defendants filed their cross-motion for partial summary

judgment, arguing there are no material facts in dispute as to the following:

theft or conversion of property; diversion and/or loss of business income or

opportunity from Reserve; damages resulting from RICO violations; and,

damages resulting from alleged interference by Gulledge with CAT’s

contract with Reserve. They requested that their partial MSJ be sustained

and the Plaintiffs’ claims be dismissed with prejudice. The Defendants

attached the following: Gulledge’s affidavit; the business filings of CAT and

GGH; Gulledge’s resignation letter; the business plan Gulledge prepared;

text messages between Gulledge and Reserve employees; emails between

the attorneys of record regarding discovery; business filings of Grayson

10

Logistic Solutions, LLC and Absolute Nursing Care of LA, LLC;3 a

transportation agreement between England Logistics, Inc. and CAT dated

December 24, 2019; a waiver of liability and indemnification agreement

between House of Raeford Farms of Louisiana, LLC and CAT dated

December 19, 2019; a motor carrier/broker agreement between LAD

Logistics, Inc. and CAT dated January 17, 2020; the transportation services

agreement between Reserve and CAT dated September 13, 2018; the

transportation services agreement between Reserve and SS7 dated December

10, 2019; a transportation services agreement between Reserve and SS7

dated May 1, 2020; an act of sale of assets from White and SS7 to Gulledge

dated March 31, 2021; loan documents between J&K and b1BANK;4 and, a

transportation services agreement between Reserve and J&K dated June 22,

2021.

On January 4, 2022, the Plaintiffs filed an opposition to the

Defendants’ exceptions. They contended that these exceptions were

previously denied by the trial court.

On May 12, 2022, a hearing was held on the Defendants’ exceptions,

where the trial court denied the exceptions. On July 19, 2022, the trial court

signed its judgment denying the Defendants’ exceptions of vagueness and

ambiguity, no right of action, and no cause of action.

On July 19, 2022, the trial court heard arguments on the motions for

summary judgment filed by both parties. The trial court stated in its oral

reasons that Gulledge stayed on as manager of CAT/GGH after the criminal

allegations were made, even though he alleges that he could no longer work

3
Grayson is an officer/member of both of these entities.
4
This is the exact spelling listed on their website and official filings.
11

with Grayson. The trial court opined that Gulledge should have resigned at

that time, but Gulledge remained with the companies and chose to actively

seek out their number one customer for his new company. For these

reasons, the trial court found that he breached his fiduciary duties. On

August 10 and 17, 2022, the trial court signed two judgments granting the

Plaintiffs’ motion for summary judgment on the issue of liability and

denying Gulledge’s cross-motion for summary judgment. The trial court

reserved the issue of damages for trial. At the direction of this Court, the

trial court signed a revised judgment stating that the Plaintiffs’ partial

summary judgment on the issue of liability for duty and breach was granted

against Gulledge only, reserving the issue of damages for trial; the

Defendants’ cross MSJ was denied; and, all other claims and defenses were

reserved for trial. Gulledge now appeals.

DISCUSSION

In this appeal, Gulledge alleges the trial court erred in granting

summary judgment in Grayson’s favor. He claims the criminal complaints

made by Grayson terminated his fiduciary duties. He also claims the

transportation services agreement between CAT/GGH and Reserve did not

obligate Reserve to use CAT/GGH. He asserts that the Operating

Agreements do not contain noncompete or non-solicitation clauses. Finally,

he argues that Grayson’s petition, as supplemented and amended, does not

state a cause of action against him for “reckless disregard and interference”

with a contract under La. R.S. 12:1314(B).

No Cause of Action

Gulledge asserts that the petition, as amended and supplemented, does

not state a cause of action against him for “reckless disregard and
12

interference.” He also argues that Grayson could not bring a cause of action

to recover damages against the Defendants.

The peremptory exception of no cause of action is set forth in La.

C.C.P. art. 927(A)(5). It tests the legal sufficiency of the petition by

determining whether the law affords a remedy on the facts alleged in the

petition. Garsee v. Sims, 54,832 (La. App. 2 Cir. 1/11/23), 355 So. 3d 1149,

writ denied, 23-00407 (La. 6/21/23), 362 So. 3d 428; Sharp v. Melton,

53,508 (La. App. 2 Cir. 5/20/20), 296 So. 3d 1135; Pesnell v. Sessions,

51,871 (La. App. 2 Cir. 2/28/18), 246 So. 3d 686. The purpose of the

exception of no cause of action is not to determine whether the plaintiff will

prevail at trial but to ascertain if a cause of action exists. Sharp v. Melton,

supra. A “cause of action,” when used in the context of the peremptory

exception of no cause of action, refers to the operative facts that give rise to

the plaintiff’s right to judicially assert the action against the defendant. Id.

The exception is triable on the face of the petition, and for the purpose of

determining the issues raised by the exception, the well-pleaded facts in the

petition must be accepted as true. Fink v. Bryant, 01-0987 (La. 11/28/01),

801 So. 2d 346; Sharp v. Melton, supra.

No evidence may be introduced at any time to support or controvert

the objection that the petition fails to state a cause of action. La. C.C.P. art.

931. The burden of demonstrating that the petition states no cause of action

is upon the mover. Wright v. Louisiana Power & Light, 06-1181 (La.

3/9/07), 951 So. 2d 1058; Sharp v. Melton, supra. All reasonable inferences

are made in favor of the nonmoving party in determining whether the law

affords any remedy to the plaintiff. Villareal v. 6494 Homes, LLC, 48,302

(La. App. 2 Cir. 8/7/13), 121 So. 3d 1246. An exception of no cause of
13

action should be granted only when it appears beyond doubt that the plaintiff

can prove no set of facts in support of any claim which would entitle him to

relief. Sharp v. Melton, supra.

If the petition states a cause of action on any ground or portion of the

demand, the exception should generally be overruled. Every reasonable

interpretation must be accorded the language used in the petition in favor of

maintaining its sufficiency and affording the plaintiff the opportunity of

presenting evidence at trial. Badeaux v. Southwest Computer Bureau, Inc.,

05-0612 (La. 3/17/06), 929 So. 2d 1211; Sharp v. Melton, supra.

An appellate court’s review of a trial court’s ruling sustaining an

exception of no cause of action is de novo because the exception raises a

question of law, and the trial court’s decision is based only on the

sufficiency of the petition. Fink v. Bryant, supra. The essential question is

whether, in the light most favorable to plaintiff and with every doubt

resolved in plaintiff’s favor, the petition states any valid cause of action for

relief. Wright v. Louisiana Power & Light, supra.

The Operating Agreements for CAT/GGH are virtually identical, with

the exceptions of membership percentages and the state in which they are

registered. The Operating Agreements provide, in pertinent part, for the

voting process of managers and the Chef Executive Manager, a list of

managerial duties, and states the manager will not be liable for acts or

omissions “which may cause or result in loss or damage to the Company or

the Members if done in good faith to promote the best interest of the

Company[.]” Both Operating Agreements provide a list of managers in

“Exhibit 1,” which states: “By a majority vote of the Members the following

Managers were elected to operate the Company pursuant to ARTICLE 4 of
14

the Agreement[.]” Gulledge is listed first as the Chief Executive Manager

and then Grayson is listed with the title of President. The Operating

Agreement then provides, “The above listed Manager(s) will serve in their

capacities until they are removed for any reason by a majority vote of the

Members as defined by ARTICLE 4 or upon their voluntary resignation.”

Article 4 of the Operating Agreement provides for management but does not

specifically outline the process for removing a manager. Article 4 provides,

“By a vote of the Members holding a majority of the capital interests in the

Company, as set forth in Exhibit 2 as amended from time to time, shall elect

so many Managers as the Members determine, but no fewer than one, with

one Manager elected by the Members as Chief Executive Manager.”

La. R.S. 12:1314 provides:

A. Subject to the provisions of R.S. 12:1315, a member, if
management is reserved to the members, or manager, if
management is vested in one or more managers pursuant to
R.S. 12:1312:

(1) Shall be deemed to stand in a fiduciary relationship to the
limited liability company and its members and shall discharge
his duties in good faith, with the diligence, care, judgment, and
skill which an ordinary prudent person in a like position would
exercise under similar circumstances. Nothing contained in this
Section shall derogate from any indemnification authorized by
R.S. 12:1315.

(2) In discharging his duties, shall be fully protected in relying
in good faith upon the records of the limited liability company
and upon such information, opinions, reports, or statements
presented to the limited liability company, the members,
managers, or any committee thereof by any of the limited
liability company’s members, managers, employees, or by any
committee of the members or managers, or by any legal
counsel, appraiser, engineer, including a petroleum reservoir
engineer, or independent or certified public accountant selected
with reasonable care by the members, managers, any committee
thereof, any agent having the authority to make such selection,
or by any other person as to matters the member, if
management is reserved to the members, or manager, if
management is vested in one or more managers pursuant to
15

R.S. 12:1312, reasonably believes are within such other
person’s professional or expert competence and which person is
selected with reasonable care by the members, managers, any
committee thereof, or any agent having the authority to make
such selection.

(3) Is not protected by Paragraph (2) of this Subsection if he has
knowledge concerning the matter in question that makes
reliance otherwise permitted by Paragraph (2) of this
Subsection unwarranted.

(4) Shall not be liable for any action taken on behalf of the
limited liability company or any failure to take any action if he
performed the duties of his office in compliance with this
Section.

(5) Shall account to the limited liability company and hold as
trustee for it any profit or benefit derived by him, without the
informed consent of a majority of the uninterested members in
accordance with R.S. 12:1318(C), from any transaction
connected with the conduct or winding up of the limited
liability company or from any personal use by him of its
property unless he proves under strict judicial scrutiny the
fairness of the transaction to the limited liability company.

B. Notwithstanding the provisions of Subsection A of this
Section, a member or manager shall not be personally liable to
the limited liability company or the members thereof for
monetary damages unless the member or manager acted in a
grossly negligent manner as defined in Subsection C of this
Section, or engaged in conduct which demonstrates a greater
disregard of the duty of care than gross negligence, including
but not limited to intentional tortious conduct or intentional
breach of his duty of loyalty.

C. As used in this Section, “gross negligence” shall be defined
as a reckless disregard of or a carelessness amounting to
indifference to the best interests of the limited liability company
or the members thereof.

D. A member or manager who makes a business judgment in
good faith fulfills the duty of diligence, care, judgment, and
skill under Subsection A of this Section if the member or
manager:

(1) Does not have a conflict of interest with respect to the
subject of the business judgment.

(2) Is informed with respect to the subject of the business
judgment to the extent the member or manager reasonably
believes to be appropriate under the circumstances.
16

(3) Rationally believes that the business judgment is in the best
interests of the limited liability company and its members.

E. A person alleging a breach of the duty of diligence, care,
judgment, and skill owed by a member or manager under
Subsection A has the burden of proving the alleged breach of
duty, including the inapplicability of the provisions as to the
fulfillment of the duty under Paragraph A(2) and Subsection D,
and, in a damage action, the burden of proving that the breach
was the legal cause of damage suffered by the limited liability
company.
The petition and amended petition allege that Gulledge breached his

fiduciary owed to the LLC and its members by failing to maintain records,

failing to pay loans and expenses, and using LLC money for personal

expenses, among other allegations. The Plaintiffs further alleged that

Gulledge breached his fiduciary duty by soliciting Reserve for the benefit of

SS7 while he was still managing CAT/GGH. They state that this shows his

reckless disregard for CAT/GGH’s business in violation of La. R.S.

12:1314(B).

La. R.S. 12:1314 states that a manager shall discharge his duties in

“good faith, with the diligence, care, judgment, and skill which an ordinary

prudent person” would exercise. It further states that a manager will not be

held personally liable unless he acted in a grossly negligent manner. Gross

negligence is defined as “a reckless disregard of or a carelessness amounting

to indifference to the best interest of the [LLC] or the members[.]” La. R.S.

12:1314(C).

Based on the facts alleged in the petition, the duties placed on

managers in La. R.S. 12:1314, and the exculpation paragraph in the

Operating Agreements, we find that the Plaintiffs have stated a cause of

action. At a minimum, they have sufficiently alleged Gulledge’s reckless

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disregard to the best interest of CAT/GGH and its members through self-

dealing, mismanagement of funds, and soliciting Reserve’s business from

CAT/GGH to SS7 while managing CAT/GGH. This assignment of error

lacks merit.

As to Gulledge’s argument that Grayson is not a manager of

CAT/GGH and unable to bring suit, we disagree. Grayson is clearly listed

as a manager of CAT/GGH in the Operating Agreements and, therefore, able

to bring suit on their behalf.

We affirm the trial court’s ruling denying the Defendants’ exception

of no cause of action.

Transportation Services Agreement

Gulledge argues the trial court erred in its construction of the

transportation services agreement between CAT and Reserve because

Reserve was not obligated to use CAT for its transportation needs. We do

not find this holding or issue in the record from the lower court. If this suit

were for the enforcement of a contract between CAT and Reserve, Reserve

would be a necessary party. Instead, the Plaintiffs brought suit against the

Defendants, not Reserve, for breach of fiduciary duty. The business

between Reserve and CAT is mentioned only because Gulledge solicited

Reserve’s business on behalf of SS7 while still managing CAT/GGH. The

transportation services agreement shows that Reserve was a customer of

CAT while Gulledge was the manager. The trial court did not hold that

Reserve was contractually required to use CAT for its transportation needs

or breached its duty to use CAT. Therefore, this argument lacks merit.

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Motion for Summary Judgment

A de novo standard of review is required when an appellate court

considers rulings on motions for summary judgment, and the appellate court

uses the same criteria that governed the district court’s determination of

whether summary judgment was appropriate. J & L Oil Co. v. KM Oil Co.,

LLC, 51,898 (La. App. 2 Cir. 2/28/18), 247 So. 3d 147; Creek Mgmt., L.L.C.

v. Unopened Succession & Unknown Heirs or Legatees of Williams, 51,392

(La. App. 2 Cir. 5/17/17), 223 So. 3d 1194, writ denied, 17-1252 (La.

10/27/17), 228 So. 3d 1222. 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. La. C.C.P. art. 966(A)(3). The only documents

that may be filed in support of or in opposition to the motion are pleadings,

memoranda, affidavits, depositions, answers to interrogatories, certified

medical records, written stipulations, and admissions. La. C.C.P. art.

966(A)(4).

It is undisputed that Gulledge has been a member and manager of

CAT and GGH since August 30, 2018. Gulledge admitted in his deposition

that while he was a manager of CAT/GGH, he owed a fiduciary duty to the

companies and its members. Neither the law nor the Operating Agreements

provide that a fiduciary duty ends upon the filing of a criminal complaint.

The Operating Agreement states that a manager will continue to serve until

he is removed by vote or voluntarily resigns. Nothing in the record indicates

that there was ever a vote to remove Gulledge as manager, and this Court

will not unilaterally make the leap to equate a criminal complaint to a vote

of removal. As noted by the trial court, Gulledge could have resigned from
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his position or sought to dissolve the companies after the complaint was

filed, but he chose to stay with CAT/GGH and keep his managerial position.

As long as Gulledge was a manager of CAT/GGH, he owed a fiduciary duty

to the LLC and its members. Therefore, we next analyze whether Gulledge

breached his fiduciary duty before he resigned from CAT/GGH.

We agree with Gulledge’s contention that the Operating Agreements

do not contain a “noncompete” or “non-solicitation” clause in compliance

with La. R.S. 23:921. However, under La. R.S. 12:1314, Gulledge owed a

fiduciary duty to CAT/GGH and its members while he was still the manager.

Therefore, this is not an issue of whether he violated a “noncompete” clause,

but rather, the issue is whether he breached his fiduciary duty by acting in a

manner that amounted to “gross negligence” or “a reckless disregard of or a

carelessness amounting to indifference to the best interests of the limited

liability company or the members thereof.”

Gulledge admitted in his deposition that between November 2019 and

December 8, 2019, he communicated with White, the owner of SS7, in

person, by phone, and through text message. He agreed that he spoke with

White about SS7’s “factoring” company, truck paint colors, truck VIN

numbers, MC and DOT numbers, fuel cards, and federal tax ID number, as

well as Gulledge assuming SS7’s tax liability. Although he was unwilling to

agree with whether his actions hurt CAT/GGH and helped SS7, Gulledge

stated that Reserve was aware of talks with White regarding SS7, and he

discussed a “revised rate agreement” with employees from Reserve.

Gulledge stated that he informed the employees of Reserve that he would be

leaving CAT/GGH and going to SS7. When questioned if he informed them

before he resigned on December 9, 2019, Gulledge stated, “I told him on the
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8th, roughly. I’m not going to quote the exact date. Roughly the 8th. I don’t

really remember the exact dates.”

Based on this deposition testimony, Gulledge, while still managing

CAT/GGH, began making a move to another trucking company and

informed CAT/GGH’s number one customer of his move. Gulledge stated

that he stayed with the companies after the criminal complaints were filed in

order to try to make the best of things; however, his actions prove otherwise.

Gulledge’s conversations with White about SS7’s financials and operating

information, as well as his agreement to assume SS7’s tax liability show that

he acted with a careless indifference to the best interest of CAT/GGH.

Gulledge then informed CAT/GGH’s number one customer, Reserve, of his

move to SS7, and on December 10, 2019, Reserve signed a transportation

agreement with SS7. Gulledge clearly acted in his own best interest with no

regard for the companies he managed. Had Gulledge resigned from his

management position prior to lining up a new position with SS7 or

informing Reserve of his upcoming move, our analysis may have been

different. Gulledge’s actions amount to gross negligence and a breach of his

fiduciary duty to CAT/GGH and its members.

Therefore, we affirm the trial court’s ruling granting Grayson’s partial

MSJ on the issue of liability for breach of fiduciary.

CONCLUSION

For the reasons articulated above, we affirm the judgment of the trial

court. Costs of this appeal are assessed against the Defendants-Appellants.

AFFIRMED.

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