Isla Resources, LLC v. Danette Trahan Frey

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 05-1607

ISLA RESOURCES, LLC, ET AL.

VERSUS

DANETTE TRAHAN FREY, ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 2003-0462
HONORABLE THOMAS R. DUPLANTIER, DISTRICT JUDGE

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JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Glenn B. Gremillion, and Elizabeth A. Pickett,
Judges.

REVERSED AND REMANDED.

Stanford B. Gauthier, II
Attorney at Law
1405 West Pinhook Rd, Ste 105
Lafayette, LA 70503
(337) 234-0099
Counsel for Plaintiffs/Appellants:
Isla Resources, L.L.C.
Delphin Energy, L.L.C.
Louis E. Bernard, Jr.

D. Reardon Stanford
Hoyt, Hodge, & Stanford, L.L.C.
P. O. Box 3263
Lafayette, LA 70502-3263
(337) 234-1012
Counsel for Defendants/Appellees:
Lou King-Patin
King-Patin, Ltd.

Danette Trahan Frey
In Proper Person
Avoyelles Simsport Correctional Center
620 Martin Luther King Dr.
Simsport, LA 71369

SAUNDERS, Judge.

Mr. Louis E. Bernard contacted Ms. Lou King-Patin of King-Patin, Ltd., an

employment staffing agency, in July of 2001 in order to locate an individual to work

as an “executive assistant” for his companies, Isla Resources, LLC and Delphin

Energy, LLC. Based on the agency’s recommendation, Mr. Bernard hired Ms.

Danette Frey. In February of 2002, he discovered that Ms. Frey had embezzled over

$31,000.00 from his companies.

Isla Resources, LLC and Delphin Energy, LLC filed suit against Ms. Lou

King-Patin and King-Patin, Ltd., alleging that they were liable to them for damages

because Ms. Frey was not properly “screened” by the employment agency. Before

this matter came to trial, Defendants filed a motion for summary judgment. After the

hearing on the motion, the trial court, after examining all the documentary evidence

and testimony, determined that there was no genuine issue of material fact and

granted summary judgment in favor of Ms. Lou King-Patin and King-Patin, Ltd. We

reverse and remand.

FACTS AND PROCEDURAL HISTORY

In July of 2001, Mr. Louis E. Bernard, the sole owner and General Manager of

Isla Resources, LLC and Delphin Energy, LLC (hereinafter collectively referred to

as Bernard) contacted Ms. Lou King-Patin with King-Patin, Ltd., (hereinafter

collectively referred to as King-Patin) an employment staffing agency, and requested

that she locate an individual to work as an “executive assistant” for both companies.

Based upon the recommendations of King-Patin, Bernard hired Ms. Danette Frey.

As “executive assistant,” Ms. Frey was given responsibility for the checking

accounts for both Isla Resources, LLC and Delphin Energy, LLC. In February of

2002, Mr. Bernard discovered that Ms. Frey had forged his signature on numerous

company checks and had stolen funds from company bank accounts. She had also

cashed and retained funds from checks made payable to Isla and Delphin and made

unauthorized charges on company credit cards. In total, Ms. Frey allegedly

embezzled $31,348.10. She was subsequently terminated on February 28, 2002.

After terminating Ms. Frey, Bernard hired Mr. Russell Ancelet, a licensed

private investigator, to perform a background search on her. Mr. Ancelet used Ms.

Frey’s name, address, aliases, date of birth, social security number, and residences

over the last ten years to determine whether she had a prior arrest, conviction, or was

a party in a civil suit. Through his investigation, he found that she had been

convicted of criminal offenses in East Baton Rouge Parish, Louisiana, and San

Marcos, Texas and New Braunfels, Texas.

Bernard subsequently bought suit against King-Patin, alleging that Ms. Frey

was not properly “screened” and that King-Patin was liable to them for damages

incurred as a result of the improper screening. King-Patin, filed a motion for

summary judgment. At the hearing, the court, after examining all the documentary

evidence and testimony, determined that there was no genuine issue of material fact

and granted King-Patin’s motion for summary judgment. Bernard now appeals.

ASSIGNMENT OF ERROR

The trial court erred in granting Defendants’ Motion for Summary Judgment.

STANDARD OF REVIEW

Appellate courts conduct a de novo review of rulings on motions for summary

judgment. “It is well established that a summary judgment shall be rendered if the

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pleadings, depositions, answers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine issue as to material fact, and

that the mover is entitled to judgment as a matter of law.” Alfred Palma, Inc. v.

Crane Servs. Inc., 03-0614, p. 3 (La.App. 3 Cir. 11/5/03), 858 So.2d 772, 774

(quoting Shelton v. Standard/700 Assocs., 01-0587, p. 5 (La. 10/16/01), 798 So.2d 60,

64-65) ; La.Code Civ.P. art. 966(B).

LAW AND ANALYSIS

In determining whether a trial court’s granting of summary judgment was

appropriate, appellate courts conduct a de novo review of the record. Richard v. Hall,

03-1488 (La. 4/23/04), 874 So.2d 131. If the evidence presented at trial is subject to

conflicting interpretations, then summary judgment is not appropriate. Federated

Rural Elec. Ins. Corp. v. Gulf S. Cable Inc., 02-0852 (La.App. 3 Cir. 11/12/02), 833

So.2d 544.

Appellants argue that their claim is a damage claim arising out of a breach of

contract, not a tort claim, as the defendants argue in their brief in support of summary

judgment. They argue that they entered into a contract with Appellees, and offer the

July 30, 2001 letter sent to Mr. Bernard from Ms. King-Patin as evidence of the

Appellees’ undertaking relative to the staffing position. The letter states, “This

candidate was chosen from a select few for the position . . . Because of our high

standards at King-Patin, Ltd., we have a rigorous selection process. Each candidate

considered for an employment position with one of our clients must undergo extensive

interviewing and screening.” However, Ms. King-Patin’s affidavit failed to recite that

her staffing agency checked any of the job references listed by Ms. Frey. Further,

Appellees argue that there is no evidence that it contractually obligated themselves to

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perform a criminal background check on any of the candidates for employment. They

assert that they did not “warrant” anything to Bernard; he simply “assumed” that they

would conduct one.

It is clear that King-Patin and Bernard entered into a contract. What is not clear

are the parameters of the contract entered into by the parties or the extent of the

contractual obligations undertaken by Bernard and King-Patin. Bernard paid King-

Patin over $2,000.00 for its services. However, there is a dispute as to the extent of

the services for which Mr. Bernard paid. Additionally, there is a dispute as to the

quality of services that King-Patin was to provide to Bernard. The parties dispute

whether there was an obligation to perform a criminal background search, and whether

the one performed was adequate. Additionally, there is a dispute as to whether Ms.

Frey was adequately screened by the agency in exchange for Mr. Bernard’s payment.

Taking these issues into consideration, we find that the question of what was included

in the King-Patin’s services remains an issue of fact that the trial court must determine.

Appellants argue that a material issue of fact exists as to whether there was

adequate “screening” of Ms. Frey. As mentioned earlier, Ms. King-Patin’s affidavit

fails to state that her staffing agency checked any references before recommending

Ms. Frey to Bernard for the position of “executive assistant.” However, in the letter

to Mr. Bernard, dated July 30, 2001, thanking him for allowing King-Patin to assist

him in his hiring of Ms. Frey, Ms. King-Patin stated that, “Each candidate considered

for an employment position with one of our clients must undergo extensive

interviewing and screening.”

Appellants introduced the affidavit of Ms. Angela Tauzin, a witness with

several years of experience in the staffing agency business, to support their argument.

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Ms. Tauzin was requested by Appellant counsel to review all documents produced by

Appellees relevant to the screening process undertaken by King-Patin. In her review

of King-Patin’s screening process, Ms. Tauzin had her assistant check the references

listed on Ms. Frey’s employment application. From this inquiry, she determined that

Ms. Frey had not been employed at two of the three listed references, and that the third

reference did not have the supervisor named on the application in their employ.

Ms. Tauzin stated that had she been responsible for the placement of Ms. Frey,

she would not have taken the interview process any further at that point. Based on her

experience in the staffing business, she opined that the core function of a staffing

business is to verify the work history, credentials, appropriateness of placement, and

ability of an employment applicant before recommending him to an employer. Ms.

Tauzin further stated that it appears that King-Patin did not check out Ms. Frey’s

employment history, as her submissions of fraudulent information concerning her

work history should have disqualified her from consideration of any nature. In her

opinion, the decision of King-Patin to recommend Ms. Frey as an acceptable candidate

for any type of position demonstrates a total disregard for the well-being of its client.

Appellees argue that Ms. Tauzin’s testimony is not admissible and should not

be considered because it contains hearsay. At the hearing on the motion for summary

judgment, counsel for Appellees objected to the evidence. However, the court never

ruled on whether the affidavit contained hearsay. Therefore, we have no ruling to

review, and the issue of whether this evidence contains hearsay is not before us. Ms.

Tauzin’s affidavit was made a part of the record when it was introduced into evidence,

and therefore, we consider it in our de novo review of the record.

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Appellees assert that Ms. Tauzin is not an expert, and therefore, the affidavit

containing her testimony is not admissible, as it states her opinion. Under La.Code

Evid. art. 701, a witness who is not testifying as an expert is limited to testifying to

opinions or inferences that are rationally based on his perception and which are helpful

to a clear understanding of his testimony or the determination of a fact in issue.

They argue that Ms. Tauzin does not meet the standards of Daubert v. Merrell

DowPharmaceuticals, Inc., 509 U.S 579, 113 S.Ct. 2786 (1993), and therefore, does

not qualify to testify as an expert in the staffing industry. They assert that her

experience in the staffing business is limited to working only a couple of years in sales

with Link Staffing and subsequently running her own employment staffing agency,

PNR Personnel, which went out of business after only three years. Further, Appellees

point out that Ms. Tauzin was never licensed, was not a member of any professional

staffing associations, never wrote any books, reports, papers, or published any kind

of documentation regarding the staffing industry or the screening of applicants. She

has also never placed anyone as an executive assistant, nor has she screened anyone

for such a position. Further, she does not consider herself an expert in the field of

applicant screening.

Ms. Tauzin was listed as an expert witness in Appellants’ pre-trial discovery.

However, when her affidavit was introduced into evidence, and at the hearing on the

motion for summary judgment, nothing was said about her status as an expert witness.

We cannot rule on whether Ms. Tauzin is an expert witness, as no determination was

made by the trial court on this issue. We note that the factors listed in Daubert are not

requirements that must be met, nor are they applicable to all types of expert testimony.

Cleland v. City of Lake Charles, 02-805, 02-1463 (La.App. 3 Cir. 3/5/03), 840 So.2d

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686, writ denied, 03-1380, 03-1385 (La.9/19/03), 853 So.2d 644, 645. In fact, we

have held that experience alone is sufficient to qualify a person as an expert. State

through Dept. of Transp. and Development v. Wahlder, 94-761(La.App. 3 Cir.

12/7/94), 647 So.2d 481. Considering Ms. Tauzin’s experience in the staffing

business, especially the fact that she owned and ran an employment staffing agency

for three years, it is at least arguable that she could have been qualified to testify as an

expert witness. While she may not consider herself an expert in the field, and she may

not have published any books on the screening of applicants, Ms. Tauzin has spent a

number of years in the staffing industry, including several years running her own

staffing agency.

Although the court made no determination of whether Ms. Tauzin qualified as

an expert witness, Ms. Tauzin’s affidavit was introduced into evidence and was made

a part of the record. Accordingly, the testimony of Ms. Tauzin found in the record will

be taken into consideration in determining if a factual issue exists as to whether proper

screening was performed on Ms. Frey by King-Patin. We find that it does.

Appellants also assert that there is a material issue of fact in dispute regarding

whether there was a criminal background search performed on Ms. Frey before the

date of her hire. Ms. King-Patin’s testimony indicates that before she provided Mr.

Bernard with Ms. Frey’s resume, she contacted Rhino Referral for a background

check. However, Mr. Larry Vegas d/b/a Rhino Referral testified that he was first

contacted on August 30, 2002, approximately seven months after Ms. Frey’s

termination. Despite the clear discrepancy in testimony, Appellees maintain that this

is not “material” to the outcome of the case. They counter by arguing that although

Mr. Vegas could not corroborate that a background check of Ms. Frey had been

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performed, the point is moot, because when Rhino Referral ran the criminal

background check on Ms. Frey in August of 2002, no criminal history was discovered.

Therefore, Appellees assert that even had a criminal background check been

performed prior to Ms. Frey’s employment, they would have found nothing to alert

them or to prevent them from recommending her to Bernard. Appellees’ argument

brings another issue to the surface: was an adequate search performed?

Appellants introduced the testimony of Mr. Russell Ancelet, a licensed private

investigator who was employed by Mr. Bernard to perform a criminal background

search on Ms Frey shortly after her termination. Using Ms. Frey’s name, date of birth,

address, and social security number, Mr. Ancelet obtained Ms. Frey’s resident

locations over the last ten years. Mr. Ancelet contacted the appropriate entities in each

resident jurisdiction to determine whether Ms. Frey had a prior arrest, conviction, or

was a party in a civil suit. From his search, he determined that Ms. Frey had been

convicted of criminal offenses in East Baton Rouge Parish, Louisiana, and San Marcos

and New Braunfels, Texas.

Appellees argue that the affidavit of Mr. Ancelet contains inadmissable hearsay,

and therefore, should not be considered. Although Appellees’ counsel objected to the

evidence at the hearing on the motion for summary judgment, the court did not make

a ruling on the admissibility of the affidavit. Therefore, we do not have a ruling to

review, and the issue of its admissibility is not on appeal before us. However, because

the affidavit was introduced into evidence and has been made a part of the record, we

consider it in our de novo review.

Additionally, Appellants introduced the testimony of Mr. F. Ray Mercke, Jr.,

an independent contractor for Kroll Background Investigations, with eight years

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experience marketing to background investigations to large companies in the Acadiana

area as well as several Fortune 500 companies. Mr. Mercke offered testimony

regarding the practice of conducting background investigations. In his affidavit, Mr.

Mercke testified that a criminal records search is conducted by running a Social

Security trace which provides information such as whether the Social Security Number

is validly issued, to whom it belongs, and the current address, as well as other known

previous addresses where the individual to whom it belongs resides. Using the

information found through the Social Security trace, Mr. Mercke searches the records

of the jurisdictions where the individual has resided in the last ten years to determine

whether there are any felony or misdemeanor filings. Mr. Mercke testified that King-

Patin could have conducted a criminal background search such as this one for the cost

of approximately $60.00. Further, he opined that had they conducted a search such

as this, the previous convictions of Ms. Frey would have been discovered.

Appellees contend that Mr. Mercke’s testimony is irrelevant to the case at hand

because he does not market to staffing companies such as King-Patin. Instead, he

markets to large companies, consisting of over 20,000 employees and Fortune 500

companies outside of the Louisiana area. Although Mr. Mercke does not market his

services to staffing services such as King-Patin, his testimony is still relevant to the

general procedure used in criminal background searches. He has been in the

background search business for several years and has personal knowledge about the

procedures used in these searches.

Clearly, the testimony of Ms. King-Patin and Mr. Vegas as to whether a

background check was performed prior to Ms. Frey’s hiring is not consistent. There

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also remains a question as to whether the background check performed was adequate

and whether Ms. Frey’s criminal background would have been discovered had a

proper check been performed prior to her employment with Bernard. Offering the

testimony of Mr. Ancelet and Mr. Mercke, Appellants argue that a material issue of

fact exists as to whether a properly conducted criminal background search would have

revealed her criminal background, as they seemed to find Ms. Frey’s criminal records

with relative ease. Although neither of the witness affidavits introduced into evidence

were from individuals that marketed to companies exactly like King-Patin, they both

described very similar criminal background search procedures. Both testified that the

residence addresses over the last ten years were used to determine which jurisdictions

in which to search for criminal records.

In her affidavit, Ms. King-Patin stated, “Rhino Referral is the local industry

standard for performing such background checks on prospective employees. At the

hearing on the motion for summary judgment, counsel for Appellees stated that it was

“undisputed that Rhino Referral is the industry standard” in the Lafayette area.

However, counsel for Appellant disputed this fact at the hearing, asserting that Mr.

Mercke’s affidavit stated otherwise. In Mr. Mercke’s affidavit, he stated, “Mr. Larry

Vegas d/b/a Rhino Referral is not the industry standard in Lafayette, Louisiana and is

not known by Affiant. The industry standard in Lafayette is Kroll Background,

America and other national firms such as Choice Point, Avert, Wells Fargo, and Hire

Check.” Clearly, there is a dispute over the issue of whether Rhino Referral is the

industry standard. Considering the evidence, we find that there is a material issue of

genuine fact that must be determined by the trial court regarding whether a criminal

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background search was performed on Ms. Frey before she was hired, and whether a

properly conducted background search would have revealed her criminal record.

After a review of the record, we find that several genuine issues of material fact

remain to be determined in this case. We find that there is a material issue of fact

regarding the extent of the contractual obligations undertaken by the parties. A

material issue of fact also exists as to whether King-Patin properly screened Ms. Frey,

as a simple reference check revealed that she had never been employed at two of the

three listed references on her employment application. Further, we find that an issue

remains as to whether a properly conducted background search would have revealed

her criminal background.

Due to the fact that we have found that there are several genuine issues of

material fact that remain undetermined in this case, we cannot affirm the trial court’s

granting of summary judgment in favor of Appellees, King-Patin. Therefore, we

reverse the decision of the trial court and remand the case to the trial court.

CONCLUSION

The judgment of the trial court is reversed and remanded. Costs of the appeal

are assessed against Appellees.

REVERSED AND REMANDED.

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