Linda K. Minton v. Long's Preferred Products, Inc.

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 07-961

LINDA K. MINTON

VERSUS

LONG’S PREFERRED PRODUCTS, INC.

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APPEAL FROM THE
NINTH JUDICIAL DISTRICT COURT
PARISH OF RAPIDES, NO. 196,819
HONORABLE F. RAE DONALDSON SWENT, DISTRICT JUDGE

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BILLY HOWARD EZELL
JUDGE

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Court composed of John D. Saunders, Marc T. Amy, and Billy Howard Ezell, Judges.

AFFIRMED.

Larry Alan Stewart
Andrew Potter Texada
Stafford, Stewart & Potter
P. O. Box 1711
Alexandria, LA 71301
(318) 487-4910
Counsel for Defendants/Appellants:
Long’s Preferred Products, Inc.
Julian W. Long
Eva Long
Tracy Percy

Larry Woodrow Rivers
Attorney at Law
5208 Jackson Street, Suite A
Alexandria, LA 71301
(318) 445-6581
Counsel for Plaintiff/Appellee:
Linda K. Minton

Larry B. Minton
Attorney at Law
P. O. Drawer 13320
Alexandria, LA 71315-3320
(318) 487-0115
Counsel for Plaintiff/Appellee:
Linda K. Minton

Ezell, Judge.

This case has a long legal history. Long’s Preferred Products, Inc. is a family-

owned corporation. Disagreements among the family members resulted in years of

litigation. The case has been before this court several times on other issues. This

time the case is before us on the issue of whether a lower court judgment should have

been annulled because the judgment was based on false testimony. In the alternative,

the Appellants claim that summary judgment was not proper.

FACTS

Long’s Preferred Products, Inc. was incorporated in 1975 by Julian E. Long

and his wife, Alma K. Long. One hundred shares of stock were issued. In the 1980’s,

the Longs donated ten shares to their son, Julian W. “Dooksie” Long, and ten shares

to their daughter, Linda K. Minton.

In 1986, Julian decided to transfer nineteen shares to Dooksie and nineteen

shares to Linda. After their mother’s death in 1990, the children inherited their

mother’s twenty-one shares of stock with their father retaining ownership of the

remaining twenty-one shares of stock. In 1996, Julian sold his twenty-one shares to

the children. The children continued running the business together until 1997, when

Linda decided she could no longer work for Long’s Preferred Products after a conflict

developed between her and an employee. It was decided that one of the siblings

would have to buy out the other’s interest in the business.

Julian became involved in the negotiations between his children. Dooksie and

his father sided together, and negotiations broke down. On July 28, 1999, Linda filed

suit. On October 10-13, 2000, a trial was held. Declaratory judgment was rendered

on May 29, 2001, finding that Linda owned fifty percent of the stock of Long’s

Preferred Products, Inc. This was based on a finding that there was a sale of nineteen

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shares of stock to Linda in 1986. The validity and authenticity of that transaction was

an issue in a previous appeal to this court. Minton v. Long’s Preferred Products, an

unpublished opinion bearing docket number 02-260 (La.App. 3 Cir. 10/2/02), 829

So.2d 669, writ denied, 02-2716 (La. 1/10/03), 834 So.2d 440.

Subsequently, Julian filed suit on April 15, 2001, seeking to rescind the sale

of the nineteen shares to Linda in 1986 on the basis that she had not paid for them.

After Julian died on August 6, 2005, Dooksie was substituted as plaintiff. Following

a four-day jury trial, the jury concluded that Linda had paid for the nineteen shares

of stock. In an unpublished opinion, this court affirmed the judgment. Long v.

Minton, 07-33 (La.App. 3 Cir. 5/2/07), 955 So.2d 278.

On February 14, 2006, Long’s Preferred Products, Dooksie, Eva Long, and

Tracy Percy filed a petition for nullity of the judgment of May 29, 2001, rendered in

the original suit against them. They alleged that the judgment should be annulled

because Linda committed fraud. The alleged fraud concerned Linda’s testimony in

the 2000 trial that she had signed a promissory note evidencing the 1986 sale of

stock. In 2005 Linda’s deposition testimony revealed that she now believes that she

never signed the promissory note. In addition to the nullity action, both sides also

filed motions for summary judgment.

A hearing was held on April 16, 2007. Judgment was rendered granting

Linda’s motion for summary judgment dismissing the petition for nullity. An

exception of res judicata filed by Linda was dismissed as moot. The motion for

summary judgment filed by Appellants was dismissed also. The Appellants appealed

the judgment to this court.

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NULLITY

The Appellants allege that they are entitled to have the 2001 judgment annulled

because it was based on false testimony by Linda that she had signed a promissory

note for the sale of the nineteen shares of stock to her in 1986. They rely on La.Code

Civ.P. art. 2004(A) which provides that “[a] final judgment obtained by fraud or ill

practices may be annulled.”

After the trial concerning the 1986 sale of stock, Linda became aware that her

father had the original promissory note in his files the entire time. During his

deposition, Dooksie testified that he originally thought he had also signed a note until

his father showed him the original unsigned note. The note was produced to the

Appellants’ attorneys in the original case. However, the note was never introduced

at the 2000 trial.

After inspecting the note, Linda filed pleadings in the 2001 rescission lawsuit

that she had been mistaken in her previous testimony concerning signing of the

promissory note. In response to motions filed by her father, the trial court ruled that

she was estopped from testifying that she did not sign the promissory note in

connection with the 1986 sale. However, the jury did find that Linda had paid for the

stock. Based on the pleadings filed by Linda, the petition for nullity was then filed

to have the 2001 declaratory judgment annulled.

In finding that the Appellants were not entitled to have the 2001 judgment

annulled, the trial court found that they failed to meet the “deprivation of legal rights”

requirement as set forth by the Louisiana Supreme Court in Johnson v. Jones-Journet,

320 So.2d 533 (La.1975). The trial court relied on the deposition testimony of

Dooksie that the original unsigned promissory note was in Appellants’ possession at

all times before and during the 2000 trial. Based on this testimony, the trial court

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held that Appellants were not deprived of knowledge or opportunity because they had

the evidence to refute Linda’s testimony during the trial.

A trial court’s decision on a petition for nullity of a judgment is permitted

discretion and is reviewed in light of whether the trial court’s conclusions were

reasonable. Belle Pass Terminal, Inc. v. Jolin, Inc., 01-149 (La. 10/16/01), 800 So.2d

762; Wright v. Louisiana Power & Light, 06-1181 (La. 3/9/07), 951 So.2d 1058.

Citing Johnson, 320 So.2d 533, and subsequent decisions, the Louisiana Supreme

Court in Wright, 951 So.2d at 1067, noted two requirements for establishing an action

of nullity: “(1) that the circumstances under which the judgment was rendered showed

the deprivation of legal rights of the litigant seeking relief, and (2) that the

enforcement of the judgment would have been unconscionable and inequitable.”

It was further recognized that a “deprivation of legal rights” has been defined

as “‘[c]onduct which prevents an opposing party from having an opportunity to

appear or to assert a defense’” in addition to the fact that a “‘a fair and impartial trial

is a legal right entitled to all participants in a legal proceeding.’” Id. (quoting Kem

Search, Inc. v. Sheffield, 434 So.2d 1067, 1070 (La.1983); and Belle Pass, 800 So.2d

at 767)(alteration in original)).

In the present case, the Appellants claim fraud based on Linda’s changed

testimony when presented with the original, unsigned promissory note. They argue

that the result in the declaratory judgment trial would have been different had she

testified that she had not signed the promissory note because this is the testimony that

the trial court relied upon in making its decision. We disagree.

In reviewing the trial court’s reasons for judgment issued in February 2001, one

can see that it relied upon all circumstances surrounding the transfer of the stock in

1986, not just testimony that a promissory note had been signed.

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Long’s Preferred Products, Inc., a family corporation, has been run as
many family corporations are done, somewhat informally. Faced with
mounting health problems and concerns caused by his wife’s gambling
problems, Julian E. Long, the father, sought to protect his corporation
with a redistribution of control of the stock. This was done without
counsel advice, but through the help of his accountant, Mr. Maurice
Daigrepont. The issue squarely presented to the Court is whether this
transaction actually occurred, in light of the fact that there are no records
remaining documenting the event. The Court finds after reviewing the
witness’ motivation and actions of parties, the transaction in 1986 did
occur as a sale and the documents have been lost or destroyed. The
existence of the documents would have been either placed in a wall for
safekeeping, and consequently destroyed or removed, or maintained in
the corporate office where they would be out of the reach of Petitioner,
Linda K. Minton.

The Court is perplexed that Mr. Julian E. Long and Maurice Daigrepont
would fabricate and perpetuate a fraud on the government for several
years, to insure the viability of some “plan” to be placed in effect
retroactively if something were to happen to him. This is compounded
by the fact that after the need for the “plan” to protect the Mother was
removed by the Mother’s death, the documentation with the government
continued. Taxes were paid pursuant to a transfer and the business was
run as it always had been. By all accounts the parties were operating
under the impression that Julian W. Long, the son, and Linda K. Minton
owned equal shares.

Both counsel are correct, this comes to a credibility call. Apparently the
frustration of Linda Minton not agreeing to the dictated terms for the
purchase of her “fifty” percent interest in the Corporation resulted in
unilateral reissuance of stock and a closing of her access to Corporate
documents and minutes. The Court finds from 1986 up until the refusal
to accept the offer for her one-half of the stock, the parties continued to
operate as if they were equal owners of the stock. This strongly
corroborates that all parties acquiesced in and accepted the 1986 transfer
of the 38 shares to the children.

The testimony of the senior Mr. Long was understandably confused,
even in its contradictions. Advancing age and what must be a difficult
time in overseeing a family fight lead [sic] to some statements that
indicated his intention was to run the Corporation as he wanted to,
retaining some control, even though he actually had surrendered stock.
The testimony of Mr. Daigrepont was entertaining and illuminating. He
clearly drafted the documents and set up reporting requirements to the
IRS to further the instructions of his client, but the Court finds it
incredulous that he would perpetuate a fraud on the government for
thirteen years without some understanding of an actual transfer of the
stock. The court finds “The great plan” story to be more incredulous
than the “rats ate the document”. The parties took steps to transfer the
stock, Ms. Minton testifies she executed certificates, she relinquished

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control of the certificates, but the Corporation continued to operate and
act as if the certificates were in effect. The Court finds that Ms. Minton
has proven by a preponderance that the transfer of nineteen shares of
stock to her in the 1986 transaction was accomplished. Based on an
examination of the succession, her brother’s offer to purchase fifty
percent of the Corporation from her, and the manner in which the
Corporation business was transacted until the family dispute on
valuation arose, the Court makes a credibility call in favor of Linda K.
Minton and accordingly rules declaratory judgment in her favor be
granted.

We find that the trial court in the present case was correct in ruling that the

Appellants had not been deprived of knowledge or opportunity. If they perceived that

an unsigned promissory note was vital to their case to show that a 1986 sale of stock

did not take place, they were the ones with the evidence to establish such at the 2000

trial.

This includes their argument that La.R.S. 10:8-319(a) in 1986 stated that the

sale of securities required “that a contract has been made for sale of a stated quantity

of described securities at a defined price.” The Appellants argue that without a

signed and executed promissory note, the trial court could not have found that a valid

sale of stock had occurred. With this argument, Appellants are simply trying to get

another bite at the apple. This argument does not constitute a basis for annulling the

judgment. If this was an argument that Appellants wanted to make, they should have

made it and presented it to the trial court with the unsigned promissory note during

the 2000 trial. They cannot now use an action to annul to attempt a different legal

argument as a basis that a 1986 sale did not occur.

At the time of the trial on the 1986 sale, Linda sincerely believed she had

signed a promissory note, as did her brother before he was presented with original

unsigned note prior to the original trial in this matter. The Appellants have not

established any fraud or ill practices by Linda entitling them to annul the 2001

judgment.

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SUMMARY JUDGMENT

The Appellants also claim the trial court erred in granting summary judgment

dismissing the petition for annulment in favor of Linda because there still exists

genuine issues of material fact. They claim that genuine issues of material fact

remain as to “(1) whether the onion skin note in defendants’ possession was ‘the

original’ note; and (2) whether this onion skin note (as opposed to a xerox copy),

would have refuted Minton’s false testimony at trial that she signed the promissory

note.”

Once again these issues pertain to the production of the “note” which was in

Appellants’s possession at the time of the original trial. The introduction of evidence

which could have been presented at the original trial usually cannot serve as a basis

for annulling the judgment. Gladstone v. American Auto. Ass’n, Inc., 419 So.2d 1219

(La.1982); Calcasieu Parish Sch. Bd. v. Parker, 02-339 (La.App. 3 Cir. 10/2/02), 827

So.2d 543, writ denied, 02-2719 (La. 1/10/03), 834 So.2d 440.

Appellants are trying to raise issues which were within their control at the time

of trial. They failed to introduce the note at the original trial. As we have previously

discussed, the Appellants have not been deprived of any legal rights. Furthermore,

it is not unconscionable nor inequitable to enforce the original judgment. As stated

before, we agree with the trial court that there was no fraud or ill practices and,

therefore; Linda was entitled to summary judgment dismissing the petition to annul.

For these reasons, the judgment of the trial court is affirmed. Cost of this

appeal are assessed to Appellants, Julian W. Long, Eva Long, Long’s Preferred

Products, Inc., and Tracy Percy.

AFFIRMED.

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THIS OPINION IS NOT DESIGNATED FOR PUBLICATION. Rule 2-16.3
Uniform Rules, Court of Appeals.

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