Indest-Guidry, Ltd. v. Key Office Equipment, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

08-599 consolidated with 08-600

INDEST-GUIDRY, LTD., ET AL.

VERSUS

KEY OFFICE EQUIPMENT, INC., ET AL.

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF ST. MARTIN, NO. 69,115
HONORABLE KEITH RAYNE JULES COMEAUX, DISTRICT JUDGE

**********

ULYSSES GENE THIBODEAUX
CHIEF JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Oswald A. Decuir, and
Marc T. Amy, Judges.

AMENDED AND AFFIRMED AS AMENDED.

Stacy Butler
Kizer, Hood & Morgan, L.L.P.
2111 Quail Run Drive
Baton Rouge, LA 70808-4127
Telephone: (225) 761-0001
COUNSEL FOR:
Defendants/Appellants - Key Office Equipment, Inc. and Kenny
Gregory

Randy M. Guidry
Durio, McGoffin, Stagg, & Ackermann
P. O. Box 51308
Lafayette, LA 70505
Telephone: (337) 233-0300
COUNSEL FOR:
Plaintiff/Appellee - Indest-Guidry, Ltd., d/b/a Impressions Print
Design and Marketing

THIBODEAUX, Chief Judge.

This case involves contract disputes between the plaintiff/appellee,

Indest -Guidry, LTD, d/b/a/ Impressions Print Design and Marketing (Impressions),

and the defendants/appellants, Key Office Equipment, Inc. (Key) and Kenneth

Gregory (Gregory), owner and president of Key. Impressions filed suit alleging

fraud, conversion, and breach of contract against Key and Gregory for failing to pay

off equipment, pursuant to an oral contract, with the proceeds of a transaction

orchestrated and disbursed by Key and Gregory.

Key reconvened, alleging that Impressions failed to pay invoices for

service and maintenance provided by Key on equipment at Impressions’ location.

The cases were consolidated. Following a bench trial, the court awarded $48,901.38,

plus ongoing rental fees, to Impressions, and awarded $5,241.66 to Key for past due

maintenance fees. Key filed this appeal. We amend, and affirm as amended, the

judgment of the trial court.

I.

ISSUES
We must decide:

(1) whether the trial court abused its discretion in the
recovery awarded to Impressions based upon the
agreements in place between the parties;

(2) whether the trial court abused its discretion in the
recovery awarded to Key based upon the agreements
in place between the parties;

(3) whether the trial court erred in awarding attorney
fees to Impressions under the Louisiana Unfair
Trade Practices Act; and

(4) whether the trial court erred in granting judgment
against Kenneth Gregory, personally.

II.

FACTS AND PROCEDURAL HISTORY

Impressions had four copiers at its printing company in Breaux Bridge,

Louisiana. Two were black and white copiers, and two were color copiers, all

manufactured by Konica. Impressions entered into two maintenance agreements with

Key on December 5, 2003. One agreement covered the black and white copiers, and

one agreement covered the color copiers. Both agreements provided that the

maintenance would include all parts, labor, travel time, developer, photo receptor,

toner, and staples. The price for maintenance on each of the four copiers was a price-

per-copy amount, and it was based upon periodic meter readings from each machine.

The maintenance agreements called for quarterly billing.

Impressions’ two existing color copiers were the Konica 7920 and the

Konica 8050. In February of 2004, Impressions and Key began discussing output and

marketing strategies, and it was determined that it would be more profitable for

Impressions to replace the 7920 with a second 8050. The 7920 had not functioned

as expected, and Impressions’ goal was to have Konica take it back and allow a trade

up to the 8050. More than one pricing proposal on the new 8050 was made by

Gregory, owner of Key and authorized seller for Konica. An early proposal for the

8050 and its component parts was $61,462.17. Gregory, who did not finance the

machines that he sold, became heavily involved in the financing end of the

discussions between Charlene Guidry, owner of Impressions, and two possible

lenders/lessors. Ms. Guidry gave Gregory authority to negotiate on her behalf.

During six months of discussions about component parts and pricing, the

parties attempted to arrange financing that would pay for the purchase of the new

8050, and pay off Guidry’s lease on the 7920, all under one transaction. Ms. Guidry

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alleged that the final transaction agreed upon in August 2004, was with G.E. Capital

for $95,500.00, and it was to pay off $22,000.00 owed on her existing lease on the

7920, and pay for the new 8050 at a special purchase price of $65,500.00. She was

to receive the remaining funds, approximately $8,000.00, as working capital.

The total proceeds of the $95,500.00 transaction were delivered to Key,

who was not a party to the transaction, and Kenneth Gregory who disbursed the entire

$95,500.00 from Key’s account. The Konica 7920 was never paid off. At the time

of trial three years later, Ms. Guidry was still paying approximately $400.00 per

month on the 7920 copier under her original lease contract with Citicorp. She was

also paying off the lease to G.E. Capital (G.E.) based upon the $95,500.00 proceeds

delivered to Key. Key had picked up the 7920 copier in September 2004 when it

delivered the new 8050 copier to Impressions. Hence, the 7920 had been in the

possession of Key, at the Baton Rouge location, for three years.

Kenneth Gregory alleged that the new 8050, with all of its component

parts, actually cost $91,520.00. He alleged that the difference between the cost and

the transaction amount of $95,500.00, approximately $3,400.00, was for shipping,

handling, and incidentals such as a developer assembly and bag. He further alleged

that the $8,000.00, which actually was disbursed to Ms. Guidry, was a loan that she

still owed to Key. Additionally, he alleged that Guidry owed him for unpaid

maintenance invoices in the amount of $48,003.25 for the last quarter of 2004 and the

first quarter of 2005.

The trial court entered a judgment in favor of Impressions and against

Key and Gregory, in solido, and ordered them to pay $22,000.00 for the pay-off of

the lease on the 7920, plus $14,800.00 for use of the 7920 copier from September

2004 through October 2007, plus $12,101.38 for attorney fees, plus $400.00 per

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month commencing in November 2007 until the return of the 7920 copier to

Impressions. The judgment also found in favor of Key and against Impressions in the

amount of $5,241.66, for unpaid maintenance services.

III.

LAW AND DISCUSSION

Standard of Review

Errors of law are reviewed de novo. Rosell v. ESCO, 549 So.2d 840

(La.1989). An appellate court may not set aside a trial court’s findings of fact in

absence of manifest error or unless it is clearly wrong. Stobart v. State, Through

DOTD, 617 So.2d 880 (La.1993). Appellate review of the trial court findings based

on credibility calls has been severely limited:

When findings are based on determinations
regarding the credibility of witnesses, the manifest
error-clearly wrong standard demands great deference to
the trier of fact’s findings; for only the factfinder can be
aware of the variations in demeanor and tone of voice that
bear so heavily on the listener’s understanding and belief
in what is said. Where documents or objective evidence so
contradict the witness’ story, or the story itself is so
internally inconsistent or implausible on its face, that a
reasonable fact finder would not credit the witness’ story,
the court of appeal may well find manifest error or clear
wrongness even in a finding purportedly based upon a
credibility determination. But where such factors are not
present, and a factfinder’s finding is based on its decision
to credit the testimony of one of two or more witnesses,
that finding can virtually never be manifestly erroneous or
clearly wrong.

Rosell, 549 So.2d at 844-45.

Recovery Granted to Impressions under the Agreements in Place

Gregory asserts that the trial court misconstrued the financing agreement

because its Reasons for Judgment indicated that Impressions purchased the new 8050

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copier from Key, where, in reality, G.E. purchased the copier from Key and leased it

to Impressions. We find that the trial court did not misconstrue the agreement,

though the court and the parties, including Key, mischaracterized the transaction at

times. The trial court demonstrated that it understood the difference between a lease

and a purchase, particularly at the end of trial when it questioned Gregory about any

residual on the Citicorp lease on the 7920 copier. Ms. Guidry did not own that

machine either. At the end of the lease, which was coming up shortly after trial,

Impressions would have to return the 7920 to Citicorp or buy it from them at fair

market value.

Even the defendant refers to the G.E. Lease Agreement on the 8050 as

a “financing” agreement, and sometimes refers to it as a loan with a borrower.

However, the G.E. Lease Agreement contains no truth in lending information, rate,

or amount financed, and it does not disclose the total payback at the end of the term.

The Lease Agreement executed between G.E. and Ms. Guidry, shows only an

agreement to lease described equipment for 60 months at $1,766.75 per month. It

also provides that the purchase option at the end of the lease is at fair market value.

The G.E. “Approval” document does reflect an approval for an amount financed of

$95,500.00 and an invoice total of $95,500.00. Mrs. Guidry did not sign this

document.

Key and Gregory contend that efforts to get an approval on a transaction

that would pay out the 7920 and purchase the new 8050 were unsuccessful, and that

the machine purchased, along with accessories added by Impressions, cost the entire

amount of $95,500.00. However, the record contains no invoice on the 8050 copier

that supports a $95,500.00 purchase price. Further, the 8050 copier leased to Ms.

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Guidry by G.E., pursuant to the Lease Agreement, was not the copier delivered to

Impressions by Key and Gregory.

The Lease Agreement between Ms. Guidry and G.E. describes the

equipment leased as a Konica 8050, Serial No. 65AEO1506, and it lists twelve

accessories, with no pricing either individually or cumulatively. However, the

equipment actually invoiced and shipped to Key from Konica, and then delivered to

Impressions is an 8050 copier, Serial No. 65AEO1620, with seven accessories, plus

toner which is not on Gregory’s list or GE’s list. Ms. Guidry testified that the

description of the equipment was filled out on the G.E. Lease Agreement by Kenneth

Gregory, whom she trusted to handle all negotiations. She further testified that she

had never seen the third page of the Lease Agreement which lists the last five of the

twelve accessories. The plaintiff’s exhibit of the Lease Agreement does not contain

the third page, while the defendant’s exhibit of the same agreement does contain a

third page, entitled Schedule A.

Schedule A contains only a listing for five additional accessories, in the

same handwriting as the first page of the lease. Page three also contains a signature

line for the lessee, which is not signed by Ms. Guidry, as is the first page. Ms. Guidry

specifically testified that she did not agree to a trimmer accessory that cost

$11,000.00, even though it would have made her general manager happy. Page three

of the Lease Agreement listed a “trimmer unit” which, based upon Konica’s separate

price list, had a retail price of $10,900.00. When questioned about this accessory at

trial, Gregory said only that Guidry accepted delivery of that product. There is no

evidence to that effect, and Gregory’s assertion appears to be a patent

misrepresentation to the court.

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The cost to Key of the 8050 copier, Serial No. 65AEO1620, and the

accessories actually delivered to Ms. Guidry, pursuant to five separate invoices, was

approximately $35,128.62. This included the basic copier at a cost of $18,245.00,

plus a print controller at $10,580.00, plus approximately six other less expensive

accessories. Ms. Guidry had paid $69,000.00 for her slightly older 8050, and she

believed that Key’s offer of a “special price” on the new 8050 of $65,500.00 was a

good deal. After all, he had offered her a similar 8050, though with slightly different

accessories, back in February of 2004 for a little over $61,000.00. While Gregory

told Impressions that he could get them the new 8050 for a little above his cost, he

actually stood to make a profit of almost $30,000.00 on the equipment delivered to

Ms. Guidry, if he had disbursed the proceeds of the $95,500.00 G.E. transaction as

promised. Moreover, there is evidence in the form of a Konica e-mail that Gregory’s

actual cost on the new 8050 was only $32,076.48, indicating a potential profit of over

$55,000.00 on the machine and accessories.

In his brief, in support of his alleged $91,520.00 purchase price for the

8050 copier, Gregory lists the copier plus thirteen accessories, which include a Color

Profile Kit not listed on the G.E. Lease. The Konica price for this accessory is

$2,000.00. Hence, Gregory’s assertions regarding the accessories do not even

correspond with the accessories that he listed on the Lease Agreement. At trial,

Gregory attempted to introduce a document purporting to be the invoice that he sent

to G.E. describing the collateral for the $95,500.00 transaction. However, the trial

court refused to admit the document because it was not produced in discovery. The

record reveals no proffer of the invoice, and the defendant does not assign as error the

trial court’s refusal to admit the invoice. The trial testimony discussing the invoice

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never referred to the serial number, and no party seems to have argued the

discrepancy in the serial numbers at the trial of this matter.

However, the record is clear. The machine listed on the Lease

Agreement has a serial number of 65AEO1506, and has twelve accessories, but the

machine delivered to Impressions and serviced by Key, according to its own invoices,

bore the serial number of 65AEO1620, and had basically seven accessories. One

accessory that actually was delivered, the IP-901 Print Controller, cost Gregory

$10,580.00, and it cost Ms. Guidry $23,000.00. Even so, that accessory was included

in the $65,500.00 price that Gregory quoted to Ms. Guidry. There is no dispute that

Key is entitled to profit on the equipment it sells, and some of the accessories were

very expensive. But the $35,000.00 worth of equipment that Key delivered to Ms.

Guidry with seven accessories, does not align with the $95,500.00 worth of

equipment and twelve accessories that Gregory listed on the G.E. lease, or with the

$91,520.00 worth of equipment and thirteen accessories that he listed in his brief.

After Ms. Guidry’s execution of the August 2004 G.E. Lease, she began

receiving bills from Citicorp on the 7920 copier lease, which should have been paid

off by the G.E. transaction. Over the next three months, Ms. Guidry heard excuses

and promises from Gregory asserting that paper work crossed in the mail to an

assertion that Konica just took the money out of his account. The record contains

numerous similar representations by Gregory that make it difficult to suspend

disbelief, and Gregory had no corroborating testimony to support him at trial. He did

not call anyone from G.E. Capital, from Konica, or from Key, even though the record

is replete with names of people who were involved in some capacity with the

negotiations and the maintenance on these machines.

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The trial court stated in its Reasons for Judgment that Ms. Guidry was

very credible and had corroborating testimony, while Mr. Gregory’s statements were

self-serving with little or no corroboration. Impressions general manager, Dale

Zeigler, and Impressions volunteer, Ginger Olivier, testified that they had been

present at December 2004 meetings when Ms. Guidry attempted to memorialize the

oral contract that she and Gregory entered into four months earlier. She attempted

unsuccessfully to get his signature on a letter that contained her understanding of the

breakdown of $95,500.00 G.E. disbursement to Key. The letter itself corroborates

Ms. Guidry’s testimony on the $65,500.00 purchase price of the new 8050 copier.

Provision number one stated as follows: “1) Konica would receive $65,500.00 from

G.E. Capital to lease the new Konica 8050.” Gregory initialed a change which made

the provision read, “1) Konica would receive $65,500.00 from Key Office Eq. to

purchase the new Konica 8050.”

When questioned by the trial court as to why he initialed the first

sentence pertaining to the $65,500.00 cost of the copier if it were not a true statement,

Gregory said that the Impressions people had come to his office unannounced and

agitated. By this time, near the end of trial, Gregory had admitted that the machine

had cost him around $40,000.00 and that Key had come out quite well on the

$95,500.00 transaction. When asked again by the trial court why he initialed the

letter if the price quoted to Ms. Guidry was not $65,500.00, Gregory responded that

at the time it seemed like the number that they were working with. The trial court

reminded him that the letter was dated December 10, 2004, which was almost four

months after the G.E. lease was executed and funded.

We find no manifest error in the trial court’s decision to credit Ms.

Guidry as having the most substantiated version of the oral contract behind the

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$95,500.00 G.E. Lease Agreement. The trial court awarded Impressions $22,000.00

to pay off the Citicorp lease on the 7920 copier. The record contains the quote from

Citicorp for the buyout on the lease and the machine for $22,512.19. The quote is

dated August 13, 2004, and it was good until September 12, 2004. The G.E. Capital

Lease Agreement was executed on August 17, 2004. Therefore, the funds were

available to pay out the lease and the buyout on the 7920 copier.1

When the 7920 was not paid out, Gregory who had possession of the

machine ultimately made another agreement with Ms. Guidry to pay her back by

allowing her to deduct $400.00 per month from the invoices that she received from

Key, for the next five years. Gregory testified that the only reason that the 7920 did

not get paid off under the new promise was because Ms. Guidry sold the company

and breached her agreement to sign five year maintenance contracts on all of her

machines. However, the maintenance agreements that Key had in place were one year

agreements. Ms. Guidry testified that she had never seen or signed a five year

agreement.

Accordingly, since the 7920 that had been in Key’s possession for three

years, was not paid off under the G.E. transaction or by Key, the trial court also

awarded Impressions $14,800.00 for Key’s use of the 7920 at his location in Baton

Rouge from September 2004, when he picked up the machine, until October 2007.

The court further awarded Impressions $400.00 per month for Gregory’s use of the

machine from November 2007, the time of judgment, until the machine was returned

to Impressions. Gregory contends that the trial court awarded Impressions twice for

recovery on the 7920 copier.

1
We are aware that, if G.E. had knowingly included the payout of the 7920 copier in the
financing of the 8050 copier, as Ms. Guidry thought, the 7920 would then have belonged to G.E.,
similar to an automobile transaction involving a trade. In fact, this is what Ms. Guidry anticipated,
as the record is clear that she wanted the 7920 off of her hands. The subsequent confusion regarding
the disposition of this machine we attribute to the multiple representations made by Gregory.

10

It is true that the court awarded her, and charged Gregory, for a pay-off

and for usage rental, on the same machine. However, the record indicates that

Gregory took the $22,000.00 and the machine, while Ms. Guidry continued to pay

two lenders/lessors for the same machine at the same time. More specifically, after

the lease on the 7920 was not paid off in August of 2004, Ms. Guidry continued

making monthly payments to Citicorp on the lease. By the time of trial, she had paid

approximately $15,849.84. Moreover, at the end of the Citicorp lease, that was

coming up in November 2007, shortly after trial, she would have to return the 7920,

that she had not seen in three years, or she would have to buy it from Citicorp at fair

market value. We are assuming that she bought it at fair market value since Key had

it and she could not return it. We do not know how much the fair market value was

at that time. In addition to the Citicorp payments, Ms. Guidry had been paying back

the $95,500.00 G.E. lease payments, which really had a total payback of $106,005.00,

a transaction that supposedly included the $22,000.00 pay-off on the 7920 copier.

Since Key and Gregory converted $22,000.00 of Impressions’ funds for

their own use, it would have been more accurate for the trial court to have awarded

her the $22,000.00 as reimbursement for the conversion of the G.E. funds, not as a

payoff that never took place. Additionally, by the time of trial, Gregory had kept the

7920 on his premises for three years without paying fair rental to Impressions, and

therefore he owed rental. We cannot say that this finding is an abuse of discretion.

Gregory asserts the second agreement to pay off the 7920 through $400.00 deductions

from Key billing. At trial, Ms. Guidry testified that she had only deducted for the

reimbursements through the December 2004 quarter. Therefore, Gregory had paid

only $1,200.00 on the 7920 copier. Therefore, we will deduct $1,200.00 from the

trial court’s rental award of $14,800.00, reducing that award to $13,600.00.

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With regard to the working capital of $8,000.00 which Gregory asserts

was a loan and is now owed to Key, we agree with the trial court that it was not a loan

but was proceeds from the G.E. Capital funds. In his discovery responses, Gregory

stated that the $8,000.00 was “surplus” and was paid to Impressions. We, therefore,

affirm all awards to Impressions having to do with the leases on the 7920 and the

8050, and amend those awards by the $1,200.00 reduction, as stated above.

Recovery Granted to Key under the Agreements in Place

Key contends that Impressions is indebted to Key for maintenance

invoices for the last quarter of 2004 and the first quarter of 2005 in the amount of

$48,003.25. The record does not support that assertion. In addition to all of the other

problems, Key’s service on the copiers had become unsatisfactory. Dale Zeigler,

Impressions’ general manager, testified that Impressions had a lot of complaints

because of delays and an inability on the part of Key to get the parts needed. On

March 2, 2005, Ms. Guidry sold Impressions to Ginger Olivier, who had volunteered

at Impressions and whose background was in marketing. As part of the sale, Ms.

Olivier agreed to pay the final quarterly invoice due to Key in December of 2004.

Her check made out to Key Office Equipment in the amount $8,388.75 was received

by Key and deposited on March 31, 2005.

The check was accompanied by a letter stating that the $8,388.75 check

was for payment of the standing maintenance agreement between Key and Indest-

Guidry, Ltd. d/b/a Impressions Print Design and Marketing, for the period of

September 15, 2004 through December 15, 2004. Although the record does not

contain an invoice for $8,388.75, the letter indicates that it satisfies the amount owed

for the last quarter of 2004, and the record contains meter readings for all four

machines. The trial court found that the check paid to Key for the last quarter of 2004

12

satisfied the maintenance on the new 8050 copier for 2004. We find that Ms.

Olivier’s check satisfied the 2004 fourth quarter billing on all four machines

maintained by Key for Impressions.

Instead of posting this payment, Gregory submitted invoices to show that

he had provided services in the amount of $21,837.45 on the new 8050 copier for the

last quarter of 2004 and the first quarter of 2005. He also submitted invoices for

services in the amount of $26,165.80 on the other three copiers for the first quarter

of 2005, for a total of $48,003.25. Gregory argued that since the maintenance

agreements on the older machines were not renewed in December 2004, and since he

never had a maintenance agreement on the new 8050, he was entitled to bill as if there

were no agreements in place, which is more expensive because he charges for parts,

labor, materials and drive time. We note that drive time alone is billed at $135.00 per

hour and $202.50 per hour for overtime drive time. There is no evidence that

Impressions ever agreed to enter into a contract on this basis.

Ms. Guidry admitted that she never signed a maintenance contract on the

new 8050. Key asserted that he gave her one at a December 2004 meeting. There

was no such document in the record. Ms. Guidry testified that she understood that

they would continue paying the price per copy on the maintenance agreements. She

further stated that she did not recall getting any quarterly billing in 2005, as the

quarter would have ended in March, and she sold the business March 2nd.

The trial court rejected the invoices submitted by Key for maintenance

services on the copiers. The court reasoned that the invoices were numbered

sequentially but bore different dates, and that he found it unbelievable that a business

like Key would have sequentially numbered invoices over the period of time covered.

Gregory has now admitted that the invoices were generated after-the-fact. He

13

referred to them as back-billing. We agree with the trial court that the invoices are

not appropriate evidence and reject them as well, for several reasons. The individual

invoices submitted as exhibits at trial do not correspond with the invoices listed on

the exhibit attached to Key’s original petition. They have different dates, different

numbers, and different amounts. Further, all ten of the invoices on the two black and

white copiers are dated either “2/1/06” or “2/2/06.” Likewise, all thirty-two invoices

on the older 8050 copier bear the dates “1/27/06” or “1/30/06” or “2/1/06.” It is

difficult to believe that there were thirty-two service calls on one machine over a six

day period. Given that Ms. Guidry sold the business on March 2, 2005, we cannot

find that the trial court abused its discretion in denying recovery on the invoices on

the older machines where each of those invoices was dated 2006.

The trial court did, however, grant Key recovery for maintenance on the

new 8050 for the first quarter of 2005 based upon the meter readings on those

invoices, not based upon the charges created by Key. We note that those invoices are

dated between October 2004 and March 2005. We, therefore, affirm the trial court’s

use of the meter readings to calculate a charge for maintenance on the new 8050 for

2005. However, we will amend the amount awarded based upon our review of the

trial court’s calculations.

The trial court took meter readings from the first and last 2005 invoices,

i.e., the January 6th and the March 7th invoices, and came up with 87,361 copies

(289,825 - 202,464). The trial court then multiplied the $.06 per copy price, pursuant

to the other color copier agreement, times 87,361 copies, and awarded Key $5,241.66

for maintenance on the new 8050 in 2005. However, the check sent to Key in

satisfaction of the last quarter’s maintenance in 2004 covered the period of September

15 to December 15, 2004. Therefore, the next quarter would have started on

14

December 16, 2004. Ms. Guidry sold the business on March 2, 2005. Hence, we will

use the meter reading from the December 28, 2004 invoice and the meter reading

from the last February 2005 invoice, which results in 95,828 total copies (273,571 -

177,743). We will not use a multiplier of $.06 per copy. Color copiers generate both

color and black and white copies. The maintenance agreements on the color copiers

charge $.06 per color copy and $.019 per black-and-white copy.

The color copier meters have a black-and-white copy count and a color

copy count, in addition to a total copy count. Key’s invoices only provide a total

copy count. It is unfair to charge the $.06 color copy price for all of the copies when

some of the copies produced on the color copiers were black and white. Therefore,

we will use an average of the two different copy prices, which is $.039, as our

multiplier for the total count of 95,828 copies. The result is $3,737.29. Accordingly,

we reduce the award to Key from $5,241.66 to $3,737.29.

Unfair Trade Practices Act and Attorney Fees

The trial court in this matter found Key and Gregory liable to

Impressions under the Louisiana Unfair Trade Practices Act (LUTPA) and awarded

attorney fees in the amount of $12,101.38. The Act, located at La.R.S. 51:1401, et

seq, was enacted to prohibit “[u]nfair methods of competition and unfair or deceptive

acts or practices in the conduct of any trade or commerce.” La.R.S. 51:1405. A

practice is unfair when it offends established public policy and when the practice is

unethical, oppressive, unscrupulous or substantially injurious. A trade practice is

deceptive under LUTPA when it amounts to fraud, deceit, or misrepresentation.

Mixon v. Iberia Surgical, L.L.C., 06-878 (La.App. 3 Cir. 4/18/07), 956 So.2d 76, writ

denied, 07-1050 (La. 8/31/07), 962 So.2d 438. Reasonable attorney fees are

recoverable under La.R.S. 51:1409 where actual damages are awarded.

15

Key contends that it was error to award attorney fees under LUTPA on

three bases: (1) Impressions is not a business competitor of Key’s; (2) Impressions

is not a natural person purchasing goods and services for personal, family, or home

use; and (3) Impressions is not an individual filing in a non-representative capacity.

The Third Circuit Court of Appeal has limited its interpretation of the

LUTPA provisions to provide recovery only to those who are direct consumers or

business competitors. Vermilion Hosp., Inc. v. Patout, 05-82 (La.App. 3 Cir. 6/8/05),

906 So.2d 688 (business competitor failed to sufficiently allege competitor status and

was not consumer; and defendant’s conduct did not rise to level of a LUTPA claim);

Washington Mut. Bank v. Monticello, 07-1018 (La.App. 3 Cir. 2/6/08), 976 So.2d

251, writ denied, 978 So.2d 369 (La. 4/25/08) (resident is not direct consumer as she

did not sign promissory note).2 There have been no allegations that Impressions was

a business competitor of Key’s. Competitor status is probably the most

2
La.R.S. 51:1402. Definitions (in pertinent part)

As used in this Chapter, the following words and phrases shall have the meanings hereinafter
ascribed to them:

(1) “Consumer” means any person who uses, purchases, or leases goods or services.

(2) “Consumer interest” means those acts, practices, or methods that affect the economic
welfare of a consumer.

(3) “Consumer transaction” means any transaction involving trade or commerce to a natural
person, the subject of which transaction is primarily intended for personal, family, or household use.

....

(8) “Person” means a natural person, corporation, trust, partnership, incorporated or
unincorporated association, and any other legal entity.

(9) “Trade” or “commerce” means the advertising, offering for sale, sale, or distribution of
any services and any property, corporeal or incorporeal, immovable or movable, and any other
article, commodity, or thing of value wherever situated, and includes any trade or commerce directly
or indirectly affecting the people of the state.

....

16

straightforward criterion in our analysis, and we will not belabor that issue.

Impressions does not seek to recover under LUTPA as a business competitor.

While the third circuit is clear that one must be a competitor or a direct

consumer to recover under the Act, the identification of a consumer is much less

straightforward than that of competitor, primarily because of LUTPA’s meanderings

along the language continuum from expansively broad to severely limiting

provisions. More specifically, “consumer” is defined in the Act as “any person who

uses, purchases, or leases goods or services.” La. R.S. 51:1402(1). “Person” means

a natural person, corporation, trust, partnership, incorporated or unincorporated

association, and any other legal entity.” La. R.S. 51:1402(8) (emphasis added). Key

seeks to deny recovery to Impressions citing our decision in Mixon v. Iberia Surgical,

L.L.C., 06-878 (La.App. 3 Cir. 4/18/07), 956 So.2d 76, writ denied, 07-1050 (La.

8/31/07), 962 So.2d 438.

Mixon borrowed language directly from La.R.S. 51:1402(3), which

states, in spite of the broad definitions of “consumer” and “person” above, that a

“consumer transaction” means any transaction involving trade or commerce to a

natural person, the subject of which transaction is primarily intended for personal,

family, or household use.” 51:1402(3). Accordingly, Key points out that Impressions

is not a natural person, but is a business entity, who is not purchasing goods or

services for personal, family, or home use. While not specifically citing La.R.S.

51:1402(3), the panel in Mixon quoted the language, along with the broader language

of La.R.S. 51:1402(1) defining consumer as any person who uses, purchases, or

leases goods or services. However, the court first reached the merits of the claim and

determined that the conduct of the LLC in releasing Dr. Mixon from its membership,

under the terms of the mutually agreed upon contract, did not amount to fraud, deceit

17

or misrepresentation. The court then indicated, without explanation, that Dr. Mixon

was not a competitor or consumer under the Act.

Mixon appears to be the only third circuit case to use the language of

La.R.S. 51:1402(3), pertaining to a “consumer transaction,” to deny coverage, and

Mixon did not say that LUTPA only covers consumers who are natural persons

buying household goods. Mixon is not dispositive in the present case where we have

fraud, deceit, and misrepresentation, and a plaintiff who is a consumer under the

specific definitions of “consumer” and “person” in La.R.S. 51:1402(1) and (8). Our

analysis will, therefore, continue.

While third circuit cases have not specifically addressed the limitation

of the Act to natural persons, pursuant to the definition of “consumer transaction” in

La.R.S. 51:1402(3), we have reached the merits of claims under LUTPA even though

the plaintiff was not a natural person or the goods and services were not for personal,

family, or household use. See Doland v. ACM Gaming Co., 05-427 (La.App. 3 Cir.

12/30/05), 921 So.2d 196 (suit brought by Pat Doland, d/b/a/ Pat’s of Cameron; lease

at issue signed by Pat Doland individually; recovery granted; gaming company’s

failure to remove machines violated Unfair Trade Practices Law); Polar Bear Ice Co.,

Inc. v. Williamson, 04-368 (La.App. 3 Cir. 9/29/04), 883 So.2d 1134 (corporate

plaintiff; held, breach of commercial lease; denied recovery under LUTPA based

upon merits where conduct did not rise to level of a LUTPA claim; no discussion of

standing).

See also, Cajun Restaurant and Bar, Inc. v. Maurin-Ogden 1978

Pinhook Plaza, 574 So.2d 536 (La.App. 3 Cir. 1991) (corporate plaintiffs; held

prescribed under 51:1409(E); but reached merits anyway finding Sheriff’s sale is

legal process, not unfair trade practice; mentioned private action under La.R.S. 51:

18

1409(A) but did not discuss standing); Fontenot v. Southwest Louisiana Hosp.

Ass’n., 00-00129 (La.App. 3 Cir. 12/6/00), 775 So.2d 1111, writ denied 01-0390 (La.

4/12/01), 789 So.2d 596 (hospital’s actions in denying doctor’s application for

privileges did not amount to unfair trade practice; hospital acted reasonably in

denying doctor’s application; no discussion of standing).

Other Louisiana circuits have not limited consumers to natural persons.

For example, in A & W Sheet Metal, Inc. v. Berg Mechanical, Inc., 26,799 (La.App.

2 Cir. 4/5/95), 653 So.2d 158, the Second Circuit Court of Appeal found that the

defendant’s exception of no right of action was properly overruled based upon a plain

reading of the LUTPA statutes. When the defendant asserted that it was neither a

business competitor of A & W, nor was the bid process a “consumer transaction”

within the meaning of La.R.S. 51:1402(3), the court found that neither of these

elements was required for A & W to have a right of action against Berg.

The court found that A & W, a corporation, was clearly within the

definition of a person as set forth in La.R.S. 51:1402(8) and La.R.S. 51:1409, which

confers a private right of action on any person who has suffered an ascertainable loss

by another’s unfair or deceptive method. Further, the court reasoned that the

construction bidding process in the A & W case amounted to the offering for sale or

distribution of any services or any property. The court articulated:

We are unpersuaded that “business competitor,” included
as a class of consumers in the jurisprudential definition of
unfair practices, should limit the broadly defined class of
potential plaintiffs set out in the statute. Although a penal
statute and strictly construed, the language in the UTPCPL
must be given its plain meaning, which, in this case,
provides A & W the private right of action against Berg.
See Monroe Medical Clinic, Inc. v. Hospital Corporation
of America, 622 So.2d 760, 763 (La.App. 2d Cir. 1993)
[writ denied, 629 So.2d 1135 (La.1993)].

A & W Sheet Metal, Inc., 653 So.2d at 164.

19

The First Circuit Court of Appeal in Barrios v. Associates Commercial

Corp.,481 So.2d 702 (La.App. 1 Cir. 1985) found that LUTPA is not limited to

transactions involving household items; rather, the statute establishes two separate

categories of regulated activity. One category is the “consumer transaction” of

La.R.S. 51:1402(3) covering natural persons in trade or commerce for personal or

household use; the other category is the “consumer interest” of La.R.S. 51:1402(2)

covering the entire field of the economic welfare of a consumer, which is defined in

the statute as any person buying an unlimited array of goods and services.

The court in Barrios explained:

Counsel finds apparent refuge in the wording of §
1402(3) which defines a consumer transaction as “. . . any
transaction involving trade or commerce to a natural
person, the subject of which transaction is primarily
intended for personal, family, or household use.” This
interpretation would seem to limit the law’s coverage to
minor items used “around the house,” such as toasters,
blenders, power mowers or window-mounted air
conditioners.

We find this to be far too narrow a reading of the
legislation. § 1402(1) defines “consumer” as “any person
who uses, purchases, or leases goods or services.” § (2)
defines “consumer interest” as “those acts, practices, or
methods that affect the economic welfare of a consumer.”
§ (8) defines “person” as “a natural person, corporation,
trust, partnership, incorporated association, and any other
legal entity.” § 1405 says, “Unfair methods of competition
and unfair or deceptive acts or practices in the conduct of
any trade or commerce are hereby declared unlawful.”
(Emphasis added).

Barrios, 481 So.2d at 704, 705.

After citing its earlier jurisprudence on the accepted rules for interpreting

state statutes, by considering the law in its entirety and all other laws on the same

subject matter and avoiding inconsistency, the court in Barrios stated:

It is patently inconsistent to limit the transactions
covered to those involving household items, and then to

20

define the consumer as any person using (any) goods or
services. Accordingly, we hold that there are two different
regulated categories: consumer transactions and consumer
interests. Each has its limits as defined by the statute.

481 So.2d at 704.

In Barrios, the court determined that the purchase of a heavy-duty,

special-order, imported truck for commercial use fell within the category of consumer

interest and that it was regulated under LUTPA. Ultimately, the truck was found to

have been lawfully seized, and the seizure did not violate the Act. Our Louisiana

Supreme Court has not overturned these decisions of other circuit courts. We will not

expand our interpretations beyond the requirement that a plaintiff must be a consumer

by the clear meaning of La.R.S. 51:1402(1) in tandem with La.R.S. 51:1402(8) and

other applicable provisions. However, we will not limit our definition of consumer

to the constraints of La.R.S. 51:1402(2) and the overly narrow reading that Key

attempts to give our decision in Mixon.

Key also cites federal cases including Hamilton v. Business Partners,

Inc., 938 F.Supp. 370 (E.D. La. 1996). Hamilton reluctantly denied recovery under

LUTPA because it was bound by the case of Orthopedic & Sports Injury Clinic, v.

Wang Laboratories, Inc., 922 F.2d 220 (5th Cir.1991). There, the plaintiff was a

medical clinic bringing claims against Wang, the seller and servicer of its computers,

for destroying valuable disks during repairs. The federal Fifth Circuit found that the

purchase of the computer equipment did not amount to a “consumer transaction”

since it was not primarily intended for personal, family or household use;

consequently, the clinic had no cause of action under LUTPA.

Hamilton provided a comprehensive analysis of consumers in state court

cases under the Louisiana Act, finding that the law in this area was fluid and that

federal jurisprudence resting upon it was therefore subject to change. The court

21

summarized its analysis by stating that “Louisiana appellate courts have given

conflicting messages about LUTPA’s scope, with no state supreme court decision

rendering the definitive answer.” Hamilton, 938 F.Supp. at 373. The court then

compared its binding precedent of Wang to the completely contrary decision in

Barrios and cited other Louisiana decisions that have dealt with LUTPA claims

brought by consumers of items other than those for personal, household or family

use.3 Hamilton, 938 F.Supp. 370. Hamilton articulated in a footnote that had the

Louisiana legislature intended to link the definition of “consumer” to the definition

of a “consumer transaction,” it would have simply defined a consumer as “one who

engages in a consumer transaction” rather than giving it the broad definition set forth

in the statute. Id. at 375, fn. 14. The court concluded its decision by stating that it

could find no Louisiana case which limited the definition of a “consumer” under

LUTPA to that described in Wang. Hamilton was decided in 1996.

Finally, Key asserts that business entities such as Impressions do not

have standing to assert claims under La.R.S. 51:1409(A): “Any person who suffers

any ascertainable loss of money or movable property, corporeal or incorporeal, as a

result of the use or employment by another person of an unfair or deceptive method,

act, or practice declared unlawful by R.S. 51:1405, may bring an action individually

but not in a representative capacity to recover actual damages . . . . In the event that

damages are awarded under this Section, the court shall award to the person bringing

such action reasonable attorney fees and costs.” La.R.S. 51:1409(A) (emphasis

3
See Gour v. Daray Motor Co., 373 So.2d 571 (La.App. 3 Cir. 1979), writ granted, 376
So.2d 1270 (La.1979), writ dismissed, 377 So.2d 1033 (La.1979) (automobile used primarily for
business); Bohm v. CIT Financial Services, Inc., 348 So.2d 132 (La.App. 1 Cir. 1977), writ denied,
350 So.2d 673 (La.1977) (truck owned by business); Faris v. Model’s Guild, 297 So.2d 536
(La.App. 4 Cir. 1974), writ denied, 302 So.2d 15 (La.1974) (professional modeling course). In
Canal Marine Supply, Inc. v. Outboard Marine, 522 So.2d 1201 (La.App. 4 Cir. 1988), the plaintiff
was a marine supply company suing its distributor for wrongful termination of the dealership
agreement.

22

added). This provision of LUTPA is entitled, “Private Actions.” This language in

La.R.S. 51:1409(A) refers to “the clear ban against class actions by private persons”

under the Act. State ex rel. Guste v. General Motors Corp., 370 So.2d 477, 483

(La.1978) (Dennis, J. Concurring).

As previously indicated, the third circuit has reached the merits of

various claims by business entities without questioning their standing under the Act

if they otherwise met the criteria of a consumer or competitor. A case which may

seem at first blush to address the issue is Dolan v. ACM Gaming Co., 921 So.2d 196.4

However, that case did not interpret the provisions at issue herein and is not

dispositive of this case. “The determination of what constitutes an unfair trade

practice is fact-sensitive and, as such, can only be decided on a case-by-case basis.”

Id. at 202. In this case, Impressions is not bringing suit against G.E. Capital on the

Lease Agreement that Ms. Guidry executed with them. (Ms. Guidry actually

executed her leases in the name of her other company, Southern Tank Testers, due to

its longer credit history and credit line). Nor is Impressions suing Key on the

maintenance contracts that Impressions entered into with Key. Impressions is a

consumer of Key’s services, suing Key and Kenneth Gregory for the oral contract

between the parties regarding the disbursement of the G.E. proceeds of $95,500.00.

4
The defendant argued that Pat’s Restaurant of Cameron, Inc. was the sole entity that owned
the right to bring the action that was filed individually by Doland, pursuant to the tax returns filed
on behalf of Pat’s Restaurant of Cameron, Inc. We stated that the issue there of who possessed the
right to bring the underlying action was answered by determining the parties to the original lease.
The original lease agreement with the defendant did not reference the corporation, Pat’s Restaurant
of Cameron, Inc. Instead, the lease’s introductory clause stated that the lease was between “Allied
Gaming Management, Inc. as Lessee, and Pat’s Restaurant of Cameron, d/b/a Pat’s Restaurant of
Cameron, Cameron, LA, [sic] Louisiana as Lessor,” and that the lease was signed by Doland,
individually, as “Pat Doland.” Id. at 201. Accordingly, we found that the right of action belonged
to Dolan. Then we analyzed the LUTPA claim and granted recovery. Pat Dolan, 928 So.2d 196.

23

We affirm the trial court’s judgment finding the defendants liable to

Impressions under the Louisiana Unfair Trade Practices Act. We turn now to the last

issue in this matter.

Judgment Against Kenneth Gregory, Personally

Key asserts that the trial court erred in issuing a judgment that was

inconsistent with his prior reasons for judgment. His true objection is that the

judgment states that Kenneth Gregory is liable in solido with Key, while the court’s

written reasons do not. Where the inconsistency is between the reasons for judgment

and the judgment itself, our jurisprudence is clear. A judgment and reasons for

judgment are two separate and distinct documents. La.Code Civ.P. art. 1918.

Appeals are taken from the judgment, not the written reasons for judgment. Greater

New Orleans Expressway Com’n v. Olivier, 02-2795 (La. 11/18/03), 860 So.2d 22.

Kenneth Gregory argues that he cannot be held personally liable with

Key because no evidence was introduced at trial to dispute the distinction between

Key, the corporation, and Gregory, the natural person. Therefore, piercing the

corporate veil was improper. Louisiana courts are reluctant to hold a shareholder,

officer, or director of a corporation personally liable for corporate obligations, in the

absence of fraud, malfeasance, or criminal wrongdoing. La.R.S. 12:93(B) and 12:955.

Manning v. United Medical Corp. of New Orleans, 04-0035 (La.App. 4 Cir. 4/20/05),

902 So.2d 406, writ denied, 05-1313 (La. 12/9/05), 916 So.2d 1063. Impressions

asserts that Gregory’s actions fall under the fraud exception, and that the court was

correct in finding him personally liable. We agree.

5
La.R.S. 12:95. Actions for fraud: Nothing in this Chapter shall be construed as in
derogation of any rights which any person may by law have against a promoter, subscriber,
shareholder, director or officer, or the corporation, because of any fraud practiced upon him by any
of such persons or the corporation, or in derogation of any right which the corporation may have
because of any fraud practiced upon it by any of these persons.

24

“The courts have recognized two exceptional circumstances where the

rule of non-liability of shareholders for the debts of the corporation will be

disregarded. The first is where the shareholders acting through the corporation

commit fraud or deceit on the third party. The second is where the shareholders

disregard the corporate formalities to such an extent that the shareholders and the

corporation become indistinguishable, or ‘alter egos.’” Amoco Production Co. v.

Texaco, Inc., 02-240 (La.App. 3 Cir. 1/29/03), 838 So.2d 821, 833, writs denied, 03-

1102, 03-1104 (La. 6/6/03), 845 So.2d 1096. Here, where Impressions alleged fraud

and deceit against Gregory and named him individually in its petition, and where

fraud and deceit were found, Impressions is not required to prove alter ego status.

In Laurents v. Louisiana Mobile Homes, Inc., 96-976 (La.App. 3 Cir.

2/5/97), 689 So.2d 536, mobile home purchasers filed a petition for damages for

violation LUTPA and for fraud, breach of warranty, breach of contract, and deceit,

naming as defendants the seller, Louisiana Mobile Homes, Inc. (LMHI), and Thomas

Reid, the general manager for LMHI. The plaintiffs sought damages, penalties, and

attorney fees from the defendants for the untimely delivery of the mobile home, for

defects in its structure and workmanship, for nonconformity of the mobile home to

the contract, for false representations, fraud, and for their refusal to return their

deposit on the mobile home.

A panel of this court found that the evidence supported the plaintiffs’

claims that the defendants had committed unfair trade practices and that the manager

was personally liable and liable in solido with the corporation. In so finding, we

articulated as follows:

If an officer or agent of a corporation through his fault
injures another to whom he owes a personal duty, the
officer or agent is liable personally to the injured third
party, regardless of whether the act culminating in the

25

injury is committed by or for the corporation and regardless
of whether liability might also attach to the corporation.
Cagle v. Loyd, 617 So.2d 592 (La.App. 3 Cir.), writs
denied, 620 So.2d 877 (La.1993);
Hemphill-Kunstler-Buhler, Auctioneers & Appraisers v.
Davis Wholesale Elecs. Supply Co., Inc., 516 So.2d 402
(La.App. 1 Cir. 1987), writ denied, 520 So.2d 751
(La.1988).

Laurents, 689 So.2d at 543.

After citing the circumstances enunciated in Canter v. Koehring Co., 283 So.2d 716,

721 (La.1973), under which an officer, agent, or employee is liable to a third person

damaged solely by reason of the individual’s breach of an employment-imposed duty,

this court found in Laurents that Mr. Reid breached the duty of care through personal

fault via the representations that he made to the plaintiffs.

Similarly, in this case, Key and Gregory owed a duty to Impressions to

refrain from engaging in fraudulent, unfair, and deceptive acts and practices in

connection with describing and delivering the 8050 copier and accessories, in

disbursing the funds from the G.E. Capital transaction, and in the use of the 7920

copier. Gregory, the owner and president of Key, negotiated the transaction with G.E.

Capital; it was his handwritten description of equipment on the Lease Agreement that

bound Ms. Guidry’s company for $106,005.00; and, it was his personal

representations to Impressions on numerous occasions that the 7920 lease would be

paid off from those funds. Accordingly, Mr. Gregory breached the duty of care

through personal fault. We find no manifest error in the trial court’s judgment that

Mr. Gregory is personally liable to Impressions.

26

IV.

CONCLUSION

Based upon the foregoing, we affirm the trial court’s judgment in favor

of Impressions and against Key and Kenneth Gregory, in solido, for $22,000.00,

which we characterize as recovery of converted funds from the G.E. Capital

transaction. We further affirm the trial court’s award in favor of Impressions and

against Key and Gregory, in solido, for past due rental on the 7920 at the time of trial,

but we reduce the amount from $14,800.00 to $13,600.00, as set forth above.

We also affirm the trial court’s award in favor of Impressions and against

Key and Gregory, in solido, for attorney fees in the amount of $12,101.38. We affirm

the trial court’s award of $400.00 per month in rental fees for the use of the 7920

copier from November 2007, until the copier is returned to Impressions. That

particular award was against Key alone.

Finally, we affirm the trial court’s award in favor of Key and against

Impressions for maintenance services on the newer 8050 copier for 2005, but we

reduce the amount, for reasons set forth above, from $5,241.66 to $3,737.29.

All of these awards are subject to judicial interest as provided for in the

judgment. All costs of this appeal are assessed against Key and Gregory.

AMENDED AND AFFIRMED AS AMENDED.

27