Robert Duncan v. Moreno Energy, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 08-786

ROBERT DUNCAN, ET AL.

VERSUS

MORENO ENERGY, INC., ET AL.

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF IBERIA, NO. 107506-C
HONORABLE JOHN E. CONERY, DISTRICT JUDGE

**********

JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Billy Howard Ezell, and J. David Painter,
Judges.

AFFIRMED.

Edward Paul Landry
Landry & Watkins
P. O. Drawer 12040
New Iberia, LA 70562-2040
(337) 234-5921
Counsel for Plaintiff/Appellant:
Robert Duncan

Bernard E. Boudreaux, Jr.
Breazeale, Sachse & Wilson
One American Place, Suite 2300
Baton Rouge, LA 70821-3197
(225) 387-4000
Counsel for Defendants/Appellees:
Michael B. Moreno
Carolyn Blanchard
Moreno Energy, Inc.

James Ray McClelland
Aycock, Horne & Coleman
P.O. Box 592
Franklin, LA 70538
(337) 828-1880
Counsel for Defendants/Appellees:
Wayne May
Robert N. Crown
Emile Dumesnil
Charles Kilgore
William Rucks, III
William Rucks, IV
Ray Flores

David Michael Thorguson
Lippman, Mahfouz & Martin
P. O. Box 2526
Morgan City, LA 70381-1833
(504) 384-1833
Counsel for Defendants/Appellees:
Carolyn Blanchard
Michael B. Moreno

Mark J. Mansfield
Dutel & Tranchina, LLC
517 N. Columbia St.
Covington, LA 70533
(985) 892-7307
Counsel for Plaintiff/Appellant:
Charlie Hodges

SAUNDERS, Judge.

This is a case wherein two minority shareholders filed suit directly against two

former board members/officers of a corporation that has ceased to exist as it was

merged with a newly formed parent corporation via a short-form merger under

La.R.S. 12:112(G). The disgruntled shareholders alleged, inter alia, that the former

board members/officers breached their fiduciary duties to them and committed

fraudulent actions upon them.

The former board members/officers moved for, and were granted, a partial

motion for summary judgment finding that the short-form merger between the parent

and subsidiary corporations was valid because the disgruntled shareholders failed to

timely object to the merger under La.R.S. 12:131. Further, the trial court found in the

summary judgment that the disgruntled shareholders’ outstanding discovery related

to their claims for breach of fiduciary duty and fraud were irrelevant to whether the

merger was valid.

The disgruntled shareholders appealed this ruling, alleging three assignments

of error. We find that these assignments of error are without merit and affirm the trial

court’s granting of the partial summary judgment.

FACTS AND PROCEDURAL HISTORY:

Robert Duncan and Charlie Hodges (plaintiffs), were shareholders in Moreno

Energy Services, Inc. (MES).The cumulative number of shares owned collectively by

plaintiffs was less than ten percent (10%) of the total number of outstanding shares

in MES.

On July 19, 2005, Moreno Energy, Inc. (MEI) was incorporated. The initial

directors of MEI were Michel Moreno and Carolyn Blanchard (Defendants). Several

other shareholders of MES contributed all of their MES shares to MEI on an

equivalent share for share basis. As a result of this contribution, MEI obtained a 90%

controlling interest in MES.

On July, 22, 2005, MEI merged with MES via a short-form merger under

La.R.S. 12:112(G). The merger certificate, as approved at the MEI board of directors’

meeting, was filed with the Louisiana Secretary of State and later in Lafayette Parish.

On that date, Plaintiffs were given the following documents: the resolution of MEI,

the notice of merger, the certificate of merger, the articles of incorporation of MEI,

and a copy of La.R.S. 12:131. Plaintiffs were then tendered what Defendants believed

to be the fair value for their shares of MES.

On May 17, 2006, Plaintiffs filed this suit in Iberia Parish. Defendants

responded by filing peremptory exceptions of no cause of action and no right of

action, and a declinatory exception of vagueness. Specifically, Defendants sought to

dismiss the entire petition due to vagueness and to dismiss, as a matter of law,

Plaintiffs’ Louisiana Unfair Trade Practices Act (LUTPA) claim. The hearing on the

exceptions was set for December 22, 2006. After the hearing, the district court

rendered a judgment dismissing Plaintiffs’ LUTPA claim, but gave them thirty days

to amend.

On or about January 12, 2007, Plaintiffs filed their second amended and

supplemental petition, and then filed their third amended and supplemental petition

on February 9, 2007. Defendants answered the two amended petitions and then, on

March 16, 2007, filed a motion for partial summary judgment on the issues presented

in this appeal regarding the validity of the short-form merger between MES and MEI.

The motion for partial summary judgment was set for hearing on June 19, 2007.

Prior to the hearing, Plaintiffs asked for and were granted, a continuance of that

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hearing on the issue of the efficacy of the short-form merger in order to review

documents presented to them by Defendants. The court then heard argument on

Defendants’ exceptions of no right and no cause of action on Plaintiffs’ LUTPA

claims and took the matter under advisement.

On July 6, 2007, the trial court rendered written reasons granting Defendants’

exceptions of no right and no cause of action on Plaintiffs’ LUTPA claims and

mistakenly granted Defendants’ motion for partial summary judgment verifying the

efficacy of the short-form merger. After the mistake was brought to the trial court’s

attention, the matter was reset for hearing on November 26, 2007. In the interim,

Plaintiffs filed a fourth amended and supplemental petition which prayed for actual

rescission of the short-form merger.

The trial court granted Defendants’ motion for partial summary judgment as to

the validity of the short-form merger on December 20, 2007. The trial court cited

La.R.S. 12:131 and ruled that Plaintiffs failed to meet the specific time frame within

which to object to the short-form merger as set out specifically in the statute. A

judgment was signed on February 11, 2008, and from that judgment this appeal is

taken by Plaintiffs raising three assignments of error.

ASSIGNMENTS OF ERROR:

1. Did the trial court err in holding that outstanding discovery motions on
Plaintiffs’ fraud and breach of fiduciary duty claims have no relevance to the
trial court’s decision on Plaintiffs’ claims pertaining to the validity of the short-
form merger between MES and MEI?

2. Did the trial court err in holding that no genuine issues of material fact are in
dispute as to the validity of the short-form merger and, thus, Defendants are
entitled to a summary judgment as a matter of law pertaining to the efficacy of
the merger?

3. Did the trial court err in holding that the Plaintiffs are forever precluded from
challenging the merger because they did not timely object to the merger in a

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manner set forth in La.R.S. 12:131?

ASSIGNMENT OF ERROR NUMBER ONE:

Plaintiffs assert that trial court erred in holding that their outstanding discovery

motions related to their fraud and breach of fiduciary duty claims had no relevance

to their claims related to the validity of the short-form merger between MES and MEI.

We find that this assertion is without merit.

When dealing with pretrial discovery matters, a trial court has broad discretion.

See Stolzle v. Safety & Sys. Assur. Consultants, Inc., 02-1197 (La. 5/24/02), 819

So.2d 287. Thus, the standard of review in this assignment is whether the trial court

abused that discretion.

Louisiana Code of Civil Procedure Article 1422 states, in part, “[p]arties may

obtain discovery regarding any matter, not privileged, which is relevant to the subject

matter involved in the pending action.” Louisiana Code of Evidence Article 401

defines relevant evidence as “evidence having any tendency to make the existence of

any fact that is of consequence to the determination of the action more probable or

less probable than it would be without the evidence.”

The discoverability test under La.Code Civ.P. art. 1422, entails first asking

whether answering the discovery is feasible and practicable. If that answer is in the

affirmative, then the court determines whether an answer to the discovery would

“expedite the litigation by either narrowing the area of controversy or avoiding

unnecessary testimony or providing a lead to evidence.” MTU of N.Am., Inc, et.al. v.

Raven Marine, Inc., et.al., 475 So.2d 1063, 1067 (La.1985).

Accordingly, in this assignment, we will adjudicate whether the trial court

abused its discretion in its finding that Plaintiffs’ outstanding discovery had no

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relevance to their claim that the short-form merger between MES and MEI was

invalid. After reviewing the record, we find that, given the admittedly draconian

statutory scheme setting up the “rights” and duties of the minority shareholder when

a short-form merger transpires, the trial court did not abuse that discretion.

Plaintiffs argue that Defendants had a fiduciary duty to them and that

Defendants breach of that duty through fraud could result in a invalidation of the

merger. We agree that under La.R.S. 12:91 Defendants had a fiduciary duty to

Plaintiffs. However, we cannot agree that the trial court abused its discretion in

finding that the existence of such a duty, and whether that duty was breached through

fraud or the like, was irrelevant to the summary judgment granted to Defendants

given the statutory scheme set up by our state legislature that we discuss further in

Assignments of Error Numbers Two and Three.

Plaintiffs state in brief that their suit for fraud and breach of fiduciary duties

go directly to the efficacy of the merger and are, therefore, interrelated. Thus,

Plaintiffs conclude that the trial court should not have found their outstanding

discovery irrelevant. Plaintiffs then follow up this assertion with no citations to the

record displaying a single example of how any of their outstanding discovery was

relevant to whether the merger between MES and MEI was proper or valid, and, thus,

the trial court’s decision was an abuse of discretion.

Rather, Plaintiffs first cite La.R.S. 12:91 for the assertion that directors and

officers have a fiduciary duty to the corporation and shareholders. They cite Crochet

v. Cisco Systems, Inc., 02-1357 (La.App. 3 Cir. 5/28/03), 847 So.2d 253, writ denied,

03-1838 (La. 10/17/03), 855 So.2d 765, and Levy v. Billeaud, 443 So.2d 539

(La.1983), for the proposition that they can sue Defendants directly, rather than via

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a derivative action on behalf of the corporation.

While these cases do stand for the cited postulates, we do not find any

correlation between La.R.S. 12:91, or the cases cited above, to this assignment of

error raised by Plaintiffs. The partial summary judgment granted by the trial court did

not declare Plaintiffs’ claims against the Defendants for a breach of fiduciary duty or

fraud dismissed, nor did it find that Defendants had no fiduciary duty to them or that

Plaintiffs had to sue Defendants via a derivative action. It simply resulted in the trial

court denying Plaintiffs the right to challenge the validity of the merger between MES

and MEI, and declaring their outstanding discovery irrelevant to that issue.

Plaintiffs next cites Delaware law, Nebel v. Southwest Bankcorp, Inc., 1999

WL 135259 (Del.Ch.1999),1 to bring forth the notion that when a short-form merger

occurs, directors and officers have a fiduciary duty to shareholders. Without regard

in this particular assignment of error as to whether Defendants actually have a

fiduciary duty to Plaintiffs in a short-form merger in Louisiana, again, this court can

find no correlation amongst the case cited by Plaintiffs, the granted summary

judgment, Plaintiffs’ outstanding discovery, and how the trial court abused its

discretion in its finding.

Finally, Plaintiffs cite Yuspeh v. Koch, 02-698 (La.App 5 Cir. 2/25/03), 840

So.2d 41, for the proposition that the trial court’s action in upholding the merger,

without considering any evidence as to the feasibility in undoing the merger,

promotes and safeguards fraudulent conduct and breach of corporate fiduciary duties.

How Plaintiffs claim that Yuspeh stands for this proposition is puzzling.

The Plaintiffs in Yuspeh, did not seek a rescission of the merger. The Yuspeh

1
The Nebel case was not reported in the Atlantic Second and is a Delaware Chancery
Court case.

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court found that a Plaintiff can attempt to recover monetary damages directly from

directors or officers for fraudulent actions or breach of fiduciary duties. The same can

be said for Plaintiffs in the case before us when they continue to pursue damages from

Defendants after the partial summary judgment rendered at the trial level. Regardless,

we fail to see how any of the arguments made by Plaintiffs lead us to the conclusion

the trial court abused its discretion when it found that their outstanding discovery is

irrelevant to the validity of the merger under Louisiana law pertaining to short-form

mergers. Nor do Plaintiffs explain how any answer made by Defendants to their

outstanding discovery could result in the remedy they seek, having the merger

invalidated in some fashion. Given that it was their burden to show that the trial court

abused its discretion, and they have failed to do so, we affirm the trial court’s finding

in this regard.

ASSIGNMENT OF ERROR NUMBER TWO:

Plaintiffs argue that the trial court erred in holding that no genuine issues of

material fact are in dispute as to the validity of the short-form merger and, thus,

Defendants are entitled to a summary judgment as a matter of law pertaining to the

efficacy of the merger. Plaintiff’s argument below has no merit.

The standard of review for a summary judgment is that of de novo. See Shelton

v. Standard/700 Assocs., 01-587 (La.10/16/01), 798 So.2d 60. Louisiana Revised

Statutes 12:112(G), in pertinent part, states:

(1) If a business, nonprofit, or foreign corporation owns at least ninety
percent of the outstanding shares of each class of one or more business,
nonprofit, or foreign corporations, none of the subsidiary nonprofit
corporations has any nonshareholding members, and the laws under
which any foreign corporations involved were formed permit merger by
the procedure prescribed in this Subsection, the parent may:

....

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(b) Merge into itself one or more such subsidiaries by delivering
to the secretary of state, who shall record it after all fees and
charges have been paid as required by law, a certificate, signed
and acknowledged by its president or a vice-president and its
secretary or an assistant secretary, setting forth a copy of the
resolution of its board of directors effecting such merger and the
date of adoption thereof.

(2) If the parent owns less than all of the outstanding shares of any
subsidiary merged into itself, the resolution of the board of directors
shall also state the terms and conditions of the merger, including the
shares, secured or unsecured obligations, cash or other consideration to
be delivered to the other shareholders of such subsidiary.

(3) A duplicate original of the certificate, issued by the secretary of
state, shall be filed for record with the recorder of mortgages of each
parish in this state in which each business corporation involved has its
registered office, and with the recorder of conveyances of each parish in
this state in which any business, nonprofit, or foreign corporation
involved owns immovable property, title to which will be transferred as
a result of the merger. A copy of the certificate shall, within twenty days
after filing thereof with the secretary of state, be mailed to each
shareholder, other than the parent corporation, of each subsidiary
involved in the merger, at his last known address. If the surviving
corporation is a business corporation, its name may be changed,
effective upon effectiveness of the merger, by inclusion of a provision
to that effect in the resolution of the parent corporation's board of
directors.

According to La.R.S. 12:112(G) above, in order for the merger between

MES and MEI to have been properly a short-form merger, the following must

be shown:

• The parent company, MEI, must own ninety percent (90%) of the
outstanding shares of its subsidiary, MES.

• A merger certificate had to have been filed with the Louisiana Secretary
of State that was signed and acknowledged by MES/MEI’s president
or a vice-president and MES/MEI’s secretary or an assistant secretary.

• Attached to the merger certificate must have been a resolution adopted
by MES/MEI’s board of directors that stated the terms and conditions
of the merger, including the shares, secured or unsecured obligations,
cash or other consideration to be delivered to the other shareholders
MES.

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• A duplicate certificate of merger has to have been filed with the
recorder of mortgages in any parish in which either MES or MEI has its
registered office, and with the recorder of conveyances of each parish
in this state in which either MES or MEI owns immovable property,
title to which will be transferred as a result of the merger.

• A copy of the certificate, within twenty days after filing thereof with
the secretary of state, has to have been mailed to each shareholder of
MES, other than those who own stock in MEI, at his or her last known
address.

Defendants have asserted that MES and MEI were merged under La.R.S.

12:112(G), and made references to the record supporting their assertions that each of

the above requirements were met. Plaintiffs have not contended that any of the above

requisites were lacking. Moreover, and more importantly, we find that the record

necessitates us finding that all of the above criteria were met. As such, we can only

reasonably conclude that MES and MEI were merged under La.R.S. 12:112(G).

In this assignment, rather than attempting to raise a genuine issue of material

fact as to whether the merger was valid under La.R.S. 12:112(G), Plaintiffs’ argument

focuses on whether Defendants met its burden of proof. Plaintiffs first correctly point

out that Defendants motioned the trial court for the summary judgment, and, second,

because it is Defendants’ burden to prove validity of the merger at trial, it was

Defendants’ burden to show that no genuine issues of material fact are in dispute on

the validity of the short-form merger.

Plaintiffs then contend that, under cited jurisprudence, as part of Defendants’

burden in proving that no genuine issue of material fact exists as to the validity of the

merger, Defendants must prove the merger was in compliance with standards of

“entire fairness.” Plaintiffs argue that, given that Defendants presented no evidence

that they complied with the standards of “entire fairness,” Defendants failed to meet

their burden of proof and, therefore, their motion for summary judgment must fail.

Were it true that Defendants need show that the merger was in compliance with

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standards of “entire fairness,” their motion for summary judgment perhaps would fail.

However, we find that Plaintiffs’ argument that “entire fairness” is owed to them by

Defendants is not well founded.

Plaintiffs cite Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238 (1939), for the

contention that directors, officers, and dominant or controlling shareholders that have

dealings with the company that they hold power over are subject to rigorous scrutiny.

Plaintiffs argue that Pepper stands for the notion that when any director, officer, or

dominant stockholder’s engagement with the corporation is challenged, the burden

is on the them to not only prove the good faith of the transaction, but also to show its

inherent fairness from the viewpoint of those interested therein, i.e. minority

shareholders, etc.

We do not reach the issue of whether the general burden enunciated in Pepper

exists when the director, officers, or dominant stockholder’s engagement with the

corporation is challenged because, in the case before us, under La.R.S. 12:131,

Plaintiffs have failed to timely or properly challenge Defendants’ engagement with

the corporation.

Louisiana Revised Statutes 12:131(emphasis added), in pertinent part, states:

A. . . . If a corporation has become a party to a merger pursuant to
La.R.S. 12:112(G), the shareholders of any subsidiaries party to
the merger shall have the right to dissent without regard to the
proportion of the voting power which approved the merger and
despite the fact that the merger was not approved by vote of the
shareholders of any of the corporations involved.

....

C. . . .(2) Each such shareholder may, within twenty days
after the mailing of such notice to him, but not thereafter,
file with the corporation a demand in writing for the fair
cash value of his shares as of the day before such vote was
taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of
the corporation may be sent, and at the same time deposit

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in escrow in a chartered bank or trust company located in
the parish of the registered office of the corporation, the
certificates representing his shares, duly endorsed and
transferred to the corporation upon the sole condition that
said certificates shall be delivered to the corporation upon
payment of the value of the shares determined in
accordance with the provisions of this Section. With his
demand the shareholder shall deliver to the corporation, the
written acknowledgment of such bank or trust company
that it so holds his certificates of stock.

....

(4) In the case of a merger pursuant to R.S.
12:112(G), the dissenting shareholder need not file
an objection with the corporation nor vote against
the merger, but need only file with the corporation
within twenty days after a copy of the merger
certificate was mailed to him, a demand in writing
for the cash value of his shares as of the day before
the certificate was filed with the secretary of state,
state in such demand the value demanded and a post
office address to which the corporation's reply may
be sent, deposit the certificates representing his
shares in escrow as provided in Paragraph (2), and
deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust
company as prescribed in Paragraph (2).

....

E. In case of disagreement as to such fair cash value, or as
to whether any payment is due, after compliance by the
parties with the provisions of subsections C and D of this
section, the dissatisfied shareholder, within sixty days after
receipt of notice in writing of the corporation's
disagreement, but not thereafter, may file suit against the
corporation, or the merged or consolidated corporation, as
the case may be, in the district court of the parish in which
the corporation or the merged or consolidated corporation,
as the case may be, has its registered office, praying the
court to fix and decree the fair cash value of the dissatisfied
shareholder's shares as of the day before such corporate
action complained of was taken, and the court shall, on
such evidence as may be adduced in relation thereto,
determine summarily whether any payment is due, and, if
so, such cash value, and render judgment accordingly. Any
shareholder entitled to file such suit may, within such
sixty-day period but not thereafter, intervene as a plaintiff
in such suit filed by another shareholder, and recover

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therein judgment against the corporation for the fair cash
value of his shares. No order or decree shall be made by the
court staying the proposed corporate action, and any such
corporate action may be carried to completion
notwithstanding any such suit. Failure of the shareholder to
bring suit, or to intervene in such a suit, within sixty days
after receipt of notice of disagreement by the corporation
shall conclusively bind the shareholder (1) by the
corporation's statement that no payment is due, or (2) if the
corporation does not contend that no payment is due, to
accept the value of his shares as fixed by the corporation in
its notice of disagreement.

There is no evidence in the record that Plaintiffs timely or properly filed

anything under the admittedly onerous statutory scheme. In order to dissent to a short-

form merger, La.R.S. 12:131 requires that, within twenty days, a shareholder must

perform a plethora of requisites, including, but not limited to, filing a written demand

for the fair cash value of his or her shares, with said demand indicating a post office

address for the corporation to reply. Moreover, again within twenty days, the statute

requires that the disgruntled former shareholders deposit, in escrow, the certificates

representative of his or her shares in a trust or chartered bank. Again, there is no

evidence in the record that Plaintiffs met this requisite.

Defendants vehemently argue that standards of “entire fairness” are not

necessary when dealing with a short-form merger. Given that Plaintiffs clearly did not

satisfy the requirements set out in La.R.S. 12:131(C), whether “entire fairness” is due

Plaintiffs is a question that we do not reach. Defendants would not need to prove that

they satisfied the standards of “entire fairness” in the case before us, even if we would

reach the conclusion that they are necessary in a short-form merger scenario. As such,

Plaintiffs argument must fail.

In summation, after a de novo review of the record, we find that Defendants

presented all the necessary evidence that there is no genuine issue of material fact that

the short-form merger between MES and MEI was valid under La.R.S. 12:112(G). As

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such, they were entitled to a judgment as a matter of law on this issue. Accordingly,

we affirm the trial court’s judgment in this regard.

ASSIGNMENT OF ERROR NUMBER THREE:

In their final assignment, Plaintiffs assert that the trial court erred in holding

that they are forever precluded from challenging the merger of MES and MEI because

they did not timely object to the merger in a manner set forth in La.R.S. 12:131. Due

to the clear language set up by our legislature, we find that this assertion lacks merit.

As in Assignment of Error #2, the trial court reached its ruling in question via

summary judgment. Thus, again in this assignment, the applicable standard of review

is that of de novo. See Shelton, 798 So.2d 60.

As we stated above in Assignment of Error Number Two, it is clear to this

court from the record that Plaintiffs failed to meet the burden placed upon them by

La.R.S. 12:131(C). Plaintiffs have not ever properly or timely filed a demand with the

Defendants for the fair value of their shares, much less traversed the several

conditions placed before them by the cited statutes.

Further, even if Plaintiffs could in any way be found to have met all of the

requirements of La.R.S. 12:131(C), under La.R.S. 12:131(E) they did not file suit

against Defendants in the proper jurisdiction to contest the merger in any way. MES

and MEI are registered in Lafayette Parish; Plaintiffs filed suit in Iberia Parish. While

this court freely expresses its sympathy for minority shareholders who are

commanded to perform numerous, onerous, perhaps even unreasonable tasks within

a very short time frame structured in La.R.S. 12:131, it is nevertheless clear that

Plaintiffs in this case failed to perform even a single enumerated task within the time

limits of the statute.

This court, in McCall v. McCall Enterprises, Inc., 578 So.2d 260 (La.App 3

13

Cir.), writ denied, 581 So.2d 708 (La.1991), found that La.R.S. 12:131(C) set forth

mandatory time periods. The McCall court then went on to state:

Plaintiffs’ failure to fulfill a necessary prerequisite for filing suit
for an appraisal of the fair market value of their shares of stock resulted
in a conclusive presumption that they acquiesced in the corporate action
proposed or taken. La.R.S. 12:131(C), supra. In this case, they are
deemed to have acquiesced in the merger and all resolutions of the
merger, including the cash value set by the board for their shares of
stock. Thus, plaintiffs have lost their right to bring an action for a court
appraisal of the fair cash value of their stock shares.

Id. at 263.

We agree with the McCall court that La.R.S. 12:131(C) sets up mandatory time

periods. However, our opinion does differ from the proposition that there is a

presumption that any “silent” shareholder has acquiesced in the corporate activities.

Rather, in disposition of the case before us, we read the language of La.R.S. 12:131

to stand for the proposition that our legislature has chosen to provide solely a

monetary remedy to a minority shareholder who has been “frozen out.” Moreover, it

is apparent to this court that our legislature, should it have intended to give the

minority shareholder in a short-form merger the power to “unmerge” what has been

merged, it would have done so expressly.

This court recognizes and has voiced that the legislation at issue in the case

before us is a bit one-sided. Nevertheless, we recognize that it is the job of our

legislature to make the laws, regardless of how wise those laws may be, and our job

to interpret them, always mindful of their equity. Whether this legislation has the

necessary level of equity at its core has already been ruled upon by the Louisiana

Fourth Circuit in Giraud v. Gillis, Ellis & Baker, Inc., 488 So.2d 1261 (La.App 4 Cir.

1986). As this particular issue has not been brought before us, under the canopy of

judicial restraint, we refrain from either approving or denouncing the validity of the

statutory scheme.

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As such, after we have reviewed the record in its entirety, we find that

Plaintiffs have clearly not met the requirements of La.R.S. 12:131, and that they are

forever barred, not only from attempting to invalidate the merger between MES and

MEI, but are also barred from contesting the value assigned to their former stocks in

MES. However, Plaintiffs can still recover from Defendants for the damage they may

have caused to the value of Plaintiffs’ former stocks in MES. The partial summary

judgment below has no bearing on Plaintiffs’ claims for monetary damages from

Defendants via breach of fiduciary duties or fraud. Accordingly, we affirm the trial

court’s findings disputed in this assignment of error.

CONCLUSION:

Plaintiffs raised three assignments of error. We have affirmed the trial court’s

findings on all three assignments. As such, we cast Plaintiffs for all costs of these

proceedings.

AFFIRMED.

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