Succession of James Robert Cole, Sr.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

12-802

SUCCESSION OF JAMES ROBERT COLE, SR.

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APPEAL FROM THE
ELEVENTH JUDICIAL DISTRICT COURT
PARISH OF SABINE, NO. 59,854
HONORABLE STEPHEN BRUCE BEASLEY, DISTRICT JUDGE

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ULYSSES GENE THIBODEAUX
CHIEF JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, John D. Saunders, and
Phyllis M. Keaty, Judges.

AFFIRMED.

Byron Andrew Richie
Richie, Richie & Oberle, L.L.P.
P. O. Box 44065
Shreveport, LA 71134
Telephone: (318) 222-8305
COUNSEL FOR:
Appellant - Cynthia Anne Cole

Robert Patrick Vance
Jones, Walker, Waechter, Poitevent, Carrére & Denégre, L.L.P.
201 St. Charles Avenue – Suite 5100
New Orleans, LA 70170-5100
Telephone: (504) 582-8336
COUNSEL FOR:
Appellee - James R. Cole, Jr., Individually

Jean-Paul Perrault
McGlinchey, Stafford, P.L.L.C.
301 Main Street - Suite 1400
Baton Rouge, LA 70801-1916
Telephone: (225) 383-9000
COUNSEL FOR:
Appellee – James R. Cole, Jr., as Executor

THIBODEAUX, Chief Judge.

In this dispute over the appropriate disposition of shares of bank stocks

inherited by two siblings, legatee Cynthia A. Cole (Cindy) appeals from a judgment

dismissing her attempt to rescind a compromise and her claim of a breach of fiduciary

duty, and granting the exceptions of her brother, co-heir, and executor of her father’s

estate, James Robert Cole, Jr. (Jim). For the following reasons, we affirm the

judgment of the trial court.

I.

ISSUES

We must decide:
(1) whether the trial court manifestly erred in finding a compromise
between the parties and in granting Jim Cole’s exception of res judicata;

(2) whether the trial court erred in granting Jim Cole’s exception of
prescription and dismissing Cindy Cole’s claims for damages for breach
of fiduciary duty; and

(3) whether the trial court abused its discretion in charging one half of
the litigation expenses to the estate.

II.

FACTS AND PROCEDURAL HISTORY

The deceased, James Robert Cole, Sr. (Mr. Cole), was the majority

stockholder of Sabine Bancshares, Inc. (SBI), a bank holding company which owned

100% of the shares of Sabine State Bank & Trust Company in Sabine Parish,

Louisiana. In 2006 Mr. Cole executed a six-page will naming his son Jim as the

executor of his succession. At the time of his death in April 2007, Mr. Cole owned

7,041 shares, representing 70.67%, of the 9,963 outstanding shares in SBI; Jim and

Cindy each owned 1,406 shares; and thirteen other shareholders owned a total of 110

shares. Mr. Cole’s will provided for special bequests of movable and immovable

property, specific charitable donations, and it created a family trust for the

grandchildren, naming Jim as trustee and bequeathing 1,000 shares of the SBI stock to

the trust. The remaining 6,041 shares of SBI stock fell to the residual estate which

Mr. Cole left to his two children, Jim and Cindy, to “share and share, alike.”

As executor of the succession, during the eight months following his

father’s death, Jim filed approximately twenty-five petitions seeking authority to

continue business, pay estate debts, invest funds, sell timber, and sell immovable

property in private sales and public auctions. One of the directives in the will

instructed that the new trust created by the bequeathal of 1,000 shares of SBI stock, be

free of all estate and inheritance taxes of any nature, with all such taxes to be paid

from the residual estate. The federal estate and gift transfer taxes owed by the

succession came to approximately twenty-one million dollars, and they were due on

January 17, 2008.

On December 10, 2007, Jim filed a twelve-page petition for authority to

apportion the 6,041 shares of SBI stock, and the tax liability, equally between himself

and Cindy. The petition asserted that, while the executor [Jim] had netted

$9,466,207.00 for the succession, there remained a cash deficiency of $11,327,003.00

for the taxes due the following month. It sought authority for the executor to borrow

up to $8,000,000.00 and to collect $1,971,550.00 each, from Cindy and Jim, via

advances on their inheritances. The petition further sought authority to sell over 400

of Cindy’s shares of SBI stock to fund her cash contribution.

On January 4, 2008, Cindy filed an opposition to the December 10

petition, asserting that the succession had the financial capacity to borrow all of the

funds necessary to meet the tax liability without using the “extraordinary” means

suggested by Jim. She further asserted that Jim had failed in his duty as succession

representative to act in the best interest of the succession and its legatees by refusing

to consider alternative means of obtaining the funds to pay the taxes.

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On January 7, 2008, the trial court conducted a contradictory hearing on

Jim’s December 10 petition and Cindy’s opposition to it. Both Jim and Cindy were

present, and both were represented by counsel. After the entry of opening statements,

exhibits, stipulations, and some testimony by Cindy, the court recessed. When court

reconvened, the parties had reached an agreement, the terms of which were read into

the record by Jim’s attorney, characterizing the agreement as a compromise. Cindy’s

attorney agreed to the stipulated agreement as cited and further stipulated that Jim had

“complied with his fiduciary obligation as succession representative insofar as the

payment of the federal estate and generation skipping tax.”

On January 23, 2008, the parties jointly submitted and signed a consent

judgment entitled, Judgment on Petition by Succession Representative for Authority

Filed December 10, 2007. The 2008 consent judgment authorized the executor [Jim]

to apportion the 6,041 shares of SBI stock equally between Jim and Cindy, allocating

3,020.5 shares to each. Subsequently, Cindy obtained new counsel, and a dispute

arose over the division of the shares. The premise of Cindy’s dispute is that she

inherited an undivided interest in 6,041 shares, whose value as a controlling majority

block was severely diminished by the in-kind division authorized in the consent

judgment. She apparently seeks a partition by licitation at some point.

Cindy attempted unsuccessfully in March 2011 to get Jim to join her in a

motion to modify and partially annul the 2008 consent judgment. Jim filed a petition

for a declaratory judgment confirming the 2008 consent judgment.

On May 26, 2011, Cindy filed reconventional demands seeking to set

aside the 2008 consent judgment; seeking a declaratory judgment regarding the

indivision ownership of the stock; and seeking damages and attorney fees for breach

of fiduciary duty resulting in diminution of the value of the allocated shares.

Jim filed exceptions of res judicata and no cause of action as to Cindy’s

demands for setting aside the 2008 consent judgment, and he filed an exception of

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prescription as to Cindy’s demand for damages for breach of fiduciary duty. Due to a

dispute over the succession’s attorney fees, Jim also filed a motion for payment of

attorney fees.

Following a contradictory hearing, the trial court dismissed Cindy’s

claims regarding the allocation of the stock, declaring that the 2008 consent judgment

was a valid and enforceable compromise not subject to set aside or modification on

any of the grounds asserted. The judgment declared that the 6,041 shares of SBI stock

would be divided in kind with 3,020.5 shares going to each, Jim and Cindy, after all

debts and charges of the succession were paid.

The court’s judgment granted Jim’s exception of res judicata regarding

the preclusive effect of compromise; it pretermitted Jim’s exception of res judicata as

it pertained to a final judgment; and it pretermitted Jim’s exception of no cause of

action.

The judgment also granted Jim’s exception of prescription as to any and

all of Cindy’s claims based upon breach of fiduciary duty; and it granted in part and

denied in part Jim’s request for the payment of attorney fees from the succession.

Cindy filed the appeal. We must affirm the judgment of the trial court.

III.

STANDARD OF REVIEW

“The standard of review of a ruling sustaining an exception of res

judicata is manifest error when the exception is raised prior to the case being

submitted and evidence is received from both parties.” Steckler v. Lafayette Consol.

Gov’t, 11-427, p. 2 (La.App. 3 Cir. 11/2/11), 76 So.3d 161, 164 (citations omitted).

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); Rosell v. ESCO, 549 So.2d 840 (La.1989).

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IV.

LAW AND DISCUSSION

ISSUE (1): THE 2008 CONSENT JUDGMENT

Cindy now challenges the validity of the 2008 consent judgment as a

compromise and an apportionment of the inherited stock, asserting that it should be

set aside on grounds of mutual error, exceptional circumstances, the capacity of Jim

individually and as executor, non-compliance with notice/publication requirements,

violation of the Bank Holding Company Act of 1956, and provisional partition. We

find no manifest error in the trial court’s judgment dismissing these claims for the

following reasons.

Compromise

Compromise is governed by La.Civ.Code arts. 3071 through 3083. “A

compromise is a contract whereby the parties, through concessions made by one or

more of them, settle a dispute or uncertainty concerning an obligation or other legal

relationship.” La.Civ.Code art. 3071. It must be “made in writing or recited in open

court” rendering it “susceptible of being transcribed from the record of the

proceedings.” La.Civ.Code art. 3072. “A compromise precludes the parties from

bringing a subsequent action based upon the matter that was compromised.”

La.Civ.Code art. 3080.

Compromise agreements made to avoid litigation are favored by law, and

courts will not declare a settlement void without a clear showing that it violates good

morals or the public interest. Brignac v. Brignac, 96-1702 (La.App. 3 Cir. 6/18/97),

698 So.2d 953, writ denied, 97-2584 (La. 1/16/98), 706 So.2d 976.

The essential elements of a compromise are (1)
mutual intention of putting an end to the litigation and (2)
reciprocal concessions of the parties in adjustment of
their differences. The Code also specifically requires a
contract in writing. The party urging an exception of res
judicata based on a contract of compromise has the
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burden of proving each of the essential requirements by a
preponderance of the evidence.

Rivett v. State Farm Fire and Cas. Co., 508 So.2d 1356, 1359 (La.1987) (footnotes

omitted).

Here, the trial court found that the first element of compromise was

satisfied because Cindy and Jim appeared at the January 2008 hearing on Jim’s

disputed petition of December 10th which specifically asked for a partition of the

6,041 shares of SBI stock in the residual estate. During a recess of the hearing, the

parties expressed their intent to resolve the issues in the petition and thereafter placed

a compromise before the court and read it into the record, making apparent the mutual

intention of putting an end to this step of the litigation.

The trial court found the second element of a compromise met because

Jim and Cindy made reciprocal concessions in adjustment of their differences. In the

December 10th petition, Jim had sought to apportion the stock equally, or in kind,

resulting in the separate ownership of 3,020.5 shares each; he also sought authority to

reduce Cindy’s allocated shares from 3,020.5 to 2,604.5 and to sell those 416 shares

for book value in order to pay what he considered Cindy’s portion of the estate taxes,

$1,971,550.00. Cindy did not want her shares reduced and sold, and she did not want

to contribute $1,971,550.00 toward the payment of estate taxes. She wanted the estate

to borrow all funds needed for the difference between the tax debt and the cash on

hand, approximately $12,000,000.00, instead of borrowing only the $8,000,000.00

that Jim had initially suggested.

Jim conceded, agreeing to apportion the stock at 3,020.5 shares each,

without reducing Cindy’s allocation and without selling 416 of her shares to pay the

taxes; Jim further agreed to borrow up to $12,000,000.00 for the payment of taxes,

instead of $8,000,000.00; and he withdrew the requirement of the $1,971,550.00

contribution from Cindy toward the payment of taxes. Cindy in turn stipulated that

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Jim had fulfilled his fiduciary duty in funding the tax liability, thereby foregoing

future litigation on that issue.

The trial court found that the writing requirement was also satisfied. The

compromise was recited into the record in open court on the day of the hearing,

January 7, 2008, becoming part of the written minutes and written transcript of the

hearing. It was then recorded as a consent judgment signed by the court on January

23, 2008. Accordingly, the elements of a compromise are met under La.Civ.Code

arts. 3071 and 3072.

The compromise in this case also became a consent judgment wherein

the trial judge ORDERED, ADJUDGED, AND DECREED fourteen issues between

the parties.

A consent judgment is a determination of the rights
of the parties and acquires the authority of the thing
adjudged. McLain v. McLain, 486 So.2d 1044 (La.App.
2d Cir.1986); Townsend v. Townsend, 421 So.2d 969
(La.App. 3d Cir.1982), writ denied, 427 So.2d 1211
(La.1983). The thing adjudged is said of that which has
been decided by final judgment, from which there can be
no appeal, either because the appeal did not lie, or
because the time fixed by law for appealing is elapsed, or
because it has been affirmed on appeal. La. C.C. art.
3556(31); McLain, 486 So.2d at 1046.

Thibodeaux v. Thibodeaux, 511 So.2d 102, 105 (La.App. 3 Cir. 1987).

A consent judgment is, by its very nature, an
agreement between the parties to resolve their differences
and as such, it is not limited by the pleadings. In other
words, while the relief granted by the courts is limited by
the demands of the parties, the parties can, by agreement,
expand on that authority by means of a consent
judgment.

McLain, 486 So.2d at 1047.
Here, Cindy did not appeal or challenge the validity of the 2008

compromise and consent judgment for over three years. She now assigns six errors by

the trial court in its April 2012 judgment for refusing to set aside the 2008 consent

judgment.
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Mutual Error

Cindy asserts that the trial court erred in finding that the ownership

interest of the stock was knowingly in dispute at the January 7, 2008 hearing and in

failing to set aside the compromise on the basis of mutual error. We disagree. “A

compromise may be rescinded for error, fraud, and other grounds for the annulment of

contracts. Nevertheless, a compromise cannot be rescinded on grounds of error of law

or lesion.” La.Civ.Code art. 3082. Cindy argues that the allocation in the

compromise embodies an erroneous interpretation of her father’s testament, which she

claims was a factual error that can be used to rescind a compromise. This argument

has no merit. The interpretation of a testament is a question of law. Succession of

Collett, 09-70 (La.App. 3 Cir. 6/3/09), 11 So.3d 724, writ denied, 09-1485 (La.

10/2/09), 18 So.3d 112. It, therefore, cannot form the basis for the rescission of a

compromise.

Cindy cites La.Civ.Code art. 3076, which states: “A compromise settles

only those differences that the parties clearly intended to settle, including the

necessary consequences of what they express.” La.Civ.Code art. 3076. The record is

clear that the apportionment of the stock was intended to be a part of the compromise.

Cindy knew about stock valuations, and she wanted the apportionment. The expert

report that Cindy explains in depth as establishing the value difference between

majority and minority shares was issued in November of 2007 before the January

2008 hearing, compromise, and consent judgment.

Further, in her deposition on December 18, 2007, Cindy testified that she

had read the will and understood that the residual estate was to be divided equally

between herself and Jim. She stated at least four times that she agreed to the

allocation of 3,020.5 shares to each of them. Following the consent judgment in 2008,

Cindy’s second set of attorneys filed pleadings in 2009 and 2010 asserting that the

will of the deceased bequeathed half of the stock at issue to Jim and half to Cindy. It

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was not until Cindy hired her third set of attorneys that she argued in May of 2011

that the apportionment was not part of the compromise. Under La.Civ.Code art. 3076,

the ultimate loss in value was a necessary consequence of the division of the shares in

the compromise.

Exceptional Circumstances

Cindy asserts that the trial court erred in failing to set aside the 2008

judgment based upon “exceptional circumstances” pursuant to La.R.S. 13:4232(A)(1),

which provides exceptions to the general rule of res judicata. It states, in pertinent

part, that “[a] judgment does not bar another action by the plaintiff [w]hen exceptional

circumstances justify relief from the res judicata effect of the judgment.” La.R.S.

13:4232(A)(1). The exceptional circumstance urged by Cindy and considered by the

trial court was “the unknowing destruction of a controlling interest in a

$685,000,000.00 corporation.” The statute’s historical notes provide that the

discretion given to the judge to grant relief from a judgment for exceptional

circumstances “is necessary to allow the court to balance the principle of res judicata

with the interests of justice.” La.R.S. 13:4232, Comment - 1990. However, this

“discretion must be exercised on a case by case basis and such relief should be

granted only in truly exceptional cases, otherwise the purpose of res judicata would be

defeated.” Id.

The trial court found that the stock was susceptible to division in kind

and that such partitions in kind are favored by law under La.Code Civ.P. art. 4606. 1

The trial court articulated that, while dividing a majority block of stock equally

between two heirs may decrease its fair market value because of the loss of the control

1
Louisiana Code of Civil Procedure Article 4606 provides: “Except as otherwise provided
by law, or unless the property is indivisible by nature or cannot conveniently be divided, the court
shall order the partition to be made in kind.”

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premium, the court could “think of no instance where that would not be true for any

close[d] corporation as it is the nature of the corporate beast.” Where the court found

no exception carved out for corporate shares, it concluded that the loss of value was

commonplace rather than exceptional in corporate existence. It, therefore, did not rise

to the degree necessary to defeat a claim of res judicata.

The trial court further found that Cindy had knowledge of the valuation

and control premium before the 2008 judgment and that she should have raised the

issue or reserved it prior to signing the consent judgment. We agree. Comment –

1990 to La.R.S. 13:4232 states that the exception for exceptional circumstances “is

not intended to apply in the case where the plaintiff has simply failed to assert a right

or claim for damages through oversight or lack of proper preparation.” Accordingly,

we find no abuse of the trial court’s discretion in declining to find exceptional

circumstances.

Provisional or Definitive Partition

Cindy asserts that the trial court erred in failing to set aside the allocation

as a “provisional” partition rather than a “final” partition. We disagree. While the

trial court did not provide written reasons on this issue, the Louisiana Civil Code

provides for the nature of the partition of succession property:

Art. 1295. Definitive and provisional partitions,
definitions
Every partition is either definitive or provisional:

Definitive partition is that which is made in a
permanent and irrevocable manner;

Provisional partition is that which is made
provisionally, either of certain things before the rest can
be divided, or even of everything that is to be divided,
when the parties are not in a situation to make an
irrevocable partition.

Art. 1296. Definitive and provisional partitions,
distinguished

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By definitive partition is also understood the
judicial partition, made according to law; and by
provisional partition, that in which the formalities
prescribed by law have not been observed, or that by
which the parties are not definitively bound.

The allocation of shares in this case was definitive because the matter

was settled in a valid compromise, and, as previously indicated, the formal

requirements of a compromise under La.Civ.Code art. 3072 were met. The

compromise has, as between the interested parties, a force equal to the authority of

things adjudged. La.Civ.Code art. 3078. Further, in this case, the compromise

containing the allocation became a signed judgment of the court; therefore, it was a

judicial partition which is a definitive partition under La.Civ.Code art. 1296. We find

the following case instructive.

In Lapeyrouse v. Lapeyrouse, 98-0271 (La.App. 1 Cir. 2/19/99), 729

So.2d 682, the parties in ongoing litigation, prior to the trial to partition the

community property, notified the court that the matter had been settled, and both

parties executed a partition of community property agreement. In addition to the

agreement, a consent judgment was prepared and approved both by the plaintiff’s

attorney and the defendant’s attorney, and it was signed by the trial court and attached

to the court’s judgment. When the husband filed a pleading to rescind the partition for

lesion under La.Civ.Code art. 814, 2 the first circuit concluded that the partition at

issue was a judicial partition and that an action for lesion would lie only against an

2
We further note that La.Civ.Code art. 814 allows rescission of an extrajudicial partition for
lesion “if the value of the part received by a co-owner is less by more than one-fourth of the fair
market value of the portion he should have received.” Here, the fair market value of the stock was
settled with the IRS at $6,000.00 per share. One fourth (¼) or 25% of $6,000.00 is $1,500.00.
Therefore, to rescind a partition for lesion under Article 814, if there were a determination of
extrajudicial partition, which there is not, there must be a loss greater than $1,500.00 per share.
Cindy asserts a book value of $4,636.00 and a loss of $1,364.00 per share for the loss of the control
premium. Therefore, the loss per share would not be enough to rescind the partition for lesion under
Article 814. Further, as previously stated, the partition here was a compromise, which “cannot be
rescinded on grounds of error of law or lesion.” La.Civ.Code art. 3082.

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extrajudicial partition. It, therefore, upheld the exception of no cause of action and

dismissed the plaintiff’s suit.

Similarly, in Daigle v. Daigle, 06-346 (La.App. 3 Cir. 9/27/06), 940

So.2d 891, writ denied, 06-2914 (La. 2/16/07), 949 So.2d 418, when the husband

sought to annul the parties’ original partition of community property, arguing that it

was extrajudicial and subject to rescission on the grounds of lesion, pursuant to

La.Civ.Code art. 814, our court found that his action was barred by res judicata. Our

court stated that Daigle’s request that the trial court partition the community property

merely asked the trial court to do what had already been done. The original partition

was not an extrajudicial partition, but one approved by the trial court four years

earlier; therefore, the consent judgment was final, and options for reversal had

prescribed and no longer existed.

It is the public policy of our judicial system to provide
an unalterable method to terminate litigation. The Louisiana
Supreme Court has consistently held that legally confected
in-court judicial settlements are binding. Collins v. Capital
Valve and Fitting Co., 409 So.2d 579 (La.1982); Felder v.
Georgia Pacific Corp., 405 So.2d 521 (La.1981).
Adams v. Adams, 529 So.2d 877, 879 (La.App. 4 Cir.), writ denied, 533 So.2d 363

(La.1988).

Publication of Notice

Cindy further contends that the trial court erred in not setting aside the

compromise where Jim failed to publish notice of the compromise pursuant to the

La.Code Civ.P. arts. 3198 and 3229. Article 3198 provides that a succession

representative may “[e]ffect a compromise of an action or right of action by or against

the succession” with court approval “after notice as provided by Article 3229.”

Article 3229 provides that notice of an application for a court order under certain

articles, including Article 3198, be published once in the parish where the succession

proceeding is pending.
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Citing Couret v. Couret, 206 La. 85, 18 So.2d 661 (La.1944), the trial

court found that Cindy had waived her right to attack the judgment procedurally when

she knowingly, and with advice of counsel, consented to its rendition. Citing Brown

v. Sutton, 356 So.2d 965 (La.1978), the trial court stated that because Cindy was

present and well-represented by competent counsel, the lack of formal notice was

cured by actual notice. We find no manifest error in the trial court’s finding.

Capacity

Cindy asserts that Jim appeared in the compromise as the succession

representative, and not in a personal capacity. Thus, there was no compromise

between the co-heirs, only a compromise between Cindy as co-heir and Jim as

succession representative. This argument has no merit. While Jim did file the 2007

petition for authority, and the 2008 compromise and consent judgment, as the

executor of the succession, he also appeared personally as the only other co-heir.

Contrary to Cindy’s assertions attempting to analogize this compromise to the

compromise in Succession of Ramp, 212 So.2d 419 (La.1968), there were no absent

heirs when the compromise was confected. Jim was not absent, he was physically

there in person with Cindy, and they, alongside their attorneys, effected the

compromise together as the only two heirs to the succession.

The trial court found that Jim acted in a dual capacity for a number of

reasons: (1) the verification affidavit of the December 2007 petition adds Jim as an

individual co-heir and bespeaks his individual intent; (2) Jim effected the 2008

compromise and consent judgment with added individual capacity where the

judgment referred to him as the succession representative, and it also adjudicated his

individual rights via the obligation that he personally loan nearly two million dollars

to the succession; (3) the succession was powerless to obligate a co-heir to a personal

loan; therefore, it was Jim’s “additional, present and appearing capacity as individual

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co-heir that personally obligated him . . . [and] his two personas became fused in the

2008 Judgment;” (4) Cindy’s “wrong hat” claim must be available for all co-heirs,

including Jim, and there would be no logic in allowing Jim to unravel his personal

obligation and back out of the personal loan because he was wearing the hat of

executor of the succession. We agree with the trial court, “one mind obligated two

personas.”

Bank Holding Company Act

Cindy asserts that the apportionment which divided the controlling

interest in SBI should have been set aside under the Bank Holding Company Act of

1956, 12 U.S.C. §§ 1841-1852, and the regulations adopted thereunder which govern

the transfer of a controlling interest in a bank holding company. More specifically,

she argues that, pursuant to 12 C.F.R. 225.41(a), the parties are required to give the

Federal Reserve Board sixty days written notice before acquiring control of a bank

holding company unless the acquisition is exempt under 12 C.F.R. 225.42.

Accordingly, the Code of Federal Regulations at Title Twelve (12), on “Banks and

Banking,” provides just such an exemption at 12 C.F.R. 225.42(b)(i) for the

“[a]cquisition of voting securities through inheritance.”

The trial court further articulated:

Given that this court has yet to render a judgment of
possession on the allocated stock (presently pledged as
loan security in the interim), there has been no
“acquisition” to trigger the notice period. Thus, Cindy
Cole’s argument fails.

On appeal, Cindy responds by asserting that the 2008 partition was not

binding or final because the parties have not been put in possession of the stock.

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However, a binding partition can be effected between co-heirs without possession.

La.Civ.Code art. 1320.3

In McLain, 486 So.2d 1044, the court found a consent judgment

partitioning property binding, even though it was confected before the legal

separation, divorce, and dissolution of community property, “where the judgment

specifically provided that partition would be effective after legal separation or

divorce, which subsequently occurred.” Id. at 1046 (emphasis added).

Similarly, here, the partition judgment in 2008 directed the executor to

apportion the stock at 3,020.5 shares each, subject to the loan agreement to which the

stock was being pledged. Likewise, the current 2012 judgment under appeal

confirmed the 2008 stock allocation and specifically stated that:

[U]pon the termination of the administration of the
Succession’s affairs, the payment of all debts and . . . all
accounts have been filed in accordance with law, that the
Succession Representative is hereby authorized and
directed to divide the Succession’s interest in the
common stock of Sabine Bancshares, Inc., in kind such
that 3,020 ½ shares shall issue to each of Jim and Cindy.

Accordingly, we find, as the trial court found, that none of the grounds

asserted by Cindy for setting aside the 2008 compromise and consent judgment has

merit. We agree with the court’s finding that the compromise was valid and

enforceable.

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The Louisiana Civil Code, Book III, Title I, Chapter 12, Section 2, Among What Persons
Partition Can Be Sued For, Article 1320 provides as follows:

Art. 1320. Ownership as basis for action of partition

It is not necessary, to support the action of partition, that
the coheirs, or the party commencing it, should be in actual
possession of the succession or of the thing to be divided; for
among coheirs and coproprietors, it is not the possession but the
ownership, which is the basis of the action.

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Res Judicata

The peremptory exception of res judicata is the proper mechanism to

raise the defense that a suit is barred by a written compromise agreement. In re

Tutorship of Witt, 99-646 (La.App. 3 Cir. 11/3/99), 747 So.2d 1142, writ denied, 99-

3426 (La. 2/4/00), 754 So.2d 238. “While the doctrine of res judicata is ordinarily

premised on a final judgment on the merits, it also applies where there is a transaction

or settlement of a disputed or compromised matter that has been entered into by the

parties. Thus, compromises have the legal efficacy of the thing adjudged.” Ortego v.

State, Dep’t of Transp. and Dev., 96-1322, p. 6 (La. 2/25/97), 689 So.2d 1358, 1363

(citations omitted).

Moreover, a consent judgment is a final judgment subject to res judicata

if there is no appeal or request for a new trial within the delays allowed by law. See

Kepco Operating, Inc. v. Eubanks, 10-1166 (La.App. 3 Cir. 3/9/11), 58 So.3d 1047,

writ denied, 11-705 (La. 6/3/11), 63 So.3d 1017; Weinstein v. Weinstein, 10-1083

(La.App. 3 Cir. 4/13/11), 62 So.3d 878.

Based upon the foregoing, as to the first issue under review, we find no

error by the trial court in finding a valid and enforceable compromise and consent

judgment and in dismissing Cindy’s claims regarding the partition of the stock

pursuant to Jim’s exception of res judicata.

ISSUE (2): BREACH OF FIDUCIARY DUTY & PRESCRIPTION

Cindy asserts that the trial court erred in granting Jim’s exception of

prescription on Cindy’s claims for breach of fiduciary duty. We disagree. When

prescription is raised by peremptory exception, with evidence being introduced at the

hearing on the exception, the trial court’s findings of fact on the issue of prescription

are subject to the manifest error-clearly wrong standard of review. London Towne

Condo. Homeowner’s Ass’n v. London Towne Co., 06-0401 (La. 10/17/06), 939 So.2d

16

1227. Ordinarily, the exceptor bears the burden of proof at the trial of a peremptory

exception of prescription; however, if prescription is evident on the face of the

pleadings, the burden shifts to the plaintiff to show that the action has not prescribed.

SS v. State ex rel. Dep’t of Soc. Servs., 02-831 (La. 12/4/02), 831 So.2d 926.

Here, the trial court applied La.Civ.Code art. 3492, which provides that

delictual actions are subject to a liberative prescription of one year. The court found

that Cindy’s reconventional demand was filed in May 2011, “clearly more than one

year” from the January 7, 2008 compromise and the January 23, 2008 consent

judgment. Then, without discussing what conduct was claimed by Cindy as a breach

of fiduciary duty entitling her to damages, the trial court found that any claim for

damages by Cindy, “insofar as a breach of fiduciary duty sounds in tort, has

prescribed.”

The character a plaintiff gives her pleadings determines the prescription

period applicable. When a plaintiff sues for the value of property wrongfully taken or

detained, the action is regarded as one for damages based upon an offense or quasi

offense, and the prescription of one year is applicable. See Edward Levy Metals, Inc.

v. New Orleans Public Belt R.R., 139 So.2d 80 (La.App. 4 Cir. 1962).

Cindy’s reconventional demands of May 26, 2011, assert that Jim

breached his fiduciary duty by causing, and then refusing to rescind, the

apportionment in January 2008 because the apportionment diluted the controlling

interest in SBI and diminished the fair market value of the stock. We find that,

regarding Cindy’s claims for breach of duty against Jim due to the partition, whether

against Jim personally for detriment to her inheritance, and/or against Jim as executor

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for detriment to the estate, those claims have been addressed substantively, and

prescription is moot.4

Cindy’s reconventional demands of May 26, 2011, also assert that Jim

breached his fiduciary duty through several acts in January 2008 leading to the

passage of the shareholder agreement and board member election. She alleges

conflicts of interest and asserts that Jim combined his position as Chairman of the

Board of SBI, and his position as executor of the succession owning 70% of SBI, to

pass a shareholder agreement that impermissibly restricted her ability to sell her

shares, including her pre-existing 1,406 shares, to anyone but Jim, and for any value

except book value, thereby diminishing the value of her shares by 50%. She further

asserts that Jim made a motion and voted to reduce the board seats resulting in her

removal from SBI’s board of directors. Cindy prays for damages for diminution of

the value of the shares, attorney fees, and costs against Jim in his personal and

representative capacity.

The record reveals that on January 16, 2008, Jim did vote the 7,041 estate

shares to reduce the board membership, even though he had earlier, on January 7 th,

agreed to allocate 3,020.5 of those shares to Cindy. Cindy admits that La.R.S.

12:75(E)5 authorizes Jim to vote the succession shares. We have found that the 2008

compromise and consent judgment, and the trial court’s 2012 judgment confirming it,

authorize Jim to ultimately divide the shares of stock, in kind, upon the termination of

the succession. Therefore, the division has not taken place as yet; Jim is still the

4
However, we make note of the fact that Cindy has asserted that both parties “unknowingly”
diminished the value of the stock by partition, which is reflective of a claim based upon negligence
with a one-year prescriptive period under La.Civ.Code art. 3492.
5
Any person in whose name shares are registered in a fiduciary capacity,
may, so far as concerns the corporation, vote the same in person or by proxy for
all purposes, and without the necessity of any authorization by a court or of any
judicial or other proceeding provided in particular laws.

La.R.S. 12:75(E).

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executor of the succession, which is still under his administration. Thus, La.R.S.

12:75(E) is still applicable.

Further, it was not Jim’s conduct in voting the 3,020.5 shares slated for

allocation to Cindy that caused the passage of the shareholder agreement or the

elimination of the board seat. Those items were passed by the votes of the other

thirteen shareholders voting their 110 shares in SBI as well. Hence, the result would

have been the same if the 7,041 succession shares had not been voted. Jim and Cindy

voted opposite each other, so their pre-existing ownership of 1,406 shares, each,

basically cancelled each other out. It was the remaining thirteen shareholders, voting,

either in person or by proxy, all of their 110 shares in favor of the shareholder

agreement and the board seat elimination, who caused the passage of those items. Not

only is causation missing, but there is also an issue of actual damages since neither

possession nor sale of the stock has yet occurred.

With regard to the conflict of interest, La.Code Civ.P. art. 3351.1 6

indicates that the shared role as officer of a corporation and executor of a succession

owning the majority of the shares in the corporation results in limitations on the

amount of the executor’s compensation, but the shared role is not forbidden as a

conflict of interest.

The executor’s fiduciary duty is as follows:

6
Unless expressly stated in the testament appointing the succession
representative, if the succession representative, in discharging his duties as
succession representative, is or becomes an officer of a corporation, in which the
majority of outstanding shares were owned by the decedent at the time of his
death, or is or becomes the managing partner of a partnership in which the
decedent at the time of his death owned a majority interest, the succession
representative shall not receive compensation both as a succession representative
and as an officer of the corporation, or managing partner of the partnership;
however, the compensation of a succession representative shall be reduced by the
amount of compensation which he received and which was attributable to the
performance of his duties as an officer of the corporation or managing partner of
the partnership.

La.Code Civ.P. art. 3351.1(A) (emphasis added).

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A succession representative is a fiduciary with
respect to the succession, and shall have the duty of
collecting, preserving, and managing the property of the
succession in accordance with law. He shall act at all
times as a prudent administrator, and shall be personally
responsible for all damages resulting from his failure so
to act.
La.Code Civ.P. art. 3191.

Cindy asserts that the trial court erred in not applying La.R.S. 9:5621,

which provides for a two-year prescriptive period for actions against succession

representatives. She correctly states that this prescriptive period does not begin to run

until the day of the judgment homologating the final account, which has not occurred.

Therefore, the action for breach of fiduciary duty under this article is premature. It is

true that the trial court did not address this statute; however, neither can the claims

urged thus far by Cindy, because the damages cannot yet have occurred.

ISSUE (3): PARTIAL PAYMENT OF FEES BY THE ESTATE

Jim petitioned the court for approval for the succession to pay the

McGlinchey Stafford law firm fees incurred by the firm while acting as counsel for

the succession representative for the work of defending the 2008 judgment. The trial

court granted in part, and denied in part, Jim’s petition, assessing one half of the fees

to Jim personally and one half of the fees to the succession. Jim does not appeal the

judgment.

Cindy asserts that the trial court erred when it apportioned to the estate

one half of the attorney fees because the legal representation at issue was primarily for

the personal benefit of Jim. She argues that the succession did not incur fees until

March 2011 when she asked Jim for modification of the 2008 judgment. Jim argues

that the succession sustained fees defending the testator’s intent and largely from

Cindy’s litigious flip-flopping of her position on the allocation of shares, voting

rights, and other issues.

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The payment of succession debts and expenses is authorized throughout

the Louisiana Code of Civil Procedure, including articles 3301, et seq., and the

Louisiana Civil Code, including articles 1421, et seq. See also, La.Code Civ.P. art.

3244. The trial court articulated as follows:

[F]inding that Jim Cole and Cindy Cole entered into a
compromise representing one hundred percent of all heirs
to the residuary estate, no intent of the testator was at risk
to require defending to the degree the succession claims.
As discussed supra, as heirs, being sui juris and being the
only persons having an interest in the residuary estate of
their father, [they] opted to partition the shares without
concern of the testator’s intent or issue regarding the joint
or separate legacy. Therefore, it is Jim and Cindy Cole
litigating their personal interests in the compromise.

37. However, the 2008 Judgment also had Jim Cole
appearing as succession representative as the compromise
addressed how the estate taxes were to be paid. As the
succession had an interest that the taxes be paid as agreed
and defend its reliance upon the compromise to do so, this
court finds that half of the subject fees of this motion be
paid by the succession and the other half by Jim Cole,
individually and as co-heir.

The trial court made reasonable factual findings, supported by the record,

and we will not disturb those findings on appeal.

V.

CONCLUSION

Based upon the foregoing, the judgment of the trial court is affirmed in

all respects. The costs of this appeal are assessed against the appellant, Cynthia A.

Cole.

AFFIRMED.

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