Louisiana Wholesale Florists, Inc. v. Dede's Wholesale Florists, Inc.

DO NOT PUBLISH

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-104

LOUISIANA WHOLESALE FLORISTS, INC.

VERSUS

DEDE’S WHOLESALE FLORISTS, RICHARD G. DAVID,
AND DIONE W. DAVID
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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20117197
HONORABLE DURWOOD CONQUE, JUDGE

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J. DAVID PAINTER
JUDGE

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Court composed of J. David Painter, Shannon J. Gremillion, and Phyllis M. Keaty,
Judges.

AFFIRMED.

Ed W. Bankston
P.O. Box 53485
Lafayette, LA 70505
COUNSEL FOR DEFENDANT-APPELLANT:
Dede’s Wholesale Florist, Inc.

Steven G. Durio
Travis J. Broussard
P.O. Box 51308
Lafayette, LA 71308
COUNSEL FOR PLAINTIFF-APPELLEE:
Louisiana Wholesale Florist

PAINTER, Judge.

Defendant, Dede’s Wholesale Florists, Inc. (Dede’s), appeals the judgment

of the trial court, finding it liable for an open account with Louisiana Wholesale

Florists, Inc. (LWF). For the following reasons, we affirm the judgment of the trial

court.

FACTS

During their marriage, Dione and Richard David operated Dede’s, a retail

florist’s shop in New Iberia, Louisiana. In 1983, Dede’s applied for and was

granted membership in LWF, a florist’s cooperative. Dede’s initially purchased the

required ten shares of stock and, over twenty-eight years of membership, accrued

the maximum eighty shares of stock allowed by LWF. In 1992, Dede’s executed a

second membership application revising the details of its original application and

pledging its LWF stock against any indebtedness to LWF. In 2009, the Davids

divorced.

It is uncontested that Dede’s ordered from LWF on at least a weekly basis

and received the merchandise accompanied by invoices showing the amount of

goods delivered and the price for each item. By the time it went out of business on

September 30, 2011, Dede’s had accrued a debt of $43,083.37 with LWF.

On December 14, 2011, LWF filed this suit on open account. Dione filed an

answer, a cross-claim against Richard, and an exception of no cause of action.

Richard filed an answer and cross-claim against Dione. The matter was tried on

September 4, 2012, after which the trial court found in favor of LWF. A rule to fix

attorney’s fees was heard on October 29, 2012, and the court signed Dede’s motion

for suspensive appeal at the time.

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DISCUSSION

Open Account

La.R.S. 9:2781 provides for the collection of sums due on open account as

follows:

A. When any person fails to pay an open account within thirty
days after the claimant sends written demand therefor correctly setting
forth the amount owed, that person shall be liable to the claimant for
reasonable attorney fees for the prosecution and collection of such
claim when judgment on the claim is rendered in favor of the
claimant. Citation and service of a petition shall be deemed written
demand for the purpose of this Section. If the claimant and his
attorney have expressly agreed that the debtor shall be liable for the
claimant's attorney fees in a fixed or determinable amount, the
claimant is entitled to that amount when judgment on the claim is
rendered in favor of the claimant. Receipt of written demand by the
person is not required.

B. If the demand is forwarded to the person by first class mail to
his last known address, a copy of the demand shall be introduced as
evidence of written demand on the debtor.

C. If the demand is made by citation and service of a petition,
the person shall be entitled to pay the account without attorney fees by
delivering payment to the claimant or the claimant's attorney within
ten days after service of the petition in city courts and fifteen days
after service of the petition in all other courts.

D. For the purposes of this Section and Code of Civil Procedure
Articles 1702 and 4916, “open account” includes any account for
which a part or all of the balance is past due, whether or not the
account reflects one or more transactions and whether or not at the
time of contracting the parties expected future transactions. “Open
account” shall include debts incurred for professional services,
including but not limited to legal and medical services. For the
purposes of this Section only, attorney fees shall be paid on open
accounts owed to the state.

E. As used in this Section the following terms shall have the
following meanings:

(1) “Person” means natural and juridical persons.

(2) “Reasonable attorney fees” means attorney fees incurred
before judgment and after judgment if the judgment creditor is
required to enforce the judgment through a writ of fieri facias, writ of
seizure and sale, judgment debtor examination, garnishment, or other
post-judgment judicial process.
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F. If the judgment creditor incurs attorney fees after judgment
on the principal demand associated with enforcement of the judgment,
the judgment creditor may obtain judgment for those attorney fees and
additional court costs by filing a rule to show cause along with an
affidavit from counsel for the judgment creditor setting forth the
attorney fees incurred. If the judgment debtor does not file with the
court a memorandum in opposition at least eight days prior to the
hearing on the rule, the court may award the attorney fees and court
costs as prayed for without the necessity of an appearance in court by
counsel for the judgment creditor. The rule to show cause shall
include notice to the judgment debtor of the consequences under this
Subsection of not timely filing a memorandum in opposition. The
amount of any post-judgment award of attorney fees and costs shall be
added to the total to be recovered on the principal demand through
any existing writ or garnishment proceedings.

This court in Scofield, Gerard, Singletary & Pohorelsky, L.L.C. v. Barr, 10-

1347, p. 3 (La.App. 3 Cir. 3/9/11), 58 So.3d 1127, 1129 (quoting Metal Coatings,

LLC v. Petroquip Energy Svcs, LP, 06-1108,(La.App. 3 Cir. 11/21/07), 970 So.2d

695), stated that:

In order to prevail in a suit on an open account, the creditor
must first prove the account by showing that the record of the account
was kept in the course of business and by introducing evidence
regarding its accuracy. Once a prima facie case has been established
by the creditor, the burden shifts to the debtor to prove the inaccuracy
of the account or to prove the debtor is entitled to certain credits.
Jacobs Chiropractic Clinic v. Holloway, 589 So.2d 31 (La.App. 1
Cir.1991).

At trial, Plaintiff elicited testimony from Dione that she had been owner of

Dede’s along with her ex-husband, Richard. She stated that while owner, she did

the bookkeeping, payroll, purchasing, design work, and delivery for Dede’s. She

testified that Dede’s had an open account with LWF and that Dede’s purchased

from LWF weekly and sometimes daily, but on average twice a week. She stated

that Dede’s received a monthly billing statement from LWF and normally paid as

agreed. Dione further testified that as LWF members, Dede’s received shares of

stock from LWF and got a small discount on purchases, accumulating the

maximum eighty shares allowed to a member. During the last three or four years of
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operations, Dede’s signed the rebates received from LWF back to LWF as payment

on account. She agreed that a past due balance remained on Dede’s account with

LWF in the neighborhood of $40,000.00. She stated that she had received the

demand letter on the open account and that she had never disputed the amount of

the account presented in the demand letter.

Richard agreed that he owned stock in Dede’s. He further testified that he

knew that LWF was one of Dede’s main suppliers. He stated that he did not

remember receiving a demand letter sent by counsel for LWF but agreed that it was

his signature on the return receipt. He further admitted that certain property owned

by Dede’s was in his possession, including a Chevrolet Corvette automobile and

two pieces of immovable property.

Merlin Leger, general manager of LWF, also testified at trial that the account

was kept in the ordinary course of business and detailed how the account was kept,

the amount owed on the account, and the credits made to the account.

The evidence adduced by LWF establishes a prima facie case. Therefore, the

burden shifted to Dede’s to prove the inaccuracy of the account or to show that it

was entitled to additional credits. Dede’s attempted to carry its burden by arguing

that a piercing of the corporate veil resulted in Dione being responsible for

payment and, alternatively, that the contract contained a liquidated damages clause

which provided for the value of the member’s stock to be the only amount payable

at the time of a breach of contract.

Piercing the Corporate Veil

Dede’s asserts on appeal that the trial court erred in disregarding a piercing

of Dede’s corporate veil that occurred in the partition of the community, which was

before a trial court in a different judicial district. Dede’s asserts that on May 19,

2009, Dione was granted control of Dede’s as managing spouse and that Richard
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had no control over the corporation and did not benefit from the open account. It

argues that three years later, the trial court reversed and awarded the by then

defunct business to Richard. As a result, Dede’s argues that Dione should be held

responsible for the debt.

Piercing the corporate veil is a radical remedy by which a court, under

certain very limited circumstances, may ignore the corporate structure to impose

liability on individual shareholders for the actions of the corporation. Gaddy v.

Universal Cable Sys., Inc., 47,088 (La.App. 2 Cir. 9/7/12), ___ So.3d ___.;

Charming Charlie, Inc. v. Perkins Rowe Assoc., L.L.C., 11-2254 (La.App. 1 Cir.

7/10/12), 97 So.3d 595; Interstate Battery Sys. of America, Inc. v. Kountz, 11-636

(La.App. 3 Cir. 11/2/11), 78 So.3d 200. Our review of the record reveals no

evidence either that Dede’s corporate veil was pierced by the court in the

community property litigation. Further, the record contains no evidence that Dede’s

did anything to warrant piercing the corporate veil. Additionally, no law has law

been cited to suggest that a piercing of corporate veil in a different suit and court

would have any effect on a suit on an open account owed by the corporation.

Counsel argued Richard was forbidden from participating in the operation of

Dede’s pending the partition of the community and that at the partition hearing, he

was awarded 100% of the stock in Dede’s. However, no judgment of the Iberia

Parish Court was introduced into evidence at the trial and none appears in the

record on appeal. Even if true, this would not constitute a piercing of the corporate

veil. A transcript of a hearing held on May 19, 2009, appears as an exhibit to

Dede’s opposition to a motion for summary judgment filed by Plaintiff. However,

Dede’s does not point to specific language in the transcript that supports the

conclusion that the trial court pierced the corporate veil, and we find none.

Therefore, this court is unable to reach any conclusion as to the contents of the trial
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court’s judgment resulting from the May 19, 2009 hearing or its effect on the

matter before this court.

Contractual Liquidated Damages Clause

Dede’s also asserts that the parties had agreed in the membership application

filed with LWF to a liquidated damages clause limiting any damages for unpaid

debt to the amount of the stock held by LWF on behalf of the member/debtor.

Dede’s, in its appellate brief, cites the following language from the

membership application as creating a liquidated damages clause:

I have read and understood all of the provisions of the Articles of
Incorporation and By-Laws of Louisiana Wholesale Florists, Inc., and
agree to be bound by and comply with all such regulations, including
but not limited to the requirements regarding stock privileges, credit
limitations and all other requirements for membership, as well as any
which might from time to time be enacted.

I/we understand and agree that if this application is accepted,
stock of Louisiana Wholesale Florist, Inc. will be issued in my/our
name, and such stock will be held by Louisiana Wholesale Florist,
Inc. as collateral for any indebtedness which we may incur to
Louisiana Wholesale Florist, Inc. Any credit extended to me/us will be
in accordance with the regulations established by the Board of
Directors of Louisiana Wholesale Florists Inc.

In consideration of and as collateral for any credit extended,
I/we hereby pledge to Louisiana Wholesale Florists, Inc. any and all
stock of Louisiana Wholesale Florists, Inc., including any accrued or
subsequently accruing dividends, issued to me/us or in my/our
name(s). In the event of any default or delinquency by me/us, as
determined by the credit requirements and regulations of Louisiana
Wholesale Florists, Inc., I/we specifically authorize Louisiana
Wholesale Florists, Inc., to sell such stock, at public or private sale,
and without the necessity for demand, notice, appraisement or judicial
proceedings, and to apply the proceeds thereof to any indebtedness
(including any accrued interest, costs of collection, attorney's fees and
expenses) which I/we might have to Louisiana Wholesale Florists,
Inc. Any surplus remaining after deduction of such amounts due, will
be refunded to me/us.

This agreement of pledge shall be irrevocable, and I/we warrant
that the pledged collateral shall (kept) free from any liens or claims,
and further agree and understand that any delay in exercise or waiver
of rights by Louisiana Wholesale Florists, Inc. shall be effective
unless in writing, and that each and every provision hereof shall be
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interpreted in such manner as to be valid and effective, and that the
invalidity of any provision hereof shall not affect the validity of the
remainder of this agreement.

Dede’s asserts that this language creates a liquidated damages clause as

contemplated by La.R.S. 3:137, which states that:

The by-laws or the marketing contract of any association
existing hereunder may fix, as liquidated damages, specific sums to be
paid by the member or stockholder to the association upon the breach
or threatened breach by him of any provision of the marketing
contract regarding the sale or delivery or withholding of products; and
may further provide that the member will pay all costs, premiums for
bonds, expenses, and fees in case any action is brought upon the
contract by the association. Such provisions shall be valid and
enforceable in the courts of this State, and the clauses providing for
liquidated damages shall be enforceable and shall not be regarded as
penalties.

In the event of any breach or threatened breach of a marketing
contract by a member or other person, the association shall be entitled
to an injunction to prevent the breach or further breach of the contract,
and to a decree of specific performance thereof. Pending the
adjudication of the action and upon filing a verified complaint
showing the breach or threatened breach, and upon filing a bond in the
sum of one hundred dollars, the association shall be entitled to an
injunction against the member or other person. The officiating judge
may increase the bond to five hundred dollars after a hearing on five
days notice to the parties, if justice demands the increase in the
amount of the bond.

La.Civ.Code art: 13 states that: “Laws on the same subject matter must be

interpreted in reference to each other.” Therefore, in interpreting La.R.S. 3:137, we

must also consider La.R.S. 3:136, which provides with regard to Cooperative

Marketing Associations, that:

A. The association and its members may make and execute
marketing contracts requiring the members to sell, for any period of
time not over ten years, all or any specified part of their agricultural
products or specified commodities exclusively to or through the
association or any facilities created by the association. If they contract
to sell to the association, title to the products shall pass absolutely and
unreservedly, except for recorded liens, to the association upon
delivery, or when put in merchantable condition, or at any other
specified time if expressly and definitely agreed in the contract.

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B. The contract may provide that the association may sell or
resell the products delivered by its members, with or without taking
title thereto, and pay over to its members the resale price, after
deducting all necessary selling, overhead, and other costs and
deductions, as defined in the contracts, and expenses including
interest on preferred stock not exceeding the legal interest rate per
annum, reserves for retiring stock, other proper reserves, and interest
not exceeding the legal interest rate per annum upon common stock.

Reading the language of the membership agreement in light of the

provisions of these statutes, we find that the cooperative marketing association

statutes are inapplicable. The agreement does not constitute the kind of contract

contemplated by R.S.3:136 & 137. Nor does the language create an agreement for

stipulated damages as set out in La.Civ.Code art. 2005: “Parties may stipulate the

damages to be recovered in case of nonperformance, defective performance, or

delay in performance of an obligation. That stipulation gives rise to a secondary

obligation for the purpose of enforcing the principal one.”

We agree with the trial court that the language of the agreement provides for

a pledge of stock against indebtedness rather than a liquidated damages clause.

“The pledge is a contract by which one debtor gives something to his creditor as a

security for his debt.” La.Civ.Code art. 3133.

The creditor cannot, in case of failure of payment, dispose of
the pledge; but when there have been pledges of stock, bonds or other
property, for the payment of any debt or obligation, it shall be
necessary before such stocks, bonds or other property so pledged shall
be sold for the payment of the debt, for which such pledge was made,
that the holder of such pledge be compelled to obtain a judgment in
the ordinary course of law, and the same formalities in all respects
shall be observed in the sale of property so pledged as in ordinary
cases; but in all pledges of movable property, or rights, or credits,
stocks, bonds or other movable property, it shall be lawful for the
pledger to authorize the sale or other disposition of the property
pledged, in such manner as may be agreed upon by the parties without
the intervention of courts of justice; provided, that all existing pledges
shall remain in force and be subject to the provisions of this act.

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The testimony at trial was that the LWF stock owned by Dede’s was pledged

against Dede’s debts to LWF and that the stock was sold and the amount credited

to the open account.

CONCLUSION

We find, therefore, that Dede’s has failed to carry its burden of proving the

inaccuracy of the account or that additional credits were due. Therefore, the trial

court correctly rendered judgment in favor of LWF. As a result, the judgment of the

trial court is affirmed. Costs of this appeal are assessed to Defendant-Appellant,

Dede’s.

AFFIRMED.

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