Southern Acadiana Services, LLC v. Phonesaga Phyarath

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

14-03

SOUTHERN ACADIANA SERVICES, LLC
AND KHAMBANG VIENGVILAY

VERSUS

PHONESAGA PHAYARATH,
I & I CONTRACTING SERVICES, LLC,
AND LYNN LATIOLAIS

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF NEW IBERIA, DOCKET NO. 121318-A
HONORABLE GERARD B. WATTIGNY, DISTRICT JUDGE

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JAMES T. GENOVESE
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, James T. Genovese,
and John E. Conery, Judges.

AFFIRMED.

Adam G. Young
Patrick C. (Con) Cotter
Laura N. Buck
Young & Cotter, L.L.C.
315 South College Road, Suite 163
Lafayette, Louisiana 70503
(337) 261-8800
COUNSEL FOR PLAINTIFFS/APPELLANTS:
Southern Acadiana Services, LLC and
Khambang Viengvilay

Edward P. Landry
Landry, Watkins, Repaske & Breaux
211 East Main Street
Post Office Box 12040
New Iberia, Louisiana 70562-2040
(337) 364-7626
COUNSEL FOR DEFENDANTS/APPELLEES:
Phonesaga Phayarath and
I & I Contracting Services, LLC

David W. Groner
230 West Main Street
New Iberia, Louisiana 70560
(337) 364-3629
COUNSEL FOR DEFENDANTS/APPELLEES:
Lynn Latiolais and
Teresa Latiolais, d/b/a Latiolais Tax Accounting

GENOVESE, Judge.

Plaintiffs, Southern Acadiana Services, LLC and Khambang Viengvilay,

appeal the judgment of the trial court granting summary judgment in favor of

Defendants, Phonesaga Phayarath and I & I Contracting Services, LLC, finding

that Plaintiffs failed to meet their burden of proof on their claims for breach of

fiduciary duty, tortious interference with contracts, unfair trade practices, and

defalcation of funds relative to their business arrangement. For the following

reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Southern Acadiana Services, LLC (SAS) was formed on June 28, 2011, by

Khambang Viengvilay and Phonesaga Phayarath to provide welding services to

industrial customers. Viengvilay and Phayarath were the only two members of the

limited liability company, each with a fifty percent membership interest.

In April 2012, after disagreements arose between Viengvilay and Phayarath,

they began discussions about closing SAS. On May 5, 2012, the parties met, but,

were unable to reach an agreement on the terms of a buyout.

On the morning of May 7, 2012, unbeknownst to Phayarath, Viengvilay

contacted SAS‟s employees and informed them that SAS was permanently closing.

Viengvilay also contacted SAS‟s insurance agent, cancelled SAS‟s workers‟

compensation and liability insurance, and emailed SAS‟s customers, advising them

that SAS no longer had insurance and that it was closing its business.

Later that same day, when Phayarath learned of Viengvilay‟s actions, he

contacted SAS‟s insurance agent and reinstated the insurance coverage. Phayarath

then went to the office of the Louisiana Secretary of State to form his own

company, I & I Contracting Services, LLC (I & I), which he created to provide

welding services to industrial customers.

Suit was subsequently filed by Viengvilay and SAS against Phayarath and

I & I asserting claims for breach of fiduciary duty, tortious interference with

contracts, unfair trade practices, and defalcation of funds.1 Viengvilay and SAS

contended that Phayarath and I & I were liable for the damages they sustained

resulting from Phayarath starting a competing business, acquiring SAS‟s

customers, and withdrawing SAS‟s funds without notice to or approval by

Viengvilay.

Phayarath and I & I filed a Motion for Summary Judgment asserting that:

There are no genuine issues of material fact as to any of
plaintiffs‟ claims since plaintiffs by their own admission triggered the
chronology of events which specifically caused the damages sustained
by Plaintiffs, Southern Acadiana Services, LLC and [VIENGVILAY].
Therefore, defendants, PHONESAGA PHAYARATH and I & I
CONTRACTING SERVICES, LLC, are entitled, as a matter of law,
to summary judgment herein, dismissing all plaintiffs‟ demands at
plaintiffs‟ costs.

Following a hearing, the trial court granted Phayarath and I & I‟s Motion for

Summary Judgment, “being of the opinion that the plaintiffs did not meet their

burden of proof as to the allegations of a claim for breach of fiduciary duty,

tortious interference with contracts, unfair trade practices, and defalcation of

funds.” Viengvilay and SAS appeal.

ASSIGNMENTS OF ERROR

On appeal, Viengvilay and SAS present the following assignments of error

for our review:

1. The [t]rial [c]ourt erred in finding that Khambang [Viengvilay]
caused damages to [SAS] and that Plaintiffs cannot sustain their
burden of proof with respect to their claim against Defendants for
breach of fiduciary duties.

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Also named as Defendants were Lynn Latiolais and Teresa Latiolais d/b/a Latiolais Tax
Accounting; however, the claims asserted against these Defendants are not at issue in this appeal.

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2. The [t]rial [c]ourt erred in finding that [SAS] had no contracts that
could be interfered with, and that Plaintiffs cannot meet their
burden of proof with respect to their claim against Defendants for
tortious interference with contracts.
3. The [t]rial [c]ourt erred in holding that the unfair trade practices
are proved to be the result of the action of Plaintiff, and that
Plaintiffs cannot meet their burden of proof with respect to their
claim for damages against Defendants pursuant to the Louisiana
Unfair Trade Practices Act.
4. The [t]rial [c]ourt erred in holding that there is no proof that the
Defendants issued checks illegally, and that Plaintiffs cannot meet
their burden of proof with respect to their claim against Defendants
for defalcation of funds.
LAW AND DISCUSSION

A motion for summary judgment is reviewed on appeal under
the de novo standard of review. Hogg v. Chevron USA, Inc., 09-2632
(La.7/6/10), 45 So.3d 991. The reviewing court uses the same criteria
as the trial court to determine whether summary judgment is
appropriate, i.e., whether there is a genuine issue of material fact, and
whether the movant is entitled to judgment as a matter of law. See
La.Code Civ.P. art. 966; Hogg, 45 So.3d 991. Summary judgment
shall be granted if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to material fact, and that
mover is entitled to judgment as a matter of law.” La.Code Civ.P. art.
966(B). “[A] „genuine issue‟ is a „triable issue,‟ or one as to which
reasonable persons could disagree. A „material fact‟ is a fact, the
existence or non-existence of which may be essential to a cause of
action under the applicable theory of recovery.” Hogg, 45 So.3d at
997 (citations omitted), citing Champagne v. Ward, 03-3211 (La.
1/19/05), 893 So.2d 773. In proving entitlement to summary
judgment:

The burden of proof remains with the movant.
However, if the movant will not bear the burden of proof
at trial on the matter that is before the court on the
motion for summary judgment, the movant‟s burden on
the motion does not require him to negate all essential
elements of the adverse party‟s claim, action, or defense,
but rather to point out to the court that there is an absence
of factual support for one or more elements essential to
the adverse party‟s claim, action, or defense. Thereafter,
if the adverse party fails to produce factual support
sufficient to establish that he will be able to satisfy his
evidentiary burden of proof at trial, there is no genuine
issue of material fact.

La.Code Civ.P. art. 966(C)(2).

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Gruver v. Kroger Co., 10-689, pp. 2-3 (La.App. 3 Cir. 2/2/11), 54 So.3d 1249,

1251, writ denied, 11-471 (La. 4/25/11), 62 So.3d 92

In support of their Motion for Summary Judgment, Phayarath and I & I

contend that it was Viengvilay‟s own unilateral and unjustified actions that caused

the losses which he and SAS allegedly sustained. To the contrary, Viengvilay and

SAS contend that summary judgment is unwarranted because “genuine issues of

material fact exist with respect to the cause of the damages to SAS.”

In considering the Motion for Summary Judgment, the trial court addressed

each of the claims asserted individually. The court ultimately concluded, based

upon the evidence, that Viengvilay and SAS were unable to meet their burden of

proof. Having conducted a de novo review of the record, we agree with the trial

court.

On the claim for breach of fiduciary duty, the trial court found that “prior to

the actions taken by [Phayarath], [Viengvilay] had already shut down the business.

He terminated the business; he saw that all of the employees were terminated; he

cancelled the insurance for the employees[;] and he advised all of the customers

that the business was shut down.” Based upon these facts, the trial court concluded

that “there is no way that [Viengvilay and SAS can] sustain the burden of proof to

prove the cause and fact of the injury sustained by [SAS] were brought about by

the actions of [Phayarath.]” To the contrary, based upon the evidence, the trial

court found “that the closing down of [SAS] and any damages[] resulted from the

sole action and sole cause in fact[] of the actions taken by [Viengvilay] in shutting

down the business, having the employees terminated[,] terminating the insurance

for the business[,] and advising the customers that the business was shut down.”

For these reasons, Viengvilay and SAS did not prove any breach of a fiduciary

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duty on the part of Phayarath which damaged Viengvilay or SAS. Consequently,

we find no error in this determination.

On the claim for tortious interference with contracts, the trial court found

that “[t]here was no contract.” After Viengvilay advised employees, customers,

and the insurer that SAS was shut down, “there [was] no longer any contract with

the customers, with the insurance company or with the employees.” Given that no

contract existed, the trial court found that Viengvilay and SAS failed to meet their

burden of proof on this claim. We agree.

On the claim of unfair trade practices, the trial court also found an inability

of Viengvilay and SAS to meet their burden of proof. Again, in the opinion of the

trial court, “the unfair trade practices are proved to be the result of the action of

[Viengvilay,] not the action of [Phayarath].” Based upon our de novo review of

the record, we likewise agree with this determination.

The final claim asserted by Viengvilay and SAS against Phayarath and I & I

was for defalcation of funds. It is undisputed that Phayarath issued and signed

checks on SAS‟s accounts. However, as noted by the trial court, “there is no proof

that any of those were illegally issued, or signed, or not done by a managing

member.” For these reason, Viengvilay and SAS also failed to meet their burden

of proof on this claim.

The crux of Viengvilay and SAS‟s argument in opposition to the Motion for

Summary Judgment is that, at the very least, issues of comparative fault remain

which preclude the grant of summary judgment. However, our de novo review of

the record reveals that there are no questions of material fact on the issue of

comparative fault. The facts, as set forth above, establish that it was the unilateral

actions of Viengvilay that caused SAS to close and caused any alleged damages

resulting thereby. Viengvilay‟s actions were taken without the knowledge or
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consent of Phayarath. Viengvilay and SAS are unable to produce factual support

sufficient to establish that they will be able to satisfy their evidentiary burden of

proof at trial on the claims asserted herein. Therefore, we find no error in the trial

court‟s grant of summary judgment in favor of Phayarath and I & I.

DECREE

For the reasons assigned, we affirm the trial court‟s grant of summary

judgment in favor of Phonesaga Phayarath and I & I Contracting Services, LLC.

Costs of this appeal are assessed to Southern Acadiana Services, LLC and

Khambang Viengvilay.

AFFIRMED.

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