Holloway Drilling Equipment, Inc. v. Danielle Bodin

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

14-248

HOLLOWAY DRILLING EQUIPMENT, INC., ET AL

VERSUS

DANIELLE BODIN, ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 2010-1717
HONORABLE DURWOOD CONQUE, DISTRICT JUDGE

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SYLVIA R. COOKS
JUDGE

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Court composed of Sylvia R. Cooks, Jimmie C. Peters, Marc T. Amy, James T.
Genovese, and John E. Conery, Judges.

REVERSED AND REMANDED.
Amy J., dissents and assigns reasons.
Conery, J., dissents for reasons assigned by Judge Amy.

L. Clayton Burgess
605 West Congress Street
Lafayette, LA 70501
(337) 234-7573
Attorney for Appellant: Holloway Drilling Equip., Inc.

William E. Wright, Jr.
Charlotte C. Meade
Deutsch, Kerrigan & Stiles, LLP
755 Magazine Street
New Orleans, LA 70130-3672
(504) 581-5141
Attorneys for Appellee: Gregory Inzerella

Cooks, J.
FACTS AND PROCEDURAL HISTORY

Danielle Bodin (Bodin) was employed as a bookkeeper and runner by

Holloway Drilling Equipment, Inc. and Holloway Equipment Rentals, Inc.

(collectively “Holloway”) from 2002 to 2010. Holloway employed the CPA firm,

Inzarella, Feldman and Pourciau, APC (Inzarella Firm) as its accounting firm

during the years of Bodin’s employment until Holloway terminated the Inzarella

Firm’s employment in 2008. After ending its relationship with the Inzarella Firm,

Holloway discovered a large discrepancy in the final bill from the Inzarella Firm.

As a result, a dispute arose between Holloway and the Inzarella Firm regarding the

final fee charged by the Inzarella Firm for its accounting services to Holloway. On

March 26, 2009, Holloway and the Inzarella Firm signed a Receipt and Release

Agreement resolving the billing dispute. The parties agreed that Holloway would

pay, and the Inzarella Firm would accept, the sum of $12,000.00 as a full and

complete payment of any monies owed by Holloway to the Inzarella Firm for its

services. The Inzarella Firm claimed Holloway owed it $23,737.99 for its services.

The Agreement was notarized by Bodin and was signed by Gregory J. Inzarella as

President of the Inzarella Firm, and Rickey A. Holloway, as President of Holloway

Drilling.

On March 11, 2010, Holloway filed suit against Bodin, her husband, Kyle

Bodin (Kyle), and their business enterprise, Butterfly Bodies, LLC. Holloway

alleged that Bodin, with the knowledge and assistance of her husband Kyle, had

embezzled substantial sums of money from Holloway while in its employ. On

February 7, 2011, Holloway amended its petition to add Iberia Bank Corporation

as a defendant. On February 28, 2011, Holloway again filed a Supplemental and

Amended Petition adding as defendants “Eric Broussard, Individually, Inzarella,

Feldman and Purciau, A Professional Corporation [,] and John W. Wright, Ltd., A

certified Public Accounting Corporation.” Holloway alleged that Broussard, acting

“individually and/or in the course and scope of his employment with Inzarella,

Feldman and Purciau,” from “late 2002 through December 2008,” and

“individually and/or in the course and scope of his employment with Wright from

January 2009 through March, 2010,” as accountant for Holloway, had cooperated

with and helped Bodin and her husband steal substantial sums of money from

Holloway.

On April 19, 2011, the Inzarella Firm filed an exception of Res Judicata

which was granted by the trial court. The trial court’s judgment granting the

Inzarella Firm’s exception of res judicata was affirmed on appeal before this court

in Holloway Drilling Equipment, Inc. v. Bodin, 12-355 (La.App. 3 Cir. 11/7/12)

107 So.3d 699, writ not considered, 13-251 (La.3/8/13) 109 So.3d 353.

On March 7, 2012, while the Inzarella Firm’s appeal was pending in this

court, Holloway filed its Fourth Supplemental and Amending Petition adding

Gregory Inzarella, individually, as a defendant in the matter alleging that he “as the

owner and managing partner of the Inzarella Firm” acted “negligently and/or

intentionally in assisting [Bodin] and/or [Eric] Broussard in” embezzling money

from Holloway. On April 2, 2012, Gregory Inzarella, individually, filed a

Peremptory Exception of Res Judicata asserting that the Receipt and Release

Agreement of March 2009, bars Holloway’s action against him, individually,

essentially for the same reasons this court found it barred recovery against the

Inzarella Firm. Holloway appeals, asserting the trial court erred in sustaining

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Gregory Inzarella’s exception of res judicata and dismissing the action against him

with prejudice.

LAW AND ANALYSIS

We have reviewed the trial court’s ruling on the exception of res judicata

under the manifest error standard of review. State ex rel. Sabine River Auth. V.

Meyers & Assocs., Inc., 07-214, 07-215 (La.App. 3 Cir. 10/3/07), 967 So.2d 585.

After a thorough review of the law and jurisprudence, and a careful consideration

of our learned colleague Judge John Saunders’ dissent in Holloway Drilling

Equipment, 107 So.3d at 710-12, we conclude that we cannot agree with the

majority’s finding and its reasoning in that opinion.

The language in the Receipt and Release Agreement made between

Holloway and the Inzarella Firm in March 2009, which resolved the dispute over

the final bill for the Inzarella Firms’ accounting services provided to Holloway,

appears in the record as follows (emphasis added):

WHEREAS, IF&P has performed professional accounting
services for CLIENT [Holloway] and for which IF&P has charged
CLIENT the sum of $23,737.99 for said services; and

WHEREAS, CLIENT has disputed the amount of the said
charges; IF&P does hereby accept the sum of $12,000.00, hereby paid
and gives full acquitance for the same and for any further
compensation arising out of its performance of professional
accounting services heretofore completed.

As consideration thereof, the parties herein specifically release,
acquit and forever discharge each other party, their agents, employee
and assigns, from any and all actions, causes of action, or claims of
every character, nature and kind, whatsoever, known or unknown,
past, present and future and all related expenses in connection with or
arising from the relationship previously existing between the parties.

The parties enter into this compromise, receipt and release in
order to put this matter to a full and final end and that the terms of the
Receipt and Release are contractual and not a mere recital, and the

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parties do hereby acknowledge that each fully understands the
contents and ramifications of same.

The Louisiana Civil Code in Title XVII, entitled “Compromise,” defines and

governs agreements such as the Receipt and Release Agreement signed by

Holloway and the Inzarella Firm in 2009. Louisiana Civil Code Article 3076

(emphasis added) provides, “A compromise settles only those differences that the

parties clearly intended to settle, including the necessary consequences of what

they express.” The revision comment(b) – 2007, which follows the article, states

“Under this article, a compromise must clearly express the rights that the parties

intended to settle.” By its express terms, this compromise agreement was for the

sole purpose of amicably resolving a disputed bill for accounting services rendered

by the Inzarella Firm to Holloway. The agreement clearly sets forth the singular

basis for this compromise agreement, i.e., the disputed amount charged by the

Inzarella Firm for its accounting services to Holloway. The agreement specifically

refers to this singular billing dispute as “this matter” in describing the reason the

parties were entering into this compromise agreement, i.e., to resolve a specifically

identified dispute over the final amount owed to the Inzarella Firm for its services

after Holloway discharged it. The broad language in the compromise agreement

cannot rightly be employed, as our colleagues in the majority in Holloway Drilling

Equipment, 107 So.3d 699-710, did, to include Holloway’s claims arising out of a

criminal conspiracy to embezzle nearly two million dollars from Holloway. That

matter is an entirely separate and distinct “matter” which is completely outside,

separate and distinct from, the “matter” clearly identified within the four corners of

the compromise Agreement at issue.

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In Reyes-Ramirez v. Progessive Security Insurance Co., 08-374, p. 3-4

(La.App. 3 Cir. 11/5/08), 996 So.2d 1213, 1216 (alterations in original) (emphasis

added), writ denied, 08-2877 (La. 2/6/09), 999 So.2d 784, this court discussed

transaction and compromise and the manner in which a court determines the scope

or extent of a compromise agreement:

A transaction or compromise, which is a contract
which settles a dispute, can serve as the basis for an
exception of res judicata. La. Civ. Code art. 3071;
Brown v. Drillers, Inc., 93-1019 (La.1/14/94), 630 So.2d
741. “A compromise settles only those differences that
the parties clearly intended to settle.” La. Civ. Code art.
3076. Being a contract, a compromise is interpreted by
determining the common intent of the parties. La. Civ.
Code art. 2045; Brown, 630 So.2d 741. “When the
words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be
made in search of the parties’ intent.” La.Civ.Code art.
2046.

In Brown, 630 So.2d at 748 (citation omitted), the
supreme court explained how a court determines the
extent of a compromise agreement pursuant to
La.Civ.Code art. 3073:

[A] compromise agreement extends
only to those matters that the parties
expressly intended to settle and . . . the
scope of the transaction cannot be
extended by implication. More precisely,
LSA-C.C. Art. 3073 set[s] forth the
following four factors to be considered in
determining the scope of a compromise
instrument:

[1] Transactions regulate only the
differences which appear clearly to be
comprehended in them by the intention of
the parties,

[2] whether it be explained in a
general or particular manner,

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[3] unless it be the necessary
consequence of what is expressed; and

[4] they do not extend to differences
which the parties never intended to
include in them.

The supreme court then observed that “the intent which the words of
the compromise instrument express in light of the surrounding
circumstances at the time of execution of the agreement is
controlling.” Id.

It would indeed lead to an absurd consequence if the Receipt and Release

agreement signed in 2009, which describes the matter being resolved as a billing

dispute which arose when Holloway terminated the services of the Inzarella Firm

in 2008, is interpreted as evidencing Holloway’s intent to release the Inzarella

Firm, “its employee, agents and assigns,” from all liability arising as a result of

Gregory Inzarella’s alleged participation in a scheme to steal nearly two million

dollars from it. The wording of the Receipt and Release at issue indicates only that

the parties intended to resolve the disputed bill and any cause of action or claim

Holloway might have, known or unknown, regarding the disputed final bill.

Nothing in the wording of the compromise agreement evidences any intention by

Holloway to accept the Inzarella Firm’s agreement to settle its claim against

Holloway in exchange for Holloway’s claim against Gregory Inzarella for

participating in the criminal theft of nearly two million dollars from Holloway.

That the two matters are distinctly different is too obvious for further comment.

Judge Saunders understood the application of Brown’s directions and the

interplay between our Civil Code’s provisions regarding compromise agreements

specifically, and contracts in general, along with the basis for a finding of res

judicata. Judge Saunders explained as follows (emphasis added):

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A compromise agreement is the law between the parties and
must be interpreted according to the parties’ intent. It follows that the
compromise instrument is governed by the same general rules of
construction applicable to contracts.

When the words of a contract are clear and explicit and lead to
no absurd consequences, no further interpretation may be made in
search of the parties’ intent. [Louisiana Civil Code] Article 2046
emphasizes that the process involves no further interpretation, as
opposed to no interpretation at all. Because a compromise extends
only to those matters the parties intended to settle, the scope of the
transaction cannot be extended by implication. In applying this rule
of construction, courts are guided by the general principle that the
contract must be considered as a whole and in light of attending
events and circumstances.

....

The basis for barring a suit due to a compromise or settlement
is res judicata.

[U]nder La. R.S. 13:4231, as amended in 1990 effective January 1,
1991, res judicata bars relitigation of a subject matter arising from the
same transaction or occurrence of a previous suit. Thus, the chief
inquiry is whether the second action asserts a cause of action which
arises out of the transaction or occurrence which was the subject
matter of the first action.

Terrebonne Fuel & Lube, Inc. v. Placid Refining Company, 95-654, 95-671, p. 12

(La.1/16/96), 666 So.2d 624, 632. Holloway Drilling Equipment, 107 So.3d at

710-11 (alterations in original) (quoting Ortego v. State Dept. of Transp. & Dev.,

06-1322. P. 7 (La. 2/25/97), 689 So.2d 1358, 1363-64 (citations omitted).

We, like Judge Saunders, recognize that Holloway in no way intended to

settle its claims against Gregory Inzarella for his alleged participation in the

criminal theft of its money when it agreed that it only owed the Inzarella Firm

$12,000.00 for its services rather than the $23,737.99 originally claimed. Clearly

the subject of the compromise settlement of 2009, and the subject of Holloway’s

lawsuit against Gregory Inzarella and others does not arise out of the same

transaction or occurrence. Likewise, we agree with the eloquent expression by

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Judge Saunders that to allow the compromise agreement signed in 2009, to

constitute res judicata barring Holloway’s claims raised in its suit commencing in

2010, is to “condone criminal activity” and “runs afoul [of] public policy

considerations, the State’s clean hands doctrine, and the statutory and

jurisprudential precedent [.]” We note the fact that the very Receipt and Release

Agreement which Gregory Inzarella asserts as a bar to Holloways’ claims against

him was signed by him, in his capacity as President of the Inzarella Firm, even

while allegedly knowing he had participated in and covered up the theft of large

sums of money from Holloway. We note too, the unsettling irony, and later

admission by Bodin that she notarized the very Receipt and Release Agreement at

issue knowing also at the time that she and her alleged accomplices had stolen

large sums of money from Holloway by using their various positions of trust and

access. For the reasons stated, we reverse the judgment of the trial court and

remand the matter for further proceedings.

REVERSED AND REMANDED.

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NUMBER 14-248

COURT OF APPEAL, THIRD CIRCUIT

STATE OF LOUISIANA

HOLLOWAY DRILLING EQUIPMENT, INC., ET AL.

VERSUS

DANIELLE BODIN, ET AL.

AMY, J., dissenting.

I respectfully dissent from the majority opinion as I would affirm the trial

court’s ruling on the exception of res judicata in light of Holloway Drilling

Equipment, Inc. v. Bodin, 12-355 (La.App. 3 Cir. 11/7/12), 107 So.3d 699, writ not

considered, 13-251 (La. 3/8/13), 109 So.3d 353. Given the broad language of the

receipt and release agreement, as discussed in that underlying appeal, I find no

distinction between the earlier proceeding and this matter brought against the

defendant in his individual capacity.