Arc Industries, L.L.C. v. William H. Nungesser

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 17-704 consolidated with CA 17-705

ARC INDUSTRIES, L.L.C.

VERSUS

WILLIAM H. NUNGESSER

**********

APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-20063028 C/W 20083100
HONORABLE THOMAS R. DUPLANTIER, DISTRICT JUDGE

**********

CANDYCE G. PERRET
JUDGE

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Court composed of Billy Howard Ezell, Van H. Kyzar, and Candyce G. Perret,
Judges.

AFFIRMED.

David Michael Hufft
George Pivach II
Timothy Thriffiley
Pivach, Pivach, Hufft
P. O. Box 7125
Belle Chasse, LA 70037
(504) 394-1870
COUNSEL FOR APPELLANT:
William H. Nungesser

Ian Alexander Macdonald
Jones Walker
P. O. Drawer 3408
Lafayette, LA 70502-3408
(337) 593-7600
COUNSEL FOR APPELLEES:
Dynamic Industries, Inc. and
LQT Industries, LLC

Jennifer M. Ardoin
Frank S. Slavich, III
Babineaux, Poche, Anthony & Slavich, L.L.C.
P. O. Box 52169
Lafayette, LA 70505-2169
(337) 984-2505
COUNSEL FOR APPELLEE:
Michel B. Moreno

PERRET, Judge.

Appellant, William Nungesser (“Mr. Nungesser,” sometimes referred to as

“Billy”) appeals the trial court’s judgment finding that no contract existed between

himself and Appellees. Mr. Nungesser maintains that a valid agreement was

entered into, and he thereafter began performing the work considered in the

agreement, which performance he argues was accepted by Appellees. Although

the trial court found no contract existed between the parties, the court did render

judgment in favor of Mr. Nungesser for damages pursuant to the theory of unjust

enrichment. Mr. Nungesser also seeks review of the amount of damages awarded

pursuant to this theory. Additionally, on this issue, Appellees answered the appeal

seeking review of the unjust enrichment finding, requesting that those damages be

set aside. We agree with the trial court’s judgment for the following reasons and

now affirm.

ISSUES FOR REVIEW

This court must decide:

1. Did the trial court commit manifest error in finding that there was no
contract between Mr. Nungesser and Arc Industries, L.L.C. (“Arc”)1 for
Mr. Nungesser’s consulting services, and, if so, is Mr. Nungesser entitled
to fifteen percent of Arc’s gross revenues for a three-year period
beginning in 2004?

2. Did the trial court commit manifest error in finding Michel Moreno is not
personally liable for breach of a consulting agreement and thus err in
granting Mr. Moreno’s motion for involuntary dismissal?

3. Did the trial court err in finding Arc was unjustly enriched, and did it
abuse its discretion in awarding $50,000.00 in damages to Mr. Nungesser
under the theory of unjust enrichment?

1
Arc Industries, L.L.C. is now LQT Industries, L.L.C. It was formally Arc Equipment
Rentals, L.L.C. Arc was a subsidiary of Dynamic Industries, Inc. when the events leading to this
lawsuit began.

4. Did the trial court abuse its discretion in failing to require Arc to produce
documents pertaining to its customers and its revenues received from
those customers so that Mr. Nungesser could quantify his damages under
the theory of unjust enrichment?

5. Did the trial court abuse its discretion in refusing to allow Mr. Nungesser
to introduce Nungesser Proffer #1, a document for purposes of settlement
showing Arc’s gross revenues?

FACTUAL AND PROCEDURAL BACKGROUND

The events leading up to this case began in 2004 when Emile Dumesnil

(“Mr. Dumesnil”), an investment banker, realized that two of his clients, Michel

Moreno (“Mr. Moreno”) and Mr. Nungesser, both expressed an interest in the

portable offshore living quarters business. Consequently, Mr. Dumesnil arranged a

lunch meeting in New Orleans between Mr. Moreno and Mr. Nungesser in 2004,

around September, to discuss the possibility of creating a new company that would

rent portable living quarters to the offshore industry. Mr. Moreno was affiliated

with Arc Industries. At the time, neither Arc Industries nor its parent company,

Dynamic Industries, Inc. (“Dynamic”), were involved in the portable living

quarters business. On the other hand, Mr. Nungesser previously worked offshore

for his father’s offshore catering business and also created a company called

General Marine, which was involved in the portable living quarters business.

At the meeting, both parties expressed an interest in the possibility of

starting this business journey together. Therefore, Mr. Dumesnil prepared a Letter

of Interest (“LOI”), which was signed by Mr. Nungesser and by Mr. Moreno, who

signed on behalf of “Newco,” in October 2004. The LOI states that it is a “non-

binding framework to further the discussions towards a consulting arrangement

between the parities [sic].” Importantly, the letter stated that, “should the parties

come to a definitive agreement, they will enter into a binding arrangement at that

2

time.” The LOI further detailed the business of the start-up company, potential

names for the start-up company, compensation to Mr. Nungesser, the assignment

of an employee, Michelle Citron, to assist Mr. Nungesser, the term of the

agreement, and the potential equity participation. Specifically, the LOI detailed

the following:

Consulting Agreement: Billy Nungessor [sic] (“Consultant”)
will enter into a consulting agreement (the “Agreement”)
with a start up company that shall be engaged in the
business of owning and leasing offshore living quarters.

....

Compensation: Compensation will be paid within 15
days of month’s end at rate of 15% of the prior month’s
gross revenue, less charge offs of receivables.

....

Other Terms and Conditions:
During the term of this Agreement, Newco (or affiliate) at
its expense will support Consultant with the following:
1. Consultant’s expenses will be reimbursed within 30
days of expense report filing, up to a maximum
amount of $2,500 / month for travel and entertainment
expensed, or such other amount as mutually agreed
upon by the parties.
2. Dedication of Michele Citroen [sic] or comparable
sales person.
3. Development of a Web site, brochures and other
marketing material appropriate for equipment rental
companies on the offshore oil and gas industry.
4. Full administrative support for billing, collecting,
bookkeeping, inventory control and other necessary
back office functions customary for equipment rental
companies in the offshore oil and gas industry.
5. Consultant will be provided an office in the Harvey
facility with appropriate support staff.

Accordingly, Mr. Nungesser and Mr. Moreno/Newco contemplated that they

would enter into a separate, binding agreement if the business venture was created

3

and a definitive agreement was reached between the parties. Although there was

never a signed consulting agreement, Mr. Nungesser began providing his expertise

to Arc. Michelle Citron was assigned to assist Mr. Nungesser. Mr. Nungesser

alleges he began making sales calls and visits to various potential clients, he taught

Arc employees about the portable living quarters business and how to bid packages

to potential customers, he met with Arc’s engineering company to assist in the

designs of the buildings, and he attended various meetings on the matter.

Approximately eight months went by before a consulting agreement was

circulated by Mr. Nungesser’s attorney. The draft agreement encompassed all

terms of the LOI with some additions, such as extending the term. Although Mr.

Dumesnil provided several changes, Mr. Moreno did not respond to the exchange.

In fact, Mr. Moreno contends that he never saw the written consulting agreement

proposed by Mr. Nungesser, the additions proposed by Mr. Dumesnil, or the

version of the agreement incorporating some of Mr. Dumesnil’s proposed changes

that were sent to him in July of 2005. Despite follow-up requests from Mr.

Nungesser’s attorney to finalize an agreement, no consulting agreement was ever

executed, and the entities described in the LOI and draft consulting agreement

were never created. Nevertheless, Mr. Nungesser continued to provide consulting

services to Arc.

On November 11, 2005, Stephanie McNeese, Arc’s Controller, wrote Mr.

Nungesser a check for reimbursement for January through July expenses and

compensation for July through August. However, on January 23, 2006, Mr.

Dumesnil advised Ms. McNeese, and copied Mr. Nungesser on the email, that no

compensation amounts should be paid until the “deal” is squared away. Arc also

contends this payment was in error.

4

Thereafter, Arc filed a petition for declaratory judgment seeking a

declaration that Mr. Nungesser has no right to demand any commission payments

or other consideration from Arc and requested the court order Mr. Nungesser to

return all payments that Arc made to Mr. Nungesser. Mr. Nungesser objected to

the venue of Arc’s petition, but that exception was ultimately denied. Mr.

Nungesser thereafter filed suit in Plaquemines Parish against Mr. Moreno, Mr.

Dumesnil, and Dynamic seeking payment according to the LOI and demanding

that he be allowed to buy into the company as provided for in the LOI. Mr.

Nungesser also filed a reconventional demand to Arc’s petition, seeking the same

relief as requested in his Plaquemines Parish petition. Mr. Moreno, Mr. Dumesnil,

and Dynamic intervened, uniting with Arc and becoming Defendants-in-

Reconvention to Mr. Nungesser’s Reconventional Demand.

Mr. Nungesser amended his Reconventional Demand in 2010, adding a

claim for unjust enrichment. Additionally, Mr. Dumesnil filed an Exception of No

Cause of Action in response to those claims against him in his individual capacity,

which was granted and then affirmed by this court. The case eventually went to

trial with the remaining parties.

At the trial on the merits, testimony was presented by Arc from Mr.

Dumensil and Mr. Moreno, both asserting there was no contract with Mr.

Nungesser. Mr. Dumesnil reiterated that the LOI simply documented the parties’

conversations and permitted the parties to enter a phase of due diligence in which

the possibility of this endeavor could be explored. On the other hand, Mr.

Nungesser testified he believed he had a “handshake agreement” when he left the

very first meeting, the New Orleans lunch meeting, with Mr. Moreno and Mr.

Dumesnil. We note that he further acknowledged he never believed Mr. Moreno

5

was binding himself personally to an agreement. Additionally, Mr. Nungesser

provided his testimony, as well as that of Kelly Nicotri and Michelle Citron,

regarding the services and knowledge he provided for Arc, as well as that of

Stephanie McNeese regarding Arc’s check that was sent to Mr. Nungesser for

expenses and fifteen percent of Arc’s income for several months.

The trial court ultimately believed it clear to all parties that Mr. Moreno was

never acting in his individual capacity and that he was always signing on behalf of

a corporate entity. Accordingly, upon Mr. Moreno’s motion, the trial court

dismissed Mr. Moreno individually. A judgment to this effect was signed on

March 7, 2017.

Arc then moved to dismiss Mr. Nungesser’s Reconventional Demand

arguing there was no agreement. The trial court took the matter under advisement

and requested subsequent briefing. The trial court concluded that there was no

agreement, oral or written. However, the court did find that Mr. Nungesser

provided services to Arc, and that Arc was unjustly enriched by his services.

Therefore, the court awarded Mr. Nungesser $50,000.00 plus interest and court

costs against Arc and Dynamic. The judgment was signed on April 17, 2017. This

appeal followed.

LAW AND DISCUSSION

Assignment of Error Number One—Written, Implied, or Oral Contract:

Assignment of Error Number One, as well as Number Two, hinges on

whether there was an agreement between the parties, including Mr. Moreno in his

individual capacity. On appeal, the manifest error—clearly wrong standard should

be applied to factual findings: “The determination of the existence of a contract is a

6

finding of fact, not to be disturbed unless clearly wrong.” Dubois Const. Co. v.

Moncla Const. Co. Inc., 39,794, p. 2 (La.App. 2 Cir. 6/29/05), 907 So.2d 855, 857.

Where there is conflict in the testimony,
reasonable inferences of fact should not be disturbed on
review, even though the appellate court may feel its own
evaluations and inferences are equally reasonable.
Stobart v. State, Through DOTD, 617 So.2d 880
(La.1993); Harrison v. Gore, 27,254 (La.App.2d
Cir.8/23/95), 660 So.2d 563, writ denied, 95–2347
(La.12/8/95), 664 So.2d 426; Gardner v. McDonald,
27,303 (La.App.2d Cir.8/23/95), 660 So.2d 107, writ
denied, 95–2349 (La.12/15/95), 664 So.2d 453.
Likewise, reasonable evaluations of credibility should not
be disturbed on review. Marshall v. Caddo Parish
School Board, 32,373 (La.App.2d Cir.10/29/99), 743
So.2d 943. It is the factfinder’s duty to weigh credibility
and accept or reject all or part of a witness’ testimony.
Id. Furthermore, when findings of fact are based on
determinations of credibility of witnesses, the manifest
error-clearly wrong standard mandates great deference to
the determinations made by the trial court. West v.
Williams, 30,842 (La.App.2d Cir.8/19/98), 717 So.2d
1224. If the trial court’s findings are reasonable when
the record is reviewed in its entirety, the appellate
court may not reverse them. Fowler v. Wal–Mart
Stores, Inc., 30,843 (La.App.2d Cir.8/19/98), 716 So.2d
511.

O’Glee v. Whitlow, 32,955, pp. 3-4 (La.App. 2 Cir. 4/7/00), 756 So.2d 1288, 1291

(emphasis added).

“A contract is formed by the consent of the parties established through offer

and acceptance. Unless the law prescribes a certain formality for the intended

contract, offer and acceptance may be made orally, in writing, or by action or

inaction that under the circumstances is clearly indicative of consent.”

La.Civ.Code art. 1927. Additionally, the party seeking to enforce an obligation has

the burden of proving the existence of the obligation. La.Civ.Code art. 1831.

However, “when parties agree to reduce their contract to writing, the

contract is not perfected, and there is no contract until the writing is duly

7

executed.” Boothe v. May, 425 So.2d 313, 315 (La.App. 3 Cir. 1982), writ denied,

429 So.2d 146 (La.1983); Brewer v. Loewer, 383 So.2d 1325, 1329 (La.App. 3

Cir.), writ denied, 391 So.2d 456 (La.1980); see also La.Civ.Code art. 1947 and

Segura v. Louisiana Architects Selection Bd., 340 So.2d 369 (La.App. 1 Cir. 1976),

writ denied, 342 So.2d 676 (La.1977).

It is well settled that where parties intend to reduce
their negotiations to writing, they are not bound until the
contract is reduced to writing and signed by them. Even
if all terms of the alleged contract have been verbally
agreed upon, so long as it is a part of the bargain that the
contract be reduced to writing, no valid contract exists
until it is reduced to writing.

Johnston v. Johnston, 469 So.2d 31, 32 (La.App. 1 Cir. 1985).

The first circuit in Segura stated:

[I]f the facts of the case reveal that the parties did not
intend to be bound until the execution of a written
document, no contract can exist until that event takes
place. However, even when a written document is
contemplated, if the parties intend to be bound by their
original verbal agreement, then a contract subsists from
that time, and the writing, if executed, is a memorial of
that agreement.
Segura, 340 So.2d at 371.

The supreme court in Breaux Bros. Construction Co. v. Associated

Contractors, Inc., 77 So.2d 17, 20 (La.1954), explained the idea set forth in

Segura, distinguishing those cases in which there is a complete verbal contract,

from those in which it is “a part of the bargain that the contract shall be reduced to

writing.” Specifically:

In the first class of cases the original verbal contract is in
no manner impaired by the failure to carry out the
subsequent agreement to put it in writing. In the second
class of cases, the final consent is suspended; the
contract is inchoate, incomplete, and it can not be
enforced until it is signed by all the parties.

8

Id. In Breaux, all parties acknowledged that a written agreement was necessary.

The parties, Breaux and Associated Contractors, Inc., contemplated entering a

subcontract for construction work. The parties met twice to discuss the work and

the price. Breaux believed that by the end of the second meeting there was an oral

contract—that the parties had agreed on the work and the price. Associated

Contractors, however, denied there was an oral agreement, denied the price was

agreed upon at the second meeting, and insisted the parties intended, from the

beginning, that any agreement reached would be reduced to writing and signed by

all parties. The supreme court concluded:

[E]ven if all of the terms of the alleged contract between
plaintiff and defendant had been verbally agreed upon, no
valid contract would have existed between the parties
because this case falls within the second class of cases . . .
and therefore in this case the final consent of the parties
was suspended until such time as the contract should be
reduced to writing and signed by all the parties.

Id.

In the case before this court, all parties testified that a final written

consulting agreement was never resolved and never executed. Therefore, the only

written, signed document involved in this case was the LOI. Even Mr. Nungesser

acknowledged the LOI was a non-binding agreement. Based on the testimony and

evidence presented at trial, the trial court correctly determined there was no written

contract agreed to by the parties. Additionally, all parties contemplated a written

consulting agreement from the beginning. Although he maintains he had an oral

agreement, Mr. Nungesser admitted he knew a subsequent, final agreement would

be forthcoming and was needed. He testified as follows:

Q. . . . You understand that the terms discussed in that
Letter of Interest could be modified, or eliminated
altogether, before a final agreement was reached?

9

A. Absolutely.

Q. And you knew, when you signed that Letter of
Interest, that there would need to be a subsequent
agreement between you and Newco, or whatever entity,
before there would be any binding obligations?

A. I thought we had a deal when I left the restaurant
and shook his hand. Mr. Moreno told Emile to get the
lawyer and him to work out the details and the final
document.

Q. But my question is, reading that document, you
knew that it called for a subsequent definitive—

A. Right.

....

Q. You were not aware of any binding written
agreement signed by you and anyone else setting forth
the terms and conditions of your relationship with any of
the parties to this lawsuit, are you?

A. No.

The testimony supports the finding that such written agreement was a part of the

bargain. Mr. Nungesser admitted he knew the discussed terms could change

before a final agreement was reached. Therefore, an agreement to any terms could

not be reached absent a final written contract.

Even if a written agreement was not part of the original bargain, an

agreement still did not exist. “[T]he deeply entrenched requirement of our law [is]

that there must be a meeting of the minds to consummate a binding agreement.”

Boothe, 425 So.2d at 314. Mr. Moreno, on behalf of Newco, believed there would

be a period of due diligence by the parties and that there would not be an

agreement until one was finalized in writing. Mr. Moreno had previously been

involved in similar deals and acknowledged, “I mean, you always enter into these

non-binding letters of intent with optimism and you don’t do it unless you hope

10

that a deal can be consummated. So yeah, we entered into this with good faith for

sure.” Mr. Moreno later continued:

Q. You said you’ve executed a number [of] Letters of
Interest before with other type[s of] deals, correct?

A. That’s correct.

Q. Do the—Do you know if the economics that are
set forth in the Letter of Interest are going to pan out,
before you get to the final, when you execute the Letter
of Interest?

A. They rarely do because, you know, it’s—when you
put something like this together, it’s very high level and
when you get through due diligence and you really get to
fine tune what a final deal will look, and in this case a
new company startup, then you get to make those kind of
adjustments. So rarely does it work out exactly from
letter of intent to final document. But that’s the general
intent, to try and get to somewhere in that, you know,
range. That’s the goal that you start out with.

Q. So often many changes in terms of compensation
and so forth between letter of intent and final deal?

A. Sure. I mean, once you figure out what your costs
are in a new startup business and, you know, how much
overhead you’re going to have, what the pricing in the
market’s going to allow, I mean, all those factors, you
know, weigh into the final terms of a deal.

Additionally, Mr. Dumesnil explained the process of a deal and the purpose

of an LOI:

It’s an ongoing discussion. The LOI isn’t
something you do after ten minutes of a conversation. So
there’s an exchange of ideas. And so we don’t waste too
much time on lawyers and effort, I try and put these ideas
out in a non-binding LOI just to make sure both parties
are generally on the same page.

Mr. Dumesnil explained that the next step, after the LOI, is due diligence.

Specifically:

11

Because the LOI contemplated the forming of a
Newco, so it’s quite an endeavor. And it also
contemplated that that Newco would invest quite a bit of
money in portable living quarters. And so the—this—
one of [the] parties was new to the market, the party—in
the case of Mike Moreno—and the other party, in the
case of Billy, had been in the market but had exited
sometime before that and the market was moving rapidly.
And so part of the due diligence was to figure out to
define the market, what the customers look like, whether
or not there was room for another portable living quarter
company in the Gulf of Mexico, and then, probably as
important as any of the others I just mentioned, whether
or not these parties could work together.
There was no meeting of the minds between the parties to consummate a

binding agreement at the first lunch meeting, other than that the parties would

investigate whether the contemplated business would have a place in the market,

what the costs would be for such a business, and what the terms of an agreement

would look like. Based on the record, we find the trial court did not err in

determining that there was no oral agreement between the parties, including with

Mr. Moreno in his individual capacity.

However, Mr. Nungesser asserts that Arc accepted his performance under

the terms of the agreement, thereby abandoning the writing requirement and

consenting to the contract, which would rebut the presumption under La.Civ.Code

art. 1947 that when the parties contemplate a specific form for the agreement, no

agreement exists until executed in that form. Even where a written document is

contemplated, when substantial performance under the agreement is conducted,

such action may constitute consent to the contract under La.Civ.Code art. 1947.

See O’Glee, 756 So.2d 1288.2

This court notes that in O’Glee, 756 So.2d 1288, the parties also signed a “Buyer’s
2

document” and the buyers immediately began operating the café that was the subject of the sale

12

Mr. Nungesser points to the fact that he did perform consulting services, and

that the trial court found he performed services for which he was awarded damages

under the theory of unjust enrichment. Additionally, the LOI specified that Arc

would dedicate a sales person to Mr. Nungesser, which it did—Michelle Citron;

that Arc would develop marketing material for Mr. Nungesser, which it did—

business cards, letterhead, shirts, and hats; and that the LOI contemplated Mr.

Nungesser would be reimbursed for expenses and compensation, which it did, but

later retracted. Mr. Nungesser provided testimony from Stephanie McNeese that

the directive to issue the check to Mr. Nungesser would have had to come from

Mr. Dumesnil, Mr. Moreno, or Mr. Jesus Moreno. However, she could not recall

who approved the check being sent to Mr. Nungesser or who directed the fifteen

percent calculation.

But, Mr. Dumesnil and Mr. Moreno both testified they understood there

would be a due diligence period following the initial meeting. During the due

diligence period, the parties would investigate whether the company could exist in

the current market, and whether the parties could work together. Mr. Nungesser’s

work in marketing, reaching out to potential clients, and assisting in the design of

buildings, which would be showcased to potential clients, is work that would be

reasonable during this due diligence period. Additionally, Mr. Nungesser would

logically need business cards and letterhead from Arc to send to prospective

customers while investigating the market. It also makes sense that Arc would keep

Mr. Nungesser informed of the marketing details for the new business because the

due diligence period was a time for the parties to determine whether they could

as if it was their own, in conjunction with that document. The court maintained that the
document coupled with the conduct was enough to prove a sale was consented to, despite the fact
final “sales documents” were not executed.

13

work alongside one another. Finally, Mr. Moreno testified that Michelle Citron

was assigned “to help and she was the one we chose to try to help put this

together,” which can be reasonably interpreted to suggest that Ms. Citron was

another factor in the due diligence period.

Based on the record, a reasonable fact finder could conclude that Arc and

Mr. Moreno operated under the belief that Mr. Nungesser’s work during this time

was part of the due diligence period as contemplated by the first meeting and LOI,

and was not work being performed pursuant to a final consulting agreement.

“If the trial court’s findings are reasonable when the record is reviewed in its

entirety, the appellate court may not reverse them.” O’Glee 756 So.2d at 1291.

The facts and circumstances of this case show that the parties contemplated a due

diligence period before executing a binding agreement. We find that the trial

court’s conclusion that there was no performance and acceptance of performance

under a consulting contract was reasonable based on the record and witness

credibility determinations. Therefore, we find that the trial court did not err in

concluding Arc’s acceptance of Mr. Nungesser’s services during the due diligence

period did not constitute consent to an agreement. Appellant’s Assignment of

Error Number One is without merit.

Assignment of Error Number Two—Mr. Moreno’s Individual Liability:

In his second Assignment of Error, Mr. Nungesser argues that Mr. Moreno

should be held individually liable for the breach of the alleged consulting

agreement. For the reasons just discussed, Mr. Moreno would also not be

individually liable to Mr. Nungesser because no contract existed between the

parties. “[A] trial court’s ruling on a motion for involuntary dismissal is reviewed

14

for manifest error.” Duncan v. Moreno Energy, Inc., 13-668, p. 10 (La.App 3 Cir.

12/11/13), 129 So.3d 849, 855, writ denied, 14-457 (La. 4/17/14), 138 So.3d 629.

Mr. Nungesser argues that Mr. Moreno was an undisclosed principle under

La.Civ.Code art. 3017. Louisiana Civil Code Article 3017 (emphasis added)

states: “A mandatary who contracts in his own name without disclosing his status

as a mandatary binds himself personally for the performance of the contract.”

However, Mr. Moreno did disclose his status as a mandatary, and such status was

even in the LOI when he signed on behalf of “Newco.” “A mandatary who enters

into a contract and discloses his status as a mandatary, though not his principal,

binds himself personally for the performance of the contract. The mandatary

ceases to be bound when the principal is disclosed.” La.Civ.Code art. 3018

(emphasis added). No contract between the parties was entered into. Had the

parties entered a consulting agreement after the due diligence period, Mr. Moreno

would have needed to disclose the company that he was contracting for at that time.

Regardless, Mr. Nungesser testified he was never under the impression that

Mr. Moreno was contracting in his individual capacity. In fact, he explained that it

was his understanding that Mr. Moreno was representing “Newco,” a “placeholder

until they decided whether the portable building would be under ARC, Dynamic,

or where exactly the buildings, as it progressed, would fit . . . .” Additionally, Mr.

Nungesser was put on notice of the principal company he would be contracting

with, if such a contract would be entered into, during the due diligence period. It

was, or should have been clear to Mr. Nungesser which company would be

housing the living quarters business, because Arc’s marketing materials were used

and Arc was inserted into the draft consulting agreements that were being

exchanged.

15

Mr. Nungesser also argues Mr. Moreno should be liable to him under

La.Civ.Code art. 1977, which states: “The object of a contract may be that a third

person will incur an obligation or render a performance. The party who promised

that obligation or performance is liable for damages if the third person does not

bind himself or does not perform.” Again, no contract existed between any party

in this suit. The parties only contemplated exercising a period of due diligence,

which they did. Mr. Moreno did not promise that Arc would bind itself to any

obligation beyond determining whether a market existed for this new company and

whether the parties could ultimately work together.

Thus, based on the facts of this case, we cannot say the trial court erred in

determining that Mr. Moreno was not personally liable to Mr. Nungesser.

Consequently, we find that Assignment of Error Number Two is also without merit.

Assignment of Error Number Three—Unjust Enrichment:

Both parties appeal the award of $50,000.00 to Mr. Nungesser for unjust

enrichment—Mr. Nungesser argues the award should be increased based on fifteen

percent of Arc’s gross revenues, while Arc argues it was not unjustly enriched.

Accordingly, we will first consider whether the trial court erred in finding Arc was

unjustly enriched.

Louisiana Civil Code Article 2298 states: “A person who has been enriched

without cause at the expense of another is bound to compensate that person. The

term ‘without cause’ is used in this context to exclude cases in which the

enrichment results from a valid juridical act or the law.” The five elements of an

unjust enrichment claim are “(1) an enrichment, (2) an impoverishment, (3) a

connection between the enrichment and resulting impoverishment, (4) an absence

of ‘justification’ or ‘cause’ for the enrichment and impoverishment, and (5) no

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other remedy at law available to plaintiff.” Dugas v. Thompson, 11-178, p. 13

(La.App. 4 Cir. 6/29/11), 71 So.3d 1059, 1067-68.

In determining whether Mr. Nungesser proved the five elements of unjust

enrichment, all factual findings of the trial court are reviewed under the manifest

error standard of review. Munro v. Carstensen, 41,714 (La.App. 2 Cir. 12/20/06),

945 So.2d 961. “[To] reverse a fact finder’s determination of fact, an appellate

court must review the record in its entirety and (1) find that a reasonable factual

basis does not exist for the finding, and (2) further determine that the record

establishes that the fact finder is clearly wrong or manifestly erroneous.” Cosby v.

Holcomb Trucking, Inc., 05-470, pp. 12-13 (La. 9/6/06), 942 So.2d 471, 479.

Arc argues Mr. Nungesser failed to satisfy the absence of justification or

cause element and failed to show that he was impoverished. Arc argues that the

jurisprudence does not support a finding of unjust enrichment when the reason for

the enrichment was a contract between the enrichee and a third party that justifies

the enrichment of the enrichee.

For example, in Liberty Personnel, Inc. v. Children’s Hospital, 487 So.2d

518 (La.App. 4 Cir. 1986), the fourth circuit found no unjust enrichment where the

benefit received by one party was achieved through means not related to the

services provided by the other party. In Liberty Personnel, Inc., the plaintiff was

an employment agency that received fees from employers who hired applicants

referred by the agency. The defendant contacted the agency to find a director for

its rehabilitation unit. The plaintiff referred one applicant, Deese, who was offered

the position with the defendant but originally declined. One month later, Deese,

who asserted she was no longer represented by the agency, contacted the defendant

to work on a temporary basis for a different position and was hired. Plaintiff also

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referred Byerly. However, Byerly became aware of the position through a

newspaper ad prior to seeking assistance from the plaintiff. After using the

plaintiff’s services, she independently contacted the defendant for the position and

was hired. Although the fourth circuit noted the issue of quantum meruit was not

before the trial court, it concluded that there was no recovery for Plaintiff under

this theory because both Dees and Byerly obtained positions through their own

initiative.

Similarly, in this case, Arc asserts that its enrichment came from “the

contracts between LQT [formally Arc] and its customers following Hurricanes

Katrina and Rita” and “LQT’s investment of skill, time, labor, financing and good

fortune.” Additionally, Arc counters Mr. Nungesser’s argument that he trained

Ms. Citron and ARC employees with the fact that Ms. Citron stopped working for

Arc after only a few months, in May 2005, and that Mr. Nungesser also stopped

working with Arc in July 2005. Therefore, Arc argues neither Ms. Citron nor Mr.

Nungesser can be responsible for Arc’s success in late 2005, 2006, or 2007.

Furthermore, Mr. Moreno testified that the company “moved on without any

material involvement from Billy.” Mr. Dumesnil recognized Mr. Nungesser

provided two prospects to Arc, but stated that to the best of his knowledge, Mr.

Nungesser’s leads did not lead to any revenue. It was Mr. Dumesnil’s opinion that

Mr. Nungesser did not help in getting the portable living quarters business started,

and did not push anything to the finish line, i.e., no effort towards revenue,

contacts, or design of the buildings.

However, the trial court also heard testimony from Ms. Citron that Mr.

Nungesser taught her everything she knows about the portable building business

and that she could not have done the business without Mr. Nungesser. She

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testified regarding meetings with Mr. Nungesser in which he sketched out designs

and layouts for the buildings, and she specifically recalled a 2005 meeting with

various Dynamic companies in Lafayette at which Mr. Nungesser gave a

presentation. She also specifically recalls a 2005 Houston sales meeting that the

Dynamic International sales representative attended. Ms. Citron testified she

worked with Mr. Nungesser until May 2005.

Mr. Nungesser also testified to specific meetings he attended, that he gave

his input into the design of the portable building layouts, and trained Arc

employees on how to bid the building packages.

In its Reasons for Ruling (emphasis added) the trial court stated:

Nungesser, on the other hand, paints a different
picture and establishes in this Court’s mind that he
was an integral part of the start-up of Arc’s living
quarters business. Nungesser testified at trial about his
extensive knowledge of what types of layout[s] would
sell and used the knowledge and plans he had from
General Marine to design new quarters. . . . He stated
that after Katrina he had several customers who needed
buildings, but that Arc did not have any available and
was constantly behind on construction.

....

First, Arc was enriched by Nungesser’s knowledge of the
industry and significant contacts with clients in the
business. Nungesser provided Arc with the skills needed
to develop the living quarters business and start-up of the
company is due to his efforts. . . . [A]lthough it is unclear
how much time was spent by Nungesser on this
endeavor, it is clear that at least from the end of 2004
through part of 2005, Nungesser provided the
groundwork that was fundamental to establishing the
business.

We find no error in the trial court’s summation of the evidence and

conclusion that Mr. Nungesser contributed to Arc’s success. Even if Arc was able

to secure contracts with customers beyond Mr. Nungesser’s time associated with

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Arc, Arc had the know-how and designs, and potential customers were aware of

Arc’s portable living quarters endeavor, due at least in part to Mr. Nungesser’s

involvement.

Additionally, Arc’s assertion that Mr. Nungesser was not impoverished is

without merit. A person is “impoverished when assets are diminished, a ‘justified

expectation of gain’ is prevented, or liabilities increased.” Munro, 945 So.2d at

966. Mr. Nungesser gave his time and knowledge to Arc without compensation.

The record shows that Arc was enriched by Mr. Nungesser’s contribution of

knowledge, ideas, and time in marketing, while Mr. Nungesser was impoverished

by giving his time and knowledge without being compensated, and that there is a

connection between the enrichment and impoverishment. Additionally, there is no

justification or cause for the enrichment because, although Arc may have obtained

some clients and contracts independently, Arc would not be in the position to gain

those clients and contracts without the knowledge and marketing efforts of Mr.

Nungesser. Lastly, because the trial court correctly found that there was no

agreement between the parties, there is no other remedy at law available to Mr.

Nungesser. We find no error in the trial court’s determination that Arc was

unjustly enriched. Consequently, we must now determine whether the trial court’s

award of $50,000.00 to Mr. Nungesser for unjust enrichment was appropriate.

Amount of Damages for Unjust Enrichment:

Under the theory of unjust enrichment, “[t]he amount of compensation due

is measured by the extent to which one has been enriched or the other has been

impoverished, whichever is less.” La.Civ.Code art. 2298 (emphasis added). “In

determining the actual value of . . . services, plus a fair profit, we note ‘[t]here is

no specific test which must be applied to determine the reasonable value of such

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services. It is a matter of equity depending upon the circumstances of each case.’”

Fogleman v. Cajun Bag & Supply Co., 93-1177, p. 7 (La.App. 3 Cir. 6/15/94), 638

So.2d 706, 710, writ denied, 94-1900 (La. 10/28/94), 644 So.2d 375 (quoting Jones

v. City of Lake Charles, 295 So.2d 914, 917 (La.App. 3 Cir. 1974) (alteration in

original)).

When determining damages in this case, the trial court commented on the

“problem . . . in establishing the amount by which Arc was enriched by

Nungesser’s services.” In reaching $50,000.00, the trial court notes that the “sole

piece of evidence presented at trial showing Arc’s living quarters revenue from

2005-2007 establishes that the company made $17,852,453.00 over the three year

period. Nungesser seeks 15% of those revenues in the amount of $2,677,867.00;

however, this too would be unjust.” Therefore, the trial court was left to determine

a fair value to compensate Mr. Nungesser for his contribution to Arc based on the

testimony and evidence presented at trial.

Mr. Nungesser testified that he took part in the layouts for the first ten

buildings Arc was going to build; met with the engineering company Arc was

using, and formulated a price list. It was Mr. Nungesser’s understanding this was

the initial fleet that would be built. Additionally, Mr. Nungesser submitted

expense reports into the record showing trips he took for meetings. The expense

reports submitted into the record show approximately ten meetings Mr. Nungesser

attended. The record also includes emails in which Mr. Nungesser either found a

prospective client, or sent out information and packages on Arc living quarters.

For instance, one email was dated November 17, 2005, from Mr. Nungesser to

Jesus Moreno regarding a prospect for housing of 200 to 500 people in New

Orleans. In another email, dated February 24, 2006, Mr. Nungesser announced he

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received a call for twenty buildings. However, there is no indication as to whether

Arc generated business from these prospects or the other contacts Mr. Nungesser

provided information to.

The trial court specifically noted:

This Court was presented with no evidence to help it
establish the number of Nungesser’s leads which
generated actual sales for the company. It would be pure
speculation on behalf of the Court to determine what
percentage of the gross revenue for the company was
actually attributable to Nungesser. Also, no evidence
was presented as to the number of hours spent by
Nungesser on behalf of the new company. Thus, this
Court is left with deciding the value of Nungesser’s
services as a consultant/marketing representative from
September 2004 through July 2005, based solely upon
the testimony regarding the services Nungesser provided.

Mr. Nungesser only argues that his services are worth fifteen percent of

Arc’s gross revenues, and fifteen percent of the gross revenue is the only amount in

the record representative of what Mr. Nungesser’s services were worth.

Additionally, the trial court believed Mr. Nungesser only rendered services through

July 2005. Although emails introduced at trial show Mr. Nungesser was still

receiving requests regarding building availability through February 2006, nothing

in the record evidences that Mr. Nungesser did any work to receive those requests

during those months. Additionally, Mr. Nungesser only provided expense reports

from January 2005, through July 2005. Therefore, we find no manifest error in the

trial court’s determination that Mr. Nungesser is due compensation for his work for

Arc from September 2004, through July 2005.

“Since the assessment of an award based on the doctrine of unjust

enrichment . . . is analogous to an award of damages, the record must clearly reveal

the trial court abused its discretion before we will disturb the award.” Bieber-

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Guillory v. Aswell, 98-559, p. 10 (La.App 3 Cir. 12/30/98), 723 So.2d 1145, 1151.

The role of the appellate court “is not to decide what we consider an appropriate

award, but rather to review the exercise of discretion by the trial court. ‘Each case

is different and the adequacy and inadequacy of the award should be determined by

the facts or circumstances particular to the case under consideration.’” Id. (quoting

Youn v. Maritime Overseas Corp., 623 So.2d 1257, 1260 (La.1993)).

Arc’s living quarters revenue was $598,374 for 2005. Compensation based

on fifteen percent of Arc’s average living quarters revenue for the months of 2005

that Mr. Nungesser worked with Arc would be $52,357.73 ($598,375 equals an

average of $49,864.5 per month in 2005 for ARC, and Mr. Nungesser provided

work for seven months during 2005). Considering it is unlikely Arc would have

seen little, if any, revenue in the early months of its involvement in the portable

living quarters business, and considering the trial court was tasked with

determining a reasonable value for Mr. Nungesser’s services as a matter of equity

depending on the circumstances of the case, we cannot say that an award of

$50,000.00 for Mr. Nungesser’s services is unreasonable. We find no abuse of

discretion in the amount of the trial court’s award to Mr. Nungesser for unjust

enrichment.

Assignment of Error Number Four—Trial Court’s Denial of Mr. Nungesser’s
Motion to Compel:
Mr. Nungesser’s Assignment of Error Number Four addresses the trial

court’s decision to deny Mr. Nungesser’s August 2009 Motion to Compel. At the

time, Mr. Nungesser had not made a claim for unjust enrichment. The hearing on

the motion took place on November 9, 2009, and, relevant here, the trial court

denied Mr. Nungesser’s motion as to interrogatory number nine and request for

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production number thirteen. Mr. Nungesser sought a supervisory writ on the

denial, docket number 09-1492 in this court, and this court denied the writ.

Trial courts are given wide discretion in ruling on discovery matters, and an

appellate court should not upset a trial court’s ruling absent an abuse of discretion.

St. Bernard Port, Harbor & Terminal Dist. v. Violet Dock Port, Inc., L.L.C., 14-

286 (La.App. 4 Cir. 8/27/14), 147 So.3d 1266, writ denied, 14-2019 (La.

10/31/14), 152 So.3d 1600.

Interrogatory number nine sought the names and addresses of all persons or

entities to which Arc sold or leased any offshore leasing quarters from January 1,

2004, through the date of discovery. Request for production number thirteen

sought copies of all customer lists, prospect lists, invoices, order forms, price

quotes, and any documentation evidencing persons to whom Arc sold or leased

offshore living quarters from January 1, 2004, through the date of discovery.

While Mr. Nungesser was provided with Arc’s annual revenue figures subject to a

confidentiality agreement, Arc refused to provide the remaining information.

Mr. Nungesser argues that, had he had access to Arc’s client lists, he could

have provided the trial court information regarding the number of his leads which

generated actual sales for the company and may support his entitlement to damages

for unjust enrichment. However, at the time this motion to compel was heard, Mr.

Nungesser had not made a claim for unjust enrichment. Instead, he only sought a

percentage of gross revenues as allegedly set forth in a contract. To calculate the

percentage, only Arc’s income would need to be established, not the number of

customers Arc had because of any of Mr. Nungesser’s leads. Mr. Nungesser did

not re-urge his motion or seek this information after amending his petition for

damages to add a claim for unjust enrichment. Therefore, we find that the trial

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court did not abuse its discretion in denying this information at the time. Mr.

Nungesser’s Assignment of Error Number Four is without merit.

Assignment of Error Number Five—Trial Court’s Refusal to admit Nungesser
Proffer #1:
Nungesser Proffer #1 is an Excel sheet sent via email from Mr. Dumesnil to

Mr. Nungesser for purposes of settlement. The Excel sheet contains the monthly

living quarter revenue for each month from July 2005 through December 2005, as

well as what fifteen percent of the monthly revenue equals. The Excel sheet only

contains the total revenue per month, without any justification or support for the

total number. Additionally, the attachment includes a “suggested settlement” offer.

As previously stated, trial courts’ rulings on discovery matters are reviewed

for an abuse of discretion. St. Bernard Port, Harbor & Terminal Dist., 147 So.3d

1266.

Mr. Nungesser argues the Excel sheet is relevant to two issues. “First, it sets

forth the gross revenues for Arc’s building business for 2005. Second, it shows

that Arc continued to operate under the understanding that Mr. Nungesser was to

receive a commission of 15% of gross living quarters revenue.” Louisiana Code of

Evidence Article 408 prohibits admitting evidence of an offer “to furnish . . .

anything of value in . . . attempting to compromise a claim which was disputed as

to either validity or amount, is not admissible to prove liability of the claim or its

amount.” Based on the trial transcript, it appears the only purpose the Proffer was

going to serve was to show that Arc attempted to buy Mr. Nungesser out by using

an offer of fifteen percent of the gross revenues. The document was not used to

show what the gross revenue breaks down to for each month of 2005. Any

suggestion by Mr. Dumesnil that Mr. Nungesser be paid fifteen percent is part of a

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settlement offer. Therefore, the trial court did not abuse its discretion in not

allowing the Proffer to be admitted to prove Arc operated under the belief Mr.

Nungesser was owed fifteen percent of gross revenues. Additionally, the Proffer

was unnecessary to show Arc’s gross revenues for 2005 because Arc previously

provided its annual gross income to Mr. Nungesser in discovery and Mr. Moreno

testified to Arc’s gross income at trial. We find that this Assignment of Error is

also without merit.

CONCLUSION

For these reasons, the judgment of the trial court is affirmed. In regards to

costs of this appeal, appellate courts have the power to tax appellate costs “against

any party to the suit, as in its judgment may be considered equitable.” La.Code

Civ.P. art. 2164. Appellant, Mr. Nungesser, was ultimately unsuccessful on all

issues raised by him on appeal. However, LQT Industries, L.L.C. and Dynamic

Industries, Inc. also answered the appeal, requesting the damages awarded Mr.

Nungesser by the trial court be set aside. LQT Industries and Dynamic Industries

were unsuccessful on this issue. On the other hand, Michel Moreno was successful

at the trial level, as well as on appeal. Mr. Moreno did not appeal the trial court’s

judgment and was only forced to file an opposition because Mr. Nungesser

appealed. Therefore, LQT Industries, L.L.C. and Dynamic Industries, Inc. shall

bear their own costs of this appeal, and the remainder of the costs of this appeal

shall be borne by William Nungesser.

AFFIRMED.

This opinion is NOT DESIGNATED FOR PUBLICATION.
Uniform Rules—Courts of Appeal, Rule 2-16.3.

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