Vesta Halay Johnston v. Susan Halay Vincent

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
P.O. Box 16577
Lake Charles LA 70616
(337) 433-9403

Judgment on rehearing rendered and
mailed to all parties or counsel of
record on July 14, 2021

REHEARING ACTION: July 14, 2021

Docket Number: 20 00357-CA

VESTA HALAY JOHNSTON, ET AL.
VERSUS
SUSAN HALAY VINCENT, ET AL.

Appealed from Calcasieu Parish Case No. 2015-4153

BEFORE JUDGES:

Hon. Sylvia R. Cooks
Hon. Elizabeth A. Pickett
Hon. Shannon J. Gremillion

As counsel of record in the captioned case, you are hereby notified that the applications

for rehearing filed by (1) Vesta Halay Johnston, et al, (2) Martin Bryan Vincent, (3)

Gulf Coast Rubber and Gasket, and (4) Susan Halay Vincent have this day been

GRANTED. (See majority opinion on rehearing also rendered this date)

cc: J. Rock Palermo, III, Counsel for the Appellant
Turner D. Brumby, Counsel for the Appellant
John Michael Veron, Counsel for the Appellant
Rudie Ray Soileau, Jr., Counsel for the Appellee
Hunter William Lundy, Counsel for the Appellee
James David Cain, Jr., Counsel for the Appellee
Thomas Patrick LeBlanc, Counsel for the Appellee

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

20-357

VESTA HALAY JOHNSTON, ET AL.

VERSUS

SUSAN HALAY VINCENT, ET AL.

**********

APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2015-4153
HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE

**********

ELIZABETH A. PICKETT
JUDGE

**********

ON REHEARING

**********

Court composed of Sylvia R. Cooks, Chief Judge, Elizabeth A. Pickett, and
Shannon J. Gremillion, Judges.

GRANTED IN PART; DENIED IN PART;
RENDERED; AND REMANDED
WITH INSTRUCTIONS.

J. Michael Veron
Turner D. Brumby
Veron, Bice, Palermo & Wilson, LLC
721 Kirby Street
Lake Charles, LA 70601
(337) 310-1600
COUNSEL FOR PLAINTIFFS/APPELLANTS:
Vesta Halay Johnston
Lake Charles Rubber and Gasket Company, L.L.C.

Rudie R Soileau, Jr.
Hunter W. Lundy
Lundy, Lundy, Soileau & South
501 Broad Street
Lake Charles, LA 70601
(337) 439-0707
COUNSEL FOR DEFENDANT/APPELLEE:
Martin Bryan Vincent

Thomas P. Leblanc
Loftin & Leblanc, LLC
410 E. College Street, Suite A
Lake Charles, LA 70605
(337) 310-4300
COUNSEL FOR DEFENDANT/APPELLEE:
Gulf Coast Rubber and Gasket, L.L.C.

PICKETT, J.

ON REHEARING

We granted rehearing in this case to consider the propriety of our original

opinion in light of issues raised by the defendants in their motion for rehearing.

Upon reconsideration, we find merit in three of the issues raised by the defendants

and that we erred in awarding judgment against Susan Halay Vincent; not

clarifying that only the award for actual damages is trebled as provided in La.R.S.

51:1409; and awarding damages in favor of Vesta Halay Johnston for diminution

in the value of her ownership interest in Lake Charles Rubber & Gasket, Co.,

L.L.C. (LCRG). We find no error with our awards of actual damages and unjust

enrichment in favor of LCRG.

DISCUSSION

Gulf Coast Rubber & Gasket Co., L.L.C. (GCRG) and Martin Bryan

Vincent filed a motion for rehearing, asserting that this court erred in awarding

judgment: 1) against Susan Halay Vincent; 2) trebling the damages awarded for

unjust enrichment and for unproven damages for lost profits and unjust

enrichment; and 3) granting judgment in favor of Vesta Halay Johnston,

individually.

GCRG points out that LCRG’s claims against Ms. Vincent were the subject

of a prior appeal, which resulted in her not being a party to this appeal. See

Johnston v. Vincent, 19-55 (La.App. 3 Cir. 5/20/20), __ So.3d __, writ denied, 20-

1344 (La. 2/9/21), 310 So.3d 182. Accordingly, our original opinion is amended to

reflect that judgment herein is rendered against GCRG and Martin Bryan Vincent

only.

Next, GCRG urges that only an award made for actual damages may be

trebled. Our original opinion did not distinguish between actual damages and

damages for unjust enrichment when awarding LCRG treble damages. The

Louisiana Unfair Trade Practices Act (LUTPA), La.R.S. 15:1401-1430, in La.R.S.

51:1409(A) provides for the recovery of actual damages which may be trebled “[i]f

the court finds the unfair or deceptive method, act, or practice was knowingly used,

after being put on notice by the attorney general.” In contrast, the Louisiana

Unfair Trade Secrets Act (LUTSA), La.R.S. 15:1431-39, allows recovery of

“damages for the actual loss caused by misappropriation” of trade secrets and for

“unjust enrichment caused by misappropriation that is not taken into account in

computing damages for actual loss.” La.R.S. 51:1433. These provisions do not

use exactly the same terminology, but together they evidence a distinction between

actual damages or actual losses as opposed to unjust enrichment for purposes of

treble damages. Accordingly, our opinion is amended to provide that only the

award of $3,850,046 for lost profits is trebled.

Turning to GCRG’s next argument that LCRG’s forensic and accounting

expert failed to acknowledge that GCRG started a new company with

knowledgeable, experienced, and enthusiastic employees who got the new

company up and running in less than thirty days such that it was able to compete

head-to-head against LCRG, the evidence shows otherwise. This claim is

contradicted by the evidence, which shows that GCRG copied and extensively

used LCRG trade secrets and engaged in unfair trade practices to compete against

GCRG. Nor is it supported by the testimony of any customer. Additionally, the

claim is belied by the fact that in at least one instance, GCRG sales personnel

directed an employee of one of LCRG’s largest customers to obtain private

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confidential information from LCRG, copy it to omit the confidentiality notice, and

provide it to GCRG so that GCRG could convert the information to its own use

and bid directly against LCRG for the customer’s business. As a result of its

wholesale misappropriation of LCRG information and unfair trade practices,

GCRG was more akin to a second location of LCRG with different management

than a new business. Accordingly, LCRG’s expert appropriately considered

income GCRG earned from its acquisition and continued use of LCRG’s

information in formulating his opinions and calculating LCRG’s damages.

Importantly, on rebuttal, LCRG’s expert addressed concerns raised by GCRG

regarding his inclusion of income it derived on its own and not as a result of use of

LCRG’s proprietary information by adjusting his initial calculations to insure that

his testimony accurately reflected the damages it caused LCRG.

Lastly, GCRG urges that Vesta Halay Johnston, as the owner of a limited

liability corporation, is not entitled to damages for the diminished value of her

ownership interest in LCRG. The Louisiana Limited Liability Company Law,

La.R.S. 12:1301-1370 provides, in part, that a member is not a proper party in a

suit for damages caused to the company, except in limited circumstances not

present here, even when the member’s ownership interest in the corporation has

been diminished as a result of those damages. See La.R.S. 12:1320(C); Glod v.

Baker, 02-988 (La.App. 3 Cir. 8/6/03), 851 So.2d 1255, writ denied, 03-2482 (La.

11/26/03), 860 So.2d 1135. Glod recognized that there are circumstances in which

a shareholder may be able to recover damages for a personal loss. The court

clarified, however, that is the case only when the shareholder’s claim is based on

breach of a contract between the shareholder and the corporation and its directors

and the corporation did not suffer a loss as LCRG did here. Therefore, Vesta

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Halay Johnston is not entitled to damages for the diminution of her ownership

interest in LCRG.

DISPOSITION

For the reasons discussed, the motion for rehearing filed by Gulf Coast

Rubber & Gasket Co., L.L.C. and Martin Bryan Vincent is granted in part and

denied in part. Our original opinion is amended to state:

Lake Charles Rubber & Gasket, Co., L.L.C. is awarded judgment against
Gulf Coast Rubber & Gasket Co., L.L.C. and Martin Bryan Vincent in the amount
of $3,850,046 for lost profits, which award is trebled as provided by La.R.S.
51:1409(A) for a total of $11,550,138; $8,024,746 for unjust enrichment;
reasonable attorney fees; and all court costs. Vesta Halay Johnston’s claim for
damages is denied. The matter is remanded to the trial court to determine Lake
Charles Rubber & Gasket, Co., L.L.C.’s reasonable attorney fees.

GRANTED IN PART; DENIED IN PART; RENDERED; AND
REMANDED WITH INSTRUCTIONS.

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