James B. Blake" Cureton v. James H. "Jimmy" Cureton and Custom Metal Fabricators, Inc. "

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

20-520

JAMES B. “BLAKE” CURETON

VERSUS

JAMES H. “JIMMY” CURETON AND

CUSTOM METAL FABRICATORS, INC.

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2020-274
HONORABLE CLAYTON DAVIS, DISTRICT JUDGE

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BILLY HOWARD EZELL
JUDGE

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Court composed of Billy Howard Ezell, D. Kent Savoie, and J. Larry Vidrine,
Judges.

VACATED IN PART; REVERSED IN PART; AFFIRMED IN PART.

_____________________

‫ ٭‬Honorable J. Larry Vidrine participated in this decision by appointment of the
Louisiana Supreme Court as Judge Pro Tempore.

James A. Watson
3403 Patrick Street, Suite B
Lake Charles, LA 70605
(337) 474-4886
COUNSEL FOR DEFENDANTS/APPELLANTS:
James H. “Jimmy” Cureton
Custom Metal Fabricators, Inc.

Todd Samuels Clemons
Todd Clemons And Associates
1740 Ryan Street
Lake Charles, LA 70601
(337) 477-0000
COUNSEL FOR PLAINTIFF/APPELLEE:
James B. “Blake” Cureton

Timothy O’Dowd
Jared W. Shumaker
924 Hodges Street
Lake Charles, LA 70601
(337) 310-2304
COUNSEL FOR DEFENDANTS/APPELLANTS:
James H. “Jimmy” Cureton
Custom Metal Fabricators, Inc.

Richard Dale Moreno
PO Box 149
Lake Charles, LA 70602-0149
(337) 433-9535
COUNSEL FOR DEFENDANTS/APPELLANTS:
James H. “Jimmy” Cureton
Custom Metal Fabricators, Inc.

Philip A. Franco
Courtney C. Miller
Jeffrey E. Richardson
Kellen J. Mathews
Adams and Reese, LLP
701 Poydras Street, Suite 4500
New Orleans, LA 70139
(504) 581-3234
COUNSEL FOR PLAINTIFF/APPELLEE:
James B. “Blake” Cureton

EZELL, Judge.

James H. “Jimmy” Cureton and Custom Metal Fabricators, Inc. appeal a trial

court judgment in favor of James B. “Blake” Cureton, recognizing his 50%

ownership interest in Custom Metal, a Louisiana partnership (the Partnership), him

as a shareholder of 50% of the outstanding shares in Custom Metal Fabricators, Inc.

(the Corporation), and his entitlement to all the rights that Louisiana law affords in

connection with those ownership rights. For the reasons that follow, we vacate the

judgment in part, reverse the judgment in part, and affirm the judgment in part.

FACTS

Custom Metal Fabricators provides metal fabrication for refineries and

businesses around the Lake Charles area. It also provides HVAC services.

According to Jimmy, Custom Metal Fabricators started as a proprietorship in 1972,

escalated to a partnership, and then became a corporation. Custom Metal

Fabricators, Inc. was cofounded by Jimmy and Walter Lee in 1994, with each

owning 50% of the shares in the corporation.

Around 2016, Jimmy and Walter talked about selling their interests in the

companies. Blake expressed an interest in becoming a part owner. The minutes of

the Corporation from September 14, 2016, indicate that there was discussion about

the possibility of Blake purchasing Walter’s interest in the Corporation. Blake was

working with two banks to secure a loan. Walter was putting together a buy/sell

agreement. In addition to Blake buying Walter out, there was also a discussion of

Blake buying Jimmy out at a later date.

In 2017, Walter and Blake entered into a “SALES AGREEMENT.” Walter

agreed to sell his 1,000 shares of the total 2,000 shares of the Corporation and his

50% ownership in the Partnership. The agreement noted that the Corporation

“operates primarily a metal fabrication and air conditioning business” and the

“Partnership owns real property, improvements, personal property, and provides

support for the Corporate activities.” The agreement was signed by Blake on June

7, 2017, and signed by Walter on June 8, 2017.

On November 26, 2019, Blake received a text message from Jimmy. The

text message contained a picture of a letter written by Jimmy informing Blake that

his employment with the Corporation was terminated. Blake was also informed

that he was to return corporate property and that his pay, benefits, and charge

accounts were cancelled.

On January 22, 2020, Blake filed a petition for writ of mandamus and writ of

quo warranto. By way of mandamus, he demanded the right to inspect and copy

the records of the Corporation and the Partnership. Pursuant to the quo warranto,

Blake sought a declaration that Jimmy had no legal right to any office in the

Corporation and therefore, had no right to terminate his employment.

A hearing was held on February 13, 2020. Following the hearing, the trial

court rendered judgment in favor of Blake, recognizing his 50% ownership interest

in Custom Metal, a Louisiana partnership, him as a shareholder of 50% of the

outstanding shares in Custom Metal Fabricators, Inc., and his entitlement to all the

rights that Louisiana law affords in connection with those ownership rights. The

trial court also ordered Jimmy, the Corporation, and the Partnership to make the

records of the Corporation and the Partnership available for inspection and copying.

Additionally, the judgment ordered that Blake be reinstated in his employment

with the business with full back pay and benefits, including health insurance. It

was also ordered that Blake be allowed full access to the business facilities, and

that he be reinstated as a signatory on all bank or financial institution accounts of

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both businesses. Blake was awarded attorney fees and costs. Judgment was signed

on February 24, 2020.

Jimmy and the Corporation filed a motion for suspensive appeal. The trial

court denied the motion, finding that the judgment was not a final judgment and

was, therefore, not subject to appeal. Jimmy and the Corporation sought

supervisory review with this court. On March 19, 2020, this court granted the writ

finding the trial court was without jurisdiction to determine whether Jimmy and the

Corporation were entitled to an immediate appeal, citing Morris v. State/Attorney

General, 05-508 (La.App. 3 Cir. 4/21/05), 909 So.2d 1. We reversed the trial court

ruling and remanded the matter for further proceedings. Cureton v. Cureton, 20-

188 (La.App. 3 Cir. 3/19/20) (unpublished opinion).

On remand, the trial court granted Jimmy’s and the Corporation’s motion for

suspensive appeal. Blake filed a motion to dismiss the appeal on November 12,

2020. Blake argued that this court already determined that Jimmy and the

Corporation did not have a right to appeal and the legislature did not provide the

right to an appeal from an order making a writ of mandamus peremptory. In an

unpublished opinion, this court denied the motion to dismiss the appeal, relying on

more recent jurisprudence to find that the mandamus and quo warranto judgment

was an appealable judgment. Cureton v. Cureton, 20-520 (La.App. 3 Cir. 12/16/20)

(unpublished opinion).

On appeal, Defendants, Jimmy and the Corporation, assert several

assignments of error. Jimmy claims that as director and president of the

Corporation, he had authority to manage the business affairs of the Corporation,

which included termination of Blake’s employment. The Defendants also claim

that the Partnership was never named as a defendant and service was never

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perfected on the Partnership, so the trial court was without jurisdiction to render a

judgment against the Partnership. Jimmy and the Corporation also +allege that

Blake failed to prove that a contract of sale occurred regarding the corporate shares.

Jimmy claims that La.R.S. 12:1-1602 does not authorize the court to order

inspection of his personal records. Finally, the Defendants claim that the law does

not provide for attorney fees, so the trial court was without authority to award

attorney fees.

THE PARTNERSHIP

We will first determine whether the trial court properly entered a judgment

against the Partnership. Jimmy and the Corporation argue that the trial court did

not have jurisdiction over the Partnership pursuant to La.Code Civ.P. art. 6 because

the Partnership was never named as a defendant and there was no service of

process on the Partnership. Furthermore, they argue the Partnership neither

submitted to the jurisdiction of the court nor waived its objection.

Pursuant to La.Code Civ.P. art. 737, “[a] partnership has the procedural

capacity to be sued in its partnership name.” Citation and service of process are

essential in all civil actions except summary and executory proceedings. La.Code

Civ.P. art. 1201(A).

Pursuant to La.Code Civ.P. art. 2592(6), mandamus and quo warranto

proceedings are summary proceedings. Therefore, citation and service of process

were not necessary. However, the fact of the matter remains that the Partnership

was not named as a defendant.

“A judgment rendered against a party who is not named as a defendant is

absolutely void.” Wilson v. Champion Ins. Co., 607 So.2d 1079 (La.App. 3 Cir.

1992). Citing La.Code. Civ.P. art. 1841, which provides that “[a] judgment is the

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determination of the rights of the parties in an action.” The court in In re

Succession of Sims, 15-1904 (La.App. 1 Cir. 12/28/16), 210 So.3d 394, held that a

judgment could not declare rights as to a church that was not a party to the

proceedings.

The only two named defendants in Blake’s petition are Jimmy and the

Corporation. The Partnership was never named. The fact that Jimmy was

personally named as a defendant does not impute his status as a partner who was

served on behalf of the Partnership, a distinct entity, when the Partnership was not

named as a Defendant in the case. The trial court erred in ruling on an issue

involving the Partnership when the Partnership was not a party to the action.

Therefore, that part of the judgment is vacated which declared Blake to be a

partner in the Partnership and further ordered Jimmy to produce the records of the

Partnership for inspection.

OWNERSHIP OF THE CORPORATION

In his petition for a writ of mandamus, Blake sought to examine the

Corporation’s records as a shareholder pursuant to La.R.S. 12:1-1602. Jimmy

answered the petition and claimed that Blake did not own any shares in the

Corporation. Jimmy argues that Blake failed to establish that an act of sale of 50%

of the corporate shares occurred.

Pursuant to La.Code Civ.P. art. 3864, a writ of mandamus may be directed

to a corporation or officer compelling the corporation to perform its duties as

required by law or for the recognition of the rights of its members or shareholders.

Louisiana Revised Statutes 12:1-1602(C) provides that a shareholder with at least 5%

of the shares of any class of the issued shares has the right to inspect and copy

corporate records “during regular business hours at a reasonable location specified

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by the corporation” after reasonable notice. Furthermore, the demand must be

made in good faith and for a proper purpose, with reasonable particularity, and

connected with the shareholder’s purpose. La.R.S. 12:1-1602(D).

A shareholder is entitled to a writ of mandamus when he establishes by a

preponderance of the evidence that he was a shareholder of the corporation.

Bernard v. Louisiana Testing & Inspection, Inc., 19-575 (La.App. 3 Cir. 2/5/20),

290 So.3d 239, writ denied, 20-393 (La. 6/3/20), 296 So.3d 1069.

A trial court’s findings of fact in reaching a determination to issue a writ of

mandamus is subject to the manifest error standard of review. Id. (citing Hess v. M

& C Ins., Inc., 14-962 (La.App. 3 Cir. 2/11/15), 157 So.3d 1200). Findings of fact

by a trial court may not be set aside by an appellate court unless they are

manifestly erroneous or clearly wrong. Id. Findings of fact based on credibility

determinations are entitled to great deference. Id.

“In resolving disputes of corporate ownership, it is well settled that a stock

certificate is prima facie evidence of ownership, but is distinguished from actual

ownership, which is to be determined from all the facts and circumstances of a

case.” Guidry v. Savoie, 15-809, 15-810, p. 9 (La.App. 5 Cir. 5/26/16), 194 So.3d

1184, 1190, writ denied, 16-1218 (La. 10/17/16), 207 So.3d 1064. “Ownership is

transferred between the parties as soon as there is agreement on the thing and the

price is fixed, even though the thing sold is not yet delivered nor the price paid.”

La.Civ.Code art. 2456.

To establish his rights as a shareholder, Blake introduced into evidence a

sales agreement in which Walter sold 50% of the shares in the Corporation to

Blake. The sales agreement introduced into evidence was signed by Blake on June

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7, 2017, before a notary and two witnesses. Walter signed the sales agreement on

June 8, 2017, before a notary and two witnesses.

There is no doubt that all parties knew about Blake purchasing Walter’s 50%

shares in the Corporation. Minutes of a corporate meeting from September 14,

2016, were introduced into evidence by Jimmy and indicate that discussions were

had concerning the purchase of Walter’s interest in the Corporation by Blake. The

minutes also state that Walter began to draw up the sales agreement. The minutes

also state that Jimmy is going to meet with an attorney to discuss Blake’s purchase

of Walter’s 50% of the Corporation and Jimmy’s agreement to sell his own 50%

interest in the Corporation at a later date.

Blake also introduced a previous email exchange between him and Jimmy

from May 23, 2017, in which Jimmy listed the subject line as “Transfer of stock

certificate.” Jimmy asked Blake when he and Walter were getting together to

transfer the ownership of Walter’s one-half, and Blake replied “tomorrow.” Jimmy

replied “Good.” Blake clearly established he purchased 50% of the Corporation.

Jimmy and the Corporation argue that Blake failed to present evidence that

the conditions to complete the sale at issue were accomplished. They claim the

contract of sale contains a suspensive condition that was never fulfilled so that the

shares of the corporation were never transferred. The Defendants rely on the

following provision in the sales agreement (italicized emphasis added):

A. Conveyance of Corporation. The Seller hereby agree[s] to
sell, transfer and convey unto Buyer all of its respective right,
title and interest in and to the capital stock of the Corporation
and to otherwise sell, assign and transfer unto Buyer any other
rights deemed to be necessary to accomplish the transfer of the
securities of the Corporation. In particular, Seller will deliver
to the Buyer a waiver of the existing Buy-Sell agreement that
has been executed between the existing owners requiring that
the stock be first offered to the Corporation.

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Blake argues that the issue of a suspensive condition was never raised in the

trial court so it was never preserved for appeal. We observe that an assertion that a

suspensive condition has not occurred shall be alleged with specificity and with

particularity. La.Code Civ.P. art. 857. However, when there is a failure to

specifically plead a defense, but the opposing party fails to object to introduction

of evidence bearing on the defense, the pleadings are construed to have been

enlarged to include the defense. Mark A. Gravel Props., LLC v. Eddie’s BBQ, LLC,

14-46 (La.App. 3 Cir. 5/7/14), 139 So.3d 653.

At trial, the following testimony regarding this particular provision was

elicited during cross examination of Blake:

Q Please refer to Article II of the agreement. On Page 2, it says,
“Conveyance of corporation.” It says, the first sentence, “The seller
hereby agree[s].”

I guess I should have a “sic” in there, to sell transfer, and
convey and to buy capital stock.

In particular, at the last sentence, “Seller will deliver to the
buyer a waiver of the existing buy/sell agreement that has been
executed between the existing owners requiring the stock to be offered
first to the corporation. “Did you ever deliver such an item to Mr.
Roach or anyone else:

A I particularly did not deliver that, no, sir.

Blake later testified that he does not know if that exact document was

delivered. Jimmy testified that he never signed a document waiving a right of first

refusal to purchase shares of the stock.

We find that this issue was raised in the trial court. Jimmy and the

Corporation specifically argue that the sale was not completed because there was a

suspensive condition in the contract requiring that Walter deliver a waiver of a

prior buy/sell agreement between the shareholders that the stock must first be

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offered to the corporation, which was never fulfilled. We now consider whether

Blake established his right to a writ of mandamus to examine the Corporation’s

records, including whether this condition affected the sale.

“A contract is an agreement by two or more parties whereby obligations are

created, modified, or extinguished.” La.Civ.Code art. 1906. “Interpretation of a

contract is the determination of the common intent of the parties.” La.Civ.Code art.

2045. “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.

“A conditional obligation is one dependent on an uncertain event.” La.Civ.

Code art. 1767. “If the obligation may not be enforced until the uncertain event

occurs, the condition is suspensive.” Id. Contractual provisions should not be

construed to be suspensive conditions when possible. S. States Masonry, Inc. v.

J.A. Jones Const. Co., 507 So.2d 198 (La.1987); Burgess v. Shi Gang Zheng, 17-

665 (La.App. 4 Cir. 10/10/18), 257 So.3d 764. The party who asserts a suspensive

condition as a defense bears the burden of establishing that there is a suspensive

condition which has not been satisfied. Abraham v. Sperandeo, 423 So.2d 65

(La.App. 1 Cir. 1982); Northshore Ins. Agency, Inc. v. Farris, 634 So.2d 867

(La.App. 1 Cir. 1993).

In Burgess, 257 So.3d 764, the court considered a provision in an agreement

to purchase property which required proof of funding for an all-cash sale. We

noted that “there was no provision in the Agreement which conditioned the sale on

[defendant’s] ability to obtain financing.” Id. at 774. This court went on to say

that “[w]hile the Agreement did require [defendant] to supply ‘proof of funds’

within 48 hours, we find this to be merely a term of sale, and not a suspensive

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condition as contemplated by our case law.” Id. This court concluded that the

term was not an uncertain event. Id.

In Evangeline Parish School Board v. Energy Contracting Services, Inc.,

617 So.2d 1259 (La.App. 3 Cir.), writ denied, 624 So.2d 1228 (La.1993), this court

analyzed a contractual obligation to supply an equipment list to the school board

and found the provision was merely to insure that no improper material, equipment,

or modification would be used in the school. It did not mean that the contract

would not be perfected until submission of the list. This court held that this

provision was not a suspensive condition and could not be a basis for ruling the

contract invalid.

Likewise, we do not find the Sales Agreement contained a suspensive

condition. The sale of stock from Walter to Blake was not conditioned on Walter

delivering a waiver of an existing buy/sell agreement between Walter and Jimmy

requiring that the stock be first offered to the Corporation. This was merely a term

of the sale. The sale was completed regardless of whether Blake received a waiver

of a previous buy/sell agreement. The purchase price in the sales agreement was

$2,500,000 for both the Corporation and the Partnership. Jimmy and the

Corporation admitted in their answer to the petition that Walter was paid the sum

of $2,500,000 with a payment financed through a loan from Whitney Bank and that

Jimmy and Blake were co-guarantors under the loan. Also, Jimmy has introduced

no evidence in the record of a previous buy/sell agreement between him and

Walter concerning the purchase of the shares of stock.

Jimmy and the Corporation failed to establish that there was a suspensive

condition in the sales agreement that was not completed. Therefore, we find that

the trial court did not err in finding that sale of Walter’s 50% in the Corporation to

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Blake was a completed and valid sale. As such, Blake is entitled to inspect the

Corporation’s records pursuant to La.R.S. 12:1-1602.

INSPECTION OF JIMMY’S PERSONAL RECORDS

Jimmy argues that the judgment’s wording “Any and all personal records . . .”

includes Jimmy’s personal records and that La.R.S. 12:1-1602 does not allow

inspection of a shareholder’s or officer’s personal records. We note that Blake

agrees that the judgment was not intended to apply to Jimmy’s personal records.

While we find that a reading of the judgment, as a whole, does not include

Jimmy’s personal records, for clarification, we find that Jimmy’s personal records

are not subject to inspection by Blake.

JIMMY’S CORPORATE AUTHORITY

Jimmy argues that the trial court erred in finding that he did not have the

authority to manage the affairs of the Corporation, which included firing Blake as

an employee of the business. He argues that his authority to manage the

corporation as a director and president continued until he was removed from office.

Jimmy further argues that he had authority to manage the business even if there

was a deadlock between the shareholders.

Blake argues that the issue of Jimmy’s authority as director and president of

the Corporation was not an issue before the court. It is Blake’s position that the

only true issue in the case is whether Blake is a shareholder in the Corporation and

entitled to a writ of mandamus to compel production of records and recognition of

his rights as a shareholder. He argues that Jimmy’s suggestion that as president of

the Corporation he could take any action he desired with no regard to the

Corporation or its other 50% shareholder is severely misplaced.

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In addition to requesting an inspection of the records in his petition, Blake

also asked for a writ of quo warranto for a determination that Jimmy had no legal

right to any office in the Corporation which allowed him to terminate Blake as an

employee of the Corporation. The judgment specifically ordered that Blake’s

employment with Corporation be reinstated, and that he be granted full access to

the Corporation’s business facilities, in addition to Blake’s reinstatement as a

signatory on all bank accounts.

Quo warranto is a writ directing an individual to show by what
authority he claims or holds public office, or office in a corporation or
limited liability company, or directing a corporation or limited
liability company to show by what authority it exercises certain
powers. Its purpose is to prevent usurpation of office or of powers.

La.Code Civ.P. art. 3901.

Comment (e) to La.Code Civ.P. art. 3901 explains the difference between a

mandamus and quo warranto as follows: “Mandamus by definition, is an order

directing performance. A writ of quo warranto, on the other hand, does not direct

the defendant to perform or to cease from performing some act, but it orders the

defendant to show by what authority he is acting.” See also Billiot v. Wiltz, 16-

1047 (La.App. 3 Cir. 5/24/17), 222 So.3d 964.

The relief a court can grant by a writ of quo warranto is limited. Camillus

Specialty Hospital, L.L.C. v. Riccio, 13-1172 (La.App. 4 Cir. 1/30/14), 133 So.3d

287.

When a court finds that a person is holding or claiming office
(whether public or corporate) without authority, the judgment shall
forbid him from doing so. See La. C.C.P. art. 3902. A court, in such a
situation, may also declare who is entitled to the office and may direct
that an election be held when necessary. Id. When a court finds that a
corporation is exceeding its powers, the judgment shall prohibit it
from doing so. Id. Given the narrow, limited nature of the writ, the
provisions of Article 3902 set out the exclusive means of relief
allowable on an application for a writ of quo warranto. See

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Plaquemines Parish Council v. Petrovich, 629 So.2d 1322, 1326
(La.App. 4 Cir.1993); Hyde v. Hyde, 590 So.2d 727, 732 (La.App. 3
Cir.1991).

Id. at 291.

The burden is on the respondent in a quo warranto proceeding to show by

what authority he or she claims or holds office in the corporation. Billiot, 222

So.3d 964; Schexnayder v. Yolande Schexnayder & Son, Inc., 12-885 (La.App. 5

Cir. 5/23/13), 119 So.3d 624.

Pursuant to La.R.S. 12:1-840 “[a] corporation shall have a secretary and

such other officers as described in its bylaws or appointed by the board of directors

in a manner not inconsistent with any bylaws.”

In addition to the secretary’s authority under R.S. 12:1-840,
each officer has the authority and shall perform the functions set forth
in the bylaws or, to the extent consistent with any bylaws, the
authority and functions prescribed by the board of directors or by
direction of an officer authorized by the board of directors to prescribe
the authority and functions of other officers.

La.R.S. 12:1-841.

An officer, when performing in such capacity, has the duty to
act in all of the following manners:
(1) In good faith.
(2) With the care that a person in a like position would
reasonably exercise under similar circumstances.
(3) In a manner the officer reasonably believes to be in the best
interests of the corporation.

La.R.S. 12:1-842(A).

Blake was aware that Jimmy was president of the Corporation before he

bought the stock. Blake testified that once he was a shareholder, there were no

meetings which changed any management of the corporation. Blake testified that

when he went to work with the Corporation, his duties included establishing new

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business contacts, helping management with day-to-day operations, and hiring and

firing other employees when necessary.

Susan Shattuck, an accountant with the Corporation for ten years, testified

that Jimmy was president and Walter was secretary and that those positions did not

change. She also stated that both Blake and Jimmy were responsible for hiring

employees but that Blake did most of the hiring and firing. Susan further testified

that Jimmy acted as supervisor because he signs off on everything.

In issuing the quo warranto, the trial court stated, “[I]t has been proven,

well-proven, that Mr. Jimmy acted beyond his authority.” The trial court then

stated that the president does not have authority to fire his 50% partner.

What we glean from the trial court’s reasons is that it found that Jimmy was

president, but that he exceeded his authority. Pursuant to La.Code Civ.P. art. 3901,

a court is not authorized to grant a remedy by quo warranto relating to the

individual exercise of alleged corporate authority. Therefore, the action for quo

warranto as to Jimmy should have been dismissed because, in his capacity as

president of the Corporation, a quo warranto is not the proper procedural

mechanism to be used by a person asserting that an officer has exceeded his

authority. Schexnayder, 119 So.3d 624.

The next issue we must address is whether the Corporation exceeded its

authority in dismissing Blake. Jimmy testified that he wrote a letter on November

26, 2019, terminating Blake. He was of the opinion there was good cause to fire

Blake.

A corporation must have full and complete organization and
existence as an entity, and in accordance with the law to which it
owed its origin, before it could assume its franchise or enter into any
kind of contract or transact any business. Ahrens & Ott Mfg. Co. v.
Caire, 5 Teiss. 154, 1908 WL 1299, 5 Orleans App. 154

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(La.App.Orleans 1908). If the parties comply with the corporate
formalities, then, “once established, the separate nature of the
corporate existence must be respected.” Joseph v. Hospital Service
Dist. No. 2 of Parish of St. Mary, 05–2364 (La.10/15/06), 939 So.2d
1206. A presumption of corporate existence arises once a certificate of
incorporation is issued by the Secretary of State, and “other
irregularities shown in matters of internal administration of its affairs
cannot vitiate the legal existence of the corporation.” American Snuff
Co. v. Stanton, 13 La.App. 321, 127 So. 633 (La.App. 1st Cir.1930).
But, “stockholders of stock corporation or members of nonstock
corporation never become owners in common of corporate property.”
Screwmen’s Benev. Ass’n of Louisiana v. Monteleone, 168 La. 664,
123 So. 116 (1929). Thus, “assets owned by a corporate entity are the
property of that entity, and are not owned by the shareholders or
partners.” McClanahan v. McClanahan, 03–1178 (La.App. 5th
Cir.2/23/04), 868 So.2d 844, writ denied, 04–1175 (La.9/3/04), 882
So.2d 609.

Tedeton v. Tedeton, 46,901, pp. 15-16 (La.App. 2 Cir. 2/8/12), 87 So.3d 914, 923.

Pursuant to La.R.S. 12:1-302(11), a corporation has the power of

appointment of employees.

The employer-employee relationship is a contractual
relationship. As such, an employer and employee may negotiate the
terms of an employment contract and agree to any terms not
prohibited by law or public policy. When the employer and employee
are silent on the terms of the employment contract, the civil code
provides the default rule of employment-at-will. Cf. Anderson v.
Douglas & Lomason Co., 540 N.W.2d 277, 281 (Iowa 1995) (“[T]he
doctrine of employment at-will is merely a gap-filler, a judicially
created presumption utilized when parties to an employment contract
are silent as to duration.”). This default rule is contained in LSA–C.C.
art. 2747.7

Under LSA–C.C. art. 2747, generally, “an employer is at liberty
to dismiss an employee at any time for any reason without incurring
liability for the discharge.” See Williams v. Delta Haven, Inc., 416
So.2d 637 (La.App. 2nd Cir.1982). However, this right is tempered by
numerous federal and state laws which proscribe certain reasons for
dismissal of an at-will employee. For instance, an employee cannot be
terminated because of his race, sex, or religious beliefs. Moreover,
various state statutes prevent employers from discharging an
employee for exercising certain statutory rights, such as the right to
present workers’ compensation claims. Aside from the federal and
state statutory exceptions, there are no “[b]road policy considerations
creating exceptions to employment at will and affecting relations

15

between employer and employee.” See Gil v. Metal Service Corp.,
412 So.2d 706, 708 (La.App. 4th Cir. 1982).

Quebedeaux v. Dow Chem. Co., 01-2297, pp 4-6 (La. 6/21/02), 820 So.2d 542,

545-46 (alterations in original)(footnotes omitted).

“[T]he reasons for termination need not be accurate, fair or reasonable. . . .

In fact, there need be no reason at all for termination.” Clark v. Acco Sys., Inc.,

39,532, p. 4 (La.App. 2 Cir. 4/6/05), 899 So.2d 783, 786.

There is no evidence that Blake had an employment contract with the

Corporation. As such, he was subject to termination at the will of the Corporation.

Therefore, the Corporation did not exceed its corporate authority in terminating

Blake and discontinuing all benefits he was entitled to as an employee. The trial

court erred in issuing a quo warranto prohibiting the Corporation from terminating

Blake’s employment and all rights that Blake enjoyed as an employee of the

Corporation.

ATTORNEY FEES

Jimmy and the Corporation claim that the trial court erred in awarding

attorney fees to Blake as there is no legal basis for this award. In asking for

attorney fees, Blake relied upon La.R.S. 12:1-1604(C), which provides:

If the court orders inspection and copying of the records
demanded, it shall also order the corporation to pay the shareholder’s
expenses incurred to obtain the order unless the corporation proves
that it refused inspection in good faith because it had a reasonable
basis for doubt about the right of the shareholder to inspect the records
demanded.

“As a general rule, attorney fees are not allowed in Louisiana unless they are

authorized by statute or provided for by contract.” Langley v. Petro Star Corp. of

La., 01-198, p. 3 (La. 6/29/01), 792 So.2d 721, 723; Rain CII Carbon, LLC v.

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Turner Indus. Group, LLC, 19-403 (La.App 3 Cir. 3/18/20), 297 So.3d 797, writ

denied, 20-774 (La. 10/20/20), 303 So.3d 319.

Louisiana Revised Statues 12:1-1604(C) provides for an award of “expenses”

a shareholder incurs in asserting his right to inspect corporate records. Attorney

fees are not mentioned. Blake cites several cases in which the court awarded

attorney fees as part of “costs and expenses” a shareholder may recover. Guidry v.

Gulf Coast Oil Tubing, 09-621 (La.App. 3 Cir. 12/9/09), 24 So.3d 1019; Naquin v.

Air Engineered Sys. & Servs., Inc., 423 So.2d 713 (La.App. 3 Cir. 1982), writ

denied, 429 So.2d 156 (La.1983); Ales v. Sewell, 00-17, 00-18 (La.App. 4 Cir.

10/17/01), 800 So.2d 36.

All these cases relied on previous law found in La.R.S. 12:172(D) (emphasis

added), which read:

Any corporation, or any officer or agent thereof, which or who
shall in bad faith refuse to permit the exercise of inspection rights as
defined in, and limited by, R.S. 12:103, shall be liable to the
shareholder or shareholders seeking to exercise such rights to the
extent of the costs and expenses of any proceeding necessary to
enforce such inspection rights, and for any other damages actually
sustained by such shareholder or shareholders.

“[T]he legislature is presumed to know the law. . . . [and] ‘is presumed to

have acted with deliberation and to have enacted a statute in light of the preceding

statutes involving the same subject matter.’” Kocher v. Truth in Politics, Inc., 20-

1153, p. 2 (La. 12/22/20), 307 So.3d 182, 184.

When the legislature enacted La.R.S. 12:1-1604(C) as part of the Business

Corporation Act by Acts 2014, No. 328, it is presumed to know that the previous

law, La.R.S. 12:172(D), allowing for recovery by a shareholder of expenses in

seeking to examine corporate records, included “costs,” “expenses,” and “any other

damages.” The legislature was also aware of case law interpreting this provision

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and providing that these terms together encompassed attorney fees. The legislature

specifically left out “costs” and “any other damages” in enacting La.R.S. 12:1-

1604(C).

We, therefore, find that the legislature did not intend for a shareholder to

recover attorney fees when seeking inspection rights of corporate records. The

legislature could have specifically provided for attorney fees in the new statute but

failed to do so. It was error for the trial court to award Blake attorney fees.

For the reasons set forth in this opinion, we vacate the judgment insofar as it

declared Blake to be a partner in the Partnership and further ordered Jimmy to

produce the records of the Partnership for inspection. We do find that a sales

agreement was completed transferring Walter Lee’s 50% interest in the

Corporation to Blake and affirm the judgment recognizing Blake as 50% owner in

the Corporation and Blake’s right of inspection the Corporation’s records. We also

find that the judgment does not include a right of inspection of Jimmy’s personal

records. We reverse, recall, and vacate the judgment granting the writ of quo

warranto finding Jimmy was not president and directing him to reinstate Blake to

employment with all its benefits. We also reverse, recall, and vacate the writ of

quo warranto directing the Corporation to reinstate Blake to employment with all

its benefits. The award of attorney fees is reversed.

VACATED IN PART; REVERSED IN PART; AFFIRMED IN PART.

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