Shawne Gielen Gardiner v. Shop Rite, Inc., Tobacco Plus, Inc. Acadia Wholesale & Tobacco,co.,inc.

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 23-660

SHAWNE GIELEN GARDINER

VERSUS

SHOP RITE, INC., TOBACCO PLUS, INC.
ACADIA WHOLESALE & TOBACCO, CO., INC.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF ACADIA, NO. 202110263
HONORABLE LAURIE A. HULIN, DISTRICT JUDGE

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GUY E. BRADBERRY
JUDGE

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Court composed of D. Kent Savoie, Guy E. Bradberry, and Wilbur L. Stiles, Judges.

AFFIRMED.

Steven Gerald Durio
Durio, McGoffin, Stagg & Guidry
P.O. Box 51308
Lafayette, LA 70505-1308
(337) 233-0300
COUNSEL FOR PLAINTIFF/APPELLANT:
Shawne Gielen Gardiner

Christopher L. Zaunbrecher
Briney Foret Corry
413 Travis Street, Suite 200
Lafayette, LA 70503
(337) 456-9835
COUNSEL FOR DEFENDANTS/APPELLEES:
Tobacco Plus, Inc.
Shop Rite, Inc.
Acadia Wholesale & Tobacco, Co., Inc.
John Cody Gielen

BRADBERRY, Judge.

In this matter, Shawne Gardiner appeals the decision of the trial court below

granting an exception of res judicata in favor of Defendant corporations Shop Rite,

Inc., Tobacco Plus, Inc., and Acadia Wholesale and Tobacco, Co. Inc., as well as the

corporation’s chief executive and her nephew, John Cody Gielen (herein collectively

referred to as the Defendants). For the following reasons, we hereby affirm the

decision of the trial court.

The underlying facts of this case were previously laid out by this court in Shop

Rite, Inc. v. Gardiner, 21-172, pp. 1–4 (La.App. 3 Cir. 12/15/21) (unpublished

opinion) (2021 WL 5925774) (footnote omitted) (second alteration ours), writ

denied, 22-329 (La. 5/3/22), 337 So.3d 159, as follows:

On February 28, 2012, Ms. Gardiner’s father, John Dan Gielen,
donated a minority interest in Shop Rite, Inc., Tobacco Plus, Inc., and
Acadia Wholesale & Tobacco Co., Inc. (collectively, “the Companies”)
to his children (Ms. Gardiner, Tracy Gielen, and Heidi Gielen Viator)
and to a grandson (John Cody Gielen). After Mr. Gielen’s death on
February 14, 2018, his spouse, Peggy Gielen (“Peggy”), became the
owner of half of the majority shares in the Companies and was
testamentary usufructuary with right of alienation of the other half of
the community shares, also referred to by the parties as legacy shares.
Mr. Gielen’s Last Will and Testament dispensed with “any inventory
of the property subject to the usufruct or any bond or security for the
value of the usufruct[,]” and granted Peggy, “as usufructuary, with
respect to all property subject to the aforementioned usufructs, the right
to sell, exchange, or otherwise dispose of such property, without the
consent of the naked owners, throughout the term of the usufruct.”
These legacy shares were subject to testamentary legacies of naked
ownership in favor of the Gielens’ children and grandson. On February
21, 2018, Peggy transferred all of her owned shares and all of the estate
shares in the Companies to voting trusts and named her grandson, John
Cody Gielen (“John Cody”), the trustee.

On July 23, 2018, Ms. Gardiner gave written notice of her
withdrawal as a minority shareholder in the Companies on grounds of
oppression pursuant to the provision of La.R.S. 12:1-1435, which
constituted an offer to sell to the Companies all of her shares in the
corporations for fair value. On July 25, 2018, the Companies received
the notice of withdrawal.

On September 21, 201[8], the Companies responded to Ms.
Gardiner’s notice by denying that she was an oppressed shareholder and
gave her notice of the Companies’ acceptance of her offer to sell her
shares in accordance with La.R.S. 12:1-1435.

On October 22, 2019, the Companies filed a Petition for
Declaratory Judgment to determine the fair value of Ms. Gardiner’s
shares and the terms under which her shares would be purchased by the
Companies. . . .

....

On October 29, 2019, Ms. Gardiner answered the Companies’
petition and filed a reconventional demand pursuant to La.R.S. 12:1-
1436 in order for the court to determine the fair value of her shares and
to determine the terms for the purchase of the shares.

....

In response to the reconventional demand, the Companies filed
an answer on November 13, 2019, wherein they admitted that Ms.
Gardiner was the record owner of 39.216 shares in Shop Rite, Inc.,
1.292 shares in Tobacco Plus, Inc., and 19 shares in Acadia Wholesale
& Tobacco Co., Inc., but denied the fact that Ms. Gardiner is the naked
owner of the inherited 79.49 shares in Shop Rite, Inc., 3.4425 shares in
Tobacco Plus, Inc., and 50.625 shares in Acadia Wholesale & Tobacco
Co. Specifically, the Companies allege that the shares that were subject
to a testamentary legacy of naked ownership in favor of Ms. Gardiner
were transferred by Ms. Gardiner’s mother, Peggy (usufructuary with
the right of disposition), to voting trusts and were subsequently
redeemed by the Companies.

On July 2, 2020, the Companies filed a Peremptory Exception of
No Right Of Action arguing that Ms. Gardiner has no right of action to
request for the trial court to determine the fair value and terms for the
purchase of shares she inherited in her father’s estate, which entailed
the 79.49 shares in Shop Rite, Inc., 3.4425 shares in Tobacco Plus, Inc.,
and 50.625 shares in Acadia Wholesale & Tobacco Co., Inc. The
Companies argued that Ms. Gardiner did not own the legacy shares on
the date of the withdrawal and that she had no capacity or right to sell
them on the date of the withdrawal. The Companies allege that her
interest in the legacy shares terminated “on February 21, 2018, when
the testamentary usufructuary with right of alienation transferred
ownership of the shares to a Voting Trust, or in any event no later than
April 17, 2019[,] when the shares previously subject to naked
ownership interest in favor of Ms. Gardiner were redeemed by the
Company.” The Companies argue that “[a]s a consequence of the
transfer of the estate shares to a third party, [Ms.] Gardiner has no claim

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or right of action as a former naked owner except a potential, inchoate
future action against the usufructuary for an accounting upon
termination of the usufruct.”

On July 9, 2020, Ms. Gardiner filed an opposition to the
exception of no right of action wherein she alleges that she acquired
naked ownership of the legacy shares immediately at her father’s death,
subject to a usufruct in favor of her mother, Peggy. Ms. Gardiner argues
that, as the naked owner, she retains a beneficial interest in the legacy
shares despite the shares being registered on the records of the
corporation in the name of the usufructuary or in the voting trusts with
John Cody as the trustee.

A hearing on the exception was held on July 14, 2021. At that
time, the Companies introduced, under seal, thirty-eight exhibits that
included copies of Mr. Gielen’s Last Will and Testament, the Voting
Trust Agreements, Amendments, Trust Deposits and Assignments of
Shares, Stock Redemption Agreements, and Stock Transfers and
Assignments. After the hearing, the trial court signed a judgment on
September 3, 2020, that sustained, in part, the no right of action. The
trial court provided the following pertinent reasons for its ruling
sustaining the exception:

Defendants in Reconvention, Shop Rite Inc.,
Tobacco Plus, Inc., and Acadia Wholesale and Tobacco
Co. Inc. except to the reconventional demand filed by
Gardiner, to the extent that Gardiner asks the court to
determine the fair value and terms for the purchase for
shares described in paragraph 3 of the reconventional
demand. The basis for the exception is that Gardiner has
no right of action. Mover argues that any interest Gardiner
may have in those shares as a legatee of naked ownership
terminated on February 21, 2018, when the testamentary
usufructuary, with right of alienation, transferred
ownership of the shares to a voting trust. In any event,
ownership terminated no later than April 17, 2019, when
the shares previously subject to naked ownership interest
in favor of Gardiner were redeemed by the company.
Plaintiff in reconvention opposes the exception arguing
that Gardiner holds an interest in the legacy shares and the
defendants in reconvention are judicially estopped from
claiming otherwise.

....

After review of the law, evidence and argument of
counsel, this court finds from February 21, 2018 until
April 17, 2019, the beneficial owners of the estate shares
were the Voting Trust and Peggy A. Gielen. On April 17,

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2019, these shares were redeemed by the companies.
Gardiner cannot sell or offer to sell the estate shares for
fair value. This court finds Ms. Gardiner does not have the
right of action against the defendant in reconvention to
seek a judicial determination of the fair value and terms
for purchase for shares in which Gardiner previously had
an interest as a testamentary legatee of naked ownership.

On appeal, this court went on to affirm that decision of the original trial court,

stating:

[T]he Last Will and Testament provided Peggy with the right to dispose
of the shares of stock in any way she chose to do so without the input
from the naked owners.

The record provides that on February 21, 2018, shortly after her
husband’s death, Peggy transferred all of her owned shares as well as
the legacy shares (Mr. Gielen was the record owner of the legacy shares)
in the Companies to voting trusts and named her grandson, John Cody,
the trustee. When Peggy transferred the legacy shares to the voting
trusts, the legacy shares were cancelled and replaced with trust shares.
The Voting Trust Agreements provided for the deposit of
certificates representing the shares owned by and/or subject to the
usufruct of Peggy, endorsed in blank by Peggy or accompanied by
a stock assignment for reissuance of the shares by the Companies
in the name of the trustee. The Voting Trust Agreements also
provided that the trustee, John Cody, was entitled to exercise all of
the rights, including the right to vote the trust shares and to sell all
or part of the trust shares. The Voting Trust Agreements provided for
issuance of Trust Certificates to Peggy, as the depositing shareholder,
and provided that Peggy, or her successor in interest, shall be entitled
to receive dividends or distributions received by the trustee upon the
shares represented by the Trust Certificates. Thus, from February 21,
2018 until April 17, 2019, the beneficial owners of the legacy shares
were the Voting Trusts (the record owner with voting rights) and Peggy
(the Trust Certificate holder, with rights of reversion and the right to
receive distributions). Per the shareholders’ vote to have the Companies
purchase the Voting Trust Shares, the legacy shares held by the Voting
Trusts were redeemed by the Companies on April 17, 2019.

Although Ms. Gardiner asserts a claim for valuation of the legacy
shares as a naked owner, we agree with the trial court that on the date
of her withdrawal, she had no ownership right in the shares. It is
worth reiterating that Ms. Gardiner, as a naked owner, does not
have a present ownership right in the legacy shares because Peggy,
per her husband’s Last Will and Testament, is the usufructuary
with the right to sell, exchange, or otherwise dispose of the shares
until the termination of her usufruct. See La.Civ.Code art. 568.

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Further, the record is devoid of any evidence that the Companies
established a procedure under La.R.S. 12:1-723 to permit Ms. Gardiner
the opportunity to file a beneficial ownership certificate electing to be
treated by the Companies as the record shareholder. After reviewing
the statutory provisions, the Voting Trust Agreements,
Amendments thereto, the Stock Redemption Agreements, the By-
Laws of the Companies, and the Minutes of the Companies
Shareholder Meetings, we, too, find that Ms. Gardiner did not have
an ownership right in the legacy shares on the date of her
withdrawal, July 23, 2018, and that the only claim Ms. Gardiner has
is a claim under La.Civ.Code art. 568.1, which provides an action
against the usufructuary (Peggy) for an accounting upon termination of
the usufruct.

Id. at pp. 8–9 (emphasis ours). That decision was appealed to the Louisiana Supreme

Court, where writs were denied, making that ruling final as to that issue.

Thereafter, Mrs. Gardiner filed the current claim, asserting that Defendants

breached their contract to purchase her legacy shares under the September 21, 2018

acceptance of her withdrawal, as well as breached their fiduciary duties and

committed conflicted interest transactions in relation to the April 17, 2019

redemption of the voting trust shares by the Defendant corporations and by Cody.

Defendants filed exceptions of res judicata, no cause of action, and no right of action.

Based on the prior ruling of this court addressed above, the trial court granted the

exception of res judicata, finding the other exceptions moot. From that decision,

Mrs. Gardiner appeals.

On appeal, Mrs. Gardiner asserts two assignments of error: she claims the trial

court erred in granting res judicata because the original enforcement suit and her

claims regarding the alleged breaches from the redemption of the stock arose out of

different transactions or occurrences; and that the trial court erred in failing to apply

La.R.S. 13:4232(A)(1), where she alleges exceptional circumstances justify relief

from any res judicata effects of the first suit. As to her second assignment of error,

this contention was not raised or argued before the trial court, and is now being raised

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for the first time on appeal. It is well-settled that an appellate court cannot consider

issues raised for the first time on appeal which have not been addressed by the trial

court. Council of City of New Orleans v. Washington, 09-1067 (La. 5/29/09), 9

So.3d 854; Johnson v. State, 02-2382 (La. 5/20/03), 851 So.2d 918; Adams v. Lori

Heaphy & Assoc., 14-580 (La.App. 3 Cir. 12/17/14), 155 So.3d 170. Therefore, we

need not address that assertion.1 As to her first assignment of error, we disagree.

In reviewing a trial court’s ruling on a res judicata exception, an appellate

court reviews legal issues under a de novo standard. Armbruster v. Anderson, 18-

55 (La.App. 4 Cir. 6/27/18), 250 So.3d 310, writ denied, 18-1276 (La. 11/5/18), 255

So.3d 1054.

Louisiana Revised Statutes 13:4231 codified a wide-ranging concept of res

judicata, which “include[s] both claim preclusion (res judicata) and issue preclusion

(collateral estoppel).” Maschek v. Cartemps USA, 04-1031, p. 5 (La.App. 4 Cir.

2/16/05), 896 So.2d 1189, 1193. Issue preclusion is codified specifically in

La.R.S.13:4231(3), which provides that “[a] judgment in favor of either the plaintiff

or the defendant is conclusive, in any subsequent action between them, with respect

to any issue actually litigated and determined if its determination was essential to

that judgment.” “Once a court decides an issue of fact or law necessary to its

judgment, that decision precludes relitigation of the same issue in a different cause

of action between the same parties.” Sanchez v. Georgia Gulf Corp., 02-1617, p. 14

(La. App. 1 Cir. 8/13/03), 853 So.2d 697, 706.

The jurisprudence has construed La.R.S. 13:4231(3) as requiring that the

following three elements be present for issue preclusion to apply: “(1) a valid and

1
Moreover, even if this issue were to be addressed, our finding as to the first assignment
of error would render it moot.

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final judgment; (2) identity of the parties; and (3) an issue that has been actually

litigated and determined if its determination was essential to the prior judgment.”

Liberty Mut. Fire Ins. Co. v. Weaver, 16-1008, p. 4 (La.App. 3 Cir. 5/10/17), 219

So.3d 442, 445–46 (quoting Harrell v. Harrell, 99-1093, p. 1 (La.App. 1 Cir.

10/6/00), 808 So.2d 363, 373, writ denied, 01-2546 (La. 12/7/01), 803 So.2d 971);

Glob. Mktg. Sols., L.L.C. v. Chevron U.S.A. Inc., 18-1765 (La.App. 1 Cir. 9/27/19),

286 So.3d 1054, writ denied, 19-1886 (La. 2/10/20), 347 So.3d 741.

It is unquestionable that our prior decision clearly litigated the issue of

whether Mrs. Gardiner had any interest or right in the legacy shares after the creation

of the voting trust and transfer of the shares thereto on February 21, 2018. She did

not. Likewise, that decision is a final and valid judgment, having been before us and

with writs denied by the Louisiana Supreme Court. Mrs. Gardiner claims in passing,

but does not fully brief, that the parties are different because Mr. Gielen was named

in the second suit as well as the Defendant corporations, and that he was not named

in the initial suit. However, Mrs. Gardiner conceded at the hearing on the exception

that Mr. Gielen was in privity with the corporations, essentially conceding the parties

are the same. Moreover, it is of no moment that all the same exact defendants named

in the present suit were not all named in the initial suit. The doctrine of res judicata

applies regardless of whether the former action included parties that were not named

in the subsequent action, or vice versa, as long as judgment in the first action was

rendered on the merits, the cause of action or issue was the same, and the party

against whom the doctrine is asserted was a party to the former litigation. Dreyfus

v. First Nat. Bank of Chicago, 424 F.2d 1171 (7th Cir. 1970), cert. denied, 400 U.S.

832, 91 S.Ct. 64 (1970). Both the corporate defendants and Mrs. Gardiner were

parties in the first suit. All parties’ interests regarding the exception of res judicata

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in the present lawsuit were represented in the previous lawsuit. The corporate

defendants have a right to assert res judicata as to any claim that Mrs. Gardiner

previously litigated against them, as does Mr. Gielen for his actions as CEO in

privity with those corporations, as conceded by Mrs. Gardiner.

Thus, because we have previously held that Mrs. Gardiner did not have an

ownership right in the legacy shares on the date of her withdrawal, July 23, 2018,

that issue is fully and finally resolved between the parties in any possible litigation.

Because she no longer held any interest in the legacy shares after February 2018, we

would be hard pressed to find she had any right of action as to the disposition of

those shares at the time of the redemption. Nor would she have any right to assert

any alleged breach of contract claims pertaining to those shares, as she clearly could

not sell the legacy shares for fair value, or even seek a judicial determination of their

fair value, as she had no interest in them after February 21, 2018, as per our prior

ruling. As noted by this court’s prior decision, Mrs. Gardiner’s sole remedy

remaining in regard to those shares is an action against her mother for an accounting

as usufructuary. Accordingly, we affirm the decision of the trial court.

For the above reasons, we hereby affirm the decision of the trial court. Costs

of this appeal are hereby assessed against Mrs. Gardiner.

AFFIRMED.

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

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