Succession of Dinesh Shaw, M.d v. Alexandria Investment Group, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

17-582

SUCCESSION OF DINESH SHAW, M.D,

VERSUS

ALEXANDRIA INVESTMENT GROUP, LLC

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APPEAL FROM THE
NINTH JUDICIAL DISTRICT COURT
PARISH OF RAPIDES, NO. 257,131
HONORABLE WILLIAM GREGORY BEARD, DISTRICT JUDGE

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D. KENT SAVOIE
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, and
D. Kent Savoie, Judges.

WRIT GRANTED AND MADE PEREMPTORY.

Michael M. Meunier
Matthew K. Brown
Imtiaz A. Siddiqui
Sullivan, Stolier, Schulze, & Grubb LLC
909 Poydras Street, Suite 2600
New Orleans, LA 70112-1044
(504) 561-1044
COUNSEL FOR DEFENDANT/APPLICANT:
Alexandria Investment Group, LLC

W. Alan Pesnell
The Pesnell Law Firm
P. O. Box 1794
Shreveport, LA 71166-1794
(318) 226-5577
COUNSEL FOR PLAINTIFF/RESPONDENT:
Succession of Dinesh Shaw, M.D.

William M. Ford
Attorney at Law
P. O. Box 12424
Alexandria, LA 71315-2424
(318) 442-8899
COUNSEL FOR PLAINTIFF/RESPONDENT:
Succession of Dinesh Shaw, M.D.

Jimmy Roy Faircloth, Jr.
Barbara Bell Melton
Faircloth, Melton, & Sobel, LLC
105 Yorktown Drive
Alexandria, LA 71303
(318) 619-7755
COUNSEL FOR INTERVENOR/RESPONDENT:
Red River Bank

SAVOIE, Judge.

Defendant-Relator, Alexandria Investment Group, LLC (Company), seeks

supervisory writ from the judgment of the trial court, granting the motion in limine

filed by plaintiff, Succession of Dinesh Shaw, M.D.

This suit was brought by plaintiff to compel Relator‟s compliance with its

Operating Agreement to buy the ownership interest of its deceased member, Dr.

Dinesh Shaw (Dr. Shaw), 1 at the “Death Purchase Price” set forth in provision

10.3.1 (emphasis added), which provides, in part:

If a Member dies, then the Company shall purchase the
Ownership Interest of the deceased Member for the Death Purchase
Price (defined below). As used in this Section 10.3, the term “Death
Purchase Price” shall mean the appraised value of the Company’s
multiplied by the Ownership Interest percentage of the deceased
Member.

On March 23, 2017, plaintiff filed its motion in limine, requesting the court

“exclude any and all references to [] evidence, testimony and argument relating to

the valuation of decedent‟s „membership interest,‟ and to limit the testimony,

evidence, and argument to the contractually agreed upon method of valuation

defined in the Operating Agreement.” Plaintiff argued that the contractually

agreed upon valuation method for the “Death Purchase Price” is the “appraised

value of the Company‟s [assets] multiplied by the Ownership Interest of the

deceased Member.” In its interpretation, i.e., its insertion of the word “assets,”

plaintiff looked to “each and every other provision in the Operation Agreement

calling for a valuation and purchase of a person‟s membership interest” in the

context of retirement (10.5.1), involuntary termination (10.6.2), and bankruptcy

1
At the time of his passing, Dr. Shaw was “a direct owner of a 15 2/7th % [minority] interest in
and to” the Company, which owned and operated a hotel and a convention center located at 2225
North MacArthur Drive and 2301 North MacArthur Drive, respectively.

(10.2.3), and in each instance, the formula consisted of “the appraised value of the

Company‟s assets . . . multiplied by the Ownership Interest” of the withdrawing

member.2

Relator opposed the motion, arguing: (1) the language of the Operating

Agreement specifically calls for the value of the Company, not its assets; (2)

testimony regarding the value of the Company and related matters is essential to

insure that any payment to Dr. Shaw of a final distribution under the Operating

Agreement is in accordance with law; (3) the proposed testimony is relevant under

the default provision of our LLC law, which states that payment is based on the

fair market value of the Company; and (4) evidence regarding the financial

condition of the Company is even relied upon by plaintiff‟s appraisal expert and,

thus, is relevant. Under Relator‟s reading of the contract, the members

intentionally omitted the word “assets” and agreed to calculate the “Death

Purchase Price” based on the value of the Company as a whole; therefore, the

apostrophe “s” was merely a typographical error.

On April 24, 2017, the trial court heard the motion and ruled from the bench:

2
Section 10.5.1 (emphasis added) provided:
Upon retirement or withdrawal, a retiring or withdrawing Member shall be
entitled to receive such distributions, if any, to which such Member is then
entitled under this Agreement, an amount equal to the appraised value of the
Company’s assets as of the Retirement Effective Date multiplied by the
Ownership Interest percentage of the retiring or withdrawing Member (the
“Retirement Price”).
Section 10.6.2 (emphasis added) provided:
Upon involuntary termination, a terminated Member shall be entitled to receive
such distributions, if any, to which such Member is then entitled under this
Agreement, and an amount equal to the appraised value of the Company’s assets
as of the Retirement Effective Date multiplied by one-half of the Ownership
Interest Percentage of such Member (the “Termination Price”).
Section 10.2.3 (emphasis added) provided:
As used in this Section 10.2, the term “Bankruptcy Purchase Price” shall mean the
lower of the appraised value or the net book value of the Company’s assets on
an accrual basis exclusive of accounts receivable multiplied by the Ownership
Interest percentage of the Bankrupt Member.

2

The motion in limine before me deals with the operating agreement
signed by all the doctors plus the late Dr. Shaw. The death of a
member section . . . ten point three point one deals with the term death
purchase price shall be appraised value of the company‟s multiplied
by the ownership interest of the deceased member. That paragraph
then continues with the paragraph ten point five with the retirement
and ten point six with involuntary termination, more or less has the
same words but for the word assets. The court is going to grant the
motion in limine. I believe the operating agreement has the words in
it that set forth the intent of the parties when they signed the
agreement that they were going to abide by what the agreement called
for. Even though the word assets is not there, it does provide enough
with the other paragraphs that the terms of the operating agreement
are clear and they control what the determination and what amount the
member is supposed to receive. And this is what the parties agreed to
when they signed the agreement. So, the motion in limine to exclude
the evidence outside of that will be granted.

Relator now seeks review of the trial court‟s written order, granting the

motion, and requests expedited consideration, preferably by July 17, as this matter

is set for trial on August 2-3, 2017, as a second setting, and, if not heard then, as a

first setting on August 31 and September 1, 2017.

“The proper procedural vehicle to contest an interlocutory judgment that

does not cause irreparable harm is an application for supervisory writs.” Brown v.

Sanders, 06-1171, p. 2 (La.App. 1 Cir. 3/23/07), 960 So.2d 931, 933 (citing

La.Code Civ.P. arts. 2087 and 2201). A court of appeal has plenary power to

exercise supervisory jurisdiction over trial courts and may do so at any time,

according to the discretion of the court. When the trial court‟s ruling is arguably

incorrect, a reversal will terminate the litigation, and there is no dispute of fact to

be resolved, judicial efficiency and fundamental fairness to the litigants dictate that

the merits of the application for supervisory writs should be decided in an attempt

to avoid the waste of time and expense of a possibly useless future trial on the

merits. Herlitz Const. Co., Inc. v. Hotel Investors of New Iberia, Inc., 396 So.2d

878 (La.1981).

3

Under La.Code Evid. art. 402, “[a]ll relevant evidence is admissible,” and

“[e]vidence which is not relevant is not admissible.” Pursuant to this scheme, “the

normal criterion for the admissibility of evidence is simply that it be relevant.”

La.Code Evid. art. 402, comment (c). “„Relevant evidence‟ means evidence

having any tendency to make the existence of any fact that is of consequence to the

determination of the action more probable or less probable than it would be

without the evidence.” La.Code Evid. art. 401. A party may seek a pre-trial ruling

on the admissibility of evidence through the use of a motion in limine. Because

this motion presents an evidentiary issue, the trial court is granted great discretion,

and its ruling should not be disturbed absent a showing of a clear abuse of

discretion. Heller v. Nobel Ins. Group, 00-261 (La. 2/2/00), 753 So.2d 841.

“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, and courts must enforce the contract as written. In

such circumstances, the question of contractual interpretation is answered purely as

a matter of law, as is the determination of whether a contract is ambiguous or not.

Sims v. Mulhearn Funeral Home, Inc., 07-54 (La. 5/22/07), 956 So.2d 583.

“However, if a court determines as a matter of law that a contract is ambiguous,

then extrinsic (parol) evidence may be used to determine the true intent of the

parties, and determining the intent of the parties becomes, in part, a question of

fact.” LFI Fort Pierce, Inc. v. Acme Steel Bldgs., Inc., 16-71, p. 7 (La.App. 3 Cir.

8/17/16), 200 So.3d 939, 946, writ denied, 16-1684 (La. 11/29/16), 210 So.3d 804.

Ambiguity as to intent arises when the contract lacks a provision bearing on that

issue, its terms are susceptible to more than one interpretation, there is uncertainty

4

or ambiguity as to its provisions, or the intent of the parties cannot be ascertained

from the language employed. Campbell v. Melton, 01-2578 (La. 5/14/02), 817

So.2d 69.

Relator asserts the trial court erred by ruling on a motion in limine that

determined the meaning of an ambiguous provision of the Operating Agreement,

specifically its interpretation of the grammatically incorrect “Company‟s,” without

permitting or considering evidence that would clarify the ambiguity. In reaching

its decision, the trial court, according to Relator, endeavored to interpret the

contract as well as the intent of the parties, ultimately concluding that the word

“assets” was inadvertently left out. However, Relator advances that its

interpretation of the contract—reading out the apostrophe “s” as a typographical

error—is equally reasonable, which presents an ambiguity in the contract, raising a

question of fact that should have been preserved for trial. Therefore, the trial court

abused its discretion in ruling on the “intent of the parties” and “what the parties

agreed to when they signed the agreement” despite those issues not being properly

before the court and, more importantly, despite Relator not being able to present its

evidence as to intent.3

Moreover, because the contract is disputed and subject to more than one

reasonable interpretation, Relator asserts that the excluded extrinsic evidence is

relevant under La.Code Evid. arts. 401 and 402.4 It further argues that limiting

evidence solely to the value of the Company‟s assets without considering the value

3
In support, Relator recites jurisprudence holding that summary judgment determining factual
issues regarding intent of the parties in ambiguous contracts is rarely appropriate. See Carter v.
BRMAP, 591 So.2d 1184 (La.App. 1 Cir. 1991).
4
Citing Sec. Ctr. Prot. Servs., Inc. v. Lafayette Sec. & Elec. Sys., Inc., 95-693 (La.App. 5 Cir.
1/17/96), 668 So.2d 1156, writ denied, 96-428 (La. 3/29/96), 670 So.2d 1217 (extrinsic evidence
only admissible to resolve contractual ambiguity); Rabenhorst Funeral Home, Inc. v. Tessier, 95-
1088 (La.App. 1 Cir. 5/10/96), 674 So.2d 1164 (court may look beyond original agreement to
determine intent when contract is ambiguous).

5

of the Company and the extent of its debts and obligations would also be improper

in light of: (1) the extensive discussion of the “income approach” to valuation by

plaintiff‟s appraisal expert, which requires a full review of the Company‟s

financial condition, and (2) La.R.S. 12:1327,5 which prohibits distributions if an

LLC cannot pay its debts.6

In opposition, plaintiff notes at the outset that Relator can proffer its

evidence to complete the record; as such, no harm arises from denying the present

writ. Plaintiff next asserts that the evidence regarding the Company‟s value or

membership value is not relevant because the formula to determine the “Death

Purchase Price” does not provide for any discounts or any reductions for minority

ownership, lack of marketability of the member‟s interest, or indebtedness of the

Company. It simply provides for a purchase price to be determined by the

application of a member‟s ownership percentage to the appraised value of the

Company‟s assets. Therefore, any evidence deviating from that standard, such as

the value of the “company membership interest,” is irrelevant and immaterial.

Plaintiff further argues that the only rational reading of the provision before the

court is that the price is determined according to this method as the trial court

5
La.R.S. 12:1327(A) provides:
A. No distribution shall be made if, after giving effect to the distribution:
(1) The limited liability company would not be able to pay its debts
as they become due in the usual course of business.
(2) The limited liability company's total assets would be less than
the sum of its total liabilities plus, unless the articles of
organization or a written operating agreement provides otherwise,
the amount that would be needed if the limited liability company
were to be dissolved at the time of the distribution to satisfy the
preferential rights of other members upon dissolution which are
superior to the rights of the member receiving the distribution.
(3) The authorization or payment thereof would be contrary to any
restrictions contained in the articles of organization or a written
operating agreement.
6
According to Relator, the most recent unaudited financial statements indicated that the
Company “was operating at a net loss of $596,913.44 and that the Company‟s total equity was a
negative $567,746.66.”

6

found, whose finding was neither an abuse of authority nor a mistake of law.

Simply put, the trial court found that the contract is unambiguous.

Intervenor, Red River Bank, filed a brief in support of the application7 in

which it alleges that the trial court erred in granting what, effectively, was a motion

for summary judgment on the factual issue of intent, which was not properly

before the court. Essentially, the trial court found the contract ambiguous, added a

word not found in the document, and then decided that, because it found the word

was inadvertently left out, evidence related to the true value of the Company was

inadmissible. Intervenor contends that this was clear legal error and an abuse of

discretion as contract interpretation is fodder for a motion for summary judgment,

but no such motion has been filed herein. Moreover, summary judgment would be

inappropriate in the face of the ambiguous provision at issue. Intervenor further

argues that even if the court had the authority to perform a contractual

interpretation analysis, its analysis was still erroneous because, rather than consider

parol evidence to determine the intent of the parties, the court unilaterally added

the word “assets,” substituting its interpretation for the intent of the parties.

Intervenor also points out that, because plaintiff argues that Relator is contractually

obligated to purchase Dr. Shaw‟s membership interest, Relator is the obligor in

7
Red River Bank intervened because Relator and its members entered into various security
agreements with Red River Bank to secure the assets of the Company in favor of Red River
Bank in connection with monies borrowed by the Company, “including a promissory note,
multiple indebtedness mortgage, and a business loan agreement.” Further all of the members,
including Dr. Shaw, executed personal guaranties in relation to the Company‟s indebtedness.
Should plaintiff succeed in this suit, Dr. Shaw‟s heirs could attempt to prime the guaranty
executed by Dr. Shaw and, further, render the Company incapable of paying its indebtedness to
Red River Bank.

7

whose favor the obligation must be interpreted under La.Civ.Code art. 2057. 8

Finally, Intervenor adopts and incorporates Relator‟s discussion on relevancy.

It is not disputed that the contractual provision at issue contains a

grammatical error, i.e., “Company‟s.” Plaintiff advances an interpretation of the

provision as merely an unintended omission of the word “assets.” Relator and

Intervenor argue that the apostrophe “s” is merely a typographical error. A motion

in limine is a device developed in our jurisprudence to test the admissibility of

evidence prior to trial as an extension of the trial court‟s gatekeeper function for

which great deference is afforded. It is not intended to resolve issues of law, such

as the contractual interpretation at issue, for which no discretion is granted and

review is de novo. The limits of the motion in limine were exceeded in this case.

The trial court determined the method by which the members agreed to calculate

the “Death Purchase Price,” and this, in turn, logically required the court to first

interpret the grammatically incorrect “Company‟s,” with the trial court ultimately

finding that there was an inadvertent omission of the word “assets.” Such a

determination was not proper on a motion in limine. Therefore, we find that the

trial court abused its discretion in granting the motion in limine.

WRIT GRANTED AND MADE PEREMPTORY.

8
La.Civ.Code art. 2057 provides, in part: “In case of doubt that cannot be otherwise resolved, a
contract must be interpreted against the obligee and in favor of the obligor of a particular
obligation.”

8