257 So. 3d 212
La. Ct. App.2018Background
- BCNO 4, L.L.C. (lessor) leased premises to An Erny Girl, L.L.C. (Erny) for the Frenchmen Art Market; litigation arose over lease renewal and possession, culminating in Erny's eviction which was affirmed on appeal.
- After finality, BCNO attempted to deposit eight rent checks (Feb–Oct 2016) delivered by Katherine Erny Gaar (Erny's member/manager); the checks were returned marked "Account Closed."
- BCNO filed a supplemental reconventional demand against Ms. Gaar individually seeking past rent ($43,940) and bank fees ($96), alleging conversion, fraud, and criminal conduct and invoking La. R.S. 12:1320(D) to pierce limited liability protections.
- Ms. Gaar and Erny excepted on grounds of no cause of action and vagueness; the trial court sustained those exceptions as to Gaar in her individual capacity and dismissed her without prejudice.
- BCNO appealed, arguing the exception was wrongly granted or, alternatively, that it should have been allowed to amend its reconventional demand to plead facts with greater particularity.
- The appellate court affirmed that the petition, as pled, failed to state a cause of action against Gaar but remanded for the trial court to allow BCNO an opportunity to amend the fraud allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether BCNO stated a cause of action against Gaar individually under La. R.S. 12:1320(D) | Gaar closed Erny's account with outstanding rent checks, removed funds, and thus committed conversion, fraud, and wrongful acts warranting personal liability | Gaar (and Erny) argued the claims were legally insufficient: checks were stale, allegations were conclusory, and LLC shield bars individual liability | Court: No cause of action as pled; allegations lack particularity re: fraud, no showing of alter-ego or that acts occurred outside member capacity; conversion fails for lack of ownership |
| Whether BCNO adequately pled fraud with particularity | BCNO alleged public statements and account closure indicating intent to harm BCNO | Gaar argued pleadings are conclusory and fail to show intent or contemporaneous insufficiency of funds | Court: Fraud not sufficiently pleaded with particularity; dismissed |
| Whether BCNO stated negligent/wrongful-act exception to LLC immunity | BCNO relied on statutory exception for wrongful/negligent acts by a member/manager | Gaar argued acts were within her capacity as LLC member/manager and not tort/criminal acts pleaded | Court: Claim fails; BCNO did not allege conduct outside Gaar’s capacity nor satisfy Ogea factors |
| Whether trial court abused discretion by denying leave to amend | BCNO argued defects were curable by amendment to plead fraud particulars | Gaar argued BCNO waived amendment by not requesting at hearing | Court: Abuse of discretion; remand for opportunity to amend fraud claim within delay set by trial court |
Key Cases Cited
- Ogea v. Merritt, 130 So.3d 888 (La. 2013) (factors for when a member may be liable for negligent or wrongful acts)
- Nunez v. Pinnacle Homes, L.L.C., 180 So.3d 285 (La. 2015) (LLC and members are separate personalities; limited liability intent)
- ORX Res., Inc. v. MBW Expl., L.L.C., 32 So.3d 931 (La. App. 4 Cir. 2010) (LLC veil-piercing and liability analysis)
- O'Dwyer v. Edwards, 15 So.3d 308 (La. App. 4 Cir. 2009) (standard of review for exception of no cause of action)
- New Orleans Jazz & Heritage Found. v. Kirksey, 40 So.3d 394 (La. App. 4 Cir. 2010) (definition and elements of conversion)
- An Erny Girl, L.L.C. v. BCNO 4 L.L.C., 216 So.3d 833 (La. App. 4 Cir. 2017) (prior appellate decision in the same dispute affirming eviction)