314 So.3d 1128
La. Ct. App.2021Background
- Paladin Contractors, LLC had five equal members; Cordell Parker (a 20% member) died in November 2015 and his surviving spouse, Lisa Parker, became administratrix and assignee of his membership interest.
- Paladin’s operating agreement was silent on death; under La. R.S. 12:1333(A) an executor/administrator is treated as an assignee of the member’s interest, and distributions default to equal shares per La. R.S. 12:1324(B).
- Lisa Parker sued in a single petition cumulating two actions: (1) an individual/damages action against Paladin and the four remaining members for failure to distribute Parker’s pro rata profits (claims: breach of operating agreement, breach of fiduciary duty, fraud, negligence); and (2) a derivative action (including a claim under La. R.S. 12:1328) against the members.
- Defendants filed six exceptions, including no right of action (targeting the derivative claim) and no cause of action (targeting the individual/damages claims against the members). The trial court granted the no-right exception (dismissing the derivative action) and granted in part the no-cause exception (dismissing all individual claims against the members except fraud), denying vagueness as to fraud.
- The trial court did not designate the July 22, 2020 order as a final judgment under La. C.C.P. art. 1915; defendants moved to dismiss the appeal for lack of appellate jurisdiction. The Fourth Circuit converted the untimely appeal to a supervisory writ (timely filed), denied the motion to dismiss, granted the writ, reversed the trial court’s partial exceptions, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appealability / jurisdiction of July 22, 2020 order | The derivative dismissal was a final judgment of one of two distinct actions and thus appealable; interlocutory aspects could be reviewed with that final appeal | The judgment was not a final adjudication of any party and was not designated final under La. C.C.P. art. 1915(B), so no immediate appeal was authorized | Court converted the appeal to a supervisory writ (timely filed), denied motion to dismiss, and proceeded to review the issues on writ jurisdictional grounds |
| Partial exception of no cause of action (dismissal of all individual claims against members except fraud) | All theories arise from the same operative facts (failure to distribute) so partial no-cause is improper and fosters piecemeal appeals | Fraud claims are factually distinct from distribution claims, so a partial dismissal was permissible under Subaru | Applied the Subaru framework: all claims arise from the same operative facts; partial no-cause exception was impermissible; reversed the partial dismissal |
| Partial exception of no right of action (derivative claim dismissed while individual claim remained) | The derivative claim was separately captioned and its dismissal was final and appealable; Parker had standing to press the derivative theory as assignee | The derivative claim lacked merit/standing (assignee not a member) and a partial no-right exception could be maintained | Court held partial no-right exception was procedurally improper where both individual and derivative claims arise from the same operative facts; reversed the partial dismissal though it noted assignee-standing issues exist and must be addressed on remand |
| Standing of an assignee to prosecute a derivative LLC claim | Parker asserted derivative relief as assignee/administratrix | Defendants argued an assignee (non-member) lacks member standing to bring a derivative suit on behalf of the LLC | Court observed it did not disagree that an assignee lacks derivative standing, but reversed because the procedural grant of a partial no-right exception (dismissing only the derivative claim) was improper; standing issues to be addressed on remand |
Key Cases Cited
- Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234 (La. 1993) (establishes framework disfavoring partial exceptions of no cause of action and explains when partial dismissals are permissible)
- Badeaux v. Southwest Computer Bureau, Inc., 929 So.2d 1211 (La. 2006) (no-cause-of-action exception raises a legal question reviewed de novo)
- Talbot v. C & C Millworks, Inc., 715 So.2d 153 (La. App. 1 Cir. 1998) (applies Subaru to hold partial exceptions of no right of action are procedurally improper when claims arise from the same operative facts)
- Mandina, Inc. v. O’Brien, 156 So.3d 99 (La. App. 4 Cir. 2013) (explains when appellate court may convert a nonappealable appeal to a supervisory writ)
- Stelluto v. Stelluto, 914 So.2d 34 (La. 2005) (recognizes appellate discretion to convert appeals to writs in appropriate circumstances)
- Quality Environmental Processes, Inc. v. Energy Development Corp., 218 So.3d 1045 (La. App. 1 Cir. 2017) (discusses categories of partial judgments appealable under La. C.C.P. art. 1915)
- Poy v. Twin Oaks Nursing Home, Inc., 671 So.2d 15 (La. App. 5 Cir. 1996) (applies Subaru reasoning to no-right exceptions and emphasizes judicial efficiency in avoiding piecemeal appeals)