276 So.3d 589
La. Ct. App.2019Background
- Payphone Connection Plus sued Wagners Chef, LLC for breach of two 15-year ATM placement agreements, alleging Wagners installed an unauthorized ATM and unplugged Payphone’s machine, causing lost revenue and the ATM’s disappearance.
- Wagners was served and answered; later Payphone filed a First Supplemental and Amended Petition adding Jadallah Saed and Shadia Hamideh as individual defendants after an affidavit of dissolution for Wagners was filed with the Secretary of State.
- Payphone obtained a preliminary default against Saed and Hamideh and, after a confirmation hearing at which only Payphone’s owner (Wimsatt) testified and offered a lost-revenue calculation and a dissolution affidavit, the trial court entered a final default judgment awarding roughly $296k plus fees.
- Saed and Hamideh appealed, arguing (inter alia) lack of service on them and that Payphone failed to establish a prima facie case against them personally; the appellate court considered the prima facie/liability issue dispositive.
- The Fourth Circuit vacated and remanded, holding Payphone failed to prove (1) a basis to hold Saed and Hamideh personally liable for Wagners’ obligations and (2) damages with the minimal specificity required to confirm a default judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Payphone proved a prima facie case to hold Saed and Hamideh personally liable for Wagners’ alleged breach | Saed and Hamideh became liable after Wagners’ dissolution and members absorb assets/liabilities; they are members/spouses so liable | No contract or agreement between plaintiff and Saed/Hamideh; no pleaded or proved basis to pierce the corporate veil or otherwise impose individual liability | Reversed: plaintiff failed to establish any factual/theoretical basis or admissible evidence attaching liability to Saed or Hamideh individually |
| Whether Payphone proved the existence and enforceability of the contracts as to these individual defendants | The placement agreements (signed by a Wagners representative) entitle Payphone to relief | Contracts were between Payphone and Wagners; signatory was Nidal Jaber, not Saed or Hamideh; Wagners previously denied validity/enforceability | Reversed: authentication/testimony did not show enforceability of contracts as to Saed/Hamideh; merely having contracts with Wagners is insufficient to bind individuals |
| Whether Payphone proved damages (lost profits and replacement value) with required specificity | Offered a calculation of anticipated revenue and valuation of ATM accessories | Plaintiff’s calculation lacked explanation, corroboration, or minimal detail; damages therefore speculative | Reversed: plaintiff failed to prove damages with minimal degree of detail required for lost-profit recovery |
| Whether inadmissible or unobjected-to evidence may support confirmation of default | Plaintiff relied on testimony and exhibits introduced at the confirmation hearing | Defendants argued evidence was inadequate and some assertions lacked foundation; rules of evidence apply at default confirmation | Reversed: court emphasized that rules of evidence apply at default confirmations and inadmissible/unsupported evidence cannot sustain a prima facie case |
Key Cases Cited
- Arias v. Stolthaven New Orleans, L.L.C., 9 So.3d 815 (La. 2009) (confirmation of default requires admissible evidence establishing a prima facie case)
- Power Marketing Direct, Inc. v. Foster, 938 So.2d 662 (La. 2006) (default confirmation standards and need to prove demand)
- McIntyre v. Sussman, 76 So.3d 1257 (La. App. 4 Cir. 2011) (standard of review for default confirmation)
- Mossy Motors, Inc. v. Cameras Am., 851 So.2d 336 (La. App. 4 Cir. 2003) (plaintiff must prove individual liability separate from LLC)
- Louisiana Safety Ass'n of Timbermen-Self Insurers Fund v. Temlaco, Inc., 903 So.2d 492 (La. App. 2 Cir. 2005) (cannot impose personal liability on officer without prima facie proof of individual liability)
- Hall v. Folger Coffee Co., 874 So.2d 90 (La. 2004) (appellate review of factual findings at default confirmation)
- LeBlanc v. Gibbens Pools, Inc., 447 So.2d 1195 (La. App. 5 Cir. 1984) (lost-profit damages must be proven with reasonable certainty)