Shaw v. Alexandria Inv. Grp., LLC
248 So. 3d 332
La. Ct. App.2017Background
- Decedent Dr. Dinesh Shaw owned a 15 2/7% membership interest in Alexandria Investment Group, LLC (the Company); his succession sued to force the Company to buy that interest at the contractually defined "Death Purchase Price."
- The Operating Agreement’s Section 10.3.1 defines "Death Purchase Price" as "the appraised value of the Company's multiplied by the Ownership Interest percentage..." (grammatical error: "Company's" without a noun).
- Other agreement provisions (retirement, involuntary termination, bankruptcy) expressly refer to "the appraised value of the Company’s assets" (or net book value of the Company's assets), suggesting a potential omission in 10.3.1.
- Plaintiff moved in limine to exclude evidence inconsistent with the contractual valuation method (i.e., to limit proof to the appraised value of the Company's assets × ownership percentage).
- Relator (the Company) argued the word "assets" was intentionally omitted and contended the clause should value the Company as a whole (company value), so extrinsic evidence on company value, debts, and financial condition is relevant; Red River Bank intervened supporting Relator.
- Trial court granted plaintiff’s motion in limine, concluding the agreement — read with other provisions — clearly required valuing the Company’s assets; Relator sought supervisory writ relief, contending the court improperly resolved an ambiguous contract on a motion in limine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper contract interpretation of Section 10.3.1 | 10.3.1 must be read with other provisions; the parties intended "assets," so valuation is assets × ownership % | The phrase "Company's" is ambiguous/typographical; the parties intended value of the Company as a whole; extrinsic evidence is relevant | Trial court exceeded motion-in-limine limits by resolving ambiguity; writ granted — extrinsic evidence may be considered at trial |
| Admissibility of extrinsic/parol evidence on valuation method | Exclude evidence deviating from agreed formula (assets × %) as irrelevant | Evidence of company value, debts, financials, and expert testimony is relevant to fair valuation and statutory solvency issues | Evidence is potentially relevant when contract is ambiguous; precluding it on a motion in limine was an abuse of discretion |
| Appropriateness of resolving intent on motion in limine | Contract is unambiguous; motion in limine appropriate to limit evidence to contractual method | Interpretation of an ambiguous contract and intent are factual; motion in limine is improper to decide intent | Court should not interpret ambiguous contract or resolve intent via motion in limine; de novo review required for legal interpretation |
| Relevance of company solvency/statutory distribution limits (La. R.S. 12:1327) | Not relevant if price fixed by contract formula without reductions for debt/discounts | Solvency and indebtedness affect distributions and may bar payment under statute; financial condition is relevant to valuation and legal compliance | Financial condition and statutory constraints may be relevant; excluding such evidence prematurely was improper |
Key Cases Cited
- Brown v. Sanders, 960 So.2d 931 (appellate court) (supervisory writ is proper vehicle to contest interlocutory judgments)
- Heller v. Nobel Ins. Group, 753 So.2d 841 (La. 2000) (trial court's evidentiary rulings on admissibility reviewed for abuse of discretion)
- Sims v. Mulhearn Funeral Home, Inc., 956 So.2d 583 (La. 2007) (contract interpretation is determination of parties' common intent; clear language is enforced as written)
- Herlitz Const. Co., Inc. v. Hotel Investors of New Iberia, Inc., 396 So.2d 878 (La. 1981) (appellate courts may exercise supervisory jurisdiction to avoid wasted trial when ruling is arguably incorrect)
- Carter v. BRMAP, 591 So.2d 1184 (La. App.) (summary judgment on intent issues in ambiguous contracts is rarely appropriate)
- Sec. Ctr. Prot. Servs., Inc. v. Lafayette Sec. & Elec. Sys., Inc., 668 So.2d 1156 (La. App.) (extrinsic evidence admissible only to resolve contractual ambiguity)
- Rabenhorst Funeral Home, Inc. v. Tessier, 674 So.2d 1164 (La. App.) (court may look beyond the agreement to determine intent when contract is ambiguous)