199 So. 3d 612
La. Ct. App.2016Background
- Bobby Smith (Defendant) sold assets of his memorial/precinct business to Leah Stroope and the succession of Stephen Alexander (Plaintiffs) via three written agreements signed Dec. 31, 2013: a lease ($4,500/mo.), an asset purchase ($30,000, paid in three $10,000 installments), and a separate $220,000 noncompete payable over 10 years. Plaintiffs paid $10,000 at closing.
- Stephen Alexander died March 20, 2014; Stroope took business records to Arkansas briefly and sought to assign or subcontract existing contracts and negotiate sales of some assets; Plaintiffs made no scheduled payments before April 1, 2014.
- On April 3–4, 2014 Smith reentered the leased premises (finding utilities disconnected, office cleaned out), removed/returned some vault forms to the manufacturer, performed a short precast job using equipment sold to Plaintiffs, and padlocked the gate; he also commenced garnishment/sequestration proceedings that froze ~ $28,000 of Plaintiffs’ receivables.
- Plaintiffs sued in Lincoln Parish (May 2014) seeking injunctive relief and alleging breach, conversion, UTPC claims; the trial court issued a preliminary injunction and later found Plaintiffs owned the assets listed in the sale, that Smith breached the lease and the noncompete by reentering and competing in April 2014, and that the sale/other contracts should not be reformed.
- The trial court awarded Smith certain prorated rents, noncompete installments through early April, and the three $10,000 asset payments (total owed $61,129.86 less credits = $36,033.09), denied damages and attorney’s fees to both parties, and assigned appeal costs to Smith; the appellate court affirmed on rehearing.
Issues
| Issue | Stroope's Argument | Smith's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs abandoned leased premises, permitting Smith self-help reentry | Stroope: she did not abandon; she intended to preserve business, negotiate assignments, and had not defaulted under lease | Smith: Stroope abandoned property and business after Alexander’s death; he could reenter and mitigate damages | Court: No abandonment; Smith’s reentry and lockout breached lease; Lessee had not defaulted under lease terms before reentry |
| Whether the asset sale ($30,000) + noncompete ($220,000) should be reformed/interpreted as a single $250,000 sale | Stroope: contracts are clear as written; parties implemented them and could not now reform | Smith: substance of transaction was sale for $250,000; contracts should be read together or reformed to reflect common intent | Court: Contracts clear; no mutual error/proof of mutual intent to treat as $250,000 sale; refuse reformation; enforce as written |
| Enforceability and scope of noncompete (10-year, $220k) and entitlement to payments after Smith’s conduct | Stroope: noncompete excessive and violative of La. R.S.23:921; Smith breached by competing in April, so payments limited to period before breach | Smith: payments are part of sale price; he should receive full installments through trial; also argued buyer didn’t carry on business so noncompete unenforceable | Court: 10-year term reduced/severed to statutory 2 years; Smith breached noncompete by performing work in April 2014; entitled only to installments through March 2014 plus prorated April payment |
| Damages and remedies for breaches / self-help conduct (rent, conversion, seizure effects) | Stroope: Smith’s garnishment and self-help interfered with ability to pay and operate; conversion claims not proven but remedies limited to short period | Smith: entitled to full contract damages (rent and noncompete installments through trial), and argued Plaintiffs’ actions obstructed performance | Court: Neither party proved additional damages; Smith entitled only to prorated rent Dec–Apr 4, 2014 and limited noncompete payments; asset sale enforceable for $30,000; total balance due $36,033.09 |
Key Cases Cited
- Powell v. Cox, 92 So.2d 739 (La. App. 2d Cir. 1957) (abandonment requires intent plus act; owner’s intent is material)
- Richard v. Broussard, 495 So.2d 1291 (La. 1986) (lessor may reenter for abandonment but generally must resort to judicial process; remedies when lessor reenters)
- Rosell v. ESCO, 549 So.2d 840 (La. 1989) (appellate review of factual findings—manifest error standard)
- Sliman v. McBee, 311 So.2d 248 (La. 1975) (seller’s remedies when buyer fails to pay price; dissolution or suit for price)
- SWAT 24 Shreveport Bossier, Inc. v. Bond, 808 So.2d 294 (La. 2001) (noncompetition agreements construed under general contract rules; public-policy limits)
- Pattridge v. Starks, 181 So.3d 192 (La. App. 2d Cir. 2015) (principles for interpreting noncompetition clauses and written instruments)