Terrebonne Concrete, LLC v. CEC Enterprises, LLC
76 So. 3d 502
La. Ct. App.2011Background
- Consolidated suits arise from a 2007 contract between CEC Enterprises, L.L.C. (owner) and Terri Matthews, Inc. (TMI) for a restaurant build in Houma, Louisiana.
- Terri Matthews is TMI’s president and majority shareholder; other principals include Carolyn Matthews, Ron Mittelstedt, and Jason Elkins.
- TMI’s bid was lowered via a change order, then progress payments were made by CEC; subcontractors and suppliers began nonpayment issues.
- In late 2007 and 2008, subcontractors sued, liens were recorded, and CEC sued TMI and Matthews for breach, liquidated damages, penalties, and fraud.
- The trial court found Matthews personally liable for fraud under La. R.S. 12:95, awarding him $100,000 personally, and also awarded other damages against TMI.
- Matthews appeals, challenging personal fraud liability and piercing of the corporate veil.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Matthews personally liable for fraud under La. R.S. 12:95 | CEC asserts fraud by Matthews as shareholder/personal liability. | Matthews owed no fiduciary duty to CEC and no personal fraud shown. | Reversed; no competent evidence of personal fraud by Matthews. |
| Whether veil piercing is warranted for alter ego | CEC relied on alter ego theory due to mismanagement and funds use. | No evidence of commingling or personal benefit; corporate form maintained. | Rejected; no sufficient evidence to pierce the corporate veil. |
| Whether evidence supports personal liability based on fiduciary duty or silence/inaction | Special relationship and duty to disclose cash-flow problems. | No fiduciary duty to CEC; silence/inaction not enough without duty and intent. | Fraud not established; no legal duty shown to support personal liability. |
Key Cases Cited
- Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164 (La.1991) (limited veil-piercing and corporate separateness principles)
- McDonough Marine Serv. v. Doucet, 694 So.2d 305 (La.App. 1st Cir.1996) (alter ego/fraud exceptions; corporate officers not per se liable)
- Scheffler v. Adams & Reese, LLP, 950 So.2d 641 (La.2007) (fiduciary duties of attorneys; general fiduciary concept used for corporate officers)
- Dutton & Vaughan, Inc. v. Spurney, 600 So.2d 693 (La.App. 4th Cir.) (fiduciary-duty considerations in commercial relationships)
- Manning v. United Med. Corp. of New Orleans, 902 So.2d 406 (La.App. 4th Cir.2005) (personal liability limits for corporate officers absent personal duty)