|! Gilfоrd Raymond Birch (“Gil”) appeals a judgment that rejected his claim for the return of separate funds given to or taken by his former wife, Kim Colvin Birch (“Kim”), during their marriage and under a matrimonial agreement that established a separate property regime. Kim answers the appeal, contesting the portion of the judgment that denied her exceptions of prescription and no right of action. We affirm in part, reverse in part and remand.
The Matrimonial Agreement
Gil and Kim got married on October 26, 1991. Gil was a pharmacist who owned The Corner Drug Store in Ruston, and Kim was an employee there. One day before the wedding, they executed a Matrimonial Agreement Before Marriage (“the agreement”) which rejected the community property regime established a separate property regime. In pertinent part, the agreement stated:
1.
All property now owned by either of said appearers shall remain the separate property of that one of the appearers to whom such property belongs, and all revenues, fruits and increases arising from such respective properties shall also be considered, and remain, the separate property of the respective appear-er[.] * * *
2.
The provisions of the precеding paragraph shall apply regardless of which of the appearers shall administer or manage the revenues, fruits, increases, property or proceeds in question; that is to say, the question as to which appearer administered or managed * * ⅜ the revenues, fruits, increases, property or proceeds of any property, shall in no way affect or modify the provisions of thepreceding paragraph, and in no way create a community interest there; the fact that either appearer may assist the other in the administration or management of the | ¡.property of the other shall not create the presumption of a claim for remuneration in favor of that appearer assisting the other, but all such services shall be considered and held as gratuitously rendered to each оther.
3.
More particularly but not by way of limitation, all accretions or increases in the value of separate property during the marriage, however same shall occur, shall be the separate property of the appearer to whom the separate property that has increased belongs and no claim for remuneration or reimbursement should exist in favor of the appearer to whom the property does not belong.
4.
Any increases or improvement of the separate property of either appearer, as separate property is set forth in this agreement, arising or made during the marriage of the appearers through the result of the common labor, expense, or industry of the appearers, shall not create any right to a reward in favor of that appearer * * * to whom the property which has been increased or improved does not belong. * * *
6.
All property acquired or wages earned by either appearer following their marriage, shall be considered separate property.
Procedural Background
The parties separated in late December 2002. In February 2003, Kim filed for an Art. 102 divorce; Gil reconvened for an Art. 103 divorce. Final judgment of divorce was rendеred in February 2004.
Gil filed a reconventional demand in February 2004, seeking to settle claims arising from the separate property regime. This was not immediately addressed, however, as the parties litigated custody and support issues that are not before the court on appeal. 1 It transpired that because of his own [¡¡drug abuse and irregularities in the handling of controlled dangerous substances at The Corner Drug Store, Gil’s рharmacy license was suspended indefinitely in 2008 and the store’s pharmacy permit placed on five years’ probation.
Gil filed a second supplemental recon-ventional demand in March 2009, demanding “recovery of Gil’s separate funds used by Kim, and * * ⅜ the recovery of the fruits of Gil’s separate funds.” He alleged that during the marriage, he ran the drugstore and made plenty of money, all of which went into the couplе’s joint checking account, which Kim balanced and managed. Kim earned a small amount of money from running a gift shop called “Kim’s Corner” in, or connected with, the drugstore, but always placed her wages in one of her separate accounts. Kim also bought three pieces of real estate in her own name: (1) in 1995, she bought the office adjacent to the drugstore (“the South Trenton Street property”), for $65,000, and rеnted this to the drugstore for $800 a month; (2) in September 1995, she bought a house (“the Hilly property”) for $242,000, renovated it for $30,000, and this became the couple’s home; (3) in August 1999, she bought a store on North Bonner Street
14Kim’s answer consisted of general denials, but she also raised several exceptions. By an exception of no right of action, she argued that “many or most” of the claims involved money paid not by Gil but by his corporation, Cupp Drug Store Inc. d/b/a The Corner Drug Store, and hence only the corporation could assert them. By an exception of prescription, she argued that Gil’s claims were essentially for conversion and hence subject to the one-year limitation for torts.
Overview of Trial Testimony
At trial in August 2009, three witnesses testified. Gil confirmed the facts outlined above, identifying one-by-one many of the checks drawn on the couple’s joint account and signed by Kim, to pay for the mortgages, renovations, property tax, inventory for her gift shop, and other expenses arising from her separate property. He also testified that when they got married, Kim had a net worth of about $100,000; during the marriage, working at the drugstore or running the gift shop, she never made more than $3,000 a month; now her net worth is about $900,000. He felt that this simply could not have occurred without the infusion of enormous amounts of his separate property, which he now wanted returned.
Gil’s CPA, James D. Johnson, testifiеd that he had handled the drugstore’s taxes since 1989. He confirmed that several of the checks drawn on the couple’s joint account, and signed by Kim, covered payroll, property taxes and renovations to her separate property.
On cross-examination, Kim conceded much of Gil’s testimony, including that Gil always put his wages in the couple’s joint checking | .^account, which she used to pay the mortgagеs on her separate property. However, she would not agree that the drugstore was Gil’s separate property and was unable to recall whether her wages ever exceeded $3,000 a month. When asked if she “did not always deposit” her own salary checks into the joint account, she replied, “Not always. No.” She did not dispute that the mortgages, taxes, inventory and other expenses vastly exceeded her income, but insisted that she built up a large reserve because “you save, you save, you save.”
Gil also offered the deposition of a forensic CPA, Susan Whitelaw, who testified that even though Kim never provided all her financial information, the available records showed that from 1996 to 2004, she reported total income of $124,000, but at the end of the same period she had a net worth of $970,000.
Kim presented no testimоny except her cross-examination of Gil and of Mr. Johnson.
Neither of Gil’s experts, Mr. Johnson nor Ms. Whitelaw, summarized all his claims, but by post trial brief he itemized the financial records into (1) separate funds used to buy real estate, (2) separate funds paid by the drugstore to Kim or for her benefit, (3) gift shop funds diverted into Kim’s separate account, and (4) rent paid by the drugstore to Kim. These items totaled $793,722.
Kim reiterated her exceptions, and then contested each item on Gil’s list. She asserted that he failed to prove that the money from the couple’s joint account was truly his separate funds; because certain
Action of the District Court
The district court rendered oral reasons, first rejecting Kim’s peremptory exceptions. The court held that a claim for reimbursement is subject to 10-year prescription, so Gil’s claim was timely, and that as the sole proprietor of the corporation, Gil had the right to pursue the claim.
On the merits, the court noted that the financial records were complex, but found sua sponte that the agreement itself waived either party’s right to seek reimbursement. The court cited ¶ 2 (“the fact that either appearer may assist the other in the administration or management of the property of the other shall not create the presumption of a claim for remuneration”), ¶ 3 (“all accretions or increases in the value of the separate property during the marriаge, however same shall occur, shall be the separate property of the ap-pearer * * * and no claim for remuneration or reimbursement should exist”), and ¶ 4 (“any increases or improvements of the separate property of either appearer * * * through the result of common labor, expense, or industry of the appearers, shall not create any right to a reward in favor of that appearer”) as disallowing Gil’s claims. Finally, the court rejected the theory of unjust enrichment as inapplicable when the claims are properly resolved by contract.
|7The court rendered judgment denying Kim’s exceptions, rejecting Gil’s claims, and assessing costs one-half to each. Gil has appealed and Kim has answered the appeal.
Discussion: Peremptory Exceptions
By answer to appeal, Kim urges the district court erred in denying her peremptory exception of prescription. Because Gil alleged that she “took from his separate estate” substantial sums, she argues the claim is for conversion, a tort subject to one-year prescription, regardless of how Gil labeled it.
Northern Assur. Co. v. Waguespack,
The 10-year liberative prescription period applicable to personal actions under Art. 3499 applies to a claim for reimbursement of property used to enhance the other spouse’s separate estate.
LeBlanc v. LeBlanc,
|sKim also contends that the court erred in denying her exception of no right of action. She argues that many of the transfers of cash came directly frоm the corporation, not from Gil, ergo only the corporation can sue to recover.
Wall v. First National Bank of Shreveport,
The exception of no right of action tests whether the plaintiff has a legal interest in judicially enforcing the right asserted. La. C.C.P. art. 927 A(6);
Skannal v. Bamburg,
44,820 (La.App. 2 Cir. 1/27/10),
Interpretation of Agreement
By seven assignments of еrror, Gil urges that the district court erred in reading the agreement as barring all claims for reimbursement between 19the parties. He suggests that the court misread the agreement in an effort to skirt the harsh result, but that the provisions waiving reimbursement are limited to narrow situations simply not present in this case. He also argues that the court’s reading, which denied any and all forms of reimbursement, completely negated the purpose of the agreement, which was to preserve the parties’ respective estates. Finally, he submits that the court fashioned a “novel theory” that neither party advanced and does not withstand minimal scrutiny.
Kim does not directly address the district court’s reasons for judgment, but states in passing that the conclusion was correct. She mainly asserts failure of proof and factual issues unrelated to the interpretation of the agreement.
In interpreting contracts, courts are guided by the general rules stated in La. C.C. arts. 2045-2057. The cardinal rule is that the interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045;
Amend v. McCabe,
95-0316 (La.12/1/95),
In the absence of specific contractual terms, a separate property agreement preserves the parties’ right to be reimbursed for separate property that was
A plain reading of Gil and Kim’s agreement shows, by contrast, that reimbursement is waived only for certain claims. Specifically, ¶ 2 states that “administration or management of the property of the other shall not create a claim for remuneration” and “all such services shall be considered and held as gratuitously rendered[J” This waiver obviously applies only to Inthe value of administration and managеment services.
Next, ¶ 3 refers to “all accretions or increases in the value of separate property” and states that “no claim for remuneration or reimbursement should exist[.]” Accretion means gradual and imperceptible addition to riparian land by water to which the land is contiguous. La. C.C. art. 499;
Walker Lands Inc. v. East Caoroll Parish Police Jury,
38,376 (La.App. 2 Cir. 4/14/04),
Similar to ¶ 3’s “increases in the value of separate property” is ¶ 4’s “increases or improvement of the separate property of either appearer[.]” The phrase “increases in the value of separate property” echoes La. C.C. art. 2368, which allows reimbursement when separate property increases in value “as a result of the uncоmpensated labor or industry of the spouses,” as by changed market conditions or inflation. See, e.g.,
St. Marie v. Roy,
09-953 (La. App. 3 Cir. 2/3/10),
On close examination, we find that the fairly narrow waivers stated in these provisions do not express a general waiver of all claims. By their own terms, they apply only to management fees, accretions, inflationary growth and market fluctuations. Nothing in the agreement waives reimbursement, upon termination of the marriage, of one spouse’s separate funds which were used to improve the other spouse’s separate property. Moreover, a [ ,2general waiver would utterly defeat the purpose of the agreement, which is to preserve each party’s separate estate.
This court is cognizant of the recent case of
Barber v. Barber,
The district court committed legal error in finding a general waiver. Gil did not waive his right to seek reimbursement of capital. The judgment will be rеversed.
Order of Relief
By his final assignment of error, Gil argues that this court should either enter
The appellate court should conduct an independent
de novo
review only when one or more trial court legal errors interdict the fact-finding process and the appellate record is otherwise complete.
S.J. v. Lafayette Parish School Bd.,
2009-2195 (La.7/6/10),
We therefore remand the case to the district court for such proceеdings as that court may deem appropriate to determine the proper amount of reimbursement. On remand, the parties and court are reminded that Ms. Whitelaw’s methodology was uneontradicted by any other expert evidence, but her calculations must reflect any missing check stubs or deposit slips which might possibly prove how much of Kim’s separate funds were applied to her separate proрerty. Also, as to the Hilly property, the claim is subject to La. C.C. art. 2373, in that each spouse must contribute to the expenses of the marriage; in the absence of a specific provision, “each spouse contributes in proportion to his means.”
Bergeon v. Bergeon,
02-158 (La. App. 5 Cir. 5/29/02),
Conclusion
For the reasons expressed, the judgment is affirmed insofar as it denied the exceptions of prescription and no cause of action; it is reversed | ^insofar as it found the agreement waived all reimbursement claims between the parties. The case is remanded for further proceedings in accordance with this opinion and the law. Trial and appellate costs are to be paid by the appellee, Kim Colvin Birch.
AFFIRMED IN PART, REVERSED IN PART, REMANDED.
Notes
. The couple had two daughters, born in April 1993 and in September 1996.