KPAX, LLC d/b/a Mid City Beer Garden v. Viking Concrete Floors, LLC and Jeremy Rowe ( 2023 )

NOT DESIGNATED FOR PUBLICATION
STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
2023 CA 0114
KPAX, LLC D/B/ A MID CITY BEER GARDEN
VERSUS
VIKING CONCRETE FLOORS, LLC AND JEREMY ROWE
DATE DE JUDGMENT.-
SEP 15 2023
ON APPEAL FROM THE NINETEENTH JUDICIAL DISTRICT COURT
PARISH OF EAST BATON ROUGE, STATE OF LOUISIANA
NUMBER 721324, SECTION 31
HONORABLE TIFFANY FOXWORTH-ROBERTS, JUDGE
Edward J. Laperouse, 11 Counsel for Plaintiff A
- ppellee
Christopher M. Patin KPAX, LLC d/ b/ a Mid City Beer
Bethany Breaux Percle Garden
Danny C. Picuo, Jr.
Baton Rouge, Louisiana
Sharon B. Kyle Counsel for Defendant -Appellant
Sebastian C. Ashton Jeremy Rowe
Danny Charles Picou, Jr.
Baton Rouge, Louisiana
BEFORE: GUIDRY, C,J., CHUTZ, AND LAMER, JJ.
Disposition. REVERSED AND REMANDED.
CHUTZ, I
Defendant, Jeremy Rowe, the sole member of Viking Concrete Floors, LLC
Viking) appeals a final default judgment holding him liable in solido with Viking
for damages allegedly resulting from poor workmanship by Viking in performing
work for plaintiff, KPAX, LLC d/b/ a Mid City Beer Garden ( Mid City). We reverse
and remand.
FACTUAL AND PROCEDURAL BACKGROUND
On November 4 and December 6, 2021, Viking ( a foreign limited liability
company) entered into written contracts with Mid City to perform certain work on
the floors at Mid City' s commercial property in Baton Rouge, Louisiana. Viking
was contracted to remove the existing floor sealers and to reapply a product provided
by Viking " to enhance the floor finish, and in certain areas, improve the flooring
surface friction." The total price of the two contacts was $ 11, 019. 00, of which Mid
City paid a deposit of $3, 673. 00.
Viking performed the contracted work on January 4- 5, 2022. In March 2022,
Viking received a demand letter from Mid City' s attorneys claiming the work
performed by Viking was defective and demanding correction of the defects. Mid
City withheld payment of the remaining $ 7, 346.00 due under the contracts.
Thereafter, on July 19, 2022, Mid City filed suit naming Viking and Mr. Rowe as
defendants. Mid City alleged Viking' s work was deficient in numerous respects
including that it exposed unsightly aggregates in the concrete not previously evident,
it created a slippery floor surface resulting in an unsafe condition for patrons and
employees, and the product applied on the floors was peeling and flaking in multiple
locations throughout the property. Mid City contended it would incur expenses,
consequential damages, court costs, and attorney fees of not less than $ 133, 240. 75
as a result of Viking' s breach of contract and negligence.
2
After being served on August 29, 2022, Mr. Rowe failed to file an answer or
any other responsive pleading. On September 27, 2022, Mid City filed a motion for
default judgment against Mr. Rowe.' To establish its claim against Mr. Rowe, Mid
City filed the affidavit of Mid City' s owner -agent Brian Baiamonte. In his affidavit,
Mr. Baiamonte stated that Viking' s defective work has required Mid City to incur
expenses of $3, 601. 71 in purchasing slip and fall mitigation supplies ( e.g., anti -slip
mats and carpets) in order to prevent slip and fall injuries, He further deposed that
Mid City would be required to spend not less than $ 44,000. 00 to repair Viking' s
defective work and would lose not less than $ 78, 049. 50 in sales revenues and
2, 250.00 in food spoilage during the approximately ten-day period Mid City would
have to be shut down while repairs were performed. Lastly, Mr. Baiamonte asserted
Mid City has incurred $ 11, 123. 65 in attorney fees, part of which was to defend
against a slip and fall claim that resulted from the hazardous floor condition created
by Viking' s defective work.
On October 6, 2022, the district court granted Mid City' s motion and signed
a final default judgment in favor of Mid City and against Mr. Rowe. The judgment
held Mr. Rowe liable in solido with Viking in the amount of $133, 240. 75, plus
11, 123. 65 for attorney fees, court costs, and legal interest compounded annually
from the date of judgment.2 Mr. Rowe has now appealed. In four assignments of
error, he argues the district court erred in finding Mid City established a prima facie
3
Viking was served with Mid City' s petition on July 27, 2022, and also failed to file an answer.
Mid City filed a separate motion for default judgment against Viking. On September 1, 2022, the
district court rendered a final default judgment in favor of Mid City and against Viking in the
amount of $133, 240. 75, plus attorney fees in the amount of $7, 851, 54, all court costs, and judicial
interest compounded annually from the date ofjudgment. The judgment against Viking is not part
of this appeal; nor is Viking a party to the instant appeal.
a The district court granted the default judgment against Mr. Rowe without holding a hearing in
open court. Pursuant to La. C. C. P. arts. 1702( B)( 1) and ( C) and 1702, 1, in certain instances,
including a suit on a conventional obligation, a district court has discretion to grant a motion for
default judgment without holding a hearing in open court if certain requirements are met. Given
our disposition of this appeal on other grounds, we express no opinion regarding whether it was
appropriate for the district court to grant a default judgment without a hearing under the
circumstances of this case,
3
case proving the existence and validity of its claims, in holding him personally liable
in solido with Viking, in awarding attorney fees when none were authorized by
statute or contract, and in awarding judicial interest and imposing in solido liability
with Viking when Mid City did not pray for such relief in its petition.
DISCUSSION
On appeal, Mr. Rowe argues Mid City failed to present admissible and
competent evidence establishing a prima facie case proving the existence and
validity of its claims. He contends the affidavit of Mr. Baiamonte, which was the
only evidence Mid City presented to establish its claims, was an " unsupported, self-
serving affidavit" containing " inexact and speculative figures" for the damages
allegedly sustained. Mr. Rowe further contends that, being merely a member of
Viking, an LLC, there was no evidence presented, or even allegations made against
him, which would support a personal judgment against him in this case. We agree.
In order to obtain a default judgment, a plaintiff must establish the elements
ofa prima facie case with competent and admissible evidence, as fully as though the
defendant had denied each of the allegations in the petition. The plaintiff must
present competent evidence that convinces the court it is probable he would prevail
on a trial on the merits in proving both the existence and the validity of his claim.
La. C. C. P. art. 1702( A); Arias v. Stolthaven New Orleans, L,L.C., 08- 1111 ( La.
515109), 9 So. 3d 815, 820; Sessions & Fishman a Liquid Air Corporation, 616
So. 2d 1254, 1258 ( La. 1993). Although there is a presumption that a default
judgment is supported by sufficient evidence, this presumption may be rebutted by
the record upon which the judgment is rendered. Id. In reviewing a default
judgment, the appellate court is restricted to determining the sufficiency of the
evidence offered in support of the judgment. This determination is a factual one
governed by the manifest error standard of review. Arias, 9 So.3d at 818.
E
In this case, even assuming arguendo that Mr. Baiamonte' s affidavit,
including his assertion that defects appeared shortly after Viking completed the
flooring work, was sufficient to establish a breach of contract by Viking, the
evidence presented was clearly insufficient to establish a prima facie case for the
damages claimed. In a breach of contract suit, the plaintiff has the burden of proving
any damage it suffered as a result of the alleged breach. In cases where a party must
obtain the services of another to complete the contractual obligations of the
breaching party, damages are assessed based on the loss sustained and any profit of
which the non -breaching party is deprived. La. C. C. arts. 1995 and 2769; L & A
Contracting Co., Inc. a Ram Indus. Coatings, Inc., 99- 0354 ( La. App. 1st Cir.
6/ 23/ 00), 762 So. 2d 1223, 1235, writ denied, 00- 2232 ( La. 11/ 13/ 00), 775 So. 2d 438.
The plaintiff must prove actual damages, however, and cannot merely claim
damages based on speculation or conjecture. It must appear reasonably certain that
the amount of damages sought by the plaintiff rests upon a certain basis. See
Payphone Connection Plus, Inc. v Wagners Chef,LLC, 19- 0181 ( La, App. 4th Cir.
7131119), 276 So3d 589, 598.
In his affidavit, Mr. Baiamonte claimed Mid City had already incurred
3, 601. 71 in slip and fall mitigation expenses due to the hazardous condition created
by Viking' s poor workmanship. No receipts or invoices for these alleged
expenditures were provided to the court, however. Mr. Baiamonte also claimed it
would cost Mid City not less than $ 44, 000. 00 to repair the floors, and it would lose
at least $ 78, 049. 50 in sales revenues and $ 2, 250. 00 in food spoilage during a forced
ten-day closure. Despite these claims, Mr. Baiamonte' s affidavit lacked any detail,
specificity, or explanation as to how these sums were calculated or why it would be
necessary for Mid City to be closed for ten days for repairs when the initial contract
work was completed in two days.
5
Mr. Baiamonte' s affidavit merely makes conclusory allegations as to the
amounts of damages Mid City allegedly sustained. Mid City provided no other
evidence to establish the claimed damages. Our review of the record reveals Mid
City failed to present evidence establishing a reasonable basis for the damages
awarded by the district court.' There is nothing in the record to show these damages
were based on anything other than speculation and conjecture. See Payphone
Connection Plus, Inc., 276 So. 3d 598. Accordingly, because Mid City failed to
make a primafacie case establishing its damages, an essential element of its claim,
the district court erred in granting a final default judgment in favor of Mid City.
Additionally, as Mr. Rowe correctly contends, the district court also erred in
finding Mid City presented a prima facie case supporting a judgment against him
personally. LLCs and their members are considered wholly separate entities. La.
C.C. art. 24: Charming Charlie, Inc. v. Perkins Rowe Associates, L.L.C., 11- 2254
La. App. 1 st Cir. 7110112), 97 So. 3d 595, 598. Generally, members of a LLC may
not be assessed with personal liability for the debts, obligations, or liability of the
LLC. See La. R.S. 12: 1320( B), Wilson v. Two SD, LLC, 15- 0959 (La. App. 1st Cir.
12123115), 186 So. 3d 103, 114. Under La. R.S. 12: 1320( D), there are only certain
narrowly defined circumstances" under which a member of a LLC may be held
personally liable. Specifically, the limitation of liability normally extended to a LLC
member is inapplicable if the member: ( 1) engages in fraud; ( 2) commits a negligent
or wrongful act; or (3) breaches a professional duty. Wilson, 186 So. 3d at 114.
3
Similarly, Mid City failed to support its claim for attorney fees with any invoices or other
documentation. Regardless, the award of attorney fees was also erroneous because there was no
basis for an award of attorney fees to Mid City either by statute or under the contracts between the
parties. While the contracts did provide for Mid City to pay Viking attorney fees in the event
collection of the contract price was necessary, the contracts did not provide for Mid City to receive
attorney fees from Viking. In Louisiana, an award for attorney fees is not allowed except when
authorized by statute or contract. Sher a Lafayette Insurance Company, 07- 2441 ( La. 418/ 08),
988 So. 2d 186, 201.
G
The fraud exception is inapplicable herein because Mid City' s petition
contains no allegations of fraud against Mr. Rowe. Moreover, to impose personal
liability on a member under the tort or wrongful act exception, the member must
owe a duty to the plaintiff that does not arise under the contract between the plaintiff
and the LLC. Wilson, 186 So. 3d at 114- 15. To do otherwise would negate the
general rule of limited liability established by La. R.S. 12: 1320. See Nunez v.
Pinnacle Homes, L.L. C., 15- 0087 ( La. 10/ 14/ 15), 180 So. 3d 285, 295. In this case,
Mid City has not showed Mr. Rowe owed any duty to it that arose outside of its
contracts with Viking. A showing of poor workmanship in performing a contract, in
and of itself, is insufficient to establish a " negligent or wrongful act" within the
meaning of La. R.S. 12: 1320( D). Wilson, 186 So. 3d at 115.
The final exception provided by La. R.S. 12: 1320( D) is the breach of a
professional duty by a LLC member. This exception has been interpreted to apply
only to one engaged in a profession specifically identified in Title 12 ofthe Louisiana
Revised Statutes ( e.g., lawyers, physicians, dentists, accountants, etc .).4 Wilson, 186So. 3d at 115. Contractors, including flooring contractors such as Mr. Rowe, are not
members of a profession identified in Title 12. Therefore, Mid City failed to
establish the breach of a professional duty exception was applicable herein. See
Nunez, 180 So. 3d at 292.
Nevertheless, Mid City argues the corporate veil should be pierced and Mr.
Rowe should be held personally liable because Viking failed to conduct its business
on a corporate footing. In particular, Mid City points out that Viking failed to follow
the statutory requirements of La R.S. 12: 1350. 1 and 12: 1354, which require LLCs
to file an annual report. In support of its claims, Mid City attached a printout from
the Louisiana Secretary of State' s office indicating Viking' s status was active, but it
4 See La. R.S. 12: 801 et seq.; La. R.S. 12: 901 et seq.; La. R.S. 12: 981 et seq.; and La. R.S. 12: 1011
et seq.
7
was not in good standing due to its failure to file an annual report, its last annual
report having being filed on December 21, 2021.
Under limited circumstances, personal liability can be imposed on an LLC
member under the jurisprudential doctrine of piercing the corporate veil. Fausse
Riviere, L.L.C. v. Snyder, 16- 0633 ( La. App. 1st Cir. 2/ 15/ 17), 211 So. 3d 1188,
1192. The determination of whether to allow piercing of the corporate veil is not
made, however, based on a single factor but by considering the totality of the
circumstances. Some circumstances that may point to a disregard of the corporate
identity are: ( 1) commingling of corporate and shareholder funds; ( 2) failure to
follow statutory formalities for incorporating and transacting corporate activities; ( 3)
under -capitalization; ( 4) failure to provide separate bank accounts and bookkeeping
records; and ( 5) failure to hold regular shareholder and director meetings. Fausse
Riviere, L.L. C, 211 So. 3d at 1193. In this case, Mid City' s argument that the
corporate veil should be pierced and Mr. Rowe held personally liable is based solely
on Viking' s failure to meet the statutory requirement of filing an annual report.
While the failure to follow statutory requirements is one of the factors to be
considered in determining whether to pierce the corporate veil, it is only one of the
numerous factors considered in making this determination. Mid City presented no
other evidence supporting its claim that Viking failed to conduct its business on a
corporate footing. Accordingly, Mid City failed to meet its burden of establishing
exceptional circumstances that warranted disregarding the concept of Viking as a
separate entity from its members. See Fausse Riviere, L.L.C., 211 So. 3d at 1192-
95. Standing alone, Viking' s failure to file an annual report was insufficient to
establish a prima facie case supporting the district court' s imposition of personal
liability on Mr. Rowe.
n.
CONCLUSION
For the reasons stated, the October 6, 2022 judgment of the district court is
reversed, and this matter is remanded for further proceedings consistent with this
opinion. All costs of this appeal are assessed to KPAX, LLC d/ b/ a Mid City Beer
Garden.
REVERSED AND REMANDED.
E