J. Marion Matherne VS TWH Holdings, LLC
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2012 CA 1878 J MARION MATHERNE VERSUS f n T1NH HOLDINGS L C On Appeal from the 19th udicial District Court Parish of East Baton Rouge Louisiana Docket No 610 Section 22 401 Honorable Timothy E Kelley ludge Presiding ames S Holliday Jr Broussard III Baringer Law Firm Attorneys for Evest A The Appellant Plaintiff C L Marion Matherne Baton Rouge LA James C Percy David M Kerth Attorneys for Jones Walker Waechter Poitevent TWH Holdings L C Carrere Appellee Defendant Denegre L P Baton Rouge LA BEFORE PARRO WELCH AND DRAKE 77 Judgment rendered flEC o 2Q1 PARRO J J Marion Matherne appeals a judgment in favor of TWH Holdings L TWH C sustaining its peremptory exception raising the objection of res judicata and dismissing s Matherne claims alleging an ownership interest in TWH For the following reasons we affirm the judgment FACTUAL AND PROCEDURAL BACKGROUND On November 26 1991 J Marion Matherne the sole shareholder of K TEK Corporation K entered into a TEK Management and Control Agreement the 1991 Agreement with Tony W Harper to accompiish the eventual transfer of Matherne s ownership management and control of K to Harper Under the 1991 Agreement TEK the transfer was to be finalized at the end of 1996 at which time all payments under the 1991 Agreement would be paid in full all of Matherne shares in K would be s TEK returned to the corporation as treasury shares and Harper would become the sole owner of K Two key provisions of the 1991 Agreement stated the following TEK 17 Neither of the parties can sell transfer assign or e their ncumber stock in The Corporations K and M during the life of this TEC RISE TEC agreement except as herein contemplated or with the written consent of both parties to the contrary It is also agreed that neither parry will vote any stock they have in The Corporations for the purposes of allowing The Corporations to issue any additional shares of stock without the mutual written consent of those parties 18 At the end of the six year period of time commencing with January 1 1991 and assuming that all payments due hereunder have been made and all transfers of property have been accomplished and all the other terms and conditions as set forth herein are fully performed then Matherne will return all of his outstanding stock in Mand K RISE TEC TEK to The Corporations without further consideration being paid for same All of this stock will then become treasury stock in The Corporations Paragraph 19 of the 1991 Agreement stated that any disputes or decisions not settled by mutual agreement of the parties would be submitted to binding arbitration On December 27 1996 Matherne and Harper entered into a letter agreement the 1996 Agreement which addressed all the remaining issues between them that The 1991 Agreement also provided for the transfer of ownership management and control of another corporation M Inc under the same conditions That transfer is not at issue in this appeal RISE TEC 2 were based on the 1991 Agreement That letter stated 2 Upon receiving the payments described in paragraph 1 above you Matherne will return your shares of M and K to TEC TEK those corporations for cancellation as treasury shares At that time I Harper wil be the sole shareho of M and K der TEC TEK All the agreed payments under the two agreements were paid and Matherne upon surrendered his shares in the two corporations as required by both agreements In late 1997 Matherne asked K for certain payments that had not been TEK covered by either of the two agreements including money allegedly owed to him for equipment rental He also asked for accelerated payment of certain consulting fees that were to be paid to him under the 1996 Agreement K refused these requests TEK In succeeding months Matherne continued to assert that various obligations to him from the two agreements had not been resolved that Harper had breached certain verbal agreements between the parties and thaf he Matherne was prepared to take legal steps to regain his position and ownership of K TEK In order to resolve these demands on July 23 1999 K M and TEK TEC RISE Harper filed suit against Matherne in the Twenty Judicial District Court the 23rd Third JDC suit or the first suit seeking a deciaratory judgment to determine the rights status and other legal relations between the parties injunctive relief and damages Paragraph 10 of the petition in the 23rd JDC suit stated Matherne and Rita signed the 1996 Letter Agreement and all payment of the sums contemplated by the 1991 Agreement as amended and supplemented by the 1996 Letter Agreement were made to Matherne Matherne and Rita then surrendered the remaining shares in K and TEK TEC M for redemption and Matherne resigned all offices and positions with the corporations Matherne was then engaged as an as needed or at will consultant to K and as a at will non of M TEK n manager officer TEC in satisfaction of the obligation to provide meaningful employment to him pursuant to the 1991 Agreement Copies of the 1991 Agreement and 1996 Agreement were attached to the petition The Mathernes and MPS filed an answer in the 23rd JDC suit on December 3 1999 Paragraph 10 of their answer stated the following z Matherne and his wife Rita signed the 1996 agreement on January 2 1997 The 23rd JDC suit also named as defendants Matherne wife Rita and Modern Process Systems MPS s another corporation owned by the Mathernes 3 i The allegations of plaintiffs ekition paragraph no 10 are admitted in regards to the transfer of shares between the Mathernes and Harper However all other allegations of plaintiffs petition paragraph no 10 are denied In an amended answer filed March 17 2000 the Mathernes asserted a reconventional demand containing additional claims for monetary payments under the 1991 Agreement that they alleged had not been paid as agreed Eventually all parties to the 23rd JDC suit filed a motion to invoke alternative dispute resolution procedures seeking arbitration of their remaining disagreements Paragraph 3 of the motion stated The parties with the advice of counsel and after due and diligent inquiry into relevant facts and applicable law have identified the following matters as constituting all claims demands and causes of action between them hereafter the disputed matters and agree that any claim demand or cause of action not specifically identified herein shall be deemed forever waived and renounced The sole and only disputed matters between the parties concern the following 1 i The obligation if any of any party to pay and the right of any party to receive money pursuant to any provision of the agreement between J Marion Matherne and Tony lN Harper dated on or about November 26 1991 a copy of which is attached to the petition filed herein as Exhibit A hereafter referred to as the 1991 Management and Control AgreemenY as the same may be determined to have been modified by the letter agreement between J Marion Matherne Rita L Matherne Tony W Harper and Natalie Harper dated December 27 1996 and signed by the Mathernes on January 2 1997 a copy of which is attached to the petition filed herein as Exhibit B hereafter referred to as the 1996 Letter Agreement and 2 The claim if any of Modern Process Systems Inc against K TEK Corporation for the payment of money for fair rental or use of and necessary repairs to certain items of equipment owned by Modern Process Systems Inc and used by TEK K Corporation and 3 The obligation if any of any of the Harper Parties to Rita L Matherne on any unpaid instaliment promissory note There are no other disputed matters between any of the parties of any kind character or nature and to the e the ent same may exist such disputed matters are deemed forever waived and renounced Emphasis in the original The judge in the 23rd JDC suit signed a Consent Order pursuant to the motion regarding arbitration on April 4 2000 4 An arbitration proceeding was heid before Vincent P Fornias who rendered his decision on May 16 2000 rejecting all of the Mathernes demands and taxing all costs of the proceeding against them The Harpers moved for a judgment confirming the decision of the arbitrator and the aistrict court judge entered and signed such a judgment on July 25 2000 That judgment included certain injunctive relief in favor of the Harpers and K that had not been at issue in the arbifration and the Mathernes TEK moved for a new trial to have that injunctive language removed A new trial was granted and on September 25 2000 the judge in the 23rd JDC suit signed a consent judgment that confirmed the decision of the arbitrator and did not include the language concerning injunctive relief Among other things that judgment stated IT IS FURTHER ORDERED ADJUDGED AND DECREED THAT All other disputed matters relating to or connected with the 1991 Agreement or the 1996 Agreement asserted or assertable by any of J Marion Matherne Rita L Matherne or Modern Process Systems Inc on the one hand against or concerning any of Tony W Harper Natalie L Harper K Corporation or MInc on the other hand are TEK RISE TEC hereby dismissed with prejudice Almost twelve years later on March 21 2012 Matherne initiated the current litigation by filing suit in the Nineteenth 7udicial District Court the 19th JDC suit or the second suit against the successor corporation to K 11NH TEK In this suit Matherne claimed to be the owner of 4000 shares of stock in K as evidenced by a stock TEK certificate issued to him on December 6 1996 The petition also alleged that without s Matherne knowledge or consent on December 17 1999 K had merged with K TEK TEK L that following the merger K L was the survivor and that the C TEK C name of K L was changed in 2007 to WH Holdings L Matherne claimed TEK C C an equity interest in TWH and sought to have that recognized or to be bought out In response to this petition TWH filed e peremptory exception raising the objection of res judicata and seeking dismissal of Matherne sclaims On August 13 2012 the judge in the 19th JDC suit held a hearing on TWH s exception at which the entire record of the 23rd JDC suit was introduced as evidence Following that hearing in oral reasons for judgment the judge stated 5 I understand the case very very well A lawsuit was filed It was filed in the 23rd JDC The parties are the same in this lawsuit At issue in that lawsuit was among other things ownership of stock and monies due and owing by and between the parties under a 1991 and 1996 agreement They were put at issue Specifically put at issue were the transfer of the stocks The judgment issued by Judge Holdridge on September 25th of 2000 addresses afl af the money issues but then it adds it is further ordered adjudged and decreed that all other disputed matters relating to or connected with the 1991 Agreement or the 1996 Agreement asserted that means set forth in the 23rd lawsuit or assertable claims that could have been made that weren yet asserted by any of Marion t Matherne Rita Matherne or Modern Process Systems Inc on the one hand against or concerning any of Tony Harper Natalie Harper K TEK Corporation or MInc on the other hand are hereby dismissed RISE TEK with prejudice That means that all matters between the parties stock issues as well as money issues were raised and resolved either through the pleadings and arbitration in Suit Number 65 Division C of the or 186 23rd JDC It was in fact a final and valid judgment pursuant to Louisiana S 4231 R 13 and therefore res judicata does apply in this matter and I will grant the exception of res judicata dismissing the matter with prejudice I sign an order upon presentation Sir Thank you Costs ll assessed against Mr Matherne A judgment in accordance with these reasons was signed on August 23 2012 This appeal followed DISCUSSION Louisiana Revised Statute 13 states the following in pertinent part 4231 concerning the doctrine of res judicata Except as otherwise provided by law a valid and final judgment is conclusive between the same parties except on appeal or other direct review to the following extent 1 If the judgment is in favor of the plaintiff all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are e and merged ctinguished in the judgment Emphasis added The amendment of this statute by 1990 Louisiana Acts No 521 effective January 1 1991 made a substantial change in the law Under its provisions the central inquiry is not whether a second action is based on the same cause or cause of action a concept which is difficult to define but whether a second action asserts a cause of action that arises out of the transaction or occurrence that was the subject matter of the first action This serves the purpose of judicial economy and fairness by requiring the plaintiff to seek all relief and to assert all rights which arise out of the same transaction 6 or occurrence For purposes of res judi it v not matter whether the cause of ata rould action asserted in a second actian was the same as that asserted in the first or was different as long as it arose out of the transaction or occurrence that was the subject matter of the first action LSA 13 Comments Comment a So R 4231 1990 Under LSA 13 all of the foflo efements must be satisfied for res S R 4231 ving judicata to preclude a secor ackioni C1 the judgment is valid 2 the judgment is d final 3 the parties are the same 4 the cause or causes of action asserted in the second suit existed at the time of the final judgment in the first litigation and 5 the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matker af the firsk litigation Burguieres v Pollingue 1385 02 La 2 843 So 1049 1053 03 25 2d A judgment determining the merits of a case in whole or in part is a final judgment P C LSA art 1841 see also Tolis v Board of Sup of Louisiana State rs Univ 95 La 10 660 So 1206 A fnal judgment acquires the authority 1529 95 16 2d of the thing adjudged if no further review is sought within the time fixed by law Tolis 660 So at 1206 2d A confirmed arbitration award is considered to be a valid and final judgment for purposes of res judicata See In re Interdiction of Wriaht 10 La 1826 11 25 10 75 So 893 897 3d 98 There is no requirement that the claims be actually litigated for the doctrine of res judicata to appiy Leon v Moore 98 La App lst Cir 4 731 So 1792 99 1 2d 502 505 writ denied 99 La 7 747 So 20 Also although not explicitly 1294 99 2 2d stated in the amended statute the requirement that the parties be the same in order for a second suit to be precluded by operation of res judicata retains an identity of capacity component that was recognized under the former law That is under LSA S 4231 R 13 the parties are the same wh nthey appear in the same capacities in both suits Burguieres 843 So at 1054 TYuus the jurisprudence does not require that 2d 55 the parties in the two lawsuits be physically identical as iong as they share the same quality as parties Code v Deoartment of Pub Safet Corr 1i La App and 1282 7 lst Cir 10 103 So 1118 1125 v c 12 La 1 105 12 24 3d t r enied 2516 13 23 3d So 59 The doctrine of res judicata is not discretionary and mandates the effect to be given final judgments Diamond B Const Co Inc Department f Transp and Dev v 0573 02 La App 1st Cir 2 845 So 424 435 The burden of proving the 03 14 2d facts essential to sustaining the objection is on the party pleading the objection Union Planters Bank v Commercial Capital Holding Corp 04 La App lst Cir 3 0871 05 24 907 So 129 130 If any doubt exists as to its application the exception raising the 2d objection of res judicata must be overruled and the second lawsuit maintained Denkmann Assoc v IP Timberlands Operating Co Ltd 96 La App lst Cir 2209 98 20 2 710 So 1091 1096 writ denied 98 La 7 724 So 738 2d 1398 98 2 2d The res judicata effect of a prior judgmsnt is a question of law that is reviewed de novo Pierrotti v Johnson i1 La App 1st Cir 3 91 So 1056 1063 1317 12 19 3d 64 Applying these principles to the matter before us we note that the first two requirements of the statute the existence of a valid and final judgment are met For purposes of res judicata a valid judgment is one rendered by a court with jurisdiction over both the subject matter and the parties after proper notice has been given A final judgment is one that disposes of the merits in whole or in part The use of the phrase final judgment also means that the preclusive effect of a judgment attaches once a final judgment has been signed by the trial court and bars any action filed later unless the judgment is reversed on appeal S R 4231 1990 iSA 13 Comments Comment d see also Burguieres 843 So at 1053 In the matter before us the judgment in 2d the first suit was rendered in the 23rd JDC a cour twith subject matter jurisdiction and personal jurisdiction over the parties It confirmed the decision of an arbitrator which is considered to be a valid and final judgment for purposes of res judicata The judgment in the first suit was rendered aftet notice to the parties disposed of the merits of the suit and was not appealed Therefore it was a valid and final jud ment 8 i which met the first two requirements of LSA 13 S R 4231 With reference to the identity of the parties the first suit was filed by K M TEK TEC and Harper against Matherne his wife Rita and MPS The second action was filed by Matherne against TWH the successor corporation to K Identity of parties TEK is satisfied when a privy of one of the parties is involved Burguieres 843 So at 2d 1054 n In its broadest sense privity is the mutua or successive relationship to the 3 same right of property or such an identification in interest of one person with another as to represent the same legal right Five N Co L v Stewart 02 La App C 0181 lst Cir 7 850 So 51 61 Matherne was a party to both suits TWH a party 03 2 2d in the second suit was the successor corporation to K a party in the first suit TEC Therefore the third requirement of SA 13 is met and a valid and final S R 4231 judgment in the first suit has res judicata effect The fourth requirement of LSA 13 is that the cause or causes of action S R 4231 asserted in the second suit existed at the time of the finai judgment in the first litigation The claim asserted by Matherr in the second suit was that he had an e ownership interest in TWH based on an alleged ownership interest in K that was TEC evidenced by a certificate dated December 6 1996 showing him as the owner of 4000 shares of K stock The first suit was filed in July 1999 and the final judgment was TEC signed in September 2000 One of the issues in thak suit involved the ownership of K TEC and the transfer of that ownership interest from Matherne to Harper in 1996 Therefore Matherne claim of ownership in K as of 1996 existed at the time of the s TEC final judgment in the first suit Thus the fourth requirement of LSA 13 is S R 4231 satisfied The fifth requirement of LSA 13 is that the cause or causes of action S R 4231 asserted in the second suit arose out of the transaction or occurrence that was the This certificate was signed on December 6 1996 by J Marion Matherne as President of K and TEK Rita L Matherne as Vice President and Acting Secretary of K Other documents in the record show TEK that Rita was not authorized to sign as Secretary or Acting Secretary ak this time and that the wrporation had not voted to authorize the issuance of additional shares to Matherne at that time Moreover such issuance was an apparent breach of paragraph 17 of the 1991 Agreement since there was no mutual written consent by Matherne and Harper to such issuance 9 subject matter of the first litigation The subject matter of the first litigation was s Matherne ownership of K and the transfer of that ownership to Harper upon TEK satisfaction of obligations set forth in two agreements between the parties the 1991 Agreement and the 1996 Agreement The cause of action asserted by Matherne in the second suit is that he had an wnership interest in TWH as a result of an ownership interest in TEK K He sought to have that interest recognized by issuance of an appropriate stock certificate in TWH or in the alternative to have his membership interest valued as of the time of the merger of K into K L and to have TEK TEK C payment to him from TWH of cash or property equivalent to that value Thus the cause of action asserted in the second suit of K in 1996 resulting in ownership TEK ownership of TWH out of the transaction or occurrence of K arose transfer TEK ownership to Harper in 1996 was the subject matter involved in the first suit that Therefore all five requirements for the application of res judicata set out in LSA S R 4231 13 were satisfied in this case Moreover although there is no requirement that the claims in the second suit were actually litigated in the first suit for the doctrine of res judicata to apply we agree with the trial court that those claims were litigated in the first suit and were resolved by the September 25 2000 judgment which confirmed the decision of the arbitrator K s TEK petition in the first suit asserted that all of the payments required by the 1991 Agreement as amended by the 1996 Agreement had been made that Matherne had surrendered his remaining shares in K to the corporation as treasury shares and TEC that Harper was now the sole owner of K In his answer Matherne admitted the TEK allegations of the petition in regards to the transfer of shares between the Mathernes and Harper Therefore the transfer of Matherne K shares to Harper was no s TEC longer an issue in the litigation having been resolved by Matherne admission of that s fact The remaining issues concerned the satisfaction of the obligations in the 1991 and 1996 Agreements as well as the existence and enforceability of certain alleged oral agreements these were submitted to arbitration In their motion to invoke arbitration 10 both parties agreed that there were no other disputed matters between them of any kind character or nature and to the extent the same may exist such disputed matters were deemed forever waived and renounced The judgment rendered by the trial court in the first suit confirmed the decision of the arbitrator in favor of plaintiff K which decision had rejected and dismissed TEK all of Matherne claims against it on the issues submitted to arbitration As previously s noted that judgment further stated IT IS FURTHER ORDERED ADJUDGED AND DECREED THAT All other disputed matters relating to or connected with the 1991 Agreement or the 1996 Agreement asserted or assertable by any of J Marion Matherne Rita L Matherne or Modern Process Systems Inc on the one hand against or concerning any of Tony W Harper Natalie L Harper K Corporation or M Inc on the other hand are TEK RISE TEC hereby dismissed with prejudice Emphasis added By dismissing all disputed matters asserted or assertable between Matherne and K TEK related to or connected with the 1991 Agreement or the 1996 Agreement the court recognized and exercised the claim preclusion function of res judicata as set out in LSA 13 That function e all causes of action existing at the time S R 4231 inguishes of final judgment in the first suit whether asserted or not as long as those causes of action arose out of the transaction or occurrence that was the subject matter of the litigation In this judgment in the first suit the trial court also implicitly recognized and enforced the waiver and renunciation of any and all claims that either party may have against each other which was a condition of their agreement to arbitrate their disputes In the second suit which is before us in this appeal the trial court recognized that all matters between the parties including stock issues and money issues had been raised and resolved either through the pleadings and arbitration in the first suit or The court further noted that the judgment rendered in that suit was a final and valid judgment pursuant to LSA 13 and that therefore res judicata applied to the S R 4231 claims raised in the second suit Based on our de novo review of the record we agree with the judgment of the trial court which sustained the exception raising the objection of res judicata and dismissed all of Matherne claims with prejudice s 11 CONCLUSION For the above reasons the August 23 2012 judgment of the trial court is affirmed All costs of this appeal are assessed to J Marion Matherne AFFIRMED 12
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