In Re: Reinstatement of CBG Investment Group, L.L.C.
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT N0 2009 CA 2150 IN RE REINSTATEMENT OF CBG INVESTMENT GROUP L C 7udgment rendered JUN 0 3 2010 Appealed from the 19th Judicial District Court in and for the Parish of East Baton Rouge Louisiana Trial Court No 580 345 Honorable Timothy E Kelley Judge I SCOTT E FRAZIER ATfORNEYS FOR CHRISTOPHER R RUIZEN APPELLEES PIAINTIFFS BATON ROUGE LA BREfT BAROUSSE BRUCE GRIZZAFFI JOHN CAPONE CBG INVESTMENTMENT GROUP C L LARRY M ROEDEL ATfORNEYS FOR JOSHUA B ZELDON APPELLANT INTERVENOR BATON GEORGE DANE BROUSSARD ROUGE LA BEFORE CARTER C GUIDRY AND PETTIGREW 7 PETTIGREW 7 The question presented by this appeal is whether the trial court ex parte order to s reinstate the corporate status of a limited liability company voluntarily d by ssolved affidavit pursuant to La R 12 constituted an abuse of discretion S 142 1 FACTS In early 2005 Brett Barousse Bruce Grizzaffi and John Capone formed CBG Investment C Group L CBG collectively defendants for the purpose of purchasing investing in and developing certain pieces of real estate and hopefully or selling those properties later for a profit Barousse Grizzaffi and Capone were the sole members of CBG with Barousse and Grizzaffi designated as managers of the company At some point it appears Barousse Grizzaffi and Capone offered George Dane Broussard a long acquaintance of Barousse an opportunity to purchase an time uncompleted home in the Wilderness at White Oak Subdivision Relying apparently on assurances given to him by Barousse Grizzaffi and Capone Broussard purchased the uncompleted home situated at 19423 River Breeze Drive Baton Rouge Louisiana from CBG on November 00 494 22 2005 for 507 After depositing a substantial down payment and financing the balance of the purchase price Broussard evidently hoped to promptly flip or resell the home and reap an immediate profit Following his purchase of the uncompleted home Broussard allegedly discovered substantial defects inciuding unfinished and substandard construction a large crack in the foundation a crack in the brick wall of the attached garage and a surrounding neighborhood generally unfinished and abandoned Due to these defects Broussard claimed he was unable to obtain Certificates of Occupancy and the property remained uninhabitable unrentable and unsellable Broussard eventually defaulted on his notes and the properly was ultimately foreclosed upon and sold at Sheriff ssale With no ownership interest in the properry a sizeable deficiency judgment and other losses Broussard filed suit in the 19 Judicial District Court on August 24 2006 2 alleging defendants sold him a materially defective house and thereaf failed to live up er to promises and assurances made to him regarding payment of the notes Alleging its financial ventures had been unsuccessful CBG ceased developing real estate for financial gain in 2006 Claiming CBG was devoid of any assets owned no immovable properry and owed no debts Grizzaffi in his capaciry as manager of CBG voluntarily dissolved CBG on April 15 2008 by filing an affidavit of dissolution with the Louisiana Secretary of State pursuant to La R 12 S 142 A 1 ACTION OF THE TRIAL COURT Evidently realizing that dissolution of CBG company charter exposed them to s potential personal liabiliry pursuant to La R 12 S 142 1the members of CBG instituted the present litigation on uly 14 2009 by filing an ex parte Petition for Reinstatement of CBG Investment Group LLC together with an attached order directing the Secretary of State to reinstate CBG as a viable Louisiana limited liability company As part of their petition for reinstatement the members of CBG disclosed that at the time of CBG s dissnlution Broussard lawsuit was pending in the 19th Judicial District and remained s unresolved Thereafter counsel of record for defendants informed Broussard through his attorney that a Petition for Reinstatement had been filed and forwarded him a courtesy copy of said petition The order directing the Secretary of State to reinstate CBG as a viable Louisiana limited liability company was signed by the trial court on July 21 2009 and then forwarded to the Secretary of State who reinstated CBG on July 28 2009 On July 30 2009 Broussard filed a Petition of Intervention pursuant to La Code Civ P art 1091 claiming the unilateral reinstatement of CBG would have a substantial impact on his ongoing lawsuit against defendants Broussard was thereafter granted leave of court to intervene in this matter 1 George Dane Broussard v CBG Investment Group L Brett Barousse Bruce Grizzaffi and C 7ohn Capone Docket No 546 Section 24 19th Judicial District Court Parish of East Baton Rouge 724 State of Louisiana 3 In response to Broussard intervention the members of CBG filed a peremptory s exception urging that as there was no pending action Broussard had no legal authority to intervene in this matter and as thus possessed no cause of action In the interim Broussard moved for and on September 30 2009 was granted a devolutive appeal from the order of reinstatement signed by the trial court on July 21 2009 Despite opposition from Broussard the trial court following a contradictory hearing signed a judgment granting defendants exception on October 15 2009 LAW AND DISCUSSION The Louisiana Business Corporation Law LBCL authorizes two methods for voluntarily dissolving a corporation out 1 by action of the corporation pursuant court of to La R 12 with the appointment of a liquidator or 2 by affidavit executed by S 142 the shareholders pursuant to La R 12 when the corporation is not doing S 142 1 business and has no debts This case involves the simplest and most convenient method of voluntary corporate dissolution by affidavit Louisiana Revised Statute 12 provides 1 142 1 142 Dissolution by affidavit A In addition to all other methods of dissolution if the corporation is not doing business owes no debts and owns no immovable property it may be dissolved by filing an affidavit with the secretary of state executed by the shareholders or by the incorporator if no shares have been issued attesting to such facts and requesting that the er Thereaf the shareholders or the corporation be dissolved incorporator if no shares have been issued shall be personally liable for any debts or claims if any against the corporation in proportion to their ownership in the shares of the corporation B The secretary of state shall reinstate a corporation which has been dissolved pursuant to this Section only upon receipt of a court order directing him to so reinstate the corporation Z As Broussard was an interested third person who could have intervened in the trial court prior to its signing of the order of reinstatement Broussard was granted a devolutive appea pursuant to La Cale Civ P art 2086 4 As this court has noted in two earlier opinions La R 12 is silent regarding S 142 1 several pertinent issues i what supporting evidence is necessary and sufficient in e or order for a court to reinstate corporate status and if a reinstatement is ordered whether a corporation is entitled to have the reinstatement declared to be retroactive See In re Reinstatement of Venture Associates Inc of Louisiana 00 p 4 App 1 0711 La Cir 2d 01 li 5 808 So 650 653 hereafter referred to as Venture I In re Reinstatement of Venture Associates Inc of Louisiana 04 pp 4 La App 0439 5 1 Cir 2d 05 li 2 906 So 498 500 hereafter referred to as Venture II In both of these prior opinions this court respectfully suggested that the legislature address the points left unanswered by La R 12 S 142 1 It should be noted that unlike the facts presented to this court in the Venture cases defendants in the present case apparently do not seek retroactive reinstatement of s CBG corporate status In the present case Broussard questions 1 whether Barousse Grizzaffi and Capone possessed the requisite authority to reinstate CBG and 2 whether the trial court abused its discretion in issuing an order for CBG reinstatement without an s evidentiary or adversarial hearing In his brief to this court Broussard cites and relies on Venture I as authority for the proposition that an ex parte motion for reinstatement of corporate status should not be granted absent an evidentiary hearing when there is an adversarial interest involved See Venture i 00 p 8 808 So at 655 0711 2d The opinion of this court in Venture I reveals following Venture sincorporation on June 3 1987 several of its employees filed Jones Act claims On May 18 1989 Venture filed a declaratory action in Iberia Parish seeking a determination on the issue of insurance coverage and later in 1992 amended its petition to name various insurance 3 In Venture I this court found o examination of the jurisprudence interpreting l R 12 ur a S 142 B 1 and related statutory provisions reveals there is no jurisprudential support for the proposition that Venture was clearly entitled to the ex parte order of retroactive reinstatement issued herein La Code Civ P art 963 Venture I 00 p 8 808 So at 655 Bold emphasis supplied Earlier in its opinion in 0711 2d Venture I this court noted w do not address prospective reinstatement as that issue is not before us in e this appeal Venture i 0711 00 n 2 808 So at 651 2d 5 entities including the appellants as defendants After settling with certain insurance entities Venture continued to pursue its case against appellants On August 11 1993 Venture stwo shareholders filed an affidavit to dissolve the corporation pursuant to La R S s A 1 142 12 Upon learning of Venture dissolution appellants filed exceptions raising the objection of no right of action and the district court in Iberia Parish granted appellants exceptions as to no right of action based upon proof of sdissolution Venture Thereafter Venture shareholders filed a written Motion for Reinstatement of s Corporate Status in St Mary Parish on January 12 2000 Said motion together with various attachments was submitted ex parte and no evidence was submitted in support of the motion The trial court signed an order the same date directing the reinstatement of Venture corporate status retroactive to August 11 1993 the date of its dissolution by s affidavit The appellants assigned as error the trial court granting of the ex parte motion s for Venture sretroactive reinstatement absent evidence in support of the motion In its opinion in Venture I this court noted La R 12 was silent not only as to the S 142 1 need for supporting evidence but more importantly as to the stockholders right to procure a retroactive reinstatement Venture I 00 p 4 808 So at 653 0711 2d Finding there was no statutory support for or against Venture entitlement to the ex s parte order for retroactive reinstatement this court then determined there was no controlling jurisprudence directly on point This court concluded Venture was not clearly entitled pursuant to La Code Civ P art 963 to the order of retroactive reinstatement issued ex parte by the trial court and further ruled that as the pleadings disclosed the existence of an adversarial interest the trial court should have held an evidentiary hearing Venture I 00 p 8 808 0711 2d So at 655 Accordingly this court vacated the order of reinstatement and remanded the matter for further proceedings 6 Broussard asserts this court should follow its earlier decision in Venture I and similarly vacate CBG order of reinstatement and remand to the trial court for further s proceedings Defendants respond with the argument that upon remand the parties in Venture I filed a new motion for reinstatement wherein an evidentiary hearing was conducted On hearing the new motion for reinstatement the trial court determined there was sufFicient evidence to allow for reinstatement of the corporation retroactive to the date of dissolution This court in Venture II upheld that determination finding that the desire to maintain a pending lawsuit in a corporation name is a valid and lawful purpose for s ordering the reinstatement of a corporation Venture II 04 p 7 906 So at 0439 2d 501 This court in Venture II further recognized Ithough s A Venture right of action may have ended when the corporation was dissolved by affidavit the cause of action against the appellants survived because the lawsuit was pending prior to the effective date of the dissolution One of two things must happen in order to maintain the Iberia Parish case originally brought by Venture against the appellants Either the proper party plaintiff must be substituted in the Iberia Parish case pursuant to La Code Civ P arts 692 and 700 or Venture corporate status must s be retroactively reinstated so that Venture can maintain the lawsuit Because we have already found that the trial court did not err when it issued the order reinstating Venture scorporate status we likewise find that it was not error to order that the reinstatement be retroactive to the date of the dissolution Venture II 04 pp 9 906 So at 503 Footnotes omitted 0439 10 2d Defendants further point out that CBG acknowledged the adversarial interest of Broussard in its Petition for Reinstatement and cite and rely upon La R 12 S 148 C which provides as follows C Upon issuance of the certificate of dissolution the corporate existence shall cease as of the effective date stated in the certificate except for the sole purpose of any action or suit commenced theretofore by or commenced timely against the corporation As Broussard litigation had commenced against CBG at the time CBG was s dissolved by affidavit pursuant to La R 12 defendants claim the corporate S 142 1 existence of CBG remained technically in effect pursuant to La R 12 S 148 Cand never ceased for purposes of Broussard ssuit against CBG At the close of their brief to this court defendants argue for the first time that there is no reason the reinstatement 7 of CBG should not be reinstated retroactivety to the date of dissolution Bold emphasis supplied After a thorough review of the record in this case we are mindful that th primary issue before this court is whether the trial court abused its discretion when it ordered reinstatement of CBG without conducting an evidentiary or adversarial hearing Accordingly we reject defendants contention that the holding of this court in Venture II can similarly be applied to the current stage of the present litigation for the reason that an evidentiary or adversarial hearing has not been held For the reasons previously expressed by this court in Venture I we conclude CBG was not clearly entitled pursuant to La Code Civ P art 963 to the order of retroactive reinstatement issued ex parte by the trial court and as the pleadings disclosed the existence of an adversarial interest the trial court should have held an evidentiary hearing Accordingly the trial s court order directing reinstatement of CBG corporate status is hereby vacated and this s matter is remanded to the trial court for further proceedings consistent with this opinion In the event reinstatement of CBG corporate status is ordered following an s evidentiary or adversarial hearing we express no opinion as to whether CBG is entitled to have said reinstatement declared to be retroactive but instead direct the trial court s attention to Butcher v Keith Hebert Carpentry Siding Inc 06 La Vinyl 672 App 3 Cir 12 945 So 914 916 and In re Reinstatement of North 06 20 2d 917 Louisiana Well Servicing Co Inc 597 So 160 162 La App 2 Cir 1992 2d CONCLUSION For the above and foregoing reasons the trial court order directing reinstatement s of CBG corporate status is hereby vacated and this matter is remanded to the trial court s 4 We further note that as this court observed in Venture II Some distinctions exist in the case before us For example the pending lawsuit is not one that was filed against Venture as is the case with the present litigation but rather was brought by Venture against appellants Most importantly Venture has no apparent corporate creditors that are protesting the reinstatement of its corporate status as is atso the case with the present litigation Venture II 04 pp 6 906 So at 501 Italics found in original 0439 7 2d 8 for further proceedings consistent with this opinion All costs associated with this appeal shall be assessed against defendants Brett Barousse Bruce Grizzaffi and John Capone ORDER VACATED MATTER REMANDED 9
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