JAMES F. McKAY III, Chief Judge.
Defendant, Keisha McKey ("McKey"), appeals the March 18, 2014 judgment of the trial court, granting summary judgment in favor of defendant-in-reconvention, Anthony Mason ("Mason"), and dismissing McKey's reconventional demand against Mason with prejudice.
McKey's New Orleans home was demolished following Hurricane Katrina. Thereafter, McKey purchased a new home kit from Valuebuild (not involved in this action), consisting of pre-cut construction materials such as structurally insulated panels ("SIPs"). On October 20, 2008, McKey contracted with Syzygy Construction, LLC ("Syzygy") to construct the Valuebuild home.
The record reflects that Syzygy was formed in 2006, and was issued a Louisiana Residential Contractor License in 2007. Mason and Marking were the sole managers and members of Syzygy, with Marking serving as the qualifying party on Syzygy's license.
Syzygy began work on McKey's home in March 2009. A dispute arose during construction, and the contract was terminated. Syzygy filed a petition for damages on open account alleging that McKey owed a balance of $30,249.62 on the contract. McKey answered and filed a reconventional demand against Syzygy, Mason, and Marking, alleging breach of contract, unfair trade practices, fraud, professional negligence, and negligent infliction of emotional distress.
At the heart of this matter, McKey asserts that Mason's acts of fraud and professional negligence subject him to personal liability pursuant to La. R.S. 12:1320(D).
Following oral argument and the introduction of evidence, the trial court granted Mason's motion for summary judgment and dismissed McKey's reconventional demand with prejudice. This appeal followed.
"A motion for summary judgment is a procedural device used when there is no genuine issue of material fact for all or part of the relief prayed for by a litigant." Samaha v. Rau, 2007-1726, p. 3
A motion for summary judgment is properly granted "if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, admitted for purposes of the motion for summary judgment, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law." La. C.C.P. art. 966(B)(2). "A fact is material if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute." Hines v. Garrett, 2004-0806, p. 1 (La. 6/25/04), 876 So.2d 764, 765 (per curiam) (citing Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La.7/5/94), 639 So.2d 730, 751). "A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate." Id. at p. 1, 876 So.2d at 765-66.
La. C.C.P. art. 966(C)(2) sets forth the burden of proof in summary judgment proceedings, providing:
See also Schultz v. Guoth, 2012-0343, p. 6 (La. 1/19/11); 57 So.3d 1002, 1006.
In granting summary judgment in favor of Mason, the trial court found no evidence of fraud or breach of professional duty. On appeal, McKey asserts that the trial court erred in finding that there was no genuine issue of material fact as to: 1) whether Mason committed fraud in the inducement to contract between McKey and Syzygy; and 2) whether Mason is subject to professional negligence.
Generally, the law considers an LLC and the member(s) comprising the LLC, as being wholly separate persons. Ogea v. Merritt, 2013-1085, p. 6 (La. 12/10/13), 130 So.3d 888, 894-895 (citing La. C.C. art. 24). Additionally, members of an LLC are immune from liability for the LLC's debts, obligations, and liabilities. La. R.S. 12:1320(B). However, this limited liability for members is subject to certain exceptions. La. R.S. 12:1320(D) provides that members of an LLC can be liable in their individual capacity if they: 1) commit fraud; 2) breach a professional duty; or 3) perform a negligent or wrongful act against another. See Ogea, supra, p. 8, 130 So.3d at 896.
McKey alleges that Mason (along with Marking) fraudulently induced her to enter into the contract with Syzygy by misrepresenting that the company had expertise and knowledge in new home construction using pre-cut panels (SIPs) as contained in the Valuebuild kit. In support of this assertion, McKey relies on the fact that Syzygy was a newly formed construction company in 2006, and that prior to 2006, Mason had only performed smaller remodeling jobs. Thus, McKey maintains that Mason misrepresented his expertise. McKey further asserts that proof of the misrepresentation is reflected in the poor workmanship, which she enumerates in her reconventional demand.
In opposition to McKey's claim of fraudulent inducement to contract, Mason presented his affidavit attesting to the fact that Syzygy was a licensed residential general contractor during the construction of McKey's home. Mason testified in his deposition that he started doing construction work in 2000 or 2001. He explained that he worked for a general contractor for a couple of years, and then began working with Marking on their own projects. When asked if he had experience with putting up SIPs, Mason unequivocally stated that he, together with the other individuals working on McKey's job, had installed pre-cut panels before. Regarding his participation on McKey's project, Mason's affidavit states:
The record reflects that McKey admitted in her deposition and in her reconventional demand that she chose Syzygy as her contractor after discovering (in early 2008) that Syzygy was building a Valuebuild-type home in another New Orleans neighborhood. This statement controverts McKey's assertion that Syzygy and Mason had no experience in the construction of homes with SIPs. The record also reflects that Marking testified in his deposition that although he was not familiar with Valuebuild as a brand, he had worked on other SIP constructed homes. Clearly, McKey presents nothing to dispute the fact that Mason had experience with SIP construction and that Syzygy was licensed to construct her home. McKey has not suggested that construction with SIPs requires a special license or particular expertise.
Regarding the definition of fraud as an exception to a member's limited liability, the Supreme Court explained:
Ogea, 2013-1085, p. 11, 130 So.3d at 897-898.
After our de novo review of the record, and considering the definition of fraud cited hereinabove, we find no evidence that Mason intentionally misrepresented or suppressed the truth regarding his knowledge and expertise in construction. In sum, the record fails to demonstrate any genuine issues of material fact as to whether Mason fraudulently induced McKey to contract.
Although McKey does not raise the third exception found in La. R.S. 12:1320(D), i.e., negligent or wrongful acts, we note that her fraud claim against Mason lies in allegations of poor workmanship. In Ogea, the Supreme Court specifically stated:
Ogea, 2013-1085, p. 25, 130 So.3d at 905-906.
Utilizing this same rational, we cannot say that poor workmanship establishes fraud on the part of the LLC member under La. R.S. 12:1320(D).
In addition to the fraud exception, McKey asserts that Mason should be held personally liable under the professional negligence exception in La. R.S. 12:1320(D). McKey submits that Mason breached his professional duty as a contractor because the work performed on her home fell below construction industry standards. We note that McKey cites no legal authority in support of this argument.
Mason counters, arguing that he does not fit the definition of "professional" as contemplated by La. R.S. 12:1320(D), relying on his undisputed assertions that he was not the qualifying party for Syzygy's general contractor's license, and that he held no construction license at the time in question. Mason further argues that he is not a professional as recognized by the Supreme Court in the Ogea case.
In Ogea, Ms. Ogea contracted with Merritt Construction, LLC to build a home. Mr. Merritt was the only member of the LLC. A dispute arose in connection with pouring the slab. Ms. Merritt filed suit against the LLC and against Mr. Merritt individually. The district court rendered judgment against both the LLC and Mr. Merritt, finding that Mr. Merritt personally performed some of the foundation work and failed to properly supervise the subcontractor who actually poured the concrete, providing grounds for Mr. Merritt's personal liability. The appellate court affirmed the imposition of personal liability on Mr. Merritt. The Louisiana Supreme Court granted writs to address the limitation of liability afforded to a member of an LLC, and reversed the lower courts' rulings.
Ogea, 2013-1085, pp. 12-14, 130 So.3d at 898-899.
In the present case, the record demonstrates that Mason was not the qualifying party on Syzygy's general contractor's license, and he held no contractor's license in his name. Under the circumstances, and applying the Court's reasoning in Ogea, we find that Mason was not a professional within the meaning of La. R.S. 12:1320(D), and thus, cannot be held personally liable for breach of professional negligence.
For the foregoing reasons, we find that the trial court properly granted the motion for summary judgment in favor of Mason and properly dismissed McKey's reconventional demand against him. Accordingly, the judgment is affirmed.
A. The liability of members, managers, employees, or agents, as such, of a limited liability company organized and existing under this Chapter shall at all times be determined solely and exclusively by the provisions of this Chapter.
B. Except as otherwise specifically set forth in this Chapter, no member, manager, employee, or agent of a limited liability company is liable in such capacity for a debt, obligation, or liability of the limited liability company.
C. A member, manager, employee, or agent of a limited liability company is not a proper party to a proceeding by or against a limited liability company, except when the object is to enforce such a person's rights against or liability to the limited liability company.
D. Nothing in this Chapter shall be construed as being in derogation of any rights which any person may by law have against a member, manager, employee, or agent of a limited liability company because of any fraud practiced upon him, because of any breach of professional duty or other negligent or wrongful act by such person, or in derogation of any right which the limited liability company may have against any such person because of any fraud practiced upon it by him.
