PETTIGREW, J.
Plaintiffs appeal the dismissal of their lawsuit as res judicata due to a prior arbitration. For the reasons set forth below, we reverse and remand.
According to the record, plaintiffs, Warren "Chip" Pierrotti and Elizabeth T. Pierrotti (collectively referred to hereafter as "Pierrotti"), and defendants, Glenn Lee Johnson and Kim Graham Johnson (collectively referred to hereafter as "Johnson"), were years ago partners in multiple business ventures. On January 15, 2004, Pierrotti and Johnson entered into a Master Settlement Agreement ("MSA") "to effect a settlement of all claims between the parties." It was the intent of the parties that by entering into the agreement, they were
For purposes of this litigation, the important section of the MSA is Agreement # 6, which sets forth the following:
When the parties entered into the MSA on January 15, 2004, both parcels of property listed in Agreement # 6 were mortgaged, and neither Pierrotti nor Johnson owned any equity in the properties. At some point in early 2005, Pierrotti sought to refinance the Cloverland property and arranged, in accordance with Agreement # 6, for Johnson to be "fully released as a maker and guarantor of notes and all other obligations associated" with the Cloverland property. As further intended by the MSA, Johnson executed a document entitled "Act of Donation" on February 28, 2005, transferring his ownership interest in the Cloverland property to Pierrotti.
As evidenced by documents in the record, Johnson transferred his ownership interest in the Cloverland property to Pierrotti, Johnson was released as a maker and guarantor on all loans and obligations associated with the Cloverland property, and Pierrotti secured a new mortgage on the Cloverland property, which paid off the existing mortgage. For the next 5 years, Pierrotti made monthly payments on the mortgage totaling over $200,000.00. Johnson never made a payment on the mortgage,
According to the record, however, there was a problem with the Nelson property in early 2005. Johnson was contacted by the bank holding the mortgage on the Nelson property and informed that the note was 90 days past due. At that point, Johnson began making monthly payments on the Nelson property. Arbitration was invoked to enforce Agreement # 6 of the MSA. The arbitrator found that pursuant to Agreement # 6 of the MSA, because Johnson had been called upon to make payment on the Nelson property, his obligation to transfer his ownership interest in the property was cancelled. Thus, the arbitrator ruled in Johnson's favor, cancelling Johnson's obligation to transfer his ownership interest in the Nelson property to Pierrotti. The award of the arbitrator was signed November 15, 2005. Pierrotti then transferred ownership of the Nelson property to Johnson in exchange for Johnson reimbursing Pierrotti the amounts Pierrotti expended for mortgage payments on the Nelson property after the MSA became effective.
Subsequently, on July 30, 2010, Pierrotti entered into a purchase agreement to sell the Cloverland property to a third party. During the buyer's due diligence period, their attorney, Brett Furr, noticed that the title company that handled the refinancing on the Cloverland property had failed to properly record the "Act of Donation" that Johnson had signed transferring his interest in the Cloverland property to Pierrotti. Mr. Furr also noticed that only one witness had signed the "Act of Donation." Mr. Furr contacted Johnson to obtain corrective documents. Mr. Furr was advised by Johnson's attorney that Johnson would sign whatever was needed to be signed "in order to uncloud the title." However, once Mr. Furr presented the documents for signing, Johnson refused to cooperate and acted to obstruct the sale.
On August 17, 2010, Pierrotti filed suit to clear the title to the Cloverland property and recover damages occasioned by Johnson's actions. Named as defendants were Johnson, Prestige Title, Inc., the company that handled the refinancing of the Cloverland property, and Stephen Colson, an employee of Prestige Title, Inc. Pierrotti sought a judgment finding that Johnson had transferred all ownership interest in the Cloverland property on February 28, 2005, and ordering that Johnson execute curative documents to formally notice the transaction. Pierrotti also requested damages for lost profits from the sale of the property and costs incurred relative to the lost sale.
In response to the petition, Johnson filed a general denial and exceptions raising the objections of res judicata and no cause of action. Johnson argued that the parties had previously arbitrated Agreement # 6 of the MSA, the section upon which Pierrotti based his alleged claims, and that the previous arbitration award between the parties barred Pierrotti's suit due to its res judicata effect. The parties subsequently filed competing motions for summary judgment. All of the matters proceeded to hearing before the trial court on April 4, 2011. After hearing argument from the parties, the trial court made the following observations:
Judgment was signed by the trial court on May 2, 2011, sustaining the exceptions of res judicata and no cause of action filed by Johnson and dismissing, with prejudice, Pierrotti's claims against Johnson.
The objection that a petition fails to state a cause of action is properly raised by the peremptory exception. La.Code Civ. P. art. 927(A)(5). The purpose of the peremptory exception raising the objection of no cause of action is to test the legal sufficiency of a pleading by determining whether the law affords a remedy on the facts alleged in the pleading. Ourso v. Wal-Mart Stores, Inc., 2008-0780, pp. 3-4 (La.App. 1 Cir. 11/14/08), 998 So.2d 295, 298, writ denied, 2008-2885 (La.2/6/09), 999 So.2d 785.
Generally, no evidence may be introduced to support or controvert the objection that the petition fails to state a cause of action. La.Code Civ. P. art. 931. However, as set forth in City Nat. Bank of Baton Rouge v. Brown, 599 So.2d 787, 789 (La.App. 1 Cir.), writ denied, 604 So.2d 999 (La.1992), the jurisprudence recognizes an exception to this rule, which allows the court to consider evidence which is admitted without objection to enlarge the pleadings. Treasure Chest Casino, L.L.C. v. Parish of Jefferson, 96-1010, p. 5 (La.App. 1 Cir. 3/27/97), 691 So.2d 751, 754, writ denied, 97-1066 (La.6/13/97), 695 So.2d 982. Otherwise, the exception is triable on the face of the pleadings, and, for the purposes of determining the issues raised by the exception, the well-pleaded facts in the petition must be accepted as true. Ourso, 2008-0780 at 4, 998 So.2d at 298. The court must determine if the law affords plaintiff a remedy under those facts. Stroscher v. Stroscher, 2001-2769, p. 3 (La.App. 1 Cir. 2/14/03), 845 So.2d 518, 523. Any doubts are resolved in favor of the sufficiency of the petition. Id.
An exception of no cause of action is likely to be granted only in the unusual case in which the plaintiff includes allegations that show on the face of the petition that there is some insurmountable bar to relief. Thus, dismissal is justified only when the allegations of the petition itself clearly show that the plaintiff does not have a cause of action or when its allegations show the existence of an affirmative defense that appears clearly on the face of the pleadings. Lyons v. Terrebonne Parish Consol. Government, 2010-2258, p. 6 (La.App. 1 Cir. 6/10/11), 68 So.3d 1180, 1183.
The burden of demonstrating that a petition fails to state a cause of action is upon the mover. Foti v. Holliday, 2009-0093, p. 6 (La.10/30/09), 27 So.3d 813, 817. In reviewing a district court's ruling sustaining an exception of no cause of action, appellate courts conduct a de novo review, because the exception raises a question of law, and the district court's decision is based only on the sufficiency of the petition. Torbert Land Co., L.L.C. v. Montgomery, 2009-1955, p. 4 (La.App. 1 Cir. 7/9/10), 42 So.3d 1132, 1135, writ denied, 2010-2009 (La.12/17/10), 51 So.3d 16.
As previously discussed, the trial court expressed in its oral reasons for judgment that because it was granting the res judicata exception, it found that the no cause of action of exception was moot. Even the parties seemed to believe that the trial court did not rule on the no cause of action exception at the hearing, as both appeal briefs make reference to the trial court's ruling on the exception as moot. However, in the May 2, 2011 judgment that has been appealed to this court, the trial court actually acted on the no cause of action exception and sustained same. We have reviewed the record before us and, accepting the well-pleaded allegations of fact in Pierrotti's petition as true, we are satisfied that Pierrotti has stated a valid cause of action to clear the title to the Cloverland property. Accordingly, the trial court's
Res judicata bars relitigation of a subject matter arising from the same transaction or occurrence of a previous suit. Avenue Plaza, L.L.C. v. Falgoust, 96-0173, p. 4 (La.7/2/96), 676 So.2d 1077, 1079; La. R.S. 13:4231. It promotes judicial efficiency and final resolution of disputes. Terrebonne Fuel & Lube, Inc. v. Placid Refining, Co., 95-0654, 95-0671, p. 12 (La.1/16/96), 666 So.2d 624, 631. Louisiana Revised Statutes 13:4231 provides for res judicata as follows:
The chief inquiry is whether the second action asserts a cause of action that arises out of the transaction or occurrence that was the subject matter of the first action. Avenue Plaza, L.L.C., 96-0173 at 6, 676 So.2d at 1080. However, the Louisiana Supreme Court has also emphasized that all of the following elements must be satisfied in order for res judicata to preclude a second action: (1) the first judgment is valid and final; (2) the parties are the same; (3) the cause or causes of action asserted in the second suit existed at the time of final judgment in the first litigation; and (4) the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matter of the first litigation. Burguieres v. Pollingue, 2002-1385, p. 8 (La.2/25/03), 843 So.2d 1049, 1053.
The burden of proving the facts essential to sustaining the objection is on the party pleading the objection. Union Planters Bank v. Commercial Capital Holding Corp., 2004-0871, p. 3 (La.App. 1 Cir. 3/24/05), 907 So.2d 129, 130. If any doubt exists as to its application, the exception raising the objection of res judicata must be overruled and the second lawsuit maintained. Denkmann Associates v. IP Timberlands Operating Co., Ltd., 96-2209, p. 8 (La.App. 1 Cir. 2/20/98), 710 So.2d 1091, 1096, writ denied, 98-1398 (La.7/2/98), 724 So.2d 738. The concept should be rejected when doubt exists as to whether a plaintiffs substantive rights actually have been previously addressed and finally resolved. Patin v. Patin, 2000-0969, p. 5 (La.App. 1 Cir. 6/22/01), 808 So.2d 673, 676.
When, as here, an objection of res judicata is raised before the case is submitted and evidence is received on the objection, the standard of review on appeal is traditionally manifest error. Leray v. Nissan Motor Corp. in U.S.A., 2005-2051, p. 5 (La.App. 1 Cir. 11/3/06), 950 So.2d 707, 710. However, the res judicata effect of a prior judgment is a question of law that is reviewed de novo. Fogleman v. Meaux
Pierrotti initially argues on appeal that the exception of res judicata was not properly before the trial court for review because Johnson failed to file a supporting memorandum citing relevant facts and applicable law in accord with Uniform Rules — Louisiana District Courts, Rule 9.9(a). In addition, Pierrotti contends that Johnson was required, as the objecting party, to introduce the entire record of the underlying proceeding in order that the trial court could make a determination as to whether res judicata was appropriate. See Middleton v. Livingston Timber, Inc., 2010-1203, pp. 3-4 (La.App. 1 Cir. 2/11/11), 57 So.3d 590, 592-593. We find no merit to these arguments.
As correctly pointed out by Johnson in brief to this court, there is nothing in Rule 9.9(a) to support Pierrotti's position that failure to file the required memorandum means the issue was not properly before the trial court. In fact, the only sanction found in Rule 9.9(a) for failure to file a supporting memorandum of law is that the offending party may forfeit the privilege of oral argument. Moreover, while the record is devoid of any memorandums either in support of or in opposition to the res judicata exception, there is nothing in the record to suggest that the trial court did not have sufficient evidence before it at the hearing on the exceptions to decide the issue. In fact, the trial court started its findings with the following: "The Court has carefully examined all the pleadings, the memorandums, exhibits and the law in connection with these exceptions...." Thus, we find no merit to Pierrotti's argument that the res judicata issue was not briefed by the parties and the trial court had insufficient evidence on which to base its ruling.
Next, Pierrotti argues that even if the trial court properly considered the res judicata issue, all the necessary elements of res judicata are not present in this case. Pierrotti contends that "while there may be an identity between the parties, it is not as clear as with the `cause' and there is clearly a different `thing' demanded." Pierrotti goes on to allege that although the underlying 2005 arbitration proceeding was predicated on the MSA, it dealt solely with the Nelson property and had nothing to do with the Cloverland property. We find merit to this argument.
Although it is clear that the underlying arbitration proceeding and the instant claim by Pierrotti both stem from the MSA (i.e., the arbitration proceeding dealt
For the above and foregoing reasons, we reverse the May 2, 2011 judgment of the trial court and remand for further proceedings consistent with this opinion. All costs associated with this appeal are assessed against defendants-appellees, Glenn Lee Johnson and Kim Graham Johnson.