The opinion
STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
21-349
NICOL EDWARD HANNIE
VERSUS
COLONIAL OAKS AL LAFAYETTE EMPLOYER, LLC, ET AL.
oR RE oR oR eo ok oe
APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20202779
HONORABLE EDWARD B. BROUSSARD, DISTRICT JUDGE
3 3 3 2s 2 ak 3 a 2 ok
VAN H. KYZAR
JUDGE
eRe RE Re
Court composed of Sylvia R. Cooks, Chief Judge, Van H. Kyzar, and J. Larry
Vidrine, Judges.
REVERSED IN PART AND RENDERED;
AND AFFIRMED IN PART.
" Honorable J. Larry Vidrine participated in this decision by appointment of the Louisiana
Supreme Court as Judge Pro Tempore.
Gregory J. Logan
The Logan Law Firm
P. O. Box 52704
Lafayette, LA 70505
(337) 406-9685
COUNSEL FOR PLAINTIF/DEFENDANT IN
RECONVENTION/APPELLANT/APPELLEE:
Nicol Edward Hannie
Eric R. Miller
Elizabetbh Bailly Bloch
The Kullman Firm, APLC
4605 BlueBonnet Boulevard, Suite A
Baton Rouge, LA 70809
(225) 906-4250
COUNSEL FOR DEFENDANT/PLAINTIFF IN
RECONVENTION/APPELLEE/APPELLANT:
Colonial Oaks AL Lafayette Employer, LLC
Colonial Oaks Senior Living Employer, LLC
KYZAR, Judge.
Both the plaintiff/defendant in reconvention, Nicol Edward Hannie, and the
defendant/plaintiff in reconvention, Colonial Oaks AL Lafayette Employer, LLC,
appeal from the trial court judgment awarding Mr. Hannie his unpaid accrued
vacation/sick leave pay, together with penalty wages and attorney fees pursuant to
La.R.S. 23:631 and La.R.S. 23:632. For the reasons set forth, we reverse in part
and render judgment and affirm in part.
FACTS AND PROCEDURAL HISTORY
The background of this dispute stems from the sale of two assisted-living
facilities located in Lafayette, Louisiana: Rosewood Retirement & Assisted Living
Community (Rosewood) and Cedar Crest Memory Care (Cedar Crest). Mr.
Hannie was a minority shareholder of Hannie Development, Inc. (Hannie
Development), the owner and operator of Rosewood, as well as Cedar Crest, LLC,
the owner and operator of Cedar Crest. Mr. Hannie had also been employed as
Rosewood’s director since its inception.
The buyers and subsequent operators of these facilities were all companies
owned and operated by Carl Mittendorff: Seniors Investments II, LLC (Seniors
Investments}; Colonial Oaks Assisted Living Lafayette, LLC; Colonial Oaks
Memory Care Lafayette, LLC; Colonial Oaks Senior Living, LLC; Colonial Oaks
AL Lafayette Employer, LLC (Colonial Oaks AL); Colonial Oaks MC Lafayette
Employer, LLC (Colonial Oaks MC); and Colonial Oaks Senior Living Employer,
LLC (Colonial Oaks SL). In the proceedings below, the parties were not clear as
to the exact involvement of each of these entities in the transactions and
subsequent operations of these facilities. Adding to the confusion is the fact that
the names of six of these entities began with “Colonial Oaks.”
On March 31, 2016, Seniors Investments entered into an asset purchase
agreement (APA) with Hannie Development for the purchase of Rosewood for
$10,642,500.00. It entered into a similar agreement with Cedar Crest, LLC for the
purchase Cedar Crest for $5,857,500.00. As part of the APAs, the parties agreed to
enter into “holdback escrow agreements” (HEAs), whereby Hannie Development
and Cedar Crest, LLC (collectively referred to as “the sellers”) would deposit four
percent of the gross purchase price into an escrow account, which funds were to be
held for a period of one year from the date of closing, a period known as the
survival period. These funds were to be held as security against any breach of a
survival-period obligation by the sellers that was raised by the buyers. In addition
to the outlined procedures for accessing the escrow funds, the HEAs provided that
the parties would resolve any disputes through non-binding mediation or, if
unsuccessful, through final, binding arbitration.
Although Seniors Investments executed the APAs as the buyer in both
agreements, it is not clear whether it remained the buyer in both transactions at the
December 1, 2016 closing. In the federal litigation spawned by these transactions,
Colonial Oaks Assisted Living Lafayette, LLC and Colonial Oaks Memory Care
Lafayette, LLC sued the sellers and their representatives, alleging claims for
breach of contract and breach of representations or warranties under the terms of
the APAs. Colonial Oaks Assisted Living Lafayette, L.L.C. v. Hannie Dev., Inc.,
972 F.3d 684 (Sth Cir. 2020). In the fifth circuit opinion, Colonial Oaks Assisted
Living Lafayette, LLC was identified as the buyer of Rosewood, and Colonial
Oaks Memory Care Lafayette, LLC was identified as the buyer of Cedar Crest.
Moreover, in a prior arbitration proceeding,’ the parties stipulated that Seniors
' Hannie Development, Ine. and Cedar Crest, LLC v. Colonial Oaks Assisted Living
Lafayette LLC and Colonial Oaks Memory Care Lafayette, LLC, AAA Case No. 0114-8-0-002-
2
Investments assigned its rights as buyer under the Rosewood APA to Colonial
Oaks Assisted Living Lafayette, LLC, and its rights under the Cedar Crest APA to
Colonial Oaks Memory Care Lafayette, LLC. Thus, we will refer to Colonial Oaks
Assisted Living Lafayette, LLC and Colonial Oaks Memory Care Lafayette, LLC,
collectively, as the buyers.
The instant appeal arises from a suit filed by Mr. Hannie on June 11, 2020,
against Colonial Oaks AL and Colonial Oaks SL (referred to collectively as
Colonial Oaks AL/SL). The action was brought as a summary proceeding pursuant
to the Louisiana Wage Payment Act, La.R.S. 23:631, et seq., which authorizes the
use of summary proceedings to enforce claims for unpaid wages. In his petition,
Mr. Hannie alleged that his employment as Rosewood’s director continued after its
acquisition by Colonial Oaks AL/SL, but that he was reassigned to the position of
community relations director two months later. He alleged that he resigned as
community relations director on May 31, 2017, and requested a transfer to another
position within the company. He asserted that rather than reassign him, Colonial
Oaks AL/SL terminated his employment. Mr. Hannie alleged that pursuant to the
employee handbook that governed his employment, he was owed accrued sick
leave and vacation pay upon his termination.
Mr. Hannie further alleged that Colonial Oaks AL/SL had “filed a claim
against its predecessor owner and claimed an offset reimbursement for a
substantial amount related to [his] accrued sick leave and vacation time.” He
asserted that as a result of Colonial Oaks AL/SL’s failure to pay him the amounts
due, he retained legal counsel and incurred legal fees and expenses. Thus, he
104. AAA is the acronym for the American Arbitration Association.
* As previously stated, Rosewood was actually acquired by Colonial Oaks Assisted
Living Lafayette, LLC.
asserted that he was entitled to payment for his accrued sick leave and vacation
time, penalty wages, attorney fees, costs, judicial interest, and any other legal and
equitable relief found just and proper.
In response, Colonial Oaks AL/SL filed multiple exceptions, an answer, and
a reconventional demand. The exceptions included peremptory exceptions of res
judicata and no cause of action and dilatory exceptions of unauthorized use of
summary proceedings and arbitrability.” In its answer, Colonial Oaks AL/SL
admitted that Mr. Hannie was previously an employee of Colonial Oaks AL, but
denied that he was employed by Colonial Oaks SL. It further admitted that Mr.
Hannie was terminated from his employment on May 31, 2017.
The matter was heard on November 2, 2020. Following the hearing on the
exceptions, the trial court denied Colonial Oaks AL/SL’s exceptions of res judicata,
unauthorized use of summary proceeding, no cause of action, and arbitrability.
Thereafter, the matter proceeded to a trial on the merits, after which the trial court
took the matter under advisement. On November 23, 2020, the trial court rendered
written reasons for judgment, granting judgment in favor of Mr. Hannie and
against Colonial Oaks AL“ and awarding Mr. Hannie $18,153.44 in accrued
vacation/sick leave, $35,517.60 in penalty wages, and $9,000.00 in attorney’s fees
for a total award of $62,671.04. A written judgment was rendered on December 29,
2020. Both parties have appealed from this judgment.
In its appeal, Colonial Oaks AL asserts the following assignments of error:
1. [T]he trial court err[ed] in overruling Colonial Oaks AL’s
peremptory exception of res judicata under Louisiana Code of
* Colonial Oaks AL/SL also filed a peremptory exception of prescription, which it later
voluntarily dismissed.
4 Although the judgment prepared by Mr. Hannie’s counsel was against both Colonial
Oaks AL and Colonial Oaks MC, the trial court struck through Colonial Oaks MC’s name. Thus,
the judgment was only rendered against Colonial Oaks AL.
4
Civil Procedure Article 927(A)(3) and Louisiana Revised
Statute 13:4231[.]
[T]he trial court errfed] in overruling Colonial Oaks AL’s
dilatory exception of unauthorized use of summary proceeding
under La. C.C.P. art. 926(A)(3)[.]
[T]he trial court errfed] in overruling Colonial Oaks AL’s
declinatory exception of arbitrability under La. C.C.P. art.
925(A)(6)[-]
[T]he trial court err[ed] in awarding judgment in favor of [Mr.]
Hannie for unpaid wages under La. R.S. 23:631[.]
[T]he trial court err[ed] in awarding judgment in favor of [Mr.]
Hannie for penalty wages under La. R.S. 23:632(A)[.]
[T]he trial court err[ed] in awarding judgment in favor of [Mr.]
Hannie for attorney’s fees under La. R.S. 23:632(C)[.]
On appeal, Mr. Hannie asserts three assignments of error, as follows:
l.
We will first address Colonial Oak AL’s appeal as several of its assignments
In its first assignment of error, Colonial Oaks AL argues that the trial court
The district court made an erroneous factual determination in
determining that [Colonial Oaks SL] was not an employer of
{Mr.]} Hannie.
The district court erred as a matter of law in attempting to cast
an unnamed defendant, [Colonial Oaks MC,] in place of named
defendant [Colonial Oaks SL] when the named defendant had
sent an employment offer and had issued the majority of the
paychecks representing the majority of [Mr. Hannie’s] salary
during his employment with Colonial Oaks.
The district court erred in omitting a named party from the
Judgment, [Colonial Oaks SL], from solidary liability when it
and the other defendants acted as a single business enterprise,
and it paid [Mr.] Hannie[’s] wages.
OPINION
Res Judicata
of error, if found to be meritorious, would result in a reversal of the trial court’s
judgment, mooting all other issues.
erred in overruling its peremptory exception of res judicata because the prior
5
arbitration dispute involving the sellers and the buyers resolved the dispute
between Mr. Hannie and Colonial Oaks AL/SL as to his entitlement to his accrued
vacation/sick leave benefits.
Louisiana Revised Statutes 13:4231 provides for the doctrine of res judicata
and forms the basis for the peremptory exception thereof in a subsequent action
between the parties.
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
extinguished and merged in the judgment.
(2) If the judgment is in favor of the defendant, all causes of
action existing at the time of final judgment arising out of the
transaction or occurrence that 1s the subject matter of the litigation are
extinguished and the judgment bars a subsequent action on those
causes of action.
(3) A judgment in favor of either the plaintiff or the defendant
is conclusive, in any subsequent action between them, with respect to
any issue actually litigated and determined if its determination was
essential to that judgment.
Appellate review of the exception requires a determination of whether the
trial court’s decision was legally correct. McCalmont v. McCalmont, 19-738
(La.App. 3 Cir. 4/29/20), 297 So.3d 1057. “The burden of proof is upon the
pleader to establish the essential facts to sustain the plea of res judicata.” Jans.
Assocs., Inc. v. Francis Camel Constr., Inc., 95-1955, p. 3 (La.App. 1 Cir. 5/10/96),
673 So.2d 687, 689. At the hearing on the exception, “evidence may be introduced
to support or controvert any of the objections pleaded, when the grounds thereof do
not appear from the petition.” La.Code Civ.P. art. 931. When evidence is
introduced in support of the exception, “the trial court’s factual findings are
a
reviewed pursuant to the manifest error—clearly wrong standard of review.’
Richard y. Taylor, 15-681, p. 7 (La.App. 3 Cir. 12/9/15), 179 So.3d 975, 981.
Colonial Oaks AL/SL introduced the following evidence in support of its
exceptions: the Cedar Crest APA,’ which included the arbitration provisions;
Rosewood’s employee handbook (the Handbook); and excerpts from the
arbitrator’s April 25, 2019 partial final award (arbitration ruling) and Mr. Hannie’s
testimony from that proceeding.
At the close of the hearing, the trial court orally denied Colonial Oaks
AL/SL’s res judicata exception after finding that Mr. Hannie was not a party to the
arbitration proceeding. [n its written reasons, the trial court reiterated this finding
in addition to finding that “there was no evidence that the arbitrator’s partial final
award had been confirmed by a court, as contemplated by La.R.S. 9:4212.”
While we agree that Mr. Hannie was not a party to the arbitration proceeding,
we further find that neither Colonial Oaks AL/SL were parties to that proceeding.
As stated by the supreme court, in Khammash v. Clark, 13-1564, p. 15 (La. 5/7/14),
145 So.3d 246, 257, “a previous judgment can only preclude an issue against a
party that actually participated in the litigation[.]” According to both the
arbitration ruling and the fifth circuit opinion, the parties involved in those matters
were Hannie Development, Cedar Crest, LLC, Colonial Oaks Assisted Living
Lafayette, LLC, and Colonial Oaks Memory Care Lafayette, LLC. Moreover, in
taking judicial notice of the Louisiana Secretary of State’s website, as allowed by
La.Code Evid. art. 201, we note that Colonial Oaks Assisted Living Lafayette,
LLC, Colonial Oaks Memory Care Lafayette, LLC, Colonial Oaks Senior Living,
° Because the APAs were basically identical, Colonial Oaks introduced only one
agreement.
LLC, Colonial Oaks AL, Colonial Oaks MC, and Colonial Oaks SL are all separate
entities with which Mr. Mittendorff is involved.
Based on our finding that none of the parties involved in this matter were
parties to the arbitration proceeding, we affirm the trial court’s denial of Colonial
Oaks’ peremptory exception of res judicata.
Lack of Subject Matter Jurisdiction
In its third assignment, Colonial Oaks AL argues that the trial court erred in
denying its declinatory exception of lack of subject matter jurisdiction because Mr.
Hannie’s claim for unpaid wages originated from the APAs, which are governed
by arbitration. We disagree.
In Collins v. Prudential Insurance Co. of America, 99-1423, pp. 9-10 (La.
1/19/00), 752 So.2d 825, the supreme court determined that before a district court
grants an exception or stays a proceeding to require arbitration, it must make two
preliminary determinations: “First, the trial judge must ensure that a valid
arbitration agreement between the parties exists. Second, the judge must decide
whether the dispute at issue falls within the scope of the agreement.” /d. at 831.
It is “well-settled” law that “the existence of a contract is a
finding of fact, subject to the manifest error standard of review.”
Mark A. Gravel Props., LLC v. Eddie’s BBQ, LLC, 14-46, p. 7
(La.App. 3 Cir. 5/7/14), 139 So.3d 653, 658, (citing Dubois Const. Co.
v. Moncla Const. Co., Inc., 39,794 (La.App. 2 Cir. 6/29/05), 907
So.2d 855). Thus, this court cannot set aside the trial court’s finding
that no contract existed between these parties unless we find the trial
court was clearly wrong or manifestly erroneous. Coffman Homes,
L.L.C. v. Sutherland, 10-178 (La.App. 5 Cir. 2/15/11), 60 So.3d 52,
writ denied, 11-10111 (La.6/24/11), 64 So.3d 223.
Bayou Rapides Corp. v. Dole, 14-906, pp. 5-6 (La.App. 3 Cir. 5/27/15), 165 So.3d
373, 377.
Based on our finding that Rosewood/Cedar Crest were actually purchased by
Colonial Oaks Assisted Living Lafayette, LLC/Colonial Oaks Memory Care
Lafayette, LLC, we find that neither Mr. Hannie nor Colonial Oaks AL/ SL were
8
bound by the APAs’ arbitration provisions. While Mr. Hannie may have testified
in the arbitration proceeding, no evidence established that he was a party to the
APAs or that he agreed to be bound, individually, by their terms. Furthermore,
although Mr. Mittendorff and his counsel never specifically identified the actual
buyers of Rosewood/Cedar Crest, Mr. Mittendorff, when testifying as Colonial
Oaks AL/SL’s representative, stated, “We never actually owned the Lafayette
properties.”
In its reasons for judgment, the trial court stated that it “overruled Colonial
Oaks’ exceptions based on the asset purchase agreement, because Mr. Hannie was
not a party to the agreement, and there is no evidence to support ‘piercing the
corporate veil.’” As we previously determined, none of the parties in this matter
were signatories to the APAs. Accordingly, it was not manifest error for the trial
court to find that no valid contract of arbitration existed between the parties. The
judgment of trial court denying the exception of lack of subject matter is affirmed.
Use of Summary Proceedings
In its second assignment of error, Colonial Oaks AL asserts that the trial
court erred in overruling its dilatory exception of unauthorized use of summary
proceeding. In arguing that the use of summary proceedings was inappropriate in
this instance, Colonial Oaks AL again asserts that the APAs’ provisions govern
this matter, and because this matter involves contract interpretation and application,
the rules of ordinary proceedings apply.
Specifically, Colonial Oaks AL asserts that rather than being an action to
recover unpaid wages, “Hannie’s request for unpaid wages is governed by terms of
the APAs between Cedar Crest and Seniors Investments II, and between [Hannie
Development] and Seniors Investments II, sale contracts of which the [sic] Hannie
was a party.” It further argues, “Additionally, the HEAs attached to these contracts
9
controlled whether Hannie was due any unpaid wages by his prior employer before
Senior Investments I] acquired Rosewood and Cedar Crest.”
The procedural rules applicable in summary proceedings are found in
La.Code Civ.P. arts. 2591-2596. Summary proceeding are ones “which are
conducted with rapidity, within the delays allowed by the court, and without
citation and the observance of all the formalities required in ordinary proceedings.”
La.Code Civ.P. art. 2592. Although La.Code Civ.P. art. 2591 sets out twelve
specific situations in which summary proceedings are appropriate, it further
provides that summary proceedings are appropriate in “[a]ll other matters in which
the law permits summary proceedings to be used.” La.Code Civ.P. art. 2592(13).
Summary proceedings are specifically authorized for claims involving unpaid
wages. La.R.S. 23:631(B). As Mr. Hannie’s suit raises a claim for unpaid wages,
we find no error in the trial court’s denial of Colonial Oaks AL/SL’s dilatory
exception of unauthorized use of summary proceedings.
Unpaid Wages, Penalty Wages, and Attorney Fees
In its fourth, fifth, and sixth assignments of error numbers, Colonial Oaks
AL argues that the trial court erred in finding that Mr. Hannie was entitled to
$18,153.44 in unpaid wages, $35,517.60 in penalty wages, and $9,000.00 in
attorney fees. As each of these issues revolve around the propriety of the award
for unpaid wages, we will address them together.
Colonial Oaks AL first argues that the trial court erred by awarding Mr.
Hannie $18,153.44 in unpaid wages for the vacation/sick leave accrued by him
during his employment with Hannie Development. It argues that pursuant to the
Rosewood APA and a November 30, 2016 letter, Mr. Hannie’s employment with
Hannie Development terminated effective that date, whereupon he started a new
term of employment with it on December |, 2016, and, as such, was subject to its
10
employee policies.” Colonial Oaks AL further argues that although it adopted the
Handbook in the absence of its own handbook, Mr. Hannie, as a new employee,
was not entitled to accrued vacation/sick leave because his employment started
anew and lasted less than a year before his resignation.’
The Louisiana Wage Payment Act, La. R.S. 23:631, et seq., is
designed to compel prompt payment of earned wages upon an
employee’s discharge or resignation. Molina v. Oilfield Production
Contractors, Inc., 17-0455, p. 2 (La. App. Ist Cir. 12/29/17), 241
S0.3d 337, 2017 WL 6629235. The main purpose of the wage
payment law is to compel an employer to pay the earned wages of an
employee promptly after his dismissal or resignation and to protect
discharged employees from unfair and dilatory wage practices of
employers. Molina, 17-0455 at p. 3, 241 So.3d at 339.
Specifically, La. R.S. 23:631(A)(1)(a) provides that upon
discharge of an employee, the employer shall “pay the amount then
due under the terms of employment. . . on or before the next regular
payday or no later than fifteen days following the date of discharge,
whichever occurs first.” Furthermore, any employer who fails or
refuses to comply with the provisions of La. R.S. 23:631 shall be
liable to the employee either for ninety days wages at the employee’s
daily rate of pay or full wages from the time the employee demands
payment until the employer pays or tenders the amount of unpaid
wages due to such employee, whichever is the lesser amount of
penalty wages. La. R.S. 23:632(A).
Accordingly, to prove entitlement to penalty wages under La.
R.S. 23:632, the employee must prove: (1) that wages were due and
owing, (2) that demand for payment was made at the place where the
employee was usually paid, and (3) that the employer failed to pay
upon demand. Kern v. River City Ford, Inc., 98-0407, pp. 8-9 (La.
App. Ist Cir. 2/19/99), 754 So.2d 978, 983. Louisiana Revised
Statute 23:632 is penal in nature and, therefore, must be strictly
construed. Pokey v. Five L Investments, Inc., 96-0018, p. 5 (La. App.
Ist Cir. 9/27/96), 681 So.2d 489, 492.
Haber v. Ocean Canyon Properties, Inc., 17-1472, p. 5 (La.App. 1 Cir. 5/31/18),
251 So.3d 454, 458.
6 However, the letter states that all of the sellers’ employees would be employed by
Colonial Oaks SL, which was identified as Mr. Mittendorff’s management company.
‘ Colonial Oaks AL asserts that Mr. Hannie resigned from his employment, whereas Mr.
Hannie claims that his employment was terminated. Whether Mr. Hannie resigned or was
terminated is irrelevant under La.R.S. 23:631(A), as an employee ts entitled to unpaid wages in
either situation.
11
The amount due an employee in unpaid wages includes accrued vacation pay
if, pursuant to the employer’s vacation policy, the employee is “eligible for and has
accrued the right to take vacation time with pay[]” but “has not taken or been
compensated for the vacation time as of the date of the discharge or resignation.”
La.R.S. 23:631(D)(1). A trial court’s determination that unpaid wages, penalty
wages, or attorney fees are due an employee are findings of fact that will not be
reversed on appeal absent manifest error or unless its finding is clearly wrong. Red
Ball Oxygen, Inc. v. Swilley, 11-787 (La.App. 3 Cir. 12/7/11), 82 So.3d 360.
However, where one or more legal errors interdict the fact-finding
process, the manifest error standard no longer applies. Campo v.
Correa, 2001-2707 (La. 6/21/02), 828 So. 2d 502, 510. A legal error
occurs when a trial court applies incorrect principles of law and such
errors are prejudicial. Legal errors are prejudicial when they
materially affect the outcome and deprive a party of substantial rights.
Evans v. Lungrin, 97-0541 (La. 2/6/98), 708 So. 2d 731, 735. When
such a prejudicial error of law skews the trial court’s finding of a
material issue of fact and causes it to pretermit other issues, the
appellate court is required, if it can, to render judgment on the record
by applying the correct law and determining the essential material
facts de novo. Id.
Brehm v. Amacker, 19-1452, pp. 6-7 (La.App. 1 Cir. 9/21/20), 314 So.3d 58, 62,
writ denied, 20-1224 (La. 1/26/21), 309 So.3d 343.
Mr. Mittendorff, the chief executive officer, representative, and manager of
both Colonial Oaks AL/SL, never identified the actual buyers of Rosewood/Cedar
Crest, although he testified that they were purchased by an affiliated company
owned by him. He further stated that as the buyers’ authorized representative, he
negotiated the terms of the APAs with Mr. Hannie’s brother, Maurice, but that Mr.
Hannie was in on every call during the negotiations.
According to Mr. Mittendorff, the APAs required the sellers to deposit four
percent of the purchase price into HEAs, which would be administered by third-
party escrow agents. He stated that the deposited amounts from both sales, totaling
$616,000.00, was to be held as security against any claims raised by the buyers
12
subsequent to the transactions’ closing date. He stated that the APAs further
required that the “seller was to give buyer a credit for all of the approved employee
benefit costs.” The APAs defined accrued employee benefits as “[a]ccrued
vacation, sick time, and other approved paid time off which information shall be
provided by seller on a schedule within ten (10) business days of the effective
date .. . related to hired employees, if any, with respect to which Buyer receives a
credit in accordance with the provisions of Section 6.3 (g) hereof.”
Mr. Mittendorff testified that the November 30, 2016 letter, which he
described as a form letter, was sent to all of the sellers’ employees, informing them
about the December 1, 2016 transfer of ownership. The letter, which was sent out
by Colonial Oaks Senior Living, LLC, provided:
In connection with this transition, you will be terminated effective
immediately from your existing employer, however, we are pleased to
offer you (as well as all other employees) the same position within
Colonial Oaks Senior Living Employer, LLC. Your employment will
be automatically transitioned without interruption. Additionally, you
are eligible for paid time off and other leave in accordance with the
company’s normal practices and policies.
In regard to the letter, the following colloquy occurred between Colonial Oaks
AL/SL’s counsel and Mr. Mittendorff:
Q. In the second paragraph, the last sentence indicates,
additionally, you’re eligible for paid time off and other leave in
accordance with the company’s normal practices and policies?
A. This is a form letter.
Q. Which company are you referring to? Is that Colonial, the new
employer or the old employer?
A. The new employer. This is a form letter. We make it explicitly
clear to employees that we intend to honor their tenure and their
existing accrued vacation and time off, et cetera because
remember, these are all new employees for us.
So in this case, we did not state that we would be giving any
credit to any employees’ accrued benefits. And that was a
business decision we had a right to make and we made it. In
13
the policy, only one that knew because of his position as the
seller, that we actually got a credit from the buyer for those
benefits. This was a transaction. There were a lot of
debits/credits from a business prospective.
This was the letter that made it very clear to employees that we
will let them know what our benefits plan is. And it’s going to
be in accordance with our company normal practices, not the
seller’s and not their former employer’s practices.
Mr. Mittendorff testified that had Colonial Oaks AL intended to honor the
benefits accrued by these employees from their prior employment, it would have
said so in the letter. He stated that when the employees were terminated by the
sellers, “anything that they had as an arrangement with that employer was the
seller’s business.” With regard to their employment with the buyers, he further
testified:
[W]e rehired them the date that we took over. And we actually
rehired them under two specific Louisiana entities — employers for
multiple reasons, including Louisiana insurance purposes. And we
notified all of the employees of that and they saw that on their check.
Before, it was a very — I think the only — rare exceptions that because
we had to allocate them between the two communities, that we
actually, for a time period — but he was never an employee of that
company. He was an employee of the Rosewood/Cedar Crest
employers.
Mr. Mittendorff testified that subsequent to the closing, the buyers entered
into arbitration with the sellers pertaining, in part, to their failure to pay the
accrued-employee-benefit credit. He said that one of the issues in that proceeding
was whether the buyers were entitled to a credit for the excessive amount of
vacation/sick leave accrued by Mr. Hannie prior to the sale. He claimed that prior
to the sale, Mr. Hannie directed that his accrued vacation/sick leave hours be
increased to more than he was otherwise eligible for under the Handbook.
The Handbook contained the following vacation/sick leave and termination
policies:
14
VACATION - At the end of one year of continuous employment,
employees will be eligible for a paid vacation of | week. At the end
of two years of continuous employment, employees will be eligible
for 2 weeks paid vacation. At the end of five years of continuous
employment, employees will be eligible for three weeks paid vacation.
Vacation must be taken within the year after vacation time is earned
and cannot be caried over to following year. Vacation time is capped
at 3 weeks for all employees. Timing of vacations is the
responsibility of the supervisor, however, requests for vacation dates
will be honored whenever possible. Each employee is expected to
take the vacation time earned and additional salary will not be paid in
lieu of vacation.
SICK LEAVE — After 3 months of full time employment employees
are eligible for sick leave at the rate of 1/2 day per month. Sick days
may be accumulated up to 36 days.
Bonus: Sick leave in excess of 36 days may be converted to
vacation days at a rate of 2 sick leave days for 1
vacation day (not to exceed 5 vacation days per year).
5. Sick leave will not be paid as terminal leave.
TERMINATION:
An employee is expected to present written notice of resignation to
his/her supervisor at least 2 weeks before the termination date.
Failure to give proper notice may result in forfeiture of accrued
vacation allowances. Accrued vacation benefits, when applicable,
will be paid.
Mr. Mittendorff testified that the policy capped the amount of vacation an
employee could accrue based on the length of their employment:
There’s caps on it, depending on how long you worked for seller.
And basically, as a buyer, what this boils down to is how much money
we get from the seller in our pocket as the buyer. And then we make
a separate business decision with respect to the new hires and the new
employees going forth.
So what this boiled down to really was understanding what the
current employees’ benefits were and then knowing where they’re
going to vary between what we choose to offer our future employees
when we hire them and our benefit package includes how much
15
vacation they get. So for us, we understood their handbook was — and
that amounts to a number the seller gives the buyer and we make the
decisions for the employees going forward.
According to the April 7, 2016 Paid Time Off List provided by the sellers to the
buyers, Mr. Hannie had accrued 852 vacation hours and 332.70 sick leave hours.
Mr. Mittendorff testified that although the arbitrator found that the seller
owed the buyer a credit for the total amount of accrued employee benefits, the
amount owed for Mr. Hannie’s accrued benefits was reduced from $61,302.39 to
$20,126.64, after his vacation/sick leave were reduced to 120 hours and 288 hours,
respectively, the maximum allowed by the Handbook. He further testified that
although the arbitrator held that the sellers owed the buyers a credit for the accrued
employee benefits, he never found that the buyers owed Mr. Hannie his accrued
employee benefits. He stated:
Mr. Hannie isn’t due any of the accrued vacation and sick leave
because the buyer and seller reached economic terms in the agreement.
That’s completely separate. There’s no obligations under the APA for
the buyer to have paid out any employee benefits to employees.
There’s no obligation in the APA. It’s a separate transaction. And
you’re aware of that. These are separate transactions. When we
offered Nicol Hannie employment, we offered him employment on
certain terms. What we chose to do is honor the handbook, but treated
him as a new employee. So his employment started with us Day 1. I
think it’s December 4", 2016. He didn’t work for us for twenty-two
years.
Mr. Mittendorff testified that Mr. Hannie was hired by Colonial Oaks AL
and Colonial Oaks MC (referred to collectively as Colonial Oaks AL/MC) after the
closing and that he divided his time between those two entities. He stated that Mr.
Hannie was never employed by Colonial Oaks SL, although he was supervised by
Colonial Oaks SL employees. He claimed that Mr. Hannie resigned on June 1,
2017, after he was informed by his supervisors “that he was not being efficacious
to his job.” He stated that as of that date, Mr. Hannie had not accrued any
vacation/sick leave hours.
16
Although Mr. Mittendorff initially claimed that Mr. Hannie’s employment
was governed by Colonial Oaks AL/MC’s own employee handbook, he admitted
that no such handbook existed and that Mr. Hannie’s employment was governed by
the Handbook, which Colonial Oaks AL/MC adopted. He further stated that even
though Colonial Oaks AL/MC utilized the Handbook, Mr. Hannie was still
considered a new employee, who had not accrued any vacation/sick leave hours
prior to his resignation.
Mr. Mittendorff claimed that although Mr. Hannie’s first seven paychecks
were issued by Colonial Oaks SL, he was never employed by it. He stated that
Colonial Oaks SL “paid his payroll out of that account for accounting purposes so
that they could then allocate them to his actual employer|s],” Colonial Oaks
AL/MC. He further admitted that Mr. Hannie received forty hours of vacation pay
in his December 30, 2016 paycheck. When asked why Mr. Hannie received
vacation pay despite being a new employee, he stated, “We do quite often pay over
and above our handbook policies for multiple employees.” He continued, “We’ll
often pay bonuses that are out [sic] on a bonus schedule. And we’ll often let
people take time off if they’re going through a personal crisis or personal situations
that are outside and above the handbook. The handbook is the handbook. We can
do more than that for any employee who used it.”
Mr. Hannie testified that he, along with his father and brother, started
Rosewood in 1996, and that he was a minority shareholder in both Rosewood and
Cedar Crest. He stated that he was also employed as Rosewood’s director until its
sale and that he continued in that position after the sale until he was named the
community relations director for both Rosewood and Cedar Crest. Mr. Hannie
testified that his employment with Colonial Oaks AL/SL lasted through June 1,
2017. Although his petition alleged that Colonial Oaks AL/SL terminated his
17
employment after refusing to transfer him to another position, he testified, at trial,
that he resigned from his employment. He stated that he was earning $49.33 per
hour when he resigned.
Based on the April 7, 2016 Paid Time Off List, Mr. Hannie testified that he
had accrued 852 vacation hours and 332.70 sick leave hours by the end of his
employment with Hannie Development. He denied that these numbers were
manipulated to increase his hours, as claimed by Mr. Mittendorff. He explained
that he never took vacation during his tenure with Rosewood, and he claimed that
Hannie Development’s computer program continuously rolled his vacation/sick
leave hours over every year. He further denied that he took vacation but failed to
report his hours. Mr. Hannie testified that although the arbitrator reduced his
accrued vacation/sick leave hours, no determination was made that he improperly
manipulated his hours prior to the sale. He stated that the buyers received a credit
from the sellers for the amount of accrued employee benefits recognized by the
arbitrator. During the arbitration proceeding, Mr. Hannie admitted that the
Handbook, which he wrote, capped an employee’s accrued vacation time at three
weeks and, although it paid accrued vacation at termination of employment, it did
not pay accrued sick leave at termination.
Mr. Hannie testified he received the November 30, 2016 letter from the
buyer regarding continuing employment. He stated that he interpreted the letter to
mean that his eligibility for paid time off or leave was in accordance with the
practices and procedures contained in the Handbook, rather than Colonial Oaks
AL/SL’s handbook. Mr. Hannie testified that he would not have accepted
employment with Colonial Oaks AL/SL had it not agreed to recognize his accrued
vacation/sick leave. He said that had that occurred, he would have expected
Hannie Development to pay him his accrued benefits when his employment with it
18
terminated. He stated that it was his understanding as of the date of the trial, that
the sellers’ employees were terminated and then hired by the buyers.
Mr. Hannie testified that Colonial Oaks AL/SL paid him for forty hours of
vacation in December 2016. He admitted that Mr. Mittendorff gave him
permission to take the vacation because it had already been planned. Thus, he
admitted that as he was paid for these hours, Colonial Oaks should only have
received a credit of $20,126.00 for his accrued benefits. He further stated that
Colonial Oaks AL/SL never provided him with its own employee handbook during
his employment.
Mr. Hannie testified that under the Handbook, an employee received one
week of paid vacation after one year of employment, two weeks of paid vacation
after two years of employment, and three weeks of paid vacation after five years of
employment. He agreed that the Handbook prevented an employee from rolling
his unused vacation time over to the next year; an employee’s vacation was capped
at three weeks; and an employee was only entitled to three weeks of paid vacation
upon termination, as long their vacation hours had not been used.
In reviewing his Colonial Oaks AL/SL work calendar, Mr. Hannie was
questioned regarding those dates that listed no appointments. He admitted that
there were many days during his five months of employment in 2017, where his
calendar contained no written appointments.
After taking the matter under advisement, the trial court issued written
reasons for judgment on November 23, 2020. Based on the evidence, the trial
court held that the employment of the sellers’ employees continued with the buyers
without interruption pursuant to the policies and procedures contained in the
Handbook. As there was no employment contract between Mr. Hannie and
Colonial Oaks AL/SL, the trial court stated that it found the APAs and the
19
arbitrator’s findings instructive. Although it found that a preponderance of the
evidence supported the arbitrator’s credit of $20,126.64 for Mr. Hannie’s accrued
employee benefits, the trial court reduced that amount to $18,153.44 based on Mr.
Hannie’s use of forty hours of vacation early in his employment with Colonial
Oaks AL/MC. It further held that Colonial Oaks AL/MC acted in bad faith in its
refusal to pay Mr. Hannie’s accrued employee benefits; thus, it awarded Mr.
Hannie $35,517.60 in penalty wages pursuant to La.R.S. 23:632. In making this
award, the trial court rejected Colonial Oaks AL/SL’s argument that this award
was improper in the absence of a demand for payment by Mr. Hannie. It held that
the demand language relied on by Colonial Oaks AL/SL was removed from La.R.S.
23:632 by an earlier amendment. Finally, the trial court awarded Mr. Hannie
$9,000.00 in attorney fees pursuant to La.R.S. 23:632(C).
Vacation
It is undisputed that upon termination by the sellers, their employees
“automatically transitioned without interruption” to employment with the buyers
per their November 30, 2016 letter. This was borne out by the paystubs issued by
Colonial Oaks AL/SL to Mr. Hannie, all of which list his hire date as July 1, 1996.
Moreover, Mr. Mittendorff admitted that the buyers intended to honor the
employees’ tenure and existing accrued vacation and time off. It is further
undisputed that Mr. Hannie’s employment with Colonial Oaks AL/MC was
governed by the Handbook.
In rendering judgment, the trial court, as well as the parties, focused on the
benefits Mr. Hannie accrued while employed by Hannie Development, as well as
the credit received by the buyers in the arbitration proceeding. However, we find
that the trial court was manifestly erroneous in doing so. Accordingly, we will
20
conduct a de novo review of the record and render a judgment on the merits.
Siverd v. Permanent Gen. Ins. Co., 05-973 (La. 2/22/06), 922 So.2d 497.
As per the Handbook, any accrued vacation not taken by Mr. Hannie prior to
January 1, 2017, was lost as Hannie Development had a “use it or lose it” policy
with regards to unused vacation hours, which prevented employees from
accumulating unused vacation and rolling that time over to the next employment
year. The Handbook further capped an employee’s vacation time at three weeks.
Pursuant to Mr. Hannie’s final Hannie Development paycheck, covering the
November 20, 2016 through December 3, 2016 pay period, Mr. Hannie had 908
accrued vacation hours, for a total of 22.7 weeks of vacation. However, per the
Handbook, his vacation was capped at three weeks. After he transitioned to
Colonial Oaks AL/SL, Mr. Hannie received forty hours of vacation pay in his
second check, covering the December 11-24, 2016 pay period. As his employment
continued automatically and without interruption from Hannie Development to
Colonial Oaks AL/SL, these forty hours would have been deducted from the three
weeks of vacation he accrued while with Hannie Development. Thus, Mr. Hannie
had two accrued weeks of vacation as of December 31, 2016, which he forfeited at
the end of that day in accordance with the Handbook’s “use it or lose it” policy.
However, in accordance with the Handbook, we find that Mr. Hannie was
again entitled to three weeks of paid vacation as of January 1, 2017. Unlike its
sick leave policy, the Handbook did not provide a formula by which vacation hours
were accumulated on a monthly basis. Rather, it simply stated that an employee
was eligible for three weeks of paid vacation after five years of continuous
employment. Accordingly, Mr. Hannie was entitled to three weeks of paid
vacation as of January 1, 2017, and as there was no evidence establishing that he
21
used any vacation time between January | and May 31, 2017, we find he had three
weeks of accrued vacation as of May 31, 2017. Although the Handbook stated that
“Tflailure to give proper notice may result in forfeiture of accrued vacation
allowances[,] and that “[e]Jach employee is expected to take the vacation time
earned and additional salary will not be paid in lieu of vacation[,]” we find these
policies inapplicable as they would prevent Mr. Hannie from receiving the wages
due him, in contravention of La.R.S. 23:631(D)(2).’
Accordingly, judgment is rendered in favor of Mr. Hannie, awarding him
three weeks or 120 hours of accrued vacation at his hourly rate of $49.33 for a total
of $5,919.60 in unpaid wages.
Sick Leave
Colonial Oaks AL next argues that the trial court erred in awarding Mr.
Hannie $14,207.04 for his accrued sick leave as the Handbook did not allow
payment of this benefit at termination of employment. We agree.
The Handbook allowed an employee to accrue up to thirty-six days of sick
leave. For any accrued sick leave exceeding thirty-six days, the Handbook allowed
the conversion of two sick leave days to one vacation day, not to exceed five
vacation days per year. The Handbook further provided that sick leave would “not
be paid as terminal leave.”
In Davis v. St. Francisville Country Manor, LLC, 13-190 (La.App. 1 Cir.
11/1/13), 136 So.3d 20, the first circuit addressed the issue of whether a paid day
off qualified as an amount due pursuant to La.R.S. 23:631. In finding that it did,
the court stated:
* Louisiana Revised Statutes 23:631(D)(2) provides, “The provisions of this Subsection
shall not be interpreted to allow the forfeiture of any vacation pay actually earned by an
employee pursuant to the employer’s policy.”
22
When an employer promises a benefit to employees, and
employees accept by their actions in meeting the conditions, the result
is not a mere gratuity or illusory promise, but a vested right in the
employee to the promised benefit. Knecht v. Board of Trustees for
State Colleges and Universities and Northwestern State University,
591 So.2d 690, 695 (La.1991). Applying this principle, the court in
Macrellis v. Southwest Louisiana Independence Center, 94-1155
(La.App. 3rd Cir.5/3/95), 657 So.2d 135, 137, recognized that earned
annual leave was an “amount then due” within the meaning of LSA-
R.S. 23:631, noting that “[a]lthough the right to enjoy the annual leave
was prospective, it became the property of the employee as it was
earned during the first year of employment. Thus, the earned annual
leave was an ‘amount then due’ under LSA-R.S. 23:631(A).” See
also, Beard [v. Summit Inst. for Pulmonary Med. & Rehab., Inc.], [97-
1784 (La. 3/4/98),] 707 So.2d [1233,] 1235.
Id. at 24 (footnote omitted).
While this opinion dealt with the issue of paid time off, we find it instructive on the
issue of sick leave, which unlike vacation pay, is not specifically mentioned in
La.R.S. 23:631.
Although the Handbook neither prevents an employee’s sick leave from
rolling over to the next year nor subjects it to the same “use it or lose it” policy
restricting vacation time, it specifically restricts an employee from receiving sick
leave as terminal leave. Thus, because sick leave was not a benefit that Colonial
Oaks AL promised to pay Mr. Hannie at termination, it was not a vested right
which became Mr. Hannie’s property, and thus, an amount which was due under
La.R.S. 23:631. Accordingly, the judgment of the trial court awarding Mr. Hannie
$14,207.04 in accrued sick leave is reversed.
Penalty Wages
Colonial Oaks AL next argues that the trial court erred in finding that Mr.
Hannie was entitled to penalty wages despite his failure to first make a demand for
payment pursuant to La.R.S. 23:632. The trial court held that La.R.S. 23:631 and
23:632 no longer required the employee to first demand payment of his unpaid
wages from his employer in order to receive penalty wages.
23
Louisiana Revised Statutes 23:632(A) provides in part:
Except as provided for in Subsection B of this Section, any
employer who fails or refuses to comply with the provisions of R.S.
23:631 shall be liable to the employee either for ninety days wages at
the employee’s daily rate of pay, or else for full wages from the time
the employee’s demand for payment is made until the employer shall
pay or tender the amount of unpaid wages due to such employee,
whichever is the lesser amount of penalty wages.
Thus, in order to recover penalty wages, an employee must prove “that (1)
wages were due and owing; (2) demand for payment thereof was made where the
employee was customarily paid; and (3) the employer did not pay upon demand.”
Winkle v. Advance Prods & Sys., Inc., 98-694, p. 14 (La.App. 3 Cir. 10/28/98), 721
So.2d 983, 990 (quoting Hebert v. Ins. Ctr., Inc., 97-298, p. 9 (La.App. 3 Cir.
1/7/98), 706 So.2d 1007, 1013, writ denied, 98-353 (La. 3/27/98), 716 So.2d 888).
Accordingly, we find that the trial court legally erred in its interpretation of La.R.S.
23:632(A).
After performing a de novo review, we find that the record is void of any
evidence establishing that Mr. Hannie made a demand upon Colonial Oaks AL
prior to the institution of his suit. Accordingly, the judgment of the trial court
awarding Mr. Hannie $35,517.60 in penalty wages is reversed.
Colonial Oaks AL further argued that it was entitled to an offset because Mr.
Hannie took more time off than was allowed.
Louisiana courts have recognized that an employer may have a
claim of setoff or compensation against former employees.
Employers have been allowed a setoff against a former employee’s
unpaid wage claim for damages pertinent to physical property or for
definitive amounts of money owed by the employee for salary
overpayment, loans or outstanding account balances. See Richard v.
Vidrine Automotive Services, Inc., 98-1020 (La.App. Ist Cir.4/1/99),
729 So.2d 1174.
Newsom v. Global Data Sys., Inc., 12-412, 12-413, p. 7 (La.App. 3 Cir. 12/12/12),
107 So.3d 781, 787, writ denied, 13-429 (La. 4/5/13), 110 So.3d 595.
Thus, based on our reversal of the penalty-wage award, we need not address
Colonial Oaks AL’s offset claim.
Attorney Fees
Colonial Oaks AL further argues that the trial court was manifestly
erroneous in awarding Mr. Hannie $9,000.00 in attorney fees.
In Cleary v. LEC Unwired, L.L.C., 00-2532, pp. 9-10 (La.App. 1 Cir.
12/28/01), 804 So.2d 916, 923, the first circuit set out the law relative to attorney
fee awards in a suit for unpaid wages:
With regard to attorney fees, La.R.S. 23:632 provides for the
award of reasonable attorney fees in the event that a plaintiff files a
well-founded suit for unpaid wages. A recognized purpose of the
legislative grant of attorney fees by La.R.S. 23:632 is to foster the
availability of counsel to workers who have been unlawfully denied
earned compensation. Cochran v. American Advantage Mortgage
Company, Inc., 93-1480, p. 9 (La.App. 1 Cir. 6/24/94), 638 So.2d
1235, 1240. Clearly, attorney fees are due when “to recover wages
due him an employee is forced to file a well-founded suit for their
payment.” Carriere v. Pee Wee's Equipment Company, 364 So.2d
555, 556 (La.1978). The award of reasonable attorney fees is
mandatory when an employee brings a “well-founded” suit for unpaid
wages, irrespective of any equitable defenses that may have been
raised. Suits in which the recovery of back wages is granted are
considered “well-founded.” See Pokey [v. Five L Investments, Inc.],
96-0018 at 11-12, 681 So.2d [489,] 496; Glover v. Diving Services
International, Inc., 577 So.2d 1103, 1108-09 (La.App. 1 Cir.1991).
Reasonable attorney fees are to be awarded in the event that the
employee files a well-founded suit for unpaid wages, even if penalty
wages are not due. Cochran, 93-1480 at 9, 638 So.2d at 1240.
If the record fails to disclose the amount in attorney fees expended by an
employee, the court may fix that amount based on its review of the record. Winkle,
721 So.2d 983. A trial court is vested with great discretion in determining an
attorney fee award. Thus on appeal, an award of attorney fees will not be disturbed
absent an abuse of discretion by the trial court. Hanks v. La. Cos., 16-334 (La.App.
3 Cir. 12/14/16), 205 So.3d 1048.
25
In determining whether an attorney fee award is reasonable, the reviewing
court should consider the following:
(1) the ultimate result obtained; (2) the responsibility incurred; (3) the
importance of the litigation; (4) the amount of money involved; (5)
the extent and character of the work performed; (6) the legal
knowledge, attainment, and skill of the attorneys; (7) the number of
appearances involved; (8) the intricacies of the facts involved; (9) the
diligence and skill of counsel; and (10) the court’s own knowledge.
Rivet v. State, Dep’t of Transp. & Dev., 96-145, pp. 11-12 (La. 9/5/96), 680 So.2d
1154, 1161.
The only evidence presented on this issue was Mr. Hannie’s testimony that
he had incurred approximately $7,800.00 in attorney fees in pursuing his claim
against Colonial Oaks AL. The trial court, in awarding $9,000.00 in attorney fees,
stated as follows:
In addition to his wages and penalties, Mr. Hannie is entitled to
recover reasonable attorney’s fees. At the hearing, Mr. Hannie
testified that he had incurred about $7,800.00 in attorney’s fees and
court costs. The Court has not seen an itemization of the work
performed by his attorney. However, in addition to presiding over the
hearing, the Court has reviewed the entire record, including the
numerous exceptions and memoranda filed by Colonial Oaks and the
responsive pleadings and memoranda submitted by Mr. Hannie’s
counsel. Considering the amount of work and quality of the work, the
result achieved, and the prevailing rate for legal work in this area, the
Court finds that a total award of $9,000.00 is reasonable. That
amount will be taxed as costs to be paid by the employer. La.R.S.
23:632(C).
Even though there was a lack of evidence on this issue, the trial court held
that $9,000.00 was a reasonable amount based on its own knowledge of the amount
and quality of the work provided by counsel for Mr. Hannie, the result achieved,
and its knowledge of the prevailing legal-fee rate in the Lafayette area. Despite
our reduction of the amount of unpaid wages awarded and the reversal of the
penalty wage award, we still find that Mr. Hannie’s suit was well-founded.
Accordingly, we find no abuse of discretion in the trial court’s award of $9,000.00
in attorney fees.
26
MR. HANNIE’S APPEAL
Assignment of Error Number Two
In his second assignment of error, Mr. Hannie argues that the trial court
erred as a matter of law in attempting to cast an unnamed defendant, Colonial Oaks
MC, in place of the named defendant, Colonial Oaks SL. He argues that the
November 30, 2016 employment letter was sent by Colonial Oaks SL and that it
issued the majority of his paychecks during his employment with Colonial Oaks
AL/SL.
The trial court’s written reasons for judgment stated that judgment was being
rendered against Colonial Oaks AL/MC. We note that while the judgment
presented to the trial court for signing included Colonial Oaks MC as one of the
parties against whom judgment was being rendered, the trial court struck through
its name. Thus, the final signed judgment named Colonial Oaks AL as the sole
defendant cast in judgment. We find that this was not error as Colonial Oaks MC
was never a named defendant in Mr. Hannie’s suit.’ To the extent that Mr. Hannie
argues that Colonial Oaks SL should have been cast in judgment with Colonial
Oaks AL, we address that issue below.
Assignments of Error Numbers One and Three
In his first assignment of error, Mr. Hannie asserts that the trial court was
manifestly erroneous in concluding that he was not employed by Colonial Oaks SL.
He further argues, in his third assignment of error, that the trial court erred in
omitting Colonial Oaks SL from solidary liability when it acted with the other
entities as a single business enterprise, and it paid Mr. Hannie wages. As these
Pan judgment rendered beyond the pleadings is a nullity.” Monroe v. Physicians
Behavioral Hosp., LLC, 49,248, p. 21 (La.App. 2 Cir. 8/13/14), 147 So.3d 787, 798.
27
assignments of error are related, we will address them together using the manifest
error—clearly wrong standard of review.
In light of our determination that Mr. Hannie was owed accrued vacation
pay, as well as attorney fees, we must now determine whether the trial court erred
by failing to cast Colonial Oaks SL in judgment along with Colonial Oaks AL,
based on its finding that Mr. Hannie was not employed by Colonial Oaks SL.
In its initial pleading, Colonial Oaks AL/SL asserted a peremptory exception
of no cause of action on the grounds that Colonial Oaks SL was not Mr. Hannie’s
employer. Prior to the trial on the merits, the trial court denied the exception,
stating, “I’m going to also deny the no cause of action because, as Mr. Logan said,
you must accept the allegation of this petition as true.” However, following the
trial on the merits, the trial court found that Mr. Hannie had not been employed by
Colonial Oaks SL. In its written reasons, the trial court made the following factual
findings:
Nicol Edward Hannie was a part-owner and managerial
employee of Rosewood Retirement & Assisted Living Community
“Rosewood”), a joint venture of Hannie Development, Inc. and Cedar
Crest, LLC. In 2016, Rosewood was sold to Seniors Investments II,
LLC pursuant to an asset purchase agreement. (Exhibits A-1 and A-2).
After the sale, Mr. Hannie continued to work for the purchaser until
he resigned on May 31, 2017. He was initially paid by Colonial Oaks
Senior Living Employer, LLC, and later, by Colonial Oaks AL
Lafayette Employer, LLC and Colonial Oaks MC Lafayette
[Employer], LLC (collectively referred to herein as “Colonial Oaks”).
Mr. Hannie claims that Colonial Oaks wrongfully refused to pay him
for the accrued vacation and sick pay that he was owed at the time of
his resignation.
At the conclusion of its reasons, however, the trial court ruled in favor of Mr.
Hannie against Colonial Oaks AL/MC and not Colonial Oaks SL. In a footnote,
the trial court set forth its reasons supporting this decision.
Mr. Hannie appropriately named as defendants the entities whose
names first appeared on his payroll checks. However, Mr.
Mittendorff’s unrebutted testimony was that one of the earlier payors,
28
Colonial Oaks Senior Living Employer, LLC only performed payroll
management functions for the first few weeks, and that Mr. Hannie’s
actual employers were Colonial Oaks AL Lafayette Employer, LLC
and Colonial Oaks MC Lafayette Employer, LLC. That testimony is
borne out by Mr. Hannie’s more recent payroll stubs. (Exhibit J).
We cannot conclude on the record that it was manifest error for the trial
court to find that Colonial Oaks SL was not Mr. Hannie’s employer. Mr.
Mittendorff testified at trial that Mr. Hannie’s work time and efforts were split
between Colonial Oaks AL/MC and that he never performed work for Colonial
Oaks SL. During his testimony, the following colloquy occurred regarding this
issue:
Q. Initially, the first set of checks from, which I guess, is
December 30 through March 24 are checks from Colonial Oaks
Senior Living Employer. Do you see that?
A. Yes, I do.
Q. And then after that, he has checks from Colonial Oaks AL. Do
you see that?
A. Yes.
Q. Could you explain to the Court why the initial checks were
Colonial Oaks Senior Living Employer?
A. Because he was performing some things for both communities.
And so we had to allocate them between the two communities.
He always did work for both communities, as I recall.
Q. And when you refer to both communities, are you referring to
Colonial Oaks AL and Colonial Oaks MC?
A. Yes, Cedar Crest and Memory Care. So his employer were
those two companies.
Did he ever do any work for Colonial Oaks Senior Living?
No.
Q Was he ever supervised by anyone from Colonial Oaks Senior
Living?
29
A. He was supervised by folks at Colonial Oaks Senior Living.
Those are strictly the headquarters office personnel. He was
never a headquarter personnel.
Q. Okay. Did he ever perform any functions at a facility owned by
Colonial Oaks Senior Living?
A. No.
While Mr. Hannie testified that he worked for Colonial Oaks SL and that he
initially received payment from this entity, the trial court obviously credited Mr.
Mittendorff’s testimony over that of Mr. Hannie on this issue. It is not for us to
determine credibility issues or the weight to be given to a particular witness’
testimony, as those tasks fall within the purview of the trial court. Rosell v. ESCO,
549 So.2d 840 (La.1989). Thus, we find no manifest error in this factual
conclusion.
Mr. Hannie further argues the trial court erred by failing to cast Colonial
Oaks SL in judgment in addition to Colonial Oaks AL as both entities were
operated as a single business entity, such that each was solidarily liable for his
unpaid wages, penalty wages, and attorney fees.
In Green v. Champion Insurance Co., 577 So.2d 249 (La.App. | Cir.), writ
denied, 580 So.2d 668 (La.1991), the first circuit recognized the “single business
enterprise” or “instrumentality” theory, in addition to the use of the “piercing the
veil” theory, to extend liability beyond a separate entity. Therein, the court set
forth the following non-exclusive factors to examine.
When determining whether a corporation is an alter ego, agent,
tool or instrumentality of another corporation, the court is required to
look to the substance of the corporate structure rather than its form.
The following factors have been used to support an argument that a
group of entities constitute a “single business enterprise”:
l. corporations with identity or substantial identity of
ownership, that is, ownership of sufficient stock to
give actual working control;
30
2. common directors or officers;
3. unified administrative control of corporations
whose business functions are similar or
supplementary;
4. directors and officers of one corporation act
independently in the interest of that corporation;
5. corporation financing another corporation;
6. inadequate capitalization (“thin incorporation”);
7. corporation causing the incorporation of another
affiliated corporation;
8. corporation paying the salaries and other expenses
or losses of another corporation;
9. receiving no business other than that given to it by
its affiliated corporations;
10. corporation using the property of another
corporation as its own;
11. noncompliance with corporate formalities;
12. common employees;
13. services rendered by the employees of one
corporation on behalf of another corporation;
14. common offices;
15. centralized accounting;
16. undocumented transfers of funds between
corporations;
17. unclear allocation of profits and losses between
corporations; and
18. excessive fragmentation of a single enterprise into
separate corporations.
Id. at 257-58.
In Dishon v. Ponthie, 05-659 (La.App. 3 Cir. 12/30/05), 918 So.2d 1132,
writ denied, 06-599 (La. 5/5/06), 927 So.2d 317, a panel of this court applied the
“single business entity” theory to extend liability beyond a separate entity, noting
3]
that we had recognized but not relied on the theory in previous cases." We note
that in this instance, we are dealing with limited liability companies, or LLCs, as
opposed to corporations. However, “[t]he doctrine of piercing the corporate veil is
applicable to limited liability companies as well as corporations.” Hodge v. Strong
Built Int’l, LLC, 14-1086, p. 4 (La.App. 3 Cir. 3/4/15), 159 So.3d 1159, 1163.
“Whether an affiliated group of entities constitutes a ‘single business enterprise’ is
+
a question of fact to be decided by the trial court[]” and reviewed on appeal
pursuant to the manifest error or clearly wrong standard. Green, 577 So.2d at 257.
After reviewing the record, we find no manifest error in the decision of the
trial court to hold only Colonial Oaks AL liable for Mr. Hannie’s unpaid wages
and attorney fees. In considering the Green factors in relation to the matter at hand,
we note that although some of the factors favored a finding that a single business
enterprise existed, many of the factors were either not proven or established.
Essentially, whether Colonial Oaks AL/SL was operated as a single business
enterprise comes down to a weighing of Mr. Hannie’s testimony over that of Mr.
Mittendorff, the owner/operator of both entities. Based on the judgment rendered,
the trial court credited the testimony of Mr. Mittendorff in determining that
Colonial Oaks AL/SL was not a single business enterprise and that Colonial Oaks
SL did not employ Mr. Hannie. Thus, we affirm the judgment of the trial court in
this respect.
DECREE
For the forgoing reasons, the judgment of the trial court in favor of Nicol
Edward Hannie and against Colonial Oaks AL Lafayette Employer, LLC,
” Haywood v. La. Sugar Cane Prods., 96-1151 (La.App. 3 Cir. 3/5/97), 692 So.2d 524:
Thibodeaux yv. Ferrellgas, Inc., 98-862 (La.App. 3 Cir. 1/6/99), 741 So.2d 34, writ denied, 99-
0366 (La. 3/26/99), 739 So.2d 797; and Amoco Prod. Co. v. Texaco, Inc., 02-240 (La.App. 3 Cir.
1/29/03), 838 So.2d 821, writ denied, 03-1102, 03-1104 (La. 6/6/03), 845 So.2d 1096.
32
awarding $18,153.44 in accrued vacation/sick leave and $35,517.60 in penalty
wages, is reversed, and judgment is rendered in favor of Mr. Hannie awarding him
$5,919.60 in accrued vacation pay. The judgment of the trial court awarding Mr.
Hannie $9.000.00 in attorney fees is affirmed, for a total award of $14,919.60 in
his favor. Costs of this appeal to be divided equally between the parties.
REVERSED IN PART AND RENDERED; AND AFFIRMED IN PART.