Ghergich v. Toye

Citations: 164 So. 3d 238; 14 La.App. 5 Cir. 300; 2014 La. App. LEXIS 2596; 2014 WL 5463293Docket: No. 14-CA-300

Court: Louisiana Court of Appeal; October 29, 2014; Louisiana; State Appellate Court

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Plaintiff Matthew Ghergich, IV appealed a summary judgment that dismissed his lawsuit against defendants Paul Toye, III, Paul Toye, IV, Sal Michel, and Advanced Pain Management Clinic, L.L.C. Ghergich claimed that he, along with John DeFraites, formed Health Tech Wellness Center, L.L.C. in 2004, and that Health Tech merged with Advanced in 2005, granting all parties equal ownership interests. He alleged that an operating agreement was prepared but not signed by all members, yet they acted according to it and paid him profit distributions. After noticing a reduction in his distributions, Ghergich requested access to Advanced's records, which was denied.

In response, the defendants filed for summary judgment, asserting Ghergich was never a member of Advanced and lacked evidence of ownership. They argued that even if a merger occurred, Ghergich was barred from ownership due to a 1986 marijuana possession conviction, which disqualified him under Louisiana law. Ghergich contended that his conviction was set aside and his record expunged, and claimed that the Louisiana Department of Health and Hospitals had waived concerns regarding his criminal history.

The trial court ruled in favor of the defendants, stating that even if a merger agreement existed, it would be void due to Ghergich's prior conviction. The appellate court affirmed this decision, applying a de novo review standard for summary judgments, which requires no genuine issue of material fact for the mover to be entitled to judgment as a matter of law.

The summary judgment procedure is favored to ensure just, speedy, and inexpensive resolution of actions, as per La. C.C.P. art. 966(A)(2). Mr. Ghergich contends that the trial court erred in granting summary judgment that dismissed his lawsuit. He asserts that although individuals with prior disqualifying convictions cannot own a pain management clinic outright, neither La. R.S. 40:2198.12 nor La. Admin. Code, Title 48, Part I, 7803 addresses ownership of a limited liability company (L.L.C.) operating such clinics if they were established before June 15, 2005. Defendants counter that an L.L.C. cannot bypass statutory ownership requirements, which prohibit individuals with drug convictions from owning any part of a pain management clinic.

La. R.S. 40:2198.11 et seq., enacted in 2005, regulates pain management clinics, defining them as facilities that primarily treat pain through narcotic prescriptions. Ownership rules stipulate that clinics must be owned and operated by certified physicians, with specific provisions regarding pre-existing clinics. According to La. R.S. 40:2198.12(D), individuals with certain misdemeanor convictions related to narcotics cannot own such clinics. 

The Department of Health and Hospitals has established regulations under La. Admin. Code, Title 48, Part I, 7803, requiring that clinics be fully owned by certified pain management physicians, although exceptions exist for clinics operating before the cutoff date if they meet specified criteria. Mr. Ghergich argues that his past conviction, for which he received an expungement, should not disqualify him from being a member of an L.L.C. that owns a pain management clinic, rather than claiming direct ownership of the clinic itself.

Defendants are granted summary judgment as the evidence does not support Mr. Ghergich's claim of a merger agreement between Health Tech and Advanced in October 2005, relying solely on his assertions. Furthermore, Mr. Ghergich's claim to membership in Advanced lacks evidentiary backing and violates La. R.S. 7803, which prohibits any individual with a misdemeanor drug-related conviction from owning any part of a pain management clinic. The court emphasized that statutory language must be applied as written when clear, and even if ambiguous, it should align with the statute's purpose. The clear legislative intent forbids individuals with prior drug convictions from ownership interests in such clinics, which includes membership in an LLC like Advanced. Thus, Mr. Ghergich, having a conviction for possession of marijuana, is legally barred from owning an interest in Advanced, equating to ownership of the clinic itself. His request for remand to pursue an unjust enrichment claim is denied as he did not initially include this claim in his pleadings. The summary judgment in favor of the defendants is affirmed, dismissing the lawsuit. The record does not contain the operating agreement referenced in Mr. Ghergich's petition.

La. R.S. 12:1319(B) outlines the rights of members in a limited liability company (LLC), stipulating that unless specified otherwise in the articles of organization or operating agreement, members can: 1) Inspect and copy LLC records at their expense during regular business hours upon reasonable request; 2) Obtain true and complete information about the LLC’s business and financial condition, access copies of federal and state income tax returns upon availability, and receive other reasonable information regarding LLC affairs; and 3) Demand a formal accounting of the LLC's affairs when justifiable. In the context of a summary judgment motion, Paul Toye, III claims he is entitled to summary judgment on the basis that he is neither a member nor an owner of Advanced. Additionally, it is noted that an alleged merger of two pain management clinics did not take place before June 15, 2005, and according to La. R.S. 7803(C), clinic licenses are non-transferable and cannot be sold. The evidence presented does not confirm that any individual, including Toye and Michel, holds an ownership interest in Advanced.