Biller v. Snug Harbor Jazz Bistro of Louisiana, L.L.C.

Citations: 99 So. 3d 730; 2011 La.App. 4 Cir. 1784; 2012 La. App. LEXIS 1110; 2012 WL 3860030Docket: No. 2011-CA-1784

Court: Louisiana Court of Appeal; September 5, 2012; Louisiana; State Appellate Court

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Plaintiffs Robert and Stephanie Biller appealed a trial court judgment that dismissed their lawsuit against Snug Harbor Jazz Bistro of Louisiana, L.L.C. The case stems from an accident in April 2007 involving Snug Harbor, a business owned by George Edgar Brumat, who died testate in July 2007. His will bequeathed his property to his niece, Luana Brumat, who became the independent executrix of his estate. Subsequently, in September 2007, Wesley J. Schmidt and Luana Brumat formed Snug Harbor, L.L.C. 

In March 2008, the Billers filed a damage petition against Snug Harbor, L.L.C. and Snug Harbor, Inc., later adding the Succession of George Edgar Brumat as a defendant. The trial court awarded the Billers $80,000 from Brumat's estate. Seeking to enforce this judgment, the Billers alleged that Snug Harbor, L.L.C. was a successor in interest to Brumat’s estate and therefore liable for its debts. Snug Harbor, L.L.C. countered that it was formed after Brumat's death and was not liable for his debts since the succession never transferred ownership to the LLC.

The trial court found that Snug Harbor operated as a sole proprietorship under Brumat until his death, after which Snug Harbor, L.L.C. was created and was thus a separate entity. The court ruled that the only proper party for the Billers to recover from was the Succession of George Edgar Brumat, leading to the dismissal of their claims against Snug Harbor, L.L.C.

Plaintiffs argue that the trial court incorrectly determined that Snug Harbor, L.L.C. was not the successor in interest to Snug Harbor and thus not responsible for its debts. They assert that evidence from the trial showed Snug Harbor, L.L.C. continued the operations of Snug Harbor after Mr. Brumat’s death, with Mr. Schmidt, the former office manager, running the business at the same location and forming Snug Harbor, L.L.C. using its goodwill and assets without compensation. Citing Wolff v. Shreveport Gas, Electric Light, Power Co., plaintiffs contend that Snug Harbor, L.L.C. should be considered a "mere continuation" of Snug Harbor due to potential fraud against creditors or the nature of the business transition.

The appellate court emphasizes that it cannot overturn a trial court’s factual findings unless there is manifest error. The focus is whether the trial court's conclusions were reasonable based on the evidence. Testimony from Mr. Schmidt revealed that he managed daily operations post-Brumat's death and co-founded Snug Harbor, L.L.C. with Ms. Brumat, each contributing $5,000. They made joint business decisions, and Snug Harbor, L.L.C. entered into a lease agreement for restaurant equipment and a long-term commercial lease for the premises. However, Mr. Schmidt clarified that no sale or transfer of Snug Harbor’s assets occurred from Mr. Brumat’s estate to Snug Harbor, L.L.C. Ultimately, the appellate court found no error in the trial court’s determination that Snug Harbor, L.L.C. is a distinct legal entity from Mr. Brumat and his estate, and therefore not liable for his debts.

Snug Harbor, L.L.C. was determined not to have existed at the time of Mr. Biller’s accident and was formed after Mr. Brumat's death. The plaintiffs claimed that Ms. Brumat merged or transferred the "business of the Succession of George E. Brumat" into Snug Harbor, L.L.C., but failed to provide evidence for this assertion. Additionally, there was no evidence indicating that Ms. Brumat and Mr. Schmidt intended to defraud any creditors of the succession. Consequently, the trial court's dismissal of the claims against Snug Harbor, L.L.C. was upheld. The lease for Snug Harbor was set to expire on November 18, 2014. Ms. Brumat, a resident of Rome, Italy, had executed a power of attorney in 2007 appointing David Nelson Corkern to manage the succession's assets, including Snug Harbor. The original petition mistakenly referred to Snug Harbor, Inc. as a defendant, which did not own or operate Snug Harbor at the time of the incident. Mr. Biller was injured in a chair collapse while dining at Snug Harbor on April 13, 2007. The record includes an equipment lease related to Snug Harbor, and it is noted that Mr. Brumat had obtained an SBA loan for new equipment post-Hurricane Katrina, although related documentation is absent from the record. Snug Harbor, L.L.C. presented the commercial lease at trial.