NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

NUMBER 2005 CA 0253

AMSOUTH BANK

VERSUS

UNEMPLOYMENT COMPENSATION CONTROL SYSTEMS LLC

LJ U luAND DARLENE S RANSOME

JJudgment Rendered May 8 2009

Appealed from the Nineteenth Judicial District Courtin and for the Parish of East Baton Rouge

State of LouisianaSuit Number 512 396

Honorable Timothy E Kelly Judge

David M CohnBaton Rouge LA

Counsel for Plaintiff AppelleeAmSouth Bank

J Marvin MontgomeryBaton Rouge LA

Counsel for Defendant Third PartyPlaintiff AppellantDarlene S Ransome

Ronald S Haley JrPeter CarmichaelBaton Rouge LA

Counsel for Third PartyDefendant AppelleeNational Compensation ControlSystems Inc

Michael H PiperBaton Rouge LA

Counsel for Third PartyDefendant AppelleeRalph W Theriot

BEFORE WHIPPLE McCLENDON AND WELCH JJ

It trfJc lJ vnwLJJid 17N5 th5

WHIPPLE J

This matter is before us on appeal by defendant Darlene S Ransome from a

judgment dismissing her third party claims and granting declinatory exceptions

raising the objections of lis pendens For the following reasons we affirm the

judgment of the trial court dismissing Ransome s third party claims but amend it

to sustain the peremptory exception raising the objection of res judicata

FACTUAL AND PROCEDURAL BACKGROUND

The instant appeal comes before this court following remand to the trial

court In remanding this case back to the trial court we noted that the record

contain ed no evidence of or pleadings from the other alleged pending suits

preclud ing any meaningful review of the trial court s judgment by this court

Accordingly this court remand ed the case to the trial courtto allow the

petitions relied upon by exceptors as well as any other relevant pleadings to

be entered into the record Following remand the parties consented to have all

filings related to AI J Ransome et ale V Joe A Terrell et al 19th JDC Docket

No 460 543 consolidated with Darlene S Ransome et ale V Joe A Terrell et

al 19th JDC Docket No 487 560 which are maintained by the clerk of court for

the Nineteenth Judicial District Court 19th JDC entered into the underlying

recordI

To recapitulate the pertinent facts on October 1 2003 AmSouth Bank filed

the present suit in the 19th JDC against Unemployment Compensation Control

Systems LLC UCCS2

to recover 23 080 67 allegedly due under a credit

agreement Darlene Ransome Ransome one of the owners of UCCS was also

named as a defendant based on a guarantee she executed in connection with the

IThe parties also agreed to have all filings related to Darlene S Ransome et al vNational Compensation Control Services Inc et al 19th JDC Docket No 510 151 enteredinto the record

2At the time suit was filed UCCS had become Former 5353 LLC but we will continue

to refer to the entity as UCCS for clarity and for consistency with our prior opinion

2

credit agreement Ransome answered the suit and filed a cross claim against

UCCS complaining that it failed to pay the debt allegedly owed AmSouth Bank

and that it improperly sold through its court appointed receiver Ralph Theriot

Theriot contracts with clients and resulting proceeds that had been pledged to

secure the loan to AmSouth She also filed a third party demand against National

Compensation Control Services Inc NCCS the corporation that purchased

UCCS s assets and Theriot individually and in his capacity as receiver

Ransome alleged that she was entitled to recover from NCCS any amount she was

obligated to pay AmSouth due to NCCS s failure to pay the AmSouth loan because

NCCS knew or should have known that the contracts it purchased were pledged as

security for that debt She asserted that NCCS s ownership interest in those

contracts was not superior to AmSouth s recorded security interest in them

Ransome also complained that Theriot sold UCCS s client contracts to

NCCS despite knowing that they were pledged to secure the AmSouth loan and

then failed to pay the AmSouth debt out of the sale proceeds She further alleged

that since NCCS was owned by Joe Terrell who also owned 50 of UCCS the

sale constituted an improper distribution of assets to one owner in preference to

creditors and the other owner

NCCS and Theriot each filed a declinatory exception raising the objection of

lis pendens asserting that there was a prior consolidated suit on the same

transaction between the same parties pending in the 19th JDC in another division

namely AI J Ransome et ale V Joe A Terrell et al Docket No 460 543

consolidated with Darlene S Ransome et al V Joe A Terrell et al 19th JDC

Docket No 487 560 hereinafter referred to as the receivership suits3

Therein

3In further support of its exception NCCS also relied on another suit pending in the 19thJDC namely Darlene S Ransome et al v National Compensation Control Services Inc etal Docket No 510 151 However Ransome s counsel at oral argument before this courtindicated that this suit has been abandoned

3

the trial court signed a judgment ex parte on November 29 2002 authorizing

Theriot as the court appointed receiver to sell UCCS s assets to NCCS The court

also approved the sale of the assets of Unemployment Compensation Control

Systems of Mississippi LLC UCCSMS and Compensation Specialties LLC

CS two other companies in which Ransome held an ownership interest to

NCCS4 The trial court further ordered that a rule nisi be issued directing

Ransome5 to show cause why the judgment should not be vacated and set aside

Following a hearing the trial court signed a judgment on December 30 2002

maintaining the original judgment and authorizing the sale of the three companies

assets

Ransome subsequently filed writs with this court which were denied

Thereafter Ransome filed a devolutive appeal with this court seeking to enjoin the

sale from taking place While the appeal was pending the sale of the companies

assets to NCCS was completed Accordingly this court dismissed the appeal as

moot inasmuch as it was impossible for this court to undo what has already been

done or to afford practical relief6 Ransome v Terrell 2003 1214 2003 1215

p 6 La App 1st Cir 4 2 2004 unpublished This court s decision thereafter

became final and definitive pursuant to La Code of Civ P art 2166A as no party

applied to this court for rehearing or filed an application to the Louisiana Supreme

Court for a writ of certiorari

40ne of the main reasons for the trial court s initial approval ex parte was based on thefact that the Internal Revenue Service had agreed to asettlement amount arising from back taxesowed by the companies but the sale had to occur promptly to meet requisite IRS deadlines

5The rule nisi was also issued to Ransome s husband Al Ransome who had amanagement interest in the companies

6Ransome claimed that the appeal therein was not rendered moot by the subsequent salebecause she was not appealing the denial of an injunction to prevent a sale but rather seeking areversal ofthe trial court s judgments and adeclaration that the purchase agreement was null andvoid Despite Ransome s contentions this court found that Ransome was clearly seeking toenjoin the sale

4

The trial court also rendered two additional judgments in the receivership

suits that were not subject to the prior appeal On July 16 2003 the trial court

after receiving and approving the final statement of the receiver discharged

Theriot7 Ransome subsequently filed an objection to the final accounting and an

additional motion to vacate the trial court s judgment approving the final

statement In support of her motion to vacate Ransome alleged that the receiver

breached his fiduciary duty by failing to ensure that all debts were paid when the

pledged assets were sold to NCCS She further alleged that NCCS failed to

assume certain loans including the AmSouth loan even though it received the

collateral securing those loans Thereafter on October 6 2003 the trial court

signed another judgment denying Ransome s motion to vacate the trial court s

July 16 2003 judgment Neither the July 16 2003 judgment nor the October 6

2003 judgment were appealed

On June 14 2004 following a hearing in the case sub judice the trial court

granted the exceptions raising the objection of lis pendens of both NCCS and

Theriot hereinafter exceptors stating

I t s clear to the court that all of this does arise out of the same

transaction or occurrence which is the receivership matter Theparties are the same Im going to therefore grant the lis pendens onboth parties part

A written judgment followed and Ransome filed the instant appeal raising as her

sole assignment of error that the trial court erred in granting the exceptions of lis

pendens and dismissing her third party demand

DISCUSSION

Louisiana Code of Civil Procedure article 531 provides When two or more

suits are pending in a Louisiana court or courts on the same transaction or

occurrence between the same parties in the same capacities the defendant may

7Likewise the trial court discharged Theriot s surety United States Fidelity GuarantyCompany

5

have all but the first suit dismissed by excepting thereto as provided in Article

925 The party filing the exception of lis pendens has the burden of proving the

facts necessary for the exception to be sustained Robinson v Robinson 474

So 2d 46 48 La App 3rd Cir 1985 When the grounds to support the

declinatory exception do not appear on the face of the petition citation or return

evidence may be introduced to support the exception La Code ofCiv P art 930

No evidence was introduced at the hearing on the exception of lis pendens

However the trial court in considering the exception could properly take judicial

notice of the relevant facts with regard to the receivership suits that were filed in

the 19th JDC La Code Evid art 201 Because the requirement to establish the

exception raising the objection of lis pendens conforms to the requirements of res

judicata a court must determine whether a judgment in the first filed suit would

bar the claims asserted in the subsequent suit Newman v Newman 96 1062 pp

4 5 La App 1st Cir 327 97 691 So 2d 743 745

Ransome alleges that the exception was improperly granted because the

receivership suits were no longer pending at the time of the June 14 2004 hearing

on the exception raising the objection of lis pendens in the case sub judice

Instead Ransome notes the judgment in the receivership suits became final on

May 3 2004 when no party filed a writ of certiorari to seek review of this court s

ruling in Ransome v Terrell 2003 1214 2003 1215 p 6 La App 1st Cir

4 2 2004 Ransome notes that despite having knowledge that the receivership

suits were no longer pending the exceptors did not amend their pleadings to plead

the peremptory exception raising the objection of res judicata prior to the June 14

2004 hearing As such Ransome argues that the trial court erred in granting the

exception raising the objection of lis pendens

Because the receivership suits were no longer pending at the time of the

hearing in the case sub judice we recognize that the exception of lis pendens was

6

not applicable herein with respect to the receivership suits8 Nonetheless we find

the exception raising the objection of res judicata applies herein and is dispositive

Although the exceptors did not amend their pleadings to specifically plead the

exception of res judicata based upon the receivership suits we note that this court

can notice the exception of res judicata on its own motion La Civ Code art

927 B as amended by 2008 La Acts No 824 S 1 Moreover even where an

exception of lis pendens is properly granted by a trial court at the time of the

hearing when the other case is no longer pending at the time the appellate court

reviews the ruling on lis pendens the appellate court must determine whether the

judgment in the prior case is res judicata with respect to the latter case Acadian

Gas Pipeline Sys v Bourgeois 2004 0578 p 9 La App 5th Cir 1130 04 890

So 2d 634 639 writ denied 2004 3203 La 311 05 896 So 2d 69 Because the

requirements for lis pendens conform to the requirements of res judicata and the

parties have had ample opportunity to address the requisite elements we will

consider the trial court s ruling based upon the principles governing the exception

raising the objection of res judicata which we raise herein

The res judicata statute La R S 13 4231 provides as follows

Except as otherwise provided by law a valid and final judgment isconclusive between the same parties except on appeal or other directreview to the following extent

1 If the judgment is in favor of the plaintiff all causes of actionexisting at the time of final judgment arising out of the transaction oroccurrence that is the subject matter of the litigation are extinguishedand merged in the judgment

2 If the judgment is in favor of the defendant all causes of actionexisting at the time of final judgment arising out of the transaction oroccurrence that is the subject matter of the litigation are extinguishedand the judgment bars a subsequent action on those causes of action

3 A judgment in favor of either the plaintiff or the defendant isconclusive in any subsequent action between them with respect to

8However we note that the suit referenced in footnote 3 above was still pending at thetime the trial court considered the exception

7

any issue actually litigated and determined if its determination wasessential to that judgment

Louisiana Revised Statute 13 4231 embraces the broad usage of the phrase res

judicata to include both claim preclusion res judicata and issue preclusion

collateral estoppel Diamond B Constr Co v Dep t of Transp and Dev

2002 0573 p 9 La App 1 Cir 214 03 845 So 2d 429 435 As noted therein

Under claim preclusion a res judicata judgment on the meritsprecludes the parties from relitigating matters that were or could havebeen raised in that action Under issue preclusion or collateralestoppel however once a court decides an issue of fact or lawnecessary to its judgment that decision precludes relitigation of thesame issue in a different cause of action between the same partiesThus res judicata used in the broad sense has two different aspects 1foreclosure of relitigating matters that have never been litigated butshould have been advanced in the earlier suit and 2 foreclosure of

relitigating matters that have been previously litigated and decided

2002 0573 at pp 9 10 845 So 2d at 435 436

Under La R S 13 4231 a second action is precluded when all of the

following criteria are satisfied 1 the judgment is valid 2 the judgment is final

3 the parties are the same 4 the cause or causes of action asserted in the second

suit existed at the time of final judgment in the first litigation and 5 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 Stogner v

Allbritton 2006 1863 p 6 La App 1st Cir 6 8 07 965 So 2d 408 412

As discussed above it is undisputed that there is a valid and final judgment

in the receivership suits Ransome asserts however that the remaining elements

necessary for res judicata are not met herein Ransome contends that the exceptors

have not proven that the receivership suits and the instant third party demand are

between the same parties Ransome notes that while Theriot and NCCS are named

defendants in the instant third party demand neither Theriot nor NCCS were

named parties in the receivership suits Moreover Ransome alleges that the

receivership suits were brought in a derivative capacity whereas she filed the

8

instant third party demand in her individual capacity as guarantor of the credit

agreement Accordingly Ransome concludes that the two suits are not between

the same parties

First with regard to Theriot we note that he was the court appointed

receiver and participated throughout the course of the receivership proceedings in

that capacity Similarly in the instant third party demand Ransome has

challenged Theriot s actions as receiver Because the receivership proceedings

afforded Ransome the opportunity to raise any issues she had with the receiver the

instant third party demand is precluded if the other elements of res judicata are

met

Next while NCCS s participation in the receivership proceedings was

limited we note NCCS purchased the assets of UCCS which was a named

defendant in the receivership proceedings Although res judicata requires an

identity of parties this requirement can be satisfied when a privy of one of the

parties is involved Burguieres v Pollingue 2002 1385 p 8 n 3 La 2 25 03

843 So 2d 1049 1054 n3 In its broadest sense privity is the mutual or

successive relationship to the same right of property or such an identification in

interest of one person with another as to represent the same legal right Five N

Company L L C v Stewart 2002 0181 p 16 La App 1st Cir 7 2 03 850

So 2d 51 61 In connection with the doctrine of res judicata a privy is one

who after the commencement of the action has acquired an interest in the subject

matter affected by the judgment through or under one of the parties as by

inheritance succession purchase or assignment Id citing Black s Law

Dictionary 1200 6th ed 1990 Accordingly NCCS by virtue of its purchase of

UCCS s assets is UCCS s privy and the two share the same capacity or status as

parties herein

9

Moreover although Ransome asserts that the receivership suits were only

derivative in nature we note that she filed suit therein individually and

derivatively As is evidenced by the pleadings she filed in connection with the

receivership proceedings nothing precluded Ransome from raising any issue she

had with the receiver and or UCCSNCCS in the context of the receivership

proceedings Accordingly we find that the res judicata requirement of identity of

the parties has been met

Ransome also urges that the exceptors have failed to show that the instant

third party demand arises from the same transaction or occurrence as the

receivership suits Ransome asserts that the transaction or occurrence giving rise

to the receivership suits was a deadlock in management which dealt with the

internal affairs of UCCS and the two other companies Ransome avers that the

case sub judice by contrast arises from the credit agreement between UCCS and

AmSouth Bank Ransome argues that the factual groupings giving rise to the

receivership suits and the case sub judice are not related in time space origin or

motivation Ransome concludes that the fact that the instant case arises out of

separate transactions that occurred within the receivership proceedings does not

cause the suits to arise from the same transaction or occurrence

Despite Ransome s assertion that the instant third party demand does not

arise out of the same transaction or occurrence as the receivership suits we note

that the issues raised in the third party demand were addressed in connection with

the receivership proceedings as evidenced by Ransome s motion to vacate the trial

court s July 16 2003 judgment We note that in objecting to the final accounting

in the receivership suits Ransome alleged that the receiver breached his fiduciary

duty by failing to ensure that all debts were paid when the pledged assets were sold

to NCCS Additionally Ransome alleged that although NCCS received the

collateral securing the loan it had not assumed the loan Rather Ransome noted

10

that the receiver listed the AmSouth debt as a UCCS obligation in his final report

Despite Ransome s objection the trial court nonetheless approved the final

accounting thereby allowing NCCS to purchase UCCS s assets without assuming

the AmSouth debt Notably Ransome did not seek appellate review of that ruling9

In the instant third party demand Ransome is again requesting that the trial

court determine whether NCCS was allowed to purchase UCCS s assets without

assuming the AmSouth debt and whether Theriot as receiver negligently

improperly or willfully transferred UCCS s assets without paying the company s

debts including the AmSouth loan However Ransome is precluded from

relitigating these issues which were addressed in the receivership suits

CONCLUSION

For the foregoing reasons the trial court s judgment dismissing appellant s

third party claims against Ralph Theriot and National Compensation Control

Services Inc is affirmed but on an alternative basis The judgment is specifically

amended to provide that the exception of res judicata rather than the exception of

lis pendens applies herein and is sustained Costs of this appeal are assessed

against appellant Darlene Ransome

AFFIRMED AS AMENDED

9Although this court could not afford Ransome any practical relief in the prior appeal in

the receivership suits because the relief sought was injunctive in nature and the assets hadalready been sold the trial court had not yet accepted the receiver s final statement oraccounting After accepting the receiver s statement ex parte Ransome filed amotion to vacatethe trial court s judgment wherein she made the referenced allegations Although the trial courtdenied Ransome s motion to vacate Ransome never sought review of the trial court s ruling

11

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2005 CA 0253

AMSOUTH BANK

VERSUS

UNEMPLOYMENT COMPENSATION CONTROL SYSTEMS LLCAND DARLENE S RANSOME

McCLENDON J concurs and assigns reasons

I respectfully concur in the result I further note that the majority does

not discuss whether the amendment to LSA C C P art 927B effective

January 1 2009 may be applied retroactively However the result would be

the same