Louisiana Litigation in Review Q2 2025
This quarterly review is an opportunity to update you on recent developments in Louisiana litigation. In this edition, Andy Mendez summarizes five Louisiana cases. These articles feature recent court decisions that may be of interest to business people and legal professionals alike.
BUSINESS ENTITIES NEED LAWYERS – LITERALLY. ELA Group, Inc. v. Bradley Murchison Kelly & Shea, LLC, 56-227 (La. App. 2 Cir. 4/9/25), – So.3d – (2025).
In Louisiana, as in most jurisdictions, an individual has the right to represent him or herself in court (whether doing so is a good idea is another question). However, a business entity – such as a corporation or limited liability company – is not allowed to represent itself.
This principle, and the potential consequences of running afoul of it, is illustrated by the Louisiana Second Circuit Court of Appeal's decision in ELA Group, Inc. v. Bradley Murchison Kelly & Shea, LLC. There, ELA Group, Inc. ("ELA") sued its former attorneys, Bradley Murchison Kelly & Shea, LLC ("Bradley Murchison"), for malpractice in an earlier lawsuit. ELA's Petition (the pleading that initiates a lawsuit) was filed on its behalf by its president, Ed Angel, who is not an attorney. After filing suit, ELA retained an attorney, Brian Crawford, who informally contacted Bradley Murchison.
Bradley Murchison excepted (objected) to the Petition on various grounds, including that its filing constituted the unauthorized practice of law by Mr. Angel, and that ELA had no right to sue without counsel. ELA's attorney, Mr. Crawford, then formally appeared as counsel of record and filed an amended petition. Bradley Murchison renewed its exceptions to the amended petition.
The trial court sustained Bradley Murchison's exceptions, noting ELA's original Petition was filed "by an individual who is not admitted to practice law," and, therefore, was of "no legal effect." The case was dismissed "without prejudice."
Generally, a dismissal without prejudice means the losing party has the right to try again. Here, however, refiling the lawsuit (this time by an attorney) would be futile, because the one-year preemptive period (similar to a statute of limitations) for a malpractice claim had expired in the meantime. On appeal, ELA argued the amended Petition filed by Attorney Crawford effectively cured the defective original Petition (filed by a non-lawyer). The Second Circuit rejected ELA's arguments, finding that because the "illegally filed" original Petition was of no legal effect, it could not be amended (even if the amendment was filed by a lawyer).
Retaining a lawyer to represent your interest in litigation is usually the best move. For an entity, it is the only move.
ARBITRATION AWARD OBTAINED BY UNDUE PRACTICES MAY BE VACATED. Carver Theater, LLC, v. Melancon, 2024-0468 (La. App. 4 Cir. 5/5/25), – So.3d – (2025).
Arbitration is a voluntary, private alternative means for parties to resolve disputes without going through the public court system. Contracts that require the parties to arbitrate their disputes are common.
The Louisiana Fourth Circuit Court of Appeal's decision in Carver Theater, LLC v. Melancon demonstrates that, while judicial review of arbitration awards is narrow, it is possible to have an award vacated in some circumstances.
In Carver Theater, LLC v. Melancon, Carver Theater, LLC ("Carver") entered into multiple agreements with Ms. Melancon and others (together, "Defendants") that contemplated a joint venture to operate the theater. One such agreement was a Memorandum of Understanding ("MOU"), which required the parties to arbitrate any disputes with the American Arbitration Association using its Commercial Rules.
Carver later filed a lawsuit against the Defendants, alleging they improperly used insider information to its detriment. In response, Defendants sought to require arbitration. Carver opposed, arguing the MOU (which required arbitration) was ineffective because Defendants had not performed thereunder; Carver also amended its lawsuit to omit references to the MOU, and to assert claims under another agreement that lacked an arbitration clause.
The district court required the parties to arbitrate, which they then did. The arbitrators ruled for Defendants. The parties then returned to the district court, where Carver sought to vacate the award, arguing it was procured by fraud or undue means. Specifically, Carver complained that, in the district court, Defendants had argued the MOU (which included an arbitration clause) was enforceable, but in arbitration, Defendants argued the MOU was ineffective. The district court accepted Carver's argument and vacated the award. Defendants appealed.
The appellate court noted that a district court's review of an arbitration award is not designed to correct legal or factual errors. Instead, its review is "extraordinarily narrow," and limited to specific grounds, including where there is an allegation that the award was obtained by fraud or undue practices. The court found Defendants had engaged in "gamesmanship" by invoking arbitration under the MOU, then later denying the MOU was enforceable, which warranted vacating the award. Notably, the result may have been different under the Federal Arbitration Act ("FAA"), but the court found the FAA was inapplicable (a dissenting judge disagreed with that conclusion).
Carver Theater illustrates that, while judicial review of arbitration awards is very narrow, an award may be vacated in exceptional circumstances. The "pros and cons" of including an arbitration clause in a contract should be discussed with counsel.
AMBIGUOUS CONTRACTS MAKE LITIGATION MORE COSTLY. Equilibrium Catalyst, Inc. v. Scallan, 2024-691 (La. App. 3 Cir. 6/11/25), – So.3d – (2025).
Under Louisiana law, where a contract is clear, the court must interpret it without considering additional evidence, unless doing so would lead to "absurd" consequences. It is presumed that an unambiguous contract reflects the parties' intent. If a contract is ambiguous, however, the court may consider other evidence (e.g., witness testimony) to determine the parties' intent.
In Equilibrium Catalyst, Inc. v. Scallan, the Louisiana Third Circuit Court of Appeal interpreted a Memorandum of Understanding ("MOU") between the owners of Equilibrium Catalyst, Inc. ("ECI"). After one of the three principals (Mr. Schick) died, a retirement protocol was triggered under the MOU, and ECI began to pay million in benefits to his estate. ECI and the Schick Estate disagreed over who was responsible for the resulting income taxes.
At trial, the Schick Estate argued the MOU was unambiguous, and it moved to prevent ECI from offering evidence of prior agreements between the parties. The Estate also argued that other evidence was inadmissible because the MOU had an "integration" clause. An integration clause (also called a "merger" clause) is a contractual provision that states the contract is the entire agreement between the parties and supersedes (and makes irrelevant) any prior discussions or agreements. The trial court denied the Estate's motion and permitted evidence going to the parties' intent.
The Estate appealed, contending (among other things) the trial court erred by denying its motion to preclude evidence of prior agreements. The appellate court disagreed, finding that parol (oral) evidence was admissible to interpret the MOU. The appellate court noted the MOU did not address the tax treatment of retirement payments. Because of this gap in the MOU, it was ambiguous on that point, and the trial court correctly heard evidence of the parties' intent regarding taxes.
A court can often interpret an unambiguous contract without the long delays and substantial legal fees required for a trial on the merits. It is prudent to consult counsel before entering into a contract, because proper drafting reduces the risk of prolonged, costly litigation in the event of any disputes.
ONLY PARTIES AND THIRD-PARTY BENEFICIARIES MAY SUE FOR BREACH OF CONTRACT. O'Dwyer v. Metairie Towers Condominium Association Board President, 24-CA-277 (La. App. 5 Cir. 1/29/25), 404 So.3d 1059 (2025).
Generally, a non-breaching party to a contract has the right to sue the party who breaches a contract. In some circumstances, a non-party may also enforce a contract, but only if they are an intended "third-party beneficiary." If someone is neither a party, nor a third-party beneficiary to a contract, they generally have no right to sue for breach of contract.
Those principles were demonstrated in the Louisiana Fifth Circuit Court of Appeal's decision in O'Dwyer v. Metairie Towers Condominium Association. In 2021, the Metairie Towers condominium complex was damaged by Hurricane Ida and a second incident. It was managed by the Metairie Towers Condominium Association ("MTCA"), a non-profit corporation. The MTCA hired attorneys and other professionals, including a public insurance adjuster, to assert claims against its insurers for the damages. Tens of millions in insurance proceeds were received.
When the proceeds proved insufficient to repair all the damages, however, the MTCA advised condo owners they would need to either pay an assessment to fund repairs, or sell the property. One condo owner, Mr. O'Dwyer, sued the MTCA and the professionals it hired to pursue the insurance claim, including multiple law firms and a public insurance adjuster.
In response to the lawsuit, the law firms and adjuster excepted (objected) that Mr. O'Dwyer had no right to sue them for malpractice, because their client was the MTCA's Board, rather than the individual condo owners. The trial court sustained the exceptions and dismissed the claims against the law firms and adjuster. Mr. O'Dwyer appealed.
The appellate court affirmed the dismissal. It explained that a legal malpractice claim requires an attorney-client relationship, and the firms' client was the MTCA, not individual unit owners. Because there was no evidence introduced to show that Mr. O'Dwyer had a contract with the firms, he was not their client and could not sue them for malpractice. The court also rejected the alternative argument that Mr. O'Dwyer was a "third party beneficiary" of the contracts between the MTCA and the law firms. Under Louisiana law, it is never presumed that a third party was intended to benefit from a contract. Instead, third-party beneficiary status is determined on a case-by-case basis based on specific criteria, including that the contract manifests a clear intention to benefit a third party. Because no contracts were introduced in evidence (let alone any contract showing such an intention), Mr. O'Dwyer had no right to sue as a third-party beneficiary.
If a party to a contract intends to benefit a non-party, that intention needs to be made clear.
PARTIES MAY AGREE NOT TO BE BOUND UNTIL A FINAL CONTRACT IS SIGNED. Orleans Parish School Board v. City of New Orleans, 2025-0247 (La. App. 4 Cir. 5/19/25), – So.3d – (2025).
When do discussions between parties become binding contracts? That question is sometimes difficult to answer. In Louisiana, one of the guidelines for answering that question is, if the parties contemplate certain formalities for a contract that are not legally required, they may not be bound until they have a contract in the specific form they contemplated.
In Orleans Parish School Board v. City of New Orleans, the Fourth Circuit Court of Appeal considered whether emails exchanged between the parties' counsel constituted a binding settlement agreement. In Louisiana, settlement agreements are required to be in writing (unless they are read into the record in open court).
The parties in City of New Orleans had exchanged emails regarding a lawsuit over whether the City had unconstitutionally withheld millions of dollars in administrative fees for collecting taxes on behalf of the Orleans Parish School Board (the "School Board"). Specifically, a City councilman had emailed proposed settlement terms to the School Board. The School Board's representative advised that it would consider the proposal the following day. Thereafter, the board advised the City that it approved the terms, and the City approved an Amended Budget that reflected a payment that was among the proposed settlement terms.
The City's proposal, however, expressly contemplated "a completed CEA [Cooperative Endeavor Agreement] between the parties [to] memorialize these material terms." The parties exchanged drafts of a CEA, but no CEA was ever finalized or signed.
The School Board nonetheless sought to enforce the parties' email as a binding settlement agreement; the City disputed the existence of a binding settlement on several grounds. The trial found there was no binding settlement, and the School Board appealed.
The appellate court recognized that, while an email exchange could satisfy the writing requirement for settlements, the parties here contemplated additional formalities, i.e., a signed CEA. The court reasoned that, if the parties intended their email exchange to be binding, there would be no need for a CEA. Because the parties never signed a CEA (as they had contemplated), they did not have a binding contract.
While the dispute in this case was in the context of a proposed settlement, the decision turned, in part, on a principle that applies to contracts generally: if parties contemplate a contract in a certain form, they may not be bound absent the agreed-upon formalities. Counsel can assist clients to make sure they know when they are crossing the line from non-binding negotiations to a binding contract.