Brennan et al v. Brennan et al

Filing 73

ORDER AND REASONS dismissing as moot plaintiffs' request for preliminary injunctive relief. FURTHER ORDER denying plaintiffs' request for permanent injunctive relief. FURTHER ORDER granting in part and denying in part plaintiffs request for declaratory judgment, as stated herein. FURTHER ORDER granting in part and denying in part defendants requests for writs of mandamus, as stated herein. Signed by Judge Susie Morgan on 5/17/2013. (tsf)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
THEODORE BRENNAN, et al.,
Plaintiffs

CIVIL ACTION

VERSUS

No. 13-2491

OWEN E. BRENNAN, et al.,
Defendants

SECTION “E”

ORDER AND REASONS
The parties in this case have come to the Court requesting a determination of the
rights of plaintiff Theodore Brennan (“Ted”)1 and of defendant Owen E. Brennan, Jr. (“Pip”)
as shareholders, officers, and/or directors of plaintiff Brennan’s, Inc. (“Brennan’s, Inc.” or
the “corporation”), along with related relief. The Court rules as follows.
BACKGROUND
The Court will not attempt to recount the long and complicated history of the
Brennan family, the Brennan’s Restaurant on Royal Street in New Orleans’ French Quarter
(“the restaurant”), and the family’s corporation, Brennan’s, Inc. Suffice it to say the family
is litigious.2 To put the instant dispute into context, however, a brief recap of the family’s
history in connection with the restaurant and the corporation is in order.
Owen Brennan, Sr., the owner and founder of the predecessors to Brennan’s
Restaurant and Brennan’s, Inc., passed away in 1955, leaving control of the restaurant and
the corporation to his wife, Maude Brennan; their three children, Pip Brennan, Ted

1

names.

For ease of reference, the Court refers to the parties and their family members by their first

2

For a more detailed examination of the history of the Brennan family and Brennan’s Restaurant,
see, e.g., Brennan’s, Inc. v. Dickie Brennan & Co., Inc., 376 F.3d 356, 359-61 (5th Cir. 2004). Additional
litigation involving various family members has been filed since that time.

1

Brennan, and James Brennan (“Jimmy”) (collectively, the “brothers”); and various aunts
and uncles of the brothers. Brennan's, 376 F.3d at 358. Settlement of a disagreement in
the 1970s between branches of the family led to control of Brennan’s Restaurant and of
Brennan’s, Inc. being placed in the hands of Maude, Pip, Ted, and Jimmy, with the aunts
and uncles acquiring ownership of other New Orleans restaurants. Id. After Maude’s death
in 1988, the three brothers were the sole shareholders in Brennan’s, Inc., with each one
holding 196 shares and all three serving as officers and directors of the corporation. From
the late 1980s until the mid-2000s, the corporation and restaurant apparently ran
smoothly; indeed, the restaurant enjoyed its most profitable years during this time.
However, after Hurricane Katrina made landfall in August 2005, devastating the restaurant
along with much of the Greater New Orleans region, relations between the brothers took
a decidedly negative turn.
After Hurricane Katrina, Pip’s sons Blake Brennan (“Blake”) and Bert Clark Brennan
(“Clark”), both of whom were former employees of Brennan’s Restaurant, initiated plans
to open their own restaurants in Florida and Mississippi. See Brennan’s, Inc. v. Brennan,
289 F. App’x 706, 707 (5th Cir. 2008), cert. denied, 129 S. Ct. 1615 (2009). Brennan’s, Inc.
sued Clark and Blake for trademark infringement and unfair competition.

See id.

Brennan’s, Inc. also sued Pip in Louisiana state court for unauthorized assignment of a
Brennan’s, Inc. trademark to his sons. On March 28, 2006, a meeting of the three
shareholders in the corporation - Ted, Jimmy, and Pip - was held.3 At this meeting,
discussions took place regarding Pip’s involvement in Blake’s and Clark’s plans, which led
to a resolution supported by Ted and Jimmy relieving Pip of his duties as manager of
3

See Joint Bench Book Exhibit 47 (Minutes of March 28, 2006 meeting).

2

Brennan’s, Inc.4 Ted and Jimmy also voted to terminate a 1983 compensation agreement
executed between the three brothers (the “1983 Compensation Agreement”).5

On

December 19, 2006, a special meeting of the Board of Directors of Brennan’s, Inc. was
held.6 At this meeting, Ted and Jimmy voted to remove Pip as an officer in the corporation,
to elect Ted President, to elect Jimmy secretary, and to elect Ted’s daughter Bridget
Brennan Tyrrell (“Bridget”), a plaintiff in the instant suit, treasurer.7 On January 4, 2007,
another special meeting of the shareholders of Brennan’s, Inc. was held, and at this
meeting, Ted and Jimmy voted to ratify the actions taken by the directors at the December
19, 2006 meeting, including the termination of the 1983 Compensation Agreement.8 Ted
and Jimmy also voted to remove Pip as a director in Brennan’s, Inc. and to elect Bridget as
a “replacement director.”9 Meanwhile, in addition to the lawsuits described above, Pip
instituted litigation in state court against his brothers and the corporation; the corporation
and his brothers also filed lawsuits in state court against Pip.
On February 2, 2010, a special meeting of the shareholders of Brennan’s, Inc. was
held.10 Ted, Jimmy, and Bridget were in attendance.11 No evidence was introduced at the
May 13, 2013 hearing to establish whether notice was given of the meeting, and, if so, to
4

See id.

5

See id.

6

See Joint Bench Book Exhibit 46 (Minutes of December 19, 2006 meeting).

7

See id.

8

See Joint Bench Book Exhibit 48 (Minutes of January 4, 2007 meeting).

9

Id.

10

11

See Joint Bench Book Exhibit 52 (Minutes of February 2, 2010 meeting).
Id.

3

whom. At the meeting, one share of stock in Brennan’s, Inc. was issued to Bridget as
compensation for services rendered by her as treasurer and director to the corporation.12
The Court has not been asked to determine the validity of the issuance of the share to
Bridget at this time, but it is clear from the pleadings and the evidence presented at the
hearing that Bridget’s shareholder status is in dispute.
In July 2010, Jimmy passed away. Pursuant to a stock redemption agreement
calling for the corporation to buy Jimmy’s stock upon his death,13 on October 15, 2010
Brennan’s, Inc. entered into an agreement with Shawn Tiffany Brennan and Samantha
Scott Brennan, in their capacities as independent co-executors of Jimmy’s Succession
(collectively, the “Succession”), to buy Jimmy’s stock. That same day, Brennan’s, Inc.
executed a promissory note in favor of the Succession, obligating the corporation to pay the
Succession approximately $2 million, plus interest, in exchange for Jimmy’s shares of
stock.14 The Succession and Brennan’s, Inc. also entered into a “Pledge and Security
Agreement,” which granted the Succession a security interest in the shares of stock.15 By
the terms of this agreement, the Succession was to maintain this security interest in the
shares until the final payment due under the Promissory Note was paid, and the Succession
was granted certain rights in the event the corporation defaulted on its obligations.16

12

Id.

13

See Joint Bench Book Exhibit 2A.

14

See Joint Bench Book Exhibit 13 (October 15, 2010 Promissory Note).

15

See Joint Bench Book Exhibit 12 (October 15, 2010 Pledge and Security Agreement).

16

Id.

4

On December 23, 2010, after several years of intense and protracted litigation, Pip
and Brennan’s, Inc. entered into a “Settlement Agreement and Release” (the “December
2010 Settlement”).17 In the December 2010 Settlement, Pip agreed to “sell to Brennan’s all
of his stock in Brennan’s.”18 Brennan’s, Inc. agreed to “pay Pip Two Millions Dollars
($2,000,000.00) plus interest pursuant to the TERMS AND RATE set forth” in a 1983
stock redemption agreement (the “1983 Redemption Agreement”), attached as an exhibit
to the December 2010 Agreement.19 Brennan’s, Inc. agreed to pay this $2 million in
“monthly installments of $20,000.00,” with the first payment due on February 28, 2011.20
Brennan’s, Inc. also agreed that “[a]s soon as the last monthly installment on the previously
mentioned Two Million Dollars ($2,000,000) is completed, Brennan’s will continue to pay
Pip monthly installment payments of a minimum of $20,000 per month until another (One
Million Dollars) $1,000,000, without interest, is paid.”21 The agreement states that “[t]hese
additional payments are in further consideration for the stock sale from Pip to Brennan’s.”22
In addition, the corporation agreed to maintain various insurance policies for Pip and his
wife and to pay Pip $6,000 per month, payable on the 28th day of each month beginning
in February 2011, in lieu of purchasing additional life insurance for Pip.23 The corporation

17

See Joint Bench Book Exhibit 2.

18

Id.

19

See id.; see also Joint Bench Book Exhibit 2A.

20

Joint Bench Book Exhibit 2.

21

Id.

22

Id.

23

Id.

5

also agreed to forgive Pip’s loan account with the corporation and to pay Pip a sum of
$35,000, broken out into 24 equal monthly installments, payable on the 28th day of each
month beginning in July 2011.24 The parties disagree about whether all or only some
portion of these insurance and loan forgiveness payments were in exchange for Pip’s stock.
The parties also disagree about whether forgiveness of Pip’s loan was consideration for the
sale of stock, and, if so, the amount that was forgiven. Pip testified that his loan balance at
the time of the December 2010 Agreement was $330,000. Bridget testified Pip’s loan
balance was $537,921.42.
The corporation agreed the “value of Pip’s stock [would] be maintained until all
payments” set forth in the December 2010 Agreement were made.25 As security for its
obligations under the December 2010 Agreement, Brennan’s, Inc. offered primary security
in the form of a personal guaranty by Ted, secondary security in the form of a personal
guaranty by Ted’s children Bridget, Alana Brennan (“Alana”) and Theodore Brennan, Jr.
(“Teddy”), tertiary security comprised of a security interest in Pip’s shares, and quaternary
security in the form of a limited security interest in certain of Brennan’s, Inc.’s intellectual
property.26
Brennan’s, Inc. quickly fell behind on its payment obligations to Pip. Brennan’s, Inc.
failed to make most, if not all, payments in a timely fashion.27 After three checks had to be

24

25

Id.

26

Id.

27

Inc.).

Joint Bench Book Exhibit 2; Joint Bench Book Exhibit 2A.

See Joint Bench Book Exhibit 28 (Pip’s handwritten record of payments made by Brennan’s,

6

replaced due to insufficient funds,28 and after Brennan’s, Inc. began paying Pip less than
the full amount owed each month, the corporation stopped paying Pip altogether.29 The last
full payment by Brennan’s, Inc. came in August 2012 (for the July 2012 scheduled
payment), and the last partial payment came in May 2013.30 Pip testified that Brennan’s,
Inc. failed to pay him the full amount due under the terms of the December 2010
Agreement for the months of August 2012, September 2012, October 2012, November 2012,
December 2012, January 2013, February 2013, March 2013, April 2013, and May 2013. The
parties agree these deficiencies constitute a breach of the agreement on the part of
Brennan’s, Inc.
At no point did Brennan’s, Inc. demand the return or cancellation of any or all of
Pip’s stock certificates, and to date, Pip maintains possession of these documents. Likewise,
at no point did Brennan’s, Inc. send written notice of redemption of all or part of the shares
to Pip.
In light of Brennan’s, Inc.’s failure to pay under the terms of the December 2010
Agreement and its obvious financial troubles,31 Pip filed suit against the corporation in
Louisiana state court in September 2012 to enforce the December 2010 Agreement and to
accelerate the debt owed to him by the corporation under that agreement.32

28

See id.; see also Joint Bench Book Exhibits 26-27.

29

Joint Bench Book Exhibit 28.

30

Joint Bench Book Exhibit 43. This payment was made by direct deposit into Pip’s account
without his knowledge. It is unclear what this May 2013 partial payment was intended to pay.
31

In addition to the corporation’s other financial difficulties described herein, the building in
which Brennan’s Restaurant is housed is scheduled to be sold at a Sheriff’s sale on May 23, 2013.
32

The Court takes judicial notice of Pip’s petition and amended petition filed in Case Number
12-9217, Civil District Court for the Parish of Orleans, State of Louisiana.

7

Meanwhile, in December 2012, a judgment was entered against Ted, on behalf of the
corporation, in favor of oblique plaintiffs Edward Tuck Colbert and Kenyon & Kenyon, LLP
(collectively, “Kenyon”), in the amount of $4,070,135.84, plus legal interest from December
10, 2012 (the “December 2012 Judgment”).33 On February 7, 2013, Kenyon obtained a writ
of fieri facias, pursuant to Louisiana Code of Civil Procedure Articles 2291 et seq.,
authorizing the seizure of Ted’s property to satisfy the December 2012 Judgment.34 On
April 25, 2013, United States Magistrate Judge Sally Shushan ordered that, pursuant to the
writ of fieri facias, Kenyon was entitled to take control of Ted’s stock certificates in
Brennan’s, Inc.,35 and on April 26, 2013, Kenyon took control of those certificates.36 To
date, Kenyon has not taken any formal steps to dispose of Ted’s shares through a judicial
sale or otherwise.
On April 8, 2013, Pip sent the corporation a written request for a special
shareholders meeting.37 In this request, Pip stated his intent to raise several issues at the
meeting, including the denouncement of Ted’s and Bridget’s conduct in running Brennan’s,
Inc., the removal of Ted and Bridget as officers and directors in the corporation, and the
changing of the registered office and agent of the corporation.38 The request stated that
“[t]he record date for purposes of voting rights” at the requested meeting would be April

33
This Judgment was entered in Civil Action No. 12-137, a case that is pending before this Court.
See Civil Action No. 12-137, R. Doc. 192.
34

See Civil Action No. 12-137, R. Doc. 203.

35

See Civil Action No. 12-137, R. Doc. 241.

36

See Joint Bench Book Exhibit 25.

37

Joint Bench Book Exhibit 6.

38

See id.

8

8, 2013, and that “[o]nly those shareholders with voting rights and authorized by law to
vote at the close of business on April 8, 2013, will be entitled to vote, in person or by proxy,”
at the requested meeting.39 On April 9, 2013, Pip issued a notice of special shareholders
meeting to be held on April 26, 2013.40 The notice reiterated that “[t]he record date for
purposes of voting rights” at the meeting was April 8, 2013, and that “[o]nly those
shareholders with voting rights and authorized by law to vote at the close of business on
April 8, 2013, will be entitled to vote, in person or by proxy,” at the meeting.41 No evidence
has been introduced to show to whom the notice was sent.
On April 23, 2013, a special meeting of the Board of Directors of Brennan’s, Inc. was
held.42 No evidence has been introduced regarding how this meeting was called or who
received notice of the meeting. It appears from the minutes of the meeting that the
attendees were Ted, Bridget, Alana, Teddy, and a lawyer named Laura Plunkett.43 It also
appears from the minutes that Ted and Bridget voted to confirm Ted as president of the
corporation, to elect Bridget as secretary, and to elect Teddy as treasurer.44 The validity of
the calling of this meeting and the actions taken there are in dispute.
On April 26, 2013, the special shareholders meeting called by Pip was held.45 It

39

Id.

40

Joint Bench Book Exhibit 7.

41

Id.

42

Joint Bench Book Exhibit 49.

43

See id.

44

Id.

45

See Joint Bench Book Exhibits 8-9.

9

appears from the minutes of the meeting that Pip, Bridget, and Ted were in attendance,
along with lawyers and other family members.46 It also appears from the minutes that Pip
voted his shares and the Succession’s shares47 to take several actions: (1) to denounce them
actions of Ted and Bridget as ultra vires and in breach of their fiduciary duties to the
corporation; (2) to remove Ted and Bridget as directors and elect Pip, Clark, and Blake as
directors to serve out Ted’s and Bridget’s terms; (3) to remove Ted and Bridget from their
respective offices and elect Pip as president, Blake as secretary, and Clark as treasurer; and
(4) to change the registered agent and registered office of the corporation.48 It appears
from the record that Ted and Bridget voted against the resolution to remove them as
officers and directors and that their votes were “taken under protest” by Pip and the
Succession.49
Shortly after the meeting, Pip, Clark, and Blake, and others, entered Brennan’s
Restaurant, declaring that Bridget and Ted had been ousted from the corporation as a result
of the meeting; that Pip, Clark, and Blake had taken control of the corporation; and that
Pip, Clark, and Blake would be running the restaurant.50 After a “stand-off,” the parties
agreed that Teddy and Blake would “co-manage” the restaurant for the weekend until the
parties could be heard in court.51

46

Id.

47

The validity of the purported proxy given by the Succession to Pip is in dispute.

48

See Joint Bench Book Exhibit 9.

49

See Joint Bench Book Exhibit 8.

50

See R. Doc. 61 (Plaintiffs’ amended complaint).

51

Id.

10

On April 29, 2013, Ted, Bridget, and the corporation filed a petition in state court
seeking a temporary restraining order, preliminary and permanent injunctive relief, and
a declaratory judgment.52 Pip, Blake, and Clark were named defendants in this state court
action. Shortly after the petition was filed, defendants removed the action to this Court,
invoking the Court’s diversity jurisdiction.53 After the case was removed, the Court held a
status conference on May 2, 2013.54 Plaintiffs’ request for a temporary restraining order
was denied, and plaintiffs’ other causes of action were set for hearing on May 13, 2013.55
The parties agreed to maintain their arrangement, calling for a representative from Ted’s
family and a representative from Pip’s family to co-manage the restaurant, until the Court
ruled on the parties’ requests. On May 3, 2013, defendants filed a counterclaim requesting
writs of quo warranto and mandamus be directed against the corporation, Ted, and
Bridget.56 The Court informed the parties the issues raised by the counterclaim would also
be heard at the May 13, 2013 hearing.57 Under the then-existing pleadings, the Court found
that the Succession was a party required to be joined to both the petition and the
counterclaim under Federal Rule of Civil Procedure 19, but that it was not feasible for the
Succession to be joined as a party in this case. The Court instructed the parties to amend
the petition and counterclaim to remove from their respective prayers all requests for relief

52

R. Doc. 1-3.

53

R. Doc. 1.

54

R. Doc. 17.

55

Id.

56

R. Doc. 20.

57

R. Doc. 29. The parties consented to the plaintiffs’ requests for injunctive and declaratory relief
and the defendants’ requests for writ of mandamus being heard in summary proceedings.

11

involving the determination of the rights of the Succession.58
On May 11, 2013, plaintiffs filed an amended complaint, seeking the following relief:
(1)

a preliminary and permanent injunction enjoining Pip, Clark, and
Blake, and any person acting in concert with them, from entering the
premises of the Brennan’s Restaurant; and/or purporting to take any
action as a shareholder, director, or officer of Brennan’s, Inc;

(2)

a Declaratory Judgment that the April 26, 2013 meeting was invalid,
unlawful and of no force and effect because Pip was not a shareholder
in Brennan’s, Inc., and, as such, had no authority to call the meeting;

(3)

a Declaratory Judgment that Pip, Clark, and Blake are not
shareholders, directors, or officers of Brennan’s, Inc. and have no
authority to act on behalf of the corporation;

(4)

a Declaratory Judgment that the Brennan’s, Inc. registered office and
registered agent were not changed as a result of the actions taken at
the April 26, 2013 meeting; and

(5)

a Declaratory Judgment that the Defendants have no authority to
change Brennan’s, Inc.’s registered office or registered agent and that
any purported changes at the April 26, 2013 meeting to the
corporation’s registered office or registered agent are null and void.59

On this same date, defendants filed an amended counterclaim, requesting the
following relief:
(1)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget ordering them to recognize the rights of the corporation’s
members or shareholders;

(2)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget recognizing the rights of Pip as a shareholder to call April 26,
2013 meeting and to vote Pip’s 196 shares at that meeting;

58
See R. Doc. 57; see also R. Doc. 53 (Order requesting briefing on Rule 19 issue). Before the
Court instructed the parties to amend their pleadings, defendants filed a motion to consolidate certain
issues of fact and law pending in Civil Action No. 12-2442 with this case in an effort to have the
Succession’s rights decided without adding it as a party to this case. See R. Doc. 24. After reviewing briefs
submitted by plaintiffs in this case, plaintiffs in Civil Action No. 12-2442, and the Succession (a defendant
in Civil Action No. 12-2442), the Court denied the motion to consolidate. R. Doc. 52.
59

R. Doc. 61.

12

(3)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget ordering them to show cause as to the ability of Ted to vote his
shares at the April 26, 2013 meeting;

(4)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget ordering that an election of officers and directors take place
based on the status of the voting stock of Brennan’s, Inc. as of the date
of the filing of the Amended Counterclaim;

(5)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget ordering that the corporate books of Brennan’s, Inc. be
corrected as of April 26, 2013, to properly show the status of Pip and
Ted’s Brennan’s, Inc. voting stock on that date; and

(6)

a writ of mandamus against Brennan’s, Inc. and/or Ted and/or
Bridget ordering that the corporate books of Brennan’s, Inc. correctly
reflect the current status of the voting stock of Pip Brennan and Ted
Brennan prior to this Court’s directing a writ of mandamus ordering
the new election of officers and directors.60

On May 12, 2013, plaintiffs filed an answer to the amended counterclaim,61 and on May 13,
2013, defendants filed an answer to the amended complaint.62
On May 13, 2013, a hearing was held.63 At the hearing, Bridget testified for plaintiffs,
Pip testified for defendants, and the testimony of defense witness Stephanie Audibert was
proferred. On May 14, 2013, the Court entertained closing arguments from counsel for the
parties and took the above issues under submission.64 The Court has carefully considered

60

R. Doc. 58. With the filing of these amended pleadings and amended prayers for relief, the
parties are no longer asking the Court to determine the rights of the Succession as shareholder in the
corporation. Likewise, the Court is not at this time being asked to determine the rights of Bridget as
shareholder, officer, or director in the corporation.
61

R. Doc. 69.

62

R. Doc. 70.

63

See R. Doc. 71.

64

See R. Doc. 72.

13

the pleadings, the testimony and evidence presented at the hearing, various state and
federal court pleadings of which the Court took judicial notice, and the arguments of
counsel, and is now ready to rule on the parties’ limited prayers for relief.
ANALYSIS
As a threshold matter, the Court notes that because the Court is sitting in diversity,
the Court applies the substantive law of Louisiana, the forum state. See, e.g., Holt v. State
Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010) (citing Erie R. Co. v. Tompkins, 304
U.S. 64 (1938)). The parties agree Louisiana law governs this case.
I.

The Requested Injunctive Relief is Denied

The Court will first address plaintiffs’ requests for preliminary and permanent
injunctive relief. Under Louisiana law, an injunction is a “harsh, drastic, and extraordinary
remedy, and should only issue where the party seeking it is threatened with irreparable loss
or injury without adequate remedy at law.” Lafreniere Park Foundation v. Friends of
Lafreniere Park, Inc., 97-152 (La. App. 5 Cir. 7/29/97); 698 So.2d 449, 452, writ denied,
97-2186 (La. 11/21/97); 703 So. 2d 1312. “In order to obtain a preliminary injunction a
plaintiff must show that he will suffer irreparable harm if the injunction is not granted, that
he is entitled to relief sought, and he must make a prima facie showing that he will prevail
on the merits.” Id. If the action complained of is unlawful, however, the plaintiff need not
show the action will cause the plaintiff irreparable harm. Id. The trial court has “great
discretion” to grant or deny a request for preliminary injunctive relief. Id. A preliminary
injunction maintains the status quo until final determination on the merits of the case. See
id.; see also La. Granite Yard, Inc. v. LA Granite Countertops, L.L.C., 45,482 (La. App. 2
Cir. 8/18/10); 47 So.3d 573, 581, writ denied, 10–2354 (La. 12/10/10); 51 So.3d 733
14

(internal citation omitted). In this case, the parties agreed to consolidate hearings on
plaintiffs’ requests for preliminary and permanent injunctive relief and have those requests
heard simultaneously and in a summary proceeding. Because the parties agreed to
maintain the status quo until the merits of this case could be decided, plaintiffs’ request for
preliminary injunctive relief is moot.
Unlike a preliminary injunction, the issuance of a permanent injunction takes place
only after a trial on the merits, and the party seeking the permanent injunction must prove
its entitlement to the relief by a preponderance of the evidence. See, e.g., Farmer’s Seafood
Co., Inc. v. State ex rel Dep’t of Pub. Safety, 2010–1746 (La. App. 1 Cir. 2/14/11), 56 So.3d
1263, 1266. To obtain a permanent injunction, the party requesting the relief must
demonstrate that irreparable injury will result if the injunction is not granted, regardless
of the lawfulness of the defendant’s actions. See LA. CODE CIV. PROC. ANN. art. 3601; see
also Elysian Fields Church of Christ v. Dillon, 08-989 (La. App. 4 Cir. 3/18/09); 7 So.3d
1227, 1232. In this case, the Court finds that plaintiffs did not prevail on the merits with
respect to Pip’s status as a shareholder. Furthermore, defendants have not requested a writ
of mandamus with respect to the status of Clark and Blake as officers and directors and do
not assert these two individuals are shareholders, so plaintiffs’ request for permanent
injunctive relief with respect to them is moot. Finally, plaintiffs have failed to demonstrate
by a preponderance of the evidence that irreparable harm will result if the Court fails to
grant the relief requested. At trial, Bridget testified the uncertainty caused by the rift
between the two branches of the Brennan family is having a negative effect on the
restaurant’s employees but that the restaurant’s operations are running relatively smoothly
under the current co-management arrangement. Feelings of tension amongst employees
15

and animosity amongst adverse litigants do not amount to an irreparable injury. Plaintiffs’
request for permanent injunctive relief is denied.
II.

Declaratory Relief

Plaintiffs’ requests for declaratory relief fall into two categories: (1) the rights of Pip,
Clark, and Blake as shareholders, officers, and directors in Brennan’s, Inc.; and (2) the
validity of the April 26, 2013 meeting. The Court will address each category in turn.
A.

Blake and Clark are Not Shareholders, Officers, or
Directors; Pip is a Shareholder but not an Officer or
Director

Plaintiffs seek a declaration that neither Pip nor his sons Clark and Blake are
shareholders, officers, or directors in Brennan’s, Inc. As explained below, Pip is a
shareholder in the corporation, so plaintiffs’ request for declaratory judgment is denied
insofar as it seeks a declaration to the contrary. There has been no argument or evidence
presented that Clark or Blake are shareholders in the corporation, so plaintiffs’ request for
a declaratory judgment that neither Clark nor Blake is a shareholder is granted.
With respect to plaintiffs’ request for a declaratory judgment as to Pip’s, Clark’s, and
Blake’s status as officers or directors in the corporation, the undisputed evidence at the
hearing was that Pip was removed as officer and director in the corporation in 2006, and,
as explained below, the April 26, 2013 meeting at which Pip, Clark, and Blake were
purportedly elected as officers and directors in the corporation was not proven to be
properly called or conducted. As a result, neither Pip nor Clark nor Blake has been validly
elected to the position of officer or director in Brennan’s, Inc., and plaintiffs’ request for a
declaratory judgment on this issue is granted. Pip, Clark, and Blake are not officers or
directors in Brennan’s, Inc. at this time.
16

B.

The April 26, 2013 Meeting Was Not Properly Called or
Conducted

The April 26, 2013 special shareholders meeting called by Pip was not properly
called or conducted and, as a result, none of the corporate resolutions or elections voted on
at that meeting is of any effect. Pip testified at trial that he issued notice of the meeting, one
day after requesting the meeting, because he did not know who, if anyone, held the position
of secretary of Brennan’s, Inc. Section 73(B) of the Louisiana Business Corporations Law
authorizes a shareholder to call a special meeting only if the secretary of the corporation
refuses or neglects to call the meeting for a date within 60 days after receipt of the written
request. See LA. REV. STAT. ANN. § 12:73(B). Pip did not wait the requisite amount of time
before calling the meeting on his own. Even if the meeting was timely and properly called
by Pip because there was no duly elected secretary of the corporation, it has not been
established that all shareholders were given notice of the meeting or that all shareholders
were allowed to attend and vote their shares.65 Only a properly noticed meeting at which
all shareholders present are allowed to vote their shares can result in valid corporate action.
Plaintiffs’ request for a declaratory judgment that the April 26, 2013 meeting was invalid,
unlawful, and of no force and effect is granted.
1.

The Registered Office and Registered Agent of
Brennan’s, Inc. Were Not Changed

Because the April 26, 2013 meeting was invalid, the corporate resolutions adopted
and elections held during that meeting are null and void, including the resolutions to
change the corporation’s registered office and agent. Accordingly, plaintiffs’ request for a
65

Under the current circumstances, it is unclear who the shareholders are, and, absent an
agreement of all interested parties, it appears impossible for there to be a validly noticed and held meeting
of the shareholders.

17

declaratory judgment that neither the registered office nor the registered agent of the
corporation was changed as a result of the meeting is granted.
2.

Pip, Clark, and Blake Did Not Have Authority to
Change the Registered Office or Registered Agent of
Brennan’s, Inc. at the April 26, 2013 Meeting

In addition to the April 26, 2013 meeting being invalid, which means that Pip, Clark,
and Blake had no authority to change the registered officer or agent of the corporation at
that meeting, Clark and Blake are not shareholders, officers, or directors in the corporation
with the right to vote on corporate matters. Plaintiffs’ request for a declaratory judgment
that Pip, Clark, and Blake had no authority to change the registered office and registered
agent of the corporation at the April 26, 2013 meeting is granted.
III.

Writ of Mandamus

The Court now turns to defendants’ prayers for relief in the amended counterclaim,
all of which fall under the umbrella of the writ of mandamus set forth in Louisiana Code of
Civil Procedure articles 3861-3866.66 “By definition, mandamus is an order directing
performance.” In re Interdiction of Vicknair, 01-902 (La. App. 1 Cir. 7/21/02); 922 So.2d
46, 49. A writ of mandamus may be directed to an officer of a corporation to compel the
corporation to recognize the rights of the corporation’s members or shareholders. LA. CODE
CIV. PROC. ANN. art. 3864; see also Vicknair, 922 So.2d at 49. Before issuing a writ of
mandamus to an officer of Brennan’s, Inc. compelling the corporation to recognize the
rights of the corporation’s shareholders, the Court must first determine who exactly those
shareholders are. See Vicknair, 92 So.2d at 49. This determination of shareholder status,
66

In the original counterclaim, defendants sought relief in the form of a writ of mandamus and a
writ of quo warranto under Louisiana Code of Civil Procedure articles 3901-3902. See R. Doc. 20. In the
amended counterclaim, defendants removed their claims for a writ of quo warranto.

18

at least with respect to Ted and Pip, is at the heart of all six writs requested in the amended
counterclaim. The Court will address Ted’s status before turning to Pip’s status.67 The
Court’s findings as to Ted’s and Pip’s status are limited to their status as shareholders as of
May 11, 2013, the day the amended complaint and amended counterclaim were filed.
A.

Ted is a Shareholder in Brennan’s, Inc.

The Court finds that Ted was the record owner of 196 shares of stock in Brennan’s,
Inc. as of May 11, 2013. While his stock certificates were seized pursuant to a writ of fieri
facias by counsel for Kenyon, it is undisputed that Kenyon has not taken the steps
necessary under Louisiana law to sell the shares of stock represented by those certificates.
A writ of fieri facias directs the seizure and sale of property. A seizing creditor, by the mere
act of seizure, acquires a privilege on the property seized but does not acquire ownership.
See LA. CODE CIV. PROC. ANN. arts. 2291-2343. Under Louisiana law, an owner of shares of
stock retains his right to vote those shares of stock unless and until the ownership of those
shares is formally transferred to another person or entity. See Foreman v. Hines, 314 So.2d
460, 464 (La. App. 4 Cir. 1975). While a certificate of stock serves as prima facie evidence
of corporate ownership, actual ownership and shareholder status is determined from all the
facts and circumstances of a case. Vicknair, 822 So.2d at 50. In this case, the stock is still
registered in Ted’s name and Ted has established from all the facts and circumstances of
this case that he remains the owner of the shares, even if he does not have them in his
possession. Thus, Ted maintains his right to vote those shares.68 See Foreman, 314 So.2d

67

Again, the Court does not address Bridget’s nor the Succession’s shareholder status at this time.

68

At oral argument on May 14, 2013, counsel for defendants conceded that Kenyon’s seizure of
Ted’s certificates did not divest Ted of his shares or his ability to vote those shares.

19

464. To the extent defendants’ amended counterclaim seeks a writ of mandamus directed
to the corporation ordering Ted to show cause as to his ability to vote his shares, that
request is denied.

Instead, the Court will issue a writ of mandamus ordering the

corporation to reflect on its books that Ted is the record owner of 196 shares in Brennan’s,
Inc. as of May 11, 2013.
B.

Pip is a Shareholder in Brennan’s, Inc.

The Court finds that Pip was the record owner of 196 shares of stock in Brennan’s,
Inc. as of May 11, 2013. On that date, all 196 shares remained of record in Pip’s name,69 and
the certificates remained in Pip’s possession. As explained above with respect to Ted,
record ownership of stock serves as prima facie evidence of corporate ownership, and
ownership of shares of stock in a corporation carries the right to vote those shares. See LA.
REV. STAT. ANN. § 12:75; LA. REV. STAT. ANN. § 12:601; Vicknair, 822 So.2d at 50. As the
record owner, Pip had the right to vote those shares and, pursuant to Brennan’s, Inc.’s
Articles of Incorporation and Articles of Amendment,70 he had the right to request the
corporation’s secretary notice a special shareholders meeting.71
Furthermore, Pip has not been divested of his ownership by virtue of the December
2010 Agreement. The Court finds that the December 2010 Agreement, with the 1983 Stock
Redemption Agreement attached as Exhibit A, was a stock redemption agreement within
the meaning of Section 75A of the Louisiana Business Corporations Law (“ Section 75A “).

69

See Joint Bench Book Exhibit 17 (Pip’s stock certificates).

70

See Joint Bench Book Exhibit 1.

71

The Court has found, however, that even though Pip had the right to request the meeting, and
would have the right to vote his shares at a properly called meeting, Pip did not establish that all
shareholders were given proper notice of the meeting and an opportunity to vote at the meeting.

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Under Section 75A, a shareholder of record is entitled to vote each of his shares at every
shareholders’ meeting, and even if the corporation has decided to redeem the shares, the
shareholder maintains his right to vote those shares until the entire redemption price is
paid or a sum sufficient to redeem the shares is deposited. See LA. REV. STAT. ANN. §
12:75A.72
Under certain circumstances, prima facie evidence of stock ownership may be
rebutted upon a showing from all the facts and circumstances of the case that actual
ownership is otherwise. Vicknair, 822 So.2d at 50. In this instance, Ted and Bridget have
the burden of proving facts and circumstances to rebut Pip’s presumption of ownership of
the shares as of May 11, 2013. Ted’s and Bridget’s sole argument is that the December 2010
Agreement was not a stock redemption agreement within the meaning of Section 75A but
instead was a completed sale which immediately divested Pip of ownership. Thus, they
argue, Section 75A does not apply.
Even if Bridget and Ted were given the benefit of the doubt, and the Court found that
the December 2010 Agreement was ambiguous on this front, the Court would find the
intent of the parties was for the agreement to be a stock redemption agreement within the
meaning of Section 75A. Under Louisiana law, “[i]nterpretation of a contract is the

72

Section 75A provides as follows:

Except as provided in R.S. 12:136 and R.S. 12:140.12, and except as otherwise provided in the
articles, each shareholder of record shall have the right, at every shareholders' meeting, to
one vote for each share standing in his name on the books of the corporation; provided that
on and after the date on which written notice of redemption of redeemable shares has been
mailed to the holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders thereof upon surrender of certificates therefor, such shares
shall not be entitled to vote on any matter and shall not be deemed to be outstanding shares.
LA. REV. STAT. ANN. § 12:75A.

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determination of the common intent of the parties.” LA. CIV. CODE ANN. art. 2045. When
a contract’s terms are clear and explicit and lead to no absurd consequences, no further
interpretation may be made in search of the intent of the parties. LA. CIV. CODE ANN. art.
2046. However, when the contracting parties’ intent is less than clear, the “agreement shall
be construed according to the intent of the parties, which is to be inferred from all of the
surrounding circumstances.” New Orleans Jazz and Heritage Foundation, Inc. v. Kirksey,
09-1433 (La. App. 4 Cir. 5/26/10); 40 So.3d 394, 401-02 (citing Derbes v. GBS Properties,
04–1460 (La. App. 5 Cir. 4/26/05); 902 So.2d 1109, 1111).
If the December 2010 Agreement were ambiguous, the Court would have to attempt
to determine the intent of the parties. Kirksey, 40 So.3d at 401. Ted did not testify at the
hearing so he provided no evidence of his intent with respect to the interpretation of the
December 2010 Agreement. The corporation did not produce minutes from any meetings
at which the execution of the agreement or the ownership of the stock thereafter was
discussed. No corporate stock ledger was introduced into evidence to show what, if any,
changes were made on the books of the corporation with respect to record ownership of
Pip’s shares. Ted and Bridget failed to establish the amount they believe was to be paid for
Pip's shares in full or on a pro rata basis. Instead, the only evidence presented regarding
the parties’ intent was Pip’s testimony at trial. Pip testified his intent was that the stocks
would be redeemable over time, only if and when the corporation called for pro rata
redemption of a specific number of shares, and only upon the corporation clearly
establishing the amount required to be paid for the shares and that this amount had been
paid. The only alternative, in his opinion, was that all his stock would be redeemable upon
the corporation’s call for redemption of all shares after payment in full had been made to
22

the satisfaction of Pip and the corporation. Considering Pip’s testimony and the lack of
testimony or evidence from Ted, Bridget, and/or the corporation, the Court finds that, even
if the December 2010 Agreement were ambiguous, Bridget and Ted failed to prove that the
intent of the parties was for the transaction to be a completed sale not subject to Section
75A. Instead, the evidence demonstrates the parties intended for the December 2010
Agreement to be a stock redemption agreement and for Pip to retain ownership of his
shares until the shares were redeemed in accordance with Section 75A. 73
Finally, the Court notes that the parties dispute the amounts that have been paid
and/or forgiven, and whether all such amounts are in consideration for the sale of Pip’s
stock. As a result, the redemption price has not been paid full nor has a sum sufficient
been deposited. The case of Guidry v. Gulf Coast Coil Tubing, 09-621 (La. App. 3 Cir.
12/9/09); 24 So.3d 1019, involved a dispute over the price to be paid under a redemption
agreement similar to the situation presented by the case at bar. Id. at 1021-25. In affirming
the trial court, the appellate court noted that Section 75A provides a holder of redeemable
shares of stock maintains his right to vote those shares unless and until a sum sufficient has
been deposited. In that case, the amended articles called for redemption of shares at “book
value” and the redemption letters called for redemption at a rate of $1.00 per share - two
values that are not necessarily the same. Thus, the sum sufficient for redemption had not
been determined. Id. Because the sum sufficient had not been determined, the redemption
was never effected, and the ousted directors maintained their rights as shareholders. Id.
In this case, Ted and Pip disagree as to the consideration to be paid Pip for his stock.
73

Indeed, a shareholder’s sale of his shares of stock to the corporation in which those stocks are
held is the definition of a stock redemption; by definition, the sale of the shares back to the corporation is
a redemption of those shares by the corporation.

23

Since the corporation’s monetary obligations to Pip in connection with the redemption
agreement are unclear, the stock has not been redeemed. See Guidry, 24 So.3d 1025.
To the extent defendants request a writ of mandamus ordering the corporation to
recognize that Pip was the record owner of 196 shares as of May 11, 2013, the request is
granted.
C.

Writ of Mandamus to Brennan’s, Inc.

Defendants’ request for a writ of mandamus is granted. The corporation is ordered
to recognize Pip as the record owner of 196 shares of stock in Brennan’s, Inc., with the right
to vote those shares, as of May 11, 2013. The corporation is further ordered to recognize
Ted as the record owner of 196 shares of stock in Brennan’s, Inc., with the right to vote
those shares, as of May 11, 2013.
CONCLUSION
IT IS ORDERED that plaintiffs’ request for preliminary injunctive relief be and
hereby is DISMISSED AS MOOT.
IT IS FURTHER ORDERED that plaintiffs’ request for permanent injunctive
relief be and hereby is DENIED.
IT IS FURTHER ORDERED that plaintiffs’ request for declaratory judgment be
and hereby is GRANTED IN PART and DENIED IN PART, as set forth above.
IT IS FURTHER ORDERED that defendants’ requests for writs of mandamus be
and hereby are GRANTED IN PART and DENIED IN PART, as set forth above.

17th
New Orleans, Louisiana, this ____ day of May, 2013.

_____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE
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