Najor v. Plaquemines Clay Co., LLC et al

Filing 246

ORDER AND REASONS regarding 207 Motion for Summary Judgment and 211 Motion for Summary Judgment. IT IS ORDERED that Defendant's Motion for Partial Summary Judgment as to the Second and Third Claim for Relief: Single Business Enterprise a nd Alter Ego (Rec. Doc. 207) be GRANTED. IT IS FURTHER ORDERED that Defendant's Motion for Partial Summary Judgment as to the Fourth Claim for Relief: Simulation (Rec. Doc. 209) is GRANTED. IT IS FURTHER ORDERED that Defendant's Motion for Summary Judgment on Acquisitive Prescription (Rec. Doc. 211) is DENIED as moot. Considering that the Court has now dismissed all claims brought by Plaintiff in this matter, Plaintiff's complaint is DISMISSED with prejudice. Signed by Judge Carl Barbier on 11/5/21. (Reference: All Cases)(cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ROBERT NAJOR

CIVIL ACTION

VERSUS

No.: 13-5000
c/w 16-15412
SECTION: “J” (1)

PLAQUEMINES CLAY CO.,
LLC, et al.

ORDER & REASONS
Before the Court are three Motions filed by Defendant Huyen T. Nyugen, in
her capacity as Trustee of the Nguyen Family Trust (“Defendant Trustee”): Motion

for Partial Summary Judgment as to Plaintiff’s Second and Third Causes of Action:
Single Business Enterprise and Alter Ego (Rec. Doc. 207); Motion for Partial
Summary Judgment on Plaintiff’s Fourth Claim for Relief: Simulation (Rec. Doc 209);
and Motion for Summary Judgment on Acquisitive Prescription (Rec. Doc. 211). All
three motions are opposed by Plaintiff Robert Najor. (Rec. Doc. 227). Defendant
Trustee submitted a reply (Rec. Doc. 235). Having considered the motions and legal
memoranda, the record, and the applicable law, the Court finds that Defendant
Trustee’s Motions should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This litigation derives from a default judgment rendered in this Court on
November 9, 2017, against Hai Nguyen (“Judgment Debtor”) and the Nguyen Family
Trust (“the Trust”) by and in favor of Robert Najor (“Plaintiff”). (Rec. Doc. 80).

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On April 5, 2013, Plaintiff instituted an action against Judgment Debtor and
Plaquemines Clay Co., LLC to recover payment owed on a promissory note 1 dated
February 22, 2012. (Rec. Doc. 1, at 3). This Court entered a default judgment in favor
of Plaintiff and against Judgment Debtor and Plaquemines Clay Co., LLC on March
14, 2014. (Rec. Doc. 23). Thereafter, Plaintiff filed suit against Judgment Debtor and
the Trustee of the Trust, and the case was consolidated with the action instituted on
April 5, 2013. (See Rec. Doc. 43). 2
On June 16, 2017, default was entered against Judgment Debtor and
Defendant Trustee. (Rec. Doc. 69). This Court held an evidentiary hearing on October
18, 2017. (Rec. Doc. 75). Plaintiff’s counsel submitted a Trial Exhibit containing,
among other things, a copy of a purported cash sale in 2002 of property located at
1725 Lakeshore Drive in New Orleans, Louisiana (“the Property”) from an entity
entitled National Marine Financing Corporation (“National”) to the Trust. (Rec. Doc.
77, at 1). Judgment Debtor was the President of National. The cash sale specifically
names Huyen Nguyen as the Trustee of the Trust and appears to list her mailing
address as that of the Property where service upon Defendant Trustee was executed.
(See Rec. Doc. 77, at 1).
On November 9, 2017, this Court entered a judgment against Judgment Debtor
and the Trust. (Rec. Doc. 80). On October 5, 2018, this Court granted Defendant
Trustee’s motion for a new trial. (See Rec. Docs. 84, 94). This Court subsequently

The promissory note was in the amount of $100,000.00, or 12 percent per annum, equaling
$12,000.00 from February 22, 2012, plus all sums due under the promissory note. (Rec. Doc. 1, at 3).
2 The original case number was 16-15412.
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granted Defendant Trustee’s Motion to Alter, Clarify or Amend Judgment (Rec. Doc.
98), concluding that the Court’s October 5, 2018 Order had the effect of granting a
new trial on all issues and entirely setting aside the Court’s November 9, 2017
Judgment. (Rec. Doc. 138).
Plaintiff filed an amended complaint on January 16, 2019 stating seven
possible claims for relief. (Rec. Doc. 128). Defendant Trustee responded with a Motion
to Dismiss Counts One, Four, Six, and Seven of the amended complaint. (Rec. Doc.
130). On April 15, 2019, the Court issued an Order & Reasons granting Defendant
Trustee’s Motion to Dismiss regarding Counts One, Four, Six, and Seven, but
specifically retaining jurisdiction over part of Plaintiff’s Count Four, which alleged
the sale of the Property in 2002 to Defendant Trustee was a simulation (Rec. Doc.
141). Defendant Trustee then produced an authenticated counter letter (“Counter
Letter”) evidencing that the purported sale of the Property from National to
Defendant Trustee was in fact a donation to Defendant Trustee. (Rec. Doc. 146-5).
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as
to any material fact and that the movant is entitled to judgment as a matter of law.”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56); Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a
dispute as to any material fact exists, a court considers “all of the evidence in the
record but refrains from making credibility determinations or weighing the evidence.”
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Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th
Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but
a party cannot defeat summary judgment with conclusory allegations or
unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be
satisfied that “a reasonable jury could not return a verdict for the nonmoving party.”

Delta, 530 F.3d at 399.
If the dispositive issue is one on which the nonmoving party will bear the
burden of proof at trial, the moving party may satisfy its burden by merely pointing
out that the evidence in the record is insufficient with respect to an essential element
of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden then shifts
to the nonmoving party, who must, by submitting or referring to evidence, set out
specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may
not rest upon the pleadings but must identify specific facts that establish a genuine
issue for trial. See, e.g., id. at 325; Little, 37 F.3d at 1075.
In cases where motive, intent, and state of mind are at issue, summary
judgment is disfavored because much depends on the credibility of the witnesses. See

Croley v. Matson Nav. Co., 4343 F. 2d 73, 77 (5th Cir. 1970); see also Carter v.
BRMAP, 591 So. 2d 1184, 1189 (La. Ct. App. 1 Cir. 1991). However, “the mere
incantation of intent or state of mind [does not] operate as a talisman to defeat an
otherwise valid [summary judgment] motion,” and “[t]he state of mind exception . . .
is appropriate only where solid circumstantial evidence exists . . . .” Carter, 591 So.

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2d at 1190 (citing Citizens Bank of Clearwater v. Hunt, 927 F.2d 707, 711 (2nd Cir.
1991)).
DISCUSSION
I.

SINGLE BUSINESS ENTERPRISE AND ALTER EGO
A. SINGLE BUSINESS ENTERPRISE
Single business enterprise is the theory that “when a corporation is so

organized and controlled as to make it merely an instrumentality or adjunct of
another corporation,” the separate corporations’ distinct identity may be disregarded.

Green v. Champion Ins., 577 So. 2d 249, 257 (La. Ct. App. 1 Cir. 1991). It is “a theory
for imposing liability where two or more business entities act as one.” Andretti Sports

Marketing La. v. NOLA Motorsports Host Comm. Inc., 147 F. Supp. 3d 537, 553 (E.D.
La. 2015) (citing Brown v. ANA Ins. Grp., 99 So. 2d 1265 (La. 2008)). As the court
held in Andretti, single business enterprise theory is for business entities exclusively,
and not to be applied to individuals. Id.
Here, Defendant Trustee contends that because the single business enterprise
theory applies only to business entities and not to individuals, Judgment Debtor
cannot be a single business enterprise with either National or the Trust. (Rec. Doc.
207-1, at 6). Defendant Trustee asserts that National is unquestionably a business
entity. Id. Moreover, the Trust and Judgment Debtor are also not a single business
enterprise, Defendant Trustee argues, because a trust is a juridical person like a
corporation. Id.

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In opposition, Plaintiff begins by acknowledging the case law that Defendant
Trustee relies upon to argue that the single business enterprise doctrine does not
apply to individuals. (Rec. Doc. 227, at 43–44). However, Plaintiff asks the Court to
take a more nuanced approach to the single business enterprise issue at hand in this
case. Id. Plaintiff contends that public policy is the source of the jurisprudence
regarding the single business enterprise doctrine and its application to individuals.

Id. at 43. Specifically, Plaintiff cites to Green v. Champion Insurance Company, the
foundational Louisiana case regarding single business enterprise theory. Id. In

Green, Plaintiff argues, the court found that individuals were not to be made a part
of the single business enterprise determination because the individuals’ assets were
not a part of the fraud scheme at issue. Id. (citing to Green, 577 So. 2d at 257–58).
Moreover, Plaintiff asserts that the court in Green reserved civil fines and personal
judgments for later litigation against the individuals in their individual capacity. Id.
Here, Plaintiff avers that Judgment Debtor’s individual assets are part of the
fraudulent scheme, and, for this reason, Judgment Debtor, National, and the Trust
should be considered a single business enterprise. Id. The Court is not persuaded that
Plaintiff’s attempted distinction can overcome the long-held jurisprudence that
individuals cannot be a part of a single business enterprise.
Finally, in one last attempt to save his single business enterprise theory,
Plaintiff asserts that Judgment Debtor, National, and the Trust are an
unincorporated association which thus makes them a single business enterprise.
(Rec. Doc. 227, at 44). An unincorporated association is created by a “contract between

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two or more persons to combine their efforts, resources, knowledge or activities for a
purpose other than profit or commercial benefit.” Ermert v. Hartford Ins., 559 So. 2d
467, 473 (La. 1990). At a minimum, the persons “must intend to create a separate
entity with a juridical personality distinct from its members,” Friendship Hunting

Club v. Lejeune, 999 So. 2d 216, 222 (La. Ct. App. 3 Cir. 2008), and the
“common intent of the parties is the controlling factor.” Ermert, 559 So. 2d at 474.
Here, Plaintiff avers that Judgment Debtor, National, and the Trust are an
unincorporated association with allusions to the 2002 Act of Sale in which National
was the seller and the Trust the buyer (or donor/donee). (Rec. Doc. 227, at 44).
However, courts have not found that simply entering into a contract converts persons
into an unincorporated association. Compare Ermert, 559 So. 2d at 474 (finding no
unincorporated association when the persons “never drew up a contract, constitution,
by-laws, or any written instrument;” “no oral agreement to create an entity separate
from themselves;” “no name given to the group;” “no officers elected or appointed and
no formal meetings held”), with Bogue Lusa Waterworks Dist. v. La. Dept. of Env’t

Quality, 897 So. 2d 726, 729 (La. Ct. App. 1 Cir. 2004) (finding unincorporated
association when the persons formed articles of incorporation even though only two
members and no meetings were held). Therefore, the single transaction between
National and the Trust does not create an unincorporated association.
Defendant Trustee seeks summary judgment on Plaintiff’s Count Two Claim,
asking the Court to declare that National, the Trust, and Judgment Debtor are not a
Single Business Enterprise. The Court finds that no genuine issue of material fact

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exists. Judgment Debtor is an individual and, as such, the Single Business Enterprise
Doctrine does not apply.
B. ALTER EGO
There are two limited circumstances in which a corporation may be found to
be the alter ego of the shareholder: (1) fraud or deceit and (2) disregard of the
“requisite corporate formalities to the extent that the corporation ceases to be
distinguishable from its shareholders.” Riggins v. Dixie Shoring Co., 590 So. 2d 1164,
1168 (La. 1991). In analyzing alter ego claims, the court examines a non-exhaustive
list of factors under a totality of the circumstances analysis: “(1) commingling of
corporate and shareholder funds; (2) failure to follow statutory formalities for
incorporating and transacting corporate affairs; (3) undercapitalization; (4) failure to
provide separate bank accounts and bookkeeping records; and (5) failure to hold
regular shareholder and director meetings.” Riggins, 590 So. 2d at 1168–69 (citing

Kingsman Enter. v. Bakerfield Elec. Co., 339 So. 2d 1280 (La. Ct. App. 1 Cir. 1976)).
Notably, one of the main reasons to permit the piercing of the corporate veil is “to
prevent the use of the corporate form in the defrauding of creditors.” Id. at 1169.
Here, Defendant Trustee asserts that the Trust and Judgment Debtor are not
alter egos for the following reasons. (Rec. Doc. 207-1, at 9). First, Defendant Trustee
contends that “there is no evidence that [Judgment Debtor] mixed his personal funds
with those of the Nguyen Family Trust.” Id. Second, “there are no outstanding loans
between [Judgment Debtor] and the [Trust].” Id. Third, Judgment Debtor’s children
paid [the Property’s] expenses and cared for the Property, all without the assistance

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or involvement of [Judgment Debtor].” Id. at 8. And fourth, the “Trust has been
properly incorporated in Louisiana and has its own bank accounts.” Id. at 9.
Defendant Trustee does, however, admit that “there were no regular, formal
shareholder or director meetings,” and that “the [T]rust has not filed tax returns.” Id.
In opposition, Plaintiff begins by noting that Defendant Trustee only discusses
one exception of when a corporation becomes the alter ego of a shareholder: failure to
follow corporate formalities. (Rec. Doc. 227, at 41). Plaintiff argues that the fraud or
deceit exception applies here, and Defendant Trustee fails to address this exception.

Id. Plaintiff contends that Judgment Debtor has demonstrated twelve “historic
badges of fraud,” 3 six of which relate to the Property’s transfer from National to the
Trust. Id. at 37. The Court recognizes the “historic badges of fraud” argument that
Plaintiff puts forth. However, on a motion for summary judgment, Plaintiff must
present more than conclusory allegations that Judgment Debtor practiced fraud or
deceit on Plaintiff. Plaintiff must present competent summary judgment evidence by
persons with firsthand knowledge. The main source of alleged fraud here is the
donation of the Property. However, the Property was transferred to the Trust in 2002,
(i) assets being transferred away from a debtor in exchange for less than fair value (the alleged
transfer of the House and the Quitclaim to Midway Cattle),
(ii) leaving a lack of funds to compensate the creditors (the alleged transfer of the House and the
transfer of the USACE settlement funds),
(iii) secret transfers (the use of a Quitclaim),
(iv) asset transfers to relatives or insiders (the transfer of the House and the Quitclaim to Midway
Cattle and the transfer of the USACE settlement funds),
(v) the continued ownership or possession of the property after its alleged transfer by the debtor (the
alleged transfer of the House),
(vi) self-serving representations in transfer documents that the transfer was not intended to defraud
creditors or later determined false statements, transfers of substantially all assets of the debtor (the
alleged transfer of the House), and
(vii) transfer made while the action was pending against the transferor (the transfer of the House
and the transfer of the USACE settlement funds).

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years before Judgment Debtor knew Plaintiff, let alone knew that he would owe
money to Plaintiff.
Plaintiff argues that Defendant Trustee focuses solely on the alter ego of
Judgment Debtor and the Trust, and she ignores the alleged alter ego of Judgment
Debtor and National. However, in reply, Defendant Trustee contends that the alleged
alter ego relationship of Judgment Debtor and National is wholly new; specifically,
this theory is not in the Complaint. (Rec. Doc. 235, at 6). The Fifth Circuit has found
that a plaintiff “may not defeat summary judgment on the basis of a theory found
nowhere in their complaint.” Id. (citing Johnson v. Thibodaux City, 887 F. 3d 726, 736
(5th Cir. 2018). The Third Claim for Relief in the Complaint is entitled “The Nguyen
Family Trust is the Alter Ego of the Judgment Debtor Hai Nguyen . . .” (Rec. Doc.
128, at 16). Nowhere is it alleged that Judgment Debtor is the alter ego of National.
Moreover, Plaintiff fails to submit any evidence to support this new contention.
Defendant Trustee seeks summary judgment on Plaintiff’s Count Three Claim,
asking the Court to declare that the Trust is not the alter ego of Judgment Debtor.
The Court finds that Plaintiff failed to support his assertions with anything more
than conclusory allegations.
II.

SIMULATION AND ACQUISITIVE PRESCRIPTION
Plaintiff’s success in proving simulation or disproving Defendant Trustee’s

acquisitive prescription defense requires Judgment Debtor to be the transferor of the
Property. Therefore, the Court’s granting of summary judgment as to Count Two:

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Single Business Enterprise and Count Three: Alter Ego renders moot Plaintiff’s
Simulation claim and Defendant Trustee’s Acquisitive Prescription defense.
After granting Defendant Trustee’s instant motions for summary judgment,
the Fifth Claim for Relief is the sole claim remaining. This claim for relief is entitled,
“Judgment Debtor Hai Nguyen who shall be liable to Mr. Najor for his direct and
indirect donation to the Nguyen Family Trust.” (Rec. Doc. 128, at 20). Plaintiff seeks
a declaration that the transfer of the Property to the Nguyen Family Trust is a
donation from Judgment Debtor “which would allow and permit [Plaintiff] to effect,
perfect, execute, and enforce any and all of his rights as Judgment Creditor of
Judgment Debtor Hai Nguyen against the [Property].” This claim for relief is
dependent on a finding of Single Business Enterprise or Alter Ego between Judgment
Debtor and National, which this Court has found does not exist. Therefore, Plaintiff’s
Fifth Claim for Relief is rendered moot as well.
CONCLUSION
Accordingly,
IT IS ORDERED that Defendant’s Motion for Partial Summary Judgment as
to the Second and Third Claim for Relief: Single Business Enterprise and Alter Ego
(Rec. Doc. 207) be GRANTED.
IT IS FURTHER ORDERED that Defendant’s Motion for Partial Summary
Judgment as to the Fourth Claim for Relief: Simulation (Rec. Doc. 209) is GRANTED.
IT IS FURTHER ORDERED that Defendant’s Motion for Summary Judgment
on Acquisitive Prescription (Rec. Doc. 211) is DENIED as moot.

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Considering that the Court has now dismissed all claims brought by Plaintiff
in this matter, Plaintiff’s complaint is DISMISSED with prejudice.
New Orleans, Louisiana, this 5th day of November, 2021.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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