Resolving Family Business Disputes: Navigating Complexities and Seeking Resolution

family_family_posing_psychotherapy-scaledFamily businesses can present challenging legal issues. Although you might feel like you can trust your family members to do the right thing, this is not always true, especially when large sums of money are involved. This case illustrates the complexities that resulted from agreements related to ownership of a family business, which was only resolved following multiple appeals. 

Sam Broussard Jr. (BR) and his three sisters each owned 25% of Sam Broussard Trucking (“SBT”). After their parents died, BR was the president of SBT. His sisters agreed to make him the majority owner of SBT. Each sister received a Stock Redemption Agreement (“SRA”). Under the SRA, each of the three sisters agreed to transfer 171.5 shares of SRT stock back to SRT for $200,000. 

One of his sisters, Guillory, filed a lawsuit against BR, claiming he had not kept his promises related to the SRA. At trial, the jury found BR had not given Guillory sufficient profits, as promised. The jury also found BR had violated the Louisiana Unfair Trade Practices Act, La. R.S. 51:1401. The jury awarded Guillory $69,084 for this violation. The jury also found Guillory’s error concerning the SRA invalidated it. 

On a prior appeal, the appellate court held the Louisiana Unfair Trade Practices Act did not apply, but general contract law principles did, so it affirmed the award. Concerning the SRA, the appellate court found the SRA was void. When the case was remanded back to the trial court, Guillory filed a summary judgment motion seeking the return of her 171.5 shares, distribution of profits, and fees for service as a board member because she claimed she had been improperly removed from the Board. BR and SBT argued Guillory should only own 25% of the company, not the 43.8% she would own if the 171.5 shares were returned to her. BR also claimed he should not be personally liable because he was not personally a party to the SRA. The trial court found in favor of Guillory and awarded her $2,625,282.91 and the amount lost in fees as a board member. 

On appeal, BR and SBT argued that the trial court’s judgment contradicted a prior ruling recognizing that each sibling had previously owned 25% of SBT, contrary to La. C.C. art. 2033 as it did not restore each party to the previous situation. BR also argued he should not be personally liable, and the trial court should not have awarded her director’s fees. Guillory argued BR should be personally liable, the court should have specified she was entitled to 171.5 stock shares, and the trial court should have awarded legal interest. 

The appellate court noted when the SRA was executed, each sibling owned 180 shares individually and 25% of the 80 shares in a trust in which each sibling had an interest. The SRA specified Guillory would receive $200,000 in exchange for 171.5 shares. Therefore, while the appellate court agreed with the trial court’s conclusion, it should have explicitly stated SBT was required to issue Guillory 171.5 stock shares. This was consistent with the requirements of La. C.C. art. 2033 as it restored her to the situation previously existing and did not unjustly enrich BR by allowing him to receive a larger share of the company’s distributions. 

The appellate court also noted inconsistencies in the trial court’s calculations based on the supporting documentation. The appellate court explained there were factual issues on whether BR could be held personally liable based on whether he had exercised his fiduciary duties to SBT in bad faith when he calculated the distribution payments to Guillory, acting as an agent of SBT. The appellate court also explained that awarding director’s fees was appropriate given the finding Guillory had been improperly removed from the Board under La. C.C.P. Art. 1921, Guillory was entitled to interest on the judgment awarded from the last day of the year when the distributions she should have received from SBT were payable. 

Therefore, the appellate court amended the trial court’s judgment to reissue 171.5 stock shares of SBT to Guillory and award her decreased damages of $2,622,246.54 for unpaid distributions and $34,200 for directors. The appellate court also reversed the trial court’s judgment holding BR personally liable, remanded the case for further proceedings, and ordered the trial court to determine the appropriate interest owed to Guillory. Otherwise, the appellate court affirmed the trial court’s judgment. 

Disputes within family businesses can be highly intricate, intertwining personal and financial matters. This case highlights the importance of seeking legal advice and taking preventative measures to avoid such conflicts. By consulting with an experienced attorney, you can gain insights into safeguarding your interests and navigating the complexities of family business agreements. If legal action becomes necessary, a skilled lawyer can provide the guidance to pursue a fair resolution.

Additional Sources: Simone B. Guillory, et al. v. Samuel S. Broussard, Jr., et al.

Additional Berniard Law Firm Article on Family Businesses: Family Business Suit in Beauregard Parish Illustrates Dismissal Principles

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