Case Name: James T. LYTAL, III v. Mary Lynn LYTAL
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 2001-11-14
Citations: 818 So. 2d 111
Docket Number: No. 2000 CA 1934
Parties: James T. LYTAL, III v. Mary Lynn LYTAL.
Judges: Before: FOIL, PETTIGREW and KLINE JJ.
Reporter: Southern Reporter, Second Series
Volume: 818
Pages: 111–117

Head Matter:
James T. LYTAL, III v. Mary Lynn LYTAL.
No. 2000 CA 1934.
Court of Appeal of Louisiana, First Circuit.
Nov. 14, 2001.
Writ Denied March 8, 2002.
Mitchell J. Hoffman, New Orleans, for Appellant Plaintiff James T. Lytal, III.
Johnny X. Allemand, Thibodaux, Paul M. Hebert, Jr., Baton Rouge, for Appellee Defendant Mary Lynn Tytal.
Before: FOIL, PETTIGREW and KLINE JJ.
. Judge William F. Kline, Jr., Retired, serving Pro Tempore by special appointment of the Louisiana Supreme Court

Opinion:
| ¡¿FOIL, Judge.
In this appeal, James T. Lytal, III, challenges the issuance of a preliminary injunction in favor of his ex-wife, Mary Lynn Lytal, in a community property partition proceeding. We affirm.
FACTS AND PROCEDURAL BACKGROUND
James and Mary Lynn Lytal were married in 1960 and divorced by judgment dated August 29, 1997. The community existing between them was terminated retroactive to the filing of the divorce petition, January 16, 1997. The community assets include various ocean-going vessels and certain corporations that own fleets of vessels used in the supply boat business. At issue here is a community-owned corporate entity called Lytal Offshore, Inc., which was created during the marriage. Lytal Offshore is a community asset owned in indivisión by the parties, but controlled solely by Mr. Lytal, in whose name 100 percent of the corporation's stock was issued. This company owned a motor vessel named the M/V James T. Lytal, III. The vessel was sold in Decem ber, 1999 for a net sales price of $440,000. These proceeds form the basis of the instant dispute.
When Mrs. Lytal learned of the sale of the vessel, she requested that Mr. Lytal consent to some type of protective measures with regard to the proceeds. Mr. Lytal refused to take any of these measures, so Mrs. Lytal filed a rule to show cause why a preliminary injunction should not issue in the partition proceeding barring Lytal Offshore from using any of the funds realized from the sale of the vessel.
After a hearing, the trial court issued a preliminary injunction to Mr. Lytal, enjoining him, his agents and officers of Ly-tal Offshore from disposing of, concealing, alienating or encumbering the net proceeds from the sale of the M/V James T. Lytal, III. This appeal by Mr. Lytal followed.
On appeal, Mr. Lytal urges that the trial court erred in issuing a preliminary injunction in this matter. Specifically, he argues that the funds from the sale of the vessel are not community property. He further asserts that the injunction was issued against persons, e.g., officers of Lytal Offshore and |3the entity Lytal Offshore, who were not parties to this suit and who were not served with notice or afforded due process. Mr. Lytal also asserts that an injunction is improper in this case because the asset had already been sold and the cash proceeds used by the corporation in the normal course of business. Finally, he claims it was error to issue the preliminary injunction because Mrs. Lytal failed to prove that she would suffer irreparable injury. Alternatively, Mr. Lytal argues that if an injunction was warranted, the court erred in not requiring Mrs. Lytal to post a bond.
DISCUSSION
Under Louisiana law, property of married persons is generally characterized as either community or separate. La. Civ. Code art. 2335. The classification of property as separate or community is fixed at the time of its acquisition. Biondo v. Biondo, 99-0890, pp. 3-4 (La.App. 1 Cir. 7/31/00), 769 So.2d 94, 99. The trial court's findings regarding the nature of the property as community or separate are factual determinations. As such, they are governed by the manifest error—clearly wrong standard of review. Id., 99-0890 at p. 4, 769 So.2d at 99.
In a divorce proceeding, a spouse may obtain an injunction restraining the disposition of community property. La. R.S. 9:371. Either party to an action for divorce may obtain injunctive relief without posting bond. Further, irreparable injury need not be shown. La.Code Civ. P. art. 3944 and comments thereto. Jurisprudence has held that injunctive relief may be allowed as long as the necessity for it continues, regardless of whether it was requested prior to or after the judgment of divorce. Hendrick v. Hendrick, 470 So.2d 449, 457 (La.App. 1st Cir.1985).
In this case, the trial court found that Lytal Offshore, among numerous other corporations, is a community asset. Specifically, the court found that in cases where all of the stock of a corporation is owned solely by the community, the assets of the corporation are community property. The court noted there is no precedent for this conclusion, but it found slender support in the case State Bank & Trust Co. of Golden Meadow v. Boat "D.J. Griffin", 755 F.Supp. 1389 (E.D.La.1991).
In State Bank, several companies were formed and incorporated during the existence of the Griffins' marriage. Citing La. Civ.Code arts. 2336 and 2338, the federal district court stated that the assets of those companies were community property and, as such, the Griffins each owned an undivided one-half interest in the assets of the companies. Id., 755 F.Supp. at 1397. Considering the language of State Bank, it cannot be said that the trial court committed manifest error in holding that the assets of Lytal Offshore are community property.
Based on the testimony presented at the hearing on the injunction, the trial court found that Mr. Lytal had engaged in a "pattern of preparation" for the divorce by taking the corporations belonging to the community and isolating Mrs. Lytal from the management of the family operations. The trial court noted its hesitancy to "enter the internal workings of a corporation" in a community property dispute, but stated it could not "allow the defendant husband to consume the corporate assets to the detriment of the community." The trial court found that Mrs. Lytal demonstrated that Mr. Lytal was "systematically removing funds from the corporate structures." The court stated, "[t]he wife is entitled to half the community assets. Unless the courts have the power to stop the dispersal of funds from corporate structure into the pockets of the husband it would leave the wife powerless in a divorce action." Accordingly, the trial court found Mrs. Lytal was entitled to an injunction prohibiting Mr. Lytal from disposing of the cash assets of the corporation.
The trial court was correct. As stated above, based on the record before us, the trial court was not clearly wrong in concluding that the proceeds from the sale of a motor vessel belonging to Lytal Offshore is community property that may be involved in the partition. The evidence presented at the hearing supports the court's conclusion that Mr. Lytal, pursuant to a "preplanned divorce strategy," was systematically removing funds from the corporate structures. To prevent the further erosion of community assets, we conclude | «¡the trial court properly afforded protection to Mrs. Lytal by means of injunctive relief pending a final partition of the former community. Under La. R.S. 9:371 and La. Code Civ. P. art. 3944, a preliminary injunction was properly issued without the need to post a bond or show irreparable injury.
Concerning the issues of notice and due process, there were no notice violations or due process problems. There is strong evidence in the record that Mrs. Lytal pierced the "corporate veil" to reveal that Lytal Offshore is indistinguishable from Mr. Lytal.
The judgment of the trial court issuing a preliminary injunction enjoining Mr. Lytal from disposing of the net proceeds from the sale of the motor vessel M/V James T. Lytal, III, is affirmed. We remand the matter to the trial court for completion of the community property partition. As noted by the trial court, we are aware that the total net proceeds no longer remain in the bank because various corporations continued to operate using the funds as an injection of cash. Any determination as to what portion of the sale proceeds should or should not be replenished is a matter to be determined by the trial court on remand. Costs of this appeal are assessed to appellant.
AFFIRMED; REMANDED.
PETTIGREW, J., concurs and assigns reasons.
KLINE, J., concurs in part and dissents in part with reasons.