Case Name: Donald J. PALMISANO, Robert E. Ruel, Kenneth L. Veca, John E. McLachlan, and Gerald R. LaNasa, as Trustee for Gerald R. LaNasa, M.D., et al., v. John L. MASCARO, Individually and as General Partner of the Lake Forest Boulevard Medical Development, a Partnership in Commendam
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1992-01-16
Citations: 611 So. 2d 632
Docket Number: No. 90-CA-0819
Parties: Donald J. PALMISANO, Robert E. Ruel, Kenneth L. Veca, John E. McLachlan, and Gerald R. LaNasa, as Trustee for Gerald R. LaNasa, M.D., et al., v. John L. MASCARO, Individually and as General Partner of the Lake Forest Boulevard Medical Development, a Partnership in Commendam.
Judges: Before BYRNES, and WARD, JJ., and HUFFT, J. Pro Tern.
Reporter: Southern Reporter, Second Series
Volume: 611
Pages: 632–645

Head Matter:
Donald J. PALMISANO, Robert E. Ruel, Kenneth L. Veca, John E. McLachlan, and Gerald R. LaNasa, as Trustee for Gerald R. LaNasa, M.D., et al., v. John L. MASCARO, Individually and as General Partner of the Lake Forest Boulevard Medical Development, a Partnership in Commendam.
No. 90-CA-0819.
Court of Appeal of Louisiana, Fourth Circuit.
Jan. 16, 1992.
On Rehearing Dec. 15, 1992.
Writ Denied March 19, 1993.
Russ M. Herman, John B. Loweb, Herman, Herman, Katz & Cotlar, New Orleans, for defendant-appellee.
Phillip A. Wittmann, Kyle Schonekas, Nole J. Darce, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, for plaintiffs-appellants.
Before BYRNES, and WARD, JJ., and HUFFT, J. Pro Tern.

Opinion:
BYRNES, Judge.
Plaintiff Donald Palmisano, and Gerald LaNasa, as trustees for Gerald LaNasa, Ralph Sagrera, and Baptiste Brunner, appeal several aspects of the trial court's decision on the dissolution of their partnership with the defendant John Mascaro. We affirm in part, and remand in part.
In the mid-nineteen seventies a group of physicians wished to design and construct a medical office building to serve primarily the needs of the participating physicians. In order to begin this project, they formed a partnership in commendam. The physicians were designated as limited partners and John Mascaro, a real estate developer, was designated as sole general partner. The language of the partnership agreement empowered the general partner to do all manner of things that he deemed "necessary, advisable and proper", and granted advance ratification and approval of the general partner's actions, without exception or limitation. Thus,, the general partner was afforded absolute, total, and complete authority to conduct the dealings of the partnership.
In 1974, the partnership purchased a tract of land near Methodist Hospital. The partnership attempted to have the property rezoned but were unsuccessful due to opposition from surrounding medical office owners. Mr. Mascaro, unable to carry forward with the original construction plans, arranged to sell the land in 1978. Upon learning of Mr. Mascaro's plan to sell the land in 1979, the limited partners, sued to dissolve the partnership, and filed a notice of "lis pendens" on the land to halt any possible sales.
In 1980, Mr. Mascaro filed an action to cancel the notice of lis pendens and was successful. This court affirmed that decision. Palmisano v. Lake Forest Boulevard Medical Development, 425 So.2d 905 (La.App. 4th Cir.1983). Subsequently, Mr. Mascaro sold divisions of the property in separate deals.
The limited partners then filed civil suit against Mr. Mascaro seeking damages, contending Mr. Mascaro breached his fiduciary duty in his conduct surrounding the sale of the property. Mr. Mascaro reconvened, contending damages due to the bad faith conduct of the limited partners in interfering with the partnership business dealings. The trial court found in favor of Mr. Mas-caro and awarded $189,759.77 in damages in the following amounts:
Delay $ 2,500.00
Quantum Meruit $45,000.00
Loss of Interest $97,259.77
Attorney's Fees $45,000.00
This award was offset against the undistributed partnership assets yet to be transferred to the limited partners. From that decision, the limited partners appeal.
ASSIGNMENTS OF ERROR
Plaintiffs Dr. Palmisano, Dr. LaNasa, and others, (the "limited partners") present several claims of errors in the trial court's decision. The limited partners initially contend that Mr. Mascaro breached his fiduciary duty. They further claim that the trial court erred: (1) in finding liability against the limited partners for the wrongful filing of a notice of lis pendens; (2) in awarding quantum meruit damages and attorney's fees; (3) in deducting these damages and fees awarded from the undistributed partnership assets; and (4) by denying the limited partners interest on the amounts due them.
In their first assignment of error, the limited partners contend that the general partner, Mr. Mascaro, breached his fiduciary duty to the partnership.
In its reasons for judgment, the trial court stated:
"LSA-Civil Code Article 1901 is very specific: Agreements legally entered into have the effect of laws on those who have formed them. In following this language our Courts have declared that parties are free to make their own contracts, and however unusual they may be or what drastic or unreasonable features may be therein, they should be enforced so long as they do not contravene good morals or public policy." Roos v. Dole [Dale], 234 So.2d 489 (La.App. 3rd Cir.1970); Arkansas Fuel Oil Corporation v. Maggio, 141 So.2d 516 (La.App. 4th Cir.1962).
Also, as the trial court stated in its reasons, "[e]ven a cursory review of the 'Agreement' demonstrates clearly that the partners intended that the general partner could act on behalf of the partnership as he in his sole discretion deemed appropriate." The partnership agreement gave the general partner absolute authority in making decisions and taking actions with the partnership assets. The general partner's actions were granted advance ratification without exception or limitation. This broad grant of authority to the general partner was freely entered into and is not against public policy.
Arkansas Fuel Oil Corporation v. Maggio, supra; 141 So.2d at 520 relied on by the trial court, states:
"The policy of the law is that all men of lawful age and competent understanding shall have the utmost liberty of contracting, and their contracts, when freely and voluntarily made, are not lightly to be interfered with by the courts.... The court is not concerned with the wisdom or the folly of the contract.... The contract in this respect may be a hard one for the defendant, but it is one that the parties were competent to make and had the right to make. It is the law between them and the court has no alternative except to enforce it as written." (Emphasis added.) See also Groom, v. W.H. Ward Lumber Co. Inc., 432 So.2d 984 (La.App. 1st Cir.1983); Louisiana Power & Light Co. v. Mecom, 357 So.2d 596 (La.App. 1st Cir.1978).
The limited partners cite the case of Bossier v. Lovell, 410 So.2d 821 (La.App. 3rd Cir.1982), concerning the fiduciary obligation of the general partner, as requiring the general partner to give full consultation and gain consent of the in commendam partners, to sell partnership assets. However, in Bossier, the partnership agreement gave the general partner absolute authority for the specific purpose of building and operating an apartment complex. The Bossier agreement specifically provided that the general partner could not do any act which would make it impossible to carry on the ordinary business of the partnership without the written consent of all the partners, and that the partnership shall not engage in any other business, other than its purpose, without the consent of all its partners. Id. at 823-824. In the agreement before us, the purpose of the partnership, to be carried out by the general partner, is to "acquire, hold, sell, subdivide, lease ." the property. (Emphasis added.) The provisions of this agreement are not ambiguous, and the agreement does not include provisions similar to those in Bossier. Thus, Bossier has no bearing here.
Also, the limited partners contend that Mr. Mascaro violated his fiduciary duty in "not dealing at arm's length" with them and acting secretly behind their backs. The limited partners specifically refer to Mr. Mascaro's dealings with his brother-in-law and ten percent shareholding partner, Bernard Frischhertz. However, Mr. Mas-caro was authorized to take any action he felt necessary without the necessity of consulting the limited partners. Specifically, he was authorized to "grant, bargain, sell, assign, set over, convey, deliver, sub-lease, mortgage, . said property in any manner, . for such amounts and on such terms and conditions, in such forms of instruments, and with such conditions, provisions and stipulations as said General Partner shall in his sole and uncontrolled discretion, deem necessary, advisable or proper." (Emphasis added.)
This court, in consideration of Mr. Mas-caro's dealings with Mr. Frischhertz, his brother-in-law, must look at article 14(c) of the agreement which states:
The fact that the General Partner or a member of his family is directly or indirectly interested in or connected with any person, firm or corporation employed by the Partnership to render or perform a service, or from which or whom the partnership may buy merchandise or other property, shall not prohibit the General Partner from employing such person, firm or corporation or from otherwise dealing with it.
Mr. Mascaro's actions, as a fiduciary, seem suspect. He sold the land to a relative at a bargain price which was one-third below optimum market value. However, this court can not find that Mr. Mascaro breached his fiduciary duty in light of the agreement's provisions granting him absolute authority and discretion. Also, Mr. Mascaro held a twenty percent interest in the partnership and stood to lose more than most of the other partners because of these questionable dealings. Therefore, this court cannot find the trial court erred in concluding that Mr. Mascaro did not breach his fiduciary duty to the partnership. Thus, this assignment has no merit.
In their second assignment of error, the limited partners contend that the trial court erred in finding them liable for the wrongful filing of a notice of lis pendens. This court has previously determined that the filing of the notice of lis pendens was improper. Palmisano, supra. The limited partners assert that they acted with probable cause and on the advice of counsel, therefore without malice. Thus, they claim that damages cannot be due Mr. Mascaro, relying on Dane v. Doucet Bros. Construction Co., 396 So.2d 418 (La.App. 4th Cir.1981). However, the trial court was very specific in its determination that the limited partners acted with malice toward Mr. Mascaro.
In its reasons for judgment, the trial court described the manner of Dr. LaNasa during testimony, stating:
"His manner was aggressive and boastful, almost to the point of demonstrating a disdain for the orderly processes of the law_ His bad faith was not only expressed by his words but by his manner of testifying; facial expressions as well as eye and body movements.
Even so, the limited partners contend that they filed the notice of lis pendens on the advice of their attorney. The trial court found that the attorney of the limited partners, Mr. LeBlanc, warned them of the consequences of filing a notice of lis pen-dens, but that they desired "to pursue this course of action despite the possible consequences." Louisiana C.C.P. art. 3751 provides notice of lis pendens to alert third parties to the pendency of an action or proceeding "affecting the title to, or asserting a mortgage or privilege on, immovable property...." The limited partners filed notice of lis pendens although there was no action or pending proceeding that concerned title to the property. The essential elements of abuse of process are ulterior purpose and willful act in the use of the process not proper in the regular prosecution of the proceeding. Eicke v. Eicke, 517 So.2d 1067 (La.App. 3rd Cir.1987); Goldstein v. Serio, 496 So.2d 412 (La.App. 4th Cir.1986), writ denied 501 So.2d 208 and 501 So.2d 209 (La.1986). Malice can be inferred from a lack of probable cause. Breda v. Attaway, 371 So.2d 1270 (La.App. 3rd Cir.1979). The applicable standard of review requires that we give great weight to the factual conclusions of the trier of fact, in this case the trial judge. Mascaro v. Davis, 420 So.2d 755 (La.App. 4th Cir.1982). Absent the showing the trial court's finding were manifestly erroneous, its findings of fact must be accepted by this court. Gordon v. National Union Fire Ins. Co. of Pittsburgh, 449 So.2d 152 (La.App. 4th Cir.1984).
Because this court has already determined in Palmisano that there was no basis to file a lis pendens action against Mr. Mascaro and the trial court found that the general partners, based on their testimony, acted with malice toward Mr. Masca-ro, the trial court could award damages. Since the limited partners have not shown the trial court's factual determination was manifestly erroneous, the trial court did not err in awarding damages based on its determination of malice with no probable cause. Therefore, this assignment of error has no merit.
In their third assignment of error, the limited partners contend that the trial court erred in the granting the award for quantum meruit damages and attorney fees. The limited partners contend that Mr. Mas-caro should not receive quantum meruit damages for services rendered on behalf of the partnership, because he had agreed to act as general partner without compensation other than the profits received from his partnership investment. The trial court awarded Mr. Mascaro $45,000 quantum me-ruit damages based on additional services of $5,000 per year for the nine years from the filing of the notice of lis pendens by the limited partners until the time of trial. The trial court stated:
"... this court accepts the uncontradict-ed testimony of Mr. Mascaro, in that he was a successful land dealer and that in the instant case he caused the partnership to reap a tremendous profit despite the unwarranted actions of two of the limited partners."
The trial court determined that Mr. Mas-caro was denied the opportunity to attend to his own business because of the limited partners' actions, which were performed in bad faith against their general partner and the contract. "Quantum Meruit is appro priate where defendant is enriched by plaintiffs time, talent, labor and material or where plaintiffs efforts inure to defendant's benefit, under such circumstances as imply an obligation to pay for the service thus rendered to plaintiff. Fullerton v. Scarecrow Club, Inc., 440 So.2d 945, 949-950 (La.App. 2nd Cir.1983). Quantum meruit is an equitable doctrine, based on the concept that no one who benefits by the labor and materials of another should be unjustly enriched thereby." Alexis v. Pacaccio, 410 So.2d 867 (La.App. 4th Cir.1982). See also La.C.C. art. 2055. The contract between Mr. Mascaro and the limited partners did not contemplate additional compensation, other than profits, for the general partners, but it also did not contemplate the bad faith actions which provided over nine years of litigation on the part of the limited partners against Mr. Mascaro. Due to equity and the bad faith actions of the limited partners, this court cannot find the trial court erred in awarding Mr. Mascaro quantum meruit damages.
Also, the limited partners contend that the trial court erred in awarding attorney's fees to Mr. Mascaro, absent authorization by statute or the contract between the parties. We must agree. Louisiana jurisprudence supports, and this court has stated, that "attorney's fees are not allowed except where authorized by statute or agreed to by contract." Dane v. Doucet Brothers Construction Co. Inc., 396 So.2d 418, 421 (La.App. 4th Cir.1981). Huddleston v. Bossier Bank and Trust Co., 475 So.2d 1082 (La.1985) Dane concerned an action to collect attorney's fees based on the cancellation notice of an improper lis pendens filed by the defendants. In Dane, the plaintiff relied on Lacour v. Merchants Trust and Savings Bank, 153 So.2d 599 (La.App. 4th Cir.1963), writ refused 244 La. 1004, 156 So.2d 56 (1963) and 244 La. 1007, 156 So.2d 58 (1963), which concerned this Court's award of attorney's fees based on a bank's responsibility for the failure to cancel a mortgage note. But the court, in Dane, distinguished Lacour on its facts.
Mr. Mascaro contends that the award of attorney's fees could be based in the contract's provisions indemnifying the general partner for any losses incurred in acting on behalf of the partnership. If attorney's fees are contemplated as an element of damages in case of a breach, the contract should say so explicitly. Morein v. G.J. Deville Lumber Co., 215 So.2d 208 (La.App. 3rd Cir.1968). This indemnification provision is not explicit enough in the contemplation of attorney's fees for us to base an award upon it.
In their fourth assignment of error, the limited partners contend that the trial court erred in denying them interest on their respective partnership distributions owed them and in deducting Mr. Mascaro's damages award from the undistributed partnership assets. Mr. Mascaro's reconvened both in tort and in contract, based on the limited partners' bad faith actions. This court determined that the trial court did not err in its award of damages based on its finding of malice in the filing of the notice of lis pendens. These damages are based on the contract between Mr. Mascaro and the limited partners.
Article 1893 of the Louisiana Civil Code provides:
Compensation takes place by operation of law when two persons owe to each other sums of money or quantities of fungible things identical in kind, and these sums and quantities are liquidated and presently due.
In such a case, compensation extinguishes both obligations to the extent of the lesser amount.
The trial court awarded damages of delay and quantum meruit dated from the bad faith filing of the notice of lis pendens in 1979. The limited partners "actively" breached the contract and thus owed Mr. Mascaro damages from the date of the breach without the need to be put in default. LSA-C.C. art. 1994. In its judgment, the trial court awarded the limited partners $65,635.00 each for their respective partnership shares after disposition. However, it offset this award with Mr. Mascaro's award of $189,759.77 which we have reduced to $144,759.77. The limited partners did not sue for interest in their demand for distribution of the partnerships assets, and the trial court awarded none. We do not find error in the trial court's award, or offsetting of awards. Thus these assignments have no merit.
CONCLUSION
The trial court did not err in finding Mr. Mascaro did not breach his fiduciary duty, or in finding liability against the limited partners for maliciously filing an improper notice of lis pendens. While the trial court did not err in awarding quantum meruit damages, it can not grant attorney's fees in this case due to the lack of provision in the agreement. Finally, the trial court did not err in not awarding the limited partners interest and then off setting the awards against each other.
The award for attorney's fees is vacated. The trial court's award of $189,759.77 is reduced to $144,759.77. In all other respects, the decision of the trial court is affirmed.
AFFIRMED AS AMENDED.
HUFFT, J., concurs in results.
WARD, J., dissents with reasons.