In Conroy v. Suzico, 2022-CA-0974 (La.App. 1 Cir. 2/24/23), the First Circuit examined a sale and purchase agreement involving commercial property located in Baton Rouge. Christopher Conroy, the buyer, alleged that the seller, Suzico LLC, agreed in writing to sell the subject property for $1.44 million, but the seller wouldn’t complete the sale. Conroy filed a petition for specific performance, attorney fees, and damages against the seller.
The seller Suzico filed counter-claims against the buyer Conroy, his realtor, Lee Lambert of Latter & Blum, and Suzico’s agent, Ms. Melancon. Suzico alleged that Conroy and Lambert conspired with Ms. Melanson to sell the subject property far below market value. The seller claimed that Conroy signed the purchase agreement the same day the property was listed for sale by Mr. Lambert at a price less than one-half of actual market value. Suzico further claimed that Ms. Melanson did not have legal authority to sign the purchase agreement on behalf of Suzico. Suzico also alleged that a subsequent ratification of Ms. Melanson’s signature was performed under duress, error, and fraud, claiming the conspirators fraudulently led him the company’s owner to believe that the property was worth only $1.44 million, less than half of its actual market value.
Court Proceedings
Ms. Melanson filed a motion for summary judgment claiming that her signature to the purchase agreement was ratified by the company’s owner when he signed the addendum granting her authority to sign on Suzico’s behalf. The trial court granted her motion for summary judgment. The First Circuit reversed, finding that Suzico presented sufficient evidence to establish a genuine issue of material fact that there did exist the potential for error or fraud in ratifying Ms. Melanson’s signature. The court held that nullifying the addendum would negate Ms. Melanson’s signature and legal authority to enter into the transaction. Thus, the appeals court found that the district court erred in granting Ms. Melanson’s motion for summary judgment, and the case will now proceed to a trial to determine whether fraud or error existed the company’s owners signed the addendum.
Conclusion
For the real estate industry, the lesson to be learned from this litigation is to first ensure that all parties have proper legal authority to enter into the transaction. When the transaction involves a company, the company’s agent should possess proper documentation establishing this person’s legal authority to enter into the transaction. Moreover, parties and agents should never coordinate with parties to enter into any potentially fraudulent or erroneous transactions. Duress, fraud, and error may be used as grounds to rescind a written agreement by vitiating or destroying consent. Louisiana specifically recognizes the doctrine of lesion by moiety, which holds that a sales transaction may be rescinded where the sales price is less than 1/2 of market value.