KELLY CASTILLE ET AL v. LAND ET AL (2025)

This appeal questions whether the plaintiffs could rely on apparent authority in the purchase of a subdivision lot.

FACTS AND PROCEDURAL HISTORY

In October 2013, L.F.R.S. Land, L.L.C. (“LFRS”) contracted with Larry Toups to supervise the development of a residential subdivision named Oleander at Graywood. Here are the relevant terms of that contract:

[Larry Toups] will be responsible to act as the property development supervisor whose goals will be to make this development financially successful and whose duties shall include, but not be limited to, conduct extensive advertising as appropriate for immediate sales, make reasonable efforts to cause immediate sales, cause the conduct of sales, make reasonable to cause construction of infrastructure and otherwise develop the property.

Six weeks later, on December 10, 2013, LFRS purchased the land for the Oleander development. The next day, LFRS filed its operating agreement in the public records of Calcasieu Parish. The operating agreement lists the company owners; Larry is not an owner. It also names two managers with the exclusive authority to sell immovable property of the company; Larry is not a manager.

Nevertheless, two weeks later, Larry approached his niece, Kelly Castille, and her boyfriend, Joshua Marze, about buying a lot in Oleander for $35,000.00, which is roughly one-half of the listed price. Larry provided them with a property brochure which advertised the subdivision this way: “Be The First To Reserve Your Exclusive Spot Today! Contact Larry Toups[.]” He also provided them with a subdivision plat.

One week after that, on December 31, 2013, Larry executed a contract of sale with Kelly and Joshua. Larry purported to sign the contract on behalf of LFRS. The purchase price for the lot was $35,000.00. Kelly paid $20,000.00; Joshua paid $15,000.00. Both checks were made out to Larry, who then deposited the funds into his own business account.

Oversimplifying slightly, the sale never closed, title to the lot never transferred to Kelly and Joshua, and LFRS never received any of the $35,000.00. Thus, in January 2015, Kelly and Joshua filed suit against various defendants, including Larry and LFRS.

A bench trial took place in early October 2022. Two weeks later, the trial court signed a final judgment in favor of Kelly and Joshua. In essence, the trial court found that Larry had the apparent authority to sell LFRS's immovable property (the lot) to Kelly and Joshua. And based on this finding, the court ruled that LFRS and Larry were solidarily liable to Kelly and Joshua for damages, attorney fees, and costs.

In response, LFRS filed a motion for new trial. The hearing was held in March 2023. The trial court then waited nearly two years to rule on that motion. Eventually, the trial court granted the motion and signed a final judgment on January 14, 2025. This time, the trial court denied any relief to Joshua but maintained its earlier ruling in favor of Kelly. LFRS appeals this judgment.

On appeal, LFRS asserts one assignment of error:

1. The trial court erred by finding apparent authority to sell immovable property based upon (i) the representation of the purported agent[,] (ii) a brochure that read “contact” the purported agent and nothing more, and (iii) activities that took place twenty-six days after the transaction.

LAW AND ANALYSIS

A trial court's finding of apparent authority is reviewed on appeal for manifest error. Barrilleaux v. Franklin Found. Hosp., 96-343 (La.App. 1 Cir. 11/8/96), 683 So.2d 348, writ denied, 96-2885 (La. 1/24/97), 686 So.2d 864.

To reverse a factual finding by the trial court under this standard, the appellate court must apply a two-part test: (1) the appellate court must find that a reasonable factual basis does not exist in the record for the finding; and (2) the appellate court must further determine that the record establishes that the finding is clearly wrong. Stobart v. State, Dept. of Transp. & Dev., 617 So.2d 880 (La.1993).

In its sole assignment of error, LFRS contends the trial court erred by finding that Larry had the apparent authority to sell the Oleander lot to Kelly. The Louisiana Supreme Court addressed the doctrine of apparent authority in Tedesco v. Gentry Development, Inc., 540 So.2d 960, 963 (La.1989) (citations and footnotes omitted):

Apparent authority is a doctrine by which an agent is empowered to bind his principal in a transaction with a third person when the principal has made a manifestation to the third person, or to the community of which the third person is a member, that the agent is authorized to engage in the particular transaction, although the principal has not actually delegated this authority to the agent. In an actual authority situation the principal makes the manifestation first to the agent; in an apparent authority situation the principal makes this manifestation to a third person. However, the third person has the same rights in relation to the principal under either actual or apparent authority. Further, apparent authority operates only when it is reasonable for the third person to believe the agent is authorized and the third person actually believes this.

There is no express codal or statutory authority for the doctrine of apparent authority in Louisiana. This doctrine of unprivileged agency power, however, is an important part of the modern law of agency.

Following Tedesco, the mandate articles of the Louisiana Civil Code were revised, and apparent authority is now recognized in La.Civ.Code art. 3021, which states: “One who causes a third person to believe that another person is his mandatary is bound to the third person who in good faith contracts with the putative mandatary.”

In our view, Article 3021 simply codifies the prior jurisprudence on apparent authority. See, e.g., Grabowski v. Smith & Nephew, Inc., 14-433, 13-1409 (La.App. 3 Cir. 10/1/14), 149 So.3d 899; and Venable v. U.S. Fire Ins. Co., 02-505 (La.App. 3 Cir. 10/30/02), 829 So.2d 1179. Thus, as explained in Barrilleaux, 683 So.2d at 354 (citations omitted):

The burden of proving apparent authority is on the party seeking to bind the principal. A third party may not blindly rely on the assertions of an agent, but has a duty to determine, at his peril, whether the agency purportedly granted by the principal permits the proposed act by the agent. One must look from the viewpoint of the third party to determine whether an apparent agency has been created.

Now to the record evidence. Kelly testified that—except for the subdivision brochure and plat—she relied exclusively on the representations of Larry, her uncle, for her belief that he had the authority to sell the Oleander lot, that he had the authority to give her a $30,000.00 discount, and that he had the authority to accept the checks. Indeed, Kelly's testimony during her direct examination ran this way:

A What is the date of this contract?

Q December 31, 2013.

A And on that date had you ever heard of L. F. R. S.?

Q No.

A Did you know what L. F. R. S. was?

Q No.

A Why did you believe then that that was [Larry's] company?

Q Because he was representing that company. That's what he told us.

Then, during cross-examination, she testified as follows:

Q [Kelly], this is Exhibit-1 [the contract of sale]. You've seen this earlier, right?

A. Yes.

Q So. You understood as of the date of this deal, 12-31-13, from whom did you think you were buying the property?

A From Larry and the company that he worked with or for.

Q Okay. L. F. R. S?

A Yes.

Q Okay. And you understood the purchase price to be $35,000, correct?

A Correct.

Q You understood that was a discounted price, correct?

A Correct.

Q When did those agreements come together? How far before the actual date of the paying of the checks?

A Give or take a week.

Q Okay. And so when did you learn that the payment of the checks would be made to Larry and not to L. F. R. S.?

A The day that this contract was written, on December 31st.

Q Okay. So, as far as [Larry's] authority, you understood [Larry] had authority to sell for L. F. R. S., correct?

A Correct.

Q You understood [Larry] had authority to take the proceeds, be made payable to him, correct?

A Yes.

Q You understood there was a discounted price, correct?

A Yes.

Q And all of that authority for [Larry] to do that on L. F. R. S.’s behalf, that was all derived from what [Larry] told you, correct?

A Yes.

Q Because you had not seen any documents, such as who owned that property. You had not seen such documents.

A No.

Q This pamphlet that -- you recall giving some testimony about this pamphlet, a little bit of testimony earlier today?

A Yes.

Q It's Exhibit-4 in the record. Do you recall -- did you receive that -- when do you believe you received that pamphlet?

A It was after the initial -- after Larry had initially told me and Josh about this deal. So, if I'm correct, this was there with the paperwork when he presented it to Josh and I came home from work. Josh had all these papers and told me about the deal.

Q All right. And that -- just to make sure, nothing on this document suggests, and let me hand it to you real quick just to make sure, nothing on that suggests that [Larry] has a right to sign and actually make delivery of the property on behalf of L. F. R. S., does it?

A There's nothing about L. F. R. S. on this, no.

Q Okay. And you've seen brochures like this before, have you not?

A Sure.

Q I mean realty companies put them out all the time to sell things, correct?

A Right.

Q Okay. This is in evidence as Exhibit-5. It's the plat. When did you receive this plat? I think you testified you took a picture of it.

A This is a -- yes, I had it at one point in my possession and I took a picture of it to submit to my lawyer.

Q Okay, but when did you take that picture? When did you see the plat?

A Initially this was part of the paperwork that was given to Josh, which would be about a week before December 31st.

Q Okay, and actually this document shows it's a plat made for Mr. Larry Toups, but you're buying it from L. F. R. S. So, what investigation did you do to see how L. F. R. S. had it and how Larry Toups had authority to sell?

A We did not investigate.

Q So far as I understand it, you were relying on [Larry] for the authority for the various things; one, to buy from L. F. R. S.; two, to buy for a discounted price; three, to make the checks payable out to him. All that authority, these six documents that have been submitted into evidence, this is what you have, correct?

A Yes.

Q And this is all you knew at the time you purchased it on 12-31-13.

A Yes.

Q And it was your understanding from [Larry], he represented to you, that you could purchase Lot 42 at a discount and sell it later for a higher value, correct?

A Yes.

Q [Larry] told you that.

A Yes.

As a matter of law, “it is a well-established rule that the declarations and representations of an alleged or reputed agent are not admissible evidence to prove the fact of his agency against the principal.” Lou-Ark Equip. Rentals Co., Inc. v. Hong Ah Fong, 355 So.2d 1019, 1021 (La.App. 4 Cir.), writ denied, 357 So.2d. 1167 (La.1978).

So without Larry's representations to Kelly, what are we left with? Stated differently, what did LFRS do to manifest to Kelly—or to the community—that Larry was authorized to sell the Oleander lot, to discount the purchase price, and to accept the checks? The trial court answered the question this way in its oral reasons:

[I]n looking at the public, the only thing they had out there in the public was - - at that point was this flyer [property brochure]. So it looks like to me they were making manifestations to the community that, you know, that he was - - hey, “be the first to reserve your exclusive spot. Contact Larry Toups.” Anyway, I guess I'm just saying that I think that was enough to create a manifestation to the community and to her that—with this flyer that she had—that [Larry] had the authority to enter that contract.

We disagree. The property brochure is woefully short for two reasons. First, “[i]n the sale of immovable property, written authority is required for an agent to execute either an agreement to sell or a contract of sale.” Tedesco, 540 So.2d at 964. And second, LFRS is not mentioned in the brochure. As stated earlier, the brochure merely says: “Be The First To Reserve Your Exclusive Spot Today! Contact Larry Toups[.]”

To sum up, at the time Kelly signed the contract of sale, LFRS had made no manifestations to Kelly—or to the community—that Larry was authorized to buy or sell the company's real estate. Instead, Kelly relied blindly on the misrepresentations of her uncle; she ignored her affirmative duty to investigate; she wants LFRS to return the funds she paid to her uncle who defrauded her; and she relies on apparent authority. But LFRS does not have the $35,000.00. LFRS did not benefit from Larry's scheme. And in the end, there is no evidence to support the trial court's finding of apparent authority. The trial court's finding of apparent authority is clearly wrong.¹

DISPOSITION

The trial court Judgment of January 15, 2025, is reversed as it relates to L.F.R.S. Land, L.L.C.: Larry Toups had no authority to act for L.F.R.S. Land, L.L.C.; and the plaintiffs’ claims against L.F.R.S. Land, L.L.C. are dismissed with prejudice.

In all other respects, the Judgment of January 15, 2025, is affirmed.

All costs of this appeal are assessed to Kelly Castille.

REVERSED IN PART AND AFFIRMED IN PART.

FOOTNOTES

1.   LFRS also argues that the trial court admitted irrelevant evidence over objection. Although we agree that evidence of acts occurring after the execution of the contract is irrelevant to the question of apparent authority, we need not address this issue based on our disposition.

CHARLES G. FITZGERALD JUDGE