«NOW INTO COURT, through undersigned counsel, comes Petitioner Barry F. Kern, who suggests that he is entitled to a judgment declaring that he is a ...»
CIVIL DISTRICT COURT FOR THE PARISH OF ORLEANS
STATE OF LOUISIANA
NO. DIVISION “ ”
BARRY F. KERN
BLAINE KERN ARTISTS, INC.
FILED: ______________________________ ____________________________________
PETITION FOR DECLARATORY JUDGMENT,
FOR QUO WARRANTO AND FOR APPOINTMENT OF RECEIVERNOW INTO COURT, through undersigned counsel, comes Petitioner Barry F. Kern, who suggests that he is entitled to a judgment declaring that he is a 48.7% shareholder of Blaine Kern Artists, Inc. (hereafter referred to as “BKA”), and to a judgment of quo warranto evicting Blaine S.
Kern from any directorial or officer position he currently claims to hold at BKA, and for the appointment of a receiver to manage and/or dissolve BKA. In support of this Petition, Barry F. Kern
avers and states as follows:
Petitioner herein is Barry F. Kern, a natural person of the age of majority and a domiciliary of the Parish of Orleans, Louisiana.
Defendant herein is Blaine Kern Artists, Inc., a domestic corporation organized and existing under the laws of the State of Louisiana, with its registered address and principal place of business and domicile in Orleans Parish, Louisiana, and which is doing business within the jurisdiction of this Court.
Jurisdiction and Venue 3.
This Court has jurisdiction and venue over this matter.
−1− Factual Background FAMILY DAYS 4.
On July 22, 1957, the Articles of Incorporation for Blaine Kern Artists, Inc. were filed with the Louisiana Secretary of State. BKA was chartered to, inter alia, “carry on and conduct the business of designing, erecting, and repairing carnival floats.” BKA was authorized to issue 100 shares of stock. “All voting rights at stockholder’s meetings [were] vested in the holders of shares of stock in the corporation, and each stockholder [was] entitled to one vote, …, for each share of stock standing in his name on the books of [the] corporation. At all the stockholder’s meetings the stockholder’s [would] have the rights of cumulative voting in the election of the directors.” Id.
The Articles of Incorporation further state that “[t]he business and affairs of this corporation shall be managed, and all corporate powers of same shall be vested in and exercised by a Board of three (3) Directors, unless and until otherwise provided by the by-laws of this corporation.” 6.
The Articles of Incorporation further state that “[s]hould any vacancy occur on the Board of Directors, by death or otherwise, a new director shall be named by the remaining members of the Board for the unexpired term, at the meeting of the Board of Directors.” 7.
Blaine Kern, Sr. was named as the original President of BKA.
The Articles of Incorporation called for an annual meeting of the shareholders every August 1.
The Articles of Incorporation stated that “this corporation may be dissolved in the method and manner provided by law.” 10.
On July 22, 1957, BKA issued ten (10) shares of stock. Blaine Kern, Sr. originally owned five (5) shares, with other shareholders owning five (5) shares amongst them.
Blaine Kern, Sr.’s father, Roy, was an artist who worked his way through the Depression as a sign painter. In 1932, Roy, along with his son Blaine Kern, Sr., built the first float for the Krewe of Alla. Blaine Kern, Sr. learned the trade from his father. A mural Blaine Kern, Sr. painted in a hospital to help pay for his mother’s medical bills caught the eye of a surgeon who was captain of the Krewe of Alla. Blaine Kern, Sr. was hired to design Alla’s floats, and eventually more parades, becoming New Orleans’ leading parade creator. As the son of Blaine Kern, Sr., Barry Kern worked for BKA from a young age learning the business. With the help of loyal employees, the Kern family developed BKA into a successful and well-known business synonymous with New Orleans Mardi Gras.
As early as March 15, 1977, Jerelyn Hall “Pixie” Naquin, who had worked for BKA since age sixteen (16), served as a Director and as Secretary of BKA.
Jerelyn Hall “Pixie” Naquin ran the day-to-day operations of BKA from the 1960s into the 1990s when Barry Kern assumed managerial responsibilities. While his children and Jerelyn Hall “Pixie” Naquin helped manage the day-to-day operations of BKA, in the early decades Blaine Kern, Sr. served as the artist, dreamer and visionary for BKA, and has always been the face of BKA to the public.
On December 21, 1989, the shareholders met and amended the Articles of Incorporation, authorizing the issuance of 1,000 shares of stock.
Barry Kern, having grown up in the family business, moved to Spain in the early 1980s and developed a business producing props for Mardi Gras floats, entertainment venues and social events.
His business thrived with clients throughout Europe and the United States, including Las Vegas and Orlando. Barry Kern helped furnish Walt Disney projects in the United States and Europe and the Las Vegas Hotels MGM, Luxor and Circus, Circus.
After Barry Kern developed his own successful international business, and both Blaine Kern, Sr. and BKA found themselves in some financial difficulty, Blaine Kern, Sr. requested that Barry Kern return to New Orleans and help the flailing family business financially and managerially.
On March 2, 1993, Blaine Kern, Sr. and Barry Kern entered into an agreement governing the stock of BKA in which Barry Kern obtained the right to purchase Blaine Kern, Sr.’s stock under certain conditions, including the death of Blaine Kern, Sr. Blaine Kern, Sr. expressed to Barry Kern that he desired Barry Kern to substantially own BKA upon his death.
Effective November 30, 1994, Barry Kern became President of BKA, and on that same day, Barry Kern, as President of BKA, executed a Continuing Guaranty with Whitney National Bank “for the purpose of inducing the Bank … to lend money and advance credit to, and to renew and extend the obligations of Blaine S. Kern.” Also on November 30, 1994, Barry Kern received 481 additional shares of stock of BKA. Since then, Blaine Kern, Sr. has been the owner of 501 shares of stock in BKA (50.1%); Barry Kern has been the owner of 487 shares of stock in BKA (48.7%); with his brother, Brian Kern being the owner of 6 shares of stock in BKA (.06%) and his sister Blainey Kern being the owner of 6 shares of stock in BKA (.06%) 19.
Documents executed on May 26, 1999, evidence that at least by that time, Blaine Kern, Sr., Barry Kern and Jerelyn Hall “Pixie” Naquin served as Directors of BKA, and Jerelyn Hall “Pixie” Naquin served as Secretary.
For over fifteen (15) years, from 1994 until September of 2010, Barry Kern served as President of BKA and managed the day-to-day affairs of BKA. BKA generally prospered, although profits were curtailed in recent years by Hurricane Katrina and the national recession. Nevertheless, despite difficult times, the employees and creditors were paid and “the Greatest Free Show on Earth” went on.
After Jerelyn Hall “Pixie” Naquin became ill, and in the wake of Hurricane Katrina, Holly Bensel-Brown (“Holly Brown”), the young paramour of Blaine Kern, Sr., began managing the personal finances of Blaine Kern, Sr., eventually taking over the accounts by 2009.
Jerelyn Hall “Pixie” Naquin, a Director and Secretary of BKA since the 1970s, long-time executive at BKA, and general voice of reason, died on June 15, 2010.
The July 23, 2010, Annual Report of BKA listed Barry Kern as President and Blaine S. Kern as Director.
On July 26, 2010, Blaine Kern, Sr., at eighty-three (83) years of age, took as his fourth wife Holly Brown. Holly Brown is nearly fifty (50) years younger than Blaine. She is a “fan” of, and appears on, the Facebook page “Blaine’s World (and Holly’s!)” which refers to her as a “gold digger.” 25.
Soon after Blaine Kern, Sr. began dating Holly Brown, Blaine Kern, Sr.’s personal expenditures on houses, cars, travel and entertainment, and thus his debt, skyrocketed. Blaine Kern, Sr. then began demanding advances of money from BKA and appeared at the offices of BKA almost exclusively to request money. Besides attempting to reason with his father, Barry Kern directly implored Holly Brown to stop badgering his father for more and more money, without success.
Instead, Holly Brown has manipulated her 83-year old husband and largely alienated him from his family, friends, business associates and employees. Numerous friends, family and business professionals have advised Blaine Kern, Sr. to stop allowing Holly Brown to dominate his life and business relationships, also without success. Some of his oldest and closest friends, family and business professionals have become estranged from Blaine Kern, Sr.
Co-Captain and Treasurer of Blaine Kern’s Krewe of Halloween in the Boo Carre. On May 19, 2010, Blaine Kern’s Krewe of Halloween in the Boo Carre entered into an Agreement with BKA wherein BKA agreed to provide equipment, materials and services for payment in May, July and September of 2010, all of which have not been timely made. The payment amounts were comparably more favorable to Blaine Kern’s Krewe of Halloween in the Boo Carre than amounts paid by other customers for similar equipment, materials and services.
On August 31, 2010, Blaine Kern, Sr. issued correspondence to Barry Kern purporting to “accept [his] resignation for the following companies: President of Blaine Kern Artists, President of Blaine Kern’s Mardi Gras World, Inc., Manager of Kern Studios.” In fact, Barry Kern had never offered his resignation from any of these companies, and Blaine Kern, Sr. owned no portion of, held no position in, and was not employed by, Kern Studios, L.L.C., which is a Louisiana limited liability company solely owned and managed by Barry Kern. Since this feigned acceptance of a resignation, Blaine Kern, Sr. has publicly disparaged Barry Kern to employees, customers and business associates. Blaine Kern, Sr. has also misrepresented the role of Barry Kern and Blaine Kern Artists, Inc. in prominent business deals, requiring the issuance of cease and desist letters.
Apparently then recognizing the foregoing, on September 4, 2010, Blaine Kern, Sr. issued a letter to Barry Kern, proclaiming that “[e]ffective immediately you are terminated as President and CEO of Blaine Kern Artists and Blaine Kern Mardi Gras World, Inc. or any other position with any companies that I am involved in.” 29.
As of September 4, 2010, and for at least the decade preceding, Blaine Kern, Sr. held no position with BKA, except for Director. As of September 4, 2010, when Blaine Kern, Sr. purported to fire him, Barry Kern was the sole other Director of BKA and its President. Blaine Kern, Sr. thus had no authority to “terminate” Barry Kern. Only a majority of the Board of Directors has authority to terminate an officer of a corporation. Blaine Kern, Sr. had no corporate authority to fire the
Until these recent events, Blaine Kern, Sr. had never voiced any significant criticism of the service of Barry Kern as President of BKA or any other business.
Since his “termination,” Barry Kern was denied any participation in the management of BKA or in the control of BKA’s activities.
Unable to reason with Blaine Kern, Sr. or to act on behalf of BKA, on September 15, 2010,
Barry Kern resigned as an officer and director of BKA in a letter stating:
have no authority to fire me as President of the referenced companies. Although you own a bare majority of the stock, I am President and a member of the Board of Directors, and have been running these companies with you for over fifteen (15) years. Nevertheless, it is painfully obvious that you, your former paramour/current wife and Blaine, Jr. have been engaged in a course of conduct designed to undermine me and my reputation and are incapable of working with me in a rational, business-like manner. Therefore, effective immediately, I hereby resign as an officer and director of both the referenced companies. I remind you, however, that I continue to be a shareholder and expect you to act in a fiduciary manner in the conduct of the business of these companies. Also, please be advised that I am in no way resigning any positions with any other companies I have any interest in, including without limitation my total ownership and control of Kern Studios, LLC.
Blaine Kern, Sr. is eighty-three (83) years old.
nearly fifty (50) years younger than him.
Blaine Kern, Sr. has not been cognizant of the day-to-day operations of BKA for at least fifteen (15) years.
Blaine Kern Artists, Inc. is technically insolvent.
Blaine Kern Artists, Inc. has negative retained earnings and owners’ equity.
As Blaine Kern, Sr. has not managed BKA in over a decade, the customers of BKA are not confident in the leadership of Blaine Kern, Sr.
Thais Kern (“T.K.”), daughter of Blaine Kern, Sr. and his personal assistant, recently became engaged to be married and left the service of BKA in early September 2010, leaving BKA even more in need of experienced management.
Before his unauthorized and unwarranted “termination” as President of BKA, Barry Kern loaned BKA tens of thousands of dollars so BKA could meet payroll.
Blaine Kern Artists, Inc. has, since the “termination” of Barry Kern, issued payroll checks to employees that have been returned for non-sufficient funds.
While issuing payroll checks to employees that have been returned for non-sufficient funds, Blaine Kern, Sr. has nevertheless caused BKA to issue checks to Blaine Kern, Sr. out of separate accounts which were properly funded.