Opinion
NO. 2012 CA 0232
12-21-2012
REGIONS BANK D/B/A REGIONS MORTGAGE v. BERTHA DAKIN RAUCH A/K/A BERTHA DAKIN, BERTHA D. RAUCH, BERTA RAUCH
Patrick D. Breeden New Orleans, Louisiana and Frans J. LaBranche Mandeville, Louisiana Counsel for Defendant/Appellant Bertha Dakin Rauch Penny M. Daigrepont Eva M. Simkovitz Metairie, Louisiana and Zara L. Zeringue Covington, Louisiana Counsel for Plaintiff/Appellee Regions Bank d/b/a Regions Mortgage
NOT DESIGNATED FOR PUBLICATION
Appealed from the
22nd Judicial District Court
In and for the Parish of St. Tammany
State of Louisiana
Case No. 2010-13504
The Honorable William J. Crain, Judge Presiding
Patrick D. Breeden
New Orleans, Louisiana
and
Frans J. LaBranche
Mandeville, Louisiana
Counsel for Defendant/Appellant
Bertha Dakin Rauch
Penny M. Daigrepont
Eva M. Simkovitz
Metairie, Louisiana
and
Zara L. Zeringue
Covington, Louisiana
Counsel for Plaintiff/Appellee
Regions Bank d/b/a Regions
Mortgage
BEFORE: CARTER, C.J., GUIDRY, AND GAIDRY, JJ.
GAIDRY , J.
This is an appeal of a judgment rendered by the 22nd Judicial District Court, in the Parish of St. Tammany, in favor of the Appellee, Regions Bank ("Regions"), and against the Appellant, Bertha D. Rauch, in which an exception of res judicata raised by Regions was sustained, and a notice of lis pendens recorded by Ms. Rauch encumbering her property, which was seized by Regions through executory process, was dismissed. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
A petition for executory process with benefit of appraisal was filed by Regions on June 1, 2010, alleging that it was the holder of a promissory note executed by Ms. Rauch and payable to Regions in the original principal sum of $116,000.00, plus interest. The note was secured with an act of mortgage recorded in the St. Tammany Parish mortgage records. The act of mortgage encumbered property owned by Ms. Rauch in the Red Gap Acres Subdivision in Abita Springs, Louisiana. It was agreed by Regions and Ms. Rauch in the act of mortgage that should the note not be paid within the terms and conditions in the mortgage, the property could be seized and sold by executory process. Regions averred that the payments on the mortgage were past due and a balance of $114,236.15 was left unpaid, with interest, and prayed that a writ of executory process be issued. An affidavit of verification of indebtedness, the promissory note, and the mortgage were attached to the petition.
The note was originally in favor of Union Planters Bank, but was subsequently transferred to Regions, who was the last holder of the note at the time the petition for executory process was filed.
The property is described as "Section 12, Township 7 South, Range 11 East in Red Gap Acres Subdivision, Parish of St. Tammany and designated as Lot 15, Block 6" in instrument no. 1412145 of the St. Tammany Parish conveyance records.
The court ordered a writ of executory process be issued on June 2, 2010. The St. Tammany Parish Sheriff's Office sent notice of the seizure of the property to the clerk of court on June 22, 2010. The sheriffs sale was held on October 13, 2010, whereby Regions purchased the property for the sum of $80,000.00.
On November 19, 2010, Ms. Rauch filed a petition for a temporary restraining order to suspend eviction, a preliminary injunction, a permanent injunction, damages, and for the return of the property. Ms. Rauch claimed in her petition that Regions, for various reasons, did not conform to the procedure of executory process outlined in Louisiana Code of Civil Procedure. The court denied the temporary restraining order. Ms. Rauch moved from the property some time afterward, rendering the petition for a preliminary injunction moot.
Ms. Rauch states in her petition that Regions violated the law for executory process as stated in La.C.C.P. art. 2751; however that article only states the causes for which the defendant may arrest the seizure of and sale of the property.
On August 3, 2011, Regions filed exceptions of res judicata, no cause of action, no right of action, unauthorized use of summary proceedings and improper cumulation of actions. On October 13, 2011, the trial court granted the peremptory exception of res judicata, finding that it was bound by the holding in Avery v. CitiMortgage, Inc., 2008-2052 (La. App. 1 Cir. 5/13/09), 15 So.3d 240. Ms. Rauch's petition was thereby dismissed with prejudice, and the other exceptions filed by Regions were not adjudicated. The court also cancelled a notice of lis pendens recorded by Ms. Rauch in the public records of St. Tammany Parish on November 19, 2010, which encumbered the subject property. Ms. Rauch filed a motion for suspensive appeal on November 2, 2011, which the trial court granted.
The suspensive appeal was later changed to a devolutive appeal by Ms. Rauch for reasons found in Regions Bank d/b/a Regions Mortgage v. Bertha Dakin Rauch wk/a Bertha Rauch, 2012 CA 1084, 22nd JDC docket no. 2010-13504.
ASSIGNMENTS OF ERROR
Ms. Rauch has cited nine separate assignments of error, but since the trial court's ruling only addresses the exception of res judicata and the cancellation of the lis pendens, we find only assignments of error 1, 2, and 5 to be relevant to this appeal. They are as follows:
Assignment of error 6 asks whether the creditor violated the order of the cancellation of lis pendens by filing the cancellation prior to the time the order was final, i.e., before the running of the thirty (30) day period for filing a suspensive appeal. Since the suspensive appeal was subsequently converted into a devolutive appeal, the issue of this assignment error is now moot.
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1) Whether an order of executory process is res judicata.
2) Whether Avery can overrule prior opinions of the Louisiana Supreme Court.
5) Whether the trial court erred in ordering the cancellation of the notice of lis pendens.
STANDARD OF REVIEW
The standard of review of a peremptory exception of res judicata requires an appellate court to determine if the trial court's decision is legally correct or incorrect. Myers v. National Union Fire Ins. Co. of Louisiana, 2009- 1517, p. 5 (La. App 4 Cir. 5/19/10), 43 So.3d 207, 210, writ denied, 2010- 2049 (La. 11/12/10), 49 So.3d 892. A final judgment has the authority of res judicata only as to those issues presented in the pleadings and conclusively adjudicated by the court. R-Plex Enterprises, LLC v. Desvignes, 2010-1337, p. 3 (La. App. 4 Cir. 2/9/11), 61 So.3d 37, 39. The standard of review of a ruling sustaining an exception of res judicata is manifest error when the exception is raised prior to the case being submitted and evidence is received from both parties; otherwise, the res judicata effect of a prior judgment is a question of law that is reviewed de novo. Fogleman v. Meaux Surface Protection, Inc., 2010-1210, p.2 (La. App 3 Cir. 3/9/11), 58 So.3d 1057, 1059, writ denied, 2011-0712 (La. 5/27/11), 63 So.3d 995. Since evidence has already been submitted in the instant case, including evidence of the writ of seizure and sheriffs sale, and the trial court has made its ruling based upon this evidence, we have before us a question of law where a de novo review is the more appropriate course of action.
DISCUSSION
Res Judicata
There is much contention over whether a "judgment" was ever rendered in the instant case, precluding Ms. Rauch's petition for temporary restraining order and injunctions pursuant to Louisiana Revised Statutes § 13:4231. It is clear from the record that Ms. Rauch brought her action after the writ of seizure and sale occurred; therefore, we find it necessary to first answer whether there was a "judgment" against Ms. Rauch and in favor of Regions already in place when she brought her action.
Ms. Rauch points out in her brief that La.C.C.P. art. 2631 states that "[executory proceedings are those which are used to effect the seizure and sale of property, without previous citation and judgment" to support her argument that an executory order is not a judgment. Ms. Rauch, however, takes the article out of context. Article 2631 actually states that a seizure and sale of property can be effected without necessitating the existence of a prior judgment. The judgment contemplated is not the order for executory process itself, but some other predicate judgment authorizing the executory process. At any rate, the language of Article 2631 cited supra is not germane to the facts of the instant case.
Article 2631 goes on to say that executory proceedings can also "enforce a mortgage evidenced by an authentic act importing a confession of judgment." This is the circumstance present in the instant case. Item 23 in the act of mortgage states the borrower, Ms. Rauch, "confesses judgment and acknowledges to be indebted to [Regions]." This phrase is in conformity with La.C.C.P. art. 2632, which states, "An act evidencing a mortgage or privilege imports a confession of judgment when the obligor therein acknowledges the obligation secured thereby... and confesses judgment thereon if the obligation is not paid at maturity." When Ms. Rauch failed to repay the loan made by Regions, she at that time confessed judgment against herself and in favor of Regions, acknowledging her indebtedness. The executory proceeding was then the vehicle used by the court pursuant to art. 2631 to finalize that judgment. Therefore, when Ms. Rauch states that no judgment exists, her statement is not correct. The judgment of her indebtedness to Regions does exist, and it is enforced upon her by the executory proceeding.
Ms. Rauch uses a couple of antiquated Louisiana Supreme Court cases as support for her argument that an order of seizure and sale cannot support a plea of res judicata. See J.H. Mitchell v. S. Logan, 34 La. Ann. 998, 1882 WL 8957 (La. 1882), see also LaCour Plantation Co. v. Jewell, 186 La. 1055, 173 So. 761 (La. 1937). Ms. Rauch states in her brief that Avery v. CitiMortgage does not follow the ruling of these cases. However, in the somewhat more recent Louisiana Supreme Court case of Reed v. Meaux, 292 So.2d 557 (La. 1974), the supreme court aptly describes the uniquely Louisianain concept of executory process as "an In rem action derived from the civil law; it provides a simple, expeditious, and inexpensive procedure by which creditors may seize and sell property upon which they enjoy a mortgage or privilege." Reed, at 559. The plaintiff must present evidence to prove the secured obligation and the mortgage importing a confession of judgment, while the defendant may raise defenses and procedural objections either by suspensive appeal or injunction. Id, at 559-60. The proceeding is regarded as a harsh remedy, and the creditor must strictly comply with the letter of the law. Id. at 560.
Reed, however, does not definitively answer whether or not a judgment per se is rendered through executory process. That issue is addressed directly by the First Circuit in Avery v. CitiMortgage, which tailored the elements of res judicata to executory process. Louisiana Revised Statutes 13:4231 provides a broad application of res judicata; the purpose is to foster judicial efficiency and protect the defendants from multiple lawsuits. Avery at 243. To dismiss an action on the basis of res judicata, a court must find: (1) the judgment in the executory process lawsuit is valid; (2) the judgment is final; (3) the parties are the same; (4) the cause or causes of action asserted in the present suit existed at the time of the final judgment; and (5) the cause or causes of action asserted in the present petition arose out of the transaction or occurrence that was the subject matter of the executory process lawsuit. Id.
In the instant case, we must first determine if the executory process judgment is valid. The order to seize and sell the property was filed with the court on June 1, 2010, and signed by the judge on the following day. It orders the notice of judgment to be served upon Ms. Rauch in rem at the property's address, or to whoever was residing at the property at the time. Secondly, the order is final as it was never appealed. Third, the parties to both the order and Ms. Rauch's petition are identical. Fourth, the causes of action for Ms. Rauch's petition for temporary restraining order and injunction (the seizure and sale of her home) certainly existed at the time of the executory process. Fifth, those causes of action arose out of the same occurrence, which was the default on the loan from Regions to Ms. Rauch.
As the instant case meets the five elements of Avery, we find Ms. Rauch's petition which was filed after the sheriff's sale of her home was completed to be barred by res judicata. There is no reason to overrule the Avery case, as Ms. Rauch suggests, because it does not go against any of the jurisprudence of the past or the present. The Fourth Circuit has similarly ruled that a petition filed after an order for executory process is signed by the court was barred by res judicata, as the order had become final and nonappealable. Antoine v. Chrysler Financial Corporation, 2000-0647 (La. App. 4 Cir. 3/7/01), 782 So.2d 651, 653. Since we affirm the lower court on this issue, it is not necessary to review the other exceptions filed by Regions.
Dismissal of Lis Pendens
Ms. Rauch complains of the trial court's premature dismissal of the notice of lis pendens she had recorded after she had filed her petition. She claims in her brief that Regions cancelled the lis pendens before she was able to appeal the issue of res judicata. As we have just ruled on that issue in this opinion, the premature dismissal of which Ms. Rauch complained, if it ever existed at all, has now been rectified. Her petition is being dismissed with prejudice, effectively ending the litigation on which the lis pendens was based. We therefore affirm its dismissal.
CONCLUSION
The trial court correctly applied Avery to the instant case when it sustained the peremptory exception of res judicata filed by Regions. Our affirmation of that ruling and dismissal of Ms. Rauch's petition with prejudice removes any obstacle to dismissing her notice of lis pendens as well.
DECREE
The trial court's sustaining the peremptory exception of res judicata filed by the Appellee, Regions Bank, is affirmed, and the petition for a temporary restraining order to suspend eviction, a preliminary injunction, a permanent injunction, and damages for the return of the property filed by the Appellant, Bertha D. Rauch, is dismissed with prejudice. The order to dismiss the notice of lis pendens recorded by Ms. Rauch is also affirmed. All costs of this appeal are to be assessed to the Appellant.
AFFIRMED.