Opinion
NO. 2013 CA 0777
02-10-2014
GILBERT L. DOZIER v. BRAD J. SMITH
William C. Shockey Bradley C. Stidham Baton Rouge, Louisiana Attorneys for Plaintiff/Defendant-in- Reconvention/Appellant, Gilbert L. Dozier Daniel D. Holliday, III Baton Rouge, Louisiana Attorney for Defendant/Plaintiff-in- Reconvention/Appellee, Brad J. Smith
NOT DESIGNATED FOR PUBLICATION
On Appeal from the
19th Judicial District Court
In and for the Parish of East Baton Rouge
State of Louisiana
No. 580,065
The Honorable Trudy M. White, Judge Presiding
William C. Shockey
Bradley C. Stidham
Baton Rouge, Louisiana
Attorneys for Plaintiff/Defendant-in-
Reconvention/Appellant,
Gilbert L. Dozier
Daniel D. Holliday, III
Baton Rouge, Louisiana
Attorney for Defendant/Plaintiff-in-
Reconvention/Appellee,
Brad J. Smith
BEFORE: PARRO, GUIDRY, AND DRAKE, JJ.
DRAKE, J.
Plaintiff, Gilbert L. Dozier, appeals the trial court's granting of summary judgment dismissing plaintiff's claims against defendant/plaintiff-in-reconvention, Brad J. Smith, and rendering judgment in Smith's favor on the reconventional demand. For the reasons stated herein, the judgment of the trial court is amended in part and affirmed as amended.
FACTS AND PROCEDURAL HISTORY
Dozier owned a house and property located on Highland Road in Baton Rouge, Louisiana (Property) that sustained damage as a result of Hurricane Gustav, on or about September 1, 2008. On March 9, 2009, Dozier and Smith executed a Louisiana Residential Agreement to Buy or Sell (purchase agreement) regarding the Property. Dozier agreed to sell and Smith agreed to buy the Property for the sum of $550,000. In conjunction with the purchase agreement, Smith paid Dozier a $20,000 deposit. The purchase agreement stated that "[t]his sale is conditioned upon the ability of BUYER to borrow with this Property as security for the loan the sum of $385,000 or 70% of the Sale Price" with not more than ten percent initial interest and not less than five years to repay the loan. The purchase agreement further provided that the buyer, Smith, agreed to make a good faith application for loan approval within fifteen days of the purchase agreement and required the buyer to supply the seller with written proof from the lender that an application had been made. The purchase agreement also provided the following:
RETURN OF DEPOSIT: The Deposit shall be returned to the BUYER and this Agreement declared null and void without demand in consequence of the following events:
* * *
2) If this Agreement is subject to BUYER'S ability to obtain a loan and the loan is not obtained by the date set forth in...this Agreement
but only if the BUYER has made timely application for the loan and made good faith efforts to obtain the loan....
Dozier originally filed a motion for summary judgment, seeking stipulated damages, the deposit, attorney's fees, and costs. The trial court denied Dozier's motion for summary judgment. Smith filed his own motion for summary judgment as defendant and plaintiff-in-reconvention, seeking the return of his deposit, attorney's fees and costs, as provided for in the purchase agreement. The trial court granted Smith's motion for summary judgment, which was signed on March 4, 2013. Dozier appeals this judgment.
The trial court originally signed a judgment on January 7, 2013, but revised it on joint motion of the parties to correct the interest on the attorney's fees and costs to run from the date of judgment, rather than judicial demand.
STANDARD OF REVIEW
In determining whether summary judgment is appropriate, appellate courts review summary judgment de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Brassette v. Exnicios, 11-1439 (La. App. 1 Cir. 5/14/12), 92 So. 3d 1077, 1081, writ denied, 12-1583 (La. 11/9/12), 100 So. 3d 831 (citing Sanders v. Ashland Oil, Inc., 96-1751 (La. App. 1 Cir. 6/20/97), 696 So. 2d 1031, 1035, writ denied, 97-1911 (La. 10/31/97), 703 So. 2d 29). Furthermore, an appellate court asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. Brassette, 92 So. 3d at 1081. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case. Id.
LEGAL PRINCIPLES
A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine issue of material fact. Gonzales v. Kissner, 08-2154 (La. App. 1 Cir. 9/11/09), 24 So. 3d 214, 217. A motion for summary judgment is properly granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, admitted for purposes of the motion for summary judgment, show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B)(2). The summary judgment procedure is expressly favored in the law and is designed to secure the just, speedy, and inexpensive determination of non-domestic civil actions. See La. C.C.P. art. 966(A)(2). The procedure is favored and shall be construed to accomplish these ends. La. C.C.P. art. 966(A)(2); Independent Fire Insurance Co. v. Sunbeam Corp., 99-2181 (La. 2/29/00), 755 So. 2d 226, 231.
A genuine issue of fact is an issue on which reasonable minds could disagree. If "reasonable persons could reach only one conclusion" based on "the state of the evidence," a genuine issue does not remain. See Smith v. Our Lady of the Lake Hosp., Inc., 93-2512 (La. 7/5/94), 639 So. 2d 730, 751. "A fact is 'material' when its existence or nonexistence may be essential to plaintiff's cause of action under the applicable theory of recovery." Id. Whether a particular fact in dispute is "material" for summary judgment purposes is viewed in light of the substantive law applicable to the case. MB Industries, LLC v. CNA Ins. Co., 11-0303 (La. 10/25/11), 74 So.3d 1173, 1183.
The mover bears the burden of proving that he is entitled to summary judgment. La. C.C.P. art. 966(C)(2).
The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.When the mover will bear the burden of proof at trial, that party must support his motion with credible evidence that would entitle him to a directed verdict if not controverted at trial. Mines v. Garrett, 04-0806 (La. 6/25/04), 876 So. 2d 764, 766. Such an affirmative showing will then shift the burden of production to the party opposing the motion, requiring the opposing party either to produce evidentiary materials that demonstrate the existence of a genuine issue for trial or to submit an affidavit requesting additional time for discovery. Id. at 766-67. If the mover has put forth supporting proof through affidavits or otherwise, the adverse party may not rest on the mere allegations or denials of his pleadings, but his response, by affidavits or otherwise, must set forth specific facts showing that there is a genuine issue for trial. La. C.C.P. art. 967(B); Mitchell v. Southern Scrap Recycling, L.L.C., 11-2201 (La. App. 1 Cir. 6/8/12), 93 So. 3d 754, 756-57, writ denied, 12-1502 (La. 10/12/12), 99 So. 3d 47.
La. C.C.P. art. 966.
DISCUSSION
Smith supported his motion for summary judgment with his deposition testimony, the purchase agreement, the deposition testimonies of Michael Matthis, Janet Campo, Gwen Cangelosi, and Rhonda Shea, all loan officers at various local banks, and Smith's affidavit. Smith also provided various emails and correspondence between himself and the various loan officers. Dozier opposed the motion for summary judgment and attached many of the same documents relied upon by Smith in supporting his motion for summary judgment. Dozier claimed that Smith breached the purchase agreement by not making a good faith effort to secure financing for the purchase of the home and never provided Dozier with written proof that any good faith applications were made. Dozier's argument was that although Smith approached five different lenders, Smith requested both the purchase price and financing to renovate the home, rather than financing for only the purchase price. Furthermore, Dozier asserted that First Bank and Trust (First Bank) did agree to provide Smith financing, but he declined the offer due to the terms the bank required. Smith responded that the offer from First Bank contained terms substantially different from those required by the purchase agreement. Smith claimed that he attempted to obtain financing from five separate financial institutions, each of that declined to provide financing that met the financing terms contained in the purchase agreement.
The record contains the deposition of Smith, which indicates he first called Matthis at First Bank regarding financing for the Property. Matthis indicated that at the time of the request, the real estate market was not very favorable, and that 2009 was a slow and unproductive year for his bank. Smith asked Matthis about the options to finance the Property and provided Matthis with the purchase agreement, his personal financial statement, and profit and loss statements for two companies that he owned. First Bank agreed to loan Matthis funds to finance the Property, but, due to the condition of the house, required $153,000 from Smith to be kept in escrow and disbursed to Smith as renovations were done on the house. Furthermore, First Bank would only agree to a 12-month, interest-only loan, which was different from the terms of the purchase agreement. Matthis could not recall if he and Smith ever specifically discussed a loan for $385,000 or 70 percent of the $550,000 purchase price with an initial interest rate not to exceed ten percent per annum, as stated in the purchase agreement. However, he and Smith discussed what First Bank would be willing to offer and different options. The terms offered by First Bank required Smith to dedicate a large amount of cash to the Property. Smith did not accept First Bank's loan offer due to the unfavorable terms of financing, which required him to keep a large amount of cash in an account.
Smith then approached Janet Campo with Plaquemine Bank regarding the financing of the purchase agreement. Plaquemine Bank had already agreed to make Smith a loan for another project prior to Smith's request about the Property. After getting a few details about the Property, a bank employee viewed the Property, and the bank decided they did not want to make a loan for this Property. The decision to reject the loan was not based on the condition of the house, but because Smith already had an existing loan with the bank for a different property. Plaquemine Bank had Smith's financial information, but never requested the purchase agreement.
Smith also approached Gwen Cangelosi, a loan officer with Citizen's Bank, and generally discussed a request for financing of the Property. Smith also had two previous loans with Citizen's Bank. When Smith contacted Citizen's Bank regarding a possible loan on the Property, the bank declined, since they already had two loans with him. Cangelosi sent Smith a letter declining the loan request.
Smith contacted Rhonda Shea, a loan officer with Iberia Bank, by phone to discuss financing the Property. Smith then sent documents requested by Shea, including the purchase agreement and financial information. Smith could not specifically recall requesting a loan of $385,000 with ten percent interest over five years, but he did explain the project to Shea, and those terms were in the purchase agreement. Shea reviewed the request and determined that the bank was not interested and did not have an inclination for the type of loan requested at that time. Iberia Bank based its decision on the fact that the real estate market was not very good at that time and that the loan would have been for a purely speculative property, as there was no buyer. Shea ultimately informed Smith that Iberia Bank was not interested in financing the project.
Smith finally contacted Ron Anderson at Hancock Bank regarding financing of the Property and forwarded the appropriate financial information. Anderson failed to contact Smith, which Smith interpreted as a lack of interest. Eventually, Anderson informed Smith that Hancock was not interested in financing the Property. Appropriateness of Summary Judgment
Dozier contends that this matter is inappropriate for summary judgment, because there is a genuine issue of material fact as to the intent, motive, and presence or lack of good faith on the part of Smith in seeking financing of the Property. Dozier claims that the purchase agreement required Smith to obtain $385,000 or 70 percent of the purchase price for not more than 10 percent interest for not less than five years. Dozier asserts that Smith did not just seek the amount required by the purchase agreement, but also funds to repair the Property. Therefore, Dozier claims that Smith was not in good faith in seeking the appropriate financing, as required by the purchase agreement.
Even though summary judgment is favored, it is not a substitute for trial on the merits, and it is inappropriate for judicial determination of subjective facts, such as motive, intent, good faith, or knowledge that call for credibility evaluations and the weighing of testimony. S.J. v. Lafayette Parish School Bd., 06-2862 (La. 6/29/07), 959 So. 2d 884, 887(Johnson, J., concurring); Carter v. BRMAP, 591 So. 2d 1184, 1189 (La. App. 1st Cir. 1991). Summary judgment is seldom appropriate for determinations based on subjective facts of motive, intent, good faith, knowledge, or malice, yet it may be granted on a subjective intent issue when no issue of material fact exists concerning the pertinent intent. Jones v. Estate of Santiago, 034424 (La. 4/14/04), 870 So.2d 1002, 1006; Smith, 639 So.2d at 751. A fact is material if it potentially ensures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. Holt v. Torino, 12-1579 (La. App. 1 Cir. 4/26/13), 117 So. 3d 182, 185, writ denied, 13-1161 (La. 8/30/13), 120 So. 3d 267. The trial court determined that this matter was one in which no issue of material fact existed concerning Smith's good faith. Purchase Agreement Null and Void
When a purchaser, through no fault of his own, is unable to obtain the loan as provided for in the purchase agreement, he may invoke an available provision in the contract, conditioning the entire agreement on his ability to make said loan, so as to declare the contract null and void, and demand the return of his deposit. Century 21 Acadia Realty and Development Co., Inc. v. Brough, 393 So. 2d 287, 289 (La. App. 1 Cir. 1980). Such a suspensive condition is solely for the purchaser's benefit, and if the condition remains unfulfilled because of the purchaser's fault, it will be presumed fulfilled, and the condition may not be invoked as a defense to the contract's enforcement. Id.; see La. C.C. art. 1772. A purchaser must, in good faith, make reasonable efforts to obtain the agreed to loan. Id.
In the present case, the purchase agreement provided that the deposit was to be returned to Smith and the agreement declared null and void if Smith were unable to obtain a loan, despite making a good faith application, within fifteen days of March 9, 2009, with terms set forth in the purchase agreement. Final loan approval was due "on or prior to closing." The Act of Sale was to be executed on or before March 31, 2009. By its terms, the purchase agreement became null and void if Smith were unable to obtain a loan by March 31, 2009, provided Smith timely made an application for the loan and made good faith efforts to obtain the loan. The issue is whether Smith acted in good faith in attempting to secure the financing according to the purchase agreement, or whether there is an issue of material fact as to Smith's good faith.
Matthis testified that he and Smith discussed the financing options for the Property, keeping in mind the real estate market at the time. First Bank also took into consideration that the purchase of the Property was speculative, since it was being purchased to renovate and resell. First Bank agreed to a loan, but required Smith to put up $153,000 in cash for the renovations. Matthis had viewed the house at the time he and Smith were discussing the loan, and testified that First Bank would not loan money for the Property unless the bank monitored the condition of the renovations. The renovations to the house were an "absolutely, one hundred percent" necessary component to the bank's willingness to loan any money for the Property. Matthis also testified that he and Smith did discuss First Bank just financing the purchase of the Property. However, Matthis indicated that First Bank was not interested in just the purchase of the Property. Matthis stated, "It had to be a package deal for us. It had to be a purchase, plus the renovation." Smith testified that First Bank would not finance the Property without the funds available to remodel the home. First Bank was not interested in loaning funds for the purchase of this house without any renovation. Matthis received pertinent financial information from Smith as well as the purchase agreement.
The evidence in the record clearly shows that First Bank was not going to finance just the purchase of the Property due to its condition and the need for renovation. Smith did discuss financing the purchase price with First Bank, but the bank declined and offered a financing package that required the renovation and a substantial amount of cash from Smith, while only permitting a 12-month term to repay the loan. Smith was not required to accept financing terms that were different from those included in the purchase agreement. It was the bank that required that the renovations be done in order to lend any money for the Property.
At oral argument, counsel for Dozier argued that several emails between Smith and Matthis evidenced Smith's acceptance of the loan offered by First Bank. After reviewing those emails and all of the documents, this court finds that although the loan offered by First Bank ($375,000 for one year) was close to the terms of the Purchase Agreement ($385,000 for five years), the terms were not so similar that Smith was obliged to accept the offer of loan.
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Dozier relies on Harris v. James, 11-1533 (La. App. 1 Cir. 5/4/12), 2012 WL 1580517 (unpublished opinion), where this court affirmed the trial court's finding that the purchaser did not make a good faith application for a loan, as required by the purchase agreement. The purchaser sought to borrow 100% of the purchase price of the home, rather than the 80% required by the purchase agreement. Harris is distinguishable, since, despite the purchaser's requesting an amount that was nonconforming to the purchase agreement, the bank actually offered him a loan conforming to the purchase agreement, which the purchaser rejected. In the present case, the evidence in the record is that First Bank did consider the purchase agreement that Smith sent to Matthis, even though Smith never directly requested the exact amount in the purchase agreement, and the offer made by First Bank was nonconforming to the terms of the purchase agreement.
Furthermore, when First Bank declined to offer Smith financing according to the purchase agreement, Smith was not required to seek any further financing. A buyer need only make one good faith effort to fulfill the condition of securing financing. See Weger v. Silveria, 460 So. 2d 49, 51 (La. App. 1 Cir. 1984); Garsee v. Bowie, 37,444 (La. App. 2 Cir. 8/20/03), 852 So. 2d 1156, 1161-62. While not necessary, Smith continued to seek financing from other banks, all of which declined him, which emphasizes his good faith effort to secure financing. Some of the refusals were based on the state of the real estate market or the fact that Smith had previous outstanding loans with that bank. Smith was unable to secure financing for the Property even after the parties had extended the closing date.
There is no issue that Smith made a timely application, since he contacted First Bank on March 7, 2009, two days before the signing of the purchase agreement. Dozier contends that Smith was not in good faith, since he never filed a written application for a loan. However, this argument is without merit. Matthis testified that no formal application was necessary. Usually, the borrower sends a financial statement, which is considered the application, and there are email or face-to-face discussions. Campo testified that it was fairly common for a bank to decline a customer without a formal application for loan. Shea also testified that verbal discussions are a form of a loan application. Usually, there is not a formal application to complete in a commercial transaction. Smith did send to each bank the documents required by that bank. The record contains the testimony of Smith regarding his denials from each bank as well as two written rejections of a loan from Iberia Bank and Citizen's Bank. Furthermore, First Bank ultimately offered Smith a loan, but with terms that varied from the purchase agreement. Therefore, the banks involved considered Smith's actions to be an application.
Dozier also argues that the purchase agreement required Smith to forward written proof of his good faith attempts to seek financing. Dozier claims Smith breached the purchase agreement because Smith never forwarded Dozier such written proof. The purchase agreement states:
BUYER agrees to make a good faith application, ... within 15 calendar days of acceptance of this offer or any counteroffer and written proof from the lender that the application has been made shall be supplied by BUYER to the SELLER.
It is undisputed that Dozier was aware that Smith had been turned down for several loan applications. The original closing date was set for March 31, 2009. On March 31, 2009, Dozier and Smith entered into an addendum extending the purchase agreement which stated:
Since it appears at this time that the Act of Sale will not close on the date set forth in the purchase agreement between the undersigned Seller and Buyer, and since the delay is not the fault of either party, both Seller and Buyer hereby agrees to extend the time for passing the Act of Sale until the 30th day of April, 2009.
On April 30, 2009, Dozier and Smith again extended the closing date with virtually identical language. The petition of Dozier states, "The Addendums were executed to provide Smith with additional time with which to secure proper financing." Therefore, Dozier was aware that Smith was then currently unable to obtain financing for the Property.
Additionally, Dozier was informed of Smith's continued attempts to obtain financing. While going through the process with Ron Anderson, Smith kept Dozier informed by phone calls and meetings. Dozier sent Smith a letter on May 3, 2009, indicating that Dozier had attempted to find a bank interested in financing the purchase agreement. Dozier wrote to the title company on May 14, 2009, explaining that Smith was attempting to obtain financing through Iberia Bank. On May 18, 2009, Dozier again wrote to Smith and suggested he speak to Ron Anderson at Hancock Bank regarding the loan.
Louisiana Civil Code article 1767 provides, in pertinent part, that "[a] conditional obligation is one dependent on an uncertain event. If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive." The right to enforce the obligation does not arise until the fulfillment of the suspensive condition, and the obligation may not be enforced until the condition is met. Hampton v. Hampton, Inc., 97-1779 (La. App. 1 Cir. 6/29/98), 713 So. 2d 1185, 1190. Courts do not construe stipulations in a contract as suspensive conditions unless the express contract language compels such construction. Id.
We find no merit to Dozier's contention that because Smith failed to notify him in writing of the attempts to obtain financing, as required by the purchase agreement, Smith breached the purchase agreement. Because Dozier had actual notice that Smith had attempted and was unable to secure financing of the Property, written notice would have been superfluous and mere ceremony. The law will not require a vain and useless thing. See Tillman v. New Orleans Saints Football Club, 265 So. 2d 284, 288 (La. App. 4 Cir. 1972). We agree with the reasoning of the trial court that there are no material facts in dispute.
ANSWER TO APPEAL
Smith answered the appeal and requested additional attorney fees for the work necessitated by the appeal. Additional attorney fees are usually awarded on appeal when a party appeals, obtains no relief, and the appeal has necessitated additional work on the opposing party's counsel, provided that the opposing party appropriately requests an increase. Roussell v. St. Tammany Parish Sch. Bd., 042622 (La. App. 1 Cir. 8/23/06), 943 So. 2d 449, 464, writ not considered, 06-2362 (La. 1/8/07), 948 So. 2d 116. We render judgment awarding Smith an additional $1,000 in attorney's fees for work performed on appeal.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is amended to order plaintiff/defendant-in-reconvention, Gilbert L. Dozier, to pay defendant/plaintiff-in-reconvention, Brad J. Smith, an additional $1,000 in attorney's fees for the appeal, with legal interest from the date of this judgment until paid. In all other respects, the judgment is affirmed. Costs of the appeal are assessed to plaintiff/defendant-in-reconvention, Gilbert L. Dozier.
AMENDED IN PART AND AFFIRMED AS AMENDED.