Opinion
NO. 2016–CA–1284
10-18-2017
ENGLISH TURN PROPERTY OWNER'S ASSOCIATION, INC. v. Marilyn Cutrone CONTOGOURIS
Jacob Kansas, LAW OFFICE OF JACOB KANSAS, 1801 Carol Sue Avenue, Gretna, LA 70054, COUNSEL FOR PLAINTIFF/APPELLANT Jack E. Truitt, Pamela S. Chehardy, Alexandra Schultz, Amber L. Mitchell, Peter M. Gahagan, THE TRUITT LAW FIRM, 149 North New Hampshire Street, Covington, LA 70433–3235, COUNSEL FOR DEFENDANT/APPELLEE
Jacob Kansas, LAW OFFICE OF JACOB KANSAS, 1801 Carol Sue Avenue, Gretna, LA 70054, COUNSEL FOR PLAINTIFF/APPELLANT
Jack E. Truitt, Pamela S. Chehardy, Alexandra Schultz, Amber L. Mitchell, Peter M. Gahagan, THE TRUITT LAW FIRM, 149 North New Hampshire Street, Covington, LA 70433–3235, COUNSEL FOR DEFENDANT/APPELLEE
(Court composed of Judge Joy Cossich Lobrano, Judge Sandra Cabrina Jenkins, Judge Regina Bartholomew Woods, Judge Paula A. Brown, Judge Marion F. Edwards, Pro Tempore)
Judge Regina Bartholomew Woods
This case arises as a result of a claim for a delinquent homeowner's association assessments owed to Appellant, English Turn Property Owner's Association ("ETPOA"). Notified nearly four years after the first delinquent assessment, the homeowner tendered payment for delinquent assessments prior to trial; therefore, that matter was not at issue during the trial or on appeal. At issue at trial were the resulting interest, attorney's fees, and costs that accumulated as a result of the delinquent assessments. After a trial on the merits, the trial court awarded a reduced amount of interest, attorney's fees, and costs; pursuant to the reductions, the ETPOA appealed. For the reasons that follow, we reverse, in part; vacate, in part; and remand for further proceedings.
FACTUAL AND PROCEDURAL HISTORY
Appellee, Marilyn Cutrone Contogouris, owns property located at 15 Murifield Place in the English Turn subdivision. Pursuant to the English Turn property covenants, homeowners are required to pay an assessment twice per year; payment is due January 1st and July 1st of each year. According to ETPOA, Ms. Contogouris failed to pay the following assessments: July 2010 ($1,230.00), July 2011 ($1,230.00), January 2012 ($1,290.00), July 2012 ($1,290.00), January 2013 ($1,290.00), July 2013 ($1,290.00), January 2014 ($1,350.00), and July 2014 ($1,350.00); the total of the unpaid assessments was $10,320.00. It was not until August 20, 2014, that the ETPOA notified Ms. Contogouris by letter of the delinquent assessments. In addition to demanding payment of delinquent assessments, ETPOA demanded attorney's fees at the rate of thirty-five percent (35%), late fees at the rate of ten percent (10%), and interest at the rate of twelve percent (12%). In this letter, ETPOA's attorney stated the following:
On April 16, 2002, husband and wife, Spyro and Marilyn Contogouris, acquired this property. In 2009, Spyro and Marilyn Contogouris divorced, but continue to live together in the home. Mr. Contogouris donated his one-half interest in the property to Mrs. Contogouris. By their agreement, Mr. Contogouris remains financially responsible for the English Turn Property Owners Association assessments.
"[f]ederal law gives you [thirty] 30 days after you receive this letter to dispute the validity of this debt or any part of it....If you request proof of the debt within the thirty (30) day period that begins with your receipt of this letter, the law requires me to suspend my efforts through litigation or otherwise to
collect the debt until I mail the requested information to you."
In an undated letter to ETPOA's counsel, Mr. Contogouris challenged the debt and requested the opportunity to retrieve his bank records. Although the timeliness of Mr. Contogouris' letter to plaintiff's counsel was disputed, an email from ETPOA dated September 10, 2014, makes reference to a letter from Mr. Contogouris. However, ETPOA's counsel wrote to Mr. Contogouris on September 24, 2014, and stated that he had not received Mr. Contogouris' letter until September 22, 2014. On September 23, 2014, ETPOA filed the petition that gave rise to the underlying matter from which this appeal lies.
In his letter, Mr. Contogouris, states, in pertinent part, that he "feels certain that the demand for earlier payments must be in error as I recall paying my POA dues. Accordingly, I'll order my check copies from the bank today and retrieve all the payments I have made and [forward] them to you upon receipt, along with any difference."
Additionally, a copy of Mr. Contogouris' letter is contained in the record and is marked "POA Received 9/9/14."
In its judgment and incorporated reasons for judgment, the trial court awarded ETPOA late fees in the amount of five hundred dollars ($500), interest in the amount of eight hundred dollars ($800), attorney's fees in the amount of four thousand sixty-seven dollars ($4,067), and court costs and judicial interest. In reaching this judgment, the trial court found "that defendant's practices are inconsistent, deficient, and inaccurate." The trial court also "took note of the length of time the defendant took to collect his bank records, and the years it took the plaintiff to bring forth this action ... as well as the length of time it took for [ETPOA] to deposit various checks that were tendered by the defendant. Hence, a substantial amount of late fees have not been awarded." The trial court also found that the defendant's "nonpayment of assessments for over four years" and the "process by which the defendant paid his assessments and kept this accounting" was "negligent" and is "not reasonable or responsible." "Hence, some interest has been awarded to the plaintiff." In reaching its decision, the trial court "took note of the conflicting testimony of the employees and bookkeepers of English Turn, and their failure to properly and adequately give timely notice of fees due." It is from this judgment that ETPOA appeals.
While it is obvious that the trial court is referring to ETPOA, the trial court inadvertently labels ETPOA as "the defendant" rather than as the plaintiff.
DISCUSSION
In its brief, ETPOA designates a number of assignments of error. In summary, ETPOA questions whether the trial court erred in refusing to award the total amount of interest, late fees and attorney's fees it sought.
Although this matter stems from delinquent property owners' association assessments, as noted in the trial court's judgment and incorporated reasons for judgment, the parties reached a consent regarding the unpaid assessments totaling $10,320.00; therefore, the delinquent assessments are not part of this appeal, only the interest, late fees, attorney's fees and costs associated therewith.
INTEREST AND LATE FEES
Disputes, such as the instant one, are governed by the Louisiana Homeowners Association Act as set forth in La. R.S. 9:1141.1, et. seq. Specifically, La. R.S. 9:1141.8 sets forth that "community documents of residential planned communities shall have the force of law between the homeowners association and the individual lot owners and as between individual lot owners. The remedies for breach of any obligation imposed on lot owners or the association shall include damages, injunctions, or such other remedies as are provided by law."
In the instant matter, the community document pertinent to this appeal that was introduced into evidence during the trial of this matter is the Declaration of Covenants, Conditions and Restrictions (the "covenants"). The covenants provide for semi-annual assessments to be paid by the homeowner to ETPOA.
This Court has previously interpreted the ETPOA covenants in accordance with this State's jurisprudence regarding the interpretation of contracts. See English Turn Prop. Owner's Ass'n, Inc. v. Short, 2016-0460, p. 8 (La. App. 4 Cir. 11/30/16, 1), 204 So.3d 672, 679, reh'g denied(Dec. 14, 2016). The interpretation of unambiguous contractual provisions is a matter of law, which this Court reviews under the de novo standard. Landis Const. Co. v. St. Bernard Parish, 2014-0096, p.5 (La. App. 4 Cir. 10/22/14), 151 So.3d 959, 963. "[T]he determination of whether a contract is clear or is ambiguous is also a question of law." Id."Errors of law are reviewed de novo by the appellate courts." Norfleet v. Lifeguard Transp. Serv., Inc., 2005-0501, p. 5 (La. App. 4 Cir. 5/17/06), 934 So.2d 846, 852.
In the instant matter, we find that the trial court committed legal error in awarding conventional interest to the ETPOA. Section 9.08 of the covenants, which provides for conventional interest relative to unpaid assessments of an owner, reads as follows:
9.08 Effect of Nonpayment; Remedies of the Association. Any assessments of an owner...which are not paid when due shall be delinquent. Any assessment delinquent for a period of more than ten (10) days after the date when due shall incur a late charge in an amount as may be determined by the Board from time to time and shall also commence to accrue simple interest at the maximum rate of eighteen (18%) percent per annum, but in no event to exceed the maximum rate authorized by Louisiana law.
ETPOA introduced into evidence at trial the Minutes of the Board of Directors Meeting of the English Turn Property Owners' Association, dated December 11, 2002. These minutes contained a resolution, which provided the following ("the 2002 Resolution"):
All accounts not paid by the end of the first month are considered delinquent and a Past Due Notice with a copy of the account will be mailed to the property owner. All delinquent accounts will be assessed a (10%) late fee for the current period and each previous past delinquent assessment, and will commence to accrue simple interest at the rate of eighteen (18%) per annum.
(Footnote added).
In Section 9.08 of the covenants, the term "delinquent" describes assessments not paid within ten (10) days of becoming due. The 2002 resolution describes accounts not paid by the end of the first month as "delinquent." Any distinction between these documents as to when assessments become "delinquent," however, has no bearing on the disputed issues in the case sub judice.
In Section 9.08 of the covenants, the term "delinquent" describes assessments not paid within ten (10) days of becoming due. The 2002 resolution describes accounts not paid by the end of the first month as "delinquent." Any distinction between these documents as to when assessments become "delinquent," however, has no bearing on the disputed issues in the case sub judice.
ETPOA argues that it should be awarded $4,977.75 in conventional interest, which is twelve percent (12%) on each semi-annual assessment from the due date until June 16, 2016, when the defendant's check was honored by her bank. Twelve percent is the maximum conventional interest rate provided under La. R.S. 9:3503.
In English Turn Prop. Owner's Ass'n, Inc. v. Short, this Court interpreted Section 9.08 of the covenants, finding that ETPOA was entitled to judicial interest, not conventional interest, because the interest rate was not "fixed in writing." Short, 2016–0460 at pp. 13–15, (La. App. 4 Cir. 11/30/16), 204 So.3d 672, 681–82. This Court stated the following:
...Rather than setting forth a definite rate of interest, Section 9.08 sets forth a range for the interest rate "as may be determined by the Board from time to time" which can be at any amount, so long as it is no more than "eighteen (18%) percent per annum" and so long as it does not "exceed the maximum rate authorized by Louisiana law." Under these terms, the Board could arbitrarily choose any rate between zero (0) percent and twelve (12) percent, the maximum rate for conventional interest. [footnote omitted] Had the covenants specifically provided that the ETPOA could charge interest on unpaid assessments in the amount of twelve percent (12%), as the ETPOA seeks to do in this matter, there would be no issue, as that is the maximum amount permitted by law; and the parties would be bound by that term.
The covenants, though, do not comply with La. R.S. 9:3500 C(1), which provides that conventional interest "must be fixed in writing; testimonial proof of it is not admitted in any case." We believe the term "fixed in writing" indicates that the interest rate set forth in a contract must be "fixed." That is, it must be certain so that the parties are mutually clear as to the amount of interest being charged. See, e.g., Gold, Weems, Bruser, Sues & Rundell v. Granger, 06-859 (La. App. 3 Cir. 12/29/06), 947 So.2d 835, 843 ("[i]t is allowable under Louisiana law for an attorney to charge a client interest on sums overdue as long as that interest rate is spelled out in a contractual agreement").
The covenants in this matter do not explicitly set forth the interest rate and are, thus, not "fixed in writing." Moreover, under the Louisiana Homeowners Association Act, La. R.S. 9:1141.1, et. seq. ("the Act"):
Upon the filing of a sworn detailed statement in accordance with this Part, an association of owners of lots in a residential or commercial subdivision shall have a privilege upon the lot and improvements thereon of an owner in the subdivision who fails to pay charges, expenses or dues imposed upon such lot and improvements thereon in accordance with recorded restrictions, servitudes, or obligations affecting such subdivision.... The privilege shall secure unpaid charges, expenses or dues imposed by the association of owners, together with legal interest from the date due and reasonable attorney's fees.
La. R.S. 9:1145. (Emphasis added). It is clear that the privilege afforded under the Act includes legal interest.
Based on the provisions of this statute and the ambiguity in the covenants' terms concerning interest, we find that the ETPOA is entitled only to legal interest. We, therefore, find no error in the trial court's award of judicial interest. However, the judgment states that judicial interest is owed "from the Date of Judicial Demand." La. R.S. 9:1145 provides that judicial interest is owed from the date that the unpaid dues (assessments) are owed. We therefore amend the judgment to reflect that judicial interest is owed from the date that the assessments became due.
Id.
This case differs from Short in that no party in Short introduced the 2002 resolution into evidence. See Id., 2016–0460 at pp. 16–17, 204 So.3d at 683. To the extent the 18% interest rate set forth in the 2002 resolution could be considered "fixed in writing," this interest rate runs afoul of La. R.S. 9:3503, which provides a maximum conventional rate of 12%. La. R.S. 9:3501 provides that [a]ny contract for payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted.
This case differs from Short in that no party in Short introduced the 2002 resolution into evidence. See Id., 2016–0460 at pp. 16–17, 204 So.3d at 683. To the extent the 18% interest rate set forth in the 2002 resolution could be considered "fixed in writing," this interest rate runs afoul of La. R.S. 9:3503, which provides a maximum conventional rate of 12%. La. R.S. 9:3501 provides that [a]ny contract for payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted.
Notwithstanding the standard set forth by this Court in Short, ETPOA argues that the instant matter differs from Short in a significant way. In Short, the 2002 resolution was never admitted into evidence. Id. at pp. 16–17, 204 So.3d at 683. The ETPOA would like this Court to believe that the 2002 resolution is equivalent to the term of "fixed in writing," as contemplated by the instructive Louisiana Revised Statutes. However, that argument fails for two reasons: first, there was no evidence introduced that the 2002 Resolution was ever made part of the covenants or transmitted to the homeowners as an amendment and integral part of the covenants; furthermore, even if there was evidence showing that it was made part of the covenants, the interest rate contained in the resolution runs afoul of La. R.S. 9:3503, which provides for a maximum conventional interest rate of 12%. Moreover, La. R.S. 9:3501 provides that "[a]ny contract for the payment of interest in excess of that authorized by law shall result in the forfeiture of the entire interest so contracted." [Emphasis added].
Based on the aforementioned, the covenants between the ETPOA and the homeowner are considered a contract. Further, pursuant to applicable statutory law, since there was no evidence showing that the 2002 resolution was made a part of the covenants, the ETPOA is disallowed from collecting any conventional interest for the reasons assigned by this Court in Short, to wit, the interest rate was never fixed in writing. Thus, analogous to the decision reached in Short, we find that while the ETPOA is not allowed to collect any conventional interest, we do hold that an award of judicial interest is warranted. We find that the trial court committed legal error in awarding any amount of conventional interest to the ETPOA, as opposed to judicial interest from the date the unpaid assessments were due, and reverse that portion of the judgment accordingly, and remand for further proceedings.
Next, we turn to the issue of late fees. Section 9.08 of the covenants provides that "[a]ny assessment delinquent for a period of more than ten (10) days after the date when due shall incur a late charge in an amount as may be determined by the Board from time to time...." The 2002 resolution provides that "[a]ll delinquent accounts will be assessed a (10%) late fee for the current period and each previous past delinquent assessment...." ETPOA argues that under the 2002 resolution, ETPOA should be awarded $1,032.00 in late fees, which is ten percent (10%) of the outstanding assessments of $10,320.00. We disagree.
"Contracts have the effect of law between the parties, and the courts are bound to interpret them according to the common intent of the parties." 6126, L.L.C. v. Strauss, 2013-0853, p. 12 (La. App. 4 Cir. 12/4/13), 131 So.3d 92, 100–01 (citing La. C.C. arts. 1983 and 2045). See also La. R.S. 9:1141.8 ("community documents of residential planned communities shall have the force of law between the homeowners association and the individual lot owners..."). "When a contract is not ambiguous or does not lead to absurd consequences, it will be enforced as written and its interpretation is a question of law for a court to decide." 6126, L.L.C., 2013–0853 at p. 13, 131 So.3d at 1001.
The 10% late fee was set forth in the 2002 Resolution. However, there was no evidence introduced at trial that the 2002 Resolution was ever made part of the covenants or transmitted to the homeowners as an amendment and integral part of the covenants. Notice of modification of a contract that is reasonable in time and form is a basic right of any party. Harp v. Autrey, 47,749 (La. App. 2 Cir. 8/21/13, 10), 121 So.3d 1260, 1267 (citing Stegall v. Orr Motors of Little Rock Inc., 48,241 (La. App. 2 Cir. 6/26/13), 121 So.3d 684, 688. Without the 2002 Resolution, Section 9.08 of the covenants is vague and does not contain a definitive method by which late charges are to be determined. See e.g., Short, 2016–0460 at p.17, 204 So.3d at 683. Thus, we find that the ETPOA is not entitled to any late fees and the trial court committed legal error when it awarded late fees to the ETPOA. Accordingly, we reverse and set aside that portion of the judgment.
ATTORNEY'S FEES
Regarding attorney's fees, the trial court awarded $4,067.00, which is thirty-five percent (35%) of the total three items: $10,320.00 in assessments, $500.00 in late fees, and $800.00 in conventional interest. While not expressly stating the basis of its attorney's fee award, it is clear that the trial court relied on the contract between ETPOA and counsel for ETPOA, which provides for attorney's fees of "thirty-five (35%) percent of all funds received, including principal, late charges, interest, and costs."
This Court has "noted that ‘[a] court may consider a contingency fee contract when awarding attorney's fees, but the court is not bound by the contract's terms.’ " Short, 2016–0460 at p. 18, 204 So.3d at 684 (quoting Norfleet, 2005–0501 at pp. 18–19, 934 So.2d at 859 ).
"[T]his Court noted that certain factors are to be considered in determining the reasonableness of an award of attorney's fees, including:
1) the ultimate result obtained; 2) the responsibility incurred; 3) the importance of the litigation; 4) the amount of money involved; 5) the extent and character of the work performed; 6) the legal knowledge, attainment, and skill of the attorneys; 7) the number of appearances made; 8) the intricacies of the facts involved; 9) the diligence and skill of counsel; and 10) the court's own knowledge."
Id. (citations omitted).
"The trial court is vested with great discretion in arriving at an award of attorney's fees, the exercise of which will not be reversed on appeal absent a showing of clear abuse of that discretion." Discover Bank v. Rusher, 2010-0850, p. 3 (La. App. 4 Cir. 12/8/10), 53 So.3d 651, 653. Because we find that the trial court erred as a matter of law in its awards of late fees and conventional interest, it stands to reason that the trial court abused its discretion in calculating attorney's fees based on the other erroneous awards. Furthermore, it should be noted that the contract between ETPOA and counsel for ETPOA provides for costs to be included in the calculation of attorney's fees. The lower court awarded court costs to ETPOA but did not set forth the amount of those court costs in the judgment. Therefore, it is impossible to determine the exact calculable award of attorney's fees without knowing the exact amount of costs to be awarded. Thus, we vacate the award of attorney's fees and remand this matter to the lower court for a determination of court costs and attorney's fees. DECREE
For the foregoing reasons, we reverse and set aside the trial court's award of conventional interest and award judicial interest from the date due to the ETPOA; we reverse the trial court's award of late fees; and we vacate the trial court's judgment awarding attorney's fees, and remand this matter for further proceedings not inconsistent with this opinion to determine the total amount of interest owed, court costs incurred, and an appropriate attorney's fee award.
REVERSED, in part, VACATED, in part and REMANDED
LOBRANO, J., DISSENTS AND ASSIGNS REASONS
JENKINS, J., DISSENTS AND ASSIGNS REASONS
LOBRANO, J., DISSENTS AND ASSIGNS REASONS.
I respectfully dissent. I disagree with the majority's reversal of all late fees and conventional interest. I would amend the lower court's judgment to reflect an award of $1,032.00 in late fees and $4,977.75 in conventional interest and affirm as amended. I would also vacate the lower court's ruling on attorney's fees and remand for a determination of court costs and attorney's fees consistent with my dissent.
This appeal arises from a homeowners' association assessment dispute between ETPOA and Contogouris, which is governed by the Louisiana Homeowners Association Act as set forth in La. R.S. 9:1141.1, et seq. Louisiana Revised Statute 9:1141.8 provides that "community documents of residential planned communities shall have the force of law between the homeowners association and the individual lot owners and as between individual lot owners. The remedies for breach of any obligation imposed on lot owners or the association shall include damages, injunctions, or such other remedies as are provided by law." The community documents relevant to this appeal are the Declaration of Covenants, Conditions and Restrictions (the "covenants"). The covenants provide for semiannual assessments to be paid by the homeowner (here, Contogouris) to ETPOA.
Community documents, such as the ETPOA covenants, are subject to the rules of the civil code and principles of contract interpretation contained therein. Fairway Estates Homeowners Ass'n, Inc. v. Jordan, 2008-0949, p. 10 (La. App. 4 Cir. 5/20/09), 15 So.3d 1011, 1017 (citing Williams v. Southern Trace Property Owners Ass'n, Inc., 43,186, p. 3 (La. App. 2 Cir. 4/23/08), 981 So.2d 196, 198 ). "Contracts have the effect of law between the parties, and the courts are bound to interpret them according to the common intent of the parties." 6126, L.L.C. v. Strauss, 2013-0853, p. 12 (La. App. 4 Cir. 12/4/13), 131 So.3d 92, 100–01 (citing La. C.C. arts. 1983 and 2045). "When a contract is not ambiguous or does not lead to absurd consequences, it will be enforced as written and its interpretation is a question of law for a court to decide." 6126, L.L.C., 2013–0853 at p. 13, 131 So.3d at 1001.
Turning first to the award of late fees, ETPOA argues on appeal that it should be awarded $1,032.00 in late fees, which is ten percent (10%) of the outstanding assessments of $10,320.00. I agree. For the reasons explained below, I dissent from the majority's reversal of all late fees. I find that the lower court properly concluded that ETPOA was entitled to a late fee; however, the lower court erred in awarding a reduced amount of late fees.
Section 9.08 of the ETPOA covenants provides for late fees and conventional interest relative to unpaid assessments, as follows:
9.08 Effect of Nonpayment; Remedies of the Association. Any assessments of an owner... which are not paid when due shall be delinquent. Any assessment delinquent for a period of more than ten (10) days after the date when due shall incur a late charge in an amount as may be determined by the Board from time to time and shall also commence to accrue simple interest at the maximum rate of eighteen (18%) percent per annum, but in no event to exceed the maximum rate authorized by Louisiana law.
ETPOA introduced into evidence at trial Minutes of the Board of Directors Meeting of the English Turn Property Owners' Association, dated December 11, 2002. These minutes contained a resolution (the "2002 resolution") providing as follows:
All accounts not paid by the end of the first month are considered delinquent and a Past Due Notice with a copy of the account will be mailed to the property owner. All delinquent accounts will be assessed a (10%) late fee for the current period and each previous past delinquent assessment, and will commence to accrue simple interest at the rate of eighteen (18%) per annum.
I find that the 10% late fee was set forth in clear, unambiguous language and is enforceable as written. Section 9.08 of the covenants explicitly provided the ETPOA Board with the authority to determine the amount of a late fee "from time to time." Under La. C.C. art. 1971, "[p]arties are free to contract for any object that is lawful, possible, and determined or determinable." "If the determination of the quantity of the object has been left to the discretion of a third person, the quantity of an object is determinable." La. C.C. art. 1974. ETPOA and Contogouris contracted that the amount of the late fee may be determined by the ETPOA Board, as permitted by La. C.C. art. 1974.
The majority acknowledges that the 10% late fee was set forth in the 2002 resolution, but finds that ETPOA is nevertheless not entitled to late fees. The majority cites to English Turn Prop. Owner's Ass'n, Inc. v. Short, 2016-0460, p. 16 (La. App. 4 Cir. 11/30/16), 204 So.3d 672, 683, reh'g denied(12/14/16) for the proposition that "[w]ithout the 2002 Resolution, Section 9.08 of the covenants is vague and does not contain a definitive method by which late charges are to be determined." The majority also protests that "there was no evidence that the 2002 Resolution was ever made part of the covenants or transmitted to the homeowners as an amendment and integral part of the covenants..." I disagree with these findings.
This case is distinguishable from Short on the issue of late fees because, in Short, the 2002 resolution was not offered into evidence at trial. 2016–0460 at p. 16, 204 So.3d at 683. In the matter currently on appeal, however, it is clear from the record that the 2002 resolution was introduced as an exhibit at trial. The 2002 resolution is evidence that the ETPOA Board determined the amount of the late fee at its December 11, 2002 meeting. The majority fails to explain with law or record evidence how the 2002 resolution could have been "made part of the covenants" or what ETPOA failed to do in this respect.
The majority cites to no law and I find none that prohibits a late fee that may be re-determined periodically by a governing board of homeowners in the manner done in this case. Rather, this Court has permitted imposition of a late fee in similar circumstances. In Eastover Prop. Owner's Ass'n, Inc. v. Cochrane, 2002-1502, pp. 5-6 (La. App. 4 Cir. 5/21/03), 848 So.2d 710, 713, this Court upheld a late fee not specified in the community documents where those community documents gave the board the "authority to do any other things that, in their opinion, will promote the common benefit and enjoyment of the residents of the subdivision" finding that the late fee was "necessitated because a short fall in the collection of the quarterly assessments would directly impact all of the property owners in the subdivision because services would have to be reduced or eliminated."
The majority cites to Harp v. Autrey, 47,749 (La. App. 2 Cir. 8/21/13), 121 So.3d 1260 for the proposition that a party has a right to reasonable notice of modification of a contract. Harp is distinguishable, as that case involved termination of a contract without notice. A lot owner of a mobile home community sent a letter to residents in which the owner assumed a duty to provide water and sewer services, and then severed those services without notifying the residents. Id., 47,749 at p. 11, 121 So.3d at 1267. Here, no contract was terminated or modified; the ETPOA Board determined the amount of the late fee in accordance with the authority provided to the Board by the ETPOA covenants.
Moreover, whether the homeowners had notice of the 2002 resolution was not an issue litigated at trial, and this Court lacks authority to review facts that were never before the lower court. The lower court awarded late fees, albeit at a reduced rate, such that it is evident that the lower court found late fees proper under the covenants. The parties did not introduce evidence regarding notice or lack of notice of the 2002 resolution, and no such evidence forms a part of the record on appeal. "A court of appeal is a court of review. It is limited in its review to the evidence submitted and entered into the record at the trial court level." Lorbeck v. Lorbeck, 99-1257, p. 5 (La. App. 4 Cir. 5/23/01), 789 So.2d 656, 659 (citing Uniform Rules, Courts of Appeal, Rule 1–3 ). As the parties did not submit evidence of notice to the homeowners at trial, this issue is beyond the scope of this Court's appellate review.
I find merit to ETPOA's assignment of error as to late fees. I find that the lower court erred as a matter of law in awarding a reduced amount of $500.00 in late fees, based on its finding that ETPOA's bookkeeping practices were substandard and the length of time it took ETPOA to bring its suit to collect the unpaid assessments and deposit certain checks tendered by Contogouris. I find no law that supports the method of reducing late fees set forth in the lower court's judgment.
Contogouris suggests that La. C.C. art. 2003 operates to reduce late fees due to ETPOA's negligence, arguing that this article supports the lower court's decision to award late fees at a reduced rate. La. C.C. art. 2003 provides as follows:
An obligee may not recover damages when his own bad faith has caused the obligor's failure to perform or when, at the time of the contract, he has concealed from the obligor facts that he knew or should have known would cause a failure.
If the obligee's negligence contributes to the obligor's failure to perform, the damages are reduced in proportion to that negligence.
I find that La. C.C. art. 2003 does not apply to the facts of this case. Under Contogouris' argument, failure to perform is failure to pay semiannual homeowners' assessments timely. The record evidence does not show that the obligee, ETPOA, caused the obligor, Contogouris, to fail to pay semiannual assessments timely or that ETPOA concealed facts that ETPOA knew or should have known would cause Contogouris to fail to pay her semiannual assessments timely. There is no evidence that any purportedly negligent collection efforts by ETPOA, which took place years after outstanding assessments were due, contributed to those assessments not being paid in the first place. ETPOA's after-the-fact collection efforts are irrelevant to Contogouris' ability to pay assessments when they became due under the ETPOA covenants.
Louisiana Civil Code article 2003 should not operate to reduce late fees otherwise due under contract in the case before this Court, especially where Contogouris paid the underlying assessments on the last day of trial, without objection. The lower court erred as a matter of law in reducing the late fee award based on the court's perception that collection practices took too long.
I would therefore amend the portion of the lower court's judgment regarding late fees to reflect an award of $1,032.00 in late fees to ETPOA and affirm as amended.
Addressing the issue of conventional interest, I agree with ETPOA's argument that it should be awarded $4,977.75 in conventional interest, which is twelve percent (12%) of the $10,320.00 homeowners' associate assessment in dispute. Twelve percent is the maximum conventional interest rate provided under La. R.S. 9:3500(C)(1) at all pertinent times. I find that the lower court correctly concluded that ETPOA was entitled to conventional interest pursuant to the ETPOA covenants. Nevertheless, for the reasons discussed above regarding late fees, I find that the lower court erred as a matter of law in awarding a reduced amount of $800.00 in conventional interest. I do not find that La. C.C. art. 2003 applies or provides a basis to reduce conventional interest under the facts on appeal.
Section 9.08 of the covenants provides a maximum cap on the conventional interest rate, that "[a]ny assessment delinquent for a period of more than ten (10) days after the date when due shall ... commence to accrue simple interest at the maximum rate of eighteen (18%) percent per annum, but in no event to exceed the maximum rate authorized by Louisiana law." Stated another way, Section 9.08 fixes the conventional interest rate at the lesser of 18% or the maximum interest rate permitted by Louisiana law.
I disagree with the majority's reversal of the entire conventional interest award. The majority takes issue with the 2002 resolution, in which the ETPOA Board adopted an 18% conventional interest rate on delinquent assessments. The majority finds (1) that there was no evidence that the 2002 resolution was "made a part of the covenants or transmitted to the homeowners"; (2) that the conventional interest rate was not fixed in writing as described in Short, 2016–0460 at p. 14, 204 So.3d at 682 ; and (3) that the 18% interest rate exceeded the statutory maximum conventional interest rate of twelve percent (12%).
As discussed above, the issue of notice to the homeowners of the 2002 resolution was not litigated at trial and is beyond the scope of this Court's appellate review, as no evidence was introduced into the record on this issue. See Lorbeck, 99–1257 at p. 5, 789 So.2d at 659 ; Uniform Rules, Courts of Appeal, Rule 1–3.
The majority also does not explain with any law or record evidence how the 2002 resolution could have been "made a part of the covenants" or what ETPOA failed to do to accomplish those ends. I find, however, that the 2002 resolution does not govern the conventional interest rate. The ETPOA covenants do not give the ETPOA Board the authority to change the interest rate by enacting a resolution. In fact, ETPOA never tried to enforce the 18% interest rate in the 2002 resolution with respect to Contogouris and charged a 12% interest rate pursuant to the covenants.
Under Section 9.08 of the covenants, the Board may determine the amount of a "late charge" "from time to time" but the covenants do not state that the Board can change the interest rate. I disagree with Short and the majority's interpretation of Short to the extent that Section 9.08 is misquoted and the opinion concludes that Section 9.08 provides a "range for the interest rate." 2016–0460 atp. 13, 204 So.3d at 681.
Instead, Section 9.08 of the covenants unambiguously provides a cap on the conventional interest rate, the lesser of 18% or the maximum rate allowed by Louisiana law. Louisiana Revised Statute 9:3500(C)(1) requires that the conventional interest rate must be "fixed in writing." I find this requirement was satisfied.
In addition, I do not find that conventional interest was forfeited under La. R.S. 9:3501 because there is no evidence that ETPOA collected or attempted to collect usurious conventional interest in excess of the maximum rate of 12%. Rather, the trial record is clear and none of the litigants disputed that ETPOA only sought to collect 12% conventional interest and did not actually collect conventional interest in excess of 12%. The Louisiana Supreme Court has found that, where a note contained an interest rate in excess of the statutory maximum, but the note holder did not collect or intend to collect the interest over the maximum rate, the interest collected should not be forfeited. See Huddleston v. Bossier Bank & Tr. Co., 475 So.2d 1082, 1084-85 (La. 1985). Here, the conventional interest rate is further limited because Section 9.08 provides that such interest rate is "in no event to exceed the maximum rate authorized by Louisiana law." I do not find that La. R.S. 9:3501 applies to the facts of this case.
Thus, I would amend the lower court's judgment to reflect an award of $4,977.75 in conventional interest and affirm as amended.
For the reasons stated herein, I would also vacate the lower court's ruling on attorney's fees and remand for a determination of court costs and attorney's fees consistent with my dissent.
JENKINS, J., DISSENTS AND ASSIGNS REASONS
Because the decretal language in the trial court's money judgment does not give the name of the party in whose favor the judgment is rendered, and the name of the party cast in judgment, I would find that this court lacks appellate jurisdiction to review this judgment.
Before considering the merits of any appeal, appellate courts have the duty to determine, sua sponte, whether subject matter jurisdiction exists, even when the parties do not raise the issue. Urquhart v. Spencer, 15-1354, p. 3 (La. App. 4 Cir. 12/1/16), 204 So.3d 1074, 1077. This court cannot determine the merits of this appeal unless its jurisdiction is invoked by a valid final judgment. Id. For a judgment to be a "valid final judgment," it must contain specific decretal language. Id."Decretal language is defined as the portion of a court's judgment or order that officially states (‘decrees') what the court is ordering and generally starts with the formula, ‘It is hereby ordered, adjudged, and decreed that ....’ " Freeman v. Phillips 66 Co., 16-0247, p. 2 (La. App. 4 Cir. 12/21/16), 208 So.3d 437, 440. "The decree alone indicates the decision." Jones v. Govt. Employees Ins. Co., 16-1168, p. 2 (La. App. 4 Cir. 6/14/17), 220 So.3d 915, 919 (emphasis added).
A valid judgment must be precise, definite, and certain. Urquhart, 15–1354, p. 3, 204 So.3d at 1077. The quality of definiteness is essential to a proper judgment. Id. The result decreed, therefore, must be spelled out in lucid, unmistakable language. Id.
Importantly for this case, the decree must name the party in favor of whom the ruling is ordered, and the party against whom the ruling is ordered, and the relief that is granted or denied. Id. These requirements must be evident without reference to an extrinsic source such as pleadings or reasons for judgment. Thompson v. Beagle, 17-0207, p. 4 (La. App. 4 Cir. 8/16/17), 226 So.3d 518, 521–22, 2017 WL 3499011, *2.
Here, the decree in the judgment states as follows:
IT IS HEREBY ORDERED, ADJUDGED AND DECREED: The Court hereby awards the following late fees in the amount of FIVE HUNDRED DOLLARS ($500.00); interest in the amount of EIGHT HUNDRED DOLLARS ($800.00); attorney fees in the amount of FOUR THOUSAND SIXTY–SEVEN DOLLARS ($4,067.00); and court costs and judicial interest.
This decretal language does not give the name of the party awarded these sums, and does not give the name of the party cast in judgment. The result decreed, therefore, is not spelled out in precise, definite, certain, and unmistakable language. In the absence of this requisite decretal language, I find that the judgment is not final and appealable.
Although I would not find this sufficient, the decree does not even refer to the parties in their procedural capacities, such as "defendant" or "plaintiff." See English Turn Prop. Owners Ass'n v. Taranto, 16-0319, p. 2 (La. App. 4 Cir. 4/19/17), 219 So.3d 381, 395 (Jenkins, J., dissenting).
I also note that the trial court's incorporated reasons for judgment refers to the "bookkeeping and records" maintained by ETPOA, and then concludes that "the defendant's practices are inconsistent, deficient, and inaccurate." This confusing language adds further uncertainty to what I find to be an imprecise, indefinite, and uncertain judgment.
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The absence of decretal language also creates practical difficulties related to the execution of the judgment. In enforcing an imprecise judgment such as this, a sheriff who is directed to seize the defendant's property "would have to act as a judge" to determine whether that person was the party cast in judgment. See Borg–Warner Acceptance Corp. Through Borg–Warner Leasing v. Whitlow Truck Ctr., Inc., 508 So.2d 857, 859 (La. App. 5th Cir. 1987). And with such a deficient judgment, a trial court might later set aside and revoke a writ of fieri facias or garnishment order on the grounds that, in the absence of the necessary decretal language, the judgment being enforced was not a valid final judgment. See Morris, Lee and Bayle, LLC v. Macquet, 14-1080, pp. 12-13 (La. App. 4 Cir. 3/23/16), 192 So.3d 198, 207–08 (concluding that because the judgment "does not state that it is rendered in favor of Plaintiff against Defendant," it is "not a final, enforceable money judgment," and "the writ of fifa and the order for garnishment were improperly sought, issued, and executed").
Because the judgment lacks the necessary decretal language, I would find that this court lacks appellate jurisdiction to consider the merits of this appeal.