Opinion
NO. 2017 CA 1021
03-29-2018
JOHNNY WAYNE GIROIR v. JAMES DALE THOMAS, JR.
NICHOLAS F. LAROCCA, JR. MORGAN CITY, LA ATTORNEY FOR PLAINTIFF-APPELLANT JOHNNY WAYNE GIROIR JAMES DALE THOMAS, JR. BERWICK, LA IN PROPER PERSON DEFENDANT-APPELLEE
NOT DESIGNATED FOR PUBLICATION Appealed from the 16th Judicial District Court in and for the Parish of St. Mary, Louisiana
Trial Court No. 130364
Honorable Lori A. Landry, Judge NICHOLAS F. LAROCCA, JR.
MORGAN CITY, LA ATTORNEY FOR
PLAINTIFF-APPELLANT
JOHNNY WAYNE GIROIR JAMES DALE THOMAS, JR.
BERWICK, LA IN PROPER PERSON
DEFENDANT-APPELLEE BEFORE: GUIDRY, PETTIGREW, AND CRAIN, JJ. PETTIGREW, J.
This appeal arises from a trial court judgment denying plaintiff's petition for possession of property. We reverse, render, and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
On February 15, 2016, Johnny Wayne Giroir and James Dale Thomas, Jr. entered into an agreement entitled "Assignment of Lease/Purchase" (the "Agreement") concerning a parcel of land and a mobile home owned by Giroir and mortgaged to Nationstar Mortgage LLC ("Nationstar"). The Agreement states that Giroir will assign, transfer, and convey any and all right, title, interest, and all warranties to Thomas for the price of $40,000.00, to be paid as follows: (1) a down payment of $19,124.00 to be paid at the time of execution of the Agreement; (2) assumption of the monthly mortgage payments to Nationstar for loan #0621874742 in the amount of $393.00 per month until the balance of $11,383.28 (less four payments to be made by Giroir by February 16, 2016) is paid off; and (3) payment to Giroir in the amount of $300.00 per month until the balance of $10,176.00 is paid in full. The Agreement states that once the balance is paid in full, the property will be transferred to Thomas. The Agreement also provides:
Nationstar Mortgage LLC is referred to in the Agreement as "Nation Star Mortgage."
If LESSEE becomes 90 days delinquent during the term of this agreement, this LEASE/PURCHASE agreement will become null and void and LESSOR has the right to reclaim the property and evict LESSEE.
On February 16, 2016, Thomas paid the $19,124.00 down payment to Giroir. Also on February 16, Giroir sent a $1,500.00 payment for loan #0621874742 to Nationstar. Thereafter, Thomas made several payments for different amounts: in March 2016, Thomas made a $300.00 payment to Giroir; on May 18, 2016, Thomas paid $400.00 to Giroir for the May mortgage payment; on June 24, 2016, Thomas sent $1,000.00 via Western Union to Nationstar in Giroir's name for payment on loan #0621874742; and on July 8, 2016, Thomas sent $500.00 via Western Union to Nationstar in Giroir's name for payment on "Account # ******4742."
There is a Money Order Receipt in the record dated May 18, 2016, for $400.00, payable to the order of "National Star." No loan account number is referenced on the receipt.
At some point a dispute arose between the parties as to amounts due under the Agreement and whether homeowners' insurance was included in the monthly mortgage payment. Thomas admittedly made no more payments after July 8, 2016, and on September 21, 2016, Giroir had Thomas served with a Notice to Vacate. When Thomas did not vacate the premises within five days, Giroir filed an eviction proceeding, which was heard in the justice of the peace court and dismissed. On November 14, 2016, Giroir filed a Petition for Possession of Premises in the 16th Judicial District Court, in which he alleged that Thomas had failed to make the required payments under the Agreement and refused to vacate the premises after being served with notice, and therefore he was entitled under the Agreement to evict Thomas and reclaim the leased premises.
Although there is no evidence of the eviction proceeding in the record, both parties testified that a hearing was held before a justice of the peace and that the matter was dismissed. The parties' testimony conflicted as to whether the proceeding was dismissed on the merits or because it exceeded the jurisdictional limit of the justice of the peace court.
A hearing was held on Giroir's petition on December 14, 2016. After taking the matter under advisement, judgment was rendered on January 3, 2017, denying Giroir's request to evict Thomas and reclaim possession of the property. The trial judge found that there was no valid contract between the parties and, therefore, the trial court lacked authority to evict Thomas. Giroir appealed, arguing that the trial court erred in finding that the Agreement was not a valid contract.
DISCUSSION
A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished. La. C.C. art. 1906. Contracts may be either nominate or innominate. Nominate contracts are those given a special designation, such as sale, lease, loan, or insurance; innominate contracts are those with no special designation. La. C.C. art. 1914. The proper interpretation of a contract is a question of law subject to de novo review on appeal. When considering legal issues, the reviewing court accords no special weight to the trial court, but conducts a de novo review of questions of law and renders judgment on the record. Montz v. Theard, 01-0768, p. 5 (La.App. 1 Cir. 2/27/02), 818 So.2d 181, 185.
Contracts have the force of law between the parties, and the courts are to interpret them according to the common intent of the parties. La. C.C. arts. 1983, 2045. If the words of the contract are clear, unambiguous, and lead to no absurd consequences, the court need not look beyond the contract language to determine the parties' true intent. La. C.C. art. 2046. Whether or not a contract is ambiguous is a question of law. Hoffman v. Travelers Indem. Co. of America, 13-1575, p. 6 (La. 5/7/14), 144 So.3d 993, 997-98.
Although the parties entered into an agreement entitled "Assignment of Lease/Purchase," the label put on the transaction is not determinative. Montz, 01-0768 at p. 8, 818 So.2d at 187. It is the nature of the obligations, rather than the parties' characterizations, which governs the classification of a contract. Keyes v. Brown, 14-0821, p. 8 (La.App. 4 Cir. 1/28/15), 158 So.3d 927, 932. The terms of the Agreement between Giroir and Thomas resemble a bond for deed, i.e., a contract to sell real property in which the purchase price is to be paid by the buyer in installments and the seller agrees to deliver title to the buyer after payment of a stipulated sum. See La. R.S. 9:2941. However, the bond for deed statutes set forth a number of particular directives the seller must comply with in a bond for deed transaction, such as appointing a bank to serve as escrow agent to receive payments from the purchaser and obtaining a guarantee to the purchaser from any mortgage holder that it will release the mortgage when it is paid in full. Montz, 01-0768, p. 8, 818 So.2d at 187. The Agreement in this case met neither of these statutory requirements. However, the Louisiana Supreme Court has made it clear that a contract can be treated as a bond for deed despite its failure to comply with certain particulars of the statutes, especially where the party for whom the omitted protections are designed does not protest their absence. Montz, 01-0768 at p. 8, 818 So.2d at 187; Scott v. Apgar, 113 So.2d 457, 459-60 (La. 1959). Moreover, even if the Agreement between Giroir and Thomas is not classified as a bond for deed, it is a valid innominate contract. See Montz, 01-0768 at p. 10, 818 So.2d at 188.
La. R.S. 9:2942. --------
In denying Giroir's request to evict Thomas and regain possession of the property, the trial court did not classify the Agreement between the parties as any particular type of contract. Nevertheless, the trial court held that no valid contract existed between the parties because Giroir lacked capacity to contract since: (1) Giroir did not prove that he had authority to transfer property co-owned with his ex-wife, who may have been unaware of the contract; and (2) Giroir did not provide proof, aside from his own testimony, of the mortgage holder's knowledge of and consent to the transfer of ownership of the property.
Under La. C.C. art. 2347, the concurrence of both spouses is required for the alienation, encumbrance, or lease of community immovables, standing, cut, or fallen timber, furniture or furnishings while located in the family home, all or substantially all of the assets of a community enterprise, and movables issued or registered as provided by law in the names of the spouses jointly. When the concurrence of the spouses is required by law, the alienation, encumbrance, or lease of community property by a spouse is relatively null unless the other spouse has renounced the right to concur. La. C.C. art. 2353. A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed, either tacitly or expressly. La. C.C. arts. 2031 and 1842. Although the alienation, encumbrance, or lease of community property by one spouse without the concurrence of the other is a relative nullity, the nullity may only be invoked by the person for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative. See Solet v. Brooks, 09-0568, p. 6 (La.App. 1 Cir. 12/16/09), 30 So.3d 96, 100; La. C.C. art. 2031. Thus, only the spouse whose concurrence was required but not obtained may void the relatively null transaction. Devier v. Robert, 08-1790, p. 3 (La.App. 1 Cir. 3/27/09), 2009WL838683 (unpublished).
There was very little testimony at trial regarding the community nature of the property and Giroir's ex-wife's concurrence in the Agreement. During Giroir's testimony, the trial judge began questioning him about a Nationstar letter and mortgage statement filed as Plaintiff's Exhibit 2, which was addressed to both Giroir and "Racquel L. Giroir":
THE COURT:
All right. You're Johnny W. Giroir; your mom is Raquel [sic]?
MR. GIROIR:
No.
THE COURT:
Who's Raquel [sic]?
MR. GIROIR:
That's my ex-wife.
THE COURT:
Who lives at 1069 Tower Tank Road?
MR. GIROIR:
My mother and dad.
THE COURT:
Okay. So it goes to that address?
MR. GIROIR:
Yes, ma'am.
THE COURT:
And it's addressed to you?
MR. GIROIR:
Yes.
THE COURT:
And the other person it's addressed to doesn't live there?
MR. GIROIR:
Yes, ma'am.
THE COURT:
There was no other testimony regarding the community status of the property. In ruling that no valid contract existed between the parties, the trial court assumed that the property was community and found that "[Giroir's] testimony suggested [Racquel] was unaware of this arrangement [with Thomas]." It is unnecessary for us to determine whether the property was community such that Racquel Giroir's concurrence would be required for its alienation, encumbrance, or lease; the trial court erred in voiding a contract based on a relative nullity on its own initiative.Okay. All right. Okay.
The trial court also found that there was no valid contract between the parties because there was no evidence that Nationstar consented to a transfer of ownership of the mortgaged property. Giroir testified that he spoke with a Nationstar representative named Tracy, who told him that he could lease the property and once the loan was paid in full, Nationstar would send the deed to the property to Giroir and he could transfer it to Thomas at that time. The trial court found this testimony not credible and held that Giroir lacked capacity to enter into a contract to transfer ownership of the mortgaged property. Although La. R.S. 9:2942 provides that it shall be unlawful to sell real property encumbered by a mortgage by bond for deed contract without first obtaining a written guarantee from the mortgage holder to release the property upon payment by the buyer of a stipulated mortgage release price, the statutorily-prescribed consequence of a violation by a seller in a bond for deed contract is a criminal penalty: a fine of not more than one thousand dollars or imprisonment for not more than six months, or both. La. R.S. 9:2947. Without determining whether the Agreement at issue herein was a bond for deed contract, we note that failure to comply with La. R.S. 9:2942 by obtaining consent of the mortgage holder does not render a bond for deed contract absolutely null. See Scott v. Apgar, 113 So.2d at 459-60. Furthermore, the trial court cited no authority, and we are aware of none, for the proposition that a sale, lease, or innominate contract is absolutely null if a mortgagor agrees, without the consent of the mortgagee, to transfer ownership to mortgaged property after the mortgage is satisfied. Of course, in such event the mortgagee may exercise any rights and remedies available to it under the mortgage.
Giroir and Thomas voluntarily participated in a contractual arrangement for their own purposes, despite its imperfection and lack of clarity. The designation of the type of contract is not a compelling matter, and we need not address the question of whether the Agreement constituted a lease purchase agreement or bond for deed contract, as opposed to an innominate contract. The trial court erred in ruling that the Agreement between the parties was not a valid contract, and because of this erroneous conclusion, the trial court did not reach the issue of Giroir's right to evict Thomas and regain possession of the property under the terms of the Agreement. Generally, where the fact finder does not reach an issue because of an earlier finding which disposes of the case, the court of appeal, in reversing the earlier finding, must make a de novo determination of the undecided issues from the facts in the record. LeBlanc v. Stevenson, 00-0157, p. 6 (La. 10/17/00), 770 So.2d 766, 771-72; Campbell v. Cerdes, 13-2062, p. 15 (La.App. 1 Cir. 8/10/15), 181 So.3d 41, 51, writ denied, 15-1658 (La. 10/30/15), 180 So.3d 302.
The Agreement provides that if Thomas becomes 90 days delinquent, Giroir shall have the right to reclaim possession of the property and evict Thomas. Under the terms of the Agreement, Thomas was to pay $393.00 per month to Nationstar and $300.00 per month to Giroir. From the very first month of the Agreement, Thomas did not pay the entire amount due, and at no point did he make payments to cure the delinquency. In March, Thomas paid only $300.00; in April, no payments were made; in May, Thomas paid only $400.00; in June, Thomas paid $1,000.00; and in July, Thomas paid only $500.00. Thomas acknowledged that he made no further payments after July. By the time Giroir served Thomas with the notice to vacate in September, Thomas should have made monthly payments totaling $4,851.00, but had only paid $2,200.00. He was more than 90 days delinquent. Regardless of how the transaction between the parties is characterized, Giroir had a right to regain possession of the property upon Thomas's default, as that was clearly the intent of the parties as set forth in the contract. Montz, 01-0768 at 13-15, 818 So.2d at 190-91; Keyes, 14-0821 at 13, 158 So.3d at 935. We therefore render judgment in favor of Giroir, granting possession of the property at issue, and remand this matter to the trial court to set a reasonable time frame for Thomas to vacate the premises.
Furthermore, although Giroir is entitled to reclaim possession of the property due to Thomas's default, there is no dispute that Thomas made a down payment plus a number of other payments towards the purchase of the property, and the jurisprudence provides that appropriate adjustments must be made to avoid an inequitable result in situations such as this. Regardless of any penalty or forfeiture clauses in a contract, the seller in a cancelled bond for deed contract is not entitled to retain all amounts paid by the purchaser, as this would represent an illegal attempt to recover punitive rather than compensatory damages. Montz, 01-0768 at p. 9, 818 So.2d at 187. For the same public policy reasons, this rule applies to other types of contracts, including innominate contracts. Montz, 01-0768 at pp. 13-14, 818 So.2d at 190-91. The purchaser is entitled to the return of all amounts paid on the purchase price, including the down payment and monthly installments, minus an allowance for the fair rental value of the property during the period of occupancy. Where the rental value cannot be determined from the record, a remand is appropriate. Montz, 01-0768 at 15, 818 So.2d at 191. There is insufficient evidence in the record for this court to determine a fair rental value for Thomas's use of the property; therefore, on remand the trial court must also determine the amount, if any, which must be returned to Thomas, as well as any other remedies available to the parties.
CONCLUSION
The judgment dismissing Giroir's petition for possession is reversed, judgment is rendered granting possession to Giroir, and this matter is remanded for further proceedings consistent with this opinion. Costs of this appeal are assessed to appellee, James Dale Thomas, Jr.
REVERSED, RENDERED, AND REMANDED.