Opinion
2019 CA 1698-R
11-04-2022
LEISURE RECREATION & ENTERTAINMENT, INC. v. FIRST GUARANTY BANK
Andre G. Coudrain, Jamie A. Polozola Gomez, Callie D. Casstevens, Hammond, Louisiana and E.B. Dittmer II, Craig J. Robichaux, Cameron D. Robichaux, Mandeville, Louisiana, Counsel for Appellant, Defendant/Plaintiff-in-Reconvention—First Guaranty Bank Ryan K. French, Robert W. Barton, Baton Rouge, Louisiana, Counsel for Appellee, Plaintiff/Defendant-in-Reconvention—Leisure Recreation & Entertainment, Inc.
Andre G. Coudrain, Jamie A. Polozola Gomez, Callie D. Casstevens, Hammond, Louisiana and E.B. Dittmer II, Craig J. Robichaux, Cameron D. Robichaux, Mandeville, Louisiana, Counsel for Appellant, Defendant/Plaintiff-in-Reconvention—First Guaranty Bank
Ryan K. French, Robert W. Barton, Baton Rouge, Louisiana, Counsel for Appellee, Plaintiff/Defendant-in-Reconvention—Leisure Recreation & Entertainment, Inc.
Before: Whipple, C.J., Welch, and Chutz, JJ.
WELCH, J.
This matter involves cross-motions for summary judgment arising out of a petition for declaratory judgment seeking a declaration, inter alia , that First Guaranty Bank (the "Bank") applied an incorrect interest rate and thus miscalculated the principal owed on a certain Promissory Note executed by Leisure Recreation & Entertainment, Inc. ("Leisure") in favor of the Bank on December 31, 1991. The facts and procedural history of this matter are fully detailed in prior opinions of this court and the Louisiana Supreme Court. This case initially came before this court on an appeal filed by Leisure to reverse the district court's ruling that granted summary judgment to the Bank, denied Leisure's motion for summary judgment, and dismissed Leisure's suit. This court reversed the grant of summary judgment in favor of the Bank and the dismissal of Leisure's suit; affirmed the denial of Leisure's motion for summary judgment; and remanded the matter to the district court. Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2016-0281, 2016-0978 (La App. 1st Cir. 8/17/17), 2017 WL 3573998, at *10 (unpublished) (" Leisure I" ). The Bank filed a writ of certiorari and/or review, which the Supreme Court denied. Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2017-1567 (La. 11/17/17), 229 So.3d 932.
See Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2016-0281, 2016-0978 (La. App. 1st Cir. 8/17/17), 2017 WL 3573998, at *1-2 (unpublished), writ denied, 2017-1567 (La. 11/17/17), 229 So.3d 932 ("Leisure I "); Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2019-1698 (La. App. 1st Cir. 2/11/21), 317 So.3d 809, 812-16 ("Leisure II "), writ granted, 2021-00838 (La. 10/19/21), 326 So.3d 1223, and rev'd and remanded, 2021-00838 (La. 3/25/22), 339 So.3d 508 ; and Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2021-00838 (La. 3/25/22), 339 So.3d 508, 510-16 ("Leisure III ").
The matter came before this court for a second time on appeal, this time filed by the Bank to reverse the district court's ruling that granted summary judgment in favor of Leisure; denied the Bank's motion for summary judgment; and overruled the Bank's peremptory exception urging prescription. This court reversed the grant of summary judgment in favor in Leisure and reversed the district court's decree that the choice of prime rate interest structure reverted to Leisure and that Leisure had paid all indebtedness owed to the Bank on the Note. This court further reversed the denial of the Bank's motion for summary judgment on the voluntary-payment affirmative defense and rendered judgment in favor of the Bank, granting its motion on that affirmative defense and dismissing Leisure's claim for declaratory relief as to the interest voluntarily paid to the Bank between December 31, 2001, and October 7, 2013. As to any remaining balance on the indebtedness, this court rendered judgment ordering the Bank to return to Leisure any overcharge of interest in excess of the prime rate that Leisure had paid on the promissory note since the filing of its suit together with legal interest thereon. Finally, this court remanded the matter to the district court with instructions to hold a hearing to fix that specific amount and render judgment accordingly. Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2019-1698 (La. App. 1st Cir. 2/11/21), 317 So.3d 809, 825 (" Leisure II ").
Leisure filed a writ of certiorari , which the Supreme Court granted. Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2021-00838 (La. 10/19/21), 326 So.3d 1223. The Supreme Court reviewed whether this court "erred in applying the ‘voluntary payment doctrine’ to hold that Leisure is estopped from recovering payments voluntarily made, regardless of whether owed." The Supreme Court additionally reviewed whether this court "erred in determining the Note presented an alternative obligation as to the Prime Rate interest structure for years 11 through 30 of its repayment" and "erred in imposing its own interest rate structure during that period ... ." Finally, the Supreme Court reviewed "whether the Bank's prescription arguments preclude Leisure's recovery of any interest paid and not due between December 31, 2001 and October 7, 2013." Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank, 2021-00838 (La. 3/25/22), 339 So.3d 508, 510 (" Leisure III ").
The Supreme Court reversed this court:
Finding the "voluntary payment doctrine" contravenes the Louisiana Civil Code, we reverse the court of appeal insofar as it (1) reversed the portion of the district court's judgment denying the motion for summary judgment filed by the Bank as to the voluntary payment affirmative defense, see La. C.C. art. 2299 ; (2) dismissed Leisure's claim for declaratory relief as to the interest it voluntary paid the Bank between December 31, 2001 and October 7, 2013; and (3) rendered judgment ordering the Bank to repay Leisure "any overcharge of interest in excess of the prime rate that Leisure has paid on the [Note] since the filing of its suit on October 7, 2013, together with interest thereon from the date of judicial demand until paid."
Finding that the Note sets forth an "alternative obligation" as defined in La. C.C. art. 1808, we reverse the court of appeal insofar as it (1) reversed the district court decree that Leisure was entitled to select the Prime Rate structure pursuant to La. C.C. art. 1810 ; and (2) reversed the district court's declaration that Leisure paid all indebtedness owed to the Bank on the Note as of June 28, 2015, and is owed return of all amounts paid thereafter, [Footnotes omitted.]
Leisure III, 339 So.3d at 510-11, 523.
The Supreme Court issued a remand order to this court "for consideration of the Bank's arguments on appeal that were pretermitted by the court of appeal opinion and are not in conflict with the foregoing disposition and to render judgment in accordance herewith." Leisure III, 339 So.3d at 511, 523. In response to the Supreme Court's remand, we ordered additional briefing from the parties and fixed the case for submission on oral argument.
The Bank contends that the only issues remaining before this court are whether Leisure is entitled to: 1) a monetary judgment ordering the Bank to return all overpayments it received from Leisure after June 28, 2015 (the date the Note was repaid in full); and 2) judicial interest thereon.
The Supreme Court's Opinion in Leisure III
The Bank argues that Leisure is not entitled to monetary damages because the Supreme Court did not expressly reinstate the district court's March 29, 2019 judgment in Leisure III . The Bank contends that the Supreme Court "considered and rejected Leisure's request for a money judgment and interest on the amount of overpayment. That aspect of the [district] court's decision was not reinstated by the [Supreme] Court." We disagree.
The district court's March 29, 2019 judgment at issue decreed, in pertinent part:
a. Leisure is entitled to judgment against [the Bank] as a matter of law;
b. There is no genuine issue of material fact that the choice of selecting a Prime Rate structure (applicable to the Promissory Note in question) returned to Leisure and that Leisure's selection of a fixed, 1-year Prime Rate should be applied; and
c. In accordance with Leisure's selection of said Prime Rate, there is no genuine issue of material fact that, on June 28, 2015, Leisure paid all indebtedness owed to [the Bank] on the Promissory Note.
IT IS THEREFORE ORDERED that [the Bank] shall return to Leisure all sums it received from Leisure after June 28, 2015 (which amounts total $487,312.31), together with legal interest thereon from the date of judicial demand until paid.
IT IS FURTHER ORDERED that the Motion for Summary Judgment filed by [the Bank] be, and it [is] hereby, DENIED.
IT IS FURTHER ORDERED that the Peremptory Exception of Prescription filed by [the Bank] be, and it is hereby, DENIED.
The Supreme Court held in Leisure III : "summary judgment in favor of Leisure declaring that Leisure was entitled to select the Prime Rate interest structure under the Note is proper." 339 So.3d at 521. The Supreme Court further ruled: "summary judgment may be rendered declaring that Leisure's choice, a fixed one-year Prime Rate, applies beginning in year 11 and until the Note is repaid in full," Leisure III, 339 So.3d at 521. Finally, the Supreme Court held: "Leisure presented uncontroverted evidence that the Note was repaid as of June 28, 2015 if its selected Prime Rate structure is applied ... ." Leisure III, 339 So.3d at 521.
For those reasons, the Supreme Court reversed this court's ruling in Leisure II , which had "reversed the district court's declaration that Leisure paid all indebtedness owed to the Bank on the Note as of June 28, 2015, and is owed return of all amounts paid thereafter ." Leisure III, 339 So.3d at 523 (Emphasis added). In reversing this court's reversal of the district court, the Supreme Court affirmed the district court's March 29, 2019 judgment granting declaratory judgment in favor of Leisure and ordering the Bank to return all overpayments, with interest. Our interpretation of the Supreme Court's ruling in Leisure III is that the district court's March 29, 2019 judgment is the judgment currently in effect.
Monetary Damages
The Bank further argues that Leisure is not entitled to a monetary judgment because monetary damages are unavailable in a declaratory judgment action. In support of its argument, the Bank cites La. C.C.P. art. 1878, which states, in pertinent part:
A. Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application therefor shall be by petition to a court having jurisdiction to grant the relief. If the application is considered sufficient, the court, on reasonable notice, shall require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause why further relief should not be granted forthwith.
The Bank does recognize that Leisure requested monetary damages and interest in its motion for summary judgment, but argues that Leisure did not properly join those claims to its declaratory judgment action. The Bank argues that joining Leisure's claims for damages and interest to its declaratory judgment action could only be accomplished through a supplemental pleading filed in accordance with La. C.C.P. art. 1155, not through a motion for summary judgment
Louisiana Code of Civil Procedure article 1155 provides:
The court, on motion of a party, upon reasonable notice and upon such terms as are just, may permit mover to file a supplemental petition or answer setting forth items of damage, causes of action or defenses which have become exigible since the date of filing the original petition or answer, and which are related to or connected with the causes of action or defenses asserted therein.
We appreciate the Bank's arguments on this issue, and especially note La. C.C.P. arts. 1871 - 1883, which govern actions for declaratory judgment. However, La. C.C.P. art. 862 provides that "a final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings and the latter contain no prayer for general and equitable relief." The unique and prolonged posture of this case provides the basis for Leisure's entitlement to monetary damages and interest.
We must first look to the 2015 Consent Order. As discussed in the prior opinions, during the pendency of the suit, Leisure "believed" that as of June 18, 2015, it had paid all indebtedness owed to the Bank on the Note in full. To avoid breaching its agreement with the Bank, Leisure filed a Motion to Permit Deposit of Disputed Funds . Following a hearing, the parties entered into a Consent Order on July 20, 2015, in which the parties agreed that Leisure would continue to make the disputed monthly payments, with the following reservation of rights:
[A]ll payments hereafter made by [Leisure] shall be understood to be made under protest and with express reservation of [Leisure's] right to continue to assert any "defense" to the demanded payment of those disputed amounts.
***
Solely to the extent necessary to effectuate this Order and for no other purpose, [the Bank] renounces any right that it may otherwise have to assert that the making of a disputed payment prejudiced or altered [Leisure's] rights . Accordingly, the making of any disputed payments to [the Bank] shall not be deemed to constitute an acknowledgement, waiver, or other similar alteration of [Leisure's] or [the Bank's] legal position. Nor shall the making of any disputed payment preclude [Leisure] from affirmatively recovering that payment if the Court ultimately determines that [the Bank] has computed interest illegally or incorrectly or otherwise caused [Leisure] to overpay. It is expressly understood that such disputed payments shall not in any way prejudice, affect, or impact [Leisure's] right to continue to assert that a claim or defense is a "defense" to those payments within the meaning of Louisiana Code of Civil Procedure article 424. [Emphasis added.]
Therein, the Bank agreed that Leisure would not be precluded from "affirmatively recovering" the overpayments "if the Court ultimately determines that [the Bank] has computed interest illegally or incorrectly or otherwise caused [Leisure] to overpay." Since the Supreme Court has in fact determined that the Bank incorrectly computed interest and caused Leisure to overpay, Leisure is entitled to recover its overpayments. The Bank is bound by the 2015 Consent Order and may not interfere with Leisure's entitlement to recover the overpayments.
We also find that Leisure's pleading was "enlarged" with its claim for monetary damages and interest by the 2015 Consent Order. Louisiana Code of Civil Procedure article 1154 provides "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised by the pleading." Although Leisure did not request monetary damages and interest in its initial pleading for declaratory judgment, damages and interest were placed before the district court through the parties’ acquiescence of those issues as raised and consented to in the 2015 Consent Order. Thus, we must treat Leisure's claim for monetary damages and interest "in all respects as if [it] had been raised by the pleading." See La. C.C.P. art. 1154 ; Broyles v. Ducote , 2021-0852 (La. App. 1st Cir. 6/14/22), 343 So.3d 902, 913 (citing Carraway v. Carraway , 2020-1309 (La. App. 1st Cir. 7/29/21), 2021 WL 3205383, at *4, n.6 (unpublished), writ denied, 2021-01764 (La. 1/19/22), 331 So.3d 325 ). Furthermore, there is no law preventing the cumulation of a declaratory action with a claim for monetary damages or contractual damages. The Louisiana Code of Civil Procedure provides for three different modes of procedure in civil matters in the district courts—ordinary, summary, and executory proceedings— and how those actions may be cumulated. La. C.C.P. arts. 462, 851. Louisiana Code of Civil Procedure article 462 provides, in pertinent part:
A plaintiff may cumulate against the same defendant two or more actions even though based on different grounds, if:
(1) Each of the actions cumulated is within the jurisdiction of the court and is brought in the proper venue; and
(2) All of the actions cumulated are mutually consistent and employ the same form of procedure.
The requirement that all of the actions employ the same form of procedure refers to whether each of the cumulative actions employ ordinary, executory, or summary procedure. Abadie v. Cassidy , 581 So.2d 657 (La. 1991).
Ordinary proceedings are to be used in the district courts in all cases, except as otherwise provided by law. La. C.C.P. art. 851. Louisiana Code of Civil Procedure article 2592 provides an exclusive list of those matters which may be tried or otherwise disposed of by means of summary proceedings, and La. C.C.P. art. 2631 lists those matters which employ the executory process. A declaratory judgment action is an ordinary proceeding. La. C.C.P. art. 851 ; Frierson v. Sheridan, 593 So.2d 655, 657 (La. App. 1st Cir. 1991). Similarly, a suit for monetary damages also employs the ordinary process. See La. C.C.P. art. 851 : see also Zachary Mitigation Area, LLC v. Tangipahoa Par. Council , 2016-1675 (La. App. 1st Cir. 9/21/17), 231 So.3d 687, 689 n.1. Because both actions employ the same procedure, there is nothing improper about the cumulation of an action for declaratory judgment with a monetary damage claim. In its brief on remand, Leisure cited several cases where declaratory actions and claims for monetary damages were cumulated in the same suit.
See e.g., Patten/Jenkins BR Popeyes, L.L.C. v. SRG Baton Rouge II, L.L.C., 2019-1160 (La. App. 1st Cir. 6/16/20), 306 So.3d 453, 458 ; Zachary Mitigation Area, LLC, 231 So.3d at 689 ; Risener v. Hosp. Serv. Dist. No. One of the Par. of Terrebonne, 2001-2755 (La. App. 1st Cir. 11/8/02), 834 So.2d 480, 481, writ denied, 2003-0142 (La. 3/21/03), 840 So.2d 536 ; Chauvet v. City of Westwego, 599 So.2d 294, 296 (La. 1992).
Judcial Interest
The Bank argues that Leisure is not entitled to interest under La. C.C.P. art. 1921 because Leisure's petition made no demand for interest. Louisiana Code of Civil Procedure article 862 provides that a judgment may and should include an award of interest when a party is entitled to such, even if such relief is not demanded in the pleadings, See also Miller v. Louisiana Gas Serv. Co., 95-874 (La. App. 5th Cir. 6/25/96), 680 So. 2d 52, 56, writ denied, 96-2792 (La. 1/6/97), 685 So.2d 119. Louisiana Civil Code article 2000 provides, in pertinent part, "[w]hen the object of the performance is a sum of money, damages for delay in performance are measured by the interest on that sum from the time it is due, at the rate agreed by the parties or, in the absence of agreement, at the rate of legal interest as fixed by R.S. 9:3500."
Louisiana Code of Civil Procedure article 862 states, in pertinent part: "[A] final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings and the latter contain no prayer for general and equitable relief."
Because we find that Leisure is entitled to a monetary damages award, and because Leisure prayed for interest in its motion for summary judgment on said damages award, we hold that Leisure is entitled to interest thereon. In this case, the Note was payable in installments. While the Note contains acceleration clauses providing that in the event of Leisure's default, the Bank would be entitled to accelerate the maturity of the note and prospectively adjust and fix the interest rate from the date the Note became due, there was no acceleration because Leisure never defaulted. The law is clear that legal interest is recoverable on debts arising ex contractu from the time they become due, unless otherwise stipulated. La. C.C. art. 2000 ; S. Marine Sales, Inc. v. Matherne, 2005-181 (La. App. 5th Cir. 11/29/05), 915 So.2d 1042, 1048, writ denied, 2006-0177 (La. 4/24/06), 926 So.2d 545. Leisure accordingly requested and is entitled to legal interest from the date of each protested payment until paid. See La. C.C.P. art. 1921 ; La. R.S. 9:3500 ; Barker v. Banks , 15 La. 453, 455 (1840) ; Aetna Finance Co. of Baton Rouge v. Perkins , 448 So.2d 121, 128 n.4 (La. App, 1st Cir. 1984). Because the district court awarded interest from the date of judicial demand until paid, we amend that portion of the district court's March 29, 2019 judgment to award interest from the date of each protested payment until paid.
Finally, the sworn affidavit of Leisure's Chief Financial Officer supporting Leisure's motion for summary judgment included an attached amortization calculation setting forth the amount of the overpayments, with interest, up to the time Leisure filed its motion for summary judgment on August 30, 2018. In the event Leisure made any overpayments to the Bank after Leisure filed its motion for summary judgment on August 30, 2018, we remand this matter to the district court to hold a hearing to calculate the amount of the overpayments, with interest, made after August 30, 2018.
DECREE
In accordance with the grant of summary judgment in its favor, Leisure Recreation & Entertainment, Inc. is entitled to a monetary damages award and legal interest thereon for the reasons set forth above. First Guaranty Bank is ordered to return all overpayments it received from Leisure Recreation & Entertainment, Inc. after June 28, 2015 (the date the Note was repaid in full), with legal interest thereon. We amend the district court's March 29, 2019 judgment to award Leisure Recreation & Entertainment, Inc. interest from the date of each protested payment until paid. This matter is remanded to the district court to hold a hearing to calculate the amount of any overpayments, along with interest, that Leisure Recreation & Entertainment, Inc., made after August 30, 2018. Costs of the proceedings in this court are assessed to First Guaranty Bank.
JUDGMENT AMENDED, AND AS AMENDED, AFFIRMED; REMANDED WITH INSTRUCTIONS .