Opinion
NO. 2017 CA 1705
06-01-2018
REGIONS BANK v. 47204, LLC
Richard A. Richardson Covington, Louisiana Counsel for Defendants/Appellants 47204, LLC and Chad Bordelon Brandon K. Black Justin J. Marocco Baton Rouge, Louisiana Counsel for Plaintiff/Appellee RREF II RB Acquisitions, LLC
NOT DESIGNATED FOR PUBLICATION Appealed from the 21st Judicial District Court In and for the Parish of Tangipahoa State of Louisiana
Case No. 2011-0003670 The Honorable Charlotte H. Foster, Judge Presiding Richard A. Richardson
Covington, Louisiana Counsel for Defendants/Appellants
47204, LLC and Chad Bordelon Brandon K. Black
Justin J. Marocco
Baton Rouge, Louisiana Counsel for Plaintiff/Appellee
RREF II RB Acquisitions, LLC BEFORE: McCLENDON, WELCH, AND THERIOT, JJ. THERIOT, J.
47204, LLC (47204), and Chad Bordelon, the appellants, appeal the summary judgment by the Twenty-First Judicial District court, which was granted in favor of the appellee, RREF II RB Acquisitions, LLC (RREF), and dismissed the appellants' claims with prejudice. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
On June 7, 2007, Chad Bordelon executed, on behalf of 47204 as member and manager, a promissory note for $1.5 million, in favor of Regions Bank (Regions), the lender. 47204 further agreed to pay attorney fees to the lender for the recovery of the balance in the event of default. The note was secured by a mortgage on property owned by 47204, recorded in the Parish of Tangipahoa at File Number 753871, Mortgage Book Number 1627, page 530. In the mortgage, "Mortgagee" was defined as meaning "Regions Bank, its successors and assigns, and any future holder or holders of any of the indebtedness." Mr. Bordelon also executed a personal guaranty of the indebtedness. The note matured on October 5, 2009, at which time 47204 defaulted.
Upon agreement with Regions, the note's maturity date had been extended from June 7, 2009 to October 5, 2009.
On November 2, 2011, Regions filed a petition for executory process, demanding the remaining $1,496,243.89 on the note, plus interest, costs, and attorney's fees. The encumbered property was seized by the Tangipahoa Parish Sheriff's Office on November 8, 2011.
On January 3, 2012, a motion to intervene, petition to assert superior privilege, and motion to stay sheriff's sale was filed by Jerry Hiers, in which he claimed he was the holder of a superior mortgage on the encumbered property, but that due to a clerical error, his mortgage had been incorrectly cancelled and erased from the public records of Tangipahoa Parish. Mr. Hiers further averred that he had filed a writ of mandamus on September 21, 2011 for the Clerk of Court for the Parish of Tangipahoa to rectify the error and restore his rank of privilege on the encumbered property in the public records. That suit for writ of mandamus was pending before the 21st JDC at the time Mr. Hiers filed his January 3, 2012 pleadings. By judgment signed April 30, 2012, the 21st JDC ordered that a writ of mandamus issue for the Clerk of Court to restore Mr. Hiers's rank of privilege on the encumbered property in the public records, and erase the cancellation of his mortgage.
Jerry Hiers v. Julian Dufreche, docket no. 2011-3145, 21st JDC, Parish of Tangipahoa, division "B." This Court subsequently reversed the district court's judgment. See Hiers v. Dufreche, 2012-1132 (La. App. 1 Cir.) (on rehearing) (unpublished), 2013 WL 8445626.
On March 28, 2013, Regions transferred the note and mortgage to RREF by execution of an assignment of security instrument recorded in the public records of Tangipahoa Parish. RREF filed a motion to substitute itself as the plaintiff in Regions's suit for executory process on May 11, 2015. The trial court signed the order to substitute RREF on May 19, 2015.
The sheriff's sale of the encumbered property occurred on July 29, 2015 and was finalized on August 12, 2015, in the amount of $818,334.00. On March 21, 2016, RREF filed an amended petition for deficiency judgment, in which it claimed the proceeds from the sheriff's sale did not satisfy the full amount of indebtedness on the note, and demanded the balance.
The petition was styled as an amendment to the original petition for executory process filed by Regions. --------
On May 16, 2016, 47204 and Mr. Bordelon filed an answer with affirmative defenses and a reconventional demand to enforce their right to redeem a litigious right. 47204 and Mr. Bordelon identified this litigious right as what was "acquired by RREF from Regions in this matter after the credit of $818,334.00 is applied to the purchase price of said litigious rights," and requested that the price for which RREF paid for the litigious right once held by Regions be determined.
On May 17, 2017, RREF filed a motion for summary judgment, seeking to enforce the debt for which it alleged 47204 and Mr. Bordelon were liable in solido. By judgment signed August 16, 2017, the trial court granted RREF's motion for summary judgment, ordering 47204 and Mr. Bordelon to be held liable in solido for the remaining indebtedness on the note, including interests, costs, and attorney's fees, and further ordering the reconventional demand of 47204 and Mr. Bordelon to be dismissed with prejudice. It is from this judgment that 47204 and Mr. Bordelon appeal.
ASSIGNMENTS OF ERROR
47204 and Mr. Bordelon allege the following errors by the trial court:
1. The trial court erred in granting the motion for summary judgment, by determining that there was a deficiency owed by 47204 and Mr. Bordelon, as well as incorrectly determining the amount of the deficiency.
2. The trial court erred in dismissing the reconventional demand seeking to enforce the redemption of the litigious right pursuant to La. C.C. art. 2652.
STANDARD OF REVIEW
This Court applies a de novo standard of review in considering lower court rulings on motions for summary judgment. Thus, we use the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Bufkin v. Felipe's Louisiana, LLC, 2014-0288 (La. 10/15/14), 171 So.3d 851, 854. A court must grant a motion for summary judgment if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law, pursuant to La. C.C.P. art. 966(A)(3).
On motion for summary judgment, the burden of proof remains with the movant. However, if the moving party will not bear the burden of proof on the issue at trial and points out that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense, then the non-moving party must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial. If the opponent of the motion fails to do so, there is no genuine issue of material fact and summary judgment will be granted. See La. C.C.P. art. 966(D)(1); see also Bufkin at 854.
DISCUSSION
Our de novo review of the record shows that RREF attached a number of exhibits to its memorandum in support of the motion for summary judgment, and subsequently filed them into evidence, without objection, at the hearing on the motion. The relevant exhibits are the promissory note, 47204's mortgage to secure the debt, Mr. Bordelon's personal guaranty, the assignment of loan documents by Regions to RREF, the assignment of security instrument by Regions in favor of RREF, the order of the trial court for a writ of seizure and sale of the encumbered property, the notice of seizure, and the sheriff's act of sale. All of these exhibits, when read together, show a debt of $1.5 million owed by 47204 and Mr. Bordelon that is secured by a mortgage in favor of Regions. The right to collect that debt was sold or assigned by Regions to RREF. The trial court ordered the encumbered property to be seized and sold at sheriff's sale to satisfy the remaining debt of $1,496,243.89. The sale of the property yielded proceeds of $818,334.00, which was insufficient to satisfy the full debt.
Also attached to RREF's memorandum and filed into the record is the affidavit of Daniel Chilgren, corporate representative of RREF, who is responsible for the collection of the debt in question. In his affidavit, Mr. Chilgren testified as to the calculation of interest rates of the loan and the default interest rate. He further testified that after the sale proceeds were deducted from the debt, which included interest, there was still a principal debt in the amount of $1,252,519.02 remaining, plus interest, attorney's fees, and costs. Neither 47204 nor Mr. Bordelon presented any evidence or argument at the hearing to contest this amount. Instead, 47204 and Mr. Bordelon argued that they were entitled to redeem the litigious right of RREF for the amount RREF paid to purchase it from Regions.
The sale of litigious rights is addressed by La. C.C. art. 2652:
When a litigious right is assigned, the debtor may extinguish his obligation by paying to the assignee the price the assignee paid for the assignment, with interest from the time of the assignment.
A right is litigious, for that purpose, when it is contested in a suit already filed.
At the hearing, 47204 and Mr. Bordelon argued that RREF bought a litigious right from Regions at a "discount," since the litigious right was based on the mortgage's second ranking behind Mr. Hiers's mortgage. Thus, 47204 and Mr. Bordelon requested that RREF disclose to the trial court how much was paid to Regions for the right to collect the debt in question.
For the purposes of litigious redemption, there must exist a suit and contestation on the same. A right transferred after suit is instituted and an answer filed thereto, and before the judgment therein is final, is a litigious right, since there is a suit and contestation thereon. Martin Energy v. Bourne, 598 So.2d 1160, 1162 (La. App. 1 Cir. 1992).
Suit was instituted in the instant case on November 2, 2011, when Regions filed the petition for executory process. Neither 47204 nor Mr. Bordelon filed an answer to this petition. The right was transferred from Regions to RREF on March 28, 2013. The sale of the encumbered property occurred on July 29, 2015 and was finalized on August 12, 2015. After RREF collected the proceeds from the sale, the litigious right to collect the debt was extinguished. 47204 and Mr. Bordelon did not express their intent to redeem the litigious right until May 16, 2016, upon filing their answer and reconventional demand to RREF's amended petition for deficiency judgment.
Comment (b) to La. C.C. art. 2652 states "a party seeking to redeem a litigious right that has been transferred must be prompt in making his intention known." Once the encumbered property had been sold, the litigious right which 47204 and Mr. Bordelon wanted to redeem, the right of executory process for the debt owed on the promissory note, was mooted. The proceeds for the sale had been collected by RREF and used toward the debt on the note. The litigious right had never been contested by 47204 or Mr. Bordelon during the suit's pendency through a filed answer. After the sale was completed, the right could no longer be contested. We therefore agree with the trial court that, at the time 47204 and Mr. Bordelon filed their reconventional demand to redeem the litigious right, the issue was moot.
DECREE
The summary judgment granted by the Twenty-first Judicial District Court in favor of the appellee, RREF II RB Acquisitions, LLC, and against the appellants, 47204, LLC and Chad Bordelon, is affirmed. All costs of this appeal are assessed to 47204, LLC and Chad Bordelon.
AFFIRMED.