Opinion
NO. 2014 CA 1222
03-11-2015
RONALD A. MENTEL, SR. AND NORTHSIDE ELECTRIC, INC. v. MARK F. MENTEL
S. C. Garcia, III Christine I. MacKinnon Covington, Louisiana Counsel for Defendant/Appellant Mark F. Mentel Robert C. Lowe David M. Prados New Orleans, Louisiana Counsel for Plaintiffs/Appellees Ronald A. Mentel, Sr. and Northside Electric, Inc.
NOT DESIGNATED FOR PUBLICATION Appealed from the 22nd Judicial District Court In and for the Parish of St. Tammany State of Louisiana
Case No. 2011-16283
The Honorable Allison H. Penzato, Judge Presiding S. C. Garcia, III
Christine I. MacKinnon
Covington, Louisiana
Counsel for Defendant/Appellant
Mark F. Mentel
Robert C. Lowe
David M. Prados
New Orleans, Louisiana
Counsel for Plaintiffs/Appellees
Ronald A. Mentel, Sr. and
Northside Electric, Inc.
BEFORE: GUIDRY, THERIOT, AND DRAKE, JJ. THERIOT, J.
The appellant, Mark F. Mentel, seeks review of the judgment rendered by the Twenty-second Judicial District Court in favor of the appellees, Ronald A. Mentel, Sr. and Northside Electric, Inc. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
Ronald Mentel is the father of Mark Mentel. Northside Electric, Inc., ("Northside") is partially owned by Ronald. The ownership of several movables, consisting of vehicles, machines, and pieces of heavy equipment, the ownership of which are contested in the instant case. These movables were located on Ronald's property in Mississippi. After Ronald sold the Mississippi property, the movables were moved to Mark's property in Bush, Louisiana. Mark began to use the items and lend them to neighbors who were trying to repair and recover their property after Hurricane Katrina.
According to the petition to return property, Northside allegedly owned several of the items. An itemized list of the contested items can be found in the petition, the act of donation, and the counter letter, all of which will be discussed below.
Ronald alleged he became concerned about his and Northside's liability, due to Mark's activities with the items, should someone cause injury or damage with the equipment. Ronald therefore executed an act of donation on October 28, 2005, which was signed by both Ronald and Mark, notarized, and signed by two witnesses. The authentic act evidenced a donation inter vivos of eighteen movables owned by Ronald to Mark.
On October 15, 2007, Mark executed an authentic act in which he declared that certain movable items in his possession were actually owned by his father, Ronald. Mark listed the same eighteen items included in the 2005 act of donation, and included another ten items that were not in the 2005 act of donation. The authentic act declared that all twenty-eight items were owned by Ronald, and Mark acknowledged that he never paid any consideration to Ronald when the items were transferred to him.
On My 18, 2011, Ronald sent a certified demand letter to Mark, requesting that all twenty-eight items be returned to him. On August 12, 2011, Ronald made a second demand upon Mark to return the items, along with some additional items that were owned by Ronald that were in Mark's possession. Despite these demands, Mark never returned the movable property to Ronald.
None of these additional items are at issue in this appeal.
Because of Mark's apparent refusal to return the movable property, Ronald filed a petition for return of property on November 9, 2011. In his petition, Ronald averred that the October 15, 2007 authentic act executed by Mark was a counterletter in which Mark declared the items were placed in his name for Ronald's convenience only, and renounced all ownership interests he may have had with respect to the twenty-eight items listed in the act. Ronald contended Mark had effectively transferred the items back to him.
Following a trial on the matter, the district court signed a judgment on April 21, 2014, that ordered Mark to return twenty-one of the twenty-eight items included in the October 15, 2007 authentic act. It is from this judgment that Mark appeals.
ASSIGNMENTS OF ERROR
Mark cites eight assignments of error:
1. The district court erred in failing to find that the items listed in the judgment were gifts of corporeal movables which had been manually delivered to him, and thus were validly and irrevocably donated to him.
2. The district court erred in implicitly rejecting Mark's contention that the 2005 act of donation was not a simulation but an authentic
act formalizing manual gifts and reflecting Ronald's true donative intent.
3. The district court erred in finding the 2007 counterletter to be valid and finding that the attachment referenced in the counterletter was attached in its final form at the time it was signed.
4. The district court erred in finding that Ronald could not donate items allegedly owned by Northside to Mark, where it was not established that Northside owned the items or that Ronald lacked authority to donate items on behalf of Northside. The court erred in failing to find Ronald was the presumptive owner of the movables and that he had the authority and intent to validly and irrevocably donate the movables to Mark.
5. The district court erred in determining Ronald's donative intent as of the time the counter letter was executed in 2007, which was well after he had divested himself of the items and they had been delivered to Mark. Ronald's donative intent should have been determined as of the time the items were physically delivered from Ronald to Mark.
6. The district court erred in awarding the small Kubota tractor to Ronald, where Mark had purchased it with his own resources.
7. The district court erred in awarding the Pace trailer and Kubota utility vehicle to Ronald where they were manual gifts to Mark, not subject to any formal act of donation or counterletter.
8. The district court erred in awarding the movables to Ronald where Mark acquired them through acquisitive prescription.
This item is listed as No. 14 in the judgment.
These items are listed as Nos. 21 and 20, respectively, on the judgment.
DISCUSSION
A contract is a simulation when, by mutual agreement, it does not express the true intent of the parties. If the true intent of the parties is expressed in a separate writing, that writing is a counterletter. La. C.C. art. 2025. A simulation is absolute when the parties intend that their contract shall produce no effects between them. That simulation, therefore, can produce no effects between the parties. La. C.C. art. 2026. The true intent of the parties to an absolute simulation is given effect when, for example, an apparent transferee confirms by counterletter that the subject property still belongs to the transferor. The apparent transferor may not succeed in attacking an absolute simulation in the absence of a counterletter. Scoggins v. Frederick 98-1814 (La. App. 1 Cir. 9/24/99), 744 So.2d 676, 685, writ denied, 99-3557 (La. 3/17/00), 756 So.2d 1141.
Comment (b) to La. C.C. art. 2026 gives the example utilized by Scoggins, which is that when a transferee of property confirms by counterletter that the subject property still belongs to the transferor, the underlying transfer is an absolute simulation. Ordinarily, whether or not a transaction is simulated is a matter to be decided in the light of the circumstances of each case. Rousseau v. Badeaux, 2010-0832 (La. App. 1 Cir. 10/29/10) (unpublished opinion), writ denied, 2011-0054 (La. 2/18/11) 57 So.3d 339; Milano v. Milano, 243 So.2d 876, 879 (La. App. 1 Cir. 1971). As the situation in the instant case closely follows the example of comment (b), we must examine the circumstances surrounding the two authentic acts to determine whether an absolute nullity exists.
The authentic act of October 28, 2005 contains the following language: "[I]n consideration of the love and affection that [Ronald] bears for his son [Mark], he does hereby make an irrevocable gift and donation inter vivos unto his son... herein appearing for the purpose of accepting the same, of the following described movables..." (RAM #1) The act is signed by both Ronald and Mark, two witnesses, and a notary. This act is facially a valid donation inter vivos. See La. C.C. arts. 1541, 1833.
The authentic act of October 15, 2007 contains the following language:
Though the acceptance of donations and purchase of the attached list of movables was taken in his name, Mark F. Mentel now declares that in truth and in fact, he has no interest in said movable property; that the same was placed in his name for convenience only for the account of Ronald A. Mentel, Sr., that no sums were actually paid by Mark F. Mentel for the acquisition of any of the movable property...
To recognize Ronald A. Mentel, Sr.'s full ownership in and to the movable property... Mark F. Mentel does hereby transfer, set forth, and deliver, without any warranty of title whatever, even for the return of any purchase price paid... unto Ronald A. Mentel, Sr. ... full ownership in and to the movables...
The act is signed by both Mark and Ronald, two witnesses, and a notary. In this authentic act, Mark acknowledges that he accepted the items merely for the convenience of his father, that he has no interest in the subject items, that no consideration was paid for them, and that he recognizes Ronald's full ownership of the items. This language clearly indicates that Ronald's donation inter vivos was an absolute simulation and had no legal effect between Ronald and Mark. One of the witnesses, Treva Cairns, testified at trial that there was no confusion between Mark and Ronald when they executed the act and that Mark assisted her in preparing the document. (R. 547, 587) Mark's authentic act, which is notarized and signed by two witnesses, satisfies the form of a counterletter set forth in La. C.C. art. 2025.
Mark testified that at the time the counterletter was executed, Ronald told him that it would have no effect unless Mark predeceased him, since Mark had no will. We find the district court did not abuse its discretion in granting more weight to the language of the authentic acts rather than Mark's own testimony. See La. C.C. art. 1848. As to the eighteen items listed in the donation inter vivos, they are still Ronald's property, and we agree with the district court that they should be returned to Ronald. Assignments of error 1, 2, and 3 with respect to those items are without merit.
In his fifth assignment of error, Mark claims that Ronald's donative intent should have been determined as of the time the items were physically delivered, which was before the counterletter was executed. Donative intent is a factual issue and is reviewed on appeal under the manifest error standard of review. Rose v. Johnson, 2006-518 (La. App. 3 Cir. 9/27/06), 940 So.2d 181, 184, writ denied, 2006-2528 (La. 12/15/06), 944 So.2d 1273. The district court only had to look at the writing of the two authentic acts to determine Ronald's true intent. Since the 2005 donation was a simulation, there never was any donative intent on Ronald's part. A donation divests the donor of ownership upon acceptance by the donee, and delivery is not required for acceptance. See La. C.C. art. 1551, comment (b). If the donation was simulated, the acceptance was simulated as well. The district court was not manifestly erroneous in using the counterletter to determine donative intent. This assignment of error is without merit.
In his counterletter, Mark listed a number of items in the attached Exhibit "A" that were not included in Ronald's 2005 donation inter vivos. Mark recognized Ronald's "full ownership" in all the items listed in Exhibit "A," and transferred all his rights in those items to Ronald. Mark now claims that all the items were manually delivered to him by Ronald and that they are irrevocable donations. Even if Ronald had made manual gifts of those items, Mark clearly renounced the gifts by transferring all rights of ownership that he had in the items back to Ronald.
The donee bears the burden of proving the validity of the alleged donations. Proof must be strong and convincing that the donor intended to give the property. Fogg v. Fogg, 571 So.2d 838, 842 (La. App. 3 Cir. 1990), writ denied, 575 So.2d 372 (La. 1991). At trial, Ronald introduced the counterletter. This authentic act shows, as stated above, that Mark intended on transferring all the items listed on Exhibit "A" to Ronald. Twenty-eight items are found on the exhibit. Twenty-one of those items are the subject of this appeal. The district court found that those twenty-one items were transferred to Ronald and that he is the owner. We find no error in the district court's judgment and will not disturb it on appeal. See Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). Assignment of error 1 with respect to items 20 and 21 of the counterletter and assignment of error 7 are without merit.
Assignment of error 7 is incorrectly labeled number 8 in the appellant's brief.
Items 1-18 are included in the donation inter vivos. Item 19 is not subject to this appeal.
Ronald testified at trial that he could not donate any of the subject items in the first place, because they were owned by Northside. In Mark's fourth assignment of error, he claims the district court erred in ruling that Ronald did not have authority to donate the items. If it is true that Ronald could not donate the items, Mark could neither accept them. This would be further proof that Ronald's donation was an absolute simulation.
Ronald was a fifty-percent owner in Northside. The co-owner of Northside, Earl Langhoff, Jr., testified that neither he nor Ronald would dispose of Northside property without conferring with the other. Mr. Langhoff was aware of Ronald's 2005 donation inter vivos to Mark, but testified that Ronald's true purpose for the act of donation was for "insurance purposes." Mr. Langhoff had reviewed the items listed in the petition for return of property, and he testified that to the best of his knowledge, all of the listed items belonged to Northside.
Whether Ronald had authority to dispose of the items is actually a moot point due to the act of donation being an absolute simulation. The testimony and evidence show that Ronald had no intention of permanently transferring ownership of those items to Mark. The fourth assignment of error is without merit.
Mark further contends that he owns the items listed as No. 14 of the judgment because he purchased them with his own funds. Regardless, Mark effectively transferred them to Ronald with the counterletter when he recognized Ronald's full ownership in the items. Assignment of error 6 is without merit.
Item 14 is named "Kubota Tractor with Grille Guard and Remote."
In the eighth assignment of error, Mark argues that in the alternative, he gained ownership of the items through acquisitive prescription. Ownership in movables can be acquired either by a prescriptive period of three years or ten years. La. C.C. art. 3489. Since the ten-year prescriptive period would not have run by the time of this appeal, only the three-year period is at issue.
Assignment of error 8 is incorrectly labeled number 7 in the appellant's brief.
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One who has possessed a movable as owner, in good faith, under an act sufficient to transfer ownership, and without interruption for three years, acquires ownership by prescription. La. C.C. art 3490. The act of donation purports to transfer ownership of the items to Mark on October 28, 2005. Therefore, if Mark possessed the items as owner in good faith, he would have acquired ownership rights on October 28, 2008.
Louisiana Civil Code Article 3490 provides that three-year acquisitive prescription requires possession in good faith "under an act sufficient to transfer ownership." Mark's possession of the movables from October 28, 2005 to October 15, 2007, under the act of donation executed by Ronald, may have been sufficient for accrual of prescription; however, Mark only possessed the movables pursuant to the act of donation for a period of two years and then executed an act sufficient to transfer ownership back to Ronald before the accrual of three years. Thus, as of October 15, 2007, it can be said that acquisitive prescription was no longer accruing because (1) Mark no longer possessed "under an act sufficient to transfer ownership"; (2) the counter letter constituted an interruption of any period that had accrued. Assignment of error 8 has no merit.
CONCLUSION
The district court was not manifestly erroneous or abusive of its discretion in finding that Ronald had no donative intent in his 2005 donation inter vivos, as it was an absolute simulation. Mark's counterletter is the best evidence of this simulation. Also, the counterletter expresses Mark's donative intent to irrevocably transfer additional items to his father, as it follows the form of a donation inter vivos in its own right. Absent manifest error, this Court will not disturb the district court's judgment ordering Mark to return the twenty-one items at issue to Ronald.
DECREEE
The judgment in favor of the appellees, Ronald A. Mentel, Sr. and Northside Electric, Inc., is affirmed. All costs of this appeal are assessed to the appellant, Mark F. Mentel.
AFFIRMED.