Opinion
NUMBER 2017 CA 1097
04-06-2018
ROY WINSTON, JR. v. DEWITTE DENSON HALL
Garth J. Ridge Baton Rouge, LA Attorney for Appellant Defendant - Dewitte Denson Hall Dale R. Baringer Benjamin J. B. Klein Jarred W. Schick Baton Rouge, LA Attorneys for Appellee Plaintiff - Roy Winston, Jr.
NOT DESIGNATED FOR PUBLICATION
Appealed from the 19th Judicial District Court In and for the Parish of East Baton Rouge, Louisiana
Trial Court Number 625594 Honorable Janice Clark, Judge Garth J. Ridge
Baton Rouge, LA Attorney for Appellant
Defendant - Dewitte Denson Hall Dale R. Baringer
Benjamin J. B. Klein
Jarred W. Schick
Baton Rouge, LA Attorneys for Appellee
Plaintiff - Roy Winston, Jr. BEFORE: McCLENDON, WELCH, AND THERIOT, JJ. WELCH, J.
In this suit on a promissory note, the defendant, Dewitte Denson Hall, appeals a summary judgment granted in favor of the plaintiff, Roy Winston, Jr., finding Mr. Hall liable to Mr. Winston in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid and judicial interest. For reasons that follow, we reverse the judgment of the trial court and remand for further proceedings.
FACTUAL AND PROCEDURAL HISTORY
On July 27, 2012, Mr. Hall executed a collateral mortgage note in the amount of $40,000.00 payable to bearer on demand. The collateral mortgage note had an interest rate of 12% per year from the date of execution until paid. It further provided for an additional amount of 25% of the principal and interest for attorney fees if the note was not paid at its maturity and had to be collected by an attorney or sued upon. Additionally, the collateral mortgage note was paraphed by a notary public to identify it with an authentic act of mortgage executed before the same notary by Mr. Hall on that same date, July 27, 2012. In the act of mortgage, which was recorded with the clerk of court for the Parish of East Baton Rouge, Mr. Hall granted a mortgage in favor of any future holder of the attached collateral mortgage note on a particularly described piece of immovable property located in East Baton Rouge Parish. On August 1, 2012 Mr. Hall allegedly executed a promissory note in favor of Mr. Winston for the principal sum of $30,260.00 together with interest accrued at the rate of 1% per month.
Mr. Winston subsequently commenced these proceedings by filing a petition for executory process against Mr. Hall, and attached to the petition were the collateral mortgage note, the act of mortgage, and the promissory note. In the petition, Mr. Winston claimed that Mr. Hall was indebted to him in the amount of $32,980.00 in principal, plus accrued interest through August 1, 2013 in the amount of $3,957.60 and 25% of said principal and interest for attorney fees, which amounted to a total of $46,172.00, plus interest thereafter at the rate of one percent 1% per month until paid. In support of Mr. Winston's claim, he asserted that he was the holder of the collateral mortgage note, which had been pledged and delivered to him as security for the debt that Mr. Hall owed to Mr. Winston, as represented by the promissory note. He also asserted that the act of mortgage granted a mortgage in favor of any holder of the note on a particularly described piece of property, that Mr. Hall confessed judgment on the collateral mortgage note in the act of mortgage and consented to the seizure and sale of the property under executory process if the collateral mortgage note was not paid in accordance with the terms, and that Mr. Hall had failed to make payment to Mr. Winston on the promissory note. Accordingly, Mr. Winston sought a writ of seizure and sale of the property described in the act of mortgage to satisfy his claim against Mr. Hall.
The record does not reveal the reason for the discrepancy between the principal sum of the promissory note ($30,260.00) or the amount that Mr. Winston claimed was the principal sum in the petition ($32,980.00). This discrepancy is irrelevant as Mr. Winston sought and obtained summary judgment on the principal sum of $30,260.00.
The writ of seizure and sale of the property described in the act of mortgage was subsequently issued on May 14, 2014; however, in response, Mr. Hall filed a petition for preliminary injunction and permanent injunction to arrest the seizure and sale of the property. Therein, Mr. Hall asserted, among other things, that the act of mortgage and collateral mortgage note were not pledged to secure the payment of the promissory note and that there was no authentic evidence of the pledge of the collateral mortgage note to secure the promissory note, as required for executory process. Therefore, Mr. Hall sought to enjoin the seizure and sale of the property through executory process. However, Mr. Hall's request for the injunction was continued, and Mr. Winston subsequently amended his petition to convert it from executory process to ordinary process.
Thereafter, Mr. Hall filed an answer generally denying the allegations of the petition and asserting the affirmative defenses of lack of consideration, failure of consideration, fraud, and error or mistake. Essentially, Mr. Hall claimed that no funds were ever owed by him to Mr. Winston that would constitute consideration for the promissory note sued upon by Mr. Winston. In addition, Mr. Hall claimed that he did not recall executing the promissory note and believed that it was either done by another person without his authorization, permission, or consent, or if it was signed by him, it was done unwittingly and that any such signature was procured by fraud, error, or mistake. On December 17, 2014, Mr. Winston filed a motion for summary judgment, maintaining that there was no genuine issue of material fact in dispute relative to Mr. Hall's failure to pay the balance due on the promissory note ($30,260.00), the accrued interest through October 1, 2014 ($8,529.11), or the attorney fees of 25% of the total accrued principal and interest ($9,697.27) under the note. Therefore, Mr. Winston sought judgment in his favor in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid. In opposition to the motion for summary judgment, Mr. Hall maintained that there were genuine issues of material fact as to the affirmative defenses that he pleaded, and therefore, the motion for summary judgment should be denied.
25% x ($30,260.00 (principal) + $8,529.11 (interest)) = $9,697.27 (attorney fees).
We cannot determine why Mr. Winston sought (and the trial court granted) judgment in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid. Based on our calculation of the sums allegedly owed, Mr. Winston would have only been entitled to seek (and the trial court award) the sum of $48,486.38, i.e., $30,260.00 (principal) + $8,529.11 (interest through October 1, 2014) + $9,697.27 (attorney fees) = $48,486.30, plus interest thereafter at the rate of 1% per month until paid. However, because reversal of the judgment is warranted on other grounds as detailed hereinafter, we need not address this discrepancy.
Pursuant to a judgment signed on July 28, 2015, the trial court granted Mr. Winston's motion for summary judgment and found Mr. Hall liable to Mr. Winston in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid and judicial interest. From this judgment, Mr. Hall has appealed, arguing that the trial court erred in granting the motion for summary judgment without addressing or considering the affirmative defenses that Mr. Hall had raised.
LAW AND DISCUSSION
A motion for summary judgment is a procedural device used to avoid a full scale trial when there is no genuine issue of material fact. Johnson v. Evan Hall Sugar Cooperative, Inc., 2001-2956 (La. App. 1st Cir. 12/30/02), 836 So.2d 484, 486. A motion for summary judgment shall be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, admitted for purposes of the motion for summary judgment, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B)(2). In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. In re Succession of Beard, 2013-1717 (La. App. 1st Cir. 6/6/14), 147 So.3d 753, 759-760.
Louisiana Code of Civil Procedure article 966 was amended and reenacted by 2015 La. Acts, No. 422, § 1, eff. January 1, 2016. The amended version of La. C.C.P. art. 966 does not apply to any motion for summary judgment pending adjudication or appeal on the effective date of the Act. In this case, the motion for summary judgment was adjudicated and appealed prior to January 1, 2016; therefore, we refer to the former version of the article in this case. See 2015 La. Acts, No. 422, §§ 2 and 3.
The initial burden on a motion for summary judgment is on the mover to show that no genuine issue of material fact exists and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(D)(1). The burden then shifts to the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. Id. If the adverse party fails to do so, then summary judgment shall be granted. La. C.C.P. art. 966(A)(3).
Summary judgment is an appropriate procedural device to enforce a promissory note when the defendant establishes no defense against enforcement. See American Bank v. Saxena, 553 So.2d 836, 845-846 (La. 1989). In a suit to collect on a promissory note, once the plaintiff, as holder of a promissory note, proves the maker's signature, or the maker admits it, the holder has made out his prima facie case by mere production of the note; the burden then shifts to the defendant to prove the existence of a triable issue of material fact and/or any affirmative defenses. Id.; see also Hancock Bank of Louisiana v. C & O Enterprises, LLC, 2014-0542 (La. App. 1st Cir. 12/23/14), 168 So.3d 595, 598-599, writ denied, 2015-0621 (La. 5/22/15), 171 So.3d 251.
Fraud, error or mistake, failure of consideration, and lack of consideration are affirmative defenses that may be asserted by the defendant. See La. C.C.P. art. 1005. Fraud and error may vitiate consent. See La. C.C. art. 1948. Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party. La. C.C. art. 1949. Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other; fraud may also result from silence or inaction. La. C.C. art. 1953.
Failure of consideration is defined as consideration that originally existed that was not performed or which failed thereafter—as opposed to want or lack of consideration, which is no consideration at the time the instrument was given. Graves v. Porterfield, 555 So.2d 595, 598 (La. App. 1st Cir. 1989); Picou v. Anny, 2017-0875, p.7 (La. App. 1st Cir. 1/4/18) (unpublished). See also Sonnier v. Gordon, 50,513 (La. App. 2nd Cir. 4/13/16), 194 So.3d 47, 54 (noting that there is a difference between the affirmative defense of failure of consideration and the defense of want of consideration: failure of consideration concedes that there was consideration for the instrument in its inception, but alleges that the consideration has wholly or partially ceased to exist, whereas lack of consideration asserts that consideration was not given for the note). Thus, with respect to the defense of lack of consideration, the defendant is merely producing evidence which rebuts the plaintiff's contention that consideration was given for the note. See Sonnier, 194 So.3d at 54.
In a suit on a promissory note by a payee against the maker, the plaintiff will be given the presumption that the instrument was given for value received unless the maker casts doubt upon the consideration; once the maker has cast doubt upon the issue of consideration, the burden shifts to the payee to prove consideration by a preponderance of the evidence. Courtesy Financial Services, Inc. v. Hughes, 424 So.2d 1172, 1174 (La. App. 1st Cir. 1982); Community Bank of Lafourche v. Motel Management Corp. of La., 558 So.2d 641, 644 (La. App. 1st Cir. 1990)
In support of Mr. Winston's motion for summary judgment, he relied on the collateral mortgage note, the act of mortgage, the promissory note, and his own affidavit. Mr. Winston stated in his affidavit that he was the holder and owner of the act of mortgage and the promissory note, that the act of mortgage was delivered to him by Mr. Hall on the date of its execution as collateral security for (and a security interest was granted to secure) his debt to Mr. Winston, as represented by the promissory note, and that the balance due on the promissory note was $30,260.00 in principal, $8,529.11 in accrued interest through October 1, 2014, plus 25% of said principal and interest as attorney fees, which amounted to a total of $57,015.51, plus interest thereafter at the rate of 1% per month until paid. Mr. Winston also stated that Mr. Hall had failed to make any payment on the note, despite demand.
In opposition to Mr. Winston's motion for summary judgment, Mr. Hall relied on his own affidavit. According to Mr. Hall's affidavit, he was co-owner of an automobile dealership, In Motion Sales LLC ("In Motion"), with Mr. Winston in the years prior to and including 2012; however, Mr. Winston had abandoned his role in In Motion approximately nine months prior to Mr. Hall's execution of the act of mortgage. According to Mr. Hall, In Motion had a floor plan with Dealer Services Corporation ("DSC") in 2011 and 2012, which was personally guaranteed by Mr. Winston and Mr. Hall, and in 2012, In Motion owed money on vehicles to DSC from transactions in 2011, when Mr. Winston was still actively involved in In Motion. Mr. Hall further stated that in May 2012, Mr. Winston opened a separate used automobile dealership and that Mr. Hall executed the act of mortgage on July 27, 2012, in the event that at the culmination of his and Mr. Winston's business together, if Mr. Hall owed Mr. Winston any money, a note would be executed by Mr. Hall and pledged to the act of mortgage. Mr. Hall stated that he did not recall ever signing the promissory note sued upon herein and that he never intended to sign any note payable to Mr. Winston in August 2012, because In Motion was failing as a business in July 2012. Mr. Hall further stated that there were numerous financial transactions between Mr. Winston and Mr. Hall to raise funds in August 2012 for Mr. Winston to assist him in his newly started used automobile dealership, for which In Motion, Mr. Winston, and Mr. Hall were liable to third parties. Lastly, Mr. Hall stated that Mr. Winston never loaned him any money and that he did not owe Mr. Winston any sums due under the promissory note or otherwise.
We note that at the time of the hearing on the motion for summary judgment, Mr. Hall had not filed either an opposition to the motion for summary judgment or an opposing affidavit, but rather, the trial court left the matter open for eight days to allow Mr. Hall to submit anything that he wanted considered. Thereafter, Mr. Hall filed his opposition and affidavit, and the trial court subsequently granted the motion. While the time delays set forth in La. C.C.P. art. 966(B) for filing a response to the motion for summary judgment or opposing affidavits were not complied with, under the applicable version of La. C.C.P. art. 966(B), a trial court has discretion as to whether or not to admit a late-filed affidavit. See Buggage v. Volks Constructors, 2006-0175 (La. 5/5/06), 928 So.2d 536 (per curiam). In this case, we find no abuse of discretion in the trial court's decision to hold the record open and admit Mr. Hall's affidavit under the prior version of La. C.C.P. art. 966(B). See James Construction Group, L.L.C. v. State ex rel. Department of Transportation & Development, 2007-0225 (La. App. 1st Cir. 11/2/07), 977 So.2d 989, 999-1000. But cf. Daigle v. First Student, Inc. 2017-0717 (La. App. 1st Cir. 10/2/17) (unpublished writ action) (under the present version of La. C.C.P. art. 966(B) (i.e., as amended and reenacted by 2015 La. Acts, No. 422), a trial court does not have discretion to admit into evidence a late-filed opposition, addendum, or attachments to a motion for summary judgment, but rather, the trial court's discretion is limited to continuing the hearing on the motion for summary judgment in order for the filing of the opposition to comply with La. C.C.P. art. 966(B)(2)).
Based on our de novo review of the record, we find that Mr. Hall has met his burden of establishing genuine issues of material fact as to whether consideration was given for the promissory note, whether the promissory note was executed by Mr. Hall, or whether his consent to the promissory note was vitiated by a vice of consent. Although Mr. Winston produced the promissory note and established, through his affidavit, that he was the holder of the promissory note and that the note was delivered to him by Mr. Hall, Mr. Hall specifically attested that he never received any money from Mr. Winston for the promissory note and that he did not owe Mr. Winston any sums of money. At that point, Mr. Winston could not rely on his production of the note and affidavit that he was holder of the note and that it was delivered to him. Rather, the burden shifted to Mr. Winston to establish that consideration was given for the note; however, no such evidence was presented. Thus, Mr. Hall's affidavit establishes that there are genuine issues of material fact as to his affirmative defenses of lack of or failure of consideration.
Accord Talley v. Celestin, 2004-1003 (La. App. 5th Cir. 1/11/05), 894 So.2d 389, 392 and Sonnier, 194 So.3d 47 (in a suit on a note wherein the defense of lack of consideration was raised, summary judgment was inappropriate because the defendants established issues of fact as to whether adequate consideration was given for the promissory note sued upon by presenting affidavits stating that they did not receive consideration for the promissory note). --------
Mr. Hall's affidavit also establishes that there are genuine issues of material fact as to his affirmative defenses regarding fraud and error or mistake. While Mr. Hall admitted that he executed the collateral mortgage note and the act of mortgage, he stated that he did so in the event that he owed Mr. Winston money when their business relationship ended, that he did not owe any money to Mr. Winston, that Mr. Winston never loaned him any money, that he did not recall signing any note payable to Mr. Winston, and that he never intended to sign any note to Mr. Winston in August 2012, because the business that he had with Mr. Winston was failing.
Having determined that there are genuine issues of material fact as to Mr. Hall's affirmative defenses, summary judgment in favor of Mr. Winston was inappropriate. Therefore, we reverse the July 28, 2015 judgment of the trial court, which granted summary judgment in favor of Mr. Winston and found Mr. Hall liable to Mr. Winston in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid and judicial interest. This matter is remanded for further proceedings.
CONCLUSION
For all of the above and foregoing reasons, the July 28, 2015 judgment of the trial court, granting summary judgment in favor of Roy Winston, Jr. and finding Dewitte Denson Hall liable to Roy Winston, Jr. in the amount of $57,015.51, plus interest thereafter at the rate of 1% per month until paid and judicial interest is reversed, and this matter is remanded for further proceedings.
All costs of this appeal are assessed to the plaintiff/appellee, Roy Winston, Jr.
REVERSED AND REMANDED.