Judgment rendered March 4, 2020. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 53,417-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
AG RESOURCE Plaintiffs-Appellees MANAGEMENT, LLC. AND AGRIFUND, LLC versus
BUNGE NORTH AMERICA, INC. Defendants-Appellants AND DANNY ALLEN DICKERSON *****
Appealed from the Sixth Judicial District Court for the Parish of Tensas, Louisiana Trial Court No. 23,971 Division “A”
Honorable Michael E. Lancaster, Judge
WIENER, WEISS & MADISON Counsel for Defendant- By: R. Joseph Naus Appellant Bunge North Patrick L. McCune America, Inc.
HUSCH BLACKWELL, LLP By: Marshall C. Turner Jamie H. Steiner
DANNY ALLEN DICKERSON In Proper Person
BREITHAUPT, DUBOS & WOLLESON, LLC Counsel for Plaintiffs- By: Michael L. Dubos Appellees Ag Resource K. Lamar Walters, III Management, LLC & Agrifund, LLC
Before MOORE, McCALLUM, and THOMPSON, JJ. MOORE, J.
Bunge North America appeals a judgment that denied its motion for
summary judgment and allowed the plaintiffs, Ag Resource Management
LLC and Agrifund LLC, to pursue their claim of wrongful conversion. The
plaintiffs have filed a motion to dismiss the appeal. For the reasons
expressed, we deny the motion to dismiss, convert the appeal to a writ
application, deny the writ, and remand the case for further proceedings.
FACTUAL BACKGROUND
The original lender was Ag Resource Management of Louisiana
(“ARM”), which later assigned its assets to Agrifund LLC. In March 2015,
ARM granted a crop loan to Radar Ridge Planting Co., a farming company
that operated in Morehouse, Franklin and Richland Parishes. Radar Ridge,
through its president, Tommy Dickerson, executed a promissory note (“the
2015 note”) for $2,683,002, to come due on December 15, 2015. Radar
Ridge also executed an Agricultural Security Agreement (“ASA”) which
granted a security interest in its 2015 corn crop, wherever located, for “any
and all present and future loans, loan advances, extensions of credit and/or
other financial accommodations” from the lender, with “a continuing
security interest in the Collateral * * * to secure any and all present and
future indebtedness as may be outstanding from time to time[.]” ARM filed
a UCC-1F financial statement, which described the collateral as “all crops
grown in [Louisiana] together with all present and future FSA payments.”
Radar Ridge booked its 2015 corn crop with Bunge, which operated a
grain storage facility in Tensas Parish. According to the ASA and UCC-1F,
ARM’s security followed the corn into Bunge’s silos. In August 2015, someone at Bunge altered the 79 grain storage
tickets, scratching out the name “Radar Ridge” and handwriting in “Danny
Dickerson,” Tommy Dickerson’s father. Bunge then issued a check, for
$347,217, made out jointly to Danny Dickerson and to Winnsboro State
Bank & Trust, completely ignoring ARM’s security interest.
In September 2015, ARM assigned its assets, including the 2015 note
and ASA, to Agrifund.
In December 2015, the 2015 note matured. Agrifund alleged that in
January 2016, Tommy Dickerson approached its officers about transferring
the crop loan to a crop storage loan. Agrifund now concedes that owing to
constraints from its own lender, Capital One, it could not simply extend the
maturity date of the 2015 note; the borrower’s only options were to pay off
the note, or to execute a new note on the crop storage loan, and Dickerson
chose the latter.
In January 2016, Radar Ridge executed a new promissory note (“the
2016 note”), for $3,002,940, to come due on June 15, 2016. Radar Ridge
also executed a new ASA, and Agrifund filed another UCC-1F. Most of the
proceeds of the 2016 note were applied to pay off the 2015 note; statements
sent from ARM to Radar Ridge showed a zero balance on the 2015 note.
In February 2016, Agrifund sent employees to Bunge’s facility for a
periodic inspection of the bins that were supposed to be holding Radar
Ridge’s corn. They found, however, that the bins were empty, and at this
time Agrifund realized that its collateral had been sold.
Radar Ridge did not pay the 2016 note when it came due.
2 PROCEDURAL HISTORY
Agrifund and ARM filed this suit in February 2016 against Bunge and
Danny Dickerson. They alleged that the defendants converted their
collateral, the 2015 corn crop, that was subject to the plaintiffs’ security
interest. Discovery was extensive, and resulted in an October 2017
nondisclosure agreement wherein several exhibits were placed under seal.
Bunge filed this motion for summary judgment in August 2018. It
contended that Agrifund could not prove any damages because (1) the 2015
note had been paid in full, with the proceeds of the 2016 note, and (2) a
novation had occurred, whereby all accessory obligations of the 2015 note
were extinguished when that note was novated in favor of the 2016 note. It
argued that any time “a debtor contracts a new debt to his creditor, which
new debt is substituted for an old one, which is extinguished, novation
occurs,” Scott v. Bank of Coushatta, 512 So. 2d 356 (La. 1987), and once the
principal obligation is extinguished, all accessory obligations are also
extinguished. In support, it attached 15 exhibits, including depositions of
Agrifund’s CEO, Brad Terral, and regional risk manager, Robby Miller, who
stated that they could not extend the 2015 note, owing to an agreement with
their own lender, Capital One, so they issued the 2016 note to pay it off.
Bunge also attached Exhibit 38, the transcript of a June 2018 hearing on a
motion to compel, in which Agrifund’s counsel allegedly conceded that the
2015 note was paid in full with the proceeds of the 2016 note.
Agrifund opposed the MSJ, arguing that there was no novation: the
2016 note was a “mere modification of an obligation” or “a new writing,”
which La. C.C. art. 1881 defines as not novation. It quoted the ASA (“any
and all present and future loans” and “present and future indebtedness”) and 3 argued that this expressed the consent of the debtor to transfer the security to
a new obligation, as allowed by La. C.C. art. 1884. Agrifund also offered
the affidavits of Terral and Miller, under seal; these stated that the purpose
of the 2016 note was to extend the maturity date for the 2015 note.
ACTION OF THE DISTRICT COURT
The matter came for a hearing in September 2018. Agrifund moved
to strike Exhibit 38 on grounds that a transcript is not allowable summary
judgment evidence, La. C.C.P. art. 966 A(4); the court granted this. Bunge
did not object to the Terral and Miller affidavits filed by Agrifund.
At the close of the hearing, the court conceded that it initially thought
the first loan was paid off, there was a novation, and thus the ASA was
extinguished. However, after hearing the arguments, the court found the
matter “not so clear,” and felt it must go to trial. The court therefore denied
the motion for summary judgment, and later signed a judgment designating
this as final and immediately appealable, under La. C.C.P. art. 1915 B.
Bunge took this appeal, designating five assignments of error.
Agrifund and ARM filed a motion to dismiss the appeal on grounds that the
denial of a motion for summary judgment is interlocutory and not
appealable, La. C.C.P. art. 968. We will address this issue first.
DISCUSSION
Appealability of Judgment
An appeal does not lie from the court’s refusal to render any summary
judgment. La. C.C.P. art. 968; Hood v. Cotter, 08-0215 (La. 12/2/08), 5 So.
3d 819. This is because denial of summary judgment is interlocutory: it
does not determine the merits but only preliminary matters in the course of
the action. La. C.C.P. art. 1841; Weaver v. City of Shreveport, 52,407 (La. 4 App. 2 Cir. 12/19/18), 261 So. 3d 1079. A court may render a partial
summary judgment, as to one or more of all claims, and determine and
designate this as a final judgment. La. C.C.P. art. 1915 B; Terrell v. Town of
Lecompte, 18-1087 (La. 9/28/18), 253 So. 3d 134. However, the court may
not designate the denial of summary judgment as final and appealable. SS v.
State, 02-0831 (La. 12/4/02), 831 So. 2d 936; Weaver v. City of Shreveport,
supra.
The district court was plainly wrong to designate the denial of
Bunge’s motion for summary judgment as final. However, in the interest of
judicial economy, the appellate court may convert an unauthorized appeal to
a supervisory writ and treat it as if the writ had been granted. Burmaster v.
Plaquemines Parish Gov’t, 07-2432 (La. 5/21/08), 982 So. 2d 795; Port City
Glass & Paint Inc. v. Brooks, 52,534 (La. App. 2 Cir. 2/27/19), 266 So. 3d
516. We also note that Bunge’s motion for appeal was filed within the 30
days allowed for a writ application. URCA 4-3; Port City Glass & Paint v.
Brooks, supra. We will therefore address the issues raised, under our
supervisory jurisdiction.
Denial of Summary Judgment on Issue of Novation
By its first three assignments of error, Bunge urges the district court
erred in denying the motion for summary judgment. Specifically, Bunge
argues that it presented competent summary judgment evidence of a
novation of the principal obligation; the plaintiffs’ action is based entirely on
“correlative rights of action and/or accessory obligations”; the novation
extinguished these rights; and the plaintiffs failed to submit competent
summary judgment evidence to establish a genuine issue of material fact.
Bunge contends that Agrifund made an entirely new loan to Radar Ridge in 5 January 2016; this paid off the 2015 note, extinguished all ancillary causes
of action, and negated Agrifund’s claim of conversion.
Bunge cites the definitions of novation, La. C.C. art. 1879 (“the
extinguishment of an existing obligation by the substitution of a new one”)
and of objective novation, La. C.C. art. 1881 (“by agreement of the parties, a
new performance is substituted for that previously owed”), and urges that
the 2016 note was precisely such a “new performance.” It further contends
that novation extinguishes the entire original legal relationship, including all
correlative rights and duties. HDRE Business Partners Ltd. Group v. Rare
Hospitality Int’l Inc., 834 F. 3d 537 (5 Cir. 2016); In re Barnett Marine Inc.,
343 B.R. 561 (E.D. La. 2006). Factually, it cites specific items (Agrifund’s
account statements, the depositions of Terral and Miller) as proof that the
2016 note paid off and extinguished the 2015 note; and others (Agrifund’s
credit agreement with Capital One, the same depositions) to show that by
January 2016, Agrifund could not have used the 2015 note as collateral, and
thus was required to cancel it and issue a new obligation.1 It concludes that
all this established novation, beyond a genuine issue of material fact.
A motion for summary judgment is a procedural device used when
there is no genuine issue of material fact for all or part of the relief prayed
for by a litigant. La. C.C.P. art. 966 A(3); Maggio v. Parker, 17-1112 (La.
6/27/18), 250 So. 3d 874. An issue is genuine “if reasonable persons could
disagree.” Peironnet v. Matador Res. Co., 12-2292 (La. 6/28/13), 144 So.
3d 791. In ruling on the motion for summary judgment, the district court is
1 Agrifund’s credit agreement with Capital One stated, “Unless the Required Lenders otherwise expressly consent in writing, the following shall not constitute an “Eligible Note”: * * * (xi) any Portfolio Note the payment of which is thirty (30) days or more past due[.]” 6 not to evaluate the weight of the evidence or determine the truth of the
matter, but instead to determine whether there is a genuine issue of triable
fact. All doubts should be resolved against granting the motion. Hines v.
Garrett, 04-0806 (La. 6/25/04), 876 So. 2d 764. Summary judgment is
seldom appropriate for determinations based on subjective facts of motive,
intent, good faith, knowledge, or malice, yet it may be granted on such
issues when “no issue of material fact exists concerning the pertinent intent.”
Jones v. Estate of Santiago, 03-1424 (La. 4/14/04), 870 So. 2d 1002.
Relevant to our analysis are the following code articles:
Art. 1879. Extinguishment of existing obligations
Novation is the extinguishment of an existing obligation by the substitution of a new one.
Art. 1880. Novation not presumed
The intention to extinguish the original obligation must be clear and unequivocal. Novation may not be presumed.
Art. 1881. Objective novation
Novation takes place when, by agreement of the parties, a new performance is substituted for that previously owed, or a new cause is substituted for that of the original obligation. If any substantial part of the original performance is still owed, there is no novation.
Novation takes place also when the parties expressly declare their intention to novate an obligation.
Mere modification of an obligation, made without intention to extinguish it, does not effect a novation. The execution of a new writing, the issuance or renewal of a negotiable instrument, or the giving of new securities for the performance of an existing obligation are examples of such a modification.
Art. 1884. Security for extinguished obligation
Security given for the performance of the extinguished obligation may not be transferred to the new obligation without agreement of the parties who gave the security. 7 Notably, Art. 1881 discourages the finding of novation in the absence
of a clear indication that a new obligation has been contracted and the
original obligation has been extinguished. Rebel Distributors Corp. v.
LUBA Workers’ Comp., 13-0749 (La. 10/15/13), 144 So. 3d 825. Article
1881 explicitly states that the execution of a new writing, issuance of a
negotiable instrument, or giving of new securities is a modification, not
novation. Id.; McKoin Starter & Generator Inc. v. Snap-On Credit Corp.,
37,210 (La. App. 2 Cir. 6/25/03), 850 So. 2d 924, writ denied, 03-2605 (La.
12/12/03), 860 So. 2d 1156; GE Comm’l Finance v. Louisiana Hosp. Ctr.,
2010-1838 (La. App. 1 Cir. 6/10/11), 69 So. 3d 649. The key factor is the
intent of the parties. Rebel Distribs. Corp. v. LUBA, supra; Isaacs v. Van
Hoose, 171 La. 676, 131 So. 845 (1930). The burden of proof for
establishing novation is on the party who asserts it. Scott v. Bank of
Coushatta, supra; Barham v. St. Mary Land & Expl. Co., 48,604 (La. App. 2
Cir. 11/20/13), 179 Oil & Gas Rep. 634, writ denied, 13-2943 (La. 2/21/14),
134 So. 3d 586.
At the outset, we observe that the word “novate” or “novation” never
appears in the 2016 note. Absent such an express declaration, Bunge owed
the burden of proving objective novation under Art. 1881. Scott v. Bank of
Coushatta, supra; Barham v. St. Mary Land & Expl. Co., supra.
On de novo review, we find genuine issues of material fact that
preclude the grant of summary judgment. We agree that the proceeds of the
2016 note were applied to pay off the 2015 note, and the latter was marked
as zero balance in ARM’s statements to Radar Ridge; we also agree that a
provision of Agrifund’s credit agreement with Capital One made the 2015
8 note ineligible as collateral by January 2016. However, Art. 1881 prevents
the finding of novation merely on the execution of a new writing. The
issuance of a new note, which rolls in unpaid interest from an earlier note, is
not novation. Rex Finance Co. v. Cary, 145 So. 2d 672 (La. App. 4 Cir.
1962), aff’d, 244 La. 675, 154 So. 2d 360 (1963). Agrifund’s risk manager,
Robby Miller, testified by deposition that even though they could not simply
extend the deadline on the 2015 note, the “balance was shifted” to the new
loan; its CEO, Brad Terral, testified by deposition that giving Radar Ridge
the crop storage loan enabled Agrifund to maintain its collateral. This
evidence creates a genuine issue whether the 2016 note was a substituted
obligation, resulting in novation, or just a new writing with a substantial
portion of the original performance still owed, defeating novation. The
ambivalence of Miller’s and Terral’s depositions leaves wide open the
genuine issue whether the lender intended to substitute a new obligation or,
rather, to improvise a way to extend the old one.
Moreover, the ASA defined indebtedness as follows (with emphasis
added):
Indebtedness: The term “indebtedness” refers to Grantor’s [Radar Ridge] Indebtedness and obligations under a certain promissory note dated 3/3/2015, in the amount of U.S. $2,683,002.00, as well as any substitute, replacement or refinancing note or notes for the above described promissory note.
The term “indebtedness” also refers individually, collectively and interchangeably to any and all present and future loans, loan advances, extensions of credit and/or other financial accommodations obtained and/or to be obtained by Grantor from Lender, * * * from time to time, one or more times, now or in the future, and any and all promissory notes and other instruments or agreements evidencing such present and future loans, loan advances, extensions of credit, and/or other financial accommodations * * * that Grantor may now and/or in the future owe to or incur in favor of Lender[.] 9 This document shows the intent of Radar Ridge to apply the security
not only to the 2015 note but to any substitute, replacement, or refinancing
instrument, and thus may satisfy Art. 1884’s provision that security may be
transferred to a new obligation by “agreement of the parties who gave the
security.” At the very least, it creates a genuine issue whether, even if the
2016 note was a novation, the parties intended the security to transfer to the
new obligation.
On de novo review, we find the summary judgment evidence does not
show an absence of genuine issues as to novation, and does not show that
Bunge is entitled to judgment as a matter of law. These assignments of error
lack merit.
Evidentiary Issues
By its fourth assignment of error, Bunge urges the district court erred
in considering the plaintiffs’ affidavits, to the extent that these were
inconsistent with their discovery responses and earlier depositions, without
any explanation of why these witnesses contradicted their prior testimony.
Bunge contends that Miller and Terral gave “sham affidavits,” merely in an
effort to manufacture a genuine issue, but that no witness’s affidavit can be
used to contradict his prior deposition testimony. Row v. Pierremont Plaza
LLC, 35,796 (La. App. 2 Cir. 4/3/02), 814 So. 2d 124, writ denied, 02-1262
(La. 8/30/02), 823 So. 2d 952; Holmes v. North Texas Health Care Laundry
Coop. Ass’n, 304 F. Supp. 3d 525 (N.D. Tex. 2018).
By its fifth assignment, Bunge urges the district court erred in striking
Exhibit 38 and disregarding it in ruling on the motion for summary
judgment. Bunge concedes that a hearing transcript is not one of the items
10 listed as competent summary judgment evidence in La. C.C.P. art. 966 A(4).
However, Bunge argues that in that hearing, Agrifund’s counsel made
statements that amounted to a judicial confession, and as such are binding on
the client. La. C.C. art. 1853; C.T. Traina v. Sunshine Plaza Inc., 03-1003
(La. 12/3/03), 861 So. 2d 156; Singleton v. Bunge Corp., 364 So. 2d 1321
(La. App. 4 Cir. 1978). Bunge further argues that there is no need to show
that the other party detrimentally relied on the statement, to make it a
judicial confession. Alexis v. Metropolitan Life Ins. Co., 604 So. 2d 581 (La.
1992); Royal v. Cook, 2007-1465 (La. App. 4 Cir. 4/23/08), 984 So. 2d 156,
writ denied, 08-1133 (La. 9/19/08), 992 So. 2d 941. Bunge concludes that
had the court disallowed Miller’s and Terral’s affidavits, or allowed the
transcript of the prior hearing, or done both of these things, it would have
granted the motion for summary judgment.
The evidence admissible on a motion for summary judgment is
limited by La. C.C.P. art. 966 A(4):
The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions. The court may permit documents to be filed in any electronically stored format authorized by court rules or approved by the clerk of court.
This provision, which took effect on January 1, 2016, lists the only
documents that may be filed to support or oppose the motion for summary
judgment.2 Davis v. Hixson Autoplex of Monroe LLC, 51,991 (La. App. 2
Cir. 5/23/18), 249 So. 3d 177; Raborn v. Albea, 2016-1468 (La. App. 1 Cir.
5/11/17), 221 So. 3d 104. Items that are not listed in Art. 966 A(4), such as
transcripts of prior proceedings, are not admissible on the motion. Bryde v.
2 2015 La. Acts No. 422. 11 Lakeview Regional Med. Ctr. LLC, 19-166 (La. App. 5 Cir. 12/11/19), 284
So. 3d 686, fn. 7. Exhibit 38, a transcript of a prior hearing, is not one of the
documents on the exclusive list; moreover, Agrifund objected to it timely.
The district court did not err in excluding it. The fifth assignment of error
lacks merit.
A further refinement of the use of evidence on motion for summary
judgment is stated in La. C.C.P. art. 966 D(2), also effective January 1,
2016: “The court may consider only those documents filed in support of or
in opposition to the motion for summary judgment, and shall consider any
documents to which no objection is made.” Thus, the court is required to
consider any item on the exclusive list if the opponent does not object to it.
Davis v. Hixson Autoplex, supra; McMahon v. City of New Orleans, 2018-
0842 (La. App. 4 Cir. 9/4/19), 280 So. 3d 796, writ denied, 19-01562 (La.
11/25/19), 283 So. 3d 498. The record shows that Bunge did not object to
Miller’s and Terral’s affidavits, so the objection is waived. Moreover, we
have examined the depositions. Miller testified that Agrifund “couldn’t
simply extend the deadline or the maturity date” of the 2015 note, but it
could “take that grain [production loan] and roll it into a crop storage loan”
and, thus, “I think we could extend it.” This does not really conflict with his
statement in affidavit, “The purpose of the 2016 crop storage loan was to
extend the maturity date for the 2015 crop production loan that was not paid
at maturity.” Terral’s deposition, while less equivocal, stated that the object
was “to maintain our collateral,” even though a technical “extension” was
not possible. In short, the inconsistency is not enough to make either one a
sham affidavit. The fourth assignment of error lacks merit.
12 CONCLUSION
For the reasons expressed, we deny Agrifund and Ag Resource
Management’s motion to dismiss. We convert the appeal to a writ
application, deny the writ, and remand the case for further proceedings. All
costs are to be paid by Bunge North America Inc.
MOTION TO DIMISS DENIED. APPEAL CONVERTED TO
WRIT, WRIT DENIED, AND CASE REMANDED FOR FURTHER
PROCEEDINGS.