Agrifund, LLC v. Radar Ridge Planting Co., Inc. and Thomas A. Dickerson

Opinion

No. 52,432-CA

CONCURRENCE IN THE DENIAL OF REHEARING RENDERED ON AUGUST 27, 2019

COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA

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AGRIFUND, LLC Plaintiff-Appellant

versus

RADAR RIDGE PLANTING CO., Defendants-Appellees INC. AND THOMAS A. DICKERSON

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Appealed from the Fifth Judicial District Court for the Parish of Richland, Louisiana Trial Court No. 45037

Honorable Glen Wade Strong (Pro Tempore), Judge

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BREITHAUPT, DUBOS, & WOLLESON, LLC Counsel for Appellant By: Robert Alan Breithaupt Michael Lee DuBos James R. Close Jared S. Scheinuk

MIXON, CARROLL & FRAZIER, PLLC Counsel for Appellee By: James E. Mixon Caldwell Bank & Trust James L. Carroll Company Rossanna R. McIlwain LAW OFFICE OF BRIAN E. CRAWFORD Counsel for Appellee By: Brian E. Crawford Franklin State Bank & Trust Company

PETTIETE, ARMAND, DUNKELMAN Counsel for Appellee WOODLEY, BYRD, & CROMWELL, L.L.P. Commercial Capital By: Joseph S. Woodley Bank

COOK, YANCEY, KING, & GALLOWAY Counsel for Appellee By: Bernard S. Johnson Clark A. McCain Lisa Conly Cronin

SMITH & ASSOCIATES Counsel for Appellee By: Leroy Smith, Jr. Danny A. Dickerson

HAMMONDS, SILLS, ADKINS, & GUICE Counsel for Appellee By: Jon Keith Guice Brian Wilson Justin N. Myers Linda K. Ewbank

FRILOT, LLC Counsel for Appellees By: David S. Daly David S. Stephens, Elliot M. Lonker Lawrence W. Pickett, Jr., and Lawrence W. Pickett, Jr., APAC

SAMUEL T. SINGER Counsel for Appellee Franklin State Bank & Trust Company

MICHAEL E. KRAMER Counsel for Appellee Franklin State Bank & Trust Company

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Before PITMAN, GARRETT, STONE, COX, and McCALLUM, JJ. GARRETT, J., would deny rehearing.

I vote to deny all of the applications for rehearing, but write separately

to clarify the majority opinion and to respectfully address some of the

incorrect reasoning and misapprehensions of the law applied in the dissent

and in some of the applications for rehearing.

The dissent claims that the majority erred in finding a cause of action

against the defendant banks for conversion, applied a common law strict

liability standard, and made available a cause of action for common law

conversion to secured creditors with non-possessory, non-ownership security

interests in the property converted. In support of its argument, the dissent

points to only a portion of the various decisions cited by the majority on the

law of conversion. The majority opinion contained a full discussion of the

applicable law, including the standard set forth in Dual Drilling Co. v. Mills

Equip. Investments, Inc., supra, relied upon so heavily by the dissent. It is

also interesting to note that the law set forth in Louisiana State Bar Ass’n v.

Hinrichs, supra, which was severely criticized in the dissent, was

subsequently cited in numerous other cases including Deposit Guar. Nat.

Bank v. Cent. Louisiana Grain Co-op., Inc., supra, in which the Louisiana

Supreme Court denied a writ application after its decision in Dual Drilling

Co. v. Mills Equip. Investments, Inc., supra.

To be clear, the majority opinion should not be interpreted to find that

a cause of action for conversion could exist absent allegations of negligence

on the part of a defendant. In maintaining that Agrifund failed to state a

cause of action against the banks for conversion, the dissent completely

ignores all of the lengthy allegations which, if proven, would establish negligence on the part of the banks.1 These allegations describe in great

detail the large sums of money flowing in and out of accounts at the three

rural banks, which routinely engaged in agricultural loans; the active

involvement on the part of bank officers and employees; the failure to abide

by banking rules and regulations; and the improper action by the banks in

receiving, diverting, and converting to their own use the funds derived from

the sale of crops secured by Agrifund’s loans and UCC security interest.

Agrifund also alleged that the defendants acted in bad faith. The allegations

in Agrifund’s petitions sufficiently alleged that the banks were at fault

because they knew, or should have known, in the exercise of due care, that

something was amiss. It is clear that Agrifund’s petitions allege negligence

on the part of the banks sufficient to support a cause of action for

conversion.

The dissent next contends that the majority makes a conversion action

available to a secured creditor with a non-possessory, non-ownership

security interest in the property converted. The arguments set forth in the

dissent exhibit a misunderstanding of the principles of the UCC. The dissent

criticizes the majority’s reliance upon UCC Comment Two to La. R.S. 10:9-

315, stating that it is not specific to Louisiana law and is a comment to the

“generic” UCC. The dissent fails to recognize that La. R.S. 10:9-315 is a

portion of the adoption of the UCC into the law of this state. The comment

is relevant to interpretation and application of that provision of Louisiana

law enacted by the legislature.

1 Without copying all of the allegations, the following nonexclusive list of paragraphs from the petitions is referenced as a sampling of the myriad of allegations made in this case: 84, 85, 96, 113, 197, 207, 208, 209, 210, 211, 212, 213, 215, 216, 217, 226, 227, 228, 229, and 230. 2 Again, it is important to note that the only issue before the court is

whether Agrifund has stated a cause of action against the various defendants.

The question is not whether Agrifund will be successful in proving its cause

of action. The dissent engages in a lengthy forensic analysis and factfinding

mission which is inappropriate in deciding an exception of no cause of

action. Footnote four of the dissent vividly illustrates this shortcoming. The

dissent outlines some of the allegations in Agrifund’s petitions and states

that certain allegations are “without merit.” Such a determination cannot be

made on the bare allegations of the petitions.