BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing LP v. Marcus L. Louis and Wanda L. Louis

• Court: Louisiana Court of Appeal
• Decided: May 13, 2021
• Docket: 2020CA0717
• Status: Unknown

Opinion

DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2020 CA 0717

BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP U'

VERSUS

MARCUS L. LOUIS and WANDA L. LOUIS

Judgment rendered: MAY 13 2021

On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana No. C608468, Div. / Sec. 21/ 1)

The Honorable Janice Clark, Judge Presiding

Avery A. Simmons Attorneys for Plaintiff/Appellant Charlotte, North Carolina Nationstar Mortgage, LLC and

Melissa S. Gutierrez Houston, Texas and

Marc James Ayers, pro hac vice Birmingham, Alabama

Garth J. Ridge Attorneys for Defendants/ Appellees Jonathan B. Holloway Marcus L. Louis and Wanda L. Louis Baton Rouge, Louisiana

Benjamin D. Beychok Attorney for Defendant/Appellee Baton Rouge, Louisiana Doug Welborn, Clerk of Court, East Baton Rouge Parish

BEFORE: McDONALD, HOLDRIDGE, AND PENZATO, JJ. HOLDRIDGE, J.

The plaintiff, Nationstar Mortgage, LLC ( Nationstar), appeals the trial

court' s denial of its motion to set aside a judgment of dismissal. After review, we

affirm.

FACTUAL AND PROCEDURAL HISTORY

On January 19, 2012, BAC Home Loans Servicing, LP FKA Countrywide

Home Loans Servicing LP ( BAC) filed a suit on promissory note and to enforce a

mortgage against the defendants, Marcus L. Louis and Wanda L. Louis. The

defendants were the payors of a promissory note, dated September 15, 2006, in the

principal amount of $69, 750. 00 together with 6. 875% per annum interest in favor

of H& R Block Mortgage Corporation. The promissory note was secured by an

accompanying mortgage on immovable property defendants owned in Baton

Rouge, Louisiana. In May 2010, the defendants transferred ownership of the

immovable property to MWSL Enterprises, LLC.' On March 29, 2012, the

defendants answered the petition, denying all claims and asserting several

affirmative defenses.

On February 26, 2013, BAC filed a motion for summary judgment alleging

that the defendants failed to plead any facts refuting the amount due on the note

and mortgage. On March 20, 2013, the defendants filed a motion to continue the

summary judgment hearing. On July 23, 2014, the trial court signed an order

substituting Nationstar as the plaintiff.

On July 9, 2015, the plaintiff filed a " Petition for Reinstatement of

Mortgage," which added Doug Welborn, Clerk of Court for the Parish of East

Baton Rouge, and MWSL Enterprises, LLC as additional defendants. The petition

alleged that on or about June 23, 2010, the Louises tendered to BAC a check in the

On July 1, 2011, BAC merged with and into Bank of America, N.A. ( BANA), and BANA serviced the loan. On or about April 1, 2013, BANA transferred service of the loan to Nationstar. 2 amount of $ 68, 000. 00 to pay off the promissory note. On or about July 6, 2010,

the check was returned to BANA unpaid due to being drawn from an account that

did not exist. On or about July 14, 2010, BANA updated its business records to

reflect that the mortgage should not be cancelled because the payoff of the loan

was reversed due to the check being drawn on a non-existent account. BANA then

reinstated the loan on its business records. Due to receipt of the check, BANA

stamped the original Note as ` paid in full' and returned the original Note to

Wanda Louis." Thereafter, MWSL Enterprises, LLC submitted a request to cancel

the mortgage in East Baton Rouge Parish. The Deputy Clerk of Court for East

Baton Rouge Parish executed and recorded the cancellation on August 19, 2010.

After realizing the mortgage was improperly cancelled, BANA re- recorded the

mortgage on December 8, 2011. Based on these alleged facts, the plaintiff argued

that it was entitled to have the mortgage reinstated from the effective date of the

first inscription.

On November 2, 2015, the plaintiff filed a " Rule to Show Cause for Petition

for Reinstatement of Mortgage" requesting a hearing on the petition. Almost four

years later, on June 21, 2019, the Louises filed a " Motion to Dismiss Case as

Abandoned" in accordance with La. C. C.P. art. 561. The Louises argued that the

case was abandoned because no step in the prosecution had been taken since

February 26, 2013 when BAC filed its motion for summary judgment. The

Louises further argued that the " Petition for Reinstatement of Mortgage" filed by

the plaintiff in July 2015 did not include a motion for leave of court in accordance

with La. C. C. P. art. 1151 and therefore it had no effect.2 Thus, the Louises argued

that any subsequent filings relating to that petition were ineffective.

2 Under La. C. C.P. art. 1151, a petition may be amended after an answer has been filed " by leave of court." Barringer v. Robertson, 2015- 0698 ( La. App. 1 Cir. 12/ 2/ 15), 216 So. 3d 919, 927, writ denied, 2016- 0010 ( La. 2/ 26/ 16), 187 So. 3d 1004. The record reveals that the plaintiff did not obtain leave of court before filing the petition in July 2015. Even if we accept the July 2015 3 On June 26, 2019, the trial court signed an order granting the Louises' ex parte motion to dismiss the plaintiff' s case as abandoned.3 Thereafter, the plaintiff

filed a " Motion to Set Aside Dismissal Order," which stated that it had not

abandoned the case against the Louises because "[ the plaintiff] ha[ d] actively

pursued this foreclosure via the Reinstatement Case." On January 13, 2020, the

trial court held a hearing on the motion, wherein it denied the plaintiff's motion.

The trial court signed a judgment on May 12, 2020 in accordance with its oral

ruling. Thereafter, the plaintiff appealed.

APPLICABLE LAW

Louisiana Code of Civil Procedure article 561 governs abandonment of

cases, providing, in pertinent part:

A. ( 1) An action, except as provided in Subparagraph ( 2) of this

Paragraph, is abandoned when the parties fail to take any step in its prosecution or defense in the trial court for a period of three years[.]

3) This provision shall be operative without formal order, but, on ex parte motion of any party or other interested person by affidavit which provides that no step has been timely taken in the

prosecution or defense of the action, the trial court shall enter a formal order of dismissal as of the date of its abandonment. The sheriff shall serve the order in the manner provided in Article 1314, and shall execute a return pursuant to Article 1292.

4) A motion to set aside a dismissal may be made only within thirty days of the date of the sheriff' s service of the order of dismissal. If the trial court denies a timely motion to set aside the dismissal, the clerk of court shall give notice of the order of denial pursuant to Article 1913( A) and shall file a certificate pursuant to Article 1913( D).

5) An appeal of an order of dismissal may be taken only within sixty days of the date of the sheriffs service of the order of

petition as a step in the prosecution, the jurisprudence indicates that the plaintiff' s claim is abandoned under La. C. C. P. art. 561. Thus, we pretermit discussion of this issue.

3 We note that the June 26, 2019 order that dismissed the plaintiff' s case as abandoned is presumed to be without prejudice. When a judgment is silent as to whether it is being dismissed with or without prejudice, the dismissal must be without prejudice. Quality Environmental Processes, Inc. v. IP Petroleum Co., Inc., 2016- 0230 ( La. App. 1 Cir. 4/ 12/ 17), 219 So. 3d 349, 379, writ denied, 2017- 00915 ( La. 10/ 9/ 17), 227 So. 3d 833.

fl dismissal. An appeal of an order of denial may be taken only within sixty days of the date of the clerk' s mailing of the order of denial.

B. Any formal discovery as authorized by this Code and served on all parties whether or not filed of record, including the taking of a deposition with or without formal notice, shall be deemed to be a step in the prosecution or defense of an action.

Louisiana Code of Civil Procedure article 561 provides the procedure for a

judgment dismissing an action on the basis of abandonment. See McNealy v.

Englade, 2019- 0573 ( La. App. 1 Cir. 2/ 21/ 20), 298 So. 3d 182, 185- 86. Louisiana

Code of Civil Procedure article 561 imposes three requirements on a plaintiff to

avoid having a case dismissed due to abandonment. First, the plaintiff must take a

step" towards prosecution of his lawsuit. Id. at 186. A " step" is defined as taking

formal action before the court that is intended to hasten the suit toward judgment.

Id. at 186. Second, the step must be taken in the proceeding and, with the

exception of formal discovery, must appear in the record of the suit. Id. at 186.

Third, the step must be taken within the three-year period prescribed by La. C. C.P. art. 561. Id. at 186. When the parties take no steps in the prosecution or defense

of their claims during the period set forth in La. C. C. P. art. 561, " the logical

inference is that the party intends to abandon the claim and the law gives effect to

this inference." Id. at 186- 87.

Whether a step in the prosecution or defense of a case was taken in the trial

court within a period of three years is a question of fact subject to a manifest error

review on appeal. Wilkerson v. Buras, 2013- 1328 ( La. App. 1 Cir. 8/ 12/ 14), 152

So. 3d 969, 974. On the other hand, whether a particular act, if proven, qualifies as

a step in furtherance of the action and thereby precludes abandonment is a question

of law that we review by simply determining whether the trial court' s interpretative

decision is correct. Id., citing Hinds v. Global International Marine, Inc., 2010-

1452 ( La. App. 1 Cir. 2/ 11/ 11), 57 So. 3d 1181, 1183. DISCUSSION

On appeal, the plaintiff argues that the trial court erred in denying its

Motion to Set Aside Dismissal Order" under La. C. C. P. art. 561 because

Louisiana law is clear that the presumption of abandonment that arises under [ La.

C. C. P. art.] 561 after three years of litigation inactivity is ` not conclusive."'

However, if three years have passed without any activity, the burden is then upon

the plaintiff to show that the three requirements under La. C. C. P. art. 561 have

been met to avoid abandonment. See Hancock Bank of Louisiana v. Robinson,

2020- 0791 ( La. App. 1 Cir. 3/ 11/ 21), So. 3d , 2021 WL 925813, at

2- 3. It is undisputed that the provisions for abandonment of an action become

operative without a formal order. La. C. C. P. art. 561( A)(3). It occurs

automatically on the passing of three years without a step being taken by either

party, and it is effective without a court order. McNealy, 298 So. 3d at 186.

On the ex parte motion to dismiss on the basis of abandonment of any party

or other interested person, with an affidavit,' " the trial court shall enter a formal

order of dismissal as of the date of its abandonment." La. C. C. P. art. 561( A)(3).

Emphasis added.) Suits dismissed for want of prosecution do not decide any

issues in controversy, do not form the basis of res judicata, and are therefore

presumptively to be dismissed without prejudice. Countrywide Home Loans,

Inc., v. Estate of Rowe, 51, 489 ( La. App. 2 Cir. 6/ 21/ 17), 224 So. 3d 1152, 1160.

In this case, the trial court signed an order on June 26, 2019, dismissing the matter

as " abandoned pursuant to Louisiana Code of Civil Procedure article 561." On

July 17, 2019, the plaintiff fax -filed " Plaintiff' s Motion to Set Aside Dismissal

Order." The plaintiff' s motion to set aside the dismissal was timely filed within

4 The Louises submitted with their motion and order an affidavit of their counsel of record attesting that no step in the prosecution or defense of the action had taken place during the three- year abandonment period.

2 thirty days of the date of the sheriff' s service of the order of dismissal in

accordance with La. C. C. P. art. 561( A)(4). The plaintiff filed a memorandum and

various exhibits in connection with its motion.

On January 13, 2020, the trial court heard the plaintiff' s motion. The

hearing on the motion to set aside dismissal is a contradictory hearing wherein the

plaintiff must produce evidence as to why the order of dismissal should not be set

asides See Hancock Bank, 2021 WL 925813, at * 2 ( unpublished); Woodward v.

Lumbermens Mut. Cas. Co., 2000- 0399 ( La. App. 1 Cir. 3/ 28/ 01), 808 So. 2d

554, 555- 56. In this case, the plaintiff failed to introduce any exhibits or

documents into evidence at the hearing. Even though the plaintiff argued that

another suit had been filed and discovery was conducted, no evidence of such

action was introduced at the hearing. Evidence attached to a memorandum is not

evidence that can be considered by the appellate court unless it is formally

introduced at the hearing on the motion to set aside the dismissal. See Jackson v.

United Services Auto. Ass' n Cas. Ins. Co., 2008- 333 ( La. App. 5 Cir. 10/ 28/ 08),

1 So. 3d 512, 515. The trial court and the appellate court cannot consider evidence

if it is not admitted at the contradictory hearing, even though the plaintiff's

argument included references to other actions. See Clark v. State Farm Mutual

Automobile Ins. Co., 2000- 3010 ( La. 5/ 15/ 01), 785 So. 2d 779, 784.

Further, from our review of the record, it is clear that there was never an

executory process suit filed in this case to initiate a foreclosure proceeding. The

original petition filed by BAC was an ordinary proceeding titled " Suit on

Promissory Note and to Enforce Mortgage." In its petition, BAC only requested

that a judgment be rendered for the amount owed on the promissory note, plus

5 Louisiana Code of Civil Procedure article 963 provides, in pertinent part, "[ i] f the order applied for by written motion is one to which the mover is not clearly entitled, or which requires supporting proof, the motion shall be served on and tried contradictorily with the adverse party. The rule to show cause is a contradictory motion." 7 additional charges and attorney' s fees, and for recognition of the mortgage. There

was not a request for the trial court to issue an order of seizure and sale in

accordance with La. C. C.P. art. 26386 nor were any of the exhibits necessary for an

executory proceeding attached to BAC' s petition.7

The plaintiff relies upon Nationstar Mortgage, LLC v. Harris, 2013- 1335

La. App. 4 Cir. 5/ 14/ 14), 141 So. 3d 829, 837, for the proposition that a " step" in

a separately filed title clearing action could be considered a " step" in a foreclosure

action. However, Nationstar Mortgage is distinguishable from the present case,

which is an ordinary process suit to obtain a money judgment against the

defendants, rather than an executory process suit (a foreclosure suit).

The plaintiff' s argument in the present case that it has taken steps in another

action to bring a " foreclosure suit" has no merit. The plaintiff is barred from using

executory process, herein, since the mortgage in question is not an authentic act;

the plaintiff chose to begin its suit by ordinary process; and an ordinary proceeding

may not subsequently be converted into an executory proceeding or foreclosure

suit. La. C. C. art. 2644. Additionally, " steps" taken in another ordinary action do

not interrupt the time period for abandonment under La. C. C. P. art. 561. See

Sutton v. Adams, 2019- 0394 ( La. App. 4 Cir. 5/ 29/ 19), 273 So. 3d 1276, 1278- 79

The plaintiff' s opposition to motion for sanctions filed in the record of defamation

case but related to another action pending before a different division did not move

the defamation case forward or defend the matter, and thus was not a step in the

prosecution or defense sufficient to interrupt the period for abandonment); Hardy

6 Louisiana Code of Civil Procedure article 2638 provides "[ i] f the plaintiff is entitled thereto, the court shall order the issuance of a writ of seizure and sale commanding the sheriff to seize and sell the property affected by the mortgage or privilege, as prayed for and according to law."

7 We note that it appears that the plaintiff is not able to use the foreclosure procedure ( executory process) established by the Louisiana Code of Civil Procedure since the mortgage in question was not an authentic act executed before a notary and two witnesses. See La. C. C. art. 1833, La. C. C. P. arts. 2635- 2636. Therefore, the plaintiff' s only remedy would be to obtain a money judgment and have the property seized under a writ of fieri facias once the judgment becomes executory. See La. C. C. P. arts. 2252, 2291. 8 v. A. Wilbert' s Sons, L.L.C., 2006- 1093 ( La. App. 1 Cir. 9/ 19/ 07), 970 So. 2d

10635 1066, ( signing of the case management order by the trial court in another

division did not interrupt the running of the time period for abandonment as to the

instant lawsuit); and Sassau v. Louisiana Workover Service, Inc., 607 So. 2d 809,

812 ( La. App. 1 Cir. 1992), writ denied, 609 So. 2d 259 ( La. 1992), ( formal action

taken in a separate bankruptcy proceeding involving one of the defendants does not

prevent abandonment of the action against other defendants in a state court action).

The record reveals that the last pleading filed in the record was a " Rule to

Show Cause for Petition for Reinstatement of Mortgage" filed on November 2,

2015, which the trial court set a hearing date for January 4, 2010 Since nothing

was filed after the " Rule to Show Cause for Petition for Reinstatement of

Mortgage" until the " Motion to Dismiss Case as Abandoned," which was filed on

June 21, 2019, this case was abandoned by operation of law as mandated by La.

C. C. P. art. 561. Since no evidence was introduced into the record by the plaintiff

to show that a step in the prosecution was taken within the three- year abandonment

period under La. C.C.P. art. 561, we find that the trial court properly dismissed the

plaintiff' s claim as abandoned.

We note that the June 26, 2019 judgment dismissed the plaintiff' s claim

without prejudice. Louisiana Code of Civil Procedure article 1673 states, in

pertinent part, that "[ a] judgment of dismissal without prejudice shall not constitute

a bar to another suit on the same cause of action." The Official Revision Comment

for article 1673 notes that "[ a] case dismissed without prejudice can be reinstituted;

the judgment is neither final nor definitive." See La. C. C. P. art. 1673, comment

1960. Thus, the trial court' s ruling in this case does not preclude the plaintiff from

refiling a suit on promissory note against the Louises if the plaintiff's action for a

s We pretermit discussion of whether the abandonment period is continuously interrupted until See Hilbert v. Miley, 2012- 2108 ( La. App. 1 Cir. 11/ 14/ 13), 136 So. 3d 847, 849- the trial date. 50 and Loftus v. Grain Dealers Mut. Ins. Co., 195 So.2d 747, 748 ( La. App. 1 Cir. 1967). 9 judgment on the amount owed on the promissory note is not expired, prescribed, or perempted. See La. C. C. art. 3498, Hancock Bank, 2021 WL 925813, at * 2- 3

unpublished); see also NorthShore Regional Medical Center, L.L.C. v. Dill,

2011- 2271 ( La. App. 1 Cir. 6/ 8/ 12), 94 So. 3d 155, 165 n.7, writ denied, 2012- 1494

La. 10/ 8/ 12), 98 So. 3d 862.

Accordingly, we find no error in the trial court' s June 26, 2019 judgment

granting the ex parte motion and dismissing the plaintiff' s case as abandoned in

accordance with La. C. C.P. art. 561. Therefore, the plaintiff' s claim against the

Louises are dismissed without prejudice. See Wells v. Banks, 2018- 1612 ( La.

App. 1 Cir. 6/ 3/ 19), So. 3d 1, 2019 WL 2335860, at * 2.

CONCLUSION

For the foregoing reasons, we find that the trial court did not err in granting the Louises " Motion to Dismiss Case as Abandoned" and in denying Nationstar' s

Motion to Set Aside Dismissal Order." Therefore, we affirm the May 12, 2020

judgment of the trial court. All costs of this appeal are assessed to the plaintiff,

Nationstar Mortgage, LLC.

AFFIRMED.