Cromwell v. Commerce & Energy Bank

514 So. 2d 198, 1987 La. App. LEXIS 10382
CourtLouisiana Court of Appeal
DecidedOctober 7, 1987
Docket86-892
StatusPublished
Cited by6 cases

This text of 514 So. 2d 198 (Cromwell v. Commerce & Energy Bank) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cromwell v. Commerce & Energy Bank, 514 So. 2d 198, 1987 La. App. LEXIS 10382 (La. Ct. App. 1987).

Opinion

514 So.2d 198 (1987)

Terry A. CROMWELL, M.D., Plaintiff-Appellant,
v.
COMMERCE & ENERGY BANK OF LAFAYETTE, et al., Defendants-Appellees.

No. 86-892.

Court of Appeal of Louisiana, Third Circuit.

October 7, 1987.
Rehearing Denied November 17, 1987.

Durio, McGoffin & Stagg, Steven G. Durio and Jeffrey Ackermann, Lafayette, for plaintiff-appellant.

Robert Jackson, Baton Rouge, Dennis L. Doise, Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, William E. Logan, Jr., Logan & Sallinger, Gene Broussard, Lafayette, Lee C. Kantrow, Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, Douglas F. Pedigo, Broadhurst, Brook, Mangham & Handy, Lafayette, John D. Powers, Downing & Powers, Baton Rouge, Ernest L. Parker, Bean & Parker, Purvis Carmouche, Jr., Mouton & Roy, Cliffe Laborde, Laborde & Lafargue, Lafayette, Winston Ardoin, Ardoin & Daigle, Frank McGee, Guillory, McGee & Fontenot, Eunice, John Munsterman, Gist, Methvin, Hughes & Munsterman, Alexandria, William R. Forrester, Lemle, Kelleher, Kohlmeyer, Dennery, Hunley, Moss & Frilot, New Orleans, Henry Lemoine, Pineville, Darrel O. Ryland, Marksville, Henry C. Perret, Jr., Lafayette, John Geiger, Baton Rouge, O.C. Guilliot, Lafayette, Susan Rouprich, Michael H. Rubin, Steen, Rubin, Curry, Colvin & Joseph, Baton Rouge, Mary Coon Biggs, Bauer, Darnell & Boudreaux, Franklin, for defendants-appellees.

*199 Before STOKER and YELVERTON, JJ., and CULPEPPER, J. Pro Tem.[*]

YELVERTON, Judge.

The appellants in these consolidated cases, Terry A. Cromwell, M.D., et al, appeal a judgment sustaining an exception of improper cumulation of actions filed by European American Bank and Trust Company of New York (EAB) and dismissing the appellants' third supplemental and amending petition with prejudice. We find that there was no improper cumulation of actions, and we reverse and remand.

This is a complicated securities fraud case which has generated prolonged litigation. The original petition sought a temporary and a permanent injunction against the initial defendants, the issuing banks of letters of credit, to stop the banks from honoring the letters of credit. The plaintiffs-appellants in these five consolidated actions consist of 28 investors who purchased certain partnership interests in Combined Investments, Ltd. (C.I., Ltd.), a Louisiana limited partnership. As security for their capital contribution, the 28 limited partners were required to have letters of credit issued in favor of C.I., Ltd. The letters of credit were issued by 14 Louisiana banks. EAB became the final beneficiary under the letters of credit as security for a $10,000,000 line of credit. An injunction against the issuing banks would prevent the beneficiary, EAB, from drawing on the letters of credit.

The original five suits by the 28 investors were based on a claim that they had been defrauded. EAB intervened in these cases to assert its right to draw on the letters of credit. C.I., Ltd., as well as Combined Equities, Incorporated (C.E., Inc.), a syndication and management company which formed C.I., Ltd., and was its general partner, also intervened to refute plaintiffs' claim that they were defrauded. The trial court originally issued a temporary restraining order, then a preliminary injunction, prohibiting the 14 issuing banks from honoring EAB's drafts for payment of the letters of credit. The trial court did this after making a finding that there was fraudulent activity on the part of C.E., Inc. and C.I., Ltd.

On the first appeal this court reversed the granting of the preliminary injunction. 450 So.2d 1 (La.App. 3rd Cir.1984). We remanded the case for the limited purpose of considering the demands for damages and attorney's fees asserted by EAB and two of the defendant banks for wrongful issuance of the temporary injunction. The Supreme Court granted writs, and subsequently affirmed this court's decision dissolving the preliminary injunction. 464 So.2d 721 (La.1985). The Supreme Court, like the Court of Appeal, held that in the record before the trial court at the preliminary injunction hearing, there was no evidence of fraud or knowledge of fraud on the part of EAB. However, the Supreme Court remanded the case for a trial on the merits as to the permanent injunction, since plaintiffs had not waived their right to a trial on the merits.

After the remand from the Supreme Court, the 28 plaintiffs filed a second amending and supplemental petition (the first is not relevant here) for a temporary restraining order and injunctive relief, in which they alleged that they had obtained new and additional evidence which, taken in conjunction with the earlier evidence, would eliminate any doubt as to the fraud or knowledge of fraud on the part of EAB. The allegations of that amending petition went on to describe in great detail facts which purported to show that EAB knew and recognized, at all relevant times, that there had been a failure on the part of the general partner to disclose seriously adverse financial information concerning itself and in its possession at the time of the offering of the securities to the plaintiffs, and that EAB violated a duty to make an appropriate supplemental disclosure to the investors.

On the basis of this second amending and supplemental petition, and the prayer for a temporary restraining order, the district court on April 16, 1985 granted a second *200 temporary restraining order against the 14 issuing banks and ordered the banks, along with EAB, to show cause on a certain date as to why a preliminary injunction should not issue. The Supreme Court granted writs and vacated and reversed that temporary restraining order, and its extension, and remanded the case to the district court "pursuant to the judgment of this Court on original hearing." 466 So.2d 1290 (La. 1985) and 468 So.2d 1142 (La.1985).

Then, on June 4, 1985, the plaintiffs were permitted to file a third supplemental and amending petition which is what is before us now. This pleading is the action which EAB asserts was improperly cumulated with the pending action for a permanent injunction. In this third supplemental and amending petition the 28 original petitioners again, but in greater detail, alleged EAB's participation in the fraudulent activities, asserting that EAB assisted in and induced the furtherance of the fraud for its own purposes in order to remedy its already accrued losses resulting from delinquencies in interest. Violations of state and federal securities laws were also alleged, as was negligence. Injunctive relief was not requested, only damages. Named as defendants in this amending petition were EAB, C.E., Inc., C.I., Ltd, Combined Equities Securities, Ltd., and several individuals. The 14 issuing banks who had been made defendants in the original, still pending petitions, were not named defendants in this third amending petition. Damages of over $6 Million are sought.

The amending petition also alleged that on May 2, 1985, after expiration of the prior injunctions against payment of the letters of credit, EAB renewed its demand upon each of the issuing banks for payment of the letters of credit, and that each of the issuing banks then paid every letter of credit drawn upon, and sought reimbursement of such payments from the plaintiffs.

All the defendants named in the third supplemental and amending petition, except EAB, filed answers. EAB responded by filing exceptions of venue as to certain plaintiffs, improper cumulation of actions as to all plaintiffs, no cause of action, and prescription and peremption.

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Abshire v. State, Through Dept. of Ins.
636 So. 2d 627 (Louisiana Court of Appeal, 1994)
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514 So. 2d 202 (Louisiana Court of Appeal, 1987)
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514 So. 2d 204 (Louisiana Court of Appeal, 1987)
Anderson v. American Bank & Trust Company of Lafayette
514 So. 2d 204 (Louisiana Court of Appeal, 1987)

Cite This Page — Counsel Stack

Bluebook (online)
514 So. 2d 198, 1987 La. App. LEXIS 10382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cromwell-v-commerce-energy-bank-lactapp-1987.