UNITED STATES COURT OF APPEALS For the Fifth Circuit
No. 00-31195
JESCO CONSTRUCTION CORPORATION,
Plaintiff-Appellee,
VERSUS
NATIONSBANK CORPORATION, ET AL.,
Defendants,
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY; CONTINENTAL CASUALTY COMPANY; UNDERWRITERS AT LLOYDS OF LONDON,
Defendants-Appellants,
BANK OF AMERICA COMMERCIAL FINANCE CORPORATION, formerly known as NationsCredit Commercial Corporation,
Cross Claimant-Appellant.
Appeals from the United States District Court For the Eastern District of Louisiana December 28, 2001 Before JONES and DeMOSS, Circuit Judges, and FELDMAN,* District Judge.
DeMOSS, Circuit Judge:
CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF LOUISIANA, PURSUANT TO RULE XII OF THE RULES OF THE SUPREME COURT OF LOUISIANA.
TO THE SUPREME COURT OF LOUISIANA AND THE HONORABLE JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case in which certification is made is Jesco
Construction Company, Plaintiff-Appellee, versus NationsBank
Corporation, NationsCredit, and NationsCredit Commercial
Corporation, Defendants, and American International Speciality
Lines Insurance Company, Continental Casualty Company, Underwriters
at Lloyds of London, Defendants-Appellants, versus Banc of America
Commercial Finance Corporation, formerly known as NationsCredit
Commercial Finance Corporation, Cross Claimant-Appellant, on appeal
from the United States District Court for the Eastern District of
Louisiana. This case involves a determinative question of state
law; federal jurisdiction is based solely on diversity of
citizenship.
* District Judge of the Eastern District of Louisiana, sitting by designation.
2 II. STATEMENT OF THE CASE
A. Background
Jesco sought a $17.7 million loan from Bank of America
Commercial Finance Corporation f/k/a NationsCredit Commercial
Finance Corporation (BACF) to purchase King Fisher Marine Services’
stock. The parties’ versions of why the deal came apart at the
last minute differ greatly. Jesco claims that the appraisals were
done; the terms were negotiated; the closing documents, including
the notes, mortgages, and guarantees were circulated; and that on
October 23, 1997, BACF indicated that the loan was approved, the
transaction would close by the following Friday, and that it was a
“done deal.” In contrast, BACF claims that appraisals of King
Fisher revealed that it was simply worth less than the bank’s
letter of interest required. An unrelated third party eventually
purchased King Fisher’s stock for $2 million more than the Jesco
offer, and its financing was based solely on the same documents and
appraisals BACF relied upon in denying Jesco’s loan application.
In April 1998, Jesco sued BACF over its failure to loan these
funds. The case was removed to federal court based on diversity of
citizenship. In its original petition, Jesco alleged breach of
contract, detrimental reliance, negligent misrepresentation, unfair
trade practices, breach of the duty of good faith and fair dealing,
promissory and equitable estoppel, and breach of fiduciary duty.
The parties dispute whether Jesco also made out a fraud claim.
3 Jesco twice amended its petition, listing as defendants: BACF;
American International Speciality Lines Insurance Co. (AISLIC);
Continental Casualty Co.; and Underwriters at Lloyds of London.
The insurers answered by pleading various coverage exclusions and
other limitations as affirmative defenses.
The defendants all filed motions for summary judgment,
alleging, among other things, that because no written credit
agreement existed between Jesco and BACF as required by section
6:1122 of the Louisiana Credit Agreement Act,1 all Jesco’s causes
of action were barred. The district court made an express finding
that there was no written agreement within the meaning of section
6:1122. Jesco Constr. Corp. v. Nationsbank Corp., 107 F. Supp. 2d
715, 720 (E.D. La. 2000). However, making an “Erie guess” based on
the Louisiana Supreme Court’s dicta in Whitney National Bank v.
Rockwell, the court also concluded that while the Louisiana Credit
Agreement Statute’s writing requirement did bar Jesco’s breach-of-
contract claim, it did not bar Jesco’s alternative causes of
action. See id. at 719-20. Accordingly, the court granted partial
summary judgment and allowed Jesco to proceed against BACF, AISLIC,
Continental, and Underwriters on its other claims. See id. at 720-
25.
1 Section 6:1122 provides: “A debtor shall not maintain an action on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the relevant terms and conditions, and is signed by the creditor and the debtor.”
4 The defendants all filed Motions to Certify and/or Amend the
court’s order based on the intervening Louisiana Court of Appeals’
decision in Guzzardo-Knight v. Central Progressive Bank, which held
that claims for fraud, negligent misrepresentation, and detrimental
reliance, which arise out of an oral credit agreement, are barred
by the Louisiana Credit Agreement Statute. 762 So. 2d 1243, 1247
(La. App. 1st Cir. 2000), writ denied, 793 So. 2d 208 La. 2001).
The district court declined to reconsider its ruling and instead
certified this issue for interlocutory appeal to this Court.2 The
court limited the question on appeal to “whether the Louisiana
Credit Agreement Statute precludes all actions for damages arising
from oral credit agreements regardless of the legal theory of
recovery asserted.”
B. Relevant Caselaw
Under well-established Erie principles, we are required to
follow state law in diversity cases. See Erie R.R. Co. v.
Thompkins, 304 U.S. 64, 78 (1938). As the Louisiana Supreme Court
has recognized, the Louisiana Credit Agreement Statute is silent on
the question of whether it precludes causes of action other than
breach of contract. See Whitney National Bank v. Rockwell, 661 So.
2d 1325, 1331 (La. 1995) (“The Louisiana statute does not address,
one way or the other, any protection of unsophisticated borrowers
or any exemption based on fraud, misrepresentation, promissory
2 See 28 U.S.C. 1292 (b).
5 estoppel or other equitable theory.”). Accordingly, we must look
to the Louisiana courts’ interpretations of the statute for
guidance.
Louisiana’s second circuit court of appeals was the first to
consider section 6:1122's effect on non-breach-of-contract claims.
See Fleming Irrigation, Inc. v. Pioneer Bank & Trust Co., 661 So.
2d 1035 (La. App. 2d Cir. 1995), writ denied, 664 So. 2d 427 (La.
1995). In Fleming, the plaintiff, complaining about oral promises
made by the defendant, argued that the Louisiana Credit Statute
does not affect recovery under other theories, such as fraudulent
or tortious misrepresentation, negligence, promissory estoppel, or
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UNITED STATES COURT OF APPEALS For the Fifth Circuit
No. 00-31195
JESCO CONSTRUCTION CORPORATION,
Plaintiff-Appellee,
VERSUS
NATIONSBANK CORPORATION, ET AL.,
Defendants,
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY; CONTINENTAL CASUALTY COMPANY; UNDERWRITERS AT LLOYDS OF LONDON,
Defendants-Appellants,
BANK OF AMERICA COMMERCIAL FINANCE CORPORATION, formerly known as NationsCredit Commercial Corporation,
Cross Claimant-Appellant.
Appeals from the United States District Court For the Eastern District of Louisiana December 28, 2001 Before JONES and DeMOSS, Circuit Judges, and FELDMAN,* District Judge.
DeMOSS, Circuit Judge:
CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF LOUISIANA, PURSUANT TO RULE XII OF THE RULES OF THE SUPREME COURT OF LOUISIANA.
TO THE SUPREME COURT OF LOUISIANA AND THE HONORABLE JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case in which certification is made is Jesco
Construction Company, Plaintiff-Appellee, versus NationsBank
Corporation, NationsCredit, and NationsCredit Commercial
Corporation, Defendants, and American International Speciality
Lines Insurance Company, Continental Casualty Company, Underwriters
at Lloyds of London, Defendants-Appellants, versus Banc of America
Commercial Finance Corporation, formerly known as NationsCredit
Commercial Finance Corporation, Cross Claimant-Appellant, on appeal
from the United States District Court for the Eastern District of
Louisiana. This case involves a determinative question of state
law; federal jurisdiction is based solely on diversity of
citizenship.
* District Judge of the Eastern District of Louisiana, sitting by designation.
2 II. STATEMENT OF THE CASE
A. Background
Jesco sought a $17.7 million loan from Bank of America
Commercial Finance Corporation f/k/a NationsCredit Commercial
Finance Corporation (BACF) to purchase King Fisher Marine Services’
stock. The parties’ versions of why the deal came apart at the
last minute differ greatly. Jesco claims that the appraisals were
done; the terms were negotiated; the closing documents, including
the notes, mortgages, and guarantees were circulated; and that on
October 23, 1997, BACF indicated that the loan was approved, the
transaction would close by the following Friday, and that it was a
“done deal.” In contrast, BACF claims that appraisals of King
Fisher revealed that it was simply worth less than the bank’s
letter of interest required. An unrelated third party eventually
purchased King Fisher’s stock for $2 million more than the Jesco
offer, and its financing was based solely on the same documents and
appraisals BACF relied upon in denying Jesco’s loan application.
In April 1998, Jesco sued BACF over its failure to loan these
funds. The case was removed to federal court based on diversity of
citizenship. In its original petition, Jesco alleged breach of
contract, detrimental reliance, negligent misrepresentation, unfair
trade practices, breach of the duty of good faith and fair dealing,
promissory and equitable estoppel, and breach of fiduciary duty.
The parties dispute whether Jesco also made out a fraud claim.
3 Jesco twice amended its petition, listing as defendants: BACF;
American International Speciality Lines Insurance Co. (AISLIC);
Continental Casualty Co.; and Underwriters at Lloyds of London.
The insurers answered by pleading various coverage exclusions and
other limitations as affirmative defenses.
The defendants all filed motions for summary judgment,
alleging, among other things, that because no written credit
agreement existed between Jesco and BACF as required by section
6:1122 of the Louisiana Credit Agreement Act,1 all Jesco’s causes
of action were barred. The district court made an express finding
that there was no written agreement within the meaning of section
6:1122. Jesco Constr. Corp. v. Nationsbank Corp., 107 F. Supp. 2d
715, 720 (E.D. La. 2000). However, making an “Erie guess” based on
the Louisiana Supreme Court’s dicta in Whitney National Bank v.
Rockwell, the court also concluded that while the Louisiana Credit
Agreement Statute’s writing requirement did bar Jesco’s breach-of-
contract claim, it did not bar Jesco’s alternative causes of
action. See id. at 719-20. Accordingly, the court granted partial
summary judgment and allowed Jesco to proceed against BACF, AISLIC,
Continental, and Underwriters on its other claims. See id. at 720-
25.
1 Section 6:1122 provides: “A debtor shall not maintain an action on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the relevant terms and conditions, and is signed by the creditor and the debtor.”
4 The defendants all filed Motions to Certify and/or Amend the
court’s order based on the intervening Louisiana Court of Appeals’
decision in Guzzardo-Knight v. Central Progressive Bank, which held
that claims for fraud, negligent misrepresentation, and detrimental
reliance, which arise out of an oral credit agreement, are barred
by the Louisiana Credit Agreement Statute. 762 So. 2d 1243, 1247
(La. App. 1st Cir. 2000), writ denied, 793 So. 2d 208 La. 2001).
The district court declined to reconsider its ruling and instead
certified this issue for interlocutory appeal to this Court.2 The
court limited the question on appeal to “whether the Louisiana
Credit Agreement Statute precludes all actions for damages arising
from oral credit agreements regardless of the legal theory of
recovery asserted.”
B. Relevant Caselaw
Under well-established Erie principles, we are required to
follow state law in diversity cases. See Erie R.R. Co. v.
Thompkins, 304 U.S. 64, 78 (1938). As the Louisiana Supreme Court
has recognized, the Louisiana Credit Agreement Statute is silent on
the question of whether it precludes causes of action other than
breach of contract. See Whitney National Bank v. Rockwell, 661 So.
2d 1325, 1331 (La. 1995) (“The Louisiana statute does not address,
one way or the other, any protection of unsophisticated borrowers
or any exemption based on fraud, misrepresentation, promissory
2 See 28 U.S.C. 1292 (b).
5 estoppel or other equitable theory.”). Accordingly, we must look
to the Louisiana courts’ interpretations of the statute for
guidance.
Louisiana’s second circuit court of appeals was the first to
consider section 6:1122's effect on non-breach-of-contract claims.
See Fleming Irrigation, Inc. v. Pioneer Bank & Trust Co., 661 So.
2d 1035 (La. App. 2d Cir. 1995), writ denied, 664 So. 2d 427 (La.
1995). In Fleming, the plaintiff, complaining about oral promises
made by the defendant, argued that the Louisiana Credit Statute
does not affect recovery under other theories, such as fraudulent
or tortious misrepresentation, negligence, promissory estoppel, or
detrimental reliance. 661 So. 2d at 1039. The Second Circuit
disagreed, concluding that section 6:1122 precludes all actions for
damages arising from oral promises to lend money. Id.
A few months after Fleming was decided, the Louisiana Supreme
Court considered another case involving the Louisiana Credit
Agreement Statute. See Rockwell, 661 So. 2d 1325. The court found
it unnecessary to reach “whether there are any exceptions to the
credit agreement statute, such as fraud, misrepresentation,
promissory estoppel or particularly vulnerable parties.” Id. at
1332. But it went on to say that it declined “to adopt a blanket
rule, as the Second Circuit [in Fleming] recently did in holding
that the credit agreement statute precludes all actions for damages
arising from oral credit agreements, regardless of the theory of
6 recovery asserted.” Id. at 1332 n.6. Two months after deciding
Rockwell, the court denied review in Fleming. See Fleming
Irrigation, Inc. v. Pioneer Bank & Trust Co., 664 So.2d 427 (La.
1995).
The Louisiana courts of appeals have twice since revisited
this issue, reaching opposite results. In Diamond Services Corp.
v. Benoit, the Third Circuit Court of Appeals rejected a blanket
rule prohibiting all claims related to oral agreements to lend
money—as the Supreme Court in Rockwell had done—noting that such
a rule “would allow creditors to freely defraud unsophisticated
borrowers and rely on the law in perpetrating that fraud.” 757 So.
2d 23, 28-29 (La. App. 3rd Cir. 1999), rev’d in part on other
grounds, 780 So. 2d 367 (La. 2001). Accordingly, the court
reversed the district court’s dismissal of a fraud claim and held
that it was a factual question to be determined by the trial court.
Id. at 29.
In contrast, the first circuit court of appeals in Guzzardo-
Knight v. Central Progressive Bank followed Fleming to hold that
the “plaintiffs’ causes of action for fraud, negligent
misrepresentation and detrimental reliance, which arise out of an
oral credit agreement, are barred by La. R.S. 6:1122.” 762 So. 2d
at 1247.
7 C. Authority for Certification
Rule XII of the Rules of the Supreme Court of Louisiana
allows a Federal Circuit Court of Appeals, upon its own motion, to
certify a question of law to the Supreme Court on a determinative
issue if there is no clear controlling precedent in the decisions
of the State Supreme Court. We have done so in the past when we
determined that the issue carried “tremendous consequences” for a
particular state industry, Frey v. Amoco Prod. Co., 951 F.2d 67, 67
(5th Cir. 1992), and when “the intermediate Louisiana appellate
court decisions cast some doubt on how the Louisiana Supreme Court
would resolve” an important state issue. Grubbs v. Gulf Int’l
Marine, Inc., 985 F.2d 762, 763 (5th Cir. 1993).
Here, the parties urge that this case presents a important
question of state law, and the Louisiana Bankers Association’s
amicus curiae brief indicates that our resolution has widespread
ramifications for the banking industry in Louisiana. Accordingly,
we conclude that the issue presented is of such importance that we
should refrain from making an “Erie guess” as to how the Louisiana
Supreme Court might rule, and instead should request binding advice
from that court through the certification process.
III. CERTIFIED QUESTION
The question certified is whether the Louisiana Credit
Agreement Statute precludes all actions for damages arising from
8 oral credit agreements, regardless of the legal theory of recovery
asserted.
IV. CONCLUSION
We disclaim any intent that the Louisiana Supreme Court
confine its reply to the precise form or scope of the legal
question that we certify. The answer provided by the Louisiana
Supreme Court will determine the issue on appeal in this case. We
transfer to the Louisiana Supreme Court the record and appellate
briefs in this case with our certification.
We CERTIFY the question stated to the Louisiana Supreme Court.