REDAR, LLC v. Rush

51 So. 3d 859, 10 La.App. 3 Cir. 308, 2010 La. App. LEXIS 1576, 2010 WL 4628179
CourtLouisiana Court of Appeal
DecidedNovember 17, 2010
Docket09-1417
StatusPublished
Cited by6 cases

This text of 51 So. 3d 859 (REDAR, LLC v. Rush) 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
REDAR, LLC v. Rush, 51 So. 3d 859, 10 La.App. 3 Cir. 308, 2010 La. App. LEXIS 1576, 2010 WL 4628179 (La. Ct. App. 2010).

Opinions

PICKETT, Judge.

11 Norris and Patsy Rader and their family owned two corporations that operated stores, Norris Rader, Inc. and Norris Rad-er of St. Martin, Inc. The stores took out loans from St. Martin Bank and Regions Bank, and Norris and Patsy Rader both personally guaranteed the notes. When the stores shut down and the corporations entered into bankruptcy, St. Martin Bank and Regions Bank took action to collect on the personal guarantees, as Norris and Patsy Rader had extensive real estate holdings. In an effort to protect those assets from seizure by the bank, the Rad-ers transferred the family home to the Rader Qualified Personal Residence Trust (Rader QPRT), naming the Raders’ children as the beneficiaries and Patsy Rader as the trustee. The rest of their property was transferred to Redar, LLC, a limited liability company owned by a second trust named the 2002 Norris and Patsy Rader Trust, whose beneficiaries were the Rad-ers’ children. The banks were suspicious of these transfers, and began to take steps to attack the transfers.

The Raders went to Warren Rush, an attorney in Opelousas, seeking advice on how to keep their property from being seized by St. Martin Bank and Regions Bank. Rush concocted a scheme, which the trial court explained in its reasons for judgment:

On October 16, 2002, St. Martin Bank filed a petition for executory process, to seize and sell the Rees Street store in Breaux Bridge in order to satisfy an indebtedness of $1,192,443.07 plus $41,858 interest through July 25, 2002, plus interest thereafter at 7.75% annually, plus $255 attorney’s fees. St. Martin Bank advised Mr. Rush by letter from the bank’s president that they had a strong case against Mr. Rader for divesting himself of his assets. Mr. Rush submitted a proposal to St. Martin Bank for St. Lafayette Properties, L.L.C., hereinafter St. Lafayette, to purchase the Breaux Bridge store for a price equal to the total outstanding debt then owed by Norris Rader of St. Martin, Inc. The proposal required the bank to take title to the store by bidding it in at the sheriffs sale, which would wipe out a second mortgage on the store held by Do It Best, and then to sell the store to the newly formed L.L.C. under a credit sale. On January 13, 2003, Allan 12Purand, attorney for St. Martin Bank, sent Mr. Rush a fax confirming the agreement between the bank and Mr. and Mrs. Rader that the bank would pre-sign a credit sale of the Breaux Bridge store to a new L.L.C., bid the store in at a Sheriffs sale, and then transfer title to the new L.L.C., provided the bank received $200,000 as a down payment, plus an escrow of the first year’s interest on the note, plus Mr. and [863]*863Mrs. Rader’s personal guaranty of the new loan. Mr. Rush advised Mr. and Mrs. Rader that they could settle with St. Martin Bank, but that they had to put up $180,000. The Raders paid $180,000 to St. Lafayette on January 16, 2003, which Mr. Rush then paid to St. Martin Bank.
Mr. Rush formed St. Lafayette on December 18, 2002. Dan Menard was the sole member of St. Lafayette. While representing Mr. and Mrs. Rader, Redar and the QPRT, Mr. Rush also represented St. Lafayette and Dan Me-nard, the only identified member of St. Lafayette. Mr. Menard testified that Mr. Rush was the only attorney he and St. Lafayette used and Mr. Menard acknowledged that his handwritten notes evidenced his intent to pay Mr. Rush for his legal services out of the proceeds of the sale of property titled in St. Lafayette’s name. The representation of St. Lafayette by Mr. Rush is also evidenced by Mr. Rush’s letters dated December 15, 2008, and February 15, 2004, informing the Sheriff that St. Lafayette was his client. When the Raders tendered only $180,000, the bank agreed to make a side loan for the prepaid interest and insurance premium. Under these revised terms, St. Martin Bank required that Mr. and Mrs. Rader produce as ■additional collateral first mortgages on 500 plus acres of real estate in Iberia Parish formerly titled in their name, plus the $180,000 cash down payment.
At the sheriffs sale on January 15, 2003, the bank was the only bidder and took title pursuant to the sheriffs deed. Although the bank could have pursued a deficiency judgment against Mr. Rader for almost $700,000.00, the bank agreed not to and confirmed its agreement in writing prior to the sheriffs sale. The agreement was conditioned upon the Raders coming up with the required down payment and signing personal guaranties.
Mr. Rush advised the Raders that they should move the properties held by Redar and the QPRT to St. Lafayette. Plaintiffs contend that they were advised that this structure would help protect the properties from seizure by their creditors and allow time for the orderly sale of the properties to the extent necessary to pay their debts. The Raders testified that it was also their understanding of the arrangement with St. Lafayette that the properties would be returned to Redar once the litigation with Regions Bank was over. Mr. and Mrs. Rader signed documents transferring title to all the real estate owned by Redar and the QPRT to St. Lafayette, to be mortgaged to St. Martin Bank. Because five tracts were already mortgaged to Regions, St. Martin Bank agreed to accept as a substitute an additional cash down payment of $57,500.
|sThe recited consideration was St. Lafayette’s agreement to hold Redar and Mr. and Mrs. Rader harmless from their obligations on guaranties in connection with St. Martin Bank’s lawsuit against Norris Rader Sr. and against Norris Rader of St. Martin, Inc. The Act of Conveyance also obligated St. Lafayette to contribute any cash required to buy the Breaux Bridge store from St. Martin Bank and to hold Mr. and Mrs. Rader harmless if St. Martin Bank required either or both of them to co-sign or guaranty St. Lafayette’s note to the Bank. A counter letter was signed contemporaneously with the Act of Conveyance. The counter letter stated the only consideration received by the Raders was the consideration set forth in the Act of Conveyance.
On January 16, 2003, the Raders, as managers of Redar, had Redar transfer [864]*864properties that it held to St. Lafayette. On January 29, 2003, Patsy Rader, as the trustee of the QPRT, transferred ownership of the family home to St. Lafayette as well. On February 6, 2008, Mr. Menard paid $57,500 to St. Lafayette, which in turn paid the money to St. Martin Bank to complete the release of Mr. and Mrs. Rader from the Norris Rader of St. Martin, Inc. debt and the purchase of the Breaux Bridge store. Upon sale of the Breaux Bridge property by St. Lafayette, the Raders’ personal guaranties were extinguished.

In another suit against the Raders, they were able to settle a three million dollar judgment against them in favor of Regions Bank for $400,000.00. See Regions Bank v. Norris Rader of Lafayette, Inc., 03-1665 (La.App. 3 Cir. 7/14/04), 879 So.2d 904, and Regions Bank v. Norris Rader of Lafayette, Inc., 04-1505 (La.App. 3 Cir. 5/25/05), 904 So.2d 76. When the Raders were unable to pay the $400,000.00 to Mega Properties, who had purchased the litigious right from Regions, and Mega was threatening to foreclose on certain properties, Rush advised the Raders to file for bankruptcy. The Raders did, but the bankruptcy case was dismissed nine months later. Meanwhile, Rush arranged for two of his clients to take out loans from St. Martin Bank for $240,000.00 each. The proceeds of these loans were used to satisfy the $425,324.55 obligation to Mega and to pay Rush $54,675.45.

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REDAR, LLC v. Rush
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Cite This Page — Counsel Stack

Bluebook (online)
51 So. 3d 859, 10 La.App. 3 Cir. 308, 2010 La. App. LEXIS 1576, 2010 WL 4628179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/redar-llc-v-rush-lactapp-2010.