Rhodes v. Gulfco Finance Co. of Lake Charles

610 So. 2d 1073, 1992 La. App. LEXIS 3794, 1992 WL 364388
CourtLouisiana Court of Appeal
DecidedDecember 9, 1992
DocketNo. 91-1212
StatusPublished

This text of 610 So. 2d 1073 (Rhodes v. Gulfco Finance Co. of Lake Charles) 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
Rhodes v. Gulfco Finance Co. of Lake Charles, 610 So. 2d 1073, 1992 La. App. LEXIS 3794, 1992 WL 364388 (La. Ct. App. 1992).

Opinion

DOMENGEAUX, Chief Judge.

Plaintiffs, Mr. and Mrs. Joseph Rhodes, filed suit against Gulfco Finance Company of Lake Charles for the return of excess funds received in an executory proceeding and for damages for the tortious conversion of those funds. In a related action, plaintiffs filed suit against the sheriff of Calcasieu Parish who conducted the execu-tory proceeding. The suits were consolidated, and during the trial, the trial judge dismissed both defendants pursuant to an exception of no right of action which he noticed on his own motion. Plaintiffs appealed the dismissal of Gulfco, and this court reversed and remanded, holding that the trial court erred in finding that the Rhodes had no right of action against Gulf-co for surplus monies from the sale of the mortgaged property. See Rhodes v. Gulfco Finance Co., 576 So.2d 1078 (La.App.3d Cir.1991). Plaintiffs did not appeal the dismissal of the sheriff; therefore, that judgment has become final, and the sheriff is no longer a party to these proceedings.

Upon remand, a bench trial was held, and the trial judge ruled in favor of the plaintiffs. He awarded $13,581.80 as the recovery of excess funds and $7,500.00 in general damages. The trial judge denied Gulf-co’s reconventional demand for additional monies due by the plaintiffs. Gulfco has appealed, raising several issues, and plaintiffs answered the appeal, requesting an increase in the award of general damages.

FACTS

On April 17, 1980, plaintiffs borrowed $20,400.00 from Gulfco, which debt was evidenced by a promissory note identified as 40515-9, and secured by a mortgage on certain movable and immovable property. The mortgaged property consisted of three pieces of real estate and numerous house[1075]*1075hold goods. The mortgage was dated April 17, 1980, and was numbered 1606686.

On April 18, 1980, plaintiffs borrowed another $20,400.00 from Gulfco, which debt was evidenced by a promissory note identified as 40514-2, and secured by a mortgage on two other pieces of real estate and the same household goods listed in the previous mortgage. This mortgage was dated April 18, 1980, and was numbered 1606013.

The three pieces of real estate which were mortgaged by number 1606686 and which secured loan no. 40515-9 were sold in 1981 and 1982, and the properties were released from the mortgage. Plaintiffs paid to Gulfco a portion of the proceeds, although the exact amount is not disclosed in the record, and Gulfco applied this money, in part, to loan no. 40515-9. Gulfco also applied some of this money to another loan, no. 40242-0 which dated back to 1977, and to loan no. 40514-2. The record indicates that the mortgaged movable property was also released from both mortgages 1606686 and 1606013, although the date and reason for such release are not evident in the record. In any event, by July of 1982, loan no. 40515-9 was unsecured, and loan no. 40514-2 was secured by a mortgage on two pieces of real estate.

On July 30, 1982, Gulfco filed a petition for executory process, seeking to foreclose on the two remaining mortgaged properties described in mortgage no. 1606013. Apparently by mistake, Gulfco attached to its petition the promissory note dated April 17, 1980, evidencing loan no. 40515-9, which was by that time an unsecured debt. The amount sued for in the executory proceeding, however, corresponds to the amount owed on loan no. 40514-2, $10,180.48, which figure is included on a pay off worksheet attached to Gulfco’s ledger for loan no. 40514-2.

Plaintiffs did not assert any defenses to the executory proceeding; they did not seek to enjoin the seizure and sale, nor did they appeal the order directing the issuance of the writ of seizure and sale. After the property was sold for the net sum of $21,086.80, plaintiffs simply tried to collect the excess proceeds informally from Gulfco and the sheriff. Gulfco refused to turn over the excess proceeds to the plaintiffs, contending that the funds were applied to the remaining balance on loan no. 40515-9.

This suit followed. Plaintiffs sought $7,805.60 as the amount in excess of $10,-180.48, plus interest and attorney’s fees, which was the amount prayed for in the executory proceeding. Not until this case was tried pursuant to this court’s remand in 1991 did the parties and the trial judge realize that the executory proceeding forced the seizure and sale of mortgaged property which secured a debt other than the debt described in the petition. The trial judge was troubled by this discrepancy and criticized the carelessness of Gulfco’s record keeping practices.

Ultimately, the trial judge determined that the proper recovery from the executo-ry proceeding should have been $7,505.23, which was alleged to be the outstanding balance owed on loan no. 40515-9, the loan described in and attached to the petition. The trial judge mentioned, but did not rely on the fact that the seized property secured loan no. 40514-2. The trial judge did not include interest and attorney’s fees as part of the amount which should have been given to Gulfco after the seizure and sale were completed.

ANALYSIS

The case of First Guaranty Bank v. Baton Rouge Petroleum Center, Inc., 529 So.2d 834, on rehearing, (La.1988), was a deficiency judgment case wherein the Supreme Court refused to allow a debtor to assert as a defense a minor procedural defect in the preceding suit for executory process. The court cited La.C.C.P. art. 2642 and stated that the proper procedures for objecting to executory process are appeal and injunction; in certain limited circumstances, the sheriff’s sale may be annulled in a subsequent direct action for nullity. The court gave the following explanation for this rule:

[I]f the assertion is that any defense which could have been raised in the exec-utory proceeding may be urged in the [1076]*1076deficiency action because the deficiency action is based upon, a part of, or a continuation of the executory proceeding, this reasoning is also fallacious. The deficiency judgment action, although related to the executory proceeding, is established by the legislated law as a separate and independent proceeding, different in concept and purpose, involving different kinds of procedure, evidence and defenses.

529 So.2d at 843. The court went on to explain the proper allegations which may be asserted in defense of a deficiency judgment action:

The debtor, on the other hand, may assert both negative and affirmative defenses against the deficiency judgment action. He may defend by demonstrating the creditor’s failure to prove one of the aforementioned elements of his case or by rebutting the existence of such an element. Additionally, the debtor may assert that an obligation is null, or that it has been modified or extinguished, but in such a case the debtor must prove the facts or acts giving rise to the nullity, modification, or extinction. La.C.C. art. 1831; La.C.C.P. art. 1005.

529 So.2d at 842. Following the Baton Rouge Petroleum case, the Second Circuit has held that a creditor may assert the defense of setoff in a deficiency judgment action even though he failed to raise such a defense in the executory proceeding. La. Association for the Blind, Inc. v. Robertson, 552 So.2d 580 (La.App.2d Cir.1989).

The case before us is not a deficiency judgment action; it is, however, related to an executory proceeding in the same way that a deficiency judgment action is.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

First Guar. Bk. v. Baton Rouge Petroleum Center, Inc.
529 So. 2d 834 (Supreme Court of Louisiana, 1988)
Lincecum v. Smith
287 So. 2d 625 (Louisiana Court of Appeal, 1974)
Moore v. Louisiana Bank & Trust Co.
528 So. 2d 606 (Louisiana Court of Appeal, 1988)
Louisiana Ass'n for the Blind v. Robertson
552 So. 2d 580 (Louisiana Court of Appeal, 1989)
Rhodes v. Gulfco Finance Co. of Lake Charles
576 So. 2d 1078 (Louisiana Court of Appeal, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
610 So. 2d 1073, 1992 La. App. LEXIS 3794, 1992 WL 364388, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rhodes-v-gulfco-finance-co-of-lake-charles-lactapp-1992.