STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
CA 06-328
THE COTTONPORT BANK
VERSUS
DD GROUP, INC. D/B/A CENTRAL FORD, ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2002-4673 HONORABLE R. RICHARD BRYANT, JR., DISTRICT JUDGE
BILLY HOWARD EZELL JUDGE
Court composed of Oswald A. Decuir, Marc T. Amy, and Billy Howard Ezell, Judges.
REVERSED AND REMANDED.
Stephen Charles Polito Henry Alan McCall Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P. P. O. Box 2900 Lake Charles, LA 70602-2900 (337) 436-9491 Counsel for Plaintiff/Appellee: The Cottonport Bank Stephen D. Wheelis Richard Alan Rozanski J.P. D’Albor Wheelis & Rozanski P. O. Box 13199 Alexandria, La 71315-3199 (318) 445-5600 Counsel for Defendants/Appellants: DD Group, Inc. Central Ford, Inc. Douglas B. Gehrig Ezell, Judge.
Douglas Gehrig appeals a trial court judgment rendered pursuant to a motion
for summary judgment which found him liable to The Cottonport Bank in the amount
of $62,364.28. Mr. Gehrig claims the trial court erred in finding that there were no
genuine issues of material fact surrounding a commercial guaranty signed by him.
For the following reasons, we reverse.
FACTS
DD Group, Inc. is a Louisiana corporation domiciled in Lake Charles,
Louisiana. It was incorporated by Douglas Gehrig in 1997, and he became one of the
directors. The other director was Donald Goodlow. DD Group applied with the
Louisiana Secretary of State to operate under the trade name Central Ford in order to
operate a Ford Motor Company automobile dealership in Avoyelles Parish, Louisiana.
Financing for this business was obtained from The Cottonport Bank on several
occasions.
The particular loan at issue in this case concerns promissory note #67006678
which was dated February 3, 1999, in the amount of $250,050.00. At the same time
a commercial guaranty was executed by Mr. Gehrig.
In 2001 Mr. Goodlow was granted a discharge of his debts by the United States
Bankruptcy Court. However, a consent judgment was signed denying the discharge
of debt owed to DD Group, Inc. and Mr. Gehrig.
On September 20, 2002, The Cottonport Bank filed suit on the above
promissory note against DD Group, Inc. d/b/a Central Ford and Mr. Gehrig. This
case was previously before this court pursuant to a writ of review on a denial of an
exception of nonjoinder of a party, Mr. Goodlow, and the denial of an exception of
no cause of action. This court found no merit to either argument. The Cottonport
1 Bank v. DD Group, Inc., 04-242 (La.App. 3 Cir. 2/2/05), 893 So.2d 171.
Subsequently, The Cottonport Bank filed a motion for summary judgment.
Finding no genuine issues of material fact concerning Mr. Gehrig’s liability pursuant
to the commercial guaranty, judgment was entered on December 8, 2005, holding Mr.
Gehrig liable to The Cottonport Bank in the amount of $62,364.28 with interest.
Attorney fees were also awarded in the amount of twenty-five percent of the sum of
principal and interest. Mr. Gehrig appeals claiming genuine issues of material fact
exist concerning the validity of the loan documents and the authority of Mr. Goodlow
to borrow the money. He also contests the amount of attorney fees.
DISCUSSION
Mr. Gehrig raises several points which he urges present genuine issues of
material fact as to his liability pursuant to the commercial guaranty form. He argues
that there are ambiguities in the documents and that Mr. Goodlow did not have
authority to borrow over $10,000.00.
Appellate courts review summary judgments de novo under the same criteria that govern the district court’s consideration of whether summary judgment is appropriate. Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d 342 (La.1991). A court must grant a motion for summary judgment “if the depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law.” LSA-C.C.P. art. 966(B). The summary judgment procedure is favored under our law. LSA-C.C.P. art. 966(A)(2).
Lemann v. Essen Lane Daiquiris, Inc., 05-1095, p. 6 (La. 3/10/96), 923 So.2d 627,
632. “Because the applicable substantive law determines materiality, whether a
particular fact in dispute is material can be seen only in light of the substantive law
applicable to the case.” Id.
A contract of guaranty is equivalent to a contract of suretyship, and the two
may be used interchangeably. The Cottonport Bank v. Reason, 01-1039 (La.App. 3
2 Cir. 12/12/01), 801 So.2d 1236. Pursuant to La.Civ.Code art. 3046, the surety can
assert any defenses to the principal obligation against the creditor that the principal
obligor could assert except lack of capacity or discharge in bankruptcy of the
principal obligor.
Mr. Gehrig claims that the documents themselves create issues of fact. The
promissory note at issue lists the borrower as “DONALD GOODLOW” and lists his
personal social security number. “D/B/A CENTRAL FORD” is then typed under
Mr. Goodlow’s name. The “PROMISE TO PAY” language then provides that
“DONALD GOODLOW (“Borrower”) promises to pay to the order of THE
COTTONPORT BANK (“Lender”).” However, in the “MULTIPLE ADVANCE
LOAN” section he is listed as “DONALD GOODLOW, PRESIDENT.” The loan
document is simply signed by Donald Goodlow with no indication of any capacity.
The commercial guaranty lists the borrower in the same manner as the
promissory note. However, in the definition of borrower it states, “DONALD
GOODLOW, D/B/A CENTRAL FORD.” While we agree the intention may have
been to bind the corporation, we cannot say it is clear from the documents.
To further his argument that there are questions of material fact surrounding
the documentation, Mr. Gehrig argues that there is a 1997 corporate resolution
limiting Mr. Goodlow’s borrowing authority on behalf of DD Group to $10,000.00.
On the other hand, The Cottonport Bank asserts that Mr. Gehrig’s actions in
executing the commercial guaranty negate any limitation in the resolution.
Pursuant to La.Civ.Code art. 2997(3), authority must be expressly given to
contract a loan. This court in South Louisiana Bank v. Williams, 591 So.2d 375, 378
(La.App. 3 Cir. 1991), writ denied, 596 So.2d 211 (La.1992), quoted from Carey
Hodges Associates, Inc. v. Continental Fidelity Corp., 264 So.2d 734, 736 (La.App.
3 1 Cir. 1972) (alteration in original), regarding a third person’s knowledge of the
agent’s authority when dealing with a corporation:
“[T]hat the person who deals with a corporation is chargeable with notice of the limitations and restrictions placed upon it by statute and is generally bound to know whether or not the person who presumes to represent the corporation and act in its name is authorized to do so. Our jurisprudence holds additionally that the person dealing with an agent is put on his guard by the fact of the person’s alleged agency alone and deals with him at his own risk.
Free access — add to your briefcase to read the full text and ask questions with AI
STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
CA 06-328
THE COTTONPORT BANK
VERSUS
DD GROUP, INC. D/B/A CENTRAL FORD, ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2002-4673 HONORABLE R. RICHARD BRYANT, JR., DISTRICT JUDGE
BILLY HOWARD EZELL JUDGE
Court composed of Oswald A. Decuir, Marc T. Amy, and Billy Howard Ezell, Judges.
REVERSED AND REMANDED.
Stephen Charles Polito Henry Alan McCall Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P. P. O. Box 2900 Lake Charles, LA 70602-2900 (337) 436-9491 Counsel for Plaintiff/Appellee: The Cottonport Bank Stephen D. Wheelis Richard Alan Rozanski J.P. D’Albor Wheelis & Rozanski P. O. Box 13199 Alexandria, La 71315-3199 (318) 445-5600 Counsel for Defendants/Appellants: DD Group, Inc. Central Ford, Inc. Douglas B. Gehrig Ezell, Judge.
Douglas Gehrig appeals a trial court judgment rendered pursuant to a motion
for summary judgment which found him liable to The Cottonport Bank in the amount
of $62,364.28. Mr. Gehrig claims the trial court erred in finding that there were no
genuine issues of material fact surrounding a commercial guaranty signed by him.
For the following reasons, we reverse.
FACTS
DD Group, Inc. is a Louisiana corporation domiciled in Lake Charles,
Louisiana. It was incorporated by Douglas Gehrig in 1997, and he became one of the
directors. The other director was Donald Goodlow. DD Group applied with the
Louisiana Secretary of State to operate under the trade name Central Ford in order to
operate a Ford Motor Company automobile dealership in Avoyelles Parish, Louisiana.
Financing for this business was obtained from The Cottonport Bank on several
occasions.
The particular loan at issue in this case concerns promissory note #67006678
which was dated February 3, 1999, in the amount of $250,050.00. At the same time
a commercial guaranty was executed by Mr. Gehrig.
In 2001 Mr. Goodlow was granted a discharge of his debts by the United States
Bankruptcy Court. However, a consent judgment was signed denying the discharge
of debt owed to DD Group, Inc. and Mr. Gehrig.
On September 20, 2002, The Cottonport Bank filed suit on the above
promissory note against DD Group, Inc. d/b/a Central Ford and Mr. Gehrig. This
case was previously before this court pursuant to a writ of review on a denial of an
exception of nonjoinder of a party, Mr. Goodlow, and the denial of an exception of
no cause of action. This court found no merit to either argument. The Cottonport
1 Bank v. DD Group, Inc., 04-242 (La.App. 3 Cir. 2/2/05), 893 So.2d 171.
Subsequently, The Cottonport Bank filed a motion for summary judgment.
Finding no genuine issues of material fact concerning Mr. Gehrig’s liability pursuant
to the commercial guaranty, judgment was entered on December 8, 2005, holding Mr.
Gehrig liable to The Cottonport Bank in the amount of $62,364.28 with interest.
Attorney fees were also awarded in the amount of twenty-five percent of the sum of
principal and interest. Mr. Gehrig appeals claiming genuine issues of material fact
exist concerning the validity of the loan documents and the authority of Mr. Goodlow
to borrow the money. He also contests the amount of attorney fees.
DISCUSSION
Mr. Gehrig raises several points which he urges present genuine issues of
material fact as to his liability pursuant to the commercial guaranty form. He argues
that there are ambiguities in the documents and that Mr. Goodlow did not have
authority to borrow over $10,000.00.
Appellate courts review summary judgments de novo under the same criteria that govern the district court’s consideration of whether summary judgment is appropriate. Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d 342 (La.1991). A court must grant a motion for summary judgment “if the depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law.” LSA-C.C.P. art. 966(B). The summary judgment procedure is favored under our law. LSA-C.C.P. art. 966(A)(2).
Lemann v. Essen Lane Daiquiris, Inc., 05-1095, p. 6 (La. 3/10/96), 923 So.2d 627,
632. “Because the applicable substantive law determines materiality, whether a
particular fact in dispute is material can be seen only in light of the substantive law
applicable to the case.” Id.
A contract of guaranty is equivalent to a contract of suretyship, and the two
may be used interchangeably. The Cottonport Bank v. Reason, 01-1039 (La.App. 3
2 Cir. 12/12/01), 801 So.2d 1236. Pursuant to La.Civ.Code art. 3046, the surety can
assert any defenses to the principal obligation against the creditor that the principal
obligor could assert except lack of capacity or discharge in bankruptcy of the
principal obligor.
Mr. Gehrig claims that the documents themselves create issues of fact. The
promissory note at issue lists the borrower as “DONALD GOODLOW” and lists his
personal social security number. “D/B/A CENTRAL FORD” is then typed under
Mr. Goodlow’s name. The “PROMISE TO PAY” language then provides that
“DONALD GOODLOW (“Borrower”) promises to pay to the order of THE
COTTONPORT BANK (“Lender”).” However, in the “MULTIPLE ADVANCE
LOAN” section he is listed as “DONALD GOODLOW, PRESIDENT.” The loan
document is simply signed by Donald Goodlow with no indication of any capacity.
The commercial guaranty lists the borrower in the same manner as the
promissory note. However, in the definition of borrower it states, “DONALD
GOODLOW, D/B/A CENTRAL FORD.” While we agree the intention may have
been to bind the corporation, we cannot say it is clear from the documents.
To further his argument that there are questions of material fact surrounding
the documentation, Mr. Gehrig argues that there is a 1997 corporate resolution
limiting Mr. Goodlow’s borrowing authority on behalf of DD Group to $10,000.00.
On the other hand, The Cottonport Bank asserts that Mr. Gehrig’s actions in
executing the commercial guaranty negate any limitation in the resolution.
Pursuant to La.Civ.Code art. 2997(3), authority must be expressly given to
contract a loan. This court in South Louisiana Bank v. Williams, 591 So.2d 375, 378
(La.App. 3 Cir. 1991), writ denied, 596 So.2d 211 (La.1992), quoted from Carey
Hodges Associates, Inc. v. Continental Fidelity Corp., 264 So.2d 734, 736 (La.App.
3 1 Cir. 1972) (alteration in original), regarding a third person’s knowledge of the
agent’s authority when dealing with a corporation:
“[T]hat the person who deals with a corporation is chargeable with notice of the limitations and restrictions placed upon it by statute and is generally bound to know whether or not the person who presumes to represent the corporation and act in its name is authorized to do so. Our jurisprudence holds additionally that the person dealing with an agent is put on his guard by the fact of the person’s alleged agency alone and deals with him at his own risk. It is his duty to inquire into and ascertain the nature and extent of his powers as an agent and determine whether or not the act or contract about to be consummated comes within the province of his agency and will or will not bind his principal.”
The Cottonport Bank admits that it has a corporate resolution specifically
authorizing Donald Goodlow as president to borrow $170,050.00 on a previous loan.
The record is devoid of any such authority for the loan at dispute in this case.
However, while there is no resolution providing for Mr. Goodlow’s authority to
borrow, the absence of a resolution is not fatal. Greenleaf Plantation, Inc. v. Kieffer,
403 So.2d 100 (La.App. 3 Cir.), writ denied, 409 So.2d 675 (La.1981). This court in
Greenleaf held that pursuant to the doctrines of estoppel, informal ratification, and
apparent authority, the corporation was bound by the actions of its president in
expressing an intent to exercise an option to purchase.
We do agree with The Cottonport Bank that there is no evidence that it owed
a fiduciary duty to Mr. Gehrig. “Pursuant to La.R.S. 6:1124, no fiduciary relationship
exists between a bank and its customers or third parties unless it is agreed in writing
that a relationship of agency or trust exists between the parties.” Singleton v.
American Sec. Bank of Ville Platte, Inc., 02-1109, p. 11 (La.App. 3 Cir. 4/30/03), 849
So.2d 72, 78.
However, the record does not establish that Mr. Goodlow had the authority to
borrow money on behalf of Central Ford. While there is no doubt that Mr. Gehrig
signed a commercial guaranty securing promissory note #67006678, we do not know
4 if he was securing a loan on behalf of the corporation or for Mr. Goodlow personally.
Based on this determination, there may or may not be different defenses that Mr.
Gehrig can raise as a guarantor of the loan.
We find that there are genuine issues of material fact yet to be determined.
While the trial court may still find Mr. Gehrig responsible for the balance on this loan
pursuant to the commercial guaranty, there are still too many facts at issue, making
summary judgment inappropriate. With this finding, there is no need to discuss the
issue of the amount of attorney fees awarded.
For these reasons the judgment of the trial court granting The Cottonport
Bank’s motion for summary judgment against Douglas Gehrig is reversed, and the
case is remanded for further proceedings. Costs of this appeal are assessed to The
Cottonport Bank.