McLemore v. Landry, Civ. A. No. 86-238-B

Citation687 F. Supp. 1038
Decision Date03 June 1988
Docket Number86-359-B,87-401-B and 86-825-B.,Civ. A. No. 86-238-B
PartiesDr. Henry McLEMORE, II, et al. v. Paul J. LANDRY, et al. SUN BELT FEDERAL BANK, F.S.B. v. RIVER VILLA PARTNERSHIP, et al. Dr. David WALLIN, et al. v. FSC SECURITIES CORPORATION, et al. Dr. Lawrence TUJAGUE, et al. v. Paul J. LANDRY, et al.
CourtUnited States District Courts. 5th Circuit. Middle District of Louisiana

Thomas H. Benton, Benton, Benton & Benton, Richard C. Odom, Baton Rouge, La., for plaintiffs.

John Dale Powers, Powers & Vaughn, Clegg, Baton Rouge, La., J.P. Hebert, Liskow & Lewis, Lafayette, La., for Sun Belt Federal Bank and F.S.L.I.C.

Mark D. Mese, Ray C. Dawson, Franklin, Moore & Walsh, Baton Rouge, La., for Nat. Union Bonding Co.

W. Shelby McKenzie, T/A, John F. McDermott, Taylor, Porter, Brooks & Phillips, Baton Rouge, La., for New England Ins. Co. and New England Reinsurance Corp.

Kevin Patrick Monahan, Robert Felton Monahan, Vinet & Monahan, Baton Rouge, La., for Interplan Development.

Richard A. Curry, Rubin, Curry, Colvin & Joseph, Baton Rouge, La., E. Keith Carter, Shreveport, La., for FSC Securities.

William E. Wright, Jr., David Banowetz, Jr. T/A, Marie Breaux Stroud, New Orleans, La., for Pelican Homstead.

J. Rodney Ryan, Jr., Gary, Field, Landry, Dornier, L.C., Baton Rouge, La., for Cecil Cavanaugh and Bernard Robins & Cavanaugh, Cert. Public Accounts.

OPINION

POLOZOLA, District Judge.

This action was originally filed in the Nineteenth Judicial District Court for the Parish of East Baton Rouge. In the state court suit, Sun Belt Federal Bank, F.S.B. ("Sun Belt") filed suit against the defendants River Villa, a Louisiana partnership, Interplan Development, Inc., a Louisiana corporation, and Drs. Henry McLemore, Thomas Jenkins, Leon Lastraps III, Gerald Murdock, Francis Elias, Robert Lyons, Lawrence Tujague, William O'Neal, David Wallin, Patrick Breaux, William Harkrider, Lawrence Broussard and also against Charles Smith and Gerald Schiff in connection with a promissory note and mortgage executed on behalf of these defendants by Paul J. Landry on December 10, 1984, in the original amount of $1,585,000.1 After Sun Belt closed, the Federal Savings and Loan Insurance Corporation ("FSLIC") was substituted as a party plaintiff in its capacity as a duly appointed receiver of Sun Belt Federal Bank, F.S.B. Thereafter, the suit was removed to this court. The matter is now before the court on cross motions for summary judgment filed by the FSLIC as well as River Villa Partnership. The court has heard oral arguments in this case and for reasons which follow finds that the motion of FSLIC for summary judgment should be granted. The court further finds that the motion of River Villa Partnership for summary judgment should be denied.

The facts in this case are not in dispute. Paul J. Landry induced the partners of River Villa Partnership to execute individual powers of attorney authorizing Landry to perfect an exchange of partnership properties. The powers of attorney gave Landry authority to exchange False River Properties, owned by the partnership, for certain properties located in Gonzales, Louisiana, which were owned by a third party. Landry was also authorized in the power of attorney to borrow $1,550,000.00 from Sun Belt on behalf of the River Villa Partnership. It is clear that both the exchange and the financing were to be done "all on such terms and conditions as the agent deems fit and proper in his sole discretion."2 Sun Belt then made a loan to River Villa Partnership and its individual partners on December 10, 1984. This loan was evidenced by a promissory note executed by Landry as president of Interplan Development, Inc., the managing partner of River Villa Partnership, and as the attorney in fact for the individual partners by virtue of certain powers of attorney executed by those individual partners in favor of Landry. As security for the loan by Sun Belt to River Villa and its partners, Landry, as attorney in fact for the partners and the partnership and as the authorized representative of the managing partner, Interplan Development, Inc., executed the following documents: (1) an authentic act of collateral mortgage dated December 10, 1984, affecting certain tracts of land located in Gonzales, Louisiana; (2) a collateral mortgage note dated December 10, 1984, in the principal amount of $1,900,000.00 payable on demand and made payable to the order of Itself; (3) a promissory note dated December 10, 1984, in the amount of $1,585,000.00 payable to the order of Sun Belt Federal Bank, F.S.B.; (4) a collateral pledge agreement whereby the aforesaid collateral mortgage note was pledged and delivered to Sun Belt as security for any and all loans made by Sun Belt to River Villa; and (5) a notarial act of assignment of leases and rents dated December 10, 1984.

A review of the record reveals that Landry signed the above documents and accomplished the exchange, but not according to certain side agreements Landry had made with the partners.3 The properties received by River Villa were poor investments. Furthermore, there is evidence in the record which strongly suggests the appearance of fraud by Landry in connection with his activities in this transaction. Thereafter, the partnership stopped payment on the notes and Sun Belt filed suit in state court. When the partnership declined to make payments on the note, the entire loan by Sun Belt to River Villa became due on May 1, 1985.4 The balance due on the note is $1,584,018.45, together with accrued interest through January 27, 1988 in the sum of $577,670.86. The per diem interest accrues at the rate of $592.00 per day.

In its motion for summary judgment, FSLIC seeks judgment in accordance with the notes and affidavits attached thereto and seeks recognition of the mortgages which were previously described above. However, FSLIC does not seek at this time to impose joint and solidary liability on Dr. Francis Elias, Dr. Patrick Breaux and Dr. David Wallin because of their apparent failure to execute powers of attorney in favor of Landry. Insofar as these three defendants are concerned, the Receiver seeks judgment in its favor against these individuals for their pro rata and virile shares.

River Villa strenuously opposes FSLIC's motion for summary judgment. River Villa contends that FSLIC cannot recover on the notes as a matter of law because the powers of attorney authorizing the notes are defective. River Villa further contends that even if the powers of attorney are not defective, FSLIC is estopped from recovery because it bought the notes with knowledge of their fraudulent origin. These contentions are without merit.

The record in this case fails to reveal how the powers of attorney executed in favor of Landry were invalid. A power of attorney need not be in authentic form. See Louisiana C.C. Article 2992; Weinhardt v. Weinhardt, 214 So.2d 254 (La.App. 4th Cir.1968) appl. denied 253 La. 57, 216 So.2d 305 (1968). Thus, the fact that Landry appeared as a witness on the powers of attorney is immaterial. Under Louisiana law a power of attorney must be express in order to buy or sell property, but it need not contain a specific property description. Louisiana C.C. Article 2997; Resweber v. Daspit, 240 So.2d 376 (La.App. 3rd Cir.1970). Thus, the absence of the property description referred to as Exhibit B in the power of attorney is not fatal to the agreement. Furthermore, the inadvertent reversal of the captions to the property descriptions...

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  • McLemore v. Landry
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • April 6, 1990
    ...Villa and its individual partners liable, in solido, on the promissory note and recognizing the collateral mortgage. 4 McLemore v. Landry, 687 F.Supp. 1038 (M.D.La.1988). 5 While post-judgment motions from both River Villa and the FSLIC were pending River Villa moved to file a compulsory co......

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