952582 La.App. 1 Cir. 9/27/96, Alco Collections, Inc. v. Poirier

Decision Date27 September 1996
Citation680 So.2d 735
PartiesCir
CourtCourt of Appeal of Louisiana — District of US

Garth J. Ridge, Baton Rouge, for Defendant/Relator, Dixie V. Poirier.

Charles E. Daspit, Baton Rouge, for Plaintiff/Respondent, Alco Collections, Inc.

Before CARTER, PARRO and McDONALD, 1 JJ.

[952582 La.App. 1 Cir. 2] CARTER, Judge.

The issue presented in this writ application is whether a licensed collection agency may file a suit, in its own name, on a debt allegedly assigned to it on a contingency fee basis or whether such action constitutes the unauthorized practice of law.

BACKGROUND

In July, 1993, defendant, Dixie V. Poirier, executed a lease for an apartment in the Savoy Plaza Apartments in Baton Rouge, Louisiana. Poirier allegedly defaulted on her lease and owed the Savoy Plaza Apartments monthly rent of $535.00 for the months of November, 1993, through January, 1994, for a total of $1,605.00. In addition, Poirier allegedly owed the Savoy Plaza Apartments late fees of $50.00.

On February 8, 1994, the Savoy Plaza Apartments executed an instrument entitled "Assignment," wherein the Savoy Plaza Apartments allegedly assigned to Alco Collections, Inc. (Alco), a licensed collection agency, the debt owed to it by Poirier. The assignment provided, in part, as follows:

SAVOY PLAZA APARTMENTS, (hereinafter "Client"), hereby assigns unto Alco Collections, Inc. (hereinafter "Alco"), the following debt, presently owed to Client: DIXIE V. POIRER # 264 As consideration for the above assignment, ALCO hereby agrees to make a good faith effort to collect this debt, including the filing of suit in the appropriate court of law in order to enforce that debt, and remit to client 50.00% of all sums collected through suit or otherwise on said debt.

FACTS

On February 17, 1994, Alco, through its president, James Allen, filed a statement of claim in the small claims division of the Baton Rouge City Court. 2 In its pleading, [952582 La.App. 1 Cir. 3] Alco alleged the Savoy Plaza Apartments assigned Alco the debt owed to it by Poirier. 3 Alco sought recovery of the $1,655.00 due from Poirier, together with legal interest from date of judicial demand and all costs of the proceedings.

Poirier answered Alco's petition, denying that she was in default on her lease with the Savoy Plaza Apartments and denying that the Savoy Plaza Apartments had validly assigned her account to Alco. In further answering Alco's petition, Poirier alleged that Alco's claim is void and against public policy in that the filing of the suit on the allegedly assigned claim by Alco constituted the unauthorized practice of law in violation of LSA-R.S. 37:212 A and C.

Poirier also requested that the matter be transferred from the small claims division to the regular docket of the Baton Rouge City Court. By order, dated March 24, 1994, the matter was transferred to the regular docket of the Baton Rouge City Court. Thereafter, Alco retained the services of an attorney to assume its representation in the proceedings.

In response to discovery requests, a copy of the alleged assignment was filed into the record. Poirier filed a peremptory exception pleading the objection of no right of action. In her exception, Poirier alleged that the Savoy Plaza Apartments assigned her account to Alco for a 50% contingency fee, that the assignment specifically authorized Alco to file suit on the debt allegedly owed by her, and that Alco, in turn, filed suit against her pursuant to that assignment. Poirier reasoned that the assignment is absolutely null in that it authorized Alco, a lay entity, to take legal action to collect her account for the Savoy Plaza Apartments.

After a hearing, on November 21, 1995, the city court judge denied Poirier's exception pleading the objection of no right of action.

[952582 La.App. 1 Cir. 4] From this adverse judgment, Poirier filed an application for supervisory writs with this court. By order, dated April 30, 1996, this court granted a writ of certiorari. The issue presented in this supervisory writ is whether the court erred in denying the exception pleading the objection of no right of action, thereby allowing a licensed collection agency to file a suit, in its own name, on a debt assigned to it on a contingency fee basis.

NO RIGHT OF ACTION

The peremptory exception pleading the objection of no right of action tests whether the plaintiff has any interest in judicially enforcing the right asserted. LSA-C.C.P. art. 927 A(5); Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 95-1784 p. 5 (La.App. 1st Cir. 4/4/96); 672 So.2d 356, 359; Jones v. McDonald's Corporation, 618 So.2d 992, 995 (La.App. 1st Cir.1993); Duplessis Cadillac, Inc. v. Creative Credit Services, Inc., 597 So.2d 1155, 1157 (La.App. 1st Cir.1992). The essential function of the objection is to provide a threshold device which terminates suits brought by one who has no interest in enforcing judicially the right asserted. Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 672 So.2d at 359; Jones v. McDonald's Corporation, 618 So.2d at 995. Simply stated, the exception pleading the objection of no right of action tests whether this particular plaintiff, as a matter of law, has an interest in the claim sued on. Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 672 So.2d at 359; Jones v. McDonald's Corporation, 618 So.2d at 995; Mercier v. Flugence, 408 So.2d 52, 53 (La.App. 3rd Cir.1981).

Evidence supporting or controverting an objection of no right of action is admissible, but objections of no right of action cannot be used simply because there may be a valid defense to the proceeding. Bank of New Roads v. Livonia South, Inc., 527 So.2d 1132, 1135 (La.App. 1st Cir.), writ denied, 532 So.2d 150 (La.1988). Generally, a party raising a peremptory exception bears the burden of proof. See Spott v. Otis Elevator Company, 601 So.2d 1355, 1361 (La.1992). To prevail on a peremptory exception pleading the objection of no right of action, the defendant must show that the plaintiff does not have an interest in the subject matter of the suit or legal capacity to proceed with the suit. Falco Lime, Inc. v. Plaquemine Contracting Co., [952582 La.App. 1 Cir. 5] Inc., 672 So.2d at 359; Jones v. McDonald's Corporation, 618 So.2d at 995; Moyers v. Altmann, 594 So.2d 6, 8 (La.App. 3rd Cir.1992).

In the instant case, in her peremptory exception pleading the objection of no right of action, Poirier alleged that the Savoy Plaza Apartments assigned her debt to Alco for a 50% contingency fee and that the assignment specifically authorized Alco to engage in the filing of a suit. Poirier contended that such assignment is absolutely null and void in that it authorizes a lay entity to take legal action to enforce a debt in violation of the prohibition against the unauthorized practice of law, citing Andrus v. Guillot, 160 So.2d 804 (La.App. 3rd Cir.1964).

In opposition to the exception, Alco contended that, although the Third Circuit Court of Appeal in Andrus interpreted LSA-R.S. 37:212 to prohibit a collection agency from suing a debtor on a debt which had been assigned to it by the original creditor on a contingency fee basis, that case is not binding in the instant case. Moreover, Alco reasoned that Andrus has been legislatively overruled by the enactment of the Collection Agency Regulation Act, LSA-R.S. 9:3576.1 et seq. Alco contended that LSA-R.S. 9:3576.19 clearly authorizes a licensed collection agency to take an assignment of a claim of its client and, pursuant to that assignment, to file suit to collect that claim for the client.

The city court judge denied Poirier's exception pleading the objection of no right of action, thereby authorizing Alco to proceed with the collection of the debt assigned to it by the Savoy Plaza Apartments.

In order to determine whether Alco has a right of action, we must examine the act of assignment to determine what rights, if any, were transferred to Alco by the Savoy Plaza Apartments.

INTERPRETATION OF THE ACT OF ASSIGNMENT

An assignment or transfer of credits is a species of sale. Shell Western E & P, Inc. v. Fluid Driers, Inc., 572 So.2d 323, 325 (La.App. 3rd Cir.1990), writ denied, 575 So.2d 823 (La.1991). The contract of sale is an agreement by which one gives a thing for a price in current money, and the other gives the price in order to have the thing itself. LSA-C.C. art. 2439. A sale is perfect between the parties when they agree (consent) as to the thing sold and the price. LSA-C.C. art. 2439; Evans v. Graves Pontiac-Buick-[952582 La.App. 1 Cir. 6] Truck, Inc., 576 So.2d 1025, 1028 (La.App. 1st Cir.), writ denied, 581 So.2d 687 (La.1991); DB Orban Company v. Lakco Pipe & Supply, Inc., 496 So.2d 1382, 1384 (La.App. 3rd Cir.1986). In a sale, it is essential that the price be fixed and determined between the parties, otherwise no sale exists. LSA-C.C. art. 2464; DB Orban Company v. Lakco Pipe & Supply, Inc., 496 So.2d at 1384.

Generally, legal agreements have the effect of law upon the parties, and, as they bind themselves, they shall be held to a full performance of the obligations flowing therefrom. Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 672 So.2d at 360; Belle Pass Terminal, Inc. v. Jolin, Inc., 92-1544 p. 16 (La.App. 1st Cir. 3/11/94); 634 So.2d 466, 479, writ denied, 94-0906 (La. 6/17/94); 638 So.2d 1094; Spohrer v. Spohrer, 610 So.2d 849, 851-52 (La.App. 1st Cir.1992). In other words, a contract between the parties is the law between them, and the courts are obligated to give legal effect to such contracts according to true intent of the parties. LSA-C.C. art.2045; Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 672 So.2d at 360; Martin Exploration Company v. Amoco Production Company, 93-0349 p. 4 (La.App. 1st Cir. 5/20/94); 637 So.2d 1202, 1205, writ denied, 94-2003 (La. 11/4/94); 644 So.2d 1048; Spohrer v. Spohrer, 610 So.2d at 852. ...

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