American Furniture Co., Inc. v. International Accommodations Supply

• Decision Date: 11 March 1981
• Docket Number: No. 79-2757,79-2757
• Citation: 721 F.2d 478
• Parties: AMERICAN FURNITURE COMPANY, INC. d/b/a American of Martinsville, Plaintiff- Appellee, v. INTERNATIONAL ACCOMMODATIONS SUPPLY, etc., et al., Defendants, Louisiana State Employees' Retirement System, Defendant-Appellant. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 478

721 F.2d 478

AMERICAN FURNITURE COMPANY, INC. d/b/a American of Martinsville, Plaintiff- Appellee, v. INTERNATIONAL ACCOMMODATIONS SUPPLY, etc., et al., Defendants Louisiana State Employees' Retirement System, Defendant-Appellant.

No. 79-2757.

United States Court of Appeals Fifth Circuit.

Unit A

March 11, 1981.

William J. Guste, Jr., Atty.Gen., Louis M. Jones, New Orleans, La., for defendant-appellant.

Young & Mars, Theodore A. Mars, Jr., William Waller Young, III, New Orleans, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before GOLDBERG, POLITZ and JOHNSON, Circuit Judges.

POLITZ, Circuit Judge:

The Louisiana State Employees' Retirement System (LASER) appeals a judgment ranking a vendor's privilege asserted by plaintiff, American Furniture Co., Inc. (American), above LASER's mortgage and granting American judgment against LASER for $93,601.33, together with interest, costs and attorney's fees. Finding that this controversy has been previously resolved by the state courts, we reverse and dismiss American's complaint.

Context Facts

In March of 1973 American, a Virginia corporation, sold and delivered certain furniture and furnishings for use in the International American Red Carpet Inn (the Inn), Metairie, Louisiana. The items were invoiced to International American Co., Inc., d/b/a International Accommodations Supply, a Louisiana corporation solely owned by Gaspar Occhipinti.

The Inn belonged to Campo Realty Co., Inc., a Louisiana corporation solely owned by John J. Campo, who also solely owned Campo Hardware Co., Inc., another Louisiana corporation. American declined to ship the furniture until payment was guaranteed by Mr. Campo and Campo Hardware. After these guarantees were executed, American delivered the furniture to the Inn and into the possession of Campo Realty.

Mr. Campo incorporated Campo Realty for the express purpose of building the Inn and borrowing the funds necessary for the project. International American was organized by Messrs. Campo and Occhipinti to serve as the vehicle for obtaining wholesale prices for the furniture, fixtures and supplies needed in the Inn. Mr. Campo represented International American in the negotiations with American.

In January and February 1974, Borg-Warner Acceptance Corporation loaned Campo Realty substantial sums which were secured by chattel mortgages on the contents of the Inn, including the furniture subject to this suit. In July 1974, Campo Realty mortgaged the Inn and all of its furniture and appurtenances to LASER as security for a four million dollar loan. Borg-Warner Acceptance Corporation subordinated its chattel mortgages to the LASER mortgage.

The Course of Litigation

Payments due LASER and American became delinquent and both creditors repaired to the judicial arena. In November 1974, American invoked diversity jurisdiction and filed suit on open account against International Accommodations Supply, Campo Hardware and John Campo, seeking recognition of its vendor's privilege and judgment for $93,601.33, plus interest, costs and attorney's fees. In December 1974 LASER filed suit via executiva, foreclosing on its mortgage on the Inn and its contents, in suit entitled "Louisiana State Employees' Retirement System vs. Campo Realty Company, Inc.," bearing number 170-174 on the docket of the 24th Judicial District Court, Jefferson Parish, Louisiana. The Sheriff seized the Inn and its contents.

A number of creditors of the Inn, including American, intervened in the foreclosure action. Early in 1975 American filed a petition and then a supplemental petition in intervention in the state court proceedings, asking that its vendor's privilege be recognized and held to prime LASER's mortgage, and that its claim for the balance of the purchase price, interest, costs and attorney's fees, be honored.

The judicial processes continued in both fora. In January 1975, as a corollary to its state court intervention, American filed a supplemental and amended petition in the instant diversity suit, reiterating its original petition and making Campo Realty and LASER additional defendants. In its prayer American sought recognition of its vendor's privilege and a declaration that its privilege primed all mortgages on the property. American also sought judgment against the original three defendants and the additional two defendants for $93,601.33, plus interest, costs and attorney's fees. ¹

State-Federal Parallel

With the intervention by American in the state court foreclosure proceeding and its naming of LASER as an additional defendant in the open account suit in federal district court, we see the alignment of parties and espousal of issues running parallel in the state and federal courts. The judicial sauce thickens when in December 1975, American caused the Marshal to seize the furniture which was already under seizure by the Sheriff in LASER's foreclosure suit. About ten months later, in September 1976, LASER moved for release of the federal seizure and posted a bond as security for the release. After securing the release, the state foreclosure suit was again put in motion. Ultimately, bidding from the vantage of its mortgage position, LASER purchased the Inn at Sheriff's sale.

The judicial wheels continue to turn, grinding slowly but, as has been said, exceedingly fine. The state district court considered the various interventions and found that one, the intervention by Robertson Factories, Inc., primed LASER's mortgage. By judgment rendered May 2, 1978, the state district court honored that privilege. As to the claims of the other intervenors, including American, the state district judge found: "The other claims brought by intervenors and all other claims rank after the chattel mortgage held by plaintiff; said claims to such movable items being lost." Pursuant to this finding the state court decreed: "IT IS FURTHER ORDERED that all other claims be and they are hereby denied." The decision as it related to Robertson Factories was reviewed and reversed by the Fourth Circuit Court of Appeal of Louisiana on May 4, 1979 (on rehearing March 11, 1980). The result of the state district court judgment, as reversed in part on appeal, is the upholding of the primacy of LASER's mortgage over all intervenors, including American. Louisiana State Emp. Retirement v. Campo Rlty., 380 So.2d 1377 (La.App.1980).

Meanwhile, on the federal side of the ledger, hearings were held before the magistrate and district court on various motions, including a motion to dismiss filed by LASER and a motion for summary judgment filed by American. Both were denied. The matter proceeded toward trial on the merits but prior to trial, a judgment based on a stipulation of some of the parties was entered on February 14, 1977. This judgment was in favor of American and against International Accommodations Supply, Campo Hardware and Campo Realty, ² for $93,601.33 plus interest, costs and contractual attorney's fees of 25%.

After this stipulation, the only issue remaining in the diversity suit was the dispute between American and LASER, i.e., whose claim primed, American's unrecorded vendor's privilege or LASER's later recorded mortgage. That issue was tried to the magistrate and reviewed by the district judge, who modified and adopted the magistrate's findings. On July 2, 1979, judgment declaring that American's vendor's privilege primed LASER's mortgage and granting American judgment against LASER for $93,601.33, plus interest, costs and attorney's fees was entered. LASER noticed its appeal, thereafter filing a Motion to Correct Judgment on which no action is apparent. The district court stayed its judgment pending appeal.

LASER assigns multiple errors on appeal. We pretermit LASER's specifications of error for we find in this record an uncontroverted state of facts mandating reversal of the district court's judgment.

The record before us is replete with references to the state court proceedings, from the filing of the foreclosure suit up through and including the opinion on hearing rendered by the Louisiana Fourth Circuit...