C & J Contractors v. American Bank & Trust Co.

• Decision Date: 21 February 1990
• Docket Number: Nos. CA,s. CA
• Citation: 559 So.2d 810
• Court: Court of Appeal of Louisiana — District of US
• Parties: C & J CONTRACTORS v. AMERICAN BANK & TRUST CO., et al. BARBER BROTHERS CONTRACTING CO., INC. v. SANTA MARIA LAND COMPANY, et al. ANDERSON DUNHAM, INC. v. SANTA MARIA GOLF CLUB, et al. GLOBE HEATING, PLUMBING AND AIR CONDITIONING, INC. v. SANTA MARIA GOLF CLUB, et al. Herschel HOFFPAUIR, etc. v. SANTA MARIA MANAGEMENT CORP., et al. The BOLTON CO., INC. v. SANTA MARIA GOLF CLUB, et al. BATON ROUGE LUMBER CO., INC. v. SMITH AND DUPREE DEVELOPMENT CORP., et al. 88 1728--CA 88 1734.

Page 810

559 So.2d 810

C & J CONTRACTORS v. AMERICAN BANK & TRUST CO., et al.

BARBER BROTHERS CONTRACTING CO., INC. v. SANTA MARIA LAND COMPANY, et al.

ANDERSON DUNHAM, INC. v. SANTA MARIA GOLF CLUB, et al.

GLOBE HEATING, PLUMBING AND AIR CONDITIONING, INC. v. SANTA MARIA GOLF CLUB, et al.

Herschel HOFFPAUIR, etc. v. SANTA MARIA MANAGEMENT CORP., et al.

The BOLTON CO., INC. v. SANTA MARIA GOLF CLUB, et al.

BATON ROUGE LUMBER CO., INC. v. SMITH AND DUPREE DEVELOPMENT CORP., et al.

Nos. CA 88 1728--CA 88 1734.

Court of Appeal of Louisiana First Circuit.

Feb. 21, 1990.

Concurring and Dissenting Opinion of Judge Lanier March 1, 1990.

Rehearing Denied May 15, 1990.

Writs Denied June 22, 1990.

Charles Watts, Baton Rouge, for plaintiff-appellee C & J Contractors, Inc.

Guy Modica, Baton Rouge, for plaintiff-appellee Anderson-Dunham, Inc. Rodolfo J. Aguilar, Jr., Baton Rouge, Paul Anderson, New Orleans, for defendant-appellant American Bank and Trust Co.

Lawrence Durant, Baton Rouge, for plaintiff-appellee The Bolton Co., Inc.

John Fetzer, Baton Rouge, for plaintiff-appellee Barber Bros. Contracting Co.

James Ross, Baton Rouge, for plaintiff-appellee Herschel Hoffpauir d/b/a Herschel Hoffpauir & Associates.

Craig Kaster, Baton Rouge, for plaintiff-appellee Globe Plumbing Heating & Air Conditioning, AAA Rental-All, Inc., RL Buckle Co., Inc., Montgomery Elevator, RLB Hollow Metal and Specialty Co., and Vulcraft.

Lee Herrinton, Baton Rouge, for defendant-appellee Santa Maria Golf Club.

Martin Schott, Baton Rouge, for defendant-appellee Ronald J. Smith, and Charles

B. Dupree, Jr.

Carey Holliday, Baton Rouge, for defendant-appellee Kesler Intern. Corp.

Ann Halpen, Baton Rouge.

William Finn, New Orleans.

John Brady, Baton Rouge, for plaintiff-appellee Baton Rouge Lumber Co., Inc.

Before EDWARDS, LANIER and FOIL, JJ.

EDWARDS, Judge.

American Bank and Trust Company (AmBank) appeals the judgments of the trial court, which held that numerous liens were superior to AmBank's mortgage. We affirm in part and reverse and remand in part.

In 1985, Santa Maria Golf Club Partnership (Santa Maria) contracted for the construction of a golf course on Santa Maria property. In the summer of 1985, C & J Contractors, Inc. (C & J) began the work of building the golf course, including digging lakes and constructing tees, fairways, greens, and bunkers.

AmBank holds a collateral mortgage note, dated January 2, 1986, in the sum of ten million dollars, secured by a collateral mortgage, of the same date, on the Santa Maria property. The collateral mortgage was recorded January 2, 1986. AmBank obtained a site inspection or "no work" affidavit from a registered land surveyor, which attested that he had inspected the immovable property on January 3, 1986, and that, as of that date, work had not commenced and materials had not been placed on the site. The affidavit was recorded on the same day.

During 1986, liens were filed against the property by:

1. C & J;

2. Barber Brothers Contracting Co., Inc. (Barber);

3. Anderson Dunham, Inc. (Anderson);

4. Globe Heating, Plumbing and Air Conditioning, Inc. (Globe);

5. R.L. Buckle Company, Inc. (Buckle);

6. Central Erectors, Inc. (Central);

7. R L B Hollow Metal & Specialty Company, Inc. (RLB);

8. AAA--Rent-All, Inc. (AAA);

9. Vulcraft;

10. Montgomery Elevator Company (Montgomery);

11. Herschel Hoffpauir d/b/a Herschel Hoffpauir and Associates, Architect (Hoffpauir);

12. The Bolton Co., Inc. (Bolton);

13. LeBlanc's Tree & Stump Removal, Inc. (LeBlanc);

14. Baton Rouge Lumber Company, Inc. (Baton Rouge Lumber); and,

15. Kesler International Corporation (Kesler).

The lienholders also filed suits asking for judgments in their favor in the full sums owed and that the privileges on the property be recognized.

C & J filed an action for declaratory judgment on December 8, 1986, against multiple parties appearing to hold security interests in the Santa Maria land. C & J sought a determination of the ranking of the liens. All of the above-named lienholders were either named defendants in the suit, had their suits seeking recognition of the privileges consolidated with the suit for declaratory judgment, or both. The principal defendant on the ranking issue was AmBank. The trial court rendered judgments in favor of some of the lienholders recognizing their liens. AmBank was notified of a May 11, 1988, hearing during which stipulations were entered into by several lienholders and Santa Maria. The hearing resulted in stipulated judgments. AmBank did not attend, but agreed to submit the ranking issue to the trial court.

The trial court, by judgment rendered on July 12, 1988, and signed on July 18, 1988, held that the liens of C & J, Barber, Kesler, Anderson, Globe, AAA, LeBlanc, Buckle, RLB, Baton Rouge Lumber, Bolton, and Hoffpauir "to the extent those liens have been perfected pursuant to the provisions of the Private Works Act ..." were "superior to that of the mortgage held by American Bank...." In its written reasons for judgment, the trial court found that AmBank had actual knowledge that the construction of the golf course had begun prior to the recordation of the mortgage. Therefore, the "no work" affidavit could not be relied upon by AmBank. The court agreed with AmBank's argument that work done in preparation for the construction does not establish a privilege pursuant to LSA-R.S. 9:4808(C). However, the trial court also found that "[t]he 'dirt work' done before January 2, 1986, was not done in 'preparation for the construction ...', but was the actual work performed for the construction of the golf course." By amended judgment, signed on November 18, 1988, the trial court added three lienholders, Montgomery, Vulcraft, and Central, that had been inadvertently left out of the July 18 judgment.

AmBank appeals the judgments of July 18th and November 18th. Baton Rouge Lumber filed a motion to dismiss the appeal. The motion is denied. ¹

AmBank makes the following arguments:

1. AmBank did not have actual knowledge that the work had begun;

2. The sworn statements of Frank Martty, Ronald Smith, and Charles Dupree were improperly considered by the court in rendering its decision;

3. AmBank should be allowed to rely on the "no work" affidavit;

4. The "dirt work" done by C & J did not constitute work begun and did not accord a privilege under LSA-R.S. 9:4808(C);

5. The lienholders did not prove their liens were valid or superior to AmBank's mortgage; and,

6. The claims of the lienholders had no effect as to third parties because the lienholders failed to file timely and adequate notices of lis pendens as required by LSA-R.S. 9:4833(F).

The case before us is governed by provisions of the Private Works Act, LSA-R.S. 9:4801, et seq. Amendments to the Private Works Act, made after the facts of this case had arisen, were not considered. ²

THE EFFECTS OF ACTUAL KNOWLEDGE ON THE BANK'S RELIANCE

In response to a request for admissions of fact, AmBank admitted that officers of the bank visited the golf course site several times between the dates of September, 1985, through December, 1985. AmBank also admitted that "on or before December 31, 1985 ... significant work had been accomplished and that shaping and construction of tees, lakes, fairways, greens and bunkers had been largely accomplished."

AmBank argues that the trial court improperly considered the sworn statements of Martty, Smith, and Dupree in rendering its decision because AmBank had not stipulated to the use of the statements. Although, based on the record, the validity of that claim is doubtful, it is not necessary to reach that issue. Even without the sworn statements, the record is convincing that the construction work had begun and that AmBank had knowledge that the project was well underway.

AmBank responds to the court's findings with an argument based on LSA-R.S. 9:4820(C), which provides:

C. A person acquiring or intending to acquire a mortgage, privilege, or other right, in or on an immovable may conclusively rely upon an affidavit made by a registered or certified engineer or surveyor or licensed architect that states he inspected the immovable at a specified time and work had not then been commenced nor materials placed at its site, provided the affidavit is filed before or within two business days after the filing of the mortgage, privilege, or other document creating the rights. The correctness of the facts recited in the affidavit may not be controverted to affect the priority of the rights of the person to whom or for whom it is given. A surveyor, architect, or engineer who gives a false or fraudulent affidavit shall be responsible for any loss or damage suffered by any person whose rights are adversely affected.

It is true that the facts of a valid site inspection affidavit cannot be controverted merely to show that work had begun. This rule protects the innocent third party that obtained the affidavit and either did not inspect the property, or had no actual knowledge that more than preparatory work on the project had begun. However, when the issue before the court is whether a party actually relied on the "no work" affidavit, evidence of actual knowledge may be used to show that the party requesting the affidavit did not rely on it. See Louisiana National Bank of Baton Rouge v. Triple R Contractors, Inc., 345 So.2d 7, 11 (La.1977), Tharpe & Brooks, Inc. v. Arnott Corp., 406 So.2d 1, 4 (La.App. 1st Cir.1981), writ granted in part, denied in part, 410 So.2d 1145 (La.1982). To do otherwise would encourage the abuse of an article which affords protection to a mortgage holder that follows the requirements of the statute. It was not meant to provide technical immunity to mortgage holders that have actual knowledge that a project is well under way, who wish to use the affidavit only to protect their interest and usurp the rights of lienholders when a project fails.

Under the facts here, the trial court...