Estrada v. Hulin

• Decision Date: 25 November 2020
• Docket Number: 20-231
• Parties: NANCY ESTRADA v. SHAWN PETER HULIN
• Court: Court of Appeal of Louisiana — District of US

NANCY ESTRADA v. SHAWN PETER HULIN

20-231

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

November 25, 2020

NOT DESIGNATED FOR PUBLICATION

APPEAL FROM THE SIXTEENTH JUDICIAL DISTRICT COURT PARISH OF ST. MARTIN, NO. 88398

HONORABLE KEITH R. J. COMEAUX, DISTRICT JUDGE

CANDYCE G. PERRET JUDGE

Court composed of Shannon J. Gremillion, Van H. Kyzar, and Candyce G. Perret, Judges.

AFFIRMED.

Paul J. deMahy

Thompson Law Office

2901 Johnston Street, Suite 301

Lafayette, LA 70503

(337) 534-8761

COUNSEL FOR DEFENDANT/APPELLEE:

Shawn Peter Hulin

Ramon J. Fonseca, Jr.

Fonseca & Associates, LLC

921 Kaliste Saloom Road

Lafayette, LA 70508

(337) 456-1163

COUNSEL FOR PLAINTIFF/APPELLANT:

Nancy Estrada

PERRET, Judge.

This appeal challenges the trial court's determination that prescription has run on Appellant's action to collect a loan of money secured by a collateral mortgage note and a collateral mortgage. After review, we affirm the trial court's judgment.

FACTUAL AND PROCEDURAL HISTORY:

Appellant, Nancy Estrada, filed a Petition on Promissory Note and for Recognition of Mortgage alleging that Appellee, Shawn Peter Hulin, was indebted to her for a loan of money. In her amending petition, Appellant alleged that Mr. Gerald Hulin loaned Appellee $60,000.00 plus eight percent interest per annum.¹ To secure the loan, Appellee executed a collateral mortgage note on December 5, 2011, entitled "Promissory Note," in the amount of $60,000.00 plus eight percent interest per annum payable to Bearer on demand and paraphed for identification with an act of collateral mortgage. The note was later secured by a "Collateral Mortgage" dated May 10, 2012.

On June 8, 2016, Mr. Gerald Hulin assigned "all interests and rights under this Promissory Note and Collateral Mortgage which were formerly owned by Bearer/Gerald Hulin" to Appellant. The assignment is entitled "Notice of Assignment of Promissory Note, and Collateral Mortgage" signed by Gerald Hulin and notarized. The "Promissory Note" and "Collateral Mortgage" referenced in the assignment were identified by date and signor. Appellant also asserts that physical possession of the note was delivered to her on this date.

Appellant further alleges that she has maintained possession of the note, that she has made demands for payment on the loan, that Appellee has made no payments on the loan, and that she is, as Bearer of the note, entitled to recover the principal balance, interest, and reasonable attorney's fees as provided in the collateral mortgage note. Appellant also sought to have her mortgage on the property described in the "Collateral Mortgage" recognized and maintained. Attached to the petition were copies of the "Promissory Note," St. Martin Parish Recording Page, "Collateral Mortgage," and the "Notice of Assignment of Promissory Note." However, Appellant has not produced the original "Promissory Note."

In response, Appellee filed an Exception of Prescription alleging that no payments on the money lent have been made and the obligation has prescribed. Appellee also filed an answer and reconventional demand seeking to have the collateral mortgage recordation cancelled. In opposition, Appellant asserts that her possession of the collateral mortgage note acted as a continual interruption of prescription; thus, the exception of prescription should be denied.

At the hearing on the exception, Appellant introduced an affidavit of the notary who prepared the "Promissory Note" and "Collateral Mortgage" instruments. The notary attested that both were executed "as security for an underlying loan of money by Gerald Hulin to Shawn Peter Hulin to assist Shawn Peter Hulin." However, despite the trial court's request, Appellant could not produce the original note, and her counsel admits that, at the present, "we're not in possession of the original to supply to the court." Thereafter, the trial court determined that the note was prescribed on its face; thus, prescription would only be interrupted by continued possession of the note, which Appellant could not produce. Thereafter, the trial court granted the exception of prescription and dismissed Appellant's petition with prejudice.

On appeal, Appellant asserts that the trial court erred in four respects: (1) in determining that the "Promissory Note" was the principal obligation, rather than the oral loan of money, (2) by not treating the "Promissory Note" and "Collateral Mortgage" as accessory obligations securing the oral loan of money, (3) by failing to find that the pledge of the "Promissory Note," and its continued possession by Appellant, interrupted prescription on the oral loan of money, and (4) by requiring Appellant to produce the original "Promissory Note."

LAW AND ANALYSIS:

When reviewing peremptory exceptions of prescription on appeal, the appellate standard of review depends on whether evidence was adduced at the trial court. N. G. v. A. C., 19-307 (La.App. 3 Cir. 10/2/19), 281 So.3d 727. If no evidence was submitted, "the judgment is reviewed simply to determine whether the trial court's decision was legally correct." Id. at 733 (quoting Arton v. Tedesco, 14-1281, p. 3 (La.App. 3 Cir. 4/29/15), 176 So.3d 1125, 1128, writ denied, 15-1065 (La. 9/11/15), 176 So.3d 1043). If evidence was supplied, the trial court's factual findings are reviewed under the manifest error-clearly wrong standard of review. Specialized Loan Servicing LLC v. January, 12-2668 (La. 6/28/13), 119 So.3d 582; Smith v. Vick Inv., LLC, 19-622 (La.App. 3 Cir. 6/3/20), 298 So.3d 288, writ denied, 20-830 (La. 10/14/20) 302 So.3d 1114.

Recently, this court favorably quoted McGill v. Thigpen, 34,386, pp. 3-4 (La.App. 2 Cir. 2/28/01), 780 So.2d 1224, 1227-28, which explained collateral mortgage instruments as well as the applicable prescription periods:

A collateral mortgage is a form of conventional mortgage which developed in Louisiana's jurisprudence through the recognition that one can pledge a note secured by a mortgage to secure another debt. The collateral mortgage is comprised of three documents. First, there is a promissory note, referred to also as a collateral mortgage note or a ne varietur note. Second, there is an act of mortgage, also referred to as the collateral mortgage, which secures the collateral mortgage note. Third, there is an indebtedness evidenced by a promissory note, also referred to as the hand note, for which the collateral mortgage note is pledged as security. No money is directly advanced on the collateral mortgage note which is paraphed to identify it with the act of mortgage. Instead, the collateral mortgage note and the mortgage securing it are pledged to secure a debt evidenced by the hand note.

Since the collateral mortgage note and hand note are promissory notes, they are subject to a prescriptive period of five years as provided in La. C.C. art. 3498. . . . Prescription on a note payable on demand runs from the date of execution of the note. . . .

The party pleading the peremptory exception of prescription bears the burden of proof. However, where the [creditor's] cause of action is prescribed on the face of the petition, the [creditor] bears the burden of rebutting the plea of prescription. . . .

Succession of Campbell, 19-91, pp. 8-9 (La.App. 3 Cir. 10/2/19), 280 So.3d 979, 986.

Appellant's Assignments of Error Numbers One and Two involve the trial court's determination of whether the primary obligation was the oral loan of money or the "Promissory Note." Appellant argues that the "Promissory Note" was, in fact, the collateral mortgage note, secured by the "Collateral Mortgage," which secured the oral loan of money. Under this scenario, there is no hand note evidencing the primary indebtedness as described in Campbell. Appellant asserts that the trial court erred in finding that the "Promissory Note" was the hand note representing the primary obligation instead of the accessory obligation.

The hearing transcript first appears to indicate that the trial court believed the "Promissory Note" to be the principal obligation. The trial court stated:

[T]he problem here is you have the original promissory note for the debt, but you're trying to enforce it and it's beyond the five year period. In order to do so, you have to have the hand note that was secured by the mortgage that was pledged to you to interrupt prescription. You don't have that, so he's proper on prescription.

Later, the trial court appears to entertain the idea that the "Promissory Note" is, instead, the collateral mortgage note:

BY THE COURT:

Because we have a hand note payable to bearer, Ms. Estrada could take that hand note and that mortgage and go to the bank and say I want to pledge this as security for a loan for me. And she could do that. So this only says the [sic] he executed the note. This doesn't say she's still in possession of it, and she could have pledged it to someone else.

[APPELLANT]:

Correct, Your Honor. So essentially, production of the original hand note, possession of that as far as the theory that we forwarded, would suggest that the possession is a continuing acknowledgement of it whereby prescription would not have run on the underlying obligation--

BY THE COURT:

You don't have possession of it.

[APPELLANT]:

But in the event? Because my client suggests there's an original and locating that hasn't happened yet. There's a question about where it is. We're determine to find it. Unfortunately, at present we're not in possession of the original to supply to the Court. But there's an original that we're determined to locate.

However, the court ultimately concluded:

BY THE COURT:

It's based on your pleadings. You said a promissory note was executed, more than five years had passed and no payments were made, and a collateral mortgage was granted along with a hand note. Based on the pleadings of the petition, okay, he files an exception of prescription that it's beyond the five year period, unless you can produce the hand note to interrupt that prescription, or some payment, or some form

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