Fid. Bank v. Vaughn

• Decision Date: 05 June 2019
• Docket Number: CA 19-47
• Parties: FIDELITY BANK v. Lloyd VAUGHN
• Court: Court of Appeal of Louisiana — District of US

274 So.3d 91

FIDELITY BANK

v.Lloyd VAUGHN

CA 19-47

Court of Appeal of Louisiana, Third Circuit.

June 5, 2019

Richard A. Rozanski, Wheelis & Rozanski, 2312 South MacArthur Drive, Alexandria, La 71315, (318) 445-5600, COUNSEL FOR DEFENDANT/APPELLANT: Lloyd Vaughn

Barbara Bell Melton, Faircloth Melton, LLC, 105 Yorktown Drive, Alexandria, LA 71303, (318) 619-7755, COUNSEL FOR PLAINTIFF/APPELLEE: Fidelity Bank

Court composed of Elizabeth A. Pickett, Billy Howard Ezell, and D. Kent Savoie, Judges.

PICKETT, Judge.

A personal surety appeals the trial court's judgment granting summary judgment against him in favor of the holder of two promissory notes for which he guaranteed payment. As discussed below, the trial court's judgment is reversed, and the matter is remanded to the trial court.

FACTS

In 2013, Lloyd Vaughn entered into a business venture for the development of a residential development in Fort Mitchell, Alabama. Mr. Vaughn signed a personal guaranty guaranteeing the debt of Westgate Homes, L.L.C., which consisted of two promissory notes, with The Bank of Georgia (The Bank). Westgate defaulted on the promissory notes and filed for bankruptcy. In 2015, The Bank sued Mr. Vaughn to collect the balance Westgate owed on the notes.

In October 2015, The Bank entered into receivership with the Federal Deposit Insurance Corporation (FDIC). Pursuant to a purchase and assumption agreement with the FDIC, Fidelity Bank acquired the assets of The Bank, including enforcement rights of promissory notes payable to The Bank. The trial court granted leave for Fidelity Bank to be substituted as plaintiff in place of The Bank.

Thereafter, Fidelity Bank filed two motions for summary judgment. One motion sought judgment against Mr. Vaughn as guarantor of Westgate's debt. The second motion sought dismissal of reconventional demands Mr. Vaughn asserted in his answer to the petition. The trial court denied both motions after hearings held in July 2016, finding that the parties had not had adequate time to conduct discovery.

In May 2017, Fidelity Bank substituted its counsel, and the new counsel filed a peremptory exception of no cause of action to have Mr. Vaughn's reconventional demands dismissed. The trial court sustained the exception, and Mr. Vaughn did not appeal the judgment dismissing those demands.

In April 2018, Fidelity Bank filed another motion for summary judgment to enforce Mr. Vaughn's guaranty of Westgate's debt. After a hearing, the trial court granted the motion and signed a judgment granting judgment in favor of Fidelity Bank in the principal amount of $ 373,207.92, together with legal interest, late fees, attorney fees, and judicial interest. Mr. Vaughn filed a motion for new trial, which was denied; he then filed a motion for appeal.

ASSIGNMENT OF ERROR

Mr. Vaughn's sole assignment of error states:

The [t]rial [c]ourt erred in granting Fidelity Bank's [m]otion for [s]ummary [j]udgment where genuine issues of material fact existed as to whether Lloyd Vaughn's Guaranty was extinguished by breach by The Bank ... (and Fidelity Bank as the assignee of the FDIC) of its contractual obligation of good faith and fair dealing and impairment of collateral securing the Westgate Homes, L.L.C. loan.

DISCUSSION

Jurisdiction

Fidelity Bank asserts that this court does not have jurisdiction to consider Mr. Vaughn's assigned error because Mr. Vaughn designated the judgment denying his motion for a new trial by title and date as the judgment being appealed in his motion for appeal. Contrary to that designation, Mr. Vaughn addresses only the trial court's judgment granting Fidelity Bank's motion for summary judgment in his assignment of error and his arguments to this court.

We addressed this issue in Babineaux v. University Medical Center , 15-292, p. 5 (La.App. 3 Cir. 11/4/15), 177 So.3d 1120, 1123, explaining:

[W]hen the pleadings and briefs on appeal indicate that an appellant actually intended to appeal from a final judgment on the merits, the appeal could be maintained as being taken from the judgment on the merits. See Garrett v. City of Lake Charles, 499 So.2d 956 (La.App. 3 Cir.1986) (appeal dismissed where the intent was to appeal the dated judgment denying the plaintiff's motion for a new trial).

See also Fuqua v. Gulf Ins. Co. , 525 So.2d 190 (La.App. 3 Cir. 1988).

Fidelity Bank argues that McClure v. City of Pineville , 05-1460 (La.App. 3 Cir. 12/6/06), 944 So.2d 805, writ denied , 07-43 (La. 3/9/07), 949 So.2d 446, requires that we dismiss Mr. Vaughn's appeal. In McClure , the appellant designated the judgment on his motion for new trial by date and title as the judgment being appealed, and its actions did not evidence that it misstated the judgment it was appealing. Mr. Vaughn's arguments clearly evidence his intent to appeal the judgment granting summary judgment. McClure has no application here.

Summary Judgment

Appellate courts review summary judgments de novo, using the same criteria as the trial court. Gray v. Am. Nat'l Prop. & Cas. Co. , 07-1670 (La. 2/26/08), 977 So.2d 839. To succeed on a motion for summary judgment, the moving party must show that there are no genuine issues of material fact and that he "is entitled to judgment as a matter of law." La.Code Civ.P. art. 966(A)(3). "A fact is ‘material’ when its existence or nonexistence may be essential to plaintiff's cause of action." Smith v. Our Lady of the Lake Hosp., Inc. , 93-2512, p. 27 (La. 7/5/94), 639 So.2d 730, 751.

"The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions." La.Code Civ.P. art. 966(A)(4). "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." La.Code Civ.P. art. 967(A).

Personal knowledge means something the witness actually saw or heard, as distinguished from what he learned from some other person or source. The purpose of the requirement of "personal knowledge" is to limit the affidavit to facts which the affiant saw, heard, or perceived with his own senses. Portions of affidavits not based on personal knowledge of the affiant should not be considered by the trial court in deciding a motion for summary judgment.

Denbury Onshore, L.L.C. v. Pucheu , 08-1210, p. 18 (La.App. 3 Cir. 3/11/09), 6 So.3d 386, 398, (quoting Hibernia Nat'l Bank v. Rivera , 07-962, pp. 8-9 (La.App. 5 Cir. 9/30/08), 996 So.2d 534, 539-40 (citations omitted)).

When considering a motion for summary judgment, courts are not to evaluate the weight of the evidence, but to determine whether there is a genuine issue of triable fact. Hines v. Garrett , 04-806 (La. 6/25/04), 876 So.2d 764. Summary judgments are now favored; nonetheless, "factual inferences reasonably drawn from the evidence must be construed in favor of the party opposing the motion, and all doubt must be resolved in the opponent's favor." Willis v. Medders , 00-2507, p. 2 (La. 12/8/00), 775 So.2d 1049, 1050.

The Merits

In its motion for summary judgment, Fidelity Bank sought judgment against Mr. Vaughn on the basis that he guaranteed Westgate's two promissory notes. It supports its motion with documentation evidencing Westgate's promissory notes, Mr. Vaughn's guaranty of the notes, the FDIC's assignment of the notes to it, and an affidavit attesting to the outstanding balances due thereon. Mr. Vaughn does not dispute that he guaranteed Westgate's indebtedness. Instead, he argues that The Bank engaged in actions that caused the real property securing Westgate's indebtedness to be sold below market value. Citing La.Civ. Code art. 3062,¹ he asserts that The Bank's actions impaired the value of the real property securing Westgate's indebtedness and extinguished his suretyship. Moreover, he contends that The Bank's actions violated its obligations of good faith and fairness that are imposed by Louisiana law. He supports his claims with his personal affidavit.

Fidelity Bank argues that the D'Oench, Duhme doctrine set forth in D'Oench, Duhme & Co. v. FDIC , 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), and codified in 12 U.S.C. § 1823(e), defeats Mr. Vaughn's defense. In D'Oench, Duhme , the Supreme Court held that "a borrower [cannot assert] against the FDIC defenses based upon secret or unrecorded ‘side agreements’ that altered the terms of facially unqualified obligations." Bell & Murphy & Assocs., Inc. v. Interfirst Bank Gateway, N.A., 894 F.2d 750, 753 (5th Cir.), cert. denied , 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990). As codified, the doctrine grants the FDIC and its assignees the power to void any agreement which tends to diminish or defeat their interest:

[I]n any asset acquired by it as a receiver unless such agreement: (1) is in writing; (2) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset; (3) was approved by the depository institution's board of directors or its loan committee; and (4) has been continuously an official record of the depository institution.

Johnson v. Drury , 99-608, 99-1071 p. 7 (La.App. 5 Cir. 6/2/00), 763 So.2d 103, 108.

Fidelity Bank contends the D'Oench, Duhme doctrine requires that The Bank's alleged breach of its contractual obligations of good faith and fair dealing, which resulted in the claimed impairment of Westgate's security for its debt, must be evidenced on the face of Westgate's loan documents maintained by The Bank or they fail. Mr. Vaughn counters that the D'Oench, Duhme doctrine applies only to oral agreements, not to obligations imposed by law. He cites Texas Refrigeration Supply, Inc. v. FDIC , 953 F.2d 975, 981 (5th Cir. 1992) (alteration in original), which held, in pertinent part:

D'Oench, Duhme does

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