Gipson v. Fortune

• Decision Date: 27 January 2010
• Docket Number: 021-CA.,No. 45,45
• Citation: 30 So.3d 1076
• Parties: Lawrence GIPSON, Independent Executor for the Estate of Hazel Williams Gipson Lee, Plaintiff-Appellant, v. Donald Ray FORTUNE and Chase Home Finance, LLC, Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

30 So.3d 1076

Lawrence GIPSON, Independent Executor for the Estate of Hazel Williams Gipson Lee, Plaintiff-Appellant, v. Donald Ray FORTUNE and Chase Home Finance, LLC, Defendants-Appellees.

No. 45,021-CA.

Court of Appeal of Louisiana, Second Circuit.

January 27, 2010.

Dianne Hill, Monroe, for Appellant.

Philip E. McQueen, for Appellee, Donald Fortune.

McGlinchey Stafford, PLLC, by: Michael D. Ferachi, Jonathan G. Wilbourn, Jamie D. Seymour, Baton Rouge, for Appellees, JP Morgan Chase Bank and Chase Home Finance.

Before BROWN, PEATROSS, and MOORE, JJ.

BROWN, Chief Judge.

Plaintiff, Lawrence Gipson, Independent Executor for the Estate of Hazel Williams Gipson Lee, has appealed from the trial court's judgment in favor of defendant, JP Morgan Chase Bank, which sustained the bank's exception of no cause of action and dismissed with prejudice plaintiff's claim against Chase Bank. For the reasons set forth below, we affirm.

Facts and Procedural Background

On March 7, 2008, Gipson, as executor for the estate of his mother, filed suit against Chase Bank and his brother, Donald Fortune, seeking damages for the loss/diminished value of assets from the estate of Mrs. Lee. In his petition, Gipson alleged that he was the sole owner of all property comprising the estate of Mrs. Lee, who had died on June 27, 2007. Gipson further averred that on March 8, 2000, Mrs. Lee entered into a $30,000 home equity line of credit ("HELOC") with Bank One (Chase Bank's predecessor), and that the HELOC was secured by real property owned by Mrs. Lee located at 2817 Murray Street in Monroe, Louisiana.

Gipson alleged that Mrs. Lee suffered from dementia and was mentally incapacitated at the time that she entered into the HELOC. Therefore, Bank One was negligent in issuing funds to Mrs. Lee based upon the fact that it "knew or should have known that she lacked capacity to enter into a contract." Gipson sought to rescind the mortgage contract and promissory note executed by Mrs. Lee based upon the fact that they are null and void as they were entered into when she lacked mental capacity to contract. Gipson also asserted several separate claims against his brother, Fortune, for conversion and/or mismanagement of the assets of their mother prior to her death. Plaintiff's claims against his brother are still pending and not at issue in the instant appeal.

Chase Bank filed its answer and affirmative defenses on May 7, 2008, and thereafter, both parties began discovery. Neither Gipson nor Chase Bank was satisfied with the other's responses (or lack thereof) in the discovery process. A motion to compel discovery was filed by Gipson on December 2, 2008, and was denied by the trial court following a hearing held on January 12, 2009, by judgment dated January 21, 2009.

Chase Bank filed an exception of no cause of action and a motion to determine the sufficiency of plaintiff's answers to requests for admissions on March 13, 2009, and a hearing on the exception and motion was set for May 18, 2009. According to Chase Bank, plaintiff's nullity action should be dismissed because Gipson had failed to allege any of the exclusive grounds for nullifying a contract of a noninterdicted decedent as required by La. C.C. art. 1926. Gipson filed a second motion to compel discovery on April 13, 2009, and a hearing on Gipson's motion was set for June 19, 2009. Thereafter, plaintiff filed an opposition to the exception of no cause of action on April 30, 2009, admitting that while he had not alleged a cause of action to nullify the HELOC under La. C.C. art. 1926, he had made sufficient allegations to support a cause of action against Chase Bank for fraud and/or conversion.

Attorneys for both parties set forth their respective positions at the May 18, 2009, hearing on the exception and motion filed by Chase Bank. Plaintiff again admitted that his petition did not allege the elements of a cause of action under La. C.C. art. 1926, then stated "but it does not mean that they don't exist, and it's a little complicated." The trial court queried why, if the elements existed, did plaintiff not provide this information in his discovery responses. Plaintiff contended that he did not have all of the information because of the ongoing discovery dispute with Chase Bank. The trial court noted that information about the four grounds for nullification under La. C.C. art. 1926, such as whether a petition to interdict Mrs. Lee had been filed, was available to plaintiff, and was not dependent upon any information Chase Bank had not already provided to Gipson.

Plaintiff then noted that he learned during the discovery process that no money had been disbursed under the 2000 HELOC, but that there was a second contract dated October 26, 2006, allegedly signed by Mrs. Lee, under which the $30,000 was disbursed. Plaintiff noted that they did not have any information about this subsequent document when the petition was filed in March 2008, and acknowledged his receipt of a copy of the second contract in July 2008. When asked by the trial court why the petition had not been amended after plaintiff obtained the subsequent contract in July 2008 to include any allegations related to this document, plaintiff asserted that there were other things involved, such as Mrs. Lee's condition, which had to be gleaned from the voluminous nursing home records.

The trial court noted that, even if the court accepted as true plaintiff's allegation that Mrs. Lee was mentally incompetent to enter into the HELOC, the only cause of action for nullity of this contract was one under La. C.C. art. 1926. Because plaintiff had not alleged any of these grounds and had provided no argument to support his ability to do so, the trial court sustained defendant's peremptory exception of no cause of action. The trial court next analyzed La. C.C.P. art. 934, and found that based upon plaintiff's counsel's argument, plaintiff would not be able to amend his petition to state a cause of action under art. 1926, and that therefore allowing plaintiff an opportunity to amend his petition would be frivolous. Plaintiff's claims against Chase Bank were dismissed with prejudice, and this appeal ensued.

Discussion

The purpose of the peremptory exception of no cause of action is to test the legal sufficiency of the petition by determining whether the law affords a remedy on the facts alleged in the petition. Veroline v. Priority One EMS, 09-1040 (La.10/09/09), 18 So.3d 1273; Scheffler v. Adams and Reese, LLP, 06-1774 (La.02/22/07), 950 So.2d 641. The peremptory exception of no cause of action is triable on the face of the pleadings,¹ and, for purposes of resolving issues raised by the exception, the well-pleaded facts in the petition must be accepted as true. Id. To determine whether the trial court in the instant case erred in granting Chase Bank's exception of no cause of action, we accept all facts alleged in the petition as true. In reviewing a trial court's ruling sustaining an exception of no cause of action, the appellate court conducts a de novo review because the exception raises a question of law and the trial court's decision is based only on the sufficiency of the petition. Harrington v. Harrington, 43,373 (La.App.2d Cir.08/13/08), 989 So.2d 838.

A contract is an agreement by two or more parties whereby obligations are created, modified, or extinguished. La. C.C. art. 1906. The four elements required for confection of a valid contract are: (1) the capacity to contract (La.C.C. art. 1918); (2) mutual consent (La.C.C. art. 1927); (3) a certain object (La.C.C. art. 1971); and (4) a lawful cause (La.C.C. art. 1966). Worley v. Chandler, 44,047 (La. App.2d Cir.03/04/09), 7 So.3d 38; Provenza v. Central & Southwest Services, Inc., 34,162 (La.App.2d Cir.12/15/00), 775 So.2d 84.

The general rule is that all persons are presumed capable of contracting, except those who have been declared incapable by law. La. C.C. art. 1918; Taylor v. Taylor, 32,517 (La.App.2d Cir.01/06/00), 755 So.2d 341; Standard Life & Accident Insurance Co. v. Pylant, 424 So.2d 377 (La.App. 2d Cir.1982), writ denied, 427 So.2d 1212 (La.1983); Julius Cohen Jeweler, Inc. v. Succession of Jumonville, 506 So.2d 535 (La.App. 1st Cir.1987), writ denied, 511 So.2d 1155 (La.1987).

Attacks on contracts for lack of mental capacity are governed by La. C.C. art. 1919-1926. As a general proposition, contracts entered into by a noninterdicted deceased person may not be attacked. La. C.C. art. 1926 sets forth the exclusive grounds upon which a contract made by a...