Lagraize v. Basler

Decision Date09 September 2020
Docket NumberNO. 20-CA-39,20-CA-39
Citation304 So.3d 102
Parties Dr. Albert LAGRAIZE v. Rachele BASLER, Derrick Riley and People Speak, L.L.C.
CourtCourt of Appeal of Louisiana — District of US

COUNSEL FOR PLAINTIFF/APPELLANT, DR. ALBERT LAGRAIZE, Regel L. Bisso, Robert G. Miller, Jr.

COUNSEL FOR DEFENDANT/APPELLEE, RACHELE BASLER, DERRICK RILEY AND PEOPLE SPEAK, L.L.C., Thomas A. Robichaux

Panel composed of Judges Jude G. Gravois, Hans J. Liljeberg, and John J. Molaison, Jr.

MOLAISON, J.

Appellant, Dr. Albert Lagraize, appeals the trial court's dismissal of his claims of ownership and security interests in two properties owned by the Appellee, People Speak, LLC, resulting from "loan agreements" in which Dr. Lagraize loaned the down payment for the purchase of those properties to Appellees, People Speak, LLC, Rachele Basler, and Derrick Riley. For the reasons discussed herein, we reverse the trial court's May 6, 2020 amended judgment in its entirety and find that People Speak, LLC is a party to the loan agreements, along with Basler and Riley, liable to repay the funds loaned to them by Dr. Lagraize.

Concerning Dr. Lagraize's claims for enforcement of the ownership and security interest provisions in the loan agreements, we remand these claims, as well as appellees’ claims raised in their reconventional demand, for joinder of People Speak, LLC's lender, Loan Partners, LLC, and retrial. People Speak, LLC granted Loan Partners, LLC a mortgage on the properties at issue and Dr. Lagraize's claims to enforce the ownership and security interest provisions of the loan agreements may impair or impede Loan Partners, LLC's interests in the properties.

Factual and Procedural History

Dr. Lagraize, a retired veterinarian with a thirty-year background in real estate dealings, was approached by Rachele Basler (a real estate broker, certified occupancy specialist, and community apartment manager who worked at a law firm), to get involved with her and her partner, Derrick Riley's purchase of a property intended to be run as a "bed and breakfast." After formal offers were made on two properties in Orleans Parish, located at 1419 Dauphine Street ("Dauphine property") and 4417 Dryades Street ("Dryades property"), Dr. Lagraize put down a $25,000 earnest money deposit for each property, and the parties negotiated terms.1

Dr. Lagraize drafted a handwritten "loan agreement" for the Dryades property, based on the negotiated terms on April 10, 2017. The document was signed by all parties in signature blocks designated for Lagraize, Basler, Riley, and People Speak, LLC.2 Basler and Riley, who are currently married, started People Speak, LLC as a holding LLC for rental properties in November of 2012.

Later, when the Dauphine property became available, the parties decided to acquire it as well. A loan agreement for $382,500 for the down payment for the Dauphine property was typed by Basler and signed by the parties on May 1, 2017. This document, borrowing the format of the handwritten loan agreement, changed the signature blocks for Basler and Riley, referring to them as "Purchaser" and did not include a signature block for People Speak, LLC.

According to the original agreements "between Rachele Basler, Derrick Riley, both personally and People Speak LLC, hereafter known as borrowers, and Albert Lagraize, hereafter known as lender," Dr. Lagraize lent money "at an annual compounded interest rate of 25% for the down payment on the purchase" of the Dryades and Dauphine properties. The borrowers agreed to give Dr. Lagraize 20% "outright ownership" of the properties at the time of the act of sale as compensation for the loan. Basler and Riley also agreed to repay the loans, at an interest rate of 25%, according to a schedule within 15-16 months, and upon failure to make timely payments, the collateral would be an additional 40% interest in the ownership of the properties.

After further negotiations on May 22 and 23, 2017, the parties updated the loan agreements to increase the initial outright ownership interest for Dr. Lagraize from 20% to 37.5%.3 Basler and Riley both signed the agreement as "purchaser" on May 23, 2017, and Dr. Lagraize signed it on May 24, 2017. The act of sale for both properties was conducted on May 24, 2017. Dr. Lagraize was present and signed as a witness when People Speak, LLC purchased the properties. People Speak, LLC entered into a multiple indebtedness mortgage with Loan Partners, LLC ("LP Nola") to secure present and future indebtedness of up to five million dollars for the purchase of the two properties.4 No further agreements were entered into by the parties in furtherance of the obligations created by the loan agreements. Basler immediately began renting out the properties to guests.5

The appellees failed to make the first loan repayment on the Dryades property when it was due on August 24, 2017. On August 31, 2017, Dr. Lagraize filed a Petition for Declaratory and Miscellaneous Relief, seeking a ruling by the trial court that he was entitled to a 77.5% ownership interest in the Dryades property, including the 40% due to the appellees’ default and the 37.5% he was to have received at the purchase.6 On November 24, 2017, appellees defaulted on the first payment for the Dauphine property. Dr. Lagraize filed a First, Supplemental, Amended and Restated Petition to include a declaration of his right to a 77.5% interest in the Dauphine property. Dr. Lagraize file a notice of lis pendens with the Office of the Recorder in Orleans parish, including the loan agreements as "counter letters." Appellees had made no payments to Dr. Lagraize for either property at the time of the trial.

Appellees filed an answer on August 6, 2018, alleging that Dr. Lagraize did not follow formalities for the conveyance of an interest in immovable property, his counter letter was defective, and raising the affirmative defense of duress. They further raised a reconventional demand for a declaratory judgment to maintain that People Speak, LLC is the sole owner of the properties, a judgment to remove the lis pendens , and for damages from not being able to refinance the properties due to the lis pendens . Appellees filed a motion for partial summary judgment on March 28, 2019, which was denied by the trial court on May 16, 2019.

A trial was held on August 13, 2019. During the trial, the parties testified that the properties were purchased by People Speak, LLC. Basler and Dr. Lagraize testified that the parties’ original agreement was to give Dr. Lagraize a 20% interest in the properties, but on May 22, 2017, Dr. Lagraize requested a 51% interest which the parties negotiated to 37.5% in the final loan agreements. Both parties introduced emails sent between the parties and third parties which describe a plan to refinance the properties and record a second mortgage for Dr. Lagraize. Riley testified that Basler handled the negotiations, and his contribution to the LLC was his maintenance experience. Basler testified that People Speak, LLC was unable to pay Dr. Lagraize when the first payments became due because they had been unable to sell other properties to raise the funds. The parties submitted posttrial memoranda on August 23, 2019.

In an amended judgment, the trial court found Basler and Riley jointly and solidarily liable to Dr. Lagraize for the down payment, plus 12% interest per annum, and denied Dr. Lagraize's remaining claims by dismissing them with prejudice. The trial court granted the appellees’ petition for reconventional demand, decreeing People Speak, LLC the sole owner of the properties, canceling and removing the lis pendens , but denying additional claims for monetary damages.7 In her written reasons for judgment, the trial court stated the parties failed to adhere to the agreements, there was no meeting of the minds, and the 25% interest rate was usurious.8 Dr. Lagraize filed a timely notice of suspensive appeal.

DISCUSSION

Dr. Lagraize alleges five assignments of error in the trial court's judgment.

First Assignment of Error

Dr. Lagraize claims the trial court erred in failing to find liability on the part of People Speak, LLC. The amended judgment denied Dr. Lagraize's claims to any ownership interest in properties owned by People Speak, LLC. The trial court found that People Speak, LLC was not bound by the loan agreements. In the reasons for judgment, the court found:

Nowhere on the document is the signature or express consent for an authorized member of People Speak, LLC to obligate the LLC. No express unanimous written consent authorizing Ms. Basler and/or Mr. Riley to sign the agreement on behalf of People Speak, LLC exists. Not only does the LLC operating agreement provide that "no member shall have any ownership interest in Company property in whole or in part" but also La. R.S. 12:1329 provides the same.

When a contract can be construed from the four corners of the instrument, interpretation of the contract is a question of law. First Bank & Trust v. Redman Gaming of La., Inc ., 13-369 (La. App. 5 Cir. 12/12/13), 131 So.3d 224, 228. If the terms are subject to more than one interpretation, or there is uncertainty or ambiguity as to its provisions, determining the intent becomes, in part a question of fact. Id. Whether a contract is ambiguous is a question of law. Id . citing Koeniger v. Newsome , 03-1492 (La. App. 4 Cir. 2/4/04), 873 So.2d 652, 655. Whether a party signs in their individual capacity or as a representative is a question of fact. Hohensee v. Turner , 13-615 (La. App. 4 Cir. 1/22/14), 133 So.3d 141, 143. The appellate court should only overrule the trial court upon a finding of manifest error. Weinmann v. Duhon , 08-186 (La. App. 5 Cir. 10/28/08), 997 So.2d 647, 655-56, writ denied , 08-2814, 08-2815, 08-2830 (La. 3/13/09), 5 So.3d 117, 118.

The signature of the appellees as "Purchaser" on the contract is ambiguous. This Court has previously found that a member unambiguously binds the LLC and personally binds himself, when the signature block...

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