Whitney Nat. Bank v. Demarest
| Citation | 947 F.2d 182 |
| Decision Date | 18 November 1991 |
| Docket Number | No. 91-3029,91-3029 |
| Parties | WHITNEY NATIONAL BANK, Plaintiff-Appellant, Cross-Appellee, v. Francis J. DEMAREST, Jr., Recorder of Mortgages, Parish of Orleans, Defendant, Resolution Trust Corporation Conservator of Fountainebleau Federal Savings Bank, Defendant-Appellee, Cross-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Talmage M. Watts, F. Frank Fontenot, Edward J. Pointer, Jay Corenswet, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, La., for plaintiff-appellant, cross-appellee.
Ann Horton-Breaux, R. Patrick Vance, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for defendant-appellee, cross-appellant.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before KING, JOHNSON and EMILIO M. GARZA, Circuit Judges.
This case is an action to rank competing liens between Whitney National Bank ("Whitney") and the Resolution Trust Corporation ("RTC"), as receiver (formerly conservator) of Fountainebleau Federal Savings Bank ("Fountainebleau"). Whitney appeals from a summary judgment by the district court holding that the promissory note held by Whitney had prescribed, thus extinguishing its accessory vendor's lien. We find that summary judgment was appropriately granted, and therefore affirm the judgment of the district court.
First Homestead Savings Association, now Secor Bank ("First Homestead"), was the holder of a promissory note payable to First Homestead ("First Homestead Note" or "Note"), dated November 26, 1980, given for the purchase of a number of condominium units. The maker of the First Homestead Note was Tall Timbers Townhomes, Inc. ("Tall Timbers"), and the Note was personally endorsed by Sidney J. Artigues ("Artigues"), Daniel W. Osborne ("D. Osborne"), Keith Dufour, and William F. Osborne, Jr. The First Homestead Note was secured by an Act of Credit Sale (the "First Homestead Vendor's Lien" or "Vendor's Lien") recorded in the mortgage records of the Parish of Orleans, Louisiana, on December 2, 1980. The First Homestead Note was to be paid in eleven monthly installments, with the final installment of the principal balance due on December 1, 1981. On February 10, 1982, Tall Timbers executed an Act of Amendment of Mortgage and Vendor's Lien providing that the entire balance of principal and interest would be due and payable on or before December 1, 1982.
On September 3, 1982, Tall Timbers, Artigues, and D. Osborne executed a collateral mortgage note, a collateral mortgage (the "Fontainebleau Mortgage"), and a hand note in the amount of $300,000 in favor of Fontainebleau. The Fontainebleau Mortgage was recorded in the mortgage records of the Parish of Orleans on September 7, 1982. The First Homestead Note and the Fontainebleau Note are secured by the same property.
On July 30, 1984, Tall Timbers made an interest payment on the First Homestead Note. That payment was Tall Timber's last payment to First Homestead on the First Homestead Note. Tall Timbers subsequently defaulted on the Note, and First Homestead decided to foreclose. On December 27, 1984, to avoid foreclosure by First Homestead on the First Homestead Note, Phillip Gattuso, D. Osborne, and Artigues formed GOA Partnership ("GOA"), which was to purchase the property encumbered by the First Homestead Vendor's Lien and the Fontainebleau Mortgage. GOA contacted Whitney to obtain financing for the purchase. Whitney avers that a Fountainebleau representative agreed with representatives of GOA to subordinate Fountainebleau's second mortgage to a new mortgage in favor of Whitney. This oral agreement, according to Whitney, was designed to keep Fountainebleau in its position as second mortgagee, and to allow Whitney to be subrogated to the rights of First Homestead as first mortgagee.
On December 31, 1984, Whitney loaned money to GOA, and GOA executed a promissory note, a collateral mortgage note, and a collateral mortgage in favor of Whitney. GOA then purchased the condominium units from Tall Timbers and delivered the purchase money to First Homestead. The Act of Sale by Tall Timbers to GOA expressly recites the purchase price of $100, and notes that the property was purchased "subject to" the unpaid balances of the First Homestead Vendor's Lien and the Fontainebleau Mortgage. Whitney's mortgage from GOA was recorded behind the Fountainebleau Mortgage. The purchase money was in the form of a check, drawn on GOA's account at Whitney, payable to the order of First Homestead. First Homestead, allegedly without the knowledge or consent of Tall Timbers, GOA, or Whitney, stamped the First Homestead Note "canceled," and returned it to a partner of GOA. GOA then pledged and transferred the First Homestead Note to Whitney. The public records of the Parish of Orleans now reflect that the original First Homestead Vendor's Lien has been canceled. Whitney contends that the cancellation resulted from an allegedly false Act of Partial Release, which was drafted by Fountainebleau's notary and executed by First Homestead on or about June 30, 1988, without the knowledge or consent of Tall Timbers, GOA, or Whitney.
Fountainebleau was subsequently taken over by the RTC, who refused to honor the alleged oral agreement to subordinate. Whitney filed a petition for writ of mandamus ("Petition") against Francis J. Demarest, Jr. ("Demarest"), in his capacity as Recorder of Mortgages for the Parish of Orleans, in Civil District Court for the Parish of Orleans, Louisiana, seeking reinstatement of the First Homestead Vendor's Lien and erasure of the Act of Partial Release pertaining to that lien from the public records. The Petition alleged that the Act of Partial Release was improper because Whitney, as holder of the First Homestead Note, had not consented to execution of the Act of Partial Release.
Subsequently, Fountainebleau intervened and opposed Whitney's Petition. Fontainebleau also filed a separate petition for writ of mandamus against Demarest, seeking cancellation of the First Homestead Vendor's Lien. On Fontainebleau's motion, the two mandamus proceedings were consolidated.
On or about June 28, 1989, Whitney filed a First Supplemental, Amended and Restated Petition adding Fontainebleau as defendant. This petition alleged that Whitney was the holder, as pledgee, of the First Homestead Note as a result of a pledge of the Note by GOA. It also alleged that GOA entered into an oral agreement with Fontainebleau in which Fontainebleau agreed to subordinate its collateral mortgage to Whitney's subsequent collateral mortgage.
The RTC removed the case to federal court. On September 1, 1989, the RTC filed a motion to dismiss Whitney's First Supplemental, Amended and Restated Petition, which Whitney opposed. On January 17, 1990, Whitney moved for leave to amend the complaint. The amended complaint, filed February 13, 1990, alleged that GOA was legally subrogated to First Homestead's Vendor's Lien and that GOA assigned all rights thereunder to Whitney.
By minute entry dated April 4, 1990, the district court granted in part and denied in part the RTC's motion to dismiss. The district court dismissed Whitney's claims that were premised on enforcement of the alleged oral agreement pursuant to which Fontainebleau allegedly agreed to subordinate its mortgage, but did not dismiss Whitney's claims based upon the alleged assignment of GOA's subrogation rights and pledge of the First Homestead Note to Whitney.
On October 2, 1990, Whitney and the RTC filed cross-motions for summary judgment. By minute entry dated December 7, 1990, the district court issued reasons for judgment in favor of the RTC on the basis that the First Homestead Note, through which Whitney claimed a superior lien ranking, had prescribed, resulting in extinguishment of the accessory First Homestead Vendor's Lien. On December 14, 1990, the court granted the RTC's motion for summary judgment, and dismissed Whitney's claims with prejudice. The judgment provided that Fontainebleau's mortgage on the Tall Timbers property was superior to any lien or mortgage held by Whitney, and ordered Demarest to cancel the First Homestead Vendor's Lien. Whitney timely filed its appeal to this court, and the RTC timely filed a cross-appeal.
This court reviews a district court's grant of summary judgment de novo, and determines whether the issues presented in the record entitle the movant to judgment as a matter of law. Lowery v. Illinois Central Gulf R.R., 891 F.2d 1187, 1190 (5th Cir.1990). When so doing, this court views the evidence and draws inferences in favor of the party resisting the motion. British Caledonian Airways, Ltd. v. First State Bank, 819 F.2d 593, 597 (5th Cir.1987); BAW Mfg. Co. v. Slaks Fifth Ave., Ltd., 547 F.2d 928, 930 (5th Cir.1977).
On appeal, Whitney contends that Tall Timbers on three instances acknowledged the First Homestead Note in a manner sufficient to interrupt prescription. 1 Whitney also contends that the district court correctly held that Whitney was subrogated to the First Homestead Vendor's Lien. The RTC, on cross-appeal, argues that the "acknowledgments" cited by Whitney were insufficient to interrupt prescription, and that GOA had waived its right of subrogation to the First Homestead Vendor's Lien.
Both parties agree that the issue of whether or not the First Homestead Note has prescribed determines the priority of liens between Whitney and the RTC. 2 The RTC contends that the First Homestead Note prescribed on July 30, 1989, five years after the last payment by its maker, Tall Timbers. 3 If this be the case, the accessory obligation to the Note, the First Homestead Vendor's Lien, has therefore been extinguished by prescription of the underlying Note, 4 and the Fountainebleau Mortgage (now held by the RTC), previously second in priority to the First Homestead Vendor's Lien, would assume primacy. ...
To continue reading
Request your trial
-
Se Prop. Holdings, LLC v. Gibson, CIVIL ACTION No. 17-7644 SECTION: "J"(5)
...established have been incurred and extinguished, notwithstanding certain subsequent acts of the parties. See Whitney Nat'l Bank v. Demarest, 947 F.2d 182, 188 (5th Cir. 1991) (concluding that a mortgage that had been extinguished via prescription could not be revived despite a later acknowl......