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Carter v. First South Farm Credit, ACA

Court of Appeal of Louisiana, Second Circuit

January 14, 2015

MICHAEL SHAWN CARTER & CHRISTI LYNN CARTER, Plaintiffs-Appellants
v.
FIRST SOUTH FARM CREDIT, ACA, MICHAEL E. KRAMER & DAWN HENDRIX MIMS, Defendants-Appellees

Page 929

Appealed from the Fifth Judicial District Court for the Parish of Richland, Louisiana. Trial Court No. 42,791-A. Honorable Terry A. Doughty, Judge.

AFFIRMED.

D. CLAY WIRTZ, Counsel for Appellants, Michael Shawn Carter, Christi Lynn Carter & U.S. Chapter 7 Bankruptcy Trustee, Linda S. Payne, Dallas, TX.

HUDSON, POTTS & BERNSTEIN, L.L.P., Robert M. Baldwin, Johnny R. Huckabay, Counsel for Appellee, First South Farm Credit.

DEUTSCH, KERRIGAN & STILES, L.L.P., William E. Wright, Jr., Melissa M. Lessell, Counsel for Appellee, Michael E. Kramer.

ALLEN & GOOCH, James H. Gibson, D. Paul Gardner, Jr., Counsel for Appellee, Dawn Hendrix Mims.

Before BROWN, CARAWAY & PITMAN, JJ.

OPINION

Page 930

[49,531 La.App. 2 Cir. 1] PITMAN, J.

Plaintiff-Appellants Christi Lynn Carter and Linda S. Payne, who serves as bankruptcy trustee for Michael Shawn Carter's estate, appeal the trial court's granting of motions for summary judgment filed by Defendant- Appellees First South Farm Credit (" First South" ) and Michael E. Kramer. The parties do not contest the trial court's denial of a motion for summary judgment filed by Defendant Dawn H. Mims.[1] For the following reasons, we affirm.

FACTS

In 2007 and 2009, the Carters signed two promissory notes in the amounts of $656,000 and $387,000, respectively, plus interest secured by mortgages in favor of First South. The loans were secured by 80 acres of immovable property in Richland Parish and by equipment, farm products and crops. In 2008, the Carters moved from Louisiana to Texas. In February 2010, they defaulted on the loans with First South. In October 2010, Mr. Kramer, the attorney for First South, sent a letter to the Carters at their address in Texas, stating that the loans were in default and that legal proceedings would be initiated if they were not paid. The Carters failed to pay the loans.

On December 21, 2010, Mr. Kramer filed a petition for executory process against the Carters on behalf of First South, alleging that the Carters were former residents of Louisiana who were now Texas residents and [49,531 La.App. 2 Cir. 2] requested the appointment of an attorney to represent their interests.[2] Ms. Mims was appointed as curator[3] and was served with the notice of seizure and sale for certain immovable and movable property owned by the Carters. Their immovable property was sold at sheriff's sale for $180,000. Following the seizure and sale, the deficiency was $244,696.21 with interest.

On April 4, 2012, the Carters filed a petition alleging a wrongful seizure and conversion of their property in that their immovable and movable property located in Richland Parish and/or Franklin Parish

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was sold at auction, but they did not receive notice of the seizures and sales until after the auctions. The Carters argued that Mr. Kramer failed to meet the burden necessary for the appointment of a curator. They also alleged that Curator Mims failed to perform her duties as curator because she did not file an answer to the petition for executory process, did not assert defenses on their behalf, did not file a curator's return and did not contact them prior to the sale of their immovable property. The Carters alleged that Mr. Kramer knew of Curator Mims's failures and yet proceeded with the sale of the immovable property. They further alleged that Mr. Kramer failed to contact them prior to the sheriff's sale even though he had their telephone numbers, email addresses and mailing address. They argued that the acts of [49,531 La.App. 2 Cir. 3] Mr. Kramer and Curator Mims in failing to contact them and provide them with proper notice of the seizure and sale of their property deprived them of their constitutional due process rights. The Carters argued that First South and Mr. Kramer could not obtain a deficiency judgment because they failed to provide them with proper notice of seizure or the right to appoint appraisers. The Carters also asserted that their due process rights were violated and that they have a 42 U.S.C. § 1983 claim. They alleged that First South, Mr. Kramer and Curator Mims did not meet the standard found in Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983), that required reasonable diligence to locate and serve them with the notice of seizure and sale when their location was not only reasonably ascertainable, but known by Mr. Kramer.[4] They contended that Mr. Kramer and First South are solidarily liable for all damages for wrongful seizure and conversion, including, but not limited to, compensation for inconvenience, loss of use, embarrassment, humiliation, mental anguish and worry, and compensatory damages.

On May 15, 2012, First South filed an answer, reconventional demand and cross claim. First South contended that the Carters failed to state a cause of action for wrongful seizure and/or conversion of property. It alleged that the sale of the Carters' property was insufficient to satisfy the balance of the performance due on notes, which resulted in a $244,696.21 deficiency, and asserted a reconventional claim for recovery of the [49,531 La.App. 2 Cir. 4] deficiency with interest and attorney fees. First South also asserted a cross claim against Curator Mims because the Carters alleged that her conduct in failing to contact them and give them proper notice precluded First South's entitlement to a deficiency judgment. In the alternative, First South sought recovery against Curator Mims for the amount of the deficiency judgment of which it was deprived and/or damages for which it may be cast.

On May 23, 2012, Mr. Kramer filed an answer in which he denied all liability for all acts and/or omissions and for all damages asserted by the Carters. In the alternative, he alleged that any damages suffered by the Carters for which he is responsible are the fault of the Carters and/or third parties. Mr. Kramer also contended that the Carters failed to mitigate their damages.

On November 21, 2013, First South filed a motion for partial summary judgment regarding the claims of and against Mrs.

Page 932

Carter because Mr. Carter was in bankruptcy. First South argued that a deficiency judgment was appropriate and that 42 U.S.C. § 1983 does not apply because First South is a private party and not a state actor and there was no violation of due process as notice was given.

On December 20, 2013, Mr. Kramer filed a motion for summary judgment, asserting that Mr. Carter had no right to bring the cause of action because he had filed for bankruptcy. Mr. Kramer contended that he acted lawfully in the foreclosure proceedings and was legally authorized to appoint a curator for the Carters because they were absentees as they resided outside of the state of Louisiana. He further stated that the notice of seizure [49,531 La.App. 2 Cir. 5] and sale to Curator Mims was proper as she was the Carters' curator; therefore, there was no violation of 42 U.S.C. § 1983.

On February 10, 2014, the Carters filed an opposition to the motions for summary judgment. They reasserted the claims raised in their original petition. First South and Mr. Kramer filed replies to the Carters' opposition and reasserted the claims made in their motions for summary judgment. A hearing was held on the motions for summary judgment and the exceptions of no right of action on February 18, 2014.

On February 25, 2014, the trial court filed written reasons for judgment. Regarding the exceptions of no right of action contained in the motion for summary judgment filed by First South, Mr. Kramer and Curator Mims, the trial court determined that, due to the filing of the Chapter 7 bankruptcy by Mr. Carter, he no longer had an interest in judicially enforcing the right asserted. The trial court stated that the only person who can enforce the right for Mr. Carter is the bankruptcy trustee and gave the Carters 30 days to amend their petition to state the correct plaintiffs. The trial court granted the motions for summary judgment filed by First South and Mr. Kramer and dismissed the Carters' suit with prejudice. The trial court further found that the appointment of a curator was proper in this situation, i.e., the Carters are nonresidents of the State of Louisiana, and it noted that First South and Mr. Kramer did not have a duty to ensure that the curator notified the Carters. It granted the motion for partial summary judgment filed by First South, resulting in a deficiency judgment against Mrs. Carter in the amount of $244,696.21 with interest, reasonable attorney [49,531 La.App. 2 Cir. 6] fees and court costs. A judgment on the motions for summary judgment and a judgment on the exceptions of no right of action were filed on March 19, 2014.

On March 26, 2014, the Carters filed a motion and order to amend their petition and requested that bankruptcy trustee Linda S. ...


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