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LLC v. Equity Trust Co.

Court of Appeal of Louisiana, Third Circuit

March 11, 2015



Steven J. Durio, Travis J. Broussard, Durio, McGoffin, Stagg & Ackermann, Lafayette, LA, ATTORNEY FOR PLAINTIFFS/APPELLEES: 308 Holding Company, LLC, Linda Rimes Donado and William J. Donado.

Robin B. Cheathem, Louis C. LaCour, Jr., Adams and Reese LLP, New Orleans, LA, ATTORNEY FOR DEFENDANTS/APPELLANTS: Equity Trust Company, Custodian, FBO Charles K. Breland, Jr., IRA.

Court composed of Sylvia R. Cooks, Elizabeth A. Pickett and Shannon J. Gremillion, Judges.


Page 588

[14 903 La.App. 3 Cir. 1] Sylvia R. Cooks, Judge.

These appeals arise from the trial court's judgment finding an alleged mortgage between the parties was instead a simulation and not a mortgage. The trial court nullified the alleged mortgage and granted an order to remove it from the public records. For the following reasons, we affirm the judgment of the trial court.


The facts established Plaintiffs, Linda Donado and her son, William Donado, were real estate agents who worked regularly for Charles Breland beginning in 2002. The Donados worked approximately nine years for Breland, purchasing and selling millions of dollars of properties in Mexico. The Donados worked on commissions they would receive from the sale or purchase of the properties.

In the fall of 2004, the Donados were due to receive several millions dollars in commissions in the near future, the first such commission to accrue following a December 15, 2004 closing. During this time period, Linda found herself facing a December 1, 2004 expiration of a purchase agreement for a home located at 101 Turfway Drive in Lafayette, Louisiana because her lessor/seller would not agree to an extension. She discussed her situation with Breland and asked if he would advance her $700,000 of the approximately $5.8 million the Donados would be receiving in commissions.

According to the Donados, Breland agreed to the advance, but conditioned the advance upon an agreement which would require the Donados to repay $1 million to Breland from the future commissions. The Donados stated Breland told Linda he did not personally have $700,000 available, but he could arrange for the loan to be made from his self-directed IRA. Linda was referred to Breland's counsel, who arranged for the loan to be funded by his IRA. Breland required a note and mortgage on the home at 101 Turfway Drive, but only to facilitate the use [14 903 La.App. 3 Cir. 2] of IRA funds from Equity Trust, the custodian of Breland's IRA, to make the advance. The Donados maintained they accepted Breland's condition and agreed to execute the repayment counterletter. All paperwork required by Equity Trust was properly completed and executed.

Breland argued he and the Donados had a " special agreement by which Breland would be paid $500,000 for each of the two transactions when each closed (one in December, 2004 and one in March, 2005)." His version of the arrangement differs significantly from that of the Donados. Breland testified he requested this arrangement due to the " windfall of commissions" the Donados were to receive. Breland maintained this was the reason the two payments of $500,000 were to be made to him.

The first $500,000 repayment was required on December 15, 2004, and the second was to be repaid from escrow after a second closing in March 2005. A $500,000 repayment was made by the Donados immediately upon receiving their commission following the December 15, 2004 closing. Following the March 2005

Page 589

closing, a large portion of the Donados commission was placed in an escrow account. In July of 2005, it is undisputed Breland withdrew the funds necessary to make the second repayment.

Despite the Donados repaying Breland the agreed upon $1 million, the mortgage was never removed from the public records. Although no demand was ever made for the home at 101 Turfway Drive, the terms of the mortgage provided a one year maturity date of December 1, 2005.

Several years later, in early 2007, the Donados became aware the home at 101 Turfway was still subject to the Equity Trust mortgage. The discovery was made when Linda attempted to execute a reverse mortgage on the property to acquire money to help care for her aging parents.

[14 903 La.App. 3 Cir. 3] William stated he contacted Breland and was told that Breland had not paid off the Equity Trust mortgage, despite the receipt of $1 million dollars from the Donados. Breland explained he needed to keep the mortgage in place and requested a substitute mortgage on William's house at 104 Turfway Drive. William testified that in an attempt to indulge Breland and continue their profitable business association, he agreed to the request and executed the mortgage, which released the mortgage on the property at 101 Turfway Drive.

Ultimately, the relationship between Breland and the Donados became contemptuous. On June 8, 2011, a " Petition to Extinguish Mortgage and Cancel Recordation" was filed by 308 Holding Company, and its duly authorized members, Linda and William Donado.[1] It sought to have the mortgage on the property at 104 Turfway Drive released. Named as defendant in the petition was Equity Trust Company, as the custodian of Charles Breland's IRA. Approximately four months after the Donados filed their petition, Equity Trust, purportedly at the request of Breland, sought to foreclose on ...

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