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Ursulines, L.L.C. v. Regions Bank

United States District Court, E.D. Louisiana

April 10, 2015

URSULINES, L.L.C.,
v.
REGIONS BANK AND ABC INSURANCE COMPANY, Section:

ORDER AND REASONS

MARY ANN VIAL LEMMON, District Judge.

IT IS HEREBY ORDERED that Regions Bank's Motion for Summary Judgment (Doc. #15) is DENIED.

BACKGROUND

This matter is before the court on a motion for summary judgment filed by defendant, Regions Bank. Regions argues this suit should be dismissed under the doctrine of res judicata because it is duplicative of plaintiff's prior suit against Regions regarding the same issues, which was dismissed with prejudice by this court, Ursulines, L.L.C. v. Regions Bank and ABC Insurance Company, Civil Action No. 12-2974 (E.D. La.) (Lemmon, J.).

In 2005, Ursulines sought to purchase vacant land in the Treme neighborhood of New Orleans, Louisiana for the purpose of developing a condominium complex. On July 8, 2005, Regions' predecessor in interest, AmSouth Bank, wrote to Cesar Burgos, Ursulines' representative, discussing the possibility of AmSouth's providing a construction loan to Ursulines, and outlining the terms and conditions of any such loan. That correspondence stated that it was "for discussion purposes only" and that "[t]his letter is not to be construed as a commitment to lend, but as an expression of [AmSouth's] interest in providing the financing outlined above." One of the terms of the proposal was the pre-sale of five of the condominium units.

On July 13, 2005, AmSouth issued a commitment letter to Burgos, in which it agreed to lend Ursulines $1, 050, 000 or 80% of the acceptable appraised value of the land or 75% of the contract price for the purchase of the land. The commitment letter did not include discussion of the construction loan that was proposed in the July 8, 2005, communication.

On August 12, 2005, a certified appraiser valued the property at $1, 400, 000. On August 15, 2005, Ursulines purchased the property for $1, 400, 000, and executed a loan agreement and a promissory note secured by a mortgage on the property in favor of AmSouth in the principal amount of $1, 050, 000. Thereafter, Ursulines engaged an architect to design the condominium complex, and began to pre-sell the properties. By August 29, 2005, Ursulines had pre-sold five units.

In February 2006, a certified appraiser reconfirmed that the value of the land was $1, 400, 000, and found that the value of the proposed improvements had a prospective market value of $7, 600, 000.

In May 2006, AmSouth merged with Regions, and Regions became the owner of the August 15, 2005, loan agreement and promissory note. However, Regions would not offer Ursulines a construction loan conforming to the terms that AmSouth outlined in the July 8, 2005, proposal. Instead, Regions required Ursulines to pre-sell all of the units to obtain the construction loan.

Thereafter, Ursulines renewed the promissory note with Regions several times, each time extending its maturity date. Ursulines alleges that it timely made all payments on the loan and reduced the principal balance while Regions held it. Ursulines claims that it invested over $1, 094, 730 toward the project, and Regions' new requirements to obtain the construction loan rendered impossible the condominium construction project.

Ursulines alleges that in August 2009, it learned that the loan was placed in Regions' "Special Assets' division, typically reserved for non-payment loan accounts, " and was informed that Regions "wished for Ursulines to either move the loan or right-size' the loan." Ursulines also alleges that it "learned that Regions had conducted an appraisal of the Property in November 2008 and valued the property at: $575, 000, which was 41% of the appraised value in August 2005." Ursulines claims that the November 2008 appraisal was incorrect because the property did not flood during Hurricane Katrina or Hurricane Rita and was adjacent to the French Quarter, and that Regions would not provide Ursulines with a copy of the appraisal.

Ursulines alleges that Regions then became "unyielding in its refusal to extend the maturity date of the loan beyond September 25, 2009, " and Ursulines "was thus forced to seek assistance from another lending institution before discharging the loan, and also incur additional refinancing costs."

Ursulines sought to refinance the loan with First NBC Bank. First NBC conducted an appraisal of the land on September 15, 2009, and found its value to be $1, 215, 000, which was 86% of the August 2005 appraisal value. However, First NBC would refinance only 70% of the appraised value, which was $789, 750. Thus, Regions retained the remaining $218, 224 of the mortgage note, "and Ursulines was told to move the note or Regions would move forward with defaulting Ursulines and its guarantors on its mortgage note." Ursulines alleges that it:

was forced to abandon the condominium construction project and due to Regions['] ardent pursuit of defaulting Ursulines on the property[, ] on May 18, 2010[, ] had to sacrifice the project and the valuation of the construction, even recognized by Regions, and sell the Property to a third party purchaser for one million two-hundred and fourteen thousand dollars ($1, 214, 000.00) at a great loss to Ursulines, between interest payments, principal payments, ...

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