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Dorries v. Linder

Court of Appeals of Louisiana, Second Circuit

January 11, 2017

DAVID L. DORRIES and LINDA L. DORRIES Plaintiffs-Appellants/Appellees
EDWARD EARLE LINDER Defendant-Appellant/Appellee

         Appealed from the Second Judicial District Court for the Parish of Claiborne, Louisiana Trial Court No. 40066 Honorable Jenifer Ward Clason, Judge

          DAYE, BOWIE & BERESKO, APLC By: R. Scott Bowie Counsel for David L. Dorries and Linda L. Dorries, Plaintiffs/ Second Appellants.

          KITCHENS LAW FIRM By: Graydon K. Kitchens, Jr. Counsel for Edward E. Linder, Defendant/First Appellant, and X-Sell Properties LLC, Intervenor/First Appellant.

          Before DREW, GARRETT, and STONE, JJ.

          GARRETT, J.

         This litigation arises from a family dispute over an unpaid debt. The plaintiffs, David and Linda Dorries, are seeking to execute on a deficiency judgment against Linda's brother, Edward Earle Linder ("Earle"), by seizing and selling at sheriff's sale his interest in immovable property located in Claiborne Parish. Earle claimed to have sold the property to a third party, who later intervened in the suit. Both sides appeal from a trial court judgment which upheld an injunction in favor of Earle and the intervenor, enjoining the seizure and sale of the property until the intervenor's alleged ownership could be adjudicated. The judgment then fully adjudicated the ownership claim by granting a revocatory action on behalf of the plaintiffs and annulling Earle's sale to the intervenor. Earle and the intervenor contend that the trial court erred in annulling their transaction and that the intervenor acquired the property free and clear of the plaintiffs' judicial mortgage. The plaintiffs agree with the ruling on their revocatory action, but also seek relief on some matters not ruled upon below and argue the trial court should not have assessed them half of the court costs. Both sides claim they are entitled to damages and attorney fees. For the reasons set forth below, we affirm the trial court judgment in part and reverse in part.


         What began as a simple executory process lawsuit has now spun totally out of control due to the actions of Earle in failing to repay an obligation he clearly owed. In order to understand the chain of events leading up to the judgment that is now before us, some background information is necessary.

         Linda Linder Dorries, Earle Linder, and Randall Ray Linder are the children of R.B. Linder and Bobbie Ray Linder. In April 2003, the parents created a revocable inter vivos trust in which they designated themselves as the settlors, the sole income beneficiaries, and the trustees. Among other assets, several tracts of immovable property were placed in the trust by an act of donation. They included tracts in Claiborne Parish, one of which contained the parents' residence and another containing what was known as "the yellow house." Several of these tracts were located close to Lake Claiborne. The original act of donation involving the immovable property contained almost five single-spaced, legal-size pages of very complicated property descriptions.

         Over time, the trust documents were amended on several occasions. The original trust document provided that, upon the death of the settlor last to die, the principal of the trust and all undistributed income "shall be immediately distributed" to the three Linder children in equal portions. It also initially provided that, after the deaths of both parents, Earle was to be temporary successor trustee for "the single purpose of winding up the affairs of this trust and making the final distribution of the corpus thereof to the principal beneficiaries." In a 2006 amendment, Earle and Randall were named temporary successor co-trustees for the same purpose.

         The father died on November 13, 2010. In March 2012, the mother amended the trust to give a right of first refusal to purchase the property containing the parents' home to Randall and "the Hatfield lot"[1] to Earle. It also provided that upon her death, the trust would terminate "as soon as is reasonable." It further stated that, subject to the rights of first refusal, the remaining principal, income from the sale of the two tracts, and all undistributed income "shall be immediately distributed to . . . children of Settlors, in equal proportions to each, free of trust." In August 2013, the mother resigned her position as trustee due to her declining health and appointed Earle and Randall as successor trustees. The last amendment to the trust was made in May 2014. The mother expressly revoked the 2012 amendment and the right of first refusal given to Earle for the Hatfield lot. However, Randall's right of first refusal on the parents' residence was maintained. The amendment stated that "[u]pon the death of the second settlor to die the trust shall be terminated as soon as is reasonable." This amendment included language that, subject to Randall's right of first refusal, "the remaining principal of this trust, income from the sale of the above tract, and all undistributed income shall be immediately distributed" to the three children "in equal proportions to each, free of trust, except that [Earle's] share shall be reduced by $12, 000." The mother died on July 9, 2014. As explained below, the immovable property remaining in the trust was not transferred by the trustees to the Linder children until January 2015.

         Over the years, Linda and her husband, David, had loaned a substantial amount of money to Earle. The debt was evidenced in two promissory notes: a 2011 note for $115, 000 and a 2012 note for $25, 000. Earle secured the loans with a mortgage on two tracts of property he owned near Lake Claiborne. After Earle failed to repay them, the Dorrieses filed a petition for executory process on December 13, 2013. The property mortgaged by Earle was seized and sold, with benefit of appraisal, at sheriff's sale to the Dorrieses for $76, 533.33, on February 12, 2014.

         On July 16, 2014, the Dorrieses filed a petition for a deficiency judgment in the amount of $79, 585.59, as of February 12, 2014, plus interest, and attorney fees of 15% of the amount due on November 5, 2013. Earle, acting in proper person, filed a general denial answer on August 1, 2014.

         The Dorrieses then filed a motion for summary judgment, which was set for hearing on October 2, 2014. After the sheriff was unsuccessful in serving Earle, a private process server was appointed, who eventually located him. Paul Kitchens, as Earle's counsel, filed an answer, an opposition to the motion for summary judgment, and a motion for continuance which asserted that Earle was domiciled in California. Over the Dorrieses' objections, the continuance was granted, and the matter was reset for November 3, 2014. The Dorrieses also responded to the opposition.

         On November 3, 2014, the trial court granted the plaintiffs' motion for summary judgment in open court and awarded them a deficiency judgment of $79, 585.59, with interest, plus attorney fees of $22, 312.50. At the conclusion of the hearing, Paul Kitchens filed a motion to withdraw as Earle's counsel of record. However, he agreed to sign the judgment on the motion for summary judgment when it was prepared. The trial court granted his motion and signed the judgment allowing him to withdraw. Judgment in conformity with the trial court's ruling on summary judgment was signed on November 18, 2014. This judgment was recorded in the mortgage records of Claiborne Parish on November 26, 2014.[2]

         In the meantime, on November 4, 2014, Paul Kitchens notarized a cash sale deed whereby Earle purported to sell his interest in certain immovable property to X-Sell Properties, LLC, a Colorado company, for $25, 000. The document had already been executed by X-Sell's manager, Vicki Schmidt, on October 31, 2014, before a notary public in Arizona. The deed recited that no title opinion had been performed or requested and that the parties furnished the legal description. A lengthy, detailed - and very confusing - description of the property being sold was attached to the deed as an exhibit. While the property descriptions appear generally to track those in the 2003 original act of donation transferring the Linders' property to the trust, the descriptions contained numerous errors and included property no longer owned by the trust. In addition to the property near Lake Claiborne, the list of property sold to X-Sell by Earle included interests in two other Claiborne Parish tracts and mineral rights to property in Claiborne Parish and Arkansas. The appearance clause recited that Earle lived in California. The cash sale deed was recorded in the conveyance records of Claiborne Parish on November 5, 2014.

         The Dorrieses sought to collect on their deficiency judgment against Earle. Since he had moved to California and was supposedly no longer represented by Paul Kitchens, they requested a writ of attachment, based upon Earle being "a nonresident who has no duly appointed agent for service of process within the state, " pursuant to La. C.C.P. art. 3541. They sought to attach Earle's interest in property that had been in the name of the Linder parents' trust, which included a checking account, bank stock shares, immovable property, and mineral rights. The writ of attachment was granted on December 22, 2014.

         On January 9, 2015, Earle - again represented by Paul Kitchens - filed both a petition for declaratory judgment and a motion seeking dissolution of the writ of attachment. He claimed that the issuance of the writ of attachment violated a spendthrift clause in the trust and Louisiana law. Although he had alleged that he was domiciled in California in his earlier motion for continuance, he now asserted that he was only "temporarily domiciled in California, " thus making issuance of the writ of attachment improper. He requested attorney fees and court costs.

         In response, the Dorrieses cited the recent transfer deed from the trustees of the Linder parents' trust to the beneficiaries, which had been filed in the Claiborne Parish conveyance records on January 20, 2015. The document was executed by all three of the Linder children, including Earle, who again recited that he was a resident and domiciliary of California. The deed transferred to each child an undivided one-third interest of several tracts of land in Claiborne Parish, as well as mineral rights to property in Claiborne Parish and Arkansas, a party barge, and stock. Many of the property descriptions in this document differed from those in the original 2003 act of donation due to subsequent alienations of portions of the property and also because of updated and more precise descriptions developed pursuant to 2014 surveys of the Lake Claiborne tracts.[3] The document also excepted certain property from the transfer - the property to which Randall had been given right of first refusal, [4] and two tracts sold to the Dorrieses in 2012.[5] The transfer document consisted of 14 pages, which included several surveys and is rather complex, to say the least.

         On February 6, 2015, Paul Kitchens executed a document entitled "Notarial Act of Correction, " which referenced the cash sale deed between Earle and X-Sell that he notarized on Earle's behalf on November 4, 2014. The document recited that "inaccuracies" were included in the property descriptions and purported to correct these mistakes. It appeared to track the new property descriptions found in the January 2015 transfer deed from the trustees to the beneficiaries. The act recited that Earle was not the record owner at the time of the recordation of the cash sale deed, and then asserted the application of the doctrine of after-acquired title to attempt to cure title issues. This document was not executed by either Earle or X-Sell - only by one of the two notaries to the original deed, pursuant to La. R.S. 35:2.1. The "Notarial Act of Correction" was notarized by Graydon Kitchens, Jr., a member of the same law firm.

         The Dorrieses continued their efforts to collect their deficiency judgment, as Earle tried to thwart them. The Dorrieses agreed not to pursue the writ of attachment. However, on March 2, 2015, a writ of fieri facias was issued seizing Earle's right, title and interest in his mother's succession.

         A judgment debtor examination was held on March 9, 2015. The judge who presided over the trial in this matter also presided over the judgment debtor exam. Earle did not bring all the financial documents requested by the Dorrieses. He testified that in the summer of 2014, he received $140, 000 from his parents' trust and that he had spent all but $300 of it on "traveling, normal business expenses, . . . normal household expenses, gambling." He could not provide a detailed description of where the money went. He also admitted that he had sold for "$10.00 and other valuable considerations" a tract of property in Arizona which he had purchased for about $500, 000. Earle was ordered to produce certain financial documents when the examination resumed on May 4, 2015. From the record before us, it does not appear that another judgment debtor exam was conducted.

         On April 24, 2015, Earle filed a motion for dissolution of the writ of fieri facias pertaining to his mother's succession, as well as attorney fees, damages and a permanent injunction. He asserted that the property sought by the Dorrieses was actually still owned by the family trust. By consent judgment signed on June 25, 2015, the parties agreed that, if the trust still existed, any property it owned was excluded from this writ of fieri facias.

         On June 8, 2015, the Dorrieses requested a writ of fieri facias to seize and sell the tracts of immovable property which Earle had allegedly transferred to X-Sell. On June 15, 2015, the Dorrieses filed a motion for appointment of an attorney, pursuant to La. C.C.P. art. 2293, for service of a writ of fieri facias to X-Sell. The description of the properties to be seized utilized the newer property descriptions from the 2014 surveys and tracked the language of the January 2015 transfer deed. The properties were the tract containing the yellow house; the 50-foot lakefront tract; a 100-acre tract and a 120-acre tract, both in Claiborne Parish[6]; and mineral rights to a 40-acre tract in Claiborne Parish.

         On July 15, 2015, X-Sell - represented by the same law firm as Earle - filed a petition of intervention captioned as a "Motion for Dissolution of Writ of Fieri Facias, for Injunction, and for Attorney's Fees and Damages." Earle was also a party to this pleading, which was filed on behalf of him and X-Sell by Graydon Kitchens. X-Sell asserted that it had obtained all of Earle's interest in certain immovable property in Claiborne Parish under the doctrine of after-acquired title and that the judicial mortgage recorded on November 26, 2014, never attached to or encumbered the property. The sale of the property scheduled for August 5, 2015, was enjoined by the trial court, pending adjudication of X-Sell's claim of ownership.

         In their answer to the petition of intervention, the Dorrieses asserted that Earle had no interest in the immovable property at issue at the time he purported to sell it to X-Sell. Also, the property descriptions in the purported sale were incorrect and had to be corrected in February 2015. They maintained that their November 2014 judicial mortgage recorded against Earle attached to the property he acquired from the trust in January 2015 and continued to do so. In a reconventional demand, they asserted a revocatory action under La. C.C. art. 2036 and requested that the purported sale to X-Sell be annulled. The Dorrieses requested dissolution of the injunction, as well as attorney fees and costs.

         A trial was finally held on November 5, 2015.[7] Although the proceedings were supposed to be limited to issues susceptible to summary disposition, the trial court elected to hear all issues as a matter of judicial economy and courtesy to the parties who lived out-of-state - Earle in California and Ms. Schmidt, X-Sell's managing broker, in Colorado. The parties acquiesced in this procedure and thus all issues were before the court. The parties stipulated that the value of Earle's portion of the disputed property in Claiborne Parish was $66, 406.[8] Numerous documents and exhibits were admitted into evidence, including trust documents and amendments, deeds, and financial records.

         Extensive evidence was taken on Earle's finances, specifically his bank records, which will be discussed in detail infra. Additionally, Earle denied giving Ms. Schmidt money before or after executing the cash deed to her. However, he admitted that he made many large cash withdrawals in that time period. He explained the process by which he came up with the $25, 000 sale price in the cash deed. Since he had once had a right of first refusal to buy the yellow house for $40, 000, he came up with $50, 000 "just off the top of my head" for all of the property he was selling her. Since it was undivided property, he then divided that price by half.

         The testimony established that Earle and Ms. Schmidt, a real estate broker, were childhood friends. She admitted that she relied upon what Earle told her about the property; that she was unaware that he did not own it at the time of the sale; that she had neither a title opinion nor an appraisal done on the property; and that she thought the property sounded "very interesting for $25, 000.00."[9] Ms. Schmidt testified that she would not have bought the property had she known Earle did not own it. When asked if Earle was paying her legal fees in the current litigation, she replied that she did not know, but ...

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