FROM THE 21st JUDICIAL DISTRICT COURT ST. HELENA
PARISH, LOUISIANA DOCKET NUMBER 22, 106, DIVISION
"B" HONORABLE CHARLOTTE FOSTER, JUDGE
M. Harlan Baton Rouge, Louisiana Scott H. Sledge Hammond,
Louisiana Attorneys for Plaintiff/ Appellant American Bank
Brener New Orleans, Louisiana Attorney for Defendant/
Appellee Singleton Farm, Inc.
BEFORE: WHIPPLE, C.J., McDONALD, and CHUTZ, JJ.
appeal, a bank, as mortgagee, challenges a judgment ordering
cancelation of a mortgage on a corporation's immovable
property and also ordering the bank to pay attorney fees and
costs to the corporation for the bank's failure to timely
dismiss one of its claims against the corporation. We reverse
in part and affirm in part.
AND PROCEDURAL BACKGROUND
Farm, Inc. (SFI) is a Louisiana corporation in Greensburg,
Louisiana.SFI was incorporated in 1992 by Ernest and
Evelyn Singleton, the original two directors. At some point,
Mr. and Mrs. Singleton transferred ownership of their farm to
SFI, which included about 157 acres of land containing a farm
house, a dairy barn, three ponds, and some patches of timber
(Singleton Farm). Records on file with the Louisiana
Secretary of State show that Mr. and Mrs. Singleton were the
only two SFI directors until their respective deaths in
November and December 2001.
Mrs. Singleton had one son, Ernest "Lynn"
Singleton, an attorney whose practice was also in Greensburg.
After his parents died, Lynn Singleton did not institute
succession proceedings to deal with their estates. In 2001,
however, he filed SFI's 2001 domestic corporation annual
report with the Secretary of State, listing his deceased
father and his surviving mother as directors, and signing the
form designating himself as SFI's "President]."
In 2004, he again filed SFI's 2004 annual report, marking
through his father's name as a director, and writing in
his own name, address, and identifying himself as SFI's
"President." Similar annual reports, identifying
Lynn Singleton as SFI's president, were filed for later
years, including 2007, 2008, 2009, and 2011.
August 2010, Lynn Singleton personally obtained a $225, 550
loan from American Bank and Trust (AB&T) with the stated
purpose of "improvements to farm." The proceeds of
this first loan were deposited into SFI's bank account.
In July 2012, Lynn Singleton renewed the loan and borrowed
additional money, for "business expenses, "
totaling $240, 747.65. And, in November 2012, he obtained a
third loan for $13, 650 for "business expenses."
All three loans to Lynn Singleton were secured by a multiple
indebtedness mortgage on Singleton Farm (the Mortgage),
executed by him as SFI's purported president. At trial,
Lynn Singleton testified that he used the loan proceeds to
pay bills, to carry on his dozer business, and for his law
2013, Lynn Singleton had developed Parkinson's disease,
had had a long-term alcohol abuse problem, and was committed
to a mental institution. In June 2013, his daughter, Stacy
Head, was helping to clean out her father's office in
preparation to close his law practice. She discovered her
deceased grandparents' executed but unprobated wills, in
which Mr. and Mrs. Singleton had left all of their property
to each other, and if one predeceased the other, then each
spouse left all of his/her property to Lynn's children,
Ms. Head and her brother, Michael Singleton (grandchildren),
to share. This property included all SFI stock. Ms.
Head also discovered documents showing that her father had
previously obtained the three loans from AB&T and, as
SFI's purported president, had granted AB&T the
Mortgage to secure the loans. Before June 2013, the
grandchildren did not know their grandparents had left wills
naming them as legatees.
2013, the grandchildren filed a petition, alleging the
discovery of their grandparents' attached wills; that
Mrs. Singleton had become Mr. Singleton's universal
legatee in accordance with his will when he died in November
2001; that the grandchildren had become Mrs. Singleton's
universal legatees in accordance with her will when she died
in December 2001; and requesting that they be put into
possession, without administration, of her property. On July
29, 2013, a district court signed a judgment of possession,
recognizing the grandchildren as Mrs. Singleton's
universal legatees, and giving them possession of enumerated
property, including "[a]ll right, title and interest in
and to 100% of corporate stock of [SFI]." Two days
later, the grandchildren's attorney wrote a letter to
AB&T, claiming that the Mortgage was invalid and asking
that it be released. Also, about that time, SFI filed updated
records with the Secretary of State listing Ms. Head as
SFI's president and registered agent.
then filed a petition for executory process against Lynn
Singleton and SFI, alleging that Lynn Singleton had defaulted
on the three loans and seeking seizure and sale of Singleton
Farm to satisfy his outstanding debt. SFI responded with an
application for preliminary injunction to stop the seizure
and sale of its property. After a hearing, the district court
signed a judgment temporarily enjoining AB&T from
proceeding with the sale, after finding that AB&T had not
done "enough to protect [its] interest" before
making the loans to Lynn Singleton.
later filed an amended petition, converting the matter to an
ordinary proceeding and adding a claim for damages against
SFI (in addition to the in rem claim against Singleton Farm),
in the event the Mortgage against Singleton Farm was found
unenforceable. According to AB&T, Lynn Singleton
transferred part of the loan proceeds to SFI, and AB&T
was entitled to recover those funds from SFI. SFI answered
the amended petition, discovery was conducted, motions were