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SE Property Holdings, LLC v. Gibson

United States District Court, E.D. Louisiana

June 13, 2018

SE PROPERTY HOLDINGS, LLC
v.
CHARLES GIBSON, ET AL.

         SECTION: “J” (5)

          ORDER AND REASONS

          CARL J. BARBIER UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion for Summary Judgment (Rec. Doc. 13) filed by Plaintiff, SE Property Holdings, LLC, and two oppositions thereto (Rec. Docs. 23, 25) filed by Defendants, Jeffrey Green, Cecile Green, and Charles Gibson. SE Property Holdings, LLC, has also filed a reply (Rec. Doc. 29). Having considered the motion and legal memoranda, the record, and the applicable law, the Court finds that the motion should be GRANTED.

         FACTS AND PROCEDURAL BACKGROUND

         The facts in this case are not in dispute. On November 19, 2007, Jeffrey Green and Cecile Green (the “Greens”) purchased a tract of immovable property located in Washington Parish, Louisiana (“Tract A”). In connection with the purchase, the Greens granted First National Bank of Baldwin a properly recorded security interest in Tract A to secure the amounts owed under a promissory note (the “FNBB Mortgage”). Over the next few years, the Greens purchased three additional tracts of immovable property (“Tract B, ” “Tract C, ” and “Tract D”) also located in Washington Parish.[1]

         On July 13, 2012, the Greens executed a mortgage in favor of Charles Gibson (“Gibson”) as to Tracts A, C, and D, which mortgage secured a $200, 000 debt owed by the Greens to Gibson (the “Gibson Mortgage”). Upon being filed in the Washington Parish records, the Gibson Mortgage established the second encumbrance on Tract A (inferior to the FNBB mortgage), and the sole encumbrance on Tracts C and D. Tract B, however, remained unencumbered.

         On September 27, 2013, Plaintiff, SE Property Holdings, LLC (“SEPH”), obtained a judgment against the Greens in the principal amount of $23, 626, 922.31 plus interest, reasonable attorneys' fees, and costs. SEPH's judgment was recorded in the property records of Washington Parish on July 15, 2014, thereby perfecting a judicial mortgage against Tracts A, B, C, and D. Consequently, SEPH's judicial mortgage established the third encumbrance on Tract A, the second encumbrance on Tracts C and D, and the sole encumbrance on Tract B. SEPH foreclosed on Tract B in execution of its judgment, and subsequently acquired the property on June 3, 2015.

         On April 10, 2015, Gibson acquired the FNBB Mortgage and underlying promissory note by assignment from Tarpon Pool I, LLC.

         On August 13, 2015, the Greens executed a dation en payment, or giving in payment, in favor of Gibson, which transferred Tracts A, C, and D to Gibson in satisfaction of the FNBB Mortgage and the Gibson Mortgage (the “Mortgages”). The parties recorded the dation in the conveyance and mortgage records of Washington Parish the following day. One week later, on August 20, 2015, Defendants attempted to rescind the dation by executing and filing an “Act of Rescission of Dation en Paiement” (the “Act of Rescission”) into the conveyance and mortgage records of Washington Parish.

         On August 8, 2017, SEPH filed this lawsuit against Defendants seeking a declaratory judgment that the Mortgages are null and void and without any legal effect. SEPH also seeks injunctive relief as may be necessary to enforce and effectuate its declaratory judgment.

         PARTIES' ARGUMENTS

         SEPH contends that it is entitled to judgment as a matter of law because the Mortgages were extinguished by confusion as a result of the dation. In addition, SEPH argues that because the obligations were extinguished, Defendants' subsequent Act of Rescission was without any legal effect and failed to revive the Mortgages.

         Defendants argue that summary judgment is improper for a host of reasons. First, Defendants argue that the Mortgages were not extinguished by confusion because Gibson had an interest in keeping the titles distinct and separate to ensure that the property actually satisfied the obligations being forgiven by the dation. To this end, Defendants contend that even if the Court determines that the Mortgages are extinguished, Gibson should retain his ranking and priority prior to confusion for the amount owed on the Mortgages. Next, Defendants argue that summary judgment is improper because the prescriptive period for bringing a claim to have the dation declared a relative nullity has not expired. Lastly, Defendants contend that the Act of Rescission successfully dissolved the dation and restored the parties to the situation they were in before the dation was executed.

         LEGAL ...


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