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SBN V FNBC LLC v. Vista Louisiana, LLC

Court of Appeals of Louisiana, Fourth Circuit

March 27, 2019


          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2018-00262, DIVISION "I-14" Honorable Piper D. Griffin, Judge



          Court composed of Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins, Judge Paula A. Brown

          Rosemary Ledet, Judge.

         This is a suit on a promissory note. From the trial court's judgment granting the motion for summary judgment filed by the plaintiff, SBN V FNBC LLC ("SBN"), the defendant, Vista Louisiana, LLC ("Vista"), appeals. Vista also seeks review of the trial court's interlocutory judgment denying its motions for new trial and to compel discovery. The issues before us on this appeal are two-fold: (i) whether the trial court prematurely granted summary judgment without allowing Vista adequate discovery; and (ii) whether the trial court erred in finding that SBN was entitled to summary judgment on its claims against Vista. Because SBN's motion for summary judgment revolves around two legal determinations- construction of a contract (the Business Loan Agreement) (the "Contract") and interpretation of a statute (the Louisiana Loansharking Statute, La. R.S. 14:511) (the "Statute")[1]-we find the trial court did not prematurely rule on SBN's summary judgment motion. On the merits, we find no legal error in the trial court's rejection of Vista's defenses. For these reasons, we affirm the trial court's judgment granting SBN's summary judgment motion.


         On July 15, 2015, Vista executed a promissory note payable to the order of First NBC Bank ("FNBC") (the "Note"). The original principal amount of the Note was $1, 000, 000.00. The Note was payable "in full immediately upon Lender's demand" or, if no demand was made, "no later than February 28, 2016." The Note had a variable interest rate. Contemporaneously with the execution of the Note, Vista executed the Contract with FNBC. Pursuant to the Contract, Vista provided a Letter of Credit (the "LOC"), which was in the same amount as the Note, as security for the Note.

         In April 2017, FNBC closed; and the Federal Deposit Insurance Corporation (the "FDIC") was named as FNBC's receiver. At that time, the Note was in default. In October 2017, the FDIC entered into a loan sale agreement with SBN. Pursuant to that agreement, SBN purchased from the FDIC a pool of loans, which included the Note. On the allonge attached to the Note, the FDIC endorsed the Note to the order of SBN.

         In January 2018, SBN commenced this suit on the Note against Vista. In its petition, SBN averred that it was the holder of the Note and that it had the rights of a holder in due course. In its petition, SBN prayed for a judgment against Vista for the following five items: (i) the unpaid principal balance of the Note- $1, 000, 000.00; (ii) the accrued unpaid interest due on the Note through January 5, 2018-$75, 104.16; (iii) additional default interest of 21% from January 6, 2018, until paid;[2] (iv) late charges-$2, 000.00; and (v) attorneys' fees of 25% of the total sum due.

         In March 2018, Vista answered the suit asserting the following two defenses: (i) off-set based on FNBC's failure to timely draw down on the LOC (the "LOC Defense"); and (ii) absolute nullity based on the Statute (the "Loansharking Defense").

         Shortly after Vista's answer was filed, SBN filed a motion for summary judgment, contending that it was a holder in due course. In support, SBN provided an affidavit of Kelli Wood, SBN's custodian of records. In her affidavit, Ms. Wood identified the Note and the facts surrounding SBN's acquisition of the Note. Attached to her affidavit and identified in it were copies of the Note and the Contract.

         Opposing the motion, Vista acknowledged the validity of the Note and the Contract; however, it disputed SBN's status as a holder in due course. On the merits, Vista asserted the same two defenses it asserted in its answer-the LOC Defense and the Loansharking Defense.

         In support, Vista attached to its opposition affidavits from the following three people: (i) Lawrence Starkman, Vista's manager; (ii) John Seago, Vista's attorney; and (iii) Rene Meaux, a certified public accountant retained by Vista. Mr. Starkman attested that Vista had "filed Interrogatories, Requests for Production of Documents and Admissions of Fact which requested SBN to provide the exact amount SBN paid for the Vista loan" (the "Discovery Requests"). Mr. Seago attested that he prepared the Discovery Requests. Attached to and identified in Mr. Seago's affidavit was a copy of the Discovery Requests. Mr. Meaux attested that he performed calculations based on the average price paid in each pool for each loan and that he concluded the rate of return sought by SBN exceeded 45% per annum.[3] Attached to Mr. Meaux's affidavit were copies of his report and a summary of his calculations.

         On May 11, 2018, the summary judgment hearing was held. At the hearing, SBN conceded, contrary to the allegation in its petition, that it was not a holder in due course; and Vista requested a continuance to conduct discovery. Vista stressed that, on April 17, 2018, it filed the Discovery Requests; that SBN had not yet answered them; and that SBN's responses were not due until May 17, 2018, six days after the hearing. At the hearing, the trial court orally granted SBN's motion for summary judgment and, by implication, denied Vista's request for a continuance. Although the trial court granted SBN's summary judgment motion at the hearing, two weeks later (on May 25, 2018), Vista filed a motion to compel, seeking a response to the Discovery Requests.

         On June 1, 2018, [4] the trial court rendered a written judgment granting SBN's summary judgment; the judgment was in favor of SBN and against Vista for the amounts prayed for in the petition with the one exception.[5] Five days later (on June 6, 2018), Vista filed a motion for new trial, asserting the same two defenses that it raised in its answer and its opposition to the motion for summary judgment. The trial court denied both the motion to compel and motion for new trial. Vista appealed.


         "Summary judgments are reviewed de novo on appeal, with the reviewing court using the same criteria that govern the trial court's determination of whether summary judgment is appropriate; whether there is any genuine issue of material fact, and whether the movant is entitled to judgment as a matter of law." Smith v. Robinson, 18-0728, p. 5 (La. 12/5/18), __ So.3d __, __, 2018 WL 6382118, *3 (citing La. C.C.P. art. 966; Louisiana Safety Ass'n of Timbermen Self-Insurers Fund v. Louisiana Ins. Guar. Ass'n, 09-0023, p. 5 (La. 6/26/09), 17 So.3d 350, 353). Likewise, "when a matter involves the interpretation of a statute, it is a question of law, and a de novo standard of review is applied." New Orleans Fire Fighters Pension & Relief Fund v. City of New Orleans, 17-0320, p. 5 (La.App. 4 Cir. 3/21/18), 242 So.3d 682, 688 (citing Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't. of Econ. Dev., 10-0193, p. 9 (La. 1/19/11), 56 So.3d 181, 187).

         The summary judgment procedure is favored. La. C.C.P. art. 966(A)(2).[6]The standard for obtaining a summary judgment is set forth in La. C.C.P. art. 966(A)(3), which provides that "[a]fter an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law." Whether a fact is material is a determination that must be made based on the applicable substantive law. Roadrunner Transp. Sys. v. Brown, 17-0040, p. 7 (La.App. 4 Cir. 5/10/17), 219 So.3d 1265, 1270 (citing Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La. 7/5/94), 639 So.2d 730, 751).

         Typically, suits on promissory notes are appropriate for summary judgment when the debtor establishes no defense against enforcement. American Bank v. Saxema, 553 So.2d 836, 845 (La. 1989); Premier Bank v. Percomex, Inc., 615 So.2d 41, 43 (La.App. 3d Cir. 1993); see also Fed. Deposit Ins. Corp. v. Cardinal Oil Well Servicing Co., Inc., 837 F.2d 1369, 1371 (5th Cir.1988) (observing that "[t]ypically, suits on promissory notes provide fit grist for the summary judgment mill").

         In a suit on a promissory note, the plaintiff-lender's burden of proof is straightforward; "the [plaintiff-lender's] production of the note sued upon makes his case." Merchants Trust & Sav. Bank v. Don's Int'l, Inc., 538 So.2d 1060, 1061 (La.App. 4th Cir. 1989); Pannagl v. Kelly, 13-823, p. 6 (La.App. 5 Cir. 5/14/14), 142 So.3d 70, 74 (observing that "[o]nce the plaintiff, the holder of a promissory note, proves the maker's signature, or the maker admits it, the holder has made out his case by mere production of the note and is entitled to recover in the absence of any further evidence"). In order to defeat summary judgment, the defendant-borrower must assert a valid defense to liability on the promissory note, not separate and distinct claims that are unrelated to the question of liability. Saxena, 553 So.2d at 844.

         Here, Vista does not dispute the validity of the Note produced by SBN. Rather, as noted elsewhere in this opinion, Vista asserts two defenses to the Note. Villa also asserts the procedural argument that summary judgment was prematurely granted and that its request to continue and to compel discovery should have been granted. Addressing the issues Vista raises on appeal, we divide our analysis into three parts-prematurity, the LOC Defense, and the Loansharking Defense.

         P ...

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