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Franklin v. Regions Bank

United States District Court, W.D. Louisiana, Shreveport Division

July 12, 2019

ELIZABETH FRY FRANKLIN, ET AL.
v.
REGIONS BANK ELEANOR BAUGNIES DE ST. MARCEAUX
v.
REGIONS BANK

          TERRY A. DOUGHTY JUDGE

          SUPPLEMENTAL REPORT AND RECOMMENDATION

          KAREN L. HAYES UNITED STATES MAGISTRATE JUDGE

         Before the undersigned magistrate judge, on second reference from the District Court, is a motion to dismiss for failure to state a claim upon which relief can be granted [doc. # 75] filed by defendant Regions Bank (“Regions”). The motion is opposed. For reasons assigned below, it is recommended that the motion be DENIED, as originally filed, but GRANTED, on the grounds advanced by movant in its objection to the undersigned's initial report and recommendation.

         Procedural History[1]

         On February 12, 2019, Regions filed the instant motion to dismiss for failure to state a claim upon which relief can be granted. In its original motion, Regions argued that plaintiffs' claims had prescribed and were subject to dismissal because the agency agreements at issue in this consolidated case were subject to the Louisiana Credit Agreement Statute, which imposed a one year prescriptive period for any claim for breach of fiduciary duty stemming not only from credit agreements, but from all types of relationships that a financial institution (such as Regions) is a party to. See La. R.S. § 6:1124. Regions further argued that because plaintiff, St. Marceaux, did not allege that she had a written agency agreement with Regions, then the bank did not owe her a fiduciary obligation or responsibility. See La. R.S. § 6:1124.

         In their opposition to the motion to dismiss, plaintiffs clarified that they were prosecuting a claim for breach of contract, not a claim for breach of fiduciary duty. (Pl. Opp. Memo. [doc. # 77]). Nonetheless, in its reply brief, Regions re-urged dismissal on the same grounds asserted in its original motion, i.e., that plaintiffs' “true claim” was one for breach of fiduciary duty. [doc. # 78].

         On May 30, 2019, the undersigned readily concluded that plaintiffs were not asserting a claim for breach of fiduciary duty, and therefore, their cause of action was not subject to § 6:1124's one year prescriptive period. (May 30, 2019, R&R [doc. # 82]). Accordingly, the undersigned recommended that Regions' motion to dismiss be denied. Id. The court added, however, that the closer question was whether plaintiffs' claims really were ex contractu or, instead, did they sound ex delicto. Id. At least at the pleading stage, [2] and in the absence of any argument to the contrary, the undersigned was inclined to credit plaintiffs' allegations that Regions had breached specific contractual provisions. Id.

         On June 13, 2019, Regions filed an objection to the R&R, in which it stood by the bases for its original motion to dismiss, but then asserted that the undersigned had “fundamental[ly]” and unmistakabl[y]” erred by failing to recognize that 1) plaintiff, St. Marceaux's contract of mandate with Regions had to be in writing because it purportedly authorized the lease of mineral rights which had to be perfected by written act, La. Civ. Code Art. 2993; and 2) plaintiffs' remaining claims were delictual, and therefore, time-barred under Louisiana Civil Code Article 3492. (Regions Objection [doc. # 83]).

         Later that same day, the District Court noted that Regions, in its objection, had for the first time argued that plaintiffs' claims were prescribed as a delictual action under Louisiana Civil Code Article 3492. [doc. # 84]. Therefore, the District Court referred Regions' motion back to the undersigned for consideration of this new argument, via supplemental report and recommendation. Id. A few hours later, Regions filed a motion for summary judgment seeking dismissal of plaintiffs' claims on the basis that their claims sounded in tort and were prescribed. [doc. # 85]. The motion for summary judgment is pending before the District Court. [doc. # 86].

         On July 3, 2019, plaintiffs filed a supplemental opposition in response to Regions' modified prescription argument. [doc. # 91]. The matter is ripe.

         Discussion

         The court hereby adopts and incorporates the background, standard of review, and governing law sections of the May 30, 2019, R&R. The instant report supersedes only those portions of the prior R&R that are inconsistent herewith. Nonetheless, for ease of reading, the court will recite some provisions of the prior report.

         The Peironnet plaintiffs allege that they collectively own a majority interest in 1805.34 acres of property in various sections located within Caddo Parish, Louisiana (the “Property”) and that they contracted with Regions in writing “[t]o manage and supervise all said oil gas royalty and mineral interests, to do therewith what is usual and customary to do with property of the same kind and in the same locality . . . ” and “[t]o execute acknowledge and deliver oil, gas and mineral leases containing such terms and provisions as the bank shall deem proper . . .” (Peironnet Compl., ¶ 5 and the “Agency Agreement” attached thereto).

         In the second consolidated action, St. Marceaux alleged that she owned a minority interest in the Property and that she too had an agreement with Regions. (St. Marceaux Compl. ¶ 7). She further alleged that she was injured in the same manner and for the same reasons as the Peironnet Plaintiffs. (St. Marceaux Compl., ¶¶ 6-29 [doc. # 1]).

         Neither complaint specified a theory of liability. Plaintiffs, however, allege that Regions injured them by failing to draft an appropriate lease extension with an oil and gas exploration company.[3] In support of their claims, the Peironnet plaintiffs and St. Marceaux rely on the outcome of a lawsuit between themselves and the exploration company over the lease extension. Peironnet v. Matador Res. Co., 144 So.3d 791 (La. 2013). In its June 28, 2013, decision, the Louisiana Supreme Court determined that the lease extension was valid and that “the plaintiffs' failure to question the extension, to seek clarification of the acreage covered, or to even discuss the Deep Rights demonstrate[d] an inexcusable lack of ‘elementary prudence' or simple diligence . ...


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