The opinion
STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
12-1406
ST. LANDRY HOMESTEAD FEDERAL SAVINGS BANK
VERSUS
HUBERT VIDRINE, JR. ET AL.
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APPEAL FROM THE
TWENTY-SEVENTH JUDICIAL DISTRICT COURT
PARISH OF ST. LANDRY, NO. 11-C-5310-A
HONORABLE JAMES P. DOHERTY JR., DISTRICT JUDGE
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JIMMIE C. PETERS
JUDGE
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Court composed of Sylvia R. Cooks, Jimmie C. Peters, and Billy Howard Ezell,
Judges.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Cliffe E. Laborde, III
Cliff A. LaCour
Laborde & Neuner
P.O. Box 52828
Lafayette, LA 70505-2828
(337) 237-7000
COUNSEL FOR DEFENDANTS/APPELLANTS:
Hubert Vidrine, Jr., Tammy Vidrine, and
Vidrine Estates, LLC
Gary T. Cornwell
The Cornwell Law Firm
12314 Hawthorne Drive
Montgomery, TX 77356
(936) 448-7789
COUNSEL FOR DEFENDANTS/APPELLANTS:
Hubert Vidrine, Jr., Tammy Vidrine, and
Vidrine Estates, LLC
James H. Gibson
David J. Ayo
Allen & Gooch
P. O. Box 81129
Lafayette, LA 70598-1129
(337) 291-1450
COUNSEL FOR PLAINTIFF/APPELLEE:
St. Landry Homestead Federal Savings Bank
Michael D. Singletary
Singletary & Associates, APLC
P. O. Box 97
Opelousas, LA 70571-0097
(337) 407-8990
COUNSEL FOR PLAINTIFF/APPELLEE:
St. Landry Homestead Federal Savings Bank
PETERS, J.
Hubert Vidrine, Jr., Tammy J. Vidrine, and Vidrine Estates, LLC (the
Vidrines) are both defendants and plaintiffs-in-reconvention in this litigation.
They are before this court appealing the trial court judgment rendered in favor of
the plaintiff and defendant-in-reconvention, St. Landry Homestead Federal Savings
Bank (the Bank), granting its peremptory exception of no cause of action and
dismissing their reconventional demand. For the foregoing reasons, we affirm the
trial court judgment in part, reverse it in part, and remand the matter to the trial
court for further proceedings consistent with this opinion.
DISCUSSION OF THE PROCEDURAL RECORD
This litigation began on November 14, 2011, when the Bank filed suit
against the Vidrines, asserting that they were in default on a commercial loan
secured by a June 4, 2010 promissory note and mortgage. The Bank asserted in its
petition that the Vidrines owed $2,194,635.65 on the promissory note at the time it
filed suit, listed ten separate parcels of immovable property secured by the
mortgage; and asserted that the Vidrines had failed to pay the September 4, 2010
installment on the promissory note. The Bank sought judgment for the amount
owed, contractual attorney fees, and recognition of its liens on the ten parcels of
immovable property listed in the mortgage.
The Vidrines filed a twenty-three-page response to the Bank‟s suit. In that
response, they generally denied the Bank‟s assertions of liability; raised affirmative
defenses; and asserted a reconventional demand against the Bank. In their
reconventional demand, the Vidrines asserted that they were entitled to damages
resulting from the actions of the officers and employees of the Bank based on fraud
and duress, conduct prohibited by law and against public policy, detrimental
reliance, breach of contract, and tortious interference with both their business and
contractual relationships. The Bank responded to the Vidrines‟ reconventional
demand by answering the assertions and by filing peremptory exceptions of
prescription, no right of action, and no cause of action.
Following a June 1, 2012 hearing, the trial court took the issues raised by the
exceptions under advisement. On July 19, 2012, the trial court rendered written
reasons for judgment sustaining the Bank‟s peremptory exception of no cause of
action as to all claims asserted by the Vidrines on their own behalf and sustaining
the Bank‟s peremptory exception of no right of action as to all claims asserted by
the Vidrines on behalf of third parties. The trial court concluded that its ruling on
the two exceptions rendered the prescription issue moot. The trial court executed a
judgment to this effect on August 9, 2012, and thereafter, the Vidrines perfected
this appeal. In their appeal, they raised eight assignments of error, all directed
toward the grant of the exception of no cause of action:
A. The District Court erred in dismissing the Vidrines‟
reconventional demands without crediting all of the Vidrines‟
allegations, and in failing to construe the Vidrines‟ pleading in
the light most favorable to the Vidrines, as required by law.
B. The Court erred in dismissing the Vidrines‟ reconventional
demands for fraud and duress, erred in broadly concluding that
“at least one, if not several, of the (elements of fraud) were not
alleged sufficiently by the Vidrines in order to state a cause of
action for fraud,” and erred in holding that allegations of
violence or threats are necessary to constitute legal duress.
C. The Court erred in dismissing the Vidrines‟ reconventional
demand for Conduct Prohibited by Law and Against Public
Policy upon the ground that 12 U.S.C. 4638 prohibited the
claim.
D. The Court erred in misconstruing the Vidrines‟ reconventional
demand for Detrimental Reliance, and in ignoring the factual
allegations in the Vidrines‟ pleading which sufficiently alleged
that reconventional demand.
E. The Court erred in dismissing the Vidrines‟ reconventional
demand for Breach of Contract, which was based on the Bank‟s
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breach of the Vidrine‟s [sic] written contracts (promissory notes
and related mortgage agreements) with the Bank.
F. The Court erred in dismissing the Vidrines‟ reconventional
demand for Tortious Interference with Contract upon the
ground that it was barred by current Louisiana jurisprudence.
G. The Court erred in dismissing all of the Vidrines‟
reconventional demands upon the ground that La.R.S. 6:1121-
1124 barred all of the Vidrines‟ reconventional demands.
H. The Court erred in dismissing the Vidrines‟ reconventional
demands without allowing the Vidrines to amend their pleading
to cure any perceived pleading insufficiency.
OPINION
The trial court‟s grant of the peremptory exception of no right of action
related to the right of the Vidrines to bring claims on behalf of other individuals
similarly situated, and the Vidrines do not question that ruling on appeal. Instead,
their complaints on appeal relate solely to the trial court‟s grant of the peremptory
exception of no cause of action.
Scope of Review
In Ramey v. DeCaire, 03-1299, pp. 7-8 (La. 3/19/04), 869 So.2d 114, 118-
19, the supreme court stated the following regarding appellate review of an
exception of no cause of action:
A cause of action, when used in the context of the peremptory
exception, is defined as the operative facts that give rise to the
plaintiff‟s right to judicially assert the action against the defendant.
Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d
1234, 1238 (La.1993). The function of the peremptory exception of
no cause of action is to test the legal sufficiency of the petition, which
is done by determining whether the law affords a remedy on the facts
alleged in the pleading. Id. at 1235. No evidence may be introduced
to support or controvert an exception of no cause of action. La.
C.C.P. art. 931. Consequently, the court reviews the petition and
accepts well-pleaded allegations of fact as true. Jackson v. State ex
rel. Dept. of Corrections, 00-2882, p. 3 (La.5/15/01), 785 So.2d 803,
806; Everything on Wheels Subaru, 616 So.2d at 1235. The issue at
the trial of the exception is whether, on the face of the petition, the
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plaintiff is legally entitled to the relief sought. Montalvo v. Sondes,
93-2813, p. 6 (La.5/23/94), 637 So.2d 127, 131.
Louisiana has chosen a system of fact pleading. La. C.C.P. art.
854 cmt. (a); Montalvo[,] at p. 6, 637 So.2d at 131. Therefore, it is
not necessary for a plaintiff to plead the theory of his case in the
petition. Kizer v. Lilly, 471 So.2d 716, 719 (La.1985). However, the
mere conclusions of the plaintiff unsupported by facts does not set
forth a cause of action. Montalvo[,] at p. 6, 637 So.2d at 131.
The burden of demonstrating that the petition states no cause of
action is upon the mover. City of New Orleans v. Board of Com’rs of
Orleans Levee Dist., 93-0690, p. 28 (La.7/5/94), 640 So.2d 237, 253.
In reviewing the judgment of the district court relating to an exception
of no cause of action, appellate courts should conduct a de novo
review because the exception raises a question of law and the lower
court‟s decision is based solely on the sufficiency of the petition.
Fink v. Bryant, 01-0987, p. 4 (La.11/28/01), 801 So.2d 346, 349; City
of New Orleans[,] at p. 28, 640 So.2d at 253. The pertinent question
is whether, in the light most favorable to plaintiff and with every
doubt resolved in plaintiff‟s behalf, the petition states any valid cause
of action for relief. City of New Orleans[,] at p. 29, 640 So.2d at 253.
Following the guidance provided by the supreme court in Ramey, we must conduct
a de novo review of the trial court‟s action. We accomplish this by first accepting
the well-pleaded allegations of fact in the Vidrines‟ reconventional demand as true.
Next, we must determine whether the trial court erred in concluding that these facts
do not state a cause of action under the legal theories advanced by the Vidrines.
In their reconventional demand, the Vidrines asserted that their debt to the
Bank stems from “a conspiracy carried out through a pattern of wrongful, willful,
intentional and illegal conduct during the years 2002 through 2011, by, between
and among the Bank and various Bank insiders and affiliated parties[.]”1 The
Vidrines identified the Bank‟s former President, Harold Fontenot, as the primary
insider responsible for most of the offensive conduct giving rise to their
1
Given the posture of the matter now before us, we need not consider whether a
corporation can conspire with its officers and employees and despite the “conspiracy” language
of the Vidrines‟ reconventional demand, we interpret their allegations to assert that the Bank is
responsible for the acts or omissions of its agents. See Aucoin v. Kennedy, 355 F.Supp.2d 830
(E.D. La. 2004).
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complaints, but further asserted that others acted to aid, assist, and encourage him
in his activities; and that the offensive conduct continued after Mr. Fontenot‟s
September 20, 2009 death. These other “insiders and affiliated parties” included
the attorneys who represented the Bank during the time period of the offensive
conduct as well as the Bank‟s directors, officers, and employees.2
The initial pattern of conduct begun by Mr. Fontenot consisted primarily of
his use of his insider position for his own personal gain. After Mr. Fontenot‟s
death, the pattern of conduct changed to an effort to cover up the earlier illegal
activity “by fraudulently misleading, deceiving and coercing [the Vidrines] . . . into
either paying off or consolidating the illegally extended loans, forfeiting their
collateral, and/or moving their banking business elsewhere, all at the greatest
possible savings to the Bank and without regard to (and/or in order to achieve)
related losses by [the Vidrines].” The Vidrines claim that the insiders and
affiliated parties concealed these actions from the federal regulatory authorities and
carried out their objectives by:
a. Extending loans to uncreditworthy customers and engaging in
other “unsafe and unsound” banking practices prohibited by
federal law.
b. Putting their own, personal self-interests above those of the
Bank, and thereby defrauding both the Bank‟s owners, its
customers and regulatory authorities, by concealing and failing
to disclose:
(1) conflicts of interest between themselves, personally, and
the Bank‟s owners,
(2) conflicts of interest between themselves, personally, and
the public interests (including that of the FDIC), and
2
The names of some of the individuals named in the reconventional demand appear in
connection with transactions involving parties other than the Vidrines, and their involvement in
this litigation was resolved through the granting of the peremptory exception of no right of
action. That being the case, we will not specifically identify them in this litigation.
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(3) conflicts of interest between themselves, personally, and
the customers to whom they gave advice, guidance, and
directives under the guise of befriending and “helping”
those customers.
c. Advising, enticing, encouraging, pressuring and when
necessary coercing customers to purchase and/or develop
property, with the purchase money typically “funded” by bank
loans at 100% of the purchase price and/or on other favorable
terms, often without evidence of credit worthiness, and often
coupled with promises that the Bank would help the customer
to quickly flip the property again, all in order to reap personal
profits for Bank insiders and affiliated parties, get bad loans off
of the Bank‟s books, and conceal bad loans from federal
regulators – in effect, a Ponzi scheme perpetrated through a
succession of unsound, unsafe, and otherwise unlawful loans.
d. Using bank funds to “entice” customers into purchasing
property owned by (and thereby reap profits for) bank insiders
and affiliated parties.
e. Advising, enticing, encouraging, pressuring and when
necessary coercing less sophisticated bank customers into
borrowing from the Bank to make unnecessary, unwise and
unsound investments, all in order to benefit Bank insiders and
affiliated parties, and/or to benefit the Bank‟s larger and “more
sophisticated” customers.
f. Fraudulently manipulating appraised values on property,
sometimes inflated to justify loans, and sometimes deflated to
lower equity values and thereby facilitate “defaults” and
foreclosures.
g. Intentionally breaching contracts, terminating long-standing
banking practices historically relied upon by customers in
conducting their businesses, and declaring alleged “loan
defaults” against customers who the Bank perceived would
thereby become financially disadvantaged and unable to defend
themselves from such conduct.
The reconventional demand contains descriptions of specific factual
scenarios the Vidrines faced in their dealings with the Bank which support their
conspiracy allegations. For the limited purpose of this review, we accept these
factual assertions as true, and whether they are sufficient to state a cause of action
against the Bank as a matter of law is the issue before us. We summarize as
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follows the reconventional demand assertions which we find pertinent to this phase
of the litigation:
BACKGROUND
The Vidrines‟ relationship with the Bank began in 2001 through
a personal relationship between Mr. Vidrine and Mr. Fontenot, who
was both the Bank‟s President and Chairman of the Board of
Directors. Mr. Fontenot became a regular customer at the Vidrines‟
café that year, personally owned immovable property close to the
Vidrines‟ café, and befriended Mr. Vidrine at a time when he needed a
friend because he was under a federal indictment for Environmental
Protection Agency (EPA) violations. This friendship grew to a point
that the Vidrines “believed that [they] could trust and rely on [Mr.
Fontenot‟s] good intentions and advice.”
MARCH 28, 2003 TRANSACTION
Early in the friendship, Mr. Fontenot advised Mr. Vidrine to
invest in land, but Mr. Vidrine replied that he “[had] too many legal
bills.” However, in March of 2002, Mr. Fontenot informed Mr.
Vidrine that he had just purchased 36.8 acres of immovable property
situated across the street from the Vidrines‟ business establishments
from an individual named Robert Sullivan. Mr. Fontenot offered the
property to Mr. Vidrine for the price of $150,000.00 and suggested
that in selling the property to him, he would be making Mr. Vidrine
“the deal of a lifetime.” As a further incentive, Mr. Fontenot orally
promised Mr. Vidrine that if he wished to develop the property, the
Bank would provide one hundred percent of the financing for the
development. The Vidrines executed a purchase agreement for the
property on March 29, 2002, and finalized the sale on March 28,
2003. Immediately thereafter, the Vidrines began planning the
development of a subdivision on the 36.8 acres.
The Vidrines later discovered that Mr. Sullivan, who was the
paramour of Mr. Fontenot‟s sister, had purchased the 36.8 acres on
March 11, 2002, through his corporation, Dusty Morgan Corporation,
from the estate of Mr. Fontenot‟s aunt, for $72,000.00. On March 23,
2002, or six days before they and Mr. Fontenot executed the purchase
agreement, the corporation transferred the property to Mr. Fontenot
for the same $72,000.00 consideration. Thus, six days after acquiring
title to the 36.8 acres, Mr. Fontenot caused the Vidrines to execute the
purchase agreement which assured himself of a $78,000.00 profit
within one year as well as capital gains treatment of the profit. Mr.
Fontenot was able to reap this benefit because of his ability to obtain
favorable financing arrangements for the Vidrines from the Bank.
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AUGUST 19 AND 22, 2003 TRANSACTIONS
Subsequent to the transfer of the 36.8 acres, Mr. Fontenot
arranged for the Bank to loan the Vidrines additional sums to settle
their financial matters with other creditors and consolidate everything
within the Bank. This included a $600,000.00 loan consummated on
August 19, 2003, and an additional $129,212.00 loan consummated
on August 22, 2003. As a part of the consolidation process, Mr.
Fontenot required that the Vidrines provide security for the loan in the
form of a pledge of their business property, which consisted of a store,
restaurant, and real estate. At this time, Mr. Vidrine was still under
the cloud of a federal indictment, and was facing a possible five-year
sentence and millions of dollars in fines if convicted. Because of his
personal situation, he considered his ability to repay these loans to be
“highly questionable.”
FEBRUARY 6 AND OCTOBER 8, 2004 TRANSACTIONS
On September 18, 2003, the pending federal charges against
Mr. Vidrine were dismissed. Soon thereafter, another opportunity
became available to the Vidrines when they learned that two tracts of
immovable property located across the street from their business
location were for sale. The Vidrines had long wanted to own this
property and approached Mr. Fontenot to obtain financing. The Bank
financed the purchase of one of the two tracts, a 59.3 acre tract, on
February 6, 2004, for the sum of $205,700.00. However, several
months later when they approached Mr. Fontenot about the Bank
financing the $70,125.00 purchase price for the second tract, an
eleven acre tract, Mr. Fontenot refused to consider that transaction
unless the Vidrines also purchased an additional 26.4 acres originally
belonging to his mother‟s estate for $112,000.00. The 26.4 acres had
previously been sold to another individual and was on the Bank‟s
records as a bad loan. Although Mr. Vidrine complained to Mr.
Fontenot that the property was overpriced and in a bad location, he
agreed to include the parcel in exchange for Mr. Fontenot‟s promise
that the Bank would finance one hundred percent of the purchase
price of both parcels. The October 8, 2004 transaction transferring
title to both parcels to the Vidrines resulted in a new loan from the
Bank in the amount of $183,000.00.
At this point in time, the Vidrines‟ indebtedness to the Bank
totaled approximately $900,000.00, but their business income
provided sufficient funds to easily meet this and their other financial
obligations. However, their situation severely limited any future
business flexibility because the Bank held a lien against every asset
owned by the Vidrines except Hubert and Tammy Vidrine‟s family
home. That being the case, the Vidrines felt they had no choice but to
follow the Bank‟s directions as expressed by Mr. Fontenot.
8
JIM WALTER HOMES 2006 TRANSACTION
In 2006, the Jim Walter Homes business organization
approached the Vidrines and asked that they consider a plan for
developing the 59.3 acre tract the Vidrines had purchased on February
6, 2004. The plan called for the Vidrines to develop the infrastructure
on the property over a nine-month period, in exchange for Jim Walter
Homes‟ agreement to purchase three lots per month for thirty-six
months at the price of $15,000.00 each, once the infrastructure was
completed. This would result in a total payout to the Vidrines of
$2,250,000.00.
Mr. Vidrine met with Mr. Fontenot and Charles Boagni, the
Bank‟s attorney at that time, to discuss the project and seek financing.
Mr. Fontenot caused the Bank to approve a $900,000.00 loan to the
Vidrines for the required infrastructure work, and the Vidrines
retained Mr. Boagni to personally represent them in the negotiation of
the contract with Jim Walter Homes. The Vidrines trusted Mr.
Boagni to protect their interest in the preparation of the contract. The
final executed contract had an effective date of May 9, 2006, but also
contained a right of cancellation in favor of Jim Walter Homes
allowing it to withdraw from the contract on or before July 7, 2006.
Trusting Mr. Boagni to protect their interests, neither Hubert nor
Tammy Vidrine read the contract. However, Mr. Boagni failed to
advise them of the right of cancellation, and they only became aware
of its existence when, on July 7, 2006, Jim Walter Homes exercised
its right to withdraw from the contract. At that time, the Vidrines
were still working on the infrastructure project. A few days after
withdrawing from the contract, Jim Walter Homes declared
bankruptcy.
When Mr. Vidrine informed Mr. Fontenot that without the Jim
Walter Homes income he could not repay the loan, Mr. Fontenot
instructed him to continue the development activity because the loan
had already been approved by the Bank. Mr. Fontenot told Mr.
Vidrine, “Don‟t worry, I will sell it for you.” Believing they had no
choice, the Vidrines continued with the development activity. On
August 11, 2006, they signed an additional note to the Bank for
$900,000.00. This transaction added an additional $7,400.00 to the
Vidrines‟ monthly debt structure and became more than their business
interests could afford.
APRIL 5, 2007 TRANSACTION
The pressure from the Bank did not cease when the Vidrines
reached their debt limit. In April of 2007, Mr. Fontenot requested that
the Vidrines purchase a fifty-acre tract of land which the Bank had
financed for Larry Leger, but which was in a delinquent status. The
Bank had financed Mr. Leger‟s purchase of the property from Robert
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Sullivan and Mr. Fontenot‟s sister at the request of Mr. Fontenot. The
purpose of this transfer was to remove another delinquent loan from
the Bank‟s books, but after the transfer, Mr. Leger made no payment
on the indebtedness to the Bank. On April 5, 2007, Mr. Fontenot
called Mr. Vidrine and told him, “the auditors were in the Bank, and
that [Mr. Vidrine] needed to come to the Bank right away. [Mr.]
Fontenot said, „Pick up [Mrs. Vidrine], and come now; I have no one
else to help me; I promise that I will sell the property for you as soon
as possible.‟” The Vidrines did as Mr. Fontenot asked and purchased
the property that same day for $156,000.00. The Bank financed one
hundred percent of the purchase price, and this transaction raised the
monthly debt obligation of the Vidrines by an additional $800.00.
MAY 22, 2009 TRANSACTION
In 2008, and with their repayment capacity past their limits, the
Vidrines attempted to surrender the two subdivisions and the last-
purchased fifty-acre tract to the Bank, in an effort to save their
business. Although Mr. Vidrine was aware that it had done so for
numerous other customers, Mr. Fontenot informed Mr. Vidrine that
the Bank could not accept the return of the property. With Mr.
Fontenot‟s permission, Mr. Vidrine changed the subdivision
restrictions to allow mobile homes and reduced the subdivision‟s lot
prices. These business decisions accelerated the sale of the lots and
the revenue generated from these sales was initially applied to the
indebtedness.
In early 2009, the Vidrines informed Mr. Fontenot that they
intended to file a Chapter-11-bankruptcy action and reorganize their
financial matters. Mr. Fontenot talked them out of this action and
loaned them an additional $175,000.00. As security for this loan,
Hubert and Tammy Vidrine mortgaged their last asset, their family
home, to the Bank. This transaction occurred on May 22, 2009.
JUNE 4, 2010 TRANSACTION
Sometime prior to the May 22, 2009 transaction, Mr. Fontenot
was diagnosed with cancer, began treatment, and was seldom
available to customers. Kathy LeJeune, the Bank‟s Vice President,
began handling the Vidrine accounts and, in her meetings with Mr.
Vidrine, constantly criticized Mr. Fontenot for the loans he had made
to the Vidrines. Ms. LeJeune described herself as the “hatchet lady,”
and seemed proud that the Bank was becoming known for its high rate
of foreclosures. She cancelled the long-standing privilege granted to
the Vidrines by Mr. Fontenot of receiving same-day credit for their
deposits, and this action “disrupted the timing of their cash flow,
destroyed [their] income from customer check cashing services, and
resulted in tens of thousands of dollars in bounced check charges.”
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Ms. LeJeune criticized everything the Vidrines were doing to
solve their existing debt service problems, even though the Bank was
primarily responsible for their financial dilemma. Concerning the
Vidrines‟ decision to reduce the sale price for the subdivision lots, she
found this to be a bad business approach despite the fact that the
reduced price not only increased the sale of lots to the immediate
advantage of the Bank (given the fact that all of the proceeds were
applied to the Vidrines‟ debt at the Bank), but sale of all the lots at the
reduced price would pay the Bank debt in full and cause the Vidrines
to receive a satisfactory profit over and above the indebtedness.
After Mr. Fontenot‟s death on September 20, 2009, Ms.
LeJeune intimated that she intended to put the Vidrines and Mr.
Fontenot‟s other customers out of business. She informed them that
“I have a list with 43 names on it, loans that [Mr. Fontenot] made to
his friends. You‟re on it, and I‟m going to get rid of all of them.” To
that end, the Bank stopped applying the subdivision revenue derived
from sale of the individual lots to their note payments and refused
them any portion of the revenue for their personal use. This change in
policy, together with the non-sufficient-funds (NSF) charges rising to
a level of thousands of dollars per month completely absorbed the net
revenue from the Vidrines‟ store and café businesses such that they
had no source of income sufficient to cover the monthly notes.
In April of 2010, Mr. Vidrine met with Kip Bertrand, the
Bank‟s new president, to request help. Mr. Bertrand agreed to deposit
the revenue from the next three lot sales into their account, but Ms.
LeJeune diverted the third deposit to the indebtedness. When Mr.
Vidrine called Ms. LeJeune‟s attention to Mr. Bertrand‟s promise, she
simply responded that it was “[t]oo late; I took it and put on the note.”
Ms. LeJeune‟s action resulted in more bounced checks and an
increase in NSF charges. The Bank‟s actions reminded Mr. Vidrine
that prior to his death, Mr. Fontenot told him, “They will destroy all of
my friends as soon as I die.”
The next month after Mr. Bertrand made his promise to deposit
the three revenue sources into the operating account, Ms. LeJeune
summoned Mr. Vidrine to a meeting at the Bank with her and another
Bank employee, Gene Kidder. In that meeting, the two Bank
employees informed him that they “had a plan to save him” by
consolidating all of the indebtedness into one note at a lower interest
rate. When he asked whether the Bank would return to the previous
policy of crediting the subdivision sales to the note, he was informed
that would be the new policy under the single note. He then inquired
about a line of credit to stop the NSF charges, and they responded,
“We‟ll see how much we can give you after the appraisal.”
After the fact, the Vidrines discovered that the underlying
purpose of the new plan was not to help them, but to cause them to
default on this consolidation loan so the Bank could seize all of their
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assets through litigation. To that end, the Bank instructed its
appraiser, John Foti, to prepare an appraisal of their property which
greatly deflated its value by millions of dollars. It instructed Mr. Foti
to appraise the Vidrines‟ business as if it were a vacant and abandoned
building, and to ignore the fact that the business was producing
$4,000,000.00 per year in revenue. The Bank also instructed Mr. Foti
to ignore the amount received from the current subdivision lot sales
activity and to appraise that property at an arbitrary value of less than
fifty percent of the value for which it was being sold.
Based on this flawed appraisal, the Bank classified the Vidrines
as a high-risk customer with a loan-to-value ratio of over seventy
percent. Despite this classification, the Bank allowed the Vidrines to
consolidate all of their indebtedness into one note and that note was
executed on June 4, 2010. This increased their monthly payment to
$15,000.00 and left them with few financial choices. In fact, the
financial classification arising from the flawed appraisal gave the
Bank the excuse it needed to reject the requested line of credit. It also
allowed the Bank to maintain its source of income from the NSF
charges. Equally important, it gave the Bank justification for refusing
to apply future loan payments to their monthly obligations, thereby
using the misapplication as an excuse for declaring that they were in
default.
EVENTS SUBSEQUENT TO THE JUNE 4, 2010
TRANSACTIONS
The final blow occurred just two months later when, in August
of 2010, the Vidrines were called to the Bank for a meeting with Mr.
Bertrand, Ms. LeJeune, Mr. Kidder, and Harold Carrier, the Chairman
of the Bank‟s Board of Directors. At that meeting, the Vidrines were
informed that they could no longer use the subdivision lot sales to
make monthly payments on the consolidation note and that they must
generate the $15,000.00 per month obligation from other sources of
income. When the Vidrines expressed their inability to meet this
burden, the officials of the Bank responded, “Too bad, you‟ll have to
take bankruptcy, or move your accounts to another bank.” Thereafter,
even when they were able to make their payments, the Bank failed to
credit those payments to their note, placing them in default.
In early 2011, in a final effort to meet their financial obligations
to the Bank, the Vidrines placed the subdivision property on the
market. They were in the process of closing a sale of the property for
$500,000.00 when Ms. LeJeune intervened and caused the sale to fall
through. Ms. Lejeune falsely informed the prospective buyer that the
Bank was foreclosing on the property and that he [the buyer]should
look at purchasing other property that the Bank had for sale instead.”
[Emphasis in the reconventional demand]. It was not until November
14, 2011, that the Bank instituted this action. The Vidrines describe
Ms. LeJeune‟s action in causing the sale to fall through as “an act of
12
maliciousness, carried out with spite and ill will, the sole object of
which was to harm the Vidrines.”
Having summarized the factual allegations of the Vidrines, and accepting
these assertions as true for the purpose of considering the exception of no cause of
action, we now address their arguments on appeal, but not necessarily in the order
they appear in the assignments of error.
Louisiana Credit Agreement Act
Although the trial court considered each of the asserted causes of action
individually, it additionally found that the application of the Louisiana Credit
Agreement Act (La.R.S. 6:1121 through La.R.S. 6:1124) precludes the Vidrines
from asserting any of the claims for relief raised in their reconventional demand.
Before considering the arguments on the individual factual claims, we will discuss
the effect this legislative enactment has on the asserted facts in general.
By Acts 1989, No. 531, the Louisiana Legislature enacted Chapter 16, Title
6 of the Louisiana Revised Statutes, titled “CREDIT AGREEMENTS—
WRITING REQUIREMENTS,” and which has been generally referred to by the
jurisprudence as the Louisiana Credit Agreement Act (hereinafter sometimes
referred to as the “Act”). The Historical Note following La.R.S. 6:1121 stated that
the purpose of the legislation was “to provide that certain credit agreements be in
writing; to define such agreements; and to provide for related matters.”
Two years later, by Acts 1991, No. 581, the Louisiana Legislature added
La.R.S. 6:1124 to Chapter 16, Title 6. The Historical Note following this statute
stated that “[t]his Act is deemed to be clarifying in nature and shall apply to prior
and now existing relationships and transactions involving financial institutions.”
The four statutes comprising Chapter 16, Title 6 read as follows:
13
La.R.S. 6:1121. Definitions
For purposes of this Chapter, the following terms shall have the
following meanings:
(1) “Credit agreement” means an agreement to lend or forbear
repayment of money or goods or to otherwise extend credit, or make
any other financial accommodation.
(2) “Creditor” means a financial institution or any other type of
creditor that extends credit or extends a financial accommodation
under a credit agreement with a debtor.
(3) “Debtor” means a person or entity that obtains credit or
seeks a credit agreement with a creditor or who owes money to a
creditor.
(4) “Financial institution” means a bank, savings and loan
association, savings banks, or credit union authorized to transact
business in this state.
La.R.S. 6:1122. Credit agreements to be in writing
A debtor shall not maintain an action on a credit agreement
unless the agreement is in writing, expresses consideration, sets forth
the relevant terms and conditions, and is signed by the creditor and the
debtor.
La.R.S. 6:1123. Actions not considered agreements
A. The following actions shall not give rise to a claim that a
new credit agreement is created, unless the agreement satisfies the
requirements of R.S. 6:1122:
(1) The rendering of financial or other advice by a creditor to a
debtor.
(2) The consultation by a creditor with a debtor.
(3) The agreement of a creditor to take or not to take certain
actions, such as entering into a new credit agreement, forbearing from
exercising remedies under a prior credit agreement, or extending
installments due under a prior credit agreement.
B. A credit agreement shall not be implied from the
relationship, fiduciary, or otherwise, of the creditor and the debtor.
14
La.R.S. 6:1124. No implied fiduciary obligations
No financial institution or officer or employee thereof shall be
deemed or implied to be acting as a fiduciary, or have a fiduciary
obligation or responsibility to its customers or to third parties other
than shareholders of the institution, unless there is a written agency or
trust agreement under which the financial institution specifically
agrees to act and perform in the capacity of a fiduciary. The fiduciary
responsibility and liability of a financial institution or any officer or
employee thereof shall be limited solely to performance under such a
contract and shall not extend beyond the scope thereof. Any claim for
breach of a fiduciary responsibility of a financial institution or any
officer or employee thereof may only be asserted within one year of
the first occurrence thereof. This Section is not limited to credit
agreements and shall apply to all types of relationships to which a
financial institution may be a party.
Clearly, the Bank is a “creditor” as defined in La.R.S. 6:1121(2), and the
Vidrines are “debtor[s]” as defined in La.R.S. 6:1121(3). It is equally clear that the
Bank and the Vidrines entered into a number of “credit agreements” as that term is
defined in La.R.S. 6:1121(1), during the years that a creditor/debtor[s] relationship
existed between the litigants. These qualify as contracts as that term is defined in
La.Civ.Code art. 1906.
The Louisiana Supreme Court first addressed the application of the
Louisiana Credit Agreement Act to the creditor/debtor relationship in Whitney
National Bank v. Rockwell, 94-3049 (La. 10/16/95), 661 So.2d 1325. This case
arose from a situation where, in response to the lending bank‟s suit on a
promissory note, the debtor asserted a reconventional demand based on his claim
that the lending bank breached its oral promises to accept interest-only payments
for an initial period after the loan was made and then to grant a term of years for
repayment in monthly installments.3 In concluding that the Act precluded the
debtor‟s cause of action on the oral promise, the supreme court stated:
3
The terms of the promissory note provided for repayment in full within seventy-six days
from the date of its execution.
15
[T]he Bank‟s alleged breach of the oral agreement by demanding
payment in full in accordance with the terms of the note, is exactly the
situation that the Legislature contemplated in enacting the credit
agreement statute. The very purpose of the statute was to prohibit a
debtor‟s action for damages based on the breach of an alleged oral
agreement to forebear repayment or to make financial
accommodations.
Id. at 1332.
The impact of this statute on other causes of action arising from a
creditor/debtor relationship was addressed by the Louisiana Supreme Court, in
Jesco Construction Corp. v. Nationsbank Corp., 02-57, p. 1 (La. 10/25/02), 830
So.2d 989, 990, wherein it responded affirmatively to the question certified by the
United States Fifth Circuit of Court of Appeal, of “whether the Louisiana Credit
Agreement Statute precludes all actions for damages arising from oral credit
agreements, regardless of the legal theory of recovery.” Jesco Construction Corp.
v. NationsBank Corp., 278 F.3d 444, 448 (5th Cir. 2001). The facts before the
supreme court in that matter were summarized by the majority as follows:
This matter arises from a failed loan application process in
which Jesco Construction Corporation (“Jesco”) sought a $17.7
million loan from Bank of America Commercial Finance Corporation
(“BACF”). Jesco sought to obtain the loan in order to purchase the
stock of King Fisher Marine Services.
The parties differ on why Jesco terminated the loan application
process prior to its completion. Jesco contends that the appraisals
were done; terms negotiated; and closing documents circulated; and
that BACF indicated on October 23, 1997, that the loan was approved;
that the transaction would be completed by the following Friday; and
that the loan was a “done deal.” On the other hand, BACF claims that
appraisals of King Fisher revealed that it was worth less than BACF‟s
letter of interest required. An unrelated third party eventually bought
the King Fisher stock for $2 million more than the Jesco offer.
Jesco originally filed the matter in the Civil District Court for
the Parish of Orleans in April 1998, alleging breach of contract,
detrimental reliance, negligent misrepresentation, unfair trade
practices, breach of the duty of good faith and fair dealing, promissory
and equitable estoppel, and breach of fiduciary duty.
16
Jesco, 830 So.2d at 990-91 (footnote omitted).
The matter was removed to the Federal District Court for the Eastern District
of Louisiana, where BACF obtained a summary judgment dismissing all of Jesco‟s
causes of action based on the application of the Louisiana Credit Agreement Act.
In responding to the certified question, the supreme court concluded that “all
actions (or causes of action or theories of recovery) based upon an oral agreement
to lend money are barred by the La.Rev.Stat. 6:1122.” Id. at 992. In Jesco‟s case,
the supreme court found that “[t]he basis for each and every one of these causes of
action is the failure by BACF to make a loan based upon an alleged oral credit
agreement.” Id. Such causes of action were barred, according to the supreme
court, because “the primary purpose of credit agreement statutes is to prevent
potential borrowers from bringing claims against lenders based upon oral
agreements.” Id.
In his dissent, Chief Justice Calogero directed the majority to the opinion in
Whitney, wherein the supreme court concluded that “[t]he Louisiana statute does
not address, one way or the other, any protection of unsophisticated borrowers or
any exemption based on fraud, misrepresentation, promissory estoppel or other
equitable theory.” Id. at 992 (Calogero, C.J., dissenting) (alteration in original).
He went on to state what he considered to be the result of the majority opinion:
The majority opinion will allow lenders to freely defraud
unsophisticated borrowers. Lending institutions like [the defendant]
should not be allowed to commit misrepresentation and fraud, and
engage in unfair trade practices to the detriment of a [sic] innocent
borrowers who sustain damage because of their good faith. Such a
result surely extends the reach of the Louisiana Credit Agreement
Statute beyond its plain language. Accordingly, I would hold that the
Louisiana Credit Agreement Statute forecloses only a borrower‟s
breach of contract action on an oral credit agreement.
Id. at 944.
17
The supreme court revisited the cause of action issues raised by the Act in
King v. Parish National Bank, 04-337 (La. 10/19/04), 885 So.2d 540, and, with
Chief Justice Calogero again dissenting, reached a decision similar to that in Jesco.
In King, the debtor had consolidated his individual loans into one large promissory
note secured by mortgages over various immovable properties. According to the
debtor, a bank loan officer assured him that the restructuring of the indebtedness
would not impair or jeopardize his personal and financial welfare as long as he
kept his obligations to the bank current. The consolidation occurred in March of
1990, and in early 1993, the lending bank informed the debtor that the maturity
date of the note was approaching and that the bank would require appraisals of his
collateral as well as other financial information before the maturity date. If the
debtor failed to make the requested information available, the bank expected the
loan to be paid in full on the maturity date. Subsequent appraisals arranged for by
the lending bank through a nephew of its president established that the note was
secured by insufficient collateral. Based on this information, the lending bank
refused to renew the loan on its current terms and security. Ultimately, in order to
avoid bankruptcy, the debtor transferred some of his security to the bank as dations
en payment and was left with a debt less than one third of the original debt.
The debtor then brought suit against the bank and other parties asserting that
the bank‟s actions during the renegotiation of his prior loan consolidation were
done in bad faith giving rise to “several causes of action in tort, breach of quasi-
contractual obligations, error, fraud, and duress based on defendants‟ actions and
roles surrounding the 1990 loan consolidation and 1993 workout.” Id. at 543. The
matter finally reached the supreme court when it “granted certiorari to consider
whether the Louisiana credit agreement statutes, La. R.S. 6:1121 et seq., preclude
18
all of King‟s causes of action regarding his 1993 workout with PNB against the
defendants.” Id. at 545. Answering that question in the affirmative by relying on
its opinion in Jesco, the supreme court stated:
In Jesco Construction Corp. v. Nationsbank Corp., 02-0057, p.
4 (La.10/25/02), 830 So.2d 989, 992, this court held that the Louisiana
Credit Agreement Statute precludes all actions for damages arising
from oral credit agreements, regardless of the legal theory of recovery
asserted. This court recognized that allowing debtors to bring actions
predicated upon oral agreements to lend money, but on theories other
than breach of contract, thereby circumventing the writing
requirement of the credit agreement statute, would “thwart the intent
of the legislature and render the entire statute meaningless.” Id. In
Jesco, the plaintiff‟s petition asserted actions for breach of contract,
detrimental reliance, negligent misrepresentation, unfair trade
practices, breach of the duty of good faith and fair dealing, promissory
and equitable estoppel, and breach of fiduciary duty. Id. Since the
basis for each cause of action was the failure by the creditor to make a
loan based upon an alleged oral credit agreement, this court held that
each and every cause of action in the petition was barred by La. R.S.
6:1122. Id.
Id. at 547 (footnote omitted).
The supreme court went on to state:
Essentially, King is asserting an implied agreement between PNB and
himself not to require appraisals on mortgaged property in order to
secure credit based on the previous relationship and actions of the two
parties. Such an agreement, based on PNB and King‟s previous
commercial relationship, is expressly precluded by La. R.S. 6:1123(B)
and is not enforceable without a written agreement.
Id. at 548.
Once again dissenting from the majority‟s opinion on this issue, Chief
Justice Calogero reiterated his opinion from his dissent in Jesco that La.R.S.
6:1124‟s language only applies to actions based on credit agreements which have
not been reduced to writing. Therefore, he reiterated that it “does not preclude
causes of actions based on fraud, misrepresentation, promissory estoppel or other
equitable theories that are alleged in this case.” Id. at 550 (Calogero, C.J.,
dissenting in part).
19
In Whitney, Jesco, and King, the transactions at issue directly involved credit
agreements as defined in La.R.S. 6:1121(1), and the general rule of law established
by these three decisions is the affirmative answer to the question certified to the
supreme court by the United States Fifth Circuit Court of Appeal in Jesco. The
issue in Whitney and King involved oral promises of future actions or inactions
purportedly made by the financial institution at the time the written credit
agreement was executed, while the issue in Jesco involved oral promises and/or
representations purportedly made in advance of consummating a written credit
agreement.
In rendering written reasons for judgment in favor of the Bank, the trial
court did not limit its ruling to include only the oral promises and representations
made to the Vidrines by Mr. Fontenot and the other Bank officials in relation to the
various credit agreements, but concluded that all other allegations made by the
Vidrines fell within the scope of the protections provided to financial institutions
by the Louisiana Credit Agreement Act. We find this expansive reading of the
decisions in Whitney, Jesco, and King to be in error. We do agree, however, that in
accepting the facts of the reconventional demand, the trial court correctly
determined that the Vidrines have no cause of action and are thereby precluded
from pursuing any claims for damages arising from the statements, representations,
or promises made to them by Mr. Fontenot or any other Bank official before or in
conjunction with the execution of the various credit agreements set forth in the
reconventional demand. Except as modified hereafter, this would specifically
apply to any oral promise or representation made by Mr. Fontenot in relation to the
credit agreements executed on March 28, 2003, October 8, 2004, August 11, 2006,
April 5, 2007, and May 22, 2009, or made by any other Bank official in relation to
20
the June 4, 2010 credit agreement. However, we do not interpret the supreme
court‟s decisions in Whitney, Jesco, and King to establish a rule of law that the
Louisiana Credit Agreement Act renders a financial institution immune from any
and all liability arising from its business operations, including business operations
that occur outside the parameters of a credit agreement as defined in La.R.S.
6:1121(1). Thus, we must now address each of those factual scenarios to
determine whether any set forth a cause of action under the theories advanced by
the Vidrines.
Fraud
The first cause of action asserted by the Vidrines in their reconventional
demand is that of fraud. As set forth in La.Civ.Code art. 1927, “[a] contract is
formed by the consent of the parties established through offer and acceptance.”
However, that consent necessary for the formation of a contract can be vitiated by
fraud or duress. La.Civ.Code art. 1948.
Fraud is defined in La.Civ.Code art. 1953 as “a misrepresentation or a
suppression of the truth made with the intention either to obtain an unjust
advantage for one party or to cause a loss or inconvenience to the other. Fraud
may also result from silence or inaction.” Thus, in order to prove fraud on the part
of the Bank, the Vidrines must prove:
(1) a misrepresentation, suppression, or omission of true information;
(2) the intent to obtain an unjust advantage or to cause damage or
inconvenience to another; and (3) the error induced by a fraudulent act
must relate to a circumstance substantially influencing the victim‟s
consent to (a cause of) the contract. In addition to the intent to
defraud or gain an unfair advantage, there must be a resulting loss or
damage.
Williams v. Interstate Dodge, Inc., 45,159, pp. 7-8 (La.App. 2 Cir. 4/14/10), 34
So.3d 1151, 1155-56 (citations omitted).
21
While La.Civ.Code art. 1954 provides that “[f]raud does not vitiate consent when
the party against whom the fraud was directed could have ascertained the truth
without difficulty, inconvenience, or special skill[,]” that same Article provides
that “[t]his exception does not apply when a relation of confidence has reasonably
induced a party to rely on the other‟s assertions or representations.” Fraud may be
proven by circumstantial evidence, so long as proof is by a preponderance of the
evidence. La.Civ.Code art. 1957.
In their reconventional demand, the Vidrines assert that the fraud perpetrated
on them consisted of a pattern which “consisted of both misrepresentations and
suppressions of the truth, and both actions and silence and inactions, all with the
intention to obtain an unjust advantage for the Bank and to cause a loss or
inconvenience to [them].” The Vidrines further assert that the “purported
friendship extended [to them] by . . . Harold Fontenot created a relation of
confidence that reasonably induced [them] to rely on the Bank‟s assertions and
representations to their detriment.”
With regard to the March 28, 2003 transaction, the only fraudulent act
committed in association with the negotiation process involved Mr. Fontenot‟s
failure to advise the Vidrines that the transaction would involve a $78,000.00
personal profit to him over a six-day period. He suppressed and omitted personal
information with the intent to obtain an unjust advantage over the Vidrines. This
act of suppression and omission did relate to a circumstance which, if known to the
Vidrines, would have substantially influenced their consent to the transaction, and
they sustained a loss in that they purchased immovable property at twice its value.
However, nothing in the accepted facts establish that the Bank had any knowledge
of Mr. Fontenot‟s fraudulent action. That being the case, the accepted facts do not
22
establish a cause of action against the Bank for the actions of Mr. Fontenot outside
the course and scope of his relationship with the Bank. La.Civ.Code art. 2320;
Macaluso v. Travelers Cas. and Sur. Co., 10-1478 (La. 2/23/11), 59 So.3d 454.
Thus, the trial court did not err in concluding that the Vidrines failed to state a
cause of action against the Bank on these facts.
With regard to the facts surrounding the August 19, 2003, August 22, 2003,
February 6, 2004, October 8, 2004, April 5, 2007, May 22, 2009, and June 4, 2010
transactions, we note that the pattern of fraudulent activity asserted by the Vidrines
falls within the negotiation process giving rise to the various credit agreements
entered into by the Vidrines. Any cause of action for fraud with regard to these
pre-credit-agreement negotiations is precluded by the Louisiana Credit Agreement
Act. Therefore, we find no error in the trial court‟s determination that the Vidrines
failed to state a cause of action for fraud as it pertains to these transactions.
Additionally, we find no error in the trial court‟s determination that the
Vidrines failed to state a cause of action against the Bank for fraud as it pertains to
the Jim Walter Homes transaction. The Vidrines‟ complaint is primarily against
Mr. Boagni in his capacity as their personal lawyer, not as the lawyer for the Bank.
Duress
Louisiana Civil Code Article 1959 provides that in a contractual
relationship, “[c]onsent is vitiated when it has been obtained by duress of such a
nature as to cause a reasonable fear of unjust and considerable injury to a party‟s
person, property, or reputation.” Additionally, the “[a]ge, health, disposition, and
other personal circumstances of a party must be taken into account in determining
reasonableness of the fear.” Id. However, the “threat of doing a lawful act or a
threat of exercising a right does not constitute duress. A threat of doing an act that
23
is lawful in appearance only may constitute duress.” La.Civ.Code art. 1962.
Additionally, the fear of economic deprivation has been recognized as a species of
duress sufficient to vitiate consent by the Louisiana Supreme Court. Wolf v. La.
State Racing Comm’n, 545 So.2d 976 (La.1989); Martco P’ship v. Frazier, 01-72
(La.App. 3 Cir. 6/6/01), 787 So.2d 1196.
The Vidrines do not state with any specificity the act or acts of the Bank that
give rise to duress. Instead, they seem to assert in their reconventional demand
that the same facts which gave rise to the claim of fraud also give rise to the claim
of duress. After applying the Louisiana Credit Agreement Act to preclude any
claim for duress based on the pre-credit-agreement negotiations, we are still left
with the actions of Ms. LeJeune from the time of the beginning of Mr. Fontenot‟s
cancer struggle to the April 2010 meeting, which began the negotiation process for
the June 4, 2010 transaction, and the actions of the Bank officers and directors that
occurred after the August 2010 meeting. We find that these facts do state a cause
of action for duress which falls outside the Louisiana Credit Agreement Act and
that the trial court erred in dismissing the duress cause of action with regard to
these facts.
Conduct Prohibited by Law and Against Public Policy
In their reconventional demand, the Vidrines reference a number of statutes
found in Title 12 and Title 18 of the United States Code and assert that the Bank‟s
actions in the various transactions violate these statutes, thereby providing them
with a cause of action under these statutes. While recognizing that the Bank is a
federally chartered bank subject to the provisions of the United States Code as
referenced by the Vidrines, the trial court found that none of these statutes provide
24
them with a personal cause of action. The trial court did so by relying on the
language found in 12 U.S.C. § 4638, which states:
This chapter shall not create any private right of action on
behalf of any person against a regulated entity, or any director or
executive officer of a regulated entity, or impair any existing right of
action under other applicable law.
This statute is found in Chapter 46 of Title 12, and is not directly dispositive of all
the situations covered by the other provisions of Title 12 and Title 18 referenced
by the Vidrines. However, this thread is consistent with the content of all
referenced statutes in that they are all regulatory statutes, which set forth the
compliance requirements of a federally chartered bank toward the federal
regulatory agencies having jurisdiction over all federally chartered banks. Nothing
in these statutes impairs existing rights, but nor do they establish a private cause of
action for the Vidrines. We find no error in the trial court‟s determination that the
Vidrines cannot maintain a cause of action on the basis of the federal statutes cited.
Detrimental Reliance
In their reconventional demand, the Vidrines assert that they detrimentally
relied on the promises made to them by Mr. Fontenot and the other officers of the
Bank with regard to the various credit agreements they executed between March
28, 2003 and June 4, 2010. Although La.Civ.Code art. 1967 provides such a
remedy generally, we find that any reliance on oral statements made in the credit
agreement negotiation phase are clearly subject to the supreme court‟s decisions in
Whitney, Jesco, and King, and cannot be the basis for a cause of action for
detrimental reliance. We find no error in the trial court‟s determination that the
Vidrines cannot maintain this cause of action.
25
Breach of Contract
In its judgment, the trial court first ordered “that the VIDRINES‟;
reconventional demand[] for . . . breach of contract . . . fail[ed] to state a claim
upon which relief can be granted.” In the next paragraph, the trial court ordered
“that the Exception of No Cause of Action is hereby sustained and the
reconventional demand[] for . . . breach of any oral contract constituting a credit
agreement . . . with the Bank [is] dismissed.” Thus, the judgment could be
interpreted as dismissing all claims for breach of contract, including those arising
from the written credit agreements, or only those claims arising out of any oral
contract entered into by the parties. In the case of either interpretation, we find no
error in the trial court‟s determination that the reconventional demand failed to
state a cause of action upon which relief could be granted.
A breach of a contract occurs when a party fails to perform an obligation
under the terms of a contract which results in damages to the other party. Favrot v.
Favrot, 10-986 (La.App. 4 Cir. 2/9/11), 68 So.3d 1099, writ denied, 11-636 (La.
6/5/11), 62 So.3d 127. In their reconventional demand, the Vidrines do not
specifically state which contract has been breached. Instead, they assert that the
“breaches” complained of consist “of the Bank‟s deliberate refusal to abide by the
express terms of the contracts as proscribed by LSA-C.C. Art. 1994, and the
Bank‟s failure to exercise good faith as required by both the terms of the contracts
and LSA-C.C. Art. 1759.” They further state in the reconventional demand that
they “seek the dissolution of all contracts at issue, and in addition, damages as
provided by LSA-C.C. Art. 2013.” (Emphasis added.)
Louisiana Civil Code Article 1994 provides that “[a]n obligor is liable for
the damages caused by his failure to perform a conventional obligation. A failure
26
to perform results from nonperformance, defective performance, or delay in
performance.” Additionally, La.Civ.Code art. 1759 provides that “[g]ood faith
shall govern the conduct of the obligor and the obligee in whatever pertains to the
obligation.”
We have already concluded that the Louisiana Credit Agreement Act
precludes a cause of action for any oral agreements entered into during the
negotiations leading up to the written credit agreement and not included within that
written agreement. However, the Vidrines seem to argue that it is the written
credit agreements themselves that have been breached, and not the ancillary
agreements arising from those written agreements. As pointed out in Ramey, 869
So.2d at 118, “Louisiana has chosen a system of fact pleading[,]” and “the mere
conclusions of the plaintiff unsupported by facts does not set forth a cause of
action.” In this case, the Vidrines have not asserted facts to support a cause of
action on that basis.
Tortious Interference with Contracts and Business Relationships
In their reconventional demand, the Vidrines assert that they have a cause of
action for damages based on Ms. Lejeune‟s interference with their efforts to sell
the subdivision property, which led to the loss of a sale of the property. In its
reasons for judgment, the trial court noted the supreme court‟s conclusion in 9 to 5
Fashions, Inc. v. Spurney, 538 So.2d 228 (La.1989), that a plaintiff could maintain
a cause of action against a corporate officer for tortious interference with a
contract, but followed this circuit‟s decision in Technical Control Systems, Inc. v.
Green, 01-0955 (La.App. 3 Cir. 2/27/02), 809 So.2d 1204, writ denied, 02-962 (La.
5/31/02), 817 So.2d 100, and declined to expand that cause of action to the
corporation itself. We do not find that either of these cases are dispositive of the
27
interference issue before us. In both cases, the contract at issue was between the
plaintiff and the defendant corporation. In the matter before us, the contract at
issue is between the plaintiffs and a third party. Thus, this can better be described
as a claim for tortious interference with a business relationship, and our courts do
recognize a cause of action for this tort. Bogues v. La. Energy Consultants, Inc.,
46,434 (La.App. 2 Cir. 8/10/11), 71 So.3d 1128.
This issue of tortious interference with business relations was thoroughly
discussed in Bogues, where the second circuit stated:
The cause of action for tortious interference with business derives
from La. C.C. art. 2315. Tortious interference is based on the
principle that the right to influence others not to enter into business
relationships with others is not absolute. Junior Money Bags, Ltd. [v.
Segal, 970 F.2d 1 (5th Cir. 1992)], citing Ustica Enterprises, Inc. v.
Costello, 434 So.2d 137 (La.App. 5th Cir.1983). Louisiana law
protects the businessman from “malicious and wanton interference,”
though it permits interferences designed to protect legitimate interests
of the actor. Dussouy [v. Gulf Coast Inv., Corp., 660 F.2d 594 (5th
Cir. 1981)]. A plaintiff bringing a claim for tortious interference with
business must ultimately show “by a preponderance of the evidence
that the defendant improperly influenced others not to deal with the
plaintiff.” Junior Money Bags, Ltd., supra. Significantly, it is not
enough to allege that a defendant‟s actions affected plaintiff‟s
business interests; the plaintiff must allege that the defendant actually
prevented the plaintiff from dealing with a third party. Ustica, supra.
Id. at 1134-35.
While recognizing that a cause of action exists for tortious interference with a
business relationship, the courts do not look on this particular cause of action with
favor. Id. Proof of this cause of action has been made more difficult by the
imposition of an “actual malice” element of proof on the plaintiff. JCD Mktg. Co.
v. Bass Hotels and Resorts, Inc., 01-1096, p. 11 (La.App. 4 Cir. 3/6/02), 812 So.2d
834, 841.
Although the Vidrines‟ burden of proof on this issue is significant, the facts
in the reconventional demand clearly establish a cause of action for tortious
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interference with their business relationship with the potential purchaser of the
subdivision property. Furthermore, the Vidrines plead the “actual malice” element
in their reconventional demand. This cause of action is not precluded by the
Louisiana Credit Agreement Act, and the trial court erred in dismissing it.
Amendment of Pleadings
In their final assignment of error, the Vidrines argue that the trial court erred
in dismissing their claims for relief without first allowing them to amend their
reconventional demand. Louisiana Code of Civil Procedure Article 934 (emphasis
added) provides:
When the grounds of the objection pleaded by the peremptory
exception may be removed by amendment of the petition, the
judgment sustaining the exception shall order such amendment within
the delay allowed by the court. If the grounds of the objection raised
through the exception cannot be so removed, or if the plaintiff fails to
comply with the order to amend, the action, claim, demand, issue, or
theory shall be dismissed.
Based on the foregoing, a party must be allowed the opportunity to amend their
petition if the grounds for the exception can be remedied. Alexander and
Alexander, Inc. v. State, Div. of Admin., 486 So.2d 95 (La.1986).
We find that while the trial court did not err in concluding that the Vidrines
had not stated causes of action for fraud and breach of contract, the trial court did
err in not giving them the opportunity to attempt to state a cause of action by
amendment as to these claims only. Thus, we remand the matter to the trial court
with instructions to allow the Vidrines a period of time of not less than twenty days
from the date of this opinion to amend their reconventional demand to, if they can,
state a cause of action against the Bank for Mr. Fontenot‟s fraudulent action in
using his position with the Bank to effect a $78,000.00 profit for himself; and state
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facts sufficient to state a cause of action for breach of the written credit agreements
set forth in their reconventional demand.
DISPOSITION
We affirm that portion of the trial court judgment granting the exception of
no cause of action filed by the defendant-in-reconvention, St. Landry Homestead
Federal Savings Bank, and dismissing the claims of the plaintiffs-in-reconvention,
Hubert Vidrine, Tammy Vidrine, and Vidrine Estates, LLC, based on conduct
prohibited by law and against public policy and detrimental reliance. We affirm
that portion of the trial court judgment finding that the plaintiffs-in-reconvention
failed to state a cause of action for fraud and breach of contract, but reverse the
trial court‟s dismissal of these claims and remand this matter to the trial court with
instructions to allow the Vidrines a period of time of not less than twenty days
from the date of this opinion to amend their reconventional demand to, if they can,
state a cause of action against the Bank for these claims or have these claims
dismissed. We reverse that portion of the trial court judgment the claim of the
plaintiffs-in-reconvention for duress and for tortious interference with contracts
and business relationships, and remand the matter to the trial court for further
proceedings. We assess costs of this appeal equally between the plaintiffs-in-
reconvention and the defendant-in-reconvention.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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