Colbert et al v. Brennan et al
Filing
146
ORDER AND REASONS denying with prejudice 116 MOTION for Summary Judgment filed by Brennan's Inc., Theodore Brennan. Signed by Judge Susie Morgan on 11/28/12.(cbn) Modified on 11/28/2012 to edit document type (cbn).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EDWARD TUCK COLBERT, et al.,
Plaintiffs
CIVIL ACTION
VERSUS
NO. 12-137
THEODORE BRENNAN, et al.,
Defendants
SECTION “E”
ORDER AND REASONS
Before the Court is a “Motion for Summary Judgment on Prescription” filed by
defendants Theodore Brennan (“Ted Brennan”) and Brennan’s, Inc.1 Plaintiffs oppose the
motion.2 Defendants have filed a reply in further support of their motion.3 The Court heard oral
argument on defendants’ motion for summary judgment on November 16, 2012.4 For the
reasons set forth below, defendants’ motion for summary judgment is denied with prejudice.
Plaintiffs’ oblique action is not prescribed as a matter of law. Plaintiffs informed the Court at
oral argument that they have withdrawn their revocatory action and are only pursuing an
oblique action against defendants, so the Court does not address defendants’ motion for
summary judgment on prescription with respect to the revocatory action.
BACKGROUND
Plaintiffs are asserting an oblique action against defendants under Louisiana Civil Code
1
R. Doc. 116.
2
R. Doc. 124.
3
R. Doc. 132.
4
R. Doc. 135.
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article 2044.5 Plaintiffs allege that they are judgment creditors of Brennan’s, Inc., and that
Brennan’s, Inc. is insolvent.6 Plaintiffs also allege that Ted Brennan is indebted to Brennan’s,
Inc., and that Brennan’s, Inc. is failing to seek repayment of loans it made to Ted Brennan.7
Plaintiffs argue that Brennan’s, Inc.’s failure to seek repayment of those loans either caused or
increased Brennan’s, Inc.’s insolvency.8 In this oblique action, plaintiffs seek to “step into the
shoes” of Brennan’s, Inc. and seek repayment of the loans from Ted Brennan on behalf of
Brennan’s, Inc.
ARGUMENTS OF THE PARTIES
In their motion for summary judgment, defendants argue that plaintiffs’ oblique action
has prescribed. Defendants contend that plaintiffs are limited to seeking repayment of loans
made to Ted Brennan within one year of January 18, 2012 - the date of the filing of this lawsuit and claim that Ted Brennan paid more money to Brennan’s, Inc. during that one year period
than Brennan’s, Inc. loaned to him, and thus that plaintiffs’ oblique action must fail.9 In support
of their motion for summary judgment, defendants attach an excerpt of a judgment debtor
examination conducted by plaintiffs’ counsel of Brennan’s, Inc. in connection with the state
court action that led to this federal lawsuit10 and the sworn affidavit of Bridget Brennan Tyrrell,
5
See R. Doc. 1 (Complaint).
6
See R. Doc. 124 at pp. 2-4.
7
Id. at p. 4.
8
Id. at pp. 4-5.
9
See R. Doc. 116-1. Defendants also argue that the amount of money paid to Brennan’s, Inc. by
Ted Brennan from January 2009 to January 2012 exceeds the amount of the loans taken by Ted Brennan
from Brennan’s, Inc. during that same period.
10
Id. See also R. Doc. 116-2 (Excerpt of September 2011 judgm ent debtor examination).
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the treasurer of Brennan’s, Inc.11 Defendants have not provided the Court, or opposing counsel,
with other evidence relative to loans from Brennan’s, Inc. to Ted Brennan nor with respect to
any amounts of money Ted Brennan allegedly paid to Brennan’s, Inc.
In response, plaintiffs argue that defendants' motion for summary judgment is predicated
on a fundamental misunderstanding of prescription and peremption for oblique actions under
Louisiana law. They say that, because their claims are not facially prescribed, the burden is on
defendants to prove prescription, and that defendants have failed to carry that burden. They
also attack defendants' summary judgment evidence as inadmissible, self-serving hearsay, and
argue that the affidavit was submitted in bad faith.
Plaintiffs argue that their oblique action is, in fact, timely, as the prescriptive period on
their claim began to run in September 2011, when they learned that Brennan's, Inc. was not
seeking to recover the debt owed to it from Ted Brennan. Plaintiffs argue that defendants have
not provided the Court any competent evidence that plaintiffs learned of this failure to act any
earlier than September 2011. Plaintiffs also argue that the prescriptive and peremptive periods
applicable to oblique actions do not set time limits on the loans that a creditor, standing in the
shoes of its debtor, can recover from a third party, but instead set an outer limit on when an
oblique action may be initiated. Plaintiffs argue that they brought their oblique action within
the applicable prescriptive period, and because the nature of the oblique action is such that
plaintiffs exercise Brennan’s, Inc.’s right to seek repayment, the time period during which
plaintiffs may recover loans made to Ted Brennan is limited by the prescriptive period
applicable to the recovery of the loans, and not the prescriptive period applicable to the
11
R. Doc. 116-3.
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initiation of an oblique action.
ANALYSIS
I.
Summary Judgment Standard
Summary judgment is appropriate only “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” FED . R. CIV. P. 56 ; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
The initial burden of demonstrating the absence of any genuine issues of material fact lies with
the party seeking summary judgment. Celotex, 477 U.S. at 324. If the moving party fails to
carry this burden, the motion must be denied. However, if the moving party successfully carries
this burden, the burden then shifts to the non-moving party that a genuine issue of material fact
exists. Id. at 322-23.
Once the burden has shifted, the non-moving party must direct the Court’s attention to
something in the pleadings or other evidence in the record that sets forth specific facts sufficient
to establish that a genuine issue of material fact does indeed exist. Id. at 324. The non-moving
party cannot simply rely on allegations or blanket denials of the moving party’s pleadings as a
means of establishing a genuine issue of material fact, but instead must identify specific facts
that establish a genuine issue for trial. Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282
(5th Cir. 2001). “An issue is material if its resolution could affect the outcome of the action.”
DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2005). When assessing whether a
material factual dispute exists, the Court considers “all of the evidence in the record but refrains
from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v.
Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008); see also Reeves v.
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Sanderson Plumbing, Inc., 530 U.S. 133, 150-51 (2000). All reasonable inferences are drawn
in favor of the nonmoving party. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
There is no genuine issue of material fact if, even viewing the evidence in the light most
favorable to the non-moving party, no reasonable trier of fact could find for the non-moving
party, thus entitling the moving party to judgment as a matter of law. Smith v. Amedisys, 298
F.3d 434, 440 (5th Cir. 2002).
II.
Prescription Generally; Burden of Proof
In this diversity case, the Court applies the prescriptive period of the forum state as
substantive law. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010). Under
Louisiana law, the burden of proving prescription ordinarily rests with the defendant. Campo
v. Correa, 01-2707 (La. 6/21/02); 828 So.2d 502, 508. However, if prescription is evident on
the face of the pleadings, the burden shifts to the plaintiff to show that its claims have not
prescribed. Id. at 508; Carter v. Haygood, 04-646 (La. 1/19/05); 892 So.2d 1261, 1267.
III.
Oblique Action
Louisiana Civil Code article 2044 states that "[i]f an obligor causes or increases his
insolvency by failing to exercise a right, the obligee may exercise it himself, unless the right is
strictly personal to the obligor. LA . CIV. CODE . art. 2044. This action is known as an oblique
action. To assert an oblique action, the obligee must join in the suit “his obligor and the third
person against whom that right is asserted." Id. Article 2041 provides the prescriptive and
peremptive periods for an oblique action: "The action of the obligee must be brought within one
year from the time he learned or should have learned of the act, or the result of the failure to act,
of the obligor that the obligee seeks to annul, but never after three years from the date of that
act or result." LA . CIV. CODE art. 2041; see also Nicholson Mgmt. & Consultants, Inc. v.
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Bergman, 96-557 (La. App. 4 Cir. 9/25/96); 681 So.2d 471, 476 (article 2041 applies to oblique
actions, even though it is contained in the revocatory action section of the Civil Code).
Accordingly, an oblique action arises when a creditor learns of its debtor's failure to assert a
right against a third party indebted to the debtor. The creditor then“steps into the shoes” of the
debtor and exercises the debtor’s right to seek repayment of the third party’s debt.
Because the oblique plaintiffs are exercising a right belonging to Brennan’s, Inc. as if it
were Brennan’s, Inc. itself exercising that right, plaintiffs’ ability to seek repayment of loans is
limited only by whatever legal and temporal restrictions the law places on Brennan’s, Inc.’s
ability to seek repayment of loans directly from Ted Brennan. Accordingly, while the initiation
of plaintiffs’ oblique action is governed by article 2041's one year prescriptive period, Nicholson,
681 So.2d at 476, once the oblique action has been timely initiated, the time period during which
plaintiffs may seek recovery of loans from Ted Brennan, on behalf of Brennan’s, Inc., is
governed by the ten year liberative prescriptive period applicable to personal actions. See LA .
CIV. CODE art. 3499. To hold that article 2041 not only limits the time in which an oblique action
can be brought, but also sets a time limit on the loans that can be recovered by the oblique
plaintiff, as defendants suggest, would lead to an absurd result and would severely limit the
oblique action in a way the Louisiana legislature and Louisiana courts surely never
contemplated.
IV.
Plaintiffs’ Oblique Action Is Not Prescribed
In this case, plaintiffs’ oblique action clearly is not prescribed. Plaintiffs have provided
the Court with evidence showing that they first learned of Brennan’s, Inc.’s failure to seek
repayment of loans it made to Ted Brennan in September 2011. This action was instituted in
January 2012, well within the one year prescriptive period applicable to oblique actions.
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Because plaintiffs’ oblique action is not facially prescribed, the burden is on defendants to prove
that plaintiffs’ claim is prescribed. Defendants have not carried that burden, as they have not
introduced any evidence contradicting plaintiffs’ assertion that they learned of Brennan’s, Inc.’s
failure to seek repayment of Ted Brennan’s loans in September 2011.
CONCLUSION
Accordingly, IT IS ORDERED that defendants’ motion for summary judgment be and
hereby is DENIED WITH PREJUDICE.
28th
New Orleans, Louisiana, this ___ day of November, 2012.
____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE
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