Ursulines, L.L.C. v. Regions Bank et al
Filing
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ORDER AND REASONS granting 12 Motion for Summary Judgment. Signed by Judge Mary Ann Vial Lemmon on 5/20/13. (cbn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
URSULINES, L.L.C.
CIVIL ACTION
VERSUS
NO: 12-2974
REGIONS BANK AND ABC
INSURANCE COMPANY
SECTION: "S" (1)
ORDER AND REASONS
IT IS HEREBY ORDERED that Regions Bank's Motion for Summary Judgment (Doc.
#12) is GRANTED, and plaintiff's claims against it are DISMISSED WITH PREJUDICE.
BACKGROUND
This matter is before the court on a motion to dismiss, or alternatively, motion for summary
judgment filed by defendant, Regions Bank. Regions argues that plaintiff, Ursulines, L.L.C., cannot
maintain any cause of action against Regions for a failing to make a certain loan to Ursulines
because there was no signed credit agreement for that loan.
In 2005, Ursulines sought to purchase vacant land in the Tremé neighborhood of New
Orleans, Louisiana for the purpose of developing a condominium complex. On July 8, 2005,
Regions' predecessor in interest, AmSouth Bank, wrote Cesar Burgos, Ursulines' representative
member, discussing the possibility of AmSouth's providing a construction loan to Ursulines, and
outlining the terms and conditions of any such loan. That correspondence stated that it was "for
discussion purposes only" and that "[t]his letter is not to be construed as a commitment to lend, but
as an expression of [AmSouth's] interest in providing the financing outline above." One of the terms
was the pre-sale of five of the condominium units.
On July 13, 2005, AmSouth issued a commitment letter to Burgos, in which it agreed to lend
Ursulines $1,050,000 or 80% of the acceptable appraised value of the land or 75% of the contract
price for the purchase of the land. The commitment letter did not include the construction loan that
was proposed in the July 8, 2005, communication.
On August 12, 2005, a certified appraiser valued the property at $1,400,000. On August 15,
2005, Ursulines purchased the property for $1,400,000, and executed a loan agreement and a
promissory note secured by a mortgage on the property in favor of AmSouth in the principal amount
of $1,050,000. Thereafter, Ursulines engaged an architect to design the condominium complex, and
began to pre-sell the properties. By August 29, 2005,1 Ursulines had pre-sold five units.
In February 2006, a certified appraiser reconfirmed that the value of the land was
$1,400,000, and found that the value of the proposed improvements had a prospective market value
of $7,600,000.
In May 2006, AmSouth merged with Regions, and Regions became the owner of the August
15, 2005, loan agreement and promissory note. However, Regions would not offer Ursulines a
construction loan conforming to the terms that AmSouth had outlined but not finalized in the July
8, 2005, proposal. Instead, Regions required Ursulines to pre-sell all of the condominium units to
obtain the construction loan.
Thereafter, Ursulines renewed the promissory note with Regions several times, each time
extending its maturity date. On March 26, 2010, Ursulines paid $730,000 of the principal balance
on the note after receiving a loan from First NBC Bank. Ursulines then sold the property for
$1,214,000, and paid Regions the remaining balance on the promissory note, $265,650, on May 19,
2010.
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This is the date on which Hurricane Katrina struck New Orleans, Louisiana.
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Ursulines filed this action against Regions alleging that Regions damaged Ursulines by
failing to offer Ursulines a construction loan that conformed to the terms proposed by AmSouth in
July 2005. Specifically, Ursulines alleges that:
Thereafter, on August 15, 2005, AmSouth approved a commercial
development loan in the amount of four million and eight hundred
thousand dollars ($4,800,000.00). Of this loan, one million and four
hundred thousand dollars ($1,400,000.00) would become available
immediately for the purchase of the land property. The remaining
funds, three million and four hundred thousand ($3,400,000.00), for
the construction of the condominium complex, would be available as
a line of credit and required that five (5) united be presold prior to
commencing disbursement of the funds.
Ursulines alleges that, as a result of Regions' failure to lend it the construction funds with the same
terms proposed by AmSouth on July 8, 2005, it was forced to abandon the condominium project and
lost profits and pre-paid out-of-pocket expenses. Ursulines contends that Regions is liable to it
under the theories of breach of contract, fraud, detrimental reliance and unjust enrichment.
Regions filed this motion to dismiss, or alternatively, motion for summary judgment arguing
that Ursulines cannot maintain a cause of action against it for failure to enter into the construction
loan with Ursulines because there was never a credit agreement for that loan that meets the
requirements of Louisiana law. In support of its motion, Regions attached the affidavit of its
Assistant Vice President, John W. "Casey" Thornton, Jr. Thornton attested that he maintains the
pertinent records at the bank, and there was no credit agreement for the construction loan, only the
July 8, 2005, proposal that specifically states that it is not a commitment to lend.
Ursulines argues that its claims are not entirely about the proposed construction loan, but
rather that Regions inducement of Ursulines to enter into the loan to purchase the property, and its
detrimental reliance on Regions' representations regarding its intent to enter into the construction
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loan. Ursuline argues that Regions never disavowed that it intended to make the loan. Ursulines
also argues that whether Regions acted fraudulently during the parties' business relationship is a fact
question that cannot be determined on summary judgment.
ANALYSIS
A.
Legal Standard
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a motion to dismiss a
complaint for failure to state a claim upon which relief can be granted. To survive a Rule 12(b)(6)
motion to dismiss, enough facts to state a claim for relief that is plausible on its face must be
pleaded. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl.
v. Twombly, 127 S.Ct. 1955, 1964-65 & 1973 n. 14 (2007)). A claim is plausible on its face when
the plaintiff pleads facts from which the court can “draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). “Factual
allegations must be enough to raise a right to relief above the speculative level, on the assumption
that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl., 127 S.Ct. at
1965. The court “must accept all well-pleaded facts as true and view them in the light most
favorable to the non-moving party.” In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir.
2008). However, the court need not accept legal conclusions couched as factual allegations as true.
Iqbal, 129 S.Ct. at 1949-50.
In considering a motion to dismiss for failure to state a claim, a district court may consider
only the contents of the pleading and the attachments thereto. Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citing FED. R. CIV. P. 12(b)(6)). However, “[d]ocuments
that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are
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referred to in the plaintiff’s complaint and are central to her claim.” Id. at 498-99 (internal citations
omitted).
“If, however, a district court considers other information ‘outside the complaint,’ it must treat
the motion to dismiss as a motion for summary judgment. Rodriguez v. Rutter, 310 Fed. Appx. 623,
626 (5th Cir. 2009). “In the event a motion to dismiss is converted to one for summary judgment,
a district court must first give the parties notice, and then may consider all the evidence presented.”
Id.
Summary judgment is proper when, viewing the evidence in the light most favorable to the
non-movant, “there is no genuine issue as to any material fact and ... the moving party is entitled to
judgment as a matter of law.” Amburgey v. Corhart Refractories Corp., 936 F.2d 805, 809 (5th Cir.
1991); FED. R. CIV. PROC. 56(c). If the moving party meets the initial burden of establishing that
there is no genuine issue, the burden shifts to the non-moving party to produce evidence of the
existence of a genuine issue for trial. Celeotex Corp. v. Catrett, 106 S.Ct. 2548, 2552 (1986). The
non-movant cannot satisfy the summary judgment burden with conclusory allegations,
unsubstantiated assertions, or only a scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d 1069,
1075 (5th Cir. 1994) (en banc). If the opposing party bears the burden of proof at trial, the moving
party does not have to submit evidentiary documents to properly support its motion, but need only
point out the absence of evidence supporting the essential elements of the opposing party’s case.
Saunders v. Michelin Tire Corp., 942 F.2d 299, 301 (5th Cir. 1991).
B.
Louisiana Credit Agreement Statute
Louisiana Revised Statutes § 6:1122, provides that "[a] debtor shall not maintain an action
on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the
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relevant terms and conditions, and is signed by the creditor and the debtor." Section 6:1121 defines
a "creditor" as "a financial institution or any other type of creditor that extends credit or extends a
financial accommodation under a credit agreement with a debtor." LA. REV. STAT. § 6:1121. A
"debtor" is "a person or entity that obtains credit or seeks a credit agreement with a creditor or who
owes money to a creditor." Id. A "credit agreement" is "an agreement to lend or forbear repayment
of money or goods or to otherwise extend credit, or make any other financial accommodation." Id.
Further, La. Rev. Stat. § 6:1123 provides:
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 a creditor and the debtor.
Moreover, a financial institution is not deemed or implied to be acting as its customer's fiduciary or
to have any fiduciary obligation or responsibility to its customer 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. Id. at § 6:1124.
In Jesco Constr. Corp. v. Nationsbank Corp., 830 So.2d 989, 992 (La. 2002), the Supreme
Court of Louisiana, answering a question certified to it by the United States Court of Appeals for
the Fifth Circuit, held that the Louisiana Credit Agreement Statute precludes all actions for damages
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arising from agreements that do not conform to the Louisiana Credit Agreement statutes, regardless
of the theory of recovery. The court reasoned that term "action" means any "demand for the
enforcement of a legal right," and the "primary purpose of the credit agreement statutes is to prevent
potential borrowers from bringing claims against lenders based upon oral agreements." Id.
The Louisiana Credit Agreement statutes clearly apply to this case. Regions is a creditor,
i.e. it is a financial institution that extends credit. Ursulines is a debtor, i.e. an entity that sought
credit with Regions, and also owed money to Regions on a different loan agreement. Ursulines'
allegations involve a proposed credit agreement for the construction loan, i.e. a proposed agreement
to lend. Under La. Rev. Stat. § 6:1122, a debtor cannot maintain any action on a credit agreement
that is not in writing, expressing consideration, setting forth the relevant terms and conditions and
signed by the creditor and the debtor. Ursulines has not alleged that such an agreement definitively
existed, nor has Ursulines contradicted, with competent summary judgment evidence, Thornton's
affidavit that there was no such agreement. All of Ursulines' causes of action are predicated on
Regions' alleged oral agreement to extend the construction loan to Ursulines. Because Ursulines has
no proof of a written credit agreement conforming to the requirements of the Louisiana Credit
Agreement statutes, Regions is entitled to summary judgment on all of Ursulines' claims. See Jesco,
830 So.2d at 992. Therefore, Regions' motion for summary judgment is GRANTED, and Ursulines'
claims against it are DISMISSED WITH PREJUDICE.
CONCLUSION
IT IS HEREBY ORDERED that Regions Bank's Motion for Summary Judgment (Doc.
#12) is GRANTED, and plaintiff's claims against it are DISMISSED WITH PREJUDICE.
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20th
New Orleans, Louisiana, this _____ day of May, 2013.
____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE
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