BY Equities, LLC v. Carver Theater Productions, LLC et al
ORDER AND REASONS denying 10 Motion for Summary Judgment. Signed by Judge Carl Barbier on 11/17/20. (Reference: All cases)(cg)
Case 2:20-cv-01290-CJB-MBN Document 31 Filed 11/18/20 Page 1 of 7
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BY EQUITIES, LLC
PRODUCTIONS, LLC, ET AL.
ORDER & REASONS
Before the Court is a Motion for Summary Judgment (Rec. Doc. 10) filed by
BY Equities, LLC (referred to as “Plaintiff”), an opposition (Rec. Doc. 18) thereto by
Carver Theater Productions, LLC (“Carver”) and Eugene Oppman (collectively
referred to as “Defendants”), a reply by Plaintiff (Rec. Doc. 25), and a sur-reply by
Defendants. (Rec. Doc. 29). Having considered the motion and memoranda, the
record, and the applicable law, the Court finds that Plaintiff’s motion should be
FACTS AND PROCEDURAL BACKGROUND
On January 29, 2015, Carver executed a promissory note (“the Note”) in the
original principal amount of $1,590,278.00 payable to the order of First NBC Bank
(“FNBC”). The Note’s maturity date absent demand was May 2, 2015. The Note was
subsequently modified by a Change in Terms Agreement on August 28, 2015, which
increased the maximum principal indebtedness to $1,628,977.72 and extended the
maturity date to February 1, 2016. The parties executed a Second Change in Terms
Agreement on March 8, 2016, which extended the maturity date to December 5, 2016.
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Eugene Oppman signed a Commercial Guaranty, which guaranteed all of
Carver’s indebtedness to FNBC, “now existing or hereafter arising or acquired, on an
open and continuing basis.” The Commercial Guaranty specifies that it is
transferrable to any subsequent holders of Carver’s indebtedness. The Note is also
secured by a Commercial Security Agreement executed by Carver and granted to
FNBC and its assignees.
On April 28, 2017, FNBC was closed by court order. The FDIC was appointed
as receiver of FNBC, vested with title to its assets, and granted managerial control
of the failed bank. On October 18, 2017, the FDIC assigned the Note to OSK VII, LLC
(“OSK”), which subsequently assigned the Note to Plaintiff on December 12, 2019.
The Note matured on December 5, 2016. Carver concedes that the Note was
not fully paid upon maturity, which placed it in default. Carver has not made any
payments towards the balance of the Note since December 12, 2019. After issuing
formal demand for payment, Plaintiff filed this suit against Carver and Eugene
Oppman to collect the balance due under the Note and enforce its rights under the
Commercial Guaranty and Commercial Security Agreement. After 3 months had
passed since Defendants filed their answer, Plaintiff filed the instant motion for
Summary judgment is appropriate when “the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as
to any material fact and that the movant is entitled to judgment as a matter of law.”
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Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56); Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a
dispute as to any material fact exists, a 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). All reasonable inferences are drawn in favor of the nonmoving party, but
a party cannot defeat summary judgment with conclusory allegations or
unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be
satisfied that “a reasonable jury could not return a verdict for the nonmoving party.”
Delta, 530 F.3d at 399.
Carver has conceded that it is in default of the Note that was assigned to
Plaintiff. (Rec. Doc. 6 at ¶ 23). Therefore, summary judgment should be granted in
favor of Plaintiff unless Defendants have asserted an affirmative defense that is
supported by sufficient material facts.
Defendants bear the burden of proving any affirmative defense. F.T.C. v. Nat’l
Business Consultants, Inc., 376 F.3d 317, 320 (5th Cir. 2004). Defendants have
submitted two non-conclusory affirmative defenses for the Court to consider. First,
Defendants argue that Plaintiff acquired the Note as a result of the sale of a litigious
right, and thus, Defendants are entitled to pay the price that OSK paid to the FDIC,
instead of the total balance of the Note. Second, Defendants argue that Carver was
fraudulently induced to take the loan by FNBC. In the alternative, Defendants argues
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that they should be allowed more time for discovery before the Court decides to grant
Plaintiff’s motion for summary judgment pursuant to Federal Rule of Civil Procedure
SALE OF A LITIGIOUS RIGHT
Defendants argue that the Note was a litigious right when it was assigned to
OSK and subsequently to Plaintiff. (Rec. Doc. 18 at p. 4-5). Plaintiff argues that the
right was not litigious, and, even if the right was litigious, it was not exercised
promptly. (Rec. Doc. 25 at p. 3).
“When a litigious right is assigned, the debtor may extinguish his obligation
by paying to the assignee the price the assignee paid for the assignment, with interest
from the time of the assignment.” La. Civ. Code art. 2652. The right to redeem a
litigious right must be exercised promptly. Clement v. Sneed Brothers, 116 So. 2d 269,
271 (1959). In Charrier v. Bell, the Louisiana First Circuit Court of Appeal held that
the filing of a motion for litigious redemption was not timely because six months had
passed since the movant had knowledge of the sale of a litigious right. 380 So. 2d 155,
156 (La. Ct. App. 1979). Similarly, in A. M. & J. Solari, Ltd. v. Fitzgerald, the
Louisiana Fourth Circuit Court of Appeal held the same when 11 months had passed
since the movant had knowledge of the sale of a litigious right. 150 So. 2d 896, 897
(La. Ct. App. 1963).
Over 3 years have passed since the FDIC transferred the allegedly litigious
rights to the Note to OSK, and over 10 months have passed since OSK transferred
said rights to Plaintiff. (Rec. Doc. 25 at p. 2). Since failure to motion for litigious
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redemption within six months results in untimeliness, Defendants have failed to
assert any right to litigious redemption that may or may not have existed in a timely
manner. Thus, Defendants’ affirmative defense that they are entitled to litigious
redemption must fail.
Defendants also argue that they have asserted fraudulent inducement as an
affirmative defense. Specifically, Defendants allege that Ashton Ryan and Bryan
Brad Calloway, individually and on behalf of FNBC, intentionally misrepresented to
Defendants that state and federal tax credits would pay the Note. (Rec. Doc. 18 at pp.
6-7). Defendants aver that Carver would not have executed the Note without these
false misrepresentations. (Rec. Doc. 18 at p. 7). In response, Plaintiff argues that
Defendants’ fraudulent inducement defense is barred by the D’Oench, Duhme
doctrine. (Rec. Doc. 25 at p. 4).
The D'Oench, Duhme doctrine prevents parties from “rely[ing] on an oral
agreement between [a failed bank and its customer] as the basis for defenses or claims
against the FDIC.” Lemaire v. FDIC, 20 F.3d 654, 657 (5th Cir. 1994). This rule was
codified in 12 U.S.C. § 1823(e)(1). The protections granted under the D'Oench, Duhme
and § 1823(e)(1) have been extended to private parties that purchase the assets of
insolvent banks from the FDIC. Porras v. Petroplex Sav. Ass'n, 903 F.2d 379, 381 (5th
Cir. 1990); C&C Inv. Properties, L.L.C. v. Trustmark Nat'l Bank, 838 F.3d 655, 659
(5th Cir. 2016).
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Defendants have not submitted any writings showing that FNBC made
representations that state and federal tax credits would pay off the Note that is the
subject of this litigation. Thus, this fraudulent inducement defense should fail under
the D'Oench, Duhme doctrine. However, Defendants aver that documents supporting
its defense will likely be found in the course and scope of discovery.
Summary judgment for failure to provide supporting evidence is warranted
only "after adequate time for discovery." Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). Summary judgment may be denied under Rule 56(d) when the opposing party
submits “a plausible basis for that specified facts, susceptible of collection within a
reasonable time frame, probably exist and indicate how the emergent facts, if
adduced, will influence the outcome of the pending summary judgment motion.” Raby
v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010).
In support of its contention that discovery will likely produce documents
supporting its fraudulent inducement defense, Defendants cite the Commercial
Security Agreement between Carver and FNBC, which granted a security interest in
favor of FNBC and its assignees over “[c]apital contributions received by [Carver]
directly or indirectly from State Tax Credit Investor(s) related to State of Louisiana
Historic Restoration Tax Credits and State of Louisiana Live Entertainment
Performance Tax Credits.” (Rec. Doc. 18 at p. 7). These references to specific tax
credits in the Commercial Security Agreement tends to support Defendants’
argument that tax credits were a subject of the negotiation between FNBC and
Defendants. (Rec. Doc. 29 at p. 3).
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Thus, Defendants have demonstrated that some negotiation over tax credits
between Defendants and FNBC likely occurred, and, if the results of such
negotiations were memorialized in writing, Defendants have asserted fraudulent
inducement as a plausible affirmative defense. Discovery regarding the existence of
any such documents has not yet occurred. Therefore, Plaintiff’s motion for summary
judgment should be denied until such discovery has been completed.
IT IS HEREBY ORDERED that Plaintiff’s Motion for Summary Judgment
(Rec. Doc. 10) is DENIED without prejudice.
New Orleans, Louisiana this 17th day of November, 2020.
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
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