Mendoza et al v. Doyle International Louisiana, LLC et al

Filing 132

RULING AND ORDER denying 48 Motion for Reconsideration. Signed by Judge Brian A. Jackson on 01/24/2020. (NLT)

UNITED STATES DISTRICT COUHT
MIDDLE DISTRICT OF LOUISIANA

DOUGLAS MENDOZA, ET AL. CIVIL ACTION

VERSUS
DOYLE INTERNATIONAL NO: 17-00437-BAJ-EWD
LOUISIANA, LLC, ET AL.

RULING AND ORDER
Before the Court is the Joint Motion for Reconsideration (Doc. 48) filed
by Plaintiff-in-Intervention Hancock Whitney and the Federal Deposit Insurance
Corporation ("FDIC") as receiver for Defendant First NEC Bank ("FNBC"). Hancock
Whitney and the FDIC request the Court reconsider its Ruling and Order (Doc. 42),
in which the Court declined to dismiss Plaintiffs' claims for intentional
misrepresentation, fraudulent inducement, and annulment of the contract. For the

reasons that follow, the Motion is DENIED.

I. BACKGROUND
A. Plaintiffs' Allegations
Plaintiffs allege that Defendant Jason Doyle ("Doyle") implemented a scheme
whereby he enticed victims to invest in purported restaurant enterprises, which were
never constructed or opened for business. (Doc. 18-3 at p. 2) Doyle and his associates

instead diverted the money for personal use. (Id.) Plaintiffs further allege that FNBC
participated in Doyle's scam. (Id.) FNBC Chief Executive Officer Ashton Ryan and

Senior Vice-President Fred Beebe allegedly knew that Doyle was defrauding
investors and helped facilitate the fraud. (Id.) Plaintiffs claim that Ryan and Beebe
approved a series of improper commercial loans to Doyle and his various shell

business entities totaling over $800,000. (Id. at pp. 2-3.)
As part of this scheme, Plaintiffs allege that in 2012 Doyle and his associates,
as well as Beebe, convinced Mendoza to invest $300,000 in an entity called LCN MOL,
LLC ("LCN"). Doyle's company, Doyle International, was already the majority
shareholder in LCN. (Doc. 1-2 at p. 3; Doc. 18-3 at p. 7). Doyle allegedly promised
that the investment would be used to construct and operate a branch of the New
Oiieans-based restaurant La Crepe Nanou on Bluebonnet Boulevard in Baton Rouge.
(Id.) The restaurant was never opened. (Id.)

Plaintiff further alleges that FNBC moved a portion of the $300,000 from the
account that was to fund the restaurant to different accounts under Doyle s name and
that these accounts were completely unrelated to the restaurant. (Doc. 18-3 at p. 9)

Doyle then allegedly spent a portion of these funds on loan and interest payments to
FNBC. (Id.} Plaintiffs brought claims against FNBC for fraud - specifically
intentional misrepresentation and fraudulent inducement (Doc. 18-3; Doc. 1-2),
annulment of a contract, intentional and negligent infliction of emotional distress,
and conversion. (Id.)

B. IMotion to Dismiss and the Court's Ruling
On August 10, 2018, the FDIC, as receiver for FNBC, filed a Motion to Dismiss
(Doc. 18) pursuant to Federal Rule of Civil Procedure 12(b)(6), seeking to dismiss all

III. DISCUSSION
Hancock Whitney and the FDIC argue that the remaining claims against
Defendant FNBC are predicated upon (1) alleged oral assurances by Defendant
FNBC in connection with Plaintiffs execution of a credit agreement, or (2) alleged
failures by Defendant FNBC to disclose information to Plaintiffs. For this reason, the
Hancock Whitney and the FDIC allege that Plaintiffs' remaining claims are barred
by the Louisiana Credit Agreement Statutes ("LCAS"), La R.S. 6:1122 et seq.
Hancock Whitney and the FDIC contend that under this statute, borrowers may state
a claim against a financial institution in connection with a credit agreement only
where they allege that the financial institution has violated the terms of a specific
credit agreement. Hancock Whitney and the FDIC further contend that since
Plaintiffs have failed to allege that FNBC violated the written terms of a credit
agreement within meaning of the statute, they have failed to state a claim against
Defendants FDIC and FNBC as a matter of law.
The Court finds that Plaintiffs did not allege that Defendants violated any oral
assurances or any written agreement. Under the LCAS, a debtor shall not maintain
an action on a credit agreement unless the agreement is in writing..,." La R.S.
6:1122. According to the statute, actions on a credit agreement with a financial

institution are confined to the LCAS; however, claims unrelated to a credit agreement
may be brought against a financial institution. The Court finds that Plaintiffs' claims
are unrelated to the credit agreement with Defendant; thus, the claims are not

confined to the LCAS. Plaintiffs' remaining claims are predicated on the allegation

that despite Defendant FNBC s alleged knowledge of Defendant Doyle's questionable
financial status and practices. Defendant allegedly aided in the misrepresentation to
induce Plaintiff to invest in Defendant Doyle's business. The Court concludes that
Plaintiffs remaining claims, unrelated to the LCAS, will not be dismissed.
The Court also finds that Plaintiffs remaining claims are not predicated on a
Defendant s failure to disclose. Under the LCAS, 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..., 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." La R.S. § 6:1124.
Plaintiffs claim regarding the Defendant's alleged breach of fiduciary duty was
already dismissed by the Court for the failure to plead it correctly. Thus, there are no
remaining claims alleging a fiduciary duty to disclose. Plaintiffs' claims for fraud and
annulment of the contract are not predicated on the existence of an express or implied

fiduciary duty between Defendant and Plaintiffs. The elements of intentional
misrepresentation and fraudulent inducement do not require the allegation of a

fiduciary relationsliip to correctly plead or prove tliem.1 The Court finds that
Plaintiffs remaining claims are not based on alleged failures of Defendant to disclose;

1 For intentional misrepresentation, a Plaintiff must plead: (1) a misrepresentation of a material fact;
(2) made with intent to deceive; (3) causing justifiable reliance with resultant injury. Kadlec Medical
Center v. Lakeview Anesthesia. Associates, 527 F.3d 412, 41.8 (5th Cir. 2008). For fraudulent
inducement, a Plaintiff must show : (1) the defendant engaged in a misrepresentation, suppression, or
omission of true information; (2) the defendant intended to obtain an unjust advantage or to cause
damage or inconvenience to another; (3) the error induced by defendant s fraudulent act substantially
influenced the victim, s consent to contract. Envtl. Safety & Health Consulting Services v. Crest Energy
Partners, L.P., 13-GV-5747, 2015 WL 2452458, at *4 (E.D. La. 2015) (citing Shelton v. Standard/700
Associates, 01-0597 (La. 10/16/01).

thus, Plaintiffs' claims are not barred by the LCAS. The Court finds no reason to
reconsider its Ruling and Order. Accordingly,

IT IS ORDERED that the Motion to Reconsider is DENIED.

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Baton Rouge, Louisiana, this ^^' day of January, 2020.

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JUDGE BRIAN\^J^CKSON
UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA