182 So. 3d 108
La. Ct. App.2015Background
- Diversified and Crystal Lakes Properties sue Teche Federal Bank in Louisiana state court over distributions under a confirmed Chapter 11 plan for Denham Homes’ Crystal Lakes subdivision.
- The plan divided net proceeds among creditors; Teche had a 50% share with Class 3-9 mechanics, then 70% for Teche and others after those liens were paid.
- Disputes arose when Class 3-9 liens were canceled; Teche argued it was entitled to 70% of past and future proceeds due to extinguishment of those claims.
- Denham Homes missed the first-anniversary sales benchmark under the plan, prompting Teche to issue a default and postpone mortgage releases for proposed home-site sales.
- Denham Homes sought to reopen the bankruptcy and later enforce plan terms; Teche sought to dismiss claims in state court.
- The district court sustained prescription and no-cause-of-action exceptions; on appeal, the First Circuit reversed in part and remanded for amendment as to Anderson, while dismissing Diversified for lack of right of action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prescription barred the tort claims. | Diversified argued bankruptcy filings interrupted prescription. | Teche argued prescription ran from 2011; no interruption shown. | Prescriptions sustained for tort claims; no interruption proven; remanded on contract claim. |
| Whether the petition states a breach-of-contract claim against Teche. | Plan is a contract; petition pleads plan obligations and Teche’s refusal to release mortgage. | Plan is not a contract but a judgment; no contract-based duties against Teche. | Plan is a contract; petition states breach of contract against Teche; remand to perfect Anderson claim. |
| Whether Diversified has a right of action given its assignment to CLP. | Diversified assigned all rights to CLP; CLP remains plaintiff. | Entire rights assigned; Diversified lacks independent action. | Diversified has no right of action; CLP remains plaintiff; Diversified dismissed with prejudice. |
Key Cases Cited
- In re U.S. Brass Corp., 301 F.3d 296 (5th Cir.2002) (bankruptcy plan functions as contract interpreted by state law)
- In re Offshore Diving & Salvaging, Inc., 226 B.R. 185 (Bankr.E.D. La.1998) (plan functions as contract; apply state contract law)
- Stobart v. State, Dept., of Transp. and Dev., 617 So.2d 880 (La.1993) (manifest error standard for prescription factual findings)
- Marin v. Exxon Mobil Corp., 48 So.3d 234 (La. 2010) (prescription and evidentiary standards; burden shifting)
- Wimberly v. Gatch, 635 So.2d 206 (La.1994) (contra non valentem and suspension theories for prescription)
- Christen v. Al Copeland Enterprises, Inc., 635 So.2d 596 (La.App. 3rd Cir.1994) (bankruptcy-related staying and remedies not extending contra non valentem)
- Howard v. Administrators of Tulane Educational Fund, 986 So.2d 47 (La.2008) (no right of action; ability to amend when assignor/assignee issues arise)