57 So. 3d 553
La. Ct. App.2011Background
- Gulf Coast Bank loaned Elizabeth and Ferdinand D'Orville $344,365, secured by a mortgage on their home and a guaranty signed by Norbert Simmons.
- The D'Orvilles defaulted and foreclosed; their debt was discharged in bankruptcy after sheriff's sale.
- The sheriff's sale occurred at about $400,000; proceeds were credited to the bank with Simmons as the guarantor.
- The bank sought the deficiency from Simmons in a subsequent ordinary proceeding, naming only Simmons as a defendant.
- Simmons argued there was a compromise or settlement extinguishing his guaranty, based on an email exchange and alleged bank representations.
- The trial court granted summary judgment for the bank; on de novo review the Louisiana Fourth Circuit upheld that Simmons remained liable and the guaranty was not extinguished by a compromise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid compromise extinguished Simmons' guaranty. | Simmons | Simmons | No genuine issue; no written compromise shown |
| Whether the alleged negotiations created a binding extinguishment defense that defeated summary judgment. | Simmons | Bank | Not supported; no written agreement existed |
| Whether Simmons failed to plead extinguishment or res judicata to contest the bank's claim. | Bank | Simmons | Bank burden unchanged; no affirmative defense pleaded |
Key Cases Cited
- First Nat. Bank of Crowley v. Green Garden, 387 So.2d 1070 (La.1980) (surety obligations; extinguishment by performance)
- Colonial Mortgage & Loan Corp. v. James, 812 So.2d 817 (La.App.4 Cir. 2002) (burden-shifting on promissory note; affirmative defenses needed)
- Merchants Trust & Savings Bank v. Olano, 512 So.2d 1218 (La.App.5th Cir.1987) (guarantor’s burden of proof and evidence)
- Felder v. Georgia Pacific Corp., 405 So.2d 521 (La.1981) (written form required for contract modification; offer and acceptance)
- Hawthorne v. Barbier, 841 So.2d 28 (La.App.4 Cir.2003) (written documentation required for compromise; not oral)
- Townsend v. Square, 643 So.2d 787 (La.App.4 Cir.1994) (acceptance must be clearly expressed in writing)
- Vermilion Corp. v. Vaughn, 397 So.2d 490 (La.1981) (oral arguments insufficient without proper writing for compromise)
- American Bank & Trust Co. v. Int'l Dev. Corp., 506 So.2d 1234 (La.App.1st Cir.1987) (parol evidence issues in modification arguments)
- Ortego v. State, Dept. of Transportation and Devp., 689 So.2d 1358 (La.1997) (res judicata and compromise principles in Louisiana law)
- Franklin Credit Management Corp. v. Gray, 2 So.3d 598 (La.App.4 Cir.2009) (summary judgment standard and burden shifting)
- Saxena v. American Bank, 553 So.2d 836 (La.1989) (evidence and burden on guaranty disputes; governs persuasive proof)