168 So. 3d 595
La. Ct. App.2014Background
- C & O Enterprises, LLC (C & O) borrowed funds from Hancock Bank secured by a June 1, 2006 multiple‑indebtedness mortgage covering 1.58 acres and related improvements.
- C & O obtained a construction loan and later executed a March 20, 2009 promissory note; C & O filed Chapter 11 on June 5, 2009 and confirmed a reorganization plan that recognized the debt to Hancock.
- Pursuant to the confirmed plan, C & O executed a March 29, 2011 replacement promissory note (secured by the 2006 mortgage) acknowledging the indebtedness; the note defined default and allowed acceleration, fees, and foreclosure remedies.
- Hancock declared C & O in default in October 2012 and filed suit seeking foreclosure and a money judgment for the unpaid balance and accrued charges; C & O raised multiple defenses (e.g., bad faith, breach, fraud, predatory lending).
- Hancock moved for summary judgment attaching the replacement note and mortgage; the trial court granted summary judgment to Hancock, recognized mortgage enforcement and reserved guarantor claims; C & O’s reconventional demand was dismissed under lis pendens.
- C & O’s motion for new trial was denied; C & O appealed, arguing among other things that the court should have allowed further discovery and that defenses to the note were available.
Issues
| Issue | Plaintiff's Argument (C & O) | Defendant's Argument (Hancock) | Held |
|---|---|---|---|
| Enforceability of replacement promissory note | Note enforcement barred by Hancock’s alleged bad faith, breach, and other defenses | Hancock produced signed replacement note and mortgage; C & O previously acknowledged debt in bankruptcy | Court enforced the note; summary judgment for Hancock |
| Judicial estoppel | Not applicable — defenses preserved | C & O affirmed the debt in bankruptcy and executed replacement note; cannot now assert contrary defenses | Court applied judicial estoppel — C & O barred from inconsistent defenses |
| Adequacy of discovery before summary judgment | Trial court should have permitted more discovery to oppose motion | C & O had fair opportunity; discovery requests late and materials produced; no depositions noticed | Court found no abuse of discretion in denying more discovery and granting summary judgment |
| Reconventional demand / lis pendens | Reconventional demand alleges lender misconduct and should proceed | Hancock argued same claims are pending in another action; raised lis pendens exception | Trial court sustained lis pendens and dismissed reconventional demand without prejudice |
Key Cases Cited
- American Bank v. Saxena, 553 So.2d 836 (La. 1989) (summary judgment appropriate to enforce a promissory note when defendant shows no defense)
- Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) (factors for applying judicial estoppel)
- Johnson v. Evan Hall Sugar Cooperative, Inc., 836 So.2d 484 (La. Ct. App. 2002) (summary judgment procedural standards)
- Lowman v. Merrick, 960 So.2d 84 (La. Ct. App. 2007) (judicial estoppel prevents inconsistent positions that pervert the judicial process)
- Lieux v. Mitchell, 951 So.2d 307 (La. Ct. App. 2006) (appellate de novo review of summary judgment)