LSREF2 Baron, L.L.C. v. Tauch
2014 U.S. App. LEXIS 8598
| 5th Cir. | 2014Background
- Tauch executed a Limited Guaranty securing 25% of a loan with Regions; Baron later acquired Regions’s rights.
- First KT defaulted; Regions sued Tauch to collect the full guaranty amount under the terms, plus costs.
- Guaranty allows for reductions (credits) for certain payments/offsets by Tauch or related parties; specifies credits for DIP loan payments, taxes/insurance, principal reductions from claims proceeds, and capital investments with lender approval.
- Tauch answered with general denials and reserved right to amend; no affirmative defenses pleaded.
- Regions moved for summary judgment for the full amount; Tauch argued setoff/payments by First KT reduced his liability.
- District court granted summary judgment, deeming payment/setoff a Louisiana-affirmative defense that must be pleaded and finding prejudice from late raising of the defense.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether payment/offset is an affirmative defense under Louisiana law | Baron (Regions) argues no offset defense was pleaded | Tauch contends payments reduce liability and are defensible as setoff/payment | Yes; payment/offset is an affirmative defense and must be pleaded |
| Did Tauch waive the defense by failing to plead it earlier | Baron asserts waiver due to no timely pleading | Tauch claims pragmatically sufficient time and no prejudice to respond | No; prejudice shown; district court did not abuse discretion in enforcing pleading rule |
| Did the district court abuse its discretion in preventing untimely pleading of the payment defense | Baron argues late raise prejudiced response and deadlines passed | Tauch argues no intentional delay and no prejudice argued elsewhere | Yes; court properly found prejudice and upheld denial of late defense |
Key Cases Cited
- Fontenot v. LaFleur, 281 So.2d 868 (La. Ct. App. 1973) (payments/setoffs are affirmative defenses must be pleaded)
- Preferred Inv. Corp. v. Denson, 251 So.2d 455 (La. Ct. App. 1971) (payment is an affirmative defense burden on defendant)
- Paul Piazza & Son, Inc. v. Sider, 427 So.2d 672 (La. Ct. App. 1983) (payments reducing amount owed are affirmative defense; burden on pleader)
- Touro Infirmary v. Marine Med. Unit, Inc., 699 So.2d 90 (La. Ct. App. 1997) (payment as affirmative defense defined; burden to prove)
- Levy Gardens Partners 2007, L.P. v. Commonwealth Land Title Ins. Co., 706 F.3d 622 (5th Cir. 2013) (illustrates prejudice inquiry and that exclusion/non-exclusion defenses affect discretion)
- Levy Gardens Partners 2007, L.P. v. Commonwealth Land Title Ins. Co. (cited again for prejudice analysis), 706 F.3d 622 (5th Cir. 2013) (distinguishes between exclusions and liability extent; discretionary prejudice review)
- Aunt Sally’s Praline Shop, Inc. v. United Fire & Cas. Co., 418 Fed-Appx. 327 (5th Cir. 2011) (recognizes non-fatality of minor Rule 8(c) failures if no prejudice)