150 So. 3d 477
La. Ct. App.2014Background
- In 1991 PAF entered a purchase agreement with Gulf South Bank that exempted PAF’s corporate accounts from "service charges" on all Gulf South accounts as a condition of sale.
- Regions acquired Gulf South in 1996 and succeeded to its obligations under the 1991 agreement.
- After Regions changed computer systems in 2007, PAF’s accounts began showing charges; a Regions branch manager reimbursed some charges, but later reimbursements were contested and Regions concluded some reimbursements improperly included "miscellaneous charges."
- PAF sued in 2009 seeking reimbursement for allegedly prohibited service charges and specific performance; parties entered a 2012 consent judgment recognizing the 1991 agreement as binding and leaving the amount of reimbursement to be determined by the court.
- At bench trial the court awarded PAF $13,297.44 for breach; on appeal Regions argued no breach/damages, PAF sought additional/future damages and specific performance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the 1991 clause exempt all charges labeled "service charges" only, or broader bank fees? | The exemption covers all charges PAF was assessed and seeks reimbursement for charges at Regions and later at Whitney. | "Service charges" are technical banking terms distinct from "miscellaneous charges"; only technical service charges are excluded. | Court held "service charges" are terms of art; interpret using banking technical meaning — only technical service charges are excluded. |
| Were PAF’s damages correctly calculated and awarded? | PAF relied on its expert who totaled all disputed fees as "service charges" to get $13,297.44. | Regions showed many fees were "miscellaneous" and that Regions had reimbursed wrongly assessed technical service charges. | Trial court abused discretion by adopting plaintiff's expert calculation; record shows Regions reimbursed all wrongly-incurred technical service charges for the period. Judgment awarding damages reversed. |
| Is specific performance available to require Regions to honor the 1991 exemption going forward? | PAF requested specific performance to enforce permanent exemption. | Regions argued performance is impracticable because PAF closed accounts and no ongoing relationship exists. | Specific performance is impracticable now because PAF closed accounts; court declined to grant it but noted the agreement would apply if parties reestablish a relationship (concurring judge criticized that advisory language). |
| Are future or additional damages (including fees at Whitney Bank) recoverable? | PAF sought future damages and reimbursement for charges at Whitney after it moved accounts. | Regions asserted no liability for post-closure/new-bank charges and that it had reimbursed owed service charges. | Court pretermitted discussion because it found no unpaid wrongly-incurred technical service charges; reversed damage award. |
Key Cases Cited
- Subervielle v. State Farm Mut. Auto. Ins. Co., 32 So.3d 811 (La. App. 4 Cir. 2009) (contract interpretation reviewed de novo)
- Prytania Park Hotel, Ltd. v. Gen. Star Indem. Co., 179 F.3d 169 (5th Cir. 1999) (Louisiana Civil Code principles guide contract interpretation)
- Spangenberg v. Yale Materials Handling-Louisiana, Inc., 407 So.2d 1270 (La. App. 4 Cir. 1981) (parties do not bind themselves to unreasonable obligations)
- Hussain v. Khan, 142 So.3d 281 (La. App. 5 Cir. 2014) (standard of review for contract damage awards)
- Sizeler Prop. Investors, Inc. v. Gordon Jewelry Corp., 544 So.2d 53 (La. App. 4 Cir. 1989) (specific performance may be impracticable where business reorganization is required)
- Balluff v. Riverside Indoor Soccer II, L.L.C., 982 So.2d 199 (La. App. 5 Cir. 2008) (courts should not render advisory opinions)