Mid-South Plumbing, L.L.C. v. Development Consortium-Shelly Arms, L.L.C.Mid-South Plumbing, L.L.C. v. Development Consortium-Shelly Arms, L.L.C.
h Mid-South Plumbing, LLC (“Mid-South”) appeals the trial court’s judgment overruling Mid-South’s exceptions of no right of action and no cause of action, and granting the petition for preliminary injunction filed by the mortgagee, First Bank and Trust (“First Bank”). For the reasons assigned, the judgment of the trial court is affirmed and this matter is remanded to the trial court for further pro
FACTUAL AND PROCEDURAL BACKGROUND
In January and February of 2002, Mid-South was hired to do plumbing repair work at the Magnolia Garden Apartments located at 6001 Dowman Road in New Orleans. After the work was completed, Mid-South sent invoices to the apartment’s management company totaling $35,177.50. Because it was only paid $10,000.00 of the amount owed, on June 12, 2002, Mid-South filed a Statement of Claim and/or Privilege (“Lien”) for the balance in the Office of the Recorder of Mortgages and Notarial Archives for the Parish of Orleans. The Lien identified the property as the Magnolia Garden Apartments, but did not name the owner of the property.
|2On January 29, 2003, Mid-South filed a lawsuit in Orleans Parish to recover the outstanding balance of $25,907.50, along with interest and attorney fees. Mid-South also sought recognition and maintenance of a privilege against the property based upon the Lien. The sole defendant named in the petition was The Development Consortium-Shelly Arms, LLC (“Shelly”), a prior owner of the property with no interest in it at the time that the work was performed by Mid-South. In connection with the petition, Mid-South also filed a Notice of Lis Pendens in the Orleans Parish mortgage records which also misidentified the owner of the property as Shelly. On March 13, 2003, Mid-South filed an amended petition substituting the correct owner, Cobalt, LLC (“Colby”), as the proper defendant in the place of Shelly. Mid-South failed, however, to amend the Lien and the Notice of Lis Pendens to name Cobalt as the owner of the property in the mortgage records and notarial archives.
Thereafter, in September of 2004, the owner, Cobalt, obtained a mortgage of the property through First Bank to secure a loan of $2,500,000.00. Due to Mid-South’s filing error, at the time that the mortgage was executed and recorded, the public records- did not reflect the existence of a claim by Mid-South against any property owned by Cobalt. As a result, the title attorney handling the loan was unable to locate the Lien or the Notice of Lis Pendens and consequently entered into a contract that did not take into consideration either document.
In 2009, nearly five years after First Bank granted a mortgage on the property, Mid-South filed a Motion for Summary Judgment against Cobalt. In doing so, Mid-South erroneously represented to the trial court that its Lien included “the identity of the person for whom the contract was performed.” [¡¡The trial court granted Mid-South’s motion on September 11, 2009.
Thereafter, a writ of fien facias issued. The property was seized by the Sheriff and scheduled for public auction on August 16, 2012. First Bank received a Mennonite notice
^DISCUSSION
Exceptions of No Right of Action and No Cause of Action
By its first assignment of error, Mid-South argues that First Bank could not establish a right or cause of action because Louisiana Code of Civil Procedure Articles 1092, 2298, and 2643 expressly require a party to have an alleged ownership interest in property in order to have standing to enjoin a foreclosure sale. It argues that the Bank should have instead intervened to assert its alleged right to share in the proceeds from the sale.
Peremptory exceptions of no right of action are reviewed de novo because they involve questions of law. Turner v. Law Firm of Wolff & Wolff, 07-1589, p. 2 (La.App. 4 Cir. 6/4/08),
Peremptory exceptions of no cause of action are also subject to de novo review; not only do they involve questions of law, but the trial court’s decision is based solely on the sufficiency of the petition. Fink v. Bryant, 01-0987, p. 4 (La.11/28/01),
Mid-South claims that a plain language reading of Articles 1092, 2298, and 2643 supports the conclusion that third persons claiming a mortgage interest in seized property may only intervene to share in the distribution of sale proceeds and to contest ranking. According to Mid-South, the seizure and sale were valid because the trial court’s September 11, 2009 judgment recognized and maintained the Lien as valid and this judgment was neither appealed nor declared to be null. Mid-South claims that as a result, First
Article 1092 begins by providing that “[a] third party claiming ownership of, or a mortgage or privilege on, property seized may assert his claim by intervention.” (Emphasis added). The use of the word, “may” indicates that the assertion of third-party rights to seized property via intervention is permissive, rather than mandatory. La. R.S. 1:3 (“The word shall’ is mandatory and the word may’ is permissive”). The Article goes on to address the time frame within which third parties claiming specific rights to the property may intervene. According to Article 1092, if the third party is asserting an ownership interest in the property, the party may intervene at any time prior to the sale, “and the court | fimay grant him injunctive relief to prevent such sale before an adjudication of his claim of ownership.” La. C.C.P. art. 1092. If, on the other hand, the third party is claiming a mortgage or privilege on the property, the party may intervene at any time prior to the distribution of proceeds from the sale “and the court shall order the sheriff to hold such proceeds subject to its further orders.” La. C.C.P. art. 1092.
Of significance, Article 1092 does not directly address the rights of third parties contesting the validity of the sale itself. Rather, the article provides that “[a]n in-tervener claiming the proceeds of a judicial sale does not thereby admit judicially the validity, nor is he estopped from asserting the invalidity, of the claim of the seizing creditor.” La. C.C.P. art. 1092. In addition, the Article does not prescribe a particular means by which one contesting the validity of a judicial sale must do so. As a result, we find that there is nothing in Article 1092 that prevents a third party claiming a mortgage or privilege on the property from contesting the validity of a sale prior to the sale, and such rights do not have to be asserted via intervention.
The second codal article that Mid-South relies on to contest First Bank’s intervention is Article 2298, which relates to the injunction of Sheriffs sales. It provides that judgment debtors and third persons claiming ownership of property seized under a writ of fieri facias are entitled to injunctive relief prohibiting the sheriff from proceeding with the sale of property in four situations, including “[wjhen the sheriff is proceeding with the execution contrary to law” and “[wjhen the judgment sought to be executed is absolutely null.” La. C.C.P. art. 2298(1) and (4). While this article plainly addresses the rights of judgment debtors and |7purported owners, we find it significant that it does not state that these are the only parties entitled to in-junctive relief; therefore Mid-South’s argument that this article precludes others from seeking injunctive relief lacks merit.
The third article cited by Mid-South is Article 2643. It addresses the rights of third parties claiming a mortgage, security interest, or privilege on seized property, and states in pertinent part, “[a] third person claiming a mortgage, security interest, or privilege on the property seized in an executory proceeding may assert his right to share in the distribution of the proceeds of the sale of the property by intervention, as provided in Article 1092.” This article coincides with Article 1092, and also fails to address the situation where a third party is not merely attempting to assert its right to sale proceeds, but
The Louisiana Supreme Court examined the right of a third party to enjoin a judicial sale in Shaw v. Hingle, 94-1579 (La.1/17/95)
At issue before the Supreme Court was whether a “strict reading” of the Code of Civil Procedure
[Ajpplying such an interpretation to this case would ignore a fundamental distinction, namely, that [the creditor] is not attempting to enjoin the sale of property in order to enforce rights which arise from the executory proceedings; rather he is attempting by means of the injunction to preserve the status quo pending a resolution of his revocatory action.”
Shaw,
|flBased on our reading of Articles 1092, 2298, and 2643, and the Supreme Court’s ruling in Shaw, we do not find that the trial court erred in overruling Mid-South’s exceptions of no right or action and no cause of action. Because First Bank is contesting the validity of the sale itself, rather than simply its ranking, its rights were not limited to those that could be asserted through a timely filed intervention.
We must now determine whether or not the trial court erred in granting First Bank’s petition for a preliminary injunction under La. C.C.P. art. 3601.
The preliminary injunction is an interlocutory device designed to preserve the existing status pending a trial of the issues on the merits of the case. Chalmette Amusement Co., Inc. v. Alphonso, 07-1512, p. 7 (La.App. 4 Cir. 4/16/08),
“The standard of review for a preliminary injunction is whether the trial court abused its discretion in ruling.” Kern, 11-0915, p. 6,
A review of the evidence submitted in this case reveals that neither the Lien nor the Notice of Lis Pendens identified Cobalt as the owner of the Magnolia Garden Apartments property. As a result, when First Bank accepted a mortgage on the property from Cobalt as security for a multi-million dollar loan, it had no statutorily required notice of any adverse claim being asserted by Mid-South against the property. In addition, although Mid-South amended its petition to identify Cobalt as the proper owner of the property, the Lien and Notice attached to the petition as evidence still failed to identify Cobalt as the owner. Therefore, on Lithe face of the proceedings, the trial court judgment recognizing the Lien as valid was erroneous.
It is a long standing principle of statutory interpretation that statutes creating liens and privileges are stricti juris and their provisions are to be strictly construed against the parties in whose favor the liens are created. State Through Div. of Admin. v. McInnis Bros. Const., 97-0742, p. 9 (La.10/21/97),
Louisiana Revised Statute 9:4822(G) lists the information that must be included in a statement of claim or privilege and states that it must “reasonably identity” the owner of the affected immovable property. “If liens are to be strictly construed, it is obvious that there must be set forth information [indicating] against whom it is to be asserted.” Hughes v. Will,
Based on the foregoing, we do not find that the trial court abused’ its discretion in granting a preliminary injunction in favor of First Bank. Although |1PMid-South argues that First Bank could not satisfy the requirement of showing irreparable harm because its damages could be measured in monetary terms, we find that the trial court was not clearly wrong in rejecting this argument. While it appears that First Bank’s damages are in fact quantifiable, injunctive relief may still be proper where monetary judgment is expected to be valueless due to the insolvency of the judgment debtor, or for other reasons such as evidence that the judgment would not likely be paid. Oestreicher v. Hackett,
CONCLUSION
[ isFor the reasons discussed, the district court’s judgment overruling Mid-South’s exceptions of no right or action and no cause of action, and granting First Bank’s petition for preliminary injunction is affirmed. This matter is remanded to the trial court for further proceedings consistent with this opinion. The trial court is further ordered to conduct a hearing and rule on the Mid-South’s reconventional demand.
AFFIRMED AND REMANDED.
Notes
. The defendant. Cobalt, was unrepresented and did not appear at the hearing on the motion for summary judgment.
. See Mennonite Board of Missions v. Adams,
. In support of its reconventional demand, Mid-South argued that First Bank had actual notice of Mid-South's judgment against the property prior to receiving Mennonite notice of the sale, and therefore could have taken action to prevent the sale and seizure before Mid-South incurred additional expenses in seeking to enforce the judgment.
. The revocatory action was filed pursuant to La. C.C. art. 1977.
. The Court specifically examined La. C.C.P. arts 1092 and 2751. Article 2751, entitled, “Grounds for arresting seizure and sale; damages,” states:
The defendant in the executory proceeding may arrest the seizure and sale of the property by injunction when the debt secured by the security interest, mortgage, or privilege is extinguished, or is legally unenforceable, or if the procedure required by law for an executory proceeding has not been followed.