O.J. Vincent v. A.C. & S., Inc.

833 F.2d 553

5th Cir.

1987

Check Treatment

O.J. VINCENT, Plaintiff-Appellee, v. A.C. & S., INC., et al., Defendants-Appellants.

No. 87-4247.

United States Court of Appeals, Fifth Circuit.

Dec. 7, 1987.

833 F.2d 553

cannot conceive that a wholly independent fee paid directly to an attorney or someone else to help in an application for a loan to a Bank must be considered a “finance charge” of the Bank and could result in a claim of usury against the Bank. These are not finance charges by the Bank at all.

We have guidance on these matters in our own prior decisions. In Berryhill v. Rich Plan of Pensacola, 578 F.2d 1092, 1099 (5th Cir.1978), we undertook to define those charges required to be included as “finance charges” in the Truth in Lending Act. “The important question is whether the seller refuses to extend credit until the customer agrees to another charge.” An independent legal fee paid by the debtor directly to the attorney is not such a required charge. It is a matter of a completely personal arrangement between attorney and client. In Watts v. Key Dodge Sales, Inc., 707 F.2d 847 (5th Cir.1983), contrary to an informal staff interpretation letter of the Federal Reserve Board, we held that the notarial fee incurred by the bank in obtaining the required authentication of a chattel mortgage need not be listed as a “finance charge” so long as the form disclosed by itemization that the debtor was being required to pay the bank for it. From these two cases we discover that if the charge is something the Bank does not collect and with which it has nothing to do it is not an indirect finance charge and that some charges even collected by the Bank can be excluded from finance charges as long as they are properly disclosed by itemization to the consumer.

I concur fully in the holding in this case, including the requirement of payment of back fees to the consumer, because all that the FDIC is undertaking to enforce are the fees that arose from the preparation of the chattel mortgages by the two lawyers who had close connections with the Bank and worked with the Bank under circumstances which led the Bank automatically to collect those attorneys fees as part of the cost of obtaining the loan. These fees are distinguishable from the notarial fee in Watts because in Watts notarization was required by law although the fee itself was not set by law. Beyond Banks themselves indirectly furnishing the legal services, sensible and reasonable requirements of Banks that lead to wholly independent hirings of help by loan applicants with direct payment of fees from the applicants to the persons hired are not within the statutory definition of finance charges. The FDIC claims that they are. But it disavows any attempt to enforce its own rule under those circumstances. This is not the way the law should be applied nor is intended to be applied.

I concur fully in the decision in this case but on the narrower ground set out in this opinion.

William B. Baggett, Jr., William B. Baggett, Lake Charles, La., for plaintiff-appellee.

Lawrence G. Pugh, III, New Orleans, La., for Raymark, Inc.

John B. Scofield, Thomas M. Bergstedt, Richard M. Perles, Patrick D. Gallaugher, Jr., Lake Charles, La., for Turner & Newell, et al.

Edward O. Taulbee, IV, Kenny L. Oliver, Lafayette, La., for Combustion Engineering, Inc.

Before REAVLEY, WILLIAMS and HIGGINBOTHAM, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellants A.C. & S., Inc, et al. claim appellee Vincent‘s cause of action based upon having become a victim of asbestosis is barred by Louisiana‘s one year prescription period. La.Civ. Code Ann. art. 3492 (West Supp.1987). The district court denied appellants’ motion for summary judgment, holding prescription had not occurred because of the provisions of Articles 3466¹ and 3463² of the Louisiana Civil Code. We affirm the district court.

Facts

Appellee Vincent was diagnosed as having contracted asbestosis in 1981, and within the year of limitations sued eleven asbestos manufacturers. On March 15, 1984, a few days before trial, Vincent informed the district court that he had settled with the eleven defendant manufacturers for $200,000. On the same day, the district court entered an order stating that the case was to be dismissed without prejudice upon stipulation to be submitted by the parties and subject to being reopened in ninety days if the settlement was not consummated.

The next day, March 16, 1984, (obviously prior to the ninety day expiration and final judgment in the first case), Vincent undertook to file a supplemental and amended complaint on the same cause of action against a new set of asbestos manufacturers. The district court determined that the 1982 suit against the original eleven defendant manufacturers had settled, and directed that the 1984 supplemental complaint be treated as a new case. On August 7, 1984, Vincent and the original eleven manufacturers, pursuant to Fed.R.Civ.P. 41(a), filed the formal stipulation of dismissal with prejudice called for in the court‘s order of March 15. The second set of manufacturers, those of the 1984 suit, later moved for summary judgment claiming that the cause of action had accrued in 1981 and that the one year prescription period had already run against Vincent‘s claim.

Under Louisiana law, prescriptions affecting one principal cause of action are interrupted by suit on that cause of action and run anew when the suit is no longer pending. Louviere v. Shell Oil Co., 720 F.2d 1403 (5th Cir.1983) (upon certification holding in accordance with the decision of the Louisiana Supreme Court interpreting La.Civ.Code Ann. art. 3466). Thus, looking only to this postulate, Vincent‘s second asbestosis suit was filed prior to completion of his first suit. The statute of limitations was effectively tolled.

This tolling provision is limited, however, by La.Civ.Code Ann. art. 3463, which states in pertinent part:

Interruption [of prescription] is considered never to have occurred if the plaintiff abandons, voluntarily dismisses, or fails to prosecute the suit at the trial. [emphasis added].³

If the March 15, 1984, closing order without prejudice was a “voluntary dismissal” within the meaning of La. art. 3463, then it erased the interruption of prescription by predating Vincent‘s 1984 suit. The district court ruled dubitante that the closing order was not a voluntary dismissal, denied the motion for summary judgment, and certified an appeal under 28 U.S.C. § 1292(b). The second set of manufacturers appeal.⁴

DISCUSSION

The sole issue presented on appeal is whether voluntary dismissal of Vincent‘s suit against the original eleven manufacturers (the 1982 suit) occurred before filing of the amendment which became the suit against the second set of manufacturers (the 1984 suit). Stated another way, the issue is whether the district court‘s March 15, 1984, order dismissing the 1982 suit without prejudice was a voluntary dismissal under La. art. 3463. We find that the order was not a voluntary dismissal, because voluntary dismissal of the original 1982 suit occurred only after the 90 day postponement of final order by the district court. Before the expiration of the 90 day period, the petition to amend to include appellants had been filed. Thus, the 1984 suit against the second set of defendant manufacturers is not barred by prescription.

This case is in federal court under diversity jurisdiction. 28 U.S.C. § 1332. It is well established that federal procedural law and state substantive law apply in a diversity action. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed 1188 (1938). And state statutes of limitations are considered substantive for purposes of Erie analysis. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 82 L.Ed. 2079 (1945); Abdul-Alim Amin v. Universal Life Ins. Co., 706 F.2d 638, 640 (5th Cir.1983). Thus, we apply Louisiana prescription law and the Federal Rules of Civil Procedure. First we address “voluntary dismissal” within the context of the La.Civ. Code Ann. art. 3463 tolling provision. We then consider the district court‘s closing order as it relates to that provision.

While “voluntary dismissal” is the term used in La. art. 3463, whether or not there has been a voluntary dismissal in a case in federal court must depend on federal procedural law as implemented under Fed.R.Civ.P. 41(a). See Hilbun v. Goldberg, 823 F.2d 881 (5th Cir.1987) (diversity case holding that a Fed.R.Civ.P. 41(b) failure to prosecute constitutes a voluntary dismissal under La.Civ.Code Ann. art. 3463). Under Fed.R.Civ.P. 41(a), voluntary dismissal may occur: “(1) By Plaintiff; By Stipulation,” or “(2) By Order of Court.” We are not concerned with Rule 41(a)(1) dismissal by stipulation of plaintiff. In this case the parties did not formally stipulate to dismissal until August 7, 1984, — five months after Vincent filed against the second set of manufacturers. But under Rule 41(a)(2) voluntary dismissal may also occur by order of court. Thus, the core issue in the case is whether the district court‘s order of March 15, 1984, was a voluntary dismissal by order of court.

The prospect is unseemly. Rule 41(a) is interpreted to refer to dismissals made at the plaintiff‘s request. Schwarz v. Folloder, 767 F.2d 125 (5th Cir.1985). See also 9 C. Wright and A. Miller, Federal Practice and Procedure 2364, at 165 (1971) (The purpose of 41(a)(2) “By Order of Court” dismissal is to protect the defendant from prejudice by plaintiff-instigated dismissals). Vincent never instigated dismissal, at least not until the formal stipulation in August of 1984. He merely notified the district court in March that his first suit had settled. The district court‘s closing order of March 15, 1984, was only a tentative termination of the first suit. The district court specifically called for a stipulation to be submitted by the parties and further allowed for the possibility of the case being “reopened” if settlement was not finalized within ninety days.⁵ The fact that the district court assigned a new number to the case did not change the fact that it was an amendment to the first suit because the court order recognized the settlement was “with a reservation of rights.” This amendment occurred before formal stipulation of dismissal in the first suit. Thus, the provision of La.Civ. Code Ann. art. 3463 tolled the running of limitations and the suit against the second set of defendant manufacturers is not time barred. We affirm the district court‘s denial of the motion for summary judgment which was based upon prescription.

AFFIRMED.

PATRICK E. HIGGINBOTHAM, Circuit Judge, specially concurring:

I join Judge Williams’ opinion affirming the district court, but disagree with one of its reasons. Whether or not there has been a voluntary dismissal under the Louisiana statute that sets the conditions for tolling the Louisiana prescriptive period is a matter of Louisiana law. Louisiana, as a matter of its substantive policy, does not extend the benefit of tolling to a plaintiff who “voluntarily” terminates a suit. The treatment of a termination by the Federal Rules of Civil Procedure and its characterization as voluntary may well inform a conclusion that a particular dismissal was voluntary, but it does not control that conclusion.

Our decision in Hilbun v. Goldberg, 823 F.2d 881 (5th Cir.1987), is not to the contrary. There we concluded that where the Federal Rules afford a form of dismissal not available under Louisiana law we were “to decide this question as we believe the Louisiana courts would if they were to address it.” Id. at 883. I am persuaded that a Louisiana court would conclude that the only “dismissal” at issue was not effective until after the disputed amendment was made. We need say no more.

Notes

La.Civ.Code Ann. art. 3466 (West Supp.1987) states: If prescription is interrupted, the time that has run is not counted. Prescription commences to run anew from the last day of interruption.

La.Civ.Code Ann. art. 3463 (West Supp.1987) states: An interruption of prescription resulting from the filing of a suit in a competent court and in the proper venue or from service of process within the prescription period continues as long as the suit is pending. Interruption is considered never to have occurred if the plaintiff abandons, voluntarily dismisses, or fails to prosecute the suit at the trial. [Emphasis added].

This statute has been interpreted to apply to suits filed after voluntary dismissal. But it does not apply to suits filed more than one year after the tort which are based on the same cause of action as that of a timely suit which is later dismissed. .

Manufacturer Raymark settled with Vincent and was dismissed from the appeal.

La.Civ.Code Ann. art. 3463, Comment b states in pertinent part: [I]f an interruption results and the action is dismissed without prejudice, the period during which the action was pending does not count toward the accrual of prescription. The plaintiff then has the full prescriptive period within which to bring a new action. See . This provision shows that a Louisiana law is in accordance with our holding that “voluntary dismissal” under art. 3463 does not include tentative dismissals, such as the district court‘s closing order.