Lead Opinion
|2This is аn appeal from a judgment maintaining one defendant’s peremptory exception of no cause of action and dismissing plaintiffs suit against that defendant with prejudice. For the following reasons, we affirm in part, reverse in part, and remand.
FACTS AND PROCEDURAL HISTORY
On October 9, 2008, Levi Robertson filed a “Petition for Damages” against defendants, Sun Life Financial, Sun Life Assurance Company of Canada, and/or Sun Life Administrators (U.S.), Inc. (colleсtively referred to as “Sun Life”); Wachovia Bank, N.A. (“Wachovia Bank”); Capital One Bank, N.A. (“Capital One”); and Matthew Pizzolato. In original and amended petitions, Robertson alleged that he, an unlearned and trusting offshore worker, was deceived into transferring his entire lifetime retirement savings from his company trust to one managed by defendant Pizzo-lato. Additionally, Robertson alleged that Pizzolato then placed Robеrtson’s money into an account in Robertson’s name with Sun Life, which, in turn, had an account with Wachovia Bank. According to Robertson’s allegations, Pizzolato was engaged in a massive fraudulent scheme to embezzle defendants’ funds and those of many others, “to the tune of many millions of dollars.”
Robertson further alleged that on or about October 21, 2005, defendant Sun Life issued a check in the amount of $99,999.99, which was drawn on defendant Wachovia Bank and made payable to Robertson. According to Robertson, defendant Pizzolato gained possession of the check and forged Robertson’s signature on the instrument. Robertson further alleged that, in turn, defendant Capital One cashed the check over a forged endorsement; Wa-chovia Bank paid the sum of the forged check without verifying the endorsement; and Sun Life withdrew $99,999.99 from Robertson’s account based on the negotiation of the Isforged instrument. According to Robertson’s allegations, Robertson was not aware that the check, which was attached to the petition as an exhibit, was issued or cashed until approximately July 8, 2008. Thus, Robertson asserted claims against the various defendants based on the forgery and the payment on the forged instrument.
In response to Robertson’s suit, Capital Onе filed peremptory exceptions of no cause of action and prescription. In sup
Additionally, Capital One contended that pursuant to LSA-R.S. 10:3-420(f), an action for conversion prescribes one year from the date of the conversion and that suspension of prescription pursuant to the doctrine of contra non valentum was inapplicable under the fаcts alleged. Thus, Capital One also asserted that, even if a cause of action existed, Robertson’s claims against it, based on an instrument negotiated on October 21, 2005, were prescribed.
Following a hearing on the exceptions, the trial court issued reasons for judgment, finding that Robertson was “not the proper plaintiff’ to bring a claim for conversion against Capital One, apparently based on the assertion by Capital One that Robertson had never taken delivery of the check. Accordingly, by judgment |4dated July 9, 2009, the trial court maintained Capital One’s exception of no cause of action and dismissed with prejudice Robertson’s claims against it. The judgment was silent as to Capital One’s exception of prescription.
From this judgment, Robertson appeals, listing eight assignments of error.
DISCUSSION
At the outset, we note thаt in assignments of error three, four, five, six, and seven, Robertson asserts various arguments as to why the trial court erred in finding that Robertson’s claims against Capital One had prescribed. However, as noted above, the trial court’s judgment was silent as to Capital One’s exception of prescription. Silence in a judgment as to any issue that was placed before the trial court is deemed a rejection of thаt demand or issue. Hayes v. Louisiana State Penitentiary, 2006-0553 (La.App. 1st Cir.8/15/07),
Additionally, in assignment of error number eight, Robertson contends thаt the trial court erred when it found that Capital One exercised reasonable banking industry standards when it negotiated a forged instrument. As set forth above, the trial court’s judgment was based strictly on its finding that Robertson was not the proper plaintiff to bring a claim for conversion against Capital One. The court below made no findings regarding the underlying merits of any of Robertson’s asserted causes of action and specifically made no finding as to the reasonableness of Capital One’s actions in negotiating the check at issue. Thus, we also decline to address the argument set forth in assignment of error number eight.
As noted by the Louisiana Supreme Court, although they are often confused or improperly combined in the same exception, the peremрtory exceptions of no cause of action and no right of action are separate and distinct. LSA-C.C.P. art. 927(A)(5) & (6). One of the primary differences between the two exceptions lies in the fact that a frequent focus in an exception of no cause of action is on whether the law provides a remedy against a particular defendant, while the focus in an exception of no right of aсtion is on whether the particular plaintiff has a right to bring the suit. Industrial Companies, Inc. v. Durbin, 2002-0665 (La.1/28/03),
Specifically, an exception of no cause of action questions whether the law extends a remedy against the defendant to anyone under the factual allegations of the petition. Industrial Companies, Inc.,
On the other hand, with regard to the peremptory exception of no right of action, generally an action can only be brought by a person having a real and actual interest which he asserts. LSA-C.C.P. art. 681. The exception of no right of action is designed to test whether the plaintiff has a real and actual interest in the action. LSA-C.C.P. art. 927(6). The function of the exception urging no right of action is to determine whether the plaintiff belongs to the clаss of persons to whom the law grants the cause of action asserted in the suit. Industrial Companies, Inc.,
Unlike the exception of no cause of aсtion, evidence may be received under the exception of no right of action for the purpose of showing that the plaintiff does not possess the right he claims or that the right does not exist. Teachers’ Retirement System of Louisiana v. Louisiana State Employees’ Retirement System,
In the instant case, Capital One, through its exception of no cause of action, does not challenge the existence of a cause of action for conversion pursuant to |7LSA-R.S. 10:3 — 420(a)(iii) where “a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment,” as the original and amended petition allege Capital One did. Rather, Capital One contends that because Robertson did not receive delivery of the instrument, he is not the proper party to bring an action for conversion herein. Thus, although its exception is labeled “no cause of action,” Capital One has clearly raised an exception of no right of action. Accordingly, because every pleading shall be so construed as to do substantial justice, LSA-C.C.P. art. 865, we shall construe Capital One’s exception of no cause of action as an exception of no right of action. See Williams v. Mumphrey, 95-643 (La.App. 5th Cir.1/30/96),
As stated above, LSA-R.S. 10:3-420 establishes the cause of action for conversion of an instrument, and it provides that an instrument is converted when a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. Regarding who may bring an action for conversion of an instrument, LSA-R.S. 10:3-420 further provides:
(b) An action for conversion of an instrument may not be brought by (i) the issuer оr acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or co-payee or (iii) by the drawer.
(Emphasis added). The basis for Capital One’s exception herein is its contention that because, as alleged in Robertson’s petition, Pizzolato intercepted the check, Robertson did not receive delivery of the check and, thus, cannot assert a claim for conversion of the instrument against Capital One.
Thus, the questions presented herein are what constitutes “receiving] delivery of the instrument” pursuant to LSA-R.S. 10:3 — 420(b)(ii) and whether ^Capital One carried its burden of proving that Robertson did not receive delivery of the instrument due to Pizzolato’s alleged action of intercepting the check.
Louisiana Revised Statute 10:3-420, which was enacted as part of the amendment and reenactment of Chapter 3 of Title 10 by Acts 1992, No. 1133, § 3, effective January 1, 1994, is a modification of former LSA-R.S. 10:3-419. LSA-R.S. 10:3-420, Uniform Commercial Code Comment, comment 1. Prior to the 1992 amendment and reenactment of Chapter 3 of Title 10, former LSA-R.S. 10:3-419 had provided that “when a person pays an instrument on a forged indorsement, he is liable to the true owner.” In interpreting that statute, Louisianа courts concluded that the statute gave a “true owner” of an instrument a direct cause of action against the party who paid the instrument on a
The rationale behind such a ruling was that a negotiable instrument had no legal inception or valid existence until it had been delivered in accordance with the purpose and intention of the parties and that, until that was done, the instrument was a nullity and not subject to ownership. Sunbelt Factors, Inc.,
|S)On the other hand, this court, in Patterson v. Livingston Bank,
However, the 1992 amendments to Chapter 3 of Title 10 deleted the “true owner” language in favor of the requirement that the payee must have “receive[d] delivery of the instrument” (either directly or through an agent) to be entitled to bring an action for conversion of the instrument. LSA-R.S. 10:3 — 420(b)(ii). Comment 1 of the Uniform Commercial Code Comment to LSA-R.S. 10:3A20 explains that under former Article 3, there had been a split of authority on the issue of whether a payee who never received the instrument is a proper plaintiff in a conversion action. The Comment further notes that under current Section 3-420, the payee has no conversion action where the check is never delivered to the payee, such as when the check is mailed to an address different than that of the payee. LSA-R.S. 10:3-420, Uniform Commеrcial Code Comment, comment 1.
Similar to the rationale under the former “true owner” analysis, the reasoning for this rule is explained in the comment as follows:
Until delivery, the payee does not have any interest in the check. The payee never became the holder of the check nor a person entitled to enforce the check. Section 3-301. Nor is the payee injured by the fraud. Normally thе drawer of the check intends to pay an obligation owed to the payee. But if the check is never delivered to the payee, the obligation owed to the payee is not affected. If the check falls into the hands of a thief who obtains payment after forging the signature of the payee as an indorsement, the obligation owed to the payee continues to exist after the thief rеceives payment. Since the payee’s right to enforce the underlying obligation is unaffected by the fraud of the thief, there is no reason to give any additional remedy to the payee.
110LSA-R.S. 10:3-420, Uniform Commercial Code Comment, comment 1.
Significantly, with regard to when the payee “receives delivery” of the instrument, the comment additionally provides that “[t]he payee receives delivery when the check comes into the payee’s possession, as for example when it is put into the payee’s mailbox.” LSA-R.S. 10:3-420, Uniform Commercial Code Comment, comment 1 (emphasis added).
In the instant case, because Capital One failed to present any evidence on the exception of no right of action, this court must decide, on the basis of Robertson’s allegations alone, whether Robertson belongs to the class of persons to whom the law grants the cause of action for conversion of an instrument. Industrial Companies, Inc.,
For these reasons, we affirm the portion of the trial court’s judgment thаt maintained Capital One’s exception, which has been deemed an exception of no right of action. However, we reverse that portion of the trial court’s judgment that dismissed with prejudice Robertson’s claim against Capital One without allowing Robertson the opportunity to amend his petition to establish his right to pursue a conversion claim against Capital One. LSA-C.C.P. art. 934; Sunbelt Factors, Inc.,
CONCLUSION
For the above and foregоing reasons, the portion of the July 9, 2009 judgment maintaining Capital One’s exception (which
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED FOR FURTHER PROCEEDINGS.
Notes
. To the extent that Robertson contends in his second assignment of error that the exception of no cause of action was improperly maintained because he learned of the forgery only three months prior to filing suit, Robertson is in essence arguing for a suspension of prescription. Because the trial court did not rule on the exception of prescription, we decline to address in this appeal any arguments relating to that exception.
. Robertson attached an affidavit to his memorаndum in opposition to Capital One's exceptions, which lists his home address as the address printed on the check at issue, thus indicating that the check was sent to Robertson’s address, rather than a false address. He also attached to his memorandum an Affidavit of Forgery, wherein he had asserted that Pizzolato "must have” stolen the check from Robertson's mailbox.
However, Robertson failed to introduce these affidavits into evidence at the hearing on the exceptions. Because these affidavits were not formally introduced into evidence, they cannot properly be considered by this court herein at this stage in these proceedings. See Cichirillo v. Avondale Industries, Inc., 2004-2894, 2004-2918 (La. 11/29/05),
Concurrence Opinion
concurring.
hi concur and note that Louisiana has fact pleading. The defendant does not get to designate the cause of action in order to more easily defеat it. If plaintiff received delivery, he apparently has a cause of action for conversion. If he never received the check, the obligation owed to the payee is not affected, it continues to exist, and can be sued upon directly under the contract, as explained in the comments to LSA-R.S. 10:3-420. Louisiana also allows the pleading of alternative theories of recovery.