Opinion
NO. 2019-CA-0392
10-23-2019
WELLS FARGO BANK, N.A., as Trustee for Option One Mortgage Loan Trust 2000-C, Asset-Backed Certificates, Series 2000-C v. Tracie WASHINGTON
STEPHEN RIDER, McGLINCHEY STAFFORD, PLLC, 601 Poydras Street, 12th Floor, New Orleans, Louisiana 70130, -and- ZELMA M. FREDERICK, McGLINCHEY STAFFORD, PLLC, 301 Main Street, 14th Floor, Baton Rouge, Louisiana 70801, COUNSEL FOR PLAINTIFF/APPELLANT DONALD L. HYATT, II, DONALD L. HYATT, II APLC, 1217 Florida Street, Mandeville, Louisiana 70448, COUNSEL FOR DEFENDANT/APPELLEE
STEPHEN RIDER, McGLINCHEY STAFFORD, PLLC, 601 Poydras Street, 12th Floor, New Orleans, Louisiana 70130, -and- ZELMA M. FREDERICK, McGLINCHEY STAFFORD, PLLC, 301 Main Street, 14th Floor, Baton Rouge, Louisiana 70801, COUNSEL FOR PLAINTIFF/APPELLANT
DONALD L. HYATT, II, DONALD L. HYATT, II APLC, 1217 Florida Street, Mandeville, Louisiana 70448, COUNSEL FOR DEFENDANT/APPELLEE
(Court composed of Chief Judge James F. McKay III, Judge Daniel L. Dysart, Judge Joy Cossich Lobrano )
JAMES F. MCKAY III, CHIEF JUDGE
In this action on a petition to enforce security interests by ordinary process, the plaintiff, Wells Fargo Bank, N.A., as trustee for Option One Mortgage Loan Trust 2000-C, Asset-Backed Certificates, Series 2000-C (Wells Fargo), appeals the trial court's granting of a peremptory exception of prescription in favor of the defendant, Tracie Washington. For the reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
On June 26, 2000, Ms. Washington obtained a mortgage for her home located at 8004 Belfast Street in New Orleans, Louisiana. Ms. Washington executed a promissory note for $140,000.00 payable to Bourgeois & Associates Mortgage, L.L.C. and granted a mortgage encumbering the property. The loan was subsequently assigned to Option One, which later assigned the loan to Wells Fargo.
Paragraph7(B) of the Note states:
If I do not pay the full amount of each monthly payment on the date it is due, I will be in default. If I am in default, the Note Holder may require me to pay immediately the full amount of the principal which has not been paid and all interest that I owe on that amount, together with any other charges that I owe except as otherwise required by applicable law.
Ms. Washington failed to make the monthly installment payment due on November 1, 2001 or any other payment due thereafter. On February 11, 2002, Wells Fargo filed a petition for executory process, where the unpaid principal balance and interest due was then accelerated under the note. This foreclosure lawsuit was dismissed, without prejudice, after the parties reached a settlement as to the arrears owed by Ms. Washington.
Orleans Parish Civil District Court, Case No. 2002-2293
On December 16, 2003, a second petition for executory process was filed. As in the first lawsuit, Wells Fargo again accelerated the debt because, as of September 1, 2003, Ms. Washington again failed to pay the full monthly installments on her mortgage loan obligations. This foreclosure lawsuit was also dismissed without prejudice on May 9, 2007.
Orleans Parish Civil District Court, Case No. 2003-18612
On March 15, 2017, Ms. Washington moved to have the 2003 foreclosure suit deemed abandoned. Ms. Washington alleged that she never received notice that the 2003 foreclosure suit was dismissed. However, Wells Fargo's prior voluntary dismissal had been entered on May 9, 2003.
On March 4, 2010, Wells Fargo filed the instant suit via a petition to enforce security interest by ordinary process. In response, Ms. Washington filed an answer, exceptions, alternative affirmative defenses, and a reconventional demand on September 16, 2010. On March 24, 2016, Ms. Washington filed an amended answer, alternative affirmative defenses, and reconventional demand. On May 22, 2018, Ms. Washington filed an exception of prescription, which was heard by the trial court on November 29, 2018. Ms. Washington argued that in cases involving more than one lawsuit over a note which is accelerated in the first case, any subsequent case is prescribed if it is brought more than five years after the initial acceleration. Both sides also put on competing evidence as to whether or not Ms. Washington acknowledged the debt. The trial court ruled from the bench and later memorialized a judgment on February 8, 2019, granting Ms. Washington's exception of prescription. It is from this judgment that Wells Fargo now appeals.
DISCUSSION
On appeal, Wells Fargo raises the following assignment of error: the trial court erred in granting Washington's exception of prescription because Washington acknowledged the mortgage loan debt by: (1) making a payoff request to Option One, her prior mortgage loan servicer, on September 19, 2005; (2) calling American Home Mortgage Servicing, Inc., her subsequent mortgage loan servicer, to ask about the status of the unpaid principal balance on the loan; and (3) admitting she tendered payments on the loan in her reconventional demand. Alternatively, Wells Fargo argues even if there was no acknowledgement of the debt, the trial court erred in finding that the entire mortgage debt should be canceled on prescription grounds, because only those mortgage loan installment payments that came due more than five years before the filing of this foreclosure suit could be prescribed.
The policy basis for prescription is simple; parties who are actual or possible defendants should not have to worry about possible litigation for limitless periods of time after an event triggers the right to sue. The standard of review of a trial court's ruling on a peremptory exception of prescription turns on whether evidence is introduced. Wells Fargo Financial Louisiana, Inc. v. Galloway , 17-0413, p. 7 (La.App. 4 Cir. 11/15/17), 231 So.3d 793, 800. When no evidence is introduced, appellate courts review judgments sustaining an exception of prescription de novo , accepting the facts alleged in the petition as true. Id. ; Lennie v. Exxon Mobil Corp. , 17-0204, p. 3 (La.App. 5 Cir. 6/27/18), 251 So.3d 637, 642, writ denied , 18-1435 (La. 11/20/18), 256 So.3d 994. However, when evidence is introduced at a hearing on an exception of prescription, the trial court's findings of fact are reviewed under the manifest error standard. Id. ; Tenorio v. Exxon Mobil Corp. , 14-0814 (La.App. 5 Cir. 4/15/15), 170 So.3d 269, 273. When evidence is introduced but the case involves only the determination of a legal issue, not a dispute regarding material facts, an appellate court must review the issue de novo , giving no deference to the trial court's legal determination. Wells Fargo , 17-0413, p. 8, 231 So.3d at 800 ; Cawley v. National Fire & Marine Ins. Co. , 10-2095, p. 3 (La.App. 1 Cir. 5/6/11), 65 So.3d 235, 237.
Ordinarily, the party urging prescription bears the burden of proving that the cause of action has prescribed. Vicari v. Window World, Inc. , 14-870 (La.App. 5 Cir. 5/28/15), 171 So.3d 425, 435. However, when prescription is evident on the face of the pleadings, the burden shifts to the plaintiff to show the action has not prescribed. Id.
"Actions on instruments, whether negotiable or not, and on promissory notes, whether negotiable or not, are subject to a liberative prescription of five years. This prescription commences to run from the day payment is exigible." La. C.C. art. 3498. An installment note normally has a separate five-year prescriptive period for each scheduled payment. When the note has been accelerated, however, the five-year prescription for the entire note begins to run on the date of acceleration. JP Morgan Chase Bank, N.A. v. Boohaker , 14-0549, pp. 10-11 (La.App. 1 Cir. 11/20/14), 168 So.3d 421, 428. When there has been more than one lawsuit over a note, and the note is accelerated in the first suit, and a later suit is not filed until more than five years after the acceleration in the first suit, then the claim asserted in the later suit has prescribed. See Occidental Props., Ltd. v.Zufle , 14-0494, p. 10 (La.App. 5 Cir. 11/25/14), 165 So.3d 124, 130.
In this matter, Wells Fargo sued in 2002 and dismissed the matter without prejudice after some sort of settlement. In 2003, Wells Fargo sued again, although its efforts to use executory process for a quick seizure were unsuccessful, Wells Fargo decided to dismiss without prejudice. On March 4, 2010, Wells Fargo filed the present action as an ordinary proceeding. The present litigation was initiated more than seven years after the note at issue was accelerated. Because of the acceleration, the note at issue appears prescribed on its face. On February 11, 2002, Wells Fargo filed a petition for executory process, which accelerated and/or recognized a prior acceleration of the June 26, 2000 note. This case was dismissed. On December 16, 2003, Wells Fargo filed its second petition for executory process, including acceleration of the note. This case was also dismissed. However, at the time of acceleration the entire debt/note became due. Accordingly, based on the five-year prescriptive period of La. C.C. art. 3498, the debt at issue in the instant case prescribed on either February 11, 2007 or at the latest on December 16, 2008.
Wells Fargo urges that Ms. Washington tacitly acknowledged the obligation by making two alleged phone calls, one on September 19, 2005, to a loan servicer to obtain a payoff amount, and the other on July 1, 2009, to a loan servicer to learn the unpaid balance. These are the only communications which Wells Fargo identified in response to written discovery as occurring between Ms. Washington and Wells Fargo or its agents from March 3, 2005, five years before the 2010 action was filed, to the date of response.
Ms. Washington disputes making the phone calls in question. She stated the reasons for her denial in her affidavit as well as her live testimony. Ms. Washington testified in detail as to why she knew she did not make the purported calls as described in the records of the loan servicers. Her testimony included her life situation at the time, such as being essentially homeless for a period after Hurricane Katrina, such that she would she would not have requested a payoff amount at the time of the first purported phone call and recognition that the phone number attached to the second purported call was not hers, but was the phone number for one of the loan servicers. Additionally, Ms. Washington testified that she reviewed her cell phone records for the period of time in question, and they did not reflect that she had made the purported phone calls. She also confirmed the lengthy litigation history between herself and Wells Fargo, from 2002 to the time of the hearing, before testifying she had not contacted her loan servicer since Hurricane Katrina.
Her cell phone was her primary, if not only, telephone at the time the purported phone calls were made.
This was clearly a credibility call by the trial court and there is no indication that its finding was clearly wrong or manifestly erroneous.
Wells Fargo also contends that the trial court erred in finding that its claim had prescribed when Ms. Washington admitted that she tendered payments on the loan in her reconventional demand. The pleading at issue, in Paragraph 31, states:
Both during and after the litigation of the 03-18612 proceeding Ms. Washington attempted to pay her mortgage payments to Wells Fargo. The tendered mortgage payments were refused numerous times. Eventually, when it became clear that such repeated tenders of payment were a vain and useless act, Ms. Washington ceased tendering payment.
The paragraph at issue was contained in the original reconventional demand, which was dismissed on a no cause of action exception on February 8, 2016. Although it was also contained in the amended answer and reconventional demand filed later by Ms. Washington on October 31, 2017, Wells Fargo filed a motion to strike that pleading as having been untimely filed. The motion to strike has never been heard or ruled on. Furthermore, Wells Fargo has never filed an answer to the reconventional demand and has never taken any other action in reliance on the statements contained in it. In any event, Ms. Washington withdrew her alleged admission during the briefing on the exception of prescription.
Before a judicial admission or confession is binding in a civil matter, a party must rely on said admission or confession to its detriment. See Yount v. Lafayette Ins. Co. , 08-0308, p. 18 (La.App. 4 Cir. 1/28/09), 4 So.3d 162, 173-174. Also, a unilateral pleading or allegation in a petition is insufficient, absent a response to it, to constitute a binding judicial admission or confession as a matter of law. Finally, a judicial admission or confession can be revoked for an error of fact. Barnes v. Riverwood Apartments Partnership , 43,798, p. 6 (La.App. 2 Cir. 2/4/09), 16 So.3d 361, 366.
Alternatively, Wells Fargo asserts that if prescription is applicable at all to this matter, then it is only applicable to the payments due more than five years prior to the filing of the 2010 lawsuit. The basic premise for its argument is that the dismissal of the prior 2002 and 2003 lawsuits without prejudice somehow de-accelerated the acceleration of the loan caused by operation of La. C.C. art. 3463. However, this is a new argument raised for the first time on appeal. Louisiana appellate courts and the Supreme Court routinely refuse to consider arguments presented for the first time on appeal. See LHSAA v. State of Louisiana , 12-1471, p. 15 n. 13 (La. 1/29/13), 107 So.3d 583, 596 ; see also Rule 1-3, Uniform Rules, Courts of Appeal. As such, we will not consider this argument here.
CONCLUSION
For the above and foregoing reasons, we affirm the trial court's granting of the peremptory exception of prescription filed by Ms. Washington and its dismissal with prejudice of Wells Fargo's action against her. Parties who are actual or possible defendants should not have to worry about possible litigation for limitless periods of time after an event triggers the right to sue.
AFFIRMED
DYSART, J., DISSENTS, WITH REASONS
LOBRANO, J., CONCURS IN THE RESULT
DYSART, J., DISSENTS, WITH REASONS.
I find that the trial court erred in granting Ms. Washington's Exception of Prescription. I therefore dissent for the reasons that follow.
In two reconventional demands, in several letters between Ms. Washington's counsel and counsel for Wells Fargo (and the preceding holders of the note), and in correspondence authored and signed by Ms. Washington to counsel for Wells Fargo, Ms. Washington admits that she owed the subject debt to Wells Fargo.
Ms. Washington is an attorney and, at the time correspondence was being exchanged between counsel, she was "of counsel" in the firm that was representing her.
--------
In the reconventional demand filed on September 16, 2010, it was alleged:
24.
Upon information and belief, the dispute and litigation bearing docket no. 02-2293 between Ms. Washington and Option One was compromised. On April 15, 2003 counsel for Option One wrote to Ms. Washington's counsel indicating Option One's acceptance of a settlement in which Ms. Washington would pay $30,000.00 with certain terms as to the crediting of such funds and the provision of a plan by Option One for the payment of a deferred amount owed by Ms. Washington.
25.
Upon information and belief, Ms. Washington paid $30,000.00 to Option One. Despite Option One accepting both the settlement and the payment pursuant to the settlement, the funds were not credited as had been agreed. Furthermore, Option One has not provided an intelligible or meaningful accounting or explanation of how the funds were credited.
In Ms. Washington's Amended Answer and Reconventional Demand filed on March 24, 2016, she averred:
32.
Both during and after the litigation of the 03-18612 proceeding Ms. Washington attempted to pay her mortgage payments to Wells Fargo. The tendered payments were refused numerous times. Eventually, when it became clear that such repeated attempts of payment were a vain and useless act, Ms. Washington ceased tendering payment.
Louisiana Civil Code art. 1853 provides that "[a] judicial confession is a declaration made by a party in a judicial proceeding. That confession constitutes full proof against the party who made it. A judicial confession is indivisible and it may be revoked only on the ground of error of fact."
"The well settled jurisprudence establishes that an admission by a party in a pleading constitutes a judicial confession and is full proof against the party making it." C.T. Traina, Inc. v. Sunshine Plaza, Inc. , 03-1003, p. 5 (La. 12/3/03), 861 So.2d 156, 159, citing Taboni ex rel. Taboni v. Estate of Longo , 01-2107 (La. 2/22/02), 810 So.2d 1142 ; Starns v. Emmons , 538 So.2d 275 (La. 1989) ; Smith v. Board of Trustees , 398 So.2d 1045 (La. 1981) ; Cheatham v. City of New Orleans , 378 So.2d 369 (La. 1979).
In Wegmann v. Tramontin , 15-0561 (La.App. 4 Cir. 1/13/16), 186 So.3d 236, the trial court granted an exception of no cause of action. In the underlying petition, appellant alleged that a verbal contract existed between the parties (which would support her cause of action). On appeal, appellant alleged that the terms of the verbal contract were different than what she alleged in her petition. This Court, citing Traina , found that appellant's petition was clear, and she was therefore bound by her judicial admission. 15-0561, p. 5-6, 186 So.3d at 240.
The majority cites to Barnes v. Riverwood Apartments Partnership , 43,798 (La.App. 2 Cir. 2/4/09), 16 So.3d 361, for the proposition that a judicial admission or confession can be revoked for an error of fact. In Barnes , early on in the litigation the defendant apartment complex admitted that it owned the property on which plaintiff was injured. However, after discovery, it was revealed that the property actually belonged to the city. The trial court allowed the defendant to withdraw its earlier admission.
In this matter, Wells Fargo filed the instant suit styled as a Petition to Enforce Security Interest by Ordinary Process on March 4, 2010. As noted above, Ms. Washington reconvened in September of 2010, admitting that the debt was owed. In March of 2016, Ms. Washington again admitted in an amended answer and reconventional demand, that the debt was owed. The majority relies on the fact that Ms. Washington "withdrew" her admission in briefs relative to the Exception of Prescription. La. Civ. Code art. 1853 allows for the withdrawal of an admission for error of fact. Here, it would appear Ms. Washington wished to withdraw her admissions as they were detrimental to her position, not because they were erroneous.
Louisiana Civil Code art. 3462 provides in part that "when an obligee commences action against the obligor, ... prescription is interrupted only as to a defendant served by process within the prescriptive period." It is not disputed that Ms. Washington was timely served.
Louisiana Civil Code art. 3463 provides:
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 prescriptive period continues as long as the suit is pending. Interruption is considered never to have occurred if the plaintiff abandons, voluntarily dismisses the action at any time either before the defendant has made any appearance of record or thereafter, or fails to prosecute the suit at trial.
Louisiana Civil Code art. 3464 provides that "[p]rescription is interrupted when one acknowledges the right of the person against whom he had commenced to prescribe." "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 art. 3466. Suits on notes are subject to a liberative prescription of five years. La. Civ. Code art. 3498.
Wells Fargo filed the subject suit on March 4, 2010. On September 16, 2010 and March 24, 2016, Ms. Washington acknowledged that a debt was due in favor of Wells Fargo. These judicial admissions suffice to interrupt prescription. As Wells Fargo has not abandoned or failed to prosecute the suit, I would not find that this case is prescribed. Accordingly, I dissent from the majority opinion.