Rose v. Johnson

Citations: 940 So. 2d 181; 2006 WL 2775311Docket: 2006-518

Court: Louisiana Court of Appeal; September 27, 2006; Louisiana; State Appellate Court

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Bernard Johnson purchased 31 acres of property in Lafayette, Louisiana, but faced foreclosure in 1996 and sought help from his nephew, Theophilus Rose. Rose, unable to buy the property himself, arranged for his brother-in-law, Dr. Bryan LeBean, to purchase 11.5 acres for $213,000, which would cover the mortgage and taxes, leaving Johnson with $25,000. LeBean imposed conditions on the purchase: he refused to buy directly from Johnson and wanted Johnson to transfer the remaining 19.5 acres to Rose. All parties agreed to these conditions, and the transactions were notarized.

At trial, Johnson claimed he did not intend to donate the remaining property and mistakenly signed the donation document, believing it was a copy of the cash sale deed. He asserted he would not have agreed to the sale had he been aware of the donation. After realizing the mistake, Johnson requested the property be returned, but Rose refused, stating he had changed his mind. Johnson subsequently used a power of attorney to execute a quitclaim deed to regain the property.

The trial court ruled in favor of Rose, affirming the validity of the donation. Johnson appealed, contending the court erred in finding his intent to donate, in disregarding claims of error or duress, and in not considering the donation's legality under Louisiana Civil Code article 1498. The appellate court affirmed the trial court's decision.

Rose testified that Johnson did not communicate his intentions regarding the property or seek authorization before executing a quitclaim deed. After the quitclaim deed was executed, Johnson sold the property to Celebrity Professional Services, Inc., which he headed. Johnson later sent Rose an offer to buy the property for $300,000, which Rose declined, leading him to file a suit to annul the quitclaim deed. In response, Johnson filed a reconventional demand claiming the donation inter vivos was invalid and that the initial transfer to Rose was null. Following a bench trial, the court ruled in Rose's favor, upholding the donation and annulling the quitclaim deed, which also voided the sale to Celebrity Professional Services, Inc. Johnson appealed, arguing that the trial court erred in concluding that he had intended to donate the property. He contended that the evidence did not support a finding of donative intent and claimed he was unaware that he was signing a donation. The legal framework for a donation inter vivos requires a present and irrevocable divestment by the donor, along with the acceptance by the donee, as outlined in Louisiana Civil Code Articles 1468 and 1536. The trial court established that the donation was executed in proper form with a notary and two witnesses, rejecting Johnson's assertions about his lack of intent. The court emphasized the significance of donative intent as a factual issue, subject to a manifest error standard on appeal. Rose's testimony indicated that he initially located the property and sought Johnson's assistance in purchasing it, emphasizing their close relationship, which supported the trial court's determination of donative intent.

Rose testified that Johnson sought his assistance, leading Rose to request a loan from LeBean to address mortgage arrears, which they later repaid. When the property faced foreclosure again, Rose appealed to LeBean for help. LeBean could not secure the full amount but made a down payment on the property, with Rose offering two and a half acres as additional collateral. Rose communicated his intentions to his uncle, Johnson, ensuring no conditions would be imposed on him. 

During the transaction process, Rose and Johnson met with attorney Alfred Boustany, who clarified that the purchase would only proceed if Rose was the sole owner, a condition Johnson accepted without objections. They signed the necessary documents on December 19, 1997, after which Boustany reiterated to Johnson that he would lose control of the property. 

Three days post-signing, the sale to LeBean was finalized. Johnson later claimed he was unaware he had signed a donation document until he reviewed the copies afterward. He expressed regret, stating he intended the property for his retirement and family, not for Rose, and learned of the property's sale through a sign rather than from Rose.

Johnson testified that he did not discuss donating property to Rose with anyone, asserting that his intention was solely to sell the property to Dr. LeBean to eliminate the mortgage and prevent foreclosure. During cross-examination, Johnson claimed Boustany did not provide or explain the donation documents, but his subsequent testimony contradicted this, indicating that Boustany had indeed given him the documents and read the sales document aloud. Johnson believed he was signing a duplicate of the sales document.

Boustany, the notary-attorney, claimed Johnson was aware of what he was signing, stating that the donation to Rose was the original intention behind the transaction. He recounted preparing a different donation document initially but opted for a sale and donation structure instead. Boustany testified that Johnson did not object to the donation and was clear about the transfer of property to Rose. He explained the execution process of the documents, confirming that he informed Johnson of the nature of the two documents and ensured Johnson understood he would no longer have any involvement with the property after signing.

The trial court found Boustany's testimony credible and ruled in favor of Rose, emphasizing that there was no deception involved and that the legal process was standard for real estate transactions. The court acknowledged its role in assessing credibility and weighing evidence, referencing relevant Louisiana case law to support its decision. The court indicated that Johnson's reconventional demand would not succeed based on the findings.

Rose successfully demonstrated that Johnson intended to donate property to him, supported by testimonies from Boustany and Rose regarding their discussions about executing a donation inter vivos. The circumstances of the donation's execution, including Johnson's acknowledgment of understanding the consequences, validate the trial court's ruling that the donation was valid, with no manifest error found.

Johnson alternatively claimed the donation was invalid due to fraud, asserting that Rose and his wife did not inform Boustany of Johnson's marital and familial status, which complicated the donation process. He also contended that Boustany failed to explain the document in detail, leading him to believe he was signing a sales agreement instead. Under Louisiana law, specifically Civil Code Article 1483, a fraud claim requires clear and convincing evidence unless a confidential relationship existed, which was not the case here as Rose is related to Johnson by blood, thus necessitating a higher standard of proof.

Johnson cited that Rose's omission of his familial status during the donation's execution indicated an intent to defraud. However, Boustany testified that he provided copies of the documents for review, and Johnson confirmed he read the sales document, which mentioned his marriage but not his children. Furthermore, there was no evidence of Johnson seeking clarification or indicating confusion about the donation. Boustany's testimony confirmed Johnson understood he would relinquish ownership post-execution. The court found no evidence of fraud based on the notary's reputable testimony.

Additionally, Johnson claimed duress due to his age and financial difficulties during the donation. However, the evidence presented did not substantiate this claim sufficiently to warrant declaring the donation null. Overall, both claims of fraud and duress were deemed without merit.

Johnson argues that his frequent travel between California and Louisiana has financially impacted him and complicates his ability to conduct business independently, leading him to allow his nephew, Rose, to negotiate on his behalf. He claims that duress and Rose’s undue influence resulted in him signing an authentic act regarding property. Under Louisiana Civil Code Article 1959, consent is invalidated by duress that instills reasonable fear of significant harm. Article 1479 invalidates donations if they result from undue influence that compromises the donor's autonomy. Despite Johnson being eighty at the time of the transaction, there is no evidence indicating he lacked the mental or physical capacity to understand his actions. His prior experience in real estate transactions suggests he was capable of recognizing the implications of the agreement. Johnson was aware of the conditions under which a potential buyer, LeBean, would purchase the property, indicating he had other options. The trial court found no evidence of duress or undue influence, and Johnson's claims were deemed meritless. Johnson also asserts that the case falls under Louisiana Civil Code Article 1498, which states that a donor must retain sufficient property for subsistence to avoid nullifying the donation. He contends that this issue could be raised at any point in the proceedings per Article 2030. However, the trial court declined to expand the pleadings on this matter, stating that the relevant law had not been properly pled. After reviewing the case, the court found no error in its determination.

Article 2030 allows any party to assert the absolute nullity of a contract, which can also be recognized by the court. In IP Timberlands Operating Co. Ltd. v. Denmiss Corp., it was established that if a defendant fails to raise a claim in their answer or reconventional demand, that claim cannot be a basis for judgment. This principle was reinforced in Romero v. State Farm Fire & Casualty Co., where the court cited earlier case law. In Successions of Webre, the court noted a lack of allegations regarding the nullity of a specific article, concluding that since such claims were introduced for the first time during trial, the trial court's ruling was correct. Consequently, the trial court's judgment was affirmed, with all costs assigned to the defendant, Bernard E. Johnson. Notably, it was mentioned that Rose, who is dyslexic, had his wife read the documents for him, and an unsigned onerous and remunerative donation was presented as evidence.