Adair Asset Management, LLC/US Bank v. Honey Bear Lodge, Inc.
Docket: No. 2012 CA 1690
Court: Louisiana Court of Appeal; February 12, 2014; Louisiana; State Appellate Court
IgHoney Bear Lodge, Inc. (HBL) appeals a February 8, 2010 judgment favoring Adair Asset Management, LLC/US Bank (Adair) that granted Adair's motion for summary judgment and confirmed its title to HBL's immovable property acquired through tax sale. HBL also contests a March 19, 2012 judgment denying its motion for a new trial or to nullify the prior judgment. The court initially raised concerns regarding the timeliness of HBL's appeal and the sufficiency of the March 19, 2012 judgment's language. Adair filed a motion to dismiss the appeal. The court decided to withdraw the show cause rule, deny the dismissal motion, and maintain the appeal. Upon review, the court vacated the February 8, 2010 judgment, reversed the March 19, 2012 judgment, and remanded the case for further proceedings.
Background: On September 30, 2004, HBL purchased property at 300 A. B Live Oak Boulevard, assuming the 2004 taxes. After failing to pay taxes, HBL received notice of delinquency from the St. Tammany Parish Sheriff on December 20, 2004. HBL was subsequently notified of tax delinquency by certified mail, with return receipt signed by HBL’s secretary on April 25, 2005. Despite repeated notices over three years, HBL did not redeem the property, leading to its sale to Adair on June 8, 2005, for unpaid taxes. Adair filed a petition to quiet tax title on April 6, 2009, but was unable to serve HBL directly. Consequently, the court appointed attorney Joseph T. Oubre as curator ad hoc. Oubre attempted to notify HBL, but all certified letters were returned as undeliverable, and HBL did not respond. Oubre withdrew as curator on November 24, 2009, without notifying Adair. Adair then filed a motion for summary judgment on December 22, 2009, which was heard on February 8, 2010, resulting in a judgment favoring Adair, recognizing it as the sole owner of the property.
On March 15, 2010, notice of the judgment was mailed to Oubre. By June 11, 2010, occupants of the property received an eviction notice. Subsequently, a Louisiana attorney representing Carol Schwab informed Adair’s attorney that Schwab owned the property. Adair’s attorney responded on July 1, 2010, confirming Adair as the legal owner. On October 3, 2011, HBL filed a motion for a new trial or to annul the February 8, 2010 judgment, arguing that the judgment was invalid since the motion for summary judgment had not been served on HBL, claiming that service to Oubre was inadequate as he had withdrawn as curator ad hoc before the filing. HBL served the motion on Adair and Entrust, with Entrust opposing it. The court held a hearing on December 22, 2011, and subsequently denied HBL’s motion, with a judgment signed on March 19, 2012. HBL appealed both the March 19, 2012, and February 8, 2010 judgments, raising three assignments of error related to the service of the summary judgment motion. HBL asserted that the trial court abused its discretion in denying the motion for new trial, erred in denying the annulment of the summary judgment due to improper service, and incorrectly granted summary judgment to Adair despite the lack of notice to HBL regarding the tax sale. The court's analysis indicated that HBL’s arguments were based on the claim that Oubre’s withdrawal as curator ad hoc invalidated the service of the summary judgment motion, and clarified that the absence of the curator did not nullify the proceedings according to LSA-C.C.P. art. 5098.
The main issue is the validity of the summary judgment against HBL, contingent on whether HBL was properly served with the motion. A judgment is considered an absolute nullity if the defendant was not served and did not enter a general appearance, as per Louisiana Civil Code Procedure Articles 2001 and 2002(A)(2). Relevant case law indicates that a defendant may file a nullity action at any time, and any interested party can seek annulment through collateral proceedings under Article 2002(B).
Service of subsequent pleadings, as mandated by Article 1312, generally requires service on the adverse party according to Articles 1313 or 1314, with specific provisions for pleadings that set a court date necessitating service by registered or certified mail or sheriff. If proper service is contested, the challenging party must demonstrate, by a preponderance of the evidence, that service was not adequately executed, following the standard set in Hall v. Folger Coffee Co. The purpose of Articles 1313 and 1314 aligns with the constitutional due process requirement for adequate notice and an opportunity for a hearing, emphasizing the necessity of proper service before adjudication can occur.
To ensure effective notice to a litigant, it must be presumed that the service to counsel of record will be communicated to them. In Rawley, the court ruled that service on an attorney who had withdrawn as counsel was invalid, as the appellant was unaware of the proceedings, leading to a nullification of the partition sale due to improper service. In contrast, in the current case, Adair’s attorney was unaware of Oubre’s withdrawal as curator ad hoc, but HBL similarly lacked notice of a summary judgment motion until months after it was rendered.
In Billiot v. Sea Life, Inc., the court found that serving notice of a sanctions hearing on a withdrawn attorney was insufficient, resulting in a default judgment being struck down due to lack of proper notice to the defendants.
Additionally, Hill v. Lopez illustrated that defendants could not seek summary judgment on reconventional demands before the plaintiffs were properly served; since the plaintiffs had not been served with the reconventional demand, the defendants' motion for summary judgment was deemed null.
The Hill case involved the court's interpretation of LSA-C.C.P. art. 1313(A) regarding service requirements for post-petition pleadings. The court clarified that the prior version necessitated service by sheriff for pleadings requiring an appearance or answer, making mail service insufficient for motions like summary judgment. The 1999 amendment allowed service by regular mail or facsimile, with Article 1313(C) specifically requiring registered or certified mail for pleadings setting court dates. The court deemed that a summary judgment motion falls under Article 1313(C), ruling that a certificate of service by fax or U.S. mail was inadequate and rendered the judgment null.
In Davis v. Dunn, the court ruled that a claimant must receive written notice of a trial when their attorney withdraws. It emphasized the trial court's duty to ensure the unrepresented litigant receives this notice, either directly or through proof that the withdrawing attorney informed the client. Failure to provide this notice constitutes a denial of procedural due process.
Similarly, in Roman v. LRASIF Claims Mgmt, the appellate court reversed a summary judgment due to lack of notice to the unrepresented litigant, citing due process concerns. The case was remanded for a new hearing with proper notice. This contrasted with Smith v. LeBlanc, where the court upheld service of a petition on a counsel who had filed to withdraw, finding it effective despite the pending withdrawal.
The district court's approval of Oubre's withdrawal as curator ad hoc for HBL meant he was no longer obligated to notify HBL about the motion for summary judgment. Consequently, since HBL did not receive proper service of the motion or notice of the hearing, the judgment in favor of Adair was deemed null due to lack of service. Although an attempt was made to serve HBL by certified mail, the documents were returned as undeliverable. Proper service required compliance with Article 1313(C) and Article 1314, which stipulate methods of service that were not followed. Specifically, personal service on HBL through an appropriate agent or officer was not accomplished, nor was service made on counsel of record, as Oubre had withdrawn. The sheriff's service on Oubre’s father did not satisfy the legal requirements, as domiciliary service is not applicable to corporations. Hence, the court concluded that the judgment against HBL was invalid, and the subsequent denial of HBL's motion for a new trial must be reversed.
HBL's motion for a new trial was deemed timely because an absolutely null judgment can be contested at any time. The timeline for filing such a motion begins the day after the clerk mails or the sheriff serves the notice of judgment. In this case, notice of the February 8, 2010 judgment was improperly served and not mailed, causing the filing deadline for HBL to never commence. The judgment denying HBL’s motion for a new trial was signed on March 19, 2012, and since a timely application for a new trial had been filed, HBL's subsequent devolutive appeal was also timely, filed on May 8, 2012, within the sixty-day period established by law.
The court also addressed whether the March 19, 2012 judgment contained sufficient decretal language to be considered a final judgment for appeal. A judgment must clearly identify the parties involved and the relief granted or denied. While the Johnson case indicated that the absence of such language can prevent a judgment from being final, the March 2012 judgment effectively dismissed HBL's claims and confirmed Adair as the sole owner of the disputed property. It detailed the denial of HBL's motion and awarded costs to Adair and Entrust, meeting the necessary criteria for a final judgment.
Consequently, the court withdrew its show cause order regarding the appeal's timeliness, denied Adair’s motion to dismiss, vacated the February 8, 2010 judgment as absolutely null, reversed the March 19, 2012 judgment, and remanded the case for further proceedings, with all appeal costs assessed to Adair.
The property is legally identified as 'LOT 1 BLK 12 WELDON PARK CB 1100489 CB1316 269 CB1381 145 CB 1395 65 CB 1374 770 CB 1459 897 INST No 1321209,' located in Ward No. 14, Parish of St. Tammany. Records with the Kentucky Secretary of State include details of HBL’s directors, officers, and agent for service of process. Domiciliary service was attempted on Oubre at his address of record, as indicated in the sheriff’s return. Additionally, Adair's attorney sought to serve HBL via certified mail to the Dixie Avenue address, but the return receipt was unsigned and marked 'not deliverable.' On April 6, 2010, Adair transferred ownership of the property to Adair Holdings, L.L.C. through a quitclaim deed, which then sold it to Entrust, an unrelated third party, on December 8, 2010. Amendments to Article 1314(B) in 2012 broadened the service provisions, while Article 1313(A) was modified in 2010 to allow service by electronic means, including email and fax. Further amendments to Article 1313(C) and the addition of paragraph (D) in 2012 permitted service by commercial courier. Despite these provisions, there are concerns regarding the sufficiency of notice and due process for litigants, particularly regarding whether such service would ensure proper communication.
