U.S. Bank Trust National Association, as Trustee of the Lodge Series III Trust Versus Melvin Parks and Lucresia Fontenberry Parks

U.S. BANK TRUST NATIONAL NO. 22-CA-56
ASSOCIATION, AS TRUSTEE OF THE
LODGE SERIES III TRUST FIFTH CIRCUIT

VERSUS COURT OF APPEAL

MELVIN PARKS AND LUCRESIA STATE OF LOUISIANA
FONTENBERRY PARKS

ON APPEAL FROM THE TWENTY-NINTH JUDICIAL DISTRICT COURT
PARISH OF ST. CHARLES, STATE OF LOUISIANA
NO. 87,726, DIVISION "E"
HONORABLE TIMOTHY S. MARCEL, JUDGE PRESIDING

November 02, 2022

JOHN J. MOLAISON, JR.
JUDGE

Panel composed of Judges Susan M. Chehardy,
Robert A. Chaisson, and John J. Molaison, Jr.

AFFIRMED
JJM
SMC
RAC

COUNSEL FOR DEFENDANT/APPELLANT,
MELVIN PARKS AND LUCRESIA FONTENBERRY PARKS
David S. Moyer

COUNSEL FOR PLAINTIFF/APPELLEE,
U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE OF THE
LODGE SERIES III TRUST
Rader Jackson
Cris R. Jackson
Joseph H. Riley, II
Rachel Breaux

MOLAISON, J.

This appeal arises from a promissory note and mortgage (“the Note”), which

encumbers the appellants’, Melvin and Lucresia Parks (“the Parks”), property

located at 317 Riverwood Drive in St. Charles Parish. The Parks challenge the trial

court’s judgment denying their motion for permanent injunction and subsequently

allowing the appellee, U.S. Bank Trust National Association, as Trustee of the

Lodge Series III Trust (“U.S. Bank”), to enforce its right to executory process. For

the reasons that follow, the judgment of the trial court is affirmed.

FACTS AND PROCEDURAL HISTORY

On February 19, 2008, the Parks entered into a mortgage with Wachovia

Mortgage Corporation, which secured property located at 317 Riverwood Drive in

St. Rose. The provisions of the Note entailed a principal sum of $345,000, bearing

a 6.000% per annum interest rate from the date executed until paid, as well as a

monthly principal and interest installment of $2,068.45. Following its execution,

the Note was later assigned to Wells Fargo Bank, NA, on or about December 6,

2011. The appellants have not attacked the validity of the note’s chain of

ownership from Wachovia to Wells Fargo.

On March 1, 2013, the Parks executed a Loan Modification Agreement with

Wells Fargo Bank, NA, resetting the principal balance to $385,562.02 with

$86,502.02 to be deferred and non-interest bearing.1 Thus, the modified terms of

the Note provided an interest-bearing new principal balance of $299,000, 4.000%

per annum interest rate, monthly principal and interest installments at $1,249.64,

1
Pursuant to LA. R.S. 9:5390(A):

“The effectiveness, validity, enforceability, and priority of a conventional mortgage,
conventional chattel mortgage, or security agreement are not adversely affected by a change in
the terms of the note or notes secured thereby, including but not limited to such changes as
extension of the maturity of the note or notes, an increase or decrease of the interest rate
stipulated in the note or notes, or the agreement that the unpaid accrued interest of the note or
notes would be converted to principal and thereafter bear interest.”

22-CA-56 1

and extended the life of the Note until March 1, 2053. Following the Loan

Modification, the Note was later assigned as follows:2

1. December 12, 2018, the Note is assigned to Wilmington Savings
Fund, Society FSB.
2. March 20, 2019, the Note is assigned to plaintiff, U.S. Bank.

On March 13, 2020, U.S. Bank filed a petition for executory process at the

Twenty-Ninth Judicial District Court, which sought to enforce its right to foreclose

on the property as provided by the terms of the Note. U.S. Bank’s verified petition

showed the Note was delinquent for the installment due on February 1, 2019, and

all subsequent installments.3 On March 17, 2020, the trial court signed the order of

seizure and sale and set the Sheriff’s Sale of the Parks’ property for August 17,

2020. On June 26, 2020, within their answer, the Parks filed an exception of no

cause of action and also filed a subsequent petition for preliminary injunction,

which sought to enjoin U.S. Bank from selling or transferring the property. The

rule to show cause was set for September 11, 2020.

On July 7, 2020, the Parks filed a motion to reset their petition for

preliminary injunction to August 7, 2020, to obtain a judgment on their request for

injunctive relief prior to the Sheriff’s sale. Following the hearing on August 7,

2020, the trial court granted the Parks’ injunctive relief against U.S. Bank and the

hearing regarding the Parks’ exception of no cause of action was set for September

11, 2020. At the hearing on the exception of no cause of action, the trial court

decided to take the matter under further advisement; however, the injunctive relief

against U.S. Bank was extended until November 19, 2020.

Following the trial court’s decision to grant the Parks’ preliminary

injunction, U.S. Bank filed an application for supervisory writ to this Court on

December 7, 2020. We denied U.S. Bank’s application without consideration as to

2
As evidenced in the Parks’ “exception for no cause of action” filed June 26, 2020. The Parks do
not attack the validity of transfers that resulted in the note’s possession by U.S. Bank.
3
See, La. C.C.P. art. 2635 and La. C.C. art. 3312 (cmt.(a)).

22-CA-56 2

its merits because it was not filed within the 15-day period from the day the

judgment was signed as per La. C.C.P. art. 3612.4 Thereafter, the appellants

petitioned the trial court for a permanent injunction, and a hearing was held on July

8, 2021. On October 19, 2021, the trial court denied the appellants’ petition for a

permanent injunction and the instant appeal followed.

ASSIGNMENTS OF ERROR

On appeal, the Parks first contend that the trial court erred in denying their

exception of no cause of action based upon its finding that the original mortgage

was a “bearer note/paper,” and therefore subject to negotiation by transfer of

possession alone. In their second assignment of error, the Parks argue that the trial

court erred in denying their petition for injunction based on its finding that the loan

modification did not extinguish the original note and mortgage and create a new

and separate principal obligation.

STANDARD OF REVIEW

Our standard of review regarding this appeal is two-fold. First, the Parks

assert the trial court erred in its decision to deny the exception of no cause of

action. In reviewing a trial court’s ruling on an exception of no cause of action,

appellate courts apply the de novo standard of review. Herman v. Tracage

Development, L.L.C., 16-0082 (La. App. 4 Cir. 9/21/16), 201 So.3d 935, 939. The

function of the exception of no cause of action is to question whether the law

extends a remedy to anyone under the factual allegations of the petition. Scanlan v.

MBF of Metairie, LLC, 21-323 (La. App. 5 Cir. 3/23/22), 337 So.3d 562, 565

(citing Grubbs v. Haven Custom Furnishings, LLC, 18-710 (La. App. 5 Cir.

5/29/19), 274 So.3d 844, 847-48). We apply the de novo standard because the

exception raises a question of law, thus the trial court’s decision is based only on

the sufficiency of the petition and all facts pleaded in the petition must be accepted

4
U.S. Bank Trust v. Parks, 20-471 (La. App. 5 Cir. 1/14/21), (unpublished writ).

22-CA-56 3

as true. Id. Second, the Parks assert the trial court erred in denying their petition for

injunctive relief. In reviewing denials of preliminary or permanent injunctions, we

utilize the abuse of discretion standard of review. Delta Black, L.L.C. v. Parish of

St. Bernard, 12-1153 (La. App. 4 Cir. 1/16/13), 108 So.3d 336, 340, (citing A.M.E.

Disaster Recovery Services, Inc, v. City of New Orleans, 10-1755 (La. App. 4 Cir.

8/24/11), 72 So.3d 454, 456).

LAW AND ANALYSIS

Classification of the Original Note

The promissory note in this matter is a negotiable instrument pursuant to La.

R.S. 10:3-104; therefore, it must be further classified as either a “bearer

note/paper” or an “order note.” The Parks contend that the trial court erred in its

finding that the Note, made payable to Wachovia Mortgage Corporation when it

was first executed, is a “bearer note/paper.” The Parks asserted in their exception

of no cause of action that the Note should instead be classified as an “order note”

in accordance with R.S. 10:3-109(b). Therefore, the Parks argue that U.S. Bank

lacked the authority to file an action for executory process because it was required

to “submit with his [sic] petition authentic evidence of: (1) the note, bond, or other

instrument evidencing the obligation secured by the mortgage, security agreement,

or privilege; and (2) the authentic act of mortgage or privilege on immovable

property importing a confession of judgment” pursuant to La. C.C.P. art. 2635(A).

However, in accordance with the provisions of La. R.S. 9:4422(3), as the holder of

the promissory note, regardless of its negotiability, U.S. Bank was entitled to

executory process absent authentic evidence of any assignments and transfers of

the promissory note. Thus, we find the Parks’ first argument is without merit.

To determine the classification of the Note, we look to the express language

of the Note executed on February 19, 2008. The indorsement states: “PAY TO

THE ORDER OF [blank], WITHOUT RECORSE, WACHOVIA MORTGAGE

22-CA-56 4

CORPORATION, Signed: Karen Davis, Assistant Vice President.” The language

of the Note provides that it is payable to Wachovia Mortgage Corporation, an

identified entity; therefore, the Note originated as an Order Note pursuant to La.

R.S. 10:3-109(b). However, as this Court has previously held, an instrument

payable to an identified person may become payable to bearer if it is indorsed in

blank in accordance with La. R.S. 10:3-205(b). Federal Nat. Mortg. Ass’n v. Thao

Thi Duong, 14-689 (La. App 5 Cir. 2/11/15), 167 So.3d 920, 923. When a

negotiable instrument has been indorsed “in blank,” this means that no specific

person has been identified as the payee.5 When Wachovia transferred the Note,

absent a special indorsement, and subsequently transferred to U.S. Bank, the Note

was negotiated by its transfer of possession alone until specially indorsed as per

La. R.S. 10:3-205(b).

Furthermore, pursuant to La. C.C. art. 2645, comment (b), the transfer of a

promissory note also transfers the accessory rights of mortgage and privilege that

secure the debt involved. See also Holliday v. Logan, 134 La. 427, 64 So. 277, 278

(1914). This is further supported by the language of the mortgage,6 which states:

“This Security Instrument secures to Lender (i) the repayment of the Loan, and

all renewals, extensions and modifications of the Note; and (ii) performance of

Borrower’s covenants and agreements under this Security Instrument and the

Note…and to the successors and assigns of MERS…” (Emphasis added.) Thus,

5
As explained in 13 West's Legal Forms, Commercial Transactions § 41:152 (5th ed.):

A blank indorsement is usually the signature of the indorser on the back
of the instrument without other words. When indorsed in blank, an instrument
becomes payable to bearer and may be negotiated by transfer of possession alone
until specially indorsed. U.C.C. § 3-205(b) and Comment 2.

This Court recognized the validity of an identical indorsement in blank in Federal Nat.
Mortg. Ass'n v. Thao Thi Duong, supra. In that case, as in the instant case, the indorsement on an
instrument read “pay to the order of .” The line was left blank, followed by the indorsement
signature. We held that the format constituted a blank indorsement which created bearer paper,
pursuant to La. R.S. 10:3-104, 10:3-109(c), and 10:3-205.
6
As reflected in the record, the mortgage was attached to the original Note executed by
Wachovia Mortgage Corporation and the Parks on February 19, 2008.

22-CA-56 5

U.S. Bank is considered the proper holder of the Note and all rights and obligations

established within the Note were subsequently transferred to it by Wachovia

initially indorsing the Note “in blank.”

The Parks further assert that, “[a]uthentic evidence of the assignment and

endorsement of an order note is required to support the use of executory process.”

Aetna Life Ins. Co. v. Lama Trusts, 28,328 (La. App. 2 Cir. 5/8/96), 674 So.2d

1086, 1089. Here, U.S. Bank attached the original promissory note between

Wachovia and the appellants to its petition for executory process. In doing so, U.S.

Bank demonstrated that it had possession of the note and was entitled to enforce

the terms of the instrument as its bearer. As per La. R.S. 9:4422, authentic

evidence of how U.S. Bank came into possession of the note was not necessary to

establish that it had standing to bring the action for executory process. See, First

Nat. Bank of Lafayette v. Gaddis, 250 So.2d 504, 509-10 (La. Ct. App. 1971).7

Effect of the Loan Modification Agreement

The Parks next contended in their motion for permanent injunction that

when they executed the Loan Modification Agreement with Wells Fargo on March

1, 2013, this effectively cancelled the Note and created a new note and mortgage

with separate rights and obligations only enforceable by Wells Fargo. The Parks

also assert that the Loan Modification materially changed the terms of the Note;

therefore this Court’s prior holding in Federal Nat. Mortg. Assoc. v. Thao Thi

Duong, supra, is inapplicable to the instant case.

To support their assertion, the Parks heavily rely on their previous argument

concerning the Note, that by Wells Fargo identifying itself as “Lender,” the Loan

Modification Agreement became an “order note” pursuant to La. R.S. 10:3-109(b).

The Parks conclude in their petition for permanent injunction that U.S. Bank was

7
See also, comment (d) for La. C.C.P. art. 2635, which states, in part: “[i]f the mortgage note is
made payable to the order of the mortgagor and by him endorsed in blank, and the act of mortgage so
recites, no authentic evidence of the transfer by the mortgagee is required.”

22-CA-56 6

not the named lender on the Note. Additionally, the Parks argue that because the

Note was an Order Note, and U.S. Bank failed to provide evidence to show the

subsequent chain of assignments and transfers, as required to prove its legal right

to pursue executory process, they were entitled to permanent injunctive relief. As

we have previously stated, however, as the holder of the promissory note,

regardless of its negotiability, U.S. Bank was entitled to executory process without

the need to present authentic evidence of any assignments and transfers. La. R.S.

9:4422(3). Therefore, upon our de novo review, we find this argument is without

merit.

The terms of the original Note secure to the lender “(i) the repayment of the

Loan, and all renewals, extensions and modifications of the Note…” (Emphasis

added.) Thus, the Loan Modification Agreement is analogous to the previous

discussion of the Note. The only difference is that the Parks executed the Loan

Modification Agreement with Wells Fargo rather than Wachovia Mortgage

Corporation. By making the Note payable to Wells Fargo, an identified entity, the

modification creates an Order Note as per La. R.S. 10:3-109(b). However, there is

no evidence provided in the record which suggests that Wells Fargo specially

indorsed the modified Note prior to its transfer to U.S. Bank; therefore, the

modified Note became a Bearer Note, negotiated by its transfer into U.S. Bank’s

possession alone, in accordance with R.S. 10:3-205(b). Upon the Note’s transfer,

U.S. Bank also inherited the right to enforce any obligations secured by such

mortgage in accordance with La. C.C. art. 3312.

We now turn to the Parks’ argument that the Loan Modification Agreement

materially changed the terms of the Note. On its face, the Loan Modification

changes the financial obligations owed by the Parks. It is undisputed by the parties,

however, that this Loan Modification was executed only to make the Note more

affordable for the Parks. A review of the February 25, 2013, modification between

22-CA-56 7

Wells Fargo and the Parks provides that it “amends and supplements” the

mortgage dated February 19, 2008.

The Parks nevertheless argue that the Loan Modification Agreement was

effectively a novation, thus extinguishing the existing obligation of the original

Note by substituting the new obligation of the Loan Modification pursuant to La.

C.C. art. 1879. However, as per La. C.C. art. 1880, novation may not be presumed,

and the “intention to extinguish the original obligation must be clear and

unequivocal.” La. C.C. art. 1881 states: “[i]f any substantial part of the original

performance is still owed, there is no novation.” Here, there is no evidence in the

record of a cancellation or substitution of the original promissory note. To the

contrary, the 2013 modification specifically references the original debt created by

the 2008 note and merely sets forth new terms of payment for the existing unpaid

obligation by the appellants. The modification also specifically states that

“[n]othing in this Agreement shall be understood or construed to be a satisfaction

or release in whole or in part of the Note and Security Instrument.” Based on the

explicit language of the Loan Modification Agreement, it does not appear it was

intended to create an entirely new and distinct note and mortgage. Therefore, we

find no merit in the appellants’ argument that modification of the 2008 note in any

way extinguished it, or affected the enforcement rights of U.S. Bank. See, Arnold

v. Hancock, 06-632 (La. App. 3 Cir. 2/7/07), 950 So.2d 911, 918. Furthermore, any

modifications of a conventional mortgage, as in the present case, do not adversely

affect any validity or enforceability of the Note for purposes of executory process

pursuant to La. R.S. 9:5390(A). Thus, U.S. Bank is entitled to executory process.

CONCLUSION

The 2008 note between the appellants and Wachovia contemplated both a

transfer of ownership and the possibility of a later modification of the mortgage.

The 2013 modification of the note by Wells Fargo expressly did not extinguish the

22-CA-56 8

appellants’ obligation to repay the balance due on the 2008 note. The blank

indorsement of the 2008 note made it permissible to transfer ownership by

possession alone, and U.S. Bank did, in fact, have possession of the note at the

time it filed its petition for executory process after the appellants’ default. U.S.

Bank was not required to produce any additional authentic evidence concerning its

acquisition of the note.

Based on our de novo review of the record, we conclude that the Parks failed

to meet their burden to establish that U.S. Bank did not have a cause of action to

assert its rights to executory process. Because the Parks have failed to meet their

burden to prove that the law does not extend any legal remedy to U.S. Bank based

on the facts alleged in its petition, we find no error in the trial court’s decision to

deny their exception of no cause of action. Furthermore, we find no abuse of

discretion by the trial court in its denial of the Parks’ request for injunctive relief.

Accordingly, for the foregoing reasons, the judgment of the trial court is affirmed.

AFFIRMED

22-CA-56 9

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

SUSAN S. BUCHHOLZ
FREDERICKA H. WICKER
INTERIM CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON LINDA M. WISEMAN
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
HANS J. LILJEBERG
JOHN J. MOLAISON, JR. FIFTH CIRCUIT
MELISSA C. LEDET
JUDGES 101 DERBIGNY STREET (70053)
DIRECTOR OF CENTRAL STAFF
POST OFFICE BOX 489
GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX
www.fifthcircuit.org

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY
I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED
IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY
NOVEMBER 2, 2022 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES
NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

22-CA-56
E-NOTIFIED
29TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE TIMOTHY S. MARCEL (DISTRICT JUDGE)
DAVID S. MOYER (APPELLANT) RACHEL BREAUX (APPELLEE)

MAILED
CRIS R. JACKSON (APPELLEE)
JOSEPH H. RILEY, II (APPELLEE)
MATTHEW S. RESOR (APPELLEE)
RADER JACKSON (APPELLEE)
ATTORNEYS AT LAW
935 GRAVIER STREET
SUITE 1400
NEW ORLEANS, LA 70112