AG Resource Management, LLC. and Agrifund, LLC v. Bunge North America, Inc. and Danny Allen Dickerson

Judgment rendered March 4, 2020.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 53,417-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

AG RESOURCE Plaintiffs-Appellees
MANAGEMENT, LLC. AND
AGRIFUND, LLC
versus

BUNGE NORTH AMERICA, INC. Defendants-Appellants
AND DANNY ALLEN
DICKERSON
*****

Appealed from the
Sixth Judicial District Court for the
Parish of Tensas, Louisiana
Trial Court No. 23,971 Division “A”

Honorable Michael E. Lancaster, Judge

*****

WIENER, WEISS & MADISON Counsel for Defendant-
By: R. Joseph Naus Appellant Bunge North
Patrick L. McCune America, Inc.

HUSCH BLACKWELL, LLP
By: Marshall C. Turner
Jamie H. Steiner

DANNY ALLEN DICKERSON In Proper Person

BREITHAUPT, DUBOS & WOLLESON, LLC Counsel for Plaintiffs-
By: Michael L. Dubos Appellees Ag Resource
K. Lamar Walters, III Management, LLC &
Agrifund, LLC

*****

Before MOORE, McCALLUM, and THOMPSON, JJ.

MOORE, J.

Bunge North America appeals a judgment that denied its motion for

summary judgment and allowed the plaintiffs, Ag Resource Management

LLC and Agrifund LLC, to pursue their claim of wrongful conversion. The

plaintiffs have filed a motion to dismiss the appeal. For the reasons

expressed, we deny the motion to dismiss, convert the appeal to a writ

application, deny the writ, and remand the case for further proceedings.

FACTUAL BACKGROUND

The original lender was Ag Resource Management of Louisiana

(“ARM”), which later assigned its assets to Agrifund LLC. In March 2015,

ARM granted a crop loan to Radar Ridge Planting Co., a farming company

that operated in Morehouse, Franklin and Richland Parishes. Radar Ridge,

through its president, Tommy Dickerson, executed a promissory note (“the

2015 note”) for $2,683,002, to come due on December 15, 2015. Radar

Ridge also executed an Agricultural Security Agreement (“ASA”) which

granted a security interest in its 2015 corn crop, wherever located, for “any

and all present and future loans, loan advances, extensions of credit and/or

other financial accommodations” from the lender, with “a continuing

security interest in the Collateral * * * to secure any and all present and

future indebtedness as may be outstanding from time to time[.]” ARM filed

a UCC-1F financial statement, which described the collateral as “all crops

grown in [Louisiana] together with all present and future FSA payments.”

Radar Ridge booked its 2015 corn crop with Bunge, which operated a

grain storage facility in Tensas Parish. According to the ASA and UCC-1F,

ARM’s security followed the corn into Bunge’s silos.

In August 2015, someone at Bunge altered the 79 grain storage

tickets, scratching out the name “Radar Ridge” and handwriting in “Danny

Dickerson,” Tommy Dickerson’s father. Bunge then issued a check, for

$347,217, made out jointly to Danny Dickerson and to Winnsboro State

Bank & Trust, completely ignoring ARM’s security interest.

In September 2015, ARM assigned its assets, including the 2015 note

and ASA, to Agrifund.

In December 2015, the 2015 note matured. Agrifund alleged that in

January 2016, Tommy Dickerson approached its officers about transferring

the crop loan to a crop storage loan. Agrifund now concedes that owing to

constraints from its own lender, Capital One, it could not simply extend the

maturity date of the 2015 note; the borrower’s only options were to pay off

the note, or to execute a new note on the crop storage loan, and Dickerson

chose the latter.

In January 2016, Radar Ridge executed a new promissory note (“the

2016 note”), for $3,002,940, to come due on June 15, 2016. Radar Ridge

also executed a new ASA, and Agrifund filed another UCC-1F. Most of the

proceeds of the 2016 note were applied to pay off the 2015 note; statements

sent from ARM to Radar Ridge showed a zero balance on the 2015 note.

In February 2016, Agrifund sent employees to Bunge’s facility for a

periodic inspection of the bins that were supposed to be holding Radar

Ridge’s corn. They found, however, that the bins were empty, and at this

time Agrifund realized that its collateral had been sold.

Radar Ridge did not pay the 2016 note when it came due.

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PROCEDURAL HISTORY

Agrifund and ARM filed this suit in February 2016 against Bunge and

Danny Dickerson. They alleged that the defendants converted their

collateral, the 2015 corn crop, that was subject to the plaintiffs’ security

interest. Discovery was extensive, and resulted in an October 2017

nondisclosure agreement wherein several exhibits were placed under seal.

Bunge filed this motion for summary judgment in August 2018. It

contended that Agrifund could not prove any damages because (1) the 2015

note had been paid in full, with the proceeds of the 2016 note, and (2) a

novation had occurred, whereby all accessory obligations of the 2015 note

were extinguished when that note was novated in favor of the 2016 note. It

argued that any time “a debtor contracts a new debt to his creditor, which

new debt is substituted for an old one, which is extinguished, novation

occurs,” Scott v. Bank of Coushatta, 512 So. 2d 356 (La. 1987), and once the

principal obligation is extinguished, all accessory obligations are also

extinguished. In support, it attached 15 exhibits, including depositions of

Agrifund’s CEO, Brad Terral, and regional risk manager, Robby Miller, who

stated that they could not extend the 2015 note, owing to an agreement with

their own lender, Capital One, so they issued the 2016 note to pay it off.

Bunge also attached Exhibit 38, the transcript of a June 2018 hearing on a

motion to compel, in which Agrifund’s counsel allegedly conceded that the

2015 note was paid in full with the proceeds of the 2016 note.

Agrifund opposed the MSJ, arguing that there was no novation: the

2016 note was a “mere modification of an obligation” or “a new writing,”

which La. C.C. art. 1881 defines as not novation. It quoted the ASA (“any

and all present and future loans” and “present and future indebtedness”) and
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argued that this expressed the consent of the debtor to transfer the security to

a new obligation, as allowed by La. C.C. art. 1884. Agrifund also offered

the affidavits of Terral and Miller, under seal; these stated that the purpose

of the 2016 note was to extend the maturity date for the 2015 note.

ACTION OF THE DISTRICT COURT

The matter came for a hearing in September 2018. Agrifund moved

to strike Exhibit 38 on grounds that a transcript is not allowable summary

judgment evidence, La. C.C.P. art. 966 A(4); the court granted this. Bunge

did not object to the Terral and Miller affidavits filed by Agrifund.

At the close of the hearing, the court conceded that it initially thought

the first loan was paid off, there was a novation, and thus the ASA was

extinguished. However, after hearing the arguments, the court found the

matter “not so clear,” and felt it must go to trial. The court therefore denied

the motion for summary judgment, and later signed a judgment designating

this as final and immediately appealable, under La. C.C.P. art. 1915 B.

Bunge took this appeal, designating five assignments of error.

Agrifund and ARM filed a motion to dismiss the appeal on grounds that the

denial of a motion for summary judgment is interlocutory and not

appealable, La. C.C.P. art. 968. We will address this issue first.

DISCUSSION

Appealability of Judgment

An appeal does not lie from the court’s refusal to render any summary

judgment. La. C.C.P. art. 968; Hood v. Cotter, 08-0215 (La. 12/2/08), 5 So.

3d 819. This is because denial of summary judgment is interlocutory: it

does not determine the merits but only preliminary matters in the course of

the action. La. C.C.P. art. 1841; Weaver v. City of Shreveport, 52,407 (La.
4

App. 2 Cir. 12/19/18), 261 So. 3d 1079. A court may render a partial

summary judgment, as to one or more of all claims, and determine and

designate this as a final judgment. La. C.C.P. art. 1915 B; Terrell v. Town of

Lecompte, 18-1087 (La. 9/28/18), 253 So. 3d 134. However, the court may

not designate the denial of summary judgment as final and appealable. SS v.

State, 02-0831 (La. 12/4/02), 831 So. 2d 936; Weaver v. City of Shreveport,

supra.

The district court was plainly wrong to designate the denial of

Bunge’s motion for summary judgment as final. However, in the interest of

judicial economy, the appellate court may convert an unauthorized appeal to

a supervisory writ and treat it as if the writ had been granted. Burmaster v.

Plaquemines Parish Gov’t, 07-2432 (La. 5/21/08), 982 So. 2d 795; Port City

Glass & Paint Inc. v. Brooks, 52,534 (La. App. 2 Cir. 2/27/19), 266 So. 3d

516. We also note that Bunge’s motion for appeal was filed within the 30

days allowed for a writ application. URCA 4-3; Port City Glass & Paint v.

Brooks, supra. We will therefore address the issues raised, under our

supervisory jurisdiction.

Denial of Summary Judgment on Issue of Novation

By its first three assignments of error, Bunge urges the district court

erred in denying the motion for summary judgment. Specifically, Bunge

argues that it presented competent summary judgment evidence of a

novation of the principal obligation; the plaintiffs’ action is based entirely on

“correlative rights of action and/or accessory obligations”; the novation

extinguished these rights; and the plaintiffs failed to submit competent

summary judgment evidence to establish a genuine issue of material fact.

Bunge contends that Agrifund made an entirely new loan to Radar Ridge in
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January 2016; this paid off the 2015 note, extinguished all ancillary causes

of action, and negated Agrifund’s claim of conversion.

Bunge cites the definitions of novation, La. C.C. art. 1879 (“the

extinguishment of an existing obligation by the substitution of a new one”)

and of objective novation, La. C.C. art. 1881 (“by agreement of the parties, a

new performance is substituted for that previously owed”), and urges that

the 2016 note was precisely such a “new performance.” It further contends

that novation extinguishes the entire original legal relationship, including all

correlative rights and duties. HDRE Business Partners Ltd. Group v. Rare

Hospitality Int’l Inc., 834 F. 3d 537 (5 Cir. 2016); In re Barnett Marine Inc.,

343 B.R. 561 (E.D. La. 2006). Factually, it cites specific items (Agrifund’s

account statements, the depositions of Terral and Miller) as proof that the

2016 note paid off and extinguished the 2015 note; and others (Agrifund’s

credit agreement with Capital One, the same depositions) to show that by

January 2016, Agrifund could not have used the 2015 note as collateral, and

thus was required to cancel it and issue a new obligation.1 It concludes that

all this established novation, beyond a genuine issue of material fact.

A motion for summary judgment is a procedural device used when

there is no genuine issue of material fact for all or part of the relief prayed

for by a litigant. La. C.C.P. art. 966 A(3); Maggio v. Parker, 17-1112 (La.

6/27/18), 250 So. 3d 874. An issue is genuine “if reasonable persons could

disagree.” Peironnet v. Matador Res. Co., 12-2292 (La. 6/28/13), 144 So.

3d 791. In ruling on the motion for summary judgment, the district court is

1
Agrifund’s credit agreement with Capital One stated, “Unless the Required
Lenders otherwise expressly consent in writing, the following shall not constitute an
“Eligible Note”: * * * (xi) any Portfolio Note the payment of which is thirty (30) days or
more past due[.]”
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not to evaluate the weight of the evidence or determine the truth of the

matter, but instead to determine whether there is a genuine issue of triable

fact. All doubts should be resolved against granting the motion. Hines v.

Garrett, 04-0806 (La. 6/25/04), 876 So. 2d 764. Summary judgment is

seldom appropriate for determinations based on subjective facts of motive,

intent, good faith, knowledge, or malice, yet it may be granted on such

issues when “no issue of material fact exists concerning the pertinent intent.”

Jones v. Estate of Santiago, 03-1424 (La. 4/14/04), 870 So. 2d 1002.

Relevant to our analysis are the following code articles:

Art. 1879. Extinguishment of existing obligations

Novation is the extinguishment of an existing obligation
by the substitution of a new one.

Art. 1880. Novation not presumed

The intention to extinguish the original obligation must
be clear and unequivocal. Novation may not be presumed.

Art. 1881. Objective novation

Novation takes place when, by agreement of the parties, a
new performance is substituted for that previously owed, or a
new cause is substituted for that of the original obligation. If
any substantial part of the original performance is still owed,
there is no novation.

Novation takes place also when the parties expressly
declare their intention to novate an obligation.

Mere modification of an obligation, made without
intention to extinguish it, does not effect a novation. The
execution of a new writing, the issuance or renewal of a
negotiable instrument, or the giving of new securities for the
performance of an existing obligation are examples of such a
modification.

Art. 1884. Security for extinguished obligation

Security given for the performance of the extinguished
obligation may not be transferred to the new obligation without
agreement of the parties who gave the security.
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Notably, Art. 1881 discourages the finding of novation in the absence

of a clear indication that a new obligation has been contracted and the

original obligation has been extinguished. Rebel Distributors Corp. v.

LUBA Workers’ Comp., 13-0749 (La. 10/15/13), 144 So. 3d 825. Article

1881 explicitly states that the execution of a new writing, issuance of a

negotiable instrument, or giving of new securities is a modification, not

novation. Id.; McKoin Starter & Generator Inc. v. Snap-On Credit Corp.,

37,210 (La. App. 2 Cir. 6/25/03), 850 So. 2d 924, writ denied, 03-2605 (La.

12/12/03), 860 So. 2d 1156; GE Comm’l Finance v. Louisiana Hosp. Ctr.,

2010-1838 (La. App. 1 Cir. 6/10/11), 69 So. 3d 649. The key factor is the

intent of the parties. Rebel Distribs. Corp. v. LUBA, supra; Isaacs v. Van

Hoose, 171 La. 676, 131 So. 845 (1930). The burden of proof for

establishing novation is on the party who asserts it. Scott v. Bank of

Coushatta, supra; Barham v. St. Mary Land & Expl. Co., 48,604 (La. App. 2

Cir. 11/20/13), 179 Oil & Gas Rep. 634, writ denied, 13-2943 (La. 2/21/14),

134 So. 3d 586.

At the outset, we observe that the word “novate” or “novation” never

appears in the 2016 note. Absent such an express declaration, Bunge owed

the burden of proving objective novation under Art. 1881. Scott v. Bank of

Coushatta, supra; Barham v. St. Mary Land & Expl. Co., supra.

On de novo review, we find genuine issues of material fact that

preclude the grant of summary judgment. We agree that the proceeds of the

2016 note were applied to pay off the 2015 note, and the latter was marked

as zero balance in ARM’s statements to Radar Ridge; we also agree that a

provision of Agrifund’s credit agreement with Capital One made the 2015

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note ineligible as collateral by January 2016. However, Art. 1881 prevents

the finding of novation merely on the execution of a new writing. The

issuance of a new note, which rolls in unpaid interest from an earlier note, is

not novation. Rex Finance Co. v. Cary, 145 So. 2d 672 (La. App. 4 Cir.

1962), aff’d, 244 La. 675, 154 So. 2d 360 (1963). Agrifund’s risk manager,

Robby Miller, testified by deposition that even though they could not simply

extend the deadline on the 2015 note, the “balance was shifted” to the new

loan; its CEO, Brad Terral, testified by deposition that giving Radar Ridge

the crop storage loan enabled Agrifund to maintain its collateral. This

evidence creates a genuine issue whether the 2016 note was a substituted

obligation, resulting in novation, or just a new writing with a substantial

portion of the original performance still owed, defeating novation. The

ambivalence of Miller’s and Terral’s depositions leaves wide open the

genuine issue whether the lender intended to substitute a new obligation or,

rather, to improvise a way to extend the old one.

Moreover, the ASA defined indebtedness as follows (with emphasis

added):

Indebtedness: The term “indebtedness” refers to Grantor’s
[Radar Ridge] Indebtedness and obligations under a certain
promissory note dated 3/3/2015, in the amount of U.S.
$2,683,002.00, as well as any substitute, replacement or
refinancing note or notes for the above described promissory
note.

The term “indebtedness” also refers individually, collectively
and interchangeably to any and all present and future loans,
loan advances, extensions of credit and/or other financial
accommodations obtained and/or to be obtained by Grantor
from Lender, * * * from time to time, one or more times, now
or in the future, and any and all promissory notes and other
instruments or agreements evidencing such present and future
loans, loan advances, extensions of credit, and/or other
financial accommodations * * * that Grantor may now and/or
in the future owe to or incur in favor of Lender[.]
9

This document shows the intent of Radar Ridge to apply the security

not only to the 2015 note but to any substitute, replacement, or refinancing

instrument, and thus may satisfy Art. 1884’s provision that security may be

transferred to a new obligation by “agreement of the parties who gave the

security.” At the very least, it creates a genuine issue whether, even if the

2016 note was a novation, the parties intended the security to transfer to the

new obligation.

On de novo review, we find the summary judgment evidence does not

show an absence of genuine issues as to novation, and does not show that

Bunge is entitled to judgment as a matter of law. These assignments of error

lack merit.

Evidentiary Issues

By its fourth assignment of error, Bunge urges the district court erred

in considering the plaintiffs’ affidavits, to the extent that these were

inconsistent with their discovery responses and earlier depositions, without

any explanation of why these witnesses contradicted their prior testimony.

Bunge contends that Miller and Terral gave “sham affidavits,” merely in an

effort to manufacture a genuine issue, but that no witness’s affidavit can be

used to contradict his prior deposition testimony. Row v. Pierremont Plaza

LLC, 35,796 (La. App. 2 Cir. 4/3/02), 814 So. 2d 124, writ denied, 02-1262

(La. 8/30/02), 823 So. 2d 952; Holmes v. North Texas Health Care Laundry

Coop. Ass’n, 304 F. Supp. 3d 525 (N.D. Tex. 2018).

By its fifth assignment, Bunge urges the district court erred in striking

Exhibit 38 and disregarding it in ruling on the motion for summary

judgment. Bunge concedes that a hearing transcript is not one of the items

10

listed as competent summary judgment evidence in La. C.C.P. art. 966 A(4).

However, Bunge argues that in that hearing, Agrifund’s counsel made

statements that amounted to a judicial confession, and as such are binding on

the client. La. C.C. art. 1853; C.T. Traina v. Sunshine Plaza Inc., 03-1003

(La. 12/3/03), 861 So. 2d 156; Singleton v. Bunge Corp., 364 So. 2d 1321

(La. App. 4 Cir. 1978). Bunge further argues that there is no need to show

that the other party detrimentally relied on the statement, to make it a

judicial confession. Alexis v. Metropolitan Life Ins. Co., 604 So. 2d 581 (La.

1992); Royal v. Cook, 2007-1465 (La. App. 4 Cir. 4/23/08), 984 So. 2d 156,

writ denied, 08-1133 (La. 9/19/08), 992 So. 2d 941. Bunge concludes that

had the court disallowed Miller’s and Terral’s affidavits, or allowed the

transcript of the prior hearing, or done both of these things, it would have

granted the motion for summary judgment.

The evidence admissible on a motion for summary judgment is

limited by La. C.C.P. art. 966 A(4):

The only documents that may be filed in support of or in
opposition to the motion are pleadings, memoranda, affidavits,
depositions, answers to interrogatories, certified medical
records, written stipulations, and admissions. The court may
permit documents to be filed in any electronically stored format
authorized by court rules or approved by the clerk of court.

This provision, which took effect on January 1, 2016, lists the only

documents that may be filed to support or oppose the motion for summary

judgment.2 Davis v. Hixson Autoplex of Monroe LLC, 51,991 (La. App. 2

Cir. 5/23/18), 249 So. 3d 177; Raborn v. Albea, 2016-1468 (La. App. 1 Cir.

5/11/17), 221 So. 3d 104. Items that are not listed in Art. 966 A(4), such as

transcripts of prior proceedings, are not admissible on the motion. Bryde v.

2
2015 La. Acts No. 422.
11

Lakeview Regional Med. Ctr. LLC, 19-166 (La. App. 5 Cir. 12/11/19), 284

So. 3d 686, fn. 7. Exhibit 38, a transcript of a prior hearing, is not one of the

documents on the exclusive list; moreover, Agrifund objected to it timely.

The district court did not err in excluding it. The fifth assignment of error

lacks merit.

A further refinement of the use of evidence on motion for summary

judgment is stated in La. C.C.P. art. 966 D(2), also effective January 1,

2016: “The court may consider only those documents filed in support of or

in opposition to the motion for summary judgment, and shall consider any

documents to which no objection is made.” Thus, the court is required to

consider any item on the exclusive list if the opponent does not object to it.

Davis v. Hixson Autoplex, supra; McMahon v. City of New Orleans, 2018-

0842 (La. App. 4 Cir. 9/4/19), 280 So. 3d 796, writ denied, 19-01562 (La.

11/25/19), 283 So. 3d 498. The record shows that Bunge did not object to

Miller’s and Terral’s affidavits, so the objection is waived. Moreover, we

have examined the depositions. Miller testified that Agrifund “couldn’t

simply extend the deadline or the maturity date” of the 2015 note, but it

could “take that grain [production loan] and roll it into a crop storage loan”

and, thus, “I think we could extend it.” This does not really conflict with his

statement in affidavit, “The purpose of the 2016 crop storage loan was to

extend the maturity date for the 2015 crop production loan that was not paid

at maturity.” Terral’s deposition, while less equivocal, stated that the object

was “to maintain our collateral,” even though a technical “extension” was

not possible. In short, the inconsistency is not enough to make either one a

sham affidavit. The fourth assignment of error lacks merit.

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CONCLUSION

For the reasons expressed, we deny Agrifund and Ag Resource

Management’s motion to dismiss. We convert the appeal to a writ

application, deny the writ, and remand the case for further proceedings. All

costs are to be paid by Bunge North America Inc.

MOTION TO DIMISS DENIED. APPEAL CONVERTED TO

WRIT, WRIT DENIED, AND CASE REMANDED FOR FURTHER

PROCEEDINGS.

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