Washington Mutual Bank v. Henry Charles Monticello

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

07-1018

WASHINGTON MUTUAL BANK

VERSUS

HENRY CHARLES MONTICELLO, ET AL.

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2004-1304
HONORABLE R. RICHARD BRYANT, JR., DISTRICT JUDGE

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ULYSSES GENE THIBODEAUX
CHIEF JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, and
Jimmie C. Peters, Judges.

AFFIRMED.

Aubrey Edward Denton
Aubrey E. Denton, Ltd., APLC
P. O. Drawer 52110
Lafayette, LA 70505-2110
Telephone: (337) 289-9151
COUNSEL FOR:
Defendant/Appellant - Jaime Monticello

Richard Dale Moreno
Robinson and Moreno, L.L.C.
One Lakeshore Drive - Suite 1135
Lake Charles, LA 70629
Telephone: (337) 433-9535
COUNSEL FOR:
Defendant/Appellant - Jaime Monticello

Eric James Simonson
McGlinchey Stafford PLLC
643 Magazine Street
New Orleans, LA 70130-3477
Telephone: (504) 586-1200
COUNSEL FOR:
Plaintiff/Appellee - Washington Mutual Bank

THIBODEAUX, Chief Judge.

Ms. Jaime Monticello, one of the defendants in reconvention against

Washington Mutual Bank (WMB), individually and on behalf of her minor children

(collectively referred to as Jaime Monticello), appeals the district court judgment

granting WMB’s peremptory exceptions of no right of action and no cause of action,

and consequently dismissing her claim. Jaime contends that WMB negligently

allowed a judicial sale of her parents’ seized property to proceed. Jaime asserts that

she has a right of action as well as viable causes of action against WMB because she

and her children were permanent occupants of her parents’ house, and therefore had

a property interest therein.

For the following reasons, we affirm the judgment of the district court.

I.

ISSUES

We shall consider whether:

1. the trial court erred in granting WMB’s peremptory
exception of no right of action; and

2. the trial court erred in granting WMB’s peremptory
exception of no cause of action.

II.

FACTS

Over thirty years ago, Henry Charles Monticello and his wife, Katerina

Monticello (the Monticellos) signed a promissory note of which Washington Mutual

Bank (WMB) was payee. The note was secured by a mortgage on the Monticellos’

residence located in Lake Charles, Louisiana.

In October 2003, the Monticellos defaulted on their monthly payment,

and WMB sent the Monticellos several past due notices in an attempt to collect

payment. After these efforts proved futile, WMB informed the Monticellos of its

intent to exercise its right to accelerate the promissory note, and demanded full

payment for the amounts due thereon.

Upon the Monticellos failure to make full payment, WMB filed suit on

the note to enforce the mortgage. The Monticellos were properly served. Despite

having actual knowledge of the pending suit against them, they failed to either file

any responsive pleadings or appear for the hearing to show cause. Accordingly, the

district court granted a money judgment by default against them and on behalf of

WMB, awarding WMB the outstanding principal balance due on the note; all interests

due; late charges; past and future advances; and attorney fees. These amounts totaled

$14,683.31. WMB then proceeded to record the judgment in the mortgage

conveyance records for the Parish of Calcasieu, and the Sheriff served the

Monticellos with the judgment.

After the judgment was entered against the Monticellos, WMB requested

that a writ of fieri facias be issued and that service thereof be made upon the

Monticellos. The Calcasieu Parish Sheriff executed the writ of fieri facias and seized

the property. The Sheriff also informed the Monticellos that the property was

scheduled for judicial sale on September 8, 2004.

On Saturday, September 4, 2004, a few days before the judicial sale was

scheduled to occur, the Monticellos sent $10,000.00 in certified funds to WMB to

partially cover their outstanding debt. However, this transaction was not processed

until September 8, 2004, the same day on which the judicial sale took place.

According to WMB, the transaction was not processed immediately because the

monies were sent to WMB over the long Labor Day weekend. The judicial sale took

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place on September 8, 2004, as scheduled, and Myrtis Mueller was the successful

bidder, becoming the third party purchaser of the Monticellos’ house.

In order to prevent the Monticellos from being evicted from their house

after effecting payment on their account, WMB allegedly asked Myrtis Mueller

whether she would voluntarily give up her right to acquire the property, but Ms.

Mueller refused. WMB proceeded to file a “Motion to Rescind and Set Aside

Sheriff’s Sale and for Temporary Restraining Order and Permanent Injunction”

(Motion to Set Aside the Sale) based upon equitable grounds. According to WMB,

the $10,000.00 payment made by the Monticellos was sufficient to reinstate the loan

to a current status.

At the hearing to show cause on the Motion to Set Aside the Sale, Ms.

Mueller opposed it arguing that the Monticellos failed to exercise their right to stop

the judicial sale by paying the judgment in full before the judicial sale took place.

The district court judge agreed with Ms. Mueller and denied the motion, concluding

that there was no basis in which to set aside the judicial sale.

After the district court rendered judgment, the Monticellos in

conjunction with their major daughter, Jaime Monticello, who was living at the

Monticellos’ house with their permission and consent, filed a reconventional demand

arguing that WMB acted negligently by failing to halt the judicial sale. In response

thereto, WMB filed peremptory exceptions of no right of action and no cause of

action against the claim brought by Jaime Monticello. WMB maintained that Jaime

Monticello had no remedy at law under either contract or tort law. It contended that

Jaime Monticello was unable to establish a claim under contract law because there

was no privity of contract between the parties. Likewise, WMB argued that Jaime

Monticello was unable to institute a claim based on tort because it did not owe any

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duty to her. The district court granted both of WMB’s peremptory exceptions and

dismissed Jaime Monticello’s claim.

On appeal, Jaime Monticello argues that the district court erred in

granting WMB’s peremptory exceptions, as she had a right of action against WMB

because she was a permanent occupant of the Monticellos’ residence up until the day

the property was seized. For this reason, she contends having three causes of action

against WMB, namely a cause of action predicated upon negligence; a cause of action

pursuant to the Louisiana Unfair Trade Practices and Consumers Law (LUTPA); and,

a cause of action under Thomas v. Werlein, 181 La. 104, 158 So. 683 (1935).

III.

LAW AND DISCUSSION

Standard of Review

Both peremptory exceptions of no right of action and no cause of action

pose a question of law. Accordingly, we review these exceptions de novo. See

Rowan v. Town of Arnaudville, 02-882 (La.App. 3 Cir. 12/11/02), 832 So.2d 1185.

See also Industrial Companies, Inc. v. Durbin, 02-665 (La. 1/28/03), 837 So.2d 1207.

We will review the record in its entirety to determine whether the trial court was

legally correct or legally incorrect. Citgo Petroleum Corp. v. Franz, 03-88 (La.App.

3 Cir. 6/4/03), 847 So. 2d 734, writ denied, 03-1911 (La. 10/31/03), 857 So.2d 484.

A.

Did the Trial Court Correctly Grant WMB’s
Peremptory Exception of No Right of Action?

According to Jaime Monticello, her right of action stems from La.Code

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Civ.P. arts., 6821 and 683B.2 She maintains that because she has juridical capacity

to sue on her behalf and that of her children, she then has general procedural capacity

to pursue various causes of action against WMB. This argument is misplaced. It is

noteworthy that Jaime Monticello supports her theory by invoking Articles 682 and

683B, yet she entirely overlooked Article 681 which, de jure, governs the disposition

of this question of law.

Louisiana Code of Civil Procedure Article 681 provides:

Except as otherwise provided by law, an action can be
brought only by a person having a real and actual interest
which he asserts.

Accordingly, when the facts alleged in the petition provide a remedy to someone, but

the plaintiff who seeks the relief for himself is not the person in whose favor the law

extends the remedy, the proper objection is an exception of no right of action. Cox

Cable New Orleans, Inc. v. City of New Orleans, 624 So.2d 890 (La.1993). This

exception is used to determine whether the plaintiff belongs to the class of persons

to whom the law grants the cause of action asserted in the suit. Glod v. Baker, 02-988

(La.App. 3 Cir.), 851 So.2d 1255, writ denied, 03-2482 (La. 11/26/03), 860 So.2d

1135. For this reason, “in order to participate in the lawsuit, a party must have an

actionable right–i.e., an interest of which a court may take cognizance.” State v.

Danzy, 87-210 (La.App. 3 Cir. 1988), 527 So.2d 68, 70, writ denied, 528 So.2d 153

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Art. 682. Individuals Having Procedural Capacity

A competent major and a competent emancipated minor have the
procedural capacity.
2
Art. 683. Unemancipated Minor

....

B. Except as otherwise provided in article 4431, the tutor
appointed by a court of this state is the proper plaintiff to sue to
enforce a right of an unemancipated minor, when one or both parents
are dead, the parents are divorced or judicially separated, or the minor
is born outside of marriage.

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(La.1988). From this principle follows the corollary that a party has an actionable

right, and consequently standing, if “it can be said that the plaintiff has a legally

protectable and tangible stake in the litigation.” Citizen Comm. for Better Law

Enforcement v. City of Lafayette, 95-1630 (La.App. 3 Cir. 11/20/96) 685 So.2d 289,

290, writ denied, 96-3087 (La. 2/7/97), 688 So.2d 507 (citation omitted).

Merely stating that Jaime Monticello was a permanent occupant of the

Monticellos’ house is insufficient to establish she had a legally protectable and

tangible stake in the litigation. Jaime Monticello was unable to establish that she had

an interest in the property because she did not prove a contractual relationship with

WMB, an ownership or leasehold interest in the property, or even a right to possess

the property after foreclosure, notwithstanding that “evidence is admissible on the

trial of an exception of no right of action to ‘support or controvert any of the

objections pleaded, when the grounds therefor do not appear from the petition.’”

Industrial Co., Inc., 837 So.2d at 1216 (citing La.Code Civ.P. art. 931).

Jaime Monticello’s inability to prove she had a legal interest in the

property is clearly attributable to the fact that she was simply living at the

Monticellos’ residence because of their goodwill. Permission or consent to occupy

a property, by and of itself, does not create a legally recognizable interest in the

property. The trial court correctly granted the exception of no right of action because

Jaime Monticello did not have an interest in the property, and, therefore, she did not

belong to the class of persons to whom the law affords the cause of action or remedy

asserted on the reconventional demand.

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B.

Did the Trial Court Correctly Grant WMB’s
Peremptory Exception of No Cause of Action?

“The function of the peremptory exception of no cause of action is to

question whether the law extends a remedy against the defendant to anyone under the

factual allegations of the petition.” Cleco Corp. v. Johnson, 02-17, p. 3 (La.

11/29/01), 795 So.2d 302, 304 (citation omitted). The purpose of the exception of no

cause of action is to determine the legal sufficiency of the petition. Barrie v. V.P.

Exterminators, Inc., 625 So.2d 1007 (La.1993). The exception is tried on the face of

the pleadings and the court accepts the facts alleged in the petition as true,

determining whether the law affords relief to plaintiff if those facts are proved at trial.

Id. If the grounds of the objection raised through the exception cannot be removed,

or if the plaintiff fails to comply with the order to amend, the action, claim, demand,

issue, or theory shall be dismissed. La.Code Civ.P. art. 934.

In this case, we will individually address each of the three causes of

actions alleged by Jaime Monticello on appeal to determine whether the trial court

correctly granted the exception of no cause of action in favor of WMB.

i.

Does Jaime Monticello have a Cause of Action
Predicated on Tort Law?

In negligence cases, Louisiana courts apply the duty-risk analysis to

determine whether liability exists.

This approach provides an analytical framework for
evaluation of liability. One analysis requires proof by the
plaintiff of five separate elements: (1) the defendant had a
duty to conform his conduct to a specific standard (the duty
element); (2) the defendant’s conduct failed to conform to
the appropriate standard (the breach element); (3) the
defendant’s substandard conduct was a cause in fact of the

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plaintiff’s injuries (the cause-in-fact element); (4) the
defendant’s substandard conduct was a legal cause of the
plaintiff’s injuries (the scope of liability or scope of
protection element); and (5) the actual damages (the
damages element).

La Pac Mfg. v. TCM Mfg., 06-748, p. 6 (La.App. 3 Cir. 12/6/06), 944 So.2d 831, 835-

36, (citing Lemann v. Essen Lane Daiquiris, Inc., 05-1095, p. 7 (La. 3/10/06), 923

So.2d 627, 632-33 (citations omitted)).

In this case, we find that there was no negligence on the part of WMB

because the element of duty is lacking, and “[a] negative answer to any of the

inquiries of the duty risk analysis results in a determination of no liability.” Id.

“The existence of the duty is clearly a question of law. The inquiry is

whether the plaintiff has any law (statutory, jurisprudential, or arising from general

principles of fault) to support a claim.” Nicholson v. Calcasieu Parish Police Jury,

96-314 (La.App. 3 Cir. 12/11/96), 685 So.2d 507, 511 (citations omitted). Jaime

Monticello cites La.Code Civ.P. art. 2751 and Secor Bank v. Hackle, 94-158 (La.App.

4 Cir. 10.27/94), 644 So.2d 1138, 1142-1143 as sources of the duty owed by a seizing

creditor. She argues that WMB, as a seizing creditor, had a high duty to comply with

statutory requirements and phrases the said duty as follows:

[the] [e]xecutory process has many technical requirements
that must be observed scrupulously, and it is one of the few
areas of law wherein there is a rational basis for giving
form precedence over substance. Seizure pursuant to
executory process is wrongful if the procedure required by
law for an executory proceeding has not been followed
(citations omitted).

We find that reliance on these authorities is misplaced. These

propositions are properly invoked when the procedural aspect of the seizure is being

challenged. The question of procedural sufficiency in this case was addressed before

the trial judge at the hearing between Myrtis Mueller and WMB on the Motion to Set

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Aside the Sale. At the hearing, after hearing both arguments, the trial judge

concluded that the judicial sale conformed with all procedural requirements and,

therefore, lacked any procedural defect which would justify setting it aside. We

agree.

No one is disputing that WMB, in all likelihood, owed a duty to the

Monticellos to conduct due diligence to prevent the improper sale of their residence

if, indeed, the house note was paid by the terms agreed upon between the Monticellos

and WMB prior to the judicial sale. However, the question here is whether that duty

extended to Jaime Monticello. In our view, it did not. We have not found any

positive law or jurisprudence imposing a duty on mortgagees whereby they have to

make sure that all permanent occupants of a house have a roof over their heads in the

event of wrongful foreclosure, despite not having any legal interest in the property.

ii.

Does Jaime Monticello have a Cause of Action pursuant to the
Louisiana Unfair Trade Practices and Consumer Law (LUTPA)?

Jaime Monticello, without indicating how LUTPA affords her a remedy

at law, advances the conclusory statement that “numerous cases also affirm a cause

of action under the Louisiana Unfair Trade Practices Act for wrongful foreclosure or

seizure.” In response to this assertion, WMB maintains that this claim was raised for

the first time on appeal, and “since the appellant’s newly-minted LUTPA claim was

not raised before the trial court, ‘it is inappropriate for consideration by this court.’”

In support thereof, WMB cites Hargett v. Hargett, 00-799 (La.App. 3 Cir. 12/6/00),

9

772 So.2d 999 (citation omitted) and the Uniform Rules–Courts of Appeal, Rule 1–3.3

In our view, WMB’s argument lacks merit.

First, this case is clearly distinguishable from Hargett because there the

defendant attacked the sufficiency of the facts pleaded by the plaintiff, whereas here

WMB is not attacking the sufficiency of the facts pleaded by Jaime Monticello.

Rather, it is attacking the timeliness in which the LUTPA claim was raised. For this

reason, this legal proposition is misplaced and does not govern the disposition of this

case. Instead, we analyze it under Industrial Co., Inc., supra.

In Industrial Co., Inc., the Louisiana Supreme Court, in discussing the

exception of no cause of action, stated that “a petition should not be dismissed for

failure to state a cause of action unless it appears beyond doubt that the plaintiff can

prove no set of facts in support of any claim which would entitle him to relief.” Id.

(Emphasis supplied). Therefore, even though Jaime Monticello did not raise the

LUTPA claim at the trial level, our court has the authority to entertain it, particularly

since we are conducting a de novo review of these exceptions.

As stated before, the trial court’s grant of an exception of no cause of

action is reviewed de novo. Industrial Co., Inc., 837 So.2d 1207. In a de novo

review, “the appellate court is at liberty to make an independent decision based on the

record evidence.” Bujol v. Entergy Servs., Inc., 03-492, p. 11 (La. 5/25/04), 922

So.2d 1113, 1144, Fn. 1. When an exception of no cause of action is raised, “[t]he

question is whether, in the light most favorable to the plaintiff, the petition states any

3
Rule 1–3. Scope of Review

The Scope of Review in all cases within the appellate and supervisory
jurisdiction of the Courts of Appeal, shall be as provided by LSA-
Const. Art. 5 Sec. 10(B), and as otherwise provided by law. The
Courts of Appeal will review only issues which were submitted to the
trial court and which were contained in specifications or assignments
of error, unless the interest of justice clearly requires otherwise.

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valid cause of action for relief. . . . [Citations omitted.]” Crosby v. Stinson, 33-628,

p. 3 (La.App. 2 Cir. 8/23/00), 766 So.2d 615, 617. In these instances, appellate courts

can look at the petition to determine if the facts stated therein afford the plaintiff any

sound cause of action, regardless of whether or not the newly raised cause of action

was brought before the trial court.

In this situation, Jaime Monticello is precluded from suing WMB

because she does not have a legal interest in the property. But, assuming, arguendo,

that Jaime Monticello had a legal interest in the said property, she still would not be

able to sue WMB on LUTPA grounds.

The Louisiana Unfair Trade Practices and Consumer
Protection Act (LUTPA) states that “[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce are hereby declared
unlawful. La.R.S. 51:1405. It confers a right of action on
any person who “suffers any ascertainable loss of money or
movable property, corporeal or incorporeal,” for actual
damages resulting from unfair trade practices, in addition
to court costs and attorney fees. La.R.S. 51:1409. . . .
Except for the Louisiana First Circuit Court of Appeals,
Louisiana Courts, both state and federal, have uniformly
held the personal right of action granted under LUTPA
applies only to direct consumers or to business
competitors.

Vermillion Hosp., Inc. v. Patout, 05-82, p. 3-4 (La.App. 3 Cir. 6/8/05), 906 So.2d 688,

691-92.

Accordingly, to have standing under LUTPA, Jaime Monticello must

show that she was either a direct consumer or a business competitor of WMB. A

“consumer” is defined in the statute as “any person who uses, purchases, or leases

goods or services.” La.R.S. 51:1402(1). Alternatively, to be considered a “business

competitor,” “[the plaintiff] must establish [she] engages in business that competes

directly or indirectly with the defendant as a business competitor.” Vermillion Hosp.,

Inc., 902 So.2d at 692.

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Jaime Monticello’s petition does not suggests that she is a direct

consumer of WMB. Her parents, not her, were the ones who signed the promissory

note of which WMB was payee. Similarly, Jaime Monticello is unable to establish

she is a business competitor of WMB. Consequently, Jaime Monticello lacks

standing to pursue an action under LUTPA.

iii.

Does Jaime Monticello have a remedy
under Thomas v. Werlein?4

Jaime Monticello argues that under Thomas v. Werlein, 181 La. 104, 158

So. 635 (1935), she is entitled to damages. Her interpretation of Thomas is sweeping

and without merit; accordingly, we disagree.

In Thomas, the plaintiff, a widow, sued the defendant on her behalf and

that of her children alleging that the defendant, through its agents, had wrongfully and

fraudulently removed from her home a radio-phonograph which was purchased by her

deceased husband. Jaime Monticello asserts that pursuant to Thomas, “for 70 years,

Louisiana courts have recognized a claim for damages to the non-owning spouse over

the loss by wrongful seizure of a mere phonograph” and, therefore, she is entitled to

damages thereunder.

Jaime Monticello’s sweeping reading of this case fails to notice that at

the end of the opinion the court mentions that the plaintiffs were awarded damages

“under their transmitted rights.” Id. By virtue of these “transmitted rights,” the

plaintiffs were able to sue the defendant and recover damages because, by operation

of law, they had an ownership interest in the radio-phonograph. In contrast, Jaime

4
181 La. 104, 158 So. 635 (1935).

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Monticello does not have any legal interest in the Monticellos’ property, transmitted

or otherwise, and as a result she is precluded from suing WMB.

IV.

CONCLUSION

For the foregoing reasons, we affirm the judgment of the trial court

granting WMB’s peremptory exceptions of no right of action and no cause of action

against Jaime Monticello.

AFFIRMED.

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