Nationstar Mortgage, LLC v. Richard D. Schales A/K/A Richard Dewy Schales

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

18-439

NATIONSTAR MORTGAGE, LLC

VERSUS

RICHARD D. SCHALES A/K/A RICHARD DEWY SCHALES

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF IBERIA, NO. 124893
HONORABLE GREGORY P. AUCOIN, DISTRICT JUDGE

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JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Billy H. Ezell, and Candyce G. Perret, Judges.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

Jessica Michelle Vasquez
Attorney at Law
400 Poydras Street, Suite 900
New Orleans, LA 70130
(504) 571-9582
COUNSEL FOR DEFENDANT/APPELLANT:
Richard Schales

Angelina Christina
Akerman LLP
909 Poydras Street, Suite 2000
New Orleans, LA 70112
(504) 584-9105
COUNSEL FOR PLAINTIFF/APPELLEE:
Nationstar Mortgage, LLC

SAUNDERS, Judge.

This is a case involving a mortgagee using executory process against a

mortgagor and the propriety of a mortgagor’s response by bringing a reconventional

demand alleging damages. Further, the issue is whether the trial court properly

dismissed the mortgagor’s claims with prejudice rather than allowing the mortgagor

to cure the defects or severing the claims.

After a hearing in which neither the mortgagor nor his attorney were present,

the trial court granted the mortgagee’s motion to strike the mortgagor’s

reconventional demand for damages and all dilatory and peremptory exceptions filed

by the mortgagee. This resulted in the dismissal, with prejudice, of all claims

asserted by the mortgagor. Thereafter, the mortgagor filed a motion for new trial on

the matters, which was denied. This appeal follows.

FACTUAL AND PROCEDURAL HISTORY:

Appellant, Richard Dewy Schales, executed a $70,000.00 promissory note in

favor of New South Federal Savings Bank on March 20, 2003. The note is secured

by a mortgage encumbering the property located at 2112 Kramer Drive, New Iberia,

Louisiana. New South indorsed the note to Countrywide Home Loans. Countrywide

indorsed the note in blank and delivered the original note to Appellee, Nationstar

Mortgage, LLC.

A dispute arose between Schales and Nationstar regarding the proper monthly

payment amount and the process by which Schales was allowed to obtain

homeowner’s insurance in early 2013. Nationstar contends that Schales defaulted

on his obligation under the note and mortgage by failing to pay his November 1,

2014 monthly installment and failed to cure that failure to pay over the next ten

months. Schales contends that he timely and consistently paid the agreed-upon note

and that his property was improperly placed into a foreclosure proceeding due to the

fault of Nationstar during the time the mortgage was transferred from Bank of

America to it in early 2013.

On August 13, 2014, Nationstar filed a verified petition for executory process

attaching the original note, indorsed in blank, a certified copy of the mortgage, and

a copy of the assignment. On August 19, 2014, the trial court found Nationstar

entitled to issuance of writ of seizure and sale and the use of executory process based

on the petition and attached exhibits. The Iberia Parish clerk of court issued a writ

of seizure and sale over the property, and the sheriff recorded a notice of seizure.

On December 18, 2014, Schales filed a petition for preliminary injunction,

temporary restraining order, and a reconventional demand for damages against

Nationstar. The claims set forth in the reconventional demand were for wrongful

foreclosure, negligence, due process, conversion, breach of fiduciary duty, violation

of the Louisiana Unfair Trade Practices Act, and violation of the Fair Debt

Collections Act.

On November 28, 2016, at the behest of Nationstar, an order was signed by

an Iberia Parish judge cancelling the seizure notice because the property described

in the seizure notice was not the same property encumbered by the mortgage.

According to Nationstar, to date, Schales’ property has not been seized and is not

subject to sale.

On June 14, 2017, Nationstar filed a motion to strike Schales’ reconventional

demand, the dilatory exceptions of unauthorized use of summary procedure,

improper cumulation of actions, and improper use of executory process, and the

peremptory exceptions of no cause of action and prescription. Schales filed no

opposition to these filings by Nationstar.

On September 12, 2017, the trial court heard Nationstar’s motion and

exceptions. Neither Schales nor his attorney attended the hearing.
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After the hearing, the trial court granted all of Nationstar’s exceptions.

Further, the trial court granted Nationstar’s motion striking all claims asserted by

Schales. As a result, the trial court dismissed all of Schales’ claims with prejudice.

On September 26, 2017, once Schales allegedly learned of the judgment, he

filed a pro se motion for new trial and hired new counsel. On December 20, 2017,

the trial court denied Schales’ motion for new trial. It is from these judgments that

Schales presents six assignments of error.

ASSIGNMENTS OF ERROR:

1. The trial court erred in granting Nationstar’s Exceptions of

Unauthorized Executory Proceedings.

2. The trial court erred in granting Nationstar’s Exceptions of

Unauthorized Summary Proceedings.

3. The trial court erred by granting summary Nationstar’s Motion to Strike

Reconventional Demand.

4. The trial court erred by granting Nationstar’s Exceptions of Improper

Cumulation.

5. The trial court erred in granting Nationstar’s Exceptions of No Cause

of Action.

6. The trial court erred in sua sponte dismissing all remaining causes of

action.

ASSIGNMENT OF ERROR NUMBER ONE:

Schales’ first assignment of error is that the trial court erred in granting

Nationstar’s Exception of Unauthorized Use of Executory Proceedings. We find no

error in granting the exception.

“Executory proceedings are those which are used to effect the seizure and sale

of property, without previous citation and judgment, to enforce a mortgage or
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privilege thereon evidenced by an authentic act importing a confession of judgment,

and in other cases allowed by law.” La.Code Civ.P. art. 2631. “Defenses and

procedural objections to an executory proceeding may be asserted either through an

injunction proceeding to arrest the seizure and sale as provided in Articles 2751

through 2754, or a suspensive appeal from the order directing the issuance of the

writ of seizure and sale, or both.” La.Code Civ.P. art. 2642(A). “The defendant in

the executory proceeding may arrest the seizure and sale of the property by

injunction when the debt secured by the security interest, mortgage, or privilege is

extinguished, or is legally unenforceable, or if the procedure required by law for an

executory proceeding has not been followed.” La.Code Civ.P. art. 2751.

In this case, Schales filed a reconventional demand seeking, inter alia,

damages, penalties, and attorney’s fees in response to Nationstar’s instituted claims

under executory process. This reconventional demand is an incidental action in

response to a petition filed using executory process. “The mode of procedure

employed in the incidental action shall be the same as that used in the principal action,

except as otherwise provided by law.” La.Code Civ.P. art. 1036(B). As such,

Schales’ filing of a reconventional demand against Nationstar alleging damages and

entitlement to penalties and attorney’s fees is not proper use of executory

proceedings. Accordingly, we find no error by the trial court in granting Nationstar’s

Exceptions of Unauthorized Executory Proceedings.

ASSIGNMENT OF ERROR NUMBER TWO:

In his second assignment of error, Schales asserts that the trial court erred in

granting Nationstar’s Exception of Unauthorized Use of Summary Proceedings. We

find no error by the trial court in granting the exception.

“Summary proceedings are those which are conducted with rapidity, within

the delays allowed by the court, and without citation and the observance of all the
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formalities required in ordinary proceedings.” La.Code Civ.P. art. 2591. Summary

proceedings may be used only in those matters in which the law permits them to be

used. La.Code Civ.P. art. 2592. Louisiana Code of Civil Procedure Article 926(A)(3)

provides for the dilatory exception of unauthorized use of a summary proceeding.

Here, Schales filed a reconventional demand against Nationstar seeking

damages, penalties, and attorney’s fees. Schales points to no law, nor does one exist

in this State, that a summary proceeding may be used to adjudicate a reconventional

demand for damages. Accordingly, we find no error by the trial court in granting

Nationstar’s Exception of Unauthorized Use of Summary Proceedings.

ASSIGNMENT OF ERROR NUMBER FOUR:

We address this assignment prior to Assignment of Error Number Three due

to the similarities with Assignments of Error Numbers One and Two. In his fourth

assigned error, Schales asserts that the trial court erred by granting Nationstar’s

Exception of Improper Cumulation. We disagree with this assertion.

A plaintiff may cumulate against the same defendant two or more
actions even though based on different grounds, if: 1) each of the
actions cumulated is within the jurisdiction of the court and is brought
in the proper venue; and 2) all of the actions cumulated are mutually
consistent and employ the same form of procedure. La.Code Civ.P. art.
462.

The requirement that all of the actions employ the same form of
procedure refers merely to whether each of the cumulative actions
employ either ordinary, executory or summary procedure. See La.Code
Civ.P. art. 463, comment (a); Johnson v. Marvin Cutrer Contractor,
Inc., 348 So.2d 1256 (La.App. 2nd Cir.1977); Tate, Work of the
Appellate Courts-1968-1969, 30 La.L.Rev. 286, 287 (1969).

Abadie v. Cassidy, 581 So.2d 657, 657 (La.1991).

When the court lacks jurisdiction of, or when the venue is
improper as to, one of the actions cumulated, that action shall be
dismissed.

When the cumulation is improper for any other reason, the court
may: (1) order separate trials of the actions; or (2) order the plaintiff to
elect which actions he shall proceed with, and to amend his petition so
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as to delete therefrom all allegations relating to the action which he
elects to discontinue. The penalty for noncompliance with an order to
amend is a dismissal of plaintiff’s suit.
La.Code Civ.P. art. 464.

The grant of a dilatory exception of improper cumulation is a final judgment

subject to a manifest error standard of review. Dietz v. Superior Oil Co., 13-657

(La.App. 3 Cir. 12/11/13), 129 So.3d 836.

Here, Schales’ claims against Nationstar are improperly cumulated because

they do not employ the same form of procedure, as we found above. Schales’ request

for a preliminary injunction employs executory or summary procedure while his

claims for damages employ ordinary procedure. Thus, we find it reasonable for the

trial court to grant Nationstar’s exception of improper cumulation.

ASSIGNMENT OF ERROR NUMBER THREE:

Next, Schales contends that the trial court erred by granting Nationstar’s

Motion to Strike Reconventional Demand. We find merit to this contention.

A motion to strike is provided for in La.Code Civ.P. art. 964, which
states, “[t]he court on motion of a party or on its own motion may at
any time and after a hearing order stricken from any pleading any
insufficient demand or defense or any redundant, immaterial,
impertinent, or scandalous matter.” Motions to strike are viewed with
disfavor and are infrequently granted. Federal Deposit Ins. Corp. v.
Niblo, 821 F.Supp. 441 (N.D.Tex.1993). It is disfavored because
striking a portion of a pleading is a drastic remedy, and because it is
often sought by the movant simply as a dilatory tactic. Id. A motion to
strike is only proper if it can be shown that the allegations being
challenged are so unrelated to a plaintiff’s claims as to be unworthy of
any consideration and that their presence in the pleading would be
prejudicial to the moving party. Id. “A motion to strike is not an
authorized or proper way to procure the dismissal of a complaint or a
cause of action.” Pitre v. Opelousas Gen. Hosp., 530 So.2d 1151, 1162
(La.1988); see also, Bellah v. State Farm Fire and Cas. Ins. Co., 546
So.2d 601 (La.App. 3 Cir.1989) and Adams v. New Orleans Blood Bank,
Inc., 343 So.2d 363 (La.App. 4 Cir.1977). A court must deny a motion
to strike if there is any question of fact or law. Federal Deposit Ins. Co.,
821 F.Supp. 441.

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Hazelwood Farm, Inc. v. Liberty Oil and Gas Corp.¸ 01-345, pp. 6-7 (La.App. 3 Cir.

6/20/01), 790 So.2d 93, 98, writ denied, 01-2115 (La. 7/26/01), 794 So.2d 834

(alteration in original).

Much like the case before us, our fifth circuit court, in Bank of America, N.A.

v. Erazo, 13-153 (La.App. 5 Cir. 10/9/13), 128 So.3d 383, dealt with a mortgagee

filing for a preliminary and/or permanent injunction and making a reconventional

demand against the mortgagor for damages. Our fifth circuit affirmed the grant of

the mortgagor’s motion to strike the mortgagee’s reconventional demand. However,

despite technically affirming the motion to strike (which this court does not agree

was proper), the court went on to rule that the trial court erred by dismissing the

mortgagee’s reconventional demand for damages and ordered that the

reconventional demand be severed from the executory proceedings. As such, the

case was remanded for further proceedings on the mortgagee’s claims in his

reconventional demand. In making its ruling, our fifth circuit cited Mortgage

Electronic Registration Systems, Inc. v. Wells, 05-795 (La.App. 4 Cir. 4/5/06), 930

So.2d 117, as well as Deutsche Bank Trust Co. America v. Ochoa, 12-800 (La.App.

5 Cir. 5/23/13), 120 So.3d 735, and Bank of New York Mellon v. Smith, 11-60

(La.App. 3 Cir. 6/29/11), 71 So.3d 1034, writ denied, 11-2080 (La. 11/18/11), 75

So.3d 462 (where this court opines that under La.Code Civ.P. art. 464, if cumulation

is improper, the trial court should sever, not dismiss claims.)

Given the actual result of our sister court’s case and the standard as stated in

Hazelwood Farm, Inc., 790 So.2d 93, we find that it was not proper for the trial court

to grant Nationstar’s motion to strike to dismiss Schales’ reconventional demand in

its entirety, especially with prejudice. However, because the the trial court was silent

as to why it dismissed Schales’ reconventional demand claims, we must still

deliberate the grant of Nationstar’s peremptory exceptions in order to determine
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whether Schales’ claims against Nationstar were, perhaps, properly dismissed with

prejudice.

ASSIGNMENT OF ERROR NUMBER FIVE:

Schales’ fifth assignment of error is that the trial court erred in granting

Nationstar’s Exceptions of No Cause of Action. We agree.

Our supreme court, in Ramey v. DeCaire, 03-1299, pp. 7-8 (La.3/19/04), 869

So.2d 114, 118-19 (citations omitted), stated the following:

A cause of action, when used in the context of the peremptory
exception, is defined as the operative facts that give rise to the
plaintiff’s right to judicially assert the action against the defendant. The
function of the peremptory exception of no cause of action is to test the
legal sufficiency of the petition, which is done by determining whether
the law affords a remedy on the facts alleged in the pleading. No
evidence may be introduced to support or controvert an exception of no
cause of action. Consequently, the court reviews the petition and
accepts well-pleaded allegations of fact as true. The issue at the trial of
the exception is whether, on the face of the petition, the plaintiff is
legally entitled to the relief sought.

Louisiana has chosen a system of fact pleading. Therefore, it is
not necessary for a plaintiff to plead the theory of his case in the petition.
However, the mere conclusions of the plaintiff unsupported by facts
does not set forth a cause of action.

The burden of demonstrating that the petition states no cause of
action is upon the mover. In reviewing the judgment of the district court
relating to an exception of no cause of action, appellate courts should
conduct a de novo review because the exception raises a question of law
and the lower court’s decision is based solely on the sufficiency of the
petition. The pertinent question is whether, in the light most favorable
to plaintiff and with every doubt resolved in plaintiff’s behalf, the
petition states any valid cause of action for relief.

In this case, Nationstar contends that none of the items alleged in Schales’

reconventional demand state a cause of action. Schales’ reconventional demand

listed a multitude of allegations including damages for wrongful foreclosure,

negligence, due process, conversion, breach of fiduciary duty, violation of the

Louisiana Unfair Trade Practices Act, and violation of the Fair Debt Collections Act.

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Nationstar asserts that the Louisiana Unfair Trade Practices Act and the Fair Debt

Collections Act acts do not apply to it.

When considering an exception of no cause of action, courts have “developed

a general rule against maintaining an exception of no cause of action in part. If the

petition states a cause of action as to any ground or portion of the demand, the

exception of no cause of action generally should be overruled.” Everything on

Wheels Subaru, Inc. v. Subaru S., Inc., 616 So.2d 1234, 1236 (La.1993).

In Everything on Wheels Subaru, Inc., the supreme court
formulated two general rules concerning the granting of partial
judgments on exceptions of no cause of action. The rule applicable to
the case at hand was explained as follows:

If there are two or more items of damages or
theories of recovery which arise out of the operative facts
of a single transaction or occurrence, a partial judgment
on an exception of no cause of action should not be
rendered to dismiss one item of damages or theory of
recovery. In such a case, there is truly only one cause of
action, and a judgment partially maintaining the exception
is generally inappropriate.

Id. at 1239 (emphasis added) (footnote omitted).

McDonald v. Zapata Protein (USA), Inc., 97-10, p. 3 (La.App. 3 Cir. 4/30/97), 693

So.2d 296, 298.

Here, we find that Schales’ claims in his reconventional demand arise of a

single transaction or occurrence. Thus, regardless of whether Nationstar is correct

regarding the inapplicability to it of the Louisiana Unfair Trade Practices Act and

the Fair Debt Collections Act, if Schales’ reconventional demand alleged other

actionable claims, Nationstar’s exception of no cause of action must fail.

“A party aggrieved by the wrongful seizure is entitled to recover not only

special damages caused him thereby, but also general damages (if proven) by way

of mortification, humiliation, mental worry, etc. caused by this intentional violation

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of his property rights.” Nassau Realty Co., Inc. v. Brown¸ 332 So.2d 206, 211

(La.1976) (citations omitted) (parenthetical in original).

Shales’ reconventional demand consists of over one hundred and thirty

paragraphs, and reads, “The seizure of the Subject Property by Nationstar was

wrongful. The wrongful seizure of the Subject Property by [Nationstar] has caused

the Shales to suffer damages, including attorneys’ fees and costs, in an amount to be

proven at the trial of the permanent injunction.” Thereafter, Shales alleges the

following:

Petitioner fears that during the pendency of these proceedings,
the sheriff will proceed with the said sale and that immediate and
irreparable injury and/or loss and/or damage will result to petitioner
thereby all to her prejudice and it is, therefore, necessary that a
temporary restraining order in the form and substance of the injunction
mentioned above issue herein enjoining and restraining the Sheriff of
the Parish of St. Tammany from proceeding with the sale of the
property described herein.

In reviewing his reconventional demand, we find that Shales states a cause of

action against Nationstar for wrongful seizure and/or for an injunction enjoining the

sale of his property. Accordingly, we reverse the trial court’s blanket dismissal, with

prejudice, of all of Schales’ claims against Nationstar based on a finding of no cause

of action.

ASSIGNMENT OF ERROR NUMBER SIX:

Shales’ final assignment of error is that the trial court erred in sua sponte

dismissing all remaining causes of action. We agree.

The only remaining matter raised by Nationstar in its response to Schales’

reconventional demand is that of Nationstar’s peremptory exception of prescription.

Nationstar’s contends that Schales’ claims were prescribed on the face of his

petition-in-reconvention. As such, according to Nationstar, the burden shifted to

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Schales to demonstrate why his claims did not prescribe, and he failed to do so by

not even contesting the exception.

Our review of the record is that Nationstar filed its petition for executory

process on August 13, 2014. Schales filed his petition for preliminary injunction,

temporary restraining order, and reconventional demand for damages on December

18, 2014. This is clearly within one year of the Nationstar’s initial pleading. Thus,

Nationstar’s claim that Schales’ petition was prescribed on its face is unfounded.

Accordingly, we find merit to this assignment of error. Any dismissal of

Schales’ reconventional demand based on prescription on the face of the pleading is

reversed.

CONCLUSION:

Richard Dewy Schales alleges six assignments of error. The crux of these

assignments is whether the trial court was proper in dismissing, with prejudice,

Schales’ petition for preliminary injunction, temporary restraining order, and his

reconventional demand for damages against Nationstar. Rather, according to

Schales, the trial court erred in not giving him the opportunity to cure the issues by

either ordering Schales to amend his pleadings or ordering that those offending

claims be severed and assigning them a different docket number.

We do find that the trial court correctly granted Nationstar Mortgage, LLC’s

dilatory exceptions and motion to strike. However, we agree with Schales’ position

regarding the result of the grant of those exceptions and motion. As such, we find

that the trial court erred in dismissing Schales’ claims rather than ordering that the

improperly cumulated claims be severed and assigned a new docket number or

ordering that Schales amend his pleadings to conform to proper procedure. As such,

we reverse the trial court’s dismissal of Schales’ claims with prejudice and remand

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the case for further proceedings consistent with this opinion. Costs are assessed to

Nationstar Mortgage, LLC.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

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