AG Res. Mgmt., LLC. v. Bunge N. Am., Inc.

293 So.3d 1179

AG RESOURCE MANAGEMENT, LLC. and Agrifund, LLC, Plaintiffs-Appellees

v.BUNGE NORTH AMERICA, INC. and Danny Allen Dickerson, Defendants-Appellants

No. 53,417-CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered March 4, 2020.

WIENER, WEISS & MADISON By: R. Joseph Naus, Shreveport, Patrick L. McCune, HUSCH BLACKWELL, LLP, By: Marshall C. Turner, Jamie H. Steiner, Denver, Counsel for Defendant-Appellant Bunge North America, Inc.

DANNY ALLEN DICKERSON, In Proper Person

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

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 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. 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 926 ; 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 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 (5th Cir. 2016) ; In re Barnett Marine Inc. , 343 B.R. 561 (E.D....