author: BROWN, Chief Judge. MOORE, J.,

text:
    Amanda Fontenot MATHEWS, Plaintiff-Appellee v. Jennifer Lynn EMERSON, O’Brien Duke and Kevin Michael Duke, Defendants-Appellants.
    No. 48,887-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 23, 2014.

      Kevin W. Hammond, for Appellants.
    Amanda Fontenot Mathews, Pro Se.
    Before BROWN, WILLIAMS, MOORE, LOLLEY, and GARRETT, JJ.
   BROWN, Chief Judge.

|! Plaintiff, Amanda Fontenot Mathews, brought this action to reform a cash sale deed to include a mineral reservation. Finding mutual error, the trial court reformed the cash sale deed to include a mineral reservation in favor of plaintiff. Defendant, Jennifer Lynn Emerson O’Brien Duke, has appealed. We affirm.

Facts

Amanda purchased a two-acre lot next to one owned by her mother in the Woolworth subdivision in DeSoto Parish, Louisiana. On February 20, 2004, plaintiff executed a mineral lease, with a no surface operations clause, with JPD Energy, Inc. A pooled unit was created, and producing wells were drilled in the unit at the Cotton Valley level. Amanda received royalties regularly which she used to pay her house note. Also, because she was at school, she rented the house.

In September of 2006, Amanda listed the property with Realty Executives and wrote on the listing agreement “mineral rights reserved.” The official MLS listing showed that the mineral rights were to be reserved. Defendant purchased the property as her separate and paraphernal property on April 24, 2007. The deed made no mention of a mineral reservation. Prior to the purchase, plaintiff executed a “property disclosure document for residential real estate.” This disclosure statement consisted of seven pages and included a paragraph with two check marks signifying “rights vested [ ¿with others.” An explanatory notation at the bottom of the page contained the writing “pipeline runs through property, mineral rights reserved-long term lease.” On April 3, 2007, both plaintiff and defendant initialed the bottom of each page of the seven-page disclosure statement and signed on the last page. Thereafter, defendant’s realtor drafted an offer, in the form of a buy/sell agreement, to purchase the property for less than the listed price. The property was listed for $125,000 with a mineral reservation. Defendant’s offer was for $113,500. Defendant signed the offer on April 3, 2007, and Amanda accepted it on April 4, 2007. Although the buy/sell agreement did not mention a mineral reservation, it did contain wording that the “purchaser does acknowledge receipt of the seller’s property condition statement.” As stated, the disclosure statement included the wording “mineral rights reserved-long term lease.”

At closing, plaintiff was presented with a cash sale deed drafted pursuant to defendant’s realtor’s instructions. Admittedly plaintiff did not read the deed; however, Amanda specifically asked whether her minerals were reserved. Her realtor and the closing agent (in brief defendant refers to a “closing attorney”) assured plaintiff that the minerals were reserved. The closing agent/attorney did not testify at trial. At trial neither defendant nor defendant’s realtor could remember whether the minerals were discussed.

Plaintiffs mother testified that she was involved in the process, except that she was not present when the deed was executed. She testified, as did plaintiffs realtor, that the minerals were to be reserved was clearly stated to everyone and that no one objected to or questioned this reservation.

laFor approximately two years after the sale, Amanda continued to receive the mineral royalties without resistance or objection from defendant. In her testimony, defendant indicated that she could see the wells from the back of her house. At no time, until after being contacted by plaintiff, did Jennifer assert ownership of the minerals.

In the summer of 2008, the Haynesville Shale came into play and issues arose concerning the deeper mineral rights below the Cotton Valley formation. At this time, plaintiff learned that the deed did not include a mineral reservation. Amanda and her mother contacted defendant by phone and informed defendant of the error. In that conversation Jennifer expressed concern about a possible right-of-access across the property. At trial Jennifer did not recall these conversations. Plaintiff sent a Mend, Chris Procell, who was a landman, to speak with defendant to explain the process if access was sought. Procell also brought an act of correction concerning the minerals. According to Procell, Jennifer admitted that the minerals were to be reserved but this reservation did not get into the deed.

Defendant sent the document to her mother who worked for a law firm in New Orleans. After hearing from her mother, Jennifer refused to sign the act of correction and claimed ownership of the minerals. Plaintiff then filed suit seeking reformation of the deed. At the conclusion of trial, the district court took the matter under advisement and later issued a lengthy and well-reasoned written opinion. The trial court found that plaintiff met her burden of proving that mutual error existed between the two parties at the time the |4cash sale deed was executed. The court ruled that plaintiff was entitled to reform the deed to provide for a mineral reservation in her favor. Defendant filed this appeal.

Discussion

Under the manifest error standard of review, a court of appeal may not set aside a trial court’s finding of fact in the absence of manifest error or unless it is clearly wrong. Snider v. Louisiana Medical Mutual Insurance Co., 13-0579 (La.12/10/13), 130 So.3d 922; Rosell v. ESCO, 549 So.2d 840 (La.1989). Under this standard, determinations of fact are entitled to great deference on review. McGlothlin v. Christus St. Patrick Hospital, 10-2775 (La.07/01/11), 65 So.3d 1218; Guillory v. Lee, 09-0075 (La.06/26/09), 16 So.3d 1104.

[T]he reviewing court must give great weight to factual conclusions of the trier of fact; where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable. The reason for this well-settled principle of review is based not only upon the trial court’s better capacity to evaluate live witnesses (as compared with the appellate court’s access only to a cold record), but also upon the proper allocation of trial and appellate functions between the respective courts.

Guillory, 16 So.3d at 1116-17 (quoting Perkins v. Entergy Corp., 00-1372 (La.03/23/01), 782 So.2d 606). An appellate court in reviewing factual conclusions must satisfy a two-step process on the record as a whole: there must be no reasonable factual basis for the trier of fact’s conclusion, and the finding must be clearly wrong. McGlothlin, supra.

With these principles in mind, we will review the evidence in the record to determine whether the trial court’s factual conclusions regarding | ^mutual error are unsupported by a reasonable factual basis and if so, whether these findings are clearly wrong or manifestly erroneous.

La. C.C. art. 1949 provides:

Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party.

As reflected in our jurisprudence and codified in the 1984 Revision of the Civil Code’s articles on Obligations, error, which vitiates consent, can manifest itself in two ways: mutually, i.e., both parties are mistaken, or unilaterally, i.e., only one party is mistaken. However, in both situations, the error for which relief may be granted must affect the cause of the obligation, and the other party must know or should have known “the matter affected by error was the cause of the obligation for the party in error; that is, that it was the reason he consented to bind himself.” See Revision Comments (b) and (c) to La. C.C. art. 1949.

The granting of relief for error presents no problem when both parties are in error, that is, when the error is bilateral. When that is the case the contract may be rescinded. As an alternative, the instrument that contains the contract may be reformed in order to reflect the true intent of the parties. As observed by the supreme court in Peironnet v. Matador Resources Co. 12-2292, p. 13 (La.06/28/13), 2013 WL 3752474, 144 So.3d 791, 804:

When a contract is reduced to writing, an error may occur in the drafting of the instrument so that the written text does not reflect the true intention of the parties. When such is the case, upon proof that the error is mutual, that is, that neither party intended the contract to be as reflected in the writing, the court may decree the reformation of the written instrument, rather than the rescission of the contract, so that the writing, once reformed, will express the parties’ true intention.
Inin the view expressed by Louisiana courts, an action to reform a written instrument is an equitable remedy, and it lies only to correct errors in a written instrument that does not express the true agreement of the parties ...
... An action to reform a written instrument is a personal action, even when applied to real estate, and the burden of establishing the mutual error by clear and convincing proof rests on the party seeking reformation.
Litvinoff, Vices of Consent, Error, Fraud, Duress and an Epilogue on Lesion, 50 La.L.Rev. 1, 45-46 (1989)(foot-notes omitted).

Unlike reformation, which is only available upon mutual error for the explicit purpose of reforming an instrument to reflect the true intent of both parties, rescission is a remedy available for both forms of error. Peironnet, supra. Our Civil Code specifically allows for rescission for unilateral error, providing the party who obtains rescission on grounds of his own error is liable for the loss thereby sustained by the other party unless the latter knew or should have known of the error. La. C.C. art. 1952.

In the case of an unilateral error, to determine whether to grant rescission, our courts have considered “whether the error was excusable or inexcusable, a distinction received by modern civilian doctrine,” granting relief when error has been found excusable. Peironnet, supra at 14, 144 So.3d at 810; Franklin v. Camterra Resources Partners, Inc., 48,021 (La.App.2d Cir.05/22/13), 123 So.3d 184.

This court concurs with the trial court’s finding that plaintiff consistently expressed her intent to reserve the mineral rights. Evidence of this communication is contained in the MLS listing notifying potential buyers, as well as the property disclosure statement. Even the buy/sell agreement references the disclosure statement. The buy/sell agreement was |7a counteroffer dealing only with the price. The listing by plaintiff reflected a price for the property without the minerals. As the trial court stated, “It is noted that the final purchase price (allegedly with the minerals) was less than the asking price (without the minerals). In other words, defendant got more by paying less.” The mineral reservation clearly concerned a cause without which the obligation would not have been incurred. La. C.C. art. 1949.

This case presented a factual question, i.e., was there mutual error? The trial court answered this affirmatively. The trial court found plaintiff and her witnesses to be credible, while it found defendant and defendant’s realtor to be equivocal. The overwhelming evidence supports that conclusion. Plaintiff was a student, a single women, who was receiving royalties from her minerals. She had no intention of giving up the minerals or the income derived therefrom. Defendant and her realtor clearly understood plaintiffs intent. Following the sale of the surface, plaintiff continued to receive the royalties for approximately two years uninterrupted and without objection by defendant, who knew that the wells were there and were producing. Defendant admitted as much to Pro-cell.

The trial court wrote, “As noted above, the court finds that the evidence showed that neither Ms. Mathews [n]or Ms. Duke intended a mineral transfer ... [A]s such, to deny reformation would be to deny the truth of the matter.” This record contains a reasonable factual basis for the trial court’s factual conclusions, which are neither clearly wrong nor manifestly erroneous. See Guillory, supra; McGlothlin, supra. Under the particular and unique circumstances of this case, we affirm.

| ¿Conclusion

For the reasons stated above, the trial court’s judgment granting reformation of the cash sale deed is affirmed at defendant’s cost.

MOORE, J., dissents with written reasons.

WILLIAMS, J., dissents for the reasons assigned by MOORE, J.

MOORE, J.,

dissents.

hi respectfully dissent. I understand the equities of the case and this court’s proclivity to restore as many mineral rights as possible to the people who owned them before the Haynesville Shale. The majority cites a portion of the supreme court’s recent opinion, Peironnet v. Matador Resources Co., 2012-2292 (La.6/28/13), 144 So.3d 791, for its discussion of rescission and reformation, drawn from Prof. Litvinoffs article. What the majority conspicuously omits, however, is that the high court’s decree in Peironnet actually reversed another ruling of this court that found mutual error, and reinstated the district court’s refusal to reform or rescind a mineral lease. Specifically, the supreme court rejected our theory that a party seeking to reform or rescind a contract need prove only that the other side “should have known” the plaintiffs intent. The burden of proof is actually clear and convincing evidence. Id. at 22, 144 So.3d at 809 (quoting Prof. Litvinoff). I do not agree that Ms. Mathews met this burden of proof.

The record amply shows that Ms. Mathews intended to reserve the mineral rights to this two-acre lot, that she discussed this with her realtor, Ms. Allen, and that the reservation was stated on internal MLS documents and the property disclosure executed by Ms. Mathews. However, Ms. Duke (through her realtor, Ms. Ratcliff) made an offer to purchase without reservation of minerals, and Ms. Mathews accepted, making no counteroffer. The buy/sell agreement, the sale-in-process checklist and, critically, the cash sale deed all totally omit the reservation of minerals. Ms. Mathews signed these documents without objection. Notably, this sale occurred in April 2007, before the March 2008 announcement of the Haynesville Shale play |2and the spike in mineral royalties. Ms. Mathews did not try to revive her reservation of mineral rights until early 2009.

The case is governed by the precepts reiterated in Peironnet: “The only error alleged is in signing a written contract without reading it, believing it to contain the terms of an agreement as he had understood them, which, in the absence of any charge or proof of fraud, force or improper influences upon the part of the other contracting party, is not an error from which the law will relieve him.” Id. at 23-24, 144 So.3d at 810, quoting Watson v. Planters’ Bank of Tennessee, 22 La.Ann. 14 (1870). “Courts will refuse rescission unless they can conclude that the error besides meeting the requirements already discussed, is also excusable, that is, that the party in error did not fail to take elementary precautions that would have avoided his falling into error, such as making certain that he was reasonably informed. Otherwise the error is regarded as inexcusable, in which case the party does not obtain relief.” Id. at 24, 144 So.3d at 810, quoting Saúl Litvinoff, Vices of Consent, Fraud, Duress and an Epilogue on Lesion, 50 La. L.Rev. 1, 36 (1989). “The most fertile ground for the healthy growth of the notion of inexcusable error is the often-recurring situation where a party claims to have made an error that bears on a cause of his obligation but further explains that he omitted to read the writing to which the contract giving rise to that obligation was reduced. In such a context Louisiana courts have said that a party may not avoid the provisions of a written contract he signed but failed to read or have explained to him. That is so because, ‘Signatures to obligations are not mere ornaments.’ ” Id. at 25, 144 So.3d at 811, quoting Litvinoff, op. cit, 37 (internal citations omitted).

|3With due deference to the trial court’s credibility calls and factual findings, this record does not prove, either by a preponderance or by clear and convincing evidence, that Ms. Mathews took the elementary precaution of reading the documents before she signed them, or of asking her realtor or the closing agent why they failed to reserve the minerals. Her error is inexcusable and does not support reformation of the sale. I would reverse and render, dismissing this claim.

      . When all the documents in this case were executed, Amanda was not yet married and she signed as Amanda Shantal Fontenot, a single woman.

      . Jennifer’s husband, Kevin Duke, was also named as a defendant, but he had no ownership interest in the property. He signed the deed with the statement that the property was her separate property and paid for from her separate funds.

      . The lease provided that at the expiration of the lease term upon cessation of drilling for 90 consecutive days the lease will terminate except to a depth of 100 feet below the deepest zone drilled.


source: Caselaw Access Project

author: STEWART, J.

license: Public Domain

text:
    James M. JONES, Jr., Plaintiff-Appellant v. DELTA FUEL COMPANY, INC., Defendant-Appellee.
    No. 48,885-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 28, 2014.

      James W. Berry, Rayville, for Appellant.
    Smith, Taliaferro & Purvis, by V. Russell Purvis, Jr., Brandy L. McClure, for Appellee.
    Before BROWN, STEWART and PITMAN, JJ.
   STEWART, J.

11James M. Jones, Jr., also known as Mike Jones (“Jones”), appeals the district court’s judgment that granted Delta Fuel Co. Inc.’s (“Delta Fuel”) special motion to strike. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

In 2009, Mike Jones Flying Service, Inc., became indebted to Delta Fuel in the amount of $8,702.46. Delta Fuel’s counsel sent three certified letters to Jones Flying Service, Inc., to the following address in an attempt to recover the debt:

Jones Flying Service, Inc.

Mike Jones P.O. Box 156 Epps, Louisiana 71237

Jones signed for each letter, but failed to make any attempt to contact Delta Fuel, or to satisfy the debt.

After Jones failed to respond, Delta Fuel filed suit against Jones Flying Service to collect the money owed on August 31, 2009. Delta Fuel requested service as follows:

JONES FLYING SERVICE

401 Fortune Drive Monroe, Louisiana 71201

On September 15, 2009, service was personally made upon Jones Flying Service, Inc., by way of Diana Jones, Jones’s wife, at this address. This location is the Joneses’ residential address. Jones ignored the petition, and a default judgment was rendered against Jones Flying Service on January 26, 2010. On February 6, 2010, notice of judgment was personally served upon Diana for Jones Flying Service, Inc.

[2Pelta Fuel filed a motion seeking to perform a judgment debtor exam on Jones Flying Service. Jones Flying Service was issued an order to appear on July 2, 2010. Service was requested and personally made upon it, via Diana, at the previously mentioned address on May 14, 2010. Jones ignored the order.

After no one appeared for the July 2, 2010, judgment debtor exam, Delta Fuel filed a rule for contempt against Jones Flying Service on July 22, 2010. On August 16, 2010, Jones Flying Service was served, via Diana, with an order to appear at a hearing on the rule set for September 1, 2010. Again, no one appeared on its behalf for this hearing.

On September 10, 2010, Delta Fuel filed a second rule for contempt against Jones Flying Service. A second order to appear at a hearing on the rule was issued to “Mike Jones, Jones Flying Service,” directing Mike Jones to appear at a hearing set for November 8, 2010. On October 7, 2010, Jones was personally served with the order as follows:

MIKE JONES JONES FLYING SERVICE 401 FORTUNE DRIVE MONROE, LA 71201

Jones did not respond to the rule for contempt, nor did he appear at the November 8, 2010, hearing. As a result, the district court issued a writ of attachment-bench warrant for the apprehension of Jones Flying Service, Inc., namely James M. Jones, for failure to appear at the hearing after having been personally served and ordered to appear according to the law. During the early morning of November 10, 2010, Jones was apprehended by the Ouachita Parish Sheriffs Office.

|sOn January 8, 2011, Jones filed a petition against Delta Fuel, seeking damages for his arrest pursuant to the writ of attachment. In turn, Delta Fuel filed a special motion to strike and a motion for summary judgment. The trial court granted Delta Fuel’s special motion to strike, and ordered Jones to pay court costs and attorney fees.

Jones appeals.

LAW AND DISCUSSION

In Jones’s sole assignment of error, he argues that the trial court erred in granting Delta Fuel’s special motion to strike, in dismissing his suit, and in casting him with costs and attorney’s fees. He alleges that Delta Fuel sued the wrong defendant in the wrong court and served the wrong agent for service of process. Jones further alleges that he “erroneously” appeared in these proceedings as agent for service of process. He does not find it unreasonable for him to believe that the order regarding the rule for contempt was just another service on Jones Flying Service, erroneously made through him. However, Jones does admit that the account sued upon was actually owed by his business, Mike Jones Flying Service, Inc., which is domiciled in West Carroll Parish, Louisiana, and for which he is the agent for service of process.

The granting of a special motion to strike presents a question of law. Questions of law are reviewed de novo, with the judgment rendered “on the record, without deference to the legal conclusions of the tribunals below.” In re Succession of Carroll, 46,327 (La.App.2d Cir.7/20/11), 72 So.3d 884; Thinkstream, Inc. v. Rubin, 06-1595 (La.App. 1 Cir.9/26/07), 971 So.2d 1092, writ denied, 07-2113 (La.1/7/08), 973 So.2d 730.

|4La. C.C.P. art. 971(A)(1), which defines a special motion to strike, provides:

A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or Louisiana Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that plaintiff has established a probability of success on the claim.

Section (F)(1)(a) of this article defines an “[a]ct in furtherance of a person’s right of petition or free speech under the United States or Louisiana Constitution in connection with a public issue” to include “[a]ny written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law.

The moving party must first satisfy the burden of proving the cause of action arises from an act in the exercise of his right of free speech regarding a public issue. If the mover satisfies this initial burden of proof, then the burden shifts to the plaintiff to show a probability of success on his claim. Johnson v. KTBS, Inc., 39,022 (La.App.2d Cir.11/23/04), 889 So.2d 329, writ denied, 2004-3192 (La.3/11/05), 896 So.2d 68; Thomas v. City of Monroe, 36,526 (La.App.2d Cir.12/18/02), 833 So.2d 1282. When the plaintiff is unable to meet this burden, the special motion to strike should be granted. If the defendant is successful on his motion, the defendant shall be awarded reasonable attorney fees and costs. La. C.C.P. art. 971(B).

Article 971 was enacted by the legislature as a procedural device to be used in the early stages of litigation to screen out meritless claims brought primarily to chill the valid exercise of the constitutional rights of freedom of | .¡speech and petition for redress of grievances. Johnson, supra; Lee v. Pennington, 02-0381 (La.App. 4th Cir.10/16/02), 830 So.2d 1037. The special motion to strike applies to allegations made in pleadings by attorneys on behalf of their clients to protect their clients’ right to free speech, and it is not limited only to actions involving free speech. In re Succession of Carroll, supra; Thinkstream, supra.

In the case sub judice, Delta Fuel filed a motion to strike Jones’s petition pursuant to La. C.C.P. art. 971 because Jones’s action taken against Delta Fuel arose from its actions undertaken in a judicial proceeding and pleadings filed in court. More specifically, Jones’s action taken against Delta Fuel arose from the motion it filed for contempt, and the damages Jones sustained are a direct result of the trial court’s issuance of the writ of attachment-bench warrant. This writ of attachment was issued only after Delta Fuel obtained a default judgment, filed a motion to examine the judgment debtor, filed a rule for contempt when Jones did not appear, and filed a second rule for contempt when Jones failed to appear for the first contempt hearing. Therefore, the damages claimed in the instant case arise from actions undertaken in a judicial proceeding and pleadings filed in court.

The damages Jones alleges he sustained were the direct result of his failure to comply with a court order commanding his appearance on November 8, 2010. This order was personally served on Jones by the Ouachita Parish Sheriffs Office on October 17, 2010. However, he chose to ignore the rule for contempt because he alleged that he “had no connection with or relationship to Jones Flying Service.”

| fiThe correctness of a court order or ruling is not contested by deciding to willfully disobey it, without suffering the consequence of that disobedience. Respect for the judicial process is a small price for the civilizing hand of law. Absent a showing of transparent invalidity or patent frivolity surrounding the order, it must be obeyed until stayed or reversed by orderly review. Dauphine v. Carencro High School, 02-2005 (La.4/21/03), 843 So.2d 1096; City of Lake Charles v. Bell, 347 So.2d 494 (La.1977).

Jones’s remedy in this case would have been to appear as ordered and explain to the court why the order was incorrect. He did not have the option to willfully ignore the order. Jones had numerous opportunities to respond to the pleadings and inform the court that he was not the registered agent for Jones Flying Service, Inc. In fact, he could have responded and informed the court that the account sued upon was actually owed by his business, Mike Jones Flying Service, Inc., which is domiciled in West Carroll Parish, Louisiana, and for which he is the agent for service of process. Any damages that Jones sustained were caused by his decision to ignore a legitimate court order that was personally served to him, ordering him to appear. His arrest and subsequent public humiliation resulted from his decision not to appear, and any damages he suffered were a result of his actions.

We find that Delta Fuel met its burden of proving that Jones’s cause of action arose from acts it undertook in the exercise of its right of petition. Thus, the burden shifted to Jones to demonstrate a probability of success on his claim. After a thorough review of the record, we find that it supports the |7district court’s finding that Jones would be unable to satisfy his burden. This assignment of error lacks merit.

CONCLUSION

For the foregoing reasons, we affirm the district court’s granting of the special motion to strike in favor of Delta Fuel. Costs of the appeal are assessed to the plaintiff, James M. Jones, Jr., also known as Mike Jones.

AFFIRMED.


author: ROBERT A. CHAISSON, Judge.

text:
    WOODLANDS DEVELOPMENT, L.L.C., Anthony Reginelli, Jr., Shauna Landry Reginelli, Peter R. Steur, and Lee R. Steur v. REGIONS BANK, Soundra J. Temple and Johnson Property Group, L.L.C.
    No. 12-CA-754.
    Court of Appeal of Louisiana, Fifth Circuit.
    May 28, 2014.
    Rehearing Denied July 15, 2014.

      Todd R. Slack, Attorney at Law, New Orleans, Louisiana, for Plaintiff/Appellee.
    John A. Dunlap, J. Patrick Gaffney, Attorneys at Law, New Orleans, Louisiana, for Defendant/Appellant.
    Panel composed of Judges FREDERICKA HOMBERG WICKER, MARC E. JOHNSON, and ROBERT A. CHAISSON.
   ROBERT A. CHAISSON, Judge.

| .¿Regions Bank (“Regions”) appeals a judgment dismissing with prejudice, as a sanction for discovery violations, its claims against debtors on a promissory note and guarantees. Regions also appeals an earlier judgment denying its motion for summary judgment on the same promissory note and guarantees. For the following reasons, we vacate the judgment dismissing with prejudice Regions’ suit on the note and guarantees, grant Regions’ motion for summary judgment on the note and guarantees, and remand the matter for further proceedings on the debtors’ claims for damages due to alleged fraud on the part of Regions and its employees.

FACTS AND PROCEDURAL HISTORY

The facts of the dealings between the parties are set forth in a prior appeal in this matter and therefore need only be summarized here. In 1999, Woodlands ^Development, L.L.C. (“Woodlands”) purchased an apartment complex (the “property”) on Sandra Drive in New Orleans consisting of over 300 rental units. On June 12, 2001, Woodlands borrowed approximately $5,000,000 from AmSouth Bank, the predecessor of Regions, which loan was secured by a mortgage on the property. The loan documents provided the bank a security interest in any insurance proceeds involving damage to the property, giving the bank the right to apply any such proceeds to the indebtedness. When the loan matured in July 2005, Woodlands defaulted, but the parties entered into a forbearance agreement giving the debtors until January 2006, to repay the obligation. In January 2006, AmSouth again agreed to extend the maturity date of the note to December 2006.

In September 2006, Regions approved a sale of the property to Johnson Property Group (“JPG”), which required JPG to assume the unpaid principal balance of Woodlands’ debt to Regions, and pay Woodlands $500,000 cash. The cash portion of the sale required a $100,000 payment directly to Regions to bring the interest payments current, and a note in favor of Woodlands for the $400,000 balance, secured by a second mortgage on the property. The Woodlands group remained obligated for the original loan, and JPG and its principal, Soundra Temple, also became guarantors on the note. JPG and Ms. Temple were to take over the project, complete renovations, and rent out the units. In furtherance of this transaction, the parties executed the First Amendment to Forbearance Agreement in November 2006, extending the maturity date on the note until November 2007. In December 2007, the parties executed the Second Amendment to Forbearance Agreement, extending the maturity date on the note until November 2008.

l/The transaction giving rise to this litigation occurred on January 10, 2008. On that date, JPG sold the property to Crescent City Gates Fund (“CCGF”). Almost one year later, on January 8, 2009, Woodlands filed the present suit seeking a judgment declaring its obligations under the note void because of Regions’ fraudulent complicity in the sale to CCGF. Woodlands asserted that because of the sale, its mortgage on the property by JPG was rendered unenforceable, as JPG no longer owned the property. It further asserted that Regions had not complied with certain obligations which it had under the forbearance agreements to monitor the renovations to the property by JPG, and that these derelictions further affected its security interest in the property and rendered the note unenforceable.

Regions denied these allegations, particularly asserting that it learned of the sale to CCGF months after it had taken place. It reconvened against Woodlands seeking repayment of the original $5,000,000 loan. It also sought the proceeds paid to Woodlands under an insurance policy covering damages to the property occasioned by Hurricane Katrina. These insurance proceeds are on deposit with the clerk of court, and total over $5,000,000. Woodlands answered the reconventional demand and asserted as an affirmative defense the same fraud allegations as those in its original suit.

Regions eventually filed a motion for summary judgment on Woodlands’ suit for declaratory relief, as well as on its own reconventional demand. The trial court granted Regions’ motion as to Woodlands’ petition for declaratory judgment pursuant to the Louisiana Credit Agreement Act, La. R.S. 6:1122, reasoning that there was no writing absolving Woodlands from its obligations under the note. However, the trial court reserved to Woodlands the right to raise the same issues as a defense to Regions’ reconventional demand. Woodlands appealed to this court.

| ¡While the matter was pending before this Court, Woodlands sought further discovery, which the trial court allowed to go forward. Regions applied to this court for a supervisory writ, arguing that it was entitled to summary judgment on its re-conventional demand, as well as the previous summary judgment in its favor on the original declaratory judgment suit. This court denied the writ. At that point, Regions asserted in the appeal in this Court that the judgment dismissing the debtors’ declaratory action pursuant to La. R.S. 6:1122, should likewise result in the granting of its summary judgment motion in its reconventional demand.

This Court affirmed the summary judgment dismissing Woodlands’ action for declaratory relief, and also affirmed the district court judgment allowing the re-conventional demand to continue based on Woodlands’ affirmative defense of fraud. During further discovery, it was revealed that Regions was unable to produce emails sought by Woodlands because many of them, if indeed they had existed, would have been deleted under Regions’ electronic records retention policy. The trial court deemed the retention policy to be in bad faith, and dismissed with prejudice Regions’ reconventional demand pursuant to La. C.C.P. art. 1471.

Regions now appeals that judgment, and also appeals the earlier judgment denying its motion for summary judgment on its reconventional demand.

LAW AND ANALYSIS

Dismissal of Regions’ suit on promissory note as sanction for discovery violations

During discovery, Woodlands sought production of all e-mails in the possession of Regions relating in any way to the dealings between the parties. During this process, it was revealed that Regions had in effect a standard electronic information retention policy in which documents in electronic form were to be maintained for as long as a paper document would be maintained in the normal | f,course of the bank’s business. In the case of emails, the policy was that if the individual employee determined that the information contained therein need not be maintained for a longer time under the general retention policy, then the e-mail would be deleted after 90 days. It was also the policy that when suits were filed, all e-mails relating to the suit should be retained.

Suit was filed on January 8, 2009. Woodlands asserted that the pertinent time period involved was between late 2006, shortly after the First Amendment to Forbearance Agreement was signed, and January 2008, when the property was sold to CCGF. It alleged that during that time, Regions engaged in fraudulent behavior which caused Woodlands damage. It therefore sought production of all relevant e-mails for that period. Regions produced several thousand documents in response, many of which had been retained under the retention policy. However, any e-mails which were not deemed retainable for business purposes had long been deleted under the 90-day schedule by the time suit was filed. In response to a motion to compel the release of additional e-mails, Regions represented to the trial court that a search was continuing in its information technology department; the trial court therefore issued an order for further production. Elicia Reames, who was in charge of Regions’ document retention system, stated in her deposition that she had been asked by Regions’ counsel to look for e-mails related to three bank employees who were named in the discovery requests, and that she delegated this task to her assistant, Felecia McCord. Ms. Reames also said that she received an order to hold e-mails relating to the Woodlands’ account in September of 2009, some eight months after suit was filed. She further testified that she did not search for e-mails involving non-bank employees who were mentioned in the discovery requests from Woodlands.

|7When this information was presented to the district court, the trial judge concluded that Regions was in bad faith in regard to discovery. He particularly noted that the 90-day retention policy for emails was not a “good faith” policy as contemplated in La. C.C.P. art. 1471(B). He therefore dismissed Regions’ suit in its entirety and with prejudice.

La. C.C.P. art. 1471(B) provides that “[ajbsent exceptional circumstances, a court may not impose sanctions under this Article on a person or party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system.” The article also provides that one of the sanctions for failure to abide by a discovery order is dismissal of the action. However, that draconian sanction is available to trial judges only in the most egregious of cases involving willful violation of discovery orders, and such sanctions are reviewed under the abuse of discretion standard. Mascaro v. Parish of Jefferson, 10-488 (La.App. 5 Cir. 11/28/10), 54 So.3d 715.

In the present case, Regions had in effect a comprehensive information retention policy applicable to all of its business proceedings. For e-mail, the policy was that if the e-mail was of a nature that, if it were a writing, it would be considered a document to be retained, then that e-mail was to be retained. A “document” was defined as any material that was generated, sent, or received by the bank, regardless of its medium or form, which should be retained “in order to meet customer, legal, regulatory and business requirements.” If, on the other hand, the e-mail was not of any administrative or business value, it could be deleted. This decision was left to the discretion of the individual user. Any emails not noted for retention were automatically deleted by the system after 90 days.

As the chronology of events shows, the events alleged to be fraudulent occurred sometime during 2007 when the second amendment to the forbearance | Ragreement was being discussed by the parties, and before January 10, 2008, the date the property was sold by JPG to CCGF. Suit was filed on January 8, 2009. Thus, any e-mails not deemed to be “documents” would have been deleted by the system by April of 2008, eight months before Regions was sued by Woodlands. It was thus impossible for Regions to retrieve these e-mails once suit was filed. Further, there was no evidence to show that Regions’ retention policy was anything but routine, or that it was operated in any bad faith manner in regard to this dispute. The trial court also faulted Regions for representing to the court that it had conducted additional searches, when Ms. Reames said in deposition that she had only been asked to do one search. It is unclear from the deposition excerpts in the record exactly what searches were conducted because Ms. Reames also said that she had given Felecia McCord the job of looking for the requested e-mails, but Ms. McCord was not deposed. The trial court also noted that Regions had resisted discovery in a “systematic and intentional” way. However, as noted in Woodlands Development, L.L.C., much of this resistance was due to Regions’ proper reliance on La. R.S. 6:633(I)(2), which protects certain financial records from discovery, in disputing whether Woodlands was entitled to much of the information which it sought. Finally, the trial court pointed out that Regions did not put a hold order on the emails until September 2009, eight months after suit was filed, and thus information useful to Woodlands’ case was lost. While there was a delay in the hold order to the information technology department, it is nonetheless also true that by the time suit was filed, the e-mails from the pertinent period had already been deleted.

We have reviewed the record relating to this discovery dispute, and conclude that the trial court abused his discretion in dismissing the case. While some e-mails may have been lost, the conclusion that these communications were essential |9to Woodlands’ case is not well founded. Under the retention policy, employees were required to keep all e-mails that were related to the bank’s clients, business, legal, and regulatory purposes. Only those emails with no administrative or business purposes were to be deleted. To subscribe to Woodlands’ argument that Regions was acting in bad faith in deleting the e-mails would mean that its retention policy was routinely ignored by its employees with Regions’ knowledge. There is no evidence of record to support such a finding. We therefore conclude that the trial court abused his discretion in dismissing the suit, especially in light of La. C.C.P. art. 1471(B). The judgment dismissing Regions’ reconventional demand is therefore vacated.

Regions’ Motion for Summary Judgment on promissory note and guarantees

The second issue is whether Regions’ earlier motion for summary judgment in its reconventional demand on the promissory note and guarantees was properly denied.

In determining whether summary judgment is appropriate, the appellate court reviews evidence de novo. Under such standard, the appellate court looks at pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, in making an independent determination that there is no genuine issue of material fact and that movant is entitled to judgment as a matter of law. Woodlands, supra at 151. The burden of proof in a motion for summary judgment remains with the movant. La. C.C.P. art. 966(C)(2).

In this case, it was incumbent upon Regions, as the party that will bear the burden of proof on its suit on the promissory note and guarantees, to put forth a prima facie case of its entitlement to recover on them. In order to do so, Regions simply needed to produce the promissory note and guarantees sued upon. See Humphrey v. Humbrecht, 427 So.2d 461, 463 (La.App. 5 Cir.1983), cert. denied, 433 So.2d 1052 (La.1983). Since Woodlands did not dispute the authenticity of the promissory note or guarantees, or their original indebtedness thereunder, Regions met its burden of putting forth a prima facie case. Thereafter, the burden of proof shifted to Woodlands to prove the existence of a triable issue of fact. Premier Bank, National Association v. Percomex, Inc., 615 So.2d 41, 43 (La.App. 3 Cir.1993). Woodlands asserted that there are genuine issues of material fact regarding its fraud allegations against Regions that precluded the grant of summary judgment. For the following reasons, we disagree.

In its answer to Regions’ reconventional demand on the promissory note and guarantees, Woodlands designated its fraud allegations against Regions as “affirmative defenses” to Regions’ right to collect on the note and guarantees, and prayed that Regions’ reconventional demand be dismissed. We disagree with Woodlands’ assertion that its allegations of fraud are “affirmative defenses,” which, if proven, would entitle it to extinguishment of its debt to Regions.

La. C.C.P. art. 1005 includes “fraud” as one of the affirmative defenses which must be specially pleaded. Article 1005 further contains an omnibus recital clause, which provides that “... any other matter constituting an affirmative defense” must be specially pleaded. In explaining Article 1005’s omnibus recital clause, the Louisiana Supreme Court has stated, “[A]n affirmative defense raises new matter which, assuming the allegations in the petition to be true, constitutes a defense to the action and will have the effect of defeating plaintiffs demand on its merits.” Webster v. Rushing, 316 So.2d 111, 114 (La.1975).

In this case, Woodlands alleges that after the signing of the First Amendment to the Forbearance Agreement in November 2006, Regions engaged in fraudulent activity to the detriment of Woodlands. However, Woodlands’ note and guarantees were entered into over five years earlier in June 2001. Therefore, | nWoodlands’ allegations of fraud are not in regard to the negotiation for, or consummation of, its credit agreement with Regions, and therefore are clearly outside the parameters of the credit agreement. Furthermore, the only act undertaken by Woodlands, subsequent to the alleged fraud, was the signing of the Second Amendment to the Forbearance Agreement in December 2007. Yet Woodlands admits that, other than extending the maturity date of the loan for an additional year, the terms and conditions of the Second Amendment were identical to the First Amendment. Under these circumstances, Woodlands’ fraud allegations, even if proven, do not implicate its credit agreement with Regions such that those allegations would serve as an affirmative defense, and have the effect of defeating Regions’ right to collect on the note and guarantees. Additionally, Woodlands has not cited any authority for its position that its fraud allegations, if proven, would extinguish its debt to Regions as a matter of law. Woodlands’ specific allegations of fraud, rather than being affirmative defenses to Regions’ right to collect on the note and guarantees, amount to a separate cause of action against the bank sounding in tort. As such, any evidence of such fraud presented by Woodlands on the motion for summary judgment, is insufficient to raise a genuine issue of material fact that would preclude the grant of summary judgment on the note and guarantees.

In addition to enforcement of the promissory note and guarantees, Regions’ motion for summary judgment also sought enforcement of the bank’s security interest in the insurance proceeds. In response, Woodlands argues that in § 1.4(E) of its September 27, 2006 purchase agreement with JPG, it specifically reserved its rights to any insurance proceeds derived from any claim or suit that it had against any insurer of the property for events occurring prior to the closing date. We note that under Woodlands’ credit agreement with Regions, the bank was assigned a | i2security interest in any such insurance proceeds. Therefore, the only right that Woodlands had to reserve, absent a contrary agreement by Regions, was its rights to insurance proceeds subject to the assigned security interest of the bank to those proceeds. Regions was not a party to Woodlands’ and JPG’s purchase agreement, and that document only establishes the rights of Woodlands and JPG vis-a-vis one another. Even if, as alleged by Woodlands, Regions approved the purchase agreement with JPG, no evidence has been presented to show that the bank waived, renounced or altered its security interest in any insurance proceeds. As such, there is no genuine issue of material fact that Regions is entitled to enforce its security interest in the insurance proceeds and apply such portion of those proceeds as are necessary to satisfy Woodlands’ loan. On the record before us, we are unable to determine the current amount of Woodlands’ debt to Regions or the current amount of insurance proceeds in the registry of the court. Therefore, we remand this matter to the district court for determination of the current amount of Woodlands’ debt, and for determination of the portion of the insurance proceeds which are necessary to satisfy that debt.

Status of Woodlands’ claims against Regions for fraud

In this appeal, Regions has argued a number of reasons why the trial court erred in denying its motion for summary judgment on the promissory note and guarantees. One of the reasons advanced by Regions is that the prior dismissal of Woodlands’ declaratory judgment action is res judicata, thereby precluding “relitigation” of Woodlands’ fraud allegations. Having disposed of Regions’ motion for summary judgment on other grounds, it is not necessary for us to address this argument for resolution of Regions’ summary judgment. However, in light of our opinion rendered herein, and the prior opinion rendered in this matter by another panel of this Court, we are compelled to address Regions’ argument as |13to the preclusive res judicata effect of the prior judgment, insofar as it implicates the current status of Woodlands’ claims against Regions for fraud.

In the prior Woodlands opinion, this Court held that “[bjecause plaintiffs have produced no written credit agreement signed by both plaintiffs and Regions purporting to release them from their continuing guarantees on the loan, their suit for a declaratory judgment was properly dismissed under LSA-R.S. 6:1122.” Woodlands, at 152. In so ruling, however, this Court specifically recognized that “the substance of plaintiffs’ fraud allegations that served as a basis for the declaratory judgment suit have also been asserted as affirmative defenses to Regions’ reconven-tional demand, which remains viable in the court below.” Id. at 152-153.

As explained in the prior opinion, “LSA-R.S. 6:1122 expressly prohibits an action by a debtor against a creditor based on an oral credit agreement, providing that ‘[a] debtor shall not maintain an action on a credit agreement unless the agreement is in writing, expresses consideration, sets forth the relevant terms and conditions, and is signed by the creditor and the debt- or.’ ” Id. at 152.

In St. Landry Homestead Federal Savings Bank v. Vidrine, 12-1406 (La.App. 3 Cir. 6/12/13), 118 So.3d 470, writs denied, 13-2218, 13-2219 (La.12/2/13), 126 So.3d 1283, the court reviewed the jurisprudence interpreting this statute, as set forth in Whitney National Bank v. Rockwell, 94-3049 (La.10/16/95), 661 So.2d 1325; Jesco Construction Co. v. Nationsbank Corp. 02-0057 (La.10/25/02), 830 So.2d 989; and King v. Parish National Bank, 04-337 (La.10/19/04), 885 So.2d 540. The St. Landry court concluded that “we do not interpret the supreme court’s decisions in Whitney, Jesco, and King to establish a rule of law that the Louisiana Credit Agreement Act renders a financial institution immune from any and all liability arising from its business operations, including business operations that | Hoccur outside the parameters of a credit agreement as defined in La. R.S. 6:1121(1).” St. Landry, supra at 486. We agree with this analysis. The Louisiana Credit Agreement Act is intended to preclude a claim that a verbal agreement for credit exists, or that the terms of a -written credit agreement have been verbally altered. The Act is not intended to insulate financial institutions from any and all liability that arise outside the parameters of a credit agreement.

As previously noted in this opinion, the specific allegations of fraud made by Woodlands, which alleged conduct postdates the credit agreement by some six years, are not in regard to the negotiation for, or consummation of, its credit agreement with Regions, and therefore are clearly outside the parameters of the credit agreement. In our view, it would be inconsistent to find that Woodlands’ fraud allegations are not sufficient to raise a genuine issue of material fact for purposes of the motion for summary judgment on the credit agreement, yet find that those same fraud allegations are within the parameters of the credit agreement for purposes of the preclusive effect of LSA-R.S. 6:1122. While we disagree with the prior opinion’s adoption of Woodlands’ designation of their fraud allegations as “affirmative defenses” to Regions’ suit on the note, we find that the practical effect of the opinion (i.e., that Woodlands’ fraud allegations are still viable against Regions), is the correct result.

LSA-R.S. 13:4232(A)(1) provides: “A judgment does not bar another action by the plaintiff when exceptional circumstances justify relief from the res judicata effect of the judgment.” We find that such exceptional circumstances exist in this case because we agree with the prior opinion that Woodlands’ allegations of fraud are still viable, just not in the procedural posture of “affirmative defenses” to Regions’ suit on the note. We therefore reject Regions’ argument that res judicata precludes further litigation of Woodlands’ fraud allegations. While it is not 11fientirely clear to this Court how the sale of the property to CCGF affected Woodlands’ security interests in the property itself, or how its obligations under the credit agreements were changed by the sale, Woodlands should nonetheless be given the opportunity to establish facts in support of their allegations. We therefore remand this matter to the trial court for further proceedings on Woodlands’ fraud allegations consistent with this opinion.

CONCLUSION

For the above reasons, we vacate the judgment dismissing with prejudice Regions’ reconventional demand. We grant Regions’ motion for summary judgment on the note and guarantees, including enforcement of the security interest in the insurance proceeds. We remand this matter to the district court for determination of the current amount of Woodlands’ debt, and for determination of the portion of the insurance proceeds which are necessary to satisfy that debt. As to Woodlands’ fraud claim against Regions, we also remand that matter for further proceedings consistent with this opinion.

VACATED AND REMANDED.

      . See, Woodlands Development, L.L.C. v. Regions Bank, 11-263 (La.App. 5 Cir. 12/28/11), 83 So.3d 147, writ denied, 12-424 (La.4/9/12), 85 So.3d 704.

        . The principals of Woodlands signed as guarantors on the note and are also plaintiffs in this litigation. They therefore are included in our references to "Woodlands.”

      . Regions asserts that its understanding of the transaction was that it would be a bond-for-deed contract rather than an actual sale, but it was in fact a sale.


author: PAINTER, Judge.

text:
    PINE PRAIRIE ENERGY CENTER, LLC and Plains Marketing, LP v. Eddie SOILEAU, Sheriff and Ex Officio Tax Collector, Parish of Evangeline, State of Louisiana and Dirk Deville, Assessor, Evangeline Parish, State of Louisiana.
    No. 13-CW-1300
    Court of Appeal of Louisiana, Third Circuit.
    June 11, 2014.

      Brian A. Eddington, Baton Rouge, LA, for Defendants-Appellants, Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish and Dirk Deville, Assessor for Evangeline Parish.
    Jesse R. Adams, III, Andre B. Burvant, New Orleans, LA, for Plaintiffs-Appellees, Pine Prairie Energy Center, LLC, and Plains Marketing, LP and the Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.
    Anthony L. Walker, Ville Platte, LA, for Plaintiff-Appellee, Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.
    Court composed of SYLVIA R. COOKS, J. DAVID PAINTER, and PHYLLIS M. KEATY, Judges.
   PAINTER, Judge.

hFor the reasons set forth in the companion case hereto, Pine Prairie Energy Center, L.L.C. And Plains Marketing, L.P. v. Eddie Soileau, Sheriff And Ex Officio Tax Collector, Parish Of Evangeline, State Of Louisiana and Dirk Deville, Assessor, Evangeline Parish, State Of Louisiana, 14-5 c/w 14-142, (La.App. 3 Cir. 6/11/14), 141 So.3d 367, 2014 WL 2853911, the judgment of the trial court is affirmed. Costs of this appeal are assessed to Defendants-Appellants, Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish, and Dirk De-ville, Assessor for Evangeline Parish.

AFFIRMED.

COOK, J., dissents.


text:
    PINE PRAIRIE ENERGY CENTER, L.L.C. and The Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc. v. Eddie SOILEAU, Sheriff and Ex Officio Tax Collector, Parish of Evangeline, State of Louisiana and Dirk Deville, Assessor, Evangeline Parish, State of Louisiana.
    No. 14-142
    Court of Appeal of Louisiana, Third Circuit.
    June 11, 2014.
    Rehearing Denied July 23, 2014.
    Brian A. Eddington, Baton Rouge, LA, for Defendants-Appellants, Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish and Dirk Deville, Assessor for Evangeline Parish.
    Jesse R. Adams, III, Andre B. Burvant, New Orleans, LA, for Plaintiffs-Appellees, Pine Prairie Energy Center, LLC, and Plains Marketing, L.P. and the Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.
    Anthony L. Walker, Ville Platte, LA, for Plaintiff-Appellee, Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.
    Court composed of SYLVIA R. COOKS, J. DAVID PAINTER, and PHYLLIS M. KEATY, Judges.
   PAINTER, Judge.

I,For the reasons set forth in the companion case hereto, Pine Prairie Energy Center, L.L.C. And Plains Marketing, L.P. v. Eddie Soileau, Sheriff And Ex Officio Tax Collector, Parish Of Evangeline, State Of Louisiana and Dirk Deville, Assessor, Evangeline Parish, State Of Louisiana, 14-5 c/w 13-1300, (La.App. 3 Cir. 6/11/14), 141 So.3d 367, 2014 WL 2853911, the judgment of the trial court is affirmed. Costs of this appeal are assessed to the Defendants-Appellants, Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish, and Dirk Deville, Assessor for Evangeline Parish.

AFFIRMED.

COOK, J., dissents.


text:
    PINE PRAIRIE ENERGY CENTER, LLC and Plains Marketing, LP v. Eddie SOILEAU, Sheriff and Ex Officio Tax Collector, Parish of Evangeline, State of Louisiana and Dirk Deville, Assessor, Evangeline Parish, State of Louisiana.
    No. 14-5.
    Court of Appeal of Louisiana, Third Circuit.
    June 11, 2014.
    Rehearing Denied July 23, 2014.

      Brian A. Eddington, Baton Rouge, LA, for Defendants-Appellants Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish and Dirk Deville, Assessor for Evangeline Parish.
    Jesse R. Adams, III, Andre B. Burvant, New Orleans, LA, for Plaintiffs-Appellees Pine Prairie Energy Center, LLC, and Plains Marketing, LP and the Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.
    Anthony L. Walker, Ville Platte, LA, for Plaintiff-Appellee Industrial Development Board No. 1 of the Parish of Evangeline, State of Louisiana, Inc.

      Court composed of SYLVIA R. COOKS, J. DAVID PAINTER, and PHYLLIS M. KEATY, Judges.
   PAINTER, Judge.

| defendants, Eddie Soileau, Sheriff for Evangeline Parish (the Sheriff), and Dirk Deville, Assessor for Evangeline Parish(the Assessor), appeal the trial court’s grant of summary judgments filed by the Plaintiffs, Pine Prairie Energy Center, L.L.C. (PPEC) and Plains Marketing, L.P., the parent company of PPEC. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

PPEC operates an underground natural gas storage facility and associated facilities and pipelines located in Evangeline Parish (the PPEC project). PPEC obtained the appropriate authorization for construction and operation of the PPEC project from the Federal Energy Regulatory Commission in 2004. In May 2005, an application was filed with the Evangeline Parish Police Jury (Police Jury) for the establishment of Evangeline Parish Industrial Development Board Number 1 (the IDB). The application included articles of incorporation indicating that the purpose of the IDB was to acquire, own, and lease property to PPEC as a means of encouraging PPEC to locate in the parish. An ordinance was adopted allowing creation of the IDB, approving its articles of incorporation, and appointing a board of directors.

In July 2005, the IDB entered into a memorandum of understanding with PPEC agreeing to issue bonds to finance the acquisition and construction of the project property, which would be owned by the IDB and leased to PPEC, and agreeing that the property would not be subject to ad valorum property taxes. In January 2006, the Police Jury and PPEC entered into an agreement affirming the understandings and undertakings in the memorandum of understanding, including the exemption from property taxes on the property during the lease period. On March 20, 2006, the Assessor sent a letter to PPEC stating that the Assessor’s ^Office would not consider the property covered by the lease to be subject to taxation as long as it was owned by the IDB.

The Police Jury approved the issuance of bonds by the IDB. In January 2006, Chesapeake Energy Marketing sold the Chalk Pipeline to PPEC. In May 2006, PPEC conveyed the property comprising the PPEC project (the PPEC project property) including the Chalk Pipeline, the CGT Meter Site, and the gas storage facility, to the IDB and leased it back. In 2011, the Assessor placed the PPEC project property on the tax rolls. PPEC objected and paid the taxes under protest.

On January 25, 2012, PPEC and Plains Marketing, L.P. filed the suit currently before this court on appeal under docket number 14-5 asserting that they were not the owner of any of the property listed in the assessments, including the gas storage facility property, the Chalk Pipeline and the CGT Meter Site, seeking a declaratory judgment that the PPEC project property was exempt from taxation, and that they were entitled to refund of the taxes paid under protest. The suit was later amended to add the IDB as a party plaintiff. The Assessor determined that the storage facility property had been conveyed to the IDB, cancelled the assessments, and reissued them in the name of the IDB. The Sheriff refunded the taxes paid under protest.

On January 29, 2013, PPEC, on its own behalf and on behalf of the IDB, filed an additional suit, now before this court on appeal under docket number 04-142, seeking recovery of taxes paid under protest and declaratory judgment that the property at issue is owned by the IDB, and that, as such, it is exempt from property taxes, as well as cancellation of the tax notices, and a permanent injunction prohibiting the Assessor and the Sheriff from issuing any future tax assessments.

[oPPEC filed a motion for summary judgment in each suit. In the original suit, in a motion filed on August 15, 2013, Plaintiffs asked for summary judgment as follows:

1) Finding that Petitioners do not owe any ad valorem property taxes on any property that is owned by the Industrial Development Board No 1 of the Parish of Evangeline State of Louisiana, Inc. (Evangeline Parish IDB);
2) Finding that the Chalk Pipeline and CGT Meter Site as defined in the accompanying Memorandum are not owned by Petitioners as they were conveyed to the Evangeline Parish IDB;
3) Finding that the property owned by the Evangeline Parish IDB is exempt from ad valorem property taxation;
4) Ordering a refund of all unreim-bursed ad valorem property taxes paid by Petitioners under protest along with interest as provided by law; and
5) Prohibiting the Sheriff and the Assessor and from issuing to Petitioners any future assessments, tax bills, tax notices, tax liens, notices of seizure or adjudications related to the Chalk Pipeline, the CGT Meter Site or any other property as long as it is owned by the Evangeline Parish IDB.

In the second suit, Plaintiffs asked for a partial summary judgment as follows:

1Finding that the Chalk Pipeline and CGT Meter Site are owned by the IDB;
2 Finding that property owned by the IDB is public property and is thus exempt from ad valorem property taxation;
3 Cancelling all assessments, tax notices, tax statements or bills issued to the IDB and all assessments, tax notices, tax statements or bills issued to PPEC regarding the Chalk Pipeline and the CGT Meter Site;
4 Ordering a refund to PPEC of all ad valorem property taxes paid under protest along with interest as provided by law; and
5 Declaring that any future assessments, tax bills, tax notices, tax liens, notices of seizure or other adjudications related to the Chalk Pipeline CGT Meter Site or all other property that is owned by the IDB for as long as it is owned by the IDB are void ab initio, null, illegal and of no effect.

|4After hearing arguments, the trial court granted Defendants a summary judgment in the first suit and a partial summary judgment in the second suit. Defendants filed a writ with this court asking for an unlimited appeal, which is before this court under docket number 13-1300 and which this court referred to the merits. Defendants appeal the judgments of the trial court, and this court has consolidated the matters on appeal on its own motion.

DISCUSSION

Summary Judgment

Appellate courts review trial courts’ ruling on motions for summary judgment de novo. Sanchez v. Harbor Const. Co., Inc., 07-0234, p. 4 (La.App. 4 Cir. 10/3/07), 968 So.2d 783, 786. “An appellate court reviews a trial court’s decision granting summary judgment de novo using the same standard applied by the trial court in deciding the motion for summary judgment.” Id. “ ‘An appellate court thus asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover-appell[ee] is entitled to judgment as a matter of law.’” Williams v. Mem’l Med. Ctr., 03-1806, p. 13 (La.App. 4 Cir. 3/17/04), 870 So.2d 1044, 1052-53, quoting Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 26 (La.7/5/94), 639 So.2d 730, 750.
“The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.” La. C.C.P. art. 966(B)(2). As to the burden of proof, the burden:
remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant’s burden on the motion does not require him to negate all essential elements of the adverse party’s claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
La. C.C.P. art. 966(C)(2). “The summary judgment procedure is |5designed to secure the just, speedy, and inexpensive determination of actions.” Merit-Plan Ins. Co. v. DeSalvo, 03-1493, p. 3 (La.App. 4 Cir. 3/24/04), 871 So.2d 461, 463. “The procedure is favored and shall be construed to accomplish these ends.” La. C.C.P. art. 966(A)(2).

St. Bernard I, LLC v. Williams, 12-372, pp. 5-6 (La.App. 4 Cir. 3/13/13), 112 So.3d 922, 926, writ denied, 13-1008 (La.6/14/13), 118 So.3d 1090.

Ownership of the Pipeline

Defendants assert that the trial court erred in finding that “the Chalk Pipeline was conveyed to the IDB through an Act of Conveyance dated May 9, 2006, and a Conveyance and Lease Addendum No. 1 dated November 12, 2007.”

Defendants argue that the conveyance did not by its terms include the actual pipeline but only “fee properties, lease and easements and rights of way.” Plaintiffs assert that the actual pipeline is an accessory to the pipeline servitude and, as such, was included in the sale of the servitude pursuant to La.Civ.Code art. 2461.

After reviewing the Act of Conveyance and the applicable law, we find that the pipeline is an accessory to the pipeline servitude as argued by Plaintiffs. See Ortega v. Sevarg Co., Inc., 550 So.2d 340 (La.App. 3 Cir.1989). Therefore, we agree that it was conveyed along with the servi-tudes.

Constitutionality ofLa.R.S. 51:1160

Defendants first assert that La. R.S. 51:1150 is unconstitutional because La. Const, art. VII § 21(A) provides the only basis for exemptions from ad valorem property taxes as follows: “In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation: (A) Public lands; other public property used for public purposes.”

| (¡Louisiana Revised Statutes 51:1160 states, with regard to municipal and parish industrial development boards, that:

The corporation is hereby declared to be performing a public function on behalf of the municipality or parish with respect to which the corporation is organized and to be a public instrumentality of such municipality or parish. Accordingly, the corporation and all properties at any time owned by it and the income therefrom and all bonds issued by it and the income therefrom shall be exempt from all taxation in the state of Louisiana; provided, however, that the corporation may require the lessee of each of the projects of the corporation to pay annually to parish or municipal taxing authorities, through the normal collecting agency, a sum in lieu of ad valorem taxes to compensate such authorities for any services rendered by them to such projects which sum shall not be in excess of the ad valorem taxes such lessee would have been obligated to pay to such authorities had it been the owner of such project during the period for which such payment is made. Such payments to be made in lieu of taxes together with any fees and charges of such public trust, to the extent in the aggregate they do not exceed the amount of taxes that would be paid if the lessee were the owner, shall constitute statutory impositions within the meaning of R.S. 47:2128. Also for the purposes of R.S. 51:708(1) and any amendment thereto or substitution therefor, bonds issued by the corporation shall be determined to be securities issued by a public instrumentality of a political subdivision of the state of Louisiana.

“This statute is entitled to the presumption of constitutionality, and [Defendants have] the burden of proving that the statute is unconstitutional.” Bd. of Assessors of City of New Orleans v. City of New Orleans, 02-691, p. 14 (La.App. 4 Cir. 9/25/02), 829 So.2d 501, 509, writ denied, 02-2633 (La.1/10/03), 834 So.2d 439.

We find that this statute does not, as Defendants argue, create a new class of exempt property, rather, in it, the legislature clarifies that municipal and industrial development boards are, by definition, performing a public function and, therefore, fall into the class of organization covered by La. Const, art. 7 § 21.

Defendants do not argue that the IDB is not a public entity, rather they argue that it does not own the PPEC project property and that it is not public property because that conveyance from PPEC to IDB is a simulation. Simulation is defined |7by La.Civ.Code art. 2025 as: “A contract is a simulation when, by mutual agreement, it does not express the true intent of the parties.” Defendants assert that the sale with option to purchase and lease-back show that there was not a true intent to transfer ownership.

The party alleging that the purported sale was a simulation bears the burden of proving with reasonable certainty that the sale was simulated. Thompson v. Woods, 1525 [525] So.2d 174 (La.App. 3 Cir.1988). If any consideration is given for the conveyance, the sale is not a simulation. Id.

Bennett v. Porter, 10-1088, pp. 9-10 (La.App. 3 Cir. 3/9/11), 58 So.3d 663, 671. See also St. Bernard, 112 So.3d 922.

Further, La.R.S. 9:3371 states that:

Sale/lease-back commercial transactions involving immovable or movable property with a fair market value in excess of twenty-five thousand dollars and located -within this state are hereby declared to be valid and enforceable. Such transaction shall produce and result in the legal consequences described in the written saleAease-back agreement between the parties and shall not be presumed to be a simulation.

It is unquestioned that the PPEC property conveyed to the IDB and subsequently leased back to PPEC had a commercial value in excess of twenty-five thousand dollars. As stated in Entergy Louisiana, Inc. v. Kennedy, 03-166, p. 8 (La.App. 1 Cir. 7/2/03), 859 So.2d 74, 80, writ denied, 03-2201 (La.11/14/03), 858 So.2d 430, “a transaction will not be set aside as a simulation if any consideration supports the transaction; the reality of the transference is thus established.”

The Act of Conveyance contains the following description of the consideration for that transaction:

This act of conveyance is made for and in consideration of Vendee issuing its Taxable Industrial Development Revenue Bonds (Pine Prairie Energy Center LLC Project) Series 2006 (the “Bonds”) for the purpose of financing the acquisition, construction and installation of all facilities necessary and appropriate in connection with the establishment of natural gas storage, pipelines and related handling and storage facilities within the Parish of Evangeline, State 18of Louisiana (the “Facility”) to be located on the Property, which Facility and Property -will be owned by Vendee and leased to Vendor for a rental that is sufficient in amount to pay the principal of, interest and premium on the Bonds when they become due pursuant to a Lease Agreement dated of even date herewith by and between Vendee, as lessor, and Vendor, as lessee.

The lease agreement by which the property was leased back to PPEC provided for payments in lieu of taxation, or PILOT payments, on the storage facility to the Sheriff and Ex Officio Tax Collector as follows:

Section 5.2 PILOT Payments
(a) Beginning with the calendar year following the year in which the In Service Date has occurred, and for each calendar year thereafter during the Lease Term, the Lessee shall make a PILOT payment of $500,000, but if and only if the average of the annual ad valorem inventory tax revenues applicable to natural gas in the Project caverns for the prior three consecutive calendar years (the “Three Year Average”) is less than $500,000, in which case the PILOT payment applicable for such calendar year shall be the difference between $500,000 and the Three Year Average (it being understood that the Three Year Average for the first calendar year shall be $500,000, and that the “Three Year Average” for the second such calendar year shall be the average of the actual ad valorem inventory tax for such year and the prior calendar year). For the avoidance of doubt, if the Three Year Average for any calendar year is $500,000 or more, the Lessee shall not be required to make any PILOT payment for such calendar year pursuant to this paragraph.
(c) In addition to the foregoing, the Lessee shall make a PILOT payment with respect to the pipeline commonly referred to as the “LA Chalk Pipeline” which generally constitutes the pipeline segment of approximately 33 miles of 24-inch diameter buried pipeline, beginning at a point on the Louisiana Chalk Gathering System commonly referred to as “Tennessee Junction” in Rapides Parish, Louisiana (Section 34-T1S-R2W) and extending southward, through the Parish to an existing point of interconnection with the facilities of El Paso Field Services Company’s Eunice Gas Processing Plant in Acadia Parish, Louisiana (Section 12-T75-R2W). The PILOT payment shall be only with respect to that portion of the LA Chalk Pipeline that is situated in the Parish, shall be payable commencing with respect to the calendar year after the year which such pipeline is acquired by the Issuer, shall be in an amount not to exceed $45,000 per annum (payable in arrears) and shall be payable to the Sheriff on or prior to December 31 of each year.
Section 5.3 Obligation to De-fease/Repay School Bonds. In addition to PILOT payments set forth herein, the Lessee agrees to make, on the date which is the earlier of (i) 13 months following the In Service Date; or (ii) March 1, 2008, a payment in lieu of a PILOT payment, which shall be made to the Paying Agent for the Pine Prairie School District No. 4 General Obligation Bonds, which bonds were issued on March 1, 2001 in the original principal amount of $3,750,000 (the “School Bonds”). Such payment shall be in an amount sufficient to defease or otherwise pay the principal and interest on the School Bonds (at their then outstanding balance based on the existing amortization schedules) in full or to provide for their payment in full at the next available redemption date; provided that the issuer thereof (x) may not agree to an increase in the principal amount of such School Bonds or an increase in the interest rate or other amounts which would be due the owners of the School Bonds; and (y) may not agree to an amendment to the amortization schedule which has the effect of postponing the payment of any principal or interest or other amount; and (z) must continue to be current with respect to payments of principal and interest thereon.

In light of these provisions, we conclude that there was valid consideration for the conveyance and lease-back agreements and, as a result, that no simulation occurred.

Defendants next argue that the property is not being used for a public purpose. Defendants assert that in order to be considered as being used for public purposes, the use must be direct use by the public. However, the Louisiana Supreme Court, in considering the definition of public use in the context of expropriation has stated that:

While actual public use of the servitude may play a role in the appropriate case in determining whether the expropriation serves a public purpose, we do not read the constitutional provision and the statutes granting ExxonMobil its authority to expropriate private property as restricting expropriating real estate to that on which the pipeline itself is placed, nor do we interpret these provisions and the jurisprudence as requiring direct public use as the sole factor in determining whether the expropriated property will serve a public purpose.

Exxon Mobil Pipeline Co. v. Union Pac. R.R. Co., 09-1629, p. 8 (La.3/16/10), 35 So.3d 192, 197 (emphasis added). This court, in Town of Vidalia v. Unopened Succession of Ruffin, 95-580, pp. 6-7 (La.App. 3 Cir. 10/4/95), 663 So.2d 315, 319 (footnote omitted), explained that:

Defendants in the case sub judice contend that in order to show a public purpose, there must be “a general public right to a definite use of the property, as distinguished from a use by a private individual or corporation which may prove beneficial or profitable to some portion of the public.” River & Rail Terminals, Inc. v. Louisiana Ry. & Nav. Co., 171 La. 223, 180 So. 387 (1930). Despite this restrictive language, the Louisiana jurisprudence has not defined “public purpose” so narrowly. See Texas Pipe Line Co. v. Stein, 190 So.2d 244 (La.App. 4 Cir.1966), reversed on other grounds, 250 La. 1104, 202 So.2d 266 (1967) (“ ‘actual public use’ is not the criteria by which public purpose is determined”). Rather, any allocation to a use resulting in advantages to the public at large will suffice to constitute a public purpose. Moreover, a use of the property by a private individual or corporation, when such use is merely incidental to the public use of the property by the state or its political subdivisions, does not destroy an otherwise valid public purpose. In considering this issue, the Louisiana Supreme Court has noted that:
“ ‘public use’ is synonymous with ‘public benefit,’ ‘public utility’ or ‘public advantage,’ and ... authorize^] the exercise of the power of eminent domain to promote such public benefit, etc., especially where the interests involved are of considerable magnitude, and it is sought to use the power in order that the natural resources and advantages of a locality may receive the fullest development in view of the general welfare.”
City of New Orleans v. New Orleans Land Co., 136 So. at 92.

In this case, the benefit to the public was outlined clearly in the affidavit of Dr. William A. Ward, President of the IDB, wherein he stated, in pertinent part, with regard to the PPEC Project that:

3.
In an effort to encourage Pine Prairie Energy Center, LLC (“PPEC”) to acquire, construct and install a natural gas storage facility, and the necessary equipment and pipelines (the “Project”), the IDB authorized me, acting as President, to take any and all actions and to sign any and all documents, instruments, contracts or writings that would be necessary to encourage PPEC to locate the Project in Evangeline Parish. The IDB specifically resolved that the acquisition, construction, and installation of the Project would benefit the welfare and economy of the citizens of Evangeline Parish and it was in the |npublic interest of those citizens to encourage the location of the Project in the Parish.
8.
The project has resulted in an investment of approximately $700,000,000 in Evangeline Parish.
9.
During the construction phase of the Project, over 500 individuals were employed at the project.
10.
The project has resulted in the permanent creation of 20 full-time jobs with wages double the average of Evangeline Parish.
11.
The construction and operation of the Project has generated approximately $10,000,000 in sales and use tax for Evangeline Parish, and Evangeline Parish is currently receiving approximately $1.2 million annually in ad valorem taxes on the natural gas stored at the facility.
12.
Since the Project came on line, PPEC has made of $450,000 in PILOT payments to Evangeline Parish under the Lease Agreement and has also made significant financial contributions that support various organizations and causes in Evangeline Parish.
13.
PPEC voluntarily provided the Evangeline Parish School Board with $8.2 million to retire general obligation bonds that the Evangeline Parish School Board issued in 2001 for use in significant upgrades to school facilities in Pine Prairie, Louisiana.

In light of this information, which was not countered in any way by Defendants, and the jurisprudence defining use for a public purpose, we find that the PPEC project is beneficial to the public of Evangeline Parish and, thus, is being used for a public purpose.

| ^CONCLUSION

Having so found, we agree with the trial court that there is no material fact remaining but that Plaintiffs are entitled to judgment finding that the IDB is the owner of the Chalk Pipeline, that all the PPEC project property is public property being used for a public purpose and is therefore exempt from taxation for ad valorem property taxes from the date of the conveyance of the property from PPEC to the IDB, and that Defendants should be enjoined from issuing further tax assessments, bills and/or liens, and from instituting any further enforcement proceedings against PPEC or the IDB in connection with this property during the term of the lease-back between those parties. Accordingly, the judgment of the trial court is affirmed.

Costs of this appeal are assessed to Defendants-Appellants, Eddie Soileau, Sheriff and Ex Officio Tax Collector for Evangeline Parish, and Dirk Deville, Assessor for Evangeline Parish.

AFFIRMED.

COOK, J., dissents.

      . Defendants conceded ownership of the CGT Meter Site in their appeal brief.