author: McClendon, j. McDONALD, J.,

text:
    In re Royce TONEY.
    No. 2012 CA 1887.
    Court of Appeal of Louisiana, First Circuit.
    May 30, 2014.

      R. Gray Sexton, Alesia M. Ardoin, Jennifer L. Jackson, Baton Rouge, Louisiana, for Plaintiff/Appellant Royce Toney.
    Kathleen M. Allen, Aneatra P. Boykin, Michael D. Dupree, Baton Rouge, Louisiana, for Defendant/Appellee Louisiana Board of Ethics.
    Before PETTIGREW, McDONALD, and McClendon, jj.
   McClendon, j.

|2In this appeal, Royce Toney, the former Sheriff of Ouachita Parish, challenges a declaratory opinion of the Louisiana Board of Ethics (Ethics Board), finding that Sheriff Toney could not use his campaign funds to pay legal fees that he incurred in connection with the defense of criminal charges against him contained in a federal indictment. For the reasons that follow, we affirm.

FACTUAL AND PROCEDURAL HISTORY

On February 22, 2012, the United District Court for the Western District of Louisiana, Monroe Division, indicted Sheriff Toney on twenty-one counts, which included conspiracy, fraud, and related activity in connection with computers, identity theft, obstruction of an investigation, and obstruction by retaliating against a victim. The indictment provided that at all relevant times therein, Sheriff Toney was the elected sheriff of Ouachita Parish.

Count 1, the conspiracy count, alleged that Sheriff Toney, with others, conspired to track the communications of a former employee of the Ouachita Parish Sheriffs Office (OPSO). Count 1 also alleged that Sheriff Toney contacted an employee of the OPSO, inquiring about obtaining telephone records, that Sheriff Toney asked the employee to access the former employee’s telephone records, providing said employee with the former employee’s email address and password, and that a computer at the OPSO was repeatedly utilized to access the former employee’s personal email account without authorization.

The fraud counts, Counts 2-10, alleged that Sheriff Toney, on nine different dates, intentionally and without authorization, and in excess of authorization, accessed a protected computer and obtained information. The identity theft counts, Counts 11-19, alleged that Sheriff Toney, on nine different dates, knowingly transferred, possessed, and used, without lawful authority, a means of identification of another person with the intent to commit unlawful activity. Count 20, obstruction of an investigation, alleged that Sheriff Toney corruptly influenced, obstructed, and impeded a criminal investigation by the Federal Bureau of Investigation by reformatting and installing a new operating Usystem to the computer utilized to commit the crimes charged in Counts 2 through 19. The last count, Count 21, alleged that Sheriff Toney knowingly, with the intent to retaliate, took an action harmful to the former employee, that is, an internal affairs investigation, for providing to a law enforcement officer truthful information relating to the commission of a federal offense.

On March 2, 2012, Sheriff Toney made a request for an advisory opinion from the Ethics Board regarding whether he could use his campaign funds to pay legal fees incurred in connection with the defense of the charges contained in the criminal indictment. On May 16, 2012, Sheriff Toney withdrew his request for an advisory opinion and converted the request to an application for a declaratory opinion. He also requested that the matter be heard at the June 2012 meeting of the Ethics Board.

The Ethics Board considered the application for the declaratory opinion at its June 15, 2012 meeting. Following the hearing on June 15, 2012, the Ethics Board concluded that LSA-R.S. 18:1505.21 of the Campaign Finance Disclosure Act prohibited Sheriff Toney from using his campaign funds to pay legal fees incurred in connection with his federal indictment. On July 20, 2012, a declaratory opinion was approved and published by the Ethics Board.

On August 8, 2012, Sheriff Toney submitted an application for rehearing and a request for reconsideration. In support of its application, Sheriff Toney submitted the affidavit of Michael Reese Davis, Sheriff Toney’s attorney in connection with his federal criminal charges. Mr. Davis attested, in part, that Sheriff Toney entered into a plea agreement with the government and that he pled guilty on August 2, 2012, to the misdemeanor charges of accessing a former employee’s computer. At a meeting held on August 17, 2012, and upon Preview of Sheriff Toney’s request, the Ethics Board denied the request for rehearing.

Thereafter, on September 13, 2012, Sheriff Toney filed this appeal, assigning the following as error:

1. The Ethics Board erred in disregarding its previous advisory opinions where the Ethics Board held an elected official may use his campaign funds to pay for the defense of a criminal indictment when the conduct is related to the holding of public office.
2. The Ethics Board erred in issuing a declaratory opinion concluding the allegations in the criminal indictment brought against Sheriff Toney were not related to Sheriff Toney’s holding of public office as the Sheriff of Ouachita Parish.
3. The Ethics Board erred in not allowing into evidence a videotape of an internal affairs investigation that resulted in the most serious count in the indictment brought against Sheriff Toney.

DISCUSSION

The Board of Ethics is established by LSA-R.S. 42:1132 and is charged with enforcing the Louisiana Code of Ethics. See LSA-R.S. 42.T132. The purpose of the Code of Ethics is to further the public interest by insuring that the law protects against conflicts of interest on the part of Louisiana’s public officials and state employees by establishing ethical standards to regulate the conduct of those persons. See LSA-R.S. 42:1101. Duplantis v. Louisiana Bd. of Ethics, 2000-1750, 2000-1956 (La.3/23/01), 782 So.2d 582, 586.

Sheriff Toney requested a declaratory opinion from the Ethics Board pursuant to LSA-R.S. 42:1141.1. Louisiana Revised Statutes 42:1141.1 provided:

A. Upon application of a public servant, other person, or agency, the board may declare rights, status, and other legal | ¡¡relations established by the provisions of this Chapter or by any other law within its jurisdiction or under opinions issued by the board, either before or after there has been a breach thereof. The applicant may seek to have the board determine any question of construction or validity arising under the provisions of this Chapter or by any other law within its jurisdiction.
B. The board’s power to declare rights, status, or legal relations established by the provisions of this Chapter or by any other law within its jurisdiction or under opinions issued by the board, or the construction of said laws or opinions, is not limited or restricted to any proceeding where a declaratory opinion is sought in order to terminate a controversy or remove an uncertainty.
C. The purpose of a declaratory opinion is to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations established by the provisions of this Chapter or by any other law within the board’s jurisdiction or under opinions issued by the board, or the construction of said laws and opinions.
D. A declaratory opinion is a decision of the board. The decision of the board on an application for a declaratory opinion shall be rendered after a public hearing and only after the requesting party, all other interested parties, and the board’s staff have been afforded full and complete opportunity to present evidence, testimony, and argument. A declaratory opinion of the board shall be considered a final decision and shall be reviewable by the Court of Appeal, First Circuit, pursuant to R.S. 42:1142.
E. The board may refuse to render a declaratory opinion where such opinion, if rendered, would not terminate the uncertainty or controversy giving rise to the proceeding.
F. When a declaratory opinion is sought, the public servant, other person, or agency, as necessary and appropriate for the rendition of a declaratory opinion, who has or claims any interest which would be affected by the opinion shall be made a respondent and given notice of the request and of all public hearings conducted pursuant to the request.
G. The procedures for seeking a declaratory opinion and for the public hearing on such request shall be provided by rule adopted by the board pursuant to the Administrative Procedure Act.

Louisiana Revised Statutes 42:1142A provided, in pertinent part:

Whenever action is taken against any public servant or person by the board or panel or by an agency head by order of the board or panel, or whenever any public servant or person is aggrieved by any action taken by the board or panel, he may appeal therefrom to the Court of Appeal, First Circuit, if application to the board is made within thirty days after the decision of the board becomes final.

| fiIn this matter, we first address the argument of the Ethics Board that this court is without authority to review its declaratory opinion, asserting that the declaratory opinion rendered in this matter is actually an advisory opinion. Therefore, according to the Ethics Board, the declaratory opinion is not a decision under LSA-Const. Art. 10, § 21.

In the First Circuit case of In re Lorusso, 11-0666 (La.App. 1 Cir. 12/29/11), 85 So.3d 712, we reversed a decision of the Board of Ethics that held that a political candidate was not permitted to amend his campaign finance disclosure report to correct a typographical error, whereby a particular sum was listed as a contribution rather than as a loan. In its discussion of whether a justiciable controversy existed, this court first noted that the legislature did not otherwise define declaratory opinions in the Code of Ethics. Thus, the court looked to the Louisiana Code of Civil Procedure for guidance and discussed the grant of authority given to the courts to render declaratory judgments in LSA-C.C.P. art. 1871. In re Lorusso, 85 So.3d at 717.

Declaratory judgments may be rendered “whether or not further relief is or could be claimed.” LSA-C.C.P. art. 1871. Nevertheless, a declaratory judgment has the force and effect of a final judgment or decree and may serve as the basis for a petition seeking further relief. See LSA-C.C.P. arts. 1871 and |71878. However, a court may refuse to render a declaratory judgment or decree where such judgment or decree, if rendered, will not terminate the uncertainty or controversy giving rise to the proceeding. LSA-C.C.P. art. 1876. Accordingly, courts will only act in cases of a present, justiciable controversy and will not render merely advisory opinions. In re Lorusso, 85 So.3d at 717; Church Point Wholesale Beverage Co., Inc. v. Tarver, 614 So.2d 697, 701 (La.1993). The Lorusso court then stated:

A justiciable controversy is a real and substantial controversy admitting of specific relief through a decree of conclusive character. Am. Waste & Pollution Control Co. v. St. Martin Parish Police Jury, 627 So.2d 158, 161 (La.1993). It has been generally defined as a dispute between “adverse parties with opposing claims ripe for judicial determination,” involving “specific adversarial questions asserted by interested parties based on existing facts.” Prator v. Caddo Parish, 2004-0794, p. 6 (La.12/1/04), 888 So.2d 812, 816.
In the context of declaratory judgment, a justiciable controversy must involve uncertain or disputed rights in an immediate and genuine situation, and must be a substantial and actual dispute as to the legal relations of parties having real, adverse interests. Steiner v. Reed, 2010-1465, p. 6 (La.App. 1st Cir.2/11/11), 57 So.3d 1188, 1192. Such a justiciable controversy must be distinguished from one that is merely hypothetical or abstract, or one presenting an issue that is academic, theoretical, or based on a contingency that may or may not arise. Id.

In re Lorusso, 85 So.3d at 717-18.

In this case, we find that Sheriff Toney has presented a justiciable controversy, as it is a request for a determination of his right to use his campaign funds in the defense of his criminal indictment, i.e., a request for resolution of an uncertain right and a demand for relief presented in an immediate and genuine situation. See In re Lorusso, 85 So.3d at 718. As argued by Sheriff Toney, if he used his campaign funds to pay his legal bills without seeking a declaratory opinion from the Ethics Board, he would ostensibly violate the CFDA if that use of his campaign funds was not related to the holding of public office. Thus, as in Lorusso, a ruling by the Ethics Board in favor of Sheriff Toney would terminate the controversy. Therefore, resolution of the issue constitutes a substantial and actual dispute as to the legal relations between Sheriff Toney and the Ethics Board, each of whom have a real and actual interest in the resolution of the issue raised in Sheriff Toney’s request for declaratory relief.

Accordingly, we conclude that we have jurisdiction to review the declaratory opinion issued on July 20, 2012, because as a declaratory opinion presenting a justiciable controversy under LSA-R.S. 42:1141.6, it is appealable.

A declaratory opinion of the board shall be considered a final decision and shall be reviewable by the Court of Appeal, First Circuit, pursuant to R.S. 42:1142.

The Ethics Board functions as the supervisory committee on campaign finance disclosure, and its members constitute the supervisory committee. See LSA-R.S. 18:1511.1A. As such, it shall “function as the supervisory committee to administer and enforce the provisions of this Chapter [LSA-R.S. 18:1481-LSA-R.S. 18:1555, i.e„ the CFDA] and the rules, regulations, and orders issued hereunder.” LSA-R.S. 18:1511.1A.

At issue herein is LSA-R.S. 18:1505.21(1) of the CFDA, which provides, in pertinent part:

On and after January 1, 1991, contributions received by a candidate or a political committee may be expended for any lawful | ^purpose, but such funds shall not be used, loaned, or pledged by any person for any personal use unrelated to a political campaign, the holding of a public office or party position, or, in the case of a political committee, other than a candidate’s principal campaign committee or subsidiary committee, the administrative costs or operating expenses of the political committee .... (Emphasis added.)

Sheriff Toney argues that his right to use his campaign funds to pay for the defense of his criminal indictment is not only statutorily authorized, but consistent with previously rendered opinions of the Ethics board. Sheriff Toney contends that the Ethics Board erred as a matter of law when it disregarded overwhelming evidence showing that the allegations against him were related to the holding of public office and that the actions taken by him could only have been taken as sheriff. Conversely, the Ethics Board contends that the activity at issue is not related to the holding of public office and that numerous advisory opinions of the Ethics Board, as introduced into evidence, conclude that such activity is impermissible. Thus, the issue before us is the proper interpretation of “the holding of a public office.” Questions of law, such as the proper interpretation of a statute, are reviewed by this court under the de novo standard of review. Saizan v. Pointe Coupee Parish School Bd., 10-0757 (LaApp. 1 Cir. 10/29/10), 49 So.3d 559, 564, writ denied, 10-2599 (La. 1/14/11), 52 So.3d 905.

Following the June 15, 2012 hearing, the Ethics Board “concluded that Sheriff Royce Toney may not use his campaign funds to pay the legal fees he has incurred in connection with [his] federal indictment.” In its opinion, the Ethics Board stated, that “the actions taken [in] this particular case were not related to the holding of Sheriff Toney’s public office.” Although there is no statute or rule that defines what is related to “the holding of public office,” we find that any use by Sheriff Toney of campaign funds for the defense of his criminal indictment following a guilty plea is prohibited as unrelated to the holding of a public office. In this unique situation, Sheriff Toney pled guilty to criminal conduct related to the acts alleged in the indictment. Although it was after the issuance of the declaratory opinion, said plea was entered prior to his 1 ^application for rehearing before the Ethics Board. Further, the affidavit of his attorney confirming the plea is part of the record before us.

Nor do we find any merit to Sheriff Toney’s argument regarding the videotape. Sheriff Toney asserts that the Ethics Board erred in failing to admit into evidence a videotape showing Sheriff Toney conducting an internal affairs investigation. Counsel for the Ethics Board objected to the admittance of the videotape based on a lack of relevancy. During the hearing, Sheriff Toney’s counsel argued that the videotape showed “an internal investigation being conducted in an interrogation room with the Sheriff dressed in his uniform, as the Sheriff, with the First Deputy Sheriff there assisting the Sheriff, with the Respondent on the other side of a small table being examined by the Sheriff.” Counsel for the Ethics Board stipulated that Sheriff Toney was in his sheriffs uniform during the course of an internal affairs investigation and that an internal affairs investigation was being conducted by Sheriff Toney. The chairman of the Ethics Board sustained the objection, reasoning that it was not the purpose of the Ethics Board to determine whether the internal affairs investigation was legitimate, and because counsel for the Ethics Board stipulated to the facts that Sheriff Toney intended to prove with the videotape, the videotape was irrelevant. We can find no abuse of discretion or error in the failure to introduce the videotape.

CONCLUSION

For the above and foregoing reasons, we affirm the July 20, 2012 declaratory opinion of the Board of Ethics. Costs of the appeal are assessed against Royce Toney.

AFFIRMED.

McDONALD, J., dissents and assign reasons.

McDONALD, J.,

dissenting.

11While I believe the majority’s analysis of the merits of this matter is correct, and I would normally agree with their decision to affirm the decision of the Board of Ethics, I respectfully dissent because I do not believe the matter is appealable. Therefore, I do not believe we have subject matter jurisdiction over the Board’s declaratory or advisory opinion and believe the appeal should be dismissed.

In 1997, the Louisiana Supreme Court issued its opinion in Transit Management of Southeast Louisiana, Inc. v. Commission on Ethics for Public Employees, 96-1982 (La.12/2/97), 703 So.2d 576, 577, finding that an advisory opinion was not a “preliminary, procedural, or intermediate action” within the meaning of La. R.S. 42:1142(A). Therefore, the court reasoned that “[tjhere is no constitutional or legislative authority for judicial review of an advisory opinion rendered by” the Board of Ethics.

Thereafter, the Legislature attempted to overrule Transit Management by enacting Acts 1999, No. 252 § 1, effective June 11, 1999, amending La. R.S. 42:1142(A) to provide that:

Whenever action is taken against any public servant or person by the board or panel or by an agency head or by order of the board or panel, or whenever any public servant or person is aggrieved by any action taken by the board or panel, he may appeal there from to the Court of Appeal, First Circuit, if application to the board is made within thirty days after the decision of the board becomes final. Any advisory opinion issued to any person or governmental entity by the board or panel or any preliminary, procedural, or intermediate action or ruling by the board or panel is subject to |athe supervisory jurisdiction of the appellate jurisdiction of the appellate court as provided by Article V, Section 10 of the Constitution of Louisiana.

(Emphasis added.)

Despite the amendment by the Legislature, the supreme court found in Duplantis v. Louisiana Bd. of Ethics, 2000-1750, 2000-1956 (La.3/23/01), 782 So.2d 582, that there is no constitutional authority for judicial review of an advisory opinion. The court noted that while Article X, § 21 of the constitution provides authority for judicial review of “decisions” of the Board, an advisory opinion is not such a decision. Neither is it a preliminary, procedural, or intermediate action or ruling by the Board. The court noted that an advisory opinion is usually sought by correspondence to the Board by an applicant. The facts on which the Board bases its reply are provided by the applicant. There is no investigation by the board, neither is there an adversarial hearing. After the opinion is issued, the applicant is in the same position as before. Duplantis, 782 So.2d at 587-588.

It is important also that there is no “justiciable controversy” or actual dispute with adverse parties, such that a “judgment of the court may effectively operate through a decree of conclusive character.” Duplantis, 782 So.2d at 589. The Board is not adverse to a person seeking an interpretation of a law over which the board has jurisdiction to interpret and enforce. See R.S. 42:1132 et seq. The Board adopts an adversarial position when it becomes an “enforcer” rather than “interpreter.”

The majority references In re Lorusso, 2011-0666 (La.App. 1st Cir.12/29/11), 85 So.3d 712, in which this court reviewed the response by the Ethics Board to a request for a declaratory opinion. In that matter, a declaratory opinion was requested from the Board as to whether a campaign finance disclosure report could be amended to show that a $30,000.00 contribution from the candidate to his Rcampaign fund was in reality a loan. This court found that a “justiciable controversy” existed, specifically noting:

In the context of declaratory judgment, a justiciable controversy must involve uncertain or disputed rights in an immediate and genuine situation, and must be a substantial and actual dispute as to the legal relations of parties having real, adverse interests. Steiner v. Reed, 2010-1465, p. 6 (La.App. 1st Cir.2/11/11), 57 So.3d 1188,1192.

Lorusso, 85 So.3d at 717. (Footnote added.)

I do not believe a justiciable controversy exists in this matter. Louisiana courts are prohibited from rendering or reviewing advisory opinions and may only review matters that are justiciable. Duplantis, 782 So.2d at 589, and eases cited therein. In Lorusso, the Board’s response to the request for a declaratory opinion, dealt with an action already taken by an elected official, and found that the action requested by Rep. Lorusso would be a violation La. R.S. 18:1505.1 and expose him to civil penalties in accordance with La. R.S. 18:1505.4.(B). In that matter, Rep. Lorus-so and the Board had “real, adverse interests.” The Board is not adverse to a person asking a hypothetical question. Even if the Board’s response interprets the law so that it is contrary to what the person requested, when no action is taken either by the Board or by the person requesting an interpretative or “declaratory opinion” they are not adversaries.

I also note that La. R.S. 42:1141.1 was repealed by the Legislature by Acts 2012, No. 608 § 2, effective June 7, 2012. It was replaced by La. R.S. 42:1141.6. The purpose of the Act was to amend and reenact provisions in the Code of Governmental Ethics. Much of the language regarding declaratory opinions was deleted or revised.

| ^Importantly, it established the Ethics Adjudicatory Board that has jurisdiction over matters referred to the Board of Ethics. The Board is still empowered to conduct hearings on a violation of a law over which the Board has jurisdiction. Louisiana Revised Statute 42:1135 provides, in pertinent part, that the Board of Ethics shall have the right to enforce any valid regulation, final decision, or final order of the Board of Ethics or the Ethics Adjudicatory Board. The revisions in the Code of Governmental Ethics were extensive. The initial request for a declaratory opinion pursuant to La. R.S. 42:1141.1 was made by Sheriff Toney in May before the new law took effect. However, the changes were so extensive and they became law before this matter was appealed and I believe they are instructive.

The Legislature continues to give persons aggrieved by a “decision” of the Board of Ethics and now, the Ethics Adjudicatory Board, the right to appeal to the First Circuit Court of Appeal. However, the new law sets out considerable language devoted to complaints, investigations, and hearings. Matters in which the Board has investigated complaints, and proposed enforcement actions are appealable. The Board may also take action, that is, investigate and enforce a provision of law under its jurisdiction, without the necessity for a sworn complaint.

In this matter, we are dealing with a declaratory rather than an advisory opinion, but under these facts, I do not see a difference. It is the Board’s position, as articulated by their legal counsel, that there is no difference in an “advisory opinion” and a “declaratory opinion” in this matter. I agree. The request involves no enforcement action; there is nothing to enforce because there has been no action taken to which the Board could respond. It is strictly an interpretation of the effect of a provision, La. R.S. 42:1142(A), in the Code of Governmental Ethics regarding the use of campaign funds.

¡¿Because I believe we have no authority to review this matter, either by appeal or by supervisory writ, I believe we should dismiss it. Therefore, 1 respectfully dissent from the well written and well reasoned opinion of the majority.

      . On June 11, 2012, Sheriff Toney sent a supplement to his request for a declaratory opinion.

      . At the hearing, Sheriff Toney and the Ethics Board entered into ten stipulations of fact and stipulated to the admissibility of seven exhibits, including a comprehensive memorandum of prior advisory opinions.

      .Attached to Mr. Davis’ affidavit was a copy of the indictment and a copy of a Second Superceding Indictment, filed on July 26, 2012.

      . Louisiana Revised Statutes 42:1132C, regarding the jurisdiction of the Ethics Board, provides, in relevant part:
      The Board of Ethics shall administer and enforce the provisions of this Chapter and the rules, regulations, and orders issued hereunder with respect to public employees and elected officials, including final decisions of the Ethics Adjudicatory Board. In addition, the Board of Ethics, functioning as the Supervisory Committee on Campaign Finance Disclosure, shall administer and enforce the provisions of Chapter 11 of Title 18 of the Louisiana Revised Statutes of 1950, and the rules, regulations, and orders issued thereunder.

      . Louisiana Revised Statutes 42:1141.1 was repealed by Acts 2012, No. 608 § 2, effective June 7, 2012, and replaced with LSA-R.S. 42:1141.6.

      . Louisiana Revised Statutes 42:1142 was also amended in 2012, by Acts 2012, No. 607, effective June 7, 2012.

      . Article 10, Section 21 of the Louisiana Constitution provides:
      The legislature shall enact a code of ethics for all officials and employees of the state and its political subdivisions. The code shall be administered by one or more boards created by the legislature with qualifications, terms of office, duties, and powers provided by law. Decisions of a board shall be appealable, and the legislature shall provide the method of appeal.

      . Louisiana Code of Civil Procedure Article 1871 provides:
      Courts of record within their respective jurisdictions may declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for; and the existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate. The declaration shall have the force and effect of a final judgment or decree.

      .Louisiana Code of Civil Procedure Article 1878 provides:
      Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application therefor shall be by petition to a court having jurisdiction to grant the relief. If the application is considered sufficient, the court, on reasonable notice, shall require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause why further relief should not be granted forthwith.

      .' Louisiana Code of Civil Procedure Article 1876 provides:
      The court may refuse to render a declaratory judgment or decree where such judgment or decree, if rendered, would not terminate the uncertainty or controversy giving rise to the proceeding.

      . Louisiana Revised Statutes 42:1141.6 replaced LSA-R.S. 42:1141.1 by Acts 2012, No. 608 § 1, eff. June 7, 2012. As in the prior version, Subsection D provides, in pertinent part:

      . Louisiana Revised Statutes 18:1511.1 A provides:
      The Supervisory Committee on Campaign Finance Disclosure is established. The Board of Ethics, as established in R.S. 42:1132, shall function as the supervisory committee to administer and enforce the provisions of this Chapter and the rules, regulations, and orders issued hereunder. The members of the Board of Ethics shall constitute the supervisory committee.

      . The supervisory committee may also render an advisory opinion concerning the application of a general provision of this Chapter. LSA-R.S. 18:1511.2B. Further, the supervisory committee may render an opinion in response to a request by any public official, any candidate for public office, any political committee, or the committee may render an advisory opinion on its own initiative. LSA-R.S. 18:1511.2B.

      . We leave for another day, the question of whether the result herein would have been different had there been no guilty plea.

      . Finding that the Board had not established rules to govern its responses to requests for declaratory opinions, the First Circuit reached its decision by turning to the Louisiana Code of Civil Procedure for guidance.


source: Caselaw Access Project

author: HIGGINBOTHAM, J. KUHN, J.,

license: Public Domain

text:
    MGD PARTNERS, LLC v. 5-Z INVESTMENTS, INC.
    No. 2012 CA 1521.
    Court of Appeal of Louisiana, First Circuit.
    June 2, 2014.

      Douglas T. Curet, Rick A. Singer, Hammond, LA, for Plaintiffs/Third Party Defendants-Appellants, John Mills, Terry Carson Davis, and MGD Partners, LLC.
    T. Jay Seale, III, Amy L. Gonzales, Les-li S. Bolner, Hammond, LA, for Defendant/Third Party Plaintiff-Appellee 5-Z Investments, Inc.
    Before WHIPPLE, C.J., PARRO, KUHN, GUIDRY, PETTIGREW, McDonald, McClendon, welch, HIGGINBOTHAM, CRAIN, THERIOT and DRAKE, JJ.
   HIGGINBOTHAM, J.

| ¡¡This suit arises out of a redhibition action filed by appellants, MGD Partners, LLC (MGD), and a suit for a deficiency judgment filed by appellee, 5-Z Investments, Inc. (5-Z). In the redhibition action, appellant, MGD appeals the trial court’s judgment, which sustained appel-lee’s peremptory exception raising the objection of prescription. In the action for the deficiency judgment, appellants, Carson Davis and John Mills, appeal from the trial court’s judgment granting appellee’s motion for partial summary judgment. For the following reasons, we reverse the trial court’s judgment sustaining the exception of prescription under La. Civ.Code art. 2534, and the trial court’s judgment granting partial summary judgment in favor of 5-Z, and remand the matter for further proceedings.

FACTS AND PROCEDURAL HISTORY

On March 17, 2006, MGD purchased approximately 324 acres of land in Tangipa-hoa Parish (the property) from 5-Z. The property consisted of three primary parcels: an 80-acre parcel that has been partially developed since the date of the sale with roads, in addition to curb and gutter infrastructure in preparation for a residential development (parcel 1); a second 80-acre parcel that has been developed since the date of the sale by construction of a wastewater treatment facility (parcel 2); and a 160-acre parcel that has remained undeveloped (parcel 3). MGD purchased parcel 1 outright. Parcel 2 and parcel 3 were financed by two separate notes given to 5-Z on March 17, 2006. Promissory note 1, for parcel 2, was payable in the amount of $860,741.60 and due 18 months from March 17, 2006 (note 1). Promissory note 2, for parcel 3, was payable in the amount of $1,721,483.20 and due 36 months from March 17, 2006 (note 2).

MGD purchased the property with the intention of creating a residential development. In furtherance of its plan, on parcel 1 of the property, it developed Rroads, as well as curb and gutter infrastructure. However, on March 9, 2009, after reviewing a public notice and related documents from the Army Corps of Engineers, MGD learned that the entirety of the property is located within the boundaries of the former Hammond Bombing and Gunnery Range. On April 23, 2009, MGD received a letter from Maurice Jordan, the Tangipa-hoa Parish Engineer, indicating that no further permits or approvals would be issued by the parish for development activities on MGD’s property until the risk of contamination had been fully investigated and remedied.

Thereafter, on October 28, 2009, MGD filed a suit for rescission of the sale, claiming that the property’s prior use as a bombing range constituted a redhibitory defect in the property and had it known of the defect, it would not have purchased the property. According to the petition, MGD purchased the property “under the mistaken belief that it was suitable for residential development purposes.” MGD also asserted that 5-Z knew of the defect and failed to disclose it to MGD. In MGD’s prayer for relief, it requested that the sale of parcel 3 be rescinded, and that it receive a refund of the sale price plus interest. MGD further requested a reduction in the purchase price of parcel 1 and parcel 2 to reflect the decreased value of these parcels as a result of the redhibitory defect.

In response to the allegations- raised in MGD’s petition, on January 7, 2010, 5-Z filed a peremptory exception raising the objection of prescription, asserting that it did not know of the redhibitory defect at the time of the sale, that MGD’s suit was not filed within a year of the sale, and therefore, according to La. Civ.Code art. 2534(A)(2), MGD’s redhibition claim was prescribed. On March 29, 2010, at a hearing, the trial court determined that La. Civ.Code art. 2534(A)(2) governed the prescriptive period in this case, which is a period of one year. The hearing on 5-Z’s prescription exception was continued without prejudice so that it could be re-urged in the future, pending the completion of additional discovery.

|4On March 31, 2010, 5-Z filed a recon-ventional demand against MGD and a third party demand against Carson G. Davis and John Mills, as members of MGD. In 5-Z’s petition, it asserted that Davis and Mills are “joint, several, and solidary obligors” on a promissory note in the amount of $1,721,483.20 payable to 5-Z, executed on March 17, 2006. 5-Z requested a deficiency judgment against Davis and Mills for the full amount due under the note, subject to credit for the sum realized at the sheriffs sale and amounts previously paid. According to 5-Z, the note was past due and owing, because sums owed on the note were not paid by the maturity date stipulated in the note. The property was previously sold on January 6, 2010, for $613,334.00 at a sheriffs sale in a separate matter entitled “5-Z Investments, Inc. v. MGD Partners, LLC,” and numbered 2009-0002936.

On October 25, 2010, 5-Z filed a motion for partial summary judgment on its third party and reconventional demands, contending that the “pleadings, affidavits and exhibits on file show that there is no genuine issue as to material fact,” and that it was entitled to a deficiency judgment as a matter of law. On December 10, 2010, the trial court signed a judgment granting 5-Z’s motion for partial summary judgment and entered judgment in favor of 5-Z and against Carson Davis and John Mills, as follows:

[A]s joint, several and solidary obligors for the sum of $1,721,483.20, plus interest at the rate of 3.5% from March 17, 2006, until paid, together with all costs in these proceedings and in proceedings entitled “5-Z Investments, Inc. v. MGD Partners, LLC” ... and stipulated attorney’s fees in the amount of 25%, less credits of $100,000.00 paid on or about November 11, 2006 and $601,067.32 paid on or about January 6, 2010.

This judgment was certified as final by the trial court on May 1, 2012. Davis and Mills had filed a motion for new trial on December 14, 2010, which was denied by the trial court. Davis and Mills also applied for supervisory writs from this court |fiseeking review of the December 10, 2010 judgment. This court subsequently denied the writ application on June 20, 2011, declining to exercise its supervisory jurisdiction and determining that MGD would have an adequate remedy by review on appeal.

On December 22, 2011, 5-Z filed a motion to reset its exception of prescription. The matter was heard on February 22, 2012, after which the trial court signed a judgment on March 2, 2012, sustaining 5-Z’s exception of prescription and dismissing MGD’s claims against 5-Z with prejudice. MGD filed a motion for new trial contending that the judgment was contrary to the law and evidence, and that it had discovered new evidence since trial. MGD’s motion for new trial was denied on May 1, 2012.

It is from the December 10, 2010 judgment granting partial summary judgment in favor of 5-Z that Davis and Mills appeal. MGD appeals the March 2, 2012 judgment sustaining 5-Z’s peremptory exception raising the objection of prescription.

DISCUSSION

I. Prescription

MGD contends that the trial court erred in granting 5-Z’s peremptory exception raising the objection of prescription, because the trial court: (1) wrongly classified the property as residential; (2) erroneously determined that 5-Z was not aware of the defect of the property at the time of the sale; and (3) failed to apply the doctrine of contra non valentón.

Louisiana Civil Code article 2534 sets forth the prescriptive period for filing a claim against a seller in redhibition and states, in part:

A. (1) The action for redhibition against a seller who did not know of the existence of a defect in the thing sold prescribes in four years from |fithe day delivery of such thing was made to the buyer or one year from the day the defect was discovered by the buyer, whichever occurs first.
(2) However, when the defect is of residential or commercial immovable property, an action for redhibition against a seller who did not know of the existence of the defect prescribes in one year from the day delivery of the property was made to the buyer.
B. The action for redhibition against a seller who knew, or is presumed to have known, of the existence of a defect in the thing sold prescribes in one year from the day the defect was discovered by the buyer.

The trial court determined that 5-Z’s exception of prescription is governed by paragraph A(2) of Article 2534, because “it was undisputed that the property was purchased and developed for residential purposes,” and therefore, the applicable prescriptive period is one year from the date of delivery of the property. MGD contends that the characterization of the property as residential was in error. According to MGD, at the time of the sale the property was vacant and undeveloped. MGD asserts that in order to classify the property at issue and determine the applicable prescriptive period, the court must look at the condition of the property at the time of the sale, and not its intended use. Thus, MGD contends that paragraph A(l) of Article 2534 governs the prescription exception with an applicable prescriptive period of four years from the date of delivery of the property or one year from the day the defect was discovered by MGD.

Louisiana Civil Code article 2534(A)(2) provides, “when the defect is of residential or commercial imm.ovable property, an action for redhibition against a seller who did not know of the existence of the defect prescribes in one year from the day delivery of the property was made to the buyer.” (Emphasis added.) The language of this provision does not specifically address if such a classification is based on the intended use of the property, or if it is determined by the state of the property at the time of the sale.

17This court previously addressed this issue in Ndanyi v. White, 07-0682 (La.App. 1 Cir. 1/30/08), 976 So.2d 356 (table). In Ndanyi, this court determined that because a suit in redhibition is based on the intended use of the property, in interpreting the language of the prescriptive article on redhibition, the trial court should classify the property based upon its intended use.

This issue was submitted to the Court en banc. For the following reasons, we find that the prescriptive period for the redhibition claims is determined by the actual character of the property, as of the date of the sale, and based upon objective evidence, not upon the intended use of the property by the buyer. Accordingly, we overrule Ndanyi v. White.

Statutes providing for prescriptive periods are to be strictly construed in favor of maintaining a cause of action. David v. Our Lady of the Lake Hosp., Inc., 02-2675 (La.7/2/03), 849 So.2d 38, 47. On appeal, MGD contends that logic and the desire to avoid absurd consequences and extreme uncertainty dictate that this reasoning must prevail.

MGD sets forth that it purchased this property “under the mistaken belief that the property was suitable for residential development purposes” and that 5-Z knew of and failed to disclose the defect (i.e. that the property is actually part of a former bombing and gunnery site wholly unable to be used as a residential development without remediation, if at all). Further, MGD only learned of this defect after preliminary efforts in development of the land.

Louisiana Civil Code article 2520 provides in part, as follows:

The seller warrants the buyer against redhibitory defects, or vices, in the thing sold.
A defect is redhibitory when it renders the thing useless, or its use so inconvenient that it must be presumed that a buyer would not have bought the thing had he known of the defect. The existence of such a defect gives a buyer the right to obtain rescission of the sale.
A defect is redhibitory also when, without rendering the thing totally useless, it diminishes its usefulness or its value so that it must be presumed that a buyer would still have bought it but for a lesser price. The existence of such a defect limits the right of a buyer to a reduction of the price. (Emphasis added.)

There are three factors which must be present to give rise to a redhibition action, those being first, a sale; second, a defect; and third, the defect must be of such a nature as to render the object purchased so inconvenient or imperfect it gives rise to a presumption the buyer would not have bought it, had he known of that defect. Cimmaron Homeoumers Ass’n v. Cimmaron, Inc., 533 So.2d 1018, 1020 (La.App. 1st Cir.1988), writ denied, 537 So.2d 1167 (La.1989); Napoli v. Gully, 509 So.2d 798, 799 (La.App. 1st Cir.), writ denied, 512 So.2d 1182 (La.1987). The party’s intended use of “the thing” is not referenced in the article or the jurisprudence.

The plain language of La. Civ.Code art. 2520 refers to the thing sold. The “thing sold” has a definite character at the time of sale, which cannot be altered by the buyer’s intent. When the property herein was purchased, it was neither “residential” nor “commercial.” Instead, it was unimproved, unzoned, undeveloped raw pasture and woodland. Regardless of the use or uses MGD may have ultimately intended, the property it purchased from 5-Z undisputedly was not residential or commercial. Thus, MGD’s intent is irrelevant. Like MGD, 5-Z should be bound by the character of the property at the time of the purchase regardless of MGD’s subjective intent. Any other result would lead to absurd consequences such that if the party changes its intent, the prescriptive period would change. There must be objective criteria on which to base the prescriptive period, i.e., the classification of the property as it existed at the time of the sale. Accordingly, when reviewing a matter for prescriptive purposes, the court must look at the character of the thing sold at the time of the sale, irrespective of its intended use.

|9Thus, given the nature of the property at the time of its purchase herein, the four-year prescriptive period and/or discovery rule of La. Civ.Code art. 2534(A)(1) should apply and not the one-year prescriptive period found in La. Civ.Code art. 2534(A)(2), which, by its terms, pertains to residential or commercial immovable property.

Louisiana Civil Code article 2534(A)(1) provides that an action for redhibition against a seller who did not know of the existence of a defect in the thing sold prescribes in four years from the day delivery of such thing was made to the buyer or one year from the day the defect was discovered by the buyer, whichever occurs first. MGD purchased the property from 5-Z on March 17, 2006. According to the record, MGD discovered the alleged defect in the property around March 9, 2009, and there was insufficient evidence to prove that MGD knew of the defect prior to that date. On October 28, 2009, within four years of the sale and prior to one year from discovering the alleged defect in the property, MGD filed a suit for rescission of the sale. Therefore, MGD’s suit for redhi-bition has not prescribed, and the judgment of the trial court sustaining 5-Z’s peremptory exception raising the objection of prescription is reversed.

II. Summary Judgment

5-Z filed a motion for partial summary judgment on its third party demand against Davis and Mills as joint, several, and solidary obligors of promissory note 2. In its motion, 5-Z contended that there is no genuine issue as to material fact, and it is entitled to a deficiency judgment as a matter of law. In favor of its motion for summary judgment, 5-Z attached the following: (1) note 2, which provided Davis and Mills “jointly, severally and in solido, promise to pay to the order of [5-Z] ... the sum of ONE MILLION SEVEN HUNDRED TWENTY ONE ^THOUSAND FOUR HUNDRED EIGHTY THREE AND 20/100 ($1,721,-483.20) ... Due and payable Thirty Six (36) months from [March 17, 2006];” (2) the credit deed, which provided the real estate that secured the mortgage; (3) the affidavit of Mr. Clarence Zahn, in which Mr. Zahn stated that $100,000.00 had been paid towards the balance of the note, that the property was sold at sheriffs sale, and that after credit for those amounts, there still remained an outstanding balance on the note; and (4) the sheriffs sale after appraisal, showing the amount for which the property sold.

Davis and Mills contend that there are “significant issues of material fact that are genuinely in dispute,” and therefore, the trial court erred in granting summary judgment in favor of 5-Z and rendering a deficiency judgment against them. Davis and Mills argue that if, in the main demand, the contract of sale is cancelled, then the obligations of the surety are likewise extinguished as provided under La. Civ.Code arts. 3058 and 3059. Specifically, Davis and Mills contend that should MGD be successful in its redhibition claim against 5-Z then the entire debt of 5-Z, would be discharged, and Davis and Mills would also enjoy the benefits of this discharge.

A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine issue of material fact. Johnson v. Evan Hall Sugar Co-op., Inc:, 01-2956 (La.App. 1 Cir.12/30/02), 836 So.2d 484, 486. Summary judgment is properly granted if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits, if any, show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law. La.Code Civ. P. art. 966(B)(2). Summary judgment is favored and is designed to secure the just, speedy, and inexpensive determination of every action. La. Code Civ. P. art. 966(A)(2); Thomas v. Fina Oil and Chemical Co., 02-0338 (La.App. 1 Cir.2/14/03), 845 So.2d 498, 501-02. On a motion for summary In judgment, the initial burden of proof is on the mover. If the moving party points out that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense, then the nonmoving party must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden at trial. La.Code Civ. P. art. 966(C)(2). If the nonmoving party fails to do so, there is no genuine issue of material fact, and summary judgment should be granted. Id., 845 So.2d at 502.

In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the trial court’s determination of whether summary judgment is appropriate. Allen v. State ex rel. Ernest N. Mortal — New Orleans Exhibition Hall Authority, 02-1072 (La.4/9/03), 842 So.2d 373, 377. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to this case. Foreman v. Danos and Curole Marine Contractors, Inc., 97-2038 (La.App. 1st Cir.9/25/98), 722 So.2d 1, 4, unit denied, 98-2703 (La.12/18/98), 734 So.2d 637.

The general law applicable for determining the validity of a deficiency judgment action is set forth in First Guaranty Bank, Hammond, Louisiana v. Baton Rouge Petroleum Center, Inc., 529 So.2d 834, 841-42 (La.1987) (on rehearing), as follows:

When the property has been sold under the executory proceedings after appraisal and in accordance with statutory provisions governing appraisal, the creditor may obtain a personal judgment against the mortgagor for any deficiency remaining after the application of the net proceeds of sale to the secured debt. La. [Code Civ.] P. art. 2771.
To obtain a deficiency judgment, the creditor first must affirmatively plead and prove the existence of the obligation giving rise to the debt, La. [Civ.Code.] art. 1831, and the grounds of nonperformance entitling him to maintain his judicial action. La. [CivjCode]12 art. 1994. Further, he must aver and establish by evidence that the property was sold under the executory proceeding after appraisal in accordance with the provisions of article 2723 of the Code of Civil Procedure ... and that the proceeds received were insufficient to satisfy the balance of the performance then due. La. [Code Civ.] P. art. 2771; La.R.S. 13:4106; 4107.
The debtor, on the other hand, may assert both negative and affirmative defenses against the deficiency judgment action. He may defend by demonstrating the creditor’s failure to prove one of the aforementioned elements of his case or by rebutting the existence of such an element. Additionally, the debtor may assert that an obligation is null, or that it has been modified or extinguished, but in such a case the debtor must prove the facts or acts giving rise to the nullity, modification, or extinction. La. [Civ. Code] art. 1831; La. [Code Civ.] P. art. 1005. [Case citations and footnotes omitted.]

After review of the evidence submitted by 5-Z in favor of summary judgment, 5-Z established that the property was sold under the executory proceeding after appraisal in accordance with the provisions of Article 2723 of the Code of Civil Procedure, and that the proceeds received were insufficient to satisfy the balance of the performance then due. However, Davis and Mills contend that should MGD be successful in its redhibition claim against 5-Z, then the entire debt of 5-Z would be discharged and Davis and Mills would also enjoy the benefits of this discharge.

The deficiency judgment proceeding is subject to all of the ordinary defenses available to a debtor, including the defense that the obligation has been modified or extinguished. Louisiana Civil Code article 3059 provides that “[t]he extinction of the principal obligation extinguishes the suretyship.” In a deficiency judgment proceeding, the surety may interpose all nonpersonal defenses availáble to the principal debtor. See Simmons v. Clark, 64 So.2d 520, 523 (La.App. 1st Cir.1953).

Davis and Mills signed the note as members of MGD, who received the property, but also in their individual capacities. In a deficiency judgment 11sproceeding, as a debtor on the note, Davis and Mills may assert that the obligation is null or that it has been modified or extinguished. MGD requested that the sale of certain property be rescinded, and the price of certain property be reduced because of a redhibitory defect. This court has determined that MGD’s claim in redhibition has not prescribed, and thus, is still pending before the trial court. In this procedural posture, summary judgment on the deficiency action is not appropriate at this time. Although the evidence submitted by Davis and Mills is not sufficient to prove MGD’s claim in redhibition, it is sufficient to raise a genuine issue of material fact. See Jackson v. Slidell Nissan, 96-1017 (La.App. 1st Cir.5/9/97), 693 So.2d 1257,1264.

Finding that a genuine issue of material fact exists, the trial court’s judgment granting partial summary judgment in favor of 5-Z is reversed, and the matter is remanded for further proceedings.

CONCLUSION

For the foregoing reasons, the judgment of the trial court sustaining 5-Z’s peremptory exception raising the objection of prescription and the trial court’s judgment granting partial summary judgment in favor of 5-Z are reversed. This matter is remanded to the trail court for further proceedings. All costs of the appeal are assessed to appellee, 5-Z Investments, Inc.

REVERSED AND REMANDED.

McClendon, j., concurs.

CRAIN, J., concurs.

KUHN, J., dissents and assigns reason.

McDONALD, j., dissents for the reasons assigned by KUHN, J.

PETTIGREW, J., dissents and joins in reasons with KUHN, J.

THERIOT, J., dissents with reasons assigned by KUHN, J.

GUIDRY, J., dissents for reasons assigned by KUHN, J.

KUHN, J.,

dissenting.

hi disagree with the majority’s reversals of the trial court’s actions of: (1) sustaining a peremptory exception of prescription filed by 5-Z Investments, Inc. (5-Z) and dismissing the redhibition claim filed by MGD Partners, LLC (MGD); and (2) granting summary judgment in favor of 5-Z in a deficiency judgment action against MGD sureties finding that because MGD might prevail on its redhibition claim, genuine issues of material fact preclude judgment.

In its petition averring entitlement to relief as a result of a redhibitory defect, MGD alleged that at the time of the purchase from 5-Z, it intended to use the property for residential development. And at the trial of the peremptory exception raising the objection of prescription, MGD urged that when the property was sold, it was for the purpose of residential development. Indeed, the entire basis of the redhibition claim according to MGD’s petition is that the property it acquired was not suited for its intended purpose, i.e., residential development. But at the hearing on the motion for new trial and now on appeal, MGD maintains, and the majority apparently agrees, that the determination of whether the defect is of residential or commercial property for purposes of prescription under La. C.C. art. 2534 should be based on simply viewing the property at the time of delivery, thereby creating as a new legal precept an “objective observation” of alleged defective property.

| ^Redhibition is the avoidance of a sale on account of some vice or defect in the thing sold which renders it either absolutely useless, or its use so inconvenient and imperfect, that it must be supposed that the buyer would not have purchased it, had he known of the vice. La. C.C. art. 2520. In a suit for redhibition, the plaintiff must prove: (1) the seller sold the thing to him and it is either absolutely useless for its intended purpose or its use is so inconvenient or imperfect that had he known of the defect, he would never have purchased it; (2) the thing contained a non-apparent, or latent, defect at the time of sale; and (3) the seller was given an opportunity to repair the defect. Walton Constr. Co., L.L.C. v. G.M. Home & Co., Inc., 2007-0145 (La.App. 1st Cir.2/20/08), 984 So.2d 827, 834. In conjunction with proof that the thing contained a non-apparent (latent) defect at the time of sale, Louisiana courts recognize sellers are bound by an implied warranty that the thing sold is reasonably fit for the buyer’s intended use. See Walton Constr. Co., L.L.C., 984 So.2d at 834 n. 8 (citing Young v. Ford Motor Co., Inc., 595 So.2d 1123, 1126 (La.1992)); see also La. C.C. art. 2475; accord La. C.C. art.1967 (defining “cause” as “the reason why a party obligates himself’ and providing that “[a] party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying”).

The majority’s conclusion that since residential development of the property had not occurred as of the date of the sale, the proper basis for classifying the property, apparently as a matter of law, is an “objective observation” of the characteristics of the property at the time of the sale, turns a blind eye to the requirements necessary to support a claim for redhibition. It is well settled that the defectiveness of the thing sold is a factual determination to be made by the trier of fact, whose factual conclusions are not to be disturbed on appeal absent manifest | .¡error. See Arceneaux v. Domingue, 365 So.2d 1330, 1333-34 (La.1978). In order to reach the conclusion that a thing sold is “useless” or its “use” is inconvenient or imperfect under an application of the provisions of La. C.C. art. 2520, the trier of fact must necessarily determine the thing’s intended use, which is a factual finding subject to the manifest error/clearly wrong standard of review. The majority has simply ignored this well established standard of appellate review of a lower court’s judgment and judicially created new law in the process.

It is noteworthy that the majority does not expressly state that it is reversing the trial court for having committed a legal error, though having failed to review the evidence in the record to ascertain the basis for its “objective observation” of the characteristics of the property, it certainly has not undertaken a manifest error/clearly wrong review. The majority’s failure to articulate under which standard of review it has rendered its disposition undermines the importance of the Louisiana Rules of Court and the obligation the rules impose on practitioners. See La. Uniform Rules — Courts of Appeal, Rule 2-12.4A(9)(b) (requiring the appellant’s brief to contain a concise statement of the appropriate standard of review for each assignment of error and issue for review). In such instances, the nature of this court is no longer that of a Court of Appeal but becomés that of a legislature or creator of the law.

Based on the allegations of its petition, MGD seeks recovery for a redhibitory defect as a result of the seller’s breach of its obligation to ensure that the thing sold is fit for its intended use. See La. C.C. art. 2475 (“The seller is bound to deliver the thing sold and to warrant to the buyer ownership and peaceful possession of, and the absence of hidden defects in, that thing. The seller also warrants that the thing sold is fit for its intended use”). Thus, the factfinder’s determination of whether the property is residential or commercial in accordance |4with the intended use is consistent with the object of the lawsuit. To rule as the majority has done creates an incongruent situation where to prove his claim for redhibition a plaintiff must demonstrate the intended use of the property without being subjected to the legally imposed time limitations for that intended use. The majority has looked at “the thing,” ostensibly “objectively,” and found it to be “unimproved, unzoned, undeveloped raw pasture and woodland.” But without knowing of the intended use of the undeveloped property, where is the defect? The majority has expressly defined the defect as “that the property is actually part of a former bombing and gunnery site wholly unable to be used as a residential development without remediation, if at all.” (Emphasis added.)

The very basis for any entitlement to the relief MGD seeks is the incompatibility of the undeveloped land with MGD’s intent to use that land as a residential development. It is properly the role of the legislature to determine the length of prescriptive periods and not that of judicially active courts, even if judges do not agree with the clearly written law.

A trial court’s determination of whether the property is residential or commercial based on the intended use of the immovable property at the time of delivery, read in pari materia with La. C.C. arts. 2475 and 2520 for purposes of an application of La. C.C. art. 2534, is proper and consistent with the object of MGD’s lawsuit. Accord La. C.C. art. 1967. Specifically, La. C.C. art. 2520 defines a redhibitory defect as one that “renders [a] thing useless, or its use so inconvenient that it must be presumed that a buyer would not have bought the thing had he known of the defect.” The jurisprudence has included as elements of a plaintiffs claim for redhibitory relief proof that the seller sold the thing to him and it is either absolutely useless for its intended purpose; or its use so inconvenient/imperfect it may be presumed he would not have purchased the thing | fihad he known of the defect. And the jurisprudence has recognized the concomitant obligation of the seller to warrant that the thing containing that non-apparent defect is reasonably fit for the buyer’s intended use. See Walton Constr. Co., L.L.C., 984 So.2d at 834.

Moreover, assuming arguendo that the determination of whether the property is residential or commercial for purposes of applying La. C.C. art. 2534 is one that should be based on the characteristics of the immovable at the time of the sale rather than its intended use in confecting that sale, the evidence actually admitted at the hearing of the exception of prescription should not be disregarded under the guise of an “objective observation” of the thing that is subject of the redhibition claim. The evidence admitted at the hearing about the characteristics of the immovable property prior to the sale without regard to the buyer’s intended use actually supports a finding that the defect was of commercial immovable property.

Clarence Zahn, one of the five Zahn brothers, stated that for many years (somewhere between 25 and 40), the property had been used as a dairy farm. He and his brothers acquired it from the dairy farmers for the purpose of growing timber as an investment. Thus, the only evidence showing the characteristics of the property at the time of the sale was that it was commercial. As such, under La. C.C. art. 2534A(2), the redhibitory claim of the defect of commercial property prescribed one year from the day of delivery of the property. And although it may be suggested that looking at evidence of the use the seller made of the property in classifying it for purposes of application of the correct prescriptive period is inequitable because it overlooks the buyer’s intended future use, the majority has concluded that the thing’s classification is an objective one for which the buyer’s intended use is “irrelevant.”

| (¡Finally on this point, one may inquire how a person can look at an immovable and determine whether it is or is not residential or commercial merely by objectively observing it. A person can certainly choose to purchase what appears to a casual observer “unimproved, unzoned, undeveloped raw pasture and woodland” with a full intent of “flipping it” and taking advantage of tax consequences for the acquisition inasmuch as the owner deems the immovable property commercial in purpose. Likewise, woodland can readily yield timber and easily be considered a commercial enterprise by the owner. According to the majority’s reasoning, the owners’ decisions to treat each acquisition as commercial are incorrect as a matter of law. Similarly, a buyer may choose to purchase a house that is in dilapidated condition with the intent of demolishing it and using it for unimproved farm land. When it is discovered that it was part of a former bombing range (or burial site or medical waste disposal), is the purchaser relegated to the one-year prescriptive period of La. C.C. art. 2534A(2) because, at the time of the sale, an “objective observation” convinced the observer that it was a house and, therefore, residential?

Addressing the merits of this appeal, in support of the peremptory exception raising the objection of prescription, evidence was introduced. When evidence is so introduced, the trial court’s findings of fact are subject to the manifest error-clearly wrong standard of review. Carter v. Haygood, 2004-0646 (La.1/19/05), 892 So.2d 1261, 1267. Under this standard, if the trial court’s findings are reasonable in light of the record reviewed in its entirety, an appellate court may not reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Stobart v. State, through Dep’t of Transp. and Dev., 617 So.2d 880, 882-83 (La.1993).

|7At the hearing on the exception of prescription, Carson Davis, a member of MGD and the real estate agent under contract with 5-Z who sold the property for 5-Z to MGD, testified. Among other things, Davis stated that after Hurricane Katrina, he was looking for a tract of land for residential purposes and called Zahn, who Davis believed was a representative of 5-Z, to see if the tract 5-Z owned on Highway 445 was available for sale. According to Davis, after the sale, but prior to his discovery that the property had been within the parameters of the Hammond Bombing and Gunnery Range and the discontinuance of the issuance of building permits by the parish, MGD had been working to put in the infrastructure. Davis stated that MGD had pre-sold fifty lots at $2,500,000.00. This testimony constitutes a reasonable factual basis to support the trial court’s determination that the property had been purchased for the intended use of developing it for residential purposes and, therefore, that the defect was of residential immovable property-

Additionally, a reasonable factual basis exists to support the trial court’s finding that 5-Z was unaware of the defect at the time of the sale and, therefore, was in good faith. Davis testified that at a meeting in Baton Rouge with the U.S. Army Corps of Engineers regarding the property 5-Z sold to MGD, Zahn had stated, “[Ejvery-body knew it was in the bombing range.” George Sullivan, who also attended the meeting, testified that he overheard Zahn make a similar statement, but he could not verify if Zahn was referring to the property MGD purchased from 5-Z.

IsAccording to Zahn’s testimony, the meeting in Baton Rouge involved the entirety of the property located in the former Hammond Bombing and Gunnery Range, not just the property 5-Z sold to MGD. Zahn denied having made any statement suggesting that the property 5-Z sold to MGD was located in the former bombing range. He stated that at the time of the sale neither he nor, to the best of his knowledge, the members of 5-Z knew the property 5-Z sold to MGD was in the bombing range. Therefore, although there was conflicting testimony on this point, the trial court’s choice to credit that of Zahn over that of Davis was reasonable. See Stobart, 617 So.2d at 882-83.

MGD’s contention that under the doctrine of contra non valentem, prescription did not begin to run until it discovered the defect in the property is also without merit. Although the doctrine of contra non valentem is a jurisprudential rule under which prescription may be suspended, see Carter, 892 So.2d at 1268, the date of discovery plays no part at all in determining the prescriptive period against such a seller. Wimberly v. Blue, 2008-1535 (La.App. 3d Cir.5/6/09), 11 So.3d 560, 563. To apply the discovery rule of contra non valentem to the sale of residential or commercial immovable property when that situation is the only one for which the legislature did not specifically provide for its application would render subparagraph (2) of La. C.C. art. 2534(A) redundant. Had the legislature intended the discovery rule to apply to this situation, it would have provided that the prescriptive period run from the date of discovery. Wimberly, 11 So.3d at 564; see also Bunch v. Town of St. Francisville, 446 So.2d 1357, 1360 (La.App. 1st Cir.1984) (it will not be presumed that the lawmaker inserted idle, meaningless, or superfluous language in the law or that it intended for any part or provision of the law to be meaningless, redundant, or useless).

Thus, applying the provisions of La. C.C. art. 2534A(2) under the appropriate standard of review, which is the manifest error/clearly wrong standard, MGD’s action for redhibition against 5-Z, a seller who did not know of the existence of the defect, prescribed in one year from March 2006, when delivery of the property was made to MGD. MGD’s lawsuit, filed on October 28, 2009, well over a year after delivery, was untimely. The trial court correctly sustained the objection of prescription and dismissed MGD’s lawsuit against 5-Z. Accordingly, finding a reasonable factual basis to support the trial court’s conclusion that the claim was untimely asserted, the trial court correctly sustained the exception of prescription and dismissed MGD’s redhibition claim.

The trial court also correctly granted summary judgment in favor of 5-Z on its deficiency judgment action against Davis who, along with John Mills, another MGD member, signed the promissory note as a surety for MGD’s obligation. In reversing the trial court, the majority determined that because MGD’s redhibition claim was not prescribed, summary judgment on the deficiency judgment action was inappropriate, reasoning that Davis and Mills could assert any defenses available to the debt- or, including extinction of the claim as a result of any recovery on MGD’s redhibition claim.

The record established that 5-Z affirmatively pled and proved the existence of the obligation giving rise to the debt and the grounds of non-performance entitling it to maintain its judicial action. Further, 5-Z established by evidence that the property was sold under the executory proceeding, after appraisal, in accordance with the provisions of C.C.P. art. 2723 (providing for appraisal of the |inproperty unless it is waived), and that the proceeds received were insufficient to satisfy the balance of the performance then due. Davis and Mills did not rebut the existence of any of the elements necessary for 5-Z to obtain a deficiency judgment. Simply stated, none of the defects Mills and Davis allege are in the chain of authentic evidence supporting the executory process are “fundamental” so as to preclude a deficiency judgment.

The assertion by Davis and Mills that 5-Z is prohibited from use of the Louisiana Deficiency Judgment Act because 5-Z failed to include them as necessary parties in the executory process and failed to provide adequate notice to them is likewise without merit. In the promissory note executed by 5-Z and MGD, Mills and Davis appear as guarantors on the note. The Deficiency Judgment Act was not designed to protect accommodation parties who have no interest in the mortgaged property. See Chrysler Credit Corporation v. Breaux, 293 So.2d 261, 266 (La.App. 1st Cir.), writ denied, 294 So.2d 548 (La.1974). Sureties are not entitled either to notice of the foreclosure sale or the right to appoint an appraiser. See Cameron Brown South, Inc. v. East Glen Oaks, Inc., 341 So.2d 450, 458-59 (La.App. 1st Cir.1976).

Therefore, because 5-Z proved entitlement to summary judgment in its deficiency judgment action, and there are no outstanding issues of material fact, since I believe MGD’s redhibition claim is prescribed, I would affirm the trial court’s judgment on this basis as well. Lastly, I would remand the matter to the trial court to hold an evidentiary hearing for a determination of a reasonable amount of attorney’s fees.

For all these reasons, I dissent.

      . Carson Davis and John Mills are members of MGD.

      . On May 2, 2012, 5-Z filed a motion to dismiss its reconventional demand against MGD, reserving its rights against Davis and Mills.

      . MGD Partners, LLC v. 5-Z Investments, Inc., 2011 CW 0731 (La.App. 1st Cir.6/20/11) (unpublished).

      . We have concluded that La. Civ.Code art. 2534(A)(1) applies herein; therefore, we need not address whether the doctrine of contra non valentem applies or whether 5-Z was aware of the alleged defect at the time of the sale.

      . Appeals are taken from judgments, not the written reasons for judgment. See Davis v. Farm Fresh Food Supplier, 2002-1401 (La.App. 1st Cir.3/28/03), 844 So.2d 352, 353-54.
      Thus, to the extent that the trial court's finding that the property was purchased and developed for residential purposes is no longer an undisputed fact, mindful that the trial court’s judgment simply sustains the exception of prescription, the evidence should be reviewed to determine whether any implicit findings support the trial court's conclusion.

      . MGD filed a motion for a new trial, suggesting it had discovered new evidence about 5-Z’s knowledge at the time of the sale and, on appeal, challenges the overruling of its motion. The new evidence consisted of Deputy Thomas R. Davidson’s testimony that he was also at the meeting in Baton Rouge and had overheard the statement made by Zahn. As the trial court noted, the new evidence did not show "the extent [that] this problem was known at the time of the sale.” Thus, because the testimony contains no new evidence that would change the result of this case, the trial court did not abuse its discretion in overruling the motion, particularly given the cumulative nature of the new evidence. See Thomas v. Comfort Center of Monroe, LA, Inc., 2010-0494 (La.App. 1st Cir. 10/29/10), 48 So.3d 1228, 1240.


author: McDonald, j.

text:
    Beverly V. KEMP and Mary Ann Kemp v. CLARENDON AMERICA INSURANCE COMPANY, Clarendon National Insurance Company, Western World Insurance Company, Larry G. Savoie, and John C. Holliday, Jr.
    No. 2013 CA 0807.
    Court of Appeal of Louisiana, First Circuit.
    June 3, 2014.

      D. Patrick Daniel, Jr., Lafayette, Louisiana, for Plaintiffs/Appellees, Beverly V. Kemp and Mary Ann Kemp.
    John P. Wolff, III, Nancy B. Gilbert, Chad A. Sullivan, Virginia J. McLin, Baton Rouge, Louisiana, for Defendants/Appellants, Segue Distribution, Inc., Chubb Custom Insurance Company.
    Douglas K. Williams, Chris D. Billings, Baton Rouge, Louisiana, for Defendant/Appellee (Cross-Claim Appellee), Clarendon America Insurance Company.
    Albert C. Miranda, Julie E. Vaicius, Rachael D. Johnson, Metairie, Louisiana, for Defendant/Appellee, Hartford Fire Insurance Company.
    Jennifer L. Simmons, New Orleans, Louisiana, for Defendant/Appellee, Zurich America Insurance Company of Illinois.
    Thomas P. LeBlanc, Lake Charles, Louisiana, for Holiday Trucking, Inc. John C. Holliday, Jr. and Larry G. Savoie.
    Before PETTIGREW, McDONALD, and McClendon, jj.
   McDonald, j.

IsThis litigation arose as the result of an automobile accident in July 2007, in which a 2004 International Truck driven by Larry G. Savoie (Savoie) collided with a school bus driven by Beverly Kemp (Kemp). Kemp filed suit in June 2008 for injuries received in the accident, in which his wife, Mary Ann, joined with a loss of consortium claim. The issue in this appeal is the ranking of the three insurance policies that were undisputedly responsible for the insurance available to settle the claims of the plaintiffs. For the reasons that follow, we reverse and remand.

The 2004 International truck driven by Savoie was personally owned by Jason Holliday (Holliday). Holliday also owned Holliday Trucking, Inc. (Holliday Trucking), which he had established to get into the trucking and hauling business. At the time of the accident, Savoie was making a delivery for Segue Distribution, Inc. (Segue). Segue had a contract with Holliday Trucking for transportation services. Clarendon America Insurance Company (Clarendon) insured Holliday Trucking. Chubb Custom Insurance Company (Chubb) provided insurance to Segue from October 6, 2006 through October 6, 2007. Hartford Insurance Company (Hartford) provided insurance to Segue from May 18, 2007 through May 18,2008.

The underlying suit has been settled and there are no issues concerning the responsibility of each insurer for the settlement to Kemp. However, in the course of the litigation, Chubb provided a defense to Savoie and now seeks reimbursement from the other insurers for this cost. Each insurer had identical language in its policy concerning primary and excess coverage:

5. Other Insurance
For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance....
|4d. When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.

On December 27, 2006, Segue entered into a Transportation Service Agreement (TSA) with Holliday, whereby Holliday was to perform transportation services. Referring to Segue Distribution, Inc. as the “Company” and Holliday as the “Contractor,” the TSA’s provisions were extensive. It provided that the Contractor would be an Independent Contractor, including for tax purposes, and that “the transportation services performed by the Contractor shall be performed entirely at Contractor’s risk.” The Contractor was responsible for obtaining all permits and licenses, and paying all applicable sales, use, federal, and state income taxes.

Section 4.08 provided, in part:

Contractor shall, at no expense to Company procure, maintain and provide to Company certificates of insurance throughout the Initial Term and successive terms the following insurance with effective dates of coverage being the date hereof:
Commercial Vehicle Liability Insurance covering all vehicles, whether owned, leased or hired, with a combined single limit of $300,000 per occurrence with no aggregate limitation.

Section 7.12 provided that the Contractor would indemnify and hold harmless the Company.

Pursuant to the TSA, Holliday obtained a commercial auto policy from Clarendon that provided a $1,000,000 limit for liability coverage and listed the 2004 International Truck as a covered auto with Larry Savoie as an approved driver. Savoie was employed and paid by Holliday; however, according to Savoie’s deposition testimony, his supervisor was Todd Achee, a Segue employee. Holliday Trucking, Inc., not Jason Holliday, was listed as the “insured” under the policy. As noted, the truck was owned by Holliday personally.

| ¡¡Hartford also issued an insurance policy that covered Segue with a $1,000,000 policy limit. All three insurers at issue, Hartford, Chubb, and Clarendon, were named as defendants in this matter based on the allegation that they each issued an insurance policy that provided coverage for the July 2007 accident and the damages sustained by the plaintiffs. All three policies contained identical “other insurance” provisions, and all policies provided $1,000,000 coverage. The “other insurance” provision is considered in ranking multiple policies to determine which insurer has the initial liability and which are excess.

The district court ruled that all three insurers provided coverage for the accident but that none provided primary coverage since none was providing coverage for a vehicle “owned” by the insured; thus, all provided excess coverage. Also, the district court found that no insurance company owed defense costs to another, which is a concomitant of the first ruling, because only a primary insurer could owe defense costs for an insured to an excess insurer that paid them. If all insurers provided excess coverage, the insurance companies would pay the damages in pro rata shares. The district court ruled that the three insurance companies each owed a third of the damages.

In February 2011, Chubb and its insured, Segue, filed for leave to file a cross-claim and third-party demand in the district court. These claims were dismissed in the court’s ruling of September 16, 2011, which was finalized in a judgment signed on October 14, 2011, and is the judgment before us for review.

Chubb and Segue appeal, assigning as error the district court’s failure to find that Clarendon’s policy applies on a primary basis and the district’s failure to find that Clarendon owed Segue for the defense costs that Chubb had paid. Chubb also raises as error by the district court the decision that the October 14, 2011 judgment was a final judgment. It maintains that unresolved issues exist concerning the | ^interpretation of the TSA, the status of the TSA as an “Insured Contract,” and Chubb’s entitlement to pursuit charges from Clarendon thereunder.

The court’s finding that the October 14, 2011 judgment was a final judgment (although it was not designated as such until July 2012, based on a motion by Clarendon), required that Chubb’s claims be dismissed. Chubb’s assertion that unresolved issues remain regarding the TSA, is de-pendant on a finding that Holliday and Holliday Trucking, Inc. are a single entity or that the TSA creates a single business entity.

Louisiana jurisprudence is replete with cases holding the corporate veil can only be pierced in extraordinary circumstances, generally involving fraud. Riggins v. Dixie Shoring, Co., Inc., 590 So.2d 1164, 1168— 69 (La.12/2/91), contains a detailed discussion by the supreme court of factors to be considered in “veil piercing” cases and cites numerous cases for each of the factors reviewed. The case establishes that if plaintiffs (creditors) do not allege shareholder fraud, they bear a heavy burden of proving that shareholders disregarded the corporate entity to such an extent that it became indistinguishable from themselves. Some of the factors courts consider when determining whether to apply this “alter ego doctrine” include, but are not limited to: commingling of corporate and shareholder funds; failure to follow statutory formalities for incorporating and transacting corporate affairs; undercapitalization; failure to provide separate bank accounts and bookkeeping records; and failure to hold regular shareholders meetings. The case also establishes that courts are reluctant to hold a director of a corporation personally liable for corporate obligations, in the absence of fraud, malfeasance, or criminal wrongdoing. When a party seeks to pierce the corporate veil, the totality of the circumstances is determinative.

Holliday Trucking’s corporate charter was revoked by the Secretary of State in 2003. Holliday did maintain a business entity for some purposes after that date | y(to make certain payments), but we find that Holliday Trucking was not an entity separate from Holliday. Holliday Trucking did not maintain statutory formalities, and the charter was revoked for failure to file annual reports as required. After three consecutive years of failure to hold meetings, corporation law requires that the charter be revoked authority. There was commingling of Holliday’s personal funds and corporate funds. Although Holliday testified that an accountant reviewed and reported on transactions on the bank account of Holliday Trucking separate from Holiday’s personal account, the corporation was undercapitalized such that Holli-day personally was required to deposit his own funds into the corporate account to pay bills. Holliday also testified that the corporation neither held meetings, nor did it maintain minutes.

Recognizing the principles of Riggins, this court has held that the fact that one person owns all or a majority of the stock of a corporation does not in itself make that person liable for corporate debts. Terrebonne Concrete, LLC v. CEC Enterprises, LLC, 11-0072 (La.App. 1 Cir. 8/17/11), 76 So.3d 502, 508, writ denied, 11-2021 (La.11/18/11), 75 So.3d 464. The instant case, however, is not a typical “piercing the veil” case. The main purpose of a corporation is to prevent shareholders from being personally liable for corporate debts. This ability to establish an identity to engage in business without being personally liable for its debts is considered to be an excellent way to stimulate the economy.

In this case, Holliday is not being held personally liable for a debt. The district court determined that the insurance policy that he purchased to insure the truck involved in the accident provided coverage for one third (1/3) of the damages. When the parties entered into the TSA contract, it required Holliday to maintain insurance to protect the “Company,” Segue. When the TSA established the contract between Holliday/Holliday Trucking and Segue in December 2006, it |swas the intention of Holliday to provide transportation services to other clients. At the time of the accident, July, 2007, however, Segue was Holliday’s only client.

The revocation of the corporate charter by the Secretary of State resulted in the corporate entity ceasing to exist. It is our finding that the totality of circumstances dictate that Holliday and Holliday Trucking, Inc. are a single entity. Accordingly, the fact that Holliday was the owner of the truck, but the Clarendon insurance policy insured Holliday Trucking is of no significance and Clarendon is the primary insurer.

The district court’s finding that none of the insurers were primary insurers necessitated the dismissal of Chubb’s cross-claim and third-party demand. However, because we find that the Clarendon policy was primary, Chubb, having paid the costs of defense for Clarendon’s insured, had a right to file an action against Clarendon for recovery of those costs. We have determined that Holliday and Holliday Trucking, Inc. are a single entity. By Clarendon’s own argument, the Clarendon policy would be considered primary if Holliday Trucking owned the covered auto or if Holliday was a named insured such that the TSA is an insured contract. Since they are a single entity, it is a distinction without a difference.

Also, it is apparent from a reading of the TSA that one of its purposes was to provide Segue with protection against liability for any accidents Holliday/Holliday Trucking, Inc. was involved in when transporting Segue merchandise. The initial consideration in contract interpretation is to determine the intent of the parties. Where the language is clear and explicit “no further interpretation may be made in search of the parties’ intent.” La. C. C. Art.2 046. Thus, the initial consideration is the language of the contract; only when it is not clear, is a search for the parties’ intent warranted. As noted, the TSA had multiple purposes, but it was clearly its intention to make Holliday the primary insurer for accidents.

|aThat portion of the judgment holding that all three policies are excess, is reversed, and the matter is remanded to the district court for a determination of the amounts for which each insurer is liable in defense costs.

Chubb also challenges the district court’s designation of the October 14, 2011 judgment as a final judgment and the dismissal of its cross-claim and third-party demand as being in error. It is Chubb’s contention that several other issues remain, including interpretation of the ISA and the rights thereunder. If Chubb feels it has claims that have not been put before the district court, its motion and memorandum should be submitted by a date designated by the district court. We are not persuaded by Clarendon’s arguments that if they have not already been presented to the court, Chubb’s claims have been lost. An appropriate time to assert its claims would have been after the ruling by the district court, as to which, if any, insurance policy is primary.

CONCLUSION

Based on the foregoing, we find that the policy numbered DSA019515 issued to Jason Holliday/Holliday Trucking, Inc. by Clarendon America Insurance Company provides primary coverage for the damages sued upon. The judgment of the district court that all insurers provided excess coverage and that none owed defense costs to any other is reversed. This matter is remanded to the district court for a determination of Chubb’s defense costs and for consideration of Chubb’s claims which are to be submitted to the district court by a date designated by that court. Costs of this appeal are assessed against Clarendon America Insurance Company.

REVERSED AND REMANDED.