Opinion
Civil Action No. 03-2889 Section: "R" (5).
January 4, 2005
ORDER AND REASONS
3 Eagles Aviation moves the Court for summary judgment to declare certain conveyances entered into by Wayne Rousseau null and void because he entered into them at a time when he owed an antecedent debt to 3 Eagles and they caused or increased his insolvency. For the following reasons, the Court GRANTS the motion.
I. BACKGROUND
At the outset, the Court notes that the defendants have not responded to the motion for summary judgment. Therefore, the Court relies on 3 Eagles' presentation of the facts except when the record reveals a factual ambiguity. See R.L. Carpenter v. Gulf States Mfrs., Inc., 764 F. Supp. 427, 429 (N.D. Miss. 1991).
Wayne Rousseau personally and unconditionally guaranteed two promissory notes executed by 3 Eagles and Rollins Air S. De. R.L. One of the notes is dated September 24, 1997, and the other is dated December 18, 1997 (collectively, "the note"). Rollins Air missed several payments on the note, and 3 Eagles made demand on Mr. Rousseau. Mr. Rousseau never responded to 3 Eagles's demands.
On January 22, 2002, Mr. Rousseau sued 3 Eagles in this Court for a declaration that the guarantee he executed on the note was a nullity. On September 30, 2002, the Court held Mr. Rousseau unconditionally liable for the note. The Court entered judgment against Mr. Rousseau and in favor of 3 Eagles in the amount of $1,341,462.14, plus interest. The Court also entered a judgment for attorney's fees in favor of 3 Eagles against Rousseau in the amount of $49,660.68 on April 2, 2003. To date, 3 Eagles has seized and collected approximately $73,280.00 of the $1.6 million that Mr. Rousseau owes. Mr. Rousseau alleges that he has no other assets to satisfy the judgments.
On October 15, 2003, 3 Eagles sued Mr. Rousseau and other defendants in this Court. 3 Eagles seeks to have several conveyances that Mr. Rousseau entered into declared null and void because he entered into them when he owed an antecedent debt to 3 Eagles and they caused or increased his insolvency.
Specifically, 3 Eagles moves the Court to declare the following conveyances null and void:
(1) The Act of Donation Inter Vivos to Wayne M. Rousseau II of immovable property located at 925 Taft Park, Metairie, Louisiana. This transaction was recorded on July 29, 2002 as Instrument No. 10246967 in CB 308168 in the official records of Jefferson Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. N.)
(2) The Quitclaim Deed to HJS Enterprises L.L.C. of the immovable property located at 925 Taft Park, Metairie, Louisiana. This transaction was recorded on October 31, 2002 as Instrument No. 10266478 in CB 3086363 in the official records of Jefferson Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. O.)
(3) The Act of Cash Sale to HJS Enterprises L.L.C. of the immovable property located at 925 Taft Park, Metairie, Louisiana. This transaction was recorded on October 31, 2002 as Instrument No. 10266477 in CB 3086364 in the official records of Jefferson Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. Q.)
(4) The Act of Cash Sale to David L. Bell Associates, L.L.C. of lots 21-22 at 4317 Wichita Street, Metairie, Louisiana. This transaction was recorded on October 31, 2002 as Instrument No. 10266479 in CB 3086364 in the official records of Jefferson Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. BB.)
(5) The Act of Cash Sale to David L. Bell Associates, L.L.C. of the immovable property located at 21381 North Street, Abita Springs, Louisiana. This transaction was recorded on October 31, 2002 as Instrument No. 133173, Registry No. 1204528 in the official records of St. Tammany Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. AA.)
(6) The Act of Donation Inter Vivos to Brigette Rousseau Smith of the immovable property consisting of two lots described as Lot 5, Square 7 and Lot 41, Square 5 in Hillcrest Country Club, St. Tammany Parish, Louisiana. This transaction was recorded on July 29, 2002 as Instrument No. 1316304, Registry No. 1177359 GGH in the official records of St. Tammany Parish, Louisiana. (Pl.'s Mem. Supp. Summ. J. Ex. Z, T.)
3 Eagles contends that these conveyances are null and void under Louisiana Civil Code 2036, or, in the alternative, under Louisiana Civil Code 2480.
II. DISCUSSION
A. Legal Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party. Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990). The moving party bears the burden of establishing that there are no genuine issues of material fact.
B. Analysis
Under Louisiana Civil Code article 2036, "[a]n obligee has a right to annul an act of the obligor, or the result of a failure to act of the obligor, made or effected after the right of the obligee arose, that causes or increases the obligor's insolvency." An action under article 2036 is typically known as a revocatory action. An obligee may bring a revocatory action if the obligor's act prejudices the obligee's rights. In re Goldberg, 277 B.R. 251, 280 (M.D. La. 2002). An obligee suffers prejudice, for example, "if the debtor has stopped the creditor's avenue of recovery from the debtor's property." Id. at 283. To prevail in a revocatory action, the obligee must prove (1) that the obligor effected the transactions after the right of the obligee arose, and (2) that the transaction caused or increased the obligor's insolvency. Trania v. Whitney Nat'l Bank, 109 F.3d 244, 246 (5th Cir. 1997).
The Court finds that 3 Eagles has proved that it should prevail on the present revocatory action. First, Mr. Rousseau owed 3 Eagles an antecedent debt at the time of the transfers. This is because Rousseau guaranteed the note on September 24, 1997 and December 18, 1997, and Rollins Air fell into arrears in its payments around February of 1999. ( See Pl.'s Mem. Supp. Summ. J. Ex. C (Order and Reasons).) Rollins Air remained in default on the note. ( Id.) 3 Eagles sent Rousseau demand letters as guarantor of the note during the summer of 2001, and this Court enforced Mr. Rousseau's guaranty of the note by judgment on October 15, 2002. ( Id.) Notably, the transfers at issue took place between July 29, 2002 and October 31, 2002. Therefore, 3 Eagles' right arose long before the transfers took place. Accordingly, the Court finds that Mr. Rousseau effected the transactions after 3 Eagles' right under the note arose, as required by article 2036. See Trania, 109 F.3d at 246. The defendants have introduced no evidence to the contrary.
Second, the transactions caused or increased Mr. Rousseau's insolvency. Insolvency occurs when total liabilities exceed the total of fairly appraised assets. La. Civ. Code art. 2037. In May of 2002, before the dispute over the note arose, Mr. Rousseau provided a financial statement to Metairie Bank Trust in order to obtain a loan. (Pl.'s Mem. Supp. Summ. J. Ex. F.) At that time, his net worth was $1,118,000.00. His assets included:
$12,000.00 cash
$60,000.00 government securities
$200,000.00 other stocks and bonds
$650,000.00 real estate
$36,000.00 automobiles registered in his name
$10,000.00 other assets
$110,000.00 Rousseau Rousseau
$115,000.00 cash balance at Metairie Bank Trust
$650,000.00 real estate
Following the entry of this Court's October 2002 judgment against Mr. Rousseau, 3 Eagles conducted a judgment debtor examination of him. After that, 3 Eagles seized all of Mr. Rousseau's bank accounts and brokerage accounts. This generated approximately $73,280.00 of the $1.6 million that Mr. Rousseau owes 3 Eagles. Mr. Rousseau claims that he has no other assets to satisfy the judgment. Therefore, the transactions by which Mr. Rousseau divested himself of the Taft Park property, the Wichita Street property, the Abita Springs property, and the Hillcrest Country Club property decreased his real estate assets and increased his insolvency. Thus, the transactions meet the second requirement of article 2036. See Trania, 109 F.3d at 246. The defendants have introduced no evidence to the contrary.
The Court concludes that the transactions prejudiced 3 Eagles' rights because Mr. Rousseau stopped 3 Eagles' avenue of recovery through his property. See Goldberg, 277 B.R. at 283. Accordingly, the Court declares the transactions null and void under article 2036. Because the transactions are null and void under article 2036, the Court does not reach 3 Eagles' argument in the alternative that some of the transactions are null and void under article 2048.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS 3 Eagles' motion for summary judgment.