Source: http://la.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20190717_0002712.LA.htm/qx
Timestamp: 2020-08-08 13:07:25
Document Index: 118937045

Matched Legal Cases: ['Art. 5', 'art. 927', 'art. 931', '§2', 'art. 1953', 'art. 856', 'art. 2324', 'art. 2324']

FindACase™ | Agrifund, LLC v. Radar Ridge Planting Co., Inc.
Agrifund, LLC v. Radar Ridge Planting Co., Inc.
AGRIFUND, LLC Plaintiff-Appellant
RADAR RIDGE PLANTING CO., INC. AND THOMAS A. DICKERSON Defendants-Appellees
Appealed from the Fifth Judicial District Court for the Parish of Richland, Louisiana Trial Court No. 45037 Honorable Glen Wade Strong (Pro Tempore), Judge
BREITHAUPT, DUBOS, & WOLLESON, LLC By: Robert Alan Breithaupt, Michael Lee DuBos, James R. Close, Jared S. Scheinuk Counsel for Appellant
MIXON, CARROLL & FRAZIER, PLLC By: James E. Mixon James L. Carroll Rossanna R. McIlwain Counsel for Appellee Caldwell Bank & Trust Company
LAW OFFICE OF BRIAN E. CRAWFORD By: Brian E. Crawford Counsel for Appellee Franklin State Bank & Trust Company
PETTIETE, ARMAND, DUNKELMAN WOODLEY, BYRD, & CROMWELL, By: Joseph S. Woodley Counsel for Appellee Commercial Capital Bank
COOK, YANCEY, KING, & GALLOWAY By: Bernard S. Johnson Lisa Conly Cronin Counsel for Appellee Clark A. McCain
SMITH & ASSOCIATES By: Leroy Smith, Jr. Counsel for Appellee Danny A. Dickerson
HAMMONDS, SILLS, ADKINS, & By: Jon Keith Guice Justin N. Myers Linda K. Ewbank Counsel for Appellee Brian Wilson
FRILOT, LLC By: David S. Daly Elliot M. Lonker Counsel for Appellees David S. Stephens, Lawrence W. Pickett, Jr., and Lawrence W. Pickett, Jr., APAC
SAMUEL T. SINGER Counsel for Appellee Franklin State Bank & Trust Company
MICHAEL E. KRAMER Counsel for Appellee Franklin State Bank & Trust Company
Before PITMAN, GARRETT, STONE, COX, and McCALLUM, JJ. STONE, J., dissents in part with written reasons.
This case arises from agricultural loans that were not repaid. The lender, Agrifund, LLC ("Agrifund"), appeals from a trial court judgment granting exceptions of no cause of action as to its claims against eight of the numerous defendants in this case, and the dismissal of those defendants with prejudice. For the reasons stated below, we affirm in part and reverse in part. We find that the plaintiff has alleged a cause of action in conversion against the three banks named as defendants. We find that the plaintiff has not alleged any other causes of action against any of the defendants who filed the exceptions that are before us. The matter is remanded to the trial court for further proceedings.
SYNOPSIS AND PROCEDURAL BACKGROUND
This matter began on April 14, 2016, with a ten-page petition filed by an agricultural lender, Agrifund, against Radar Ridge Planting Company, Inc. ("Radar Ridge"), a farming entity, and Thomas A. Dickerson ("Dickerson"), as guarantor, to collect money owed under a delinquent agricultural loan and for recognition of a security interest on agricultural products secured under the UCC. The original suit, grounded on promissory notes and security agreements, consisted of 47 paragraphs.
The matter lay dormant until March 1, 2017, when Agrifund filed a "First Supplemental and/or Amended Petition." This pleading adopted all of the original allegations and added 22 additional pages of allegations, for a total of 102 paragraphs of allegations. This petition added 21 additional defendants, whom we will refer to as the (1) Dickerson entities, (2) banks and bank employees with whom Dickerson and his entities did business ("bank defendants"), and (3) accountants who provided services for Dickerson and his entities ("accounting defendants"). This petition sought damages against the added parties under different legal theories designated as counts. Count One alleged fraud and conspiracy to commit fraud, Count Two alleged racketeering, Count Three alleged unfair trade practices under the Louisiana Unfair Trade Practices Act ("LUTPA"), and Count Four alleged conversion. The petition recited a lengthy history of events in an effort to establish liability on the part of all of the added parties, in addition to still seeking relief against the original defendants on the notes and security interests and damages. The thrust of the amended petition was that the conduct on the part of the added parties either facilitated, caused, or contributed to a massive fraudulent scheme perpetrated by Dickerson against Agrifund.
Exceptions of no cause of action filed by the banking and accounting defendants were sustained by the trial court, which dismissed the claims, but allowed Agrifund time to amend.
On November 29, 2017, Agrifund filed a "Second Supplemental and Amended Petition," which amended many of the existing paragraphs and added additional paragraphs, for a total of 234 numbered paragraphs, in an effort to address the deficiencies noted by the trial court in its opinion sustaining the exceptions. In response, the same exceptors filed more exceptions of no cause of action. The trial court again sustained the exceptions and dismissed the plaintiff's claims against the exceptors.[1]
Agrifund appealed. Voluminous briefs and reply briefs were filed. This case was initially argued before a three-judge panel. Pursuant to La. Const. Art. 5, Section 8(B), the case was later reassigned to a five-judge panel. Additional briefs were filed. The matter was argued again before the five-judge panel. More briefs were then filed. Hence, a rather unusual delay in handling the appeal has occurred in this case.
The narrow issue before us is whether the trial court erred in sustaining the exceptions of no cause of action filed by the banking and the accounting defendants and dismissing the plaintiff's claims as to these parties.
Following our de novo review, and guided by the well-established legal precept that we must assume that all of the well-pled factual allegations are true, we ultimately find that the plaintiff has alleged a cause of action for a claim in conversion against the three banks. This cause of action was pled only against the banks. In all other respects, we find that the plaintiff has not alleged any other causes of action against any of the exceptors under the other legal theories pled by Agrifund.
To evaluate whether the trial court correctly sustained the exceptions in this matter, a detailed examination of all three petitions is necessary. This task is complicated because the petitions are not succinctly stated or artfully drawn. Further, none of the loan documents, promissory notes, agricultural security agreements, UCC-1F forms, guaranty agreements, or checks described below were attached to the pleadings. The trial court chose to rule on the exceptions of no cause of action and pretermitted ruling on the numerous other exceptions which address some of these deficiencies, so they are not before us.
According to the original petition, in 2015, Agricultural Resource Management ("ARM") extended a crop production loan for that year to Dickerson and one of his farming entities, Radar Ridge. ARM filed a UCC-1F form perfecting its security interest in all future crops and future Farm Services Agency ("FSA") payments for the defendants' cotton, soybean, corn, and rice crops grown in Morehouse, Franklin, and Richland Parishes. In January 2016, the parties agreed to convert the crop production loan to a crop storage loan with Agrifund, an affiliate of ARM. In February 2016, it was discovered that the defendants did not have the grain in storage that they claimed. In April 2016, Agrifund filed its original petition against Dickerson and Radar Ridge seeking payment of the delinquent notes, recognition of its security interests, and damages for nonpayment of the loan.
As set forth above, Agrifund filed a first supplemental and amended petition adding numerous defendants, including Dickerson's father, Danny A. Dickerson, and the "Dickerson entities" comprised of Dickerson Ag Inc.; Kelley Ag Service, Inc.; Dickerson Farming Partnership; Dickerson Agricultural Partnership; B&T Farms, LLC; Tough Luck Farms, LLC ("Tough Luck"); W&T Farms, LLC; Yes Farms, LLC ("Yes Farms"); Tibb Co. Farms, LLC; High Flyers, Inc. ("High Flyers"); and Number Two Farms, LLC ("Number Two Farms"). Agrifund also named as defendants the "bank defendants" comprised of several banks and bank employees, including Clark A. McCain, an employee of Franklin State Bank and Trust Company; Franklin State Bank and Trust Company ("FSB"); Commercial Capital Bank ("Commercial Capital"); Brian Wilson, an employee of Caldwell Bank and Trust Company; and Caldwell Bank and Trust Company ("Caldwell Bank"). Agrifund also included as defendants the "accounting defendants" comprised of Dickerson's accountants and accounting firm, David S. Stephens; Lawrence W. Pickett, Jr.; and Lawrence W. Pickett, Jr., a Professional Accounting Corporation. Finally, Agrifund named as a defendant Crop Production Services, Inc. ("Crop Production Services"), an entity associated with FSB.
Regarding the accounting defendants, Agrifund alleged that they performed accounting services for Dickerson and his entities and conspired with Dickerson in preparation for the 2015 crop year to organize farming entities to engage in improper, fraudulent, and deceptive acts and practices with respect to acquisition of crop loans, conduct of operations, sale of crops, and allocation and disbursement of proceeds from the sale of crops. Agrifund contended that the accounting defendants aided in reactivating High Flyers, an inactive corporation, without the knowledge of the registered agent, William J. Casiday, and used Casiday's tax identification number to defraud creditors, kite checks, launder money, and abscond with the proceeds from crops that were pledged as security for loans. It alleged that the accounting defendants added Scott and Theresa Higdon as partners in the Dickerson Agricultural Partnership without their knowledge, submitted fraudulent documents to FSA to participate in government crop and crop insurance programs, forged signatures on loan documents submitted to FSB, forged signatures to open an account with Crop Production Services, and forged signatures for a loan with Commodity Credit Corporation.
As to the bank defendants, Agrifund alleged that McCain, an employee of FSB, signed loan documents benefitting Dickerson with FSB, which included the forged signatures of the Higdons, and that McCain knew of the forgery. FSB and McCain cashed forged instruments, negotiated instruments that Dickerson had no legal right to, converted third party checks to cashier's checks, and McCain endorsed grain elevator checks. Agrifund alleged that FSB passed funds through various accounts with the bank, including Doe Properties, an entity for which McCain controlled the checkbook. Agrifund also alleged that McCain hired harvesters and got farmhands to sign loan agreements, the proceeds of which actually went to Dickerson. According to Agrifund, in December 2015, McCain approved a loan to pay rent on farmland, an expense that should have been included in the crop production loan.
Agrifund claimed that Wilson, at Caldwell Bank, loaned money to Dickerson that was not really a crop loan, cashed checks for Dickerson, and issued cashier's checks. These included checks 1740 and 1743 from Kennedy Rice Dryers ("Kennedy Rice"). Check 1740 was payable to Yes Farms, which did not have a crop loan for 2015 with Caldwell Bank. The check for $406, 412.51 was split into two cashier's checks payable to Joseph Blake Lively, the agent for one of the Dickerson entities, who was not aware that the funds were run through his account at the bank. Check 1743 was converted to cashier's checks payable to Dickerson. Agrifund alleges that these transactions were approved by Wilson.
Agrifund alleged that Commercial Capital was involved in a check kiting scheme for Dickerson, ignored his large negative account balances, and gave him a bailout loan of $1, 849, 646.50, based upon false information regarding delays in harvesting.
Agrifund alleged that all defendants were engaged in fraud and conspiracy to commit fraud; all defendants were engaged in racketeering; all defendants, except the banks, engaged in unfair trade practices prohibited by LUTPA, set forth in La. R.S. 51:1405 et seq.; and that the banks and Crop Production Services engaged in conversion of the proceeds of the sale of the crops which belonged to Agrifund by virtue of its security interests.
Various exceptions were filed, including exceptions of no cause of action. The exceptions of no cause of action were sustained by the trial court in a judgment signed on November 13, 2017. In written reasons for judgment, the trial court found no causal connection between the actions alleged and the disposition of the proceeds from Dickerson and Radar Ridge's crops which were subject to Agrifund's lien. The court stated that there was no showing that the actions of the defendants caused damage to Agrifund. The trial court reasoned that the banks did not have a legal duty to monitor the funds deposited into the accounts in the banks and there was no fiduciary duty between the banks and Agrifund.
Regarding the allegations of fraud and conspiracy to commit fraud, the trial court found that there was no showing of an agreement to defraud Agrifund. As to racketeering, the trial court stated that there was no showing of an alleged enterprise for the purpose of engaging in illegal activity, no showing that the defendants participated in the operation or management of the alleged enterprise, and there was no link between the use of racketeering income and Agrifund's injury. As to the LUTPA claims, the trial court found that LUTPA did not apply to the banks or bank employees. The trial court found that Agrifund failed to state a cause of action for conversion because there was no alleged act of dominion over Agrifund's property by the defendants, and the defendants were not aware that the funds belonged to Agrifund. The trial court granted Agrifund time to amend its petition to state a cause of action.
Agrifund filed its second supplemental and amended petition on November 29, 2017, which contained 52 more pages of allegations, in addition to adopting all of the previous allegations.[2] Agrifund alleged that ARM gave crop production loans to Radar Ridge and Dickerson Ag in exchange for promissory notes of $2, 683, 002 and $2, 200, 137, respectively, and Dickerson and Radar Ridge granted ARM a continuing security interest in their crops, farm products, equipment, and inventory. The agreement specified that Radar Ridge and Dickerson Ag would not use any of the farm products or inventory for their own purposes without ARM's consent. The petition set forth the numerous farms in Morehouse, Richland, and Franklin Parishes to be covered by the crop production loan. The petition alleged that ARM filed the UCC-1F forms identifying its collateral and securing its interest in the crops of Radar Ridge and Dickerson Ag.
Agrifund further alleged that, on September 9, 2015, it acquired ARM's rights to the Radar Ridge and Dickerson Ag loan. In January 2016, after the loans matured, Dickerson, Radar Ridge, and Dickerson Ag approached Agrifund about replacing the crop production loan with a crop storage loan. Agrifund agreed to the crop storage loan. A new Agricultural Security Agreement ("ASA") was entered and Agrifund secured its position through the filing of a UCC-1F on the defendants' crops. Agrifund alleged that it received by assignment all of the previous positions perfected in the crops by ARM's UCC filings. Dickerson personally guaranteed the loans.
According to Agrifund, in February 2016, it became aware that the amount of grain represented by Dickerson was not in storage. It claimed that Dickerson conspired with the defendants to launder the proceeds from the sale of the crops, knowing that they were secured by perfected security interests of other lenders, including Agrifund.
Agrifund alleged that the defendants acted in concert with Dickerson to divert money away from other creditors to pay debts owed to the defendant banks, and the banks sought to continue their business relationships with Dickerson and the Dickerson entities in order to mitigate their losses.
Regarding the accountants, Agrifund made the same allegations contained in the first amended petition.
Agrifund made extensive allegations regarding FSB and McCain. Agrifund claimed that FSB granted a crop loan for 2015 on the Dickerson Agricultural Partnership crops based upon the forged signatures of the Higdons. The company asserted that FSB knew that the Higdons' signatures were forged.
Agrifund alleged that Dickerson and the Dickerson entities conspired with McCain, FSB, Wilson, and Caldwell Bank to divert funds from the sale of Dickerson entity crops, which was the collateral of Agrifund, and laundered the funds to benefit Dickerson and the banks. According to Agrifund, the banks cashed forged instruments, negotiated instruments to which Dickerson and the Dickerson entities had no rights, and converted third party checks to cashier's checks to launder funds and disguise their source, depriving Agrifund of its security interest in the crops and the proceeds from them.
Agrifund claimed that McCain was Dickerson's accomplice at FSB. The company asserted that many grain elevator checks were endorsed by McCain and internal bank tickets directing the application of funds were in McCain's handwriting. Agrifund alleged that, from September through December, 2015, numerous accounts at FSB were used as "pass-through" accounts to kite checks. The company maintained that three accounts were opened in conjunction with new loans made to Dickerson in early 2015. McCain controlled the checkbook for Doe Properties, another Dickerson entity. Agrifund asserted that it was highly irregular for a loan officer to have control of a customer's checking account. McCain exercised power of attorney on behalf of Crop Production Services, a business that operated in conjunction with FSB and used his power of attorney to negotiate grain checks where Crop Production Services was the payee.
Agrifund urged that McCain received checks payable to FSB and Crop Production Services but, instead of applying the funds to the loans at the bank, McCain paid the proceeds directly to Dickerson. Agrifund claimed that McCain hired harvesters for Dickerson and had farm hands sign loan documents, the proceeds of which were paid to Dickerson.
Agrifund asserted that, in January 2016, Kennedy Rice issued Check 1777 for grain from Farm Serial Number ("FSN") 6492, and Agrifund held the security interest in the crops from that farm.[3] The grain was booked under W&T Farms, FSB, and Crop Production Services, and the check was made payable to those entities, even though they did not have a security interest in the crops. This check was endorsed by McCain, clearing the proceeds for Dickerson's use.
Later in January 2016, Kennedy Rice issued Check 1778, for grain from the same farm, FSN 6492, which was subject to Agrifund's security interest. The check was presented at FSB, payable to W&T Farms, which did not have an outstanding loan with FSB. The check was endorsed by McCain and given to Crop Production Services.
Agrifund alleged that Wilson and Caldwell Bank diverted funds from a crop loan made to Danny Dickerson in 2014. Agrifund claimed the funds were given to Dickerson and the Dickerson entities. Agrifund also claimed that Kennedy Rice issued Check 1740 to Yes Farms and Caldwell Bank, which was given for grain originally booked under Dickerson Ag and to which Agrifund had a security interest. Yes Farms did not have an account at Caldwell Bank. These funds were converted to two cashier's checks, one payable to Joseph Blake Lively, who did not appear to be aware of the transaction. A second cashier's check was also issued from the funds represented by Check 1740. These checks were used to purchase other cashier's checks in order to launder the funds. The checks were initialed by Wilson, who should have questioned the source of the money because nothing was due Caldwell Bank.
Agrifund alleged that, in December 2015, Kennedy Rice issued Check 1743 to Yes Farms and Caldwell Bank. Agrifund contended that the grain came from one of the farms for which it held a security interest. The check was presented to Caldwell Bank and Wilson approved converting the proceeds to a cashier's check which was deposited to Dickerson's personal account at Winnsboro State Bank.
Agrifund sets forth in its petition that conversion occurred on several occasions. The company maintained that, on August 27, 2015, Caldwell Bank converted four third-party checks to two cashier's checks, payable to Danny Dickerson or Thomas Dickerson, neither of whom had an account at the bank. Wilson initialed each check. Agrifund claimed this was to disguise the source of the grain proceeds checks in derogation of the rights of Agrifund.
Agrifund asserted that, on October 2, 2015, two third-party checks were presented, payable to Yes Farms and Number Two Farms, neither of which had an account at Caldwell Bank. The checks were initialed by Wilson and one cashier's check was issued, which was deposited at Commercial Capital in the name of Tough Luck Farms. Agrifund alleged that this transaction was made to divert funds owed to it by Dickerson and the Dickerson entities.
Agrifund asserted that, on October 19, 2015, two third-party checks payable to Number Two Farms, which had no account at Caldwell Bank, were presented at Caldwell Bank, initialed by Wilson, and reissued as one cashier's check payable to Dickerson.
Agrifund claimed that, on August 31, 2015, Caldwell Bank converted third-party checks to two cashier's checks payable to Dickerson entities and these transactions were approved by Wilson.
On October 23, 2015, Agrifund claimed that Dickerson presented a check payable to Joseph Blake Lively, which was not deposited to his account. Rather, a cashier's check was issued payable to DPF Harvest.
On November 2, 2015, a check payable to B&T Farms, which had no account with Caldwell Bank, was presented and a cashier's check was issued payable to Dickerson Farming Partnership. The check was initialed by Wilson.
On November 5, 2015, two checks drawn on Commercial Capital and payable to Number Two Farms, which did not have an account at Caldwell Bank, were presented at Caldwell Bank and two cashier's checks were issued to Tough Luck Farms. These checks were then deposited at Commercial Capital to cover an overdraft.
Agrifund claimed that, in early December 2015, a check for grain subject to its security interest, payable to Yes Farms and Caldwell Bank, was presented to Caldwell Bank. Yes Farms did not have an account at Caldwell Bank and did not have any outstanding loans there. A cashier's check payable to Dickerson was issued and was approved by Wilson.
Regarding Commercial Capital, Agrifund alleged that the bank assisted Dickerson in his check kiting scheme, and, instead of shutting down Dickerson and the Dickerson entities, the bank gave Dickerson a bailout loan of $1, 849, 646.50. Agrifund contended that a bank memo associated with this loan falsely stated that the loan was made because Dickerson had weather delays in harvesting his crops.
Agrifund asserted that all the defendants engaged in fraud and conspiracy to commit fraud by misrepresenting or suppressing the truth in order to gain an unjust advantage for Dickerson and for themselves. Agrifund claimed the conspiracy involved more than 283 checks which were issued for no legitimate business purpose. The company maintained that the banks were required by banking regulations to monitor Dickerson's transactions and to file reports for transactions they knew or suspected to be suspicious.[4] Agrifund contended that all the defendants engaged in a pattern of racketeering activity under La. R.S. 15:1352. Agrifund asserted that all defendants, other than the banks, engaged in unfair trade practices in violation of LUTPA. Agrifund claimed that only the banks, Caldwell Bank, FSB, and Commercial Capital, committed conversion by improperly diverting the proceeds from the sale of crops, which belonged to Agrifund by virtue of its security interests, to other entities that had no interest in the proceeds.
Exceptions of no cause of action were again filed by the bank defendants and the accounting defendants. After a hearing, the trial court issued written reasons, again sustaining the exceptions as to all the movants. The trial court found: (1) Agrifund failed to allege facts showing causation between the appellees' actions and Agrifund's damages; (2) Agrifund failed to show that the appellees owed a duty to Agrifund; and (3) McCain and Wilson, as employees of FDIC-insured banks, were exempt from Agrifund's LUTPA claims under La. R.S. 51:1406. With regard to the conversion claim, the trial court reasoned that the crop storage loan replaced the crop production loan and that any conduct prior to January 2016 was not the cause of any damage. No analysis, discussion, or consideration of the plaintiff's rights under its security interests was included in the reasons for judgment. The trial court rendered a final judgment dismissing Agrifund's claims against the appellees with prejudice. Agrifund appealed.
EXCEPTIONS OF NO CAUSE OF ACTION
The peremptory exception of no cause of action is set forth in La. C.C.P. art. 927(A)(5). It tests the legal sufficiency of the petition by determining whether the law affords a remedy on the facts alleged in the petition. Vince v. Metro Rediscount Co., Inc., 18-2056 (La. 2/25/19), 264 So.3d 440; Jackson v. City of New Orleans, 12-2742 (La. 1/28/14), 144 So.3d 876; Port City Glass & Paint Inc. v. Brooks, 52, 534 (La.App. 2 Cir. 2/27/19), 266 So.3d 516; Pesnell v. Sessions, 51, 871 (La.App. 2 Cir. 2/28/18), 246 So.3d 686; Gipson v. Fortune, 45, 021 (La.App. 2 Cir. 1/27/10), 30 So.3d 1076, writ denied, 10-0432 (La. 4/30/10), 34 So.3d 298. The exception is triable on the face of the petition; and, for the purpose of determining the issues raised by the exception, the well-pleaded facts in the petition must be accepted as true. Fink v. Bryant, 01-0987 (La. 11/28/01), 801 So.2d 346; Pesnell v. Sessions, supra. No evidence may be introduced at any time to support or controvert the objection that the petition fails to state a cause of action. La. C.C.P. art. 931. An exception of no cause of action should be granted only when it appears beyond doubt that the plaintiff can prove no set of facts in support of any claim which would entitle him to relief. If the petition states a cause of action on any ground or portion of the demand, the exception should generally be overruled. Every reasonable interpretation must be accorded the language used in the petition in favor of maintaining its sufficiency and affording the plaintiff the opportunity of presenting evidence at trial. Badeaux v. Southwest Computer Bureau, Inc., 05-0612 (La. 3/17/06), 929 So.2d 1211; Stonecipher v. Caddo Par., 51, 148 (La.App. 2 Cir. 4/7/17), 219 So.3d 1187, writ denied, 17-0972 (La. 10/9/17), 227 So.3d 830.
The burden of showing that the plaintiff has stated no cause of action is upon the exceptor. The public policy behind the burden is to afford the party his day in court to present his evidence. City of New Orleans v. Board of Directors of La. State Museum, 98-1170 (La. 3/2/99), 739 So.2d 748; Port City Glass & Paint Inc. v. Brooks, supra; Villareal v. 6494 Homes, LLC, 48, 302 (La.App. 2 Cir. 8/7/13), 121 So.3d 1246.
An appellate court reviews a trial court's ruling on an exception of no cause of action de novo because the exception raises a question of law and the lower court's decision is based only on the sufficiency of the petition. Port City Glass & Paint Inc. v. Brooks, supra; Mack v. Evans, 35, 364 (La.App. 2 Cir. 12/5/01), 804 So.2d 730, writ denied, 02-0422 (La. 4/19/02), 813 So.2d 1088. See also Kinchen v. Livingston Parish Council, 07-0478 (La. 10/16/07), 967 So.2d 1137; Hebert v. Shelton, 2008-1275 (La.App. 3 Cir. 6/3/09), 11 So.3d 1197; Ordoyne v. Ordoyne, 2007-0235 (La.App. 4 Cir. 4/2/08), 982 So.2d 899.
We will address each of the four counts in the order alleged by Agrifund.
FRAUD AND CONSPIRACY TO COMMIT FRAUD
Agrifund argues that the trial court erred in concluding that the company failed to allege a cause of action against the exceptors for fraud and conspiracy to commit fraud. This argument is without merit.
The definition of fraud is found in the portion of the Louisiana Civil Code dealing with vices of consent to contracts. However, not all fraud actions are contract claims. Thomas v. North 40 Land Dev., Inc., 2004-0610 (La.App. 4 Cir. 1/26/05), 894 So.2d 1160; Boudreaux v. Jeff, 2003-1932 (La.App. 1 Cir. 9/17/04), 884 So.2d 665. Fraud actions may also constitute a tort, sometimes called deceit. Frank L. Maraist and Thomas C. Galligan, Louisiana Tort Law §2.06(10) (2016). When fraud is alleged, all persons who participated in the alleged fraud and those who are beneficiaries are proper parties to the suit. Thomas v. North 40 Land Dev., Inc., supra.
Fraud is a misrepresentation or suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction. La. C.C. art. 1953. See also Benton v. Clay, 48, 245 (La.App. 2 Cir. 8/7/13), 123 So.3d 212; Quality Envtl. Processes, Inc. v. IP Petroleum Co., Inc., 2016-0230 (La.App. 1 Cir. 4/12/17), 219 So.3d 349, writ denied, 17-00915 (La. 10/9/17), 227 So.3d 833; Johnson v. First Nat. Bank of Shreveport, 2000-870 (La.App. 3 Cir. 6/20/01), 792 So.2d 33, writ denied, 01-2770 (La. 1/4/02), 805 So.2d 212, writ denied, 01-2783 (La. 1/4/02), 805 So.2d 213.
A claim of fraud based on silence or suppression of the truth requires there to be a duty to speak or disclose information. Greene v. Gulf Coast Bank, 593 So.2d 630 (La. 1992); Joyner v. Liprie, 43, 233 (La.App. 2 Cir. 5/7/08), 983 So.2d 257, writ denied, 08-1236 (La. 8/29/08), 989 So.2d 108. While fraud may result from a party's silence or inaction, mere silence or inaction without fraudulent intent does not constitute fraud. Intent to defraud and loss or damage are two essential elements to constitute legal fraud. Benton v. Clay, supra.
To succeed in a claim for intentional/fraudulent misrepresentations, the petition must contain allegations of: (1) a misrepresentation of material fact, (2) made with the intent to deceive, (3) causing justifiable reliance with resulting injury. Benton v. Clay, supra; Systems Eng'g & Sec., Inc. v. Science & Eng'g Associations, Inc., 2006-0974 (La.App. 4 Cir. 6/20/07), 962 So.2d 1089.
In pleading fraud or mistake, the circumstances constituting fraud or mistake shall be alleged with particularity. Malice, intent, knowledge, and other condition of mind of a person may be alleged generally. La. C.C.P. art. 856.
An independent cause of action for civil conspiracy does not exist in Louisiana; rather, the actionable element is the intentional tort that the conspirators agreed to commit or committed, in whole or part, causing the plaintiff's injury. Coleman v. Querbes Co. No. 1, 51, 159 (La.App. 2 Cir. 2/15/17), 218 So.3d 665; Haygood v. Dies, 48, 485 (La.App. 2 Cir. 11/20/13), 127 So.3d 1008, writ denied, 13-2955 (La. 2/28/14), 134 So.3d 1177; Hardy v. Easterling, 47, 950 (La.App. 2 Cir. 4/10/13), 113 So.3d 1178. See also Ross v. Conoco, Inc., 02-0299 (La. 10/15/02), 828 So.2d 546; Jeff Mercer, LLC v. State through Dept. of Transp. & Dev., 51, 371 (La.App. 2 Cir. 6/7/17), 222 So.3d 1017, writ denied, 2017-1442 (La. 12/5/17), 231 So.3d 625, cert. denied, ___ U.S. ___, 138 S.Ct. 1566, 200 L.Ed.2d 746, (2018); Thames v. Thames, 50, 639 (La.App. 2 Cir. 5/18/16), 196 So.3d 653.
He who conspires with another person to commit an intentional or willful act is answerable, in solido, with that person, for the damage caused by such act. La. C.C. art. 2324(A). The actionable element in a claim under La. C.C. art. 2324 is not the conspiracy itself, but rather the tort which the conspirators agreed to perpetrate and which they actually commit in whole or in part. The purpose of solidary liability is to compel any tortfeasor to pay an entire judgment. See Ross v. Conoco, Inc., supra.
To establish a conspiracy, a plaintiff is required to provide evidence of the requisite agreement between the parties, i.e., the plaintiff must establish a meeting of the minds or collusion between the parties for the purposes of committing wrongdoing. See Jeff Mercer, LLC v. State through Dept. of Transp. and Dev., supra; Crutcher-Tufts Resources, Inc. v. Tufts, 09-1572 (La.App. 4 Cir. 4/28/10), 38 So.3d 987.
To establish conspiracy, a plaintiff must prove that: (1) an agreement existed to commit an illegal or tortious act; (2) the act was actually committed; (3) the act caused the plaintiff's injury; and (4) there was an agreement as to the intended outcome or result. Jeff Mercer, LLC v. State through Dept. of Transp. and Dev., supra; Thames v. Thames, supra; Crutcher-Tufts Res., Inc. v. Tufts, supra.
Based upon our de novo review of the record, we find that Agrifund failed to state a cause of action against either the accounting defendants or the banking defendants for fraud and conspiracy to commit fraud.
Agrifund argues that it sufficiently stated in its petition that the bank defendants and the accounting defendants acted in furtherance of Dickerson's scheme to divert funds from the sale of crops, which were the collateral of Agrifund, to further Dickerson's failing farm enterprise and to benefit Dickerson and the banks. Agrifund claims that the banks profited from the scheme by receiving interest and bank fees on the transactions engaged in with Dickerson. Agrifund maintains that the banks participated in Dickerson's scheme by aiding in check kiting and money laundering.
Regarding the accounting defendants, Agrifund asserted the same allegations in the first and second amended petitions. Agrifund claimed that the accounting defendants conspired to organize farm entities for Dickerson to engage in improper, fraudulent, and deceptive acts and practices with respect to the acquisition of crops loans, sale of crops, and the allocation of the proceeds from those sales. Agrifund alleged that the accounting defendants aided Dickerson in reactivating High Flyers without the knowledge of its agent, Casiday, and added the Higdons as partners in the Dickerson Agricultural Partnership without their knowledge. Agrifund contended that the accounting defendants aided Dickerson in filing fraudulent documents in order to participate in government crop loans and crop insurance programs. Agrifund also alleged that the accounting defendants aided Dickerson in forging signatures to open accounts with Crop Production Services and obtain loans from FSB and Commodity Credit Corporation.
These allegations do not assert that the accounting defendants misrepresented or suppressed the truth with the intent to obtain an unjust advantage over or cause a loss or inconvenience to Agrifund. There are no allegations that the accounting defendants remained silent when they had a duty to Agrifund to disclose information. There are no allegations that the plaintiff ever relied upon any work performed by the accounting defendants. Agrifund failed to allege that the accounting defendants were even aware of the existence of Agrifund or had any communications or contact with the company. Further, the claims in Agrifund's petitions do not allege that the accounting defendants agreed with and had a meeting of the minds with Dickerson, the Dickerson entities, or any other defendants to engage in fraudulent conduct with the intent to cause injury to Agrifund. Therefore, Agrifund failed to allege fraud or conspiracy to commit fraud against it by the accounting defendants.
Agrifund also failed to state a cause of action for fraud and conspiracy to commit fraud against the banks or bank employees. Agrifund alleged that loan documents were filed with FSB containing the forged signatures of the Higdons and that McCain knew of the forgery. Agrifund claimed that the bank defendants cashed forged instruments and improperly converted third party checks to cashier's checks. Agrifund urged that Kennedy Rice checks were endorsed by McCain. The proceeds from one were deposited at Commercial Capital and the proceeds of another were given to Crop Production Services. According to Agrifund, the bank defendants improperly passed funds through various accounts at the banks. The company alleged that McCain induced farm hands to sign loan applications, but the proceeds were actually paid to Dickerson, and the bank approved a loan to Dickerson to pay rent on farmland when funding for rent should have already come from crop production loans.
Agrifund alleged that Wilson and Caldwell Bank loaned money to Dickerson that was not really a crop loan. Agrifund also maintained that Caldwell Bank improperly cashed checks for Dickerson and issued cashier's checks for the money. Agrifund urged that Commercial Capital aided in check kiting and gave Dickerson a bailout loan.
Agrifund claimed that the bank defendants diverted funds from Agrifund for the benefit of Dickerson and the banks. The company urged that the conspiracy involved a large number of checks which were not issued for legitimate business purposes.[5]
Based upon the three petitions filed by Agrifund, the company has failed to allege that the bank defendants misrepresented or suppressed the truth to gain an unfair advantage or to cause a loss or inconvenience to Agrifund. Many of the allegations, such as improperly obtaining crop loans based upon forged signatures, and inducing farm hands to sign loan applications where Dickerson actually received the proceeds, fail to establish a connection with Agrifund or how the activities harmed Agrifund. The allegations regarding cashing checks not payable to Dickerson and issuing cashier's checks for the proceeds, if proven to be true, fail to establish that the actions were done to cause injury or harm to Agrifund. There are no allegations that any of the bank defendants ever had any contact, communications, or dealings with Agrifund. Simply stated, there are no allegations which establish an agreement or meeting of the minds among the bank defendants with Dickerson to commit fraud upon Agrifund.
In summary, fraud occurs when one party intentionally misrepresents or withholds information from another party who relies on the inaccurate information or lack of information and sustains damage as a result. While Agrifund may have sufficiently pled a cause of action against Dickerson for fraud, it failed to sufficiently plead that the accounting defendants or the banking defendants knew that Dickerson was defrauding Agrifund and agreed with Dickerson to act in furtherance of his scheme. Therefore, Agrifund has failed to state a cause of action against the accounting defendants or the banking defendants for fraud and conspiracy to commit fraud.
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