Opinion ID: 1684454
Heading Depth: 1
Heading Rank: 2

Heading: application of la.r.s. 22:618(a)

Text: The documents excluded, referred to by the court of appeal as an application package, consisted of the following: Application for Endorsement under the bond, the LoanPower Evaluation form, the Customer Statement, the Vehicle Purchase Order/Sales Invoice, and the credit reports on each borrower. A brief description of several documents is helpful in understanding the case. The first section of the Application for Endorsement contains basic information on the borrower, such as name, address and Driver's License number. The second section is a worksheet which discloses the basic terms of the loan and calculates the premium due. The third section consents to the release of credit information, acknowledges that the borrower remains primarily responsible on the loan obligation and is signed by the borrower. On the reverse, there are sections to be completed by the dealer and lender, showing their respective addresses. The lender section also contains the signature of the approving loan officer. The application also instructs that the remaining documents specified above, except for the credit report, are to be attached to the application. The LoanPower evaluation form is a rating form to be completed by the lender to determine if the borrower qualifies for the program. The lender is obligated to take four steps before rating the borrower: (1) complete the lender's conventional loan application, (2) obtain a credit report, (3) determine from this information whether the borrower can meet the loan obligation, and (4) determine if the borrower would qualify for the loan under the lender's criteria if the borrower provided a conventional downpayment. If the lender answered the questions posed by steps three and four affirmatively, the lender was to proceed with rating the borrower to determine if the LoanPower Minimum Acceptance Criteria were met. The borrower was rated by scoring his creditworthiness based on his length of employment and time at present address, occupation, whether he owned his residence, quality of borrower's credit report, number of dependents, and other criteria. If the score was greater than 36 points, the borrower qualified. At the bottom of the form the lender is instructed to attach the credit report, if available, and to sign his approval. The Customer Statement is merely a standard credit application supplied by the General Motors Acceptance Corporation (GMAC). All of the information provided, such as the borrower's address, occupation, employer, monthly income and references are provided by the borrower. The form is signed by the borrower and authorizes the lender to investigate his credit and employment history. According to the testimony all of the forms necessary for the borrower to participate in the LoanPower program, including the Application for Endorsement and the LoanPower Evaluation form, were actually prepared and assembled by Lieux Chevrolet, not Guaranty Bank. By the time these documents were sent to Guaranty the vehicle had already been delivered to the borrower. The lending officer merely checked to see if all the necessary forms were included. The decision to submit a borrower to the program was made by the dealer. Under the LoanPower program, lenders were authorized to submit borrowers for participation based upon information provided by the dealer. The lender, however, remained responsible for qualifying the borrower by determining if the borrower would meet the lender's criteria for a conventional loan, verifying employment and income, and determining if the borrower met the LoanPower criteria by rating the borrower with the LoanPower Evaluation form. At trial, LIGA sought to avoid paying these claims by asserting contractual defenses contained in the indemnity bond issued by Ideal. The bond provides in part: 4. Negligence or Misconduct of Obligee's Employees, Agents or Representatives In the event that any employees, agents or representatives of the obligee fail to comply with the operational procedure(s) which the surety or its authorized agent may from time to time prescribe, or in the event they commit deceit or fraud in connection with any application for this bond or in connection with the procurement of any endorsement hereto or any premium payment, surety and its authorized agent shall have no obligation whatsoever with respect to such application for this bond or endorsement, except to refund any amounts received pursuant thereto.