The Nature Conservancy VS Upland Properties, L.L.C. and Marshall Investments Corporation
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2010 e THE 9V S CA 0516 NATURE CONSERVANCY VERSUS UPLAND PROPERTIES LLC AND MARSHALL INVESTMENTS CORPORATION Judgment Rendered October 29 2010 On Appeal from the 22nd Judicial District Court In and For the Parish of St Tammany Trial Court Number 2008 16511 Division D The Honorable Peter J Garcia Judge Presiding Monique M Lafontaine Robert W Mouton Counsel for Defendant Appellant Marshall Investments Corporation Jason M Cerise New Orleans LA Jay M Jalenak Jr Troy J Charpentier Baton Rouge LA Counsel for PlaintiffAppellee The Nature Conservancy BEFORE PARRO GUIDRY AND HUGHES JJ HUGHES J This is an appeal by Marshall Investments Corporation MIC from the grant of a confirmation of a default judgment in favor of The Nature Conservancy TNC and against appellant MIC and Upland Properties LLC Upland in the amount of 456 plus interest and costs For 80 564 the reasons that follow we reverse the confirmation of the default judgment against MIC and remand for further proceedings FACTS AND PROCEDURAL HISTORY Upland was the owner of a 939acre tract of land in St Tammany Parish Upland intended to improve and develop the land into a residential community known as Bedico Creek The Bedico Creek project would affect In such a case federal and state wetlands located on the property regulations require that land developers mitigate or offset the damages caused to the wetlands and require the developers to apply for a permit from the United States Army Corps of Engineers the Corps The permit necessary for the development of the Bedico Creek property required among other things that Upland contract with an offsite mitigation bank to fund the perpetual enhancement and management of 150 acres of pine flatwoodsavannah wetlands To fund the Bedico Creek project Upland took out a construction loan with MIC The loan documents were signed on March 17 2005 The debt was secured by Mortgages Security Agreements and Assignments of Rents and Leases which were filed and recorded in the St Tammany Parish mortgage records Thereafter to meet the permit requirement of enhancing and s maintaining the wetlands on May 26 2005 Upland entered into a Upland is not a party to this appeal 2 Mitigation Participation Agreement with TNC a conservation organization that protects and restores ecologically important lands and waters Under the Mitigation Participation Agreement TNC agreed to implement the mitigation required by the permit and Upland agreed to pay a certain sum pursuant to a payment schedule Upland defaulted on both the construction loan with MIC and the Mitigation Participation Agreement with TNC In accordance with LSA S 5136 R 9 et seq MIC foreclosed on the property and later purchased it at a public auction which was held pursuant to executory process by order of the United States District Court for the Eastern District of Louisiana The Act of Sale is dated June 4 2008 and provides that MIC will acquire all of s Upland rights but not its obligations under any documents and all permits licenses franchises certificates and other rights and privileges obtained in connection with the Land Although MIC held mortgages on the property the subsequent contract whereby TNC conveyed to Upland the use of the mitigation credits was unsecured Thereafter on December 10 2008 TNC filed a Petition for Damages from Breach of Contract and Unjust Enrichment against both Upland and MIC for the remaining balance Upland owed it for the wetlands mitigation credits TNC moved for a default judgment against both parties That default judgment was confirmed after a hearing on March 25 2009 and a judgment of 456 564 was rendered against Upland and MIC in solido 80 In written reasons for judgment the trial court held that TNC had established a prima facie case against MIC under the theories of unjust enrichment and thirdparty beneficiary of a contract 3 MIC filed a motion for new trial which was denied by a judgment signed November 3 2009 MIC appeals and asserts two assignments of error A The District Court Erred in Granting a Default Judgment to the PetitionerAppellee Against Marshall Investments Corporation MIC The PetitionerAppellee Failed to Establish a prima facie Case of Unjust Enrichment Against MIC as Required by Louisiana Code of Civil Procedure Article A 1702 Because Cause Exists for the Alleged Unjust Enrichment and the PetitionerAppellee has Another Remedy Available Under Law The District Court Erred in Granting a Default Judgment MIC The PetitionerAppellee Against PetitionerAppellee Failed to Establish a prima facie Case That it is a Third Party Beneficiary of a Permit Between Upland Properties LLC and the Army Corps of Engineers as Required by Louisiana Code of Civil Procedure Article 1702 The A B to the Permit Does Not Express an Intent to Benefit any ThirdParty LAW AND ANALYSIS To confirm a default judgment the plaintiff must present proof of the demand sufficient to establish a prima facie case LSAC art 1702 P C A A prima facie case is established if the plaintiff presents competent evidence sufficient to prove the essential elements of the petition as fully as if each allegation had been specifically denied Clary v D 95 0447 La Agostino App 1 Cir 12 665 So 792 793 Stated differently the plaintiff 95 15 2d must present competent evidence that convinces the court that it is more probable than not that he would prevail at a trial on the merits See Grevemberg v G Strategic Forecasting Group Inc 060766 La A P App I Cir 2 959 So 914 917 18 07 9 2d Appellate review of a confirmation of a default judgment is limited to a determination as to the sufficiency of the evidence offered Grevemberg v G 959 So at 918 And while there is a presumption as to the A P 2d sufficiency of the evidence if the judgment recites that the plaintiff has 4 produced same that presumption does not apply where the testimony is transcribed and contained in the record as in this case See Bates v Legion Indem Co 01 0552 La App 1St Cir 2 So 176 179 818 02 27 2d 1 Unjust Enrichment Louisiana Civil Code article 2298 provides in pertinent part that A person who has been enriched without cause at the expense of another person is bound to compensate that person The term without cause is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule The root principle of an unjustified enrichment is that the plaintiff suffers an economic detriment for which he should not be responsible while the defendant receives an economic benefit for which he has not paid Board of Supervisors of Louisiana State University v Louisiana Agricultural FinanceAuthority 2007 0107 La App 1St Cir 2 984 08 8 2d So 72 Scott v Wesley 589 So 26 27 La App I Cir 1991 2d Unjust enrichment is only applicable to fill a gap in the law where no other remedy is provided for by law Louisiana National Bank of Baton Rouge v Belello 577 So 1099 1102 La App 1 Cir 1991 see also Coastal 2d St Environmental Specialists Inc v Chem Lig International Inc 001936 La App 1 st Cir 11 09 818 So 12 19 01 2d The Louisiana Supreme Court in Minyard v Curtis Products Inc 251 La 624 652 205 So 422 432 1967 set forth five prerequisites a ed plaintiff must prove to prevail under the theory of unjust enrichment 1 2 3 4 5 an enrichment an impoverishment a connection between the enrichment and the impoverishment an absence ofjustification or cause for the enrichment and the impoverishment and no other available remedy at law for the impoverished party 5 MIC alleges that unjust enrichment principles do not apply to this case because there is justification or cause for the enrichment and the impoverishment and there are other remedies at law available to TNC Specifically MIC argues that TNC impoverishment preserving and s maintaining 150 acres of wetlands was justified or caused by the promise of Upland to pay a certain sum of money MIC argues that the contract between Upland and TNC is a valid juridical act and therefore precludes TNC from obtaining a judgment against MIC under the theory of unjust enrichment Moreover TNC had the legal remedy of filing suit against Upland and actually did successfully obtain a judgment against Upland for the full balance of the contract We find that the evidence presented by TNC at the hearing to confirm the default judgment supports MIC position that the fourth and fifth pre s requisites of an unjust enrichment are not fulfilled in this case The Mitigation Participation Agreement is a valid juridical act As such a valid juridical act caused TNC impoverishment and Upland enrichment s s barring the applicability of unjust enrichment principles While we agree that ultimately MIC received a benefit MIC did so through its rights as mortgagee and purchaser at a foreclosure sale of the Bedico Creek property Moreover TNC also filed suit and obtained a judgment against Upland While TNC may be unable to recover the unpaid balance of the contract pursuant to that judgment we cannot overlook the fact that there was an obvious available legal remedy for TNC 2 ThirdParty Beneficiary Louisiana Civil Code article 1978 provides that 2 Comment B of the 2000 Revision Comments to LSAC art 395 defines a juridical act as C a lawful volitional act intended to have legal consequences It may be a unilateral act such as an affidavit or a bilateral act such as a contract It may be onerous or gratuitous 3 A contracting party may stipulate a benefit for a third person called a third party beneficiary Once the third party has manifested his intention to avail himself of the benefit the parties may not dissolve the contract by mutual consent without the beneficiary agreement s While the written reasons for judgment state that TNC is clearly a third party beneficiary of the provisions of the permit issued by the Corps to Upland TNC argument in brief to this court is that MIC is the third s party beneficiary of the mitigation agreement between TNC and Upland To be thorough we will address both positions This court in Paul v Louisiana State Employees Group Ben Program 19990897 La App I Cir 5 762 So 136 140 held 00 12 2d that The Louisiana Civil Code provides that a contracting party may stipulate a benefit for a third person called a third party beneficiary LSAC art Under Louisiana law C 1978 such a contract for the benefit of a third party is referred to as a stipulation pour autrui See e Whitney Nat Bank v g l Howard Weil Fin Corp 93 1568 La 4th Cir App 94 27 1 631 So 1308 1310 A stipulation pour autrui is never 2d presumed Rather the intent of the contracting parties to stipulate a benefit in favor of a third party must be made manifestly clear Homer Nat Bank v TriDistrict Dev l Corp 534 So 154 156 La 3rd Cir writ denied 2d App 1988 536 So 1236 La Additionally to establish a 2d 1989 stipulation pour autrui the thirdparty relationship must form the consideration for a condition of the contract and the benefit may not be merely incidental to the contract Concept Design Inc v J Krebs Sons Inc 96 1295 La 4th App 97 19 3 Cir 692 So 1203 1205 06 The party demanding 2d performance of an obligation pursuant to a stipulation pour autrui bears the burden of proving the existence of this obligation See LSAC arts 1831 and 1981 C As such a stipulation pour autrui is intended to give to a third party a cause of action against an obligor but is not intended to allow an obligor to force a benefit on a third party The stipulation for another must be beneficial to the other not onerous TNC therefore cannot force MIC into the position of a thirdparty beneficiary for the purpose of binding MIC to 7 pay the debt of Upland TNC could not recover from MIC under the theory that MIC is a third party beneficiary of the mitigation agreement between TNC and Upland MIC was not a party to the contract between TNC and Upland and was not contemplated as a thirdparty beneficiary in the traditional sense Nor can TNC force MIC to pay Upland contractual obligation under s the mitigation agreement by way of the permit issued by the Corps The potentially applicable language in the permit reads as follows 7 The permittee has agreed to compensate for unavoidable impacts to wetland functions by Contracting with an appropriate offsite mitigation bank area in St Tammany Parish to fund the perpetual enhancement and management of 150 acres of pine savannah flatwood wetlands Proof of payment shall be C provided to the Corps prior to the initiation of construction activities on site or within one year of permit issuance whichever occurs first The permittee shall include a copy of this permit with the contribution sent to the bank sponsor Even assuming that the permit issued to Upland by the Corps is a contract as contemplated by LSAC art 1978 and that there is C sufficient language in the permit to designate TNC as a thirdparty beneficiary MIC cannot be forced to assume the obligation of Upland under the permit MIC was not a party to the contract and obtained the property through foreclosure and public auction and thus without any duty to assume the obligations of Upland TNC remedy as a thirdparty beneficiary would s be against Upland or the Corps and as noted TNC has already obtained a judgment against Upland Here again MIC was not a party to any contract between Upland and the Corps and does not step into the shoes of Upland because it succeeded Upland through foreclosure and public auction 0 CONCLUSION We conclude that TNC cannot recover against MIC under any of the theories advanced TNC had a direct remedy against Upland and in fact obtained a judgment against Upland pursuant to its contract MIC is therefore not liable under a theory of unjust enrichment Nor can MIC be forced into the position of a thirdparty beneficiary of the contract between Upland and TNC in order to require it to assume the obligations of Upland Nor even if TNC is considered the beneficiary of an agreement between Upland and the Corps can MIC be forced to assume the obligations of Upland when it was not a party to the contract and obtained the property through foreclosure and public auction Accordingly we reverse the judgment appealed from against MIC and remand this case to the district court for further proceedings All costs of this appeal are to be paid by TNC REVERSED AND REMANDED o
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