Leisure Recreation & Entertainment, Inc. v. First Guaranty Bank
Annotate this CaseThis summary judgment matter arose from a petition for declaratory judgment seeking a declaration (amongst other things) that defendant First Guaranty Bank (the “Bank”) applied an incorrect interest rate and thus miscalculated the principal owed on a Promissory Note executed by borrower-petitioner Leisure Recreation & Entertainment, Inc. (“Leisure”) in favor of the Bank in December 1991 (the “Note”). The Louisiana Supreme Court granted Leisure’s writ application to determine whether the court of appeal erred in applying the “voluntary payment doctrine” to hold that Leisure was estopped from recovering payments voluntarily made, regardless of whether owed. In addition, the Court reviewed whether the court of appeal erred in determining the Note presented an alternative obligation as to the Prime Rate interest structure for years 11 through 30 of its repayment, whether it erred in imposing its own interest rate structure during that period, and whether the Bank’s prescription arguments preclude Leisure’s recovery of any interest paid and not due between 2001 and 2013. Finding the “voluntary payment doctrine” contravened the Louisiana Civil Code, the Supreme Court reversed the court of appeal insofar as it: (1) reversed the portion of the district court’s judgment denying the motion for summary judgment filed by the Bank as to the voluntary payment affirmative defense; (2) dismissed Leisure’s claim for declaratory relief as to the interest it voluntary paid the Bank between 2001 and 2013; and (3) rendered judgment ordering the Bank to repay Leisure “any overcharge of interest in excess of the prime rate that Leisure paid on the [Note] since the filing of its suit on October 7, 2013, together with interest thereon from the date of judicial demand until paid.” Finding that the Note set forth an “alternative obligation,” the Supreme Court reversed the court of appeal insofar as it: (1) reversed the district court decree that Leisure was entitled to select the Prime Rate structure pursuant to La. C.C. art. 1810; and (2) reversed the district court’s declaration that Leisure paid all indebtedness owed to the Bank on the Note as of June 28, 2015, and was owed return of all amounts paid thereafter. The case was remanded to the court of appeal for consideration of the Bank’s arguments on appeal that were pretermitted by the court of appeal opinion and were not in conflict with the Supreme Court's opinion.
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