IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 95-31103
Summary Calendar
CANTERBURY JOINT VENTURE,
Plaintiff-Appellant,
versus
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA; BHNO PARTNERS LIMITED,
Defendants-Appellees.
________________________________________________
Appeal from the United States District Court for the
Eastern District of Louisiana
(95-CV-2135-A)
________________________________________________
September 27, 1996
Before GARWOOD, WIENER and PARKER, Circuit Judges.*
GARWOOD, Circuit Judge:
Appellant Canterbury Joint Venture (Canterbury) appeals the
district court’s dismissal pursuant to Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim upon which relief
can be granted. We affirm.
Facts and Proceedings Below
*
Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
This appeal presents a narrow question of Louisiana law which
may be stated as whether the payee’s transfer to a third party of
a defaulted and admittedly owing promissory note constitutes the
sale of a litigious right, and therefore triggers the maker’s right
of redemption.
In December 1970, Canterbury signed a promissory note in favor
of appellee Prudential Insurance Company of America (Prudential)
secured by a mortgage on a commercial property located at 1010
Common Street in New Orleans, Louisiana. Canterbury concedes that
it defaulted on the note on December 31, 1993, with a balance of
approximately $8 million owing. On April 24, 1994, Prudential
filed an executory proceeding to foreclose on the mortgage.
However, Prudential and Canterbury entered into a forbearance
agreement in July 1994 that allowed Canterbury until January 1,
1995, to pay the balance owing on the note. In consideration for
this agreement, Canterbury agreed to pay Prudential $70,110.75 and
waive all defenses to enforcement of the note as well as foregoing
its right to seek bankruptcy protection. Canterbury failed to pay
the remaining balance by the agreed upon date, yet offered to
purchase the note from Prudential for $4 million on February 17,
1995. Prudential made a counteroffer to sell the note to
Canterbury for $5.5 million to which Canterbury did not respond.
Canterbury alleges that it notified Prudential on March 6, 1995, of
its intent to exercise its right of redemption should Prudential
assign the note to a third party.
2
On April 11, 1995, Prudential assigned the note to appellant
BHNO Partners, Ltd. (BHNO). Canterbury alleges that Prudential and
BHNO entered into a confidentiality agreement to prevent the
disclosure of the price paid for the assignment to Canterbury.
BHNO was substituted for Prudential as plaintiff in the executory
proceeding on April 11, 1995, and on April 27, 1995, caused the
property to be readvertised for sheriff’s sale on June 29, 1995.
At the June 29, 1995, sheriff’s sale BHNO purchased the property.
On July 3, 1995, Canterbury filed the instant complaint in the
United States District Court for the Eastern District of Louisiana
alleging that Prudential and BHNO had: (1) conspired to deprive
Canterbury of its right to redeem a litigious right, (2)
intentionally deprived Canterbury of its right of redemption, and
(3) breached an unspecified “special duty” to disclose to
Canterbury the amount which BHNO had paid for the assignment.
Prudential and BHNO moved to dismiss for failure to state a claim
upon which relief can be granted pursuant to Rule 12(b)(6). By
order entered September 18, 1995, the district court dismissed
Canterbury’s claims with prejudice. A Rule 58 judgment dismissing
the suit with prejudice was subsequently entered on September 20.
The district court reasoned that all of Canterbury’s claims
were premised upon the existence of a litigious right, yet no such
right existed as the facts pleaded by Canterbury demonstrated that
Canterbury had failed to contest the executory proceeding, and had
in fact waived all defenses to such proceeding. The district court
3
noted that it is necessary that the suit be contested for any
litigious right to arise under Louisiana law. The court below
additionally held that even if a litigious right were found to
exist, Canterbury had waived its right of redemption by failing to
assert it in a timely manner. The court additionally observed that
the twin policies of preventing speculation in litigation and
putting an end to litigation that underlie the right of redemption
where a litigious right is sold would not be served under the facts
of the present case. Finally, the court held that Canterbury’s
conspiracy claim under Louisiana Civil Code Article 2324 could not
succeed because such a claim must be premised upon the commission
of some underlying tort under Louisiana law, and no such tort could
be pleaded in this case as no litigious right existed, and that the
absence of any such litigious right was similarly fatal to
Canterbury’s claim that some special duty was owed by the
defendants.
On October 2, 1995, Canterbury filed a motion for
reconsideration followed by a motion on October 13 to amend its
complaint to include two new claims under the abuse of rights
doctrine. By order entered October 17, the district court denied
Canterbury’s motion to amend as untimely as a matter of law in
light of the fact that the action had already been dismissed. The
district court subsequently entered an order on October 20 denying
Canterbury’s motion for reconsideration on the grounds that
Canterbury had failed to present any new argument or authority
4
which would persuade the court to vacate its judgment, and that no
claim regarding the asserted right of redemption could be
established based upon the undisputed facts. Canterbury now brings
this appeal.
Discussion
I. Failure to State a Claim
We review a dismissal for failure to state a claim under the
same standard as the district court: a claim may not be dismissed
unless it is certain that the defendant cannot prove any set of
facts in support of his claim that would entitle him to relief.
Leffall v. Dallas Ind. School Dist., 28 F.3d 521, 524 (5th Cir.
1994). We assume the truth of the facts alleged in the complaint,
but we do not assume facts that are not alleged. McCormack v.
National Collegiate Athletic Ass’n, 845 F.2d 1338, 1343 (5th Cir.
1988).
Under Louisiana law, “[w]hen a litigious right is assigned,
the debtor may extinguish his obligation by paying to the assignee
the price the assignee paid for the assignment, with interest from
the time of the assignment.” La. Civ. Code Ann. art. 2652 (Supp.
1996). “A right is litigious, for that purpose, when it is
contested in a suit already filed.” Id; Martin Energy Co. v.
Bourne, 598 So.2d 1160, 1162 (La. App. 1st Cir. 1992).
5
Canterbury challenges the district court’s conclusion that no
litigious right existed because Canterbury failed to contest the
executory proceeding, and therefore Canterbury necessarily lacked
any right of redemption under Article 2652. Canterbury’s arguments
on this point are twofold: (1) the district court’s holding rests
on an overly mechanistic application of the contestation
requirement as no answer is provided for in executory proceedings;
and (2) Canterbury was de facto contesting the executory proceeding
by negotiating the forbearance agreement and continuing to
negotiate for the purchase of the note. We address these arguments
seriatim.
Canterbury’s first argument ignores the fact that there are
other procedural avenues available to contest an executory
proceeding. “[A] right is contested once an answer or defense has
been filed in response to the petition.” First Nat’l Bank of
Jefferson Parish v. Keyworth, 670 So.2d 1288, 1291 (La. App. 5th
Cir. 1996) (emphasis added). While no answer is provided for in
executory proceedings, “[d]efenses and procedural objections to an
executory proceeding may be asserted either through an injunction
proceeding to arrest the seizure and sale . . . or a suspensive
appeal from the order directing the issuance of the writ of seizure
and sale, or both.” La. Code Civ. P. art. 2642. Either of these
mechanisms would suffice to constitute a contest within the meaning
of Article 2652. See Keyworth, 670 So.2d 1291 (petition for
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temporary restraining order and preliminary injunction contested
right to seize and sell property, although holding no sale of
litigious right because did not contest until after transfer of
note). Canterbury’s complaint does not allege that Canterbury
sought to file any formal contest to the executory proceeding
whatsoever.
Furthermore, Canterbury affirmatively pleaded that it had
waived all defenses to foreclosure as partial consideration for the
forbearance agreement. Therefore, the complaint reflects that not
only did Canterbury fail to contest the executory proceeding, but
it could not do so having waived all defenses to the action.
Finally, Canterbury does not dispute that the note was due and
owing. See FSLIC v. Mmahat, 89 B.R. 573, 575 (E.D. La.
1988)(holding that the purchase of a loan did not create a
litigious right where the loan is undisputed by the obligor).
With respect to Canterbury’s second argument that the
negotiation of the forbearance agreement and for the purchase of
the note constituted a contest, Canterbury cites no authority to
the effect that the Louisiana courts have recognized anything other
than a contested judicial proceeding as satisfying this
requirement.
In short, we agree with the court below that the facts alleged
by Canterbury affirmatively demonstrate that no litigious right
existed in the present case, and that therefore Canterbury’s
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allegations premised on interference with the right of redemption
on sale of a litigious right necessarily fail to state a claim upon
which relief can be granted.1
II. Denial of Motion to Amend
Canterbury additionally complains of the district court’s
denial of its motion to amend its complaint to allege causes of
action under the Louisiana abuse of rights doctrine. We find no
error in denying the motion to amend. Amendment simply was not
available because the district court had dismissed Canterbury’s
entire action rather than just its complaint.
In Whitaker v. City of Houston, 963 F.2d 831 (5th Cir. 1992),
we were confronted with facts similar to those in the present case
in that the district court had entered an order dismissing the
plaintiff’s “claims” which we noted gave little indication as to
whether the court intended to dismiss the complaint or the entire
action. Much turns on this distinction as it governs whether the
plaintiff may seek leave to amend under Federal Rule of Civil
Procedure 15(a). In Whitaker, we held:
“A district court’s order dismissing a complaint
constitutes dismissal of the action when it states or
clearly indicates that no amendment is possible——e.g.,
1
For instance, Canterbury’s claim for conspiracy must fail in
the absence of any valid right of redemption under article 2652
because article 2324 of the Louisiana Civil Code does not provide
an independent basis for liability, but must be premised upon a
wrong which would otherwise give rise to a cause of action. See,
e.g., Magee v. Employers Information Serv., Inc., 468 So.2d 712,
714 (La. App. 4th Cir. 1985).
8
when the complaint is dismissed with prejudice or with
express denial of leave to amend——or when circumstances
otherwise indicate that no amendment is possible——e.g.,
when the limitations period has expired. In any such
case, dismissal of the complaint terminates the action
even though the district court does not use those precise
words, and thus constitutes a final order, subject to the
thirty-day appeal limit——assuming, that is, that a Rule
58 judgment was entered, which was not the case here.
If, on the other hand, the district court’s order does
not expressly or by clear implication dismiss the action,
then under Czeremcha, such order merely dismisses the
complaint. In that case, the plaintiff may amend under
Rule 15(a), but only with permission of the court.
. . . .
As no Rule 58 judgment was entered in this case, we
are not directly concerned with the effect of entry of a
Rule 58 judgment on the plaintiff’s option to file a
motion for permissive amendment. Nevertheless, we note
that post-Czeremcha decisions in the Eleventh Circuit
have held that once a Rule 58 judgment is entered
amendment of the complaint is no longer possible.” Id.
at 835.
Unlike in Whitaker, the court’s order dismissing the action in the
present case expressly stated that the dismissal was with
prejudice, and a Rule 58 judgment was entered shortly thereafter.
As the district court had dismissed Canterbury’s entire action,
there was simply nothing left for Canterbury to amend, and
therefore Canterbury’s only remaining options were a motion to
9
reconsider the judgment or an appeal of the dismissal.2 See
Whitaker, 963 F.2d at 834.
For the foregoing reasons, the judgment of the district court
is hereby
AFFIRMED.
2
Even if there were something left to amend, the Louisiana
abuse of rights doctrine would not have resurrected Canterbury’s
action as Canterbury’s proposed amended complaint still failed to
state a cause of action. “The Louisiana abuse-of-rights doctrine
applies only if one of the following conditions is met: (1) The
rights were exercised ‘exclusively for the purpose of harming
another or with the predominant motive to cause harm;’ (2) an
absence of [sic] ‘of a serious and legitimate interest that is
worthy of judicial protection;’ (3) using ‘the right in violation
of moral rules, good faith or elementary fairness;’ or (4)
‘exercising the right for a purpose other than that for which it
was granted.’” Deus v. Allstate Ins. Co., 15 F.3d 506, 520 (5th
Cir.)(quoting Illinois Cent. R.R. v. International Harvester Co.,
368 So.2d 1009 (La. 1979)), cert. denied, 115 S.Ct. 573 (1994); see
also Massachusetts Mut. Life Ins. Co. v. Nails, 549 So.2d 826 (La.
1989). “The doctrine of abuse of rights has been invoked sparingly
in Louisiana. The doctrine is a civilian concept which is applied
only in limited circumstances because its application renders
unenforceable one’s otherwise judicially protected rights.” Oliver
v. Central Bank, 658 So.2d 1316, 1321 (La. App. 2d Cir.
1995)(internal citations omitted); see also Dufour v. Westlawn
Cemeteries, Inc., 639 So.2d 843 (La. App. 5th Cir. 1994).
Canterbury’s proposed amended complaint alleged: (1)
“Prudential abused the right to assign the Promissory Note because
it did so for the predominant motive of causing harm to
Canterbury;” and (2) “Prudential and BHNO abused the right to enter
into the confidentiality agreement because: (a) the predominant
motive for entering into the agreement was to harm Canterbury; (b)
there was no legitimate motive for not disclosing the amount paid
for the assignment; and (c) the refusal to disclose the amount paid
for the assignment was unfair and done in bad faith.”
We fail to see how the assignment itself caused any harm to
Canterbury in the absence of a valid right of redemption. As for
Canterbury’s claim relating to the confidentiality agreement, this
act could cause harm to Canterbury only if Canterbury possessed a
valid right of redemption which we have already concluded that it
did not.
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