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Hibernia National Bank v. Carner

decided: August 5, 1993.

HIBERNIA NATIONAL BANK, PLAINTIFF-APPELLEE,
v.
JOHN W. CARNER, DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Middle District of Louisiana. D.C. DOCKET NUMBER CA90 263 B M1. JUDGE Frank J. Polozola

Before King, Higginbotham and Demoss, Circuit Judges.

Author: King

KING, Circuit Judge:

We are asked to consider whether the Louisiana legislature, in 1981, changed the time-honored definition of "virile share" in the context of a general partner's liability for his or her partnership's debt. We are also asked to consider whether a judgment obtained by a creditor against a Louisiana general partnership is res judicata in a suit in federal district court for the amount of any deficiency owed by a general partner. Finding that the Louisiana legislature has not departed from the established definition of "virile share" and that a judgment obtained against the partnership is res judicata on the amount of a deficiency owed by a general partner, we affirm in part, reverse in part, and remand.

I. BACKGROUND

In September 1985, John W. Carner, a citizen of California, joined several Louisiana citizens and a Louisiana corporation to form Jefferson Hills Partnership (JHP), a Louisiana partnership. The Articles of Partnership, as amended, set forth the partners' ownership interests and the respective percentages for the sharing of profits and losses. Under the articles, Carner holds a five-percent interest in JHP, which constitutes the smallest partnership share.

The purpose of JHP was to purchase the Jefferson Hills Apartment complex (Jefferson Hills), which is located in Baton Rouge, Louisiana, and to convert this complex into a retirement condominium community. JHP's acquisition of Jefferson Hills was accomplished through "Sale(s) with Assumption of Mortgage(s)," under which the partnership assumed all indebtedness represented by thirty promissory notes executed to construct the complex's thirty separate, four-unit apartment buildings. These notes were held by Fidelity National Bank.*fn1 Fidelity later merged with Hibernia National Bank of New Orleans, which then merged with other banks to become Hibernia National Bank.

In March 1987, JHP defaulted on the promissory notes and Hibernia instituted a foreclosure action in Louisiana state court.*fn2 As a result of this default, JHP filed for protection under Chapter 11 of the Bankruptcy Code, and the state court foreclosure action was removed to federal court and given an adversary proceeding number. JHP also filed a counterclaim in the bankruptcy court, alleging that Hibernia breached an agreement with JHP to release the JHP properties on a per-unit basis and that Hibernia wrongfully induced JHP into assuming troubled loans. Hibernia sought a judgment for the full amount due under the terms of the notes--including attorney's fees, costs, and interest--in its adversary proceeding against JHP and in its motion for summary judgment; nevertheless, Hibernia obtained a summary judgment against JHP from the bankruptcy court in December 1988 for an amount that approximates the principal ($4,156,895.76) and pre-petition interest ($309,169.14) due under the terms of the notes at the time JHP filed its bankruptcy petition. Hibernia's motion for summary judgment was not opposed (nor was the judgment appealed) because JHP and a number of individual partners had reached partial settlement agreements with Hibernia. Hibernia then commenced a federal seizure proceeding through the United States Marshal's Office against JHP's mortgaged real estate and movable property. A United States Marshal's sale of JHP's assets was conducted, and the Jefferson Hills Apartments were sold to a third party for $2,125,000; the property had been appraised earlier for $2,600,000. JHP's movable property, which was appraised at $20,410, was sold to a third party for $5,200. Accordingly, following the Marshal's sale and payments of the Marshal's costs and expenses, Hibernia was left with a deficiency of more than $2 million.

Hibernia then commenced proceedings against JHP's eight individual partners. Hibernia then entered into settlement agreements with all of the JHP partners but Carner and reached a partial settlement with JHP. This settlement with JHP was executed by Sam Gallo, JHP's managing partner, after notice was sent to all the partners, including Carner. In all of these settlement agreements, Hibernia reserved its rights against JHP and any non-settling partners. The final effect of the agreements was that, in exchange for a release from liability for the underlying notes, the partnership and settling partners (1) paid Hibernia a total of $296,920, (2) released the JHP counterclaim, and (3) by not opposing Hibernia's motion for summary judgment, allowed Hibernia to foreclose on the JHP property. After giving effect to these settlements, Hibernia still was left with a substantial deficiency on its judgment against JHP.

In March 1990, Hibernia brought this action against Carner--at that time, the only remaining non-settling partner--to collect his virile share*fn3 of the amount that Hibernia considered to be the JHP deficiency. Hibernia then moved for summary judgment. The district court, finding that Carner is liable to Hibernia as a matter of law, granted that motion. However, the court reserved its decision on the amount of the judgment and set that matter for trial. Following a trial on the issue of damages, the court rendered judgment in favor of Hibernia for: one-eighth of the outstanding JHP deficiency as determined by the bankruptcy court's December 1988 judgment, or $437,414.58; additional interest as provided for in the thirty promissory notes; attorney's fees in the amount of one-eighth of $200,000, or $25,000; and legal interest as provided for by Louisiana law on the total sum of the principal and interest awarded from the date of judicial demand to the date the judgment is paid in full. Carner appeals from that judgment.

II. STANDARD OF REVIEW

In reviewing a grant of summary judgment, we apply the same standard as the district court. Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989) (we review grants of summary judgment de novo). Specifically, we ask whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). In making this determination, we view all of the evidence and inferences drawn from that evidence in the light most favorable to the party opposing the motion for summary judgment. Reid v. State Farm Mutual Auto Ins. Co., 784 F.2d 577, 578 (5th Cir.1986).

To defeat a motion for summary judgment, Rule 56(e) of the Federal Rules of Civil Procedure requires the non-moving party to set forth specific facts sufficient to establish that there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). While a mere allegation of the existence of a dispute over material facts is not sufficient to defeat a motion for summary judgment, if the evidence shows that a reasonable jury could return a verdict for the non-moving party, the dispute is genuine. Id. at 247-48, 106 S. Ct. at 2510. On the other hand, if a rational trier of fact, based upon the record as a whole, could not find for the non-moving party, there is no genuine issue for trial. Amoco Production Co. v. Horwell Energy, Inc., 969 F.2d 146, 147-48 (5th Cir.1992). Such a finding may be supported by the absence of evidence to establish an essential element of the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.), cert. denied, U.S. , 113 S. Ct. 82, 121 L. Ed. 2d 46 (1992); International Ass'n of Machinists & Aerospace Workers, Lodge No. 2504 v. Intercontinental Mfg. Co., 812 F.2d 219, 222 (5th Cir.1987).

Finally, where the non-moving party has presented evidence to support the essential elements of its claims but that "evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S. Ct. at 2510-11 (citations omitted). And a summary assertion made in an affidavit is simply not enough evidence to raise a genuine issue of material fact. See Lechuga v. Southern Pacific Transp. Co., 949 F.2d 790, 798 (5th Cir.1992) ("Conclusory statements in an affidavit do not provide facts that will counter summary judgment evidence, and testimony based on conjecture alone is insufficient to raise an issue to defeat summary judgment."); Galindo v. Precision American Corp., 754 F.2d 1212, 1216 (5th Cir.1985) ("Affidavits setting forth "ultimate or conclusory facts ...' are insufficient to either support or defeat a motion for summary judgment....") ...


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