Gonsoulin v. Pontiff

Louisiana Court of Appeal
74 So. 3d 809 (2011)

ELI5:

Rule of Law:

A contract is an absolute nullity and therefore unenforceable when its cause, the reason a party obligates itself, is to produce a result that is prohibited by law or is against public policy.

Facts:

In June 1992, Michelle Pontiff and her husband purchased a house.
By December 1992, they could no longer afford the house and transferred ownership to Pontiff's mother, Gwen Gonsoulin.
Pontiff continued to live in the house after the transfer of ownership.
At some point, Gonsoulin executed a form document at the Lafayette Parish Assessor's office.
The form's stated purpose was to grant Pontiff a 'right of use of habitation' specifically for 'allowing him to claim Homestead Exemption.'
As the non-resident owner, Gonsoulin was not legally entitled to claim a homestead exemption for the property.
The physical document granting the right of habitation was subsequently lost or destroyed.
In April 2010, Gonsoulin sought to evict Pontiff from the home.

Procedural Posture:

Gwen Gonsoulin served a notice of eviction on Michelle Pontiff in a justice of the peace court.
Pontiff filed an exception claiming the amount in dispute exceeded the court's jurisdiction, and the case was removed to the Fifteenth Judicial District Court (a state trial court).
At a hearing, the trial court found that Gonsoulin had executed a document granting a limited right of habitation to Pontiff.
The trial court ruled that the cause for granting this right—to unlawfully obtain a homestead exemption—was illicit, rendering the document a nullity.
The trial court entered a judgment of eviction against Pontiff.
Pontiff, as the appellant, appealed the trial court's judgment to the Court of Appeal of Louisiana, Third Circuit.

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Issue:

Does a contract purporting to grant a right of habitation, created for the sole purpose of unlawfully obtaining a homestead tax exemption, have a lawful cause and is it therefore enforceable?

Opinions:

Majority - Pickett, Judge

No. A contract created for the sole purpose of unlawfully obtaining a homestead tax exemption does not have a lawful cause and is therefore unenforceable. The court's reasoning is grounded in the Louisiana Civil Code, which requires every obligation to have a lawful cause. The cause of an obligation is unlawful when its enforcement would produce a result prohibited by law or public policy. In this case, testimony from the assessor's office and the language of the exemplar forms clearly indicated that the sole purpose of the document was to allow the property to be improperly exempted from property taxes, a benefit to which the owner, Gonsoulin, was not entitled. Because the contract's cause was to achieve an illegal tax avoidance, it violates a rule of public order and is considered an absolute nullity, meaning it is void and cannot be confirmed or enforced.

Analysis:

This decision reinforces the fundamental contract principle that courts will not enforce agreements with an illegal purpose or 'cause.' It demonstrates that courts will look beyond the form of an instrument, such as a purported 'right of habitation,' to its underlying substantive purpose. The ruling serves as a precedent against using juridical acts as a pretext for unlawful activities like tax evasion. For future cases, this affirms that a contract's legality is determined by its intended result, and any agreement designed to circumvent public laws will be deemed void from its inception.

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