London Towne Condo. Ass'n v. LONDON TOWNE
2006 WL 2956209, 939 So. 2d 1227 (2006)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The recordation of an act of sale in the public records does not, by itself, constitute constructive knowledge to an obligee that commences the one-year prescriptive period for a revocatory action under Louisiana Civil Code article 2041. The period begins when the obligee knew or should have known of the act, which is a factual determination based on all circumstances of the case.
Facts:
- On August 19, 2000, London Towne Company (LTC) acquired a property known as Unit 9 of 1201 Chartres Street in New Orleans.
- On August 28, 2001, the London Towne Homeowner's Association (the "Association") initiated a lawsuit against LTC to collect unpaid dues and recover for property defects.
- While the lawsuit was pending, LTC executed an Act of Sale on February 1, 2002, to transfer the Chartres Street property to Millennium Group I, LLC ("Millennium").
- The Act of Sale transferring the property to Millennium was recorded in the Orleans Parish conveyance records on February 19, 2002.
- On May 24, 2004, the Association obtained a final, unsatisfied judgment against LTC for $281,899.16.
- Shortly after obtaining its judgment, the Association learned of the 2002 property transfer from LTC to Millennium.
Procedural Posture:
- The London Towne Homeowner's Association filed a Petition for Declaratory Judgment in the Orleans Parish trial court against London Towne Company and Millennium Group I, LLC, seeking to annul the property transfer.
- Millennium filed a peremptory exception of prescription, arguing the revocatory action was filed more than one year after the Act of Sale was recorded.
- The trial court denied Millennium's exception of prescription.
- Millennium sought supervisory review from the Louisiana Fourth Circuit Court of Appeal.
- The court of appeal granted the writ, reversed the trial court's judgment, and held that the action had prescribed because the date of recordation provided constructive notice.
- The Association then sought a writ of certiorari from the Supreme Court of Louisiana, which the court granted to resolve a split among the circuits.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the mere act of recording a property transfer in the public conveyance records, by itself, constitute constructive knowledge to a creditor sufficient to trigger the one-year prescriptive period for a revocatory action under Louisiana Civil Code article 2041?
Opinions:
Majority - Victory, J.
No. The mere recordation of a property transfer in the public records does not, standing alone, commence the running of the one-year prescriptive period for a revocatory action. The plain language of La. C.C. art. 2041 states that prescription begins when the obligee 'learned or should have learned of the act.' The court, citing its precedent in Phillips v. Parker, explained that the public records doctrine's purpose is to render unrecorded interests ineffective against third parties, not to impute constructive knowledge of recorded documents to them. Therefore, the determination of when an obligee 'should have learned' of a transfer is a factual question that depends on all circumstances, and the party pleading prescription bears the burden of proving that the obligee had sufficient information to excite inquiry. In this case, Millennium failed to meet its burden by relying solely on the date of recordation as proof of the Association's knowledge.
Analysis:
This decision resolves a split among Louisiana's circuit courts and clarifies the application of prescription in revocatory actions. By rejecting recordation as an automatic trigger for prescription, the court protects creditors from debtors who attempt to fraudulently convey assets and hide behind the public records doctrine. The ruling emphasizes that the 'should have known' standard is a fact-intensive inquiry, placing the burden on the party asserting prescription to prove the creditor had notice, rather than requiring creditors to constantly monitor public records. This interpretation prevents a claim from being extinguished before a creditor could reasonably be expected to discover the underlying fraudulent act.
