GULF STATES LAND AND DEVELOPMENT INC v. OUACHITA NATIONAL BANK IN MONROE (1997)

This litigation spans nearly a decade.   A group of individuals and their corporation, Gulf States Land & Development, Inc., sued the defendant-bank for breach of contract, extortion and defamation in connection with the Bank's failure to fulfill a loan commitment to develop a subdivision.   The Bank sued the Gulf States parties for non-payment of 41 promissory notes.   When the air cleared, there were judgments in favor of all parties.   With certain amendments, this court affirmed.¹  The parties are now back with questions concerning offset and compensation of the different awards. The precise issue presented is whether the district court properly calculated the amounts owed to the respective parties under the terms of the judgment.   We reverse and render.

Facts and Procedural History

The “Gulf States parties” (Mr. and Mrs. Stanley Palowsky, Mr. and Mrs. Larry James, Mr. and Mrs. Walter Meredith, Dr. John Smiarowski and Gulf States Land & Development, Inc.) attempted to develop a residential subdivision north of Monroe, Louisiana in the 1980s.   Ouachita National Bank (known subsequently as “Premier Bank” and now “Bank One”) committed to finance this project and loaned money to the Gulf States parties, who executed a series of promissory notes in connection with these loans.

Gulf States, Inc. signed all of the notes;  however, the individual parties signed separate promissory notes as guarantors.   A collateral note secured by a mortgage on the subdivision property was executed by the individual co-makers and their spouses to secure the 41 promissory notes.   Palowsky was co-maker with Gulf States, Inc. on 12 promissory notes which had a combined face value of $675,666.66.   James was a co-maker with Gulf States, Inc. on 13 promissory notes  which had a combined face value of $725,666.68.   Smiarowski was a co-maker with Gulf States, Inc. on 13 promissory notes which had a combined face value of $725,666.66.   Meredith was a co-maker with Gulf States, Inc. for three notes which had a combined face value of $264,000;  however, Meredith also signed a continuing guaranty agreement for $563,000.

The business venture encountered difficulties and the parties became embroiled in litigation.²  The Gulf States parties asserted various causes of action against the Bank;  including an extortion claim by Palowsky.   The Bank sought judgment against the Gulf States parties on the promissory notes.

The cases were consolidated for trial.   A jury returned verdicts in favor of each of the Gulf States parties for breach of contract and in favor of Stanley Palowsky on his extortion and defamation claims.   The trial judge granted judgment in favor of the Bank on the promissory notes and awarded attorney fees incurred in collection of the notes.

In its judgment on the promissory notes, the trial court found that the corporation, Gulf States, Inc., was liable to the Bank for the entire indebtedness, but that Palowsky, Smiarowski, James and Meredith were liable, in solido, with Gulf States, Inc ., to the limited extent of the guaranty and promissory notes they each individually executed as co-maker and for interest and attorney fees associated with those obligations.

 After adding interest accrued to July 31, 1992, the judgment on the unpaid promissory notes against Gulf States, Inc ., totaled $3,670,812.92.   Each individual, however, was only liable in solido with Gulf States, Inc., to the following extent:

In addition, attorney fees of $855,646.50 were awarded to the Bank, the individual parties being liable in solido with Gulf States, Inc., to the following extent:

The jury found merit to Stanley Palowsky's extortion claim and awarded him $2.5 million in damages.   However, the district judge determined after trial that Palowsky's extortion claim had prescribed and granted the Bank's motion for judgment notwithstanding the verdict (JNOV) on the extortion claim.³  On appeal, this court agreed that Palowsky's extortion claim had prescribed, but that:

[T]he  jury award of Two Million Five Hundred Thousand Dollars ($2,500,000) to Stanley R. Palowsky, Jr., and against Defendant, [Bank One], is affirmed only insofar as it may be used to offset the amount of [Bank One's] judgments, including interest, attorney fees and court costs, against Stanley R. Palowsky, Jr., in the March 19, 1993 judgment.

Palowsky v. Premier Bank, N.A., 26,255, consolidated with 26,299, 26,300, 26,301 (La.App.2d Cir. 4/5/95), 653 So.2d 1380 (unpublished opinion, attached as Appendix A), writs denied, 95-1335, 95-1378 (La.10/27/95), 661 So.2d 1368.

Furthermore, on appeal this court reduced the jury's $7 million breach of  contract award to Gulf States, Inc. to $2 million and the Palowskys' award of $1.25 million for breach of contract to $400,000.   This court otherwise left the jury's findings and trial court's judgment undisturbed.   The jury and court had decreed that:

Larry  and Dianne James were entitled to a $200,000 breach of contract award against the Bank;

John Smiarowski was entitled to a $200,000 breach of contract award against the Bank;

Walter and Mona Meredith were entitled to a $200,000 breach of contract award against the Bank;

The Bank was entitled to funds in the registry of the court, which would be credited against the sums due the Bank;

The Bank's mortgage was to be recognized and maintained;  and;

The Gulf States parties were liable for interest on the unpaid principal from the date of July 31, 1992, at the rate of 9.25% per annum.

After the supreme court denied direct review on October 27, 1995, the parties attempted to execute the judgment as amended on appeal.

The parties submitted their respective interpretations of the final judgment.⁴  The trial court's calculation of the amounts due the parties is now at issue.   The trial court offset the prescribed extortion award as to Palowsky only.   Thus, Palowsky's obligation on the promissory notes he signed was extinguished;  however, the court refused to reduce the debt owed by Gulf States, Inc., and the other Gulf States parties by the amount of Palowsky's offset.

The trial court then set off the non-Palowsky Gulf States parties' breach of contract claims against the Bank's judgment and found that the Bank was owed  $830,782.02 plus interest.   Gulf States, Inc., John Smiarowski, Larry James and Walter Meredith were found liable in solido for this amount, except that Meredith's liability was limited to the principal sum of $48,641.85 plus interest.   Because Palowsky's debt to the Bank was extinguished by the prescribed extortion judgment, the Bank was held liable to Palowsky for the $400,000 awarded by the jury for breach of contract.

The Gulf States parties now appeal.   They contend that under a proper interpretation of the March 1993 judgment as amended on appeal, they are net judgment creditors of the Bank, who has answered the appeal, asking only that the district court's judgment be amended to explicitly acknowledge continuing interest in Bank One's favor.

Discussion

Compensation is a method by which obligations are extinguished.   When two persons owe each other money, compensation is a mechanism of extinguishing each obligation without the necessity of an actual disbursement of funds by the parties.   La.C.C. art.   1893. In common law, this is known as set-off.  Saul Litvinoff, Obligations § 19.1, at 658, 5 Louisiana Civil Law Treatise (1992).

 Solidary obligors are liable for the whole debt;  however, the creditor is only entitled to collect the full amount and no more.   Thus, when one solidary obligor pays the debt in full, the creditor can collect nothing more from the other obligors.   As noted above, compensation is a method of paying a debt.   Under La.C.C. art. 1898, compensation only extinguishes the debt to the extent owed by the obligor who is entitled to the compensation.  Tolbird v. Cooper, 243 La. 306, 143 So.2d 80 (1962).

In Young v. Fremin-Smith, Inc., 265 So.2d 341 (La.App. 4th Cir.1972), a plaintiff-employee filed suit against his former employer seeking unpaid wages.    The defendant-employer asserted as set-off $4,000 allegedly owed by the employee for damaged equipment.   Because the employer's claim was prescribed, he was unable to directly obtain a monetary award.   However, the court permitted the employer to extinguish the employees claim for unpaid wages with the prescribed claim pursuant to La.C.C.P. art. 424.⁵  The court held that the obligation owed to the employee was extinguished by judicial compensation as recognized and defined by the supreme court in Tolbird, supra.

In Fireman's Fund v. Charles Carter Construction, 382 F.Supp. 332 (M.D.La.1974), the federal district court recognized that a claim can be compensated legally or judicially even though prescribed.   In holding that the prescribed claim could be offset, the federal court referred to the holding in Tolbird, supra, that to urge a prescribed claim as a defense pursuant to La.C.C.P. art. 424, the requirements for legal compensation did not have to be present:

[I]t  is apparent that Article 424 of the Code of Civil Procedure does no violence to Article 2209 [now 1893] of the Civil Code, and when it speaks in terms of “obligations” and “causes of action” it directs itself to both legal compensation and judicial compensation as the case may be.   It permits the urging of prescribed “obligations” and “causes of action” as defenses whether the conditions of Article 2209 [now 1893] of the Civil Code are met or not.

Fireman's Fund, 382 F.Supp. at 338.

 Louisiana jurisprudence makes no distinction between a “defense” under La.C.C.P. art. 424 and an “affirmative claim” for legal or judicial compensation.   Set-off or compensation, whether asserted by way of affirmative defense, reconventional demand or claim, results in extinguishment of the debt.   See Coburn v. Commercial National Bank, 453 So.2d 597 (La .App.2d Cir.1984);  Labbe v. Premier Bank, 618 So.2d 45 (La.App. 3d Cir.1993);  Thibaut v. Thibaut,  607 So.2d 587 (La.App. 1st Cir.1992).   The trial court erred in concluding otherwise.

 In this case, compensation occurred between Palowsky's prescribed extortion claim, which he successfully asserted as a defense pursuant to La.C.C.P. art. 424, and the Bank's promissory note judgment.   This court's previous opinion, in which judicial compensation was ordered, set off the Bank's judgment against Palowsky in the amount of his particular promissory notes, attorney fees and interest, thus extinguishing these obligations.

 Performance by one solidary obligor relieves the others of liability (to that extent) toward the obligee.  La.C.C. art. 1794.   The goal of article 1794 is complete reparation, no more, no less.  Fertitta v. Allstate Insurance Co., 462 So.2d 159 (La.1985).   Therefore, all solidary obligors benefit to the extent of payment or extinguishment, even where one obligor pays or extinguishes only part of the entire amount due.  Williams v. Sewerage & Water Board of New Orleans, 611 So.2d 1383 (La.1993).

The clear import of the trial court's judgment as amended by this court was that the individual Gulf States parties were not liable in solido with each other, but liable in solido with the corporation, Gulf States, Inc., on the particular promissory notes that they each signed.   Thus, compensation between the Bank and Palowsky liberates the solidarily obligated Gulf States, Inc., in the same measure and to the same extent that Palowsky is liberated.

The trial court's error was in not reducing the liability of Gulf States, Inc., by the amount of the principal, interest and attorney fees owed by Palowsky on the notes executed by Palowsky and the corporation.

 Conclusion

Based on the computation of interest agreed to by the parties and used by the trial court, we calculate the offsetting debts as of October 27, 1995 (the date the judgment on appeal became final).

Decree

We hereby REVERSE the judgment of the trial court and RENDER judgment as follows:

IT IS ORDERED, ADJUDGED, AND DECREED that the liability of the Gulf States parties on the promissory notes, with attorney fees, and interest to Bank One, f/k/a Premier Bank, f/k/a Ouachita National Bank in Monroe, contained in the trial court's March 19, 1993, judgment, is hereby extinguished.

IT IS ORDERED, ADJUDGED, AND DECREED that there be judgment in favor of LARRY AND DIANNE PYLE JAMES and against BANK ONE in the amount of $285,765, together with legal interest from October 27, 1995, until paid.

IT IS ORDERED, ADJUDGED, AND DECREED that there be judgment in favor of JOHN SMIAROWSKI and against BANK ONE in the amount of $285,765, together with legal interest from October 27, 1995, until paid.

IT IS ORDERED, ADJUDGED, AND DECREED that there be judgment in favor of WALTER AND MONA MEREDITH and against BANK ONE in the amount of $317,034, together with legal interest from October 27, 1995, until paid.

IT IS ORDERED, ADJUDGED, AND DECREED that there be judgment in favor of STANLEY PALOWSKY AND CAROL HARGUS PALOWSKY and against BANK ONE in the amount of $400,000, together with legal interest from the date of judicial demand.

IT IS ORDERED that the trial court cancel the mortgage in favor of PREMIER BANK, N.A., recognized in Paragraph XII of its March 19, 1993, judgment.

 IT IS ORDERED, ADJUDGED, AND DECREED that BANK ONE is to bear the costs, here and below.

REVERSED AND RENDERED.

APPENDIX A

No. 26.255-CACONSOLIDATED WITHNos. 26,299-CA, 26,300-CA and 26,302-CA

Court of Appeal

Second CircuitState of LouisianaApril 5, 1995.

Stanley R. Palowsky, Jr. and Carol Hargus Palowsky, Plaintiff-Appellant

versus

Premier Bank, N.A., et al., Defendant-Appellee

Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 93-1804, Honorable R.W. Kostelka, Judge

Theus, Grisham, Davis & Leigh by J. Michael Hart, Counsel for Plaintiff-Appellant.

Shotwell, Brown & Sperry by George M. Wear, Jr., Taylor, Porter, Brooks & Phillips by Tom F. Phillips, Harry J. Phillips, Jr., Cook, Yancey, King & Galloway by F. Drake Lee, Jr., Counsel for Appellee

Before MARVIN, VICTORY and JONES, Pro Tempore, JJ.

These four consolidated actions arise from a 1986 commercial loan by the defendant bank, Ouachita National Bank in Monroe, now known as Premier Bank, N.A. (“Premier”) to several individuals in order to purchase land and develop it into North Pointe Subdivision.   We affirm and amend in part.

PROCEDURAL HISTORY

On March 21, 1988, Gulf States Land & Development, Inc. (“Gulf States”), Stanley Palowsky (“Palowsky”), Carol Palowsky, Dr. John Smiarowski, Larry James, Dianne James, Walter Meredith and Mona Meredith,¹ (collectively “Plaintiffs”), filed suit against Premier seeking damages resulting from the bank's breach of a 2.868 million dollar commitment to fund the plaintiffs' development of property into a residential subdivision (“Breach of contract suit”).   Plaintiffs amended their suit on March 6, 1991, to allege, for the first time, that Premier loan officer, A.W. Hood, had extorted Palowsky into signing the loan agreement by threatening to publicize false statements about Palowsky that the bank had obtained in a report from a private investigator, Maurice Pearson, hired in 1985 while the loan agreement was being negotiated.   The 1991 amendment joined as defendants the bank's attorney, Don Kneipp, Pearson, and John Lang who allegedly distributed the report.   Hood, who had previously been named in the suit, filed an exception of prescription to the extortion claim, which was sustained and later affirmed by this court Gulf States Land & Development, Inc. v. Ouachita National Bank in Monroe, 612 So.2d 1031 (La.App.2d Cir.1993), rehearing denied, 618 So.2d 406 (La.1993), reconsideration denied, 619 So.2d 540 (La.1993) ² . The claim against Lang was settled prior to trial.

On August 30, 1988, Premier sued the individual plaintiffs and Gulf States, the corporation formed to develop the subdivision, for nonpayment of the promissory notes given in connection with the loan agreement and to recognize the bank's mortgage on the subdivision property (“Suit on the notes”).   A partial summary judgment in favor of Premier on the notes was subsequently reversed by this court in Ouachita National Bank in Monroe, supra, In another action, Premier sought a declaratory judgment that Gulf States had breached the loan agreement.  (“Declaratory action”).

The three aforementioned suits were consolidated on April 5, 1989, for a month long trial held in August 1992.   On August 27, 1992, the trial court granted Premier's motion for directed verdict and dismissed the claims of Gulf States Land and Development, Inc., Mrs. Palowsky, Dr. Smiarowski, Larry and Dianne James and Walter and Mona Meredith for direct tort damages on the extortion claim, leaving the extortion claim of Stanley Palowsky to the jury.   Thereafter, the jury returned verdicts:  (1) in favor of Gulf States and the individual plaintiffs against Premier for breach of contract, awarding $8,850,000.00 in damages;  (2) in favor of Palowsky against Premier for extortion, awarding $2,500,000.00 in damages;  (3) in favor of Palowsky against Premier and Pearson for defamation, awarding $800,000.00 in damages;  (4) in favor of Don Kneipp.   The trial court granted judgment in favor of Premier and against the plaintiffs on the promissory notes in the sum of $3,670,812.92 plus interest, but denied dissolution of the commitment.   In a post-trial hearing, the trial court awarded $855,646.50 in interest and attorney fees in favor of Premier in connection with the collection of the promissory notes.

Following trial. the court granted a motion for judgment notwithstanding the verdict in favor of Premier on its exception of prescription to Palowsky's extortion claims.   Pretermitting the issue of prescription. the trial court granted the JNOV in favor of Premier as to the defamation claim, finding a qualified privilege and that there was no publication by Premier of the private investigative report outside the bank.   Pearson's motion for JNOV as to the defamation award was denied.

Premier appeals the jury verdict with regard to the breach of contract claims.   The plaintiffs appeal the trial court rulings as to the extortion and defamation claims as well as certain evidentiary rulings and the jury finding of no liability on the extortion issue as to Don Kneipp and Maurice Pearson.   Maurice Pearson appeals the defamation award against him.

On May 19, 1993, Stanley and Carol Palowsky filed another suit for damages, consolidated for the purposes of this appeal, alleging that Premier, and several of its officers and attorneys, (G. Lee Griffen, J. Noland Singletary, James A. Rountree, William Mike Baggett and Jeff Joyce), intentionally concealed the existence of Pearson's report in order to bar the Palowskys from bringing a timely cause of action (“Intentional concealment suit”).   On September 23, 1993, the trial court granted the exceptions of prescription filed by Premier, Griffen, Singletary, Baggett and Joyce, and the motion for summary judgment filed by defendant Rountree and dismissed the suit.   The Palowskys appeal these rulings.   James Rountree, William Baggett and Jeff Joyce have answered the appeal seeking damages for frivolous appeal.   Finally, on September 6, 1994, Premier filed a peremptory exception of res judicata in this court claiming that all state claims asserted on appeal have been previously adjudicated by the federal litigation.³

FACTUAL SYNOPSIS

In the mid-1980's, Dr. LeRoy Joyner was involved in several real estate holdings with Palowsky and Dr. John Smiarowski, with whom he was partners, along with several other doctors, in a successful medical clinic in Monroe.   Joyner and Smiarowski, together as J & S Pecan Farms (“J & S”), owned a tract of land (the “North Pointe tract”) which was mortgaged to Premier for $1.3 million.   The North Pointe tract is the subject of the plaintiffs' subsequent loan agreement with Premier bank.   J & S Partnership also owned another tract of land known as the Williams Orchard, which was mortgaged to lenders other than Premier.

Joyner, Smiarowski, and Palowsky jointly owned a tract of land in Arkansas, held free of debt.   In addition, all three were partners in the Reviens Partnership, which owned other real estate on which Premier held a mortgage, second to one held by Travelers Insurance Company.   Finally, both Joyner and Palowsky were part owners of several other tracts of land known as the Interchange property, also mortgaged to Premier Bank.

In 1985, Dr. Joyner's employment with the medical clinic was severed and he began having trouble servicing the large amount of debt incurred with his real estate holdings.   At about the same time, he and his wife, Nancy, separated.   Don Kneipp represented Nancy Joyner in negotiating a community property settlement and hired Maurice Pearson to investigate the extent of Dr. Joyner's financial holdings.   About this time, Dr. Joyner's partners desired to separate their interests from Dr. Joyner's in the various properties.   With the bank's help, several land swap transactions were thereafter negotiated and Dr. Joyner's indebtedness to Premier was restructured accordingly.

On December 2, 1985, Larry James and Walter Meredith acquired, with $5.000 loaned to them by Palowsky, an option to purchase the North Pointe tract for $1.3 million. the amount of J & S's outstanding debt on the property.   Unable to obtain a non-recourse government loan for the development of the subdivision, the parties began negotiating a purchase to be financed by Premier.   Dr. Smiarowski, Prentiss Seymour and Palowsky agreed to participate as purchasers.   Palowsky later claimed in pleadings and at trial that he was blackmailed into participating by Hood, who threatened to make public an incident, occurring some twenty years prior, involving Palowsky and another man, “John Doe.”

The negotiations for the transfer of properties and restructuring of debt culminated on October 13, 1986, (the “October transactions”) when the Gulf States principals purchased the North Pointe tract for $800,000.   At that time, Premier agreed to fund a development loan and Hood, without the knowledge of his superiors at the bank, issued a loan commitment letter for $2.868 million.   The letter, dated October 13, 1986, and addressed to Stanley Palowsky, Et Al., stated:

This letter shall confirm our agreement as the Ouachita National Bank has agreed to lend an amount not to exceed $2,868,000.00 for the purpose of developing the property located on Highway 165 North, currently known as J & S Pecan Farms.   This commitment shall run for thirty months from the above date and shall be reduced by an amount of money equal to draws made against this commitment.

This loan shall be secured by a 1st Real Estate Mortgage covering approximately 88 acres of land being the property purchased and shall be personally guaranteed in the amount of $450,000.00 each by Mr. Stanley Palowsky, Dr. John Smiarowski, Mr. Prentiss Seymour 4, Mr. Walter Meredith and Mr. Larry James.

Funding for the thirty month period commencing with the above date shall be at 9.25 percent interest per annum.   Upon completion of the project the amount of the debt shall be based upon the sale of lots involved in the mortgaged property and shall be fixed at a mutually agreed upon price.

According to the bank's loan committee meeting minutes and the testimony of its president, Robert Vanderpool, III., however, Premier mistakenly believed that the amount of the commitment totaled only $1.6 million.

On March 17, 1987, the individual borrowers transferred the North Pointe property to their wholly-owned corporation, Gulf States Land and Development, Inc., and signed increased limited individual guarantees of $563,000 on the Gulf States debt.   The corporation began developing the property into a residential subdivision with funding advanced under the commitment by the borrowers executing hand notes, signed by Gulf States and one of the plaintiffs, or by the bank covering Gulf States' overdrafts.

Meredith withdrew from the project in mid-1987 and Gulf States paid him $8,000 for his 25% of the corporation's stock.   His liability on the Gulf States' debt continued however, and he continued to sign notes in connection with the project.

In late August or early September 1987, when the loan balance reached the $1.6 million limit approved by the bank's loan committee, Premier executives questioned Hood who explained that he understood, and represented as such to the plaintiffs, the $1.6 million commitment to be in addition to the purchase price of $800,000 for a total commitment of $2.4 million.   Premier then continued to fund the project without interruption.

Relations between the bank and the plaintiffs began to deteriorate in late 1987 or early 1988.   In November 1987, Premier began requesting current financial statements from Palowsky when he indicated to the bank that he was having difficulty servicing other personal loans at the bank unrelated to the North Pointe loan.   Despite several requests.   Palowsky failed to furnish updated financial statements.   The borrowers complained that the loan was being managed improperly citing incidences where Hood delayed the deposit of signed notes into the Gulf States account resulting in overdraft notices.   A dispute also arose over whether the bank would agree to allow its name to be used in advertising for the project and provide attractive financing for lot purchasers.   At this time, the North Pointe project had already experienced cost overruns which were incurred as a result of stringent police jury flood plain requirements.   Paul Aron, a special assets officer in charge of troubled loans. replaced Hood as the Premier officer responsible for the loan.

Adding to the air of confusion and distrust existing between the borrowers and Premier were events occurring in a separate dispute involving the real estate owned by the Reviens Partnership.   Premier held a mortgage on the property second to that of Travelers Insurance Company.   When Dr. Joyner's interests were separated from the other parties, Palowsky and Smiarowski pledged their interests in the Reviens Partnership to Premier.   Palowsky and Smiarowski contended that the pledge agreement obligated Premier to make the annual payments due on the mortgage to Travelers.   Premier, however, which had never signed the agreement and asserted that it was unaware of its existence until late 1987, took the position that, if liable at all, it was only responsible for indemnifying Palowsky and Smiarowski from any loss resulting from the non-payment of the pledgors' proportionate part of the mortgage payments.   Travelers foreclosed on the property in November 1987 and filed suit against Palowsky and Smiarowski for the deficiency on March 14, 1988.   On March 15, 1988, Palowsky and Smiarowski filed a third party demand in that suit against Premier.

On March 15, 1988, Aron called Palowsky and informed him that Gulf States had drawn the full amount of the loan commitment of $2.4 million and that no further funds could be advanced.   Aron notified James of the bank's action on March 16, 1988.   Upon receiving a letter from Gulf States' counsel suggesting that “you [the bank] get your facts straight,” senior management questioned Hood on March 18 about the statements contained in the letter.   Hood informed management that he may have agreed to a $2.5 million commitment and, later in the day, produced the $2.868 million commitment letter.

On Sunday.   March 20, 1988, the bank's executive committee met and voted to ratify the unauthorized commitment.   Aron was authorized to inform the plaintiffs of the committee's action.   Before that information was relayed, however, Gulf States filed suit on Monday, March 21, 1988.   On March 22, 1988, Premier informed the plaintiffs of the bank's decision to honor the commitment and continue funding of the project, despite the suit, to the full amount of the $2.868 million commitment.

On August 3, 1988, pursuant to an ex parte order, Premier deposited into the registry of the court $157,533.53, representing the balance of the commitment.   The order allowed funds to be drawn by the plaintiffs if an affidavit was executed swearing that the funds were to be used only for the development of the property and certifying that prior draws had been used for the development of the property.   The plaintiffs never attempted to use the funds in the registry of the court.   They objected to the deposit and by order signed September 25, 1989, the deposit was nullified and the funds returned to Premier Bank.

With the above facts in mind, we now turn to the various assignments of error made by the parties in this appeal.

RES JUDICATA

On December 6, 1989, the plaintiffs filed suit against Premier in federal court alleging violations of the Bank Holding Company Act, the Sherman Act, and the Clayton Act (“Bank Holding Act Lawsuit”).   They also asserted pendent state law claims based upon Louisiana Antitrust statutes and tortious interference with contracts.   Subsequently, by motions filed March 14, 1990, and October 15.1990, Premier moved to dismiss the federal claims asserted in the Bank Holding Act Lawsuit, and also moved to dismiss the pendent state law claims for lack of jurisdiction.

On October 3, 1990, the plaintiffs filed a second federal suit against Premier alleging RICO violations and certain other pendent state law claims (“RICO Lawsuit”).   On November 14, 1990, Premier moved to dismiss all of the federal and state law claims asserted in the RICO Lawsuit.

On January 3, 1991, the federal court issued two written opinions dismissing both federal suits.   As to the Bank Holding Act Lawsuit, the court found that all of the federal claims were meritless.   Additionally, the court dismissed all of the state law claims, finding that the Louisiana Antitrust claims were prescribed and that the tortious interference with contractual relations claim was meritless.   The court ruled as follows:  “For the reasons stated above, defendants [Premier Bank's] motion for summary judgment as to all claims in this action is GRANTED.” ⁵

With regard to the RICO Lawsuit, the court dismissed the federal RICO claims finding that they had prescribed.   The court then dismissed the remaining pendent state claims, stating:  “Having disposed of plaintiffs' [Gulf States parties'] Federal claims, this court declines to exercise jurisdiction over the pendent State law claims and dismisses them as well.”

On February 27, 1992, Premier filed an exception of res judicata and accompanying motion for summary judgment in the state “breach of contract” suit.   Premier based the exception upon the federal court ruling in the Bank Holding Act Lawsuit, claiming that all state claims, including those asserted in the pending state court proceeding, had been adjudicated by the federal court.

On March 13, 1992, Premier filed a second exception of res judicata and accompanying motion for summary judgment in the state breach of contract suit.   Premier based this exception upon the federal court ruling in the RICO Lawsuit, again claiming that all state claims had been adjudicated by the federal court.   These two exceptions are almost identical.

On April 15.1992, the plaintiffs filed a motion in federal court requesting clarification of the judgment rendered in the Bank Holding Act Lawsuit, as far as it addressed the dismissal of the pendent state law claims.   The motion was granted, and the judgment was modified to order dismissal of all federal claims, with prejudice, and all state claims without prejudice.

On May 5, 1992, the trial court in the state breach of contract suit denied Premier's “Exception of Res Judicata.”   On September 6, 1994, Premier filed an exception of res judicata in this court, again asserting that all state claims asserted on appeal were adjudicated by the federal court in the Bank Holding Act Lawsuit and the RICO Lawsuit.   It contends that the exception may be heard in this court because the trial court only ruled on the March 13, 1992 exception, thereby leaving the February 27, 1992 res judicata exception undecided.

In pertinent part, LSA-C.C.P. Art. 2163 provides that:

The appellate court may consider the peremptory exception filed for the first time in that court, if pleaded prior to a submission of the case for a decision, and if proof of the ground of the exception appears of record.   [Emphasis added.]

The court of appeal may receive peremptory exceptions but should consider only those which the trial court has not been asked to consider.  Fleniken v. Allbritton, 566 So.2d 1106 (La.App.2d Cir.1990).

Here, the exception has not been filed for the first time on appeal.   It is evident that the trial court considered and rejected both of Premier exceptions of res judicata in its May 5, 1992 dismissal.   In its ruling the trial court stated that the only arguments heard in the federal court system were “RICO and other federal causes of action.”  [Emphasis added.]   The trial court's reference to the other federal causes of action clearly refers to the federal claims asserted in the Bank Holding Act Lawsuit. indicating that the ruling encompassed both exceptions of res judicata filed by Premier.   Since the trial court was presented with and decided the exceptions.   Premier's remedy was to seek writs on a showing of irreparable injury or to appeal the ruling.   Having failed to do so, we decline to consider the exception reurged in this court.   Fleniken, supra.

EXTORTION CLAIMS

The plaintiffs assert that the trial court erred in sustaining Premier's exception of prescription on the extortion claim.   They contend that the March 1991 amendment adding the extortion claims relates back to the filing of the original petition in the breach of contract suit filed on March 21, 1988, because:  (1) the extortion claims were all related to the contract and promissory note claims:  and (2) prescription was interrupted against Premier by a third party demand against them seeking indemnification in a lawsuit filed by Travelers Insurance Company against the Reviens partnership for a deficiency judgment in March 1988.   Although that suit involved a loan to the Reviens partnership secured by property unrelated to the North Pointe tract, the plaintiffs argue that the claim against Premier for indemnification arose from the commercial loan transaction at issue in this appeal.   However, we need not determine whether the March 1991 amendment relates back as we conclude that the one year prescriptive period in tort ran as to Premier before the filing of the original breach of contract suit on March 21, 1988.⁶

Other than Palowsky's testimony that Hood blackmailed him, the record does not contain any proof that any other officer of Premier extorted Palowsky or conspired with Hood to extort Palowsky into entering the commercial loan transaction signed in October 1986.   Premier's liability for any acts of extortion then stems from the employee/employer relationship it had with Hood. LSA-C.C. Art. 2320 provides, in pertinent part, that “masters and employers are answerable for the damage occasioned by their servants and overseers, in the exercise of the functions in which they are employed.”   As we determined in our earlier decision, Palowsky knew that he had a cause of action against Hood for extortion when he signed the loan agreement in 1986.   The claim against Hood prescribed in 1987, well before the March 1991 amendment adding the claims of extortion to the March 21, 1988 suit for breach of contract.   Gulf States Land & Development, Inc., supra, 612 So.2d at 1035.   Thus, absent evidence that officers of Premier, other than Hood, extorted Palowsky into borrowing money, the cause of action against Premier for extortion is prescribed and the trial court did not err in so ruling.

Extortion claim against Don Kneipp and Maurice Pearson

The plaintiffs assert that the jury was manifestly erroneous in finding that Don Kneipp and Maurice Pearson did not conspire with Hood to extort Stanley Palowsky.   They argue that the jury's findings stem from the trial court's exclusion of certain evidence, and admission of other evidence only as to some defendants.   The plaintiffs' theory of conspiracy was that Dr. Joyner agreed to act as a “front man” for Hood by requesting and paying for the report on Palowsky, and that certain excluded exhibits illustrate conspiratorial acts by Hood. Kneipp and Pearson.

A brief review of the factual circumstances surrounding the plaintiffs' extortion claims is necessary to examine the contested exhibits.   Don Kneipp was retained by Nancy Joyner in May 1985, to represent her in her domestic dispute with Dr. Joyner.   In preparation for negotiating a community property settlement.   Kneipp employed Maurice Pearson to investigate Dr. Joyner's financial status.   The work was completed in early September 1985. and a community property settlement was reached wherein Dr. Joyner agreed to assume all of the couples' liabilities and indemnify Mrs. Joyner from liability thereafter.   As part of the settlement, Kneipp also requested, and received on Mrs. Joyner's behalf, a release from Hood as to all of the parties' liabilities with Premier Bank.

Dr. Joyner's marital difficulties in September 1985 coincided with his strained relationships with his other partners in the medical clinic and Palowsky, who acted as a business adviser to the group.   At that time, Dr. Joyner left the practice following a dispute over recognition for an innovative medical technique and he stopped speaking with Palowsky, with whom he had theretofore been very friendly.   Kneipp testified that at a meeting between the parties regarding the community property settlement, Dr. Joyner asked Kneipp whether he thought that Pearson would investigate for him an incident at the Mohawk Tavern involving Palowsky and another man.   Kneipp responded that he did not know, and that Dr. Joyner should ask Pearson.

Maurice Pearson testified that when his work on the domestic matter was nearly complete, Nancy Joyner hired him, on behalf of Dr. Joyner, to investigate the incident involving Palowsky.   He was assured by Mrs. Joyner that Dr. Joyner would pay for his services.   The investigation was completed within a few days and a written report prepared and sent to Dr. Joyner.   The cover letter stated that a copy of the report had been sent to “your [Dr. Joyner's] attorney Mr. Don L. Kneipp.”   At trial, Nancy Joyner denied hiring Pearson and testified that she never received a copy of the report nor did she ever discuss it with Kneipp.

Kneipp maintained at trial that he had nothing to do with the preparation of the report, that he never read it and that he never discussed it with Hood. He recalled that Pearson handed him a copy of the report, but he immediately gave it back to him and had no other connection with it.   Kneipp explained the reference in the letter to his being Dr. Joyner's attorney by noting that he represented Dr. Joyner in a few matters following the community property settlement to the extent that they also aided Nancy Joyner.   However, their attorney/client relationship terminated on October 7, 1985.

At trial portions of Pearson's billings referencing the Joyner domestic investigation and the Palowsky investigation were introduced into evidence.   Althogh the bills sought payment from Nancy Joyner and Dr. Joyner, Kneipp was copied as well.   Pearson testified that he copied the statements to Kneipp because he was having trouble collecting the debt and hoped that Kneipp, whom he believed was representing both Joyners at that time, could aid in that matter.

For the period ending September 1985, Pearson's services in the Joyner domestic dispute totalled § 19,786.20. On July 1, 1985, Nancy Joyner borrowed $17,000 from Premier, using Hood as the loan officer.   From this amount, $8500 was paid to Pearson.   For the report on Palowsky, Pearson charged Dr. Joyner $1,800 of which Dr. Joyner paid $900 in November 1985.   The balance on the bill for the Palowsky report went unpaid.   On September 23, 1985, Kneipp's law firm borrowed $8,000 from Premier, using Hood as the loan officer, to pay Pearson for work done on behalf of Nancy Joyner.   According to Kneipp, the arrangement was made with the understanding that Dr. Joyner would reimburse the law firm pursuant to the community property agreement to assume both spouses' liabilities.   A paragraph evincing this agreement is contained in a letter written to Dr. Joyner's counsel at that time.   The $8.000 was reimbursed to Kneipp's firm out of the proceeds attributable to Dr. Joyner at the closing of the October 1986 transactions.   Kneipp denied that any part of the § 8.000 loan approved by Hood was used to pay Pearson for the report on Palowsky.

Nancy Joyner terminated her attorney/client relationship with Kneipp in June 1990, and picked up her client file.   The file contained the billing from Pearson that referenced the investigative report prepared on Palowsky as well as handwritten notes indicating that Kneipp had conferred with Hood regarding Dr. Joyner's loans.   Nancy Joyner relayed this information to Palowsky who deposed Pearson on November 27, 1990.   At that deposition, the written report was provided to Palowsky.

Contested Exhibits

Plaintiffs contend that the trial court's exclusion of the following exhibits as to certain defendants, caused the jury to erroneously conclude that neither Kneipp nor Pearson conspired with Hood to extort Palowsky:

1. P-25:  This is a copy of Pearson's time log and was admitted into evidence only in the case against Pearson.   Kneipp's objection on the basis of relevancy was sustained.   Following its admittance into evidence, plaintiffs questioned Pearson regarding his dealings with Nancy Joyner.   No further offering of the exhibit against Kneipp was attempted.

2. P-30 attachments:  Plaintiffs Exhibit P-30 is a copy of Kneipp's letter of September 11, 1985, to Dr. Joyner enclosing a proposed draft of a property settlement and matrimonial agreement.   It was identified by Kneipp and offered. without the attachments. and received into evidence without objection.   Although Kneipp was questioned about the notations made on the attachments, the attachments themselves were never offered into evidence.

3. P-31a:  Plaintiffs Exhibit P-31, admitted into evidence, is a copy of Kneipp's letter of September 16, 1985, to Dr. Joyner's attorney, Ms. Vicki Green, enclosing for her review documents which reflect the settlement agreement reached by the Joyners.   Plaintiff's Exhibit 31a was mistakenly admitted into evidence as the “Agreement” which accompanied Plaintiffs Exhibit P-31. When the error was noted later. it was removed from evidence without objection from plaintiffs.   Although listed in the appeal as a contested excluded exhibit, it is not addressed in plaintiffs' brief.

4. P-33:  This exhibit is a $25,000 Collateral Mortgage dated September 16, 1985, and executed by Dr. Joyner and Nancy Joyner before Kneipp, as notary, and two witnesses.   Plaintiffs argue that the exhibit is relevant to prove that Hood only approved this loan, to be used to open a new medical clinic, if Dr. Joyner agreed to appear to pay for the report on Palowsky.

P-36:  This exhibit is Pearson's cover letter to Dr. Joyner of September 19, 1985, noting that the report requested on Palowsky was enclosed and that a separate copy had been provided to Kneipp.   Following an objection as to relevance by Premier, the exhibit was admitted only in the case against Pearson.   Plaintiffs argue that the exhibit is relevant for the same reason as Plaintiffs Exhibit P-33.

6. P-37:  This exhibit is a copy of Collateral Receipt number 233090, Ouachita National Bank, dated September 19, 1985, regarding a $25,000 promissory note executed by Dr. Joyner and Nancy Joyner on September 16, 1985.   Plaintiffs argue that the exhibit is relevant for the same reason as Plaintiffs Exhibit P-33.

7. P-53:  This exhibit is a copy of a letter from Pearson to Dr. Joyner dated October 15, 1985, referencing the investigation report on Palowsky and the requested payment of $1800.   Following a hearsay objection, the letter was admitted without the second paragraph which read:

This investigation was conducted by us in good faith pursuant to your request through Nancy Joyner and Don Kneipp.   It is also my understanding that Don Kneipp provided you with a copy of the report prior to your receiving the original.

8. P-84:  This exhibit is a letter from Kneipp to Hood dated April 30, 1986, regarding a $36.004.99 payment to Ouachita National Bank and release of the $25.000 collateral mortgage.   When asked, Kneipp stated that he had seen the document before.   An offering was made and Premier's relevance objection was sustained.   Later, Hood was asked to turn to the document.   Plaintiff then offered the document and again, Premier's relevance objection was sustained.

9. P-299:  This exhibit is an August 16, 1990 letter from Jeff Joyce, a Premier attorney, to plaintiffs' counsel in response to a letter from plaintiffs' counsel dated August 13, 1990.   As requested by plaintiffs' counsel, Joyce's letter encloses a copy of a letter dated August 7, 1990. and discusses the poor quality of the bank's microfilm records regarding an unspecified September 1985 loan for $8,000.

10. P-315:  This exhibit is a copy of Pearson's investigative report on Palowsky minus the cover letter.   Pearson identified the report and it was offered into evidence.   Kniepp's objection as to relevance was sustained and the report was admitted only in the case against Pearson.   Another witness, Jack Wright, Jr., an attorney who at one time represented Dr. Joyner, was questioned about this exhibit.   He testified, however, that Kneipp neither gave him a copy of the report nor discussed it with him.

11. P-41:  This exhibit is a copy of an $8,000 check dated September 23, 1985, drawn on the account of Grant & Dean, and made payable to Pearson.   The exhibit also contains a copy a Pearson's deposit slip for $8,000 dated September 23, 1985, referencing “Joyner.”   Plaintiffs contend that the exhibit is relevant because it tends to prove that Premier, through Kneipp's law firm, paid Pearson for the investigative report.

LSA-C.E. Art. 402 provides that all relevant evidence is admissible.   LSA-C.E. Art. 401 defines relevant evidence as evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.   The exclusion or admission of evidence on the grounds of relevancy is within the discretion of the trial court and its ruling will not be reversed absent a clear abuse of discretion.  Citizens Bank & Trust Company v. Consolidated Terminal Warehouse, Inc., 460 So.2d 663 (La.App. 1st Cir.1984).   In order for the contested evidence to be relevant in this case. it must have a tendency to establish that Kneipp or Pearson conspired with Hood to extort Palowsky.   We have examined the exhibits for relevancy and conclude that the trial court did not clearly abuse its discretion in excluding the exhibits.

A review of the jury's determination that Kneipp and Pearson did not conspire with Hood to extort Palowsky is governed by the manifest error/clearly wrong standard of review.   That standard precludes the setting aside of a trial court or jury's findings of fact unless those findings are clearly wrong in light of the record viewed in its entirety.  Alexander v. Pellerin Marble & Granite, 93-1698 (La.01/14/94), 630 So.2d 706;  Rosell v. ESCO, 549 So.2d 840 (La.1989);  Whitaker v. Mullinax, 628 So.2d 222 (La.App.2d Cir.1993).

The issue for the reviewing court is not whether the trier of fact was right or wrong, but whether the factfinder's conclusion was reasonable.  Stobart v. State of Louisiana Through DOTD, 617 So.2d 880 (La.1993);  Dismuke v. Quaynor, 25,482 (La.App.2d Cir. 04/05/94), 637 So.2d 555.   Where two permissible views of the evidence exist, the factfinder's choice between them cannot be manifestly erroneous or clearly wrong.  Stobart, supra;  Rosell, supra.   The record must be reviewed in the light most favorably supports the judgment.  Theriot v. Allstate Insurance Co., 625 So.2d 1337 (La.1993);  Whitaker, supra.   Given the weak evidence before it. the jury's finding that Kneipp and Pearson did not conspire with Hood to extort Palowsky is not manifestly erroneous.⁷

DEFAMATION CLAIOMS

Premier Bank

As noted earlier, the jury rejected the bank's claim of conditional privilege and found in favor of Palowsky against Premier for defamation, awarding $800,000.00 in damages.   However, the trial court reversed this finding following a post-trial hearing on Premier's motion for judgment notwithstanding the verdict.   In written reasons, the trial court found that there was no evidence that Premier had communicated the report, or its contents, to anyone outside the bank.   The trial court found that, even if there was publication, it consisted of only internal communications within the bank regarding matters of interest to the bank and were made to proper parties in good faith.   It concluded that, under these circumstances, Premier was protected by the conditional, or qualified, privilege.

To maintain a case for defamation, the plaintiff bears the burden of proving the following elements:  defamatory words;  publication;  falsity;  malice (actual or implied);  and resulting injury.  Cangelosi v. Schwegmann Bros. Giant Super Markets, 390 So.2d 196 (La.1980);  Hines v. Arkansas Louisiana Gas Co., 613 So.2d 646 (La.App.2d Cir.1993), rehearing denied, 617 So.2d 932 (La.1993);  Martin v. Lincoln General Hosp., 588 So.2d 1329 (La.App.2d Cir.1991), rehearing denied, 592 So.2d 1302 (La.1992).

Language is defamatory when it tends to expose the plaintiff to contempt, hatred, ridicule or obloquy, or causes him to be shunned or avoided, or has a tendency to deprive him of the benefits of public confidence or injure him in his occupation.  Martin, supra.   Words that impute crime to another are defamatory per se and proof of malice is not required.  Cangelosi, supra;  Martin, supra;  Elmer v. Coplin, 485 So.2d 171 (La.App.2d Cir.1986), writ denied, 489 So.2d 246 (La.1986).   Publication means the communication of non-privileged defamatory words to even one person.  Martin, supra;  Toomer v. Breaux, 146 So.2d 723 (La.App. 3d Cir.1962), writ denied.   A defendant who utters a defamatory. statement is responsible for all republication that is the natural and probable consequence of the author's act.  Martin, supra;  Wattigny v. Lambert, 408 So.2d 1126 (La.App. 3d Cir.1981), writ denied, 410 So.2d 760 (1981), cert. denied, 457 U.S. 1132, 102 S.Ct. 2957, 73 L.Ed.2d 1349 (1982);  Giordano v. Tullier, 139 So.2d 15 (La.App. 4th Cir.1962).

The report prepared by Pearson states that on October 31, 1963, Palowsky and “John Doe,” after drinking heavily and getting into a fist fight, engaged in anal intercourse in the backseat of a car parked outside of the Mohawk Tavern in Monroe, Louisiana.   During the sexual act, police officers arrived on the scene and arrested both men.  “John Doe” was booked on a charge of crime against nature and Palowsky was taken to an area hospital and admitted for observation.  “John Doe” subsequently pled guilty to the charge and was sentenced to a suspended three year sentence.   The charges against Palowsky were dropped upon his father's intervention.   Both men were expelled from Northeast Louisiana State College as a result of the arrests.   The report further stated that, according to “John Doe,” Palowsky fondled another man a few months later after the two had consumed a large amount of alcohol.

Liability for defamation does not attach from privileged publications or communication.  Hines, supra;  Martin, supra;  Toomer, supra.   A publication enjoys a qualified or conditional privilege if the communication is made in good faith, on a subject in which the communicator has an interest or duty, to one having a corresponding interest or duty.  Hines, supra;  Martin supra;  Henderson v. Guillory, 546 So.2d 244 (La.App.2d Cir.1989), rehearing denied, 551 So.2d 635 (La.1989);  O'Dell v. Deich, 496 So.2d 1074 (La.App. 4th Cir.1986);  Ward v. Sears, Roebuck & Co., 339 So.2d 1255 (La.App. 1st Cir.1976).   Such a privilege arises from the social necessity of permitting free and unrestricted communication concerning matters in which the parties have a common duty or interest, and acts to protect good faith communicators from liability if the statement later turns out to be inaccurate.  Hines, supra;  Martin, supra;  Henderson, supra;  Ward, supra.

Within the context of qualified privilege. “good faith” means having reasonable grounds for believing that the statement is correct, but proof of ultimate truth is not necessarily required.  Hines, supra;  Martin, supra;  O'Dell, supra;  Ward, supra;  Only when lack of such reasonable grounds is found can it be said that the person uttering the statement is actuated by malice or ill will.  Martin, supra;  Ward, supra;  Williams v. Touro Infirmary, 578 So.2d 1006 (La.App. 4th Cir.1991).

The plaintiffs appeal the ruling of the trial court, arguing that the bank was not in good faith when it circulated the report among the following persons:  (1) Kneipp;  (2) Jim Lowry, Premier bank officer;  (3) George Rorex, Premier director;  (4) R.L. Vanderpool Jr., Chairman of the Board of Ouachita National Bank;  (5) J. Noland Singletary, Premier house counsel;  (6) all of the attorneys defending Premier in this suit;  (7) G. Lee Griffen, Chief Executive Officer of Premier Bancorp;  and (8) Charles McCoy, Premier Chairman of the Board.

John Lang, a tax consultant with an office in the Ouachita bank building, the same building containing Pearson's office, testified that Pearson gave him a copy of the report in the spring of 1989.   Subsequently, he loaned a copy of the report to George Rorex, who had an office on the same floor.   Lang also testified that he gave a copy of the report to R.B. Martin, a local businessman.   Martin. however. did not testify and the extent to which he may have republished the report is unknown.   Rorex testified that he showed the report to Vanderpool.   Jr., thinking that it would be of interest to the bank president as it had a connection with a loan at the bank.   Rorex then returned the report to Lang. A couple of days later.   Rorex talked with Lowry and informed him of the contents of the report.   Rorex explained that he thought the report would be of interest to Lowry, a credit officer of the bank, as it contained information on a customer to whom credit had been extended.   The remainder of those listed with access to the report are all officers, directors, and attorneys for the bank who, at that time, were in charge of, or involved with, the pending litigation over the alleged breach of the commitment letter.

A judgment notwithstanding the verdict is warranted when the facts and inferences point so strongly and overwhelmingly in favor of one party that reasonable jurors could not arrive at a contrary verdict.  LSA-C.C.P. Art. 181 Anderson v. New Orleans Public Service, Inc., 583 So.2d 829 (La.1991).   In granting Premier's motion, the trial judge did not err in determining that reasonable jurors could only conclude the bank's limited internal publication of the report was protected by the conditional privilege.

Maurice Pearson

Pearson appeals the jury's finding in favor of Palowsky awarding $800,000 in damages for defamation, arguing that:  (1) the cause of action is prescribed;  (2) a qualified privilege exists as to the communication of a report prepared by a private investigator:  (3) the trial court erred in failing to find that the contents of the report were substantially true:  and (4) there is no evidence of injury to Palowsky's reputation as a result of the communication of the report to persons already familiar with its contents sufficient to support the jury's damage award.

Plaintiffs amended the breach of contract suit to add the defamation claim against Pearson on March 6, 1991.   Pearson argues that the defamation action is prescribed since the amendment came over one year since the alleged use of the report in 1986 to extort Palowsky, and the communication of the report to John Lang in 1989.   We disagree.

As this court stated in National Union Fire Ins. Co. of Pennsylvania v. Spillars 552 So.2d 627, 630 (La.App.2d Cir.1989), writs denied, 556 So.2d 61 (La.1990):

The jurisprudence recognizes the doctrine of contra non valentem, whereby prescription does not begin to run on a cause of action that was not known or reasonably knowable to the plaintiff.   Constructive knowledge sufficient to start the running of prescription requires more than mere apprehension that something might be wrong.   Prescription does not run against a person who is ignorant of the facts upon which his cause of action is based. as long as such ignorance is not wilful, negligent or unreasonable.   Prescription does not run if the cause of action has not established itself with sufficient certainty to be susceptible of proof in a court of justice, or if the defendant has concealed information or misled or lulled the plaintiff into inaction.   [Citations omitted.   Emphasis in original.]

While it is true that Palowsky knew of his extortion claims by 1986, the evidence shows that he only learned of Pearson's involvement and of the possibility of a defamation claim based on the circulation of the actual report sometime after June 1990, when he was furnished information by Nancy Joyner from the files of Kneipp.   The amendment to the breach of contract suit adding Pearson as a defendant was filed within one year of that time.

Pearson argues that, as he is a private investigator, the good faith communication of his report to his client Dr. Joyner is protected by the qualified privilege.   Further, he asserts that the trial court erred in failing to find that the contents of the private investigator's report were substantially true.   However, we need not determine whether the private investigator and his client shared a corresponding interest or duty.   It is clear that, even if such a duty existed, the jury could reasonably have found that Pearson was not in good faith when preparing the report, that the contents of the report were not substantially true. and that Pearson also communicated the report to Lang, a disinterested party with whom Pearson did not share a privilege.   Lang then allowed the report to pass into the hands of bank officials.   The communication of non-privileged defamatory words to even one person constitutes publication in this instance.  Martin, supra;  Toomer, supra.

Truth, or substantial truth, is an absolute defense to a defamation action.   Pool v. Gaudin.   209 La. 281, 24 So.2d 383 (1945);  Martin, supra.   Pearson contends that the report is substantially true, even if Palowsky were not arrested, because it truthfully describes an underlying homosexual incident.

The record, contrary to Pearson's assertions, reflects that much of the contents of the report are false.   According to the police reports and the testimony of Palowsky and “John Doe.” the two men had been drinking heavily and fighting when “Doe” attempted to perform anal intercourse on Palowsky.   When police arrived, Palowsky was semi-conscious and an apparent unwilling participant in the attempted sexual conduct.  “Doe” was arrested and charged with attempted crime against nature to which he later pled guilty.   Criminal charges were never filed against Palowsky who was taken to an area hospital.   The other alleged homosexual conduct was denied by both Palowsky and “Doe” who testified that he never told Pearson that any fondling had occurred in the other incident.   According to Palowsky, he was never expelled from his university studies and Pearson admitted that he never confirmed that allegation with the school's administration.   Pearson's assertion that the report was substantially true, and therefore not defamatory, is without merit.

In any event, whether or not Pearson acted in good faith when preparing the report is a factual issue resolved by the jury against him.   The evidence showed that Pearson failed to corroborate the information contained in his report with police reports made about the incident.   He likewise neglected to check the university's records to determine if Palowsky had in fact been expelled.   Therefore. even if a privilege might otherwise exist. the jury could reasonably have determined that Pearson was not in good faith.

Finally, Pearson complains that the damage award of $800,000 is excessive where there is no evidence of injury to Palowsky's reputation as a result of the communication of the report to persons already familiar with the report's contents.

In a successful defamation case, damages may be awarded for humiliation, loss of reputation, embarrassment, and mental suffering, even without pecuniary loss.  Moreau v. Brenan, 466 So.2d 572 (La.App. 5th Cir.1985).   In determining the award the following factors should be considered by the trier of fact:  the severity of the charges, the motives of the defamer, the position of influence enjoyed by the defendant and the extent of the publicity given to the statements.  Moreau, supra;  SAS Jaworsky v. Padfield, 211 So.2d 122, 127 (La.App. 3d Cir.1968).

In assessing damages in cases of offenses, quasi-offenses, and quasi-contracts, much discretion must be left to the judge or jury.  LSA-C.C. Art. 2354.1.   Before an appellate court may disturb such an award, the record must clearly reveal that the jury abused its broad discretion, based on the particular injuries and their effect upon the particular individual injured.   Youn v. Maritime Overseas Corp., 623 So.2d 1257 (La.1993), rehearing denied;  Reck v. Stevens, 373 So.2d 498 (La.1979);  Brimer v. Copeland, 604 So.2d 1388 (La.App.2d Cir.1992).   Upon finding such an abuse, consideration of other cases becomes relevant, but only to determine whether a contested award is greatly disproportionate to the mass of past awards for truly similar injuries and losses.  Youn, supra;  Reck, supra;  Thomas v. Petrolane Gas Service, Ltd. 588 So.2d 711 (La.App.2d Cir.1991), rehearing denied, 590 So.2d 1201 (La.1992).

Under the instant circumstances, the $800,000 award represents a clear abuse of jury discretion.   Pearson s report was seen by Hood, Lang and others and did contain false material.   However, Palowsky has failed to show any substantial damage to his reputation through this publication.   Palowsky himself was unaware of any defamation until he got the report in 1990.   There is no evidence that Hood showed the report to anyone else.   At the time Lang published the report to Rorex who distributed it to other Premier bank officials. the suit for breach of contract brought by Palowsky and the other plaintiffs, was already pending.   There was no proof presented that the report's revelations lowered the bank's pre-existing opinion of Palowsky's reputation.

To the extent that the jury's award represents damages incurred as a result of Hood's use of the investigative report, we find that Palowsky has failed to prove defamation damages.   Palowsky has not shown that Hood's acquisition of the false information contained in the report damaged his reputation with Hood. If Hood had so little regard for Palowsky that he would extort him into the October transactions, it is extremely unlikely that Pearson providing Hood with the tool used to extort Palowsky would damage Hood's opinion of Palowsky.

The only evidence with regard to Palowsky's loss of reputation in the community was general testimony given by Palowsky and his wife, Carol.   Both testified that it was their belief that Palowsky's business and credit reputation had been destroyed by the litigation.   However, he offered no specific evidence that he has been unable to obtain employment or that other lending institutions have refused to loan him funds for new construction projects for this reason.

Nevertheless, we can see that the dissemination of the false information in the report some twenty years after the incident would cause humiliation and mental anguish.

We are also mindful,. however, that the magnitude of damages caused by defamatory words is often a function of the extent of the publication.   Martin, supra;  Garrett v. Kneass, 482 So.2d 876 (La.App.2d Cir.1986), writ denied, 484 So.2d 671 (La.1986).   In this case, Hood saw the report and Pearson gave a copy of the report to Lang who loaned it to Rorex at Premier.   Each subsequent distribution of the report to Premier directors and attorneys remained within the confines of the bank.   The limited amount of republication and resulting loss to reputation can not support the large quantum awarded here.   This court recently indicated in Martin, supra, that a damage award of $250,000 would have been excessive had a privilege not otherwise existed in that case involving limited republication.   Other recent damage awards for defamation approved by the appellate courts have ranged from § 5.000 to $10,000.  Smith v. Atkins, 622 So.2d 795 (La.App. 4th Cir.1993);  Lege v. White, 619 So.2d 190 (La.App. 3d Cir.1993);  Melancon v. Hyatt Corp., 589 So.2d 1186 (La.App. 4th Cir.1991), writ denied, 592 So.2d 411 (La.1992);  Watson v. Church's Fried Chicken, Inc., 527 So.2d 979 (La.App. 4th Cir.1988), writ denied, 532 So.2d 135 (La.1988).   Given the very limited publication. we find that the highest amount the jury could have reasonably awarded Palowsky on this record for pain and suffering, embarrassment and humiliation, and loss of reputation against Pearson to be $20,000.00.

BREACH OF CONTRACT CLAIMS

Premier appeals the jury's finding of breach of contract and award of damages for Premier's bad faith breach in the following amounts:  (1) $7,000,000 to Gulf States Land and Development.   Inc.;  (2) $1,250,000 to Stanley and Carol Palowsky;  (3) $200,000 to Larry and Dianne James;  (4) $200,000 to John Smiarowski;  and (5) $200,000 to Walter and Mona Meredith.   It contends that the verdicts are contrary to the law and the evidence and that it was denied a fair trial when the trial court erred in excluding evidence, in instructing the jury, and in allowing the trial of the prescribed tort claims along with the contract claims.   For these reasons, Premier seeks a de novo review of the record.

De novo Review

Ordinarily a jury's findings of fact are reviewed under the manifest error standard.  Arceneaux v. Domingue, 365 So.2d 1330 (La.1978).   However, where some consequential error was made in the trial court, the manifest error standard is no longer applicable, and the appellate court must make its own independent review of the record, giving no weight to the jury verdict and deciding the case by a preponderance of the evidence McLean v. Hunter.   495 So.2d 1298 (La.1986);  Hines, supra;  Pitard v. Stillwater Transfer & Storage, 589 So.2d 1127 (La.App. 4th Cir.1991), writ denied, 594 So.2d 1314 (La.1992);  Schwamb v. Delta Air Lines, Inc., 516 So.2d 452 (La.App. 1st Cir.1987), writ denied, 520 So.2d 750 (La.1988);  Brooks v. St. Tammanv Parish School Board, 510 So.2d 51 (La.App. 1st Cir.1987), writ denied, 513 So.2d 821 (La.1987).

In support of its contention that a de novo review is required.   Premier first directs our attention to the trial court's exclusion of three letters exchanged between the plaintiffs and Premier in March and April 1988.   It argues that the letters, written contemporaneously with the filing of the suit for breach of contract, should have been admitted for the limited purpose of showing that Gulf States was in bad faith and did not want Premier to continue funding the commitment but, rather, wanted to be relieved of the obligation to repay the debt evidenced by the promissory notes.

The trial court excluded the letters because they evinced settlement negotiations.  LSA-C.E. Art. 408.   Rulings admitting or excluding relevant evidence are within the trial court's great discretion and are not disturbed on appeal unless the record demonstrates an abuse of that discretion.  Shaw v. Fidelity & Casualty Insurance Company, 582 So.2d 919 (La.App.2d Cir.1991).   No such abuse is shown here where the prejudicial effect of the evidence clearly outweighs its probative value.

Premier next contends that a de novo review is required because the jury instructions were insufficient and confused tort issues with contract issues without the benefit of adequate transitional language.   The trial court is not required to give the precise instruction submitted by a litigant.   The court need only give instructions that properly reflect the applicable law and adequately convey the issues to the jury.  Luman v. Highlands Insurance Company, 25,445 (La.App.2d Cir.02/23/94), 632 So.2d 910;  Smith v. American Indemnity Insurance Company, 598 So.2d 486 (La.App.2d Cir.1992), writ denied, 600 So.2d 685 (La.1992).   To determine the sufficiency of a jury charge, all charges should be read together as a whole.  Luman, supra;  Wisner v. Illinois Central Gulf Railroad, 537 So.2d 740 (La.App. 1st Cir.1988), writ denied, 540 So.2d 342 (La.1989).

The mere discovery of an error in the court's instructions does not automatically justify a de novo review by the appellate court without first measuring the gravity or degree of the error and considering the instructions as a whole and the circumstances of the case.   The manifest error standard may not be ignored unless the jury charges are so incorrect or so inadequate that the jury was precluded from reaching a proper verdict based on the law and the facts.  Boh Brothers Construction Company, Inc. v. Luber-Finer, Inc., 612 So.2d 270 (La.App. 4th Cir.1992), writ denied, 614 So.2d 1256 (La 1993).

The trial court instructed the jury that:

Damages due for the breach of an obligation are the amount of the loss sustained, and the profit of which one has been deprived.   A party to a contract who is in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform.   These damages may include mental anguish. inconvenience, pain and suffering and any damages to reputation.

It neglected. however. to qualify the instruction concerning nonpecuniary damages by properly instructing the jury on LSA-C.C. Art.1998.   That article provides:

Damages for nonpecuniary loss may be recovered when the contract, because of its nature, is intended to gratify a nonpecuniary interest and, because of the circumstances surrounding the formation or the nonperformance of the contract, the obligor knew, or should have known, that his failure to perform would cause that kind of loss.

Regardless of the nature of the contract. these damages may be recovered also when the obligor intended, through his failure, to aggrieve the feelings of the obligee.

Premier also contends that the jury verdict is tainted because the jury was allowed to hear evidence on the extortion claim that was later ruled prescribed.   After considering the gravity of these errors under the circumstances of the whole case. we disagree that a de novo review is required.   Therefore, we have reviewed the jury verdict under the manifest error rule, bearing in mind that the jury was not fully instructed in the area of damages for nonpecuniary loss and that the jury might have been influenced by the extortion evidence.

The record supports the jury's conclusion that Premier breached the contract with the plaintiffs.   Premier failed to honor its written commitment to lend plaintiffs $2.868 million for a period of time resulting in a lawsuit being filed and the delay in payment of one of plaintiffs' bills.   The bank also was untimely in depositing loans made pursuant to the commitment letter into the plaintiffs' banking account, resulting in some temporary overdraft notices and inconvenience to the plaintiffs.   The record fails to support all other claims of breach of contract due to failure of proof, relevancy, or based on a duty not owed by Premier.

The record further shows that plaintiffs breached their agreement with the bank in several ways, including defaulting on the repayment of the loan obligation, refusing to provide additional collateral, diverting excess funds away from the project into their own pockets for salary, and Palowsky's refusal to provide a current financial statement.

That Premier's breaches of the contract were not the main reason for the failure of the North Pointe project is apparent from the record.   It is clear that the project failed because the plaintiffs were inexperienced in subdivision development, badly underestimated the cost of the project, overspent their budget and diverted funds needed for the project to personal use.   It is clear from the record that the project was in severe financial trouble well before Premier failed to honor the commitment letter.   Premier's breach in this regard only lasted a few days, although by the time the matter was corrected a lawsuit had been filed.   Yet the March 1988 lawsuit was filed by plaintiffs against Premier for damages and certainly did not carry with it the stigma of a foreclosure suit.   With the correction of the funding error, the potential for damage to plaintiffs was greatly reduced.

The evidence shows Premier immediately notified the plaintiffs of its commitment error, advised them the project would be funded to the full extent of the written commitment and did all it could to minimize the damage that had been done.   The record shows that. after discovering that excess project funds had been used personally, Premier acted reasonably in depositing the balance of the commitment with the court to be drawn only on affidavit that the funds would be properly used on the project.

The record clearly shows that plaintiffs had access to the remainder of the funds available under the commitment letter, but failed to use them.   Undoubtedly they knew, as is apparent from the record, that the project could not be completed by using the $157,533.53 remaining under the commitment.   Plaintiffs' evidence, as well as the bank's evidence. shows a minimum of several hundred thousands of dollars over and above the $2.868 million commitment was needed to complete the project.

With the aforementioned facts in mind, the amount of damages for breach of contract awarded by the jury in this case to Gulf States is unsupported by any reasonable construction of the record and is manifestly erroneous.   On this record, we hold the maximum amount the jury could have reasonably awarded Gulf States Land & Development, Inc. for Premier's breaches of contract is $2 million.   Further, the jury's award to Palowsky for $1,250,000 individually for breach of contract is unsupported by the record.   Palowsky offered only his own testimony that his business reputation has suffered and that he has been unable to work in the construction business following the collapse of the subdivision venture.   This self-serving testimony fails to demonstrate that Palowsky individually suffered an amount of lost profits and loss of reputation that would justify such an award.   Thus, the Palowsky award against Premier is reduced to § 400.000. Our amendment of the March 19, 1993 judgment is pronounced in the decree of this opinion.

SUIT ON NOTE CLAIMS

Upon finding Gulf States and the individual borrowers liable on the promissory notes, the trial court awarded interest on $2,572,527.45, representing the unpaid principal due on the notes, at 9.25% as provided for in the notes from the date the notes or overdrafts were made.   Following an evidentiary hearing on October 19, 1992, the trial court awarded $855,646.50 in attorney fees.   The plaintiffs contend that the trial court erred in awarding interest and attorney fees where the jury found Premier to have been in bad faith in breaching the October 13, 1986 commitment.   They assert that penalty and liquidated damages may not be recovered where the plaintiffs are excused from performance due to the bank's bad faith breach.

LSA-C.C. Art.2063 provides, in pertinent part, that “an obligee may not recover damages when his own bad faith has caused the obligor's failure to perform.”   However, in this case, there has been no finding by the trial judge that Premier's bad faith caused the plaintiffs' failure to perform according to the terms of the promissory notes.   In accordance with LSA-C.C.P. Art. 1732, the trial court decided the claims in the suit on the notes separate from the jury's determinations in the breach of contract suit.   When deciding in favor of Premier, the trial court stated:

The bank did not fund the full amount of the October 13, 1986. commitment.   To the extent this failure is a breach, the Court finds offsetting breaches on the part of the plaintiffs.

The jury's findings in the breach of contract suit are not binding on the judge's ruling with regard to the claims on the promissory notes.

Therefore, the trial court did not err in awarding attorney fees to Premier on the notes.   The judgment reflects that Premier was awarded 25 percent as provided in the notes.   The plaintiffs complain that the $855.646.50 in attorney fees is excessive. and urges this court to reduce the amount.

Courts may inquire into the reasonableness of legal fees.   The prohibition against excessive attorney fees can not be avoided by fixing the amount of attorney fees as a percentage of the amount to be collected on a note.   Central Progressive Bank v. Bradley, 502 So.2d 1017 (La.1987);  Northshore Ins. Agency, Inc. v. Farris, 634 So.2d 867 (La.App. 1st Cir.1993);  Allen v. Burnett, 530 So.2d 1294 (La.App.2d Cir.1988).   Factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;  and

(8) whether the fee is fixed or contingent.

Louisiana Rules of Professional Conduct, Rule 1.5;  Jackson Parish Bank v. Durbin, 535 So.2d 1074, 1078 (La.App.2d Cir.1988).

This court recognizes that trial courts have much discretion in awarding attorney fees.  Allen, supra;  Sims v. Hays, 521 So.2d 730, 733 (La.App.2d Cir.1988).

The record discloses no abuse of discretion the trial court in determining that the amount of attorney fees provided for in the notes (25 percent) was reasonable.   Principal and interest due upon the 41 promissory notes through July 31.1992. totalled § 3,422,586.70. The trial court's award of 25 percent of that amount as attorney fees is not manifestly erroneous given the evidence presented by Premier as to the effort spent. including research, depositions, number of pleadings filed, and time spent in trial, in obtaining a judgment on these notes.

SET-OFF or COMPENSATION

Palowsky argues that, even though his tort claim for extortion may be prescribed, he is entitled to “set-off” the amount awarded by the jury against Premier's award against him.   See LSA-C.C.P. Art. 424.   We agree.   We reject the bank's argument that Palowsky did not sufficiently plead the prescribed extortion claim as a defense to the notes.   The ruling that his extortion claim had prescribed did not come until after the trial.   Under these circumstances, we hold Palowsky's pleadings are sufficient to place Premier on notice that he was claiming extortion damages to the extent of using it as a defense to Premier's claims on the notes.

Although set-off against a claim on a note is a matter for a judge and not a jury, due to the timing of the prescription ruling (which came after trial), we have no ruling on set-off by the trial judge.   See LSA-C.C.P. Art. 1732.   A ruling on the set-off issue would require a fact-finder to determine if the claim of extortion, though prescribed, was proven at trial.   We have such a determination in this case from the jury, although the tort claim of extortion was later held to be prescribed and we are affirming that ruling here.

Our review of the record convinces us that the extortion award by the jury was made primarily on the basis of credibility.   Clearly the jury accepted Palowsky's testimony that Hood extorted him. and rejected Hood's testimony to the contrary.

In the interest of judicial economy we are not inclined to remand this matter to the trial court for a ruling by the trial judge on this issue.   Nor are we inclined to make such a credibility determination from a written record.   We believe that, although prescribed, the parties were given a fair hearing on the extortion issue in the trial court and received an impartial credibility call by the jury as to Palowsky and Hood's testimony and the jury's determination in this regard is not manifestly erroneous.   Therefore, rather than remanding the case and rather than us attempting to judge credibility from the cold record, we accept the jury's determination, for the purposes of set-off, that Hood extorted Palowsky.   It is not necessary for us to rule on the reasonableness of the entire $2.5 million extortion award to Palowsky by the jury.   We simply hold that the award is affirmed solely for the purpose of off-setting Premier's awards against Palowsky to the extent of $1,217,752.30, for principal and interest through July 31, 1992, attorney fees, plus interest accruing after July 31, 1992, on the sum stated in Paragraph X of the trial court's judgment.   Our decree in this respect is pronounced under our docket Nos. 26,300-CA and 26,301-CA.

UNFAIR TRADE PRACTICES CLAIM

At the conclusion of the evidence, the trial court granted Premier's motion for directed verdict dismissing the plaintiffs' claim of unfair trade practices.   The plaintiffs appeal this ruling arguing that Premier engaged in unfair trade practices by:  (1) filing pleadings containing false allegations of theft and misappropriation of funds against the borrowers;  (2) participating in the investigation of Palowsky;  and (3) using the contents of Pearson's investigative report to extort Palowsky.

A bank chartered by or under the authority of the United States is exempt from the provisions of the Louisiana Unfair Trade Practices and Consumer Protection Law. LSA-R.S. 51:1406(1);  Financial Bank, FSB v. Butler, 492 So.2d 503 (La.App. 5th Cir.1986).   The plaintiffs' claims against Premier stem from its alleged mishandling of the commercial loan transaction.   Monitoring and collecting a loan are powers incident to a state bank's express power to lend money and therefore constitute actions subject to the jurisdiction of the commissioner of financial institutions.  Scott v. Bank of Coushatta, 512 So.2d 356 (La.1987).   The plaintiffs' claim that the trial court erred in dismissing this claim is without merit.

INTENTIONAL CONCEALMENT CLAIM

Stanley and Carol Palowsky appeal the trial court ruling of November 12, 1993, dismissing, as prescribed, their claims against Premier and several of its officers and attorneys.   The Palowskys alleged that the defendants intentionally concealed the existence of Pearson's investigative report in order to bar them from bringing a timely cause of action for extortion in the breach of contract suit.   They claim that they were unaware that the bank knew of the existence of the report until they examined Premier's attorney billings in connection with the post-trial hearing on attorney fees held October 19, 1992.   The Palowskys contend that the billings revealed that the Premier officers and attorneys knew about the report during the discovery phase of the breach of contract suit and deliberately concealed that knowledge.   They assert that the intentional concealment suit, filed May 19, 1993, was brought within one year of discovering the attorney billings.   Alternatively, the Palowskys argue that the claims for intentional concealment did not arise until February 23, 1993, when the trial court ruled that the extortion claim against Premier had prescribed.

Following a hearing on September 23, 1993, the trial court sustained the exceptions of prescription filed by Premier Bank, N.A.;   Premier Bancorp;  J. Noland Singletary, President and C.E.O. of Premier Bancorp;  G. Lee Griffen, General Counsel Premier Bancorp;  William Mike Baggett and Jeff Joyce, Premier attorneys, and granted the motion for summary judgment filed by James A. Rountree, Premier attorney, on the basis of prescription.   Rountree, Baggett and Joyce have answered the Palowskys' appeal seeking damages for frivolous appeal.

We find no error in the trial court's dismissal of the claims for intentional concealment as prescribed.   As evidenced by the exhibits introduced at the hearing on the exceptions.   Palowsky had knowledge sufficient to put him on notice of this cause of action more than one year before suit was filed.   For example, Palowsky claimed in his federal lawsuit asserting RICO violations against Premier, that the bank, through Vanderpool, Jr., and Hood, used the investigative report to extort Palowsky.   That suit, Civil Action 90-2231, was filed on October 3, 1990, well over two years prior to the filing of the intentional concealment claim.   Additionally, Paragraph 48 of the March 6, 1991 amendment to the breach of contract suit adding the extortion claim, alleges that Premier attorney Baggett was aware of the existence of the report as early as 1988.   The Palowskys' assertion that these claims for intentional concealment are timely is without merit.

Frivolous Appeal

Baggett, Joyce and Rountree have filed answers to the Palowskys' appeal, seeking damages for frivolous appeal pursuant to LSA-C.C.P. Art. 2164.   We note that appeals are favored and appellate courts are therefore reluctant to impose damages for frivolous appeal.  Comet Industries v. Lawrence, 600 So.2d 85 (La.App.2d Cir.1992), writ denied, 604 So.2d 1002 (La.1992);  Bellard v. Safeway Insurance Company, 442 So.2d 1314 (La.App. 3d Cir.1983);  Weatherall v. Department of Health and Human Resources, 432 So.2d 988;  (La.App. 1st Cir.1983), writ denied, 437 So.2d 1150 (La.1983).   An appeal will only be deemed frivolous if it does not present a substantial legal question or if it obvious either that it was taken solely for delay or that counsel does not seriously believe in the view of the law he advocates.   Comet Industries, Inc., supra;  Johnson & Placke v. Norris, 571 So.2d 702 (La.App.2d Cir.1990), writ denied, 573 So.2d 1142 (La.1991);  In re Succession of Bradford, 550 So.2d 678 (La.App.2d Cir.1989).

After carefully reviewing the record in this case, we cannot say that damages for frivolous appeal are warranted.   While we do not find merit in the Palowskys' allegations and have determined that they are not entitled to relief, we can not say that this appeal was taken solely for the purpose of delay or that appealing counsel does not seriously believe in the position he advocates.

DECREE

For the reasons stated, the award to Gulf States Land and Development, Inc. and against Defendant.   Premier Bank, N.A., in paragraph one of the March 19, 1993 judgment is reduced from Seven Million Dollars ($7,000,000) to Two Million Dollars ($2,000,000), together with legal interest from the date of judicial demand until paid.   The award to Stanley R. Palowsky, Jr. and Carol Hargus Palowsky and against Defendant, Premier Bank, N.A., in paragraph two of March 19, 1993 judgment is reduced from One Million Two Hundred and Fifty Thousand Dollars ($1,250,000) to Four Hundred Thousand Dollars ($400,000), together with legal interest from the date of judicial demand until paid.   The award to Stanley R. Palowsky, Jr. and against Defendant, Maurice Pearson in paragraph six of the March 19, 1993 judgment is reduced from Eight Hundred Thousand Dollars ($800,000) to Twenty Thousand Dollars ($20,000), together with legal interest from the date of judicial demand until paid.   In all other respects the judgment is affirmed.   Premier Bank's exception of res judicata filed in this court is overruled.   Each party shall pay the cost of his, her or its respective appeal.

AFFIRMED AND AMENDED.

Nos. 26,300-CA and 26.301-CA

CONSOLIDATED WITHNos. 26,255-CA and 26.299-CACourt of AppealSecond CircuitState of LouisianaApril 5, 1995.

The Ouachita National Bank in Monroe, Plaintiff-Appellant/Appellee

versus

Gulf States Land and Development, Inc., et al, Defendants-Appellees/Appellants Defendants-Appellees/Appellants

The Ouachita National Bank in Monroe, Plaintiff-Appellant/Appellee

versus

Gulf States Land and Development, Inc., et al, Defendants-Appellees/Appellants

Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 88,978, 88-3110, 88-4484, Honorable John R. Ballard and Honorable Charles R. Joiner, JJ.

Theus, Grisham, Davis & Leigh by J. Michael Hart, Counsel for Gulf States Land and Development, Inc., Et Al

Joseph D. Cascio, Jr., Counsel for Donald L. Kneipp

Sam O. Henry, III, Counsel for A.W. Hood

William R. Boles, Jr., Counsel for Paul Aron

Brian E. Crawford, Counsel for John Lang

Maurice Pearson, Counsel for IPP

Kimberly O. Golden, Counsel for Capital Bank

Taylor, Porter, Brooks & Phillips by:  Tom F. Phillips, Harry J. Phillips, Jr., Counsel for Premier Bank, N.A.

Shotwell, Brown & Sperry by:  George M. Wear, Jr., C.A. Martin, III, Winstead, Sechrest & Minick, P.C. by:  Wesley W. Steen, W. Mike Baggett, Jeff Joyce, Cook, Yancey, King & Galloway by:  F. Drake Lee, William T. McNew, Counsel for The Ouachita National Bank In Monroe

Before MARVIN, VICTORY and JONES, Pro Tempore, JJ.

DECREE

For the reasons given in the companion case Gulf States Land Development Inc., et al. v. Ouachita National Bank, (La.App.2d Cir.4/05/95), 653 So.2d 1380, rendered this date, the jury award of Two Million Five Hundred Thousand Dollars ($2,500,000) to Stanley R. Palowsky, Jr. and against Defendant, Premier Bank, N.A., is affirmed only insofar as it may be used to offset the amount of Premier Bank, N.A.'s judgments, including interest, attorney fees and court costs, against Stanley R. Palowsky, Jr., in the March 19, 1993 judgment.   In all other respects, the March 19, 1993 judgment is affirmed.   Each party shall pay the cost of his, her or its respective appeal.

AFFIRMED AS AMENDED.

Stanley R. Palowsky, Jr. and Carol Hargus Palowsky, Plaintiff-Appellant

versus

Premier Bank, N.A., et al, Defendant-Appellee

No. 26.255-CA

CONSOLIDATED WITHNos. 26.299-CA, 26.300-CA and 26.301-CACourt of AppealSecond CircuitState of LouisianaApril 5, 1995Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 93-1804, Honorable R.W. Kostelka, Judge

Theus, Grisham, Davis & Leigh by:  J. Michael Hart, Counsel for Plaintiff-Appellant

Shotwell, Brown & Sperry by:  George M. Wear, Jr., Taylor, Porter, Brooks & Phillips by:  Tom F. Phillips, Harry J. Phillips, Jr., Cook, Yancey, King & Galloway, by:  F. Drake Lee, Jr., Counsel for Appellee

Before MARVIN, VICTORY and JONES, Pro Tempore, JJ.

For the reasons given in the companion case, Gulf States Land Development Inc., et al. v. Ouachita National Bank, 26,299 (La.App.2d Cir.04/05/95), 653 So.2d 1380, rendered this date, the judgment of the trial court is affirmed.

All parties are to pay their own costs.

AFFIRMED.

FOOTNOTES

1.   This opinion was unpublished.   In order to better understand the present issues we now, with the permission of a majority of the original panel, publish that opinion as appendix A. [Editors Note:  The text of the unpublished opinion appears as an appendix on WESTLAW.]

2.   There have been numerous reported decisions dealing with matters incident to this litigation.   See Ouachita National Bank in Monroe v. Palowsky, 554 So.2d 108 (La.App.2d Cir.1989);  Ouachita National Bank v. Palowsky, 570 So.2d 114 (La.App.2d Cir.1990);  Ouachita National Bank v. Gulf States, 556 So.2d 50 (La.1990);  Palowsky v. Premier Bancorp, Inc., 595 So.2d 670 (La .App. 1st Cir.1991);  Ouachita National Bank in Monroe v. Gulf States Land & Development, Inc., 579 So.2d 1115 (La.App.2d Cir.), writ denied, 587 So.2d 695 (La.1991);  Palowsky v. Premier Bancorp, Inc., 597 So.2d 543 (La.App. 1st Cir.1992);  Gulf States Land & Development, Inc. v. Ouachita National Bank in Monroe, 612 So.2d 1031 (La.App.2d Cir.), writ denied, 618 So.2d 406 (La.1993).

3.   The jury also awarded Palowsky $800,000 against the Bank for defamation.   The trial court granted the Bank's JNOV on the merits and dismissed this claim, which we affirmed.

4.   On January 23, 1996, Regions Bank, a third party, intervened in these proceedings.   On January 25, 1996, Roy and Linda McCaskill intervened.   On February 26, 1996, the Bank filed a “motion of intervention” in order to seize Palowsky's litigious rights in the suit;  however, they sought no separate or different relief than that claimed by the Bank and the Gulf States parties.

5.   La.C.C.P. art. 424 provides in part that a prescribed obligation arising under Louisiana law may be used as a defense if it is incidental to or connected with the obligation sought to be enforced by the plaintiff.

1.   Walter and Mona Meredith were not originally named as plaintiffs and were added to the suit at a later date.

2.   We have previously decided related issues in this litigation in Ouachita National Bank in Monroe v. Gulf States Land and Development, Inc., 579 So.2d 1115 (La.App.2d Cir.1991), rehearing denied, 587 So.2d 695 (La.1991);  Ouachita National Bank v. Palowsky, 570 So.2d 114 (La.App.2d Cir.1990);  Ouachita National Bank in Monroe v, Palowsky, 554 So.2d 108 (La.App.2d Cir.1989).

3.   Bank Holding Act lawsuit and RICO lawsuit.

4.   Seymour, for reasons not disclosed in the record, apparently withdrew from the project in its initial stages.   He is not a co-maker on any of the current promissory notes, nor is he a principal in the individual borrowers' corporation.   Gulf States Land & Development, Inc.

5.   This ruling was affirmed by the U.S. Fifth Circuit Court of Appeals in Gulf States Land & Development, Inc. v. Premier Bank N.A., 956 F.2d 502 (5th Cir.1992).

6.   We reject the argument that Premier was sued within a year of Hood's last act of extortion.   Palowsky's claim at trial that he was extorted into signing the new guaranty of March 17, 1987, if true, is not within a year of the March 21, 1988 filing date.   Further, his testimony that he “believed” he may have been extorted in the fall of 1987 into not suing Premier over the indemnity agreement is clearly insufficient to prove such an act even occurred.   Palowsky was not made a party to the Traveler's lawsuit until March 14.1988. and filed a third party demand against Premier the next day.   Likewise, we reject the argument that an incidental demand filed against Premier in connection with the deficiency judgment proceeding in another lawsuit somehow interrupted prescription on the tort claim of extortion.

7.   On appeal Kneipp has alternatively reurged his exception of prescription.   Our ruling that the jury was not manifestly erroneous in finding no conspiracy to extort renders the exception moot.

 BROWN, Judge.