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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-10959
Summary Calendar
In the Matter of:
CADDO PARISH-VILLAS SOUTH, LTD.
Debtor,
----------------------------------
CADDO PARISH-VILLAS SOUTH, LTD.,
Appellant,
versus
BEAL BANK, S.S.B.,
Appellee.
Appeal from the United States District Court
for the Northern District of Texas
April 30, 2001
Opinion on Rehearing
Before POLITZ, DAVIS, and BENAVIDES, Circuit Judges.
POLITZ, Circuit Judge:

This bankruptcy proceeding returns to this court on an appeal by Caddo
Parish-Villas South, Ltd., which unsuccessfully objected to a claim asserted by
Beal Bank, S.S.B., made pursuant to a mortgage note acquired from the
Department of Housing and Urban Development (HUD). For the reasons assigned
we affirm.
This matter initially came before the district court in February 1998 on
appeal from the bankruptcy court. The district court then held that Beal Bank had
satisfied its burden of proving its claim under La. R. S. 10:3-309(a). Specifically,
our learned trial court held that Beal Bank need only prove that its assignor, HUD,
had met the requirements detailed in the statute for enforcement of a lost
instrument. The district court then remanded the matter to the bankruptcy court for
a determination whether indemnification was required for adequate protection of
the debtor. The debtor appealed. We rejected that appeal because the district court
order was not a "final order" for purposes of appeal.
Thereafter, the bankruptcy court resolved the indemnity issue. The debtor
then appealed to the district court which affirmed the bankruptcy court,
incorporating therein its February 1998 ruling. The instant appeal followed.
During the interim between the initial district court decision and the instant
2

appeal, a decision was rendered in Southeast Investment, Inc. v. Clade.1 The facts
and issues in that litigation are identical to those presented herein. The district
court there held that: "As the assignee of the Note, Plaintiff stands in the shoes of
the FDIC and obtains all the rights, title, and interest that the FDIC had at the time
of the assignment. This includes the right of enforceability under section 3-309."2
As support for its holding, the court relied, inter alia, on the February 1998 decision
by the district court á quo.3 On April 3, 2000 we affirmed that decision.4 Based on
that affirmance, we issued an opinion on February 14, 20001 affirming the
judgment in the instant case. In its Petition for Panel Rehearing, the appellant notes
that the question of enforcability of the underlying note in Southeast Investments
was not an issue therein and, accordingly, our reliance on that affirmance was
inappropriate. We granted rehearing to consider that proposition.
ANALYSIS
11999 WL 476865 (N.D. Tex., July 7, 1999).
2Id. at *3 (internal citation omitted).
3Beal Bank, S.S.B. v. Caddo Parish-Villas South, Ltd., 218 B.R. 851, 855 (N.D.
Tex. 1998).
4Southeast Investments v. Clade, 212 F.3d 595 (5th Cir. 2000).
3

Louisiana Revised Statutes 10:3-309(a) provides that:
A person not in possession of an instrument is entitled to enforce the
instrument if (i) the person was in possession of the instrument and
entitled to enforce it when loss of possession occurred; (ii) the loss of
possession was not the result of a transfer by the person or a lawful
seizure; and (iii) the person cannot reasonably obtain possession of the
instrument because the instrument was destroyed, its whereabouts
cannot be determined, or it is in the wrongful possession of an
unknown person or a person that cannot be found or is not amenable
to service of process.
Section 3-309 is a modification of former § 3-804. As the comments to § 3-309
reflect, the modified version provides for the rights of "a person entitled to enforce
the instrument" at the time of loss, and not of the "owner" of the instrument.
Caddo Parish-Villas does not contest the fact that HUD was the "person" entitled
to enforce the instrument when it was lost. Nor does it claim that the loss of
possession was a result of a transfer by HUD or unlawful seizure or that the
instrument could not be reasonably obtained. Therefore, the sole issue for purposes
of this appeal is whether Beal Bank, as an assignee of the note from the HUD, may
enforce the note under § 3-309.
Section 1-103 of the Louisiana UCC chapter mandates that, in the absence
of a specific provision in that chapter, "the other laws of Louisiana shall apply."
Louisiana law provides that "all rights may be assigned, with the exception of those
pertaining to obligations that are strictly personal. The assignee is subrogated to
4

the rights of the assignor against the debtor."5 Additionally, Article 2654 provides
that, "The assignor of a right must deliver to the assignee all documents in his
possession that evidence the right. Nevertheless, a failure by the assignor to deliver
such documents does not affect the validity of the assignment."
The right to enforce a negotiable instrument is not a strictly personal
obligation.6 It therefore may be assigned. It is undisputed that HUD validly
assigned all of its rights under the note to Beal Bank. That assignment included
any and all rights of enforcement that HUD had. Accordingly, as the assignee of
HUD, Beal Bank may enforce the note against Caddo Parish-Villas upon
demonstrating that HUD satisfied the requirements of § 3-309. The district court
found that Beal Bank had presented sufficient evidence to prove that: (1) HUD was
in possession of the note when the loss occurred; (2) the loss of possession was not
the result of a transfer or unlawful seziure; and (3) possession of the note cannot
reasonably be obtained because its whereabouts cannot be determined. Finally, the
district court also found that Beal Bank had proven the terms of the instrument by
submitting a copy of the note and mortgage at the bankruptcy proceeding. The
5LA. CIV. CODE ART. 2642.
6LA. CIV. CODE ART. 1766 ("An obligation is strictly personal when its performance
can be enforced only be the obligee, or only against the obligor.").
5

record fully supports these findings.
Beal Bank has satisfied all of the requirements of § 3-309 and it is therefore
entitled to enforce the note. The judgment appealed is AFFIRMED.
6