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Rabalais v. Gray

Court of Appeals of Louisiana, Fifth Circuit

December 16, 2014

MR. KENNETH J. RABALAIS, JR. AND JENNIFER ANN VAUGHT RABALAIS
v.
DENVER FREDERICK GRAY, PATRICIA M. GRAY, SUSAN HURTH PRICE AND GBS PROPERTIES, L.L.C. D/B/A PRUDENTIAL GARDNER REALTORS

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 709-306, DIVISION "P" HONORABLE LEE V. FAULKNER, JR., JUDGE PRESIDING

JAMES M. GARNER, RYAN O. LUMINAIS MARY E. AKIN, ATTORNEYS AT LAW, COUNSEL FOR PLAINTIFFS/APPELLANTS

MICHAEL S. RICCI, JONATHAN L. SCHULTIS JOSEPH S. PAPPALARDO, JR., ATTORNEYS AT LAW, COUNSEL FOR DEFENDANTS/APPELLEES

Panel composed of Judges Susan M. Chehardy, Jude G. Gravois, and Stephen J. Windhorst

JUDE G. GRAVOIS, JUDGE

Plaintiffs/appellants, Kenneth J. Rabalais, Jr. and Jennifer Ann Vaught Rabalais, appeal the trial court's grant of summary judgment in favor of defendants/appellees, Susan Hurth Price and GBS Properties, L.L.C. d/b/a Prudential Gardner Realtors ("Prudential Gardner"), finding Ms. Price and Prudential Gardner not liable to plaintiffs for an alleged negligent misrepresentation of fact made by Ms. Price to plaintiffs in connection with a real estate transaction, and dismissing all claims against Ms. Price and Prudential Gardner. For the reasons that follow, we affirm the trial court's grant of summary judgment.

FACTS

In the summer of 2007, plaintiffs approached Denver Gray and Patricia Gray through their real estate agent, Susan Hurth Price, [1] about purchasing the Grays' residential property located at 620 Northline Street in Metairie, Louisiana. The property had flooded and was damaged as a result of Hurricane Katrina, which struck the New Orleans area on August 29, 2005. Mr. and Mrs. Gray were living in North Carolina at the time. They remained in North Carolina following the storm and did not return to New Orleans until over a year later. The Grays, who were respectively 81 and 73 years old at the time, decided not to repair the damages to their Northline residence caused by Hurricane Katrina, it being too substantial an undertaking for them given their ages. They eventually decided to sell the Northline property. In 2007, Mrs. Gray approached a real estate agent friend of hers to list the Northline property for sale, but as her friend was then retired, she recommended that Mrs. Gray contact Ms. Price. Mrs. Gray testified in deposition that she never met Ms. Price face-to-face; rather, they conducted all of their business over the phone or by fax.[2] Plaintiffs showed serious interest in the Northline property and the parties eventually agreed upon a price of $950, 000.00 for the property in its "as is" condition. The sale was consummated on September 20, 2007.[3]

On December 13, 2011, plaintiffs filed suit against Mr. and Mrs. Gray, Ms. Price, as their real estate agent, and her agency, Prudential Gardner, alleging fraud (intentional misrepresentation) and negligent misrepresentation, when they learned that the Northline property they had purchased from Mr. Gray[4] in 2007 was not eligible for Louisiana Road Home Program benefits because it was covered by flood insurance at the time Hurricane Katrina struck the New Orleans area. Plaintiffs alleged that Ms. Price had represented to them that the property had no flood insurance coverage when Hurricane Katrina struck, a fact that plaintiffs allege was a substantial factor in their decision to purchase the Northline property, because such lack of flood insurance coverage would have supposedly allowed them to collect up to $130, 000.00 in Road Home benefits for repairs to the property caused by Hurricane Katrina flooding.[5] When plaintiffs applied for Road Home benefits for the Northline property, their application was denied when it was determined that the property indeed had flood insurance coverage when Hurricane Katrina struck, for which Mr. Gray had actually made a claim and had actually received flood insurance proceeds.[6]

Mrs. Gray testified in deposition that she was not aware of any flood insurance coverage on the Northline property and believed that there was no flood insurance coverage on the property. She testified that she was unaware of any flood insurance claim of any kind made on the Northline property and did not know that Mr. Gray had received flood insurance proceeds on the property for Hurricane Katrina flood damage. She stated that she did not remember telling Ms. Price this, but stated that she may have done so.

Ms. Price testified in deposition that Mrs. Gray told her that there was no flood insurance coverage on the property for Hurricane Katrina flood damage, and that she told this to plaintiffs, not knowing that this information was false.

In their suit, plaintiffs alleged that the availability of Road Home benefits was a primary inducement for their purchase of the Northline property, and that they would not have consented to purchase the property had they known that such benefits were not available.[7] Plaintiffs sought monetary damages rather than rescission of the contract of sale, recognizing that rescission of the contract of sale was impossible and/or impractical at that point in time.

Following discovery, Ms. Price and Prudential Gardner filed a motion for summary judgment, claiming that the depositions of the parties revealed that there was no fraud or intentional misrepresentation by them of the fact of the home's lack of flood insurance coverage. They further argued that under La. R.S. 9:3894(B), they cannot be held liable for negligent misrepresentation for conveying information to plaintiffs that was given to them by their clients that they did not have actual knowledge was false. They introduced excerpts from Ms. Price's and Mrs. Gray's depositions showing that Ms. Price received her information about the property's prior flood insurance coverage solely from Mrs. Gray. They further asserted that plaintiffs cannot produce any evidence to show that they had actual knowledge that such information received by them from their clients was false prior to providing such ...


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