December 23, 2014
ALBERT W. TEMES, JR., STEPHEN C. JUAN, RAYMOND OLIVIER, JR., DORMAN TODD DAVIDSON, EDWARD J. BRANLEY, JR., INDIVIDUALLY AND ON BEHALF OF T. L. STARKE, INC., AND ROY K. SAIA, O/B/O ALGIERS ROY & SONS MUSIC COMPANY, INC.
THE MANITOWOC CORPORATION AND THE SENTRY INSURANCE COMPANY C/W ESPLANADE PLAZA, L.L.C. AND HANOVER INSURANCE COMPANY AS SUBROGEE OF ESPLANADE PLAZA, L.L.C.
THE MANITOWOC COMPANY AND OLIVIER'S AIR CONDITIONING, HEATING AND REFRIGERATION
[Copyrighted Material Omitted]
APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH
OF JEFFERSON, STATE OF LOUISIANA. NO. 640-741 C/W 644-211,
DIVISION " E" . HONORABLE MARION F. EDWARDS, JUDGE
PRO TEMPORE PRESIDING.
C. JUAN, ATTORNEY AT LAW, Metairie, Louisiana, COUNSEL FOR
A. BRINDISI, ATTORNEY AT LAW, Kenner, Louisiana, COUNSEL FOR
H. BROWN, III, EUGENE TERK, ATTORNEYS AT LAW, New Orleans,
Louisiana, COUNSEL FOR DEFENDANT/APPELLANT.
composed of Judges Jude G. Gravois, Marc E. Johnson, and
Stephen J. Windhorst.
J. WINDHORST, J.
La.App. 5 Cir. 3] Defendants, Manitowoc Corporation and its
liability insurer Sentry Insurance Company ("
Manitowoc" ), appeal from a judgment in favor of T.L.
Starke, Inc. (" Starke" ) and Roy K. Saia o/b/o
Algiers Roy & Sons Music Company Inc. (" ARS"
). The trial court found that plaintiffs
bore their burden of proving liability and it awarded damages
totaling $109,477.23 to Starke and $54,076.02 to ARS. In a
separate judgment, the trial court denied Manitowoc's
motion for sanctions. For the reasons that follow, we amend
the judgment, and as amended, affirm. We further affirm the
trial court's denial of Manitowoc's motion for
suit arises from a fire that occurred in Mulligan's
Tavern (" Mulligan's" ). Mulligan's was
located in a shopping center owned by Esplanade Plaza, L.L.C.
(" Esplanade" ) on Severn Avenue in Metairie,
Louisiana. At the time of the fire, Mulligan's was owned
by Flappery, Inc. (" Flappery" ) and operated by
Starke. Located inside Mulligan's were
video poker and amusement devices that were owned and
operated by ARS.
La.App. 5 Cir. 4] Prior to the fire, Flappery entered into
negotiations with Starke for the sale of Mulligan's.
According to their agreement, Starke took over management of
the business while it waited for its video poker and alcohol
licenses. Starke began managing the business on April 1,
2006. Also on April 1, 2006, Starke purchased a Manitowoc
Series 600 ice machine, which was installed by Olivier's
Air Conditioning and Heating.
early morning hours of April 29, 2006, a fire started in the
Manitowoc ice maker, causing damages and necessitating
closing of the business while repairs were made. After the
fire, and during the repairs process, Flappery and Starke
re-negotiated the sale of Mulligan's. Starke ultimately
assumed ownership and Mulligan's reopened in January of
2007. The business closed one year later.
and ARS filed this suit for lost revenue and damages incurred
from the date of the fire until Mulligan's reopening in
January of 2007. After trial on the merits, the court found
that the ice maker was defective and that Manitowoc was
liable for the damages caused by the fire. Manitowoc appeals.
appeal, Manitowoc assigns the following as error:
trial court erred in applying res ipsa loquitur to
find a manufacturing defect in the Manitowac ice machine
because under Louisiana law:
a) Plaintiffs cannot take advantage of a presumption of
defect because direct evidence was spoliated by
Plaintiffs' expert before it was examined.
b) The evidence did not sufficiently eliminate other causes
of the fire.
trial court erred in finding a manufacturing defect in the
machine because Plaintiffs did not present evidence to
establish that the product deviated from Manitowoc's
specifications or performance standards as required by La.
Rev. Stat. 9:2800.55.
trial court erred in awarding video poker revenue (as opposed
to lost profits) to Plaintiffs without taking the expenses
necessary to generate the revenue into account.
La.App. 5 Cir. 5] 4. The trial court erred in awarding rental
payments which Plaintiffs had no legal obligation to pay.
trial court erred in awarding undocumented building repair
expenses which were voluntarily made.
trial court erred in awarding Starke damages for property (a)
Starke did not own at the time of the fire, and (b) for which
Starke had previously received reimbursement.
trial court erred in denying the motion for sanctions because
of Plaintiffs' repeated violation of the Court's
discovery Orders and testimony at trial established that
prior representations regarding the non-existence of
responsive documents were patently false.
bifurcated trial was held with both the issues of liability
and damages presented to the judge. After the conclusion of
the hearing on liability, the trial court found that
plaintiffs had borne their burden of proof.
prove causation, plaintiff Starke presented the testimony of
George Hero, who was qualified as an expert in electrical
engineering and fire origin and causes. Mr. Hero was
originally hired by Caitlin Insurance, Mulligan's
insurance carrier. Defendant Manitowoc presented the
testimony of Robert Russell, who qualified as an expert in
origins and causes of fire.
stated previously, Starke took over management of
Mulligan's on April 1, 2006. On that day, Starke had a
brand new Manitowoc ice machine installed. The fire occurred
in the early morning hours of April 29, 2006, when the bar
was closed. At the end of a long bar, there was an alcove, or
a little storage room, that [14-93 La.App. 5 Cir. 6]
contained the ice machine and some miscellaneous storage.
With the exception of the alcove, the majority of the damage
to the premises was caused by heat and smoke, not fire. On
first inspection, it was obvious that the source of the heat
was around the ice machine. There was no evidence that the
floor of the premises had caught fire.
Hero testified that he started his investigation by
photographing the unit in place. He then called Mr. Olivier,
of Olivier's Air Conditioning, Heating and Refrigeration,
and they removed the unit from the alcove. They discovered
that, based on the pattern of the fire, the origin had to be
within the machine. At that point, they ceased examining the
machine and called for a Manitowoc representative. Further
examination of the premises showed that
the building wire was not damaged, and the junction box
coming out of the wall was not damaged. The aluminum coil
attached to the ice machine was damaged only on the inside of
the unit, and not on the backside toward the wall, showing
that the heat was within the unit. The pattern of the fire
indicated ignition within the ice maker and no defects or
source of ignition was found anywhere else in the building.
Mr. Hero was joined by Robert Russell from Manitowoc, and Mr.
Hero conducted a second inspection of the unit. During that
inspection, he removed the ice maker from the ice bin, and
wrapped the ice maker in plastic so that it could be stored
for a second, more detailed inspection. Mr. Hero again
concluded that the source of the ignition was within the ice
Hero conducted a third inspection in which the unit was
completely dismantled and every piece was inspected. By
agreement of all present, including Mr. Russell, the pieces
were not separately bagged; instead they were dumped in the
ice bin. Mr. Hero testified that after this last inspection
was concluded, there [14-93 La.App. 5 Cir. 7] was nothing
left of the ice maker except torn apart scraps, which could
not be reassembled. He stored these scraps for a while, and
then threw them away.
third inspection revealed that the condenser and evaporator
fan motors were badly burned. The compressor motor had an
internal short, but was not grounded. The case of the ice
maker was in good shape and there was no evidence of
overheating. The external connectors were proper. The end of
the control wire had " a melt," which indicated
that the fire reached 2,000 degrees. The pattern of the fire
indicated that it started within the machine, and ignited the
shelving and combustibles stored above the machine. Mr. Hero
testified that he saw no evidence of improper installation.
This inspection confirmed Mr. Hero's original conclusion
that the origin of the fire was within the ice machine from
an internal defect within the machine, and not from the
external connections or any internal source other than the
Hero testified at trial that he found no evidence to suggest
that the fire originated anywhere else but inside the
machine. He also found no evidence to suggest an improper
installation of the machine, including no evidence of arcing.
His final opinion was that an internal short was the source
of the ignition of the fire. He testified that it was mainly
the controls and pressure switches in the ice maker that were
destroyed. Mr. Hero stated that he did not think the fire
started in the compression motor.
Russell, who was also present at this last, destructive
inspection, testified at trial that he saw no evidence of an
internal defect with any of the manufactured components
within the ice machine. He also stated that he believed that
whoever installed the machine did not do a " good"
job. His opinion was that there were loose electrical
connections, where there were exposed strands of wire [14-93
La.App. 5 Cir. 8] at the wire nut, which somehow started the
fire. He further testified that if the improper installation
did not start the fire, then the cause was undetermined.
Muller, staff engineer at Manitowoc, testified that each ice
machine was functionally tested after assembly. He stated
that if there was an electrical fault within the machine, he
would expect it to show up during this quality control
process. He further testified that there was a fail-safe
within the machine that would shut down the system if there
was a short. In order for a fire to occur, there would have
to be simultaneous failures of systems within the machine.
Mr. Muller admitted
that he did not examine the particular machine at issue prior
well-settled that a reviewing court may not disturb the
factual findings of the trier of fact in the absence of
manifest error. Arabie v. CITGO Petroleum Corp.,
10-2605 (La. 03/13/12), 89 So.3d 307, 312; Rosell v.
ESCO, 549 So.2d 840, 844 (La. 1989); Arceneaux v.
Domingue, 365 So.2d 1330, 1333 (La. 1979). In Arceneaux,
the Louisiana Supreme Court set forth a two-part test for the
appellate review of facts: (1) the appellate court must find
from the record that there is a reasonable factual basis for
the finding of the trial court, and (2) the appellate court
must further determine that the record establishes the
finding is not clearly wrong or manifestly erroneous.
Arceneaux, 365 So.2d at 1333; Arabie, 89
So.3d at 312. If the trial court's findings are
reasonable and not clearly wrong in light of the record
reviewed in its entirety, the appellate court may not
reverse. Arabie, 89 So.3d at 312; Sistler v.
Liberty Mutual Ins. Co., 558 So.2d 1106, 1112 (La.
1990). Consequently, when there are two permissible views of
the evidence, the fact finder's choice between them
cannot be manifestly erroneous. Arabie, 89 So.3d
312; Stobart v. State, Through Department of
Transportation and Development, 617 So.2d 880, 883 (La.
La.App. 5 Cir. 9] Here, the trial court first made a factual
finding, based on the evidence presented, that the fire
started within the ice maker and not at the installation
juncture. We find no manifest error in this determination.
found that the fire started within the machine, the court
then applied the doctrine of res ipsa loquitur. The
doctrine of res ipsa loquitur is a rule of
circumstantial evidence that creates an inference of
negligence on the part of the defendant when the facts of the
case indicate that the negligence of the defendant is the
probable cause of the accident and there is an absence of
other equally probable explanations offered by credible
witnesses. Montgomery v. Opelousas Gen. Hosp., 540
So.2d 312, 319 (La. 1989). " The doctrine allows an
inference of negligence to arise from the common experience
of the factfinder that such accidents normally do not occur
in the absence of negligence." Id. The
Louisiana Supreme Court held that res ipsa loquitur
applies in cases involving circumstantial evidence, rather
than direct evidence, provided the plaintiff establishes the
following foundation of facts: (1) the injury is of the kind
which does not ordinarily occur in the absence of negligence;
(2) the evidence sufficiently eliminates other possible
causes of the injury, such as the plaintiff's own
responsibility or the responsibility of others; and (3) the
alleged negligence of the defendant must fall within the
scope of his duty to the plaintiff, which will often be the
case if the defendant had exclusive control of the thing or
situation that caused the injury to the plaintiff.
Linnear v. CenterPoint Energy Entex/Reliant Energy,
06-3030 (La. 9/5/07), 966 So.2d 36, 45. See also Spott v.
Otis Elevator Co., 601 So.2d 1355, 1362 (La. 1992).
doctrine of res ipsa loquitur is circumstantial
evidence, not substantive law. State Farm Mut. Auto. Ins.
Co. v. Wrap-On Co., 626 So.2d 874, 876-877 (La.App. 3
Cir. 1993), writ denied, 93-2988 (La. 1/28/94), 630 So.2d
800, citing Cangelosi v. Our Lady of Lake Regional
Medical Center, 564 So.2d 654 (La. [14-93 La.App. 5 Cir.
10] 1989). Circumstantial evidence is evidence of fact, from
which the fact sought to be proven may be inferred.
Id. In other words, circumstantial evidence is
evidence which tends to prove or disprove a fact, and from
that fact one may logically conclude that the fact sought to
be proven exists.
All that is meant by res ipsa loquitur is 'that the
circumstances involved in or connected with an accident are
of such an unusual character as to justify, in the absence of
other evidence bearing on the subject, the inference that the
accident was due to the negligence of the one having control
of the thing which caused the injury. This inference is not
drawn merely because the thing speaks for itself, but because
all of the circumstances surrounding the accident are of such
a character that, unless an explanation can be given, the
only fair and reasonable conclusion is that the accident was
due to some omission of the defendant's duty.'
Wrap-On Co., supra at 876-877, citing Larkin v.
State Farm Mutual Automobile Insurance Co., 233 La. 544,
97 So.2d 389, 391 (La. 1957).
Court has previously said that that the doctrine of res
ipsa loquitur applies when:
(1) the accident would not normally occur in the absence of
negligence, (2) there is an absence of direct evidence to
explain the activities leading to the injury, and (3) the
accident or injury was caused by an agency on instrumentality
within the actual or constructive control of the defendant.
Thus, the plaintiff must show that the injury would not
normally occur in the absence of negligence. Id. As
long as the fact-finder can " reasonably conclude that
plaintiff's injuries were, more probably than not, caused
by defendant's negligence under the particular facts of a
case, the doctrine of res ipsa loquitur applies."
Id. (citations omitted).
Powell v. Chabanais Concrete Pumping, Inc., 11-408
(La.App. 5 Cir. 12/28/11), 82 So.3d 548, 557; Ullrich v.
Jefferson Parish Hospital Service District No. 2,
03-0958 (La.App. 5 Cir. 1/27/04), 867 So.2d 7, 12.
doctrine of res ipsa loquitur has been applied to
products liability cases. See Weber v. Fidelity &
Casualty Insurance Company of New York, 250 So.2d 754,
259 La. 599 (La. 1971); [14-93 La.App. 5 Cir. 11] Guidry
v. Louisville Tin & Stove Co., Inc., 613 So.2d 1114
(La.App. 5 Cir. 1993).
case, once the trial court made the factual finding that the
fire originated within the ice maker, and was not the cause
of faulty installation, it then needed to determine what
caused the fire. The trial court did not err in determining
that, having found the fire started within the ice maker, the
only fair and reasonable conclusion was that there was a
defect within the ice maker that caused the fire.
next argues that Starke cannot take advantage of a
presumption of defect because the direct evidence was
spoliated by plaintiffs' expert before it was examined.
theory of " spoliation of evidence" refers to an
intentional destruction of evidence for the purpose of
depriving opposing parties of its use. The tort of spoliation
of evidence has its roots in the evidentiary doctrine of
" adverse presumption," which allows a jury
instruction for the presumption that the destroyed evidence
contained information detrimental to the party who destroyed
the evidence unless such destruction is adequately explained.
Desselle v. Jefferson Parish Hosp. Dist. No. 2,
04-455 (La.App. 5 Cir. 10/12/04), 887 So.2d 524, 534.
However, the presumption of spoliation is not applicable when
the failure to produce the evidence has a reasonable
explanation. Allen v. Blanchard, 99-0277 (La.App. 1
Cir. 03/31/00), 763 So.2d 704, 710.
Hero testified that he was hired by Caitlin Insurance,
insurer for then owner
Flappery. He conducted several inspections of the ice
machine. The first inspection was cursory, at which time he
called for a representative of Manitowac to be present.
Ronald Russell, Manitowoc's expert, was present during
the second inspection and also during the third inspection,
when the ice maker was dismantled and analyzed in detail. All
parties had an opportunity to inspect each piece at that
[14-93 La.App. 5 Cir. 12] time. As each piece of the unit was
analyzed, it was placed into the ice bin of the unit. No one
present at the inspection, including Mr. Russell, requested
that any piece be preserved. Mr. Hero stated that he retained
the pieces for a period of time after the inspection and
disposed of them only after his client, Caitlin, had settled
its portion of the case. At the time of disposal, the pieces
left had no probative value and there was no way the unit
could have been reassembled. We find that the failure to
produce the evidence had a reasonable explanation and
therefore the theory of spoliation is not applicable in this
defendants argue that the evidence did not sufficiently
eliminate other causes of the fire. They further contend that
the trial court erred in finding that a manufacturing defect
existed because plaintiff did not present evidence to show
that the product deviated from Manitowoc's specifications
or performance standards as required by La. R.S. 9:2800.55.
R.S. 9:2800.51 et seq. establishes the exclusive
theories of liability for manufacturers for damage caused by
their products. La. R.S. 9:2800.52. A manufacturer is liable
for damages proximately caused by an unreasonably dangerous
product when the damages arose from a reasonably anticipated
use of the product. La. R.S. 9:2800.54(A). A product may be
deemed unreasonably dangerous due to its composition or
construction, its design, the manufacturer's failure to
provide an adequate warning, or the product's failure to
conform to an express manufacturer's warranty. La. R.S.
9:2800.54(B). The plaintiff bears the burden of proving the
alleged defect. La. R.S. 9:2800.54(D). In order to prove a
product is unreasonably dangerous in construction or
composition, it must be shown that at the time the product
left the manufacturer's control, it deviated in a
material way from the manufacturer's specifications or
performance standards for the product, or if the product
deviated from otherwise identical products made by [14-93
La.App. 5 Cir. 13] the same manufacturer. La. R.S. 9:2800.55.
Hanover Am. Ins. Co. v. Trippe Mfg. Co., 37,060
(La.App. 2 Cir. 04/09/03), 843 So.2d 571, 575. La. R.S.
9:2800.55 provides that " A product is unreasonably
dangerous in construction or composition if, at the time the
product left its manufacturer's control, the product
deviated in a material way from the manufacturer's
specifications or performance standards for the product or
from otherwise identical products manufactured by the same
established that the ice maker was new, and that the fire
occurred less than one month after installation. Therefore,
the trial court, having found that the origin of the fire was
within the ice maker, did not err in finding that the ice
maker was defective.
Manitowoc's first two assignments of error to be without
the trial court ruled on the issue of liability, the second
phase of the trial concerning the amount of damages suffered
was conducted. The trial court rendered judgment awarding
damages as follows:
Loss of video poker revenue
Loss of coin machine revenue
TOTAL FOR T.L. STARKE, INC.
ALGIERS ROY & SONS MUSIC, INC.
Loss of video poker revenue
Loss of coin machine revenue
Damages to machines
TOTAL FOR ALGIERS
ROY & SONS MUSIC, INC.
La.App. 5 Cir. 14] Relevant to Manitowoc's assignments of
error challenging the award of damages is the agreement
entered into between Flappery and Starke, and Starke's
subsequent lease agreement with Esplanade.
and exhibits at trial established that, at the time of the
fire, Flappery was the owner of Mulligan's, and leased
the space from Esplanade. Starke's president and manager,
Albert Temes, testified that Starke was formed for the
purpose of buying a business, and Mulligan's became
available. The members of Starke were interested in
Mulligan's because of the video poker revenue, which was
about $3,000.00 per week. Temes stated that he did not
examine Flappery's books and was not interested in the
bar sales. He knew the business would be profitable because
of the video poker revenue.
original purchase price was $165,000.00. Starke entered into
a management agreement with the intent of going to Act of
Sale within 30-45 days. However, because of the length of
time required to obtain video poker and liquor licenses, the
agreement provided that Starke would take over management of
Mulligan's for the period of time needed to obtain those
began managing the bar on April 1, 2006, at which time its
contents were still owned by Flappery. Temes testified that
Starke immediately made several improvements: it purchased
the ice machine and several TVs, it installed a new stereo
system, it cleaned and painted the interior, and did some
redecorating. The fire occurred on April 29, 2006, four weeks
later. As a result, the purchase agreement became null on May
to Mulligan's were performed by Starke, and the process
took about 35 weeks. Mulligan's reopened on January 2,
November 10, 2006, prior to the reopening of Mulligan's,
Starke entered into a second purchase agreement with
Flappery, contingent on Starke's ability to [14-93
La.App. 5 Cir. 15] obtain a lease from Esplanade, which
Starke was able to obtain after agreeing to pay Esplanade for
lost rents while the building was under repair. The purchase
agreement also provided an assignment of insurance proceeds
from Flappery to Starke.
actual asset sale between Flappery and Starke occurred on
February 12, 2007, for the same price of $165,000.00 that was
set before the fire.
Mulligan's reopened, it never returned to its pre-fire
video poker revenues. Starke sold the business in 2008, and
the purchasers took over management on February 1, 2008.
Manitowoc first argues that the trial court erred in its
award for video poker revenue and coin machine revenue
without taking into account the losses incurred by operating
the bar itself.
act whatever of man that causes damage to another obliges him
by whose fault it happened to repair it. La. C.C. art. 2315.
Damages are measured by the loss sustained by the obligee and
the profit of which he has been deprived. La. C.C. art. 1995.
In general, lost profits are calculated by deducting the
expenses that would have been incurred from the gross
revenues that would have been derived from the contract.
First Alarm Fire Equip., Inc. v. Southland Int'l of
La., Inc., 47,823 (La.App. 2 Cir. 05/08/13), 114 So.3d
stated that, from December 22, 2005 until the date of the
fire, Mulligan's had a profitable video poker business
that averaged $2,937.85 per week after expenses. Starke and
ARS split the revenues 55/45 percent respectively, giving
Starke a weekly revenue of $1,615.82 and ARS a weekly revenue
of $1,322.63. According to ARS, these figures included
deducting for expenses, contrary to Manitowoc's
assertions. In addition, Mulligan's had a music box and a
countertop game, with revenue of about $130.00 per week,
which Starke and ARS [14-93 La.App. 5 Cir. 16] split equally.
Mulligan's was closed after the fire for 35 weeks and
three days. Accordingly, for the time period that
Mulligan's was closed, Starke lost video poker profits of
$57,248.50 and ARS lost video poker profits of $46,839.52. In
addition, each lost coin revenue of $2,294.50.
record, Starke waived its claim for alleged bar income. As a
result, the trial court allowed questioning to issues related
specifically to video poker losses, and not to other income
the bar may have enjoyed. Manitowoc proffered exhibits and
testimony from Charles Theriot, CPA, who was qualified as an
expert in forensic accounting and evaluation of lost profits.
Mr. Theriot stated that in order to derive income from video
poker machines, they had to be placed in a business
establishment, whether it was a bar, restaurant, hotel,
off-track betting establishment or video poker truck stop.
Thus, in order for Starke to operate video poker, it had to
also operate Mulligan's. Mr. Theriot concluded that
Mulligan's would have operated at a $44,000.00 loss had
it been open during the time period of the repairs.
assignment of error regarding lost income, Manitowoc argues
that the trial court erred in excluding this testimony, and
in failing to deduct Mulligan's net loss from the video
poker revenue for the purpose of calculating damages. We
agree. We find that the trial court erred in failing to allow
Mr. Theriot's proffered testimony concerning
Mulligan's business losses. Despite Starke's waiver
of its claim for the loss of Mulligan's "
profits," Mulligan's actually operated at a loss,
excluding video poker revenues. Revenue from video poker made
Mulligan's profitable, and the net losses due to the
operational expenses of Mulligan's were relevant and
necessary to determine the net profit of the business. Had
Mulligan's remained open during the time in question,
Mulligan's and Starke would have continued to incur
operating expenses. Revenues from video poker would have
[14-93 La.App. 5 Cir. 17] been offset by those expenses (or
losses attributable to operation of the bar) to determine the
profits gained during that time period.
Louisiana R.S. 27:413 requires, and Mr. Theriot testified
that, in order to be licensed to receive and operate video
draw poker devices, a licensee must operate one of four types
of establishments: bar, restaurant, off-track betting, or
truck stop. Without the alcoholic beverage and
food operation of Mulligan's, and Mulligan's
conforming premises, the owner/operator of Mulligan's
could not be licensed to receive and operate video draw poker
devices, and plaintiffs could not receive video poker
revenue. Video poker was an indivisible part of
Mulligan's in both practical and legal senses. Therefore,
the expenses incurred by Mulligan's as the business
establishment were indispensable to realizing video poker
therefore find that the trial court erred in failing to
consider what would have been Mulligan's expenses and net
loss during the time period in question. We further find that
the trial court committed manifest error in its award of
video poker revenue to Starke, without deducting the expenses
it would necessarily have incurred in order to realize those
trial court awarded Starke lost video poker revenue of
$57,298.50. Subtracting the $44,000.00 lost by the business
at that time, we find that Starke lost income is in the
amount of $13,298.50, and we amend the judgment of the trial
court accordingly. We affirm the damage award to Starke of
$2,294.50 for loss of coin machine revenue.
ARS's award of video poker revenue and lost coin machine
revenue, Roy K. Saia, president and owner of ARS, testified
that ARS's expenses were fixed, and encompassed multiple
locations. Fixed costs are not to be deducted from gross
revenues in determining an award for lost profits.
Rosbottom v. Office Lounge, 94-894 (La.App. 3 Cir.
04/05/95), 654 So.2d 377, 379 [14-93 La.App. 5 Cir. 18]. We
find no error in the trial court's award of loss of video
poker revenue and loss of coin machine revenue to ARS.
Manitowoc argues that the trial court erred in awarding
damages for rental payments that Starke and ARS were not
required to pay. Manitowoc argues that at the time of the
fire, Starke did not have a lease with either Flappery or
Esplanade and was not paying rent to either entity. Starke
and ARS agreed to pay $11,375.00 to cover Esplanade's
lost rents while repairs were being made, with Starke paying
$7,583.00 (2/3) and ARS paying $3,792.00(1/3). Esplanade
required this agreement as a condition of the lease Starke
entered into to reopen Mulligan's after the fire.
Manitowoc also argues that the trial court erred in awarding
building repair expenses, contending that Starke had no legal
obligation to pay these expenses, and further that Starke did
not present sufficient evidence to support these awards.
first contends that plaintiffs are not entitled to damages
for either the lease payments or for building repair expenses
because Starke breached its duty to mitigate damages.
Manitowoc argues that, after the fire, Starke could have
simply walked away from the sale, in which case it would not
have suffered the damages incurred by continuing with its
plans to purchase Mulligan's.
C.C. art. 2002 provides that " An obligee must make
reasonable efforts to mitigate the damage caused by the
obligor's failure to perform. When an obligee fails to
make these efforts, the obligor may demand that the damages
be accordingly reduced." The standard by which an
obligee's actions are judged is that of a reasonable
man under like circumstances. Dixie Sav. & Loan Asso. v.
Bonura, 549 So.2d 424, 426, (La.App. 5 Cir. 1989).
[14-93 La.App. 5 Cir. 19] " This Article adjusts the
conflict of interests that would otherwise exist when an
obligee neglects to mitigate his damages and thereby exposes
the obligor to further liability for consequences resulting
from the obligor's failure to perform that were
reasonably avoidable by the obligee." Elliott v.
Normand, 07-569 (La.App. 5 Cir. 01/22/08), 976 So.2d
case, Starke elected to go through with the purchase after
the fire and after rights to insurance proceeds had been
assigned to it. Unfortunately, what should have been a
three-month repair time, as judged by the landowner's
insurer, stretched to approximately eight months through no
fault of Starke. By the actual time of the sale, Starke had
already made a substantial investment. We find that a
reasonable man under like circumstances could have made the
same decision to continue with the purchase. We therefore
find that the duty to mitigate was not breached in this case.
also contends that the trial court erred in awarding lease
payments that Starke was not legally obligated to make.
However, Starke was obligated to pay the rents if it wanted
to obtain a lease with Esplanade in order to re-open
Mulligan's. Accordingly, the trial court did not err in
awarding damages for these rental payments.
next contends that the trial court erred in awarding damages
for building repairs that were not substantiated at trial.
However, at trial Temes testified as to payments he made for
repairs made that were not reimbursed by insurance proceeds,
as well as the $5,000.00 deductible that Esplanade was not
willing to pay for the repairs. In addition, he presented
receipts for those repairs. The trial court's finding
that Temes made these payments was not manifestly erroneous.
La.App. 5 Cir. 20] In its next assignment of error directed
toward the amount of damages awarded, Manitowoc contends that
the trial court erred in awarding Starke contents replacement
of $24,053.82 for damages for property (a) Starke did not own
at the time of the fire, and (b) for which Starke had
previously received reimbursement.
first argument contends that because the purchase had not
been completed at the time of the fire, Starke did not own
the items in Mulligan's and therefore should not be
compensated for his costs in replacing these articles. Starke
assumed all of the rights and liabilities of Flappery, and
therefore was entitled to receive compensation that Flappery
would have incurred in replacing those articles.
next argues that the trial court erred because it failed to
find that Starke had previously received reimbursement for
this damages property. At trial, Temes presented evidence to
show that contents loss totaled $71,162.82 and that
Flappery's insurer paid $47,109.00. Manitowoc offered no
evidence to controvert these claims. Accordingly, we see no
manifest error in the trial court's ruling awarding to
Starke $24,053.82 for contents replacement.
last assignment of error, Manitowoc alleges that the trial
court erred in denying its motion for sanctions based on what
it contends were ARS's failure to comply with discovery
orders. The trial court has much discretion in imposing
sanctions for failure to comply with discovery orders, and
its ruling should not be reversed absent an abuse of
discretion. Gauthier v. Harmony Constr., LLC, 13-269
(La.App. 5 Cir. 10/09/13), 128 So.3d 314.
Here, we find no abuse of the trial court's discretion in
imposing no sanctions.
La.App. 5 Cir. 21] CONCLUSION
the foregoing, we amend the trial court's judgment to
reduce the award to plaintiff T.L. Starke, Inc. for the loss
of video poker revenue from $57,298.50 to $13,298.50, and as
amended, affirm. We further affirm the ruling of the trial
court denying Manitowoc's motion for sanctions. Each
party is to bear its own costs.
AND AS AMENDED, AFFIRMED; DENIAL OF MOTION FOR SANCTIONS
Initially, suit was filed by Albert Temes,
Jr., Stephen C. Juan, Raymond Olivier, Jr., Dorman Todd
Davidson, and Edward J. Brantley, Jr., individually and on
behalf of T.L. Starke, Inc. The individual plaintiffs were
dismissed from the suit by the grant of an exception of no
right of action filed by Manitowoc.
A separate suit was filed by Esplanade
Plaza against Manitowoc and also against Olivier's Air
Conditioning and Heating. Flappery and its insurer Caitlin
Insurance Company intervened in that suit. The claims were
settled and Esplanade Plaza's suit was dismissed on
January 7, 2010. Flappery's intervention was dismissed on
April 27, 2010.
The trial court, in oral reasons for
judgment, said that:
I do believe that the doctrine of res ipsa
does apply, and I believe that the plaintiffs have borne
their burden of proving liability here.
I am impressed by the fact that there is no arcing
or evidence of the wires melting at the point that the
defendants allege that the fire began.
Also, I think that it is certainly reasonable, we
all know that the wire nut's plastic covering would
have at least come down and covered some of that exposed
wire that we're looking at. And I'm not convinced
that the positioning of that wire wouldn't have been
different prior to the fire, and that a fire that's of
the intensity that this obviously was could not have
affected the location of those wires.
Esplanade's insurer compensated
Esplanade for three months' rent following the fire,
representing the amount of time that it believed
repairs could have been accomplished. Temes testified that
repairs took longer because the fire occurred shortly after
Hurricane Katrina caused massive damage to the area, limiting
the availability of contractors and supplies.