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Johnson v. Orleans Parish School Board

Court of Appeals of Louisiana, Fourth Circuit

April 26, 2017

JOHN JOHNSON, INDIVIDUALLY AND AS REPRESENTATIVE OF THE CLASS OF THOSE SIMILARLY SITUATED
v.
ORLEANS PARISH SCHOOL BOARD, XYZ INSURANCE COMPANY, CITY OF NEW ORLEANS, AND ABC INSURANCE COMPANY

         APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 1993-14333 C/W 94-05446 C/W 94-12996 C/W 95-13271, DIVISION "A", Honorable Tiffany G. Chase, Judge.

         Linda S. Harang Law Offices of Warren A. Forstall, Jr., P.L.C. AND Suzette Peychaud Bagneris THE BAGNERIS FIRM, L.L.C. AND Stephen B. Murray, Sr. MURRAY LAW FIRM AND George J.G. Roux AND Joseph Michael Bruno BRUNO & BRUNO, COUNSEL FOR PLAINTIFFS/APPELLEES, FLIGHT I PLAINTIFFS.

          Roy J. Rodney, Jr. John K. Etter RODNEY & ETTER, LLC., COUNSEL FOR DEFENDANT/APPELLANT, HOUSING AUTHORITY OF NEW ORLEANS.

          Adam J. Swensek Chief Deputy City Attorney Rebecca H. Dietz City Attorney, COUNSEL FOR DEFENDANT/APPELLANT, CITY OF NEW ORLEANS.

          Court composed of Judge Terri F. Love, Judge Sandra Cabrina Jenkins, Judge Marion F. Edwards, Pro Tempore [1]

          TERRI F. LOVE JUDGE.

         This appeal arises from class action litigation regarding damages suffered by plaintiffs buying property, living, or working on or near a former landfill. Having previously adjudicated the class certification and common issues of liability against the housing authority and the City of New Orleans, the trial court began assessing damages to the first flight of non-class representative plaintiffs. The trial court assessed the plaintiffs' emotional distress damages and awards for diminution in property values. The housing authority and the City of New Orleans appealed the trial court's judgment contending that the claims were prescribed, awards were improperly calculated, and that workers' compensation barred some plaintiffs' recovery.

         We find that numerous assignments of error raised on appeal are barred by the doctrine of res judicata. Further, the plaintiffs' claims were not prescribed, as the suit was filed within one year of the discovery of the contamination. The exclusive remedy of worker's compensation was untimely raised and does not apply. The plaintiffs proved they suffered from emotional distress, and the trial court did not abuse its discretion in making those awards. The trial court did not commit manifest error by calculating the diminution in property values based on a combination of the expert testimony presented. The defendants were not entitled to an offset for payments received by the plaintiffs after Hurricane Katrina because the payments were not duplicative. Accordingly, the judgment of the trial court is affirmed.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         Plaintiffs' complaints arose from working, renting, or owning a home on or adjacent to the Agriculture Street Landfill ("ASL"). Plaintiffs were exposed to toxic materials after the U.S. Department of Housing and Urban Development ("HUD") approved the development of public and private housing, elderly housing, and businesses on and near a site that the City of New Orleans ("City") previously leased and utilized as the ASL. Plaintiffs are the first flight of plaintiffs to proceed to trial regarding their emotional distress and property damages claims since the initial liability trial. We previously summarized the facts as follows:

From the early 1900's until approximately 1958, the City of New Orleans (City) leased more than one hundred acres of land in the City's ninth ward for the operation of a municipal landfill and garbage dump. The site, known as the Agriculture Street Landfill (ASL), was bordered by Almonaster Boulevard on the west, Higgins Boulevard on the north, Louisa Street on the east, and the Peoples Avenue Canal and railroad tracks on the south. In 1965, the City reopened the ASL site for the disposal of massive quantities of debris created by Hurricane Betsy.
In 1967, the City and the Housing Authority of New Orleans (HANO) entered into a cooperative agreement for the development of residential properties in the Desire area of the City. Between 1969 and 1971, Drexel Development Corporation constructed the Press Park town homes and apartments for HANO. No remediation or special site preparation was done before Press Park was constructed. In 1971, HANO purchased the completed Press Park project from Drexel and has owned and operated the site since that time. Some Press Park tenants participated in a "turn key" program, whereby a portion of their monthly rent was placed in an escrow account and applied toward the purchase of their town home unit. When their escrow account reached the amount needed for purchase of the unit, HANO transferred title of the unit to the tenant. HANO never advised any of the prospective Press Park tenants or home buyers that the site had once been a part of the City's landfill.
In the late 1970s, the City performed soil testing in the Gordon Plaza area of the ASL neighborhood, in anticipation of the construction of the Gordon Plaza single-family homes. As a result of the soil testing, the City required the developers of Gordon Plaza to add topsoil before constructing the homes. In 1980, sixty-seven family homes comprising Gordon Plaza were built. The Gordon Plaza home buyers were not told that their homes were located on what had once been a part of the City's landfill.
In 1975, the Orleans Parish School Board (School Board) purchased a tract of land along Abundance Street in the ASL neighborhood, with the intent to build an elementary school. In 1984, the School Board began plans for construction of Moton Elementary School on the site. Because the School Board knew when it purchased the property that the site had once been a part of the City's landfill, the School Board hired engineering firms to conduct an environmental evaluation of the property. Environmental testing on the site identified the presence of numerous toxic and hazardous materials, including lead, arsenic, mercury, and polycyclic aromatic hydrocarbons. Because of the presence of the toxic and hazardous materials, the School Board hired several environmental consultants to advise them on how the site could be remediated to eliminate the danger of harmful exposures created by the presence of hazardous materials. The environmental consultants recommended that the entire site be excavated to a depth of three feet, with the top three feet of contaminated soil removed and replaced with two feet of clean topsoil. Between the clean topsoil and the hazardous materials, the consultants recommended that a layer of six inches to one foot of impermeable clay be placed over the entire site. In 1986-87, Moton Elementary School opened for kindergarten through sixth grade with an enrollment of approximately nine hundred students. The School Board did not tell its employees or the parents of the students that the school had been built on a part of the City's former landfill or that environmental testing had identified the presence of toxic materials on the site. During the 1991-92 school-year, there were plumbing problems at Moton Elementary which required under-slab construction and repairs. This necessitated the construction of a trench and the breach of the three-foot layer of clean topsoil.
The Environmental Protection Agency (EPA) tested the soil in parts of the ASL neighborhood in 1986 to determine whether the ASL site was contaminated. The residents were not given the results of the EPA's 1986 soil tests nor were they told that their property was contaminated or given any special instructions to follow or precautions to take to protect themselves from exposures to the soil. Between 1985 and 1986, the Louisiana Department of Health and the Agency for Toxic Substance Disease Registry (ATSDR) conducted a public health screening of children in the ASL neighborhood to determine whether there was an increased incidence of elevated blood lead levels. The residents were never told that their children had been exposed to excess levels of lead, nor were they given any special instructions or precautions to follow to protect their children from exposures to the soil.
In 1993, the EPA came back to the ASL site and conducted more soil tests throughout the neighborhood. The tests indicated that the soil was contaminated with more than one hundred forty toxic and hazardous materials, more than forty of which are known to cause cancer in humans. The EPA told the ASL residents to take special precautions to protect themselves from any exposure to the soil. In 1994, the EPA placed a portion of the ASL neighborhood on the National Priorities List and later that same year it declared that the ASL site was sufficiently contaminated to be named a Superfund site. Later that same year, the School Board closed the Moton Elementary School campus and the ASL residents formed the Concerned Citizens of the Agriculture Street Landfill, Inc. to qualify for federal grant funding to pay for the services of an environmental technical advisor.
In the mid-1990s, the EPA proposed a remediation plan for the ASL site that would remove and replace the top two feet of soil, where possible, with a semipermeable barrier between the clean topsoil and the contaminated soil. The soil under buildings and the streets would not be disturbed. The ASL residents opposed the EPA's plan as being inadequate to remediate the site. The ASL residents supported an alternative voluntary relocation/buy-out plan. The EPA rejected the requests of the ASL residents and from 2000-2001, the EPA financed a $20, 000, 000.00 remediation project. In the remediation process, approximately two feet of soil was removed from around houses and buildings where possible. Due to underground utilities, water lines, etc., only one foot of soil was removed in some areas. After the EPA completed the remediation work, the ASL residents were given a certificate of completion confirming that their property had been partially remediated. The EPA also gave the ASL residents a list of permanent restrictions on the use of their property and advised the ASL residents that they were responsible for maintaining the integrity of the clean layer of topsoil and the felt-like material that comprises the semi-permeable barrier between the clean layer of topsoil and the ground below.
Not satisfied with the steps taken to correct the problems with the ASL neighborhood, a number of the residents proceeded with a class action lawsuit. The named defendants in the action include the City, HANO, the School Board, and HANO's insurers, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, U.S. Fire Insurance Company, Republic Insurance Company, and South American Insurance Company/Louisiana Insurance Guaranty Association. The plaintiff class has previously been defined as follows: 1) current and former residents who have lived on the site of the former landfill, as defined as the area bounded on the north by Higgins Blvd., on the east by Louisa Street, on the south by Florida Avenue and on the west by Almonaster Avenue and the Peoples Avenue Canal, for at least twelve months prior to February 1, 1994; 2) current and former business owners and their employees who have operated a business on the former landfill site, as described above, for at least twelve months prior to February 1, 1994; 3) current residents who are the owners of record of their homes, or who are buying their homes but have not yet completed their payments; and 4) former students and employees of Moton Elementary School who attended or worked at the school on the site of the former landfill for at least twelve months or one school year prior to February 1, 1994.

Johnson v. Orleans Par. Sch. Bd., 06-1223, pp. 1-6 (La.App. 4 Cir. 1/30/08), 975 So.2d 698, 703-05 ("Johnson VI ").[2]

         The trial court conducted a common issues and liability trial that also adjudicated the nine class representatives' damages claims. "The trial court found the City (50%), HANO (50%) and their insurers liable jointly and in solido to the members of the first three sub-classes." Johnson VI, 06-1223, p. 6, 975 So.2d at 705. "The trial court found that the city was negligent in its actions and inactions that resulted in the conversion of its own former municipal landfill into a residential area that the EPA deemed unreasonably dangerous in 1994." Id., 06-1223, pp. 7-8, 975 So.2d at 706. "This finding was based on Civil Code Article 2315 as it existed prior to 1980." Id. "HANO was found negligent under Civil Code Article 2317 as it existed prior to 1980." Id.

         On appeal, we reduced the trial court's awards for emotional distress damages by 50% and affirmed the remainder of the judgment. Johnson VI, 06-1223, p. 24, 975 So.2d at 714. The Louisiana Supreme Court denied the seven writs sought. Johnson v. Orleans Par. Sch. Bd., 08-0607 (La. 6/27/08), 983 So.2d 1289, and writ denied, 08-0664 (La. 6/27/08), 983 So.2d 1289, and writ denied, 08-0671 (La. 6/27/08), 983 So.2d 1289, and writ denied, 08-0672 (La. 6/27/08), 983 So.2d 1290, and writ denied, 08-0673 (La. 6/27/08), 983 So.2d 1290, and writ denied, 08-0674 (La. 6/27/08), 983 So.2d 1290, and writ denied, 08-0675 (La. 6/27/08), 983 So.2d 1291, and writ denied, 08-0682 (La. 6/27/08), 983 So.2d 1291. The United States Supreme Court also subsequently denied cert. Nat'l Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. Allen, 555 U.S. 1085, 129 S.Ct. 768, 172 L.Ed.2d 756 (2008).

         The damages trial for the first flight of 65 non-class representative plaintiffs commenced in 2013. Following a lengthy bench trial, the trial court dismissed four plaintiffs' claims for their failure to appear at trial. The trial court issued a lengthy judgment, which was later amended after motions for new trial were filed. The trial court denied the defendants' claims of prescription, and found that the affirmative defense of worker's compensation was untimely raised, as it was raised, for the first time in 20 years, at trial. The trial court awarded the remaining plaintiffs damages for emotional distress. Further, the trial court made awards for diminution in property values utilizing present day values for Gordon Plaza residents, and pre-Hurricane Katrina values for Press Park townhome owners. HANO and the City's (collectively "Defendants") suspensive appeals followed.[3]

         The Defendants contend that the trial court erred by finding that the plaintiffs' claims were not prescribed, erred by awarding/calculating emotional distress damages, and that the calculations for the diminution of property awards were flawed. The Defendants also assert that the trial court erred by not assigning fault to anyone other than them, holding them solidarily liable, and holding them liable for damages caused by Hurricane Katrina.

         STANDARD OF REVIEW

         Factual determinations are reviewed using the manifest error/clearly wrong standard of review. Hall v. Folger Coffee Co., 03-1734, p. 9 (La. 4/14/04), 874 So.2d 90, 98. This "precludes the setting aside of a district court's finding of fact unless that finding is clearly wrong in light of the record reviewed in its entirety." Id. "[A] reviewing court may not merely decide if it would have found the facts of the case differently." Id. "Therefore, the appellate review of facts is not completed by reading so much of the record as will reveal a reasonable factual basis for the finding in the trial court; there must be a further determination that the record establishes that the finding is not clearly wrong (manifestly erroneous)." Arceneaux v. Domingue, 365 So.2d 1330, 1333 (La. 1978). "Accordingly, if an appellate court concludes that the trial court's factual findings are clearly wrong, the mere fact that some record evidence appears which would furnish a reasonable factual basis for the contested findings does not require affirmance." Mart v. Hill, 505 So.2d 1120, 1127 (La. 1987).

         Additionally, "[w]hen findings are based on determinations regarding the credibility of witnesses, the manifest error-clearly wrong standard demands great deference to the trier of fact's findings." Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). "[O]nly the factfinder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding and belief in what is said." Id. "Where documents or objective evidence so contradict the witness's story, or the story itself is so internally inconsistent or implausible on its face, that a reasonable fact finder would not credit the witness's story, the court of appeal may well find manifest error or clear wrongness." Id., 549 So.2d at 844-45. "[W]here such factors are not present, and a factfinder's finding is based on its decision to credit the testimony of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong." Id., 549 So.2d at 845.

         "Although appellate courts must accord great weight to the factual findings of the trial judge, these same courts have a duty to determine if the fact finder was justified in his conclusions." Mart, 505 So.2d at 1127. Further,

[a]n appellate court is not required, because of the foregoing principles of appellate review, to affirm the trier of fact's refusal to accept as credible uncontradicted testimony or greatly preponderant objectively-corroborated testimony where the record indicates no sound reason for its rejection and where the factual finding itself has been reached by overlooking applicable legal principles.

Id.

         "However, when a legal error has restricted or interdicted the fact-finding process, the abuse of discretion standard no longer applies, and we apply a de novo standard of review." Provosty v. Arc Constr., LLC, 15-1219, p. 7 (La.App. 4 Cir. 11/2/16), 204 So.3d 623, 629. "A legal error exists upon the application of incorrect principles of law that deprives a party of substantial rights." Id.

         When reviewing questions of law, appellate courts use the de novo standard. Harold A. Asher, CPA, LLC v. Haik, 12-0771, p. 5 (La.App. 4 Cir. 4/10/13), 116 So.3d 720, 724. Mixed questions of law and fact are reviewed with the manifest error standard of review. Barrois v. Panepinto, 13-0577, p. 3 (La.App. 4 Cir. 1/8/14), 133 So.3d 36, 38.

         RES JUDICATA

         The Defendants raise numerous assignments of error that the plaintiffs contend are precluded because of res judicata. As the plaintiffs' argument ...


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