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Koerner v. Vigilant Insurance Co.

United States District Court, E.D. Louisiana

October 18, 2017

LOUIS R. KOERNER, JR.
v.
VIGILANT INSURANCE COMPANY

         SECTION I

          ORDER AND REASONS

          LANCE M. AFRICK UNITED STATES DISTRICT JUDGE.

         Louis R. Koerner, Jr. (“Koerner”) owns a house on Jackson Avenue in New Orleans. On November 11, 2005, Koerner contracted with CMR Construction & Roofing, LLC (“CMR”) to replace the house's slate roof.[1] The roof installed by CMR- a “Slate 2.0 roof”[2]-is at the center of the present dispute.

         Koerner contends that he wanted to purchase what he labels a “traditional slate roof, ” that CMR knew the same, and that CMR led him to believe that the Slate 2.0 roof was a “traditional slate roof.”[3] According to Koerner, a Slate 2.0 roof is not a “traditional slate roof, ” because CMR used a synthetic membrane instead of felt underneath the slate tiles.[4] Koerner alleges that he never would have purchased the Slate 2.0 roof had he known that it was not a “traditional slate roof, ” and had CMR not made other representations to him regarding the quality of the roof and its advantages when compared to other available roofs.[5]

         Further, Koerner argues that representations made by CMR when Koerner sought subsequent repair work on the roof caused him additional damage.[6] Koerner also contends that the overall quality of CMR's work-the removal of the old roof and installation of the new one, as well as the remedial work-was shoddy.[7] Based on these allegations, Koerner asserts numerous Louisiana law claims against CMR, including breach of warranty, breach of contract, rescission of contract, detrimental reliance, redhibition, negligence, and fraud.[8]

         CMR has now moved for summary judgment, arguing that most of Koerner's claims are perempted.[9] CMR also contends that it is entitled to summary judgment on Koerner's remaining claims, which relate to repair work performed on his Jackson Avenue house's roof in 2012.[10] Further, CMR argues that Koerner's fraud claims are prescribed.[11]

         I.

         Summary judgment is proper when, after reviewing the pleadings, the discovery and disclosure materials on file, and any affidavits, the court determines that there is no genuine dispute of material fact. See Fed. R. Civ. P. 56. “[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party's case. Id.; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986).

         Once the party seeking summary judgment carries its initial burden, the nonmoving party must come forward with specific facts showing that there is a genuine dispute of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue of material fact is not satisfied by creating “‘some metaphysical doubt as to the material facts, ' by ‘conclusory allegations, ' by ‘unsubstantiated assertions, ' or by only a ‘scintilla' of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue of material fact exists when the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. However, the nonmoving party's evidence “is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor.” Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).

         Moreover, “[a]lthough the substance or content of the evidence submitted to support or dispute a fact on summary judgment must be admissible . . ., the material may be presented in a form that would not, in itself, be admissible at trial.” Lee v. Offshore Logistical & Transp., LLC, 859 F.3d 353, 355 (5th Cir. 2017) (quoting 11 Moore's Federal Practice-Civil ¶ 56.91 (2017)). “This flexibility allows the court to consider the evidence that would likely be admitted at trial . . . without imposing on parties the time and expense it takes to authenticate everything in the record.” Maurer v. Independence Town, No. 16-30673, 2017 WL 3866561, at *3 (5th Cir. Sept. 5, 2017).

         II.

         CMR argues that peremption bars most of Koerner's claims. “Peremption is a period of time fixed by law for the existence of a right.” La. Civ. C. art. 3458. “Unless timely exercised, the right is extinguished upon the expiration of the peremptive period.” Id.; see also Naghi v. Brener, 17 So.3d 919, 926 (La. 2009) (observing that “the cause of action no longer exists after the termination of the peremptive period and any right to assert the claim is destroyed”). “Peremption may not be renounced, interrupted, or suspended.” La. Civ. C. art. 3461; cf. Naghi, 17 So.3d at 925-26 (“Because the cause of action no longer exists after the termination of the peremptive period and any right to assert the claim is destroyed, there is nothing to which an amended or supplemental pleading filed after the peremptive period has expired can relate back.”).

         “Peremption may be pleaded or it may be supplied by a court on its own motion at any time prior to final judgment.” La. Civ. C. art. 3460. As a general rule, “the exceptor bears the burden of proof at the trial of the peremptory exception.” Rando v. Anco Insulations, Inc., 16 So.3d 1065, 1082 (La. 2009). However, where peremption is “evident on the face of the pleadings, ” the burden shifts to the plaintiff to demonstrate that an action is not perempted. Id.

         “Peremptive statutes are strictly construed against peremption and in favor of the claim.” Id. at 1083. “Of the possible constructions, the one that maintains enforcement of the claim or action, rather than the one that bars enforcement should be adopted.” Id.

         When interpreting Louisiana law-including Louisiana's preemptive statutes-a federal court must heed the Louisiana Supreme Court's instructions regarding statutory interpretation. See In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007). “[T]he starting point in interpreting any statute is the language of the statute itself.” Louisiana v. Johnson, 884 So.2d 568, 575 (La. 2004).

The meaning and intent of a law is determined by considering the law in its entirety and all other laws on the same subject matter and by placing a construction on the law that is consistent with the express terms of the law and with the obvious intent of the legislature in enacting the law. A statute must be applied and interpreted in a manner that is logical and consistent with the presumed purpose and intent of the legislature.
Further, it is presumed that every word, sentence, or provision in a law was intended to serve some useful purpose, that some effect is to be given to each such provision, and that no unnecessary words or provisions were employed. As a result, courts are bound, if possible, to give effect to all parts of a statute and to construe no sentence, clause or word as meaningless and surplusage if a construction giving force to, and preserving, all words can legitimately be found. Finally, it is presumed that the legislature acts with full knowledge of well-settled principles of statutory construction.

Moss v. Louisiana, 925 So.2d 1185, 1196 (La. 2006) (internal citations omitted). Ultimately, “[t]he fundamental question in all cases of statutory interpretation” involving Louisiana law “is legislative intent.” Id.

         In addition to these jurisprudential principles, the Louisiana legislature has enacted specific rules governing the interpretation of Louisiana's revised statutes. See generally La. R.S. § 1. As relevant in this case, the legislature directs that “[w]ords and phrases shall be read with their context and shall be construed according to the common and approved usage of the language.” Id. § 1:3. “Technical words and phrases, and such others as may have acquired a peculiar and appropriate meaning in the law, shall be construed and understood according to such peculiar and appropriate meaning.” Id. “The word ‘shall' is mandatory and the word ‘may' is permissive.” Id. Moreover, “[w]hen the wording . . . is clear and free of ambiguity, the letter of it shall not be disregarded under the pretext of pursuing its spirit.” Id. § 1:4. Finally, “[u]nless it is otherwise clearly indicated, the word ‘person' includes a body of persons, whether incorporated or not.” Id. § 1:10.

         With these rules of construction in mind, the Court turns to the peremption issue raised by CMR.

         III.

         A.

         CMR's peremption argument focuses on La. R.S. § 9:2722, which the Louisiana legislature enacted in 1964 “to protect residential building contractors from liability for past construction projects that could extend for an indefinite period of time.” Thrasher Const., Inc. v. Gibbs Residential, L.L.C., 197 So.3d 283, 290 (La. Ct. App. 4th Cir. 2016). The current version of § 9:2722 became effective as of August 15, 2003, and so was in effect well before Koerner contracted with CMR to install a Slate 2.0 roof on his Jackson Avenue house. Metairie III v. Poche' Const., Inc., 49 So.3d 446, 450 (La. Ct. App. 4th Cir. 2010).

         Section 9:2772 provides, in pertinent part:

Except as otherwise provided in this Subsection, no action, whether ex contractu, ex delicto, or otherwise, including but not limited to an action for failure to warn, to recover on a contract, or to recover damages, or otherwise arising out of an engagement of planning, construction, design, or building immovable or movable property which may include, without limitation, consultation, planning, designs, drawings, specification, investigation, evaluation, measuring, or administration related to any building, construction, demolition, or work, shall be brought . . . against any person performing or furnishing the design, planning, supervision, inspection, or observation of construction or the construction of immovables, or improvement to immovable property, including but not limited to a residential building contractor as defined in R.S. 37:2150.1:
(1)(a) More than five years after the date of registry in the mortgage office of acceptance of the work by owner.
(b) If no such acceptance is recorded within six months from the date the owner has occupied or taken possession of the improvement, in whole or in part, more than five years after the improvement has been thus occupied by the owner.

         La. R.S. § 9:2772(A) (emphasis added). In other words, “actions involving deficiencies in surveying, design, supervision, or construction of immovables or improvements thereon” are subject to § 9:2772's five-year peremptive period.[12] Thrasher Const., 197 So.3d at 290.

         The peremptive period's trigger “is not dependent on the discovery of the defect.” Burkart v. Williamson, 29 So.3d 635, 639 (La. Ct. App. 1st Cir. 2009). Moreover, “any repairs or promises to repair alleged to have been made” do not interrupt the running of the § 9:2772 peremptive period. Lasseigne v. Schouest & Sons, Builders, 563 So.2d 371, 373 (La. Ct. App. 1st Cir. 1990).

         B.

         The parties first dispute whether the § 9:2772 peremptive period applies to claims arising from the underlying contract between the parties. As the Court previously explained, the dispute between CMR and Koerner centers on a 2005 contract in which CMR agreed to remove the Jackson Avenue house's old slate roof and install a new Slate 2.0 roof. Koerner contends that a genuine dispute of material fact exists as to whether this contract was a contract of sale or a construction contract.[13] If the contract was a contract of sale, as opposed to a construction contract, then § 9:2772's peremptive period is inapplicable. See Swope v. Columbian Chems. Co., 281 F.3d 185, 201-02 (5th Cir. 2002) (quoting KSLA-TV, Inc. v. Radio Corp. of Am., 693 F.2d 544, 545 (5th Cir. 1982) (per curiam)). CMR disagrees, contending that “a roof is an improvement to an immovable, or part of an immovable, as a matter of law”-and therefore the underlying contract obligating CMR to remove the house's old roof and install a new one is a construction contract falling squarely within the purview of § 9:2772.[14] The parties do not dispute the work for which Koerner contracted with CMR: replacement of the roof of Koerner's Jackson Avenue house.

         Louisiana law provides that “[t]racts of land, with their component parts, are immovables.” La. Civ. C. art. 462. Buildings, such as houses, are “components parts” of the land and therefore are themselves immovables. Id. art. 463. “[A] new home construction on a vacant lot is an ‘improvement to immovable property, '” and “it is equally the case that once such a home is built it becomes an immovable itself, and any further construction, be it a renovation or addition to the home, is likewise an ‘improvement to immovable property.'” Dugas v. Cacioppo, 583 So.2d 26, 27 (La. Ct. App. 5th Cir. 1991); see also Moll v. Brown & Root Inc., 218 F.3d 472, 476 (5th Cir. 2000) (discussing Dugas). As a renovation to a home, the installation of the Slate 2.0 roof is subject to § 9:2772. See, e.g., Celebration Church, Inc., v. Church Mutual Ins. Co., 216 So.3d 1059, 1061-63 (La. Ct. App. 5th Cir. 2016) (applying § 9:2772 to claims arising from a contractor's alleged failure to properly repair and replace a roof).

         Koerner also alleges that “[h]e was solicited by CMR to purchase a roof, not to purchase installation or repair services, ” and thus the 2005 contract with CMR was a contract for sale.[15] Despite Koerner's contention, however, the record clearly demonstrates-and Koerner admits-that CMR provided both materials and installation services pursuant to the 2005 contract.[16] Indeed, many of Koerner's claims against CMR derive from CMR's alleged faulty installation work.

         In other words, Koerner did not simply buy slate tiles; he bought the installation of a new roof for his Jackson Avenue house, which is an improvement on an immovable as a matter of law. Cf. Vicari v. Window World, Inc., 171 So.3d 425, 433 (La. Ct. App. 5th Cir. 2015) (“[T]he object of the Vicari contract was not to simply sell forty-five windows to the Vicaris, but to install those windows in their home. To suggest that the Vicaris' only desire in contracting with Window World was to purchase forty-five custom windows to be delivered and set aside at their home, is illogical. The installation was not incidental to the sale, . . . it was the object of the contract.”). The 2005 contract is a construction contract and so § 9:2772 applies to claims arising from it.

         In addition to claims arising from the 2005 contract, Koerner also asserts claims against CMR arising from subsequent repair work performed on the roof in 2006, 2007, 2011, and 2012.[17] CMR argues that such claims are also governed by § 9:2772's preemptive period.[18] The Court agrees. See Celebration Church, 216 So.3d at 1061-63 (treating roof repairs as covered by § 9:2772); cf. Vicari, 171 So.3d at 436 (same for claims arising from repairs to previously installed windows); but cf. Chaisson v. Avondale Indus., Inc., 947 So.2d 171, 196 (La. Ct. App. 4th Cir. 2006) (observing that “no Louisiana appellate court” had yet to hold that the particular “type of asbestos repair and maintenance work” at issue fell within the purview of § 9:2772).

         C.

         Next, the Court must determine which, if any, of Koerner's claims are perempted under § 9:2772(A). Under the “clear and specific” language of § 9:2772, Celebration Church, 216 So.3d at 1062, the five-year peremptive period for claims arising from construction work runs either 1) from “the date of registry of the acceptance in the mortgage office of the work by the owner, ” or 2) if the owner does not register his acceptance “within six months from the date the owner has occupied or taken possession of the improvement, in whole or in part, ” from the date that “the improvement has been thus occupied by the owner, ” La. R.S. § 9:2772(A)(1). In this case, neither party argues that Koerner registered CMR's roof work.

         Koerner first asserted claims against CMR arising from CMR's roof work on November 14, 2016.[19] Under § 9:2772(A), then, any claims arising from “improvement[s]” that Koerner “occupied” prior to November 14, 2011, would fall outside the required five-year window and be perempted.

         The parties do not dispute that CMR's removal of his old roof and installation of the Slate 2.0 roof, as well as the repair work in 2006 and 2007, all constitute improvements that Koerner occupied well before November 14, 2011.[20] Any claims arising from these jobs are therefore perempted under § 9:2772(A). Likewise, the parties do not dispute that claims arising from repair work performed by CMR in 2012 are not perempted under § 9:2772(A).[21]

         The parties do dispute, however, whether claims arising from roof repairs performed by CMR in late 2011 are perempted. CMR contends that these roof repairs were completed by November 10, 2011.[22] On the other hand, Koerner-“based on [his] understanding”-suggests that those specific repairs were part of a larger remedial project that was not completed until November 2012.[23]

         Upon closer examination, the record belies Koerner's belief that the repairs that CMR completed by November 10, 2011, were part of one continuous project that did not come to fruition until November 2012. CMR's job report documenting the 2011 repairs lists the job as “Closed” on November 10, 2011.[24] CMR next agreed to do work for Koerner approximately three months later, in early February 2012, when Koerner entered into an agreement with CMR to do a discrete repair project.[25] CMR performed additional repair work for Koerner between late February and July 2012.[26]Finally, in October 2012, Koerner entered into an agreement with a third party-not CMR-to undertake certain repairs.[27]

         “When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S. 372, 380 (2007). There is no genuine dispute that the repair work performed in 2011 amounts to an “improvement” distinct from the repair work performed in 2012, and that Koerner “occupied” this “improvement” at the time of its completion.[28] As such, claims arising from CMR's 2011 repair work are perempted under § 9:2772(A).

         IV.

         A.

         While § 9:2772(A) applies to many of Koerner's claims, the Court's analysis is not at an end because Koerner contends that he is able to escape this preemptive period by way of § 9:2772(H).[29] Under this subsection, “[t]he peremptive period provided by [§ 9:2772(A)] shall not apply to an action to recover on a contract or to recover damages against any person . . . whose fraud has caused the breach of contract or damages sued upon.” La. R.S. § 9:2772(H)(1). For § 9:2772(H)(1) to apply, the breach or damages must in fact be caused by fraud; where damages are a result of alleged deficient work, for example, then fraud did not cause the damages. See Thrasher Const., 197 So.3d at 293.

         The term “fraud” as used in § 9:2772 has “the same meaning as provided in Civil Code Article 1953.” La. R.S. § 9:2772(H)(3). Article 1953 defines “fraud” as “a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other.” This article further clarifies that fraud may result from either silence or a failure to act. La. Civ. C. art. 1953.

         To establish fraud involving a contract, a plaintiff must show “(1) a misrepresentation, suppression, or omission of true information; (2) the intent to obtain an unjust advantage or to cause damage or inconvenience to another; and (3) the error induced by a fraudulent act must relate to a circumstance substantially influencing the victim's consent to (a cause of) the contract.” Shelton v. Standard/700 Associates, 798 So.2d 60, 64 (La. 2001). Evidence is “sufficient to support an inference of fraudulent intent if [it] either ‘(1) show[s] a defendant's motive to commit [ ] fraud or (2) identif[ies] circumstances that indicate conscious behavior on the part of the defendant.'” Cargill, Inc. v. Degesch Am., Inc., 875 F.Supp.2d 667, 675 (E.D. La. 2012) (quoting Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 565 (5th Cir. 2002)) (alternation in original).

         Fraud will not nullify contractual consent “when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill, ” unless “a relation of confidence has reasonably induced a party to rely on the other's assertions or representations.” La. Civ. C. art. 1954; see also Cashman Equip. Corp. v. Acadian Shipyard, Inc., 66 Fed. App'x 524 (5th Cir. 2003) (per curiam) (discussing and applying La. Civ. C. art. 1954). A “relation of confidence has been found to exist where there is a long-standing and close relationship between the parties due to numerous transactions.” Sepulvado v. Procell, 99 So.3d 1129, 1137 (La. Ct. App. 3rd Cir. 2012). The required “confidante/trustee relationship is less likely to exist between parties to a single or limited business transaction.” Id. at 1137-38.

         “[P]laintiffs must state all allegations of fraud with particularity by identifying the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what that person obtained thereby.” Owens v. Jastrow, 789 F.3d 529, 535 (5th Cir. 2015) (internal quotation marks omitted); see also Fed. R. Civ. P. 9(b); Williams v. WMX Tech., Inc., 112 F.3d 175, 177 (5th Cir. 1997) (“We see no principled reason why the state claims of fraud should escape the pleading requirements of the federal rules . . . .”). Further, plaintiffs must state “the specifics of the false representation.” United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 188-89 (5th Cir. 2009).

         “Fraud need only be proven by a preponderance of the evidence and may be established by circumstantial evidence.” Lomont, 172 So.3d at 629. Such evidence may include “highly suspicious facts and circumstances.” Id.

         B.

         The Court must first consider if a genuine dispute of material fact exists as to whether fraud caused any of the damages upon which Koerner is suing.

         Koerner alleges that CMR misrepresented the nature of the product that he was purchasing, i.e., that a Slate 2.0 roof was a “traditional slate roof, ” that a Slate 2.0 roof would “outlast” Koerner, and that a Slate 2.0 roof was backed by a 75-year warranty.[30] Koerner also alleges that CMR did not properly remove the old roof from the Jackson Avenue house, that CMR did not properly install the Slate 2.0 roof, and that CMR did not properly repair the Slate 2.0 roof's deficiencies after installation.[31]As a result, Koerner argues that he did not receive the roof that he wanted and that his house sustained damage from CMR's work.

         To the extent that Koerner asserts claims against CMR for physical damage resulting from the removal of his old roof, the installation of the Slate 2.0 roof, and subsequent repair work in 2006, 2007, and 2011-all jobs performed and completed by CMR before November 14, 2011-there is no genuine material dispute that fraud did not cause the damages. Rather, the quality of CMR's work-alleged to be deficient-is to blame. See Thrasher Const., 197 So.3d at 293. Koerner cannot salvage claims arising from the alleged substandard quality of CMR's work by relying on the § 9:2772(H) fraud exception and so such claims are perempted. Thus, all claims arising from CMR's repair work in 2006, 2007, and 2011 are perempted and will be dismissed.

         On the other hand, Koerner's claims arising from his purchase of the Slate 2.0 roof from CMR may qualify for the § 9:2772(H) exception. With respect to the purchase, the “damages sued upon”-purchasing one product under false pretenses- could have been caused by fraud. La. R.S. § 9:2772(H)(1).

         CMR argues that Koerner cannot prove that his purchase of the Slate 2.0 roof was caused by any fraud on the part of CMR. CMR points out that its agent provided Koerner with product literature, [32] and that the 2005 contract between CMR and Koerner explicitly provided for a Slate 2.0 roof.[33] Further, the 2005 contract does not mention a 75-year warranty and explicitly notes, after listing 10-year workmanship and materials warranties, that “THERE ARE NO OTHER WARRANTIES EXPRESS OR IMPLIED, AND THERE IS NO IMPLIED WARRANTY OF MERCHANTABILITY.”[34] To CMR, Koerner's assertion that fraudulent behavior by CMR led to his purchase of the Slate 2.0 roof is “devoid of factual support.”[35]

         Koerner's only evidence that fraud caused him to purchase the Slate 2.0 roof is his own unsworn declaration under penalty of perjury, [36] in which Koerner details his interactions with the CMR agent with whom he dealt to purchase the roof.[37] According to Koerner, “I made it clear to CMR's salesman that I wanted to purchase a traditional ...


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