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Cenac v. ORKIN, LLC

United States District Court, E.D. Louisiana

June 12, 2018

CHRISTOPHER E. CENAC, JR., ET AL.
v.
ORKIN, LLC

         SECTION: "A" (3)

          ORDER AND REASONS

          JUDGE JAY C. ZAINEY UNITED STATES DISTRICT JUDGE

         The following dispositive[1] motions are before the Court: Motion for Summary Judgment Under the Contract (Rec. Doc. 52) filed by defendant Orkin, LLC; Motion for Partial Summary Judgment on LUTPA Claims (Rec. Doc. 54) filed by defendant Orkin, LLC; Motion for Partial Summary Judgment on Bad Faith Penalties (Rec. Doc. 56) filed by defendant Orkin, LLC; Motion for Partial Summary Judgment on Claims for Negligence, Gross Negligence, and Negligent Misrepresentation (Rec. Doc. 58) filed by defendant Orkin, LLC; Motion for Partial Summary Judgment on Emotional Distress Damages (Rec. Doc. 60) filed by defendant Orkin, LLC; Motion for Partial Summary Judgment on Claims for Unjust Enrichment and Detrimental Reliance (Rec. Doc. 62) filed by defendant Orkin, LLC; Motion for Summary Judgment on Contract Transfer (Rec. Doc. 76) filed by plaintiffs, Drs. Audra and Christopher E. Cenac, Jr. (referred to at times as “C. Cenac”). All motions are opposed. The motions, noticed for submission on May 16, 2018, are before the Court on the briefs without oral argument.[2]

         I. BACKGROUND

         In the spring of 2015 Plaintiffs' home located in Houma, Louisiana became infested with Formosan termites. At the time of the infestation, Plaintiffs had their home under contract with the Orkin pest control company.[3] Orkin treated the property to kill the destructive pests but the damage to the home was significant. At first Plaintiffs and Orkin worked cooperatively to address Plaintiffs' damages. Orkin agreed to reimburse Plaintiffs for certain relocation expenses.[4] At one point early on, Mr. Russell Fielder with Orkin told Dr. C. Cenac that Orkin was willing to repair the home. (Rec. Doc. 76-9, C. Cenac deposition at 230-31). Ultimately, negotiations broke down. Plaintiffs' repair estimates are over one million dollars.

         The primary issue in this case is whether Orkin is obligated, contractually or otherwise, to pay for the repairs to the property that were caused by Formosan termites. In addition to their contractual claims, Plaintiffs have asserted other non-contractual claims under Louisiana law.

         Orkin now moves for summary judgment on all claims.[5] Plaintiffs have filed their own cross motion pertaining to the contract claim.

         A jury trial was scheduled for July 9, 2018. The Court has continued the trial in light of the large number of pending motions.

         II. DISCUSSION

         Summary judgment is appropriate only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, " when viewed in the light most favorable to the non-movant, "show that there is no genuine issue as to any material fact." TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 759 (5th Cir. 2002) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A dispute about a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. (citing Anderson, 477 U.S. at 248). The court must draw all justifiable inferences in favor of the non-moving party. Id. (citing Anderson, 477 U.S. at 255). Once the moving party has initially shown "that there is an absence of evidence to support the non-moving party's cause, " Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), the non-movant must come forward with "specific facts" showing a genuine factual issue for trial. Id. (citing Fed. R. Civ. P. 56(e); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986)). Conclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not adequately substitute for specific facts showing a genuine issue for trial. Id. (citing SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993)).

         When faced with a well-supported motion for summary judgment, Rule 56 places the burden on the non-movant to designate the specific facts in the record that create genuine issues precluding summary judgment. Jones .v Sheehan, Young, & Culp, P.C., 82 F.3d 1334, 1338 (5thCir. 1996). The district court has no duty to survey the entire record in search of evidence to support a non-movant's position. Id. (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1992); Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1307 (5th Cir. 1988)).

         A. Contract Claims

         The issue at the heart of the contract claim is whether Orkin is contractually obligated to pay for the significant repairs to Plaintiffs' property that were caused by Formosan termites. Plaintiffs' position is that an ownership repair guarantee that was issued in favor of a former owner was transferred to them when they purchased the property in 2003. Then in 2007 they upgraded this guarantee to include coverage for Formosan termites. Thus, according to Plaintiffs, Orkin is contractually obligated to pay for the Formosan-related repair costs to their home.

         Orkin's positon is that the clear and express terms of the governing agreements exclude any liability on the part of Orkin to pay for the cost of repairing the Formosan termite damage that forms the basis of this lawsuit.

         Plaintiffs' contract claim originates with a Subterranean Termite Agreement (Rec. Doc. 76-3, Exh. A) issued in 1991 to Mr. Allen Eschete, a former owner of the property.[6] According to the agreement, Mr. Eschete paid $1, 230.00 to have Orkin provide an initial treatment of the property for subterranean termites. The agreement unequivocally excludes protection against Formosan termites.[7] As part of the agreement, Mr. Eschete also obtained a Full Renewable Subterranean Termite Home Ownership Repair Guarantee (“OR”). Pursuant to the OR Guarantee, Orkin agreed, for as long as Mr. Eshete owned the premises and paid the annual renewal fee, to re-treat when required and to repair any new damage to the building or its contents caused by Subterranean termites. (Rec. Doc. 76-3). Importantly, the OR Guarantee did not cover damage from Formosan termites, and it includes the following pertinent restriction: “This Guarantee is not transferrable after one year from the original treatment date.” (Id.) (emphasis added). Presumably the original treatment date occurred in February 1991, which is when the Agreement was executed. Therefore, unless the non-transferability limitation is invalid under Louisiana law, the OR Guarantee could not have been transferred to any subsequent owner of the property (including the Cenacs) after February 1992, without Orkin's consent.

         Plaintiffs purchased the property in 2003. As is common with residential purchases, the existing termite contract was transferred to Plaintiffs as the new owners of the property. Dr. Christopher Cenac was adamant that he was assured at the closing that he was obtaining a full termite repair guarantee. It is undisputed, however, that those assurances-while they might have been made by realtors or bankers or other persons-were not made by anyone with Orkin. (Rec. Doc. 76-9, C. Cenac deposition at 53, 86). It is also clear from Dr. C. Cenac's deposition that he relied on those other persons' oral assurances as to what the Orkin agreement provided without having actually read the agreement itself.Moreover, Dr. C. Cenac's erroneous assumptions about the nature of the termite agreement that was transferred at the closing cannot be attributed to any ambiguities in the document. The 1991 agreement is not ambiguous and even if it were, Dr. C. Cenac did not read it.[8]

         In 2007, Plaintiffs received an undated letter to “Dear Customer” from Orkin salesman Jerry L. Aucoin. (Rec. Doc. 80-3, Exh. B). It is apparent from the letter that Aucoin was soliciting sales of treatment specific to Formosan termites from existing Orkin customers who did not already have Formosan termite coverage. The letter states in part:

Orkin Pest Control is offering a special offer to our current customers who do not have Formosan Termite coverage. The Supplemental Treatment will not affect your current coverage in any way at all. This treatment allows Orkin to retreat your home with the new termiticides designed to stop and kill Formosan and Native Subterranean termites.

(Rec. Doc. 80-3, Exh. B).

         Plaintiffs opted to buy the additional treatment for Formosan termites. Dr. Audra Cenac signed the Orkin Continuous Protection Plan on June 21, 2007 (Rec. Doc. 52-4). Dr. C. Cenac testified that it was his understanding, based on his discussion with Aucoin, that he was just adding Formosan termite coverage to his existing Orkin contract, which to Dr. C. Cenac's understanding provided him with the full OR Guarantee for home repairs. In other words, Dr. C. Cenac's understanding was that since home repairs were already part of his existing termite contract, and since the Formosan coverage was just being added on to his existing contract, he would be covered for home repairs necessitated by Formosan termite damage. But the 2007 Orkin Continuous Protection Plan states in the first paragraph: “This Service does not cover any damage to the structure or contents.” (Id.). Later in the same paragraph, in all uppercase letters for emphasis, the following statement appears: “CUSTOMER EXPRESSLY RELEASES ORKIN FROM ANY CLAIMS FOR TERMITE DAMAGE OR REPAIR.” (Id.). Dr. C. Cenac did not read this language. (Rec. Doc. 76-9, C. Cenac deposition at 92).

         In searching for an affirmative contractual obligation by Orkin to repair Formosan termite property damage, Plaintiffs rely on the original 1991 Eschete agreement-which while it included a repair guarantee expressly excluded damage from Formosan termites-joined with the 2007 Orkin Continuous Protection Plan-which while it included coverage for Formosan termites expressly excluded property repairs. Plaintiffs move for summary judgment on the issue of contract transfer, pressing their contention that the OR Guarantee from the 1991 Eschete agreement was transferred to them along with the termite agreement as a whole, even though the OR Guarantee contained an express provision barring transfer after one year from the original treatment date. Alternatively, Plaintiffs argue that Orkin's actions throughout the years manifested an intent to transfer the OR Guarantee to them.

         Orkin moves for summary judgment on Plaintiffs' contract claims contending that the clear and express terms of the original 1991 Eschete agreement and the 2007 Orkin Continuous Protection Plan exclude any liability on the part of Orkin to pay for the cost of repairing the Formosan termite damage that forms the basis of this lawsuit.

         In support of their motion for summary judgment, Plaintiffs argue that La. R.S. § 3:3370 renders the non-transferability limitation in the OR Guarantee invalid under Louisiana law. The statute reads in relevant part:

Any currently effective standard contract and all terms and conditions contained therein shall be transferable to a subsequent owner of the property covered by such contract.

La. R.S. § 3:3370(A)(2).

         Plaintiffs argue that if the statute is construed to allow Orkin to limit transfer of the OR Guarantee, then the statute would be meaningless and accomplish nothing.

         The parties cite no decisions related to this statutory provision and the Court's own research has likewise revealed none. The Court notes, however, that La. R.S. § 3:3370 was amended in 2001 to include the provision quoted above. 2001 La. Acts 551, § 1. Thus, by the time that La. R.S. § 3:3370(A)(2) was enacted, the OR Guarantee had been rendered non-transferable for nearly 10 years, i.e., one-year after the original 1991 termite treatment, which would have been in or about February 1992. By 2003 when the contract was transferred to Plaintiffs, the absence of the OR Guarantee was simply one of the agreement's “terms and conditions.” Regardless of what § 3370(A)(2) was intended to accomplish prospectively, it could not as a matter of law render the OR Guarantee transferrable once it had validly (in the absence of a statutory prohibition) become non-transferrable pursuant to the express terms of the agreement.

         Even if La. R.S. § 3:3370(A)(2) did not void the OR Guarantee's transfer limitation, Plaintiffs argue that Orkin's actions throughout the years manifested an intent to transfer the OR Guarantee to them. Plaintiffs point out that Orkin's yearly service reports continued to indicate “OR” in the blank for Guarantee Type after they assumed the contract from Mr. Eschete. (Rec. Doc. 76-6 Exh. D, Termite Service Reports 6/8/02-6/5/15). Orkin's own internal database indicated the Guarantee Type as “OR.” (Rec. Doc. 76-7 Exh. E). Plaintiffs point out that they made and Orkin accepted the annual payments, which increased annually, that Mr. Eschete had been making to maintain the OR ...


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