United States District Court, E.D. Louisiana
ORDER & REASONS
E. FALLON U.S. DISTRICT COURT JUDGE.
the Court is a motion for summary judgment filed by Defendant
John T. Campo & Associates (“Campo”). R. Doc.
162. The Motion is opposed. R. Doc. 169. Campo has filed a
reply. R. Doc. 178. The Court having heard oral argument on
the motion on April 22, 2019, R. Doc. 179, rules as follows.
Cotton Exchange Investment Properties LLC (“Cotton
Exchange”) alleges its hotel was damaged as a result of
faulty workmanship performed by Defendants Commercial
Renovation Services, Inc. (“CRS”) and Campo
during the hotel's renovation. R. Doc. 23 at 2. Plaintiff
further contends the hotel also sustained damages as a result
of defective maintenance and repairs to the hotel's HVAC
system performed by Defendant Xcel Air Conditioning Services,
Inc. (“Xcel”). In the present suit, Cotton
Exchange seeks recovery for its damages.
complaint, Plaintiff alleges that in 2014, Supreme Bright New
Orleans LLC (“Supreme Bright”), which owned the
hotel at the time, executed several contracts for its
renovation. R. Doc. 23 at 2. In January 2014, Supreme Bright
contracted with Xcel to provide HVAC services, including the
maintenance of the hotel's cooling tower, roof top units,
and chilled water pumps. R. Doc. 1 at 3. That same month,
Supreme Bright entered into a contract with Campo (the
“Architectural Agreement”), whereby Campo would
provide architectural, design, and engineering services. R.
Doc. 23 at 4. A few months later, Supreme Bright contracted
with CRS to serve as general contractor for the project. R.
Doc. 23 at 2. In June 2015, the hotel was bought by Pacific
Hospitality Group (“PHG”), who assumed the rights
to all three contracts. R. Doc. 1 at 3. PHG subsequently
assigned all of its rights, title, and interest in the
purchase to Plaintiff, including the contracts with Xcel,
Campo, and CRS. R. Doc. 1 at 4. Plaintiff alleges that under
the terms of their respective contracts, Cotton Exchange was
indemnified by all three Defendants for any property damage
caused by their negligent acts or omissions related to the
scope of their work. R. Doc. 1 at 5; R. Doc. 23 at 3-4.
to Cotton Exchange, the hotel suffered serious moisture
damage as a result of Defendants' faulty workmanship,
including water damaged walls and floors due to exposed
chilled water piping, missing or improperly sealed
insulation, and cracked or leaking draining pans. R. Doc. 23
at 7. Plaintiff claims it had to close the hotel due to this
extensive damage. R. Doc. 23 at 6. Plaintiff canceled the
HVAC contract pursuant to its terms in December 2015 and
notified Xcel of the damage on three occasions. R. Doc. 1 at
5, 6. Xcel did not respond to the demand for indemnity. R.
Doc. 1 at 6. Additionally, Plaintiff avers it demanded
indemnity from CRS and Campo, but was also unsuccessful in
these demands. R. Doc. 23 at 7. As a consequence, Plaintiff
filed suit on December 16, 2016, bringing breach of contract
and negligence claims against all three Defendants and breach
of warranty of good workmanship claims against CRS and Campo.
R. Doc. 23 at 7-16.
25, 2018, Campo filed a third-party complaint against
Cosentini Associates, Inc. (“Cosentini”),
alleging that “on or about August 14, 2013, Cosentini
submitted a proposal to Campo ‘to provide MEP/FP
engineering design services' for the [hotel renovation]
project.” R. Doc. 88 at ¶ 3. Campo further
contends that, because “Cosentiti was responsible for
providing MEP/FP engineering design services for the project,
. . . Cosentini, not Campo, is responsible, to the extent any
exist, which is disputed, for any error or omissions related
to the MEP/FP design and/or the design services provided [by]
Cosentini related to the MEP/FP design.” Id.
at ¶ 12.
and Defendant CRS filed a consent motion to stay proceedings
against CRS pending the completion of arbitration, R. Doc. 44
at 1, which the Court granted on June 14, 2017, R. Doc. 45 at
1. The Court denied Defendant Xcel's motions to dismiss
in August 2017. R. Doc. 51. On October 10, 2018, Cosentini
filed a motion seeking to compel arbitration of Campo's
claims against it, R. Doc. 111, which the Court granted on
November 8, 2018, R. Doc. 127. On November 9, 2018, the Court
severed Campo's third-party complaint against Cosentini
from the main action. R. Doc. 134.
instant motion, Campo contends Cotton Exchange lacks standing
to assert any contract claims arising under the Architectural
Agreement against Campo, as Cotton Exchange was never validly
assigned any rights to the Agreement. R. Doc. 162-1 at 10.
Thus, because there is no privity of contract between Cotton
Exchange and Campo, Campo argues Cotton Exchange has no cause
of action for breach of contract or breach of the warranty of
good workmanship. Id. First, Campo contends the sale
and assignment of rights from Supreme Bright to PHG and
subsequently to Cotton Exchange did not include the
Architectural Agreement held between Campo and Supreme
Bright. According to Campo, for the contract to have been
included as an assigned operating agreement transferred from
Supreme Bright to PHG under Section 2.1.8 of the purchase
agreement, the Architectural Agreement “had to either
(1) be assumed by PHG pursuant to the terms of an Assignment
and Assumption Agreement or (2) listed as an Assumed Contract
in Schedule 2.1.8 to the PHG Purchase Agreement, ” but
that the Architectural Agreement was not assigned under
either option. Id. at 15. Further, Campo submits PHG
did not assume the rights to the Agreement pursuant to
section 2.1.14, because that section requires Supreme Bright
to provide copies of the Architectural Agreement to PHG,
which Supreme Bright did not do. Id. at 15-16.
Finally, Campo argues Supreme Bright did not confer Cotton
Exchange rights in the Architectural Agreement directly.
Id. at 16.
Campo contends the contract it held with Supreme Bright
contained language requiring Supreme Bright to obtain
Campo's consent before assigning Supreme Bright's
rights to a third party, and that, because Cotton Exchange
“has no evidence that Campo provided written consent to
any assignment of rights in the Architectural Agreement,
[Cotton Exchange] cannot prove that it is an assignee to the
Architectural Agreement.” Id. at 13. Thus,
even if subsequent amendments to the sales contract between
Supreme Bright and Cotton Exchange were made to include the
Agreement, which Campo denies, these amendments did not cure
Supreme Bright's failure to obtain Campo's consent
for the assignment, as the Architectural Agreement requires.
Id. at 17.
respect to Cotton Exchange's breach of warranty claims,
Campo argues, even if the Agreement were validly transferred
to Cotton Exchange, Campo made no express warranty and,
therefore, Cotton Exchange “cannot assert a breach of
warranty of good workmanship claim against Campo for any
express warranty.” Id. at 18. Moreover, Campo
argues Cotton Exchange cannot bring breach of warranty claims
pursuant to any implied warranties, as “the implied
warranty of good workmanship is only implied from a
building contract, ” not a contract for
professional services, such as the Architectural Agreement.
Id. at 18-19. Finally, Campo contends that, even if
the Architectural Agreement includes an implied warranty,
“the warranty of good workmanship implied in a building
contract is also not automatically transferred to the
subsequent purchaser of immovable property.”
Id. at 19.
Campo moves for summary judgment on Cotton Exchange's
negligence claims against it, as it avers Supreme Bright
never conveyed a personal right to sue to either PHG or
Cotton Exchange. Id. at 20. Because the right to sue
for damage sustained to property before a sale is a personal
right of the person or entity who owned the property at the
time the damage was inflicted, and personal rights of the
former owner do not pass with the property in an act of sale
in the absence of an express and specific assignment of that