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Sewell v. Sewerage and Water Board of New Orleans

Court of Appeals of Louisiana, Fourth Circuit

May 29, 2019

ELIZABETH SEWELL, WIFE OF/AND WILLIAM SEWELL, ELSEBETH FENNER, WIFE OF/AND JAMES FENNER AND BETH DUESSING, WIFE OF/AND GEORGE DUESSING
v.
SEWERAGE AND WATER BOARD OF NEW ORLEANS

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2015-04501, DIVISION "D" Honorable Nakisha Ervin-Knott, JUDGE

          Joseph M. Bruno Daniel A. Meyer BRUNO & BRUNO LLP Alexis A. Butler THE WHITAKER LAW FIRM, APC Michael T. Whitaker (Pro Hac Vice) THE WHITAKER LAW FIRM, APC COUNSEL FOR PLAINTIFF/APPELLEE

          Craig B. Mitchell Kiana A. Mitchell Joseph B. Morton, III Christopher D. Wilson Kendale J. Thompson MITCHELL & ASSOCIATES, APLC Darryl Harrison SEWERAGE & WATER BOARD OF NEW ORLEANS COUNSEL FOR DEFENDANT/APPELLANT

          Court composed of Judge Edwin A. Lombard, Judge Roland L. Belsome, Judge Tiffany G. Chase

          ROLAND L. BELSOME JUDGE

         The Defendant, the Sewerage and Water Board of New Orleans, appeals the trial court's judgment awarding damages, attorney fees and costs to the Plaintiffs: George and Beth Deussing, David Epstein, Faye Lieder, Thomas Ryan and Judith Jurisich, and Dorothy White. For the reasons that follow, we amend the trial court's judgment and affirm as amended.

         FACTS AND PROCEDURAL HISTORY

         This case involves several groups of homeowners, who claimed their homes were damaged during the course of construction of the Southeast Louisiana Urban Drainage Project (SELA Project).[1] The United States Army Corps of Engineers (USACE) partnered with the Sewerage and Water Board of New Orleans (SWB) for the Orleans Parish portion of the SELA Project. There were seven phases involving the uptown area: Claiborne I, Claiborne II, Jefferson I, Jefferson II, Napoleon II, Napoleon III, and Louisiana I.

         In May of 2015, a lawsuit was filed against the SWB.[2] The Plaintiffs claimed that their homes were damaged as a result of pile driving, the operation of heavy equipment, and other activities related to the SELA Project. As a result, they brought numerous claims against the SWB under strict liability for timber pile driving activities, custodial liability for ownership of defective things, negligence, and inverse condemnation. In response, the SWB filed an answer including third-party indemnity demands against the contractors hired by the USACE to construct the SELA project. Consequently, the case was removed to federal court in July of 2015. After the federal trial court granted the contractors' motions for summary judgment based on immunity, the case was remanded back to Civil District Court in January of 2017.[3]

         The Plaintiffs in the instant appeal (Residential Trial Group A) were set for priority trial due to their ages, pursuant to La. C.C.P. art. 1573.[4] After a four-day bench trial in March of 2018, the trial court rendered a judgment in favor of the Plaintiffs in the amount of $518, 653.08. In addition, it awarded the Plaintiffs reasonable attorney fees and costs. The trial court later denied the SWB's motion for new trial. After a hearing on the Plaintiffs' Motion to Tax Attorneys' Fees and Costs, the trial court rendered a second judgment awarding the Plaintiffs $400, 000.00 in attorney fees and $145, 000.00 in expert costs. The SWB appeals both judgments.

         STANDARD OF REVIEW

         In reviewing a trial court's findings of fact, appellate courts employ a "manifest error" or "clearly wrong" standard of review. Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989) (citations omitted). Regarding issues of law, the standard of review of an appellate court is simply whether the court's interpretive decision is legally correct. Glass v. Alton Ochsner Medical Foundation, 02-412, p. 3 (La.App. 4 Cir. 11/6/02), 832 So.2d 403, 405. Accordingly, if the decision of the trial court is based upon an erroneous application of law rather than on a valid exercise of discretion, the decision is not entitled to deference by the reviewing court. Ohm Lounge, L.L.C. v. Royal St. Charles Hotel, L.L.C., 10-1303, p. 4 (La.App. 4 Cir. 9/21/11), 75 So.3d 471, 474.

         DISCUSSION

         On appeal, the SWB asserts nine assignments of error related to the trial court's conclusions on three key issues: liability, damages, and attorney fees and costs.

         LIABILITY

         First, the SWB challenges the trial court's liability rulings, raising four errors concerning: 1) inverse condemnation, 2) custodial liability for defective things, 3) strict liability for timber pile driving, and 4) comparative fault. On the liability issues, the trial court concluded that the SWB was the owner of the SELA Project and the SELA project caused the Plaintiffs to suffer damages. As such, the trial court found the SWB solely liable to the Plaintiffs for inverse condemnation, hazardous pile driving activities and ownership of a defective thing arising from the SELA Project construction activities.

         INVERSE CONDEMNATION

         Relative to inverse condemnation, the SWB argues that the trial court's finding against the SWB was clearly wrong. Specifically, the SWB contends that the SELA Project was a federal project, not a state project. Thus, it suggests that the USACE, not the SWB, was liable for the damages on the inverse condemnation claim.

         La. Const. art. I, §4 provides that the State or its subdivisions may not take or damage a person's private property without paying just compensation.[5] An action for inverse condemnation allows property owners to seek compensation for land already taken or damaged from a governmental entity or private entity having powers of eminent domain where no expropriation has commenced. State Through Dep't of Transp. & Dev. v. Chambers Inv. Co., 595 So.2d 598, 602 (La. 1992)(citation omitted). However, the state and its political subdivisions cannot be held liable for the taking and damaging of private property under circumstances in which the federal government carries out the taking and damaging of the private property as part of a federal project. Holzenthal v. Sewerage & Water Bd. of New Orleans, 06-796, p. 15 (La.App. 4 Cir. 1/10/07), 950 So.2d 55, 66.[6]

         In support of its argument that the SELA Project was a federal project operated by the USACE, the SWB cites to Cooper v. City of Bogalusa, 195 La. 1097, 198 So. 510 (La. 1940); Vuljan v. Bd. of Com'rs of Port of New Orleans, 170 So.2d 910, 912 (La.App. 4th Cir. 1965); and Petrovich v. State of Louisiana, 181 So.2d 811 (La.App. 4th Cir. 1966). However, this Court rejected that argument in Holzenthal, supra, which is factually analogous to the instant case.

         In Hozenthal, this Court reviewed the facts in Vuljan, finding in that case the State's participation in the project was limited to its agreement to furnish the necessary lands, servitudes and rights-of-way, and to use its inherent power of eminent domain to hold the United States harmless against claims arising out of the Mississippi River-Gulf Outlet's construction, maintenance, and operation. Id. 06-796, p. 16, 950 So.2d at 67. There was no evidence that the State had any contribution in project design, monitoring, financing or otherwise. Id.

         In contrast, the Holzenthal Court distinguished its facts finding that the facts of its case established that the Cooperation Agreement between the federal government and the Sewerage & Water Board called for continued input, consultation, and shared responsibilities for the project. Id., 06-796, p. 17 950 So.2d at 67. The Sewerage & Water Board co-chaired a coordination team that oversaw issues related to design, planning, scheduling, contract awards, costs, inspections, and more. Id. Finally, the Sewerage & Water Board was responsible to contribute a minimum of twenty-five percent but not more than fifty percent of the costs of the total project. Id. The Hozenthal Court further found these facts distinguishable from Vuljan, and from Petrovich, wherein the United States exercised exclusive jurisdiction and control over a federal project. Id., 06-796, pp. 18-19, 950 So.2d at 68.

         Similar to Hozenthal, the record in the instant case reveals that the SWB was the non-federal SELA Project sponsor. As such, it was part of the SELA Project Coordination Team. As a member of the Coordination Team, the SWB participated in monthly meetings concerning the SELA Project construction. While USACE was responsible for administering the SELA Project, the SWB granted USACE the necessary access for the SELA Project construction and was responsible to pay thirty-five percent of the SELA Project costs.

         As the owner of the SELA drainage systems, the SWB was tasked with the project design and responsible for the operation, maintenance, repair and replacement of the SELA drainage system. In addition, the SWB fielded complaints through a hotline and agreed to indemnify USACE from damages arising from the SELA Project.

         Under these facts and circumstances, the record supports the conclusion that the SELA Project was a state project, wherein the SWB was acting under its power of eminent domain in carrying out the project. Thus, we cannot say that the trial court was manifestly erroneous in finding that the SWB was liable to the Plaintiffs on the inverse condemnation claim.

         CUSTODIAL LIABILITY

         Turning to custodial liability, the SWB claims that the trial court was manifestly erroneous in finding it owned and controlled the SELA Project, for purposes of La. C.C. art. 2317. In addition, it contends the trial court legally erred when it failed to apply La. R.S. 9:2800, which is the applicable statute for public entities.

         In its judgment, the trial court found the SWB strictly liable to the Plaintiffs under La. C.C. arts. 2317 and 2317.1.[7] La. C.C. art. 2317 creates a cause of action for damages caused by things in our custody. La. C.C. art. 2317 states:

We are responsible, not only for the damage occasioned by our own act, but for that which is caused by the act of persons for whom we are answerable, or of the things which we have in our custody. This, however, is to be understood with the following modifications.

         La. C.C. art. 2317.1 generally modifies custodial liability under Article 2317 by requiring proof that: 1) the owner or custodian of a defective thing has knowledge of the defect, 2) the damage could have been prevented by the exercise of reasonable care, and 3) the failure to exercise reasonable care. See Moffitt v. Sewerage & Water Bd. of New Orleans, 09-1596, p. 5 (La.App. 4 Cir. 5/19/10), 40 So.3d 336, 339 (holding Article 2317 was qualified generally by Article 2317.1). Specifically, Article 2317.1 provides:

The owner or custodian of a thing is answerable for damage occasioned by its ruin, vice, or defect, only upon a showing that he knew or, in the exercise of reasonable care, should have known of the ruin, vice, or defect which caused the damage, that the damage could have been prevented by the exercise of reasonable care, and that he failed to exercise such reasonable care.

         Further, custodial liability under Article 2317 is specifically limited as to public entities by La. R.S. 9:2800, which requires additional proof that the public entity had notice and opportunity to repair the defect.[8] See id., 15-1596, pp. 5-6, 40 So.3d at 340 (holding Article 2317 is also qualified particularly to public entities by entities such as the SWB by La. R.S. 9:2800). As such, in order to impose custodial liability against a public entity, the plaintiff must prove that: (1) the thing which caused the damage was owned or in the custody of the public entity; (2) the thing was defective due to a condition creating an unreasonable risk of harm; (3) the entity had actual or constructive notice of the defective condition yet failed to take corrective action within a reasonable period of time; and (4) the defect was the cause of the plaintiff's harm. See La. C.C. arts. 2317 and 2317.1; La. R.S. 9:2800. See also Bridgewater v. New Orleans Regional Transit Auth., 15-0922, p. 8 (La.App. 4 Cir. 3/9/16), 190 So.3d 408, 413 (citation omitted).

         Here the SWB challenged the first and third elements. First, the SWB argues that the trial court was manifestly erroneous in finding that it was the owner of the SELA Project, who exercised custody or garde over the SELA Project. Custody or garde is a broader concept than ownership. Dupree v. City of New Orleans, 99-3651, p. 7 (La. 8/31/00), 765 So.2d 1002, 1009 (citation omitted). "[I]n determining whether a thing is in one's custody or garde, courts should consider (1) whether the person bears such a relationship as to have the right of direction and control over the thing; and (2) what, if any, kind of benefit the person derives from the thing." Dupree, 99-3651, p. 8, 765 So.2d at 1009. (citations omitted). Determining custody or garde of the thing is a fact driven determination. Dupree, 99-3651, p. 7, 765 So.2d at 1009 (citation omitted). "Although there is a presumption that an owner has custody or garde of its property, this presumption is rebuttable. One way to rebut the presumption is by establishing a contractual undertaking by another to maintain and control the property." Gallina v. Hero Lands Co., 03-331, p. 5 (La.App. 4 Cir. 10/7/03), 859 So.2d 758, 762.

         On the first issue relative to the right of direction and control, a review of the record reveals that SWB owned and maintained direction and control over the SELA Project. As discussed, the SWB owned the SELA drainage systems and was responsible for the design, operation, maintenance, repair and replacement of the SELA drainage system. The SWB also participated in monthly meetings concerning SELA construction, as well as received complaints from property owners.

         The SWB suggests that USACE had custody and control over the SELA Project. However, more than one party may have custody or garde of a thing under Article 2317. Dupree, 99-3651, p. 7, 765 So.2d at 1009. While the USACE was the project administrator, there was no evidence produced to rebut the presumption the SWB, as the owner of the SELA drainage system, also maintained custody or garde over the construction, or otherwise entered into a contract to give the USACE exclusive control over the project.

         As to the second issue, there is no dispute that the SWB, as the entity responsible for public drainage in New Orleans, derived a substantial benefit from the SELA Project. Given that the record supports the trial court's conclusion, we cannot say that the trial court ...


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