United States District Court, E.D. Louisiana
ORDER & REASONS
the Court is a motion for summary judgment filed by Defendant
Xcel Air Conditioning Services, Inc. (“Xcel”). R.
Doc. 195. The Motion is opposed. R. Doc. 199. Xcel has filed
a reply. R. Doc. 205. The Court now 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 John T.
Campo & Associates (“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. 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, 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.
2015, Pacific Hospitality Group (“PHG”) entered
into a purchase agreement with Supreme Bright to buy the
hotel whereby PHG would assume 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 Cotton
Exchange, including the contracts with Xcel, Campo, and CRS.
Thereafter, Cotton Exchange executed the purchase agreement
with Supreme Bright (the “Assignment and Assumption
Agreement”). R. Doc. 1 at 4. On January 31, 2017,
Cotton Exchange and Supreme Bright entered into a settlement
agreement resolving a matter unrelated to the issue at bar,
wherein the parties amended the Assignment and Assumption
Agreement's terms by adding the following language:
Assignor hereby assigns, transfers and conveys all of
Assignor's rights, title and interest in and to the
Assigned Property, including all contractual and personal
rights in and/or related to the Hotel, including without
limitation the personal right to sue for damages, that
Assignor has against CRS, subcontractors and vendors to CRS,
and any other contractors or vendors engaged by [Supreme
Bright] prior to the Closing Date.
R. Doc. 199-8 at 4-5.
Exchange 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. According 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 because of 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
March 29, 2019, Defendant Campo filed a motion for summary
judgement, R. Doc. 162, which the Court granted in part and
denied in part, R. Doc. 190. With respect to Cotton
Exchange's breach of contract and breach of warranty
claims against Campo, summary judgement was granted because
Campo and Supreme Bright's agreement contained language
requiring Supreme Bright to obtain Campo's explicit
consent before assigning their agreement to a third party.
Id. at 8. However, with respect to Cotton
Exchange's negligence claims against Campo, summary
judgement was denied because part of Cotton Exchange's
complaint alleges it sustained damage caused by Campo during
its ownership of the property. Id. at 10.
March 22, 2019, Defendant CRS filed a motion to dismiss
contending Cotton Exchange had no right of action in contract
or tort. R. Doc. 156. On May 16, 2019, the Court denied
CRS's motion, holding Supreme Bright retained its
personal right to sue CRS after the sale to Cotton Exchange
and thus validly transferred this right to Cotton Exchange
over a year after the sale pursuant to the Assignment and
Assumption Agreement. R. Doc. 198.
instant motion, Defendant Xcel contends Cotton Exchange was
not assigned the personal right to sue Xcel under two
separate Aaon Unit repair contracts (R. Doc. 195-5; R. Doc.
195-5) or a fan coil unit cleaning (“FCU”)
contract (R. Doc. 195-6). R. Doc. 195-1 at 2-3. According to
Xcel, the Assignment and Assumption Agreement assigned the
Preventative Maintenance Contract only. Id. at
4. Furthermore, Xcel submits a lack of valid assignment
warrants a dismissal of the claims related to the Aaon Unit
and FCU contracts because a party not in privy to a contract
cannot recover for its breach. Id. at 8.
Additionally, Xcel argues the subsequent purchaser rule bars
Cotton Exchange from recovering under the Aaon Unit and FCU
contracts because “an owner of property has no right or
actual interest in recovering from a third party for damage
which was inflicted on the property before his
purchase.” Id. at 8-9. Finally, Xcel points to
this Court's order granting partial summary judgment in
favor of Campo, arguing that order is controlling here.
opposition, Cotton Exchange acknowledges it has not sued Xcel
for its work under the two Aaon Unit repair contracts, and
therefore, does not oppose summary judgment on those
contracts. R. Doc.199 at 2. Next, Cotton Exchange
argues the Settlement Agreement reached between Supreme
Bright and Cotton Exchange on January 31, 2017 amended the
Assignment and Assumption Agreement specifically assigning to
Cotton Exchange Supreme Bright's personal right to sue on
the FCU contract. Id. at 3. Thus, Cotton Exchange
contends, Xcel's motion to dismiss Cotton Exchange's
claims based on that contract should be denied. Lastly,
Cotton Exchange avers the Court's ruling on Defendant
Campo's motion for summary judgement is not applicable
here, as Supreme ...