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Cotton Exchange Investment v. Xcel Air Conditioning

United States District Court, E.D. Louisiana

July 10, 2019


         SECTION “L” (5)

          ORDER & REASONS

          Eldon E. Fallon U.S. District Court Judge

         Before the Court is a motion seeking reconsideration of the Court's partial denial of summary judgment filed by Defendant John T. Campo (“Campo”). R. Doc. 200. The motion is opposed. R. Doc. 209. Campo has filed a reply. R. Doc. 218. The Court now rules as follows.

         I. BACKGROUND

         Plaintiff Cotton Exchange Investment Properties LLC (“Cotton Exchange”) alleges its hotel was damaged as a result of faulty workmanship performed by Defendants Campo and Commercial Renovation Services, Inc. (“CRS”) during the hotel's renovation. R. Doc. 23 at 2. Plaintiff 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 its complaint, Plaintiff alleges that in 2014, Supreme Bright New Orleans LLC (“Supreme Bright”), which owned the hotel at the time, executed several contracts for the hotel's renovation. Id. 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 for Campo to 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, 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”). Id. 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.

         Cotton 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. Id. at 6. In December 2015, Plaintiff alleges it canceled the HVAC contract with Xcel pursuant to its terms and notified Xcel of the damage on three occasions. R. Doc. 1 at 5, 6. Xcel allegedly did not respond to the demand for indemnity. Id. 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. Id. at 7-16.[1]

         On March 29, 2019, Defendant Campo filed a motion for summary judgment, 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, the Court granted summary judgment 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. With respect to Cotton Exchange's negligence claims against Campo, however, the Court denied summary judgment because Cotton Exchange's complaint alleges, in part, that the hotel sustained damage caused by Campo during Cotton Exchange's ownership of the property. Id. at 10.[2]


         In the instant motion, Campo seeks reconsideration of the Court's denial of summary judgment on Cotton Exchange's negligence claims against Campo. R. Doc. 200. Alternatively, Campo moves the Court to certify the issue for interlocutory appeal. Id. Campo argues this Court committed legal error in denying its motion with respect to Cotton Exchange's negligence claims, reiterating its argument that the subsequent purchaser rule bars these claims and again pointing to Eagle Pipe & Supply, Inc. v. Amerada Hess Corp., 2010-2267 (La. 10/25/2011), 79 So.3d 246. R. Doc. 200 at 3.

         In opposition, Cotton Exchange states, “should this Court decide to reconsider its ruling on Campo's motion for Summary Judgment, [it] asks that [the Court] also reconsider (1) its ruling that [Cotton Exchange] was not assigned [Supreme Bright's] right to enforce Campo's statutorily implied warranty of good workmanship and (2) [the Court's] failure to rule on [Cotton Exchange's] contention that [it] was assigned the right to sue Campo in tort via the January 31, 2017 Settlement and Release Agreement.” R. Doc. 209 at 1-2.

         III. LAW & ANALYSIS

         The Court first considers the issue of whether it committed a manifest error of law, as Campo and Cotton Exchange both contend, before considering whether to certify for interlocutory appeal the issue of whether Cotton Exchange may sue ...

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