United States District Court, W.D. Louisiana, Shreveport Division
ANIL VELUVOLU, ET AL.
NISSAN NORTH AMERICA, INC., ETAL
HORNSBY MAGISTRATE JUDGE.
ELIZABETH ERNY FOOTE UNITED STATES DISTRICT JUDGE.
before the Court are briefs filed by both parties addressing
whether nonpecuniary damages can be awarded pursuant to
Louisiana Civil Code article 1998 in an action for
redhibition when the remedy is reduction of the purchase
price rather than rescission of the sale.
matter arises out of the sale of a new vehicle, a 2017 Acura
NSX ("the Acura"). Record Document 3, ¶ 8.
Plaintiffs purchased the Acura from Orr Infiniti in
Shreveport, Louisiana on November 3, 2016. Id.
Plaintiffs claim that the Acura began to manifest several
defective conditions within a few months after the sale.
Record Document 3, ¶ 15. The main defective condition
was the failure of the car to start, which occurred on four
separate occasions in 2017. Record Document 17-6, pp. 18, 23,
& 25-26. Plaintiffs brought suit against American Honda
Motor Company, Inc. ("AHM") for breach of implied
and express warranties. Record Document 3, p. 3. Plaintiffs
request a rescission of the sale, a return of the purchase
price, and costs related to the sale, pursuant to the
Louisiana law of redhibition and the Magnuson-Moss Warranty
Act, along with attorney's fees and damages for mental
anguish, humiliation, and inconvenience pursuant to Louisiana
Civil Code article 1998 which allows the recovery of
nonpecuniary damages in certain circumstances. Id.
AHM has admitted that it is considered to be the legal
manufacturer of the Acura for the purposes of relevant
Louisiana law. Record Document 37, p. 1.
Civil Code article 2520 states that a seller warrants the
buyer against redhibitory defects in the thing sold, and a
defect is considered redhibitory when it renders the thing
useless, or its use so inconvenient that it must be presumed
that a buyer would not have bought the thing had he known of
the defect. La. Civ. Code Ann. art. 2520. The existence of
such a defect entitles the buyer to obtain rescission of the
sale. Id. Article 2520 also provides that a defect
can be redhibitory even when it merely diminishes the
usefulness or value of a thing so that it must be presumed
that a buyer would still have bought it but for a lesser
price. Id. In such a case, the proper remedy is a
reduction of the purchase price rather than a rescission of
the sale. Id. On summary judgment, the Court held
that whether the Acura contained a redhibitory defect when it
was sold, and whether the proper remedy is rescission of the
sale or a reduction of the purchase price, were issues of
fact to be decided at trial. Record Document 29, pp. 11 &
14-15. The Court also held that whether Dr. Veluvolu was
eligible to receive nonpecuniary damages pursuant to article
1998 was a factual issue to be decided at trial. Id.
their joint pretrial order, the parties highlighted an
additional legal issue to be determined by the Court: whether
general damages, interest, and other expenses surrounding the
sale can be recovered by a plaintiff whose recovery in
redhibition has been limited to a reduction of the purchase
price. Record Document 29, p. 4. During the pretrial
conference, this issue was narrowed further. The Court
ordered the parties to submit briefing on whether
nonpecuniary damages are recoverable in a redhibition case
where the plaintiffs recovery has been limited to a reduction
of the purchase price. Record Document 42, p. 8.
Nonpecuniary Damages are Available
the Court's clear instructions, AHM's brief does not
address whether nonpecuniary damages can be awarded in a
redhibition case where the remedy is a reduction in price.
AHM provided the Court with no legal authority on the
requested topic and instead argued that a manufacturer cannot
be liable for nonpecuniary damages in a redhibition action at
all. Record Document 43, p. 2. In order to reach this broad
conclusion, AHM was either lax in its research efforts or
lacks candor with the Court.
Civil Code article 2545 sets forth the liability of bad faith
sellers (those who knew of a redhibitory defect in the thing
sold) and manufacturers (who are presumed to know of any
defects in the things they sell). Comment (j) to article 2545
clearly states, "Under this Article, nonpecuniary
damages are recoverable, as in other cases of contractual
breach, whenever the requirements set forth in Civil Code
Article 1998 ... are met." La. Civ. Code Ann art. 2545
cmt. (j). Nothing about this comment indicates that its
meaning does not apply equally to sellers and manufacturers.
In fact, in the seminal Louisiana case regarding nonpecuniary
damages under article 1998, Young v. Ford Motor Company,
Inc., the plaintiff sued both the manufacturer and the
seller in redhibition. 595 So.2d 1123 (La. 1992). The
Louisiana Supreme Court held that nonpecuniary damages are
recoverable in a redhibition case if it can be established
that "the obligee intended-and if the nature of the
contract supports this contention-to gratify a significant
nonpecuniary interest by way of the contract, and that the
obligor either knew or should have known that failure to
perform would cause a nonpecuniary loss to the obligee."
Id. at 1133. This holding does not exclude the
manufacturer from liability for nonpecuniary damages where
the requirements of article 1998 are met. Furthermore, every
Louisiana appellate court has followed suit and evaluated
whether a plaintiff in redhibition has met the requirements
of article 1998 and is therefore eligible to receive
nonpecuniary damages from a manufacturer. See Lovell v.
Blazer Boats Inc., 2011-1666 (La.App. 1 Cir. 10/24/12);
104 So.3d 549, 555; Jones v. Winnebago Indus., Inc.,
47, 137 (La.App. 2 Cir. 5/16/02); 92 So.3d 1113, 1121;
Landry v. Forest River, Inc., 2006-1424 (La.App. 3
Cir. 3/14/07); 953 So.2d 1046, 1051; Nelson Radiology
Assocs., L.L.C. v. Integrity Med. Sys., Inc., 2008-0443
(La App. 4 Cir. 7/29/09); 16 So.3d 1197, 1208-09; Poche
v. Bayliner Marine Corp., 93-CA-721 (La.App. 5 Cir.
2/09/94); 632 So.2d 1170, 1175.
AHM argues against this well-established facet of Louisiana
law. It begins its argument by stating that the Louisiana
Products Liability Act ("LPLA") is the exclusive
theory of liability against manufacturers for damages caused
by their products. Record Document 43, p. 2. Notably,
Plaintiffs do not assert that the Acura caused personal
injury or economic damages within the meaning of the LPLA.
AHM cites Brandner v. Abbott Laboratories, Inc., No.
10-3242, 2012 WL 195540 at *6 (E.D. La. Jan. 23, 2012) which
states that "[t]he Fifth Circuit has held that
redhibition damages are limited to economic loss, which
includes 'the cost of the product, and the loss of income
or profits resulting from the loss of or inability to use the
product as intended."' (quoting Chevron USA,
Inc. v. Aker Maritime, Inc., 604 F.3d 888, 900-01 (5th
Cir. 2010)). In Chevron, the Fifth Circuit was asked
to determine whether the LPLA precluded the trial court's
award of attorney's fees to a plaintiff who brought
claims under the LPLA and redhibition. 604 F.3d at 899. The
court observed that the LPLA provides the exclusive theory of
recovery against manufacturers for damage caused by their
products and does not allow the recovery of attorney's
fees. Id. at 900. Examples of damages under the LPLA
include pain and suffering, medical expenses, damage to other
property, and loss of consortium, as opposed to the economic
losses recoverable in a redhibition action. Id. The
court held that the damages the plaintiff was asserting were
primarily for damage that the defective product caused to
other property, rather than economic loss related to the cost
of the defective product itself. Id. at 901. For
that reason, the court found that the plaintiffs damages fell
entirely under the LPLA and not redhibition. Id.
Therefore, the plaintiff could not recover attorney's
argues that this Court is bound by stare decisis to
hold that nonpecuniary damages are not recoverable in a
redhibition action based on the Fifth Circuit's holding
in ChevronRecord Document 43, pp. 3-4. In
context, the Fifth Circuit's holding that the plaintiffs
losses were non-economic and therefore could not be awarded
as part of a redhibition action was intended to contrast
those economic damages with the personal injury-type damages
that are recoverable under the LPLA. See Id. This
statement does not reflect a holding by the Fifth Circuit
that nonpecuniary damages cannot be recovered in a
redhibition action. In fact, Chevron does not
mention nonpecuniary damages at all. Therefore, stare
decisis does not dictate AHM's desired result as to
nonpecuniary damages are available in a redhibition case
where the proper remedy is a reduction of the purchase price
is somewhat unclear under Louisiana law. This confusion has
been noted by Louisiana legal scholars:
Article 2545 does not refer to the distinction between
rescission and price reduction. The article, however, does
use the term redhibition, which under the sales revision
leads to either rescission or price reduction. Yet this
article seems to have only rescission in mind. The remedies
it provides seem only to fit rescission, not reduction of the
price. Yet for both kinds of ...