A Matter of Control of a Bike Results in No Liability under the LPLA

In the recent case of Riedel v. Fenasci,2018-0540 (La. App. 1 Cir. 12/28/18), _______ So. 3d _______, 2018 WL 6818716,home buyers sued the sellers and the involved real estate agents after mold wasdiscovered shortly following the sale. This is a common fact pattern in humidSouth Louisiana. The buyers lost in the trial court when there was no evidencethat the sellers or the agents knew of the problem. The result was affirmed bythe First Circuit Court of Appeal.

The Riedels identified mold weeks afterthe closing and filed a claim with their homeowner’s insurer. But the claim wasdenied when the insurer’s inspection revealed long- term damage, rot, anddeterioration in a ceiling due to water damage. That finding prompted thesuit.

Against the sellers, the Riedels contendedthat they “had to have known” about the moisture and mold in the home prior tothe sale. Because the home was sold “as is,” they had to establish fraudto recover. However, the sellers had not lived in the home for years and hadreceived no complaints from tenants over this time. Under such facts, the claimof fraud was not supported.

The Riedels also sued both agents for negligent misrepresentation, and their own agent for breach of fiduciary duty. In assessing the claim against the agents, the Riedel Court agreed that real estate agents are liable for negligent misrepresentation when they fail to disclose hidden defects in the property which were known or should have been known to them. The Court also agreed that a purchaser’s real estate agent owes a fiduciary duty, the highest duty of care recognized by law. Nevertheless, when the plaintiffs’ own inspector found no visible evidence of mold prior to the sale and there was no indication that the agents possessed prior knowledge of the mold, the claim against the agents was also dismissed.

Marty Golden has been practicing law based in Baton Rouge, Louisiana for over thirty years, concentrating in civil litigation primarily involving injuries, property damage, insurance coverage, and contract disputes. Much of his practice is defending and advising real estate agents in suits by property buyers and sellers, but Marty also defends other professionals, insurance companies, manufacturers, and business owners. Marty has a special interest in all things procedural, because they are the rules of the road for litigators and knowing them better than his opponent gives him a leg up in court.

In Marrero v. I. Manheim Auctions, Inc., the plaintiff fell after he exited a building during a rainstorm and stepped off a curb into a parking lot. He claimed he stepped into a divot where asphalt had washed away. The defendant moved for summary judgment.

In opposition, the plaintiff offered an expert affidavit that cited a lack of handrails, code violations, and loose pebbles as contributing to the plaintiff’s fall. To recover in the case, the plaintiff possessed the burden under La. R.S. 9:2800.6 to establish three elements: 1) the parking lot presented an unreasonable risk of harm, 2) this risk of harm was reasonably foreseeable, and 3) the defendant possessed actual or constructive notice of the alleged defect.

The defense argued the plaintiff could not show the parking lot presented an unreasonable risk of harm that was reasonably foreseeable and produced an expert affidavit to show the divot was only 3/16” deep. Evidence also showed the plaintiff was familiar with the area where he fell. The defendant also had received no prior complaints about the area. The trial court found that the parking lot did not present an unreasonable risk of harm because the divot was only 3/16” deep and granted summary judgment.

On appeal, the plaintiff argued that the trial court should not have granted summary judgment in light of the competing expert affidavits regarding whether the parking lot presented an unreasonable risk of harm. However, when a motion for summary judgment is appealed, the court uses a de novo standard of review. Under this standard, the appellate court reviews all issues and considers all evidence submitted to the trial court in its ruling.

The First Circuit affirmed summary judgment but did so for different reasons than the trial court. The Marrero court found the plaintiff failed to produce any evidence of the third element, i.e., whether the defendant knew or should have known of the defect. Because the plaintiff failed to establish a material issue of fact as to all three required elements, summary judgment was granted. Marrero reminds that appellate courts may consider facts and legal issues the trial court did not address in its ruling.

The Louisiana Products Liability Act (“LPLA”) contains the exclusivetheories of recovery against a manufacturer for damages caused by its product.The term “manufacturer” within the LPLA includes “the seller of a product whoexercises control over or influences a characteristic of the design,construction, or quality of the product that causes damage.” The rapid growthof e-commerce raises a unique question – how do we classify internet retailers?

Internet retailers generally act as a middleman for third partymanufacturers and online consumers. In this respect, they are not technically“sellers” as defined by the LPLA because they typically do not have controlover the design or construction of the products they sell. Nevertheless, theproper categorization of internet retailers may become important when someoneis injured by a product, as was the case in State Farm Fire and CasualtyCompany v. Amazon.com, Inc., 2019 WL 5616708 (Miss. N.D. 10/31/19) ---F.Supp.3d ---.

In State Farm Fire and Casualty Company v. Amazon.com, Inc., two hoverboards purchased through Amazon caught fire inside a Mississippi home and the home was destroyed. In considering Amazon’s possible liability, the Mississippi Court asked whether Amazon was a “service provider” or a “marketplace.” In Mississippi, a finding that Amazon was a “service provider” would insulate it from the claim. However, if Amazon acted as a “marketplace,” it could be exposed by the common law to a negligent failure-to-warn claim. The Mississippi Court held that, because Amazon operated as a marketplace, the claim against it could go forward.

If similar facts arose in Louisiana, could Amazon or similar retailers be exposed under the LPLA? If an internet retailer established policies that forced a “true” manufacturer to negatively alter product quality, would the LPLA provide a remedy? For example, if an internet retailer sets a price ceiling, this artificial figure, especially if unreasonably low, might pressure a manufacturer to lower product safety. Is setting a price range the exercise of enough control or influence over the “design, construction, or quality of a product” to render internet retailers subject to suit under the LPLA? That is a question likely to be answered in cases to come.