Class Actions in a State of Undress

The Louisiana Supreme Court recently addressed the impact of contractual "errors" in Cynthia Fry Perionnet and Elizabeth Fry Franklin v. Matador Resources Company, 2012-2292, 2012-2377, -- So. 3d --.

The Perionnet case involved a dispute over the intent of a contract to extend a mineral lease. The property owners believed that the lease was extended as to only 168.95 acres of nonproducing land. The defendant/lessors argued that the contract contemplated that the lease would extend to the entire 1850.34 acres to include producing wells. Plaintiffs/property owners argued that their unilateral error regarding the terms of the contract was ground for rescission. The jury ruled in favor of the defendant/lessors. The Court of Appeal reversed. The Supreme Court granted writs.

The Perionnet Court began its opinion with an overview of basic tenets of contract law. The Louisiana Civil Code defines a contract as "an agreement by two or more parties whereby obligations are created, modified, or extinguished." La. C.C. art. 1906. Contracts are formed through offer and acceptance. La. C.C. art. 1927. Once formed, contracts have "the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law." La. C.C. art. 1983. One such "ground" under Louisiana law is "error." La. C.C. art. 1948.

The Louisiana Civil Code recognizes two forms of error: mutual error (both parties are mistaken) or unilateral error (only one party is mistaken). However, for either error to cause the dissolution of a contract, the error (1) must effect the cause of the obligation and (2) the other party must have known that the matter impacted by the error was the reason for the contract. La. C.C. art. 1949. In a case of mutual error, the court can reform the contract. Either partial or full rescission is the only remedy available for unilateral error. La. CC. art. 1952.

A party challenging a contract for unilateral error must also prove that the error was excusable. "Louisiana jurisprudence is sprinkled with cases which deny relief to the parties who claim an agreement should be invalidated because of unilateral error which is caused, in large part, by the complaining party's inexcusable ignorance, neglect or want of care." Id. p. 25.

The Perionnet Court found that the plaintiffs' alleged mistake was inexcusable. The defendants demonstrated that: 1) plaintiffs could show no excuse for failing to read and understand the contract; 2) plaintiffs' agents who negotiated and reviewed the contract were self-proclaimed experts in oil and gas; and 3) the original lease was on the plaintiffs' agent's own forms. The Court found a "sea of flags" in the written agreement that should have notified the experienced plaintiffs that the agreement extended to the entire property. Therefore, the Court found that the mistake was easily detectable and could have been rectified by a minimal amount of care, i.e. "by simply reading the document and/or requesting simple changes to the written offer before acceptance." Id. at 30.

The Supreme Court's Perionnet decision serves as a healthy reminder of a basic concept - read your contracts. Although to err may be human, it can affect your bottom line.

It seems intuitive that people have an obligation to avoid potentially harmful conditions that are open and obvious. Nevertheless, treatment of open and obvious conditions in Louisiana law has proved tricky because many cases did not apply a uniform analytical framework. In Farrell v. Circle K Stores, Inc. and the City of Pineville, the Louisiana Supreme Court recently offered needed guidance on the appropriate analysis for open and obvious conditions.

The plaintiff stopped at a gas station and decided to walk her dog in a nearby grassy area. To get to the grassy area, Farrell had to cross a pool of water that was “approximately the length of a tractor-trailer.” Farrell attempted to jump across the narrowest part of the pool, but slipped and fell. She sued for damages arising from her injuries. The defendants moved for summary judgment on the grounds that the condition was open and obvious. The trial court and court of appeal denied the defendants’ motion. However, the Louisiana Supreme Court reviewed the matter and reversed.

In finding that the condition was open and obvious, the court began its analysis by outlining the elements that a plaintiff must establish to recover for damage arising from a defect under Louisiana Civil Code articles 2315, 2316, 2317 and 2317.1:

• That the defendant owed plaintiff a duty to conform its conduct to a specific standard;
• That the defendant breached the duty owed;
• That the defendant’s conduct was the cause-in-fact of the plaintiff’s injuries;
• That the defendant’s conduct was the legal cause of the plaintiff’s injuries; and,
• That the plaintiff suffered damages.

The court also highlighted the requirement under La. R.S. 2317.1 that plaintiff show the defendant knew or should have known of the condition before the injury occurred.

The court noted that some courts had assessed whether a condition was open and obvious in the context of whether the defendant owed the plaintiff a duty, while other courts had assessed whether a condition was open and obvious in the context of whether the defendant had breached the duty that was owed. In Farrell, the court found a duty was owed under the code articles referenced above. It clarified that whether a condition was open and obvious should be considered during analysis of whether the duty was breached, pursuant to Louisiana’s “risk/utility” test. This test requires consideration of whether the condition presented an unreasonable risk of harm, which considers whether the condition had any social utility; the likelihood and magnitude of harm the condition presented; the cost of preventing the harm; and the nature of the plaintiff’s conduct, including whether plaintiff’s conduct was socially useful or inherently dangerous.

Specifically, whether a condition is open and obvious should be considered in determining the likelihood of harm and magnitude of harm to an objectively reasonable person. The court further advised that the specific nature of the condition should be considered, such as its location and size. In contrast, a plaintiff’s particular and subjective knowledge of the condition is not relevant in determining whether defendant has breached a duty.

The Farrell court applied this analysis to the facts. It found that the pool served no useful purpose. No evidence existed regarding the cost to eliminate the risk. With respect to Farrell’s conduct, the court found that walking a dog was not dangerous by nature and may have an important social function, but this did not weigh heavily in the analysis. However, with respect to whether the condition as open and obvious, the court considered the location of the pool at the edge of the parking lot, the size of the pool, and the fact that it was apparent to all who encountered it. Thus, the condition was open and obvious, and the likelihood of and magnitude of the harm was minimal.

The court concluded that these factors collectively showed the condition was not unreasonably dangerous. The defendants did not breach their duty to plaintiff, and summary judgment should have issued for the defendants. In so holding, the Supreme Court provided clarifying guidance on analysis of open and obvious conditions under Louisiana law.

Case Reference:

Farrell v. Circle K Stores, Inc. and the City of Pineville, 2022-000849 (La. 3/17/23), --- So.3d ----, 2023 WL 2550503.

A Louisiana court recently granted a motion for summary judgment in a case involving third-party criminal activity on a university campus. The motion initially was denied, but the Louisiana Supreme Court remanded the motion for reconsideration in light of its ruling in Evans v. Abubaker, Inc. After considering Evans in the context of a claim brought against an institution of higher learning, the court found Grambling University had no duty to provide additional security measures and could not have done anything within its scope of duty to prevent the murder of one of its students. See Augman v. Grambling State University.

In Augman, the plaintiff’s son, a student at Grambling University, was fatally shot at a party on the Grambling campus by another Grambling University student. The established facts confirmed the social gathering was on campus, that alcohol was consumed at the party, and that guns were present. In applying Evans to a higher education context and granting Grambling University’s Motion for Summary Judgment, the Third Judicial District Court reasoned:

There are allegations of breached policies by Grambling, i.e., allowing alcohol consumption on campus, allowing a pop-up party, and not searching for weapons in all the dorm rooms. Despite those allegations, there is no evidence presented in this summary judgment that shows that by following any of those policies to the T, Grambling would have prevented this incident. Likewise, the evidence presented on summary judgment does not show that there are additional security measures that Grambling could have taken to prevent this tragedy.

There is no indication Grambling had any duty to provide any additional security measures in this case. Likewise, there is no evidence presented that Grambling could have done anything within its duty or scope of duty, analyzed with regard to Evans, to prevent this tragedy.

The Louisiana Supreme Court’s opinion in Evans explained that preventing third party criminal activity by someone who intentionally engages in criminal conduct is not within the scope of duty of a business owner. The Evans court held, “Some risks that arise because of a defendant’s conduct are not within the scope of the duty owed to a particular plaintiff because they are unforeseeable.” Augman applied Evans’ reasoning in a higher education/alleged negligence on campus context and dismissed the claims brought against Grambling University because preventing the shooting of one student by another student on its campus was not within Grambling’s scope of duty.

Just one month after the Augman ruling, the Louisiana Supreme Court issued the opinion of Campbell v. Orient-Express Hotels Louisiana, Inc. For more detailed analysis of this case, see a July 28, 2025, Keogh Cox blog by John P. Wolff III. In Campbell, the Supreme Court did not modify the duty/risk analysis but clarified the separate analyses of “duty” and “scope of duty”, concluding that the scope of the duty owed by the defendant hotel did not encompass the risk of the harm and injury suffered by the plaintiff. Again, the Campbell Court focused on “foreseeability” of the criminal activity and considered evidence that the plaintiff’s own actions placed him in the path of peril.

The Louisiana Supreme Court’s reasoning in Campbell echoes its decision in Evans, suggesting that the issue of “scope of duty” for third-party criminal activity on university campuses analyzed in Augman would apply in cases involving claims against other institutions of higher learning as well.

References:

Evans v. Abubaker, Inc., 2023-00955 (La. 5/10/24), 384 So.3d 853.

Augman v. Grambling State University, Third Judicial District Court, Parish of Lincoln, Supplemental Summary Judgment Ruling with Reasons for Ruling, Feb. 07, 2025.

Campbell v. Orient-Express Hotels Louisiana, Inc., 2024-00840 (La. 3/21/25), 403 So.3d 573.