When "Drone" Used to be a Boring Word

In Smith v. Grantham, homebuyers sued the sellers for alleged failure to disclose prior flooding of the home. The buyers also sued the sellers’ real estate agent for negligent misrepresentation, arguing the realtor knew or should have known of a prior history of flooding. The plaintiff referenced the previous sellers’ property disclosure documents located in the MLS listing database, which disclosed a prior flooding incident. However, the property disclosure document that the realtor received from her clients denied any prior flooding of the property or structure.

The Court of Appeal affirmed summary judgment in favor of the sellers’ agent, noting that her clients represented in their property disclosure document that the property had never flooded, and she had no actual knowledge contradicting their representation. The Court stated that under La. R.S. 9:3894(B), a real estate agent is relieved of liability for providing false information furnished by her client if she did not have actual knowledge that the information was incorrect. The court held that imposing a higher duty on a real estate agent would improperly “create a situation in which the agent had to independently verify information before conveying it to the buyer.”

Reference:

Smith v. Grantham, 93-0881 (La. App. 1 Cir. 9/4/24), 394 So.3d 316.

In a first-party action obtained by assignment for excess liability against an insurer, the Louisiana Supreme Court in Smith v. Citadel Insurance,19-00052 (La. 10/22/19) ruled that the claim against the carrier is subject to the 10-year contract prescription period under La. law, stating:

“For the above reasons, we hold an insurer’s duty of good faith owed to its insured under La. R.S. 22:1973 does not exist separate and apart from an insurer’s contractual obligations. The duty of good faith is codified in La. R.S. 22:1973, but this duty is an outgrowth of the contractual and fiduciary relationship between the insured and the insurer, and the duty of good faith and fair dealing emanates from the contract between the parties. Thus, first-party bad faith claims against an insurer are governed by the ten-year prescriptive period set forth in La. C.C. art. 3499. Consequently, Ms. Smith’s first-party bad faith claim against GoAuto, brought pursuant to an assignment of rights from the insured, was subject to a 10-year prescriptive period and is not prescribed.”

The concurring justice noted that it was not necessary to engage in the protracted discussion concerning the duties of insurers relative to first-party claims. Nevertheless, the court offered an in-depth discussion of these duties.

The Louisiana legislature recently enacted laws that set new prescription periods for most delictual/tort actions and claims for damage caused to immovable property. Civil Code articles 3492 and 3493 previously established a prescription period of one year for these types of claims. The legislature repealed these articles and enacted Louisiana Code Articles 3493.1 and 3493.2 in their place.

Louisiana Code Article 3493.1 now establishes a prescriptive period of two (2) years for delictual actions/tort claims that runs from the day injury occurred or damage is sustained. It contains language previously included in Louisiana Civil Code Article 3492, which states that prescriptive period does not run against minors or interdicts in actions involving permanent disability and brought pursuant to the Louisiana Products Liability Act or state law governing product liability actions in effect at the time of the injury or damage.

Louisiana Civil Code Article 3493.2 also establishes a prescriptive period of two (2) years when damage is caused to immovable property. This prescriptive period runs from the day the owner of the immovable acquired, or should have acquired, knowledge of the damage.

These changes went into effect of July 1, 2024. Louisiana Civil Code Articles 3493.1 and 3493.2 apply prospectively only and apply to delictual actions arising after July 1, 2024.