Court holds real estate agents representing sellers are not required to investigate the seller’s representations about the property.

Louisiana’s anti-indemnity statute applicable to construction contracts, R.S. 9:2780.1, became law in 2011. The statute renders unenforceable any provision in, or collateral to, a construction contract that purports to indemnify or hold harmless a person from liability for its own negligence, or has the effect of doing so. Since the law's passage, few court decisions have interpreted its seemingly broad language and many questions remain as to the law's full impact.

The obvious intent of the anti-indemnity law is to avoid shifting liability away from a party at fault to another person. To this end, the language in the statute nullifies any agreement that has "the effect of holding the person at fault harmless.” But what about "limit of liability" provisions? Arguably, such provisions have the effect of holding harmless the party at fault. Does a limit of liability provision, otherwise valid and enforceable under Louisiana law, run afoul of the anti-indemnity statute? After all, those parties with superior bargaining power in construction contracts will seek to insulate themselves from liability to the fullest extent allowed by law, and will look for alternatives to the indemnity provisions that now expressly violate public policy.

One court recently held that R.S. 9:2780.1 does not prohibit a limit of liability provision in a construction contract. In Patriot Contracting, LLC v. Star Insurance Company, (E.D. La. 3/01/2018), the construction contract contained a provision that excluded liability of the architect for good faith decisions made during contract administration. The plaintiff/contractor alleged that the architect was negligent in its contract administration duties and caused it to suffer economic loss. The court dismissed the claim, rejecting the contractor’s argument that the provision violated the anti-indemnity law.

The Patriot court explained that the statute prohibits an indemnity agreement, i.e., where one party agrees to reimburse a second party for damages for which the second party becomes liable to a third party. However, the anti-indemnity law did not impact the provision that excluded the contractor’s right to recover from the architect. Thus, at at least according to one court, parties in construction contracts are still free to include limit of liability provisions.

Mary Anne Wolf is an engineer/attorney with a construction background who represents design professionals, contractors, and others in construction litigation. She also gives seminars on the subject. She enjoys travel, yoga, and encouraging her husband in his gardening and cooking endeavors.

The Louisiana Supreme Court recently held that the New Home Warranty Act ("NHWA") is not the exclusive remedy for a purchaser of a new home where the builder fails to disclose known defects in the Residential Property Disclosure Act ("RPDA"). Stutts v. Melton, 2013-0557, -- So.2d. ----. The Court also upheld an award of damages and attorney fees for fraud victims who elect not to seek rescission of a sales contract despite no Civil Code article expressly allowing for attorney fees in such instances.

Builder Chad Melton completed a home in Walker, Louisiana in 2004. He and his wife lived in the home for approximately nine months prior to selling the home to James and Lisa Stutts. The Residential Property Disclosure Act, La. R.S. 9:3196, et seq., requires disclosures of known problems with a home prior to sale. Melton provided the Stutts with a disclosure form, but failed to mention that color had previously been observed bleeding onto the walls of the home from the roof.

In Stutts, it was factually established that Melton was aware of the roof defect because he had entered into a $13,600 settlement with the roof manufacturer to fund the replacement of the roof. Nevertheless, Melton cleaned the walls and installed gutters instead of the more expensive roof replacement.

Melton's gutter solution was ill-advised and unsuccessful. After discovering the problem in the summer of 2006, the Stutts filed suit seeking as damages: the repair costs for the roof; costs for additional repairs; and attorney fees.

The Stutts filed a motion for summary judgment on their fraud claim citing La. C.C. art. 1953. The Meltons opposed the motion, arguing that the NHWA provides the "exclusive remedy" available to the Stutts. The motion was granted and, after a bench trial on damages, the trial judge awarded damages to include attorney fees.

The court of appeal reversed both the summary judgment and the money judgment, holding that the Stutts' claims were untimely under the NHWA.The NHWA provides a one year warranty period for new home construction and an additional thirty day period in which to file suit under the Act. By its terms, the NHWA provides the "exclusive remedies" between a builder and an owner relative to home construction.

The Louisiana Supreme Court reversed and reinstated that lower court's judgment. The Court held that the RPDA applied in this case because the home had been occupied by the Meltons after construction was completed. Even though the NHWA claims were prescribed, the Stutts possessed a timely claim that Melton had provided a fraudulent disclosure in violation of the RPDA.

The Court next addressed the Stutts' claim for attorney fees. The Court observed that no statute specifically authorized attorney fees where the plaintiff does not seek rescission of the sale. However, the Court reasoned, citing principles of equity found in Louisiana Civil Code article 4, that the legislature surely did not intend for victims of fraud to go uncompensated if they elect not to seek full rescission of the sale. Accordingly, attorney fees were held appropriate where fraud is committed but the victim elects not to seek rescission of the contract.

The Court's holding in Stutts may have a limited impact on the NHWA because of the peculiar facts of the case, i.e. the builder of the new construction living in the completed home before selling it to plaintiffs. However, the Court's award of attorney fees is an interesting development in the law. Time will tell whether the Court may be inclined to create further exceptions to the established rule that attorney fees cannot be awarded in the absence of statutory or contractual language awarding attorney fees.

Drones play an increasing role in modern life; all indications are that this role will increase, maybe to disturbing levels. The popularity and availability of drones have sky-rocketed in recent years. As with most new technologies, the development of the law to regulate this technology lags behind. To their credit, the DOT and FAA have been pro-active in developing regulations. This article will address some of these regulations and the expected development of future regulations.

Initially, the FAA prohibited the use of drones in the commercial industry. Gradually, the FAA granted exemptions to certain companies for the commercial use of drones. These exemptions permitted these companies to use drones for:

(i) the movie and video industry;

(ii) real estate photography;

(iii) agricultural monitoring;

(iv) aerial surveying;

(v) delivery of medical supplies in rural areas; and,

(vi) inspecting flare stacks

Applying for exemptions can be costly and the outcome is not guaranteed. However with growing commercial demand, the FAA has gradually loosened its restrictions and granted more exemptions.

The FAA and DOT finalized the first operational rules for routine commercial use of drones which took effect in August 2016. These regulations are available at: http://www.faa.gov/uas/media/Part_107_Summary.pdf. The issuance of these regulations is projected to generate $82 billion for the U.S. economy and create more than 100,000 jobs over the next ten years.

While these regulations are fairly comprehensive, they prohibit the use of drones beyond the line of sight of the operator over unprotected persons on the ground. Further, there are limitations on size and when drones can be flown. Based on these restrictions, plans to use drones for delivery services will likely have to wait. However, the FAA is permitting companies to apply for waivers, available if companies demonstrate that the proposed flight will be conducted safely. Even if a drone flight is permitted, air traffic control authorization is required if the flight is in controlled airspace. Requests for waivers and authorization must be applied for on the FAA’s online portal located at https://www.faa.gov/uas/.

The FAA is trying to balance the benefits of drone use with its mission to protect public safety. The FAA also provides all drone users with recommended privacy guidelines and is set to issue new guidance to local and state governments on drone privacy concerns.

The White House announced that the FAA is currently working on developing regulations to permit the safe and beneficial use of drones over crowds. As part of this development, the FAA launched an Unmanned Aircraft Safety Team and a Drone Advisory Committee.

We expect the FAA to allow a more expansive use of drones in the years to come. Like it or not, the drones are here and are not going away; they are rising.