Louisiana Expands Definition of Medical Malpractice Under the LMMA

Louisiana premises liability law continues to evolve in the wake of the Louisiana Supreme Court's decision in Broussard v. State, 113 So.3d 175 (La. 2013). The Broussard decision was believed to limit the application of the open and obvious defense in the context of a Motion for Summary Judgment on liability.On February 18, 2014, the First Circuit Court of Appeals decided Gustafson v. Priority Electric, Inc., et al, 2013 CA 1096, 2014 WL 647704 (2/18/14) (not designated for publication), providing additional insight as to how Broussard will affect the applicability of the open and obvious defense. Based on Gustafson, the open and obvious defense may still be alive in the context of a Motion for Summary Judgment.While the Gustafson's home was under construction, Ms. Gustafson entered the home unescorted. She stood facing a newly repainted wall and took several steps backward to broaden her perspective of the wall. As she walked backwards, she tripped on one of two unfinished PVC conduit "stub-outs" containing electrical wire that would ultimately service floor-mounted outlets in an adjoining den. The lawsuit ensued.Priority Electric filed a Motion for Summary Judgment on the grounds that the stub-out presented an open and obvious condition that was readily discoverable had plaintiff exercised reasonable care. The company further argued that it had no duty to warn. The Trial Court agreed that the stub-out was an open and obvious condition and granted the motion.The Appellate Court conducted a de novo. The defendants argued, and the Trial Court agreed, that "if a defect is obvious and apparent, then there is no correlative duty to warn of its existence." Citing Broussard, the Appellate Court found that statement to be a misstatement of the law, noting that Broussard's analytic framework for evaluating an unreasonable risk of harm is classified as a determination of whether a defendant breached a duty owed, rather than a determination of whether a duty is owed ab initio.In light of Broussard, the Trial Court's reasoning underlying the grant of summary judgment was flawed. Nevertheless, the Appellate Court found a basis to support the Trial Court's dismissal of the claims utilizing a "risk-utility" analysis considering multiple factors.

1. Utility of the Stub-Outs

The necessity and utility of the stub-outs was not disputed.

2. Likelihood and Magnitude of Harm

The decision turned on this element. The utility of the stub-outs must be weighed against the likelihood and magnitude of harm presented by their defective condition, including whether the defect was open and obvious. The plaintiffs did not make a showing that any of the numerous contractors, subcontractors or visitors to the premises ever tripped. They also failed to offer expert testimony to show that the stub-outs presented an unreasonable risk of harm. Instead, they relied solely on the testimony of Ms. Gustafson, who admitted she was walking backwards and not paying attention. Unlike in Broussard, there was no evidence that the stub-outs were not "open and obvious to all who encountered them..."3. Cost of Preventing the HarmNo expert testimony was presented to show that the use of PVC stub-outs was unconventional in a new home or that there were reasonable alternatives to their use. No evidence was presented to show how the stub-outs could have been better placed or made more visible.　 Although plaintiffs argued that warning cones should have been in place, no evidence was presented to show that the contrast of the blue pipes on the gray cement was insufficient to alert an unsuspecting person.4. Nature of Plaintiff's ActivityPlaintiff was walking backwards when she fell. She acted unreasonably. The home was under construction and could have encountered a number of hazards. She failed to offer countervailing evidence on this issue.Upon balancing all of the factors above, all evidence showed that the accident would not have occurred "but for" Ms. Gustafson's own inattention and negligence.

The longstanding rule that the analysis for "piercing the corporate veil" of an LLC is substantially the same as the analysis for piercing the veil of corporations has been called into question by the recent Louisiana Supreme Court decision in Ogea v. Travis Merritt and Merrit Construction, LLC, 2013-1085, --- So.3d ---. In Ogea, the Court addressed "the extent of the limitation of liability afforded to a member of an LLC" and the statutory basis for exceptions to this limited liability.

Typical of a veil piercing case, the Ogea Court began its discussion by citing familiar Louisiana cases on the topic: Riggins v. Dixie Shoring Co., Inc., 590 So.2d 1164 (La. 1991) and the more recent Charming Charlie, Inc. v. Perkins Rowe Associates, L.L.C., 11-2254 (La. App. 1 Cir. 7/10/12), 97 So.3d 595. However, the similarities stopped there.

The Court noted that traditional veil piercing doctrine was not invoked by the lower courts or the plaintiff. Instead, the Court's analysis turned on the interpretation of an infrequently cited statute within Title 12 that addresses the limitation of liability for LLC members. La. R.S. 12:1320(A) states that the liability of members and managers of an LLC "shall at all times be determined solely and exclusively by the provisions of this Chapter." Subsection (B) provides that members and managers are generally not liable for the debts, obligations, or liabilities of the LLC. Subsection (D) prescribes the exceptions to this limitation of liability, to include fraud, breach of professional duty, and any other negligent or wrongful act by the member or manager.

Addressing this statute as a matter of first impression, the Ogea Court applied the statute to the facts of the case. Merritt Construction, LLC was hired to build a home for plaintiff, Mary Ogea. As part of the process, Ms. Ogea requested that she have a friend prepare the site for the foundation. Travis Merritt, the sole member of Merritt Construction, LLC, informed Ms. Ogea that having someone else prepare the site would waive the warranty. Mr. Merritt subsequently operated the bulldozer to prepare the site for a subcontractor to pour the concrete slab. A dispute arose when a concrete contractor informed Ms. Ogea of problems with the home's foundation. Under these facts, the Court concluded Mr. Merritt was not personally liable under the exclusive exceptions to limited liability found in La. R.S. 12:1320(D).

The first exception, fraud, was rejected because no evidence in the record supported a finding that Mr. Merritt committed fraud.

Turning to the next exception, the Court also rejected the argument that plaintiff breached a professional duty as the sole member of the construction company. The professions recognized in Louisiana's corporate laws do not include individuals who perform construction work. Thus, Mr. Merritt could not breach a "professional duty" as contemplated by the statute. The Court also noted that the contract at issue only recognized Merritt Construction, LLC as a licensed contractor and did not reference any contractor's license held by Mr. Merritt personally.

Finally, the Court addressed the final exception to limited liability: "negligent or wrongful act." Plaintiff asserted that the term "negligence" in the statute only required proof of a tort by the individual. The Court quickly rejected this argument, noting that such an interpretation would improperly expand the liability of LLC members.

Rather, the Court set forth four factors to assist in the analysis under the last "negligence" exception: 1) whether a member's conduct could be fairly characterized as a traditionally recognized tort; 2) whether a member's conduct could be fairly characterized as a crime, for which a natural person, not a juridical person, could be held culpable; 3) whether the conduct at issue was required by, or was in furtherance of, a contract between the claimant and the LLC; and 4) whether the conduct at issue was done outside the member's capacity as a member.

It appears from the Ogea Court's focus that the prior analysis for "piercing the veil" of an LLC has perhaps been set aside and replaced with a new analysis which considers the exceptions to limited liability listed in La. R.S. 12:1320. However, the Court failed to expressly state that the prior analysis is improper and therefore no longer applicable. For now, it appears that the rules for piercing the veil of an LLC have changed but the true impact of Ogea remains to be seen.

When Casey Krueger and his family went to the pool at the La Quinta Inn & Suites in Baton Rouge, they knew how they wanted to end their day. What the Kruegers (and La Quinta) did not know was that a piece of clear, broken glass was on the bottom of the pool. Mr. Krueger stepped on the glass and experienced a “large and deep cut” that caused permanent loss of some function of his toe. He filed suit alleging that La Quinta was negligent for the defective condition in its pool. Krueger v. La. Quinta Inn & Suites, 18-0052 (La. App. 1 Cir. 9/21/18). He also alleged the negligence of La Quinta was self- evident such that the doctrine of res ispa loquitur should apply to impose liability. His claims were rejected by the jury; the Louisiana First Circuit upheld the verdict.

“Res ipsa loquitur” is a Latin phrase that means “the thing speaks for itself.” The doctrine of res ipsa is used where a plaintiff relies solely upon circumstantial evidence to prove negligence. For res ipsa to apply, the plaintiff must: 1) prove that the injury is the kind which ordinarily does not occur in the absence of negligence; 2) eliminate other more probable causes of the injury (such as the conduct of the plaintiff or of third-persons); and 3) show that the negligence of the defendant fell within the scope of the duty owed to the plaintiff. Res ipsa is often cited where the defendant possessed exclusive control of the thing which caused the injury. Id.

In the Krueger case, La Quinta checked the pool twice a day and posted signs that banned glass from the pool area. There was also no evidence that it knew or should have known of the glass in the pool. After all, clear glass in a clear pool is hard to detect. Lacking direct evidence of negligence, the Kruegers hoped the res ipsa doctrine would make their case. With some justification, they contended that broken glass was not to be expected in a hotel pool. However, res ipsa was found not to apply. Because it was “possible that a third party caused broken glass to enter the pool,” the plaintiffs could not establish all three elements to the doctrine.

Collin is a Keogh Cox partner who litigates injury, commercial, and legal malpractice disputes. He lives in nearby Zachary, Louisiana with his wife Melissa and three all too active children. He is an outdoorsman, a league tennis player, a cook, and a hobbyist writer.