Renewed or Was it New? Dispute over UM Coverage in Auto Policy

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.

Earlier this year, Apple was sued in the California class action of Ceja v. Apple, BC #647057, Superior Ct. of California, County of Los Angeles. In the Ceja suit, it was alleged that Apple is liable for automobile-related injuries and death. The “theory of recovery” against Apple is fairly straight-forward: 1) since 2008, Apple has possessed the “lock-out” ability to prevent texting while driving; and, 2) it is liable because it failed to do so. Whether or not the plaintiffs prevail against Apple, the national trend is toward stricter anti-texting laws and harsher consequences for those who text and drive. While this post does not intend to suppose a moral equivalence between drunk driving and driving while texting, the building momentum against texting while driving is reminiscent of the development of the anti-drunk driving laws and message.

It was not until 1938 when 0.15 became the first commonly-used blood alcohol level for intoxication (nearly two times today’s legal limit). Today, driving with a .08 will land you in a Louisiana jail. Many states such as Louisiana have enacted punitive damage statutes that allow for substantial money awards against drunk drivers. For instance, under Civil Code Article 2315.4, punitive damages (a.k.a. “exemplary” damages) are available against any driver whose intoxication causes injury. The message has been heard: drunk driving is illegal and may costs you your freedom, your money, or both.

The prohibitions against texting while driving (and even the broader category of “distracted driving”) are expanding. The State of Washington was the first state to ban texting while driving in 2007. Almost every state has since followed suit. Attitudes are also changing, perhaps in response to public service announcements and targeted media campaigns.

While once legal here, Louisiana, at least on paper, now completely bans texting while driving under La. R.S. 32:300.5. This law was later expanded to prohibit driving while accessing, reading, or posting to a “social networking site.” Last year, related fines and penalties were increased.

The practice of texting while driving has been said to involve three forms of distraction:

1. Manual distraction- taking your hands away from the wheel;

2. Visual distraction- diverting your eyes away from the road;

3. Cognitive distraction- taking your attention away from safely driving.

In the last few years, at least two drivers (one in New Jersey and one in Pennsylvania) have been sued under allegations that they are liable for injury because they sent texts to persons they knew or should have known were driving. Kubert v. Best, 75 A.3d 1214 (2013) and Gallatin v, Gargiulo, #10401 of 2015, Lawrence County, PA.

At some point, auto manufacturers and phone/electronics suppliers may choose or be forced to render texting while driving impossible. Until such a time, the trend against texting while driving continues.

Louisiana’s New Home Warranty Act (“NHWA”) provides remedies to homeowners forcertain construction defects once the new home construction is complete. La. R.S. 9:3141 et seq. These protections can prove crucial to a homeowner’s ability to remedy defects that appear in their home, but the statutes providing these remedies establish strict guidelines that must be followed for the protections to apply. This generally post sets forth some of the key protections and obstacles/defenses that often arise. However, each specific claim should be considered under its own facts.

PROTECTIONS

The NHWA provides specific protections to homeowners. Each protection expires if not advanced within a set time-period.

Noncompliance/Defects- The NHWA protects against “any defect due to noncompliance with the building standards or other defects in materials or workmanship not regulated by building standards.” La. R.S. 9:3144(A)(1). This category includes defective construction or materials used in the construction. Even seemingly minor issues such as cracked plaster, yellowing paint, and “rubbing off” of new paint can give rise to a valid claim for recovery under this portion of the NHWA. See Bynog v. MRL, LLC, 05-122 (La. App. 3 Cir. 6/1/05), 903 So.2d 1197. Deviations from the “plans and specifications” for a home may also be recoverable. See Thorn v. Caskey, 32-310 (La. App. 2 Cir. 9/22/99), 745 So.2d 653.

Because this first protection is so broad, it also provides the shortest time-period to assert a claim: one year from the “warranty commencement date,” which is either the date legal title to the home is conveyed to its initial purchaser or the date the home is first occupied, whichever occurs first. La. R.S. 9:3142(7).

Plumbing/Electrical/HVAC- The NHWA also protects the homeowner from defects in the plumbing, electrical, heating, cooling, and ventilating systems. These protections exclude equipment or appliances. A homeowner must bring a claim under this second category within two years of the warranty commencement date. La. R.S. 9:3144(A)(2).

Major Structural Problems- the NHWA allows recovery for major structural defects up to five years following the warranty commencement date. La. R.S. 9:3144(A)(3). For instance, recovery was allowed for a failing foundation under this provision in Campo v. Sternberger, 15-53 (La. App. 5 Cir. 11/19/15),179 So.3d 908.

PITFALLS

The most obvious – and probably most prevalent – pitfall is the timeliness of the claim. Courts do not hesitate to dismiss a claim if it is not timely filed.

The NHWA also requires that the homeowner give the builder written notice (via certified mail) of the defect before the homeowner attempts a repair, or before filing suit under the NHWA. La. R.S. 9:3145(A). This notice must be sent to the builder within one year after the homeowner has knowledge of the defect. Therefore, the one-year “clock” may begin to run when the homeowner gains knowledge of the problem even if the NHWA provides a longer time-period to advance the claim.

A failure by the homeowner to give timely notice can also diminish the claim even if it is brought within the deadlines. Under La. R.S. 9:3144(B)(4)(c), any damages caused by the homeowner’s failure to give the builder notice of the defect are not recoverable. In that circumstance, builders often contend that the severity of the problem could have been lessened had they been made aware.

RECOVERABLE DAMAGES

With some exceptions, damages under the NHWA are limited to the actual damages incurred by the homeowner, including attorney fees and court costs arising out of the builder’s violation. La. R.S. 9:3149. The actual damages cannot exceed the reasonable cost of repair or replacement necessary to cure the defect. If there are multiple defects across the home, damages are limited to the original purchase price of the home.

Consequential damages such as pain and suffering, mental anguish, or loss of use are generally not recoverable. See La. R.S. 9:3144(B); Iteld v. Four Corners Const., L.P., 12-1504 (La. App. 4 Cir. 6/5/13), 157 So.3d 702. However, there may be exceptions to this general rule under certain factual circumstances beyond the scope of this post.

CONCLUSION

The NHWA provides important remedies to homeowners. But, the New Home Warranty Act is complex and balances the competing interests of the homeowners and the builders. For this reason, a failure to follow the notice and timeliness requirements will often defeat the claim.

John Grinton, is a partner at Keogh Cox whose practice areas include commercial and construction litigation. When he is not practicing law, John spends most of his time with his wife and son, and their two dogs.