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Insight
When the Stakes are High: Class Actions in Louisiana
They make movies about “class actions” exactly because they can involve high stakes, with millions, even billions of dollars on the line. The class action procedure can create exposure at this level because of the large numbers of potential claims involved. Class actions are used to address losses experienced from unfair or fraudulent business practices, natural disasters, industrial explosions, or any event or action which is alleged to have damaged a large group in a similar way.
As a procedural device, the class action combines several claims (often hundreds or thousands) into a single action. A key battle in most Louisiana class actions is whether the proposed claim can properly be “certified” as a class action under Louisiana procedure. The recent Fourth Circuit decision in Duhon v. Harbor Homeowners’ Ass’n., Inc., 2016 WL 3551620 (La. App. 4 Cir. 6/30/16) addressed whether the lower court’s class “certification” was proper under Louisiana Code of Civil Procedure Article 591.
Duhon involved damages experienced following hurricanes Katrina and Rita. In particular, the class representatives sought damages against the Harbor View Condominium Association and its insurers claiming that the association was guilty of faulty repairs following these two hurricanes. In deciding whether certification was proper, the Duhon court considered the following elements, all of which must be present to certify a proper class action:
Numerosity- the class must be so numerous that joinder of all involved persons would prove impractical;
Commonality- the case must present questions of law and fact that are common to the class;
Typicality- the claims and defenses of the representative parties must be typical of the claims or defenses of the class; and,
Adequacy of representation- the representative parties must be positioned to fairly and adequately protect the interest of the class.
After analyzing each of these “elements,” the Duhon court upheld the Trial Court’s certification of the claim as a class action. Further, the court concluded that the questions of law and fact common to the members of the class predominated over any questions affecting only individual members such that a class action was superior to other available methods to fairly and efficiently adjudicate the controversy.
While the class action procedure has its detractors, it is sometimes the only real option to address a harm to a large group. Now that the class in Duhon has been certified, the case will proceed through discovery and towards trial on the merits. Who knows, they may make a movie about it someday.
Class Actions
Litigation
Torts
Insight
The “Great Flood of 2016”--Update and Resources
“Disaster Declaration” Expanded. The list of parishes now declared disaster areas by the federal government has increased to include the following parishes: Acadia, Ascension, East Feliciana, Iberia, Lafayette, Pointe Coupee, St. Landry, and Vermilion.
http://gov.louisiana.gov/news/additional-parishes-added-to-federal-disaster-declaration-8-16-16
Potential Tax Implications for Flood Victim. For those insured, it is critical that you document your losses with as much detail as possible; serial numbers, make/model/description—the more detail the better. Keep receipts and credit card statements. Time-dated photos are also important. Even those without flood insurance should do the same as it may assist in obtaining FEMA assistance. However, the same documentation of your losses could also help to reduce your tax exposure. The attached link provides key information and outlines the impact the flooding may have on tax-filing and other deadlines.
https://www.irs.gov/uac/tax-relief-for-victims-of-severe-storms-flooding-in-louisiana
Flood
Louisiana
News
A visit to Cuba
Gracella Simmons wrote an article entitled “A Visit to Cuba” that was published in the September edition of Around the Bar.
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Resource
APPEALS/ NEW TRIAL
APPEALS/NEW TRIAL- The recent decision in Logan v. Schwab, Jr., 15-C-1508 (La. 5/27/16), ______ So. 3d _______ addressed serious concerns about the conduct of a trial judge during trial. On appeal, this conduct, described as “bizarre and disturbing,” was sufficient to cause the need for a new trial.
The Logan plaintiff alleged damages as a result of a gallbladder removal surgery. The jury verdict was in favor of the surgeon, and the plaintiff appealed. The cited grounds for appeal included alleged improper conduct by the trial judge which may have biased the jury in favor of the defendant and caused juror confusion. Finding insufficient support in the record and a lack of contemporaneous objections, the First Circuit Court of Appeal affirmed the defense verdict.
While questions were raised as to the sufficiency of the plaintiff’s proof, the plaintiff alleged that the trial judge’s improper conduct involved: warmly greeting and embracing the defendant’s expert witness in the presence of the jury; questioning the plaintiff’s medical expert regarding the amount of fees he was being paid (after he was released as a witness); walking around the courtroom while witnesses were being examined; and, looking out windows and sitting in various seats throughout the courtroom. Allegedly, the trial judge even sat amongst the jurors in the jury box and ate candy--while testimony was being given. Nevertheless, the Court of Appeal ruled that this “inappropriate and untoward” conduct was insufficient to deprive the plaintiff of a fair trial.
The Louisiana Supreme Court reversed in a three sentence per curiam opinion. The Court ordered a new trial, finding that “the trial judge’s actions resulted in a miscarriage of justice.”
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Insight
2016 Historic Flood
Thousands of people are currently dealing with the devastating flooding in Baton Rouge and surrounding areas. Here are a few pieces of information that may assist you as you begin to recover from this event:
- Do your best to document your property damage claim as best you can. Take as many pictures of the damage as possible, whether of your house, commercial building, personal contents or inventory. These photos will be your proof of damage for whatever damage claim you are able to make, whether through your insurance company or otherwise.
- Similarly, try and compile whatever pictures you can of your house or business, and its contents, from before the flood. To the extent, there is a dispute of whether a specific item was damaged or not, or even existed in the home or building before the flood, these pictures will be invaluable.
- As soon as possible, attempt to itemize all of the contents in your home. A handwritten list is fine. Go through each room and attempt to list out every one of your possessions. Try and identify the make or model of each item, what you paid for it, and how old it is. Some insurance companies will require this specific information before you will be paid for each item. Of course, it is unlikely that you will have purchase documents for each item in your possession. Although this type of documentation is not required to prove your claim, it is obviously helpful for the insurance company to process it.
- Keep records of what you spend to live elsewhere, including food and toiletries. If you rent a hotel room or are required to rent a house, make sure to keep records of what you pay.
- Likewise, keep good records of any expenses you incur to repair your home or business. An organized and well-documented insurance or property damage claim is always better received and more quickly processed than one that is not.
- With respect to insurance claims, and to the extent the policy provides coverage for your specific loss, an insurance company has an obligation, by law, to pay all undisputed amounts to you within a certain period of time. In other words, your insurance company has to at least pay you for everything that is undisputed. If there is a legitimate dispute over something, the insurance company can withhold payment for those items but must pay you for the items for which there is no disagreement. If the insurance company does withhold payment without a legitimate reason or fails to pay you within a certain amount of time, it may be responsible for certain statutory penalties and costs. You will need to discuss this with an attorney if you feel your insurance company is not treating you fairly.
- To this point, because the insurance company must pay all undisputed amounts if there remain any disputed items, do not sign anything until the claim is fully resolved. You are not required to sign anything to receive any undisputed money under your policy.
- If you have flood insurance, depending on the policy language, you may be eligible to receive immediate, emergency payments. Ask your insurance company what your policy provides, but do not assume what you are told is correct. Ask for a copy of your policy and read it for yourself.
- To date, President Obama has made available federal disaster aid to residents of the parishes of East Baton Rouge, Livingston, Tangipahoa, and St. Helena. If you do not have flood insurance, you should immediately register with FEMA. You can also call FEMA at 800-621-3362. More information about the available federal assistance, including those for some businesses, can be found here.
- The Louisiana State Bar Association and the Baton Rouge Bar Association will be providing free legal services to assist anyone with any legal issues arising from this disaster. For now, you can call the LSBA at 504-566-1600 or 800-421-5722 or the BRBA at 225-344-4803. More information will be disseminated as efforts are further coordinated.
Hopefully, this information will provide you with a little bit of information about the property damage claim process.
Flood
Louisiana
Resource
CONSTRUCTION: SORTING THROUGH LOUISIANA PEREMPTION LAW
The five-year time limit for suits under the New Home Warranty Act (“NHWA”) and La. R.S. 9:2772 benefit contractors, but can also set a trap that may cost general contractors their ability to pursue indemnity. As a result of the peremption period in 9:2772, a general contractor may be called upon to pay for the faulty workmanship of its “subs” with no recourse against those same contractors.
In Kelleher v. Custom Homes, 15-1798 (La.App. 1 Cir. 6/3/16), the First Circuit clarified the law by affirming dismissal of the builder’s third-party indemnity demand against a subcontractor. The homeowner timely sued the builder for construction defects just before expiration of the NHWA’s five year peremption period, and the builder filed its indemnity demand within 90 days. The indemnity demand was properly dismissed under 9:2772 because more than five years had passed since the home was occupied.
The Kelleher Court relied on its ruling in Peck v. Richmar Construction, Inc, 13-1170 (La.App. 1 Cir. 2/26/14), 144 So.3d 1042, which held that the 90 day grace period in Code of Civil Procedure art. 1067 did not apply to the more specific peremption rule of La. R.S. 9:2772. Further, the legislature’s amendment to La. R.S. 9:2772 to add a 90 day grace period did not become effective until after suit was filed.
Relying on the Louisiana Supreme Court ruling in Ebinger v. Venus Const. Corp., 10-2516 (La. 7/1/11), 65 So.3d 1279, the Kelleher Court concluded that the filing of the main action did not toll the peremption period, which by definition cannot be interrupted. (Civil Code art. 3461). In this situation, the indemnity claim perempted just as the cause of action arose, leaving the general contractor solely liable.
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Insight
Walking Drivers: A “Sudden” Defense to Rear-end Liability
A rear-end collision is a unique animal in the law. Plaintiff’s attorneys seek them out, and insurance companies fear them--sometimes for good reason. The "rear-end" accident is unique because proof of the mere fact that one vehicle strikes the rear of another creates a strong legal presumption of fault under La. R.S. 32:81. While this presumption is formidable, it may be overcome.
The rear-end presumption is premised upon the duty to not follow too closely and the law will assume that the following driver breached this duty when there is impact. However, the following driver can escape liability if he shows that his vehicle was under control, that he followed at a safe distance, and that the lead driver negligently created a hazard which could not have reasonably been avoided. For instance, if it is shown that the reckless or unpredictable driving of the lead motorist created a sudden emergency, the following driver will not be at fault. Brewer v. J.B. Hunt Transport, Inc., 35 So.3d 230 (La. 2010). Once established, the sudden emergency defense trumps the “rear-end presumption.”A "sudden emergency" is created when a driver is placed in a position of imminent peril that he or she did not create through their own conduct. Hickman v. Southern Pacific Transport Company, 262 So.2d 385 (La. 1972). When a driver can demonstrate the existence of a sudden emergency, they are not negligent for failing to do what a reasonable person might have done to avoid the accident had they been given enough time to assess and react to the situation.In Jewitt v. Alvarez, 179 So.3d 645 (La. App. 2 Cir. 9/30/15), a following driver who rear-ended the vehicle of the lead driver was free from fault as a result of the sudden emergency defense where the facts revealed that the accident was solely caused by the slow speed of the lead driver (who almost came to a complete stop on the interstate) and the presence of surrounding traffic prevented the following vehicle from taking evasive action.In Carias v. Loren, 2015 WL 1019481 (La.App. 1 Cir. 3/9/15), an eighteen-wheeler was traveling in the middle lane of the interstate when a "phantom driver" moved without warning from the left lane to the middle lane and slammed on its brakes in front of the eighteen-wheeler. In attempt to avoid the collision, the driver of the eighteen-wheeler swerved to his right and impacted a vehicle which then struck the plaintiff's vehicle. The driver of the eighteen-wheeler invoked the sudden emergency defense; the court agreed and found the defendant-driver free from fault.Rear-end collisions are hard to defend, but a defendant may want to gather a clear understanding of all of the facts before accepting liability. If these facts support the sudden emergency defense, the driver may "walk."
Attorney
Collision
Insurance
News
John Wolff participates in pilot mentoring program
The Louisiana Supreme Court implemented the Transition Into Practice (“TIP”) mentoring program this past year. Keogh Cox partner, John Wolff, along with first-year attorney, Elisa Stephens Randall, were the first to complete the program.
The pilot TIP program began during January, 2015. According to the Louisiana State Bar, “[t]he program will match one mentor with one mentee, allowing more experienced attorneys to share their knowledge with those who are just starting their careers. The Bar and the Louisiana Supreme Court see this as an opportunity to exercise the highest level of professionalism.” TIP will initially be available in Baton Rouge, Shreveport, and the greater New Orleans area.
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Insight
Trees and Neighbors: A Growing Problem
Louisiana is a river delta state filled with fertile land and the refusal of its local fauna to stay within boundaries is a problem. Trees create hazards. They also bring nuisance in all its forms––pine sap drizzled over a new car, an oak branch casting a sun-blocking shadow over the perfect tanning spot, and on and on. If you own the tree, the problem is easy enough to address; but what if the tree belongs to your neighbor? Can you cut your neighbor’s tree?
While the Louisiana Civil Code provides guidance, it does not answer every question. Under the Civil Code, “a landowner has the right to demand that the branches or roots of a neighbor’s trees, bushes, or plants, that extend over or into his property be trimmed at the expense of the neighbor.” La. Civil Code Art. 688. Nevertheless, the right to "demand" that the problem be addressed is not a “license to cut;” and does not permit a landowner to cut without permission. Kahl v. Luster, 110 So.3d 1101 (La. App. 1 Cir. 12/28/12).In the event a neighbor is less than neighborly and refuses to trim back a trespassing branch, a landowner may bring an "injunction" against his neighbor. Such an action was involved in Scott v. Ramos, 399 So.2d 1266 (La. App. 4 Cir. 1981) where the defendant/neighbor's large oak tree extended over the plaintiff's property and deposited leaves and branches onto his roof and into his yard. In defense of the action, the defendant presented evidence that cutting the tree back to the property line would essentially kill the tree. Over these objections, the Louisiana Fourth Circuit Court of Appeal granted plaintiff a permanent injunction which required the defendant neighbor to “keep the tree, its limbs and branches cut” back to the property line. Further, the court ordered that defendant reimburse the plaintiff for the cost of removing leaves and fallen debris once a year.So, should your neighbor’s tree ever present a hazard or impede on the enjoyment of your property, there are means of relief. However, gassing up your chainsaw, without your neighbor’s permission, is not one of them.
Property
Louisiana
Resource
THEBAULT V. AMERICAN HOME ASSURANCE COMPANY, ET AL, 15-0800 (LA. APP. 4 CIR. 4/20/16)
INSURANCE: The loss of power following Hurricane Katrina created great hardship throughout the region. Shortly before landfall, the Touro infirmary in New Orleans secured an Aggreko “backup generator” that failed within hours of being put into service. The litigation in Thebault v. American Home Assurance Company, et al, 15-0800 (La. App. 4 Cir. 4/20/16), _____ So. 3d ______, 2016 WL 3353974 involved a claim that an infant was injured through exposure to excess heat at Touro.The Thebault suit was only one of forty-one suits filed related to the Touro power outage. In Thebault, Aggreko’s insurer, American Home alleged that a $50,000 “per occurrence” deductible applied separately to each plaintiff’s claim. American Home cited to a 1973 Louisiana Supreme Court decision and its progeny holding that, in exposure cases, the number of occurrences under a liability insurance policy is determined by the “effect” of the exposure rather than the “cause” of the individual plaintiff’s damages. In other words, each plaintiff damaged by the exposure counts as a separate occurrence, rather than a single occurrence that injured multiple plaintiffs. The trial court agreed and ruled for American Home on this issue.The Court of Appeal reversed, noting that the exposure line of cases involved damages caused by a series of events over a significant period of time, rather than the single, uninterrupted loss of power at Touro. The Court also distinguished the exposure line of cases on the ground that they interpreted “occurrence” policy language found in “limits of liability” clauses, rather than the American Home deductible endorsement which did not specify a separate deductible for each claim. The Thebault Court also noted that American Home’s argument, if accepted, would cause Aggreko’s “deductible responsibility” for the forty-one separate plaintiffs to be higher than the $2 million aggregate liability limit of the policy. According to the Court, such a result “would be an absurd and unintended result.”
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Insight
Can a Corporation Drive Drunk?: A Look at Employer Liability for Punitive Damages
The power to punish is generally the role of the criminal courts. Civil courts concern themselves with making a plaintiff "whole." In fact, it would be legal error for a civil court to impose recovery against a defendant as a form of punishment--with one notable exception. When "punitive damages" are allowed, a civil court may "punish" a defendant.
In Louisiana, punitive damages are only allowed when a statute specifically says they may be awarded. One of these statutes is La. Civil Code article 2315.4, which allows punitive damages when the plaintiff’s injuries were caused “by a defendant whose intoxication while operating a motor vehicle was a cause in fact of the resulting injuries.” Based upon the words used, punitive recovery for drunk driving would appear limited to recovery against the individual who was "operating a motor vehicle." However, what if the driver was intoxicated while “on the clock,” in the "course and scope" of his employment? Can his employer also be liable for punitive damages? Unfortunately, the answer to these questions is unclear and may vary depending upon where the case was filed.
The First and Third Circuits indicate that an employer should not be liable for these damages. In Darby v. Sentry Ins. Auto. Mut. Co., the First Circuit held that an employer could not be liable for punitive damages when its intoxicated employee was at fault for an accident, even when the employer was aware the employee had a history of alcohol abuse. The court reasoned that the principle of strict construction of punitive statutes prevented it from holding anyone other than the driver liable. 2007-0407 (La. App. 1 Cir. 3/23/07), 960 So. 2d 226, writ denied, 2007-0638 (La. 3/28/07), 953 So. 2d 59. Similarly, in Romero v. Clarendon Am. Ins. Co., the Third Circuit ruled that an employer could only be liable for the compensatory damages caused by its employee, to the exclusion of punitive damages. 2010-338 (La. App. 3 Cir. 12/29/10), 54 So. 3d 789, writ denied, 2011-0551 (La. 4/25/11), 62 So. 3d 96. A federal court decision from the Western District of Louisiana also supports this conclusion. See Lankford v. Nat'l Carriers Inc., 2015 WL 518736 (W.D. La. Feb. 6, 2015).
In contrast, the Fourth and Fifth Circuits have found that an employer can be liable for its intoxicated employee’s punitive damages. The Fourth Circuit, offering little commentary, found that an employer could be responsible for damages caused by its employee’s acts, including punitive damages under art. 2315.4. See Curtis v. Rome, 98-0966 (La. App. 4 Cir. 5/5/99), 735 So. 2d 822. Punitive damages were also awarded against an employer in a Fifth Circuit case, Levet v. Calais & Sons, Inc., 751 So.2d 153 (La. Ct. App. 1987). However, in Levet, the employer stipulated to liability and essentially agreed to be responsible for punitive damages.
While the Louisiana Supreme Court has not squarely addressed the issue, language from Berg v. Zummo tends to indicate that the employer may not be liable for drunk-driving punitive damages. In Berg, the Supreme Court examined art. 2315.4 to determine whether a bartender could be liable for providing an intoxicated driver with alcohol prior to the accident. In that context, the Court held that art. 2315.4 did not extend to someone who “contributed to” the intoxication because that Article “reflects the legislature’s intent to penalize only the intoxicated driver.” 2000-1699 (La. 4/25/01), 786 So. 2d 708, 718. However, the Berg Court specifically acknowledged lower court decisions that permitted such liability for employers, reserving its judgment on that issue for another day.
So, if someone asks you whether a corporation can drive drunk, the proper answer may be this: depends on who you ask.
Attorney
Collision
Resource
ILL PRACTICES/LEGAL ETHICS
"ILL PRACTICES"/LEGAL ETHICS"- Louisiana's procedural laws provide a mechanism to enter a "default judgment" against a party who chooses to ignore or refuses to respond to a suit, but a recent decision from the Third Circuit strongly indicates that this procedure is not properly suited for use against a party who believes they are under no pending obligation to answer a suit. It also demonstrates that an attorney's filing of an improper pleading can prove costly to the attorney.In Buster’s Frozen Custard v. Lancaster Manufacturing, 2015-947 (La. App. 3 Cir. 4/27/16), ______ So. 3d ______, 2016 WL 1660494, a defense attorney followed customary practices and called the plaintiff attorney to request an extension of time to file responsive pleadings. During the call, plaintiff’s counsel agreed to the extension and expressed interest in settlement. He then sent an email advising that a firm settlement demand would be provided once better estimates were obtained concerning the costs to remove the disputed equipment. Estimates were then forwarded a few days later along with a firm settlement demand, after which the attorneys engaged in settlement negotiations by phone and email.In one of the emails from plaintiff’s counsel, he expressed his desire to settle “without having to waste time in court proceedings.” That same day he took a preliminary default against the defendant. At the default confirmation hearing a month later, plaintiff’s counsel certified that there was no appearance by the defendant whether by answer to the suit, “enrollment of counsel, or otherwise.” The Court rendered a default judgment which the attorney recorded in the mortgage records.While the parties ultimately settled the underlying dispute, the defendant proceeded with a petition to annul the default judgment due to the plaintiff attorney’s “ill practices” as provided by La. C.C.P. Art. 2004. The Trial Court granted the annulment in view of the "ill practices," and further ordered the attorney to personally pay the defendant over $28,000 in attorney fees pursuant to La. C.C.P. Art. 863, which provides that an attorney’s signature to a pleading constitutes certification that the “pleading is not being presented for any improper purpose.” The Court found that the motion for preliminary default was certified for the improper purpose of obtaining a judgment against a party without notifying the party of the action, and the confirmation obtained without divulging to the judge ongoing negotiations and an informal extension of time for the defendant to answer. The Court of Appeal affirmed.
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