Virginia J. ‘Jenny’ McLin

Picture it – you purchase a new home in a quiet, family-friendly neighborhood. On your first night, you notice that the neighbors are having a party – a big loud party. Your haven of peace and tranquility is interrupted by thumping bass and the shrieks of people jumping into a pool. The next day, the neighbors are gone, and the block is quiet again. However, the party returns the next weekend, bigger and louder than before. You do some research and find the house is listed on a popular website for short term rentals. What do you do?

This is the exact question that was posed to the Louisiana Court of Appeals for the Second Circuit in Marina Homeowners Association, Inc. v. Cahill. In that case, the Marina Homeowner’s Association filed a petition seeking declaratory judgment against the owner of the house on the basis that the use of the home as a short-term rental violated the covenants of the homeowner’s association. In response, the property owners argued that the covenants had expired and were no longer applicable. Therefore, they claimed they were free to use their property as they saw fit.

Many homeowners in Louisiana are familiar with building restrictions. Authority for the issuance of building restrictions is found in Louisiana Civil Code article 775. A building restriction is a real right under Louisiana Civil Code article 777. However, Louisiana Civil Code article 778 provides that if there is doubt as to the existence, validity, or extent of building restrictions, the issue should be resolved in favor of the unrestricted use of the immovable. These articles also provide a subsequent purchaser of the immovable property is also bound by the building restrictions if they are recorded in the public records.

The building restrictions for the subdivision at issue provided that the restrictions had a term of twenty years and then would renew automatically in ten-year periods. These restrictions bound the original property owners and all subsequent property owners. The court found that even though the original twenty-year term for the building restrictions had expired, the restrictions would automatically renew unless amended by the Association. Therefore, the property owner’s house was subject to the building restrictions.

Importantly for this case, the building restrictions specifically prohibited the use of the property for any reasons other than residential purposes. Therefore, the operation of a short-term rental was a violation of the building restrictions.

The Homeowners Association prevailed in this case – the property owners were no longer able to use their property for short term rentals. As the moral of the story – to be a good neighbor – it helps to follow the rules. And it is always important to check the fine print to know what those rules are!

References:

Marina Homeowners Ass'n, Inc. v. Cahill, 56,423 (La. App. 2 Cir. 8/27/25), 420 So. 3d 782.

A jury in the 16^th Judicial District Court awarded a garbage truck driver $8,307,050.00 in damages related to a September 16, 2016 accident with a train. The Louisiana Court of Appeal for the First Circuit reversed the decision in Theopholia Thomas v. BNSF Railway Company– because the answers to the questions on the jury verdict form were inherently inconsistent.

A garbage truck driver (Thomas) sued BNSF, the company that maintained a railroad track in the Town of Baldwin. On September 16, 2016, Thomas turned too wide while crossing railroad tracks, and his left front tire dropped off wooden planks on the crossing. This caused his left front tire to become stuck between the tracks. Thomas immediately began reversing the truck, then pulled forward and began moving across the railroad tracks. At that time, a BNSF train was bearing down on the crossing, blaring its horn. Thomas accelerated but train struck the rear of his truck. Thomas was injured in the incident.

Thomas filed suit the merits in May of 2022, the jury was provided a verdict form with a series of questions to 1) assign fault between the BNSF and Thomas; 2) determine the proximate cause of the accident; and 3) state the amount of damages. The jury completed the form, and a judgment was rendered by the Court in favor of Thomas.

The jury found: 1) that Thomas was negligent; 2) but that Thomas’ negligence was not a proximate cause of the accident; 3) however, the jury then assigned Thomas 15% of the fault. BSNF challenged the judgment, claiming that the answers on the jury verdict form were inconsistent. If Thomas was at fault, but that fault was not a proximate cause of the accident, then how was he assigned a portion of the fault? Before a party can be assigned fault, the jury must find both that the party was negligent, and that party’s negligence is a proximate cause of the accident.

The court of appeal overturned the over $8 million verdict in favor of Thomas because it agreed that the jury verdict form answers were inconsistent. La. C.C.P. art. 1813(E) provides that when the answers on a jury verdict form are inconsistent with each other, then the court shall not direct the entry of judgment but may return the form to the jury for further consideration or may order a new trial. The appellate court found that the jury could not both: 1) find that Thomas’ negligence was not the proximate cause of the accident; and 2) assign 15% fault to Thomas. Therefore, the verdict was vacated, and the case remanded for a new trial.

The lawsuit will be tried again – to a different jury. Certainly a cautionary tale.

References:

Theopholia Thomas v. BNSF Railway Company, 2023 CA 1209 (La. App. 1 Cir. 8/6/24).

Preparing for a trial is a tense and stressful process for attorneys and their clients. Sometimes, during trial preparation, a crucial piece of evidence can come to light that may push a case from a path towards trial to a path towards a settlement agreement. A “settlement” or “compromise” under Louisiana law is just that – an agreement between the parties to settle the dispute raised in the lawsuit, usually with the exchange of a sum of money. Often, settlements are reached in the weeks leading up to trial or even on the courthouse steps.

This type of scenario occurred in Nola Title Company, LLC v. Archon Information Systems. While in the thick of trial preparation, audio recordings from one of the parties were discovered. That party concluded this evidence would be prejudicial to its case at trial, which spurred settlement negotiations. The parties eventually agreed to a compromise and notified the court of the settlement via an email to the judge’s law clerk. The next day, the attorneys reported to court and verbally outlined the terms of the settlement agreement on the official court record.

Two weeks later, the defendants hired new counsel. Two months after that, counsel for the plaintiff forwarded the formal settlement documents to memorialize the agreement that was made between the parties and entered into the court’s record. However, the defendants refused to sign the paperwork and did not timely make the payments that previously were agreed upon. Therefore, the plaintiff filed a motion to enforce the settlement agreement.

In opposition to the motion to enforce, the defendants argued: 1) that their prior counsel did not have authority to enter into the settlement agreement; and 2) that the agreement on the record of the court was invalid because it did not include a provision about the audio recording, which the defendant claimed was a key element of the agreement between the parties. After an evidentiary hearing, the trial court found that the settlement that was stated on the record was an enforceable settlement agreement.

The Louisiana Court of Appeals for the Fourth Circuit affirmed the ruling of the trial court. In its opinion, the appellate court includes a summary of the law governing settlements in Louisiana. After a thorough review of the applicable law, the court came to the following conclusions:

• The settlement agreement on the record of the court was a binding settlement agreement, even if the parties contemplated a future formal written agreement;
• When a compromise is placed on the record, the recital must include full disclosure of the material terms;
• Any “missing terms” from the recorded settlement agreement were not a material element of the settlement; and
• The defendants’ prior counsel had authority to enter into the settlement as written.

Based upon the court’s ruling, if the parties have a meeting of the minds and settlement terms are entered on the trial court record, there are no “do-overs” or “take-backs.” It is important to “make sure you are sure” when entering the crucial courthouse steps settlement agreement.

References:

Nola Title Company, LLC v. Archon Information Systems, et. al., 2022-CA-0967 (La. App. 4 Cir. 4/13/23), 360 So. 3d 166.