Author: Chelsea A. Payne

An Update on Prescription – The Most Important Issue

“Prescription” is the time period in which a litigant must file suit, or the action is barred.  One of the first lessons a Louisiana law student learns is the importance of determining the prescriptive period of a cause of action.  Filing a cause of action too late is fatal.  A recent decision from the Louisiana Fifth Circuit Court of Appeal reads like a law school exam and illustrates that determining which prescriptive period applies is sometimes the key to the case.

In DeFelice v. Federated Nat’l Ins. Co., 18-374 (La. App. 5 Cir. 7/9/19), mold was discovered in plaintiff’s home on June 10, 2016.  Plaintiffs notified their insurance company, who hired a mold remediation company to inspect the home.  When the home was inspected on June 22, 2016, the inspector verbally informed plaintiffs that the home was safe.   On the same day, a separate mold inspector collected samples. The second mold inspector issued a report on June 23, 2016 advising that mold remediation may be necessary.  This report specifically stated that “certain mold and mold spores in buildings and housing can result in mild to severe health effects in humans and can deteriorate the structure of the dwelling resulting in content or structure damage.”  The second report was provided to the plaintiffs.   

Plaintiffs continued to live in the home.  In August of 2016, plaintiffs’ infant son was born.  Shortly thereafter, the infant began to experience breathing issues and was diagnosed with a lung condition by December of 2016.  Plaintiffs vacated the premises in January of 2017.

More than one year after receipt of the second mold report, plaintiffs filed suit on July 24, 2017 against their insurer and the inspector who advised that the home had no mold problems.  Plaintiffs raised claims for property damage, damage to the health of the parents, damage to the health of the minor child, and consortium claims on behalf of the parents for the damage to the minor child.

The DeFelice court found that prescription began to run on June 23, 2016 with regard to the parents’ individual and property damage claims.  Because suit was not filed within a year of the second mold report advising of possible health and property damages, the parents’ individual health claims and the claims for property damage were prescribed under the one-year period set by Civil Code article 3492.

The minor child was not born when the report was issued on June 23, 2016.  Plaintiffs argued that those claims were brought within a year of the child’s birth, and were therefore timely. The DeFelice court agreed and held that prescription could not began to run until the child was born. While Louisiana law provides that a child is a “person” upon conception, this “legal fiction” applies only to protect the interests of the child. The court reasoned that a finding that prescription commenced prior to birth would not “protect the interests” of the child.  While the parent’s claims were prescribed, the claim filed on behalf of the infant, and any claims that the parents had related to their infant’s health condition, were timely.

The court’s analysis in DeFelice reminds that determining which prescriptive period applies to which claim is often the most important issue.

Who’s Left Holding the Bag? Indemnity in Construction Contracts

The period of time before the contract is signed in one of optimism. After all, few sign a contract expecting problems. But if you do not consider the many “what ifs,” you may be left holding the bag. And this “bag” may include indemnity provisions which could force you respond for the actions of other parties.

Many contracts include “indemnity” or “hold harmless” provisions. Black’s Law Dictionary defines indemnity as “a duty to make good any loss, damage, or liability incurred by another.” Like many states, Louisiana allows one party to agree to pay for the damages caused by the fault of the other, if this intention is sufficiently expressed. However, there are broad statutory exceptions that can nullify the indemnity requirement.

Parties to construction contracts should be careful not to blindly rely upon indemnity provisions because the Louisiana legislature in La. R.S. 9:2780.1 declared invalid any indemnity provision where a party seeks indemnity from another for its own fault.

Despite the broad nullification of certain types of indemnity provisions in construction contracts, current Louisiana law allows a party to be indemnified for its own fault when the other party obtains insurance to cover the risk, and recovered the cost of insurance in the contract price. For example, a general contractor can require a subcontractor to indemnify the general contractor for the general contractor’s fault, as long as the subcontractor obtains insurance for this obligation, and was paid that amount under the contract.

Indemnity obligations are not always as they seem. Even in the pre-contract period of optimism, you may want to contact an attorney so you won’t be left holding the bag.

 

Chelsea Payne is an associate at Keogh Cox and has been practicing for three years. Her practice mainly relates to construction law and complex litigation. Chelsea enjoys playing tennis and spending time with her family.

Is Your Neighbor a Nuisance?

The poet Robert Frost famously wrote that: “Good fences make good neighbors.” But what if there is a problem even fences won’t solve? Louisiana law offers some answers.

Under Louisiana law, a landowner cannot use their property in a manner that interferes with their neighbor’s enjoyable use. While a neighbor may have to put up with some inconveniences, excessive inconveniences that cause damage may be actionable. If a landowner’s activity is considered a nuisance, he may be liable for damages, and the court may require the landowner to stop the activity.

To determine whether a particular activity is considered a nuisance, courts look to the following factors: (1) the character of the neighborhood; (2) the degree of the intrusion; and, (3) its effect on the use and enjoyment of neighboring properties. For example, a person living in a heavy industrial area may have to put up with more noise than someone living in the suburbs. Whether activity is considered a nuisance is determined on a case-by-case basis.

Further, the nature of the noise and its persistence and duration can be a factor in determining whether the activity is a nuisance. For example, in Parish of E. Feliciana ex rel. E. Feliciana Parish Police Jury v. Guidry 2004-1197 (La. App. 1 Cir. 8/10/05), 923 So. 2d 45, writ denied, 05-2288 (La. 3/10/06), 925 So. 2d 515, the court looked not only at the level of the noise, but also at the “nature” of the noise. The court held that noise from a motor cross track was a nuisance, likening the noise to a chainsaw, a buzzing bee, or a dentist drill.

Even when a landowner has a right to conduct a business on his property, he cannot create a nuisance in running the business. Louisiana courts have held that noxious smells, dust, debris, rats, flies, and noise may all constitute a nuisance, even if the business was otherwise lawful.

The duty owed to neighbors applies not only to the landowner, but may also apply to tenants or contractors performing “work” on the property. To prove a nuisance, the offended neighbor must show that the landowner/tenant/contractor either “knew or should have known” that the activity was a nuisance.

When mending fences is not possible, you may have other options.

 

Chelsea Payne is an associate at Keogh Cox and has been practicing for three years. Her practice mainly relates to construction law and complex litigation. Chelsea enjoys playing tennis and spending time with her family.

The New Home Warranty Act: How Does It Work?

Whether you are building a new home, buying a new home, or a residential construction contractor, there is one Louisiana law that you should know: The New Home Warranty Act (“NHWA”).

The NHWA provides the exclusive remedies, warranties, and peremptive periods between a builder and owner relative to home construction. The NHWA provides a warranty for new home purchases and defines the responsibilities of the builder during the warranty periods.

What warranties are provided?

  • 1 year: For one year following the warranty commencement date, the builder warrants that the home will be free from defects due to noncompliance with the building standards or other defects not regulated by building standards;
  • 2 years: For two years after the warranty commences, the builder warrants the plumbing, electrical, heating, cooling, and ventilation systems or other defects not regulated by building standards; and,
  • 5 years: For five years following the warranty commencement, the builder warrants that the home will be free from major structural defects, including foundation systems, or other defects not regulated by building standards.

However, the builder’s warranty will exclude certain items, including, but not limited to: fencing, landscaping, insect damage, bodily injury, and mold damage.

The homeowner is also required under the NHWA to give written notice to the builder by registered or certified mail within one year of knowledge of the defect. Failure to give this required notice may forfeit any claims the homeowner may possess against the builder.

Once notice is given to the builder, if the builder fails to perform as required by the warranties, the owner may bring a claim against the builder for damages, including a claim for attorney fees. This cause of action must be brought within 30 days of the expiration of the applicable warranty period. The damages available to a homeowner cannot exceed the reasonable cost of the repair of the defect, and cannot exceed the original purchase price of the home.

While the NHWA provides certain “bright-line” rules and clarifies the rights and remedies available when a problem arises with new construction, litigation of these claims and the defenses provided to builders can present difficult issues. When an issue arises, you should consult an attorney experienced in this area of practice.

Arbitration: Losing Your Day in Court with a Click of the Mouse?

Almost everyone has signed a phone contract, home-repair agreement, or other contract filled with terms and provisions they might not fully understand, or navigated a website only to receive a prompt to “accept these terms and conditions” before continuing. Most, and hopefully all attorneys, have that moment of hesitation- right before they click “yes.”

If you clicked “yes” or signed the contract, and the contract included an “arbitration clause,” you may have just signed away your right to access the court system; and you didn’t even know it. But are such arbitration agreements enforceable? Generally, these clauses are enforceable and found to be consistent with a strong public policy in favor of arbitration. However, a recent decision from the Louisiana Supreme Court  places arbitration clauses in consumer transactions under scrutiny and may render arbitration provisions unenforceable in some cases.

In Duhon v. Activelaf, LLC, 2016-0818 (La. 10/19/16), the plaintiff brought a negligence suit against an indoor trampoline park. In an effort to prevent a formal trial, the defendants attempted to enforce the arbitration clause found in the Participant Agreement, Release, and Assumption of Risk document that was electronically signed by plaintiff to gain entry into the trampoline park. In this setting, the Court applied a “contract of adhesion” analysis to test the validity of the arbitration clause.

The Court set forth the following factors to gauge the enforceability of the arbitration clause:  (1) the physical characteristics of the arbitration clause; (2) the distinguishing features of the arbitration clause; (3) the mutuality of the arbitration clause; and (4) the relative bargaining strength of the parties.

Under the facts in Duhon, the Court found that the lack of distinguishing features and the specific placement of the text served to conceal the arbitration clause from the plaintiff. While the arbitration language was consistent in size and font with the other contractual provisions, the clause was located in the eleventh line of a paragraph that covered multiple topics. The arbitration agreement also required only the plaintiff to arbitrate any dispute. Further, it required the plaintiff to pay $5,000 if he ignored the arbitration clause and instead filed a lawsuit. According to the Court, this “lack of mutuality” supported its conclusion that the arbitration clause was adhesionary.

Ultimately, the Duhon Court struck down the arbitration clause. While courts generally uphold arbitration clauses, especially in a commercial setting, Duhon shows that arbitration clauses are not per se valid and that the consumer, in some cases, still may have their day in court.

Going Once, Going Twice … A New Alternative to Design-Bid-Build Contracts

The 2014 Legislative Session brought new possibilities for large construction projects under the Public Contract Law. Generally, a public entity is required to separately hire a design professional to design the project, and let the project out for public bid for the construction work. “Design-build” contracts, in which the public owner contracts with one entity for the design and construction of the facility, are prohibited under Public Contract Law.  However, the Legislature has now given public entities another option under the Public Bid Law: Construction Management at Risk Delivery Method (CMAR).

What’s the Delay? Contractor Delay Damages Under the Public Bid Law

Generally, a provision in a construction contract for private work limiting the contractor’s right to recover additional costs arising from delays outside of the contractor’s control may be enforceable. However, under the Public Bid Law, such a provision has been found to be against public policy. La. R.S. 38:2216 prohibits any public contract provision that purports to waive, release or extinguish the rights of a contractor to recover delay damages if the delay was caused in whole or in part by the acts or omission of the public entity.