Fraud Just Got More Expensive – Equity as a Factor in Attorney Fee Awards

The Louisiana Supreme Court recently held that the New Home Warranty Act (“NHWA”) is not the exclusive remedy for a purchaser of a new home where the builder fails to disclose known defects in the Residential Property Disclosure Act (“RPDA”). Stutts v. Melton, 2013-0557, — So.2d. —-. The Court also upheld an award of damages and attorney fees for fraud victims who elect not to seek rescission of a sales contract despite no Civil Code article expressly allowing for attorney fees in such instances.

Builder Chad Melton completed a home in Walker, Louisiana in 2004. He and his wife lived in the home for approximately nine months prior to selling the home to James and Lisa Stutts. The Residential Property Disclosure Act, La. R.S. 9:3196, et seq., requires disclosures of known problems with a home prior to sale. Melton provided the Stutts with a disclosure form, but failed to mention that color had previously been observed bleeding onto the walls of the home from the roof.

In Stutts, it was factually established that Melton was aware of the roof defect because he had entered into a $13,600 settlement with the roof manufacturer to fund the replacement of the roof. Nevertheless, Melton cleaned the walls and installed gutters instead of the more expensive roof replacement.

Melton’s gutter solution was ill-advised and unsuccessful. After discovering the problem in the summer of 2006, the Stutts filed suit seeking as damages: the repair costs for the roof; costs for additional repairs; and attorney fees.

The Stutts filed a motion for summary judgment on their fraud claim citing La. C.C. art. 1953. The Meltons opposed the motion, arguing that the NHWA provides the “exclusive remedy” available to the Stutts. The motion was granted and, after a bench trial on damages, the trial judge awarded damages to include attorney fees.

The court of appeal reversed both the summary judgment and the money judgment, holding that the Stutts’ claims were untimely under the NHWA.The NHWA provides a one year warranty period for new home construction and an additional thirty day period in which to file suit under the Act. By its terms, the NHWA provides the “exclusive remedies” between a builder and an owner relative to home construction.

The Louisiana Supreme Court reversed and reinstated that lower court’s judgment. The Court held that the RPDA applied in this case because the home had been occupied by the Meltons after construction was completed. Even though the NHWA claims were prescribed, the Stutts possessed a timely claim that Melton had provided a fraudulent disclosure in violation of the RPDA.

The Court next addressed the Stutts’ claim for attorney fees. The Court observed that no statute specifically authorized attorney fees where the plaintiff does not seek rescission of the sale. However, the Court reasoned, citing principles of equity found in Louisiana Civil Code article 4, that the legislature surely did not intend for victims of fraud to go uncompensated if they elect not to seek full rescission of the sale. Accordingly, attorney fees were held appropriate where fraud is committed but the victim elects not to seek rescission of the contract.

The Court’s holding in Stutts may have a limited impact on the NHWA because of the peculiar facts of the case, i.e. the builder of the new construction living in the completed home before selling it to plaintiffs. However, the Court’s award of attorney fees is an interesting development in the law. Time will tell whether the Court may be inclined to create further exceptions to the established rule that attorney fees cannot be awarded in the absence of statutory or contractual language awarding attorney fees.

14 comments on “Fraud Just Got More Expensive – Equity as a Factor in Attorney Fee Awards

  1. Tomasz Michałowski on

    Wonderful job right here. I seriously enjoyed what you had to say. Keep going because you undoubtedly bring a new voice to this subject. Not many people would say what youve said and still make it interesting. Properly, at least Im interested. Cant wait to see far more of this from you.

  2. Keygen Music Guitar on

    Howdy! I know this is kind of off topic but I was wondering if you knew where I could locate a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having difficulty finding one? Thanks a lot!

  3. Yahoo Engine on

    This post is really helpful for some1 who has been having difficulties with this situation. I have looked at a number of resources but to no avail. I will continue reading and learning here in the hope of ultimately getting past this.

  4. I Like Ducks on

    I must say, as a lot as I enjoyed reading what you had to say, I couldnt help but lose interest after a while. Its as if you had a excellent grasp to the topic matter, but you forgot to include your readers. Perhaps you should think about this from more than 1 angle. Or maybe you shouldnt generalise so significantly. Its better if you think about what others may have to say instead of just going for a gut reaction to the subject. Think about adjusting your own believed process and giving others who may read this the benefit of the doubt

  5. M106 on

    I want to thnx for the efforts you have made in composing this blog post. I am hoping the same top-grade post from you in the future as well. In fact your creative writing skill has inspired me to start my own blog now. Truly the blogging is spreading its wings rapidly. Your write up is a good model of it.

  6. unlimited quartz on

    I’m not that much of a internet reader to be honest but your sites really nice, keep it up! I’ll go ahead and bookmark your website to come back in the future. All the best|

  7. Zbigniew Buczkowski on

    What i do not understood is actually how you are not actually much more well-liked than you might be now. You are so intelligent. You realize therefore considerably relating to this subject, produced me personally consider it from so many varied angles. Its like women and men arent fascinated unless it’s one thing to do with Lady gaga! Your own stuffs great. Always maintain it up!

  8. Humor on

    POST dont actually find out what youre speaking about these. this particular cant end up being the only real approach to think about this can them? It looks like you understand a whole lot around the theme, exactly why definitely not explore that far more? Allow it to be more attainable for you to everyone altogether different that would possibly not agree with people? Youd acquire far more folks behellond this specific when you just simply quit creating general transactions.

  9. Norwegia on

    Hi, I found your article by mistake when i was searching bing for this issue, I have to say your article is really helpful I also love the theme, its amazing!. I dont have that much time to read all your post at the moment but I have bookmarked it and also add your RSS feeds. I will be back in a day or two. thank you for a huge site.

  10. SEO Senior on

    Hello there, I?ve read a few just right stuff here. Certainly worth bookmarking for revisiting :-). I surprise how much attempt you place to create any such magnificent informative web site, Nice JOB!.

  11. Jimslace on

    Go 1to this site to get some cooking fever free diamonds

    The game is a lot more fun when you have unlimited diamonds.If you love phone games like this you should check out the website above

Leave a Reply

Your email address will not be published.


Keogh Cox & Wilson, Ltd. provides this blog as a public service for general information only. The materials contained herein may not reflect the most current legal developments or even express the opinion of all or even most of Keogh Cox attorneys. Such material does not constitute legal advice or form any attorney-client relationship. Keogh Cox and all contributing author(s) expressly disclaim all liability to any person with respect to the contents of this Web site and Blog and expect that no reliance will be made upon the information provided.