Keogh Cox's Win Prevents Plaintiff from Recovering Louisiana Lottery Jackpot

The Supreme Court ruling in Couvillion Group, LLC v. Plaquemines Parish Government, 2020 -00074 (La. 4/27/20) is a reminder that an indemnity claim must be sufficiently related to the principal demand and that contract indemnity provisions are to be strictly construed.

In Couvillion, the general contractor sued the owner of a public works port project for contract delay damages resulting from a cease work order issued to allow redesign of a fuel tank platform. When the contractor submitted its delay claim, the owner requested that its project engineer review it and make recommendations. The engineer recommended payment of a little over $1 million dollars. When the owner refused to pay, the contractor sued. In response, the owner filed a third-party demand against the engineer alleging that its recommendation was erroneous and excessive and that, if it was bound by the engineer’s recommendation, then the engineer must indemnify the owner.

On behalf of the engineer, Keogh Cox attorneys argued that the engineer should not be required to reimburse the owner for any delay costs and asked for dismissal through an exception of no cause of action. Code of Procedure Article 1111 provides that a defendant in a principal action may bring in any person who may be liable to him for all or part of the principal demand. Here, that was not the situation. The engineer was not liable to the owner for any part of the contractor’s delay claim because the engineer did not cause the delay. The delay damages were incurred before the engineer made a recommendation for payment. The events giving rise to the two claims were separate and distinct: the main demand arose from the project delay and the third- party demand arose from the engineer’s recommendation of the claim amount. The Court commented that the principal claim against the owner for delay damages was too attenuated from the owner’s claim against the engineer, thus the third-party demand was improper.

The owner also relied on the indemnity provision in the engineer’s contract that required the engineer to indemnify the owner against any and all claims for personal injury or “damages to property” that may arise from its services. The Court held that the plain meaning of the term did not include the economic-only losses related to the subject delay claim. The Court further reasoned that indemnity agreements are to be strictly construed, rejecting the owner’s broader interpretation.

Louisiana’s anti-indemnity statute applicable to construction contracts, R.S. 9:2780.1, became law in 2011. The statute renders unenforceable any provision in, or collateral to, a construction contract that purports to indemnify or hold harmless a person from liability for its own negligence, or has the effect of doing so. Since the law's passage, few court decisions have interpreted its seemingly broad language and many questions remain as to the law's full impact.

The obvious intent of the anti-indemnity law is to avoid shifting liability away from a party at fault to another person. To this end, the language in the statute nullifies any agreement that has "the effect of holding the person at fault harmless.” But what about "limit of liability" provisions? Arguably, such provisions have the effect of holding harmless the party at fault. Does a limit of liability provision, otherwise valid and enforceable under Louisiana law, run afoul of the anti-indemnity statute? After all, those parties with superior bargaining power in construction contracts will seek to insulate themselves from liability to the fullest extent allowed by law, and will look for alternatives to the indemnity provisions that now expressly violate public policy.

One court recently held that R.S. 9:2780.1 does not prohibit a limit of liability provision in a construction contract. In Patriot Contracting, LLC v. Star Insurance Company, (E.D. La. 3/01/2018), the construction contract contained a provision that excluded liability of the architect for good faith decisions made during contract administration. The plaintiff/contractor alleged that the architect was negligent in its contract administration duties and caused it to suffer economic loss. The court dismissed the claim, rejecting the contractor’s argument that the provision violated the anti-indemnity law.

The Patriot court explained that the statute prohibits an indemnity agreement, i.e., where one party agrees to reimburse a second party for damages for which the second party becomes liable to a third party. However, the anti-indemnity law did not impact the provision that excluded the contractor’s right to recover from the architect. Thus, at at least according to one court, parties in construction contracts are still free to include limit of liability provisions.

Mary Anne Wolf is an engineer/attorney with a construction background who represents design professionals, contractors, and others in construction litigation. She also gives seminars on the subject. She enjoys travel, yoga, and encouraging her husband in his gardening and cooking endeavors.

The United States District Court for the Eastern District of Louisiana grants defendant, Circle K's, Motion to Dismiss concluding that plaintiff has no right to claim loss of opportunity to win the Louisiana Lottery Powerball jackpot, $103,100,000.00, because of an expired ticket issued in error.

This matter arose from plaintiff's purchase of two sets of Powerball tickets on or about January 19, 2012. The drawing that was the subject of the purchase was to be held on January 21, 2012 with a jackpot of $103,100,000.00. Sometime after the drawing date, plaintiff discovered the purchased tickets were printed on January 18, 2012 and worthless for the January 21, 2012 drawing. Plaintiff filed suit seeking damages in the amount of the Powerball jackpot.

After removal to Federal Court, on behalf of Circle K, Keogh Cox moved to dismiss the suit by claiming that Louisiana law affords no relief to plaintiff for the alleged claims. Specifically, Louisiana law explicitly precludes any relief to the plaintiff.

Keogh Cox cited La. R.S. 47:9009 which states "that there shall be no liability on the part of and no cause of action shall arise against the corporation, its governing board, staff, agents, vendors, or employees, arising out of or in connection with the issuance, failure to issue, or delivery of a lottery ticket."

Moreover, Keogh Cox asserted that the Louisiana Statute precludes payment of prize money on the basis of lottery tickets produced or issued in error. The United States District Court found merit in these assertions after extensive briefing and arguments by Keogh Cox attorneys, John P. Wolff, III, Nancy B. Gilbert, Richard W. Wolff and Mark Assad.

The United States District Court found that Circle K was statutorily exempt from the suit and, under the directives of the lottery itself, it is the sole responsibility of plaintiff to verify the accuracy of the game play. Plaintiff failed to do so and, as such, was barred from suit.