Schilling v. Bernhard Bros. Mechanical Contractors, LLC
Docket: No. 2012 CA 2105
Court: Louisiana Court of Appeal; September 13, 2013; Louisiana; State Appellate Court
Joann Schilling filed a lawsuit for damages against Bernhard Brothers Mechanical Contractors, LLC, alleging personal injuries from inhaling fumes due to a plumbing leak at the Poydras Building on December 15, 2009. Schilling claimed the leak resulted from defective plumbing work, implicating Bernhard Brothers and Ratcliff Construction Company as defendants. Following the initial filing on December 9, 2010, Schilling amended her petition multiple times, including allegations of fraudulent concealment of defects against Bernhard Mechanical Contractors, Inc.
Service issues arose with attempts to notify the correct defendant, leading to a default judgment against Bernhard Mechanical Contractors, Inc. for $510,354.63 after they failed to respond. Bernhard filed a motion for a new trial, asserting defenses including improper service and peremption under LSA-R.S. 9:2772 A(1)(a). The trial court denied the motions, prompting Bernhard to appeal. On appeal, Bernhard contends that the trial court erred in entering the default judgment due to invalid service and that all claims were perempted before the lawsuit was filed. The appellate court vacated the default judgment and remanded the case for further proceedings.
The Trial Court's decision to render a Default Judgment against Bernhard Mechanical Contractors, Inc. is challenged on two main grounds: the introduction of incompetent and inadmissible evidence by the plaintiff to establish both liability and damages amounting to $510,354.63. A new trial could be warranted under Louisiana law for peremptory grounds as outlined in LSA-C.C.P. art. 1972, including when a judgment is contrary to law and evidence, when new evidence emerges post-trial, or when juror misconduct occurs. Discretionary grounds for a new trial are also available under LSA-C.C.P. art. 1973 if there is good reason.
Bernhard asserts that it was improperly served, arguing that service must be made on its registered agent as per LSA-C.C.P. art. 1261; the initial service was directed to a separate entity, Bernhard Brothers Mechanical Contractors, Inc., rather than its registered agent. Although Bernhard initially focused on evidentiary issues in its December 29, 2011, motion for a new trial, it did not raise the service insufficiency until June 21, 2012, which is deemed too late, as objections to service must be made before or alongside any relief-seeking pleadings, or prior to confirming a default judgment. By engaging in the trial process without raising the service issue initially, Bernhard is considered to have waived its objection and submitted to the court's jurisdiction.
Defendant has invoked the court's jurisdiction by pursuing remedies beyond challenging service of process, leading to a waiver of any objections to service. Citing LSA-C.C.P. art. 2002 A(2), the court confirms that a final judgment can be annulled only if the defendant was not properly served and did not waive objections. Because Bernhard filed motions before contesting service sufficiency, it waived those objections. In the second assignment of error, Bernhard claims that all of plaintiff's claims were perempted before the lawsuit was filed, referencing that the State accepted the Poydras Building on October 10, 2002. Bernhard argues that the acceptance included the entire construction project and asserts that the lawsuit, filed on December 15, 2009, was beyond the three-year peremptive period established by LSA-R.S. 9:2772 A, which mandates that actions related to construction must be initiated within five years of project acceptance. Consequently, Bernhard contends the claims were extinguished by law by October 10, 2007. In contrast, the plaintiff argues that Bernhard's peremption objection cannot be considered until a judgment is vacated. However, peremption can be raised at any time before final judgment, including during new trial delays, thus allowing Bernhard to file its peremption exception. While the plaintiff acknowledges the normal five-year peremptive period, they argue that a fraud provision in LSA-R.S. 9:2772 H(1) may apply.
Louisiana Revised Statutes 9:2772 H(1) states that the peremptive period does not apply to actions for contract recovery or damages linked to fraud that caused the breach or damages. This provision is retroactive. Fraud is defined as a misrepresentation or suppression of truth intended to gain an unfair advantage or cause loss to another, and it can also arise from silence or inaction. For allegations of fraud, a separate trial is required to determine its existence, which is a factual question. In pleading fraud, specific circumstances must be detailed, though knowledge can be stated generally. Fraud requires fraudulent intent; mere negligence or mistakes do not qualify. Without proving fraud, a plaintiff's claim would have been perempted upon filing. Establishing a prima facie case involves proving essential allegations with competent evidence, showing it is more probable than not that the plaintiff would prevail at trial. A default judgment is presumed correct if sufficient evidence supports it, but this presumption is void if testimony is recorded. At a default confirmation hearing, the rules of evidence apply, and both the plaintiff and the judge must ensure that the judgment is based on admissible evidence establishing a prima facie case. The plaintiff claims that evidence from the confirmation hearing, including the State's admissions regarding the Poydras Building's drainage plans and subsequent inspections, sufficiently demonstrated a prima facie case of fraud.
Ratcliff Construction Company, LLC, the general contractor for the Poydras Building, admitted that Bernhard was the exclusive contractor for all plumbing work. The State acknowledged that it had not made any alterations to the fourth floor break room floor drain before the plaintiff's incident. Evidence presented at the confirmation hearing indicated that a four-inch thimble for a floor drain was not installed into the two-inch p-trap, which was not extended through the floor. To address this issue, the State installed a four-inch plug to prevent future spills. The plaintiff did not specifically argue fraud at the hearing, and no evidence supporting claims of intentional concealment of defects by Bernhard was introduced. The court noted that while suspicious circumstances can be considered in fraud cases, fraud is not presumed. The evidence was deemed insufficient to establish a prima facie case of fraud, which requires proof of misrepresentation or concealment for unjust advantage, as defined by Louisiana Civil Code article 1953. Consequently, the plaintiff failed to demonstrate a likelihood of success at trial. Given the circumstances, including procedural issues and non-compliance with Louisiana Revised Statutes 9:2772 H(2), the case was remanded to the trial court. The court granted Bernhard’s motion for a new trial, vacated the previous judgment, and assessed appellate costs to the plaintiff. Additionally, Bernhard Brothers Mechanical Contractors, Inc. had been inactive since 2004, and the plaintiff's service of process on Mr. C. Robert Bernhard, who is not a registered agent for Bernhard Mechanical Contractors, Inc., was not valid under Louisiana law regarding service of process.
Peremptory grounds for nullifying a judgment, such as lack of legal service, can be raised via a motion for a new trial, appeal, or separate action, as outlined in LSA-C.C.P. art. 2002 A(2). In a case involving the Poydras Building, the State confirmed that William Morrison accepted the building based on designer Richard Brow's recommendation, providing various inspection documents and certificates. The plaintiff alleges that defendants failed to properly disconnect and reconnect plumbing related to a floor drain, concealing a defect by placing a grating over it. The plaintiff argues that this act demonstrates bad faith, which should negate the peremptive period protection under La. R.S. 9:2772. The plaintiff's assertion hinges on the belief that the defendants intentionally hid the plumbing defect. However, the court noted that arguments presented in briefs do not constitute evidence. During the hearing on the new trial motion and peremptory exception, only issues of service and citation were discussed, leaving other matters, including peremption and fraud, unresolved as the trial court indicated it would take the matter under advisement. The court's lack of focus on the fraud issue may have contributed to its failure to rule on it separately.
