Liberty Mut. Fire Ins. Co. v. Randall J. Hebert & Assocs., Inc.

Citation: 265 So. 3d 1089Docket: 18-496

Court: Louisiana Court of Appeal; February 5, 2019; Louisiana; State Appellate Court

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Liberty Mutual Fire Insurance Company and Hanover Insurance Company appealed the December 4, 2017 judgment granting summary judgment in favor of the St. Martin Economic Development Authority (SMEDA), which dismissed their claims for flood damage to the building of their insured, Waukesha Pearce Industries, LLC (WPI). SMEDA, a Louisiana non-profit established in 1994, was not involved in the acquisition of land or the construction of Petroleum Parkway, where WPI's building is located. The St. Martin Parish Government received a grant to establish the Highway 90 Industrial Park, and WPI purchased a lot within this park. Flood damage occurred in November 2015 and was paid for by Liberty Mutual and Hanover.

The insurers alleged negligence and sought damages from SMEDA and other entities, claiming that the defendants were responsible for the flood due to poor design and maintenance of drainage systems. SMEDA moved for summary judgment, asserting that there were no material facts in dispute. Supporting affidavits from SMEDA’s President, Fred H. Mills, and Executive Director, Beth Guidry, indicated that SMEDA did not perform any work on Lot 21-A or own it at the time of the flood, as it had sold the lot to WPI shortly after acquiring it from a previous owner. The trial court upheld SMEDA’s summary judgment, concluding that SMEDA bore no responsibility for the flooding.

The Act of Sale attached to Mr. Mills' affidavit states that the property was sold to the Purchaser "as-is where is" without warranties regarding its condition. There were no corrections or amendments to the sale documents. After acquiring Lot 21-A in 2007, WPI engaged N.C. Sturgeon, LP for construction and Randall Hebert & Associates for engineering services, specifically drainage design. No evidence was found of other entities providing drainage services for Lot 21-A. Both Mr. Mills and Ms. Guidry, representing SMEDA, stated they were unaware of any flooding or drainage issues prior to the sale to WPI. In response to SMEDA's motion for summary judgment, insurers Liberty Mutual and Hanover did not submit counter affidavits but instead provided financial statements and excerpts from depositions, asserting their claims were based on negligence rather than redhibition. Their argument suggested that because SMEDA approved plans for surrounding buildings, it should be liable for drainage issues arising from those structures. However, no evidence was presented to support this claim or the specifics of SMEDA's approval process. After considering oral arguments on November 3, 2017, the trial court ruled in favor of SMEDA, stating it had no role in the development of the lots and was entitled to judgment as a matter of law, dismissing all claims against SMEDA from Liberty Mutual and Hanover without a request for written reasons.

A final judgment was rendered on December 4, 2017, by the trial court, which was designated as final and appealable under La.Code Civ. P. art. 1915. Liberty Mutual filed a timely appeal against this judgment, which favored SMEDA, with Hanover supporting the appeal. Liberty Mutual's brief included an "Assignments of Error" section, where both Liberty Mutual and Hanover contended that the trial court incorrectly granted summary judgment and dismissed their negligence claims against SMEDA, rather than recognizing them as redhibition claims, as argued by SMEDA.

According to La.Code Civ. P. art. 862, a final judgment must grant the relief entitled to the prevailing party, regardless of whether it was specifically demanded in the pleadings. Louisiana's fact pleading system allows plaintiffs to present the facts of their claims without detailing every possible legal theory. SMEDA's motion for summary judgment was based on redhibition, presuming that the plaintiffs intended to pursue this claim due to SMEDA's limited interaction with WPI since the 2007 property sale. However, the plaintiffs maintained that their claims were rooted in negligence, which SMEDA addressed in its arguments. The trial court's ruling, which dismissed all claims against SMEDA, was supported by the evidence and oral arguments presented during the November 3, 2017 hearing.

The appellate court will review the trial court's summary judgment ruling using a de novo standard, assessing whether there is a genuine issue of material fact and if the mover is entitled to judgment as a matter of law. A material fact is one that is essential to the plaintiff's claims, and a genuine issue exists if reasonable persons could disagree on the fact's existence; if not, summary judgment is appropriate.

A motion for summary judgment is granted when it is demonstrated that no genuine issue of material fact exists and the mover is entitled to judgment as a matter of law, as stipulated in La.Code Civ. P. art. 966(A)(3). According to La.Code Civ. P. art. 966(D)(1), if the mover does not bear the burden of proof at trial, they need only highlight the lack of factual support for essential elements of the adverse party's claim, rather than disproving all elements. The opposing party must then provide sufficient factual support to show a genuine issue of material fact.

In the case concerning SMEDA's involvement in the Highway 90 Industrial Park, affidavits from SMEDA officials illustrated that SMEDA's only connection to WPI was the brief transaction of selling Lot 21-A without warranties. In contrast, Liberty Mutual and Hanover presented SMEDA's financial statements from 2012, 2015, and 2016, suggesting ongoing activities related to lot sales and development, potentially contributing to flooding issues. They cited a deposition from a contractor's representative, asserting that SMEDA's failure to review construction plans could have caused flooding years later. However, the contractor clarified that an independent engineer managed the drainage design, with no evidence linking SMEDA to drainage services for WPI's lot. SMEDA's affidavits, asserting no involvement in street or drainage construction, remain unrefuted. Consequently, under Louisiana law, SMEDA's summary judgment motion shifts the burden to Liberty Mutual and Hanover to present factual support demonstrating a genuine issue of material fact, specifically regarding the services SMEDA provided.

SMEDA's involvement in the development of the Park was questioned, particularly regarding specific improvements and the drainage system. Counsel for Hanover argued that SMEDA's motion for summary judgment was premature due to ongoing discovery and the need for expert testimonies. However, the trial court inquired about SMEDA's role in the land's development, emphasizing that there had been ample time for Liberty Mutual and Hanover to counter SMEDA's claims. The court noted that the affidavits from Mr. Mills and Ms. Guidry confirmed that the Parish was responsible for the Park's improvements, and these affidavits were unchallenged by the opposing parties. Consequently, the trial court affirmed SMEDA's motion for summary judgment, dismissing all claims against SMEDA with prejudice, and assessed costs to Liberty Mutual Fire Insurance Company. SMEDA's original motion was based on the absence of genuine issues of fact, and despite its initial claims of prescription and no cause of action, the focus remained on the summary judgment hearing held on November 3, 2017. Hanover did not file an appeal regarding this judgment.