Articles Posted in Building Defects

One area where lawyers must continue to improve is drafting contracts. It is imperative that lawyers learn the intricacies of legal writing and the different meanings words have in the legal community and their ordinary meaning. If a word or phrase in a company’s contract is ambiguous, it is susceptible to multiple interpretations and might result in litigation at some point. A common example of litigation like this involves insurance policies. Therefore, it’s important to draft clear and concise contracts in order to save the time, money, and effort associated with litigation.

Ambiguous contractual provisions are to be strictly construed against the insurer and in favor of coverage for the insured. Insurance coverage is meant to protect the insured, so the public policy reflects this favoring. However, this strict construction rule applies only if the ambiguous policy provision is susceptible to two or more reasonable interpretations. The key is that it must be reasonable, not just another interpretation. If the word or phrase is clear, then no further interpretation is necessary. The words and phrases used in insurance policies are to be construed using their plain, ordinary, and generally prevailing meaning unless the words have acquired a technical meaning.

This seems to be a clear explanation of how contract terms are to be interpreted, but even so, many cases arise with an insured claiming that a certain phrase is ambiguous and they should not be denied relief under their policy. For example, Herbert Farms, who conducts a rice farming operation in St. Landry Parish, Louisiana, claimed the phrase “rice drying house” in their policy was ambiguous and other reasonable interpretations of the phrase was possible. Herbert Farms filed a claim for losses under its policy when its rice was damaged while in storage, seeking coverage under a section that listed “grain tanks” as covered property. However, there is a clear and unambiguous exclusionary clause that states that property covered in certain sections, including the section listing grain tanks, is not covered. The two pertinent pieces of property not covered in Herbert Farms’ policy were the contents of a rice warehouse and rice drying houses.

In the aftermath of Hurricanes Katrina and Rita, the Louisiana legislature set deadlines for the filing of claims for damages resulting from the hurricanes. These dates were September 1, 2007 for claims of damage resulting from Hurricane Katrina and October 1, 2007 for claims of damage resulting from Hurricane Rita. Any claims filed beyond these dates would be subject to the exception of prescription, meaning that any legal remedies stemming from such damages would be extinguished. Under certain circumstances, however, Louisiana law allows for the suspension of prescription. For members of an ongoing class action in Louisiana state court, the deadline to file individual claims based on the same damages is suspended.

The countdown for the valid filing of individual claims begins to run again when a class member elects to be excluded from the class action or is notified that he or she has been excluded from the action, or is notified that the action has been dismissed. Once the countdown starts to run again, it resumes with how much time was left before the commencement of the class action. For instance, if there were two months remaining to file an individual claim of damages at the time a class action was started, the countdown for a class member’s individual claim would resume with two months remaining upon the member’s exclusion or the dismissal of the class action. This would hold true no matter how much time had elapsed since the class action’s commencement. However, it is crucial to note that such suspension of prescription is only allowed for class actions in Louisiana state court.

In a recent Louisiana Supreme Court case, a couple in Harvey, LA filed an individual claim for property damages resulting from Hurricanes Katrina and Rita more than two years after the deadline set by the legislature. Because the couple were members of a recently dismissed class action in federal court seeking the same damages, they argued that the countdown for the filing of their individual claim had been suspended. The Louisiana Supreme Court ruled, however, that only class actions filed in Louisiana state court (rather than federal class actions, or class actions in another state’s court system) could suspend the deadline for filing claims under Louisiana law. This meant that the couple’s individual claim had long expired unless they could prove membership in a class action in Louisiana state court for the same damages during that period.

An insurance company found itself on the defending side of a civil claim but not for the reason one might expect. Larry Modicue, a Louisiana man weighing 404 pounds, filed a claim against State Farm Casualty & Fire Insurance and its representative Rose Kennedy when the chair Ms. Kennedy offered him collapsed under his weight. The Fourth Judicial District Court granted the defendants’ motions for summary judgment and the Court of Appeal for the Second Circuit affirmed.

Mr. Modicue alleged that the incident in which his chair collapsed was an example of res ipsa loquitor. This common law phenomenon is found when a court deems that a particular incident or accident is the type that does not occur without negligence on behalf of some actor. Res ipsa loquitor means “the thing speaks for itself” in Latin and is a way for a plaintiff to prove the duty and breach prongs of a negligence case. As a review, a prima facie negligence case requires four essential elements: duty, breach, causation and harm. A plaintiff must prove each of these elements in order for a case to proceed to the trier of fact, whether judge or jury.

The appellate court reviewed the granting of a summary judgment de novo meaning that the appellate court could consider all things that the trial court could have considered in rendering its decision. The appellate court reviewed Louisiana C.C. art. 2317.1 in determining the outcome of this case. This statute places liability on the owner or custodian of a thing when that person knew or should have known through the exercise of reasonable care that a particular condition existed when it is determined that the condition caused damage to a plaintiff and the custodian or owner could have remedied the condition with reasonable care. Liability attaches if that care was not exercised. This statute is a reflection of traditional negligence principles. If a party has exclusive control over an object it is responsible for conditions in that object that cause harm to others. It is interesting to note that this statute goes on to specifically note that nothing in it should be construed to prevent a court from applying res ipsa loquitor. The appellate court found that Ms. Kennedy had no reason to know that this particular chair would give out under Mr. Modicue’s weight since it had held him without incident on a previous occasion.

The Court of Appeal went on to dismiss the plaintiff’s allegation that res ipsa loquitor applied to this situation. The court noted that Harper v. Advantage Gaming, 880 So. 2d 948 clarifies the situations in which res ipsa loquitor applies. That case required a court to find unusual circumstances such that, in the absence of other evidence, there was an inference of negligence on the part of the defendant. In conjunction with this the defendant must have had exclusive control over the object that caused the injury. These circumstances must lead to the finding that the only reasonable conclusion is that the defendant breached a duty to the plaintiff and that this was the cause of the plaintiff’s injuries.

The court in this case found that due to Mr. Modicue’s weight, there was more than one potential explanation for the chair’s failure. The court went on to explain that Mr. Modicue had not provided enough evidence to get the issue of the defendants’ negligence to the jury. As such, the defendants were entitled to a summary judgment as a matter of law. Mr. Modicue’s reliance on res ipsa loquitor caused his negligence claim to fail. Had he offered evidence of all four elements of negligence, it is possible that he would have succeeded, though it is unclear if this evidence existed.

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Injuries can happen anywhere but do not always lead to successful legal suits. Larry Modicue was directed by Rose Kennedy, an insurance agent for State Farm Fire & Casualty Co. in West Monroe, Louisiana, to have a seat in her office, which resulted in the chair collapsing. Modicue is a 404-pound man who has sat in this same chair with no prior injuries or incidents but suffered a shoulder injury in the fall, requiring medical assistance.

Modicue sought relief for his injuries and brought suit against Kennedy and State Farm. Kennedy and State Farm’s, in turn, filed a motion for summary judgment. Summary judgment is a maneuver used by one party to have the court make a decision on part or the whole dispute without going to trial. For a motion for summary judgment to be granted there must be no disputes on material fact, showing that one party is entitled to judgment. The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action and is favored by the courts and construed to accomplish these ends. In this case, Kennedy and State Farm’s motion for summary judgment was granted due to the fact that the court found no genuine issue of material fact.

Modicue appealed this decision arguing that the court erred in granting summary judgment. His reasoning was that 1) a Louisiana business owner has a duty to provide seating which is adequate for the general public, and 2) the facts of the case permit the application of res ipsa loquitor.

The court disagreed with Modicue. According to the Louisiana C.C. art. 2317.1, an owner is only responsible for damage of the object is if 1) he knew about a ruin, vice, or defect which caused the damage, or 2) he should have known of the ruin, vice, or defect, 3) the damage could have been prevented if he exercised reasonable care, and 4) that he failed to exercise reasonable care.

Modicue failed to show that there was prior knowledge on the part of Kennedy and State Farm of the chair being defected. There was also no reasonable belief that the chair was defected and could not support Modicue because he had sat in the same chair before without any injury or incident. The chair also did not contain any warning about the capacity at which it could hold.

Res ipsa loquitor, a rule of circumstantial evidence that applies when the facts suggest that the negligence of the defendant is the most plausible explanation of the injury, did not apply either. According to Harper v. Advantage Gaming, it is applicable when 1) the circumstances of the accident are so unusual that, in the absence of other evidence, there is an inference of negligence by defendant; 2) defendant had exclusive control over the thing causing injury; and, 3) the only reasonable conclusion is that defendant’s breach of duty caused the accident.

The original ruling in favor of Rose Kennedy and State Farm Fire & Casualty Co. was upheld due to Modicue’s failure to produce sufficient evidence showing the negligence of Kennedy and State Farm.

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The “New York Convention” (9 U.S.C. §§ 201 et seq.) gives a U.S. court the ability to enforce a foreign arbitration award if there is personal jurisdiction over the defendant. Personal jurisdiction is when the defendant can expect to appear in a foreign country’s court because the defendant has minimum contacts with the country. First Inv. Corp. v. Fujian Mawei Shipbuilding, Ltd. reaffirms that personal jurisdiction is necessary when a plaintiff is trying to confirm an arbitration award.

In First Inv. Corp., a Marshall Islands corporation and Chinese shipbuilding company entered into a contract that had an arbitration clause. The Marshall Islands is a presidential republic of the United States. The U.S. provides defense, funding, social services, and its currency for use to the republic. The arbitration clause required all disputes to be resolved in neutral territory under the London Maritime Arbitrators Association rules. The English arbitration panel found for the Marshall Islands corporation, but China refused to enforce the award against the defendant because not all the arbitrators on the panel had seen the final draft of the decision. Instead of resolving the matter in either the country of arbitration or the defendant’s country, First Inv. Corp. commenced action in the U.S. District Court for the Eastern District of Louisiana. The case eventually appeared before the Fifth Circuit Court of Appeals.

The Fifth Circuit affirmed the district court’s decision that the U.S. lacks personal jurisdiction over a Chinese shipbuilding company that has no contacts with the U.S. The Chinese company did not distribute products, conduct any transactions, or maintain property on American soil. However, the Marshall Islands plaintiff argued that since the defendant did not have any contacts with the U.S., the defendant should not be afforded the right of due process stemming from personal jurisdiction. The Fourteenth Amendment of the U.S. Constitution forbids states from depriving “any person of life, liberty, or property, without due process.” In the district court trial, the plaintiff argued that as a corporation controlled by the Chinese government, the defendant was not entitled to due process. Ultimately, the trial court rejected the plaintiff’s argument because it would undermine the “minimum contacts” test set by the U.S. Supreme Court because a confirmation of the award would suggest that a court can exercise personal jurisdiction over a defendant with no contacts in the U.S. The Fifth Circuit followed up by citing cases affirming due process protection for foreign corporations.

The plaintiff then argued that a confirmation of the arbitration would not affect the defendant’s “substantive rights” or fundamental protections afforded by the U.S. Constitution. The Fifth Circuit disagreed because a confirmation of the arbitration award would allow the plaintiff to enforce the judgment in Britain.

First Inv. Corp. shows how significant it is for parties to understand U.S. legal procedures when seeking to enforce foreign arbitration awards.

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The Louisiana Supreme Court has recently undertaken a case deciding whether arbitration clauses in attorney-client retainer agreements are appropriate. In the past, Louisiana has favored the enforcement of arbitration clauses in written contracts. Arbitration avoids taking a case to trial and is a thrifty and efficient way to conduct the resolution of disputes outside of the courts. During arbitration, each party refers its dispute to an arbitrator, who then imposes a decision that is legally binding for both sides. However, Louisiana law also imposes a fiduciary duty requiring attorneys to act with the utmost fidelity and forthrightness in their dealings with clients and any contractual clause, which may limit the client’s rights against the attorney is subject to the upmost scrutiny.

According to the Louisiana Supreme Court in Hodges v. Reasonover, there is no per se rule against such binding arbitration clauses, provided that they are fair and reasonable to the client. In Hodges v. Reasonover, Jacqueline Hodges, the founder, sole shareholder, and CEO of Med-Data Management, Inc., hired Kirk Reasonover of the law firm of Reasonover & Olinde to sue a company known as MedAssets, Inc. in federal court in Atlanta, Georgia. In the retainer agreement between Hodges and Reasonover there was an arbitration clause, which essentially provided that any dispute shall be submitted to arbitration in New Orleans, Louisiana and that such arbitration shall be submitted to the American Arbitration Association (AAA).

Hodges was ultimately unsuccessful on her suit against MedAssets, Inc., which led her to file suit for legal malpractice against Reasonover. According to the Louisiana Supreme Court, Courts must closely scrutinize attorney-client agreements for signs of unfairness or overreaching by the attorney. Further, Louisiana Rule of Professional Conduct 1.8(h)(1) prohibits a lawyer from “prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement.”

Even in 2012, issues regarding Hurricane Katrina, which occurred in 2005, are still prevalent. Insurance companies are particularly affected by Katrina, and they are still attempting to sort out many claims. Some of the contract claims that are still moving through the courts are somewhat unique. For example, contracts occasionally have provisions where both parties can appoint an appraiser if the two parties cannot decide how much damage actually occurred. The insurance policies will only insure up to a certain amount, of course, but determining the amount of damage is a vital part of reimbursement of the claim.

An apartment building in Metairie, Louisiana carried insurance that had such an appraisal policy. The contract explained that both parties were to appoint their own appraiser, who is supposed to be fair and impartial. Then, a third individual, the umpire, would be appointed. The umpire takes both of the appraisers’ estimates, examines them, and then comes up with a third number that will be the final number for total damage. The two parties are supposed to appoint the umpire as well, but if the two parties cannot decide on an umpire, then the court can appoint one for them.

In this case, the court did appoint an umpire. However, the court not only appointed an umpire, but also imposed certain rules and restrictions to the appraisal process. In particular, the court restricted the documents that the umpire could receive and required that if the umpire needed to communicate with either party then the opposing party would also be included in the conversation. The communication issues required the umpire to copy both parties on e-mails, letters, and make conference calls. Communication with just one party was strictly not allowed. In addition, neither party was to give the umpire documentation of a legal nature that would attempt to convince the umpire that the award should be a certain amount. Instead, the documentation was limited to receipts, inspections, and other impartial information.

The apartment’s appraiser valued the damage at approximately $200,000, but the insurance company’s appraiser valued the damage at zero. The apartment owner argued that the insurance company’s appraiser was not being impartial because they did not award any damages. However, the insurance company noticed that the apartment owners had already fixed most of the damage using funds from other insurance companies, so the insurance company’s appraiser determined that the apartment owners were not entitled to any more damage payments.

The umpire agreed with the insurance company’s appraiser and recommended that the damage award be zero. Naturally, the apartment owner was upset by this result, so he appealed the decision to the Fifth Circuit Court of Appeals for the State of Louisiana. The apartment owner argued that the court interfered too much with the process–the apartment owner should have been able to give the umpire whatever documentation they wanted and communicated however they wanted.

The Court disagreed. It began its analysis by underscoring that although the two parties had an appraisal clause in their contract, the clause does not take away the court’s right to hear a case. In addition, insurance policies are contracts, and should be interpreted under the regular principles of contracts. Therefore, the court will interpret the contract using its regular meaning unless some of the phrases have gained technical definitions in that particular line of business.

The Court explained that the two parties deliberately involved the court when they stated in the contract that the court was to assign an umpire if the two parties could not agree to one. The appraisal portion of the contract did not set specific guidelines in the process, so the court stepped in to create them. The lower court explained that they were afraid the umpire was getting far too much irrelevant information, so they intervened. The Court deemed this a completely acceptable practice under the circumstances. The Court also decided that the insurance company’s appraiser was sufficiently impartial. Lastly, the Court concluded that since the lower court acted appropriately, the award of zero damages should still stand.

This case illustrates a unique clause that could potentially be helpful for the insured, but since the clause was not detailed enough to limit the court’s actions, it turned out to be detrimental.

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Licensed attorneys in New Orleans were asked which attorney they would recommend to residents in the New Orleans area. Attorney Jeffrey Berniard, of the New Orleans-based Berniard Law Firm, LLC, was named one of the best mass litigation and class action attorneys in New Orleans in the November 2012 issue of the magazine. Propelled into success by holding insurance companies accountable in the wake of Hurricane Katrina, Berniard has built the Berniard Law Firm into one of the premiere personal injury law practices in not only New Orleans, but the entire state of Louisiana. Since Hurricane Katrina, Berniard Law Firm has focused on insurance disputes and class action litigation.

Jeffrey Berniard has been involved in several high-profile cases, solidifying his expertise in complex high risk litigation. He worked on the highly publicized Deep Water Horizon oil rig case in the Gulf Coast, representing a very large group of individuals affected by the sinking oil rig. In 2008, Berniard Law Firm secured a $35 million dollar settlement for a class of 70,000 members seeking bad faith penalties for tardy payments by a Louisiana insurance company in the wake of Hurricane Katrina and Hurricane Rita. In 2009, the Berniard Law Firm participated in five class actions against insurance companies and corporations. In the process of these major claims, the firm also helped many residents of the Gulf Coast with their personal injury concerns, insurance claims and business disputes.

– What is Mass Tort Litigation? –

In the first year of law school, nearly every student takes a course in Contracts. Contract law is one of the bases of our legal system and is at the core of almost all legal agreements. Everytime you get car insurance, sign a lease, agree to pay your plumber or electrician for work, or sign up for new cellphone service, you are dealing with a contract.

In contracts, every single word and punctuation mark is important. Clear, concise and unambiguous language is vital to writing a good contract. Sometimes even big companies enter into contracts that contain ambiguous language. These ambiguities can cause legal problems down the road. The case of WH Holdings, L.L.C. et al. v. ACE American Insurance Company illustrates how ambiguous contract language can lead to legal problems for the parties involved.

Prior to Hurricane Katrina, WH Holdings, the owner of the Ritz Carlton Hotel Complex in New Orleans, hired Gootee Construction Company to renovate the existing structure of the complex. Gootee was in the process of performing the renovations when Hurricane Katrina made landfall and caused damage to the exterior of the building. WH Holdings filed suit against Gootee’s insurer, ACE American Insurance Company, for almost $3.3 million for damage to the exterior of the hotel.
The parties agreed that the contract was governed by a form document known as the General Conditions of the Contract for Construction (General Conditions). The General Conditions is a document that contains amendments that the parties negotiated themselves – the Court acknowledges that these amendments are clearly marked in the document.

Both parties also agreed that WH Holdings was only covered under the policy which ACE issued to Gootee if, and only if, WH Holdings qualified as an insured party under the policy. Thus the entire case rested on whether or not Gootee was “contractually obligated… to insure WH Holdings such that it became an insured on the ACE policy.”

To reach its decision, the District Court looked at two clauses of the contract, Subsections 11.4.1 and 11.1.5(g). The parties distinctly amended a portion of Subsection 11.4.1. to seemingly place the responsibility of purchasing property insurance on Gootee. The District Court even acknowledged that if 11.4.1 stood alone, ACE would have no basis to contest WH Holdings claim. However, the District Court held that a separate subsection, 11.1.5(g), located in a different portion of the contract, changed the meaning of 11.4.1 by “unambiguously… obligating WH Holdings to carry the insurance ‘when the construction is an addition or a renovation.'”
The district court granted ACE’s motion for summary judgment and concluded that WH Holdings was not an insured party under the contract and Gootee had no responsibility to insure WH Holdings.

The 5th Circuit disagreed with the District Court’s analysis stating that while the district court “relied entirely on subsection 11.1.5(g) in finding the contract unambiguous… subsection 11.1.5(g) is not as ‘crystal clear’ as the district court thought it to be.” The Court goes on to point out that 11.1.5(g) appeared in an entirely different portion of the contract than 11.4.1. Subsection 11.1.5(g) appeared in a section of the contract covering “Contractor’s Liability Insurance” while 11.4.1 appeared in a section entitled “Property Insurance.” The Court found that 11.1.5(g) is limited in scope by a preceding clause and therefore does not modify 11.4.1, and to read it any other way would be ignoring this express limit. The 5th Circuit finally stated that it simply cannot agree with Gootee’s assertion and the District Court’s conclusion that the contract language unambiguously obligated WH Holdings to purchase property insurance.

The 5th Circuit also disagreed with WH Holdings argument that it was in fact Gootee who was “unambiguously required… to purchase the property insurance” since WH Holdings was unable to persuasively argue their interpretation. Stating that there were “difficulties with each party’s contention that the contract unambiguously supports its position,” the 5th Circuit vacated the District Court’s judgment and remanded the case back to the District Court. Finally, due to the ambiguous nature of the contract, the 5th Circuit also ordered the District Court to examine outside evidence brought by both parties regarding the meaning of the contract and to examine how both parties had performed the contract prior to the lawsuit being brought.

Contracts can be extremely important and very complicated particularly when dealing with insurance issues. Hiring the proper attorney is very important to ensure that all documents relevant are maintained, and provided, from start to finish, as well as to navigate any complicated appeals that may arise.

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In Jane Doe v. Southern Gyms, LLC arising out of Baton Rouge, Louisiana, a class action suit was filed involving a local branch of the national gym, Anytime Fitness, was accused of taking pictures of 250-300 women changing in a locker room. The plaintiffs filed on behalf of all women who’d used the gym during the time period and the class was certified to proceed to trial.

To understand what “the class was certified” means, it is important to understand what a class action suit is the reasons why we allow class actions in the first place. Class action suits are a useful tool in litigation in that it can bring together large numbers of substantially similar or identical claims into a single proceeding. This contributes to judicial efficiency as often times the type of cases litigated as class actions can have as many as thousands of plaintiffs. Assuming each of these cases was large enough to be worth bringing to court individually, there would be substantial amounts of duplicated effort by each party. However, the real value of class actions is in allowing cases that normally would be too small to litigate individually to have their day in court. If a case involves a real injustice to thousands of people, but the actual per person damages is relatively small it would be too costly to vindicate their claims.

In this case, the class proposed was:

all females who physically entered the women’s restroom/locker room/ changing room at Anytime Fitness, 200 Government Street, Baton Rouge, LA 70802 from November 1, 2009, through and including April 5 2010.

The rules that govern class actions require that several hurdles be met before a class can be certified (allowed) to proceed: there must be enough members that litigating separately is impractical; the questions of law and facts in the case common to the parties; the class representative’s claims must be typical of the claims of the class; they are able to protect the interests of the entire class, and finally the class must be able to be adequately defined so the court can be satisfied that the suit will end the dispute.

This case is noteworthy because the actual size of the class is fairly small. The gym operator admitted to videotaping on only 10-15 occasions. While any number of women may have been victims during these periods, the class itself was certified for any woman using the gym during a nearly 6 month period. There is no rule that states the minimum number of plaintiffs required for a class action, but the appeals court did not give a rousing endorsement for the “numerosity” (size) of the class in this case, they merely deferred to the trial court judgment on the matter. What was particularly noteworthy was the court weighed concerns beyond just the actual numbers of women involved. An additional factor was evidence that the gym allowed members from around the country to use it and thus the plaintiffs might not all have been locals which would have substantially increased the burden to litigate separately. Had all the women been locals, it is possible the court would have required “joinder” or just combining separate cases rather than allowing a representative in a class action suit.

Most people have been involved in a class action suit and may not have even been aware of it. Generally, each member of the class is required to be notified to give them the opportunity to opt-out of (or into) the class. This will typically be done via a postcard by mail. Thousands of these cards are thrown away without being read yearly but they can entitle plaintiffs to small to moderate cash settlements without ever setting foot in a courtroom, as you are being represented by the person bringing the suit!

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