Dorvin et al v. 3901 Ridgelake Drive, LLC et al

Filing 109

ORDER AND REASONS granting 8 Plaintiffs' Motion for Partial Summary Judgment on the Issue of the New Home Warranty Act; DENYING 50 CSI's Motion for Partial Summary Judgment against 3901, without prejudice to reurge after completion of all discovery. Signed by Judge Ivan L.R. Lemelle on 3/27/12. (mmv, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DORVIN, et al

CIVIL ACTION

VERSUS

NUMBER:

11-00696

3901 RIDGELAKE DRIVE, LLC, et al

SECTION:

“B”

ORDER AND REASONS
Before the Court is Plaintiffs Dorothy Watkins Dorvin, Edwin
C. Dorvin, Patricia Barilleau Zerangue, Donald C. Zerangue, Frances
Lopinto Dwyer, William J. Dwyer, Anna Cannizzaro Steiner, Robert A.
Steiner,

Cynthia

America

Gacharna,

Anthony

Brandner,

Michael

German

Gacharna,

and

S.

Anthony

Brandner,
P.

Sr.,

Doughty’s

(collectively Plaintiffs) Motion for Partial Summary Judgment on
the Issue of the New Home Warranty Act (Rec. Doc. No. 8). In
response, third-party defendant ConstructionSouth, Inc. (CSI) filed
a Memorandum in Opposition to Plaintiffs’ Motion for Partial
Summary

Judgment

(Rec.

Doc.

No.

11).

In

response

to

CSI’s

Memorandum in Opposition, Plaintiffs offered a Reply (Rec. Doc. No.
21), and Defendant 3901 Ridgelake Drive, LLC (3901) filed a
Response in Opposition to CSI’s Memorandum (Rec. Doc. No. 12). CSI
filed its own Motion for Partial Summary Judgment seeking dismissal
of

claims brought by 3901 against them (Rec. Doc. No. 50).
Various third-party defendants also filed Memoranda in

Opposition to Plaintiffs’ Motion for Partial Summary Judgment:
Architectural

Building

Components

(ABC)

(Rec.

Doc.

No.

27);

Commercial Paint Company, Inc. (Commercial Paint) (Rec. Doc. No.

29); Year Round Heating & Air Conditioning Co., Inc. (Year Round)
(Rec. Doc. No. 32); Soprema, Inc. (Soprema) (Rec. Doc. No. 34);
Crasto Glass and Mirror Company, Inc. (Crasto) (Rec. Doc. No. 36);
and, Sharp Electric, Inc. (Sharp) (Rec. Doc. No. 37). In response,
Plaintiffs filed a Reply to Third Party Defendants’ Memoranda in
Opposition (Rec. Doc. No. 49). Accordingly, and for the reasons
articulated below,
IT IS ORDERED that Plaintiffs’ Motion for Partial Summary
Judgment on the Issue of the New Home Warranty Act is GRANTED.
IT IS FURTHER ORDERED that CSI’s Motion for Partial Summary
Judgment against 3901 is DENIED.
PROCEDURAL HISTORY
Plaintiffs

are

the

purchasers

of

condominiums

in

the

Pontchartrain Caye Complex, all marketed and sold by 3901.
Rec. Doc. No. 1-2 at 2). 3901 was the developer of the
project; they

“purchased the land on which the project was

constructed, obtained financing, and hired a general contractor for
construction.” (Rec. Doc. No. 8-1 at 2). The units at Pontchartrain
Caye were advertised as being “premium quality in construction,
with premium-quality materials.” Id. Beginning in 2004, Plaintiffs
entered into “Agreements to Purchase and Sell” (APS) with 3901,
which served as a guarantee that Plaintiffs would later purchase
and APS would later sell the units. Id. In the APS, there was an
express warranty provision where 3901 “obligated itself to the
2

warranty provisions of a builder pursuant to Louisiana’s New Home
Warranty Act (NHWA) as provided in La. R.S. 9:3141 et seq.” Id.
3901 selected CSI as the general contractor for the project.
Id. Construction began on the project in June 2004 and was meant to
be completed by August 2005. Id. at 2-3. However, work was not
completed by the time that Hurricane Katrina made landfall, and the
storm only further delayed completion of the Pontchartrain Caye
units.

Id. at 3. Plaintiffs closed on their condominiums in

February and March 2007. Id.
After moving into the units in 2007, Plaintiffs
discovered multiple construction defects resulting from “shoddy .
. . defective workmanship.” (Rec. Doc. No. 1-2 at 2). Additionally,
the “materials used to construct the complex were not of the kind
and type promised to them by the defendants and/or their agents.”
Id. After discovering the defects, Plaintiffs allegedly alerted
3901 of the damaged areas. Id. Plaintiffs claim that “Defendants
promised that these defects and poor construction areas would be
addressed.” Id. However, the repairs were never fully completed and
Plaintiffs continued to notice problems with the construction of
the

units.

Id.

at

3.

Additionally,

Plaintiffs

claim

that

“defendants failed to build the condominium complex, including
individual units, to the original specifications and/or blueprints
drawn by the architects that designed the complex.” Id. at 3.
As part of the action, 3901 hired Joe Caldarera to inspect the
3

condition of the building. (Rec. Doc. No. 8-1 at 3). His report1
details “significant and extensive defective conditions” that exist
in the building. Id. at 4. He estimated that a “significant amount
of work” must be completed to remedy the defects. Id. Caldarera
claims that the costs will be $6,364,504.34; this includes costs
incurred already by the Plaintiffs to do any repairs and excludes
costs already paid by 3901. Id.
were

Plaintiffs

guaranteed

“clear

title

to

their

individual condominium units at the time of purchasing the units.”
(Rec. Doc. No. 1-2 at 3). However, Plaintiffs allege that 3901 did
not fully compensate all of the contractors and sub-contractors
that

worked

on

the

project.

Id.

Because

of

this,

“the

uncompensated contractors and sub-contractors placed liens against
the Plaintiff[s’] condominium units.” Id. Plaintiffs therefore do
not hold clear title to their units, and the value of these units
has been reduced due to the liens. Id. Specifically, Plaintiffs
claim that all defendants committed “acts of negligence, breach[ed
their]. . . contract, and breach[ed] . . . their duty of good faith
and fair dealing” in the instant case. Id. at 4.
Arbitration

proceedings

occurred

between

3901,

CSI,

and

defendant Gayle O. Jenkins between November 8, 2010, and December
1

Caldarera’s original report was 104 pages long. (Rec. Doc.
No. 8-1 at 4 n. 5). As a result, Plaintiffs only submitted
“portions relevant to [their] Motion for Summary Judgment.” (See
Rec. Doc. No. 8-5). Caldarera supplemented his original report in
March 2009. (See Rec. Doc. No. 8-6).
4

17, 2010. (Rec. Doc. No. 11 at 2). The arbitrator found that CSI
“substantially performed the construction contract with 3901" and
was owed $1,040,550.00 in unpaid fees. (Rec. Doc. No. 11-2 at 2).
The arbitrator found that the “reasonable costs to repair the
following

items

of

minor

defective

work

for

which

CSI

is

responsible” is $77,500.00. Id.
The instant suit was filed in the 24th Judicial District for
Jefferson Parish, State of Louisiana, on February 15, 2008. Id. at
1. Specifically, Plaintiffs filed against 3901, Gayle O. Jenkins,
Arlen Jenkins, Gayle O. Jenkins Properties, and Southwinds Express
Construction, LLC. (Rec. Doc. No. 49 at 1). Defendants then added
CSI; Fidelity and Deposit Company of Maryland; ABC, Clayton Roofing
and Construction, Inc.; Soprema; Simms Hardin Company, LLC; Sharp;
Gallo Mechanical, Inc.; Commercial Paint; Crasto; Year Round; and
Thrasher Waterproofing Corp.. Id. at 1-2.
Gayle Jenkins, filed for bankruptcy on January 28, 2011. This
case was removed to the Eastern District of Louisiana on March 31,
2011 under 28 U.S.C. § 1334(e)(1).2 (Rec. Doc. No. 1). The matter

2

This statute provides that “[t]he district court in which
a case under title 11 is commenced or is pending shall have
exclusive jurisdiction” over “all the property, wherever located,
of the debtor as of the commencement of such case . . . .” 28
U.S.C. 1334(e)(1) (2006). Jenkins argued that this case “involves
an action against the debtor for damages to real property
pursuant to the New Home Warranty Act” and “[a]s such, these
actions directly involve property of the debtor’s estate.” (Rec.
Doc. No. 1 at 2). Therefore, removal of the action from state
court to federal court was proper.
5

was referred to the United States Bankruptcy Court for the Eastern
District of Louisiana after Jenkins claimed that a judgment in the
instant matter would affect her bankruptcy estate. (Rec. Doc. No.
8-1 at 1). On July 7, 2011, the Eastern District “withdrew the
reference of this matter to the Bankruptcy Court” because all
parties desired a jury trial. (Rec. Doc. No. 5). The instant suit
was reallotted to these chambers on January 18, 2012.
LAW AND ANALYSIS
A. Standard of Review
1. Summary Judgment
Federal Rule of Civil Procedure 56 permits a court to grant
summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). In making this
determination, a district court must consider “the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any” are presented. Id. 56(c). A
party requesting summary judgment “must establish that there are no
genuine issues of material fact.” Provident Life & Acc. Ins. Co. v.
Goel, 274 F.3d 984, 991 (5th Cir. 2001). In the Fifth Circuit, an
issue is material if its resolution has the potential to affect the
outcome of the action. See, e.g.,

Roberts v. Cardinal Services,

Inc., 266 F.3d 368, 373 (5th Cir. 2001). Summary judgment cannot be
granted if the evidence available would permit a reasonable jury to
6

return a verdict for the non-moving party. See, e.g., Hunt v.
Rapides Healthcare System, LLC, 277 F.3d 757, 762 (5th Cir. 2001).
If the moving party can demonstrate that there is no genuine
issue of material fact, the “burden shifts to the nonmoving party
to show that summary judgment is not appropriate.” Fields v. City
of S. Houston, 922 F.2d 1183, 1187 (5th Cir. 1991). For a nonmoving party to prevail on a motion of summary judgment, it must
“go beyond the pleadings and by her own affidavits, or by the
‘depositions, answers to interrogatories, and admissions on file,’
[and] designate ‘specific facts showing that there is a genuine
issue for trial.’” Celotex Corp. v. Catrett, 477 U.S. 317, 324
(1986)(quoting Fed. R. Civ. P. 56). For the purposes of a motion
for summary judgment, “[t]he evidence of the non-movant is to be
believed, and justifiable inferences are to be drawn in his favor.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
In the Fifth Circuit, “unsworn expert reports . . . do not
qualify as affidavits or otherwise admissible evidence for [the]
purpose of Rule 56, and may be disregarded by the court when ruling
on a motion for summary judgment.” Provident Life, 274 F.3d at 1000
(quoting 11 JAMES WM. MOORE

ET AL,

MOORE’S FEDERAL PRACTICE ¶ 56.14(2)(c)

(3d ed. 1997)); see also Duplantis v. Shell Offshore, Inc., 948
F.2d 187, 191 (5th Cir. 1991)(expert letter not considered for
summary judgment purposes where it is unsworn and fails to indicate
expert’s qualifications); Nissho-Iwai American Corp. v. Kline, 845

7

F.2d 1300, 1306 (5th Cir. 1988)(“It is a settled rule in this
circuit that an unsworn affidavit is incompetent to raise a fact
issue precluding summary judgment.”).
2. Third-Party Standing to Oppose Motions
The Federal Rules of Civil Procedure state that a “party
seeking to recover upon a claim, counterclaim or cross-claim” or “a
party

against

whom

a

claim,

counterclaim

or

cross-claim

is

asserted” may seek or oppose a motion for summary judgment. Fed. R.
Civ. P. 56(a)-(b). In interpreting Rule 56, the Eastern District of
Louisiana has held that “co-defendants do not have standing to
oppose a defendant’s motion for summary judgment when the motion is
unopposed by the plaintiff.” Thurman v. Wood Group Prod. Services,
Inc., CIV A. 09-4142, 2010 WL 5207587, at *1 (E.D. La. Dec. 14,
2010); see also C.F. Bean Corp. v. Clayton Indus., Ltd., CIV A. 950161, 1996 WL 470644 (E.D. La. Aug. 19, 1996). Similarly, other
district courts have found that co-defendants lack standing to
oppose a motion for summary judgment filed by the named defendant
when “none of the defendants . . . have filed claims against each
other.” Fraioli v. Lemcke, 328 F.Supp.2d 250, 263 n.4 (D. R.I.
2005); see also Hawes v. Blast-Tek, Inc., CIV 09-365 RHK/AJB, 2010
WL 2680778 (D. Minn. July 2, 2010); Eckert v. City of Sacramento,
No. 2:07-cv-00825-GEB-GGH, 2009 WL 3211278 (E.D. Cal. Sept. 30,
2009).
3. Louisiana New Home Warranty Act
8

The Louisiana state legislature expressed a
need to promote commerce in Louisiana by
providing clear, concise, and mandatory
warranties for the purchasers and occupants of
new homes in Louisiana and by providing for
the use of homeowners' insurance as additional
protection for the public against defects in
the construction of new homes. This need can
be met by providing a warranty for a new home
purchaser defining the responsibility of the
builder to that purchaser and subsequent
purchasers
during
the
warranty
periods
provided herein.
The warranty, which is
mandatory in most cases, shall apply whether
or not building code regulations are in effect
in the location of the structure, thereby
promoting uniformity of defined building
standards.
Additionally, all provisions of
this Chapter shall apply to any defect
although there is no building standard
directly regulating the defective workmanship
or materials.
LA. REV. STAT. § 9:3141 (2011). The warranties provided in the
Louisiana New Home Warranty Act (NHWA) are “mandatory and cannot be
waived by the owner or reduced by the builder.” Allemand v.
Discovery Homes, Inc., 2009-1565 (La. App. 1 Cir. 5/28/10); 38
So.2d 1183, 1187. Subject to the NHWA, each builder warrants
certain guarantees to homeowners:
(1)
One
year
following
the
warranty
commencement date, the home will be free from
any defect due to noncompliance with the
building standards
(2)
Two
years
following
the
warranty
commencement date, the plumbing, electrical,
heating, cooling, and ventilating systems
exclusive of any appliance, fixture, and
equipment will be free from any defect due to
noncompliance with the building standards.
(3)
Ten
years
following
the
warranty
commencement date, the home will be free from
9

major structural defects due to noncompliance
with the building standards.
Barnett v. Watkins, 2006-2442 (La. App. 1 Cir. 9/19/07); 970 So.2d
1028, 1034-35, writ denied, 20007-2066 (La. 12/14/07); 970 So.2d
537 (citing LA. REV. STAT. § 9:3144(A)(2011)). If the NWHA warranties
are breached by a builder, any owner has the right to recover “any
non-excluded ‘actual damages, including attorney fees and court
costs.’” Id. at 1035 (quoting LA. REV. STAT. § 9:3149(A) (2011)).
However, any “‘damages with respect to all defects in the home
shall not exceed the original purchase price of the home.’” Id.
(quoting LA. REV. STAT. § 9:3149(A)).
This Court is able to enforce Louisiana state law under the
Erie Doctrine. In Erie Railroad Co. v. Tompkins, 304 U.S. 64
(1938), the Supreme Court held that “[e]xcept in matters governed
by the Federal Constitution or by acts of Congress, the law to be
applied in any case is the law of the state.” Id. at 78. Since
there is no federal warranty for home owners, the NHWA can be
applied in the instant case.
4. Res Judicata Effect of Arbitration Proceedings
The Fifth Circuit has held that, in order for a claim to be
barred by res judicata, three requirements must be met:
(1) the parties must be the same or in privity
with
each
other,
(2)
the
transactions
litigated and decided in the first action must
be the same as those in the second action, and
(3) the first action must conclude in a final
judgment on the merits by an authority of
10

competent jurisdiction.
Russell v. Sunamerica Sec., Inc., 962 F.2d 1169, 1173 (5th Cir.
1992). Similarly, in Louisiana, for res judicata to preclude a
second action, there are multiple requirements:
(1) the judgment is valid; the judgment is
final; (3) the parties are the same; (4) the
cause or causes of action asserted in the
second suit existed at the time of final
judgment in the first litigation; and (5) the
cause or causes of action asserted in the
second suit arose out of the transaction or
occurrence that was the subject matter of the
first litigation.
Burguieres v. Pollingue, 2002-1385 (La. 2/25/03); 843 So.2d 1049,
1053.
The Supreme Court has declined to bar “the offensive use of
collateral estoppel from arbitration in subsequent federal court
litigation.” Universal Am. Barge Corp. v. J-Chem, Inc., 946 F.2d
1131, 1136 (5th Cir. 1991); see also Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213 (1985). In a case that does not involve federal
statutory or constitutional rights, “courts should use a case-bycase approach to determining the collateral estoppel effects of
arbital findings.” Universal Am. Barge Corp., 946 F.2d at 1136-37;
see also Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352,
1361 (11th Cir. 1985). The Fifth Circuit held that a district court
“may preclude relitigation of issues previously determined in an
arbitration if the court finds, under the facts of that case, that
the arbital procedures afforded due process, that the requirements

11

of offensive collateral estoppel are met, and that the case raises
no federal interests warranting special protection.” Universal Am.
Barge Corp., 946 F.2d at 1142.
B. The Third Party Defendants Do Not Have Standing to Oppose
Plaintiffs’ Motion for Partial Summary Judgment
Plaintiffs assert that the third-party defendants are not
parties to the instant Motion for Partial Summary judgment for
multiple reasons. (Rec. Doc. No. 21 at 2; Rec. Doc. No. 49 at 2).
First, the “moving party has not filed any claims against the
third-party defendants nor have the third party defendants filed
any claims against plaintiffs.” (Rec. Doc. No. 49 at 2). Second,
since the “third-party defendants were not named as parties” to the
Plaintiffs’ Motion, “any judgment granted as a result . . . will be
rendered against 3901 only.” Id.
This Court has held that co-defendants lack standing to oppose
a

defendant’s

motion

for

summary

judgment

unopposed by the Plaintiff. Thurman,

if

the

motion

is

2010 WL 5207587, at *1. The

instant case in analogous to Thurman. In that case, this Court
based its finding on the fact that an adverse party had not raised
an

objection

Plaintiffs’

to

named

the

motion

adverse

for

party

summary
-

3901

judgment.
-

has

not

Id.

Here,

raised

an

objection to Plaintiffs’ Motion for Partial Summary Judgment. (See
Rec. Doc. No. 12 at 1). Instead, various third-party defendants
that were added to the litigation by 3901 raised objections to
Plaintiffs’

Motion.

Since

the

third-party
12

defendants

are

not

adverse parties to Plaintiffs, they have no standing to challenge
Plaintiffs’ Motion for Partial Summary Judgment, which 3901 did not
oppose.
C. Partial Summary Judgment
Appropriate against 3901

on

the

Issue

of

Liability

is

3901 concedes that it “cannot deny the essential and material
allegations of the plaintiff’s demand, because 3901 has judicially
confessed3 [to] the [construction] defects in state court as a
matter of law and is also barred by judicial estoppel, from denying
those allegations.” (Rec. Doc. No. 12 at 2). Given that there is no
opposition to Plaintiffs’ Motion by the named party in the lawsuit
and that the third-party defendants do not have standing to
challenge Plaintiffs’ Motion, summary judgment on the issue of
liability should be granted.
D. The Arbitration Decision Does Not Have Preclusive Effect on
3901's Claims Against CSI in the Instant Suit
CSI argues that res judicata precludes a finding for liability
against them by 3901 because of the arbitration proceeding that
occurred

in

late

2010.

For

the

outcome

of

the

arbitration

proceeding to have preclusive effect in the instant case, this
Court must determine whether the procedure had appropriate due
process, that the general requirements of res judicata are met, and
3

In Louisiana, “a judicial confession is a declaration made
by a party in a judicial proceeding. That confession constitutes
full proof against the party who made it.” La. Civ. Code Art. 1853
(2011). It is “indivisible” and “may be revoked only on the ground
of error of fact.” Id.
13

that there is no federal interest raised that warrants special
protection. Universal Am. Barge Corp., 946 F.2d at 1142. In the
Fifth Circuit, that means that the parties must be the same (or in
privity with one another), that the transactions in the first and
second action are the same, and that there was a final judgment on
the merits in the first action. See, e.g., Russell, 962 F.2d at
1173.
In the instant case, there is no allegation of improper due
process during the arbitration proceedings; therefore, the first of
the Universal American Barge factors is fulfilled. 946 F.2d at
1142. Similarly, there are no “federal interests warranting special
protection” alleged by any of the parties. Id. However, CSI has
difficulty fulfilling the second of the Universal American Barge
requirements in the instant case: that the general requirements of
res judicata are met. Id.
CSI cannot establish that res judicata is applicable under the
Fifth Circuit standard outlined in Russell. 962 F.2d at 1173.
First, the parties in the first action and the second action must
be the same or in privity4 with one another. In the instant case,
4

Black’s Law Dictionary defines privity as:
[t]he relationship between the parties to a
contract, allowing them to sue each other but
preventing a third party from doing so. The
requirement of privity has been relaxed under
modern laws and doctrines of implied warranty
and
strict
liability,
which
allow
a
third-party beneficiary or other foreseeable
user to sue the seller of a defective product.
14

the arbitration proceeding was between CSI, 3901, and former
defendant Gayle O. Jenkins (Rec. Doc. No. 11-2 at 1). The lawsuit
is between Dorvin and the other named Plaintiffs against 3901; CSI
was not an original party to the case. There is no privity between
CSI and Dorvin because there is no contract between Dorvin and CSI;
CSI was merely hired by 3901 to work on the Pontchartrain Caye
Complex. Second, the transactions in the first action and the
second

action

must

be

the

same.

The

subject

matter

of

the

arbitration was CSI “seeking recovery of damages under contract and
tort theories . . . for the construction of [the] condominiums,”
and

3901

“seeking

recovery

of

damages

from

CSI

for

alleged

defective work, unperformed punch list work, warranty documents and
liquidated damages.” (Rec. Doc. No. 11-2 at 1). Conversely, the
lawsuit was brought by the Plaintiffs against 3901 for construction
defects,

breach

misrepresentation.

of

warranty,

breach

of

contract,

and

(Rec. Doc. No. 1-2 at 3, Count VIII). Given

that the arbitration arises out of a contract dispute between the
contractor and the subcontractor, and the instant suit arises out
of a contract dispute between the contractor and the purchasers of
property, the causes of action are different in the two actions.
Third, there must be a final judgment on the merits in the first
action. This requirement is fulfilled, since the arbitrator issued
a Final Award on January 14, 2011. (Rec. Doc. No. 11-2 at 3). Since

BLACK’S LAW DICTIONARY (9th ed. 2009).
15

the two proceedings are materially different and involve different
parties, the arbitration award cannot be granted preclusive effect.
CONCLUSION
Given

that

the

named

Defendant,

3901,

does

not

oppose

Plaintiffs’ Motion for Partial Summary Judgment, and that the
third-party

defendants

lack

the

standing

to

do

so,

and

alternatively, their objections lack merit, IT IS ORDERED that
Plaintiffs’ Motion for Partial Summary

Judgment on the Issue of

the New Home Warranty Act (Rec. Doc. No. 8) is GRANTED.
Given that the arbitration award has no preclusive effect on
the instant litigation, IT IS FURTHER ORDERED that CSI’s Motion for
Partial Summary Judgment against 3901 (Rec. Doc. No. 50) is DENIED
without prejudice to reurge after completion of all discovery.
New Orleans, Louisiana, this 27th day of March, 2012.

_________________________________
UNITED STATES DISTRICT JUDGE

16