425 Notre Dame, LLC v. Kolbe & Kolbe Millwork Co., Inc. et al
Filing
93
ORDER & REASONS: ORDERED that Kolbe's Motion for Summary Judgment is DENIED. IT IS FURTHER ORDERED that Kolbe's Motion for Leave to File Reply is DENIED as moot. IT IS FURTHER ORDERED that the oral argument set for March 23, 2016 is CANCELED. Signed by Judge Carl Barbier on 3/21/16. (sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
425 NOTRE DAME, LLC
CIVIL ACTION
VERSUS
NO: 15-454
KOLBE & KOLBE MILL WORK CO.,
INC., ET AL.
SECTION: “J” (4)
ORDER AND REASONS
Before the Court is a Motion for Partial Summary Judgment
(Rec. Doc. 81) filed by Defendant, Kolbe & Kolbe Millwork Co.,
Inc. (“Kolbe”), and an Opposition thereto (Rec. Doc. 90) filed by
Plaintiff, 425 Notre Dame, L.L.C. (“Notre Dame”). Kolbe asked the
Court to hear oral argument on its motions. Having considered the
motion and legal memoranda, the record, and the applicable law,
the Court finds that the motion should be DENIED.
FACTS AND PROCEDURAL BACKGROUND
This litigation arises from a construction and renovation
project in New Orleans, Louisiana. The owner, Notre Dame, hired
Landis
Construction
Co.
L.L.C.
(“Landis”)
as
the
general
contractor on the project. (Rec. Doc. 36-1, at 1.) The contract
between Notre Dame and Landis provided that the buildings were to
contain an aluminum window system. Id. at 2. According to Landis,
the architect on the project, Rozas Ward Architects, insisted on
using windows manufactured by Kolbe. Id. Landis then entered into
1
a purchase agreement with Grand Openings, Inc. (“Grand Openings”),
a distributor for Kolbe, which provided that Grand Openings would
furnish the windows for the project. (Rec. Doc. 1, at 2.) In turn,
Grand Openings and Kolbe signed a purchase order, in which Kolbe
agreed to manufacture the windows. (See Rec. Doc. 36-1, at 2.)
Landis
also
entered
Fabricators,
Inc.
into
and
a
contract
Southern
Steel
with
Southern
Fabricators,
Steel
L.L.C.
(collectively “Southern Steel”), in which Southern Steel agreed to
manufacture the window mullions and steel stiffners. (Rec. Doc.
48-1.) McInerney & Associates, Inc. (“McInerney”) installed the
mullions and stiffeners manufactured by Southern Steel, as well as
the windows manufactured by Kolbe. (Rec. Doc. 49-1, at 2.)
The windows began leaking after installation. Id. at 3. Notre
Dame
hired
a
consultant
to
perform
water
intrusion
testing
services, and the windows failed the test. Id. Kolbe removed a
window unit and tested it at its facility in Wisconsin. Id. Kolbe
then attempted to fix the leaking windows by injecting silicone
into the corners of each window. Id. at 4. Its corrections were
unsuccessful, and the windows continued to leak. Id. Grand Openings
and Kolbe declined to manufacture and provide replacement windows.
Id.
On February 12, 2015, Notre Dame filed suit against Kolbe and
Grand Openings, alleging that Defendants are liable for damages
for negligence, breach of warranty against redhibitory defects,
2
for breach of warranty of fitness for ordinary use, and under the
Louisiana Products Liability Act (“LPLA”). Id. at 5. On August 17,
2015, Kolbe filed a cross-claim against Grand Openings and a thirdparty complaint against Landis. (Rec. Doc. 22.) On that same day,
Grand
Openings
filed
third-party
complaints
against
Landis,
Southern Steel, and McInerney. (Rec. Doc. 24.) Grand Openings
alleged that Southern Steel was liable to it jointly and in solido
for any defects in the stiffners and mullions. Grand Openings also
alleged that McInerney was liable jointly and in solido for the
negligence of its employees in failing to properly install the
windows, mullions, and stiffners. Grand Openings and Kolbe both
alleged that Landis was required to defend, indemnify, and hold
harmless the Third-Party Plaintiffs for the negligence of Landis
employees and as a seller or manufacturer under the LPLA.
In an Order and Reasons dated December 16, 2015, the Court
dismissed Defendants’ claims against Third-Party Defendants. (Rec.
Doc. 69.) The Court stated:
Solidary liability does not arise under these facts
between
Third-Party
Plaintiffs
and
Third-Party
Defendants.
Thus,
the
third-party
demands
for
contribution and indemnity cannot be maintained. Kolbe
and Grand Openings are attempting to use third-party
claims to assert that they are not responsible for Notre
Dame’s damages, but that Landis, Southern Steel, and
McInerney are at fault. In effect, Defendants are
claiming, “It was him, not me.” This is an improper use
of the third-party claim. Because Defendants have no
legal basis for claiming contribution or indemnity, the
Third-Party Defendants’ motions to dismiss must be
granted.
3
Id. at 21-22. Specifically, with respect to Landis, the Court found
that Landis and the Defendants could not be solidarily liable for
redhibition or the breach of implied warranty of fitness for
ordinary use. Only sellers in the chain of title can be held liable
for redhibition. Landis is not a seller. Its contract with Notre
Dame is a contract to build, rather than a sale. Thus, the windows’
chain of title ended with Landis. In so deciding, the Court
emphasized, “At this time, the Court does not decide whether Landis
acted as Notre Dame's agent in the transaction, or whether Landis
should be considered the ultimate purchaser of the windows. This
decision will impact Notre Dame's ability to bring redhibition
claims against Kolbe and Grand Openings, an issue that is not
presently before the Court.” Id. at 20 n.4.
Kolbe filed the instant motion on February 4, seeking summary
judgment on Notre Dame’s redhibition and warranty of fitness
claims. Notre Dame opposed the motion on March 15, 2016. Kolbe
subsequently filed a Motion for Leave to File Reply. (Rec. Doc.
92.) Kolbe’s motion is set for oral argument on March 23.
PARTIES’ ARGUMENTS
A. Kolbe’s Motion for Partial Summary Judgment
In its motion, Kolbe argues that it is entitled to summary
judgment on Notre Dame’s contract-based claims. Essentially, Kolbe
asserts that the 1995 amendments to the Louisiana Civil Code
articles
on
redhibition
eliminated
4
the
right
of
an
ultimate
consumer to sue a manufacturer in redhibition. Kolbe claims that
redhibition is a contract right attached to a sales contract, not
a warranty inherent in the product sold. Thus, Kolbe argues that
the right is transmitted from seller to buyer through subrogation.
The ultimate buyer is entitled to sue any proceeding seller,
reaching back up the chain of title to the manufacturer because
each buyer is subrogated to the redhibition rights obtained from
each seller.
Subrogation, according to Kolbe, takes place by contract or
by
operation
of
law.
Kolbe
argues
that
Notre
Dame
was
not
subrogated to Landis’ rights by contract because the construction
contract did not provide for subrogation. Further, Kolbe asserts
that the contract between Grand Openings and Landis did not contain
any warranty against redhibitory defects. Thus, Kolbe claims that
subrogation must arise by operation of law. Kolbe extensively
chronicles the legal basis for conventional subrogation in the
redhibition context. According to Kolbe, the Civil Code did not
initially
provide
for
subrogation
in
redhibition
contracts.
Eventually, courts relied on articles pertaining to the warranty
against eviction to establish implied subrogation in redhibition
cases. Louisiana courts subsequently decided that the ultimate
user of a product had the right to sue the manufacturer in
redhibition,
even
if
the
ultimate
user
did
not
purchase
the
product. This interpretation of the law allowed owners of buildings
5
to sue manufacturers in redhibition, even when the owners’ general
contractors purchased the product.
However, Kolbe argues that the 1995 amendments eliminated
this
implied
specifically
redhibition
subrogation.
provides
right
of
The
that
the
redhibition
the
buyer
seller.
article
is
amendment
subrogated
Because
the
to
the
article
now
specifically mentions a buyer-seller relationship, Kolbe argues
that
the
legal
right
of
subrogation
applies
only
in
sales
contracts, not building contracts. This Court previously held that
Landis and Notre Dame entered into a contract to build, not a
contract of sale. Thus, Kolbe claims that Notre Dame was not
subrogated to Landis’ right to sue in redhibition. Further, Kolbe
argues that the older cases applying subrogation in the absence of
a
sales
contract
are
no
longer
good
law
following
the
1995
amendments.
B. Notre Dame’s Opposition
In its opposition, Notre Dame first argues that one of Kolbe’s
exhibits is inadmissible. Kolbe attached Exhibit D, a purported
copy of the Purchase Order between Grand Openings and Landis. Notre
Dame
argues
that
the
exhibit
is
inadmissible
because
it
is
incomplete. The document does not contain the signature page or
the Instructions, Terms, and Conditions of the order. Thus, Notre
Dame asks the Court to strike Exhibit D from the record.
6
Next, Notre Dame argues that it is subrogated to Landis’
rights by contract and by operation of law. Notre Dame asserts
that the warranty of redhibition transferred from Grand Openings
to Landis via the Purchase Order. The Instructions, Terms, and
Conditions contained a provision that provided that warranties ran
to Landis, “its successors, assigns, customers, and the users of
its customers’ products . . . .” (Rec. Doc. 90, at 7.) Further,
the contract between Landis and Notre Dame provided that the
contractor, Landis, agreed to assign all manufacturer’s warranties
to the buyer, Notre Dame. Thus, Notre Dame claims that it was
subrogated to Landis’ right to sue based on the warranty against
redhibitory defects and warranty of fitness.
Further,
Notre
Dame
argues
that
subrogation
applies
by
operation of law. According to Notre Dame, Louisiana courts have
repeatedly held that the ultimate end user of a product may sue
the manufacturer for redhibition, even though privity of contract
between
the
parties
does
not
exist.
Notre
Dame
asserts
that
Louisiana jurisprudence also provides that the fact that an owner
and a contractor entered into a contract to build does not prevent
the owner from suing a manufacturer for redhibition.
Finally, Notre Dame addresses Kolbe’s suggestion that Landis
waived any applicable warranties. Notre Dame argues that a waiver
must be “(1) be written in clear and unambiguous terms, (2) be
contained in the contract, and (3) either be brought to the
7
attention of the buyer or explained to him.” (Rec. Doc. 90, at
15.) Notre Dame argues that Kolbe did not introduce sufficient
evidence to prove a valid waiver. Also, Kolbe, as a manufacturer,
is presumed to have knowledge of the defective product. A waiver
is invalid when the seller has declared that the product has a
quality that he knew it did not have. Thus, any waiver is per se
invalid because Kolbe did not disclose the redhibitory defects.
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing former
Fed. R. Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069,
1075 (5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, the Court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing
the
evidence.”
Delta
&
Pine
Land
Co.
v.
Nationwide
Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving party,
but
a
party
cannot
defeat
summary
judgment
with
conclusory
allegations or unsubstantiated assertions. Little, 37 F.3d at
1075. A court ultimately must be satisfied that “a reasonable jury
8
could not return a verdict for the nonmoving party.” Delta, 530
F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th Cir.
1991) (citation omitted). The nonmoving party can then defeat the
motion by either countering with sufficient evidence of its own,
or “showing that the moving party’s evidence is so sheer that it
may not persuade the reasonable fact-finder to return a verdict in
favor of the moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324.
The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial.
See, e.g., id. at 325; Little, 37 F.3d
at 1075.
9
DISCUSSION
First, the Court will address Notre Dame’s admissibility
arguments.
On
a
motion
for
summary
judgment,
the
evidence
introduced must be competent and admissible at trial. Bosarge v.
Cheramie Marine LLC, No. 14-2153, 2015 WL 4645636, at *2 (E.D. La.
Aug. 4, 2015) (Milazzo, J.). “If a party introduces all or part of
a writing or recorded statement, an adverse party may require the
introduction, at that time, of any other part–or any other writing
or recorded statement–that in fairness ought to be considered at
the same time.” Fed. R. Evid. 106. However, “arguments regarding
the accuracy or incompleteness of the document go to the weight of
the evidence, not its admissibility.” Greener v. Cadle Co., 298
B.R. 82, 92 (N.D. Tex. 2003). The documents introduced by Kolbe as
Exhibit
D
were
incomplete,
but
this
does
not
affect
their
admissibility. The Court declines to strike Kolbe’s Exhibit D from
the record.
Kolbe argues that it is entitled to summary judgment on Notre
Dame’s redhibition and warranty of fitness claims. The Louisiana
Civil Code describes redhibition as follows:
The seller warrants the buyer against
defects, or vices, in the thing sold.
redhibitory
A defect is redhibitory when it renders the thing
useless, or its use so inconvenient that it must be
presumed that a buyer would not have bought the thing
had he known of the defect. The existence of such a
defect gives a buyer the right to obtain rescission of
the sale.
10
A defect is redhibitory also when, without rendering the
thing totally useless, it diminishes its usefulness or
its value so that it must be presumed that a buyer would
still have bought it but for a lesser price. The
existence of such a defect limits the right of a buyer
to a reduction of the price.
La. Civ. Code art. 2520. The warranty of fitness is closely related
to the warranty against redhibitory defects. See 24 Dian TooleyKnoblett & David Gruning, La. Civ. L. Treatise, Sales § 11:44. The
Civil Code simply provides, “The thing sold must be reasonably fit
for its ordinary use.” La. Civ. Code art. 2524. The general rules
of obligations govern a breach of this warranty. Id. Because the
same law applies to both warranties, the Court will discuss them
together.
Kolbe argues that Notre Dame cannot sue in redhibition because
it is not subrogated to Landis’ redhibition rights. “Subrogation
is the substitution of one person to the rights of another.” La.
Civ. Code art. 1825. Subrogation may be conventional (by contract)
or legal (by operation of law). Id. Conventional subrogation by
the obligee is tantamount to an assignment of rights. Id., Official
Comment (a). “All rights may be assigned, with the exception of
those pertaining to obligations that are strictly personal. The
assignee is subrogated to the rights of the assignor against the
debtor.” La.
Civ.
Code
art.
2642.
Redhibition
rights
may
be
transferred by assignment and conventional subrogation. Alvis v.
CIT Group/Equip. Fin., Inc., 918 So. 2d 1177, 1184 (La. Ct. App.
11
2005); see Kelly v. Porter, Inc., 687 F. Supp. 2d 632, 643 (E.D.
La. 2010) (Knowles, Maj.).
The Purchase Order between Grand Openings and Landis provided
for several warranties. Section 14 of the order states:
“In addition to any warranty in fact or implied by law,
Seller [Grand Openings] hereby expressly warrants that
all goods or services covered by this Order will conform
to the drawings, specifications, data, samples, or other
description, furnished or incorporated as part of this
Order and will be fit and sufficient for the purpose
intended,
merchantable,
of
good
materials
and
workmanship and free from defect. . . . These warranties
shall run to the Buyer [Landis], its successors,
assigns, customers, and the users of its customers’
products . . . .”
(Rec. Doc. 90-1, at 5.) By its own terms, the Purchase Order
warrants against defects and warrants that the product will be fit
for its ordinary use. Additionally, the Purchase Order includes
“any warranty . . . implied by law.” The warranty of fitness and
the warranty against redhibitory defects are implied by law in
every sales contract. Radalec, Inc. v. Automatic Firing Corp., 81
So. 2d 830, 833 (La. 1955) (warranty against redhibitory defects);
Ca. Chem. Co. v. Lovett, 204 So. 2d 633, 636 (La. Ct. App. 1967)
(warranty of fitness).
The Purchase Order specifically provides that the warranties
will cover Landis’ successors, assigns, customers, and users of
its customers’ products. Notre Dame argues that it is Landis’
customer. Even if Notre Dame is not a customer, it is certainly an
assignee of Landis. Notre Dame and Landis signed a Standard Form
12
of Agreement Between Owner and Contractor. (See Rec. Doc. 81-3.)
The
General
Conditions
to
the
agreement
provide,
“Contractor
[Landis] agrees to assign to the Owner [Notre Dame] any and all
manufacturer’s warranties relating to materials used in the Work
. . . .” (Rec. Doc. 81-4, at 13.) Thus, Landis assigned the
warranties to Notre Dame via the contract. Notre Dame has the right
to sue in redhibition and for breach of the warranty of fitness.
Kolbe did not specifically argue that Landis waived any
redhibition rights. However, Notre Dame’s opposition mentioned the
waiver issue. “The parties may agree to an exclusion or limitation
of the warranty against redhibitory defects. The terms of the
exclusion or limitation must be clear and unambiguous and must be
brought to the attention of the buyer.” La. Civ. Code art. 2548.
Kolbe did not introduce any evidence to show that Landis was made
aware of any waiver provisions. Thus, to the extent that Kolbe
raised such an argument, the Court cannot decide it on summary
judgment.
Moreover, subrogation seems to occur by operation of law in
the case at bar. Kolbe argues that the 1995 amendments invalidated
earlier cases holding that an end user outside the chain of title
can sue in redhibition. According to Kolbe, the end user must also
be a buyer. However, cases decided since the 1995 amendments
continue to hold that the ultimate consumer of a defective product
may sue the manufacturer for redhibition. See, e.g., Sw. La. Hosp.
13
Ass'n v. BASF Const. Chems., LLC, 947 F. Supp. 2d 661, 682-83 (W.D.
La. 2013), amended (Sept. 6, 2013).
Commenters debate the reasons for holding that an ultimate
user, even if not a buyer, can sue for redhibition. “Although some
confusion exists as to the source of this right to sue, be it as
an imputed tort or as subrogation or as transmission of an implied
warranty with the product with each sale, the right to so sue
appears to exist.” Scott v. Am. Tobacco Co., No. 97-1178, 1997 WL
749415, at *3 (E.D. La. Dec. 2, 1997) (internal citations omitted);
see also Datamatic, Inc. v. Int'l Bus. Machines Corp., 795 F.2d
458, 464 (5th Cir. 1986). Other courts have suggested that, “[w]hen
the action is against the manufacturer, proof need only be made
that the defect occurred in the manufacture of the product.”
Moreno's Inc. v. Lake Charles Catholic Schools, Inc., 315 So. 2d
660
(La.
1975);
see
C-Innovation,
LLC
v.
Norddeutsche
Seekabelewerke GMBH, No. 10-4441, 2013 WL 990026, at *7 (E.D. La.
Mar. 13, 2013) (Morgan, J.); Aucoin v. S. Quality Homes, LLC, 984
So. 2d 685, 693 (La. 2008). In that case, a manufacturer may be
liable for its product’s redhibitory defects, without regard to
the status of the end user. Therefore, the 1995 amendments did not
necessarily destroy Notre Dame’s right to sue.
Even if Notre Dame is not subrogated to Landis’ rights, other
courts have suggested that an owner and a contractor are parties
to an agency relationship, giving the owner the right to sue in
14
redhibition. The Western District of Louisiana has found that
agency law, or mandate, is one potential basis for allowing an
owner
to
sue
in
redhibition,
even
when
the
owner
is
not
a
purchaser. Sw. La. Hosp. Ass'n, 947 F. Supp. 2d at 682-83. “A
mandate is a contract by which a person, the principal, confers
authority on another person, the mandatary, to transact one or
more affairs for the principal.” La. Civ. Code art. 2989. When a
mandatary contracts with a third person on the principal’s behalf,
the principal becomes a party to the contract. See La. Civ. Code
arts. 3020-23.
In the case at bar, the agreement between Landis and Notre
Dame established that Landis would act on Notre Dame’s behalf.
“The Contractor [Landis] . . . covenants with the Owner [Notre
Dame] to cooperate with the Architect and exercise the Contractor’s
skill and judgment in furthering the interests of the Owner . . .
.” (Rec. Doc. 81-3, at 2.) With Landis acting as Notre Dame’s agent
in the window purchase from Grand Openings, Notre Dame became a
party to the sales contract. Thus, by operation of mandate law,
Notre Dame is a buyer and may sue the sellers and manufacturers of
the windows for redhibition.
Thus, the Court finds several potential bases for Notre Dame’s
contract claims against Kolbe and Grand Openings: conventional
subrogation, legal subrogation, and by operation of the law of
15
mandate. Granting summary judgment on Notre Dame’s contract claims
is inappropriate.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Kolbe’s Motion for Summary Judgment
is DENIED.
IT IS FURTHER ORDERED that Kolbe’s Motion for Leave to File
Reply is DENIED as moot.
IT IS FURTHER ORDERED that the oral argument set for March
23, 2016 is CANCELED.
New Orleans, Louisiana this 21st day of March, 2016.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
16
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