Vega v. Autumnwood Homes, Inc.

Filing 32

ORDER & REASONS: ORDERED that Defendant's Motion to Dismiss (R. Doc. 22) is GRANTED IN PART. Plaintiff's claims against Defendant are DISMISSED WITHOUT PREJUDICE. Plaintiff is granted leave to amend his Complaint within (30) days of the entry of this Order, if he can plausibly state a cause of action under the Louisiana law of redhibition. Signed by Judge Carl Barbier on 2/16/17. (sek)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

ORLANDO VEGA

CIVIL ACTION

VERSUS

NO: 16-751

AUTUMNWOOD HOMES, INC.

SECTION: “J”(1)

ORDER & REASONS
Before

the

Court

is

Defendant,

Autumnwood

Homes,

Inc.’s

(“Defendant”) Motion to Dismiss for Failure to State a Claim,
Summary Judgment, or Failure to Join a Necessary Party (R. Doc.
22), an opposition (R. Doc. 26) thereto filed by Plaintiff, Orlando
Vega (“Plaintiff”), and a reply (R. Doc. 31) by Defendant. Having
considered the motion and legal memoranda, the record, and the
applicable law, the Court finds that the motion should be GRANTED
IN PART.
FACTS AND PROCEDURAL BACKGROUND
This litigation arises from the sale of an allegedly defective
home located in New Orleans, Louisiana. See (R. Doc. 1.) On June
3, 2015, Plaintiff purchased a home and its improvements from
Defendant. Id. at 2. Plaintiff alleges that after he purchased the
home, he discovered that an occupancy permit was not issued by the
City

of

New

discovered
asserts

Orleans.

the

that

Id.

property

despite

Further,

failed

failing

Plaintiff

alleges

that

he

a

city

inspection.

Plaintiff

the

city

inspection,

Defendant

1

“closed in the walls of the house and proceeded to” sell the
property to Plaintiff. Id. at 3. Plaintiff now seeks rescission of
the contract and damages. Id.
On January 4, 2017, Defendant filed the present motion to
dismiss. (R. Doc. 22.) Defendant argues that Plaintiff has failed
to state a claim for redhibition under Louisiana law, and that
Plaintiff purchased the home “as is” and is not entitled to
rescission.

Plaintiff

argues

that

he

has

stated

a

claim

for

redhibition, and further argues that the “as is” clause does not
insulate Defendant from liability for fraudulent concealment of
defects in the property. Id. at 2. Defendant’s motion is now before
the Court on the briefs and without oral argument.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a complaint must
contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
complaint must “give the defendant fair notice of what the claim
is and the grounds upon which it rests.” Dura Pharm., Inc. v.
Broudo, 544 U.S. 336, 346 (2005). The allegations “must be simple,
concise, and direct.” Fed. R. Civ. P. 8(d)(1).
“Under

Rule

12(b)(6),

a

claim

may

be

dismissed

when

a

plaintiff fails to allege any set of facts in support of his claim
which would entitle him to relief.” Taylor v. Books A Million,
Inc., 296 F.3d 376, 378 (5th Cir. 2002) (citing McConathy v. Dr.
2

Pepper/Seven Up Corp., 131 F.3d 558, 561 (5th Cir. 1998)). To
survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
enough facts to “state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when the plaintiff pleads facts that allow the
court to “draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. A court must accept all
well-pleaded facts as true and must draw all reasonable inferences
in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d
228, 232 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196 (5th
Cir. 1996). The court is not, however, bound to accept as true
legal conclusions couched as factual allegations. Iqbal, 556 U.S.
at

678.

“[C]onclusory

allegations

or

legal

conclusions

masquerading as factual conclusions will not suffice to prevent a
motion to dismiss.” Taylor, 296 F.3d at 378.
DISCUSSION
Defendant argues that Plaintiff has failed to properly plead
a claim for redhibition, and argues that Plaintiff’s complaint
does

not

plead

any

facts

to

support

a

claim

for

fraudulent

concealment. Defendant further argues that the parties’ agreement
contained a valid waiver of redhibitory defects. (R. Doc. 22-1 at
2.) Defendant asserts that Plaintiff waived his redhibition claim
by signing the act of sale which contained the following language:
3

WARRANTY OR AS IS CLAUSE WITH WAIVER OF REDHIBITION:
B. SALE “AS IS” WITHOUT WARRANTIES: The SELLER and the
BUYER hereby acknowledge and recognize that the Property
being sold and purchased is to be transferred in “as is”
condition and further the BUYER does hereby waive,
relieve and release the SELLER from any claims or causes
of action for redhibition pursuant to Louisiana Civil
Code Article 2520, et seq., and Article 2541, et seq. or
for reduction of Sale Price pursuant to Louisiana Civil
Code Article 2541, et seq. Additionally, the BUYER
acknowledges that this sale is made without warranty of
fitness for ordinary or particular use pursuant to
Louisiana Civil Code Article 2524. The SELLER and the
BUYER agree that this clause shall be made a part of the
Act of Sale.
(R. Doc. 22-2 at 4.)
Under Louisiana law, a “seller warrants the buyer against
redhibitory defects, or vices, in the thing sold.” La. Civ. Code
art. 2520. “A defect is redhibitory when it renders the thing
useless, or its use so inconvenient it must be presumed that a
buyer would not have bought the thing had he known of the defect.”
Id.

In

such

a

case,

the

buyer

retains

the

right

to

obtain

rescission of the sale. Id. However, a defect is also redhibitory
when, without rendering the thing totally useless, it diminishes
its usefulness or value so that it must be presumed that a buyer
would still have bought it but for a lesser price. Id. Under these
circumstances, the buyer is limited to a reduction in the price of
the thing purchased. Id.
A seller however owes no warranty for defects in the thing
that were known to the buyer at the time of the sale, or for
defects that should have been discovered by a reasonably prudent
4

buyer of such things. La. Civ. Code art. 2521. If a buyer believes
that the thing suffers from a redhibitory defect, she must give
the seller notice of the existence of the redhibitory defect and
allow the seller to make the required repairs. Id. If a buyer fails
to give such notice, and the seller can show that the defect could
have been repaired, or that repairs would have been less burdensome
had the buyer received timely notice, the buyer suffers diminution
of the warranty against redhibitory defects. Id. However, such
notice is not required when the seller has actual knowledge of the
existence of a redhibitory defect in the thing sold. Id. If a
seller knows the thing he sells has a defect but omits to declare
it, or a seller declares that the thing has a quality that he knows
it does not have, the seller is liable to the buyer for the return
of the price with interest from the time it was paid, for the
reimbursement of the reasonable expenses occasioned by the sale
and those incurred for the preservation of the thing, and also for
damages and reasonable attorney’s fees. La. Civ. Code art. 2545.
Under Louisiana law, parties may agree to exclude or limit
the warranty against redhibitory defects. See La. Civ. Code art.
2548. The terms of such exclusion or limitation must be clear and
unambiguous and brought to the attention of the buyer. Id. The
seller bears the burden of proving the warranty against redhibitory
defects has been waived, Tyson v. Brentley Merchand, 2014-1767
(La. App. 1 Cir. 6/5/15); 2015 WL 3548159, at *5 (citing Bo-Pic
5

Foods, Inc. v. Polyflex Film and Converting, Inc., 95-0889 (La.
App. 1 Cir. 12/15/95); 665 So. 2d 787, 791), and these exclusions
or limitations are strictly construed against the seller, Id. A
buyer

is

not

bound

by

an

otherwise

effective

exclusion

or

limitation when the seller has declared that the thing has a
quality that he knew it did not have. La. Civ. Code art. 2548.
Thus,

an

otherwise

effective

exclusion

or

limitation

on

the

warranty against redhibitory defects is ineffective if the seller
commits fraud, as defined by the Louisiana Civil Code, upon the
buyer.

Tyson,

2015

WL

3548159,

at

*5

(quoting

Shelton

v.

Standard/700 Assocs., 2001-0587 (La. 10/16/01); 798 So. 2d 60,
64). This is because a contract is only formed by consenting
parties, and fraud is a vice of consent. See La. Civ. Code art.
1948. Fraud is a misrepresentation or suppression of the truth
made with the intention either to obtain an unjust advantage for
one party or to cause a loss or inconvenience to the other. Fraud
may result from silence or inaction. La. Civ. Code art. 1953. An
exception to the general rule is that fraud does not vitiate
consent when the party against whom the fraud was directed could
have ascertained the truth without difficulty, inconvenience, or
special skill. La. Civ. Code art. 1954.
Plaintiff alleges that after he purchased the property he
discovered that an occupancy permit had never been issued and that
the house failed a city inspection. (R. Doc. 1 at 2-3.) Plaintiff
6

then merely cites to Louisiana Civil Code Article 2545 and recites
its language. Id. at 3. Assuming for purposes of this motion that
not having an occupancy permit 1 and failing a city inspection are
redhibitory defects, Plaintiff has failed to plead that the defect
has rendered the property useless or so inconvenient it must be
presumed that he would not have purchased it had he known of these
defects. See La. Civ. Code art. 2520. Further, Plaintiff has failed
to plead that Defendant knew the property did not have an occupancy
permit and knew the property failed a city inspection. See La.
Civ. Code art. 2545. Plaintiff also failed to plead that he did
not know, and could not have reasonably discovered, that these
defects existed prior to purchasing the property. See La. Civ.
Code art. 2521. However, Plaintiff’s opposition to Defendant’s
motion to dismiss argues, for the first time, that Defendant
fraudulently concealed these “defects.” (R. Doc. 26 at 2-3.)
Plaintiff’s Complaint fails to state a claim for relief for
redhibition and must therefore be dismissed. However, Plaintiff is
granted leave to amend his Complaint within thirty (30) days of
the entry of this Order if he can plausibly state a cause of action
under the Louisiana law of redhibition and an exception for the
waiver against redhibitory defects. However, this Order makes no
determination as to the validity of the parties’ alleged waiver.

1

Plaintiff admits that he has obtained an occupancy permit, but he still seeks
to rescind the sale.
7

While Defendant also asks the Court to grant summary judgment in
its favor under Federal Rule of Civil Procedure 56, the Court shall
defer ruling on this portion of Plaintiff’s motion at this time.
See Fed. R. Civ. P. 56, advisory committee’s note (b) to 2010
amendment (noting that although summary judgment motions may be
filed at the commencement of an action, in many cases the motion
is premature until pretrial proceedings have begun). Plaintiff
filed this lawsuit in January of 2016. (R. Doc. 1.) Plaintiff was
granted an entry of default in May, 2016. (R. Doc. 7.) On September
2, 2016, Plaintiff notified the Court that it was engaged in
settlement discussions with Defendant. (R. Doc. 12.) On November
9, 2016, the Court granted Defendant’s motion to set aside the
entry of default finding Defendant was not properly served. (R.
Doc. 16.) The Court granted Plaintiff an additional ninety (90)
days to properly serve Defendant. Id. Defendant filed an answer to
Plaintiff’s Complaint on January 3, 2017, and filed the present
motion to dismiss on January 4, 2017. (R. Docs. 13, 14.) Thus,
Defendant’s motion for summary judgment is premature as the Court
has yet to set a Scheduling Order and the case is still in its
early stages.
Finally, Defendant argues that Plaintiff has failed to join
an indispensable party. (R. Doc. 22-1 at 5-6.) Defendant argues
that Pulver Equities, LLC (“Pulver”) signed the agreement as an
8

agent of Defendant. (R. Doc. 22-2 at 7.) Defendant argues that
Pulver was the general contractor for all construction of the
property at issue. Defendant states that it “only served as the
holding company for funds for the purchase of the property and
retained title under the Act of Sale.” (R. Doc. 22-1 at 5.) Thus,
Defendant argues that “plaintiff interacted only with [Pulver] and
its subcontractors and agents.” Id. Defendant asserts that the
only

entity

involved

in

the

city

inspection

was

Pulver.

In

response, Plaintiff argues that the public records do not reflect
that

Pulver

had

any

ownership

interest

in

the

property.

Accordingly, Plaintiff argues that Pulver is not a necessary party
to this litigation and his claim is against the seller of the
property, Defendant, for rescission of the agreement and damages
for

failing

to

disclose,

and

fraudulently

concealing,

the

property’s alleged defects.
Federal Rule of Civil Procedure 19 requires the joinder of
any party “who is subject to service of process and whose joinder
will not deprive the court of subject-matter jurisdiction” if:
(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that disposing
of the action in the person's absence may:
(i) as a practical matter impair or impede the person's
ability to protect the interest; or
(ii) leave an existing party subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations because of the interest.

9

Fed. R. Civ. P. 19. Pulver is not an indispensable party to this
litigation. Plaintiff seeks rescission of the sale and any damages
he may be entitled to pursuant to Louisiana law for Defendant’s
alleged failure and concealment of certain defects. From the facts
presently

before

the

Court,

Pulver

is

not

needed

to

afford

Plaintiff the full relief he requests.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss (R.
Doc. 22) is GRANTED IN PART. Plaintiff’s claims against Defendant
are DISMISSED WITHOUT PREJUDICE. Plaintiff is granted leave to
amend his Complaint within (30) days of the entry of this Order,
if he can plausibly state a cause of action under the Louisiana
law of redhibition.
New Orleans, Louisiana this 16th day of February, 2017.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

10