Novak et al v. St. Maxent-Wimberly House Condominium, Inc. et al

Filing 179

ORDER AND REASONS: It is ORDERED that Motion for Summary Judgment (Rec. Doc. 117 ) by Movants Thom Beaty and French Quarter Realty, Inc. is GRANTED. It is FURTHER ORDERED that Movants' Motion to Reset Hearing (Rec. Doc. 174 ) is DENIED AS MOOT. Signed by Judge Carl Barbier. (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

TODD NOVAK

CIVIL ACTION

VERSUS

No. 16-6835

ST. MAXENT-WIMBERLY HOUSE
CONDOMINIUM, INC., ET AL.

SECTION: “J”(3)

ORDER AND REASONS
Before the Court are the Motion for Summary Judgment (Rec.
Doc. 117) and related the Motion to Reset Hearing (Rec. Doc. 174)
submitted by Defendants Thom Beaty and French Quarter Realty, Inc.
Parties

have

had

the

opportunity

to

file

their

respective

opposition and reply memoranda and have done so. Having considered
the motions and legal memoranda, the record, and the applicable
law, the Court finds that the Movants’ Motion for Summary Judgment
should be GRANTED. Therefore, the Motion to Reset Hearing is
DENIED AS MOOT.
FACTS AND PROCEDURAL BACKGROUND
This litigation derives from a dispute over the right to lease
a condominium the Plaintiffs purchased from Michael and Jenny
Tilbury. The Plaintiffs are school teachers residing in California
who hoped to buy a French Quarter condo that they could use as a
vacation home during summer break, but lease during the regular
school year when they would be out-of-state. The Plaintiffs hired
a real estate agent to represent them and the Tilburys hired the

Movants

as

their

own

agent.

Plaintiffs’

agent

and

Movants

successfully negotiated the sale of the condo property, but the
Plaintiffs’ plan to lease the condo for nine months was thwarted
when the condo’s board of directors informed Plaintiffs that the
minimum lease length had been extended from six months to one year.
Before purchasing the condo, Plaintiffs had it inspected.
Plaintiffs subsequently filed suit against basically everyone
involved in the transaction, including their own real estate agent,
the Tilburys, and of course the Movants. This Court granted summary
judgment in favor of Plaintiff’s agent. (Rec. Doc. 177). This Order
treads

on

much

of

the

same

ground

as

that

one,

but

as

the

relationship between parties is not identical, the Court has
tailored its analysis to the instant matter.

Plaintiffs allege

only two (of their total seventeen) causes of action in their
second

amended

Plaintiffs

complaint

first

claim

against
damages

Movants.
due

to

(Rec.
the

Doc.

53).

negligent

misrepresentation by Movants, causing them to be “disallowed from
renting” and resulting in their “purchasing a property in a state
of managerial disarray, and purchasing a property with latent
defects.” Plaintiffs’ second claim is that Movants participated in
a civil conspiracy perpetrated against Plaintiffs by the condo
board, the Tilburys, and their own agent.

2

The Movants then filed their Motion for Summary Judgment.
(Rec. Doc. 117). Plaintiffs responded with opposition (Rec Doc.
127), which again relies on the unsworn declaration of Malcom M.
Kelso (Rec. Doc. 127-3), as the primary factual basis for their
claims against Movants. Movants also filed a reply (Rec. Doc. 127)
to Plaintiffs’ opposition to the Motion for Summary Judgment and
requested oral argument in a Motion to Reset Hearing (Rec. Doc.
174).
PARTIES’ ARGUMENTS
Movants argue that they are entitled to summary judgment as
to

both

Plaintiffs’

negligent

misrepresentation

and

civil

conspiracy claims. Movants cite the depositions of the Plaintiffs
as

evidence

that

misrepresentation

no

factual

claim.

basis

(Rec.

exists

Docs.

117-4,

for

the

117-5).

negligent
Just

as

Plaintiffs admitted knowing no factual basis for their claims that
their own real estate agent had withheld any information from them
(Rec. Doc. 177), Plaintiffs admit having no factual basis against
Movants.

When

she

was

asked

whether

the

Movants

disclosed

everything they knew, Plaintiff Kate Novak responded “I don’t know
if they did or did not.” (Rec. Doc. 117-5 at 214-15).
Plaintiffs do not respond with record evidence supporting
their claim that Movants withheld any information they possessed,
but retort that “even if [Movants] did not have actual knowledge
about latent defects and gross mismanagement . . . [Movants were]
3

still negligent in failing to provide Plaintiffs with all documents
required to facilitate the sale.” (Rec. Doc. 127 at 9). For this
proposition, Plaintiffs cite a familiar provision of the Louisiana
Condominium

Act:

La.

R.S.

§

9:1124.107.

Movants

reply

that

Plaintiffs cannot prove any damages, reemphasize a lack of factual
basis, and argue that § 1124.107 provides a limited remedy which
has been waived.
Movants similarly claim that the civil conspiracy cause of
action

fails

for

want

of

an

established

factual

basis.

And

Plaintiffs again oppose summary judgment with the argument that
Movants “intentionally kept [information required by La. R.S. §
9:1124.107]

from

Plaintiffs

in

order

to

mislead

them

into

purchasing the property.” (Rec. Doc. 127 at 15) (citing Declaration
of Malcom Kelso (Rec. Doc. 127-3)).
LEGAL STANDARD
Summary

judgment

is

appropriate

when

the

pleadings,

the

discovery, and any affidavits show 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); see also
Celotex

Corp.

v.

Catrett,

477

U.S.

317,

322–23

(1986).

All

reasonable inferences are drawn in favor of the nonmoving party,
but “unsupported allegations or affidavits setting forth ‘ultimate
or conclusory facts and conclusions of law’ are insufficient to
either support or defeat a motion for summary judgment.” Galindo
4

v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). “If the
dispositive issue, as here, is one for 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 contains insufficient proof concerning an essential element
of the nonmoving party's claim.” Natl. Am. Ins. Co. v. Melancon,
No. 98-1273, 1999 WL 675421, at *3 (E.D. La. Aug. 31, 1999).
DISCUSSION
I. Negligent Misrepresentation
For a plaintiff to recover for negligent misrepresentation in
Louisiana, “there must be [1] a legal duty on the part of the
defendant to supply correct information, [2] a breach of that duty,
and [3] damage to the plaintiff caused by the breach.” Duplechin
v. Adams, 95-0480 (La. App. 1 Cir. 11/9/95); 665 So. 2d 80, 84
writ denied, 666 So. 2d 1104 (La. 1996). Although it is not always
explicitly listed as an element, Louisiana courts also require a
plaintiff to prove reasonable reliance on the defendant’s alleged
misrepresentation. See id. (reversing trial court’s judgment in
favor of plaintiffs because a reasonable person would not rely on
the realtor’s assertions without further investigation); see also
Melancon, No. 98-1273, 1999 WL 675421, at *4. A real estate agent
has a duty to relay information accurately between the seller and
the purchaser. Smith v. Remodeling Serv., Inc., No. 94-589 (La.
5

App. 5 Cir. 12/14/94); 648 So. 2d 995, 1000. A realtor violates
this duty when he or she fails to disclose knowledge of some
crucial defect. Josephs v. Austin, 420 So. 2d 1181, 1185 (La. App.
5th Cir. 1982), writ denied, 427 So. 2d 870 (La. 1983) (finding
duty breached where realtor knew, but did not disclose that HUD
had discovered a failure in the property foundation and for that
reason had rescinded sale to the prior owners).
The Plaintiffs themselves have flatly admitted in depositions
that they have no factual basis for their claims that the Movants
withheld anything from them. Moreover, as this Court previously
found

in

its

order

granting

summary

judgment

in

favor

of

Plaintiffs’ own real estate agent, the conclusory allegations by
Malcolm Kelso of actual or constructive knowledge of defects or
managerial affairs are not substantial enough to withstand summary
judgment. (Rec. Doc. 177). Thus, Plaintiffs have failed to prove
they can meet an essential element must be met at trial: that the
realtor’s duty to accurately relay information has been breached.
However, Plaintiffs also assert that a special duty to hand
over certain documents to purchasers prescribed in La. R.S. §
9:1124.107 has been violated. Plaintiffs cite no case law for the
proposition that violation of § 1124.107 gives rise to a claim for
damages under a negligent misrepresentation cause of action. The
Court now finds that even assuming that § 1124.107 applies to

6

Movants as the designated agents of the unit owners, that law does
not provide the relief that Plaintiffs seek.
Section 1124.107 of the Louisiana Condominium Act requires
unit owners reselling condominiums to provide a “certificate” to
a purchaser which includes various statements reflecting on the
financial

health

of

the

home

owner’s

association.

Section

1124.107(C) clearly explains the consequences of non-compliance:

A unit owner is not liable to a purchaser for the failure
or delay of the association to provide the certificate
in a timely manner; however, the contract to purchase is
voidable by the purchaser until a certificate has been
provided and for five days thereafter or until
conveyance, whichever first occurs.

Thus, § 9:1124.107 serves “to give the purchaser an absolute right
to rescind within a certain period of time before closing (the
"cooling off" period) regardless of whether or not the [seller]
has made adequate disclosure.” GARY A. POLIAKOFF, THE LAW

OF

CONDOMINIUM

OPERATIONS § 8:54 (2017) (citing La. R.S. § 9:1124.106). 1 The purpose
of the provision is to allow the purchaser a period to become
acquainted with the property while the contract is still voidable
and also to encourage full disclosure by the seller. Id.

1

The Louisiana Condominium Act distinguishes between first time
sales and resales of condominiums. La. R.S. § 9:1124.106 applies
to first time sales and gives the purchaser 15 days (rather than
5) to cancel the sale after purchaser is given a “public
offering statement,” unless there has been conveyance.
7

Section 1124.107 makes no reference to damages. 2 The Louisiana
legislature apparently concluded that its purpose is achieved
without also imposing damages on the seller or seller’s agents. If
the Legislature intended § 1124.107 as a vehicle for damages it
could have explicitly enumerated that remedy, as a model provision
in the Uniform Condominium Act does. Unif. Condominium Act § 4103(a)(11)(ii), 7 U.L.A. 537 (1985) (“[I]f a declarant fails to
provide a public offering statement to a purchaser before conveying
a unit, that purchaser may recover from the declarant (10) percent
of the sales price of the unit.”). In fact, the language of §
1124.107(C) discourages the interpretation that it allows any
remedy other than a time limited right to void the contract: “A
unit owner is not liable to a purchaser for the failure or delay
of the association to provide the certificate in a timely manner
. . . .” Therefore, the Court concludes that a plaintiff may not
seek damages under a negligent misrepresentation theory for a unit
seller’s non-compliance with La. R.S. § 9:1124.106. There being no
dispute to material facts, summary judgment is appropriate as to
the negligent misrepresentation claim.

2

La. R.S. § 9:1124.106 does mention damages, but not for failure
to deliver disclosure. Rather, it allows damages or rescission
for reasonable reliance on a materially false or misleading
statement in the public offering statement. La. R.S. §
9:1124.106(C).
8

II.

Civil Conspiracy

Plaintiffs also assert a civil conspiracy among transaction
participants, alleging Movants “failed to provide Plaintiffs with
a financial certificate, which would have contained information
demonstrating managerial disarray and latent defects affecting
[the condo complex].” (Rec. Doc. 127 at 16). The civil conspiracy
action is rooted in the Louisiana Civil Code, which provides: “He
who conspires with another person to commit an intentional or
willful act is answerable, in solido, with that person, for the
damage caused by such act.” La. C.C. art. 2324. To succeed, a
plaintiff must prove “an agreement existed to commit an illegal or
tortious act, which act was actually committed, which resulted in
the plaintiff's injury, and there was an agreement as to the
intended outcome or result.” Curole v. Delcambre, No. 16-550 (La.
App. 3 Cir. 8/2/17); 224 So. 3d 1074, 1082, writ denied, 231 So.
3d 652 (La. 2018), and writ denied, 231 So. 3d 653 (La. 2018).
In order to succeed on this claim, Plaintiffs must not merely
prove that Movants did not disclose documents under § 1124.107,
but also that Movants did so willfully and in illicit agreement
with the other alleged co-conspirators. Id. Once again, Plaintiffs
provides

no

factual

basis

other

than

purely

speculative

allegations. Once again, § 1124.107 grants a limited remedy.
Summary judgment is appropriate.

9

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that Movants' Motion for Summary Judgment
(Rec. Doc. 117) is GRANTED.
IT IS HEREBY FURTHER ORDERED that Movants' Motion to Reset
Hearing (Rec. Doc. 174) is DENIED AS MOOT.

New Orleans, Louisiana this 28th of June, 2018.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

10