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

Filing 195

ORDER AND REASONS regarding cross motions for summary judgment. IT IS HEREBY ORDERED that the Motion for Partial Summary Judgment Regarding Breach of By-laws Regarding Arbitration and Accounting (Rec. Doc. 95) and Motion for Partial Summary Judgment for Misrepresentation and Breach of Contract in Violation of the By-Laws and Louisiana Condominium Act (Rec. Doc. 137) submitted by Plaintiffs are DENIED with prejudice IT IS FURTHER ORDERED that the Rule 56 Motion for Summary Judgment (Rec. Doc. 11 2) and Motion for Summary Judgment (Rec. Doc. 113) submitted by Defendants are GRANTED as to the Sixth Cause of Action, and as to Plaintiffs' allegations of "prior acts" committed by Defendants prior to the Plaintiffs' obtaining legal interest in St. Maxent and are otherwise DENIED. IT IS FURTHER ORDERED that no further dispositive motions shall be filed without the Court's leave. Signed by Judge Carl Barbier on 4/11/2019. (cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TODD NOVAK, ET AL.

CIVIL ACTION

VERSUS

No. 16-6835

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

SECTION: “J”(3)

ORDER AND REASONS
Before the Court are cross motions for summary judgment filed by plaintiffs,
Todd and Kate Novak, and defendants, St. Maxent-Wimberly House Condominium,
Inc., Michael Skinner, Cynthia Cunningham, Ross Henry, Henry Insurance Services,
Inc., Kevin Cunningham, and State Farm Fire and Casualty Company (collectively,
“Defendants”). The motions are:
a Motion for Partial Summary Judgment Regarding Breach of By-laws
Regarding Arbitration and Accounting (Rec. Doc. 95) submitted by
Plaintiffs and opposed by Defendants (Rec. Doc. 100);
a partial Rule 56 Motion for Summary Judgment (Rec. Doc. 112)
submitted by Defendants and opposed by Plaintiffs (Rec. Doc. 114) 1;
and a Motion for Partial Summary Judgment for Misrepresentation and
Breach of Contract in Violation of the By-Laws and Louisiana
Condominium Act (Rec. Doc. 137) submitted by Plaintiffs and opposed
by Defendants (Rec. Doc. 151).

State Farm did not actually join the other defendants in filing their motion (Rec. Doc. 112); rather,
it adopted their arguments as its own in its Motion for Summary Judgment (Rec. Doc. 113). Plaintiffs
filed an opposition (Rec. Doc. 115), adopting its own previously asserted opposition arguments. For the
sake of simplicity, the Court shall not distinguish between the motions.
1

Considering the motions, the memoranda, the record, and the law, the Court
finds Plaintiffs’ motions shall be DENIED and Defendants’ motion shall be
GRANTED in part and DENIED in part.
FACTS AND PROCEDURAL HISTORY
This litigation devolved from a dispute over the Plaintiffs’ right to short-term
lease a condominium unit they purchased in the French Quarter. The Novaks are
school teachers who work in California; their plan was to buy a French Quarter condo
unit which they could use as a vacation home during summer break but lease during
the regular school year when they would be teaching in California. 2
On February 16 of 2015, in pursuit of their plan to buy a summer retreat which
would also turn a profit, the Plaintiffs agreed to purchase one of the five units that
make up St. Maxent-Wimberly House (the “House”). 3 The House is a 150-year-old
French Quarter residence located on Governor Nichols Street. 4 It was made into a
condominium in 1990 in accordance with the Louisiana Condominium Act, La. R.S.
9:1121.101, et seq.
The Novaks purchased their unit, Unit 1, from Jenny and Michael Tilbury for
$379,000 through an “as is,” no warranty, cash sale. 5 The purchase agreement gave
the Novaks 14 days in which they could inspect the property and terminate the sale
based on the results of the inspection. 6 The Novaks exercised this right and hired

(Rec. Doc. 177 at 1-3).
(Rec. Doc. 139-5).
4 (Rec. Doc. 112-1 at 2-5).
5 (Rec. Doc. 139-5)
6 (Rec. Doc. 139-5)
2
3

2

Henry & Hatchett Inspection Services to inspect the House. Henry & Hatchett
concluded the building to be in “fair to good condition,” 7 and the Novaks went ahead
and executed their purchase of Unit 1 through an Act of Cash Sale on March 30,
2015. 8
After ownership of Unit 1 transferred, tensions began to rise between the
Novaks and the association tasked with managing and regulating the condominium,
St. Maxent-Wimberly Condominium, Inc. (“St. Maxent”), which is controlled by a
board of directors (the “Board”). 9 Plaintiffs allege that after they purchased their unit,
the Board informed Plaintiffs that the By-Laws had previously been amended to
prohibit leases of less than one year. 10 Although there is evidence that the Board
voted to make this change in 2006, the amendment was never recorded in the
conveyance records of Orleans Parish, as required by the By-Laws. 11 Nevertheless, it
appears that it was the Board’s position that leases for less than a year were
prohibited. 12 This short-term rental prohibition was obviously an obstacle to the
Novaks’ plan to lease the unit nine months out of the year, and the Novaks
communicated their dissatisfaction with the short-term rental rule.

(Rec. Doc. 139-6 at 10).
(Rec. Doc. 139-9).
9 St. Maxent’s membership is composed of the unit owners of the condominium. According to its ByLaws, the corporation is controlled by a board of directors (the “Board”), also consisting of the owners
of the condominium’s five units. (Rec. Doc. 95-2). In practice, however, not all members of St. Maxent
became directors on the Board, as membership on the board technically requires an election and the
consent of the unit owner. Kate Novak, for example, refused to become a director. In 2016, the directors
were Michael Skinner, Cynthia Cunningham, Ross Henry, and briefly, Ehab Zagzoug.
10 (Rec. Doc. 137-3 at 4).
11 (Rec. Doc. 137-3 at 4).
12 (Rec. Doc. 139-7 at 20).
7
8

3

In August of 2015, Cynthia Cunningham informed Kate Novak that the Board
would consider allowing the Novaks to rent their unit for 6-months but that it would
require a vote from the Board. 13 The Novaks never followed up with the Board,
because they felt it was “not a very safe place to rent to somebody” due to newly
discovered problems with mold and several episodes of vandalism the Novaks
experienced. 14 Despite these alleged concerns, the Novaks did make several shortterm rentals of their unit. Kate Novak testified that she and her husband used the
online marketplace Airbnb to rent their unit for short periods that not only violated
St. Maxent’s By-Laws but also were illegal pursuant to a 60-day minimum rental
period set by the Vieux Carré Commission. 15 The Novaks were fined by the
Commission for violating the short-term rental restriction. 16
Relations between the Novaks and the other members of St. Maxent did not
improve. In the fall of 2015, the Novaks allegedly requested to examine St. Maxent’s
books in accordance with the By-Laws, a request the Board denied. 17 In January of
2016, the Novaks allegedly demanded an accounting of St. Maxent’s finances again.
They also allege they asked for arbitration pursuant to the By-Laws. The relevant
section, § 6.02, states, “In the event there is any dispute among the Unit Owners or
among the members of the Board which is not reconciled by a vote pursuant to these

(Rec. Doc. 139-7 at 6).
(Rec. Doc. 139-7 at 9).
15 (Rec. Doc. 139-7 at 12).
16 (Rec. Doc. 139-7 at 12).
17 (Rec. Doc. 137-3 at 4).
13
14

4

By-Laws, such dispute shall be submitted to arbitration under the Louisiana
Arbitration Act.” 18
On February 12, 2016, the unit owners (then, Michael Skinner, Cynthia
Cunningham, Ross Henry, Ehab Zagzoug, and Kate Novak) and the Board (same,
except Kate Novak refused to act as a director) had their annual meeting. 19 A
majority of the Board and unit owners voted to amend the By-Laws by adopting a 1year lease restriction. 20 The amendment was recorded by the Clerk of Court for the
Parish of Orleans on April 19, 2016. 21
In March of 2016, the Novaks hired Gurtler Bros. Consultants, Inc. to inspect
the common areas of the house. The Gurtler report concludes that deferred
maintenance had caused various common parts of the House to fall into disrepair. 22
The Novaks then hired Kotter & Associates to create an estimate of the costs to repair
alleged defects in the building. 23
The Novaks then initiated this litigation by filing a Petition to Enforce
Agreement to Arbitrate and to Compel Arbitration (Rec. Doc. 1) on May 23, 2016,
naming St. Maxent, Michael Skinner, Cynthia Cunningham, Ross Henry, and State
Farm as defendants. The Petition asks for relief in the form of an order compelling
defendants to submit to arbitration. Plaintiffs subsequently obtained new counsel
and filed their First Supplemental and Amended Complaint (Rec. Doc. 13). The first

(Rec. Docs. 127-3, at 2, 95-2 at 7).
(Rec. Doc. 95-3).
20 (Rec. Doc. 112-8).
21 (Rec. Doc. 112-8).
22 (Rec. Doc. 137-6).
23 (Rec. Doc. 137-7).
18
19

5

sentence of the Amended Complaint states that Plaintiffs “withdraw their request for
arbitration.” Plaintiffs then filed a Second Supplemental and Amended Complaint
(Rec. Doc. 53), this one “meant to replace all previous complaints and demands.” This
complaint pleads seventeen causes of action, including an allegation of civil
conspiracy amongst St. Maxent, the Board members, the realtors, and the Tilburys.
Following this amendment to the pleadings, the parties engaged in extensive
motion practice. The Court granted summary judgment in favor of the realtors and
the Tilburys; only St. Maxent., its board members, and their insurers remain as
defendants in this case.
STANDARD OF LAW
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 Fed. R. Civ. P. 56); Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a
dispute as to any material fact exists, a 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

6

satisfied that “a reasonable jury 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, 1264-65 (5th Cir. 1991). 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.
DISCUSSION
This case has been needlessly complicated by the Plaintiffs’ unwieldy Second
Amended Complaint, which meanders for 227 paragraphs. At its essence, Plaintiffs’
grievance is simply that St. Maxent is not maintaining the House and is not keeping

7

sufficient documentation for the association members to determine what is being
expended on maintenance, all in violation of the By-Laws and the Louisiana
Condominium Act. This case should be as easy as determining (1) whether St. Maxent
breached these duties as they are clearly set forth in the Act, and if so, (2) whether
these breaches resulted in provable damage, presumably in the form of lost rents or
a diminution in the value of the Novaks’ unit.
This case has been far from easy because Plaintiffs allege, for example, that a
“failure to maintain and repair the building” gives rise to not just a cause of action
under the By-Laws or the Act, but also claims of negligent or intentional or fraudulent
misrepresentation (causes of action 9, 10), intentional or tortious interference with
contract (11), intentional or tortious interference with business (12), breach of
fiduciary obligation (13), civil conspiracy (16), as well as a derivative action by the
Novaks on behalf of St. Maxent (17). Plaintiffs further complicate matters by
challenging in their complaint whether the association even constitutes an
incorporated entity and by claiming the “Purported Board of Directors of St. Maxent”
and St. Maxent’s board members are liable individually. The Court begins by
reviewing the statutory provisions controlling the administration of condominiums
before resolving Plaintiffs’ motions, and finally the Defendants’ motion.
I.

THE LOUISIANA CONDOMINIUM ACT

The Louisiana Condominium Act defines “condominium” as “the property
regime under which portions of immovable property are subject to individual
ownership and the remainder thereof is owned in indivision by such unit owners.” La.

8

R.S. 9:1121.103(1). An “association,”—such as St. Maxent—is defined as “a
corporation, or unincorporated association, owned by or composed of the unit owners
and through which the unit owners manage and regulate the condominium.” La. R.S.
9:1121.103(8). By law, every association’s membership consists exclusively of all of
its unit owners. La. R.S. 9:1123.101. If the association is incorporated, it may be as
a for-profit corporation, or a non-profit corporation as St. Maxent is. Id. In the case it
is a corporation, the association is controlled by a board of directors. Pursuant to the
Act, St. Maxent’s board has the power to: “adopt and amend bylaws and rules and
regulations;” “adopt and amend budgets for revenues, expenditures, and reserves and
make and collect assessments for common expenses from unit owners;” “regulate the
use, maintenance, repair, replacement, and modification of common elements;”
“exercise any other powers conferred by the declaration or bylaws;” and “exercise any
other powers necessary and proper for the governance and operation of the
association.” See La. R.S. 9:1123.102.
Consistent with scope of the association’s powers, it is “responsible for
maintenance, repair, and replacement of the common elements” and for keeping
“financial records sufficiently detailed to enable the association to comply” with its
maintenance obligation. La. R.S. 9:1123.107, 9:1123.108. “All financial and other
records shall be made reasonably available for examination by any unit owner and
his authorized agents.” La. R.S. 9:1123.108. Thus, the “Act imposes a legal obligation
upon condominium associations to maintain, repair, or replace the common elements
of the condominium building,” FIE, LLC v. New Jax Condo Assn., Inc., 241 So. 3d

9

372, 392 (La. App. 4th Cir. 2018), and St. Maxent may be sued for its failure to satisfy
this or its record-keeping obligations as a condominium association incorporated as a
non-profit corporation. See id.; see also La. Civ. Code art. 24. St. Maxent’s board,
however, “is not a juridical person and lacks the requisite procedural capacity” to be
sued. Wells v. Fandal, 136 So. 3d 83, 91 (La. App. 5th Cir. 2014). While, the board of
directors is the decision-maker charged with steering an incorporated association, it
is not recognized as an entity to be held separately liable from the association. Id.
Furthermore, while the liability of individual directors of all corporations is limited,
the liability of directors acting on behalf of condominium associations is limited by a
specific statute:
A person who serves as a director, officer, or trustee of a homeowners
association and who is not compensated for such services on a salary
basis shall not be individually liable for any act or omission resulting in
damage or injury, arising out of the exercise of his judgment in the
formation and implementation of policy while acting as a director,
officer, or trustee of that association, or arising out of the management
of the affairs of that association, provided he was acting in good faith
and within the scope of his official functions and duties, unless such
damage or injury was caused by his willful or wanton misconduct.
La. R.S.. § 9:2792.7.
II.

PLAINTIFFS ARE NOT ENTITLED TO SUMMARY JUDGMENT

Plaintiffs have filed two partial summary judgment motions against
Defendants. They first ask for summary judgment “as it relates to their demand for
arbitration and for an accounting of Homeowners’ Association funds, as provided for
in the By-Laws.” (Rec. Doc. 95). However, Plaintiffs specifically withdrew their
request for arbitration when they amended their complaint, and Plaintiffs’ Second

10

Amended Complaint (Rec. Doc. 53), as exhaustive as it would appear, does not allege
that Defendants breached any contract with Plaintiffs by failing to arbitrate. The
Court cannot grant summary judgment on a claim that has not even been properly
pleaded. 24
Likewise, summary judgment is not warranted on Plaintiffs’ assertion that
Defendants breached the By-Laws by failing to provide an accounting. Plaintiff cites
to no record evidence in its memorandum of any request by Plaintiffs that Defendants
denied. Elsewhere, Plaintiffs do cite to the unsworn declaration of Malcolm Kelso,
who states, “In our pursuit of the alleged amendment, we noticed systemic failures
on the part of the BOD, and requested an accounting of the St, Maxent books and
records.” 25 But that self-serving factual allegation that Plaintiffs requested an
accounting—which fails to provide any specifics, including dates—is not enough for
the Court to find as a matter of summary judgment that St. Maxent failed to provide
an accounting in violation of the By-Laws. At most, the Court can conclude that issues
of material fact persist. See C.R. Pittman Const. Co., Inc. v. Natl. Fire Ins. Co. of
Hartford, 453 Fed. Appx. 439, 443 (5th Cir. 2011) (unpublished).
Plaintiffs filed a second partial summary judgment motion (Rec. Doc. 137)
against Defendants for negligent misrepresentation, breach of contract and the By-

See also New Jax Condominiums Assn., Inc. v. Vanderbilt New Orleans, LLC, 219 So. 3d 471, 480
(La. App. 4th Cir. 2017) (finding district court did not err in choosing not to stay proceedings for
arbitration where dispute was between the Board and unit owners and arbitration provision only
contemplated disputes among unit owners or among the board).
25 (Rec. Doc. 127-3).
24

11

Laws, and violation of the Louisiana Condominium Act. First, Plaintiffs ask for
summary judgment because St. Maxent misrepresented:
(1) [that] annual meetings were held; (2) that St. Maxent’s funds and
expenditures were properly accounted for; (3) that St. Maxent permitted
Plaintiffs to inspect all of its books and records; (4) that St. Maxent
provided Plaintiffs with all financial information as required by the
LCA; (5) that St. Maxent properly elected officers and directors; (6) that
St. Maxent properly maintained and repaired the building; and (7) that
St. Maxent properly repaired and maintained the building in
accordance with the VCC. 26
Confusingly, Plaintiffs cite to the Defendants’ Responses for Request for Production
in this litigation as evidence of the Defendants’ negligent misrepresentations and yet
they allege that “Defendants made these misrepresentations to others prior to
Plaintiffs[‘] purchase of the property.” 27 How the Defendants’ responses in discovery
in 2016 could be considered evidence of representations (false or not) that the
Defendants made in 2015, before the Plaintiffs purchased the unit, the Court does
not know. Plaintiffs’ negligent misrepresentation claims are unsupported by
competent summary judgment evidence.
Second, Plaintiffs alleges that Defendants breached its contract with the
Novaks by violating the By-Laws by:
(1) failing to hold annual meetings—until prompted to do so by
Plaintiffs, and even then St. Maxent failed to properly notice those
meetings as required by the By-laws; (2) failing to properly account for
St. Maxent funds and expenditures for more than ten years, though
Plaintiffs requested such an accounting; (4) refusing to allow Plaintiffs
to inspect St. Maxent’s books and records upon request; (5) refusing to
provide financial information to Plaintiffs, which information is
required for Plaintiffs to comply with the LCA, in violation of La. R.S. §
1124.107; (6) failing to properly appoint officers and directors—the BOD
26
27

(Rec. Doc. 137-3 at 10-11).
(Rec. Doc. 137-3 at 12).

12

was improperly elected prior to Plaintiffs purchasing property at St.
Maxent, and no elections have taken place since, despite Plaintiffs
request for the same; (7) failing to properly maintain and repair the
building in accordance with the By-laws and the LCA at La. R.S. §
1123.112, and the requirements of the VCC. 28
Again, Plaintiffs rely almost entirely on the Defendants’ Responses for Request for
Production as evidence of these claims. Plaintiffs cite to no relevant case law. They
cite to no evidence of damages, claiming without citation to the record that they have
been unable to lease or sell Unit 1 due to the alleged breaches of contract. Summary
judgment cannot issue on such a showing.
III.

DEFENDANTS ARE ENTITLED TO PARTIAL SUMMARY JUDGMENT

The Defendants’ motion (Rec. Doc. 112) is also for partial summary judgment.
Defendants request “dismissal of all of plaintiffs’ prior acts claims, and Causes of
Action 6, 7, and 8.” 29 The Court addresses each of these causes of action in turn and
will consider dismissal of Plaintiffs’ “prior acts claims” last.
The sixth cause of action is a request for a declaratory judgment that Board
improperly amended St. Maxent’s by-laws to restrict short-term rentals to 1-year and
not 6-months. The Court agrees with Defendants that this demand for declaratory
relief is moot, given that the Board properly amended the By-Laws in early 2016 to
adopt a 1-year rental restriction.
The seventh cause of action is a demand for damages resulting from the
Novaks’ inability to rent the unit pursuant to the unauthorized and improper changes
to the By-Laws. Defendants argue that this cause of action is likewise moot because

28
29

(Rec. Doc. 137-3 at 12-13).
(Rec. Doc. 112).

13

the By-laws were properly amended to preclude short-term rentals of less than 1year. However, the Board did not elect to make this change until February of 2016,
and the amendment was not recorded until April of 2016. Therefore, unlike the
request for declaratory relief, Plaintiffs can theoretically recover against St. Maxent
for any damages they suffered due to lost 6-12-month rentals because St. Maxent
improperly enforced such a restriction in contradiction to the properly recorded ByLaws. Summary judgment is denied on the seventh cause of action.
The eighth cause of action is a demand for damages due to the “purported
Board’s” breach of the By-Laws. The Board is “purported” to exist according to
Plaintiffs because “[t]here was not a properly and legally-constituted Board of
Directors as per the governing requirements of the By-Laws at any time material to
this Complaint.” 30 Plaintiffs seemingly argue that the Board was improperly elected
in 2016 because written notice was not given 10 days before the annual meeting, 31
even though Plaintiffs had actual notice of the meeting, attended by proxy, and
abstained from voting in the election of new directors. 32 Plaintiffs assert that the
directors were “operating as individuals” for failing to observe corporate formalities
and are therefore liable as individuals for breaching of the By-Laws. Plaintiffs further
urge the following nine specific breaches of the By-Laws by the “purported board”:
a.
b.
c.
d.

Failure to hold annual meetings;
Failure to properly account for St. Maxent funds for more than 10
years;
Failure to disclose financial statements upon request;
Refusal to allow the inspection of St. Maxent’s books and records;

(Rec. Doc. 53 at 22-23).
(Rec. Doc. 114).
32 (Rec. Doc. 95-3).
30
31

14

e.
f.
g.
h.
i.

Refusal and/or failure to provide necessary financial information
as required by the Louisiana Condo and Homeowners Association
Statutes;
Failure to properly appoint officers and directors;
Failure to properly maintain and repair the building;
Failure to properly maintain and repair the building in
accordance with the Vieux Carré Commission Ordinance; and
Failure to properly account for funds and expenditures. 33

Defendants argue the eighth cause of action is unduly speculative to the extent
it asks for damages arising from Plaintiffs’ membership in an unincorporated
condominium association. The Court agrees; Plaintiffs have not even hinted at how
they have been damaged by St. Maxent’s failure to hold annual meetings or its failure
to appoint officers and directors in the years before the Novaks became members of
St. Maxent. Moreover, Plaintiffs fail to provide any authority supporting their
assertion that St. Maxent should be treated as an “unincorporated [condominium]
association” or that the defendant directors should be considered members of a
“purported BOD.” 34 Plaintiffs appear to suggest the Court should pierce the corporate
veil—an act which would require this Court to ask whether shareholders disregarded
corporate formalities. See Riggins v. Dixie Shoring Co., Inc., 590 So. 2d 1164, 1168
(La. 1991). However, veil-piercing requires much more than a failure to properly give
notice for meetings; generally, the doctrine is applied only where a shareholder has
abused the corporate form by using the corporation as an alter ego. Id. In determining
whether the corporation was a mere alter ego the court considers a host of factors
(Rec. Doc. 53 at 22-23). Plaintiffs further allege that these same enumerated failures give rise to
many other causes of action against the board members for: negligent and intentional
misrepresentation (9-10); intentional or tortious interference with contract (11); intentional or tortious
interference with business (12); breach of fiduciary duty (13); and a derivative action by the Novaks
on behalf of St. Maxent (17).
34 (Rec. Doc. 112-8).
33

15

such

as

the

“commingling

of

corporate

and

shareholder

funds”

and

“undercapitalization.” Id. There is no evidence of such abuses in this case and
Plaintiffs fail to properly raise the theory. St. Maxent’s corporate form will not be
disregarded. 35 See Jones v. Briley, 593 So. 2d 391, 397 (La. App. 1st Cir. 1991).
Accordingly, where Plaintiffs allege that the “purported BOD” breached some
duty, this is properly considered an allegation against St. Maxent, the corporate
entity “having legal personality under La. Civ. Code art. 24.” See Wells, 136 So. 3d at
91. Because the Plaintiffs have already named St. Maxent as a defendant, no
amendment to the pleadings is necessary. See id.
With that clarification, Plaintiffs’ eighth cause of action is simply a claim
against St. Maxent for breach of the By-Laws, and some of these alleged breaches
may give rise to a claim to non-speculative damages. However, the Defendants point
out that many of the alleged actions or inactions by St. Maxent occurred in the 10-15
years before the Plaintiffs purchased Unit 1. Defendants argue they are not liable
for this conduct occurring before the Novaks were members of the association
pursuant to Louisiana’s duty and standing requirements. See La. Code Civ. Proc. art.
681.
Plaintiffs counter that “Defendants’ bad acts prior to Plaintiffs’ purchase of the
property are indicative of their bad acts after, and indeed are indicative of the manner

Neither will the Court disregard the immunity bestowed upon uncompensated directors of
associations under La. R.S. 9:2792.7 whose conduct “does not rise to the level of bad faith and willful
and wanton misconduct.” Caracci v. Cobblestone Village Condo. Ass'n, 927 So. 2d 542, 545 (La. App.
5th Cir. 2006).

35

16

in which they are governing St. Maxent today.” 36 But this is no argument for liability
attaching to St. Maxent’s “prior acts,” and the Court agrees with Defendants that
they owed no statutory, or contractual duties to plaintiffs and that plaintiffs have no
claim for damages arising out of events that took place during the years preceding
their purchase of a legal interest in the condominium property, whether as a matter
of tort, contract, or statute. 37 Although restated in a half a dozen different ways and
under just as many causes of action, Plaintiffs’ essential claim against St. Maxent is
for breach of St. Maxent’s obligations under the By-Laws because of its failure to
maintain the House and its failure to account for its expenses in maintaining (or not
maintaining) the House. 38 These duties extended to the Novaks only after the Novaks
obtained a legal interest in St. Maxent. As the Defendants point out, to the extent the
House was not maintained prior to the Novaks’ purchase of their unit, the Plaintiffs
benefited from a lower purchase price of their unit. The Novaks had an opportunity
to have the common areas of the House inspected before their purchase and they in
fact did so. After they purchased Unit 1, the association’s duty to maintain the House

(Rec. Doc. 114 at 11).
(Rec. Doc. 112-1 at 1-2). Of course, torts do not generally require a legal relationship between parties.
A defendant condominium association would be liable for falsely representing that it inspects for
termite damage yearly even though a legal relationship with the plaintiff did not form until the
plaintiff purchased his unit and discovered termite damage in the common areas. However, as alluded
to above, Plaintiffs have failed to provide any evidence of any representation by St. Maxent to Plaintiffs
before Plaintiffs purchased their unit.
38 If Plaintiffs were injured because St. Maxent failed to “hold annual meetings” or “appoint officers
and directors,” it is because these failures inhibited the association from carrying out its obligations
to maintain the property and keep up financial records documenting this maintenance. As Plaintiffs
admit, they allege liability for St. Maxent’s corporate disarray as a means to cumulate evidence. The
question before the Court today is not an evidentiary one, it is of liability, and the Court finds that St.
Maxent may only be held liable for its actions or inactions committed after the Plaintiffs obtained their
legal interest in the association.
36
37

17

and account for its expenses was extended to the Novaks. It is from this point on that
St. Maxent’s conduct may give rise to liability.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the Motion for Partial Summary Judgment
Regarding Breach of By-laws Regarding Arbitration and Accounting (Rec. Doc. 95)
and Motion for Partial Summary Judgment for Misrepresentation and Breach of
Contract in Violation of the By-Laws and Louisiana Condominium Act (Rec. Doc.
137) submitted by Plaintiffs are DENIED with prejudice
IT IS FURTHER ORDERED that the Rule 56 Motion for Summary
Judgment (Rec. Doc. 112) and Motion for Summary Judgment (Rec. Doc. 113)
submitted by Defendants are GRANTED as to the Sixth Cause of Action, and as to
Plaintiffs’ allegations of “prior acts” committed by Defendants prior to the Plaintiffs’
obtaining legal interest in St. Maxent and are otherwise DENIED.
IT IS FURTHER ORDERED that no further dispositive motions shall be
filed without the Court’s leave.
New Orleans, Louisiana, this 11th day of April, 2019.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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