Napoleon v. Shows, Cali & Walsh, LLP

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

CHARLES NAPOLEON CIVIL ACTION

VERSUS NO. 20-1775

SHOWS, CALI & WALSH, SECTION “B”(4)

LLP, ET AL.

ORDER AND REASONS

Before the Court is defendants’ motion to dismiss pursuant to

the Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) (Rec.

Docs. 25, 31, 37). For the following reasons,

IT IS ORDERED that defendants’ motion to dismiss for lack of

jurisdiction is DENIED and defendant’s motion to dismiss for

failure to state a claim is GRANTED IN PART and DENIED IN PART.

I. FACTS AND PROCEDURAL HISTORY

This suit arises from a dispute over funds provided to Charles

Napoleon following Hurricanes Katrina and Rita in 2005. Hurricane

Katrina made landfall in Louisiana and Mississippi on August 29,

2005, and was quickly followed by Hurricane Rita on September 24,

2005. Rec. Doc. 25 at 7. The resulting devastation was

unprecedented, leading Congress to appropriate “disaster recovery

funds to the State of Louisiana, through HUD’s Community

Development Block Grant (“CDBG”) Program.” Id. at 7-8. HUD directed

Louisiana to submit an Action Plan for Disaster Recovery, and

through this Action Plan the State “created the Road Home Program

to compensate affected Louisiana homeowners for their losses.” Id.

at 8-9. CDBG grants funded the Road Home Program and the Louisiana

Recovery Authority (LRA) operated it. Id. at 9, 9 n.10. The LRA is

a “state agency created [by Executive order] to administer funds

for recovery from Hurricanes Katrina and Rita, including CDBG

Disaster Recovery Grant Funds.” Id.

HUD maintained that they would “monitor the State’s use of

funds and its actions for consistency with the Action Plan.” Rec.

Doc. 31 at 4 (emphasis in original). Also, HUD would “instate risk

analysis and on-site monitoring of grantee management of the grants

and of the specific use of funds.” Id. HUD’s responsibility

extended to “ensuring Louisiana’s interpretation of the statutory

and regulatory requirements were ‘not plainly inconsistent with

the [Housing and Community Development Act of 1974].’” Rec. Doc.

25 at 10 (alteration added) (quoting 24 C.F.R. § 570.480(c)). HUD’s

other responsibilities included: providing technical assistance,

“advice, training, or program models to ensure the State of

Louisiana complied with CDBG program requirements . . . .” Id. The

State of Louisiana remained responsible for “the implementation,

design, and administration of the Road Home Program in conformance

with the applicable CDBG Program requirements set by HUD.” Id. at

11 (internal quotations omitted) (quoting Rec. Doc. 25-2 at 69).

Whereas the Road Home Program disbursed four types of grants,

only two are involved in this matter: the compensation grant and

the elevation grant. See Rec. Doc. 31 at 5. The compensation grant

was given to homeowners to repair property damage on their homes.

Id. Napoleon executed the compensation grant agreement on April

24, 2007, and received a check for $48,496.70 but “returned the

check to the title company,” thinking it was to purchase his house.

Id. at 7.

The elevation grant was “given to eligible homeowners who

agreed to elevate their homes within three years.” Id. at 5. The

elevation grant totaled $30,000.00 and to receive the grant, the

homeowner had to execute the Road Home Program Elevation Incentive

Agreement For Use With Prior Road Home Grant. See id.; Rec. Doc.

25 at 11-12. Napoleon entered into the agreement on July 23, 2008.

Rec. Doc. 25-2 at 51. The agreement provided:

Within three years of the date of this Elevation

Incentive Agreement, the elevation (height) of the home

on the above Property will be at or above the Advisory

Base Flood Elevation (ABFE’s) published by FEMA . . . I

understand that to comply with this paragraph I must

elevate my home to be at or above the elevation required

by this Agreement even if the authority having

jurisdiction of building code enforcement is not

requiring elevation of the home . . . If the home on the

property does not meet or exceed the applicable ABFE’s

or BFE’s by three years from the date of the Elevation

Incentive Agreement, the entire amount of my Elevation

Incentive must be repaid to the State of Louisiana . . .

This Agreement shall be enforceable, at law or in equity,

by the State of Louisiana or the United States of

America. I agree that [the Office of Community

Development (“OCD”)] shall be entitled to recover

reasonable attorney’s fees and other costs, in the event

OCD institutes legal action against me for enforcement

of this Agreement.

Id. at 50. “When Mr. Napoleon received the elevation grant, he

used that money to repair his home.” Rec. Doc. 31 at 7-8. Napoleon

obtained a Certificate of Occupancy and Completion on October 12,

2011, which stated that he made repairs and renovated his home

after the storms. Id. at 8. Napoleon did not keep copies of the

original receipts or proof of repair. Id.

On July 26, 2013, HUD approved Action Plan Amendment No. 60

which stated:

The cost to elevate homes has increased substantially

since the Road Home program began disbursing Elevation

Incentive (RHEI) awards to homeowners. In addition, many

homeowners did not have adequate funds to complete the

basic repairs needed to re-inhabit their homes at the

pre-existing elevation. As a result, applicants

receiving RHEI funds may have found it necessary to use

those funds to complete their repair/reconstruction at

the existing elevation. Since the primary goal of the

Road Home Program is to enable applicants to return and

reoccupy their homes, this Action Plan Amendment (APA

60) identifies how the use of RHEI funds will be

considered in cases where applicants have used some or

all of those funds to repair and re-occupy their homes.

The purpose of APA 60 is to enable RHEI award amounts

that have been used for home repair and reconstruction

to be more accurately re-classified as part of the

applicant’s compensation award.

Rec. Doc. 31-12 at 2. This re-classification applied to “[o]nly

Road Home applicants that have received an RHEI award and have not

yet met the compliance terms associated with the award

agreement . . . .” Id. The Amendment further stated that:

If an eligible applicant . . . has used a portion or all

of his or her RHEI funds for valid home repairs, then

the respective amount used for home repairs will be added

to the applicant’s compensation award. Their RHEI award

amount will be reduced accordingly. Homeowners must

provide documentation that can demonstrate the use of

the RHEI funds on valid home repairs.

Id. Two years later on December 28, 2015, the OCD sent Napoleon a

letter stating that he could keep the elevation grant funds “[i]f

you used your elevation incentive funds to finish the repairs to

your home.” Rec. Doc. 31 at 9, 51 (alteration in original)

(internal quotations omitted).

On January 5, 2018, Mary Catherine Cali and John C. Walsh of

Shows, Cali & Walsh, LLP mailed Napoleon a letter which stated

that Napoleon “failed to establish compliance with [his] RHEI

obligations.” Rec. Doc. 25-2 at 53. The letter requested documents

establishing that (1) the home was elevated; (2) the funds were

used to elevate the home but elevation was never completed; or (3)

the funds were used to finish repairs to the home. See id. The

letter also stated that:

You have 30 days after your receipt of this letter to

notify our office that you dispute the validity of this

[RHEI], or any portion thereof. Failure to timely do so

will result in an assumption by our office that the full

amount of the RHEI repayment claim is valid.

Id. at 54. The letter further included that “if you do not take

any of the actions outlined above, within ninety days after your

receipt of this letter, Road Home may proceed with further action

against you, including legal action, in connection with the amount

of RHEI funds owed as outlined above.” Id. At this point, Napoleon

did not submit any additional documentation. Rec. Doc. 31 at 9. On

February 12, 2012, defendants received a call on behalf of

Napoleon1 that they previously submitted documentation on how the

money was used, but defendants could find no such documentation in

their records. Rec. Doc. 31-13 at 2. Then between June and July of

2019, Napoleon submitted additional photographs to show that he,

as the applicant, shored his home. Defendants, however, could not

observe an increase in elevation. See id. at 1.

On July 1, 2019, Shows, Cali & Walsh, LLP filed suit in the

Orleans Civil District Court on behalf of the State of Louisiana,

Division of Administration, Office of Community Development —

Disaster Recovery Unit, naming Charles and Mary Ann Napoleon as

defendants. Rec. Doc. 31 at 10; see State of La., Div. of Admin.,

Off. of Cmty. Dev. — Disaster Recovery Unit v. Napoleon, 2019-6927

(Orleans Parish Civ. Dist. Ct. 2019). In that suit, the State

alleged Napoleon must return his $30,000.00 elevation grant. Rec.

Doc. 31 at 10; see Rec. Doc. 31-4. On September 3, 2019, Napoleon

answered, making no affirmative defenses. Rec. Doc. 25 at 13; Rec.

Doc. 31 at 10. The State then moved for summary judgment, but on

January 23, 2020, before the motion could be heard, Napoleon filed

a voluntary Chapter 13 bankruptcy petition in the United States

Bankruptcy Court for the Eastern District of Louisiana (Case No.

20-10175). Rec. Doc. 31 at 10-11. On the A/B schedule Napoleon

1 The call came from a woman named Ashlynn, it is unclear the relation to Charles

and Mary Napoleon. The call log states that Charles Napoleon gave verbal

permission for Ashlynn to speak on his behalf. Rec. Doc. 31-13 at 2.

answered “No” to question 33 for “Claims against third parties,

whether or not you have filed a lawsuit or made a demand for

payment[;]” however, Napoleon answered “Yes” to question 34 for

“Other contingent and unliquidated claims of every nature,

including counterclaims of the debtor and rights to set off

claims[.]” Rec. Doc. 31-14 at 11. In the claim description,

Napoleon wrote “Possible suit vs. law firm representing Road Home

Program, and State of LA, regarding improper collection of Road

Home Grant funds[.]” Id.

Napoleon next filed this suit against the law firm

representing the Road Home Program on June 21, 2020, which

defendants answered on October 30, 2020. The complaint was then

amended on February 1, 2021. In the amended complaint, plaintiff

makes two claims for relief. Plaintiff’s first claim is that under

15 U.S.C. §§ 1692e(2)(A), (5), (10), and § 1692f, defendants were

prohibited from trying to collect the grant money from the

plaintiff, because it was not owed to the State, as plaintiff used

the funds within the acceptable parameters of the grant. See Rec.

Doc. 19 at 11-13. Plaintiff also brought their second claim under

15 U.S.C. §§ 1692e(2)(A), (5), (10), and § 1692f, and contends

that even if the money was owed to the State, defendants were time-

barred from collection under the six-year federal statute of

limitations, 28 U.S.C. § 2415(b), or in the alternative the five-

year liberative prescription period for actions on negotiable and

nonnegotiable instruments under Louisiana Civil Code Article 3498.

Id. at 13-15.2 On July 16, 2016, defendants submitted the instant

motion to dismiss for lack of standing/subject matter jurisdiction

and for failure to state a claim.3

II. LAW AND ANALYSIS

A. Standard of Review for a 12(b)(1) Motion

“When a Rule 12(b)(1) motion is filed in conjunction with

other Rule 12 motions, the court should consider the Rule 12(b)(1)

jurisdictional attack before addressing any attack on the merits.”

See Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)

(citing Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir.

1977)). “On a Rule 12(b)(1) motion, the party seeking to invoke

federal jurisdiction has the burden [of proof].” Boudreaux v. La.

State Bar Ass’n, 3 F.4th 748, 753 (5th Cir. 2021). The district

court should only grant a 12(b)(1) motion “if it appears certain

that the plaintiff cannot prove any set of facts in support of his

claim that would entitle plaintiff to relief.” Ramming, 281 F.3d

at 161. In the Fifth Circuit, the standard of review applicable to

motions to dismiss under Rule 12(b)(1) resembles the standard of

2 While plaintiff states in the amended complaint that the Louisiana Civil Code

Article 3498 applies if state law applies, in plaintiff’s response to

defendants’ motion to dismiss, he argues that if state law applies, the five-

year liberative prescription periods of Article 1564 or Louisiana Revised

Statute 9:2772 apply, not the liberative prescription period of Article 3498.

Compare Rec. Doc. 19, with Rec. Doc. 31.

3 Then on August 12, 2021, plaintiff filed a motion for class certification

under Rule 23 of the Federal Rules of Civil Procedure. Rec. Doc. 28. This motion

is still pending.

review for motions to dismiss under Rule 12(b)(6), but also allows

the Court to consider a broader range of materials. Mansa Musa El

v. United States, No. 21-cv-968, 2021 WL 4148118, at *3 (E.D. La.

Sept. 13, 2021) (citing Williams v. Wynne, 533 F.3d 360, 364-65

n.2 (5th Cir. 2008)). Under 12(b)(6), the district court “must

accept all well-pleaded facts as true and view those facts in the

light most favorable to the plaintiff.” Schlesinger v. ES & H,

Inc., No. 11-cv-294, 2011 WL 3900577, at *2 (E.D. La. Sept. 2,

2011) (Lemelle, J.) (citing True v. Robles, 571 F.3d 412, 417 (5th

Cir.2009)).

B. Standard of Review for a 12(b)(6) Motion

When addressing a 12(b)(6) motion, the “district court must

accept all well-pleaded facts as true and view those facts in the

light most favorable to the plaintiff.” Schlesinger, Inc., 2011 WL

3900577, at *2 (Lemelle, J.) (citing True, 571 F.3d at 417). A

plaintiff must plead enough facts, if taken as true, to state a

claim that is plausible on its face. Bell Atl. Corp. v. Twombly,

550 U.S. 544, 556 (2007). A “formulaic recitation of the elements

of a cause of action” will not meet this pleading standard. Id. at

555. Plausibility does not require a showing of probability as a

well-pleaded complaint can proceed even if “actual proof of those

facts is improbable, and that a recovery is very remote and

unlikely.” Id. at 556. However, legal conclusions are not entitled

to a presumption of truth for the purposes of a 12(b)(6) motion.

Ashcroft v. Iqbal, 129 U.S. 1937, 1949 (2009).

C. Standing

Plaintiff has standing to bring this suit. Rec. Doc. 31-14 at

11, 16; see also Rec. Doc. 31 at 11. Under the Bankruptcy Code,

“debtors are under a continuing duty to disclose all pending and

potential claims.” Kane v. Nat’l Union Fire Ins. Co., 535 F.3d

380, 384–85 (5th Cir. 2008). “The bankruptcy trustee . . . has

exclusive standing to assert undisclosed claims that fall within

the bankruptcy estate.” U.S. ex rel. Spicer v. Westbrook, 751 F.3d

354, 362 (5th Cir. 2014). A debtor loses all rights to assets that

are a part of the bankruptcy estate unless the estate abandons the

asset. See Kane, 535 F.3d at 385. Abandoned property reverts back

to the debtor, and all the debtor’s rights are restored as if no

bankruptcy was filed. See id. Therefore, where the debtor does not

disclose the possible claim to the trustee in the bankruptcy

schedules, the claim remains part of the bankruptcy estate. See

generally, id.

Defendants argue that plaintiff did not disclose its claim

against defendants; therefore, the claim remains with the

bankruptcy estate, and plaintiff lacks standing. However, Napoleon

did list the potential lawsuit in Part 4, Question 34 of Schedule

A/B, which asked for “Other contingent and unliquidated claims of

every nature, including counterclaims of the debtor and rights to

set off claims.” See Rec. Doc. 31-14 at 11 (“Possible suit vs. law

firm representing Road Home Program, and State of LA, regarding

improper collection of Road Home Grant funds”). The Supervisor at

the Chapter 13 Trustee’s office confirmed that the lawsuit was

listed in the schedules, but the Trustee simply committed an

oversight in “fail[ing] to send out a lawsuit letter or monitor

for 6 month status.” Id. at 16. Consequently, plaintiff has

standing and this Court does not lack subject matter jurisdiction.

D. The Ten-Year Prescription Period in Louisiana Civil Code

Article 3499 Applies

Plaintiff is incorrect in arguing that the six-year federal

statute of limitation or the five-year state liberative

prescription period applies. First, plaintiff errs in claiming

that the six-year statute of limitations pursuant to 28 U.S.C.

§ 2415(a) applies. Rec. Doc. 31 at 12. The statute provides:

[E]very action for money damages brought by the United

States or an officer or agency thereof which is founded

upon any contract express or implied in law or fact,

shall be barred unless the complaint is filed within six

years after the right of action accrues or within one

year after final decisions have been rendered in

applicable administrative proceedings required by

contract or by law, whichever is later . . . .

28 U.S.C.A. § 2415(a). Title 28 defines “agency” as “any

department, independent establishment, commission,

administration, authority, board or bureau of the United States or

any corporation in which the United States has a proprietary

interest, unless the context shows that such term was intended to

be used in a more limited sense.” 28 U.S.C. § 451.

In determining whether the federal statute of limitations

applies, the Court analyzes whether OCD is an agent of the federal

government. To do so, the Court relies on United States v. Orleans,

425 U.S. 807 (1976). Orleans held that the Warren-Trumbull Council

for Economic Opportunity and the Westlawn Neighborhood Opportunity

Center, which were federally funded local centers, were not federal

agencies or instrumentalities as to fall within the meaning of the

Federal Torts Claim Act (FTCA). United States v. Orleans, 425 U.S.

807, 819 (1976); see also Rec. Doc. 25 at 21. The Court reasoned

that “[b]illions of dollars of federal money are spent each year

on projects performed by people and institutions with contract

with the Government.” Orleans, 425 U.S. at 815-16. Regulations

aimed at assuring compliance with federal goals do not convert the

acts of local entities into federal governmental acts. Id. The

Court further clarified that in the context of the FTCA, “the

question here is not whether the community action agency receives

federal money and must comply with federal standards and

regulations, but whether its day-to-day operations are supervised

by the Federal Government.” Id. at 815.

Under this standard, plaintiff cannot show that HUD

controlled the day-to-day operations of the Road Home Program.

Whereas HUD performed audits, provided technical assistance, and

ensured that Louisiana’s interpretation of the statutory and

regulatory requirements was consistent with HDCA, HUD did not

participate in the day-to-day governance or implementation of the

program. Rec. Doc. 25 at 9-10. Day-to-day governance, development,

and implementation of the Road Home grant program was performed by

the Louisiana Recovery Authority (LRA), which had its Action Plans

approved by the Governor of Louisiana, and the Louisiana

legislature. Id. at 10, 19-20. The Road Home program’s only

connection to the federal government is that the federal government

provided funds to the State of Louisiana, which, through the OCD,

used those funds for the Road Home Program. Mere funding, as

apparent here, is not enough to establish agency under Orleans.

Plaintiff argues that Orleans is inapplicable because the

driving concern there was “attaching liability to the federal

government for countless torts based on nothing more than the

countless funds” that the federal government provides to local

programs. See Rec. Doc. 31 at 15. Additionally, plaintiff claims

Orleans was decided according to principles of vicarious liability

and the Court should instead rely on Dixson v. United States, 465

U.S. 482 (1984), in determining the appropriate statute of

limitations. See id. These arguments, however, are unavailing.

Generally, Dixson applies in criminal matters. The question

presented in Dixson was “whether local authorities administering

HDCA [Housing and Community Development Act of 1974] grants should

be considered public officials under the federal bribery statute.”

Dixson, 465 U.S. at 500. Dixson is concerned with holding criminals

accountable for violating the federal bribery statute, and is cited

almost exclusively in criminal cases. See, e.g., United States v.

Wilson, 408 F. App'x 798, 805-06 (5th Cir. 2010); United States v.

Naccarato, 921 F.2d 282, 1990 WL 212674, at *2 (9th Cir. 1990);

but see Rowan Ct. Subdivision 2013 Ltd. P'ship v. La. Hous. Corp.,

No. CV 15-870-JWD-RLB, 2017 WL 4018859, at *8 (M.D. La. Sept. 12,

2017), aff'd sub nom., 749 F. App'x 234 (5th Cir. 2018) (applying

Dixson in a civil matter). On the other hand, Orleans is concerned

with extending liability to the federal government and its agents

in civil matters. Rec. Doc. 25 at 15. Moreover, plaintiff’s

argument that Orleans is only applicable to the FTCA is unfounded.

Adams v. State Farm Fire & Cas. Co., No. CIV. A. 96-1571, 1996 WL

592734, at *2 (E.D. La. Oct. 10, 1996) (applying the Orleans test

for federal agency to a claim under the Equal Access to Justice

Act); White v. N. La. Legal Assistance Corp., 468 F. Supp. 1347,

1351 (W.D. La. 1979) (applying Orleans for a claim under the Legal

Services Act).

Orleans is therefore the appropriate standard here, and

because day-to-day governance, development, and implementation of

the Road Home grant program was performed by LRA not the federal

government, the Court must apply a state prescription. Id. at 10.

The question remains as to which state prescription or

peremptive period applies. The applicable state prescription

period is ten-years under Article 3499. “An action on a contract

is governed by the prescriptive period of 10 years for personal

actions.” First La. Bank v. Morris & Dickson, Co., 45,668 (La.

App. 2 Cir. 11/3/10); 55 So. 3d 815, 825 (citing La. Civ. Code

art. 3499). “A personal action is one brought to enforce an

obligation against the obligor, personally and independently of

the property which he may own, claim, or possess.” La. Code Civ.

Proc. art. 422. Article 3499 states, “Unless otherwise provided by

legislation, a personal action is subject to a liberative

prescription of ten years.” La. Civ. Code art. 3499.

But Article 3499 will only apply if another more-specific

article does not govern. See, e.g., Merchants Nat. Bank & Tr. Co.

of Indianapolis v. Smith, Hinchman & Grylls Assocs., Inc., 876

F.2d 1202, 1206 (5th Cir. 1989) (refusing to apply Article 3499

when the more specific Article 3492 governed the particular

action). Here, the grant agreement was a contract between a state

citizen, and the State of Louisiana, Division of Administration,

OCD through the Road Home Program. Rec. Doc. 25-2 at 48-52. Thus,

defendants’ action against plaintiff was a personal action, and

according to Article 3499, it is only barred after ten years.

Defendants, consequently, have a right to seek recovery for

plaintiff’s alleged debt.

Plaintiff claims that two other prescriptive periods apply

here, but neither are appropriate. Article 1564 which governs

prescription of donations inter vivos states that “[a]n action to

dissolve a donation for failure to fulfill the conditions or

perform the charges imposed on the donee prescribes in five years,

commencing the day the donee fails to perform the charges or

fulfill his obligation or ceases to do so.” La. Civ. Code art.

1564 (emphasis added). However, “a donation inter vivos by manual

gift requires the simultaneous occurrence of the donor’s intent to

give and the actual possession by delivery.” See Montet v. Lyles,

93-CA-1724 (La. App. 1 Cir. 6/24/94); 638 So. 2d 727, 730. “The

donee bears the burden of proving donative intent and such proof

must be strong and convincing.” Id. Determining donative intent is

a question of fact. Id.

Here, there is no donative intent. The only indication of

donative intent that plaintiff argues is that the word “grant”

implies the Road Home Program elevation grant was a donation. Rec.

Doc. 31 at 20. Black’s Law Dictionary defines a “grant” as “[a]n

agreement that creates a right of any description other than the

one held by the grantor.” Grant, Black’s Law Dictionary (8th ed.

2004). Under this definition alone, plaintiff cannot show donative

intent.

More importantly the Louisiana Constitution article VII,

§ 14(A) offers that, “[e]xcept as otherwise provided by this

constitution, the funds, credit, property, or things of value of

the state or of any political subdivision shall not be loaned,

pledged, or donated to or for any person, association, or

corporation, public or private.” La. Const. art. VII, § 14(A). As

the funds of the state cannot be donated, plaintiff’s Road Home

grant is not a donation under Article 1564. Section 14(B)(1) of

the Louisiana Constitution does allow “the use of public funds for

programs of social welfare for the aid and support of the needy;”

however, it is unlikely that the elevation or compensation grant

falls under this exception. See La. Const. art. VII, § 14(B)(1);

see, e.g., La. Att’y Gen. Op. No. 12-0114 (Sept. 14, 2012) (using

public funds to clear a body of water behind private homes in a

neighborhood would be a violation of this Section); La. Att’y Gen.

Op. No. 13-0065 (Aug. 13, 2013) (“Public funds cannot be used to

make repairs to bridges located on private property unless the

Parish determines that the benefit of doing so would accrue to the

Parish and not the private landowner.”). Plaintiff does not satisfy

the “strong and convincing” burden of proof. See Montet, 638 So.

2d at 730.

Plaintiff’s suggestion that Louisiana Revised Statute

§ 9:2772 applies must also be rejected. Section 9:2772 “imposes a

five-year peremptive period for breach of construction contracts.”

Rec. Doc. 31 at 21; see La. Rev. Stat. § 9:2772. The statute

provides for a five-year peremptive period for actions “arising

out of an engagement of planning, construction, design, or building

immovable or movable property . . . .” La. Rev. Stat. § 9:2772(A).

To determine whether there even is a contract to build as to

fall within Section 9:2772 the court has developed the following

test:

First, in a contract to build, the “purchaser” has some

control over the specifications of the object. Second,

the negotiations in a contract to build take place before

the object is constructed. Lastly, and most importantly,

a building contract contemplates not only that the

builder will furnish the materials, but that he will

also furnish his skill and labor in order to build the

desired object.

Alonzo v. Chifici, 526 So. 2d 237, 241 (La. Ct. App. 5 Cir. 1988)

(quoting Acadiana Health Club, Inc. v. Hebert, 469 So. 2d 1186,

1189 (La. Ct App. 3 Cir. 1985) (first citing Duhon v. Three Friends

Homebuilders Corp., 396 So.2d 559 (La. Ct. App. 3 Cir. 1981); then

citing Airco Refrigeration Serv., Inc. v. Fink, 134 So.2d 880

(1961))), writ denied, 527 So. 2d 307 (La. 1988).4

Regarding the first element, OCD is not a “purchaser” within

the meaning of the statute. The only evidence suggesting OCD is a

purchaser is that “On July 23, 2008, Mr. Napoleon executed an

agreement with the OCD to elevate his home.” Rec. Doc. 31 at 22.

4 There are other tests available, such as the “value test” which “determines

whether the labor expended in constructing the item, or the materials

incorporated therein, constitute the ‘principal value of the contract.’” Alonzo,

526 So. 2d at 241 (citing Price v. Huey Childs Builder, Inc., 426 So. 2d 398

(La. Ct. App. 2 Cir. 1983), writ denied, 433 So. 2d 164 (La.)). However, both

plaintiff and defendants cite to the test as outlined in Acadiana Health Club

and stated above. Rec. Doc. 31 at 22; Rec. Doc. 37 at 7.

Turning again to Black’s Law Dictionary, a purchaser is “[s]omeone

who obtains property for money or other valuable consideration; a

buyer.” Purchaser, Black’s Law Dictionary (11th ed. 2019). This

definition, along with the statute’s ordinary meaning, weighs

against finding OCD to be a “purchaser.” Even so, OCD must also

have exercised “some control over the specifications of the

object.” See Alonzo, 526 So. 2d at 241 (citations omitted). OCD

did not exercise this control, as the only requirement was that

the work conform to the applicable minimal building codes as

published by FEMA. Rec. Doc. 31 at 22; Rec. Doc. 37 at 7. Therefore,

the first element is not satisfied.

Second, the Court requires that the negotiations of the

contract take place before the object is built. See Alonzo, 526

So. 2d at 241. Whereas no actual negotiations transpired, the

agreement was executed before the construction was to occur, and

as construction never occurred, the contract necessarily was

executed prior to elevation. Therefore, the second element is

satisfied. Rec. Doc. 31 at 22; Rec. Doc. 37 at 7.

Finally, the last requirement is that “a building contract

contemplates not only that the builder will furnish the materials,

but that he will also furnish the skill and labor in order to build

the desired object.” See Alonzo, 526 So. 2d at 241. This contract

did not contemplate that Napoleon would perform the elevation or

preparatory work himself or that Napoleon would furnish the skills

or labor to elevate his home. The funds were an incentive to

elevate the home, not compensation for skills, labor, and

materials. Rec. Doc. 37 at 8. Therefore, the third element is not

satisfied.5 Because the elements of a construction contract cannot

be satisfied, the five-year peremptive period for breach of

construction contracts under Section 9:2772 cannot apply.6

As the ten-year prescriptive period applies in this case,

defendants were not time-barred from collecting from plaintiff,

and therefore, plaintiff’s second claim must be dismissed. Rec.

Doc. 19 at 13-15.

E. Whereas the Debt Was Not Time-Barred, Plaintiff States a

Claim Upon Which Relief Can Be Granted

Upon applying Article 3499, defendants were not time-barred

from attempting to collect money owed by Napoleon; however, in

construing the facts in the light most favorable to the plaintiff,

the Court finds plaintiff has stated a claim, albeit minimally,

upon which relief can be granted. Taking the facts pleaded by

plaintiff as true, it is plausible that plaintiff did not owe the

money for which the defendants attempted to collect. As stated,

5 Because Napoleon cannot show there was a construction contract, there is no

need to address defendants’ other argument of subsection F, which carves out an

exception from the five year peremptive period for the owner of the property,

when the action is brought against the owner of the property as the owner. See

Donald G. Lambert Contractor v. Par. of Jefferson, 97-140 (La. Ct. App.

9/17/97); 700 So. 2d 894, cert. denied, 97-2557 (La. 1997); 706 So. 2d 459.

6 As plaintiff does not satisfy these elements, the Court also declines to

address additional arguments regarding Section 9:2772’s applicability, such as

that there was no construction defect and that the very nature of the statutory

language demonstrates its inapplicability.

plausibility does not require probability, and plaintiff has

stated a claim under Rule 12(b)(6).

According to the record, Napoleon received $48,496.70 for the

original compensation grant, but Napoleon returned the check to

the title company. Id. at 7. Then Napoleon received $30,000 for

the elevation grant from the Road Home Program, but he used the

funds to make repairs and renovations to his home. Id. at 5, 8.

Napoleon provided all original receipts and proof of repair to the

State in 2011 to show compliance with the agreement. Id. at 8.

Then on July 26, 2013, HUD approved Action Plan Amendment No. 60

which allowed the elevation grant to be reclassified as a

compensation grant where the original compensation grant was

insufficient to make the necessary home repairs and the Road Home

applicants had not yet met the compliance terms associated with

their agreement. Rec. Doc. 31-12 at 2. In 2015, the OCD sent

Napoleon a letter notifying him that the elevation funds could be

kept if he used the funds to finish repairs on his home. Rec. Doc.

31 at 9. Napoleon did not keep any of the original receipts and

defendants could find no evidence of their submission. Id. at 8;

Rec. Doc. 31-13 at 2. Plaintiff did submit additional photographs

to show that Napoleon shored their house, but defendants could not

observe an increase in elevation. Rec. Doc. 31-13 at 1. Plaintiff

was allocated $48,496.70 for compensation, and only used $30,000,

even though he spent a total of $68,000 to make substantial repairs

to the home. Rec. Doc. 31 at 24.

While it is not settled whether plaintiff did owe the funds

he received under the elevation grant, based on the above facts,

it is arguably plausible that the funds could have been

reclassified as proper under the compensation grant. Therefore, at

this stage, plaintiff’s claim survives summary dismissal for now.

New Orleans, Louisiana this 30th day of November, 2021

___________________________________

SENIOR UNITED STATES DISTRICT JUDGE