The opinion
STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
13-1302
JENNIFER DIANE NUNEZ
VERSUS
PINNACLE HOMES, L.L.C. AND
SUA INSURANCE COMPANY
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APPEAL FROM THE
THIRTY-EIGHTH JUDICIAL DISTRICT COURT
PARISH OF CAMERON, NO. 10-18501
HONORABLE PENELOPE RICHARD, JUDGE
************
J. DAVID PAINTER
JUDGE
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Court composed of John D. Saunders, Marc T. Amy, and J. David Painter, Judges.
Amy, J., concurs in part, dissents in part, and assigns reasons.
AFFIRMED.
John C. Anderson
P. O. Box 82982
Baton Rouge, LA 70884
COUNSEL FOR DEFENDANTS-APPELLANTS:
Pinnacle Homes, L.L.C. and Allen Lenard
J. Bryan Jones, III
P. O. Box 4540
Lake Charles, LA 70606
COUNSEL FOR PLAINTIFF-APPELLEE:
Jennifer Diane Nunez
PAINTER, Judge.
Defendants, Pinnacle Homes, L.L.C. (Pinnacle) and Allen Lenard, appeal the
judgment of the trial court finding that Pinnacle Homes and Lenard, personally,
violated the New Home Warranty Act by failing to construct a house for Plaintiff,
Jennifer Diane Nunez, that met state, parish, and FEMA elevation requirements
and awarding damages in the amount of $210,600.00. Finding no error in the trial
court’s judgment, we affirm.
FACTS
In written reasons for judgment, the trial court correctly outlined the
underlying facts of the case as follows:
On January 8, 2008, JENNIFER DIANE NUNEZ and
PINNACLE HOMES, LLC entered into a Cost Plus Contract - Fixed
Fee contract for the construction of a new home located on 111
Boudreaux Lane, in the Grand Lake area, in Cameron Parish,
Louisiana. The fixed fee of the contract was $33,748.00, and the pre-
construction estimate of the construction costs was $277,772.00. (See
Plaintiff s Exhibit No. 4).
Pertinent provisions of the construction contract are located in
Section 4.2 and Section 4.4. Section 4.2 of the contract, provides that
“[a]ll work shall be completed in a workman like manner, and shall
comply with all applicable national, state and local building codes and
laws.” Section 4.4 provides that “[c]ontractor shall obtain all permits
necessary for the work to be completed.’“
....
Accu-Line Surveying, Inc.[] prepared an updated elevation
certificate on or about September 18, 2007, which is dated March 12,
2006, which indicated that the Base Flood Elevation was 9.0 feet and
Advisory Base Flood Elevation was 10.0 feet for the Nunez home.
(See Plaintiff’s Exhibit. No. 1). The elevation certificate also included
the lowest adjacent grade at 4.61 feet and the highest adjacent grade at
5.48 feet.
According to the testimony of Ernestine Horn, Cameron Parish
Administrator, the base flood elevation is required by FEMA and the
advisory base flood elevation is required by the parish. After
Hurricane Rita, the State of Louisiana mandated all coastal parishes,
including Cameron Parish, to add one (1) foot to all of the elevations
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contained in the flood elevation maps. (See Trial Transcript of
8/1/2012, p. 56).
The permit issued by the Cameron Parish Police Jury for the
construction of plaintiff’s home[] required that the base flood
elevation be 10 feet for the plaintiff’s home. (See Plaintiff’s Exhibit
No. 6).
The post-construction elevation certificate prepared by Accu-
Line Surveying, Inc.[] indicates that the elevation of plaintiiff’s home
is 8.66 feet. It also indicates that the lowest elevation of machinery or
equipment servicing the building is 8.10 feet. (See Plaintiff’s Exhibit
No. 2).
....
The plaintiff’s home is below the required base flood elevation
of 9 feet as required by FEMA and below the advisory base flood
elevation of 10 feet as required by the permit issued by the Cameron
parish Police Jury
Nunez filed this suit for breach of warranties and contract naming Pinnacle
and SUA Insurance Co. (SUA) as defendants. She amended the petition to include
Lenard, the owner of Pinnacle, and American Safety Casualty Insurance Co.
(ASCI) as defendants. Nunez voluntarily dismissed the claims against SUA. The
claims against ASCI were dismissed pursuant to motion for summary judgment.
The trial court denied Lenard’s Exception of No Cause of Action and
Pinnacle’s motion for an order staying the proceedings and ordering arbitration.
The matter was tried, and the trial court rendered judgment in favor of Plaintiff and
awarded damages. Pinnacle and Lenard appeal.
DISCUSSION
On appeal, Defendants dispute the trial court’s finding that Plaintiff suffered
damages because of the incorrect elevation of her house and that Lenard was
personally liable for the failure to correctly elevate the house.
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Standard of Review
The trial court found that:
[T]he applicable law in this case is contained in the New Home
Warranty Act. LSA-R.S. 9:3141-3150 et seq. Also applicable to the
facts of this case is LSA-R.S.12:1320(D).
The defendant, PINNACLE HOME[S], LLC, violated the New
Home Warranty Act by not complying with the elevation standards
imposed by FEMA, the State of Louisiana, and the Parish of
Cameron.
This finding is not controverted on appeal.
The trial court’s factual findings in cases involving the NHWA
are subject to manifest error review. Hutcherson v. Harvey Smith
Const, Inc., 08-1046, p. 3 (La.App. 1 Cir. 2/13/09), 7 So.3d 775, 778.
An appellate court cannot set aside the trial court’s factual findings
unless it determines there is no reasonable factual basis for the
findings and the findings are clearly wrong. Stobart v. State through
Dept. of Transp. and Dev[.], 617 So.2d 880, 882 (La.1993). Thus, if
the findings are reasonable in light of the record reviewed in its
entirety, this court may not reverse even though convinced that had it
been sitting as the trier of fact, it would have weighed the evidence
differently. Rosell v. ESCO, 549 So.2d 840, 844 (La.1989). With
regard to questions of law, the appellate review is simply a review of
whether the trial court was legally correct or legally incorrect. On
legal issues, the appellate court gives no special weight to the findings
of the trial court, but exercises its constitutional duty to review
questions of law and render judgment on the record. Pierce v. State,
Office of Legislative Auditor, 2007-0230, p. 7 (La.App. 1 Cir. 2/8/08),
984 So.2d 61, 67, writ denied, 2008-0542 (La.4/25/08), 978 So.2d
369.
Jenkins Bldg. Supply, Inc. v. Thigpen, 09-903, pp. 3-4 (La.App. 1 Cir. 12/23/09),
34 So.3d 867, 869.
Defendants raise questions about whether Plaintiff proved damages due to
the violation of the act and whether they proved personal liability on the part of
Lenard. These are questions of fact. Therefore, we will review this matter under a
manifest error standard.
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Damages
We first consider Defendants’ assertion that Plaintiff failed to prove
damages to a reasonable certainty. The trial court, in its written reasons, found as
follows with regard to damages:
The plaintiff provided two estimates of her damages. The first
estimate was the cost to elevate plaintiff’s slab home to proper
elevation. The total cost of the elevation was $201,600. (See
Plaintiff’s Exhibit No. 3). Defendant argues that this amount is
substantial given the total price of plaintiff’s home.
The second estimate of damages was the increased cost of flood
insurance premiums over the life of plaintiff’s mortgage both through
the National Flood Insurance Program and through a private insurance
policy. (See Plaintiff’s Exhibit No. 8 and 9). From the court’s
calculations, the increased insurance premiums could result in
damages of as little as $21,750 (NFIP) or as high as $142,440,
(private policy) over a 30 year period. Thereafter, if Mrs. Nunez
wanted to purchase flood insurance for her home, she would not be
compensated. Mrs. Horn explained that plaintiff may face other
damages if her home is not at proper elevation. She could be sued by
the parish and be subject to a fine of up to $500, court costs, and
possible jail time, under the parish ordinance. If found guilty under
the ordinance, Mrs. Nunez’s property would be designated a section
1316 property with FEMA and therefore would be ineligible to
purchase flood insurance through the National Flood Insurance
Program. Further, that designation would remain with the property
and would be applicable to future owners of the property. Plaintiff
would be required to disclose that designation to potential buyers of
her home. Further, given that the property is below the base flood
elevation required by FEMA, it is likely that the property may not be
adequately protected from future flood events. All of these damages
are too speculative to calculate and almost impossible for the plaintiff
to prove with any legal certainty.
The court finds that the elevation of plaintiff’s home is the only
way to adequately compensate plaintiff for the damages she suffered
in this case. Damages are hereby awarded in the amount of $201,600,
the cost to elevate plaintiff’s home to the proper elevation, plus legal
interest from the date of judicial demand.
Defendants assert that the trial court found that any calculation of damages
was too speculative to prove with legal certainty. However, a reading of the
reasons does not support this conclusion. Rather the trial court found that damages
other than the cost to elevate the house to the correct level were too speculative to
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prove with certainty. Therefore, she awarded the amount needed to elevate the
home to the correct level. The record supports the conclusion that the house was
not built at the elevation required by the State, the Parish, and FEMA. This fact is
undisputed. Further, trial testimony supports the conclusion that the amount
required to elevate the house to the correct level was $201.600.00. Defendants did
not dispute the fact that this amount would be required to elevate the house. The
New Home Warranty Act allows for an award of the amount required to repair a
defect as an appropriate award of damages. See La.R.S. 9:3149. Accordingly, we
find no manifest error or abuse of discretion in the trial court’s conclusion that this
is the amount required to repair the house or in its award of damages in this
amount.
Personal Liability of Lenard
In the remaining assignments of error, Defendants argue that the trial court
erred in finding Lenard personally liable for the defect in Plaintiff’s house.
The trial court gave the following reasons for its determination of personal
liability:
The defendant, ALLEN LENARD, committed professional
negligence by not properly calculating and/or supervising the amount
of dirt that would be required to bring the property to proper
grade/elevation, and by failing to have an elevation shot performed
after the dirt work was completed and prior to beginning construction
on plaintiff’s home. Although Mr. Lenard initially testified in his
deposition and on the first day of trial that he consulted with Keith
Daigle on the calculation of the amount of dirt, he later contradicted
his testimony at the second day of trial and testified that he left that up
to the dirt contractor. Mr. Lenard also testified on February 21, 2013,
that it was usually the dirt contractor that would be responsible for
obtaining another elevation shot after the dirt work was completed.
His testimony was contradicted by his deposition testimony wherein
he testified that his company had the equipment to perform the
elevation shot, and that Cletis or Keith Daigle would have been the
one to do it. Obviously, it was not done by Keith Daigle the dirt
contractor, nor Cletis, an employee of PINNACLE HOME, LLC. He
later testified during the defense’s case that it would have been
Martine Nocilla, with his company, that would have been responsible
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for shooting the elevation, because Cletis was not working with him at
the time of Mrs: Nunez’s foundation work. Nevertheless, ultimately,
as the licensed contractor on the job, it was Mr. Lenard’s
responsibility to ensure that both of these things were done and done
correctly. Therefore, the court finds that the defendant, ALLEN
LENARD, is liable to plaintiff personally pursuant to LSA R.S.
12:1320(D). See Regions Bank v. Ark-La-Tex Water Gardens, L.L.C.,
997 So.2d 734, (La. App. 2 Cir. 11/5/08), writ denied, 5 So.3d 119
(La. 3/13/2009).
The court further cited La.R.S. 12:1320(D), which provides that:
A. The liability of members, managers, employees, or agents, as
such, of a limited liability company organized and existing under this
Chapter shall at all times be determined solely and exclusively by the
provisions of this Chapter.
B. Except as otherwise specifically set forth in this Chapter, no
member, manager, employee, or agent of a limited liability company
is liable in such capacity for a debt, obligation, or liability of the
limited liability company.
C. A member, manager, employee, or agent of a limited liability
company is not a proper party to a proceeding by or against a limited
liability company, except when the object is to enforce such a person's
rights against or liability to the limited liability company.
D. Nothing in this Chapter shall be construed as being in
derogation of any rights which any person may by law have against a
member, manager, employee, or agent of a limited liability company
because of any fraud practiced upon him, because of any breach of
professional duty or other negligent or wrongful act by such person, or
in derogation of any right which the limited liability company may
have against any such person because of any fraud practiced upon it
by him.
Defendant asserts that the finding of personal liability was incorrectly
founded on the fact that Lenard holds a contractor’s license rather than on any
affirmative action or failure to act by Lenard. The trial court, however, found
personal involvement and inaction by Lenard which it found constituted a “breach
of professional duty or other negligent or wrongful act.” Id. This factual finding is
based on Lenard’s own testimony, and we will not overturn it absent manifest
error. Finding none, we find no error in the trial court’s conclusion that Plaintiff
carried her burden of proof in this regard.
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CONCLUSION
Having found no error in the judgment of the trial court, we affirm. Costs of
this appeal are assessed to Defendants-Appellants, Pinnacle Homes, L.L.C. and
Allen Lenard.
AFFIRMED.
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NUMBER 13-1302
COURT OF APPEAL, THIRD CIRCUIT
STATE OF LOUISIANA
JENNIFER DIANE NUNEZ
VERSUS
PINNACLE HOMES, LLC, ET AL.
AMY, J., concurring in part and dissenting in part.
I join in the majority opinion with regard to the imposition of damages
against the defendant limited liability company.
However, I respectfully dissent from the remainder of the majority opinion
since I conclude that the trial court erred in finding Mr. Lenard personally liable.
In reasons for ruling, the trial court found Mr. Lenard “professionally negligent”
and imposed personal liability, concluding that it was Mr. Lenard‟s responsibility
to ensure the quality of the elevation and foundation work. In my opinion, the
record does not support a determination that personal liability was appropriate
pursuant to La.R.S. 12:1320(D).
Louisiana Revised Statutes 12:1320(B) broadly provides that:
Except as otherwise specifically set forth in this Chapter, no member,
manager, employee, or agent of a limited liability company is liable in
such capacity for a debt, obligation, or liability of the limited liability
company.
Louisiana Revised Statutes 12:1320(D) thereafter sets forth exceptions to that
general pronouncement, providing for an LLC member/manager‟s liability upon
“any breach of professional duty or other negligent or wrongful act by such
person[.]” (Emphasis added.)
Under the facts of this case, I do not see that Mr. Lenard, who testified that
he is a licensed contractor, may be considered a “professional” within the context
of the statute. Rather, I view the breach of professional duty exception as one that
must arise within the context of those professions whose members owe separate,
non-contractual duties to their clients. Otherwise, it seems to me that any
member/manager/employee of an LLC working within that LLC‟s business could
be held personally liable upon a finding that he or she was “professionally
negligent” as was determined in this case. It is my view that such a broad reaching
application would circumvent, and render meaningless, the limitation of liability
otherwise provided by La.R.S. 12:1320(B).
Recently, in Ogea v. Merritt, 13-1085 (La. 12/10/13), _ So.3d _, _, the
supreme court specifically refrained from reaching the question of whether a
general contracting license “elevates an individual to the status of a „professional‟
as contemplated by the legislature[.]” It noted, however, that at the time the LLC
statutes were enacted, the term “professional” had a defined meaning within the
body of business law and that statutory provisions existed for the creation of a
variety of professional corporations. Id. Those professional corporations are
designated within Revised Statutes Title 12 and include professional corporate
entities for law, medical, dental, accounting, chiropractic, nursing, architecture,
optometry, psychology, veterinary medicine, occupational therapy, and social
work. Contracting is not included among those professional corporations listed in
Title 12. Additionally, and again within the context of the limited liability law, the
supreme court observed that the definition of “business” makes a distinction
between a “trade” and a “profession.” Id. at _. See also La.R.S. 12:1301(A)(2).
See also La.R.S. 37:2150 (which references the “contracting vocation”)(emphasis
added). Given the lack of indicia that contractors owe separate, non-contractual
duties to their clients as members of traditionally accepted professions may, I do
not find that the plaintiff has demonstrated that the “breach of professional duty”
exception applies to Mr. Lenard in his personal capacity.
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Alternatively, La.R.S. 12:1320(D) provides for a cause of action against an
LLC member for “other negligent or wrongful act by such person[.]” In analyzing
this exception, the supreme court identified four factors to be considered in
balancing the limitation of liability provided by the statute while also affording the
terms “negligent” and “wrongful” acts their commonly understood meaning:
1) whether a member‟s conduct could be fairly characterized as a
traditionally recognized tort;
2) whether a member‟s conduct could be fairly characterized as a
crime, for which a natural person, not a juridical person, could be held
culpable;
3) whether the conduct at issue was required by, or was in furtherance
of, a contract between the claimant and the LLC; and
4) whether the conduct at issue was done outside the member‟s
capacity as a member.
Ogea, _ So.3d at _. It is the last two factors that I find determinative of this case.
Certainly, in my opinion, the complained-of conduct here (the supervision of
his own employees or of subcontractors in the elevation aspect of the construction)
was required by or in furtherance of the contract between the plaintiff and the LLC.
On this point, the supreme court remarked that, since an LLC is a juridical person,
“it follows that if the reason a member is engaged in the conduct at issue is to
satisfy a contractual obligation of the LLC, then the member should be more likely
to qualify for the protections of the general rule of limited liability[.]” Ogea at _.
In this case, the contract at issue was, in fact, entered into between the plaintiff and
the LLC. Further, it is clear from the testimony that the elevation/foundation work
was tasked to that company. Thus, in my opinion, Mr. Lenard‟s role in the
supervision of his own employees and/or subcontractors in that aspect of the home
construction was in furtherance of that contract.
As for the final element of whether Mr. Lenard‟s conduct arose inside or
outside of the LLC, it seems to me that, while perhaps ultimately negligent, that
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conduct was again within the context of the LLC‟s business. There is no indication
that Mr. Lenard was acting in his own personal capacity. Although the plaintiff
testified that the signature on the underlying contract was that of Mr. Lenard, the
contract lists the parties as the plaintiff and the contracting company. It did not list
Mr. Lenard personally as the contractor.
Notably, the trial court rendered judgment in this case prior to the supreme
court‟s release of Ogea. However, the reasons for ruling in this case essentially
reveal a finding of poor workmanship for which Mr. Lenard, as contractor, was
responsible. Yet, Ogea, _ So.3d at _, explains that “a showing of poor
workmanship arising out of a contract entered into by the LLC, in and of itself,
does not establish a „negligent or wrongful act‟ under La.R.S. 12:1320(D). To
hold that poor workmanship alone sufficed to establish personal liability would
allow the exception in La.R.S. 12:1320(D) to negate the general rule of limited
liability in La.R.S. 12:1320(B).”
Thus, finding neither of the exceptions of La.R.S. 12:1320(D) applicable, I
would reverse the trial court‟s imposition of personal liability. I would affirm the
remaining aspects of the case.
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