216 So. 3d 346
La. Ct. App.2017Background
- Justiss contracted with MidStates to drill a 15,000-foot well; Justiss bought 12,500 feet of 7⅞" intermediate casing from Oil Country, manufactured by North American Interpipe (NAI). The pipe was represented as API 5CT (certified) with a 12,600 psi burst rating.
- Testing and later on-site sampling revealed a high defect rate in the batch (about 14% defective joints); the installed casing leaked and could not hold required pressures during drilling, forcing Justiss to cease operations for safety reasons.
- Jury found the pipe defective and defendants liable in redhibition but also returned a confusing verdict finding the defect did not proximately cause damages and allocating 90% fault to Justiss; trial judge found the special verdict contradictory and granted JNOV for Justiss.
- Trial court awarded rescission-type redhibition relief: return of purchase price, repair costs, consequential damages (lost profits equal to contract price), interest, costs, expert fees, and attorney fees; then reduced consequential damages by 90% per the jury allocation.
- On appeal the court (majority) affirmed JNOV, held comparative-fault article (La. Civ. Code art. 2323) does not apply to redhibition (contract) claims, reversed any apportionment against Justiss, corrected a double-recovery error (deducted purchase price from consequential damages), and awarded appellate attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of comparative-fault (La. Civ. Code art. 2323) to redhibition | Art. 2323 is inapplicable; redhibition is contract law so damages should not be reduced by comparative fault | Art. 2323 applies and the jury’s apportionment (90% to Justiss) should reduce damages | Art. 2323 applies to torts only; comparative fault not available in redhibition; reversal of any fault allocation against Justiss |
| Sufficiency of causation finding (jury’s finding that defect did not proximately cause damages) | Defect caused failure to complete well and consequential losses; defendants failed to prove an intervening cause | Jury found defect did not cause damages; defendants argue Justiss’ conduct or a formation "dry hole" caused the loss | Trial court did not err granting JNOV: record supports that the defective pipe, not a proved intervening cause, prevented completion; jury verdict on causation was internally inconsistent and reversed |
| Mitigation and recovery of repair costs and consequential damages (lost profits) | Justiss reasonably attempted costly mitigation for ~5 weeks; such expenditures are recoverable and lost profits flow from redhibition | Justiss should have stopped sooner or used different procedures; damages should be reduced for plaintiff’s contributory negligence | Reasonable mitigation efforts were recoverable; repair costs awarded in full; consequential damages (lost profits) recoverable in full absent proof of intervening cause; no reduction for plaintiff’s conduct |
| Measure of recovery and double recovery error | Trial court’s total award overstated because it included purchase price twice (direct return and within consequential damages) | — | Court amended judgment to deduct purchase price from consequential damages and awarded appellate attorney fees; otherwise affirmed JNOV and awards |
Key Cases Cited
- Young v. Ford Motor Co., 595 So.2d 1123 (La. 1992) (explaining redhibition’s purpose to restore status quo and buyer remedies)
- Rey v. Cuccia, 298 So.2d 840 (La. 1974) (manufacturer solidarily liable and buyer’s remedies against manufacturer for redhibitory defects)
- Media Prod. Consultants, Inc. v. Mercedes-Benz of N. Am., 262 So.2d 377 (La. 1972) (permitting buyer’s recovery directly from manufacturer despite lack of privity)
- Unverzagt v. Young Builders, 215 So.2d 823 (La. 1968) (mitigation doctrine; injured party need not incur unreasonable or extraordinary efforts)
- Chevron USA, Inc. v. Aker Mar., Inc., 604 F.3d 888 (5th Cir. 2010) (manufacturer conclusively presumed to know of defects; manufacturer liable for buyer’s attorney fees in redhibition)