CLARK, Justice.
The issue presented in these consolidated matters arises from the sale of land to the plaintiff, who later discovered that the land was allegedly contaminated with radioactive material. The plaintiff filed suit against the former landowners and the oil and trucking companies allegedly responsible for the contamination. In the district court, exceptions of no right of action raised by the oil and trucking companies were granted. The court of appeal initially affirmed this decision, but reversed on rehearing.
We granted writs to determine whether a subsequent purchaser of property has the right to sue a third party for non-apparent property damages inflicted before the sale in the absence of the assignment of or subrogation to that right. After review, we find the fundamental principles of Louisiana property law compel the conclusion that such a right of action is not permitted under the law. Instead, the subsequent purchaser has the right to seek rescission of the sale, reduction of the purchase price, or other legal remedies. For the following reasons, we hold the appellate court on rehearing erred by reversing the district court's granting of the peremptory exceptions of no right of action on behalf of the oil and trucking companies. Accordingly, we reverse the court of appeal's decision on rehearing and reinstate the ruling of the district court.
This matter is before the court on an exception of no right of action. Although
On July 15, 2008, Eagle Pipe and Supply, Inc. ("Eagle Pipe" or plaintiff) filed a petition for damages in the Civil District Court for the Parish of Orleans, alleging causes of action for breach of contract, negligence, strict liability, redhibition, fraud and conspiracy in connection with property Eagle Pipe acquired two decades earlier.
According to the petition, more than twenty years ago, on April 22, 1988, Eagle Pipe purchased property in Lafayette Parish from the Former Property Owner Defendants.
Eagle Pipe asserted that radioactive scale known by the acronym TENORM was removed from the tubing or pipes
The petition alleged Eagle Pipe has never cleaned pipe on its premises. Therefore, the plaintiff asserted all of the TENORM allegedly present on the property is the result of Union Pipe's activities in cleaning hazardous and radioactive contaminated pipe from the Oil Company Defendants, which was transported to Union Pipe's facilities by the Trucking Company/Transporter Defendants. Eagle Pipe alleged its property has lost all value and is no longer marketable as a result of the long-standing radioactive contamination.
Eagle Pipe alleged a specific cause of action against the Former Property Owner Defendants for redhibition; the other causes of actions are generally asserted against all of the defendants.
The defendants filed declinatory, dilatory and/or peremptory exceptions. All of the defendants filed, or joined in, the peremptory exception of no right of action, arguing Eagle Pipe had no right to assert a claim for damage to the property which occurred before Eagle Pipe was its owner. After a hearing on the exceptions, the trial court ruled, inter alia, that the defendants' exceptions of no right of action be sustained, dismissing Eagle Pipe's claims with prejudice.
Eagle Pipe filed a motion for new trial seeking, in part, to amend its petition. The trial court denied the motion for new trial. Thereafter, the plaintiff filed an appeal with the Fourth Circuit Court of Appeal. On original hearing, a three-judge panel affirmed the trial court's ruling on
All of the Oil Company Defendants participating in the courts below and all but two of the Trucking Company/Transporter Defendants filed writs in this court.
At issue in this matter is the correctness of the trial court's ruling to grant the exceptions of no right of action filed by the Oil Company Defendants and the Trucking Company/Transporter Defendants. We begin our review by acknowledging that an action can be brought only by a person having a real and actual interest which he asserts. La. C.C.P. art. 681. By filing a peremptory exception of no right of action, a defendant challenges whether a plaintiff has such a real and actual interest in the action.
"The function of the exception of no right of action is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit." Hood v. Cotter, 2008-0215, p. 17 (La.12/2/08), 5 So.3d 819,
The determination whether a plaintiff has a right to bring an action raises a question of law. A question of law requires de novo review. Holly & Smith Architects, Inc. v. St. Helena Congregate Facility, Inc., 2006-0582, p. 9 (La.11/29/06), 943 So.2d 1037, 1045. Applying this standard of review to the instant matter, we will examine the law de novo to determine whether a purchaser of property may sue a third person for damage which was not apparent at the time of the sale and which was inflicted on the property before the purchase.
The Louisiana Civil Code provides there are only two sources of law: legislation and custom. La. C.C. art. 1; see Doerr v. Mobil Oil Corp., 2000-0947, p. 13 (La.12/19/00), 774 So.2d 119, 128. However, legislation is the superior source of law in Louisiana; custom may not abrogate legislation. La. C.C. art. 3, Revision Comments-1987, (d). "Judicial decisions, on the other hand, are not intended to be an authoritative source of law in Louisiana.... our civilian tradition does not recognize the doctrine of stare decisis in our state." Doerr, 2000-0947, p. 13, 774 So.2d at 128.
Under our civilian tradition, we recognize instead that "a long line of cases following the same reasoning within this state forms jurisprudence constante." Doerr, 2000-0947, p. 13, 774 So.2d at 128. This concept has been explained, as follows: "[w]hile a single decision is not binding on our courts, when a series of decisions form a `constant stream of uniform and homogenous rulings having the same reasoning,' jurisprudence constante applies and operates with `considerable persuasive authority.'" Doerr, 2000-0947, p. 13-14, 774 So.2d at 128.
With these principles in mind, we will examine the general Louisiana rule that a purchaser of property cannot recover from a third party for property damage inflicted prior to the sale, sometimes referred to as the subsequent purchaser rule. In order to make this examination, we will review the property law precepts that support this rule, and the reasoning and development of the rule over more than a hundred years of jurisprudence.
The subsequent purchaser rule is a jurisprudential rule which holds that an owner of property has no right or actual interest in recovering from a third party for damage which was inflicted on the property before his purchase, in the absence
The Oil Company Defendants and the Trucking Company/Transporter Defendants rely upon this rule as the basis of their peremptory exceptions of no right of action. According to the defendants, any alleged damage to the property at issue occurred well before Eagle Pipe became owner. The defendants further assert Eagle Pipe cannot show it was the recipient of an assignment or a subrogation of any rights the Former Property Owner Defendants may have against them as alleged tortfeasors.
Eagle Pipe contends the subsequent purchaser rule does not apply here. According to the plaintiff, the rule applies only where the prior damage to property was overt or apparent at the time of the sale. Here, the plaintiff argues the radioactive contamination of the property at issue was not apparent at the time of its purchase. Moreover, Eagle Pipe has asserted its entitlement to damages as the owner of property which is currently being damaged. Finally, the plaintiff asserts that it was subrogated to all of the property rights of the Former Property Owner Defendants through the sale. Alternatively, Eagle Pipe argues that it is a third party beneficiary to contracts entered into between Union Pipe and the Oil Company Defendants.
In order to resolve this matter, it is necessary to examine some fundamental principles of Louisiana property law and how those principles differ from the law of obligations.
Property law in Louisiana is a distinct branch of the civil law,
The Louisiana Civil Code classifies "things" into different categories to which different rules may apply.
The Civil Code provides that a person may have various rights in things. La. C.C. art. 476 describes the various rights in things as: (1) ownership; (2) personal and predial servitudes; and (3) such other real rights as the law allows. Real rights are not defined by the Civil Code, but ownership is. Ownership is defined as "the right that confers on a person direct, immediate, and exclusive authority over a thing." La. C.C. art. 477(A); see also La. C.C. art. 476, Revision Comments—1978, (b).
The owner of a thing may perform a certain number of juridical acts relating to the thing, all consisting of the transfer
Furthermore, "[t]he idea must be thoroughly understood that these various juridical acts are carried out, not upon the thing but upon the owner's right." Id. Thus, a real right can be understood as ownership and its dismemberments.
The various dismemberments of ownership also confer real rights on the owner or holder of that right. For example, servitudes are of two types—personal and predial—and they each confer a real right on the holder of the servitude. See La. C.C. arts. 476, 533. A personal servitude is a charge on a thing for the benefit of a person, and is divided in the Civil
This Court has defined a real right as "synonymous with proprietary interest, both of which refer to a species of ownership. Ownership defines the relation of man to things and may, therefore, be declared against the world." Harwood Oil & Mining Co., 240 La. at 652, 124 So.2d at 767, citing Reagan v. Murphy, 235 La. 529, 541, 105 So.2d 210, 214 (1958), superceded by statute on other grounds, recognized in Salvex, Inc. v. Lewis, 546 So.2d 1309 (La.App. 3 Cir. 1989). Commentators have discussed the essential quality of ownership, that which distinguishes ownership from other real rights, as "the power of disposing of the thing, by consuming it, by physically destroying it and by transforming its substance."
The law of obligations is found in Book III of the Louisiana Civil Code, and is entitled "Of the Different Modes of Acquiring the Ownership of Things." Whereas property law encompasses the legal relationship which a person has in things, the law of obligations deals with a specific legal relationship between persons. The Civil Code defines an obligation as a "legal relationship whereby a person, called the obligor, is bound to render a performance in favor of another, called the obligee." La. C.C. art. 1756.
Obligations may arise from contracts and other declarations of will. La. C.C. art. 1757. In a contract of sale, for example, the seller is obligated "to deliver the thing sold and to warrant to the buyer ownership and peaceful possession of, and the absence of hidden defects in, that thing. The seller also warrants that the thing sold is fit for its intended use." La. C.C. art. 2475.
La. C.C. art. 2520. Thus, when defects are discovered in a thing sold which were not apparent, or hidden, at the time of the sale, the law of obligations provides to the buyer a cause of action in redhibition and the right to sue for rescission of the sale or for a reduction of the purchase price.
However, the seller owes no warranty for defects in the thing that were known to, or should have been discovered by, a reasonably prudent buyer. La. C.C. art. 2521. When the defects of the thing sold are apparent, the law of obligations does not provide a cause or right of action to the buyer. Thus, the Civil Code makes a distinction between apparent (overt) and non-apparent (hidden) defects in a thing sold, and what rights and causes of action are provided for the buyer/new owner, within the law of obligations.
Obligations may also arise directly from the law, regardless of a declaration of will, in instances such as wrongful acts, the management of the affairs of another, unjust enrichment, and other acts or facts. La. C.C. art. 1757. An example of an obligation that arises as a matter of law is found in La. C.C. art. 2315, which establishes the basis of tort liability and provides: "[e]very act whatever of man
In general, obligations are divided in the Civil Code into "strictly personal," "heritable," and "real." An obligation is strictly personal when its performance can be enforced only by the obligee, or only against the obligor. La. C.C. art. 1766. An obligation is heritable when its performance may be enforced by a successor of the obligee or against a successor of the obligor. La. C.C. art. 1765. A real obligation is a duty correlative and incidental to a real right. La. C.C. art. 1763.
Real obligations are pertinent to our discussion of the present issue because a real obligation and real right both attach to a thing. La. C.C. art. 1764, Revision Comments—1984, (b). La. C.C. art. 1764 explains the effects of a real obligation:
The nature of a real obligation has been thus described:
Both real rights and real obligations may be contrasted with personal rights. The legal right that a person has against another person to demand the performance of an obligation is called a personal right.
In some instances, a real right and a personal right may appear to be the same, but the underlying nature of the rights distinguishes them. For example,
This court has held "[u]nder the civil law concept, a lease [a contract about property] does not convey any real right or title to the property leased, but only a personal right." Richard v. Hall, 2003-1488, p. 17-18 (La.4/23/04), 874 So.2d 131, 145. "That a lease is not a real right under the civil law is well settled." Reagan, 235 La. 529, 541, 105 So.2d 210, 214. This concept was further explained:
Reagan, 235 La. at 541, 105 So.2d at 214, citing In Re Morgan R.R. & S.S. Co., 32 La.Ann. 371 (1880).
Real rights, and real obligations pass to a subsequent acquirer of the thing to which it is attached without the need of a stipulation to that effect. La. C.C. art. 1764, Revision Comments—1984, (c).
A hundred and sixty years ago, in Clark v. J.L. Warner Co. et al, 6 La.Ann. 408 (1851), the plaintiff, who had purchased property which included a two-story brick house, kitchen and outhouses, sued the owner of the adjoining property and his lessee, who ran an ice house depot. The plaintiff claimed damage to his house was caused by the pressure, moisture and other destructive effects of the ice on his buildings. The trial court rendered a money judgment in favor of the plaintiff.
This court reversed, finding the district court erred in awarding to the plaintiff all the damages caused to the premises while they belonged to the former property owner, and indeed, to several preceding owners. We held "as to damages actually suffered before the purchase," general tort principles would require that each preceding owner would have a right to recover for the damages which occurred while he or she owned the premises. Clark, 6 La. Ann. at 409. The claim for damages belonging to each preceding owner was described as "an incorporeal right, and strictly personal property." Clark, 6 La.Ann. at 409.
This personal right was not explicitly transferred by the former owner in the bill of sale to the plaintiff, as the bill of sale, examined by the court, was found to be in its usual form for the conveyance of real estate and its appurtenances. Consequently, this court held the plaintiff did not have a right to assert a claim for damage to the property before the date of the act of sale whereby he purchased the property, either by operation of law or contract. Clark, 6 La.Ann. at 409. However, since the plaintiff might have been able to furnish more explicit testimony as to any damages actually suffered by him from the time he became the property owner, the court entered a judgment of non-suit against him.
The plaintiff, and the court of appeal on rehearing, have cited to selected language in the Clark opinion as support for the position that a right of action exists for the plaintiff in the present matter. In Clark, we said:
Id., 6 La.Ann. at 409.
The plaintiff, and the court of appeal on rehearing, rely on this language to contend and assert, respectively: (1) Eagle Pipe is the only party which has suffered damage because the sellers here, the Former Property Owner Defendants, did not have to accept a reduced price for apparently damaged property; (2) Art. 2315 provides a remedy to a damaged party; therefore, (3) Eagle Pipe has a right of action to seek damages. The plaintiff and the court of appeal on rehearing are in error.
The language in Clark, understood in context and giving effect to subsequent portions of the opinion, as well as principles of property law and obligations law, shows that such an interpretation is unsound. Louisiana law provides that when property is damaged through the actions of another, the owner of the property (obligee) obtains a personal right to demand that the tortfeasor (obligor) repair the damage to the property. La. C.C. art. 2315 ("Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it."). This personal right of the property owner arises because his real rights in the ownership of the property have been disturbed—his use, enjoyment or disposal of the property.
The analysis in Clark continued beyond the portion above-cited, making clear that each successive owner of the property was recognized as having a right to sue for the damage to the property which occurred during his or her ownership. This right of action arose when the real rights of the owners were disturbed by the operation of the adjoining business:
Id., 6 La.Ann. at 409. Clark makes clear that the former property owners still have a personal right of action against a tortfeasor for the damage he inflicted on the property while they were the owners, despite the fact that they no longer own the property.
Clark explicitly states the personal right of the property owner to demand damages for the injury to the property must be assigned or subrogated if the personal right is to survive a change of ownership in the property:
Id., 6 La.Ann. at 409.
The plaintiff in Clark brought suit against a third-party tortfeasor seeking damages for the condition of the property, not a suit against his vendor. We have already discussed that the Civil Code provides a cause of action in redhibition for a buyer who discovers defects in the purchased property which were not apparent at the time of the sale. When the defect is not apparent, the buyer may seek rescission of the sale or a reduction in the purchase price. However, the Civil Code does not provide a cause of action or a right to rescission or a reduction in the purchase price for the buyer against his seller where the damage to the property is apparent at the time of the sale.
Consequently, Clark, who had a "perfect knowledge" of the dilapidated and dangerous condition of the premises when he purchased the property, had no right of action for damages, or for reduction of the purchase price, against his vendor for a breach of the warranty against defects or vices in the thing sold which were known to him at the time of sale. But neither did Clark have a right of action for damages against the tortfeasor responsible for the condition of the property before Clark was the owner. As Clark explains, the apparent damage was taken into consideration for the purchase price and the court would not allow the known damage to be "a source of profit to the purchaser" by allowing the buyer a further right of action against the tortfeasor who damaged the property before his purchase. Clark, 6 La.Ann. at 409. Instead, the personal right of action for damages belonged to the former owners of the property, each having the right of action to sue for damages inflicted on the property during their term of ownership.
The rule enunciated in Clark was described in a subsequent case, as follows:
Payne v. James, 42 La.Ann. 230, 234, 7 So. 457, 458 (1890). This subsequent expression of the rule does not indicate a requirement that the damage to the property be apparent in order for the rule to apply.
In Payne, supra, a property owner sold property during the term of a lease. Thereafter, the former owner/lessor sued his former lessees for failure to surrender the leased property in the like condition, good order, and repair in which they received the property. The lessees excepted to the suit on the ground that the lessor had no interest in the value of the repairs which should be made to property he did not now own. The court acknowledged the lessor had an actionable interest in bringing suit on the ground that, owing to the dilapidated condition of the property, which was the result of the lessees' violation of their obligation, he was compelled to accept a much lower purchase price than the property would have brought had it been in proper repair. Payne, 42 La. Ann. at 233-234, 7 So. at 457. Thus, even though the former property owner no longer owned the property, the court found "such allegations unquestionably disclose an actionable interest in the complaining lessor." Payne, 42 La.Ann. at 234, 7 So. at 457.
In Matthews v. Alsworth, 45 La.Ann. 465, 12 So. 518 (1893), property was sold subject to an existing lease. The new owner filed suit against the lessee for a dissolution of the lease based on the lessee's violation of his obligations, for compensation for the diminution in the value of the property for the lessee's damage to the property, and for the rent for the year which accrued in the year before the sale. This court found the new owner had no right of action to sue for damages from the lessee for damage to the property before the sale, either under the lease contract or in tort. Instead, the right to sue for damage to the property inflicted before the sale was a personal right of the former owner/lessor which arose from the lessee's breach of the contractual obligations of the lease during the time the lessee owed those obligations to the former owner/lessor.
The former owner had not assigned or subrogated this personal right to the new owner in the act of sale. The deed contained the following language:
By this language, the court held the new owner/lessor was subrogated to the lease provisions, but only from the date of his purchase of the property. "The lessee is liable on the covenants of his lease, and to these, unquestionably, plaintiff [the new property owner] is subrogated from the date of his purchase. By the use of the words `right in, to, or under the lease,' the plaintiff did not become an assignee of damages of date prior to the sale." Matthews, 45 La.Ann. at 469, 12 So. at 519.
The personal right of the owner to sue for damages was not explicitly assigned in the act of sale, and additionally was not an accessory right which passed with the title without description of, or reference to, the claim. In the act of sale, the property was specifically described, and there was no mention of a claim for damages. The court held it could not "presume that there were additional rights in the nature of damages, the deed being silent as to damages." Matthews, 45 La.Ann. at 469, 12 So. at 519. Matthews reinforces the proposition that personal rights of the former owner do not pass with the property in an act of sale unless specifically assigned or subrogated to the new owner.
Similarly, in Bradford v. Richard, 46 La.Ann. 1530, 16 So. 487 (1894), the court found the new owner of property was not assigned or subrogated to the former owner's right to sue for damages for the cutting
Bradford, 46 La.Ann. at 1533-1534, 16 So. at 487. Here, as in Clark, the court discussed the presumption that apparent damage to the property is taken into account in negotiating the purchase price, and the fact that a buyer who has obtained a lower purchase price due to apparent damage or deterioration of the property at the hands of a lessee, or third party, will not be entitled to further benefit by the imputation to him of the seller's personal right to sue for damages.
In examining related jurisprudence, we find the rights and liabilities of the parties are similar to those involving the servitudes obtained by railroad companies in appropriation-servitude cases.
Counsel for the property owner raised an exception to the rule which arises when the entry or taking of the land is in the nature of a trespass, and applies to the demand for the value of the land as distinguished
Taylor v. New Orleans Terminal Co., 126 La. 420, 52 So. 562 (1910) is a similar case. Land was taken by the railroad and used for a switch track with the tacit consent of the then-owner of the property. A subsequent property owner sued for the value of the appropriated land and damages. The trial court rendered judgment in favor of the new property owner, but this court reversed, holding:
Taylor, 126 La. at 422-423, 52 So. at 562.
In Taylor, however, the railroad had agreed in a deed to a former landowner to make improvements to the property, i.e. to fence and drain the land and to construct crossings. With regard to these claims, the court found the former property owner acquired the right as a servitude for the benefit of the estate and not for his own personal benefit. A servitude, being a real right, follows the property without the necessity of its inclusion in an act of sale, unlike a personal right. As such, the new property owner had a right under the servitude to bring suit for enforcement of the obligations established in the former deed. Taylor, 126 La. at 426, 52 So. at 564. The right followed the property and was not personal to the owner of the property, whomever it might be. Id., 126 La. at 425, 52 So. at 564.
Gumbel v. New Orleans Terminal Co., 197 La. 439, 1 So.2d 686 (1941), overruled on other grounds, Lake, Inc. v. Louisiana Power & Light Co., 330 So.2d 914 (La. 1976), was another case where a railroad company appropriated property without expropriation or payment. The owner of the property and his vendee acquiesced in the railroad's laying of tracks across the property. Years later, a new owner of the property complained and ultimately filed suit to recover compensation for the value of the land appropriated or damages to his remaining property. This court found neither the landowner at the time the railroad appropriated the property nor his vendee (the plaintiffs vendor) ever assigned or subrogated to the new owner any rights of action against the railroad to recover compensation for the value of the land taken, occupied and used, or for damages for the remaining land. Gumbel, 197 La. at 444-445, 1 So.2d at 687. After reviewing its decisions in McCutchen, supra, and Taylor, supra, the court held:
Gumbel, 197 La. at 444, 1 So.2d at 688. So finding, this court affirmed the rulings of the trial court.
In Prados v. South Central Bell Tel. Co., 329 So.2d 744 (La.1975) (on rehearing), a property owner leased land to the South Central Bell Telephone Company ("Bell"). In a series of leases, Bell was granted the right to construct improvements on the property, namely buildings, sheds, fences, etc., as well as the privilege of removing them. In a lease terminating in April, 1973, the owner/lessor again granted Bell the right to construct buildings and also granted Bell the corresponding "privilege of removing same at the conclusion of this lease or renewals thereof." Id., 329 So.2d at 745. At that time, the Civil Code required that a lessee restore the property to its owner in its original condition, unless the contrary had been established in the lease contract.
After the lease expired, Bell did not remove the improvements it had made to the property and the owner/lessor did not request that Bell remove them, either under the terms of the lease contract or the Civil Code. A few months thereafter, the owner sold the property to another. After acquiring title, the new owner demanded that Bell remove the concrete structures and other improvements it had built on the property. When Bell refused, the new owner had the improvements removed and restored the property to its condition at the commencement of the lease.
The new owner filed suit against Bell, seeking to recover the amount which had been necessary to restore the property. Both the trial court and court of appeal held in favor of the new owner, finding he could recover the cost of removing the improvements from the property under the provisions of the lease between his ancestor in title and Bell.
On original hearing, this court affirmed, finding the lease provisions imposed real obligations on the property which were consistent with the provisions
Consequently, the court determined "the question of liability must be resolved in the light of the rules governing the assignment and subrogation of rights." Id. In other words, in order for the new owner of the property to assert the former owner's right to insist on Bell's performance of its lease obligations, the new owner must have been assigned or subrogated to those rights. The court found the nature of the former owner/lessor's rights, which arose from the obligations found in the lease provisions, were personal rights, rather than real rights. Id.
The next step for the court was to determine whether the former lessor/owner expressly assigned or subrogated his personal right to the new owner. The court reviewed the act of sale and found the conveyance and subrogation clauses therein made "no reference to the expired lease, nor to the right of the seller to a restoration of the property to its original state, nor to the right of damages." Id., 329 So.2d at 750. Instead, the subrogation clause in the act of sale was directed to the rights and actions of warranty against previous owners:
Id., 329 So.2d at 749-750. Thus, there was no express assignment to the new owner of the right to sue the former lessee for damages based on violations of the expired lease.
Since there was no express assignment or subrogation of the former owner's right to sue for damages, the court then questioned whether the personal right was impliedly or tacitly assigned to the new owner as an "accessory" of the land, as the sale of immovable property included its "accessories and dependencies." Id., 329 So.2d at 750.
The court held there had been no implied or tacit assignment of the personal right in the act of sale because the law was clear that "accessories" to a sale do not include personal rights belonging to the seller. "Under the article [former La. C.C. art. 2490], however, Accesories [sic] do not include personal rights of the seller." Id., 329 So.2d at 750. The court cited as authority Gumbel, supra, Clark, supra, and Planiol to hold: "Personal rights belonging to the seller can never be considered as accessories sories [sic] of the immovable sold."
The court could have ended its analysis at that point, having found no explicit or implicit assignment to the new owner of the personal rights of the former owner to sue for damages against the former lessee. Instead, the court embarked on a discussion of accessory rights, addressing other fact situations where no accessory rights passed in the sale of property without assignment.
First, the court noted that rents which accrued before the sale of property under an existing lease cannot be recovered by the new owner, citing among other cases, the Matthews decision discussed earlier. The court then stated the general rule at issue here: "Likewise, a purchaser cannot recover from a third party for damage to the property incurred prior to the sale." Prados, 329 So.2d at 750. Cited as authority for this rule were Gumbel, supra; Taylor,
Id., 329 So.2d at 751.
This statement has been widely misinterpreted. The plaintiff and the court of appeal have interpreted this statement as containing the "general principle" of the subsequent purchaser rule itself, i.e. that the rule applies only when damage is apparent and when a purchaser has been able to negotiate a lower sales price due to the obvious deterioration or damage to the property. Looking at the court's statement in context, however, the comment was merely a part of the court's discussion of accessory rights in a sale of property under an existing lease, the subject matter under discussion.
At the conclusion of the discussion of accessory rights, the court reaffirmed that the personal right of the former owner obtained under the now-expired lease had not passed to the new owner with the title:
Id., 329 So.2d at 751 (emphasis added).
A careful reading of the Prados opinion clearly distinguishes between the discussion of accessory rights and the court's holding. Only after finding that the new owner did not acquire the former owner's personal rights explicitly, in the act of sale; implicitly, by a transfer of accessory rights; or under any other theory, did the court state: "We hold that the present owner has no right to recover damages against the former lessee." Id., 329 So.2d at 751.
In St. Jude Medical Office Bldg. Ltd. Partnership v. City Glass and Mirror, Inc., 619 So.2d 529 (La.1993), the owner of property, which included a medical office building and retail complex, sued its contractor and others for construction defects. The owner defaulted on its mortgage and the mortgagee obtained a judgment in its favor. The building was seized when the mortgagee executed on its judgment.
After the building was seized, the mortgagee petitioned to intervene in the owner's suit against the contractors after purchasing the property at judicial sale, asserting its right as the new owner to sue third parties for damage to the property which occurred before its purchase. In making this claim, the mortgagee/subsequent owner relied on jurisprudence from this court which held: "that a subsequent purchaser was subrogated to the implied warranty of materials and workmanship in a building contract. Despite lack of privity, the purchaser of immovable property was allowed to enforce a property improvement contract made by the previous owner." St. Jude, 619 So.2d at 531.
This court denied the subsequent purchaser's claim and held the mortgagee's authority was based on law which had since been repealed.
Another source of confusion in the interpretation of the subsequent purchaser rule was inadvertently engendered by our brief per curiam opinion in Hopewell, Inc. v. Mobil Oil Co., 2000-3280 (La.2/9/01), 784 So.2d 653. The underlying facts of the case are presented in its appellate decision.
Hopewell, Inc. ("Hopewell") purchased a 442 acre tract from the Pugh family in 1994, which included the 70 acre tract already discussed. On January 2, 1997, Hopewell filed suit for damages against Mobil and the Pugh family, contending the property was contaminated by hazardous and toxic substances deposited on the ground during the former oil and gas operations conducted on the property.
Mobil filed, inter alia, an exception of no right of action, contending the right to recover for damage to the property was personal to the owner of the property at the time the damage occurred and did not transfer with the sale to Hopewell. The trial court denied Mobil's exception of no right of action, but the court of appeal reversed. The court of appeal explicitly found the holding in Prados was controlling, and that the right to recover for damages was personal to the owners of the property at the time the damage occurred.
Hopewell has been cited as authority by lower courts, and the court of appeal in this case, for the proposition that Prados is limited to actions for damages by a subsequent purchaser against a former lessee for damages arising out of violations of a lease, and where the damage to the property is apparent. Such an interpretation is a misunderstanding of the very limited nature of the Hopewell ruling due, admittedly, to the abbreviated nature of the per curiam.
Although the per curiam mentions the facts of Hopewell are distinguishable, the brief ruling does not articulate what the distinguishing facts may be. Hopewell
Finally, in Marin v. Exxon Mobil Corporation, 2009-2368 (La.10/19/10), 48 So.3d 234, this court granted writs, in part, to consider the very question presented in the instant matter: "whether a subsequent purchaser has the right to sue for property damages that occurred before he purchased the property, particularly where the damage was not overt." Id., 2009-2368, p. 32 n. 18, 48 So.3d at 256 n. 18. The court did not reach the issue in Marin, however, because the court found, even assuming a right as a subsequent purchaser to sue in tort for property damage, the right had prescribed. Id. Consequently, writs were granted in the instant matter to consider the unanswered question.
Although the plaintiff asserts the subsequent purchaser rule applies only when there is apparent damage to property, we think the rationale also extends to the situation where the damage to property is not apparent. Whether this should be called an extension of the subsequent purchaser rule, or simply the way in which the fundamental principles of property law operate, the result is the same. Damage to property may disturb not only the owner's rights of use of, and enjoyment in, the property (the usus and fructus rights in ownership), but may also disturb his right to alienate the property, or to dispose of the property, completely and without disturbance (the abusus right in ownership).
The property owner at the time the damages were inflicted has a personal right of action against the tortfeasor for the disturbance of his real right in the property. When the damage is apparent, the property owner obtains the personal right of action to sue for damages to compensate for a loss of value in the property or an interference with the property's use. This personal right exists during his use and enjoyment while he owns the property. This personal right exists even during and after his disposal of the property, as it is assumed the apparent damage would result in a loss of value to the property which would be reflected in the sale price. Where damage to the property is not apparent, and the property has been sold, the law provides the purchaser with the right to seek rescission of the sale or a reduction in the purchase price. In that instance, the former owner's right to dispose of the property without disturbance has been affected, as the owner must now defend against an action in redhibition or take some other action to repair, remedy or correct the defect.
We are not unaware of the effects which the rules of discovery and prescription will have on certain fact situations under this analysis,
Nor are we indifferent to criticisms of the remediation procedures of the La. DEQ raised by the plaintiff and amicus curiae. However, these assessments of the current legislative scheme for property remediation are also matters best addressed to the legislature. What we discern from the current legislative scheme is a determination by the legislature to remediate property to put it back into use and commerce.
With this analysis of the law in mind, we review the reasoning of the court of appeal de novo.
On original hearing, before a three-judge panel, the Fourth Circuit denied the plaintiffs claims under both tort and contract
Next, the court of appeal considered and rejected Eagle Pipe's contentions of entitlement to a right of action as a third party beneficiary. The court found Eagle Pipe failed to identify a contract or contracts which established its status as a third party beneficiary. Instead, the allegations cited in the petition referenced benefits incidental to the contracts discussed. The court additionally found that any obligation to repair the land which might have been found in contracts entered into by the Oil Company Defendants was a personal right which inured to the previous landowners, which was not assigned to Eagle Pipe. Consequently, on original hearing, the court of appeal found no abuse of the trial court's discretion in denying the plaintiffs motion for new trial which sought leave to amend the petition, finding: "[t]here are no facts to cure the causes of action alleged in the petition because the causes of action pertain to alleged damages to the land prior to Eagle's ownership and Eagle lacks an assignment of rights."
Rehearing was granted before a five-judge panel. The opinion on original hearing was vacated and a new opinion on rehearing was rendered. Based on our review of the jurisprudence and the law discussed herein, we find the reasoning of the court of appeal on rehearing to be fundamentally unsound.
The rehearing panel majority found that our brief per curiam in Hopewell changed the law, limiting Prados to fact situations where a subsequent purchaser files an action against a former lessee arising out of a terminated lease. Moreover, the court of appeal, in failing to read Prados carefully, relied on the "general principle" in the discussion of accessory rights as authority to find the subsequent purchaser rule did not apply where damage to property was not apparent at the time of its sale. As our previous analysis shows, the Fourth Circuit's analysis on rehearing with regard to our holdings in Hopewell and in Prados was flawed.
The rehearing panel majority next failed to thoroughly read Clark, as has already been discussed; the court of appeal on rehearing held that where there is injury, there must be reparation in the form of a tort right of action. Although La. C.C. art. 2315, the general authority for tort liability, was discussed in Clark as the basis for the subsequent purchaser's claim, the rest of the analysis in the Clark opinion made clear that each succeeding owner had the right of action to sue for damages inflicted on the property while he or she was the owner, that this right was a personal right, and that the right remained with each owner unless assigned.
The court of appeal on rehearing approached the present problem by focusing on the concept of injury, rather than analyzing the current matter under the principles of Louisiana property law or understanding that under Louisiana law the damage to property is considered as damage to the owner's rights in the property. In support of its flawed reasoning,
Finally, the court of appeal on rehearing confused the right to bring an action with a cause of action. In the first of its four "findings," the rehearing panel majority held: "(1) the manifestation of radioactive contamination allegedly caused by defendants constitutes an injury giving rise to a legitimate
For the foregoing reasons, we find the ruling of the court of appeal on rehearing was erroneous. We now turn to our own review of the plaintiffs claims.
Reviewing the allegations of the petition de novo, and assuming the petition states a valid cause of action for some person, we must now determine whether the plaintiff belongs to the class of persons to whom the law grants the causes of action asserted in the suit. In reviewing the causes of action asserted by the plaintiff, we find they fall into two general categories, those arising in tort and those arising under contract.
Eagle Pipe raises a tort cause of action, claiming the defendants are strictly liable and liable for their negligence in damaging the property. Eagle Pipe claims a right of action as the current property's owner who is injured by the contamination of the property by TENORM. Although Eagle Pipe argues the distinction between real and personal rights is irrelevant, our analysis shows that this distinction is at the very core of the Louisiana property laws which resolve this dispute.
As we have explained, injury to property must be understood as damage to the real rights in the property. A tortfeasor who causes injury or damage to a real right in property owes an obligation to the owner of the real right. This relationship arises as a matter of law and provides to the owner of the real right a personal right to sue the tortfeasor for damages. In the absence of an assignment or subrogation of this personal right, a subsequent purchaser of the property cannot recover from a third party for property damage inflicted prior to the sale. Insofar as Eagle Pipe claims a right to sue based on the damage to the property which occurred before its ownership, we hold the plaintiff has no right of action to assert as a matter of law.
To the extent the plaintiff claims the damage to the property is continuing, such that Eagle Pipe asserts its own right of action to sue for damages, we find the law is clear that the allegations of the plaintiffs petition cannot constitute a continuing tort. In Crump v. Sabine River Authority, 98-2326, p. 7 (La.6/29/99), 737 So.2d 720, 726, this court noted "the theory of continuing tort has its roots in property damage cases and requires that the operating cause of the injury be a continuous one which results in continuous damages." We have held "[a] continuing tort is occasioned by continual unlawful acts and for there to be a continuing tort there must be a continuing duty owed to the plaintiff and a continuing breach of that duty by the defendant." Id., 98-2326, p. 10, 737 So.2d at 728.
The inquiry as to whether there is continuous tortious conduct "is essentially a conduct-based one, asking whether the tortfeasor perpetuates the injury through overt, persistent, and ongoing acts." Hogg v. Chevron USA, Inc., 2009-2632, p. 16 (La.7/6/10), 45 So.3d 991, 1003. In Hogg, we cited with approval the following analysis:
We find the operating cause of the injury claimed in the petition here was the tender of allegedly contaminated oilfield equipment from the Oil Company Defendants and the Trucking Company/Transporter Defendants to Union Pipe, the lessee of the Former Property Owner Defendants. The petition does not claim that there have been continual or ongoing unlawful acts; instead, the petition asserts the alleged tortious acts ceased as of 1988. We also find the continued presence of the alleged contamination, the injury claimed, is simply the continuing ill effect from the original tortious acts. Crump, 98-2326, p. 9, 737 So.2d at 727-728. The fact that a subsequent purchaser "discovers" the continuing ill effects of the original tortious acts does not give rise to a new, discrete right of action in tort.
A civil trespass is a tort. Even if the facts alleged in the petition could be considered tortious acts which constituted a trespass which caused damage to the property, the principles of Louisiana property law would still provide the owner of the property at the time the injury occurred with a personal right to sue the trespasser for damages, and not the subsequent owner. Moreover, not all trespasses are continuous acts giving rise to successive damages.
In Hogg, we observed "the concept of continuing tort finds its origins in trespass and nuisance cases." Id., 2009-2632, p. 16, 45 So.3d at 1003.
Thus, to determine whether a trespass is continuous, a court must use the same inquiry used to determine the existence of a continuing tort. As we have already seen, the injury alleged in the petition was not perpetuated through overt, persistent, and ongoing acts. Consequently, even if the allegations in the petition could be considered as asserting a trespass claim, Eagle Pipe would not have a right of action to assert that claim.
Finally, Eagle Pipe relies upon a Civil Code comment for the proposition that "the obligation ... to restore the premises to their previous condition is a real obligation, following the immovable into the hands of any acquirer." La. C.C. art. 1764, Revision Comments—1984(f). Although the language used in the comment certainly appears to provide relief for the plaintiff, a closer look at the paragraph in which this statement is made and the authorities cited for the proposition reveal the comment is referring to a real obligation to restore premises correlative and incidental to a predial servitude. See Yiannopoulos, Predial Servitudes, § 157 (3d ed.2004). The paragraph in which the relied-upon statement appears is a discussion of the effects of real obligations in
We have already found, absent assignment or subrogation, Eagle Pipe as a subsequent purchaser of the property does not have a right to assert a claim for damages which were inflicted on the property before the sale. Consequently, we must examine the act of sale to determine whether the Former Property Owners Defendants explicitly assigned their personal right to sue for damage to Eagle Pipe. The act of sale was attached to the petition and was offered as an exhibit at the hearing on the exceptions. In pertinent part, the act of sale provides:
We find these provisions are substantially similar to those found in Prados, supra, in which we stated the subrogation clause in the act of sale was directed to the rights and actions of warranty against previous owners, and not an express assignment or subrogation of personal rights to the new owner. Prados, 329 So.2d at 749-750. Likewise, we find no express assignment or subrogation of the former property owners' personal right to sue for damage in the act of sale at issue here. Consequently, Eagle Pipe has no right of action based on an assignment of personal rights from its vendor.
Eagle Pipe contends that Union Pipe and the Oil Company Defendants entered
Eagle Pipe also contends that Union Pipe entered into contracts with its customers by which the Oil Company Defendants obligated themselves to provide certain health and safety conditions and notices. Eagle Pipe asserts these contracts were similar in nature to contracts entered into by other oil companies and pipeyards. Eagle Pipe asserts it is a third party beneficiary to such contracts, and as such, has the right to demand performance from the Oil Company Defendants. The petition recites portions of these other alleged contracts which purport to show the assumption by other oil companies of "specific health and safety obligations" and "... in providing healthy and safe working conditions with adequate environmental and pollution controls...."
La. C.C. art. 1978 provides: "A contracting party may stipulate a benefit for a third person called a third party beneficiary. Once the third party has manifested his intention to avail himself of the benefit, the parties may not dissolve the contract by mutual consent without the beneficiary's agreement." This court has held "such a contract for the benefit of a third party is commonly referred to as a `stipulation pour autrui.'" Joseph v. Hospital Service Dist. No. 2 of Parish of St. Mary, 2005-2364, p. 7 (La.10/15/06), 939 So.2d 1206, 1211.
In order to help with this determination, we found:
In addition, a stipulation pour autrui can never be presumed and the party claiming its benefit bears the burden of proof. Id.
Putting aside requirements of proof, and assuming that such contracts exist and contain the language described, we find no clear manifestation of a stipulation for the benefit of a third party such as Eagle Pipe.
Our analysis of the three criteria for determining whether contracting parties have provided a benefit for a third party like Eagle Pipe leads us to conclude that Eagle Pipe does not have a right of action to assert on this basis. "A person may derive a benefit from a contract to which he is not a party without being a third party beneficiary." Joseph, 2005-2364, p. 12, 939 So.2d at 1214. The contracts between Union Pipe and its customers encompassed the personal rights and obligations of the contracting parties, but failed to include provisions for third party beneficiaries like Eagle Pipe.
Under the facts alleged in the petition, the law has provided to Eagle Pipe a cause of action in redhibition and the right to sue for rescission of the sale or the reduction of the purchase price. In addition, the legislature has provided a mechanism for Eagle Pipe to obtain remediation of the
So finding, we reverse the ruling of the court of appeal on rehearing and reinstate the ruling of the court of appeal on original hearing, affirming the trial court's granting of the defendants' exceptions of no right of action.
Retired Judge ROBERT J. LOBRANO, assigned as Justice ad hoc, sitting for Justice JEANNETTE T. KNOLL, recused.
JOHNSON, Justice, dissents.
VICTORY, Justice, concurs in the result and assigns reasons.
WEIMER, Justice, dissents and assigns reasons.
GUIDRY, Justice, concurs and assigns additional reasons.
LOBRANO, Justice ad hoc, dissents for the reasons assigned by WEIMER, J.
CLARK, Justice, concurs and assigns additional reasons.
WEIMER, J., assigns additional reasons for his dissent.
LOBRANO, J., ad hoc, joins in the additional reasons for dissent by Justice WEIMER.
VICTORY, J., concurring in the result.
I agree with the majority's conclusion that, under Louisiana law, a subsequent purchaser of property does not have the right to sue a third party for non-apparent property damages inflicted before the sale in the absence of an assignment of or subrogation to that right.
WEIMER, J., dissenting.
I respectfully dissent from the majority opinion insofar as it adopts a bright line rule expanding the application of the jurisprudentially created subsequent purchaser rule to all circumstances, regardless of the facts. In my view, the blanket expansion of the subsequent purchaser rule to include latent conditions on property divorced of any consideration of the particular circumstances out of which those conditions arise has the potential to produce unworkable and inconsistent results at odds with the facts and the law.
This matter comes before the court on an exception of no right of action that simply tests whether the plaintiff has an interest in the action. La. C.C.P. art. 927(A)(6). In other words, the exception asks "whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit." Hood v. Cotter, 2008-0215, p. 17 (La.12/2/08), 5 So.3d 819, 829. Adopting a bright line, inflexible approach to this preliminary determination in view of the myriad of factual circumstances that may present themselves is, in my view, unwise and conducive to unjust and inequitable results.
In Clark, the plaintiff purchased a tract of land with a two-story brick house, kitchen and out-houses. Id. at 408. After taking possession of the property, he sued the defendant, a lessee of the neighboring property owner, for damages to the house and out-buildings caused by defendant's operation of an ice house. Id. The trial court's judgment in favor of the plaintiff was reversed on appeal, with the court noting:
Clark, 6 La.Ann. at 409.
The rule first announced in Clark has been followed consistently in this court's jurisprudence. It is premised on the idea that the purchaser is not the party damaged by the tortious conduct; rather it is the seller who has suffered damage in the form of the reduced price received for the property: "The general principle, we think, is that a buyer is presumed to know the overt condition of the property and to take that condition into account in agreeing to the sales price." Prados, 329 So.2d at 751. The subsequent purchaser rule is, therefore, nothing more than the jurisprudence's common sense approach to situations where known or overt conditions of immovable property result in a diminution in value that in turn results in a lower price paid for the property. The jurisprudence recognizes that the purchaser, who receives the benefit of the diminution in value, suffers no loss and, therefore, no damage.
The rule has roots in French civilian tradition. As explained by Aubry and Rau in their discussion regarding what rights transfer in a sale of property:
2 AUBRY & RAU, LOUISIANA CIVIL LAW TRANSLATIONS: DROIT CIVIL FRANCAIS § 176, pp. 76-77 (7th ed.1971). See also, Id., at n.6 ("This solution presupposes that the deterioration has been taken into account when setting the sales price. Otherwise the opposite decision would be justified.")
The majority opinion goes to some length, in tracing the origins of the subsequent purchaser rule, to discount the idea that application of the doctrine hinges on the overt or known characteristic of the damage. Thus, it recites that the rationale of Clark does not indicate a requirement that the damage be overt. Eagle Pipe and Supply v. Amerada Hess Corp., 10-C-2267, 10-C-2272, 10-C-2275, 10-C-2279, and 10-C-2289, op. at 265-66 (October 2011). However, Clark was not a case in which the damage to the property was latent or hidden. As a result, it was unnecessary for the Clark court to comment on whether the rule should be extended to cases of latent damage. Had it attempted to do so, its statement in that regard would have been dicta. The majority opinion similarly distinguishes Prados on grounds that the presumption that the buyer is aware of the overt condition of the property and takes that condition into consideration in agreeing to the sales price is discussed in a paragraph on accessory rights. Eagle Pipe, op. at 272-73. Ultimately, however, this is a distinction without a difference, as the key to the holding in Prados is revealed in the single statement, quoted by the majority: "The right to damages accrued to the lessor prior to the sale." Prados, 329 So.2d at 751. That right accrued before the sale because before that time the damages were obvious, and their existence interfered with the owner's "use, enjoyment or disposal of the property," in that the owner received a reduced price for the property, and thereby incurred damages.
Given the common sense underpinnings of the subsequent purchaser rule, it is not surprising that it has been applied by this court thus far only in cases where the damage to the real property has been overt. There is simply nothing in the rationale underlying the doctrine that supports its extension to hidden or latent injuries to property. Indeed, adoption of the majority's position in this case will result in precisely the situation then-Justice Tate counseled against in his dissent in Prados: a former owner with a right of action but no cause of action (because having received full value for the property, the former owner has suffered no damage) and a present owner with damage, and a cause of action, but no right of action. Prados, 329 So.2d at 752 (Tate, J., dissenting). This is the seemingly absurd result produced by applying a rule that simply was never contemplated or designed to apply to hidden or latent conditions.
Indeed, on the single prior occasion in which this court has been called upon to answer the precise question presented here, i.e., whether a landowner whose property was damaged as a result of hidden contamination prior to purchase has a right of action against the defendant/tortfeasor to recover for damages to the property, or whether this right belongs solely to the owner of the land at the time of damage and does not transfer to the new owner absent a specific stipulation, the
In my view, the central problem with the majority opinion is the false dilemma on which it is based. According to the majority's reasoning, either the right to recover for damage to immovable property is a personal right, in which case the subsequent purchaser rule applies to deprive the plaintiff in this case of a right of action, or it is a real right that is transferred with the sale of the property. This approach ignores the third approach to the issue, the one adopted by the court of appeal.
In its opinion on rehearing, the court of appeal recognized that the right to recover for damages to immovable property is a personal right belonging to the property owner at the time the damage occurs. However, it examined in the context of La. C.C. art. 2315, the fountainhead of tort responsibility in Louisiana, when injury/damage occurs and a resultant cause of action for property damage arises. This single issue—when the damage occurs and who suffers that damage—holds the key to resolving this case.
Under Louisiana law, for a negligence cause of action to accrue, three elements are required: fault, causation and damages. Owens v. Martin, 449 So.2d 448, 450 (La.1984). "Thus, a sine qua non for accrual of a cause of action is damages." Cole v. Celotex Corp., 599 So.2d 1058, 1063 n. 15 (La.1992). In Louisiana, "damage" to real property is typically measured by the difference between the value of the property before and after the harm. Roman Catholic Church of the Archdiocese of New Orleans v. La. Gas Service Co., 618 So.2d 874 (La.1993). Consequently, a seller who receives fair market value for real property with a hidden or latent defect is not "damaged" by the condition of the property. This seller has experienced no pecuniary loss. However, pecuniary loss is a necessary predicate to the award of compensatory damages for property damage. See, RESTATEMENT (SECOND) OF TORTS § 906 (1979) ("Compensatory damages that will not be awarded without proof of pecuniary loss include compensation for (a) harm to property....").
The majority opinion, far from undercutting this idea, actually supports it. According to that opinion, damage to property occurs when there is a disturbance or interference with the owner's right to use, enjoy, or alienate the property. Eagle Pipe, op. at 275-76. In the case of hidden damage, which is unknown to either seller or purchaser at the time of a sale, the only landowner who sustains an interference with his use, enjoyment, or alienation of the property is the owner of the property at the time the hidden damage is discovered.
Again, as the majority opinion points out, in Louisiana, there are only two sources of law—legislation and custom— and of the two, legislation is the superior source of law. Eagle Pipe, op. at 256, citing La. C.C. arts. 1, 3 and Doerr v. Mobil Oil Corp., 00-0947, p. 13 (La.12/19/00), 774 So.2d 119, 128. Judicial decisions are not intended to be an authoritative source of law. Doerr, 00-0947 at 13, 774 So.2d at 128. In the provisions of the civil code can be found broad principles which are intended to be extended and applied to different factual circumstances to formulate a coherent body of law. Louisiana C.C. art. 3493, a written provision of our law, specifically refers to the owner of immovable property and explicitly links the commencement of prescription to knowledge of damage. Implicitly, this article recognizes a right of action in the owner of the immovable at the time damage is or should have been discovered. I believe that it is this codal provision, rather than the expansion of a jurisprudential rule, which must serve as guidance in this case. Drawing upon that codal provision, I believe that it is proper to conclude, as did the court of appeal on rehearing, that in the case of latent or unknown damage to property, the cause of action arises upon actual or constructive knowledge, and the right of action belongs to the property owner at the time of that discovery.
Ultimately, then, the majority's analysis of the issue presented in this case, while exhaustive and detailed, is one with which I must respectfully disagree. I do not believe that the subsequent purchaser rule, which has previously been applied by this court only in cases of overt injury to property where the injury has been accounted for in the reduced price paid for the property, can or should be expanded to cases of latent and unknown injury so as to deprive the subsequent landowner who discovers the injury of a right of action, especially where, in the one case to raise the issue prior to the present one, Hopewell, the court refused to do so.
GUIDRY, Justice, concurs and assigns additional reasons.
I agree that the court of appeal erred in applying La. C.C. article 2315 to find Eagle Pipe, as a subsequent purchaser, was not precluded from seeking reparation from the Oil Company Defendants and the Trucking/Transportation Defendants merely because the alleged damage was hidden at the time it acquired the property. While Eagle Pipe may have sustained damages as a result of the difference between the sale price and actual value of the
In my view, Louisiana law already protects the rights of purchasers of real property, providing the purchaser avails itself of those protections. Under the facts of this case, the property was contaminated during the period the sellers owned it. As such, the sellers, and not Eagle Pipe, would have possessed any personal right of action in tort against these defendants. Eagle Pipe could have protected its rights at the time of purchase, but apparently failed to do so. The record reflects Eagle Pipe, as a sophisticated purchaser—indeed, it was apparently engaged in the same business as the seller's lessee—neglected to protect its interests, for example, by having the property adequately inspected, by obtaining an express assignment of the seller's personal rights, or by retaining a redhibitory remedy for the rescission of the sale. Eagle Pipe cannot now seek a remedy in tort where none exists, especially against these defendants, for economic losses sustained as a result of what may have turned out to be an unfavorable business transaction.
CLARK, Justice, concurs with additional reasons.
I believe the dissent falls into legal error in several respects and I write separately to respond to those issues. While the subsequent purchaser rule is a jurisprudential creation, the opinion goes to great lengths to show that its application is based squarely on property law and the law of obligations. Although Clark v. J.L. Warner & Co., 6 La.Ann. 408 (1851) is the first expression of the concept, the rule is derived from the operation of basic property and obligations law.
The dissent, like the court of appeal on rehearing and several other appellate courts, cites part of the discussion of accessory rights in Prados v. South Central Bell Tel. Co., 329 So.2d 744 (La.1975), as its holding, i.e. "The general principle, we think, is that a buyer is presumed to know the overt condition of the property and to take that condition into account in agreeing to the sales price." Id., 329 So.2d at 751. However, as explained in the opinion, the authority for this statement was a passage in Aubry and Rau discussing accessory rights. See 2 Aubry & Rau, Louisiana Civil Law Translations: Droit Civil Francais, § 176, p. 76 (7th ed.1961). In Prados, this court rejected the viewpoint of Aubry and Rau on accessory rights as applicable to that case, holding instead, with no less an authority than Planiol, that "[p]ersonal rights belonging to the seller can never be considered as accessories of the immovable sold." Prados, 329 So.2d at 750.
The additional citation to Aubry and Rau cited in the dissent omits the first sentence of that paragraph. The first sentence of the paragraph shows that what was actually under discussion was which rights should be considered accessory when property is sold with an existing lease. The entire paragraph states:
In addition, one of the footnotes omitted from this paragraph in the dissent defines the concept of "excessive deterioration" as "affecting the substance of the immovable." Aubry & Rau, § 176, p. 76, n.11. I would posit that damage "affecting the substance of the immovable," especially if "not taken into account when the sales price was set," if not apparent, would constitute a redhibitory defect. Although the dissent discusses an interesting point about accessory rights, this court already rejected the idea that the personal rights of the seller could ever be considered accessory rights to the sale.
With regard to the reliance on Justice Tate's dissent in Prados, Justice Tate believed "[a]n ordinary lease contract includes both real and personal rights and obligations, ...." Prados, 329 So.2d at 751 (Tate, J. dissenting). Thus, he found the expired lease contained a real obligation. With all due respect, the majority properly found this viewpoint to be incorrect, as the lease contained only personal rights and obligations between the contracting parties. Insofar as Justice Tate believed the obligation arose by reason of a codal provision, the majority found the contracting parties provided otherwise in the terms of the lease contract.
Moreover, any reliance on this court's prior holding in Hopewell, Inc. v. Mobil Oil Co., 2000-3280 (La.2/9/01), 784 So.2d 653, as support for the plaintiff's position here is misplaced. While the Hopewell case presented significant distinctions from the facts in Prados, those distinctions were not fleshed out in either the per curiam which was rendered or in a full opinion. Based on the analysis presented here, the Hopewell opinion, insofar as it stands for the proposition that Prados should be limited to damage claims against former lessees or where damage to property is apparent, is expressly renounced.
Additionally, I believe the dissent's embrace of the analysis by the court of appeal on rehearing is a case of the tail wagging the dog. The analysis focuses on when the
Finally, the dissent bases its conclusion on an
WEIMER, J., assigns additional reasons for his dissent.
I feel it necessary to respond to certain comments made in the additional concurring reasons which I fear demonstrate a misunderstanding of the dissent and its underlying principles.
At the heart of that misunderstanding is the concurrence's suggestion that the dissent, in contrast to the plurality opinion, is not grounded in "basic property and obligations law." To the contrary, the dissent is firmly rooted in articles of the Civil Code, particularly, La. C.C. arts. 2315 and 3493.
The issue on which this court granted writs can be simply stated: whether a purchaser of property has a right to sue for damages to the property resulting from tortious conduct that occurred prior to the purchase, where the damage was not overt. As my dissent points out, prior to the plurality opinion in this case, the subsequent purchaser rule (a rule of jurisprudential creation) has never been applied to a case of latent or hidden damage to property. In an attempt to justify extension of the rule to hidden damage, the plurality goes to great lengths to discount the idea, announced in Clark v. J.L. Warner & Co., 6 La.Ann. 408 (La.1851), and reiterated in Prados v. S. Cent. Bell Telephone Co., 329 So.2d 744 (La.1976) (on rehearing), and, indeed, in a litany of decisions applying the subsequent purchaser rule, that an underpinning of the rule is the legal principle that for a negligence cause of action to accrue, three elements are required—fault, causation, and damage—and, in the case of overt damage to property, the purchaser is not the party damaged by the tortious conduct, but rather, the damaged party is the seller, who has suffered damage in the form of the reduced price received for the property. Yet, (and this bears reiteration) this is precisely what the Clark decision recognized when it held:
Clark, 6 La.Ann. at 409. And, it is the precise principle that the majority in Prados
The plurality opinion posits that a proper interpretation of Clark and Prados hinges on a recognition that the "personal right of the property owner arises because his real rights in the ownership of the property have been disturbed—his use, enjoyment or disposal of the property." Eagle Pipe and Supply v. Amerada Hess Corp., 10-2267, 10-2272, 10-2275, 10-2279, 10-2289, op. at 264 (La.10/25/2011). But that opinion fails to explain, and the additional concurring reasons offer no suggestion as to how, in the case of hidden or latent property damage, the "real rights" of the property owner at time of the tortious conduct—his right to use, enjoy or dispose of that property—are disturbed when he is able to sell, or dispose of the property, at full value, undiminished by the effects of the hidden damage.
In the additional concurring reasons, two full pages are devoted to an attempt to undercut any notion that the holding in Prados hinges on the overt or known characteristic of the damage. Thus, the concurring reasons insist that Prados' statement that "[t]he general principle, we think, is that a buyer is presumed to know the overt condition of the property and to take that condition into account in agreeing to the sales price," is directed solely to a discussion of accessory rights that was "rejected .... as applicable" to the case.
While it is true that the majority in Prados held that the right to damages accruing prior to the sale was not an accessory to the sale, in doing so, it cited with approval Aubry and Rau's discussion of what should happen if the deterioration, or damage, had not been accounted for in the sales price.
The point which is not acknowledged in the additional concurring reasons is that Prados is a case in which the property damage was overt, and there is nothing in that opinion that supports its extension to a case involving latent or hidden damage, except the majority's citation to Aubry and Rau, wherein, it is suggested, the "opposite decision would be justified."
At any rate, what the additional concurring reasons fail to address is the application of basic principles of negligence law to this case. The articles on redhibition are not the only codal source of obligations and are not exclusive. La. C.C. art. 2315 declares that "[e]very act whatever of man that causes damage to another obliges him by whose fault it happened to repair it." As this court has recognized, a logical corollary of this rule is that reparation must be made to him who suffered the injury. Clark, 6 La.Ann. at 409. In other words, it is the person who sustains damage who possesses the right of action under La. C.C. art. 2315 for reparation of that damage.
The Louisiana Civil Code recognizes, in the context of damage to property, that damage may remain hidden for some indeterminate period of time. It specifically takes into account situations such as the present, where long-term contamination may remain undetected. It does so by expressly incorporating a discovery rule which marks the commencement of prescription "from the day the owner of the immovable acquired, or should have acquired, knowledge of the damage." La. C.C. art. 3493. This linkage of the right to commence an action with the owner of immovable property at the time knowledge is obtained is basically a reiteration and reaffirmation of the declaration in La. C.C. art. 2315 that every act of man that causes damage to another obliges him by whose fault it happened to repair it, and the corollary principle, that reparation must be made to him who suffered the injury, that person being the landowner at the time the damage becomes manifest. To hold otherwise is to hold that the property owner at the time of the tortious conduct has a personal right of action against the tortfeasor, even though he does not know about it, and to effectively render that right of action, in the case of overt or hidden damage, meaningless.
In the final analysis, while the concurring reasons imply that the dissent improperly supplies a right of action in the absence of legislative enactments supporting same, it is clear that the dissent is grounded in codal authority. To the extent it is suggested that the sole remedy of the subsequent purchaser lies in redhibition or under the Louisiana Conservation and/or Environmental Quality Acts, it ignores La. C.C. art. 2315. And, to the extent the concurring reasons suggest that applying the broad principles of Article 2315 to recognize a right of action in the property owner at the time damage becomes manifest creates a species of "imprescriptible torts," it remains obdurate in its refusal to acknowledge the operation of La. C.C. art. 3493. Louisiana C.C. art. 3493 commences prescription at actual or constructive knowledge. That such knowledge may not be attained for over twenty years does not render a tort "imprescriptible," it simply acknowledges reality—that some forms of property damage can be insidious and elusive. There is no practical or legal difference between a landowner who holds onto his land until hidden damage is discovered and one who purchases at full value, ignorant of the latent injury. Both are equally damaged at the point of discovery. Thus, a codal provision, and not the dissent, dictates prescription will not commence until knowledge is, or should have been, acquired.
LOBRANO, J., ad hoc, joins in the additional reasons for dissent by Justice WEIMER.
Despite the various types of radioactive material discussed in the petition, the plaintiff asserted, in other sections of the petition, that the radioactive materials complained of here are comprised solely of TENORM. Petition, ¶ VI(6), Vol. 1, p. 6.
Former Art. 2012 provided that real obligations could be created in three ways: (1) by the alienation of immovable property, subject to a real condition, either expressed or implied by law; (2) by alienating to one person the immovable property, and to another, some real right to be exercised upon it; and (3) by the creation of a right of mortgage upon the immovable property. Former Art. 2012 also stated: "All these contracts give rise to obligations purely real on the part of those who acquire the land, under whatever species of title they possess it; they are not personally liable, but the real property is, and, by abandoning it to the obligee, they relieve themselves from all responsibility. A sale subject to a rent charge, or to a right of redemption as consideration of the sale, are examples of the first kind of obligations; servitudes, the right of use and habitation and usufruct, are examples of the second; and the several kinds of mortgages, and the creation of a rent charge, of the third."
After the 1984 revision, the effects of real obligations were continued in Art. 1764, as discussed in the body of the opinion.
The "inclusion of accessories" to a sale is now found in La. C.C. art. 2461: "The sale of a thing includes all accessories intended for its use in accordance with the law of property." According to the revision comments, the new codal article changes the law in part, "since according to Articles 2461 and 2490 of the Louisiana Civil Code of 1870 the sale of a thing also includes its accessories, while under property law the solution depends on whether the thing is movable or immovable." La. C.C. art. 2461, Revision Comment—1993.
La. C.C. art. 469 now provides: "The transfer or encumbrance of an immovable includes its component parts." The revision comments to that article explains: "Under the regime of the Louisiana Civil Code of 1870, the transfer of an immovable included, specifically, its accessories that were classified as immovables by destination. In this revision, the transfer of an immovable includes its accessories though classified as movables. Article 508, infra, [which discusses things principal and accessory] defines the accessories of a movable. The same definition may be applied by analogy to define the accessories of an immovable." La. C.C. art. 469, Revision Comments—1978(g).
The heritable obligation is now defined in La. C.C. art. 1765, which reproduces the substance of former La. C.C. arts. 1997, 1999 and 2009 (1870). See La. C.C. art. 1765, Revision Comments—1984. La. C.C. art. 1765, regarding heritable obligations, provides: "An obligation is heritable when its performance may be enforced by a successor of the obligee or against a successor of the obligor. Every obligation is deemed heritable as to all parties, except when the contrary results from the terms or from the nature of the contract. A heritable obligation is also transferable between living persons."
The other authority was the code article in redhibition providing that a seller owes no warranty for defects that were known, or should have been known, at the time of the sale. La. C.C. art. 2521.
Even if the comment was directed at the general rule expressed in the subsequent purchaser rule, the statement merely reiterates the observation made in earlier cases that obvious or apparent damage to property is generally taken into account in setting the purchase price.
See St. Jude, 619 So.2d at 531 (emphasis in original).
This former codal provision was subsequently repealed and replaced with La. C.C. art. 1764, which describes the effects of real obligations. See Art. 1764, Revision Comments— 1984(a). Art. 1764, Revision Comment (d) explains former Art. 2011 was "suppressed because its provisions are conceptually inconsistent with other provisions of Louisiana law." La. C.C. art. 1764, Revision Comments—1984(d) explains further: "A particular successor, that is, one who acquires a thing by particular title, is not bound by the personal obligations of his author with respect to the thing, unless he has assumed these obligations by delegation. Conversely, a particular successor does not acquire, without stipulation to that effect, any personal rights that his author has with respect to the thing. For example, if the owner of an immovable who has made a contract for its repair sells the immovable, the purchaser is not bound to perform the obligation of the owner under the repair contract unless he assumes that obligation. Conversely, the purchaser does not acquire any right under the repair contract unless such a right is assigned to him."
According to St. Jude, the holding in Aizpurua was "in derogation of the general rule of non-recovery." St. Jude, 619 So.2d at 531.
A seller who did not know that the thing he sold had a defect is only bound to repair, remedy, or correct the defect. If he is unable or fails so to do, he is then bound to return the price to the buyer with interest from the time it was paid, and to reimburse him for the reasonable expenses occasioned by the sale, as well as those incurred for the preservation of the thing, less the credit to which the seller is entitled if the use made of the thing, or the fruits it has yielded, were of some value to the buyer.
A seller who is held liable for a redhibitory defect has an action against the manufacturer of the defective thing, if the defect existed at the time the thing was delivered by the manufacturer to the seller, for any loss the seller sustained because of the redhibition. Any contractual provision that attempts to limit, diminish or prevent such recovery by a seller against the manufacturer shall have no effect.
In this case, the court of appeal relied on Ricks v. Kentwood Oil Co., Inc., 2009-0677 p. 11-12 (La.App. 1 Cir. 2/23/10), 38 So.3d 363, 371-372, appeal denied, 2010-1733 (La.10/15/10), 45 So.3d 1112 (trigger for emotional/mental distress damages under insurance contract was after damage became known; interpretation of "occurrence"); Rando v. Top Notch Properties, L.L.C., 2003-1800 p. 4-18 (La.App. 4 Cir. 6/2/04), 879 So.2d 821, 825-834 (defects in construction that result in damage subsequent to completion are "occurrences" under insurance contract when they manifest); Oxner, 34,727 p. 11-12, 794 So.2d at 93 (property damage considered to have occurred when it became manifest, regardless of when the act from which it resulted occurred; insurance coverage excluded by other insurance provisions); and James Pest Control, Inc. v. Scottsdale Ins. Co., 99-1316 p. 12 (La.App. 5 Cir. 6/27/00), 765 So.2d 485, 491, writ denied, 2000-2285 (La. 10/27/00), 772 So.2d 657 (manifestation of termite damage triggered insurance coverage) as authority for its conclusion that injury is deemed to occur when the damage "manifests." See Eagle Pipe, 2009-0298 p. 8-9, 47 So.3d at 441. These theories of insurance contract interpretation, deriving from personal injury concepts, are not applicable here.
Moreover, because not factually relevant, we express no opinion as to the applicability of our holding to fact situations involving mineral leases or obligations arising out of the Mineral Code.