BARRY W. ASHE, District Judge.
Before the Court is a motion by defendant Trane U.S., Inc. ("Trane") for summary judgment.
This case concerns a malfunctioning heating, ventilation, and air conditioning system ("HVAC"). PNCS is a limited liability company that operates Vyoone's Restaurant located at 412 Girod Street, New Orleans, Louisiana ("the property").
On October 24, 2016, in connection with Steve's A/C's bid, Trane provided a proposal to supply the HVAC equipment for the project.
On March 16, 2017, Trane provided ADG with information regarding the HVAC system's product specifications and performance data.
Vyoone's Restaurant opened in November 2017.
PNCS filed this suit against Trane on March 29, 2019, alleging that the HVAC system continued to malfunction, and that Vyonne's Restaurant has lost customers, and thus revenue, due to the faulty equipment.
PNCS's lost profits claim is for the period of December 31, 2017, to April 2019.
Trane moves for summary judgment arguing that PNCS cannot prevail on any of its three alleged causes of action: negligence, stipulation pour autrui, or redhibition. Trane argues that PNCS's negligence claim is barred by the economic loss doctrine because PNCS is seeking lost profits (that is, economic damages) caused by the operational problems with the HVAC system itself and PNCS's inability to use it.
In opposition, PNCS argues that, although it did not plead a claim under the Louisiana Products Liability Act ("LPLA"), Louisiana law applies to this entire action because it is a products lability action and Louisiana Civil Code article 3545, the choice-of-law provision for the LPLA, dictates the application of Louisiana law.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial." Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324.
A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp't Opportunity Comm'n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). "[U]nsubstantiated assertions," "conclusory allegations," and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, 656 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant "when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990)).
After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998); Fed. R. Civ. P. 56(c)(1)(A) & (c)(2). Such facts must create more than "some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. When the nonmovant will bear the burden of proof at trial on the dispositive issue, the moving party may simply point to insufficient admissible evidence to establish an essential element of the nonmovant's claim in order to satisfy its summary judgment burden. See Celotex, 477 U.S. at 322-25; Fed. R. Civ. P. 56(c)(B). Unless there is a genuine issue for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.
To prevail on a negligence claim under Louisiana law, the plaintiff must prove: (1) the defendant had a duty to conform its conduct to a specific standard (the duty element); (2) the defendant's conduct failed to conform to the appropriate standard (the breach element); (3) the defendant's substandard conduct was a cause in fact of the plaintiff's injuries (the cause-in-fact element); (4) the defendant's substandard conduct was a legal cause of the plaintiff's injuries (the scope of liability or scope of protection element); and (5) the actual damages (the damages element). Lemann v. Essen Lane Daiquiris, Inc., 923 So.2d 627, 633 (La. 2006) (citing Fowler v. Roberts, 556 So.2d 1, 4 (La. 1989)). A negative answer to any of the inquiries of the dutyrisk analysis results in a determination of no liability. Mathieu v. Imperial Toy Corp., 646 So.2d 318, 326 (La. 1994).
In this case, PNCS alleges that Trane breached a duty of care owed to PNCS in the design, manufacture, and installation of the HVAC system.
"In most jurisdictions, the `economic-loss rule' bars recovery in tort when a party suffers economic loss unaccompanied by harm to his own person or property." Wiltz v. Bayer CropSci., Ltd. P'ship, 645 F.3d 690, 695 (5th Cir. 2011) (citations omitted). In Chevron USA, Inc. v. Aker Maritime, Inc., the Fifth Circuit explained the economic loss rule as follows:
604 F.3d 888, 900-01 (5th Cir. 2010) (citations omitted).
PNCS's tort claim against Trane seeking to recover lost profits resulting from the damaged product itself and PNCS's inability to use the product falls squarely under the economic loss rule, and it is thus barred. Although PNCS argues that the faulty HVAC system rendered the building unusable, its claim is not for remediation to the building, but rather for lost profits, which is prohibited by the economic loss doctrine. As such, Trane's motion for summary judgment is GRANTED as to PNCS's negligence claim, which is DISMISSED WITH PREJUDICE.
The parties dispute whether Louisiana or New York law applies to PNCS's claim for stipulation pour artrui (Louisiana) or third-party beneficiary contract (New York) concerning Trane's contract with Steve's A/C. Because PNCS did not provide an adequate choice-of-law analysis and PNCS's claim fails under both Louisiana and New York law, the Court will not resolve the choice-of-law issue.
Under Louisiana law, a contract for the benefit of a third party is called a stipulation pour autrui. Joseph v. Hosp. Serv. Dist. No. 2 of Par. of St. Mary, 939 So.2d 1206, 1211-12 (La. 2006). A stipulation pour autrui exists if (1) the contract manifests a clear intention to benefit the third party; (2) there is certainty as to the benefit provided the third party; and (3) the benefit is not a mere incident of the contract between the parties. Id. at 1212. "A stipulation pour autrui is never presumed." Id. The party claiming the benefit bears the burden of proof, which it cannot meet, unless the contract manifests a clear intention to benefit the third party. Id. Further, Louisiana law provides that "[t]he promisor may raise against the beneficiary such defenses based on the contract as he may have raised against the stipulator." La. Civ. Code art. 1982. Indeed, the rights of the third-party beneficiary under the contract cannot exceed those of the contracting parties. Avatar Expl., Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314, 318 (5th Cir. 1991).
New York law similarly provides that:
Nanomedicon, LLC v. Research Found. of State Univ. of N.Y., 112 A.D.3d 594, 596 (N.Y. Sup. Ct. 2013) (quotation marks and citations omitted). Moreover, a third-party beneficiary "has no greater rights under the contract than any of the contracting parties." MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 39 Misc.3d 1220(A) (N.Y. Sup. Ct. 2013); see also BAII Banking Corp. v. UPG, Inc., 985 F.2d 685, 687 (2d Cir. 1993).
Here, there is doubt whether PNCS has carried its burden of establishing that it was a third-party beneficiary of the contract between Trane and Steve's A/C. PNCS points to nothing in the contract that manifests an intent that it benefit therefrom. Rather, as a lessee of the property that did not itself pay for the renovations, PNCS received only an incidental benefit of the contract. Moreover, even if PNCS were a third-party beneficiary, it has no greater rights than the contracting party, Steve's A/C, and the contract specifically excludes recovery for incidental, indirect, and consequential damages, including lost profits, which constitutes PNCS's sole claim for damages. Because PNCS cannot maintain its third-party beneficiary claim under either New York or Louisiana law, Trane's motion for summary judgment is GRANTED as to PNCS's stipulation pour autrui claim, and it is DISMISSED WITH PREJUDICE.
Under Louisiana law, sellers impliedly warrant buyers against redhibitory defects, or vices, in the thing sold. La. Civ. Code art. 2520. A seller is liable to a buyer for a redhibitory defect when: (1) the seller sold a thing that is either absolutely useless for its intended purpose or its use is so inconvenient or imperfect that had the reasonable buyer known of the defect, he or she would not have purchased it; (2) the thing sold contained a non-apparent defect at the time of sale; and (3) the seller was afforded an opportunity to repair the defect. See, e.g., Hoffman v. B&G, Inc., 215 So.3d 273, 277-78 (La. App. 2017). An "action in redhibition may be brought only by a buyer against a seller of property ... [and] the existence of a sale to the buyer must be proven." Franks v. Royal Oldsmobile Co., 605 So.2d 633, 635 (La. App. 1992) (citations omitted).
Here, it is undisputed that PNCS was not the buyer of the Trane HVAC system. Thus, PNCS cannot bring an action in redhibition against Trane. Accordingly, Trane's motion for summary judgment is GRANTED as to PNCS's redhibition claim, which is DISMISSED WITH PREJUDICE.
Accordingly, for the foregoing reasons,
IT IS ORDERED that Trane's motion for summary judgment (R. Doc. 13) is GRANTED, and PNCS's claims are DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that Trane's motion to strike PNCS's expert witnesses (R. Doc. 14) is DISMISSED as moot.