KB Home/Shaw La., LLC v. Enterprises

KB HOME/SHAW LOUISIANA, LLC AND KB HOME NEW ORLEANS INC. v. VINSON ENTERPRISES, LLC OF FLORIDA AND XYZ INSURANCE COMPANY

NO. 2017 CA 1321

STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT

December 6, 2018

NOT DESIGNATED FOR PUBLICATION

Appealed from the 22nd Judicial District Court In and for the Parish of St. Tammany, State of Louisiana

Trial Court No. 2017-10120

Honorable August J. Hand, Judge

SCOTT C. BARNEY

DOUGLAS L. GRUNDMEYER

BATON ROUGE, LA

COUNSEL FOR

PLAINTIFFS-APPELLANTS

KB HOME/SHAW LOUISIANA, LLC AND

KB HOME NEW ORLEANS, INC.

JOHN I. HULSE IV

STEPHEN K. CONROY

AMANDA D. HOGUE

METAIRIE, LA

COUNSEL FOR

DEFENDANT-APPELLEE

VINSON ENTERPRISES, LLC OF

FLORIDA

BEFORE: GUIDRY, PETTIGREW, CRAIN, THE RIOT, AND PENZATO, JJ.

PETTIGREW, J.

This is an appeal of a judgment that dismissed a breach of contract action between a general contractor and a subcontractor pursuant to a peremptory exception raising the objection of peremption. The judgment also sustained a peremptory exception of no right of action. For the following reasons, we reverse, render, and remand.

FACTS AND PROCEDURAL HISTORY

KB Home New Orleans, Inc. is the sole owning member of KB Home/Shaw Louisiana, LLC, a foreign limited liability company that served as general contractor for the construction of a residential building in the Guste Island subdivision in Madisonville, Louisiana (KB Home New Orleans, Inc. and KB Home/Shaw Louisiana, LLC are referred to collectively herein as "KB Home."). In May 2007, KB Home entered into an agreement with Vinson Construction Services, LLC ("Vinson Construction"), whereby Vinson Construction was hired as a subcontractor to supply concrete and perform the foundation work on the building. Problems later arose allegedly related to the foundation work performed by Vinson Construction. KB Home paid the expenses to remediate the complaints of the owners of the units in the building and then unsuccessfully sought indemnification under the May 2007 agreement for the costs incurred.

On January 9, 2017, KB Home filed a petition for breach of contract and damages against Vinson Enterprises, LLC of Florida ("Vinson Enterprises"), asserting that it was the company formerly known as Vinson Construction, again seeking indemnification for the remediation expenses it had incurred. Vinson Enterprises answered the petition acknowledging that it was named a defendant in the action, but otherwise denying the allegation that it was formerly known as Vinson Construction. Vinson Enterprises also asserted peremptory exceptions raising the objections of peremption and no right of action. It alleged that KB Home's claims were perempted pursuant to the five-year peremptive period provided in La. R.S. 9:2772 and that KB Home had no right of action because no contract existed between KB Home and Vinson Enterprises.

A hearing on Vinson Enterprises' peremptory exceptions was held on May 31, 2017. Following the hearing, the trial court ruled in favor of Vinson Enterprises, sustaining both exceptions. The written judgment, signed June 12, 2017, recognized that KB Home's suit was perempted and dismissed the suit with prejudice on that basis. With regards to the objection of no right of action, the judgment stated:

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Exception of No Right of Action is MAINTAINED; provided, however, that in the event plaintiffs are successful on any timely appeal of this Judgment on peremption, plaintiffs have thirty (30) days from entry of reversal on appeal to amend their Petition for Breach of Contract and Damages to name the correct defendant.

KB Home timely sought a devolutive appeal of the June 12, 2017 judgment.

After the appeal was lodged with this court, a rule to show cause was issued questioning whether the June 12, 2017 judgment was final because of the conditional language in the ruling on the Exception of No Right of Action. In response to the rule to show cause, the parties submitted briefs asserting that the June 12, 2017 judgment was final and appealable based on the trial court dismissing KB Home's suit in its entirety based on peremption. Thereafter, following an interim order issued by this court inviting the trial court to consider amending the phraseology of the judgment to remove the conditional language, the trial court signed an amended judgment on December 21, 2017, wherein it stated that "it is the opinion of this Court that the matter is perempted and that Vinson Enterprises, LLC of Florida is not a proper party." The trial court dismissed KB Home's action with prejudice based on peremption, and designated this portion of the judgment as a final judgment under La. C.C.P. art. 1915(B). The trial court also stated that "the Exception of No Right of Action is MAINTAINED." After the record on appeal was supplemented with the December 21, 2017 amended judgment, a panel of this court issued a ruling to maintain the appeal, but stated that "a final determination as to whether this appeal is to be maintained is reserved for the panel to which the appeal is assigned."

The dismissal of the suit with prejudice on an exception of peremption is determinative of the merits in whole; therefore the judgment is final, and La. C.C.P. art. 1915(B) certification is not necessary. See La. C.C.P. art. 1841. Furthermore, when an unrestricted appeal is taken from a final judgment, the appellant is entitled to seek review of all adverse and interlocutory rulings prejudicial to him, in addition to review of the final judgment. Jackson v. Wise, 17-1062, p. 3 (La. App. 1 Cir. 4/13/18) 249 So.3d 845, 850. For the above reasons, the appeal is maintained.

ASSIGNMENTS OF ERROR

On appeal, KB Home alleges the trial court committed the following errors:

1. The [trial] court erred in dismissing KB Home's claims as perempted under the five-year periods of La. R.S. 9:2772 and La. R.S. 9:3144(A)(3), where Vinson failed to introduce any evidence establishing the commencement of the applicable peremptive period.

2. The [trial] court erred in concluding that KB Home untimely filed its claims, where KB Home and Vinson validly agreed to lengthen the applicable peremptive period to ten years, and KB Home timely filed its claims within that extended period.

3. The [trial] court erred in maintaining Vinson's exception of no right of action, where Vinson failed to establish that KB Home does not belong to the class of parties entitled to bring the claims asserted in this action.

DISCUSSION

We will begin our review with KB Home's second assignment of error, in which it argues that the trial court erred in not finding that the contractual agreement effectively allowed it up to ten years to file its indemnification claim based on alleged construction defects, thereby extending the peremptive period applicable to its claim. To support its contention, KB Home relies on the following language in Paragraph 19 of the May 2007 agreement with Vinson Construction, entitled "Warranty; Customer Service; and Louisiana Home Warranty Act":

Subcontractor warrants and represents to Contractor that the workmanship of the Work ... shall be in conformance with this Subcontract and the Contract Documents, be of the finest quality, and be free from faults and defects of design, material and workmanship for at least the period(s) set forth in Contractor's warranty, which is incorporated herein by reference, or for such longer periods as may be required by FHA, VA and/or other applicable governmental authorities.

KB Home Home's "New Home Limited Warranty Agreement" provides a ten-year warranty against any major structural defect,¹ commencing from the date the homeowner closed on the purchase of the home from KB Home.

However, Louisiana Revised Statutes 9:2772 provides, in pertinent part:

A. Except as otherwise provided in this Subsection, no action, whether ex contractu, ex delicto, or otherwise, including but not limited to an action for failure to warn, to recover on a contract, or to recover damages, or otherwise arising out of an engagement of planning, construction, design, or building immovable or movable property . . . shall be brought against . . . any person performing or furnishing the design, planning, supervision, inspection, or observation of construction or the construction of immovables, or improvement to immovable property, including but not limited to a residential building contractor as defined in R.S. 37:2150.1:

(1)(a) More than five years after the date of registry in the mortgage office of acceptance of the work by owner.

(b) If no such acceptance is recorded within six months from the date the owner has occupied or taken possession of the improvement, in whole or in part, more than five years after the improvement has been thus occupied by the owner.

. . .

B. (1) The causes which are perempted within the time described above include any action:

(a) For any deficiency . . . in the construction of any improvement to immovable property, including but not limited to any services provided by a residential building contractor as defined in R.S. 37:2150.1(9).

(b) For damage to property, movable or immovable, arising out of any such deficiency.

. . .

(3) Except as otherwise provided in Subsection A of this Section, this peremptive period shall extend to every demand, whether brought by direct action or for contribution or indemnity or by third-party practice, and whether brought by the owner or by any other person.

Although KB Home acknowledges that peremption may not be renounced, interrupted, or suspended (see La. C.C. art. 3461), it nonetheless argues that the parties to the May 2007 agreement merely "extended" and did not "renounce" the peremptive period provided by law. While the parties to the May 2007 agreement did agree to a warranty period that would otherwise hold the subcontractor liable for a period beyond the peremptive period established in La. R.S. 9:2772,² the warranty provision directly conflicts with governing statutory law.³ Hence, the contractual provision...