The Four Seasons Coming to New Orleans, Eventually

In a promising development for The Four Seasons, Judge Tiffany G. Chase of Orleans Parish Civil District Court issued two rulings on November 10, 2015 in favor of the City of New Orleans, the New Orleans Building Corporation, and Carpenter-Woodward. The rulings were prompted by a suit initiated by Two Canal Street Investors, Inc., one of the eleven original bidders on the project to redevelop the World Trade Center building. Two Canal Street Investors, Inc. alleged that the vetting process utilized to award the project was unfair, secretive, and violated public leasing laws.

The redevelopment bid was granted to New Orleans Building Corporation and Carpenter-Woodward after a vetting process which left Carpenter-Woodward’s development plans scoring high over the other ten bidders, including Two Canal Street Investors, Inc. The eventual redevelopment will feature 350 rooms, 76 luxury condominiums, and 20,000 square feet of meeting space.

In one of its rulings, the court determined that the New Orleans Building Corporation was a properly qualified and constituted public benefit corporation pursuant to Louisiana law, despite the arguments presented by Two Canal Street Investors, Inc. The court granted two of the three motions for partial summary judgment in favor of New Orleans Building Corporation and Carpenter-Woodward, including one which found that the court had no authority to outright award Two Canal Street Investors, Inc. the redevelopment bid.

For a landmark property in New Orleans that has stood vacant for years, the rulings were a step in the right direction. With subsequent court decisions likely, a 2017 grand opening might be wishful thinking.

Caitlin R. Byars

Professional Negligence Exception to LLC Liability Shield Narrowly Construed

Pursuant to Louisiana Revised 12:1320, a limited liability company (“LLC”) organized in Louisiana is “solely and exclusively” liable for its members and employees. However, there are narrow exceptions to this exclusive liability protection (e.g. fraud, breach of professional duty, wrongful acts). In a recent case against a residential construction company, personal liability was imposed on the sole member and manager of the LLC. Plaintiff entered into a contract with Pinnacle Homes, L.L.C. (“Pinnacle”) for the construction of a home in Cameron Parish. The only member of Pinnacle was Lenard, a state-licensed contractor. Plaintiff filed suit against both Pinnacle and Lenard alleging that the home did not meet elevation guidelines, requiring plaintiff to spend substantial sums of money to elevate the house. The trial court denied Lenard’s exception for no cause of action and found him personally liable under the professional negligence exception. Similarly, the Louisiana Third Circuit affirmed the trial court’s decision imposing personal liability on Lenard.

On appeal to the Supreme Court of Louisiana, however, Lenard was found not to be a “professional” within the meaning of the professional negligence exception and, therefore, could not be personally liable. The Court observed that contracting is not one of the professional occupations codified and there is no evidence that the Legislature intended for contractors to owe a non-contractual duty to their customers. Extending the professional negligence exception to contractors, the Court warned, would cause untenable results that could expose members of LLCs to personal liability whenever they practice their trade under a state license. The Court further held that Lenard could not be liable under the “other negligent or wrongful act” exception as there was no evidence that Lenard owed a non-contractual duty to the plaintiff. An allegation of poor workmanship, the Court explained, was insufficient to establish negligence under the exception.

Nunez v. Pinnacle Homes, L.L.C.

Jeremiah N. Johns

Mining, To Infinity and Beyond . . .

Earlier this week, Congress passed H.R. 2262, the Space Act of 2015 (“Act”), allowing large-scale extraction of minerals from other plants or cosmic bodies. Specifically, the Act aims to “promote the right of U.S. commercial entities to explore outer space and utilize space resources, in accordance with such obligations, free from harmful interference, and to transfer or sell such resources.” According to the Act, any resources extracted will belong to the entity that obtained such resource, which lays the legal groundwork for privatization of extra-planetary resources. Proponents of the Act have compared it to the passage of The Homestead Act of 1862 which advocated for the search of gold and timber at a time when both resources were relatively underdeveloped. However, though the passage of the Act would allow for the privatization of resources in outer-space, there is not yet a law which dictates how an Earth-based government will regulate such an industry. If, and when, the President approves the Act, there will surely be more legal guidance to follow.

Caitlin R. Byars

Ignoring Court Orders and Deadlines Cost Plaintiffs

Here is just another example of why it is always important to comply with court orders and deadlines. While inmates at a correctional facility, plaintiffs were involved in an automobile accident during a work assignment transport. Plaintiffs filed suit against the driver of the automobile, as well as the driver’s employer, the Richwood Correctional Center (“RCC”).

Thereafter, the sheriff was unable to effect service on the driver, who as a result filed a declinatory exception for insufficiency of service of process. The court denied the exception, but ordered the plaintiffs to personally serve the driver with the lawsuit within 30 days. Despite the court’s order, plaintiffs failed to serve the driver over the course of the next four months, and the court ultimately dismissed the plaintiffs’ claims against the driver with prejudice. Moreover, plaintiffs failed to abide by a court order instructing them to respond to the defendants’ discovery requests. As a result, the court awarded attorney’s fees and costs to the defendants and dismissed plaintiffs’ entire case against the defendants with prejudice.

Plaintiffs unsuccessfully moved for a new trial, and thus appealed the dismissal of their case to the Louisiana Second Circuit Court of Appeals. On appeal, the trial court’s dismissal of the suit against the driver was upheld. The Second Circuit noted that although plaintiffs were warned that failure to serve the driver could result in dismissal, they failed to effectuate service for more than four months. With respect to plaintiffs’ failure to respond to discovery, the Second Circuit asserted that Article 1471 of the Louisiana Code of Civil Procedure permits a court to strike pleadings or dismiss an action for failure to obey an order. The refusal to comply with court-ordered discovery is a serious matter, and trial judges must have severe sanctions available to deter litigants from flouting discovery orders. The trial court’s dismissal of the entire case was affirmed. This case is a cautionary tale providing yet another example why it is never a good idea to ignore court orders and deadlines.

Alcorn v. Duncan

Jeremiah N. Johns

Sixth Circuit Stays Recently Implemented Clean Water Rule

According to the EPA, the Clean Water Rule “ensures that waters protected under the Clean Water Act are more precisely defined, more predictably determined, and easier for business and industry to understand.” Specifically, the EPA states the Clean Water Rule clearly defines and protects tributaries that impact the health of downstream waters, and provides certainty in how far the safeguards extend to nearby waters, ultimately reducing a case-specific analysis as to what is protected under the Clean Water Act. The Clean Water Rule went into effect August 28, 2015. The U.S. Sixth Circuit Court of Appeals, however, recently stayed the implementation of the Clean Water Rule.

Eighteen states have challenged the validity of the Clean Water Rule, including Louisiana. These states contend that the rule expands the agencies’ regulatory jurisdiction and alters the balance of federal/state collaboration. Furthermore, the states argue that the rule, which seeks to define “significant nexus to navigable waters,” is inconsistent with the law as defined by the United States Supreme Court. In response, the EPA contends that the states did not make a requisite showing to justify a stay.

The Sixth Circuit ultimately concluded that the states had demonstrated a substantial possibility of success on the merits of their claims. The states took issue with the way the rule was promulgated administratively. Initially, the proposed Clean Water Rule did not include distance limitations in its treatment of “adjacent waters,” and waters having a “significant nexus,” as was provided in the final rule. Therefore, the proposed Clean Water Rule was not a logical outgrowth of the final rule, as required by 5 U.S.C. §553. Second, the Sixth Circuit concluded that the irreparable harm factor was not determinative for each side. Neither the states would be harmed by the rules continued application, nor was there any indication that the nation’s waters would be harmed without it. Finally, and more importantly, the Sixth Circuit noted the nationwide burden on private parties and government bodies—state and federal—implicated by the Clean Water Rule’s effective redrawing of jurisdictional lines. Accordingly, the Clean Water Rule is stayed for now, pending further litigation.

In re E.P.A.

Juan C. Obregon

Significant Award of Sanctions Upheld by Louisiana Third Circuit

Allegations of child abuse during the pendency of a custody proceeding prompted the filing of a separate lawsuit based upon the alleged abuse. During the child custody proceeding, the judge determined that the abuse allegations were not proven. The civil case proceeded for more than a year after the disposition of custody proceeding. When the civil case came on for trial, the minor child was unwilling to testify. As a result, the plaintiff did not proceed with the trial and the case was dismissed.

The defendant in the civil case later filed a rule for sanctions against the attorney who filed the civil lawsuit, arguing that the suit was in violation of Louisiana law governing attorney conduct. The defendant, and now mover, alleged the suit was filed without sufficient investigation of the claims, that there was a failure to investigate through discovery and a refusal to dismiss the case after a lack of evidence of abuse was found in the custody case. The defendant argued that this amounted to an attempt to harass her and scare her into paying money. The trial judge agreed and awarded more than $20,000.00 in sanctions against the plaintiff’s attorney.

On appeal, two judges on the Third Circuit panel found no manifest error in the trial court’s determination that the plaintiff’s attorney had violated the law and the award of sanctions was upheld. One judge dissented, noting her belief that the trial court was manifestly erroneous in finding no reasonable basis for the plaintiff’s claim.

Stegall v. Laborde

Trevor M. Cutaiar

TransCanada Requests U.S. State Department Suspend its Permit for Keystone XL Pipeline

TransCanada Corp., the company behind the Keystone XL Pipeline, has asked the U.S. State Department to suspend its application while the company goes through the state review process in Nebraska. The company is expecting the permit application to be rejected by the Obama administration, with the decision expected as soon as this week. The letter requesting a halt to the permit application comes in the wake of both a likely rejection and low oil prices, which have been detrimental to business interests in Canada’s oil reserves.

By way of background, the proposed pipeline would span 1,700 miles across six states and move as many as 830,000 barrels of oil a day, mostly from Canada’s oil sands through Nebraska, where it would then connect to existing pipelines to Gulf Coast refineries. The project has met staunch opposition in Nebraska due to the pipeline’s path through the state.

In a letter to the State Department, the company explained: “[i]n order to allow time for certainty regarding the Nebraska route, TransCanada requests that the State Department pause its review of the presidential permit application.”

In September 2015, the company signaled a change in strategy when it dropped legal challenges and efforts to seize land in Nebraska. The hope is that the strategic move will extend the review process while details on the Nebraska pipeline route are worked out. Some see this as an attempt to extend the review process until the commencement of the next presidential administration—all republican candidates support the pipeline and all democratic candidates oppose it.

For more information, see

Juan C. Obregon

Louisiana Supreme Court Speaks – Attorney Discounts are Not Collateral Sources

In a matter of first impression, the Louisiana Supreme Court has ruled that the collateral source rule does not apply to attorney-negotiated discounts. As such, the defendant tortfeasor is only responsible for the actual amount paid by the plaintiff to the provider, and the plaintiff cannot recover the amounts that are written off as discounts. In Hoffman v. 21st Century, 2015 WL5776131 (La. 10/2/15), the plaintiff attempted to recover $3,000 charged by an MRI facility when the records showed that the only $950.00 was paid to the provider. The remainder of the balance was written off as an attorney discount. The plaintiff argued that the collateral source rule applied because he diminished his patrimony by virtue of his contractual obligation to pay attorney fees, but the Court rejected this argument.

It will be interesting to see if the plaintiff’s bar and medical providers heavily involved in personal injury claims will modify their practices in an attempt to get around the Court’s decision in Hoffman.

Gerard J. Dragna

Update – Fantasy Sports in Louisiana

On October 13, 2015, a class-action lawsuit was filed against FanDuel and DraftKings, the two competing daily fantasy sports (“DFS”) websites, in U.S. District Court for the Eastern District of Louisiana. DFS website games operate in much the same manner as normal season-long fantasy sports games except that each game may only include one week or one day of fantasy play. Users or subscribers in these games pay an entry fee and use a set “salary cap” to choose a team of sports players with preassigned costs set by the DFS sites themselves. The performance of a DFS user’s team is based on the actual performance of the real athletes picked for the team. In these DFS tournaments, cash prizes are paid to the highest performing DFS teams.

The suit alleges that FanDuel and DraftKings conspired to develop a market for DFS through fraudulent means. Specifically, that the companies’ deliberate misrepresentations and omissions used to attract as many users as possible resulted in windfalls to the companies and their employees with access to insider data with respect to the composition of winning lineups. The suit alleges that the companies’ deceptive marketing practices and activities of mail fraud, wire fraud, and use of interstate facilities to conduct unlawful activity amount to violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Additionally, the suit alleges that the companies violated various state consumer protection statues and the Uniform Deceptive Trade Practices Act.

As previously reported, DFS are not legal in Louisiana and the defendants in this suit do not allow users to play with billing addresses in the state. The named plaintiff in the subject suit asserts that he is a resident of New Orleans and alleges that Defendants conduct substantial business in the district. As this litigation moves forward, it will be interesting to see how these facts may affect the Court’s rulings on Defendants’ potential challenges to jurisdiction and venue.

Genchanok v. FanDuel, Inc., et. al.

Pierce C. Azuma

Blood on the Dance Floor

In Mills v. Cyntreniks Plaza, L.L.C., the plaintiff was attending a birthday party with friends at The Lyceum Dean Ballroom (“ballroom”) in Baton Rouge, an establishment operated by Cyntreniks Plaza, L.L.C. (“Cyntreniks”). While plaintiff was attending a private party, the ballroom was open to the general public and included a cash bar and DJ playing music on a stage near the dance floor. Plaintiff and her friends had purchased drinks at the bar and were dancing when plaintiff slipped and fell on a clear liquid and glass located on the dance floor. Plaintiff left the ballroom without reporting the incident and she was treated for two broken bones in her left arm that required surgery. Plaintiff later filed suit against Cyntreniks for the incident. In response, Cyntreniks filed for summary judgement contending that plaintiff could not meet her burden of proof under the Merchant Liability Statue (“MSA”). Cyntreniks’ motion was granted by the district court and plaintiff appealed.

Under the MSA, a merchant owes a duty to exercise reasonable care to keep its floors in a reasonably safe condition. La. R.S. 9:2800.6(A). A “merchant” is one whose business is to sell goods, foods, wares, or merchandise at a fixed place of business. La. R.S. 9:2800.6(C)(2). Although the ballroom was an “events” venue, where weddings, concerts, parties, meetings, and other private events could be held, the Louisiana First Circuit Court of Appeal determined that, on the date of plaintiff’s injury, it was operating as a night club or cocktail lounge and concluded that the ballroom qualified as a merchant within the meaning of the MSA. The First Circuit acknowledged that a claimant carries a heavy burden and failure to prove any element of the MSA results in the failure of the claimant’s entire action. The record showed that Cyntreniks had neither actual nor constructive knowledge of the liquid or broken glass. Accordingly, the First Circuit held that plaintiff failed to meet her burden, and Cyntreniks was entitled to summary judgment. The judgment of the district court was affirmed.

Mills v. Cyntreniks Plaza, L.L.C.

Pierce C. Azuma