50 June / July 2010

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Debt Relief Agencies

Milavetz, Gallop & Milavetz, P.A., et al. v. United States, 559 U.S. ____, (2010) (Slip Opinion), No. 08-1119, 08-1225.

In Milavetz, the United States Supreme Court affirmed in part, reversed in part, and remanded the decision of the 8th Circuit. The court held that:

► attorneys who provide bankruptcy assistance to assisted persons are con-sidered to be debt relief agencies under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005;

► section 526(a)(4) of the Bankruptcy Code prohibits a debt relief agency from advising a debtor to incur additional debt because the debtor is filing for bankruptcy, as opposed to a valid purpose; and

► the obligations imposed under section 528 of the Bankruptcy Code, which sets out the requirements of debt relief agencies, are valid as applied to the plaintiff.

Plaintiff law firm and others filed a preenforcement suit seeking declaratory relief, asking the district court for vari-ous rulings. First, the plaintiff law firm requested a determination that it was not bound by the debt relief agency provi-sions of the Bankruptcy Code. The court held that the plain language of the statute and the statutory context indicates that attorneys are debt relief agencies when they provide “bankruptcy assistance” to “assisted persons” as those terms are defined in the Bankruptcy Code.

Second, the plaintiff law firm sought a determination that it was free to advise cli-

ents to incur additional debt. Initially, the 8th Circuit held that section 526(a)(4) was substantially overbroad. The Supreme Court rejected the 8th Circuit’s conclu-sion and held that the narrower reading of this section was the appropriate one, stating that section 526(a)(4) prohibits a debt relief agency only from advising the debtor to incur more debt because the debtor is filing for bankruptcy, as opposed to for a valid purpose. The court added that professionals remained free to speak fully and candidly about incurring debt in contemplation of filing a case under the Bankruptcy Code, explaining

that 526(a)(4) requires professionals to avoid instructing or encouraging assisted persons in that situation to take on more debt. The controlling question, the court stated, is whether the “impelling reason” for recommending that an assisted person incur more debt is “the prospect of filing for bankruptcy.” In a footnote, the court offered examples such as providing advice to refinance a mortgage or purchase a car prior to filing for bankruptcy in order to reduce interest rates or improve ability to repay as not being prohibited, since the anticipated filing was not the impelling cause. The court additionally rejected

Bankruptcy Law

Louisiana Bar Journal Vol. 58, No. 1 51

the plaintiff’s argument that narrowly construed section 526(a)(4) was imper-missibly vague.

Finally, the plaintiff law firm requested a determination that it was not required to identify itself as a debt relief agency and provide other disclosures in its ad-vertisements. Addressing the plaintiff’s “as-applied” challenge to section 528’s disclosure requirements, the court noted that the disclosure requirements regu-late commercial speech, and impose a disclosure requirement as opposed to an affirmative limitation on speech, and therefore must be reasonably related to the government’s interest in preventing the deception of consumers. Because the court determined that the requirements under section 528 which command the plaintiff to identify itself as a debt relief agency and include particular informa-tion about its bankruptcy-assistance and related services meet this standard, the provisions were upheld as applied to the plaintiff.

Succession Rights

Laughlin v. Nouveau Body & Tan, L.L.C., et al. (In re Laughlin), 09-10622 (March 29, 2010).

In Laughlin, the 5th Circuit reviewed the decision of the district court which affirmed the bankruptcy’s court’s judg-ment denying a discharge to the debtor under 11 U.S.C. § 727(a)(2). This section provides in relevant part that:

the court shall grant the debtor a discharge, unless . . . (2) the debtor, with intent to hinder, delay, or de-fraud a creditor . . . has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed . . . (A) property of the debtor, within one year before the date of filing of the petition . . . .

An adversary proceeding was filed by one of the debtor’s creditors who objected to the debtor’s discharge, arguing that the debtor’s renunciation of his interest in his father’s estate constituted a transfer of

property within one year of the filing of his bankruptcy petition, made with the intent to delay, hinder or defraud his creditors under section 727(a)(2). The 5th Circuit reversed the bankruptcy court’s judgment which denied the debtor a discharge and remanded the case.

The parties were in dispute as to whether the debtor’s pre-petition renun-ciation of his succession rights constituted a “transfer” under section 727(a)(2), and if it was a transfer, whether it was done with an intent to hinder, delay or defraud credi-tors. The 5th Circuit discussed that while the Bankruptcy Code defines “transfer,” it does not define “property” or “interest in property,” and when federal law does not control, “[p]roperty interests are cre-ated and defined by state law.” Quoting Butner v. United States, 440 U.S. 48, 55 (1979).

The court explained that Louisiana Code Article 947 provides that a suc-cessor is not obligated to accept rights to succeed, and when he renounces rights to succeed, he is considered never

to have had them. Article 967 of the Louisiana Code, which states that when a renunciation is “annulled in favor of a creditor,” it “remains effective against the successor,” was additionally not deemed to clearly recognize or create rights in a renouncing successor. Therefore, the 5th Circuit determined that a valid pre-petition renunciation of an interest does not amount to a transfer of the debtor’s property pursuant to section 727(a)(2) and held that the debtor’s discharge had been improperly denied.

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52 June / July 2010

Act 312 Jurisdiction Over Oilfield Site

Remediation Claims

The Louisiana 3rd Circuit Court of Appeal recently held that the Louisiana Department of Natural Resources (LDNR) does not have primary jurisdiction over oilfield site remediation claims and that the trial court does not have the discretion to refer litigation to LDNR prior to adjudication on the issues of damages and liability. Duhon v. Petro “E,” L.L.C., 09-1150, 09-1473 (La. App. 3 Cir. 4/7/10), ____ So.3d ____, 2010 WL 1379892.

Duhon involves property damage claims filed against several industry

defendants for alleged contamination of plaintiff’s property from oilfield operations, including oilfield waste storage and disposal in unlined pits. Plaintiff alleges that defendants conducted various oil and gas exploration and production activities, including the use of saltwater disposal wells, pits, tank batteries and treatment, separation and transportation facilities, which caused pollution on the property. Plaintiff also alleges that a September 2007 spill was reported to the Louisiana Department of Environmental Quality but nothing has been done to address plaintiff’s concerns or clean up the property. Defendants filed an exception of lack of subject matter jurisdiction based on the primary jurisdiction of the LDNR, which was granted by the 15th Judicial District Court. The court referred the matter to the LDNR “for review and such agency action as may be appropriate in advance of further consideration by this Court of the allegations of substandard conditions and/or non-compliance raised herein.”

Plaintiff appealed the trial court’s ruling.

On appeal, defendants argued that under La. R.S. 30:29 (commonly referred to as Act 312), subject matter jurisdiction is discretionary with the trial court, which may refer the case to LDNR at any time. Defendants also asserted that primary jurisdiction rests with LDNR. The 3rd Circuit rejected both arguments.

Quoting the Louisiana Supreme Court’s decision in M.J. Farms, Ltd. v. Exxon Mobil Corp., 07-2371 (La. 7/1/08), 998 So. 2d 16, the 3rd Circuit stated that:

Act 312 does not divest the district court of original jurisdiction... [N]ot only is the claim for environmental damages filed in the district court, the claim is not deferred to DNR until the district court determines environmental damage exists and further determines the legally responsible

Environmental Law

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Louisiana Bar Journal Vol. 58, No. 1 53

party. La. R.S. 30:29 (C)(1). Moreover, the district court is not required to adopt the plan approved by the administrative agency, and further retains jurisdiction to compare the various proposed plans, whether proposed by a party or the administrative agency, and determines which plan is “a more feasible plan to adequately protect the environment and the public health, safety, and welfare.” La. R.S. 30:29(C)(5).

In M.J. Farms, the Louisiana Supreme Court “made it clear that it is the job of the district court to determine whether environmental damage exists and who the legally responsible party or parties are prior to referral to the DNR.”

The 3rd Circuit also held that LDNR does not have primary jurisdiction in such matters. La. R.S. 30:29 “plainly sets forth a procedure whereby litigation is filed in the district court and remains there ” until a party admits liability or the finder of fact determines environmental damage exists and determines who is legally responsible for the damage. LDNR has the right, under La. R.S. 30:29, to intervene in the litigation, but the statute includes no referral mechanism to LDNR prior to a determination of damage and responsibility.

EPA Issues Final Action on Greenhouse Gas Emissions

Regulation at PSD and Title V Sources

On April 2, 2010, the Environmental Protection Agency (EPA) published its final action regarding its interpretation of the timing of greenhouse gas (GHG) emissions regulation at sources subject to the Clean Air Act (CAA) Prevention of Significant Deterioration (PSD) and Title V programs. 75 Fed. Reg. 17004, et seq., “Reconsideration of Interpretation of Regulations That Determine Pollutants Covered by Clean Air Act Permitting Programs.” Currently, GHG emissions are not regulated under the CAA and are not subject to CAA permitting requirements. It is anticipated that this will change

on Jan. 2, 2011, when EPA’s light-duty vehicle rule, which establishes GHG emissions standards and improved fuel economy standards for passenger cars, light-duty vehicles and medium-duty passenger vehicles, is expected to “take effect.” At that time, GHG emissions will become subject to regulation under the CAA’s PSD and Title V programs. EPA will be issuing a final Tailoring Rule setting forth details of the permitting requirements. On April 2, 2010, several industry groups filed a petition for review of this EPA final action in the U.S. Court of Appeals, District of Columbia Circuit. On May 7, 2010, EPA published its light-duty vehicle rule and several groups have filed a petition for review in the D.C. Circuit, challenging the rule.

—John B. Shortess Member, LSBA Environmental

Law Section Phelps Dunbar, L.L.P.

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C O N S T R U C T I O N

Family Law

Custody

Jarnagin v. Jarnagin, 09-903 (La. App. 3 Cir. 12/9/09), 25 So.3d 1028.

The trial court’s emphasis on some, but not all, of the relocation factors in its written Reasons for Judgment was not error, especially where it was clear from the record that the court had considered all of the factors. The court of appeal agreed with the trial court that the notice of intent to move was in good faith and not prompted by retaliation against Mr. Jarnagin for disapproving of her home schooling of the children. The trial court did not err in not appointing a mental health expert under La. R.S. 9:355.8; moreover, he could have retained his own expert.

Granger v. Granger, 09-272 (La. App. 3 Cir. 11/10/09), 25 So.3d 162.

The majority held that because the parties shared joint custody and had a physical custody schedule under La. R.S. 9:335 as a result of a considered decree, Dr. Granger’s request to change the physi-cal custody schedule sought to modify custody, not visitation (which only applies under La. Civ.C. art. 136 to a parent not granted custody or joint custody), and, thus, he had to meet Bergeron. Because the present physical custody schedule was not working due to changes that had occurred, any harm from a new schedule of less time to him during the school year and more time during the summer was outweighed by its advantages. The dis-sent disagreed that it was appropriate to apply Bergeron to a change in the access schedule only.

Richardson v. Richardson, 09-609 (La. App. 3 Cir. 11/18/09), 25 So.3d 203.

Although Mr. Richardson received military orders to transfer to Colorado (his preferred assignment) a month after the

54 June / July 2010

court named him the domiciliary parent, the trial court did not err in finding that he had not “orchestrated” the transfer in bad faith. Further, the trial court’s analysis of the relocation factors was well founded, and supported its allowing him to relo-cate with the two children, particularly considering her documented history of bipolar disorder and her inability to foster the relationship between the children and their father.

McCormic v. Rider, 09-2584 (La. 2/12/10), 27 So.3d 277.

After the child was adopted by the paternal grandmother, the biological mother and father, who had not married, sought custody of the child, alleging that the grandmother was unable to care for the child. The district court, under La. Civ.C. art. 133, treated the grandmother as the parent, and the parents as non-parents, and found that since substantial harm would result to the child if the grandmother maintained sole custody, joint custody should be shared among the three parties, with the mother named as the domicili-ary parent. The court of appeal reversed, finding that since the district court found that the grandmother was entitled to joint custody, the parents had failed to dem-onstrate that her custody would result in substantial harm to the child, and, thus, held that since no substantial harm was proven, the district court could not grant custody to the parents. The Supreme Court reversed, ruling that while sole custody to the grandmother would be detrimen-tal to the child, the triple joint custody arrangement, with the mother named domiciliary parent, would “alleviate” any

problem with her ability to care for the child. Moreover, since the fundamental goal was the best interest of the child, the court found that this arrangement would be in the child’s best interest by keeping the family unit intact.

Child Support

Fobbs v. Fobbs, 09-219 (La. App. 3 Cir. 11/10/09), 25 So.3d 168.

The court of appeal reversed the trial court’s finding Mr. Fobbs in contempt for non-payment of child support and medi-cal bills because Ms. Fobbs’ claim was vaguely pled, her evidence was unreliable and inconclusive, and her case was not proven with specificity by a preponder-ance of the evidence. It also found that the trial court had failed to give him credit for child support he had paid after the youngest child reached majority.

Property

Scarborough v. Scarborough, 44,814 (La. App. 2 Cir. 10/28/09), 25 So.3d 941.

The parties were separate in property, but individually guaranteed a debt of Ms. Scarborough’s corporation. After the com-pany defaulted, and the obligee obtained judgment against the parties as sureties, Ms. Scarborough paid the judgment and sued Mr. Scarborough for his virile share. The court of appeal found that he was a co-surety with her, not that she was the primary obligor “one and the same” with her corporation.

White v. White, 44,778 (La. App. 2 Cir.

10/28/09), 25 So.3d 885.Ms. White’s evidence was insuf-

ficient to show that Mr. White was late in making installment payments on a community property equalization debt so as to trigger an acceleration clause; the checks had gone to her attorney and then to her before she cashed them. The court of appeal upheld the trial court’s assessment of costs against his attorney, personally, under La. C.C.P. art. 863 for inappropriate and contradictory actions and representations to the court.

Anzalone v. Anzalone, 07-1905 (La. App. 1 Cir. 11/18/09), 25 So.3d 836.

Ms. Anzalone was entitled to one-half of the disability benefits received by Mr. Anzalone until the termination date of the community property regime. Once he reached age 70, the age at which he would have been able to begin receiving retire-ment benefits as a judge with less than 10 years of service, the disability benefits “converted” to retirement benefits, and she was “entitled to her proportionate share of the retirement benefit attributable to the six years [he] served as a Judge without disability during the marriage.” That is, the court “limit[ed] her share to the percentage she would have been en-titled to, had [he] not been disabled, and attributable to [his] six years of service as a Judge.” The dissent would have al-lowed her one-half of the entire benefit. The court of appeal held that she would not be entitled to surviving spouse benefits at his death because they were divorced, and she no longer met the statutory clas-sification as a surviving spouse (relying on LASERS v. McWilliams, but prior to the Supreme Court’s later reversing itself on this issue on rehearing).

—David M. PradosMember, LSBA Family Law Section

Lowe, Stein, Hoffman, Allweiss& Hauver, L.L.P.

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Louisiana Bar Journal Vol. 58, No. 1 55

Louisiana Public Works Act/Public Bids

Following the Aug. 20, 2009, promulgation by the Louisiana Division of Administration, Office of Facility Planning and Control, of the Louisiana Uniform Public Works Bid Form, the city of Covington let a project for bid (in September 2009) utilizing a bid form other than the standard form created and issued by the state. The city asked the attorney general for an opinion on whether Covington was required by law to have utilized the new standard bid form and, if so, whether the city was required to reject all bids on the basis of the city’s utilization of an improper bid form.

In Opinion Number 09-0304, issued Jan. 21, 2010, the attorney general weighed in. Utilizing what it described as “general rules regarding statutory interpretation,” the attorney general determined that the various legislative acts calling for the creation of the standard bid form obligate “public entities” (of which the city of Covington is one, in

accordance with the definition of that term in the Louisiana Public Bid Law, La. R.S. 38:2211 et seq.) to utilize the standard form for public projects required by law to be advertised and let to the lowest responsible and responsive bidder. The attorney general found that Covington’s use of a form other than the new standard form “cannot be considered to be mere informality or a waivable error,” further concluding that the city was required to reject all bids for the particular public bid (citing to the several recent court decisions in Louisiana, including Hamp’s Construction L.L.C. v. The City of New Orleans, 05-0489 (La. 2/22/2006), 924 So.2d 104. No mention was made by the attorney general on whether the standard form may be varied at all by the public entity conducting the bid.

Construction Servitudes/Civil Trespass

A general contractor responsible for placement of water and sewer lines incidental to the construction of an adjacent new highway in Plaquemines Parish was held liable for civil trespass on the property of homeowners whose property was affected by those utilities. In its defense, the general contractor offered proof of a fairly standard servitude agreement entered into between the parish and the homeowners, whereby the

homeowners consented to the placement of the water and sewer lines through their property.

The claims of the plaintiff homeowners in Boudreaux v. Plaquemines Parish Government, 09-0396 (La. App. 4 Cir. 9/30/09), 22 So. 3d 1117, however, were not concerning the location of the utilities on their property but rather focused on the storage of the general contractor of its equipment and materials in the servitude area for a period of six months. The trial court held that the general contractor was liable to the homeowners for civil trespass described by the court as “intentional,” and contemporaneously absolved the parish for any responsibility for the trespass because the general contractor qualified as an “independent contractor” (noting also that the general contractor should have notified the parish of its particular needs for storage so that the parish might have made appropriate arrangements).

In its review, the court of appeal examined Louisiana case law on similar servitudes and the general rule that other rights of use may be inherent in a servitude if those are ancillary to the principal use granted by the servitude — but only if the additional uses do not place a greater burden on a property. Convinced that the general contractor’s placement of equipment and materials on the plain tiffs’ property not only imposed

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Fidelity, Surety and Construction Law

56 June / July 2010

a greater burden on the plaintiffs but also was not performed in a manner which was as expedient as possible under the circumstances, the court of appeal affirmed the trial court’s judgment and the award by the lower court of monetary damages to the plaintiffs.

Louisiana Private Works Act Liens

Louisiana Private Works Act liens, having been declared by Louisiana courts to be “in deroga tion” of ordinary property rights, are supposed to be strictly construed. Some courts have disregarded various statutory lien requirements if the equities of the case demanded it. (The requirements for written Private Works Act liens are contained at La. R.S. 9:4822G.)

In Tee It Up Golf, Inc. v. Bayou State Construction, L.L.C., 2010 La. App. LEXIS 185 (3 Cir.), the court of appeal ruled against the lienholder on several elements of two liens, including one aspect of the liens — reasonable item-ization — seldom utilized by courts to invalidate liens. The court found that the liens were invalid for a number of reasons, including failure to properly describe the immovable/real property at issue (the liens only provided a municipal address, which is specifically prohibited by the Private Works Act); failure to properly state the amount of the claims (identical amounts due were stated in the two liens and the court deemed it unreason able to assume that “two separate projects in two separate locations” would have

identical claims on each); and failure to reasonably itemize the claims (claims for “Materials Supplied” did not satisfy the requirement of La. R.S. 9:4822G that a lien “reasonably itemize the elements comprising” the claim).

In the trial court, the party opposing the lien was granted $3,000 in attorney’s fees incurred in opposing the lien (having availed itself of the specific provisions of La. R.S. 9:4833 allowing for demand by letter for removal of an invalid lien and penalties for the lienholder’s failure to do so), although other damages sought were denied because plaintiff had not proven those. At the appellate level — although plaintiff’s demand for damages based upon frivolous appeal by the lienholder was rejected — the court of appeal granted plaintiff an additional $3,000 in attorney’s fees related to the cost of the plaintiff’s successful defense of the appeal.

Local Building Codes Are Incorporated into Building

Contract

Bonvillain Builders v. Gentile, 2009 WL 3530867 (La. App. 1 Cir. 10/30/09).

The owner hired a contractor to construct a medical office building. The contractor received initial approval for its building permit. Soon thereafter, the parish issued a cease-and-desist order, advising the contractor that its construc-tion plans did not conform to the parish building code requirements for drain-age systems. The contractor retained an engineer and found that the cost to complete the drainage system would be

an additional $47,422.02. However, the contractor did not disclose this cost to the owner until the project was nearly complete and a dispute arose as to who was responsible for this cost.

The contractor alleged that the drain-age costs were not contemplated in the contract. However, the owner argued that that the costs were contemplated in the contract as it was a requirement to make the office building code complaint.

The trial court agreed with the con-tractor, relying on the fact that this was a “hidden condition,” not contemplated in the contract. The court of appeal over-turned this ruling, holding that the drain-age work was included in the contract. The court examined the general rules of contractual interpretation, noted that there were no signed change orders by both parties, and concluded that the work, which was required to make the building code compliant, “formed an implied part of the construction contract, with the same force and effect as if it had been expressly stated therein.” The court also noted that:

where a parish or city has in effect a building code, the provisions of that building code form a part of every construction contract ex-ecuted in that parish or city. Such a contract contemplates a building constructed in compliance with local building code requirements, as though expressly written into the contract.

—Daniel Lund IIIMember, LSBA Fidelity, Surety

and Construction Law SectionShields Mott Lund, L.L.P. Ste. 2600, 650 Poydras St.

New Orleans, LA 70130and

Douglass F. Wynne, Jr.Member, LSBA Fidelity, Surety

and Construction Law SectionSimon, Peragine, Smith

& Redfearn, L.L.P.30th Flr., 1100 Poydras St.

New Orleans, LA 70163

Louisiana Bar Journal Vol. 58, No. 1 57

Insurance, Tort, Workers’ Compensation & Admiralty Law

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Insurance/Compulsory Arbitration

Todd v. Steamship Mutual Underwriting Ass’n (Bermuda) Ltd., ____ F.3d ____ (5 Cir. 2010).

Todd was injured while working aboard a replica steamboat owned and operated by the Delta Queen Steamboat Co., cruising the Mississippi River in Louisiana in 2000. Delta Queen filed bankruptcy in 2001, but Todd received approval from the bankruptcy court to proceed with a suit against the company. He won a judgment against Delta Queen in Louisiana state court in 2007, which judgment went unsatisfied. In 2008, Todd filed suit in Louisiana state court against Steamship Mutual, Delta Queen’s insurer,

under Louisiana’s direct action statute, La. R.S. 22:1269, which authorizes injured individuals to proceed directly against insurers when an insured tortfeasor is insolvent. Steamship Mutual removed to federal district court, asking to stay the proceedings and to compel Todd to arbi-trate his claims pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, under a clause in Delta Queen’s policy with Steamship Mutual requiring Delta Queen to arbitrate disputes with Steamship Mutual. The district court denied the motion to com-pel, citing the 5th Circuit’s decision in Zimmerman v. International Companies & Consulting, Inc., 107 F.3d 344 (5 Cir. 1997). In Zimmerman, an injured seaman filed suit against his employer’s insurer under Louisiana’s direct action statute. The insurer sought to stay the suit until the insurer had exercised its contractual right to arbitrate with the seaman’s employer. In declining the stay, the court focused on the Federal Arbitration Act, 9 U.S.C.

§§ 1-16 (2006) (FAA):

The FAA does not require arbitra-tion unless the parties to a dispute have agreed to refer it to arbitration. Likewise, the mandatory stay pro-vision of the FAA does not apply to those who are not contractually bound by the arbitration agreement. Thus, the FAA, the source of the federal policy favoring arbitra-tion, has no application to require direct action plaintiffs to arbitrate or to stay their lawsuits during arbitration.

Subsequent to the district court’s denial of Steamboat Mutual’s motion to compel arbitration, the Supreme Court decided Arthur Andersen, L.L.P. v. Carlisle, 129 S.Ct. 1896 (2009), effectively overruling Zimmerman, concluding that nonsigna-tories to arbitration agreements (such as direct action plaintiffs) may sometimes be compelled to arbitrate. While the FAA “creates substantive federal law regarding the enforceability of arbitration agree-

58 June / July 2010

ments, . . . background principles of state contract law” control the interpretation of the scope of such agreements, “including the question of who is bound by them, . . . ‘traditional principles’ of state law allow a contract to be enforced by or against nonparties to the contract through assump-tion, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estop-pel.” (quoting Williston on Contracts, § 57:19 [4th ed. 2001]).

Little League Dads Behaving Badly

Mark Baggett, et ux. v. Richard Tassin and Allstate Insurance Co., 93-803 (La. App. 5 Cir. 3/23/10).

Baggett and Tassin were attending their minor sons’ Babe Ruth baseball game. Tassin’s son was catching and Baggett was seated directly behind home plate at the lowest bleacher level. Various allegations of the parties are that Baggett was ragging

young Tassin for his poor play, and young Tassin turned to Baggett, inquiring “What is your problem?” At the end of the inning, Baggett walked toward young Tassin’s dugout. Tassin heard his son yelling and walked toward Baggett, whereupon he heard Baggett call his son a “smart-ass little m.f.-er.” Baggett’s testimony was that he had turned away and was leaving the vicinity of the dugout when he was struck from behind and pounced upon and beaten by Tassin pere. Tassin’s version is that he observed Baggett badgering his son from the bleachers. When Baggett walked toward the dugout and Tassin heard his son’s shouts and Baggett’s remarks, he po-sitioned himself between Baggett and the dugout to protect his son. When Baggett advanced upon him toward the dugout, Tassin pushed him, whereupon Baggett fell to the ground, and Tassin stood over him to prevent further advance, but denied striking him again.

At trial, Tassin’s homeowner’s insurer, Allstate, moved for and was granted

summary judgment to be dismissed as a party litigant based upon Tassin’s inten-tional act in battering Baggett. The policy provision relied upon by Allstate reads, in pertinent part:

We do not cover any bodily injury... intended by, or which may reason-ably be expected to result from the intentional or criminal acts... of the insured person. This exclusion applies even if:

such insured person lacks (a) the mental capacity to govern his . . . conduct.

The appellate court reviewed several earlier decisions involving intent, in-cluding the Louisiana Supreme Court’s holding in Breland v. Schilling, 550 So.2d 609 (La. 1989), that, in interpreting an intentional acts exclusion, the insured’s subjective intent regarding bodily injury, as measured by the fact finder, controls whether coverage applies.

In Inzinna v. Walcott, (La App. 1 Cir. 11/21/03), 868 So.2d 721, the defendant pulled a bar stool away from behind the plaintiff, who fell to the floor, arose and shoved defendant, who punched him in the face. The appellate court found the punch thrown by defendant was a “negligent reaction” in response to plain-tiff’s aggressive shove, and deemed the defendant’s action to be negligent rather than intentional.

Finding a genuine issue of material fact, i.e., whether Tassin acted in self-defense/defense of another (his son), rather than as an aggressor, the court held the case not ripe for summary judgment and remanded for further proceedings.

—John Zachary Blanchard, Jr.Member, LSBA Insurance, Tort,

Workers’ Compensation and Admiralty Law Section

90 Westerfield St.Bossier City, LA 71111

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World Trade Organization

After the largest decline in trade for more than 70 years, the World Trade Organization (WTO) reports that world trade in 2010 will rebound at an estimated rate of 9.5 percent. Exports from developed countries are expected to increase by 7.5 percent and exports from the remainder of the world are expected to rise by approximately 11 percent. The global recession contracted trade by an estimated 12.2 percent, and even the projected 2010 growth will not recover all of the lost ground. China remained the largest exporter in 2009 despite a 16 percent retraction, while Germany and the United States remained second and third, respec-tively, in total export volume. The United States remained the largest importer, despite

a 26 percent decline in imports.

United States

National Export Initiative, 75 Fed. Reg. 12433 (March 16, 2010).

In an effort to spur economic growth and create jobs, President Obama initiated an ambitious export initiative aiming to double exports within five years. The National Ex-port Initiative (NEI) establishes an Export Promotion Cabinet consisting of at least 14 members, including the Secretaries of State, Treasury, Agriculture, Commerce and La-bor. Some of the NEI goals include:

► develop programs designed to enhance and grow exports by small- and medium-sized enterprises (SMEs);

► promote resources to assist export activity;

► ensure that trade missions focus on export promotion;

► increase the availability of export credit to SMEs; and

► develop a framework for the promo-tion of exporting trade in services.

U.S.-India Framework for Cooperation on Trade and Investment Agreement (March 17, 2010).

The United States and India have clashed on numerous occasions during the ongoing Doha Round of negotiations within the WTO, primarily on agricultural subsidies and special safeguard mechanisms. In an effort to bridge the gap, the two countries signed a framework agreement on U.S.-India trade. The agreement reaffirms the existing U.S.-India Trade Policy Forum as the primary bilateral mechanism to negoti-ate bilateral trade objectives. The primary purpose of the framework agreement is to increase and facilitate trade flows, foster technological collaboration and innovation, and promote transparent procedures that can increase job growth in the two nations. Historically, India has sought greater access to the U.S. market for its workers through expansion of the U.S. commitments in Mode 4 of the WTO General Agreement on Trade in Services. Those efforts were routinely opposed by Sen. Edward Kennedy as chair of the Senate Judiciary Committee. It remains to be seen if this framework or

international Law

60 June / July 2010

any other forum will significantly improve delicate bilateral trade relations.

European union

Brita GmbH v. Hauptzollamt Ham-burg-Hafen, (Case C-386/08) (2008/C 285/43).

The European Court of Justice (ECJ) ruled on Feb. 25, 2010, on a question regarding whether goods that originate in the West Bank should be granted prefer-ential treatment (i.e., tariff free) under the EC-Israel Association Agreement. Brita is a German company that sought to import into Germany products manufactured in the West Bank. Brita informed the customs authorities that the goods originated in Israel in order to obtain preferential treat-ment, but when German customs asked their Israeli counterparts to confirm the origin of the goods, they failed to respond regarding whether the goods originated from the occupied territories. The German authorities refused preferential treatment and Brita brought suit against the German authorities, who referred the complaint to the ECJ.

The ECJ ruled that the EC-Palestinian Liberation Organization Association Agreement applied as it expressly includes the West Bank and the Gaza Strip. The EC-Israel Agreement did not contain specific language regarding these two areas and, therefore, the ECJ ruled that products originating in the West Bank are not en-titled to preferential market access under the EC-Israel agreement.

U.N. Commission on international Trade Law

Chevron Corp. and Texaco Petroleum Co. v. The Republic of Ecuador, Partial Award on the Merits (March 30, 2010).

Two U.S. petroleum companies invoked arbitration under the U.S.-Ecuador Bilateral Investment Treaty regarding alleged denial of justice under customary international law norms for lengthy delays by Ecuadorian courts in responding to claims by the com-panies involving expropriation measures taken by Ecuador. The arbitral tribunal considered whether the claims satisfied the definition of “investment” under the Bilateral Investment Treaty and whether claimants had exhausted all local remedies before pursuing arbitration.

The arbitral tribunal ruled that the claim did fall within the treaty and that Ecuador had breached the treaty due to the undue delay in providing a timely local remedy. The tribunal went further and issued a partial award of consequential damages in an amount to be decided by the tribunal in the future. This is a noteworthy result as it strengthens the impact of Bilateral Investment Treaties and requires U.S. treaty partners to provide adequate and timely local remedies, failing which substantial damages could be awarded.

—Edward T. HayesMember, LSBA International

Law SectionLeake & Andersson, L.L.P.Ste. 1700, 1100 Poydras St.

New Orleans, LA 70163

Mineral Law

Effective Date of Conventional Unitization

A landowner granted a series of three leases over the same land — the first two to the same lessee, and the third to a different lessee. Mobil Oil Exploration & Producing Southeast, Inc. v. Latham Exploration Co., 44,996 (La. App. 2 Cir. 2/3/10). The operator of a well filed a concursus, with the defendants being various parties that would have rights to production revenue depending upon which of the leases was effective.

There had not been production from the lease tract during the primary term of the first lease, but persons claiming rights under that lease argued that the lease had been maintained by production from a conventional unit. The court disagreed and held that the lease had terminated. Although the unit had been declared during the primary term, the declaration was not recorded until after the primary term. The lease required that any conventional unit be declared and recorded. The court held that the unit was not effective until both steps were completed.

The second lease had a similar unitization clause. A unit was declared and recorded during the primary term, and there was unit production. Concursus defendants whose rights depended upon the third lease argued, however, that the declaration had been ineffective because the declaration

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Louisiana Bar Journal Vol. 58, No. 1 61

SOLACE

Area Coordinator Phone E-mailAlexandria Area Elizabeth Erny Foote (318)445-4480 efoote@smithfoote.comBaton Rouge Area Ann G. Scarle (225)214-5563 ann@brba.orgCovington/Mandeville Area Suzanne E. Bayle (504)524-3781 sebayle@bellsouth.netDenham Springs Area Mary E. Heck Barrios (225)664-9508 mary@barrioslaw.comHouma/Thibodaux Area Danna Schwab (985)868-1342 dschwab@theschwablawfirm.comJefferson Parish Area Pat M. Franz (504)455-1986 patfranz@bellsouth.netLafayette Area Susan Holliday (337)237-4700 susan@lafayettebar.orgLake Charles Area Chantell Marie Smith (337)475-4882 csmith5@ldol.state.la.usMonroe Area John C. Roa (318)387-2422 roa@hhsclaw.comNatchitoches Area Peyton Cunningham, Jr. (318)352-6314 peytonc1@bellsouth.net Cell (318)481-5815New Orleans Area Helena N. Henderson (504)525-7453 hhenderson@neworleansbar.orgOpelousas/Ville Platte/Sunset Area John L. Olivier (337)662-5242 johnolivier@centurytel.net (337)942-9836 (337)232-0874River Parishes Area Jude G. Gravois (225)265-3923 judegravois@bellsouth.net (225)265-9828 Cell (225)270-7705Shreveport Area Sandra Haynes (318)222-3643 shaynes@shreveportbar.com

Support of Lawyers/Legal Personnel — All Concern EncouragedThe Louisiana State Bar Association/Louisiana Bar Foundation’s Community Action Committee supports the SOLACE program. Through the program, the state’s legal community is able to reach out in small, but meaningful and compassionate ways to judges, lawyers, court personnel, paralegals, legal secretaries and their families who experience a death or catastrophic illness, sickness or injury. For assistance, contact a coordinator.

referenced the first lease in describing the land that was included in the unit. The court rejected that argument, stating that the declaration had given a correct description of the land included in the unit, and that the lease’s unitization clause did not require the declaration to refer to the lease. Accordingly, the second lease had been maintained, and the third lease was a top lease that was not effective.

Working Interest Was “Security” for Purposes of

Blue Sky Law

The plaintiffs purchased a fractional working interest in an oil and gas lease. They also signed an agreement for one of the defendants to serve as operator, but the plaintiffs never paid their share of expenses. Macareno v. Karon, 2010 WL 743564 (W.D. La.). The plaintiffs sued to rescind their purchase of the working interest, arguing that the interest was a “security” and that the defendants breached the Louisiana Blue Sky Law by failing to register the security. The court agreed that the working interest qualified as a “security.” The court noted the Blue Sky Law has exemptions to the registration requirement, but concluded that none applied to the transaction at issue. The court denied the defendants’ motion for summary judgment.

JOA DisputeTwelve parties, including Yuma, entered

a joint operating agreement for production of oil and gas in a certain area. Mayne & Mertz, Inc. v. Sweet Lake Oil Co., 28 So.3d 1227 (La. App. 3 Cir. 2010). They each represented that they owned mineral interests in the area. The parties began producing minerals pursuant to the JOA, and Yuma received income from that production. Later, a court determined that Yuma’s lease interests were unenforceable because Yuma’s lessor did not own the mineral rights in the leased tract.

The JOA contained language stating that, in the event of title failure, “[t]here shall be no retroactive adjustment of expenses incurred or revenues received from the operation the Lease or Interest which has failed.” The court held that this language entitled Yuma to receive production revenue through the date its lease was declared invalid. Further, under the JOA:

[a]ny liability to account to a person not a party to this agreement for prior production of Oil and Gas which arises by reason of title failure shall be borne severally by each party . . . who received production.

Thus, each JOA party would bear a proportionate share of any liability to the owner of the mineral rights purportedly covered by the invalid lease.

Lease Enforceable Notwithstanding Payment of Bonus by Conditional Draft

The plaintiff granted a mineral lease, and the lessee issued a draft to the plaintiff for approximately $1.5 million. Davis v. Meagher Oil & Gas Properties, 2010 WL 819403 (W.D. La.). The face of the draft conditioned payment on the draft on the lessee’s approval of title within 30 days. Without ever presenting the draft for payment, the plaintiff filed suit seeking a declaration that the mineral lease was null, arguing that the conditional nature of the draft made the lessee’s obligation an illusory promise. The court rejected that argument, holding that the lessee’s obligation was not illusory and that the lease was not void.

—Keith B. HallMember, LSBA Mineral Law Section

Stone Pigman Walther Wittmann, L.L.C.

546 Carondelet St.New Orleans, LA 70130

For more information, go to: www.lsba.org/2007InsideLSBA/solace.asp.

62 June / July 2010

Mandatory Venue for Hospital Service District

Black v. St. Tammany Parish Hosp., 08-2670 (La. 11/6/09), 25 So.3d 711.

The plaintiff filed a lawsuit against St. Tammany Parish Hospital Service District No. 1, d/b/a St. Tammany Parish Hospital, and others in Washington Par-ish, where she alleged her cause of action arose. The defendants filed an exception of improper venue, arguing that La. R.S. 46:1063 mandates that a hospital service district, which is a political subdivision of the state, must be sued in the parish of its domicile — in this case, St. Tammany.

The district court granted the exception and transferred the suit to St. Tammany Parish, following which the court of ap-peal reversed and remanded the matter to Washington Parish, finding that La. R.S. 13:5104(B) controlled. The Supreme Court granted a writ solely on the issue of venue.

Venue provisions for suits against political subdivisions are set forth in La. R.S. 13:5104(B) and specify only two parishes in which political subdivisions can be sued: the parish in which the politi-cal subdivision is located, or the parish in which the cause of action arose. After evaluating the exceptions to venue rules, the Supreme Court said that:

. . . the plain language of La. Rev. Stat. §46:1063 indicates a legisla-tive intent that the parish of the hospital service district’s domicile would constitute the exclusive venue for actions against the hos-

pital service district.

The court concluded that logic de-manded that the Legislature’s use of the phrase “at which domicile it shall be sued” in §46:1063 meant that it intended for hospital service districts, though political subdivisions, only to be sued in the parish of their domicile.

The court recognized that in 2002 it had rendered a seemingly contrary holding in White v. Beauregard Memorial Hosp., 02-0902 (La. 6/14/02), 821 So.2d 481. The Black court observed:

. . . a careful study of the two relevant provisions renders only one interpretation logically con-sistent with the presumed purpose and intent of the legislature . . . that La. Rev. Stat. §46:1063 is a specific and mandatory provision which serves as an exception to the general rules of venue governing

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Pro Bono Heroes: Providing Justice for All

Very few pro bono cases make headlines or change laws. But many change the world—for that client. What is the fee

versus the value? How much for notarizing an instrument that unencumbers a person to care for his dying neighbor? How much for an expungement that allows a reformed parent to advance to a dream job? Your pro bono service acts as stimulus in tough times, and you will share the reward with your community.

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Professional Liability

Louisiana Bar Journal Vol. 58, No. 1 63

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Property Owner Not Entitled to Damages Based on

Actions Occurring Prior to Ownership

In Eagle Pipe and Supply, Inc. v. Amerada Hess Corp., 09-298 (La. App. 4 Cir. 2/10/10), the plaintiff (Eagle Pipe) discovered that property owned by it was allegedly contaminated with radioactive material prior to its acquisition. Eagle Pipe purchased the property in 1998. From 1981-88, the property was alleg-edly leased to Union Pipe (no longer a viable entity and, therefore, not made a defendant in the case), which operated an industrial pipeyard “that bought, stored, and sold used oilfield tubing.” At some point after the acquisition of the property by Eagle Pipe, the Louisiana Department of Environmental Quality (LDEQ) found Eagle Pipe to be in violation of state exposure regulations as a result of the presence of “technologically enhanced naturally occurring radioactive materials” and allegedly ordered that the property be remediated. Eagle Pipe, thereafter, sought relief against the former owners of the property, as well as the oil and trucking companies allegedly responsible for the contamination. The appellate court up-held the ruling of the trial court granting

Trusts, Estate, Probate & immovable Property Law

political subdivisions contained in . . . §13:5104(B).

The court held that the more specific statute (§46:1063) prevails as an excep-tion to the more general venue provisions (13:5104(B)), and “White’s holding to the contrary is hereby overruled.”

Birth Trauma Case

Schultz v. Guoth, 09-251, (La. App. 3 Cir. 1/13/10), 27 So.3d 1116.

Two physicians were sued because of their alleged untimely arrival at a hospital to perform an emergency C-section delivery. A medical review panel had found unanimously in favor of both physicians. One was dismissed from the lawsuit, and the second filed a motion for summary judgment, alleging that the plaintiffs would be unable to meet their burden of proof at trial because she had no expert witness. The trial court denied the motion for summary judgment, and the defendant filed an application for a supervisory writ.

The defendant argued that expert testi-mony was necessary to prove a breach of the standard of care in his case, particularly in light of the medical review panel’s opin-ion in his favor and an affidavit from one of the panelists stating that the defendant did not breach the standard of care.

The trial court had placed heavy reli-ance on Pfiffner v. Correa, 94-992, 84-924, 94-963 (La. 10/17/94), 643 So.2d 1228, in deciding that expert testimony is not always required in a medical malpractice case. Here, the defendant did not at-tempt to distinguish Pfiffner but instead pointed out that, in the 93 times Pfiffner was cited in later jurisprudence, none involved an obstetrical case. Here, the trial court found that there were genuine issues of material fact as to whether the defendant arrived timely at the hospital to respond to the emergency, whether he then waited too long to perform the C-section, and whether his delay caused the death of the unborn child. The court of appeal found that the mother did not need an expert to defeat the motion for summary judgment because a jury could reasonably infer negligence based on the

facts, despite the defendant’s claim that a layman cannot infer negligence from these facts and, furthermore, could not determine whether the child would have survived even if he had acted sooner.

The hearing on the motion was not recorded, preventing the court of appeal from determining what evidence, if any, was submitted by the plaintiffs. Neverthe-less, the court found that:

. . . it is possible that Ms. Brow will rely on the testimony of the defen-dant doctors themselves as to the standard of care and on Dr. Rabie’s testimony regarding his alleged breach of that standard of care. In addition, as noted in Pfiffner . . . the facts of this case could demonstrate that Dr. Rabie’s failure to respond timely to the patient’s emergency is an example of obvious negligence that requires no expert testimony to show his fault.

One judge dissented, opining that, without expert testimony, the plaintiffs would be unable to sustain their burden of proof concerning a breach and that the breach resulted in the damages sus-tained.

—Robert J. DavidGainsburgh, Benjamin, David, Meunier

& Warshauer, L.L.C.Ste. 2800, 1100 Poydras St.

New Orleans, LA 70163-2800

64 June / July 2010

exceptions of no right of action filed by the oil and trucking companies.

The exception of no right of action presents a question of law, which requires a de novo review by the appellate court. The function of the exception of no right of action is to determine whether the plaintiff belongs to the particular class of persons to whom the law grants the cause of action asserted in the petition. Eagle Pipe argued on appeal that the trial court essentially permitted the defendants to hide their alleged tortuous actions, and claimed it was a “damaged” party under La. Civ.C. art. 2315, but that a cause of action based on its damages did not ac-crue until the LDEQ notified Eagle Pipe of the contamination.

Citing St. Jude Med. Office Bldg. Ltd. Partnership v. City Glass and Mir-ror, Inc., 619 So.2d 529 (La. 1993), the court cited the general rule in Louisiana that “a purchaser cannot recover from a third party for property damage inflicted prior to the sale.” In affirming the trial court’s granting of the exception, the court held that damages to the owner of the land occurring prior to the sale of the land are personal to the owner and are not recoverable by the new owner without an express subrogation. “The landowner at the time of the alleged damages is the

person with the real and actual interest to assert the claim for damages to the land.” Eagle Pipe, 2010 WL at 3 (citing Dorvin Land Co. v. Parish of Jefferson, 469 So.2d 1011 (La.App. 5 Cir. 1985)). This personal right is not transferred by a mere transfer of title to the land but can only be transferred by a specific assign-ment of the right. A claim for damages, therefore, whether arising under a predial lease or mineral lease, is a personal right which must be specifically assigned to run with the property.

Eagle Pipe asserted that such rights were properly transferred in the sale of the property since the sale included the following language:

for consideration hereinafter men-tioned they do by these presents sell, transfer and deliver, with full guarantee of title and free from all encumbrances, and with subrogation to all their rights and action of warranty against previous owners.

The court held that this language was not a valid assignment of specific personal rights since the subrogation clause does not mention the assignment of alleged rights that the previous landowners

possessed pursuant to the leases, or an assignment of rights to seek damages for any alleged previous damage to the property.

Eagle Pipe unsuccessfully attempted to assert that it was a third-party beneficiary of any contracts that may have been ex-ecuted by and between the oil companies and Union Pipe. The court dismissed this argument, however, since Eagle Pipe was not able to identify a single contract to which it was a third-party beneficiary.

Judge Bonin dissented from the ma-jority opinion and cited La. Civ.C. art. 2315, which provides that, “[E]very act whatever of man that causes damage to another obliges him by whose fault it hap-pened to repair it.” Judge Bonin asserted that the damage was caused to Eagle Pipe and, therefore, Eagle Pipe certainly had a right or interest in bringing the lawsuit to recover its damages.

—Chad P. MorrowMember, LSBA Trusts, Estate, Probate and Immovable Property Law Section

Sher Garner Cahill Richter Klein & Hilbert, L.L.C.

909 Poydras St., 28th Flr.New Orleans, LA 70112

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