Title: Eagle Pipe & Supply, Inc. v. Amerada Hess Corp.

State: louisiana

Issuer: Louisiana Supreme Court

Document:

SUPREME COURT OF LOUISIANA.
NO. 2010-C-2267
CONSOLIDATED WITH

NO. 2010-C-2272, 2010-C-2275, 2010-C-2279
AND 2010-C-2289

EAGLE PIPE AND SUPPLY, INC.
VERSUS.
OCT 2.5 zon
AMERADA HESS CORPORATION, ET AL.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FOURTH CIRCUIT, PARISH OF ORLEANS

CLARK, Justice.!

m /2.C __ Theissue presented in these consolidated matters arises from the sale of land

to the plaintiff, who later discovered that the land was allegedly contaminated with
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radioactive material. The plaintiff filed suit against the former landowners and the
oil and trucking companies allegedly responsible for the contamination, In the
district court, exceptions of no right of action raised by the oil and trucking
companies were granted. The court of appeal initially affirmed this decision, but
reversed on rehearing.

‘We granted writs to determine whether a subsequent purchaser of property has
the right to sue a third party for non-apparent property damages inflicted before the
sale in the absence of the assignment of or subrogation to that right. After review, we
find the fundamental principles of Louisiana property law compel the conclusion that
such a right of action is not permitted under the law. Instead, the subsequent
purchaser has the right to seek rescission of the sale, reduction of the purchase price,

or other legal remedies. For the following reasons, we hold the appellate court on
Qfark, 3. Comcurs and

ane] Reasons
" Rete Jude Robe. Lobes aigned as otic ao, ing Stic Janet Kool ee

  

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rehearing erred by reversing the district court’s granting of the peremptory exceptions
‘of no right of action on behalf of the oil and trucking companies. Accordingly, we
reverse the court of appeal’s decision on rehearing and reinstate the ruling of the
istrict court.

FACTUAL AND PROCEDURAL
BACKGROUND

This mater is before the court on an exception of no right of action. Although
evidence is admissible on the trial of such an objection “to support or controvert any
of the objections pleaded,” La. C.C.P. art. 931, the only evidence admitted at the
hearing in this case was the bill of sale for the property at issue. This bill of sale was
also attached to the petition. Consequently, our recitation of the facts is necessarily
obtained from the allegations in the petition. “For purposes of the exception all well
pleaded facts in the petition must be taken as true.” Harwood Oil & Min. Co. v.
Black, 240 La. 641, 649, 124 So.2d 764, 766-767 (1960), superceded by statute on
other grounds, recognized in Salver, Inc. v. Lewis, 546 So.24 1309 (La. App. 3 Cir
1989).

On July 15, 2008, Eagle Pipe and Supply, Inc. (“Eagle Pipe” or plaintiff) filed

4 petition for damages in the Civil District Court for the Parish of Orleans,

 

leging
causes of action for breach of contract, negligence, strict liability, redhibition, fraud
and conspiracy in connection with property Eagle Pipe acquired two decades earlier?
‘Named in the petition were four groups of defendants: (1) ten oil companies,

collectively referred to as the “Oil Company Defendants;” (2) eight trucking

 

> See Petition, $Y VII(1-8); Vol. 1, p. 6-8.

? The Oil Company Defendants named in the petition are: (1) Hess Corporation f/k/a
‘Amerada Hess Corporation; (2) Chevron U.S.A. Ine. (3) Exxon Mobil Corporation; (4) Kerr-MeGee
Oil & Gas Corporation; (5) OXY USA, Inc. individually and as successor in interest to Placid Oil
Co,; (6) Shell Offshore, Inc. (7) Shell Oil Company; (8) SWEPI, LP; (9) Stone Oil Company; and
(10) Berry Petroleum Company. See Petition, §{1I(1-10); Vol. 1, p. 1-3. The record doesnot reflect
that Stone Oil Company filed an answer or exceptions to the petition, When the defendants are

 

2
 

 

companies, collectively referred to as the “Trucking Company/Transporter
Defendants; (3) Robert Bridges, Patsy Tremble Bridges and Edmund J. Baudoin,
It, collectively referred to as the “Former Property-Owner Defendants,” and (4)
ABC Insurance Company, Inc.®

According tothe petition, more than twenty years ago, on April22, 1988, Eagle
Pipe purchased property in Lafayette Parish from the Former Property Owner
Defendants.” For several years before the sale, from 1981 to 1988, the Former
Property Owner Defendants allegedly leased the property at issue to Union Pipe and
Supply, Inc. (“Union Pipe”), which operated a pipe yard or pipe cleaning facility on
the property. In conducting its business, Union Pipe allegedly bought, cleaned, stored
and sold used oilfield tubing from the Oil Company Defendants. ‘The Trucking
Company/Transporter Defendants allegedly transported the tubing from the Oil
Company Defendants to Union Pipe's facilities,

Eagle Pipe asserted that radioactive scale known by the acronym TENORM
‘was removed from the tubing or pipes during Union Pipe’s cleaning process and was
deposited onto the surface of the pipe yard, contaminating the soil where Eagle Pipe

now conducts its business," Eagle Pipe claimed it became aware of the alleged

 

referred to collectively in this opinion, it should be understood thatthe reference is only to those
defendants who responded to the petition by filing answers and/or exceptions.

* The Trucking Company/Transporter Defendants named inthe petition are: 1) Intracoastal
‘Tubular Services, Inc, k/a Intracoastal Truck Lines, Inc.; (2) Walker Trucking, Inc; (3) Paterson
‘Truck Line, Ine,; (4) Packard Truck Lines, In. (5) Acme Truck Lines, Ine.; (6) Ace Transportation,
LL.C.(7) Dynasty Transportation, L-L.C.; and (8) Venture Transport Logistics, LLC. individually
land as successor in interest to Venture Transport Logistics Holdings, L.L.C. See Petition, # 1V(1-
8); Vol. 1, p. 4-5.

* See Petition, $4 (1-3); Vol. 1, 3-4,
* See Petition} V(1); Vol. 1, p.5.

* The factual basis forthe plaintifP's claims are found in $Y VINI(1-42) of the Petition; Vol.
1,p.9-20.

* ‘The acronym TENORM stands for “Technologically Enhanced Naturally Occurring,
Radioactive Materials.” ‘The petition alleges TENORM is also known as “Naturally Occurring

3
 

contamination of its property after the Louisiana Department of Environmental
Quality (La. DEQ”) conducted a field interview and found Eagle Pipe to be in
violation of a number of TENORM exposure regulations, The La. DEQ allegedly
found TENORM exposure levels on the property which exceeded the regulatory
criteria for unrestricted use of property and posed a health hazard to both Eagle Pipe
and the public. Eagle Pipe asserted subsequent testing by La. DEQ prompted the
agency to issue an order for the remediation of the property. Sometime thereafter,
Eagle Pipe filed its suit?

‘The petition alleged Eagle Pipe has never cleaned Pipe on its premises.
Therefore, the plaintiffasserted all of the TENORM allegedly present on the property
is the result of Union Pipe’s activities in cleaning hazardous and radioactive
contaminated pipe from the Oil Company Defendants, which was transported to
Union Pipe’s facilities by the Trucking Company/Transporter Defendants. Eagle
Pipe alleged its property has lost all value and is no longer marketable as a result of
the long-standing radioactive contamination.

Eagle Pipe alleged a specific cause of action against the Former Property

Owner Defendants for redhibition; the other causes of actions are generally asserted

 

Radioactive Materials” (NORM) and that “Technologically Enhanced Radioactive Materials”
(TERM) was also discovered on the property. TENORM was defined in the petition using the
Gefinition ofthe National Research Council ofthe National Academy of Sciences:

‘Technologically enhanced naturally occurring radioactive materials are any naturally
‘occurring radioactive materials not subject to regulation under the Atomic Energy
Act whose radionuclide concentrations or potential for human exposure have been,
increased above levels encountered in the natural state by human activities. Petition,
VIG),

Despite the various types of radioactive material discussed in the petition, the plaintiff
asserted, in other sections of the petition, that the radioactive materials complained of here are
‘comprised solely of TENORM. Petition, ¥ VI(6), Vol. 1, p. 6.

* Eagle Pipe failed to state in its petition any dates for either La. DEQ's alleged field
interview or remediation order.

 
against all of the defendants." Eagle Pipe asserted that its petition made no claims
under federal law; the Louisiana Conservation Act (La. RS. 30:1 et seq.); or the
Louisiana Environmental Quality Act (La. R.S. 30:2001 et seq.).""

The defendants filed declinatory, dilatory and/or peremptory exceptions, All
of the defendants filed, or joined in, the peremptory exception of no right of action,
arguing Eagle Pipe had no right to assert a claim for damage to the property which

occurred before Eagle Pipe was its owner. Aftera hearing on the exceptions, the:

 

court ruled, inter alia, that the defendants’ exceptions of no right of action be
sustained, dismissing Eagle Pipe’s claims with prejudice.

Eagle Pipe filed a motion for new trial seeking, in part, to amend its petition.
The trial court denied the motion for new trial. Thereafter, the plaintiff filed an
appeal with the Fourth Circuit Court of Appeal. On original hearing, a three-judge
Panel affirmed the trial court's ruling on the exception of no right of action by a two-
to-one vote. On rehearing before a five-judge panel, the court of appeal majority
reversed the judgment of the district court with respect to its ruling on the exception
of no right of action.”

All of the Oil Company Defendants participating in the courts below and all

‘but two of the Trucking Company/Transporter Defendants filed writs in this court.”

 

" See Petition, $ VIS), Vol. 1, p. 8
See Petition, $Y VII40-41), Vol. 1, p. 20.

"See Bagle Pipe and Supply, Inc. v. Amerada Hess Corp. et a,2009-0298 (La. App. 4 Ci.
2/10/10), 47 $0.34 428, The court of appeal also reviewed the trial court's ruling on other matters,
\Nine defendants answered Eagle Pipe's appeal to preserve their appellate rights to seek review of
{the district court's denial oftheir motions to transfer on the ground of forum non conveniens if the
appellate court reversed the district court's ruling on the exceptions of no right of action, Because
the court of appeal on rehearing reversed the district courts ruling on the exception of no right of
action. andthe dismissal ofthe suit with prejudice, the court of appeal also reviewed the defendant's
answer to the appeal. Finding no error in the district court's denial of the defense motions to
transfer, the court of appeal affirmed the district court's judgment inthis regard

 

"Intracoastal Tubular Services Inc., fk/a Intracoastal Truck Lines, Ine. and Walker
‘Trucking, Inc. did not seek writs from this cour.

3
These applications were consolidated and granted to review the correctness of the
court of appeal’s decision on rehearing," Leave was granted by the court for the
filing of several briefs by amicus curiae."
LAW AND DISCUSSION
Standard of Review

At issue in this matter is the correctness of the trial court’s ruling to grant the
‘exceptions of no right of action filed ‘by the Oil Company Defendants and the
‘Trucking Company/Transporter Defendants. We begin our review’ by acknowledging
that an action can be brought only by a person having a real and actual interest which
he asserts. La. C.CP. art. 681. By filing a peremptory exception of no right of
action, a defendant challenges whether a plaintiff has such a real and actual interest
inthe action." La. C.CP. art, 927(A)(6). Atthe hearing on the exception of no right
of action, the exception may be submitted on the pleadings, or evidence may be
introduced either in support of or to controvert the objection raised when the grounds
thereof do not appear from the petition. La. C.C.P. art. 931,

“The function of the exception of no right of action is to determine whether the

 

plaintiff belongs to the class of persons to whom the law grants the cause of action
asserted in the suit.” Hood v. Cotter, 2008-0215, p. 17 (La. 12/2/08), 5 $0.34 819,

829. An appellate court reviewing a lower court’s ruling on an exception of no right.

 

“See Eagle Pipe and Supply, Inc. v. Amerada Hess Corp. etal, 2010-C-2267 clw 2010-C-
2272 clw 2010-C-2275 cw 2010-C-2279 c/w 2010-C-2289 (La. 2/4/11), 56 So.34 979, 981, 982.

Ws Amicus briefs were filed in support of the plaintiff by: (1) the Louisiana Association for
Justice; 2) Rathbome Properties, In; and (3) Global Marketing Solutions, LL.C., Lary Wagoner,
Jean Wagoner, Russell G. Wagoner, Sr, Angela C. Wagoner, Roy Wagoner, Ivie Wagoner, Barbers
R. Mayeur, James E. Mayeux, Jr, Timothy J. Mayeux, Renee Mayeux Bordelon, Joey Mayeux
Milazzo, Six C Properties, L.L.C,, Cross Creek Properties, L.L.C., James Glasgow, Busbice
Children’s Trust, through its trustee, Billy A. Busbice, Jr, Billy Busbice, Jr. and Hunter Farms &
Timber, LLC.

“6 The objection may be raised by the defendent or noticed by the court on its own motion
{neither the tral or appellate court. Howard v. Administrators of Tulane Educational Fund, 2007-
2224 p. 16-17 (La. 7/1/08), 986 So.24 47, $9; La. C.C.P. arts. 927(B) and 2163.

6
 

of action should focus on whether the particular plaintiff has a right to bring the suit
and is a member of the class of persons that has a legal interest in the subject matter
of the litigation, assuming the petition states a valid cause of action for some person.
Ids; Badeaux v. Southwest Computer Bureau, Inc., 2005-0612, p. 6-7 (La. 3/17/06),
929 $0.24 1211, 1217; Turner v. Busby, 2003-3444, p. 4 (La. 9/9/04), 883 $0.24 412,
415-416; Reese v. State, Dept. of Public Safety and Corrections, 2003-1615, p.3(La.
2/20/04), 866 So.2d 244, 246,

‘The determination whether a plaintiff has a right to bring an action raises a
question of law. A question of law requires de novo review. Holly & Smith
Architects, Inc. v. St Helena Congregate Facility, Inc., 2006-0582, p. 9
(La.11/29/06), 943 So.2d 1037, 1045. Applying this standard of review to the instant
‘matter, we will examine the law de novo to determine whether a purchaser of property
may sue a third person for damage which was not apparent a the time of the sale and
which was inflicted on the property before the purchase.

Jurisprudence Constante

The Louisiana Civil Code provides there are only two sources of law:
legislation and custom. La. C.C. art. 1; see Doerr v. Mobil Oil Corp., 2000-0947, p.
13 (La. 12/19/00), 774 So.24 119, 128. However, legislation is the superior source
of law in Louisiana; custom may not abrogate legislation, La. C.C. art. 3, Revision
‘Comments-1987, (4). “Judicial decisions, on the other hand, are not intended to be
‘an authoritative source of law in Louisiana. ... our civilian tradition does not
recognize the doctrine of stare decisis in our state.” Doerr, 2000-0947, p. 13, 774

So.2d at 128.”

 

Under our civilian tradition, we recognize instead that “a long line of cases

 

"” See also A.N. Yiannopoulos, Louisiana Civil Law Systems, § 35, p. $3 (1977) and citing
cases.
following the same reasoning within this state forms jurisprudence constante.”
Doerr, 2000-0947, p. 13, 774 So.2d at 128. This concept has been explained, as
follows: “{w]hile a single decision is not binding on our courts, when a series of
decisions form a ‘constant stream of uniform and homogenous rulings having the
same reasoning,’ jurisprudence constante applies and operates with ‘considerable
persuasive authority.” Doerr, 2000-0947, p. 13-14, 774 So.2d at 128."* Thus, “prior
holdings by this court are persuasive, not authoritative, expressions of the law.”
Doerr, 2000-0947, p. 14, 774 So.2d at 129."

With these principles in mind, we will examine the ‘general Louisiana rule that
a purchaser of property cannot recover from a third party for property damage
inflicted prior to the sale, sometimes referred to as the : ‘subsequent purchaser rule. In
order to make this examination, we will review the property law precepts that support
this rule, and the reasoning and development of the rule over more than a hundred
years of jurisprudence.

Subsequent Purchaser Rule

The subsequent purchaser rule is a jurisprudential rule which holds that an
owner of property has no right or actual interest in recovering from a third party for
damage which was inflicted on the property before his purchase, in the absence of an
assignment or subrogation of the rights belonging to the owner of the property when
the damage was inflicted,

The Oil Company Defendants and the Trucking Company/Transporter
Defendants rely upon this rule as the basis of their peremptory exceptions of no right

ofaction. According to the defendants, any alleged damage to the property at issue

 

 

"Citing James L, Dennis, Interpretation and Application of the Ci
Evaluation of Judicial Precedent, 4 La. L.Rev. 1, 15 (1993).

il Code and the

° See Yiennopolous, supra at §35,p. 54.
8
 

occurred well before Eagle Pipe became owner. The defendants further: ‘assert Eagle
Pipe cannot show it was the recipient of an assignment or a subrogation of any rights
the Former Property Owner Defendants may have against them as alleged tortfeasors.

Eagle Pipe contends the subsequent purchaser rule does not apply here,
According to the plaintiff, the rule applies only where the prior damage to property
‘was overt or apparent atthe time ofthe sale. Here, the plaintffargues the radioactive
contamination of the property at issue was not apparent at the time of its purchase.
Moreover, Eagle Pipe has asserted its entitlement to damages as the owner of property
which is currently being damaged. Finally, the plaintiff asserts that it was subrogated
to all of the property rights of the Former Property Owner Defendants through the
sale. Alternatively, Eagle Pipe argues that it is a third party beneficiary to contracts

entered into between Union

 

and the Oil Company Defendants.

In order to resolve this matter, it is necessary to examine some fundamental
principles of Louisiana property law and how those principles differ from the law of
obligations.

Principles of Louisiana Property Law

Property law in Louisiana is a distinct branch of the civil Jaw,” dealing with
the principal real rights that a person may have in things.”"" Book Il of the Louisiana
Civil Code, which sets forth the law of property, is entitled “Things and the Different
Modifications of Ownership.” Thus, an “[a}ccurate definition of the word ‘things’
is indispensable in view of the fact that only things in the legal sense may be objects
of property rights."?

‘The Louisiana Civil Code classifies “things” into different categories to which

 

» 2AN.

 

iannopoulos, Louisiana Civil Law Treatise, Property at § 3, p.4(4* ed 2001).
* Yiannopoulos, at § 4, p. 6.

® Yiannopoulos, at § 2, p. 3
 

different rules may apply.” The 1978 Revision of the Civil Code uses the word

 

“thing” in both a broad and a narrow sense, depending on whether the thing is or is
not susceptible of appropriation or pecuniary evaluation.™ The first division of things

inthe

 

I Code is into common, public and private things. La. C.C. art. 448. The
first two classifications-common and public-encompass the broad sense of a
“thing.” However, in most of the codal provisions, the word “thing” is used “in a
nartow sense to designate objects susceptible of appropriation and of pecuniary
evaluation,” i.e. private things.” Private things are owned by individuals, other

private persons, and by the state or its political subdi

 

jons in their capacity as
private persons. La. C.C. art. 453.

‘The Civil Code provides that a person may have various rights in things. La,
C.C. art. 476 describes the various rights in things as: (1) ownership; (2) personal and
redial servitudes; and (3) such other real rights as the law allows. Real rights are not
defined by the Civil Code, but ownership is. Ownership is defined as “the right that
confers ona person direct, immediate, and exclusive authority overa thing.” La. C.C.
art. 477(A); see also La. C.C. art. 476, Revision Comments-1978, (b)” The three

‘main elements of ownership are set forth as the rights of use, enjoyment and disposal,

 

® Yiannopoulos, a § 18, p.35.
* Yiannopoulos, at § 15, p.29.

% “Thus, ‘common things,’ such as the atmospheric air and the open sea, though not
‘susceptible of appropriation, are termed things; andthe beds or bottoms of natural navigable water
bodies, running water, the territorial sea, and its shores, though necessarily owned by the state in its
‘capacity asa public person, are likewise termed things.” Yiannopoulos, at § 15, p.29; se also La,
CC. arts. 449 (Common things) and 450 (Public things).

% Yiannopoulos, a § 15,p.29; see also Lanza v. Lanza, 2004-1314, p. 7.3 (La. 3/2/05),
898 So.2d 280, 284 n3,

* Commentators have described the concept of ownership as “exclusive, that isto say it
Consists in the attribution ofa thing toa given person to the exclusion of ll others.” Marcel Planiol
‘and George Ripert, Treatise on the Civil Law, Property, Vol. 1, Patt 2, no. 2329, p. 378 (12
24.1939) (translated by the Louisiana State Law Institute with the authority of Librairie Générale de
Droit et de Jurisprudence (Paris).

10
within the limits and under the conditions established by law. 1d.2*

‘The owner of a thing may perform a certain number of juridical acts relating
to the thing, all consisting of the transfer

to another, in whole or in part, the right of enjoyment and of

consumption that belongs to the owner of the thing. If he transmits all

his right, it is said that he alienates the thing; he performs an act

translative of ownership. Ifhe grants merely a right of partial enjoyment

of the thing, itis said that he dismembers his ownership. He creates

upon the thing areal right of usufruct, emphyteusis or servitude.[*] He

is still owner but his ownership has been dismembered. Somebody else

has a part, more or less important, of his rights upon the thing.”°
Furthermore, “{t]he idea must be thoroughly understood that these various juridical
acts are carried out, not upon the thing but upon the owner's right.” Jd. Thus, a real
right can be understood as ownership and its dismemberments."

The various dismemberments of ownership also confer real rights on the owner
or holder of that right. For example, servitudes are of two types-personal and
predial-and they each confer a real right on the holder of the servitude. See La. C.C.
arts, 476, 533. A personal servitude is a charge on a thing for the benefit of a person,

andis:

 

ided in the Civil Code into three sorts-usufruct,” habitation,” and rights of

® In referring tothe rights of ownership, “t]he ancients used solely the nouns usus, fructus,
and abusus....” Planiol and Ripert, at No. 2332, p. 380 n.1. .

 

® Usufruct and servitude will be subsequently discussed. An emphyteusis “a contract by
Which a landed estate was leased to a tenant, either in perpetuity or fora long term of years, upon
the reservation of an annual rent or canon, and upon the condition thatthe lessee should improve the
property, by building, cultivating, or otherwise, and with a right inthe lessee to alien the estate at
pleasure or pass it to his heirs by descent, and free from any revocation, re-entry, or claim of
forfeiture on the part ofthe grantor, except for non-payment of the ret.” Black's Law Dictionary,
471 (5% ed. 1979),

® Planjol and Riper, at No. 2337, p. 384-385,

The nature ofa real right is explained in a treatise on the civil law of property as “rights
‘that impose a general obligation to respect the power that a person has under the law to derive from
things the whole ora part of the advantages which their possession entails or as rights that confer
‘on a person a direct and immediate authority over a thing which is operative against the world.”
‘Yiannopoulos, at § 214, p. 411

® Usufiuct is areal right of limited duration on the property of another. La, C.C, art. 535.

 
 

use.* A predial servitudeis a charge ona servient estate for the benefit of a dominant
estate, where the two estates belong to different owners, and can be of four
types-natural, legal, voluntary, and conventional. La. C.C. art. 654.% Mineral
rights** and building restrictions” are further examples of real rights.* Some
distinguishing features of real rights are that they cannot exist without a determined
object,” may be asserted against anyone, confer the right of preference" and the right
to follow," and are susceptible of possession and of abandonment.”

This Court has defined a real right as “synonymous with proprietary interest,
both of which refer to a species of ownership. Ownership defines the relation of man
to things and may, therefore, be declared against the world.” Harwood Oil & Mining

Co., 240 La. at 652, 124 So.2d at 767, citing Reagan v. Murphy, 235 La. 529, 541,

The personal servitude of right of use confers in favor ofa person a specified use of an
estate less than full enjoyment. La. C.C. art. 639.

 

» Natural predial servitudes arise from the netural situation of estates. Legal predial
servitudes are imposed by law. Voluntary or conventional predial servitudes are established by
Juridical act, prescription, or destination ofthe owner, La, C.C. art. 654

% La. RS. 30:16 provides, in pertinent part: “the basic mineral rights that may be created
by a landowner are the mineral servitude, the mineral royalty, and the mineral lease. This
‘eoumeration does not exclude the creation of other mineral rights by a landowner. Mineral rights
are real rights...”

® Building restrictions are charges imposed by the owner of an immovable in pursuance of
‘8 general plan governing building standards, specified uses, and improvements, La, C.C. att.775.
‘The classification of building restrictions as sui generis real rights is subject to the requirement,
imposed by the Civil Code, that there be a general plan that is feasible and capable of being
preserved. Id, Revision Comments-1977,(c)

% There are other real rights which are not relevant to this opinion and are not discussed.

” The object may be either a movable or an immovable. Under Louisiana law, tracts of land,
with their component parts, ae immovables. La. C.C. art. 462. Corporeal movables ae things,
‘Whether animate or inanimate, that normally move or can be moved from one place to another. La
CC. art. 471

 

‘© “The right of preference isthe prerogative that the holder of areal right has to exclude
fiom the enjoyment ofa thing persons having only a personal right ora real right of inferior rank.”
‘Yiannopoulos, at § 215, p.413.

“' “Its the prerogative of the holder of a real right to exercise his right over the thing
wherever itmay be found. The owner of a thing may thus reclaim it in the hands of any possessor.”
‘Yiannopouilos, at § 215, p. 412.

© Yiannopoulos, at § 223, p. 428.

2
105 S0.24 210, 214 (1958), superceded by statute on other grounds, recognized in
Salvex, Inc. v. Lewis, 546 So.2d 1309 (La. App. 3 Cir. 1989). Commentators have
discussed the essential quality of ownership, that which distinguishes ownership from
other real rights, as “the power of disposing of the thing, by consuming it, by
physically destroying it and by transforming its substance.”® By contrast, “{all other
real rights authorize those in whom they are vested to enjoy the thing of another in
@ more or less complete manner, but always with the obligation of preserving the
substance.” Id.

‘The domain of property law in Louisiana is generally distinct from the other
main branches of the civil law, including the law: ‘of obligations. Because we find the
plaintiffurges, and the court of appeal on rehearing held, that certain principles of the
Jaw of obligations are applicable to this question of property law, we must also
‘examine some principles of the law of obligations,

Principles of Obligations Law

‘The law of obligations is found in Book II of the Louisiana Civil Code, and
is entitled “Of the Different Modes of Acquiring the Ownership of Things.” Whereas
property law encompasses the legal relationship which a person has in things, the law
of obligations deals with a specific legal relationship between persons. The Civil
‘Code defines an obligation as a “legal relationship whereby a person, called the
obligor, is bound to render a performance in favor of another, called the obligee.” La.
CO. art, 1756.

Obligations may arise from contracts and other declarations of will. La. C.C.
art. 1757. In a contract of sale, for example, the seller is obligated “to deliver the

thing sold and to warrant to the buyer ownership and peaceful possession of, and the

 

© Planiol and Ripert, at No. 2332, p. 380.
B
absence of hidden defects in, that thing. The seller also warrants that the thing sold
is fit for its intended use.” La. C.C. art. 2475. Specifically, the seller warrants the
buyer against redhibitory defects, or vices, in the thing sold, as follows:

A defect is redhibitory when it renders the thing useless, or its use
so inconvenient that it must be presumed that a buyer would not have
bought the thing had he known of the defect. The existence of such a
defect gives a buyer the right to obtain rescission of the sale.

A defect is redhibitory also when, without rendering the thing
totally useless, it diminishes its usefulness or its value so that it must be
presumed that a buyer would still have bought it but for a lesser price.

‘The existence of such a defect limits the right of a buyer to a reduction

of the price.

La. C.C. art. 2520. Thus, when defects are discovered in a thing sold which were not
apparent, or hidden, at the time of the sale, the law of obligations provides to the
buyer a cause of action in redhibition and the right to sue for rescission of the sale or
for a reduction of the purchase price.

However, the seller owes no warranty for defects in the thing that were known
to, of should have been discovered by, a reasonably prudent buyer. La. C.C. att
2521. When the defects ofthe thing sold are apparent, the law of obligations does not
provide a cause or right of action to the buyer. Thus, the Civil Code makes a
distinction between apparent (overt) and non-apparent (hidden) defects in a thing
sold, and what rights and causes of action are provided for the buyer/new owner,
within the law of obligations.

Obligations may also arise directly from the law, regardless of a declaration of
will, in instances such as wrongful acts, the management of the affairs of another,

‘unjust enrichment, and other acts or facts. La. C.C. art. 1757. An example of an

obligation that arises as a matter of law is found in La. C.C. art. 2315, which

 

“ This codal article clarifies... that ownership is comprised in the warranty...” La. C.C.
art 2475, Revision Comments-1993(2),

14
establishes the basis of tort liability and provides: “[e]very act whatever of man that
causes damage to another obliges him by whose fault it happened to repair it.™*

In general, obligations are divided in the Civil Code into “strictly personal,”
“heritable,” and “real.” An obligation is strictly personal when its performance can
be enforced only by the obligee, or only against the obligor. La. C.C. art. 1766. An
obligation is heritable when its performance may be enforced by a successor of the
obligee or against a successor of the obligor. La. C.C. art. 1765. A real obligation
is a duty correlative and incidental to a real right. La. C.C. art. 1763. Thus, a real
obligation does not exist in the absence of a real right.

Real obligations are pertinent to our discussion of the present issue because
@ real obligation and real right both attach to a thing. La. C.C. art. 1764, Revision
Comments-1984, (b). La. C.C. art. 1764 explains the effects of a real obligation:

A real obligation is transferred to the universal or particular

successor who acquires the movable or immovable thing to which the
obligation is attached, without a special provision to that effect.

   

But a particular successor is not personally bound, unless he
assumes the personal obligations of his transferor with respect to the
thing, and he may liberate himself of the real obligation by abandoning

 

 

“ Art. 2315 is found in Book Ill (Obligations Law), Title V (entitled “Obligations Arising
‘Without Agreement"), Chapter 3 entitled “Of Offenses and Quasi Offenses”).

“ Former La. C.C, Art. 2012 (1870) described the methods of creating real obligations, but
this article was not included in the 1984 revision of the Civil Code, having been deemed
‘unnecessary. See La. C.C. at. 1764, Revision Comments-1984, (g)

Former Art. 2012 provided that real obligations could be created in three ways: (1) by the
alienation of immovable property, subject to areal condition, ether expressed or implied by law, (2)
by alienating to one person the immovable property, and to another, some real righ tobe exercised
‘pon it; and (3) by the creation of aright of mortgage upon the immovable property. Former Art
2012 alo stated: “All these contracts give rise to obligations purely real on the part of those who
acquire the land, under whatever species of ile they posses i; they are not personally lable, but
the real property is, and, by abandoning it to the obliges, they relieve themselves fiom all
responsibility. A sale subject to arent charge, orto aright of redemption as consideration of the
sale, are examples of the fist kind of obligations; servtudes, the right of use and hebitation and
‘sufruc, are examples ofthe second; and the several kinds of mortgages, and the creation ofa ret
charge, ofthe third.”

After the 1984 revision, the effects of real obligations wete continued in Art. 1764, as
discussed in the body of the opinion,

 

 

15
 

the thing,
‘The nature of a real obligation has been thus described:

Real obligations are always duties incidental and correlative of real

rights. They are obligations in the sense that they are duties imposed on

4 particular person who owns or possesses a thing subject to areal right,

and they are real in the sense that, as correlative of a real right, these

obligations attach to a particular thing and are transferred with it without

the need of an express assignment or subrogation. They are also real in

the sense that the responsibility of the obligor may be limited to value

of the thing”

Both real rights and real obligations may be contrasted with personal rights.
‘The legal right that a person has against another person to demand the performance
of an obligation is called a personal right.” Distinct from a real right, which can be
asserted against the world, a personal right is effective only between the parties. La,
C.C. art. 1758.° This court has declared that “a personal right ... defines man’s
relationship oman and refers merely to an obligation one owes to another which may
be declared only against the obligor.” Harwood Oil d& Mining Co., 240 La. at 651,
124 $0.24 at 767, citing Reagan, 235 La, at $41, 105 So.2d at 214,

In some instances, a real right and a personal right may appear to be the same,
but the underlying nature of the rights distinguishes them. For example,

[a]ecording to appearances, a usuftuctuary anda lessee seem to have the

use and enjoyment of a house in much the same way. But, technically,

the usufructuary has a right in the enjoyment of a house; the lessee has

a right against the owner of a house to let him enjoy it. One has a real

right and the other a personal right.”

This court has held “[ujnder the civil law concept, a lease [a contract about property]

 

* Yiannopoulos, at § 212, p. 407.
“ Yiannopoulos, at §§ 201 and 203, pp. 384, 386,
* See also Yiannopoulos, at § 214, p. 411

® Yiannopouls, at § 201, p. 384. Although recordation, for instance of leas, enables the
lessee to assert his right against third parties, the nature of the right ofthe lessee isnot altered. The
lessee has a personal right against the owner to let him enjoy the thing. The lessee's remedy for a
‘breach of obligation is an action for damages or termination of the lease. Yiannopoulos, at § 226,
pds

16
does not convey any real right or title to the property leased, but only a personal
fight.” Richard v. Hall, 2003-1488, p. 17-18 (La. 4/23/04), 874 So.2d 131, 145.
“That a lease is not a real right under the civil law is well settled.” Reagan, 235 La.
529, $41, 105 So.2d 210, 214, This concept was further explained:

‘The rights of use, enjoyment, and disposal are said to be the three

elements of property in things. They constitute the jura in re: The right

of lessee is not a real right, ie., ajus in re. In other words, the lessee

does not hold one of the elements of property in the thing. His right is
jus ad rem, aright upon the

 

Reagan, 235 La. at S41, 105 So.2d at 214, citing In Re Morgan RR. & SS. Co.,32
La, Ann. 371 (1880).

Real rights, and real obligations pass to a subsequent acquirer of the thing to
which itis attached without the need ofa stipulation to that effect. La. C.C. art. 1764,
Revision Comments~1984, (c).*' A personal right, by contrast, cannot be asserted by
another in the absence of an assignment or subrogation. La. C.C. art. 1764, Revision

Comments~1984, (d) and (9).

 

* La. COC. art. 1764, Revise

 

‘Comments-1984,(c) provides:

‘A real obligation passes to a subsequent acquirer of the thing to which it is attached.
‘without need ofa stipulation to that effect. Thus, when an estate burdened with «
servitude is transferred, the real obligation tha is corelative of the right of servitude
is also transferred. See C.C. Art. 650(2) Rev. 1977). Itis otherwise with respect to
personal obligations,

 

* La. CC. art. 1764, Revision Comments-1984, (4) and (f) provide, in pertinent part:

(@)A particular successor, thats, one who acquires thing by particulartitle,
isnot bound by the personal obligations ofhis author with respect to the thing, unless
hhehas assumed these obligationsby delegation. Conversely, a particular successor
does not acquire, without stipulation to that effect, any personal rights that his
author has with respect to the thing. For example, if the owner of an immovable
who has made # contract for its repair sels the immovable, the purchaser is not
bound to perform the obligation of the owner under the repair contract unless he
assumes that obligation. Conversely, the purchaser does not acquire any right under

the repair contract unless such aright is assigned to him.

 

(P) Louisiana courts have held thatthe indemnity due to the owner of an
immovable for the expropriation ofa part of that immovable, and damages due
to the owner of a thing for its partial destruction or for an interference with the
‘owner's rights, belong to the person who was owner at the time of the
‘expropriation, destruction, or interference. These are persoual rights that are

”
‘We now examine the jurisprudential rule at issue in light of the principles of
property law and the law of obligations.
Subsequent Purchaser Rule and its Development
a. Clark, Warner

A hundred and sixty years ago, in Clark v. J.L. Warner Co. et al. ,6 La. Ann.
408 (1851), the plaintiff, who had purchased property which included a two-story
brick house, kitchen and outhouses, sued the owner ofthe adjoining property and his
lessee, who ran an ice house depot. The plaintiff claimed damage to his house was
caused by the pressure, moisture and other destructive effects of the ice on his
buildings. The trial court rendered a ‘money judgment in favor of the plaintiff.

This court reversed, finding the district court erred in awarding to the plaintiff
all the damages caused to the premises while they belonged to the former property
owner, and indeed, to several preceding owners. We held “as to damages actually
suffered before the purchase,” general tort principles would require that each
preceding owner would havea right to recover for the damages which occurred while
he or she owned the premises. Clark, 6 La. Ann. at 409, The claim for damages
belonging to each preceding owner was described as “an incorporeal right, and
strictly personal property.” Clark, 6 La. Ann. at 409.

This personal right was not explicitly transferred by the former owner in the
bill of sale to the plaintiff, as the bill of sale, examined by the court, was found to be
in its usual form for the conveyance of real estate and its appurtenances.
Consequently, this court held the Plaintiff did not have a right to assert a claim for

damage to the property before the date of the act of sale whereby he purchased the

 

not transferred to a successor by particular title without a stipulation to that
effect. Rogers v. Louisiana Power and Light Co., 391 $0.24 30 (La. App. 3° Cir,
1980); Yiannopoulos, Predial Servitudes § 147 (1983).

18
 

property, either by operation of law or contract. Clark, 6La. Ann. at 409. However,
since the plaintiff might have been able to furnish more explicit testimony as to any
damages actually suffered by him from the time he became the property owner, the
court entered a judgment of non-suit against him.

‘The plaintiff, and the court of appeal on rehearing, have cited to selected
language in the Clark opinion as support for the position that a right of action exists,
for the plaintiff in the present matter. In Clark, we said:

It is true, that the purchaser of property is presumed to purchase all
actions appurtenant to the property, and necessary to its perfect
enjoyment; but as to damages actually suffered before the purchase, we
know of no other principles governing the case than those referrable to
this general provision of the code, that every act of man that causes
damage to another obliges him by whose fault it happened to repair it.
It is a mere corollary, that the reparation must be made to him who
suffered the injury. And the principle is strikingly illustrated by this
case. The plaintiff, after possessing the property twenty months, claims
one-third more damages than he gave Mrs. Springer [the immediate
former owner] for his lot with all the buildings and improvements. This
leads to the impression, that the modicity of the price he gave for the
premises may, pethaps, be attributed to their dilapidated and dangerous
situation, on account of the erection of the ice house and other causes.
Itis impossible, from the law, to concur with the district court, that these
‘damages, which probably caused the moderate price given for the house
and kitchen, should be a source of profit to the purchaser, who had a
perfect knowledge of their existence when he purchased.

 

 

Jd, 6 La. Ann. at 409.

‘The plaintiff, and the court of appeal on rehearing, rely on this language to
contend and assert, respectively: (1) Eagle Pipe is the only party which has suffered
damage because the sellers here, the Former Property Owner Defendants, did not
have to accept a reduced price for apparently damaged property; (2) Art. 2315
provides a remedy to a damaged party; therefore, (3) Eagle Pipe has a right of action
to seek damages. The plaintiff and the court of appeal on rehearing are in error.

The language in Clark, understood in context and giving effect to subsequent

portions of the opinion, as well as principles of property law and obligations law,

19
shows that such an interpretation is unsound. Loui

 

law provides that when
property is damaged through the actions of another, the owner of the property
(obligee) obtains a personal right to demand that the tortfeasor (obligor) repair the
damage to the property. La. C.C. art. 2315 (“Every act whatever of man that causes
damage to another obliges him by whose fault it happened to repair it"). This
personal right of the property owner arises because his real rights in the ownership
of the property have been disturbed-his use, enjoyment or disposal of the property,

‘The analysis in Clark continued beyond the portion above-cited, making clear
that each successive owner of the property was recognized as having a right to sue for
the damage to the property which occurred during his or her ownership. This right
of action arose when the real rights of the owners were disturbed by the operation of
the adjoining business:

‘The damages which occurred while Herriman owned the premises,

belong to him; a part belongs to Gregg in like manner; and Mrs.

Springer is entitled to what happened while she owned the property. Did

she or they transfer their claim to damages to the plaintiff? The claim is

an incorporeal right, and strictly personal property.

Id, 6 La. Ann. at 409, Clark makes clear that the former property owners still have
personal right of action against a tortfeasor for the damage he inflicted on the
property while they were the owners, despite the fact that they no longer own the
property.

Clark explicitly states the personal right of the property owner to demand
damages for the injury to the property must be assigned or subrogated if the personal
right is to survive a change of ownership in the property:

(The former owner's] bill of sale to the plaintiff is in the usual form for

the conveyance of real estate and its appurtenances. It does not transfer

her claim for damages, expressly, nor is there any thing in it which

indicates a transfer by implication. The rights and appurtenances

‘mentioned in the bill of sale have always been considered real rights. It
doesnot appear, therefore, either by law or contract, that the plaintiffhas

20
any claim for damages previous to the 16th of May, 1848, when he
purchased the property.

Id., 6 La. Ann. at 409.

‘The plaintiff in Clark brought suit against a third-party tortfeasor seeking
damages for the condition of the property, not a suit against his vendor. We have
already discussed that the Civil Code provides a cause of action in redhibition for a
buyer who discovers defects in the purchased property which were not apparent at the
time of the sale. When the defect is not apparent, the buyer may seek rescission of
the sale or a reduction in the purchase price, However, the Civil Code does not
Provide a cause of action or a right to rescission or a reduction in the purchase price
for the buyer against his seller where the damage to the property is apparent at the
time of the sale.

Consequently, Clark, who had a “perfect knowledge” of the dilapidated and
dangerous condition of the premises when he purchased the property, had no right of
action for damages, or for reduction of the purchase price, against his vendor for a
breach of the warranty against defects or vices in the thing sold which were known
to him at the time of sale. But neither did Clark have a right of action for damages
against the tortfeasor responsible for the condition of the property before Clark was
the owner. As Clark explains, the apparent damage was taken into consideration for
the purchase price and the court would not allow the known damage to be “a source
of profit to the purchaser” by allowing the buyer a further right of action against the
tortfeasor who damaged the property before his purchase. Clark, 6 La. Ann. at 409.
Instead, the personal right of action for damages belonged to the former owners of the
property, each having the right of action to sue for damages inflicted on the property
uring their term of ownership.

The rule enunciated in Clark was described in a subsequent case, as follows:

a
the purchaser of property is presumed to acquire all actions appurtenant

to the property, and necessary to its perfect enjoyment; but, as to

damages actually suffered by the vendor before the sale, they are

personal to him, and cannot be recovered by the purchaser, without an

express subrogation.
Payne v, James, 42 La. Ann. 230, 234, 7 So. 457, 458 (1890). This subsequent
expression ofthe rule does not indicate a requirement that the damage tothe property
be apparent in order for the rule to apply.

b. Other early cases

In Payne, supra, a property owner sold property during the term of a lease.
Thereafter, the former owner/lessor sued his former lessees for failure to surrender
the leased property in the like condition, good order, and repair in which they
received the property. The lessees excepted to the suit on the ground that the lessor
had no interest in the value of the repairs which should be made to property he did not
now own. The court acknowledged the lessor had an actionable interest in bringing
suit on the ground that, owing to the dilapidated condition ofthe property, which was
the result of the lessees’ violation of their obligation, he was compelled to accept a
much lower purchase price than the property would have brought had it been in
proper repair. Payne, 42 La. Ann. at 233-234, 7 So. at 457. Thus, even though the

former property owner no longer owned the property, the court found “such

 

allegations unquestionably disclose an actionable interest in the ‘complaining lessor.’
Payne, 42 La. Ann. at 234, 7 So. at 457.

The record further disclosed even stronger grounds on which to base its
holding. At the time of the sale, the former owner/lessor Specially reserved all his
rights and claims as lessor in the act of sale to the new owners, including in explicit

terms the right to sue for the recovery from his lessees all damages which the property

Sustained while in the lessees’ possession prior to the sale. /d., 42 La. Ann. at 234,

2
7 So. at 458. Payne exemplifies the balance in the former owner's retention of the
personal right to sue for damage to property to compensate for his acceptance of a
lower sales price for apparent damage to property inflicted by another.

In Matthews v, Alsworth, 45 La. Ann, 465, 12 So. 518 (1893), property was
sold subject to an existing lease, The new owner filed suit against the lessee for a
dissolution of the lease based on the lessee’s violation of his obligations, for
compensation for the diminution in the value of the property for the lessee’s damage
to the property, and for the rent for the year which accrued in the year before the sale.
This court found the new owner had no right of action to sue for damages from the
lessee for damage to the property before the sale, either under the lease contract orin
tort. Instead, the right to sue for damage to the property inflicted before the sale was
a personal right of the former owner/lessor which arose from the lessee’s breach of
the contractual obligations of the lease during the time the lessee owed those
obligations to the former owner/lessor.

‘The former owner had not assigned or subrogated this personal rightto the new
owner in the act of sale. The deed contained the following language:

Said lease and all the aforesaid conveyors’ rights in, to, or under the

same are transferred hereby, and simultaneously herewith, to the

conveyee herein. This conveyance is made with complete transfer and

subrogation of all rights and all actions of warranty or otherwise against

all former claimants, proprietors, tenants, or warrantors of the property

herein conveyed.
By this language, the court held the new owner/lessor was subrogated to the lease
provisions, but only from the date of his purchase of the property. “The lessee is
liable on the covenants of his lease, and to these, unquestionably, plaintiff [the new

Property owner] is subrogated from the date of his purchase, By the use ofthe words

‘right in, to, or under the lease, the plaintiff did not become an assignee of damages

 

» Matthews, 45 La. Ann. at 466, 12 So. at $18,
23
 

of date prior to the sale.” Matthews, 45 La. Ann. at 469, 12 So. at 519.

‘The personal right of the owner to sue for damages was not explicitly assigned
in the act of sale, and additionally was not an accessory right which passed with the
title without description of, or reference to, the claim. In the act of sale, the property
was specifically described, and there was no mention ofa claim for damages. The
court held it could not “presume that there were additional rights in the nature of
damages, the deed being silent as to damages.” Matthews, 45 La. Ann. at 469, 12 So.
at 519. Matthews reinforces the proposition that personal rights of the former owner
do not pass with the property in an act of sale unless specifically assigned or
subrogated to the new owner,

Similarly, in Bradford v. Richard, 46 La. Ann. 1530, 16 So. 487 (1894), the
‘court found the new owner of property was not assigned or subrogated to the former
owner's right to sue for damages for the cutting of timber from the property, which
occurred prior to the sale, because such assignment or subrogation was not
specifically described in the act of sale. The court noted the new owner's familiarity
with the property and the almost immediate filing of suit after the purchase. The
court found that, ifthe parties to the sale of the property intended for the new owner,
and not the property owner at the time the damages were inflicted, to be compensated
for the damage to the property via a suit against an alleged tortfeasor, the right to
claim damages would have been transferred through assignment or subrogation in the
act of sale:

[i}fthe price of one dollar per acre is to be considered as a low price for

the land, itis to be presumed that the taking off the timber and other

damages were estimated in fixing the price, and we cannot believe that

the price was so fixed in order to permit the plaintiff to reap a rich

reward in the way of profits for damages and loss of timber prior to the

sale. If so, the specific claim transferred would have been mentioned.

Bradford, 46 La. Ann. at 1533-1534, 16 So. at 487. Here, as in Clark, the court

4
 

 

discussed the presumption that apparent damage to the property is taken into account
in negotiating the purchase price, and the fact that a buyer who has obtained a lower

purchase price due to apparent damage or deterioration of the property at the hands

 

ofa lessee, or third party, will not be entitled to further benefit by the imputation to
him of the seller's personal right to sue for damages.

In examining related jurisprudence, we find the rights and liabilities of the
parties are similar to those involving the servitudes obtained by railroad companies
in appropriation-servitude cases. In McCutchen v. Texas &P, Ry. Co., 118 La. 436,
43 So. 42 (1907), a property owner sued to recover a strip of land which the railroad
had used, apparently without expropriation or purchase, for more than twenty years,
‘orto recover its value. Although the court found any right of action had prescribed,
the court also held the right to sue for damage to the property did not pass to the
property owner with his purchase from the prior owners, since the right was personal
to his vendors and the deed by which he acquired the property contained no
subrogation to that right. McCutchen, 118 La. at 438-439, 43 So. at 42.

Counsel for the property owner raised an exception to the rule which arises
when the entry or taking of the land is in the nature of a trespass, and applies to the
demand for the value of the land as distinguished from the claim for damages

incidental to such trespass. The court denied the applicability of the exception since

 

“The following cases belong in a long line of cases dealing with the jurisprudentially-
recognized theory involving the creation of a servitude by “unopposed use and occupancy” by &
corporation with the power of expropriation. This came to be known as the St. Julien doctrine, after
one ofthe frst ofthese cases, St. Julien v. Morgan Louisiana é& Texas Railroad Co., 35 La. Ann.
924 (1883). In that case, the court, relying on common law authorities, held that public policy
Fequired “that in such case the owner shall not be permitted to reclaim his property ffee from the
servitude he has permitted to be imposed upon it, but shall be restricted to his right of
compensation.” St. Julien, 35 La. Ann. at 926. The St. Julien doctrine was ultimately overruled in
Lake, Inc. v. Louisiana Power & Light Co., 330 S0.24 914 (La. 1976), and the court returned to the
Civil Code provisions for the establishment of servitudes for the benefit of the “clarity and
predictability of the law.” Lake, Inc. 330 So.2d at 918. The cases cited herein with a connection
to the St. Julien doctrine are not cited forthe later-overruled reasoning regarding the creation of a
servitude, but for the unaffected rule thatthe personal right for compensation or damages remains
‘with the person who was the owner of the property atthe time the land was taken or damaged.

2s
 

the facts showed the entry was made, and the land was occupied, with the
‘acquiescence of the owner of the property at the time the entry and occupation
cccurred. McCutchen, 118 La, at 439, 43 So. at 43

Taylor v. New Orleans Terminal Co., 126 La. 420, 52 So. 562 (1910) is a
similar case. Land was taken by the railroad and used fora switch track with the tacit
consent ofthe then-owner of the property . A subsequent property owner sued for the
value of the appropriated land and damages. The trial court rendered. judgment in
favor of the new property owner, but this court reversed, holding:

By defendant’s appropriation withthe tacit consent of the owner

at the time, the right to the strip of land passed from the owner to the

appropriator-the right became segregated from the property, and the

owner became a creditor for the value of the property taken.

The right was personal, The owner at the time had a claim
personally for the amount.

The purchaser by the act of purchase does not become invested
with a right to the value of the property taken unless the right is
transferred with the property.
Taylor, 126 La. at 422-423, 52 So. at 561-562.
In Taylor, however, the railroad had agreed in a deed to a former landowner to

make improvements to the property, i.e. to fence and drain the land and to construct

 

crossings. With regard to these claims, the court found the former property owner
acquired the right as a servitude for the benefit of the estate and not for his own
personal benefit. A servitude, being a real right, follows the property without the
necessity of its inclusion in an act of sale, unlike a personal right. As such, the new
property owner had a right under the servitude to bring suit for enforcement of the
obligations established in the former deed. Taylor, 126 La. at 426, $2 So. at 564
The right followed the property and was not personal to the owner of the property,

‘whomever it might be. /d., 126 La. at 425, 52 So. at 564.

26
 

Gumbel v. New Orleans Terminal Co., 197 La. 439, 1 So.2d 686 (1941),
overruled on other grounds, Lake, Inc. v. Louisiana Power & Light Co., 330 $0.24
914 (La. 1976), was another case where a railroad company appropriated property
without expropriation or payment. The owner of the property and his vendee
‘acquiesced in the railroad’s laying of tracks across the property. Years later, a new
‘owner of the property complained and ultimately filed suit to recover compensation
for the value of the land appropriated or damages to his remaining property. This
court found neither the landowner atthe time the railroad appropriated the property
nor his vendee (the plaintiff's vendor) ever assigned or subrogated to the new owner
any rights of action against the railroad to recover compensation for the value of the

land taken, occupied and used, or for damages for the remaining land. Gumbel, 197

 

La, at 444-445, | So.2d at 687. After reviewing its decisions in McCutchen, supra,
and Taylor, supra, the court held:

Under the facts of this case and in view of the foregoing authorities, it

is clear that whatever right of action (the owner of the property at the

time of the appropriation] had against the defendant for compensation

and damages for appropriating his property did not pass to the plaintiff.

when he purchased the title to the square of ground, because there was

neither an assignment nor a subrogation of that right by [the owner of

the property at the time of the appropriation] to [the plaintiff's vendor]

and by [plaintiff's vendor] to him.
Gumbel, 197 La. at 444, 1 So.2d at 688. So finding, this court affirmed the rulings
of the trial court,

¢. Prados v. South Central Bell

In Prados v. South Central Bell Tel. Co., 329 So.24 744 (La. 1975) (on
rehearing), a property owner leased land to the South Central Bell Telephone
‘Company (“Bell”). In a series of leases, Bell was granted the right to construct
improvements on the property, namely buildings, sheds, fences, etc., as well as the

privilege of removing them. In a lease terminating in April, 1973, the owner/lessor

27
 

again granted Bell the right to construct buildings and also granted Bell the
corresponding “privilege of removing sameat the conclusion of this lease or renewals
thereof.” Jd., 329 So.2d at 745. At that time, the Civil Code required that a lessee
restore the property to its owner in its original condition, unless the contrary had been
established in the lease contract."

After the lease expired, Bell did not remove the improvements it had made to
the property and the owner/lessor did not request that Bell remove them, either under
the terms of the lease contract or the Civil Code. A few months thereafter, the owner
sold the property to another. After acquiring title, the new owner demanded that Bell
remove the concrete structures and other improvements it had built on the property.
When Bell refused, the new owner had the improvements removed and restored the
property to its condition at the commencement of the lease.

‘The new owner filed suit against Bell, seeking to recover the amount which had
bbeen necessary to restore the property. Both the trial court and court of appeal held
in favor of the new owner, finding he could recover the cost of removing the
improvements from the property under the provisions of the lease between his

ancestor in title and Bell.

 

* Former Articles 2719 and 2720 obliged a lessee to return the premises to the lessor inthe
same condition in which they were received, excepting normal usage, unless the lease contract
provided otherwise. Former La. C.C. art. 2719 provided: “If an inventory hes been made of the
‘premises in which the situation, atthe time of the lease, has been stated, it shall be the duty ofthe
lessee to deliver back everything in the same state in which it was when taken possession of by him,
‘making, however, the necessary allowance for wear and tear and for unavoidable accidents.” Former
La. CC. art.2720 provided: “If no inventory has been made, the lessee is presumed to have received
the thing in good order, and he must return it in the same state, with the exceptions contained in the
preceding article.”

% The facts in Prados contain a complicating factor not found in our present case. Under
the lease in Prados, the lessee was authorized by the lessor to build on the land leased. Ordinarily,
‘buildings and other constructions permanently attached tothe ground are component parts of the land
under Louisiane law, when they belong to the owner of the ground. La, C.C. arts. 463 and 465. In
addition, a building may be a separate immovable when it belongs toa person other than the owner
ofthe ground. La. C.C. art. 464. Inthe absence of any agreement to the contrary, the building
Constructed by the lessee would have belonged tothe lessor/owner ofthe ground after the expiration
‘of the lease, but the lessee would have had an action to recover reimbursement. The lease provision
‘which authorized the lessee to build also gave the lessee the right to remove the building, or not, at

 

 

 

 

28
 

‘On original hearing, court affirmed, finding the lease provisions imposed
real obligations on the property which were consistent with te provisions ofthe Civil
Code regarding a lessee’s obligation to restore property. Upon re-examination, the
court found it had erroneously considered the matter in its original opinion as though
the property had been sold during an existing lease. Under those circumstances, the
new owner would have been bound to perform the obligations of the lessor stated in
the lease in the absence of a contrary stipulation, and would have been entitled to
receive the benefit of the obligations of the lessee (such as rent) from the time of his
acquisition of the property. Id.,329 So.2d at 749. Here, however, the lease between
the former owner and Bell expired before the property was sold to the new owner, and
the seller conveyed the property free of any lease.

Consequently, the court determined “the question of liability must be resolved
in the light of the rules governing the assignment and ‘subrogation of rights.” /d. In
other words, in order for the new owner of the property to assert the former owner's
right to insist on Bell’s performance ofits lease obligations, the new owner must have
been assigned or subrogated to those rights, The court found the nature of the former
‘owner lessor’s rights, which arose from the obligations found inthe lease provisions,
were personal rights, rather than real rights. 1d.”

‘The next step for the court was to determine whether the former lessot/owner

 

the end ofthe lease term. One of the underlying questions at issue in Prados was wheter this lease
provision overrode the codal requirements that the lessee return the land to its original condition

% See also Leonard v, Lavigne, 24S La. 1004, 1008, 162 $0.24 341, 343 (1964) where the
Court held that a covenant in a recorded lease prohibiting landlords from using adjoining property
{for business purposes that would compete with those engaged in by their tenant expressly bound the
heirs and assigns ofthe landlords, but was not areal obligation on the land itself. “The stipulation
in the contract of lease does not create a real obligation upon the land itself, but is clearly an
obligation the lessors placed upon themselves.” In Calhoun v, Gulf Refining Co.,235 La. 494, 307,
104 S0.2d 547, 551 (1958), the court held “{t)he lessee under a lease contract does not obtain a real
‘ight in the sense of absolute dominion, anda lease isnot one of those real obligations which attach
asa burden tothe land, as does a servitude; in other words, alease i nota Jus in re, but aJus in rem,
‘right upon the thing”

 

29
 

expressly assigned or subrogated his personal right to the new owner. The court
reviewed the act of sale and found the conveyance and subrogation clauses therein
‘made “no reference to the expired lease, nor to the right of the seller to a restoration
of the property to its original state, nor to the right of damages.” Id., 329 So.2d at
750. Instead, the subrogation clause in the act of sale was directed to the rights and
actions of warranty against previous owners:

.» {the seller] does by these presents, grant, bargain, sell, convey,

transfer, assign and set over with full guarantee against all mortgages,

liens, claims, evictions, or other encumbrances or alienations

whatsoever, and with subrogations to all her rights and actions of

warranty against all previous owners, and with full guarantee of title,
unto [buyer]

 

Id., 329 So.2d at 749-750. Thus, there was no ‘express assignment to the new owner
of the right to sue the former lessee for damages based on violations of the expired
lease.

Since there was no express assignment or subrogation of the former owner's
right to sue for damages, the court then questioned whether the personal right was
impliedly or tacitly assigned to the new owner as an “accessory” of the land, as the
sale of immovable property included its “accessories and dependencies.” [d., 329

So.2dat 750. Moreover, former law recognized an implied assignment of heritable

 

* Foner La. C.C. art. 2461 (1870) provided “[tJhe sale of a thing includes that ofits
‘accessories, and of whatever has been destined for its constant use, unless there be a reservation to
the contrary.” Former La. C.C. art. 2490 (1870) provided “{he obligation of delivering the thing
includes the accessories and dependencies, without which it would be of no value or service, and
likewise everything that has been designed to its perpetual use.”

 

 

 

The “inclusion of accessories” to a sale is now found in La. C.C, art. 2461: “The sale of
{hing includes all accessories intended for its usein accordance with the law of property.” According
tothe revision comments the new codal article changes the aw in part, “sinice according to Articles
2461 and 2490 of the Louisiana Civil Code of 1870 the sale ofa thing also includes its accessories,
‘hile under property law the solution depends on whether the thing is movable or immovable:" La,
CC. art. 2461, Revision Comment - 1993.

La, CC. art. 469 now provides: “The transfer or encumbrance of an immovable includes its
component parts.” The revision comments to that article explains: “Under the regime of the
Louisiana Civil Code of 1870, the transfer of an immovable included, specifically, its accessories
that were classified as immovables by destination. In this revision, the transfer of an immovable
includes its accessories though classified as movables. Article 508, inffa, (which discusses things

30
rights from the conveyance of the property to which the rights were attached.”

‘The court held there had been no implied or tacit assignment of the personal
right in the act of sale because the law was clear that “accessories” to a sale do not
include personal rights belonging to the seller. “Under the article [former La. C.C.
art. 2490], however, Accesories [sic] do not include personal rights of the seller.”"Jd.,
329 So.2d at 750. The court cited as authority Gumbel, supra, Clark, supra, and
Planiol to hold: “Personal rights belonging to the seller can never be considered as
accessories sories [sic] of the immovable sold.”

The court could have ended its analysis at that point, having found no explicit

or

 

plicit assignment to the new owner of the personal rights of the former owner
to sue for damages against the former lessee. Instead, the court embarked on a
discussion of accessory rights, addressing other fact situations where no accessory
rights passed in the sale of property without assignment.

First, the court noted that rents which accrued before the sale of property under
an existing lease cannot be recovered by the new owner, citing among other cases, the

Matthews decision discussed earlier. The court then stated the general rule at issue

 

principal and accessory} defines the accessories of amovable. The same definition may be applied
by analogy to define the accessories of an immovable.” La. C.C. art. 469, Revision Comments-
1978(Q)

According to former La. C.C. at. 2009 (1870): “All rights, acquired by a heritable
obligation, may be assigned (and transferred); this assigament may be made, expressly by contract
‘granting such right, or impliedly by the conveyance of the property fo which they are attached.”
(Emphasis added),

 

 

‘Theheritable obligation is now defined in La.C.C. art, 1765, which reproduces the substance
of former La. C.C. ars. 1997, 1999 and 2009 (1870). See La. C.C. art. 1765, Revision Comments
= 1984. La. C.C. at. 1765, regarding heritable obligations, provides: “An obligation is heritable
‘when its performance may be enforced by a successor of the obligee or against a successor of the
‘obligor. Every obligation is deemed heritable aso al parties, except when the contrary results from
the terms or from the nature of the contract. A heritable obligation is also transferable between
living persons.”

© Prados, 329 So.24 at 750 n.1, citing Marcel Planil and Georges Ripest, Trate Pratique
de Droit Civil Francais, Contrats Civils, Vol. 10, Sec. 87, p. 89-90 (2% ed. 1956) ("Des droits
personnels appertenant au vendeur ne peuvent jamais re considérés comme des accessoires de
Mimmeuble vend.”

3
 

here: “Likewise, a purchaser cannot recover from a third party for damage to the
property incurred prior tothe sale.” Prados, 329 So.2d at 750. Cited as authority for
this ule were Gumbell, supra; Taylor, supra; McCutchen, supra; Bradford, supra;
and Clark, supra. Next, the court stated the purchaser of immovable property sold
‘during an existing lease acquired no right to sue the lessee for property damage which
occurred before the sale. To illustrate this example, the court again referred to
‘Matthews, supra, and included a passage from that opinion which emphasized that
a buyer is presumed to buy the accessory rights to property, but does not obtain in the
transfer the personal rights of the vendor, acquired by the vendor before the sale,
without an express subrogation. See Prados, 329 So.2d at 750-751. ‘Thereafter, the
court stated:

‘The general principle, we think, is that a buyer is presumed to know the

overt condition of the property and to take that condition into account

in agreeing to the sales price. See LSA-C.C. Art. 2521; Aubry & Rau,

Droit Civil Francais, supra, p. 76 (f.n. 6).

Id., 329 So.2d at 751.

This statement has been widely misinterpreted. The plaintiff and the court of
appeal have interpreted this statement as containing the “general principle” of the
‘subsequent purchaser rule itself, ie. that the rule applies only when damage is
apparent and when a purchaser has been able to negotiate a lower sales price due to
the obvious deterioration or damage to the property. Looking at the court's statement
in context, however, the comment was merely a part of the court’s discussion of
accessory rights ina sale of property under an existing lease, the subject matter under

discussion.

 

“The authority forthe court's statement was, in part, Aubrey & Rau, Droit Civil Francais,
‘An English Translation by the Louisiane State Law Institute, Vol. 2, § 176, p. 76 (7™ ed. 1961).
Found on the page indicated in Section 176 is No. 69 entitled “Rights accessary tothe transferred
property.” In Aubrey & Rau, the example under discussion concemed property sold during an
existing lease, which was not at issue in Prados and isnot at issue here.

2
At the conclusion of the discussion of accessory rights, the court reaffirmed
thatthe personal right of the former owner obtained under the now-expired lease had
not passed to the new owner with the title:

The rationale of the foregoing decisions applies more strongly to

the present case. Here, as we have noted, the conveyance was made

after the termination of the lease. The property passed to the buyer

unencumbered. The right to damages accrued to the lessor prior to the

sale. It was a personal right, as distinguished from a real right. Under

‘no sound theory can it be considered as attached to or accessory to the

immovable property. Hence, in the conveyance, the plaintiff received

no assignment of the right.

Id, 329 So.2d at 751 (emphasis added).

A careful reading of the Prados opinion clearly distinguishes between the
discussion of accessory rights and the court’s holding. Only after finding that the
nnew owner did not acquire the former owner's personal rights explicitly, in the act of
sale; implicitly, by a transfer of accessory rights; or under any other theory, did the
court state: “We hold that the present owner has no right to recover damages against
the former lessee.” Jd., 329 So.2d at 751,

4. Post-Prados cases

In Si. Jude Medical Office Bldg. Ltd. Partnership v. City Glass and Mirror,
Inc., 619 So.24 529 (La. 1993), the owner of property, which included a medical
office building and retail complex, sued its contractor and others for construction
defects. The owner defaulted on its mortgage and the mortgagee obtained a judgment

in its favor. The building was seized when the mortgagee executed on its judgment.

After the building was seized, the mortgagee petitioned to intervene in the

 

‘The other authority was the code article in redhibition providing that a seller owes no
‘warranty for defects that were known, or should have been known, a the time of the sale. La, C.C.
art 2521.

Even if the comment was directed atthe general rule expressed inthe subsequent purchaser
rule, the statement merely reiterates the observation made in earlier cases that obvious or apparent
«damage to property is generally taken into account in setting the purchese pice.

33
‘owner's suit against the contractors after purchasing the property at judicial sale,
asserting its right as the new owner to sue third parties for damage to the property

‘which occurred before its purchase. In making this claim, the mortgagee/subsequent

 

owner relied on jurisprudence from this court which held: “that a subsequent
purchaser was subrogated to the implied warranty of materials and workmanship in
abuilding contract. Despite lack of privity, the purchaser of immovable property was
allowed to enforce a property improvement contract made by the previous owner.”
St. Jude, 619 So.2d at 531.

This court denied the subsequent purchaser's claim and held the mortgagee's
authority was based on law which had since been repealed." In addition, the court
found the mortgagee purchased its building and property at a judicial sale and knew

of the defects in the building at the time of the purchase. On both of those grounds,

 

© See Aizpurua v. Crane Pool Co,, Inc. 449 $0.24.471 (La. 1984), superceded by statute,
1s recognized in St. Jude Medical Ofice Bldg. Ltd. Partnership v. Cty Glass and Mirror, In., 608
$0.24 236 (La. 1993).

© Aizpurua was based on former La. CC. art. 2011 (1870), which held:

Not only the obligation, but the right resulting from a contract relative to immovable
‘property, passes with the property. Thus, the right of servitude in favor of immovable
Droperty, passes with it, and thus also the heir or other acquirer will have the right fo
‘enforce a contract made fr the improvement ofthe property by the person from whom he
acquired it

‘See St. Jude, 619 S024 at $31 (emphasis in original),

‘This former codal provision was subsequently repealed and replaced with La... at. 1764, which
Aescribes the effects of real obligations. See At. 1764, Revision Comtumeats-1984(a). Art 1764, Revision
(Comiment(€) explains former Art. 2011 was "suppressed becaute it provisions ae conceptually inconsistent
wth othe provisions of Louisiana law.” La. C.C. art. 1764, Revision Comments-1984(2) explains further:
particular successor, tat is, one who acquires a thing by particular title, is not bound bythe personal
‘obligations of his author with respect tothe thing, ualess he ha assumed these obligations by deleyat
ilar successor does not acquire without stipulation to that effect, any personal rights that
with respectto the thing. For example, ifthe owner ofan immovable who has made «contact
{its repair sells the immovable, the purchaser is not bound to perform the obligation of the owner under
the repair contract unless he assumes that obligation. Conversely, the purchaser does not acquire any right
under the repair contract unless sucha right is asigned to him."

  

According to St. Jude, the holding in Aizpurua was “in derogation of the general rule of Hoa
recovery.” St. Jude, 619 S0.2d at 531

34
 

the court noted the mortgagee had no right to seek redhil

 

ion. Jd. Finding the
‘underlying obligation in the construction contracts was a personal right and not areal
right in the property, the court held the mortgagee had no right of action to intervene
in the former owner’s suit in the absence of a stipulation or assignment. Id. St. Jude
"eaffirmed the general rule that, in the absence of an assignment or subrogation, “a
Purchaser cannot recover froma third party for property damage inflicted priorto the
sale.” Id., 619 So.2d at 530.

Another source of confusion in the interpretation of the subsequent purchaser
rule was inadvertently engendered by our brief per curiam opinion in Hopewell, Inc.
v. Mobil Oil Co., 2000-3280 (La. 2/9/01 ), 784 So.2d 653. ‘The underlying facts of the
‘ase are presented in its appellate decision. Briefly, in 1921, the Pugh family
‘ranted to Fortune Oil Company (“Fortuna”) the right to construct a casing head gas

Plant on @ 70 acre tract of land. Fortuna already owned a mineral lease on

  

act.
In 1922, the Pughs sold to Fortuna the surface rights, as well. Oil and gas operations
were conducted on the property by Fortuna. Fortuna subsequently sold the property
fo Magnolia Oil Company (“Magnolia”). The 70 acre tract was later conveyed back
to the Pugh family in 1945 in settlement of a lawsuit with Magnolia. Thereafter, the
Pughs leased the surface tights back to Magnolia. The gas plant ceased operations
inthe 1950's. At some unspecified time, Mobil Oil Co. (“Mobil”)

 

acquired Magnolia
and assumed its liabilities.

Hopewell, Inc.(“Hopewell”) purchased a 442 acre tract from the Pugh family
in 1994, which included the 70 acre tract already discussed. On January 2, 1997,

Hopewell filed suit for damages against Mobil and the Pugh family, contending the

 

In Aizpurua, the former property owners were sued in redhibition; however, the claim was
dismissed as having been prescribed. Id, 449 So.2d at 471-472.

© See Hopewell, In. v, Mobil Oil Co, 33,774, p. 1-2 (La, App. 2 Cit. 11/1/00), 770 S0.24
874, 875-876,

35
 

property was contaminated by hazardous and toxic substances deposited on the
ground during the former oil and gas operations conducted on the property.

Mobil filed, inter alia, an exception of no right of action, contending the right
to recover for damage to the property was personal to the owner of the property at the
time the damage occurred and did not transfer with the sale to Hopewell. The trial
court denied Mobil’s exception of no right of action, but the court of appeal reversed.
The court of appeal explicitly found the holding in Prados was controlling, and that
the right to recover for damages was personal to the owners ofthe property atthe time
the damage occurred.“ Hopewell sought writs from this court, which were granted.
‘Thereafter, the court issued a brief per curiam opinion reversing the court of appeal:

Granted. Judgment of the Court of Appeal is reversed. Judgment of the

trial court denying defendant's exception of no right of action is

reinstated. Prados v. South Central Bell Telephone Company, 329

So.2d 744 (La. 1975) (on rehearing), which the Court of Appeal relied

‘upon, involves rights arising under @ lease and is distinguishable from

the instant facts. Case remanded to the trial court for further

proceedings.”

Hopewell has been cited as authority by lower courts, and the court of appeal
in this case, for the proposition that Prados is limited to actions for damages by a
subsequent purchaser against a former lessee for damages arising out of violations of
a lease, and where the damage to the property is apparent. Such an interpretation is
misunderstanding of the very limited nature of the Hopewell ruling due, admittedly,
to the abbreviated nature of the per curiam.

Although the per curiam mentions the facts of Hopewell are distinguishable,
the brief ruling does not articulate what the distinguishing facts may be. Hopewell
‘was never intended to repudiate the central holding in Prados, or to limit that holding

todamageclaims against former lessees or where the damage to property is apparent.

 

“ Hopewell, 3,774, p. 5, 770 So.2d at 878.
© Hopewell, 2000-3280, p. 1, 784 S0.2d at 653.
36
To the extent Hopewell has been so interpreted, that interpretation is expressly
renounced.

Finally, in Marin v. Exxon Mobil Corporation, 2009-2368 (La. 10/19/10), 48
So.3d 234, this court granted writs, in part, to consider the very question presented
in the instant matter: “whether a subsequent purchaser has the right to sue for
property damages that occurred before he purchased the property, particularly where
the damage was not overt.” /d., 2009-2368, p. 32 n. 18, 48 So.3d at 256 n. 18. The
court did not reach the issue in Marin, however, because the court found, even
assuming a right as a subsequent purchaser to sue in tort for property damage, the
right had prescribed. Jd. Consequently, writs were granted in the instant matter to
consider the unanswered question.

Analysis

Although the plaintiff asserts the subsequent purchaser rule applies only when
there is apparent damage to property, we think the rationale also extends to the
situation where the damage to property is not apparent. Whether this should be called
‘an extension of the subsequent purchaser rule, or simply the way in which the
fundamental principles of property law operate, the result is the same, Damage to
property may disturb not only the owner’s rights of use of, and enjoyment in, the
Property (the usus and fructus rights in ownership), but may also disturb his right to
alienate the property, or to dispose of the property, completely and without
disturbance (the abusus right in ownership).

‘The property owner at the time the damages were inflicted has a personal right
of action against the tortfeasor for the disturbance of his real right in the property.
‘When the damage is apparent, the property owner obtains the personal right of action

to sue for damages to compensate for a loss of value in the property or an interference

37
with the property’s use. This personal right exists during his use and enjoyment while
hhe owns the property. This personal right exists even during and after his disposal
of the property, as it is assumed the apparent damage would result in a loss of value
to the property which would be reflected in the sale price. Where damage to the
property is not apparent, and the property has been sold, the law provides the
Purchaser with the right to seek rescission of the sale or a reduction in the purchase
price. In that instance, the former owner’s right to dispose of the property without
disturbance has been affected, as the owner must now defend against an action in
redhibition or take some other action to repair, remedy or correct the defect. *

‘With apparent damage to property, the law does not provide to the subsequent
purchaser a source of profit by allowing him to negotiate a low purchase price based
on the condition of the property and the right to seek damages from the tortfeasor
‘who is responsible for the property's poor condition, With damage that is not
apparent, the law does not provide the subsequent purchaser with both the rightto sue
for rescission of the sale, or @ reduction in the purchase price, and the right to sue for
‘damages against the tortfeasor. Instead, whether damage to the property is apparent

or not, the personal nature ofthe right ofthe landowner at that time does not change,

 

and remains with the landowner unless the right is explicitly assigned or subrogated

 

“ La. CC. art 2531 provides specific rules when the seller did not know of the defect:
Art. 2531. Liability of seller who knew not of the defect

A seller who did not know that the thing he sold had a defect is only bound to repair, remedy,
orcorrect the defect. Ifhe is unable or fails so to do, he is then bound to return the price to the buyer
With interest from the time it was paid and to reimburse him for the reasonable expenses occasioned
by the sale, as well as those incurred forthe preservation of the thing, less the credit to which the
seller is entitled ifthe use made of the thing, or the fruits it has yielded, were of some value to the
buyer.

 

le for aredhibitory defect has an action agains the manufacturer of
the defective thing, ifthe defect existed at the time the thing was delivered by the manufacturer to
the seller, for any loss the seller sustained because ofthe redhibition. Any contractual provision that
attempls to limit, diminish or prevent such recovery by a seller agaist the manufacturer shall have
no effec.

38
 

to another.
‘Weare not unaware of the effects which the rules of discovery and prescription
will have on certain fact situations under this analysis,” especially where the damage
to property occurred in the distant past, where property rapidly changes hands, or
where ancestors in title are non-existent.” We find the rules of discovery and
prescription are deliberate legislative choices which ultimately limit otherwise
imprescriptable torts and which maintain certainty in transactions involving
immovable property. The legislature, if it chose, could! ‘have created a right of action
to seek damages against tortfeasors for damage to property which affects current
Property owners no matter when the damage occurred, or could have made an
exception to prescription rules for long-term contamination of property. But such
legislation has not been enacted. Instead, the legislature has decided the only
addition to current legal remedies is a mechanism for remediating the property.”
‘Nor are we indifferent to criticisms of the remediation procedures of the La.
DEQ raised by the plaintiff and amicus curiae. However, these assessments of the
current legislative scheme for property remediation are also matters best addressed
to the legislature. What we discern from the current legislative scheme is a
determination by the legislature to remediate property to put it back into use and

commerce.” In the absence of legislative action, we cannot supply a right of action

 

® Seeex. La. C.C. art.2534, which provides for prescription for theright of redhibition, and
La. CC. at. 3493, which provides for prescription for damage to immovable property.

Marini such a case, where this cout found even ifthe plaintiff had aright to bring an
action, the action would be prescribed due to the passage of time.

‘See La. RS. 30:2026 (Citizen suits), La. RS. 30:6(F) (interested persons have the right
tohave the commissioner of conservation calla hearing forthe purpose of taking action); La. RS.
30:16 (suit by interested party upon commissioner of conservation’s failure to sue); see also
‘generally La. R.S. 30:2001 et seg. (Louisiana Environmental Quality Act).

In the absence of legislative action in this regard, we note our rejection ofthe analysis of
the concurring opinion on rehearing. We find nothing inthe federal or state governments’ actions
in creating a mechanism for remediation of property which would necessarily rest in a tight of

39
through jurisprudence which the law does not.

With this analysis of the law in mind, we review the reasoning of the court of
appeal de nove.

Court of Appeal Opinion

On original hearing, before a three-judge panel, the Fourth Circuit denied the
plaintiff's claims under both tort and contract theories.” Citing to the general rule,
the appellate court held Eagle Pipe could not assert a right of action under tort
principles. The court of appeal noted the act of sale did not explicitly include an
assignment ofthe former owner's personal right to damages and correctly interpreted
that Hopewell had not changed the law. The court of appeal also denied any
exception to the general rule based in trespass under the facts presented here.

Next, the court of appeal considered and rejected Eagle Pipe’s contentions of
entitlement to a right of action as a third party beneficiary. The court found Eagle
Pipe failed to identify a contract or contracts which established its status as a third
party beneficiary. Instead, the allegations cited in the petition referenced benefits
incidental to the contracts discussed. The court additionally found that any obligation
to repair the land which might have been found in contracts entered into by the Oil
Company Defendants was a personal right which inured to the previous landowners,
which was not assigned to Eagle Pipe. Consequently, on original hearing, the court
of appeal found no abuse of the trial court's discretion in denying the plaintiff's
motion for new trial which sought leave to amend the petition, finding: “{t]here are
no facts to cure the causes of action alleged in the petition because the causes of

action pertain to alleged damages to the land prior to Eagle's ownership and Eagle

 

‘action by the current landowner to claim damages.
® Eagle Pipe, 2009-0298, p.1-9, 47 $0.34 at 431-435,
40
lacks an assignment of rights."

Rehearing was granted before a five-judge panel. ‘The opinion on original
hearing was vacated and a new opinion on rehearing was rendered, Based on our
review of the jurisprudence and the law discussed herein, we find the reasoning of the
court of appeal on rehearing to be fundamentally unsound,

‘The rehearing panel majority found that our brief per curiam in Hopewell
changed the law, limiting Prados to fact situations where a subsequent purchaser files
‘n action against a former lessee arising out of a terminated lease, Moreover, the
court of appeal, in failing to read Prados carefully, relied on the “general principle”
inthe discussion of accessory rights as authority to find the subsequent purchaser rule
did not apply where damage to property was not apparent at the time of its sale. As
our previous analysis shows, the Fourth Circuit's analysis on rehearing with regard
to our holdings in Hopewell and in Prados was flawed,

The rehearing panel majority next failed to thoroughly read Clark, as has
already been discussed; the court of appeal on rehearing held that where there is
injury, there must be reparation in the form of a tort right of action. Although La.
CC. art. 2315, the general authority for tort liability, was discussed in Clark as the
basis for the subsequent purchaser’s claim, the rest of the analysis in the Clark
opinion made clear that each succeeding owner had the right of action to sue for
damages inflicted on the property while he or she was the owner, that this right was
4 personal right, and that the right remained with each owner unless assigned,

‘The court of appeal on rehearing approached the present problem by focusing
oon the concept of injury, rather than analyzing the current matter under the principles

of Louisiana property law or understanding that under Louisiana law the damage to

 

 

‘Id., 2009-0298, p. 9, 47 So.3d at 435.
41
Property is considered as damage to the owner's rights in the property. In support of
its flawed reasoning, the rehearing panel majority undertook the novel, although
incorrect, approach of relying on jurisprudence regarding the occurrence of property

damage under contractual language in insurance cases.” While this analysis may

 

have superficial appeal, it is not the correct approach to resolve the present issue.
Finally, the court of appeal on rehearing confused the right to bring an action

with a cause of a

 

n. In the first ofits four “findings,” the rehearing panel majority

hel

 

(1) the manifestation of radioactive contamination allegedly caused by
defendants constitutes an injury giving rise to a legitimate cause of action .. 2
‘What is at issue here is whether Eagle Pipe has the right to bring a suit seeking

‘damages for injury to its property which occurred before the plaintiff became owner

 

Cases interpreting whether an “occurrence” occurs during a policy period of insurance
‘coverage have considered both the exposure theory and the manifestation theory,

Under the exposure theory, damage would be considered to have occurred
When the act which resulted in the damage took place, not when the damage was
discovered. Thus, where damage develops over a period of time from continuous ot
‘repeated exposure to injurious conditions, courts have determined tha the occurrence
took place either at the inception of the exposure period or continuously during the
‘entire course of exposure, as in asbestos cases. Even where the damage or injury was
‘not manifested until after an insurer’s policy period, ifthe insurer's policy period fell
either atthe inception or during the course of exposure, the insurer would be liable,

‘Unilerthe manifestation theory, property damage would be considered to have
‘occurred when it became manifest, regardless of when the act fiom which it resulted
‘occurred. Omer v. Montgomery, 34,727, p. Ll (La. App. 2 Cit. 8/1/01), 794 80.2
86,93, writ denied, 2001-2489 (La. 12/7/01),803 So.24 36, citing Korossyv. Sunrise
Homes, Inc., 994-0473 (La. App. 5 Cir. 3/15/95), 653 So.2d 1215, writs denied,
1995-1536, 1995-1522 (La. 929/95), 660 So.2d 878

 

In this case, the court of appeal relied on Ricks» Kentwood ito, tne, 2009-0677 p. 11-12 (La
‘App. 1 Cir. 223/10), 38 $0.3d 363, 371-372, appeal denied, 2010-1733 (La. 10/15/10), 45 $0.34 1112
(riage for emotionamental distress damages underinsurance contract was afer damage became knows
{interpretation of “occurrence”; Rondo v Top Notch Properties .L.C., 2003-1800 p. 4-18(La. App. & Cir
£2104), 879 So. 24821, 825-634 defects in construction that result in dunage subsequent to completion are
“occurrences” under insurance contract when they manifest); Oxner, 34,727 p. 11-12, 794 So.2d at 93.
roperty damage considered to have occurred when it became manifest, tegardless of when the act fom
‘which it resulted occured; insurance coverage excluded by other insurance provisions); and James Pest
Control, In. v. Scottsdale Ins. Co., 1999-1316 p. 12 (La. App. 5 Cit, 6/27/00), 765 80.2 485, 491, writ
denied, 2000-2285 (La, 10/27/00), 772 So.24 657 (manifestation of termite damage triggered insurance
‘coverage) as authority for its conclusion tha injury is deemed to oceur when the damage “manifests” See
Eagle Pipe, 2009-0298 p.8.9,47 So3d 441. These theories of insurance contrac interpretation, deriving
‘from personal injury concepts, are wot applicable here.

 

™ Eagle Pipe, 2009-0298, p. 9, 47 So.34 at 442 (emphasis added).
2
of the property. The court of appeal’s focus was incorrect.

For the foregoing reasons, we find the ruling of the court of appeal on
rehearing was erroneous. We now tum to our own review of the plaintif?’s claims.
Allegations of the Petition

Reviewing the allegations of the petition de novo, and assuming the petition
States a valid cause of action for some person, we must now determine whether the
plaintiff belongs to the class of persons to whom the law grants the causes of action
asserted in the suit. In reviewing the causes of action asserted by the plaintiff, we
find they fall into two general categories, those arising in tort and those arising under
contract.

a. Tort claims

Eagle Pipe raises a tort cause of action, claiming the defendants are strictly
liable and liable for their negligence in damaging the property. Eagle Pipe claims a
right of action as the current property's owner who is injured by the contamination
of the property by TENORM. Although Eagle Pipe argues the distinction between
real and personal rights is irelevant, our analysis shows that this distinction is at the
very core of the Louisiana property laws which resolve this dispute.

As we have explained, injury to property must be understood as damage to the
real rights in the property. A tortfeasor who causes injury or damage to a real right
in property owes an obligation to the owner of the real right. This relationship arises
a a matter of law and provides to the owner of the real right a personal right to sue
the tortfeasor for damages. In the absence of an assignment or subrogation of this,
personal right, a subsequent purchaser of the property cannot recover from a third
party for property damage inflicted prior to the sale. Insofar as Eagle Pipe claims a

right to sue based on the damage to the property which occurred before its ownership,

a
wwe hold the plaintiff has no right of action to assert as a matter of law.
Tothe extent the plaintiff claims the damage to the property is continuing, such
that Eagle Pipe asserts its own right of action to sue for damages, we find the law is

clear that the allegations of the pl

 

{Fs petition cannot constitute a continuing tort,
In Crump v. Sabine River Authority, 1998-2326, p. 7 (La. 6/29/99), 737 So.24 720,

726,

 

court noted “the theory of continuing tort has its roots in property damage
cases and requires that the operating cause of the injury be a continuous one which
‘results in continuous damages.” We have held “{a] continuing tort is occasioned by

continual unlawful acts and for there to be a continuing tort there must be a

 

continuing duty owed to the plaintiff and a continuing breach of that duty by the
defendant.” 1d., 1998-2326, p. 10,737 So.2d at 728.

‘The inquiry as to whether there is continuous tortious conduct “is essentially
@ conduct-based one, asking whether the tortfeasor perpetuates the injury through
overt, persistent, and ongoing acts.” Hogg v. Chevron USA, Inc., 2009-2632, p. 16
(La. 7/6/10), 45 So.34 991, 1003. In Hogg, we cited with approval the following
analysis:

- courts look{] to the alleged injury-producing conduct of the
tortfeasors to determine whether that conduct was perpetuated through
overt, persistent, and ongoing acts. Where the wrongful conduct was
completed, but the plaintiff continued to experience injury in the

absence of any further activity by the tortfeasor, no continuing tort was
found. Id., 2009-2632, p. 21, 45 So.3d at 1005.

  
  

‘We find the operating cause of the injury claimed in the petition here was the
tender of allegedly contaminated oilfield equipment from the Oil Company
Defendants and the Trucking Company/Transporter Defendants to Union Pipe, the
lessee of the Former Property Owner Defendants. The petition does not claim that
there have been continual or ongoing unlawful acs; instead, the petition asserts the

alleged tortious acts ceased as of 1988. We also find the continued presence of the

4
alleged contamination, the injury claimed, is simply the continuing ill effect from the
original tortious acts. Crump, 1998-2326, p. 9, 737 So.2d at 727-728. The fact that
# subsequent purchaser “discovers” the continuing ill effects of the original tortious
acts does not give rise to a new, discrete right of action in tort.

Similarly, to the extent the allegations in the petition could be construed to
assert a cause of action under trespass, as alluded to inthe plaintiff's brief and urged
by amicus, we find the law does not extend a right of action to Eagle Pipe under the
facts alleged. The plaintiff cites to McCutcheon, supra, where this court noted in
ruling that the current landowner could not recover for damages to the land that
‘occurred prior to purchase that “[tJhe exception to this rule (to which the learned
Counsel calls attention) arises when the entry or taking of land is in the nature of a
{tespass, and applied to the demand for the value of the land as contradistinguished
from the claim for damages incidental to such trespass.” 118 La. at 439, 43 So. at 42
(Parenthetical in original).” However, Eagle Pipe does not include the court’s
conclusion in McCutcheon, which found: “[iJn the instant case we find as a fact that
the entry was made and the land occupied with the acquiescence of the owner. The
case does not, therefore, fall within the exception.” Jd.

A civil trespass is a tort. Even if the facts alleged in the petition could be
considered tortious acts which constituted a trespass which caused damage to the
roperty, the principles of Louisiana property law would still provide the owner of

the property at the time th

 

jury occurred with a personal right to sue the trespasser
for damages, and not the subsequent owner. Moreover, not all trespasses are
continuous acts giving rise to successive damages.

In Hogg, we observed “the concept of continuing tort finds its origins in

 

” Opposition Brief of the Plaintiff-Respondent,p. 15,
45
 

trespass and nuisance cases.” Id., 2009-2632, p. 16, 45 So.3d at 1003,

A continuous trespass is a continuous tort; one where multiple acts of
trespass have occurred and continue to occur; where the tortious conduct
is ongoing, this gives rise to successive damages. ... That situation,
our courts have cautioned, is to be distinguished from a trespass which
causes continuing injury by permanently changing the physical
condition of the land. When a trespass which permanently changes the
physical condition of the land is concluded, no additional causes of
‘action accrue merely because the damage continues to exist or even
progessively worsens. Id.,2009-2632, p. 17, 45 So.3d at 1003 (citation
omitted).

 

 

‘Thus, to determine whether a trespass is continuous, a court must use the same
inquiry used to determine the existence of continuing tort. As we have already seen,
the injury alleged in the petition was not perpetuated through overt, persistent, and
‘ongoing acts. Consequently, even if the allegations in the petition could be
considered as asserting a trespass claim, Eagle Pipe would not have a right of action
to assert that claim.

Finally, Eagle Pipe relies upon a Civil Code comment for the proposition that

 

“the obligation ... to restore the premises to their previous condition is a real
obligation, following the immovable into the hands of any acquirer.” La. C.C. art.
1764, Revision Comments-1984(f). Although the language used in the comment
certainly appears to provide relief for the plaintiff, a closer look at the paragraph in
hich this statement is made and the authorities cited for the proposition reveal the

comment

 

referring to areal obligation to restore premises correlative and incidental
toa predial servitude. See Yiannopoulos, Predial Servitudes, § 157 (3d ed. 2004).
‘The paragraph in which the relied-upon statement appears is a discussion of the

effects of real obligations in connection with predial servitudes.”* Consequently,

* La. CC. att 1764, Revision Comments-1984(f) provides, in pestinent part:

‘When the owner of the servient estate interferes with the servitude, he
violates areal obligation, and may cause damage to the owner of the dominant estate.

6
 

Eagle Pipe cannot assert a right of action under these provisions.
b. Contract elaims

We have already found, absent assignment or subrogation, Eagle Pipe as a
subsequent purchaser of the property does not have a right to assert a claim for
damages which were inflicted on the property before the sale. Consequently, we must
examine the act of sale to determine whether the Former Property Owners Defendants
explicitly assigned their personal right to sue for damage to Eagle Pipe. The act of
sale was attached to the petition and was offered as an exhibit at the hearing on the
exceptions. In pertinent part, the act of sale provides:

.». [the sellers] do by these presents sell, transfer and deliver, with full

guarantee of title and free from all encumbrances, and with full

subrogation to all their rights and action of warranty against previous
owners ..””

 

‘We find these provisions are substantially similar to those found in Prados, supra, in
which we stated the subrogation clause in the act of sale was directed to the rights and
actions of warranty against previous owners, and not an express assignment or
subrogation of personal rights to the new owner. Prados, 329 So.2d at 749-750.
Likewise, we find no express assignment or subrogation of the former property
owners’ personal right to sue for damage in the act of sale at issue here.

‘Consequently, Eagle Pipe has no right of action based on an assignment of personal

If the owner of the dominant estate sells it, the claim for damages still belongs to
hhim. Its personal right that doesnot pass with the immovable unless assigned.
Conversely, when the owner of the dominant estate abuses the servient estate, an
indemnity may be due to the owner of the servient estate. If the servient estate is
sold, the indemnity belongs to the vendor. Its a personal right that does not pass
‘with the immovable unless assigned. See Dunlap v. Red River Waterway
Commission, 405 So.24 655 (La. App. 3*Cir. 1981); Dickson v. Arkansas Louisiana
Gas Co,, 193 So, 246 (La. App. 2 Cir. 1939); Yiannopoulos, Predial Servitudes §
157(1983). In contrast, the obligation to demolish works and to restore the premises
to their previous condition is real obligation, following the immovable ito the
hhands of any acquirer. 1d; 3 Planiol et Ripert, Traté pratique de droit civil frangais
966 (2d ed. Picard 1951). (Emphasis added),

 

 

™ “Act of Sale and Mortgage,” Exhibit A tothe Petition, Vol. 1, p. 23
a
 

rights from its vendor.”

Eagle Pipe contends that Union Pipe and the Oil Company Defendants entered
into contracts, obligations or agreements that provide for the recovery of damages
caused to the property. This contention suggests earlier contracts between the lessee
and its customers established a real obligation which followed the property.
However, a real obligation is correlative and incidental to a real right. Although
‘Union Pipe as lessee had a right against the Former Property Owner Defendants to
use and enjoy the property during the term ofits lease, Union Pipe did not have a real
right in the property. The Former Property Owner Defendants retained the real rights
to use and enjoy the property, while the lease provided Union Pipe with a personal
right against the owners to allow it to use and enjoy the property. The contracts
between Union Pipe and the Oil Company Defendants, therefore, could not involve
any real right in the property. It is a fundamental principle that “no one can transfer
4 greater right than he himself has." If there was no real right involved in the
contracts between Union Pipe and the Oil Company Defendants, then there could be

© Wedo not find the provisions of La. RS. 30:29(H) supply a separate right of action in the
absence of an express contractual provision:

 

1H. This Section shall not preclude an owner of land from pursuing a judicial
remedy or receiving a judicial award for private claims suffered as a result of
environmental damage, except as otherwise provided in this Section. Nor shall it
preclude a judgment ordering damages for or implementation of additional
remediation in excess of the requirements of the plan adopted by the court pursuant
to this Section as may be required in accordance with the terms of an express
contractual provision. Any award granted in connection with the judgment for
additional remediation is not required to be paid into the registry of the court. This
‘Section shall not be interpreted to create any cause of action or to impose additional
implied obligations under the mineral code or arising out of « mineral lease.

   

 

 

Moreover, because not factually relevant, we express no opinion as othe applicability ofour
holding to fact situations involving mineral leases or obligations arising out of the Mineral Code,

 

© See La. C.C. art. $17, Revision Comments-1979(b); former La. C.C. art. 2015 (1870)
provided in pertinent part: “no one can transfer a greater right than he himself has.” The disposition
of this former Civil Code article is explained in La. C.C. art. 1764, Revision Comments-1984(g):
“Civil Code Article 2015 (1870) has also been eliminated without intending any change in the law.
‘That no one may transfer a greater right than he has is 2 conclusion that results from general
principles.” (Emphasis added)

48
established no real obligation which was correlative and incidental to that real right.
Instead, the contractual rights and obligations between Union Pipe and the Oil
Company Defendants established personal rights between the contracting parties.
Eagle Pipe does not have a right of action based on a real obligation established by
an earlier contract between a lessee of the property and its customers.

Eagle Pipe also contends that Union Pipe entered into contracts with its
customers by which the Oil Company Defendants obligated themselves to provide
certain health and safety conditions and notices. Eagle ipe asserts these contracts
\ere similar in nature to contracts entered into by other oil companies and pipeyards.
Eagle Pipe asserts itis a third party beneficiary to such contracts, and as such, has the
right to demand performance from the Oil Company Defendants. The petition recites
portions of these other alleged contracts which purport to show the assumption by
other oil companies of “specific health and safety obligations” and “... in providing
healthy and safe working conditions with adequate environmental and pollution
controls... .""*

La. C.C. art. 1978 provides: “A contracting party may stipulate a benefit for a
third person called a third party beneficiary. Once the third party has manifested his
intention to avail himself of the benefit, the parties may not dissolve the contract by
mutual consent without the beneficiary's agreement.” This court has held “such a
contract for the benefit of a third party is commonly referred to as a ‘stipulation pour
utrui.”" Joseph v. Hospital Service Dist, No. 2 of Parish of St. Mary, 2005-2364, p.
7 (La, 10/15/06), 939 So.2d 1206, 1211. While the Louisiana Civil Code recognizes

the existence of a third party beneficiary contract, the code provides few governing

 

© See Petition, $4 VIII(17-19); Vol. 1, p. 13-14.

© As noted in Joseph, BLACK’S LAW DICTIONARY 1724 (7* ed. 1999) defines a
stipulation pour auruias a French civil law term meaning a stipulation “for other persons.” Joseph,
2005-2364, p. 7.5, 939 So.2d at 1211 n5.

49
 

rules, Id., 2005-2364, p. 8, 939 So.2d at 1211." Instead, “{eJach contract must be
evaluated on its own terms and conditions in order to determine if the contract
stipulates a benefit for a third person.” 1d., 2005-2364, p. 8, 939 So.2¢ at 1212.

In order to help with this determination, we found:

{our study of the jurisprudence has revealed three criteria for

determining whether contracting parties have provided a benefit for a

third party: 1) the stipulation for a third party is manifestly clear; 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 promisor and

the promisee. In applying these criteria, we ultimately rely on the words

of Article 1978 that the contract must “stipulate a benefit for a third

person.” /d., 2005-2364, p. 8-9, 939 So.2d at 1212.

In addition, a stipulation pour autrui can never be presumed and the party claiming
its benefit bears the burden of proof. Jd.

Putting aside requirements of proof, and assuming that such contracts exist and
contain the language described, we find no clear manifestation ofa stipulation for the
benefit of third party such as Eagle Pipe." The language cited in the petition shows,
if the contracts contained a stipulation for the benefit of third parties, the benefit was
intended for the employees and subcontractors of the pipeyards entering into these
contracts with the oil companies, and not for a subsequent purchaser of the property.
Likewise, we find the benefit which was intended to accrue to these beneficiaries was
for the health and safety of the workers. Finally, we find that any benefit which Eagle
Pipe derives from these provisions of the contracts between Union Pipe and its

customers would be incidental to the contracts themselves, inasmuch as any person

coming into contact with land has an interest in the land not

 

1g contaminated.

™ See La. CC. arts, 1978-1982.

* Although the plaintiff would ordinarily bear the burden of proving both that such contracts
exist and that they contain the described language, ths issu arises inthe context of an exception of
no right of action, “For the purposes ofthe exception all well pleaded facts in the petition must be
taken as true.” Harwood Oil & Min. Co., 240 La. at 649, 124 So.24 at 766-767.

 

In Lejeune v. Rayne Branch Hospital, $56 $0.24 559, 569 (La. 1990), we stated: “(the
‘mere fact that a duty exists does not mean that it extends to everyone against every risk all of the

  

50
 

‘Our analysis of the three criteria for determining whether contracting parties
have provided a benefit for a third party like Eagle Pipe leads us to conclude that
Eagle Pipe does not have a right of action to assert on this basis. “A person may
derive a benefit from a contract to which he is not a party without being a third party
beneficiary.” Joseph, 2005-2364, p. 12, 939 So.2d at 1214, The contracts between
Union Pipe and its customers encompassed the personal rights and obligations of the
contracting parties, but failed to include provisions for third party beneficiaries like
Eagle Pipe.
CONCLUSION

Under the facts alleged in the petition, the law has provided to Eagle Pipe a
cause of action in redhibition and the right to sue for rescission of the sale or the
reduction of the purchase price. In addition, the legislature has provided a
mechanism for Eagle Pipe to obtain remediation of the property. While the law
provides Eagle Pipe a contractual remedy, and the legal remedy of remediation, the
law is not required to provide Eagle Pipe with every possible remedy. PPG
Industries, Inc. v. Bean Dredging, 447 So.2d 1058, 1061 (La. 1984) (“..the rule of
law which prohibits negligent damage to property does not necessarily require that
4 party who negligently causes injury to property must be held legally responsible to
all persons for all damages flowing in a ‘but for’ sequence from the negligent
conduct.”) (emphasis in original). Our de novo review of the allegations in the
plaintiff's petition shows that Eagle Pipe does not belong to the class of persons to
‘whom the law grants the causes of action asserted in the suit.

DECREE

So finding, we reverse the ruling of the court of appeal on rehearing and

 

time’

3
reinstate the ruling of the court of appeal on original hearing, affirming the trial
court's granting of the defendants’ exceptions of no right of action,

REVERSED

2
SUPREME COURT OF LOUISIANA.

‘Nos. 2010-C-2267 e/w 2010-C-2272 e/w 2010-C-2275
hw 2010-C-C-2279 c/w 2010-C-2289

EAGLE PIPE AND SUPPLY, INC.
vs,
AMERADA HESS CORPORATION, ET AL. Oct 25 zon

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
G\ GG FOURTH CIRCUIT, PARISH OF ORLEANS

GUIDRY, Justice, concurs and assigns additional reasons

‘agree thatthe court of appeal erred in applying La. C.C. article 2315 to find
Fagle Pipe, asa subsequent purchaser, was not precluded from seeking reparation
from the Oil Company Defendants and the Trucking/Transportation Defendants
‘merely because the alleged damage was hidden atthe time it acquired the property.
‘While Eagle Pipe may have sustained damages as a result ofthe difference between
‘he sale price and actual value of the contaminated property, the law does not now
Provide aremedy intortto Eagle Pipe under these circumstances. To hold otherwise,
fs the defendants correctly point out, an interest in immovable property that has long
been recognized asa personal right would be transformed into a real righ that runs
‘with the property, potentially ad infinitum, thereby creating an imprescriptible variety
oftortaction. This is especially compelling in a case such asthe instant one where
the issue of discovery of hidden property damage is premised on the subjective
Knowledge of the subsequent purchaser. Moreover, such a holding would also
Undermine the clarity and predictability ofthe public records doctrine, discouraging

reliance on recorded instruments.
 

'w, Louisiana law already protects the rights of purchasers of real
Property, providing the purchaser avails itself of those protections, Under the facts
ofthis case, the property was contaminated during the period the sellers ownedit, As
such, the sellers, and not Eagle Pipe, would have possessed any personal right of
‘action in tort against these defendants, Eagle Pipe could have protected its rights at
the time of purchase, but apparently filed to do so. The record reflects Eagle Pipe,
‘8. sophisticated purchaser — indeed, it was apparently engaged in the same business
4 the seller's lessee ~ neglected to protect its interests, for example, by having the
Property adequately inspected, by obtaining an express assignment of the seller's
personal rights, or by retaining a redhibitory remedy for the rescission of the sale.
Eagle Pipe cannot now seek a remedy in tort where none exists, especially against
these defendants, for economic losses sustained as a result of what may have tured

‘out to be an unfavorable business transaction,
 

ww

SUPREME COURT OF LOUISIANA

NO. 2010-C-2267
CONSOLIDATED WITH
NOS. 2010-C-2272, 2010-C-2275, 2010-C-2279 & 2010-C-2289
EAGLE PIPE AND SUPPLY, INC.
‘OCT 26 20
VERSUS

AMERADA HESS CORPORATION, ET AL.

On Writ of Certiorari to the Court of Appeal, Fourth Circuit, Parish of Orleans

WEIMER, J., dissenting.

I respectfully dissent from the majority opinion insofar as it adopts a bright line
rule expanding the application of the jurisprudentially created subsequent purchaser
rule to all circumstances, regardless of the facts. In my view, the blanket expansion
ofthe subsequent purchaser rule to include latent conditions on property divorced of
‘any consideration of the particular circumstances out of which those conditions arise
thas the potential to produce unworkable and inconsistent results at odds with the facts
and the law.

This matter comes before the court on an exception of no right of action that

simply tests whether the plaintiff has an

 

terest in the action. La. C.C.P. art.
927(A}(6). In other words, the exception asks “whether the plaintiff belongs to the
class of persons to whom the law grants the cause of action asserted in the suit.”
Hood v. Cotter, 2008-0215, p. 17 (La. 12/2/08),5 So.34819, 829. Adopting abright
line, inflexible approach to this preliminary determination in view of the myriad of
factual circumstances that may present themselves is, in my view, unwise and

conducive to unjust and inequitable results.
 

 

‘The subsequent purchaser rule isa jurisprudential creation. It recognizes that
the right to recover for damage to real property is a personal right belonging to the
Property owner at the time the damage occurs, as such, it does not transfer to a
subsequent purchaser absent an express assignment. See, St, Jude Med. Office Bldg.
Ltd. P'ship v. City Glass & Mirror, Ine., 619 So.2d 529, 530-531 (La. 1993);
Prados v. S. Cent. Bell Telephone Co., 329 So.2d 744, 749-751 (La. 1976) (on
reh’g). Although linked to La. C.C. art. 1764,' the rule is not derived from that, or
any, codal provision; rather, it finds its roots in the case of Clark v. J.L. Warner &
Co. 6La. Ann. 408 (La. 1851).

In Clark, the plaintiff purchased a tract of land with a two-story brick house,
kitchen and out-houses. Jd. at 408. After taking possession of the property, he sued
the defendant, a lessee of the neighboring property owner, for damages to the house
‘and out-buildings caused by defendant's operation of an ice house. Id. The trial
court's judgment in favor of the plaintiff was reversed on appeal, with the court
noting:

It is true, that the purchaser of property is presumed to purchase all

actions appurtenant to the property, and necessary to its perfect

enjoyment; but as to damages actually suffered before the purchase, we

know of no other principles governing the case than those referrable to

this general provision of the code, that “every act of man that causes

damage to another obliges him by whose fault it happened to repair it.”

It is a mere corollary, that the reparation must be made to him who

suffered the injury. “And the principle is strikingly illustrated by this

case. The plaintiff, after possessing the property twenty months, claims

‘one-third more damages than he gave Mrs. Springer for his lot with all

the buildings and improvements. This leads to the impression, that the

modicity of the price he gave for the premises may, pethaps, be

attributed to their dilapidated and dangerous situation, on account of the
erection of the ice house and other causes. It is impossible, from the

law, to concur with the district court, that these damages, which
Probably caused the moderate price given for the house and kitchen,

 

* Ses, La. C.C. art. 1764, emt. (D (1984).
should be a source of profit to the purchaser, who had a perfect
knowledge of their existence when he purchased.

Clark, 6 La, Ann. at 409.

‘Therule first announced in Clarkhas been followed consistently in this court's
jurisprudence. It is premised on the idea that the purchaser is not the party damaged
by the tortious conduct; rather itis the seller who has suffered damage in the form of
the reduced price received for the property: “The general principle, we think, is that
‘2 buyer is presumed to know the overt condition of the property and to take that
condition into account in agreeing to the sales price.” Prados, 329 So.2d at 751. The
subsequent purchaser rule is, therefore, nothing more than the jurisprudence’s
common sense approach to situations where known or overt conditions of immovable
property result in a diminution in value that in turn results in a lower price paid for
the property. The jurisprudence recognizes that the purchaser, who receives the
benefit of the diminution in value, suffers no loss and, therefore, no damage.

‘Therule has roots in French civilian tradition. As explained by Aubry and Rau
in their discussion regarding what rights transfer in a sale of property:

There isno doubt that an action for rescission or in damages because of

circumstances occurring before the sale such as changes in the premises

or an unauthorized assignment of the lease, is not transferred to the

buyer. But an action on grounds of excessive deterioration should pass

onto the buyer, atleast ifthis circumstance was not taken into account

when the sales price was set. (Emphasis added; footnotes omitted.]
2 AUBRY & RAU, LOUISIANA CIVIL LAW TRANSLATIONS: DROIT CIVIL FRANCAIS
§ 176, pp. 76-77 (7* ed. 1971). See also, Hd. at n.6 (“This solution presupposes that
the deterioration has been taken into account when setting the sales price. Otherwise
the opposite decision would be justified.”)

‘The majority opinion goes to some length, in tracing the origins of the
subsequent purchaser rule, to discount the idea that application of the doctrine hinges

3
 

‘on the overt or known characteristic of the damage. Thus, itrecites that the rationale
of Clark does not indicate a requirement that the damage be overt. Eagle Pipe and
Supply v. Amerada Hess Corp., 10-C-2267, 10-C-2272, 10-C-2275, 10-C-2279, and
10-C-2288, slip op. at 22 (October 2011). However, Clark was not a case in which
the damage to the property was latent or hidden. As a result, it was unnecessary for
the Clark court to comment on whether the rule should be extended to cases of latent
damage. Had itattempted to do so, its statement in that regard would have been dicta,
‘The majority opinion similarly distinguishes Prados on grounds that the presumption
that the buyer is aware of the overt condition of the property and takes that condition
into consideration in agreeing to the sales price is discussed in a paragraph on
accessory rights. Eagle Pipe, slip op. at 33. Ultimately, however, this is distinction
without a difference, as the key to the holding in Prados is revealed in the single
statement, quoted by the majority: “The right to damages accrued to the lessor prior
to the sale.” Prados, 329 So.2d at 751. That right accrued before the sale because
before that time the damages were obvious, and their existence interfered with the
owner's “use, enjoyment or disposal of the property,” in that the owner received a
reduced price for the property, and thereby incurred damages.

Given the common sense underpinnings of the subsequent purchaser rule, itis
not surprising that it has been applied by this court thus far only in cases where the
 La, CC. art 3493 provides

‘When damage is caused to immovable property, the one year prescription
‘commences torun from the day the owner ofthe immovable acquired, or should have
acquired, knowledge of the damage.
 

a coherent body of law. Louisiana C.C. art. 3493, a written provision of our law,
specifically refers to the owner of immovable Property and explicitly links the
‘commencement of prescription to knowledge of damage. Implicitly, this article
recognizes a right of action in the owner of the immovable at the time damage is or
‘should have been discovered. I believe that it is this codal provision, rather than the
expansion of a jurisprudential rule, which must serve as guidance in this case
Drawing upon that codal provision, I believe that itis proper to conclude, as did the
Court of appeal on rehearing, that in the case of latent or unknown damage to
property, the cause of action arises upon actual or constructive knowledge, and the
Tight of action belongs to the property owner at the time of that discovery.*
Ultimately, then, the majority's analysis of the issue presented in this case,
while exhaustive and detailed, is one with which I must respectfully disagree. Ido
not believe that the subsequent purchaser rule, which has previously been applied by
this court only in cases of overt injury to property where the injury has been
accounted for in the reduced price paid for the property, can or should be expanded
to.cases of latent and unknown injury so as to deprive the subsequent landowner who
discovers the injury of a right of action, especially where, in the one case to raise the

issue prior to the present one, Hopewell, the court refused to do so.

«Any other interpretation would render the provisions of La C.C. art. 3493 meaningless, because
in the case of latent damage, which does not manifest itself until after a sale the right to recovery
‘would be extinguished before prescription could even commence.
SUPREME COURT OF LOUISIANA
No. 10-C-2267 c/w 10-C-2272 c/w 10-C-2275 c/w 10-C-2279 c/w 10-C-2289
EAGLE PIPE AND SUPPLY, INC.
VERSUS
/ AMERADA HESS CORPORATION, ET AL.

OCT 25 zon

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FOURTH CIRCUIT, PARISH OF ORLEANS.

VICTORY, J., concurring in the result.

agree with the majority's conclusion that, under Louisiana law, a subsequent
purchaser of property does not have the right to sue a third party for non-apparent
Property damages inflicted before the sale in the absence of an assignment of ot

subrogation to that right,