Opinion ID: 768363
Heading Depth: 3
Heading Rank: 3

Heading: Equitable Avoidance of the Return Requirement

Text: 22 Appellants insist that the district court erred in not excusing the return requirement. They note that Louisiana law does not require the purchaser to return a defective product when the product has been consumed by use. See Walton v. Katz & Besthoff, 77 So.2d 563, 566 (La. App. Orl. 1955) (holding that plaintiff could sue for rescission of sale of defective paint despite his inability to return the paint and restore the status quo ante because paint was consumed by use). Appellants rely primarily upon our decision in PPG Indus., Inc. v. Industrial Laminates Corp., 664 F.2d 1332 (5th Cir. 1982), and the Louisiana Fourth Circuit's decision in Frank Brigtsen, Inc. v. Swegel, 258 So.2d 579 (La. App. 4th Cir. 1972) to support their consumed by use claim. We find neither of these cases dispositive. 23 In PPG we did not address whether the products at issue, spandrel wall panels, were consumed by use and therefore unreturnable. We simply recognized that for statute of limitations purposes a case may sound in redhibition even if the defective product cannot be returned to the seller. See PPG, 664 F.2d at 1335. We did not determine that the spandrel panels were or were not returnable. See id. As a result, PPG cannot support Appellants' claim that the shingles were consumed by use. 24 Appellants' interpretation of Brigtsen conflates the tender requirement with the return requirement. In Brigtsen a homeowner purchased 20,000 Spanish moss simulated old bricks. The homeowner had installed 6,500 of these bricks. It rained that night, washing off the bricks' coating. The homeowner complained to the seller and asked that the seller inspect the installed bricks. After inspection, the seller hauled away the remaining 13,500 bricks and sued the homeowner on the open account for the 6,500 installed bricks and drayage costs. 7 The homeowner sued in reconvention claiming that the coating on the bricks was defective. The trial court and the court of appeal agreed with the homeowner and assessed drayage costs to the seller. See Brigtsen, 258 So.2d at 579-581. 25 On application for rehearing, the court of appeal appended to its decision a per curiam denial of rehearing addressing the tender requirement. The court waived the pre-filing tender requirement noting that: 26 To require the [homeowner] to incur the additional cost of removing the installed bricks from the garage in addition to drayage costs, in order to tender them to plaintiff, would, in our opinion, be an exercise in futility and onerous, therefore unreasonable in these circumstances. 27 Id. at 581. As the court's original opinion assessed drayage fees to the seller, this reference to the homeowner's bearing drayage costs makes sense only in reference to a hypothetical pre-filing tender. Moreover, the case upon which the court relied in reaching this conclusion, Zibilich v. Metry Upholstery, Inc., 148 So.2d 436 (La. App. 4th Cir. 1963), examined the pre-filing tender requirement. Finally, the Brigtsen court's conclusion that [t]he law does not require one to do a vain and useless thing, Brigtsen, 258 So.2d at 581-82 citing Harkness v. Leggett, 131 So. 190 (La. 1930); Perkins v. Chatry, 58 So.2d 349, 352 (La. App. Orl. 1952), stems from a long line of Louisiana cases involving waiver of allegedly futile pre-filing requirements, see Louisiana Highway Comm'n v. Bullis, 200 So. 805 (La. 1941) (waiving need for tender of true value of land before eminent domain proceeding); MacLeod v. Hoover, 105 So. 305 (La. 1925) (waiving need for tender prior to finalization of tax sale); Southern Sawmill Co. v. Ducote, 46 So. 20 (La. 1908) (waiving default requirement when obligor fails to manufacture and deliver goods within a fixed time); Dwyer v. Tulane Educ. Fund's Adm'rs., 17 So. 796 (La. 1895) (waiving default requirement when contractor cannot complete building on time); and, thus, is not an exception to the return requirement. 28 Louisiana's consumed by use case law holds plaintiffs to a very high standard: a product is consumed by use only if it obviously cannot be returned. Walton, 77 So.2d at 566 (used paint); see also, Rapides Grocery Co., Inc. v. Clopton, 131 So. 734 (La. 1930) (planted seeds); Greenburg v. Fourroux, 300 So.2d 641 (La. App. 3rd Cir. 1974) (dead puppy), Molbert Bros. Poultry & Egg Co. v. Montgomery, 261 So.2d 311 (La. App. 3rd Cir. 1972) (dead chickens). The mere fact that a product may be useless once returned does not warrant waiver of the return requirement. See Vance, 420 So.2d at 1035 (holding that defective custom carpet must be returned to seller despite the fact that the returned carpet would be useless to the seller). 29 We have not discovered any evidence in the record suggesting that it would be impossible to remove the siding from the apartment buildings. In fact, testimony indicates that the siding can be removed. Although it will certainly be costly to remove it and it will be of little value once removed, Louisiana law mandates that the parties be put back in the positions they held before the sale. To this end, the court properly ordered the Appellees to return the purchase price minus an appropriate discount for the value Appellants' received from use of the shingles 8 and to pay an additional $177,000 for the reasonable expenses Appellants will incur in removing the siding. In exchange, Appellants must return the siding as a condition precedent to the judgment. INSURANCE COVERAGE 30 The trial court ruled on summary judgment that the C&I Policy covers only the jury awards for diminution in value, costs, and reasonable attorney's fees. 9 The trial court based its decision on the Policy's work product exclusion which provides that the Policy does not apply to property damage to [Shakertown's] products arising out of such products or any part of such products. Both the Appellants and Shakertown challenge this ruling and insist that the Policy covers the awards for the purchase price and reasonable expenses as well as the above mentioned awards. Their argument is three-fold. First, they argue that the work product exclusion is irreconcilable with the Policy's warranty exception which excludes coverage for Shakertown's liability under any contract or agreement except for a warranty of fitness or quality of products or work which is implied by statute. Second, they contend that even if the policy is unambiguous, the work product exclusion is inapplicable because the Appellants incorporated the shingles into their buildings making them no longer Shakertown's product. Finally, they allege that under Louisiana law when a defective product is incorporated into a larger work, work product exclusions do not apply to the costs associated with repair and replacement of the defective product and that, accordingly, the Policy covers the award of reasonable expenses.