Opinion ID: 2491629
Heading Depth: 1
Heading Rank: 12

Heading: Post-Prados cases

Text: In St. Jude Medical Office Bldg. Ltd. Partnership v. City Glass and Mirror, Inc., 619 So.2d 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 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 a building 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. [62] This court denied the subsequent purchaser's claim and held the mortgagee's authority was based on law which had since been repealed. [63] 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, the court noted the mortgagee had no right to seek redhibition. Id. [64] Finding the underlying obligation in the construction contracts was a personal right and not a real 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 reaffirmed the general rule that, in the absence of an assignment or subrogation, a purchaser cannot recover from a third party for property damage inflicted prior to 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 case are presented in its appellate decision. [65] Briefly, in 1921, the Pugh family granted to Fortuna Oil Company (Fortuna) the right to construct a casing head gas plant on a 70 acre tract of land. Fortuna already owned a mineral lease on this tract. 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 to 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 rights back to Magnolia. The gas plant ceased operations in the 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 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 of the property at the time the damage occurred. [66] 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 a lease and is distinguishable from the instant facts. Case remanded to the trial court for further proceedings. [67] 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 a 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 to damage claims against former lessees or where the damage to property is apparent. 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. Id., 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. Id. Consequently, writs were granted in the instant matter to consider the unanswered question.