Opinion ID: 2655125
Heading Depth: 2
Heading Rank: 3

Heading: Amzak’s Negligence Claim

Text: Amzak also appeals the district court’s grant of summary judgment in favor of Appellees on its negligence claim. Under Louisiana law, to succeed on a negligence claim, a plaintiff must prove: (1) the had a duty to conform his or her conduct to a specific standard of care (the duty element); (2) the defendant failed to conform his or her conduct to the appropriate standard of care (breach of duty element); (3) the defendant’s sub-standard conduct was a cause-in-fact of the plaintiff’s injuries (the cause-in-fact element); (4) the defendant’s substandard conduct was the legal cause of the plaintiff’s injuries (the scope of protection element); and (5) actual damages (the damages element). La. Civil Code art. 2315. The cause-in-fact element is dispositive here. When there are multiple causes of loss, the proper inquiry is whether the complained-of conduct was a substantial factor in bringing about the loss. Perkins v. Entergy Corp., 782 So. 2d 606, 611 (La. 2001); see also Westchester Fire Ins. Co. v. HaspelKansas Inv. P’ship, 342 F.3d 416, 420 (5th Cir. 2003). In determining whether an event was a “substantial factor,” the questions are “whether the actor’s conduct has created a force or series of forces which are in continuous and active operation up to the time of the harm” and whether each of the multiple causes “played so important a part in producing the result that responsibility should be imposed upon” each item of conduct. LeJeune v. Allstate Ins. Co., 365 So. 2d 471, 477 (La. 1978). 6 6 Amzak points to First Nat’l Bank of Louisville v. Lustig, 961 F.2d 1162 (5th Cir. 1992) to support a wider reading of “by reason of.” Lustig interpreted coverage issues arising from a banker’s blanket bond. In that case, the lender would not have made the loans “in the absence of the [employee’s] fraud.” Likewise, Amzak argues, it would not have made its loan “in the absence of a valid mortgage.” Hence, under a lender’s title policy, as in Lustig, “[t]here will always be” other causes “for the failure of [the loan] to be repaid,” because “otherwise the 12 Case: 13-30675 Document: 00512546787 Page: 13 Date Filed: 02/27/2014 No. 13-30675 In order to prove that the title defect was a substantial factor in bringing about Amzak’s purported loss, Amzak had to create a genuine issue of material fact as to the following chain of events: (1) Amzak and WFA had agreed on the terms of a forbearance agreement, which included an additional capital infusion by WFA; (2) the investors would have made a $7-8 million infusion investment despite the existence of the Fluor and subcontractors liens, which they believed to be a threat; (3) with that infusion, WFA would not have filed bankruptcy; (4) that infusion would have been enough to turn around the mill financially; and (5) the mill would have become profitable, allowing WFA to repay its creditors, including Amzak, in full. As the district court aptly noted, Amzak has not done this. Tembec Indus., Inc. v. Amzak Capital Mgmt., LLC, No. 11-622-JJB (M.D. La. May 1, 2013). Amzak’s expert, Professor Glynn Lunney, Jr., did not project what WFA might do with a capital infusion, could not testify to what creditors would have been paid with such an infusion or what portion would remain for Amzak, and stated “[i]t would be foolish . . . to make a post hoc prediction of what would have actually happened (or not happened) if the Mortgage defect had not existed . . . because there are too many variables that would have changed the result.” Amzak has invested at least $58 million in its subsidiary which now runs the mill, and the mill continues to lose money. Finally, the defect was effectively waived by the parties in bankruptcy, as Amzak was permitted to bid its debt to obtain the property as if there had been no title defect. We agree with the district court that Amzak did not create a genuine issue of material fact as to these essential steps of causation. [lender] would suffer no loss.” Id. at 1167. All this may be true, but as discussed above, Amzak has not proven that its loss resulted from a defect in the mortgage. 13 Case: 13-30675 Document: 00512546787 Page: 14 Date Filed: 02/27/2014 No. 13-30675 We briefly mention legal causation, although the lack of cause-in-fact is enough to dispose of Amzak’s negligence claim. Under Louisiana law, legal causation is “ultimately a question of policy as to whether a particular risk falls within the scope of the duty.” Roberts v. Benoit, 605 So. 2d 1032, 1044 (La. 1991). STL’s duty to Amzak is defined by the title policy. As we have stated, the policy provides indemnity for actual loss “by reason of” title defect; it does not guarantee the effectiveness of Amzak’s mortgage or the property’s fair market value. Accordingly, under the undisputed facts developed here, STL’s delay in making a complete filing of Amzak’s mortgage was not a legal cause of Amzak’s loss.