Opinion ID: 801410
Heading Depth: 3
Heading Rank: 3

Heading: The Contractual Claim

Text: White contends that the district court erred in characterizing his bad-faith breach-of-contract claim as a tort claim subject to LA. CIV. CODE art. 1983’s oneyear prescription period.7 We agree. “Louisiana jurisprudence is well settled that the character of an action given by a plaintiff in his pleadings determines the prescription applicable to it.” Duer & Taylor v. Blanchard, Walker, O’Quin & Roberts, 354 So. 2d 192, 194 (La. 1978). “It is the nature of the duty breached that should determine whether the action is in tort or in contract.” Roger v. Dufrene, 613 So. 2d 947, 948 (La. 1993). “Contractual damages arise out of the breach of a special obligation contractually assumed, and delictual damages 7 “Delictual actions are subject to a liberative prescription of one year,” LA. CIV. CODE art. 3492, whereas contractual claims are subject to the default prescription period set by LA. CIV. CODE art. 3499, which states that “[u]nless otherwise provided by legislation, a personal action is subject to a liberative prescription of ten years.” See also Qayyum v. Morehouse Gen. Hosp., 874 So. 2d 371, 374 (La. Ct. App. 2004). 8 Case: 11-30788 Document: 00511873040 Page: 9 Date Filed: 05/31/2012 No. 11-30788 arise out of the violation of a duty owed to all persons.” Strahan v. Sabine Retirement & Rehab. Ctr., Inc., 981 So. 2d 287, 291 (La. Ct. App. 2008). All of the damages White seeks in this claim arise from the alleged breach of the provisions of the agreement requiring State Farm to support White’s agency and allow him discretion in operating it. The district court reasoned that “a claim of a breach of the duty to act in good faith does not allege a breach of an obligation imposed by contract, but instead alleges the breach of a separate duty implied by law or imposed by statute.” However, breaching the obligation to perform a contract in good faith is actionable only when conjoined with breach of a particular obligation created by the contract. Favrot v. Favrot, 68 So. 3d 1099, 1110 (La. Ct. App. 2011) (“[J]udicial determination of good-faith (or bad-faith) failure to perform a conventional obligation is always preceded by a finding that there was a failure to perform, or a breach of the contract.”)8 While the duty to perform in good faith does arise from LA. CIV. CODE art. 1983 rather than the parties’ agreement alone, that is true of all Louisiana-law contractual obligations.9 The only differences between a typical breach-of-contract claim and a bad-faith breach-ofcontract claim are that the latter alleges a culpable mental state and allows the 8 If the contract allows a party discretion in carrying out an obligation, the underlying breach may take the form of the party exercising that discretion in a manner calculated to injure or deceive the other party. See Adams v. First Nat’l Bank of Commerce, 644 So. 2d 219, 222 (La. Ct. App. 1994). The district court relied on Office of Comm’r of Ins. v. Hartford Fire Ins. Co., 623 So. 2d 37 (La. Ct. App. 1993). But that case involved an action for “breach of the duties of ‘good faith’ and ‘reasonable care’ imposed by [LA. REV. STAT.] 40:1299[.44](C)(7) . . . ,” not bad-faith breach of contract. Id. at 40. 9 See LA. CIV. CODE art. 1983 (“Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law.”) See also, e.g., Family Care Servs., Inc. v. Owens, 46 So. 3d 234, 241 (La. Ct. App. 2010) (citing LA. CIV. CODE art. 1983 for the proposition that “Contracts have the effect of law for the parties and must be performed in good faith”); Davis v. Russell, 26 So. 3d 950, 952 (La. Ct. App. 2009) (same). 9 Case: 11-30788 Document: 00511873040 Page: 10 Date Filed: 05/31/2012 No. 11-30788 recovery of all the damages from the defendant’s failure to perform, rather than merely those that were reasonably foreseeable.10 We believe that the Louisiana Supreme Court would regard claims alleging breach of a contractual duty in bad faith as a species of breach-of-contract claim rather than one sounding in tort. State Farm argues that White did not adequately plead the contractual claim. Although we recognize that White’s pleading fell short of what FED. R. CIV. P. 8 would require, White initially filed his case in Louisiana state court, and that state’s fact-pleading standard does not require a plaintiff to spell out the particular legal theories under which the facts he alleges entitle him to recovery.11 “After removal, repleading is unnecessary unless the court orders it,” FED. R. CIV. P. 81(c)(2), so we do not fault White for failing to spontaneously amend his pleading to conform to the federal pleading standard. Moreover, the federal pleading standard “requires only a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the claim is and the grounds upon which it rests . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964 (2007) (internal citations, quotation marks, and ellipsis omitted). Although White’s pleading should have identified the particular contractual provisions requiring support of his agency and giving him discretion to run it, State Farm was not unfairly prejudiced by that omission. Given the petition’s factual allegations and the fact that any Louisiana bad-faith breach-of-contract claim must arise from breach of a particular contractual obligation, a liberal construction of White’s petition suggests that his contractual claim arose from the agreement’s provisions 10 Compare LA. CIV. CODE art. 1996 (“An obligor in good faith is liable only for the damages that were foreseeable at the time the contract was made”), with LA. CIV. CODE art. 1997 (“An obligor in bad faith is liable for all the damages, foreseeable or not, that are a direct consequence of his failure to perform.”). 11 See First S. Prod. Credit Ass’n v. Georgia-Pacific, 585 So. 2d 545, 548 (La. 1991). 10 Case: 11-30788 Document: 00511873040 Page: 11 Date Filed: 05/31/2012 No. 11-30788 concerning support and discretion in running the agency. Pre-trial procedures afforded State Farm ample opportunity to confirm that interpretation or otherwise compel White to clarify his theory of recovery.