Opinion ID: 3005104
Heading Depth: 2
Heading Rank: 1

Heading: Wells Fargo’s Motion to Dismiss

Text: We review de novo the district court’s ruling on a motion to dismiss for failure to state a claim. Highland Capital Mgmt., L.P. v. Bank of Am., N.A., 698 F.3d 202, 205 (5th Cir. 2012). In doing so, we accept all well-pleaded factual allegations as true and view them in the light most favorable to the plaintiff. Id. “[A] pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief,” which need not include 4 Case: 15-30031 Document: 00513209556 Page: 5 Date Filed: 09/28/2015 No. 15-30031 “detailed factual allegations,” but must include “more than an unadorned, thedefendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009) (citations and internal quotation marks omitted). A plaintiff must plead “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must “plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A complaint is insufficient if it offers only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Id. (quoting Twombly, 550 U.S. at 555).
Under Louisiana law, a “seller warrants the buyer against redhibitory defects, or vices, in the thing sold.” LA. CIV. CODE art. 2520. A defect is redhibitory when either “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” or “it diminishes [the thing’s] usefulness or its value so that it must be presumed that a buyer would still have bought it but for a lesser price.” Id. “A seller who knows that the thing he sells has a defect but omits to declare it . . . is liable to the buyer . . . .” LA. CIV. CODE art. 2545. Defects that a buyer knew of or that were apparent are excluded from the warranty of redhibition. See LA. CIV. CODE. art. 2521; Amend v. McCabe, 664 So. 2d 1183, 1188 (La. 1995). A defect is apparent if “a reasonably prudent buyer, acting under similar circumstances, would discover it through a simple inspection of the property.” Amend, 664 So. 2d at 1188. When a defect “is concealed within [a] home’s structure (e.g., walls and floors) it is considered unapparent because it is not discoverable by a simple inspection.” Id.; see also Jessup v. Ketchings, 482 F.3d 336, 345 (5th Cir. 2007) (citing Amend, 664 So. 5 Case: 15-30031 Document: 00513209556 Page: 6 Date Filed: 09/28/2015 No. 15-30031 2d at 1188); McGough v. Oakwood Mobile Homes, Inc., 779 So. 2d 793, 801 (La. App. 2 Cir. 2000) (“The buyer is under no obligation . . . to inspect with expertise or to deface the thing purchased while inspecting it.”). Jones’s complaint contains factual allegations that the home she purchased from Wells Fargo had a redhibitory defect as defined in LA. CIV. CODE art. 2520: it states that at the time of purchase, the Residence had mold growth so extensive that it caused her family illness and would require extensive remediation efforts, as well as that this defect diminished the Residence’s usefulness or value to the extent that Jones would only have purchased it at a much lower price. The complaint contains factual allegations that, at the time of purchase, Jones did not know of the defect, nor was the defect apparent since the mold growth was in the wall cavities and there had been active attempts to conceal the mold growth. See Jessup, 482 F.3d at 345 (citing Amend, 664 So. 2d at 1188). The complaint also contains factual allegations that Wells Fargo is liable for the redhibitory defect because it knew of the defect but omitted to declare it: (1) Wells Fargo had full knowledge of the mold growth and was provided two mold remediation plans for the property; and (2) Wells Fargo actively concealed the mold growth and did not disclose the mold growth. See LA. CIV. CODE art. 2545. Based on these factual allegations, we hold that Jones’s complaint states a claim for redhibition “that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
Under Louisiana law, “[f]raud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.” LA. CIV. CODE art. 1953. The elements of an action 6 Case: 15-30031 Document: 00513209556 Page: 7 Date Filed: 09/28/2015 No. 15-30031 for fraud are: “(1) a misrepresentation, suppression, or omission of true information; (2) the intent to obtain an unjust advantage or to cause damage or inconvenience to another; and (3) the error induced by a fraudulent act must relate to a circumstance substantially influencing the victim’s consent to (a cause of) the contract.” Shelton v. Standard/700 Assocs., 798 So. 2d 60, 64 (La. 2001). Similar to redhibition, fraud is not actionable “when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill.” LA. CIV. CODE art. 1954. Jones’s complaint contains factual allegations that at the time of the sale, Wells Fargo knew of a defect and omitted and suppressed information of that defect, thus satisfying the first element of fraud: (1) it states that Wells Fargo was made fully aware of the mold growth; and (2) it states that Wells Fargo actively concealed the mold growth and did not disclose the mold growth. As to the second element, the complaint alleges that Wells Fargo acted with the intent to obtain an unjust advantage. This allegation is supported by the fact that Wells Fargo was provided with two remediation plans for the mold growth, but instead of remediating the mold growth as stated in those plans, Wells Fargo performed cosmetic work to conceal the mold so that the Residence could be sold without a buyer discovering the mold. As to the third element, the complaint contains allegations that Jones purchased the Residence under the mistaken belief that the Residence “did not have any mold-related issues,” and that, if she had known of the extensive mold growth, she would have only purchased the Residence at a much lower price. See Sun Drilling Prods. Corp. v. Rayborn, 798 So. 2d 1141, 1153 (La. App. 4 Cir. 2001) (explaining that the third element requires the plaintiff to “at least be able to say that had he known the truth, he would not have acted as he did to his detriment”). Finally, the facts in the complaint demonstrate that Jones could not “have ascertained 7 Case: 15-30031 Document: 00513209556 Page: 8 Date Filed: 09/28/2015 No. 15-30031 the truth without difficulty, inconvenience, or special skill” because the mold was within the walls and had been actively concealed by Wells Fargo. LA. CIV. CODE art. 1954. Accordingly, the complaint contains “sufficient factual matter, accepted as true, to state a claim” for fraud “that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation and internal quotation marks omitted).
Wells Fargo contends that the As-Is and Mold Waivers attached to its motion to dismiss demonstrate that Jones failed to state claims for redhibition and fraud. The district court agreed with Wells Fargo and dismissed Jones’s claims on this basis. On appeal, Jones argues that it was error for the district court, in deciding a motion to dismiss pursuant to Rule 12(b)(6), to go beyond her complaint and consider these documents. In deciding a motion to dismiss under Rule 12(b)(6), a court generally may only consider those documents that are part of the pleadings. “Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff’s complaint and are central to her claim.” Causey v. Sewell CadillacChevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). Wells Fargo argues that the district court properly considered the As-Is and Mold Waivers pursuant to this rule because the documents were part of the contract to purchase the Residence and are central to Jones’s claim. However, these documents are not explicitly referred to in Jones’s complaint and her claims of redhibition and fraud do not directly reference the contract to purchase the Residence. We find it unnecessary to resolve whether the district court properly considered the waivers because, if the facts as alleged by Jones are ultimately 8 Case: 15-30031 Document: 00513209556 Page: 9 Date Filed: 09/28/2015 No. 15-30031 proven, the waivers do not negate Jones’s claims under Louisiana law. 1 Accordingly, we pretermit this issue and hold that Jones stated plausible claims of redhibition and fraud. See Iqbal, 556 U.S. at 678. First, the Mold Waiver states only that mold “may exist at the property.” This acknowledgement of the possibility of mold does not disclose the true nature of the defect as Jones alleges it was known by Wells Fargo—that extensive mold growth did exist at the property. See Frey v. Walker, 807 So. 2d 887, 891–92 (La. App. 5 Cir. 2001) (concluding that partial disclosures were inadequate to disclose the full nature of defects); cf. Jessup, 482 F.3d at 345 (holding that a disclosure that the property “had termites” and that “[v]isible evidence of wood destroying insects was observed” was sufficient to make the presence of termite damage apparent). Second, it is well-settled under Louisiana law that a seller may not fail to disclose a defect or actively conceal it and then employ a waiver to contract out of its obligation to disclose that defect. See Shelton, 798 So. 2d at 64 (explaining that “fraud in the inducement of a contract cannot be waived,” and that “although the warranty against redhibitory defects may be excluded or limited, a seller cannot contract against his own fraud and relieve himself of liability to fraudulently induced buyers”); Schmuck v. Menees, 131 So. 3d 277, 281 (La. App. 5 Cir. 2013) (“[A] seller with knowledge of a redhibitory defect, who, rather than informing the buyer of the defect opts to obtain a waiver of the warranty implied by law, commits fraud, which vitiates the waiver because it is not made in good faith.” (citation and internal quotation marks omitted)). 1Jones also argues that the district court erred by granting a motion to dismiss under Rule 12(b)(6) based on a weighing of the evidence. We need not address this argument because, in conducting a de novo review, we conclude that Jones’s complaint states a claim upon which relief can be granted. 9 Case: 15-30031 Document: 00513209556 Page: 10 Date Filed: 09/28/2015 No. 15-30031 Jones’s complaint contains factual allegations that Wells Fargo was fully aware of the mold growth in the Residence, took steps to actively conceal the mold growth, and then failed to disclose that information and those efforts. Under these facts, the As-Is and Mold Waivers are unenforceable and ineffectual to preclude Jones’s redhibition and fraud claims. See Shelton, 798 So. 2d at 64; Frey, 807 So. 2d at 893. Accordingly, we REVERSE the judgment of dismissal granted in favor of Wells Fargo and REMAND for further proceedings consistent herewith.