Louisiana Bar Journal Vol. 55, No. 4 267

RECENTDevelopments

ADR TO PROFESSIONAL LIABILITY

Alternative Dispute

Resolution

Loyola Establishes

Katrina Construction Law

Mediation Clinic

The Loyola University New Orleans

College of Law has established a Media-

tion Clinic to help resolve claims be-

tween Road Home applicants and build-

ers-contractors. The mediators are Loyola

law students who are enrolled in and

have received mediation training from

the Loyola Mediation Clinic. The stu-

dent-mediators will mediate the cases

under the supervision of Loyola clinical

faculty members. Funding for the Media-

tion Clinic was provided by ICF Emer-

gency Management Services, L.L.C.,

contractor for the Road Home Program.

The clinic will mediate approximately

350 civil consumer-contractor cases,

some involving allegations of contractor

fraud. The mediations are confidential,

and the mediators will not discuss the

cases with others outside of the media-

tions. Mediations will be held on the

Loyola Law College campus, and the

clinic will operate for an initial 12-month

service period (which began Sept. 1,

2007). For more information on the clinic,

contact Leila Bonilla at (504)861-5590.

Party’s Waiver of the

Right to Arbitrate

Arkel Constructors, Inc. v. Duplantier

& Meric, Architects, L.L.C., 06-1950

(La. App. 1 Cir. 7/25/07), 965 So.2d 455.

A subcontractor filed suit against the

general contractor on a construction

project to recover funds allegedly owed

for contracted work. After filing suit, the

subcontractor filed a motion to compel

arbitration and to stay proceedings pend-

ing arbitration. The general contractor

recognized that the agreement governing

the relationship between the general con-

tractor and subcontractor contained an

arbitration clause, but argued that the

subcontractor waived its right to arbitra-

tion by filing suit without asserting its

right to arbitrate the dispute.

The subcontractor appealed the trial

court’s ruling denying its motion to com-

pel arbitration, and the court of appeal

converted the appeal into an application

for supervisory writs. The court, recog-

nizing that an undisputed arbitration

agreement existed between the parties,

held that under La. R.S. 9:4203, issues of

waiver are to be handled by an arbitrator,

not the trial court. Therefore, determining

whether the right to arbitrate had been

waived by the subcontractor was held to be

a function of the arbitrator. Consequently,

the court of appeal reversed the judgment

of the trial court, rendered judgment grant-

ing a stay pending arbitration and ordered

the parties to submit to arbitration.

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MAPS has a panel of over 50 mediators throughoutLouisiana and Mississippi with experience in a broadrange of specialties to accommodate any mediationeven on short notice.

268 December 2007 / January 2008

Arbitration Agreement

Executed as Part

of Installment Sale Contract

Easterling v. Royal Manufactured

Housing, L.L.C., 07-0192 (La. App. 3

Cir. 6/6/07), 963 So.2d 399.

The proceeding arose from a contract

between the plaintiff and the defendant

providing for the sale of a manufactured

home. Though the defendant gave the

plaintiff an option to pay for the home in

installments, the plaintiff obtained financ-

ing elsewhere and paid cash for the home.

The plaintiff later signed additional docu-

ments, one of which was an arbitration

agreement. The agreement, in pertinent

part, provided:

This Arbitration Agreement

(“Agreement”) is executed contem-

poraneously with, and becomes part

of, the Retail Installment of Sales

Contract (“Contract”) for the pur-

chase of a manufactured home . . . .

After the plaintiff moved into the manu-

factured home, various defects were dis-

covered, and the plaintiff filed suit for

redhibition. The defendant thereafter filed

a motion to compel arbitration. The trial

court denied the motion.

The court of appeal affirmed the trial

court’s denial, holding that the first sen-

tence of the arbitration agreement ren-

dered the agreement unenforceable. The

arbitration agreement provided that it

was executed contemporaneously with

and became part of an installment-sales

contract. Because an installment con-

tract never existed, there was no valid

arbitration agreement to be enforced.

Arbitration Provision

in Contract Between

Architect and Hospital

Town of Homer, Inc. v. Gen. Design,

Inc., 42,027 (La. App. 2 Cir. 5/30/07),

960 So.2d 310.

A hospital brought an action against

an architect for negligence and breach of

contract. In response, the architect filed a

motion to stay proceedings pending arbi-

tration. The trial court granted the mo-

tion, and the hospital sought supervisory

review.

The court of appeal held that a prior

contract between the hospital and archi-

tect governing a major hospital renova-

tion did not apply to the architect’s later

work on an addition made for medical-

records storage. Thus, the earlier

contract’s arbitration provision did not

apply to the negligence and breach-of-

contract claims arising from problems

with the later addition. Though the court

acknowledged that no written contract

governed the addition project and that

the parties’ dealings were similar for

both projects, the court held that oral or

written authorization was required to

make the initial contract’s provisions

applicable to the later project. Moreover,

the court noted that the earlier written

contract expressly required a new meet-

ing of the minds to bring services related

to future facilities within the reach of the

provisions of the initial contract. Finding

that no written contract existed mandating

arbitration of the claims, the court of appeal

reversed the ruling of the district court.

Arbitration Provision Was

Adhesionary and,

Therefore, Unenforceable

Lafleur v. Law Off. of Anthony G.

Buzbee, 06-0466 (La. App. 1 Cir. 3/23/

07), 960 So.2d 105.

The plaintiff filed suit against his at-

torneys alleging negligent representation.

The defendant attorneys thereafter filed

motions to stay the proceedings and to

compel arbitration. The motions were

denied, and the defendants appealed.

The court of appeal affirmed the judg-

ment of the trial court, holding that the

arbitration provision sought to be en-

forced was adhesionary and, therefore,

unenforceable. In reaching its decision,

the court noted that the attorney-client

relationship is more than a contractual

relationship; the relationship is fiduciary

and, therefore, requires that an attorney

provide “full and fair disclosure of all the

rights and interests which are materially

affected by the contract.” Moreover, the

court noted that the arbitration provision

was unduly burdensome in that it bound

only the client to the arbitration require-

ment and required that all arbitration

expenses be borne solely by the client,

regardless of the arbitration’s outcome.

Finally, the court recognized a client’s

unequal bargaining position when ini-

tially contracting with an attorney by

signing a pre-printed form prepared by

the attorney.

— Bobby Marzine Harges

Member, LSBA Alternative Dispute

Resolution Section

Loyola University New Orleans

College of Law

7214 St. Charles Ave., CB 901

New Orleans, LA 70118

Louisiana Bar Journal Vol. 55, No. 4 269

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AV RATED

Criminal

Law

Excessive Sentence for

Malfeasance in Office

State v. McGuffie, 42,069 (La. App. 2

Cir. 8/1/07), 962 So.2d 1111.

Woodson McGuffie, an assistant par-

ish administrator for the Ouachita Parish

Police Jury, had a parish tree-trimming

crew work on his personal property.

McGuffie offered to pay the employee

for his work, but instead the employee

was instructed by his supervisor to make

out a work order so that the tree trimmer

was paid overtime from parish money for

the work performed. At trial, McGuffie

denied ordering the work and stated that

his wife had offered to pay the employee

money for the work performed. He fur-

ther testified that he had paid the supervi-

sor directly for other tree-trimming work.

McGuffie was indicted for one count

of malfeasance in office and convicted

after a jury trial. He was sentenced to the

maximum five-year sentence, two years of

which were suspended, and a $3,500 fine.

McGuffie did not file a motion to

reconsider his sentence. Thus, on appeal,

he was limited to a claim of unconstitu-

tional excessiveness, but he prevailed on

that issue. The court noted that the pur-

pose of the malfeasance charge is to deter

public officials from abusing their au-

thority and public resources. In this case,

McGuffie’s position was not particularly

powerful, and the loss to the parish was

not substantial. Further, McGuffie had

lost his job for misuse of resources and

had been publicly humiliated by his pros-

ecution.

Finally, McGuffie was a 58-year-old

first offender with no criminal record of

any sort, who suffered from serious medi-

cal conditions. The presentence investi-

gation noted that the cost of McGuffie’s

medication alone during incarceration

would be approximately $3,000 per

month over and above the cost of incar-

ceration.

In light of the loss of under $300 to the

parish, the court remanded for resentenc-

ing. The appellate court did not recom-

mend a jail sentence, but stated that the

maximum sentencing range that would

be affirmed would be one year without

hard labor and a fine of no more than

$3,000.

Lustful Disposition

Evidence Under

La. C.E. 412.2

State v. Richard Cotton, 42,509 (La.

App. 2 Cir. 9/19/07), ____ So.2d ____.

Richard Cotton was convicted of one

count of sexual battery of his step-grand-

daughter, who was 6 years old at the time

of the offense, for inappropriately touch-

ing her through her clothing at a family

function. At trial, the victim’s mother,

who was the defendant’s stepdaughter,

testified that she had been molested by

the defendant as a child, as did his niece.

Cotton admitted molesting the mother,

but blamed his post-traumatic stress dis-

order. He stated he had been in counsel-

ing since 1979 for his experiences in

Vietnam. He denied molesting his niece

or the victim before the court.

Cotton was convicted by a unanimous

jury and sentenced to five years at hard

labor without benefit of parole, proba-

tion or suspension of sentence. He ap-

pealed his conviction and sentence.

On appeal, the defendant argued that

the conviction was based on highly preju-

dicial “lustful disposition” evidence that

did not pass the Louisiana Code of Evi-

dence article 403 balancing test. The

270 December 2007 / January 2008

court of appeal found that the notice

requirement of Code of Evidence article

412.2 had been satisfied, and that the

prosecution stated that it was using the

evidence to show intent to commit the

offense, to show lustful disposition to-

wards children and to demonstrate that

the instant offense was part of a pattern of

behavior towards children. Between the

facts of the case and the limiting instruc-

tion given the jury (closely resembling a

limiting instruction for Code of Evidence

article 404), the court of appeal found no

error in the presentation of the past bad acts

to the jury. Based on the admissibility of the

evidence at trial, there was likewise no

error in using the past bad acts as a factor in

sentencing the defendant.

— Michael S. Walsh

Chair, LSBA Criminal Law Section

Lee & Walsh

628 North Blvd.

Baton Rouge, LA 70802

and

Joseph K. Scott III

Member, LSBA Criminal Law Section

830 Main St.

Baton Rouge, LA 70802

Environmental

Law

LDEQ Groundwater

Certification Program

Discontinued

Since November 1989, the Louisiana

Department of Environmental Quality

(LDEQ) has required regulated facilities

undertaking construction activities in-

volving subsurface intrusive techniques,

such as excavation and the installation of

footings, pilings or drill shafts or other

support structures, in connection with air

permits, modifications or exemptions, to

submit a formal groundwater certifica-

tion to the LDEQ demonstrating that

those activities will not affect existing

groundwater quality. The LDEQ has now

recognized that potential subsurface im-

pacts are being adequately addressed/

assessed through existing notification and

remediation regulations, RCRA correc-

tive action and/or other assessment prac-

tices necessary to obtain financing for

such projects and has concluded that

protection of the subsurface environment

can be attained without the need for for-

mal groundwater certifications. There-

fore, as of Nov. 1, 2007, the LDEQ will

no longer require groundwater certifica-

tions for construction activities associ-

ated with LDEQ air permits, modifica-

tions or exemptions.

No Bifurcation of Liability

and Damages in Oilfield

Legacy Suit

La. R.S. 30:29 governs the litigation

of claims for environmental damage

caused by oilfield operations (a/k/a

“legacy suits”). The statute requires the

party found liable for environmental dam-

age caused by past oilfield operations to

submit a remediation plan to the Depart-

ment of Natural Resources (DNR). The

statute also provides for the submission

and consideration of a response to that

plan by the plaintiff, a public hearing on

the proposed plans by the DNR, selec-

tion of the most feasible remediation

plan by the DNR, and the court’s issu-

ance of judgment adopting the most fea-

sible plan. The liable party must deposit

the cost of implementing the selected

plan into the registry of the court, and the

deposited funds may only be used to fund

remediation of the environmental dam-

age. The statute notably does not “preclude

an owner of land from pursuing a judicial

remedy or receiving a judicial award for

private claims suffered as a result of envi-

ronmental damage” nor does it:

preclude a judgment ordering dam-

ages for or implementation of addi-

tional remediation in excess of the

requirements of the plan . . . as may be

required in accordance with the terms

of an express contractual provision.

In Brownell Land Co. v. Oxy USA,

Inc., 2007 WL 3046203 (E.D. La. 2007),

defendants in a legacy suit moved via a

motion in limine to exclude all testimony

and evidence regarding the need for and

the extent and cost of plaintiff’s pro-

posed remediation plan during the initial

trial, claiming that consideration of such

evidence is appropriate only after the

court has determined that environmental

damage exists and that defendant is re-

sponsible for that damage. Citing an un-

published decision of the Louisiana 4th

Circuit in Duplantier Family Partner-

ship v. B.P. Amoco, 07-0293 (La. App. 4

Cir. 5/16/07, 955 So.2d 763, (which the

court noted was not controlling on it or

any other court) and the wording of the

subject statute, the Federal Eastern Dis-

trict denied defendant’s motion, conclud-

ing that the statute did not require a

separate determination of liability and

damages and noting that:

There is nothing wrong with a jury

determination of the amount of dam-

ages. Thereafter DNR will decide

(with the court’s approval) how

much of those damages are to be

used for remediation.

Property Owner’s Claim

Extends to Adjoining

Contaminated Properties

In the case of Consolidated Compa-

nies v. Union Pacific Railroad. Co., 499

F.3d 382 (5 Cir. 2007), plaintiff had

purchased a tract of land that formed a

portion of a former railroad yard owned

and operated by the defendant’s prede-

cessor in interest (the Railroad). It was

undisputed that the Railroad’s activities

had resulted in contamination over the

entirety of the former railroad yard, in-

cluding the plaintiff’s parcel. After dis-

covering contamination on its parcel and

incurring certain response costs, plaintiff

filed suit against the Railroad’s succes-

sor in interest, pleading causes of action

under the Resource Conservation Re-

covery Act (RCRA) and the Louisiana

Environmental Quality Act (LEQA).

Plaintiff sought monetary damages and

Louisiana Bar Journal Vol. 55, No. 4 271

injunctive relief, directing the defendant

to clean up the contamination on not only

plaintiff’s property but throughout the

entire former railroad yard.

On appeal, the 5th Circuit addressed

both the issue of plaintiff’s standing to

assert claims for contamination existing

on adjoining properties not owned by

plaintiff and whether the term “facility”

as used in RCRA and the LEQA was

limited to only the property owned by

plaintiff or extended to all of the property

constituting the former railroad yard that

suffered contamination.

On the first issue, the court held that

plaintiff had standing, concluding that the

contamination existing on the adjoining

properties threatened further contamina-

tion of plaintiff’s parcel through migration.

As to the second issue, the court

rejected defendant’s contention that the

term “facility” for purposes of plaintiff’s

RCRA claims should be limited only to

the property owned by plaintiff. Citing

the expansive definition of facility in both

RCRA and the Comprehensive

Environmental Response, Compensation

and Liability Act (CERCLA), and noting

that a division of the former railroad yard

into “several separate facilities along

current property lines would require

plaintiffs to bring numerous suits to

effectuate their remediation of one large,

discreet pollution source” and further that

“if a single source of contaminants, like

the former railroad site, is to be

adequately cleaned up, it must be done

in a comprehensive fashion,” the court

concluded that under § 6972(a)(1)(b) of

RCRA, the term encompassed the entire

former railroad site. Similarly, the court

concluded that the term “facility” for

purposes of the LEQA is not limited by

property boundaries and instead

encompasses the “entire location of a

discharge of contaminants.”

— Timothy J. Poché

Vice President, LSBA

Environmental Law Section

Taylor, Porter, Brooks

& Phillips, L.L.P.

451 Florida St., Chase Bank, 8th Flr.

Baton Rouge, LA 70801

Family Law

Custody

Pounds v. Spears, 06-2375 (La. App. 1

Cir. 3/23/07), 960 So.2d 92.

Although the father was named the

domiciliary parent, the trial court’s visi-

tation schedule had the child living pri-

marily with the mother in order to attend

school in Bogalusa where she lived, rather

than in Hammond where the father lived.

The court of appeal reversed, finding that

this negated the father’s designation as

domiciliary parent, and ordered that the

visitation schedule be changed to place

the child primarily with the father. It also

reversed the trial court’s determination

of the child’s pediatrician, as that, too,

deprived the father of the decision-mak-

ing authority granted to him as domicili-

ary parent.

Child Support

Strange v. Strange, 42,318 (La. App. 2

Cir. 6/20/07), 960 So.2d 1223.

After Ms. Strange remarried, had an-

other child and quit her job, she moved to

reduce the child support she was paying

to Mr. Strange for their two children. The

trial court found that she was voluntarily

under-employed and reduced her sup-

port for 29 months, subject to review on

motion by the father. The court of appeal

affirmed, finding no abuse of discretion

even though the trial court failed to cal-

culate the child support that would have

been due under the child support guide-

272 December 2007 / January 2008

lines, although it did give reasons for its

deviation.

Spousal Support

Martello v. Martello, 06-0594 (La. App.

1 Cir. 3/23/07), 960 So.2d 186.

Even though the trial court found the

parties mutually at fault, Ms. Martello

was still entitled after this determination

to an award of interim spousal support

until the date of the divorce. The trial

court amended the amount of interim

support awarded because it did not ap-

propriately consider Mr. Martello’s abil-

ity to pay and funds needed for his own

support. Mr. Martello’s having the chil-

dren 42.85 percent of the time did not

create a shared custody arrangement so

as to require Worksheet B. Although

there was no contradictory evidence of-

fered, the trial court determined Mr.

Martello’s business expenses to be less

than he presented them to be, and the

court of appeal affirmed, finding this to

be an “inherent credibility call.” The trial

court found Ms. Martello voluntarily

under-employed, even though she was

caring for the parties’ disabled child. She

had previously worked, was capable of

returning to work and the child was above

the age of 5. The court vacated the child-

support award, remanding for a new de-

termination after considering her earning

capacity and imputed income.

The parties’ letter agreement before a

notary and two witnesses after the peti-

tion for divorce was filed to cancel their

prenuptial separate-property contract was

valid and enforceable, despite his claims

that he signed the agreement to try to save

the marriage and because of financial

difficulties. The court did not address the

effect of the document, as it was not

before the court. There was no abuse in

the trial court’s not awarding rental to

him for her use of the matrimonial domi-

cile where he had requested use, but not

made an alternative claim for rent, and

where she had sought use but he had not

reconvened for rent.

Property

Sanders v. Sanders, 06-1401 (La. App. 1

Cir. 5/4/07), 961 So.2d 464.

Even though the trial court authorized

the parties to enter a community property

settlement attached to the petition for

divorce, it did not approve or sign the

judgment itself. Thus, the judgment was

not a judicial partition, and Mr. Sanders

successfully had it rescinded for lesion.

Clemons v. Clemons, 42,129 (La. App. 2

Cir. 5/9/07), 960 So.2d 1068.

The parties’ pre-termination line of

credit was required by the bank post-

termination to be converted to a perma-

nent loan. Subsequently, Dr. Clemons

refinanced the loan with another bank at

a lower interest rate. The court of appeal

held that the present debt was still a

community debt because it encompassed

the same debt and because he was re-

quired to prudently manage the commu-

nity obligations as well as its assets. Be-

cause he used his separate property post-

termination to make payments on this

debt, he was entitled to reimbursement.

The court of appeal reversed the award to

Ms. Clemons under La. Civ.C. art. 121,

finding that she had benefited for six

years after his graduation by accumu-

lated community property, even if not by

an improved lifestyle.

The trial court did not err in accepting

Dr. Clemons’ value of cattle and horses

and a reimbursement to him for post-

termination expenses for them because

he was familiar with valuing and main-

taining livestock and presented an objec-

tive methodology by which he valued

them. The court of appeal also affirmed

the deduction of $4,000 in bad debts

from the value of his veterinary practice

after reviewing Ms. Clemons’ argument

that they were merely uncollected, not

uncollectible. The court of appeal did not

allow him reimbursement for payments on

a truck loan where he had exclusive use. A

settlement of a suit by Dr. Clemons against

another veterinarian for breach of a non-

compete contract was part community and

part separate. The separate portion was for

damages to the goodwill of the business.

Procedure

Nguyen v. Le, 07-0081 (La. App. 5 Cir.

5/15/07), 960 So.2d 261.

The court found that “the Post-Sepa-

ration Family Violence Relief Act can-

not be [pled] for the first time on appeal,

as it requires the trial court to make a

specific determination of ‘a history of per-

petration of family violence.’” Ms. Nguyen

had sought sole custody under La. Civ.C.

art. 132 and had presented evidence of

alleged abuse at trial. The trial court did not

err in granting joint custody.Best advertising tool on the market today.

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Ellison v. Ellison, 06-0944 (La. App. 1

Cir. 3/23/07), 960 So.2d 155.

Ms. Ellison’s petition for nullity on

the grounds of fraud and ill practice was

perempted due to her failure to investi-

gate the status of the partition suit after

Louisiana Bar Journal Vol. 55, No. 4 273

she had knowledge of facts, including the

death of her attorney, sufficient to cause

a reasonable person to make further in-

vestigation into the matter.

Welborn v. 19th Jud. Dist. Ct., 06-2307

(La. App. 1 Cir. 5/4/07), 961 So.2d 394.

The 19th Judicial District Court and

the East Baton Rouge Parish Family Court

have concurrent subject matter jurisdic-

tion over actions brought under the Do-

mestic Abuse Assistance Act and/or the

Protection from Dating Violence Act

when the victim is a “dating partner” or

unrelated “household member” of the

alleged perpetrator.

— David M. Prados

Member, LSBA Family Law Section

Lowe, Stein, Hoffman, Allweiss

& Hauver, L.L.P.

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Insurance,

Tort, Workers’

Compensation

and Admiralty

Law

Plaintiff Precluded from

Asserting Federal Common

Law Causes of Action

Wright v. Allstate Ins. Co., 500 F.3d 390

(5 Cir. 2007).

Wright brought suit against Allstate

Insurance Co., a Write-Your-Own insur-

ance company that issued his federal-

flood-insurance policy. Wright’s home

sustained damage in 2001 as a result of

Tropical Storm Allison. Unsatisfied with

the amount paid under his flood-insur-

ance policy, Wright filed suit against

Allstate and one of its employees, assert-

ing claims for breach of contract, as well

as state law claims for fraud and negli-

gent misrepresentation. Wright later

sought leave of court to add federal com-

mon-law claims for fraud and negligent

misrepresentation. The district court dis-

missed the state-law extra-contractual

claims, holding that these claims were

pre-empted by federal law. The court

also denied leave to amend to add the

federal common-law claims. The court

further held that Allstate was equitably

estopped from asserting Wright’s alleged

failure to provide an adequate proof of

loss, but determined that Wright had failed

to prove that all of his claimed damages

were the result of flooding. The court

awarded Wright $24,029, following a

bench trial.

Wright appealed, and the U.S. 5th

Circuit held that his state-law claims were

indeed pre-empted by the National Flood

Insurance Act. See Wright v. Allstate Ins.

Co., 415 F.3d 384 (5 Cir. 2005). The

court further held that Wright’s claim of

equitable estoppel was not viable in this

case. Id. at 388. Significantly, however,

the court did not foreclose the use of

equitable estoppel in the appropriate case.

Id. The court remanded the case to the

district court, however, for clarification

of the basis for the denial of Wright’s

motion for leave to add the federal com-

mon-law claims. Id. at 391. On remand,

the district court rejected the federal com-

mon-law claims, stating that it was “not

aware by the pleading or otherwise of any

federal common law cause(s) of action

that might be asserted by [Wright].”

Unsatisfied with the district court’s

explanation on remand, Wright again

appealed. In his second appeal, Wright

contended that the National Flood Insur-

ance Act expressly authorizes extra-con-

tractual federal common-law claims for

fraud and negligent misrepresentation.

As grounds for this argument, Wright

asserted that the Standard Flood Insur-

ance Policy specifies that disputes aris-

ing under the policies will be governed

by federal common law. Alternatively,

he claimed that the Act impliedly autho-

274 December 2007 / January 2008

rizes such claims. As support for this

claim, Wright asserted that the language

and purpose of the National Flood Insur-

ance Act implied such a cause of action.

The 5th Circuit rejected both argu-

ments. With regard to the express autho-

rization argument, the court reviewed the

Standard Flood Insurance Policy and the

National Flood Insurance Act and deter-

mined that neither contained any indicia

of a congressional intent to allow the

extra-contractual causes of action. To

determine whether a right of action was

implicitly authorized, the court reviewed

the four factors set forth in Cort v. Ash,

95 S.Ct. 2080 (1975). The court held that

Wright’s alternative argument was uncon-

vincing, and stated that it perceived no

evidence that Congress implicitly intended

that policyholders by able to file claims

against Write-Your-Own insurers other than

those claims specifically provided for in

the National Flood Insurance Act.

flooded. The hurricane also caused water

damage to the second story of the duplex,

as well as the contents of the Bests’

apartment. The Bests made a claim to

State Farm under the contents portion of

their policy, based upon their assertion

that the source of the water on the second

floor was holes in the roof caused by

wind damage. State Farm denied the claim

based upon its determination that the

source of the water on the second floor

was flooding. After reviewing all evi-

dence presented by the Bests and by

State Farm, the trial court held that the

damage to the contents of the plaintiffs’

home was caused by wind, not flooding.

The trial court awarded the Bests the full

amount of the limits of the renter’s policy,

and assessed statutory penalties against

State Farm, in accordance with La. R.S.

22:658, as it was in effect prior to its

amendment on Aug. 15, 2006.

On appeal, the Bests asserted that the

trial court erred in finding that the pre-

amendment version of La. R.S. 22:658

applied. The pre-amendment version of

the statute provided that, when an insurer

failed to make payment on a property-

damage claim within 30 days after re-

ceipt of satisfactory proof of loss and

such failure was found to be “arbitrary,

capricious, or without probable cause,”

the court may assess penalties in the

amount of 25 percent of the amount found

to be due from the insurer to the insured,

or $1,000, whichever is greater. Effec-

tive Aug. 15, 2006, the statute was

amended to provide for a 50 percentInternational Law

penalty and to provide an assessment of

reasonable attorneys’ fees and costs.

The Bests submitted their satisfactory

proof of loss on or before Jan. 3, 2006,

but State Farm continuously denied the

claim up until the time of trial. In deter-

mining which version of the statute to

apply, the appellate court noted the trial

judge’s finding that the cause of action

under the statute arose when State Farm

failed to pay the Bests’ claim within 30

days of notice of the claim. As such, the

appellate court stated, “Even though State

Farm’s failure to pay the Bests’ claim

extended beyond the effective date of the

2006 amendments to La. R.S. 22:658,

their cause of action arose prior to the

effective date.” The appellate court held

that the Bests were not entitled to the

increased penalty provided by the statute

as amended in 2006.

— Brendan P. Doherty and

Rachel G. Webre

Members, LSBA Insurance, Tort,

Workers’ Compensation

and Admiralty Law Section

Gieger, Laborde & Laperouse, L.L.C.

One Shell Square, Ste. 4800

701 Poydras St.

New Orleans, LA 70139-4800

Determination of Extent of

Penalties Owed by Insurer

Aronson v. State Farm Fire and Cas.

Co., 07-0573 (La. App. 4 Cir. 10/10/07),

____ So. 2d ____.

Plaintiffs, Katheryn Aronson Best and

Mark Best, rented half of a two-story

duplex. The Bests had a policy of renter’s

insurance issued by State Farm that pro-

vided coverage for wind damage, but not

for flooding. As the result of Hurricane

Katrina, the first floor of the duplex was

World Trade Organization

Intellectual Property

Dispute Settlement

China — Measures affecting the protec-

tion and enforcement of intellectual prop-

erty rights (WT/DS362).

On Sept. 25, 2007, the World Trade

Organization’s (WTO) Dispute Settle-

ment Body established the first dispute-

settlement panel to review China’s pro-

tection and enforcement of intellectual

property rights. The United States initi-

Louisiana Bar Journal Vol. 55, No. 4 275

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ated consultations with China on April

10, 2006, regarding various alleged defi-

ciencies in China’s domestic intellec-

tual-property regime. The dispute-settle-

ment panel will resolve several issues,

including:

� whether China has implemented ap-

propriate criminal procedures and pen-

alties in cases involving willful trade-

mark counterfeiting or copyright pi-

racy pursuant to Articles 41.1 and 61

of the WTO Agreement on Trade-

Related Aspects of Intellectual Prop-

erty Rights (TRIPS Agreement);

� whether China maintains appropriate

measures under TRIPS articles 46 and

59 to appropriately dispose of confis-

cated goods that infringe intellectual

property rights; and

� whether China is acting inconsistently

with TRIPS articles 9.1 and 14 by

denying the protection of its copy-

right law to creative works of author-

ship that have not been cleared for

publication or distribution within

China (the Chinese law allegedly de-

nies copyright protection for works

poised to enter the market but await-

ing Chinese censorship approval).

One of China’s defenses is that the

United States is seeking to impose extra

obligations on a developing country in

violation of the TRIPS Agreement. See

TRIPS Agreement arts. 65 & 66. The

WTO Agreements do not define what

constitutes a developing country, and the

panel for the first time will have to ad-

dress the issue of whether China qualifies

for special and differential treatment as a

developing country within the context of

the TRIPS Agreement.

shrimp processors and other businesses

engaged in harvesting and processing

domestic shrimp (including many

Louisiana businesses) previously

obtained an Antidumping Order on

imported shrimp from Brazil, China,

Ecuador, India, Thailand and Vietnam.

See Antidumping Orders on Certain

Frozen or Canned Warmwater Shrimp

and Prawns, Department of Commerce

Case Nos. A-351-838 (Brazil); A-570-

893 (China); A-331-802 (Ecuador); A-

533-840 (India); A-549-822 (Thailand);

and A-552-802 (Vietnam). In response

to the order against it, Ecuador lodged a

case at the World Trade Organization

(WTO) complaining about the United

States Department of Commerce’s

“zeroing” methodology for the

calculation of dumping margins. The

controversial “zeroing” methodology

allows the Department of Commerce to

exclude transactions that have a negative

dumping margin; in essence, where the

Antidumping Duties and

Procedures Regarding

Imported Shrimp

A coalition of domestic shrimpers,

276 December 2007 / January 2008

foreign producer is not selling the subject

product at less than fair value in the

United States, the Department of

Commerce has the option to exclude that

transaction from the total weighted

average, resulting in a higher overall

average than would occur if the

transaction were included. The WTO

dispute-settlement panel found the

practice a violation of the WTO

Antidumping Agreement Article 2.4.2,

first sentence. See United States-Anti-

Dumping Measure on Shrimp from

Ecuador (WT/DS335/R). As a result of

the ruling, the antidumping margins on

shrimp from Ecuador were deemed de

minimis and the Department of

Commerce revoked the Antidumping

Orders on imported shrimp and prawns

from Ecuador. See 72 Fed. Reg. 48,257

(Aug. 23, 2007).

The Department of Commerce’s

acceptance of the WTO Ecuador ruling

and subsequent elimination of the orders

on shrimp from Ecuador illustrates a

significant shift from prior “zeroing”

rulings where the Department of

Commerce did not reverse the practice

and appealed the decision to the WTO

Appellate Body. See e.g. United States-

Laws, Regulations and Methodology for

Calculating Dumping Margins (Zeroing)

(WT/DS294/AB/R); United States-

Measures Relating to Zeroing and Sunset

Measures, (WT/DS322/AB/R). WTO

dispute-settlement panel (and Appellate

Body) rulings apply only to the parties

in the case and have no stare decisis or

precedential effect on other cases. See

Japan-Taxes on Alcoholic Beverages

(WT/DS8.10.11/AB/R).

The compatibility of the zeroing

practice with the WTO Antidumping

Agreement is ultimately subject to a

ruling by the WTO Ministerial

Conference, which has the ultimate

authority to interpret the WTO Agreements,

and is currently being negotiated in the

WTO Doha Round negotiations.

Rodney A. “Rocky” Seydel, Jr.

M e d i a to r & M e d i c a l R e v i e w Pa n e l A t to r n e y C h a i r p e r s o n

Automobile • Dramshop Liability • Landlord & Tenant • Medical Malpractice

Personal Injury • Premises Liability • Product Liablity

New Orleans Metro AreaFor dispute resolut ion services, contact MAPS:

Two Lakeway Center • Suite 4003850 N. Causeway Blvd.Metairie, LA 70002800.443.7351 504.831.2141

Fax: 504.837.2566Email: resolutions@maps-adr.comWebsite: www.maps-adr.com

2191-2194. Congressional approval of

the agreements is performed in “mock”

markup negotiating sessions without the

opportunity to insert changes or amend-

ments to the agreement (so-called “fast

track” procedure). Congress can vote only

yeah or nay on the terms of the agreement

as presented by the President and as

outlined in the implementing legislation

submitted by the President with the agree-

ment. Id. The President’s Trade Promo-

tion Authority expired under the existing

statute at midnight on July 1, 2007. Id. at

§3803(c)(1)(B). However, the four agree-

ments were presented to Congress prior to

the statute’s expiration and will be consid-

ered under the terms of the now-expired

statute. There is no current proposal to

renew or re-enact the President’s Trade

Promotion Authority, essentially eliminat-

ing the current Administration’s ability to

negotiate any new Free Trade Agreements,

including any conclusion to the ongoing

WTO Doha Round negotiations.

— Edward T. Hayes

Member, LSBA International

Law Section

Saporito & Hayes, L.L.C.

Ste. 2100, 639 Loyola Ave.

New Orleans, LA 70113

United States Free Trade

Agreements

The United States recently signed Free

Trade Agreements with Colombia,

Panama, Peru and South Korea. All four

agreements are unique in that they con-

tain new, stronger provisions on environ-

mental and labor protection. Each agree-

ment awaits congressional approval un-

der the procedures outlined in the United

States Trade Promotion Authority Act

(Trade Act of 2002). See 19 U.S.C. §§

Louisiana Bar Journal Vol. 55, No. 4 277

Lloyd T. Bourgeois

m e d i a t o r

Automobile • Insurance Liability • Personal Injury

Premises Liability • Property Damage • Real Estate

Houma/ Thibodaux/

Lafayette Metro AreasFor dispute resolut ion services, contact MAPS:

Two Lakeway Center • Suite 400

3850 N. Causeway Blvd.Metairie, LA 70002800.443.7351 504.831.2141Fax: 504.837.2566Email: resolutions@maps-adr.com

Website: www.maps-adr.com

Labor and

Employment

Law

No Coverage

or Duty to Defend

Henly v. Phillips Abita Lumber Co., 06-

1856 (La. App. 10/3/2007), ____ So.2d

____.

The traditional notion that commer-

cial-general-liability policies do not cover

employment issues is still alive and well in

the 1st Circuit of Louisiana. This case gives

a clear explanation of this principle.

Abita Lumber Co. supervisor Jeffrey

Bruce is alleged to have committed im-

proper workplace behavior against a fe-

male employee both on and off the pre-

mises of the lumber yard, including both-

ering her while both were at work at the

lumber yard site by improper touching,

solicitations and sexual comments. One

particular allegation was the focus of the

attention of the 1st Circuit: the supervi-

sor, while giving the female employee a

ride to work, allegedly pulled off the road

and exposed himself to her. When she

rebuffed his unwelcome advances, he

threatened her with the loss of her job,

yelled at her, threw chairs and, on one

occasion, pushed or kicked her in the

back, forcing her forward into a wall and

causing a lower back injury that eventu-

ally required surgery.

Abita Lumber Co. filed a demand

against its commercial-general-liability

company for liability coverage and a

defense to the claims of the plaintiff

female employee, including reimburse-

ment of litigation expenses already in-

curred. The insurance company, Travel-

ers Property Casualty Co. of America,

filed an answer denying coverage and a

duty to defend on the basis of policy

exclusions, including the workers’ com-

pensation exclusion, the “bodily injury

to an employee” exclusion, the employ-

ment-related practices exclusion, and the

discrimination exclusion.

After a hearing, the district court granted

Traveler’s motion for summary judgment

as to both coverage and defense and denied

Abita’s motion, stating that:

the Travelers policy clearly and un-

ambiguously excludes coverage for

the acts alleged in the petition of

. . . [the supervisor] and Travelers

does not have a duty to defend . . .

Abita against the allegations of . . .

[the female worker].

Abita appealed.

The 1st Circuit reiterated all of the

usual principles of summary judgment,

insurance policy interpretation and the

duty to defend (the “eight-corners rule”).

In its analysis, the 1st Circuit limited

its review because the lumber company

conceded that the workplace allegations

were not covered in that the policy unam-

biguously excluded coverage for all ex-

cept the exposing incident. Also, the lum-

ber company appealed only the duty-to-

defend decision and did not appeal the

coverage issue.

An occurrence is, under the policy,

one that takes place during the policy

period and within the coverage territory.

There is no dispute that the exposing

incident took place during the policy

period and the coverage territory. The

decision turned on a specific inquiry to

determine whether the supervisor was

within the course and scope of his em-

ployment when he allegedly exposed him-

self to her. The factual allegations of the

petition show that it did not occur on the

lumber yard property nor during working

hours, inasmuch as they were on their

way to work but had not yet arrived.

Because an employee usually does not

begin work until he reaches his employer’s

premises, his travel to and from work is

generally considered outside the course

278 December 2007 / January 2008

of his employment, unless he has a duty

to perform en route. There was no evi-

dence that he had to perform a work-

related duty, nor did the supervisor’s

duties have anything to do with the kind

of activities he was employed to perform

for the lumber company. His improper

sexual conduct was “certainly not so

closely connected in time, place, and

causation to his employment duties with

the lumber yard that it could be regarded

as a risk of harm fairly attributable to its

business.” The court concluded that Bruce’s

actions were a “purely personal mission

entirely extraneous to his employment.”

— Gregory K. Moroux

Member, LSBA Labor

and Employment Law Section

The Onebane Firm

Ste. 300, 1200 Camellia Blvd.

Lafayette, LA 70502-3507

Professional

Liability

Physician-Patient

Confidentiality Privilege

Coutee v. Beurlot, 06-2943 (La. 9/5/07),

964 So.2d 304.

Mr. Coutee sued Dr. Beurlot for dis-

closing private and confidential informa-

tion during an ex parte pretrial meeting

with an attorney who did not have the

plaintiff’s authorization to participate in

such a conference. The trial and appel-

late courts found that Dr. Beurlot had

undermined the confidence between phy-

sician and patient by violating this “con-

fidential, personal and professional rela-

tionship between physician and patient.”

The trial court awarded $20,000 in dam-

You’ll call him an

S e r v i n g A c a d i a n a f o r 3 0 Ye a r s

1101 S College Rd., Suite 400 / Lafayette, LA 70503 / 337.233.5025 / www.psassoc.com

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ages for emotional injuries, and the court

of appeal reduced the award to $10,000.

The Supreme Court reversed, ruling that

Coutee failed to prove two necessary

elements of his case: causation and dam-

ages. This decision allowed the court to:

find it unnecessary to discuss

whether or not Dr. Beurlot’s giving

of a new, different opinion at the ex

parte meeting constituted a viola-

tion of the doctor-patient privilege,

or whether a violation of the dis-

covery statutes constitutes a com-

pensable tort.

One concurring opinion stated that

Coutee failed to prove any “legally com-

pensable damages,” and a second con-

curring opinion posited that violations of

the physician-patient privilege are gov-

erned by Louisiana Code of Evidence

article 510(G), which states that a patient’s

remedy in such a case is against the

Louisiana Bar Journal Vol. 55, No. 4 279

JOHN CAULKING J. GREGG COLLINS TOM FOUTZ JOEL FRIEDMAN RICHARD GANUCHEAU

PHELPS GAY JOEL GOOCH BEN HANCHEY MAURICE HEBERT, JR.CAROLYN GILL- JEFFERSON

KATHY HOBSON DANIEL HURLEY LAVONNE MARTIN JOE MURRAY JOHN MUSSER, IV

STEVEN PLOTKIN J. VAN ROBICHAUX, JR. ANDY SCHAFFER DAVID WILLIAMS

MEDIATION

JURY FOCUS GROUPS

ARBITRATION

MEDICAL REVIEW PANELS

MEDIATED SETTLEMENT DAYS

SEMINARS

TOLLFREE 800.884.9939

FAX 504.838.9555

MEDIATE@ADRINCORPORATED.COM

WWW.ADRINCORPORATED.COM

attorney, not the physician. It should be

noted that Coutee did not file a HIPAA

complaint against the physician.

Penalties for Not Timely

Paying Settlement Funds

the PCF, would determine the amount

due Medicare through negotiations and

provide the tax identification informa-

tion requested.

Seven weeks later, the defendants ad-

vised the plaintiffs that they had not re-

ceived the requested information and in-

quired about the status of the Medicare

discussions. Two months later, the de-

fendants sent a draft of settlement docu-

ments to the plaintiffs.

The defendants contended that sev-

eral additional months then lapsed with

no response from the counsel for the

plaintiffs and, on March 24, 2004, de-

fense counsel contacted Medicare and

learned that no request had been made by

anyone to determine the lien information

that was communicated to plaintiffs’

counsel, who in turn contacted Medi-

care.

The defendants contended that they

waited another year for a response and,

having received none, attempted to coor-

dinate efforts with the PCF for a joint

settlement. They claimed that again they

got no response from plaintiffs’ counsel

and that yet another year went by with no

activity relative to the settlement until

March 22, 2006, when counsel for the

PCF advised that there was no Medicare

lien and that the plaintiffs had rejected

the PCF’s settlement offer.

On April 28, 2006, the draft settle-

ment documents were again sent to

plaintiff’s counsel. Another month

elapsed before they heard from plaintiff’s

counsel and still they had not been pro-

vided with the payee information.

The plaintiffs contended that by their

letter of April 1, 2003, they advised de-

fendants that designating Medicare as a

payee on the settlement check was unac-

ceptable because they anticipated a dis-

pute with Medicare. They also asserted

that the defendants accepted this “coun-

teroffer” by stating that they were willing

to make payments upon resolution of the

Reiners v. St. Landry Hosp. Serv. Dist.

Two, 07-0158 (3 Cir. 5/30/07), 958 So.2d

783.

The plaintiffs filed a petition to en-

force a written agreement to settle a medi-

cal-malpractice case and for penalties

pursuant to La. R.S. 22:1220.

The defendants had extended a writ-

ten settlement offer on April 1, 2003,

specifying that Medicare would be a

named payee on the settlement check and

that defendants would be provided with

payee information for all of the plaintiffs

and their attorney. The plaintiffs re-

sponded that same date, accepted the

offer and informed the defendants that

they would seek excess damages from

280 December 2007 / January 2008

Medicare lien. Furthermore, the plain-

tiffs contended that once the defendants

were advised that there was no Medicare

lien, there was nothing to prevent the

defendants from issuing the settlement

check, yet over three years elapsed be-

tween the time of the settlement agree-

ment and the date the plaintiffs filed the

petition to enforce the settlement.

The trial court granted the plaintiffs’

petition to enforce the settlement and

awarded penalties of $35,000 ($5,000

per plaintiff).

The defendants contended on appeal

that they were not in bad faith because the

plaintiffs did not provide the necessary

payee information and had refused to

accept a settlement check that included

Medicare as a payee. Federal law forbids

issuing a settlement check with only the

plaintiffs as payees unless there is an

assurance that the Medicare lien would

be, or had been, satisfied, and the defen-

dants argued that the plaintiffs did not

notify them that there was no Medicare

lien until three years after the settlement

agreement was reduced to writing.

The court of appeal affirmed the trial

court’s ruling that:

defendants acted in bad faith be-

cause the settlement agreement did

not state or include any specific

amount that may be due Medicare

and because three and one-half years

had elapsed with no tender of a

settlement check.

The award of penalties for the

defendant’s conduct, which the trial court

found was “arbitrary and capricious,”

was affirmed.

— Robert J. David

Gainsburgh, Benjamin, David,

Meunier & Warshauer, L.L.C.

Ste. 2800, 1100 Poydras St.

New Orleans, LA 70163-2800

SOLACE / Support of Lawyers/Legal Personnel All Concern Encouraged

The Louisiana State Bar Association/Louisiana Bar Foundation’s Community Action Committee supports the SOLACE program.

Through the program, the state’s legal community is able to reach out in small, but meaningful and compassionate ways to

judges, lawyers, court personnel, paralegals, legal secretaries and their families who experience a death or catastrophic illness,

sickness or injury, or other catastrophic events. For assistance, contact a coordinator.

Area Coordinator Phone E-mail

Alexandria Area Elizabeth Erny Foote (318)445-4480 efoote@psfllp.com

Baton Rouge Area Ann G. Scarle (225)214-5563 ann@brba.org

Covington/Mandeville Area Suzanne E. Bayle (504)524-3781 sebayle@bellsouth.net

Denham Springs Area Mary E. Heck Barrios (225)664-9508 mary@barrioslaw.com

Houma/Thibodaux Area Danna Schwab (985)868-1342 dschwab@theschwablawfirm.com

Jefferson Parish Area Pat M. Franz (504)455-1986 patfranz@bellsouth.net

Lafayette Area Susan Holliday (337)237-4700 susan@lafayettebar.org

Lake Charles Area Joel Lutz (337)433-0022 joel@stuteslaw.com

Monroe Area Daniel J. Ellender (318)647-3311 mail@ellenderlaw.com

Natchitoches Area Peyton Cunningham, Jr. (318)352-6314 peytonc1@bellsouth.net

(318)481-5815

New Orleans Area Helena N. Henderson (504)525-7453 hhenderson@neworleansbar.org

Opelousas/Ville Platte/Sunset Area John L. Olivier (337)662-5242 johnolivier@centurytel.net

(337)942-9836

(337)232-0874

Shreveport Area Patti Guin (318)222-3643 pguin@shreveportbar.com

For more information, go to: www.lsba.org/2007InsideLSBA/solace.asp.