Trial Court Decision Affecting Property Disclosure Document Reversed
LOUISIANA REALTORS • January 25, 2019
By: Patricia B. McMurray, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, Chase Tower North, 20th Floor
Baton Rouge, Louisiana 70801
Background
In Valobra v. Nelson, the buyer sued the seller alleging the seller misrepresented the condition of the property by checking the "no" box on the Property Disclosure Document ("PDD") instead of the "no knowledge" box as to questions regarding the condition of the property.[1] The buyers allege because of this misrepresentation by the sellers on the PDD, the buyers agreed to buy the property "as is" and waive redhibition rights in the Act of Sale. Redhibition is a warranty required by state law to be given to a buyer unless waived by the buyer. Redhibition means the buyer can sue to return the property to the seller or get a refund of a portion of the purchase price after the sale if the buyer discovers a defect in the property that if the buyer had known about prior to the sale he would not have bought the property.[2] The Valobra buyers alleged that the sellers checked the box marked "no" in response to questions on the PDD regarding whether the property had certain defects. Defects in the property were later discovered. The sellers then claimed they did not know of the defects in the property.[3] The buyers argued that the sellers checking the box marked "no" instead of the box marked "no knowledge" on the PDD and therefore intentionally misled the buyers into believing that the sellers had knowledge that there were no defects in the property. The buyers alleged the sellers were in bad faith and fraudulently induced the sellers to execute a waiver of redhibition contained in the Act of Sale by stating "no" instead of "no knowledge" of the defects.[4]
24th Judicial District Court
The trial court, the 24th Judicial District Court denied the motion for summary judgment filed by the Seller on March 25, 2018. The Seller alleged in the motion that there appears to be no controversy over whether the Buyer was aware of the alleged "defects" at the time of execution of the waiver of redhibition included in the Act of Sale as the Seller and Buyer had agreed to a price concession to compensate the Buyer for the "defects" noted by the home inspection prior to sale. The Seller filed a Writ to the Court of Appeal requesting the Court of Appeal revise the trial court's denial of the motion for summary judgment.
Louisiana REALTORS® filed an amicus brief in support of the Seller's Writ. The Court of Appeal held that the
"Plaintiff's (Buyers) argument failed to recognize that the Property Disclosure required by the RPDA (property disclosure form) does not provide a guaranty that no defects exist in the property, but rather requires disclosures of known defects to the best of the seller's information, knowledge or belief. La. R.S. 9:3198(D) specifically states a property disclosure document is not a warranty and is not part of any contract between the buyer and seller. In addition, buyers, such as plaintiffs, cannot rely on the property disclosure document as a substitution for inspections. Therefore, plaintiffs cannot use their alleged reliance on the Property Disclosure as an excuse for failing to obtain a comprehensive home inspection or failing to follow the advice of the inspectors to obtain more extensive inspections." (explanation supplied)
The Writ was granted by the Court of Appeal and the reversal of the denial of the motion for summary judgment was granted. All claims against the Seller by the Buyers were dismissed. A full copy of the Court of Appeal's Judgment can be found here.
Louisiana Supreme Court
The Buyers filed an Application for Writ of Certiorari with the Louisiana Supreme Court on January 16, 2019 requesting a review of the Fifth Circuit Court of Appeal Judgment. We will provide information on the outcome of the appeal to the Louisiana Supreme Court when available.
[1] Nancy Williams wife of/and Franco Valobra vs. Robert Allan Nelson and Jerome Garfield Smith, III as Co-Trustees of the Allan R. & Louise S. Nelson Revocable Trust & The Allan R. Nelson Marital Trust, Suit No. 720-048, 24th Judicial District Court for Jefferson Parish
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[2] La. Civil Code 2520
[3] Id.
[4] Id.
Candidate qualifying for Louisiana’s November 3 election began Wednesday, August 5, and concludes Friday, August 7. The three-day qualifying period will establish the candidates for all six U.S. House districts, as well as judicial, parish and municipal races across the state. This election cycle includes several changes to Louisiana’s congressional races and election calendar. The state’s U.S. House primaries, originally scheduled for May 16, were canceled following the U.S. Supreme Court’s decision in Louisiana v. Callais. The Louisiana Legislature subsequently adopted a new congressional map that reduced the number of Black-majority congressional districts from two to one. Under the revised election calendar, the November 3 U.S. House contests will use an open primary system. All qualified candidates will appear on the November ballot, regardless of party affiliation. A candidate receiving more than 50% of the vote will be elected. If no candidate receives a majority, the two candidates receiving the most votes will advance to a December 12 runoff. U.S. Senate The November general election will feature Republican nominee U.S. Rep. Julia Letlow and Democratic nominee Jamie Davis. Letlow's Senate campaign has also created an open seat in Louisiana's 5th Congressional District. 5th Congressional District Several candidates have announced campaigns for the 5th Congressional District seat: State Sen. Stewart Cathey State Rep. Michael Echols Louisiana Board of Regents Chair Misti Cordell State Rep. Gabe Firment Cathey, Echols and Firment currently serve in the Louisiana Legislature. Additional candidates may qualify before the deadline on Friday. The 5th District covers portions of northeastern and central Louisiana and extends into the Florida Parishes. 6th Congressional District Congressman Cleo Fields has announced that he will not seek reelection in the newly redrawn 6th Congressional District. Instead, Fields is running in a special election for his former state Senate seat, which became vacant following the death of Sen. Larry Selders of Baton Rouge. The newly drawn 6th Congressional District extends around the Baton Rouge area and includes portions of rural communities surrounding the capital region. State Sen. Rick Edmonds has announced his candidacy. State Sen. Blake Miguez has also been discussed as a potential candidate, although the candidate field will not be finalized until qualifying closes Friday. Federal law requires congressional candidates to reside in the state they seek to represent but does not require them to reside within the specific congressional district. 2nd Congressional District Congressman Troy Carter currently represents the 2nd Congressional District, which extends from the Baton Rouge area toward New Orleans. Under the newly adopted congressional map, the 2nd District remains Louisiana's sole Black-majority congressional district. East Baton Rouge Parish Judiciary All 15 judgeships on the 19th Judicial District Court are scheduled for election following the Legislature's creation of two new judicial election subdistricts. Each subdistrict will elect seven judges, with an additional judgeship elected parishwide. Litigation challenging the new judicial map remains pending. Judicial races are among the contests being monitored by Louisiana REALTORS® and local Political Action Teams. Judicial decisions can have implications for property rights, business activity, litigation and the overall legal environment in Louisiana. Local Elections Voters across Louisiana will also consider candidates for mayors, city and parish councils, school boards, police chiefs and other local offices. While these races typically receive less statewide attention than congressional and statewide contests, local elected officials make decisions affecting land use, zoning, permitting, infrastructure, taxation and housing policy. These issues can directly affect real estate activity and development within local communities. Candidate Lists and Election Information The candidate field will not be final until qualifying closes Friday, August 7. The official list of qualified candidates is available through the Louisiana Secretary of State's Candidate Inquiry portal. The complete election schedule, including key dates for voting, registration and absentee ballots, is available through the Secretary of State's election calendar. For Louisiana REALTORS®, the qualifying period provides an early look at the candidates who will appear on the November ballot and the races that may affect real estate, property rights, development and local communities across the state.
The Louisiana REALTORS® Board of Directors will elect six (6) LR At-Large Directors at its October 1st meeting. Qualifications and an application for the position can be found below.
From the Louisiana Department of Insurance: Insurance Commissioner Tim Temple recognizes fire districts that have received improved fire ratings since last year. Improved fire ratings lead to reduced fire insurance premiums for property owners in the associated area. “Improved fire protection ratings demonstrate the hard work and dedication of fire departments and community leaders. These improvements make homes and communities safer and can reduce fire insurance premiums,” Commissioner Temple said. “Some premium reductions are more than others, but any improvement to the safety and resilience of our communities is a win for everyone.” Fire protection grading is promulgated by the Property Insurance Association of Louisiana (PIAL) and approved by the Commissioner of Insurance. All fire districts are graded on a scale of 1 to 10 by PIAL, with 10 representing no fire protection and 1 representing the best level of protection. The PIAL considers several factors when determining a district’s grading, including the number of dispatchers on duty, the number of firefighters and fire trucks and the availability of water. “I’m extremely proud of the Louisiana Fire Service,” said Department of Public Safety Principal Assistant Chief Bryan J Adams. “They continue to step up, work hard and deliver exceptional service to protect our community. As we partner with them through training and the enrollment support they need to succeed, you can expect continued results like this. Our office is committed to staying at the forefront of collaboration with the Louisiana Fire Service—because we’re truly One Team.” Policyholders in the affected areas should contact their insurance producer if they have questions about how fire rating improvements may affect their fire insurance premiums. The average annual premium reduction examples below are calculated for a brick masonry home with an HO-3 policy insured for $250,000, with a $500 deductible.
