Ogea v. Merritt

• Citation: 109 So.3d 516
• Decision Date: 10 April 2013
• Docket Number: No. 12–1028.,12–1028.
• Parties: Mary P. OGEA v. Travis MERRITT and Merritt Construction, LLC.
• Court: Court of Appeal of Louisiana (US)

109 So.3d 516

Mary P. OGEA
v.
Travis MERRITT and Merritt Construction, LLC.

No. 12–1028.

Court of Appeal of Louisiana,
Third Circuit.

Feb. 6, 2013.
Rehearing Denied April 10, 2013.

[109 So.3d 518]

Richard D. Moreno, Richard D. Moreno, L.L.C., Lake Charles, LA, for Defendant/Appellant, Travis Merritt, Merritt Construction, LLC.

Benji J. Istre, Benji J. Istre, LLC, Lake Charles, LA, for Plaintiff/Appellee, Mary P. Ogea.

Court composed of ELIZABETH A. PICKETT, JAMES T. GENOVESE, and SHANNON J. GREMILLION, Judges.

PICKETT, Judge.

[3 Cir. 1]Limited liability company and its sole member appeal judgment holding them solidarily liable for damages arising from their construction of the plaintiff's home. For the reasons discussed below, we amend and affirm.

FACTS

In February 2007, Mary P. Ogea signed a “Custom Home Building Agreement” with Merritt Construction, LLC (Merritt LLC), contracting Merritt LLC to build a home on a lot she owned near Lake Charles. Travis Merritt, the sole member of Merritt LLC, signed the contract on behalf of the company. During construction, Ms. Ogea became aware of problems with the construction. After being made aware of a problem with the slab of the home, she hired Charles Norman, an engineer, to inspect her home. Mr. Norman performed inspections in September 2007, November 2007, and May 2011. Based on Mr. Norman's findings during his first two visits and his expert opinion regarding the slab, Ms. Ogea notified Merritt LLC in January 2008 of the problems with the slab and requested a refund of all monies she had paid and demolition of the unfinished home.

Receiving no response from Merritt LLC, Ms. Ogea filed suit in April 2008 against Merritt LLC and Mr. Merritt (the defendants), alleging violations of the New Home Warranty Act (NHWA), La.R.S. 9:3141–3150, and various Louisiana Civil Code articles related to construction defects. Mr. Travis filed a Peremptory Exception of No Cause of Action, which the trial court denied after a hearing. The defendants then filed an Answer and Reconventional Demand. Thereafter, counsel for the defendants withdrew as counsel.

On October 5, 2011, a bench trial was held. Mr. Merritt represented himself and Merritt LLC at [3 Cir. 2]trial. Mr. Norman, Ms. Ogea, and Mr. Merritt testified at the trial. At the conclusion of the trial, the trial court found that Merritt LLC and Mr. Merritt each met the definition of “builder” under the NHWA and that based on Mr. Norman's expert testimony, there

[109 So.3d 519]

was a slab defect, that constituted a “major structural defect” under the NHWA, which created other “significant” problems with the construction. The trial court further determined that “[u]nder one or more of the [legal] theories,” the damages alleged by Ms. Ogea were caused either by Merritt LLC or Mr. Merritt or both. Specifically as to Mr. Merritt, the trial court found that he personally performed the work for the pad of the home and that his failure to provide proof of insurance, as requested, constituted fraud. Based on these findings, the trial court held Mr. Merritt personally responsible and solidarily liable with Merritt LLC for damages Ms. Ogea incurred as a result of the defective construction.

The trial court granted judgment in favor of Ms. Ogea awarding her: (1) $221,262.11 for monies she paid prior to the date of trial with judicial interest from the date of judicial demand; (2) $16,105.00 for demolition costs with legal interest from the date of judgment; (3) $15,500.00 for attorney fees with legal interest from the date of judgment; (4) $3,050.00 for expert fees with legal interest from the date of judgment; and (5) cancellation of the lien filed by Merritt LLC. The trial court also granted judgment in favor of Merritt LLC on its Reconventional Demand in the amount of $8,800.00 with legal interest from date of judicial demand as an offset against Ms. Ogea's judgment. The judgment cast Merritt LLC and Mr. Merritt in solido for all costs of the proceedings.

In finding Mr. Merritt personally liable, the trial court explained:

“[E]ither Travis Merritt and/or Merritt Construction, LLC, in the handling of the pouring of the slab, since that [is] ... the main defect.... It was the job of Merritt Construction, whether it was poured by them or not, to oversee and make sure that it was done within the standards that would be expected under the law.”

[3 Cir. 3]After the trial court stated its reasons for judgment, Ms. Ogea asked the trial court to address her request that Mr. Merritt be found to have perpetrated fraud on her. The trial court explained, “when I indicated he would be personally held responsible and by the dilatory actions, as well as the non-compliance with the depositions and other matters, it's the Court's position from a civil standpoint that he has committed fraud.”

After judgment was signed, the defendants filed a timely Motion for New Trial which the trial court denied after a hearing. The defendants appealed.

ASSIGNMENTS OF ERROR

In their appeal, the defendants assign the following errors with the trial court's judgment:

1. The trial court erred by denying the Peremptory Exception of No Cause of Action filed by Mr. Merritt, individually.

2. The trial court erred by rendering Judgment against Mr. Merritt, individually and in solido with Merritt LLC.

3. The trial court erred by rendering judgment against Mr. Travis and Merritt LLC under the NHWA.

4. In its judgment, trial court erroneously awarded damages that were not allowed by law, were not sustained by the evidence, or were duplicative.

5. The trial court erred in awarding $8,800.00 with legal interest from date of judicial demand in favor of Merritt LLC on its Reconventional Demand.

6. The trial court erred in awarding

[109 So.3d 520]

$15,500.00 in attorney fees to Ms. Ogea.¹

7. The trial court erred by failing to award Merritt LLC reasonable attorney fees under its contract with Ms. Ogea for investigation, filing an answer, and prevailing on its Reconventional Demand.

DISCUSSION

[3 Cir. 4]At the heart of Mr. Merritt's appeal are the NHWA and the law governing limited liability companies (LLC). The NHWA provides mandatory warranties in favor of purchasers or occupants of new homes. The warranties apply to all defects “although there is no building standard directly regulating the defective workmanship or materials.” La.R.S. 9:3140. The remedies provided in the NHWA are exclusive, and no other remedies provided by law apply between an owner and a builder. La.R.S. 9:3141.

Louisiana's LLC law benefits its members by limiting their liability. The limited liability of LLC members to third parties is provided in La.R.S. 12:1320 which states:

A. The liability of members, managers, employees, or agents, as such, of a limited liability company organized and existing under this Chapter shall at all times be determined solely and exclusively by the provisions of this Chapter.

B. Except as otherwise specifically set forth in this Chapter, no member, manager, employee, or agent of a limited liability company is liable in such capacity for a debt, obligation, or liability of the limited liability company.

C. A member, manager, employee, or agent of a limited liability company is not a proper party to a proceeding by or against a limited liability company, except when the object is to enforce such a person's rights against or liability to the limited liability company.

D. Nothing in this Chapter shall be construed as being in derogation of any rights which any person may by law have against a member, manager, employee, or agent of a limited liability company because of any fraud practiced upon him, because of any breach of professional duty or other negligent or wrongful act by such person, or in derogation of any right which the limited liability company may have against any such person because of any fraud practiced upon it by him.

Peremptory Exception of No Cause of Action

In their first assignment of error, the defendants argue that the trial court erred in denying Mr. Merritt's exception of no cause of action. In his exception, Mr. Merritt asserted that Ms. Ogea's contract was with Merritt LLC and that [3 Cir. 5]Merritt LLC performed all the work on her home. He contends that under general corporate law, there is no basis for him, as a member of an LLC, to be personally liable for the debts of the LLC. He further asserts on appeal that Ms. Ogea did not allege in her petition that he committed fraud with regard to the slab; therefore, he contends no basis exists in the petition to pierce the corporate veil and hold him personally liable to her.

Appellate courts review the denial of an exception of no cause of action de novo on appeal to determine “whether, in the light most favorable to plaintiff and with every doubt resolved in plaintiff's behalf, the petition states any valid cause of action for

[109 So.3d 521]

relief.” ARC Indus., L.L.C. v. Nungesser, 11–331, 11–332, p. 3 (La.App. 3 Cir. 10/5/11), 74 So.3d 864, 867. No evidence can be introduced regarding an exception of no cause of action. La.Code Civ.P. art. 931. The defendant must prove that the well-pleaded allegations contained in the petition, when accepted as true, do not show the plaintiff is entitled to the relief she seeks. Taylor v. Leger Constr., LLC, 10–749 (La.App. 3 Cir. 12/8/10), 52 So.3d 1098.

In her petition, Ms. Ogea alleges that there are numerous defects with the concrete slab and foundation of her home caused by poor drainage and substandard workmanship, that Mr. Merritt “performed the dirt work for the foundation of the home,” that Mr. Merritt failed to complete several items according to the specifications for her home and altered or added other items at his own discretion without her permission, that Mr. Merritt is liable to her for “constructing the home in a substandard workmanlike manner,” and that Mr. Merritt “is personally responsible to [her] for all damages because he personally performed work in the...