Blue v. Schoen, 89-CA-611

CourtCourt of Appeal of Louisiana (US)
Writing for the CourtBefore CHEHARDY; CHEHARDY
Citation556 So.2d 1364
PartiesGeorge R. BLUE, Jr. v. Gerard L. SCHOEN, Jr., Patrick M. Schoen, Aline C. Schoen and Schoen Energy Management Corp. 556 So.2d 1364
Docket NumberNo. 89-CA-611,89-CA-611
Decision Date16 February 1990

Page 1364

556 So.2d 1364
George R. BLUE, Jr.
Gerard L. SCHOEN, Jr., Patrick M. Schoen, Aline C. Schoen
and Schoen Energy Management Corp.
No. 89-CA-611.
556 So.2d 1364
Court of Appeal of Louisiana,
Fifth Circuit.
Feb. 16, 1990.
Writ Granted April 27, 1990.

Page 1365

Baldwin & Haspel, Jack G. Ricci, Daryl G. Glorioso, New Orleans, for defendants-appellants.

Blue, Williams & Buckley, John V. Baus, Jr., George R. Blue, Jr., Metairie, for plaintiff-appellee.


CHEHARDY, Chief Judge.

Defendants, Gerard Schoen, Jr., Patrick M. Schoen, Aline C. Schoen and Schoen Energy Management Corporation (referred to collectively as the Schoens), appeal from a judgment in a redhibition and/or breach of contract case. Plaintiff in the matter is George R. Blue, Jr., a local attorney who purchased a home "weatherization" system sold and installed by defendants.

On appeal, defendants assert the transaction was not a sale within the meaning of the law of redhibition. Alternatively they argue that, if redhibition applies, the claim was prescribed; or if the claim was not prescribed, a reduction of the purchase price was the proper remedy as opposed to rescission of the sale. Further, defendants

Page 1366

object to the award of damages and attorney fees. For his part, plaintiff asks this court to increase the amount of attorney fees awarded by the trial judge and to award a separate amount for the work performed pursuant to the appeal.

George Blue was approached early in 1985 by a salesman employed by defendants to purchase and install a system in plaintiff's home which would "weatherize" it, thereby saving him money on his energy bills. After several discussions, the parties arrived at an agreement and the contract was executed on March 12, 1985. Plaintiff thereafter paid defendants $6,000 for the system.

In conjunction with the contract, which contemplated some unknown percentage of energy savings over the life of the system, plaintiff was provided a five-year parts and labor warranty. In addition, he was given a written guarantee that he would experience at least a 30% savings on his combined gas and electric bills for the two years following installation of the system. Failing that, the defendants agreed to reimburse him for the difference. (The 30% savings figure was based on 40% of 75% of the total utility bill since the guarantee only applied to savings related to air conditioning, heating and hot water. According to the agreement, those items comprise three-fourths of the total energy bill of a household.) For his part, plaintiff was required to calculate his savings on a yearly basis by comparing his utility bills after each of the two years to the one in the year preceding the installation of the system.

On March 14, 1985, defendants' work crew arrived at plaintiff's home to install the system. At that time, the crew conducted an air filtration test to discover all possible sources of air leakage. To do this they used an "energy door", a large fan which forced air out of the house to form a vacuum making air leakages detectable. They then sealed the air leaks by use of caulking, installed a setback thermostat (which was supposed to maximize the hot or cool air in the vent pipes) and installed a domestic solar hot water system. The solar hot water system included installation of a solar panel on the roof and a storage tank in the attic connecting to a water heater.

The following year, in January, defendants responded to a call from plaintiff regarding a leak from the solar panel. A repair crew arrived and fixed the leak. At that time they also removed the setback thermostat, promising to "check it out" and return it.

In March, plaintiff performed his calculations according to the guarantee and discovered no savings in his combined utility bills. (To the contrary, his electrical bill increased, although his gas bill showed a decrease.) Consequently, plaintiff wrote a letter demanding his reimbursement pursuant to the guarantee, as well as requesting reimbursement for the cost of the thermostat, which was never returned or replaced. The amount requested representing his loss of savings was $437.98.

Following plaintiff's letter, a series of discussions ensued, but no reimbursement was forthcoming. Gerard Schoen inspected the house in June 1986 and, although he found the component parts of the system operating properly, he promised to resolve the problem. However, no physical action was taken and discussions about the problem continued.

In March 1987, plaintiff performed the calculations to determine the promised second-year savings but found, as in 1986, no combined savings, and an increase in his electrical bill. As a result, he wrote another letter to defendants requesting payment of the reimbursement for both years, which totaled $946.93. He was again put off by promises to remedy the situation. When the promised remedy failed to occur, plaintiff filed suit in August 1987 for redhibition and/or breach of contract.

Defendants responded to the suit with a general denial and exception of prescription. The exceptions were denied and the case went to trial on March 22, 1989. Following the trial, judgment was rendered in plaintiff's favor in the amount of $10,752.59 on the main demand and $5,600 for attorney fees.

Page 1367

Defendants first contend the law of redhibition does not apply to the transaction in this case. They argue the "weatherization" system was a service on a "building" and not the sale of a "thing," as contemplated by LSA-C.C. art. 2520. They assert the jurisprudence distinguishes a sale for redhibition purposes by assessing the degree and magnitude of the services the obligor must perform. If the court finds the services a significant aspect of the contract, then, defendants contend, the transaction is not a sale. As examples, defendants cite Stratton-Baldwin Co., Inc. v. Brown, 343 So.2d 292 (La.App. 1 Cir.1977), in which a contract to sell carpet and flooring was found to be a sale, and Kegler's, Inc. v. Levy, 239 So.2d 450 (La.App. 4 Cir.1970), where a contract to furnish and install carpet was determined not to be a sale. Other cases cited by defendant are: Martin v. AAA Brick Co., Inc., 386 So.2d 987 (La.App. 3 Cir.1980)--a contract to build a fireplace not considered to be a sale; Airco Refrigeration Service, Inc. v. Fink, 242 La. 73, 134 So.2d 880 (1961)--a contract to install defendant's air-conditioner not a sale; Martin v. Earl J. Rome, Jr., D.D.S., 486 So.2d 213 (La.App. 1 Cir.1986)--the fitting of a dental patient with bridgework sold by a dentist construed to be a service contract, not a sale.

In further support of their contention that this transaction was a service or construction contract defendants cite Gulf States Utilities Co. v. Ecodyne Corp., 635 F.2d 517 (5 Cir.1981). There the contractor built two cross-flow induced draft cooling towers after supplying design services, materials and supervision of the construction. Under these circumstances, the court concluded the contract was not one of sale subject to redhibition. Defendants assert the similar facts here require an identical finding.

Plaintiff, on the other hand, asserts the issue requires a determination of which element of the transaction--the giving or sale versus the doing or building--is more fundamental to the intent of the parties and the transaction itself. And, in support of this argument, he cites the analysis performed by this court in Alonzo v. Chifici, 526 So.2d 237 (La.App. 5 Cir.1988). There we adopted a three-prong test to determine the nature of the contracts for redhibition purposes.

In a contract to build, we stated, the purchaser has some control over the object's specifications, the negotiations occur prior to construction and the contract contemplates the builder will furnish the materials, skill and labor. We further applied the "value test," which is whether the labor, as opposed to the incorporated materials, constitutes the "principal value of the contract." When the former supercedes the latter, the contract is one to build, whereas where the incorporation of the materials is the principle value of the contract then it is a sale. Using the Alonzo analysis, plaintiff asserts the facts herein show the transaction constitutes a sale since the principle value was the incorporated materials or the "system" designed to weatherize his house.

In further support of his assertions plaintiff cites Rasmussen v. Cashio Concrete Corp., 484 So.2d 777 (La.App. 1 Cir.1986); Photocopy, Inc. v. Software, Inc., 510 So.2d 1337 (La.App. 3 Cir.1987); FMC Corp. v. Continental Grain Co., 355 So.2d 953 (La.App. 4 Cir.1977) and Chastant v. SBS-Harolyn Park Venture, 510 So.2d 1341 (La.App. 3 Cir.1987).

The Rasmussen case involved a seller who assembled component parts manufactured by others into a sewer system and sold it to the purchaser. That was deemed a sale, as was the sale and installation of a customized computer software program in Photocopy, Inc. Likewise, in FMC Corp., a sale was found where the seller contracted with the owner of a coal loading machine to convert it for use in unloading grain. All three cases, plaintiff asserts, are similar to this one in that the various defendants assembled component parts manufactured by others into a system or product and sold it for a fixed price. In addition, defendants here, as in Photocopy and Chastant, which involved the building of townhouses, labeled the product and presented it for sale as their own causing it to become a manufacturer for all legal purposes.

Page 1368

Redhibition, as defined by LSA-C.C. art. 2520, is the "avoidance of a sale on account of some vice or defect in the thing sold, which renders it either absolutely useless, or its use so inconvenient and imperfect, that it must be supposed that the buyer would not have purchased it, had he known of the vice." A contract of sale is an...

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