Eagle Pipe & Supply, Inc. v. Amerada Hess Corp.

• Decision Date: 25 October 2011
• Docket Number: NO. 2010-C-2289,NO. 2010-C-2272,NO. 2010-C-2279,NO. 2010-C-2275,NO. 2010-C-2267,2010-C-2267,2010-C-2272,2010-C-2275,2010-C-2279,2010-C-2289
• Parties: EAGLE PIPE AND SUPPLY, INC. v. AMERADA HESS CORPORATION, ET AL.
• Court: Louisiana Supreme Court

EAGLE PIPE AND SUPPLY, INC.
v.
AMERADA HESS CORPORATION, ET AL.

NO. 2010-C-2267
NO. 2010-C-2272
NO. 2010-C-2275
NO. 2010-C-2279
NO. 2010-C-2289

SUPREME COURT OF LOUISIANA

Dated: October 25, 2011

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FOURTH CIRCUIT, PARISH OF ORLEANS

CLARK, Justice.¹

The issue presented in these consolidated matters arises from the sale of land to the plaintiff, who later discovered that the land was allegedly contaminated with radioactive material. The plaintiff filed suit against the former landowners and the oil and trucking companies allegedly responsible for the contamination. In the district court, exceptions of no right of action raised by the oil and trucking companies were granted. The court of appeal initially affirmed this decision, but reversed on rehearing.

We granted writs to determine whether a subsequent purchaser of property has the right to sue a third party for non-apparent property damages inflicted before the sale in the absence of the assignment of or subrogation to that right. After review, we find the fundamental principles of Louisiana property law compel the conclusion that such a right of action is not permitted under the law. Instead, the subsequent purchaser has the right to seek rescission of the sale, reduction of the purchase price, or other legal remedies. For the following reasons, we hold the appellate court on

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rehearing erred by reversing the district court's granting of the peremptory exceptions of no right of action on behalf of the oil and trucking companies. Accordingly, we reverse the court of appeal's decision on rehearing and reinstate the ruling of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

This matter is before the court on an exception of no right of action. Although evidence is admissible on the trial of such an objection "to support or controvert any of the objections pleaded," La. C.C.P. art. 931, the only evidence admitted at the hearing in this case was the bill of sale for the property at issue. This bill of sale was also attached to the petition. Consequently, our recitation of the facts is necessarily obtained from the allegations in the petition. "For purposes of the exception all well pleaded facts in the petition must be taken as true." Harwood Oil & Min. Co. v. Black, 240 La. 641, 649, 124 So.2d 764, 766-767 (1960), superceded by statute on other grounds, recognized in Salvex, Inc. v. Lewis, 546 So.2d 1309 (La. App. 3 Cir. 1989).

On July 15, 2008, Eagle Pipe and Supply, Inc. ("Eagle Pipe" or plaintiff) filed a petition for damages in the Civil District Court for the Parish of Orleans, alleging causes of action for breach of contract, negligence, strict liability, redhibition, fraud and conspiracy in connection with property Eagle Pipe acquired two decades earlier.² Named in the petition were four groups of defendants: (1) ten oil companies, collectively referred to as the "Oil Company Defendants;"³ (2) eight trucking

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companies, collectively referred to as the "Trucking Company/Transporter Defendants;"⁴ (3) Robert Bridges, Patsy Tremble Bridges and Edmund J. Baudoin, Jr., collectively referred to as the "Former Property-Owner Defendants;"⁵ and (4) ABC Insurance Company, Inc.⁶

According to the petition, more than twenty years ago, on April 22, 1988, Eagle Pipe purchased property in Lafayette Parish from the Former Property Owner Defendants.⁷ For several years before the sale, from 1981 to 1988, the Former Property Owner Defendants allegedly leased the property at issue to Union Pipe and Supply, Inc. ("Union Pipe"), which operated a pipe yard or pipe cleaning facility on the property. In conducting its business, Union Pipe allegedly bought, cleaned, stored and sold used oilfield tubing from the Oil Company Defendants. The Trucking Company/Transporter Defendants allegedly transported the tubing from the Oil Company Defendants to Union Pipe's facilities.

Eagle Pipe asserted that radioactive scale known by the acronym TENORM was removed from the tubing or pipes during Union Pipe's cleaning process and was deposited onto the surface of the pipe yard, contaminating the soil where Eagle Pipe now conducts its business.⁸ Eagle Pipe claimed it became aware of the alleged

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contamination of its property after the Louisiana Department of Environmental Quality ("La. DEQ") conducted a field interview and found Eagle Pipe to be in violation of a number of TENORM exposure regulations. The La. DEQ allegedly found TENORM exposure levels on the property which exceeded the regulatory criteria for unrestricted use of property and posed a health hazard to both Eagle Pipe and the public. Eagle Pipe asserted subsequent testing by La. DEQ prompted the agency to issue an order for the remediation of the property. Sometime thereafter, Eagle Pipe filed its suit.⁹

The petition alleged Eagle Pipe has never cleaned pipe on its premises. Therefore, the plaintiff asserted all of the TENORM allegedly present on the property is the result of Union Pipe's activities in cleaning hazardous and radioactive contaminated pipe from the Oil Company Defendants, which was transported to Union Pipe's facilities by the Trucking Company/Transporter Defendants. Eagle Pipe alleged its property has lost all value and is no longer marketable as a result of the long-standing radioactive contamination.

Eagle Pipe alleged a specific cause of action against the Former Property Owner Defendants for redhibition; the other causes of actions are generally asserted

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against all of the defendants.¹⁰ Eagle Pipe asserted that its petition made no claims under federal law; the Louisiana Conservation Act (La. R.S. 30:1 et seq.); or the Louisiana Environmental Quality Act (La. R.S. 30:2001 et seq.).¹¹

The defendants filed declinatory, dilatory and/or peremptory exceptions. All of the defendants filed, or joined in, the peremptory exception of no right of action, arguing Eagle Pipe had no right to assert a claim for damage to the property which occurred before Eagle Pipe was its owner. After a hearing on the exceptions, the trial court ruled, inter alia, that the defendants' exceptions of no right of action be sustained, dismissing Eagle Pipe's claims with prejudice.

Eagle Pipe filed a motion for new trial seeking, in part, to amend its petition. The trial court denied the motion for new trial. Thereafter, the plaintiff filed an appeal with the Fourth Circuit Court of Appeal. On original hearing, a three-judge panel affirmed the trial court's ruling on the exception of no right of action by a two-to-one vote. On rehearing before a five-judge panel, the court of appeal majority reversed the judgment of the district court with respect to its ruling on the exception of no right of action.¹²

All of the Oil Company Defendants participating in the courts below and all but two of the Trucking Company/Transporter Defendants filed writs in this court.¹³

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These applications were consolidated and granted to review the correctness of the court of appeal's decision on rehearing.¹⁴ Leave was granted by the court for the filing of several briefs by amicus curiae ¹⁵

LAW AND DISCUSSION
Standard of Review

At issue in this matter is the correctness of the trial court's ruling to grant the exceptions of no right of action filed by the Oil Company Defendants and the Trucking Company/Transporter Defendants. We begin our review by acknowledging that an action can be brought only by a person having a real and actual interest which he asserts. La. C.C.P. art. 681. By filing a peremptory exception of no right of action, a defendant challenges whether a plaintiff has such a real and actual interest in the action.¹⁶ La. C.C.P. art. 927(A)(6). At the healing on the exception of no right of action, the exception may be submitted on the pleadings, or evidence may be introduced either in support of or to controvert the objection raised when the grounds thereof do not appear from the petition. La. C.C.P. art. 931.

"The function of the exception of no right of action is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit." Hood v. Cotter, 2008-0215, p. 17 (La. 12/2/08), 5 So.3d 819, 829. An appellate court reviewing a lower court's ruling on an exception of no right

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of action should focus on whether the particular plaintiff has a right to bring the suit and is a member of the class of persons that has a legal interest in the subject matter of the litigation, assuming the petition states a valid cause of action for some person. Id.; Badeaux v. Southwest Computer Bureau, Inc., 2005-0612, p. 6-7 (La. 3/17/06), 929 So.2d 1211,1217; Tumer v. Busby, 2003-3444, p. 4 (La. 9/9/04), 883 So.2d412, 415-416; Reese v. State, Dept. of Public Safety and Corrections, 2003-1615, p. 3 (La. 2/20/04), 866 So.2d 244, 246.

The determination whether a plaintiff has a right to bring an action raises a question of law. A question of law requires de novo review. Holly & Smith Architects, Inc. v. St. Helena Congregate Facility, Inc., 2006-0582, p. 9 (La. 11/29/06), 943 So.2d 1037, 1045. Applying this standard of...