Hostetler v. W. Gray & Co., Inc.

• Decision Date: 30 March 1988
• Docket Number: No. 19487-CA,19487-CA
• Citation: 523 So.2d 1359
• Parties: James Arthur HOSTETLER and Elizabeth Louise Martin McAlister Hostetler, Plaintiffs-Appellants, v. W. GRAY & COMPANY, INC., et al., Defendants-Appellees. 523 So.2d 1359
• Court: Court of Appeal of Louisiana — District of US

Page 1359

523 So.2d 1359

James Arthur HOSTETLER and Elizabeth Louise Martin McAlister Hostetler, Plaintiffs-Appellants, v. W. GRAY & COMPANY, INC., et al., Defendants-Appellees.

No. 19487-CA.

523 So.2d 1359

Court of Appeal of Louisiana, Second Circuit.

March 30, 1988.

Rehearing Denied April 28, 1988.

Evans, Feist, Keene & Mills by George H. Mills, Shreveport, for plaintiffs-appellants.

Nelson, Hammons & Johnson by Sydney B. Nelson, Mayer, Smith & Roberts by Caldwell Roberts, Shreveport, for defendants-appellees.

Before FRED W. JONES, Jr., SEXTON and LINDSAY, JJ.

SEXTON, Judge.

The plaintiffs appeal the trial court's judgment rejecting their demands for the rescission of the sale of the lakefront lot that they bought and for nonpecuniary damages. We reverse in part, amend in part, affirm in part and render.

In March 1986, the plaintiffs filed suit against W. Gray & Company, Inc., the vendor of the lot, and Coyle Engineering Company, Inc., the surveyor who replatted the subdivision. The plaintiffs asked for rescission, damages and attorney's fees. The defendants filed a general denial, and Gray filed a third party demand against Coyle. The defendants filed amended answers alleging that the plaintiffs were contributorily negligent.

The trial court denied the plaintiffs' request for rescission and nonpecuniary damages, but determined that plaintiffs had been damaged in the amount of $26,000, representing a reduction of the purchase price, plus $5,000 in attorney's fees. The court reduced these amounts by twenty-five percent due to the fault of the plaintiffs and rendered judgment in the amounts of $19,500 and $3,750, respectively.

In addition, the trial court entered judgment in favor of Gray and against Coyle for indemnification of the above amounts, less twenty percent for Gray's fault.

Only the plaintiffs have appealed, asking for the rescission of the sale of the lot, damages of $139,000 for the value of the house they built thereon, nonpecuniary damages in the amount of $30,000, and additional attorney's fees of $5,000.

FACTS

In 1984, James Hostetler and his wife, Elizabeth, purchased a lot which was located in Smithland Estates Subdivision on Cypress Lake in Bossier Parish for $29,000. The developer of the subdivision was W. Gray & Company, Inc. Prior to the purchase, the plaintiffs were provided with a subdivision plat prepared by defendant Coyle Engineering Company, Inc. for Gray. The plat showed a flowage easement going across the lower portion of their lot. The flowage easement is the line above which the Cypress-Black Bayou Lake Commission cannot raise the lake.

In 1980, Coyle had prepared the original plat which showed the natural drainage running through the middle of one or more lots. Gray asked Coyle to replat the subdivision so that the drainage would not be in the middle of the lots. Gray also asked Coyle to show the flowage easement on the replat. In platting the flowage easement, Coyle relied upon a prior topographical survey which Gray provided. On that topographical survey was the following statement: "I hereby certify that is [sic] topographical survey is true and suitably accurate for preliminary planning purposes " (emphasis added).

On the replat, Mr. Coyle put the following note: "This property is subject to a flowage easement to the 187.5 M.S.L. contour shown approximately hereon." (Emphasis added.) The replat was recorded in the public records of Bossier Parish. It was this replat that was given to the plaintiffs.

Prior to building their house, plaintiffs submitted their plans to the architectural control committee. Mr. Gray, on behalf of the committee, approved the plans. According to the declaration of covenants, conditions and restrictions for lots six through twenty-eight of the replat of Smithland Estates Subdivision, Unit No. 1, Bossier Parish, Louisiana, no structure could be erected on the lot until the structure plans showing the location of the proposed structure is approved by the architectural control committee. In a letter to the plaintiffs, Mr. Gray approved the house plans. At trial, Mr. Gray emphasized that he approved only the plaintiffs' house plans since the plans submitted by the plaintiffs did not show the location of the proposed house on the lot. The plaintiffs planned to construct most of their house on an area of the lot below the flowage easement.

Ron Hutchison, Gray's realtor, advised the plaintiffs in his land appraisal report that a slightly elevated foundation would be required. Bill Gouge, the plaintiffs' builder and the person that the plaintiffs understood to be Gray's property manager, suggested that all they needed to do was to build the house pad up approximately two feet in order to get the entire house above the flowage easement as shown on the replat.

As the plaintiffs were finishing the house, their next-door neighbor had Coyle prepare another survey. The new survey showed that the flowage easement on the survey provided to the plaintiffs was incorrect. The easement line was actually 125 horizontal feet from the erroneous easement line on the replat. The flowage easement is 187.5 feet mean sea level (M.S.L.). The plaintiffs' expert, James L. White, a registered surveyor, testified that the floor of the house is 186.03 feet M.S.L. Coyle testified that the floor of the house is 186.16 feet M.S.L. Thus, the plaintiffs' entire house is 1.34 to 1.47 vertical feet below the flowage easement.

SPECIFICATION OF ERRORS

The plaintiffs assign the following as errors:

(1) The trial court erred in failing to rescind the sale and award damages.

(2) The trial court erred in failing to make an award to plaintiffs for general damages including mental anguish and moral damages.

(3) The trial court erred in failing to consider evidence concerning flooding of the interior of the house.

(4) The trial court erred in finding that the plaintiffs were twenty-five percent at fault.

RESCISSION

Rather than ordering a rescission of the sale of the lot, the trial court chose to award a reduction in the purchase price. The plaintiffs argue that the trial court erred in failing to rescind the sale.

In a redhibitory action, the judge has the discretion to award a reduction in the purchase price where he finds that the defect in the thing has merely diminished the value of the thing purchased and has not rendered the thing sold useless or totally unsuited to its purpose. LSA-C.C. Art. 2543; Cernigliaro v. Marquis Marine, Inc., 381 So.2d 886 (La.App. 2d Cir.1980); Ark-La-Tex Builders & Realty, Inc. v. Hoge, 344 So.2d 90 (La.App. 2d Cir.1977).

The trial court in the present case was very impressed with the testimony of the defendant's expert, Robin Beck. Mr. Beck, a real estate appraiser in northwest Louisiana, testified that the house and the lot had diminished in value by a maximum of twenty percent. His appraisal was based on his opinion that flood insurance was available and that some types of financing would be available, though V.A. and F.H.A. loans would probably not be available. Accepting Mr. Beck's testimony, the trial judge awarded the plaintiffs a total of $26,000. ¹

The factual determination of whether rescission or reduction is appropriate will not be disturbed on appeal unless there is a showing of manifest error. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978), on remand, 370 So.2d 1262, writ denied, 374 So.2d 660 (La.1979); Fogal v. Boudreaux, 497 So.2d 366 (La.App. 3rd Cir.1986). However, we find that the trial court was manifestly erroneous in awarding a reduction of the purchase price, rather than a rescission.

Redhibition is the avoidance of a sale because of some vice or defect in the thing sold which renders it either unfit for its intended use or its use so inconvenient or imperfect that the buyer would not have purchased it had he known of the vice. LSA-C.C. Art. 2520; Fogal v. Boudreaux, supra.

The plaintiffs' lot is burdened with a flowage easement or servitude. A servitude that is established in favor of immovable property, as a flowage easement is, is a predial servitude. Ogden v. Bankston, 398 So.2d 1037 (La.1981). "The very essence of a predial servitude is that the dominant estate has a right to do something which may limit the use of the servient estate." Dautreuil v. Degeyter, 436 So.2d 614, 618 (La.App. 3rd Cir.1983). The owner of the servient estate can do nothing to diminish the use of the servitude. LSA-C.C. Art. 748; Ogden v. Bankston, supra. When parties establish a servitude by contract and that contract provides the dimensions of the servitude, the contract governs the extent and the mode of the use of the servitude. Southwestern Electric Power Company v. Parker, 419 So.2d 134 (La.App. 2d Cir.1982); Red River v. Noles, 406 So.2d 294 (La.App. 3rd Cir.1981).

As the owner of the dominant estate, the Cypress-Black Bayou Lake Commission has the right to raise the lake to 187.5 feet mean sea level, and the plaintiffs as the owners of the servient estate cannot stop that action. If the lake is raised to this level, the plaintiffs' house will be flooded. Even though Larry Deen, the executive secretary of Cypress-Black Bayou Lake Commission, testified that the commission has no plans to raise the lake now or in the future, the fact remains that the commission has the absolute right to raise the lake.

The evidence reveals that the extensiveness of the flowage easement renders the lot absolutely useless for residential purposes or, at the very least, so inconvenient and imperfect that the plaintiffs would not have purchased it if they had known of the true location of the easement. The flowage easement covers almost the entire lot. The only portion of the lot on which the plaintiffs could have built their house without encroaching on the easement is between the easement and the twenty-five foot building set back. Thus, the flowage easement made the lot totally useless for its intended purpose.

In addition, the...