In re James Noel Flying Service, Inc.

• Citation: 61 BR 335
• Decision Date: 24 March 1986
• Docket Number: Adv. No. 483-0135.,Bankruptcy No. 482-00659-LO
• Parties: In re JAMES NOEL FLYING SERVICE, INC., Debtor. William C. SANDOZ, Trustee, Plaintiff, v. ENSTROM HELICOPTER CORPORATION and Bravo Investments, Inc., Defendants.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Western District of Louisiana

61 B.R. 335 (1986)

In re JAMES NOEL FLYING SERVICE, INC., Debtor William C. SANDOZ, Trustee, Plaintiff, v. ENSTROM HELICOPTER CORPORATION and Bravo Investments, Inc., Defendants.

Bankruptcy No. 482-00659-LO, Adv. No. 483-0135.

United States Bankruptcy Court, W.D. Louisiana.

March 24, 1986.

Andrew Podolnick and Karen Clark, of Milling, Benson, Woodward, Hillyer, Pierson and Miller, New Orleans, La., for Enstrom Helicopter Corp.

Keitha Leornard, of Voorhies and Labbe', Lafayette, La., for Bravo Instrument Corp.

Gerald H. Schiff, of Sandoz, Sandoz and Schiff, Opelousas, La., and David Cressy, for trustee.

William C. Sandoz, Opelousas, La., Trustee.

OPINION AND ORDER

RODNEY BERNARD, Jr., Bankruptcy Judge.

This matter came before this court on motion of defendant Enstrom Helicopter Corporation Enstrom denominated "Motion to Strike Damages Claims, Motion for Summary Judgment on All Prescribed Tort Claims and Motion to Dismiss for Failure to State a Claim on Which Relief can Be Granted". All three matters shall be treated as motions for partial summary judgment under Rules 56(b) and (d) of the Federal Rules of Civil Procedure, applicable by reference through Bankruptcy Rule 7056, since each essentially seeks to narrow the issues to be tried in this case. Gotkin v. Miller, 379 F.Supp. 859 (E.D.N.Y.1974); Krimlofski v. United States, 190 F.Supp. 734 (D.Iowa 1961). The purpose of a motion for summary judgment is to "test the intrisic merits of the case and to determine prior to trial whether the parties have a real basis for relief or defense." Gossett v. Du-Ra-Kel Corp, 569 F.2d 869 (5th Cir. 1978). The court does not try issues of fact or weigh the evidence, but only determines whether there are issues of fact for trial. Staren v. American National Bank and Trust Co., 529 F.2d 1257 (7th Cir. 1976); EEOC v. May & Co., 572 F.Supp. 536 (N.D.Ga.1983). For reasons of expeditious disposition of matters where facts are not in dispute, Rules 56(b) and (d) allow the court to grant summary judgment on particular issues, or partial summary judgment, in order to narrow the scope of trial. Chi-Mil v. W.T. Grant Co., 70 F.R.D. 352 (D.Wis.1976), amended 422 F.Supp. 46.

In ruling on a motion for summary judgment, the court must also determine whether the parties have met their burdens of proof in showing that there are not factual issues for trial. Initially, the movant clearly bears the burden of showing that no real factual controversy exists. However, after the movant makes a convincing showing, the party opposing the motion must produce proper evidence, showing that a real dispute exists. McCormick v. Ross, 506 F.2d 1205 (8th Cir.1974). The defending party must do more than make a general denial. Golden Oil Co. v. Exxon, 543 F.2d 548 (5th Cir.1976). Lesnefsky v. Fischer and Porter Co., 527 F.Supp. 951 (E.D.Pa. 1981); In re Wright, 19 B.R. 271 (Bankr.D. Mass.1982).

Statement of the Case

This matter is an adversary proceeding filed by the trustee to recover damages allegedly sustained by the debtor, James Noel Flying Service, Inc. Noel, Inc. as a result of certain contractual breaches and tortious conduct committed by the defendants, Enstrom Helicopter Corporation Enstrom, movant herein, and Bravo Investments, B.V. Bravo. This dispute is rooted in two separate distributorship agreements which were entered into between Noel, Inc. and Enstrom on April 28, 1978 and June 23, 1980, respectively. Under these agreements, Noel, Inc. became the distributor for Enstrom in a defined geographic area. This distributorship relationship was terminated by Noel, Inc. on February 9, 1981. The reasons for that termination, as they appear in a memorandum referenced in the letter of termination, both of which are part of the record herein, also form the basis of this lawsuit. These contentions are four-fold:

1. An insurance package for Enstrom purchasers was never developed;

2. An advertising campaign satisfactory to Noel, Inc. was not implemented;

3. The development of the "Hawk" model helicopter was not completed; and

4. The Enstrom helicopters contained defective parts.

These allegations, with some elaboration, were discussed at the June 18, 1984 deposition of James Noel, president of Noel, Inc., which deposition also constitutes part of the record herein. That deposition shall be referred to throughout this opinion. Also, for purposes of this motion, all allegations contained in the complaint shall be accepted as true since the issues to be determined herein are legal, not factual. The issues raised by this motion shall be addressed in the order in which they were raised, and the parties' topic headings shall be used as well, in the interest of consistency.

I.

Plaintiff's claims for intentional and negligent misrepresentation, products liability, and redhibition have prescribed.

As a result of alleged misconduct on the part of Enstrom, the trustee has asserted claims based on negligent and intentional misrepresentation, products liability and redhibition, each of which is rooted in tort. Enstrom asserts that these claims are subject to a one year prescription period, pursuant to La.Civ.Code Art. 3492, and have thus prescribed. Article 3492 of the Louisiana Civil Code establishes a one-year prescriptive period for all delictual actions. Delictual actions include those for: "intentional misconduct, negligence, abuse of right, and liability without negligence." La.Civ.Code art. 3492 comment "b" (West Supp.1985). A claim for misrepresentation is a delictual action, an action sounding in tort, to which the one-year prescriptive period applies. See, e.g., Marchand v. Estate of Loga, 354 So.2d 576 (La.App. 4th Cir. 1978); Brown Shoe Co. v. Unter, 173 So. 579 (La.App. 2d Cir.1937). A claim in products liability is also a delictual action, an action in tort, to which the one-year prescriptive period applies. Likewise, an action in redhibition against the manufacturer prescribes in one year under La.Civ.Code art. 2546 (West 1952). See, e.g., Lemoine v. Avoyelles Farmers Co-op, 307 So.2d 762, 763-64 (La.App. 3d Cir.1975); Stelly v. Gerber Products Co., 299 So.2d 529, 532 (La.App. 4th Cir.), writ denied, 302 So.2d 616 (1974).

Enstrom's contention that these actions are prescribed is based primarily on the termination of the distributorship contract in 1981. Enstrom argues that, given the stated reasons for that termination, Noel, Inc. had knowledge of the facts giving rise to its claims at that time. The trustee, on the other hand, contends that Noel, Inc.'s damage was sustained when the bankruptcy was filed. Thus, the question is when the prescriptive period began to run.

Under Louisiana law, according to an overwhelming volume of jurisprudence, a prescriptive period begins to run from the time the plaintiff has either actual or constructive knowledge of the facts giving rise to his claim. Bennett v. General Motors Corp., 420 So.2d 531, 537 (La.App.2d Cir. 1982); Lee v. The Equitable Life Assurance Society, 391 So.2d 37, 38-39 (La.App. 3d Cir.1980), writ denied, 395 So.2d 1363 (1981). In Lemoine v. Avoyelles Farmers Co-op, 307 So.2d 762 (La.App. 3d Cir.1975) the court emphasized, "whatever is notice enough to excite attention and put the owner on guard and call for inquiry, is tantamount to knowledge or notice of everything to which inquiry may lead, and such information or knowledge as ought to reasonably put the owner on inquiry, is sufficient to start the running of prescription." Id. at 763-64.

It is readily apparent from the deposition testimony of Mr. Noel that the debtor had more than enough information to excite inquiry. There is no factual issue here for trial. The only question is a legal one: when did the prescriptive period begin to run. This court finds that that period began to run when the agreement was terminated, at the very latest. The standard proposed by the trustee would indefinitely prolong the prescriptive period for any similar tort action, which is directly contrary to the policy of prescription. A plaintiff may not delay bringing an action based in tort until all possible damage has occurred, nor does filing for relief in bankruptcy re-open a prescriptive period which has run. Such a holding would render any provision for prescription pointless. Therefore, the plaintiff's claims for intentional and negligent misrepresentation, products liability, and redhibition are therefore prescribed, and are dismissed.

II.

Damages for mental anguish are not recoverable by a corporation.

In interrogatories promulgated by Enstrom, the trustee was asked the basis for the damages claimed. In Answers to Interrogatories made a part of the record herein, the trustee stated that $500,000.00 was claimed for "worry, aggravation, harrassment and inconvenience." The damages claimed by the trustee for worry, aggravation, harrassment, and inconvenience fall within the general category of mental anguish. Hogan Exploration, Inc. v. Monroe Engineering Associates, Inc., 430 So.2d 696, 704 (La.App. 2d Cir.1983). The Louisiana judiciary has consistently held that a corporate plaintiff cannot experience mental anguish. Id. Moreover, this absolute bar to an award for damages for mental anguish to a corporate plaintiff does not depend on whether the action is brought in contract or tort. See e.g., Hogan Exploration, Inc. v. Monroe Engineering Associates, Inc., supra; M & A Farms Ltd. v. Town of Ville Platte, 422 So.2d 708, 711 (La.App. 3d Cir.1982); Wendorf v. Corley, 394 So.2d 1252, 1255 (La.App.3d Cir.1980).

Again, this question presents no factual issue for trial, only the legal question of whether a corporation can suffer such damage on this point. The trustee makes only the bare assertion that a corporation can suffer harrassment and inconvenience. This court has found no support for that contention, and finds it unpersuasive. A corporation can suffer only economic damage, and can recover only for actions which have an economic...