Properties v. Donahue Favret Contractors Inc.

• Citation: 60 So.3d 110
• Decision Date: 09 May 2011
• Docket Number: 2010–CA–0855.,Nos. 2010–CA–0673,s. 2010–CA–0673
• Parties: SAFEGUARD STORAGE PROPERTIES, L.L.C., and its Subsidiaries, Safeguard GP, L.L.C., Safeguard Capital Fund, L.P., Safeguard GP II, L.L.C., Safeguard Carrollwood, L.P., Safeguard GP III, L.L.C., Safeguard Wabash, L.P., Safeguard GP IV, L.L.C., Safeguard Illinois I, L.P., et al.v.DONAHUE FAVRET CONTRACTORS, INC., Mapp Construction, L.L.C., Liberty Insurance Underwriters, Pituminous Insurance Company, Lexington Insurance Company, Pacific Insurance Company, Axis–Bermuda Insurance Company, AWAC Insurance Company, AISLIC Insurance Company, et al.Safeguard Storage Properties, L.L.C., and its Subsidiaries, Safeguard GP, L.L.C., et al.v.Donahue Favret Contractors, Inc., Mapp Construction, L.L.C., et al.
• Court: Court of Appeal of Louisiana (US)

60 So.3d 110

SAFEGUARD STORAGE PROPERTIES, L.L.C., and its Subsidiaries, Safeguard GP, L.L.C., Safeguard Capital Fund, L.P., Safeguard GP II, L.L.C., Safeguard Carrollwood, L.P., Safeguard GP III, L.L.C., Safeguard Wabash, L.P., Safeguard GP IV, L.L.C., Safeguard Illinois I, L.P., et al.

v.DONAHUE FAVRET CONTRACTORS, INC., Mapp Construction, L.L.C., Liberty Insurance Underwriters, Pituminous Insurance Company, Lexington Insurance Company, Pacific Insurance Company, Axis–Bermuda Insurance Company, AWAC Insurance Company, AISLIC Insurance Company, et al.Safeguard Storage Properties, L.L.C., and its Subsidiaries, Safeguard GP, L.L.C., et al.

v.Donahue Favret Contractors, Inc., Mapp Construction, L.L.C., et al.

Nos. 2010–CA–0673

2010–CA–0855.

Court of Appeal of Louisiana, Fourth Circuit.

March 31, 2011.Rehearing Denied May 9, 2011.

James M. Garner, Peter L. Hilbert, Jr., Darnell Bludworth, Sharonda R. Williams, Mary Beth Akin, Sher Garner Cahill Richter Klein & Hilbert, L.L.C., New Orleans, LA, for Safeguard Storage Properties, L.L.C., et al.Robert I. Siegel, Andrew A. Braun, Elizabeth A. Chickering, Gieger Laborde & Laperouse, LLC, New Orleans, LA, for Lexington Insurance Company & American International Specialty Lines Insurance Company.H. Alston Johnson, III, Daina Bray, Phelps Dunbar LLP, Baton Rouge, LA, and John M. Futrell, Richard M. Perles, Patricia C. Penton, Lee Futrell & Perles, L.L.P., New Orleans, LA, and David E. Walker, Robert P. Arnold, Douglas E. Feldman, Walker Wilcox Matousek LLP, Chicago, IL, for Certain Underwriters at Lloyd's.H. Alston Johnson, III, Daina Bray, Phelps Dunbar LLP, Baton Rouge, LA, for Insurers other than Lexington Insurance Company and American International Specialty Lines Insurance Company.(Court composed of Judge CHARLES R. JONES, Judge MICHAEL E. KIRBY, Judge TERRI F. LOVE).TERRI F. LOVE, Judge.

[4 Cir. 1] This appeal arises from a dispute over insurance coverage relative to alleged Hurricane Katrina damage to a self-storage business. The Plaintiffs sought recovery for lost business development opportunities for thirty-seven future stores for thirty-nine years. The trial court granted several motions for partial summary judgment dismissing the Plaintiffs' claims against all of the insurance company defendants except for one. However, the trial court denied a motion for partial summary judgment regarding the insurance coverage provided to the Plaintiffs by Certain Underwriters at Lloyd's of London because it found that genuine issues of material facts exist as to what coverage the insurance slips provided.

We find that the trial court erroneously issued an amended judgment containing a substantive change and declare the amended judgment an absolute nullity. Further, we find that the trial court erred by dismissing the Plaintiffs' claims for lost business opportunities because genuine issues of material fact exist as to the possibility of lost business development opportunities and reverse in part and remand in part for further proceedings consistent with this opinion. However, the trial court correctly interpreted the period of recovery provisions in the insurance policy and properly granted a partial motion for summary judgment on [4 Cir. 2] said period. Lastly, we find that the trial court correctly denied the motion for partial summary judgment regarding the insurance coverage provided by Certain Underwriters at Lloyd's of London and deny the writ.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Safeguard Storage Properties, L.L.C.¹ (“Safeguard”), a self-storage company, partnered with Prime Property Fund (“PPF”), a fund comprised of institutional investors advised by Morgan Stanley Real Estate Advisor, Inc. (“MSREA”). On May 31, 2005, PPF acquired an interest of approximately 93 percent in Safeguard in exchange for $391 million of debt and equity capital. Safeguard alleges that due diligence performed prior to the partnership concluded that Safeguard would develop a minimum of twelve to fifteen new self-storage locations each year. These findings allegedly assisted PPF in its decision to invest $391 million in Safeguard.² However, Safeguard claims that its proposed developments were curtailed by the devastation of Hurricane Katrina.

Prior to Hurricane Katrina, Safeguard conducted market evaluations on five potential markets: New York City/New Jersey, Philadelphia, South Florida, South Chicago, and Baltimore/Washington, D.C. and pinpointed trade zones, which were two to three square mile areas within the potential markets that exhibit the demographic characteristics and market demand parameters required for a potential site. Safeguard alleges it had nineteen new developments in process when [4 Cir. 3] Hurricane Katrina struck. From August 29, 2005, through the end of that year, Safeguard allegedly had an inventory of forty-seven potential projects in fifty-four trade zones, nine projects in the underwriting stage, and eighteen projects at the letter of intent (“LOI”) or negotiation of contract stage.

Hurricane Katrina damaged Safeguard's New Orleans area facilities and interrupted the business operations of Safeguard's corporate office and national call center located at 111 Veterans Memorial Boulevard (“Heritage Plaza”) in Metairie, Louisiana. Heritage Plaza, including Safeguard's office space, sustained approximately $30 million in damages. Safeguard alleges that it could not reoccupy its space in Heritage Plaza until late November 2005. Subsequently, Safeguard relocated its centralized call center to Chicago, Illinois, and the accounting and management team relocated to a temporary space in Atlanta, Georgia. The damaged Safeguard locations, including Heritage Plaza, were insured under MSREA's property insurance program with Lexington Insurance Company (“Lexington”) as the primary layer of insurance of $25 million and multiple layers of excess insurance.

Safeguard filed a petition for declaratory judgment and damages against Donahue Favret Contractors, Inc. (“Donahue”), Mapp Construction, L.L.C. (“Mapp”), and all of the insurers of Safeguard and Mapp ³ seeking monetary damages against companies contracted to repair Safeguard's properties, payments on policies from its excess insurers due to Hurricane Katrina damages, and penalties and attorneys' fees pursuant to La. R.S. 22:658 and La. R.S. 22:1220.⁴ Safeguard also sought monetary damages for lost business opportunities for the business locations Safeguard was allegedly unable to open due to Hurricane [4 Cir. 4] Katrina from Lexington and its excess insurers,⁵ (collectively referred to as “Defendant Insurers”). Safeguard's claims against Donahue, Mapp, and their insurers were stayed.

The Defendant Insurers' filed motions for partial summary judgment asserting that Safeguard's lost business opportunities claims for forty years of profits from thirty-six stores that would have allegedly been built but for Hurricane Katrina were too speculative as a matter of law, that Safeguard could only recover damages sustained during the applicable period of recovery, and regarding the application of the period of recovery.⁶ Safeguard subsequently filed a motion for partial summary judgment asserting that its claims for lost business developments and development income streams were covered by insurance. Numerous oppositions and cross-motions for partial summary judgment to the various motions for partial summary judgment followed.

Lloyd's filed a motion for partial summary judgment asserting that the “policy wording” controls the rights and obligations of it and Safeguard. Safeguard filed a motion for partial summary judgment regarding the “nature and effect” of Lloyd's coverage slips (“Slips”).⁷ Subsequent oppositions and cross-motions were filed.

[4 Cir. 5] Following a hearing on the multiple motions for partial summary judgment between Safeguard and the Defendant Insurers, the trial court granted the Defendant Insurers' motion for partial summary judgment as to lost business opportunities because Safeguard's claims were too “speculative” and cross-motion for partial summary judgment on Safeguard's lost business opportunity claim. The trial court then denied Safeguard's re-urged motion for partial summary judgment regarding business interruption coverage for loss of development. The trial court also granted the Defendant Insurers' motion for partial summary judgment regarding the period of recovery and denied Safeguard's corresponding re-urged motion. Finally, the trial court declared moot the following motions for partial summary judgment: Defendant Insurers' motion for partial summary judgment on causation for lost development opportunities due to direct loss damage or destruction to insured property for which damage the Defendant Insurers have accepted coverage; motion for partial summary judgment on Safeguard's burden of proof on its business interruption claim; motion for partial summary judgment on Safeguard's lost business opportunities based on mold exclusions, and Safeguard's motion for partial summary judgment regarding the burden of proof under the all risks insurance policies issued by the Defendant Insurers. Safeguard appealed.⁸

The trial court then issued an amended judgment excluding Lloyd's from the Defendant Insurers referred to in the original judgment because it mistakenly used the noun “defendant” without specificity. The trial court stated that Lloyd's “did not formally acknowledge and/or adopt the insurance contract which is the subject [4 Cir. 6] of this litigation” ⁹ and that whether or not Lloyd's would be included in the results of the original judgment depended upon the trial court's “ruling on the slip/binder issue.” Lloyd's filed an assignment of errors contained in the amended judgment, which included that the trial court was divested of jurisdiction to issue the amended judgment, La. C.C.P. art. 1951 does not permit substantive changes in an amended judgment, and that the Slips...