Sw. La. Hosp. Ass'n v. Basf Constr. Chems., LLC., 2:10–CV–902.

• Decision Date: 06 September 2013
• Docket Number: No. 2:10–CV–902.,2:10–CV–902.
• Citation: 947 F.Supp.2d 661
• Parties: SOUTHWEST LOUISIANA HOSPITAL ASSOCIATION d/b/a Lake Charles Memorial Hospital v. BASF CONSTRUCTION CHEMICALS, LLC.
• Court: U.S. District Court — Western District of Louisiana

947 F.Supp.2d 661

SOUTHWEST LOUISIANA HOSPITAL ASSOCIATION d/b/a Lake Charles Memorial Hospital

v.BASF CONSTRUCTION CHEMICALS, LLC.

No. 2:10–CV–902.

United States District Court,

W.D. Louisiana,

Lake Charles Division.

April 29, 2013.

Order Amending Sept. 6, 2013.

Stephen Charles Polito, H. Alan McCall, Stephen Donald Polito, Stockwell Sievert et al., Lake Charles, LA, for Plaintiff.

Scott C. Barney, Matt N. Terrell, Chaffe McCall et al., Baton Rouge, LA, for Defendant.

MEMORANDUM RULING

PATRICIA MINALDI, District Judge.

Before the court are a Partial Motion for Summary Judgment from the plaintiff, Southwest Louisiana Hospital Association (“Hospital”) [Doc. 40] filed on January 22, 2013, and a Motion for Summary Judgment from the defendant, BASF Construction Chemicals, LLC (“BASF”) [Doc. 41], filed on January 22, 2013. BASF timely filed an opposition to the Hospital's motion [Doc. 44] as did the Hospital for BASF's motion [Doc. 46], on February 11, 2013. Both the Hospital [Doc. 50] and BASF [Doc. 52] and also filed replies for their respective motions on February 25, 2013. The Hospital filed a motion for hearing [Doc. 48], and the undersigned heard oral argument on the two motions on Tuesday, April 2, 2012 at 10:00 a.m. The court granted portions of both parties' motions,¹ and took the remainder of the issues under advisement. For the foregoing reasons, the Hospital's Partial Motion for Summary Judgment is GRANTED and BASF's Motion for Summary Judgment is DENIED.

FACTUAL BACKGROUND

This case arises from the installation of a defective architectural wall system, referred to as Exterior Insulation Finish System (“EIFS”) on the outer walls of the Hospital's Women & Children's Hospital facility (“facility”) at the corner of Gauthier and Nelson Road in Lake Charles, Louisiana. The EIFS was manufactured by Finestone, but the defendant BASF is the successor-manufacturer for the product (via a merger on April 1, 2010), and thus appears as the named defendant in this case.² The Hospital originally filed this action on April 29, 2010 in the Fourteenth Judicial Court of Calcasieu Parish, and BASF subsequently removed it to this court based on diversity jurisdiction soon thereafter.³

A. Construction of the Facility (2001–2003)

In 2000, the Hospital contracted with Bessette Development (“Bessette”) to constructa three-building facility (containing a Utility building, Medical Office building, and Hospital building) at the corner of Nelson and Gauthier Roads in Lake Charles, Louisiana. Bessette, in turn, bid out portions of the building project to subcontractors. Eventually, Bessette selected Robbins Contracting (“Robbins”) ⁴ to construct the exterior walls of the facility. Robbins and one of the Hospital's architects, Michael Pomarico, then decided to use a Finestone Pebbletex EIFS product as the outer wall cladding system for the facility.⁵ In mid 2001, Pomarico and Bessette reviewed and approved “Finestone EIFS submittals” from Robbins, which contained, among other things, example warranty language, before acquiring the EIFS.⁶ At this point, Pomarico's main requirement for the EIFS was that it should have a ten-year warranty. Robbins subsequently purchased the EIFS materials from an EIFS supplier, F & W Architectural Products (“F & W”) and began applying the EIFS to the facility in 2001, completing the project on or about January 14, 2003.

B. Discovery of Defect: “Weeping” Rust Stains in EIFS (December 2002)

Unfortunately, the EIFS finish coat contained iron pyrite particles that quickly began to rust, soon after the application of the EIFS to the buildings and before the construction of the facility was completed. On December 17, 2002, Robbins notified F & W of the rust appearing at the facility.⁷ In the meantime, on December 19, 2002, the Certificate of Substantial Completion was issued for the facility. In response to the rust, a complaint initiation form was then sent on December 30, 2002, noting “rust on the EIFS” and requesting a remedy to the problem.⁸ At the time the Hospital became aware of the problem and made a warranty claim, Finestone had not even issued a written warranty to the Hospital. Robbins then sent a January 14, 2003 fax to F & W, asking for the EIFS Warranty.⁹ The actual written EIFS warranty (a “Limited Warranty” for a term of ten years) ¹⁰ was not delivered to the Hospitaluntil April 28, 2003, but was dated January 14, 2003. This Limited Warranty waived implied warranties of merchantability and for fitness for a particular use, and limited the buyer's remedies to either replacement of the applicable coatings component or refund of the original purchase price.¹¹

C. Remediation Efforts: First Pick and Clean (May 2003)

Robbins met with a Finestone representative on January 28, 2003 to discuss the rust issues with the EIFS. The representative's solution was a “pick and clean,” in which a contractor would pick out the iron particles of the exterior wall using a knife, and then clean the rust stains with a solution. The Finestone representative then sent a follow up letter on February, 18, 2003, noting that the EIFS had exhibited “limited amounts of sand particles that cause[d] a slight color differential, and that Finestone would hire a contractor “at no cost to remove the affected particles.” ¹² In May 2003, BASF hired a remediation contractor, Southern Stucco Coatings & Paint, to perform the “pick and clean” procedure. According to the Hospital, an internal Finestone memo noted that the rust could reappear and that Finestone should reinspect the site after six months, but Finestone did not conduct a follow-up inspection.¹³

D. Remediation Efforts: Second Pick and Clean (2005–2006)

About a month after the first remediation effort (June 2003), the Hospital once again noticed that the rust was reemerging, and they lodged another complaint with Finestone in December 2004. Finestone advised Robbins that it had recommended a second pick and clean effort to take place in the second quarter of 2005. Allegedly due to Hurricane Rita, Finestone delayed the second pick and clean until May 2006.¹⁴ Before the May 2006 pick and clean commenced, the Hospital contracted Robbins to remove and replace EIFS on the Utility building at the facility that had been damaged by Rita. In the course of performing work on the Utility Building, Robbins unilaterally decided to remediate the rust stains present on the building. While the Hospital alleges that Robbins performed the pick and clean procedure in accordance with Finestone protocol, BASF asserts that Robbins performed the work incorrectly (not using Finestone products), leading to “unique and distinct” rust stains on the Utility building. BASF has essentially disclaimed any responsibility for the Utility building in light of Robbins' work on it.¹⁵

E. Unsuccessful Meeting to Discuss Potential Third Pick and Clean (May 2008)

Finestone then had another contractor perform pick and clean remediation in May 2006 on the other two buildings at the facility (the Medical Office building and Hospital building). Following this second remediation, the Hospital once again noticed rust stains on the facility buildings and complained to Finestone. A Finestone representative (Mr. Bowen) met with Pomarico, Hospital representatives, a Bessette representative, and a Robbins representative to discuss the rust problem in May of 2008. Bowen once again recommended the pick and clean method. Pomarico refused, arguing that the only effective way to address the rust was to remove and replace the EIFS. The other Hospital parties agreed: the pick and clean appeared to be making things worse, not better.

F. Breakdown in Communication after Meeting (2008–2010)

After the May 2008 meeting, on or about June 2, 2008, Bowen transmitted a follow-up letter, memorializing in writing the offer to pick and clean the Hospital building and Medical Office building (but not the Utility building). ¹⁶ Pomarico then sent a response letter to Finestone on August 5, 2008, requesting that Finestone to perform a limited, “sample” remediation procedure which the Hospital would then review to determine if a third pick and clean would be worth it (although he indicated in his deposition and in the letter that he thought it was very unlikely that the pick and clean would be a good long term solution).¹⁷ BASF alleges it never received this letter, and in the hearing, the parties noted that the person the letter was addressed to at Finestone no longer works there. After this August 2008 letter, it appears that the parties ceased communicating altogether.

Because Finestone allegedly never received Pomarico's letter, it closed the Hospital'sfile on August 19, 2009.¹⁸ The next year, on April 29, 2010, the Hospital filed this lawsuit.

MOTION FOR SUMMARY JUDGMENT STANDARD

A court should grant a motion for summary judgment when the pleadings, including the opposing party's affidavits, “show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party moving for summary judgment is initially responsible for demonstrating the reasons justifying the motion for summary judgment by identifying portions of pleadings and discovery that show the lack of a genuine issue of material fact for trial. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995). The court must deny the moving party's motion for summary judgment if the movant fails to meet this burden. Id.

If the movant satisfies this burden, however, the nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. (quoting Celotex, 477 U.S. at 323, 106 S.Ct. 2548). In evaluating motions for summary judgment, the court must view all facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S....