Opinion
NUMBER 2015 CA 1798
06-03-2016
ADRIAN KELLEHER AND STEPHANIE MCCOLLISTER KELLEHER v. CUSTOM HOMES BY JIM FUSSELL, INC. AND XYZ INSURANCE COMPANY
Donna Garbarino Schwab Catherine Fairchild Baton Rouge, LA Attorneys for Third-Party Plaintiff/Appellant Custom Homes by Jim Fussell, Inc. Julie A. Scheib Lafayette, LA Attorney for Third-Party Defendant/Appellee Atlantic Casualty Insurance Company Paula M. Wellons Gerald F. Arceneaux New Orleans, LA Attorneys for Third-Party Defendant/Appellee On Track Construction, LLC
NOT DESIGNATED FOR PUBLICATION
Appealed from the 19th Judicial District Court In and for the Parish of East Baton Rouge, Louisiana
Trial Court Number 608791, Sec. 25 Honorable Wilson E. Fields, Judge Presiding Donna Garbarino Schwab
Catherine Fairchild
Baton Rouge, LA Attorneys for Third-Party Plaintiff/Appellant
Custom Homes by Jim Fussell, Inc. Julie A. Scheib
Lafayette, LA Attorney for Third-Party Defendant/Appellee
Atlantic Casualty Insurance Company Paula M. Wellons
Gerald F. Arceneaux
New Orleans, LA Attorneys for Third-Party Defendant/Appellee
On Track Construction, LLC BEFORE: WHIPPLE, C.J., WELCH, AND DRAKE, JJ. WELCH, J.
The third-party plaintiff/appellant, Custom Homes By Jim Fussell, Inc. ("Custom Homes"), appeals a trial court judgment sustaining a peremptory exception raising the objection of peremption filed by the third-party defendants/appellees, On Track Construction, L.L.C. ("On Track") and Atlantic Casualty Insurance Company ("Atlantic Casualty") (collectively referred to herein as "third-party defendants"). The trial court dismissed with prejudice Custom Homes' claims against the third-party defendants. For the reasons that follow, we affirm the judgment of the trial court.
FACTS AND PROCEDURAL HISTORY
This suit involves the application of the peremptive period contained in La. R.S. 9:2772 to third-party indemnity claims arising under the New Home Warranty Act, La. R.S. 9:3141, et seq. The underlying action was initiated by Adrian Kelleher and Stephanie McCollister Kelleher ("plaintiffs"), against Custom Homes for alleged major structural defects in their home under the New Home Warranty Act, as well as for breach of an escrow agreement between the parties.
The pleadings filed by the parties indicate that on April 8, 2005, Stephanie McCollister (now Kelleher) contracted with Custom Homes for the construction of a new home in the University Club Plantation subdivision. Custom Homes, a general contractor, in turn, retained certain subcontractors, including On Track, to assist with the construction of the home. A certificate of occupancy for the residence was issued on October 26, 2006. However, it is undisputed that the plaintiffs did not take possession of or begin to occupy the property until January 31, 2007, when the plaintiffs and Custom Homes entered into an act of cash sale. Additionally, on January 31, 2007, the plaintiffs and Custom Homes also entered into an escrow agreement whereby seller agreed to deposit $5,000.00 into an escrow account with the understanding that Custom Homes would be paid out the sums upon its resolution of certain outstanding construction issues.
On December 22, 2011 and January 26, 2012, the plaintiffs provided Custom Homes with written notice alleging that major structural defects were present in the home. After failing to receive a satisfactory response from Custom Homes, the plaintiffs filed suit against Custom Homes and its insurer under the New Home Warranty Act alleging major structural defects and breach of the January 31, 2007 escrow agreement. The plaintiffs' petition was filed on January 30, 2012, almost five years to the date that the act of cash sale between the plaintiffs and Custom Homes was executed granting the plaintiffs possession of the property.
On April 26, 2012, within ninety days of plaintiffs' filing of the petition, Custom Homes answered the plaintiffs' suit and filed a third-party demand against the subcontractors who performed work relative to the foundation and framing of the home, namely, On Track and Arthur Hopkins, d/b/a Foundation Specialists (and/or Foundation Specialists, Inc.). Custom Homes' third-party demand also named the subcontractors' insurers as third-party defendants, including On Track's insurer, Atlantic Casualty, and Arthur Hopkins' insurers, Penn-America Insurance Company and American States Insurance Company.
The record before this court contains no evidence to establish the date of service of the petition on Custom Homes.
Atlantic Casualty and On Track separately answered Custom Homes' third-party demand in July and August of 2012. Then, on December 19, 2014, On Track filed an exception raising the objection of peremption, and Atlantic Casualty followed with its own exception of peremption on April 21, 2015. Both third-party defendants argued that Custom Homes' third-party demand was perempted under the provisions of La. R.S. 9:2772, which establishes a five-year peremptive period for actions to recover damages arising out of the survey, design, supervision, or construction of an immovable.
Specifically, the third-party defendants argued that at the time the plaintiffs' petition was filed on January 30, 2012, La. R.S. 9:2772 provided that the five-year peremptive period extended "to every demand, whether brought by direct action or for contribution or indemnity or by third-party practice, and whether brought by the owner or by any other person." La. R.S. 9:2772(B)(3) (2003). The third-party defendants argued that peremption began to run on January 31, 2007, the date that the plaintiffs and Custom Homes entered into the act of cash sale and took possession of the property; thus, Custom Homes' third-party demand lapsed on January 31, 2012. Since Custom Homes' third-party demand was not filed until April 26, 2012, the third-party defendants averred that the indemnity claims asserted by Custom Homes were perempted.
Relevant to the matter under consideration herein is the legislature's decision in 2012 to amend La. R.S. 9:2772 by 2012 La. Acts, No. 762 § 1 (the "2012 amendment"). The 2012 amendment was effective August 1, 2012, and expressly set forth a ninety-day grace period for the filing of indemnity and contribution claims, like those asserted by Custom Homes herein, from the date of service of the main demand.
In its response to the third-party defendants' exceptions of preemption, Custom Homes filed a supplemental and amended answer on July 8, 2015, asserting that the 2012 amendment was procedural and must be given retroactive effect as to its claims against the third-party defendants. Second, the supplemental and amended answer requested that the trial court declare application of the pre-2012 amended version of La. R.S. 9:2772 to the instant matter unconstitutional. Finally, the supplemental and amended answer alleges that application herein of the version of La. R.S. 9:2772 in effect prior to the 2012 amendment will result in substantive and procedural due process violations and unconstitutionally extinguish Custom Homes' property rights in violation of La. Const. art. 1, § 2 and the Fifth and Fourteenth Amendments of the United States Constitution.
In addition to the supplemental and amended answer, Custom Homes also filed an opposition to the third-party defendants' exceptions, first, reasserting its argument that the 2012 amendment was procedural and remedial, and, thus, should be applied retroactively to the third-party demand. Second, Custom Homes argued that failure to retroactively apply the 2012 amended version of La. R.S. 9:2772 resulted in an unconstitutional divesting of its cause of action against the subcontractors. Finally, Custom Homes argued that the general ninety-day grace period for filing incidental demands from service of the main demand contained in La. C.C.P. art. 1067 should harmonized with La. R.S. 9:2772.
The trial court considered the peremptory exceptions at a hearing on August 3, 2015. The record lacks a copy of the transcript of the hearing; however, the minutes of court state that "[t]he exceptions were argued by counsel and submitted to the Court." In a judgment signed on August 20, 2015, the trial court sustained the third-party defendants' exceptions of peremption and dismissed with prejudice all of Custom Homes' claims against On Track and Atlantic Casualty. Custom Homes filed the instant devolutive appeal from that judgment.
BURDEN OF PROOF AND STANDARD OF REVIEW
Peremption has been likened to prescription; namely, it is prescription that is not subject to interruption or suspension. See Flowers, Inc. v. Rausch, 364 So.2d 928, 931 (La. 1978). The peremption exception is considered a peremptory exception. Denham Springs Economic Development District v. All Taxpayers, Property Owners and Citizens of Denham Springs Economic Development District, 2005-2274 (La. 10/17/06), 945 So.2d 665, 680; La. C.C.P. art. 927. Ordinarily, the exceptor bears the burden of proof at the trial of the peremptory exception. Carter v. Haygood, 2004-0646 (La. 1/19/05), 892 So.2d 1261, 1267. As such, the rules governing the burden of proof as to prescription apply to peremption. Rando v. Anco Insulations Inc., 2008-1163 (La. 5/22/09), 16 So.3d 1065, 1082.
If prescription is evident on the face of the pleadings, the burden shifts to the plaintiff to show the action has not prescribed. Carter, 892 So.2d at 1267. If evidence is introduced at the hearing on the peremptory exception of prescription, the district court's findings of fact are reviewed under the manifest error-clearly wrong standard of review. Stobart v. State, through DOTD, 617 So.2d 880, 882 (La. 1993).
Here, the record contains no transcript or indication otherwise that evidence was introduced at the hearing on the exception, and the relevant facts are not in dispute. Therefore, the doctrine of manifest error does not apply to this court's review of the trial court's legal conclusion. Appellate review of questions of law is simply to determine whether the trial court was legally correct. Cangelosi v. Allstate Insurance Company, 96-0159 (La. App. 1st Cir. 9/27/96), 680 So.2d 1358, 1360, writ denied, 96-2586 (La. 12/13/96), 692 So.2d 375; see also Onstott v. Certified Capital Corporation, 2005-2548 (La. App. 1st Cir. 11/3/06), 950 So. 2d 744, 746.
ASSIGNMENTS OF ERROR
Custom Homes asserts three assignments of error to the trial court's judgment:
(1) The trial court erred in failing to harmonize La. C.C.P. art. 1067 with La. R.S. 9:2772, as amended by Acts 2012, No. 762 § 1;
(2)The trial court erred in failing to find that La. R.S. 9:2772, as amended by Acts 2012, No. 762 § 1, was procedural, remedial, and/or curative, thereby necessitating its retroactive application; and
(3) The trial court's failure to apply La. R.S. 9:2772, as amended by 2012 La. Acts, No. 762 § 1, retroactively herein results in an unconstitutional taking of Custom Homes' vested property right without due process.
LAW AND DISCUSSION
Assignment of Error No. 1
When the underlying lawsuit and Custom Homes' third-party demand were filed in early 2012, La. R.S. 9:2772 provided that every demand, including third-party demands, related to the survey, construction, or design of immovable property had to be brought five-years from (1) registry of acceptance of the work in the mortgage office by the owner, (2) or, in the absence of registry of acceptance, five years from the date the owner has taken possession or occupied the property. La. R.S. 9:2772(A)(1)(a) and (b) and (B)(3). Prior to the enactment of the 2012 amendment, La. R.S. 9:2772 provided in pertinent part as follows:
A. No action, whether ex contractu, ex delicto, or otherwise, including but not limited to an action for failure to warn, to recover on a contract, or to recover damages, or otherwise arising out of an engagement of planning, construction, design, or building immovable or movable property which may include, without limitation, consultation, planning, designs, drawings, specification, investigation, evaluation, measuring, or administration related to any building, construction, demolition, or work, shall be brought against any person performing or furnishing land surveying services, as such term is defined in R.S. 37:682, including but not limited to those services preparatory to construction, or against any person performing or furnishing the design, planning, supervision, inspection, or observation of construction or the construction of immovables, or improvement to immovable property, including but not limited to a residential building contractor as defined in R.S. 37:2150.1(9):
(1)(a) More than five years after the date of registry in the mortgage office of acceptance of the work by owner.
(b) If no such acceptance is recorded within six months from the date the owner has occupied or taken possession of the improvement, in whole or in part, more than five years after the improvement has been thus occupied by the owner.
....
B. (1) The causes which are perempted within the time described above include any action:
(a) For any deficiency in the performing or furnishing of land surveying services, as such term is defined in R.S. 37:682, including but not limited to those preparatory to construction or in the design, planning, inspection, or observation of construction, or in the construction of any improvement to immovable property, including but not limited to any services provided by a residential building contractor as defined in R.S. 37:2150.1(9).
* * *
(3) This peremptive period shall extend to every demand, whether brought by direct action or for contribution or indemnity or by third-party practice, and whether brought by the owner or by any other person. [Emphasis added.]
However, as noted above, in 2012, the legislature amended La. R.S. 9:2772, to expressly provide a ninety-day grace period from the filing of a timely main demand for the filing of third-party claims for indemnity or contribution. 2012 La. Acts, No. 762 added subparagraph (A)(1)(c), to now provide:
If, within ninety days of the expiration of the five-year peremptive period described in Subparagraph (a) of this Paragraph, a claim is brought against any person or entity included within the provisions of this Subsection, then such person or entity shall have ninety days from the date of service of the main demand or, in the case of a third-party defendant, within ninety days from service of process of the third-party demand, to file a claim for contribution, indemnity or a third-party claim against any other party. [Emphasis added.]Thus, the 2012 amendment to La. R.S. 9:2772(A)(1)(c) adds language similar to that found in La. C.C.P. art. 1067, which provides the general rule for the timely filing of incidental demands, and provides:
An incidental demand is not barred by prescription or peremption if it was not barred at the time the main demand was filed and is filed within ninety days of date of service of main demand or in the case of a third party defendant within ninety days from service of process of the third party demand.
In its first assignment of error, Custom Homes contends that the "trial court erred in failing to harmonize [LSA-C.C.P. art. 1067] with La. R.S. 9:2772, as amended by Acts 2012, No. 762 § 1." However, careful review of Custom Homes' argument reveals that it is arguing that the trial court erred in refusing "to apply Article 1067 with the prior version of R.S. 9:2772, which would have harmonized with the current version of R.S. 9:2772."
Custom Homes' position is in direct conflict with this court's holding in Peck v. Richmar Construction, Inc., 2013-1170 (La. App. 1st Cir. 2/26/14), 144 So.3d 1042, writ denied, 2014-0830 (La. 6/20/14), 141 So.3d 810. Custom Homes, however, argues that the reliance by the First Circuit in Peck on the Louisiana Supreme Court's decision in Ebinger v. Venus Construction Corporation, 2010-2516 (La. 7/1/11), 65 So.3d 1279, was misplaced. According to Custom Homes, the facts of Ebinger do not align with those in Peck or the instant matter; therefore, Ebinger should not have been applied in Peck, and consequently, the instant matter.
For the reasons set forth below, we disagree with Custom Homes' position and find that the holding of Peck applies to the instant matter and precludes the application of La. C.C.P. art. 1067 to La. R.S. 9:2772 as in effect at the time the main and incidental demands were filed herein.
In Peck, this court directly considered and rejected the argument that the pre-2012 amendment version of La. R.S. 9:2772 should be harmonized with La. C.C.P. art. 1067. Peck, 144 So.3d at 1046-1047. The factual and procedural history in Peck is also similar to that presented herein. There, the plaintiff filed the underlying action one day short of the five-year peremptive period, on April 3, 2012. Peck, 144 So.3d at 1043. The petition was served on the contractor on May 4, 2012, and the contractor filed its third-party demand within ninety days from service of the petition. Id. Similar to the instant matter, the third-party defendants in Peck filed an exception of peremption arguing that all claims, including third-party claims, associated with the home construction expired five years from the date that the certificate of occupancy was issued. Peck, 144 So.3d at 1044.
After the trial court sustained the exception of peremption, the contractor appealed and argued that the trial court should have harmonized the provisions of La. C.C.P. art. 1067 to the pre-2012 amendment version of La. R.S. 9:2772. Peck, 144 So.3d at 1046. The contractor further contended that the 2012 amendments to La. R.S. 9:2772 evidenced that it was always the intent of the legislature for La. R.S. 9:2772 and La. C.C.P. art. 1067 to be read in conjunction with one another. The contractor averred that the 2012 amendment was merely a "statement of clarification" by the legislature. Id.
Noting that generally a more specific statute controls over a broader, more general statute, the court in Peck found that La. C.C.P. art. 1067 is a generalized statute intended to apply to incidental demands not otherwise specifically addressed under the Code of Civil Procedure or the Louisiana Revised Statutes, while La. R.S. 9:2772 is a more specific statute addressing the peremptive period applicable to actions involving deficiencies in the survey, design, supervision, or construction of immovable property. Peck, 144 So.3d at 1046-1047. Further, the court noted that there was no statement in the pre-2012 amendment version of La. R.S. 9:2772 that the legislature intended to incorporate the provisions of La. C.C.P. art. 1067. Peck, 144 So.3d at 1047.
Following a review of the legislative history of 2012 La. Acts, No. 762, this court rejected the contractor's contention that the 2012 statutory enactment of La. R.S. 9:2772(A)(1)(c) was a mere remedial measure intended by the legislature to clarify or interpret the existing law. Id. Instead, in Peck, the court found that the stated intent of the 2012 amendment was to add an exception to allow a person sued within the peremptive period an extra ninety days to assert a third-party demand against any other party. Id. The court concluded "[i]n that context, it is clear that the legislature set out to change the law so as to create a new exception to the five-year peremptive period under La. R.S[.] 9:2772." Id. [Emphasis added.]
Based on the above, the court in Peck found no error in the trial court's determination that La. C.C.P. art. 1067 did not apply to the contractor's third-party indemnity claims, thus, under the version of La. R.S. 9:2772 applicable to the matter filed in April 2012, the contractor's demand for indemnity filed more than five years after the issuance of the certificate of occupancy was lapsed. Id. The fact that the contractor had filed its third-party demand within ninety days from service of the underlying demand was found to have no bearing on the running of peremption.
The court in Peck next turned to the separate issue of whether the timely filing of the underlying action against the contractor "had any effect on the toll of peremption as to the third-party defendants or whether the third party demand [was] time barred under La. R.S. 9:2772[.]" Peck, 144 So.3d at 1047-1048. In finding that the timeliness of the underlying action had no bearing on the tolling of peremption of the third-party demand, and that the contractor's action was time barred, this court relied upon the Louisiana Supreme Court's holding in Ebinger.
In Ebinger, the contractor sought indemnification from a subcontractor for the construction defect claims asserted by the homeowners. The certificate of occupancy was recorded in 1997, and the homeowners filed suit in October 2003. The contractor filed its third-party claim in September 2006. Ebinger, 65 So.3d at 1282. The subcontractor excepted to the indemnity claim arguing that it was perempted under the 2003 amendment to La. R.S. 9:2772, which shortened the peremptive period from seven to five years. Id. The contractor argued that its indemnity claim vested when the construction defects first manifested prior to the 2003 amendment; thus, the shortened peremptive period under the 2003 amendment could not be applied to its claim. Ebinger, 65 So.3d at 1282-1283.
The court in Ebinger found that the 2003 amendment and its shorter five-year peremptive period applied to the contractor's indemnity claim. In reaching this finding, the court emphasized the difference between the commencement of peremption and the accrual of a cause of action. Ebinger, 65 So.3d at 1286. Peremption destroys the action without interference, whereas indemnity by its nature represents a separate substantive cause of action, independent of the underlying wrong. Id.
With those legal principles in mind, the court in Ebinger held the contractor's indemnification claim was conditional and incomplete when the homeowners observed cracks in their slab and when their suit was filed, and absent a judgment against the contractor, that cause of action had not accrued, and thus the right was not vested at the time of the 2003 amendment. Ebinger, 65 So.3d at 1288; see also Crescent Property Partners, LLC v. American Manufacturers Mutual Insurance Company, 2014-0969 (La. 1/28/15), 158 So.3d 798, 805. Because the peremptive period commenced in 1997 when the certificate of occupancy was recorded, and the five-year period of peremption set forth in the 2003 amendment applied, the Ebinger court concluded the builder's indemnity claim filed in 2006 had perempted in 2002. Ebinger, 65 So.3d at 1288.
Custom Homes, like the contractor in Peck, finds itself in the unique situation where its claim for indemnity was perempted before the cause of action arose. Here, the parties all agree that the five-year peremptive period began to run on January 31, 2007, upon the plaintiffs' occupancy of the home, and that Custom Homes did not file its third-party indemnity claim until April 26, 2012, almost four months after the five-year peremptive period in La. R.S. 9:2772 had tolled. Based upon facts presented herein, we find the holding of Peck directly, factually, and legally controlling herein. Louisiana Civil Code article 3461 is clear that peremption may not be interrupted or suspended, and the "net effect" under Ebinger is that peremption tolls regardless of when a cause of action for indemnity arises. Peck, 144 So.3d at 1049. Further, our review of the Ebinger decision does not support Custom Homes' assertion that the factual distinctions in Ebinger make application of its legal findings in Peck and to the instant matter inappropriate. Therefore, we find no merit in Custom Homes' first assignment of error, and hold that Custom Homes' third-party demand is perempted.
We are mindful that in both Peck and Ebinger, the peremptive period was found to run from the issuance of the occupancy certificate. Here, the parties all contend that peremption runs from the January 31, 2007 act of cash sale transferring possession and ownership of the home to the plaintiffs, instead of from the issuance of the occupancy certificate on October 26, 2006. Louisiana Revised Statutes 47:2772 provides that peremption runs five years from (1) registry of acceptance of the work in the mortgage office by the owner, (2) or, in absence of registry of acceptance, five-years from the date the owner has taken possession or occupied the property. La. R.S. 9:2772(A)(1)(a) and (b). Here, the record does not contain a copy of an occupancy certificate that has been recorded in the mortgage records or other recorded documents evidencing acceptance of the work by the owner as set forth in La. R.S. 9:2772(A)(1)(a). However, we find the parties' undisputed allegations in the pleadings that the plaintiffs took possession of the property on January 31, 2007, sufficient to find January 31, 2007, the proper date to calculate peremption in this matter under La. R.S. 9:2772(A)(1)(b).
Assignment of Error No. 2
In its second assignment of error, Custom Homes asserts that the trial court erred in failing to find that La. R.S. 9:2772, as amended by 2012 La. Acts, No. 762 § 1, was procedural, as well as remedial and/or curative, thus, requiring a retroactive application. On the issue of prospective and retroactive application of statutes, La. C.C. art. 6 provides:
In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretive laws apply both prospectively and retroactively, unless there is legislative expression to the contrary.Louisiana Revised Statutes 9:2772 is a procedural statute. See Ebinger, 65 So.3d at 1285. However, as discussed above, Custom Homes' indemnity claims against the third-party defendants are perempted under the version of La. R.S. 9:2772 applicable to those claims. As such, the retroactive application of the 2012 amended version of La. R.S. 9:2772 to Custom Homes' third-party demand would result in the revival of a perempted cause of action, and not merely the retroactive application of the 2012 amendment.
In Chance v. American Honda Motor Company, Inc., 93-2582 (La. 4/11/94), 635 So.2d 177, 178, the Louisiana Supreme Court set forth the test for determining whether the legislature intended for a statute to revive prescribed causes of action. In Chance, the court acknowledged the well-established principle of statutory construction that "prescriptive periods relate to the remedy and are therefore treated as procedural laws and applied retroactively," but additionally noted that "the revival of an already prescribed claim presents additional concerns ..." because a change in the right to plead prescription, once acquired, "constitutes a substantive change in the law as applied to the defendant." Id.
Guided by the principles established in La. C.C. art. 6, the court in Chance, characterizing the legislative revival of prescribed causes of action as "an extreme exercise of legislative power," held that, at the very least, a clear and unequivocal expression of intent by the legislature would be required before the court would interpret such a legislative intent behind a statute. Id. Finding no such clear expression of legislative intent in the amendment to the prescriptive statute at issue, the court in Chance declined to apply the amendment retroactively to revive an already prescribed cause of action. Chance, 635 So.2d at 179; see also Cameron Parish School Board v. Acands, Inc., 96-0895 (La. 1/14/97), 687 So.2d 84, 91; In re Succession of James, 2007-2509 (La. App. 1st Cir. 8/21/08), 994 So.2d 120, 123-24, writ denied, 2008-2302 (La. 12/12/08), 996 So.2d 1119; Succession of Faget, 2005-1434, 2005-1435 (La. App. 1st Cir. 6/9/06), 938 So.2d 1003, 1007, writ denied, 2006-1719 (La. 11/9/06), 941 So.2d 40.
Here, review of 2012 La. Acts, No. 762 and the Resume Digest for Senate Bill 258, which was subsequently signed by the Governor and became 2012 La. Acts 2012, No. 762, reveals no "clear and unequivocal" indication that the legislature intended that the 2012 amendment to La. R.S. 9:2772 would operative retroactively to revive claims already barred by prescription. The Resume Digest for Senate Bill 258 provides in pertinent part:
Prior law provided that a five-year peremptive period extends to every demand arising under the prior law, whether brought by direct action or for contribution or indemnity or by third-party practice, and whether brought by the owner or by any other person.Resume Digest, S.B. 258, 2012 Reg. Sess. (La. 2012). Further, the introduction to Acts 2012, No. 762, provides:
New law adds an exception that if, within 90 days of the five-year peremptive period, a claim is brought against any person or entity included in the prior law, then that person or entity has 90 days from date of service of the main demand or, in the case of a third-party defendant, 90 days from service of process of the third-party demand, to file a claim for contribution, indemnity or a third-party claim against any other party.
ACT NO. 762
S.B. No. 258
PEREMPTIVE PERIODS FOR CERTAIN ACTIONS
BY SENATOR APPEL
AN ACT to amend and reenact the introductory paragraph of R.S. 9:2772(A), (B)(3), and (E) and to enact R.S. 9:2772(A)(1)(c), relative to peremptive periods for certain actions; to authorize the filing of certain contribution, indemnity or third-party claims; to provide certain terms, conditions and requirements; and to provide for related matters.
Be it enacted by the Legislature of Louisiana:
Section 1. The introductory paragraph of R.S. 9:2772(A), (B)(3), and (E) are hereby amended and reenacted and R.S. 9:2772(A)(1)(c) is hereby enacted to read as follows:
In the absence of a "clear and unequivocal" expression of intent by the legislature to revive claims as to which peremption has already accrued, we find no legal basis to retroactively apply La. R.S. 9:2772 to revive Custom Homes' third-party demands. Therefore, we find no merit in Custom Homes' second assignment of error.
Assignment of Error No. 3
Finally, we consider Custom Homes' third assignment of error, which contends that the trial court's failure to apply the 2012 amended version of La. R.S. 9:2772 retroactively herein resulted in an unlawful taking of a property right, without due process, in violation of the Fifth and Fourteen Amendments to the United States Constitution and Article 1, § 2 of the Louisiana State Constitution. In particular, Custom Homes contends it obtained a vested right in its indemnity claims against the third-party defendants when the plaintiffs filed the underlying demand. (Brief, 15) Further, Custom Homes contends that the failure to apply La. R.S. 9:2772 retroactively impairs its contractual right to seek indemnification from On Track in connection with the escrow account claims asserted by the plaintiff in the underlying action.
Custom Homes has failed to brief that portion of its third assignment of error related to the alleged violation of its rights under the Fifth Amendment of the United States Constitution. As this particular assignment of error was not briefed, it is considered abandoned. See Uniform Rules, Courts of Appeal, Rule 2-12.4(B)(4). --------
The Fourteenth Amendment to the United States Constitution provides, in pertinent part, "nor shall any State deprive any person of life, liberty or property, without due process of law ... ." Similarly, Article I, § 2 of the Louisiana Constitution provides that no person shall be deprived of life, liberty, or property, except by due process of law. The determination of a procedural due process case requires application of a two-part test: first, whether a party has been deprived of a protected "life," "liberty," or "property" interest, i.e., whether the party had an interest protected by the constitution; and second, if so, whether the procedures in place comport with due process. Denham Springs Economic Development District, 945 So.2d at 681 (citations omitted).
Substantive due process may be broadly defined as the constitutional guaranty that no person shall be arbitrarily deprived of his life, liberty, or property. Babineaux v. Judiciary Commission, 341 So.2d 396, 400 (La. 1976). The essence of substantive due process is protection from arbitrary and unreasonable action. Id. In order to prove a violation of substantive due process, Custom Homes must first establish the existence of a constitutionally protected property or liberty interest. Standard Materials, Inc. v. City of Slidell, 96-0684 (La. App. 1st Cir. 9/23/97), 700 So.2d 975, 985-986. A violation of substantive due process also requires arbitrary and capricious conduct by the governing authority. Boudreaux v. Larpenter, 2011-0410 (La. App. 1st Cir. 6/1/12), 110 So.3d 159, 170.
Thus, to prove either a substantive or procedural due process claim herein, Custom Homes must demonstrate the existence of a constitutionally protected property right in its third-party indemnity claims. Property interests are not created by the constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law—rules or understandings that secure certain benefits and support claims of entitlement to those benefits. Board of Regents of State Colleges v. Roth, 408 U.S. 567, 577, 92 S.Ct. 2701, 2709, 33 L.Ed. 2d 548 (U.S. 1972). To have a property interest protected by due process, a person must clearly have more than an abstract need or desire for it. He must have a legitimate claim of entitlement to it rather than a unilateral expectation of it. Id.; American International Gaming Association, Inc. v. Louisiana Riverboat Gaming Commission, 2000-2864 (La. App. 1st Cir. 9/11/02), 838 So.2d 5, 16.
Here, we find that Custom Homes cannot meet the first requirement to succeed on either of its constitutional due process claims - i.e. the existence of a vested property right in its indemnity claims against the third-party defendants. All of the claims asserted in the third-party demand are for indemnification and contribution. As discussed above, in Ebinger, the Louisiana Supreme Court expressly found that a claim for indemnification is conditional and incomplete, and does not become a vested right for the party seeking indemnification "unless and until" that party is cast in judgment. Ebinger, 65 So.3d at 1286-1287. Here, Custom Homes has not been cast in judgment for either the construction defect claims or for breach of the escrow agreement claim; thus, it cannot be said that Custom Homes' indemnity claims have vested, such that it possesses a legitimate claim of entitlement sufficient to trigger the protections of due process.
Based on the above, we find no legal error in the trial court's judgment sustaining the third-party defendants' exceptions of peremption.
CONCLUSION
For the reasons set forth above, we affirm the judgment of the trial court, which granted the exceptions of peremption filed by the third-party defendants/appellees, On Track Construction, L.L.C. and Atlantic Casualty Insurance Company, and dismissed the third-party plaintiff/appellant, Custom Homes By Jim Fussell, Inc.'s, third-party demand for indemnity with prejudice. The costs of this appeal are assessed against the third-party plaintiff/appellant, Custom Homes By Jim Fussell, Inc.
AFFIRMED.