Alfred Palma, Inc. v. Crane Services, Inc.

• Court: Louisiana Court of Appeal
• Decided: November 5, 2003
• Docket: CA-0003-0614
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

03-0614

ALFRED PALMA, INC.

VERSUS

CRANE SERVICES, INC., ET AL.

**********

APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2002-166 HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE

OSWALD A. DECUIR JUDGE

Court composed of Ned E. Doucet Jr., Chief Judge, and Oswald A. Decuir and Marc T. Amy, Judges.

REVERSED AND REMANDED.

Eric L. Pittman Pittman & Associates 1930 Florida Avenue, S.W. Denham Springs, LA 70726-4911 (225) 664-9500 Counsel for Defendant/Appellee: JAH Enterprises, Inc.

Gary J. Gambel Ronald J. White Robert E. Guidry Murphy, Rogers & Sloss One Shell Square 701 Poydras St., Ste 400 New Orleans, LA 70139 (504) 523-0400 Counsel for Defendant/Appellant: Crane Services, Inc. Reynold LeBlanc V. Ed McGuire Plauche’, Smith & Nieset P. O. Drawer 1705 Lake Charles, LA 70602 (337) 436-0522 Counsel for Plaintiff/Appellee: Alfred Palma, Inc. DECUIR, Judge.

Defendant, Crane Services, Inc., appeals summary judgment rendered in favor

of plaintiff, Alfred Palma, Inc., granting rescission of the sale of a used industrial

crane. Upon review, we find material issues of fact preclude summary judgment, and

we reverse the decision rendered below.

On September 27, 2001, Alfred Palma, Inc., through its representative, John

Palma, purchased a Grove crane at a public auction. The seller of the crane was Crane

Services, Inc. The purchase price was $248,400.00, and the sale included a waiver of

warranty. The auction house, JAH Enterprises, Inc., d/b/a Henderson Auctions,

informed all participants prior to the auction that all items were to be sold “as is/

where is” and without warranties of any kind. This waiver of warranty was included

in the pre-bid application and in the bill of sale for the crane in question. However,

any potential purchasers were given the opportunity to view and professionally inspect

the items before the auction.

Specifically with regard to the litigants herein, John Palma testified via affidavit

that he discussed the crane with Reynold LeBlanc, of Crane Services, prior to the

auction. He was informed that the crane had been damaged in a rollover accident, but

that LeBlanc had repaired the crane and replaced certain parts. LeBlanc represented

that the repairs had been inspected and certified by Dixon Equipment Services, whose

sticker evidencing the annual inspection of September 21, 2001 was affixed to the

crane. Upon purchasing the crane, Palma put it into operation in his construction

business, and it functioned properly. Palma testified that he later sought more

information on the crane from the manufacturer. He was told that certain sections of

the boom contained damaged parts that needed to be repaired or replaced. Palma then

had the crane inspected. Crane Services subsequently refused Palma’s demand to

make the delineated repairs that Palma thought were necessary for certification under OSHA standards; Crane Services asserted that the repairs previously made were

adequate and complete.

Consequently, Palma filed this redhibition suit against Crane Services and

others, seeking to rescind the sale of the crane. After initial discovery, Palma and

Crane Services filed opposing motions for summary judgment. Palma contends the

crane is defective because it cannot be certified under OSHA standards as long as it

contains damaged parts that have been condemned by the manufacturer. Because

Palma believes the crane does not comply with OSHA regulations for cranes in use

at a construction site, Palma has taken the crane out of service. Palma also asserts that

the inspection sticker affixed to the crane at the time of the auction was bogus, and

was placed there to induce potential purchasers into believing the crane was OSHA

certified. By contrast, Crane Services’ motion for summary judgment asserts the

protections of the written warranty and redhibition waivers in the bill of sale and pre-

bid application.

In oral reasons for judgment, the trial court rejected Crane Services’ motion,

finding the Dixon certification sticker represented that the crane could be operated

“for its intended purpose,” which representation the court found was legally more

compelling than the waiver of warranty. The court determined the certification

vitiated the general waiver of warranty because it “carried more intent as to [the

crane’s] purpose with Mr. Palma than [did] the waiver.”

In granting Palma’s motion for summary judgment, the trial court found the

crane had a redhibitory defect and rescinded the sale. Specifically, the court

determined that Palma relied on the Dixon certification in purchasing the crane and

that the certification was a misrepresentation that could be imputed to Crane Services.1

1 Presumably, the trial court took note of the fact that the Dixon inspector, Reynold LeBlanc II, was the son of the owner of Crane Services.

2 The court also concluded the crane had significant problems which render it unsafe

and not fit for its intended purpose, even though he made a factual finding that the

crane is “in good shape and appears to be operational.”

In this appeal, Crane Services contests both the denial of its motion for

summary judgment and the granting of Palma’s similarly styled motion. We will not

consider the denial of Crane Services’ motion because of the provisions of article 968

of the Code of Civil Procedure, which bar review of a court’s refusal to render

summary judgment. Granger v. Guillory, 00-363 (La.App. 3 Cir. 4/26/00), 762 So.2d

640.

Rather, we will address the propriety of the trial court’s granting Palma’s

motion for summary judgment. In the factually similar case of Shelton v.

Standard/700 Associates, 01-587, p. 5 (La. 10/16/01), 798 So.2d 60, 64-65 the

supreme court reiterated the rules of summary judgment review:

Appellate courts review summary judgments de novo. Doerr v. Mobil Oil Corp., 2000-0947 (La.12/19/00), 774 So.2d 119, 136. It is well established that a summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966(B).

Interestingly, the Shelton case also involved a sale which included a waiver of

warranty against redhibitory defects. The waiver was clearly articulated in the bill of

sale and was made known to the buyer. The supreme court limited its review of the

summary judgment granted in favor of the seller to a determination of whether the

buyer could show fraud in the inducement of the contract; for without that showing,

the waiver of warranty provisions would be enforceable against the buyer:

While an exclusion or limitation of the warranty against redhibitory defects is usually effective, LSA-C.C. art. 2548 further provides that “[a] buyer is not bound by an otherwise effective exclusion or limitation of the warranty when the seller has declared that the thing has a quality that he knew it did not have.” Under this article, an otherwise effective

3 exclusion or limitation of the warranty against redhibitory defects is not effective if the seller commits fraud, as defined in the civil code, upon the buyer. Thus, although the warranty against redhibitory defects may be excluded or limited, a seller cannot contract against his own fraud and relieve himself of liability to fraudulently induced buyers. See Roby Motors Co. v. Price, 173 So. 793, 796 (La.App. 2nd Cir.1937). Indeed, such a contract would be contra bonos mores and unenforceable.

A contract is formed by the consent of the parties. LSA-C.C. art. 1927. However, consent may be vitiated by error, fraud, or duress. LSA-C.C. art. 1948. “Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.” LSA-C.C. art. 1953. “Error induced by fraud need not concern the cause of the obligation to vitiate consent, but it must concern a circumstance that has substantially influenced that consent.” LSA-C.C. art. 1955.

Nevertheless, fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill. However, this exception does not apply when a relation of confidence has reasonably induced a party to rely on the other’s assertions or representations. LSA-C.C. art. 1954.

In pleading fraud, the circumstances constituting fraud must be alleged with particularity. LSA-C.C.P. art. 856. However, fraud need only be proven by a preponderance of the evidence and may be established by circumstantial evidence. LSA-C.C. art. 1957.

In sum, there are three basic elements to an action for fraud against a party to a contract: (1) a misrepresentation, suppression, or omission of true information; (2) the intent to obtain an unjust advantage or to cause damage or inconvenience to another; and (3) the error induced by a fraudulent act must relate to a circumstance substantially influencing the victim’s consent to (a cause of) the contract.

Id., p. 4-5, 798 So.2d at 64.

In the summary judgment rendered in the instant case, the trial court necessarily

reached certain conclusions of law and material fact. First, the trial court concluded

that Palma had adequately pled fraud against Crane Services, and then made the

factual finding that fraud had been proven to the extent that no genuine issue of fact

remained on that question. Second, the trial court determined that failure to comply

with OSHA standards constitutes a redhibitory defect, and then made the finding that

the instant crane did not meet those standards at the time of its sale to Palma. In

4 reaching these conclusions, the trial court relied on affidavit testimony from the

parties and from crane repairmen and inspectors who may be qualified as experts at

a trial on the merits.

The evidence presented to the trial court was conflicting. Palma’s evidence

bolstered its assertion that the crane had too many deficiencies to be certified and,

therefore, cannot be used. Palma offered various OSHA regulations and interpretation

letters, its own professional inspection report wherein the inspector stated he could not

certify the crane, a allegedly altered inspection record from Crane Services, and an

affidavit from John Palma. Crane Services’ evidence supported its position that the

company knew of no additional repairs required by the manufacturer for the safety of

the crane, and it had no intent to defraud Palma in this transaction. It submitted

affidavits from its owner, Reynold LeBlanc, LeBlanc’s son who inspected the crane

on behalf of Dixon, the owner of the auction house, and the owner of Dixon. They

testified that repairs to a crane do not have to be approved by the manufacturer, that

Palma was given the opportunity to inspect the crane prior to purchase, that Palma

purchased the crane without any warranties, and that the crane could be certified in

its present condition.

In Moore v. Dupart, 00-1272, p. 7 (La.App. 4 Cir. 4/11/01), 785 So.2d 207,

212, writ denied, 01-1388 (La. 6/22/01), 794 So.2d 796, the court cited a long line of

cases holding “that issues pertaining to subjective facts such as intent, knowledge,

motive, malice, or good faith are usually not appropriate to a summary judgment

determination.” See Murphy’s Lease & Welding Service, Inc. v. Bayou Concessions

Salvage, Inc., 00-978 (La.App. 3 Cir. 3/8/01), 780 So.2d 1284; Belgard v. American

Freightways, Inc., 99-1067 (La.App. 3 Cir. 12/29/99), 755 So.2d 982, writ denied,

00-293 (La. 3/31/00), 756 So.2d 1147; Nelson v. Torian, 96-176 (La.App. 3 Cir.

6/26/96), 676 So.2d 773, writ denied, 96-1938 (La. 11/15/96), 682 So.2d 761; Greer

5 v. Dresser Indus., Inc., 98-129 (La.App. 3 Cir. 7/1/98), 715 So.2d 1235, writ denied,

98-2094 (La. 11/6/98), 728 So.2d 867. The Moore court explained, “Such

determinations are only possible by the trier of fact who has the opportunity to hear

all the evidence and to observe the witnesses on direct and cross-examination.” 785

So.2d at 212.

As in the case of Federated Rural Elec. v. Gulf South Cable, 02-852 (La. App.

3 Cir. 12/11/02), 833 So.2d 544, we must conclude that the trial court could not have

properly rendered its summary judgment ruling without making improper factual

findings. The trial court made credibility determinations on the issues of fraud and

the alleged defective condition of the crane simply by reviewing affidavits. No

witnesses testified, and there was no opportunity for cross-examination. This

controversy involves disputed material facts, which should be resolved by the fact

finder after trial on the merits. Our conclusion pretermits discussion of the trial

court’s legal analysis of the sufficiency of Palma’s fraud allegations and its finding

that failure to comply with unspecified OSHA regulations constitutes a redhibitory

defect.

Accordingly, for the above and foregoing reasons, the summary judgment of

the trial court rendered in favor of Alfred Palma, Inc., is reversed, and this matter is

remanded for trial on the merits. Costs of this appeal are assessed to Alfred Palma,

Inc.