Murphy Cormier Contractor, Inc. v. State of La., Dept. of Health & Hospitals

• Court: Louisiana Court of Appeal
• Decided: May 22, 2013
• Docket: CA-0012-1000
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

12-1000

MURPHY CORMIER GENERAL CONTRACTOR, INC.

VERSUS

STATE OF LOUISIANA, DEPARTMENT OF HEALTH & HOSPITALS, ET AL.

**********

APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2007-3828, DIV. H HONORABLE RONALD F. WARE, DISTRICT JUDGE

SHANNON J. GREMILLION JUDGE

Court composed of Elizabeth A. Pickett, James T. Genovese, and Shannon J. Gremillion, Judges.

AFFIRMED.

Hunter W. Lundy Rudie R. Soileau, Jr. Jackey W. South Daniel A. Kramer Lundy, Lundy, Soileau & South 501 Broad St. Lake Charles, LA 70601 (337) 439-0707 COUNSEL FOR PLAINTIFF/APPELLEE: Murphy Cormier General Contractor, Inc.

Jeffrey Ackermann Durio, McGoffin, Stagg & Ackerman 220 Heymann Blvd. Lafayette, LA 70503 (337) 233-0300 COUNSEL FOR INTERVENOR/APPELLEE: National Wastewater Systems, Inc. Elizabeth B. Hollins Assistant Attorney General, Louisiana Department of Justice One Lakeshore Dr., Suite 1200 Lake Charles, LA 70629 (337) 491-2880 COUNSEL FOR DEFENDANTS/APPELLANTS: Glenn Cambre State of Louisiana, Department of Health and Hospitals, Office of Public Health GREMILLION, Judge.

The defendant, the State of Louisiana, through the Department of Health and

Hospitals (DHH), appeals a jury verdict in favor of the plaintiff, Murphy Cormier

General Contractor, Inc. (MCGC).1 For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

MCGC manufactures, sells, and installs residential and commercial

mechanical sewage treatment plants in Calcasieu and surrounding parishes. In July

2007, MCGC filed a petition for damages and injunctive and declaratory relief

against DHH and four of its employees, Dr. Jimmy Guidry, Glenn Cambre, Dane

Thibodeaux, and Stanley Clause (collectively Defendants). MCGC claimed that it

relied on the representation of Dr. Guidry that the revised regulations regarding

residential mechanical sewage treatment plants, found in the Louisiana Sanitary

Code, would not go into effect until March 31, 2001. Instead, MCGC claimed that

Defendants prohibited the installation of sixty-eight residential sewage treatment

plants beginning March 1, 2001, resulting in economic loss to the business.

MCGC further alleged that DHH selectively enforced the new provisions, granting

its competitors approval to sell and install sewer treatment plants that were not

compliant with the new regulations. MCGC also claimed that DHH placed

unreasonable requirements on its commercial mechanical sewage treatment plants

that were contrary to law and negatively impacted it business.

In September 2007, DHH filed a declinatory exception of improper venue,

urging that venue lay exclusively in the Nineteenth Judicial District Court for the

Parish of East Baton Rouge. Following a March 2008 hearing, the trial court

1 Sometimes we refer to Murphy Cormier, the owner of MCGC, rather than the company if the witness referred to him by name. denied DHH‘s exception of improper venue. In November 2008, DHH filed a

motion for summary judgment, which was denied. It also filed an exception of

prescription, arguing that MCGC‘s claims were barred by a one-year prescriptive

period. Following an August 2009 hearing, the trial court denied DHH‘s motions.

DHH filed for supervisory writs with this court, which were denied in January

2010. The supreme court further denied writs. Additional extensive pre-trial

motions were filed by the parties. In March 2011, MCGC filed a partial motion

and order to dismiss Thibodeaux with prejudice. MCGC also dismissed Guidry

and Clause without prejudice.

Defendants filed a motion to exclude testimony of plaintiff‘s expert, Daphne

Clark. Following a March 2011 hearing, the trial court declined to exclude the

testimony. Defendants applied for writs to this court, which were denied.

Following a ten-day jury trial in August 2010, both parties moved for

directed verdicts on various issues, which were denied. The jury returned a verdict

in favor of MCGC in the amount of $7,412,383.00 finding that DHH engaged in

wrongful conduct, not subject to an immunity, that damaged MCGC. The damages

awarded consisted of $4,525,846.00 for residential units, $99,560.00 for

commercial units, and $2,786,977.00 for loss of business reputation. DHH filed a

motion to conform judgment, relying on the statutory cap against state defendants

found in La.R.S. 13:5106. The trial court denied the motion.

DHH filed a motion for new trial. Following a March 2, 2012 hearing, the

trial court denied the motion. DHH now appeals.

2 ISSUES

DHH assigns as error:2

1. The trial court committed legal error when it failed to conduct a proper Daubert hearing on DHH‘s motion to exclude the testimony of Daphne Clark and when it, consequently, allowed MCGC to introduce Clark‘s speculative and flawed damage calculations at trial.

2. The trial court committed legal error when it denied DHH‘s exception of prescription and motion to limit damages, and further erred by allowing MCGC to introduce evidence of damages on prescribed claims.

3. The trial court committed legal error when it denied DHH‘s motion for summary judgment, finding that MCGC had a claim for selective enforcement and that DHH was not entitled to discretionary or qualified immunity.

4. The trial court committed legal error when it held that MCGC could legally assert a detrimental reliance cause of action against DHH for exercising its statutorily created powers and regulatory functions.

5. The trial court committed legal error by refusing to apply the statutory cap created by LSA-R.S. 13:5106 to the award for loss of business reputation damages.

6. DHH‘s exception of improper venue should be reexamined, because venue is only proper in East Baton Rouge Parish pursuant to LSA-R.S. 13:5104.

FACTUAL BACKGROUND

This case involves complex and detailed aspects of both residential and

commercial wastewater treatment systems. Wastewater treatment systems are

subject to various rules and regulations in the State of Louisiana. Louisiana

Revised Statutes 36:258(B) authorizes the office of public health to act on behalf

of the state in protecting the general health of the public:

[I]ncluding but not limited to responsibility for the preparation and supervision of the Sanitary Code, local health units, sewage treatment 2 We note that DHH‘s assignments of error do not correspond to its briefed arguments. We will address the issues in the order presented by DHH.

3 and disposal within the state. . . . It shall also perform those functions of the state provided by law relating to environmental quality and pollution control which are related to the public health and which are specifically assigned to the department, including but not limited to functions relating to the treatment and disposal of sewage within the state, with the exception of those functions assigned by law to the Department of Environmental Quality including, but not limited to, the licensing of sewage sludge transporters or haulers.

Louisiana Revised Statutes 40:4(6) states:

In order to protect the public against disease and nuisance resulting from the improper disposal of sanitary sewage, the state health officer shall prepare and promulgate all rules and regulations necessary to insure that adequate conveyance and disposal facilities are provided for all sanitary sewage, private or public, and in such a manner that will prevent the contamination of surroundings which would have an adverse impact on drinking water supplies, recreational waters, aquatic life, and other mechanisms of human exposure to disease. Standards for the quality of sanitary sewage discharged to the ground surface (ditches, streams, water pools, or other drainage courses), construction of sewerage works, operation of sanitary sewage conveyance, and treatment and disposal facilities shall be included. Such rules and regulations shall not include the licensing of persons engaged in the business or practice of hauling the contents of septic tanks, cesspools, vaults, or similar facilities. Plans and specifications for sewerage works shall be submitted for review and approval to the state health officer or his designee.

Further, La.R.S. 40:5(9) gives the state health officer and office of public

health of DHH the ―exclusive jurisdiction, control and authority [o]ver the

treatment and disposal of municipal or domestic sewage.‖

Title 51, Part XIII, of the Louisiana Administrative Code comprises the

Sanitary Code and pertains to sewage disposal. Section 725 governs mechanical

wastewater treatment plants (also called aerobic treatment units or ATUs) that are

residential in nature. In order to receive a permit to install a residential ATU, all

plants approved for installation after March 1, 2001, ―shall strictly comply with

4 National Sanitation Foundation 3 International Standard, NSF 40-1996 for

Residential Wastewater Treatment Systems . . . as has been approved by the

American National Standards Institute[.]‖4 LAC 51: XIII: 725(D) and (E).

A large portion of this case revolves around the interpretation and

application of Section 729, which is entitled ―Pumping Stations‖ and states in

pertinent part:

A. When the elevation of a site prevents the use of gravity flow to convey liquid from one location to another, a pumping station [§1501.B.19 (Figure 22)], consisting of a holding tank, pump(s), piping, electrical controls, and other equipment as necessary, must be provided.

....

J. Suitable level control devices for use in the harsh, corrosive environment encountered, shall be provided to control pump operation. The level controls shall provide for the following functions: ―pump off,‖ ―pump on,‖ and ―high water alarm.‖

4. The ―pump on‖ level shall be set at elevation to provide a minimum working volume of 10 percent of the average daily design flow of the treatment system.

3 National Sanitation Foundation (NSF), a non-profit organization, is accredited by the American National Standards Institute (ANSI) to test and evaluate ATUs. Standard 40 applies to wastewater treatment systems with capacities between 400 and 1500 gallons per day. NSF tests the ability of the ATU to produce an acceptable quality of effluent. This is accomplished by conducting a twenty-six week study of the ATU to measure the quality of the effluent performance. The system is also tested for ―structural integrity, leakage, noise, electrical certification, access ports, failure sensing and signaling equipment (visual and audible alarms), flow design, data plate and service labels.‖

NSF provides a third-party certification of ATUs. Formerly, DHH conducted these reviews but it was determined that this process was too political in nature and that an objective third party should be brought in. The manufacturer of the ATU, such as MCGC, pays, as of the time of trial, upwards of $80,000.00 for the twenty-six week study of the unit. There are other third-party certification providers such as Baylor University in Texas. http://www.nsf.org/business/wastewater_certification/standards.asp#std40 4 Those ATUs that were approved for installation (but not necessarily installed yet) before March 1, 2001, ―shall continue to comply with the standards under which they were approved.‖ La.Admin. Code art. 725(E).

5 5. The ―high water alarm‖ level shall be set so as to provide for a net storage volume between the ―pump on‖ level and the ―high water alarm level‖ of 10 percent of the average daily design flow of the treatment system.

6. A reserve volume may be provided between the ―high water level‖ and the invert of the inlet pipe to the holding tank, if so desired.

Additionally, the industry often refers to and incorporates what is known as

the ―10 States Standards.‖ The 10 States Standards are a comprehensive guide to

the design and specifications of wastewater treatment plants. 5 The main issue

surrounding the 10 States Standards in this case is Section 42.33 entitled ―Pump

Openings‖ under the subchapter titled ―Wastewater Pumping Stations.‖ Section

42.33 states: ―Pumps handling raw wastewater shall be capable of passing spheres

of at least 3 inches (80 mm) in diameter. Pump suction and discharge openings

shall be at least 4 inches (100 mm) in diameter.‖

In Louisiana, wastewater permitting operates as follows: Residential

systems (volume less than 3,000 gallons) are reviewed for permits by one of nine

regional sanitarians, whereas commercial systems (volume greater than 3,000

gallons) permits are reviewed by DHH.

To summarize, regarding its residential units, MCGC claimed that (1) DHH

selectively enforced the requirements of Section 729, Part J (4 and 5) such that its

competitors were not required to increase their holding tank gallon size to

accommodate Section 729‘s 10%/10% pumping station requirements and the

selective enforcement resulted in extensive loss of business, as MCGC‘s costs 5 The 10 States Standards is a report of the Wastewater Committee of the Great Lakes– upper Mississippi River Board of State and Provincial Public Health and Environmental Managers which was formed in 1947. A committee was formed with a representative of each state in order to comprise joint standards. Its member states include Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, New York, Ohio, Pennsylvania, and Wisconsin. The most recent edition of the 10 States Standards was promulgated in 2004. For more information, see http://10statesstandards.com/wastewaterstandards.html.

6 substantially increased to meet the requirements, and it lost business as its

competitors were still offering the cheaper, smaller tanks. MCGC further claimed

that it detrimentally relied on a DHH employee‘s promise to extend the date the

new requirements would go into effect until March 31, 2001, instead of March 1,

2001. Regarding the residential units, DHH‘s primary argument is that Section

729 only applies to detached pumping stations, and not attached pumping stations.

Thus, DHH argues that the 10%/10% requirements did not apply to MCGC‘s main

competitors who used attached, rather than detached pump chambers, and,

therefore, no selective enforcement took place.

Regarding its commercial units, MCGC‘s complaint is that a DHH employee,

Karen Irion, Chief Engineer of DHH, intentionally and in retaliation, caused

MCGC to experience long delays in obtaining permits and caused it to change the

design of its commercial unit that had been approved and installed by DHH for

more than twenty years. Additionally, MCGC claims DHH harmed its reputation

by filing false claims against it with the Louisiana Professional Engineering and

Land Surveying Board (LAPELS) and by causing engineering firms to not want to

work with MGCG due to the long permitting delays and the complaint with

LAPELS.

DISCUSSION

Venue

Louisiana Revised Statutes 13:5104(A) states (emphasis added):

All suits filed against the state of Louisiana or any state agency or against an officer or employee of the state or state agency for conduct arising out of the discharge of his official duties or within the course and scope of his employment shall be instituted before the district court of the judicial district in which the state capitol is located or in the district court having jurisdiction in the parish in which the cause of action arises.

7 The plain language of this statute authorizes the filing of suit in either of two

places: the district court of the judicial district of the state capitol or the parish

where the cause of action arose. Venue is a threshold matter that is unrelated to the

merits of the case. The supreme court has specifically held that ―litigants are

required to seek review [of venue rulings] via supervisory writs. Failure to timely

file a writ application on a venue ruling amounts to a waiver of any objection

thereto.‖ Land v. Vidrine, 10-1342, p. 7 (La. 3/15/11), 62 So.3d 36, 40. The

inequities of allowing the losing litigant to make a claim of improper venue after a

trial on the merits disregards the legislature‘s purpose in creating the venue rules.

Id.

DHH admits that it did not seek supervisory writs of the trial court‘s denial

of its exception of venue. Although DHH argues that the defendant, Dane

Thibodeaux, who worked in a regional DHH office in Calcasieu Parish, was much

later dismissed, we do not find this action sufficient to suggest that plaintiffs were

forum shopping as in Darbonne v. Allied Signal, Inc., 03-527 (La.App. 3 Cir.

11/12/03), 865 So.2d 772, writ denied, 03-3425 (La. 2/20/04), 866 So.2d 834.

Thus, DHH waived any objection it may have had to venue in Calcasieu Parish.

Accordingly, assignment of error six is without merit.

EXPERT WITNESS/Daphne Borderlon Clark

Louisiana Code of Civil Procedure Article 1425(F) discusses the use of

expert witnesses at trial:

(1) Any party may file a motion for a pretrial hearing to determine whether a witness qualifies as an expert or whether the methodologies employed by such witness are reliable under Articles 702 through 705 of the Louisiana Code of Evidence. The motion shall be filed not later than sixty days prior to trial and shall set forth sufficient allegations showing the necessity for these determinations by the court.

8 (2) The court shall hold a contradictory hearing and shall rule on the motion not later than thirty days prior to the trial. At the hearing, the court shall consider the qualifications and methodologies of the proposed witness based upon the provisions of Articles 104(A) and 702 through 705 of the Louisiana Code of Evidence. For good cause shown, the court may allow live testimony at the contradictory hearing.

(3) If the ruling of the court is made at the conclusion of the hearing, the court shall recite orally its findings of fact, conclusions of law, and reasons for judgment. If the matter is taken under advisement, the court shall render its ruling and provide written findings of fact, conclusions of law, and reasons for judgment not later than five days after the hearing.

(4) The findings of fact, conclusions of law, and reasons for judgment shall be made part of the record of the proceedings. The findings of facts, conclusions of law, and reasons for judgment shall specifically include and address:

(a) The elements required to be satisfied for a person to testify under Articles 702 through 705 of the Louisiana Code of Evidence.

(b) The evidence presented at the hearing to satisfy the requirements of Articles 702 through 705 of the Louisiana Code of Evidence at trial.

(c) A decision by the judge as to whether or not a person shall be allowed to testify under Articles 702 through 705 of the Louisiana Code of Evidence at trial.

(d) The reasons of the judge detailing in law and fact why a person shall be allowed or disallowed to testify under Articles 702 through 705 of the Louisiana Code of Evidence.

(5) A ruling of the court pursuant to a hearing held in accordance with the provisions of this Paragraph shall be subject to appellate review as provided by law.

Louisiana Code of Evidence Article 702 provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.

An expert‘s qualifications are subject to the familiar Daubert review:

In State v. Foret, 628 So.2d 1116 (La.1993), the Louisiana Supreme Court adopted the test set forth in

9 Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 128 L.Ed.2d 469 (1993), regarding proper standards for the admissibility of expert testimony which requires the trial court to act in a gatekeeping function to ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable. State v. Chauvin, 02-1188 (La.5/20/03), 846 So.2d 697. To assist the trial courts in their preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and can properly be applied to the facts at issue, the Supreme Court suggested the following general observations are appropriate: 1) whether the theory or technique can be and has been tested; 2) whether the theory or technique has been subjected to peer review and publication; 3) the known or potential rate of error; and 4) whether the methodology is generally accepted by the relevant scientific community. Daubert, 509 U.S. at 592-594, 113 S.Ct. 2786, 125 L.Ed.2d 469. In Foret, supra, the court adopted these observations as a helpful guide for our lower courts in considering this difficult issue. Id. Thus, Louisiana has adopted Daubert’s requirement that in order for technical or scientific expert testimony to be admissible under La.Code Evid. 702, the scientific evidence must rise to a threshold level of reliability. Daubert’s general ―gatekeeping‖ applies not only to testimony based upon scientific knowledge, but also to testimony based on ―technical‖ and ―other specialized knowledge.‖ Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999); Independent Fire Ins. Co. v. Sunbeam Corp., 99-2181 (La2/29/00), 755 So.2d 226. The trial court may consider one or more of the four Daubert factors, but that list of factors neither necessarily nor exclusively applies to all experts or in every case. Id. Rather the law grants a district court the same broad latitude when it decides how to determine reliability as it enjoys in respect to its ultimate reliability determinations. Kumho, supra at 526 U.S. 142, 119 S.Ct. 1167, 143 L.Ed.2d 238.

State v. Allen, 41,548, pp. 11-13 (La.App. 2 Cir. 11/15/06), 942 So.2d 1244, 1254-55.

State v. Brannon, 07-431, pp. 8-9 (La.App. 3 Cir. 12/5/07), 971 So.2d 511, 517-

518, writ denied, 07-2465 (La. 5/9/08), 980 So.2d 689.

10 Our review of the record indicates that it is true that the trial court provided

only general reasoning to accept Clark as an expert, which is insufficient to meet

the detailed requirements of the fairly recently amended La.Code Civ.P. art.

1425(F).6 We were unable to find any Daubert analysis by the trial court in the

record. The failure to conduct an analysis is considered a legal error. See

Robertson v. Doug Ashy Bldg. Materials, 10-1552 (La.App. 1 Cir. 10/4/11), 77

So.3d 339, writs denied, 11-2468, 11-2430 (La. 1/13/12), 77 So.3d 972, 973;

Arceneaux v. Shaw Group, Inc., 12-135 (La.App. 1 Cir. 9/24/12), 103 So.3d 1086,

writ denied, 12-2732 (La. 3/1/13), __ So.3d __. Thus, we must conduct a de novo

review of Clark‘s testimony.

The hearing in which Clark‘s qualifications were supposed to be examined

took place on March 14, 2011. At this hearing many other pre-trial issues were

discussed with only the following colloquy regarding Clark‘s qualifications taking

place:

MR. ACKERMAN:

We‘ve got prescription. We‘ve got No Right of Action, No Cause of Action. We‘ve got – we haven‘t even touched the Motion to Exclude Ms. Clarke‘s deposition with all of the testimony. It‘s almost like we do need an evidentiary Daubert hearing to figure out what she‘s going to testify to. I don‘t think we‘re going to do that today.

THE COURT:

Which I‘m not inclined to exclude her testimony. I read the deposition. She‘s got training skills and expertise. She‘s got documents galore. Some of those things, I didn‘t fully understand, but I‘m not embarrassed to say that.

And Ms. Hollins, you say that several times. You say that I‘m not following you or you just threw something new at me. And Hunter said he thought that you accused her of actually throwing something at you. I thought that was kind of comical.

6 See 2008 La. Acts, No. 787 § 1.

11 But I‘m not inclined to throw her testimony – that‘s something we can defer to on the merits during the trial. I‘m not going to exclude her. I can tell you that now. I think she‘s got data that she relied on. While I say it‘s confusing, it was really quite impressive how she would – you know, the things that she considered and the way she developed her opinion.

At the conclusion of the hearing, the trial court formally denied DHH‘s motion to

exclude Clark‘s testimony.

After conducting a de novo review of Clark‘s qualifications under Article

1425(F)(4), we find that Clark was qualified to testify as an expert in business

valuation, including damages resulting as a loss of market share and that her

expertise assisted the jury in determining damages.

Clark has been a certified public accountant since 1979 and is also a certified

valuation analyst and a certified forensic accountant. She testified that the latter

two certifications required passing examinations and years of experience. Defense

counsel did not cross examine Clark on any of her qualifications or question her

expertise in the area.

Further, we find that Clark‘s testimony and use of the market share theory

was reliable. Most Louisiana jurisprudence discussing market share deals with

claims involving monopolies. Establishing a market share for the purpose of

showing a competitor‘s monopolization of the industry is frequently litigated.

Market share in terms of business valuation has been the subject of litigation, and

the term ―market share‖ is easily understood. In Pelts & Skins Export, Ltd. v. State

through the Dep’t of Wildlife & Fisheries, 97-2300 (La.App. 1 Cir. 4/1/99), 735

So.2d 116, writs denied, 99-2036, 99-2042 (La. 10/29/99), 748 So.2d 1167, 1168,

some of the plaintiff‘s damages were assessed using a lost market share analysis

that was based upon the percentage of tags issued to the plaintiff for its alligator

12 skins. In the context before us, we find that the accounting practice of determining

a company‘s market share is a reliable methodology in the accounting world.

Moreover, Clark described how MCGC‘s market share was determined and valued

in minute detail.

DHH next argues that Clark‘s calculations were flawed. Based on our

review of Clark‘s testimony, we disagree. Loss of profits is a compensable

damage that need only be proved by reasonable certainty. Pelts & Skins Export,

Ltd., 735 So.2d 116. DHH claims that Clark‘s calculations were ―speculative and

based on unsubstantiated assumptions and conclusions.‖ The majority of DHH‘s

argument centers around the attached versus detached tanks issue, in essence

arguing that Clark should not have considered the market share of residential

ATUs with attached pump tanks. We find no error in Clark‘s calculations that

considered both attached and detached pumps as described further below.

Next, DHH claims that future lost profits could not be awarded for a twenty

year period. We note that the jury form did not specifically list a section for

―future lost profits‖ but instead ―loss of business reputation.‖ Additionally, the

jury‘s award for loss of business reputation is substantially less than the estimated

future damages that Clark testified to. Finally, DHH argues that Clark failed to

consider MCGC‘s subsidiary companies. We disagree. The jury assessed the

testimony regarding damages and made its own conclusions based on all of the

factors before it. Based on all of the evidence before us, we find no error in the

inclusion of Clark‘s testimony on these various issues. The issues pertaining to the

appeal of the actual damage awards will be discussed below.

Louisiana Sanitary Code/Selective Enforcement

Louisiana Sanitary Code

13 Here, DHH essentially argues the merits of the case. First, it argues that

neither the trial court nor the jury decided the fundamental question of whether

Section 729 of the Louisiana Sanitary Code applied to residential treatment plants

(MCGC‘s position) or whether Section 725 applied to residential treatment plants

with attached pumps and Section 729 applied to residential treatment plants with

detached pump tanks. MCGC argues that the jury made this factual determination.

We agree.

The bulk of the substantial testimonial and documentary evidence presented

at trial pertained to the application of Section 729 of the Sanitary Code. DHH

cannot now argue that this legal question was not determined by the jury when it

specifically noted that it was an issue for the jury to decide. After MGCG‘s

counsel moved for directed verdict on the issue of Section 729‘s application,

counsel for the state stated: ―And the Code itself is so in-artfully drawn that it is

subject to multiple interpretations. It‘s up to the Jury to look at that and see what

their interpretation of it might be, in relation to Murphy Cormier.‖ Later DHH‘s

counsel stated: ―And you have heard two manufacturers show how they

interpreted it differently. And it made rational sense, at least to me. And that‘s up

to the Jury to decide if it makes sense to them also.‖ Moreover, the record is

replete with evidence supporting the jury‘s finding as noted in the witness

testimony reviewed below.

GEORGE ROBICHEAUX

Robicheaux, a DHH employee for the past thirty-nine years, has been a

licensed civil engineer since 1977. For over twenty-five years, he has performed

sewage program manager work for DHH. He was involved in the rewrite of the

Sanitary Code under the chairperson of the committee, Russ Radar, the former

14 chief engineer of DHH. Robicheaux testified that Cormier was asked to serve on

the committee, which began working in the late 1980s and continued working

through the 1990s.

Robicheaux testified that it was his opinion that Section 729 applied to both

attached and detached pumps of residential units. He said that Section 729

specified minimum tankage capacity requirements. Thus, the pump tankage

requirement depended on the size of the treatment unit that amounts to 10% of the

average daily design flow of the treatment system (the pump on level) plus 10% of

the average daily design flow of the treatment system (high water alarm level)

pursuant to Section 729. Further, ―a reserve volume may be provided between the

‗high water level‘ and the invert of the inlet pipe to the holding tank, if so desired.‖

Thus, a 500 gallon residential unit would require a 100 gallon pump. Robicheaux

said that the purpose of the pump (sometimes called a lift chamber or pot belly) is

to assist the gravity flow of waste materials leaving the home. He said in recent

years that the pumps also supply disinfectant via chlorine or other chemicals.

Robicheaux next discussed the treatment plant itself, which has to be

certified by a third-party such as the NSF. He said that the NSF will not inspect a

detached pump station and will generally not inspect an attached pump station

except as it relates to the structure of the treatment plant. Robicheaux testified:

Q. So if Murphy Cormier General Contractors is going to comply with the law and has a 500 ATU system with a pump tank, whether attached or detached, but he‘s got chlorine in his pump tank, he has to have 130 gallon capacity, doesn‘t he? He has to meet the ten and the ten, and he has to have a reserve for the chlorine; am I correct?

A. That‘s the way that I would view it, if I were a manufacturer, in terms of meeting the Code requirements.

15 Robicheaux went on to state that it was ―abundantly clear that those

percentages were specified as such because of the need to consider variations in

sizing of tankage,‖ i.e., 10% of gallon unit. He said that it was DHH‘s job to

enforce the new requirements of the law. Robicheaux testified that he became

involved when Cormier began complaining that the rules were not being enforced

against his competitors. Robicheaux said that his subordinate, Julie Fourrier, an

engineer, was investigating Cormier‘s complaints. A May 1, 2007 letter composed

by Fourrier, to Karen Irion, Chief Engineer of DHH, was submitted into evidence.

In the letter, Fourrier requests guidance on how to proceed following an inspection

of the pump chamber of Cormier‘s competitor that did not meet the requirements

of the Sanitary Code.

A September 11, 2006 letter from Fourrier to Irion indicated that Fourrier

and another DHH employee, Tom Walton, inspected the Cormier tanks and used a

flow meter to measure how many gallons the various pump chambers were. She

noted that before the Sanitary Code revisions his tank was 42 gallons; after the

revision his tank was 133 gallons, and his competitor‘s tank (which Cormier had

purchased two years prior) was 58 gallons.

A May 7, 2007 letter from Irion to Cormier‘s competitor, John Pomier of

American Wastewater Systems, Inc., was submitted into evidence. 7 The letter

notified Pomier that his B.E.S.T 1 AWS – 500 model was not in compliance with

the Sanitary Code and that corrective action was required to increase the pump

chamber capacity to 100 gallons. However, Robicheaux testified that this letter

7 The record indicates that the letter was drafted by Fourrier for Irion‘s signature, but it was never signed by Irion.

16 was never mailed to Pomier, in his opinion, because Pomier was a life-long friend

of Stanley Clause, a DHH employee.

Robicheaux next discussed some letters composed following a meeting in

which Irion and Cormier were present. Robicheaux said that Irion agreed with

Cormier that field sanitarians were not enforcing the Sanitary Code. Robicheaux

opined that DHH knew that Cormier was complying with the Sanitary Code while

others were not based on discussions he had with Irion, Fourrier, and the state

engineering board.

However, after Cormier filed suit, Robicheaux testified that he remembered

Irion saying that she would put Cormier out of business. Robicheaux related that

Irion began sending out emails in an attempt to shut down Cormier by gathering

evidence buttressing her position regarding commercial systems that only two-and-

a-half-inch or three-inch pumps were an acceptable size; Cormier used two-inch

pumps. Robicheaux testified that two-inch pumps had been approved by the state

for more than twenty years in all regions by Chief Engineers before Irion. He said

that numerous two-inch pump plans were approved under Irion prior to her

decision to require a two-and-a-half to three inch pump. Robicheaux described

Irion‘s actions at the time as ―quite an abrupt departure. It was with much fanfare

and with point of acute interest that we assisted on this issue of the two and two-

and-a-half inch pump.‖

Robicheaux next discussed the ―trash trap‖ design of Cormier‘s commercial

sewage treatment system. The ―trash trap‖ is a pre-separation or a pre-treatment

mechanism used in a commercial sewer treatment system. Robicheaux said that

Irion filed a notice of intent to change the regulations in 2010 to require a two-and-

a-half-inch pump or grinder in equalization units. Cormier stated that his opinion

17 was never sought and he viewed it as ―an attempt to clarify the issue that was

evolving on the basis of the complaint and litigation.‖

Robicheaux further testified regarding DHH‘s promise to Cormier that he

would be allowed until March 31, 2001, to get rid of his inventory that would no

longer meet the Sanitary Code. He recalled attending a meeting of the Governor‘s

task force and overhearing the conversation Cormier had with Dr. Guidry in which

Cormier was told that he would have until March 31, 2001, to get rid of his

inventory. He stated that Cormier‘s attorney was present at the time and had

specifically indicated to Dr. Guidry that more time would be needed. When

questioned whether the state reneged on that promise, Robicheaux responded

affirmatively.

Robicheaux further discussed the complaint filed by Irion against Cormier

with the Board of Engineering, claiming that Cormier was practicing engineering

without a license. Robicheaux recalled Irion speaking about it, and he stated that

―she was proud of the fact that she and others had done that.‖ Robicheaux

discussed the fact that Irion was operating a personal consulting business out of the

DHH office; that the Louisiana State Police seized various equipment from her;

and that she was dismissed from her duties.

Robicheaux testified that a February 28, 2001 letter sent by Cormier‘s

former attorney, James C. Percy, to Dr. Guidry, referenced the conversation

Robicheaux overheard in which Dr. Guidry said Cormier would have until March

31, 2001, to have his treatment systems be in compliance with the Sanitary Code.

Robicheaux also discussed a letter sent to Cormier that was written by Doug

Vincent, Chief Engineer, but signed by Dr. Guidry, informing Cormier that he

could not sell the smaller tanks and would not be granted an extension. However,

18 that letter was not submitted into evidence because it was missing. Robicheaux

said that Irion ordered him to bring her twenty-four boxes of records when they

transitioned from one building to another and that he ―did observe her effectively

destroying the records, putting them into–in the ‗to be trashed‘ pile, summarily.

Twenty-four boxes, legal, all principally containing the Chief Engineer‘s records.

And those were the ones that that letter that you, I think, are referring to, likely

would have been in.‖ Robicheaux further discussed the letter, noting that he was

the custodian of the records when Vincent was the boss. He stated that once

Vincent was dismissed for cause, he became the effective custodian and that once

Irion assumed Vincent‘s responsibilities, she ordered him to bring her all of

Vincent‘s files, ―as she expressed it, to cull them, to clean them out because going

forward–and these were her words–business would be conducted on her basis, not

his, as she decided, not as he decided.‖

Robicheaux then discussed a September 26, 2006 letter sent to Mr. Cormier

by Fourrier. 8 The letter advised Cormier that all pumping stations must be in

compliance and that inspections would be forthcoming. The letter states in

pertinent part (emphasis added):

The particular requirements for pumping stations can be found in the Louisiana Administrative Code (LAC) Title 51, Part XIII, Chapter 7, Section 729 which is available for download at http://www.dhh.louisiana.gov/offices/publications.asp?ID=206&Detai l=928 This section applies to any pumping station that is attached by incorporating the chamber in the mold or fabrication process to the individual mechanical plant or manufactured as a separate, detached tank.

Robicheaux again stated that when the Sanitary Code was implemented in

2001 there was no doubt that Section 729 applied to attached and detached pumps.

8 The certified mail return receipt evidencing that Cormier received the letter is included in the record.

19 Robicheaux testified that the letter merely reinforced what everyone already knew

regarding the application of the Sanitary Code to both types of pumps. Further, he

stated that the letter would not have been sent out without all supervisory staff

concurring on its contents.

JULIE REED FOURRIER

Fourrier testified that she began working for DHH in 2002 and worked

under the supervision of Robicheaux. She discussed her investigation into

Cormier‘s complaints that residential sewer treatment plants were being sold that

did not comply with the Sanitary Code. She agreed that residential sewer plants

were being sold that did not comply with the Sanitary Code as Cormier alleged.

Next, Fourrier reviewed a follow-up letter regarding the measurements that

were taken at Cormier‘s yard on August 6, 2006. The September 19, 2006 follow-

up letter Cormier sent to her essentially asked what she was going to do about the

selective enforcement of the Sanitary Code by DHH now that she had seen it with

her own eyes.

Fourrier then discussed the missing letter in which Cormier was informed

that he could not sell the forty-two gallon tanks and would not be granted an

extension. She confirmed that the letter was authored by Vincent but signed by Dr.

Guidry. Fourrier further testified that Irion had disposed of many documents.

Fourrier said that after she conducted her investigation, Irion told her to

prepare a letter to send to the manufacturers. Fourrier confirmed that she authored

the September 26, 2006 letter stating that Section 729 applied to both attached and

detached pumps. She further confirmed that the pump chamber had to have a ―ten

percent and a ten percent working capacity to compare to the amount of the

treatment plant[,]‖ meaning that 10% from the bottom of the tank to when the

20 pump kicks on from the float, and then, 10% from that point to the high-water

alarm mark. Thus, a 500 gallon tank requires a pump tank (attached or detached)

with 100 gallons. She agreed with Robicheaux that extra space for chlorine was

necessary, accounting for the extra thirty-three gallons that Cormier has in his

pump tank.

Fourrier said that Clause and Cambre knew about the September 26, 2006

letter before it went out. In the letter, manufacturers were given two options:

submit plans and specifications or inspection of their system. Fourrier said that

American Wastewater (Pomier) was first on the list for inspection and that it failed

the inspection as its pump tank was in violation of the Sanitary Code because it

was too small. She said that National Wastewater refused to allow her to conduct

her inspection. She drafted the cease-and-desist letter to American Wastewater,

and ―then after that, everything fell apart.‖

Fourrier discussed her May 1, 2007 letter to Irion informing her of American

Wastewater‘s violation. This letter was circulated to Cambre, Clause, Robicheaux,

and Vincent. Next, Fourrier drafted the May 7, 2007 cease-and-desist draft letter

that she prepared for Irion‘s signature. Fourrier said that despite Irion agreeing

with her that American Wastewater was in violation of the Sanitary Code, the

cease-and-desist letter was never issued to American Wastewater. She said that

she gave it to Irion to proceed up the proper channels, but she did not know what

happened after that. Nevertheless, Fourrier testified that American Wastewater‘s

license was renewed in 2008, 2009, and 2010, even though it was violating the

Sanitary Code. When questioned if it was clear to her that the state was selectively

enforcing the Sanitary Code, Fourrier answered affirmatively. She stated that she

felt it was unfair that Cormier could not get a straight answer from DHH and had

21 to proceed with a lawsuit. She noted that she could not get a straight answer from

her superiors, either.

Regarding Cormier‘s commercial systems and the two-inch metering pump,

Fourrier said that any time Cormier‘s name came up, Irion ―would get flustered

and would not speak highly of him.‖ She also knew that his design had been

approved by four previous engineers for more than twenty years, but that Irion was

going to prevent it.

Fourrier testified that although Section 729 historically applied to both

attached and detached pumps, the state then attempted to take the position that

Section 729 did not apply to an attached pump chamber. She stated: ―Well it did.

Then it didn‘t. Then they had no answer.‖

Fourrier said that she never denied any permit based on whether a pump was

attached or detached. She also said that through the time she left, permits had been

approved regarding residential treatment plants with attached pump chambers of

less than a hundred gallons.

Regarding commercial units, Fourrier said that the two-inch pump is in the

equalization portion of the treatment plant and not in the pretreatment process.

The two-and-a-half or three-inch requirement has to do with raw sewerage.

Fourrier testified that Irion twisted the rules in order to deny Cormier permits on

his commercial units.

GLENN CAMBRE

Glenn Cambre, a lawyer, started working for DHH in 1999, and was the

Executive Director of the Center for Environmental Health Services for the Office

of Public Health, which oversaw sanitarian services, engineering services, the

22 section of environmental, epidemiology, and toxicology and drinking water at the

time of trial.

Cambre reviewed an October 6, 2006 letter that he sent to DHH Attorney

Supervisor, David McCay, requesting advice regarding Cormier‘s claims. Cambre

testified that he stopped the cease-and-desist letter from going out to American

Wastewater because it was improper procedurally.

Cambre also notarized Irion‘s signature in the complaint against Cormier

with LAPELS for practicing engineering without a license. Cambre was Irion‘s

supervisor at the time and was aware of her complaint with LAPELS. He said that

the complaint was Irion‘s idea, but that he did not override it. He testified that he

was aware that the engineering board dismissed the charges against Cormier.9

Regarding Irion‘s decision not to allow Cormier‘s commercial sewer

treatment designs that used a two-inch metering pump in the equalization

process—Cambre said that the issue came up, and he was aware of it. He then

discussed numerous locations all over the state in which Cormier had installed

these systems, after approval by local engineers for DHH, with two-inch metering

pumps.

Cambre next discussed a June 21, 2010 letter that he composed to Cormier

which is reproduced here:

RE: Required pump sizes in commercial sewage plant equalization basins

Dear Mr. Cormier:

I have received and reviewed your letter to me dated June 11, 2010, wherein you request an Administrative Appeal regarding your

9 A letter was sent on September 30, 2010, from LAPELS determining that insufficient evidence existed against Murphy Cormier General Contractor, Incorporated, for a violation of the board‘s statutes or rules.

23 contention that LDHH‘s requirement of minimum 2.5 (inch mark) pumps (or, alternatively, grinder pumps) in equalization basins is legally impermissible. I have sought input from our legal department, and they advise me that the Louisiana Division of Administrative Law, which hears all Administrative Appeals related to the Office of Public Health, has no jurisdiction to hear or issue a ruling on such an abstract question, which essentially constitutes a request for Declaratory Judgment.

I reiterate and maintain LDHH‘s previously stated position that we are on firm legal footing in requiring 2.5 pumps in equalization basins. LDHH has imposed this requirement statewide for many years, and any instances where it was not required for MCGC‘s commercial plants represent either insubordination or oversight on the part of LDHH personnel. We also believe that this requirement is well supported by various provisions in the Ten-State Standards. Nevertheless, in the interest of removing any ambiguity and providing absolute clarity on the issue, we have drafted a Notice of Intent (―NOI‖) to appear in next month‘s edition of the Louisiana Register. A copy of the NOI is enclosed herewith. We believe that enactment of this new rule should effectively resolve and put an end to this issue.

Cambre denied that all of the engineers who approved all of the units

installed over the last twenty years with the two-inch grinder were fired for their

insubordination or oversight. However, he said one of them was no longer

working for the state, but three who had approved many of Cormier‘s two-inch

grinders still worked for Cambre.

Cambre was questioned if he knew Irion was arbitrarily enforcing something

that was not part of the law against Cormier, to which he responded that he knew

she did not like Cormier‘s design even though the design had been used for more

than twenty years. Cambre admitted that DHH withdrew the proposal following a

hearing, and the law requiring three-inch metering pumps was never passed.

However, the following exchange occurred:

Q. They‘re denying the permits when there‘s no law on the books rationalizing them doing it; am I correct?

A. You are correct.

24 Q. You can explain now, Mr. Cambre.

A. The engineers who are reviewing these plans can explain what they‘re doing. I‘m not an engineer. I‘m not going to try to give you the explanation.

Cambre was questioned as follows:

Q. Would it be correct then to say that as the head of the department, you had a question in your mind as to whether or not 729 applied to an attached pump chamber as of the date of the letter to your attorney?

A. Yes, sir.

C. RUSSELL RADER

Rader, a licensed professional civil engineer, was the Chief Public Health

Engineer for DHH from 1991-1997. He was qualified as an expert in civil,

environmental, and sanitary engineering with a sub-expertise in the 10 States

Standards of the Louisiana Sanitary Code. Rader chaired the committee to rewrite

that portion of the Sanitary Code dealing with sewage treatment plants, which he

described as being in turmoil. He stated that both Robicheaux and Cormier

participated in the rewrite of the Sanitary Code. The rewrite of Chapter 13 was

completed by mid-1997 before he left to work in West Virginia.

Rader was asked if ―the State was selectively enforcing or arbitrarily

enforcing the Louisiana Sanitary Code of 2001 to the detriment of Murphy

Cormier?‖ He was of the opinion that the Sanitary Code was being selectively

enforced. Rader testified:

Total inconsistency and being singled out to go after for whatever reason. And especially going over the fact that the agency didn‘t know what to do when something was wrong; ignore it. You know, it‘s like cheese. Got to cure. Sit there, let it sit there a while.

And the comments by the former Chief Engineer, Karen Irion, was [sic] obviously pointed. It wasn‘t pointed at industry. It was pointed at one person, and you don‘t do that. That‘s a good way to end with big problems.

25 Consistency with everybody. Don‘t point out one person as a problem.

Next, Rader was asked his opinion as to whether there was arbitrary

treatment by DHH with respect to Cormier‘s commercial sewer treatment plant

design. He stated as follows:

My opinion, based on ANSI requirements, 10 States Standards and Louisiana State Code that the agency was going out and beyond the policies and procedures and approved policies. The State has a system set up that where a policy goes through, is signed and worked its way up through the channels. Goes to State Health Officer. It‘s signed off on and given a number. And that is the policy and guidelines. It‘s not what I want. It‘s not what two or three district engineers or sanitarians want. It‘s what the agency through the State Health Officer allowed.

In one of my letters that I sent out was the fact I had checked with our legal counsel. And the only two things enforceable are what‘s in 10 States Standards and the Sanitary Code. Policy memos were basically guidances. Anything else written was just off-the-wall and not acceptable because we had some engineers that try to use minutes of previous meetings. Oh, this is what we all want to do. I‘m sorry. That not [sic] what the Code and what legal says.

Regarding Cormier‘s use of the two-inch metering system in his commercial

systems, Rader said the two-inch metering pump was approved throughout his

tenure and four others before him and further:

All of us [were] very consistent in what we felt that flow equalization in the commercial plants should be capable of passing two-inch solids because it was not addressed flow equalization, in 10 States Standards as to the pump sizing. It was basically what had been done here. We had probably better than a twenty-year track record that these two- inch metering pumps of flow equalization in commercial plants worked and still continues [sic] to work.

Rader said that both attached and detached pumps must meet the Sanitary

Code requirements. He said that compliance with the Sanitary Code is required by

law. Rader also noted that the 10 States Standard requiring a three-inch metering

26 pump applied to raw sewerage only. He said that Cormier‘s design pre-treated the

raw sewerage via its trash trap, which then leads into a flow-equalization tank.

Rader reiterated that Section 729 applies to pumping stations whether

attached or detached. Rader said that Cormier‘s design met the 10%/10%

mandatory requirements of the Sanitary Code (―shall‖) and that Cormier‘s design

used the discretionary portion between the high water alarm and the inlet valve for

the chlorine, thus the extra capacity. Rader stated that Cormier complied with the

amendments to the Sanitary Code, while some of his competitors did not.

MURPHY CORMIER

Cormier testified that he started his business manufacturing sewage systems

in 1978 and has testified as an expert on behalf of the state in enforcement actions.

He said that he was on the committee that amended the Sanitary Code, especially

Section 729. Cormier said that when he served on the committee, it was well

understood that Section 729 would apply to attached or detached pumps. Cormier

said at the time the Sanitary Code was changing he knew it would affect him and

that he would have to build new and larger forms to comply with the 10%/10%

requirement. He said that the new design was put into place to prevent sewerage

back-ups in people‘s homes. Prior to the 2001 revisions, Cormier had been

manufacturing the smaller forty-two gallon pump tank.

Cormier testified that his competitors were not complying with the new

regulations. He said that DHH assured him they would investigate and enforce the

rules against everyone. However, that was never done. Cormier testified that he

made many complaints with DHH. Finally, he said Fourrier came out to

investigate his claims. He described showing her his competitor‘s tank and the

27 flow meter test he used to show that his competitor‘s tank was a little less than

sixty gallons.

Cormier described how his business operates. He said that he recruits

submanufacturers around the state to build his tanks, as it would be cost prohibitive

to ship them due to their weight. He also recruits the installers to put the tanks in

for new homeowners. Cormier said his market share was steadily declining as

submanufacturers and installers were able to buy the much cheaper, smaller tanks

that were not complying with the Sanitary Code. Cormier‘s competitors were not

installing the high-water alarms, the controls in the pump tanks, or building them

to proper size.

Cormier testified about a meeting he had with Cambre and Irion. He said

that he asked for Fourrier and Clause to attend the meeting but that Irion told him

that she could handle it. Cormier was assured that immediate action would be

taken. Cormier said the situation only worsened over the next year, and he was

forced to file suit again in July 2007.10

Cormier stated that after Irion‘s deposition was taken and it was discovered

that she was operating a business on the side, she turned against him and started in

on his commercial units. Cormier described the delays in getting permits. He said

it normally took thirty to forty-five days to get a permit, and then suddenly it

started taking him a year because DHH would deny the permit and send back

further random requirements based on ―unwritten policies.‖ He said that

eventually DHH told him he could not use the design he had used for the past

twenty years. Cormier testified that he was forced to change his commercial

10 Cormier previously filed suit in 2002 against DHH and two of his competitors regarding the same claims. He dismissed the suit after assurances by DHH that it would enforce the Sanitary Code.

28 systems to use grinder pumps, even though he knew it was going to give inferior

treatment to his customers.

Cormier next described his long-standing business relationships with

engineers and contractors throughout the state. He said that few want to work with

him due to the delays in permitting and because his reputation has been damaged.

He testified that he had seventy-six employees, which dwindled to twenty-five to

thirty due to the loss in business. He said MCGC‘s market share of residential

units used to be 50%, and now it is not doing a third of the business that it used to.

Regarding commercial units, Cormier said that engineers refuse to do business

with him until the matter is settled. He said that he has lost millions of dollars in

business because of the selective enforcement and misapplication of the law on the

commercial sewer systems.

Cormier then discussed the attempted change in the law to require a three-

inch metering pump and the State‘s eventual withdrawal of their request to change

the law. However, Cormier testified that even though the law was not formally

changed, DHH is still requiring that he use grinder pumps in place of the two-inch

pumps he formerly used. Cormier then described seven different projects that he

completed for the state of Louisiana with two-inch non-aerated trash trap pumps.

Cormier next discussed the March 1, 2001 versus March 31, 2001

implementation of the new rules. Cormier admitted that he did not receive

permission in writing from Dr. Guidry to extend the deadline until March 31, 2001,

and he knew as of April 2000 that Vincent of DHH was protesting the extension.

TREY ALEXANDER

Alexander, a professional engineer, testified that he has worked at

Associated Design Group since 1996. Associated Design Group is comprised of

29 mechanical and electrical engineers who mostly design mechanical and electrical

systems for commercial buildings. Alexander said that Associated Design Group

used MCGC for mechanical sewer plants for many years and that Cormier had a

reputation for providing a quality product that he stood behind. Alexander said

that he reviews successful bids to make sure they meet code and standards and then

submits documentation to DHH for review in order to get a permit.

Alexander described an incident involving a school project in which DHH

wanted a change in the design, specifically aeration of a trash trap to reduce odors.

Cormier believed it was a bad design because it causes particles to lift and float

into the tank. Alexander said Associated Design Group backed out of the project

rather than get in the middle of a dispute or be held responsible for a design that

did not work properly. However, he testified that he thought both sides had valid

arguments over whether trash traps had to be aerated.

GARY SCROGGS

Scroggs, a professional engineer since 1974, testified via videotaped

deposition. He said that he worked with Cormier since 2005 doing contract work

and had completed about twenty projects for Cormier. Scroggs would receive a

design summary package from Cormier, and he would verify that everything was

according to standard and affix his professional stamp to the drawings and plans.

Scroggs said that normally when he had to interact with DHH, the questions or

comments to proposed plans were predictable and that they were easy to work with.

However, he said that DHH suddenly started denying formerly approved items and

that DHH was ―off-base‖ and ―blockading‖ the progress of the projects. He said

DHH was inconsistent and changing the rules for no reason.

30 Scroggs described a particular job in Jena, Louisiana, in which a DHH

representative out of Alexandria, Chris Soileau, demanded a non-climbable fence

that would have been flat panels of metal at an astronomical cost when six-foot

chain link fences were commonly used throughout the area. He further described

detailed questions that were posed before the project could be completed that were

never required before. He described other situations in which random and arbitrary

requirements of substantial cost were imposed on MCGC by DHH. He said

Cormier‘s projects were significantly delayed due to these extra requirements.

Scroggs testified that he was affected personally as an engineer because his

reputation was being questioned. He said that there were allegations that he was

―rubber-stamping‖ Cormier‘s designs, which he denied. He said that eventually he

received a letter from the Alexandria office of DHH requiring responses on a

letterhead. At the same time, Scroggs said he formed a company, Hummingbird,

in order to shield himself personally from liability. He said thereafter that DHH

filed a complaint against him for practicing engineering in the state of Louisiana

without having registered Hummingbird. He said that he paid the fine for not

having Hummingbird registered, but that the charges against him personally were

eventually dropped. Scroggs testified that the problems escalated and worsened as

he continued to work for Cormier. He said that he will no longer accept projects

from Cormier in the Alexandria area and has, in fact, turned down projects due to

the unwarranted scrutiny of the DHH office. However, he testified that he had no

idea if other manufacturers were experiencing similar inconsistencies.

BRANDON DUOS

Duos, a professional engineer since 2009, was employed by ReCon

Engineering (ReCon). Duos testified that he provided the engineering consulting

31 services on a project at a local school in which Cormier won the job. Duos said

that he had never worked with Cormier before, but that Cormier‘s reputation at

ReCon was good, and that the installation of the sewer system at the school was

expected to be routine.

Duos described that from the outset of the project, there was a problem with

the pump. He said DHH wanted him to use a grinder pump, which was not made

for his design. Duos said that his investigation into the 10 States Standards and the

Sanitary Code revealed that raw sewage requires a two-and-a-half inch pump but

that Cormier‘s system pre-treated the sewage thus not requiring a grinder. Duos

opined that Cormier‘s plans met the intended design and were fine. However, he

said that DHH would not approve the plans and continued to raise trivial issues.

He said that dealing with DHH was ―cumbersome.‖ For instance, Duos said DHH

would ask for information that had already been provided.

Duos further testified that ―it was actually very comical at times because I

was looking at it at my desk and saying, wow, we tried to make an attempt to

accommodate something that, in my expertise, it was not something you would

want to do.‖ He said that there was a lot of ―back-and-forth‖ on trivial issues that

just delayed the job. Duos testified that this happened repeatedly even though he

was sure every time he would send the paperwork back that the permit would be

issued. Instead, DHH would mail a new response with more questions three-to-

four weeks later despite his requests to email, phone, or meet in person in order to

speed up the process. Finally, Duos said that DHH‘s requests caused him ―to go

outside of the preferred methods of how we would normally want to do this type of

work.‖ In fact, he testified that in his opinion, DHH‘s requests were contrary to

good engineering design.

32 TODD CORMIER

Todd Cormier, Murphy‘s son, testified that he became officially employed

by MCGC in 1991. At the time of trial, Todd was the Vice President and General

Manager of MCGC. Todd discussed some of the substantial changes that MCGC

had to make once the new Sanitary Code went into effect to accommodate the

larger pump tank size requirements. He discussed the reduction in business over

time based on the ―pour schedule‖ (of the molds) that went from six days a week to

two days a week. He testified to the loss of the installers that occurred because

they continued buying smaller, cheaper tanks from MCGC‘s competitors. Todd

said that commercial units had always been approved with the two-inch pumps and

then suddenly DHH wanted a grinder. He said that the grinders are high

maintenance and have to be serviced every six months. He then discussed the

issue regarding aeration of the trash trap and said that aerating the trash trap would

stir up the solids and not let them fall out, defeating the whole design of the system.

Todd then discussed the job involving Trey Alexander. Todd said

Alexander declined to do the work after all of the previous problems they

encountered with DHH. He discussed various jobs in which permits had been

substantially delayed sometimes for more than six months, usually citing the

grinder pump or three-inch pumps as the reason.

JONATHAN CAUSEY

Causey was the Chief Engineer for DHH at the time of trial. He testified

that he oversees three major programs: the safe drinking water program;

community sewage program; and the operator certification program that certified

water and wastewater operators. Causey said that he does not oversee residential

33 sewage treatment centers at all, as that section was moved to the sanitarian services

section.

Regarding commercial units, Causey said that he began working under Irion

in 2006 and eventually took over her position when she was dismissed. Causey

said that he became aware of Cormier‘s dispute with DHH in disallowing his two-

inch equalizer pumps. Causey said that it was his job to interpret the Sanitary

Code and that it was determined at the time:

That wastewater, that is in an equalization basin, is you know, for what projects and applications that were presented to us at the time, was of the same character quality as raw wastewater. And therefore, the pump requirements applicable to raw wastewater would also be applicable [to] wastewater in these equalization basins prior to receiving treatment.

Causey said that the 10 States Standards references a three-inch solids

passage pump with four-inch discharge for pumps handling raw wastewater.

However, he said that DHH historically accepted two-and-a-half inch solids

passage pumps.

Regarding trash traps, Causey said he had never heard of one until shortly

after Hurricanes Katrina and Rita, when some were used for FEMA trailer parks.

He said they are not addressed in the 10 States Standards or the Sanitary Code.

Causey testified that his office has historically handled trash traps based on

Rader‘s old memo but that he personally does not ―really see much function that it

has.‖ However, he was willing to accept it if the trash trap design was felt

necessary by the engineer who was designing the system, but only if the trash trap

was aerated to prevent septicity of wastewater. He said that this policy is not in

writing, but he would require that the trash trap be aerated in any projects

presented to him

34 Regarding extended time for obtaining permits, Causey said that the changes

had been statewide due to turnover in engineers and ―a lot of problems, in this area,

regarding things that had been approved by the original engineer I spoke of, that

did not meet Code. . . . [H]e was enforcing the Code on plans, not enforcing the

Code during sanitary surveys, and that is still causing us problems today.‖ Causey

further attributed the permitting delay to increased regulations, increased work load,

and decreased work force. He said that DHH is attempting to have consistency

statewide and implementing new software tools.

On cross-examination, Causey was questioned about the complaint he filed

against Scroggs with LAPELS. He was not aware that the charges against Scroggs,

individually, were dropped. Causey was then questioned about a July 23, 2009

email sent to Irion that was submitted into evidence. In that email, Causey

informed Irion:

I spoke with all our Regional offices to verify what pump criteria they were using for pumps in equalization basins. The conclusion was that they were in fact applying the pump requirements in Ten State Standards for lift stations (2.5‖ solids passage or grinder pumps) to equalization basins when pumps were proposed to transfer raw wastewater from the eq chamber to the aeration basin. There were some eq basins such as in the Region 1 area that was just gravity flow from the eq basin to the treatment unit.

In fact, Causey admitted that the 10 States Standards required three inches,

but he said that DHH allowed two-and-a-half inch solids and grinder pumps on lift

stations. Counsel then questioned him about the 10 States Standards and the

definitions of raw wastewater to show that the 10 States Standards were being

misapplied to Cormier because the section dealing with raw wastewater was

separate from that area dealing with equalization basins. Cormier uses

equalization basins, and no pump size is required. Causey admitted that Cormier‘s

35 two-inch metering pump in his equalization basin had been routinely approved by

DHH within thirty days of requesting the permit across the state. He admitted that

on the job he reviewed, a 2005 FEMA project, he personally approved the use of

Cormier‘s two-inch metering pump.

Causey testified that he helped the DHH attorney draft the proposed rule

change. He essentially testified that the law had been misapplied for the twenty

years that Cormier‘s two-inch metering pump with trash trap had been approved.

In fact, through 2009, 138 of Cormier‘s two-inch metering pumps had been

approved for use in the state. Causey admitted to physically bringing Irion‘s

complaint to the LAPELS office. However, he denied knowing the content of the

complaint.

MICHAEL KELLY VIDRINE

Vidrine testified that he had worked for DHH since May 1989 and was

currently the program administrator for the on-site wastewater program for DHH.

He began his tenure with DHH as a parish sanitarian in St. Landry Parish and held

that position for ten years. He said that his department inspected residential

treatment units. Vidrine said that some had pumps attached and some did not,

depending on gravity at the particular location.

Vidrine became the on-site program manager in October 2010. He said that

in 2010, there were about 12,000 residential systems installed. He testified that

Section 729 of the code did not apply to attached pump stations. He testified that

―the Code is not very clear about it, number one, and the—the—the one illustration

they have on it is for a detached unit.‖ Vidrine opined that ANSI certified units

with attached pumps did not undergo further review before local sanitarians

36 because the whole unit had been already been certified by ANSI. However, he

knew that ANSI did not actually inspect the pumps, only the treatment unit itself.

Vidrine discussed a memo that he sent out across the state to all parish

sanitarians on March 2, 2005, that stated in part:

With regard to an unrelated matter that came up today as well, please be advised that pump stations requirements apply only to actual pump stations, and not to pumps and pump tanks that are integral to ANSI- approved treatment plant configurations. The requirements for ―off‖ and ―on‖ and ―high water alarm‖ floats which are required in pump stations, do not apply to these ―built-in‖ pumps and pump chambers.

Vidrine testified that he does not inspect attached pump chambers, but he

does inspect detached pump chambers pursuant to Section 729. Trash traps are not

inspected either unless they are on commercial units greater than 3,000 gallons.

Vidrine said that a checklist prepared by DHH engineers is used in the inspection

of commercial units.

AMANDA LAUGHLIN

Laughlin, a licensed professional environmental engineer since 2007,

worked as an engineer for DHH for nine years. She initially worked in Lafayette

as a plans review engineer, reviewing plans of systems over 3,000 gallons and also

complaints relating to sewage systems. She said that plans had to be reviewed

within sixty days of submission to the office. Laughlin noted that very few plans

are approved on their first submission. Laughlin testified that any concerns about

the plan are addressed in what is called a ―comments letter,‖ which is sent back to

the engineer. DHH then awaits a response, and the permit is eventually issued

once any issues have been addressed.

Laughlin stated that the 10 States Standards requires a three-inch solids

passage, but that DHH ―has had a long standing practice of allowing less than that,

37 a two-and-a-half-inch passage or a grinder pump.‖ However, she was aware that

Cormier had numerous plans approved and permitted with only the two-inch

equalizer pumps. In fact, she personally had permitted two of them. However, she

said it was a mistake on her part. Laughlin said that it was overlooked due to

larger issues involved in the project.

She denied ever being told to obstruct or delay plans that used Cormier‘s

units. She further stated that she had denied permits to other manufacturers using

two-inch pumps in 2007 and 2009. She said that anytime she runs into a two-inch

pump, in an equalization basin, she denies it or requires a two-and-a-half inch

pump or a grinder.

MICHAEL CAZES

Cazes, a professional engineer since 1974, testified that he is the regional

engineer for DHH Region Six covering the central Louisiana parishes of Vernon,

Rapides, Avoyelles, Grant, Winn, Catahoula, Concordia, and LaSalle. Cazes

began working for DHH in 1982. He said that he reviews commercial sewage

treatment plants in excess of 3,000 gallons while local parish sanitarians review

systems of less than 3,000 gallons. Cazes testified that his office handled the

application for permit sent in by Scroggs. He said that one of the engineers in his

office who works for him, Chris Soileau, contacted Causey regarding Scroggs‘

alleged lack of an engineering license.

Cazes said that trash traps are optional, but if they are used, they must be

aerated to reduce smell. He opined that commercial pumps require the passage of

two-and-a-half inch solids regardless of where the pumps are located in the system.

He said that DHH‘s opinion is that a two-and-a-half inch solids passage pump is

the minimum regardless of whether a trash trap is a pretreatment. Cazes said he

38 had approved Cormier‘s two-inch metering pump in the past, but that it was his

error due to oversight.

On cross examination, Cazes was presented with two other sites in the

region that were approved with use of Cormier‘s two-inch pumps. Cazes did not

recall one of them at all, but admitted that one was approved by Soileau. Thus, out

of the three plants Cormier had installed in this region, all had a pretreatment trash

trap with two-inch metering pumps.

KAREN IRION

Irion, a professional engineer since 1991, testified that she was the Chief

Engineer for DHH from August 2006, until June 2011. From 2000 to 2006, she

was the Deputy Chief Engineer for DHH.

Irion testified that she was ―vaguely familiar‖ with the complaints made by

Cormier. She claimed to be unaware of what happened because she ―stopped

working on anything to do with Mr. Cormier.‖ She denied causing delays in

Cormier‘s permitting and denied making threats to put MCGC out of business.

She explained her comments as follows:

The answer was, I said, that the – I would nev – nothing DHH would do would – would get rid of these thousands of individual sewage systems going into subdivisions, but that DEQ was going to reduce, or put these individual systems, basically, out of business. And I might have said including systems like Murphy‘s, through the total maximum daily load requirements that they are putting in place. It was a general comment that, because I don‘t like those kind of – the way they were putting them in, you know, in groups.

Q. So, you have a personal bias against individual residential systems?

A. I have an engineering bias against it –

Q. Okay.

A. –because it‘s unsanitary and unhealthy. I don‘t like kids playing in ditches with partially treated sewage

39 Irion then discussed her consulting firm, KSI Environmental Consultants,

which was founded in 1996. She said that she consults with industrial and

commercial facilities to help them permit their air, solid or hazardous waste, and

wastewater. Irion said that DHH knew of her consulting business when they hired

her in 2000 and allowed her to continue her business as long as the work went to

DEQ for approval rather than DHH to avoid a conflict of interest. She said that she

did not consult with the manufacturers or installers of residential wastewater

treatment plants.

Regarding the cease-and-desist letter that Fourrier composed for her

signature, Irion did not remember seeing it or ―killing it‖ as Robicheaux testified.

Irion admitted that she had never looked at the issue involving the

application of Section 729 nor had she ever seen a detached or attached pump in

person. Cormier‘s counsel pointed out that Fourrier‘s letter, stating that Section

729 applied to both types of pumps, went out under Irion‘s supervision. She stated:

A. Okay. I said that I don‘t know that 729 was written for anything, in particular, other than a–a wastewater plant, but that an engineering design would normally incorporate an on-off switch.

Q. Right.

A. That‘s what I said.

Q. Attached, detached, you‘d have to have a –

A. It wouldn‘t make –

Q. – an on/off switch?

A. –any difference. If you have a pump, you should have a level switch.

Regarding commercial tanks, Irion admitted she did not know if Cormier or

his competitors were complying with the law. She was then asked about the

40 deposition in which she was questioned about her consulting business. At the

deposition, Cormier‘s counsel asked for a list of clients that Irion refused to

divulge. She said ―I thought it was out of bounds, a personal attack against me,

and I said so.‖

Irion claimed that Cormier was persecuting her. She admitted never reading

the rules on commercial sewer treatment. She denied having any knowledge of the

issue over two-and-a-half-inch or grinder pumps in equalization basins. She

claimed that she was told to stay out of the issue.

Regarding the fact that the engineers working under her stopped accepting

Cormier‘s trash trap commercial design with a two-inch metering pump in the

equalization basin after the December 15, 2008 deposition in which Irion was

questioned about her consulting business, she stated:

A. Oh, okay. I actually wasn‘t even aware–we had discussed it. We had been very unhappy with the design. The reason I act is when I get complaints, okay

She was asked again and stated:

A. I did not quit accepting them because I imagine that the Regional Engineers looked at the engineering designs and, but they didn‘t specifically discuss that with me. And I am surprised that nobody brought it up in our every-other-month video conference, but no–

Q. So, you‘re telling the Jury you never discussed his designs?

A. We did discuss the designs. I didn‘t know they had refused them.

Irion claimed that Cambre made all the decisions regarding Cormier as she

was instructed to stay out of it. Despite having no involvement and having no

knowledge of numerous documents that circulated throughout the DHH office,

Irion said she did file a complaint against Cormier with LAPELS because Cormier

was having an engineer seal a plan that he did not design. However, she was

41 unaware of the outcome of the complaint. Regarding Cambre‘s notarization and

knowledge of the complaint, Irion said that she and Cambre had discussed it and

she would not have filed the complaint without his approval.

DANE THIBODEAUX

Thibodeaux testified that he has a bachelor‘s degree of science in aquatic

biology and a master‘s degree in environmental science and chemistry and has

worked for DHH since 1990. He is an environmental health specialist and has a

registered sanitarian‘s license. Since 2007, Thibodeaux was the Regional

Sanitarian for Region Five that encompasses Calcasieu, Cameron, Allen, Jefferson

Davis, and Bureaugard Parishes.

Thibodeaux testified that his office inspects about 90% of the units in the

region and that in inspecting the mechanical treatment units in his region, they only

inspect detached pump chambers. He said that his office does not inspect attached

pump chambers because they are ―considered to be part of the ANSI certification.‖

Thibodeaux discussed complaints that his office received, including those by

Cormier, regarding the size of the attached pump chambers. Thibodeaux said that

he forwarded the complaints to Vidrine and Vincent. Thibodeaux testified that

―[I]t was determined that the systems were approved under ANSI certification and

that these systems were not to be looked at for attached pump chambers.‖ He said

that any applications taken prior to March 1, 2001, were allowed to be put in even

if they were not ANSI approved or up to current pump size requirements.

Thibodeaux also testified regarding the system his office instituted in

reviewing treatment systems. He consulted with an engineer and developed a

checklist to determine if units were meeting state standards. Thibodeaux said there

has been a tremendous increase in the comments letters issued by DHH in recent

42 years as DHH continues to look for ways to protect the public‘s health. He said he

received many complaints that permits were taking too long.

Cormier‘s counsel then showed Thibodeaux an email string between himself

and Vidrine and copied to Robicheaux, Fourrier, Vincent dated April 11, 2005. In

it, Thibodeaux asked:

Hey Doug [Vincent],

I‘m assisting Allen Parish with a 1500 gpd commercial technology plans review and this system is followed by what I consider a pumping station. The pumping station will discharge the treated wastewater to an approved outfall path. After reviewing the spec.‘s for conformity with Louisiana Administrative Code, Section 729 (Pumping Stations) it has come to my attention this tank is substantially smaller than the required 20% of the systems treatment capacity (10% for on/off switch and additional 10% for high water alarm).

After discussing this matter with Murphy Cormier and Todd Cormier (Murphy‘s Son), they stated this is not a pumping station but rather a lift station following a commercial technology treatment system and the requirements are not the same. I told them I would check into this and get back with them.

I need your expertise in distinguishing between the two and if a lift station has different requirements than a pumping station please notify me of where these requirements can be found.

As always, THANKS! Dane

Vincent‘s reply email stated:

Irrespective of the terminology used, there are several distinct categories of pump/lift stations, in line with the following guidelines: 1) Lift stations that are part of a sewage collection system must conform with the requirements for lift stations contained in the 10- State Standards.

2) Final Raw Water Lift Stations and effluent pumping stations serving commercial-grade plants should conform to the 10-State Standard, although, in the past, many of our offices did not force this on small plants (i.e., 10,000 gpd or less).

43 3) Section 729 of Part 13 applies to residential, on-site systems, and should be used as a guide in those instances where no effluent pump is included in the plant design itself, or where the pumping station is not a packaged unit (as in Section 729, B.). It is my understanding that we have not generally enforced this standard for effluent pumping stations for residential applications, but you will need to obtain input from Mike Vidrine on that.

In general, the term ―lift station‖ is utilized when describing pumping facilities in a sewage collection system (as in #1 above), and the term ―pumping station‖ generally refers to a facility for pumping effluent or storm water runoff.

I don‘t know whether what you call it makes a difference or should make a difference.

Doug

Thibodeaux nevertheless said he did understand the application of Section

729, stating that it applies to pumping stations. He said the April 11, 2005 email

was referring only to a 1,500 gallon-per-day commercial system.

Based on our review of the evidence, reasonable people could readily

conclude that Section 729 applied to both attached and detached pumps. The only

witness qualified as an expert in the Sanitary Code at trial, Russel Rader, testified

that it applied to both. Robicheaux, an impressive witness and an author of the

rewrite of the Sanitary Code, testified that it was commonly understood that it

applied to both. Fourrier‘s memo makes it clear that, as a representative of the

state, it applied to both. And, even Irion testified that it applied to both. Therefore,

reasonable people could easily conclude that Section 729 applied to both attached

and detached pumps. Moreover, even accepting DHH‘s position as true that this is

a legal issue improperly before the jury, a de novo review would only result in our

concluding that Section 729 applies to both attached and detached pumps. It is

illogical to conclude that the tankage requirements are inapplicable because the

pump is attached. Additionally, it was established that NSF does not test the pump

44 in the attached units except for structural integrity as it relates to the whole system.

The ultimate reason that the 10%/10% requirements exist, regardless of the

whether the pump is attached or not, is to prevent back-up of raw sewerage into

people‘s homes. Accordingly, this assignment of error is without merit.

Selective Enforcement

The next issue is whether the jury erred in finding that DHH selectively

enforced the Sanitary Code to the detriment of MCGC pertaining to both its

residential and commercial units. Again, we find no manifest error in the jury‘s

finding that DHH selectively enforced the Sanitary Code pertaining to residential

plants (i.e., by not requiring MCGC‘s main competitors to use larger tanks) and

commercial units (by specifically delaying the permitting process and intentionally

causing various other problems in granting permits to MCGC.) Substantial

evidence at trial supports these conclusions. Significantly, at the time of trial,

MCGC‘s competitors were still selling residential units that did not comply with

the Sanitary Code. On the commercial end, the evidence was clear that DHH,

primarily through the actions of Irion and those subordinate to her, made it their

mission to delay and frustrate the permitting process against MCGC. This

assignment of error is without merit.

Detrimental Reliance/Prescription

In this assignment of error, DHH argues that the trial court erred in applying

a ten-year prescriptive period because, legally, MCGC has no claims for

detrimental reliance pursuant to Wooley v. Lucksinger, 06-1167 (La.App. 1 Cir.

5/4/07), 961 So.2d 1228. Instead, DHH argues that a one-year tort prescriptive

period applies; thus, MCGC‘s damages should be limited to a one year period prior

to the filing of suit (July 2007) rather than back to 2001. DHH further argues that

45 based on the instructions given to the jury, it found that DHH committed a tort

rather than broke a promise. We disagree.

Detrimental Reliance

Detrimental reliance is codified in La.Civ.Code art. 1967 which states in part;

A party may be obligated by a promise when he knew or should have known that the promise would induce the other party to rely on it to his detriment and the other party was reasonable in so relying. Recovery may be limited to the expenses incurred or the damages suffered as a result of the promisee‘s reliance on the promise.

In Suire v. Lafayette City-Parish Consolidated Government, 04-1459,

04/1460, 04/1466 p. 31-32 (La. 4/12/05), 907 So.2d 37, 59, the supreme court

stated:

[T]he focus of analysis of a detrimental reliance claim is not whether the parties intended to perform, but, instead, whether a representation was made in such a manner that the promisor should have expected the promisee to rely upon it, and whether the promisee so relies to his detriment.

A plaintiff relies to his detriment and is entitled to recover damages when he

proves by a preponderance of the evidence: ―(1) representation by conduct or word;

(2) a justifiable reliance in that representation; and (3) a change in position to their

detriment because of that reliance.‖ Valois v. Village of Moreauville, 12-486, p.5

(La.App. 3 Cir. 11/21/12), 103 So.3d 1232, 1235; Suire, 907 So.2d 37.

DHH relies on Wooley, 961 So.2d 1228, for the proposition that a

governmental agency cannot be held liable in detrimental reliance for performance

of its regulatory functions. We disagree.

In Wooley, Health Net argued that it had a claim against the Louisiana

Department of Insurance (DOI) because it relied on DOI‘s approval of its actions

pertaining to the sale of a health maintenance organization. After a lengthy

discussion defining ―promise,‖ the first circuit declared:

46 As a matter of law, the actions and declarations of DOI [Department of Insurance] in following, applying and executing its statutory powers and regulatory functions are not promises for Article 1967 detrimental reliance and public contract purposes. Because there is no promise by DOI in favor of Health Net as a matter of law, Health Net‘s claim for detrimental reliance is legally nonexistent.

Id. at 1239.

While a claim for detrimental reliance cannot exist when the state is

―following, applying and executing‖ its statutory and regulatory powers, that is not

the case here. Furthermore, claims against governmental agencies sounding in

detrimental reliance are not per se prohibited. We find the facts of this case

distinguishable from those of Wooley because DHH specifically failed to enforce

its own regulations against MCGC‘s competitors after numerous oral and written

promises in favor of MCGC to do so. Moreover, we agree with MCGC that DHH

mischaracterizes its reliance. MCGC‘s damages resulted from DHH‘s failure to

enforce the Sanitary Code as it promised, thereby allowing its competitors to

undercut its prices.

Again, a substantial basis of DHH‘s argument is that Section 729 only

applies to detached pumps, thus, ―MCGC‘s detrimental reliance claim relative to

the residential sewer treatment plants is based on an alleged promise made to

Murphy Cormier by DHH to apply and enforce the Sanitary Code in accordance

with Murphy Cormier‘s interpretation of the Sanitary Code.‖ As we have affirmed

the jury‘s finding with regard to Section 729‘s application to both attached and

detached pumps, this argument fails.

DHH further relies on Showboat Star Partnership v. Slaughter, 00-1227 (La.

4/3/01), 789 So.2d 554, for the proposition that a plaintiff incurs no injury when it

does what it is legally obligated to do under the correct interpretation of the law.

47 The Showboat plaintiffs paid sales taxes under protest because the Department of

Revenue had formerly told them no taxes were due. The trial court and court of

appeal found that although the taxes were due, the state was precluded from

collecting them because of the doctrines of detrimental reliance and equitable

estoppel. The supreme court disagreed finding that ―[d]etriment resulting from

reliance simply has not been proved.‖ Id. at 563.

The supreme court referenced the court of appeal‘s application of four

additional factors required to invoke detrimental reliance against a governmental

agency. The court of appeal found that a ―somewhat greater burden may be

appropriate.‖ Showboat Star P’ship v. Slaughter, 98-2882, p.7 (La.App. 1 Cir.

2/18/00), 752 So.2d 390, 394, rev’d on other grounds, 00-1227 (La. 4/3/01), 789

So.2d 554. The additional factors include: ―(1) unequivocal advice from an

unusually authoritative source, (2) reasonable reliance on that advice by an

individual, (3) extreme harm resulting from that reliance, and (4) gross injustice to

the individual in the absence of judicial estoppel.‖ Id. Even applying the more

restrictive principles set forth in Showboat, which were included in the jury

instructions, we find that MCGC met its burden of proof by a preponderance of the

evidence. Cormier was given unequivocal advice from Dr. Guidry, Fourrier, and

other DHH employees that he would be given an extension of time and that DHH

would enforce the Sanitary Code against his competitors. Cormier reasonably

relied on that advice and dropped his original lawsuit. MCGC‘s business suffered

extreme harm including loss of substantial business and damage to its reputation

such that engineering firms refused to do business with them. Finally, it would be

grossly unjust to allow DHH to get away with the multiple egregious actions

perpetrated against Cormier by its various employees.

48 DHH further argues that Showboat stands for the principle that ―no

detriment is incurred when the plaintiff‘s only identifiable injury is that it must do

what it was legally obligated to do under the correct interpretation of the law.‖ We

find that principle inapplicable to the facts of this case. The fact that Cormier

complied with the requirements of Section 729 has no bearing on the fact that the

state did not enforce it against others. Showboat involved the failure to pay taxes

based on a misrepresentation by the state. While it may be true that a party cannot

incur detriment when its only injury is that it must pay taxes due under the law,

that is not the case here. Moreover, we have found that a party relied to its

detriment on the tax-related advice rendered by one its employees after considering

the four additional factors set forth in Showboat. See CHL Enter., LLC, d/b/a

Loewer Lawn & Cycle v. State of La., Dep’t of Revenue, 09-487 (La.App. 3 Cir.

11/4/09), 23 So.3d 1000, writ denied, 09-2613 (La. 2/12/10), 27 So.3d 848. The

facts of this case are clearly distinguishable from Showboat. Finally, Showboat

affirms our previous statement that detrimental reliance claims against government

entities are not prohibited as a rule. If they were, there would be no need to

analyze the four additional factors.

For these reasons, there is no manifest error in the jury‘s finding that MCGC

relied to its detriment on various promises made by DHH. First, there was

substantial evidence that Dr. Guidry did indeed promise Cormier that he would

have until March 31, 2001, to rid himself of his older inventory with the smaller

tanks. While DHH argues that MCGC did not suffer any damages as a result, we

disagree. Second, Cormier changed his position in reliance upon the promises

made by DHH by dismissing his original suit filed in 2002 based on assurances of

49 various DHH employees that it would investigate and enforce the Sanitary Code

provisions against MCGC‘s competitors.

Prescription

Detrimental reliance claims based in contract are subject to a ten year

prescriptive period. First La. Bank v. Morris & Dickson, Co., LLC, 45,668

(La.App. 2 Cir. 11/3/10), 55 So.3d 815.11 Furthermore, a promisor who lulls the

promisee into a false sense of security that an action will be taken cannot avail

itself of claim of prescription. Babkow v. Morris Bart, P.L.C., 98-256 (La.App. 4

Cir. 12/16/98), 726 So.2d 423; Fontenot v. Houston Gen. Ins. Co., 467 So.2d 77

(La.App. 3 Cir. 1985). Although we find the ten-year prescriptive period

applicable to MCGC‘s claims, these circumstances are ones in which estoppel

would lie as DHH‘s repeated promises to MCGC that it would investigate and

enforce its code induced Cormier into abandoning his original lawsuit. DHH‘s

multiple failures to do as it promised over many years would justify it being

estopped from claiming that MCGC‘s action is prescribed.

Jury Instructions

Finally, DHH argues that the jury found that it committed a tort rather than

broke a promise based on the jury instructions that were given by the trial court

along with the wording on the jury verdict form. We disagree. It is true that the

jury was instructed in general negligence principles, i.e., those found in

La.Civ.Code art. 2315, but it was also instructed in detrimental reliance principles,

including the four additional Showboat factors. While the jury form could have

11 Notably, La.Civ.Code art. 1967 is under that portion of the Louisiana Civil Code that pertains to contracts. Scholarly interpretation of La.Civ.Code art. 1967 buttresses the argument that detrimental reliance claims sound in contract: ―the new article of the Louisiana Civil Code subtracts induced reliance from the quasi-delictual field and places it where it belongs, in contract.‖ Saul Litvinoff, Still Another Look at Cause, 48 La. L.Rev. 3, 27 (1987).

50 been more detailed, we find that the term ―wrongful conduct‖ as used on the jury

form encompasses wrongful conduct of whatever kind, including causing a

promisee to rely to its detriment on promises made by the promisor. Moreover,

considering the trial court‘s manner in instructing the jury under all of the

circumstances of this case, we find no prejudicial error occurred.

The jury did not err in finding that MCGC relied to its detriment on the

promises made by DHH and that MCGC‘s claims are subject to a ten-year

prescriptive period. Accordingly, this assignment of error is without merit.

Qualified Immunity

DHH argues that its employees were subject to qualified immunity in the

exercise of discretion pertaining to their duties, thus the trial court erred in not

granting summary judgment in its favor. However, the issue of immunity was also

one that the jury decided, which is subject to manifest error review. We find no

error in the jury‘s finding that DHH was not subject to qualified immunity.

DHH claims that the evidence supports a finding that the law pertaining to

Section 729 was not ―clearly established,‖ thus entitling DHH employees to

immunity.

Louisiana Revised Statutes 9:2798.1 states in part:

A. Liability shall not be imposed on public entities or their officers or employees based upon the exercise or performance or the failure to exercise or perform their policymaking or discretionary acts when such acts are within the course and scope of their lawful powers and duties.

B. The provisions of Subsection B of this Section are not applicable:

(1) To acts or omissions which are not reasonably related to the legitimate governmental objective for which the policymaking or discretionary power exists; or

51 (2) To acts or omissions which constitute criminal, fraudulent, malicious, intentional, willful, outrageous, reckless, or flagrant misconduct.

Government officials are entitled to qualified immunity when performing

discretionary functions. McManus v. State of La., Dep’t of Wildlife & Fisheries,

09-1158 (La.App. 3 Cir. 3/10/10), 33 So.3d 412, writ denied, 10-816 (La. 6/18/10),

38 So.3d 323; Jackson v. State of La., Dep’t of Corrs., 00-2882 (La. 5/15/01), 785

So.2d 803. The trier of fact determines whether, under the facts of the particular

case, the officials are entitled to immunity. McManus, 33 So.3d 412.

The supreme court explained discretionary immunity in Simeon v. Doe, 618

So.2d 848, 852-53 (La.1993):

In Fowler v. Roberts, 556 So.2d 1 (La.1989) (on rehearing), we set out a two step inquiry, derived from Berkovitz v. United States, 486 U.S. 531, 108 S.Ct. 1954 (1988), to determine whether the policy- making or discretionary acts doctrine applied in a specific fact situation. First, a court must determine whether a statute, regulation or policy specifically prescribes the course of action for the employee or agency to follow. If so, there is no discretion on the part of the employee or agency and therefore no immunity. If a court determines discretion is involved, the court must then determine whether that discretion ―is the kind which is shielded by the exception, that is, one grounded in social, economic or political policy.‖ Fowler, 556 So.2d at 15. If it is, then the doctrine applies and the employee or agency is insulation from liability; if it is not, the employee or agency is liable for any negligence.

In reviewing the testimony at trial, a reasonable jury could readily conclude

that DHH was not entitled to immunity under the circumstances of this case. First,

it had no discretion in the application of Section 729, and, second, pursuant to

La.R.S. 9:2798.1(C)(2), the egregious acts of its various employees, particularly

Irion, was well established by the evidence. The lack of immunity of the

government officials covers MCGC‘s residential and commercial claims.

52 DHH further argues that the trial court failed to instruct the jury on qualified

immunity, constituting a clear error. DHH argues that the jury ―never got to

consider and/or determine: (1) whether the DHH employees who interacted with

MCGC had an element of choice in enforcing the applicable provisions of the

Sanitary Code; and (2) if any discretion was involved, whether it was grounded in

social, economic or political policy.‖ We disagree.

Louisiana Civil Code Article 1792(B) requires that the trial court instruct the

jury on the law applicable to the case. On review we must determine if the trial

court adequately instructed the jury such that the instructions point out the issues

and instruct the jury on the principles of law to be applied. See Adams v. Rhodia,

Inc., 07-2110 (La. 5/21/08), 983 So.2d 798. A trial court has vast discretion in

formulating jury instructions, and we will not overturn a jury‘s verdict if the

substance of the law has been adequately conveyed to the jury. Id. We reviewed

the jury instructions regarding qualified immunity and find no error. This

Statutory Cap

In this assignment of error, DHH argues that the trial court legally erred in

failing to apply the $500,000.00 statutory cap provided for in La.R.S. 13:5106 to

limit MCGC‘s lost business reputation award, that the $2,786,977.00 award was

excessive, and that the $99,560.00 commercial unit award should be set aside.

MCGC successfully argued at the motion for directed verdict on the issues of the

cap that the loss of business reputation award was actually an award for future loss

of earning not subject to the cap. DHH argues that regardless of what MGCG calls

it, it is still a general damage award subject to the cap.

Louisiana Revised Statutes 13:5106 provides in part:

53 B.(1) The total liability of the state and political subdivisions for all damages for personal injury to any one person, including all claims and derivative claims, exclusive of property damages, medical care and related benefits and loss of earnings, and loss of future earnings, as provided in this Section, shall not exceed five hundred thousand dollars, regardless of the number of suits filed or claims made for the personal injury to that person.

C. If the state or a state agency or political subdivision is held liable for damages for personal injury or wrongful death, the court shall determine:

(1) The amount of general damages exclusive of:

(d) Loss of future earnings and/or support.

(4) Whether there will be a loss of future earnings or support, and the amounts thereof.

Part D of La.R.S. 13:5106 defines ―loss of future earnings‖ as follows:

(2) ―Loss of earnings‖ and ―loss of support‖ for the purpose of this Section means any form of economic loss already sustained by the claimant as a result of the injury or wrongful death which forms the basis of the claim. ―Loss of future earnings‖ and ―loss of future support‖ means any form of economic loss which the claimant will sustain after the trial as a result of the injury or death which forms the basis of the claim.

In denying DHH‘s motion to conform the jury verdict, the trial court stated:

The residential units loss . . . computed . . . represents past residential losses, which was computed very similarly to the commercial units loss. It was the same model, same analysis essentially done in each; and the residential units loss represents . . . lost earnings[.] . . . For that reason I find that the . . . jury award is not subject to the cap.

Also, the loss of business reputation, the evidentiary basis upon which the jury made this award consisted of loss of future earnings evidence; therefore, not subject to the cap. That is the ruling of the Court.

54 Second, DHH argues that the damage award is excessive. Third, DHH

argues that the damages awarded by the jury for the loss of sales of commercial

units should be disallowed.

Special damages are those that can be determined with reasonable certainty.

Thibeaux v. Trotter, 04-482 (La.App. 3 Cir. 9/29/04), 883 So.2d 1128, writ denied,

04-2692 (La. 2/18/05), 896 So.2d 31. The plaintiff bears the burden of proving

special damages by a preponderance of the evidence. Cormier v. Colston, 05-507

(La.App. 3 Cir. 12/30/05), 918 So.2d 541. An award of damages made by the jury

is a question of fact, entitled to deference on review. Id. In order to reverse or

modify a jury‘s damage award, there must be no factual basis for its conclusion,

and the finding must be clearly wrong. Menard v. Lafayette Ins. Co., 09-1869 (La.

3/16/10), 31 So.3d 996. It is within the jury‘s discretion to credit one expert‘s

testimony over another. Menard, 31 So.3d 996.

DAPHNE BORDERLON CLARK

Clark, a certified public accountant since 1979, has been a partner in

Langley, Williams & Company of Lake Charles since 1994. She is also a certified

forensic accountant and a certified valuation analyst, and she was qualified as an

expert in those fields.

Clark said that she read the petition, interviewed Murphy, Todd, Troy and

MCGC‘s bookkeeper, Charlene Aguillard. She obtained compiled financial

statements from MCGC‘s CPA, Anthony Lebato, for the fiscal years June 30, 2000

through June 30, 2010.12 Clark obtained information from the state and reviewed

numerous depositions.

12 Clark testified that most companies have a calendar year beginning January 1 and ending December 31st, but that MCGC chose their fiscal year to begin July 1 and end June 30.

55 Clark said that she had to perform ―normalization‖ in order to match the

fiscal year to the calendar year because the state‘s data was on a calendar year

system whereas MCGC used a fiscal year.

Clark was of the opinion that MCGC suffered damages including past

damages for the residential units beginning in 2001 through 2009 (with 2010 still

pending as she awaited information from the state) and future damages and

commercial damages both past and future.

In order to determine lost business, Clark obtained information from the

state covering the years 1991 through 2009 that had the number of residential tags

issued for treatment plants, which she compared to Cormier‘s records that date

back as far as 1999 through 2009.

A summary of Clark‘s opinion of the damages suffered by MCGC was

offered into evidence, and Clark testified that it was her opinion, based on her

expertise to a reasonable degree of accounting probability, that MCGC had

sustained or will sustain the following losses. Residential damages were

summarized as follows: Past damages $4,660,846.00; Future damages

$2,663,030.00, for a total of $7,323,876.00. Commercial damages were

summarized as follows: Past damages $99,560.00; Future damages $484,817.00,

for a total of $584,377.00.

For commercial sales her analysis began in 2004. She noted a downturn in

MCGC‘s business beginning in 2009.

Residential Loss

In determining residential damages, Clark considered the number of tags

issued and the actual number of units sold by MCGC for each calendar year and

the market share of the tags that MCGC held every year. The market share is the

56 share that MCGC had of the total of number of tags that were being sold. Clark

compiled a document with an analysis of these figures entitled the Residential Tag

Trend that showed MCGC with a market share of 17.53% in 1990. By 2009,

MCGC‘s market share had declined to 2.8%. In 1990, 9,756 tags were issued and

MCGC actually sold 1,710 units. By 2009, 11,970 tags were issued and MCGC

sold only 343 units. The document shows that from 1990 through 1999 MCGC‘s

market trend varied from 17% to 20%. 13 Beginning in 2001, MCGC‘s market

share dropped to 10.28% and steadily declined every year after that. Clark testified

that she saw a correlation with Todd‘s testimony that sales and market share had

declined based on her residential tags analysis.

Based on the figures, Clark determined that through 1999, MCGC had

18.7% of the market share. To determine MCGC‘s lost share of the business

beginning in 2001, Clark used the 18.7% figure to calculate what MGCG‘s sales

would have been based on its historical market share and then subtracted the actual

sales with the difference being the amount of sales that were lost. Clark used an

average sales price of $1,465.00 per unit based on the average unit price of the

seventy-six units MCGC had remaining in their yard at the time of the change in

the Sanitary Code.

From these figures, Clark calculated the lost revenues per year along with

the lost gross profit. Gross profits lost was then calculated and an allowance for

inflation was made since Clark relied on the $1,465.00 per unit figure. Again, the

total past residential loss was calculated to be $4,660,846.00. Future lost profits

13 There are no figures provided for the year 2000. Clark explained that in 2000, the price of the residential tags increased, thus in anticipation of the price increase tags were purchased the year before. Clark said that it was not a normal year across the State with regards to tags being issued. Thus, in the year 2000, 26,215 tags were issued, but in 2001 only 10,841 tags were issued.

57 pertaining to residential units was calculated by conducting a weighted average,

which Clark described as a common calculation and terminology in accounting.

The weighted average was discounted by 20% to account for business risk. Clark

estimated the lost future profits based on twenty years at a 20% discount rate to be

$2,663,030.00.

Commercial Loss

Clark testified that she compiled a chart detailing commercial jobs from

2004 forward that included the year of the job, the description of the job, the

address, who the contractor plumber was, who the engineer was, the plant size, the

trash-trap size, the percentage of the trash-trap size compared to the total plant size,

whether the unit had a Gould pump or a grinder pump, and the duration of the

permitting period.

Clark said that from 2004 through 2009, the permitting process was within

thirty days from the engineer‘s submission of the request for permit. However, in

2009, the permitting process was extended. In normalizing the figures, Clark

considered jobs that should have been permitted earlier, i.e., according to the

thirty-day period, in figuring out revenues by year after 2009. Four jobs that were

completed in 2010 should have been completed in 2009 if the permitting had not

been delayed. The sum for these jobs was $367,109.50; the amount which was

added to 2009. Thus, for the year 2009, Clark determined, after normalizing the

figures, that the total commercial jobs billed should have been $1,116,400.00.

Using the same accounting methods used for residential losses, the weighted

average of past loss revenue for 2010 was $99,560.00, and $484,817.00 in

estimated lost future profits based on twenty years at 20% discount rate. This

figure was arrived based on the same sales as in 2010, however, it was possible

58 that the commercial business would continue to decline and that the loss could total

as much as $1,091,000.00.

Clark testified that the delayed permitting process would have a negative

impact from loss of client referrals. Further, she could not quantify the amount of

future costs that would increase due to DHH‘s requirement of the grinder because

of increased maintenance costs due to warranty repair, cost to the business, and

damage to Cormier‘s reputation.

On cross-examination Clark was questioned whether all of the tags issued by

the State were for ATUs with pump tank chambers. Clark said it was her

understanding that the State does not differentiate between pump/no pump units

when issuing the tags and that her calculations did not differentiate between units

with or without pumps. She noted that a business share of a market can change for

a variety of reasons such as the economy or competition. She also testified that she

did not deduct business operating expenses in her calculations or use tax returns or

compare any other manufacturer‘s commercial sales as none were available to her.

Clark admitted that even before the disparate treatment of Irion, MCGC‘s

commercial sales had been declining. However, Clark said MCGC had formed

another company and moved some its products to the other company categorized

as the HOOT System sales.

JAMES FREDERICK STULB

Stulb, a certified public accountant since 1984, was qualified as an expert in

accounting, economic damages, and financial analysis. He testified he was not

qualified to perform a market-share analysis. Stulb said he reviewed Clark‘s

deposition, financial statements, and tax returns of Cormier for 2000 through 2010;

HOOT Systems, Inc., for 2007 through 2010; and deposition of Anthony Lebato.

59 Stulb said that Cormier has various companies owned by his children that

conduct business with MCGC. He said that the only 100% owned subsidiary was

the trucking company. Other than transactions with the trucking company, he was

unable to identify ―intercompany transactions.‖

Stulb testified that Clark used gross profit in determining loss rather than

actual cost, which he would not have done. Stulb said that he found that MCGC‘s

sales level was ―fairly consistent throughout the whole period all the way through

2010.‖ He said that Clark used the entire gross profit percentage rather than a

percentage of the total sales. Thus, he opined that MCGC‘s commercial sales‘

percentage of total sales ranged from 2.14% to a high of 10.89%–a very small

portion of total sales.

Stulb further testified that he did not see a future loss because MCGC‘s sales

had stayed the same and did not evidence a continued decline. He did not consider

any issues regarding damage to reputation. Finally, Stulb testified that there were

no damages that he could determine in either attached/detached pump stations or

commercial systems. He said that he could find no significant loss of sales to

MCGC, although he agreed that a customer base has value.

The statutory cap applies to limit general damages, but not special damages.

None of the damages awarded to MCGC can be categorized as general damage

awards. We agree with MGCG that the awards made by the jury under the

headings ―Damages: Residential Units‖ and ―Damages: Loss of Business

Reputation‖ are special damages not subject to the cap. DHH argues that the

damages for loss of business reputation are more akin to damages for a claim of

defamation, which fall under the auspices of general damages. We disagree under

the facts of this case. While ―loss of business reputation‖ would have preferably

60 been referred to as ―loss of future earnings,‖ we find that the jury‘s award closely

tracked the loss of future earnings pertaining to residential sales that Clark testified

to. In this instance, the damages caused by the loss of reputation were specifically

quantified according to the market-share formula. MCGC proved via expert

testimony that it had a reputable business reputation that was harmed to its

detriment by loss of future earnings. See Kim v. Kim, 07-318 (La.App. 5 Cir.

10/30/07), 970 So.2d 1158. Moreover, after our extensive review of the entire

record, we find the jury‘s damages awards were not manifestly erroneous. This

CONCLUSION

The judgment of the trial court in favor of the plaintiff-appellee, Murphy

Cormier Contractor, Inc., is affirmed. The costs of this appeal are assessed against

the defendant-appellant, the State of Louisiana through the Department of Health

and Hospitals in the amount of $66,362.45.