River Rental Tools, Inc. v. Smith Power Solutions, LLC

• Court: Louisiana Court of Appeal
• Decided: June 15, 2022
• Docket: 2021-CA-0716
• Status: Published

Opinion

RIVER RENTAL TOOLS, INC. * NO. 2021-CA-0716

VERSUS * COURT OF APPEAL SMITH POWER SOLUTIONS, * LLC FOURTH CIRCUIT * STATE OF LOUISIANA *******

APPEAL FROM 25TH JDC, PARISH OF PLAQUEMINES NO. 63-972, DIVISION “B” Honorable Michael D. Clement, ****** Judge Daniel L. Dysart ****** (Court composed of Judge Roland L. Belsome, Judge Daniel L. Dysart, Judge Joy Cossich Lobrano)

George Pivach II Timothy Thriffiley PIVACH, PIVACH, HUFFT, THRIFFILEY & DUNBAR, L.L.C. 8311 Highway 23, Suite 104 P. O. Box 7125 Belle Chasse, LA 70037

COUNSEL FOR PLAINTIFF/APPELLEE

Bryan Edward Lege KRAFT LEGE, LLC Chase Tower 600 Jefferson Street, Suite 410 Lafayette, LA 70501

COUNSEL FOR DEFENDANT/APPELLANT

AFFIRMED IN PART; REVERSED AND VACATED IN PART DLD This matter involves a breach of contract/sale claim, wherein the trial court RLB JCL ruled in favor of the plaintiff, River Rental Tools, Inc. (“River Rental”), and

against the defendant, Smith Power Solutions, LLC (“Smith Power”). The trial

court ordered the rescission of the contract and awarded the plaintiff the return of

the contract price, damages and interest. For the reasons that follow, we affirm the

judgment of the trial court in part and we reverse in part.

FACTS AND PROCEDURAL HISTORY

On September 21, 2016, River Rental contacted Smith Power regarding the

purchase of new power units to do a repower on some centrifugal pumps. River

Rental advised Smith Power’s representative, Jerry Smith, that it was looking for

two 120 – 140 hp engines, preferably 4BT Cummins units, with 12 volt starters

and alternators. On October 7, 2016, Smith Power advised River Rental that it had

obtained pricing on two Cummins Model 4B3.9L 125 hp engines for a price of

$8,800.00 per engine. In an October 7, 2016 email, River Rental advised Smith

Power that it would also need engine panels for the engines. The total amount of

the sale was $18,581.90, which River Rental paid in full by October 13, 2016.

1 On October 14, 2016, Mr. Smith informed River Rental that the engine

supplier agreed to change the starters and alternators on the engines from 24 volts

to 12 volts at no extra charge and that the engines would be ready to ship by the

end of the next week. However, the engines were not delivered to River Rental

until March of 2017. In fact, these engines had not even been sold to Smith Power

by Seven Kings, LLC until sometime after December 21, 2016. Upon delivery,

River Rental found that the engines were not what had been ordered from or

promised by Smith Power. The engines were not converted from 24 volts to 12

volts; the solenoids in the engines were never changed to 12 volts; and Smith

Power did not supply the correct engine panels and wiring harnesses.

After finding that the engines did not meet the specifications and equipment

promised, River Rental contacted Smith Power. Mr. Smith responded that the

engines were sold “as is” and were non-returnable even though there was nothing

to that effect in the sales invoice.

Failing to reach an amicable solution, on September 22, 2017, River Rental

filed a petition to rescind the contract and seeking damages. In response, Smith

Power filed an answer and a reconventional demand on October 27, 2017.

Following a bench trial on April 19, 2021, the trial court entered a judgment on

August 5, 2021, ruling in favor of River Rental and against Smith Power. The trial

court ordered the rescission of the sale of the two engines and awarded River

Rental $18,581.90 for the return of the purchase price of the engines, as well as

additional damages of $13,366.88, plus legal interest thereon from the date of

judicial demand until paid, plus all costs of the proceedings. The trial court further

found that Smith Power committed fraud and violated the Louisiana Unfair Trade

Practices Act (LUTPA), awarding River Rental an additional $20,950.00 as an

2 award of attorney’s fees. Finally, the trial court dismissed Smith Power’s

reconventional demand with prejudice.

Smith Power now appeals the trial court’s judgment and River Rental has

answered the appeal seeking additional costs and attorney’s fees in defending the

appeal.

DISCUSSION

On appeal, Smith Power raises the following assignments of error: 1) the

district court committed manifest error in finding that Smith Power committed

fraud and/or violated the Louisiana Unfair Trade Practices Act and awarding

attorney fees; 2) the district court committed manifest error in finding that River

Rental did not commit fraud and in failing to award attorney’s fees to Smith

Power; 3) the district court committed manifest error in failing to find that contract

of sale was an absolute nullity as it was entered into by River Rental with the intent

of circumventing EPA regulations; and 4) the district court committed manifest

error in awarding additional damages for the work/services provided by Coastal

Engines in the amount of $13,366.88, which River Rentals admits it never paid.

Also, River Rental seeks to recover the attorney’s fees associated with defending

this appeal.

Standard of Review

The Louisiana Supreme Court has made clear that in all civil matters, the

appropriate standard for appellate review of determinations is the manifest error-

clearly wrong standard, which precludes the setting aside of a trial court’s finding

of fact unless that finding is clearly wrong in light of the record reviewed in its

entirety. Hayes Fund for the United Methodist Church of Welsh, LLC v. Kerr-

McGee Rocky Mountain, LLC, 14-2582, p. 8 (La. 12/18/15), 193 So.3d 1110, 1115

3 (citation omitted). Thus, a reviewing court may not merely decide if it would have

found the facts of the case differently. Hall v. Folger Coffee Co., 03-1374, p. 9

(La. 4/14 /04), 874 So.2d 90, 98 (citation omitted). Rather, in reversing a trial

court’s factual conclusions, the appellate court must satisfy a two-step process

based on the record as a whole: there must be no reasonable factual basis for the

trial court’s conclusion, and the finding must be clearly wrong. Stobart v. State

through Dept. of Transp. And Development, 617 So.2d 880, 882 (La. 1993).

Fraud

“Fraud is a misrepresentation or a suppression of the truth made with the

intention either to obtain an unjust advantage for one party or to cause a loss or

inconvenience to the other. Fraud may also result from silence or inaction.” La.

C.C. art. 1953. “Fraud need only be proved by a preponderance of the evidence

and may be established by circumstantial evidence.” La. C.C. 1957. “The party

against whom rescission is granted because of fraud is liable for damages and

attorney fees.” La. C.C. art. 1958. The existence of fraud is a question of fact;

thus the trial court’s determination of fraud or its absence is subject to the manifest

error standard of review on appeal. Monroe v. Mc Daniel, 16-0214, p. 8 (La.App.

5 Cir. 12/0716), 207 So.3d 1172, 1178 (citation omitted).

“The seller also warrants that the thing sold is fit for its intended use.” La.

C.C. art. 2475. “The seller must deliver to the buyer things that conform to the

contract. Things do not conform to the contract when they are different from those

selected by the buyer, or are of a kind, quality, or quantity different from the one

agreed.” La. C.C. art. 2603. “The seller must deliver the thing sold in the

condition that, at the time of the sale, the parties expected, or should have

expected, the thing to be in at the time of delivery, according to its nature.” La.

4 C.C. art. 2489. “When the thing the seller has delivered . . . is not of the kind or

quality specific in the contract or represented by the seller, the rights of the buyer

are governed by other rule of sale

and conventional obligations.” La. C.C. art. 2529.

In an October 14, 2016 email, Mr. Smith assured River Rental that he had

arranged for the engine supplier to convert the engines from 24 volt to 12 volt.

This was not true. In that same October 14, 2016 email, Mr. Smith promised that

the engines would be ready to ship “by the end of next week.” This was also false.

The engines were not ordered from the supplier until October 25, 2016. Mr. Smith

claimed that National Equipment Sales, Inc. had shipped the wrong engines to him,

sending 60 hp engines instead of 125 hp engines. However, Mr. Smith allowed

these engines to be shipped, despite knowing they were the wrong engines before

they were shipped.

On November 14, 2016, Mr. Smith informed River Rental

that the engines were in, and he was only waiting on radiator kits, which he

wouldn’t have until December 1, 2016. However, Mr. Smith did not have the

engines that River Rental wanted. It was not until December 6, 2016 that Mr.

Smith contacted Stour 2, LLC about purchasing the engines needed by River

Rental. The engines were not ready to ship until January 12, 2017. In the end,

Smith Power provided River Rental with engines, which were completely

inoperable, and could not be made operable for River Rental’s repowered pumps.

Mr. Smith induced River Rental to pay for two engines in full, did not order

any engines for River Rental, used River Rental’s funds for the sole benefit of

Smith Power, and then provided River Rental with unusable engines. During the

entire transaction, Mr. Smith misrepresented facts to River Rental and suppressed

5 the truth regarding Smith Power’s use of River Rental’s funds, and the fact that the

engines had not been converted to 12 volts, and other issues. Based on these facts,

the trial court was not clearly wrong or manifestly erroneous in finding that Smith

Power had committed fraud.

Smith Power produced no evidence to support its claim of fraud against

River Rental as the customer of Smith Power. River Rental advised Smith Power

that it was doing a re-power of some pumps, using the old pumps. River Rental

was not using the surplus engines on new pumps. The surplus engines were to be

used for pumps and used parts, and were going to be placed upon the skids which

had rusted out. Smith Power advised River Rental that it could use a tier 2

mechanical engine if it was replacing an old tier 2 engine, and that was River

Rental’s plan for the project. There is no evidence that River Rental tried to

circumvent any EPA regulation or other law. We find no error in the trial court’s

finding that River Rental did not commit fraud.

Louisiana Unfair Trade Practices Act

To establish a claim under the Louisiana Unfair Trade Practices Act

(LUTPA), a plaintiff must show that the alleged conduct offends established public

policy and is immoral, unethical, oppressive, unscrupulous, or substantially

injurious. Agrifund, LLC v. Radar Ridge Planting Co., Inc., 52,432, p. 29 (La.App.

2 Cir. 7/17/19), 278 So.3d 1025, 1044 (citations omitted). To sustain a cause of

action under LUTPA, the Supreme Court has promulgated a two-part test: 1) the

person must suffer an ascertainable loss; and 2) the loss must result from another’s

use of unfair methods of competition and unfair or deceptive acts or practices.

Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 09-1633, p. 10 (La. 4/23/10),

35 So.3d 1053, 1059.

6 Any person who suffers an ascertainable loss of money or movable property,

corporeal or incorporeal, as a result of the use or employment by another person of

an unfair or deceptive method, act, or practice declared unlawful by R.S. 51:1405,

may bring an action individually but not in a representative capacity to recover

actual damages. In the event that damages are awarded under this Section, the

court shall award to the person bringing such action reasonable attorney fees and

costs. La. R.S. 51:1409(A).

The manifest error standard of review applies to the review of claims under

the Unfair Trade Practices and Consumer Protection Law, preventing the Court of

Appeal from disturbing the trial court’s findings of fact and evaluations of

credibility that have a reasonable basis in the evidence. Doland v. ACM Gaming

Co., 05-427, p. 8 (La.App. 3 Cir. 12/30/05), 921 So.2d 196, 202 (citation omitted).

In the instant case, Smith Power engaged in a number of actions that could

be considered unethical and unscrupulous conduct that would be covered under

LUTPA. These actions include: obtaining funds from River Rental for the

purchase of engines and then using those funds to purchase engines for a different

customer; informing River Rental that Smith Power had the engines converted to

12 volt when the engines had not been procured; failing to convert the engines to

12 volt, despite assurances that Smith Power would convert the engines to 12 volt;

informing River Rental that the engines had been delivered, when in fact they had

not even been located yet; and informing River Rental that the sale was “as is”

when Smith Power delivered nonconforming products.1

1 “A buyer is not bound by an otherwise effective exclusion or limitation of the warranty when

the seller has declared that the thing has a quality that he knew it did not have.” La. C.C. art. 2548.

7 Considering the foregoing facts, we cannot say that the trial court was either

clearly wrong or manifestly erroneous in finding that Smith Power had violated the

Louisiana Unfair Trade Practices Act.

Absolute Nullity

Smith argues the contract is absolutely null as it violates a rule of public

order, as when the object of a contract is illicit or immoral. See La. C.C. art. 2030.

The object of the sale was two engines. Neither the engines at issue, nor their sale

was illicit or immoral. They were sold on the open market. Their sale violated no

statute or law. Although Smith argues that River Rental was going to use these

engines to allegedly circumvent environmental regulations, there is no proof of that

and the argument is too speculative to make the object of the sale or the sale itself

either illicit or immoral.

The trial court could not have ruled on the alleged absolute nullity of this

contract of sale, as illegality of the contract was not plead by Smith Power.

Illegality is an affirmative defense that must be raised in the answer. La. C.C.P.

art. 1005.

Additional Damages

The trial court awarded additional damages of $13,366.88 to River Rental.

This was to compensate River Rental for charges for merchandise from a third

party. River Rentals admits that it ordered part/accessories from a third party, but

they were never received or were defective. River Rental also never paid for these

part/accessories. As such, the trial court was manifestly erroneous in awarding

$13,366.88, in additional damages because those damages were never incurred by

River Rental.

8 Attorney’s Fees on Appeal

A plaintiff who is awarded damages and attorney’s fees in an action under

the Unfair Trade Practices Act, and then successfully defends an appeal of that

action, is entitled to additional attorney’s fees incurred in connection with the

appeal. See Laurents v. Louisiana Mobile Homes, Inc., 96-0976, p. 12 (La.App. 3

Cir. 2/5/97), 689 So.2d 536, 543. In the instant case, River Rental was awarded

damages and attorney’s fees under LUTPA. However, there were additional issues

raised in Smith Power’s appeal and River Rental did not successfully defend all of

those issues. Accordingly, we will not award any additional attorney’s fees on

CONCLUSION

For the above and foregoing reasons, we affirm the trial court’s judgment in

rescinding the contract between the parties and finding that defendant, Smith

Power, committed fraud and violated LUTPA. We further affirm the trial court’s

damage awards to the plaintiff, River Rental, of $18,581.10 (return of purchase

price for the engines) and $20,950.00 (attorney’s fees). We also affirm the trial

court’s dismissal of the defendant’s reconventional demands. However, we

reverse and vacate the trial court’s award of $13,366.88 in additional damages to

the plaintiff. We also deny the plaintiff’s request for additional attorney’s fees

associated with the appeal of this matter.

AFFIRMED IN PART; REVERSED AND VACATED IN PART