Shelton v. Standard/700 Associates

798 So. 2d 60, 2001 WL 1223679
Supreme Court of Louisiana·Decided October 16, 2001·No. 2001-C-0587·Published·Cited by 137 cases

Opinion

798 So.2d 60 (2001)

J. Elise SHELTON
v.
STANDARD/700 ASSOCIATES, A Louisiana Joint Venture Standard/700 Associates, Inc., Smith, Bright & Standard, L.L.C. and Baker Group Associates, Inc.

No. 2001-C-0587.

Supreme Court of Louisiana.

October 16, 2001.
Rehearing Denied November 16, 2001.

*62 Robert L. Hackett, New Orleans, Counsel for Applicant.

Justin L. Hawks, Thomas G. Buck, George C. Aucoin, Jr., Blue Williams, Metarie, Counsel for Respondent.

KNOLL, Judge.[*]

This writ concerns whether the sellers of a condominium were properly granted summary judgment against the buyer, where the buyer alleged fraud in the inducement of a contract of sale waiving all warranties and rights to sue in redhibition. Finding that there is an absence of factual support to show fraud, which is essential to the buyer's claim, we affirm.

FACTS AND PROCEDURAL HISTORY

On September 4, 1996, the plaintiff, J. Elise Shelton, purchased a condominium from defendant Standard/700 Associates. The condominium, designated as Unit 617, is located on the top floor of a building at 700 South Peters Street in the City of New Orleans. The condominium was sold "as is where is," without any warranties or right to sue in redhibition.

Two months after the sale, on or about November 13 or 14 of 1996, water began to leak through the ceiling of the condominium, causing damage to the interior of the condominium and plaintiffs personal property.[1] After several failed attempts by defendant Standard/700 Associates to repair the roof of the building, on April 17, 1997, plaintiff filed suit.[2] In her petition for damages, plaintiff alleged the leaks were caused by a swimming pool, a hot tub, and planters located on the roof of the building. Seeking recission of the sale, plaintiff further alleged the condominium contained a redhibitory defect insofar as the leaks rendered the condominium useless or, alternatively, its use so inconvenient that plaintiff would not have bought the condominium had she known of the defect.

*63 In a supplemental and amending petition, plaintiff pled fraud and inducement, alleging that defendants had knowledge of the condition of the roof, but intentionally concealed this information from plaintiff prior to purchase.[3] Plaintiff specifically alleged that, prior to the act of sale, defendant Ms. Margaret Aldon Lovelace Guichard, the sales agent for defendant Standard/700 Associates, "unequivocally vouched for the soundness of the roof of the subject condominium complex" and stated there had been no previous leaks.

After answering plaintiff's original petition and amended petition, defendants moved for summary judgment, contending that plaintiff effectively waived the warranty against redhibitory defects when plaintiff entered the contract of sale containing the "as is where is" clause. Defendants relied on the following language contained in the act of sale:

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE UNIT DESCRIBED HEREIN IS SOLD AND PURCHASED "AS IS WHERE IS", WITHOUT ANY WARRANTY OR REPRESENTATION WHATSOEVER WITH RESPECT TO THE CONDITION OR REMAINING USEFUL LIFE OF SUCH CONDOMINIUM UNIT OR WITH RESPECT TO ANY OF THE COMMON ELEMENTS OF THE CONDOMINIUM, OR ANY OF THEIR COMPONENTS OR PARTS OR CONTENTS, AND WITHOUT WARRANTY WHATSOEVER WITH RESPECT TO THE FITNESS OF ANY CONDOMINIUM UNIT OF THE COMMON ELEMENTS FOR ANY PARTICULAR OR GENERAL USE OR PURPOSE AND NO REPRESENTATION OR WARRANTIES WITH RESPECT TO ANY OF THE FOREGOING ARE MADE, ALL OF THEM BEING EXPRESSLY DISCLAIMED.
PURCHASER HEREBY WAIVES ANY RIGHT TO SUE IN REDHIBITION OR FOR RETURN OR REDUCTION OF THE PURCHASE PRICE OR ANY PART THEREOF AS A RESULT OF THE CONDITION OF THE UNIT OR UNITS DESCRIBED HEREIN OR THE CONDOMINIUM.

After a hearing, the trial court granted defendants' motion.[4] On appeal, the Fourth Circuit affirmed. Shelton v. Standard/700 Associates, XXXX-XXXX (La.App. 4th Cir.1/31/01), 778 So.2d 1265. In reaching its holding, the court of appeal relied on two findings. First, the court of appeal found no defect existed in the condominium at the time of delivery. Consequently, the court of appeal determined there was no redhibitory defect in the condominium. LSA-C.C. art. 2530.[5] Second, the court of appeal found that plaintiff waived her right to sue for redhibitory defects.

DISCUSSION

The issue before us does not concern the "as is where is" waiver of warranties plaintiff signed. It is the allegation of fraud that prompted this court to grant this *64 writ,[6] as fraud in the inducement of a contract cannot be waived.

Plaintiff can only obtain relief from the harsh consequences of the waiver she signed if she can show fraud in the inducement of the contract. As such, our discussion will address the body of law pertaining to fraud in the inducement of a contract of sale.

It is clear that a seller warrants his buyer against redhibitory defects, or vices, in the thing sold. LSA-C.C. art. 2520. It is equally clear, however, that this warranty may be excluded or limited per LSA-C.C. art. 2548, which provides, in pertinent part:

The parties may agree to an exclusion or limitation of the warranty against redhibitory defects. The terms of the exclusion or limitation must be clear and unambiguous and must be brought to the attention of the buyer.

While an exclusion or limitation of the warranty against redhibitory defects is usually effective, LSA-C.C. art. 2548 further provides that "[a] buyer is not bound by an otherwise effective exclusion or limitation of the warranty when the seller has declared that the thing has a quality that he knew it did not have." Under this article, an otherwise effective exclusion or limitation of the warranty against redhibitory defects is not effective if the seller commits fraud, as defined in the civil code, upon the buyer. Thus, although the warranty against redhibitory defects may be excluded or limited, a seller cannot contract against his own fraud and relieve himself of liability to fraudulently induced buyers. See Roby Motors Co. v. Price, 173 So. 793, 796 (La.App. 2nd Cir.1937). Indeed, such a contract would be contra bonos mores and unenforceable.

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

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

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

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Shelton v. Standard/700 Associates, 798 So. 2d 60, 2001 WL 1223679 (La. 2001).

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