State Ex Rel. Guste v. Orkin Exterminating Company, Inc.

528 So. 2d 198, 1988 WL 56884
CourtLouisiana Court of Appeal
DecidedJune 7, 1988
DocketCA 6995
StatusPublished
Cited by20 cases

This text of 528 So. 2d 198 (State Ex Rel. Guste v. Orkin Exterminating Company, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Guste v. Orkin Exterminating Company, Inc., 528 So. 2d 198, 1988 WL 56884 (La. Ct. App. 1988).

Opinion

528 So.2d 198 (1988)

STATE of Louisiana, ex rel. William J. GUSTE, Jr., Attorney General
v.
ORKIN EXTERMINATING COMPANY, INC.

No. CA 6995.

Court of Appeal of Louisiana, Fourth Circuit.

June 7, 1988.
Rehearing Denied August 2, 1988.

*199 Patricia J. Hakes, Sp. Asst. Atty. Gen., New Orleans, for plaintiff.

John R. Schupp, Karen M. Worthington, Broadhurst, Brook, Mangham & Hardy, New Orleans, for defendant.

Before BYRNES and ARMSTRONG, JJ., and PRESTON H. HUFFT, J. Pro Tem.

ARMSTRONG, Judge.

The State of Louisiana filed suit against defendant, Orkin Exterminating Company, Inc., ("Orkin") alleging that Orkin's unilateral increase in renewal fees under a fixed-price contract and conduct incident thereto constituted deceptive and unfair trade practices under La.R.S. 51:1405 et seq. The matter was tried before a commissioner whose findings were later adopted by the trial court. Orkin appeals the trial court's judgment in favor of the State of Louisiana ordering that Orkin be required to: refund renewal fees collected in excess of the contractual amount, with interest; roll back renewal fees billed in the future to the contractual amount; and offer to reinstate any former customer who held a pre-1975 contract at the time of the fee increase who would agree to pay Orkin his total arrearage in renewal fees within one year of Orkin's offer.

We affirm the trial court's order because we find that it is reasonably related to the violations found to exist. We also affirm the trial court's judgment as it is supported by the facts and there is no manifest error.

FACTS

Between January 1, 1966 and February 1, 1975, Orkin contracted with thousands of Louisiana customers for treatment and control of wood destroying organisms. The contracts, (hereinafter "pre-1975 contracts"), offered pest control and repair services with guarantees for the lifetime of the treated structure so long as the customer paid a specified annual renewal fee. Also during this period, Orkin used advertising, sales materials and sales training literature which stated that the annual renewal fee would not increase for the life of the covered structure. The contracts at issue made no provision for increases in the annual renewal fee except where the structure was altered after treatment. In August, 1980 Orkin began billing the pre-1975 customers for annual renewal fees at increased rates above those stated in their contracts by 40% or $25.00, whichever was greater. Customers complained to Orkin and an "accomodation program" was instituted to address their concerns. The program involved form letters sent to complaining customers to explain and justify the fee increase and some limited exceptions were made to its across-the-board increases in the renewal fees for pre-1975 contracts.

In 1981, subsequent to an investigation by the Attorney General, and the Louisiana Office of Consumer Protection, Orkin rolled back the renewal fees of all customers with contracts executed in 1968, stating that it had just discovered that advertising used in 1968 might have led customers to *200 believe that their annual renewal fee could not be increased. Orkin continued to implement the fee increase for other pre-1975 customers. When customers persisted and sent Orkin the amount stated in their contract, it was Orkin's policy to return it. From 1981-1984, Orkin obtained from $525,000.00 to $600,000.00 from Louisiana customers who paid the renewal fee increases.

On February 8, 1983 the State of Louisiana, acting through the Attorney General, filed suit seeking preliminary and permanent injunctions prohibiting Orkin from raising the annual renewal fees or breaching any duty established in its advertising or contracts with customers. It also requested that Orkin reinstate the original renewal rate on fixed payment contracts still in effect and to refund overcharges with interest. On June 12, 1984, the trial court entered a preliminary injunction ordering Orkin to refrain from charging an annual fee higher than that stated in the contract to any contract holder who at the time suit was filed possessed a fixed contract or one similar thereto, or otherwise breaching any duty established by Orkin in its advertising or consumer contracts. The trial court denied the other preliminary relief requested by the State.

On February 6, 1985 the trial court overruled the defendant's exception of No Cause of Action. On the same day defendant's exception of Prescription was referred to the merits.

The case proceeded to trial before the Commissioner for the Civil District Court for the Parish of Orleans. The exception of Prescription was overruled. The Commissioner found that Orkin was liable under the Louisiana Unfair Trade Practices and Consumer Protection Law and recommended that an order be issued enjoining Orkin from engaging in the illegal practices alleged by the State, and requiring Orkin to refund overpayments with interest to its customers. The Commissioner also recommended that Orkin be required to offer consumers who were billed increased amounts, but did not pay them, full services pursuant to their contracts, upon payment within a reasonable time of any unpaid contractual renewal fees for the years including and subsequent to the illegal increases. The recommendations of the Commissioner were adopted by the trial court and judgment was rendered in favor of the State. Orkin's request for a new trial was denied. On appeal, Orkin maintains that the trial court erred:

1) in finding that the term of the pre-1975 termite contracts is for the lifetime of the structure,

2) in finding that the term of the pre-1975 termite contracts was for a definite period,

3) in finding that Orkin engaged in practices forbidden by Louisiana's Unfair Trade Practices and Consumer Protection Law,

4) in finding that Orkin's representations of its attorneys' opinions violated La.R.S. 51:1401 et seq.,

5) in awarding interest to customers with pre-1975 contracts,

6) in extending its judgment to those who no longer have contracts with Orkin,

7) in retroactively applying Louisiana's Unfair Trade Practices and Consumer Protection Law,

8) in overruling Orkin's exception of Prescription.

Orkin appeals from the trial court's judgment that their conduct violated Louisiana's Unfair Trade Practices and Consumer Protection Law. We are therefore obligated to review the facts to determine whether they support the judgment rendered. The standard used on review is that of "manifest error". Arceneaux v. Domingue, 365 So.2d 1330 (La.1978). Orkin also maintains that the trial court exceeded its powers in issuing the order. The order must be reasonably related to the violations found to exist. F.T.C. v. National Lead Co., 352 U.S. 419, 77 S.Ct. 502, 1 L.Ed.2d 438 (1957); Jacob Siegel Co. v. F.T.C., 327 U.S. 608, 66 S.Ct. 758, 90 L.Ed. 888 (1946).

Louisiana's Unfair Trade Practices and Consumer Protection Law is modeled after the Federal Trade Commission Act ("FTCA") and the federal jurisprudence under the FTCA is incorporated into the Louisiana *201 statute. We find it compelling that the Federal Trade Commission has decided a case of the same facts as the instant case and that the reasoning and conclusion of that opinion is consistent with that made in the district court.[1]

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Bluebook (online)
528 So. 2d 198, 1988 WL 56884, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-guste-v-orkin-exterminating-company-inc-lactapp-1988.