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                                               53 of the 2010 Regular Legislative                The parties’ participation in a pre-
                                               Session.                                          1008 mediation conference does not
                      Alternative                 Act 53 amended La. R.S. 23:1310.3,             interrupt the running of prescription.
                      Dispute                  transforming workers’ compensation                While Act 53 essentially creates a
                                               mediations to an almost exclusively               voluntary mediation system, it does not
                      Resolution               voluntary process. The amendment,                 completely strip the judges of the Office
                                               which became effective Aug. 15, 2010,             of Workers’ Compensation of all power
                                               creates three separate and distinct types         in this regard. Workers’ compensation
    Act 53 and Workers’                        of workers’ compensation mediations:              judges retain the power and authority
                                               pre-1008, post-1008 and court-ordered.            to order a mediation conference in any
  Compensation Mediation
                                               Pursuant to the amended statute, the              claim in which they believe mediation is
                                               parties, upon joint written request,              appropriate and may result in resolution
    The Hearings Section of the Louisiana
                                               may request a mediation conference                of the disputed claim.
Office of Workers’ Compensation
                                               before and/or after filing a 1008, or at             When requesting mediation, the
(OWCA) is created to resolve and/or
                                               any time prior to the trial on the matter.        parties may choose any one of the
adjudicate disputed claims filed with
the office of workers’ compensation


                                                  maps                                                                 leader
administration. In 1991, the Hearings            Mediation Arbitration
Section established mediation as a                                                                           ...the
means to resolve these disputed claims.                             Professional Systems, Inc.                        in resolution
The disputed claim for compensation
(LDOL-WC 1008) is a lawsuit filed by a           800.443.7351    866.769.4553     800.397.9533             E-mail: resolutions@maps-adr.com
party requesting workers’ compensation           New Orleans     Baton Rouge      Jackson, MS                  Website: www.maps-adr.com
benefits, controverting the entitlement
to benefits or other relief under the
                                                 Free monthly breakfast CLEs
                                                 7:45am - 8:45am
Workers’ Compensation Act. Attorney
mediators are employed by the OWCA               METAIRIE:
to exclusively mediate workers’                  3900 N. Causeway Blvd. • 2nd Floor
compensation claims. They are specially          May 19, 2011
trained in the mediation process                     Topic: Social Networking: Ethical Issues
and resolution techniques and are                    Speaker: Bobby M. Harges
experienced in workers’ compensation
                                                 June 16, 2011                                         Bobby M. Harges     Frank E. Lamothe, III
law. Mediators assist the parties to                  Topic: Sex Abuse in Louisiana
a workers’ compensation dispute,                      Speaker: Frank E. Lamothe, III
employees, employers, insurers, doctors
and their lawyers in settling these lawsuits     BATON ROUGE:
before they are heard by a workers’              8550 United Plaza Blvd • 1st Floor
compensation judge. Frequent changes             May 27, 2011
in legislation have altered the character           Topic: UM: Waivers and Wonders
of workers’ compensation mediations                 Speaker: Frank A. Fertitta
over the years. These changes range              June 24, 2011
from requiring mandatory appearance                   Topic: Negotiation Myths and Maxims              Frank A. Fertitta      Jay McCreary
at mediation conferences to voluntary                 Speaker: Jay McCreary
mediation conferences scheduled only
at the request of the parties. The most               Find us on Facebook
recent change to workers’ compensation
mediation occurred as the result of Act              See MAPS’ website or MCLE calendar for a complete listing of all our seminars.




                                                                                       Louisiana Bar Journal Vol. 58, No. 6                  393
11 Office of Workers’ Compensation               Mediation in the Hearings Section
mediators whose services are paid for         of the Louisiana Office of Workers’
by the state, or they may elect to use        Compensation continues to evolve to                          Art,
a private mediator at their cost. Parties     meet the needs of the public. If history is                  Entertainment
seeking the professional services of          any indicator, changes to the mediation                     and Sports Law
an Office of Workers’ Compensation            process will continue to occur. The
mediator are required to submit their         advantages and value of mediation are
request in writing on a Mediation             obvious, and it is important that the
Request Form. On the date scheduled           mediation process and the professional          Supreme Court Interprets
for mediation, the parties are required       mediators provided by the state remain        Legislative Intent in Limiting
to have available, either in person or        part of the workers’compensation system.
                                                                                            Time to Earn Motion Picture
via telephone, a representative with          Compared to litigation, mediation is
authority to enter into negotiations in       fast and inexpensive. If mediation is             Investor Tax Credits
a good faith effort to resolve the issue      the future of conflict resolution, the
in dispute. Upon mutual consent, the          Hearings Section of the Louisiana Office      Red Stick Studio Dev., L.L.C. v. State ex
parties may participate in the mediation      of Workers’ Compensation is way ahead         rel. Dep’t of Econ. Dev., 10-0193 (La.
by telephone. However, in-person              of the game.                                  1/19/11), ____ So.2d ____.
mediation conferences are preferred and                                                         In a significant decision for the motion-
encouraged.                                                      —Sheral C. Kellar          picture investor tax-credit industry, the
   Mediation conferences held before any          Workers’ Compensation Chief Judge         Louisiana Supreme Court determined
of the Office of Workers’ Compensation              Office of Workers’ Compensation         that a grandfathered state-certified
mediators are held in the respective                Administration, Hearings Section        infrastructure project under La. R.S.
district office of the mediator selected                             P.O. Box 94040         47:6007 is not entitled to earn 40 percent
by the parties. Mediation conferences                  Baton Rouge, LA 70804-9040           tax credits until project completion, but
held by a private mediator are conducted                                        and         rather is eligible only for tax credits on
at a location mutually agreeable to the                       Judy Stewart Franklin         expenditures incurred by Jan. 1, 2010.
parties. If the parties choose to use a                 Attorney/Statewide Mediator             Plaintiff, Red Stick Studio Developments,
private mediator, they must certify to the         Louisiana Workforce Commission           L.L.C., submitted an application for a state-
court, after the private mediation, that a                           P.O. Box 82407         certified infrastructure project to develop
conference has occurred and the results                Baton Rouge, LA 70884-2407           full-service motion-picture-production and
thereof.                                                                                    post-production facilities. At the time Red
                                                                                            Stick submitted its application in February
                                                                                            2007, La. R.S. 47:6007 provided for a
                                                                                            40 percent tax credit until Jan. 1, 2008.




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394      April / May 2011
The purpose of this legislation was in       Stick filed a declaratory action seeking a       would not change. The 1st Circuit Court
part to attract private investment for the   determination that Section 3(C) did not          of Appeal affirmed the decision.
production of films containing substantial   set a time limitation for expenditures that         In reversing the lower courts, the
Louisiana content and to develop a tax       would qualify for tax credits. Red Stick         Supreme Court found that Section
infrastructure to encourage investments in   contended that as long as it received an         3(C) was susceptible to more than one
state-certified production projects. While   Initial Certification Letter and made the        meaning. Thus, the Supreme Court was
Red Stick’s application was pending,         minimum spend by Jan. 1, 2010, then Red          required to examine legislative intent. In
the Louisiana Legislature enacted Act        Stick was entitled to 40 percent tax credits     doing so, the court declined to consider
465, which amended La. R.S. 47:6007          until the project was completed. The State       the trial testimony of the legislators and
and imposed certain limits on these tax      Department of Economic Development,              other witnesses as to the Legislature’s
credits. Specifically, Section 3(C) of       Division of Administration, and Office of        intent. The only relevant issue was the
Act 465, which applied to Red Stick’s        Entertainment Industries Development             intent of the entire Legislature. The
project, provided that an application for    took the position that Red Stick was             Supreme Court also noted that the post-
an infrastructure project filed on or before entitled to 40 percent tax credits only on       enactment statements of legislators on
Aug. 1, 2007, had until Jan. 1, 2010, “in    expenditures made by Jan. 1, 2010.               legislative intent have generally been
which to qualify for the forty percent tax       Red Stick’s declaratory action               excluded as having limited value. Instead,
credits earned on expenditures.” To earn     proceeded to a five-day trial featuring          the court reviewed the contemporaneous
the tax credits in the year in which the     testimony from various legislators and           legislative history, including prior
expenditures were made, an applicant         other witnesses regarding legislative            versions of the Act and information and
must first expend 20 percent, or $10         intent and their understanding of Act            testimony presented to legislators in the
million, of the total base investment on     465. The trial court found the statute           House and Senate Committees and on
film production infrastructure.              clear and unambiguous in holding that            the House and Senate floors.
   The state issued an Initial Certification Red Stick could claim the tax credits               The Supreme Court determined
Letter to Red Stick for its proposed         until it completes the project and was not       that this contemporaneous legislative
project. The certification letter, however,  limited to expenditures incurred by Jan.         history provided an understanding that
noted that Red Stick had only until Jan.     1, 2010. The trial court noted that as the       grandfathered projects had to be completed
 23377 Koerber_LA_7.125x4.625:KoerberYourClientsAd_horz 11/8/10 4:52 PM Page 1
1, 2010, to earn tax credits on the project  statute was clear, it did not have to look       within 24 months, or by Jan. 1, 2010, to
pursuant to Section 3(C) of Act 465. Red     to legislative intent, but if it did, the result earn tax credits. The court observed that




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                                                                                    Louisiana Bar Journal Vol. 58, No. 6           395
as the grandfather clause developed,                                                                Second, the 5th Circuit affirmed
there were changes and amendments                                                               the lower courts’ rulings that the plan
that imposed additional requirements or                                                         improperly classified creditors and, thus,
restrictions on grandfathered projects.                         Bankruptcy                      was not confirmable. Specifically, the 5th
The Supreme Court also rejected the                             Law                             Circuit found that the debtor classified
notion that a change of the words “claim                                                        one of its unsecured creditors’ claims
tax credits” to “qualify for tax credits”                                                       separately from the other unsecured
substantively changed the meaning                                                               creditors in order to gerrymander a vote in
of this requirement from previous                   Plan Confirmation and                       favor of the plan. The 5th Circuit held that
amendments. Finally, the court noted                Designation as Small                        the unsecured creditor did not hold a “non-
that if an applicant were allowed to earn              Business Debtor                          creditor interest” such that the separation
40 percent tax credits for the life of the                                                      of its claim against the debtor was proper.
project, it would provide a greater benefit        In Save Our Springs (S.O.S.) Alliance,       Accordingly, the 5th Circuit held that the
than what was permitted under the prior        Inc. v. WST (II)-COS, LLC, ____ F.3d             lower courts properly denied confirmation
version of the law. Thus, Section 3(C) of      ____ (5 Cir. 2011), the 5th Circuit              of the debtor’s plan.
Act 465 limits grandfathered projects,         affirmed the lower courts’ decisions                 In the event the 5th Circuit did not
such as the one submitted by Red Stick,        denying confirmation of the debtor’s plan        reverse the lower courts’ decision denying
to 40 percent tax credits on expenditures      and holding that the debtor was judicially       confirmation of its plan, the debtor argued
incurred by Jan. 1, 2010.                      estopped from amending its designation as        that the lower courts erred in ruling that the
   Interestingly, there was significant        a small-business debtor, which resulted in       debtor would not be allowed to amend its
argument before the Supreme Court              a dismissal of the debtor’s case for failure     petition in order to change its designation
that the ruling applied only to the 40         to meet the 300-day deadline for filing a        as a small-business debtor. Under the
percent tax credits and not the 25 percent     plan under 11 U.S.C. § 1121(e)(2) in a           Bankruptcy Code, different rules apply
tax credits allowed under the pre-2007         small-business case.                             to debtors that are considered small-
revisions to the law. The decision,                First, the 5th Circuit affirmed the lower    business debtors. One such rule is that a
however, is silent on this issue.              courts’ rulings that the plan was not feasible   small-business debtor’s plan must be filed
                                               and, thus, could not be confirmed. The           within 300 days of the petition date or the
            —Michael B. DePetrillo             debtor, a nonprofit charitable organization,     debtor’s case will be dismissed. In this
 Member, LSBA Art, Entertainment and           proposed a plan that proposed to supply          case, the debtor’s 300-day deadline had
                  Sports Law Section           a $60,000 creditor fund that would be            expired, and the lower courts dismissed
   Jones, Walker, Waechter, Poitevent,         collected through charitable contributions.      the debtor’s bankruptcy case. Accordingly,
           Carrère & Denègre, L.L.P.           The 5th Circuit found that because the           the debtor sought to amend its petition in
        201 St. Charles Ave., 49th Flr.        evidence presented failed to establish a         order to change its initial designation as a
             New Orleans, LA 70170             “reasonable assurance” that the debtor           small-business debtor, which would have
                                               would raise sufficient donations to fund         allowed the debtor additional time to file a
                                               the plan, the plan was not feasible.             plan and avoid dismissal of its case.




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396      April / May 2011
   The 5th Circuit affirmed the lower            moved to Texas. In his petition, the debtor            to the federal exemptions provided in [11
courts’ ruling that the debtor was judicially    elected to claim the federal exemptions                U.S.C. §522(d)].” Fla. Stat. Ann. § 222.20.
estopped from amending its petition.             set forth in 11 U.S.C. § 522. The trustee                  Affirming the district court’s decision,
Applying the three judicial estoppel factors,    objected, arguing that Florida law                     the 5th Circuit held that since the debtor
the 5th Circuit found: (1) the debtor’s new      prohibited the debtor from electing the                was not a Florida “resident” when he filed
assertion that it was not a small-business       federal exemptions. The bankruptcy court               his petition, Florida law did not restrict
debtor was clearly inconsistent with its         sustained the objection, but the district              him from claiming federal exemptions.
original designation; (2) the bankruptcy         court reversed the bankruptcy court. The               The 5th Circuit rejected the trustee’s
court accepted the debtor’s designation          trustee appealed to the 5th Circuit.                   argument that the term “resident” should
by treating it as a small-business debtor            Under 11 U.S.C. § 522(b)(3), debtors               be read broadly to include any person
by allowing it to enjoy the beneficial rules     have the option to exempt property that is             who is subject to Florida’s jurisdiction.
applicable to small-business debtors; and        exempt under either federal law or the state           The 5th Circuit also rejected the trustee’s
(3) the debtor enjoyed the benefits of the       law where the debtor has been domiciled                argument that the 5th Circuit’s decision
small-business-debtor rules and could            for 730 days preceding the date of the filing,         may lead to forum shopping, recognizing
not be allowed to avoid the costs of the         and if there is no such state, the domicile of         that Congress’ decision to allow states to
small-business designation at the expense        the debtor for the 180 days preceding the              opt out of the federal exemptions created
of its creditors. Thus, the 5th Circuit held     730 days or for a longer portion of such               the opportunity to forum shop.
that the debtor was judicially estopped          180-day period than in any other place.
from amending its designation as a small-        Since the debtor had been living in Texas                               —Tristan E. Manthey
business debtor.                                 fewer than 730 days, the law of his previous             Chair, LSBA Bankruptcy Law Section
                                                 domicile, Florida, applied.                                                               and
         State Opt Out of                            Section 522(b)(2) authorizes states to                            Cherie Dessauer Nobles
       Federal Exemptions                        opt out of the federal exemptions, limiting            Member, LSBA Bankruptcy Law Section
                                                 debtors to state exemptions. Florida opted                    Heller, Draper, Hayden, Patrick
   In re Camp, ____ F.3d ____ (5 Cir.            out of the federal exemption allowance,                                       & Horn, L.L.C.
2011), the debtor lived in Florida for           providing in pertinent part, “In accordance                         Ste. 2500, 650 Poydras St.
three years; however, prior to filing his        with the provisions of [11 U.S.C. §522(b)],                            New Orleans, LA 70130
petition for bankruptcy relief, the debtor       residents of this state shall not be entitled



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                                                                                          Louisiana Bar Journal Vol. 58, No. 6                                       397
                                              on writs reversed the court of appeal          adoption terminated all of the biological
                                              and reinstated the trial court’s award of      parents’ rights, finding that the consent
                                              joint custody because the mother had           judgment was a contract and its terms
                   Family                     not pled for sole custody and had not          prevailed.
                   Law                        proved by clear and convincing evidence
                                              that sole custody was in the child’s best      Elliott v. Elliott, 10-0755 (La. App. 1 Cir.
                                              interest. However, it affirmed the court       9/10/10), 49 So.3d 407, writ denied, 10-
                                              of appeal’s reversal of the trial court’s      2260 (La. 10/27/10), 48 So.3d 1088.
               Custody                        order that the parties continue working           The trial court did not abuse its
                                              with a co-parenting counselor. Such a          discretion in not ordering a mental-
State ex rel. D.E., 45,809 (La. App. 2 Cir.   counselor was not ordered under the co-        health evaluation because legal custody
9/22/10), 47 So.3d 1109, writ denied, 10-     parenting statute, she could not afford        was not at issue, only a change in the
2645 (La. 12/15/10), 51 So.3d 6.              the continuing costs, and there had been       physical custody schedule regarding
    The maternal grandparents, who had        no showing of the need for a parenting         the travel time for the children between
been granted custody of and had raised        coordinator for this extensive length          Louisiana and Texas for the mother’s
the child for 11 years, stipulated that       of time. The Supreme Court found that          physical custodial time. The mother’s
he was a child in need of care, which         a domiciliary parent should have been          move to Texas, increasing the travel
caused them to lose their custodial status    named and designated the mother as the         time to twice as long (approximately
to the state. They were not parties to the    domiciliary parent because she had been        5.5 hours one way), was a material
disposition proceeding because they did       the primary decision maker. The Supreme        change of circumstances that affected the
not intervene. Thus, they had no right to     Court also affirmed that parents may use       children’s welfare sufficiently to modify
appeal the juvenile court’s decision to       corporal punishment as long as it is used      the physical custody schedule. Their best
grant custody to the biological parents,      in a reasonable manner.                        interests were served by modification
with the father as domiciliary parent.                                                       because the increased distance for travel
Further, they had no right to appeal          State ex rel. C.S., 10-0687 (La. App. 1        affected their ability to participate in
as parties who could have intervened,         Cir. 9/10/10), 49 So.3d 38.                    extracurricular activities such as dancing
because they were not “aggrieved,” as            The adoptive parents and biological         and volleyball. The court’s change to
they had not been recommended for             parents entered a consent judgment             the physical custody schedule and the
custody by OCS.                               providing that the adoptive parents were       exchange point was affirmed even though
                                              granted custody of the child subject to        she had less time than before and was not
Griffith v. Latiolais, 10-0754 (La.           reasonable visitation by the biological        granted additional time in the summer or
10/19/10), 48 So.3d 1058.                     parents. After the juvenile court awarded      during holidays.
   The trial court awarded joint custody      the biological father supervised visits, the
with no domiciliary parent. The court         adoptive parents appealed. The court of        Chauvin v. Chauvin, 10-1055 (La. App.
of appeal reversed and awarded the            appeal rejected their arguments that the       1 Cir. 10/29/10), 49 So.3d 565.
mother sole custody. The Supreme Court




398      April / May 2011
   Mr. Chauvin’s assignment of error that      appeal recalculated the child support and
the trial court allowed each side only two     increased his share.                                Looking for
hours to present its case in this custody
matter was rejected because he did not
                                                                                                     litigation
                                                   Final Spousal Support
object at the beginning of the trial when                                                          experience?
the court stated the time limit, did not ask   Ashworth v. Ashworth, 10-0215 (La.
for more time at the end of his case, did      App. 3 Cir. 10/6/10), 46 So.3d 1291.                Want to give
not ask to proffer unoffered testimony,
and did not allege any prejudice in his
                                                  The court of appeal dismissed Mr.
                                               Ashworth’s appeal of the trial court’s
                                                                                                   back to your
appellate brief or that he had been unable     finding that Ms. Ashworth was free                  community?
to offer all of the evidence he wanted.        from fault in the breakup of their
The court affirmed the change from
joint custody with alternating weeks
                                               marriage because that judgment was an
                                               interlocutory judgment, as an award of
                                                                                                Become a Pro
to naming Ms. Chauvin as domiciliary           support had not yet been made. The court         Bono volunteer
parent because of the change to Mr.
Chauvin’s work schedule and the child’s
                                               of appeal also found that designating
                                               the judgment as immediately appealable
                                                                                                  attorney!
poor behavior after his time with Mr.          under La. C.C.P. art. 1915(B) would be
Chauvin.                                       inappropriate as subsequent appeals            Pro Bono lawyers gain real
                                               would be sure to follow once the issues
                                                                                              experience while providing valuable
           child Support                       of need, ability to pay and quantum were
                                                                                              services for those who may not
                                               determined.
Fuqua v. Fuqua, 45,555 (La. App. 2 Cir.                                                       otherwise be able to afford legal
9/22/10), 47 So.3d 1121.                                                                      help. No matter what your practice
                                                              Property
    The court of appeal affirmed the                                                          area or experience level, there are
trial court’s imputation of an income of       Faircloth v. Faircloth, 45,673 (La. App.       pro bono programs that will be of
$125,000 to Mr. Fuqua despite his claims       2 Cir. 9/22/10), 48 So.3d 1100.                interest to you. Here are some of the
and its acknowledgment of the “national            Mr. Faircloth obtained a default           Pro Bono programs with exciting
economic downturn.” However, it                judgment of partition of community             opportunities in your area:
reversed the imputation of 6 percent           property on the same day that he filed his
interest on $175,000 that each party had       detailed descriptive list. The trial court          Northwest Louisiana
received from the sale of their interests in   granted Ms. Faircloth’s petition to annul             Pro Bono Project
a business because there was no evidence       because she had never been served with             nwlaprobono@gmail.com
that the funds could earn that rate, and       the list or given an opportunity to traverse
safe investments paid negligible interest.                                                       Baton Rouge Bar Foundation
                                               it in accordance with La. R.S. 9:2801. On
                                               appeal, he argued that because she did
                                                                                                      Pro Bono Project
Todtenbier v. Todtenbier, 10-0304 (La.         not answer the original petition, he did                www.brba.org
App. 1 Cir. 10/27/10), 48 So.3d 413.           not have to comply with La. R.S. 9:2801.
    On his rule to reduce spousal support                                                               Central La.
                                               The court of appeal affirmed, finding that
and child support, Mr. Todtenbier              because he did not file his list with his
                                                                                                   Pro Bono Project, Inc.
was imputed the same income that an            petition, she did not have the opportunity           probonopro@att.net
Arizona court had imputed to him in            to traverse; therefore, the required
the original judgment, and he failed to                                                        Lafayette Volunteer Lawyers
                                               procedures of La. R.S. 9:2801 were not
show a change of circumstances. On             followed.
                                                                                              www.lafayettebar.org/volunteer.php
the child support issue, the court did not
allow a credit for his time with the child,
                                                                                                   The Pro Bono Project,
                                                                  —David M. Prados
especially because of an Aug.18, 2009,                                                                 New Orleans
                                                   Member, LSBA Family Law Section
agreement between the parties that the                Lowe, Stein, Hoffman, Allweiss
                                                                                                    www.probono-no.org
access schedule would not be a change                                & Hauver, L.L.P.
in circumstances or a shared custody plan
                                                                                                    Southwest Louisiana
                                                            Ste. 3600, 701 Poydras St.
for child support purpose. Because the                                                               Pro Bono Project
                                                       New Orleans, LA 70139-7735
Social Security income the child received                                                       executivedirector@swlabf.org
due to the mother’s disability was to be
applied as a credit to the mother’s child
                                                                                                 Southeast Louisiana Legal
support obligation, not a deduction from                                                         Services’ Pro Bono Project
the basic child support owed, the court of                                                            of the 22nd JDC
                                                                                                    cbordonaro@slls.org


                                                                                     Louisiana Bar Journal Vol. 58, No. 6       399
                                                following receipt by the escrow agent           order to assert a claim that has otherwise
                                                of a notarized request of the contractor.       perempted, the statute was amended
               Fidelity,                        However, disputed amounts are not               to provide that parties making claims
               Surety and                       released until such time as either litigation   of fraud in bad faith are liable to the
               Construction                     or arbitration over the dispute is “final” —    aggrieved defendant for court costs and
               Law                              either on “final order” by arbitrator or a      attorney’s fees. A corresponding provision
                                                “final order” by the court, or a settlement     was added allowing a successful plaintiff
                                                agreement executed by both contractor           to recover its court costs and attorney’s
        Work of the 2010                        and owner is presented to the escrow            fees in the proceeding.
      Louisiana Legislature                     agent. The statute does not speak in terms
                                                of appeals of court decisions or arbitration    Senate Bill 457: Failure to Pay
   In summer 2010, the Louisiana                awards, but presumably contemplates that        Arbitration Fees, amending and
Legislature passed a significant number         the “final order” is one that is no longer      reenacting La. R.S. 9:4203 and 4206
of bills affecting the construction industry.   appealable. Escrow agents releasing                 Parties subject to an arbitration clause
Below are summaries of the laws that            monies to a contractor are protected against    in a contract that fail to pay arbitration
have recently gone into effect (although,       claims of misfeasance under the statute as      fees related to an instituted arbitration
as discussed below, one truly takes effect      long as the agents are in compliance with       are now subject to being haled into court
only at year-end).                              the statute.                                    over the matter, and may be liable for
                                                                                                the attorney’s fees of the opponent in the
Senate Bill 218: Escrow of                      Senate Bill 437: Recovery of                    process. This fairly simple amendment has
Retainage on Private Projects,                  Attorney’s Fees against a Claimant              already caused significant consternation
enacting La. R.S. 9:4815                        in Certain Fraud Cases, amending                in the legal community, as it is not clear
   This bill, aimed at preventing private       La. R.S. 9:2772                                 whether the “removal” of the matter to
owners from squandering retainage,                 Louisiana law provides at La. R.S.           state court now provided by the statute
applies to every private construction           9:2772 a five-year “peremptive” period          entails removal of the entire matter (that
contract in excess of $50,000 (other than       within which to file suit on certain            is, there will no longer be an arbitration
single or double family residential homes       construction-related claims. As opposed to      proceeding). Likewise, questions remain
and various specifically enumerated             the more common and often more liberal          concerning whether the attorney’s fees
industrial projects). For such contracts,       “prescriptive” periods found in the law         provision pertains simply to the cost of
the owner must establish an escrow              governing when suits may be instituted,         addressing the default-in-payment issue
arrangement with a qualified financial          “peremptive” periods are generally              or allows recovery of attorney’s fees as a
institution and deposit all retainage monies    rigorously applied by courts and mark the       part of the main claim in the case (noting
with the escrow agent in an interest-           immutable beginning and end of a period         that, by law, attorney’s fees are able to be
bearing account. The particular escrow          within which suit may be instituted.            recovered only if called for specifically in
agent to be used is to be approved by the          La. R.S. 9:2772 provides in its text a       a contract or applicable statute).
contractor.                                     specific exception to the five-year rule if
   At the completion of work under the          fraud is alleged to have been the source        Senate Bill 625: Louisiana
contract, release of the funds is governed      of the damage about which the claim is          Construction Contract Anti-
according to the statute. Undisputed            made. In an effort to penalize parties for      Indemnity Law, enacting La. R.S.
amounts are released three business days        improvidently alleging fraud simply in          9:2780.1




     CMC
                                                                                                   The statute applies only to contracts
                                                                                                entered on or after Jan. 1, 2011. Many
                                                       INSURANCE &                              in the industry believe this statute has
                                                                                                been a long time coming, as it mirrors
                                                   FINANCIAL CONSULTING                         in many respects the Louisiana Oilfield
                                                                                                Anti-Indemnity Statute (La. R.S. 9:2780,
                                                        WAYNE CITRON
                                                                                                enacted in 1981).




    ADVISORS
                                                 Expert Insurance Testimony                        The new statute applies to all
                                                                                                construction contracts, including contracts
                                                A Leading Firm in Life, Health,                 for design. Apparently taking into account
                                                   Disability, Property and                     the disparate bargaining power often
                                                   Casualty Insurance for                       present between parties in construction
       1-800-CITRON1                                   Over 38 Years                            contracts, the Legislature declared null
                                                                                                and void any provision in a construction
    www.citronagency.com                        Insurance Law and Regulations                   contract whereby the indemnifying party
                                                                                                protects the indemnitee from liability, loss



400       April / May 2011
or damage stemming from the negligence           preventing individuals or other entities
or intentional acts or omissions of the          from bidding on public work if the
indemnitee (or its agents). Previously,          individual or at least 10 percent owner of
                                                                                                                        Insurance, Tort,
such an indemnity provision in a contract        the entity has been convicted of certain                               Workers’
was permissible as long as it was express.       crimes enumerated in the statute, and                                  Compensation &
                                                 provides for a five-year prohibition for                               Admiralty Law
Senate Bill 641: Nullification of Public         convictions of certain other enumerated
Contracts Obtained through Public                crimes. The other bill, HB 1490, allows the
Bribery, enacting La. R.S. 33:41                 public entity to reject certain low bids if a          Insurance: Exclusionary
    This new law declares public contracts       sole proprietor or at least 5 percent owner           Clauses and Public Policy
obtained by bribery — when a related             in the bidding entity has been convicted of
conviction has been obtained — null and          a crime related to public bidding.                  Sensebe v. Canal Indem. Co., 10-0703
void and unenforceable in the courts.                Interestingly, neither of the new               (La. 1/28/11), ____ So.3d ____.
The statute places the burden on the local       statutes requires the public entity to                 Ms. Boudreaux, an employee of
governmental authority to pursue in court        affirmatively pursue information as to              Top Hatch, rear-ended Ms. Sensebe’s
an order enjoining further activity under        the bid-worthiness of potential bidders             vehicle. Boudreaux was driving a pickup
the contract, and then upon the local district   (even where the bidders are required to             truck owned by Gregory Hyneman and
attorney should governmental authorities         provide information — per HB 1292 —                 insured by Farm Bureau. At the time
fail to do that. This statute is apparently      the statute specifically eliminates any duty        of the accident, she was headed to Top
aimed at political subdivisions that allow       of the public entity to perform additional          Hatch’s shop, where modifications to
contracts in process to proceed to their end     criminal background checks). Hence,                 the upholstery of Hyneman’s truck were
notwithstanding determinations by a court        each of the new laws appears to require in          to be done. Canal Indemnity was Top
that the confection of the contract was          practice that aggrieved third parties raise         Hatch’s insurer.
tinged with public bribery.                      the issue with the public owner.                       Farm Bureau’s policy contained an
                                                     Time will tell whether these statutes           automobile-business-exclusion clause
House Bill 1243: Change to                       are effective or whether they are able to           that defined its insured. The exclusion
Designation of Time and Place                    be manipulated by the public entities.              stated, in pertinent part:
for Public Bids, amending and                    Likewise, there is a question inherent in the
reenacting La. R.S. 38:2214(A)                   10 percent/5 percent ownership provisions                The insurance with respect to
    The Legislature removed the                  in the statutes, in that percentage of                   any person or organization other
requirement previously in the statute            ownership as such seems to be inherently                 than the named insured or spouse
that public entities must designate in           malleable by companies seeking to place                  does not apply (1) to any person
their initial resolution for a particular        a public bid.                                            or organization, or to any agent
project the time and place that bids will                                                                 or employee thereof, operating
be received and opened. Instead, public                               —Daniel Lund III                    an automobile business, with
entities now need make that designation                Member, LSBA Fidelity, Surety and                  respect to any accident arising out
only in their advertisement for bids. While                    Construction Law Section                   of the operation thereof . . . . (2)
this amendment arguably decreases the                          Shields Mott Lund, L.L.P.                  Automobile Business means an
notice available to potential bidders of                       Ste. 2600, 650 Poydras St.                 automobile sales agency, repair
the time and place for bids, it also avoids                      New Orleans, LA 70130                    shop, service station, storage
the problem of inconsistent designations                                                                  garage or public parking place.
and allows the public entity to determine
the bid date subsequent to the time of the
issuance of the resolution authorizing the                                                                                                 Ask about

project.                                                                                                                                  FasTrac℠
                                                                                                                                          Mediation
                                                                                                                                          3 Hour Limit
House Bills 1292 and 1490:                                                                                                                 Fixed Fee
Prohibiting Certain Bidders Based
upon Convictions, enacting                                                                DAVID S. COOK
La. R.S. 38:2227 and 38:2218.8,                                                                          MEDIATOR
respectively
                                                                                                    Over 2,000 Mediations
   The Legislature aggressively pursued                                                No charge for travel throughout the State of Louisiana
prohibitions to bidding for public work to
certain parties and their companies based                                                              (337) 234-4155
upon prior convictions.
   HB 1292 is aimed at permanently



                                                                                        Louisiana Bar Journal Vol. 58, No. 6                             401
   Then,       under      the      “OTHER       courts, stating:                            Cheatham. After trial, the judge ruled
DEFINITIONS” heading, the policy                                                            for the defendants, emphasizing in his
states, in pertinent part: “(2) Automobile         Under the plain language of              opinion that he credited the testimony
Business means an automobile sales                 LSA-R.S. 32:900(B)(2) there is           of Cheatham that he was not served any
agency, repair shop, service station,              a mechanism for motor vehicle            alcoholic beverages while at Central
storage garage or public parking place.”           liability policies to cover not only     Station.
   Farm Bureau moved for summary                   the insured specifically named in            On appeal, plaintiffs urged, inter
judgment, arguing that the automobile-             the policy, but also to cover any        alia, error in finding no liability on the
business exclusion, viewed in light of the         other driver who drives with the         part of Central Station and the Giglios,
general rules of contract interpretation           permission of the named insured.         citing La. R.S. 9:2800.1, the social-host-
set forth in the Louisiana Civil Code,             From the legislature’s choice of         liability statute. That statute effectively
“unambiguously reflected the insurer’s             the word “shall” . . . we are bound      immunizes from liability persons
and insured’s intent to exclude a driver           to conclude that the mechanism           who provide alcoholic beverages,
such as Ms. Boudreaux from coverage.”              for coverage of permissive drivers       commercially or otherwise, for the
The district court heard arguments                 is not optional, but mandatory.          actions of their intoxicated patrons
from both sides and, finding that “the                                                      or guests who are of legal age. Thus,
automobile business exclusion of Farm              Because the insurance policy at          when a bar employee serves alcohol to
Bureau’s policy is clearly applicable              issue contains an exclusion for a        a person under age 21, La. RS. 9:2800.1
and . . . under these facts . . . not against      driver engaged in an automobile          does not immunize the bar owner from
public policy,” granted the motion,                business, but that exclusion             liability, but neither is that bar owner
dismissing Farm Bureau.                            conflicts with the legislated            absolutely liable.
   The court of appeal reversed, finding           policy of affording coverage to              In determining whether liability
Farm Bureau had failed to carry its                permissive drivers, the automobile       exists, the court must determine
burden of proving that the automobile-             business exclusion cannot be             whether the bar owner violated general
business exclusion applied, a matter               enforced in this matter.                 negligence principles, applying the
of contract interpretation, but without                                                     traditional duty/risk analysis. Five
reaching the question of whether the               The judgment of the district court       separate elements must be proved: (1)
exclusion should be struck as violating         dismissing Farm Bureau was reversed.        duty; (2) breach of duty; (3) cause-in-
Louisiana’s public policy, as set forth         Because the legal issues and Justice        fact; (4) scope of liability or scope of
in the “omnibus clause” of La. R.S.             Weimer’s scholarly 18-page opinion are      protection; and (5) damages. A negative
32:900(B)(2):                                   more complex and nuanced than this          answer to any of the elements prompts
                                                brief exegesis can convey, a reading of     a no-liability determination. Colgate v.
   B. Such owner’s policy of                    the full opinion is recommended.            Mughal Bros., 36,754 (La. App. 2 Cir.
   liability insurance: (2) Shall                                                           1/29/03), 836 So.2d 1229.
   insure the person named therein                   Tort: Host’s Liability                     Judge Peatross affirmed the trial
   and any other person, as insured,                                                        court’s decision dismissing the Giglios
   using any such motor vehicle or              Wimberly v. Giglio, 46,000 (La. App. 2      based on a determination that there was
   motor vehicles with the express              Cir. 1/26/11), ____ So.3d ____.             insufficient proof of Cheatham having
   or implied permission of such                    Ollie Wimberly, 18, and Robert          been served alcohol at Central Station.
   named insured against loss from              Cheatham, 19, Louisiana Tech freshmen       He might have gone directly to that
   the liability imposed by law                 friends, attended a party in Shreveport     critical point. Fortunately, he used the
   for damages arising out of the               at which alcoholic beverages were           opportunity to provide a thoughtful
   ownership, maintenance, or use of            consumed. They later went to Central        and instructive review of the social-
   such motor vehicle . . . .                   Station, a Shreveport nightclub owned       host-liability statute and the duty/risk
                                                by the Giglios, using fake IDs to gain      analysis process.
    Farm Bureau applied for a writ              admittance. They left Central Station
of review, which the Louisiana                  after midnight with Cheatham at the                —John Zachary Blanchard, Jr.
Supreme Court granted. Its analysis             wheel because Wimberly was too drunk              Past Chair, LSBA Insurance, Tort,
stressed evaluation of “the effect of           to drive. The car struck a tree while                       Workers’ Compensation
the automobile business exclusion on            heading eastbound on I-20 at 1:50 a.m.                  and Admiralty Law Section
relevant statutory provisions which             Wimberly was ejected and suffered fatal                           90 Westerfield St.
recite the public policy of Louisiana,”         injuries; Cheatham survived. Plaintiffs,                     Bossier City, LA 71111
citing its prior holding that “exclusions       Ollie’s parents, alleged that the Giglios
contained within the policy that conflict       were liable for their son’s death
with statutes or public policy will not be      because employees of the bar served
enforced.” The court reversed the lower         alcoholic beverages to the under-aged


402       April / May 2011
                                                       Strategic Arms                      contended that the state legislative
                                                      Reduction Treaty                     measures implementing the terms of the
                 International                                                             master-settlement agreement imposed
                      Law                        On Dec. 22, 2010, the U.S. Senate         discriminatory payment burdens and
                                              voted overwhelmingly (71-26) in favor        deprived them of the value of their
                                              of the new Strategic Arms Reduction          investment in the United States by
                                              Treaty between Russia and the United         substantially altering the regulatory
                                              Sates. The arms-reduction treaty was         framework for the sale of tobacco
    State Visit by Chinese                    signed by Presidents Obama and               products, all purported violations
     President Hu Jintao                      Medvedev on April 8, 2010. Article           of NAFTA articles 1102 (national
                                              II of the treaty requires each party to      treatment), 1102 (most-favored nation
   President Obama welcomed Chinese           reduce and limit numerous aspects of         treatment), 1105 (minimum standard of
President Hu Jintao on an official state      their respective nuclear arsenals within     treatment under international law) and
visit in mid-January. President Obama         seven years, including reduction to a        1110 (expropriation).
addressed numerous bilateral economic         maximum of 700 deployed ICBMs,                   The United States countered that
issues. The following is a brief summary      1550 for warheads on deployed ICBMs          Grand River did not have an “investment”
of the areas where further U.S.-Chinese       and 800 for deployed and non-deployed        in the United States under NAFTA and
cooperation is expected.                      ICBM launchers.                              therefore did not qualify for NAFTA
   ►      Chinese       Currency. The                                                      Chapter 11 protection. The United
undervaluation of the Chinese yuan                                                         States also defended the state legislative
                                              North American Free Trade                    measures as reasonable and necessary to
is a source of continuing trade tension
between the United States and China.                 Agreement                             protect public health. After seven years
President Obama urged President Hu                                                         of submissions and hearings, the NAFTA
to allow the currency to float with the       Grand River Enterprises Six Nations,         tribunal rejected Grand River’s claims
market to address current economic            Ltd. v. United States of America (Jan.       in their entirety. The tribunal found that
imbalances between the countries.             12, 2011).                                   the claimants had no investment in the
Despite the President’s comments,                On Jan. 12, 2011, a NAFTA arbitration     United States and that the legislative
China is not listed as an official currency   panel rejected claims made by a Canadian     measures were not discriminatory and
manipulator on the Department of              corporation and several of its constituent   did not violate the minimum standard of
Treasury’s 2011 report.                       members against the United States for        non-discriminatory treatment required
   ► Intellectual Property. China             damages resulting from certain state         by NAFTA.
continues to offer little protection to       legislative measures related to the 1998
U.S. intellectual property interests and      Master Settlement Agreement between                             —Edward T. Hayes
President Obama urged President Hu            several states and major U.S. tobacco                   Member, LSBA International
to strengthen domestic intellectual           companies. Grand River and Native                                       Law Section
property enforcement in line with its         Wholesale Supply (Grand River) are                       Leake & Andersson, L.L.P.
WTO obligations. Private sector reports       Canadian manufacturers and retailers of                  Ste. 1700, 1100 Poydras St.
contend that a 50 percent decrease in         tobacco products. Grand River initiated                     New Orleans, LA 70163
Chinese software piracy could lead to an      arbitration in 2004 seeking as much as
increase of $4 billion in software sales      $664 million in damages as a result of
for U.S. companies.                           the settlement agreement. Grand River
   ► Market Access and Government
Procurement. China’s domestic market
continues to grow as it develops a
sustainable middle class with relevant              A Fresh Perspective
purchasing power. China committed to                   On Your Case
expand its market access commitments
to U.S. goods and services. China also
committed to submitting a revised
offer to join the WTO Agreement on
Government Procurement, allowing
U.S. providers access to the estimated
$88 billion annual Chinese market for
government procurement of goods and
services.                                                    Jury Focus Groups | Mock Trials
                                                                                                              www.tomfoutzadr.com

                                                11005.FTZ_LSBA_feb_mar.indd 1                                       12/1/10 10:08:57 AM



                                                                                   Louisiana Bar Journal Vol. 58, No. 6            403
                                                           of the minerals, but, by that time, XTO               created at the time of a partition of the
                                                           no longer was interested in leasing the               land in 1993. The defendants argued
                                                           property.                                             that the portion of the servitude where
               Mineral                                         The Sparkses brought suit against                 the well was located had terminated
               Law                                         their title insurance company, which                  by prescription of nonuse. At the time
                                                           had prepared the erroneous act of sale.               the well was drilled, no production
                                                           The company moved for summary                         or operations had occurred on the
                                                           judgment, noting that the Sparkses’ land              servitude tract for more than 10 years.
        Notices of Lease:                                  was subject to a previously-recorded                  Further, the location of the well was
        Acts 2010, No. 284                                 lease to St. Mary Land & Exploration.                 not encompassed by any unit in which
                                                           That lease’s three-year primary term                  operations or production had occurred
   Effective Jan. 1, 2011, La. R.S.                        had expired (and apparently the lease                 during the previous 10 years.
44:104 is redesignated as 9:2742. The                      had not been maintained by production),                   The plaintiffs argued, however, that
statute specifies, among other things,                     but the lease contained an option for a               prescription was interrupted for the
that recordation of a notice of lease will                 two-year extension, which St. Mary                    entire servitude by activity for units
be given the same effect as recordation                    had exercised. The title insurance                    that included certain other portions of
of the lease itself.                                       company argued that the Sparkses were                 the servitude tract. Under the Mineral
                                                           not damaged by XTO’s withdrawal of                    Code, unit production or unit operations
   Unrecorded Exercise of                                  its lease offer because the pre-existing              that occur outside a servitude tract will
                                                           lease to St. Mary precluded the Sparkses              interrupt prescription if the unit overlaps
   Option to Extend Lease                                  from granting a valid lease to XTO.                   the servitude tract, but the default rule
                                                               The Sparkses argued that they were                is that such an interruption extends only
Sparks v. United Title & Abstract,
                                                           not bound by St. Mary’s unrecorded                    to the portion of the servitude included
L.L.C., 45,776 (La. App. 2 Cir.
                                                           exercise of its option to renew. The trial            in the unit. Nevertheless, Mineral Code
12/15/10), ____ So.3d ____.
                                                           court disagreed, holding that, under the              article 75 allows the parties to a servitude
   Claude and Linda Sparks purchased
                                                           public records doctrine, a third party                to alter this default rule by agreeing
10 acres in Caddo Parish. The parties
                                                           is bound by an unrecorded exercise of                 “expressly and in writing” that any unit
to the transaction had agreed that the
                                                           an option to renew a lease if the lease               operations will interrupt prescription
sellers would reserve 25 percent of the
                                                           containing the option is recorded. The                as to the entire servitude. The plaintiffs
minerals, but the parties signed an act
                                                           2nd Circuit affirmed.                                 argued that the act creating the servitude
of sale that erroneously stated that the
                                                                                                                 had done that by stating that the parties
sellers reserved 75 percent. The error
                                             Prescription of Nonuse                                              to the partition of land agreed to keep
was not immediately discovered.
                                                                                                                 their mineral interests “in undivided
   Some time later, XTO offered to
                                         Petitjean II v. Samson Contour Energy                                   ownership . . . for the maximum
lease the Sparkses’ 75 percent mineral
                                         E&P, L.L.C., 10-0496 (La. App. 3 Cir.                                   allowable period of time.”
interest for $20,000 per acre, but XTO
                                         12/8/10), 51 So.3d 200.                                                     Although the plaintiffs’ interpretation
withdrew the offer upon determining
                                            A productive well was drilled in 2006.                               of the act creating the servitude would
that the Sparkses appeared to own only
                                         The plaintiffs claimed they were entitled                               have kept the ownership of the minerals
25 percent of the minerals. An act of
                                         to a portion of a well’s proceeds, based                                undivided for a longer period of time by
correction was recorded to reflect that
 BusinessLoss 1-6pg.qxp 6/28/10 3:01 PM Page 1
                                         on their co-ownership of a servitude                                    enlarging the area for which prescription
the sellers had reserved only 25 percent
                                                                                                                 was interrupted, the court rejected
                                                                                                                 the plaintiffs’ interpretation. The 3rd
                                                                                                                 Circuit concluded that the parties to an
  Business loss engagements involve cases in many areas including oil spills.                                    act creating a servitude need not refer
                                                                                                                 to Mineral Code article 75 in order to
      “Our Professionals have on hand experience dealing in all                                                  overrule the default rule regarding the
       financial aspects of the legal profession. We have extensive                                              extent of interruption of prescription by
       experience in Business Loss and Bankruptcy.”                                                              unit operations, but they “must leave no
                                                                                                                 question that the parties intend to invoke
                                                —Kernion T. Schafer, CPA                                         the benefit of having the interruption
                                                                                                                 extended to lands beyond what would
                                                                                                                 occur under the default rule.” The court
                       Certified Public Accountants
                                                                                                                 held that the language of the act creating
  SCHAFER              701 Aurora Avenue • Suite A • Metairie, LA 70005
                                                                                                                 the servitude was not sufficiently clear
  GROUP          LTD   Phone 504.837.6573 • Fax 504.837.6570 • Email tina@schafergroup.net
                                                                                                                 to do that.
   Forensic Accounting Emerging Issues Financial Services Litigation Services Legal Services Emerging Business




404       April / May 2011
    Subsequent Purchaser                                                                                                                            pathologist who interpreted the slides in
          Doctrine                                                                                                                                  1998, asking that the court declare La. R.S.
                                                                                                                                                    9:5628 unconstitutional because it violated
Wagoner v. Chevron USA, Inc., 45,507 (La.
                                                                                                         Professional                               Louisiana Constitution article I, section 3
App. 2 Cir. 11/24/10), ____ So.3d ____.                                                                     Liability                               (equal protection) and article I, section 22
   Relying on the “subsequent purchaser”                                                                                                            (access to the courts).
doctrine, the 2nd Circuit held that a                                                                                                                   A Sibley hearing, which provides parties
landowner had no right of action against                                                                                                            an opportunity to present evidence as to
a mineral lessee for property damages that                                    Constitutional Challenge to                                           whether a medical malpractice statute is
occurred prior to the landowner’s purchase                                  Medical Malpractice Prescription                                        constitutional, was scheduled but then
of the property. The right of action for                                        Statute La. R.S. 9:5628                                             continued without date. In the interim, the
those damages is a personal action that                                                                                                             defendants filed a peremptory exception of
belongs to the individual who owned the                                     Russo v. Kraus, 10-2463 (La. 1/28/11),                                  prescription and two motions for summary
property at the time the contamination                                      ____ So.3d ____.                                                        judgment, the first asserting that Section 5628
occurred. The right of action does not                                          A patient filed a medical malpractice                               did not discriminate on the basis of physical
pass to the new owner by a mere transfer                                    claim in 2006, alleging that her cancer of                              condition, and the second asserting that the
of ownership of the land. There must be                                     the cervix, which she discovered in 2006,                               statute was constitutional. The trial court
an express assignment of the claim for                                      could and should have been detected and                                 heard and granted both motions for summary
damages. The basis of this doctrine is a                                    treated in 1998. Her first indication of                                judgment before holding a Sibley hearing.
presumption that a purchaser knows the                                      a problem was when she felt a lump in                                   (The exception of prescription was later
condition of the property and takes it into                                 her neck approximately seven and one-                                   sustained.) The parties then stipulated that the
account in agreeing to a sales price.                                       half years after a pathologist allegedly                                claim had prescribed under Section 5628, but
                                                                            incorrectly interpreted her tissue slides.                              the plaintiffs reserved their rights to appeal
                       —Keith B. Hall                                       The undiagnosed pelvic/cervical cancer                                  the granting of the motions for summary
    Member, LSBA Mineral Law Section                                        had by then metastasized, and she died                                  judgment and the sustaining of the exception
 Stone Pigman Walther Wittmann, L.L.C.                                      from metastatic disease.                                                of prescription. The matters were consolidated
                     546 Carondelet St.                                         The plaintiffs filed a petition for                                 on appeal. Russo v. Kraus, 10-0178, (La. App.
               New Orleans, LA 70130                                        declaratory judgment against the                                        4 Cir. 9/29/10), 49 So.3d 941.




       sTeFAnie AllWeiss              TonY Clesi                J. gregg Collins                DonAlD DoUglAs                ToM FoUTz




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                                                                                                                                                                MoCk TriAls

                                                                                                                                                                 seMinArs


                                                                                                                                                            TollFree 800.884.9939
                      DAniel hUrleY                 lAvonne MArTin                 Joe MUrrAY               John MUsser, iv

                                                                                                                                                               FAx 504.838.9555

                                                                                                                                                      MeDiATe@ADrinCorporATeD.CoM

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        sTeven ploTkin          J. vAn robiChAUx, Jr.            AnDY sChAFFer                  Joseph TieMAnn             DAviD WilliAMs




   11002.ADR_LSBAREV.indd 1                                                                                                                                                         2/18/11 10:33:02 AM


                                                                                                                                            Louisiana Bar Journal Vol. 58, No. 6                   405
    The plaintiffs contended on appeal         15, 2004. She was transferred to Tulane            witnesses in New Orleans (another
that the trial court committed four errors:    Hospital in Orleans Parish for emergency           res nova issue) was said to “carry
1) failing to hold a Sibley hearing before     treatment, where she died on June 16. Her          significantly less weight than the
dismissing the case, 2) sustaining the         parents filed suit in Orleans Parish and           location of the parties and their
motions for summary judgment, 3) granting      named as defendants only Lincoln Parish            percipient witnesses.” Litigants
the exception of prescription, and 4) ruling   residents. The defendants filed exceptions         choose their experts, and if the
that Section 5628 was constitutional.          of improper venue and, in the alternative,         convenience of experts were given a
    Section 5628 provides that a medical       a motion to transfer pursuant to forum non         significant amount of weight in the
malpractice action must be brought within      conveniens. The defendants had not yet             analysis, presumably the plaintiffs
one year from the date of the negligence       answered the lawsuit but had conducted             could select any forum in which
or within one year from the date of the        discovery that provided adequate bases for         jurisdiction was proper “simply by
discovery of the negligence, but in no         determination of the issues.                       employing counsel and a witness
event more than three years after the date         The trial court overruled the exceptions,      there.” Expert witnesses testify on
of the alleged act or omission.                and the court of appeal denied the                 behalf of one of the litigants, and
    The court of appeal evaluated the          defendants’ application for supervisory            while they may be inconvenienced
plaintiffs’ arguments and ruled that it        writs. The Supreme Court then granted each         by travel, they are compensated for
did not “presently” find Section 5628          defendant’s application for interlocutory          time and travel expenses, and the
unconstitutional, but it reversed the          review.                                            inconvenience does not appear to
trial court’s rulings on the motions for           The Supreme Court had never addressed          affect their ability to testify at trial
summary judgment and on the exception          whether venue was a threshold issue to             “as evidenced by the frequency by
of prescription. The case was remanded for     be tried prior to rendering a decision on          which parties retain expert witnesses
a Sibley hearing to determine, inter alia,     a motion for forum non conveniens. Two             from other states.”
whether a medical insurance crisis existed     Louisiana appellate courts had ruled that
when the statute was enacted and whether       courts have jurisdiction to rule on a forum         La. C.C.P. art. 123 dictates the final
the patient’s disease was one of the 19        non conveniens motion irrespective of           factor in the decision of whether to transfer
diseases cited in Whitnell v. Silverman, 95-   whether venue is proper. In Holland,            — which venue best serves the “interest
0112 (La. 12/6/96), 686 So.2d 23, 28, that     however, the court decided that there           of justice.” The court noted that all parties
have a latency period of more than three       was no need to address whether Orleans          resided in Lincoln Parish, all acts of
years and is a disease that should be added    was a parish of proper venue because the        negligence took place in Lincoln Parish
to the list of 19 cited in Whitnell.           application of forum non conveniens was         and “there is a local interest in having
    The Supreme Court issued a one             “relatively straightforward.”                   localized controversies decided at home.”
paragraph “Order” in response to the               The court recognized that plaintiffs        Piper Aircraft Co. v. Reyno, 102 S.Ct. 252
defendants’ writ application:                  may choose any venue available, and their       (1981), quoting Gulf Oil Corp. v. Gilbert,
                                               choice is “entitled to deference,” with the     67 S.Ct. 839 (1947).
   Writ granted. In light of the               burden to show why the motion should be             The plaintiffs argued that the defendants
   defendants’ stipulation to the latency      granted being placed on the party moving        did not claim that Orleans Parish would
   of Janice Russo’s disease and this          to transfer.                                    be a hostile forum or that they would be
   court’s prior findings concerning the           The court evaluated the following           unable to receive a fair trial in that forum.
   existence of a medical malpractice          pertinent facts:                                In Gulf Oil, supra, the U.S. Supreme Court
   insurance crisis in the 1970s, the              ► All parties resided in Lincoln Parish,    said that in ruling on a motion for forum
   Court of Appeal erred in reversing          and all acts of alleged negligence took         non conveniens, a court must weigh the
   the District Court’s judgment and           place there.                                    “relative advantages and obstacles to fair
   remanding this matter for a Sibley              ► The distance between Lincoln and          trial” in each forum. The Holland court
   . . . hearing on these issues . . . .       Orleans parishes is more than 300 miles,        pointed out, however, that article 123 does
   Accordingly, the judgment of the            a comparatively long distance that would        not require a party seeking transfer to show
   Court of Appeal is hereby reversed,         require a five-hour drive for the defendants    that it cannot receive a fair trial.
   and the judgment of the District            and a stay over a period of one or more             The denial of defendant’s motion
   Court is hereby reinstated.                 nights.                                         to transfer was reversed and the matter
                                                   ► Several key witnesses resided in or       transferred to Lincoln Parish.
      Venue and Forum Non                      near Lincoln Parish, including the three
          Conveniens                           members of the medical-review panel and                             — Robert J. David
                                               two nurses the defendants stated would be         Gainsburgh, Benjamin, David, Meunier
Holland v. Lincoln General Hospital, 10-       called as witnesses.                                                & Warshauer, L.L.C.
0038 (La. 10/19/10), 48 So.3d 1050.                ► No malpractice is alleged to have                      Ste. 2800, 1100 Poydras St.
   A young child with chronic health           occurred in Orleans Parish.                               New Orleans, LA 70163-2800
problems received allegedly negligent
care in Lincoln Parish on June 14 and             The location of the plaintiffs’ expert


406      April / May 2011
                                                filed suit to rescind the amendment,             amendment, as adopted, violated a rule
                                                asserting that it was invalid because such       intended for the protection of a private
               Trusts, Estate,                  a change in ownership of the common              party, i.e., the Trust’s consent to the
               Probate &                        elements required the unanimity of all           amendment and transfer of its ownership
               Immovable                        unit owners. The association argued that         interest in the common elements. Because
               Property Law                     the amendment was valid because (1)              the amendment was only relatively null,
                                                the declaration requires a vote of only 66       the Trust could expressly or tacitly confirm
                                                percent of the ownership interests to adopt      it under La. Civ.C. art. 1842.
   Confirming a Relative                        an amendment; or, alternatively, (2) the             The court held that when the Trust sold
 Nullity: The Significance of                   amendment was a relative nullity that was        its interest to the third party, it expressly
  “Subject to” Language                         confirmed by the terms of the Trust’s sale       and validly confirmed the publicly
                                                to the third party and, in due course, each      recorded amendment by conditioning the
Cusimano         v.    Port      Esplanade      plaintiff.                                       sale on the “made, executed and accepted
Condominium Assn., 10-0477 (La. App. 4              Both parties moved for summary               subject to” language in the act of sale. The
Cir. 1/12/11), ____ So.3d ____.                 judgment. The district court found the           court reviewed controlling cases on the
    Plaintiffs filed suit to rescind an         amendment to be valid, granted summary           binding effect of the “subject to” language
amendment to the condominium                    judgment in favor of the association and         and explained that the Trust’s inclusion of
declarations that had been enacted and          dismissed the plaintiffs’ suit with prejudice.   this language in the act of sale cured the
publicly recorded years before they             On appeal, the 4th Circuit affirmed the          deficiency:
purchased units in the condominium              dismissal.
regime. In 2002, a condominium                      The court first addressed the legal and         [T]he Trust’s express stipulation that
association had adopted an amendment to         conventional requirements for transferring          its sale to Mr. Wilkinson was “made,
the condominium declarations by a vote of       or re-designating common elements to                executed and accepted subject to”
69.96 percent of the ownership interests        limited common elements in a Louisiana              the Second Amendment constitutes
that, among other things, re-designated         condominium regime. Citing Professor                the Trust’s confirmation of the
certain common elements as the limited          Yiannopoulos, the court stated that each            Second Amendment — supplying
common elements of a group of units.            owner of an “individual unit has an                 the requisite unanimity of consent
The amendment was then recorded in              undivided interest in the common elements,          for this change. The effect of the
the public records. The Hardcastle Trust,       which is a right of co-ownership.” These            Trust’s confirmation is retroactive
the plaintiffs’ common predecessor-in-          common elements are held in indivision              to the date of the adoption of the
title, owned the remaining 30.04 percent        by all of the condo unit owners, and use            Second Amendment...
ownership interests but did not consent to      and management of common elements are
the amendment.                                  to be determined by agreement of all the            Consequently, the amendment, having
    Subsequently, the Trust transferred its     co-owners. Based on these precepts, the          been validly confirmed, was binding and
ownership interest to a third party, and that   court held that re-designation of common         enforceable with respect to the immovable
transfer was expressly “made, executed          elements to limited common elements              property, the third party and each of his
and accepted subject to” the publicly           would deprive a co-owner in indivision of        successors-in-title, the plaintiffs.
recorded amendment. Between 2005 and            his right of use; thus, unanimous consent
2008, plaintiffs purchased their respective     is required to transfer or re-designate the                       ─ Raymond C. Lewis
units from the third party. Again, each         common elements.                                    Member, LSBA Trusts, Estate, Probate
of the plaintiffs’ acts of sale was made,           Turning to the issue of whether the             and Immovable Property Law Section
executed and accepted “subject to” the          amendment was adopted with the requisite              Sher Garner Cahill Richter Klein &
publicly recorded amendment.                    unanimity, the court characterized the                                    Hilbert, L.L.C.
    Despite this language, plaintiffs later     amendment as a relative nullity under                         Ste. 2800, 909 Poydras St.
                                                La. Civ.C. arts. 2030 and 2031. The                             New Orleans, LA 70112


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                                                                                        Louisiana Bar Journal Vol. 58, No. 6             407

				
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