author: I, GASKINS, J.

text:
    MOUNT MARIAH BAPTIST CHURCH, INC., Plaintiff-Appellee, v. PANNELL’S ASSOCIATED ELECTRIC, INC. and Acstar Insurance Company, Defendants-Appellants.
    No. 36,361-CA.
    Court of Appeal of Louisiana, Second Circuit.
    Dec. 20, 2002.
    Rehearing Denied Jan. 23, 2003.

      Larry English, Shreveport, Calvin Lester, for Appellants.
    Robert E. Plummer, Mansfield, for Ap-pellee.
    Before WILLIAMS, GASKINS and PEATROSS, JJ.
   I, GASKINS, J.

The defendants, Pannell’s Associated Electric, Inc. and Acstar Insurance Company, appeal from a trial court judgment ordering them to pay the plaintiff, Mount Mariah Baptist Church, Inc., $148,620.04 arising from a dispute over a building contract. For the following reasons, we affirm in part and amend in part the trial court judgment.

FACTS

In 1998, Mount Mariah Baptist Church, Inc., “the church” decided to renovate their existing building and add a new sanctuary. The church hired Jeron Rogers, an engineer, to draw the plans. Amos Hines bid $497,000.00 to build according to the plans. The church secured financing with Hibernia Bank. The bank required that the church have a licensed and bonded contractor to oversee the project. Hines did not meet this qualification. Negotiations were entered into with Pannell’s Associated Electric (Pannell’s) which was licensed and bonded. The church insisted that Hines be the foreman on the project.

On February 8,1999, the church entered into a contract with Pannell’s to do the work for $497,000.00. The parties had reviewed cost estimates made by Hines and by Pannell’s for the various components of the construction. In the contract, Nathan Holden was designated as the architect. The contract contemplated that the architect would oversee work performed by Pannell’s and would authorize periodic payments to the company. The document also provided that the project would be built according to plans and specifications. Any changes from the plans would [¡¡cost extra. The contract required that the defendant start work within 30 days of the contract, with substantial completion within 180 days of the date of commencement.

Financing was not complete until April 1999, when Acstar Insurance Company (Acstar) issued a performance bond in the amount of $497,000.00. Construction began within 30 days of obtaining financing. The plans furnished by the church were lacking in detail. Generally, the architect hired by the owner would be consulted throughout the construction process regarding lack of detail or other problems with the plans. In this case, the architect sought payment from Pannell’s. However, Pannell’s contended that the architect was to be paid by the church. Apparently, due to nonpayment, the architect ceased work on the project. It appears that Pannell’s was then forced to consult directly with representatives of the church regarding the lack of specificity in the plans.

The church then began making oral changes to the plans without change orders and without paying for the changes. Due to the failure to pay the architect, there was no review of the changes. The changes included the alteration of the thickness of the concrete slab, deletion of classrooms, changes to the balcony, change of the size of the pulpit area, and changes to the choir area. Two bathrooms were deleted and a lounge was added to the entry area. Other changes were made to use more expensive materials than originally called for. Wood paneling was placed behind the choir area |ginstead of sheetrock and more expensive stained glass windows were added. Different and more extensive lighting was installed. These changes were made by the church’s pastor, Johnny Baylor, and/or one of the deacons, Robert Boyd. The changes were implemented by Hines, often without any consultation with Pannell’s.

In October 1999, the church presented Pannell’s with a bill for more than $18,000.00 for a sound system that was not included in the plans. The preliminary cost allowances provided $4,000.00 for a sound system. Pannell’s refused to pay the bill or to pay for any more changes without a change order. The parties reached an impasse at this point and the church contacted Acstar on the performance bond, claiming that Pannell’s had stopped work on the project. The problem was temporarily worked out and Pan-nell’s continued to work.

Pannell’s insisted that the church owed approximately $58,964.00 for changes made to the plans. When an agreement as to this amount could not be reached, the church locked Pannell’s off the job site, refusing to let the company continue with the work. Subcontractors, who had not been paid, filed liens against the church.

Due to the changes in the original plans, which increased the seating capacity of the sanctuary, the fire marshal changed the building’s classification from “Class C” to “Class A.” This required extensive modifications to the fire alarm, sprinkler, air conditioning and electrical systems. The fire marshal would not allow the building to be occupied without the modifications.

4On April 5, 2000, the church filed suit against the defendants, basically asserting a claim for breach of contract. The church claimed that Pannell’s failed to complete the renovation and construction in accordance with the design and specifications. The church also alleged that Pannell’s failed to pay invoices for labor and materials resulting in numerous liens. The church asserted that Pannell’s departed from the design for the work resulting in a different classification by the fire marshal and requiring extensive additional work to meet fire code regulations. The church attached a list of deficiencies in the building to its pleadings and sought to recover for unpaid claims for labor and materials, the expense of having another contractor complete the work, costs of performing the work required by the fire marshal, costs to redo unsatisfactory work performed by Pannell’s, sums due for breach of contract by Pannell’s, additional costs for material, labor, and engineering, and additional architectural fees, legal fees, and costs.

The defendants answered and filed a reconventional demand against the church, the members of the building committee, and the pastor. According to the defendants, the church breached the contract by failing to retain an architect or engineer to oversee the work and in making numerous changes to the original plan without paying for them. The defendants sought $112,555.00, which included the cost of the changes, the amount necessary to perform work required by the fire marshal, costs associated with any increase in bond premiums, lost profits, costs associated with lien Isfilings, and attorney fees and costs. Pannell’s also complained that the church refused to allow the company to finish the project.

The pastor and building committee members filed an exception of no cause of action which was granted by the trial court. The matter was tried and on November 13, 2001, a judgment was filed, ordering the defendants to pay the church $136,850.04 together with $11,770.00 in expert witness fees.

In written reasons for judgment, the court found that this was a suit for breach of contract, redhibition, and quantum merit. The court noted that the project cost more than anticipated and the church was riot satisfied with the quality of the work. Also, some of the labor and materials were not paid for by Pannell’s.

The court denied the church’s redhibition claim, finding that the church was using the facility and was largely satisfied with it. However, because many aspects of the construction were substandard, the court found that a reduction in price was warranted.

The court found that the church was entitled to reimbursement for five liens against the property totaling $46,249.45. The court then went through a list of deficiencies in materials and construction and set forth the amounts due the church for these items. The church was also awarded a credit for the cost of a metal roof originally contemplated in the plans. The court allowed a credit to the church for the amount needed to complete the project. The court further found that the church was entitled to recover | (¡expert witness fees. The total amount the court found due to the church was $183,823.04.

The court then found that this amount was subject to an offset for items due to the defendants. The court found that the church had to pay for a thicker slab than specified in the plans. Pannell’s was also granted recovery for the cost of the sound system not included in the plans, but paid for out of the contract price. The court found that a final payment under the contract was owed to Pannell’s.

The court noted that the plans for the project were inadequate, and that the church did not provide an engineer or architect as required by the contract. The court denied Pannell’s claim for lost profits due to the church’s action in seeking to enforce the performance bond. According to the court, although the church erroneously believed that the bond was an additional source of funding, the quality of the work was substandard. Therefore, the church was entitled to seek enforcement of the performance 17bond. The total amount of the set-off allowed to the defendants was $35,203.00. Therefore, the judgment awarded to the church was $148,620.04. The defendants appealed, asserting numerous assignments of error.

JUDGMENT AGAINST DEFENDANTS

The defendants argue that the trial court erred in rendering judgment against them. They contend that it was the church that breached the contract and caused the damages by failing to retain the services of an architect and/or engineer, in making modifications to the plans without paying for the changes, in failing to communicate with Pannell’s, and in refusing to allow Pannell’s access to the project. They contend that by January or February 2000, the project was substantially completed and that the church was responsible for all delays in the completion of the project. The defendants claim that all damages were caused by the church and the court’s judgment unjustly enriches the church.

Contracts have the effect of law for the parties and must be performed in good faith. La. C.C. art.1983. Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art.2045. Where factual findings are pertinent to the interpretation of a contract, those factual findings are subject to the manifest error standard of review. Industrial Roofing & Sheet Metal Works, Inc. v. J.C. Dellinger Memorial Trust, 32,048 (La.App.2d Cir.8/20/99), 751 So.2d 928, writs denied, 99-2948, 99-2958 (La.12/17/99), 752 So.2d 166.

|RA court of appeal may not set aside a trial court’s findings of fact in the absence of manifest error or unless it is clearly wrong. Stobart v. State, through Department of Transportation and Development, 617 So.2d 880 (La.1993). In applying this standard, the appellate court must determine not whether the trier of fact was right or wrong, but whether the factfinder’s conclusion was a reasonable one. If the factfinder’s findings are reasonable in light of the record, viewed in its entirety, the court of appeal may not reverse, even if convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Reasonable evaluations of credibility and inferences of fact should not be disturbed upon review where conflict exists in the testimony. Absent a finding of manifest error, the judgment should be upheld. Peterson Contractors, Inc. v. Herd Producing Company, Inc., 35,567 (La.App.2d Cir.2/27/02), 811 So.2d 130.

La. C.C. art. 2769 governs building contracts. It provides:

If an undertaker fails to do the work he has contracted to do, or if he does not execute it in the manner and at the time he has agreed to do it, he shall be liable in damages for the losses that may ensue from his non-compliance with his contract.

In construction contracts, Louisiana law implies that the contractor will construct the work in a good and workmanlike manner, the work will be suitable for its intended purpose, and the work will be free of defects in workmanship or materials. Peterson Contractors, Inc. v. Herd Producing Company, Inc., supra.

Accordingly, the jurisprudence dictates that a contractor is liable for damages if it is shown that he did not possess the necessary skill, efficiency or knowledge, or did not exercise ordinary care in performing work and is | flliable for losses, which the owner suffered because of the contractor’s non-compliance with the contract. Austin Homes, Inc. v. Thibodeaux, 2001-1282 (La.App. 3d Cir.5/8/02) 821 So.2d 10, writ denied, 2002-2324 (La.11/15/02), 829 So.2d 436.

An owner seeking to recover from a contractor bears the burden of proving: 1) both the existence and nature of the defects; 2) that the defects were due to faulty materials or workmanship; and 3) the cost of repairing the defects. Guy T. Williams Realty, Inc. v. Shamrock Construction Company, 564 So.2d 689 (La.App. 5th Cir.1990), writ denied, 569 So.2d 982 (La.1990).

La. R.S. 9:2771 provides:

No contractor, including but not limited to a residential building contractor as defined in R.S. 37:2150.1(9), shall be liable for destruction or deterioration of or defects in any work constructed, or under construction, by him if he constructed, or is constructing, the work according to plans or specifications furnished to him which he did not make or cause to be made and if the destruction, deterioration, or defect was due to any fault or insufficiency of the plans or specifications. This provision shall apply regardless of whether the destruction, deterioration, or defect occurs or becomes evident prior to or after delivery of the work to the owner or prior to or after acceptance of the work by the owner. The provisions of this Section shall not be subject to waiver by the contractor.

If the defect in the construction is caused by faulty or insufficient plans or specifications, the contractor is immune from liability upon constructing in compliance therewith, provided the specifications are not provided by him. Dumas v. Angus Chemical Company, 31,399 (La.App.2d Cir.1/13/99), 729 So.2d 624; Peterson Contractors, Inc. v. Herd Producing Company, Inc., supra.

|inThe plaintiff and the defendants have each claimed that the other party breached the contract and are liable for damages. As found by the trial court, in essence, both parties breached the contract. The church furnished Pannell’s with a set of plans that lacked the necessary degree of specificity regarding many details. The church failed to retain the services of an architect to provide information as to the details of the plan and to consult when the plans were not workable. The presence of an architect, as contemplated by the contract between the parties, would have avoided many of the problems that eventually developed.

The church proceeded to change the plans and implemented those changes through Hines, often with no prior notification to or consultation with Pannell’s. However, the record also shows that in numerous instances, the work performed by Pannell’s was substandard and was not attributable to deficient plans or to changes made by the church. Therefore, Pannell’s breached the building contract by failing to perform in a good and workmanlike manner. Accordingly, the trial court did not err in finding that the contract was breached by Pannell’s and in awarding judgment against the defendants.

CALCULATION OF DAMAGES

The defendants argue that the trial court erred in its calculation of the award to Pannell’s. While they agree with the court’s decision to make an award for the increase in concrete thickness, the sound system, and the failure to pay the final contract payment, they claim that they should also have recovered for all the changes required by the church, for lost profits, |nand for other items included in the reconventional demand. These arguments have some merit.

In awarding damages in this matter, the trial court considered the case to involve breach of contract, redhibition, and quantum merit. Although the court stated that it rejected the claim for redhi-bition, it found that a reduction in price was appropriate. We find that the trial court was erroneous in this reasoning. Concepts of redhibition apply in the context of sales. This case does not involve a sale. Rather, it involves a building contract between an owner, a contractor, and the contractor’s surety. Where the relationship is that of a contractor-owner rather than that of a vendor-vendee, the principles for an action for redhibition or a reduction in price are not applicable. Davidge v. H & H Construction Company, 432 So.2d 393 (La.App. 1st Cir.1983). Accordingly, the awards made by the trial court will be reviewed in the context of breach of a building contract.

The standard for reviewing the award of damages for breach of contract is whether the trial court abused its discretion. Hernandez v. Martinez, 2000-1282 (La.App. 5th Cir.2/28/01), 781 So.2d 815. For a breach of a building contract under La. C.C. art. 2769, the appropriate measure of damages is the cost of repairing any defects or of completing the work. Guy T. Williams Realty, Inc. v. Shamrock Construction Company, supra.

Where the owner presents evidence of the cost of completion of the work or correction of the defective work, the contract price may be reduced by that amount. The factors to be considered in determining whether there |1Phas been substantial performance include the extent of the defect or non-performance, the degree to which non-performance has defeated the purpose of the contract, the ease of correction, and the use or benefit to the owner of the work already performed. Mayeaux v. Mclnnis, 2000-1540 (La.App. 1st Cir.9/28/01), 809 So.2d 310, writ denied, 2001-3286 (La.3/8/02), 810 So.2d 1164.

Under Louisiana law, a building contractor is entitled to recover the contract price even though defects and omissions are present when he has substantially performed the building contract. “Substantial performance” means that the construction is fit for the purposes intended despite the deficiencies; this is a question of fact for the trial judge. Mayeaux v. McInnis, supra.

The trial court allowed recovery to the church for liens filed against it. Several liens were filed against the church when subcontractors and suppliers were not paid. The defendants argue that the liens were caused by the church’s cost overruns. Many of the deficiencies are attributable to the defendants. The defendants failed to show that the liens were filed solely as a result of the church’s actions. The defendants have not adequately shown that the trial court erred in this regard, therefore, this portion of the award is affirmed.

In this case, the trial court evaluated the various deficiencies in the church construction and made determinations as to whether they were caused by the faulty construction plans, the changes made by the church, or by Pannell’s workmanship. The trial court noted that there were numerous | ^deficiencies in the quality of work done by Pannell’s. The court allowed recovery for seven areas it termed substantial deficiencies rather than items that would ordinarily be repaired on a punch list. The first of these is the uneven gable eave that juts out in an irregular fashion over a stone area on the front of the building. The court found this was due to improper construction and allowed the church recovery of $10,000.00 to repair this item. Patrick D. Bass, an architect, testified that this deficiency was not according to the plans furnished by the church. Therefore, we find that the trial court’s award in this regard was proper.

The court awarded $5,000.00 to repair problems with the bricks. It found that there were holes in the walls where temporary electrical service had been installed, there was inconsistency in the mortar joints, and there were encroachments on the door frames causing the doors not to open properly. This appears to be an item of substandard work by Pannell’s and the trial court did not err in making an award for these deficiencies.

The court noted that the carports or porte cocheres on the east and west sides of the church have deflections in their load-bearing beams. In other words, the roofs sag. The court allowed $6,000.00 for repair of this problem. However, Donald Willis, a general contractor who examined the church, testified that the problem with this portion of the structure was attributable to a design defect. Bass concurred in this assessment. There is nothing in the record to show that the sag is the result of poor workmanship. Therefore, we find that the trial court erred in allowing recovery for this | urepair. We amend the judgment to delete recovery for repair of the porte cocheres.

The trial court granted recovery to the church in the amount of $5,000.00 to repair laminated beams which were left outside, unprotected, during construction and which have now begun to mildew. This deficiency is attributable to substandard work by Pannell’s. The trial court did not err in making an award for this item.

The trial court found that several items of finish work needed to be done due to Pannell’s substandard work. These included finish work in bathrooms, unacceptable drywall work and improper finishing of wood trim and paneling. The court’s finding is supported by the record. There is no showing that the factors were attributable to the faulty plans or to changes made by the church. The court did not err in awarding $12,500.00 to complete the finish work.

The court allowed recovery to the church for $10,000.00 for light cove that was improperly installed. According to Bass, the lighting trough purlins were not true and square and the framing was not properly installed. Insulation was exposed on the wall above the lights. This type of lighting was not included in the original plans and was added by the church. However, these deficiencies are all the result of poor workmanship by Pannell’s. The trial court did not err in making this award.

The trial court further found that insufficient space was provided in passageways, stair risers were not properly constructed, and there was inadequate access to the baptistry. These factors are attributable to faulty |1Bdesign in the construction plans. Therefore, the defendants are not liable for these deficiencies. Further, the trial court allowed recovery for drywall work and unlevel door trims. While these items are attributable to Pannell’s, the trial court already made an award for finish problems such as drywall and wood trim. Therefore, we amend the trial court judgment to delete this $20,000.00 award to the church.

The trial court allowed the church a credit of $14,300.00 for a metal roof. The original plans called for a metal roof, but an asphalt shingle roof was installed instead. The cost of the shingle roof was much less than the expense of a metal roof. The church was entitled to a credit for this reduction in price. The trial court correctly granted a credit for this item.

The trial court allowed the church $33,003.59 to complete the project, excluding repairs required by the fire marshal. The necessary items for completion include repair of a sewer line cut by an electrician, completion of the electrical system, and equipment rental. These items were not required because of design defects in the building plans. Accordingly, the trial court did not err in making this award.

ENFORCEMENT OF THE PERFORMANCE BOND

The defendants assert that the trial court erred in finding that the church acted properly in seeking enforcement of the performance bond. They continue to argue that any defects in the construction were caused by compliance with the plans furnished by the church and the church’s changes to those plans. Therefore, the church should not have sought enforcement of the performance bond. Pannell’s seeks to recover damages for lost 11fiprofits caused by the inability to obtain bonds for other jobs and for increases in premiums for performance bonds. This argument is without merit.

Although some of the problems in this case were caused by the lack of specificity in plans furnished by the church and by changes made by the church, other deficiencies and increases in costs were caused by substandard work by Pannell’s. The agreement under the performance and payment bond includes the obligation of true and faithful performance of the building contract. The concept of breach of default on a contract is not limited to the obvious case of the nonperformance of the contract, but extends to any major departure from the contract even though the building itself is actually physically completed. This includes negligent performance of the building contract. See Congregation of St. Peter’s Roman Catholic Church of Gueydan v. Simon, 497 So.2d 409 (La.App. 3d Cir.1986).

As discussed above, there were some deficiencies in the performance of the building contract caused solely by Pan-nell’s substandard work. Under these circumstances, the trial court did not err in finding that the church acted appropriately in seeking enforcement of the performance bond. Accordingly, the court did not err in denying Pannell’s claim for lost profits and for his increase in bond premiums occasioned by the church’s action in seeking to enforce the bond.

INEXPERT WITNESS FEES

The defendants claim that all problems with the quality of work are due to changes made by the church or by the plans furnished by the church. They also assert that much of the work complained of as substandard was completed by other workers after Pannell’s was shut out of the job. They claim that the church’s experts did not look at the plans furnished by the church and were not aware of the state of the work at the time Pannell’s was put off the job. They contend that the experts could not adequately address whether the problems were caused by defective workmanship by Pannell’s, or by the change in plans, or by other workers. Therefore, they insist that expert witness fees should not have been awarded.

Witnesses called to testify as expert witnesses shall be compensated for their services, with the amount to be determined by the court and taxed as costs to be paid by the party cast in judgment. La. R.S. 13:3666; Hammock ex rel. Thompson v. Louisiana State University Medical Center in Shreveport, 34,086 (La.App.2d Cir.11/1/00), 772 So.2d 306. An expert witness is entitled to reasonable compensation for his court appearance and for his preparatory work. The trial judge is not required to set an expert fee at the amount charged by the expert witness. The trial judge has great discretion in awarding and fixing costs and expert fees. A trial court’s assessment of costs can be reversed by an appellate court only upon a showing of abuse of discretion. Hammock ex rel. Thompson v. Louisiana State University Medical Center in Shreveport, supra.

h «Factors to be considered by the trial judge in setting an expert witness fee include time spent testifying, time spent in preparatory work for trial, time spent away from regular duties while waiting to testify, the extent and nature of the work performed, and the knowledge, attainments and skill of the expert. Additional considerations include the helpfulness of the expert’s report and testimony to the court, the amount in controversy, the complexity of the problem addressed by the expert and awards to experts in similar cases. Hammock ex rel. Thompson v. Louisiana State University Medical Center in Shreveport, supra.

In the present case, the trial court taxed expert witness fees for a report outlining the deficiencies in the construction. The court also granted expert witness fees for the testimony of Patrick D. Bass and Donald Willis, who further outlined the deficiencies of the construction and offered guidance as to whether the deficiencies were the result of poor workmanship or design defects. The report and testimony was obviously helpful to the trial court in reaching its decision. We do not find that the trial court abused its discretion in taxing the cost of these items as expert witness fees in this case.

NO CAUSE OF ACTION

The defendants argue that the trial court erred in granting an exception of no cause of action filed by the pastor and members of the building committee. The defendants’ claims against these defendants-in-reconvention were dismissed with prejudice. The defendants urge that the church changed its representative in violation of the terms of the |13contract. According to the defendants, the pastor and members of the church building committee were representatives of the church and were the individuals responsible for making changes to the plans. They also insisted that Hines be the-foreman of the project. The defendants contend that, even if these individuals were not parties to the written contract, they entered into numerous oral contracts that were breached. The defendants assert that the award to the church should be adjusted to reflect the role of these individuals in causing the damages.

An exception of no cause of action is a peremptory exception intended to test the legal sufficiency of the petition. La. C.C.P. art. 927. Western Development Group, Inc. v. Shlosman, 32,343 (La.App.2d Cir.9/22/99), 744 So.2d 197. On hearing an exception of no cause of action, in addition to the well pleaded allegations of the petition, any annexed documents must be assumed as true, and any doubt should be resolved in favor of the petition. The exception generally must be overruled unless the allegations pled in the petition and annexed documents exclude every reasonable hypothesis other than the premise on which the defense is based or, in other words, unless the plaintiff has no cause of action under any evidence admissible under the pleadings. Western Development Group, Inc. v. Shlosman, supra.

In the present case, the trial court did not err in granting the exception of no cause of action. The record shows that the plaintiffs dealt with Robert Boyd, Johnny Baylor, or members of the building committee only in their capacities as representatives of the church. Further, Boyd was designated in Lpthe building contract as the representative of the church. The record does not justify the imposition of personal liability on these individuals. The trial court did not err in granting the exception of no cause of action.

CONCLUSION

For the reasons stated above, we affirm the trial court’s finding of liability against Pannell’s based upon its breach of the building contract. We also affirm that portion of the trial court judgment finding that the church properly sought to enforce Pannell’s performance and payment bond, awarding expert witness fees to the church, and granting the exception of no cause of action, dismissing the defendant’s claims against the pastor and members of the church’s building committee.

We amend the trial court’s calculation of damages and its award to the church to delete recovery for porte cochere repairs, structure and drywall repair, and credit for a metal roof. However, we affirm that portion of the trial court judgment allowing a set-off to the defendants in the amount of $35,203.00. Accordingly, as amended, and allowing for the set-off, the defendants owe the plaintiff $112,620.04. Costs in this court are assessed one-half to the plaintiff and one-half to the defendants.

AMENDED, AND AS AMENDED, AFFIRMED.

APPLICATION FOR REHEARING

Before BROWN, C.J., WILLIAMS, GASKINS, PEATROSS, and KOSTELKA, JJ.

Rehearing denied.

      . The amounts allowed to the plaintiff are:
      Labor and material liens 46,249.45
      Gable eave repair 10,000.00
      Brick work repair 5,000.00
      Porte Cochere repair 6,000.00
      Laminated beam repair 5,000.00
      Interior finish repair 12,500.00
      Light cove repair 10,000.00
      Structure and diywall repair 20,000.00
      Metal roof credit 14,300.00
      Project completion credit 33,003.59
      Expert fees 11,770.00
      We note that these figures total $173,823.04 rather than $183,823.04 as found by the trial court.

      . The set-off amounts allowed to the defendants are:
      Concrete thickness 8,116.00
      Sound system 18,087.00
      Final contract payment 9,000.00 35,203.00


source: Caselaw Access Project

author: J^PETTIGREW, J.

license: Public Domain

text:
    Joseph A. WHITE, III, John L. Monson and Anthony J. Cashiola, Sr. v. GENERAL MOTORS CORPORATION, Brockhoeft’s Chevrolet, Inc. and Hank’s Pontiac-GMC-Buick, Inc.
    No. 2002 CA 0771.
    Court of Appeal of Louisiana, First Circuit.
    Dec. 20, 2002.
    Rehearing Denied Feb. 3, 2003.

      Davis B. Allgood, Baton Rouge, David G. Radlauer, Thomas A. Casey, Jr., New Orleans, Lee A. Schutzman, Detroit, MI, Counsel for Defendanb-Appellant General Motors Corporation.
    Robert A. Vosbein, Sr., Michael G. Crow, William B. Gaudet, William J. Kelly, III, New Orleans, Patrick W. Pendley, Plaquemine, John W. “Don” Barrett, Lexington, MS, Brian Wolfman, Washington, DC, Counsel for Plaintiffs-Appellees Joseph White, et al.
    M.F. Baxter, Marshall, TX, Counsel for Appellee Tommy Dollar, et al.

      Elizabeth J. Cabraser, San Francisco, CA, Timothy J. Crowley, Houston, TX, Counsel for Appellees Middle District Litigation Plaintiffs.
    Dianne M. Nast, Lancaster, PA, Counsel for Appellee John Martin.
    Daniel E. Becnel, Jr., Reserve, Counsel for Appellee Kenneth Hight.
    Jack M. Stolier, New Orleans, Joe R. McRay, San Francisco, CA, Richard H. Rosenthal, Carmel Valley, CA, Lynde Sel-don, San Diego, CA, Counsel for Appellees Jack French, et al.
    Charles S. Lambert, Jr., Baton Rouge, Counsel for Appellees Fred Butcher, et al.
    Before: PETTIGREW, J, and CIACCIO and PATTERSON, JJ. Pro Tern.

      . Judge Philip C. Ciaccio, retired, is serving as judge pro tempore by special appointment of the Louisiana Supreme Court.

      . Michael A. Patterson is serving as judge pro tempore by special appointment of the Louisiana Supreme Court.

   J^PETTIGREW, J.

In this appeal, General Motors Corporation (“GM”) once again challenges a trial court order requiring implementation of a class action settlement. GM asserts that similar to this court’s previous opinion in White v. General Motors Corporation, 99-2585 (La.App. 1 Cir. 11/3/00), 775 So.2d 492, on rehearing, 99-2585 (La.App. 1 Cir. 1/16/01), 782 So.2d 9, an order by the trial court makes impermissible substantive changes to the settlement agreement. The plaintiffs in the class action (“settlement class”) contend that GM, upon realizing that its class settlement would be too effective at compensating too many settlement class members, now seeks to block an organized secondary market for settlement certificates.

BACKGROUND FACTS

Beginning in 1992, numerous class action lawsuits were filed nationwide against GM on behalf of the registered owners of certain Chevrolet or GMC “C” or “K” series pickup trucks manufactured between 1973 through 1987. The allegations of the various petitions alleged that the pickup trucks at issue were defective in design because the side-mounted fuel tanks were located outside the frame rails of the vehicle making them more susceptible to fuel fires in side-impact collisions.

One of the aforementioned petitions was filed in the Eighteenth Judicial District Court, Parish of Iberville, State of Louisiana. During the pendency of this proceeding, GM removed several similar state actions to federal court. Because of the potential for settlement of the litigation in federal court, the state court proceeding was stayed pursuant to a joint motion. Shortly thereafter, the parties in the federal court action announced a settlement agreement. The settlement class and settlement were later approved; however, several objectors to the settlement appealed. The federal court settlement was later set aside by the Third Circuit Court of Appeal in In re: General Motors Corporation Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768 (3rd Cir.1995), cert. denied, 516 U.S. 824, 116 S.Ct. 88, 133 L.Ed.2d 45 (1995) (“GM Truck”). The federal court concluded that the settlement was deficient in part due to a lack of proof as to whether a settlement class member’s option to transfer his $1,000.00 certificate was of any value. The federal court noted the value of the transfer option “depends on the development of a secondary market for these certificates.” Id., 55 F.3d at 809.

Following the decision in GM Truck, the parties jointly moved to lift the stay in the proceedings in state court in 1996. In response to concerns raised by the federal court in GM Truck (namely, that certificate holders would be unable to realize any significant value from the transfer option), the previous settlement was revised to increase the transferability of the certificates and to facilitate the development of a secondary market. See White v. General Motors Corporation, 99-2585, p. 9 (La.App. 1 Cir. 11/3/00), 775 So.2d 492, 497. On December 19, 1996, the trial court in the Eighteenth Judicial District certified a nationwide settlement class and approved a settlement agreement. The trial court further granted Class Counsel’s request for attorneys’ fees costs and expenses. Following an appeal to this court, the final order and judgment of the trial court were vacated and the matter was remanded for further proceedings. See White v. General Motors Corporation, 97-1028 (La.App. 1 Cir. 6/29/98), 718 So.2d 480.

On January 20, 1999, three years after negotiating a settlement with GM, the trial court once again certified a nationwide settlement class and approved the settlement agreement. The terms of that settlement agreement are at issue in this appeal.

TERMS OF THE SETTLEMENT AGREEMENT

The settlement agreement provides that members of the settlement class will receive a $1,000.00 certificate (hereinafter referred to as “consumer certificate(s)”) for each GM pickup truck owned and these consumer certificates can be applied toward the | Kpurchase price of any new GM vehicle from an authorized GM dealer. These consumer certificates are initially valid for 15 months, and during this period, settlement class members may “freely transfer” their $1,000.00 consumer certificates, but only to a member of their household or a subsequent transferee who currently owns the pickup truck identified on the consumer certificate. A transferee cannot be an authorized GM dealer or an affiliated entity.

In the event a settlement class member does not use the consumer certificate to purchase a new GM car or truck, the settlement agreement further provides that within the initial 15-month period, the settlement class member can sell or transfer his entire interest in his original $1,000.00 consumer certificate by exchanging same for a $500.00 “third party certificate.” See White, on rehearing, 99-2585 at 2, 782 So.2d at 10. Said “third party certificate” could be used within the unexpired portion of the initial 15-month period by a designated third party who could in turn apply same towards the purchase of a new GM vehicle without proof of ownership of a GM pickup truck.

After the expiration of the initial 15-month period, consumer certificates can be redeemed for lesser value for additional periods of 18 and 35 months depending upon whether the settlement class member is a consumer, fleet, or governmental entity. Settlement class members who are consumers have a total of 33 months to use the consumer certificate. Settlement class members who are consumers will receive $500.00 toward the purchase price of any new GM vehicle from an authorized GM dealer. Alternatively, said consumer certificates are freely transferable following endorsement by the named settlement class member and can only be used by any transferee for $250.00 towards the purchase of a new GM vehicle by the transferee. Thus, after the initial 15 months, the settlement class member is no longer required to exchange the original consumer certificate for a “third party certificate” in order to transfer his or her rights.

IfiThe settlement agreement also provides for the establishment of a safety research project funded by GM’s payment of a total of $4.1 million in equal installments over three years following the effective date of the settlement. The purpose of the research project was to research, develop, and implement feasible and practical means to enhance fuel system safety in motor vehicles.

The terms of the settlement agreement further provide:

The Court shall retain continuing and exclusive jurisdiction over the parties hereto, including all members of the SETTLEMENT CLASS, and over the administration and enforcement of the Settlement and the benefits to the SETTLEMENT CLASS hereunder. Any disputes or controversies arising with respect to the interpretation, enforcement, or implementation of the settlement must be made by motion to the Court.

PRIOR APPEAL REGARDING IMPLEMENTATION OF THE SETTLEMENT

Following its January 20, 1999 order approving the settlement, the trial court scheduled a hearing for March 22, 1999, to facilitate implementation of the settlement. On April 1, 1999, the trial court issued an order approving the form of the final notice and claim form (a copy of which was attached to the order) for mailing to the settlement class. The approved notice contained a stipulated reference to a toll-free number where counsel for the settlement class (“Class Counsel”) could be reached for assistance in transferring or selling consumer certificates.

Pursuant to subsequent motions filed by Class Counsel, the trial court held hearings on May 24,1999, and June 18,1999, to address several issues related to administration and/or implementation of the settlement. At the hearings, Class Counsel introduced, among other things, a sample of a “cash option” letter that it sought to have included in the mail-out envelope containing the final notice and proof of claim form to settlement class members. The proposed “cash option” letter included a detachable “$100 CASH OFFER” form that allowed a settlement class member to receive $100.00 in cash as an alternative to GM’s issuance of a consumer certificate. Despite GM’s vigorous objection, the trial court signed an implementation order on June 21, 1999, which among other things, approved the inclusion of the “cash option” letter in the mail-out along with the final notice and proof of claim form. GM thereafter appealed to this court and 1 challenged the trial court’s June 21, 1999 implementation order on the grounds it made impermissible substantive changes to the terms of the settlement agreement. See White v. General Motors Corporation, 99-2585 (La.App. 1 Cir. 11/3/00), 775 So.2d 492, on rehearing, 99-2585 (La.App. 1 Cir. 1/16/01), 782 So.2d 9.

In its opinion prior to rehearing, this court held:

The authority of the trial court to order the inclusion of the cash option letter in the final notice mail-out is governed by the terms of the settlement agreement itself and Louisiana laws regarding compromise and class action settlements.

White, 99-2585 at 12, 775 So.2d at 499.

Noting that a settlement class member’s ability to transfer a consumer certificate and the development of a secondary market for these certificates had been a concern throughout this litigation, this court nevertheless held:

If the parties would have agreed to the alternative cash option as opposed to the issuance of certificates, it would have been in the settlement agreement. The record clearly indicates [GM] agreed to include language in the final notice informing settlement class members that Class Counsel could provide further information and assistance in transferring or selling their certificates and providing a toll free telephone number where Class Counsel could be reached. However, an agreement to include a telephone number is not an agreement to include a letter offering settlement class members a cash option rather than a certificate. The plain words of the settlement agreement, as well as the background and events surrounding the settlement agreement, indicate there was no such agreement between the parties. The fact that the settlement agreement does not specifically preclude the cash option letter is not an indication that the inclusion of the cash option letter was agreed upon.

White, 99-2585 at 14-15, 775 So.2d at 500 (Italics contained in original text).

This court further held that Section III.D of the settlement agreement “clearly sets forth the mechanism” to be used in the event settlement class members would desire to sell or transfer their entire interest in any or all of their consumer certificates. White, 99-2585 at 15, 775 So.2d at 501. Section III.D of the Settlement Agreement expressly limits transferability during the first 15 months, and provides that:

In the event of such a sale or transfer, each Certificate may be exchanged for a Third Party- Certificate which shall be issued in the name of the person or entity designated on the written request referred to below. The Third Party Certifícate may only be used for the unexpired portion of the first 15 months and is not transferable further.

The court further added that:

|s[A]lthough the mechanism set forth in Section D does not preclude the participation of a market maker in the certificate redemption process, it plainly does not envision the inclusion of a cash option letter in the final notice mail-out, authorizing a market maker’s cash option offer to become a court approved alternative to [GM’s] issuance of certificates to the settlement class members. Thus, the trial court’s authority to review the “form and content” of the final notice did not extend to the issuance of an order that changed the terms of the settlement agreement. Under Section XI. 1 of the settlement agreement, “any change, modification, amendment, or addition” could only occur with “the express written consent of counsel on behalf of all parties” to the settlement agreement. Such consent was not given in this case.

White, 99-2585 at 15, 775 So.2d at 501.

The court ultimately concluded that because the trial court exceeded its authority, the June 21, 1999 order would be reversed to the extent it required the inclusion of the cash option letter in the final notice mail-out. Following a subsequent grant of rehearing, the matter was then remanded to the trial court for further proceedings.

During the pendency of the above-referenced appeal of the trial court’s June 21, 1999 implementation order, the trial court issued an order on March 15, 2000, requiring GM to fund the research project. GM once again appealed claiming that its previously pending appeal had divested the trial court of jurisdiction, and alternatively, that its obligation to fund the research project did not exist until the “effective date” of the settlement. This court held the trial court was divested of jurisdiction only as to the issues contained in the June 21, 1999 order GM previously appealed from; and since the order did not address or adjudicate GM’s obligation to fund the research project, the trial court retained jurisdiction over the research project funding issue and did not err in issuing the March 15, 2000 order after the appeal had been granted. This court further held that the effective date of the settlement occurred, and GM’s obligation to fund the research project came into existence on November 3, 2000, the date this court partially reversed the trial court’s June 21, 1999 implementation order. See White v. General Motors Corporation, 2000-1387, pp. 6-7 (La.App. 1 Cir. 6/22/01), 808 So.2d 722, 725.

laTHE PRESENT DISPUTE

Following this court’s decision on rehearing, Class Counsel and GM began again working towards the mailing of final notice and proof of claim forms to settlement class members. In a letter dated March 6, 2001, Class Counsel advised GM that it interpreted this court’s prior ruling as permitting Class Counsel to advise settlement class members through a “1-800” message that settlement class members may instruct an entity known as Experian Information Systems, Inc. (“Experian”) to issue consumer certificates in their name and send same directly to Chase Bank of Texas as escrow agent for Certificate Redemption Group (“CRG”).

GM asserted that this proposal would violate the terms of settlement agreement, and Class Counsel requested a status conference with the trial court. When the parties failed to reach an accord, GM filed a Motion to Compel Compliance With Settlement Agreement on March 29, 2001. During a hearing before the trial court on April 9, 2001, evidence was introduced on behalf of both parties and the court took the matter under advisement.

On April 18, 2001, GM mailed the final notice of court approval and proof of claim forms to 5.8 million eligible settlement class members who were owners-of-record of the pickup trucks at issue as of 12:01 a.m. on July 4, 1996. The Final Notice included an application to be filled out by members of the settlement class to enable them to receive the Consumer Certificate for $1,000.00 toward the purchase of a new GM vehicle.

On that same date, Class Counsel mailed a separate letter to members of the settlement class that included a detachable form wherein settlement class members who did not intend to purchase a new GM car or truck could take part in a “cash alternative” hpoffer to purchase their consumer certificates. The “cash alternative” plan was reminiscent of the earlier “cash option” plan previously rejected by this court in that it also allowed settlement class members to sell their consumer certificates for $100.00 for a limited time (ie., 30 days) to CRG. (See Exhibit “J”).-

Two days later on April 20, 2001, GM supplemented its pending motion seeking compliance with the settlement agreement with an additional memorandum that notified the trial court of the actions undertaken by Class Counsel since the filing of GM’s original motion. GM’s requests for a ruling from the trial court were unsuccessful.

On April 24, 2001, GM filed a notice of its intention to seek supervisory writs from this court regarding the trial court’s failure to issue a ruling in connection with its Motion to Compel Compliance With Settlement Agreement. GM sought a ruling on the merits of its motion, or an order directing that the trial court rule promptly on its motion. Noting that the trial court had not ruled on the pending motion, this court denied GM’s writ application as “premature”, but directed the trial court to “hear and rule” on GM’s pending motion by May 1, 2001.

In a hearing held on April 27, 2001, the trial court considered the motions filed by both parties. On May 2, 2001, the trial court signed an order denying GM’s motion, holding that Class Counsel’s “cash alternative” plan was valid and consistent with the settlement agreement and prior orders of the courts. The trial court order further directed GM to refrain from communicating its disagreement with Class Counsel’s solicitation, except in connection with briefs to this Court.

Pursuant to the “cash alternative” procedures outlined in the trial court’s order, Experian, the entity court appointed to issue consumer certificates, will, upon request by a member of the settlement class, issue a consumer certificate in the name of a settlement class member and “make it available to Class Counsel[.]” Class Counsel will purportedly l^then “take possession” of its clients’ consumer certificates and thereafter “transport or ship” the consumer certificates to Rust Consulting, Inc. (“Rust”), a third party contractor. CRG will then market and sell the consumer certificates, and provide Class Counsel with the names of the respective purchasers. Experian will thereafter print and issue the third party certificates in the names of the designated persons or entities provided by CRG.

On April 30, 2001 and May 2, 2001, GM attempted to obtain a suspensive appeal or a stay pending writs from the trial court’s May 2, 2001 order. These requests were subsequently denied by the trial court. GM filed another notice of intent to seek writs.

On May 31, 2001, this court stayed “[a]ll proceedings, including the trial court’s April 30, 2001 judgment and May 2, 2001 order, and execution of the cash alternative option[.]” White v. General Motors Corporation, 2001-CW-0937 (La.App. 1 Cir. 5/31/2001). Later, on August 24, 2001, this court granted GM’s writ application in part, ordering “a suspensive appeal of all orders issued in the trial court’s May 2, 2001 judgment, upon [GM’s] furnishing legally acceptable security in the amount of $30,000.00[.]” White v. General Motors Corporation, 2001-CW-0937 (La.App. 1 Cir. 8/24/2001). GM timely supplied the security, and the trial court ordered a suspensive appeal on August 30, 2001.

ISSUES PRESENTED FOR REVIEW

In connection with its appeal in this matter, GM assigns the following issues for consideration by this court:

1. Whether the trial court’s order ... approving Class Counsel’s “cash alternative” violates the Settlement Agreement?
2. Whether the trial court’s order ... approving Class Counsel’s “cash alternative” violates this Court’s prior ruling?
3. Whether the trial court’s order is supported by record evidence?
| ia4. Whether the trial court’s order ... unconstitutionally abridges GM’s right to free speech?
5.Whether the trial court’s order ... erroneously prohibited GM from modifying its Administrative Dealer Rules which are not part of the settlement?
6. Whether Certificates can be transferred to dealers?
7. Whether Class Counsel’s “cash alternative” letter is deceptive?
8. Whether GM is entitled to specific performance of the Settlement Agreement, including the right to injunctive relief prohibiting Class Counsel’s breaches and requiring the undoing of the improper actions?
9. Whether Class Counsel failed to comply with Rule of Professional Conduct 1.8?
10. Whether Class Counsel, acting alone or in concert with Experian and/or CRG, may retain, use, or disseminate any list of class members who responded affirmatively to the “cash alternative”?

DISCUSSION

First and Second Assignments of Error

In its first and second assignments of error, GM asks this court to consider whether the trial court’s order approving Class Counsel’s “cash alternative” violates the settlement agreement or prior rulings of this court.

In its brief to this court, GM argues that the “cash alternative” plan developed by Class Counsel and approved by the trial court is nothing more than a series of elaborate “procedures” primarily designed to circumvent the terms of the settlement agreement and allow “a series of successive certificate transfers that entirely bypass the [settlement] class members to enable the mass sale and resale of Certificates to automotive dealers and fleets.” Conversely, Class Counsel contends that GM’s objections to the “cash alternative” represent a fabricated attempt to block an organized secondary market by any means.

The present “cash alternative” is akin to the earlier “cash option” in that both proposals allow a settlement class member to receive a check for $100.00 from CRG in lieu of a consumer certifícate. In our previous opinion, this court invalidated the “cash option” on the grounds that the parties did not agree to the inclusion of such a letter in the final notice of settlement. See White, 99-2585 at 14-15, 775 So.2d at 500.

113Unlike the “cash option” offer previously invalidated by this court, the letter outlining the “cash alternative” was not enclosed in the final notice of settlement. The present “cash alternative” requires settlement class members to make a choice between the issuance of a consumer certificate and participation in the “cash alternative” offer. Under the “cash alternative” plan, settlement class members who wish to accept $100.00 in lieu of a consumer certificate must execute a power of attorney and request that their consumer certificates be turned over to Class Counsel. Said power of attorney authorizes Class Counsel to take possession of settlement class members’ consumer certificates and “take any and all action necessary” to sell their consumer certificates. (See Exhibit “J”).

Due to the transfer restrictions contained within the settlement agreement and the time limitations of the “cash alternative” offer, settlement class members may not request issuance of a consumer certificate, and following delivery, decide to sell same to CRG. Thus, participation in the “cash alternative” offer would evidently preclude manual delivery or actual physical possession of the settlement certificate by the settlement class member.

The settlement agreement expressly provides in Section III that

Upon receipt of a Proof of Claim form ... an entity or entities selected by CLASS COUNSEL and [GM] ... shall issue to each SETTLEMENT CLASS member for each GM PICKUP TRUCK owned a Certificate toward the purchase of any NEW GM VEHICLE purchased from an authorized GM dealer of that line and make subject to the following terms and conditions:
(Underscoring supplied).

The question of whether the trial court’s order approving the “cash alternative” option violated the settlement agreement or prior rulings of this court, hinges upon the effect envisioned by the parties when they approved the language “shall issue to each SETTLEMENT CLASS member” that is contained in the settlement agreement. As this court previously stated:

[T]he trial court’s authority to review and approve the form and content of the final notice, as well as its continuing jurisdiction over the administration and enforcement of the settlement agreement, is not without limits. Section XI. 1 of the settlement agreement provides that it “and its attachments shall constitute the entire Agreement of the parties and shall not be subject to any change, modification, amendment, or addition without the express written consent of counsel on behalf of all parties to the | uAgreement.” Further, a settlement, or “transaction or compromise” as referred to in civilian terms, regulates only the differences that appear clearly to be intended by the parties, and does not extend to differences that the parties never intended to include in the settlement. La. C.C. arts. 3071, 3073. A settlement agreement is the law between the parties and must be interpreted according to their intent. Smith v. Walker, 96-2813 (La.App. 1 Cir. 2/20/98), 708 So.2d 797, 802, writ denied, 98-0757 (La.5/1/98), 718 So.2d 418. The compromise instrument is governed by the same general rules of construction applicable to contracts. Ortego v. State, Department of Transportation and Development, 96-1322 (La.2/25/97), 689 So.2d 1358, 1363. Accordingly, when the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. La. C.C. art.2046. In determining those matters the parties intended to settle, consideration must be given to the contract as a whole and in light of attending events and circumstances. Ortego, 689 So.2d at 1363. Thus, the intent the words of the compromise instrument express, in light of the surrounding circumstances at the time of execution of the agreement, is controlling. Brown v. Drillers, Inc., 93-1019 (La.1/14/94), 630 So.2d 741, 748.

White, 99-2585 at 13, 775 So.2d at 499-500.

So the question remains: can issuance of the consumer certificate be accomplished with manual delivery made, not to the settlement class member, but to one given his power of attorney?

Black’s Law Dictionary (5th ed.1979), defines “issue,” in part, as follows:

To send forth; to emit; to promulgate; as, an officer issues orders, process issues from a court. To put into circulation; as, the treasury issues notes. To send out, to send out officially; to deliver, for use, or authoritatively; to go forth as authoritative or binding. ...
In financial parlance the term “issue” seems to have two phases of meaning. “Date of Issue” when applied to notes, bonds, etc., of a series, usually means the arbitrary date fixed as the beginning of the term for which they run, without reference to the precise time when convenience or the state of the market may permit of their sale or delivery. When the securities are delivered to the purchaser, they will be “issued” to him, which is the other meaning of the term.
In commercial law, means the first delivery of an instrument to a holder or a remitter. [Citation omitted.]

The most closely analogous definition here appears to be the commercial one dealing with the issuance of securities. An incorporeal right manifested in the paper evidencing that right, which is “issued” when the paper (or certificate) is delivered.

The agreement does not define what is meant by “issuance” of a consumer certificate; however, the provisions of the settlement agreement speak alternately of |1R“shall issue to” and “shall be issued in the name of.” In the first instance, the cited language appears in Section III of the settlement agreement referring to the initial issuance of the consumer certificates to members of the settlement class. In the latter instance, the quoted language appears in Section III.D of the settlement agreement regarding exchanges of consumer certificates for Third Party Certificates. In our opinion, this distinction was intentional, and not merely coincidental. It is clear from our reading of the settlement agreement that the parties intended for there to be restrictions on the transfer of the consumer certificates at least during the first 15 months, and it is further the opinion of this court that if the parties had intended to allow someone other than a settlement class member to receive the certificates, proper provision would have been made in the settlement agreement. To paraphrase a previous pronouncement of this court, the fact that the settlement agreement does not specifically preclude a member of the settlement class from authorizing Class Counsel to perform transitional functions on his behalf, does not indicate that the inclusion of this alternative was agreed upon by the parties.

Finally, it is the opinion of this court that although the mechanism set forth in Section III may not preclude the participation of a representative or mandatary at some point in the certificate redemption process, it clearly does not envision that within the first -15 months the consumer certificates might be transferred or exchanged without actual receipt by the settlement class member. Thus, the trial court’s authority to administer and review the settlement agreement did not extend to the issuance of an order that abrogated the express terms of the settlement agreement.

Therefore, because the trial court exceeded its authority, the May 2, 2001 order must be reversed to the extent it permits a settlement class member, who has not actually received his consumer certificate, to request within the first 15 months, that his consumer certificate be issued and made available to Class Counsel who would be hfithereafter empowered to designate that it be re-issued in the name of a third person designated by CRG.

However, once the settlement class member has received his consumer certificate pursuant to Section III.D, he may sell or transfer his entire interest in any or all consumer certificates. Specifically, Section III.D provides:

D. Alternatively, CONSUMERS, FLEETS and GOVERNMENTAL ENTITIES with CONSUMER Certificates, FLEET Certificates or GOVERNMENTAL ENTITY Certificates (collectively referred to as “Certificate” or “Certificates”) may sell or transfer their entire interest in any or all of their certificates. In the event of such a sale or transfer, each certificate may be exchanged for a third party certificate which shall be issued in the name of the person or entity designated on the written request referred to below. The third party certificate may only be used for the unexpired portion of the first 15 months and is not transferable further. [Emphasis added.]

We have emphasized the word “with” in the above-quoted excerpt from the settlement agreement for the reason that the term “with” implies actual possession of the consumer certificate. Additionally, we can find no language in the settlement agreement that expressly or impliedly prohibits a settlement class member from authorizing Class Counsel to exchange, on the settlement class member’s behalf, a consumer certificate for a third party certificate in the name of a designated purchaser. It should be noted that while the process of exchanging a consumer certificate for a third party certificate facilitates the creation of a secondary market as envisioned by the parties and the courts, the right of Class Counsel to exchange a consumer certificate for a third party certifi'cate pursuant to an act of mandate or power of attorney does not arise until after the settlement class member has received the original consumer certificate.

The alternative plan, as ordered by the trial court, is invalid to the extent it allows Class Counsel to perform transactional functions for a member of the settlement class prior to the time the settlement class member receives the consumer certificate. Once the settlement class member has received his consumer certificate, we find nothing in the language of the settlement agreement that would prohibit Class Counsel from performing this transactional function on the settlement class member’s behalf.

117Third and Seventh Assignments of Error

These assignments question whether the trial court’s order is supported by record evidence, and whether Class Counsel’s “cash alternative” letter is deceptive. Considering this court has already found merit in GM’s assignments of error one and two, it necessarily follows that the trial court’s order is not supported by record evidence; and Class Counsel’s “cash alternative” letter is deceptive, because it violates the settlement agreement and is contrary to it. These assignments also have merit.

Fourth Assignment of Error

The fourth assignment of error is whether the trial court’s order unconstitutionally abridges GM’s rights to free speech. In this assignment, GM complains of the following section of the trial court’s judgment/order:

GM refrain from communicating that the secondary market is invalid or otherwise beyond the scope of the Settlement Agreement and previous orders of the Courts. However, this does not preclude GM from communicating its contentions or objections made in connection with the appellate process to any third party.

GM contends that this order is a “prior restraint” of its right to free speech. GM urges that the speech sought to be enjoined by the order is not “commercial” speech, proposing a commercial transaction, but rather “content-based” speech or “editorial and historical commentary” on the actions of the courts and litigants; under these circumstances, GM asserts, the court’s injunction is subject to strict scrutiny. See CPC International Inc. v. Skippy, Inc., 214 F.3d 456 (4th Cir.2000).

Skippy is a trademark infringement case. Class Counsel somewhat surprisingly cites Gulf Oil Company v. Bernard, 452 U.S. 89, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981), in which the court upheld an appellate decision finding unconstitutional prior restraint and held the district court had exceeded its authority under Federal Rules of Civil Procedure 23 (relative to class actions) by enjoining parties and counsel from communicating with potential class members in the employment discrimination suit where the record showed no reason necessitating the order. The opinion does not specify what “standards are mandated by the First Amendment” in a class action case, but states that the record 11sshould show that “restraint is justified by a likelihood of serious abuses.” Id. 101 S.Ct. at 2202.

Class Counsel claims that the “trial court made a record of the particular abuses and the potential confusion which would result from GM’s continued media blitzkrieg[.]” Very few references were made to GM’s alleged media blitz at the hearing. Class Counsel purported 'to read “a few quotes from GM’s press releases” but then merely stated “the auto maker envisioned a truck owner selling his option to Cousin Ed.” A spokesman for GM was identified by name, and Class Counsel averred that GM had “disseminated these lies about the settlement agreement in the press ... [and] tried to sow confusion.” (See Exhibit 33). Certainly, it is likely that any announcement by GM that it had doubts about the implementation of the cash alternative would cause confusion among settlement class members who had just received notice about that option from Class Counsel. However, the press releases to which Class Counsel referred to in argument are not appended to their brief, nor do they otherwise appear as exhibits in the documents presented to this court. Based upon the record before us, it would be difficult to say that the trial court established a record showing the restraint ordered in the judgment is “justified by the likelihood of serious abuses.” Accordingly, there appears to be merit in this assignment by GM. Therefore, this portion of the trial court’s order is reversed, and remanded for further hearings by the trial court to determine whether the restraint is justified by the likelihood of serious abuses.

Fifth Assignment of Error

The fifth error assigned by GM is whether the trial court erroneously prohibited GM from modifying its Administrative Dealer Rules, which are not part of the settlement agreement.

Herein, GM challenges paragraph one of the judgment order: “Any change or proposed change of the GM Administrative Message/Rules previously approved by this Court and modified by the First Circuit Court of Appeal is the law of the case, final, and can only be modified by motion and order of this Court.” GM claims that the settlement' agreement does not give the trial court authority to approve GM’s dealership rules. Class |1flCounsel counters that changes to the dealership rules were previously approved by the trial court and modified by this court thus bringing the rules within the court’s review. Further, Class Counsel urges that GM’s express displeasure with the current implementation of the settlement agreement requires the court to continue to supervise the situation so that GM does not alter the rules to the detriment of the settlement class members. This section of the order of the trial court enjoining change where no change has been shown to be contemplated may have been premature. In light of the fact that this court is reversing part of the trial court’s order, no changes in GM’s dealership rules may be necessary. However, considering the trial court’s previous involvement in approving changes to these rules and amendment of those orders by this court, the GM dealership rules are subject to court review to insure the proper enforcement of the settlement agreement with the members of the settlement class. Any changes in the dealership rules concerning the honoring of the provisions of the settlement agreement are subject to judicial review. This assignment of error has no merit.

Sixth Assignment of Error

The sixth assignment raised by appellant is whether consumer certificates could be transferred to dealers.

Section III.E.8 of the settlement agreement provides that:

Certificates may not be transferred to authorized General Motors dealers or their affiliated entities during the first 15 months, except that Certificates may be redeemed at authorized General Motors dealers as provided in this Agreement.

GM cites a Class Counsel press release introduced at the April 27, 2001 hearing to the effect that, by mid-May, “dealers, leasing companies, and fleets will be able to access a special Web site ... where [consumer] certificates may be purchased in large quantities.” GM contends that Class Counsel intends to have CRG sell consumer certificates to dealers, who will then, presumably, sell or exchange these consumer certificates for third party certificates in the names of actual vehicle purchasers.

laoFirst, GM appears to be correct that this scheme would involve two sales of the original consumer certificate; whether or not more than one sale is contemplated in the settlement agreement is debatable. Further, the settlement agreement expressly prohibits the transfer of consumer certificates to GM dealers. GM contends that the trial court erred to the extent it did not prevent this violation from occurring; indeed the judgment does not expressly preclude transference of consumer certificates to dealers. Moreover, paragraph E of the trial court’s judgment/order states that “[a] request for Third Party Certificate may be sent to Experian by any person or entity holding a [consumer] Certificate.” Class Counsel does not directly address this issue. It is our finding and our opinion that to the extent the judgment allows GM dealers to purchase or obtain consumer certificates, it is in violation of the settlement agreement and must be reversed.

Eighth Assignment of Error

The issue posed by GM’s eighth assignment of error is whether GM is entitled to specific performance of the settlement agreement, including the right to injunctive relief prohibiting Class Counsel’s breaches and requiring the undoing of the improper actions. The only apparent difference between GM’s present request for specific performance of the settlement agreement and its earlier Motion to Compel Compliance, the denial of which gave rise to this appeal, is that GM now seeks to have “Class Counsel pay for undoing what they have already done.” As GM did not raise the issue of damages below, the trial court did not have the opportunity to rule on this issue. Accordingly, this assignment is not appropriate for review at this time, and will be remanded to the trial court for resolution after implementation of the judgment of this court.

Ninth Assignment of Error

The ninth error assigned by GM is whether Class Counsel failed to comply with Rule of Professional Conduct 1.8.

GM raised its ethics arguments at the trial court; however, the trial court opined it does not hear questions regarding professional conduct. Indeed, it appears that the appropriate forum in which to raise an alleged violation of professional conduct is through 121the Attorney Disciplinary Board and Office of Disciplinary Counsel as more specifically set forth under the Louisiana Supreme Court Rules For Lawyer Disciplinary Enforcement. See Supreme Court Rules, Rule 19. Following investigation and review by a hearing committee, a complainant not satisfied with disposition of a disciplinary matter may appeal to a panel of the disciplinary board and ultimately request review by the Louisiana Supreme Court. Supreme Court Rules, Rule 19, Section 30. Accordingly, this assignment is without merit.

Tenth Assignment of Error

The tenth and final error assigned by GM questions whether Class Counsel, acting alone Or in concert with Experian and/or CRG, may retain, use, or disseminate any list of settlement class members who responded affirmatively to the “cash alternative”. This court has already stated that it could not find any language in the settlement agreement that expressly or impliedly prohibits a member of the settlement class from authorizing Class Counsel to exchange, on the settlement class member’s behalf, a consumer certificate for a third party certificate in the name of a designated purchaser provided a consumer certificate has previously been delivered to a settlement class member. Similarly, we find nothing in the settlement agreement that would prohibit Class Counsel, either alone or in concert with Experian or CRG from obtaining lists of settlement class members.

Paragraph III.D of the settlement agreement envisions the creation of a secondary market whereby settlement class members not interested in purchasing a new vehicle may sell or transfer their consumer certifícate for a third party certifí-cate to be used for the unexpired portion of the initial 15-month period. If Class Counsel, either alone or in concert with Experian or CRG, were precluded from acquiring a list of settlement class members for the purpose of locating a market maker for a secondary market, such action would, in the opinion of this court, undermine the alternative set forth in paragraph III.D of the settlement agreement. This assignment is without merit.

^CONCLUSION

For the foregoing reasons, the trial court’s order dated May 2, 2001, is affirmed in part only, insofar as paragraph I of said order. This court has found merit in the first, second, third, fourth, sixth, and seventh errors assigned by GM. For this reason, the remainder of the order dated May 2, 2001 is reversed and this proceeding is remanded to the trial court for further proceedings consistent with this opinion.

The trial court is further ordered to hold a hearing for the purpose of determining an appropriate date for issuance of a new final notice and proof of claim. In furtherance of this order, all time delays set forth in the settlement agreement are suspended and do not run against settlement class members until such time as a date for issuance of a new final notice and proof of claim is selected by the trial court. At this point, the delays set forth in the settlement agreement shall begin to run anew.

Additionally, Class Counsel shall bear all expenses associated with notifying settlement class members of this new final notice and proof of claim. The amount of said expense shall be determined by the trial court.

It is further ordered that settlement class members who have already responded to Class Counsel’s offer must be notified of the changes consistent with this opinion by Class Counsel, and Class Counsel shall bear all costs for same.

All costs of this appeal shall be borne by the settlement class.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH ORDER.

      .The history of how the nationwide class action settlement ultimately came to the Louisiana court system is set forth in White v. General Motors Corporation, 97-1028, pp. 3-9 (La.App. 1 Cir. 6/29/98), 718 So.2d 480, 482-486.

      . The settlement class includes a consumer sub-class, a fleet sub-class, and a governmental sub-class.

      . The settlement agreement defines “NEW GM VEHICLE” as “any new and unused General Motors light truck or automobile, which include Chevrolet, Geo, GMC Truck, Buick, Oldsmobile, Pontiac and Cadillac models. NEW GM VEHICLE shall not include Saturn models or electric powered vehicles.”

      . White v. General Motors Corporation, on rehearing, 99-2585 (La.App. 1 Cir. 1/16/01), 782 So.2d 9.

      . In our previous opinion in White, this court ruled that the trial court impermissibly approved Experian to perform the final notice/claim form mail-out function for the settlement of class action claims. This court further concluded that the trial court erred in ordering that any information be provided to Experian. See White, 99-2585 at 18-19, 775 So.2d at 502-503.

      .A copy of a press release purportedly distributed by Class Counsel and CRG was filed into the record and states that "Houston-based Certificate Redemption Group, LLP ["CRG”], was formed in 1996 for the sole purpose of creating a secondary market for GM certificates in the GM pickup truck class settlement. CRG is the exclusive secondary market maker endorsed and supported by class counsel for the GM ... Full-Size Pickup Settlement.”

      . White v. General Motors Corp., 2001-CW-0855 (La.App. 1 Cir. 4/26/01).

      . Class Counsel filed a motion entitled “Motion Relating to Administration and/or Implementation of Settlement” on April 25, 2001. (Exhibit 26)

      . The responsibilities of Rust are unclear. At the April 27, 2001 hearing, Class Counsel described Rust as “the nation's premiere class action administrative service firm.” Class Counsel later advised the trial court that Rust would probably staple an original certificate with a request for a third party certificate, send the two together to GM Settlement Headquarters in Young America, Minnesota, where they will be processed and data-inputted and the data would then be transmitted back to Experian where the third party certificate would be created.

      . Settlement Agreement, Section III, p. 7.

      . Settlement Agreement, Section III.D, p. 10.


author: |, COOKS, Judge.

text:
    Evelyn LEMONS v. SAFEWAY INSURANCE COMPANY OF LOUISIANA.
    No. 02-687.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 27, 2002.

      Steven Beverung, Book & Beverung, Lake Charles, LA, for Appellant, Evelyn Lemons.
    Keith Borne, Stacy McQuillin, Borne & Wilkes, Lafayette, LA, for Appellee, Safeway Insurance Company of Louisiana.
    Court composed of ULYSSES GENE THIBODEAUX, SYLVIA R. COOKS, JIMMIE C. PETERS, Judges.
   |, COOKS, Judge.

STATEMENT OF THE CASE

Evelyn Lemons purchased a new Ford Explorer in the summer of 1999 in Houston, Texas. On August 6, 1999, she obtained liability and collision insurance with Safeway Insurance Company through its agent, Handley-Traske Insurance Agency and financing from Assurance, Ltd., a premium finance company. Monthly payments were to be made either to Assurance, Ltd. or to Handley-Traske. When she purchased the Safeway policy, Ms. Lemons was informed by Ms. Traske she needed to provide registration information on the automobile. Ms. Lemons testified she had not yet received the registration certificate from the dealership in Houston.

In September 1999, her policy with Safeway was canceled. Notice of cancellation provided the reason as “underwriting reasons.” Ms. Traske testified the reason for the policy’s cancellation was failure to provide proof of ownership on the vehicle. Ms. Lemons, however, testified she assumed the policy was cancelled for nonpayment of the monthly premium. Two facts in the record support her assumption: First, Ms. Lemons had a history of late payments on the monthly premium, and; second, Safeway issued another policy in October without receipt of the registration information on the vehicle.

In October 1999, Ms. Lemons again obtained insurance from Safeway through its agent, Handley-Traske, on the 1999 Ford Explorer and made financial arrangements with Assurance, Ltd. for the payment of the monthly premiums. Safeway issued policy number 177251 having a policy period of October 21, 1999, to April 21, 2000. Handley-Traske again requested registration information on the vehicle. Ms. Lemons testified she was still waiting for the information from the Houston dealership when she purchased the second Safeway policy.

li>On November 10,1999, Safeway mailed a notice of cancellation by certified mail to Ms. Lemons which stated the following:

You are hereby notified that in accordance with the terms and conditions of your automobile policy SL 177251 and the provisions of Section 636.IB of the Louisiana Insurance Code, your insurance will cease at 12:01 A.M. Standard Time on 12/10/99 for the reason indicated on the reverse side: H

The reverse side of the cancellation notice provided in relevant part:

REASON FOR CANCELLATION

H. Underwriting reasons.

It is undisputed the notice of cancellation sent by certified mail was not received by Ms. Lemons. It was marked “unclaimed” by the post office and returned to Safeway. Ms. Lemons did receive a different notice of cancellation by regular mail which indicated her policy would be canceled for nonpayment of the premium unless payment was received by the end of the day December 3, 1999. On December 3, 1999, Ms. Lemons paid the premium on the policy to Ms. Traske. Ms. Traske accepted payment and did not inform Ms. Lemons that her policy would be canceled on December 10,1999.

On December 12, 1999, Ms. Lemons’ vehicle was involved in an automobile collision in Mississippi. She submitted a collision claim to Safeway. Safeway denied the claim, arguing the policy was canceled on December 10, 1999, relying on the notice of cancellation sent on November 10, 1999.

Ms. Lemons filed suit against Safeway. The parties agreed to try the issue of liability separately. After trial on the merits, the trial judge rendered a judgment in favor of Safeway, stating:

Safeway followed the procedure set out in R.S. 22:636.1. The evidence of notice was introduced along with a stipulation that the postal official would testify that two notices were left with the plaintiff of the certified letter of cancellation.
|RThe plaintiff was unable to testify unequivocally that she had not received it. She did not recall receiving it. Her daughter’s testimony in support of receipt was unworthy of belief.
Therefore, this Court finds that the plaintiff failed to rebut the presumption created by the defendant’s evidence.

Ms. Lemons filed this appeal. For the reasons assigned below, we reverse the judgment of the trial court and remand for trial on the issue of damages.

LAW AND ARGUMENT

Louisiana Revised Statute 22:636.1(D)(1) provides the procedure for cancellation of automobile insurance policies:

No notice of cancellation of a policy to which Subsection B or C of this Section applies shall be effective unless mailed by certified mail or delivered by the insurer to the named insured as least thirty days prior to the effective date of cancellation; however, when cancellation is for nonpayment of premium at least ten days notice of cancellation accompanied by the reason therefor shall be given. In the event of nonpayment of premiums for a binder, a ten day notice of cancellation shall be required before the cancellation shall be effective. Notice of cancellation for nonpayment of premiums shall not be required to be sent by certified mail. Unless the reason accompanies the notice of cancellation, the notice of cancellation shall state or be accompanied by a statement that upon written request of the named insured, mailed or delivered to the insurer within six months after the effective date of cancellation, the insurer will specify the reason for such cancellation.

(Emphasis added.)

Louisiana Revised Statute 22:636.1(F) provides in relevant part:

Proof of mailing of notice of cancellation, or of intention not to renew or of reasons for, cancellation, to the named insured at the address shown in the policy, shall be sufficient proof of notice.

When an insurer can establish a prima facie case that the notice of cancellation was mailed in accordance with the statute, the burden shifts to the insured to establish non-delivery of the notice. Doucet v. State Farm Ins., 99-663 (La.App. 5 Cir. 11/30/99); 748 So.2d 1228.

The trial court found Safeway' established proof of notice of cancellation under |4La.R.S. 22:636.1(F) by producing the certified letter marked “unclaimed” and by introducing the testimony of the postal supervisor regarding the standard procedure for notice regarding certified mail. The trial court found Safeway met the statutory requirements and Ms. Lemons was unable to demonstrate she did not receive two postal notices informing her of the existence of the certified letter. The judge, then, concluded Ms. Lemons had adequate notice of cancellation.

We disagree. Even assuming Ms. Lemons received the certified letter from Safeway, the notice of cancellation failed to meet the requirement La.R.S. 22:636.1(D)(1) which provides the notice must state the reason for the cancellation of the policy or must be “accompanied by a statement that upon written request of the named insured ... the insurer will specify the reason for such cancellation.”

The requirements set forth in La. R.S. 22:636.1(D)(1) are mandatory and are designed to notify the insured his policy is being terminated, to provide the reason for the termination and to afford him ample time to obtain other insurance protection. Johnson v. Davis, 95-1425 (La.App. 4 Cir. 3/5/97); 690 So.2d 995. The burden of proof is on the insurer to establish facts which show “positive and unambiguous proof of understanding of the cancellation of the policy.” Chapman v. Leger, 405 So.2d 604, 606 (La.App. 3 Cir.1981).

The notice sent by Safeway to Ms. Lemons did not adequately inform her of the reason for the cancellation or give her an opportunity to correct the problem prior to the loss of coverage. Safeway contends the policy was canceled because Ms. Lemons failed to provide proof of ownership. Nowhere in the notice is this reason stated in clear and unambiguous language.

In Johnson v. Davis, 95-1425 (La.App. 4 Cir. 3/5/97); 690 So.2d 995, the notice of cancellation stated the reason as “COMPANY REQUEST”. The court | ¿found the notice of cancellation was inadequate to deny coverage and stated:

The requirement of the statute that the reason must be given is a requirement that information is to be given to the policy holder. “COMPANY REQUEST” applies to any and all reasons a company cancels a policy. Therefore, “COMPANY REQUEST” is equivalent to no reason as it gives no hint of the real reason and therefore furnishes the policy holder with no more information than had he just received a policy cancellation notice containing no reason.

Id. at 998.

There was nothing in the notice of cancellation which gave Ms. Lemons notice that the reason for the cancellation was her failure to provide proof of ownership of the vehicle. We, therefore, find Safeway failed to meet the requirements of La.R.S. 22:636.1(D)(1).

DECREE

For the foregoing reasons, the judgment of the trial court is reversed. All costs of this appeal are assessed to Safeway Insurance Company.

REVERSED.