text:
    SPECIALIZED COMMERCIAL LENDING, INC. v. MURPHY-BLOSSMAN APPRAISAL SERVICES, L.L.C., Rick Murphy, A.R. Blossman, III, and ABC Insurance Company.
    No. 2007 CA 0100.
    Court of Appeal of Louisiana, First Circuit.
    Nov. 2, 2007.
    Rehearing Denied Jan. 17, 2008.

      Andrew A. Braun, Daniel G. Rauh, New Orleans, LA, for Plaintiff/First Appellant Specialized Commercial Lending, L.L.C.
    David S. Daly, Metairie, LA, for Defendant/Second Appellant Chicago Insurance Company.
    Joseph G. Glass, William J. Guste, IV, Metairie, LA, for Defendant/Appellee Murphy-Blossman Appraisal Services, L.L.C.
    Michael P. Bienvenu, Baton Rouge, LA, Counsel for Defendant/Appellee Richard L. Murphy.
    Robert S. Stassi, New Orleans, LA, for Defendant/Appellee A.R. Blossman, III.
    Brian B. Brown, Mandeville, LA, In Proper Person for Third Party Defendants/Appellees, Brian B. Brown, Brian B. Brown Construction, Inc., and Bacmar Enterprises, Inc.
    Angela P. Miles, Mandeville, LA, In Proper Person for Third Party Defendant/Appellee, Angela P. Miles.
    Before WHIPPLE, GUIDRY, and HUGHES, JJ.
   HUGHES, J.

1 sThis is an appeal from a judgment in favor of a lender and against a real estate appraisal company for the loss of collateral resulting from the latter’s failure to verify that homes were being constructed as represented, for which loan funds were advanced. For the reasons that follow, we affirm the trial court judgment in part and reverse in part.

FACTS AND PROCEDURAL HISTORY

Between 1998 and 1999, Brian B. Brown and companies he controlled, Brian B. Brown Construction, Inc. and Bacmar Enterprises, Inc. (hereinafter collectively as “Brown”), began borrowing money from Specialized Commercial Lending, L.L.C. (“Specialized”) for the purchase of lots and construction of residences thereon, as a business venture for sale of the homes after construction. Specialized financed the construction of some fifty homes by Brown. Between October and December of 2000, Specialized advanced funds, secured by mortgage on the immovable properties at issue, to Brown for the construction of ten houses that were never built. During this time, the firm of Murphy-Blossman Appraisal Services, L.L.C. (“Murphy-Blossman”) was hired to complete verifications and/or certifications that relevant phases of construction of the houses had been completed, which were prerequisite to payment of four separate construction “draws” or loan disbursements on each of the ten houses. As part of the verification/certification process, Murphy-Blossman was required to visually inspect construction in progress and then submit written verification in conjunction with Brown’s draw requests that certain construction phases had been completed. Upon receipt of a verification/certification from Murphy-Blossman, Specialized disbursed loan funds to Brown. Murphy-Blossman submitted written verification and ^certification to Specialized that construction phases for each of the ten homes at issue had been completed, when in fact no work had been done. The only explanation offered by Murphy-Blossman for the incorrect documentation was that Murphy-Blossman office manager Lisa Torres failed to properly locate the subject properties during her visual inspections and was misled to view other homes under construction rather than the ten lots that were vacant.

Specialized pursued the instant lawsuit against Murphy-Blossman and Chicago Insurance Company (“Chicago”), for damages it sustained as a result of the breach of Murphy-Blossman’s contractual agreement, as an independent, licensed real estate appraisal company, to verify and certify completion by Brown of requisite construction phases. Specialized contended that it relied to its detriment on Murphy-Blossman’s incorrect representations and certifications, in making loan advances to Brown. Murphy-Blossman filed a third party demand against Brown and Brian Brown’s associate, Angela Miles.

Following trial of the matter, the trial court rendered judgment apportioning fault as follows: 40% to Brown and Angela Miles; 40% to Murphy-Blossman; and 20% to Specialized. Specialized’s damages were determined to be $654,497.02, with $261,798.81 to be paid by Murphy-Bloss-man and Chicago, and $392,698.21 to be paid by Brown and Angela Miles.

Specialized has appealed and contends the trial court erred in assigning it a percentage of fault, and in apportioning fault equally between Murphy-Blossman and Brown/Miles. Chicago has also appealed and |Kmaintains that the trial court erred in: (1) denying Chicago’s motion for summary judgment and granting Specialized’s motion for summary judgment on coverage, finding that there was coverage under the Chicago policy for Specialized’s claims; (2) refusing to dismiss Specialized’s claims against Chicago at the close of Speeial-ized’s cases; (3) finding that the Chicago policy covered the acts of Murphy-Bloss-man; (4) casting Chicago jointly, severally, and solidarity liable with Murphy-Bloss-man; and (5) not dismissing all negligent supervision claims at the close of Specialized’s case.

LAW AND ANALYSIS

Apportionment of Fault

Specialized asserts the trial court erred in assigning it a percentage of fault in this case, arguing that it should not have been found at fault for loss that Murphy-Bloss-man had a professional duty to protect it from. Alternatively, Specialized asserts that the trial court had no reasonable basis in the record and was clearly wrong in finding that it was negligent and contributed to its own loss. Finally, Specialized asserts that Murphy-Blossman should have been apportioned a greater share of fault than Brown.

As with other factual determinations, the trier of fact is vested with much discretion in its allocation of fault; therefore, an appellate court should only disturb the trier of fact’s allocation of fault when it is clearly wrong or manifestly erroneous. Bergeron v. Williams, 2005-0847, p. 12 (La.App. 1 Cir. 5/12/06), 933 So.2d 803, 812 (citing Duncan v. Kansas City Southern Railway Co., 2000-0066, pp. 10-11 (La.10/30/00), 773 So.2d 670, 680, cert. dismissed, 532 U.S. 992, 121 S.Ct. 1651, 149 L.Ed.2d 508 (2001)). Only after making a determination that the trier of fact’s apportionment of fault is clearly wrong can an appellate court disturb the award, and then only to the extent of lowering it or raising, it to the highest or lowest point | (¡respectively that is reasonably within the trial court’s discretion. Duncan v. Kansas City Southern Railway Co., 2000-0066 at p. 11, 773 So.2d at 680-81 (citing Clement v. Frey, 95-1119 (La.1/16/96), 666 So.2d 607, 611).

The trial court issued written reasons for judgment, which set forth his findings of fact as follows:

The facts presented indicate Murphy[-]Blossman was hired to perform construction draw verifications for the [Brown] properties....
First to testify in that regard was Lisa Torres, the office manager for Murphy-Blossman during the time of the alleged wrong-doing. Ms. Torres stated that Murphy-Blossman was aware Specialized would rely on the construction draw verifications, as they were intended to insure “the builder was building on the right piece of property.” And, if a mistake were made, then the lender would suffer serious damage....
Ms. Torres was originally hired by Murphy-Blossman as a part-time receptionist. Six (6) months later she was promoted to a full-time office manager. In addition to general filing, answering the phone, managing accounts payable and payroll, she also handled construction draw verifications. There was a great deal of testimony as to whether Ms. Torres was properly trained to perform and, whether she was supervised during the course of performing, the construction draw verifications. Ms. Torres stated she was trained to do the construction draws by Mr. Murphy, Mr. Blossman, and Todd Fitzmorris (all appraisers with Murphy-Blossman). She stated she not only did construction draws for Specialized, but for other banks which were funding houses for Brian Brown as well. Ms. Torres indicated that when she was unsure of the location of a home-site, she would contact Angela Miles (a business associate with Brian Brown) for directions to the properties.
It was revealed in her testimony that, on many construction draw verification sheets, Ms. Torres did not recognize her signature. (Forgery was implied.) On cross-examination however, Ms. Torres struggled to maintain consistency in her testimony when asked to identify her handwriting and signature.... She did say that if she had the original construction draw, she could be certain. When asked whether she knew where the original files were being stored, she responded negatively.
Mr. Wayne LeBlanc was next called to testify. He identified himself as the chief financial advisor for Specialized since January 1, 1998 until the present[ ] Mr. LeBlanc further stated he had been a CPA since 1975. His general duties were to authorize, monitor and collect customer loans. The business |7of Specialized, Mr. LeBlanc explained, was to make commercial loans to contractors and clothing manufacturers.
Mr. LeBlane described Brian Brown as a customer and “quasi-friend.” He stated Specialized financed approximately fifty to sixty (50-60) homes for Mr. Brown and his companies. In connection with this financing, Specialized hired Murphy-Blossman to perform appraisals of the lots for Mr. Brown’s homes and of the value of completed homes slated for construction. Mr. Le-Blanc stated early on he handled the construction draw verifications himself. Upon a request by Mr. Brown for a certain draw, Mr. LeBlane testified that he would personally visit the property and verify that the stages of construction were complete. This became increasingly burdensome for Mr. LeBlane as the volume increased. The procedure was then modified to the submission of photos, rather than a personal visit, for verification of each phase of construction. Finally, Murphy-Blossman was retained to perform the construction draw verifications as well as the appraisals on the properties. This last procedural modification began in approximately September, 2000.
Mr. LeBlane was questioned about the circumstances of discovering Specialized had advanced money for houses which were not built. He stated he was actually with Mr. Brown, returning from a trip to Florida, when Mr. Sanderson (owner of Specialized) called and asked him, “Where are these ten_hous-es?” Mr. LeBlane said he, in turn, questioned Mr. Brown, who retorted, “That’s impossible!” Finally, Mr. Le-Blanc stated that when he questioned Murphy-Blossman about the draw verifications for the missing ten houses, they offered him no explanation for what had transpired.
When cross-examined, Mr. LeBlane admitted Specialized is a sub-prime lender. Further, he stated he knew Mr. Brown could not go to a prime lender and get competitive rates. Still, Specialized was not concerned about Mr. Brown’s credit because the loans were asset-based (based upon the property value and, of course, verified construction). Mr. LeBlane testified he relied upon Murphy-Blossman to ensure that each phase of construction was complete.
Also called to testify in Plaintiffs casein-chief was Richard Murphy. He explained that in the practice with Murphy-Blossman, he largely performed residential appraisals and Mr. Blossman did commercial appraisals. He stated however that both he and Mr. Blossman jointly handled office work such as hiring and firing, and supervision of staff. He acknowledged there were no set procedures or training on how to prepare construction draws. And, he testified he did not know how or when Lisa Torres began to perform construction draw verifications on her own, but admitted that her construction draw verifications were not monitored.
Mr. Murphy explained that for each property, an original appraisal was performed. A file was then created. That file would contain all information regarding the property, its location and the subsequent verifications for each phase of Isconstruction. The file would have been brought along when approving a phase of construction, but the file wasn’t always needed to confirm the location of the construction site. When asked why he was unable to produce the original files for the ten (10) properties at issue here, Mr. Murphy explained that the discovery had gone from law firm to law firm during the pendency of this suit. He stated he never “intentionally removed the ten files.” Regardless of the reason for the disappearance of the files, Mr. Murphy speculated the files contained only the original appraisals and Murphy-Blossman’s invoice.
Mr. Thomas Finnegan was called to testify. He was qualified by the Court as an expert in construction draw inspection and verification services. After educating himself with facts through deposition testimony, Mr. Finnegan opined that the training of Lisa Torres was inadequate. He stated, “It is never prudent to rely on the builder, or his associate, to indicate the location of the property.” Finally, in his opinion, the construction draw verification forms were “just plain sloppy.”
The Court was then to hear from Ms. Angela Miles. But, before the Court would allow her testimony, Counsel was required to advise Ms. Miles of her right to refuse to testify, as guaranteed by the Fifth Amendment to the Constitution. Despite that instruction, Ms. Miles elected to testify.
Ms. Miles explained she had a full and complete Power of Attorney for Brian Brown which authorized her to act in his behalf for many transactions. From August through December, 2000, Ms. Miles stated she ran the job sites, did purchasing and scheduling of contractors and executed, pursuant to the Power of Attorney, closings on vacant lots. She also ordered the pre-construction appraisals and requested the construction draws through Murphy-Blossman. And, Ms. Miles extolled [sic] a romantic, as well as business relationship with Brian Brown.
Ms. Miles admitted the following: She sent construction draw requests for houses which were not built; this was accomplished by requesting money for houses with the same lot (but different square) numbers as houses which actually were being built; she intentionally misled Lisa Torres to the wrong lots when the draw requests were being verified; she was not aware that anyone at Murphy-Blossman knew about the fraud, but Brian Brown certainly knew the scheme; the money advanced by Specialized for these ten (10) properties was used to satisfy accruing interest on loans Mr. Brown secured for a development in Florida. When asked by the Court whether Ms. Torres was receiving a “kickback” for the erroneous draw verifications, Ms. Miles stated, “I didn’t know Lisa well enough for that.” Ms. Miles confirmed that the construction draws at issue here were all made subsequent to September, 2000 (after Murphy-Blossman was engaged to verify the draw requests).
What was also conveyed through the testimony of Ms. Miles was that the relationship between Mr. Brown, Mr. LeBlanc and Mr. Sanderson was a bit more than a business acquaintance. Ms. Miles stated that the three men with their Iqwives (and she with Mr. Brown) once traveled to South America. Also, she stated Mr. LeBlanc was financially involved in the Florida development with Mr. Brown. Ms. Miles firmly believed Mr. LeBlanc knew about Mr. Brown’s scheme on the ten (10) properties in Mandeville. Yet, this testimony is unreliable and speculative. It is not considered by the Court.
The remaining witnesses called to testify merely confirmed what was previously stated. Todd Fitzmorris, an appraiser with Murphy-Blossman[,] agreed that Lisa Torres’[s] construction draw verifications were not supervised, but that he had no knowledge about what happened regarding the ten (10) lots at issue. Robin Ketron, a bookkeeper for Specialized!,] stated the construction draw requests which she received from Murphy-Blossman were not reviewed by her or her superiors, except to ensure signatures on the appropriate lines.

[Footnote omitted.]

Based on these findings of fact, the trial court reached the following legal conclusions:

The rule of law for the determination of fault in this case is negligence. Thus, the standard of care to which the defendant Murphy-Blossman, must conform should first be established. Real estate appraisers are required by law to provide an accurate appraisal to clients and others who rely on their reports. This duty also extends to construction draw verifications or certifications performed by appraisers. [Alley v. Courtney, 448 So.2d 858, 859 (La.App. 2 Cir.), writ denied, 450 So.2d 360 (La.1984) (cited with approval in Thomas v. Livingston Parish Sheriff's Office, 2004-1822, p. 5 (La.App. 1 Cir. 9/23/05), 923 So.2d 662, 668) ].
Pursuant to the above standard, Murphy-Blossman owed a duty to Specialized to properly perform the construction draw verifications for the Brown loans. The question then before the court is whether this duty was breached.
The evidence presented by the employees of Murphy-Blossman painted a grim picture of the procedure which was followed for the submission of the construction draw verifications. It was un-controverted that Lisa Torres handled the construction draws at issue here. She admitted she had no real training to perform such draws and that she was not supervised. Moreover, she stated when issuing draws, she relied on information provided to her by Ms. Miles, in particular the location of the subject properties. The testimony of Mr. Murphy is as equally damning. Mr. Murphy admitted he had “no set policies for any procedures,” and stated repeatedly that he “did not know,” and that he “wasn’t sure what happened here,” and that he didn’t know [“]what happened to the files.”
Counsel for Specialized argued strenuously for the imposition of the “adverse presumption” regarding the ten (10) |inmissing files for the properties a: issue. Under Louisiana law, if a litigant fails to produce evidence available to him, and a reasonable explanation is not made for that course of action, there is a presumption that the production of such evidence would have been adverse to his cause. [Wise v. Bossier Parish School Board, 2002-1525, p. 12 (La.6/27/03), 851 So.2d 1090, 1098].
Because no original files or photographs were ever produced to Specialized as requested on several occasions through discovery, then Specialized wants this Court to presume such evidence would have been adverse to Murphy-Blossman. This Court acknowledges the theory of “adverse presumption” but in light of the Court’s ruling (infra), such presumption against Murphy-Blossman need not be imposed. Alternatively, this Court accepts Mr. Murphy’s statement that, even had the files been produced, they would contain only an appraisal and an invoice. This statement in itself is rather adverse to Murphy-Blossman (since evidence was presented to show that draws were certainly made on the subject properties).
That being so, this Court does not need an expert’s testimony to be convinced that the practices employed by Murphy-Blossman were imprudent. Yet, this Court accepts the testimony of Mr. Finnegan in support of a finding that Murphy-Blossman breached the standard of care in failing to supervise the construction draw verifications which Ms. Torres single-handedly submitted to Specialized. Furthermore, this Court finds that Murphy-Blossman is liable for negligent or tortious acts performed by its employee, Lisa Torres.
The Louisiana Civil Code provides that a tortfeasor is only liable for his degree of fault. (La.C.C.arts. 2323-2324.) ...
* ⅝ *
These provisions dictate that a party (or non-party) can be liable only in accordance with the respective degree of fault which is assigned. Applying these articles to the facts of this case, the Court must consider fault not only of the defendant, but also as to the plaintiff, and the third-party defendant, Brian Brown.
As a rule[,] lending institutions, such as Specialized, are held to a higher standard of care commonly imposed upon fiduciaries. However, pursuant to the facts before this Court, imposing a higher duty of care upon Specialized would be inappropriate. Specialized’s actions in this case are assessed from the perspective of an investor. In other words, the duty imposed upon Specialized is simply what a reasonably prudent person would do to protect its own investment.
Wayne LeBlanc stated he did not insure the correctness of the construction draw verifications submitted by Murphy-Blossman. In fact, he said he completely relied on the expertise | nof Murphy-Blossman when advancing each draw. He testified he never once visited the ten properties at issue in this case until, of course, the sham was discovered.
This Court simply cannot accept the argument made on behalf of Specialized that Murphy-Blossman was to be their “watch-dog,” while Specialized turned a blind eye as it issued countless checks in the hundreds of thousands of dollars .... Granted the facts are uncon-troverted that Murphy-Blossman was hired by Specialized to perform the construction draw verifications, and that they received a payment for that duty in the amount of fifty to one hundred ($50.00 — $100.00) dollars for each verification .... Still, Mr. LeBlanc stated he advanced each draw request which came in, whether or not he felt the requests were sloppy or hastily prepared.
In an apparent attempt to bolster credibility for Specialized, Robin Ketron (the bookkeeper) stated she would look for “red flags” on the construction draw forms. When asked to explain a “red flag” however, Ms. Ketron was unable to do so. Moreover, Mr. LeBlanc knew Mr. Brown’s credit rating prevented him from borrowing from prime lenders[] Despite that fact, Mr. LeBlanc was unconcerned because the loans were “asset-based.” Why Mr. LeBlanc did not then feel compelled to retain at least some: responsibility for insuring he had an “asset” to protect his loan is the reason this Court simply cannot absolve Specialized of fault. Despite the hiring of Murphy-Blossman, no reasonably prudent person would have failed to monitor assets for loans approaching one million dollars.
Through the testimony of Angela Miles, the fraudulent scheme which caused the losses suffered by Specialized has been fully disclosed. In this connection, it is argued that the fault of the third party defendants, since it is based on fraud, should supersede any apportionment of fault to other parties. Cited in support of this argument is the civilian tradition which recognizes “the bad faith of one party always renders the error of another party excusable.” ...
... [H]ow convenient it is to apply that statement to these |1s>facts to exonerate Murphy-Blossman from liability. Certainly in a Utopian society, this Court would not hesitate to do so. Unfortunately, under these facts, we are dealing with less than Utopian creatures. The players here are experienced businessmen who are not unaccustomed to turning profits on formidable amounts of money. To allow Murphy-Blossman to rest on defenses such as naivete and innocence is unfortunately not a suitable finding for the current state of business affairs. That being so, this Court can only apply the theories ... offhandedly to the facts of this case. Granted, Ms. Miles and Mr. Brown lied to Murphy-Blossman. But, the facts disclosed at trial show Richard Murphy and A.R. Blossman, III did a lot of work for Mr. Brown. They were aware of his less-than passable credit.[] Thus, Murphy-Blossman’s responsibility superseded Mr. Brown’s ability to defraud him, and the reasonably prudent person would have known that.

[Footnotes omitted.]

The court went on to assess fault to the parties as previously indicated: 40% to Brown/Miles; 40% to Murphy-Blossman; and 20% to Specialized.

After a thorough review of the record presented on appeal, we find the trial court’s findings of fact were, in the main, amply supported by the record. Certainly, significant evidence was offered to show that construction draw certification forms sent by Murphy-Blossman to Specialized were lacking in detail, which might have provoked a more cautious lender to further inquiry. Most compelling is the evidence that the construction draws for each house purportedly under construction were inordinately close together, a fact that was evident from the certification forms.

The time period between the date the first draw was requested by Specialized and the day the fourth and final construction draw was requested (for which Murphy-Blossman verified the requisite construction had been completed and submitted certification of same to Specialized) was for each of the ten properties as follows: 19 days, 22 days, 25 days, 25 days, 32 days, |ia32 days, 32 days, 38 days, 39 days, 49 days (not counting the day each first draw was requested). Prior to the funding of each first draw on each lot, the following construction tasks were required to be completed and/or construction components installed (as listed on the construction draw certification form completed by Murphy-Blossman): lot filled, slab formed, termite tubes, re-bars, vis-quene, subsurface plumbing, and tape around copper. By the time the fourth draw could be funded, each task required prior to the second draw, third draw, and fourth draw was to have been completed. For the second draw, these were: framing, “rough in” plumbing, “rough in” electrical, heating and air conditioning, “blacked in,” roofing installed, and exterior doors and windows installed. For the third draw, these were: brick or siding, sheetrock (hung, taped, and textured), soffit and fascia hung, and insulation installed. For the fourth draw, these were: painting completed, flooring installed, trim completed and painted, hardware installed, appliances set in place, light fixtures, A/C compressor installed, cabinets installed, house thoroughly cleaned, plumbing finished, driveway or walks finished, and ready for occupancy.

When Specialized’s Vice President and Chief Financial Officer, Wayne LeBlane, was asked about the exceedingly short time period between the first and fourth draws and questioned as to whether he was alarmed that for one of the houses the span between the first and fourth draw was only 19 days, Mr. LeBlane replied, “I just must have missed it, man.” Mr. Le-Blanc’s only justification was that Brian Brown had bragged to him that he could build a house in 30 days. Mr. LeBlane also stated that Brown often built houses next door to one another, implying that houses could be built faster when crews could be employed on multiple houses.

A review of the draw request certification forms submitted by |14Murphy-Bloss-man to Specialized reveals that the forty draw requests on the ten properties at issue were made as follows: on October 27, 2000 — 7 first draw requests; on October 31, 2000 — 1 first draw request; on November 2, 2000 — 2 second draw requests; on November 6, 2000 — 2 second draw requests; on November 7, 2000 — 3 second draw requests; on November 10, 2000 — 3 third draw requests; on November 15, 2000 — 2 first draw requests and 3 third draw requests; on November 21, 2000 — 2 second draw requests, 1 third draw requests, and 2 fourth draw requests; on November 27, 2000 — 2 third draw requests; on November 28, 2000 — 3 fourth draw requests; on December 4, 2000 — 1 second draw request and 2 fourth draw requests; on December 5, 2000 — 1 fourth draw request; on December 7, 2000 — 1 third draw request and 1 fourth draw request; and on December 19, 2000 — 1 fourth draw request. Thus, Brown was submitting draw requests, on average, every 4 days.

Mr. LeBlane testified that his main concern was that a Murphy-Blossman representative had included the location of the property, signed, and dated the form certifying that verification of the draw prerequisites had been completed. Mr. LeBlane testified that he was not concerned as to whether every block had a check in it.

At the close of Mr. LeBlanc’s testimony, the trial judge questioned him regarding the Murphy-Blossman draw certification forms submitted to Specialized, stating, “[T]hese look to be at best absolutely sloppy. You’re telling me you would accept this sloppy work and hand out money to people? That was your practice? I mean serious money?” Mr. LeBlanc |inreplied, “Based upon the approvals of the draws from experts that we had hired.”

The trial court obviously found as a matter of fact that Specialized’s reliance on the Murphy-Blossman draw certification forms was negligent. Under the particular facts and circumstances of this case, we cannot say the trial court committed manifest error in finding that Specialized was 20% at fault in accepting, without question, draw certifications from Murphy-Bloss-man that were on their face problematic and called for additional inquiry. Accordingly, we affirm that portion of the trial court’s judgment assessing Specialized with 20% fault.

Additionally, Specialized maintains on appeal that the trial court erred in apportioning fault as between Murphy-Blossman and Brown/Miles, asserting that Murphy-Blossman should have been assessed with a greater percentage of fault than Brown/Miles. The evidence presented at trial established that had either Brown/Miles or Murphy-Blossman acted in a non-culpable manner with respect to the Specialized, the loss inflicted would have been prevented entirely. So, we cannot say the trial court’s equal assessment of fault between Murphy-Blossman and Brown/Miles was error in this case. We find no merit in Specialized’s contention that Murphy-Blossman, rather than Brown/Miles, should have been assessed with the “lion’s share” of fault in this case.

We note that in the trial court judgment Murphy-Blossman was assessed with 40% of the damage amount, $261,798.81, while Brown was assessed with 40% fault but ordered to pay 60% of the damage amount, $392,698.21. Evidently, the Brown judgment amount was adjusted so as to comply with LSA-C.C. art. 2323(C), prohibiting reduction of a plaintiffs award in favor of an intentional tortfeasor.

|ir,Louisiana embraces a broad civilian concept of “fault” that encompasses any conduct falling below a proper standard, including intentional torts. Landry v. Bellanger, 2002-1443, p. 6 (La.5/20/03), 851 So.2d 943, 949. Thus, the application of Louisiana’s pure comparative fault system requires that the fault of both negligent and intentional tortfeasors be assessed by the factfinder. See Frazer v. St Tammany Parish School Board, 99-2017, pp. 5-9 (La.App. 1 Cir. 12/22/00), 774 So.2d 1227, 1231-34, writ denied, 2001-0233 (La.3/23/01), 787 So.2d 1001. Accordingly, in the instant case assessment of fault to both the negligent tortfeasor, Murphy-Blossman, and to .the intentional tortfea-sors, Brown and Angela Miles, was required under the law. However, comparative fault is not applicable to reduce the recovery of damages by a negligent plaintiff who has been injured partly as a result of the fault of an intentional tortfeasor. Landry v. Bellanger, 2002-1443 at p. 14, 851 So.2d at 953-54 (the supreme court went on to hold that Section C applies only when a plaintiffs contributory fault consists of negligence and does not apply where the plaintiffs fault is intentional); Young v. First National Bank of Shreveport, 34,214, pp. 29-30 (La.App. 2 Cir. 8/22/01), 794 So.2d 128, 147, writ denied, 2001-2642 (La.1/4/02), 805 So.2d 209, writ denied, 2001-2762 (La.3/22/02), 811 So.2d 936. See also LSA-C.C. art. 2323(C). Nevertheless, whereas in the instant case a trial court finds negligence on the part of the plaintiff and on the part of one defendant while finding another defendant has committed an intentional culpable act, the recovery of the negligent plaintiff may be reduced in accordance with his own assessed fault vis-á-vis the negligent tortfea-sor, while no reduction is made in favor of the intentional tortfeasor. See Babb v. Boney, 30,443, p. 6 (La.App. 2 Cir. 4/8/98), 710 So.2d 1132, 1135.

117Thus, we find no error in the assessments of fault and judgment amounts in this case and affirm this portion of the trial court judgment.

Interpretation of Chicago Insurance Policy

On appeal, the assignments of error put forth by Chicago have as a common basis the argument that the insurance coverage provided by Chicago to Richard L. Murphy did not provide coverage for the fault of Murphy-Blossman, either as a result of its own negligence or vicariously for the negligence of its employee, Lisa Torres.

An insurance policy is an agreement between the parties and should be interpreted by using ordinary contract principles. If the language in an insurance contract is clear and unambiguous, the agreement must be enforced as written. Smith v. Matthews, 611 So.2d 1377, 1379 (La.1993). See also Jenkins v. CNA Insurance Company, 98-0022, pp. 4-5 (La. App. 1 Cir. 12/28/98), 726 So.2d 71, 74. The parties’ intent, as reflected by the words of the policy, determines the extent of coverage. Such intent is to be determined in accordance with the general, ordinary, plain, and popular meaning of the words used in the policy, unless the words have acquired a technical meaning. Id. Exclusionary provisions in insurance contracts are strictly construed against the insurer, and any ambiguity is construed in favor of the insured. Id.

In this case, Chicago issued Mr. Murphy both primary insurance coverage in a “Real Estate Licensee Professional Liability Insurance Policy,” with a policy limit of $100,000 for each wrongful act and $300,000 as an aggregate limit, and excess insurance in a “Real Estate Licensee Excess and Augmented Professional Liability Insurance Policy,” with a policy limit of |1S $1,000,000. The primary policy was issued to “Richard L. Murphy” and the excess policy was issued to “Richard L. Murphy dba Murphy & Associates.”

The primary policy provided, “We will pay on behalf of the insured[] all sums which the insured shall become legally obligated to pay as ‘damages’[] because of a ‘wrongful act’[] in the rendering or failure to render ‘real estate services.’ ” The term “real estate services” was defined as follows:

“Real estate services” means services performed or advice given by the insured while:
a. Selling or listing real estate;
b. Managing real estate; or
c. Appraising real estate.
Appraising real estate means the process of establishing market value, investment value or other defined value of a specific item of real estate when such services are conducted by a licensed or certiñed real estate appraiser.
“Real estate services” include the following services performed or advice given by the insured in connection with the activities listed as items a, b, and c, above:
1) Consultant or counselor;
2) Notary public, or
3) Handling funds for an escrow or trust account when such funds are:
a) In the form of United States currency, certified |19check, guaranteed check or money order;
b) Held separate from your funds; and
c) Distributed in their entirety within twelve (12) months from the date received.
“Real estate services” does not include services performed or advice given by the insured in connection with activities as a:
Mortgage banker or correspondent;
Escrow agent (other than the handling of funds described in item 3. above);
Construction Manager;
Property Developer.

[Emphasis added.]

Chicago asserts that the negligence of Murphy-Blossman and/or Lisa Torres was not covered under the policy definition of “real estate services,” either because it did not fall within one of the covered categories listed in the policy, or because the construction draw certifications were not performed by a “licensed or certified real estate appraiser” as required under the policy provisions. Because we agree with the latter assertion, we find it unnecessary to address the former, or the remainder of Chicago’s contentions.

The unambiguous policy language pertinent to this case provides coverage only for “services performed or advice given” while an insured is: selling or listing real estate, managing real estate, or appraising real estate. While the negligent activities of Murphy-Blossman did not involve selling, listing, or managing real estate, arguably, the verification and certification of construction could be considered as being related to or a part of the prior appraisal process undertaken by Murphy-Bloss-man. Nevertheless, thej^negligence of Lisa Torres in performing the certifications on these ten lots was not insured by Chicago since it was undisputed that Lisa Torres was not a “licensed or certified real estate appraiser.”

Further, while Murphy-Blossman was found to be vicariously liable for the negligence of its employee, Lisa Torres, it was also found negligent in failing to properly train and/or supervise Lisa Torres in the performance of her employment duties. Clearly, the failure to properly train and/or supervise employees does not fall within the definition of “real estate services,” but rather would more appropriately fall within an administrative or managerial type function, traditionally insured under general liability insurance. Chicago did not provide commercial general liability insurance under the policies at issue.

Consequently, applying the principles of insurance contract interpretation, we conclude the unambiguous provisions of the Chicago policies at issue herein do not provide coverage under the facts of this case for the fault of Murphy-Blossman. Accordingly, we reverse that portion of the trial court judgment finding coverage under the Chicago policies.

CONCLUSION

For the reasons assigned herein, the judgment of the trial court is affirmed in part, and reversed in part. Each party is to bear his own cost of this appeal.

AFFIRMED IN PART; REVERSED IN PART.

GUIDRY, J., concurs in the result.

      . Murphy-Blossman owners A.R. “Trey” Blossman, III and Richard L. "Rick” Murphy were also made defendants to the suit, but were later dismissed with prejudice.

      . Mr. LeBlanc actually stated that he retired from Specialized because of personal disability in March or April of 2004.

      . The testimony of Mr. LeBlanc did not actually evidence a knowledge of Brown’s "credit rating;” rather, Mr. LeBlanc indicated that Specialized's business as a sub-prime lender catered to businesses with less than "exemplary credit.” Mr. LeBlanc also testified that Brown’s reason for coming to Specialized as a lender was because re had “tapped out on his lending limits with [local banks] ... [and] he wanted to build more houses.” When Brown began his credit relationship with Specialized, Mr. LeBlanc testified that he provided Specialized with a financial statement prepared by a well-respected CPA. That financial statement indicated that among Brown's assets was a personal residence valued at 1.5 million dollars. However, Mr. LeBlanc testified that the residence had been appraised by Murphy-Blossman, and when Brown encountered his financial difficulties, it was sold under foreclosure brought by a first mortgage holder; it was then revealed to have had a sales value of less than $700,000. Mr. LeBlanc further testified that until the fraudulent scheme at issue was uncovered in 2001, Brown had never missed a payment on his debt service to Specialized. On the issue of a credit rating, Mr. LeBlanc stated only that he was unconcerned about Brown’s credit rating because the loans his company made to Brown were "secured” by the immovable property at issue.

      . The trial testimony of Richard Murphy does not contain any testimony concerning what his knowledge was as to Brown’s credit-worthiness. Mr. Murphy related only that he did not “think” the company received payment for the appraisals performed on the ten properties at issue in this case. Mr. Blossman was not questioned at trial concerning Brown's credit status.

      . Specialized’s bookkeeper, Robin Ketron, also testified that her main concern in accepting a Murphy-Blossman draw certification was that the property was adequately identified and the form was signed by a Murphy-Blossman representative; variations in signatures or an absence of a check in every box were not considered by Ms. Ketron to be important.

      . "Coverage A” under the excess policy was dependant on a finding of coverage under the primary policy, as indicated in the policy language, which provides: "We will pay on behalf of the insured all sums that the insured shall become legally obligated to pay as 'damages' which are ... [bjecause of injury or 'damage' for which insurance is afforded by the 'underlying insurance.’ " The parties do not dispute that if there were coverage under the primary policy, then there would be coverage under the excess policy.

      . We note that Mr. Murphy's address was listed on the policy as: 3000 26th Street, Suite D, Metairie, Louisiana, which Mr. Murphy testified at trial was the address for his individual office. The address for Murphy-Bloss-man was: 1011 North Causeway, Mandeville, Louisiana.

      . The policy provided that "[t]he word 'insured' moans any person or organization qualifying as such under WHO IS AN INSURED (SECTION II).” An "insured” was further defined as including "[y]our employees and assistants while acting on your behalf,” and "[t]he organization you work for or represent but only with respect to the conduct of your 'real estate services.' ”

      . "Damages” were defined by the policy as "compensatory ‘damages' which an insured becomes legally obligated to pay,” and did not include "fines, sanctions or penalties against any insured, or the return or reimbursement of fees for 'real estate services.' "

      . "Wrongful act” was defined by the policy as "a negligent act, error or omission.”

      . The testimony presented at trial established that with respect to the properties at issue, Murphy-Blossman had appraised the properties and that the verification of construction for purposes of the construction draws was undertaken as something of an extension of that appraisal process. The evidence showed that the verifications and certifications completed by Murphy-Blossman were maintained in the appraisal file created for each separate property. Further, the process of verifying that the construction had been conducted in accordance with the plans and specifications appraised by Murphy-Blossman could be considered a part of the process of establishing the value of the real estate at issue.


source: Caselaw Access Project

author: GUIDRY, J.

license: Public Domain

text:
    Julia P. MORGAN v. STATE FARM FIRE AND CASUALTY COMPANY, INC., Darnell Browning, Superior Services Industry, Inc. and William Rogers d/b/a Lake Park Laundry.
    No. 2007 CA 0334.
    Court of Appeal of Louisiana, First Circuit.
    Nov. 2, 2007.

      Kris A. Perret, Baton Rouge, LA, for PlaintiffyAppellant Julia P. Morgan.
    Joseph N. Lotwick, Baton Rouge, LA, for Defendant/Appellee B & G Construction and Restoration, Inc.
    Daniel A. Reed, Baton Rouge, LA, for Defendant/Appellee Republic Vanguard Insurance Company.
    Before WHIPPLE, GUIDRY, and HUGHES, JJ.
   GUIDRY, J.

LA homeowner appeals a judgment dismissing her claims against a contractor she hired to repair her home after a fire. Having thoroughly reviewed the evidence in the record before us, and finding no error in the determinations of the trial court, we affirm.

FACTS AND PROCEDURAL HISTORY

On March 27, 1999, a fire that emanated from the fireplace damaged the home of Julia P. Morgan. Ms. Morgan was at home at the time of the fire. She maintained a policy of homeowner’s insurance covering her home with State Farm Fire and Casualty Company (State Farm), and immediately called her agent to report the occurrence. The agent arrived at Ms. Morgan’s home on the night of the fire and brought with him Barry Jenkins, the owner of B & G Construction and Restoration (B & G). Thereafter, Ms. Morgan contracted with B & G to perform the repair work on her home. The company commenced the work approximately four weeks after the date of the fire and completed the work in October 1999.

Apparently dissatisfied with how her claim was processed, on the one year anniversary of the fire, Ms. Morgan filed suit against State Farm and her agent, Darnell Browning, alleging that based on the failure to properly adjust her claim, she was not fully compensated for all the losses she suffered and that her home remained in a state of disrepair. Also in that petition, Ms. Morgan made claims against the companies that cleaned her home and clothes following the fire. She later amended her petition to name additional companies and individuals that performed work on her home relative to the fire, .which claims and defendants are not at issue in the matter before us.

However, critical to this appeal is Ms. Morgan’s first supplemental and amending petition in which she named B & G as a defendant based on its alleged ^failure to make the repairs to her home in a “timely, professional and workmanlike manner.” This petition was filed on October 13, 2000, and B & G answered the petition denying Ms. Morgan’s claims. Ms. Morgan later filed a second supplemental and amending petition naming Republic Vanguard Insurance Company as a defendant as the insurer of B & G.

After extensive pretrial discovery, motions, and interlocutory rulings, the trial court finally heard the claims asserted against B & G on June 14, -2006. Ms.., Morgan testified at the trial and presented the testimony of a witness accepted by the trial court as an expert in estimating and construction. Mr. Jenkins testified on behalf of B & G. After considering the testimony and other evidence presented, the trial court took the matter under advisement and later rendered judgment in favor of B & G, finding Ms. Morgan failed to present sufficient evidence to prove that B & G failed to repair her home in a workmanlike manner. It is from that judgment, signed August 22, 2006, that Ms. Morgan appeals, asserting that the trial court erred in not accepting as true the uncontradicted testimony offered by her expert witness and in reaching conclusions that she maintains are not supported by • the record.

DISCUSSION

The primary evidence relied on by Ms. Morgan in presenting her claim is the testimony of Winston Wood, accepted by the; trial court as an expert in estimating and construction. It is Ms. Morgan’s contention that Mr. Wood’s testimony was 14uncontradicted and clearly established her right to recover the damages claimed. On review, we find no support for these arguments.

At trial, Mr. Wood testified that he inspected Ms. Morgan’s home in 2003, nearly four years after the fire and repair work in 1999. Based on his inspection, Mr. Wood documented the following as problems he observed regarding the repair of the home: paint sloughing off surfaces throughout the house, including moldings; stained bathroom tub that should have been replaced or resurfaced and sealed; mold accumulating in a closet as a result of overflow from the air conditioning system; a hole in the wall in the hallway caused by the closet rod on the communicating wall of the closet with mold in it; nails not properly securing decking of the roof to the rafters; hole around a vent near the attic bigger than the vent, allowing hot air from the attic to reach the cold air of the interior of the house and possibly causing mold to develop; failure to spray joists, rafters and decking in the attic with a sealant to kill any odor from the fire and smoke that absorbed in the wood; air conditioner unit in attic not properly supported or anchored; tile in kitchen that was beginning to crack that needed to be replaced; a crack in kitchen countertop; bifold doors in kitchen that needed to be replaced; damage starting to show to wooden floors, either from improper installation or moisture from the overflowing air conditioning unit; and failure to use the same quality and type of wood to make repairs to the roof and in the attic.

Based on the defects observed, Mr. Wood opined that the work performed on Ms. Morgan’s house was either unsupervised or substandard. However, on cross examination, Mr. Wood admitted that he did not know what the condition of the house was when Ms. Morgan moved back into it after B & G had completed its work in October 1999. As for the damage noted in the wall in the hallway, Mr. Wood stated:

|BWell, I’m not quite sure the mechanism, how the hall wall got damaged from the other side, unless the bracket that was supporting the shelf and the rod itself when it fell just punched a hole through it, because this sheetrock wall was on the opposite side of the stud from where the problem was created.

As for the spraying of the joists and rafters in the attic with a sealant, he clarified his testimony regarding whether a sealant had been sprayed on those surfaces by admitting “[w]ell, it didn’t appear to be.” Mr. Wood also admitted not knowing when the crack in the kitchen floor had occurred. In explaining his testimony regarding the quality of the wood used to repair the fire damage to the roof, Mr. Wood stated:

If I was going to replace the roof with like and quality, I’d — unless someone asked me to raise it for some reason, I would put it back like it was, and if they wanted tongue and groove, I’d use tongue and groove. If they didn’t, I’d use plywood and give them a credit that they could use on something else or they wouldn’t pay me that money.

Following Mr. Wood’s testimony, Mr. Jenkins, the owner of B & G, was called to the stand to testify, and contrary to Ms. Morgan’s assertion on appeal, his testimony, as well as several exhibits introduced in conjunction with his testimony, did contradict the opinion and statements of Mr. Wood in several respects.

First, regarding the peeling paint observed on several surfaces in the house, Mr. Jenkins testified that when B & G began its work, it was observed that there was a pre-existing problem of where someone had previously painted over the oil based painted surfaces with a latex paint. Mr. Jenkins testified that B & G sought authorization from State Farm to completely strip the surfaces before repainting them so that the paint would adhere properly, but the request was denied. He said that the most State Farm would authorize was to sand and repaint the surfaces with latex paint.

As for other needed repairs noted by Mr. Wood, Mr. Jenkins testified that State Farm refused to authorize replacement of the bi-fold doors because it deemed |fithe damage observed to those doors not to be related to the fire. He also testified that State Farm would not authorize the resurfacing of the stained tub and tub surround because State Farm had determined that the stained condition of the tub and the tub surround was pre-existing and simply a result of age.' State Farm further would not authorize the changing the bathroom chair and door molding for the same reason. The house was built in 1955.

Nevertheless, Mr. Jenkins stated that there were many repairs that B & G performed gratuitously for Ms. Morgan that were not authorized by State Farm nor related to the fee. For instance, in the kitchen, Ms. Morgan complained of a crack in her kitchen counter. Mr. Jenkins testified “[t]his was something that was not figured by State Farm, and we didn’t break the formica, but she said she didn’t remember a crack being in it, so we ended up changing her formica.” He stated that B & G also installed smoke detectors, unsealed several windows that were nailed or painted shut, and ran a sub-feed breaker panel inside her home to allow Ms. Morgan to control her breakers without having to go to the main panel located on the outside of her home, all free of charge.

When questioned regarding the cracks in the tile floor of the kitchen and defects in the wooden floors noted by Mr. Wood and shown in the photos taken by Mr. Wood, Mr. Jenkins responded that he had not observed any defects at the time B & G completed its work. As for the hole in the hallway wall that Mr. Wood speculated, but could not say for certain, was caused by the rod in the closet on the opposite side of the communicating wall, Mr. Jenkins testified:

[T]hat ... is a hole in a wall, which is— looks like a lot greater than a screw hole left from shelving. This butts up to the closet that we added on. That closet Ms. Morgan wanted wire shelving in it. James Murphy is the wire shelving guru in Baton Rouge, and when he goes in to put the wire shelving in, he will actually — there’s a schematic that he uses, depending on the distance of the wall, ... his schematic goes up, adjusts to it, and it lays out all the screw holes. Now, it’s not to say that the screw holes are all going to line up on studs. He has |7inserts that are made to hold the shelving properly to hold clothing and whatever is stored on it, other .than something that is maybe just overweighted (sic), but by the picture, it’s hard for me to believe that a plastic insert would make a hole on the opposite side this large, because this is in the hallway, and • I can’t imagine — because it looks like it’s a foot and a half wide.

As for the work on the roof, in the attic, and on the air conditioning system, Mr. Jenkins testified that the decision to move the air conditioning unit from the downstairs closet to the attic was done to accommodate Ms. Morgan’s request to raise the level of her roof to give her more space in the attic. By raising the roof, B & G was able to move the air conditioning unit from a hallway closet to the attic and thereby give Ms. Morgan the hallway closet she wanted. To offset the cost associated with raising the deck of the roof the decision was made to use a lesser, but acceptable quality of wood, with Ms. Morgan’s agreement. As Mr. Jenkins explained, the “[r]oof decking therefore is not [of] like kind and quality as called for by the policy. That is correct, but the moneys (sic) were used to raise the pitch of her roof from three to a seven, taking, in the items that I aforementioned, meaning decking, roofing, framing.”

Mr. Jenkins also testified that a sealant was sprayed on the joists and rafters in the attic. He explained that B & G used two types of sealant — -one that leaves a white residue and-one that is clear. Mr. Jenkins stated that the clear sealant was used on the surfaces noted by Mr. Woods. As for bracing the air conditioning unit that was placed in the attic, Mr. Jenkins observed that while Mr. Wood had noted that the air conditioning unit was braced only by a two-by-four, “it’s not a two by four, but its three two by fours. This was inspected by the city on the rough-in and the final and approved by the city.” Mr. Jenkins further commented that all of the work performed, including the nailing of the decking to the rafters, was inspected and approved by the various city building inspectors in the fields of mechanical, |selectrical and framing. Copies of the inspections approving the work as of September 23, 1999, were placed into evidence.

Mr. Jenkins stated that the air conditioning unit that was in the hall closet was replaced with a new unit that was placed in the attic. He explained that contrary to Mr. Wood’s testimony, the replacement unit was not smaller, but was actually a bigger unit. The old unit was a two and a half ton unit, and the new unit was a three-ton unit. Mr. Jenkins said that Guy Fon-tenot performed the work on the inside air conditioning unit, and that at the time the work was performed, Mr. Fontenot advised Ms. Morgan to change the outside air conditioning unit as the two systems might be incompatible and the newer system could put pressure on the older unit, but she declined to do so. He said Ms. Morgan never informed him of any problems with the air conditioning unit and that she did not even call him when the condenser on the outside unit went out. Instead, she called Mr. Fontenot directly.

According to Ms. Morgan, in September 2000, she experienced problems with the outside air conditioning unit and called Total Comfort Heating and Air to inspect the unit. She was advised to replace the outside air conditioning unit, but she did not have Total Comfort Heating and Air perform the work. Instead, she had her son’s friend, who worked for an air conditioning company, perform the work. It was after that work was performed, in either 2001 or 2002, that she began experiencing problems with overflow from the inside air conditioning system.

In considering expert testimony, the trial court may accept or reject in whole or in part the opinion expressed by an expert. The effect and weight to be given expert testimony is within the broad discretion of the trial judge. Rao v. Rao, 05-0059, p. 14 (La.App. 1st Cir.11/4/05), 927 So.2d 356, 365, writ denied, 05-2453 (La.3/24/06), 925 So.2d 1232. The trier of fact may accept or reject any expert’s lflview, even to the point of substituting its own common sense and judgment for that of an expert witness where, in the fact-trier’s opinion, such substitution appears warranted by the evidence as a whole. Green v. K-Mart Corporation, 03-2495, p. 5 (La.5/25/04), 874 So.2d 838, 843; Barber Brothers Contracting Company v. Cuccia, 98-0675, p. 8 (La.App. 1st Cir. 4/1/99), 734 So.2d 820, 824, writ denied, 99-1258 (La.6/18/99), 745 So.2d 31. The decision reached by the trial court regarding expert testimony will not be disturbed on appeal absent a finding that the trial court abused its broad discretion. Fishbein v. State ex rel. LSU Health Sciences Center, 06-0549, p. 8 (La.App. 1st Cir.3/9/07), 960 So.2d 67, 73, writs denied, 07-0730, 07-0708 (La.6/22/07), 959 So.2d 495, 505.

In his testimony, Mr. Jenkins stated that B & G tried to be responsive to Ms. Morgan’s requests and complaints, even to the extent of performing work that was not authorized or paid for by State Farm. Ms. Morgan submitted several “punch” lists, or lists of repairs that Ms. Morgan noted as being needed. The last list of repairs that Ms. Morgan submitted to Mr. Jenkins was in May 2000, and Mr. Jenkins described to the court what repairs were performed, and if a repair was not performed, Mr. Jenkins explained that it was usually something that was not authorized by State Farm. Mr. Jenkins further explained to the court that several of the defects observed by Mr. Wood did not exist at the time B & G completed its work and Ms. Morgan never informed B & G of any subsequent problems.

Having reviewed the evidence and testimony as outlined above, we find no abuse of the trial court’s discretion in choosing not to give greater weight to Mr. Wood’s testimony. We further find that the evidence supports the trial court’s findings.

| ^CONCLUSION

After a thorough review of the record in its entirety, we find that the record before us contains sufficient evidence to support the trial court’s judgment. Accordingly, the judgment is affirmed. All costs of this appeal are assessed against the appellant, Julia P. Morgan.

AFFIRMED.

      . In its reasons for judgment, the trial court held:
      The court finds that the expert testimony of Mr. Wood for the Plaintiff was not compelling as his review of the property in question occurred many years after the B & G work had been completed. There was evidence produced that additional additions/modifications .to the house were made in the intervening years which, together with wear and tear associated during that time, rendered Mr. Wood’s opinions almost worthless to the court. In fact, many of the problematic areas addressed were the result of defective separate work on the exterior air conditioning unit at a later date by others.


author: GUIDRY, J. WHIPPLE, J.,

text:
    Sharon NORBERT v. LSU HEALTH SCIENCES CENTER, University Medical Center.
    No. 2007 CA 0161.
    Court of Appeal of Louisiana, First Circuit.
    Nov. 2, 2007.
    Rehearing Denied Dec. 27, 2007.

      Daniel M. Landry, III, Lafayette, LA, for Sharon Norbert.
    Martha K. Mansfield, Baton Rouge, LA, for Appellee LSU Health Sciences Center University Medical Center.
    Robert R. Boland, Jr., Baton Rouge, LA, for Anne Soileau, Director, Department State Civil Service.
    Before WHIPPLE, GUIDRY, AND HUGHES, JJ.
   GUIDRY, J.

lain this appeal, Sharon Norbert seeks review of a decision rendered by the Civil Service Commission (Commission), finding that LSU Health Sciences Center, University Medical Center (LSU) had shown cause for terminating Norbert and had acted in good faith. For the reasons that follow, we affirm in part, reverse in part, and remand.

FACTS AND PROCEDURAL HISTORY

Norbert was employed by LSU as a hospital admission technician for over twenty-two years. As an admission technician, Norbert worked from 6:30 a.m. to 3:00 p.m. and was responsible for admitting, screening, and discharging patients, which took place throughout the hospital. Additionally, Norbert was a seasonal employee of H & R Block, having worked from January through April for the past twelve years. Norbert worked approximately two evenings per week for a total of about eight hours and most of her duties could be performed while sitting at a desk.

In 1998, Norbert injured her neck and back while at work for LSU and, in addition to receiving sporadic workers’ compensation benefits, was accommodated with a special lumbar chair. In addition, LSU accommodated Norbert’s January 20, 2004 request that she not work evenings or nights, because she takes her medicine and lumbar injections in the afternoon and rests her body at night.

Thereafter, on March 4, 2004, Norbert was involved in an automobile accident while on annual leave from LSU and aggravated her pre-existing neck and back injuries. Accordingly, pursuant to her doctor’s recommendation that she not work, Norbert requested and received paid sick leave and family medical leave from March 8, 2004 through April 5, 2004. However, during this time, Norbert continued to work her second, seasonal job at H & R Block. By letter dated June 14, 2004, LSU advised Norbert that it was removing her from her permanent position effective June 21, 2004, for falsely representing that she could not work |sfor LSU, while at the same time working a second, seasonal job at H & R Block. Norbert appealed LSU’s decision to the Commission, whereupon a referee determined that LSU had proved cause for Norbert’s dismissal and denied Norbert’s appeal. Norbert filed an application for review of the referee’s decision with the Commission, which was denied. Norbert now appeals these decisions, asserting that the Commission erred in finding LSU established that it acted in good faith and with legal cause in terminating her employment.

DISCUSSION

Decisions of Commission Referees are subject to the same standard of review as decisions of the Commission itself. Decisions of the Commission are subject to the same standard of review as a decision of the district court. Accordingly, when reviewing the Commission’s findings of fact, the appellate court is required to apply the manifestly erroneous or clearly wrong standard of review. However, in evaluating the Commission’s determination as to whether the disciplinary action taken by the appointing authority is based on legal cause and commensurate with the infraction, the reviewing court should not modify or reverse the Commission’s order unless it is arbitrary, capricious, or characterized by an abuse of discretion. Usun v. LSU Health Sciences Center Medical Center of Louisiana at New Orleans, 02-0295, 02-0296, p. 4 (La.App. 1st Cir.2/14/03), 845 So.2d 491, 494.

Article 10 § 8(A) of the Louisiana Constitution provides that a classified employee may not be “subjected to disciplinary action except for cause expressed in writing.” “Cause” sufficient for the imposition of discipline means “conduct that impairs the efficiency of the public service and bears a real and substantial relation to efficient and orderly operation of the public service in which the | ¿employee is engaged.” Marsellus v. Department of Public Safety and Corrections, 04-0860, p. 5 (La.9/23/05), 923 So.2d 656, 660.

In the instant case, LSU terminated Norbert for falsely representing that she was incapable of working for LSU, while at the same time working a second, seasonal job at H & R Block. Particularly, LSU asserted that Norbert, while on paid sick leave and family medical leave, and despite having previously requested that she not work evenings and nights due to her workers’ compensation-related injury, worked evenings at H & R Block.

Civil Service rule 11.13(a) provides that sick leave may be utilized for: (1) illness or injury preventing an employee from performing his usual duties, or (2) medical, dental, or optical consultation or treatment. Using sick leave for any purpose other than the ones listed in Rule 11.13 is a misuse of sick leave and amounts to misconduct constituting cause for discipline. See Sterling v. Department of Public Safety & Corrections, Louisiana State Penitentiary, 97-1959, 97-1960, 97-1961 (La.App. 1st Cir.9/25/98), 723 So.2d 448, 453 and 454; see also Ferguson v. Department of Health and Human Resources, Office of Management and Finance, 451 So.2d 165, 168 (La.App. 1st Cir.1984).

As stated above, Norbert was a twenty-two year employee of LSU. She was involved in an automobile accident on March 4, 2004, and aggravated a pre-existing back and neck injury, for which she had received accommodation and workers’ compensation from LSU. Pursuant to her doctor’s specific recommendation that she was to have “no work status” from March 8, 2004 through April 5, 2004, Norbert received paid sick leave and family medical leave from LSU. However, during this time, Norbert continued to work her second, seasonal job at H & R Block, approximately two nights per week. Accordingly, based on our review of the record, we find that LSU established that Norbert abused the sick leave policy by claiming that she could not work for LSU due to |sher injuries and receiving leave, while continuing to work her second job at H & R Block, despite her doctor’s recommendation that she have “no work status.” (Emphasis added.)

However, dismissal from permanent employment is the most extreme form of disciplinary action that can be taken against a classified state employee. Thus, cause justifying some lesser form of disciplinary action might not justify a dismissal. Ryder v. Department of Health and Human Resources, 400 So.2d 1123, 1126 (La. App. 1st Cir.1981). Repeated improper conduct after lesser disciplinary action has been taken, the totality of individual lesser offenses, or even a single particularly aggravated incident can be considered to constitute legal cause for dismissal. Ryder, 400 So.2d at 1126.

In reviewing whether a penalty is commensurate with the offense proven, an appellate court must apply the “abuse of discretion” or “arbitrary and capricious” standard of review. See Marsellus, 04-0860 at p. 8, 923 So.2d at 661. A conclusion of a public body is “capricious” when it has not substantial evidence to support it or the'conclusion is contrary to substantiated competent evidence. Likewise, the word “arbitrary” implies a disregard of evidence or of the proper weight thereof. Sterling, 97-1960 at p. 13, 723 So.2d at 455.

The Commission determined that LSU established cause for terminating Norbert’s employment based on her violation of the sick leave policy, as well as her dishonesty in requesting that she not work evenings or nights for LSU due to her need to take her medicine and rest her body, while working evenings for H & R Block. In particular, the Commission relied on an unpublished opinion of this court, Spencer v. LSU Health Sciences Center, Earl K. Long Medical Center, 2004 CA 0619 (La.App. 1st Cir.3/24/05), 898 So.2d 636, to support its determination that termination was appropriate.

|fiIn Spencer, a two-year employee was injured in an automobile accident, and due to these injuries, which rendered him “totally incapacitated,” he received paid sick leave from his job at LSU from November 19, 2001 through January 9, 2002. However, during the time he was on sick leave, Spencer continued to work at his second job at the Chicken Shack doing light duty work. LSU terminated Spencer’s employment, claiming that he committed payroll fraud by claiming to be “totally incapacitated” from his employment with LSU, while continuing to work at the Chicken Shack. The Commission ultimately upheld Spencer’s termination, finding that he had misrepresented his job duties at LSU to his treating physician, and determining based on an accurate description of his usual duties at LSU and his duties at the Chicken Shack, that Spencer was not incapacitated from his usual duties at LSU during the time he was taking paid sick leave. On appeal, this court affirmed the Commission’s decision.

However, we note some key distinctions between Spencer and the instant case. First, Spencer was a short-term employee, having only worked for LSU for two years. However, Norbert was a long-term employee, having worked for LSU for twenty-two years. Additionally, though both Spencer and Norbert worked second jobs while on paid sick leave from LSU, the circumstances are substantially different. Spencer was a stock clerk supervisor for LSU, with eighty-five to ninety percent of his job duties involving taking care of paperwork. Based on Spencer’s misrepresentation of his job duties at LSU, his treating physician determined that he was totally incapacitated from his employment with LSU and he received paid sick leave. However, during this time, Spencer continued to work six days and over thirty hours per week at the Chicken Shack as a lead/worker assistant supervisor.

Norbert, however, was an admission technician whose duties required her to move throughout the hospital. Norbert’s physician indicated on her family medical 17leave request that she was to have “no work status” from March 8, 2004 through April 5, 2004. Despite being on paid sick leave and family medical leave based on her physician’s recommendation, Norbert worked at H & R Block approximately two days a week for a total of about eight hours. However, based on the job descriptions in the record, Norbert’s job duties at H & R Block were substantially different from her duties at LSU. At H & R Block, Norbert primarily sat at a desk and had assistance, whereas her job duties at LSU required her moving throughout the hospital.

Further, the Commission seems to analogize Norbert’s dishonesty in requesting that she not work evenings or nights because of the need to take her medicine and rest her body with Spencer’s dishonesty in misrepresenting his job duties to his treating physician. However, Spencer misrepresented his job duties so as to obtain sick leave to which he would not otherwise have been entitled. Norbert’s request, however, was not an effort to defraud her employer and to.obtain a benefit to which she was not entitled. Rather, it could be viewed as an effort to obtain a more convenient work schedule, whether to accommodate her injuries or her second job. Such dishonesty, while arguably impairing the efficient operation of LSU, does not rise to the degree of dishonesty found in Spencer.

Accordingly, we find that the facts of this case do not rise to the level of the particularly egregious conduct found in Spencer. Rather, the facts of this case are more analogous to those found in cases involving violation of sick leave policy and dishonesty that preceded Spencer, where suspension was determined to be the appropriate penalty. See Ferguson, 451 So.2d at 169 (upholding a forty-five day suspension for abuse of leave policy and insubordination); Jackson v. Department of Health and Hospitals, Hammond Developmental Center, CSC Docket Nos. 12335 and S-125262 (July 22, 1998) (modifying DHH’s dismissal for violation of sick leave policy and dishonesty to a ninety-day suspension).

| sTherefore, after a careful review of the record as a whole, given the character, content, and proper weight of the evidence, we find that the penalty of termination constituted excessive discipline, not commensurate with the relative seriousness of the offenses proven, and that the Commission’s decision to uphold that penalty was an abuse of discretion. Accordingly, we reverse the Commission’s decision insofar as it upholds LSU’s termination of Norbert and remand this matter to the Commission for imposition of appropriate discipline, short of termination.

CONCLUSION

For the foregoing reasons, we affirm the portion of the Commission’s decision finding legal cause for discipline, but reverse the portion of the Commission’s decision upholding the penalty of termination. This matter is remanded to the Commission for determination of the appropriate discipline, short of termination, to be imposed. All costs of this appeal are to be borne by the appellant, Sharon Norbert.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

WHIPPLE, J.,

dissents and would

affirm, finding the disciplinary action was acquired by appellant’s acts of engaging in work duties while receiving sick leave benefits pursuant to a physician’s “no work” order.

      . At the hearing on February 13, 2006, the parties agreed to submit the matter on stipulations, documents, and briefs. A decision was placed on hold pending this court's determination of Spencer v. LSU Health Sciences Center, Earl K. Long Medical Center, 2004 CA 0619 (La.App. 1st Cir.3/24/05) (unpublished opinion.) The matter was finally submitted on April 27, 2006.


author: CARTER, C.J.

text:
    Craig A. MAJOR and Patrice R. Major v. POINTE COUPEE PARISH POLICE JURY and The Parish of Pointe Coupee.
    No. 2007 CA 0666.
    Court of Appeal of Louisiana, First Circuit.
    Dec. 21, 2007.

      David M. Cohn, D. Brian Cohn, Baton Rouge, LA, for Plaintiffs/Appellants, Craig A. Major and Patrice R. Major.
    Leo C. Hamilton, John M. Madison, III, Baton Rouge, LA, for Defendants/Appel-lees, Pointe Coupee Parish Police Jury and the Parish of Pointe Coupee.
    Before CARTER, C.J., PETTIGREW, and WELCH, JJ.
   CARTER, C.J.

12This appeal challenges a trial court judgment sustaining a peremptory exception raising the objection of a partial no cause of action rendered by the trial court on January 10, 2007. The trial court’s ruling was in favor of defendants, Pointe Coupee Parish Police Jury and the Parish of Pointe Coupee (collectively referred to as “the Parish”) and against plaintiffs, Craig A. Major and Patrice R. Major (“the Majors”). Essentially, the trial court held that the Majors failed to state a cause of action for their “unconstitutional taking” claim associated with the Parish’s passage of a November 8, 2005 Resolution (“the Resolution”). The Resolution prohibited Federal Emergency Management Agency (“FEMA”) trailer parks for displaced evacuees of Hurricanes Katrina and Rita from being created in Pointe Coupee Parish. The trial court certified the judgment as final for appeal purposes. The Majors appeal, maintaining that the trial court erred in failing to consider that the allegations in their supplemental and amending petition stated a cause of action for the unconstitutional taking of their property that occurred without compensation. For the following reasons, we find no error in the trial court’s judgment.

| ^BACKGROUND

The Majors own approximately 839 acres of rural land located in Pointe Cou-pee Parish. After Hurricanes Katrina and Rita devastated parts of the State of Louisiana in August and September 2005, the Majors attempted to negotiate a sale of their property to an out-of-state purchaser who was interested in creating a FEMA trailer park on the property. Allegedly, FEMA also expressed an interest in the Majors’ property as a potential site for a FEMA trailer park. After the Parish passed the November 2005 Resolution prohibiting the creation of FEMA trailer parks within Pointe Coupee Parish, the prospective purchaser of the Majors’ property was no longer interested in negotiating the sale, and FEMA was no longer interested in pursuing the placement of any trailer parks for housing hurricane evacuees anywhere within Pointe Coupee Parish.

On May 11, 2006, the Majors filed a petition against the Parish seeking injunc-tive relief against the enforcement of the Resolution, alleging damages resulting from the Parish’s negligent passage of a discriminatory Resolution, and claiming that the Parish’s Resolution amounted to an unconstitutional regulatory taking of their property without compensation. The Parish responded by filing an answer denying the negligence and discrimination allegations and filing a peremptory exception raising the objection of no cause of action as to the taking claim.

The trial court sustained the Parish’s exception, but gave the Majors an opportunity to file an amended petition in order to state a cause of action regarding the regulatory taking claim. On October 17, 2006, the Majors filed a first supplemental and amending petition, adding additional paragraphs alleging that after the hurricanes, their property was more | ¿valuable than at any other time, but only if utilized as a FEMA trailer park. Further, the Majors alleged that the Parish’s passage of the Resolution eliminated the most significant and practical use of their property, thereby destroying a major portion of their property’s value. The Parish responded by filing a renewed peremptory exception raising the objection of a partial no cause of action, arguing that the Majors still had not alleged any facts that afforded them a remedy in law for the unconstitutional taking of their property. The Parish maintained that because the Majors had not alleged that their property was otherwise restricted, the property still had value and could have practical uses other than as a FEMA trailer park. After a hearing was held, the trial court ruled in favor of the Parish, again sustaining the exception and dismissing the -Majors’ regulatory taking claim. The Majors appealed.

DISCUSSION

The narrow issue presented in this case is whether the Majors’ amended petition states a cause of action against the Parish such that their claim for an unconstitutional regulatory taking of their property without compensation should be allowed to proceed to trial: This issue requires us to focus on the effect of the Resolution, rather than its validity.

A cause of action, when used in the context of the peremptory exception, is defined as the operative facts that give rise to the plaintiffs right to judicially assert the action against the defendants. Ramey v. DeCaire, 03-1299 (La.3/19/04), 869 So.2d 114, 118. The Louisiana Supreme Court recently outlined the law pertaining to peremptory | sexceptions raising the objection of no cause of action in Badeaux v. Southwest Computer Bureau, Inc., 05-0612 (La.3/17/06), 929 So.2d 1211, 1217, as follows:

[A]n exception of no cause of action questions whether the law extends a remedy against the defendant to anyone under the factual allegations of the petition. The exception is triable on the face of the petition and, to determine the issues raised by the exception, each well-pleaded fact in the petition must be accepted as true. In reviewing a district court’s ruling sustaining an exception of no cause of action, appellate courts conduct a de novo review because the exception raises a question of law and the district court’s decision is based only on the sufficiency of the petition. An exception of no cause of action should be granted only when it appears beyond doubt that the plaintiff can prove no set of facts in support of any claim which would entitle him to relief. If the petition states a cause of action on any ground or portion of the demand, the exception should generally be overruled. Every reasonable interpretation must be accorded the language used in the petition in favor of maintaining its sufficiency and affording the plaintiff the opportunity of presenting evidence at trial. (Citations omitted.)

No evidence may be introduced to support or controvert an exception of no cause of action. LSA-C.C.P. art. 931. Consequently, the issue in this case is whether, on the face of the petition, the Majors are legally entitled to relief for their claim that the Parish’s Resolution amounted to an unconstitutional regulatory taking of their property for a public purpose without compensation under the Fifth Amendment of the United States Constitution and Article I, § 4 of the Louisiana Constitution. Louisiana has a system of fact pleading; therefore, it is not necessary for a plaintiff to plead the theory of the case in the petition. Ramey, 869 So.2d at 118. However, mere conclusions unsupported by facts do not set forth a cause of action. Id.

Accepting all of the allegations in the Majors’ amended petition as true and applying the legal principles as set forth above, we find that the Majors’ amended petition fails to allege facts sufficient to state a cause of [ ^action for'a regulatory taking. The Majors’ allegations of fact do not show that they had a contract for the sale of their property in order that a FEMA trailer park could be built prior to the passage of the Parish’s Resolution that prohibited FEMA trailer parks in Pointe Coupee Parish. The allegations do not demonstrate that the Resolution so diminished the value of a major portion of the property as to leave the Majors, in effect, with nothing of value. Further, the Majors do not allege that the sale of their property was impracticable for any other purpose or that any other potential use of their property was foreclosed because of the Resolution. Rather, the Majors’ allegations of fact are based upon pure speculation that had the Resolution not been passed,- they would have been able to sell their property to some unnamed potential purchaser for the purpose of creating a FEMA trailer park. Pleadings that establish only possibility, speculation, or unsupported probability do not suffice to establish a cause of action. See Todd v. State Through Dept. of Social Services, Office of Community Services, 96-3090 (La.9/9/97), 699 So.2d 35, 43.

A regulatory taking occurs when the government regulation destroys a major portion of the property’s value or eliminates the practical economic uses of the property. Standard Materials, Inc. v. City of Slidell, 96-0684 (La.App. 1 Cir. 9/23/97), 700 So.2d 975, 984; Layne v. City of Mandeville, 633 So.2d 608, 610 (La.App. 1 Cir.1993), writ denied, 94-0268 (La.3/25/94), 635 So.2d 234; Annison v. Hoover, 517 So.2d 420, 423 (La.App. 1 Cir.1987), writ denied, 519 So.2d 148 (La. 1988). However, an unconstitutional taking of private property does not result merely because the owner is unable to develop it to its maximum economic potential. Standard Materials, 700 So.2d at 984; State, Dept. of Social Services v. City of New Orleans, 95-1757 (La.App. 4 Cir. 5/29/96), 676 So.2d 149, 154, writ denied, 96-2143 (La.11/8/96), 683 So.2d 278. Only if the regulation deprives a property owner of all practical use of his property without compensation, will an unconstitutional taking have occurred. Id.; See also Layne v. City of Mandeville, 633 So.2d at 610.

While we recognize that the Resolution at issue in this case may not allow the Majors to achieve the maximum economic potential for their property if it were to be developed as a FEMA trailer park at FEMA’s expense, we find that the Resolution as applied to the Majors does not substantially reduce the economic value of their property and its potential utility. The possibility of creating a mobile home or trailer park or some other housing development on the Majors’ property is still viable, as long as the development is not a FEMA trailer park. Likewise, the possibility of selling the property to an out-of-state investor or some other purchaser is still viable. Thus, the Majors have not been deprived of all practical uses for their property or their opportunities to sell or lease their property for a profit as a consequence of the Parish’s Resolution. They have only been denied possible income or profit that they expected to realize if they had sold their property to the out-of-state purchaser who was then going to create a FEMA trailer park. The frustration of speculative economic gain or a lost prospective business opportunity is not a taking. See United States v. Grand River Dam Authority, 363 U.S. 229, 236, 80 S.Ct. 1134, 1138-1139, 4 L.Ed.2d 1186 (1960). The denial of one avenue of selling or developing property does not amount to a taking. See Lakeshore Harbor Condominium Development v. City of New Orleans, 603 So.2d 192, 196 (La.App. 4 Cir. 1992). Likewise, the reduction in the value of property |swhen considering one of its possible uses is not necessarily equated with a taking. Andrus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 327, 62 L.Ed.2d 210(1979).

Accordingly, we hold that the Majors’ amended petition does not state a cause of action for an unconstitutional regulatory taking. We also find that the Majors will not be able to amend their petition to establish such facts that a major portion of their property’s value has been destroyed or that all practical utility of their property has been eliminated as a result of the Resolution. The Resolution did not prohibit the Majors from selling or developing their property; it simply prohibited the possible development of a FEMA trailer park on their property. Thus, the Majors need not be given leave to amend their petition. See LSA-C.C.P. art. 934; Badeaux, 929 So.2d at 1219; Ramey, 869 So.2d at 119-120.

DECREE

For the reasons discussed, the January 10, 2007 trial court judgment sustaining the Parish’s peremptory exception raising the objection of a partial no cause of action is affirmed. All costs of this appeal are to be paid by plaintiffs-appellants, Craig A. Major and Patrice R. Major.

AFFIRMED.

      . Based on our de novo review of the trial court’s certification of the judgment by utilizing the factors set forth in R.J. Messinger, Inc. v. Rosenblum, 04-1664 (La.3/2/05), 894 So.2d 1113, 1122-1123, we conclude that the designation is proper, and that the jurisdiction of this court has been properly invoked. There is no direct relationship between the elements of the remaining discrimination and negligence claims and the elements of the unconstitutional taking claim. These are all separate and distinct claims. Therefore, the partial judgment narrowed the evidence necessary for trial of the remaining issues. Although there is a slight possibility that we may be obliged to consider the unconstitutional taking issue again in connection with the consolidated actions (that are not before us in this appeal), each factual scenario is different and would not necessarily have the same result. Thus, that factor alone is not sufficient to void the certification. We find that the need for review of this issue at this time best serves the interests of the litigants as well as the concern for judicial efficiency and economy.

      . The Majors also named the insurer for the Parish, St. Paul Fire and Marine Insurance Company, as a defendant in the first supplemental and amending petition.