author: GUIDRY, Judge. DOMENGEAUX, Judge,

text:
    Mary K. HAY, Plaintiff-Appellant, v. SOUTH CENTRAL BELL TELEPHONE COMPANY, Defendant-Appellee.
    No. 83-1087.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.
    Writ Granted Feb. 8, 1985.

      Larry W. Rivers, Alexandria, for plaintiff-appellant.
    J. Michael Percy, Alexandria, for defendant-appellee.
    Before DOMENGEAUX, GUIDRY and KNOLL, JJ.
   GUIDRY, Judge.

Plaintiff, Mary K. Hay, instituted this suit against South Central Bell Telephone Company seeking death benefits under their employee benefits plan for the death of her husband.

Plaintiff was married to Dwight S. Hay at the time of his death. Mr. Hay was an employee of South Central Bell. The Bell benefits plan provided in Section 7 for death benefits. The provision states in pertinent part:

“In the event of death on or after July 18, 1974, by accident, the maximum Accident Death Benefits specified in Paragraph 1 of this Section, or in the event of death by sickness on or after the above date, the maximum Sickness Death Benefits specified in Paragraph 2 of this Section, shall be paid, subject to the provisions of sub-paragraph (c) of this Paragraph 4, to the spouse of the deceased employee if living with him at the time of his death, ...” (Emphasis ours)

The various committees which administer the plan denied Mrs. Hay’s claim for death benefits on the ground that Mrs. Hay was not living with Mr. Hay at the time of his death as required under Section 7. Mrs. Hay filed suit seeking a reversal of the committee’s final decision denying her claim.

At trial, the following facts were adduced regarding this issue and are substantially uncontradicted.

Mr. and Mrs. Hay were married in 1948. On June 29, 1977, Mrs. Hay left the matrimonial domicile located in Pineville and moved into an apartment in the same city. On July 27, 1977, Mrs. Hay filed suit for separation from bed and board on the grounds of cruelty. Mrs. Hay alleged in her petition that Mr. Hay had struck her on several occasions and she feared for her safety.

On November 23, 1977, Mr. Hay invited Mrs. Hay to the family home. Mr. Hay had suffered a heart attack and had been off work for some time. Mrs. Hay met with him and a reconciliation was discussed. Mrs. Hay agreed to spend Thanksgiving day with him. After enjoying Thanksgiving dinner together, Mrs. Hay agreed to move back to the family home. At approximately 3:00 p.m. that same day, Mrs. Hay left the home and returned to the apartment complex where she had been residing in order to give notice to the manager that she would be moving out of her apartment. Mrs. Hay testified that she intended to physically move back to the family home on November 27, 1977, with the help of her two sons who would be returning from offshore work that day.

On the morning of November 26, 1977, Mrs. Hay spoke with Mr. Hay by telephone. Mr. Hay died of a heart attack that same afternoon.

A Bell representative visited Mrs. Hay on November 27th to explain to her the benefits she was entitled to. The representative told Mrs. Hay that she was entitled to $32,000.00 in life insurance and a pension of $169.16 a month. Mrs. Hay was informed that she was not entitled to the death benefits of approximately $16,000.00 because she was not living with Mr. Hay at the time of his death.

On January 3, 1978, the Louisiana Benefit Committee recommended that the death benefits not be paid on the ground that Mrs. Hay was not living with her husband at the time of his death. On January 25, 1978, the Employee Benefit Committee denied the benefits for the same reason.

On November 27, 1978, Mrs. Hay filed this suit. Upon receipt of the suit, the fiduciaries of the benefits plan advised Mrs. Hay that they would treat her suit as a claim and again review the matter. The committee reviewed the matter and again denied her claim. On June 12, 1979, a review committee met and considered additional information furnished by Mrs. Hay’s attorney as well as the evidence already gathered by the other committees; the review committee denied her claim.

On August 23, 1983, the trial court rendered judgment in favor of Bell dismissing this suit at plaintiffs cost. Plaintiff appeals the trial court’s judgment.

On appeal, plaintiff argues the trial court erred in finding that she was not living with Mr. Hay at the time of his death. Secondly, plaintiff contends the trial court committed error in finding that the various benefit committees that reviewed her claim had not been arbitrary and capricious in their denial of these benefits.

In his written reasons for judgment, the learned trial judge stated:

“The defendant cites the case of Glover v. South Central Bell Telephone Co., 644 F 2nd 1155 (5th Cir.1981) which involved the same private pension plan as involved in the present case. The court stated as follows the applicable rule regarding the scope of judicial review of the decisions by the committees which administer the plan:
‘The limited scope of judicial review of the decisions of a committee administering a private pension plan recognized by Louisiana jurisprudence is in accord with the general rule elsewhere: The committee’s determination is conclusive so long as the evidence before the committee was sufficient to decide the plaintiff’s claim and the committee’s action was not arbitrary, capricious, or in bad faith. Davis v. Humble Oil & Refining Co., 283 So.2d 783, 793 (La.App. 1st Cir.1973). See also Golden v. Kentile Floors, Inc., 512 F.2d 838, 847 (5th Cir.1975); Marsh v. Greyhound Lines, Inc., 488 F.2d 278, 288 (5th Cir.1974); Matthews v. Swift and Company, 465 F.2d 814, 818 (5th Cir.1972).’

In the present case counsel for the plaintiff does not expressly allege in his petition or even argued (sic) in his brief that the actions of these committees was arbitrary, capricious or in bad faith. In his brief counsel for plaintiff states that the findings of the committees are ‘suspect’, because the committees are composed entirely of persons appointed by management and because most of the evidence considered by the committees was furnished by management representatives.

The minutes of all of the committee meetings are in evidence, as are the materials which they considered, including correspondence from plaintiff’s attorney which argued the facts essentially as set forth above. The court concludes there is no showing that the actions of the committees were arbitrary, capricious or in bad faith.

The next issue is whether the determination by the committees was supported by sufficient evidence. The record shows the facts presented to the committees are essentially as set forth above. There is little if any dispute as to the facts. Under these facts, the committees determined that Mrs. Hay was not ‘living with’ Mr. Hay at the time of his death, as is required by the contract. It was logical and reasonable for the committees to give to the words ‘living with’ their common and usual meaning, as required by our Civil Code Article 1946. Since Mrs. Hay was legally separated from Mr. Hay and was living in a separate residence from him at the time of his death, the committees concluded plaintiff did not meet the requirement of the contract. It obviously was not considered by the committee to be sufficient that the parties had decided to become reconciled and planned to live together again. The committee decided to use the objective yardstick which required in clear language that at the time of death the spouse must be ‘living with’ the deceased employee.

The court concludes there was clearly sufficient evidence to support the findings of the committees that plaintiff is not entitled to death benefits.”

Essentially, the plaintiff argues on appeal that the committees as well as the trial court applied too restrictive a meaning to the phrase “living with him at the time of his death”. Plaintiff asserts that under Louisiana law, the parties had reconciled and were therefore living together, as a matter of law, at the time of Mr. Hay’s death.

A review of the Louisiana jurisprudence on this subject does lend some support to plaintiff’s position, in particular, the case of Robinson v. Standard Oil Co. of Louisiana, 194 La. 904, 195 So. 351 (1940). In Robinson, our Supreme Court was called upon to decide what “living together” meant in conjunction with a widow’s suit against her deceased husband’s employer for payments under the employees’ benefit plan. The court found that the husband and wife had not dwelled together for over two years prior to the husband’s death, and had, in fact, lived a considerable distance apart from one another. However, the court concluded that the couple was living together as a matter of law. The court stated:

‘It is true that, from the latter part of 1932 to the date of the husband’s death in November, 1934, this husband and wife did not continuously dwell together under the same roof, but during the greater portion of that time were living a considerable distance apart. But the question whether, as a matter of law, a married couple is ‘living together’ does not hinge on the time they are separated or the distance they are apart, but upon the nature and character of the separation and the intention of the parties respecting it. The relationship of husband and wife, once established, is presumed to continue. The mere fact of separation alone cannot under the law be construed as an intent on the part of either to put an end to that relationship. It is true that long continued physical separation, unexplained, may give rise to an inference that the parties are not living together within the meaning which the term ‘living together’ is generally understood to have. But such an inference might not be drawn if ail the facts pertaining to the separation were known. The intent of the parties is the chief element to be considered in determining whether the relationship, once begun, has been ended.
In legal contemplation, a husband and wife are living together, though driven by stress of circumstances or pecuniary difficulties to separate, if there is no intention on the part of either to sever their marital relations permanently. If there be no estrangement, no intent to sever existing marital relations, no intent to change the relations or obligations created by the contract of marriage, the husband and wife are living together, as a matter of law. This, in substance, is what was held by the Court of Appeal, Second Circuit, in the case of Harris et al. v. Louisiana Oil Refining Corporation, 13 La.App. 416, 127 So. 40.”

As noted above, in Robinson the couple was driven to separate by their physical infirmities and resulting financial difficulties. Their relationship had remained congenial throughout the physical separation. The same may hot be said about the present case. A suit for separation had been filed by Mrs. Hay on the ground of cruelty and it was only a few days before Mr. Hay’s death that the couple exhibited any desire to get back together. Unlike Robinson, in this case the physical separation of the parties followed by the wife’s suit for judicial separation evinced the positive intention, at least on the part of Mrs. Hay, to sever the marital relationship. Therefore, we do not find the Robinson decision controlling in the present case.

We must bear in mind that this case involved a contract. Under our Civil Code, the words of a contract are to be given their common and usual signification. La. C.C. Art. 1946. As noted by the trial court, the administering committees no doubt gave the term “living with” its common and usual meaning. Clearly, Mr. and Mrs. Hay were not actually living together at the time of his death, albeit, according to Mrs. Hay’s testimony, it was to be only a matter of days before she moved back. In any event, the fact remains that Mrs. Hay had not moved back to the family home at the time of Mr. Hay’s death. All of the pertinent facts, when considered together, raise at least a fact issue concerning whether the parties were “living with” one another within the intendment of the contract at the time of Mr. Hay’s death. See Long v. Southwestern Bell Telephone Company, 442 S.W.2d 462 (Ct. of Civil Appeals of Texas, 1969).

The record reflects that the committees considered essentially the same evidence as was presented in the trial court. The committees were provided with sufficient evidence to decide the plaintiff’s claim and there has been no showing that the committees’ actions were arbitrary, capricious or in bad faith. Under these circumstances, considering the limited scope of judicial review in such cases, we cannot say that the trial court clearly erred in concluding that plaintiff is not entitled to the relief sought.

For the above and foregoing reasons, the judgment of the trial court is affirmed at plaintiff-appellant’s cost.

AFFIRMED.

DOMENGEAUX, J., dissents and assigns brief reasons.

DOMENGEAUX, Judge,

dissenting.

I agree with the trial judge’s statement concerning the scope of appellate review quoted in the majority opinion.

I respectfully suggest however, contrary to the majority conclusion, that the Supreme Court Robinson case dictates, as a matter of law, that Mrs. Hay was “living with” Mr. Hay at the time of his death. Simply put, the main force of the Robinson rational is dictated by the following language:

“But the question whether, as a matter of law, a married couple is ‘living together’ does not hinge on the time they are separated or the distance they are apart, but upon the nature and character of the separation and the intention of the parties respecting it...”

Although the Hays were “physically” apart at the time of Mr. Hay’s death, they nevertheless had surely reconciled as shown in the chronology of events from November 23, 1977, to November 27, 1977. Their uncontradicted intentions should determine their status. Under the facts herein, Mrs. Hay was legally “living with” Mr. Hay, and the Robinson case, I respectfully submit, is authority for that conclusion.

I would grant to the wife the additional approximate $16,000.00 denied her at trial and on appeal.

      . 644 F.2d 1155 (5th Cir.1981).

      . The record does not support the trial judge’s conclusion that the Hays were judicially separated at the time of Mr. Hay’s death. In fact, the separation suit filed by Mrs. Hay, although still pending on the date of Mr. Hay’s death, was dismissed as of non-suit on December 7, 1977.


source: Caselaw Access Project

author: LABORDE, Judge.

license: Public Domain

text:
    Velma Myers LANCON, Plaintiff-Appellant, v. Peter VALLOT, Jr., Defendant-Appellee.
    No. 83-1095.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.

      Mestayer & Simon, S. Gerald Simon, New Iberia, for plaintiff-appellant.
    Domengeaux & Wright, Bob F. Wright, Lafayette, for defendant-appellee.
    Before DOUCET, LABORDE, and YEL-YERTON, Judges.
   LABORDE, Judge.

Defendant is the lessee of certain land owned by plaintiff. Plaintiff sued defendant to terminate the lease and for damages, contending that defendant breached provisions of the lease by not providing sufficient insurance coverage, by not providing satisfactory evidence of insurance coverage, by subleasing the property to other businesses, and by occupying unleased portions of plaintiff’s land. Defendant reconvened and claimed damages based on the alleged deprivation by plaintiff of defendant’s full use of the leased area. After a trial on the merits, the trial judge dismissed the claims of both parties. Plaintiff appeals. We affirm.

Plaintiff Velma Myers Lancon is the owner of a tract of land in Iberia Parish. She maintains part of this property as a farm, upon which she raises horses and occasionally entertains friends and relatives.

In 1976, she leased approximately twenty-five acres of her land to defendant Peter Vallot, Jr. This lease is not a simple residential or agricultural lease, as the discussion below makes quite clear. Defendant leased the property for commercial purposes. Defendant owns or controls several business enterprises that may conveniently be classified as oil-field service companies.

The leased property is adjacent to plaintiff’s unleased land. The nearest public road is approximately two thousand feet from the leased property, and the lease provides that lessee has the right to use and the obligation to maintain a private road running through plaintiff’s unleased land from the public road to the edge of the leased property.

The lease agreement requires that defendant maintain liability insurance on the leasehold for the protection of plaintiff in the amount of $1,000,000 for personal injury claims and $1,000,000 for property damage claims. The lease agreement also limits the right of lessee to sublet the property. The particulars of the sublease and liability insurance clauses and further facts necessary for the disposition of this case will be discussed as they relate to the issues raised by plaintiff on appeal.

Plaintiff contends that the trial judge committed seven errors. Because of our disposition of this case, we need not consider two of the issues raised by plaintiff. The five issues that we will consider are:

1. Whether the trial court erred by finding that defendant did not breach the lease by failing to comply with the provisions of the lease concerning lessee’s obligation to provide insurance coverage for the protection of lessor.
2. Whether the trial court erred by finding that defendant did not breach the lease by failing to comply with its provisions concerning lessee’s obligation to provide lessor with copies of insurance policies and certificates.
3. Whether the trial court erred by accepting opinion testimony from witnesses not qualified nor accepted as experts.
4. Whether the trial court erred by finding that defendant did not breach the lease by violating the provisions of the lease concerning assignment and sublease.
5. Whether the trial court erred by finding that defendant did not breach the lease by laying claim to and attempting to possess portions of lessor’s land not subject to the lease.

DID DEFENDANT PROCURE ADEQUATE INSURANCE COVERAGE FOR THE BENEFIT OF PLAINTIFF?

The lease agreement provides: “LESSEE agrees to maintain liability insurance in the amount of One Million and No/100 ($1,000,-000.00) Dollars bodily injury liability and One Million and No/100 ($1,000,000.00) Dollars property damage to protect LESSOR

Plaintiff-lessor does not contend that defendant-lessee did not procure any insurance, nor that the procured insurance fails to protect her; rather, plaintiff contends that the insurance scheme utilized by defendant fails to provide the total amount of coverage dictated by the lease agreement.

Defendant’s insurance agent arranged defendant’s insurance of plaintiff through the Metairie, Louisiana office of Gray & Company. Gray & Company is a firm that manages the underwriting of various types of insurance, including coverage of the complex risks faced by participants in the petroleum exploration and production industry.

Defendant’s insurance scheme for the benefit of plaintiff is one common in the oil-field industry. Defendant, through Gray & Company, procured the first $85,-000 of coverage from North River Insurance Company of Morris Town, New Jersey. From $85,000 up to $5,000,000 (not merely $1,000,000), International Surplus Lines Insurance Company of Chicago, Illinois, is the underwriter of the policies covering plaintiff.

Plaintiff’s objection is to the deductible entailed by this insurance scheme. The first $35,000 of a claim must be paid by defendant. There is a variable cap on deductibles within specified years, so that the underwriters provide total coverage after a certain dollar amount of claims have been paid out.

Under his contract with Gray & Company, defendant maintains a checking account with Guaranty Bank & Trust solely for self-insurance to cover deductible claims or the deductible portion of a claim. The bank can only issue a check from the account on the joint signature of Am-Vak and Gray & Company. The insurance contract requires that the account be sufficient to pay all deductibles, with a minimum initial balance of $35,000.

As a safety device, the agreement between Gray & Company and defendant requires that Am-Vak maintain a letter of credit to cover deductible claims in the event that the bank account self-insurance funds are unavailable (e.g., if defendant’s creditors should ever seize the account). Furthermore, Gray & Company is obligated, under the terms of the agreement, to provide a defense for all claims, including claims that are wholly deductible.

We agree with the trial judge that the insurance scheme discussed above complies with the dictate of the lease agreement. Realistically, defendant cannot be expected to procure total underwriting of $1,000,000 worth of liability insurance with no deductible provisions, and we can hardly imagine that that could have been the intention of either party at the time of the lease agreement. See La.Civ.Code arts. 1945, 1950. Defendant actually has provided plaintiff with $4,000,000 more coverage than that which he is contractually obligated to provide.

Plaintiff, in brief and at trial, contends that the coverage, in effect, leaves too many loopholes, too much possibility that some party in the chain of insurance will not live up to its obligations and therefore expose plaintiff to personal liability. It is, of course, entirely possible that unforeseen circumstances could result in a lapse of coverage, or at least create legal problems for plaintiff. However, there is no indication that defendant’s insurance plan has not functioned properly to date. There is a certain amount of risk entailed by any lease or commercial endeavor. The parties in this instance, both represented by able counsel, bargained for a fair allocation of that risk. Defendant has held up his end of the bargain.

The trial court did not err by finding that the insurance defendant procured for plaintiff’s benefit complies with the lease requirement.

DID DEFENDANT PROVIDE PLAINTIFF WITH INSURANCE POLICIES AND CERTIFICATES THAT COMPLY WITH LEASE REQUIREMENTS?

We discussed above the insurance coverage requirements of the lease agreement. In reference to that insurance, the lease further provides: “LESSEE agrees to furnish LESSOR with a copy of said insurance policy or policies and a certificate certifying that said policy or policies are in full force and effect at all times during the term of this lease and the renewals thereof.”

Plaintiff-lessor contends that defendant-lessee did not comply with the lease requirement in regard to the insurance policies because the policies have a deductible provision. We have already effectively disposed of this claim. The policies complied with lease insurance coverage requirements, therefore, when defendant provided plaintiff with copies of the policies, he complied with the lease requirement at issue here, as far as the policies themselves are concerned.

Plaintiff presents a slightly stronger argument that the certificate of insurance does not meet the lease requirement. Again, defendant provided plaintiff with a certificate, but plaintiff questions whether that certificate, in compliance with the lease, “certifpes] that [the insurance is] in full force and effect at all times during the term of this lease and the renewals thereof.”

The certificate of insurance, issued by Gray & Company, relates the named insureds, the amount of and nature of coverage, and the identity of the underwriters. The certificate then concludes:

“Should the insurance herein described be cancelled, assigned or changed in such a manner as to affect this certificate, Gray & Company, Inc. will endeavor to give 10 (ten) days written notice to the certificate holder; but failure to do so shall impose no obligation or liability upon the Underwriters or Gray & Company, Inc.”

Plaintiff argues that, under the terms of the lease, the issuance of this certificate is the equivalent of issuing no certificate at all, because this certificate does not guarantee that plaintiff will, at all times, have liability insurance to protect her as landowner of the leased premises. Again, we note that plaintiff is ignoring the reality of the situation. Defendant has furnished her with a usual form of a certificate of insurance, and we doubt that defendant, or any person in defendant’s position, could ever procure an unqualified guarantee that coverage will never, under any circumstances, lapse or be cancelled. We find, as did the trial judge, that defendant has met the lease requirement by providing the certificate. There is no indication that the insurance coverage stated on the certificate has ever been cancelled or lapsed.

We interpret the agreement in light of the reasonable intentions of the parties at the time of execution: that defendant remove as much risk as possible from plaintiff by insurance and that defendant provide plaintiff with a certificate evidencing that effort. We will not interpret the agreement in a manner that would place an impossible burden on defendant. See La. Civ.Code arts. 1945, 1955. See generally Comment, The Louisiana Law of Lease, 39 TuLL.Rev. 798 (1965).

Defendant provided insurance policies and certificates in compliance with the lease agreement.

DID THE TRIAL COURT ERR BY ACCEPTING OPINION TESTIMONY FROM WITNESSES NOT QUALIFIED AS EXPERTS?

Plaintiff contends that the trial judge erred by his questioning of two of defendant’s witnesses. The witnesses were George Keenan, who is assistant to the underwriting manager with Gray & Company, and Dan Blum, who is the independent insurance agent for Mr. Vallot and Am-Vak.

The witnesses were not offered as experts, and plaintiff does not contend that defendant’s counsel attempted to elicit expert opinion testimony by his questioning; rather, plaintiff contends that the trial judge improperly elicited opinion testimony from the two witnesses.

The court asked Mr. Keenan if he thought the insurance defendant obtained through Gray & Company would completely cover claims of up to $5,000,000 against plaintiff as the landowner of the leased premises. Mr. Keenan responded affirmatively. The court asked Mr. Blum if he thought defendant’s coverage of plaintiff complied with the lease requirements. Mr. Blum answered yes.

Initially, we note that plaintiff did not object to the questions or answers at the time of the trial. At a more basic level, however, the witnesses’ testimony did not require a tender and acceptance as experts. Any witness may testify as to opinions or inferences which are based on the rational perception of facts by the witness and are helpful to a clear understanding by the fact-finder (here, the trial judge) of the testimony of the witness or to the determination of a factual issue. See Montelbano v. Montelbano, 415 So.2d 303, 305 (La. App.2d Cir.), writ denied, 420 So.2d 163 (La.1982); Greene v. Wright, 365 So.2d 551, 556-57 (La.App. 1st Cir.1978); cf Fed. R.Evid. 701. Here, the testimony of the two witnesses was at least relevant to the issue of whether defendant made a good faith effort to comply with the lease insurance provisions, which would have aided the trial judge in assessing damages had he found a breach of the lease. Moreover, the testimony was admissible because it constituted the “rational perception of facts” held by the two witnesses.

The weight that the fact-finder gives to such testimony is, of course, based on a determination of credibility. The trial judge determined, from prior testimony of these two witnesses, that they could offer credible and knowledgeable answers to his questions. Therefore, he properly assigned the weight (if any) that the contested testimony carried in his decision. The trial judge did not err by eliciting this testimony from Messrs. Keenan and Blum.

DID DEFENDANT BREACH THE LEASE AGREEMENT BY SUBLEASING TO OTHER BUSINESSES?

The lease agreement between plaintiff-lessor and defendant-lessee provides:

“LESSEE shall not assign or sub-let all or any part of the leased premises without prior written consent of the LESSOR, unless such sublease is an integral part of LESSEE’S business activity or to persons in related industries, and in any event LESSEE shall not be released from the obligations of this lease.”

In October of 1976, defendant-lessee assigned his entire leasehold interest to Am-Vak Corporation. Am-Vak immediately moved its operation to the leasehold. Defendant owns ninety percent of Am-Vak’s stock, and he is the president of the corporation. Am-Vak provides welding, fabrication, sand-blasting, and labor services to oil-field concerns. Defendant wholly owns two other companies, Val-Tex Coatings, Inc. and Val-Tex Equipment. These two businesses have occupied the leased premises too, but they have not sublet from Am-Vak. Val-Tex Coatings provides special oil-field painting services, particularly for off-shore petroleum projects, and Val-Tex Equipment supplies machinery to the same concerns.

According to plaintiffs testimony at trial, it was fully discussed and understood between the parties that these business interests of defendant would be located on the leased premises. We note, further, that these businesses clearly fall within the “integral part of lessee’s business activity” exception to the clause prohibiting sublease or assignment without approval of plaintiff. Therefore, plaintiff does not and could not successfully contend that defendant breached the lease by the assignment to Am-Vak and the location of the “Val-Tex” companies on the leased premises.

In June of 1977, defendant asked plaintiff to approve the assignment of a security interest in Am-Vak’s lease to a Lafayette Bank in connection with a financing arrangement defendant hoped to procure for Am-Vak. Plaintiff would not agree to the assignment, and Am-Vak decided not to press the issue and did not assign any interest in the lease to the bank.

On April 6, 1981, Am-Vak sublet a substantial portion of the leasehold to John M. Kent and a business partner of Mr. Kent. Mr. Kent and his partner, on that same day, sublet their interest to Blast Abrasives, Inc. Mr. Kent is the chairman of Blast Abrasives. Plaintiff’s permission was not sought for these subleases, nor for any subsequent subleases or assignments.

Blast Abrasives supplies sand to oil-field service companies for use in their sandblasting operations. Am-Vak is a customer of Blast Abrasives, and Am-Vak also recommends the use of Blast Abrasives’ sand to companies that Am-Vak services. Mr. Kent owns all of the stock in Blast Abrasives, which is a Louisiana corporation, and he also owns all of the stock in Best Barite, which is an Oklahoma corporation.

Best Barite is in the business of grinding barite to small particles which are used as a component in “drilling mud.” Drilling mud is a viscous liquid substance that is injected into an oil well during the drilling process. The mud provides lubrication, floats dirt and rock away from the drill-bit and back to the well opening, and maintains well pressure, which prevents blowouts from occurring. Best Barite grinds and stores some of its product on the subleased property of Blast Abrasives, but it is not a sublessee of Blast Abrasives. Mr. Kent testified that his barite operations in Louisiana are under the auspices of Blast Abrasives, and that Best Barite is simply used as a local trade name.

Another oil-field service concern, Sher-well, which is a subsidiary of Sherwin-Wil-liams Paint Company, apparently occupied the premises for a short period of time. Sherwell manufactures and sells chemicals which are used in the formulation of drilling mud.

As part of a financing arrangement, Mr. Kent and Blast Abrasives have assigned a security interest in Blast Abrasives’ sublease to Jefferson Bank and Trust Company.

Testimony at trial sheds light on the concerns of defendant and plaintiff when they were negotiating and formulating the lease. Plaintiff wanted, as much as feasible, to prevent subleases and assignments, because she wanted

“one person to go to if I had problems, one person to answer to me. And, I didn’t want my place cluttered up with half a dozen different companies that I didn’t have control of because it — I didn’t want to run the risk — I like my farm and I didn’t want to have it — what I had left I wanted to enjoy it — I got along fine with Mr. Vallot, we had no problems.” Conversely, defendant understood the risky nature of the business he intended to conduct on the leasehold. He knew that the oil business could boom and then bust (which subsequently occurred) in a moment’s notice. He wanted as much freedom as possible to adapt the land to a use or several uses which could provide him with a profit, or at least prevent financial ruin.

The parties, both represented by able counsel, bargained for and reached a fair and equitable agreement on the provision that governs sublease and assignment of the leasehold. We hold, as did the trial judge, that defendant has met his obligations under the lease agreement.

Clearly, under any common understanding of the phrase, all businesses that have subleased or otherwise occupied the leasehold have been engaged in “related industries.” Plaintiff argues that “related industries” means businesses owned in whole or in part by defendant. We note that the preceding alternative condition that allows sublease without lessor’s permission if the sublease constitutes an “integral part of lessee’s business activity” would be meaningless if we accepted plaintiff’s contention. See La.Civ.Code arts. 1945, 1948, 1951, 1955. “Related industries,” in the common sense of the phrase, see La.Civ.Code art. 1946, is certainly broad enough to cover the oil-field service concerns that have occupied the leasehold. Plaintiff’s valid concern about numerous companies on her land must give way to the clear wording of the contract that she entered into, which allows numerous companies to be on the land if they meet the contract requirements. Moreover, we note that plaintiff’s primary concern has been incorporated into the lease agreement, because defendant remains the person who, ultimately, must “answer to” plaintiff. The lease contract provides that he must ensure that all sublessees, assignees, or occupants of the leasehold meet the obligations of the lease, because he may “not be released from the obligations of [the lease agreement].”

The only sublease or assignment activity on the part of sublessees that arguably contravenes the lease is the security assignment by Kent and Blast Abrasives to Jefferson Bank and Trust Company. Initially, we note that this matter was not discussed at trial nor mentioned by the trial judge in his reasons for judgment, and plaintiff does not press the issue in her brief. However, the security assignment is entered into the record as plaintiff’s exhibit, therefore, we will consider this issue.

As noted above, the conclusion of the lease paragraph concerning assignment and sublease effectively extends the limitations on assignment and sublease to subsequent sublessees and assignees. Therefore, Blast Abrasives and Mr. Kent may not sublet or assign without plaintiff’s permission if defendant could not sublet or assign without plaintiff’s permission under the same circumstances. Unless the assignment to the bank falls under the integral part of business activity or related industries exceptions in the lease clause, the lease was breached by that assignment.

Blast Abrasives is not subleasing to the bank so that the bank may open a branch office on plaintiff’s land, which would be neither a related industry nor an integral part of Blast Abrasives’ business activity. Rather, Blast Abrasives is furthering its business activity on the leasehold by using its interest in the land as collateral. The bank has not taken over any part of plaintiff’s land, and the land continues to be used for oil-field service industries. All knowledgeable business persons, including plaintiff and defendant in this case, should agree that financing arrangements such as that utilized by Blast Abrasives are an integral part of the oilfield service business.

We find that Blast Abrasives’ security assignment is allowed under the lease clause which provides that permission need not be obtained from lessor for assignments or subleases that constitute an integral part of lessee’s business activity. The trial judge did not err by finding that the lease provisions restricting assignment and sublease have not been breached.

DID DEFENDANT BREACH THE LEASE BY LAYING CLAIM TO AND ATTEMPTING TO POSSESS PORTIONS OF LESSOR’S LAND NOT SUBJECT TO THE LEASE?

The resolution of this issue turns on two acts of defendant and his assignees and sublessees.

First, plaintiff contends that the lease was breached when a power-line right-of-way was granted across plaintiffs unleased land by lessees. The right-of-way was originally granted on a form supplied by Gulf States Utilities, the language of which effectively stated that the lessees owned plaintiff’s land. The trial judge found that this error was committed in good faith, and occurred as a result of a “casual” transaction between lessees and an inexperienced Gulf States employee with no legal training. We further note that, as soon as the error was discovered, the lessees and Gulf States offered to correct it. Moreover, under the lease, lessees have the right to utilities which, under the circumstances, necessarily includes a power-line right-of-way across plaintiff’s un-leased land. The trial judge found that the execution of the right-of-way form was a harmless error that in no way evidenced an intention on the part of lessees to acquire title to plaintiff’s property. We agree.

Second, plaintiff contends that road construction by Mr. Kent and Blast Abrasives breached the lease, because the construction occurred, in part, on plaintiff’s unleased property. There was no survey conducted at the inception of the lease to establish lease boundaries. Mr. Kent began the construction under a good faith belief that the boundary of the lease was an old fence row, when, in fact, the leasehold did not extend to the fence row. The trial judge found that the construction on plaintiff’s unleased property was the result of “an honest mistake.” We agree. We note, further, that the error was corrected as soon as it was pointed out to Mr. Kent, and that no damage occurred to plaintiff’s property.

Neither of these two innocuous, good faith errors constitute a breach of the lease. Defendant and his assignees and sublessees were acting as good administrators of the leased property when the errors were committed, and both errors were subsequently corrected. See La.Civ.Code art. 2710. Defendant did not breach the lease by laying claim to unleased portions of plaintiff’s land; in fact, no real claim of ownership has ever been made by defendant or his assignees and sublessees.

SUMMARY

Defendant has not breached the lease, nor is there a failure of the lease agreement at its inception. Based on the above reasons, the judgment of the trial court is affirmed at plaintiff Yelma Myers Lancon’s cost.

AFFIRMED.

      . The trial judge concluded that plaintiff did not timely notify defendant that the insurance certificate and policies that defendant provided to plaintiff were not in compliance with the lease or that the insurance coverage defendant procured for plaintiff was inadequate. We conclude that the certificates and policies meet the lease requirements and that the coverage provided is adequate; therefore, any notification by plaintiff to defendant concerning the documents or coverage is irrelevant. The trial judge did not award damages to plaintiff. Because we agree with the trial judge that defendant has not breached the lease agreement, plaintiff may not be awarded damages.

      . For example, North-West Insurance Company of Oregon, which was heavily involved in the same type of Louisiana oil-field service risk underwriting undertaken by International Surplus in this case, may be liquidated by the Oregon Insurance Commission. Claims against oil-field service companies covered by North-West have, over the past few years, substantially surpassed the premiums paid by these companies. See Times-Picayune States-Items (New Orleans), Oct. 20, 1984, at Al. Because of the enormous risks inherent in the oil-field service industry, only a small number of companies are willing to underwrite policies for industry participants at a feasible price. Most underwriters that accept oil-field service industry risks are largely dependent on that industry for their business, and lack the diversification of risks favored by most insurers in general. Therefore, an unexpected climb in liability among oil-field service companies may decimate the finances of these underwriters. See id.


author: DOMENGEAUX, Judge.

text:
    DAIRYLAND INSURANCE COMPANY, Plaintiff-Appellant, v. Anthony TRAIL, Defendant-Appellee.
    No. 83-1101.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.

      Plauche, Smith & Nieset, A.R. Johnson, IV, Lake Charles, for plaintiff-appellant.
    McHale, Bufkin & Dees, Louis D. Buf-kin, Lake Charles, for defendant-appellee.
    Before DOMENGEAUX, GUIDRY and KNOLL, JJ.
   DOMENGEAUX, Judge.

Plaintiff, Dairyland Insurance Company, as subrogee of its insured, Joseph and Linda Malbrough, appeals the decision of the district court, granting defendant’s motion for directed verdict and dismissing plaintiff’s action.

On July 25, 1981, a 1973 Ford LTD owned by Linda Malbrough and driven by her husband, Joseph Malbrough, was struck from the rear on Highway 171 in Calcasieu Parish by a 1971 Cadillac automobile driven by defendant, Anthony Trail.

Dairyland filed suit against Anthony Trail alleging that it was legally and conventionally subrogated to the rights of Joseph and Linda Malbrough.

The petition averred that the accident and all resulting damages occurred solely as a consequence of the negligence of Anthony Trail.

Plaintiff contended that Trail was an uninsured motorist and that it paid $1,500.00 to Joseph Malbrough and $1,162.00 to Linda Malbrough for bodily injury claims resulting from the accident pursuant to the uninsured motorist provision of an automobile liability policy covering the 1973 Ford LTD.

Dairyland asserts that as a result of paying these claims it is subrogated to the rights of the Malbroughs and is entitled to recover from Trail.

Defendant answered, admitting that he was an uninsured motorist, but denied all other allegations.

At trial, plaintiff introduced evidence attempting to prove the negligence of the defendant, to show that Joseph and Linda Malbrough sustained bodily injuries, and to prove the extent of those injuries.

Despite objections by the defendant, evidence was adduced to show that the Malb-roughs settled their bodily injury claims with Dairyland. The court allowed into evidence testimony by Mr. Malbrough that he settled his claim with Dairyland. Also admitted into evidence was a Receipt, Release, and Trust agreement and a Release of All Claims agreement entered into between Dairyland and Mr. and Mrs. Malb-rough. The defendant objected to the introduction of this evidence on the ground that it not be allowed to prove the existence of the contract of insurance between the Malbroughs and Dairyland as per the best evidence rule. The defendant argued that the insurance policy was the best evidence of this contract and as such was the only evidence admissible to prove its existence. The trial judge noted the objection and allowed the testimony and the exhibits into the record only as proof that the Malb-roughs had settled with Dairyland.

Dairyland failed to enter the insurance policy into evidence.

After plaintiff rested its case, the defendant moved for a directed verdict on the grounds that plaintiff had not proven that a contract of insurance existed between Dairyland and the Malbroughs and that Dairyland had failed to prove that Trail was an uninsured motorist.

The district court granted the defendant’s motion for directed verdict and dismissed the plaintiffs case. The court stated that the dismissal was warranted due to the fact that the plaintiff failed to enter the insurance policy into the record. The trial judge, in oral reasons noted:

“The record does not contain the best evidence of a contract between the parties to the subrogation agreement, demonstrating that there was actually in effect an insurance policy, or even whether or not the policy had expired or had not yet taken effect. The court does not have sufficient information to make a ruling on the claim for reimbursement under the provisions of Article 22:1406D, and the Receipt and Release Claims, and subrogation agreements filed into the record as P-3 and P-4. Consequently the suit will be dismissed at plaintiffs cost.”

Subsequently, a motion for new trial was filed by the plaintiff on the grounds that the judgment of dismissal was clearly contrary to the law and evidence. The district court denied the motion for a new trial.

There are two issues presented to this Court on appeal: (1) Whether the plaintiffs failure to introduce the insurance policy was fatal to its claim for subrogation; and (2) Whether the plaintiff was required to introduce evidence that the defendant was uninsured when the defendant admitted to being uninsured in his answer.

ISSUE I

The crux of Dairyland’s argument is that it is conventionally and legally subrogated to the rights of the Malbroughs against Trail. Plaintiff bases this contention upon the fact that it paid the obligation owed to the Malbroughs by the defendant.

The defendant argues that since the plaintiff failed to enter the insurance policy into evidence there exists no proof that a contractual relationship existed between the Malbroughs and Dairyland and therefore Dairyland did not prove its right to subrogation. The trial court held that absent the insurance policy there was insufficient evidence to allow Dairyland to recover as subrogee.

Subrogation to the right of a creditor in favor of a third person who pays him, is either conventional or legal. La.C.C. Art. 2159. La.C.C. Art. 2160 defines conventional subrogation, it states in pertinent part:

“Art. 2160. The subrogation is conventional:

(1) When the creditor receiving his payment from a third person, subrogates him in his rights, actions, privileges, and mortgages against the debtor; this subrogation must be expressed and made at the same time as the payment.”

The jurisprudence in Louisiana is well settled that the introduction of the insurance policy into evidence in an action by an insurer as subrogee is not necessary where there is other evidence introduced at trial for proving the subrogation. Allen v. Baucum, 218 So.2d 662 (La.App. 4th Cir. 1969); State Farm Fire & Casualty Company v. Sentry Indemnity Company, 316 So.2d 185 (La.App. 3rd Cir.1975); and Commercial Union Assurance Companies v. Carter, 392 So.2d 184 (La.App. 2nd Cir. 1980).

Therefore for an insurer to prove its right to conventional subrogation it need only introduce evidence sufficient to meet the requisites of La.C.C. Art. 2160.

In the instant case there is testimony in the record by Mr. Malbrough that Dairyland was his insurance company and that the claims were settled with Dairy-land.

The record also contains a Receipt, Release, and Trust agreement and a Release of All Claims agreement, both of which were signed by the Malbroughs. The agreements acknowledge receipt by Mr. and Mrs. Malbrough of the amount now being claimed by and on behalf of Dairy-land. Of paramount importance is that both agreements contain language expressing a right of subrogation on behalf of Dairyland. See Allen v. Baucum, supra, and Stephens v. Dore, 281 So.2d 889 (La. App. 3rd Cir.1973).

We find that the evidence is sufficient to prove that a conventional subrogation took place at the same time as the payment and that therefore the requirements of La.C.C. Art. 2160 have been met. We further hold that Dairyland’s status as subrogee has been sufficiently proven and its failure to introduce the insurance policy itself does not destroy its claim.

ISSUE 2

Counsel for defendant moved for a directed verdict not only because the insurance policy is not introduced but because plaintiff had not proven that Trail was uninsured. The trial court granted the dismissal but only referred to the absence of the insurance policy.

The issue presented is whether the plaintiff was required to present evidence that the defendant was uninsured when the defendant admitted that he was uninsured in his answer.

Dairyland alleged in paragraph 9 of its petition that:

“[a]t the time of the accident Trail was an uninsured motorist.”

Paragraph 9 of defendant’s answer simply states:

“Admitted.”

On factual matters a party is bound by its pleadings. C.C. Art. 2291. State v. Ward, 314 So.2d 383 (La.App. 3rd Cir.1975). An admission in a pleading falls within the scope of a judicial confession and is a party’s explicit admission of an adverse factual element; it has the effect of waiving evidence as to the subject of the admission. La.C.C. Art. 2291. Crawford v. Deshotels, 359 So.2d 118 (La.1978), and Smith v. Board of Trustees of Louisiana, 398 So.2d 1045 (La.1981).

We therefore hold that as defendant admitted to being an uninsured motorist in his answer that plaintiff is not required to introduce evidence of such at trial.

For the above and foregoing reasons the judgment of dismissal is reversed and the case is hereby remanded to the trial court for further proceedings not inconsistent with the views expressed herein. Costs at trial to await final disposition of this matter. Costs on appeal are assessed against defendant.

REVERSED AND REMANDED.


text:
    CHEF’S FRIED CHICKEN, INC., Plaintiff-Appellant, v. BULL McWOOD, INC., Kevin J. McCarrion, William B. Bull & Robert B. Harwood, Defendants-Appellees.
    No. 83-1104.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.

      Joseph A. Koury, Lafayette, for plaintiff-appellant.
    Charles L. Bull, Jr., Welsh, Miller, Miller & Craton, John F. Craton, Crowley, for defendants-appellees.
    Before DOUCET, LABORDE and YEL-VERTON, JJ.
   LABORDE, Judge.

Plaintiff, Chefs Fried Chicken, Inc., sued defendants, Bull McWood, Inc. (formerly BHM, Inc.), and William B. Bull, Robert Harwood, and Kevin McCarrion (shareholders in Bull McWood, Inc.), for breach of contract. Plaintiff contends that defendants violated the terms of a franchise agreement. The trial court held that the contract was not breached. Plaintiff appeals. We amend and affirm.

In this suit for breach of contract, plaintiff is a franchisor of various fried chicken outlets. On June 11, 1980, plaintiff and Bull McWood, Inc. entered into a franchise agreement. Section 11 of that agreement provides as follows:

“Franchisee shall not sell, transfer, assign, or lease, or sublet business premises, the business thereon, or any part thereof without in each instance first offering the same to the franchisor upon the same terms that franchisee shall previously have received as a bona fide written offer from a responsible, fully disclosed prospective purchaser. Thereafter the franchisor shall have thirty (30) days within which to determine if it desires to accept such offer. If the franchisor should decline or fail to accept such offer, the franchisee may sell, transfer, assign, or lease or sublet such interest, as the case may be, within sixty (60) days thereafter, on the same terms and conditions as contained in such offer. In no event shall the franchisee make any public offer to sell, transfer, assign, lease or sublet through any media or public advertising without first having complied with the conditions and terms of this paragraph.”

William B. Bull stated that during the course of 1980, the Chefs No. 2 fried chicken franchise did not turn a profit and, in fact, lost money. On November 13, 1980, Bisbano’s, Inc. made a written offer to purchase the Chef’s No. 2 fried chicken business from Bull McWood, Inc. for $52,-500. It is noted that William B. Bull and his wife were the sole shareholders in Bis-bano’s, Inc., while William B. Bull was the 50% shareholder in Bull McWood, Inc., as well as the president of both corporations. On November 14, 1980, notice of the offer was given to Chef’s, Inc., by Charles Bull, attorney for Bull McWood. Chef’s, Inc., subsequently put up a $2,500 deposit and, not desiring to purchase and operate the business themselves, began advertising to find a purchaser for the business; however, they were unable to find a purchaser. On February 15, 1981, after expiration of the time period which Chef’s, Inc. had to purchase the business, Bull McWood, Inc. sold the inventory and other business interests comprising Chef’s No. 2 to Bisbano’s, Inc. for $52,500. On February 18, 1981, Bisbano’s, Inc. accepted a $500 deposit toward the purchase of Chef’s No. 2 from Farmer John’s, Ltd., for $49,000.00.

Thereafter, the plaintiff-appellant filed suit for breach of contract alleging that the subsequent sale of Chef’s No. 2 from Bis-bano’s, Inc. to Farmer John’s, Ltd. in such a short time (i.e. 3 days) shows that Bisba-no’s, Inc., was not a good faith “bona fide” purchaser as required by Sec. 11 of the franchise contract. From an adverse judgment of the trial court the plaintiff-appellant has perfected this appeal. The defendant-appellee answered the appeal, requesting an increase in the trial court’s award of attorney fees under the terms of the franchise contract, and additional attorney fees for handling this appeal.

The plaintiff-appellant, Chef’s, Inc., alleges that if it had known that the business (Chef’s No. 2) would be sold to Farmer John’s, Ltd. (their competitor), they would have exercised their option to purchase the business. They further allege that they were misled and defrauded by Bull McWood, Inc. when it sold Chef’s No. 2 to Bisbano’s Inc., because Bisbano’s, Inc. was a mere alter ego of Bull McWood, Inc. and a device by which Bull McWood, Inc. would be able to sell Chef’s No. 2 to Chef’s, Inc.’s competitor, Farmer John’s, Ltd.

Bull McWood, Inc. argues that it complied fully with the contract and that the sale of Chef’s No. 2 to Bisbano’s Inc. was a legitimate sale whereby Bull McWood, Inc. could eomply with the contract and yet be free to sell and transfer Chef’s No. 2 to any prospective buyer.

It is clear that under the terms of the contract, specifically, Section 11, Bull McWood, Inc. gave the required notice of sale to Chef’s Fried Chicken, Inc. of the offer by Bisbano’s, Inc. The Court must give effect to the intent of the parties. LSA-C.C. Art. 1945. Moreover, any doubt as to the meaning of Section 11 must be resolved against Chef's, Inc., which wrote the contract. La.C.C. Art. 1957. Thus, it appears that Bull McWood, Inc. complied with Section 11.

Chef’s Inc. argues that Bisbano’s, Inc. and Bull McWood, Inc. were mere alter ego creations of William B. Bull, and that the offer to purchase Chef’s No. 2 from Bull McWood, Inc. by Bisbano’s, Inc. was a sham transaction designed to defraud Chef’s, Inc., and allow Farmer John’s, Ltd., Chef’s, Ine.’s competitor, to acquire Chef’s No. 2. This argument is unconvincing. It is noted that the offer to purchase, of which Chef’s, Inc. was notified by Bull McWood, Inc. on November 14, 1980, clearly shows that Charles Bull was the attorney for both Bull McWood, Inc., and Bisba-no’s Inc. Thus, Chef’s Inc. should have suspected that the two corporations were owned by the same persons, at least in part, since the same attorney represented both the potential buyer and seller. See Code of Professional Responsibility DR 5-105. This, at the least, should have prompted further investigation by Chef’s.

Thus, Chef’s, Inc. cannot be heard to complain that they had no knowledge that Bull McWood, Inc. and Bisbano’s, Inc. were related. In fact, the two corporations did share a common officer and shareholder (William B. Bull). It is well settled that a corporation is a distinct legal entity from those persons who compose it. La.C.C. Art. 435, 436 and 437; Cahn Elec. Appliance Co. v. Harper, 430 So.2d 143 (La.App. 2d Cir.1983); Hight Enterprises, Inc. v. Smith and Johnson, Inc., 421 So.2d 267 (La.App. 4th Cir.1982), writ denied, 427 So.2d 1206 (La.1983). Moreover, the corporate identity is to be disregarded only in exceptional circumstances, such as fraud or deceit. Cahn Elec. Appliance Co. v. Harper, supra. See also American Bank of Welch v. Smith Aviation, Inc. 433 So.2d 750 (La.App. 3d Cir.1983).

In conclusion, it appears that Bull McWood, Inc. complied with Section 11 of the contract by giving the plaintiff-appellant, Chef’s, Inc., the required notice of the offer to purchase made by Bisbano’s, Inc. Chef’s thus had ample opportunity to exercise its option to purchase the business, which it chose not to do. Thus, Chef’s had no basis to complain of the sale to Bisba-no’s, Inc. and the subsequent sale to Farmer John’s, Ltd. Chef’s, Inc.’s general allegations of deceit on the part of Bull McWood, Inc., are insufficient to justify treating the sale from Bull McWood, Inc. to Bisbano’s, Inc. as a sham or fraudulent sale. There was no mention in the contract of a minimum time period which the purchaser who bought from the franchiser must operate the business before selling or transferring their interest to Chef’s competitor or any other buyer. Once Chef’s failed to exercise its option, it could not prevent any eventual sale or transfer to a competitor, as this was not provided for in the contract. It is a rule so elementary in law that no citation is required that a person (or corporation) may sell what he owns at any time. In the absence of proof of fraud or deceit on the part of Bull McWood, Inc. in selling the business to Bisbano’s, Inc., Chef’s, Inc. had no recourse upon its failure to exercise its option. An examination of the record convinces us that the trial court did not commit manifest error when it found that the plaintiff-appellant failed to prove a breach of contract. It is equally clear from the record that the plaintiff-appellant has failed to carry its burden of proving any fraud or deceit sufficient to disregard any corporate entity.

Section 14 of the franchise contract provides:

“Attorney’s fees — In the event that any claim hereunder has to be turned over to an attorney-at-law for the taking of action in relation to this agreement, the unsuccessful party in such action shall pay to the successful party, in addition to all of the sums that either party may be called on to pay, a reasonable sum for the successful party’s attorney’s fee.”

After a review of the record, we have determined that the award granted to defendant by the trial court is sufficient as to those services rendered in the court below; no abuse of the trial court’s discretion is apparent. For services rendered in handling this appeal, the defendant’s attorney is awarded $550.

For the reasons assigned, the judgment of the trial court is hereby amended to include an additional award of $550 for attorney’s fees. In all other respects, the judgment is affirmed. The cost of this appeal is assessed to the plaintiff-appellant.

AMENDED AND AFFIRMED.


author: CULPEPPER, Judge Pro Tem.

text:
    A.J. DECUIR, Plaintiff-Appellant, v. SAM BROUSSARD, INC., et al., Defendants-Appellees.
    No. 84-11.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.

      Mouton, Roy, Carmouche, Bivins, Judice & Henke, Frank W. Dawkins, Lafayette, for plaintiff-appellant.
    Roy, Forrest & Lopresto, Alex A. Lo-presto, III, New Iberia, for defendants-ap-pellees.
    Before FORET, CUTRER, JJ„ and CUL-PEPPER, J. Pro Tern.
   CULPEPPER, Judge Pro Tem.

Plaintiff, A.J. Deeuir, brought this action against Sam Broussard, Inc. for damages due to faulty repairs and negligence in towing. Sam Broussard, Inc. (Broussard) reconvened for the amount owed on a promissory note signed by Deeuir. The trial court entered judgment for Sam Broussard, Inc. in the amount of $3,672.30. Deeuir appeals.

In mid-1978 Deeuir acquired a Kenworth tractor powered by a Cummins 350 diesel engine with 89,000 miles on it. In September of 1979 he brought the truck to Brous-sard to repair a leaking head gasket. Broussard’s mechanic used an impact wrench rather than torque wrench to tighten the bolts into the head and thereby cracked the head. He also used an oversized bolt which further cracked the head. He did not properly reset the push tubes in the engine. When Deeuir left the shop he immediately picked up a load and departed for California. The improper workmanship caused the truck to run poorly. He stopped in Houston and phoned Mike Zaun-brecher, Broussard’s service manager, who found mechanics in Houston to make temporary repairs on the engine. The repairs cost Deeuir $700. He was advised by the mechanics to return his truck to Brous-sard’s shop for an overhaul to correct completely and properly all damage when he returned from California. Deeuir lost his return load from California because of the delay.

Upon his return, plaintiff returned his tractor to Broussard and asked that his engine be overhauled. Mike Zaunbrecher, the service manager, declined but did offer to replace the “rocker box” and do a complete brake job on the vehicle, at no cost to plaintiff, to compensate plaintiff for what he paid for the repairs in Houston. Plaintiff agreed and the work was done.

Deeuir noticed a tapping sound in the engine after these repairs were done. He reported this to Zaunbrecher. Zaunbrecher stated that he could not hear the tapping but admitted that it might show up only under heavy load conditions. Because his shop was busy he told Deeuir he could not look into the problem but to keep running the truck until they could get to it. Deeuir later had Broussard replace the turbocharger on his truck. Zaunbrecher again told him to keep running the truck.

At the end of October, 1979, the engine blew up while Deeuir was operating his truck in Mississippi. The trial court found that this failure of the engine was caused by improper work done to the push tubes and valves by the Broussard mechanic when the rocker box was replaced and by failure to cheek and adjust the valves.

Plaintiff called defendant’s service manager when he broke down, and Zaunbrecher dispatched a wrecker to get the truck. The wrecker driver damaged Decuir’s tractor while loading it on the wrecker.

Broussard tried to locate a rebuilt engine for Deeuir but was unsuccessful. The service manager and parts manager then suggested that in order to get plaintiff on the road as quickly as possible they would obtain a new engine and sell it to Deeuir at defendant’s cost. They would then make a warranty claim against the engine manufacturer for the damage to the engine and afford him credit for whatever amount the manufacturer allotted against the cost of a new engine. They further assured plaintiff that this would bring the cost of a new engine to somewhere between $4,000 and $5,000. Since without his truck Decuir could not do business and could not earn any income, he agreed.

A new Cummins 400 diesel engine was obtained and installed, and in early November Decuir was presented with a bill for $17,073.09, which included $14,500 for the new engine. Defendant’s cost for the engine was $12,011. Decuir was required to pay $2,100 to defendant before he could take his tractor out of the shop.

In January Decuir brought his truck to Broussard’s shop for repair of the damage caused by the wrecker when the truck was towed in from Mississippi. These repairs were inadequately made and Decuir later had to have them redone elsewhere. In order to take his truck out of the shop, Decuir was forced to sign a promissory note for $15,869.77, although he denied he owed that much. He later made two $500 payments and one $300 payment.

The defendant’s shop had incorrectly wired the new engine when installing it. Plaintiff was inconvenienced in his work and lost revenue for two months until another mechanic correctly wired the engine. The engine was correctly wired by the new mechanic and has given no trouble since. In the meantime batteries and an alternator were ruined as a result of the electrical problems.

At some time Decuir was given credit for $4,588 as the warranty refund from Cum-mins.

Decuir filed suit against Sam Broussard, Inc., Cummins Engine Company, Inc., and Cummins Sales and Service, Inc., seeking damages for faulty repair, for the engine blowout, for repairs needed as the result of negligent towing and wiring of the new engine, for lost profits, and for loss of use, inconvenience and mental anguish. Cum-mins Engine Company, Inc. and Cummins Sales and Service, Inc. were dismissed from the case before trial. Sam Broussard, Inc. filed a reconventional demand seeking to recover on the note signed by Decuir.

The trial court held that the plaintiff could not recover for nonpecuniary damages for mental anguish and inconvenience. It held that Decuir did not prove his loss of earnings to a legal certainty. It found partial failure of consideration sufficient to vitiate the note signed by Decuir, or alternatively, that the note was invalid due to threats and duress. It then held that, “Justice between these parties requires that plaintiff be charged defendant’s cost for the new engine ($12,011.00) and the turbocharger replacement ($661.54), and be given credit for the manufacturer's warranty amount ($4,588.00), the amount he paid for repair to the damage done when his vehicle was returned from Mississippi ($612.24); the amount he paid to repair the faulty electrical work ($400.00); and the several payments he made to defendant ($3,400.00).” This leaves a net due by plaintiff to defendant of $3,672.30.

Decuir appeals from the judgment. He makes several specifications of error in his brief which raise the following issues:
1) Should Sam Broussard, Inc. be liable for the cost of the new engine, subject to credit on the warranty, since Brous-sard caused the old engine to blow up?
2) Did Decuir and Sam Broussard, Inc. enter into either a compromise or an accord and satisfaction which either extinguishes or estops Decuir’s claim for damages?
3) Is Decuir entitled to an award for temporary repairs and lost earnings?
4) Is Decuir entitled to an award for nonpecuniary damages?
5) Should the court have awarded defendant $661.54 for a turbocharger replacement although defendant did not claim this in his reconventional demand?

Decuir’s first argument is that the trial court erred in holding him liable for the $12,011 cost of the new engine for his truck, subject to credit for the $4,588 warranty claim allowed by the manufacturer, since the trial court found that the cause of his old engine blowing up was the negligent repair work done by defendant’s mechanic.

Decuir signed the note on January 30, 1980 covering the $15,869, allegedly owed to Sam Broussard, Inc. We agree with the trial court that there was only a partial failure of consideration for the note. Part of the consideration for the note was the new and larger engine and the turbocharger replacement, which benefited plaintiff. Thus, the note is valid in the amount of $12,672.54, which is the cost of the new engine ($12,011) and the amount charged for the turbocharger replacement ($661.54). However, Decuir got little or no value out of the rest of the items that went to make up the note. All of the remainder of the work done by Broussard on the truck was faulty.

We do not agree with the trial court that the note was vitiated by threats and duress. Broussard had a right to hold the truck until paid for the repairs. LSA-R.S. 9:4501. Telling Decuir that he would do what he had a right to do was not a threat. We realize that Decuir needed his truck to make a living, but the fact that he had to make arrangements to pay what he owed for repairs before he took the truck out of the shop is not the type of threats or duress that will vitiate a contract under LSA-C.C. arts. 1850-1851.

The trial judge correctly found the old engine blowout was caused by improper work done to the push tubes and valves by defendant’s mechanic when the rocker box was replaced and by failure to check and adjust the valves. Every contract for work or services carries an implied obligation on the part of the contractor that he will perform in a good workmanlike manner in default of which he must respond in damages for the losses that may ensue. Hebert v. Pierrotti, 205 So.2d 888 (La.App. 3d Cir.1968), LSA-C.C. 1930. The defendant did not perform the work in a workmanlike manner and is liable to Decuir for any damages caused thereby.

However, plaintiff has the burden of proving any damage suffered by him as a result of breach of contract, Campbell v. Lelong Trust, 327 So.2d 533 (La.App. 2d Cir.1976), writ denied, 331 So.2d 494, 496 (La.1976). We do not believe the plaintiff has sustained the burden of proving his damages from the engine blowout. Roshong v. Travelers Insurance Company, 281 So.2d 785 (La.App. 3d Cir.1973), sets forth three tests which have been used in determining property damage:

1) The cost of restoration, if the damaged object cannot be adequately repaired;
2) The difference in the value of the damaged property preceding and subsequent to the injury;
3) If the value before and after damage cannot be fairly determined or if the cost of repairs exceeds the value of the thing damaged, damages should equal the replacement cost less depreciation.

Decuir did not offer sufficient evidence to prove any of the above tests. Instead he argues that defendant must make him whole by providing him with a new engine. In awarding property damage to a party who has been injured through the legal fault of another, the primary objective is to restore him in as near a fashion as possible to the state in existence at the time immediately preceding the injury. Roshong, supra. Decuir had a Cummins 350 engine with about 150,000 miles on it at the time of replacement. He is only entitled to be restored to the same position. He is not entitled to a new Cummins 400 engine. The new engine puts him in a position better than that which he was in prior to the engine troubles. Decuir would have been entitled to an award for damages to his old engine had he proved them, but he is not entitled to a new engine.

Decuir’s second argument is that the trial court erred in holding, in effect, that Broussard and Decuir entered in either a compromise or accord and satisfaction of any claim he had for negligent breach of defendant’s duty to repair his truck when he agreed to buy the engine for Broussard’s cost.

The agreement was not a compromise since it was not reduced to writing as required by Article 3071 of the Civil Code.

We do not believe the agreement was an accord and satisfaction. There was no evidence that it was intended to be a final settlement of any claims for negligent breach of Broussard’s duty to repair the truck. There was nothing to indicate that this would settle the claims for lost loads, damage done to the truck when towed back from Mississippi, lending out of his trailer, or loss of earnings as a result of the negligence.

Since it was neither a compromise nor an accord and satisfaction, Decuir still had a cause of action for breach of the duty to make repairs in a workmanlike manner.

Decuir next argues that the trial court erred in failing to award certain pecuniary damages.

He contends the court erred in failing to award $700 for temporary repairs in Houston. When he returned from Houston defendant performed a complete brake job. The trial court apparently concluded that this was an accord and satisfaction. We find no error.

The rest of the pecuniary damages he claims are lost earnings. Since these were not proved to a certainty they cannot be recovered. His claims are for gross earnings and do not take expenses into account. He did not prove what he would have cleared. This is shown on his income tax Schedule C, where his profits were a small fraction of his gross income for two years, and for one year his business had a loss. The lost income for his down time was not proved to a certainty. The losses from loads he lost were not proved to a certainty. The $2,800 and $600 he claims for lost loads were gross amounts. He did not prove what he would have after subtracting expenses. He also did not prove the value of lending out his trailer for a month. He did not know what it would rent for.

The trial court did not err in failing to award pecuniary damages for (1) $700 for temporary repairs in Houston; (2) $2,800 for the loss of his return load from California; (3) $600 for the loss of his load in Mississippi when his engine blew up; (4) $1,000 for the loan of his trailer for one month; or (5) $25,500 in lost income due to down time.

Decuir next argues that the trial court erred in failing to award damages for substantial aggravation and inconvenience. These are nonpecuniary damages. The Supreme Court held in Meador v. Toyota of Jefferson, Inc., 332 So.2d 433 (La.1976) that nonpecuniary damages are not recoverable for breach of contract, unless intellectual gratification is the principal cause of the contract. Decuir argues that this is a tort action rather than an action for breach of contract. We disagree. The failure to properly do the work contracted for was a breach of the contract for the services. Decuir then argues that Gele v. Markey, 387 So.2d 1162 (La.1980) can be read as allowing recovery for real and substantial mental anguish if clearly proven. Justice Dennis, in his opinion in Gele stated that there was no real evidence that the plaintiffs derived substantial intellectual enjoyment from the operation of their store. He notes that the Meador decision has been criticized and went on to say that plaintiffs failed to prove that they suffered real, substantial emotional distress or loss of intellectual enjoyment. Leach v. Freeman, 395 So.2d 440 (La.App. 3d Cir.1981), writ denied, 400 So.2d 668 (La.1981), which was decided after Gele, held that nonpecu-niary damages as a result of breach of a contract for the repair of a movable are not recoverable. Decuir cannot recover nonpe-cuniary damages for inconvenience, mental distress, and substantial aggravation.

In his final argument, Decuir contends the trial court erred in awarding Broussard $661.54 for a turbocharger replacement since the reconventional demand was on a note and this claim was not plead. This contention lacks merit. Since we found above that the part of the note covering the turbocharger replacement was valid, Broussard can recover on the note rather than on a quantum meruit basis. Brous-sard is entitled to the $661.54, and we uphold the trial court’s award of this amount.

The judgment of the trial court is affirmed and costs are assessed to the plaintiff-appellant.

AFFIRMED.


author: FORET, Judge.

text:
    GIN SAW FILING & MAINTENANCE, INC., Plaintiff-Defendant-in-Reconvention-Appellant, v. PRODUCERS MUTUAL GIN COMPANY, INC., Defendant-Plaintiff-in-Reconvention-Appellee.
    No. 84-16.
    Court of Appeal of Louisiana, Third Circuit.
    Dec. 12, 1984.
    Dan B. McKay, Jr., Bunkie, for plaintiff-defendant-in-reconvention-appellant.
    Trimble, Percy, Smith, Wilson, Foote & Walker, John B. Honeycutt, Jr., Alexan-dría, for defendant-plaintiff-in-reconvention-appellee.
    Before FORET, CUTRER and CULPEP-PER , JJ.

       Judge William A. Culpepper, Retired, Judge Ad Hoc.

   FORET, Judge.

Plaintiff, Gin Saw Filing & Maintenance, Inc., filed suit to recover money allegedly due for services rendered to defendant, Producers Mutual Gin Company, Inc. Defendant answered, claiming that it owed nothing to plaintiff since the services for which plaintiff claimed payment were required due to plaintiffs faulty workmanship in an earlier job. Defendant also reconvened, seeking to recover damages allegedly suffered as a result of plaintiffs faulty workmanship. The trial court rendered judgment against plaintiff on its main demand finding that plaintiffs workmanship on the initial job was faulty. However, the court rejected defendant’s re-conventional demand, finding that defendant had not proven that any damages he had suffered, other than that repaired by plaintiff, were due to plaintiffs faulty workmanship. Plaintiff appealed the ruling of the trial court and defendant answered plaintiff’s appeal.

The two issues raised by this appeal are:
(1) Whether the trial court was clearly wrong in its determination that plaintiff’s failure to perform the initial work in a workmanlike manner was the cause of the damage to one of defendant’s gin stands.
(2) Whether the trial court erred in finding that defendant had failed to prove that the damages it sought compensation for in its reconventional demand were the result of plaintiff’s faulty workmanship.

FACTS

Defendant, Producers Mutual Gin Company, Inc., is a cotton ginning company and plaintiff, Gin Saw Filing & Maintenance, Inc., is in the business of providing repair and maintenance services to such companies. In February, 1981, defendant contacted plaintiff and asked plaintiff to recondition its three gin stands. Soon thereafter, plaintiff sent its repairman to defendant’s place of business. The work was done and defendant paid plaintiff in full.

In September of 1981, at the beginning of grinding season, plaintiffs repairman returned to defendant’s place of business and cleaned rust pivots off of the “ribs” of the three stands. The three gin stands were then placed into operation. Almost from the start, however, one gin stand (No. 2) began giving trouble. This stand was clogging up with the cotton put into it and, as a result, it had to be periodically stopped and cleaned out. This clogging or “choking” as it is called in the trade, continued until it caused a fire at the end of September, 1981. Plaintiff was contacted and it sent repairmen to defendant’s place of operations on October 1, 3, and 5, to remedy the problem. On October 1st, plaintiff’s repairmen changed three saw blades. On October 3rd and 5th, some of the “ribs” of stand # 2 were changed. After October 5th, stand #2 operated without any further trouble for the rest of the season.

In April of 1981, not long after plaintiff had reconditioned defendant’s gin stands, William H. O’Bryant had inspected the “ribs” of the stands. Mr. O’Bryant had been performing some other work for defendant and defendant’s employees had requested that he examine the “ribs” of the reconditioned stands and give them his opinion of the reconditioning job. Mr. O’Bryant manages a cotton gin and has a cotton gin and installation service. At trial, Mr. O’Bryant, testifying as an expert witness for defendant, stated that his inspection revealed that plaintiff’s repairmen had done a substandard job of filing down the “ribs”. He testified that when he inspected the “ribs” in April, he found a number of “burrs” (protuberances) on the “ribs” which were large enough to cause “choking”.

In October of 1981, gin stand # 1 also started giving defendant problems. Tarver Saw and Gin Repair, a Greensville, Mississippi company, was called by defendant to repair stand # 1. in gin stand # 1. Tarver changed the saws

PLAINTIFF’S MAIN DEMAND

Plaintiff contends that the trial court was clearly wrong in concluding that plaintiff had not performed in a workmanlike manner-when it reconditioned defendant’s gin stand, and that plaintiff’s faulty workmanship was the cause of the fire and resulting damage that occurred at the end of September.

An appellate court will not disturb the factual determination of a trial court unless they are clearly wrong. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978); Canter v. Koehring Company, 283 So.2d 716 (La.1973). In the present case, we think that the evidence supports the trial court’s determination that the fire and resulting damage were caused by plaintiff’s faulty workmanship in reconditioning gin stand # 2. We take the liberty of quoting from the trial court’s written reasons for judgment: “This Court holds that Gin Saw [defendant] failed to properly file down the ribs on gin stand # 2. The green cotton which Gin Saw claims caused the choking was being placed in all three gin stands. However, only gin stand # 2 suffered the severe choking described above. If green cotton was the cause of the choking, all three of the gin stands would have been affected. On the other hand, Gin Saw could have easily filed down the ribs on gin stand # 1 and gin stand # 3 sufficiently, but failed to sufficiently file down the ribs on gin stand # 2. As stated above, such a failure would have resulted in the type of choking that occurred. Therefore, the choking was most likely due to Gin Saw’s failure to file down the ribs.”

Additionally, the testimony of Mr. O’Bryant supports the trial court’s decision. As stated above, Mr. O’Bryant testified that in April of 1981, he inspected the reconditioned stand and found that the “ribs” had not been filed sufficiently and that “burrs” capable of producing “chokes” were present. The court’s conclusion, that these “burrs” caused the “chokes” in stand #2 and eventually the fire, was fully supported by the evidence.

When plaintiff undertook the reconditioning of defendant’s gin stands, it impliedly agreed to do the work in a workmanlike manner. By failing to properly recondition the “ribs” of the gin’s stand, plaintiff breached its obligation to perform the reconditioning in a workmanlike manner. It follows that plaintiff is liable for all damages that resulted from its failure. LSAC.C. Arts. 1930, 2769; Tiger Well Service v. Kimball Production Company, 343 So.2d 1153 (La.App. 3 Cir.1977). Defendant’s stand # 2 was damaged as a result of plaintiff’s faulty workmanship. Plaintiff was obligated to defendant for this loss and is not entitled to payment for the repairs it made to rectify the damage.

RECONVENTIONAL DEMAND

Defendant reconvened, asking for damages it claimed were due to plaintiff’s failure to properly recondition the gin stands. The first two items of damages claimed by defendant consist of losses which defendant claims it suffered as a result of its inability to operate gin stand # 2 on October 1, 3 and 5. The last item of damages consists of the money that defendant paid to Tarver Saw and Gin Repair for changing the saws on gin stand # 1 in October of 1981.

Defendant claims that, as a result of the fire and damage to gin stand # 2, it was only able to operate at two-thirds of capacity for most of October 1, 3 and 5. It alleges that, nevertheless, its utility bills and labor costs were the same as if it had been operating at full capacity. As a result, defendant claims it is entitled to recover one-third of its utility and labor costs incurred during the time that stand #2 was inoperable. As to these items of damage, the trial court found that defendant had failed to carry its burden of proof. We concur in this conclusion and again quote from the trial court’s written reasons for judgment:

“The only thing proven by Producers was that gin stand # 2 was shut down on October 1, 3 and 5, 1981. It was not shown that Producers lost any business or failed to gin as many bails of cotton as a result of gin stand # 2’s being shut down. For all this Court knows, Producers lost nothing during the three days gin stand # 2 was shut down.”

The other item of damage claimed by defendant is the money it paid Tarver Saw and Gin Repair to change the saws on gin stand # 2. Once again, the trial court found that defendant had failed to carry its burden of proof. We agree.

Although defendant introduced evidence to show that the “ribs” of the gin stands had not been properly reconditioned, defendant introduced no evidence with regard to the gin stands’ saws. The mere fact that stand # 1 broke down shortly after stand #2 is insufficient to support liability. Plaintiff cannot be cast in damages for breach of his implied obligation to perform in a workmanlike manner unless it is established that plaintiffs faulty workmanship was the cause of defendant’s damage. Tiger Well Service v. Kimball Production Company, supra. Defendant did not do this and, therefore, cannot recover for this item of damages.

DECREE

For the foregoing reasons, the judgment of the trial court is affirmed. All costs of this appeal are assessed against Gin Saw Filing & Maintenance, Inc.

AFFIRMED.