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Guthrie v. Rudy Brown Builders, Inc.

Louisiana Court of Appeal
416 So. 2d 590 (1982)
ELI5:

Rule of Law:

Under Louisiana law, a homebuyer's claim against a builder-vendor for an encroachment resulting from a surveying error is properly characterized as a breach of warranty against eviction, not redhibition. Consequently, attorney's fees are not recoverable, and damages for mental anguish are also precluded because the primary object of a contract for a house is physical gratification, not intellectual enjoyment.


Facts:

  • In May 1977, Rudy Brown Builders, Inc. built and sold a house and lot to Mr. and Mrs. Ralph Ragusa, using a survey prepared by Don Garland.
  • Shortly after, in June 1977, Mr. Ragusa constructed a fence on his property according to the Garland survey, despite noticing a discrepancy between the survey and stakes on the property which he reported to Rudy Brown Builders, Inc.
  • In October 1977, Rudy Brown Builders, Inc. sold the adjacent house and lot to Mr. and Mrs. Joseph M. Guthrie, Jr., using a second survey also prepared by Garland.
  • After their purchase, the Guthries discovered that the Ragusa's fence and a house gutter encroached upon their property.
  • It was determined that Rudy Brown Builders, Inc. had incorrectly placed the Ragusa house on its lot, causing it to violate parish ordinances and subdivision covenants, an error not reflected on either of Garland's surveys.
  • The trial court found that Rudy Brown, president of the building company, had no knowledge of the survey error before the sale to the Guthries.

Procedural Posture:

  • Sharon and Joseph Guthrie sued Mr. and Mrs. Ralph Ragusa in a Louisiana trial court, seeking an injunction against the occupation of the Ragusa residence and the removal of an encroaching fence.
  • The trial court granted a preliminary injunction.
  • The Guthries filed a 'Petition for Damages' against the Ragusas, Rudy Brown Builders, Inc. (builder-vendor), and Don Garland (surveyor).
  • The Ragusas filed a third-party demand against Rudy Brown Builders, Inc. and Don Garland.
  • Rudy Brown Builders, Inc. filed its own third-party demand against the Ragusas and Don Garland.
  • Prior to trial, the parties stipulated that Rudy Brown Builders, Inc. would pay to purchase a portion of the Guthries' land on behalf of the Ragusas to cure the encroachment and cover the costs of the property resubdivision.
  • The trial court held a trial on the remaining issues of damages, awarding monetary sums to the Guthries and Ragusas against Rudy Brown Builders but denying their claims for attorney's fees and mental anguish.
  • The Guthries and Ragusas (appellants) appealed the trial court's denial of attorney's fees and mental anguish damages to the Court of Appeal of Louisiana, Fifth Circuit.

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Issue:

Are homeowners entitled to recover damages for mental anguish and attorney's fees from their builder-vendor when a surveying error, unknown to the vendor, causes the placement of their house and fence to encroach upon an adjacent property?


Opinions:

Majority - Grisbaum, J.

No. Homeowners are not entitled to recover damages for mental anguish or attorney's fees because such claims are properly considered actions for breach of warranty against eviction, not redhibition. The court recharacterized the homeowners' claims, reasoning that an encroachment by a neighbor (for the Guthries) or exposure to suit due to the vendor's act of misplacing the house (for the Ragusas) constitutes a disturbance of peaceful possession, which is the essence of an eviction claim. Under Louisiana Civil Code articles governing eviction, attorney's fees are not recoverable. Furthermore, damages for mental anguish are unavailable because the primary object of a contract to purchase a home is for physical utility and shelter ('physical gratification'), not 'intellectual enjoyment' as required for nonpecuniary damages under the standard set in Meador v. Toyota of Jefferson, Inc.



Analysis:

This decision significantly clarifies the legal remedy available for property encroachments resulting from a builder-vendor's error in Louisiana. By classifying the issue as a breach of warranty against eviction rather than a redhibitory defect, the court effectively forecloses the recovery of attorney's fees, which are often available in redhibition cases where the seller is a manufacturer presumed to have knowledge of the defect. This ruling also reinforces the high threshold for recovering mental anguish damages in contract law, affirming that standard commercial transactions, like buying a house for shelter, do not meet the 'intellectual enjoyment' test. The case serves as a key precedent for limiting the scope of damages available to homebuyers in disputes over property boundaries and encroachments.

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