Robert Frank Palermo v. Century Indemnity Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

17-825
C/W 17-1182

ROBERT FRANK PALERMO
VERSUS

CENTURY INDEMNITY COMPANY, ET AL.

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2015-143
HONORABLE RONALD F. WARE, DISTRICT JUDGE

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VAN H. KYZAR
JUDGE

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Court composed of Phyllis M. Keaty, John E. Conery, and Van H. Kyzar, Judges.

REVERSED AND REMANDED.

Paul J. Politz

Paula M. Wellons

D. Ashbrooke Tullis

Taylor, Wellons, Politz & Duhe, APLC

1515 Poydras Street, Suite 1900

New Orleans, LA 70112

(504) 525-9888

COUNSEL FOR DEFENDANT/THIRD PARTY PLAINTIFF/APPELLANT:
Certain Underwriters at Lloyd’s, London

Tyson B. Shofstahi

Leslie M. Henry

Louis P. LaCour

Adams & Reese, LLP

701 Poydras Street, Suite 4500

New Orleans, LA 70139

(504) 581-3234

COUNSEL FOR DEFENDANTS/APPELLEES:
ConocoPhillips Company
Hartford Accident and Indemnity Company

Benjamin J. Guilbeau
John J. Simpson
Stockwell, Sievert, Viccellio, Clements, & Shaddock, L.L.P.
P. O. Box 2900
Lake Charles, LA 70602
(337) 436-9491
COUNSEL FOR DEFENDANTS/APPELLEES:
PPG Industries, Inc.
Hartford Accident and Indemnity Company

James M. Garner

Martha Y. Curtis

Amanda R. Schenck

Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC

909 Poydras Street, Suite 2800

New Orleans, LA 70112

(3504) 299-2100

COUNSEL FOR DEFENDANT/APPELLEE:
Century Indemnity Company

Michael D. Lonegrass

Rodger G. Green, Jr.

Galloway, Johnson, Tompkins, Burr & Smith

701 Poydras Street, Suite 4040

New Orleans, LA 70139

(504) 525-6802

COUNSEL FOR DEFENDANT/APPELLEE:
Crown, Cork & Seal Company

Jeffrey T. Gaughan

Wells T. Watson

Baggett, McCall, Burgess, Watson & Gaughan

P. O. Drawer 7820

Lake Charles, LA 70605-7820

(337) 478-8888

COUNSEL FOR PLAINTIFFS/APPELLEES:
Robert Frank Palermo
Roberta Palermo

Lauren D. Brossette

Kenneth R. Spears

Claudia Gary

Spears & Gary, LLC

One Lakeshore Drive, Suite 900

Lake Charles, LA 70629

(337) 513-4333

COUNSEL FOR DEFENDANT/APPELLEE:
CanadianOxy Offshore ProductionCompany

Katherine O’ Hannan

Joseph P. Guichet

Lugenbuhl, Wheaton, Peck, Rankin & Hubbard

601 Poydras Street, Suite 2775

New Orleans, LA 70130

(504) 568-1990

COUNSEL FOR DEFENDANT/APPELLEE:
Travelers Indemnity Company

Mary Arthur

Forman Watkins Krutz

701 Poydras Street, Suite 4350

New Orleans, La 70139-6001

(504) 799-4383

COUNSEL FOR DEFENDANT/APPELLEE:
Owens-Illinois, Inc.

KYZAR, Judge.

Certain Underwriters at Lloyd’s, London (“Certain Underwriters”) appeals
the granting of peremptory exceptions of res judicata dismissing its third-party
demands against ConocoPhillips Company (“ConocoPhillips”), PPG Industries,
Inc. (“PPG”), Hartford Accident and Indemnity Company (“Hartford”) as the
alleged insurer of ConocoPhillips and PPG, Century Indemnity Company
(“Century”) as the alleged insurer of PPG and certain PPG Industries, Inc.
executive officers, Travelers Casualty and Surety Company and Travelers
Indemnity Company (collectively “Travelers”)! as the alleged insurer of PPG and
certain PPG Industries, Inc. executive officers, and Crown, Cork & Seal Company,
Inc. (“CCS”), all collectively referred to as Appellees. For the reasons herein, we
reverse the decisions of the trial court.

FACTS AND PROCEDURAL HISTORY

On January 9, 2015, Plaintiffs, Robert Palermo and his wife Roberta
Palermo, initiated a personal injury action against CanadianOxy Offshore
Production Company (“CanadianOxy”) and its insurers, including Appellant,
Certain Underwriters, seeking damages for injuries allegedly sustained by Robert
Palermo resulting from his purported occupational exposure to asbestos-containing
materials. Certain Underwriters thereafter filed an Answer and Affirmative
Defenses to Plaintiffs’ Original Petition and filed Third-Party Demands, asserting
incidental actions seeking contribution against several entities, including
ConocoPhillips, PPG, Hartford as the alleged insurer of ConocoPhillips and PPG,
Century as the alleged insurer of PPG and certain PPG officers, CCS, and

Travelers as the alleged insurer of PPG and certain PPG officers. ConocoPhillips

' Travelers was not originally an appellee in the instant suit. However, following a
second appeal filed by Certain Underwriters based on the granting of Travelers’ exception of res
judicata by the trial court, the two matters were consolidated.

and Hartford filed exceptions of improper service of process, insufficiency of
citation, and lack of jurisdiction. The trial court sustained the exceptions and set a
deadline for Certain Underwriters to re-cite and re-serve the third-party defendants.
After Certain Underwriters failed to re-serve the parties within the time specified
by the trial court’s order, it ordered the dismissal of the Third-Party Demands
without prejudice, pursuant to La.Code Civ.P. art. 932(B), on March 30, 2016.
The trial court executed a written judgment to that effect on April 21, 2016.

Meanwhile, on April 14, 2016, Certain Underwriters filed a Motion and
Order for Leave to File First Supplemental Third-Party Demand. Leave was
granted by the trial court on April 18, 2016, though Certain Underwriters’ third-
party demand had been dismissed. The amended petition to the dismissed third-
party action was then cited and served on Appellees herein. Appellees
subsequently filed numerous exceptions to the service of the dismissed action. On
June 30, 2016, the trial court held a hearing and found that no third-party action
was pending in light of the April 21, 2016 judgment of dismissal, thereby
maintaining the exceptions. On August 30, 2016, the trial court executed a written
judgment submitted by the parties, dismissing without prejudice the re-cited and
re-served third-party actions.

On September 22, 2016, Certain Underwriters filed another third-party
demand naming Appellees, among others. On February 3, 2017, the trial court
held a hearing on the various Peremptory, Declinatory and Dilatory Exceptions to
the September 22, 2016 Third-Party Demand filed by ConocoPhillips, Hartford,
and PPG, including an Exception of Res Judicata. All other Appellees joined in
the exceptions, except Travelers who filed separate exceptions to the demand but

did not assert res judicata at that time. The trial court maintained Appellees’

Peremptory Exception of Res Judicata, finding that La.R.S. 13:4231, et seq., barred
Certain Underwriters from filing another third-party demand in the same
proceeding, as the court had previously entered a final judgment dismissing
Certain Underwriters’ third-party action without prejudice. Thereafter, on April
11, 2017, the trial court entered a written judgment dismissing Certain
Underwriters’ September 22, 2016 third-party demands against Appellees, not
including Travelers, without prejudice. Certain Underwriters appealed the granting
of the exception to this court in docket number 17-825.

Following this decree from the trial court, Travelers filed a separate
exception of res judicata, which was heard on June 22, 2017. On July 28, 2017,
the trial court signed a written judgment granting Travelers’ exception of res
judicata, predicated on the same grounds as its April 11, 2017 ruling, and
dismissing Certain Underwriters’ third-party demands without prejudice. Certain
Underwriters appealed the trial court’s judgment, maintaining Travelers’ res
judicata exception, in docket number 17-1182. This court then consolidated 17-
825 and 17-1182 on January 22, 2018, pursuant to an unopposed motion filed by
Certain Underwriters.

On appeal, Certain Underwriters asserts that the tria] court erred in granting
Appellees’ exceptions of res judicata as to the re-filed September 22, 2016 Third-
Party Demand.

OPINION

The issue before us is whether the trial court erred when it maintained the
exceptions of res judicata filed by Appellees, ConocoPhillips, PPG, Hartford,
Century, Travelers, and CCS, in response to Certain Underwriters’ September 22,

2016 third-party demand. When an exception of res judicata is raised before the

case is submitted and evidence is received on the exception, the standard of review
on appeal is traditionally manifest error. Leray v. Nissan Motor Corp. in U.S.A.,
05-2051 (La.App. 1 Cir. 11/3/06), 950 So.2d 707. “However, ‘[t]he res judicata
effect of a prior judgment is a question of iaw that is reviewed de novo.’”
Fogleman v. Meaux Surface Prot., Inc., 10-1210, p. 2 (La.App. 3 Cir. 3/9/11), 58
So.3d 1057, 1059, writ denied, 11-712 (La. 5/27/11), 63 So.3d 995 (quoting
Morales v. Parish of Jefferson, 10-273, p. 6 (La.App. 5 Cir. 11/9/10), 54 So.3d
669, 672). The question presented here is the res judicata effect of the previous
judgment of the trial court, dismissing without prejudice Appellant’s third-party
demands against Appellees. Accordingly, we conduct a de novo review to
determine whether the trial court was legally correct in sustaining the exceptions of
res judicata in favor of Appellees.

The purpose of the exception of res judicata is to bar the re-iitigation of a
subject matter arising from the same transaction or occurrence as that of a previous
suit. Ave. Plaza, L.L.C. v. Falgoust, 96-173 (La. 7/2/96), 676 So.2d 1077; La.R.S.
13:4231. It promotes judicial efficiency and a final resolution of disputes.
Terrebonne Fuel & Lube, Inc. v. Placid Ref. Co., 95-654, 95-671 (La. 1/16/96),
666 So.2d 624. “On the trial of the peremptory exception raising the objection of
res judicata, the burden of proving the facts essential to sustaining the objection is
on the party pleading the objection.” Union Planters Bank v. Commercial Capital
Holding Corp., 04-871, p. 3 (La.App. | Cir. 3/24/05), 907 So.2d 129, 130. If any
doubt exists as to its application, the exception raising the objection of res judicata
must be overruled and the second lawsuit maintained. Denkmann Assocs. v. IP
Timberlands Operating Co., Lid., 96-2209 (La.App. 1 Cir. 2/20/98), 710 So.2d

1091, writ denied, 98-1398 (La. 7/2/98), 724 So.2d 738. The concept should be

rejected when doubt exists as to whether a [party’s] substantive rights actually
have been previously addressed and [whether those rights have been] finally
resolved.” Patin v. Patin, 00-969, p. 5 (La.App. 1 Cir. 6/22/01), 808 So.2d 673,
676 (emphasis added).

With the 1990 amendment to the res judicata statute, however, the
chief inquiry is whether the second action asserts a cause of action
which arises out of the transaction or occurrence that was the subject
matter of the first action. Avenue Plaza at p. 6, 676 So.2d at 1080.
See also La.R.S.13:4231 cmt. a (1990). While this is the central
inquiry under the current statute, it is not the only inquiry. A reading
of La.R.S. 13:4231 reveals that a second action is precluded when all
of the following are satisfied: (1) the judgment is valid; (2) the
judgment is final; (3) the parties are the same; (4) the cause or causes
of action asserted in the second suit existed at the time of final
judgment in the first litigation; and (5) the cause or causes of action
asserted in the second suit arose out of the transaction or occurrence
that was the subject matter of the first litigation.

Burguieres v. Pollingue, 02-1385, pp. 7-8 (La. 2/25/03), 843 So.2d 1049, 1053.

The trial court and Appellees relied on the holding in Johnson v. University
Medical Center in Lafayette, 13-40 (La. 3/15/13), 109 So.3d 347, for the
proposition that the dismissal of the third-party demands of Certain Underwriters,
without prejudice and designated as a final judgment, has res judicata effect
barring the refiling of the demands. In Johnson, the court stated:

Louisiana Code of Civil Procedure Article 1673 provides, in
pertinent part: “A judgment of dismissal without prejudice shall not
constitute a bar to another suit on the same cause of action.”
(Emphasis added.) When an action has been dismissed by final
judgment, that action is at an end, and a plaintiff cannot thereafter
assert new allegations or demands in that proceeding; the plaintiff's
remedy is to file a new and separate suit. See Hayes v. Muller, 248
La. 934, 183 So.2d 310 (La.1966). The dismissal of the plaintiff's
suit, as instituted by her March 16, 2006 petition, was fully and finally
dismissed, without prejudice, pursuant to LSA-R.S. 13:5107(D), by
this court’s November 21, 2007 judgment, rendered in Johnson v.
University Medical Center in Lafayette, [07-1683 (La. 11/21/07), 968
So.2d 724]. That judgment of dismissal is now res judicata, which
can be noticed by either the trial or an appellate court on its own
motion. See LSA-C.C.P. art. 927.

Accordingly, we grant the application for certiorari in this case,

and we conclude that any further allegations or demands are now

barred in this suit.
Id. at 349.

We find that the trial court in this case misconstrued the holding in Johnson.
In Johnson, the plaintiff filed suit against State entities in ‘a medical malpractice
action. The trial court dismissed the case without prejudice. Plaintiff, after the
supreme court upheld the dismissal of the suit in 2007 in Johnson v. University
Medical Center in Lafayette, 07-1683 (La. 11/21/07), 968 So.2d 724, had the same
defendants re-served within the same lawsuit in an attempt to continue pursuing
the claim. The supreme court correctly noted that the plaintiff's main demand had
been dismissed, that the dismissal was final, and that the case could not be
resurrected thereafter within that same proceeding. Thus, the supreme court
recognized the exception of res judicata on its own motion, as authorized by
La.Code Civ.P. art. 927(B). See Johnson, 190 So.3d 347. The optimum language,
overlooked by the trial court and Appellees in argument herein, is the supreme
court’s conclusion that the re-filing of the claim is barred “in this suit.” It goes
without saying that once the main demand has been dismissed, there is no suit in
which to refile a new claim. It must be done by the filing of a new suit. That is not
the situation presented here.

The instant cases differ dramatically from the facts reviewed in Johnson.
Here, the main demand of the plaintiffs is still pending. The initial attempt at the
filing of the incidental third-party demands was dismissed, but the dismissal was
without prejudice, based on procedural grounds as opposed to substantive ones.
Clearly, as acknowledged by the third-party defendants and Appellees herein,

Certain Underwriters could file its claims in a separate, new lawsuit. “It is

elementary, however, that an exception of Res Judicata (the authority of the thing
adjudged) must be predicated upon a final judgment.” McCoy v. Tangipahoa
Parish Sch. Bd., 308 So.2d 382, 384 (La.App. | Cir.), writ denied, 310 So.2d 856
(La.1975). “A judgment that determines the merits in whole or in part is a final
judgment.” La.Code Civ.P. art. 1841. The main demand of the plaintiff was not
dismissed as a final judgment in these suits. The judgment of dismissal of the
third-party demands did not even begin to determine the merits of the claims set
forth in the third-party demands. The dismissal was based solely on procedural
grounds. It is clear Certain Underwriters’ substantive rights were not addressed.
Patin, 808 So.2d 673. The incidental third-party demands are still viable, are not
prescribed, and have not otherwise been substantively resolved. That being the
case, there is no legal impediment to the re-filing of the third-party demands in the
still pending main demand of the plaintiffs herein.

Appellees assert that because the judgment dismissing the original third-
party demands was designated a “final judgment,” the subsequent re-filing of the
third-party demands within the instant suit should not be allowed. This designation
is not, however, the sine qua non.

“A final judgment is appealable in all cases in which appeals
are given by law, whether rendered after hearing, by default, or by

reformation under Article 1814.” La. C.C.P. ART. 2083 A. “A
Judgment that determines the merits in whole or in part is a final
judgment.” La. C.C.P. ART. 1841. “No appeal may be taken from a
partial final judgment under Article 1915(B) until the judgment has
been designated a final judgment under Article 1915(B). An appeal
may be taken from a final judgment under Article 1915(A) without
the judgment being so designated.” La. C.C.P. ART. 1911.

“A judgment that does not determine the merits but only
preliminary matters in the course of the action is an interlocutory
Judgment.” La. C.C.P. ART. 1841. “An interlocutory judgment is
appealable only when expressly provided by law.” La. C.C.P. ART.
2083 C; see, e.g., La. C.C.P. ART. 3612 B (relating to the denial or
the granting of a preliminary injunction), or La. C.C.P. ART. 592

7

A(3)(b) {relating to certification in class actions). If not expressly
provided by law, there is no right to appeal an interlocutory judgment.
See, e.g. La. C.C.P. ART. 968 (“An appeal does not lie from the
court’s refusal to render any judgment on the pleading or summary
judgment.”).

Favrot v. Favrot, 10-986, pp. 2-3 (La.App. 4 Cir. 2/9/11), 68 So.3d 1099, 1102-03,
writ denied, 11-636 (La. 5/6/11), 62 So.3d 127.

“A judgment of dismissal with prejudice shall have the effect of a final
judgment of absolute dismissal after trial” while “[a] judgment of dismissal
without prejudice shall not constitute a bar to another suit on the same cause of
action.” La.Code Civ.P. art. 1673. The relevance of a dismissal with prejudice, as
opposed to without prejudice, is that the dismissal with prejudice has res judicata
effect on the parties to the suit dismissed, whereas the dismissal without prejudice
allows the re-filing of the matter at hand. Sims v. Am. Ins. Co., 12-204 (La.
10/16/12), 101 So.3d 1. In the instant case, the dismissal of the third-party
demands was without prejudice. Thus, there is no res judicata effect from the
original dismissal. Where the main demand in the suit is still pending, a judgment
of dismissal without prejudice does not preclude the re-filing of the dismissed
claims in the original suit.

Louisiana Code of Civil Procedure Art. 1673 states that [sic] in
pertinent part that “... a judgment of dismissal without prejudice shall’
not constitute a bar to another suit on the same cause of action.” The
Official Revision Comment notes that “(a) case dismissed without
prejudice can be reinstituted; the judgment is neither final or
definitive.” We interpret the word “reinstitute” to mean “reestablish”.
The wording “shall not constitute a bar to another suit” in LSA-C.C.P.
Art. 1673 does not necessarily mean that a pending suit amended to
join the same defendants shall be barred. Where there are no other
viable defendants remaining in the original suit, a new suit is required.
Louisiana C.C.P. Art. 933’s general rule-that if a dilatory exception
pleading prematurity is sustained, the suit shall be dismisséd-is
mandated where no co-defendant tortfeasors remain in the original
suit. However, where a viable defendant remains in an existing
lawsuit, it is an unnecessary and useless act to require plaintiffs to file
a new suit and then move to consolidate the cases, warranting a

8

wasteful, burdensome procedure. We find no prejudice to the rights
of the other parties in allowing plaintiffs to amend their original
petition to join additional defendants who have been dismissed
without prejudice when a viable defendant remains in an existing
lawsuit. -

Barracliff v. E. Jefferson Gen. Hosp., 573 So.2d 1200, 1203 (La.App. 4 Cir.), writ
denied, 575 So.2d 825 (La.1991).

In the instant case, it would likewise constitute an SUecesear and useless
act” to require Certain Underwriters to file a new, separate suit to assert its stil]
viable third-party demands. /d. Accordingly, we reverse the rulings of the trial
court and remand for further proceedings.

DISPOSITION

For the reasons herein, the judgments of the trial court granting the
exceptions of res judicata are reversed, in both 17-825 and 17-1182. The cases are
remanded for proceedings consistent herewith. Costs of these proceedings are
assessed to all Appellees: ConocoPhillips Company; PPG Industries, Inc.; Hartford
Accident and Indemnity Company, as the alleged insurer of ConocoPhillips and
PPG; Century Indemnity Company, as the alleged insurer of PPG and certain PPG
Industries, Inc. executive officers; Travelers Casualty and Surety Company and
Travelers Indemnity Company as the alleged insurer of PPG and certain PPG
Industries, Inc. executive officers; and Crown, Cork & Seal Company, Inc.

REVERSED AND REMANDED.