Patin v. Thoroughbred Power ( 2002 )


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  •                   Revised July 12, 2002
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    _____________________
    Nos. 00-31283, 01-30881
    _____________________
    GEORGE RANDALL PATIN; LAURA WIER PATIN
    Plaintiffs-Appellees
    v.
    THOROUGHBRED POWER BOATS INC; ET AL
    Defendants
    THOROUGHBRED POWER BOATS INC; STEVEN STEPP; VELOCITY POWER
    BOATS INC
    Defendants-Appellants
    _____________________
    CATHERINE ILENE BOLEY; DARIN LANE WATKINS
    Plaintiffs-Appellees
    v.
    THOROUGHBRED POWER BOATS INC
    Defendant-Appellant
    _____________________
    LOUISIANA FARM BUREAU INSURANCE COMPANY
    Plaintiff-Appellee
    v.
    THOROUGHBRED POWER BOATS INC; ET AL
    Defendants
    THOROUGHBRED POWER BOATS INC
    Defendant-Appellant
    _________________________________________________________________
    Appeal from the United States District Court
    for the Middle District of Louisiana
    _________________________________________________________________
    June 12, 2002
    Before KING, Chief Judge, and HIGGINBOTHAM and EMILIO M. GARZA,
    Circuit Judges.
    KING, Chief Judge:
    Defendants-Appellants Steven Stepp and Velocity Power Boats,
    Inc. appeal the district court’s judgment denying their motion to
    dismiss Plaintiff-Appellee Louisiana Farm Bureau Insurance
    Company’s complaint for lack of personal jurisdiction.
    Defendant-Appellants Thoroughbred Power Boats, Inc., Velocity
    Power Boats, Inc., and Steven Stepp appeal the district court’s
    award of damages in favor of Plaintiff-Appellee George Randall
    Patin and Plaintiff-Appellee Louisiana Farm Bureau Insurance
    Company, arguing that the district court improperly failed to
    condition execution of the redhibition judgment in favor of these
    plaintiffs on tender to Thoroughbred of the boat that is the
    subject of the redhibition claim.   For the following reasons, we
    AFFIRM the judgment of the district court, excepting that portion
    of the judgment awarding damages based on the redhibition claim.
    We VACATE the portion of the district court’s judgment awarding
    damages based on the redhibition claim and REMAND the case to the
    district court for recalculation of damages consistent with this
    opinion.
    2
    I.   Factual and Procedural Background
    On May 6, 1995, George Randall Patin and Laura Wier Patin
    (the “Patins”), along with Catherine Irene Boley and Darin Lane
    Watkins (“Boley and Watkins”), were involved in a boating
    accident while operating a boat manufactured by Thoroughbred
    Power Boats, Inc. (“Thoroughbred”) and purchased by the Patins
    from Thunder Marine, Inc. (“Thunder Marine”).   The Patins filed
    suit against Thoroughbred and Thunder Marine in Louisiana state
    court alleging that the accident was caused by a defective
    condition of the boat and seeking recovery for the purchase price
    of the boat and recovery for personal injuries and other damages
    arising from the accident.   Boley and Watkins filed a separate
    suit against Thoroughbred, also in Louisiana state court, seeking
    recovery for damages arising from the accident.   The Patins’
    insurer, the Louisiana Farm Bureau Insurance Company (“the
    LFBIC”), filed a third state court action under subrogation to
    recover the amounts it paid to or on behalf of the Patins for
    damage to the boat, salvage and storage of the damaged boat, and
    loss of Mrs. Patin’s jewelry in the accident.
    On Thoroughbred’s motion, all three suits were removed to
    federal district court based on diversity of citizenship.    The
    district court then consolidated the suits into the instant
    action.   Thoroughbred1 filed answers to the Plaintiffs’
    1
    Thoroughbred agreed to assume the defense of Thunder
    Marine and to indemnify and hold Thunder Marine harmless from any
    judgment.
    3
    complaints.2   These answers did not question the Louisiana
    federal district court’s authority to exercise personal
    jurisdiction over Thoroughbred.   The Plaintiffs then moved for
    partial summary judgment as to liability.   Thoroughbred did not
    respond to this motion.   Accordingly, on May 19, 1997, the
    district court granted partial summary judgment in favor of the
    Plaintiffs, finding that the boat was defective and that
    Thoroughbred was liable to the Plaintiffs in redhibition and
    under the Louisiana Products Liability Act.3
    The Plaintiffs subsequently became aware that Thoroughbred
    had ceased doing business.   Accordingly, on July 30, 1997, the
    Plaintiffs filed two amended complaints naming Steven Stepp
    (“Stepp”) and Velocity Power Boats (“Velocity”) as additional
    defendants, alleging that Velocity was a “successor corporation”
    to Thoroughbred and that Velocity and Thoroughbred were both
    alter egos of Stepp.4   The first of these amended complaints,
    filed by the individual plaintiffs (i.e., the Patins and Boley
    and Watkins), was never served on either Stepp or Velocity, and
    was subsequently dismissed without prejudice.   However, the
    LFBIC, who filed the second amended complaint, sought and
    2
    The Patins, Boley and Watkins, and the LFBIC will be
    referred to collectively in this opinion as “the Plaintiffs.”
    3
    At this time, the consolidated cases were assigned to
    Chief Judge Polozola. The cases subsequently were transferred to
    Judge Melançon on June 30, 2000.
    4
    Thoroughbred, Stepp, and Velocity will be referred to
    collectively in this opinion as “the Defendants.”
    4
    obtained Stepp’s and Velocity’s consent to waive service.5
    Stepp and Velocity filed a motion to dismiss the LFBIC’s
    amended complaint, arguing that the Louisiana federal district
    court lacked personal jurisdiction over them.   On May 21, 1998,
    the district court denied Stepp and Velocity’s motion to dismiss
    without prejudice, in order to allow for discovery.
    On December 15, 1998, Stepp and Velocity filed a motion for
    summary judgment, seeking to dismiss the LFBIC’s amended
    complaint for lack of personal jurisdiction, and, alternatively,
    seeking a judgment on the merits that there was insufficient
    evidence to raise a genuine issue of material fact regarding the
    appropriateness of piercing the corporate veil of Thoroughbred or
    imposing successor corporation liability upon Velocity.    The
    district court found that it lacked personal jurisdiction over
    Stepp and Velocity.6   However, the court held open the
    possibility that Stepp and Velocity might be subject to personal
    jurisdiction if those defendants were found liable (based on the
    doctrines of piercing the corporate veil and successor liability)
    for claims against Thoroughbred, because Thoroughbred waived its
    5
    Thus, at this point in the litigation, the only
    defendant to the individual plaintiffs’ actions is Thoroughbred,
    while Thoroughbred, Velocity, and Stepp are all defendants to the
    LFBIC’s action.
    6
    The court adopted this finding from a determination
    made by District Judge John Parker in a separate series of civil
    actions against Velocity. See Ruling on Motion to Dismiss, Civil
    Action Nos. 97-1092 and 98-402.
    5
    personal jurisdiction defense.7    The district court accordingly
    denied Stepp and Velocity’s motion for summary judgment, finding
    that there were genuine issues of material fact regarding whether
    Thoroughbred’s corporate veil could be pierced and whether
    Velocity could be held liable as a successor corporation of
    Thoroughbred.
    The court conducted the damages phase of the trial as a
    bench trial on July 17 and 18, 2001.      At the close of the
    Plaintiffs’ evidence, the Defendants moved for judgment as a
    matter of law pursuant to Federal Rule of Civil Procedure 52(c),
    arguing: (1) that the LFBIC’s action against Stepp and Velocity
    should be dismissed for lack of personal jurisdiction; and in the
    alternative, (2) that the LFBIC’s action against Stepp and
    Velocity should be dismissed because the Plaintiffs failed to
    show that piercing the corporate veil or imposing successor
    liability was appropriate.
    The district court issued a memorandum ruling dated
    September 21, 2000.   The district court held that, under the
    choice of law rules of the forum state (i.e., Louisiana), the
    substantive law of Florida governed the court’s determinations
    whether Velocity was a successor of Thoroughbred and whether the
    corporate veil could be pierced.       The district court determined
    7
    Both parties agree that Thoroughbred waived its defense
    to personal jurisdiction by filing an answer to the Plaintiffs’
    original complaints without raising the issue of personal
    jurisdiction.
    6
    that, under Florida law, Velocity was the successor of
    Thoroughbred because the transformation of Velocity and
    Thoroughbred constituted a “de facto merger” of the two
    corporations and because Velocity was merely a continuation of
    its predecessor, Thoroughbred.   The district court also held
    that, under Florida law, it was appropriate to pierce the
    corporate veil and hold Stepp liable for the obligations of
    Velocity and Thoroughbred.8   Accordingly, the district court
    8
    In support of these conclusions, the district court
    entered, inter alia, the following findings of fact:
    12. Until August, 1996, Stepp manufactured
    [pleasure] boats through Thoroughbred Power
    Boats, Inc.
    13. In August, 1996, Thoroughbred ceased
    manufacturing and selling pleasure boats.
    14. In August, 1996, Velocity Power Boats,
    Inc. began manufacturing and selling pleasure
    boats.
    15. Beginning in August, 1996, Stepp
    manufactured his boats through Velocity.
    ...
    19. The boats manufactured by Velocity after
    July 1996, were essentially the same boats
    that had been manufactured by Thoroughbred.
    20. Thoroughbred and Velocity were wholly
    owned by Steven Stepp and his wife.
    21. Steven Stepp and his wife were the only
    officers and board members of Thoroughbred
    and Velocity.
    22. Thoroughbred and Velocity shared the
    same address and telephone numbers.
    23. After August 1996 Steven Stepp leased
    the same property to Velocity that he had
    leased to Thoroughbred prior to August, 1996.
    24. After August 1996, Thoroughbred “leased”
    its employees; and after July, 1996, many of
    the same “leased” employees became the
    “leased” employees of Velocity.
    ...
    29. By check dated August 13, 1996, Velocity
    transferred $80,000 to Thoroughbred.
    7
    concluded that it was appropriate to impute Thoroughbred’s waiver
    of the defense of lack of personal jurisdiction to Velocity and
    Stepp and to hold Velocity and Stepp liable for Thoroughbred’s
    obligations to the LFBIC.9
    30. On or about September 5, 1996, $60,000
    was transferred from Velocity to
    Thoroughbred.
    ...
    32. Steven Stepp’s testimony was less than
    credible, in particular, but not limited to
    his testimony accounting for the transfer of
    $80,000 and $60,000 from Velocity to
    Thoroughbred and his contention that he took
    certain corporate or economic action because
    his accountant or attorney told him to do so.
    33. Steven Stepp did not provide a
    satisfactory or believable rational [sic] for
    the transformation of Thoroughbred and
    Velocity in 1996.
    34. That Thoroughbred might have an
    obligation as a result of a judgment in this
    lawsuit was a factor in Steven Stepp’s
    decision to discontinue the manufacture of
    boats through Thoroughbred and begin
    production through Velocity.
    ...
    38. Velocity is the successor corporation of
    Thoroughbred.
    39. The transformation of Velocity and
    Thoroughbred constituted a “de facto merger”
    of the two corporations.
    40. Velocity is merely a continuation of its
    predecessor, Thoroughbred.
    41. Velocity is and Thoroughbred was the
    alter ego of Steven Stepp.
    42. As there was improper conduct by
    defendants in the transformation of Velocity
    and Thoroughbred which was used to mislead
    creditors or avoid liabilities of
    Thoroughbred, the corporate veils of Velocity
    and Thoroughbred should be pierced.
    9
    Regarding the redhibition issue, the district court
    found that calculation of damages for the total loss of a boat
    was analogous to calculation of damages for the total loss of a
    8
    Pursuant to this ruling, on September 22, 2000, the district
    court entered judgment: (1) in favor of George Patin against
    Thoroughbred for the sum of $23,000 minus the salvage value of
    the boat; (2) in favor of Laura Patin against Thoroughbred for
    the sum of $2328; (3) in favor of Boley and Watkins against
    Thoroughbred for the sums of $3841 and $3836, respectively; and
    (4) in favor of the LFBIC against Thoroughbred, Velocity, and
    Stepp in the sum of $49,004.   The district court also ordered the
    parties to file a joint stipulation as to the salvage value of
    the boat or to notify the court that such stipulation was not
    possible within twenty-one days after entry of judgment.
    The parties subsequently proved unable to reach an agreement
    as to the salvage value of the boat.   The district court
    accordingly instructed Magistrate Judge Stephen Riedlinger to
    conduct a hearing inquiring into the salvage value of the boat.
    On February 9, 2001, the magistrate judge issued a report that
    determined the salvage value of the boat to be $5000, and a
    recommendation that this amount be deducted from the award to
    George Patin.   On June 6, 2001, the district court concurred with
    the magistrate judge’s findings and ordered that the salvage
    value of the boat be set at $5000 and that the previously-entered
    judgment in favor of George Patin be reduced by that amount.
    car. The court found that, under Louisiana law, when a boat is
    totally lost as a result of an accident, the owner is entitled to
    the market value of the boat before the accident, less salvage
    value, if any.
    9
    Thoroughbred, Velocity, and Stepp filed the instant appeal
    of the district court’s judgment on October 20, 2000,10 arguing:
    1) that Stepp is not liable to the LFBIC because the corporate
    veils of Thoroughbred and Velocity cannot be pierced to reach
    Stepp; 2) that Velocity is not liable to the LFBIC because
    Velocity is not the successor corporation of Thoroughbred; 3)
    that Thoroughbred’s waiver of the defense of lack of personal
    jurisdiction should not be imputed to Velocity and Stepp under
    the theories of piercing the corporate veil and successor
    corporation liability because Stepp and Velocity specifically
    alleged the defense of lack of personal jurisdiction in their
    first responsive pleading; and 4) that the district court erred
    in failing to condition execution of judgment as to George Patin
    and the LFBIC’s redhibition claims on tender of the boat to
    Thoroughbred.   We address each of these claims in turn.11
    10
    The Defendants subsequently filed an amended notice of
    appeal on June 19, 2001, after the salvage value of the boat was
    determined. As both parties agree, this amended notice of appeal
    provides this court with appellate jurisdiction.
    11
    Though ordinarily the issue of subject matter or
    personal jurisdiction must be considered by the court before
    other challenges “since the court must find jurisdiction before
    determining the validity of a claim,” Moran v. Kingdom of Saudi
    Arabia, 
    27 F.3d 169
    , 172 (5th Cir. 1994) (quoting Gould, Inc. v.
    Pechiney Ugine Kuhlmann, 
    853 F.2d 445
    , 449 (5th Cir. 1988)),
    because the factual determinations that we review in assessing
    the successor liability of Thoroughbred and the personal
    liability of Stepp are also the factual determinations critical
    to our adjudication of the personal jurisdiction issue, for the
    sake of convenience we address the successor liability and
    personal liability issues first. Cf. Spector v. LQ Motor Inns,
    Inc., 
    517 F.2d 278
    , 284 (5th Cir. 1975) (noting that when
    “jurisdictional and substantive issues are factually meshed” and
    10
    II.   Did the district court err in piercing the corporate veil of
    Thoroughbred and Velocity to reach Stepp?
    In this diversity case, we apply the choice of law rules of
    the forum state (i.e., Louisiana) to ascertain which state’s law
    governs the substantive determination whether to pierce a
    corporate veil.   Marchesani v. Pellerin-Milnor Corp., 
    269 F.3d 481
    , 485 (5th Cir. 2001).    The Louisiana Supreme Court has not
    explicitly determined what law is applicable in evaluating
    whether to pierce the corporate veil of a defendant company in a
    products liability case.    Accordingly, this court must determine
    as best it can what the state’s highest court would decide
    regarding the appropriate choice of law rule.    Howe v. Scottsdale
    Ins. Co., 
    204 F.3d 624
    , 627 (5th Cir. 2000).
    In predicting how the Louisiana Supreme Court would decide
    this issue, this court will be guided by the decisions of state
    intermediate appellate courts unless other persuasive data
    indicates that the Louisiana Supreme Court would decide
    otherwise.   First Nat’l Bank of Durant v.Douglass, 
    142 F.3d 802
    ,
    809 (5th Cir. 1998).   At least one Louisiana intermediate
    appellate court has concluded that the law of the state of
    incorporation applies in determining whether it is appropriate to
    pierce the corporate veil.    See Quickick, Inc. v. Quickick Int’l,
    
    304 So.2d 402
    , 406 (La. Ct. App. 1974).    A number of federal
    “decision on the jurisdictional issues is dependent on decision
    of the merits” decision on the jurisdictional issue “should . . .
    be reserved until a hearing on the merits”). We note that both
    parties followed this logical structure in their briefing.
    11
    district courts have reached the same conclusion when
    interpreting Louisiana law in related contexts.      See, e.g., San
    Francisco Estates v. Westfeldt Bros., No. 97-1102,
    
    1998 WL 12243
    , at *4 (E.D. La. Jan. 13, 1998) (holding that the
    substantive law of a company’s state of incorporation should be
    used to determine the viability of its corporate structure);
    Powerup of Southeast La. Inc. v. Powerup U.S.A., Inc., 94-1441,
    
    1994 WL 543631
     (E.D. La. Oct. 5, 1994) (same); cf. Lone Star
    Indus., Inc. v. Redwine, 
    757 F.2d 1544
    , 1548 n.3 (5th Cir. 1985)
    (determining that the Louisiana Supreme Court would apply the law
    of the state of incorporation to determine the viability of a
    corporation after dissolution).
    In light of these authorities, we agree with the district
    court’s determination that the Louisiana State Supreme Court
    would most likely conclude that the law of the state of
    incorporation governs the determination when to pierce a
    corporate veil.   Accordingly, this court will apply the law of
    Florida (the state of incorporation for both Velocity and
    Thoroughbred) in assessing whether the district court erred in
    piercing the corporate veils of Velocity and Thoroughbred.      This
    court reviews a federal district court’s decision to pierce the
    corporate veil for clear error.12      Huard v. Shreveport Pirates,
    12
    While Erie dictates that we apply Florida substantive
    law in determining whether it is appropriate to pierce the
    corporate veil in the instant case, “as a matter of independent
    federal procedure” we utilize our own federal standards of
    appellate review in evaluating the district court’s findings.
    12
    Inc., 
    147 F.3d 406
    , 409 (5th Cir. 1998); see also Hollowell v.
    Orleans Reg’l Hosp. LLC, 
    217 F.3d 379
    , 385 (5th Cir. 2000)
    (noting that, while the determination whether to pierce the
    corporate veil is a factual conclusion subject to deferential
    review, disputes regarding the particular factfindings that are
    necessary to support a decision to pierce the corporate veil
    raise questions of law that this court reviews de novo).
    The leading Florida case addressing the piercing of
    corporate veils is Dania Jai-Alai Palace, Inc. v. Sykes, 
    450 So.2d 1114
     (Fla. 1984).   In Dania Jai-Alai, the Florida Supreme
    Court held that in order to pierce the corporate veil of a
    defendant corporation, a plaintiff must prove both: (1) that the
    corporation is a “mere instrumentality” or alter ego of the
    defendant; and (2) that the defendant engaged in “improper
    conduct” in the formation or use of the corporation.   See 
    id. at 1120-21
     (quoting Advertects, Inc. v. Sawyer Indus., Inc., 
    84 So.2d 21
    , 24 (Fla. 1955) (internal quotations omitted)); accord
    Bellairs v. Mohrmann, 
    716 So.2d 320
    , 322 (Fla. Dist. Ct. App.
    1998).   In defining what constitutes “improper conduct,” the
    Florida Supreme Court explained that the corporate veil “will not
    be penetrated either at law or in equity unless it is shown that
    Mid-America Pipeline Co. v. Lario Enters., Inc., 
    942 F.2d 1519
    ,
    1524 (10th Cir. 1991); cf. Tutor v. Ranger Ins. Co., 
    804 F.2d 1395
    , 1398 (5th Cir. 1986) (explaining that “[i]n a diversity
    case, we apply the [] federal standard of review to assess the
    sufficiency of the evidence in relation to the verdict, but we
    refer to state law to determine the kind of evidence that must be
    produced to support a verdict”).
    13
    the corporation was organized or employed to mislead creditors or
    to work a fraud upon them.”       Id. at 1120 (quoting Advertects, 84
    So.2d at 23-24 (internal quotations omitted)).
    Since Dania Jai-Alai, intermediate Florida appellate courts
    and federal courts applying Florida law have elaborated further
    on the meaning of “improper conduct.”      In Steinhardt v. Banks,
    
    511 So.2d 336
    , 339 (Fla. Dist. Ct. App. 1987), the Florida
    District Court of Appeal for the Fourth District offered a
    “workable formula for applying the reference to ‘improper
    conduct.’”    The court stated:
    Florida decisions uniformly hold that courts
    will look through the screen of a corporate
    entity to the individuals who compose it in
    cases in which the corporation was a mere
    device or sham to accomplish some ulterior
    purpose, ... or where the purpose is to evade
    some statute or to accomplish some fraud or
    illegal purpose, or where the corporation was
    employed by the stockholders for fraudulent
    or misleading purposes, was organized or used
    to mislead creditors or to perpetrate a fraud
    upon them, or to evade existing personal
    liability.
    
    Id.
     (quoting Tiernan v. Sheldon, 
    191 So.2d 87
    , 89 (Fla. Dist. Ct.
    App. 1966) (internal quotations omitted)).      This formulation has
    been cited with approval by other Florida courts and federal
    courts applying Florida law.      See, e.g., In re Warmus, 
    276 B.R. 688
    , 697 (S.D. Fla. 2002); In re Hillsborough Holdings Corp., 
    166 B.R. 461
    , 469 (Bankr. M.D. Fla. 1994); Acquisition Corp. of Am.
    v. Am. Cast Iron Pipe Co., 
    543 So.2d 878
    , 882 (Fla. Dist. Ct.
    App. 1989).
    14
    The district court in the instant case found: (1) that
    “Velocity is and Thoroughbred was the alter ego of Steven Stepp”;
    and (2) that “there was improper conduct by defendants in the
    transformation of Velocity and Thoroughbred which was used to
    mislead creditors or avoid liabilities of Thoroughbred.”   The
    district court thus concluded that “the corporate veils of
    Velocity and Thoroughbred should be pierced.”   The Defendants
    contend that the district court’s finding that “improper conduct”
    occurred is clearly erroneous because both corporations (Velocity
    and Thoroughbred) “conducted their business publicly and without
    any subterfuge or deception” and because both corporations
    “complied with all necessary corporate formalities and filed all
    tax returns required by federal and state law.”   However, the
    Defendants point to no authority (and independent investigation
    reveals no authority) suggesting a corporate veil may not be
    pierced under Florida law when a corporation has conducted
    business publicly and complied with all necessary corporate
    formalities.   Several courts interpreting Florida law have held
    that such factors (particularly observance of corporate
    formalities) can be relevant in assessing both alter ego status
    and improper conduct.   See, e.g., Raber v. Osprey Alaska, Inc.,
    
    187 F.R.D. 675
    , 679 (M.D. Fla. 1999) (“Where the plaintiff pleads
    that a corporation is the instrumentality of the defendant and
    that the defendant engaged in improper conduct by failing to
    observe corporate formalities, by commingling funds of the
    15
    corporation with funds of other corporations and with personal
    funds, by using the assets of the corporation for his own
    personal use, by failing to adequately capitalize the
    corporation, and by using the corporate form to avoid liability,
    piercing the corporate veil is appropriate.”) (internal citations
    and quotations omitted); In re Brickell Inv. Corp., 
    85 B.R. 164
    ,
    167 (Bankr. S.D. Fla. 1988) (“When determining whether an alter
    ego theory exists, several factors should be considered
    including; whether corporate formalities were observed; whether
    one corporation dominated another by virtue of its ownership,
    control, and congruency of established goals; and whether there
    was a transfer or commingling of assets between the
    corporations.”).   However, none of these courts suggest that
    observance of corporate formalities (or the lack thereof) should
    be determinative in assessing alter ego status or in determining
    whether improper conduct has occurred.   Moreover, any such
    conclusion appears inconsistent with the Florida Supreme Court’s
    elaboration of the corporate veil-piercing inquiry in Dania Jai
    Alai and with the Fourth District Court of Appeal’s subsequent
    elaboration in Steinhardt.
    Our own review of the record reveals that numerous factors
    support the district court’s finding that the transformation of
    Thoroughbred to Velocity involved “improper conduct.”   These
    factors include, but are not limited to: the nature of Stepp’s
    financial transactions with the two companies, the timing of
    16
    Stepp’s actions in transferring Thoroughbred’s activities to
    Velocity, and Stepp’s admitted use of this transformation to
    avoid liability in the instant case.   In addition, our review of
    the record also supports the district court’s finding that
    Thoroughbred and Velocity are both alter egos of Stepp.
    Accordingly, the district court did not clearly err in piercing
    the corporate veil in the instant case.
    III. Did the district court err in finding that Velocity is
    subject to successor liability for the obligations of
    Thoroughbred?
    Florida law likewise governs our substantive determination
    whether Velocity is subject to successor liability for the
    obligations of Thoroughbred.   Florida follows the traditional
    corporate law rule that a successor corporation does not, as a
    general rule, assume the liabilities of a predecessor
    corporation.   However, Florida also recognizes all four of the
    traditionally-accepted exceptions to this rule.   Pursuant to
    these exceptions, the liabilities of a predecessor corporation
    can be imposed upon a successor corporation when: (1) the
    successor expressly or impliedly assumes obligations of the
    predecessor; (2) the transaction is a de facto merger; (3) the
    successor is a mere continuation of the predecessor; or (4) the
    transaction is a fraudulent effort to avoid the liabilities of
    the predecessor.    Bernard v. Kee Mfg. Co., Inc., 
    409 So. 2d 1047
    ,
    1049 (Fla. 1982).
    17
    The district court determined that Velocity should be held
    liable for the obligations of Thoroughbred under two of these
    exceptions.   The court concluded: (1) that “Velocity is merely a
    continuation of its predecessor, Thoroughbred,” and (2) that
    “[t]he transformation of Velocity and Thoroughbred constituted a
    ‘de facto merger’ of the two corporations.”    We need address only
    the first of these exceptions.13
    The applicability of these exceptions to the rule against
    successor liability is generally treated as an issue of fact by
    this court and our sister circuits.     See, e.g., Frank Ix & Sons,
    Inc. v. Phillipp Textiles, Inc., 
    165 F.3d 32
     (7th Cir. 1998)
    (table decision) available at 
    1998 WL 709463
    , at *5 (noting that
    imposing liability on a successor corporation based on fraudulent
    intent to escape liability “involves . . . reviewing the district
    court’s findings of fact, which we can only reverse for clear
    error”); Ed Peters Jewelry Co., Inc., v. C & J Jewelry Co., Inc.,
    
    124 F.3d 252
    , 269 (1st Cir. 1997) (explaining that “the ‘mere
    continuation’ inquiry is multifaceted, and normally requires a
    cumulative, case-by-case assessment of the evidence by the
    factfinder”); Mozingo v. Correct Mfg. Corp., 
    752 F.2d 168
    , 175-76
    (5th Cir. 1985) (treating the determination whether a successor
    corporation should be held liable for the obligations of its
    13
    While the de facto merger exception and the mere
    continuation exception are related and have similar
    characteristics, most Florida courts have treated them as
    separate theories. See Bud Antle, Inc. v. E. Foods, Inc., 
    758 F.2d 1451
    , 1457 (11th Cir. 1985) (listing cases).
    18
    predecessor on a “continuity of enterprise” theory as a question
    of fact for the jury).   Accordingly, we review the district
    court’s finding that Velocity is a “mere continuation” of
    Thoroughbred for clear error.   However, to the extent that the
    parties dispute the findings required by Florida law to support a
    determination of successor liability, such disputes present legal
    questions that we review de novo.    Cf. Hollowell, 
    217 F.3d at 385
    (noting that, while the determination whether to pierce to
    corporate veil is a factual conclusion subject to deferential
    review, disputes regarding the particular factfindings that are
    necessary to support the conclusion that piercing is appropriate
    raise questions of law subject to de novo review).
    The Florida Supreme Court has not significantly elaborated
    on the nature of the “mere continuation” exception to the general
    rule against successor liability.    Accordingly, we turn to
    decisions by state intermediate appellate courts and federal
    courts interpreting Florida law for guidance in predicting what
    elements the Florida Supreme Court would find necessary to invoke
    this exception.
    “The concept of continuation of business arises where the
    successor corporation is merely a continuation or reincarnation
    of the predecessor corporation under a different name.”
    Sculptchair, Inc. v. Century Arts, Ltd., 
    94 F.3d 623
    , 630 (11th
    Cir. 1996) (quoting Amjad Munim, M.D., P.A. v. Azar, 
    648 So. 2d 145
    , 154 (Fla. Dist. Ct. App. 1994) (internal citations and
    19
    quotations omitted)).   In other words, a “mere continuation of
    business” will be found where the purchasing corporation is
    merely a “new hat” for the seller with the same or similar
    management and ownership.   Bud Antle, Inc. v. E. Foods, Inc., 
    758 F.2d 1451
    , 1458 (11th Cir. 1985) (interpreting the same “mere
    continuation” exception under Georgia law).   Under Florida law,
    “a ‘mere continuation of business’ will be found where one
    corporation is absorbed by another, as evidenced by an identity
    of assets, location, management, personnel, and stockholders.”
    Sculptchair, 
    94 F.3d at 630
    ; accord Azar, 648 So.2d at 154.
    The district court in the instant case found: (1) that
    Thoroughbred and Velocity were both wholly owned by Steven Stepp
    and his wife; (2) that Steven Stepp and his wife were the only
    officers and board members of both Thoroughbred and Velocity;
    (3) that Thoroughbred and Velocity shared the same address and
    telephone numbers; and (4) that Stepp leased the same property
    and many of the same employees to both corporations.   These
    findings, which are supported by the record, demonstrate an
    identity of assets, location, management, personnel, and
    stockholders between Velocity and Thoroughbred, as required by
    the courts in Sculptchair and Azar.
    The Defendants argue, however, that such findings are
    insufficient to support the conclusion that Velocity is a “mere
    continuation” of Thoroughbred.   Relying on the Eleventh Circuit’s
    decision in Bud Antle, the Defendants contend that all four
    20
    exceptions to the traditional corporate law rule prohibiting
    successor liability require a transfer of assets from the
    predecessor corporation to the successor corporation.     See 
    758 F.2d at 1457
     (“All four of these exceptions require a transfer of
    assets in order to hold the acquiring corporation liable.”).
    Because the district court failed to explicitly find that a
    transfer of assets occurred in the instant case, the Defendants
    maintain that the mere continuation exception cannot apply in the
    instant case.
    We need not determine whether Florida law requires a
    “transfer of assets” (as suggested by the Bud Antle court), or
    merely an “identity of assets” (as suggested by the Sculptchair
    and Azar courts) to support application of the mere continuation
    exception.   To the extent that there is a meaningful distinction
    between these two concepts, we assume without deciding that
    Florida law requires a transfer of assets.    We further find that
    the district court’s detailed factual findings, supported by
    ample evidence in the record, demonstrate the existence of such a
    transfer of assets in the instant case.
    The district court found, inter alia, that Stepp leased the
    same equipment to Velocity that he had leased to Thoroughbred,
    that Velocity “leased” many of the same employees that
    Thoroughbred had previously leased, and that Velocity
    manufactured power boats under the same trade name that
    Thoroughbred had previously used.    The Defendants do not contest
    21
    the accuracy of these findings.    The crux of the Defendant’s
    position appears to be that, while the assets of Velocity and
    Thoroughbred were substantially the same — including, but not
    limited to, the companies’ equipment, employees, and trade name —
    no transfer of assets occurred because Thoroughbred never
    directly sold any of these assets to Velocity.14   However, the
    successor liability doctrine does not require evidence of such a
    direct sale of assets from the predecessor to the successor for
    there to be a “transfer of assets” between two corporations.
    Initially, as a number of federal courts interpreting the
    mere continuation exception have recognized, a “transfer of
    assets” does not necessarily require a sale of assets.     See,
    e.g., Kaiser Found. Health Plan of the Mid-Atlantic States v.
    Clary & Moore, P.C., 
    123 F.3d 201
    , 207 (4th Cir. 1997) (applying
    the “mere continuation” exception under Virginia law and
    considering a lease of equipment and personnel from the
    predecessor corporation to the successor corporation in assessing
    whether the transfer of assets between the two entities involved
    adequate consideration); Stoumbos v. Kilimnik, 
    988 F.2d 949
    , 961
    14
    Instead, the record reveals that Stepp engaged in a
    complex series of transactions involving a web of companies (all
    of which were solely owned and controlled by Stepp and/or other
    members of his immediate family) that resulted in the indirect
    transfers of assets from Thoroughbred to Velocity. For example,
    regarding the boat construction equipment, the record reveals
    that Stepp purchased this equipment from Thoroughbred. Stepp
    then leased this equipment back to Thoroughbred for a short time.
    He then leased the same equipment to Velocity when Thoroughbred
    ceased operations, and ultimately sold the equipment to Velocity.
    22
    (9th Cir. 1993) (applying the “mere continuation” exception under
    Washington law and recognizing that liability under this
    exception extends “to transfers other than straightforward
    purchases” because holding otherwise would permit “unscrupulous
    businesspersons . . . to avoid successor liability and cheat
    creditors merely by changing the form of the transfer”); Florom
    v. Elliott Mfg., 
    867 F.2d 570
    , 574-75 (10th Cir. 1989)
    (interpreting Colorado law and recognizing that the four
    traditional exceptions to the rule against successor liability
    apply when a “predecessor sells or otherwise transfers all its
    assets to the successor”) (emphasis added); State of New York v.
    N. Storonske Cooperage Co., Inc., 
    174 B.R. 366
    , 376 (Bankr.
    N.D.N.Y. 1994) (interpreting New York law, recognizing that the
    four traditional exceptions to the rule against successor
    liability apply “so long as there is some form of a ‘transfer’ of
    assets” and that “a literal ‘purchase’ of assets is not required
    to establish successor liability”); cf. NLRB v. Band-age, Inc.,
    
    534 F.2d 1
    , 5 (1st Cir. 1976) (explaining that “[t]he fact that
    the transfer [of assets] took the form of a lease rather than an
    outright sale is not of great significance” for purposes of
    determining successor liability in the labor law context).
    Similarly, the fact that a transfer of assets involves an
    intermediary rather than a direct transfer from predecessor to
    successor does not necessarily preclude application of the mere
    continuation exception, particularly when the intermediary is
    23
    under the control of or otherwise tied to the principals in both
    the predecessor and successor corporations.   Ed Peters Jewelry,
    
    124 F.3d at 269-70
    .   Finally, the fact that the entirety of the
    predecessor’s assets were not transferred to the successor does
    not render the mere continuation exception inapplicable.15   See,
    e.g., 
    id. at 269
    .
    In sum, in considering whether a “transfer of assets” has
    occurred, we do not think Florida courts would elevate form over
    substance.   Instead, we predict that the Florida Supreme Court
    would follow the courts in Ed Peters Jewelry and Kaiser
    Foundation and look to the true nature of the overall transaction
    in assessing whether a transfer of assets has occurred.   See 
    id. at 270
    ; accord Kaiser Found., 
    123 F.3d at 205
    .   In the instant
    case, both the district court’s factual findings and the record
    support the existence of a transfer of assets between
    Thoroughbred and Velocity.   Accordingly, the district court did
    not clearly err in concluding that Velocity is a mere
    continuation of Thoroughbred and thus holding that Velocity is
    responsible for the obligations of Thoroughbred.16
    15
    It is important to clarify that this court is not
    suggesting that the nature of a transfer of assets, the
    directness of that transfer, or the extent of the assets
    transferred are not relevant factors in assessing the
    applicability of the mere continuation exception under Florida
    law. We simply conclude that a transfer of assets can be found
    in the absence of a direct sale of all assets from predecessor to
    successor.
    16
    Because we affirm the district court’s finding that
    Velocity is a mere continuation of Thoroughbred, we need not
    24
    IV.   Can Thoroughbred’s waiver of personal jurisdiction be
    imputed to Stepp and Velocity?
    Whether in personam jurisdiction can be exercised over a
    defendant is a question of law subject to de novo review by this
    court.   Dickson Marine, Inc. v. Panalpina, Inc., 
    179 F.3d 331
    ,
    335 (5th Cir. 1999).   In a diversity suit, a federal court has
    personal jurisdiction over a nonresident defendant to the same
    extent that a state court in that forum has such jurisdiction.
    Wilson v. Belin, 
    20 F.3d 644
    , 646 (5th Cir. 1994).    Accordingly,
    the district court can exercise personal jurisdiction over the
    Defendants in the instant case only if the Defendants are subject
    to personal jurisdiction in the Louisiana state courts.
    Generally, this court conducts a two-prong analysis to
    determine if a state court may exercise personal jurisdiction
    over a nonresident defendant.   “First, we determine whether the
    long-arm statute of the forum state confers personal jurisdiction
    over the defendant.    Second, we ask whether the exercise of such
    jurisdiction by the forum state is consistent with due process
    under the United States Constitution.”    J.R. Stripling v. Jordan
    Prod. Co., LLC, 
    234 F.3d 863
    , 869 (5th Cir. 2000) (internal
    citations and quotations omitted).    However, because Louisiana’s
    long arm statute is coextensive with the limits of due process,
    “the sole inquiry into jurisdiction over a nonresident [under
    evaluate whether Velocity might also be responsible for the
    obligations of Thoroughbred pursuant to the de facto merger
    theory of successor liability.
    25
    Louisiana law] is a one-step analysis of the constitutional due
    process requirements.”   Petroleum Helicopters, Inc. v. Avco
    Corp., 
    834 F.2d 510
    , 514 (5th Cir. 1987).17
    The district court adopted Judge Parker’s finding that Stepp
    and Velocity would not ordinarily be subject to personal
    jurisdiction in Louisiana courts.    However, the court found that
    exercise of personal jurisdiction in the instant case was
    nonetheless appropriate because Thoroughbred’s consent to
    personal jurisdiction could be imputed to its alter ego (Stepp)
    and its successor (Velocity).   While the Defendants do not
    dispute that Thoroughbred waived any objection to personal
    jurisdiction by making a general answer to the Plaintiffs’
    complaints without raising personal jurisdiction as a defense,
    the Defendants contend that this waiver cannot be imputed to
    Stepp or Velocity.   They point out that both Stepp and Velocity
    pleaded lack of personal jurisdiction in their first responsive
    pleadings, and they maintain that Stepp and Velocity lack the
    requisite minimum contacts with the State of Louisiana to satisfy
    the requirements of due process.     In support of their contention
    that personal jurisdiction cannot be “imputed” under these
    17
    The constitutional due process analysis for personal
    jurisdiction imposes two requirements. First, the defendant must
    have sufficient minimum contacts with the forum state to comport
    with “traditional notions of fair play and substantial justice.”
    See Int’l Shoe Co. v. Washington, 
    326 U.S. 310
    , 316 (1945)
    (quoting Milliken v. Meyer, 
    311 U.S. 457
    , 463 (1940)). Second,
    there must be reasonably adequate notice to afford the party an
    opportunity to defend. See Burger King Corp. v. Rudzewicz, 
    471 U.S. 462
    , 475 n.17 (1985).
    26
    circumstances, the Defendants rely on language in the Supreme
    Court’s opinion in Rush v. Savchuk, 
    444 U.S. 320
    , 332 (1980),
    suggesting that, while “the parties’ relationships with each
    other may be significant in evaluating their ties to the forum,”
    the due process requirements of International Shoe “must be met
    as to each defendant over whom a state court exercises
    jurisdiction.”
    This language in Rush, however, does not preclude us from
    imputing the jurisdictional contacts of a predecessor corporation
    to its successor corporation or individual alter ego.    As the
    Plaintiffs correctly point out, federal courts have consistently
    acknowledged that it is compatible with due process for a court
    to exercise personal jurisdiction over an individual or a
    corporation that would not ordinarily be subject to personal
    jurisdiction in that court when the individual or corporation is
    an alter ego or successor of a corporation that would be subject
    to personal jurisdiction in that court.18   The theory underlying
    18
    See, e.g., Howard v. Everex Sys., Inc., 
    228 F.3d 1057
    ,
    1069 n.17 (9th Cir. 2000) (“Although jurisdiction over a
    subsidiary does not automatically provide jurisdiction over a
    parent . . . where the parent totally controls the actions of the
    subsidiary so that the subsidiary is the mere alter ego of the
    parent, jurisdiction is appropriate over the parent as well.”);
    Minnesota Mining & Mfg. Co. v. Eco Chem Inc., 
    757 F.2d 1256
    , 1265
    (Fed. Cir. 1985) (finding that the exercise of personal
    jurisdiction over a successor corporation with no ties to the
    forum state was appropriate when the successor corporation was a
    “mere continuation” of the predecessor corporation and exercise
    of personal jurisdiction would have been appropriate over the
    predecessor); Marine Midland Bank, N.A. v. Miller, 
    664 F.2d 899
    ,
    903 (2d Cir. 1981) (finding that the fiduciary shield doctrine,
    which prevents courts from imputing the jurisdictional contacts
    27
    these cases is that, because the two corporations (or the
    corporation and its individual alter ego) are the same entity,
    the jurisdictional contacts of one are the jurisdictional
    contacts of the other for the purposes of the International Shoe
    due process analysis.     See, e.g., Lakota Girl Scout Council, 519
    F.2d at 637 (explaining that “if the corporation is [the
    individual defendant’s] alter ego, its contacts are his and due
    process is satisfied”).
    Only a few federal courts have specifically considered the
    related question whether a successor corporation is bound by its
    predecessor corporation’s waiver of personal jurisdiction (or,
    similarly, whether an individual is bound by his or her corporate
    alter ego’s waiver of personal jurisdiction).   However, those
    courts have uniformly found that it is consistent with due
    process to impute a corporation’s waiver of personal jurisdiction
    of corporations to their stockholders, is inapplicable when the
    corporation is a “mere shell” for the individual stockholder);
    Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Mgmt.,
    Inc., 
    519 F.2d 634
    , 637-38 (8th Cir. 1975) (finding that the
    chief executive officer of a corporation was subject to in
    personam jurisdiction based on the corporation’s activities in
    the forum state when the evidence indicated that the corporation
    was merely the alter ego of the chief executive officer); Huth v.
    Hillsboro Ins. Mgmt., Inc., 
    72 F. Supp.2d 506
    , 510 (E.D. Pa.
    1999) (holding that the acts of a predecessor corporation may be
    attributed to its successor for purposes of determining whether
    jurisdiction over the successor is proper); Kinetic Instruments,
    Inc. v. Lares, 
    802 F. Supp. 976
    , 985 (S.D.N.Y. 1992) (“It is
    clear that if a court has jurisdiction over a corporation, it may
    obtain jurisdiction over a corporate officer or shareholder by
    disregarding the corporate entity.”).
    28
    to its successor (or its individual alter ego),19 for the same
    reasons that imputation of jurisdictional contacts is
    appropriate.   As the Packer court explained, imputing a
    corporation’s consent to personal jurisdiction to its individual
    alter ego is consistent with the underlying rationale justifying
    piercing of the corporate veil.    959 F. Supp. at 203.   When a
    corporation is deemed the “alter ego” of an individual, then
    those entities are considered to be one and the same under the
    law: “the corporation’s acts must be deemed to be [the
    individual’s] own.”   Id.   Accordingly, just as a corporation that
    has previously submitted to the jurisdiction of a court cannot
    subsequently object to that court’s exercise of jurisdiction on
    due process grounds, see Fed. R. Civ. P. 12(h), an individual
    19
    See, e.g., Hale Propeller, L.L.C. v. Ryan Marine Prods.
    PTY., LTD., 
    98 F. Supp. 2d 260
    , 264-65 (D. Conn. 2000),
    aff’d, __ F.3d __ (Fed. Cir. June 5, 2002) (table decision),
    available at 
    2002 WL 1218028
     (acknowledging that an individual
    could be bound by his corporate alter ego’s waiver of personal
    jurisdiction); Totalplan Corp. of Am. v. Lure Camera, Ltd., 
    613 F. Supp. 451
    , 458 (W.D.N.Y. 1985) (finding that a corporation’s
    waiver of personal jurisdiction could be imputed to its
    shareholders when piercing of the corporate veil was appropriate
    because “it would be inapropos to allow the company effectively
    to negate its waiver”); Mi-Jack Prods., Inc. v. The Taylor Group,
    Inc., No. 96-C-7850, 
    1997 WL 441796
    , at *4 (N.D. Ill. 1997)
    (holding that a parent corporation’s waiver of personal
    jurisdiction could be imputed to its subsidiary if the subsidiary
    could be shown to be only an alter ego of the parent); cf. Packer
    v. TDI Sys., Inc., 
    959 F. Supp. 192
    , 202 (S.D.N.Y. 1997) (holding
    that “[a] corporation’s consent to jurisdiction under a forum
    selection clause can be applied to obtain jurisdiction over an
    individual officer by disregarding the corporate entity under the
    doctrine of piercing the corporate veil”).
    29
    alter ego of a corporation that has waived personal jurisdiction
    cannot subsequently attempt to negate that waiver.
    Similarly, imputing a predecessor corporation’s waiver of
    personal jurisdiction to its successor corporation when the
    successor is a “mere continuation” of the predecessor is also
    consistent with the principles underlying this exception to the
    general rule against successor liability.    The premise underlying
    the “mere continuation” exception to the rule against successor
    liability is that the successor corporation is, in fact, the same
    corporate entity as the predecessor corporation, simply wearing a
    “new hat.”   Bud Antle, 
    758 F.2d at 1458
    ; Azar, 648 So.2d at 154.
    Under such circumstances, if the predecessor corporation has
    already submitted to the jurisdiction of a court, it cannot
    subsequently object to that jurisdiction on due process grounds
    simply because it has put on its “new hat.”   “Any other ruling
    would allow corporations to immunize themselves [from liability]
    by formalistically changing their titles.”    Duris v. Erato
    Shipping, Inc., 
    684 F.2d 352
    , 356 (6th Cir. 1982).
    Accordingly, we conclude that a successor corporation that
    is deemed to be a “mere continuation” of its predecessor
    corporation can be bound by the predecessor corporation’s
    voluntary submission to the personal jurisdiction of a court.
    Similarly, an individual can be bound by a corporation’s
    voluntary submission to the personal jurisdiction of a court when
    the corporate veil has been pierced and the corporation is deemed
    30
    to be the “alter ego” of that individual.       Consequently, in the
    instant case, because Thoroughbred, Stepp, and Velocity are
    functionally the same entity in the eyes of the law, jurisdiction
    over that entity is appropriate after it has (wearing any one of
    its “hats”) voluntarily submitted to the personal jurisdiction of
    the court by making a general appearance.20
    V.        Did the district court calculate the correct redhibition
    remedy under Louisiana law?
    Both parties agree that Louisiana law is applicable to the
    Plaintiffs’ redhibition claim.       Redhibition is an avoidance of
    sale on account of a defect in the manufacture or design of a
    thing sold “which renders it either absolutely useless, or its
    use so inconvenient and imperfect, that it must be supposed that
    the buyer would not have purchased it, had he known of the vice.”
    La. Civ. Code Ann. art. 2520 (West 1973).21      Typically, the
    20
    Accordingly, contrary to the Defendants’ suggestion, we
    need not conduct a due process inquiry into the district court’s
    exercise of jurisdiction over Thoroughbred, Velocity, or Stepp
    (or instruct the district court to do so on remand). The fact
    that Thoroughbred, Velocity, and Stepp may not have had the
    requisite “minimum contacts” with Louisiana to support exercise
    of personal jurisdiction by Louisiana courts (or federal courts
    sitting in Louisiana) is irrelevant in the instant case.
    Personal jurisdiction is an individual right that is subject to
    waiver. See Ins. Corp. of Ireland, LTD v. Compagnie des Bauxites
    de Guinee, 
    456 U.S. 694
    , 704 (1982). Once that right is waived,
    a party that has voluntarily submitted to the jurisdiction of a
    court cannot subsequently object to that court’s exercise of
    jurisdiction on due process grounds.
    21
    The sections of the Louisiana Civil Code governing
    sales were amended in 1993. See 
    1993 La. Sess. Law Serv. 841
     § 1
    (West). These amendments became effective on January 1, 1995.
    See id. Because the boat at issue in the instant case was
    purchased in 1993, the law in effect at that time governs and all
    31
    remedy contemplated in a redhibitory action under Louisiana law
    is full recission of the sale.    Recission “requires the seller to
    return the purchase price and the buyer to return the thing
    purchased, thus placing the parties in the positions they held
    before the sale.”     Lindy Invs., LP v. Shakertown Corp., 
    209 F.3d 802
    , 806 (5th Cir. 2000) (citing Capitol City Leasing Corp. v.
    Hill, 
    404 So.2d 935
    , 939 (La. 1981)).    However, when a
    redhibitory defect merely diminishes the product’s value or
    utility rather than rendering the product totally unfit for its
    intended use, “a party can recover quanti minoris damages for a
    reduction in the purchase price without having to return the
    defective product.”    
    Id.
    The trial court “has discretion to award either rescission
    or quanti minoris in a successful redhibitory action, but cannot
    award both.”   
    Id.
     (internal citations and quotations omitted).
    When a trial court awards recission, the appropriate measure of
    damages is restoration of the purchase price, plus reimbursement
    of reasonable expenses occasioned by the sale and expenses
    incurred in the preservation of the item, see, e.g., La. Civ.
    Code Ann. art. 2531 (West 1973); Poché v. Bayliner Marine Corp.,
    93-721 (La. App. 5 Cir. 2/9/94), 
    632 So.2d 1170
    , 1174),22 minus
    references herein will use the language of the articles prior to
    revision. See Fly v. All-Star Ford Lincoln Mercury, Inc., 95-
    1216 (La. App. 1 Cir. 8/21/96), 
    690 So.2d 759
    , 761 n.2.
    22
    In addition to restitution of the purchase price and
    repayment of expenses (including reasonable attorney fees), a bad
    faith seller is also answerable for other damages. See La. Civ.
    32
    any appropriate discount for the value the buyer received from
    use of the item, see La. Civ. Code Ann. art. 2531 (West 1973);
    Alexander v. Borroughs, 
    359 So.2d 607
    , 610 (La. 1978).23     See
    also Lindy Invs., 
    209 F.3d at 809
    .    When a trial court makes a
    quanti minoris award, the appropriate measure of damages is the
    difference between the actual selling price and the price that a
    reasonable buyer and seller would have agreed upon if they had
    both known of the defects.    See Fly, 690 So.2d at 763.   Factors
    to consider in making a quanti minoris award include “the number
    of defects, the frequency and length of attempted repairs of the
    defects, the inconvenience associated with the repairs, the
    actual damage, if any, caused by the defects, the actual cost of
    repairs and the curtailed use of the thing due to its defects.”
    Id.; accord Robert v. Bayou Bernard Marine, Inc., 
    514 So.2d 540
    ,
    546-47 (La. Ct. App. 1987).
    The parties dispute whether the district court calculated
    the appropriate measure of damages in the instant case.    Indeed,
    Code Ann. art. 2545 (West 1973). These damages can include, for
    example, non-pecuniary damages for mental anguish, aggravation
    and inconvenience.   See Kent v. Cobb, 35-663 (La. App. 2 Cir.
    3/8/02), 
    811 So.2d 1206
    , 1215.
    23
    The Alexander court held that “credit for a purchaser’s
    use of a product may be proper in certain instances, even in
    favor of a bad faith seller,” but clarified that “[c]ompensation
    for the buyer’s use . . . ought not be granted automatically by
    the courts; even the value of an extensive use may be overridden
    by great inconveniences incurred because of the defective nature
    of the thing and constant interruptions in service caused by the
    seller's attempts to repair.” 359 So.2d at 610.
    33
    the parties apparently disagree as to the type of award
    (recission or quanti minoris) that the district court was
    attempting to make.   The Defendants contend that the district
    court was attempting to award a recission and that the court thus
    erred in failing to instruct the Plaintiffs to return the boat to
    the Defendants.   The Plaintiffs argue in response that the
    district court was actually attempting to award quanti minoris
    damages (i.e., a reduction in the purchase price); thus the
    district court correctly determined that the Plaintiffs were not
    required to return the boat to the Defendants.
    The district court’s factual findings and conclusions of law
    reveal that the court awarded the Plaintiffs “the market value of
    the boat before the accident, less salvage value, if any.”    The
    district court apparently relied upon cases addressing the
    measure of damages for destruction of an automobile or boat by a
    third party tortfeasor, including Phelps v. White, 94-267 (La.
    App. 3 Cir. 10/5/94), 
    645 So.2d 698
    , and Coleman v. Victor, 
    326 So.2d 344
     (La. 1976), in calculating this redhibition award.
    This conceptualization of the damage award ignores the unique
    nature of a redhibition claim.
    Redhibition is an avoidance of sale.    Accordingly, the goal
    of the remedy is to return the injured party to the position he
    or she was in before the sale occurred, not to the position he or
    she was in before his or her injury, as in a tort remedy.     See
    Lindy Invs., 
    209 F.3d at 806
    .    These distinct inquiries will not
    34
    necessarily produce the same measure of damages.   For example, it
    appears in the instant case that the district court included the
    value of the Patins’ improvements to the boat, as well as any
    post-sale appreciation or depreciation in the value of the boat,
    in calculating the “market value” of the boat.   However,
    improvements made by the buyer to a purchased item and post-sale
    fluctuations in the market value of that item are not necessarily
    relevant in calculating a damage award pursuant to a redhibition
    claim, as that award is designed to rescind the sale and
    accordingly revolves around the purchase price of the boat.
    While it appears that the Plaintiffs are correct that the
    district court was actually attempting to award some form of
    quanti minoris-type damages in the instant case rather than a
    complete recission of sale, the reasoning expressed by the
    district court in its conclusions of law indicate that the court
    most likely erred in its calculation of the quanti minoris award.
    Because the district court’s factual findings do not enable this
    court to determine what the correct award should be, a remand to
    the district court is necessary to recalculate the appropriate
    award.
    VI.   Conclusions
    For the foregoing reasons, we AFFIRM the judgment of the
    district court in all respects excepting that portion of the
    judgment awarding damages based on the redhibition claim (i.e.,
    awarding damages to George Patin against Thoroughbred and
    35
    awarding damages to the LFBIC against Thoroughbred, Velocity, and
    Stepp).    We VACATE the portion of the district court’s judgment
    awarding damages based on the redhibition claim and REMAND to the
    district court for recalculation of damages consistent with this
    opinion.    Costs shall be borne by Appellants.
    36
    

Document Info

Docket Number: 00-31283

Filed Date: 7/15/2002

Precedential Status: Precedential

Modified Date: 12/21/2014

Authorities (47)

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