REVISED June 21, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 97-30635
__________________________
THE PRYTANIA PARK HOTEL, LIMITED;
ALVIN HALPERN; THEONE M. HALPERN,
Plaintiffs-Appellees,
versus
GENERAL STAR INDEMNITY COMPANY,
Defendant-Appellant.
___________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
___________________________________________________
June 17, 1999
Before GARWOOD, JONES, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
At the core of this appeal are insurance claims for property
damage and business interruption loss attributable to a fire at the
Prytania Park Hotel (“the Hotel”) in New Orleans, owned by
Plaintiffs-Appellees (“the Halperns”). The insurer of the Hotel,
Defendant-Appellant General Star Indemnity Company (“General
Star”), appeals the district court’s denial of its motion for a
judgment as a matter of law (“JML”) or, alternatively, a new trial.
General Star grounds its appeal in numerous assignments of error
that it claims adversely affected the jury trial, the resulting
verdict, and ultimately the judgment in this case.
A principal bone of contention is the district court’s pre-
trial grant of a partial summary judgment in favor of the Halperns.
The court held that fire-damaged, custom-made furniture, which was
attached by screws or bolts to the walls of guest rooms in the
Hotel (“the Furniture”1), were “[p]ermanently installed:
[f]ixtures...,” a category of movable property that is listed in
the COVERAGE provision of General Star’s policy (“the Policy”)
among those that are components of the “Building.” The Policy
differentiates between loss to the Building and loss to the
insureds’ “Business Personal Property.” By treating the Furniture
as permanently installed fixtures, the court eschewed the
possibility that it could be “[f]urniture and fixtures” which, in
the COVERAGE provision, are listed among the types of movables that
are components the insureds’ Business Personal Property. The
practical effect of this holding, when incorporated by the trial
court into its jury instructions, was to cause the Furniture to be
valued at its full replacement cost rather than at its actual cash
value as used hotel furniture on the second-hand furniture market.
Consistent with this ruling, the jury was instructed to include the
Furniture under the Policy’s coverage for loss or damage to the
Building (“the building claim”) —— and to use the new, replacement
value of the Furniture in calculating any award of damages for its
loss —— rather than under the Policy’s coverage for loss or damage
to the insureds’ Business Personal Property, i.e., the contents of
the Hotel (“the contents claim”), at actual cash value.
1
The Furniture comprised armoires, night stands,
entertainment centers/chests of drawers, desks, wall mirrors, and
hanging luggage racks.
2
We conclude that in granting this partial summary judgment the
district court erred as a matter of law in several respects: first,
when it implicitly rejected General Star’s legal contention that
the Furniture was not “fixtures” for purposes of the Policy;
second, when it explicitly ruled that the question whether removal
would cause substantial damage to the Furniture or to the Hotel was
not material; and third, when it granted the partial summary
judgment holding that, for purposes of the insurance coverage
provided by the Policy, the Furniture was permanently installed
fixtures, not furniture and fixtures, and thus compensable under
the building claim at replacement value. Our de novo review leads
us to the opposite result, which we reach in alternative holdings:
(1) The Furniture was not “fixtures” for purposes of the building
claim; but (2) if we assume arguendo that the Furniture is
“fixtures,” it was not “permanently installed” and therefore not
includable in the building claim. Either way, then, the Furniture
is covered by the Policy only as “[f]urniture and fixtures,” an
element of the Halperns’ Business Personal Property, compensable at
market value under the contents claim. We therefore reverse the
partial summary judgment which, when translated into a jury
instruction, produced an excessive jury award and thereby
constitutes reversible error. Unfortunately, given the generality
of the jury’s non-itemized, global damages awards on both the
building claim and the contents claim, neither we nor the district
court on remand is able to remedy the effects of this error by
rendering a modified judgment as to the building and contents
3
claims. We are thus left no choice but to vacate the judgment of
the district court on the building and contents claims and remand
this case for a new trial, consistent with this opinion, on the
entirety of those claims. Finding no reversible error in
connection with the jury’s business interruption award, however, we
affirm that aspect of the district court’s judgment.
I.
FACTS AND PROCEEDINGS
The Hotel sustained a fire that caused extensive damage to one
of its several buildings and to contents and component parts of
that building. The fire interrupted the Hotel’s business
operations as well. The Hotel was insured under the Policy, which
provided coverage for (1) loss or damage to the Building, defined
as including, inter alia, “[p]ermanently installed: [f]ixtures;
[m]achinery; and [e]quipment,” compensable at replacement value;
(2) loss or damage to the insureds’ Business Personal Property,
defined as including, inter alia, “[f]urniture and fixtures,”
compensable at actual cash value; and (3) loss of “[b]usiness
income” resulting from business interruption from the time of the
fire until the insureds should “as quickly as possible” resume
operations.
The Halperns submitted (1) the building claim for $276,687.96,
covering the damaged hotel building, including in it all the
Furniture as “[p]ermanently installed: [f]ixtures” at full
replacement value; (2) the contents claim for $85,888.10, covering
business personal property, but not including any of the Furniture
4
in it; and (3) the business interruption claim for $75,000.00,
covering loss of income resulting from interrupted occupancy and
operations. Following completion of the adjusting process, General
Star paid $186,448.47 on the building claim, which payment did not
include anything for the Furniture; $68,273.93 on the contents
claim, which included the Furniture at market value under the
“[f]urniture and fixtures” element of the Halperns’ Business
Personal Property, and $34,988.00 on the business interruption
claim. As these payments totaled less than the aggregate amount
sought, the Halperns filed this declaratory judgment and breach of
contract action seeking to recover those portions of their claims
that remained unpaid.
During the course of the proceedings prior to trial, the
Halperns and General Star filed cross-motions for summary judgment
on several issues, including the proper classification of the
Furniture. The district court granted the Halperns’ partial
summary judgment, as described above, and ultimately instructed the
jury accordingly.
As fate would have it, this particular issue was addressed,
seriatim, by three different judges of the Eastern District of
Louisiana, the first of whom died after granting the partial
summary judgment, and the remaining two of whom, in turn, declined
to amend or revise it. All three judges concluded that the
Furniture should be categorized as “[p]ermanently installed:
[f]ixtures,” thus bringing it under the building claim and making
it compensable by General Star at full replacement value.
5
On appeal, General Star advances numerous assignments of error
regarding the district court’s preliminary rulings and its conduct
of the trial, including evidentiary rulings and jury instructions.
All such claims of error, save the ones attacking the partial
summary judgment that held the Furniture to be permanently
installed fixtures, become moot for purposes of this appeal in
light of our determination that the court’s grant of the Halperns’
partial summary judgment on the Furniture must be reversed and the
case remanded for a new trial on the entirety of the building and
contents claims.2 The only survivor of our partial vacature of the
district court’s judgment, and our reversal and remand, is that
portion of the court’s final judgment that implements the jury’s
award of damages for business interruption, which portion we
address briefly below and affirm.
II.
Analysis
A. Standard of Review
The decision to grant or deny a motion for a new trial is
within the discretion of the trial court and will not be disturbed
absent an abuse of discretion or a misapprehension of the law.3
Under our well known standard, we review summary judgment rulings
2
For the same reason that neither we nor the district court
can cure this matter with a modified judgment, the other items
included in the building and contents claims must be dealt with in
a new trial, including, inter alia, the disputes regarding the
telephone system, laundry equipment, and improvements required by
the applicable building codes.
3
Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 252
th
(5 Cir. 1990).
6
de novo, applying the same criteria as does the district court.4
B. The Furniture: “Furniture and Fixtures” or “Permanently
Installed Fixtures”?
1. District Court’s Grant of Partial Summary Judgment
The first of the three district judges to address the central
issue of this diversity case started correctly by turning to
Louisiana law. Rather than beginning with the Civil Code, though,
the court quoted the Louisiana Supreme Court’s opinion in Pareti v.
Sentry Indemnity Co.5 for the general truisms that an insurance
policy is a contract like all others, is the law between the
parties, is enforceable as written, and is to be construed as a
whole without interpreting one portion alone while disregarding
another. The district court nevertheless failed to construe two
key provisions of the Policy in pari materia or in the context of
either the Policy as a whole or its entire COVERAGE provision.
Instead, the court proceeded next to center its attention on
another Louisiana Supreme Court pronouncement that “[w]ords and
phrases used in insurance policies are to be construed in their
plain, ordinary and popular sense.”6 This appears to have led the
court to disregard entirely the phrase “[f]urniture and fixtures”
in the COVERAGE provision’s Business Personal Property section, and
to focus solely on the phrase “[p]ermanently installed: [f]ixtures”
in the COVERAGE provision’s Building section, where these items are
4
Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir. 1994).
5
536 So. 2d 417 (La. 1988).
6
Central La. Elec. Co. v. Westinghouse Elec. Co., 579 So. 2d
981, 986 (La. 1991).
7
specified components of the Building. Significantly, the court
never even indicated an awareness that (1) the word “fixtures”
appears in both sections, but (2) the word “furniture” appears in
only one, the Business Personal Property section.
Continuing down this path, the court then proceeded to look to
nothing other than the dictionary definitions of the three words
that comprise the phrase “permanently installed fixtures” —— and to
do so wholly out of context.7 Additionally, this first district
judge placed substantial emphasis on the uncontested fact that the
Furniture was “‘custom-built’ for each room of the hotel...,” even
though that isolated fact is not material to the central issue
under consideration.8
Despite observing that there was “disagreement as to whether
removal of the furniture would damage the hotel rooms and/or the
extent of such damage,” the court nevertheless held that “that
dispute is immaterial to the Court’s decision.” As will be shown,
however, the issue of removal damage is not just material to our
7
Selecting Webster’s II New Riverside University Dictionary
(1994) as its sole source, the court observed that “permanent” is
defined as “lasting or meant to last indefinitely”; that “install”
is defined as “to set in position or adjust for use”; and “fixture”
is defined as “something securely fixed in place.”
8
The court did note correctly, however, that one of the
Halperns misspoke in referring to the Furniture as “built-in,”
which it clearly was not. Rather, it is undisputed that the
custom-built furniture, sometimes referred to by the court and the
parties as “modular furniture,” was designed for particular
locations, was fabricated off premises, and was assembled as free-
standing units inside the hotel, where it was then placed in its
intended locations and bolted or screwed to the walls of the hotel
rooms as free-standing units without ever losing its identity
separate from the Hotel.
8
alternative reasons for concluding that the partial summary
judgment was not providently granted; it is the nub of the
question. The genuineness of this dispute is another matter: Its
absence will loom large in our alternative reasoning, and
ultimately alleviate the need to remand the case for additional
factual findings regarding the extent of removal damage, requiring
us instead to reverse the district court’s grant of the Halperns’
motion for summary judgment and to grant General Star’s cross
motion that, as a matter of law, the Furniture was not permanently
attached to the Hotel.
The second of the three district judges to consider
categorization of the Furniture did so in the context of a Motion
to Amend the Partial Summary Judgment, and the third did so in the
context of a Motion to Amend Order. Like Sisyphus rolling his
stone up the mountainside, General Star’s repeated efforts to get
the district court to consider the importance of the juxtaposed
phrases “furniture and fixtures” and “permanently installed
fixtures,” in the context of the Policy’s COVERAGE provision, never
made it to the top. Neither was General Star able to get the court
to consider the permanence of the Furniture’s attachment to the
walls of the Hotel —— more precisely, the extent of the damage
that removal would cause —— in the court’s deliberations on whether
the Furniture should be covered under the building claim or the
contents claim.
2. De Novo Review of Partial Summary Judgment
Our de novo review convinces us that the district court missed
9
the mark all three times. First, the court erred when it rejected
General Star’s insistence that the meaning of “fixtures” should be
considered in the context of the Policy as a whole, particularly
the entirety of the COVERAGE provision where that word is used
twice under distinguishable circumstances, once in connection with
the building and once in connection with the contents. Second, the
court erred when it deemed the physical nature of the Furniture’s
installation immaterial, particularly the issue of the extent of
damage that removal would cause to the Furniture and the walls to
which it was attached. Third, the court incorrectly concentrated
on (1) the Halperns’ subjective intent to have the Furniture placed
indefinitely or permanently in a particular location within
particular hotel rooms, and (2) the “custom-made” nature of the
Furniture. Erroneously assigning probative value to these two
factors appears to have led the court improvidently to grant, and
twice sustain, the partial summary judgment erroneously classifying
the Furniture as “[p]ermanently installed: [f]ixtures” and thus as
items covered under the building claim.
a. Interpretation of the Policy
It is axiomatic that in Louisiana, courts must begin every
legal analysis by examining primary sources of law: the State’s
Constitution, codes, and statutes. Jurisprudence, even when it
rises to the level of jurisprudence constante,9 is a secondary law
source in Louisiana. When the analysis calls for interpreting a
9
See Alvin B. Rubin, Hazards of a Civilian Venturer in
Federal Court: Travel and Travail on the Erie Railroad, 48 La. L.
Rev. 1369, 1372 (1988).
10
contract, the Louisiana Civil Code is the starting point. In it,
the methodology for contractual interpretation is set forth in
Chapter 13 of Title IV, Book III, consisting of articles 2045
through 2057. Although the initial article of Chapter 13 defines
“[i]nterpretation of a contract” as “the determination of the
common intent of the parties,10“ the official 1984 Revision Comment
makes clear that such intent is objective in nature, i.e., “what
the parties must have intended, given the manner in which they
expressed themselves in their contract,”11 not what one or the other
might say that he intended. The Code is quick to add, in the next
succeeding article, that “[w]hen the words of a contract are clear
and explicit and lead to no absurd consequences, no further
interpretation may be made in search of the parties’ intent.”12
Clearly, that was the situation faced by the district court in this
case and faced now by us.
The second district judge to consider the central issue of
contract interpretation made mention of article 2047's directive
that “[t]he words of a contract must be given their generally
prevailing meaning.”13 He stopped prematurely, however, when he
failed to consider article 2050's mandate that “[e]ach provision in
10
La. Civ. Code Ann. art. 2045 (West 1999)(emphasis added).
11
Id. cmt. b.
12
La. Civ. Code Ann. art. 2046 (West 1999).
13
La. Civ. Code Ann. art. 2047 (West 1999); see Pareti, 536
So. 2d at 420 (noting that an insurance policy is a contract
governed by the substantive rules of conventional obligations); see
also Central La. Elec. Co., 579 So. 2d at 983.
11
a contract must be interpreted in light of the other provisions so
that each is given the meaning suggested by the contract as a
whole.”14 This rule of interpretation, coupled with the corollary
that “[a] doubtful provision must be interpreted in light of the
nature of the contract...,”15 lucidly establishes the framework for
construing the Policy.
Using the methodology of the Civil Code, we must analyze the
COVERAGE provision of the Policy to determine whether its clear and
explicit words, when interpreted in light of all its provisions so
as to give each the meaning suggested by the contract as a whole
and in light of the nature of the contract (commercial insurance),
reveal the objective purpose of the agreement and produce no absurd
consequences. To do so, we turn to the plain meaning of the
language in the Policy’s COVERAGE subsections —— a. The Building,
and b. Your Business Personal Property —— to ascertain whether the
Furniture is a component of the Building, entitling the Halperns to
full replacement cost, or an element of the Halperns’ Business
Personal Property, entitling them to actual cash value only.
b. Furniture Qua “Furniture”
Despite General Star’s repeated entreaties, the district court
never got past the out-of-context dictionary definitions of the
words “fixtures,” “permanently,” and “installed,” to interpret the
Policy in general and its COVERAGE provision in particular.
Although the three defined words are neither technical terms nor
14
La. Civ. Code Ann. art. 2050 (West 1999).
15
Id. art. 2053.
12
words of art, and thus must be given their generally prevailing
meanings, the Civil Code commands that words be given those
meanings in the context of the contract as a whole —— not in
isolation or in a vacuum. This contract is one of commercial
insurance involving the Halperns’ hotel property and business;16 it
is not, for example, a residential policy issued by a sophisticated
insurance company to an inexperienced lay homeowner. Thus, the
combination of an insurance contract covering a hotel property
essentially places these commercially sophisticated parties in
legal equipoise, General Star possessing expertise in matters of
insurance and the Halperns possessing expertise in matters of hotel
ownership and operation.
When we conduct such a contextual analysis, we discern a
contractual dichotomy between the Policy’s building coverage and
its contents coverage: Permanently installed fixtures covered under
the building and all other fixtures covered under the contents.
From our reading of the COVERAGE provision as a whole, a clear
scheme emerges: The first subcategory of movable property included
in the definition of Business Personal Property is “Furniture and
fixtures”; the second subcategory of movable property included in
the definition of the Building is “Permanently installed: (a)
Fixtures; (b) Machinery; and (c) Equipment.” Thus, under the words
of the Policy, the answer to the question, which “fixtures” are
includable in the building claim and which are includable in the
contents claim, turns entirely on the permanence of their
16
See id.
13
installation —— anything but an immaterial question of fact.
In marked contrast to this dual role of “fixtures” in the
Policy’s COVERAGE provision is the singular role of “furniture” in
that provision. Like fixtures, furniture is a specified element of
Business Personal Property; but, unlike fixtures, furniture is not
a specified element or component of the Building. Indeed, the word
“furniture” is nowhere to be found in the lengthy but clearly
exclusive list of the kinds of movables that can be components of
the Building. The structure of the Policy, juxtaposing fixtures
and furniture, leads to the following conclusions:
(1) The conjunctive phrase “Furniture and
fixtures” in the COVERAGE provision’s Business
Personal Property section demonstrates that
“furniture” and “fixtures” are two different
categories of corporeal movable (personal)
property, each of which is an element of
Business Personal Property and thus is
includable in the contents claim;
(2) When “permanently installed” in the
insured immovable (building), however,
“fixtures” is a category of corporeal movables
that is an element of the Building; but
“furniture,” whether or not permanently
installed, is a category of corporeal movables
that is neither expressly nor implicitly
includable in the definition of the Building;
(3) Therefore, given the inclusion of
“permanently installed fixtures” in the
definition of the Building and the exclusion
of “furniture” from that definition, a
building claim can never include “furniture.”
Inclusio unius est exclusio alterius.
This construction of the Policy produces a result that is
anything but absurd. The armoires, night stands, entertainment
centers/chests of drawers, desks, wall mirrors, and hanging luggage
racks that comprise the Furniture are quintessential articles of
14
furniture. Indeed, they are never referred to by the Halperns,
General Star, or the district court as anything but “furniture.”
Indisputably, then, each such item is, in common parlance, an
article of furniture.
In contrast, fixtures in commercial establishments are
movables that are attached to the premises, either temporarily or
permanently, such as (1) “store fixtures” (display cases, shelving,
check-out stands, etc.); (2) “bathroom fixtures” (sinks, toilets,
tubs, showers, faucets, towel racks, etc.); (3) “kitchen fixtures”
(ranges, ovens, icemakers, dishwashers, disposals, sinks, faucets,
etc.); (4) “lighting fixtures” (ceiling lights, wall lights, track
lights, etc.), to name but a few. In and of itself, the single act
of attaching an article of furniture to the wall (or floor or
ceiling) of a hotel room cannot mystically convert such an article
into a fixture, especially not in the context of the COVERAGE
provision’s dichotomy.
Our plenary review of the summary judgment evidence, the
pertinent provisions of the Policy, and applicable pronouncements
of Louisiana law satisfies us that the Policy (1) differentiates
between “furniture” and “fixtures”; (2) includes both furniture and
fixtures as categories of corporeal movables that are Business
Personal Property; and (3) makes an exception for fixtures —— but
not for furniture —— that are permanently installed in the insured
commercial (hotel) building by shifting coverage of such articles
from Business Personal Property to the Building. Consequently, the
custom-made articles that together comprise the Furniture are
15
“furniture,” as distinguished from “fixtures,” and as such remain
Business Personal Property of the Halperns, regardless of their
attachment to the walls of the Hotel, whether temporary or
permanent. Under the obvious scheme of the COVERAGE provision and
its building/business personal property dichotomy, the Furniture is
includable only in the contents claim, not in the building claim.
c. Furniture Qua “Permanently Installed: Fixtures”
(i) Permanence of Attachment
Notwithstanding the foregoing demonstration of how the Policy
distinguishes between “furniture” and “fixtures” as separate
categories of corporeal movables, if we assume arguendo that
attachment to the walls of the Hotel could somehow convert
furniture to fixtures, the Furniture still could not be included in
the building claim for one indisputable reason: Its attachment to
the building was not “permanent.” The summary judgment evidence
confirms that there is no genuine dispute of fact about the
permanence of the Furniture’s attachment, the Halperns’ subjective
intent to the contrary notwithstanding.
No one disputes that the Furniture was custom designed, custom
fabricated, custom assembled as free standing units, and installed
at particular locations in particular guest rooms within the Hotel;
it was not, however, “built-in.” Neither is it disputed that, at
the time of design, the Halperns intended each piece to remain in
its specific location within each guest room. Neither the
Halperns’ preconceived notions of the particular locations where
each item of furniture was to be installed, however, nor the
16
custom-made nature of the Furniture, is material to the question of
the permanence of the attachment of such furniture.17 The district
court’s focus on the custom-made nature of the Furniture and on the
Halperns’ subjective intentions regarding its location and
permanence, led the court astray. For, even if we were to assume
arguendo that the Furniture constitutes “fixtures,” its
includability in the building claim would turn not on whether the
Halperns subjectively intended it to be installed “permanently,” or
on the fact that it was custom-made, but on whether its
“installation” was “permanent.”18
To answer this question, we construe the terms of the Policy
the way we are instructed by the Civil Code to interpret any
contract in Louisiana —— by considering the plain meaning of the
language in the context of the contract as whole, and using the
generally accepted meanings of the words that are not technical
terms or words of art. Applying these provisions of the Civil
17
We notice on our own that hoteliers regularly purchase
standard, ready-made furniture, sometimes expensive and sometimes
not, from manufacturers’ “reps” or catalogues, and have it
installed, either permanently or temporarily, just as they do with
custom-made furniture. Likewise, hoteliers regularly plan to
install each item of furniture —— whether ready-made or custom-made
—— in particular locations. The point is that the finest and most
costly furniture in the world, both antique and modern, is almost
always custom-made yet is almost never attached and likely never
considered to be “fixtures.”
18
We cannot ignore the common experience of today’s travelers
who find virtually every item of movable (personal) property in a
hotel room “nailed down” —— not just the beds, dressers, night
stands, and TV sets, but lamps, clock radios, mini-bars, and remote
controls for TVs as well. Surely none would contend that these
items are “permanently installed fixtures” rather than “furniture
and fixtures.”
17
Code, we attempt to ascertain the objective intent of the parties
as reflected by the words they have employed in their agreement.
We begin with Book II, Things and the Different Modifications of
Ownership, specifically Title I: Chapter 1: Section 2, IMMOVABLES
and Section 3, MOVABLES. In these sections, we find that
immovables comprise (1) tracts of land,19 (2) buildings and standing
timber,20 (3) movable things incorporated into immovables,21 and (4)
component parts of buildings or other constructions.22 To complete
the property continuum, we note that movables include (1) things
that can be moved from one place or another23 and (2) materials
until they are incorporated into a building.24 Somewhere along the
continuum, between land and buildings on one end and free-standing,
fully peripatetic corporeal movables on the other, lie movables
that are either fully incorporated into the structure or
permanently attached to it. Both of these categories of movables
become “component parts” of the immovable, one by virtue of
“incorporation,”25 and the other by virtue of permanent attachment,
19
La. Civ. Code Ann. art. 462 (West 1999).
20
Id. art. 464.
21
Id. art. 465 (“Things incorporated into a tract of land,
a building, or other construction, so as to become an integral part
of it, such as building materials, are its component parts.”).
22
Id. art. 466.
23
Id. art. 471.
24
Id. art. 472.
25
Id. art. 465; Exposé des Motifs, Title I: Things, p. 11
(West 1980).
18
i.e., “immobilization.”26
If the Furniture had been “built-in,” i.e., had been
constructed in the Hotel by sufficiently incorporating into the
structure itself building materials that lose their separate
identities and become integral parts of the building pursuant to
article 465, the Furniture would have been a component part of the
Hotel and thus includable in the building claim. There is no
dispute, however, that such was not the case. Therefore, if the
Furniture is to be accorded “fixture” status and, by virtue of
permanent installation, to be included in the building claim, it
must do so within the confines of article 466:
Things permanently attached to a building or
other construction, such as plumbing, heating,
cooling, electrical or other installations,
are its component parts.
Things are considered permanently attached if
they cannot be removed without substantial
damage to themselves or to the immovable to
which they are attached.27
To test the Furniture under article 466 for possible inclusion
in the building claim, we consider first the article’s initial
paragraph and its illustrative, ejusdem generis list of the kinds
of movable things that Louisiana recognizes as being susceptible of
component part status by virtue of permanent attachment. As the
Furniture is not plumbing, heating, cooling, or electrical, it must
qualify as “other installations” or be ineligible for component
26
La. Civ. Code Ann. art. 466; Exposé des Motifs, Title I:
Things at 12.
27
La. Civ. Code Ann. art. 466.
19
part status under article 466. And, not every “other” installation
qualifies: An installation must be sufficiently similar to the four
identified by name in article 466's illustrative list (plumbing,
heating, cooling, or electrical) to come within the purview of the
article by virtue of the ejusdem generis maxim.28
This presents the Halperns’ first hurdle. Each named type of
installation is some kind of actively functioning machinery or
equipment. In contrast, the items that comprise the Furniture are
passive, non-functioning articles. We need not, however, and
therefore do not, resolve the issue whether the Furniture can
qualify as an article 466 “other installation.” Instead, we
further assume arguendo that article 466's illustrative list can be
read that broadly and proceed to address the permanence of the
Furniture’s attachment. We do so because “[t]hings that are not
permanently attached to a building or other construction remain
movables.”29
A straightforward reading of article 466 requires that the
permanence of any movable’s installation in “a building or other
construction” meet the definition of “permanently attached” in the
article’s second paragraph. Under that definition, the Furniture
can only qualify as “[p]ermanently installed: [f]ixtures” if its
28
See Symeon Symeonides Developments in Business Law, 1984-
85, 46 La. L. Rev. 655, 687 (1986)(“[A]n item that meets the
physical test of permanent attachment described in the second
paragraph [of article 466] would not qualify as a component part,
unless it falls into one of the categories of things enumerated in
the first paragraph or [is] sufficiently similar (‘such as’)
thereto.” (emphasis added)).
29
La. Civ. Code Ann. art. 466, cmt. b.
20
removal would cause “substantial damage” to itself or to the Hotel.
In the partial summary judgment proceedings addressing the
Furniture’s classification, neither party contended that removal
would substantially damage the Furniture itself; however, the
Halperns did attempt to dispute General Star’s contention that
removal of the Furniture would not cause substantial damage to the
walls of the Hotel. Our de novo examination of the summary
judgment record convinces us that (1) the issue of “substantial
damage” under article 466's permanent attachment test is material,
but (2) as a matter of law, any dispute about the extent of removal
damage is not genuine. As such, the district court should have
granted General Star’s motion for partial summary judgment on this
point.
In his affidavit, Edward M. Halpern, General Manager of the
Hotel, averred only conclusionally and without specific factual
support, that removal would cause substantial damage to the walls
of the Hotel. His bald assertion is unsupported by any details or
factual underpinnings. In contrast, the affidavit of William A.
Moulton, an adjuster retained by General Star, is specific and
supported by discrete facts produced from his personal
observations. He explained that the Furniture “could easily be
removed from the hotel by detaching the bolts, and that removing
the furniture in this way would not substantially damage either the
furniture or the building.” He confirms his firsthand observation,
made during an inspection following the fire and after removal of
the Furniture, which revealed the presence of no noticeable damage
21
to the Hotel from removal of the Furniture.
On summary judgment, we do not, of course, weigh the evidence
or make credibility calls. We do, however, examine the evidence to
determine whether factual disputes exist and, if so, whether they
are genuine. Here, the Halperns supported their motion for partial
summary judgment with nothing more than the single, conclusional
and unsupported statement of Mr. Edward Halpern, speculating that
reversing the screws that held the Furniture in place would cause
substantial damage to the walls. Alone, this bare declaration is
both counterintuitive and insufficient to create a genuine fact
issue, particularly when compared to the adjuster’s uncontradicted,
firsthand account of his own inspection following the fire, which
revealed, at most, superficial —— insubstantial —— wall damage had
occurred when the Furniture was actually unbolted from the walls
and removed.
We are satisfied that the summary judgment record reflects no
genuine dispute on the material fact issue of substantial damage by
removal: None would be expected and none in fact occurred. Thus,
even if the Furniture could be considered to be “fixtures” under
the Policy and an “other installation” for purposes of art. 466, it
was neither permanently attached within the contemplation of that
code article nor permanently installed within the contemplation of
the COVERAGE section of the Policy. It follows that, even as
“fixtures,” the Furniture is not includable in the building claim.30
30
This analysis is in accord with Broadmoor Lumber Co. v.
Liberto, 162 So. 2d 800 (La. App. 4th Cir. 1964), which was decided
before the adoption in 1978 of the current version of Civil Code
22
(ii) “Societal Expectations”
Presumably in recognition of their inability to demonstrate
that removal of the Furniture would cause substantial damage to it
or to the Hotel, the Halperns urge us in the alternative to
disregard article 466's bright-line permanent attachment test and
read our opinion in Equibank v. United States I.R.S.31 as holding
that this code article imported into Louisiana law, for the first
time, a case-by-case “societal expectations” inquiry as the sole
criterion for determining whether a corporeal movable is
immobilized as a component part of the immovable to which it is
attached, regardless of permanence. We are aware from Equibank
that the societal expectations canon sprang —— or, more accurately,
was launched —— full-grown from the forehead of an expert witness
who testified for the I.R.S. during the trial of that case.32 This
article 466. That case turned on whether custom-built furniture
(cabinets) were “permanently attached” as a result of being screwed
to a strip of plywood which itself was nailed to the studs of the
store building through the plaster on its wall. Relying on former
article 469, which current article 466 replaced without changing
its substance (See La. Civ. Code Ann. art. 466, cmt. e, noting that
former article 469 recognized that attached movables are components
of the building if they “cannot be taken off without being broken
or injured, or without breaking or injuring the part of the
building to which they are attached,” and further noting that
“[t]he substance of this provision has been reproduced. Louisiana
jurisprudence interpreting Article 469, therefore, continues to be
relevant.”), the court concluded that the custom-made cabinets
could be removed from the commercial building in question “without
damage to them or to the wall.” The Broadmoor court therefore held
that the cabinets had not become component parts of the store
building.
31
749 F.2d 1176 (5th Cir. 1985).
32
In Equibank, the I.R.S., as the holder of a tax lien that
encumbered, inter alia, the taxpayers’ New Orleans mansion, was
pitted against the holder of a conventional first mortgage on the
23
expert witness was not, as might have been expected, a building
contractor, electrical contractor, architect, or engineer,
testifying about the extent of collateral damage that removal of
the movables in question had caused. Instead, the witness was an
expert on Louisiana property law,33 who had served as the reporter
on the Louisiana Law Institute’s continuing revision project for
the property articles of the Civil Code when the 1978 revisions to
the subject Code articles were confected and adopted by the
Legislature.
Notwithstanding the unambiguous wording of the revised version
of article 466, the Professor urged the district court to hold that
as a matter of law the antique chandeliers were not component parts
of the mansion in which they had been installed but remained
movable property. He did so, though, not by demonstrating that
neither the chandeliers nor the ceilings of the mansion had
suffered “substantial damage” during the course of removal.
Rather, the Professor posited that, because of “societal
expectations,” such high-ticket items would not be expected by the
hypothetical buyer or seller of such a mansion, or by the borrower
or lender of a loan secured by a mortgage on such a mansion (or, we
suppose, by the insurer or insured of such a mansion) to be
mansion. To prevail, the I.R.S. had to establish that several
antique chandeliers were not component parts of the mansion and
thus not encumbered by the mortgage, but instead remained separate
movables and were therefore covered by the tax lien.
33
Professor A. N. Yiannopoulos, Eason-Weinmann Professor of
Law, Tulane University Law School, New Orleans, Louisiana
(hereafter, “the Professor”).
24
component parts of the mansion, regardless of the permanence or
impermanence of the attachment of such chandeliers. From our
opinion in Equibank, we get the impression that the Professor had
opted to disregard the concept of permanent attachment as embodied
in the plain wording of article 466 (a concept that presumably
favored his client, given the apparent dearth of trial evidence of
“substantial damage” to the chandelier or the mansion during
removal) and to ground his advocacy instead on “societal
expectations.” He did so by an imaginative parsing of this article
to visualize an otherwise invisible disjunctive between the
article’s first and second paragraphs.34 Without even adverting to
34
The pedigree of the Professor’s “societal expectations”
canon is murky at best. First, there is no harbinger of such a
supervening theory in either the wording of article 466 or the
extensive 1978 official Revision Comments accompanying that
article. Neither are there clues elsewhere in the Louisiana Civil
Code to suggest such a penumbral presence. True, the Exposé des
Motifs —— written by the Professor as the introduction to the 1978
revised version of the property articles of the Civil Code —— makes
one vague allusion to “prevailing ideas in society” but only in
reference to historical Civilian approaches to the drafting of
legislation that distinguishes between movables and immovables, not
to the 1978 approach or its ultimate product. See Exposé des
Motifs, Title I: Things at 9. Cutting against any thought that the
Exposé des Motifs supports the injection of a societal expectations
test interstitially into the law of Louisiana is the statement in
the second sentence of the next-following paragraph to the effect
that “[i]n contemporary civil law, the distinction rests, in
principle, on physical notions of mobility and on ‘inherent’
characteristics of things.” In addition to this “non-support” in
the Exposé des Motifs, even the Professor’s own treatise
(Yiannopoulos, Property 2 LOUISIANA CIVIL LAW TREATISE § 22 (1980)
—— § 32 in the 1991 Third Edition of that Treatise) provides no
support for the societal expectations test. In fact only the post-
hoc effort of the Professor’s fellow academician, Professor Symeon
Symeonides of the L.S.U. Law faculty purports to support the
proposition that in 1978 Louisiana had adopted the societal
expectations theory, and even that writing fails to withstand
careful scrutiny. Writing in the 1986 Louisiana Law Review in an
effort to attribute adoption of the Yiannopoulos theory by the
25
the significance of the non-exclusive nature of the ejusdem generis
list in the first paragraph of article 466 (“such as plumbing,
heating, cooling, electrical or other installations”), the
Professor cum expert witness interposed his take on the article:
(1) Movables falling into one of the first paragraph’s four
nominate categories of installation are component parts as a matter
of law, irrespective of the nature or extent of their attachment to
the structure; (2) all installed movables other than plumbing,
heating, cooling, or electrical are to be tested under the second
paragraph of article 466 for permanence of installation hinging on
whether they can “be removed without substantial damage to
themselves or to the immovable to which they are attached.”
panel in Equibank, Professor Symeonides begrudgingly acknowledges
that a “literal reading” [What other kind of reading are we
supposed to make?] of article 466 requires application of the
“permanently attached” test to all installations, both the four
nominate categories and all others that are “sufficiently similar
(‘such as’) thereto.” After thus tipping his hat to plain reading,
however, Professor Symeonides goes on to describe the language of
article 466 as “a poor choice of words” and to refer to Professor
Yiannopoulos as “the drafter of the article.” Neither statement is
accurate: Although Professor Yiannopoulos was the reporter on the
project, his and his Advisory Committee’s version of the article
was rejected by the Council of the Louisiana State Law Institute.
As reflected in the official minutes of the meeting of the Council
of the Institute on January 14, 1977, the Council rejected the
Professor’s version and adopted in its place a substitute version
drafted instanter by Professor Carlos Lazarus of the L.S.U. law
faculty. Anything but “unfortunate,” the words were carefully
chosen to implement the objective, permanent attachment criterion
strongly favored by the Council. The Lazarus version, identical to
current article 466, was included in the Institute’s comprehensive
revision package submitted to the Legislature and was adopted
verbatim by the Legislature. Nothing in the minutes of that
meeting of the Council of the Institute or of any of its other
meetings at which the property revision project was discussed,
reflects support for adopting a touchy-feely “societal
expectations” test in lieu of the bright-line “substantial damage”
test for permanent attachment and thus component part status.
26
Unlike the chandeliers in Equibank, though, which were
electrical installations, the Furniture fits into none of the four
categories of movables listed in the first paragraph of article
466, which categories the Professor considers components of the
building as a matter of law. Thus, even if Equibank were stretched
to constitute our acceptance of the Professor’s “societal
expectations” spin on article 466,35 it would avail the Halperns
nothing: As the Furniture is not plumbing, heating, cooling, or
electrical, but is —— at most —— “other installations,” even the
Professor, as the expert witness, would have us examine the
Furniture not for societal expectations but for the extent of the
damage, if any, that would result from removal. As noted by the
panel in Equibank:
To complete the discussion, the Professor
testified that the second paragraph of article
466 covered items other than those listed in
35
Although Judge Politz’s opinion in Equibank has been cited
by other courts as this court’s acceptance of the “societal
expectations” methodology advocated by Professor Yiannopoulos, a
careful reading of that opinion demonstrates anything but
acceptance. With the late Judge Rubin, another eminent Civilian
scholar, on the panel, Judge Politz tipped his hat (1) to the
unrelated mention of “prevailing ideas in society” in the Exposé
des Motifs (which Judge Politz well knew, both from experience and
from the first footnote in the Exposé des Motifs (“Neither the
Exposé des Motifs nor the comments contained in Acts 1978, No. 728
are law.”) are at most instructive), and (2) to the boot-straps
reliance of the witness on his own theory. Judge Politz then
proceeded to turn that theory back on the Professor, demonstrating
that the technical expertise needed to install or remove a fine
chandelier —— clearly an “electrical installation” —— is such that,
even under the societal expectation test, parties such as those in
Equibank would expect the antique chandeliers to go with the
mansion. Implicitly, Judge Politz merely assumed arguendo the
validity of the position advocated by the Professor and proceeded
to reject his position even when using his own imaginative
interpretation of article 466.
27
the first paragraph. A second paragraph item
was to be considered a component part only if
its removal occasioned substantial damage to
itself or to the immovable to which it was
attached.36
Obviously, then, it is immaterial for purposes of today’s
alternative task of determining if the Furniture, as fixtures, is
susceptible of inclusion under the building claim, whether we begin
our testing under (1) the plain wording of article 466 (which looks
solely to the extent of collateral damage that would result from
removal), or (2) the Professor’s creative “societal expectations”
test (which, by his own testimony in Equibank, applies only to
plumbing, heating, cooling, or electrical installations, and leaves
all “other installations” to be tested for the permanence of
attachment under the second paragraph of article 466 and its
“substantial damage” test). For, irrespective of which path we
take, we arrive ultimately at the test for substantial damage on
removal. And, when we administer that test, the Furniture flunks:
There is no genuine dispute that neither it nor the Hotel suffered
substantial damage on removal.37
36
Equibank, 749 F.2d at 1178.
37
The only elasticity in art. 466's bright-line test for
permanence of attachment lies in the adjective “substantial” which
modifies “damage”; obviously, the question whether removal damage
is substantial is a fact-intensive, case-by-case issue which must
be decided in the context of the case. Still, the test in every
case is whether removal damage is “substantial”; it can never begin
with a “societal expectations” test that disregards removal damage
altogether. For example, some removal damage to a crane and to the
offshore platform to which it is attached is to be “expected” in
such an industrial context, and in fact was found not to be
substantial by this court, see Coulter v. Texaco, Inc., 117 F.3d
909 (5th Cir. 1997). Yet, those same damages would likely not be
expected by owners, borrowers, buyers, sellers, and insurers of a
28
Translated into the equally clear and unambiguous language of
the COVERAGE provision of the Policy, that contract, as the law
between the parties, dictates that the Furniture —— even if it can
be “fixtures” —— is not covered as an element of the Building
unless it is “permanently installed.” As the Policy contains no
definition of “permanently,” we must interpret that word’s ordinary
meaning, but in the context of the entire agreement and those of
its provisions that work interdependently with the one in which the
words are used. When we do, we conclude that the only objectively
reasonable approach to interpretation is the one provided by
article 466, under which, as we have demonstrated, permanence of
attachment turns solely on the extent of any collateral damage that
would occur on removal. Having concluded that there is no genuine
dispute as to the material fact that removal damage, if any, would
fall well short of “substantial,” the conclusion is inescapable
that the Furniture was not “[p]ermanently installed: [f]ixtures”
and thus was not covered as a component of the Building. Rather,
the Furniture is “[f]urniture and fixtures,” and thus an element of
the Halperns’ “Business Personal Property.” Clearly, then, the
fine residence, and would almost certainly be found to be
substantial in the context of antique chandeliers and the ceiling
of a mansion. This, however, is nothing more than garden-variety
contextual judging, not judicial venturing into the subjectivity of
societal expectations ab initio: Courts cannot ignore differences
in context, such as the nature of the installation and the nature
of the building or structure (chandeliers in a mansion vis-a-vis
furniture in a hotel vis-a-vis an industrial crane on an offshore
structure), when testing whether removal damage is substantial.
Considering the “expectations” of the particular industry involved
as to what is beyond normally anticipated removal damage is clearly
distinguishable from ignoring removal damage altogether and looking
to societal expectations alone to determine component part status.
29
district court should have granted General Star’s motion for
partial summary judgment to that effect. Exercising our plenary
review of the parties’ cross motions for summary judgment, we grant
General Star’s and hold that it owes the Halperns the current value
of the Furniture on the used furniture market as of the date of the
fire.
3. Other Contested Claims
General Star complains that additional trial court errors
infected the building claim as well as other claims of the
Halperns’ under the Policy. General Star advances purported errors
in the court’s treatment of overhead and profit in the repair work,
and excessive or improper charges for millwork, sound board,
electrical, air conditioning, plumbing, telephone system, and
demolition. General Star also insists that the jury’s award to the
Halperns’ for loss of income under the business interruption claim
cannot be sustained, relying principally on differences in and
purported problems with expert witnesses’ testimony and
calculations made in applying their proffered methodology.
Again, because we are unable to “fix” the quantum of the
jury’s awards for building and contents losses by merely reversing
and rendering a modified judgment, we are constrained to vacate the
judgment of the district court on those claims and remand for a new
trial. Such a trial must resolve not only the amount of the
Furniture loss but all other contested aspects of the contents and
building claims as well. We therefore decline to wade in on
General Star’s complaints and assignments of error relating to
30
other aspects of the contents and building claims. Rather, as a
prudential matter, we leave them for comprehensive analysis and an
eventual jury verdict, when the case is retried in district court.
We do not disturb, however, the facet of the district court
judgment based on the jury’s award of business interruption loss.
Although General Star’s allegations in this regard are non-
frivolous, we cannot say that the state of the record is such that
no reasonable jury could have reached the business interruption
result reached by the jury in this case.38
III.
Conclusion
The district court’s denial of General Star’s motion for
partial summary judgment and grant of the Halperns’ motion for such
a judgment, classifying the Furniture as permanently installed
fixtures and instructing the jury to include them in the building
claim, constitutes reversible error for the reasons set forth
above. Given the non-itemized nature of the jury’s awards on the
building claim and the contents claim, any ability we might
otherwise have had to correct these errors by rendering a modified
judgment is stymied. We therefore vacate the judgment of the
district court to the extent it awards damages under the building
claim and the contents claim, and remand this case for a new trial
38
See Boeing v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969)(en
banc)(“[I]f there is substantial evidence opposed to the motions
[for a JML], that is evidence of such quality and weight that
reasonable and fair-minded men in the exercise of impartial
judgment might reach different conclusions, the motions should be
denied....”), overruled on other grounds, 107 F.3d 331 (5th Cir.
1997).
31
on those claims, with instructions that the jury be charged that,
as a matter of law, the Furniture is Business Personal Property of
the Halperns and thus is compensable as used furniture, at its fair
market value, as of the date of the fire. All other aspects of the
building claim and the contents claim shall be accorded fresh-start
treatment in the new trial. The district court’s original judgment
is affirmed, however, to the extent of its award to the Halperns
for losses covered under the business interruption provisions of
the Policy.
AFFIRMED in part; REVERSED and RENDERED in part, VACATED and
REMANDED in part, for a new trial.
32