The Louisiana Supreme Court has ruled that the state’s “subsequent purchaser rule” bars the purchaser of real property later discovered to be contaminated from obtaining damages from a third party that contributed to the contamination, absent an assignment of that right in the sales contract. Eagle Pipe & Supply, Inc. v. Amerada Hess Corp., No. 10-2267 (La. 10/25/11). According to the court, under Louisiana law, the purchaser’s remedies are limited to rescission of the sale or reduction of the purchase price.
Plaintiff purchased property in Lafayette Parish in 1988. The Louisiana Department of Environmental Quality discovered sometime later that the property was contaminated with radioactive material. Plaintiff sued several parties in 2008, alleging strict liability and negligence and arguing that they contributed to the contamination before plaintiff purchased the property. The defendants moved to dismiss, citing the subsequent purchaser rule. The trial court granted defendant’s motion. The appeals court reversed, and defendant appealed to the Louisiana Supreme Court.
Reinstating the trial court’s ruling, the court said that the subsequent purchaser rule was not limited to situations where the prior damage to the property was “overt or apparent at the time of sale.” According to the court, the “. . . seller owes no warranty for defects in the thing that were known to, or should have been discovered by, a reasonably prudent buyer.”