84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al, No. 2:2012cv01748 - Document 296 (E.D. La. 2017)

Court Description: ORDER AND REASONS granting in part and denying in part 272 Motion for Judgment on the Pleadings. The Court GRANTS defendants' motion for judgment on the pleadings with respect to the June 2012 statements of claim. The Court DENIES defendants' motion with respect to the November 2011 statement of claim. Signed by Judge Sarah S. Vance on 9/14/2017. (cg)

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84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al Doc. 296 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA 84 LUMBER COMPANY VERSUS CIVIL ACTION NO. 12-1748 F.H. PASCHEN, S.N. NIELSEN & ASSOCIATES, LLC, ET AL. SECTION “R” (5) ORD ER AN D REASON S Defendants F.H. Paschen, S.N. Nielsen & Associates, LLC (“Paschen”), Continental Casualty Com pany (“Continental”), Safeco Insurance Com pany of Am erica, and Fidelity and Deposit Com pany of Maryland (collectively, “defendants”) m ove for judgm ent on the pleadings 1 as to Count Six of the second amended com plaint. 2 For the following reasons, the Court grants in part and denies in part defendants’ motion. I. BACKGROU N D This case arises out of two school construction projects in Louisiana. 3 Paschen entered into an agreement with the Louisiana Department of Education to build a new elementary school at the Mildred Osborne School 1 2 3 R. Doc. 272. R. Doc. 249. R. Doc. 28 at 2-3 ¶ 5. Dockets.Justia.com in New Orleans (“Osborne Project”). 4 Paschen also entered into a contract with the Plaquem ines Parish School Board to build the South Plaquem ines High School (“South Plaquem ines Project”). 5 On both projects, Paschen was the general contractor. 6 Both projects were subject to the provisions of the Louisiana Public Works Act (“LPWA”), La. R.S. § 38:2241, et seq., and therefore each project required the general contractors to post payment bonds before construction could begin. 7 Continental, Safeco, and Fidelity (collectively, “Sureties”) issued the required bonds. 8 Paschen subcontracted a portion of both projects to J & A Construction Managem ent Resources Company, Inc. (“J & A”). 9 J & A in turn subcontracted a portion of its work on both projects to 84 Lum ber. 10 84 Lum ber alleges that Paschen and J & A have failed to com pensate it for its work on the projects. 11 As relevant here, 84 Lumber filed three statem ents of claim under the LPWA. See La. R.S. § 38:2242(B). First, on Novem ber 2, 20 11, 84 Lumber filed a statement of claim in the am ount of $ 3,50 7.16 for 4 5 6 7 8 9 10 11 Id. at Id. Id. at Id. at Id. Id. at Id. at Id. at 3 ¶ 5. 2 ¶ 5. 3 ¶ 6. 3 ¶ 7. 3 ¶ 9. 3-4 ¶ 9. 2 m aterials supplied on the Osborne Project. 12 Second, on J une 13, 20 12, 84 Lum ber filed a statem ent of claim in the am ount of $80 8,520 .39 for work perform ed on the Osborne Project. 13 Third, also on J une 13, 20 12, 84 Lum ber filed a statem ent of claim in the am ount of $ 1,0 42,0 80 .0 9 for work perform ed on the South Plaquem ines Project. 14 As the Court explained in an earlier order, 84 Lum ber did not provide proper notice of the J une 20 12 statements of claim. 15 Specifically, although the statute required 84 Lumber to provide written notice by registered or certified m ail to Paschen, see La. R.S. § 38:2247, 84 Lum ber provided notice by em ail to Paschen’s counsel. 16 Paschen and Continental deposited bonds as security for 84 Lumber’s statements of claim to induce the project owners to release payment to 12 Id. at 5 ¶ 13. Id. at 3-4 ¶ 9, 4 ¶ 13; see also R. Doc. 263 at 4. 14 Id. 15 R. Doc. 263. 16 Id. Although 84 Lum ber acknowledged that its em ailed com m unications did not satisfy the precise term s of Section 2247, it argued that all that is required under the statute is actual notice. This interpretation essentially rewrites the statute. The Court notes that actual notice is significantly broader than written notice “by registered or certified m ail,” potentially including notice by telephone or publication and introducing evidentiary uncertainty into a statutory process obviously designed to avoid issues about receipt of notice. While the Court is sympathetic to 84 Lum ber’s predicament, it will not rewrite a Louisiana statute that should be “strictly construed such that the privileges granted are not extended beyond the statute[].” W ilkin v. Dev Con Builders, Inc., 561 So. 2d 66, 71 (La. 1990 ). 3 13 Paschen. 17 See La. R.S. § 38:2242.2. Release bonds for the two Osborne Project statements of claim were deposited on J une 27, 20 12, and J anuary 4, 20 13. 18 The release bond for the South Plaquem ines Project statem ent of claim was deposited on August 3, 20 12. 19 On J uly 5, 20 12, 84 Lum ber sued Paschen and the Sureties, alleging that 84 Lum ber was not paid in full for work performed on the Osborne and South Plaquem ines Projects. 20 84 Lumber sued under the LPWA, seeking payment on its J une 20 12 statements of claim from both Paschen and the Sureties (Counts One and Two). 21 84 Lum ber also brought a claim of unjust enrichment. 22 On February 5, 20 13, 84 Lum ber amended its com plaint to add a breach of contract claim and to seek paym ent for m aterials provided and extra work perform ed on the projects. 23 84 Lum ber again am ended its com plaint on April 17, 20 17, seeking recovery from the release bonds (Count Six). 24 17 18 19 20 21 22 23 24 R. Doc. 249 at 1-2 ¶¶ 1-3. Id. at 1 ¶ 1, 2 ¶ 3. Id. at 2 ¶ 2. R. Doc. 1. Id. at 4-5 ¶¶ 13-14, 16. Id. at 6 ¶ 18. R. Doc. 28 at 4 ¶ 10 , 6 ¶ 20 . R. Doc. 249. 4 The Court granted sum m ary judgment against 84 Lumber on Counts One and Two, its initial LPWA claim s, because its J une 20 12 statem ents of claim lacked proper notice. 25 The Court also granted summary judgm ent on the unjust enrichm ent claim . 26 Additionally, the Court dism issed 84 Lum ber’s claim for extra work performed on the projects. 27 Defendants now m ove for judgm ent on Count Six, 84 Lum ber’s release bond claim . 28 84 Lum ber responded, 29 defendants replied, 30 and 84 Lumber filed a surreply. 31 II. LEGAL STAN D ARD A m otion for judgm ent on the pleadings under Federal Rule of Civil Procedure 12(c) is appropriate if the m atter can be adjudicated by deciding questions of law rather than factual disputes. Brittan Com m c’ns Int’l Corp. v. Sw . Bell Tel. Co., 313 F.3d 899, 90 4 (5th Cir. 20 0 2). It is subject to the same standard as a m otion to dism iss under Rule 12(b)(6). Doe v. My Space, Inc., 528 F.3d 413, 418 (5th Cir. 20 0 8). To survive a Rule 12(b)(6) m otion to 25 26 27 28 29 30 31 R. Doc. 263 at 23. Id. at 24. R. Doc. 290 . R. Doc. 272. R. Doc. 274. R. Doc. 285. R. Doc. 286. 5 dism iss, plaintiffs m ust plead enough facts to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 547 (20 0 7)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Id. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiff. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 20 0 9). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. A legally sufficient com plaint m ust establish m ore than a “sheer possibility” that plaintiff’s claim is true. Id. It need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elements of a cause of action. Tw om bly , 550 U.S. at 555. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal evidence of each elem ent of the plaintiff’s claim. Lorm and, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, or if it is apparent from the face of the com plaint that there 6 is an insuperable bar to relief, the claim m ust be dism issed. Tw om bly , 550 U.S. at 555. III. D ISCU SSION Like Counts One and Two, which were subject to an earlier m otion for sum m ary judgment, Count Six seeks payment for the work performed and m aterials supplied by 84 Lum ber on the Osborne and South Plaquem ines Projects. Count Six alleges a right to paym ent from Paschen and Continental by virtue of the release bonds. 32 Defendants principally contend that the release bond claim is not viable in light of the Court’s order granting sum m ary judgm ent on 84 Lumber’s LPWA claim s in Counts One and Two. 33 Additionally, defendants argue that 84 Lum ber’s release bond claim s are perem pted by Section 2247’s one-year lim itation period. 34 A. 8 4 Lu m be r’s Re le as e Bo n d Claim Is D e rivative o f Its Earlie r-As s e rte d LPW A Claim s The purpose of the LPWA is “to protect those contributing to the construction, alteration, or repair of public works.” Pierce Foundations, Inc. v. Jaroy Constr., Inc., 190 So. 3d 298, 30 6 (La. 20 16). To accom plish this 32 33 34 R. Doc. 249 at 3 ¶ 5. R. Doc. 272-1 at 2. R. Doc. 285 at 6-9. 7 purpose, the LPWA first requires that the contractor for projects like the Osborne and South Plaquem ines Projects post a bond “for the payment by the contractor or subcontractor to claim ants as defined in R.S. 38:2242.” Id. at 30 1 (quoting La. R.S. § 38:2241(A)(2)). Section 2242 defines a “claim ant” as: any person to whom m oney is due pursuant to a contract with the owner or a contractor or subcontractor for doing work, perform ing labor, or furnishing m aterials or supplies for the construction, alteration, or repair of any public works . . . . La. R.S. § 38:2242(A). The LPWA “further establishes a means for asserting a claim ”: Any claim ant m ay after the maturity of his claim and within forty-five days after the recordation of acceptance of the work by the governing authority or of notice of default of the contractor or subcontractor, file a sworn statement of the am ount due him with the governing authority having the work done and record it in the office of the recorder of m ortgages for the parish in which the work is done. Pierce, 190 So. 3d at 30 1-0 2 (footnote om itted) (quoting La. R.S. § 38:2242(B)). But before a subcontractor not in privity with the general contractor m ay assert a right of action against the general contractor on the bond, the subcontractor m ust provide proper notice. La. R.S. § 38:2247; see also Elec. Supply Co., Inc. v. Great Am . Ins. Co., 973 So. 2d 827, 830 (La. App. 2 Cir. 20 0 7) (“[T]he notice referenced in [Section] 2247 is to be given 8 to the contractor to preserve the right of action against the contractor or the surety.”). In effect, these provisions “give certain classes of persons not enjoying privity of contract with the general contractor or with the governing authority a claim nevertheless against the general contractor and his surety and in some instances a claim against the governing authority itself.” W ilkin v. Dev Con Builders, Inc., 561 So. 2d 66, 71 (La. 1990 ); see also Pierce, 190 So. 3d at 30 1 (noting that the LPWA grants subcontractors “a privilege against the unexpended fund in the possession of the public entity with whom the original contract had been entered into,” instead of a lien on the public work itself (quoting W ilkin, 561 So. 2d at 70 )). The public authority that owns the project becomes liable for these claim s if it “m akes final paym ent to the contractor without deducting the total am ount of all outstanding claims . . . or without obtaining a bond from the contractor to cover” that am ount. La. R.S. § 38:2242(D). To avoid the public authority’s liability, “any interested party m ay deposit” a bond, cash, certified funds, or a certificate of deposit up to 125% of the am ount asserted in the claim . Id. § 38:2242.2(A). This deposit “guarantee[s] paym ent of the obligation secured by the privilege,” and cancels the statement of claim in the m ortgage records. Id. § 38:2242.2(A)-(B). 9 According to 84 Lum ber, Paschen and Continental deposited three release bonds under this provision to induce the project owners to release payment without incurring the risk of liability under Section 2242(D). 35 84 Lum ber now seeks to recover from these release bonds instead of the payment bond. Count Six of the second am ended complaint purports to assert an additional right of action arising out of the release bonds. 36 But 84 Lum ber fails to cite any legal authority recognizing a right to recover from release bonds that is independent of its right of action under the LPWA. The statute itself does not provide an independent right of action for subcontractors to recover from release bonds. To the contrary, the LPWA describes only one process for filing a statement of claim . See La. R.S. § 38:2242(B). If such a statement is filed, Section 2242.2 perm its a contractor (or any other interested party) to deposit a bond or other security in order “to guarantee paym ent of the obligation secured by the privilege.” Id. § 38:2242.2(A). Thus, the statutory fram ework suggests that a release bond provides security for the privilege created in favor of the claim ant who properly files a statem ent of claim under the LPWA. 35 36 R. Doc. 249 at 1-2 ¶¶ 1-3. Id. at 3 ¶ 5. 10 Louisiana courts have interpreted sim ilar release bond provisions in this way. One court of appeal described the release bond authorized by the Private Works Act as “merely another form of security substituted for the lien.” Brunet v. Justice, 264 So. 2d 743, 746 (La. App. 4 Cir. 1972); see also La. R.S. § 9:4841. The Brunet court further stated that “no greater rights can [i]nure to the claimant under the bond than he possessed under the lien.” Id. Another court of appeal applied the Brunet court’s holdings to the Public Works Act, concluding that the release bond “secured payment for [the plaintiff’s] claim under” that act. D & J Constr. Co. v. Mid-Continent Stone Co., 571 So. 2d 762, 765 (La. App. 2 Cir. 1990 ). The D & J Construction court also cited a law review survey for the proposition that filing a release bond “should neither enlarge nor dim inish the substantive rights of the claim ant.” Id. (quoting Thom as Harrell, Security Devices, The W ork of the Louisiana Appellate Courts for the 1972– 1973 Term , 34 La. L. Rev. 197, 273 (1974)). A third court of appeal also described release bonds under the Public Works Act as “m erely a form of security substituted for [the plaintiff’s] claims against the funds held by the [public authority].” LeBlanc & Theriot Equip. Co. v. H & S Constr. Co., 591 So. 2d 1274, 1277 (La. App. 3 Cir. 1991). Based on the statutory framework and Louisiana caselaw, the Court concludes that the filing of a release bond does not enlarge the substantive 11 rights of a subcontractor under the LPWA. Accordingly, 84 Lum ber’s claim against Paschen and Contintental on each release bond depends on a statement of claim that satisfies the filing and notice requirem ents of the LPWA. 84 Lum ber’s counterarguments do not hold water. First, 84 Lumber argues that Section 2247’s notice provisions cannot apply to release bond claim s. 37 More specifically, 84 Lumber notes that Section 2247 refers to “the bond furnished by the contractor,” while Section 2242.2 perm its “any interested party” to deposit a bond, cash, certified funds, or a certificate of deposit. Com pare La. R.S. § 38:2247, w ith id. § 38:2242.2. 84 Lumber further contends that applying Section 2247 to release bond claim s would create an absurd result because Section 2247 requires notice of a statem ent of claim within 45 days from the owner’s acceptance of the project, while parties may file release bonds at any tim e. 38 According to 84 Lumber, a general contractor could deposit a release bond on the forty-sixth day after acceptance and then obtain a release on any subsequent statem ent of claim against the release bond because such claim would be late under Section 2247. These arguments are prem ised on a rigid distinction between release 37 38 R. Doc. 274 at 11-13. Id. at 13. 12 bond claim s and payment bond claims. Because no such distinction exists under Louisiana law, these arguments are meritless. Second, in attempting to distinguish D & J Construction and LeBlanc & Theriot Equipm ent, 84 Lum ber m isreads Pierce, in which the Louisiana Suprem e Court discussed the two avenues of relief for claim ants under the LPWA. The first avenue, available only to parties in privity with the general contractor, is a direct action against the general contractor and the sureties on the payment bond. Pierce, 190 So. 3d at 30 3-0 4 & n.3. The second avenue is to file a statem ent of claim under Section 2242(B) to obtain a “privilege against the unexpended fund in the possession of the authorities with whom the original contract had been entered into.” Id. at 30 5 (quoting W ilkin, 561 So. 2d at 70 ). If the subcontractor properly files and gives notice of this statement of claim , Section 2247 guarantees the subcontractor’s right of action against the contractor and sureties. La. R.S. § 38:2247. 84 Lumber construes its earlier-asserted LPWA claim s as following the first avenue and its release bond claim as following the second. 39 But 84 Lum ber is not in privity with the general contractor and thus cannot m aintain a direct action against Paschen and the Sureties. Therefore, Count Six necessarily relies on the same avenue of relief as Counts One and Two. 39 R. Doc. 274 at 9, 14-15. 13 As the Court explained in its earlier order, compliance with Section 2247 is a prerequisite to a subcontractor’s right of action against a general contractor not in privity with the subcontractor. Because the Court has found that 84 Lumber failed to give proper notice under Section 2247 of its J une 20 12 statements of claim , 84 Lum ber has no right of action under the LPWA and cannot recover from the release bonds related to those claim s. The Court’s earlier order, however, did not apply to the November 20 11 statement of claim for $ 3,50 7.16 in m aterials. And defendants expressly stated that this November 20 11 claim was not relevant to their m otion for sum m ary judgment. 40 Thus, the Court’s earlier grant of sum m ary judgment does not bar recovery from the release bond related to 84 Lum ber’s claim for $ 3,50 7.16 in m aterials. B. 8 4 Lu m be r’s Re le as e Bo n d Claim Is N o t U n tim e ly Defendants next argue that Count Six is untim ely because the one-year lim itation period in Section 2247 is perem ptive. 41 A perempted claim under Louisiana law cannot relate back to the original com plaint under Federal Rule of Civil Procedure 15(c). See D & S Marine Transp., L.L.C. v. S & K Marine, L.L.C., No. 14-20 48, 20 15 WL 5838220 , at *4 (E.D. La. Oct. 7, 20 15). 40 41 R. Doc. 220 -1 at 6. R. Doc. 285 at 6-9. 14 But the Louisiana Supreme Court has twice referred to the lim itation period in Section 2247 as prescriptive, not perem ptive. See Pierce, 190 So. 3d at 30 5 (“La. R.S. [§] 38:2247 is first and forem ost a prescription provision . . . .”); Honey w ell, Inc. v. Jim m ie B. Guinn, Inc., 462 So. 2d 145, 149 (La. 1985). This Court will not deviate from such clear guidance. Under Rule 15(c), 84 Lum ber’s release bond claim m ay relate back to an earlier pleading if it “arose out of the conduct, transaction, or occurrence set out . . . in the original pleading.” Fed. R. Civ. P. 15(c)(1)(B). In its first am ended complaint, filed on February 5, 20 13, 84 Lumber asserted a claim for $ 3,50 7.16 in materials provided to Paschen. 42 Thus, to the extent 84 Lum ber’s release bond claim seeks recovery based on the November 20 11 statement of claim for the same $ 3,50 7.16 in m aterials, the claim relates back to February 5, 20 13. According to defendants, the public authorities recorded their acceptance of both projects in Spring 20 14, after 84 Lumber filed its first am ended com plaint. 43 Therefore, 84 Lumber’s release bond claim is not prescribed by Section 2247. 42 43 R. Doc. 28 at 4 ¶ 11, 6 ¶ 21. R. Doc. 285 at 7. 15 IV. CON CLU SION For the foregoing reasons, the Court GRANTS defendants’ m otion for judgm ent on the pleadings with respect to the J une 20 12 statem ents of claim. The Court DENIES defendants’ m otion with respect to the November 20 11 statement of claim . New Orleans, Louisiana, this _ 14th _ day of Septem ber, 20 17. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 16

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