84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al, No. 2:2012cv01748 - Document 337 (E.D. La. 2018)
Court Description: ORDER AND REASONS regarding 324 Motion for Attorney Fees and 326 Motion to Alter Judgment. For the foregoing reasons, the Court DENIES Paschen's motion for attorney's fees and 84 Lumber's motion to alter or amend final judgment. Signed by Judge Sarah S. Vance on 3/27/2018. (cg)
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84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al Doc. 337 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 Defendant F.H. Paschen, S.N. Nielsen & Associates, LLC (Paschen) m oves for attorney’s fees, and plaintiff 84 Lum ber Company m oves to am end or alter final judgment under Federal Rule of Civil Procedure 59(e). 1 For the following reasons, the Court denies both m otions. I. BACKGROU N D This case arises out of two school construction projects in Louisiana. 2 Paschen entered into contracts to build an elem entary school at the Mildred Osborne School in New Orleans (Osborne Project) and a high school in South Plaquem ines Parish (South Plaquem ines Project). 3 1 2 3 On both projects, R. Doc. 326. R. Doc. 28 at 2-3 ¶ 5. Id. at 3 ¶ 5. Dockets.Justia.com Paschen was the general contractor. 4 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. 5 Defendants Continental Casualty Com pany, Safeco Insurance Com pany of America, and Fidelity & Deposit Com pany of Maryland (collectively, the Sureties) issued the required bonds. 6 Paschen subcontracted a portion of both projects to J &A Construction Management Resources Com pany, Inc. (J &A). 7 J &A in turn subcontracted a portion of its work on both projects to 84 Lum ber. 8 According to 84 Lum ber, in April 20 11, Paschen and J &A stopped paying 84 Lum ber for its work on the projects. 9 As a result, on November 29, 20 11, 84 Lumber filed sworn statem ents of claims for m oney owed on both projects in com pliance with the LPWA. Specifically, 84 Lumber claim ed at least $ 549,778.16 for the Osborne Project and at least $ 1,666,921.66 for 4 5 6 7 8 9 Id. at 2 ¶ 5. Id. at 3 ¶ 6. Id. Id. at 3 ¶ 7. Id. at 3 ¶ 9. R. Doc. 1 at 3-4 ¶ 9; see also R. Doc. 214-11 at 1. 2 the South Plaquem ines Project. 10 84 Lum ber also filed a statem ent of claim for $ 3,50 7.16 in m aterials supplied on the Osborne Project. 11 In an attem pt to “com prom ise partially their differences,” Paschen and 84 Lumber entered into two agreem ents in May 20 12, covering both projects. 12 Under the agreem ents, Paschen agreed to pay 84 Lumber $ 1,297,60 3, and 84 Lumber agreed to indem nify, defend, and hold Paschen harm less from certain claim s related to 84 Lum ber’s work on the projects. 13 Also in May 20 12, 84 Lum ber cancelled its November 20 11 sworn statem ents for both projects and rem oved them from the m ortgage records of Orleans Parish and Plaquem ines Parish, respectively. 14 Less than one m onth after cancelling both statem ents, on J une 8, 20 12, 84 Lum ber filed two new sworn statem ents of claim s, one for each project. 84 Lum ber claim ed $ 80 8,520 .39 for the Osborne $ 1,0 42,0 80 .0 9 for the South Plaquem ines Project. 15 Project, and Paschen and Continental later posted release bonds for these statem ents of claim . 16 10 R. Doc. 217-27 at 4; R. Doc. 214-13 at 4. R. Doc. 28 at 5 ¶ 13. 12 R. Doc. 214-31 (Osborne Project); R. Doc. 214-15 (South Plaquem ines Project). 13 R. Doc. 214-31 at 2; R. Doc. 214-15 at 2. 14 R. Doc. 214-20 ; R. Doc. 210 at 8. 15 R. Doc. 214-32 at 4 (Osborne Project); R. Doc. 214-21 at 7 (South Plaquem ines Project). 16 R. Doc. 249 at 1-2 ¶¶ 1-3. 3 11 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. 17 84 Lumber sued under the LPWA, seeking payment on its J une 20 12 statements of claim from both Paschen and the Sureties. 18 84 Lumber amended its com plaint on April 17, 20 17, seeking recovery from the release bonds. 19 The Court granted summ ary judgment dism issing 84 Lum ber’s initial LPWA claim s because the J une 20 12 statements of claim lacked proper notice under Louisiana Revised Statutes § 38:2242(B). 20 Later, the Court granted judgm ent on the pleadings and dism issed 84 Lumber’s release bond claim . 21 The Court entered final judgm ent on J anuary 22, 20 18. 22 On February 2, Paschen m oved for attorney’s fees based on the May 20 12 com prom ise agreements. 23 84 Lum ber then m oved to am end or alter final judgm ent in light of new evidence purportedly included in Paschen’s m otion. 24 17 18 19 20 21 22 23 24 R. Doc. 1. Id. at 4-5 ¶¶ 13-14, 16. R. Doc. 249. R. Doc. 263 at 23. R. Doc. 296. R. Doc. 319. R. Doc. 324. R. Doc. 326. 4 II. D ISCU SSION A. May 2 0 12 Agre e m e n ts Paschen’s and 84 Lum ber’s m otions both seek relief based on the May 20 12 agreements signed by the parties. Each agreement, one for the Osborne Project and the other for the South Plaquem ines Project, is entitled “Partial Com prom ise and Agreement for Defense and Indem nity.”25 The agreements explain that Paschen had been m aking joint paym ents to J &A and 84 Lum ber for work perform ed by 84 Lumber, but had ceased doing so in recent weeks. The parties entered into the agreements “in order to comprom ise partially their differences, and induce Paschen to continue paym ents under the J &A Subcontract.”26 Under the term s of the South Plaquem ines Project agreement, 84 Lum ber agreed to “indem nify, defend and hold Paschen . . . harm less from and against any claim . . . , and against any suit to enforce or recover on such [claim ],” including attorney’s fees, arising “from or in connection with 84 Lum ber’s work, on the Plaquem ines Project, or related to work, m aterials or equipm ent supplied or asserted to have been supplied, by any of 84’s direct or lower-tier subcontractors.”27 This indem nity obligation did not apply to 25 26 27 R. Doc. 214-15; R. Doc. 214-31. R. Doc. 214-15 at 1; R. Doc. 214-31 at 1. R. Doc. 214-15 at 2. 5 claim s by subcontractors “who contracted directly with J &A, with whom J &A did not contract at 84 Lumber’s insistence.”28 In return, Paschen agreed to pay 84 Lum ber $ 1,297,60 3 for the South Plaquem ines Project. 29 This paym ent would be by check, jointly payable to 84 Lum ber and J &A, and already endorsed by J &A. Paschen also agreed to “[m ]ake future paym ents to 84 Lumber jointly with J &A, . . . without 84’s having to produce lien waivers from its subcontractors and suppliers.”30 But Paschen would “not be obliged to m ake any payment for work which Owner has withheld payment to Paschen because of a lien filed on either Project.”31 The agreement applied “only to obligations of the signing parties to each other on that project.”32 B. Atto rn e y’s Fe e s Paschen asserts that it is entitled attorney’s fees under the May 20 12 agreements. Specifically, Paschen argues that 84 Lum ber agreed to pay attorney’s fees expended in defense of any claim s that arise from or in 28 Id. The Osborne Project agreement contains substantially sim ilar, though not identical, language. R. Doc. 214-31 at 2. 29 R. Doc. 214-15 at 2. The agreements contain no paym ent obligation for work performed on the Osborne Project. 30 Id. at 2-3. 31 Id. at 3. 32 Id. 6 connection with 84 Lum ber’s work on the projects—including 84 Lumber’s own claim s in this lawsuit. 33 Litigants are liable for their own attorney’s fees, absent a statute or contract providing otherwise. See Aly eska Pipeline Co. v. W ilderness Soc’y , 421 U.S. 240 (1975). Under Federal Rule of Civil Procedure 54(d)(2), a party can seek attorney’s fees by m otion no later than 14 days after the entry of judgm ent “unless the substantive law requires those fees to be proved at trial as an elem ent of dam ages.” Fed. R. Civ. P. 54(d)(2)(A). The Advisory Com m ittee Note explains that Rule 54(d) does not “apply to fees recoverable as an elem ent of dam ages, as when sought under the term s of a contract; such dam ages typically are to be claim ed in a pleading and m ay involve issues to be resolved by a jury.” Fed. R. Civ. P. 54 advisory com m ittee’s note to 1993 am endment. Courts have distinguished between attorney’s fees under “prevailing party” contract provisions (which are properly sought in a Rule 54(d) m otion) and attorney’s fees under other types of contract provisions (which are recoverable as damages and m ust be pleaded and proved). Com pare Engel v. Teleprom pter Corp., 732 F.2d 1238, 1242 (5th Cir. 1984) (defendant entitled to attorney’s fees when he becam e “prevailing party” after appeal), and Rissm an v. Rissm an, 229 F.3d 586, 588 (7th Cir. 20 0 0 ) 33 R. Doc. 324-1 at 6. 7 (“Fees for work done during the case should be sought after decision, when the prevailing party has been identified . . . .”), w ith Kraft Foods N . Am ., Inc. v. Banner Eng’g Sales, Inc., 446 F. Supp. 2d 551, 578 (E.D. Va. 20 0 6) (“Where attorney’s fees are an elem ent of dam ages, such as in an indem nification clause, the award of attorneys’ fees should be denied where the party seeking them fails to carry its burden of proof at trial.”); see also Malin Int’l Ship Repair & Dry dock, Inc. v. M/ V SEIM SW ORDFISH, 611 F. Supp. 2d 627, 636 (E.D. La. 20 0 9) (noting this distinction). Paschen seeks attorney’s fees based on 84 Lumber’s duty to indem nify, defend, and hold harm less—not based on the prevailing party provision of the May 20 12 settlem ent agreements. 34 As an initial m atter, Paschen has not shown that it is entitled attorney’s fees under these contracts. The contractual language itself is ambiguous. On the one hand, 84 Lum ber’s indem nity obligation m ay be read as applying to any claim arising from 84 Lum ber’s work on the projects and any claim related to work by 84 Lum ber’s subcontractors. This broader interpretation would cover claim s by 84 Lum ber itself, thus operating as a release of 84 Lumber’s claim s against 34 The agreements do provide that “[i]f either party files a suit to enforce this agreem ent, the prevailing party in such suit shall be entitled to recover . . . attorneys’ fees.” R. Doc. 214-15 at 3. The parties do not discuss, and the Court does not decide, whether this provision applies in this case. 8 Paschen. Cf. In re Y & S Marine, Inc., No. 10 -20 94, 20 13 WL 3874883 (E.D. La. J uly 25, 20 13) (interpreting indemnity obligation to cover direct claim s between the parties in addition to third-party claim s). On the other hand, the obligation m ay extend only to claims by 84 Lum ber’s subcontractors, and arising from 84 Lum ber’s work. This narrower interpretation accords with general usage of indem nification provisions. See, e.g., Soverign Ins. Co. v. Texas Pipe Line Co., 488 So. 2d 982, 984-85 (La. 1986) (discussing a broadly worded indem nification provision in terms of claim s by third parties against the indem nitee). Additionally, it would be absurd to read the contracts as requiring 84 Lum ber to defend Paschen against 84 Lum ber’s own claim. The contracts also expressly exclude claim s by J &A’s subcontractors “with whom J &A did not contract at 84 Lum ber’s insistence,” which m ay reasonably be read to include 84 Lum ber itself. 35 Reading the contract as a whole, in light of general usage, the scope of 84 Lumber’s indem nity obligation is ambiguous. But parol evidence suggests that the parties did not intend for 84 Lumber’s indem nity obligation under the May 20 12 agreements to operate as a release of 84 Lum ber’s direct claim s against Paschen. In an em ail dated March 28, 20 12, 84 Lumber’s counsel sought to clarify that “[Paschen] and 84 are reserving all rights 35 R. Doc. 214-15 at 2. 9 regarding the ‘disputed’ am ounts” Paschen allegedly owed 84 Lumber. 36 In response, Paschen’s counsel stated: “We understand you reserve rights to dispute backcharges.”37 Paschen has not pointed to any extrinsic evidence suggesting that the parties intended for 84 Lum ber’s indem nity obligation to operate as a release of 84 Lum ber’s direct claim s against Paschen. Thus, Paschen has not shown that it is entitled attorney’s fees under the May 20 12 agreements. Even if Paschen were entitled attorney’s fees, however, a Rule 54(d) m otion is not the proper vehicle to seek such fees. Under Louisiana law, a claim for indem nification is its own cause of action. See Meloy v. Conoco, Inc., 50 4 So. 2d 833, 839 (La. 1987). Moreover, “a cause of action for indem nification for cost of defense does not arise until the lawsuit is concluded and defense costs are paid.” Id. In earlier pleadings, Paschen generally asserted that it is entitled attorney’s fees, and argued that the May 20 12 agreements constituted a release of 84 Lumber’s claim s against it. But Paschen neither pleaded nor proved a cause of action for indem nification for attorney’s fees in this action, and could not have done so in any event because the cause of action had not yet accrued. Thus, Paschen m ay not now seek 36 37 R. Doc. 327-1 at 12. Id. 10 attorney’s fees based on 84 Lum ber’s duty to indem nify, defend, and hold harm less. C. Am e n d m e n t o f Fin al Ju d gm e n t 84 Lumber seeks to am end or alter final judgm ent in light of Paschen’s purported adm ission in its m otion for attorney’s fees that there was a direct contractual relationship between the two parties. According to 84 Lumber, the existence of a direct contractual relationship between the parties underm ines the Court’s order granting sum mary judgm ent against 84 Lum ber on its paym ent bond claim s. In that order, the Court dism issed 84 Lum ber’s LPWA claim s because 84 Lum ber’s J une 20 12 statem ents of claim lacked proper notice. 38 Specifically, 84 Lum ber failed to provide written notice to Paschen, by registered or certified m ail, of its statem ents of claim. See La. R.S. § 38:2247. This specific notice requirement applies only if a claim ant lacks a direct contractual relationship with the general contractor. Id. 84 Lumber therefore argues that because a direct contractual relationship existed between it and Paschen, it was not required to satisfy Section 2247’s notice requirem ent. A district court has considerable discretion to grant or deny a m otion under Federal Rule of Civil Procedure 59(e). See Edw ard H. Bohlin Co. v. 38 R. Doc. 263 at 23. 11 Banning Co., 6 F.3d 350 , 355 (5th Cir. 1993). The Court m ust “strike the proper balance between two com peting im peratives: (1) finality, and (2) the need to render just decisions on the basis of all the facts.” Id. A m oving party m ust satisfy at least one of the following criteria to prevail on a Rule 59(e) m otion: (1) the m otion is necessary to correct a m anifest error of fact or law; (2) the m ovant presents newly discovered or previously unavailable evidence; (3) the motion is necessary in order to prevent m anifest injustice; or (4) the m otion is justified by an intervening change in the controlling law. See Fid. & Deposit Co. of Md. v. Om ni Bank, 1999 WL 970 526, at *3 (E.D. La. Oct. 21, 1999). The Court denies 84 Lumber’s m otion for several reasons. First, 84 Lum ber stated in the pretrial order that “84 Lumber and [Paschen] do not have contractual privity.”39 This adm ission is binding on 84 Lum ber. See Kona Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 60 4 (5th Cir. 20 0 0 ) (“[A] joint pretrial order signed by both parties supersedes all pleadings and governs the issues and evidence to be presented at trial.” (citation om itted)); In re El Paso Refinery , L P, 171 F.3d 249, 255 (5th Cir. 1999) (“Generally, stipulations in a pretrial order bind the parties, absent modification.”). 39 R. Doc. 210 at 5. 12 Second, 84 Lumber fails to establish a sufficient ground to alter or am end final judgment. Although 84 Lum ber portrays the existence of a direct contractual relationship between the parties as new evidence, there is nothing new about the May 20 12 agreem ents. These agreem ents were in the sum m ary judgm ent record, and the Court explicitly discussed them in its sum m ary judgm ent order. 40 84 Lum ber’s argum ent, however, is new. At no point before now has 84 Lum ber argued that Section 2247’s notice requirement was inapplicable because of the May 20 12 agreem ents. But a party’s failure to raise an argument does not justify altering a final judgm ent under Rule 59(e). See Tem plet v. Hy droChem Inc., 367 F.3d 473, 478-79 (5th Cir. 20 0 4) (“This Court has held that [a Rule 59(e)] m otion is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgm ent.”). Third, 84 Lum ber’s novel argument does not hold water. Section 2247 im poses a notice requirem ent on a certain of class of claim ants: those who have a contractual relationship with a subcontractor but not with the general contractor. The Louisiana Supreme Court has noted that the notice requirement does not apply “where preexisting contractual rights exist.” Pierce Foundations, Inc. v. Jaroy Constr., Inc., 190 So. 3d 298, 30 4 (La. 40 Id. at 3-4. 13 20 16). In other words, if a claim ant m ay proceed “directly in contract,” a claim ant need not satisfy Section 2247’s notice requirement (or any other provision of the LPWA). Id. at 30 5. Here, even if the May 20 12 agreements created contractual rights in favor of 84 Lum ber, there is no indication that those contractual rights preexisted the work performed by 84 Lumber. 84 Lum ber filed its statem ents of claim for alm ost two m illion dollars in unpaid work just one m onth after the May 20 12 agreements were executed. It is unclear how m uch, if any, of this work was performed between May and J une 20 12. Additionally, the May 20 12 agreem ents im pose duties upon Paschen that are collateral to the work actually performed by 84 Lumber. The Louisiana Suprem e Court’s discussion of Section 2247 in Pierce Foundations suggests that a “contractual relationship” requires a contract for work upon which a paym ent claim is based—not som e collateral contract between the parties. 190 So. 3d at 30 5. Here, the May 20 12 agreem ents were not a contract for work upon which 84 Lumber’s LPWA claim s were based. The agreements obliged Paschen to m ake joint payments to 84 Lum ber and J &A for work performed by 84 Lumber. Courts have held that such joint check arrangements do not create a contractual relationship that would relieve a claim ant of the specific notice requirem ents. See United States ex rel. Light 14 & Pow er Utils. Corp. v. Liles Constr. Co., 440 F.2d 474, 478 (5th Cir. 1971) (noting that an “agreem ent between [general contractor] and [claim ant] to issue jointly payable checks . . . did not establish a contractual relationship” between the parties in a Miller Act case); accord United States ex rel. State Elec. Supply Co. v. Hesselden Constr. Co., 40 4 F.2d 774, 777 (10 th Cir. 1968); Dial Block Co. v. Mastro Masonry Contractors, 863 A.2d 373, 379 (N.J . Super. Ct. App. Div. 20 0 4). Moreover, Paschen had previously agreed to issue joint checks. According to the pretrial order, “on J anuary 5, 20 11, [Paschen], J &A, and 84 Lum ber executed a J oint Check Agreem ent requiring joint checks for any payments related to 84 Lum ber’s work.”41 Paschen’s contract with J &A explicitly contem plates such joint checks. The contract provides: “In the event [Paschen] has reason to believe that labor, material or other obligations incurred in the perform ance of [J &A’s] Work are not being paid, [Paschen] m ay take any steps [Paschen] deems necessary to insure that each such obligation is being paid including, but not lim ited to, the issuance of checks jointly to [J &A] and the person or entity to whom [J &A] owes an obligation . . . .”42 The contract clarifies, however, that it does “not create any 41 42 R. Doc. 210 at 7. R. Doc. 236-3 at 4. 15 obligation on [Paschen’s] part to pay [J &A’s] lower-tier subcontractors,” such as 84 Lumber. 43 Thus, the May 20 12 agreem ents do not suffice to create a contractual relationship that would relieve 84 Lumber of its duty to provide written notice under Section 2247. III. CON CLU SION For the foregoing reasons, the Court DENIES Paschen’s m otion for attorney’s fees and 84 Lumber’s m otion to alter or am end final judgm ent. New Orleans, Louisiana, this _27th _ day of March, 20 18. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 43 Id. at 5. 16
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