Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C. et al, No. 2:2016cv01131 - Document 267 (E.D. La. 2017)
Court Description: ORDER AND REASONS denying 118 Motion for Partial Summary Judgment on Waypoint's claim for lost profits. Signed by Judge Susie Morgan on 9/29/2017. (clc)
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Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C. et al Doc. 267 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A TEAM CON TRACTORS, L.L.C., Plain tiff CIVIL ACTION VERSU S N O. 16 -113 1 W AYPOIN T N OLA, L.L.C., ET AL., D e fe n d an ts SECTION : “E”( 2 ) ORD ER AN D REAS ON S Before the Court is Cross-Defendant HC Architecture’s (“HCA”) Motion for Partial Sum m ary J udgm ent 1 on Cross-Plaintiff Waypoint NOLA, LLC’s (“Waypoint”) claim for consequential dam ages. 2 The m otion is opposed. 3 The Court has considered the briefs, record, and applicable law, and now issues its ruling. For the reasons that follow, the Motion for Partial Summ ary J udgm ent is D EN IED . BACKGROU N D This case involves the developm ent and construction of the Hyatt House hotel in downtown New Orleans, Louisiana (“the Project”). It is undisputed that Team Contractors, L.L.C. (“Team ”) entered into a contract with Waypoint, the owner of the Project, for the construction and/ or renovation of seven floors of the property located at 1250 Poydras Street, New Orleans, Louisiana. 4 Waypoint also entered into an agreem ent (“HCA Contract”) by which HCA would serve as the Project’s architect, and additionally provide “all norm al Architectural, Civil, Structural, and [m echanical, electrical, an d 1 R. Doc. 118 . R. Doc. 14. 3 R. Doc. 173. 4 R. Doc. 1 at 2. 2 1 Dockets.Justia.com plum bing] engineering services.”5 HCA, in turn, subcontracted the m echanical, electrical, and plum bing (“MEP”) design work to KLG. 6 Team filed suit in this Court in February 20 17, alleging breach of contract by Waypoint and negligence on the part of Waypoint, HCA, and KLG. 7 Team alleges that it incurred dam ages during construction in the form of additional subcontractor work, hourly labor, increased supervision, and other recurring expenses, when it was directed to rem ove deficient MEP system s and re-install revised system s. 8 Waypoint filed a crossclaim against HCA and KLG, and a third-party dem an d against Bobby Beach and Danny Lundstrom , two licensed engineers who provided engineering services for KLG and HCA on the Project. 9 Waypoint alleges that HCA breached its duty to Waypoint by providing substandard plans and specifications for the Project, failing to properly oversee its subcontractors, failing to properly coordin ate the design of the project, and failing to tim ely rem edy the relevant design errors. 10 In addition to other dam ages, Waypoint claim s $ 554,90 3 in lost profits due to the delayed opening of the Hyatt House. 11 HCA seeks sum m ary judgm ent that the HCA Contract’s joint waiver of consequential dam ages precludes Waypoint’s lost profits claim . Waypoint opposes the m otion. 12 HCA filed a reply to Waypoint’s opposition. 13 The Court heard oral argum ent 5 R. Doc. 53-3. R. Doc. 157-18 (KLG Proposal). 7 R. Doc. 1. 8 R. Doc. 1 at 2-3. 9 R. Doc. 14 at 25-26. 10 R. Doc. 14 at 18 . 11 R. Doc. 118-4 (Rollins Report). 12 R. Doc. 173. 13 R. Doc. 184. 6 2 regarding the m otion on August 18, 20 17. 14 Following oral argum ent, Waypoint filed a sur-reply 15, to which HCA filed a response. 16 LEGAL STAN D ARD Sum m ary judgm ent is appropriate only “if the m ovant shows that there is no genuine dispute as to any m aterial fact and the m ovant is entitled to judgm ent as a m atter of law.”17 “An issue is m aterial if its resolution could affect the outcom e of the action.”18 When assessing whether a m aterial factual dispute exists, the Court considers “all of the eviden ce in the record but refrains from m aking credibility determ inations or weighing the evidence.”19 All reasonable inferences are drawn in favor of the nonm oving party. 20 There is no genuine issue of m aterial fact if, even viewing the evidence in the light m ost favorable to the nonm oving party, no reasonable trier of fact could find for the nonm oving party, thus entitling the m oving party to judgm ent as a m atter of law. 21 If the dispositive issue is on e on which the m oving party will bear the burden of persuasion at trial, the m oving party “m ust com e forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’”22 If the m oving party fails to carry this burden, the m otion m ust be denied. If the m oving party successfully carries this burden, the burden of production then shifts to the nonm oving party to direct the Court’s attention to som ething in the pleadings or other evidence in the 14 R. Doc. 187. R. Doc. 195. 16 R. Doc. 20 7. 17 F ED . R. CIV. P. 56; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322– 23 (1986). 18 DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 20 0 5). 19 Delta & Pine Land Co. v. N ationw ide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 20 0 8); see also Reeves v . Sanderson Plum bing Prods., Inc., 530 U.S. 133, 150 – 51 (20 0 0 ). 20 Little v. Liquid Air Corp., 37 F.3d 10 69, 10 75 (5th Cir. 1994). 21 Sm ith v. Am edisy s, Inc., 298 F.3d 434, 440 (5th Cir. 20 0 2). 22 Int’l Shortstop, Inc. v. Rally ’s, Inc., 939 F.2d 1257, 1263– 64 (5th Cir. 1991) (quoting Golden Rule Ins. Co. v. Lease, 755 F. Supp. 948, 951 (D. Colo. 1991)). 15 3 record setting forth specific facts sufficient to establish that a genuine issue of m aterial fact does indeed exist. 23 If the dispositive issue is one on which the nonm oving party will bear the burden of persuasion at trial, the m oving party m ay satisfy its burden of production by either (1) subm itting affirm ative eviden ce that negates an essential elem ent of the nonm ovant’s claim , or (2) dem onstrating there is no evidence in the record to establish an essential elem ent of the nonm ovant’s claim . 24 When proceeding under the first option, if the nonm oving party cannot m uster sufficient eviden ce to dispute the m ovant’s contention that there are no disputed facts, a trial would be useless, and the m oving party is entitled to sum m ary judgm ent as a m atter of law. 25 When, however, the m ovant is proceeding under the second option and is seeking sum m ary judgm ent on the ground that the nonm ovant has no evidence to establish an essential elem ent of the claim , the nonm oving party m ay defeat a m otion for sum m ary judgm ent by “calling the Court’s attention to supporting eviden ce already in the record that was overlooked or ignored by the m oving party.”26 Under either scenario, the burden then shifts back to the m ovant to dem onstrate the inadequacy of the evidence relied upon by the nonm ovant. 27 If the m ovant m eets this burden, “the burden of production shifts [back again] to the nonm oving party, who m ust 23 Celotex, 477 U.S. at 322– 24. Id. at 331– 32 (Brennan, J ., dissenting); see also St. Am ant v. Benoit, 80 6 F.2d 1294, 1297 (5th Cir. 1987) (citing J ustice Brennan’s statem ent of the sum m ary judgm ent standard in Celotex Corp. v. Catrett, 477 U.S. 317, 322– 24 (1986), and requirin g the m ovants to subm it affirm ative evidence to negate an essential elem ent of the nonm ovant’s claim or, alternatively, dem onstrate the nonm ovant’s evidence is insufficient to establish an essential elem ent); Fano v. O’N eill, 80 6 F.2d 1262, 1266 (citing J ustice Bren nan’s dissent in Celotex, and requiring the m ovant to m ake an affirm ative presentation to n egate the non m ovant’s claim s on sum m ary judgm ent); 10 A CHARLES ALAN W RIGHT, ARTHUR R. M ILLER & M ARY KAY KANE , F EDERAL P RACTICE AND P ROCEDURE §2727.1 (20 16) (“Although the Court issued a five-to-four decision , the m ajority and dissent both agreed as to how the sum m ary-judgm ent burden of proof operates; they disagreed as to how the standard was applied to the facts of the case.” (internal citations om itted)). 25 First N ational Bank of Arizona v. Cities Service Co., 391 U.S. 253, 28 8 – 89 (198 0 ); Anderson v. Liberty Lobby , Inc., 477 U.S. 242, 249– 50 (1986). 26 Celotex, 477 U.S. at 332– 33. 27 Id. 24 4 either (1) rehabilitate the evidence attacked in the m oving party’s papers, (2) produce additional eviden ce showing the existence of a genuin e issue for trial as provided in Rule 56(e), or (3) subm it an affidavit explaining why further discovery is necessary as provided in Rule 56(f).”28 “Sum m ary judgm ent should be granted if the nonm oving party fails to respond in one or m ore of these ways, or if, after the nonm oving party responds, the court determ ines that the m oving party has m et its ultim ate burden of persuading the court that there is no genuine issue of m aterial fact for trial.”29 “[U]nsubstantiated assertions are not com petent sum m ary judgm ent evidence. The party opposing sum m ary judgm ent is required to identify specific evidence in the record an d to articulate the precise m anner in which that evidence supports the claim . ‘Rule 56 does not im pose upon the district court a duty to sift through the record in search of evidence to support a party’s opposition to sum m ary judgm ent.’”30 LAW AN D AN ALYSIS HCA seeks sum m ary judgm ent that the contractual waiver of consequential dam ages bars Waypoint from recovering lost profits caused by the delayed hotel opening. In support of its m otion, HCA has put forth the following facts in its statem ent of uncontested fact: 31 (1) HCA contracted with Waypoint to provide architectural services for the Project; 32 (2) the contract between HCA and Waypoint contained a waiver of consequential dam ages; 33 (3) Waypoint claim ed econom ic dam ages in the form of 28 Celotex, 477 U.S. at 332– 33, 333 n.3. Id.; see also First N ational Bank of Arizona, 391 U.S. at 289. 30 Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (citing Celotex, 477 U.S. at 324; Forsy th v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) an d quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 90 9, 915– 16 & n .7 (5th Cir. 1992)). 31 R. Doc. 118-5 at 1-2. 32 R. Doc. 118-2. 33 Id. at § 4.1.3. 29 5 construction costs, lost profits, and delay related to dam ages; 34 and (4) Waypoint’s expert reported that Waypoint incurred a $ 544,90 3 loss of incom e due to the delayed opening of the hotel. 35 In opposition, Waypoint disputes only the first fact. Waypoint argues that the HCA Contract was between HCA and Waypoint Lodging L.L.C., rather than Waypoint NOLA, L.L.C., and any lim itations of liability in the HCA Contract should not apply to it. 36 This issue was addressed at oral argum ent, and is the subject of HCA’s reply m em orandum , 37 Waypoint’s sur-reply, 38 and HCA’s subsequent response. 39 At oral argum ent and in its later pleadings, Waypoint conceded that Waypoint Lodging, L.L.C. assigned the HCA Con tract to Waypoint NOLA, L.L.C. 40 It is black letter law that “an assignm ent does not alter the nature of the obligation.”41 As assignee, Waypoint NOLA, L.L.C. is subject to the sam e contractual obligations as the assignor, Waypoint Lodging, L.L.C. Accordingly, this issue does not present a genuine dispute of m aterial fact for the purposes of this m otion. To warrant sum m ary judgm ent, HCA m ust dem onstrate that these facts entitle it to judgm ent as a m atter of law. Specifically, HCA m ust show that the HCA Contract’s waiver of consequential dam ages clearly encom passes lost profit claim s. Because the Court finds that the HCA Contract is am biguous on this point, however, sum m ary judgm ent is not appropriate. 34 R. Doc. 14 at ¶ 10 3. R. Doc. 118-4. 36 R. Doc. 173 at 3-4. 37 R. Doc. 184. 38 R. Doc. 195. 39 R. Doc. 20 7. 40 See R. Doc. 195. 41 Alvis v. CIT Group/ Equipm ent Financing, Inc., 20 0 5-0 563 (La. App. 3 Cir. 12/ 30 / 0 5), 918 So. 2d 1177, 1184. 35 6 Under Louisiana law, “[w]hen the words of a contract are clear an d explicit and lead to no absurd consequences, no further interpretation” is required to determ ine the parties’ intent. 42 “A contract is considered am biguous on the issue of intent when either it lacks a provision bearing on that issue, the term s of a written contract are susceptible to m ore than one interpretation, there is uncertainty or am biguity as to its provisions, or the intent of the parties cannot be ascertained from the language em ployed.”43 “If a contract is am biguous, courts are to seek the m eaning based on the intent of the parties to the contract.”44 The determ ination of whether a contract is clear or is am biguous is a question of law, 45 but intent is an issue of fact which is to be inferred from all of the surrounding circum stances. 46 The consequential dam ages waiver provides: The Architect and Owner waive consequential dam ages for claim s, disputes, or other m atters in question arising out of or relating to this Agreem ent. This m utual waiver is applicable, without lim itation, to all consequential dam ages due to either party’s term ination of this Agreem ent, except as specifically provided in Section 5.7. 47 Waypoint argues that this provision is am biguous because it does not define what the parties contem plated would be “consequential dam ages,” as opposed to direct dam ages. 48 The Court agrees. The term “consequential dam ages” is subject to m ultiple interpretations, and “no two courts or treatises define consequential dam ages the sam e 42 LA. CIV. CODE ANN . art. 20 46 (1985). Cam pbell v. Melton, 20 0 1-2578 (La. 5/ 14/ 0 2), 817 So. 2d 69, 75. See also Cash v. Liberty Ins. Underw riters, Inc., 624 F. App’x 854, 859 (5th Cir. 20 15). 44 Maldonado v. Kiew it Louisiana Co., 20 12-18 68 (La. App. 1 Cir. 5/ 30 / 14), 152 So. 3d 90 9, 931. 45 Landis v. Const. Co. v. St. Bernard Par., 20 14-0 0 96 (La. App. 4 Cir. 10 / 22/ 14), 151 So. 3d 959, 963. 46 JIB Line Group, LLC v . Legette, 14-20 7 (La. App. 5 Cir. 11/ 12/ 14), 165 So.3d 93, 95. See also LA. CIV. CODE ANN . art. 20 45 (1985). 47 R. Doc. 118-2, art. 4.1.3. 48 R. Doc. 173 at 4-5. 43 7 way.”49 As HCA notes in its m otion, Louisiana courts treat lost profits as either direct or consequential, depen ding on the foreseeability of the dam ages at the tim e of contracting. 50 Because the foreseeability of a loss depends on the particular circum stances of an agreem ent, a determ ination of whether lost profits are categorically “consequential” or “direct” is not possible. Moreover, the HCA Contract does not define “consequential dam ages” within its four corners, as som e standard form contracts do. 51 For exam ple, the waiver of consequential dam ages in AIA A20 1-20 0 7 provides: The Contractor and Owner waive Claim s against each other for consequential dam ages arising out of or relating to this Contract. This m utual waiver includes: (1) dam ages incurred by the Owner for rental expen ses, for losses of use, incom e, profit, financing, business, and reputation, and for loss of m anagem ent or em ployee productivity or of the services of such persons (2) dam ages incurred by the Contractor for principal office expenses including the com pen sation of personnel stationed there, for losses of financing, busin ess and reputation, and for loss of profit except anticipated profit arising directly from the work. 52 Unlike the HCA Contract, the m odel contract clearly defines consequential dam ages. Because the HCA Contract is am biguous as to whether lost profits of the kind claim ed by Waypoint are consequential, the Court looks to the intent of the parties. Intent is a question of fact. 53 Neither party has subm itted evidence to prove contractual intent, however. As a result, there rem ain s a dispute about a m aterial fact at issue in the m otion. “As a gen eral proposition, when we find a contract to be am biguous, we at the sam e tim e 49 See, e.g., Lynn R. Axelroth, Mutual W aiver of Consequential Dam ages: The Ow n er’s Perspective, 18 CONSTR. L., 11 (1998 ) (listin g six different interpretations of the term ). 50 R. Doc. 118-1 at 2. See L. CIV. CODE art. 1996 (198 5). 51 See, e.g., AIA A20 1-20 0 7 General Conditions of the Contract for Construction § 15.1.6 (20 0 7). 52 Id. 53 JIB Line Group, LLC v . Legette, 14-20 7 (La. App. 5 Cir. 11/ 12/ 14), 165 So.3d 93, 95. See also LA. CIV. CODE ANN . art. 20 45. 8 would find that an issue of fact exists and then conclude that the m atter is not ripe for sum m ary judgm ent.”54 Because an issue of fact exists with regard to the intended m eaning of “consequential dam ages,” this Court concludes that HCA is not entitled to sum m ary judgm ent with respect to Waypoint’s claim for lost profits. CON CLU SION Accordingly; IT IS ORD ERED that Cross-Defendants’ Motion for Partial Sum mary J udgm ent on Waypoint’s claim for lost profits is hereby D EN IED . N e w Orle a n s , Lo u is ian a, th is 2 9 th d ay o f Se p te m be r, 2 0 17. ____________________ ________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 54 Landis v. Const. Co. v. St. Bernard Par., 20 14-0 0 96 (La. App. 4 Cir. 10 / 22/ 14), 151 So. 3d 959, 963. 9
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