Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C. et al, No. 2:2016cv01131 - Document 320 (E.D. La. 2017)
Court Description: ORDER AND REASONS granting 307 Motion Addressing Waypoint's Rights to Pursue Statutory Penalties Under LA. R.S. 22:1973. Waypoint NOLA, L.L.C.'s claim for statutory penalties pursuant to La. R.S. 22:1973 is dismissed with prejudice. Signed by Judge Susie Morgan. (bwn)
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Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C. et al Doc. 320 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 a motion by Catlin Insurance Com pany, Inc. (“Catlin”), seeking a ruling that Third-Party Plaintiff Waypoint NOLA, L.L.C. (“Waypoint”) m ay not assert a claim against it under La. R.S. 22:1973. 1 The m otion is opposed. 2 The Court ordered supplem ental briefing on this issue after responsive pleadings were filed. 3 Accordingly, the Court will construe this m otion as a m otion for judgm ent on the pleadings based on a failure to state a claim on which relief can be granted pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. 4 For the reasons below, Catlin’s m otion is GRAN TED . BACKGROU N D This case involves the developm ent and construction of the Hyatt House hotel in downtown New Orleans, Louisiana (“the Project”). The allegations in the initial pleadings are as follows. Plaintiff 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. 5 Waypoint also entered into an agreem ent by which HC Architects, L.L.C. (“HCA”) would serve as the 1 R. Doc. 30 7. See LA. R EV. STAT. ANN . § 22:1973 (20 12). R. Doc. 316. 3 R. Doc. 298 . 4 F ED . R. CIV. P. 12(c). See Jones v. Greniger, 18 8 F.3d 322 (5th Cir. 1999) (con struing a Rule 12(b)(6) m otion to dism iss for failure to state a claim that was filed after responsive pleadin gs as a 12(c) m otion for judgm ent on the pleadings). 5 R. Doc. 1 at 2. 2 1 Dockets.Justia.com Project’s architect, and additionally provide “all norm al Architectural, Civil, Structural, and [m echanical, electrical, and plum bing] (“MEP”) engineering services.”6 HCA, in turn, subcontracted the MEP design work to KLG, L.L.C., now known as Salas O’Brien South, L.L.C. (“KLG”). 7 Catlin is the professional liability insurer for both HCA and KLG. 8 After HCA delivered a com plete set of specifications, including KLG’s MEP plans, it was discovered that several com ponents of KLG’s MEP system design did not com ply with New Orleans code requirem ents. 9 Because construction had begun on the MEP system s before the parties recogn ized the code deficiencies, Team had to rem ove the faulty system s and rebuild the MEP system s from revised plans before continuing its work. 10 Team filed suit in this Court on February 5, 20 16, alleging breach of contract by Waypoint and negligence on the part of Waypoint, HCA, and KLG. 11 Waypoint filed its answer and a third-party com plaint against HCA, KLG, and Catlin on May 20 , 20 16. 12 As relevant to this m otion , Waypoint asserts a cause of action against Catlin under La. R.S. 22:1973. 13 Waypoint alleges that it m ade satisfactory proof of loss to support its claims against Catlin under the HLA and KLG policies, but Catlin, in bad faith, failed to m ake tim ely paym ent on Waypoint’s claim s. 14 Waypoint alleges that Catlin is responsible for the dam ages caused by HCA an d KLG, an d seeks paym ent of its claim s and additional penalties provided by Louisiana law. 15 6 R. Doc. 14 at 15. Id. 8 See R. Doc. 28. 9 R. Doc. 14 at 17-20 . 10 R. Doc. 1 at 4. 11 R. Doc. 1. 12 R. Doc. 14. 13 LA. R EV. STATE . ANN . § 22:1973 (20 12). 14 R. Doc. 14 at 31-32. 15 Id. at 31. 7 2 LEGAL STAN D ARD The standard for deciding a Rule 12(c) m otion for judgm ent on the pleadings is the sam e as the standard for deciding a m otion under Rule 12(b)(6). 16 Under Rule 12(b)(6), and thus under Rule 12(c), “[t]o avoid dism issal, a com plaint m ust contain sufficient factual m atter, accepted as true, to state a claim to relief that is plausible on its face.”17 “To be plausible, the com plaint’s ‘[f]actual allegations m ust be enough to raise a right to relief above the speculative level.’”18 “In deciding whether the com plaint states a valid claim for relief, we accept all well-pleaded facts as true and construe the com plaint in the light m ost favorable to the plaintiff.”19 “We do not accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.”20 AN ALYSIS Waypoint alleges a cause of action for penalties against Catlin pursuant to La. R.S. 22:1973(B)(5). 21 La. R.S 22:1973(A) defines an insurer’s duty of good faith and fair dealing, and La. R.S. 22:1973(B) establishes when an insurer m ay be held liable for a bad faith breach of its duty: (B) Any one of the following acts, if know ingly com m itted or perform ed by an insurer, constitutes a breach of the insurer’s duties . . .: (1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue. (2) Failing to pay a settlem ent within thirty days after an agreem ent is reduced to writing. (3) Denying coverage or attem pting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured. (4) Misleading a claim ant as to the applicable prescriptive period. 16 In re Katrina Canal Breaches Litig., 495 F.3d 191, 20 5 (5th Cir. 20 0 7). See also Gentilello v. Rege, 627 F.3d 540 , 543– 44 (5th Cir. 20 10 ). 17 In re Great Lakes Dredge & Dock Co., LLC, 624 F.3d 20 1, 210 (5th Cir. 20 10 ) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9)). 18 Id. (quotin g Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 555 (20 0 7)). 19 Id. (quotin g Doe v. M y Space, Inc., 528 F.3d 413, 418 (5th Cir. 20 0 8)) (internal quotation m arks om itted). 20 Id. (citations and internal quotation m arks om itted). 21 LA. R EV. STAT. ANN . § 22:1973 (20 12). 3 (5) Failing to pay the am ount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claim ant when such failure is arbitrary, capricious, or without probable cause. (6) Failing to pay claim s pursuant to R.S. 22:1893 when such failure is arbitrary, capricious, or without probable cause. 22 Waypoint asserts a claim under subsection (B)(5). Specifically, Waypoint alleges it provided Catlin with satisfactory proof of its loss, Catlin did not pay the am ount of the claim within sixty days, and Catlin’s failure to do so was “arbitrary, capricious, or without probable cause.”23 Catlin argues Waypoint is not entitled to recover pen alties under La. R.S. 22:1973(B)(5) because the provision applies only to “any person insured by the contract.”24 Catlin argues, even if third parties m ay assert claim s under subsections (B)(1)-(4), the plain language of subsection (B)(5) lim its recovery to “person[s] insured by the contract.” It is undisputed that Waypoint is a third-party claim ant, and is not Catlin’s insured. 25 Accordingly, Catlin asserts that Waypoint m ay not recover under subsection 1973(B)(5). Catlin points to a substantial body of federal and state case law supporting its position. 26 In opposition, Waypoint argues that “person insured by the contract” should be interpreted to in clude third-party claim ants. Waypoint offers several argum ents in support. First, Waypoint argues that the text and legislative history of La. R.S. 22:1973 suggest that subsection (B)(5) allows for claim s by third parties. 27 Waypoint relies on the 22 LA. R EV. STAT. § 22:1973 (20 12) (em phases added). R. Doc. 316 at 310 . 24 § 22:1973. 25 R. Doc. 316 at 11. 26 See, e.g., Thom pson v. GuideOne Mut. Ins. Co., 20 15 WL 4875923, at *2 (E.D. La. Aug. 13, 20 15); Toerner v. Henry , 20 0 0 -2934 (La. App. 1 Cir. 2/ 15/ 0 2), 812 So.2d 755; Langsford v. Flattm an, 864 So. 2d 149, 151 (La. 20 0 4); W oodruff v . State Farm Ins. Co., 767 So. 2d 785 (La. App. 4 Cir. 20 0 0 ); Celestine v . State Farm Mut. Auto. Ins. Co., 735 So. 2d 1 (La. App. 3 Cir. 1998). 27 R. Doc. 316 at 5. 23 4 Gauthier v. Travelers Ins. Co., a case in which this court allowed a third-party claim ant to assert a claim under subsection (B)(5). 28 Second, Waypoint attem pts to distinguish the present m atter from Langsford v. Flattm an, a case in which the Louisiana Suprem e Court ruled that subsection (B)(5) did not perm it a claim by a third party injured in an autom obile accident again st the other driver’s insurance com pany. 29 Waypoint argues that Langsford is lim ited to autom obile accident cases, and thus Louisiana law has left open a class of third party beneficiaries— including third-party claim ants m aking a claim on a professional liability policy—who m ay bring claim s under subsection (B)(5). 30 Third, Waypoint argues that Catlin’s interpretation of La. R.S. 22:1973 would render the provision superfluous, because Louisiana law already provides for a cause of action for insured claim ants again st their in surers in La. R.S. 22:1892(A). 31 The law provides, “All insurers issuing any type of contract . . . shall pay the am ount of any claim due any insured within thirty days after receipt of satisfactory proofs of loss from the insured or an y party in interest.”32 The section further provides, “Failure to m ake such paym ent within thirty days after receipt of such satisfactory written proofs and dem and therefor . . . shall subject the insurer to a penalty, in addition to the am ount of the loss, of fifty percent dam ages on the am ount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater. . .”33 According to Waypoint, if subsection (B)(5) claim s were lim ited to those insured under a policy, subsection (B)(5) would serve no useful purpose. 28 Gauthier v. Travelers Ins. Co., 1998 WL 37340 5 (E.D. La. J ul. 2, 1998 ). Langsford v. Flattm an, 20 0 3-0 189 (La. 1/ 21/ 0 4). 30 R. Doc. 316 at 8. 31 R. Doc. 316 at 9. 32 LA. R EV. STAT. ANN . § 22:18 92(A)(1). 33 LA. R EV. STAT. ANN . § 22:18 92(B). 29 5 After reviewing the supplem ental briefs, the statutes in question, and the governing case law, and accepting all Third-Party Plaintiff’s factual allegations as true, the Court finds that Waypoint is not entitled to seek recovery pursuant to La. R.S. 22:1973(B)(5). The plain language of the provision provides that relief is only available to “any person insured by a contract.”34 Waypoint is not insured by the insurance policy in question. Louisiana courts have overwhelm ingly confirm ed this interpretation. 35 To the extent that this court held otherwise in Gauthier, the holding in that case has been abrogated by subsequent Louisiana state court decisions, including Langsford v. Flattm an. 36 Further, the Court disagrees with Waypoint’s interpretation of Langsford, finding no principled distinction between autom obile insurance policies and professional liability insurance policies under these circum stances. Nor does Catlin’s interpretation of subsection (B)(5) render La. R.S. 22:1982 superfluous. Although Waypoint is correct that La. R.S. 22:1892 also provides a cause of action for an insured against insurer, that section is distinguishable from La. R.S. 22:1973. 37 For exam ple, La. R.S. 22:1892 allows for a claim to be brought after 30 days, while La. R.S. 22:1973 perm its claim s after only 60 days. Also, La. R.S. 22:1892 im poses 34 LA. R EV. STAT. ANN . § 22:1973(B)(5). See Toerner v. Henry , 20 0 0 -2934 (La. App. 1 Cir. 2/ 15/ 0 2); 812 So.2d 755, 758 ; W oodruff v . State Farm Ins. Co., 1999-2818 (La. App. 4 Cir. 6/ 14/ 0 0 ); 767 So.2d 785, 78 8; Celestin e v. State Farm Mut. Auto. Ins. Co., 98-578 (La. App. 3 Cir. 12/ 30 / 98 ); 735 So.2d 1, 4; Venible v. First Financial Ins. Co., 97-2495 (La. App. 4 Cir. 8/ 26/ 98 ); 718 So.2d 586, 58 8 – 89; Sm ith v. Midland Risk Ins. Co., 29-793 (La. App. 2 Cir. 9/ 24/ 97); So.2d 1192, 1197. See also Pontchartrain Gardens, Inc. v. State Farm Gen. Ins. Co., 20 0 9 WL 86671, at *6– 7 (E.D. La. J an . 13, 20 0 9) (Vance, C.J .). 36 See, e.g., Langsford v. Flattm an, 20 0 3-0 189 (La. 1/ 21/ 0 4); 864 So. 2d 149. See Celestine v. State Farm Mut. Auto. Ins. Co., 98-578 (La. App. 3 Cir. 12/ 30 / 98); 735 So.2d 1, 4 (Saunders, J ., dissenting) (citin g Gauthier). 37 See Calogero v. Safew ay Ins. Co. of Louisiana, 99-1625 (La. 1/ 19/ 0 0 ); 753 So.2d 170 , 173 (“We have previously recogn ized the close relationship between the conduct prohibited in La. R.S. 22:658 , subd. A(1) and the conduct prohibited in La. R.S. 22:1220 , subd. B(5). In fact, the conduct prohibited is virtually identical, i.e., failure to tim ely pay a claim after receiving satisfactory proof of loss when that failure to pay is arbitrary, capricious or without probable cause. The prim ary difference is that under La. R.S. 22:658, subd. A(1), the insurer m ust pay the claim within 30 days of receivin g satisfactory proof of loss, rather than the longer 60 -day period allowed under La. R.S. 22:1220 , subd. B(5).”). 35 6 less severe pen alties—an additional fifty percent of the am ount of the loss, or $ 1,0 0 0 , whichever is greater. 38 In contrast, La. R.S. 22:1973 perm its recovery of two tim es the dam ages sustained, or $ 5,0 0 0 , whichever is greater. 39 Further, as Louisiana courts hold that recovery under La. R.S. 22:1973 supersedes recovery under La. R.S. 22:18 92 such that an insured cannot recover under both statutes, 40 the two provisions are com plem entary, rather than redundant. In short, La. R.S. 22:1892 does not support Waypoint’s interpretation of La. R.S. 22:1973. Accordingly; IT IS ORD ERED that the m otion by Catlin Insurance Com pany, Inc., is hereby GRAN TED . Waypoint NOLA, L.L.C.’s claim for statutory penalties pursuant to La. R.S. 22:1973 is dism issed with prejudice. N e w Orle a n s , Lo u is ian a, th is 5th d ay o f D e ce m be r, 2 0 17. ______________________ _________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 38 LA. R EV. STAT. ANN . § 22:18 92(B)(1). LA. R EV. STAT. ANN . § 22:1973(C). 40 See Calogero v. Safew ay Ins. Co. of Louisiana, 1999-1625 (La. 1/ 19/ 0 0 ); 753 So. 2d 170 . 39 7
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