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Foster-Somerled Enterprises, LLC v. St. Paul's Episcopal Church

Court of Appeals of Louisiana, Second Circuit

January 11, 2017


         Appealed from the First Judicial District Court for the Parish of Caddo, Louisiana Trial Court No. 587333-A Honorable Ramon Lafitte, Judge

          HAYTER /REYNOLDS, LLC By: John O. Hayter, III Lauren H. Reynolds Counsel for Appellants.

          MAYER, SMITH & ROBERTS, LLP By: Frank K. Carroll Counsel for Appellee, St. Paul's Episcopal Church.

          JONES WALKER LLP By: Louis Simon, II Counsel for Appellee, GC3 d/b/a GuideOne Taylor Ball Const. Services, LLC

          SCHUTTE, TERHOEVE, RICHARDSON, EVERSBERG, CRONIN, JUDICE & BOUDREAUX By: Brad M. Boudreaux Sarah Eilts Assad Erin O. Braud Counsel for Appellee, GuideOne Mutual Ins. Co.

          Before BROWN, MOORE & PITMAN, JJ.

          PITMAN, J.

         Plaintiffs-Appellants Foster-Somerled Enterprises, LLC, d/b/a Roof or Consequences, LLC ("Foster"), and Somerled Construction, LLC ("Somerled"), appeal the judgment of the trial court granting the exceptions of no cause of action and no right of action in favor of Defendant-Appellee GuideOne Mutual Insurance Company ("GuideOne"). For the following reasons, we affirm in part, reverse in part and remand for further proceedings.


         On September 4, 2015, Foster, a licensed home improvement contractor providing services as a roofing contractor for homes and small commercial projects, and Somerled, a licensed commercial contractor, filed a petition for damages against St. Paul's Episcopal Church, Shreveport, Louisiana ("St. Paul's"); GuideOne; and GuideOne Taylor Ball Construction Services, LLC, d/b/a GC3 ("GC3"). In their petition, Plaintiffs alleged the following facts: In February 2014, Foster's representative contacted St. Paul's regarding possible hail damage to the church's roof. St. Paul's representative stated that its roof had been damaged and that its insurer, GuideOne, advised that the roof needed repairs to the ridge caps and if not repaired, the policy could be cancelled. Foster presented a contract to St. Paul's to assist in making a claim on its insurance policy and to perform the repairs to the roof with the understanding that, if replacement was necessary, the contract would be assigned to Somerled or another general contractor and Foster would assume the role of a "not at risk" construction manager. St. Paul's agreed and signed a contract with Foster. Foster then conducted an inspection of the entire roof system and determined that the damages sustained were significantly greater than initially presumed. It assigned the contract to Somerled as to the scope of the damage was beyond Foster's licensing threshold. On behalf of St. Paul's, Foster demonstrated to GuideOne the level of damage to the church's roof and convinced GuideOne that the entire roof system needed to be replaced. The roof contained asbestos material, so Foster contacted an asbestos contractor to perform its removal and disposal. GuideOne was informed of the asbestos and the additional expenses required for the abatement. Foster also identified subcontractors and suppliers for certain aspects of the project. It informed St. Paul's that the cost to replace the roof system was approximately $3, 400, 000, which would be paid by GuideOne under the insurance policy. GuideOne then requested a separate meeting with St. Paul's and GC3, excluding Foster and Somerled. During the meeting, GuideOne and GC3 attempted to replace Foster and/or Somerled as the contractor. In late April or early May, St. Paul's asserted that there was no binding contract with Somerled. St. Paul's, GuideOne and GC3 then adopted a procedure to bid the project through GC3. They requested that Somerled bid on the project, but Somerled refused because it already had a contract with St. Paul's to perform the work and because it could not engage in the bidding project as it was not allowed by Louisiana licensing laws because GC3 is an unlicensed contractor in Louisiana. St. Paul's then notified Somerled that its contract was being terminated for convenience. Subsequent to termination, Somerled submitted its invoice to St. Paul's for payment of the profit and overhead in the contract in the amount of $575, 409.82. Foster submitted an invoice to St. Paul's for its time expended as a construction manager on the project in the amount of $185, 580. Plaintiffs advised St. Paul's that upon payment to Foster, this would be credited against the amount owed to Somerled. At the date of the filing of the petition, the roof of the church had not been replaced.

         In their petition, Plaintiffs argued that GuideOne and GC3 undertook a campaign to disparage the competency and defame the reputation of Foster and Somerled and dishonor, interfere with or otherwise cancel the binding contract of Foster and/or Somerled with St. Paul's. Specifically, they alleged that, in an attempt to coerce St. Paul's to cancel the contract with Foster, GuideOne and GC3 disparaged the reputation of Foster and Somerled, attempted to convince St. Paul's that Foster and/or Somerled were not competent to handle the project, threatened to cancel St. Paul's insurance if it used Foster and/or Somerled for the project, attempted to have St. Paul's cancel the contract held by Somerled, misrepresented to St. Paul's that GC3 was a Louisiana-licensed contractor that could perform the work, advised St. Paul's not to pay profit and overhead charged by Somerled under the contract and advised St. Paul's that the project needed to be bid instead of honoring the contract with Somerled. They further argued that the actions of GuideOne, GC3 and St. Paul's constituted unfair trade practices and that these actions resulted in the termination of the contract. They contended that they are entitled to damages in amounts to be proven at trial arising out of the unfair trade practices and defamation perpetrated by St. Paul's, GuideOne and GC3, together with interest, attorney fees and all court costs.

         On September 24, 2015, GuideOne filed an exception of no cause of action and no right of action. It argued that Plaintiffs had not stated a cause of action for damages for unfair trade practices because the applicable law, Louisiana's Unfair Trade Practices and Consumer Protection Law ("LUTPA"), exempts actions regulated by the Insurance Commissioner. It explained that Plaintiffs have no right of action for unfair trade practices because the Insurance Commissioner is the sole person who may assert a cause of action under the Insurance Code for unfair trade practices. It also argued that Plaintiffs failed to state a cause of action for defamation.

         On January 28, 2016, Plaintiffs filed an opposition to the exceptions of no cause of action and no right of action. They argued that GuideOne failed to demonstrate that they do not have a right of action and that the allegations fall under the jurisdiction of the Insurance Commissioner. They further argued that they stated a cause of action for defamation by alleging that GuideOne made statements to St. Paul's that Plaintiffs were not competent to handle the project.

         A hearing on the exceptions was held on February 8, 2016. The trial court granted the exceptions and noted that defamation is listed in La. R.S. 22:1964(3) as an unfair method of competition and unfair or deceptive act or practice in the business of insurance and is under the jurisdiction of the Insurance Commissioner. On February 22, 2016, the trial court filed a final judgment sustaining GuideOne's exceptions of no cause of action and ...

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