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84 Lumber Co. v. F.H. Paschen

United States District Court, E.D. Louisiana

May 16, 2017


         SECTION “R” (5)



         Defendants F.H. Paschen, S.N. Nielsen & Associates, LLC (“Paschen”), Continental Casualty Company, Safeco Insurance Company of America, and Fidelity and Deposit Company of Maryland (collectively, “Defendants”) move for partial summary judgment on plaintiff 84 Lumber Company's Louisiana Public Works Act claims and unjust enrichment claim.[1] For the following reasons, the Court grants defendants' motion.

         I. BACKGROUND

         This case arises out of two school construction projects in New Orleans, Louisiana, the Mildred Osborne Project and the South Plaquemines Project.[2]On July 26, 2010, Paschen entered into an agreement with the Louisiana Department of Education to build a new elementary school at the Mildred Osborne School in New Orleans (Osborne Project).[3] Paschen was the General Contractor for the project.[4] On September 13, 2010, Paschen entered into a contract with the Plaquemines Parish School Board to build the South Plaquemines High School in Buras, Louisiana (South Plaquemines Project).[5] As with the Osborne Project, Paschen was the General Contractor for the South Plaquemines Project.[6] Both projects were subject to the provisions of the Louisiana Public Works Act (LPWA), La. Rev. Stat. § 38:2241, et seq., and therefore each project required 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 Management Resources Company, Inc. (J & A).[9] On November 19, 2010, J & A entered into a Master Service Agreement with 84 Lumber Company, in which J & A subcontracted a portion of its work on both projects to 84 Lumber.[10]

         According to 84 Lumber, in April 2011, Paschen and J & A stopped paying 84 Lumber for its work on the projects.[11] As a result, on November 29, 2011, 84 Lumber filed sworn statements of claims for money owed on both projects in compliance with the LPWA. Specifically, 84 Lumber claimed at least $549, 778.16 for the Osborne Project and at least $1, 666, 921.66 for the South Plaquemines Project.[12] On December 1, 2011, 84 Lumber, through its counsel, sent letters by certified mail to Paschen's attorney Charles F. Seemann, Jr., detailing the amounts owed, as well as a copy of the sworn statements.[13] 84 Lumber also mailed notice of the sworn statements to the Sureties.[14]

         In an attempt to “compromise partially their differences, ” Paschen and 84 Lumber entered into two agreements in May 2012, covering both projects.[15] Under the agreements, Paschen agreed to pay 84 Lumber $1, 297, 603, and 84 Lumber agreed to indemnify, defend, and hold Paschen harmless from any claims, liens, or other expenses that arose from or in connection with 84 Lumber's work on the projects.[16] On or about May 17, 2012, 84 Lumber cancelled its November 2011 sworn statements for both projects and removed them from the mortgage records of Orleans Parish and Plaquemines Parish, respectively.[17]

         Less than one month after cancelling both statements, on June 8, 2012, 84 Lumber filed two new sworn statements of claims, one for each project. 84 Lumber claimed $808, 520.39 for the Osborne Project, and $1, 042, 080.09 for the South Plaquemines Project.[18] 84 Lumber reflected in two June 2012 letters mailed to the Plaquemines Parish School Board, and to the Louisiana Department of Education and the Sureties, respectively, that 84 Lumber had emailed Paschen's attorney Seemann copies of the sworn statements.[19]

         On July 5, 2012, 84 Lumber sued Paschen and the Sureties, alleging that 84 Lumber was not paid in full for work performed under its Master Service Agreement with J & A.[20] 84 Lumber sued under the LPWA, seeking payment on its June 2012 Sworn Statements of Claims from both Paschen and the Sureties, and brought a claim of unjust enrichment.[21] On February 5, 2013, 84 Lumber amended its complaint to add a breach of contract claim, as well as a claim for payment for materials and additional work performed outside of the Master Service Agreement.[22] Paschen answered 84 Lumber's complaint and added J & A as a third-party defendant.[23]

         The case was stayed for nearly three years while the parties were to pursue their claims through arbitration.[24] On January 13, 2016, the case was reassigned from Judge Helen Berrigan to this Court for all further proceedings.[25] On May 5, 2016, the Court granted 84 Lumber's motion to lift the stay and to dismiss J & A's claims against 84 Lumber for failure to prosecute.[26]

         With the case reopened, defendants now move for partial summary judgment on 84 Lumber's LPWA claims and its unjust enrichment claim. 84 Lumber filed a response, [27] and defendants replied.[28]


         Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers “all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment.” Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at 1075. “No genuine dispute of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.” EEOC v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).

         If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party “must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.” Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with evidence sufficient to demonstrate the existence of a genuine dispute of material fact, or “showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party.” Id. at 1265.

         If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Id. at 324. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id.; Little, 37 F.3d at 1075 (“Rule 56 mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” (quoting Celotex, 477 U.S. at 322)).


         84 Lumber asserts two claims under the LPWA: 1) recognition and enforcement of its sworn statement of claims for amounts owed to 84 Lumber; and 2) a payment claim seeking interest, costs, and attorneys' fees.[29] Defendants argue that the two LPWA claims must be dismissed because 84 Lumber failed to comply with the statute's notice requirements.[30]As to the unjust enrichment claim, defendants argue that this claim must be dismissed because 84 Lumber has other legal remedies available.[31]

         A. Waiver of Defenses

         84 Lumber contends that defendants' notice and waiver arguments are affirmative defenses and that defendants failed to plead or preserve them properly.[32] Thus, according to 84 Lumber, these defenses are not properly before the Court. The Court rejects this argument. Although defendants' 2013 answer does not specifically mention these defenses, the February 10, 2017 pretrial order, signed by the parties, includes them both.[33] It “‘is a well-settled rule that a joint pretrial order signed by both parties supersedes all pleadings and governs the issues . . . to be presented at trial.'” Vanhoy v. United States, 514 F.3d 447, 450 n.10 (5th Cir. 2008) (quoting McGehee v. Certainteed Corp., 101 F.3d 1078, 1080 (5th Cir. 1996)). Additionally, after the trial date was continued, the Court's March 2, 2017 Scheduling Order allowed the parties to amend their pleadings.[34] Paschen and the Sureties both filed amended answers that pleaded the notice and waiver defenses.[35]

         Moreover, there is a good faith exception to waiver of affirmative defenses when the defense is raised after the pleadings but there is no undue prejudice. Kariuki v. Tarango, 709 F.3d 495, 508 (5th Cir. 2013) (“An affirmative defense is not waived if the defendant ‘raised the issue at a pragmatically sufficient time, and [the plaintiff] was not prejudiced in its ability to respond.'”) (quoting Pasco ex rel. Pasco v. Knoblauch, 556 F.3d 572, 577 (5th Cir. 2009) (citation omitted)). 84 Lumber has not even attempted to show prejudice. Further, it has had ample opportunity to respond to these defenses, since it signed the pretrial order which included them, and had the benefit of a continuance to address them. As defendants' did not waive their affirmative defenses, the Court will proceed to address them.

         B. Notice Under the LPWA

         Under the Louisiana Public Works Act, contracts for projects like the Osborne Project and the South Plaquemines Project require bonds “for the payment by the contractor or subcontractor to claimants as defined in R.S. 38:2242.” See La. Rev. Stat. § 38:2241(A)(2). Section 2242(A)(1) defines a “claimant” as:

any person to whom money is due pursuant to a contract with the owner or a contractor or subcontractor for doing work, performing labor, or furnishing materials or supplies for the construction, alteration, or repair of any public works, or for transporting and delivering such materials or supplies to the site of the job by a for-hire carrier, or for furnishing oil, gas, electricity, or other materials or supplies for use in machines used in the construction, alteration, or repair of any public works, . . .

Id. § 38:2242(A)(1). The LPWA provides two avenues of relief for “claimants” who are owed money for work on public work projects. They can file an action against the general contractor and the sureties on the project's statutory bond, or they can seek “the unexpended fund[s] in the possession of the public entity with whom the original contract was entered into” by filing an action against the public authority. Pierce Foundations, Inc. v. Jaroy Const., Inc., 190 So.3d 298, 301 (La. 2016) (quoting Wilkin v. Dev Con Builders, Inc., 561 So.2d 66, 70 (La. 1990)). Here, 84 Lumber's LPWA claims are actions on the projects' statutory bonds, and 84 Lumber does not seek money from the contracting public authorities.

         Section 2247 governs the notice requirements for actions seeking payment from a project's statutory bonds, and states:

Nothing in this Part shall be construed to deprive any claimant, as defined in this Part and who has complied with the notice and recordation requirements of R.S. 38:2242(B), of his right of action on the bond furnished pursuant to this Part, . . .; except that before any claimant having a direct contractual relationship with a subcontractor but no contractual relationship with the contractor shall have a right of action against the contractor or the surety on the bond furnished by the contractor, he shall in addition to the notice and recordation required in R.S. 38:2242(B) give written notice to said contractor within forty-five days from the recordation of the notice of acceptance by the owner of the work or notice by the owner of default, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor or service was done or performed. Such notice shall be served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place he maintains an office in the state of Louisiana.

La. Rev. Stat. § 38:2247.

         If the claimant and the general contractor are in contractual privity, then the claimant need not file a sworn statement in order to have a right of action against the general contractor and its surety. Pierce, 190 So.3d at 304-05. If, as here, the claimant is not in contractual privity with the general contractor, the claimant will not have a right of action under the LPWA against the contractor or its sureties unless it satisfies the requirements of section 2247. In other words, the claimant must provide written notice to the contractor, stating with substantial accuracy the amount claimed and the party to whom the labor or material was supplied, by registered or certified mail, addressed to the contractor at its office in Louisiana.

         Compliance with section 2247 is a prerequisite to a right of action, and failure to comply warrants dismissal. See Interstate Sch. Supply Co. v. Guitreau's Const. & Consulting Co., 542 So.2d 138, 139 n.1 (La.App. 1 Cir. 1989); Electric Supply Co., Inc. v. Great Am. Ins. Co., 973 So.2d 827, 830 (La.App. 2 Cir. 2007) (“[T]he notice referenced in [section] 2247 is to be given to the contractor to preserve the right of action against the contractor or the surety.”); See also, e.g., J. Reed Constructors, Inc. v. Roofing Supply Grp., L.L.C., 135 So.3d 752, 754-56 (La.App. 1 Cir. 2013). Whether a claimant has satisfied the notice requirement is a legal question of statutory interpretation. J. Reed at 756. (citing Livingston Parish Council on Aging v. Graves, 105 So.3d 683, 685 (La. 2012)). The Louisiana Supreme Court has stated that “as a general rule, lien statutes [like the LPWA] are stricti juris and should thus be strictly construed.” Guichard Drilling Co. v. Alpine Energy Servs., Inc., 657 So.2d 1307, 1313 (La. 1995) (italics in original); see also Wilkin, 561 So.2d at 71 (noting that the LPWA should be “strictly construed such that the privileges granted are not extended beyond the statute[]”). As such, the Court cannot ignore the language of section 2247. See Interstate Sch. Supply Co., 542 So.2d at 139 (“[T]he specific language of [section] 2247 requires compliance with the notice requirements in order to proceed ‘on the bond.' The clear language cannot be ignored.”).

         Defendants argue that 84 Lumber failed to comply with the LPWA notice requirements for its June 2012 claims, and point to the lack of evidence of any communication from 84 Lumber, mailed to Paschen at its office in Louisiana, [36] regarding the June 2012 claims. Further, defendants argue that any communications regarding the December 2011 sworn statements ...

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