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Jeff Mercer, LLC v. State Through Department of Transportation and Development

Court of Appeals of Louisiana, Second Circuit

June 7, 2017

JEFF MERCER, LLC Plaintiff-Appellee
v.
STATE OF LOUISIANA, THROUGH THE DEPARTMENT OF TRANSPORTATION AND DEVELOPMENT, WILLIS JENKINS, JOHN H. EASON, AND PAM HIGGINBOTHAM Defendants-Appellants

         Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Lower Court Case No. 073151 Honorable Wilson Rambo, Judge

          JEFFREY M. LANDRY Attorney General HAYES, HARKEY, SMITH & CASCIO, LLP By: John B. Saye Clint R. Hanchey Special Assistant Attorneys General ABRAMS & LAFARGUE, LLC By: Julie M. LaFargue Special Assistant Attorney General Counsel for Appellants

          COTTON, BOLTON, HOYCHICK & DOUGHTY, LLP By: David P. Doughty John B. Hoychick Counsel for Appellee

          Before BROWN, GARRETT, and COX, JJ.

          BROWN, C.J.

         Both parties in this tort action have appealed from the trial court's judgment entered in accordance with a jury verdict awarding plaintiff $20 million in damages for "destruction of business" and "loss of future profits." For the reasons set forth below, we reverse and render judgment in favor of defendants.

         BRIEF PROCEDURAL HISTORY

         Jeff Mercer is the sole member and manager of Jeff Mercer, LLC.[1]Mercer was qualified as a Disadvantaged Business Enterprise ("DBE") under a program established and administered by the Louisiana Department of Transportation and Development ("DOTD") in accordance with United States Department of Transportation ("USDOT") and Federal Highway Administration ("FHWA") regulations. In February 2007, Mercer was hired as a subcontractor by Diamond B, the prime contractor on the DOTD Louisville Avenue Project in Monroe, Louisiana. Mercer's work included the removal of concrete, adjustment of manholes and catch basins, and rebuilding of curbs and any affected sidewalk portions. In a petition filed on September 5, 2007, plaintiff, Jeff Mercer, LLC, named DOTD and several employees as defendants, [2] and alleged that a DOTD inspector on the Louisville Avenue project had attempted to solicit bribes from Mercer during the project. According to Mercer, he rebuffed the inspector and reported him to DOTD officials.

         Mercer alleged that after the report was made, DOTD and the named defendants retaliated against the LLC as a DBE. According to Mercer, as a result of this retaliation and discrimination, his business was injured, including "its business reputation, business profits and business relationships, " especially with Diamond B, the prime contractor on the project.

         In a supplemental petition filed five years after the initial pleading, Mercer added more individual defendants[3] and alleged that DOTD's retaliatory and discriminatory actions against him continued on projects after the Louisville Avenue project. According to plaintiff, on these subsequent jobs, DOTD, through its employees, made the work difficult and costly. Mercer also asserted for the first time claims of fraud and unfair trade practices. In a second supplemental petition, Mercer added claims that defendants conspired together to put him out of business, and noted that on September 28, 2012, Mercer filed an action against prime contractor Austin Bridge & Road, LP, several of its sureties, and DOTD in East Baton Rouge Parish, seeking over $9 million in contractual damages arising out of one of these subsequent projects.

         Defendants filed a motion for summary judgment on July 13, 2015, seeking dismissal of plaintiff's claims, which they argued were contractual, not based in tort, and unsupported by any relevant evidence from which plaintiff could establish a viable tort claim against defendants. This motion was denied by the trial court shortly before the trial began, which was on November 9, 2015. Following the presentation of Mercer's witnesses, defendants moved for directed verdict, asserting that: (1) plaintiff had failed to establish a cause of action under the Louisiana Unfair Trade Practices Act ("LUTPA"); and (2) plaintiff had failed to establish a cause of action for intentional interference with a contract because there was no contractual privity between defendants and plaintiff.

         Initially, the trial court only granted directed verdict as to plaintiff's LUTPA claim. After closing arguments, however, the trial court reconsidered its ruling and granted directed verdict as to plaintiff's intentional interference with contract claim. Along with this ruling, the trial judge noted that he had reworked the jury instructions and verdict form. Caught off-guard by the late ruling, defense counsel re-urged a previously made objection to the verdict form and noted general objections to the jury instructions. The case was submitted to the jury on December 4, 2015. The jury found that plaintiff proved by a preponderance of the evidence that it suffered a loss resulting from a conspiracy by the DOTD and its employees to intentionally harm plaintiff, and that defendants Jenkins, Eason, Murphy, and Lacy had "cooperated in, advised or assisted in the destruction of [Mercer's] business." The jury then awarded Mercer damages of $7 million for "destruction of business" and $13 million for "loss of future profits." A judgment in accordance with the jury's verdict was signed by the trial judge.

         Defendants filed a motion for new trial/JNOV on February 26, 2016, which was denied by the trial court on July 29, 2016. Defendants filed the instant appeal, and plaintiff answered the appeal.

         DISCUSSION

         Jury Instructions and Verdict Form

         In their first two assignments of error, defendants assert that the trial court erred by failing to properly instruct the jury regarding the applicable law relevant to plaintiff's case and in submitting to the jury a verdict form which failed to correctly address the law, assumed predicate torts which had been dismissed, and was so confusing and legally inaccurate that it led to the jury's $20 million verdict in favor of plaintiff.

         In brief, plaintiff argues that all assignments of error raised by defendants regarding the instructions and verdict form are barred from consideration by this Court because defendants failed to preserve their right to appeal this issue under La. C.C.P. art. 1793(C). Plaintiff also contends that defendants are prohibited from making any arguments regarding the instructions and verdict form that were not asserted before or immediately after the jury retired. Even if the objections were timely made, urges plaintiff, defendants should not be allowed to address this issue because defense counsel failed to adequately or specifically state reasons for their objections on the record at trial.

         Defendants vehemently disagree with plaintiff's position, noting that they timely objected to the trial court's inclusion of intentional interference with contract in the jury verdict form inasmuch as the claim had just been dismissed via directed verdict. Defendants' main objection was that the Court was allowing this dismissed claim to serve as the predicate tort for conspiracy. Furthermore, the trial court's revised jury instructions were the result of a surprise ruling that the judge made after the parties had made their closing arguments and right before the case was to be submitted to the jury. This was not a situation where defendants were making specific objections to the instructions and verdict form at a charge conference for which they had adequate time to prepare. Under the circumstances, urge defendants, and keeping in mind the trial court's obligation under La. C.C.P. art. 1813(B) to inform the parties within a reasonable time prior to the arguments of the general verdict form and instructions (and the requirement that the court give the parties a reasonable opportunity to make their objections), they objected timely and appropriately.

         The contemporaneous objection requirement of La. C.C.P. art. 1793(C) is relaxed and appellate review is not prohibited where there is a plain and fundamental error in the jury instructions or interrogatories. Berg v. Zummo, 00-1699 (La. 04/25/01), 786 So.2d 708, 716 n. 5; Nicholas v. Allstate Insurance Co., 99-2522 (La. 08/31/00), 765 So.2d 1017, 1022-24. See also Wegener v. Lafayette Insurance Co., 10-0810 (La. 03/15/11), 60 So.3d 1220; Luquette v. Allstate Insurance (Indem.) Co., 50, 177 (La.App. 2 Cir. 08/12/15), 174 So.3d 736, writ denied, 15-1641 (La. 10/30/15), 180 So.3d 300. As set forth below, we have reviewed the jury instructions and verdict form and have found plain and fundamental errors in both.

         The trial court is required to instruct jurors on the law applicable to the cause submitted to them. La. C.C.P. arts. 1792, 1793; Luquette, supra; Abney v. Smith, 09-0794 (La.App. 1 Cir. 02/08/10), 35 So.3d 279, writ denied, 10-0547 (La. 05/07/10), 34 So.3d 864. Adequate jury instructions are those which fairly and reasonably point out the issues and which provide correct principles of law for the jury to apply to those issues. Id.

         The trial court is responsible for reducing the possibility of confusing the jury and may exercise the right to decide what law is applicable and what law the trial court deems appropriate. The charge must correctly state the law and be based on evidence adduced at trial. Luquette, supra; Georgia-Pacific, LLC. v. Dresser-Rand Co., 15-2002 (La.App. 1 Cir. 10/31/16), 207 So.3d 1131, writ denied, 16-02114 (La. 01/13/17), __ So.3d __, 2017 WL 375015; Abney, supra.

         Louisiana jurisprudence is well established that an appellate court must exercise great restraint before it reverses a jury verdict because of erroneous jury instructions. Id. Trial courts are given broad discretion in formulating jury instructions, and a trial court judgment should not be reversed so long as the charge correctly states the substance of the law. Peironnet v. Matador Resources Co., 12-2292 (La. 06/28/13), 144 So.3d 791; Luquette, supra.

         When a jury is erroneously instructed, and the error probably contributed to the verdict, an appellate court must set aside the verdict. In the assessment of an alleged erroneous jury instruction, it is the duty of the reviewing court to assess such impropriety in light of the entire jury charge to determine if the charges adequately provided the correct principles of law as applied to the issues framed in the pleadings and the evidence, and whether the charges adequately guided the jury in its deliberation. Luquette, supra; Georgia-Pacific, LLC, supra. Ultimately, the determinative question is whether the jury instructions misled the jury to the extent that it was prevented from dispensing justice. Abney, supra. The standard of review in determining whether an erroneous jury instruction has been given requires a comparison of the degree of error with the jury instructions as a whole and the circumstances of the case. Luquette, supra; Abney, supra.

         Likewise, the jury verdict form may not be set aside unless the form is so inadequate that the jury is precluded from reaching a verdict based on correct law and facts. Georgia-Pacific, supra; Abney, supra. Jury forms or interrogatories that are misleading or confusing may constitute reversible error. Jury interrogatories must fairly and reasonably point out the issues to guide the jury in reaching an appropriate verdict. Id. If the verdict form does not adequately set forth the issues to be decided by the jury (i.e., it omits an applicable essential legal principle or is misleading and confusing), such interrogatories may constitute reversible error. Id.

         The trial court began its jury instructions by admitting that the jury verdict form previously referred to in front of the jury had been rewritten after the trial court's grant of directed verdict after closing arguments. The trial court gave general instructions regarding the burden of proof, direct and circumstantial evidence, the evaluation of witnesses, etc., and then gave the following instructions regarding plaintiff's remaining claim:

Jeff Mercer, LLC, brings this action claiming that the Louisiana [DOTD], Willis Jenkins, John Eason, Pam Higginbotham, Michael Murphy, John Gasaway, Bernard Sincavage, and Barry Lacy destroyed his construction business through conspiracy and intentional interference with his business relations with his prime contractors. A conspiracy is an agreement or combination of two or more persons for the specific purpose of committing an intentional or willful act when in addition one or more of the parties to the agreement or combination does an act or action in furtherance of the agreement or combination. . . . He who conspires with another person to commit an intentional or willful act is answerable in solido with that person for the damage caused by such act [La. C.C. art. 2324].

         Defendants point out that the predicate tort of intentional interference with business relations was not in fact submitted to the jury for deliberations, nor were the essential elements for a valid cause of action alleging intentional interference with business relations explained to the jury. We agree, and further find that the jury was not properly and adequately instructed as to the law relative to conspiracy (i.e., that conspiracy is not a stand-alone claim, but must be based on an underlying tort). Based upon our review of the record, the issues to be determined, the evidence at trial, and the instructions given to the jury, we find that the trial court's instructions to the jury were inadequate and incomplete. Because the jury instructions did not adequately set forth the issues to be decided by the jury, they constitute reversible error.

         Conspiracy by itself is not an actionable claim under Louisiana law. Ross v. Conoco, Inc., 02-0299 (La. 10/15/02), 828 So.2d 546; Thames v. Thames, 50, 639 (La.App. 2 Cir. 05/18/16), 196 So.3d 653. In order to recover under a theory of liability, a plaintiff must prove that an agreement existed to commit an illegal or tortious act; the act was actually committed and resulted in plaintiff's injury; and there was an agreement as to the outcome or result. Thames, supra; Butz v. Lynch, 97-2166 (La.App. 1 Cir. 04/08/98), 710 So.2d 1171, writ denied, 98-1247 (La. 06/19/98), 721 So.2d 473. To establish a conspiracy, a plaintiff is required to provide evidence of the requisite agreement between the parties, i.e., the plaintiff must establish a meeting of the minds or collusion between the parties for the purposes of committing an illegal or tortious act. Crutcher-Tufts Resources, Inc. v. Tufts, 09-1572 (La.App. 4 Cir. 04/28/10), 38 So.3d 987.

         To prevail on a claim for tortious interference with business, a plaintiff must prove by a preponderance of the evidence that defendants improperly influenced others not to deal with the plaintiff. Bogues v. Louisiana Energy Consultants, Inc., 46, 434 (La.App. 2 Cir. 08/10/11), 71 So.3d 1128; Junior Money Bags, Ltd. v. Segal, 970 F.2d 1 (5th Cir. 1992); Dussour v. Gulf Coast Investment Corp., 660 F.2d 594 (5th Cir. 1981). The plaintiff must show that the defendants' actions did more than adversely affect the plaintiff's business; there must be a showing that defendants actually prevented the plaintiff from dealing with a third party. Henderson v. Bailey Bark Materials, 47, 946 (La.App. 2 Cir. 04/10/13), 116 So.3d 30. The plaintiff must also prove that defendants were motivated by actual malice. Id.

         Regarding the verdict form, defendants contend that it failed to ask the jury whether a viable predicate tort was committed (a requirement for a finding of conspiracy). Instead, the jury was asked whether "plaintiff proved, by a preponderance of the evidence, that Jeff Mercer, LLC suffered a loss resulting from the conspiracy of the Louisiana DOTD and its employees to intentionally harm the plaintiff?" Defendants also note that the jury was never asked whether plaintiff proved that an actual conspiracy within the DOTD existed or that an agreement existed to commit a viable predicate tort in order to intentionally harm plaintiff. Instead, the first question on the verdict form assumes the existence of a predicate tort, then skips to the issue of whether plaintiff proved that it suffered a loss.

         We find that the jury verdict form in this case lacked any viable predicate tort from which liability and causation could have been established under La. C.C.P. art. 2324 because the only predicate tort listed on the verdict form was intentional interference with contract, which, as noted by defendants in their argument, had previously been dismissed by the trial court via directed verdict. While we observe that the trial court did use the somewhat expansive wording of "by means which include, but are not limited to, intentional interference with the plaintiff's contractual relationship with others, " the court failed to give the jury any other predicate tort from which it could have chosen, such as intentional interference with business relations as pled in Mercer's initial petition (and as contained in the court's instructions to the jury). A cause of action for tortious interference with business is separate and distinct from a claim for interference with a contract. See Brown v. Romero, 05-1016 (La.App. 3 Cir. 02/01/06), 922 So.2d 742.

         In 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La. 1989), the Louisiana Supreme Court recognized a very narrowly defined cause of action for the breach of duty by a corporate officer to refrain from intentional and unjustified interference with the contractual relationship between his employer and a third person. The specific elements for this cause of action are: (1) the existence of a contract or a legally protected interest between the plaintiff and the corporation; (2) the corporate officer's knowledge of the contract; (3) the officer's intentional inducing or causing the corporation to breach the contract or his intentional rendering of performance under the contract impossible or more burdensome; (4) absence of justification on the part of the officer; and (5) causing damage to the plaintiff by breach of contract or by rendering performance of the contract impossible or difficult. Id. at 234; Great Southwest Fire Insurance Co., 557 So.2d 966 (La. 1990); Coleman v. Querbes Company No. 1, 51, 159 (La.App. 2 Cir. 02/15/17), __ So.3d __, 2017 WL 604993; Dhaliwal v. Dhaliwal, 49, 473 (La.App. 2 Cir. 11/25/15), 184 So.3d 773, writ denied, 16-0236 (La. 04/04/16), 190 So.3d 1204; Healthcare Management Services, Inc. v. Vantage Health Plan, Inc., 32, 523 (La.App. 2 Cir. 12/08/99), 748 So.2d 580.

         Keeping in mind the trial court's incomplete and erroneous instructions on the applicable legal principles of conspiracy and plaintiff's intentional interference with business relations claim, we likewise find that the verdict form was misleading and confusing and was so inadequate that it precluded the jury from reaching a verdict based on the correct law and facts. As such, we are constrained to reverse the lower court's judgment.

         In Gonzales v. Xerox Corp., 320 So.2d 163 (La. 1975), the Louisiana Supreme Court held that, when an appellate court has a complete record in which an erroneous ruling on evidence or an erroneous jury instruction requires the appellate court to set aside the judgment of the trial court, it is not necessary to remand the case for a new trial. Under its constitutional authority to review facts in civil cases, instead the appellate court can render a judgment on the basis of an independent review of the record, without according any weight whatsoever to the judgment or jury verdict. See McLean v. Hunter, 495 So.2d 1298 (La. 1986).

         De Novo Review-Trial Testimony

         Louisville Avenue Project

         Plaintiff has claimed that DOTD Inspector Willis Jenkins' bribery attempts and Mercer's reports of the incident form the catalyst for a conspiracy among the DOTD and its employees to destroy Mercer's business. The two comments made by Jenkins were allegedly solicitations of money and a generator to "make the job go better, " or "get anything done on this job." The record shows that Jenkins made the comments. What is unclear, however, is whether he made them jokingly as he claimed (and three DOTD employees testified) or seriously as claimed by Mercer (and three Mercer employees/family members).

         Plaintiff also claimed that retaliatory actions were taken and "retribution" was sought by DOTD inspectors on the project after Mercer reported Jenkins. Specifically, the inspectors refused to accept his work product, made the job difficult and costly, undermined his work, forced him to withdraw from the project, and treated his replacement more favorably.

         Jeff Mercer testified that he was hoping that the incident with Jenkins would blow over, but instead, it just inflamed the job situation. Mercer called DOTD District Administrator Marshall Hill several weeks after the comments were made to report the incident to him. When Hill asked Mercer what he wanted done, Mercer asked that Jenkins be removed from the Louisville Avenue jobsite for the duration of the project. After Jenkins' removal and reassignment, Mercer testified that the inspectors were deliberately failing to mark out sufficient work for his crew to do each day, which had them finishing around 9:00 a.m. and cost him $500-$600 per hour in idle crew and equipment.

         On May 31, 2007, Inspector Greg Ratcliff called Project Engineer John Eason for instructions on how Mercer's crew was to pour the next section of concrete. Mercer stated that they did the work as instructed. When Eason came out to the site, he told Mercer to tear out the concrete they had just poured. Mercer responded, "You have to be joking." Eason told Mercer, "There will be no more joking on the job. Tear out the concrete."

         According to Mercer, there were additional problems on the Louisville Avenue job, such as a two-week shutdown and the inspectors continuing to "piecemeal" the work. Because of that, the concrete couldn't help but look bad. He also had a problem with the fact that the inspectors on the project were trying to force him to build non-ADA compliant handicap ramps without giving him a liability release. On July 16, 2007, Mercer sent an email to James Wood with Diamond B asking to be released from the Louisville Avenue project.

         Mercer testified that he went back to the jobsite several weeks later and took photographs. Mercer pointed out that the new subcontractor hired to finish the job was allowed to close the road, which allowed him to have access to and work both sides at one time, something DOTD would never let plaintiff do. They also let the subcontractor remove and replace larger areas of concrete at one time.

         On cross-examination, Mercer testified about concerns communicated to him by James Wood with Diamond B, on May 22, 2007, which included a lack of progress on the catch basins, and Mercer's failure to send in cost breakdowns requested by DOTD a few months previously. In his response to Wood, Mercer blamed the lack of progress on plan changes (he claimed that the way DOTD was requesting that he do the work was not the way he had bid or contracted the job) and DOTD's refusal to let him work both sides of the road. Mercer reasoned that by not allowing him to work both sides of the road, DOTD was affecting his relationship with Diamond B because it further delayed completion of the contracted work.

         Wood strongly advised Mercer to cooperate with him and DOTD and complete the catch basins, which posed a safety and liability issue, and noted, "It was in the mutual interest of all three parties that each one abide by their contractual obligations. It takes a lifetime to build relationships and just a short time to destroy them."

         Wood's concerns were not resolved as evidenced by a June 3, 2007, email he sent to Mercer again addressing DOTD's and Diamond B's safety concerns over Mercer's failure to backfill one of the catch basins which apparently had remained open for more than two weeks while Mercer worked on other jobs. Wood gave Mercer two choices: Mercer could backfill the catch basin, or Diamond B would do it and hope they did not get in trouble with the DBE Dept. for doing Mercer's work.

         Eason apparently communicated his dissatisfaction with a lot of Mercer's curbwork on the Louisville Avenue job, calling it "unacceptable, " in a letter to Diamond B. Mercer acknowledged that the work probably was not very good since he had to do it "piecemeal."

         Willis Jenkins testified that he was an Inspector One on the Louisville Avenue project and at the time of his retirement, he was an Inspector Two. Jenkins stated that he was comfortable where he was in DOTD and to go beyond level two, he would have had to obtain computer skills. As a level two inspector, Jenkins made no decisions as to how a job was laid out, where the stations were marked, etc. He likewise had no authority to stop anyone from doing work on a jobsite; that is the job of the project engineer and lead inspector.

         Jenkins testified that he never told Mercer he would put him out of business, nor did he ask or tell anyone else to do so. Jenkins said he had no power or authority, but he was just "eyes and ears on a job" and he was good with that.

         Inspector Greg Ratcliff testified that it was ludicrous to think that Jenkins was actually trying to bribe anyone. Ratcliff and Jenkins, as lower level inspectors, are analogous to laborers who can't make anything happen. When an inspector sees something that is not done correctly, it is his or her job to bring it to the contractor's attention and recommend adjustments. The next step would be to turn it over to the inspector's supervisor.

         After Jenkins was reassigned, Ratcliff continued to work on the Louisville Avenue project. He didn't treat Mercer or the crew any different than he has treated people on any other inspection job. No one at DOTD told him to instruct Mercer to do his curbs in a substandard manner, nor did anyone advise him to treat Mercer more harshly than other subcontractors or try to put him out of business.

         Inspector Brad Trichell also overheard Jenkins' comments. Trichell stated that no one, including John Eason, instructed Trichell to treat Mercer or his crew any differently or to treat Mercer so bad that they put him out of business.

         Bennett Tripp is Mercer's brother-in-law and was a member of the crew working on the Louisville Avenue project. Tripp stated they began having problems after the bribe, and that everything they did was wrong. One example is that the curb they poured in front of the furniture store was approved one day, and the next day the inspectors told them they had to move it back. Tripp testified that Jenkins was one of the inspectors involved. While they had problems on sites before and had been required to redo work occasionally, on the Louisville Avenue project it seemed to be constant.

         Tripp stated that after Jenkins was removed, one of the inspectors who took his place told them that since his buddy was removed from the project, it would be "living hell until the end." Tripp stated that the reason Mercer quit the job early was because they couldn't do anything right.

         John Sanderson, who worked as the crew foreman on the Louisville Avenue job, testified that after the incident with Jenkins, things did not blow over. It seemed to him like the inspectors were riding them extra hard and piecing the work rather than fixing it. Tommy Cox, Mercer's stepfather, also worked the Louisville Avenue job, and he testified that the inspectors didn't like anything they did, but tore up a bunch of stuff he thought was "done right."

         Marshall Hill was the DOTD Monroe District Construction Engineer in 2007. Prior to the Louisville Avenue project, he had worked with Mercer on several other jobs and had no issues with him or problems between him and inspectors. Hill noted that he removed Jenkins from the project not because of ...


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