United States District Court, E.D. Louisiana
ORDER & REASONS
the Court is Defendant Xcel Air Conditioning Services, Inc.
Motions to Dismiss for Failure to State a Claim. R. Docs. 17,
35. Plaintiff opposes the motion. R. Doc. 24. The Court held
oral arguments on this matter on August 23, 2017. Having
considered the parties' arguments, submissions, and the
applicable law, the Court now issues this Order and Reasons.
case arises from damages allegedly resulting from defective
maintenance and repairs to the HVAC system of a New Orleans
hotel. R. Doc. 1 at 1. Plaintiff Cotton Exchange Investment
Properties LLC ("CEIP"), a Delaware limited
liability company, alleges that its hotel property was
damaged by water and moisture exposure during a renovation of
the HVAC system performed by Defendant Xcel Air Conditioning
Services, Inc. R. Doc. 1 at 1. Xcel Air Conditioning Services
("Xcel") is a Louisiana corporation that performs
HVAC installations and repairs. R. Doc. 1 at 1. Defendant
Commercial Renovation Service, Inc. ("CRS") is a
Georgia corporation that provides general contracting
services. R. Doc. 23 at 2. Defendant John T. Campo &
Associates is a Louisiana corporation that specializes in
architectural and engineering services. R. Doc. 23 at 2.
contends that in 2014, Supreme Bright New Orleans LLC
("Supreme Bright") owned the Cotton Exchange
Building in downtown New Orleans and executed several
contracts for its renovation. R. Doc. 23 at 2. In January
2014, Supreme Bright contracted with Xcel to provide HVAC
services, including the maintenance of the hotel's
cooling tower, rooftop units, and chilled water pumps. R.
Doc. 1 at 3. That same month, Supreme Bright entered into a
contract with Campo whereby Campo would provide
architectural, design, and engineering services. R. Doc. 23
at 4. A few months later, Supreme Bright contracted with CRS
to serve as general contractor for the project. R. Doc. 23 at
2. Management of the HVAC system was included in both the
contracts with Campo and CRS. R. Doc. 23 at 3, 4. In June
2015, the hotel was bought by Pacific Hospitality Group
("PHG"), who assumed the rights to all three
contracts. R. Doc. 1 at 3. PHG subsequently assigned all of
its rights, title, and interest in the purchase to Plaintiff,
including the contracts with Xcel, Campo, and CRS. R. Doc. 1
at 4. Plaintiff alleges that under the terms of the contract,
all three defendants agreed to indemnify CEIP for any
property damage caused by negligent acts or omissions related
to the scope of the work. R. Doc. 1 at 5; R. Doc. 23 at 3-4.
alleges that the hotel suffered serious water/moisture damage
as a result of Xcel's defective or faulty workmanship,
including water damaged walls and floors due to exposed
chilled water piping, missing or improperly sealed
insulation, and cracked or leaking draining pans. R. Doc. 23
at 7. Plaintiff alleges that due to this extensive damage,
they had to close the hotel and incurred damages from loss of
use and repairs. R. Doc. 23 at 6. Plaintiff canceled the HVAC
contract pursuant to its terms in December 2015, and notified
Xcel of the damage on three occasions. R. Doc. 1 at 5, 6. It
appears that Xcel did not respond to the demand for
indemnity. R. Doc. 1 at 6. Additionally, Plaintiff avers that
it demanded indemnity from CRS and Campo, but was
unsuccessful in its demand. R. Doc. 23 at 7.
theory of recovery involves breach of contract and negligence
claims against all three Defendants and breach of warranty of
good workmanship claims against CRS and Campo. R. Doc. 23 at
7-16. Plaintiff alleges that it owns the rights to the three
contracts and that defects and deficiencies in the work each
party performed caused extensive damage to the floors, walls,
and other aspects of the hotel. R. Doc. 23 at 7-16. Plaintiff
argues that each defendant breached its respective contract
by failing to properly perform the required work and failing
to indemnify Plaintiff for the resulting damage. R. Doc. 23
at 7-16. Plaintiff also alleges that the damage was the
direct and proximate result of the parties' negligence.
R. Doc. 23 at 9. Plaintiff avers that each party owed a duty
of reasonable care to perform its work in a manner that did
not create an unreasonable risk of harm, and that each party
negligently violated this duty when it unreasonably damaged
the hotel. R. Doc. 23 at 9. Plaintiff also asserts that the
parties knew, or should have known, that negligent
performance would cause harm. R. Doc. 23 at 9.
Xcel filed a motion to dismiss for failure to state a claim,
arguing that Plaintiffs alleged facts are insufficient to
state a plausible claim for relief.R. Doc. 17 at 1. In
particular, Xcel avers that Plaintiff brings suit for breach
of a contract to which it is not a party and for which there
can be no assignment of benefits. R. Doc. 17 at 1. Xcel
argues that the contract does not identify Plaintiff as a
beneficiary of the contract or a party with any rights under
it. R. Doc. 17-1 at 2. Defendant further alleges that the
agreement between PHG and Plaintiff failed to assign any
rights to the HVAC contract from PHG to Plaintiff, and that
such an assignment is not allowed under Louisiana law. R.
Doc. 17-1 at 2.
Federal Rule of Civil Procedure 12(b)(6)
Rule of Civil Procedure 12(b)(6) allows a party to file a
motion to dismiss for "failure to state a claim upon
which relief can be granted." When a court considers a
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) "well-pleaded facts are viewed in the light
most favorable to the plaintiff, but plaintiff must allege
facts that support the elements of the cause of action in
order to make out a valid claim." City of Clinton,
Ark. v. Pilgrim's Pride Corp., 632 F.3d 148, 152
(5th Cir. 2010) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). "To avoid
dismissal, a plaintiff must plead sufficient facts to
'state a claim to relief that is plausible on its
face.'" Gentilello v. Rege, 627 F.3d 540,
544 (5th Cir. 2010) (quoting Twombly, 550 U.S. at
570). A court "do[es] not accept as true conclusory
allegations, unwarranted factual inferences, or legal
conclusions." Plotkin v. IP Axess Inc., 407
F.3d 690, 696 (5th Cir. 2005).
Louisiana Contractual Interpretation
words of a contract must be given their generally prevailing
meaning." La. Civ. Code. art. 2047; see also
Cadwallader v. Allstate Insurance Company, et al,
2002-1637 (La. 6/27/03), 848 So.2d 577, 580. "When the
words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in
search of the parties' intent." La. Civ. Code. art.
2046. "When interpreting a contract, the court must
discern the parties' common intent."
Cadwallander, 8848 So.2d at 580. "Where the
terms of the contract are clear and explicit and do not lead
to absurd consequences, no further interpretation may be made
in search of the intent of the parties." Id.
'"[W]ords of a contract must be given their
generally prevailing meaning, ' but '[w]ords of art
and technical terms must be given their technical meaning
when the contract involves a technical matter.'"
Id. (quoting La. Civ. Code. art. 2047) (alterations