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Bear Industries, Inc. v. The Hanover Insurance Co.

Court of Appeals of Louisiana, First Circuit

January 4, 2018

BEAR INDUSTRIES, INC.
v.
THE HANOVER INSURANCE COMPANY & AMTEK OF LOUISIANA, INC.

         On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana No. 628747 Honorable R. Michael Caldwell, Judge Presiding

          Craig L. Kaster, Teresa D. Cop, Allyson S. Jarreau, Counsel for Plaintiff/Appellee

          Donnie L. Floyd Counsel for Defendant/ Appellee

          Michael R. C. Riess Christy R. Bergeron Counsel for Defendant/ Appellant

          BEFORE: McCLENDON, WELCH, AND THE RIOT, JJ.

          McCLENDON, J.

         In this matter, a contractor and its surety appeal a trial court judgment in favor of a supplier of materials used on a construction project. For the reasons that follow, we affirm.

         FACTUAL AND PROCEDURAL HISTORY

         Bear Industries, Inc. (Bear) supplied limestone and sand materials to Amtek of Louisiana, Inc. (Amtek), a subcontractor on the New Roads Wal-Mart Supercenter project. The contractor was Hudson Construction Company of Tennessee (Hudson). Hanover Insurance Company (Hanover), as surety for Hudson, furnished the payment bond for the project. Bear, Hudson, and Amtek executed a Joint Check Agreement, and all payments to Bear on the project were by joint check from Hudson.

         Bear sold the materials to Amtek from May 21, 2012, to July 12, 2013. It is undisputed that the materials were delivered. However, at some point, a dispute arose between Amtek and Hudson, and Hudson stopped making payments.[1] Bear filed a Statement of Claim and Privilege on September 16, 2013, alleging it was owed a total of $259, 148.00 for the materials furnished and installed on the project. Payment was still not made, and on March 6, 2014, Bear filed suit against Amtek and Hanover under the Private Works Act. In response, Amtek filed a cross-claim against Hanover and Hudson, claiming an unpaid amount of $701, 296.52. Hudson filed a peremptory exception raising the objection of prematurity, claiming that under its subcontract with Amtek all disputes had to be arbitrated. On July 9, 2014, the trial court granted the exception as to Hudson and ordered that Hudson and Amtek arbitrate their disputes.

         The arbitration was conducted in April of 2016, and a Ruling was rendered on June 1, 2016.[2] Thereafter, Hudson and Hanover filed a Motion to Confirm the Arbitration Award, and Amtek filed a motion to confirm as well. Following a hearing on August 8, 2016, the trial court rendered judgment, and on August 24, 2016, the trial court signed its judgment, confirming the arbitration award.

         Thereafter, on August 29, 2016, the trial court held a bench trial on Bear's claims. On October 20, 2016, the trial court read its reasons for judgment into the record, and on October 31, 2016, the trial court signed a judgment in favor of Bear and against Hanover and Amtek in the full sum of $259, 914.80. The trial court also found Hanover obligated to Bear in the amount of $25, 914.80 for attorney fees and found Amtek obligated to Bear in the amount of $40, 000.00 for attorney fees. Lastly, the trial court found Amtek obligated to Hudson in the amount of $40, 000.00 for attorney fees expended in defense of Bear's claim. Hudson and Hanover then filed a suspensive appeal, asserting several assignments of error, essentially arguing that Bear's lien did not comply with the Private Works Act and therefore was invalid. Hudson and Hanover additionally assert that the trial court erred in limiting Hudson's recovery for attorney fees from Amtek to $40, 000.00.

         DISCUSSION

         The Louisiana Private Works Act, LSA-R.S. 9:4801, et seq., was enacted to facilitate the construction of improvements on immovable property; it serves this purpose by granting certain rights to enumerated persons to facilitate recovery of the costs of their work from an owner with whom they lack privity of contract. Wholesale Electric Supply Company v. Honeywell International, Inc., 16-1180 (La.App. 1 Cir. 5/11/17), 221 So.3d 98, 101. The Private Works Act is in derogation of general contract law; therefore, it must be strictly construed. In interpreting the Private Works Act, care must be taken not to overlook the legislative intent and fundamental aim of this act, which is to protect materialmen, laborers, and subcontractors who engage in construction and repair projects. Bernard Lumber Co., Inc. v. Lake Forest Const. Co., Inc., 572 So.2d 178, 181 (La.App. 1 Cir. 1990).

         Louisiana Revised Statutes 9:4802 clearly defines those persons granted a claim or privilege pursuant to the Act and provides, in pertinent part:

A. The following persons have a claim against the owner and a claim against the contractor to secure payment of the following obligations arising out of the performance of work under the contract:
* * *
(3) Sellers, for the price of movables sold to the contractor or a subcontractor that become component parts of the immovable, or are consumed at the site of the immovable, or are consumed in machinery or equipment used at the site of the immovable.
* * *
B. The claims against the owner shall be secured by a privilege on the immovable on which the work is performed.
C. The owner is relieved of the claims against him and the privileges securing them when the claims arise from the performance of a contract by a general contractor for whom a bond is given and maintained as required by R.S. 9:4812 and when notice of the contract with the bond ...

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