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Patriot Contracting, LLC v. Star Insurance Co.

United States District Court, E.D. Louisiana

March 1, 2018

PATRIOT CONTRACTING, LLC
v.
STAR INSURANCE COMPANY, ET AL

         SECTION: “H” (4)

          ORDER AND REASONS

          JANE TRICHE MILAZZO, UNITED STATES DISTRICT JUDGE

         Before the Court are two motions filed by Defendant The Architectural Studio/James Dodds, AIA Corporation: a Motion for Partial Summary Judgment (Doc. 163) and a Motion to Dismiss Claims for Unjust Enrichment and Attorney's Fees (Doc. 165). For the following reasons, the Motion for Partial Summary Judgment is GRANTED IN PART and the Motion to Dismiss is GRANTED.

         BACKGROUND

         This diversity action arises out a construction project in Bayou Segnette State Park in Westwego (the “Project”). The State of Louisiana (the “State”) entered into a contract with Troy Frick as general contractor for the construction of the Project (the “Original Contract”). Defendant Star Insurance Company (“Star”), as surety, issued a statutory Performance and Payment Bond in the amount of $2, 546, 000 for the Project. The State entered into a separate contract with Defendant The Architectural Studio/James Dodds, AIA Corporation (“TAS”) for planning, design, and management services with regard to the Project, whereby TAS was to provide construction documents (the “Contract Documents”) and administer the construction contract between the State and the contractor.

         When Frick failed to satisfactorily complete work on the Project, the State made demand on Star to remedy and complete the work. Star executed a Surety Takeover Agreement with the State (the “Takeover Agreement”). Star then executed a completion contract with Plaintiff Patriot Contracting, LLC (“Patriot”), where Patriot was to complete the work outlined in the Original Contract (the “Completion Contract”). Patriot was to rely on the Contract Documents created by TAS in completing the work. TAS also had the authority in its role as contract administrator to review Patriot's payment applications and decide whether to certify the work as complete, including the authority to withhold payment for work TAS deemed incomplete or inadequate.

         Patriot alleges that it became aware of design errors and omissions in the Contract Documents prepared by TAS, and that these errors resulted in significant cost overruns to Patriot and delays to its work. It further alleges that TAS was slow to respond to Patriot's requests for information regarding the details of the Contract Documents and that TAS's failures caused it to incur increased expenses. The parties agree that TAS declined to certify Patriot's construction of a concrete slab and withheld payment to Patriot. Patriot alleges that TAS acted unreasonably in withholding that and other payments, and alleges that Star and TAS continued to demand “unreasonable punch list work.” Ultimately, Patriot abandoned the Project on November 9, 2015. The State terminated the Takeover Agreement on March 14, 2016 and rebid the Project.

         Patriot filed claims against Star and TAS for professional negligence in preparing the Contract Documents, professional negligence in administering the contract, and for quantum meruit and unjust enrichment. Patriot has since settled its claims against Star.

         TAS now moves for partial summary judgment dismissing Patriot's claims for professional negligence in administering the contract on the basis of exculpatory clauses contained in the construction contract. Patriot opposes the motion. TAS also moves to dismiss Patriot's claims for unjust enrichment on the ground that the remedy is not available when pled in the alternative with another viable theory of recovery, and claims for attorney's fees on the ground that no statute or contract provision provides for their recovery. Patriot clarifies that it is not seeking attorney's fees against TAS and opposes the motion to dismiss its unjust enrichment claims.

         LEGAL STANDARD

         I. Summary Judgment

         Summary judgment is appropriate if “the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations. . ., admissions, interrogatory answers, or other materials” “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[1] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[2]

         In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.[3] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[4] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[5] “In response to a properly supported motion for summary judgment, the nonmovant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the nonmovant on all issues as to which the nonmovant would bear the burden of proof at trial.”[6] The Court does “not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[7] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[8]

         II. Rule 12(b)(6) Motion to Dismiss

         To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts “to state a claim to relief that is plausible on its face.”[9] A claim is “plausible on its face” when the pleaded facts allow the court to “draw the reasonable inference that the defendant is liable for the misconduct alleged.”[10]A court must accept the complaint's factual allegations as true and must “draw all reasonable inferences in the plaintiff's favor.”[11] The Court need not, however, accept as true legal conclusions couched as factual allegations.[12]

         To be legally sufficient, a complaint must establish more than a “sheer possibility” that the plaintiff's claims are true.[13] “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action''' will not suffice.[14] Rather, the complaint must contain enough factual allegations to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiff's claim.[15]

         LAW AND ANALYSIS

         I. TAS's Motion for Summary Judgment on Negligent Administration

         TAS moves for partial summary judgment dismissing Patriot's claims for professional negligence in administering the contract on the basis of exculpatory clauses contained in the construction contract. TAS argues that those clauses prohibit the imposition of liability on TAS for acts taken to administer the contract in good faith and points out that Patriot has produced no evidence that TAS did not act in good faith, as is its burden. Patriot opposes the motion, arguing that the clauses do not limit TAS's liability because a) TAS cannot rely on provisions of a contract to which it was not a party, b) even if the exculpatory clauses apply, they cannot relieve TAS of an independent professional duty, and c) the exculpatory provisions are void under Louisiana Revised Statutes § 9:2780.1. Patriot also argues that, even if the exculpatory provisions are effective, summary judgment is inappropriate because TAS has failed to produce evidence that TAS acted in good faith and the question of subjective intent is one for a jury.

         The provisions that TAS argues exculpate it from liability for negligent administration appear in the “General Conditions, ”[16] which were incorporated into the Construction Contract between Frick and the State.[17] Patriot became bound by the General Conditions when it agreed to the Completion Contract, which ...


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