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Roy Anderson Corporation v. 225 Baronne Complex LLC

Court of Appeals of Louisiana, Fourth Circuit

July 11, 2018

ROY ANDERSON CORPORATION
v.
225 BARONNE COMPLEX, L.L.C.

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2016-12444, DIVISION "G-11" Honorable Robin M. Giarrusso, Judge

          W. Lee Kohler Douglas A. Kewley GARDNER & KEWLEY COUNSEL FOR INTERVENOR/APPELLANT, RONALD FRANKS CONSTRUCTION CO., L.L.C.

          Matthew R Emmons Mark W. Frilot Nicholas R. Pitre BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, COUNSEL FOR DEFENDANT/APPELLEE, 225 BARONNE COMPLEX, LLC.

          Court composed of Judge Roland L. Belsome, Judge Rosemary Ledet, Judge Paula A. Brown.

          PAULA A. BROWN JUDGE.

         This underlying matter involves a dispute arising out of the Louisiana Private Works Act ("LPWA"). Appellant, Ronald Franks Construction Company, L.L.C. ("Franks Construction"), a subcontractor, intervened in the Petition to Enforce Lien and For Damages ("Petition to Enforce Lien")[1] filed by the general contractor, Roy Anderson Corp. ("RAC"), against the property owner, 225 Baronne Complex, L.L.C. ("225 Baronne"). Franks Construction appeals the district court's judgment which granted 225 Baronne's peremptory exception of no right of action, finding that Franks Construction had no right to intervene in the Petition to Enforce Lien. For the reasons that follow, we affirm the judgment.

         FACTUAL AND PROCEDURAL HISTORY

         225 Baronne and RAC entered a Contract in the amount of $61, 300, 000.00 for the renovation and reconstruction of property located at 225 Baronne Street in New Orleans, Louisiana (the "Project"). On March 17, 2014, RAC subcontracted with Franks Construction for Franks Construction to complete certain portions of the work that 225 Baronne had contracted with RAC to perform.[2]

         RAC filed a Petition to Enforce Lien on December 21, 2016, alleging that 225 Baronne had failed to pay RAC the total amount due for the work it had performed on the Project.[3] Paragraph 4 of the Petition to Enforce Lien alleged the following:

On November 8, 2013, the Contract was recorded with a Notice of Construction Contract as Instrument No. 2013-42883 with the Recorder of Mortgages for Orleans Parish.

         On April 18, 2017, Franks Construction filed a Petition for Intervention (the "Intervention") into the Petition to Enforce Lien, pursuant to La. C.C.P. art. 1091.[4]Franks Construction alleged it was entitled to intervene against both RAC and 225 Baronne to enforce its rights as a third person with an interest in the Petition to Enforce Lien. Franks Construction contended that it had entered into three subcontracts with RAC totaling $6, 691, 448.00. It alleged that delays, scheduling, and other management problems caused by RAC made it spend an additional 305 days on the Project and incur total damages in the amount of $8, 372, 629.00.[5]Franks Construction joined with RAC to seek relief for any "pass-through" claims RAC might recover against 225 Baronne.[6] Franks Construction also pled that it had filed a demand for arbitration in December 2016 with the American Arbitration Association ("AAA") against RAC to recover those damages.

         225 Baronne filed a peremptory exception of no right of action (the "Exception") in response to the Intervention. 225 Baronne alleged that RAC had furnished and maintained a payment bond (the "Bond") of solvent, legal sureties for the work to be performed under the Contract and attached the Bond to the notice of the Contract that was recorded in the Office of the Recorder of Mortgages for Orleans Parish ("Recorder of Mortgages"). The furnishing of the Bond and the recordation were completed prior to work commencing on the Project in accord with La. R.S. 9:4812(A)[7] of the LPWA. Accordingly, it argued that as the owner, La. R.S. 9:4802(C) relieves it of claims asserted against it by the subcontractor, Franks Construction, which arise from the performance of the Contract.[8]Therefore, Franks Construction did not have a right to intervene in the Petition to Enforce Lien; instead, 225 Baronne urged that Franks Construction's only LPWA remedies were limited to the arbitration action it had filed against RAC and its suit against the Bond.[9]

         On June 16, 2017, the district court heard arguments on the Exception, and orally sustained the Exception on the same date. This devolutive appeal followed.

         DISCUSSION

         "The function of the exception of no right of action is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit." Two Canal Street Investors, Inc. v. New Orleans Building Corp., 2016-1306, p. 8 (La.App. 4 Cir. 2/15/17), 212 So.3d 611, 617. (citation omitted). As set forth in Louisiana Citizens Prop. Ins. Corp. v. LAA Shoring, LLC, 2016-1136, p. 5 (La.App. 4 Cir. 6/14/17), 223 So.3d 17, 23:

"The determination of whether a plaintiff has a right of action is a question of law." Mendonca v. Tidewater Inc., [20]03-1015, p. 3 (La.App. 4 Cir. 12/17/03), 862 So.2d 505, 508. "The standard of review of a trial court's ruling on an exception of no right of action is de novo." N. Clark, L.L.C. v. Chisesi, [20]16-0599, p. 3 (La.App. 4 Cir. 12/17/16), 206 So.3d 1013, 1015. "Therefore, this court is required to determine whether the trial court applied the law appropriately." Mendonca, [20]03-1015, p. 3, 862 So.2d at 508.

         Franks Construction argues that it was entitled to intervene because the outcome of the Petition to Enforce Lien litigation would have a direct impact on its ability to recover additional funds due Franks Construction on the Project. It further asserts that RAC had informed Franks Construction that Franks Construction's outstanding claims were "pass through" claims that could be recouped only if RAC successfully recovered those claims against 225 Baronne. Therefore, Franks Construction alleges that it had the right to intervene to aggressively protect its own interests.

         Franks Construction contends the district court, in sustaining 225 Baronne's Exception, erred in: (1) basing its ruling on evidence which was not made a part of the record; (2) granting the Exception premised on an affirmative defense-La. R.S. 9:4802(C)-rather than an evaluation of Franks Construction's procedural capacity to assert the intervention; (3) failing to evaluate Franks Construction's right to intervene under the criteria enunciated pursuant to La. C.C.P. art. 1091; (4) concluding that Franks Construction had no justiciable interest connected to the object of the existing litigation; and (5) dismissing Franks Construction's Intervention with prejudice without affording Franks Construction the opportunity to amend its Intervention to remove the grounds for the Exception. We will discuss each alleged error, although some may be combined for consistency and ease of reading.

         Bond Evidence

         Franks Construction urges that comments from the district court suggest it granted the Exception based on 225 Baronne's argument that, as the owner of the property, Franks Construction did not have a right of action against it because the Bond had been furnished and the Contract recorded in accordance with La. R.S. 9:4802(C). Our jurisprudence is well-settled that an appeal is taken from a final judgment and not the district court's reasons for judgment; however, an appellate court may consider the reasons for judgment in determining whether the district court committed legal error. Winfield v. Dih, 2001-1357, p. 8 (La.App. 4 Cir. 4/24/02), 816 So.2d 942, 948 (citation omitted).

At the hearing, 225 Baronne represented the following:
“…Roy Anderson at the started[sic] of the project filed a Private Works Act statutory payment bond that exist [sic]in the record. What that does is, is it precludes subcontractors and suppliers like Ronald Franks Construction from filing direct actions against the project owner and so the - - Ronald Franks in enforcing its lien rights has to file suit against the bond which it has in an action in [sic] Eastern District. It's also initiated arbitrate [sic] against Roy Anderson to assert its claim against Roy Anderson.

         In a colloquy with counsel for Franks Construction's, the district court inquired:

THE COURT:

But don't you have to go after the bond? I don't understand how you can file suit in this. I'm having a hard time with that. Isn't your only right is to go against the surety bond?

MR. RICHESON:

          Yeah. We can also go against Roy Anderson. And we are going against Roy Anderson in the ...


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