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84 Lumber Co. v. Continental Casualty Co.

United States Court of Appeals, Fifth Circuit

January 24, 2019

84 LUMBER COMPANY, Plaintiff - Appellant
v.
CONTINENTAL CASUALTY COMPANY; SAFECO INSURANCE COMPANY OF AMERICA; FIDELITY & DEPOSIT COMPANY OF MARYLAND; F.H. PASCHEN, S.N. NIELSEN & ASSOCIATES, L.L.C., Defendants - Appellees

          Appeal from the United States District Court for the Eastern District of Louisiana

          Before WIENER, SOUTHWICK, and COSTA, Circuit Judges.

          WIENER, CIRCUIT JUDGE

         Defendant-Appellee F.H. Paschen, S.N. Nielsen & Associates ("Paschen") was the general contractor on two contracts to build public schools in Louisiana. Paschen subcontracted a portion of those projects to J & A Construction Management Resources Company ("J & A"), which then sub-subcontracted a portion of its work to Plaintiff-Appellant 84 Lumber Company. 84 Lumber filed two sworn statements of claim under the Louisiana Public Works Act ("LPWA"), La. Rev. Stat. § 38.2242, alleging that Paschen and J & A failed to pay for its work on those projects. 84 Lumber did not, however, comply with the LPWA's requirement that a subcontractor not in privity with a general contractor must send written notice of its claim by certified or registered mail to the general contractor's Louisiana office.[1] Instead of using certified mail, 84 Lumber sent its notice by email. And instead of sending the notice to Paschen's Louisiana office, 84 Lumber sent it to Paschen's lawyer.

         The district court held that 84 Lumber's notice did not comply with the LPWA's notice requirements in La. Rev. Stat. § 38:2247 ("§ 2247"). The district court also concluded that the evidence established only that the notice was sent but did not establish that it was received. We agree that the notice was insufficient and affirm.

         I.

         We must first consider whether we have appellate jurisdiction.[2]84 Lumber appeals from a grant of partial summary judgment and a Rule 12(c) judgment on the pleadings, both in favor of Paschen. Although no claims are pending in the district court, Paschen, a defendant and third-party plaintiff, voluntarily dismissed its third-party claim against J & A, the third-party defendant, but did so without prejudice. The district court subsequently entered a judgment that disposed of all the pending claims, but expressly dismissed Paschen's third-party claim against J & A without prejudice. In a subsequent order denying 84 Lumber's motion to amend or alter the judgment, the court referred to the judgment as a "final judgment." However, Paschen's third-party claim against J & A was not finally adjudicated because it had been dismissed voluntarily without prejudice.

         This court has jurisdiction over appeals from "final decisions of the district courts."[3] Under the Ryan rule, [4] "[a] voluntary dismissal of a case without prejudice is not a final appealable decision."[5] We have previously summarized the basis for this rule and its "typical" operation:

[A] party cannot use voluntary dismissal without prejudice as an end-run around the final judgment rule to convert an otherwise non-final-and thus non-appealable-ruling into a final decision appealable under § 1291.
Typically, the Ryan rule operates when a plaintiff has filed multiple claims against a single party, or against multiple parties, and the district court has dismissed some but not all of the claims. Then, in an effort to preserve his remaining claims while simultaneously appealing the adverse dismissal, the plaintiff implores the district court to dismiss his remaining claims without prejudice and enter a final judgment. Ryan eschews this practice of manufacturing § 1291 appellate jurisdiction and disallows the manipulative plaintiff from having his cake (the ability to refile the claims voluntarily dismissed) and eating it too (getting an early appellate bite at reversing the claims dismissed involuntarily). This prohibition of quasi-interlocutory appeals applies equally to a plaintiff's attempt to use a Rule 41(a) voluntary dismissal to construct the jurisdictional basis for appealing a district court's denial of a motion for remand.[6]

         We have not, however, addressed the instant situation in which the only claim standing in the way of complete finality is a voluntarily dismissed third-party claim.

         In the only case we have found that addresses this issue, the Eleventh Circuit held that the Ryan rule does not apply to third-party claims.[7] That court reasoned that Ryan's concern about manufactured jurisdiction is not present for third-party claims. "Because the [plaintiff] appellant did not participate in the voluntary dismissal of the remaining claims, there was no collusion between it and the parties dismissing the remaining claim."[8] The court concluded that "[t]he voluntary dismissal, with or without prejudice, of a defendant's remaining third-party claim in an otherwise terminated lawsuit does not bar the plaintiff's right to appeal a judgment against it."[9]

         The same is true here. The purpose of the Ryan rule is to prevent the appealing party from manufacturing jurisdiction by using an "end-run around the final judgment rule to convert an otherwise non-final-and thus non-appealable-ruling into a final decision appealable under § 1291."[10] But the plaintiff, 84 Lumber, did not participate in Paschen's dismissal of its remaining third-party claim against J & A, so it did not manufacture appellate jurisdiction. We agree with the Eleventh Circuit that the Ryan rule does not apply to a voluntarily dismissed third-party claim.

         We have jurisdiction.

         II.

         We next consider whether, under Louisiana law, notice of a claim furnished by email to a party's lawyer is sufficient to meet the LPWA's notice requirement. We hold that it does not.

         When "our subject matter jurisdiction is based on diversity," we "apply the substantive law of the forum state-here, Louisiana."[11] "To determine the forum state's law, we look first to the final decisions of that state's highest court-here, the Louisiana Supreme Court. In the absence of a determinative decision by that court on the issue of law before us, we must determine, in our best judgment, how we believe that court would resolve the issue."[12] "Under Louisiana's Civil Code, the only authoritative sources of law are legislation and custom."[13] "Unlike in common law systems, '[s]tare decisis is foreign to the Civil Law, including Louisiana.'"[14] We are, however, "'guided by decisions rendered by the Louisiana appellate courts, particularly when numerous decisions are in accord on a given issue'-i.e., jurisprudence constante-'but we are not strictly bound by them.'"[15]

         In Louisiana, legislation "is the solemn expression of the legislative will; thus, the interpretation of legislation is primarily the search for the legislative intent."[16] "When a law is clear and unambiguous, and its application does not lead to absurd consequences, it shall be applied as written, with no further interpretation made in search of the legislative intent."[17]

         The purpose of the LPWA "is to 'protect those performing labor and furnishing materials for public works' rather than protecting the sureties on the bond."[18] The provisions of the Act "must be strictly construed."[19]

         Claimants owed money for public works projects have two options for relief under the LPWA. A claimant may either (a) file an action against the general contractor and the sureties on the project's statutory bond, or (b) seek "the unexpended fund[s] in the possession of the public entity with whom the original contract was entered into" by filing an action against the public authority.[20] 84 Lumber took the first option, proceeding against the project's statutory bond. Section 2247, which governs the notice requirements for actions against a project's statutory bond, requires a subcontractor to give notice before it has a right of action on the bond:

[B]efore any claimant having a direct contractual relationship with a subcontractor but no contractual relationship with the contractor shall have a right of action against the contractor or the surety on the bond furnished by the contractor, he shall . . . give written notice to said contractor within forty-five days from the recordation of the notice of acceptance by the owner of the work or notice of the owner of the default, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor or service was done or performed. Such notice shall be served by mailing the ...

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