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Matheson Tri-Gas Inc. v. Williamson General Contractors, Inc.

United States District Court, W.D. Louisiana, Lake Charles Division

February 27, 2019

MATHESON TRI-GAS, INC.
v.
WILLIAMSON GENERAL CONTRACTORS, INC.

          ORDER

          KATHLEEN KAY JUDGE

         Before the court is a Motion for Summary Judgment [doc. 61] filed by plaintiff Matheson Tri-Gas, Inc. (“Matheson”) and opposed by defendant Williamson General Contractors, Inc. (“Williamson”). The matter has been referred to the undersigned for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636.

         I.

         Background

         This action began as a breach of contract suit relating to Matheson's Phase I construction of a new gas plant (“Pelican project”) in Westlake, Louisiana. On May 27, 2015, Williamson project manager Joey Quick submitted a bid to provide construction services on the mechanical installation at the plant, for the lump sum price of $15.8 million. Doc. 61, att. 3, pp. 3-7. Matheson accepted Williamson's bid by purchase order issued on May 29, 2015. Doc. 61, att. 4, p. 3. Construction commenced but was complicated by several design drawing revisions from Matheson. Doc. 61, att. 2, p. 2, ¶ 6; doc. 61, att. 3, p. 1, ¶ 6. Williamson responded with requests for change orders, which Matheson disputed. Doc. 61, att. 3, p. 1, ¶ 7. The parties entered into a “Change Order Agreement” effective February 2, 2016, under which Matheson agreed to pay Williamson an additional $3.4 million for costs incurred by certain revisions up to that date. Id. at pp. 1-2, ¶¶ 8-11; see Id. at pp. 8-9 (copy of agreement). The agreement specifically excluded certain costs anticipated to be incurred after its effective date, and further provided that “[a]ny modifications made or issued after Feb. 2, 2016 will be charged at the cost plus rates.” Id. at 8-9.

         On April 21, 2016, Matheson issued a letter of intent to award the mechanical portion of the Pelican Phase II project to Williamson. Doc. 61, att. 4, pp. 320-21. On June 30, 2016, Williamson demanded an additional sum of approximately $6.5 million to continue work on the Phase I project. Id. at 310-12. By email dated July 4, 2016, Matheson stated that it would need a few days to evaluate the information presented and directed Williamson not to return to the project until advised to do so by Matheson. Doc. 86, att. 2, p. 5, ¶ 24; doc. 86, att. 9. The following day, Matheson advised Williamson that it was terminating the parties' business relationship effective immediately and rescinding the letter of intent relating to Phase II. Doc. 86, att. 10.

         Matheson then filed suit in this court, asserting federal diversity jurisdiction. Doc. 1. In the complaint Matheson maintains that it paid Williamson all sums due and owing under their agreements but that Williamson continued to demand “additional unreasonable sums” to complete the facility and then breached the agreements by abandoning the project on or about June 30, 2016. Id. at p. 3, ¶¶ 7-8. As a result, Matheson asserts, several of Williamson's subcontractors have filed or threatened to file liens against the facility to recover sums that they allege are owed by Williamson. Id. at pp. 3-4, ¶ 9. Accordingly, Matheson seeks damages incurred from Williamson's alleged breaches and subrogation to the rights of any subcontractors it must satisfy based on the above liens. Id. at pp. 4-5, ¶¶ 10-16. It has also amended its complaint to add claims of indemnity and bad faith breach of contract. Doc. 20.

         Williamson brings counterclaims against Matheson for breach of contract, bad faith breach of contract, detrimental reliance, fraud/fraudulent inducement, cardinal change, open account, unjust enrichment, quantum meruit, and negligence.[1] Docs. 6, 24. Matheson now moves for summary judgment on all counterclaims raised by Williamson, stating that it has honored all binding agreements between the parties and that Williamson has no evidence to support its remaining counterclaims. Doc. 61, att. 1. Williamson opposes the motion. Doc. 84.

         II.

         Summary Judgment Standard

         A court should grant a motion for summary judgment when the movant shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. The party moving for summary judgment is initially responsible for identifying portions of pleadings and discovery that show the lack of a genuine issue of material fact. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). The court must deny the motion for summary judgment if the movant fails to meet this burden. Id.

         If the movant makes this showing, however, the burden then shifts to the non-moving party to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986) (quotations omitted). This requires more than mere allegations or denials of the adverse party's pleadings. Instead, the nonmovant must submit “significant probative evidence” in support of his claim. State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 106 S.Ct. at 2511 (citations omitted).

         A court may not make credibility determinations or weigh the evidence in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 120 S.Ct. 2097, 2110 (2000). The court is also required to view all evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000). Under this standard, a genuine issue of material fact exists if a reasonable trier of fact could render a verdict for the nonmoving party. Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).

         III.

         Application

          Under Erie Railroad Co. v. Tompkins, 58 S.Ct. 817 (1938), a federal court sitting in diversity jurisdiction applies the substantive law of the forum state. See Cates v. Sears, Roebuck & Co., 928 F.2d 679, 687 (5th Cir. 1991). Thus, the court applies Louisiana law to determine whether Williamson's claims should survive this motion for summary judgment.

         A. Breach of Contract Claims

         Williamson raises three claims of bad faith breach of contract, based on Matheson allegedly doing the following: (1) failing to pay to Williamson “the full amount of the contract price under the Agreement, as modified, ” (2) mismanaging the Phase I project, resulting in “a grossly unreasonable number of changes and revisions, ” and (3) unilaterally rescinding the Letter of Intent to award Williamson additional work on Phase II of the project.[2] Doc. 24, pp. 4-7. Matheson moves for summary judgment on these claims, maintaining that Williamson cannot show an underlying breach on any of them.[3] Doc. 61, att. 1, pp. 14-17.

         1. Legal standard

          Under Louisiana law, the essential elements of a breach of contract claim are defined as (1) the obligor's undertaking of an obligation to perform, (2) the obligor's failure to perform the obligation (the breach), and (3) resulting damages to the obligee. Boudreaux v. Flagstar Bank FSB, 623 Fed. App'x 235, 237 (5th Cir. 2015) (internal citations omitted). Louisiana law also requires that contracts be performed in good faith. La. Civ. Code art. 1983. Bad faith “means more than mere bad judgment or negligence, it implies the conscious doing of a wrong for dishonest or morally questionable motives.” MKR Servs., LLC v. Dean Hart Const., LLC, 16 So.3d 562, 566 (La. Ct. App. 2d Cir. 2009). An actor contracts in bad faith when he evinces “an intentional[] and malicious[]” failure to perform. La. Civ. Code art. 1997, cmt. (b). Bad faith in contracting is only actionable, however, when preceded by a finding that the actor breached the contract. Favrot v. Favrot, 68 So.3d 1099, 1110 (La. Ct. App. 4th Cir. 2011). “The only differences between a typical breach-of-contract claim and a bad-faith ...


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