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Team Contractors, LLC v. Waypoint Nola, LLC

United States District Court, E.D. Louisiana

March 20, 2019

TEAM CONTRACTORS, LLC, Plaintiff
v.
WAYPOINT NOLA, LLC, ET AL., Defendants

         SECTION: “E” (2)

          ORDER AND REASONS

          SUSIE MORGAN, UNITED STATES DISTRICT JUDGE

         Before the Court is a motion for summary judgment filed by Plaintiff Team Contractors, LLC (“Team”).[1] Defendant Waypoint NOLA, L.L.C. (“Waypoint”) opposes.[2]For the following reasons, the motion is DENIED.

         BACKGROUND

         This dispute arises from contracts made in connection with the construction and renovation of Waypoint's property at 1250 Poydras St. in New Orleans (“the Project”). On September 19, 2014, Waypoint entered a contract with Development Construction Management LLC, represented by Steve Laski (“Laski”), under which Laski agreed to provide project management services for the Project.[3] On September 24, 2019, Team and Waypoint entered into a construction contract (“the Prime Contract”), under which Team became the general contractor for the Project.[4] Waypoint also entered into a contract with HC Architecture, Inc. (“HCA”), under which HCA agreed to serve as the project's architect.[5] HCA, in turn, subcontracted the mechanical, electrical, and plumbing design work to KLG, L.L.C. (“KLG”).[6]

         The terms of the Prime Contract are undisputed.[7] The Prime Contract contains the following term governing payment:

         § 5.2 FINAL PAYMENT

§ 5.2.1 Final payment, constituting the entire unpaid balance of the Contract Sum, shall be made by the Owner [Waypoint] to the Contractor [Team] when
.1 the Contractor has fully performed the Contract except for the Contractor's responsibility to correct work as provided in Section 12.2.2 of AIA Document A201-2007, and to satisfy other requirements, if any, which extend beyond final payment;
.2 a final Certificate for Payment has been issued by the Architect [HCA];
.3 as a prerequisite to final payment, the Contractor shall submit (i) a release in form reasonably acceptable to the Owner of liens and claims executed by the Contractor and by each of its subcontractors on behalf of which payment is requested and (ii) a Contractor's Environmental Certification in the form attached hereto as Exhibit F.
§ 5.2.2 The Owner's final payment to the Contractor shall be made no later than 30 days after the issuance of the Architect's final Certificate for Payment, or as follows:[8]

         The contract also includes, as § 8.6.15, a heading entitled “LIEN WAIVERS FOR PROGRESS AND FINAL PAYMENTS:, ”[9] but there is no contract term following the heading.

         Team submitted three lien waivers to Waypoint on July 27, 2016.[10] Each lien waiver is labeled “Final Waiver of Liens” and includes as an attachment a list of outstanding sums owed to subcontractors.[11] The attachments list different amounts owed to different subcontractors. Waypoint did not pay Team after receiving these first three lien waivers. On June 28, 2017, Team submitted a fourth lien waiver, which also was labeled “Final Waiver of Liens” and includes as an attachment a different list of outstanding sums owed to subcontractors.[12] On July 10, 2017, Waypoint paid Team the final payment amount of $1, 023, 514.09.[13]

         On February 5, 2016, Team filed a complaint against HCA, KLG, and Waypoint.[14]Team alleged there were errors in the plans and specifications provided by Waypoint for the mechanical, electrical, and plumbing systems relating to the construction project, which were prepared by KLG.[15] Team also alleged Waypoint directed it to modify the MEP systems, but did not compensate Team for the additional costs Team incurred as a result of the modifications.[16] Plaintiff Team brought a breach of contract claim against Waypoint, alleging Waypoint's failure to compensate Team breached the construction contract.[17] Team also brought negligence claims against Waypoint, HCA, and KLG.[18]

         This Court conducted a jury trial in this matter from February 26, 2018 to March 9, 2018. There were three remaining claims at trial: Team's breach of contract claim against Waypoint and Team's negligence claims against HCA and KLG.[19] Team did not pursue a negligence claim against Waypoint at trial.[20] The jury awarded Team $565, 979.99 in damages.[21] On the negligence claims against HCA and KLG, the jury found HCA and KLG's conduct violated their professional duties of care and caused damage to Team.[22] The jury also found Waypoint had not breached the contract.[23] However, the jury assigned Waypoint and its agent responsibility for damages.[24] When assigning “percentages of responsibility for the damages” awarded, the jury assigned 30% to HCA, 60% to KLG, 5% to Waypoint, and 5% to Waypoint's project manager Steve Laski, who was not a party to the suit.[25]

         On March 19, 2018, the Court entered judgment on the verdict against Defendants HCA and KLG for $509, 381.99, representing 90% of the total damages the jury awarded.[26] The Court entered judgment in favor of Defendant Waypoint on the breach of contract claim.[27] On April 2, 2018, Team filed a motion to amend, arguing the jury's finding that Waypoint did not breach its contract with Team was irreconcilably inconsistent with its assigning Waypoint and its agent responsibility for damages.[28]

         On September 6, 2018, the Court granted Team's motion.[29] The Court found the jury verdict irreconcilably inconsistent, vacated the judgment in favor of Waypoint on Team's breach of contract claim, and ordered a new trial on the claim.[30]

         On January 9, 2019, Team filed the instant motion for summary judgment on the issue of its liability on the breach of contract claim.[31] Waypoint opposes the motion.[32]

         LEGAL STANDARD

         Summary judgment is appropriate only “if 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.”[33] “An issue is material if its resolution could affect the outcome of the action.”[34]When assessing whether a material factual dispute exists, the Court considers “all of the evidence in the record but refrains from making credibility determinations or weighing the evidence.”[35] All reasonable inferences are drawn in favor of the nonmoving party.[36]There is no genuine issue of material fact if, even viewing the evidence in the light most favorable to the nonmoving party, no reasonable trier of fact could find for the nonmoving party, thus entitling the moving party to judgment as a matter of law.[37]

         If the dispositive issue is one on which the moving party will bear the burden of persuasion at trial, the moving party “must come forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.'”[38] If the moving party fails to carry this burden, the motion must be denied. If the moving party successfully carries this burden, the burden of production then shifts to the nonmoving party to direct the Court's attention to something in the pleadings or other evidence in the record setting forth specific facts sufficient to establish that a genuine issue of material fact does indeed exist.[39]

         If the dispositive issue is one on which the nonmoving party will bear the burden of persuasion at trial, the moving party may satisfy its burden of production by either (1) submitting affirmative evidence that negates an essential element of the nonmovant's claim, or (2) demonstrating there is no evidence in the record to establish an essential element of the nonmovant's claim.[40]

         LAW AND ANALYSIS

         I. Because Team did not bring a claim for breach of an implied warranty in its Complaint, the Court denies Team's motion for summary judgment on the basis that Waypoint breach an implied warranty.

         Team argues the Prime Contract carries with it an implied warranty that “the plans and specifications prepared by the owner's design professionals are accurate and sufficient.”[41] On this basis, it argues “Waypoint breached the Contract when it provided Team with construction plans that contained design errors and omissions committed by Waypoint's designers.”[42]

         In its Complaint, Team does not bring a cause of action based on Waypoint's alleged breach of an implied warranty.[43] The only cause of action for breach of contract is a claim that Waypoint withheld a “portion of the Contract Sum past the date of substantial completion” and that it failed to compensate Team for “labor, overhead and supervision” costs.[44]

         Under Rule 56(a) of the Federal Rules of Civil Procedure, a party moving for summary judgment must “identify[] each claim or defense-or the part of each claim or defense-on which summary judgment is sought.”[45] Team has not identified a claim asserted in its Complaint for Waypoint's breach of an implied warranty by providing Team with defective designs. The Court will not permit Team to expand the pleadings on the eve of trail to assert a new cause of action. As a result, the Court denies Team's motion for summary judgment in its favor that Waypoint breached an implied warranty.[46]

         II. The Prime Contract's requirement that releases be “reasonably acceptable” to Waypoint is enforceable.

         The Prime Contract provides:

[§ 5.2].3 as a prerequisite to final payment, the Contractor shall submit (i) a release in form reasonably acceptable to the Owner of liens and claims executed by the Contractor and by each of its subcontractors on behalf of which payment is requested and (ii) a Contractor's Environmental Certification in the form attached hereto as Exhibit F.[47]

         In Team's reply memorandum and supplemental memorandum in support of the instant motion, Team argues that Waypoint's obligation to pay Team is suspensively conditioned on Waypoint's accepting a release submitted by Team, and thus the final payment clause is null and unenforceable because the fulfilment of the condition is subject solely to Waypoint's “whim.”[48] Team cites no cases in support of this argument.

         “A conditional obligation is one dependent on an uncertain event. If the obligation may not be enforced until the uncertain event occurs, the condition is suspensive.”[49] “[C]ontractual provisions are construed as not to be suspensive conditions whenever possible.”[50] Under article 1770 of the Civil Code, “[a] suspensive condition that depends solely on the whim of the obligor makes the obligation null.”[51] In Sam's Style Shop v. Cosmos Broad. Corp., a contract between a television station and an advertiser provided that “commercial material provided by AGENCY is subject to STATION approval and STATION may exercise a continuing right to reject such material, including a right to reject for unsatisfactory technical quality.”[52] The Fifth Circuit, interpreting Louisiana law, found this provision made the station's acceptance of commercial material an obligation suspensively conditional on the station's approval, but did not find the condition was based solely on the whim of the agency.[53] The Court explained its reasoning as follows:

[The condition] impliedly imposes on the station the duty of making a good-faith judgment, based on industry custom or some other reasonable basis, whether a given program or commercial is acceptable. . . . But the clause does not give station management an absolute and arbitrary right to reject a commercial after it has agreed to accept such advertisements.[54]

         In this case, to the extent the Prime Contract suspensively conditions Waypoint's obligation to pay Team on Waypoint's finding acceptable a release submitted by Team, [55]the suspensive condition is valid and not subject solely to Waypoint's whim. The Prime Contract's requirement that the release be “reasonably acceptable” imposes on Waypoint the duty of making a good-faith judgment on a reasonable basis whether the release is acceptable. The term does not give Waypoint an absolute and arbitrary right to reject a release. As a result, the Court denies Team's motion for summary judgment on the basis that the final payment clause requiring a “reasonably acceptable” lien release is null and unenforceable.[56]

         III. Genuine issues of material fact preclude summary judgment on whether Waypoint's final payment to Team was timely.

         Team argues its submission of three lien waivers to Waypoint on July 27, 2016[57] satisfied the Prime Contract's requirement that it submit “a release in form reasonably acceptable to the Owner of liens and claims executed by the Contractor and by each of its subcontractors.”[58] Because Waypoint paid Team on July 10, 2017, [59] almost one year after Team submitted the first three lien waivers, Team argues Waypoint's refusal to pay was unreasonable, in breach of provisions of the Prime Contract.[60] Waypoint argues the lien waivers of July 27, 2016 were not sufficient because they did not accurately represent Team's outstanding obligations to the ...


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