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Rain CII Carbon, L.L.C. v. Recon Engineering, Inc.

Court of Appeals of Louisiana, Fourth Circuit

May 1, 2019

RAIN CII CARBON, L.L.C.
v.
RECON ENGINEERING, INC. AND RECON MANAGEMENT SERVICES, INC.

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2018-03980, DIVISION "E" Honorable Melvin C. Zeno, Judge

          JAMES M. GARNER PETER L. HILBERT, JR. THOMAS J. MADIGAN II STUART D. KOTTLE JAMES EDWARD KUHN SHER GARNER CAHILL RICHTER KLEIN & HILBERT, L.L.C. COUNSEL FOR PLAINTIFF/APPELLEE

          ROBERT I. SIEGEL ALISTAIR M. WARD GIEGER, LABORDE & LAPEROUSE COUNSEL FOR INTERVERNOR-APPELLANT/CATLIN SPECIALITY INS. CO.

          PATRICK J. MCSHANE DANICA BENBOW DENNY KATHLEEN P. RICE LAUREN GUICHARD COUNSEL FOR INTERVENOR-APPELLANT/ALTERRA AMERICA INS. CO.

          SIDNEY W. DEGAN III KARL H. SCHMID CATHERINE N. THIGPEN COUNSEL FOR INTERVENORS-APPELLANTS/ILLINOIS NATIONAL INS. CO. AND CHARTIS SPECIALTY INS. COMPANY

          KRISTOPHER T. WILSON HEATHER N. SHARP LUGENBUHL, WHEATON, PECK, RANKIN & HUBBARDSP COUNSEL FOR INTERVENOR-APPELLANT/FIRST FINANCIAL INS. CO .

          Court composed of Chief Judge James F. McKay III, Judge Daniel L. Dysart, Judge Sandra Cabrina Jenkins

          JAMES F. MCKAY III CHIEF JUDGE

         In this arbitration case, the intervenors, Catlin Specialty Insurance Company, Alterra America Insurance Company, First Financial Insurance Company, Chartis Specialty Insurance Company, and Illinois National Insurance Company, in their capacities as the alleged insurers of defendants, ReCon Engineering, Inc. and ReCon Management Services, Inc. (sometimes hereafter referred to collectively as ReCon), appeal the trial court's granting of a dilatory exception of lack of procedural capacity and its confirmation of an arbitration award in favor of plaintiff, Rain CII Carbon, L.L.C. We affirm.

         FACTS AND PROCEDURAL HISTORY

         In 2010, Rain started a project to build a waste heat recovery power generation unit at one of its facilities in southwest Louisiana in order to capture heat exhausted from the calcinating process and convert it to usable electricity. For the project, Rain retained the services of Recon Engineering, Inc., Turner Industries Group, L.L.C., and Victory Energy Operations, LLC.[1]

         On March 15, 2013, Rain originally filed suit against ReCon, Turner, and Victory in the 14th JDC for the Parish of Calcasieu. Due to an arbitration agreement between Rain and ReCon, ReCon compelled Rain to arbitration. Rain then sought to file a direct action claims against ReCon's insurers (Catlin Specialty, Alterra America, First Financial, Chartis Specialty, Illinois National, and Imperium Insurance Company).[2] Like ReCon, the insurers successfully argued that Rain could not litigate its claims against them due to the pending arbitration. Rain then proceeded to arbitration.

         Rain sought to join the insurers to the arbitration proceedings but the insurers actively and successfully opposed joinder. The R-7 Arbitrator[3] found that the insurers were non-signatory parties and, therefore, could not be compelled to join the arbitration proceeding.

         Rain arbitrated its claims against ReCon at a final hearing on September 28, 2017 in New Orleans. On October 26, 2017, the Arbitrator rendered an arbitration award in favor of Rain and against ReCon in the amount of $4, 430, 404.74, representing a principal sum of $3, 388, 707.00; interest from the date of the arbitration demand in the amount of $638, 933.74; and attorney's fees in the amount of $402, 764.00.

         On April 24, 2018, Rain filed a motion to confirm arbitration award in the Civil District Court for the Parish of Orleans. On May 14, 2018, the insurers filed a petition for intervention and attempted to oppose confirmation. The insurers took a contrary position from what they had taken in the previous proceeding. They claimed that they did not have notice of the arbitration and the arbitration award should be vacated. In addition to their petition for intervention, the insurers filed an opposition to the motion to confirm arbitration award, a motion to vacate the arbitration award, a declinatory exception of lack of jurisdiction, and peremptory exceptions of no cause of action and no right of action. In response, on June 15, 2018, Rain filed exceptions of no right of action, no cause of action, lack of procedural capacity, and prescription, along with a motion for a protective order.

         A hearing took place on July 6, 2018. On August 10, 2018, the trial court granted Rain's exception of lack of procedural capacity, which it found rendered the insurers' exceptions moot; granted the motion to confirm arbitration award; found Rain's other exceptions to be moot; and assessed all costs against the intervenors. It is from this judgment that the insurers now appeal.

         DISCUSSION

         On appeal, the insurers raise the following specifications of error: 1) the district court erred in finding the insurers-intervenors lacked the procedural capacity to oppose the confirmation of an underlying, default arbitration award against their insured; and 2) the district court erred in confirming a default arbitration award entered by an arbitrator who "manifestly disregarded the law" and lacked jurisdiction.

         "The de novo standard of review . . . applies to our review of the trial court's ruling on a dilatory exception of procedural capacity." English Turn Prop. Owners Ass'n v. Taranto, 16-0319, pp. 5-6 (La.App. 4 Cir. 4/19/17), 219 So.3d 381, 387, writ denied, 17-1100 (La. 10/16/17), 2017 WL 4891599, --- So.3d ___ (citing Wells v. Fandal, 13-620, p. 7 (La.App. 5 Cir. 2/12/14), 136 So.2d 83, 87). See also Gunasekara v. City Of New Orleans through Munster, 17-0914, p. 3 (La.App. 4 Cir. 3/28/18), 243 So.3d 623, 626 ("The standard of review of a trial court's ruling on an exception of no right of action is de novo." (citations omitted); Woodard v. Upp, 13-0999, p. 5 (La.App. 1 Cir. 2/18/14), 142 So.3d 14, 18 ("[t]he determination of whether a party has the procedural capacity to sue or be sued involves questions of law which is reviewed under the de novo standard of review to determine whether the ruling of the trial court was legally correct.")

         "The dilatory exception of lack of procedural capacity raises the issue of want of capacity of the plaintiff to institute and prosecute the action and stand in judgment, and/or challenges the authority of a plaintiff who appears in a purely representative capacity." English Turn., p. 6, 219 So.3d at 87. See also Harvey v. State, 14-0156, p. 12 (La.App. 4 Cir. 12/16/15), 183 So.3d 684, 695, writ denied, 16-0105 (La. 3/4/16), 188 So.3d 1060. The exception "tests a party's legal capacity to bring suit." Mt. Zion Baptist Ass'n v. Mt. Zion Baptist Church #1 of Revilletown Park, 16-0151, p. 5 (La.App. 1 Cir.10/31/16), 207 So.3d 414, 417, writ denied, 16-2109 (La. 2/3/17), 215 So.3d 697.

         The insurers took a contrary position as they had taken in the previous proceeding. They claimed they did not have notice of the arbitration and that the arbitration award should be vacated, while ignoring the fact that Rain had sought to join the insurers to the arbitration. In support of the exceptions of lack of procedural capacity, no right of action, no cause of action, and prescription, Rain's central argument was ...


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