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Roy Anderson Corp. v. 225 Baronne Complex, L.L.C.

Court of Appeals of Louisiana, Fourth Circuit

September 25, 2019

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

          Lloyd N. Shields Adrian A. D'Arcy Michael S. Blackwell Laura E. Avery SHIELDS MOTT L.L.P. COUNSEL FOR PLAINTIFFS/APPELLEES

          Leopold Z. Sher James M. Garner Christopher T. Chocheles Jacob A. Airey SHER GARNER CAHILL RICHTER KLEIN & HILBERT, LLC COUNSEL FOR DEFENDANT/APPELLANT

          Court composed of Judge Joy Cossich Lobrano, Judge Rosemary Ledet, and Judge Sandra Cabrina Jenkins

          Rosemary Ledet, Judge

         This is a dispute arising out of a construction contract to renovate a large office building into a hotel, an apartment building, and a garage (the "Project"). The general contractor filed a lien under the Louisiana Private Works Act. La. R.S. 9:4801, et seq. (the "PWA").[1] The parties involved in this appeal are as follows: (i) the general contractor, Roy Anderson Corporation ("RAC")-the plaintiff and defendant-in-reconvention; (ii) the building owner, 225 Baronne Complex, L.L.C. ("225 Baronne")-the defendant, plaintiff-in-reconvention, and third-party plaintiff; and (iii) the four sureties for the Project: Travelers Casualty and Surety Company of America, Liberty Mutual Insurance Company, Fidelity and Deposit Insurance Company of Maryland, and Federal Insurance Company (collectively the "Surety Defendants")-the third-party defendants.

         From the trial court's judgment granting RAC's peremptory exceptions of prescription and res judicata and granting the Surety Defendants' peremptory exceptions of no right of action and no cause of action, 225 Baronne appeals. For the reasons that follow, we reverse in part-as to the granting of RAC's exceptions of prescription and res judicata; affirm in part-as to the granting of the Surety Defendants' exceptions of no right of action and no cause of action; and remand.

         FACTUAL AND PROCEDURAL BACKGROUND

         The underlying facts regarding this appeal are undisputed and are set forth in 225 Baronne Complex, LLC v. Roy Anderson Corp., 16-0492 (La.App. 4 Cir. 12/14/16) (unpub.), 2016 WL 7238975, writ denied, 17-0326 (La. 4/7/17), 218 So.3d 116 ("225 Baronne I "). To provide a framework for analyzing the issues presented by this appeal, we provide the following chronology of the relevant factual and procedural events:

November 8, 2013: 225 Baronne entered into a design-build contract with RAC for the Project (the "Contract"); on the same date, the Contract was recorded in the Orleans Parish mortgage records.
October 23, 2015: Having achieved substantial completion of the Project, 225 Baronne recorded a Notice of Termination in the Orleans Parish mortgage records.
December 18, 2015: RAC signed a Confirmation of No Default, which indicated that 225 Baronne was not in default of any previously billed payment obligations;[2] and 225 Baronne paid RAC $2, 941, 725.28.
December 22, 2015: RAC recorded a Statement of Lien and Privilege pursuant to La. R.S. 9:4802 of the PWA, stating that 225 Baronne owed it $15, 401, 300 (the "Lien") and that the balance owed "represents material, labor, equipment, and services provided to Owner in connection with the [Project]."
December 28, 2015: 225 Baronne sent a demand letter to RAC requesting that it immediately-within ten days-direct the Recorder of Mortgages for Orleans Parish (the "Recorder") to remove the Lien.
January 12, 2016: 225 Baronne instituted a summary mandamus proceeding pursuant to La. R.S. 9:4833 and La. R.S. 44:114 to remove the Lien (the "Lien Lawsuit"). The Lien Lawsuit petition-styled as a "Petition for Removal of Statement of Claim and Privilege and for Damages"-was filed against the Recorder and RAC.[3]
February 22, 2016: The trial court ruled in 225 Baronne's favor and ordered the Recorder to remove the Lien. The trial court deferred ruling on 225 Baronne's request for attorney's fees and damages.
April 21, 2016: The Recorder removed the Lien.
December 14, 2016: On RAC's appeal, this court, in 225 Baronne I, held that the Lien met the statutory requirements of a valid lien. Accordingly, this court reversed the trial court's judgment and ordered the Recorder to reinstate the Lien.
December 21, 2016: RAC filed an ordinary proceeding (the "Enforcement Lawsuit")-styled as a "Petition to Enforce Lien and for Damages." In its petition, RAC alleged that 225 Baronne had failed to pay RAC the total amount due for the work it had performed on the Project.
April 7, 2017: The Louisiana Supreme Court denied 225 Baronne's writ application in 225 Baronne I.
May 1, 2017: 225 Baronne answered RAC's petition in the Enforcement Lawsuit and reconvened against RAC seeking costs and attorney's fees.
September 1, 2017: The Recorder reinstated the Lien.
November 13, 2017: 225 Baronne filed an amended reconventional demand, asserting the following six causes of action against RAC: (i) racketeering; (ii) fraud; (iii) breach of contract, (iv) negligent misrepresentation; (v) gross negligence; and (vi) abuse of rights (the "Reconventional Demand"). 225 Baronne also filed a third party demand against the Surety Defendants, seeking to recover from them under the performance and payment bonds they issued regarding the Project (the "Third Party Demand").
February 2, 2018: 225 Baronne filed a fourth supplemental and amended reconventional demand and third party demand, again raising the same six claims against RAC as in the Reconventional Demand and the same claims against the Surety Defendants as in the Third Party Demand.
March 15, 2018: RAC filed prescription and res judicata exceptions, and the Surety Defendants filed no right of action and no cause of action exceptions (collectively the "Exceptions").
June 25, 2018: A hearing was held on the Exceptions, and the trial court took the matter under advisement.
July 24, 2018: The trial court granted the Exceptions.[4]

         DISCUSSION

         As noted at the outset, 225 Baronne appeals the trial court's judgment granting the Exceptions.[5] Although 225 Baronne asserts multiple assignments of error, we frame the issue presented as whether the trial court erred in granting the Exceptions. We organize our analysis around each of the Exceptions-prescription, res judicata, no right of action, and no cause of action.

         Prescription

         On appeal, 225 Baronne raises multiple theories in support of its position that the trial court erred in sustaining RAC's prescription exception, including contra non valentum, relation back, suspension, and interruption. Because we find the interruption theory dispositive, we do not reach the other theories.

         When evidence is introduced on the prescription exception, but the case presents no dispute regarding the material facts, only the determination of a legal issue, a de novo standard of review applies, "giving no deference to the trial court's legal determination". Wells Fargo Fin. Louisiana, Inc. v. Galloway, 17-0413, p. 8 (La.App. 4 Cir. 11/15/17), 231 So.3d 793, 800; see also Kirt v. Metzinger, 19-0180, p. 4 (La.App. 4 Cir. 6/19/19), 274 So.3d 1271, 1273 (citing Wells Fargo, supra, and observing that the legal correctness of a trial court's ruling on a prescription exception is reviewed under a de novo standard). Such is the case here.[6]

         A prescriptive period is interrupted "when the obligee commences action against the obligor, in a court of competent jurisdiction and venue." La. C.C. art. 3462. Prescription is interrupted by the filing of suit "even when the petition fails to state a cause of action." Velazquez v. Landcoast Insulation, Inc., 08-804, p. 7 (La.App. 3 Cir. 12/10/08), 999 So.2d 318, 323. "An action commenced in a court of competent jurisdiction and venue, or with service of process within the prescriptive period, continues to interrupt prescription for as long as the suit remains pending." Ansardi v. Louisiana Citizens Prop. Ins. Corp., 11-1717, 12-0166, p. 20 (La.App. 4 Cir. 3/1/13), 111 So.3d 460, 471-72 (citing La. C.C. art. 3463). When prescription is interrupted, the time that has elapsed is wiped out; "[p]rescription commences to run anew from the last day of interruption." La. C.C. art. 3466. Prescriptive statutes are construed liberally in favor of maintaining the obligation sought to be extinguished. Succession of Tompkins, 32, 405, p. 5 (La.App. 2 Cir. 12/8/99), 747 So.2d 1251, 1254.

         Applying these principles, we find that the trial court erred in granting the prescription exception. Prescription commenced running on December 22, 2015, when RAC recorded the Lien, prescription was interrupted when 225 Baronne filed the Lien Lawsuit on January 16, 2016. The Lien Lawsuit remained pending until the Louisiana Supreme Court denied 225 Baronne's writ application on April 7, 2017; prescription began to run anew at that time. Given that 225 Baronne filed the Reconventional Demand on November 13, 2017, its claims are not prescribed.[7]We, thus, reverse the trial court's judgment granting RAC's prescription exception.

         Res Judicata

         RAC's exception of res judicata is based on this court's 2016 decision in 225 Baronne I, which reversed the trial court's judgment in the Lien Lawsuit and ordered that the Lien be reinstated. The gist of RAC's position is that this court's decision in 225 Baronne I precludes any and all claims by 225 Baronne arising out of RAC's work on the Project. Ruling in RAC's favor, the trial court, in its written reasons for judgment, stated that "[225 Baronne's Reconventional Demand] should have been filed along with the lien dispute, and as such, is barred by res judicata."

         On appeal, 225 Baronne contends that the trial court erroneously found that it should have brought its Reconventional Demand, which asserted a $20 million tort claim via ordinary proceeding, with the summary mandamus proceeding to remove the lien-the Lien Lawsuit. It emphasizes that, under Louisiana law, it could not have cumulated an ordinary proceeding with a summary proceeding.[8] For this reason, among others, 225 Baronne contends that res judicata is inapplicable here. RAC counters that the trial court correctly concluded that res judicata applies here and that there was no procedural bar to 225 Baronne asserting its damage claims in the Lien Lawsuit. Indeed, RAC emphasizes that 225 Baronne prayed for damages in the Lien Lawsuit and that the Lien Lawsuit was captioned a "Petition for Removal of Statement of Claim and Privilege and for Damages."

         An exception of res judicata presents a question of law and is reviewed de novo. See Barrie v. City of New Orleans, 17-1001, p. 8 (La.App. 4 Cir. 5/23/18), 248 So.3d 483, 488, writ denied, 18-1041 (La. 10/15/18), 253 So.3d 1306. Stated otherwise, the standard of review of an exception of res judicata requires an appellate court to determine if the trial court's decision is legally correct or incorrect. Bd. of Sup'rs of Louisiana State Univ. v. Dixie Brewing Co., 14-0641, p. 6 (La.App. 4 Cir. 11/19/14), 154 So.3d 683, 688 (collecting cases). Any doubt as to whether res judicata applies is to be resolved against its application. Dixie ...


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