Opinion
2021 CA 1458
06-03-2022
JEFF MERCER, L.L.C. v. AUSTIN BRIDGE AND ROAD, L.P., Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America, Zurich American Insurance Company and State of Louisiana Department of Transportation and Development
David P. Doughty, John B. Hoychick, Rayville, LA and Antonio M. "Tony" Clayton, Port Allen, LA, Counsel for Plaintiff/Appellant, Jeff Mercer, L.L.C. John M. Dubreuil, Ryan M. Bourgeois, Paul R. Trapani, III, Covington, LA, Counsel for Defendant/Appellee, State of Louisiana, Department of Transportation and Development
David P. Doughty, John B. Hoychick, Rayville, LA and Antonio M. "Tony" Clayton, Port Allen, LA, Counsel for Plaintiff/Appellant, Jeff Mercer, L.L.C.
John M. Dubreuil, Ryan M. Bourgeois, Paul R. Trapani, III, Covington, LA, Counsel for Defendant/Appellee, State of Louisiana, Department of Transportation and Development
BEFORE: McDONALD, LANIER, AND WOLFE, JJ.
LANIER, J. The Nineteenth Judicial District Court granted a peremptory exception raising the objection of res judicata filed by the appellee, the Louisiana Department of Transportation and Development (DOTD), and dismissed the claims of the appellant, Jeff Mercer, L.L.C. (Mercer), with prejudice. Mercer appeals from the adverse judgment. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
In February of 2007, Mercer was hired as a subcontractor by Diamond B Construction Company, LLC, the prime contractor on the DOTD Louisville Street Project (Louisville project) in Monroe, Louisiana. Mercer's work included the removal of concrete, adjustment of manholes and catch basins, and rebuilding of curbs and any affected sidewalk portions. In a petition filed in Fourth Judicial District Court, Parish of Ouachita (the Ouachita lawsuit), on September 5, 2007, Mercer named DOTD and several of its employees as defendants, and alleged that a DOTD inspector on the Louisville project had attempted to solicit bribes from Mercer during the project's construction. Mercer allegedly rebuffed the inspector and reported him to DOTD officials.
Mercer alleged that after the report was made, DOTD and the named defendants retaliated. According to Mercer, as a result of this retaliation, its business was injured, including "its business reputation, business profits and business relationships," especially with Diamond B, the prime contractor on the project.
On July 17, 2008, Mercer was hired as a subcontractor by Austin Bridge and Road, L.P. (Austin), for the DOTD Bastrop/Log Cabin Project (Bastrop project) in Morehouse Parish. On May 19, 2009, Mercer was again hired by Austin for the DOTD 1-49 Project (1-49 Project) in Caddo Parish. Mercer claimed payment on these projects was guaranteed by performance bonds furnished by Austin.
Mercer supplemented the petition in the Ouachita lawsuit some time in 2012, stating that contractual damages were not being sought in that lawsuit, but were being sought "elsewhere." Mercer also alleged that the retaliatory actions of DOTD had adversely affected other projects it had taken on since the Louisville Project. Specific to the Bastrop and 1-49 projects, Mercer claimed that DOTD employees committed acts such as forcing Mercer to perform work outside the scope of the contract, causing Mercer to incur unnecessary expenses, and refusing to pay Mercer. Mercer also claimed that DOTD employees falsely reported Mercer to the Federal Bureau of Investigation (FBI) as an intimidation tactic.
Mercer filed the instant petition for damages with the Nineteenth Judicial District Court on September 28, 2012, alleging that DOTD, through its agents, maliciously refused to pay for the work done by Mercer. Mercer claimed that it had a direct claim against DOTD, which withheld funds from the prime contractor, Austin. Mercer alleged that DOTD's refusal to pay stems from the Ouachita lawsuit and Mercer's reporting of the DOTD inspector for attempted bribery. Mercer claimed it was owed $7,116,161.29 on the Bastrop project and $1,140,287.74 on the 1-49 project. In its first supplemental petition in the Nineteenth JDC, Mercer states that the Ouachita lawsuit seeks damages for the destruction of its business, not for monies owed by DOTD for the Bastrop and I-49 projects.
The Ouachita lawsuit proceeded to trial in the Fourth JDC, where the trial court entered a judgment in accordance with a jury verdict in favor of Mercer and against DOTD for $20 million. DOTD appealed to the Second Circuit. On June 7, 2017, the Second Circuit Court of Appeal reversed the Fourth JDC, finding there was insufficient evidence that DOTD engaged in unfair trade practices or intentionally interfered with Mercer's contracts with Austin. See Jeff Mercer, LLC v. State through Department of Transportation and Development, 51,371 (La. App. 2 Cir. 6/7/17), 222 So.3d 1017, 1044, writ denied, 2017-1442 (La. 12/5/17), 231 So.3d 625, cert. denied, ––– U.S. ––––, 138 S.Ct. 1566, 200 L.Ed.2d 746, 86 USLW 3525, 3526.
Specifically, the Second Circuit initially found defects in the trial court's jury instructions and jury verdict form, thereby requiring the appellate court to set aside the verdict and conduct a de novo review of the case. See Mercer , 222 So.3d at 1025, citing McLean v. Hunter , 495 So.2d 1298, 1304 (La. 1986). Upon the de novo review, the Second Circuit reversed the trial court and rendered judgment in favor of DOTD and other defendants, and dismissed Mercer's claims against said defendants. See Mercer , 222 So.3d at 1044.
On July 9, 2021, DOTD filed a peremptory exception raising the objection of res judicata in the Nineteenth JDC, in which it claimed that Mercer's claims in the instant matter arise out of the same transaction or occurrence that was the subject matter of the Ouachita lawsuit, in which a final judgment had been entered against Mercer in favor of DOTD. In its memorandum in support of its exception, DOTD pointed out that in the Ouachita lawsuit, Mercer made claims for amounts owed on the Bastrop and I-49 projects, which are identical to the amounts that Mercer claimed in the instant matter that it was owed by DOTD for the same projects.
Following a hearing, the trial court signed a judgment on September 23, 2021, sustaining the peremptory exception of res judicata and dismissing all of Mercer's claims against DOTD with prejudice. Mercer has timely appealed that judgment.
ASSIGNMENTS OF ERROR
Mercer alleges three assignments of error:
1. The trial court committed reversible error by sustaining the peremptory exception of res judicata on the basis that Mercer had the obligation to assert all claims in the Ouachita lawsuit.
2. The trial court committed reversible error by implicitly finding that the Ouachita judgment is final when there is an ongoing petition to nullity the Second Circuit's decision regarding that case.
3. The trial court committed reversible error by implicitly finding that the Ouachita and East Baton Rouge lawsuits involve the same parties in the same capacity.
STANDARD OF REVIEW
When an objection of res judicata is raised before the case is submitted and evidence is received on the objection, the standard of review on appeal is traditionally manifest error. Pierrotti v. Johnson , 2011-1317 (La. App. 1 Cir. 3/19/12), 91 So.3d 1056, 1063. The trial court must examine not only the pleadings, but also the entire record in the first suit to determine whether the second suit is in fact barred by res judicata. Jefferson v. Board of Supervisors of Southern University and Agricultural and Mechanical College , 2021-0716 (La. App. 1 Cir. 3/3/22), 341 So.3d 603, 608. If any doubt exists as to the applicability of res judicata, the objection must be overruled and the second lawsuit maintained. Cooper v. Baton Rouge Cargo Service, Inc. , 2019-1183 (La. App. 1 Cir. 5/11/20), 304 So.3d 86, 90, writ denied, 2020-00725 (La. 11/4/20), 303 So.3d 628.
DISCUSSION
Action to Nullify Judgment of the Second Circuit
Before addressing the central issue of res judicata, we initially address Mercer's second assignment of error. Mercer avers that the trial court erroneously deemed the Ouachita judgment as final when Mercer had filed a petition on September 27, 2019, with the Fourth JDC to nullity the Second Circuit's judgment, and that the disposition of that petition is still pending. Mercer attached the petition to annul judgment as an exhibit to its memorandum in opposition to DOTD's peremptory exception of res judicata. The underlying basis for nullity of the judgment is alleged fraud and ill practices committed by the Second Circuit. A final judgment obtained by fraud or ill practices may be annulled. La. C.C.P. art. 2004(A).
An action of nullity does not affect the right to appeal. La. C.C.P. art. 2005. A final judgment is appealable in all causes in which appeals are given by law. La. C.C.P. art. 2083. No disposition of Mercer's petition to annul is contained in the record; therefore, notwithstanding the outstanding petition to annul, we must still consider the Second Circuit's judgment a final judgment that forms the basis for the res judicata issue of the instant appeal.
Moreover, we note that in Mercer's petition to annul judgment, Mercer admitted that the alleged fraud and ill practices of the Second Circuit were discovered on June 16, 2017, over a year before the petition to annul judgment was filed on September 27, 2019. An action to annul a judgment for fraud and ill practices must be brought within one year of the discovery by the plaintiff in the nullity action of the fraud or ill practices. La. C.C.P. art. 2004(B). It is therefore highly unlikely that the Second Circuit's decision will be annulled on these grounds, since the one-year peremptive period to file an action to annul had already run. See Kfoury v. Coupel , 2018-0725 (La. App. 1 Cir. 11/2/18), 265 So.3d 796, 799. Mercer's second assignment of error is without merit.
Res Judicata
Louisiana Revised Statutes 13:4231, states:
Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
(2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
(3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined
if its determination was essential to that judgment.
The party raising the objection of res judicata bears the burden of proving the essential facts to support the objection. State ex rel. Guilbeau v. BEPCO, L.P., 2020-0429 (La. App. 1 Cir. 9/20/21), 341 So.3d 1, 8. The doctrine of res judicata is not discretionary and mandates that final judgments be given effect. Id.
DOTD attached eight exhibits to its memorandum in support of its exception of res judicata: Mercer's original petition in the instant case; Mercer's original petition in the Ouachita lawsuit; Mercer's first supplemental petition in the instant case; Mercer's first supplemental petition in the Ouachita lawsuit; a judgment denying DOTD's exception of lis pendens in the instant case; court minutes from January 25, 2016 in the instant case; the Mercer case decided by the Second Circuit; and Mercer's answers to DOTD's first set of interrogatories and requests for production of documents in the instant case. We shall examine these exhibits to determine whether the Ouachita judgment constitutes res judicata with respect to the instant case.
In Mercer's original petition filed in the instant case, Mercer, as plaintiff, named as defendants Austin, Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America, Zurich American Insurance Company, and DOTD. Mercer claimed in the petition that it is owed $7,116,161.29 by DOTD on the Bastrop project and $1,140,287.74 on the I-49 project, and that DOTD failed to pay these amounts to Mercer for the completed work on the Bastrop and I-49 projects. Mercer further alleged in the petition that DOTD maliciously refused to pay what was due to Mercer, as a result of Mercer's reporting a DOTD inspector for attempted bribery. Mercer petitioned the court to find that DOTD failed to pay Mercer "all sums owed for work performed by Mercer."
Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America, and Zurich American Insurance Company acted as sureties and furnished payment and performance bonds on the I-49 and Bastrop projects to guarantee payment on behalf of Austin to Mercer and other subcontractors on the projects. These surety companies are not involved in the instant appeal.
In the original petition in the Ouachita lawsuit, Mercer was the sole plaintiff, who named DOTD and three DOTD employees as defendants. Mercer alleged that it was a subcontractor on the DOTD Louisville project. Mercer then alleged the attempted bribery by the DOTD inspector, Willis Jenkins, whom Mercer reported to DOTD. Mercer claimed it was from that point that DOTD employees began to retaliate by making the job too costly and difficult, resulting in Mercer's withdrawal from the Louisville project on July 16, 2007. Mercer claimed that DOTD's actions injured its business, reputation, and profits, which Mercer alleged was "millions of dollars." Mercer prayed for damages, lost profits, loss of business reputation, punitive damages, attorney fees, and court costs.
In Mercer's first supplemental petition in the instant case, Mercer expanded the above allegations by elaborating on the attempted bribery by Jenkins. Mercer then stated that it had filed suit in the Fourth JDC, seeking damages for the destruction of its business, but "not for the monies owed to Mercer that [DOTD] did not pay on the [I-49 and Bastrop projects]." Mercer then claimed that as it began to work on the I-49 and Bastrop projects, the retaliation by DOTD continued. Mercer alleged that DOTD required it to use cheaper materials than the job called for and then refused to pay Mercer for the more expensive materials that were called for in the bid. Because of the use of substandard materials, Mercer claimed, the quality of the work suffered. Mercer and Austin were then blamed by DOTD for the poor quality of the work. Mercer and Austin were told by DOTD to replace the defective work, but neither were paid for doing so. When Mercer made additional demands to DOTD for payment, it alleged that DOTD reported Mercer to the FBI for groundless criminal charges. Mercer alleged that when it and Austin filed a contract dispute with DOTD, the claim was denied and they were threatened with further federal criminal prosecution. Mercer claimed that on the Bastrop project, DOTD refused to compensate Mercer for utility delays, which amounted to over $1.5 million. Mercer also alleged that it was never compensated by DOTD for road undercut work, which Mercer estimated to be over $5 million. Mercer has claimed that the utility delay and undercut figures are part of the total $7.1 million it has claimed for the Bastrop project in the instant case.
In Mercer's first supplemental petition in the Ouachita lawsuit, the allegations of the original petition were expanded to add several more DOTD employees as defendants. Mercer alleged that these individuals carried out DOTD's retaliation by conspiring and colluding to destroy Mercer's business reputation. The named defendants also allegedly added to the cost and difficulty of Mercer's work. Mercer alleged that DOTD rejected Mercer's bids on other projects, then notified other bidders of what Mercer had bid so that one of those bidders could outbid Mercer. Mercer further alleged that DOTD made false reports to the FBI that Mercer had committed mail fraud and violated federal requirements as a "disadvantaged business enterprise." Mercer claimed that the U.S. Attorney declined to prosecute these charges, and that DOTD engaged in these actions only to "harass, embarrass[,] and humiliate" Mercer. Because of these bogus claims by DOTD, Mercer alleged that DOTD has refused to pay for the work done on the two projects. Mercer also alleged fraud and unfair trade practices by DOTD.
The trial court signed a judgment denying DOTD's exception of lis pendens in the instant case on February 12, 2016, giving DOTD leave to re-urge. The court minutes of January 25, 2016 involve the hearing on the exception of lis pendens. The minutes clearly state that the trial court denied the exception without prejudice and stated that DOTD could reassert the exception at a later date based on the progress or lack of progress in the Ouachita lawsuit. Lis pendens, however, does not address the merits of the disputes between parties and should be considered in the procedural and factual climate that exists at the time of its review. See Brooks Well Servicing, Inc. v. Cudd Pressure Control, Inc. , 36,723 (La. App. 2 Cir. 6/27/03), 850 So.2d 1027, 1031, writ denied, 2003-2606 (La. 12/12/03), 860 So.2d 1157. The denial of the exception of lis pendens therefore has no bearing on the subsequent judgment granting the exception of res judicata in the instant case.
The Mercer case out of the Second Circuit reversed the Fourth JDC's judgment in favor of Mercer, and rendered a new judgment in favor of DOTD. In its de novo review of the Ouachita lawsuit, the Second Circuit made extensive factual findings regarding the I-49 and Bastrop projects. As to the I-49 project, the appellate court discussed the same work discussed in both of Mercer's petitions, how Mercer claimed DOTD made its work unnecessarily difficult, and how DOTD eventually deemed Mercer's work to be unacceptable. Mercer , 222 So.3d at 1033-34. DOTD had agreed to pay for only part of Mercer's repair of the substandard work. Witness testimony characterized Mercer's problems with DOTD as "seeking to be paid twice" and a "payment dispute." Mercer , 222 So.3d at 1036-37.
As to the Bastrop project, the Second Circuit addressed Mercer's complaints about DOTD failing to approve requests for payment relating to the undercut work that are also cited in the instant petition. Mercer admitted at trial in the Ouachita lawsuit that it left both the I-49 and Bastrop projects prior to completion due to nonpayment, requiring Austin and DOTD to find another subcontractor to take Mercer's place. Mercer , 222 So.3d at 1038-39. There was also testimony as to the utility delays, of which Mercer complained in the instant petition, causing problems with completion on the Bastrop project, and forcing Mercer to leave the Bastrop project because it was losing money on the job. Mercer submitted a claim for approximately $1.5 million to DOTD for the utility delays, which is also cited in the instant petition as a portion of the $7.1 million claimed in the Bastrop project. Mercer , 222 So.3d at 1039-40. Mercer also claimed at the Ouachita trial that it was owed compensation for the additional undercut work. Mercer , 222 So.3d at 1040.
Ultimately the Second Circuit found that there was no malicious or wanton interference with Mercer's contract on the part of DOTD, nor was there any unfair trade practices on the part of DOTD. Mercer , 222 So.3d at 1044. The evidence submitted at the Ouachita trial largely involved the nonpayment issues surrounding the I-49 and Bastrop projects, which are the central issues of Mercer's breach of contract claims in the instant case. The Second Circuit found that there was sufficient evidence in the record to justify DOTD's payment for Mercer's work. Id. Mercer applied for writs of certiorari to the Louisiana Supreme Court, and subsequently to the United States Supreme Court, to challenge the Second Circuit's decision. Writs were denied by both courts. See Mercer , 231 So.3d at 625, 138 S.Ct. at 1566.
In Mercer's answers to DOTD's interrogatories in the instant case, Mercer listed many of the same individuals who testified in the Ouachita trial as potential witnesses in the instant case. Mercer also listed many of the same exhibits from the Ouachita trial that were involved with the I-49 and Bastrop projects.
It is abundantly clear from the exhibits submitted by DOTD in support of its peremptory exception of res judicata that there exists a final judgment from the Second Circuit that has adjudicated all causes of action arising out of the same transaction or occurrence central to the instant case. The Second Circuit found that payments made to Mercer by DOTD and Austin in conjunction with the I-49 and Bastrop projects were justified and in accordance with the specifications of Mercer's contract bid. If Mercer is legally capable of suing DOTD directly for breach of contract, the Second Circuit has already held that no breach of contract occurred. In both the Ouachita lawsuit and the instant case, Mercer has made claims for the same amounts: $1,140,287.74 for the I-49 project and $7,116,161.29 for the Bastrop project. Mercer cannot now assert a breach of contract claim in the Nineteenth JDC, which claim is in truth the same tortious interference of contract and unfair trade practices claim that has already been adjudicated to completion.
We are not persuaded by Mercer's assertion that the trial court in the instant case erred by finding that Mercer should have filed the breach of contract claim in the Fourth JDC. As already stated, the contractual issues surrounding the I-49 and Bastrop projects were already adjudicated to completion. As La. R.S. 13:4231(2) states, if the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
We find that DOTD successfully met its burden of proving that Mercer's claims in the instant case are barred by res judicata, and the trial court in the instant case was not manifestly erroneous in sustaining the peremptory exception of res judicata. Mercer's first and third assignments of error are without merit.
DECREE
The judgment of the Nineteenth Judicial District Court, sustaining the peremptory exception raising the exception of res judicata filed by the appellee, the Louisiana Department of Transportation and Development, is affirmed. All costs of this appeal are assessed to the appellant, Jeff Mercer, L.L.C.
AFFIRMED.
McDonald J., concurs.