Opinion
NO. 2011-CA-0747
11-23-2011
ABC BUILDING CONTRACTORS, INC. v. WESTBANK PROFESSIONAL BUILDING PARTNERSHIP, ET AL.
Richard B. Ehret Shaundra M. Westerhoff BOYKIN EHRET & UTLEY COUNSEL FOR PLAINTIFF/APPELLANT, ABC BUILDING CONTRACTORS, INC. Mary Ann Bossetta DORSEY AND BOSSETTA COUNSEL FOR WESTBANK PROFESSIONAL BUILDING PARTNERSHIP AND LAKEWAY INVESTMENTS, LLC. Phillip A. Wittmann Samantha P. Griffin Agnieszka A. McPeak STONE PIGMAN WALTHER WITTMANN L.L.C. COUNSEL FOR LINDSTROM CLEANING AND CONSTRUCTION, INC.
NOT DESIGNATED FOR PUBLICATION
APPEAL FROM
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2006-4565, DIVISION "D-16"
Honorable Lloyd J. Medley, Judge
Judge Dennis R. Bagneris , Sr.
(Court composed of Judge Charles R. Jones, Judge Dennis R. Bagneris, Sr.,
Judge Roland L. Belsome)
BELSOME, J. DISSENTS WITH REASONS.
Richard B. Ehret
Shaundra M. Westerhoff
BOYKIN EHRET & UTLEY
COUNSEL FOR PLAINTIFF/APPELLANT, ABC BUILDING
CONTRACTORS, INC.
Mary Ann Bossetta
DORSEY AND BOSSETTA
COUNSEL FOR WESTBANK PROFESSIONAL BUILDING
PARTNERSHIP AND LAKEWAY INVESTMENTS, LLC.
Phillip A. Wittmann
Samantha P. Griffin
Agnieszka A. McPeak
STONE PIGMAN WALTHER WITTMANN L.L.C.
COUNSEL FOR LINDSTROM CLEANING AND CONSTRUCTION,
INC.
AFFIRMED
Plaintiff/appellant, American Building Contractors, Inc., and third-party defendant/appellant, Lindstrom Cleaning & Construction, Inc., appeal a judgment of the trial court, which (1) granted defendants and plaintiffs in reconvention's motions for involuntary dismissal and dismissed with prejudice all claims of ABC Building Contractors and Lindstrom Cleaning and Construction, and (2) rendered judgment in favor of third party plaintiff, plaintiff in reconvention and intervenor, Lakeway Investments, LLC in the amount of $678,360.37. For the following reasons, we hereby affirm the judgment of the trial court.
FACTS
On May 25, 2006, American Building Contractors, Inc. ("ABC") filed suit against defendants Westbank Professional Building Partnership ("Westbank"), Dr. Janos Voros, Dr. Jules Deutsch and Dr. Jerry Smith claiming that the defendants are indebted to ABC for $1,019,799.73, plus interest, lien costs, courts costs and attorneys' fees as a result of ABC supplying labor and services to Westbank. Specifically, ABC alleges that on October 9, 2005, a representative of Westbank signed a contract with it for services and goods involving demolition and remediation of damage caused by Hurricane Katrina. On August 31, 2006, Defendants filed an answer, a reconventional demand against ABC, and a third party demand against Lindstrom Cleaning & Construction ("Lindstrom"), a subcontractor of ABC. Intervenor, Lakeway Investments ("Lakeway") intervened with defendants and also reconvened against ABC and made demand upon Lindstrom. In the answer, the defendants allege that ABC and Lindstrom violated Louisiana law by not being licensed in the state of Louisiana to perform the scope of work. Further, defendants allege that ABC and Lindstrom were negligent in the performance of their work. On October 17, 2006, ABC and Lindstrom filed an answer to plaintiffs in reconvention and defendant in intervention simply denying the allegations and did not challenge the capacity of Lakeway, as the proper party, to file the reconvention and third party demand.
After a five day trial, the trial court granted an involuntary dismissal, which dismissed with prejudice all claims of ABC and Lindstrom's and found in favor of Lakeway in the amount of $678,360.37. ABC and Lindstrom now appeal this final judgment.
On appeal, ABC assigns the following assignments of error: (1) the trial court erred in finding that Lakeway owned the Westbank building; (2) the trial court erred in finding that Lakeway has standing in this case; (3) the trial court erred in not admitting into evidence the ABC contract; (4) the trial court erred in not finding Westbank breached the ABC contract and owes ABC $1,075,000.00 minus the interim payments made; (5) the trial court erred in finding that ABC and Lindstrom were not properly licensed to do the work at the Westbank thereby voiding any contract for that work; (6) the trial court erred in finding that the Louisiana emergency reciprocity statutes do not apply; (7) the trial court erred in finding there was no proof of Minnesota licenses for ABC and Lindstrom; (8) the trial court erred in finding that the work performed by ABC and Lindstrom required a mold remediation license; (9) the trial court erred in finding that ABC and Lindstrom were not entitled to recover job costs; (10) the trial court erred in finding that the job costs incurred by ABC and Lindstrom were not proven; (11) the trial court erred in not considering Mike Dewey's proffered testimony or a negative presumption for failure to call him as an expert witness; (12) the trial court erred in refusing any rebuttal evidence from ABC and Lindstrom after Lakeway rested its case on the Reconventional Demand; (13) the trial court erred in finding that Lakeway had a third party and reconventional demand seeking reimbursement in full of $678,360.37; (14) the trial court erred in awarding $678,360.37 to Lakeway on its claim for negligence; (15) the trial court erred in allowing Daniel Plunkett to testify as an expert; and (16) the trial court erred in finding Daniel Plunkett's testimony satisfied Lakeway's burden of proof.
Appellant Lindstrom assigns the following assignments of error: (1) the trial court erred in refusing to allow it, a third-party defendant, to present any evidence in defense of the third-party claims asserted by Westbank and Lakeway; (2) the trial court erred in awarding Lakeway a judgment against Lindstrom in the amount $678,370.37 for the return of moneys paid by Westbank and Jo Ellen Investments, LLC; (3) the trial court erred in refusing to admit the contract between ABC and Westbank into evidence based on purported authenticity issues where Westbank asserted a breach of contract claim based on the same contract and made numerous judicial confessions as to the authenticity of that contract; (4) the trial court erred in failing to find that ABC, a Minnesota licensed contractor, was entitled to contract for work in Louisiana and in refusing to enforce the terms of the contract despite the undisputed evidence that ABC and Lindstrom were licensed Minnesota contractors; (5) the trial court erred in not finding a contract existed among the parties even in the absence of a written agreement; and (6) the trial court erred in not awarding ABC the costs it incurred for labor and material in remediating and removing water-logged material from the defendants' property.
STANDARD OR REVIEW
In Louisiana, appellate courts review both law and facts. La. Const. Art. V, Sec. 10(B). The standard of review for a factual finding is the manifestly erroneous or clearly wrong standard. To reverse a fact finder's determination under this standard of review, an appellate court must undertake a two-part inquiry: (1) the court must find from the record that a reasonable factual basis does not exist for the finding of the trier of fact; and (2) the court must further determine the record establishes the finding is clearly wrong. Stobart v. State, through Dept. of Transp. and Development, 617 So.2d 880, 882 (La.1993). The issue to be resolved by the reviewing court is not whether the trier of fact was right or wrong, but whether the fact finder's conclusion was a reasonable one. Stobart, 617 So.2d at 882. If the factual findings are reasonable in light of the record reviewed in its entirety, a reviewing court may not reverse, even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Stobart, 617 So.2d at 882-883. Accordingly, where there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous. Stobart, 617 So.2d at 883. Further, when a fact finder's determination is based on its decision to credit the testimony of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong. Rosell v. ESCO, 549 So.2d 840, 844-845 (La.1989). The credibility determinations of the trier of fact are subject to the strictest deference under the manifest error-clearly wrong standard. Theriot v. Lasseigne, 93-2661, p.9 (La.7/5/94), 640 So.2d 1305, 1313.
DISCUSSION
The first issue to address is whether the trial court erred in its finding that Lakeway owned Westbank. According to the public records, the Westbank building sits on two lots, 20B1 and 20B2. At the time the Westbank building was built, Tenet Healthsystem Hospitals, Inc. ("Tenet") leased the two lots to Westbank; however, unless the leases were renewed by September 2002, the leases would terminate on September 30, 2004, causing the landowner (Tenet) to become the owner of the improvements. The leases were not renewed in 2002, divesting Westbank of its ownership interest in the building. Thereafter, on March 17, 2003, an Act of Sale occurred between Lakeway and Tenet whereby Tenet sold the two lots, along with the building to Lakeway. Although Lakeway sold certain parcels it had acquired to independent third parties, i.e. Jo Ellen Investments, LLC, it excluded the buildings and improvements, which would include the Westbank building. In 2006, in order to place the building and land together for potential sale of the site, Jo Ellen Investments, LLC via Quitclaim, conveyed all of its right, title and interest in the parcels back to Lakeway on February 17, 2006. Further, in order to further clarify the public record, Westbank executed a Quitclaim of any interests it may have had in the West Bank Building to Lakeway on April 20, 2006. From reviewing the public records admitted into evidence, especially the 2003 Act of Sale between Lakeway and Tenet, we agree with the trial court's finding that Lakeway was the owner of the Westbank building and is the proper party to intervene and to file a third party demand and reconvention against Plaintiffs.
We now consider whether the trial court erred in its finding that (1) a contract did not exist between Westbank and ABC, (2) Plaintiffs did not have the capacity to enter into a contract because they were unlicensed in Louisiana, (3) Plaintiffs are not entitled to recover in quantum meruit, and (4) Lakeway should be reimbursed the $678,360.37 for the work that was done at the Westbank building. After reviewing the record and finding no clear error of fact or law, we adopt the trial judge's well written reasons for judgment on these issues, which follow, as our own:
Plaintiffs were Minnesota contractors who after Katrina were hired to dry out/remediate the Westbank Building that was heavily damaged in Katrina.
Westbank and Lakeway argued that Plaintiffs and their subcontractors had no capacity to have entered into a contract due to them having no licenses in place as required by R.S. 37:2160, which makes it 'unlawful for any person to engage or continue in this state in the business of contracting, or to act as a contractor unless he holds an active license as a contractor under the provisions of the Louisiana State Licensing Laws.' To support this position, undisputed testimony was heard from the Louisiana State Licensing Board for Contractors (LSLBC) Compliance Director, Mr. Brent Templet, and the then Executive Director of the LSLBC during Katrina, Mr. Charles Marceaux, who clearly testified that the requirements of the Louisiana Licensing laws remained valid statutory requirements and were not suspended. Only the aggressive enforcement of the laws was suspended from September 1, 2005 through December 1, 2005 as there was no executive order signed by the Governor suspending Louisiana's contractor licensing laws. This same threshold issue was decided in three separate cases requiring licensure involving the same contractor referred to as the Tradewinds cases.
In Tradewinds Environmental Restoration, Inc. vs. Frank Stewart Jr., et al, No. 06-3299 2008 U.S. Dist. LEXIS 6104 (E.D. La. Jan. 24, 2008), Judge Ivan Lemelle granted summary judgment on the breach of contract claim by the unlicensed contractor, finding the
contracts null and void for lack of licensure. Judge Lemelle found the licensing laws remained valid statutory requirements despite suspension by the LSLBC of enforcement. Therefore, the Court limited plaintiff's claim to the actual costs of materials, services and labor, and there could be no recovery for profit and overhead.
In so ruling, Judge Lemelle followed his colleague from the Eastern District of Louisiana. In Tradewinds Environmental Restoration, Inc. v. St. Tammany Park. L.L.C., No. 06-593 2007 WL I191896 (E.D. La. April 20, 2007), Judge Carl Barbier granted the defendants' motion for summary judgment on the basis that the unlicensed plaintiff s contracts were void ab initio, rejecting the plaintiff's policy argument (based on the Marceaux affidavit) that because of the unprecedented devastation from Katrina and the suspension of aggressive enforcement by the LSLBC, the Court should ignore the legislative requirements of licensure. The matter was upheld on appeal in Tradewinds Environmental Restoration, Inc, Plaintiff - Appellant v. ST. Tammany Park, LLC, Defendant - Appellee, Colony Insurance Company, Third Partv Defendant-Appellee, No. 08-30729, United States Court of Appeals for the Fifth Circuit, 578 F.3d 255; (2009 U.S. App).
Just as the plaintiffs in this case argued, Tradewinds contended on appeal that the decision of the LSLBC to loosen its enforcement of the licensing statutes in the immediate aftermath of Hurricanes Katrina and Rita protected its agreement from the general rule of absolute nullity for failure of licensure. Tradewinds (as did Plaintiffs in this case) relied upon an affidavit by Charles E. Marceaux (and also live testimony), the Executive Director of the Licensing Board, that states that, for several months following the Hurricanes, the LSLBC decided to 'delay active and aggressive enforcement of licensure laws pertaining to demolition and debris removal and stay aggressive enforcement of other licensure laws.' According to Tradewinds, the district court's holding of absolute nullity imposes on Tradewinds 'the harshest enforcement possible' of Louisiana licensing requirements, in contravention of the Licensing Board's decision. Tradewinds, 578 F.3d at 262.
Tradewinds acknowledged that the Licensing Board's discretion in conducting licensing enforcement does not give it authority to suspend the licensing
requirements. Indeed, in times of emergency or disaster, Louisiana law recognizes that only the Governor has the power to suspend the provisions of any regulatory statute prescribing the procedures for conduct of state business, or the orders, rules, or regulations of any state agency, if strict compliance with the provisions of any statute, order, rule, or regulation would in any way prevent, hinder, or delay necessary action in coping with the emergency. LA. REV. STAT. § 29:724.
Both in this matter and Tradewinds, it is undisputed that no executive order suspending Louisiana licensing laws was executed in the aftermath of the hurricanes. Tradewinds, 578 F 3d at 263. Accordingly, The Fifth Circuit upheld the district court ruling that the Licensing Board's decision to loosen its enforcement of licensing requirements in the aftermath of the hurricanes did not suspend the requirement that contractors performing contracting services in Louisiana be licensed. Id.
The Court is of the opinion that these cases are the controlling legal precedent in this matter. Therefore, based on the trial evidence in the form of the uncontroverted testimony from both Mr. Templet and Mr. Marceuax [sic], as well as a lack of the production of any alleged licenses of plaintiffs and their subcontractors, it is an undisputed fact neither plaintiffs nor their subcontractors were validly licensed in Louisiana at the time they bid on the job at the Westbank Building or when they attempted to enter into the alleged contract.
The evidence was further clear that Lindstrom who worked on this job remained unlicensed in Louisiana until January 16, 2006, a month and a half past any grace period they rely upon and well after the job was completed. It is also undisputed that neither plaintiffs nor any of their subcontractors had a mold remediation license, a statutory requirement for the work they performed in accordance with the independent testimony of Mr. Templet, the LSLBC Compliance Director. It is also quite clear that all of the other three sub-contractors who performed work at the Westbank building were completely unlicensed in the State of Louisiana. Therefore, it is undisputed that during the entire time of the job in question, there were no licensed Louisiana contractors performing the work at the Westbank
building nor was there any proof of the required licensure provided by plaintiffs.
Further, Plaintiffs seek to enforce a contract and its terms that are not in evidence. Plaintiffs admit they did not sign the contract in question nor did they produce a signed original that could be authenticated. They offered no testimony or competent evidence to prove the one and only signature on the contract. There is simply no contract to enforce.
Plaintiffs have also argued that reciprocity applies in this case. Mr. Brent Templet, the LSLBC Compliance Director for the State of Louisiana, testified that Louisiana does not have reciprocity with Minnesota, the home state of plaintiff contractors, and that neither plaintiff nor any of their subcontractors applied for a waiver of reciprocity as would be required by Louisiana law. The effect of reciprocity is that it waives the necessity of the written exam only; however, all other statutory requirements to obtain a license apply.
Plaintiffs also relied on the doctrine of emergency reciprocity applied by Judge Magee in denying a summary judgment to plaintiff seeking to void the contract for failing to have a license in place at the time of the contract. Happy Closing, LLC et al. v. Chestnut Properties, et al. Case No. 2006-2549. This is a district court decision that is not controlling precedent. It is also factually dissimilar to the case at bar.
In Happv Closing s the defendants were properly licensed in their home state for the same specialty services they were providing to plaintiff's property in Louisiana. However in this case, plaintiffs, nor any of its subcontractors, offered any proof of licensure in Minnesota by providing license numbers, copies of licenses, affidavits, certificates or some form of competent evidence of licensure. Also in this case, the evidence and testimony from the LSLBC Compliance Director was that a mold remediation license was needed by the plaintiffs to perform the scope of work at the Westbank Building. Neither Plaintiffs nor any of its subcontractors had the special class of a mold remediation license in Louisiana or in Minnesota. Further, emergency reciprocity is 'subject to such limitation and conditions as the requesting state may
prescribe by executive order or otherwise.' LA. R.S. 29:751 (5).
The Fifth Circuit Court of Appeal stated in Tradewinds that the applicability of the emergency reciprocity of licensing provisions is for from a purely legal issue, as it is premised on Tradewinds's proper licensing in another state, which is a factual question. Furthermore, Tradewinds' licenses and qualifications in other states were not part of the record. Tradewinds, 573 at 266.
The record in this case is also devoid of any alleged licenses of plaintiffs and its subcontractors. Further, despite the Governor declaring a state of emergency following Katrina, she did not sign an executive order suspending the licensing laws. Lastly, all the subcontractors were completely unlicensed and Mr. Templet, LSLBC Compliance Director, was clear that all contractors, sub or general, had to have their own licenses in place and could not work under another contractor's license. The Court is of the opinion that no reciprocity exists in this case for these reasons.
Additionally, plaintiffs did not carry their burden of proof of any potential claim in quantum meruit as there was no contract entered into evidence. Further, plaintiffs only provided a Xactimate estimate as their proof of actual costs of labor, material and equipment. Xactimate is an insurance tool used by insurance companies to arrive at a national average so that contractors are paid consistently throughout the nation. This is simply not legally sufficient proof of actual costs of labor, material and equipment as the law requires.
In Alonzo v. Chifici, 526 So.2d, 237 (La.App. 5 Cir 1989), a construction contract was found to be void for failure to have proper licensure as required by law and Mr. Alonzo's claim was limited in quantum meruit for recovery of actual costs of material, services and labor and he was not entitled to any profit or overhead. The Court disallowed cash expenditures and any charges where invoices and cancelled checks did not match. Alonzo, 526 at 244. In yet another case involving Mr. Alonzo and the Chificis, (Alonzo v. Chifici, 541 So.2d 303 (La.App.5 Cir.1989)), the Court disallowed a price based on estimates where Mr. Alonzo testified that he computed the estimated cost of construction without any
effort to itemize and, therefore, did not prove his claim for compensation in quantum meruit. Alonzo, 541 at 306.
Having provided nothing more than estimated costs from a computer estimate with no documentation consisting of items such as written contracts with its subcontractors describing their scope of work, invoices from those subcontractors, proof of payment of invoices, paid labor tickets, paid invoices for equipment rental and material purchases and cancelled checks to prove payment of other incurred costs such as travel, as well as having no contract in evidence, plaintiffs are not entitled to recover in quantum meruit.
Also admitted into evidence during the plaintiffs' case was a notice of cancellation of the lien on the Westbank Building. After plaintiff rested, counsel for Westbank and Lakeway moved that all claims of the plaintiffs be involuntarily dismissed with prejudice. The Court granted the motions due to the above stated reasons.
The only surviving claim was Lakeway's third party and reconventional demand seeking reimbursement in full of the $678,360.37 paid to plaintiffs for work done at the Westbank Building. In support Mr. Danny Plunkett, an expert in construction engineering and estimation, testified that ABC and Lindstrom charged for a job that could not be done and that the building remained wet and covered with mold even after ABC and Lindstrom completed their work. He further testified that the chance of success in remediating water damage to a building significantly decreases after the first week and there is no chance to remediate water damage after four weeks requiring water soaked and damaged building materials must be demolished at that point. He also testified that all the work ABC/Lindstrom did had to be demolished, as it should have been from the first, that this was going to cost Lakeway another $492,800 and that Lakeway received no value for the work plaintiffs did, for which plaintiffs were paid $678,360.37. Proof of those payments is in evidence. Mr. Plunkett testified that any reasonable, experienced and licensed contractor knew or should have known that any attempt to dry out/remediate a building after five weeks of building materials being soaked from the Katrina's rain and full of mold was futile and impossible to do. Mr. Plunkett also testified that none of the work done by plaintiff contractors could be salvaged and all of the building's
materials, including the metal studs and sprinkler pipes, had to be demolished. ABC/Lindstrom brought no evidence to the contrary. The Court is of the opinion that the uncontroverted testimony of Mr. Plunkett must be accepted since plaintiffs produced no evidence to controvert this testimony. Opinions and conclusions of court-accepted experts are to be given great weight and proper credit when their testimony is unimpeached, uncontroverted and based on sound reasoning and on established facts. Fuller v. Wal-Mari Stores, Inc., 519 So.2d 366 (La. App.2nd Cir.1988);.Louisiana Power and LightCo. v. Roberis , 408 So.2d 54 (La.App. 3rd Cir, 1982); Geismar v. General Gas Corp. , 182 So.2d 769 (La. App. 1st Cir. 1966); Hebert v. Winn Dixie Stores of Louisiana, et al, 426 So.2d 295 (La. App. 4th Cir. 1983). Lakeway is therefore entitled to full recovery of the monies paid to ABC/Lindstrom as it proved its claim by a preponderance of evidence.
Appellants also argue on appeal that the trial court erred in refusing any rebuttal evidence after Lakeway rested its case on the Reconventional Demand. We find no merit in this assignment of error. After the close of Lakeway's case, counsel for Appellants asked the trial court for a negative inference based on the fact that Lakeway listed an expert (Mr. Mike Dewey) but did not call him to testify. Lakeway responded that counsel for ABC/Lindstrom "filed a Motion In Limine with a Daubert Exception ...objecting to the qualifications of Mr. Dewey saying that he was a Louisiana licensed contractor" and in order to cure the problem, Lakeway chose to call "Mr. Plunkett who testified basically to the same thing." ABC/Lindstrom could have called Mr. Dewey as a witness before resting its case but chose not to do so. Under these facts, we do not find that Lakeway should be penalized by its failure to call more than one witness on the same subject.
For these reasons, we hereby AFFIRM the judgment of the trial court.
AFFIRMED