Opinion
CIVIL ACTION NO. 01-2171 SECTION "F"
January 23, 2003
ORDER AND REASONS
Before the Court are defendants Associated Design Group, Inc. (ADG) and Sunbelt Controls, Inc.'s Motions to Dismiss and For Summary Judgment. For the following reasons, the motions are DENIED.
I.
Plaintiff New Orleans Assets, L.L.C. is the owner of the New Orleans FBI Headquarters. ADG subcontracted with the general contractor, Carl E. Woodward, L.L.C., to provide mechanical design services for the building's HVAC system. Sunbelt contracted with NOA to build and install the HVAC controls system. The building became beset by mold and mildew shortly after its construction.
NOA sued several parties, including its general contractor CEW. CEW, in turn, cross-claimed against ADG, and asserted a third party demand against Sunbelt. NOA has settled its claims against ADG and Sunbelt. ADG and Sunbelt now move for 12(b)(6) dismissal and, in the alternative, summary judgment of CEW' s claims.
On October 30, 2000, NOA and CEW entered into a written agreement for the purpose of "jointly mitigating the mildew problem, to identifying and eliminating the possible causes of the problem, and to identifying those persons who are potentially responsible for the problem." They further agreed to "jointly pursue all available sources of recovery for the aggregate amount of the expenses incurred by both parties in the investigation, analysis and remediation of the mildew problem, including pursuit against parties who might be potentially responsible for the mildew problem or damages associated therewith. . . ."
II.
A. Motion to Dismiss For Failure to State a Claim
Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. In ruling on a motion to dismiss, the Court should consider only those facts stated on the face of the complaint or incorporated into the complaint by reference, and matters of which judicial notice may be taken. See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996). The complaint, however, must be liberally construed in the plaintiffs favor, and all facts pleaded in the complaint must be taken as true. See Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir. 1986). A district court "may dismiss a complaint as a matter of law for (1)lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal claim." Carey v. State of Louisiana, 2001 WL 1548962, at *3 (E.D.La. Dec. 5, 2001).
1) CEW's Subrogation Claims are Cognizable
ADG and Sunbelt contend that CEW's claims against them should be dismissed for failure to state a cognizable legal claim. They assert that CEW's claims for contribution are invalid because NOA has dismissed its claims against them pursuant to a settlement agreement. CEW's claims, however, are not based in contribution; rather, its claims rest upon the more general doctrine of subrogation.
CEW's suit against ADG also charges breach of contract.
Louisiana has abolished solidary liability among nonintentional tortfeasors. La. Civil Code arts. 2323, 2324. Though contribution is a particular form of subrogation, Perkins v. Scaffolding Rental and Erection Service. Inc., 568 So.2d 549, 551 (La. 1990), not all claims made under the general doctrine of subrogation are barred. See Southern Pacific Tranp. Co. v. Chabert, 973 F.2d 441 (5th Cir. 1992).
Subrogation is the substitution of one person to the rights of another. La. Civil Code art. 1825. Under Louisiana law, subrogation may be either legal or conventional. Id. Legal subrogation occurs "in favor of an obligor who pays a debt he owes with others or for others and who has recourse against those others as a result of the payment." La. Civil Code art. 1829. Legal subrogation requires, however, that an obligor satisfy the entire debt of the original obligee. In Horn v. LaCoste, 793 So.2d 319, 326 (La.App. 1 Cir. 2001), the court stated:
[T]he pertinent issue is whether the [original claimants] received full compensation for their damages through the payment by transcontinental. The receipts and releases do not clearly demonstrate or address whether the [claimants] were compensated for all their damages by the transcontinental settlement payment. The issue is simply whether the entire debt was paid. . . . If the entire debt owed to the injured parties was not paid by transcontinental, they do not have a claim for legal subrogation.
(Emphasis not added). See also Cutrer v. Gulf States Utilities Company, 963 F. Supp. 583, 586 (M.D.La. 1996). CEW paid NOA for one-half of the building's damage; thus, CEW did not satisfy the entire obligation owed to NOA.
Conventional subrogation occurs when an obligee, receiving payment from a third person, agrees to subrogate his rights to that person, against the other obligors. La. Civil Code art. 1827; see also Southern Pacific Tranp. Co. v. Chabert, 973 F.2d 441, 444 (5th Cir. 1992). This form of subrogation must be express and contemporaneous with the payment. Id. Unlike legal subrogation, conventional subrogation does not require a third person to satisfy the entire debt owed. Id. In a partial subrogation, the debt is divided between the third party and the original obligee, making them either joint or several obligees. Id.
Although an obligor's consent is not required for conventional subrogation, an obligee's intention to subrogate must be clearly indicated. See A. Copeland Enterprises. Inc. v. Slidell Memorial Hospital, 657 So.2d 1292, 1298 (La. 1995). A subrogation agreement may be either oral or written. See id. If the intent of the agreement is disputed, an obligee's intention may be shown "by clear proof of acts of the obligee that unquestionably implies it." Id. (quoting Saul Litvinoff, The Law of Subrogation 5, § 11.22 (1992)).
CEW contends that, pursuant to an October 30, 2000 written agreement, NOA clearly indicated that it had conventionally subrogated one-half of its rights to CEW. ADG and Sunbelt, however, assert that the NOA-CEW agreement is not a subrogation agreement, but merely a reimbursement contract.
While subrogation and reimbursement are related in result, they are doctrinally unrelated. See id. at 1298. With subrogation, the obligor stands in the shoes of the obligee, and can recover money directly from other obligors; with reimbursement, the obligor has merely a right of repayment against the obligee. See id. at 1299.
Upon review of the NOA-CEW agreement, the Court finds that NOA clearly indicated that CEW was permitted to recover money directly from other obligors. Section 5 of the agreement states that the parties will "commit to jointly pursue all available funds of the federal government; applicable insurers for contractor or subcontractor; applicable errors and omission insurers for contractor or subcontractor; applicable errors and omission insurers for architects or other professionals, and any other source of recovery. . . ." (emphasis added). Moreover, the agreement dictates that the parties "agree to share equally any such recovery of funds, regardless of the source from which such funds [were] derived."
Such language informs NOA's expectations that both parties would seek recovery from potential tortfeasors. The fact that the parties agreed to share damages equally, after such damages were recovered separately, is immaterial. Thus, ADG and Sunbelt's contention that the agreement was merely a reimbursement contract is without merit.
The October 30, 2000 agreement conventionally subrogated one-half of NOA's rights to CEW. Thus, its claims for subrogation against ADG and Sunbelt are cognizable.
2) CEW's Complaint Asserted Sufficient Facts to Support Its Claims for Subrogation
ADG and Sunbelt further contend that CEW's claims against them should be dismissed because it did not assert sufficient facts to support its claims for subrogation. Rule 8(a) dictates that a pleading:
[S]hall contain . . . (2) a short plain statement of the claims showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief the pleader seeks.
The notice of pleading requirement under Rule 8 does not require an inordinate amount of detail. See St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 434 (5th Cir. 2000). The form of the complaint is not significant if it alleges facts upon which relief can be granted, even if it fails to categorize correctly the legal theory giving rise to the claim. See, e.g., id. at 434; Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 604 (5th Cir. 1981).
CEW's complaint against ADO contends that:
[I]t has expended substantial monies in connection with this remedial work. It is Carl E. Woodward's position that cross-defendants are liable to Carl E. Woodward for these monies as a result of their fault in failing to design the building properly, and in failing to perform their work in a workmanlike manner as required by their contracts.
(Emphasis added). Moreover, CEW's complaint against Sunbelt charges that it:
[H]as been sued by original complaint for mildew problems and other problems associated with the construction of [the FBI] building . . . [and is] entitled to full compensation for any and all remediation costs.
(Emphasis added).
The Court finds that CEW has satisfied the requirements of Rule 8. Because CEW's subrogation claim is cognizable, and its complaints against ADO and Sunbelt asserted sufficient facts to support its claims for subrogation, Sunbelt and ADG's motions to dismiss for failure to state a claim are without merit.
B. Motion for Summary Judgment
Federal Rule of Civil Procedure 56 instructs that summary judgment is proper if the record discloses no genuine issue as to any material fact such that the moving party is entitled to judgment as a matter of law. No genuine issue of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party.Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). A genuine issue of fact exists only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party."Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986).
The Court emphasizes that the mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. See id. Therefore, "[i]f the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50. Summary judgment is also proper if the party opposing the motion fails to establish an essential element of his case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In this regard, the non-moving party must do more than simply deny the allegations raised by the moving party. Donaghey v. Ocean Drilling Exploration Co., 974 F.2d 646, 649 (5th Cir. 1992). Rather, he must come forward with competent evidence, such as affidavits or depositions, to buttress his claims. Id. Hearsay evidence and unsworn documents do not qualify as competent opposing evidence. Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir. 1987). Finally, in evaluating the summary judgment motion, the court must read the facts in the light most favorable to the non-moving party. See Anderson, 477 U.S. at 255.
CEW has successfully established that genuine issues of material fact exist regarding the control system's role in causing the building's negative pressure, the control system's affect on the mold and mildew, and whether ADG or Sunbelt was responsible for the design and implementation of the building's carbon dioxide monitoring system. Thus, ADG and Sunbelt's motions for summary judgment are without merit.
Accordingly, ADG and Sunbelt's Motions to Dismiss and For Summary Judgment are DENIED.