Opinion
CIVIL ACTION NO: 03-3629, SECTION: "R"
March 26, 2004
ORDER AND REASONS
Before the Court are the parties' cross-motions for summary judgment. For the following reasons, the Court denies plaintiff's motion for summary judgment and grants in part and denies in part defendants' motion.
I. BACKGROUND
This suit arises out of repair and construction work at Schaumburg Elementary School, a public school in New Orleans, Louisiana (the "project"). Harvey Honore Construction Company, Inc. was the general contractor for the project. On August 8, 2001, plaintiff The Rowley Group entered into a subcontract with Honore Construction under which Rowley agreed:
to furnish all materials and perform all work necessary [t]o furnish all labor, material, equipment, and tools for a complete installation as per plans and specifications in accordance with the construction documents for the Main Building Replacements/Annex Repairs at Schaumburg Elementary School in New Orleans, LA and should include the following:
Division 12 Section 12304 Modular laminate casework
Division 12 Section 12610 Office furniture Division 12 Section 12620 Library furniture Division 12 Section 12630 Classroom furniture Division 12 Section 12644 Cafetorium furniture Basketball Goals
Pls.'s Mot. for Summ. J., Ex. B, Subcontract between Honore Const, and Rowley.
The casework described in the contract specifications encompasses, inter alia, installed cabinets, drawers, countertops, and shelving. The original contract price was $474,931.00. Rowley alleges that change orders increased the total contract price to $489,555.50.
Defs.' Memo, in Opp., Ex. D, Modular Laminate Casework.
Pla.'s Mot. for Summ. J., Ex. B, Subcontract between Honore Const, and Rowley.
In connection with the project, Honore Construction and defendants Mid-Continent Casualty Company and General Reinsurance Corporation (collectively, "Mid-Continent") entered into a Labor and Material Payment Bond in favor of Orleans Parish School Board. The defendants' obligations as sureties under the bond remain in full force and effect unless Honore Construction, as contractor,
(a) faithfully and promptly pays all Claimants as provided by Law and pays all wages of laborers, workmen, or mechanics, to be employed by any subcontractor, or by or to Subcontractors, and used in the construction, erection, alteration, installation, or repairs called for the Contract; (b) promptly pays for all material or supplies furnished to the Contractor, or by or to any Subcontractor, for use in machines used by the Contractor, or any Subcontractor, in the construction, erection, alteration, installation, or repair of the Work [.]
Id., Ex. A, Labor and Material Payment Bond — 96186.
Rowley asserts that it has provided and installed all equipment to complete its contract with Honore Construction and is therefore owed $489,555.50. Honore Construction has paid Rowley only $176,095.00. Rowley filed this suit against Mid-Continent as surety under the bond to recover the remaining balance due on the contract. Rowley now moves for summary judgment against defendants on its claims. Defendants filed a cross-motion for summary judgment against Rowley.
II. DISCUSSION
A. Summary Judgment Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The court must be satisfied "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in [its] favor." Lavespere v. Niagara Mach. Tool Works, Works, Inc. 910 F.2d 167, 178 (5th Cir. 1990) ( citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one for which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts that establish a genuine issue exists for trial. See Celotex, 477 U.S. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1996).
The Fifth Circuit has "arguably articulated an even more lenient standard for summary judgment in certain nonjury cases." Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 273 n. 15 (5th Cir. 1987); see also Chinchilla v. United States, 1999 WL 993640, at *2 (E.D.La.). In Nunez v. Superior Oil Co., 572 F.2d 1119, 11*23-24 (5th Cir. 1978), the Fifth Circuit explained:
If decision is to be reached by the court, and there are no issues of witness credibility, the court may conclude on the basis of the affidavits, depositions, and stipulations before it, that there are no genuine issues of material fact, even though [its] decision may depend on inferences to be drawn from what has been incontrovertibly proved.
Therefore, in a nonjury case, such as this case, the Court is encouraged to draw inferences, even when they appear to be factual, if a "trial on the merits would reveal no additional data." Id. at 1124; see also Professional Geophysics, Inc. v. Placid Oil Co., 932 F.2d 394, 398 (5th Cir. 1991).
B. Louisiana Public Works Act
For contracts like the one between the Orleans Parish School Board and Honore Construction, the Louisiana Public Works Act, La. R.S. 38:2241, et seq., requires a bond "for the payment by the contractor or subcontractor to claimants as defined in R.S. 38:2242." See La. R.S. 38:2241(A)(2). Revised Statute 38:2242(A)(1) defines a "claimant" as
any person to whom money is due pursuant to a contract with the owner or a contractor or subcontractor for doing work, performing labor, or furnishing materials or supplies for the construction, alteration, or repair of any public works, or for transporting and delivering such materials or supplies to the site of the job by a for-hire carrier, or for furnishing oil, gas, electricity, or other materials or supplies for use in machines used in the construction, alteration, or repair of any public works, including persons to whom money is due for the lease or rental of movable property, used at the site of the immovable and leased to the owner by written contract, and including registered or certified surveyors or engineers, or licensed architects, or their professional subconsultants, employed by the owner, or by the contractor or subcontractor in connection with the building of any public work.
Here, Rowley submitted a claim to the bond sureties for payment of the balance due on its contract with Honore Construction. Mid-Continent rejected the claim because it concluded that Rowley does not qualify as a claimant against the bond because it did not participate in the fabrication or erection of work on the project or furnish materials that were either incorporated into or consumed on the project.
Pls.'s Mot. for Summ. J., Ex. F, Surety Bond Claim Worksheet.
Id., Ex. J, Letter from Mid-Continent to Rowley dated Jan. 13, 2004.
In its letter to Rowley that rejected Rowley's claim, Mid-Continent cited Slagle-Johnson Lumber Co. v. Landis Const. Co., 379 So.2d 479 (La. 1979), to support its contention that Rowley does not qualify as a claimant. In Slagle-Johnson, the Louisiana Supreme Court held that Revised Statute 38:2242 "implies a requirement of consumption or incorporation of the materials furnished for construction of the public work before a privilege shall attach." Id. at 485. The legislature modified this consumption or incorporation requirement in 1984 when it expanded the definition of claimant in Revised Statute 38:2242(A) to include "those who furnish movable equipment on a rented basis when the equipment is 'leased to the owner by written contract.'" J.D., Fields Inc. v. St. Charles Parish Council, 571 So.2d 668, 671 (La.App. 5 Cir. 1990) (quoting La. R.S. 38:2242). The amendment to Revised Statute 38:2242 did not, as plaintiff suggests, eliminate the rule that materials must be incorporated or consumed in the construction of the public work for the provider of those materials to qualify as a claimant under the statute. See id.; Webb Elec. Co. of Florida, Inc. v. New Thought Finishing, Inc., 1995 WL 273539, *1 (E.D.La.) (requiring consumption or incorporation of materials into the public work); TR Dragline Service, Inc. v. Galan, 485 So.2d 947, 950 (La.App. 5 Cir. 1986) (same); Javeler Const. Co. v. Federal Ins. Co., 472 So.2d 258, 262 n. 1 (La.App. 1 Cir. 1985) (same). Thus, under Revised Statute 38:2242(A)(1), a claim can now be based on "material which is consumed or incorporated into the project and/or equipment supplied solely on a rental basis by written contract with the owner." J.D. Fields, 571 So.2d at 671.
Id.
Rowley also argues that it is entitled to proceed against the payment bond even if it does not meet the definition of claimant because claims against the surety of a contractor are not limited to claims made under the Public Works Act. Rowley cites J.D. Fields for this proposition, in which the court concluded that "[a] surety can, by contract, bind itself to a broader coverage which would also include claims made by those who are not defined as claimants under the Public Works Act." J.D. Fields, 571 So.2d at 672 (citing Valliant v. State Dept. of Transp. Dev., 437 So.2d 845 (La. 1983)). The Court notes, however, that the Louisiana Supreme Court issued its Valliant decision in 1983, before the Louisiana legislature amended Revised Statute 38:2241 in 1985. The 1985 amendment added the following:
The payment provisions of all bonds furnished for public work contracts described in this Part, regardless of form or content, shall be construed as and deemed statutory bond provisions. Any such bond which fails to contain any of the requirements set forth in this Part shall be deemed to incorporate all of the requirements set forth in this Section. Language in any such bond containing any obligations beyond the requirements set forth in this Part shall be deemed surplusage and read out of such bond. Sureties and contractors executing payment bonds for public works contracts under this Part shall be immune from liability for or payment of any claims not required by this Part.
La. R.S. 38:2241(C). The plain language of the revised statute limits a surety's liability to only those claims required by statute. Moreover, the Louisiana Supreme Court has held that "[t]he Public Works Act is sui generis and provides the exclusive remedies to parties in public construction work. . . . The Act is to be strictly construed and the liability of the surety should not be expanded beyond the statute." State Through Div. of Admin. v. McInnis Bros. Const., 701 So.2d 937, 944 (La. 1997). Here, the payment bond specifically states that it is "executed pursuant to LSA-R.S. Title 38, Chapter 10, Part III, [i.e., La. R.S. 38:2241, et seq.] and if any provision(s) of the Bond is/are illegal, invalid, or unenforceable, all other provisions of the Bond shall nevertheless remain in full force and effect, and the Owner shall be protected to the full extent provided by LSA-R.S. Title 38, Chapter 10, Part III."
Pla.'s Mot. for Summ. J., Ex. A, Labor and Material Payment Bond — 96186.
In light of the statute's plain language and the Louisiana Supreme Court's holding in McInnis, plaintiff's reliance on the J.D. Fields case is misplaced. Indeed, in J.D. Fields, the Louisiana Fifth Circuit Court of Appeal acknowledged upon rehearing that it found some merit in the argument that the 1985 amendment limited a surety's obligation under the Public Works Act and legislatively overruled Valiiant, but it did not reach the issue because it concluded that there were other genuine issues of material fact, such as whether the plaintiff's materials were consumed in the construction, that required reversal of the trial court's summary judgment determination.
Accordingly, the Court concludes that to support a claim against the bond, the materials that Rowley provided must have been incorporated or consumed in the construction of the project. Under its contract with Honore Construction, Rowley provided laminate casework, basketball goals, and furniture. The contract specification for the casework clearly contemplates incorporation of the casework into the project. The specification states "[c]asework is to be installed plumb and true, and is to be securely anchored in place." Further, pictures of the basketball goals support the conclusion that they were incorporated into the project. Indeed, defendants concede that the casework and basketball goals could support a valid claim under the Public Works Act. Defendants contend, however, that the furniture is not physically incorporated into the structure. Plaintiff provides no evidence to the contrary. The Court therefore focuses solely on any claim against the surety that plaintiff may have based on the casework and basketball goals.
Defs.' Memo. in Opp, Ex. D, Modular Laminate Casework.
Pla.'s Memo. in Opp., Ex. F, Basketball Court Pictures.
To determine the amount of plaintiff's claim based on materials that were incorporated into or consumed in the construction of the project, the Court must be able to determine the final contract amounts applicable to these portions of the contract. Based on the record before it, the Court finds that there are genuine issues of material fact that preclude this determination. Plaintiff submits an invoice that breaks down the revised contract price of $489,955.50 into the following amounts:
Pla.'s Mot. for Summ. J., Ex. C, Invoice dated Oct. 14, 2003.
Casework $123,712.00 Casework — Change $2,948.00 Office Furniture $63,337.00 Library Furniture $122,050.00 Classroom Furniture $123,893.00 Cafetorium Furniture $26,392.50 Basketball Goals $3,231.00 Basketball Goals Installation $700.00 Change Order Concrete Work $650.00 T.V. Brackets / Inst. $22,642.00 Total $489,555.50
First, there are genuine issues of material fact as to which items are properly classified as casework and basketball goals. Specifically, the Court cannot determine whether "T.V. Brackets/Inst." involved materials that were incorporated into or consumed by the construction of the project and would therefore support a claim against the bond. Furthermore, defendants argue that there are genuine issues of fact related to the amounts to which Rowley is entitled under the contract, if any. Defendants submit evidence in the form of an affidavit by Brent Honore, the president of Honore Construction, that the amount claimed by Rowley is subject to various back charges and delay damages. Plaintiff asserts that this affidavit is a "sham" and an "outrage" and contains "bogus" assertions. Plaintiff argues that Court should give Honore's affidavit no deference because
Defs.' Memo. in Opp., Ex. C, Affidavit of Brent Honore.
Pla.'s Memo. in Opp. to Defs.' Mot. for Summ. J., at pp. 1-2.
Honore is a convicted felon and his crimes, conspiracy to defraud the United States and fraud and false statements, involved issues of credibility and moral turpitude. Although if true, plaintiff's allegations cast doubt on the veracity of Honore's statements, the Court finds that a determination of Honore's credibility based solely on the witness' affidavit and plaintiff's allegations is inappropriate in the context of this summary judgment motion. The contractual defenses that Mid-Continent alleges in its opposition to summary judgment create a question of fact with respect to the amount due Rowley under its contract with Honore Construction. Because there exist genuine issues of material facts, the Court denies plaintiff's motion for summary judgment. As a result, the Court does not reach plaintiff's argument that it is entitled to 10% attorney's fees.
C. Defendants' Motion for Summary Judgment
Defendants also move for summary judgment. For the reasons stated above, the Court grants summary judgment in favor of the defendants as to plaintiff's claims based on furniture provided under the contract because the claims are not covered by the bond. As to any claims plaintiff may have based on the casework and basketball goals, defendants contend that Rowley installed these items first, and Rowley has already been paid for that work. The parties concur that Rowley received payments totaling $176,085.00 on its contract. Mid-Continent argues that this amount exceeds any claim Rowley has against the bond, and therefore it is entitled to summary judgment.
The Court grants in part and denies in part defendants' motion for summary judgment on plaintiff's claims based on the casework and basketball goals. Defendant asserts that plaintiff installed the casework and basketball goals first and applied for payment that work first. Defendant argues that the payments made by Honore Construction must be imputed to the oldest debt first, and because the oldest invoices encompassed the casework and basketball goals, Rowley has already received payment for this work. In support, defendants cite Louisiana Civil Code article 1868, which provides:
When the parties have made no imputation, payment must be imputed to the debt that is already due.
If several debts are due, payment must be imputed to the debt that bears interest.
If all, or none, of the debts that are due bear interest, payment must be imputed to the debt that is secured.
If several unsecured debts bear interest, payment must be imputed to the debt that, because of the rate of interest, is most burdensome to the obligor.
If several secured debts bear no interest, payment must be imputed to the debt that, because of the nature of the security, is most burdensome to the obligor.
If the obligor had the same interest in paying all debts, payment must be imputed to the debt that became due first.
If all debts are of the same nature and became due at the same time, payment must be proportionally imputed to all.
LA. C.C. art. 1868.
The documentation submitted by Rowley to Mid-Continent to support its claim indicates that Rowley imputed the payments that it received to two invoices, the invoices dated February 26, 2003 and June 26, 2003. Because Rowley imputed the payments to these specific invoices, Article 1868 is inapplicable. The February 26, 2003 invoice includes charges only for the casework and the basketball goals, and Rowley attributed $61,786.00 of the $176,085.00 that it received to this invoice. The June 26, 2003 invoice, on the other hand, includes charges only for office and classroom furniture, and Rowley attributed the remaining $114,300.00 from the payments received to this invoice. Accordingly, the Court finds that Honore Construction has already paid $61,786.00 of plaintiff's claims based on the casework and basketball goals and therefore defendant is entitled to summary judgment reducing plaintiff's claims by this amount. The remaining amount paid by Honore Construction was attributed solely to furniture, and defendant should not get the benefit of this payment since the furniture is not covered by the bond. As discussed above, the Court finds that there are questions of fact as to the amount due Rowley under the contract for the reasons given in the previous section. Because the Court cannot conclude that Rowley has received all that it is owed for the casework and basketball goals, the Court denies defendants' motion to the extent that plaintiff's claims exceed $61,786.00.
Pla.'s Mot. for Summ. J., Ex. F, Surety Bond Claim Worksheet.
Pla.'s Memo. in Opp., Ex. I, Invoice dated February 26, 2003.
III. CONCLUSION
For the foregoing reasons, the Court denies plaintiff's motion for summary judgment and grants in part and denies in part defendants' motion. The Court grants defendants' motion as to plaintiff's claims based on furniture provided under the contract that are not covered by the bond. The Court grants defendants' motion as to $61,786.00 of plaintiff's claims that are covered under the bond and denies the motion to the extent these claims exceed $61,786.00.