M&R Drywall, Inc. v. Mapp Constr., LLC
| Decision Date | 29 April 2019 |
| Docket Number | NO. 2017 CA 0188,NO. 2017 CA 0186, NO. 2017 CA 0187,2017 CA 0186 |
| Citation | 280 So.3d 260 |
| Parties | M & R DRYWALL, INC. v. MAPP CONSTRUCTION, LLC, Southgate Towers, LLC, and R.W. Day and Associates, Inc. MAPP Construction, LLC v. Southgate Penthouse, LLC, R.W. Day Development, LLC, Robert W. Day, Janice E. Day, and Lionsay, LLC Southgate Residential Towers, LLC, Southgate Penthouse, LLC v. MAPP Construction, Inc., et al |
| Court | Court of Appeal of Louisiana — District of US |
Phillip W. Preis, Charles M. Gordon, Jr., Crystal D. Burkhalter, Caroline P. Graham, Jennifer R. Dietz, Baton Rouge, Louisiana, Counsel for Plaintiffs/Appellants, Southgate Residential Towers, LLC and Southgate Penthouse, LLC
Wayne J. Lee, Mary L. Dumestre, New Orleans, Louisiana and Sidney J. Hardy, Donna Bramlett Wood, Lynda A. Tafaro, Kyle P. Kirsch, New Orleans, Louisiana, Counsel for Defendants/Appellees Great American Alliance Insurance Company and Great American Insurance Company, as the Excess Insurer of MAPP Construction, LLC
Patrick J. Briney, Lafayette, Louisiana, Counsel for Defendant/Appellee Ohio Casualty Insurance Company
Glen E. Mercer, Kourtney Twenhafel French, New Orleans, Louisiana, Counsel for Defendant/Appellee American Guarantee & Liability Insurance Company
Norman C. Sullivan, Jr., W. Jacob Gardner, Jr., New Orleans, Louisiana, Counsel for Defendant/Appellee Great American Insurance Company, in its capacity as Excess Insurer for Comfort Systems, USA, Inc., d/b/a Atlas Air Conditioning Company A. B.
Robert I. Siegel, Christopher R. Teske, Alistair M. Ward, Elizabeth A. Chickering, New Orleans, Louisiana, Counsel for Defendant/Appellee AIG Specialty Insurance Company f/k/a American International Specialty Lines Insurance Company and Counsel for Defendant/Appellee National Union Fire Insurance Company of Pittsburg, PA
BEFORE: McCLENDON, WELCH, AND THERIOT, JJ.
Southgate Residential Towers, LLC and Southgate Penthouses, LLC (collectively, "Southgate") challenge decrees favoring five insurers/appellees that afford excess coverage to their respective defendants/insureds in the underlying defective construction dispute. This appeal addresses the insurers/appellees' liability to Southgate. Additionally, these insurers/appellees each answered the appeal, seeking various relief. Further, while Southgate does not appeal the judgment as it relates to a sixth defendant/insurer, that insurer has filed an answer to the appeal.
For the following reasons, we amend in part, and affirm as amended.
This litigation involves construction defects and deficiencies in Southgate Towers, a residential apartment complex located in Baton Rouge, Louisiana. Construction took place from 2003-2005. Southgate contracted with MAPP Construction, LLC, to serve as the general contractor on the project. MAPP then hired multiple subcontractors to perform various work on the project. Pertinent among them are: M & R Drywall, Inc., Atlas Air Conditioning Company, Power Design, Inc. ("PDI"), and Thrasher Waterproofing, Inc.
Southgate, MAPP, and the subcontractors have been engaged in litigation over various construction defects since 2006. The trial court proceedings were stayed by order of this court on June 26, 2007, pending arbitration. See Southgate Residential Towers, LLC Southgate Penthouses, LLC v. MAPP Construction, Inc., 07-0489 (La. App 1 Cir. 6/26/07). Prior to the commencement of the arbitration proceedings, Southgate entered settlements with MAPP and Thrasher pursuant to Gasquet v. Commercial Union Ins. Co., 391 So.2d 466 (La. App 4 Cir. 1980), writ denied, 396 So.2d 921 (La. 1981), writ denied, 396 So.2d 922 (La. 1981). In accordance with the terms of the agreements, MAPP and Thrasher were released from further personal liability, but Southgate reserved all claims against Great American Alliance Insurance Company and Great American Insurance Company (collectively, "GA-MAPP") and National Union Fire Insurance Company of Pittsburgh, PA, as MAPP's excess insurers, and American International Specialty Lines Insurance Company ("ASIC"), as Thrasher's excess insurer. Consequently, MAPP and Thrasher were not parties to the arbitration proceeding. Southgate also entered a Gasquet release with M & R, reserving its rights to proceed against M & R's excess insurer, American Guarantee & Liability Insurance Company ("AGLIC"). M & R likewise did not participate in the arbitration.
Southgate, Atlas, and PDI, along with other subcontractors, proceeded to arbitration over the course of 34 days from June to October 2010. None of the insurers participated. The arbitration panel rendered its decision in December 2010. See MAPP Construction, LLC v. Southgate Penthouses, LLC and Southgate Residential Towers, LLC, case no: 69 110 J 09920 06 before the American Arbitration Association. The Arbitration Award was subsequently confirmed as a final judgment in February 2012. See Southgate Penthouses, LLC and Southgate Residential Towers, LLC v. MAPP Construction, Inc., 548,119 19th Judicial District Court, Parish of East Baton Rouge.
In 2012, after the stay was lifted, Southgate filed an Amended and Restated Master Petition for Damages and Declaratory Judgment. Southgate sought to enforce the Arbitration Award and corresponding final judgment against the insurers of those subcontractors who participated in the arbitration. Relevant here are Southgate's claims against Great American Insurance Company, Atlas' excess insurer ("GA-Atlas"), and Ohio Casualty Insurance Company, PDFs excess insurer.
Southgate further sought a judgment against the insurers for MAPP and those subcontractors who did not participate in arbitration but with whom Southgate had entered a Gasquet settlement. Relevant here are Southgate's claims against GA-MAPP and National Union, both as MAPP's excess insurers; AGLIC, as M & R's excess insurer; and ASIC, as Thrasher's excess insurer.
Southgate's claims against these defendant insurers proceeded to trial before a jury in September 2015. The jury's pertinent findings are summarized as follows: M & R breached its contract but no damages are owed to Southgate. MAPP breached its contract during National Union's policy period from 4/1/2003—4/1/2004 (misplaced corings), entitling Southgate to $ 370,000 in damages. MAPP also breached its contract during GA-MAPP's policy period from 4/1/2004 and 4/1/2005 (failure to supervise subcontractors), entitling Southgate to $ 2,500,000 in damages. However, Southgate failed to mitigate its damages in this regard, resulting in damages of $ 59,000. The reasonable cost to repair the property damage to the building envelope caused by Atlas's failure to caulk the HVAC vents is $ 59,000. Concerning PDFs work, the reasonable cost to complete/repair defective fire caulking of all penetrations in the corridor firewalls, as ordered in the Arbitration Award, is $ 564,000 and the reasonable cost to complete/repair defective grounding is $ 114,000. Finally, Thrasher did not breach its contract and, therefore, owes no damages to Southgate.
The trial court accepted the jury verdict then "determined the legal issues presented regarding insurance coverage." Relying on prior rulings and recommendations made by the special master and adopted by the trial court, as well as insurance policies introduced at trial, the trial court applied credits against the jury verdict in the amounts of the underlying policy limits and other available insurance coverage, thereby reducing the damages the insurers owed to Southgate. This judgment, from which Southgate appeals, was entered on December 16, 2015.
Southgate timely filed a motion for devolutive appeal. Each defendant insurer answered the appeal, asserting that the trial court erred by failing to award court costs in its favor against Southgate. Each insurer also raised additional, alternative assignments of error to be addressed only if this court reversed the trial court's judgment.
Southgate first challenges the admissibility of the Arbitration Award. It argues that the trial court legally erred by admitting the Arbitration Award into evidence, over its objection, because the Arbitration Award is inadmissible hearsay and does not fall within one of the exceptions. See La. C.E. arts. 801, 802, and 803. Southgate further argues the trial court violated La. C.E. art. 413 by allowing the defendants to introduce the Arbitration Award into evidence because it contains details regarding Southgate's settlement with other defendants. Southgate argues the admission of the Arbitration Award caused a "cascade of unprecedented legal errors" which tainted the jury verdict and asks this court to conduct a de novo review of all evidence.
The insurers disagree. For example, GA-MAPP argues that the "trial was not a ‘do over’ in which Southgate could try to get a second chance to prove conditions, causation, or damages that were considered and determined in the arbitration.
Nor was it a vehicle to obtain double recoveries." Further, it asserts that the Arbitration Award became the "baseline of facts to which Southgate itself was bound." At trial, Southgate was limited to seeking factual determinations not already tried to conclusion in the arbitration proceeding. The admission of the Arbitration Award was important so that the jury would not be misled into re-trying or confusing facts already decided and to which Southgate was bound. Thus, GA-MAPP argues, not only was the Arbitration Award highly relevant, it was necessary evidence.
The insurers point particularly to the catch-all exception to the hearsay rule, La. C.E. art 804(B)(6), which provides:1
Other exceptions. In a civil case, a statement not specifically covered by any of the foregoing exceptions if the court determines that considering all pertinent circumstances in the particular case the statement is trustworthy, and the proponent of the evidence...
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