Cook & Nichol, Inc. v. Plimsoll Club

• Citation: 451 F.2d 505
• Decision Date: 28 September 1971
• Docket Number: No. 71-1270 Summary Calendar.,71-1270 Summary Calendar.
• Parties: COOK & NICHOL, INC., Plaintiff-Appellant, v. The PLIMSOLL CLUB, Leo S. Weil et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

451 F.2d 505 (1971)

COOK & NICHOL, INC., Plaintiff-Appellant, v. The PLIMSOLL CLUB, Leo S. Weil et al., Defendants-Appellees.

No. 71-1270 Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

September 28, 1971.

John W. Haygood, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for plaintiff-appellant.

Harvey C. Koch, Frederick A. Kullman, Harvey J. Lewis, Beard, Blue, Schmitt & Treen, Kierr & Gainsburgh, New Orleans, La., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.

JOHN R. BROWN, Chief Judge:

This heated controversy over air cooling the members of New Orleans' Plimsoll Club proves again that a complaint above the Plimsoll line may not be dismissed for failure to state a claim. It reminds us of the need for periodic exercise, for over and over and over again —but apparently not often enough—this Court has stated, explained, reiterated, stressed, rephrased, and emphasized one simple, long-established, well-publicized rule of Federal practice: a motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that the plaintiff would not be entitled to recover under any state of facts which could be proved in support of his claim.¹ Webb v. Standard Oil Co., 5 Cir., 1969, 414 F.2d 320;² Millet v. Godchaux Sugars, 5 Cir., 1957, 241 F.2d 264;³ Arthur H. Richland Co. v. Harper, 5 Cir., 1962, 302 F.2d 324;⁴ Barber v. Motor Vessel "Blue Cat", 5 Cir., 1967, 372 F.2d 626;⁵ Pred v. Board of Public Instruction of Dade County, Florida, 5 Cir., 1969, 415 F.2d 851⁶—just to name five of the more than sixty cases which this Court alone has reversed since 1938 after a Trial Court had dismissed the complaint for failure to state a claim upon which relief could be granted.⁷ Still, with regularity, case after case comes before this Court where a complaint has been dismissed on "barebones pleadings" alone, and the casualty count continues to soar.⁸

Such is the case here. For "without even so much as a deferential mention"⁹ of the rule recounted above, this case reaches us on the following skeleton record: (i) a complaint alleging among other counts, a contract between two parties and a failure of one party to pay the other party the contract price, (ii) a defendants' motion, without so much as a denial of a single allegation, to dismiss the complaint for failure to state a claim upon whch relief can be granted, (iii) a judgment dismissing the suit, with prejudice (preceded by a memorandum purporting to be Findings of Fact and Conclusions of Law), and understandably (iv) a notice of appeal. With this prologue, an announcement of a reversal and remand is almost superfluous.

All of this is highlighted by the fact that in the present case (as will be discussed in more detail later) there is an allegation of the existence and subsequent breach of a contract. While that assertion may prove nothing more than a futile, desperate attempt to bring the facts of this case within some recognized legal doctrine, nothing is more elementary in law than that a breach of contract is actionable.¹⁰

This heated dispute arose, ironically, out of a contract to install central air conditioning equipment. Cook & Nichol, Inc. brought suit against the Plimsoll Club of New Orleans claiming that the latter had been unjustly enriched (or at least centrally cooled) at the Plaintiff's expense. Alternatively, the petition alleged the existence of an implied in fact contract between Plimsoll and a Joint Venture,¹¹ and non-payment by the Club under the contract.

On the first count, it was alleged that Plimsoll had contracted orally with Godchaux to install heating and air conditioning equipment in the Plimsoll Club's premises on the 30th floor of the International Trade Mart Building in New Orleans on a cost-plus basis. The remainder of the building was being air conditioned by the Joint Venture. Godchaux charged materials and labor bills arising from his individual contract with Plimsoll to the Joint Venture, and these bills were paid subsequently by Godchaux with funds of the Joint Venture. Because Moses, Plimsoll's supervising engineer, knew of and approved these interim construction payments, knowledge is imputed to Plimsoll. Likewise, Moses, acting for Plimsoll, accepted the work and approved final payment by Plimsoll of the contract price to Godchaux. Moses is also named, along with his firm, as a defendant in this suit. Godchaux was subsequently adjudicated a bankrupt without having paid the bills or repaid the Joint Venture for its funds which he used in his individual contract with Plimsoll. Cook & Nichol, as successor in interest to the Joint Venture, seeks to recover from Plimsoll for the Joint Venture funds of which Plimsoll ultimately enjoyed the benefits.

Cook & Nichol's first theory on this count can be easily stated and just as readily dismissed. Plaintiff claims that Plimsoll, in effect, received the use of Joint Venture funds, that it was not entitled to such benefit, and that, in the Codal language, "he who receives what is not due to him, whether he receives it through error or knowingly, obliges himself to restore it to him from whom he has unduly received it." Article 2301, LSA-Civil Code.

The difficulty with this theory, of course, is that since Plimsoll contracted with Godchaux for installation of heating and air conditioning equipment, if it paid Godchaux every cent due him under the contract, it got nothing more than what it paid for and was obligated for. Mere payment to Godchaux could not unjustly enrich Plimsoll, and without unjust enrichment there could be no quasi-contractual obligation to Cook & Nichol arising under Louisiana law. Thompson v. Taylor, C.A.La., 1969, 192 So.2d 609; Martin v. Bozeman, C.A.La., 1965, 173 So.2d 382. Alternatively stated, the Louisiana law is that "the substance of an action for unjust enrichment lies in a promise, implied by law, that one will restore to the person entitled thereto that which in equity and good conscience belongs to him." Martin v. Bozeman, supra, at 386. If Plimsoll merely paid Godchaux, in accordance with the provisions of its contract, and these were the only allegations of the complaint, it would be difficult to conclude that equity and good conscience demand that Plimsoll pay for its heating and air conditioning equipment a second time. Under that state of facts a dismissal for failure to state a cognizable claim would have been proper.

But the case does not end right there, for Cook & Nichol also alleges that Plimsoll had direct knowledge of Godchaux's misuse of Joint Venture funds in execution of his individual contract with Plimsoll, but nonetheless accepted benefits from Godchaux's misconduct without taking steps to assure that the Joint Venture was protected or reimbursed. Though the words of the complaint never specifically use the terms, that allegation introduces elements of willful taking of the property of another. Liberally construed and accepted as true, these facts would seem to fit squarely within the maxim of Article 2301, supra, if not within companion Article 1965.¹²

But that determination depends on the facts and the subtle nuances of the facts which so often shape equity's response and relief. Did Plimsoll actually participate in Godchaux's scheme, thereby securing for itself benefits to which it was not justly entitled (the use of Joint Venture funds)? Important factors in this determination would include the actual relation of Moses and Plimsoll, especially concerning Moses' authority to act for Plimsoll, and the requirements, if any, of prior action by him as a condition to payment by Plimsoll. In what way and how positively did Moses know that Joint Venture funds were being used? What communication of any such facts was made to the responsible management of Plimsoll? Assuming Moses knew in fact of Godchaux's current misuse of Joint Venture funds, did he know—or should he have discovered—that they were not being repaid?

With the Erie light in this case being the noble principles and equitable sentiment of the Golden Rule,¹³ we cannot say for Louisiana that the outcome would not likely be affected by one or more or all of these considerations. So until these factual issues are resolved, or at least squarely faced, and it is demonstrated that equitably appealing facts do not exist or cannot be proven, dismissal of this count of the complaint is premature and impermissible.¹⁴

As to Cook & Nichol's second and third counts, those seeking to hold Moses and his firm (not Plimsoll) liable for "assisting" in Godchaux's tortious conduct by authorizing Plimsoll to pay Godchaux despite knowledge that Godchaux was unlawfully misappropriating Joint Venture funds to finance his part of the Plimsoll contract, again a fundamental fact question controls: Did Moses owe any duty—contractual, quasi-contractual, express, implied, or other—to Cook & Nichol by virtue of the relationship between Moses, Plimsoll, Joint Venture, Cook & Nichol, and Godchaux?¹⁵

Moses cites two authorities to support his proposition that he could not, under any state of facts, be held liable to Cook & Nichol. Both of these are inapposite. In Day v. National U. S. Radiator Corp., 1961, 241 La. 288, 128 So.2d 660, the plaintiff was killed when a hot water boiler exploded prior to its final installation. Defendant architects had contracted with the owner to design the system and approve its installation. The accident apparently resulted, at least in part, from the architects' failure to supervise properly during installation and before final completion of the job. The Louisiana Supreme Court decided the case on the basis of the fact that interim supervision was not required under the architects' contract—which is opposite to the situation at bar.¹⁶

Thomas v. Fromherz Engineers, C.A. La., 1964, 159 So.2d 612, writ ref'd Mar. 11, 1964, the second case relied on...