DLN Holdings, LLC v. Guglielmo
| Decision Date | 29 June 2022 |
| Docket Number | 2021-CA-0640 |
| Parties | DLN HOLDINGS, L.L.C. v. KEITH GUGLIELMO, LAND RECORDS SUPERVISOR FOR PARISH OF ORLEANS |
| Court | Court of Appeal of Louisiana (US) |
DLN HOLDINGS, L.L.C.
v.
KEITH GUGLIELMO, LAND RECORDS SUPERVISOR FOR PARISH OF ORLEANS
No. 2021-CA-0640
Court of Appeals of Louisiana, Fourth Circuit
June 29, 2022
APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2019-07477, DIVISION "L-6" Honorable Kern A. Reese, Judge
Louis R. Koerner, Jr.
KOERNER LAW FIRM
COUNSEL FOR INTEGRATED COMMERCIAL CONTRACTORS, INC./APPELLANT
Donald C. Douglas, Jr.
Christopher K. LeMieux
RIESS LEMIEUX, LLC
COUNSEL FOR TRAPOLIN-PEER ARCHITECTS, A.P.C./APPELLEE
John I. Hulse, IV
Brian A. Gilbert
CONROY LAW FIRM, PLC
COUNSEL FOR DLN HOLDINGS, LLC AND DAVID FRANCIS/APPELLEES
Court composed of Judge Roland L. Belsome, Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins
Rosemary Ledet, Judge.
AFFIRMED
RML
RLB
SCJ
This is a construction contract dispute. From the trial court's judgments sustaining the peremptory exceptions of no right of action and no cause of action filed by the three defendants-in-reconvention,[1] the plaintiff-in-reconvention- Integrated Commercial Contractors, Inc. ("ICC")-appeals. Because all of ICC's claims asserted in its reconventional demand against the defendants-in-reconvention are contract-based and because ICC lacks privity with any of the defendants-in-reconvention, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
This dispute arises out of a renovation project at the Pelham Hotel (the "Hotel"), located in downtown New Orleans (the "Project"). There are five parties to this dispute: (i) DLN, the owner of the property on which the Hotel is situated; (ii) Pelham Hospitality, LLC ("Pelham"), the Hotel's operator; (iii) Mr. Francis, the managing member of both DLN and Pelham: (iv) TPA, the Project's architect; and (v) ICC, the Project's general contractor.
There are two contracts pertinent to this dispute: the Construction Contract and the Architect Agreement. The Construction Contract, dated March 17, 2017, is a Standard AIA Form A101 contract, which incorporates the General Conditions in the AIA form A201-2007. On the Construction Contract's cover page, "Pelham Hospitality"[2] is designated as the Project's owner; ICC is designated as the Project's contractor. Mr. Francis signed the Construction Contract for the Project's owner. The Architect Agreement, dated March 9, 2016, is a Standard AIA Form Bl01 Agreement-Standard Form of Agreement between Owner and Architect. The parties to the Architect Agreement are TPA, as the Project's architect, and "DLN Holdings, LLC/Pelham Hospitality, Limited Liability Company," as the Project's owner.
From the Project's commencement through December 2017, ICC submitted ten Contractor's Applications for Payment; all ten applications were directed to "Pelham Hospitality 444 Common St., New Orleans, La. 70130." In March 2018, Pelham terminated ICC for cause. ICC, in response, filed a lien on DLN's property for sums it claims were due it under the Construction Contract. Seeking to have the lien removed from the public records, DLN filed this mandamus action, in July 2019, against Keith Guglielmo, the Lands Records Supervisor for Orleans Parish, and ICC. Thereafter, ICC voluntarily removed the lien. DLN, however, remained a
party-plaintiff in the mandamus action to preserve its right to seek damages from ICC for wrongful lien recordation.[3]
In July 2020, ICC filed, in the mandamus action, a reconventional demand against DLN and an incidental, third-party demand against both Mr. Francis and TPA.[4] The gist of ICC's reconventional demand was that it was improperly terminated for cause-as opposed to for convenience-under the Construction Contract.[5] ICC asserted claims for breach of contract, termination-for-convenience damages, fraud, detrimental reliance, and unfair trade practices.
In response, the defendants-in-reconvention-Mr. Francis and DLN together, and TPA-filed peremptory exceptions of no cause of action and no right of action. Following a hearing, the trial court sustained all the exceptions and dismissed all of ICC's claims against all the defendants-in reconvention. The trial court refused ICC's request to allow leave to amend pursuant to La. C.C.P. art. 934.
This appeal followed.
STANDARD OF REVIEW AND GOVERNING LEGAL PRINCIPLES
Whether a plaintiff has a cause of action and a right of action are both legal questions; hence, in determining whether the trial court was legally correct in sustaining those exceptions, an appellate court is required to conduct a de novo review.[6] No cause of action and no right of action are both peremptory exceptions. The function of a peremptory exception is "to have the plaintiff's action declared legally nonexistent, or barred by effect of law, and hence this exception tends to dismiss or defeat the action."[7]
No cause of action and no right of action are legally distinct, are designed to serve different purposes, and are governed by different procedural rules. A major difference in the procedural rules governing these exceptions is that on an exception of no right of action, evidence is admissible at a hearing on the exception to either support or rebut the exception.[8] Conversely, La. C.C.P. art. 931 provides that no evidence may be introduced to support or controvert the exception of no cause of action. The court, however, can consider exhibits attached to the petition in addressing an exception of no cause of action.[9] Indeed, La. C.C.P. art. 853 provides that a copy of any written instrument that is an exhibit to a pleading is a
part of that pleading for all purposes. Thus, for purposes of determining the peremptory exception of no cause of action, the content of the annexed exhibits must also be considered as true.[10]
When, as here, the issue is the lack of privity between the parties necessary to support a contract-based claim, an exception of no cause of action is the proper procedural device.[11] In ruling on a no cause of action exception, a trial court must accept as true the facts alleged in the petition and decide whether the law affords any relief to the plaintiff assuming those facts can be proven at trial.[12] Nonetheless, Louisiana has a fact-pleading system; hence, the pleader's mere conclusions, unsupported by facts, are insufficient to state a cause of action.[13] To the contrary, the court must discard allegations purporting to be factual that are merely selfserving and allegations that are nothing more than conclusions.[14]
DISCUSSION
The sole issue presented by this appeal is whether the trial court erred in sustaining the defendants-in-reconvention's peremptory exceptions of no cause and no right of action. Proper analysis of this issue requires that we first identify the causes of action available to ICC.
ICC's reconventional demand is twenty-eight pages long, contains one hundred and seven paragraphs, and references and incorporates seventy-four attached exhibits. Simply put, ICC's claims, as the trial court observed in its reasons for judgment, are payment and performance breach of contract claims. The underlying allegations that run through all of ICC's claims are as follows: Mr. Francis, TPA, or both listed "Pelham Hospitality"-a non-existent entity-as the Project's owner on the cover page of the Construction Contract and that Mr. Francis signed the Construction Contract without qualification. After signing the Construction Contract, Mr. Francis caused the name of the Project's owner to be changed on subsequent documents-Change Orders-to "DLN Holdings/Pelham Hospitality." Thereafter, in ICC's Notice of Termination, Pelham Hospitality, LLC, is represented to be the Project's owner as well as the signatory to the Construction Contract. Yet, DLN is the record owner of the Hotel; and DLN represented itself as the owner in its filings in this litigation.
In its reconventional demand, ICC divides its causes of action into two parts-those against both DLN and Mr. Francis, and those against only TPA. As to DLN and Mr. Francis, ICC asserts five causes of action: (i) bad faith breach of contract; (ii) fraud, pursuant to La. C.C. arts. 1953 and 1997; (iii) improper termination (termination-for-convenience claim); (iv) detrimental reliance, pursuant to La. C.C. art. 1967; and (v) Louisiana Unfair Trade Practices Act ("LUTPA"). As to TPA, ICC asserts two causes of action: fault and failure to perform.
In sustaining all the defendants-in-reconvention's exceptions,[15] the trial court first classified all ICC's causes of action as contract-based claims. The trial court then cited the well-settled principle that contractual privity is an essential element of a contract-based claim.[16] The trial court found, based on the reconventional demand and attachments thereto,[17] a lack of contractual privity between ICC and any of the defendants-in-reconvention. Taken these factors together, the trial court concluded that because the privity element required for a contract-based claim is lacking between, there is no support for ICC bringing these claims against the defendants-in-reconvention.
The trial court's characterization of all of ICC's claims as contract-based is legally correct. As to TPA, ICC's allegations in its reconventional demand are twofold. First, it alleges a fault claim-TPA "failed to perform and disregarded its obligations" under the contract between ICC and the owner (the Construction Contract). Second, it alleges a failure to perform claim-TPA failed "to perform its services consistent with the professional skill and care ordinarily provided by architects." Both of these claims are contract-based and stem from the Construction Contract and the Architect Agreement.
Likewise, as to DLN and Mr. Francis, the following paragraphs of the reconventional demand, summarizing ICC's damage claims against those two parties, establish the contract-based nature of those claims:
• [Mr.] Francis and DLN willfully failed to perform...
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