El Dorado Ammonia, LLC v. Global Indus., Inc.

• Docket Number: CV-20-692
• Decision Date: 18 October 2023
• Citation: 2023 Ark. App. 455,677 S.W.3d 812
• Parties: EL DORADO AMMONIA, LLC, and El Dorado Chemical Company, Appellants/Cross-Appellees v. GLOBAL INDUSTRIAL, INC., Appellee/Cross-Appellant
• Court: Arkansas Court of Appeals

2023 Ark. App. 455

677 S.W.3d 812

EL DORADO AMMONIA, LLC, and El Dorado Chemical Company, Appellants/Cross-Appellees

v.GLOBAL INDUSTRIAL, INC., Appellee/Cross-Appellant

No. CV-20-692

Court of Appeals of Arkansas, DIVISION IV.

Opinion Delivered October 18, 2023

Rehearing Denied December 6, 2023

Greenberg Traurig LLP, by: James R. Leahy, Mary-Olga Lovett, and Stephen Edmundson ; and Quattlebaum, Grooms & Tull PLLC, Little Rock, by: Joseph R. Falasco, for appellants/cross-appellees.

Logan & Lowry, LLP, by: David E. Jones ; and Stone & Sawyer, PLLC, by: R. Jeffrey Sawyer, for appellee/cross-appellant.

RITA W. GRUBER, Judge

El Dorado Ammonia, LLC, and El Dorado Chemical Company filed an interlocutory appeal of the April 23, 2020"Amended Judgment I" of the Union County Circuit Court, and Global Industrial, Inc., cross-appeals.The parties raise multiple points on appeal, but only two of those points are dispositive: (1) whether the materialmen's lien filed by Global was perfected; and (2) whether the circuit court's reference to damages for "unpaid invoices" is a judgment that is collectible through remedies other than the materialmen's lien.We reverse and remand.

I.Factual and Procedural Background

A.Project History

In its simplest terms, this is a case about a subcontractor attempting to get paid for work it performed during the construction of an ammonia plant.

El Dorado Chemical Company("EDCC") owns a chemical plant in Union County, Arkansas, that suffered an explosion in 2012.EDCC's parent company created El Dorado Ammonia ("EDA") to own and operate an ammonia facility that would be constructed at the plant after the explosion.For purposes of this opinion, EDCC and EDA have the same interests and make the same arguments, so they will be referred to collectively as "El Dorado Chemical."Although the parent company was originally a party to this lawsuit, it was dismissed voluntarily in 2018.

In 2013, EDA engaged Leidos Constructors, LLC("Leidos"), to be the general contractor on a project during which an ammonia plant in Louisiana would be dismantled, and the salvage from that plant would be used in constructing the ammonia facility in Union County(the "Project").Leidos hired Global Industrial, Inc.("Global"), to be a subcontractor for the Project.Through three subcontracts, Leidos engaged Global in 2014 to perform both salvage and reconstruction work during the Project.Global agreed to perform its work on a time-and-materials basis.Through an additional subcontract, Leidos also engaged Global to perform repair work on other parts of the chemical plant after the explosion.Global agreed to perform this work in exchange for a lump sum.There was no contract between Global and EDA or EDCC for any work that Global performed.

On July 1, 2015, Leidos issued a written notice of termination to Global.At the time of termination, Global had already submitted invoices totaling $9,068,754.43.After

termination, Global submitted additional invoices, and the total of all unpaid invoices was $12,426,140.68.Also after the termination, Leidos and El Dorado Chemical hired replacement subcontractors to cure nonconforming work and to complete the Project.In November 2015, Leidos issued a $9,977,357 back charge against Global's outstanding invoices.Of this amount, $4,914,850 represented costs to cure Global's alleged nonconforming work, and the remaining $5,062,507 was for "inefficiency and project impact costs."

B. Materialmen's Lien History

On September 29, 2015, Global recorded a materialmen's lien in the amount of $12,426,140.68.The lien stated:

The real property which is charged with this lien is a portion of the property described on Exhibit A attached hereto and incorporated herein by this reference.Such property is commonly known as the El Dorado Chemical Plant, and such plant is located at the following address: 4500 N. West Avenue, El Dorado, AR 71730.

Exhibit A was a property description for the entirety of the property owned by EDCC at that address, which includes hundreds of acres and many buildings.Global also included as exhibits two overhead shots from Google Images showing the property and claimed exhibit B-2 "is a more detailed/closer aerial photograph depicting the general location in which the labor was furnished and materials provided."Exhibit B-2 is an aerial photograph that includes many structures and buildings with text added that says, "Plant area where Global Industrial, Inc. provided labor and materials."

After the original materialmen's lien was filed, Leidos paid Global for the difference between the amount invoiced and the amount of the back charge.Global then amended its materialmen's lien on February 23, 2016.The first amended lien was in the amount of $8,772,815.69.The amended lien did not describe the property on which work was performed with any further specificity.On February 26, 2016, Global filed a lis pendens that covered all property owned by EDCC in Union County.More than a year later, on May 30, 2017, Global filed its second amended materialmen's lien that included a metes and bounds description of precisely where on EDCC's property Global had performed work.On November 14, 2018, during trial, Global filed an amended lis pendens to include only the property identified in the second amended materialmen's lien and released the remaining previously identified portion of EDCC's property from the lien claim.

C.Procedural History

Global filed its complaint against Leidos, EDA, EDCC, and other defendants on February 26, 2016, alleging breach of contract, foreclosure, and negligence.On December 28, 2017, Global filed its second amended complaint against Leidos, EDA, EDCC, and others.This is the operative complaint in the lawsuit.On January 12, 2018, Leidos filed a counterclaim against Global for breach of contract.At various points during the litigation, other parties filed claims, counterclaims, cross-claims, and third-party claims.

On September 24, 2018, the circuit court entered an order bifurcating all cross-claims, Leidos's counter cross-claims against EDA and EDCC, Leidos's counter cross-claims against EDCC's parent company, and the third-party claims.In other words, all claims by

and directly against Global were to be tried in "Phase I," while all other matters would be heard in "Phase II."In its bifurcation order, the circuit court also stated that the parties were "free to assert at trial any and all defenses that relate to the claims by Global and the counterclaim by Leidos against Global."

Phase I was a four-week bench trial from October 22 through November 14, 2018, during which Global's five surviving causes of action were litigated: (1) breach of contract against Leidos; (2) breach of contract against EDA; (3) lien foreclosure against Leidos; (4) lien foreclosure against EDCC; and (5) lien foreclosure against EDA, as well as the counterclaims asserted by Leidos against Global.During trial, Global presented evidence of unpaid invoices totaling $9,068,754.43.Leidos presented evidence of $10,080,849 in charge backs.At the end of trial, Global moved to conform the pleadings to the evidence, which added claims for intentional interference with a contract against EDA and EDCC.

On March 12, 2020, the circuit court entered Judgment I, disposing of all claims and counterclaims tried in Phase I.In that order, the circuit court awarded judgment to Global against EDA "on its derivative action for debt on [certain subcontracts] for the sum of $3,028,082" and another judgment to Global against EDCC "on its derivative action for debt on [a certain subcontract] for the sum of $4,356,781."Judgment I then foreclosed on Global's lien in the amount of $7,384,863 and denied relief on all other claims against all other parties.

El Dorado Chemical filed a motion for reconsideration under Arkansas Rule of Civil Procedure 59.Global filed a motion to amend the judgment to include attorneys’ fees and a judgment against Leidos.

On April 23, 2020, the circuit court entered Amended Judgment I.After changing some language from Judgment I, Global was awarded judgment against EDA "on its action for nonpayment of invoices on [certain subcontracts] for the sum of $3,028,082 ..." and another judgment against EDCC "on its action for nonpayment of invoices on [a certain subcontract] for the sum of $4,356,781 ..." in Amended Judgment I.The circuit court then went on to foreclose on Global's lien against EDA and EDCC "to satisfy the debt of $4,356,781 and $3,028,082 respectively[.]"The circuit court also awarded Global prejudgment interest on a portion of the judgment and postjudgment interest against the entirety of the judgment.

As to the other claims, the circuit court ruled that no defendant was liable for breach of contract, unjust enrichment, or tortious interference.Because each party was successful, in part, in litigation that spanned many years, the circuit court did not award attorneys’ fees to any party.There is a detailed and sufficient Rule 54(b) certificate attached to Amended Judgment I. El Dorado Chemical and Global all filed timely notices of appeal.

II.Standard of Review

We review lien-foreclosure cases de novo on appeal.Fla. Oil Inv. Grp., LLC v. Goodwin & Goodwin, Inc. , 2015 Ark. App. 209, at 5, 463 S.W.3d 323, 326.

III.The Materialmen's Lien

A.Property Description in the Original and First Amended Materialmen's Liens

Materialmen's liens are governed by Arkansas Code Annotated sections 18-44-101 et seq.(Repl. 2015 & Supp. 2023).These code sections lay out a process with many steps and requirements.The determinative issue in this appeal is whether the property description in the lien was legally sufficient.

Arkansas Code Annotated section 18-44-117(a)(Supp. 2023) mandates that a person wishing to place a materialmen's lien on a piece of property must file a lien account within 120 days after the work was performed.The filing must include, among other information, "a...