Executone Sys. Co. of La., Inc. v. Jefferson Parish Hosp. Serv. Dist. No. 2 for the Parish of Jefferson

• Decision Date: 24 February 2016
• Docket Number: No. 15–CA–569.,15–CA–569.
• Citation: 186 So.3d 1210
• Parties: EXECUTONE SYSTEMS COMPANY OF LA., INC. v. JEFFERSON PARISH HOSPITAL SERVICE DISTRICT NO. 2 FOR the PARISH OF JEFFERSON, State of Louisiana d/b/a East Jefferson General Hospital, Cerner Corporation and Hill–Rom Company, Inc.
• Court: Court of Appeal of Louisiana — District of US

186 So.3d 1210

EXECUTONE SYSTEMS COMPANY OF LA., INC.

v.JEFFERSON PARISH HOSPITAL SERVICE DISTRICT NO. 2 FOR the PARISH OF JEFFERSON, State of Louisiana d/b/a East Jefferson General Hospital, Cerner Corporation and Hill–Rom Company, Inc.

No. 15–CA–569.

Court of Appeal of Louisiana, Fifth Circuit.

Feb. 24, 2016.

Randall A. Smith, J. Geoffrey Ormsby, Attorneys at Law, New Orleans, LA, for Plaintiff/Appellant.

P.J. Stakelum, III, David R. Sherman, Glenn S. Newbauer, Attorneys at Law, Metairie, LA, for Defendant/Appellee.

Gerard E. Wimberly, Jr., Angelina Christina, Melissa H. Harris, Attorneys at Law, New Orleans, LA, for Defendant/Appellee.

Panel composed of Judges FREDERICKA HOMBERG WICKER, JUDE G. GRAVOIS, and ROBERT M. MURPHY.

JUDE G. GRAVOIS, Judge.

This suit arises out of a public contract to install a nurse communication system at East Jefferson General Hospital. Plaintiff/appellant, Executone Systems Company of La., Inc. ("Executone"), an unsuccessful bidder on the contract, sought injunctive relief, writ of mandamus, declaratory judgment, damages, and attorney's fees from defendants/appellees, Jefferson Parish Hospital Service District No. 2 for the Parish of Jefferson, State of Louisiana, d/b/a East Jefferson General Hospital ("EJGH"), and Hill–Rom Company, Inc. ("Hill–Rom"). Executone appeals the trial court's July 15, 2015 judgment which granted appellees' peremptory exceptions of no cause of action and prescription and granted EJGH's motion for partial summary judgment, dismissing all claims asserted by Executone. For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

On July 10, 2013, EJGH issued Request for Proposal ("RFP") No. 5052 to solicit proposals for a "Nurse Communication Solution" at East Jefferson General Hospital. The RFP noted that EJGH had several legacy nurse communication systems, and that it sought to replace "100%" of the currently utilized nurse communication systems. EJGH was in search of "an entity" to provide "a system to fit the needs of an inpatient facility," with it being "upgradeable to a large, multi-campus inpatient and outpatient complex." The work would be completed in two phases. Phase 1 involved the implementation of the nurse communication system in "6 South" and the "Infusion Center," where no nurse communication system previously existed. Phase 2, which was referred to in the RFP as "A La Carte," involved implementing the nurse communication system in the remaining areas listed in the RFP and would require replacing previously installed nurse communication systems of various models from various manufacturers.

Three entities attended a pre-bid meeting on July 17, 2013: Executone, Hill–Rom, and Cerner Corporation.¹ After submitting proposals, in compliance with the selection process outlined in the RFP,² Executone and Hill–Rom attended a "demonstration day" at the hospital on August 29, 2013.

In November 2013, Executone contacted EJGH to find out who was awarded the contact and was told that a final decision had not yet been made. On January 23, 2014, while doing "a site survey of EJGH 6 South, Phase 1," a representative of Executone noticed that Hill–Rom had installed nurse call wire in patient rooms. Notably, on the following day (January 24, 2014), Executone contacted Austin Reeder, Vice–President of Supply Chain and Support Services for EJGH, to again find out who was awarded the contract, and was told that EJGH had awarded the contract to Hill–Rom. Executone immediately contacted the Jefferson Parish Inspector General's Office, which opened an investigation into the matter. Executone was advised that the investigation would take some time.

Almost one year to the day later, on January 23, 2015, Executone filed a verified petition for a temporary restraining order, injunctive relief, writ of mandamus, declaratory judgment, and other relief. In its petition, Executone stated that upon its information and belief, Phase 1 of the project was complete or nearly complete, but Phase 2 of the project had not yet begun. Executone asserted that EJGH violated the "Public Bid Law," La. R.S. 38:2211, et seq., or alternatively, violated La. R.S. 38:2237(A)(8) of the Political Subdivisions Telecommunications and Data Processing Procurement Law. Regardless of which law applied, Executone alleged that the work to be done in Phase 2 of the project required the use of a Louisiana licensed contractor under La. R.S. 37:2150.1(4) and 37:2160, and upon its information and belief, Hill–Rom was not a licensed contractor. Accordingly, Executone sought a temporary restraining order, preliminary injunction, and permanent injunction enjoining and restraining EJGH from proceeding with Phase 2 of the project. Alternatively, Executone sought a declaratory judgment, declaring any contract awarded by EJGH to Hill–Rom null and void. The petition further sought a writ of mandamus, damages, attorney's fees, and "any and all other relief, legal and/or equitable," the court was empowered to award.

The request for a temporary restraining order was denied on January 23, 2015. Thereafter, the hearing on the preliminary injunction was held on March 3 and 9, 2015. Following the testimony of Executone's witnesses, Hill–Rom and EJGH orally moved for an involuntary dismissal of the petition for preliminary injunction on the basis that the matter was untimely filed. The trial court then orally denied the request for a preliminary injunction. On March 23, 2015, the trial judge signed a judgment granting EJGH and Hill–Rom's motion to dismiss the petition as it related to Executone's request for a preliminary injunction and denying Executone's request for a preliminary injunction "on the basis that Executone failed to file for a preliminary injunction on a timely basis."

On March 5 and 6, 2015, Hill–Rom and EJGH, respectively, filed exceptions of no cause of action and prescription. Relying on the language of La. R.S. 38:2220 and pertinent jurisprudence, EJGH and Hill–Rom argued that Executone waited too long to file its suit for injunctive relief, and in doing so, waived its right to seek injunctive relief, damages, and the ability to nullify the contract. Further, on March 31, 2015, EJGH filed a motion for a partial summary judgment, seeking to dismiss with prejudice all claims filed by Executone for permanent injunctive relief, damages, and attorney's fees on the same untimeliness basis.

On April 20, 2015, Executone filed a first supplemental and amending petition, alleging that at an unknown time following the completion of Phase 1, Hill–Rom entered into a "Bill of Materials" contract with EJGH for Phase 2. Executone further alleged that upon receiving a nurse call schedule from EGJH, it learned that only 6 areas of Phase 2 had been completed, and that installation in 17 areas of Phase 2 remained. Executone also alleged that it had filed a complaint with the Louisiana State Licensing Board for Contractors, based on the allegation that Hill–Rom was an unlicensed contractor, and that the licensing board was conducting an investigation in connection therewith. Executone prayed that the court issue preliminary and permanent injunctions pending that investigation.

On June 18, 2015, Executone filed an opposition to the exceptions of prescription and no cause of action and the motion for partial summary judgment. In its opposition, Executone asserted that as a result of the Louisiana State Licensing Board's investigation, Hill–Rom pleaded no contest, paid fines and administration costs, and applied for a license.³ Executone further argued that the parties entered into separate contracts for Phase 1 and Phase 2 of the project, and that because almost all of Phase 2 of the contract remained to be completed, its suit was not untimely, and the remainder of the contract could be stopped and awarded to a licensed contractor.

On June 24, 2015, the trial court held a hearing on Hill–Rom and EJGH's exceptions of no cause of action and prescription and EJGH's motion for partial summary judgment. At the hearing, the trial court found that Executone failed to act timely in seeking injunctive relief. The trial court found that Executone knew or should have known that Hill–Rom was awarded the contract in January 2014, and though it pursued the matter with the Inspector General's Office, it failed to pursue the matter timely in a court proceeding. On July 15, 2015, the trial court signed a judgment granting Hill–Rom's exceptions, dismissing all claims against Hill–Rom with prejudice, and granting EJGH's exceptions and motion for partial summary judgment, dismissing all claims against EJGH with prejudice. Executone appeals this judgment.

On appeal, Executone argues that its petition to stop illegal conduct and declare an unlawful contract an absolute nullity is neither prescribed nor untimely. Specifically, Executone argues that (1) the EJGH contract awarded to Hill–Rom, an unlicensed contractor, is an absolute nullity, (2) an action to annul an absolute nullity does not prescribe, and (3) a suit for injunctive relief to halt a largely-unfinished contract is not untimely.

LAW AND ANALYSIS

Standards of Review⁴

At a hearing on a peremptory exception of prescription pleaded prior to trial, evidence may be introduced to support or controvert the exception. La. C.C.P. art. 931. When evidence is introduced, the trial court's findings of fact are reviewed under the manifest error standard. Carter v. Haygood, 04–646 (La.1/19/05), 892 So.2d 1261, 1267. In the absence of evidence, an exception of prescription must be decided on the facts alleged in the petition, with all of the allegations accepted as true. Cichirillo v. Avondale Industries, Inc., 04–2894 (La.11/29/05), 917 So.2d 424, 428.

For the purpose of the peremptory exception of no cause of action, a "cause of action" refers to the operative facts which give rise to the plaintiffs right to judicially assert an action against the defendant. Scheffler v. Adams and Reese, LLP, 06–1774 (L...