InPwr Inc. v. Olson Restoration LLC

• Decision Date: 02 November 2022
• Docket Number: 2:21-CV-00821
• Parties: INPWR INC. v. OLSON RESTORATION LLC. ET AL
• Court: U.S. District Court — Western District of Louisiana

INPWR INC.
v.
OLSON RESTORATION LLC. ET AL

No. 2:21-CV-00821

United States District Court, W.D. Louisiana, Lake Charles Division

November 2, 2022

TERRY A. DOUGHTY JUDGE

REPORT AND RECOMMENDATION

KAY MAGISTRATE JUDGE

Before the court are two motions to dismiss filed by third-party defendants, DCMC, LLC a/k/a DCMC Partners (“DCMC”) and the Lemoine Company, LLC (“Lemoine”) Docs. 129, 134. The motions are filed pursuant to Federal Rule of Civil Procedure 12(b)(6) and seek dismissal of third-party claims filed by Expedited Service Partners, LLC (“ESP”). Id. ESP opposes the motions. Docs. 137, 154. DCMC and Lemoine have replied [docs. 144, 159], and the court has granted leave for ESP to file sur-replies [docs. 150, 161]. The matter is now ripe for resolution.

This matter has been referred to the undersigned for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636. For reasons stated below, it is

RECOMMENDED that Lemoine's Motion to Dismiss [doc. 134] be DENIED;

IT IS FURTHER RECOMMENDED that DCMC's Motion to Dismiss [doc. 129] be GRANTED IN PART such that Counts One and Two (“Intentional Tort” and “Negligent Professional Undertaking”) of ESP's third party demand as to DCMC be dismissed with prejudice;

IT IS FURTHER RECOMMENDED that DCMC's Motion to Dismiss [doc. 129] be otherwise DENIED.

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I.

Background

This matter began as a suit filed by InPwr, Inc. (“InPwr”) against Olson Restoration, LLC, d/b/a Servpro Disaster Recovery Team Olson (“ServPro”), Southwest Louisiana Hospital Association d/b/a Lake Charles Memorial Hospital (“LCMH”), and ESP.^[1] Doc. 1. In the factual background of its complaint, InPwr notes that substantial damage was caused throughout Southwest Louisiana because of the landfall of Hurricane Laura on August 27, 2020, necessitating extensive restoration and recovery work on LCMH's buildings (the “LCMH Project”). Id., ¶¶ 512. The heart of InPwr's complaint is the allegation that it was not fully compensated for the services it provided for the LCMH Project. Doc. 1.

Defendant and third-party plaintiff ESP is a subcontractor who provided emergency power generation equipment for the LCMH Project. Doc. 113, p. 2, ¶ 5. In its third-party demand, ESP alleges that ServPro acted in the capacity of general contractor^[2] for the LCMH Project, and that ServPro subcontracted with InPwr to provide services for the LCMH Project including emergency power generation. Id., p. 4, ¶ 18-20. InPwr, in turn, leased equipment from ESP for the LCMH Project. Id., p. 4, ¶ 20-21. ESP also contracted directly with ServPro. Id. ESP alleges that, despite fulfilling the terms of its contracts with ServPro and InPwr, ESP was never paid for its services and is owed a total of $6.9 million plus contractual interest. Id., p. 5, ¶ 24-28.

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ESP filed a third-party demand against two entities it alleges share the fault for the nonpayment of its services: Lemoine and DCMC. Doc. 113. Via the motions now before the court, Lemoine and DCMC test the adequacy of ESP's allegations against them.

A. ESP's third-party claims against Lemoine

According to the allegations of ESP's third-party demand, LCMH hired Lemoine as project manager for the LCMH project. Id., p. 6, ¶ 33. ESP alleges that Lemoine met with and directed general contractor ServPro's work on the LCMH Project; ESP also alleges that Lemoine's role included generating cost savings for LCMH at the expense of ServPro's and downstream vendors' bottom lines. Id., p. 9-11, ¶ 47, 56-59. ESP alleges that Lemoine undertook its role via inexperienced personnel who used flawed assumptions and issued arbitrary or ill-conceived directives advising LCMH not to pay certain invoices, including ESP's invoices (which were submitted by ServPro). Id., p. 9-11, ¶ 48, 56-60. Lemoine's alleged motive for doing so was to justify its own contract price. Id.

ESP alleges that LCMH engaged Lemoine while LCMH was still negotiating its rates with ServPro, and LCMH gave Lemoine the task of reviewing the proposed service agreement and rate sheets that ServPro provided to LCMH. Id., p. 7-8, ¶ 34-37. At that point, work on the LCMH project was already underway. ESP alleges that Lemoine knew by September 2020 that the cost of the LCMH Project would exceed LCMH's insurance recovery [id., p. 7, ¶ 36-39] and that, instead of advising LCMH to “demobilize” the subcontractors working on the LCMH Project, Lemoine simultaneously encouraged ServPro to believe a contract would be finalized while simultaneously cautioning LCMH not to finalize it. Id., p. 9-10, ¶ 45-53, 60, 67.

ESP alleges that Lemoine is responsible to ESP for ESP's damages under the following theories:

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COUNT ONE: NEGLIGENT PROFESSIONAL UNDERTAKING.

Because Lemoine was tasked with reviewing LCMH Project invoices, ESP reasons that Lemoine owed ESP a duty to promptly recommend payment of those invoices, unless there was good cause to recommend otherwise

Because Lemoine allegedly unjustifiably recommended that LCMH not pay ESP invoices, but never recommended that ESP discontinue work on the LCMH Project, Lemoine breached its duty to ESP, thereby causing damages including lost revenue, lost business reputation, increased financing costs, and lost profits on other projects. Id., p. 18-19, ¶ 92-100.

COUNT TWO: NEGLIGENCE. ESP claims that Lemoine owed ESP a duty to “follow professional standards” in reviewing invoices ServPro submitted to LCMH and that Lemoine breached that duty in various ways including breaching the applicable standard of care and professional industry standards, causing ESP to incur the damages described above as well as delay damages. Id., p. 20-21, ¶ 101-110.

B. ESP's third-party claims against DCMC

ESP makes similar allegations against DCMC, which ESP describes as “primarily a FEMA consultant on the LCMH Project.” Id., p. 16, ¶ 81.^[3] ESP alleges that LCMH retained DCMC, a wholly-owned subsidiary of Lemoine, to provide “strategic planning support, operative and financial recovery needs, and grant management” services, including consulting relating to LCMH's FEMA claims. Id., p. 14, ¶ 72-73. ESP also alleges that Lemoine and DCMC worked “in tandem” to achieve their goals. Id., p. 15, ¶ 76. DCMC's work included reviewing invoices that ServPro submitted to LCMH to determine if they would be reimbursable by FEMA. Id., p. 14, ¶ 70-75. ESP alleges that DCMC provided negligent advice to LCMH, including the advice not to pay certain invoices because they were not reimbursable by FEMA or not adequately supported by “back-up information.” Id., p. 15, ¶ 80-85, 88-89. LCMH allegedly followed this advice and refused to pay certain submissions, including ESP's invoices. Id., p. 17, ¶ 86.

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ESP reasons that DCMC is responsible to ESP for ESP's damages under the same theories raised with respect to Lemoine as well as an additional “intentional tort” theory:

COUNT ONE: INTENTIONAL TORT. ESP claims that DCMC intentionally interfered with ESP's receipt of payment for its work on the LCMH Project by delaying its invoice review process, inadequately reviewing invoices, and recommending that LCMH refuse to pay invoices submitted by ServPro for ESP's work because those invoices were not reimbursable by FEMA. In doing so, DCMC caused damages to ESP. Id., p. 22, ¶ 111-118.

COUNT TWO: NEGLIGENT PROFESSIONAL UNDERTAKING. Echoing the claim against Lemoine, ESP alleges that DCMC owed a duty to ESP to promptly recommend payment of ESP's invoices, unless there was good cause to recommend otherwise. Because DCMC allegedly unjustifiably recommended that LCMH not pay ESP invoices, despite the fact that no contract made payment contingent on FEMA reimbursement, ESP alleges that DCMC intentionally or negligently breached its duty to ESP, thereby causing damages including lost revenue, lost business reputation, increased

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