Leigh Trades, L.L.C. v. Non-Flood Prot. Assets Mgmt. Auth.

• Court: Court of Appeal of Louisiana
• Writing for the Court: Judge Paula A. Brown
• Citation: Leigh Trades, L.L.C. v. Non-Flood Prot. Assets Mgmt. Auth., 274 So.3d 64 (La. App. 2019)
• Decision Date: 29 May 2019
• Docket Number: NO. 2019-CA-0042,2019-CA-0042
• Parties: LEIGH OF ALL TRADES, L.L.C. d/b/a by Land or Sea Construction, LLC v. NON-FLOOD PROTECTION ASSETS MANAGEMENT AUTHORITY, Construction Management Enterprises, LLC, and Hudson Insurance Company

274 So.3d 64

LEIGH OF ALL TRADES, L.L.C. d/b/a by Land or Sea Construction, LLC

v.NON-FLOOD PROTECTION ASSETS MANAGEMENT AUTHORITY, Construction Management Enterprises, LLC, and Hudson Insurance Company

NO. 2019-CA-0042

Court of Appeal of Louisiana, Fourth Circuit.

May 29, 2019

Ryan C. Higgins, Daniel Aubry Ranson, GAUDRY RANSON HIGGINS & GREMILLION, L.L.C., 401 Whitney Avenue, Suite 500, Gretna, LA 70056, COUNSEL FOR PLAINTIFF/APPELLEE

Albert Joseph Nicaud, Jeffrey M. Siemssen, Will C. Griffin, NICAUD & SUNSERI Law Firm, L.L.C., 3000 18th Street, Metairie, LA 70002, COUNSEL FOR DEFENDANT/APPELLANT

(Court composed of Chief Judge James F. McKay, III, Judge Joy Cossich Lobrano, Judge Paula A. Brown )

Judge Paula A. Brown

This appeal arises out of a contract dispute between Appellant/Contractor, Construction Management Enterprises ("CME"), its bond surety, Hudson Insurance Group (collectively, "CME"), and Appellee/Sub-Contractor, Leigh of All Trades, L.L.C. d/b/a By Land or Sea Construction, LLC ("LSC"), regarding sums owed on a public works construction contract. CME appeals the district court's grant of partial summary judgment in favor of LSC, finding CME liable for $ 29,072.19, the balance due on the subcontract. Finding no error of law, we affirm the judgment.

FACTUAL AND PROCEDURAL HISTORY

On February 23, 2017, the Non-Flood Protection Assets Management Authority (the "Management Authority") entered into a $ 350,000.00 public works contract ("the prime contract") with CME for the demolition of certain boathouses and improvements (the "Project"). CME obtained a payment and performance bond from Hudson Insurance Group for the Project.

On September 30, 2017, CME and LSC entered into a subcontract, valued at $ 75,000.00, for LSC to perform designated portions of the demolition work. The subcontract provided for LSC to commence work within 24 hours after LSC was notified to do so by CME, and the work was required to be completed within 22 days from the notice to proceed. The subcontract required payment of $ 10,000.00 upon signing, $ 10,000.00 upon completion of the first week of demolition, and $ 55,000.00 within thirty days after completion of LSC's work.

LSC started work on the Project on or about October 5, 2017. CME paid LSC the initial $ 20,000.00 owed on the subcontract. Thereafter, LSC submitted invoices for the remaining work completed in accordance with the original terms of the subcontract and for additional work requested by CME that allegedly went beyond the scope of the subcontract. CME made partial payments on these invoices.

The Management Authority, on November 15, 2017, executed its Notice of Substantial Completion of the Project; and on November 17, 2017, it filed the Notice of Substantial Completion in the Orleans Parish Mortgage Records.

Due to CME's failure to pay LSC's outstanding invoices, on November 20, 2017, LSC filed a Sworn Statement of Claim and Privilege ("Statement of Claim") with the Recorder of Mortgages in the amount of $ 186,550.00. On December 14, 2017, LSC amended its Statement of Claim to $ 189,080.00, which included an additional $ 2,530.00 for additional work performed on the Project on November 29, 2017, at CME's request.

On December 20, 2017, LSC filed a petition against the Management Authority and CME to recover the outstanding amounts owed under the subcontract, sums for the additional work performed beyond the scope of the subcontract, and for damages allegedly caused by CME's delays. CME¹ denied the allegations of the petition and pled affirmative and alternative defenses that included CME's entitlement to an offset.

As part of its response to LSC's petition, the Management Authority filed a petition for concursus, depositing $ 52,454.50, the remaining balance of the prime contract, into the registry of the court.² On June 11, 2018, the Management Authority, CME, and LSC entered a consent judgment, which permitted LSC to withdraw $ 25,927.81 out of the deposited funds. Afterwards, on August 8, 2018, LSC filed a motion for partial summary judgment against CME³ to recover the remaining $ 29,072.19 owed under the subcontract.⁴

In opposition, CME argued that its offset defense barred LSC's right to partial summary judgment. CME offered as evidence the 1442 deposition testimony of its corporate representative and a statement of back charges attached thereto, which itemized CME's offset damages.

LSC, in response, asserted that CME's offset defense was for unliquidated damages; and, as such, the unliquidated damages could not be used to offset LSC's liquidated claim for payment. LSC, also, specifically objected to the admissibility of CME's statement of back charges. LSC argued the statement of back charges was unsupported by an affidavit and LSC disputed CME's assertion that CME's corporate representative properly authenticated the charges listed in the statement of back charges during his 1442 deposition. LSC argued that the deposition revealed the corporate representative did not actually prepare the statement of back charges, nor was he sure when it was prepared.⁵

The district court heard argument on the motion on October 26, 2018. After oral argument, the district court granted LSC's motion for partial summary judgment and sustained LSC's objection to the statement of back charges, excluding it from evidence. The district court designated the judgment as a final judgment pursuant to La. C.C.P. art. 1915(B)(1), finding no just reason to delay.⁶

This timely appeal followed.

STANDARD OF REVIEW

This Court delineated the standard of review for a motion for summary the standard of review for a motion for summary judgment in SBN v. FNBC LLC v. Vista Louisiana, LLC , 2018-1026, pp. 5-6 (La. App. 4 Cir. 3/27/19), 267 So.3d 655, 660 as follows:

Summary judgments are reviewed de novo one appeal, with the reviewing court using the same criteria that govern the trial court's determination of whether summary judgment is appropriate; whether there is any genuine issue of material fact, and whether the movant is entitled to judgment as a matter of law." Smith v. Robinson , [20] 18-0728, p. 5 (La. 12/5/18), 265 So.3d 740, 744, 2018 WL 6382118, (citing La. C.C.P. art. 966 ; Louisiana Safety Ass'n of Timbermen Self-Insurers Fund v. Louisiana Ins. Guar. Ass'n , [20]09-0023, p. 5 (La. 6/26/09), 17 So.3d 350, 353 ). Likewise, "when a matter involves the interpretation of a statute, it is a question of law, and a de novo standard of review is applied." New Orleans Fire Fighters Pension & Relief Fund v. City of New Orleans , 17-0320, p. 5 (La. App. 4 Cir. 3/21/18), 242 So.3d 682, 688 (citing Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't. of Econ. Dev. , 10-0193, p. 9 (La. 1/19/11), 56 So.3d 181, 187 ).

The summary judgment procedure is favored. La. C.C.P. art. 966(A)(2).⁷ The standard for obtaining a summary judgment is set forth in La. C.C.P. art. 966(A)(3), which provides that "[a]fter an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law." Whether a fact is material is a determination that must be made based on the applicable substantive law. Roadrunner Transp. Sys. v. Brown , [20]17-0040, p. 7 (La. App. 4 Cir. 5/10/17), 219 So.3d 1265, 1270 (citing Smith v. Our Lady of the Lake Hosp., Inc. , 93-2512, p. 27 (La. 7/5/94), 639 So.2d 730, 751 ).

DISCUSSION

CME argues the district court erred in granting LSC's motion for partial summary judgment relief in the following respects: (1) genuine issues of material fact remain regarding CME's defense of offset or compensation;⁸ and (2) CME's statement of back charges should have been admitted into evidence. We will address each argument in turn.

Offset Defense

CME contends that it is entitled to a legal offset in the amount of $ 29,072.19, pursuant to La. C.C. art. 1893. La. C.C. art. 1893 states, in relevant part:

Compensation takes place by operation of law when two persons owe to each other sums of money or quantities of fungible things identical in kind, and these sums or quantities are liquidated and presently due.

In such a case, compensation extinguishes both obligations to the extent of the lesser amount.

The Louisiana Supreme Court, in American Bank v. Saxena , 553 So.2d 836, 844 (La. 1989), explained legal offset⁹ as follows:

Set-off, or to use the codal term, compensation, takes place by operation of law when two persons owe to each other sums of money and these sums are liquidated and presently due. In such a case, compensation extinguishes both obligations to the extent of the lesser amount. [La.] C.C. [art.] 1893.

"The two debts must be equally liquid..... [A] liquid debt [is] one whose existence is certain and its quantity determined. A disputed debt is not liquid and cannot be admitted as susceptible of compensation unless the one who asserts compensation has in hand the proof of the existence of the disputed debt and is thus in a position to prove it promptly." 4 Aubry & Rau, Cours de Droit Civil Francais, s. 326 (6th ed. 1965).

A claim is liquidated when the debt is for an amount capable of ascertainment by mere calculation in accordance with accepted legal standards. Sims v. Hays, 521 So.2d 730, 733 (La. App. 2d Cir. 1988). Thus, a determination as to the liquidity of a claim is an essential prerequisite to deciding whether such a claim is a proper basis for a plea of compensation. Lack of sufficient liquidity and demandability will preclude such a plea. Hartley v. Hartley, 349 So.2d 1258 (La. 1977) (husband's potential claim against community funds could not be used as compensation against wife's claim for past due alimony).

Thus, to determine whether CME has asserted a valid offset defense, this Court must first examine the liquidity of CME's claimed offset damages.

In calculating its $ 29,072.19 offset claim, CME itemizes that LSC owes CME...