Miller v. Housing Authority of New Orleans

• Decision Date: 03 May 1965
• Docket Number: No. 1761,1761
• Parties: Charles X. MILLER v. HOUSING AUTHORITY OF NEW ORLEANS et al.
• Court: Court of Appeal of Louisiana — District of US

Page 326

175 So.2d 326

Charles X. MILLER v. HOUSING AUTHORITY OF NEW ORLEANS et al.

No. 1761.

Court of Appeal of Louisiana, Fourth Circuit.

May 3, 1965.

Rehearing Denied June 7, 1965.

Edgar Corey, New Orleans, for Charles X. Miller, plaintiff-appellant.

Guste, Barnett & Little, William J. Guste, Jr., John Pat. Little, James M. Colomb, Jr., Roy F. Guste, Robert A. Keily, New Orleans, for Housing Authority of New Orleans, defendant-appellee.

Sessions, Fishman, Rosenson & Snellings, Cicero C. Sessions, New Orleans, for Maryland Cas. Co., appellee and third-party defendant, third-party plaintiff, plaintiff and defendant in reconvention.

Deutsch, Kerrigan & Stiles, R. Emmett Kerrigan, Malcolm W. Monroe, New Orleans, for Pittman Const. Co. and its sureties, defendants, plaintiffs in reconvention, third-party plaintiffs, etc., and appellants-appellees.

Before REGAN, SAMUEL and HALL, JJ.

REGAN, Judge.

The plaintiff, Charles X. Miller, a subcontractor, instituted this suit against the defendants, Pittman Construction Company, the general contractor, which is a partnership composed of Theodore A. Pittman and Albert E. Pittman, the partners individually, and their sureties, namely, the Continental Casualty Company, the Massachusetts Bonding and Insurance Company, American Automobile Insurance Company, the New Amsterdam Casualty Company, and also against the owner, the Housing Authority of New Orleans, endeavoring to recover the sum of $73,652.48, representing a 10% Retainage of the contract which the plaintiff asserts is due for lathing and plastering work executed by him as a subcontractor in the Desire Street Housing Project, together with various charges for extra work performed by him beyond the scope of the plans and specifications.

The Pittmans¹ and their sureties answered and denied that any amount was due Miller; in the alternative they insist that the aggregate amount due to the plaintiff is $41,001.52, after deducting the backcharges for work performed for Miller, the equipment and materials furnished to him, and the progress payments made to him.

Pittman further answered and asserted that Miller is not entitled to receive even the amount set forth hereinabove (1) since the Housing Authority of New Orleans has not yet paid the balance due Pittman under the prime contract, (2) because liens for $5,408.68 and $4,139.28 were filed by J. J. Clarke Company, Inc., and Schwartz Supply Company, Inc., respectively, (3) because a levy was served on Pittman by the United States of America for withholding taxes owed by Miller, and finally (4) because Pittman and its sureties have incurred premiums of $120.00 and $1,800.00 to cancel the liens recorded by Schwartz and Miller, respectively, together with attorney's fees of $4,500.00 resulting from the claims of the various materialmen, the United States of America, and Miller.

Predicated on the legal implications of the foregoing answer, Pittman and its sureties then reconvened against Miller for back-charges, premiums, and attorney's fees incurred by them, and for any other amounts for which they may be ultimately liable to the lien claimants.

Pittman and its sureties, out of an abundance of caution, also filed a third party petition against the Maryland Casualty Company, who was Miller's surety on one of the two subcontracts, endeavoring to preserve their right to recover from the surety the back-charges, expenses, and other liabilities to which they may be exposed which arose out of the bonded subcontract.

Maryland Casualty Company then answered the foregoing petition and denied that the amount sought to be recovered arose out of the contract on which it was surety, and in turn, to protect itself, sued Miller and his wife as indemnitors on the bond for any amount it may be ultimately obligated to pay, including attorney's fees and costs of court.

Pittman and its sureties also filed a third party petition against the Housing Authority of New Orleans, asserting that if they should be adjudged liable for Miller's claim for additional compensation or for the balance of the amount owed under the subcontract, the Housing Authority of New Orleans should, in that event, be liable to Pittman under the prime contract.

The lower court rendered judgment in favor of Miller against Pittman and its sureties for $41,001.52, less the following amounts: (1) a sum adequate to pay the levy of the United States of America against Pittman for withholding taxes, penalties, and interest owed by him; (2) an amount sufficient to satisfy the judgment rendered in favor of August A. Weggmann, Receiver of J. J. Clarke Company, Inc., ($5,408.68); and (3) the sum of $4,139.28, necessary to liquidate the lien of Schwartz Supply Company, Inc.

In addition thereto, judgment was rendered in favor of Pittman and its sureties against Miller and Maryland Casualty Company for any deficiency which may result between (a) the gross amount payable to Miller and (b) the total of the levy by the United States together with the aforesaid materialmen's liens.

Judgment was also rendered in favor of Maryland Casualty Company against Miller and his wife in the amount of $1,500.00, representing an attorney's fee and for any further amount which Maryland may be required to pay as a result of the decree.

Finally, all demands against the Housing Authority of New Orleans were dismissed.

From the foregoing judgment, Pittman and Mr. and Mrs. Charles X. Miller have prosecuted this appeal. Maryland Casualty Company has answered the appeals, in an endeavor to modify the judgment of the lower court in several respects which shall be discussed in the sequence of this opinion.

This case was consolidated with a suit by J. J. Clarke and Company, Inc., in order to facilitate and expedite the trial thereof. The suit referred to is entitled, 'J. J. Clarke Company, Inc. v. The Housing Authority of New Orleans, et al.', 175 So.2d 337. In the Clarke case, the plaintiff instituted suit against the Housing Authority of New Orleans and against Pittman and its sureties in order to satisfy its claim for materials furnished Miller which were used in the Housing Project by him.

In this consolidated suit, Pittman and its sureties filed a third party petition against Miller and his surety for any amount which it may be required to pay Clarke emanating from their vicarious liability under the Public Works Statute.

The consolidated suit originated in another division of the lower court. Clarke moved therein against Pittman for a summary judgment, which was granted. A motion for summary judgment by Pittman against Miller was severed from the Clarke proceeding against Pittman, and it, together with all other such claims, for obvious legal reasons, was consolidated with this suit by Miller against Pittman, its sureties, and the Housing Authority of New Orleans.

The record, despite the foregoing procedural gymnastics, reveals that on March 19, 1953, the plaintiff, who is a plastering contractor, executed two subcontracts with the defendant, who was the general contractor employed by the Housing Authority of New Orleans to construct the Desire Street Housing Project. The combined price of the two contracts for the lathing and plastering work amounted to the sum of $411,000.00; however, the plaintiff was able, financially, to secure a performance bond for only $260,000.00. He accordingly requested Pittman to divide the work. Hence, a bonded contract was entered into for $260,000.00, with the Maryland Casualty Company acting as his surety. An unbonded contract was then executed between the parties in the amount of $151,000.00.

The general contract provided for a 10% Retainage of the total contract price by the owner, the Housing Authority of New Orleans, from Pittman, the general contractor, in the event the Project was not accepted. The subcontracts reveal the existence of similar provisions between Pittman and Miller.

The subcontracts stipulated that Miller was to plaster 81 multi-unit buildings in the Project. Miller completed the plastering work on or about November 1, 1954, and it was accepted on January 1, 1955. Except for three buildings, the unbonded contract was performed before the work ensued under the bonded contract.

Pittman's work on the Project as general contractor was not accepted,² and the Housing Authority of New Orleans refused to pay Pittman the 10% Retainage under the prime contract. An agonizing legal duel resulted,³ and consequently Pittman refused to pay plaintiff the 10% Retainage due on the plastering subcontracts.

The record unequivocally reveals that the only plausible reason for Pittman's nonpayment of the 10% Retainage due to Miller was the fact that the Housing Authority of New Orleans refused to pay Pittman the 10% Retainage on the prime contract. The record also denotes that Pittman charged the Housing Authority of New Orleans $427,930.00 for the lathing and plastering work, and of this amount Pittman has received $385.137.00. However, Miller has only been paid $368.294.00, or $16,843.00 less then Pittman has received for the plastering work performed in the Project.

Pittman initially contends that Miller is not entitled to recover the net retainage due under their contract because of certain breaches thereof by Miller which occurred when he failed to pay for all labor and materials used in the Project. Specifically, Pittman asserts that Miller is not entitled to the net retainage since he neglected to pay for the materials which provoked the Schwartz and Clarke liens and the withholding taxes, which provoked the levy by the United States of America, and concludes therefrom that the lower court erred in rendering judgment in favor of Miller for the balance owed to him by Pittman.

The judgment of the lower court, to reiterate, awarded Miller the net retainage, minus a sum of money sufficient to satisfy the liens of the United States, Schwartz, and Clarke. In addition thereto, a judgment was...