Parkcrest Builders, LLC v. Liberty Mut. Ins. Co.
| Decision Date | 15 February 2022 |
| Docket Number | No. 21-30005,21-30005 |
| Citation | 26 F.4th 691 |
| Parties | PARKCREST BUILDERS, LLC, Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, Intervenor—Appellee, v. Housing Authority of New Orleans, Defendant—Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
David J. Krebs, Esq., Craig N. Mangum, Laetitia G. Solouki, Attorneys, Krebs Farley & Dry, P.L.L.C., New Orleans, LA, for Intervenor-Appellee.
Carl A. Butler, Butler Law Firm, L.L.C., Kenner, LA, for Defendant-Appellant.
Before Jolly, Elrod, and Oldham, Circuit Judges.
The Housing Authority of New Orleans and Liberty Mutual Insurance Company entered into a contract. The Housing Authority breached. Liberty then ignored the contract's dispute-resolution procedures—the post-breach rules of the game. Liberty says it's nonetheless entitled to attorney's fees, and the district court agreed. We reverse and render.
This case began in 2013, when the Housing Authority of New Orleans ("HANO") agreed to pay Parkcrest Builders, LLC ("Parkcrest") over $11 million to build affordable housing units. Parkcrest Builders, LLC v. Hous. Auth. of New Orleans (Parkcrest I) , No. 15-1533, 2018 WL 2766067, at *1 (E.D. La. June 8, 2018). Liberty was Parkcrest's surety. Ibid. For reasons not relevant here, the situation devolved and HANO terminated Parkcrest in early 2015, before the project was done.
Ibid. Parkcrest immediately sued, alleging breach of contract under Louisiana law. Ibid.
Then, Liberty acted to fulfill its obligations as Parkcrest's surety. Ibid. Liberty and HANO executed a "Takeover Agreement," whereby Liberty stepped into Parkcrest's shoes to finish the project. Ibid. The Takeover Agreement incorporated by reference, with alterations not relevant here, the original contract (hereinafter the "HANO Contract"). See id. at *12–13 ().
Liberty hired Parkcrest (the very same) as its completion contractor. Id. at *12. This did not help matters, and HANO soon terminated Liberty. On June 29, 2016, HANO sent Liberty a letter claiming that Liberty had forfeited any right to continue working on the project and requesting that it immediately relinquish control of the site. Liberty promptly acknowledged the termination in a letter of its own, maintaining the termination was wrongful.
Rather than following the contract's dispute-resolution procedures, which called the parties to try resolving disagreements out of court, Liberty filed a complaint-in-intervention in the HANO-Parkcrest litigation. After a bench trial, the district court concluded that HANO had breached both the Takeover Agreement and the underlying HANO Contract by terminating Liberty for convenience after Liberty had substantially completed the project. Id. at *24, *25, *27. It therefore found in Liberty and Parkcrest's favor, awarded them damages, and held they owed HANO nothing. Id. at *36. The district court also held HANO liable to Liberty for attorney's fees, but it left those fees unquantified. Ibid.
HANO appealed, and we affirmed. Parkcrest Builders, LLC v. Liberty Mut. Ins. Co. (Parkcrest II) , 796 F. App'x 852, 852–53 (5th Cir. 2020) (per curiam). But because the district court had not yet quantified attorney's fees, our court concluded it lacked jurisdiction under 28 U.S.C. § 1291 to consider the fee award. Ibid. (). So we dismissed the appeal of the fee award for lack of jurisdiction. Ibid.
On Liberty's motion, the district court then quantified its fee award. Parkcrest Builders, LLC v. Hous. Auth. of New Orleans (Parkcrest III) , No. 15-1533, 2020 WL 7060148, at *4 (E.D. La. Dec. 2, 2020). It awarded Liberty $526,192.25 in fees. Ibid.
HANO timely appealed. We have jurisdiction under 28 U.S.C. § 1291 to review the quantified fee award. See S. Travel Club , 986 F.2d at 131. This allows us to review not only the amount of the award, but also the propriety of awarding any fees at all. We hold Liberty is entitled to nothing.
We begin with two preliminaries: choice of law and the standard of review.
This is a diversity case, so Louisiana law governs the issue of attorney's fees. See, e.g., Mathis v. Exxon Corp. , 302 F.3d 448, 461 (5th Cir. 2002). That means we must look to the Louisiana Supreme Court—and in the absence of on-point cases, we "must make an Erie guess" about how that court would proceed. Six Flags, Inc. v. Westchester Surplus Lines Ins. Co. , 565 F.3d 948, 954 (5th Cir. 2009) (quotation omitted). As relevant here, Louisiana authorizes fee shifting only if a contract or statute provides for it.
Our task, therefore, is to determine whether HANO owes Liberty attorney's fees under the HANO Contract and under Louisiana contract law. Contracts "must be interpreted in a common-sense fashion, [giving] to the words of the contract their common and usual significance." Lambert v. Md. Cas. Co. , 418 So. 2d 553, 559 (La. 1982). Contract interpretation centers on the parties' intent. See LA. CIV. CODE ANN. art. 2045. But the text is the first and best evidence of that intent. See id. art. 2046. Further, Louisiana law disfavors interpretations that render words or phrases superfluous, and a court should read each term in light of the contract as a whole. Lobell v. Rosenberg , 186 So. 3d 83, 89 (La. 2015).
Next, the standard of review. This court reviews legal issues, including issues of contract interpretation, de novo. World Fuel Servs. Sing. PTE, Ltd. v. Bulk Juliana M/V , 822 F.3d 766, 770 (5th Cir. 2016). But we review the district court's factual findings only for clear error. See Kristensen v. United States , 993 F.3d 363, 367 (5th Cir. 2021). A finding is clearly erroneous if it's not supported by substantial evidence. Ibid.
This case involves two relevant questions. One is a pure question of law: whether HANO's initial breach excused Liberty from any obligation to follow the contract's dispute-resolution procedures. See Parkcrest III , 2020 WL 7060148, at *3. We review it de novo.
The other is a pure question of fact: whether HANO refused to acknowledge its own termination of Liberty. See id. at *3–4. We review it for clear error.
We now consider the merits. We first explain (A) that Liberty breached the contract's dispute-resolution procedures. Then we hold (B) this breach was unexcused. Finally, we conclude (C) Liberty is entitled to no attorney's fees. For that reason, we need not address the parties' other contentions, including their dispute about the scope of the fee-shifting clause.
In this section, we hold that Liberty breached the dispute-resolution requirements of Clauses 31 and 34 in the HANO Contract. We begin by (1) laying out Clause 31's requirements and explaining Liberty's failure to comply with them. Then we (2) do the same with Clause 34.
Clause 31, entitled "Disputes," starts by giving the word "claim" a broad definition. Clause 31(a) explains that " ‘[c]laim,’ as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract." It goes on to distinguish between "[a] claim arising under the contract" and "a claim relating to the contract" and spells out certain exclusions not relevant here.
Clauses 31(b) and (c) are the crucial pair—they directly impose the obligations Liberty violated. The former requires, with exceptions not relevant here, that "all disputes arising under or relating to this contract, including any claims for damages for the alleged breach thereof which are not disposed of by agreement, shall be resolved under" Clause 31. Clause 31(c) requires that all "claims by the Contractor" (here, that means Liberty) be "made in writing and submitted to [HANO's] Contracting Officer for a written decision." Submitted claims "shall be subject to a written decision by the Contracting Officer." Clause 31(d) imposes a reciprocal requirement on HANO: It requires HANO's Contracting Officer to "decide the claim or notify [Liberty] of the date by which the decision will be made" within sixty days of receiving the claim.
Clauses 31(e) and (f) give teeth to the Contracting Officer's claim-resolution power. The former makes the decision of HANO's Contracting Officer "final unless" Liberty either (1) appeals in writing to HANO itself, (2) seeks mediation or arbitration, or (3) "files suit in a court of competent jurisdiction." And 31(f) sums up by requiring Liberty to "comply with any decision of the Contracting Officer" and to "proceed diligently with [the] performance of this contract" while a claim is pending resolution.
Liberty breached Clause 31(c). Liberty was obligated to bring its breach claim to HANO's Contracting Officer "in writing ... for a written decision." Instead, Liberty brought its claim directly to the district court by moving to intervene and filing its complaint-in-intervention.
Filing a complaint in court does not amount to submitting the claim to HANO's Contracting Officer for a "written decision" by that officer. The plain text makes that clear. And context bolsters this conclusion: 31(e) makes the Contracting Officer's decision "final unless ," among other things, Liberty takes HANO to court. If Clause 31 were compatible with Liberty taking HANO to court first, that finality provision would be superfluous. See Lobell , 186 So. 3d at 89 (). We therefore hold that Liberty...
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