Southern Constructors Group, Inc. v. Dynalectric Co.
| Decision Date | 27 September 1993 |
| Docket Number | No. 93-3252,93-3252 |
| Citation | 2 F.3d 606 |
| Parties | SOUTHERN CONSTRUCTORS GROUP, INC., Plaintiff-Appellant, v. DYNALECTRIC COMPANY, Defendant-Third Party Plaintiff-Appellee, v. Allen R. BOUDREAUX, Third Party Defendant-Appellant. Summary Calendar. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Henry D.H. Olinde, Jr., Baton Rouge, LA, for appellant.
Howard Earl Sinor, Jr., Thomas A. Casey, Jr., Jones Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, Joni M. Parent, Metairie, LA, for appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before: JOLLY, WIENER, and EMILIO M. GARZA, Circuit Judges.
This case illustrates the preclusive consequences flowing from failure to provide proper notice of a possible theory of recovery. Plaintiff-Appellant Southern Constructors Group, Inc. ("Southern") sued Defendant-Appellee Dynalectric Company under various claims that were all predicated on the existence of a contract. The case was eventually submitted to arbitration. After receiving notice that the arbitration panel had failed to find a contract, Southern attempted to switch to a quasi-contract theory of recovery grounded in quantum meruit. The district court held that Southern had waived these claims by failing to include them within any of its original or amended complaints or even in the pretrial order. Southern appeals this conclusion. Southern also appeals the district court's refusal to grant it leave to amend its complaint to add the quasi-contract claim. Concluding that the district court properly found waiver and did not abuse its discretion in refusing to allow amendment of the complaint to include the waived claims, we affirm.
This case arises out of events following the bankruptcy of MMR Holding Company, Inc. ("MMR"), a large national electrical and mechanical contractor. MMR's bankruptcy led to default on all of its bonded work, which in turn placed responsibility for completion of this work on MMR's surety, Aetna Casualty and Surety Company ("Aetna"). Allen R. Boudreaux, a former vice-president of MMR and owner and president of Southern, contacted Dynalectric about acquiring the contracts for completing all of MMR's electrical work from Aetna. What transpired next is the subject matter of the present suit. Boudreaux claims that his expertise and connections led to the awarding of approximately $120 million of completion contracts to Dynalectric, and that Southern and Dynalectric entered into an agreement to split the profits of these contracts 80% to Dynalectric and 20% to Southern. Disputing that version of the facts, Dynalectric claims that it broke off negotiations with Southern before a contract was formed because it had learned that several of Boudreaux's representations were inaccurate and that Southern was merely a shell company without any track record or employees.
Southern brought suit against Dynalectric in August of 1990. In the second amended complaint, the operative one for this litigation, Southern alleged that Dynalectric breached its contractual and fiduciary duties, and engaged in unfair trade practices and fraud. Southern's claims included the standard prayer that it be awarded "any other just and equitable relief this Court may deem appropriate." All of the claims were apparently predicated on proof of the existence of a contract between Southern and Dynalectric. 1 When extensive discovery was complete it became clear that the existence of the contract turned on the enforceability of a draft agreement containing an arbitration provision. Thus Southern faced the prospect of submitting to two separate proceedings--a jury trial to determine the existence of a contract; and then, only if a contract were found, an arbitration proceeding to determine whether damages were due under that contract.
Instead of incurring the costs and delays of both a trial and an arbitration proceeding, Southern and Dynalectric agreed to submit all issues in this dispute to arbitration. 2 The agreement to arbitrate provided, inter alia, that an earlier pretrial order confected by Southern and Dynalectric would control the arbitration "to the extent practicable," and that the first stage of the arbitration would consider only whether a contract existed. If no contract were found the arbitration would be over and either party could seek to confirm or appeal the decision of the arbitration panel. Only if a contract were found to exist would the arbitration proceed to the second stage, determining whether and to whom damages were owed under the various contractual claims.
The arbitration panel conducted four days of formal hearings at which the parties presented numerous witnesses, depositions, and exhibits. In its initial decision the majority of the arbitration panel found that no contract existed between Southern and Dynalectric. Only after it learned of this decision did Southern raise the issue of its entitlement to recover under a quasi-contract theory. Southern raised that issue by filing a Motion to Reconsider with the arbitration panel. The majority of the panel concluded that this motion raised issues beyond the scope of the panel's authority and accordingly refused to reconsider the decision. 3 Dynalectric filed a Southern filed a timely motion with the district court to reconsider its decision confirming the arbitration award. In its motion Southern contended that the district court should hear the quasi-contract issues because the arbitration panel refused to resolve those claims. The district court reviewed the amended complaint and pretrial order, but concluded that Southern had waived the quasi-contract claims by failing to raise them in a timely manner. The district court subsequently entered judgment for Dynalectric confirming the arbitration award.
Motion to Confirm the Arbitration Award, which was granted by the district court.
After entry of judgement Southern filed a timely motion pursuant to FED.R.CIV.P. 59(e) to vacate the judgment and to grant leave to Southern to file a third amended complaint under FED.R.CIV.P. 15. The third amended complaint would have added Boudreaux as a party plaintiff and would have included quasi-contractual claims. The district court denied this motion concluding that: 1) it was correct in finding that Southern had waived the quasi-contract claims by failing to raise them until after it lost its case at arbitration; and 2) granting the motion would be unfairly prejudicial to Dynalectric in subjecting it to renewed litigation when Dynalectric had a reasonable and justifiable expectation that the arbitration had conclusively resolved its dispute with Southern. Southern timely appealed.
Southern advances two arguments to challenge the district court's entry of judgment and refusal to allow Southern to amend its complaint. First, Southern argues that the district court erred when it found that the quasi-contract claims had been waived. In short, Southern argues that the claims were implicitly included (and thus not waived) within the relevant pleadings. Second, Southern contends that the district court abused its discretion in refusing to grant Southern leave to amend its complaint to add the quasi-contract claims. We analyze each of these arguments in turn.
Southern argues that its claims in quasi-contract were included within the second amended complaint because this complaint contained allegations of facts that would lead to recovery under this theory, coupled with a prayer for relief that included a request for "any other just and equitable relief this Court may deem appropriate." According to Southern, this entitles it to relief under FED.R.CIV.P. 54(c), which provides in pertinent part that "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings." 4
Southern's argument is based on a misapprehension of how notice pleading operates under the federal rules. Under one version of this argument Southern is positing that quasi-contract is merely a form of relief, such as equitable relief in an Age Discrimination in Employment Act claim or a declaratory judgment in a damages action. 5 Such analogies are clearly inapposite. At least in Louisiana, 6 quasi-contract is one of four general categories of obligations: contract; delict Southern, under another version of its argument, urges that a party may be entitled to recovery under any legal theory that would fit allegations of fact contained in the operative pleadings. Southern contends that this rule would apply even after extensive discovery and a pretrial order have been used to narrow the facts and relevant legal issues for trial, or, as in the present case, arbitration.
(tort); quasi-contract; and quasi-delict. 7 Each imposes liability based on a party's proof that he or she has satisfied the requisite factual elements. 8 In short, quasi-contract is a doctrine used to impose liability. Classification of quasi-contract as a liability doctrine forecloses this appeal to Rule 54(c), for as we held in Flannery v. Carroll, 9 Rule 54(c) is limited to allowing a court "to order appropriate relief; it does not permit [a] court to impose liability where none has been established." 10
Adoption of Southern's blind-hog-occasionally-finds-an-acorn approach would play havoc with trial procedure and would negate the narrowing and winnowing process that occurs under the present federal rules. 11 Although we have been willing to construe pleadings liberally at the pretrial stage, thus allowing a party to engage in discovery to develop theories of liability, 12 we have never construed notice pleading as broadly as Southern wishes. Put simply, Southern asks us to grant carte blanche to a litigant to throw facts at the court, while...
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