State ex rel. Guste v. Simoni, Heck and Associates

• Decision Date: 23 February 1976
• Docket Number: No. 56673,56673
• Citation: 331 So.2d 478
• Parties: The STATE of Louisiana ex rel. William J. GUSTE, Jr., Attorney General, Plaintiff-Appellant-Relator, v. SIMONI, HECK & ASSOCIATES et al., Defendants-Appellees-Respondents.
• Court: Louisiana Supreme Court

Page 478

331 So.2d 478

The STATE of Louisiana ex rel. William J. GUSTE, Jr. Attorney General, Plaintiff-Appellant-Relator, v. SIMONI, HECK & ASSOCIATES et al., Defendants-Appellees-Respondents.

No. 56673.

Supreme Court of Louisiana.

Feb. 23, 1976.

Rehearing Denied March 26, 1976.

Dissenting Opinion May 14, 1976.

William J. Guste, Jr., Atty. Gen., Warren E. Mouledoux, First Asst. Atty. Gen., Robert E. Redmann, Asst. Atty. Gen., for plaintiff-applicant.

Carlos G. Spaht, Paul H. Spaht, Kantrow, Spaht, Weaver & Walter, Baton Rouge, for defendants-respondents.

TATE, Justice.

On application of the State of Louisiana, we granted certiorari, La., 320 So.2d 547 (1975), to review the dismissal of its claim against the defendants, an architectural firm ('Simoni') and a consulting engineer (Burkhalter). The state seeks damages from them for their defective performance in connection with construction of a state office building. The damages are alleged to result from defects in design and from improper approval of change orders from specifications which resulted in specified building defects. The cost to repair them is here sought.

The court of appeal affirmed the district court's dismissal of the suit. 314 So.2d 477 (La.App.1st Cir. 1975). See also an earlier intermediate decision in the matter. 297 So.2d 918 (La.App.1st Cir. 1974).

The issues before us concern:

(1) Does the state itself have a right to assert against the defendants a cause of action to recover for the damages resulting from their delinquent performance of their contractual duties in connection with the construction of the office building for the state, when the contract was with a state agency and not the state itself?

(2) If so, is the action prescribed because this suit was filed shortly after the three-year delay for actions against 'the contractor on the contract' by La.R.S. 38:2189 (1962)? (That is, for purposes of this short prescriptive period, is an architect or engineer considered a 'contractor' for the purposes of that special prescription statute?)

Facts

In 1966, the Louisiana Office Building Corporation (LOBC), a state agency, entered into a written contract with a general contractor (Pittman) to construct for six million dollars a giant office building for the state department of education. On February 19, 1967, the LOBC filed a notice of acceptance of substantial completion of the building (which registry commences the three-year prescription for purposes of La.R.S. 38:2189).

On November 7, 1973, more than three years later, the state and the LOBC filed this suit against Pittman, Simoni, Burkhalter, and several sub-contractors to recover for various later-discovered defects in the construction of the building. The only claim presently before us is that against Simoni and Burkhalter arising out of their defective design and improper approval of change orders, by reason of which it is alleged certain specified defects in the building resulted. Damages are sought in the amount necessary to repair them.

The LOBC contracted with Simoni, an architectural firm, to plan and design the building. Burkhalter was engaged by Simoni as a consulting engineer to design the plumbing, electrical, air conditioning, and heating systems in the building.

The LOBC is a public corporation, cf. La.R.S. 44:8 (1966), organized and operating exclusively for the purpose of acquiring or operating public buildings for the state. All buildings constructed or otherwise acquired by the corporation are for the use and benefit of the state, with title to the land and building to vest automatically in the state upon the payment of all indebtedness incurred in connection with its acquisition and construction.

In the present case, the state and LOBC originally brought suit jointly as plaintiffs, and both appealed from an adverse judgment. However, the state alone applied for certiorari to this court, which timely application was granted.

(1) Exception Urging No Right and No Cause of Action

In support of their exceptions pleading no right and no cause of action, the defendants contend (a) that the LOBC, not the state, has the only real and actual interest, La.C.Civ.P. art. 681, to bring this suit against the architects and engineer resulting from defective performance of the building construction contract between the LOBC and Pittman; and (b) in any event, the state has no cause of action against the engineer Burkhalter for his deficient performance of engineering work, because his contract was with Simoni, not with the LOBC or the state.

Contention (1)(a):

The state itself has no right or cause of action; only the LOBC can assert same

The state building was constructed with the intention that the state be the ultimate owner of it. The objective of the contract was to build a building for the state through the intermediary agency of the LOBC. As ultimate owner, the state has a cause of action which it may enforce, and it has an interest (i.e. a right of action) in enforcing it under the facts stated above.

In the first place, the state may be regarded as a third-party beneficiary in whose favor a stipulation pour autrui was made by a contract with the specified intention of so benefiting it. La.C.C. art. 1890. ¹ Additionally, we see no reason why the state may not, even before the contemplated transfer of title of the building to it, assert causes of action relating to its defective construction of the building. See La.C.C. art. 2042. ²

When, as here, both the state agency and the state join as party plaintiffs in the suit, we do not reach issues of multiplicity of action or nonjoinder of necessary parties which might result had either alone brought suit.

Further, the circumstance that the state agency did not itself apply for certiorari does not bar the state from continuing the action on its own behalf: Even if the state were a third party to the contract between the LOBC and Simoni (instead of a third-party beneficiary directly entitled to enforce it), its interests are so closely related to or connected with the object of the suit not only to entitle it to join it as a party before judgment, La.C.Civ.P. art. 1091, but also, even after judgment, to appeal it as an interested third party, La.C.Civ.P. art. 2086 (provided that such is done timely, as now).

We do not have before us a situation where issues of res judicata or estoppel might arise because a judgment rejecting the demands against the defendants became final as against the LOBC because no interested party timely sought review of it.

The defendants rely on decisions which indicate that a state agency, not the state itself, is the proper party to sue upon a cause of action in favor of the state agency. State v. Doucet, 203 La. 743, 14 So.2d 622 (1943); Saint v. Allen, 172 La. 350, 134 So. 246 (1931); State v. Standard Oil Co., 164 La. 334, 113 So. 867 (1927); State v. Tensas Delta Land Co., 126 La. 59, 52 So. 216 (1910). The present situation is distinguishable from those therein concerned, if only in that here, not only the state agency, but the state itself (as ultimate owner of the building), has a cause of action arising out of defective construction of a building for it by a state agency.

Contention (1)(b):

Neither the state nor the LOBC has a right or cause of action against the engineer Burkhalter, since there is no privity of contract between him and either of them

With regard to the second contention, Burkhalter entered into his contractual agreement with Simoni to perform engineering services in connection with the construction of the building. While he did not contract directly with the LOBC or the state, his performance under his contract with Simoni was expressly intended to benefit the owner of the building to be constructed, i.e., the LOBC and the state. The owner is thus entitled to enforce the obligation intended for his advantage. La.Civ.C. arts. 1890 ³ and 1763 ⁴; Aubry and Rau, Obligations, Section 343B (translated by Yiannopoulos at 1 Civil Law Translations 320 (1965)); Planiol Civil Law Treatise, Vol. 2, Nos. 1260, 1261 (LSLI Translation, 1959).

The defendant Burkhalter relies on decisions to the effect that an action upon a contract cannot be maintained against a party to a contract by a person who is not privy thereto. Lumber Products, Inc. v. Hiriart, 255 So.2d 783 (La.App.4th Cir. 1971); Chemical Cleaning v. Brindell-Bruno, Inc., 186 So.2d 389 (La.App.4th Cir. 1966). The decisions involved an attempt to enforce an obligation against a party who did not himself owe it--such as if Burkhalter had sought to collect his fee from the state rather than from the architect who had contracted to pay it.

The present situation is to be distinguished from those involved in the cited cases. Here the engineer defendant owed an obligation concurrently both to the architects Simoni, with whom he had a contract, and also to the LOBC and the state, for whose benefit and advantage the contract between Simoni and himself had been made.

The principle involved in the cited cases is that expressed by Article 65, page 270, of our Civil Code of 1808, ⁵ which was taken from Article 1165 ⁶ of the French Civil Code (1804), to the effect that agreements do not operate against those who are not parties thereto: but the principle expressly recognizes that such an agreement may operate in favor of third persons to it when a stipulation in the contract has been adopted for their intended advantage. Although the 1808 article was suppressed in our Civil Code of 1825, but expressly (see 1 Louisiana Archives, Project Civil Code of 1825, p. 263) only because its substance was believed to be incorporated in the provision now found as Article 1889 ⁷ of our 1870 code. The principle is thus still incorporated in our civil code. Delaney v. A. Rochereau & Co., 34 La.Ann. 1123, 1130 (1882).

Decisions of our jurisprudence hold that a third person not a party to a contract cannot sue for damages for its...