84 Lumber Company v. F.H. Paschen, S.N. Nielsen & Associates, LLC et al
ORDER AND REASONS - the Court GRANTS Fidelity's motion for partial summary judgment and DISMISSES Paschen's claims against Fidelity that arise out of the breach of Paschen's subcontract with J & A. The Court also GRANTS Fidelity's motion for judgment on the pleadings and DISMISSES Paschen's claim against Fidelity arising out of 84 Lumber's breach of its subcontract with J & A.. Signed by Judge Sarah S. Vance on 2/3/17. (jjs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
84 LUMBER COMPANY
F.H. PASCHEN, S.N. NIELSEN &
ASSOCIATES, LLC, ET AL.
SECTION “R” (5)
ORDER AND REASONS
Before the Court is Third-Party Defendant Fidelity and Deposit
Company of Maryland’s (Fidelity) motion for partial summary judgment. 1
Also before the Court is Fidelity’s motion for partial judgment on the
pleadings.2 For the following reasons, the Court GRANTS both motions.
This case arises out of two school construction projects in New Orleans,
Louisiana, the Mildred Osborne Project and the South Plaquemines Project.3
Third-party plaintiff F.H. Paschen, S.N. Nielsen & Associates, LLC (Paschen)
was the general contractor on both projects. Paschen subcontracted part of
the projects to defendant J & A Construction Management Resources
R. Doc. 185.
R. Doc. 186.
R. Doc. 70.
Company, Inc. (J & A), and J & A subcontracted its obligations to plaintiff 84
Lumber Company (the sub-subcontracts). Fidelity issued two performance
bonds for each of the sub-subcontracts between J & A and 84 Lumber. 4 The
bonds, dated October 4, 2010, and October 22, 2010, guaranteed 84
Lumber’s performance under the sub-subcontracts with J & A. 5
performance bonds clearly on their face identify 84 Lumber as the Principal,
J & A as the Obligee, and Fidelity as the Surety. 6 On October 7, 2010, and
October 22, 2010, respectively, Fidelity added riders to both performance
bonds, which amended the bonds by naming Paschen as a dual obligee. 7
Both riders stated that “[e]xcept as herein modified, said Performance Bonds
shall be and remain in full force and effect.”8
On July 5, 2012, 84 Lumber sued Paschen, Fidelity, and the other
surety companies, alleging that it was not paid in full for work performed
under its Master Service Agreement with J & A.9 It also alleged that it was
entitled to payment for materials and for additional work performed outside
of the Master Service Agreement. Paschen answered 84 Lumber’s complaint
R. Doc. 185-9 at 1; R. Doc. 185-10 at 1. Continental Casualty
Company and Safeco Insurance Company of America were also sureties.
R. Doc. 185-9 at 4; R. Doc. 185-10 at 2.
R. Doc. 1.
and added J & A as a third-party defendant. 10 Paschen’s answer also asserted
counterclaims against Fidelity, alleging that the breach of contract by 84
Lumber and J & A made Fidelity liable to Paschen for those damages. 11
The case was stayed for nearly three years while the parties attempted
to resolve their claims through arbitration. 12 On January 13, 2016, this case
was reassigned from Judge Berrigan’s chambers to this Court for all further
proceedings.13 On May 5, 2016, the Court granted 84 Lumber’s motion to lift
the stay in this case and to dismiss J & A’s claims against 84 Lumber for
failure to prosecute. 14
With the case reopened, Fidelity now moves for summary judgment
and judgment on the pleadings on Paschen’s claims. Paschen filed an
opposition to both motions, 15 and Fidelity filed replies for both. 16
R. Doc. 25.
Id. at 6-7 ¶¶ 31-32.
For a history of the failed arbitration process, see R. Doc. 151 at
R. Doc. 144.
R. Doc. 151. J & A’s claims were also dismissed against Maggie’s
R. Doc. 192; R. Doc. 193.
R. Doc. 197; R. Doc. 199.
Summary judgment is warranted when “the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994). When assessing whether a dispute as to any material fact
exists, the Court considers “all of the evidence in the record but refrains from
making credibility determinations or weighing the evidence.” Delta & Pine
Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir.
2008). All reasonable inferences are drawn in favor of the nonmoving party,
but “unsupported allegations or affidavits setting forth ‘ultimate or
conclusory facts and conclusions of law’ are insufficient to either support or
defeat a motion for summary judgment.” Galindo v. Precision Am. Corp.,
754 F.2d 1212, 1216 (5th Cir. 1985) (quoting Wright & Miller, Fed. Prac. and
Proc. Civ.2d § 2738 (1983)).
If the dispositive issue is one on which the moving party will bear the
burden of proof at trial, the moving party “must come forward with evidence
which would entitle it to a directed verdict if the evidence went
uncontroverted at trial.” Int’l Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257,
1264-65 (5th Cir. 1991) (internal quotation omitted). The nonmoving party
can then defeat the motion by either countering with sufficient evidence of
its own, or “showing that the moving party’s evidence is so sheer that it may
not persuade the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party will bear
the burden of proof at trial, the moving party may satisfy its burden by
merely pointing out that the evidence in the record is insufficient with
respect to an essential element of the nonmoving party’s claim. See Celotex,
477 U.S. at 325. The burden then shifts to the nonmoving party, who must,
by submitting or referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest upon the
pleadings, but must identify specific facts that establish a genuine issue for
trial. Id. at 325; see also Little, 37 F.3d at 1075 (“Rule 56 ‘mandates the entry
of summary judgment, after adequate time for discovery and upon motion,
against a party who fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial.’”) (quoting Celotex, 477 U.S. at 332).
Judgment on the Pleadings
A motion for judgment on the pleadings under Federal Rule of Civil
Procedure 12(c) is appropriate if the matter can be adjudicated by deciding
questions of law rather than factual disputes. Brittan Commc’ns Int’l Corp.
v. Sw. Bell Tel. Co., 313 F.3d 899, 904 (5th Cir. 2002). It is subject to the
same standard as a motion to dismiss under Rule 12(b)(6). Doe v. MySpace,
Inc., 528 F.3d 413, 418 (5th Cir. 2008). To survive a Rule 12(b)(6) motion to
dismiss, the plaintiff must plead enough facts “to state a claim to relief that
is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). A claim is facially plausible when the plaintiff pleads facts that allow
the court to “draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A
court must accept all well-pleaded facts as true and must draw all reasonable
inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d
228, 239 (5th Cir. 2009). But the Court is not bound to accept as true legal
conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
A legally sufficient complaint must establish more than a “sheer
possibility” that plaintiff’s claim is true. Id. It need not contain detailed
factual allegations, but it must go beyond labels, legal conclusions, or
formulaic recitations of the elements of a cause of action. Id. In other words,
the face of the complaint must contain enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of each element of
the plaintiff’s claim. Lormand, 565 F.3d at 257. If there are insufficient
factual allegations to raise a right to relief above the speculative level, or if it
is apparent from the face of the complaint that there is an insuperable bar to
relief, the claim must be dismissed. Twombly, 550 U.S. at 555.
Paschen asserts two claims against Fidelity, both arising out of
Fidelity’s performance bonds guaranteeing 84 Lumber’s performance in the
sub-subcontracts between J & A and 84 Lumber. The first claim seeks
damages for the failure of both J & A and 84 Lumber to perform under the
“J & A Subcontracts.” The second claim specifically seeks to recover damages
that Paschen is allegedly entitled to recover because of its status as a dual
obligee on the performance bonds issued by Fidelity.17 Fidelity moves for
summary judgment on Paschen’s first claim and judgment on the pleadings
on Paschen’s second claim. Each will be addressed in turn.
Id. at 7 ¶ 32.
Paschen’s first claim against Fidelity asserts damages arising out of the
breach by 84 Lumber and J &A of the “J & A Subcontracts,” which Paschen
itself defines as the contract between Paschen and J & A. 18 Fidelity argues it
is entitled to summary judgment as a matter of law on this claim because it
cannot be held liable for 84 Lumber’s breach of the “J & A Subcontracts” as
84 Lumber is not a party to that subcontract, nor did Fidelity bond that
subcontract. 19 Further, Fidelity argues that it cannot be held liable for J &
A’s breach of any contract because Fidelity guaranteed only 84 Lumber’s, not
J & A’s, performance. 20 In response, Paschen contends that one of the
performance bonds is ambiguous as to which contract the bond covers, and
therefore the intention of the parties must determine the scope of the
performance bonds. 21
1. Scope of the Performance Bonds
Fidelity asserts, and Paschen does not dispute, that the performance
bonds at issue are conventional bonds, governed by Louisiana’s general
Id. at 1 ¶ 18.
R. Doc. 185-1 at 2.
R. Doc. 192 at 1-2. Paschen also argues that summary judgment
is inappropriate as to Paschen’s claims arising out of its status as a dual
obligee. This argument will be discussed in the section addressing Fidelity’s
judgment on the pleadings.
suretyship law. See T & R Dragline Serv., Inc. v. CNA Ins. Co., 796 F.2d 133,
134-35 (5th Cir. 1986) (citing Elliot Construction Co., Inc. v. United States
Fidelity & Guaranty Co., 424 So. 2d 1202, 1204 (La. App. 1 Cir. 1982)).
Under Louisiana law, “suretyship is an accessory contract by which a person
binds himself to a creditor to fulfill the obligation of another upon the failure
of the latter to do so.” La. Civ. Code art. 3035. Suretyship contracts must be
express and in writing, id. art. 3038, and the suretyship “may be qualified,
conditioned, or limited in any lawful manner,” id. art. 3040. Suretyship will
not be presumed, and the scope of the suretyship will be limited to the
express terms of the contract. See First Nat. Bank of Crowley v. Green
Garden Processing Co., Inc., 387 So. 2d 1070, 1072-73 (La. 1980)
(recognizing that suretyship contracts can be limited to their express terms);
Shelter Prod., Inc. v. Am. Constr. Hotel Corp., 655 F. App’x 1012, 1015 n.4
(5th Cir. 2016) (per curiam).
Here, the suretyship was created by the performance bonds issued by
Fidelity. Both bonds state:
KNOW ALL MEN BY THESE PRESENTS:
That 84 Lumber, . . . as Principal, . . . , and Fidelity and Deposit
Company of Maryland . . . as Surety, . . . are held and firmly
bound unto J & A Construction Management Resources Co. Inc.
. . . as Obligee, . . . , in the amount of
($1,400,000.00/$5,879,950.00), for the payment of which
Principal and Surety bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally,
firmly by these presents.
WHEREAS, Principal has by written agreement dated
(10/01/2010 / 10/20/2010) entered into a subcontract with
Obligee for (Mildred Osborn School/South Plaquemines High
School) in accordance with drawings and specifications prepared
by (Fauntelory & Latham Architects/Verges Rome Architects)
which subcontract is by reference made a part hereof, and is
hereinafter referred to as the subcontract.
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION
IS SUCH, That, if Principal shall promptly and faithfully perform
said subcontract, then this obligation shall be null and void;
otherwise it shall remain in full force and effect. 22
A plain reading of both performance bonds reveals that Fidelity guaranteed
84 Lumber’s performance under both sub-subcontracts between J & A and
84 Lumber, and only 84 Lumber’s performance. Neither performance bond
makes a reference to any contract to which 84 Lumber is not a party, or to
any other subcontract for that matter.
R. Doc. 185-9 at 1 (emphasis added); R. Doc. 185-10 at 1
(emphasis added). The parenthetical entries refer to the Mildred Osborne
contract and the South Plaquemines contract, respectively.
Despite the clear and unambiguous language of the performance
bonds, Paschen argues that the scope of the bonded obligations under the
bonds is ambiguous because both bonds “provide only a general description
of the source of the bonded obligations,” and because one of the bonds lists
an incorrect date for the incorporated subcontract.23 Paschen argues that
the Court must look to extrinsic evidence to resolve the ambiguities. Neither
of Paschen’s arguments on ambiguity is persuasive.
Surety contracts are governed by the same rules of interpretation as
contracts in general. Ferrell v. S. Cent. Bell Tel. Co., 403 So. 2d 698, 700 (La.
1981). In Louisiana, the issue of the ambiguity, vel non, of a contract is a
legal question. Doré Energy Corp. v. Prospective Inv. & Trading Co., Ltd.,
570 F.3d 219, 225 (5th Cir. 2009). If the contract is not ambiguous, then
interpreting it is also a legal issue for the court. Id. A contract is considered
ambiguous on the issue of intent when it lacks a provision bearing on that
issue, the terms of a written contract are susceptible to more than one
interpretation, there is uncertainty or ambiguity as to its provisions, or the
intent of the parties cannot be ascertained from the language employed.
Campbell v. Melton, 817 So. 2d 69, 75 (La. 2002).
R. Doc. 193.
First, that the bonds generally describe the source of the bonded
obligation does not suggest ambiguity, and Paschen cites no caselaw
implying that it does or that there is a specificity requirement for
conventional bonds. But even if there were, the bonds clearly identify 84
Lumber as the Principal and J & A as the Obligee, clearly identify the contract
between the Principal (84 Lumber) and the Obligee (J & A) as the bonded
contract, and clearly guarantee the performance of the Principal (84
Lumber). None of that is ambiguous, and the scope of the obligation is
clearly limited to 84 Lumber’s performance of its sub-subcontract with J &
Second, Paschen attempts to create ambiguity by pointing out that the
performance bond for the South Plaquemines project refers to and
incorporates a subcontract between J & A and 84 Lumber dated October 20,
2010.24 Paschen notes that there is no contract in the record dated October
20, 2010, and the contract attached to Fidelity’s motion for summary
judgment purporting to be the sub-subcontract between J & A and 84
Lumber is actually dated December 3, 2010. 25 But that the date referred to
R. Doc. 185-10 at 1. Because the date on the Mildred Osborne
performance bond matches the date on the Mildred Osborn sub-subcontract
between J & A and 84 Lumber, Paschen does not argue that the Mildred
Osborne performance bond is ambiguous because of an erroneous date.
R. Doc. 185-8.
in the performance bond may be a typographical error does not create
ambiguity as which contract is bonded or as to whose performance is
guaranteed by Fidelity’s bond, especially since the bond clearly identifies the
parties to the contract and that the bond guarantees the performance of the
Principal 84 Lumber. In Louisiana, each provision in a contract must be
interpreted in light of the entire contract as a whole. Clovelly Oil Co., LLC v.
Midstates Petroleum Co., LLC, 112 So. 3d 187, 192 (La. 2013). And as a
whole, the performance bond is not ambiguous as to which contract is
bonded and whose performance is guaranteed. Thus, because the bond is
clear and unambiguous, the Court will not consider parol evidence to vary
the terms of the performance bonds. See La. Civ. Code art. 1848; McCarroll
v. McCarroll, 701 So. 2d 1280, 1286 (La. 1997) (noting that parol evidence is
inadmissible to vary the terms of an unambiguous contract).
Further, even if the Court agreed that the erroneous date meant that
the performance bond was ambiguous to the point where parol evidence
could be considered, the evidence in the record does not show a genuine issue
of material fact as to which contract is bonded or whose performance is
guaranteed by the performance bond. The performance bond clearly refers
to an October 20, 2010 contract between J & A and 84 Lumber for the South
Plaquemines High School. 26 The bond also clearly limits its obligations to
84 Lumber’s obligations under the subcontract between 84 Lumber and J &
A. 27 Fidelity has submitted a December 3, 2010 contract between J & A and
84 Lumber for the South Plaquemines High School, establishing 84
Lumber’s obligations.28 Paschen has submitted no evidence whatsoever
indicating that the performance bonds bonded a contract other than the one
between J & A and 84 Lumber or that the bonds guaranteed the performance
of any party besides 84 Lumber. Therefore, even if the Court found there is
an erroneous date on the South Plaquemines performance bond, Paschen
has failed to create a genuine issue of material fact as to the scope of the
guarantee of the performance bond. See Archie v. Acceptance Indem. Ins.
Co., 507 F. App’x 451, 454 (5th Cir. 2013) (per curiam) (“[A]ny ambiguity
introduced into the policy by the typographical error in the second part of
the provision does not create a genuine issue of material fact as to whether
the insurance policy exclusion applied.”).
Because the Court finds that Fidelity’s obligations under the bonds are
clear and unambiguous, Fidelity cannot be held liable for a breach of the
subcontract between Paschen and J & A, nor can Fidelity be held liable for
R. Doc. 185-10 at 1.
R. Doc. 185-8.
any breach committed by J & A. Therefore, Fidelity is entitled to summary
judgment as a matter of law as to Paschen’s claims arising out of J & A’s
breach of its subcontract with Paschen. 29
Judgment on the Pleadings
Paschen’s second claim against Fidelity is unrelated to any breach by J
& A and to the subcontract between Paschen and J & A. Instead, Paschen’s
second claim alleges that Paschen is entitled, as a dual obligee, to recover
from Fidelity damages it sustained from 84 Lumber’s breach.30 Fidelity
moves for judgment on the pleadings on this claim, noting that the
performance bonds clearly set out certain conditions precedent to Fidelity’s
obligations.31 Fidelity argues that Paschen’s third-party complaint does not
adequately plead the satisfaction of the conditions precedent as required
under Rule 9(c) of the Federal Rules of Civil Procedure and therefore should
Fidelity’s motion for summary judgment also argues that
Paschen’s status as a dual obligee does not alter the scope of Fidelity’s
bonded obligations. R. Doc. 185-1 at 6. Because Paschen’s response does not
argue that Paschen’s status as a dual obligee alters the scope of Fidelity’s
obligations, the Court need not address it.
R. Doc. 25 at 7 ¶ 32.
R. Doc. 186-1 at 6.
In support, Fidelity points to the text of the performance bonds and the
riders that added Paschen as a dual obligee. The performance bonds both
Whenever Principal shall be, and be declared by Obligee to be
in default under the subcontract, the Obligee having performed
Obligee’s obligations thereunder:
(1) Surety may promptly remedy the default subject to the
provisions of paragraph 3 herein, or;
(2) Obligee after reasonable notice to Surety may, or Surety
upon demand of Obligee may arrange for the performance of
Principal’s obligations under the subcontract subject to the
provisions of paragraph 3 herein;
(3) The balance of the subcontract price . . . shall be credited
against the reasonable cost of completing performance of the
subcontract. If completed by the Obligee, and the reasonable
cost exceeds the balance of the subcontract price, the Surety shall
pay to the Obligee such excess, but in no event shall the aggregate
liability of the Surety exceed the amount of this bond. 32
Additionally, both riders to the performance bonds state that “the name of
F.H. Paschen SN Nielsen & Associates LLC shall be added to said Bond as a
Named obligee” and that “[e]xcept as herein modified, said Performance
Bond shall be and remain in full force and effect.”33
In response, Paschen argues first that Fidelity’s motion improperly
relies on matters outside the pleadings and therefore must be considered as
R. Doc. 185-9 at 1 (emphasis added); R. Doc. 185-10 at 1
R. Doc. 185-9 at 4; R. Doc. 185-10 at 2.
a motion for summary judgment. 34 Further, Paschen argues that even if the
Court does not convert the 12(c) motion into a motion for summary
judgment, Paschen’s third-party complaint, liberally construed, satisfies the
requirements of Rule 9(c).35 Paschen’s arguments will be addressed in turn.
Materials Beyond the Pleadings
Paschen does not specifically identify which documents Fidelity is
relying on that were not attached to Paschen’s pleadings. But Fidelity does
quote from the performance bonds and riders in its motion, and these
documents were attached to Fidelity’s motion. Neither the performance
bonds nor the riders were attached to Paschen’s third-party complaint.
In considering a motion to dismiss for failure to state a claim, a court
must typically limit itself to the contents of the pleadings, including their
attachments. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498
(5th Cir. 2000); see also Great Plains Trust Co. v. Morgan Stanley Dean
Witter & Co., 313 F.3d 305, 312-13 (5th Cir. 2002) (discussing standard that
governs the materials district court may properly consider in deciding a Rule
12(c) motion). Federal Rule of Civil Procedure 12(d) establishes that “[i]f, on
a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are
R. Doc. 193 at 1.
Id. at 5-6.
presented to and not excluded by the court, the motion must be treated as
one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d).
Thus, while Paschen is correct that the Court cannot consider matters
outside the pleadings without converting Fidelity’s motion into a motion for
summary judgment, the documents relied on by Fidelity in this motion are
not outside the pleadings. The Fifth Circuit has repeatedly held that a court
may properly consider documents attached to a motion to dismiss if the
documents are referred to in the complaint and central to the plaintiff’s
claim. See, e.g., Collins, 224 F.3d at 498-99; Causey v. Sewell CadillacChevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004); Brand Coupon Network,
L.L.C. v. Catalina Mktg. Corp., 748 F.3d 631, 635 (5th Cir. 2014). Paschen’s
complaint clearly refers to both the performance bonds and the riders that
made Paschen a dual obligee.36 Further, both the bonds and the riders are
central to Paschen’s claims, as Paschen seeks, as dual obligee, to recover
damages from 84 Lumber’s alleged failure to perform—a performance that
Fidelity guaranteed. 37 Because the Court can consider the performance
R. Doc. 25 at 6 ¶ 31 (“Paschen required J & A to furnish Paschen
with a payment and performance bond for each project. Thereafter, 84
Lumber assisted J & A in complying . . . by furnishing to J & A a bond issued
by Fidelity . . . .”); id. (“And at the request of 84 Lumber, [Fidelity] named
Paschen as a dual obligee on the bonds . . . .”).
Id. at 7 ¶ 32 (“Paschen is also entitled to recover from [Fidelity]
pursuant to Paschen’s status as a dual obligee all that Paschen sustained
bonds and riders without converting Fidelity’s motion into a motion for
summary judgment, Paschen’s argument to the contrary is meritless.
Conditions Precedent Under Rule 9(c)
Fidelity contends, and Paschen does not dispute, that there are two
conditions precedent to trigger Fidelity’s obligations and/or liability under
the performance bonds. The conditions are (1) that 84 Lumber be in default
of the bonded sub-subcontract between 84 Lumber and J & A, and (2) that
84 Lumber be declared in default by one of the obligees.
See L & A
Contracting Co. v. So. Concrete Servs., Inc., 17 F.3d 106, 109, 109 n.6 (5th
Cir. 1994) (interpreting identical language in performance bond to impose
same two conditions as above). Additionally, Paschen does not argue that
the riders to the performance bond negated the conditions precedent or
somehow excuse Paschen from compliance.38
Federal Rule of Civil Procedure 9(c) instructs plaintiffs that “[i]n
pleading conditions precedent, it suffices to allege generally that all
conditions precedent have occurred or been performed.” Fed. R. Civ. P. 9(c);
from . . . 84 Lumber’s non-performance and breach of the J & A Subcontracts
under the dual obligee bond.”).
This argument would fail. See Travelers Cas. and Sur. Co. of Am.
v. Univ. Facilities, Inc., No. 10-1682, 2011 WL 1558009, at *4-5 (E.D. La.
Apr. 25, 2011) (holding that party made additional obligee to performance
bond was bound by terms and conditions of bond).
see also Bettes v. Stonewall Ins. Co., 480 F.2d 92, 98 (5th Cir. 1973). Fidelity
argues that Paschen has neither specifically nor generally alleged satisfaction
of the conditions precedent. Paschen’s third-party complaint makes no
general allegation that all conditions precedent have occurred or have been
A review of the complaint, however, reveals that Paschen
pleaded the satisfaction of the first condition. Paschen’s complaint alleges
that “84 Lumber’s performance was substandard, in violation of [84
Lumber’s] Subcontracts with J & A.” 39 Further, Paschen alleges that “as a
result of those defaults by J & A and 84 Lumber,” Paschen incurred
damages.40 Drawing all reasonable inferences in favor of Paschen, this
allegation is sufficient to plead the first condition precedent that 84 Lumber
was in default.
Nevertheless, the satisfaction of the second condition precedent, that
Paschen declare 84 Lumber in default, is not pleaded anywhere on the face
of Paschen’s complaint.
Nor can Paschen conflate its reference to
substandard performance by 84 Lumber with a declaration of default. This
condition precedent requires that Paschen have taken action to declare 84
Lumber in default, which is not alleged.
R. Doc. 25 at 2-3 ¶ 22.
Id. at 3 ¶ 23 (emphasis added).
Because Paschen failed to meet the requirements of Rule 9(c), its claim
against Fidelity must be dismissed. See United States v. Trimble, 86 F.R.D.
435, 437 (S.D. Fla. 1980) (dismissing claim because of failure to allege
performance or occurrence of conditions precedent); Blount v. Kay, No. 14336, 2016 WL 698146, at *5 (S.D. Miss. Feb. 19, 2016) (same); cf. Probado
Techs. Corp. v. Smartnet, Inc., No. 09-349, 2010 WL 2232831, at *8 (S.D.
Tex. June 2, 2010) (denying motion to dismiss because plaintiff’s general
allegations that it performed its contractual obligations satisfied Rule 9(c)).
Conform Pleadings to Evidence
Paschen argues that if the Court determines that it has failed to meet
the requirements of Rule 9(c), it should be afforded to opportunity to
conform its pleadings to the evidence.41 At the outset, the Court notes that
Federal Rule of Civil Procedure 15(b)(2), which allows parties to amend their
pleadings to conform them to the evidence is clearly inapplicable here, as
Rule 15(b) covers amendments “during and after trial.” Fed. R. Civ. P. 15(b);
see also id. (b)(2) (“When an issue not raised by the pleadings is tried by the
parties’ express or implied consent, . . . . A party may move—at any time,
even after judgment—to amend the pleadings to conform them to evidence.”)
Similarly, Paschen’s reliance on Nat G. Harrison
R. Doc. 193 at 6.
Overseas Corp. v. Am. Tug Titan, 516 F. 2d 89, 95-96 (5th Cir.), modified,
520 F.2d 1104 (5th Cir. 1975), is unavailing because Nat G. addressed, posttrial, a claim that not only the parties consented to trying, but was in fact
Furthermore, the liberal standards of Rule 15(a) no longer apply in this
case. The scheduling order in this case set a deadline for amendments of
pleadings, and the deadline of July 11, 2016, has passed. 42 Instead, any
request to amend Paschen’s pleadings would be governed by Rule 16(b)(4),
which states “[a] schedule may be modified only for good cause and with the
judge’s consent.” See S & W Enters., L.L.C. v. SouthTrust Bank of Ala., NA,
315 F.3d 533, 535 (5th Cir. 2003) (noting that Rule “16(b) governs
amendment of pleadings once a scheduling order has been issued by the
The good cause test has four factors, and the party seeking to modify
the scheduling order bears the burden to establish that the test has been met.
Id. at 536. In the context of untimely motions to amend pleadings, the Court
considers “(1) the explanation for the failure to timely move for leave to
amend; (2) the importance of the amendment; (3) potential prejudice in
R. Doc. 154 at 2.
allowing the amendment; and (4) the availability of a continuance to cure
such prejudice.” Id. (internal modifications and quotation marks omitted).
As Paschen incorrectly argued that Rule 15 governed, Paschen has
made no attempt to establish good cause. Therefore, Paschen gives no
explanation whatsoever as to its failure to timely move for leave to amend.
This weighs heavily against Paschen’s request, especially since Paschen filed
its third-party complaint on February 5, 2013, nearly four years ago.43 And
while the amendment is important because Paschen’s claim will fail without
it, this importance is insufficient to overcome Paschen’s lack of explanation
of its failure to timely seek leave to amend. Further, Paschen fails to
demonstrate that its amendment would not cause prejudice to Fidelity. See
Squyres v. Heico Companies, L.L.C., 782 F.3d 224, 238-39 (5th Cir. 2015).
Finally, the availability of a continuance to cure that prejudice is unlikely
given that there are multiple parties to this lawsuit, the suit was originally
filed in 2012, and the trial date is less than three weeks away. Therefore,
Paschen has failed to show good cause and the Court will not allow Paschen
to amend its complaint.
R. Doc. 25.
For the foregoing reasons, the Court GRANTS Fidelity’s motion for
partial summary judgment and DISMISSES Paschen’s claims against
Fidelity that arise out of the breach of Paschen’s subcontract with J & A. The
Court also GRANTS Fidelity’s motion for judgment on the pleadings and
DISMISSES Paschen’s claim against Fidelity arising out of 84 Lumber’s
breach of its subcontract with J & A.
New Orleans, Louisiana, this _____ day of February, 2017.
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
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