Red Dot Buildings, Inc. v. GM & R Construction Company, Inc. et al

Filing 115

ORDER AND REASONS granting the Non-Flood Protection Authority's MOTION 80 for summary judgment.. Signed by Judge Sarah S. Vance on 3/28/16. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
RED DOT BUILDINGS, INC.

CIVIL ACTION

VERSUS

NO. 14-2803

GM&R CONSTRUCTION
COMPANY INC., ET AL.

SECTION: R (4)

ORDER AND REASONS
Defendant Non-Flood Protection Asset Management Authority moves
for summary judgment on M&M Concrete Services, Inc. and Tom Branighan,
Inc.’s cross-claim that the Non-Flood Protection Authority is liable for
certain unpaid claims of M&M Concrete and Tom Branighan arising out of a
public works construction project under the Louisiana Public Works Act,
Louisiana Revised Statute § 38:2241, et seq. 1 For the following reasons, the
Court grants the Non-Flood Protection Authority’s motion for summary
judgment.

I.

BACKGROUND
This dispute arises out of the “James Wedell Hangar Project,” a public

works construction project, at the New Orleans Lakefront Airport. As owner

1

R. Doc. 80.

of the project, defendant-in-cross-claim Non-Flood Protection Authority
hired GM&R Construction Company to serve as general contractor. 2 GM&R,
in turn, hired plaintiffs-in-cross-claim M&M Concrete (for concrete services)
and Tom Branighan (for electrical services) as subcontractors. 3 The project
began in March 2012, according to the Non-Flood Protection Authority’s
“Notice to Proceed.” 4 Despite several delays, the project was substantially
completed on May 16, 2014. 5 The Non-Flood Protection Authority filed a
“Certificate of Substantial Completion” in the parish mortgage records on
May 28, 2014.6
M&M Concrete and Tom Branighan both allege that they performed
the work required under their respective subcontracts with GM&R, but were
never fully paid. M&M Concrete contends that $56,572 for its concrete work
remains unpaid.7 Tom Branighan claims an unpaid balance of $49,729.20.8

2

R. Doc. 80-3 at 1 ¶ 3 (Declaration of Cornelia Ullmann).

3

See generally R. Doc. 80-7; R. Doc. 80-8.

4

R. Doc. 80-5.

5

R. Doc. 80-6.

6

R. Doc. 80-3 at 2 ¶ 7.

7

R.Doc. 27 at 7 ¶¶ 36-39.

8

R. Doc. 28 at 8 ¶¶ 38-41.

On August 18, 2014, M&M Concrete notified GM&R and the NonFlood Protection Authority of its unpaid claims by mailing both entities a
“Statement of Claim.”9 M&M Concrete’s correspondence reflected that it had
filed its statement of claim in the parish mortgage records on August 15,
2014. 10 M&M Concrete also asked the Non-Flood Protection Authority and
GM&R to consider its August 18 letter as a “demand for immediate
payment.”11
Sometime before September 24, 2014, GM&R notified M&M Concrete
that the statement of claim in the mortgage records was untimely because it
was filed more than forty-five days after the Non-Flood Protection Authority
filed its “Certificate of Substantial Completion” on May 28, 2014. According
to the Non-Flood Protection Authority, GM&R considered the recorded
claim untimely because Louisiana Revised Statute § 38:2242 states that
“after maturity of [its] claim and within forty-five days after the recordation
of acceptance of the work by the governing authority,” a subcontractor
seeking payment may file a statement of the unpaid amount in the mortgage

9

See R. Doc. 80-9.

10

Id. at 2.

11

Id. at 1.

records.12 La. Rev. Stat. § 38:2242(B). M&M Concrete then notified the
Non-Flood Protection Authority and GM&R that “[b]ecause of the timing,
the Statement of Claim will be cancelled from the records of the Recorder of
Mortgages. However, M&M has not been paid in full and therefore M&M
maintains its claim for payment on the project.” 13
Tom Branighan also wrote to GM&R and the Non-Flood Protection
Authority about its unpaid claim on September 24, 2014. The letter states,
“Please consider this correspondence as a Statement of Claim being served
on the Non-Flood Protection Asset Management Authority, the project’s
awarding authority (owner), in accordance with the Public Works Act,
specifically LRS 28:2242(D).”14 At that time, Tom Branighan had not filed
its statement of claim in the mortgage records.
On October 7, 2014, GM&R obtained a “Lien and Privilege Certificate”
from the Orleans Parish Clerk of Court and Ex-Officio Recorder.15 The
certificate provides that, according to the parish mortgage records at that
time, “there [we]re no uncancelled mechanic’s liens and/or privileges for
12

See R. Doc. 80-1 at 3.

13

R. Doc. 81-3 at 1.

14

R. Doc. 80-11.

15

R. Doc. 80-13.

labor and/or materials furnished in connection with” GM&R’s construction
contract for the James Wedell Hangar Project.16 This lien and privilege
certificate did not reflect the claim that M&M Concrete filed two months
earlier, presumably because M&M Concrete had cancelled it.
GM&R submitted the lien and privilege certificate to the Non-Flood
Protection Authority on October 8.17 According to the Non-Flood Protection
Authority, it was then obligated to pay GM&R under Louisiana Revised
Statute § 38:2191, which provides that “[a]ll public entities shall promptly
pay all obligations arising under public contracts when the obligations
become due and payable under the contract.” Section 2191 further provides
that “[a]ny public entity failing to make any final payments after formal final
acceptance and within forty-five days following receipt of a clear lien
certificate by the public entity shall be liable for reasonable attorney fees.”
La. Rev. Stat. § 38:2191(B). The Non-Flood Protection Authority contends
that, in accordance with section 2191, it promptly paid GM&R on October 16,
2014, after receiving the lien and privilege certificate on October 8.

16

Id. at 1.

17

R. Doc. 80-2 at 3 ¶ 15.

On December 24, 2014, M&M Concrete again wrote to GM&R and the
Non-Flood Protection Authority about its unpaid claim. M&M Concrete
indicated that cancelling its earlier filing in the parish mortgage records “may
have been in error,” and M&M Concrete refiled its claim in the mortgage
records on December 23, 2014. M&M Concrete’s December 24 letter asked
GM&R and the Non-Flood Protection Authority to “consider this Statement
of Claim as demand for payment in full of the amount owed.”18 Tom
Branighan also formally filed its statement of claim in the parish mortgage
records on December 23, 2014, and mailed a copy of its filed claim to both
GM&R and the Non-Flood Protection Authority the next day.19 To date,
M&M Concrete’s and Tom Branighan’s claims remain unpaid.
The subcontractors filed suit against the Non-Flood Protection
Authority to recover the amounts of their unpaid claims on April 13, 2015.
The Non-Flood Protection Authority now moves for summary judgment,
arguing that, under the Louisiana Public Works Act, M&M Concrete and
Tom Branighan untimely filed their claims and therefore cannot recover
their unpaid debts from the Non-Flood Protection Authority. 20
18

R. Doc. 80-10 at 1.

19

See R. Doc. 80-10.

20

See generally R. Doc. 80-1.

M&M

Concrete and Tom Branighan oppose the motion, arguing that the NonFlood Protection Authority became liable for the subcontractors’ debts when
the Authority had actual knowledge of their unpaid claims before it paid
GM&R for the project in October 2014.

II.

LEGAL STANDARD
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); see also 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 refrain[s]
from making credibility determinations or weighing the evidence.” Delta &
Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99
(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); see also Little, 37 F.3d at
1075. “No genuine dispute of fact exists if the record taken as a whole could

not lead a rational trier of fact to find for the non-moving party.” EEOC v.
Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).

III. DISCUSSION
The material facts are not in dispute here. The parties disagree about
the proper interpretation of Louisiana Revised Statute § 38:2242, which
imposes liability on the awarding authority of a public works project if it pays
a general contractor for that project without taking certain precautions to
protect an unpaid subcontractor.
Section 2242 provides in relevant part:
A.
“Claimant” . . . means any person to whom money is due
pursuant to a contract with the owner or a contractor . . . for
doing work, performing labor, or furnishing materials or
supplies for the construction, alteration, or repair of any public
works . . . .
B.
Any claimant may after the maturity of his claim and
within forty-five days after the recordation of acceptance of the
work by the governing authority . . . file a sworn statement of the
amount due him with the governing authority having the work
done and record it in the office of the recorder of mortgages for
the parish in which the work is done.
....
D.
When an awarding authority makes final payment to the
contractor without deducting the total amount of all outstanding
claims so served on it or without obtaining a bond from the
contractor to cover the total amount of all outstanding claims,
the awarding authority shall become liable for the amount of
these claims.

La. Rev. Stat. § 38:2242(A)-(B), (D) (emphasis added).
Here, the Non-Flood Protection Authority argues that subsection
2242(D) must be read along with subsection 2242(B)—an “outstanding
claim so served on [the awarding authority]” is one that a claimant has filed
in the mortgage records “after the maturity of his claim and within forty-five
days after recordation of acceptance of the work.” The subcontractors argue
that subsections (B) and (D) provide separate means by which a claimant
may pursue an unpaid debt from the awarding authority. Thus, according to
M&M Concrete and Tom Branighan, to preserve a claim against an awarding
authority for an unpaid debt, a public works claimant can either, under
subsection 2242(B), file its claim in the mortgage records within forty-five
days after the awarding authority records its acceptance of the work or, under
subsection 2242(D), otherwise notify the awarding authority of the
claimant’s outstanding claim before the authority issues final payment to the
general contractor. The Court concludes that subsections 2242(B) and (D)
must be read together and that the only “outstanding claims” for which an
awarding authority of a public works project may be liable are those that have
been timely filed with the governing authority.
“The fundamental question in all cases of statutory [interpretation] is
legislative intent and the reasons that prompted the legislature to enact the

law.” In re Whitaker Const. Co., 411 F.3d 197, 204-05 (5th Cir. 2005) (citing
In re Succession of Boyter, 756 So.2d 1122, 1128 (La. 2000)). The starting
point is the language of the statute itself. Moreno v. Entergy Corp., 105
So.3d 40, 48 (La. 2012). “Words and phrases shall be read [in] context and
shall be construed according to the common and approved usage of the
language.” La. Rev. Stat. § 1:3. “When a law is clear and unambiguous and
its application does not lead to absurd consequences, the law shall be applied
as written.” La. Civ. Code art. 9; La. Rev. Stat. § 1:4; see also In re Whitaker,
411 F.3d at 205 (“[S]tatutes must be interpreted . . . to render their meaning
rational, sensible, and logical.”). When the statutory language is ambiguous,
a court must determine its meaning “by examining the context in which [the
language] occurs and the text of the law as a whole.” La. Civ. Code art. 12.
The court “should give effect to all parts of a statute and should not adopt a
statutory construction that makes any part superfluous or meaningless.” In
re Whitaker, 411 F.3d at 205. In addition, the law “must be interpreted as
having the meaning that best conforms to the purpose of the law.” La. Civ.
Code art. 10.
The purpose of the Louisiana Public Works Act is two-fold. First, the
Act protects those not in direct privity with the governing authority or the
general contractor of a public works project. Wilkin v. Dev Con Builders,

Inc., 561 So. 2d 66, 71 (La. 1990); see also In re Whitaker, 411 F.3d at 205
(explaining protection is necessary because unpaid claimants cannot seize
public property to secure payment). At the same time, for a governing
authority that complies with its provisions, the Act protects the authority
from incurring liability for a contractor’s failure to perform its subcontracts.
Wilkin, 561 So. 2d at 71.
Section 2242 of the Act achieves both purposes by allowing a claimant
to collect its unpaid debt from the governing authority if that authority does
not take certain precautions to ensure the claimant is paid. Yet an unpaid
claimant must also take certain steps to preserve its claim; the imposition of
liability on the governing authority is not without limits.
For a claimant seeking to recover his unpaid claim from the governing
authority, subsection 2242(B) requires, at a minimum, that the claimant “file
a sworn statement of the amount due him with the governing authority”
“after the maturity of his claim and within forty-five days after the
recordation of acceptance of the work.” See generally La. Rev. Stat. §
38:2242(B). Subsection 2242(D) provides that an awarding (or governing)
authority may be liable for “all outstanding claims so served on it.”
Subsection 2242(B) and subsection 2242(D) do not stand alone, as M&M
Concrete and Tom Branighan suggest. Here, subsection (D)’s reference to

claims “so served” means served by the method stated in subsection (B). See
generally La. Civ. Code art. 12 (courts must examine statutory language in
context and “examin[e] . . . the text of the law as a whole”); La. Rev. Stat. §
1:3 (“Words and phrases shall be read with their context . . . .”). To read
subsection (D) as the subcontractors suggest would delete the word “so”
before “served.” Further, to construe subsection 2242(D) as allowing a
claimant to notify a governing authority of its outstanding claim however and
whenever it chooses, so long as the governing authority has not yet paid the
general contractor, would render subsection 2242(B), with its specific
requirements, meaningless. See In re Whitaker, 411 F.3d at 205 (“Courts
should give effect to all parts of a statute and should not adopt a statutory
construction that makes any part superfluous or meaningless.”). Moreover,
the doctrine of ejusdem generis, a well-established principle of statutory
construction, warns against “expansively interpreting” broad language that
follows narrow and specific terms. “To the contrary, this maxim . . . counsels
courts to construe the broad in light of the narrow, in a commonsense
recognition that general and specific words, when present together, are
associated with and take color from each other.” United States v. Insco, 496
F.2d 204, 206 (5th Cir. 1974) (collecting cases).

At least one Louisiana appellate court has reached the same conclusion
regarding the interaction of subsections 2242(B) and (D). In Gulf Coast
Refrigeration, LLC v. Houma Terrebone Housing Authority, the state trial
court found that a subcontractor who filed its claim outside of the forty-fiveday window of time in subsection 2242(B) could not sustain a claim against
the Houma Terrebone Housing Authority, the governing authority of the
public works project at issue. See No. 2013 CA 1512, 2014 WL 1175898, at *1
(La. App. 1 Cir. Mar. 24, 2014). On appeal, the subcontractor in Gulf Coast
argued, like M&M Concrete and Tom Branighan do here, that subsection
2242(D) allowed the subcontractor more time to file its claim so long as the
governing authority had not yet paid the contractor. See id. at *3. The
Louisiana First Circuit Court of Appeal held that the subcontractor’s
argument was “a misreading of the statute and . . . ignore[d] what is clearly
required by La. R.S. 38:2242(B).” Id.; see also In re Whitaker Const. Co.,
Inc., 411 F.3d 197, 206 (5th Cir. 2005) (“[Section] 2242 mandates that a
claimant file written claim statements after the maturity of his claims and
within 45 days from the recordation of acceptance.” (emphasis added)). The
court also explained that the subcontractor’s interpretation of the statute
“would essentially render La. R.S. 38:2242(B) pointless if it meant that a

subcontractor could secure funds with an untimely filed lien.” 2014 WL
1175898, at *3.
To resist this conclusion, M&M Concrete and Tom Branighan rely on
another Louisiana appellate opinion. In VVP America, Inc. v. Design Build
Development Services, Inc., a roofing subcontractor recorded its claim
nearly one year after the governing authority recorded its certificate of
substantial completion. 951 So. 2d 461, 464-65 (La. App. 2 Cir. 2007). The
Louisiana Second Circuit Court of Appeal noted that “the different notice
provisions under the [Louisiana Public Works Act] are designed to work in
tandem so that the general contractor, surety and owner are all aware of what
is going on and each can take steps to preserve their rights against each
other.” Id. at 469. Nonetheless, without referring to the text of the statute
and relying on two nearly century-old cases, the court held that a governing
authority with actual knowledge of an unpaid claim and with enough funds
to satisfy the debt is liable to the subcontractor for the unpaid amount. 21 Id.

The cases on which the Louisiana Second Circuit relied are even less
helpful to the relevant issue. In Uvalde Rock Asphalt Co. v. City of
Shreveport, 172 La. 977 (1931), the appellant argued that the claims of
certain materialmen were not recorded “in accordance with law.” The
alleged noncompliance pertained to whether the amounts claimed were for
materials actually used in the public work and whether the claims were “in
proper form” (i.e., sworn statements). The Louisiana Supreme Court found
the appellant’s arguments “unsound.” See id. at 984-85.
21

at 469-70. In light of the statutory text and the reasoning of the Louisiana
First Circuit in Gulf Coast Refrigeration, the Court does not find VVP
America to be persuasive or controlling here.
It is undisputed that M&M Concrete and Tom Branighan did not timely
file their claims in accordance with subsection 2242(B). The Non-Flood
Protection Authority recorded its acceptance of work, via its “Certificate of
Substantial Completion,” in the mortgage records on May 28, 2014. At the
earliest, M&M Concrete served the Non-Flood Protection Authority with a
sworn statement of its claim on August, 18, 2104, nearly three months later.
Tom Branighan did not serve the Authority with its claim until September
24. 22 Because M&M Concrete and Tom Branighan failed to comply with the

In Fidelity & Deposit Co. v. Claiborne Parish School Board, 35 F.2d
376 (W.D. La. 1929), the district court found that the parish school board
with actual knowledge of unpaid subcontractor claims was liable for those
debts under general principles of civil law—“a tort or quasi offense and
breach of contract within the meaning of the code.” On appeal, the Fifth
Circuit affirmed, finding that as a result of the bond executed by the
governing authority, the general contractor, and the surety, as well as
prevailing civil law principles and “general principles of equity,” the
governing authority was liable to the surety for the amount of the unpaid
claims that the surety paid to subcontractors. Claiborne Parish School
Board v. Fidelity & Deposit Co. 40 F.2d 577 (5th Cir. 1931).
The Non-Flood Protection Authority emphasizes in its brief that
claimants seeking to recover from a governing authority must file its claim
with the authority and record its claim in the mortgage records within the
forty-five-day period. See generally R. Doc. 80-1. Because it is undisputed
that M&M Concrete and Tom Brangihan did neither within forty-five days of
22

applicable deadline, the Court grants summary judgment on the cross-claim
for their outstanding debts against the Non-Flood Protection Authority.

IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS the Non-Flood

Protection Authority’s motion for summary judgment.

28th
New Orleans, Louisiana, this ___ day of March, 2016.

____________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

the Non-Flood Protection Authority’s acceptance of the work, the Court need
not reach the issue of whether timely recordation of their unpaid claims is
also required to recover from the Authority.