Patriot Contracting, LLC v. Star Insurance Company et al

Filing 59

ORDER AND REASONS denying 48 Motion to Stay or, in the alternative, Motion for Summary Judgment. Signed by Judge Jane Triche Milazzo. (ecm)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PATRIOT CONTRACTING, LLC

CIVIL ACTION

VERSUS

NO: 15-6634

STAR INSURANCE COMPANY, ET AL

SECTION: “H”(4)

ORDER AND REASONS
Before the Court is Defendant Star Insurance Company’s Motion to Stay
or, in the alternative, Motion for Summary Judgment (Doc. 48).

For the

following reasons, this Motion is DENIED.
BACKGROUND
This diversity action arises out a construction project on a “New Group
Camp” in Bayou Segnette State Park in Westwego (the “Project”). The State
of Louisiana (the “State”) entered into a contract with Troy Frick as general
contractor for the construction of the Project (the “Original Contract”).
Defendant Star Insurance Company (“Star”), as surety, issued a statutory
Performance and Payment Bond in the amount of $2,546,000 for the Project.
The State entered into a separate contract with Defendant The Architectural
Studio/James Dodds, AIA Corporation (‘TAS”) for planning and design services
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with regard to the Project, whereby TAS was to provide construction
documents (the “Contract Documents”).
When Frick failed to satisfactorily complete work on the Project, the
State made demand on Defendant Star to remedy and complete the work.
Accordingly, Star executed a Surety Takeover Agreement with the State (the
“Takeover Agreement”).

Star then executed a completion contract with

Plaintiff Patriot, where Patriot was to complete the work outlined in the
Original Contract (the “Completion Contract”). Patriot was to rely on the
Contract Documents created by TAS in completing the work; however, it avers
that it became aware of design errors and omissions in these documents.
Patriot avers that these errors resulted in significant cost overruns to
Patriot and delays to its work. It further alleges that TAS was slow to respond
to Patriot’s requests for information regarding the details of the Contract
Documents, and that TAS’s failures caused it to incur increased expenses. It
further avers that Star has not paid Patriot under the agreement, having
rejected Patriot’s work on the Project. Patriot further contends that Star and
TAS continued to demand “unreasonable punch list work” and that they are
withholding money for already completed work.
abandoned the Project on November 9, 2015.

Ultimately, Patriot

The State terminated the

Takeover Agreement on March 14, 2016 and has rebid the Project.
Star has filed the instant Motion, asking the Court to stay these
proceedings pending resolution of disputes between it and the State. In the
alternative, Star moves for summary judgment dismissing Patriot’s claims for
all alleged outstanding payments. Patriot opposes this Motion.

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LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.”1 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”2
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor.3 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.”4 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.”5 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.”6 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the

Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
3 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).
4 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
6 John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
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necessary facts.”7

Additionally, “[t]he mere argued existence of a factual

dispute will not defeat an otherwise properly supported motion.”8
LAW AND ANALYSIS
I. Star’s Request to Stay the Matter
The Federal Courts have a “virtually unflagging obligation . . . to exercise
the jurisdiction given them.”9 Nevertheless, “A district court certainly
possesses the authority to regulate its flow of cases.”10 “Although the Court
has the inherent power to stay any matter pending before it in the interest of
justice and economy of time and effort for itself, for counsel and for litigants,
the moving party bears a heavy burden to show why a stay should be
granted.”11
Star contends that this matter should be stayed pending resolution of its
dispute with the State. The State has indicated that it intends to file suit
against Star for, inter alia, remedial work, liquidated damages, design fees for
rebidding the project, and additional costs incurred for completing the project.
Star contends that until its liability to the State is established, it will be
deprived of critical defenses against Patriot’s claims and it will be unable to
establish its own damages claim against Patriot. Patriot responds, arguing
that a stay is inappropriate, particularly in light of the fact that the State has
not instituted litigation against Star. This Court agrees. Patriot alleges that
Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
8 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
9 Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 650 (5th Cir. 2000)
(citiations omitted).
10 Coastal (Bermuda) Ltd. v. E.W. Saybolt & Co., 761 F.2d 198, 204 (5th Cir. 1985).
11St. Bernard Citizens for Envtl. Quality, Inc. v. Chalmette Ref., L.L.C., 348 F. Supp.
2d 765, 767 (E.D. La. 2004).
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Star has not paid it for work completed on the Project. It avers that it has been
exposed to multiple suits for payment from its unpaid subcontractors. Patriot
is entitled to litigate its entitlement to payment from Star sooner rather than
later. Any issues relative to Patriot’s duty to indemnify Star for those claims
asserted by the State can be resolved if and when the State files suit against
Star. Accordingly, Star’s request for a stay of these proceedings is denied.
II. Star’s Motion for Summary Judgment
In the alternative, Star moves for summary judgment on Patriot’s
claims. Star argues that the State’s approval of Patriot’s work is a suspensive
condition to Star’s payment obligations to Patriot. Star contends that it has
remitted payment to Patriot for all work that has been approved by the State
and for which payment has been remitted to Star. Star contends that the terms
of the Completion Contract include a suspensive condition whereupon Star’s
payment obligations to Patriot are contingent upon the State’s acceptance of
Patriot’s work. In pertinent part, the Completion Contract provides:
Surety [Star] will make periodic progress payments to
Completion Contractor [Patriot], for work completed by
Completion Contractor, as determined by the State in accordance
with the Contract . . . .Within ten (10) days after Surety’s receipt
of each progress payment from the State, Surety will send to
Completion Contractor its progress payment less 5% retainage.
Surety’s final payment to Completion Contractor will include all
retainages; provided, however, that Surety’s obligations to make
progress payments and the final payment to Completion
Contractor, are expressly conditioned upon (i) approval by the
State of the quality and quantity of Completion Contractor’s work
and (ii) Completion Contractor’s discharge of its obligations under
this Agreement.12

12

Doc. 28-2, p. 23.

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Patriot responds, arguing (1) that the contract does not create a suspensive
condition for payment and (2) that even if it does, genuine issues of material
fact relative to the State’s acceptance of its work preclude summary judgment
at this time. The Court will address these arguments in turn.
A. Star’s Payment Obligations are Subject to a Suspensive
Condition
The parties disagree as to whether the above cited contractual provision
creates a suspensive condition. Under Louisiana law, a suspensive condition
is a provision of a contract by which “[t]he right to enforce the obligation does
not arise until the fulfillment of the suspensive condition, and the obligation
may not be enforced until the condition is met.”13 Louisiana courts have held
that a court should find that an obligation is subject to a suspensive condition
“only when the express language of the contract ‘compels’ such a
construction.”14 In addition, “contractual provisions are construed as not to be
suspensive conditions whenever possible.”15 Star argues that the contract
provisions are analogous to a “pay-if-paid” clause in a construction contract,
wherein a general contractor’s obligation to pay is suspensively conditioned
upon the general contractor’s receipt of payment from the owner. “To create an
enforceable ‘pay-if-paid’ clause the parties’ intent to do so must be explicitly
expressed in their agreement.”16
Patriot argues that the Completion Contract’s terms do not create a
suspensive condition.

In support of this position, they point to language

contained in the Takeover Agreement between Star and the State wherein Star
Murry v. Murphy, 970 So. 2d 700, 702 (La. App. 3 Cir. 2007).
Mumblow v. Monroe Broad., Inc., 401 F.3d 616, 622 (5th Cir. 2005).
15 S. States Masonry, Inc. v. J.A. Jones Const. Co., 507 So. 2d 198, 201 (La. 1987).
1616 Tymeless Flooring, Inc. v. Rotolo Consultants, Inc., 172 So. 3d 145, 151 (La. App.
4 Cir. 2015).
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agreed to use its own funds as necessary to pay for completion of the project. 17
For the Court to consider the impact of this provision it would have to look
beyond the four corners of the Completion Contract, which the Court cannot
do absent a finding of ambiguity therein. “When a clause in a contract is clear
and unambiguous, the letter of that clause should not be disregarded under
the pretext of pursuing its spirit, as it is not the duty of the courts to bend the
meaning of the words of a contract into harmony with a supposed reasonable
intention of the parties.”18 “The rules of contractual interpretation simply do
not authorize a perversion of the words or the exercise of inventive powers to
create an ambiguity where none exists or the making of a new contract when
the terms express with sufficient clarity the parties’ intent.”19

The

determination of whether a contract is clear or ambiguous is a question of
law.20

“When a contract can be interpreted from the four corners of the

instrument, the question of contractual interpretation is answered as a matter
of law, and summary judgment is appropriate.”21
The Court has reviewed the terms of the Completion Contract and finds
that it unambiguously conditions payments to Patriot on the State’s approval
of its work. Indeed, the Completion Contract indicates that all payments “are
expressly conditioned upon (i) approval by the State of the quality and quantity
of the Completion Contractor’s work.”22 This Court cannot imagine a more
clearly stated suspensive condition.

Because the Completion Contract is

Doc. 48-2, p. 12.
Lis v. Hamilton, 652 So. 3d 1327, 1330 (La. 1995) (citations omitted).
19 Sims v. Mulhearn Funeral Home, Inc., 956 So. 2d 583, 589 (La. 2007).
20 La. Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 764 (La. 1994)
(citation omitted).
21 Mobil Exploration & Producing U.S. Inc. v. Certain Underwriters Subscribing to
Cover Note 95-3317(A), 837 So. 2d 11, 24 (La. App. 1 Cir. 2002) (citation omitted).
22 Doc. 48-2 at 23.
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unambiguous, the Court may look no further in divining the intent of the
parties. Accordingly, the Court finds that Star’s obligation to pay Patriot for
work completed is expressly conditioned on the State’s acceptance of the same.
B. Genuine Issues of Material Fact Regarding the State’s
Acceptance of the Work Preclude Summary Judgment at This Time
Star contends that the State has not approved any of Patriot’s work since
July 31, 2015 payment application and that it has remitted payment for all
work approved by the State. Patriot responds in opposition, noting that the
State has rebid the Project. Patriot contends that any work not required by
the rebid documents has necessarily been accepted by the State. It contends
that its expert is still in the process of reviewing the Rebid Documents in an
effort to establish a complete list of all work performed by Patriot and accepted
by the State. The Court finds that the extent to which the State has accepted
Patriot’s work, as evidenced by the rebid documents, is a genuine issue of
material fact precluding summary judgment at this time.
CONCLUSION
For the foregoing reasons, Defendant Star Insurance Company’s Motion
to Stay or, in the alternative, Motion for Summary Judgment (Doc. 48) is
DENIED.
New Orleans, Louisiana this 23rd day of February, 2017.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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