AFC, Inc. et al v. Mathes Brierre Architects

Filing 92

ORDER AND REASONS: ORDERED that Mathes Brierre's request for jury instructions and jury interrogatories on the issue of licensing is DENIED. Signed by Judge Lance M Africk on 9/26/2017.(blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
AFC, INC. ET AL.

CIVIL ACTION

VERSUS

No. 16-16560

MATHES BRIERRE ARCHITECTS

SECTION I

ORDER AND REASONS
This case arises out of the construction of the Boomtown Casino in Harvey,
Louisiana. Defendant Mathes Brierre Architects (“Mathes Brierre”) designed the
plans for the Boomtown project; plaintiff AFC, Inc., doing business in Louisiana as
AFC, Inc. of Mississippi (“AFC”) was a subcontractor for the project’s general
contractor, the Lemoine Company, LLC (“Lemoine”).
Mathes Brierre requests a set of jury instructions and jury interrogatories
related to the AFC-Lemoine subcontract. 1 In a nutshell, Mathes Brierre’s position is
that 1) the license that permits AFC to provide building construction services in
Louisiana is in the name of “AFC, Inc. of Mississippi”; 2 2) contracting agreements
involving unlicensed contractors violate Louisiana public policy and as such are null
and void; 3) AFC’s use of “AFC, Inc.”— and failure to use “AFC, Inc. of Mississippi”
or “AFC, Inc., d/b/a AFC, Inc. of Mississippi”—as the party executing the AFCLemoine subcontract morphs the subcontract into one involving an unlicensed party;
4) the subcontract is null and void; and 5) a portion of the damages that AFC is now

1
2

See R. Doc. No. 84.
See R. Doc. No. 82-6.
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seeking from Mathes Brierre in this implied indemnity action are unavailable to AFC
as a result.
Even assuming that the subcontract is relevant in this case, 3 the Court readily
concludes that Mathes Brierre’s argument is without merit.
According to the Fifth Circuit:
[t]he Louisiana legislature has enacted a broad licensing scheme
for contractors within [Louisiana], designed for “the protection of the
health, safety, and general welfare of all those persons dealing with
persons engaged in the contracting vocation, and the affording of such
persons of an effective and practical protection against the incompetent,
inexperienced, unlawful, and fraudulent acts of contractors with whom
they contract.”
Tradewinds Envtl. Restoration, Inc. v. St. Tammany Park, LLC, 578 F.3d 255, 25859 (5th Cir. 2009) (quoting La. R.S. § 37:2150).

Pursuant to this scheme, it is

“unlawful for any person to engage or to continue in this state in the business of
contracting, or to act as a contractor as defined [in La. R.S. § 37:2150.1(4)(a)], unless
he holds an active license as a contractor” issued by the Louisiana State Licensing
Board for Contractors. La. R.S. § 37:2160(A)(1). AFC and Mathes Brierre do not
dispute that the AFC-Lemoine subcontract fell within the scope of the state licensing
scheme or that AFC qualified as a “contractor” under the scheme. See id. § 37:2150.1
(definitions). 4

Mathes Brierre was not a party to the AFC-Lemoine subcontract. Moreover, the
present case is an implied indemnity action, and the Court questions whether Mathes
Brierre’s attempt to deconstruct the damages that AFC now seeks is appropriate.
After all, as the Court has pointed out to the parties, “[l]egal indemnity is ultimately
an equitable doctrine that entitles plaintiffs to compensation for an entire damages
award occasioned by another party’s fault.” R. Doc. No. 60, at 4 (emphasis added).
4 See R. Doc. No. 82; R. Doc. No. 84.
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2

“Louisiana courts have long recognized that statutory licensing requirements
‘were enacted to protect an interest vital to the public order’” and so have consistently
“invalidate[d] contracting agreements entered into with unlicensed contractors.”
Tradewinds Envtl. Restoration, 578 F.3d at 259 (quoting Hagberg v. John Bailey
Contractor, 435 So.2d 580, 584-85 (La. Ct. App. 3rd Cir. 1983) and citing cases); see
also La. Civ. C. art. 7 (“Persons may not by their juridical acts derogate from laws
enacted for the protection of the public interest. Any act in derogation of such laws
is an absolute nullity.”); La. Civ. C. art. 2030 (“A contract is absolutely null when it
violates a rule of public order, as when the object of a contract is illicit or immoral.”).
Given “Louisiana’s rule of absolute nullity for a contracting agreement entered into
without the benefit of a contractor’s license,” unlicensed contractors providing
contractual services under such agreements may recover only “the actual cost of
materials, services and labor.”

Tradewinds Envtl. Restoration, 578 F.3d at 260

(quoting Alonzo v. Chifici, 526 So. 2d 237, 243 (La. Ct. App. 5th Cir. 1988)) (internal
quotation marks omitted). Unlicensed contractors “are not entitled to an allowance
for profit and overhead.” Alonzo, 526 So. 2d at 243.
All parties agree that “AFC, Inc. doing business in Louisiana as AFC, Inc. of
Mississippi” is the proper plaintiff in this case.

5

AFC, Inc.—a Mississippi

corporation 6—added “of Mississippi” to its name for purposes of doing business in

See R. Doc. No 67 at 1.
The Court takes judicial notice of business filings with the Mississippi Secretary of
State.

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6

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Louisiana so as to distinguish itself from a similarly named company. 7

The

subcontract between AFC and Lemoine does not involve an unlicensed contractor,
then, because “AFC, Inc.” and “AFC, Inc. of Mississippi” are the same entity for all
relevant purposes. Cf. Cableguard Sys., Inc. v. Mid-Continent Cas. Co., 73 Fed. App’x
28, 31 (5th Cir. 2003) (“Vicari mistakenly assumes . . . that Cableguard and
Dictograph are different entities. . . . Dictograph is merely an assumed trade name of
Cableguard.”).
Moreover, AFC’s use of “AFC, Inc.” on its contract with Lemoine was perfectly
legal, despite its registration of “AFC, Inc. of Mississippi” with the Louisiana
Secretary of State. “Under Louisiana law, ‘a corporation may enter into a binding
contract under an assumed name absent any fraud or deceit.’” Cableguard Sys., 73
Fed. App’x at 31 (quoting Pro Source Roofing, Inc., v. Boucher, 822 So.2d 881, 884 n.2
(La. Ct. App. 2d Cir. 2002)). Mathes Brierre does not suggest that AFC engaged in
fraud or deceit when executing the AFC-Lemoine subcontract.
The interpretation of the Louisiana licensing scheme and applicable case law
that Mathes Brierre asks this court to adopt is, frankly, a superficial one. “Courts
should not adopt a hypertechnical construction of a [Louisiana] statute when a
reasonable interpretation can be adopted which will carry out the legislative intent.”
J. Caldarera & Co., Inc. v. Hosp. Serv. Dist. No. 2 of the Parish of Jefferson, 707 So.
2d 1023, 1026 (La. Ct. App. 5th Cir. 1998).

See R. Doc. No. 82-7, at 1-2. The Court takes judicial notice of business filings with
the Louisiana Secretary of State.

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4

The Louisiana legislature’s intent behind the statutory prohibition on work by
unlicensed contractors is “the protection of the health, safety, and general welfare.”
Tradewinds Envtl. Restoration, 578 F.3d at 258 (quoting La. R.S. § 37:2150) (internal
quotation marks omitted). Bearing this purpose in mind, Louisiana courts have
routinely rejected readings of this prohibition that exults form over function. For
example, courts have rejected the conclusion that the licensing scheme requires “that
two competent, adequately licensed entities, may not join together to bid and perform
a public project [as a joint venture] without obtaining a third, and useless license.” Id.
Moreover—and more relevant to the situation in this case—Louisiana courts have
held that the use of one corporate name on a license and a different corporate name
on a contract, where the names represent the same corporate entity, does not render
the contract unlawful. See Pro Source Roofing, 822 So. 2d at 884 (“Since the name
change from Pro Source Roofing and Guttering, Inc. to Pro-Source Roofing, Inc. did
not create a new entity, we find that the Louisiana contractor’s license issued to Pro–
Source Roofing and Guttering, Inc. was effective as to Pro–Source Roofing, Inc. . . . .”).
Against this jurisprudential backdrop, the Court rejects Mathes Brierre’s
proposed jury instructions and jury interrogatories concerning licensing. Moreover,
the Court notes its disappointment with respect to the fact that Mathes Brierre’s brief
on the licensing issue does not cite—let alone discuss—relevant case law that
contradicts Mathes Brierre’s position.
Accordingly,

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IT IS ORDERED that Mathes Brierre’s request for jury instructions and jury
interrogatories on the issue of licensing is DENIED.
New Orleans, Louisiana, September 26, 2017.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

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