Cotton Exchange Investment Properties, LLC v. Xcel Air Conditioning Services, Inc. et al
Filing
210
ORDER AND REASONS GRANTING IN PART AND DENYING IN PART 195 Motion for Partial Summary Judgment. To the extent Xcel seeks summary judgment on the two Aaon Contracts, the motion is GRANTED as unopposed. For all other requests for relief, the motion is DENIED. Signed by Judge Eldon E. Fallon on 6/4/2019. (jeg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
COTTON EXCHANGE INVESTMENT
CIVIL ACTION
VERSUS
NO. 16-17543
XCEL AIR CONDITIONING ET AL.
SECTION “L” (5)
ORDER & REASONS
Before the Court is a motion for summary judgment filed by Defendant Xcel Air
Conditioning Services, Inc. (“Xcel”). R. Doc. 195. The Motion is opposed. R. Doc. 199. Xcel has
filed a reply. R. Doc. 205. The Court now rules as follows.
I.
BACKGROUND
Plaintiff Cotton Exchange Investment Properties LLC (“Cotton Exchange”) alleges its hotel
was damaged as a result of faulty workmanship performed by Defendants Commercial Renovation
Services, Inc. (“CRS”) and John T. Campo & Associates (“Campo”) during the hotel’s renovation.
R. Doc. 23 at 2. Plaintiff further contends the hotel also sustained damages as a result of defective
maintenance and repairs to the hotel’s HVAC system performed by Defendant Xcel. In the present
suit, Cotton Exchange seeks recovery for its damages.
In its complaint, Plaintiff alleges that in 2014, Supreme Bright New Orleans LLC (“Supreme
Bright”), which owned the hotel at the time, executed several contracts for its renovation. R. Doc.
23 at 2. In January 2014, Supreme Bright contracted with Xcel to provide HVAC services, including
the maintenance of the hotel’s cooling tower, roof top units, and chilled water pumps. R. Doc. 1 at
3. That same month, Supreme Bright entered into a contract with Campo, whereby Campo would
provide architectural, design, and engineering services. R. Doc. 23 at 4. A few months later, Supreme
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Bright contracted with CRS to serve as general contractor for the project. R. Doc. 23 at 2.
In June 2015, Pacific Hospitality Group (“PHG”) entered into a purchase agreement with
Supreme Bright to buy the hotel whereby PHG would assume the rights to all three contracts. R.
Doc. 1 at 3. PHG subsequently assigned all of its rights, title, and interest in the purchase to Cotton
Exchange, including the contracts with Xcel, Campo, and CRS. Thereafter, Cotton Exchange
executed the purchase agreement with Supreme Bright (the “Assignment and Assumption
Agreement”). R. Doc. 1 at 4. On January 31, 2017, Cotton Exchange and Supreme Bright entered
into a settlement agreement resolving a matter unrelated to the issue at bar, wherein the parties
amended the Assignment and Assumption Agreement’s terms by adding the following language:
Assignor hereby assigns, transfers and conveys all of Assignor’s rights, title and
interest in and to the Assigned Property, including all contractual and personal rights
in and/or related to the Hotel, including without limitation the personal right to sue
for damages, that Assignor has against CRS, subcontractors and vendors to CRS, and
any other contractors or vendors engaged by [Supreme Bright] prior to the Closing
Date.
R. Doc. 199-8 at 4–5.
Cotton Exchange alleges that under the terms of their respective contracts, Cotton Exchange
was indemnified by all three Defendants for any property damage caused by their negligent acts or
omissions related to the scope of their work. R. Doc. 1 at 5; R. Doc. 23 at 3–4. According to Cotton
Exchange, the hotel suffered serious moisture damage as a result of Defendants’ faulty
workmanship, including water damaged walls and floors due to exposed chilled water piping,
missing or improperly sealed insulation, and cracked or leaking draining pans. R. Doc. 23 at 7.
Plaintiff claims it had to close the hotel because of this extensive damage. R. Doc. 23 at 6. Plaintiff
canceled the HVAC contract pursuant to its terms in December 2015 and notified Xcel of the damage
on three occasions. R. Doc. 1 at 5, 6. Xcel did not respond to the demand for indemnity. R. Doc. 1
at 6. Additionally, Plaintiff avers it demanded indemnity from CRS and Campo, but was also
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unsuccessful in these demands. R. Doc. 23 at 7. As a consequence, Plaintiff filed suit on December
16, 2016, bringing breach of contract and negligence claims against all three Defendants and breach
of warranty of good workmanship claims against CRS and Campo. R. Doc. 23 at 7–16. 1
On March 29, 2019, Defendant Campo filed a motion for summary judgement, R. Doc. 162,
which the Court granted in part and denied in part, R. Doc. 190. With respect to Cotton Exchange’s
breach of contract and breach of warranty claims against Campo, summary judgement was granted
because Campo and Supreme Bright’s agreement contained language requiring Supreme Bright to
obtain Campo’s explicit consent before assigning their agreement to a third party. Id. at 8. However,
with respect to Cotton Exchange’s negligence claims against Campo, summary judgement was
denied because part of Cotton Exchange’s complaint alleges it sustained damage caused by Campo
during its ownership of the property. Id. at 10.
On March 22, 2019, Defendant CRS filed a motion to dismiss contending Cotton Exchange
had no right of action in contract or tort. R. Doc. 156. On May 16, 2019, the Court denied CRS’s
motion, holding Supreme Bright retained its personal right to sue CRS after the sale to Cotton
Exchange and thus validly transferred this right to Cotton Exchange over a year after the sale
pursuant to the Assignment and Assumption Agreement. R. Doc. 198.
II.
PRESENT MOTION
In the instant motion, Defendant Xcel contends Cotton Exchange was not assigned the
personal right to sue Xcel under two separate Aaon Unit repair contracts (R. Doc. 195-5; R. Doc.
195-5) or a fan coil unit cleaning (“FCU”) contract (R. Doc. 195-6). R. Doc. 195-1 at 2–3. According
to Xcel, the Assignment and Assumption Agreement assigned the Preventative Maintenance
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Defendants Campo and CRS were added on February 23, 2017 in Plaintiff’s amended complaint. R. Doc. 23.
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Contract only. 2 Id. at 4. Furthermore, Xcel submits a lack of valid assignment warrants a dismissal
of the claims related to the Aaon Unit and FCU contracts because a party not in privy to a contract
cannot recover for its breach. Id. at 8. Additionally, Xcel argues the subsequent purchaser rule bars
Cotton Exchange from recovering under the Aaon Unit and FCU contracts because “an owner of
property has no right or actual interest in recovering from a third party for damage which was
inflicted on the property before his purchase.” Id. at 8–9. Finally, Xcel points to this Court’s order
granting partial summary judgment in favor of Campo, arguing that order is controlling here.
In opposition, Cotton Exchange acknowledges it has not sued Xcel for its work under the two
Aaon Unit repair contracts, and therefore, does not oppose summary judgment on those contracts. R.
Doc.199 at 2. Next, Cotton Exchange argues the Settlement Agreement reached between Supreme
Bright and Cotton Exchange on January 31, 2017 amended the Assignment and Assumption
Agreement specifically assigning to Cotton Exchange Supreme Bright’s personal right to sue on the
FCU contract. Id. at 3. Thus, Cotton Exchange contends, Xcel’s motion to dismiss Cotton Exchange’s
claims based on that contract should be denied. Lastly, Cotton Exchange avers the Court’s ruling on
Defendant Campo’s motion for summary judgement is not applicable here, as Supreme Bright’s
contact with Campo contained language that required Campo’s explicit consent before the contract
could be assigned to a third party, a provision Xcel’s contract does not contain. Id. at 5.
III.
LAW & ANALYSIS
Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the 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.” Celotex Corp.
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Notably, Xcel concedes that the Preventative Maintenance Contract (R. Doc. 195-7) was assigned to Cotton
Exchange in the June 2, 2015 sale from Supreme Bright to Cotton Exchange. Id. at 2.
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v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). “Rule 56(c) 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 the party will bear the burden of proof at trial.” Id. A party moving for summary
judgment bears the initial burden of demonstrating the basis for summary judgment and identifying
those portions of the record, discovery, and any affidavits supporting the conclusion that there is no
genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving
party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue
of material fact. Id. at 324.
A genuine issue of material fact exists if a reasonable jury could return a verdict for the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). “[U]nsubstantiated
assertions,” “conclusory allegations,” and merely colorable factual bases are insufficient to defeat a
motion for summary judgment. See Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994); Anderson, 477
U.S. at 249–50. In ruling on a summary judgment motion, a court may not resolve credibility issues
or weigh evidence. See Int’l Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).
Furthermore, a court must assess the evidence, review the facts and draw any appropriate inferences
based on the evidence in the light most favorable to the party opposing summary judgment. See
Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001); Reid v. State Farm Mut. Auto. Ins.
Co., 784 F.2d 577, 578 (5th Cir. 1986).
a. Analysis
The Court notes at the outset that, with respect to the two Aaon contracts, Xcel’s motion is
unopposed. Thus, the Court will grant summary judgment in favor of Xcel with respect to those two
contracts. As a result, the only remaining dispute before the Court is whether Cotton Exchange ever
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obtained the personal right to sue Xcel under the FCU Contract.
As the Court held previously in this case, the Settlement Agreement reached between
Supreme Bright and Cotton Exchange served as a valid transfer of Supreme Bright’s personal right
to sue “any other contractors or vendors engaged by [Supreme Bright] prior to the Closing Date.” R.
Doc. 198 at 7–9. Apparently requesting the Court reconsider that holding, Xcel now argues, as CRS
did in its motion, that a party’s personal right to sue must be transferred at the time of sale. The
Court declines the invitation to come to a different conclusion and reiterates its prior finding that,
“Based on the Louisiana Supreme Court’s holding in Eagle Pipe and the Second Circuit’s analysis
in Wagoner II, . . . Supreme Bright retained its personal right to sue [Xcel] after the sale and validly
transferred this right to Cotton Exchange on January 31, 2017.” Id. at 9. As a result, the Court will
deny Xcel’s motion with respect to the FCU Contract.
IV.
CONCLUSION
For the foregoing reasons,
IT IS ORDERED that Xcel’s motion, R. Doc. 195, be GRANTED in part and DENIED in
part. To the extent Xcel seeks summary judgment on the two Aaon Contracts, the motion is
GRANTED as unopposed. For all other requests for relief, the motion is DENIED.
6/4/2019
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