Gulf/Inland Contractors, Inc. v. The Hanover Insurance Company
Filing
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RULING AND ORDER denying 23 RULE 12(b)(6) Motion to Dismiss. Signed by Chief Judge Brian A. Jackson on 6/29/2016. (LLH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
GULF INLAND CONTRACTORS, INC.
CIVIL ACTION
VERSUS
THE HANOVER INSURANCE
COMPANY
NO.: 15-00458-BAJ-RLB
RULING AND ORDER
Before the Court is a Rule 12(b)(6) Motion to Dismiss (Doc. 23), filed by
Defendant, The Hanover Insurance Company (“Hanover”). Hanover seeks to dismiss
the claims of Plaintiff, Gulf Inland Contractors, Inc. (“Gulf Inland”), for failure to
state a claim upon which relief can be granted. (Doc. 23). Gulf Inland filed an
opposition, (Doc. 24), and Hanover filed a reply, (Doc. 27). Oral argument is not
necessary. Jurisdiction is proper pursuant to 28 U.S.C. § 1332.
I.
BACKGROUND
In March of 2010, DQSI, LLC (“DQSI”) contracted with the United States to
replace guide walks and construct new dolphins1 at the Atchafalaya Basin Floodway,
Bayou Sorrel Lock in Iberville Parish, Louisiana (“the Project”). (Civil Action 1300720-BAJ-RLB, Doc. 1 at ¶ 5). Western Surety Company (“Western Surety”)
provided bonds for the Project pursuant to the Miller Act, 40 U.S.C. § 3133, which
requires contractors bidding on government projects to post performance bonds and
A dolphin is a manmade structure that extends above the water and is not connected to shore. It is
used to moor ships, display regulatory information, or provide a dry access facility for ships that are
longer than the dock. Gregory P. Tsinker, Port Engeneering: Planning, Construction, Maintenance,
and Security 474 (Wiley & Sons, Inc., 2004).
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payment bonds covering the costs of labor and materials. (Id. at ¶ 6). Subsequently,
DQSI subcontracted with Sun Coast Contracting, LLC/Sun Coast Contracting
Services, LLC (“Sun Coast”) to do most of the work, (id. at ¶ 7), and Hanover provided
the requisite bonds on behalf of Sun Coast for the Project, (id. at ¶ 8). Sun Coast later
entered into a subcontract with Gulf Inland to complete crane barge services on the
Project. (Id. at ¶ 9). Sun Coast allegedly did not pay Gulf Inland for the work it
provided on the Project and Gulf Inland claims it is owed $144,269.50. (Id.).
On November 5, 2013, Gulf Inland filed Civil Action No. 13-00720 against
DQSI, Western Surety, Sun Coast, and Hanover. U.S. ex rel. Sun Coast Contracting
Servs., LLC v. DQSI, LLC, No. 13-00297-BAJ-RLB, 2014 WL 5431373, at *1 (M.D.
La. Oct. 22, 2014). Gulf Inland alleged the following causes of action: 1) the Miller
Act; 2) breach of contract; 3) open account pursuant to La. R.S. § 9:2781; 4) penalties
pursuant to La. R.S. § 9:4814; 5) detrimental reliance; and 6) unjust enrichment. Id.
On January 23, 2014, the Court consolidated that action with Civil Action No.
13-00297, which also addressed claims arising out of the Project. (Civil Action 1300720-BAJ-RLB, Doc. 5). On October 22, 2014, the Court granted DQSI and Western
Surety’s motion to dismiss, dismissing Gulf Inland’s claims against all defendants
with prejudice. Sun Coast, 2014 WL 5431373, at *5. The Court found that Gulf Inland
was precluded from proceeding under the Miller Act because it had not provided
defendants with the requisite notices mandated by the Miller Act. Id. at *4. As a
result, the Court found that federal jurisdiction was no longer proper for the state
law claims. Id.
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On June 16, 2015, Gulf Inland initiated the instant action against Hanover in
the 19th Judicial District Court for East Baton Rouge Parish. (Doc. 1-1 at p. 5). In the
Petition for Damages, Gulf Inland asserted a singular claim that Hanover, as surety
for Sun Coast, was obligated to pay it for the work it completed pursuant to the
subcontract agreement with Sun Coast. (Id. at ¶ 6). On July 14, 2015, Hanover
removed this action to federal court under diversity jurisdiction. (Doc. 1). On April
19, 2016, Hanover filed the subject motion seeking to dismiss Gulf Inland’s claims
pursuant to the doctrine of res judicata. (Doc. 23). Hanover avers that the Court’s
dismissal of the prior action, with prejudice, precludes Gulf Inland’s claim. (Id.).
II.
LEGAL STANDARD
A motion to dismiss under rule 12(b)(6) tests the sufficiency of the complaint
against the legal standard set forth in Rule 8, which requires “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). On a Rule 12(b)(6) motion, a district court generally “must limit itself to the
contents of the pleadings, including attachments thereto.” See Collins v. Morgan
Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “Determining whether a complaint stated a plausible claim for relief
[is] . . . a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679. “[F]acial plausibility” exists “when the
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plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly,
550 U.S. at 556).
Hence, the complaint need not set out “detailed factual allegation,” but
something “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action” is required. Twombly, 550 U.S. at 555. When conducting
its inquiry, the Court must “accept[] all well-pleaded facts as true and view[] those
facts in the light most favorable to the plaintiff.” Bustos v. Martini Club Inc., 599 F.3d
458, 461 (5th Cir. 2010) (quotation marks omitted).
The Supreme Court has noted that Rule 12(b)(6) requires dismissal whenever
a claim is based on an invalid legal theory:
Nothing in Rule 12(b)(6) confines its sweep to claims of law which are
obviously insupportable. On the contrary, if as a matter of law it is clear
that no relief could be granted under any set of facts that could be proved
consistent with the allegations, a claim must be dismissed, without
regard to whether it is based on an outlandish legal theory or on a close
but ultimately unavailing one.
Neitzke v. Williams, 490 U.S. 319, 327 (1989) (quotation marks and citations omitted).
However, “[f]ederal pleading rules . . . do not countenance dismissal of a complaint
for imperfect statement of the legal theory supporting the claim asserted. Johnson v.
City of Shelby, Miss., 135 S. Ct. 346, 346 (2014) (per curiam).
III.
DISCUSSION
“Claim preclusion, or res judicata, bars the litigation of claims that either have
been litigated or should have been raised in an earlier suit.” Test Masters Educ. Serv.,
Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005) (citing Petro–Hunt, L.L.C. v. United
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States, 365 F.3d 385, 395 (5th Cir. 2004) (quoting In re Southmark Corp., 163 F.3d
925, 934 (5th Cir. 1999))). It is well settled that a res judicata determination is not
contingent upon whether the prior judgment was correct or not. Federated Dep't
Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981) (holding that the res judicata
consequences of a final un-appealed judgment on the merits are not altered by the
fact that the judgment may have been wrong or rested on a legal principle
subsequently overruled in another action).
“The preclusive effect of a prior federal court judgment is controlled by federal
res judicata rules.” Michael v. United States, 616 F. App'x 146, 147 (5th Cir. 2015)
(quoting Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 2000)), cert. denied,
No. 15-8283, 2016 WL 728380 (U.S. May 16, 2016). Under federal res judicata rules,
res judicata is appropriate if each of the following four elements are met: “1) the
parties to both actions are identical (or at least in privity); 2) the judgment in the first
action is rendered by a court of competent jurisdiction; 3) the first action concluded
with a final judgment on the merits; and 4) the same claim or cause of action is
involved in both suits.” Id. Because the parties do not dispute the second element, the
Court shall only review the first, third, and fourth elements.
A.
IDENTICAL PARTIES
In order for res judicata to apply, the parties in both lawsuits must be identical.
United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994). Gulf Inland contends
that the parties are not identical because the prior action involved more defendants
than the instant action. (Doc. 24 at p. 4). However, “[t]he bare fact that other parties
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were involved in the prior action and are not involved in the later action does not oust
preclusion as to parties participating in both actions.” Carey v. Sub Sea Int'l, Inc.,
121 F. Supp. 2d 1071, 1074 (E.D. Tex. 2000) (quoting 18 Charles A. Wright, Arthur
R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 4449 (3d ed. 1998)),
aff'd, 285 F.3d 347 (5th Cir. 2002). It is only required that those parties that were in
the last action be represented in the same capacities in the current action as they
were before. See Damascus v. Five Unknown Named Agents for U.S. Atty. Generals
Off., 892 F.2d 1045, 1990 WL 356 (Westlaw table) (9th Cir. 1990) (“[T]he fact that . .
. additional parties are brought into the second action whose conduct allegedly
contributed to the same wrong as that involved in the first action will not preclude
the application of res judicata.”).
Hanover and Gulf Inland were parties to both actions, and they were
represented in the same capacities. See Stone v. Louisiana Dept. of Revenue, 996 F.
Supp. 2d 490, 500 (E.D. La. 2014), aff'd in part, rev'd on other grounds and remanded,
590 F. App’x 332 (5th Cir. 2014), cert. denied, 135 S. Ct. 2814 (2015) (holding that
because plaintiff and defendant were involved in both actions in the same capacities,
the parties were identical for the purposes of res judicata). The mere subtraction of
three defendants did not change the identities of the parties.2 Therefore, the parties
are identical for the purposes of res judicata.
Prior to the instant action, another action was brought by Gulf Inland in the 32nd Judicial District
Court for Terrebonne Parish against multiple defendants, including Hanover. Doc. 24-1 Ex. A at ¶ 2.
Hanover was dismissed without prejudice from the Terrebonne Parish litigation due to improper
venue. (Doc. 24-1 Ex. B at ¶ 2). A petition for damages was then filed by Gulf Inland in the 19th
Judicial District Court for East Baton Rouge against Hanover. Subsequently, it was removed to this
Court on the grounds of federal diversity jurisdiction. (Doc. 1).
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B.
FINAL JUDGMENT ON THE MERITS
Hanover claims that the Court’s dismissal of Gulf Inland’s claims “with
prejudice” constituted a final judgment on all of Gulf Inland’s claims, not just the one
related to the Miller Act.3 (Doc. 23-1 at pp. 5–6). However, an examination of the
order, in conjunction with the reasoning therein, demonstrates that the prior order
was not an adjudication on the merits of all of Gulf Inland’s claims, just the Miller
Act claim.
Under Rule 41(b), dismissals other than those for lack of jurisdiction, improper
venue, or failure to join a party, operate as an adjudication on the merits unless the
court states otherwise. Fed. R. Civ. P. 41(b); 18A Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedures § 4436 (2d ed.). And when the scope of an
order of dismissal is in dispute, courts have the authority to examine the
circumstances surrounding the order to determine its intent.
See generally
Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 281–83 (5th Cir. 1993).
In the body of the prior Ruling and Order, the Court noted that without the
Miller Act claim, Gulf Inland’s remaining claims had no anchor for supplemental
jurisdiction. Sun Coast, 2014 WL 5431373, at *4. However, in the conclusion of the
3 In support of its position that a dismissal with prejudice is a final judgment of the merits,
Hanover cites to Derr v. Swarek, 766 F.3d 430 (5th Cir. 2014). Derr is factually dissimilar to
the present action because the plaintiffs in Derr voluntarily dismissed the claims against the
defendants with prejudice. 766 F.3d at 440. Here, Gulf Inland’s claims were involuntarily
dismissed on jurisdictional grounds. In other words, the plaintiffs in Derr made the conscious
decision to dismiss their claims with prejudice, while Gulf Inland’s claims were dismissed
because the Court was without jurisdiction.
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Ruling and Order, the Court ordered the dismissal of all of Gulf Inland’s claims using
the following language: “Plaintiff’s claims against Defendants DQSI, Western Surety,
SCCS, and Hanover Insurance, are DISMISSED WITH PREJUDICE.” Id. at *5.
The Court acknowledges that it dismissed all of Plaintiff’s claims “with
prejudice;” nevertheless, the Fifth Circuit has stated that a dismissal with prejudice
is not a per se final judgment on the merits. Miller v. Nationwide Life Ins. Co., No.
06-31178, 2008 WL 3086783, at *5 (5th Cir. Aug. 6, 2008). Rather, the Fifth Circuit
has continuously held that jurisdictional dismissals are “insufficient to serve as final
judgments on the merits for res judicata purposes.” Oreck Direct, LLC v. Dyson, Inc.,
560 F.3d 398, 401 n.2 (5th Cir. 2009) (quoting Miller, 2008 WL 3086783, at *5).
Although the Court dismissed the state law claims with prejudice, the
dismissal was on jurisdictional grounds and not a final judgment on the merits. See
Miller, 2008 WL 3086783, at *5 (finding that the dismissal of a state law claim with
prejudice was not a final judgment on the merits because the state law claim was
dismissed on jurisdictional grounds due to a federal statute that mandated its
dismissal); see also Jordan v. Mitchell, No. 10-746-JJB-CN, 2011 WL 2746304, at *3
(M.D. La. July 12, 2011) (finding that a withdrawal of a Title VII claim does not
render the Whistleblower Protection Act claim, which relied on the Title VII claim for
federal jurisdiction, barred by res judicata). The state law claims were dismissed only
insofar as this Court no longer had the jurisdiction to hear them. And pursuant to
Rule 41(b), a jurisdictional dismissal is not a dismissal on the merits. Therefore, the
Court finds that the prior dismissal was not a final judgment on the merits.
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C.
IDENTICAL CLAIMS
Gulf Inland claims that the claim in the instant action is not identical to the
prior action because the claims in the prior action involved more than one claim. (Doc.
24 at p. 4). To analyze the identity of claims, the United States Court of Appeals for
the Fifth Circuit has adopted the “transactional test,” which requires that the claims
or causes of action arise out of the same nucleus of operative facts. Oreck Direct, LLC,
560 F.3d at 402. “The nucleus of operative facts, rather than the type of relief
requested, substantive theories advanced, or types of rights asserted, defines the
claim.” United States v. Davenport, 484 F.3d 321, 326 (5th Cir. 2007) (citing
Agrilectric Power Partners, Ltd. v. Gen. Elec. Co., 20 F.3d 663, 665 (5th Cir. 1994)).
To determine whether claims arose from the same nucleus of operative facts,
courts often consider, inter alia, whether the facts were related in time, space, or
motivation. Davis v. Dallas Area Rapid Transit, 383 F.3d 309, 313 (5th Cir. 2004).
Here, the claims in both actions are related in time and space as they are based on
the exact same factual allegations, i.e. Gulf Inland did not receive payment for
services rendered on the Project. Additionally, although the number of claims brought
in the two actions vary, Gulf Inland’s motivation for bringing the suit is the same: to
recover the money it believes it is owed on the Project. Despite the identicalness of
the claims, as the Court stated above, a final judgment on the merits was not
rendered on the prior claims. Therefore, Plaintiff’s current claims are not barred on
the basis of res judicata.
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IV.
CONCLUSION
Accordingly,
IT IS ORDERED that Hanover’s Rule 12(b)(6) Motion to Dismiss (Doc.
23) is DENIED.
Baton Rouge, Louisiana, this 29th day of June, 2016.
______________________________________
BRIAN A. JACKSON, CHIEF JUDGE
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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