R A C M L L C v. Glad Tidings Assembly of God Church of Lake Charles

Filing 17

MEMORANDUM RULING re 7 MOTION to Dismiss For Failure to State a Claim Complaint filed by Glad Tidings Assembly of God Church of Lake Charles. Signed by Judge James D Cain, Jr on 1/7/2022. (crt,Benoit, T)

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 1 of 8 PageID #: 343

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

RACMLLC

CASE NO. 2:21-CV-03580

VERSUS

JUDGE JAMES D. CAIN, JR.

GLAD TIDINGS ASSEMBLY OF GOD
CHURCH OF LAKE CHARLE

MAGISTRATE JUDGE KAY

MEMORANDUM RULING
Before the Court is a “Motion to Dismiss Plaintiff’s Complaint with Prejudice”
(Doc. 7) wherein Defendant, Glad Tidings Assembly of God Church of Lake Charles
(“Glad Tidings”) moves to dismiss Plaintiff, RACM, LLC’s d/b/a ServPro of Saginaw
(“ServPro”) claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Glad Tidings
maintains that because RACM, LLC was not licensed at the time it entered into the
contract, the contract is an absolute nullity.
BACKGROUND
On or about August 27, 2020, Hurricane Laura made landfall causing significant
storm and water damage to Defendant, Glad Tidings church and daycare. 1 On September
5, 2020, Glad Tidings and Plaintiff, ServPro, executed a contract titled “Extreme Team
Saginaw Authorization and Service Contract” (“Contract”) for carpet removal, drywall
work, contents storage and disposition, ceiling tile and grid removal, pew removal, glue

1

Plaintiff’s Amended Complaint, ¶ 6, Doc. 10.

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 2 of 8 PageID #: 344

removal, woodwork, air scrubber usage, water remediation, structural drying, and selective
demolition.2
ServPro commenced work at the church and daycare on September 7, 2020; the
work was substantially completed on or about September 30, 2020.3 On December 14,
2020, Glad Tidings paid ServPro $1,500,000. On December 17, 2020, ServPro presented
Glad Tidings two invoices: (1) Glad Tidings Preschool-Lake Charles, La for $1,242,543.87
and (2) Glad Tidings Church for $2,862,378.98.4 Both invoices were due February 1,
2021.5 Glad Tidings has refused to pay ServPro any further payments despite having
received from its insurer’s third-party administrator, Sedgwick, payments for ServPro’s
invoices, as adjusted by Sedgwick.6
Glad Tidings moves to dismiss the complaint because at the time the parties
executed the contract, ServPro was not licensed as a contractor in the state of Louisiana as
required by Louisiana Revised Statutes 37:2160(A) and 37:167(A).
RULE 12(b)(6) STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows dismissal of a complaint when it
fails to state a claim upon which relief can be granted. The test for determining the
sufficiency of a complaint under Rule 12(b)(6) is that “a complaint should not be dismissed
for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to relief.” Hitt v. City of Pasadena,

2

Id. ¶ 6.
Id. ¶ 7.
4
Id. ¶ ¶ 8 an 9.
5
Id.
6
Id. ¶ ¶ 13-14.
3

Page 2 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 3 of 8 PageID #: 345

561 F.2d 606, 608 (5th Cir. 1977) (per curium) citing Conley v. Gibson, 355 U.S. 41, 4546, 78 S.Ct. 99, (1957).
Subsumed within the rigorous standard of the Conley test is the requirement that the
plaintiff’s complaint be stated with enough clarity to enable a court or an opposing party
to determine whether a claim is sufficiently alleged. Elliot v. Foufas, 867 F.2d 877, 880
(5th Cir. 1989). The plaintiff’s complaint is to be construed in a light most favorable to
plaintiff, and the allegations contained therein are to be taken as true. Oppenheimer v.
Prudential Securities, Inc., 94 F.3d 189, 194 (5th Cir. 1996). In other words, a motion to
dismiss an action for failure to state a claim “admits the facts alleged in the complaint, but
challenges plaintiff’s rights to relief based upon those facts.” Tel-Phonic Servs., Inc. v. TBS
Int’l, Inc., 975 F.2d 1134, 1137 (5th Cir. 1992).
“In order to avoid dismissal for failure to state a claim, a plaintiff must plead specific
facts, not mere conclusory allegations . . .” Guidry v. Bank of LaPlace, 954 F.2d 278, 281
(5th Cir. 1992). “Legal conclusions masquerading as factual conclusions will not suffice
to prevent a motion to dismiss.” Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir.
1995). “[T]he complaint must contain either direct allegations on every material point
necessary to sustain a recovery . . . or contain allegations from which an inference fairly
may be drawn that evidence on these material points will be introduced at trial.” Campbell
v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995).
Under Rule 8 of the Federal Rules of Civil Procedure, the pleading standard does
not require a complaint to contain “detailed factual allegations,” but it “demands more than
an unadorned, the defendant-unlawfully-harmed-me accusation.” Bell Atlantic Corp. v.
Page 3 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 4 of 8 PageID #: 346

Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007). A complaint that offers “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action will not do.”
Id. Nor does a complaint suffice if it tenders “naked assertion[s]” devoid of “further factual
enhancement.” Id., at 557, 127 S.Ct. 1955.
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.” Id., at 570, 127
S.Ct. 1955.
LAW AND ANALYSIS
ServPro filed its original Complaint for breach of contract and open account.7
ServPro filed an Amended Complaint which removed any mention that it performed
contracting services or mold remediation.8 The Amended Complaint also added claims for
promissory estoppel/detrimental reliance and unjust enrichment.9
Glad Tidings maintains that because it is undisputed that ServPro did not possess a
valid contractor’s license or mold remediation license at the time it executed the Contract,
the Contract is absolutely null. Glad Tidings argues that ServPro cannot recover on (1) its
breach of contract claim because Louisiana treats mold remediation and restoration
companies as contractors; (2) ServPro’s promissory estoppel claim must be dismissed
because the underlying contract is absolutely null, and (3) because ServPro fraudulently
attempted to contract with Glad Tidings, ServPro’s unjust enrichment claim must fail.

7

Doc. 1.
Compare Docs. 1 and 10.
9
Id.
8

Page 4 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 5 of 8 PageID #: 347

Breach of Contract
Glad Tidings argues that Louisiana Revised Statute 37:2160(A) makes the Contract
an absolute nullity. Louisiana Revised Statute 37:2160(A) provides as follows;
A.(1) It shall be 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 this
Chapter, unless he holds an active license as a contactor under the provisions
of this Chapter.
(2) It shall be unlawful for any contractor, licensed or unlicensed, who
advertises in any form or in any news medium, to advertise that he is a
licensed contractor without specifying the type of license to which he is
referring.
Louisiana Revised Statute 37:2150.1 defines Contractor as follows:
(4)(a) “Contractor” means any person who undertakes to, attempts to, or
submits a price or bid or offers to construct, supervise, superintend, oversee,
direct, or in any manner assume charge of the construction, alteration, repair,
improvement, movement, demolition, putting up, tearing down, or furnishing
labor, or furnishing labor together with material or equipment, or installing
the same for any building, highway, road, railroad, sewer, grading,
excavation, pipeline, public utility structure, project development, housing,
or housing development, improvement, or any other construction
undertaking for which the entire cost is fifty thousand dollars or more when
the property is to be used for commercial purposes.
Louisiana Civil Code article 2030 states that “[a] contract is absolutely null when it
violates a rule of public order, as when the object of a contract is illicit or immoral. A
contract that is absolutely null may not be confirmed.” Louisiana Civil Code article 2033.
Glad Tidings relies on several Louisiana cases that have nullified contracts entered
into by unlicensed contractors. See, E.g., Executone Sys. Co. of La. v. Jefferson Par. Hosp.
Serv., 186 So.3d 1210, 1218 (La. App. 5 Cir. 2/24/16); Korrapati v. Augustino Bros. Const.,
LLC, 302 So.3d 147, 154 (La.App. 5 Cir. 7/31/20); Quaternary Resource Investigations,
Page 5 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 6 of 8 PageID #: 348

LLC v. Phillips, 316 So.3d 448, 462 (La.App. 1 Cir. 11/19/20)(“Since it is illegal for a
contractor to enter into a contract without being properly licensed, the court will not enforce
an illegal contract by allowing a contractor to recover damages for breach of that
contract.”); Touro Infirmary, Preferred Continuum Care-New Orleans, LP v. Travelers
Prop. Cas. Co. of Am., 2007 WL 496858, at *2-5 (E.D. La. Feb. 13, 2007) ( unpublished)
(holding that a contract to repair Katrina damage entered into between a hospital and an
unlicensed contractor is an absolute nullity and thus “deemed never to have existed”.); see
also United Stage Equip., Inc. v. Charles Carter & Co., Inc., 342 So.2d 1153, 1154-55 (La.
App. 1 Cir. 1977); Boxwell v. Dep’t of Highways, 14 So.2d 627, 631 (La. 1943) (quoting
Quaternary, 316 So.3d at 462).
In Tradewinds Environmental Restoration, Inc. v. St. Tammany Park, LLC, 578 F.3d
255 (5th Cir. 2009), the defendant, an owner of an apartment complex damaged by two
hurricanes, hired plaintiff to provide mold remediation and restoration to the damaged
property. After completing the project, plaintiff filed suit to recover the balance due on the
invoices. Defendant filed a counterclaim and subsequently filed a motion for summary
judgment; defendant maintained that the contract was null and void because plaintiff was
not a licensed contractor. Finding that plaintiff provided mold remediation services in
violation of Louisiana’s licensing requirements, the district court granted defendant’s
motion and nullified the contract; the court of appeal affirmed.
ServPro argues that the “mitigation’ work it performed was “dewatering” which is
excepted from the LSLBC’s license requirement. See https://lslbc.louisiana.gov/faq/doesdewatering-require -a-license-from-lslbc/. Glad Tidings informs the Court that in its
Page 6 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 7 of 8 PageID #: 349

original Complaint, ServPro alleged that “[i]t provides residential and commercial services
which include . . . mold remediation . . . and storm damage restoration.”10 The scope of the
work included carpet removal, drywall work, contents storage and disposition, ceiling tile
and grid removal, pew removal, woodwork, air scrubber usage, water remediation, mold
remediation, structural drying and selective demolition.11 The Amended Complaint, filed
after Glad Tidings filed the instant Motion to Dismiss, removed the language “contracting
services” and “mold remediation,”12 otherwise, the scope of work remained the same.
The Court finds that ServPro is a contractor as defined by Louisiana Revised Statute
37:2150.1. The Court agrees with Glad Tidings that because ServPro was not a licensed
contractor in the state of Louisiana, the Contract is an absolute nullity and therefore the
breach of contract claim must be dismissed.
Promissory estoppel/detrimental reliance and unjust enrichment
In its Amended Complaint filed after the instant Motion to Dismiss was filed,
ServPro added claims of promissory estoppel/detrimental reliance and unjust enrichment.
ServPro argues that its Complaint cannot be dismissed because Glad Tidings’ Motion to
Dismiss failed to address two of its causes of action-promissory estoppel/detrimental
reliance and unjust enrichment. Glad Tidings informs the Court that ServPro added these
two causes of action after the Motion to Dismiss was filed, but that it intends to file a
subsequent Motion to Dismiss to fully address Defendant’s newly raised theories of

10

Doc. 1, ¶ 4.
Id. ¶ 6.
12
Doc. 10, ¶ 4.
11

Page 7 of 8

Case 2:21-cv-03580-JDC-KK Document 17 Filed 01/07/22 Page 8 of 8 PageID #: 350

recovery in its Amended Complaint.13 Considering that the Amended Complaint was filed
after the Motion to Dismiss was filed, the Court will pretermit addressing the issues
concerning the two new causes of action until after the parties’ arguments have been fully
briefed.
CONCLUSION
For the reasons set forth above, the Motion to Dismiss will be granted and the breach
of contract claim asserted by ServPro will be dismissed with prejudice.
THUS DONE AND SIGNED in Chambers on this 7th day of January, 2022.

______________________________________
JAMES D. CAIN, JR.
UNITED STATES DISTRICT JUDGE

13

See footnote 14 of Glad Tidings reply in support of the Motion to Dismiss.

Page 8 of 8