Material Handling Technologies Inc v. Southland Process Group L L C et al

Filing 92

MEMORANDUM RULING denying 66 Motion for Summary Judgment; granting in part and denying in part 77 Motion for Summary Judgment. The motion is GRANTED as to Material Handling'S unjust enrichment claim and that claim is DISMISSED WITH PREJUDICE. The motion is DENIED as to Material Handling'S breach of contract and PWA claims. Signed by Judge Elizabeth E Foote on 3/3/2020. (crt,Keifer, K)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

MATERIAL HANDLING TECHNOLOGIES,
INC.

CIVIL ACTION NO. 16-CV-1297

VERSUS

JUDGE ELIZABETH FOOTE

SOUTHLAND PROCESS GROUP LLC,
ET AL.

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
This case arises out of a dispute between a subcontractor, a contractor, and an owner.
Plaintiff, subcontractor Material Handling Technologies, Inc. (“Material Handling”), filed suit
against Southland Process Group, LLC (“Southland”), its contractor, and IntegriCo Composites,
Inc. (“IntegriCo”), the owner of the project, for unpaid costs. Now before the Court is Material
Handling’s Motion for Summary Judgment. [Record Document 66]. Southland has filed a CrossMotion for Summary Judgment and an Opposition. [Record Documents 77 & 78]. Material
Handling has filed an Opposition to the Cross-Motion and a Reply in support of its own Motion.
[Record Documents 83 & 86]. For the reasons discussed below, Material Handling’s Motion for
Summary Judgment [Record Document 66] is DENIED as to Southland. 1 Southland’s CrossMotion for Summary Judgment [Record Document 77] is GRANTED in part and DENIED in
part. The motion is GRANTED as to Material Handling’s unjust enrichment claim and that claim
is DISMISSED WITH PREJUDICE. The motion is DENIED as to Material Handling’s breach
of contract and Louisiana Private Works Act claims.

1

Material Handling’s Motion for Summary Judgment as to IntegriCo will be discussed in a
separate ruling.
1

FACUTAL BACKGROUD
Material Handling sets out the facts of the case as follows. IntegriCo is an entity that
manufactures plastic railroad ties at its facility in Webster Parish, Louisiana. Record Document
66-1, p. 1. IntegriCo leases this property from the North Webster Parish Industrial District. Id. at
2. In December of 2014, IntegriCo hired Southland to perform work on a construction project to
make improvements to that property. Record Document 1, ¶ 5. In April of 2015, Southland
subcontracted with Material Handling to provide goods and services as part of this project. Id. at
¶ 6. Material Handling installed a conveyor system in the IntegriCo building between June and
August of 2015. Record Document 66-1, p. 3. Material Handling asserts that its work met or
exceeded the standards set out in its contract with Southland. Id. Material Handling now alleges
that although it was initially paid according to the agreed-upon payment schedule, it is currently
owed $82,635.00 for goods and services. Id.; Record Document 1, ¶s 11 & 12.
Material Handling brings claims against Southland and IntegriCo under the Louisiana
Private Works Act (the “PWA”). Record Document 1, ¶ 16. Material Handling claims that,
pursuant to the PWA, its performance of work on the property gives rise to a claim of privilege
against Southland and IntegriCo as the contractor and the owner. Id. Material Handling states that
this privilege secures the full amount of unpaid principal for the work, the interest due on that
amount, and the fees incurred for filing the statement of privilege. Id. at ¶ 18.
Material Handling also claims that Southland is liable for breach of contract and, as a result,
is liable for damages caused by its failure to perform under the contract between the parties,
pursuant to Louisiana Civil Code article 1994. Id. at ¶ 15. Furthermore, Material Handling alleges
that Southland is liable for all the attorneys’ fees incurred for this claim because it constitutes a
claim on an open account pursuant to Louisiana Revised Statute § 9:2781. Id. at ¶ 20. In the

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alternative, Material Handling claims that Southland has been unjustly enriched by the goods and
services Material Handling provided. Id. at ¶ 21.
LAW AND ANALYSIS
I.

Summary Judgment Standard
Federal Rule of Civil Procedure 56(a) directs a court to “grant summary judgment if the

movant shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Summary judgment is appropriate when the pleadings, answers to
interrogatories, admissions, depositions, and affidavits on file indicate that there is no genuine
issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). When the burden at trial will rest on the non-moving
party, the moving party need not produce evidence to negate the elements of the non-moving
party’s case; rather, it need only point out the absence of supporting evidence. See id. at 322–23.
However, “if the movant bears the burden of proof on an issue, . . . he must establish beyond
peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.”
Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986).
If the movant satisfies its initial burden of showing that there is no genuine dispute of
material fact, the nonmovant must demonstrate that there is, in fact, a genuine issue for trial by
going “beyond the pleadings” and “designat[ing] specific facts” for support. Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Celotex, 477 U.S. at 325). “This burden is not
satisfied with some metaphysical doubt as to the material facts,” by conclusory or unsubstantiated
allegations, or by a mere “scintilla of evidence.” Id. (internal quotation marks and citations
omitted). However, “[t]he evidence of the non-movant is to be believed, and all justifiable
inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)

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(citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158–59 (1970)). While not weighing the
evidence or evaluating the credibility of witnesses, courts should grant summary judgment where
the critical evidence in support of the nonmovant is so “weak or tenuous” that it could not support
a judgment in the nonmovant’s favor. Armstrong v. City of Dall., 997 F.2d 62, 67 (5th Cir. 1993).
Additionally, Local Rule 56.1 requires the movant to file a statement of material facts as
to which it “contends there is no genuine issue to be tried.” The opposing party must then set forth
a “short and concise statement of the material facts as to which there exists a genuine issue to be
tried.” W.D. La. R. 56.2. All material facts set forth in the movant’s statement “will be deemed
admitted, for purposes of the motion, unless controverted as required by this rule.” Id.
II.

Summary of Arguments
A.

Material Handling’s Motion for Summary Judgment

Material Handling argues that IntegriCo and Southland are liable under the PWA. Record
Document 66-1, p. 4. The PWA provides subcontractors who perform improvements to
immoveable property with a claim against the owner and the contractor for the price of their work.
La. Stat. Ann. § 9:4802(A)(1). The statute also provides that claims against the owner of the
property “shall be secured by a privilege on the immovable on work which is performed.” Id. at §
9:4802(B). Material Handling asserts that it has properly filed a statement of privilege in the public
records in accordance with § 9:4822 and has therefore secured its claim to the unpaid principal for
the work it performed on IntegriCo’s property. Record Document 66-1, p. 5.
Material Handling also claims that Southland is liable for breach of contract. Id. at 8. In
furtherance of this claim, Material Handling attempts to rebut one of the affirmative defenses
raised by Southland. In its answer, Southland states that Material Handling’s claims are barred
because the contract between the parties contains a suspensive condition, in this case a pay-if-paid

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clause, that has not yet been fulfilled. Record Document 17, p. 2. Material Handling first argues
that this pay-if-paid clause does not relieve Southland of its payment obligations because the clause
was included in the standard form purchase order provided by Southland and should therefore be
interpreted against Southland pursuant to Louisiana Civil Code article 2056. Record Document
66-1, p. 6. Material Handling also argues that the clause does not indicate a departure from the
payment schedule set forth in the purchase order. Id. at 6–7. Finally, Material Handling contends
that even if the Court finds that the clause renders the payment schedule moot, IntegriCo’s
unanticipated failure to pay Southland merely transforms the term of payment into a “reasonable
time period,” which has now passed. Id. at 7. The Court notes that Material Handling does not
challenge the validity of its contract with Southland or the validity of the payment provision itself.
B.

Southland’s Opposition/Cross-Motion for Summary Judgment

In response to Material Handling’s motion, Southland filed a Cross Motion for Summary
Judgment and an Opposition. Record Documents 77 & 78. The same brief was submitted in
support of each filing. See Record Document 77-3 & 78. Southland contends that Material
Handling has no action against it for breach of contract because the pay-if-paid clause designates
payment by IntegriCo as a suspensive condition that must occur before Southland is obligated to
pay Material Handling. Record Document 77-3, p. 4. According to Southland, Material Handling
has not demonstrated that IntegriCo has paid Southland, so Material Handling cannot show that
Southland is obligated to pay the outstanding principal. Id. at 9.
Southland argues that the pay-if-paid clause defeats Material Handling’s claim under the
PWA for the same reasons. Id. at 14–15. Additionally, Southland argues that factual issues exist
as to whether Material Handling has a valid PWA claim because it has not provided any proof that
its statement of privilege was filed within the required time period. Id. at 17. Southland points out

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that although Material Handling claims that its statement of privilege was filed within sixty days
after the filing of a notice of termination, as required by Louisiana Revised Statute § 9:4822,
Material Handling provides no proof showing that a notice of termination was ever filed. Id. at 18–
19.
Finally, Southland rebuts Material Handling’s unjust enrichment claim by arguing that an
action for unjust enrichment is only available when a plaintiff has no other legal remedy. Id. at 16–
17. Because Material Handling has a remedy under the law for breach of contract and under the
PWA, Southland argues that it cannot assert a claim of unjust enrichment. Id. at 17.
C.

Material Handling’s Opposition

In its opposition, Material Handling argues that Southland’s motion should be denied
because: (1) Southland’s interpretation of the pay-if-paid clause is incorrect; (2) Southland has not
demonstrated that it has not been paid by IntegriCo; and (3) Southland has not demonstrated that
it is free from fault for IntegriCo’s nonpayment. Record Document 83, p. 5.
As to its first point, Material Handling claims that because the statement immediately
before the pay-if-paid clause states that the payments “shall” be made in accordance with the
payment schedule, the payments are mandatory and not contingent on any condition. Id. at 13.
Alternatively, Material Handling argues that the payment schedule and the pay-if-paid clause are
in conflict with one another. Id. at 16. Second, Material Handling contends that even if the pay-ifpaid clause is a suspensive condition, Southland has not shown that it has not been paid by
IntegriCo and thus that the suspensive condition remains unfulfilled. Id. at 5. Finally, Material
Handling argues that Southland is at fault for IntegriCo’s nonpayment and therefore that the
suspensive condition should be regarded as fulfilled. Id. at 11.

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D.

Material Handling’s Reply to Southland

On December 3, 2019, Material Handling filed a reply to Southland’s opposition. 2 Record
Document 86. Upon review, this reply closely parallels Material Handling’s opposition [Record
Document 83] in substance but includes an additional section responding to Southland’s argument
that Material Handling has submitted no proof that it timely filed the statement of privilege
necessary to preserve its PWA claim. Id. at 19. Material Handling refers the Court to a Notice of
Termination that IntegriCo filed in the public records of Webster Parish on December 7, 2015. Id.
at 19; Record Document 83-9, p. 2. Material Handling alleges that its statement of privilege was
timely filed pursuant to § 9:4822 because December 7, 2015, is within 60 days of November 13,
2015, when the statement was filed. Id. Record Document 86, p. 19.
III.

Southland’s Cross-Motion for Summary Judgment
The Court will address Southland’s cross-motion for summary judgment first because the

question of whether a suspensive condition exists must be resolved before the Court can determine
whether any such condition has been fulfilled, and the existence of a suspensive condition is central
to the issues in Southland’s motion.
A.

Breach of Contract Claim

In order to decide whether Southland’s cross-motion for summary judgment should be
granted as to the breach of contract claim, the Court must resolve two issues. First, the Court must
make the legal determination as to whether the payment clause contained in Southland’s contract

2

The Court observes that the deadline to file this reply was seven days after the filing of
Southland’s opposition. See Record Document 67. The opposition was filed on November 5, 2019,
and this reply was not filed until December 3, 2019. Record Documents 78 & 86. Therefore, this
reply is untimely. However, because its content is similar to Material Handling’s timely-filed
opposition [Record Document 83] and because no party has objected, the Court will consider the
reply.
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with Material Handling constitutes a suspensive condition. Second, if a suspensive condition does
exist, the Court must decide whether there are enough facts in the record to determine whether that
condition remains unfulfilled.
1.

The pay-if-paid clause is a suspensive condition

This breach of contract suit presents a narrow issue: whether the payment provision in the
contract between Southland and Material Handling is actually a “pay-when-paid” clause or a “payif-paid” clause. The distinction between these two types of clauses is established by the Louisiana
jurisprudence on this topic. A pay-when-paid clause is a term of payment, whereas a pay-if-paid
clause is a suspensive condition. Tymeless Flooring, Inc. v. Rotolo Consultants, Inc. 2014-CA1392 (La. App. 4. Cir. 5/20/15); 172 So. 3d 145, 146. The most important factor in distinguishing
between a pay-when-paid clause and a pay-if-paid clause is the language used in the contract. Id.
at 152.
Under Louisiana law, 3 obligations between parties can be subject to both conditions and
terms. An obligation is subject to a condition if it is dependent on an uncertain event. La. Civ.
Code art. 1767. An obligation that may not be enforced until the uncertain event occurs is subject
to a suspensive condition. Id. When an obligation is subject to a suspensive condition, “the very
existence of the obligation depends upon the occurrence of the event.” Cahn. Elec. Co. v. Robert
E. McKee, Inc., 490 So. 2d 647, 652 (La. Ct. App. 1986). An obligation may also be subject to a
term of performance. La. Civ. Code. art 1778. A term can be certain, for a fixed period of time, or
uncertain, for a period of time that is either determinable by the intent of the parties or by the

3

Because this case is based on diversity jurisdiction, the Court must apply the substantive law of
the forum state, here Louisiana. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir.
2010) (citing Erie R. v. Tompkins, 304 U.S. 64, 78 (1938)).
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occurrence of a future and certain event. Id. An obligation that is subject to a term is already in
existence. S. States Masonry, Inc. v. J.A. Jones Constr. Co., 507 So. 2d 198, 203 (La. 1987).
In Southern States Masonry v. J.A. Jones Construction, the Louisiana Supreme Court was
asked to determine whether the payment provisions of two construction contracts contained
uncertain terms or suspensive conditions. Id. at 200. The case arose after the Louisiana World
Expedition, Inc. (“LWE”), the owner of the 1984 Louisiana World’s Fair, filed for bankruptcy
before paying its general contractors. Id. at 199. The case consolidated two lawsuits brought by
subcontractors demanding payment from the general contractors for the work they had performed.
Id. Both contracts between the general contractors and subcontractors contained payment
provisions stating that the subcontractor would receive payment after the general contractor was
paid. Id. at 200.
One of the payment provisions stated that the contractor would pay the subcontractor “upon
receipt of payment from the owner.” Id. at 200. In the other case, the payment provision stated that
the contractor would pay the subcontractor for each month “for which payment has been made by
said Owner to said Contractor.” Id. at 201. Both contracts also contained a provision stating that
final payment to the subcontractor would be made after final payment by the owner to the general
contractor. Id. at 200–01. The general contractors argued that those payment provisions established
that payment by the owner was a suspensive condition to their obligation to pay the subcontractors.
Id. at 200. The Court disagreed, holding that both provisions were terms of payment that “at most
retard[ed] the execution of the contractor’s obligation for a reasonable time” and did not
“suspensively condition the contractors’ obligation to make payments until the contractors were
in fact paid by the owner.” Id. at 202–03.

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The Court found that in both contracts, the owner’s payment to the general contractor was
viewed as a reasonably certain event and neither contract contemplated the owner’s possible
insolvency. Id. at 201. Based on the language of the payment provisions, the Court concluded that
it was not reasonable to infer that the parties had anticipated that the general contractors would not
be required to pay the subcontractors if they were not paid by LWE. Id. at 203–04. Furthermore,
both payment provisions were phrased in mandatory terms. Id. at 204. The Court opined that, had
the payment provisions used the conjunction “if,” those provisions “might have evidenced the
parties’ intent to condition receipt of payment by the subcontractor upon receipt of payment from
the owner to the general contractor.” Id. at 206. Thus, even though the Court found no suspensive
conditions in the contracts at issue in Southern States, it acknowledged that a different result could
be reached had the contracts used different language. Id.
In Imagine Construction, Inc. v. Centex Landis Construction Co., Inc., the Louisiana
Fourth Circuit Court of Appeals applied the holding of Southern States to a payment provision in
a construction contract and reached the opposite result. 97-CA-1653 (La. App. 4 Cir. 2/11/98); 707
So. 2d 500, 502. The court in Imagine was asked to decide whether a subcontractor’s claim for
payment against the general contractor was premature because of the owner’s nonpayment to the
general contractor. Id. at 501. In Imagine, the payment provision stated as follows:
Notwithstanding anything to the contrary . . . Subcontractor shall not be entitled to
receive any progress payment or final payment prior to Centex Landis’ actual
receipt of that payment from Owner. Subcontractor agrees that Centex Landis’
actual receipt of full payment from the owner shall be a condition precedent to the
bringing of any action by Subcontractor hereof against Centex Landis or its surety,
if any, relating to Contractor’s failure to make payment . . . .
Id. at 502 (emphasis added). The court found that this language was distinguishable from the
language at issue in Southern States because it recognized the possibility that “there may be an
utter and complete failure of either progress payments or full payments.” Id. The court emphasized
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that the most significant language in the clause was the subcontractor’s agreement that full
payment from the owner was a condition precedent to any action against the contractor. Id.; see
Southern States, 507 So. 2d at 204 n.15 (stating that the term “condition precedent” is a common
law term analogous to the civilian concept of a suspensive condition).
The same issue came before the Louisiana Fourth Circuit again several years later in
Tymeless Flooring, Inc. v. Rotolo Consultants, Inc. 172 So. 3d at 146. The payment provision in
this case stated that 90% of the subcontractor’s invoices would be paid after payment by the owner
for the subcontractor’s work. Id. at 147. The other 10% was to be paid “upon satisfactory
completion of this contract and release of final payment by the Owner.” Id. The court observed
that the determinative factor in interpreting whether a payment provision is a pay-if-paid clause,
and therefore a suspensive condition, is the language in the contract. Id. at 152 (citing Solomon &
Filipowski, Inc. v. Boes Iron Works, Inc., 621 So. 2d 882, 884 (La. App. 4 Cir. 1993)). Based on
the holdings of Southern States and Imagine, the court found that the payment provision did not
contain the “condition precedent” language that would qualify it as a suspensive condition. Id. at
153–54. However, the court also acknowledged, as the Louisiana Supreme Court did in Southern
States, that if the language of the contract had included a phrase like “unless and until” or
“condition precedent,” the court could have reached a different conclusion. Id. at 153.
Turning to the case at hand, the Court finds that the payment provision in the contract
between Material Handling and Southland obviously contains a pay-if-paid clause that designates
payment by IntegriCo as a suspensive condition to Southland’s obligation to pay Material
Handling. The relevant language states:
Supplier acknowledges and agrees that Contractor’s receipt of payment from
Owner is an express condition precedent to Contractor’s obligation to pay Supplier
under this CPO.

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Record Document 66-3, p. 36, ¶ 12 (emphasis added). This language demonstrates that the parties
acknowledged the possibility that the owner may fail to pay the general contractor. See Imagine,
707 So. 2d at 502. Furthermore, this payment provision uses the term “condition precedent,” which
is analogous to a suspensive condition. Southern States, 507 So. 2d at 204 n.15. The Court
acknowledges that this suspensive condition transfers the risk of the owner’s nonpayment wholly
to Material Handling as the subcontractor. See Tymeless, 172 So. 3d at 153.
Because the Court finds that the payment provision clearly contains a suspensive condition,
it is therefore unpersuaded by Material Handling’s arguments that the clause should be read as a
term of payment. Contrary to Material Handling’s contention, the purchase order should not be
interpreted against Southland even though Southland supplied it because this rule of interpretation
only applies when there is doubt as to a contract’s meaning. See La. Civ. Code art. 2056.
Furthermore, the pay-if-paid clause and the payment schedule are not mutually exclusive. If the
Court were to adopt Material Handling’s view on this point, then no pay-if-paid clause could ever
be valid in a contract that contained a payment schedule. To the contrary, as the court in Imagine
found, contracts can contain pay-if-paid clauses if the language is sufficiently explicit. Imagine,
707 So. 2d at 502. The language in this contract is sufficiently explicit to demonstrate the parties’
intent to subject their obligation to a suspensive condition. Thus, the Court finds that the pay-ifpaid clause constitutes a valid suspensive condition to Southland’s obligation to Material
Handling.
2.

Whether the condition has been fulfilled is an issue of fact

Although the contract between Southland and Material Handling contains a suspensive
condition, that is not sufficient to support a summary judgment ruling in Southland’s favor.
Southland must also demonstrate that the condition, payment by IntegriCo, remains unfulfilled.

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Material Handling argues that Southland has failed to do so. Record Document 83, p. 8. Material
Handling points to an interrogatory response by Southland stating that it has been paid
$7,694,309.26 by IntegriCo and an October 5, 2015 invoice from Southland to IntegriCo reflecting
that IntegriCo paid Southland a total of $9,219,477.00. Id.; See Record Documents 83-3, p. 2; 843, p. 1. Material Handling claims that these documents contradict Southland’s assertion that it has
not been paid by IntegriCo. Record Document 83, p. 8. This showing by Material Handling is
certainly sufficient to create a genuine issue of material fact as to whether IntegriCo has paid
Southland and to defeat summary judgment as to the breach of contract claim. However, as will
be more thoroughly discussed in the section analyzing Material Handling’s motion, the Court
believes that the real fact at issue is not whether IntegriCo has paid any money at all to Southland,
but whether IntegriCo has paid Southland in accordance with the intended definition of “payment”
in the pay-if-paid clause, thus triggering Southland’s obligation to pay additional amounts to
Material Handling. To be clear, the pay-if-paid clause does not operate as a bar to recovery if
Material Handling can present evidence that payment, within the meaning of the contract, has been
made to Southland.
B.

Private Works Act Claim

Southland contends that because Material Handling’s PWA claim also arises from the
contract, it cannot be liable under the PWA for the same reasons that it is not liable for breach of
contract. Record Document 77-3, pp. 14–15. Southland also argues that a pay-if-paid clause can
be raised by a contractor as a valid defense to a PWA claim. Id. at 15. In Bear Industries, Inc. v.
Hanover Insurance Company, the Louisiana First Circuit Court of Appeals held that a contractor’s
surety could not avail itself of a pay-if-paid clause as a defense to a subcontractor’s PWA claim.
2017 CA 0301 (La. App. 1 Cir. 1/4/18); 241 So. 3d 1159, 1166. The court reasoned that allowing

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a surety to assert this defense against a subcontractor, where the owner has escaped liability to the
subcontractor because of a payment bond, would contravene the protections delineated in the
PWA. Id. In reaching this conclusion, the court did not address whether a contractor itself, rather
than a contractor’s surety, would be able to assert a pay-if-paid clause as a defense to a
subcontractor’s PWA claim. The Court has been unable to locate, and the parties have not
provided, any other case law on this issue.
The PWA grants subcontractors the right to recover the costs of labor and materials from
a party with whom there is no contract in order to facilitate the construction of improvements.
Metro. Erection Co., Inc. v. Landis Const. Co., Inc., 627 So. 2d 144, 148 (La. 1993). Obviously, a
subcontractor enjoys a privity of contract with its contractor that it does not have with an owner or
a contractor’s surety. In addition to its rights under the PWA, a subcontractor has an action for
breach of contract against its contractor that it does not have against an owner or a contractor’s
surety. Therefore, the Court finds that it would not render the protections of the PWA meaningless
to allow Southland to assert the pay-if-paid clause as a defense to Material Handling’s PWA claim
against it because a contract exists between Southland and Material Handling.
A subcontractor’s claim under the PWA is based on obligations arising out of the
performance of work under a contract. La. Stat. Ann. § 9:4802(A). Because the Court has
determined that the pay-if-paid clause represents a suspensive condition, whether Southland owes
any obligation to Material Handling under the contract depends on whether that condition has been
fulfilled. Thus, the same issues of material fact that prevent Southland from succeeding on
summary judgment as to the breach of contract claim also prevent it from succeeding on summary
judgment as to the PWA claim. For the sake of clarity, the Court emphasizes that Southland’s

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assertion of the pay-if-paid clause as a defense has no impact on Material Handling’s PWA claims
against IntegriCo, which the Court will resolve in a separate ruling.
C.

Unjust Enrichment Claim

Southland argues that Material Handling cannot assert an unjust enrichment claim because
such a claim is only available when a plaintiff has no other legal remedy. Record Document 77-3,
pp. 16–17. An unjust enrichment claim involves five elements: “(1) an enrichment of the
defendant; (2) an impoverishment of the plaintiff; (3) a connection between the enrichment and
the resulting impoverishment; (4) an absence of justification or cause for the enrichment and
impoverishment; and, (5) there must be no other remedy at law available to plaintiff.” Garber v.
Badon & Ranier, 2007-1497 (La. App. 3 Cir. 4/2/08); 981 So. 2d 92, 100, writ denied, 08-1154
(La. 9/19/08); 992 So. 2d 943. Under the fifth element, “it is not the success or failure of other
causes of action, but rather the existence of other causes of action, that determine whether unjust
enrichment can be applied.” Id. (emphasis in original). In this case, no party disputes that a valid
contract exists between Material Handling and Southland. Although a genuine issue of material
fact exists as to whether Southland currently owes Material Handling any money under that
contract, the remedy in this case is governed by contract law and contract law provides Material
Handling with a cause of action. Therefore, Material Handling cannot meet the fifth element of an
unjust enrichment claim and that claim is DISMISSED WITH PREJUDICE.
D.

Conclusion of Southland’s Cross-Motion for Summary Judgment

The Court finds that Material Handling has demonstrated that there are genuine issues for
trial by going beyond the pleadings and designating specific facts in support of its argument that
Southland has already been paid by IntegriCo. Liquid Air Corp., 37 F.3d at 1075. Therefore,
Southland’s Cross-Motion for Summary Judgment [Record Document 77] is hereby GRANTED

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in part and DENIED in part. The motion is GRANTED as to the unjust enrichment claim and
DENIED as to the breach of contract and PWA claims.
IV.

Material Handling’s Motion for Summary Judgment as to Southland
Because the Court finds that a genuine issue of material fact exists as to whether the

suspensive condition governing Southland’s obligation to Material Handling has been fulfilled,
Material Handling’s motion for summary judgment as to Southland must be denied. However, the
Court will analyze Material Handling’s motion separately in order to clarify the factual issues.
A.

Breach of Contract Claim

Material Handling claims that it is entitled to summary judgment because Southland has
failed to prove two essential elements of its affirmative defense: (1) that it has not been paid by
IntegriCo and (2) that it is not at fault for IntegriCo’s failure to pay. Record Document 86, p. 8. As
an initial matter, the Court is unpersuaded by Material Handling’s argument that Southland must
demonstrate that it is free from fault as to IntegriCo’s nonpayment in order to survive summary
judgment. Material Handling refers the Court to Louisiana Civil Code article 1772 which states:
“[a] condition is regarded as fulfilled when it is not fulfilled because of the fault of the party with
an interest contrary to the fulfillment.” Under this article, if IntegriCo’s nonpayment is Southland’s
fault, the suspensive condition governing Southland’s obligation to Material Handling would be
regarded as fulfilled and Southland would currently owe payment to Material Handling. Despite
this legal principle, Material Handling offers no legal support for its assertion that Southland bears
the burden of proof on this issue and cannot survive summary judgment without such proof.
Furthermore, Material Handling’s argument that Southland is at fault is based on a separate case
currently pending between IntegriCo and Southland in which IntegriCo alleges that it stopped
making payments to Southland because Southland breached its contract. Record Document 86, p.

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13. However, the existence of this other case demonstrates that there is at the very least an issue
of fact as to whether Southland is at fault for IntegriCo’s nonpayment. Therefore, Material
Handling cannot rely on this case to positively demonstrate that Southland is at fault.
Material Handling argues for the first time in its reply that even if the pay-if-paid clause is
a suspensive condition, Southland has been already been paid by IntegriCo and therefore the
condition has already been fulfilled. 4 Again, the Court finds that the fulfillment of this condition
is a genuine issue of material fact. The factual issue is created by ambiguity as to the intended
definition of the word “payment” in the pay-if-paid clause. Under Louisiana law, “[i]nterpretation
of a contract is the determination of the common intent of the parties.” La Civ. Code art. 2045. If
the words in the contract are clear and explicit, “no further interpretation may be made in search
of the parties’ intent.” Id. art. 2046. However, if the text of a contract is subject to two or more
reasonable interpretations, a court may look to parol evidence to determine the parties’ intent.
Cenac v. Orkin, L.L.C., 941 F.3d 182, 190 (5th Cir. 2019) (citing Am. Elec. Power Co. v. Affiliated
FM Ins. Co., 556 F.3d 282, 286 (5th Cir. 2009)). In this case, the Court finds that parol evidence
is needed to determine the parties’ intent.

4

It is the practice of the Fifth Circuit and its district courts to refuse to consider arguments raised
for the first time in reply briefs. Gillaspy v. Dallas Indep. Sch. Dist., 278 F. App’x 307, 315 (5th
Cir. 2008) (per curiam). However, the Fifth Circuit has also held that Federal Rule of Civil
Procedure 56(c) “merely requires the court to give the non-movant an adequate opportunity to
respond prior to a ruling.” Sw. Bell Tele. Co. v. City of El Paso, 346 F.3d 541, 545 (5th Cir. 2003)
(quoting Jackson v. Widnall, 99 F.3d 710, 713 (5th Cir. 1996)). Material Handling argues that even
though its reply references evidence not attached to its original motion, the Court should consider
that evidence because Southland had an opportunity to respond in its reply to Material Handling’s
opposition. Record Document 86, p. 9. The Court agrees that Southland could have filed a reply
in support of its cross-motion for summary judgment and responded to the new arguments and
evidence raised in Material Handling’s reply but chose not to do so. Therefore, the Court will
consider the new arguments and evidence contained in Material Handling’s reply.
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The ambiguity of the pay-if-paid clause is reflected by its text. The language is much less
detailed than the payment provisions in the cases previously discussed. For instance, the payment
provision in Tymeless stated that 90% of the subcontractor’s invoices would be paid after payment
by the owner for the subcontractor’s work and that the remaining 10% would be released upon
completion of the contract and final payment by the owner. 172 So. 3d at 147. The clause in
Imagine stated that that subcontractor would not be “entitled to receive any progress payment or
final payment prior to [the contractor’s] actual receipt of that payment from Owner.” 707 So. 2d
at 502. The clause also specified that the contractor’s receipt of full payment from the owner was
a condition precedent to any action the subcontractor could bring against the contractor. Id. In
contrast, the pay-if-paid clause in the instant case merely states:
Supplier acknowledges and agrees that Contractor’s receipt of payment from
Owner is an express condition precedent to Contractor’s obligation to pay Supplier
under this CPO.
Record Document 66-3, p. 36, ¶ 12. As Material Handling points out, this clause does not explicitly
require payment in full or payment in installments. Record Document 86, pp. 11–12. Material
Handling interprets this ambiguity to mean that the word “payment” refers to any exchange of
money from IntegriCo to Southland. Id. at 12. However, that interpretation is no more supported
by the text than payment in full or installment payments.
The ambiguity as to the meaning of the word “payment” is further highlighted by the
parties’ filings in this case. As noted previously, Southland stated in its discovery responses that it
had received $7,694,309.26 from IntegriCo. Record Document 83-3, p. 2. Additionally, an October
5, 2015, invoice from Southland to IntegriCo reflects that a total of $9,219,477.00 had been paid
by IntegriCo up to that date. Record Document 83-4, p. 1. This invoice also lists an outstanding
balance of $496,236.43 and an additional unpaid charge of $1,135,401.41 for the month of August,

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showing that some amounts owed to Southland remained unpaid. Id. Despite some evidence of
payment, Southland asserted in its Statement of Uncontested Facts that it has not paid Material
Handling’s most recent invoices because it has not been paid by IntegriCo. Record Document 771, p. 3, ¶ 11. Similarly, Southland submits the declaration of Michael Ballard, Southland’s CEO,
wherein he states that “Southland has not been paid by IntegriCo for its contracting services
pursuant to their construction contract for the Project” and that payment to Material Handling is
not yet due because “IntegriCo has not remitted payment to Southland.” Record Document 77-4,
p. 2.
Material Handling argues that this combination of filings shows that Southland has made
contradictory statements regarding payment by IntegriCo. Record Document 86, p. 9. Instead, the
Court views Southland’s filings and Material Handling’s interpretation of those filings as an
indication that Southland and Material Handling have separate understandings of the meaning of
the word “payment” in the pay-if-paid clause. This ambiguity has created a genuine issue of
material fact as to whether the suspensive condition created by that clause has been fulfilled. The
Court acknowledges that Southland, as a party relying on a suspensive condition, has the burden
of proving the “nonoccurrence of the event on which the obligation was conditioned.” Sams’s Style
Shop v. Cosmos Broad. Corp., 694 F.2d 998, 1004 (5th Cir. 1982). However, the Court is not
willing to grant summary judgment when it finds that the record contains a genuine issue of
material fact as to whether the suspensive condition has been fulfilled. Thus, summary judgment
cannot be granted as to Material Handling’s breach of contract claim.
B.

Private Works Act Claim

The same issue of fact that prevents Material Handling from succeeding on summary
judgment as to its breach of contract claim prevents it from succeeding on summary judgment as

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to its PWA claim. A subcontractor’s claim under the PWA is based on obligations arising out of
the performance of work under a contract. La. Stat. Ann. § 9:4802(A). Again, whether Southland
owes any obligation to Material Handling depends on whether the suspensive condition has been
fulfilled. Thus, Material Handling’s PWA claim cannot be decided at the summary judgment stage.
C.

Conclusion of Material Handling’s Motion for Summary Judgment as to
Southland

Because Material Handling has failed to establish, beyond peradventure, the essential
elements of its breach of contract and PWA claims against Southland, its motion for summary
judgment [Record Document 66] is DENIED as to Southland. See Fontenot, 780 F.2d at 1194.
CONCLUSION
The Court finds that the contract between Material Handling and Southland contains a payif-paid clause that designates payment by IntegriCo a suspensive condition to Southland’s
obligation to pay Material Handling. The Court further finds that a genuine issue of material fact
exists as to whether that suspensive condition has been fulfilled. Accordingly, Material Handling’s
Motion for Summary Judgment [Record Document 66] is DENIED as to Southland. Southland’s
Cross-Motion for Summary Judgment [Record Document 77] is GRANTED in part and
DENIED in part. The motion is GRANTED as to Material Handling’s unjust enrichment claim
and that claim is DISMISSED WITH PREJUDICE. The motion is DENIED as to Material
Handling’s breach of contract and PWA claims.
THUS DONE AND SIGNED in Shreveport, Louisiana on this 3rd day of March,
2020.

___________________________
ELIZABETH ERNY FOOTE
UNITED STATES DISTRICT JUD
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