SARAH S. VANCE, District Judge.
Defendants F.H. Paschen, S.N. Nielsen & Associates, LLC ("Paschen"), Continental Casualty Company ("Continental"), Safeco Insurance Company of America, and Fidelity and Deposit Company of Maryland (collectively, "defendants") move for judgment on the pleadings
This case arises out of two school construction projects in Louisiana.
Paschen subcontracted a portion of both projects to J & A Construction Management Resources Company, Inc. ("J & A").
Paschen and Continental deposited bonds as security for 84 Lumber's statements of claim to induce the project owners to release payment to Paschen.
On July 5, 2012, 84 Lumber sued Paschen and the Sureties, alleging that 84 Lumber was not paid in full for work performed on the Osborne and South Plaquemines Projects.
The Court granted summary judgment against 84 Lumber on Counts One and Two, its initial LPWA claims, because its June 2012 statements of claim lacked proper notice.
A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is appropriate if the matter can be adjudicated by deciding questions of law rather than factual disputes. Brittan Commc'ns Int'l Corp. v. Sw. Bell Tel. Co., 313 F.3d 899, 904 (5th Cir. 2002). It is subject to the same standard as a motion to dismiss under Rule 12(b)(6). Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir. 2008). To survive a Rule 12(b)(6) motion to dismiss, plaintiffs must plead enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007)). A claim is facially plausible "when the 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. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 2009). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
A legally sufficient complaint must establish more than a "sheer possibility" that plaintiff's claim is true. Id. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Twombly, 550 U.S. at 555. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiff's claim. Lormand, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, the claim must be dismissed. Twombly, 550 U.S. at 555.
Like Counts One and Two, which were subject to an earlier motion for summary judgment, Count Six seeks payment for the work performed and materials supplied by 84 Lumber on the Osborne and South Plaquemines Projects. Count Six alleges a right to payment from Paschen and Continental by virtue of the release bonds.
The purpose of the LPWA is "to protect those contributing to the construction, alteration, or repair of public works." Pierce Foundations, Inc. v. Jaroy Constr., Inc., 190 So.3d 298, 306 (La. 2016). To accomplish this purpose, the LPWA first requires that the contractor for projects like the Osborne and South Plaquemines Projects post a bond "for the payment by the contractor or subcontractor to claimants as defined in R.S. 38:2242." Id. at 301 (quoting La. R.S. § 38:2241(A)(2)). Section 2242 defines a "claimant" as:
La. R.S. § 38:2242(A). The LPWA "further establishes a means for asserting a claim":
Pierce, 190 So. 3d at 301-02 (footnote omitted) (quoting La. R.S. § 38:2242(B)). But before a subcontractor not in privity with the general contractor may assert a right of action against the general contractor on the bond, the subcontractor must provide proper notice. La. R.S. § 38:2247; see also Elec. Supply Co., Inc. v. Great Am. Ins. Co., 973 So.2d 827, 830 (La. App. 2 Cir. 2007) ("[T]he notice referenced in [Section] 2247 is to be given to the contractor to preserve the right of action against the contractor or the surety.").
In effect, these provisions "give certain classes of persons not enjoying privity of contract with the general contractor or with the governing authority a claim nevertheless against the general contractor and his surety and in some instances a claim against the governing authority itself." Wilkin v. Dev Con Builders, Inc., 561 So.2d 66, 71 (La. 1990); see also Pierce, 190 So. 3d at 301 (noting that the LPWA grants subcontractors "a privilege against the unexpended fund in the possession of the public entity with whom the original contract had been entered into," instead of a lien on the public work itself (quoting Wilkin, 561 So. 2d at 70)).
The public authority that owns the project becomes liable for these claims if it "makes final payment to the contractor without deducting the total amount of all outstanding claims . . . or without obtaining a bond from the contractor to cover" that amount. La. R.S. § 38:2242(D). To avoid the public authority's liability, "any interested party may deposit" a bond, cash, certified funds, or a certificate of deposit up to 125% of the amount asserted in the claim. Id. § 38:2242.2(A). This deposit "guarantee[s] payment of the obligation secured by the privilege," and cancels the statement of claim in the mortgage records. Id. § 38:2242.2(A)-(B). According to 84 Lumber, Paschen and Continental deposited three release bonds under this provision to induce the project owners to release payment without incurring the risk of liability under Section 2242(D).
84 Lumber now seeks to recover from these release bonds instead of the payment bond. Count Six of the second amended complaint purports to assert an additional right of action arising out of the release bonds.
The statute itself does not provide an independent right of action for subcontractors to recover from release bonds. To the contrary, the LPWA describes only one process for filing a statement of claim. See La. R.S. § 38:2242(B). If such a statement is filed, Section 2242.2 permits a contractor (or any other interested party) to deposit a bond or other security in order "to guarantee payment of the obligation secured by the privilege." Id. § 38:2242.2(A). Thus, the statutory framework suggests that a release bond provides security for the privilege created in favor of the claimant who properly files a statement of claim under the LPWA.
Louisiana courts have interpreted similar release bond provisions in this way. One court of appeal described the release bond authorized by the Private Works Act as "merely another form of security substituted for the lien." Brunet v. Justice, 264 So.2d 743, 746 (La. App. 4 Cir. 1972); see also La. R.S. § 9:4841. The Brunet court further stated that "no greater rights can [i]nure to the claimant under the bond than he possessed under the lien." Id. Another court of appeal applied the Brunet court's holdings to the Public Works Act, concluding that the release bond "secured payment for [the plaintiff's] claim under" that act. D & J Constr. Co. v. Mid-Continent Stone Co., 571 So.2d 762, 765 (La. App. 2 Cir. 1990). The D & J Construction court also cited a law review survey for the proposition that filing a release bond "should neither enlarge nor diminish the substantive rights of the claimant." Id. (quoting Thomas Harrell, Security Devices, The Work of the Louisiana Appellate Courts for the 1972-1973 Term, 34 La. L. Rev. 197, 273 (1974)). A third court of appeal also described release bonds under the Public Works Act as "merely a form of security substituted for [the plaintiff's] claims against the funds held by the [public authority]." LeBlanc & Theriot Equip. Co. v. H & S Constr. Co., 591 So.2d 1274, 1277 (La. App. 3 Cir. 1991).
Based on the statutory framework and Louisiana caselaw, the Court concludes that the filing of a release bond does not enlarge the substantive rights of a subcontractor under the LPWA. Accordingly, 84 Lumber's claim against Paschen and Contintental on each release bond depends on a statement of claim that satisfies the filing and notice requirements of the LPWA.
84 Lumber's counterarguments do not hold water. First, 84 Lumber argues that Section 2247's notice provisions cannot apply to release bond claims.
Second, in attempting to distinguish D & J Construction and LeBlanc & Theriot Equipment, 84 Lumber misreads Pierce, in which the Louisiana Supreme Court discussed the two avenues of relief for claimants under the LPWA. The first avenue, available only to parties in privity with the general contractor, is a direct action against the general contractor and the sureties on the payment bond. Pierce, 190 So. 3d at 303-04 & n.3. The second avenue is to file a statement of claim under Section 2242(B) to obtain a "privilege against the unexpended fund in the possession of the authorities with whom the original contract had been entered into." Id. at 305 (quoting Wilkin, 561 So. 2d at 70). If the subcontractor properly files and gives notice of this statement of claim, Section 2247 guarantees the subcontractor's right of action against the contractor and sureties. La. R.S. § 38:2247. 84 Lumber construes its earlier-asserted LPWA claims as following the first avenue and its release bond claim as following the second.
As the Court explained in its earlier order, compliance with Section 2247 is a prerequisite to a subcontractor's right of action against a general contractor not in privity with the subcontractor. Because the Court has found that 84 Lumber failed to give proper notice under Section 2247 of its June 2012 statements of claim, 84 Lumber has no right of action under the LPWA and cannot recover from the release bonds related to those claims. The Court's earlier order, however, did not apply to the November 2011 statement of claim for $3,507.16 in materials. And defendants expressly stated that this November 2011 claim was not relevant to their motion for summary judgment.
Defendants next argue that Count Six is untimely because the one-year limitation period in Section 2247 is peremptive.
Under Rule 15(c), 84 Lumber's release bond claim may relate back to an earlier pleading if it "arose out of the conduct, transaction, or occurrence set out . . . in the original pleading." Fed. R. Civ. P. 15(c)(1)(B). In its first amended complaint, filed on February 5, 2013, 84 Lumber asserted a claim for $3,507.16 in materials provided to Paschen.
For the foregoing reasons, the Court GRANTS defendants' motion for judgment on the pleadings with respect to the June 2012 statements of claim. The Court DENIES defendants' motion with respect to the November 2011 statement of claim.