CARL J. BARBIER, District Judge.
Before the Court are Plaintiff's
The material facts of this contractual dispute are largely undisputed. This lawsuit arises out of the construction of the Lakeside Apartments in Slidell, Louisiana (the "Lakeside Project"). On January 14, 2008, Plaintiff Carleton Construction, Ltd. ("Carleton"), the prime subcontractor for the Lakeside Project, entered into a written subcontract ("Subcontract") with Defendant Southern States Plumbing ("Southern States"), under which Southern States was to provide plumbing materials and labor for the project. Southern States subsequently subcontracted a portion of the work to La-Tex Plumbing, LLC ("La-Tex").
Under the terms of the Subcontract, Southern States agreed to comply with all federal, state, and local laws and regulations in its performance of its duties under the Subcontract, and agreed to indemnify Carleton for any assessments, fines, taxes, or penalties it incurred on account of Southern States' noncompliance with such laws.
The Compromise Agreement further acknowledged that the Department of Labor was investigating Southern States' subcontractor, La-Tex for failure to pay its laborers prevailing wages on the Lakeside Project, in violation of the Davis Bacon and Related Acts, 40 U.S.C. §§ 3141, et seq.
Around the beginning of February 2011, the United States Department of Labor levied assessments against Southern States and La-Tex for their failure to pay prevailing wages under the Davis Bacon and Related Acts. Of the $210,797.76 assessment, $187.942.65 was assessed to La-Tex, and $22,885.11 was assessed to Southern States. Southern States agreed to use the $150,000.00 in escrow to pay a portion of the assessment, but because of temporary liquidity problems, it was unable to satisfy the remainder of the balance. Accordingly, the Department of Labor looked to Carleton to satisfy the balance of the assessments, which amounted to $60,791.44. In response, Carleton offered to advance this sum to the Department of Labor in exchange for Southern States' agreement to repay the advance, but Southern States apparently refused. Carleton thereafter satisfied the assessment, with the $150,000.00 from the escrow account and $60,791.44 of its own funds. Carleton also incurred $33,745.00 in connection with the resolution of the Department of Labor assessments, and $12,832.10 in attorney's fees, costs, and expenses in connection with the instant lawsuit.
Carleton submits that it is entitled to recover the full amount of sums expended to satisfy the Department of Labor assessments against Southern States and La-Tex, as well as costs, expenses, and attorney's fees incurred in both the investigation and resolution of the assessments and in the present suit, all in accordance with the indemnity provisions of the Subcontract. Furthermore, because Mr. Wiss personally guaranteed Southern States' obligations under the Subcontract, it contends that Wiss and Southern States are jointly and severally liable for the total sum of $107,368.54.
Southern States and Wiss oppose Carleton's Motion on two grounds. First, they submit that the Compromise Agreement constitutes a valid compromise as defined under Louisiana law, and accordingly, they argue that Carleton's recourse against Southern States is governed by and limited to the terms of the agreement. Southern States thus contends that Carleton's reliance on the Subcontract is misplaced. Because the unambiguous terms of the Compromise Agreement entitle Southern States to a credit in the amount of $22,417.53 towards any amounts owed as a result of the Department of Labor assessments, they claim that the amount of Carleton's claim must be reduced. Second, because Mr. Wiss never signed the Compromise Agreement in his individual capacity, they argue that he cannot be personally liable for any reimbursement owed by Southern States or for Carleton's costs and attorney's fees.
In response, Carleton argues that the Compromise Agreement does not alter the obligations of either Southern States or Mr. Wiss under the terms of the Subcontract. It contends that the Compromise Agreement is a commutative contract under Louisiana law, under which either party may refuse to perform if the other party fails to perform. Because its agreement to assume a portion of the assessment against La-Tex was contingent upon Southern States actually paying the balance of the assessment, which it failed to do, Carleton argues that Southern States is not entitled to any reduction of its obligations under the Subcontract.
Summary judgment is appropriate if "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If that burden has been met, the non-moving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may
In diversity suits such as the instant lawsuit, federal courts apply the substantive law of the state in which they sit. Exxon Corp. v. Burglin, 42 F.3d 948, 950 (5th Cir.1995) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). The instant case presents a question of contractual interpretation under Louisiana law.
The interpretation of a contract is generally a legal question which may be properly resolved in a motion for summary judgment. Haglund v. TC Properties of Baton Rouge, L.L.C., 1999-2323, p. 4 (La. App. 1 Cir. 11/3/00), 770 So.2d 885, 887. A valid contract has the effect of law between the parties. La. Civ.Code art. 1983. The role of a court in interpreting a contract is to determine the common intent of the parties. La. Civ.Code art. 2045. The search for the common intent of the parties necessarily begins with the words of the contract, in accordance with their ordinary meaning. Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 484, 732 F.2d 480 (5th Cir.1984). "When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. Civ.Code art. 2046. Thus, when the text of a contract is clear, the explicit meaning of that text "should not be disregarded under the pretext of pursuing its spirit." Prejean v. Guillory, 2010-0740, p. 6-7 (La. 7/2/10), 38 So.3d 274, 279.
Carleton's claims, and its Motion for Summary Judgment, appear to rely exclusively on the terms of the Subcontract. Southern States, however, argues that the Compromise Agreement operated to release Carleton's claims based on the Subcontract and that its remedy is limited to enforcing the terms of the Compromise Agreement.
"A compromise is a contract whereby the parties, through concessions made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship." La. Civ.Code art. 3071. A compromise precludes the parties thereto from bringing an action based upon the matter compromised, but its scope is limited to "only those differences that the parties clearly intended to settle." La. Civ.Code art. 3080; La.Civ. Code art. 3076. The revision comments make clear that a compromise "must clearly express" those rights which it settles.
Here, the opening recitations of the Compromise Agreement appear to suggest that the parties intended the scope of the compromise to be quite broad. Specifically, it state that they "desire to settle and compromise any and all disputes, claims, lawsuits, lien claims and obligations arising from the Projects."
Thus, it appears that the plain language of the Compromise Agreement expressly reserved Carleton's rights to seek indemnity based on the terms of the Subcontract for losses arising after October 26, 2009, as well as for losses which could arise from La-Tex's violations of the Davis Bacon and Related Acts. The Court is bound to give this language effect. Furthermore, other provisions of the agreement appear to contemplate that the indemnity provisions of the Subcontract would continue to be operative. Paragraphs 8 and 12, for example, state:
Accordingly, the Court concludes that the unambiguous language of the Compromise Agreement reveals that Carleton is entitled to seek indemnity under the provisions of the Subcontract for losses arising out of La-Tex's violations of the Davis Bacon and Related Acts. Carleton's claims are not limited to the enforcement of the terms of the Settlement Agreement.
Having concluded that the Compromise Agreement does not preclude Carleton's
Additionally, the Subcontract provides that Southern States would be liable to Carleton for all costs, including attorney's fees, and damages incurred by Carleton arising out of Southern States' failure to perform its contractual obligations.
Under any of the above clauses, it is indisputable that Southern States agreed to indemnify Carleton for the full amount of the Department of Labor assessments it incurred, along with any associated attorney's fees, costs, and expenses. Indeed, Southern States does not contend that Carleton is not entitled to indemnity for the balance of the unpaid wages assessment, or that its computation of attorney's fees, costs, and expenses are inaccurate. Instead, its primary contention is that it is entitled to a $22,417.53 credit pursuant to paragraph six of the Compromise Agreement. Paragraph six of the Compromise Agreement provides:
The Compromise Agreement is a bilateral, or synallagmatic contract, where "the parties obligate themselves reciprocally, so that the obligation of each party is correlative to the obligation of the other." La. Civ.Code art. 1908; see also Southern Nights, Inc. v. Barnett, 2004-0411, p. 4 (La.App. 4 Cir. 8/18/04), 881 So.2d 1225, 1228 (holding that a compromise is a bilateral contract). It is also a commutative contract. See La. Civ.Code art. 1911 and cmt. (b) (explaining that "correlative performances are the essential feature of commutative contracts"). In the present case, under paragraph 6, Carleton's obligation was to "share dollar for dollar with [Southern States] the cost of unpaid Wages . . . up to a cap of $44,835.06, such that [Carleton] might be responsible for a total not to exceed $22,417.53."
Nonetheless, Southern States argues that article 2022 is inapplicable here. It cites comment (c) to article 2022, which explains that the article applies "only where the performances of the parties are to be rendered simultaneously, either because the contract so provides, or because the contract by its nature demands simultaneous performances." Here, it correctly notes that the Compromise Agreement does not explicitly require simultaneous performance. It further argues that the payment of different sums of money does not "by its nature" demand simultaneous performance, and that Southern States and Carleton could have made payments to the Department of Labor "on different days, in different weeks, months, or even years." Here, the Court disagrees.
The undisputed facts show that, because Southern States was unable to pay the amount of the full amount of the assessment when it was levied, the Department of Labor turned to Carleton for satisfaction of the unpaid wages. Thus, contrary to Southern States' contentions, the nature of payments under the Compromise Agreement did, in fact, require payment to be made simultaneously, and upon demand by the Department of Labor. Southern States' contentions to the contrary ignore the reality of the undisputed events as they actually occurred.
Accordingly, when Southern States informed Carleton that it would be unable to satisfy the remaining balance of the assessment, as it was contractually obligated to, Carleton had the right to withhold the performance of its own obligations, whereby it agreed to assume responsibility for $22,417.53 of the La-Tex assessments. "Louisiana law does not permit a party to repudiate its obligations while continuing to retain the benefits of an agreement." Al Copeland Enterprises, Inc. v. C.T.V. Systems, Inc., 1993 WL 191152, at *8 (E.D.La.1993). Thus, Southern States is not entitled to seek to enforce this provision against Carleton, and is not entitled to a credit under paragraph 6 of the Compromise Agreement.
It is undisputed that Mr. Wiss never signed the Compromise Agreement dated October 7, 2009 in his personal capacity. Defendants argue that Carleton's recovery is limited to the terms of the Compromise Agreement, and because Mr. Wiss never signed the Compromise Agreement, Defendants contend that he cannot be personally liable to Carelton, in any case. Because the Court has previously rejected the argument that Carleton's recovery is limited to the terms of the Compromise Agreement, however, the Court finds this contention to be without merit.
In the alternative, Defendants argue that the Carleton has failed to submit sufficient evidence to show that Mr. Wiss ever personally guaranteed the Subcontract. Instead, Defendants argue that Mr. Wiss only signed the agreement as a representative of Southern States, as evidenced by the fact that the words "Southern States Plumbing, Inc." appears above the signatory line for the guarantee clause. Thus, under La. Civ.Code art. 2056, it contends that this ambiguity must be construed against Carleton, as the party who furnished the text of the agreement.
Under art. 2056, ambiguity in a written contract is construed against the party who furnished the contract, but only when there is "doubt that cannot be otherwise resolved." Further, Louisiana courts have held that the allegedly ambiguous provisions of the agreement must be susceptible of competing reasonable interpretations in order for article 2056 to apply. See, e.g., Genghis Kahn, Inc. v. Formosa Hotel Inc., 2003-1218, p. 5 (La.App. 4 Cir. 6/2/04), 876 So.2d 923, 926; Crum v. Crum, 330 So.2d 925, 927 (La. Ct.App. 1 Cir. 1976). Here, Defendants' proffered interpretation would require the Court to conclude that the parties had agreed for Southern States to guarantee its own obligations under the contract. Such an interpretation is plainly unreasonable as a matter of law and must be rejected.
Furthermore, other courts have rejected similar arguments regarding allegedly ambiguous guarantor signatures. In American Bank & Trust Co. of Houma v. Wetland Workover, Inc., et al, for example, three corporate officers signed loan guarantees for a corporate loan. On the bank's loan forms, the signature line gave each officer's name and corporate position. 523 So.2d 942, 943 (La.App. 4 Cir.1988). In affirming the trial court, the Louisiana Fourth Circuit Court of Appeals rejected the officers' arguments that the guarantees had been signed only on behalf of the corporation. Id. at 945. It explained that the "notation of corporate position on the guarantees [was] merely a title identification, instead of a signature in a representative capacity." Id. Furthermore, the court reasoned that "to construe the signatures
As a result, pursuant to the terms of the Subcontract and Guarantee, Southern States and Mr. Wiss are each liable, severally and in solido, for the total amount of $107,368.54, which represents all sums advanced by Carleton is satisfaction of the La-Tex Department of Labor assessments, as well as Carleton's attorney's fees, expenses, and costs incurred in resolving the Department of Labor assessments and in the present lawsuit.
Accordingly,
