Judge ROSEMARY LEDET
This is a suit by a subcontractor against a general contractor alleging,
Following a bench trial, the trial court found in Boes' favor on the principal amount due, awarded penalties under the prompt payment statute, denied penalties under the misapplication of funds statute, awarded legal interest from the date of judicial demand, and costs and attorneys' fees to be fixed at a later date. Following a subsequent hearing, the trial court awarded Boes $8,000.00 in attorneys' fees and $5,000.00 in costs. Both Boes and Defendants appealed. For the reasons that follow, we affirm.
In 2001, Entergy contacted Gee Cee Group, a Louisiana commercial (nonresidential) construction company, regarding a project to repair and renovate Entergy's Gas Department Warehouse located on Perdido Street in New Orleans, Louisiana (the "Project"). Entergy requested that Gee Cee Group present a proposal for the Project. To do so, Gee Cee Group contacted various subcontractors, including Boes, to obtain quotes to incorporate into its proposal. Entergy accepted Gee Cee Group's proposal. Thereafter, Gee Cee Group accepted Boes' quote to perform certain structural steel and iron work in connection with the Project.
On December 27, 2001, Boes completed its work on the Project and submitted two invoices to Gee Cee Group — No. 026497 in the amount of $29,988.00; and No. 026498 in the amount of $3,332.00 (a total amount of $33,320.00) (the "Invoices"). The Invoices reflected that Boes, for internal record keeping and tracking purposes, assigned the Project the job number 1079. On the bottom of each invoice, in small print, was the following language:
Based on the above language, the Invoices were due on January 20, 2002.
At trial, Craig Boes, Boes' operations manager, testified that, while the Invoices state that the amounts were due on or before the 20th day following submission of the invoices, the contract between the parties for the Project included a "pay-when-paid" term.
It is undisputed that Defendants made no payments to Boes for its work on the Project until 2010. As a result, in September 10, 2009, Mr. Boes' son, who was a manager of Boes, emailed Mr. Chigbu a copy of the Invoices, indicating a $33,320.00 outstanding balance. Sometime in April 2010, Mr. Boes and Mr. Chigbu met and discussed the Invoices. At this time, Mr. Boes and Mr. Chigbu had been doing business together for years and were personal friends. Mr. Boes testified that had Mr. Chigbu not personally guaranteed payment of the Invoices, Boes would have immediately filed suit in 2010. Mr. Boes also testified that he was unaware at the time of his April 2010 meeting with Mr. Chigbu of the distinction between Gee Cee Group and Gee Cee LA.
On May 11, 2010, Mr. Chigbu sent a follow-up email to Mr. Boes, stating the following:
On June 16, 2010, Gee Cee LA issued a check in the amount of $5,000.00; and, on September 3, 2010, Gee Cee LA issued a second check in the amount of $11,500.00. On both of the checks, it was noted that
On November 28, 2012, Mr. Boes' son faxed an invoice to Gee Cee LA showing a balance of $82,739.80. This amount included not only the remaining balance due of $16,820.00, but also interest calculated at 1 ½% per month (18% per annum) (the rate set forth on the Invoices).
On February 19, 2013, Boes filed this suit against Defendants. In response, Defendants filed various exceptions, including a peremptory exception of prescription. On February 5, 2014, an evidentiary hearing was held on the prescription exception.
On October 12, 2015, a bench trial was held in this matter. At trial, two witnesses testified — Mr. Chigbu and Mr. Boes. Following trial, the trial court ruled in Boes' favor. In its written reasons for judgment, the trial court recapped its prior findings in denying Defendants' prescription exception as follows:
Given those findings, the trial court summarized the remaining issues before it at trial as follows:
As to the alter ego issue, the trial court found that Gee Cee LA was an alter ego or a mere continuation of Gee Cee Group and thus responsible for its debts. As to the terms of the new April 2010 agreement, the trial court found that Defendants continued to owe Boes for the remaining unpaid balance of $16,820.00 and that "it is clear that Boes is entitled to collect interest on the remaining unpaid balance." Finally, as to penalties, attorneys' fees, and costs, the trial court found that Boes was entitled to penalties under the prompt pay statute, La. R.S. 9:2784, but not under the misapplication of funds statute, La. R.S. 9:4814. The trial court thus rendered judgment in Boes' favor for the principal sum of $16,820.00, penalties of $4,998.00, and judicial interest as provided for by law.
Following a separate hearing on the issue of attorneys' fees and costs, the trial court rendered judgment awarding Boes $8,000.00 in attorneys' fees, $5,161.81 in costs, and legal interest on said amounts as provided by law. From the trial court's rulings, both Boes
For ease of discussion, we divide our analysis of the issues presented by the parties into the following eight categories: (i) standard of review; (ii) alter ego or continuation doctrine; (iii) open account versus contract claim; (iv) detrimental reliance claim; (v) prompt pay claim; (vi) misapplication of funds claim; (vii) interest; and (viii) attorneys' fees. We separately address each category
Three different standards of review are applicable here — abuse of discretion, manifest error, and de novo. An abuse of discretion standard applies to the attorneys' fees award issue. The jurisprudence has recognized that "[t]he trial court is vested with great discretion in arriving at an award of attorney fees. The exercise of this discretion will not be reversed on appeal without a showing of clear abuse of discretion." Troth Corp. v. Deutsch, Kerrigan & Stiles, L.L.P., 06-0457, p. 3 (La. App. 4 Cir. 1/24/07), 951 So.2d 1162, 1165 (citing Kem Search, Inc. v. Sheffield, 434 So.2d 1067, 1070 (La. 1983).
To the extent the issues presented on appeal involve fact questions or mixed questions of law and fact, the manifest error applies. To the extent the issues involve questions of law, the de novo standard applies.
Defendants contend that the trial court legally erred in applying the continuation doctrine to find that Gee Cee Company LA was responsible for Gee Cee Group's debt given that a threshold requirement for applying the doctrine was not met. Defendants cite this court's holding in Pichon v. Asbestos Defendants, 10-0570, p. 6 (La.App. 4 Cir. 11/17/10), 52 So.3d 240, 244, that "[a] threshold requirement
The trial court, agreeing with Boes,
In further support, the trial court cited the following facts:
We agree with Defendants that the trial court's reliance on the continuation
Generally, the determination of whether the SBE doctrine applies is a question of fact for the trial court to decide. Grayson v. R.B. Ammon & Associates, Inc., 99-2597, pp. 20-21 (La.App. 1 Cir. 11/3/00), 778 So.2d 1, 15 (citing Brown v. Automotive Casualty Ins. Co., 93-2169, p. 8 (La.App. 1 Cir. 10/7/94), 644 So.2d 723, 728). Here, however, the trial court applied a different doctrine and thus did not apply the SBE doctrine. For this reason, we review this issue de novo. Dishon v. Ponthie, 05-659, p. 6 (La.App. 3 Cir. 12/30/05), 918 So.2d 1132, 1136 (noting that "[a]s the trial court did not apply it [the SBE doctrine], we will perform a de novo review on this issue.").
Simply stated, the SBE doctrine is invoked "to break down corporate walls between affiliated corporations." Glenn G. Morris and Wendell H. Holmes, 8 La. Civ. L. Treatise, BUSINESS ORGANIZATIONS § 32.15 (2016). The SBE applies when a corporation is found to be the "alter ego, agent, tool or instrumentality of another corporation." Green v. Champion Ins. Co., 577 So.2d 249, 257 (La. App. 1st Cir. 1991). In Green, the First Circuit Court of Appeal adopted the SBE doctrine
Considering the Green factors, which we note are substantially similar to those considered in applying the continuation doctrine,
As part of their exception of prescription, Defendants argued that Boes' claim is not based upon contract, subject to a ten-year prescriptive period, but based upon an open account, subject to a three-year prescriptive period.
According to Defendants, the relationship between Mr. Boes' and Mr. Chigbu's respective companies was sometimes contractual — when there was a formal bid process and a written subcontract — and sometimes based on open account. Defendants' contends that the relationship between the parties on the Project was based on an open account. Defendants emphasize that the Invoices were the only available written documentation the parties were able to produce regarding their relationship on the Project.
The issue of whether the relationship between the parties was based upon contract, as opposed to an open account, presents a question of fact subject to a manifest error standard of review. Resolving the issue in Boes' favor, the trial court noted that there was a long-standing working relationship between the heads of both entities — Mr. Chigbu and Mr. Boes. The trial court found Mr. Boes' testimony regarding the customary procedure the entities employed in entering into contracts for jobs to be credible and that the parties used that customary procedure on the Project.
Regardless, Defendants contend that Mr. Chigbu neither acknowledged nor promised to pay Gee Cee Group's debt to Boes. According to Defendants, Mr. Chigbu's May 11, 2010 email was, at best, "a new offer to pay and a new agreement;" it was not an acknowledgement. Defendants point out that Mr. Chigbu testified he believed he and Mr. Boes reached a new agreement at their April 2010 meeting. Under that new agreement, Gee Cee LA would pay the face amount of the Invoices (a total of $33,000.00) within thirty-six months (three years). Defendants contend that Mr. Boes repudiated that understanding and denied that there was a new agreement between them.
The trial court found that the April 2010 meeting between Mr. Boes and Mr. Chigbu, coupled with Mr. Chigbu's May 11, 2010 email and the checks subsequently issued through Gee Cee LA to Boes, constituted both an acknowledgement of the underlying debt sufficient to interrupt prescription and a new agreement to pay the remaining debt. The trial court noted that both the checks indicated that they were payments for Boes' Job No. 1079. The trial court thus concluded that "Mr. Chigbu, on behalf of [Gee Cee LA]... had a pecuniary interest (and thus received a benefit)
On appeal, Defendants raise a detrimental reliance claim.
Defendants contend that all three elements necessary to give rise to detrimental reliance are present. According to Defendants, the three elements are satisfied for the following reasons:
Boes counters that Defendants' detrimental reliance claim is based on Defendants' mistaken belief that during the parties' April 2010 meeting a new agreement was reached whereby Boes, without any financial consideration, agreed to waive interest and attorneys' fees under the Invoices and to provide Defendants an additional thirty-six months (three years) to pay the Invoices. Boes notes that Mr. Boes testified at trial that he did not make any such new agreement and that Mr. Chigbu testified to the contrary. Boes contends that the trial court weighed the testimony and obviously determined that no such agreement with those terms had been reached.
The jurisprudence has recognized that "detrimental reliance usually comes into play when no written contract exists or the contract is found to be unenforceable." Jackson v. Lare, 34,124, p. 7, n. 1 (La.App. 2 Cir. 11/1/00), 779 So.2d 808, 814. Such is not the case here. The trial court found there was both an original agreement and an enforceable new agreement entered into between the parties in April 2010 for Defendants to pay the remaining outstanding balance of $16,820.00 for the Project. The trial court, however, did not accept all of either party's position regarding the terms of the new agreement.
As the trial court noted, Mr. Boes testified at trial that "he never agreed to a thirty-six month term to pay the remaining debt at the April 2010 meeting with Mr. Chigbu;" the trial court implicitly accepted Boes' position on that point. The trial court, however, rejected Boes' position that the 1½ % per month interest reflected on the Invoices applied; the trial court reasoned as follows:
Given there is an enforceable contract, we find Defendants' detrimental reliance claim lacks merit.
Defendants contend the trial court erred in awarding penalties to Boes under the prompt pay statute, La. R.S. 9:2784.
On appeal, Defendants concede a violation of the prompt pay statute; however, they contend, as they did in the trial court,
Defendants' reliance on Specialty Construction, as Boes contends, is misplaced. In Specialty Construction, the appellate court expressly noted that the only issue before it was "whether the trial court erred in finding that the one-year period set forth in La. R.S. 9:4823(A)(2) for filing a lawsuit to enforce a claim and privilege granted by the Private Works Act begins to run on the date a statement of claim and privilege is filed into the mortgage records." 2011 WL 846119 at p. *2. Specialty Construction thus neither addressed nor held that actions filed pursuant to Louisiana's prompt pay statute, La. R.S. 9:2784, are subject to a one or two-year prescriptive period. Rather, the focus in Specialty Construction was the calculation of the deadline for filing suit to enforce a claim and privilege granted by the Private Works Act. As Boes points out, it did not file, and certainly did not sue to enforce, a Private Works Act claim. Specialty Construction is thus inapposite.
Given the Legislature failed to include a specific prescriptive period in La. R.S. 9:2784, Boes' prompt pay claim is subject to the ten year prescriptive period for personal actions under La. C.C. art. 3499.
At trial, the date on which Entergy paid Gee Cee Group for its work on the Project was never established; at best, it was established that Entergy paid Gee Cee Group "sometime in 2003." Given Boes' petition was filed in 2013 (on February 19, 2013), it cannot be said that Boes' petition is prescribed under the applicable ten year prescriptive period. Moreover, prescriptive periods are strictly construed against prescription and in favor of the obligation sought to be extinguished. See Dugas v. Thompson, 11-0178, p. 4 (La. App. 4 Cir. 6/29/11), 71 So.3d 1059, 1063.
Summarizing, we find the trial court did not err in awarding Boes penalties under the prompt pay statute. Moreover, we find that the prompt pay statute forms the basis for both the trial court's penalty award of $4,998.00 and its attorneys' fee award of $8,000.00 to Boes.
Boes contends that the trial court erred in rejecting its claim for penalties under the misapplication of funds statute, La. R.S. 9:4814.
On appeal, Boes contends that because Mr. Chigbu admitted that Gee Cee Group deposited Entergy's payments for Boes' work into its operating account and that it paid other business-related expenses instead of Boes, the trial court erred in failing to award penalties under the misapplication of funds statute. Noting the lack of jurisprudence interpreting the civil misapplication of funds statute, Boes cites in support of its contention a case construing the criminal misapplication of funds statute, La. R.S. 14:202.
In Cohn, the defendant-contractor was convicted of criminal misapplication of funds, which the appellate court reversed. The Supreme Court granted the State's writ and reinstated the defendant's conviction. In so doing, the Supreme Court reasoned that the direct evidence in the record established that the defendant knowingly misapplied the funds.
Cohn, 00-0313, p. 8, 783 So.2d at 1275-76.
Contrary to Boes' contention, the facts in this case are distinguishable from those in Cohn. Here, no direct evidence of a knowing misapplication of funds was presented. To the contrary, the only evidence in the record supporting Boes' misapplication of funds claim is Mr. Chigbu's testimony that his standard practice was to deposit funds into the general account and to use such funds to pay business-related expenses. The evidence presented in this case does not exclude the possibility that this was simply a "bad business deal." Cohn, supra. Boes' reliance on Cohn is thus misplaced. We thus find no error in the trial court's finding that Boes failed to prove Mr. Chigbu knowingly misapplied the funds owed to Boes. Thus, we find Boes' contention that it was entitled to penalties under La. R.S. 9:4814 is unpersuasive.
Boes contends that the trial court erred in awarding interest from the date of judicial demand; it contends that it is entitled to interest on the amounts due and owing from the time the debts became due pursuant to La. C.C. art. 2000.
In its written reasons, the trial court cited Alexander v. Burroughs Corp., 359 So.2d 607, 613 (La. 1978), for the proposition
Although the general rule in breach of contract cases is that judicial interest runs from the date of breach, the Louisiana Supreme Court recognized an exception to this rule in Trans-Global Alloy Limited v. First National Bank of Jefferson Parish, 583 So.2d 443 (La. 1991), for "highly complicated" cases. The Supreme Court distinguished the simple case in which the amount owed was both due and easily ascertainable on the date from which interest was awarded from the complicated case before it in which "three courts ... had difficulty in determining whether there was a breach meriting compensation, and what the consequential damages of that breach should be." Trans-Global, 583 So.2d at 459. The Supreme Court held that in such a "highly complicated" case interest runs from the date of judicial demand.
Invoking the "highly complicated" case exception, the court in Ashy v. Trotter, 04-612, p. 21 (La.App. 3 Cir. 11/10/04), 888 So.2d 344, 357, reasoned as follows:
As in Ashy, we find this case falls into the "highly complicated" category. Complicating factors in this case included the following:
Given these complicating factors, we find the trial court did not err in finding that Boes was entitled to interest from the date of judicial demand.
Boes challenges the trial court's award of $8,000.00 in attorneys' fees as inadequate. In Louisiana, an award of attorneys' fees is not allowed except when authorized by statute or contract. Rivet v. State, Dep't of Transp. & Dev., 96-0145, p. 10 (La. 9/5/96), 680 So.2d 1154, 1160 (citing State, DOTD v. Williamson, 597 So.2d 439, 441 (La. 1992)). As noted earlier, the basis for the $8,000.00 attorneys' fee award to Boes is not the terms of the Invoices; rather, it is part of the penalty awarded to Boes under the prompt pay statute.
The determination of a reasonable attorneys' fee is determined on a case-by-case basis based on the facts of each individual case. Filson, 07-0755 at p. 6, 990 So.2d at 67 (citing Gottsegen v. Diagnostic Imaging Servs., 95-977, p. 7 (La.App. 5 Cir. 3/13/96), 672 So.2d 940, 943). Based on Rule 1.5(a) of the Rules of Professional Conduct, the Louisiana Supreme Court in State, Dep't of Transp. and Dev. v. Williamson, 597 So.2d 439 (La. 1992), enumerated a list of ten factors to be considered in making that determination.
At the hearing to fix attorneys' fees and costs, the trial court acknowledged on the record that Boes' counsel had done "a lot of work" on this case. Also at the hearing, Boes' counsel acknowledged that Boes' request for an attorneys' fee award of $35,132.00 was "shocking on its face, given the amount of the judgment, $20,000." Boes' counsel, however, emphasized that Boes was requesting the actual amount of attorneys' fees that it incurred. Rejecting Boes' contention that it was entitled to attorneys' fees in the amount Boes' actually incurred, the trial court orally reasoned as follows:
On appeal, Boes contends that the trial court erred in focusing on the amount sued upon in setting the attorneys' fee award. Boes emphasizes that the jurisprudence has recognized that, in appropriate circumstances, attorneys' fees at or above the principal amount claimed may be awarded. In support, Boes cites Troth, supra; and South Texas Pioneer Millwork v. Favalora Constructors, Inc., 11-722 (La.App. 5 Cir. 3/13/12), 90 So.3d 1092. Boes contends that this court should find the trial court abused its discretion in limiting its attorneys' fees to $8,000.00 given the Troth and South Texas Pioneer cases, the ultimate outcome in Boes' favor, and the "extensive" work performed by its attorney, which the trial court acknowledged multiple times. Boes requests that this court reverse the award of $8,000.00 and amend the judgment to award attorneys' fees in the amount of $35,132.00 — the amount of attorneys' fees Boes actually incurred as evidenced by its attorney's unredacted fee statements.
Louisiana appellate courts, as Boes emphasizes, have affirmed attorneys' fee awards in excess of the amount sued upon.
Finally, the deference given the trial court judge on the issue of the reasonableness of an attorneys' fee award is "a recognition of the trial judge's greater familiarity with the issues involved in the overall case and with the specific value of the services rendered by the attorney whose fee is under consideration." Billieson v. City of New Orleans, 15-0858, p. 6 (La.App. 4 Cir. 1/27/16), 186 So.3d 786, 790.
For the foregoing reasons, the judgment of the trial court is affirmed.
Tymeless Flooring, Inc. v. Rotolo Consultants, Inc., 14-1392, p. 1, n. 1 (La.App. 4 Cir. 5/20/15), 172 So.3d 145, 146 (quoting MidAmerica Const. Management, Inc. v. MasTec North America, Inc., 436 F.3d 1257, 1261-62 (10th Cir. 2006)).
Green, 577 So.2d at 257-58. The Green factors are not an exhaustive list. Id. at 258. Moreover, no one of the factors is dispositive on the SBE issue. Id.
Hollowell v. Orleans Reg'l Hosp. LLC, 217 F.3d 379, 390 (5th Cir. 2000).
Cohn, 00-0313 at pp. 8-9, 783 So.2d at 1276.
In Troth Corp. v. Deutsch, Kerrigan & Stiles, L.L.P., 06-0457, p. 3 (La.App. 4 Cir. 1/24/07), 951 So.2d 1162, 1165, this court likewise outlined the factors a trial court should consider in determining a reasonable attorneys' fee award, noting those factors include the following: "[u]ltimate results obtained; responsibility incurred; importance of the litigation; amount involved; extent and character of labor performed; legal knowledge; attainment and skill of the attorney; number of appearances made; intricacies of facts and law involved; diligence and skill of counsel; court's own knowledge; and ability of party liable to pay." Id. (quoting S. Jackson & Son, Inc. v. Aljoma Lumber, Inc., 93-2531 (La. App. 4 Cir. 5/26/94), 637 So.2d 1311, 1313).
