Chemical Insulation Co., Inc. v. Arco Builders, Inc.

• Court: Louisiana Court of Appeal
• Decided: August 9, 2023
• Docket: 55,230-CA
• Status: Published

Opinion

Judgment rendered August 9, 2023. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.

No. 55,230-CA

COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA

*****

CHEMICAL INSULATION CO., INC. Plaintiff-Appellant

versus

ARCO BUILDERS, INC. Defendant-Appellee

Appealed from the Fourth Judicial District Court for the Parish of Ouachita, Louisiana Trial Court No. 2022-0866

Honorable Daniel J. Ellender, Judge

DAVID O. MOONEY Counsel for Appellant

DAVENPORT, FILES & KELLY, LLP Counsel for Appellee By: M. Shane Craighead

Before PITMAN, ROBINSON, and MARCOTTE, JJ. MARCOTTE, J.

This appeal arises from the Fourth Judicial District Court, Parish of

Ouachita, the Honorable Daniel J. Ellender presiding. Chemical Insulation

Co., Inc. (“Chemical” or “appellant”) appeals the trial court’s granting of the

peremptory exception of peremption filed by Arco Builders, Inc. (“Arco” or

“appellee”), finding that Chemical’s claim was time-barred under La. R.S.

9:2772, since it was brought after the statute’s five-year peremptive period

for claims arising out of a construction project had run. For the following

reasons, we affirm.

FACTS

The facts are not in dispute. Arco undertook a construction project for

the West Carroll Memorial Hospital in Oak Grove, West Carroll Parish,

Louisiana, in 2013. Arco then subcontracted with Chemical to provide

roofing services on the project. The project was completed on or before

April 30, 2014, and was occupied by the owner in May 2014.

More than seven years later, on March 16, 2022, Chemical filed suit

against Arco seeking to recover amounts it claimed were owed by Arco

pursuant to the contract to provide roofing services on the construction

project. In its petition, Chemical alleged that it fully performed the roofing

services contemplated by the contract but that Arco only paid $69,995.70,

rather than the full amount owed of $77,773. Chemical claimed it was owed

$7,777.30 plus legal interest.

Arco filed its answer on April 20, 2022, denying that it owed any

money to Chemical. Arco asserted that, contemporaneously with the roofing

services contract in West Carroll Parish, Chemical contracted with Arco to

provide roofing services on a nursing home renovation project in Natchitoches, Louisiana. Arco claimed that Chemical performed the work

in an unworkmanlike manner, resulting in significant monetary damages to

Arco, including protracted litigation. Arco further claimed that although the

damages caused by Chemical to Arco remain unsatisfied, Arco applied the

law of compensation to a portion of Chemical’s obligation to Arco by

offsetting amounts held as retainage on the West Carroll Memorial Hospital

project.

In its answer, Arco also affirmatively pled the provisions of La. C.C.

art. 1893, which concerns the extinguishment of an obligation by

compensation, as well as La. R.S. 9:2772, which establishes a peremptive

period for actions arising out of construction projects.

On May 9, 2022, Arco filed its peremptory exception of peremption

and memorandum in support thereof. In its exception, Arco reiterated its

position that it owes Chemical nothing based upon the law of compensation,

but stated that regardless of its defense on the merits, Chemical’s claim is

perempted pursuant to La. R.S. 9:2772, which establishes a five-year

peremptive period for contractual disputes between general contractors and

subcontractors. Arco argued that Chemical’s claims against Arco arising

from the West Carroll Memorial Hospital project were extinguished five

years from when the owner occupied the facility after the project was

completed.

On September 15, 2022, Chemical filed its memorandum in

opposition to Arco’s exception of peremption. In its opposition, Chemical

asserted that its claim is timely because the applicable prescriptive period is

ten years under La. C.C. art. 3457. Chemical claimed that the five-year

peremptive period under La. R.S. 9:2772 does not apply, because that statute 2 only considers actions involving deficiencies in construction, not claims for

an unpaid debt by a general contractor. Chemical further asserted that the

cases cited by Arco in support of its exception are distinguishable in that

they all involve claims against a general contractor arising from construction

defects, which is not the case here.

On September 19, 2022, Arco filed its reply memorandum in support

of its peremptory exception. Arco asserted that just because La. C.C. art.

3457 contains a broad prescriptive period of ten years for contractual

obligations does not mean that the court should not apply the specific

peremptive period of five years to claims arising from the construction of

immovables. Regarding Chemical’s attempt to distinguish the cited cases,

Arco pointed out that in each case, the provisions of La. R.S. 9:2772 were

applied to claims between general contractors and subcontractors arising

from those parties’ contracts relating to the construction of immovable

property.

On September 23, 2023, the trial court held a hearing on Arco’s

peremptory exception and ruled in favor of Arco. In its oral ruling, the trial

court held that Chemical’s claim was perempted by La. R.S. 9:2772 because

subsection (B)(3) of the statute extends to “every demand” whether brought

by the owner or “any other person.” Chemical now appeals.

DISCUSSION

Chemical’s sole assignment of error is that the trial court erred in

granting Arco’s exception of peremption. Chemical argues that the trial

court erred because La. R.S. 9:2772 does not apply to a contractual claim for

payment brought against a general by a subcontractor completely unrelated

3 to any deficiencies in construction. Appellant’s argument focuses on the

reason given by the legislature for the creation of the statute in 1964:

To amend Title 9 of the Louisiana Revised Statutes of 1950 by adding a new section to be designated as Section 2772, limiting the time within which actions may be brought for deficiencies in design, planning, inspection, supervision or construction of improvements to immovable property or for property damage, personal injury or wrongful death arising from any such deficiency.”

Chemical claims that because the reason given for creating the

statute mentions workmanship deficiencies, the statute is only meant

to cover actions arising from such deficiencies.

Chemical also argues that the title of the statute, “peremptive period

for actions involving deficiencies in surveying, design, supervision, or

construction of immovables and improvements thereon,” means that it only

applies to claims arising from deficiencies in the areas covered by the

statute. Chemical’s argument is essentially that since its claim is strictly one

for services rendered on a construction project, it is not subject to the five-

year peremptive period of La. R.S. 9:2772, which only extends to claims

involving workmanship deficiencies. Appellant asks this court to reverse

the trial court’s judgment and remand the matter for further proceedings.

Appellee’s argument focuses on the plain language of La. R.S.

9:2772, which specifically states that it applies to contractual claims and any

claims “otherwise arising out of” a construction project of an immovable.

Appellee also argues that subsection (B)(3) of the statute clarifies that except

as otherwise provided within the statute, the “peremptive period shall extend

to every demand, whether brought by direct action or for contribution or

indemnity or by third-party practice, and whether brought by the owner or

by any other person.” 4 Arco argues that Chemical’s claim about the meaning of the statute’s

title is unfounded, since La. R.S. 1:13 specifically provides that “headings to

sections, source notes, and cross references are given for purposes of

convenient reference and do not constitute part of the law.” Arco’s

argument is essentially that the language of the statute is clear that actions

arising from the construction of immovables are perempted upon the passage

of five years after occupation of the improvement by the owner, and it is

undisputed that Chemical filed its claim beyond the five-year period.

Appellee requests this court to affirm the trial court’s ruling sustaining its

peremptory exception of peremption.

Peremption is a period of time fixed by law for the existence of a

right. La. C.C. art. 3458. The function of the peremptory exception is to

have the plaintiff’s action declared legally nonexistent, or barred by effect of

law, and hence this exception tends to dismiss or defeat the action. La.

C.C.P. art. 923. Peremption may not be renounced, interrupted, or

suspended. La. C.C. art. 3461.

When the peremptive period has run, the cause of action itself is

extinguished unless timely exercised. Rando v. Anco Insulations Inc., 08-

1163 (La. 5/22/09), 16 So. 3d 1065. The rules governing the burden of

proof as to prescription apply to peremption. Mgmt. Grp. Four, L.L.C. v. L

B Elec., L.L.C., 54,550 (La. App. 2 Cir. 6/29/22), 342 So. 3d 1123, writ

denied, 22-01160 (La. 11/1/22), 349 So. 3d 6. If prescription is evident on

the face of the pleadings, the burden shifts to the plaintiff to show the action

has not prescribed. Id.

A judgment granting a peremptory exception of peremption is

generally reviewed de novo, because the exception raises a legal question 5 and involves the interpretation of a statute. Thrasher Const. v. Gibbs

Residential, L.L.C., 15-0607, p. 6 (La. App. 4 Cir. 6/29/16), 197 So.3d 283.

Arco asserts that Chemical’s claim is perempted pursuant to La. R.S.

9:2772, which provides, in pertinent part:

A. Except as otherwise provided in this Subsection, no action, whether ex conctractu, ex delicto, or otherwise, including but not limited to an action for failure to warn, to recover on a contract, or to recover damages or otherwise arising out of an agreement of planning, construction, design or building immovable . . . property shall be brought against any person performing or furnishing . . . the design, planning, supervision, inspection or observation of construction or the construction of immovables . . . … (1)(b) . . . more than five years after the improvement has been thus occupied by the owner. … (B)(3) Except as otherwise provided in Subsection A of this Section, this peremptive period shall extend to every demand, whether brought by direct action or for contribution or indemnity or by third-party practice, and whether brought by the owner or by any other person.

Chemical claims that this statute does not apply to a contractual

claim for payment brought against a general contractor by a subcontractor

that is unrelated to any deficiencies on the project. The plain language of the

statute indicates otherwise. La. R.S. 9:2772 specifically states that it applies

to contractual claims (“ex contractu”). Furthermore, included within the

statute’s ambit are claims “including but not limited to any action . . . to

recover on a contract.” Thus, not only does it specifically include

contractual claims, but its applicability further reaches to any claims

“otherwise arising out of” a construction project of an immovable.

Moreover, section (B)(3) of the statute provides that the five-year

peremptive period extends to “every demand . . . whether brought by the

owner or by any other person.”

6 Legislation is the solemn expression of legislative will. La. C.C. art.

2. When a law is clear and unambiguous and its application does not lead to

absurd consequences, the law shall be applied as written and no further

interpretation may be made in search of the intent of the legislature. La.

C.C. art. 9.

Here, it is undisputed that Chemical filed its claim more than five

years from when the owner occupied the improvement. We must apply the

law as written. Thus, according to the clear and unambiguous language of

La. R.S. 9:2772, Chemical’s claim is perempted.

We are unpersuaded by Chemical’s assertion that La. R.S. 9:2772

does not apply because there is no claim of any deficiency. Chemical invites

the court to seize upon the inclusion of the word “deficiencies” in the

heading of La. R.S. 9:2772, but the reality is that the word “deficiencies” is

not a limitation contained within the clear language of the statute.

Moreover, “headings to sections, source notes, and cross references are

given for purposes of convenient reference and do not constitute part of the

law.” La. R.S. 1:13. In other words, the inclusion of the word

“deficiencies” in the title of La. R.S. 9:2772 is not a source of law.

We are similarly unpersuaded by the cases relied upon by Chemical in

support of its argument. Chemical cited Bungee Corp. v. GATX Corp., 557

So. 2d 1376 (La. 1990), for the proposition that La. R.S. 9:2772 only applies

to cases of deficiencies in construction projects. However, Bungee, supra,

actually stands for the proposition that “failure to warn” claims were not

included within the ambit of the statute as it read at that time. The

legislature responded by amending the statute to specifically include an

7 “action for failure to warn.” La. R.S. 9:2772(A). See also La. R.S.

9:2772(B)(2).

Chemical also cited Academy Park Improvement Ass’n v. City of New

Orleans, 469 So. 2d 2 (La. App. 4 Cir. 1985), writ denied sub nom. Academy

Park Improvement Ass’n v. City of New Orleans, 475 So. 2d 361 (La. 1985),

and State v. Henderson, 22-0405, (La. App. 1 Cir. 12/15/22), __ So. 3d __,

2022 WL 17688337, both of which are inapposite. Academy Park

Improvement Ass’n v. City of New Orleans involved a claim which alleged

fraud against an improvement association, and La. R.S. 9:2772 expressly

excepts allegations of fraud from its application. State v. Henderson, supra,

involved a claim against a homeowner to recover funds which had been paid

to her via a grant to rebuild her home, and the applicability of La. R.S.

9:2772 was not at issue.

The gravamen of Chemical’s argument is that because the heading of

La. R.S. 9:2772 includes the word “deficiencies,” the otherwise clear

language of the statute itself should be ignored and its application be limited

to construction deficiencies. The heading, however, does not constitute part

of the statute.

The language of the statute is clear: actions arising from the

construction of immovables are perempted upon the passage of five years

after occupation of the improvement by the owner. The facts of this case are

likewise clear: Chemical filed its claim more than five years after the owner

occupied the West Carroll Memorial Hospital project. Therefore, the trial

court did not err in sustaining Arco’s peremptory exception of peremption

and Chemical’s sole assignment of error is without merit.

8 CONCLUSION

For the foregoing reasons, we affirm the judgment of the trial court in

favor of Arco Builders, Inc., and against Chemical Insulation, Inc., granting

Arco’s peremptory exception of peremption. All costs of this appeal are

assessed to appellant.

AFFIRMED.