EDAW, Inc. v. New Orleans East, Inc.

528 So. 2d 168, 1988 La. App. LEXIS 798, 1988 WL 20708
CourtLouisiana Court of Appeal
DecidedMarch 10, 1988
DocketNo. CA-8692
StatusPublished
Cited by3 cases

This text of 528 So. 2d 168 (EDAW, Inc. v. New Orleans East, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
EDAW, Inc. v. New Orleans East, Inc., 528 So. 2d 168, 1988 La. App. LEXIS 798, 1988 WL 20708 (La. Ct. App. 1988).

Opinion

SCHOTT, Judge.

This is a suit for the balance on an account for services rendered by plaintiff, EDAW, Inc. The case was referred to a commissioner for trial and his report and recommendations were approved and adopted by the trial judge after preparation of the transcript and a hearing on exceptions to the report. The trial court rendered judgment in plaintiffs favor against one of the defendants, New Orleans East, Inc. (NOE) but dismissed plaintiffs suit against the other defendants. Plaintiff has appealed seeking to have two defendants, Michoud Land Company and Eastern Yen- - ture Company, cast in judgment solidarity with NOE. The issue is whether the trial court correctly determined that the obligation undertaken by EDAW was divisible and therefore not subject to the rules governing solidary obligations.

Defendants were the owners of a vast tract of underdeveloped land in New Orleans consisting of about 30,000 acres and known as “New Orleans East”. It was divided by the defendants into tracts referred to as Drainage Districts. In September, 1980 the defendants engaged EDAW to perform various planning and related services associated with the development of the land with the initial efforts directed toward land use, street plans, and problems associated with the .Interstate 10 right-of-way which intersects the tract. At this time Drainage District One consisting of 5,000 acres was drained and ready for development, while the other Districts were wetlands, without levees, undrained, and not suitable for development. Also at this time District One was owned jointly by Michoud and NOE’s subsidiary, Eastern Venture, while the other tracts were owned by NOE.

The contract between the parties consisted of a letter sent by EDAW on September 5, 1980 to NOE’s vice-president, Jay St. Amant, proposing the services on an hourly basis “until a specific scope comes into focus.” It provided that no work on any task would proceed without written authorization by NOE or its authorized representative. It mentioned an “upset figure” [170]*170of $7,500 for EDAW’s work which would not be exceeded without explicit instructions from NOE. This letter contained the hourly rates to be charged for the services of various personnel and for various expenses together with EDAW’s billing and payment policies. EDAW’s proposal was accepted in a letter dated September 9 by St. Amant on the letterhead of “Tecon Realty Corporation Manager of New Orleans East”.

Tecon was the agent for all of the owners of New Orleans East including Mi-choud, Eastern Venture, and NOE. Orders for work by EDAW were placed by NOE personnel through and in the name of Te-con, and EDAW’s invoices were billed to Tecon. Until the end of 1982 the relationship was entirely satisfactory to all parties with numerous tasks performed by EDAW and payments made by defendants to EDAW of $850,000. However, by May, 1983 over $107,000 was past due. This delinquent balance was reduced by subsequent payments and the balance stood at $57,138.20 at the time of trial.

From the outset of the relationship the defendants had maintained a strict accounting procedure which allocated each of EDAW's tasks to the specific Drainage District which benefited so that only charges for services pertaining to District One were paid by Michoud and Eastern Venture while other charges were paid by NOE as owner of the other Districts. One of the facts in dispute is whether EDAW knew about this arrangement among the defendants. But as EDAW’s witness said, it was surely of no concern to them while they were earning and were paid the first $850,000. It became a concern only after the last work was done and the bills for this work became delinquent.

In any event, the immediate cause for the defendants’ failure to pay EDAW’s bill was that NOE ran out of money and the charges for the final work done by EDAW were allocated to Districts other than District One. The payments totalling about $50,000 on the delinquent account with EDAW were made out of Michoud’s (and East Venture’s) funds (the only ones available) not because the defendants considered that the work benefited District One, but only because NOE’s president directed the controller of all the funds to make the payments.

EDAW’s principal argument on appeal, as in the trial court, is that it was the obligor of an indivisible obligation to Mi-choud, East Venture, and NOE so that the obligees are solidarily liable for the balance. EDAW relies on LSA-C.C. arts. 1815 and 1818 as for its position.

The trial court disposed of EDAW’s position as follows:

There is no question but that New Orleans East, Inc. is liable for a debt incurred by its agent for its benefit. See La.C.C. art. 3021. EDAW argues that despite the fact that Michoud Land Company has already paid one half of this debt for a service that did it little benefit, it is nonetheless liable for the other half. Its whole argument on this point is that Michoud Land Company was solidarily liable with New Orleans East, Inc. for all of the debts incurred by Tecon Realty Corporation on behalf of any of its principals. To support this argument, it relies on Louisiana Civil Code articles 1818 and 1815. Article 1818 merely defines an indivisible obligation as an obligation giving rise to solidary liability. Article 1815 states that an obligation is indivisible “when the object of the performance, because of its nature or because of the intent of the parties, is not susceptible of division.” There was no evidence that any of the parties to this lawsuit intended to create an indivisible obligation either to or from EDAW and the various owners of New Orleans East. To the contrary, because of the significant differences in the status of Drainage Districts One on the one hand and Drainage Districts Two and Three on the other, the tasks commissioned by Tecon Realty Corporation were divisible between those that benefited Drainage District One and those that benefited Drainage District Two and Three. They were paid for from separate funds derived from separate sources.
[171]*171The only link established between Eastern Venture Company and Michoud Land Company as owners of Drainage Districts Two and Three, is that they had a common agent. This does not create solidary liability for all debts created by the agent. “Solidarity of obligation shall not be presumed. A solidary obligation arises from a clear expression of the parties’ intent or from the law.” La.C.C. art. 1796. There is nothing in evidence in this matter or in Louisiana law that establishes a solidary obligation under the facts described herein. If Michoud Land Company and Eastern Venture Company had any liability for the debt sued on by EDAW, such debt would be attributable to their co-ownership of Drainage District One. Under Louisiana law, that liability could only be for their virile share of the debt. See Reynolds v. Rowly, 3 Rob. 201 (1842); Watley [Whatley ] v. McMillan, 152 La. 978, 94 So 905 (1922). Even if the facts in this case are construed most favorable to EDAW and it is assumed that the Land Supply Atlas benefited Drainage District One to the same extent that it benefited Drainage District Two and Three, the net result is the same; Michoud Land Company discharged any such liability that it might have had to EDAW when it paid approximately one-half of the invoices that are the subject of this lawsuit. If the debt to EDAW was apportioned between the defendants based on the relative sizes of the drainage districts that they owned, then Michoud Land Company has paid for more than its share.

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Bluebook (online)
528 So. 2d 168, 1988 La. App. LEXIS 798, 1988 WL 20708, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edaw-inc-v-new-orleans-east-inc-lactapp-1988.