Judgment rendered September 25, 2019. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 53,014-CA
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
FLUID DISPOSAL Plaintiff-Appellee SPECIALTIES, INC.
versus
UNIFIRST CORPORATION Defendant-Appellant
Appealed from the Second Judicial District Court for the Parish of Claiborne, Louisiana Trial Court No. 40393
Honorable Jimmy Cecil Teat, Judge
LAW OFFICE OF DAVID TURANSKY, LLC Counsel for Appellant By: David C. Turansky
COLVIN, SMITH & MCKAY Counsel for Appellee By: James Henry Colvin, Jr. Daniel N. Bays, Jr.
Before WILLIAMS, STONE, and THOMPSON, JJ. STONE, J.
INTRODUCTION
This dispute arises out of a supposed contract between UniFirst
Corporation (“UniFirst”) and Fluid Disposal Specialties (“FDS”), which
FDS shop foreman Kenny Bryce (“Bryce”) signed in his capacity as agent of
FDS. UniFirst pursues this appeal in its capacity as plaintiff-in-reconvention.
The appellees are FDS and Bryce, defendants-in-reconvention.
This case previously came to us as an appeal of the trial court’s
granting of a preliminary injunction against enforcement of the contract via
arbitration. We affirmed the preliminary injunction on the ground that Bryce
lacked authority. Subsequently, UniFirst filed a reconventional demand in
the trial court, asserting various causes of action, including open account and
unjust enrichment. FDS filed an exception of no cause of action and a
motion for summary judgment (“MSJ”) asserting prescription of the open
account action. The trial court granted the MSJ and dismissed the exception
of no cause of action as moot, and dismissed the entire case with prejudice.
UniFirst filed this appeal. For the reasons stated herein, we reverse the trial
court judgment and deny both the exception of no cause of action and the
MSJ.
FACTS AND PROCEDURAL HISTORY
UniFirst, the plaintiff, is in the business of leasing work uniforms to
employers. The defendants are FDS and Bryce, a shop foreman for FDS. On
April 3, 2014, Bryce, supposedly without authority to do so, signed a
contract purporting to bind FDS to a uniform supply contract with UniFirst.
A short time later, Bryce entered a second uniform supply contract with
UniFirst, again purporting to act as agent of FDS. Thereafter, UniFirst delivered the uniforms; FDS accepted the uniforms and paid the rental
charges for approximately eight to ten months. However, FDS then stopped
making payments, and apparently returned the uniforms. FDS made the last
payment via check dated February 28, 2015. This check allegedly did not
clear the bank until March 30, 2015.
UniFirst filed arbitration proceedings against FDS pursuant to the
contract. On March 24, 2015, FDS obtained a preliminary injunction from
the trial court barring further arbitration proceedings. We affirmed that
preliminary injunction, reasoning that Bryce had no authority to bind FDS to
the contract, and thus, the arbitration provision thereof was unenforceable
against FDS. Fluid Disposal Specialties, Inc. v. UniFirst Corp., 50,356 (La.
App 2 Cir. 1/13/16), 186 So. 3d 210.
On March 6, 2018, UniFirst filed a reconventional demand in the trial
court seeking recovery on multiple grounds, including open account and
unjust enrichment. FDS filed an exception of no cause of action, and a MSJ
asserting that the open account action was prescribed. The trial court granted
the MSJ, and issued a final judgment dismissing any and all causes of action
asserted in the reconventional demand. The trial court also dismissed the
exception of no cause of action as moot.
UniFirst filed the instant appeal, urging the following six assignments
of error: (1) the trial court erred in applying the one-year prescriptive period
for delictual actions to an action which has nothing to do with any tort; (2)
the trial court erred in failing to find that UniFirst’s filing for arbitration
interrupted prescription, which interruption continued until UniFirst filed its
reconventional demand; (3) the trial court erred in failing to realize that its
own judgment rendered in March, 2015, was a preliminary injunction, not a 2 permanent injunction and that arbitration proceedings were enjoined,
“pending further orders of this court to the contrary,” thus continuing to
interrupt prescription; (4) the trial court erred in failing to recognize that the
prescriptive period on an action on open account is three years from the date
of the last payment on the account; (5) the trial court failed to apply the 10-
year prescriptive period for a quasi-contractual action; and (6) the trial court
failed to overrule the exception of no cause of action.
DISCUSSION
In Robert L. Manard III PLC v. Falcon Law Firm PLC, 2012-0147
(La. App. 4 Cir. 11/16/12), 119 So. 3d 1, 7, on reh’g (La. App. 4 Cir.
4/10/13), the court stated:
Louisiana jurisprudence is well settled that the character of an action as disclosed in the pleadings determines the applicable prescriptive period. SS v. State ex rel. Dept. of Social Services, 02–0831, p. 7 (La.12/4/02), 831 So.2d 926, 931; Starns v. Emmons, 538 So.2d 275, 277 (La.1989); Qayyum v. Morehouse General Hospital, 38,530 (La.App. 2 Cir. 5/12/04), 874 So.2d 371, 374.
Thus, this court will address the exception of no cause of action prior to
addressing the issue of prescription.
However, before addressing the exception of no cause of action, we
must consider the effect of our prior ruling affirming the preliminary
injunction. Regarding an appellate court, the “law of the case doctrine” is
merely a discretionary policy. Day v. Campbell-Grosjean Roofing & Sheet
Metal Corp., 260 La. 325, 256 So. 2d 105 (La. 1971). Thereunder, “an
appellate court ordinarily will not, on subsequent appeal, reconsider its own
rulings of law [emphasis supplied] on a subsequent appeal in in the same
case.” Hanson v. River Cities Disposal, 51,700 (La. App. 2 Cir. 11/5/17),
3 245 So. 3d 213; Bank One, National Ass’n v. Velten, 2004-2001 (La. App. 4
Cir. 8/17/05), 917 So. 2d 454, 458, writ denied 2006-0040 (La. 4/28/06),
927 So.2d 283, cert. denied 549 U.S. 826, 127 S.Ct. 349 (2006). The
Supreme Court, in Babineaux v. Pernie-Bailey Drilling Co., 261 La. 1080,
262 So. 2d 328, 332 (1972), stated:
The law of the case rule cannot supplant the Code of Civil Procedure…[and]…only applies when the same issue is presented to the same court that has previously decided that issue in the same case which has not become res judicata (Emphasis in original; internal citations and quotation marks omitted).
In Bank One, supra, the Fourth Circuit rejected the argument that
issuance of a preliminary injunction requires application of the law of the
case doctrine. In so doing, the court reasoned as follows:
A writ of preliminary injunction is essentially an interlocutory order issued in a summary proceeding incidental to the main demand for permanent injunctive relief. It is designed to and serves the purpose of preventing irreparable harm by preserving the status quo between the parties pending a determination on the merits of the controversy. The principal demand, as opposed to the injunction, is determined on its merits only after a full trial under ordinary process, even though the hearing on the summary proceedings to obtain the injunction may touch upon or decide issues regarding the merits. (Internal citations omitted).
Bank One at 458.
For the reasons articulated in Bank One, supra, we decline to apply
the law of the case doctrine.
Exception of no cause of action
In Jackson v. City of New Orleans, 12-2742 (La. 1/28/14), 144 So. 3d
876, 895, the Louisiana Supreme Court explained:
The peremptory exception of no cause of action is designed to test the legal sufficiency of a petition by determining whether a party is afforded a remedy in law 4 based on the facts alleged in the pleading. All well- pleaded allegations of fact are accepted as true and correct, and all doubts are resolved in favor of sufficiency of the petition so as to afford litigants their day in court. The burden of demonstrating that a petition fails to state a cause of action is upon the mover. The sufficiency of a petition subject to an exception of no cause of action is a question of law, and a de novo standard is applied to the review of legal questions; this court renders a judgment based on the record without deference to the legal conclusions of the lower courts.
Louisiana has a “fact pleading” system, as opposed to the federal “notice
pleading” system. La. C.C.P. art. 854, cmt. (a). To state a cause of action in
a Louisiana court, a petition must allege the material facts constituting the
cause of action. Id.
Actual authority
The trial court granted a preliminary injunction against enforcement
of the arbitration clause in the purported contract. In affirming the
preliminary injunction, this court found that Bryce lacked actual or apparent
authority to bind FDS to the contract.
Nonetheless, UniFirst makes allegations which, if proven, would
establish a cause of action for enforcing the contract based on actual
authority. Specifically, UniFirst alleges:
Prior to signing the agreement…Bryce left his office and UniFirst’s representative therein and went to another office. When Bryce returned to his office, he indicated that he had been authorized to sign the Master Agreement on FLUID DISPOSAL’S behalf.
It bears repeating that the law of the case doctrine does not preclude UniFirst
from pursuing enforcement of the contract on the ground of actual authority.
La. C.C. art. 3019; ratification
UniFirst alleges that, after Bryce signed the supposed contracts with
UniFirst, FDS took delivery of the uniforms and its employees used them for 5 a time, and that FDS paid UniFirst according to the purported contract.
UniFirst has also alleged that this court determined that Bryce lacked the
authority to bind FDS to these contracts.
Based on the foregoing allegations, UniFirst has stated a cause of
action against FDS for enforcement of the contract via tacit ratification, and
an alternative cause of action against Bryce.
La. C.C. art. 3019 states: “A mandatary who exceeds his authority is
personally bound to the third person with whom he contracts, unless that
person knew at the time the contract was made that the mandatary had
exceeded his authority or unless the principal ratifies the contract.”
(Emphasis supplied).
La. C.C. art. 1843 provides for tacit ratification of contracts as
follows:
Ratification is a declaration whereby a person gives his consent to an obligation incurred on his behalf by another without authority. …
Tacit ratification results when a person, with knowledge of an obligation incurred on his behalf by another, accepts the benefit of that obligation.
Ratification is an affirmative defense which must be specifically pled.1 La.
C.C.P. art. 1005; Little v. Little, 391 So. 2d 1213 (La. App. 1 Cir. 1980).
As previously stated, UniFirst’s allegations in its reconventional
demand, if proven, would establish that FDS ratified the contract.
Specifically, UniFirst alleges that it delivered the uniforms pursuant to the
agreement, FDS accepted the uniforms, and that, for a time, FDS made
1 UniFirst did not file an answer prior to the granting of the preliminary injunction enjoining arbitration. 6 payments for the uniforms pursuant to the agreement. This suffices to state a
contractual cause of action based on ratification.2
Additionally, we point out that this court did not address the issue of
ratification in affirming the preliminary injunction; therefore, the law of the
case doctrine – even if we applied it – would not bar UniFirst from pursuing
ratification.
Open account
In relevant part, La. R.S. 9:2781, known as the “open account statute,”
states:
D. For the purposes of this Section …“open account” includes any account for which a part or all of the balance is past due, whether or not the account reflects one or more transactions and whether or not at the time of contracting the parties expected future transactions. (Emphasis added).
As with all contracts, “[a]n open account necessarily involves an underlying
agreement between the parties on which the debt is based.” Sork v. Sork,
2017-0300 (La. App. 1 Cir. 2/9/18), 242 So. 3d 640. Thus, an “open
account” is a type of contract.3 In Sandair Corp. v. Davis Indus., 470 So.2d
2 La. C.C. art. 3019 imposes on an agent who exceeds his authority liability to the third party contractant; thus, if it is established that he lacked authority to bind FDS to the contract with UniFirst, Bryce could be liable to UniFirst on the contract, unless it is established that FDS ratified the contract (or that UniFirst knew he lacked authority at the time the contract was made). Accordingly, Bryce and FDS could have adverse interests. However, they are represented by the same attorney in this appeal – James Colvin, Jr. (“Mr. Colvin”). In oral arguments, this court inquired about the potential conflict of interest, and counsel stated that Bryce and FDS do not have adverse interests in this matter. Based upon that assertion, it appears to the court that FDS and Bryce have reached some type of indemnification agreement. We decline to speculate as to the specific terms of this apparent agreement, and do not pass on its validity or whether it alleviates the concerns under RPC Rule 1.7. 3 La. R.S. 9:2781(D), supra, was enacted in 2001. Acts 2001, No. 1075, Section 1. As shown below, Shreveport Elec. Co. v. Oasis Pool Serv., Inc., 38,776 (La. App. 2 Cir. 9/29/04), 889 So. 2d 274, 279, writ denied, 2005-0340 (La. 4/1/05), 897 So. 2d 613, in stating that an open account is not a contract, relies on jurisprudence which predates the enactment of La. R.S. 9:2781(D): A contract is significantly different from an open account. Louisiana Civil Code Article 1906 defines contract as an agreement by two or 7 279 (La. App. 5 Cir. 1985), a contract for rental of an air compressor for
which payments were overdue was considered an open account.
UniFirst’s allegations in the reconventional demand, if proven, are
sufficient to establish a contract between FDS and UniFirst for the rental and
laundering of the uniforms (see discussion of actual authority, ratification,
supra), and that there are overdue balances owed by FDS. Thus, the
allegations are sufficient to state a cause of action for an open account under
La. R.S. 9:2781.
Quasi-contracts
UniFirst asserts several claims that are quasi-contractual in nature: (1)
unjust enrichment; (2) quantum meruit; and (3) detrimental reliance.
Unjust enrichment/quantum meruit. La. C.C. art. 2298 articulates the
law of unjust enrichment as follows:
A person who has been enriched without cause at the expense of another person is bound to compensate that person. The term “without cause” is used in this context to exclude cases in which the enrichment results from a valid juridical act or the law. The remedy declared here is subsidiary and shall not be available if the law provides another remedy for the impoverishment or declares a contrary rule.
Thus, there are five elements essential to an unjust enrichment claim:
(1) there must be an enrichment, (2) there must be an impoverishment, (3) there must be a connection between the enrichment and resulting impoverishment, (4) there must be an absence of “justification” or “cause” for the
more parties whereby obligations are created, modified, or extinguished. An open account is an account in which a line of credit is running and is open to future modification because of expectations of prospective business dealings. Services are recurrently granted over a period of time. A contract, however, is an agreement between two or more parties in which an offer is made by one of the parties and acceptance is made by the other party, thereby establishing a concurrence in understanding the terms. Tyler v. Haynes, 99-1921 (La. App. 3d Cir.05/03/00), 760 So.2d 559.
8 enrichment and impoverishment, and (5) there must be no other remedy at law available to plaintiff
Baker v. Maclay Properties Co., 94-1529 (La. 1/17/95), 648 So. 2d 888,
897. 4
UniFirst’s reconventional demand makes allegations which, if proven,
are sufficient to establish the first four requirements. UniFirst alleges its
costs in providing the uniforms, FDS’s employees’ use of the uniforms, and
this court’s (interlocutory) ruling that there was no enforceable contract
between FDS and UniFirst.
Understandably, UniFirst does not allege that it has “no other remedy
at law” available to it. However, this should not prevent UniFirst from
pursuing unjust enrichment at this point. The matter currently before the
court is merely an exception of no cause of action; thus, this court cannot
determine whether UniFirst actually has “no other remedy at law.” Instead,
this court can determine merely whether UniFirst has stated a cause of
action for an “other remedy at law,” i.e., enforcement of the contract.
Because UniFirst has, in fact, stated a cause of action for enforcing the
contract (via ratification or actual authority), the exception of no cause of
action regarding unjust enrichment is referred to the merits.
Detrimental reliance is a cause of action distinct from unjust
enrichment. La. C.C. art. 1967, in relevant part, states: “a party may be
obligated by a promise when he knew or should have known that the
promise would induce the other party to rely on it to his detriment and the
4 “Quantum meruit,” in this context, is merely a different name for unjust enrichment. Whitbeck v. Kay, 2005-774 (La. App. 3 Cir. 2/1/06), 921 So. 2d 1178 (“[q]uantum meruit is an equitable remedy founded upon the principle that no one who benefits from the labor or materials of another should be unjustly enriched at the other’s expense. The doctrine operates in the absence of a specific contract…”) 9 other party was reasonable in so relying.” Thus there are three elements: (1)
promise by the defendant; (2) the defendant knew or should have known that
the plaintiff would rely on it to the plaintiff’s detriment; and (3) the plaintiff
reasonably relied on the promise to his or her detriment. Unlike unjust
enrichment, a promise by the defendant is an essential element of
detrimental reliance under La. C.C. art. 1967.
The allegations of the petition would appear to perhaps support a
cause of action for detrimental reliance against Bryce. The allegations
against Bryce are summarized as follows. Bryce executed an agreement with
UniFirst wherein he purported to act as FDS’s agent with authority to bind
FDS to the agreement. Bryce claimed he had authority to do so and even
negotiated terms in confecting the purported agreement. Bryce entered a
second agreement, again purporting to have authority as agent of FDS. In
reliance on these promises, which are evidenced by Bryce’s signatures on
the contracts, FDS made outlays of approximately $488,000 pursuant to the
supposed contract.
Motion for summary judgment
La. C.C.P. art. 966, in relevant part, provides:
A. (1) A party may move for a summary judgment for all or part of the relief for which he has prayed… … (3) After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. (4) The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions… … 10 D. (1) The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover’s burden on the motion does not require him to negate all essential elements of the adverse party’s claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. (2) The court may consider only those documents filed in support of or in opposition to the motion for summary judgment and shall consider any documents to which no objection is made. Any objection to a document shall be raised in a timely filed opposition or reply memorandum. The court shall consider all objections prior to rendering judgment. The court shall specifically state on the record or in writing which documents, if any, it held to be inadmissible or declined to consider. E. A summary judgment may be rendered dispositive of a particular issue, theory of recovery, cause of action, or defense, in favor of one or more parties, even though the granting of the summary judgment does not dispose of the entire case as to that party or parties. F. A summary judgment may be rendered or affirmed only as to those issues set forth in the motion under consideration by the court at that time.
Prescription
Breach of contract claims are subject to ten-year prescription under
La. C.C. art. 3499. Hotard’s Plumbing, Electrical Heating & Air, Inc. v.
Monarch Homes, LLC, 15-180 (La. App. 5 Cir. 3/16/16), 188 So. 3d 391.
Actions that sound in quasi-contract and subject to a 10-year
prescriptive period. Kilpatrick v. Kilpatrick, 27, 241 (La. App. 2 Cir.
8/23/95), 660 So. 2d 182, writ denied 644 So. 2d 444, 1995-2579 (La.
12/15/95). Thus, unjust enrichment actions are subject to the 10 year
prescriptive period of La. C.C. art. 3499. Trust for Melba Margaret
11 Schwegmann v. Schwegmann Family Trust, 09-968 (La. App. 5 Cir.
9/14/10), 51 So. 3d 737; Bazile v. Arnaud Coffee Co., 465 So.2d 111 (La.
App. 4 Cir. 1985), writ denied, 468 So. 2d 1212; Slocum v. Daigre, 424 So.
2d 1074 (La. App 3 Cir. 1982), writ denied, 429 So.2d 128; Acme
Refrigeration of Baton Rouge, Inc v. Caljoan, Inc., 346 So. 2d 743 (La. App.
1 Cir. 1977).
Assignment No. 1 – one-year prescription
One-year prescription does not apply. This is not a tort action.
Assignment Nos. 2 & 3 – interruption via arbitration filing; continuation of that interruption resulting from preliminary injunction
UniFirst argues that its filing for arbitration – pursuant to the
arbitration provision of the contract – interrupted prescription. UniFirst
further argues that the trial court’s preliminary injunction against the
arbitration proceedings causes this interruption to continue indefinitely, i.e.,
until the injunction is dissolved or made permanent.
In rebuttal, FDS argues that UniFirst’s filing did not constitute a
“submission” within the meaning of La. C.C. art. 3099 because FDS and
UniFirst had no contract (covenant) to arbitrate. Therefore, FDS argues,
UniFirst’s filing for arbitration did not interrupt prescription, as that
interruption is based on “submission” to arbitration.
“A submission is a covenant by which persons who have a lawsuit or
difference with one another, name arbitrators to decide the matter and bind
themselves reciprocally to perform what shall be arbitrated.” La. C.C. art.
3099. (Emphasis in original). A “submission” to arbitration interrupts
prescription as provided in La. C.C. art. 3105:
B. Prescription is interrupted as to any matter submitted to
12 arbitration from the date of the submission and shall continue until the submission and power given to the arbitrators are put at an end by one of the causes in Article 3132, unless suit has been filed, in which case the provisions of Articles 3462 and 3463 shall apply.
La. C.C. art. 3132 provides for the termination of the submission and power
given to the arbitrators upon the occurrence of any of the following:
1. By the expiration of the time limited, either by the submission or by law, though the award should not be yet rendered. 2. By the death of one of the parties or arbitrators. 3. By the final award rendered by the arbitrators. 4. When the parties happen to compromise touching the thing in dispute, or when this thing ceases to exist.
A submission is a covenant, i.e., a contract. Our decision of the prior
appeal in this matter merely affirmed the preliminary injunction, and
therefore, constituted only an interlocutory ruling. Thus, it does not preclude
the existence of an enforceable contract. Thus, the premise of FDS’
argument, i.e., that it has been conclusively established that there was no
contract, is erroneous. Only once the enforceability of the contract has been
determined with finality can it be determined whether or not the arbitration
filing interrupted prescription.
Assignment No. 4: Three-year prescription for open account action
La. C.C. art. 3494(4) provides a three-year prescriptive period for
open account actions. The trial judge granted the MSJ, holding that
UniFirst’s purported open account action is barred by prescription. We
pretermit this issue. Even if the last payment occurred more than three years
before UniFirst filed a reconventional demand, that does not necessarily
render the open account action prescribed. If it is determined that the
contract is enforceable via actual authority or ratification, then the arbitration
filing interrupted prescription continuously. In that eventuality, the open 13 account action would not be prescribed despite the passage of more than
three years between the last payment and the filing of suit.
SUMMARY AND CONCLUSION
In its reconventional demand, UniFirst has a stated the following
causes of action against FDS: (1) enforcement of contract via actual
authority; (2) enforcement of contract via ratification; (3) open account; or,
alternatively, (4) unjust enrichment. If UniFirst prevails on the merits
regarding actual authority or ratification, then the arbitration clause is
enforceable, and the arbitration filing (which was made before March 24,
2015), interrupted prescription.
UniFirst has also stated causes of action against Bryce for (4)
exceeding authority under La. C.C. art. 3019, and (5) detrimental reliance.
The trial court, in granting the MSJ based on prescription and
dismissing the case in its entirety, ignored all of the aforementioned causes
of action – except for open account. Because the reconventional demand was
filed within the 10-year prescriptive period applicable to these contractual
and quasi-contractual claims, this was error. Furthermore, if UniFirst
establishes actual authority/ratification on the merits, then the interruption of
prescription via arbitration filing interrupted the running of prescription as to
the open account claim as well. Therefore the MSJ regarding the open
account is denied.
DECREE
Based on the foregoing, we REVERSE the trial court judgment. The
exception of no cause of action and the motion for summary judgment are
DENIED. The defendants are cast with all costs of this appeal.
14 This case is REMANDED for further proceedings consistent with this
opinion.