Patriot Construction & Industrial,llc v. Buquet & Leblanc, Inc.

• Court: Louisiana Court of Appeal
• Decided: April 24, 2024
• Docket: CA-0023-0557
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

CA 23-557

PATRIOT CONSTRUCTION &

INDUSTRIAL, LLC

VERSUS

BUQUET & LEBLANC, INC.

**********

APPEAL FROM THE FIFTEENTH JUDICIAL DISTRICT COURT PARISH OF LAFAYETTE, NO. C-2023-3340 HONORABLE MARILYN CARR CASTLE, DISTRICT JUDGE

GUY E. BRADBERRY JUDGE

Court composed of Van H. Kyzar, Guy E. Bradberry, and Wilbur L. Stiles, Judges.

REVERSED AND REMANDED. John M. Madison Gerald J. Asay Kracht Madison Huddleston, LLP 5149 Bluebonnet Boulevard Baton Rouge, LA 70809 (225) 293-4568 COUNSEL FOR DEFENDANTS/APPELLEES: Hartford Fire Insurance Company Buquet & Leblanc, Inc.

Michael R. Dodson Fishman Haygood LLP 201 St. Charles Avenue, 46th Floor New Orleans, LA 70170-4600 (504) 586-5252 COUNSEL FOR PLAINTIFF/APPELLANT: Patriot Construction & Equipment, LLC BRADBERRY, Judge.

Patriot Construction Equipment, LLC appeals the decision of the trial court

below denying its motion for preliminary injunction against Buquet & LeBlanc, Inc.

(hereinafter B&L) in this contract dispute centered on an arbitration clause in a

purported contract between the parties. For the following reasons, we hereby reverse

the decision of the trial court and remand for further proceedings in accordance with

our decision.

B&L was a general contractor for the construction of an apartment complex

in Lafayette. B&L reached out to Patriot to perform sitework and paving on the

project in November of 2020. A price and scope of work were agreed to. Patriot

was awarded the project in January of 2021, and mobilized April 23 of that year.

Prior to that date, B&L sent Patriot the “subcontract” at issue in this litigation, which

included an arbitration agreement therein. Patriot reviewed the document prior to

mobilization and returned a redlined copy with suggested changes on April 19. The

redlined copy was sent via email by a Patriot estimator named Paige Turner. The

record, however, has nothing in it which shows Patriot’s designated representative,

Mickey Suire, initialed or signed the document. While Mrs. Turner was a vessel for

communication between the parties, nothing indicated that she had authority to bind

Patriot in any way. Again, Patriot mobilized and began work on April 23. On April

27, after work had begun, B&L President Robin Liles reviewed the redlined copy

and agreed to most of the suggested input, as indicated by his initials besides the

redlines. He did not provide the cost of liquidated damages, as requested by Patriot.

He returned his initialed copy to Patriot that day. Again, however, Patriot’s

designated representative, Mickey Suire, did not initial or sign the document in any

way. Eventually B&L became unsatisfied with Patriot’s work and initiated

arbitration proceedings in accordance with the subcontract. Patriot objected and

filed a petition for damages against B&L, as well as a Motion for Temporary

Restraining Order and Preliminary Injunction seeking to prevent arbitration. The

temporary restraining order was granted, but the trial court later ruled that Mrs.

Turner acted with apparent authority to bind Patriot in sending the redlined copy of

the agreement and denied the preliminary injunction, forcing Patriot into arbitration

for the dispute. From that decision, Patriot appeals.

On appeal, Patriot asserts four assignments of error, all essentially asserting

that the trial court erred in finding Mrs. Turner had apparent authority to bind Patriot

and in finding that a contract had actually been formed which included an arbitration

provision. We agree with those assertions.

A ruling on a preliminary injunction will not be disturbed on appeal absent a

clear abuse of discretion. Herff Jones, Inc. v. Girouard, 07-393 (La.App. 3 Cir.

10/3/07), 966 So.2d 1127, writs denied, 07-2463, 07-2464 (La. 2/15/08), 976 So.2d

185. However, this broad abuse of discretion standard is ‘“based upon a conclusion

that the trial court committed no error of law and was not manifestly erroneous or

clearly wrong in making a factual finding that was necessary to the proper exercise

of its discretion.”’ Rand v. City of New Orleans, 12-348 (La.App. 4 Cir. 12/13/12),

125 So.3d 476, 479, (quoting Yokum v. Pat O’Brien’s Bar, Inc., 12-217, p. 7 (La.App.

4 Cir. 8/15/12), 99 So.3d 74, 80). “The determination as to whether to stay or compel

arbitration is a question of law.” Lemoine Co., LLC v. Durr Heavy Constr., LLC,

15-1997, p. 3 (La.App. 1 Cir. 10/31/16), 206 So.3d 244, 246, writ denied sub nom.,

The Lemoine Co., LLC v. Durr Heavy Constr., LLC, 16-2100 (La. 1/13/17), 215

So.3d 247. “The standard of appellate review for questions of law is simply to

2 determine whether the trial court was legally correct or incorrect.” Arkel

Constructors, Inc. v. Duplantier & Meric, Architects, L.L.C., 06-1950, 06-1951, p.

7 (La.App. 1 Cir. 7/25/07), 965 So.2d 455, 459.

Louisiana Code of Civil Procedure Article 3601 provides that an injunction

shall issue in cases where irreparable injury, loss, or damage may result to the

applicant. A party may be granted a preliminary injunction only if he establishes

three elements: “(1) that the injury, loss, or damage he will suffer if the injunction is

not issued may be irreparable; (2) that he is entitled to the relief sought; and (3) that

he will be likely to prevail on the merits of the case.” St. Raymond v. City of New

Orleans, 99-2438, p. 3 (La.App. 4 Cir. 5/17/00), 769 So.2d 562, 564, writs denied,

00-2565, 00-2566 (La. 9/13/00), 767 So.2d 697.

Because of a prior ruling of this court, we will deal with the above third

element first. A party is entitled to a preliminary injunction upon a prima facie

showing that he will prevail on the merits. Lake Bistineau Pres. Soc., Inc. v. Seales,

40,583 (La.App. 2 Cir. 2/10/06), 922 So.2d 768, writ denied, 06-620 (La. 5/26/06),

930 So.2d 27. During the course of this litigation, a prior panel of this court granted

Patriot’s motion for stay of arbitration pending this court’s review in the instant

appeal. There, this court ruled that Patriot had satisfied the four factors warranting

a stay, including “whether the movant has made a showing of likelihood of success

on the merits.” Patriot Constr. & Indus., LLC v. Buquet & Leblanc, Inc., 23-557,

p.2 (La.App. 3 Cir. 11/2/23) (unpublished opinion)1 (quoting New Iberia Bancorp,

Inc. v. Schwing, 95,638 p. 4 (La.App. 3 Cir. 8/23/95), 663 So.2d 104, 106).

1 2023 WL 7214727

3 “The ‘law of the case’ doctrine applies to all prior rulings or decisions of an

appellate court or the supreme court in the same case, not merely those arising from

the full appeal process.” Dodson v. Cmty. Blood Ctr. of La., Inc., 633 So.2d 252,

255 (La.App. 1 Cir. 1993) (emphasis ours), writs denied sub nom., Dodson v. Cmty.

Blood Ctr., Inc., 93-3158, 93-3174 (La. 3/18/94), 634 So.2d 850, 851. See also

Brumfield v. Dyson, 418 So.2d 21 (La.App. 1 Cir.), writ denied, 422 So.2d 162

(La.1982). This pertains to litigants who were parties to the case when the prior

decision was rendered, as here, and who, accordingly, had their day in court. Dodson,

633 So.2d 252. “The reasons for the ‘law of the case’ doctrine is [sic] to avoid

relitigation of the same issue; to promote consistency of result in the same litigation;

and to promote efficiency and fairness to both parties by affording a single

opportunity for the argument and decision of the matter[.]” Id. at 255; Ne. Realty v.

Jackson, 36,276 (La.App. 2 Cir. 8/14/02), 824 So.2d 1264; La. Land & Expl. Co. v.

Verdin, 95-2579 (La.App. 1 Cir. 9/27/96), 681 So.2d 63, writ denied, 96-2629 (La.

12/13/96), 692 So.2d 1067, cert. denied, 520 U.S. 1212, 117 S.Ct. 1696 (1997).

An appellate court ordinarily will not reconsider its own rulings of law on a

subsequent appeal in the same case. Ne. Realty (citing Glenwood Hosp., Inc. v. La.

Hosp. Serv., Inc., 419 So.2d 1269 (La.App. 1 Cir. 1982)). “Reargument in the same

case of a previously decided point will be barred where there is simply a doubt as to

the correctness of the earlier ruling.” Martinez Mgmt., Inc. v. Caston, 39,500, p. 9

(La. App. 2 Cir. 4/13/05), 900 So.2d 301, 307. “Only where there is palpable error

or where, if the law of the case was applied, manifest injustice would occur, is the

doctrine not applied.” Id. (citing Ne. Realty, 824 So.2d 1264; Glenwood Hosp., Inc.,

419 So.2d 1269. Nothing in the record before this court indicates that our previous

panel’s finding regarding the likelihood of success on the merits was palpable error,

4 therefore, we will not reconsider that prior ruling of this court and consider that

element established.

For the purpose of determining injunctive relief, “’[i]rreparable harm’

generally means ‘loss that cannot be adequately compensated in money damages or

measured by a pecuniary standard.’” Robbins v. State, Through State Land Office,

97-671, p. 9 (La.App. 3 Cir. 12/17/97), 704 So.2d 961, 966 (quoting Star Enter. v.

State, Through Dep’t of Revenue and Taxation, 95-1980, 95-1981, 95-1982, p. 13

(La.App. 1 Cir. 6/28/96), 676 So.2d 827, 834, writ denied, 96-1983 (La. 3/14/97),

689 So.2d 1383), writ denied, 98-176 (La. 3/20/98), 715 So.2d 1214. It is clear

under Louisiana law “that a party objecting to arbitration would be irreparably

harmed by being forced to arbitrate ‘in a proceeding not required”’ by a valid

contract. S. LA Contractors, LLC v. MAPP, LLC, 22-24, p. 8 (La.App. 1 Cir.

9/16/22), 353 So.3d 144, 150 (quoting W.E. Parks Lumber Co., Inc. v. Ronald A.

Coco, Inc., 297 So.2d 925, 927 (La.App. 1 Cir.), writ denied, 302 So.2d 23

(La.1974)), writ denied, 22-1612 (La. 4/25/23), 359 So.3d 989. “Arbitration is a

matter of contract, and a party cannot be required to submit to arbitration any dispute

to which he has not so agreed.” Lemoine, 206 So.3d 244, 247; see also Fluid

Disposal Specialties, Inc. v. UniFirst Corp., 50,356, (La.App. 2 Cir. 1/13/16), 186

So.3d 210.

B&L cites Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct.

1204 (2006), for the proposition that a challenge to the validity of a contract as a

whole, rather than specifically to any arbitration clause within it, must go to the

arbitrator, rather than the court. We disagree with this assertion, as both federal and

Louisiana jurisprudence provide that the issue of the existence of an agreement to

5 arbitrate is to be decided by the courts, not an arbitrator. Fluid Disposal, 186 So.3d

210. As noted there:

the Supreme Court [in Buckeye Check Cashing] expressly noted in a footnote that the issue of a contract’s validity is different from the issue of whether any agreement at all existed between the alleged obligor and the obligee. The Court stated it was not considering cases including those holding that courts should decide whether the signor lacked authority to commit the alleged principal. This statement by the Supreme Court, as well as other federal and state jurisprudence, indicates that in such a situation, there would be no agreement at all between the parties, including an agreement to arbitrate and the issue of the existence of the agreement would be decided by the court.

Id. at 216-17 (emphasis ours).

In Collins v. Prudential Insurance Co. of America, 99-1423 (La. 1/19/00), 752 So.2d 825, the supreme court determined that before a district court can compel arbitration, it must make two preliminary determinations: “First, the trial judge must ensure that a valid arbitration agreement between the parties exists. Second, the judge must decide whether the dispute at issue falls within the scope of the agreement. State law principles govern the first question.” Collins, 752 So.2d at 831.

Louisiana law favors arbitration. Aguillard v. Auction Management Corp., 2004-2804 (La. 6/29/05), 908 So.2d 1, 7. Whether a party is obligated to arbitrate is a matter of contract and, thus, the question of who is bound by an arbitration agreement is a function of the intent of the parties, as expressed in the terms of the agreement. Prasad v. Bullard, 2010-291 (La. App. 5 Cir. 10/12/10), 51 So.3d 35, 39. Generally, in order to be subject to arbitral jurisdiction, the party must be a signatory to a contract containing an arbitration clause. Id., 51 So.3d at 40. Not all arbitration provisions are valid under state law. Rodriguez v. Ed’s Mobile Homes of Bossier City, La., 2004-1082 (La. App. 3 Cir. 12/8/04), 889 So.2d 461, 463, writ denied, 2005-0083 (La. 3/18/05), 896 So.2d 1010. Rather, the application of arbitration law presupposes the existence of a valid contract as a basis for invoking arbitration. George Engine Co., Inc. v. Southern Shipbuilding Corp., 350 So.2d 881, 884 (La. 1977); see also La. R.S. 9:4201.4. Thus, if a contract is void ab initio because of some fatal defect in its confection, any arbitration provision contained within it is also a nullity. State, Through Office of Governor v. L. W. Eaton Const. Co., Inc., 392 So.2d 477, 480 (La. App. 1 Cir. 1980).

The requirements for a valid contract are: (1) capacity; (2) consent; (3) a lawful cause; and (4) a valid object. See La. Civ. Code arts. 1918, 1927, 1966, 1971; Granger v. Christus Health Central

6 Louisiana, 2012-1892 (La. 6/28/13), 144 So.3d 736, 760-761. It is the burden of the party seeking to enforce a contract to show the contract exists. La. Civ. Code art. 1831; FIA Card Services, N.A. v. Weaver, 2010-1372 (La. 3/15/11), 62 So.3d 709, 719; see also Kosmala v. Paul, 569 So.2d 158, 162 (La. App. 1 Cir. 1990) (“The party seeking to enforce arbitration provisions has the burden of showing the existence of a valid contract to arbitrate.”)

S. LA Contractors, LLC, 353 So.3d at 150-51 (italic emphasis ours). In determining

whether a party is bound by an arbitration agreement, we apply ordinary contract

principles. Fluid Disposal, 186 So.3d 210. Thus, in order to determine if Patriot is

bound by an arbitration agreement, we must first determine whether they properly

agreed to the subcontract containing that provision. A review of the record shows

they did not.

There are several indicators in the record that the subcontract at issue was not

fully finalized between the parties. First and foremost, while the trial court held that

Paige Turner acted with apparent authority to bind Patriot to the subcontract, we find

that ruling to be in error. As noted in Boulos v. Morrison, 503 So.2d 1, 3 (La.1987):

For the doctrine of apparent authority to apply, the principal must first act to manifest the alleged agent’s authority to an innocent third party. Second, the third party must rely reasonably on the manifested authority of the agent. As the Courts of Appeal have correctly held, the principal will be bound for the agent’s actions if the principal has given an innocent third party a reasonable belief the agent had authority to act for the principal. Comfort Heating & Air Conditioning, Inc. v. Brock, 476 So.2d 927 (La.App. 2 Cir., 1985); Byles Welding & Tractor, Inc. v. McDaniel, 441 So.2d 48 (La.App. 3 Cir., 1983); Bamber Contractors, Inc. v. Morrison Engineering & Contracting Company, Inc., 385 So.2d 327 (La.App. 1 Cir., 1980). The burden of proving apparent authority is on the party relying on the mandate. Bamber Contractors, supra.

A third party seeking to benefit from the doctrine of apparent authority may not blindly rely upon the assertions of an agent. He has a duty to inquire into the nature and extent of the agent’s power. Buckley v. Woodlawn Development Corp., 233 La. 662, 98 So.2d 92 (1957); Byles Welding, supra; Bamber Contractors, supra.

7 It was uncontroverted at trial that Mrs. Turner did not have the authority to

bind Patriot to any contract. Moreover, at no point did Patriot ever hold Mrs. Turner

out as someone who could act with authority to bind the company. Mrs. Turner,

known by B&L as an estimator only, merely sent an initial copy of draft revisions to

B&L. B&L cannot establish a reasonable belief she had authority to act for Patriot

in the manner they now assert, as Mickey Suire was known by B&L to be the person

with authority to sign the contract. Likewise, his name was clearly and specifically

printed in the space on the subcontract indicating he would be the one accepting the

agreement. He did not, in fact, sign or otherwise indicate acceptance of the deal as

being finalized.

Further, it is apparent from the record that important terms of the revisions

were not completely agreed upon, including the liquidated damages provision, as

noted directly by the trial court. The uncontradicted testimony of Patriot’s president,

Ben LeBlanc, indicated this was a major financial issue affecting Patriot. That

redline item request was not initialed, even by Mr. Liles, indicating a lack of

agreement on that matter. Additionally, clear terms of the subcontract revisions were

not followed, indicating that the parties did not act in compliance therewith, as

claimed by B&L. The very first of the changes sent by Mrs. Turner and initialed by

Mr. Liles, indicating his own acceptance, dealt with the retainage rate to be applied

to payments to Patriot. The initial subcontract draft sent by B&L to Patriot indicated

a 10% retainage rate throughout the project. The revisions sent by Mrs. Turner

indicated Patriot wanted a 5% retainage rate after 50% completion of the project.

Mr. Liles indicated agreement with that rate by initialing next to the redline.

However, the record is clear that the payments were actually made through February

of 2022 at the 10% rate, well past the 50% completion indicated in the subcontract

8 initialed by Mr. Liles, indicating B&L itself was not following the terms of its own

purported subcontract.

Finally, the draft subcontract sent between the parties specifically states

(emphasis ours) that:

This Agreement may not be changed, amended, altered or modified orally, or in writing or by any means whatsoever except by WRITTEN MODIFICATIONS ON THIS ACTUAL AGREEMENT PROPERLY INITIALLED BY BOTH PARTIES or a PROPERLY EXECUTED FORMAL, WRITTEN CHANGE ORDER signed by the signer of this contract. . . . This agreement specifically may not be changed, expanded, altered, modified, subjugated, or overruled in any way by anyone’s signature on any delivery ticket, order confirmation, indemnification, hold harmless, work order, acknowledgement or ANY other document except a PROPERLY EXECUTED FORMAL WRITTEN CHANGE ORDER (as specified within).

While Mr. Liles did initial most of the changes proposed by Patriot, nothing in the

record indicates that Mr. Suire initialed any of the changes whatsoever, as clearly

required by the very document B&L now seeks to enforce.

It is clear from the record before this court that an initial contract was formed

between the parties when they agreed on a price and a scope of work. Patriot began

work under that agreement prior to B&L returning the subcontract at issue with

most of its redlined changes initialed by Mr. Liles – i.e., even B&L had not agreed

to the edits in the draft subcontract as marked prior to work beginning. The parties

clearly began back and forth negotiations on the subcontract document which were

never fully ratified, especially by anyone with authority to do so on Patriot’s part.

Therefore, the subcontract, including the arbitration provision, did not become

binding on the parties. Patriot would thus be irreparably harmed by being forced

into arbitration by a contract it did not fully agree to, is entitled to be granted its

preliminary injunction, and the trial court abused its discretion in failing to do so.

9 For the foregoing reasons, we find the trial court erred manifestly in finding

Paige Turner had the authority, or acted with apparent authority, to create a contract

binding Patriot to arbitration. Consequently, the trial court was legally incorrect in

its determination to compel arbitration and abused its discretion in denying Patriot’s

motion for preliminary injunction. Accordingly, the judgment of the trial court is

reversed. This matter is remanded to the trial court for entry of a preliminary

injunction and for further proceedings consistent with this opinion. Costs of this

appeal are hereby assessed against B&L.

REVERSED AND REMANDED.