Boes Iron Works, Inc. v. Gee Cee Grp., Inc.

206 So.3d 938

BOES IRON WORKS, INC.

v.GEE CEE GROUP, INC., Gibson C. Chigbu and the Gee Cee Company of LA, Inc.

NO. 2016–CA–0207

Court of Appeal of Louisiana, Fourth Circuit.

NOVEMBER 16, 2016

Keith L. Magness, LAW OFFICE OF KEITH L. MAGNESS, LLC, 901 Derbigny Street, Gretna, LA 70053, COUNSEL FOR PLAINTIFF/APPELLANT

Louis R. Koerner, Jr., KOERNER LAW FIRM, 1204 Jackson Avenue, New Orleans, LA 70130, COUNSEL FOR DEFENDANT/APPELLANT

(Court composed of Judge Dennis R. Bagneris, Sr., Judge Roland L. Belsome, Judge Rosemary Ledet )

Judge Rosemary Ledet

This is a suit by a subcontractor against a general contractor alleging, among other things, breach of contract and violation of the prompt pay and misapplication of funds statutes. La. R.S. 9:2784 (prompt pay statute); La. R.S. 9:4814 (misapplication of funds statute). Boes Iron Works, Inc. ("Boes"), the subcontractor, commenced this case against the following three related defendants: Gee Cee Group, Inc. ("Gee Cee Group"); The Gee Cee Company of LA, Inc. ("Gee Cee LA"); and Gibson Chigbu, the president of both Gee Cee Group and Gee Cee of LA (collectively "Defendants"). Boes contends that Defendants are liable to it for failing to pay an amount due. Defendants responded by filing an exception of prescription, which the trial court denied.

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.

FACTUAL AND PROCEDURAL BACKGROUND

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:

Notwithstanding anything to the contrary provided for herein, payment by the contractor and/or owner to Boes Iron Works, Inc. shall be due on or before the 20th day of the month following submission of invoices by Boes Iron Works, Inc. Failure to pay said invoice(s) so submitted when due shall entitle Boes Iron Works, Inc. to recover from the contractor and/or owner interest at the rate of one and one-half (1 ½) percent per month on the outstanding unpaid balance from due date until paid, all reasonable attorney's fees incurred by Boes Iron Works, Inc. in connection with the collection with such past due balance, all in addition to the outstanding unpaid principle [sic] balance. Should job be discontinued, final billing shall not be determined by "Bill to Date" amount.

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.¹ Based on that term, as the trial court noted, "Boes expected payment from Mr. Chigbu once Entergy paid Mr. Chigbu for the work previous done by Boes." Thus, the payment due date hinged on the date that Entergy paid Gee Cee Group. The exact date on which Entergy paid Gee Cee Group, however, was never established at trial; instead, it was simply established that Entergy paid Gee Cee Group "sometime in 2003."

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.²

On May 11, 2010, Mr. Chigbu sent a follow-up email to Mr. Boes, stating the following:

As I said while I visited last time, I would be back with you soon and it may take until Monday May 10 to get back with you. Sorry, it has taken a day more. I will send you a $5,000.00 check towards that account and will pay intermittent payments until all amount[s] are paid within the next 36 months or we are able to negotiate a one time or twice payoff amount. Got to figure out where and how to place this bill. Anyway, thanks.

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 the payments were being made to Boes for its Job No. 1079, which was the number that Boes assigned to the Entergy project. On June 7, 2011, Mr. Boes' son again emailed Gee Cee LA, through Mr. Chigbu, an invoice on Job No. 1079 for the remaining balance due of $16,820.00. No interest calculation was included on that invoice.

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 1½% per month (18% per annum) (the rate set forth on the Invoices).³ On December 27, 2012, Boes' attorney sent a formal written demand to Gee Cee Group setting forth the same amount due of $82,739.80.

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.⁴ Following the hearing, the trial court denied the 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:

This Court previously found that the April 2010 meeting and subsequent May 11, 2010 email from Mr. Chigbu served as a new promise by Gee Cee Company of LA to pay the debt of the closed Gee Cee Group, Inc. This Court previously found that Mr. Chigbu's meeting in April 2010 with Mr. Boes and Mr. Chigbu's follow up email on May 11, 2010 served to interrupt prescription and essentially acknowledged or guaranteed payment of a debt owed. Further, Mr. Chigbu, on behalf of Gee Cee Group of LA, issued two payments totaling $16,500.00 for Boes' Job No. 1079. In the Court's April 4, 2015 judgment, this Court found that Mr. Chigbu, on behalf of the new company, Gee Cee Group of LA, had a pecuniary interest (and thus received a benefit) by making a new agreement and promising to pay the debt of his former company. Gee Cee Group, in light of his continued business relationship with Boes Iron Works.^{[5 ]}

Given those findings, the trial court summarized the remaining issues before it at trial as follows:

1. Whether Mr. Boes contracted with Gee Cee Group or with Gee Cee LA, and whether Gee Cee LA was merely an alter ego of Gee Cee Group;

2. The terms of the April 2010 agreement between Mr. Chigbu and Mr. Boes regarding the debt, including whether the language in the Invoices entitled Boes to one and one half percent per month on outstanding unpaid balances not paid by the due date was binding on Mr. Chigbu; and

3. Whether Boes is entitled to penalties, attorneys' fees, and costs.

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 Boes⁶ and Defendants⁷ appeal.

DISCUSSION

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...