Conmaco/Rector L.P. v. L&A Contracting Co.

CONMACO/RECTOR L.P. v. L&A CONTRACTING COMPANY

CIVIL ACTION NO: 12-2337

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA SECTION: "H"(4)

Dated: October 30, 2013

ORDER AND REASONS

Before the Court is a Motion for Summary Judgment Regarding Counterclaims (R. Doc. 24), and a Motion for Summary Judgment Regarding Damages (R. Doc. 49). For the following reasons, the former is GRANTED IN PART and the latter DENIED.

BACKGROUND

This is a civil action arising out of a lease agreement between Conmaco/Rector, L.P. ("Conmaco") and L&A Contracting Company ("L&A"). Pursuant to this agreement, Conmaco agreed to lease a hydraulic hammer and certain component parts (collectively the "Hammer") to L&A. L&Aintended to use the Hammer to install large piles in connection with a flood control project on the Houma Navigation Canal.

On December 20, 2011, Conmaco delivered the Hammer to the L&A jobsite. During the week of January 2, 2012, L&A used the Hammer to drive a number of test piles. On January 9, 2012, the Hammer malfunctioned due to the failure of a component part. Conmaco subsequently ordered a replacement part from the manufacturer. The Hammer was inoperable from the date of failure until February 27, 2012?the day it was returned to L&A in working condition.

Conmaco subsequently submitted separate invoices for the period during which the Hammer was non-functional, for labor charges related to the disassembly of the Hammer, and for damage to the Hammer discovered during a post-rent inspection. L&A refused to pay the invoices, after which Conmaco brought the instant suit. L&A counterclaimed for breach of lease, breach of warranty against vices or defects, and unjust enrichment. Each counterclaim is based on damages allegedly suffered as a result of the defect in the Hammer.

LEGAL STANDARD

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c) (2012). A genuine issue of fact exists only "if the evidence is such that a reasonable jurycould return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor. Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997). "If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995). Summary judgment is appropriate if the non-movant "fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). "In response to a properly supported motion for summary judgment, the nonmovant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the nonmovant on all issues as to which the nonmovant would bear the burden of proof at trial." John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir. 2004) (internal citations omitted). "We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts." Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)). Additionally, "[t]he mere argued existence of a factual dispute will not defeat an otherwiseproperly supported motion." Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).

LAW AND ANALYSIS

Conmaco moves this Court for the entry of summary judgment as to L&A's counterclaims. Conmaco separately moves for summary judgment as to damages resulting from those counterclaims. The Court addresses each Motion separately.

I. Motion for Summary Judgment as to L&A's Counterclaims

Conmaco argues that L&A has contractually waived its right to recover any damages resulting from a defect in the Hammer, and that L&A is precluded from asserting a claim for unjust enrichment. While the Court agrees that L&A's claim for unjust enrichment fails as a matter of law, there is a genuine issue of material fact as to whether L&A waived its right to recover damages for breach of the warranty against vices or defects. Accordingly, the motion is granted in part and denied and part.

A. Whether L&A Waived its Right to Recover Damages

In this diversity case, Louisiana substantive law applies, including its principles of contract interpretation. Bayou Steel Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 642 F.3d 506, 509 (5th Cir. 2011) (citation omitted). "According to the Louisiana Civil Code, '[i]nterpretation of a contract is the determination of the common intent of the parties.'" Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 181 (5th Cir. 2007) (quoting La. Civ. Code art. 2045). In probing this intent, acourt looks first to the four corners of the contract. See John Paul Saprir, LLC v. Yum! Brands, Inc., 106 So. 3d 646, 652 (La. Ct. App. 4th Cir. 2012) (citation omitted). "When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. Civ. Code art. 2046. "Each provision of a contract must be interpreted in light of the other provisions, and a provision susceptible of different meanings must be interpreted with a meaning that renders it effective rather than one which renders it ineffective." Lis v. Hamilton, 652 So. 3d 1327, 1330 (La. 1995) (citations omitted).

The determination of whether a contract is clear or ambiguous is a question of law. La. Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 764 (La. 1994) (citation omitted). "When a contract can be interpreted from the four corners of the instrument, the question of contractual interpretation is answered as a matter of law, and summary judgment is appropriate." Mobil Exploration & Producing U.S. Inc. v. Certain Underwriters Subscribing to Cover Note 95-3317(A), 837 So. 2d 11, 24 (La. Ct. App. 1st Cir. 2002) (citation omitted). If, on the other hand, the court makes a threshold finding that the contract is ambiguous, an issue of material fact exists as to the intention of the parties, and summary judgment is rarely appropriate. See Orleans Parish Sch. Bd. v. Lexington Ins. Co., 118 So. 3d 1203, 1212 (La. Ct. App. 4th Cir. 2013) (citation omitted).

The waiver provisions in the equipment lease provide as follows:

3. LESSOR HAS MADE NO REPRESENTATION OF WARRANTY OF ANY KIND, NATURE, OR DESCRIPTION, EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING, WITHOUT

LIMITATION, THE CONDITION OF THE EQUIPMENT, ITS MERCHANTIBILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE; EXCEPT THAT LESSOR WARRANTS THAT IT WILL HAVE TITLE TO THE EQUIPMENT AT THE TIME OF DELIVERY THEREOF. AS TO LESSOR, THEREFORE, LESSEE EXPRESSLY AGREES THAT IT LEASES THE EQUIPMENT "AS IS." LESSOR SHALL NOT BE LIABLE FOR ANY DAMAGES BY REASON OF FAILURE OF THE EQUIPMENT TO OPERATE OR FAULTY OPERATION OF THE EQUIPMENT OR SYSTEM. LESSOR SHALL NOT BE HELD RESPONSIBLE FOR ANY DIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES RESULTING FROM THE INSTALLATION, OPERATION, OR USE OF THE EQUIPMENT. NO DEFECT OR UNFITNESS OF THE EQUIPMENT SHALL RELIEVE LESSEE OF THE OBLIGATION TO PAY RENT OR OTHERWISE PERFORM UNDER THE LEASE. LESSEE ACKNOWLEDGES THAT THE FOREGOING LIMITATIONS OF WARRANTY HAVE BEEN BROUGHT TO ITS ATTENTION BY LESSOR AND THAT IT HAS READ AND UNDERSTANDS THE SAME.

4. THE VENDOR, METHOD OF SHIPMENT, MAKE, MODEL, SPECIFICATIONS, PERFORMANCE, AND ALL OTHER MATTERS RELATING TO THE ORDERING, DELIVERY, OPERATION, AND PERFORMANCE OF THE EQUIPMENT HAVE BEEN SELECTED AND DETERMINED BY LESSEE. LESSOR SHALL NOT BE LIABLE FOR LOSS OR DAMAGE OCCASIONED BY ANY CAUSE, CIRCUMSTANCE, OR EVENT OF WHATSOEVER NATURE, INCLUDING BUT NOT LIMITED TO FAILURE OF OR DELAY IN DELIVERY, DELIVERY TO THE WRONG PLACE, DELIVERY OF IMPROPER EQUIPMENT OR PROPERTY OTHER THAN THE EQUIPMENT, DAMAGE TO THE EQUIPMENT, GOVERNMENTAL REGULATION, STRIKES, STORMS, WAR EMERGENCIES, LABOR TROUBLES, BELATED RECEIPT OF MATERIALS, FIRES, FLOODS, WATER, ACTS OF GOD OR OTHER CIRCUMSTANCES OF LIKE OR UNLIKE NATURE.

(R. Doc. 24-3) (emphasis in original). L&A argues there is a genuine issue of material fact as towhether the waiver of warranties in Paragraph 3 is enforceable. Conmaco counters that the Court need not address whether the waiver of warranties is enforceable, because L&A has more broadly waived its right to bring a claim for any damages, as provided in Paragraphs 3 and 4.

The parties' arguments present multiple issues for the Court's consideration. First, the Court must determine whether the lease agreement contains an enforceable waiver of the right to recover damages. Next, the Court must determine whether the lease agreement contains an enforceable waiver of the warranty against vices or defects. Should the Court answer the former in the affirmative and the latter in the negative, the Court must determine whether, as a matter of law, the parties may essentially abnegate the warranty against vices or defects by a more general waiver of the right to recover any damages.

i. Whether the Lease Contains an Enforceable Waiver of Damages

Under Louisiana law, parties may contract to limit or waive recoverable damages. See Gulf Am. Indus. v. Airco Indus. Gases, 573 So. 2d 481, 489 (La. Ct. App. 5th Cir. 1990) (citation omitted); Vaulting & Cash...