Excel Contractors, LLC v. Aptim Maint., LLC

EXCEL CONTRACTORS, LLC v. APTIM MAINTENANCE, LLC

CIVIL ACTION NO. 19-CV-580-SDD-SDJ

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

January 4, 2021

RULING

This matter is before the Court on the Motion for Summary Judgment¹ filed by Plaintiff, Excel Contractors, LLC ("Excel"). Defendant APTIM Maintenance, LLC ("APTIM") has filed an Opposition² to this Motion, to which Excel filed a Reply.³ For the following reasons, the Court finds that Excel's Motion must be denied.

I. FACTUAL BACKGROUND

This case arises from a dispute between a general contractor and subcontractor. Juniper Specialty Products, LLC ("Juniper") engaged APTIM, the general contractor, to work on a Juniper's facility in Westlake, Louisiana.⁴ APTIM in turn contracted with subcontractors, including Excel.⁵ Excel provided electrical and instrumentation services for the project.⁶ APTIM and Excel executed the Subcontract at issue in this case in March of 2018.⁷ Work commenced, and continued for a time, until Juniper abruptly locked the parties out of the construction site on May 21, 2019.⁸ Juniper informed APTIM that it wasstopping construction because it could not pay APTIM's invoices.⁹ Juniper is seeking bankruptcy protection and has not paid APTIM.¹⁰ APTIM has not paid Excel, and Excel would like to be paid, so Excel brought this suit against APTIM.¹¹

II. THE PARTIES' ARGUMENTS

The Subcontract forms the basis for this dispute; the parties agree that their respective rights and responsibilities are governed by the Subcontract. Most relevant to this dispute is Article 45 which governs a "Termination for Convenience."

Several sections of Article 45 are germane, but the gravamen of this dispute is the interpretation of § 45.6, which provides:

In the event of Client termination, Company's liability to Subcontractor shall be limited to the extent of Company's recovery on Subcontractor's behalf, except as otherwise provided in this Subcontract. Company agrees to cooperate with Subcontractor, at Subcontractor's expense, in the prosecution of any Subcontractor claim arising out of the Client termination and to permit Subcontractor to prosecute the claim, in the name of the Company for the use and benefit of Subcontractor, or assign the claim to Subcontractor.¹²

Excel argues that § 45.6 can only be interpreted to mean that Excel can recover payment for the work it performed under the Subcontract ("the Subcontract Price") from APTIM regardless of whether APTIM recovers payment from Juniper. APTIM counters that a literal application of the first sentence of § 45.6 provides that APTIM has no liability to Excel beyond what APTIM recovers from Juniper.

Excel posits that APTIM's interpretation would make § 45.6 function as a suspensive condition¹³ and argues that the Louisiana Supreme Court has held that "'contractual provisions are construed as not to be suspensive conditions whenever possible.'"¹⁴ Excel argues that § 45.6 is ambiguous, and the Court should find against a suspensive condition and hold that APTIM must pay Excel for its services rendered—regardless of whether Juniper pays APTIM.¹⁵ Excel presses that even if § 45.6 is an enforceable suspensive condition, it only suspends the payment of "claim[s] arising out of [Juniper's] termination," which should not include payment for services rendered under the Subcontract.¹⁶

III. LAW AND ANALYSIS

A. Summary Judgment Standard

In reviewing a party's motion for summary judgment, the Court will grant the motion if (1) there is no genuine issue of material fact, and (2) the mover is entitled to judgment as a matter of law.¹⁷ This determination is made "in the light most favorable to the opposing party."¹⁸ A party moving for summary judgment "'must "demonstrate the absence of a genuine issue of material fact," but need not negate the elements of the nonmovant's case.'"¹⁹ If the moving party satisfies its burden, "the non-moving party mustshow that summary judgment is inappropriate by setting 'forth specific facts showing the existence of a genuine issue concerning every essential component of its case.'"²⁰ However, the non-moving party's burden "'is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'"²¹

Notably, "[a] genuine issue of material fact exists, 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'"²² All reasonable factual inferences are drawn in favor of the nonmoving party.²³ However, "[t]he Court has no duty to search the record for material fact issues. Rather, the party opposing the summary judgment is required to identify specific evidence in the record and to articulate precisely how this evidence supports his claim."²⁴ "Conclusory allegations unsupported by specific facts . . . will not prevent the award of summary judgment; 'the plaintiffs [can]not rest on his allegations . . . to get to a jury without any "significant probative evidence tending to support the complaint."'"²⁵

B. Section 45.6 is neither a Suspensive Condition nor a Term for Performance

Excel argues that § 45.6 should not be interpreted as a pay-if-paid clause (suspensive condition) because those are disfavored in the absence of expressconditional language.²⁶ Instead, Excel argues, § 45.6 is merely a term for performance, which requires performance in a reasonable time if the length of the term is uncertain, as here.²⁷

Excel points to § 3.4.2 which provides: "[APTIM] shall pay the amount referred to in the Payment Certificate within thirty (30) [d]ays of receipt of the invoice relevant to the Payment Certificate." Given that § 3.4.2 creates an obligation and § 45.6 as interpreted would suspend that obligation, Excel argues that § 45.6 purports to be suspensive condition; and, § 45.6 does not contain the required language to effect a suspensive condition.

The parties' reliance on the suspensive condition vs. term for performance dichotomy²⁸ is misplaced. Excel relies heavily on Southern States Masonry, Inc. v. J.A. Jones Const. Co.²⁹ for its insolvency and suspensive condition arguments. In that case, the Louisiana Supreme Court interpreted two payment provisions in subcontracts.³⁰ Excel relies on the court's holding that where the parties presumed that the owner would pay the general contractor, and there was no indication that the parties had considered the possibility of the owner's insolvency, the payment clauses were not suspensive conditions.³¹

An examination of the clauses at issue in Southern States shows its limited applicability to the instant case. One of the clauses provided: "[c]ontractor shall pay toSubcontractor, upon receipt of payment from the Owner. . . ."³² The other provided: "[c]ontractor agrees that he will pay to said Sub-contractor [the contract price], said amount to be paid as follows: ninety per cent (90%) of the value of the work completed and accepted each month for which payment has been made by said Owner to said Contractor . . . .³³

Section 45.6 is fundamentally different.³⁴ The clauses at issue in Southern States described when/if payment would take place—they were part and parcel of the payment provision. In this case, the clause at issue is not a payment provision. It is a contingency plan in the event of the owner's (Juniper's) termination, which is an event that limits APTIM's obligation to pay "to the extent of [APTIM'S] recovery" from Juniper.

In Southern States the court wrestled with classifying the provisions as terms or conditions.³⁵ If a contractual provision creates a suspensive condition then the obligation does not exist until the specified condition occurs.³⁶ On the other hand, if a contractual provision stipulates the terms for payment, then, at most, the provision may trigger a delay in the time for payment, but the law imposes an obligation to make payment within a "reasonable time."³⁷ The court interpreted then-article 2049 of the Louisiana Civil Code, which provided that a term (in contrast to a condition) may consist of a determinate lapseof time or an event which was reasonably certain to occur.³⁸ The court observed that the owner's payment to the general contractor was "viewed as a reasonably certain event" and that the payment was "only uncertain to the extent that all human events are uncertain."³⁹ The court held that:

[T]he payment clauses constituted terms relating to the time of payment which served to retard or delay the general contractor's payment until the occurrence of an event (owner's payment to contractor), contemplated surely to take place in the anticipated normal course of events. The unanticipated failure to pay on the part of the owner changed the fundamental premise on which the parties were relying. That unanticipated occurrence thereupon made the time for performing the payment obligation unascertainable, or uncertain, requiring the obligation to be performed within a reasonable time.⁴⁰

The parties in this case did not expect that Juniper would cancel the project. Juniper's cancellation was not a "fundamental premise on which the parties were relying."⁴¹ Section 45.6 cannot be characterized as creating a term relating to the time of payment because it concerns something unexpected. Rather, § 45.6 limits payment. Section 45.6 is simply a risk sharing provision; a contingency plan in case things go awry.

APTIM's argument that § 45.6 creates a suspensive condition is incorrect as well. "A conditional obligation is one dependent on an uncertain event."⁴² When there is a suspensive condition, the obligation itself does not exist.⁴³ Here, APTIM is obligated to pay under § 3.4.2 (and other provisions) but § 45.6 limits APTIM's payment obligation to the extent of APTIM's recovery. Section 45.6 does not create a suspensive condition ora term for performance; the Court will interpret § 45.6 based on its plain and unambiguous meaning.

C. Interpretation of the Subcontract

The goal of contract interpretation is...