Jeff Mercer, L.L.C. v. Austin Bridge & Rd., L.P.

343 So.3d 218

JEFF MERCER, L.L.C.

v.AUSTIN BRIDGE AND ROAD, L.P., Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America, Zurich American Insurance Company and State of Louisiana Department of Transportation and Development

2021 CA 1458

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: JUNE 03, 2022

Rehearing Denied July 19, 2022

David P. Doughty, John B. Hoychick, Rayville, LA and Antonio M. "Tony" Clayton, Port Allen, LA, Counsel for Plaintiff/Appellant, Jeff Mercer, L.L.C.

John M. Dubreuil, Ryan M. Bourgeois, Paul R. Trapani, III, Covington, LA, Counsel for Defendant/Appellee, State of Louisiana, Department of Transportation and Development

BEFORE: McDONALD, LANIER, AND WOLFE, JJ.

LANIER, J.

The Nineteenth Judicial District Court granted a peremptory exception raising the objection of res judicata filed by the appellee, the Louisiana Department of Transportation and Development (DOTD), and dismissed the claims of the appellant, Jeff Mercer, L.L.C. (Mercer), with prejudice. Mercer appeals from the adverse judgment. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

In February of 2007, Mercer was hired as a subcontractor by Diamond B Construction Company, LLC, the prime contractor on the DOTD Louisville Street Project (Louisville project) in Monroe, Louisiana. Mercer's work included the removal of concrete, adjustment of manholes and catch basins, and rebuilding of curbs and any affected sidewalk portions. In a petition filed in Fourth Judicial District Court, Parish of Ouachita (the Ouachita lawsuit), on September 5, 2007, Mercer named DOTD and several of its employees as defendants, and alleged that a DOTD inspector on the Louisville project had attempted to solicit bribes from Mercer during the project's construction. Mercer allegedly rebuffed the inspector and reported him to DOTD officials.

Mercer alleged that after the report was made, DOTD and the named defendants retaliated. According to Mercer, as a result of this retaliation, its business was injured, including "its business reputation, business profits and business relationships," especially with Diamond B, the prime contractor on the project.

On July 17, 2008, Mercer was hired as a subcontractor by Austin Bridge and Road, L.P. (Austin), for the DOTD Bastrop/Log Cabin Project (Bastrop project) in Morehouse Parish. On May 19, 2009, Mercer was again hired by Austin for the DOTD 1-49 Project (1-49 Project) in Caddo Parish. Mercer claimed payment on these projects was guaranteed by performance bonds furnished by Austin.

Mercer supplemented the petition in the Ouachita lawsuit some time in 2012, stating that contractual damages were not being sought in that lawsuit, but were being sought "elsewhere." Mercer also alleged that the retaliatory actions of DOTD had adversely affected other projects it had taken on since the Louisville Project. Specific to the Bastrop and 1-49 projects, Mercer claimed that DOTD employees committed acts such as forcing Mercer to perform work outside the scope of the contract, causing Mercer to incur unnecessary expenses, and refusing to pay Mercer. Mercer also claimed that DOTD employees falsely reported Mercer to the Federal Bureau of Investigation (FBI) as an intimidation tactic.

Mercer filed the instant petition for damages with the Nineteenth Judicial District Court on September 28, 2012, alleging that DOTD, through its agents, maliciously refused to pay for the work done by Mercer. Mercer claimed that it had a direct claim against DOTD, which withheld funds from the prime contractor, Austin. Mercer alleged that DOTD's refusal to pay stems from the Ouachita lawsuit and Mercer's reporting of the DOTD inspector for attempted bribery. Mercer claimed it was owed $7,116,161.29 on the Bastrop project and $1,140,287.74 on the 1-49 project. In its first supplemental petition in the Nineteenth JDC, Mercer states that the Ouachita lawsuit seeks damages for the destruction of its business, not for monies owed by DOTD for the Bastrop and I-49 projects.

The Ouachita lawsuit proceeded to trial in the Fourth JDC, where the trial court entered a judgment in accordance with a jury verdict in favor of Mercer and against DOTD for $20 million. DOTD appealed to the Second Circuit. On June 7, 2017, the Second Circuit Court of Appeal reversed the Fourth JDC, finding there was insufficient evidence that DOTD engaged in unfair trade practices or intentionally interfered with Mercer's contracts with Austin. See Jeff Mercer, LLC v. State through Department of Transportation and Development, 51,371 (La. App. 2 Cir. 6/7/17), 222 So.3d 1017, 1044, writ denied, 2017-1442 (La. 12/5/17), 231 So.3d 625, cert. denied, ––– U.S. ––––, 138 S.Ct. 1566, 200 L.Ed.2d 746, 86 USLW 3525, 3526.¹

On July 9, 2021, DOTD filed a peremptory exception raising the objection of res judicata in the Nineteenth JDC, in which it claimed that Mercer's claims in the instant matter arise out of the same transaction or occurrence that was the subject matter of the Ouachita lawsuit, in which a final judgment had been entered against Mercer in favor of DOTD. In its memorandum in support of its exception, DOTD pointed out that in the Ouachita lawsuit, Mercer made claims for amounts owed on the Bastrop and I-49 projects, which are identical to the amounts that Mercer claimed in the instant matter that it was owed by DOTD for the same projects.

Following a hearing, the trial court signed a judgment on September 23, 2021, sustaining the peremptory exception of res judicata and dismissing all of Mercer's claims against DOTD with prejudice. Mercer has timely appealed that judgment.

ASSIGNMENTS OF ERROR

Mercer alleges three assignments of error:

1. The trial court committed reversible error by sustaining the peremptory exception of res judicata on the basis that Mercer had the obligation to assert all claims in the Ouachita lawsuit.

2. The trial court committed reversible error by implicitly finding that the Ouachita judgment is final when there is an ongoing petition to nullity the Second Circuit's decision regarding that case.

3. The trial court committed reversible error by implicitly finding that the Ouachita and East Baton Rouge lawsuits involve the same parties in the same capacity.

STANDARD OF REVIEW

When an objection of res judicata is raised before the case is submitted and evidence is received on the objection, the standard of review on appeal is traditionally manifest error. Pierrotti v. Johnson , 2011-1317 (La. App. 1 Cir. 3/19/12), 91 So.3d 1056, 1063. The trial court must examine not only the pleadings, but also the entire record in the first suit to determine whether the second suit is in fact barred by res judicata.

Jefferson v. Board of Supervisors of Southern University and Agricultural and Mechanical College , 2021-0716 (La. App. 1 Cir. 3/3/22), 341 So.3d 603, 608. If any doubt exists as to the applicability of res judicata, the objection must be overruled and the second lawsuit maintained. Cooper v. Baton Rouge Cargo Service, Inc. , 2019-1183 (La. App. 1 Cir. 5/11/20), 304 So.3d 86, 90, writ denied, 2020-00725 (La. 11/4/20), 303 So.3d 628.

DISCUSSION

Action to Nullify Judgment of the Second Circuit

Before addressing the central issue of res judicata, we initially address Mercer's second assignment of error. Mercer avers that the trial court erroneously deemed the Ouachita judgment as final when Mercer had filed a petition on September 27, 2019, with the Fourth JDC to nullity the Second Circuit's judgment, and that the disposition of that petition is still pending. Mercer attached the petition to annul judgment as an exhibit to its memorandum in opposition to DOTD's peremptory exception of res judicata. The underlying basis for nullity of the judgment is alleged fraud and ill practices committed by the Second Circuit. A final judgment obtained by fraud or ill practices may be annulled. La. C.C.P. art. 2004(A).

An action of nullity does not affect the right to appeal. La. C.C.P. art. 2005. A final judgment is appealable in all causes in which appeals are given by law. La. C.C.P. art. 2083. No disposition of Mercer's petition to annul is contained in the record; therefore, notwithstanding the outstanding petition to annul, we must still consider the Second Circuit's judgment a final judgment that forms the basis for the res judicata issue of the instant appeal.

Moreover, we note that in Mercer's petition to annul judgment, Mercer admitted that the alleged fraud and ill practices of the Second Circuit were discovered on June 16, 2017, over a year before the petition to annul judgment was filed on September 27, 2019. An action to annul a judgment for fraud and ill practices must be brought within one year of the discovery by the plaintiff in the nullity action of the fraud or ill practices. La. C.C.P. art. 2004(B). It is therefore highly unlikely that the Second Circuit's decision will be annulled on these grounds, since the one-year peremptive period to file an action to annul had already run. See Kfoury v. Coupel , 2018-0725 (La. App. 1 Cir. 11/2/18), 265 So.3d 796, 799. Mercer's second assignment of error is without merit.

Res Judicata

Louisiana Revised Statutes 13:4231, states:

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:

(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.

(2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.

(3) A judgment in favor of either

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