author: HUGHES, J.

text:
    JASPER CONTRACTORS, INC. v. E-CLAIM.COM, LLC, State Farm Fire and Casualty Company, Edgewebhosting, Inc., and XYZ Insurance Company.
    No. 2011 CW 0978 R.
    Court of Appeal of Louisiana, First Circuit.
    May 4, 2012.

      Stephen C. Carleton, Victor R. Loraso, III, Carmen T. Hebert, Vionne M. Douglas, Baton Rouge, LA, for Plaintiff/Respondent Jasper Contractors, Inc.
    Thomas G. Buck, John C. Henry, David B. Parnell, Jr., Brett W. Tweedel, Metair-ie, LA, for Defendant/Relator E-Claim, com, LLC.
    Before GAIDRY, McDONALD, and HUGHES, JJ.
   HUGHES, J.

12This is an application for supervisory review, requesting this court to overturn a district court’s denial of the defendant/relator’s exception of prematurity, based on a contractual arbitration agreement in a suit in which the plaintiff/respondent had alleged fraudulent inducement in the contract between the parties. For the reasons that follow, we grant the defendant/relator’s application for supervisory review, reverse the district court ruling, and order these proceedings stayed pending arbitration.

FACTS AND PROCEDURAL HISTORY

Jasper Contractors, Inc. (Jasper), the plaintiff/respondent, is a multi-state roofing contractor, having its principal place of business in Baton Rouge, Louisiana. In October 2008 Jasper signed a contract with E-Claim.com, LLC (E-Claim), the defendant/relator, a Belle Chasse, Louisiana company. The contract stated that E-Claim would provide software and a “server hosted environment” to maintain certain business records belonging to Jasper, which included plans, specifications, proposals, and insurance information for clients. Jasper’s goals in entering into the contract with E-Claim included achieving a “paperless” record-keeping system, having “virtual” access to its records “24/7/365,” and dealing with a local/Louisiana-based service provider. In July of 2009 a significant number of Jasper’s electronic files were lost or deleted from E-Claim’s computer servers, allegedly affecting over 900 of Jasper’s clients and negatively impacting its business. Thereafter, E-Claim disclosed to Jasper that it had outsourced webhosting of Jasper’s files to Edgewebhosting, Inc., a company located in Baltimore, Maryland.

|sOn June 17, 2010 Jasper filed suit in the 19th Judicial District Court against E-Claim and Edgewebhosting, Inc., for damages sustained and sought a declaratory judgment that its contract with E-Claim was null and void for a vice of consent arising from fraud on the part of E-Claim (based on fraudulent representations and/or misrepresentations by E-Claim, which included, among others, that Jasper’s records would be stored on Louisiana-located equipment, rather than out-of-state, and that all electronically-stored data would be regularly “backed-up” and protected by “banking level security”). On August 19, 2010 E-Claim filed an exception of prematurity, contending that Jasper’s petition was premature, because its claim was subject to mandatory contractual arbitration.

Following a November 8, 2010 hearing, the district court overruled the exception of prematurity. The district court’s March 31, 2011 written reasons stated: “The plaintiffs allegations of fraud in the instant suit are sufficient to require that the district court first determine the validity of the contract and based on that ruling, then determine whether the matter shall proceed to arbitration.” A judgment denying E-Claim’s exception of prematurity was signed on May 2, 2011.

On May 31, 2011 E-Claim filed a writ application with this court, assigning one error: “The trial court erred when it refused to enforce the mandatory arbitration provisions of the contract between the parties.” This court denied the writ application. See Jasper Contractors, Inc. v. E-Claim.com, LLC, 2011-0978 (La.App. 1 Cir. 8/29/11) (unpublished). RHowever, the supreme court granted E-Claim’s writ application and remanded the matter to this court “for briefing, argument, and full opinion.” See Jasper Contractors, Inc. v. E-Claim.com, LLC, 2011-2126 (La.11/4/11), 75 So.3d 930, 931.

On remand to this court, E-Claim contends the district court erred when it determined that it should rule on Jasper’s allegations as to the validity of the contract between the parties, rather than have the issue decided by an arbitrator.

LAW AND ANALYSIS

In the contract signed by these parties, the specified applicable law and the agreement to arbitrate is contained in Article 10, Section 10.8, which states in pertinent part:

10.8 Governing Law/Choice of Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana applicable to contracts made, executed and performed therein and without reference to any conflicts of law codes, statutes, jurisprudence or principles. Any claim, dispute, or controversy, directly or indirectly, arising out of, relating to, or in connection with this Agreement, or the performance, enforcement, breach, termination, expiration, dissolution, rescission, cancelation, validity or interpretation of this Agreement (including, without limitation, interpretation and resolution of the scope of these arbitration provisions) shall be settled by binding, nonappealable, arbitration in accordance with the Commercial Rules of the American Arbitration Association and, to the extent not inconsistent therewith, the Federal Arbitration Act [9 USC§§ letseq.]....

A plain reading of this section reveals that the parties intended to designate Louisiana law for construing and governing the making, execution, and performance of the contract, without resort to or the application of “conflicts” law. The parties further specified that “binding, nonappealable, arbitration” would be used to settle any “claim, dispute, or controversy” arising out of the contract, as well as those related to the contract’s enforcement, dissolution, cancelation, and/or validity, et cetera. | ^Arbitration was required, by Section 10.8 of the contract, to be in accordance with the American Arbitration Association’s Commercial Rules (AAA Rules) and, “to the extent not inconsistent therewith,” the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq. Thus, although Louisiana law was chosen to apply to the contract generally, the AAA Rules and, to the extent not inconsistent, the FAA were chosen to apply to the arbitration agreement contained in the contract.

While Jasper has asserted a vice of consent, i.e. fraud, as to the contract as a whole, it also contends, with respect to the arbitration agreement only, that the arbitration agreement is adhesionary, because it limits any recovery for its damages to either a “Repair Remedy” or a refund of the $7,500 “Initial License And Setup Fee” originally paid by Jasper to E-Claim. In contrast, no similar contractual limitation is placed on E-Claim’s recovery of sums alleged to be due by Jasper.

While Section 10.8 of the contract between the parties, containing the arbitration agreement, does not explicitly address damages, it states as follows:

1 fi[T]he arbitrators shall have the power of, and authority to exercise, amiable compositeur, ex aequo et bono[] and “natural justice and equity;” and, provided further, that the arbitrators shall have the authority to require specific performance or impose other equitable relief hereunder, as well as imposing money damages and awards of attorneys’ fees to the prevailing party.

Also pertinent are the following provisions of the contract relating to damages, which provide, in pertinent part:

6.2 Exclusive Remedy. As the sole and exclusive remedy of Customer for any warranty claim under Section 6.1(ii) for which E-Claim is responsible, E-Claim shall provide the error-correction services set forth in Section 7.2 (the “Repair Remedy”); provided, that E-Claim reserves the right at any time to elect not to provide, or to abort, the Repair Remedy and, in conjunction therewith, to terminate this Agreement and refund the Initial License and Setup Fee; and, by such termination and payment, Customer shall have no other right, remedy, recourse or claim whatsoever (for damages or otherwise) against E-Claim....
6.4 LIMITATION OF LIABILITY. ... THE CUMULATIVE LIABILITY OF E-CLAIM FOR ALL CLAIMS WHATSOEVER RELATED TO THE CMS APPLICATION, THE SERVER HOSTED ENVIRONMENT OR THIS AGREEMENT, INCLUDING ANY CAUSE OF ACTION SOUNDING IN, OR IN THE NATURE OF, CONTRACT, TORT, QUASI-CONTRACT, STATUTORY OR STRICT LIABILITY, SHALL NOT EXCEED THE LIABILITY CAP. THE TERM “LIABILITY CAP” MEANS THE AMOUNT OF THE INITIAL LICENSE AND SETUP FEE ... [excluding obligations under Section 8.1 relative to copyright, patent, trade secret, trademark or any other third-party proprietary right].
6.5 DISCLAIMER OF LIABILITY FOR CONSEQUENTIAL AND SPECIAL DAMAGES. IN NO EVENT SHALL E-CLAIM BE LIABLE FOR ANY CONSEQUENTIAL AND SPECIAL DAMAGES WHETHER OR NOT FORESEEABLE AND REGARDLESS OF WHETHER OR NOT E-CLAIM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH CONSEQUENTIAL AND ^SPECIAL DAMAGES. THE TERM “CONSEQUENTIAL AND SPECIAL DAMAGES” MEANS, IN ADDITION TO ITS GENERALLY ACCEPTED MEANING, THE FOLLOWING: LOSS OF PROFITS, REVENUE, PATRONAGE OR BUSINESS; DELAY DAMAGES; DAMAGE TO REPUTATION; LOSS OF GOODWILL; LOSS OR CORRUPTION TO DATA; AND ANY INCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES.

The issue for this court to decide is whether Jasper’s allegations of fraud as to the inducement of the contract, as a whole, and/or whether the allegations of adhesion as to the arbitration clause itself, can be decided by the 19th Judicial District Court or whether these issues must be decided in arbitration.

On this issue, the FAA is applicable, to the extent not inconsistent with the AAA Rules (as stated in the contract in this case), and supplies the, following general rules, which provide in pertinent part:

§ 2. Validity, irrevocability, and enforcement of agreements to arbitrate A written provision in ... a contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
§ 3. Stay of proceedings where issue therein referable to arbitration If any suit or proceeding be brought in any of the courts ... upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
|s§ 4. Failure to arbitrate under agreement; petition to United States court having jurisdiction for order to compel arbitration; notice and service thereof; hearing and determination A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any ... district court which, save for such agreement, would have jurisdiction ... in a civil action ... for an order directing that such arbitration proceed.... The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. ... If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed sum-marilg to the trial thereof....

(Emphasis added.)

Important to this discussion is the directive in 9 U.S.C. § 4, in particular, which requires the court to “proceed summarily to the trial” of an issue raised by the parties as to the “making of the arbitration agreement.” The United States Supreme Court, citing Prima Paint Corporation v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), has interpreted the FAA to mean that if a party to a contract requiring arbitration raises a challenge to the arbitration clause itself, the district court must adjudicate it, but if the challenge is to the contract as a whole (such as a claim of fraud in the inducement of the contract), the statutory language does not permit the district court to consider the issue, rather the arbitrator must decide the issue. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-45, 126 S.Ct. 1204, 1208, 163 L.Ed.2d l038 (2006). The Buckeye Court further stated that as a matter of substantive federal arbitration law, an arbitration provision is severable from 11ftthe remainder of the contract (noting that the question of “severability” is not one of state law). Id., 546 U.S. at 445, 126 S.Ct. at 1208-9. The Supreme Court rejected the contention that the only arbitration agreements to which the FAA applies are those involving a valid contract. In other Inwords, the Supreme Court has rejected the argument that an agreement, which may be void ab initio under state law, is thus not a “contract,” such that 9 U.S.C. § 2’s requirement “to settle by arbitration a controversy ... arising out of such contract” would not apply. The Supreme Court stated in Buckeye that such an argument echoes Justice Black’s dissent in Pri-ma Paint, wherein he stated: “Sections 2 and 3 of the Act assume the existence of a valid contract. They merely provide for enforcement where such a valid contract exists.” In rejecting this argument, the Buckeye Court stated:

We do not read “contract” so narrowly. The word appears four times in § 2. Its last appearance is in the final clause, which allows a challenge to an arbitration provision “upon such grounds as exist at law or in equity for the revocation of any contract.” ... There can be no doubt that “contract” as used this last time must include contracts that later prove to be void. Otherwise, the grounds for revocation would be limited to those that rendered a contract voidable — which would mean (implausibly) that an arbitration agreement could be challenged as voidable but not as void. Because the sentence’s final use of “contract” so obviously includes putative contracts, we will not read the same word earlier in the same sentence to have a more narrow meaning.

See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. at 447-48, 126 S.Ct. at 1210. Thus, the Supreme Court reaffirmed that “regardless of whether the challenge is brought in federal or state court, a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator[;]” conversely, when the challenge is directed to the arbitration clause, the district court generally has the authority, under 9 U.S.C. § 4, to decide the issue. See Id., 546 U.S. at 449,112126 S.Ct. at 1210. See also International River Center v. Johns-Man-ville Sales Corporation, 2002-3060, pp. 3-4 (La.12/3/03), 861 So.2d 139, 141-42 (holding that LSA-R.S. 9:4203 (the state counterpart to 9 U.S.C. § 4) allows a district court to ascertain only two basic facts before ordering arbitration: (1) whether there is a dispute as to the making of the agreement for arbitration, and (2) whether a party has failed to comply with the arbitration agreement; if the trial court determines that those two facts are not at issue, the court shall issue an order directing the parties to proceed to arbitration).

Nevertheless, the contract in the instant case states that the laws to be applied are “the Commercial Rules of the American Arbitration Association and, to the extent not inconsistent therewith, the Federal Arbitration Act,” and therefore, a deviation from the result that would be reached under an application of the FAA, with respect to the arbitrability issue, is produced by application of the AAA Rules over the FAA rules. AAA Rule R-7 provides:

R-7. Jurisdiction
(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.
(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for - that reason alone render invalid the arbitration clause.
(c)A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim 113that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.

(Emphasis added.)

Although general jurisprudential law, based on the FAA, allows a district court to decide a challenge directed only to a contractual arbitration clause, when, as here, the parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator. See T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 344-45 (2nd Cir.2010); Contec Corporation v. Remote Solution, Co., Ltd., 398 F.3d 205, 208 (2nd Cir.2005); Shaw Group Inc. v. Triplefine International Corporation, 322 F.3d 115, 122-23 (2nd Cir.2003); PaineWebber Inc. v. By byk, 81 F.3d 1193, 1202 (2nd Cir.1996). Likewise, in this ease, the parties’ contract expressly gives the arbitrator the power to decide challenges to the validity of the arbitration clause, via the incorporated AAA. Rules (which were effectively given supremacy, in Section 10.8 of the contract, over the FAA), rather than allowing the district court to decide the issue, as would otherwise be the case.

Jurisprudence cited by Jasper to the contrary is not persuasive. In George Engine Co., Inc. v. Southern Shipbuilding Corporation, 350 So.2d 881 (La.1977), the application of Louisiana arbitration law was at issue, whereas in the instant case, the parties contractually agreed that the current AAA Commercial Arbitration Rules and the FAA would be applicable. Furthermore, the Louisiana Supreme Court subsequently held in Aguillard v. Auction Management Corp., 2004-2804, p. 8 (La.6/29/05), 908 So.2d 1, 8, that the United States Supreme Court has made it clear that whether a claim is brought in state or federal court, and whether a claim arises out of state or federal law, courts must enforce arbitration agreements in contracts covered by the FAA, notwithstanding any state statutory or jurisprudential rules to the contrary, stating:

[A] presumption of arbitrability does exist. Due to the strong and substantial similarities between our state arbitration provisions and the federal arbitration law as seen through a comparison of La.Rev.Stat. §§ 9:4201 and 9:4202 and 9 U.S.C. §§ 2 and 3, the federal jurisprudence provides guidance in the interpretation of our provisions. We, therefore, adopt the United States Supreme Court’s interpretation of the federal arbitration law.
Accordingly, even when the scope of an arbitration clause is fairly debatable or reasonably in doubt, the court should decide the question of construction in favor of arbitration. The weight of this presumption is heavy and arbitration should not be denied unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation that could cover the dispute at issue. Therefore, even if some legitimate doubt could be hypothesized, this [c]ourt, in conjunction with the Supreme Court, requires resolution of the doubt in favor of arbitration.

| rJd., 2004-2804 at pp. 24-25, 908 So.2d at 18. See also FIA Card Services, N.A. v. Weaver, 2010-1372, p. 4 (La.3/15/11), 62 So.3d 709, 712 (holding that to the extent the Louisiana arbitration law conflicts with the FAA any inconsistency must be resolved in favor of the federal act as federal law preempts contrary state law). Consequently, since, in the instant case, the contract, by its terms, requires application of federal law, the federal jurisprudence, cited hereinabove, governs over state jurisprudence and requires arbitration of both the challenge to the contract as a whole and the challenge to the arbitration clause.

Accordingly, we must conclude that the district court erred in overruling E-Claim’s exception of prematurity.

CONCLUSION

For the reasons stated herein, we grant the application of E-Claim.com, LLC for supervisory review; reverse the district court judgment overruling the dilatory exception pleading the objection of prematurity asserted by E-Claim.com, LLC; render judgment in favor of E-Claim.com, LLC, sustaining the exception of prematurity; and order the district court proceedings stayed pending submission of the matter to arbitration. All costs of this writ application are assessed to Jasper Contractors, Inc.

WRIT GRANTED; JUDGMENT REVERSED; PROCEEDINGS STAYED PENDING ARBITRATION.

      . E-Claim’s software and Internet data hosting service was called "Click Claim, Claims Management Solutions.”

      . The matter was heard before the Honorable Hillary Crain, Pro Tempore, on November 8, 2010. He issued written reasons on March 31, 2011. On May 2, 2011 Judge Kay Bates signed a judgment in accordance with Judge Crain's written reasons. Neither party is contesting the validity of the judgment, under review here, on this basis. Further, Judge Crain's written reasons constitute a ruling on the exception. See Uniform Rules of Louisiana Courts of Appeal, Rule 4-3, 2006 Revision Comment, stating: “The 'ruling at issue’ refers to the interlocutory judgment, order, or ruling of the trial court.” See also Domino v. Striplen, 366 So.2d 1035, 1036 (La.App. 1 Cir.1978), writ denied, 369 So.2d 457 (La.1979), stating: "There is no requirement that an interlocutory judgment be in writing or that it be signed by the trial court....”

      . Section 9.5 of the contract, entitled "Accrued Claims,” states:
      No termination, expiration or otherwise end of this Agreement shall be deemed to release [Jasper] from indebtedness to E-Claim for any fees, charges accrued or incurred up to or after, the time of such termination, expiration or otherwise end of this Agreement or to release [Jasper] from claims for damages or otherwise which E-Claim accrued or suffered prior to or after such termination, expiration or otherwise end of this Agreement. Nothing in the preceding sentence shall be deemed to limit or waive [Jasper]'s right to contest, in good faith, any fee, charge or claim by E-Claim.

      . The contractual provisions that the arbitral tribunal shall decide according to what is “amiable compositeur ” means “according to equity and good conscience,” and “ex aequo et bono ” means what is “just and good." Certain Underwriters at Lloyd’s London Who Participated in Syndicates 47, 219, 227, 376, 490, 506, 529, 590, 672, 727, 807, 923, 947, 991, 994, 1003, 1027, 2003, 2027, 2227, 2376, 2490, 2506, 2591, 2923 and 2947 v. BCS Insurance Company, 239 F.Supp.2d 812, 817 (N.D.Ill.2003).

      . Although not applicable to the instant case, we note that LSA-R.S. 9:4201, 9:4202, and 9:4203 of the “Louisiana Binding Arbitration Law” are nearly identical, in all pertinent respects, to 9 U.S.C. § 2, 9 U.S.C. § 3, and 9 U.S.C. § 4, respectively.

      . The U.S. First Circuit has stated this concept as follows: The teaching of Prima Paint is that a federal court must not remove from the arbitrators, consideration of a substantive challenge to a contract, unless there has been an independent challenge to the making of the arbitration clause itself. The basis of the underlying challenge to the contract does not alter the severability principle. Thus, a party cannot avoid arbitration, through rescission of an entire agreement, when it has made no independent challenge to the arbitration clause. Unionmutual Stock Life Insurance Company of America v. Beneficial Life Insurance Company, 774 F.2d 524, 529 (1st Cir. 1985).

      . Regarding 9 U.S.C. § 2’s mandate that a contract containing an arbitration agreement be valid, irrevocable, and enforceable, "save upon such grounds as exist at law or in equity for the revocation of any contract,” the Supreme Court explained that such challenges can be divided into two types. One type challenges specifically the validity of the agreement to arbitrate. The other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract’s provisions renders the whole contract invalid. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. at 444, 126 S.Ct. at 1208. The Buckeye Court further noted that the issue of the contract’s validity is different from the issue of whether any agreement between the alleged obligor and obligee was ever concluded, stating that its opinion addressed only the former and did not speak to the latter. Buckeye, 546 U.S. at 444 n. 1, 126 S.Ct. at 1208 n. 1. The former issue includes not only whether any agreement was ever confected, but also, though arbitration clauses are severable from a larger contract, the question of whether an underlying contract contains a valid arbitration clause, because arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute that he has not agreed so to submit. See Sandvik AB v. Advent International Corp., 220 F.3d 99, 105 (3rd Cir.2000). See also Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26, 105 S.Ct. 3346, 3353, 87 L.Ed.2d 444 (1985); Spahr v. Secco, 330 F.3d 1266, 1269 (10th Cir.2003). The U.S. 9th Circuit, in Three Valleys Municipal Water District v. E.F. Hutton & Company, Inc., further explained the distinction made in Buckeye as follows:

        We read Prima Paint as limited to challenges seeking to avoid or rescind a contract — not to challenges going to the very existence of a contract that a party claims never to have agreed to. A contrary rule would lead to untenable results. Party A could forge party B's name to a contract and compel party B to arbitrate the question of the genuineness of its signature. Similarly, any citizen of Los Angeles could sign a contract on behalf of the city and Los Angeles would be required to submit to an arbitrator the question whether it was bound to the contract, even if its charter prevented it from engaging in any arbitration. Under this view, Pri-ma Paint applies to "voidable” contracts— those where one party was an infant, or where the contract was induced by fraud, mistake, or duress, or where breach of a warranty or other promise justifies the aggrieved party in putting an end to the contract. If the dispute is within the scope of an arbitration agreement, an arbitrator may properly decide whether a contract is "voidable,” because the parties have agreed to arbitrate the dispute. But, because an arbitrator's jurisdiction is rooted in the agreement of the parties, arbitrators derive their authority to resolve disputes only because the parties have agreed in advance to submit such grievances to arbitration, a party who contests the making of an arbitration agreement cannot be compelled to arbitrate the threshold issue of the existence of the agreement to arbitrate. Only a court can make that decision. Three Valleys Municipal Water District v. E.F. Hutton & Company, Inc., 925 F.2d 1136, 1140-41 (9th Cir.1991). Clearly, the trigger of the court's power to compel arbitration is the existence of a presumptively valid arbitration agreement, contained within a contract signed by the parties. Chastain v. Robinson-Humphrey Company, 957 F.2d 851, 855 (11th Cir.1992). Thus, the first task of a court, asked to compel arbitration of a dispute, is to determine whether the parties agreed to arbitrate that dispute. Chastain, 957 F.2d at 854 (wherein the signature of one party to a securities trading account was alleged to have been forged, and it was held that it is for courts to decide whether the alleged obligor ever signed the contract). Under normal circumstances, the Chastain court explained, an arbitration provision within a contract, which the contractual parties have admitted to signing, is sufficient to require the district court to send any controversies to arbitration. Under such circumstances, the parties have at least presumptively agreed to arbitrate any disputes, including those disputes about the validity of the contract in general. Because the making of the arbitration agreement itself is rarely in issue when the parties have signed a contract containing an arbitration provision, the district court usually must compel arbitration immediately after one of the contractual parties so requests. The calculus changes when it is undisputed that the party seeking to avoid arbitration has not signed any contract requiring arbitration. In such a case, that party is challenging the very existence of any agreement, as well as the existence of an agreement to arbitrate. Under these circumstances, there is no presumptively valid general contract that would trigger the district court’s duty to compel arbitration pursuant to the FAA. If a party has not signed an agreement containing arbitration language, such a party may not have agreed to submit grievances to arbitration at all. Therefore, before sending any such grievances to arbitration, the district court itself must first decide whether or not the non-signing party can nonetheless be bound by the contractual language, on some other basis. See Id. In addition to a claim that a contract, which includes mandated arbitration, was ever signed by a party, other claims, evoking a question as to whether a party has agreed to arbitration, thus presenting a question for the courts, not arbitrators, have included: whether the signor lacked authority to commit the alleged principal {see Sandvik, supra, and Three Valleys, supra); whether an agent had authority to bind the principal and whether the signor had the mental capacity to assent (see Sphere Drake Insurance Limited v. All American Insurance Company, 256 F.3d 587 (7th Cir.2001), and Spahr, supra); whether a requirement of arbitration in a written, but unsigned, confirmation notice, transmitted subsequent to an oral sales agreement, became part of the verbal agreement or was an unenforceable material alteration (see Supak & Sons Manufacturing Company, Inc. v. Pervel Industries, Inc., 593 F.2d 135 (4th Cir.1979) (which held that the seller's confirmation form, which was not signed by the buyer, providing that any controversy arising out of oral contract be submitted to binding arbitration, was a per se material alteration of the contract and did not become part of it; and further holding that, by its terms, 9 U.S.C. § 2 does not apply until the arbitration clause in question is determined to be part of the contract)); whether employer-distributed rules requiring arbitration of employment disputes, which stated acceptance of or continued employment by an employee amounted to a consent to arbitrate, constituted a valid agreement to arbitrate (see Marino v. Dillard's, Inc., 413 F.3d 530, 531 (5th Cir.2005) (citing Louisiana contract law that when an agreement to arbitrate lacks a signature, the actions and the conduct of the party or parties, who did not sign, may show the effect or validity of the agreement; the court concluded there had been a valid offer and acceptance, thus arbitration was mandated)); and when a unilateral contractual amendment, incorporating an agreement to arbitrate, is mailed to a credit card customer, who has not signed the amendment {see FIA Card Services, N.A. v. Weaver, 2010-1372 (La.3/15/11), 62 So.3d 709 (noting that 9 U.S.C. § 9’s confirmation of arbitration award procedure presupposes an agreement to arbitrate as a necessary condition for confirmation of an arbitral award, so that before a court may enter judgment on a petition to confirm, it must answer the fundamental question of whether there was an arbitration agreement between the parties; because there was no signed agreement to arbitrate, the plaintiff/credit card company was required to prove, but failed to show, that notice of the change in terms of the credit card agreement had been sent to the defendant/customer or that, after sending the notice, the customer assented to the new terms by his continued use of the card)). See also John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-47, 84 S.Ct. 909, 912-13, 11 L.Ed.2d 898 (1964) (which held that a court should decide whether an arbitration agreement survived a corporate merger and bound the successor corporation); AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (holding that a dispute, over whether an arbitration clause in an admittedly binding contract applied to a particular type of controversy (i.e., grievances concerning layoffs), is for the court); and Atkinson v. Sinclair Refining Company, 370 U.S. 238, 241-43, 82 S.Ct. 1318, 1320-21, 8 L.Ed.2d 462 (1962) (holding that the court should decide whether a clause providing for arbitration of various union "grievances” could be construed to bind the defendant/employer to arbitrate its claim for damages against the union for breach of a no-strike agreement). But see International River Center v. Johns-Manville Sales Corporation, 2002-3060, p. 4 (La. 12/3/03), 861 So.2d 139, 142 (holding that neither LSA-R.S. 9:4202 nor LSA-R.S. 9:4203 (the state counterparts to 9 U.S.C. §§ 3 and 4) allows the district court to determine the issue of whether arbitration has been waived, citing Bartley, Inc. v. Jefferson Parish School Board, 302 So.2d 280 (La.1974) (which held that LSA-R.S. 9:4203 requires a court to order arbitration once it has found that there is an agreement to arbitrate and a failure to comply with that agreement)). Thus, we can conclude that a dispute as to the "the making” of the agreement for arbitration is reserved for decision by the court, as stated in 9 U.S.C. § 4 and LSA-R.S. 9:4203. It has long been recognized that the FAA simply requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms. Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989). The purpose of the FAA is to make arbitration agreements as enforceable as other contracts, but not more so. Supak & Sons Manufacturing Company, Inc. v. Pervel Industries, Inc., 593 F.2d 135, 137 (4th Cir.1979) (quoting Prima Paint Corporation v. Flood & Conklin Mfg. Co., 388 U.S. at 404 n. 12, 87 S.Ct. at 1806 n. 12).

      . An arbitration clause will generally be "sev-erable” from the contract in which it is embedded, in the sense that it may be valid even if the rest of the contract is invalid. If the agreement of one party, to arbitrate disputes, is fully supported by the other party's agreement to do likewise, there is no need to look elsewhere in the contract for consideration for the agreement to arbitrate; so objections to other parts of the contract, based on fraud, unconscionability, mistake, et cetera, need not spill over to the arbitration clause. See Matterhorn, Inc. v. NCR Corporation, 763 F.2d 866, 868-69 (7th Cir.1985). Stated another way, the doctrine of severability presumes an underlying, existent, agreement to arbitrate. Such an agreement exists even if one of the parties seeks to rescind the larger contract on some basis (e.g., as in alleging fraud in the inducement). However, it is clear that a sev-erable arbitration clause does not exist, if no contract ever existed. See Sandvik, 220 F.3d at 106.

      . We further note that Section 9.6 of the parties' contract provides: "Notwithstanding the termination, cancelation, rescission, dissolution, ... voiding, expiration or otherwise end of this Agreement, the following provisions survive: ... Article 10...." Also, Section 10.11 states:
      In the event that all or any part of the terms, conditions or provisions contained in this Agreement are determined to be invalid, unlawful or unenforceable to any extent by any arbitrator or any court or tribunal of competent jurisdiction, such term, condition or provision shall be severed from the remaining terms, conditions and provisions which shall continue to be valid and enforceable to the fullest extent permitted by law. Further, to the extent that said arbitrator, court or tribunal has the power to conform and reform said invalid, unlawful or unenforceable term, condition or provision, said arbitrator, court and tribunal is authorized and requested by the parties (said request being hereby a covenant between the parties) to conform and reform said invalid, unlawful or unenforceable term, condition or provision to a form, and in substance, as is as close to the severed term, condition or provision as possible yet valid and enforceable.

      . A different result was reached by the Louisiana Supreme Court, with respect to the application of the Louisiana arbitration law (LSA-R.S. 9:4201 et seq.) in George Engine Co., Inc. v. Southern Shipbuilding Corporation, 350 So.2d 881 (La.1977). At issue in the George Engine case was a contention that a contract was void ab initio, because of an error on the part of the buyer in the principal cause of the agreement that resulted from a material misrepresentation by the seller. The contract between the parties contained an arbitration agreement, which the seller sought to enforce. In ruling on whether the district court suit filed by the buyer, seeking rescission of the contract, should be stayed pending arbitration, the Louisiana Supreme Court, declining to follow the Prima Paint decision, held that LSA-R.S. 9:4201 (which states that a provision in a written contract "to settle by arbitration a controversy thereafter arising out of the contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” (which we note is nearly identical in all pertinent terms to 9 U.S.C. § 2, quoted hereinabove)) is enforceable only as to a valid contract and that such a challenge to the validity of the contract is triable before the district court, rather than the arbitrator. See George Engine, 350 So.2d at 884-86.

      . The AAA Commercial Arbitration Rules are available at http://www.adr.org/sp.asp7id— 22440. See Dealer Computer Services, Inc. v. Old Colony Motors, Inc., 588 F.3d 884, 887 (5th Cir.2009).

      . Although we do not find it necessary to resolve the issue in order to dispose of this writ application, and we find no jurisprudence addressing the point, we note that where the AAA Rules govern and authorize an arbitrator to determine arbitrability, rather than the court, there is an argument to be made as to whether such an agreement, insofar as it includes disputes relative to the “making” of the arbitration agreement (i.e., when the attack on the arbitration agreement itself is that it is void, rather than voidable), may be violative of public policy. This issue is not present in the instant case because Jasper’s assertion is that the arbitration agreement is voidable, as adhesionary. However, we note that if an allegation had been made that the arbitration agreement was allegedly void, then the policy considerations expressed in the jurisprudence discussed hereinabove, stating that it is the province of the district court to decide all issues relative to the "making” of the arbitration agreement, may supersede any provisions to the contrary in the parties' contract. As stated in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83-84, 123 S.Ct. 588, 592, 154 L.Ed.2d 491 (2002), linguistically speaking, one might call any potentially dispositive gateway question a "question of arbitrability,” for its answer will determine whether the underlying controversy will proceed to arbitration on the merits; the phrase "question of arbitrability” has generally been interpreted as meaning the kind of narrow circumstance where contracting parties were not likely to have thought that they had agreed that an arbitrator would decide the case. A gateway dispute about whether the parties are bound by a given arbitration clause raises a "question of arbitrability” for a court to decide. Id.

      . We note that the supreme court in George Engine stated:
      [T]he decision in Prima Paint Corp. v. Flood & Conklin, 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).... interprets the Federal Arbitration Act (9 U.S.C. §§ 1-14) and holds that the issue of fraud in the inducement of a contract generally must be submitted to arbitration when the contract contains an arbitration clause. Although ordinarily this opinion by the United States Supreme Court would bear great weight upon our decision, in the instant case reason and law in this [cjourt's view weigh more heavily in favor of the dissenting opinion of Mr. Justice Black joined in by Mr. Justice Douglas-and Mr. Justice Stewart as the reasons assigned herein will demonstrate. Further justification for adopting the dissenting view is found in the circumstance that a state statute is being interpreted and no federal question or federal constitutional principle is involved which compels this [cjourt to follow the views expressed by ‘the United States Supreme Court. Under these circumstances Louisiana’s highest court is free to interpret this State’s law in accordance with its understanding of the legislative intent and its appreciation of what is more logical, reasonable and just.

        George Engine, 350 So.2d at 886.

      . As noted hereinabove, exceptions to the contractually-mandated referral of the arbi-trability issue include instances where there is a question as to the existence of any contract between the parties, such as when it is alleged: that there is no signed contract, that there is no arbitration agreement in a signed contract, that a party’s signature on a contract has been forged, that the party who signed a contract on behalf of someone else had no authority to do so, or that a party has been forced to sign an agreement against his will.

      . When a valid arbitration agreement exists, pending an arbitration award a court is expressly authorized to stay proceedings and/or compel the parties to proceed to arbitration upon the application of one of the parties. Bernard v. Hildebrand, 2008-0268, p. 6 (La.App. 1 Cir. 8/6/08), 993 So.2d 678, 683. See also 9 U.S.C. § 3.


source: Caselaw Access Project

author: LOLLEY, J. STEWART, J.,

license: Public Domain

text:
    HAWK FIELD SERVICES, L.L.C. and Petrohawk Energy Corporation, Plaintiffs-Appellees v. MID AMERICA UNDERGROUND, L.L.C., et al., Defendants-Appellants.
    No. 47,078-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 16, 2012.
    Rehearing Denied June 14, 2012.
    Dissenting Opinion on Denial of Rehearing June 22, 2012.

      Simon, Peragine, Smith & Redfearn, New Orleans, LA, by Robert L. Redfearn, Jr., for Defendant-Appellant U Brothers Rent, LTD.
    Hargrove, Smelley & Strickland, Shreveport, LA, by Glenn L. Langley, B. Lee Carr, for Plaintiffs-Appellees Hawk Field Services, L.L.C. & Petrohawk Energy Corp.
    Carey Poarch, In Proper Person, for Defendant-Appellee Pioneer Pipeline Services, L.L.C.
    Before STEWART, LOLLEY and SEXTON (Pro Tempore), JJ.
   LOLLEY, J.

1 tU Brothers Rent, LTD. (“U Brothers”), appeals the judgment of the Twenty-Sixth Judicial District Court, Parish of Bossier, State of Louisiana, wherein the trial court dismissed U Brothers’ claim and lien. For the following reasons, we affirm in part and reverse in part the trial court’s judgment and remand for further proceedings.

FACTS

Hawk Field Services, L.L.C. (“Hawk Field”), a subsidiary of Petrohawk Energy Corporation, hired Pioneer Pipeline Services, L.L.C. (“Pioneer”), to construct a pipeline (the “Hawk Field Pipeline”) in Bossier and Red River Parishes. Pioneer hired numerous subcontractors to complete construction on the Hawk Field Pipeline, one of which was Rapid Pipeline. Rapid Pipeline entered into a written contract with U Brothers, in which U Brothers, a heavy construction equipment rental company, agreed to lease heavy equipment to Rapid Pipeline. In turn, Rapid Pipeline orally subleased U Brothers’ heavy equipment to Pioneer. U Brothers’ heavy equipment was used on the Hawk Field Pipeline from November 2008 to February 2009, and U Brothers was paid directly by Pioneer.

On February 11, 2009, U Brothers notified Hawk Field that Pioneer failed to pay U Brothers and owed an outstanding balance of $127,950.67. On March 10, 2009, Hawk Field responded to U Brothers’ claim in a letter requesting additional information. On May 1, 2009, U Brothers filed a lien against the Hawk Field Pipeline pursuant to the Private Works Act, La. R.S. 9:4801, et seq. (“PWA”) and filed its claim on July 22, 2009.

| ¡¡Because U Brothers was not the only party to file a lien on the Hawk Field Pipeline due to Pioneer’s failure to pay, Hawk Field filed a petition for concursus in Bossier Parish. The parties agreed to the appointment of a special master in order to determine the validity of all claims and liens.

The special master submitted a preliminary report in November 2009 which stated that U Brothers did not have a valid claim or lien under the PWA. In response, U Brothers submitted additional evidence and arguments to the special master. Nevertheless, in January 2010, the special master requested that the trial court treat the preliminary report as the final report. The trial court held a contradictory hearing. U Brothers’ counsel was not present at the contradictory hearing; however, an attorney representing another party agreed to speak on U Brothers’ behalf. After the hearing, the trial court adopted the legal conclusions of the report as its judgment and set a trial date for any claims or privileges not determined by adoption of the special master’s findings. This appeal by U Brothers followed.

DISCUSSION

Adoption of the Special Master’s Report

As its first assignment of error, U Brothers argues that both the special master’s report and the trial court’s judgment adopting the report were vague as to their effect on U Brothers’ claim and privilege. U Brothers further argues that the special master’s final report does not reflect acknowledgment of the additional evidence which U Brothers submitted to the special master in response to the special master’s preliminary report. Finally, U Brothers asserts that if the trial court’s judgment acted to dismiss |SU Brothers’ claim and privilege, then .U Brothers’ constitutional and statutory rights have been violated. We disagree.

Louisiana R.S. 13:4165, which governs the use of a special master, states, in pertinent part:

A. Pursuant to the inherent judicial power of the court and upon its own motion and with the consent of all parties litigant, the court may enter an order appointing a special master in any civil action wherein complicated legal or factual issues are presented or wherein exceptional circumstances of the case warrant such appointment.
B. The order appointing a special master may specify or limit the master’s powers. Subject to such specifications or limitations, the master has and shall exercise the power to regulate all proceedings before him and to do all acts and take all measures necessary or proper for the efficient performance of his duties.
C.(1) The court may order the master to prepare a report upon the matters submitted to him and, if in the course of his duties he is required to make findings of facts or conclusions of law, the order may further require that the master include in his report information with respect to such findings or conclusions.
(2) The report shall be filed with the clerk of court and notice of such filing shall be served upon all parties.
(3) Within ten days after being served with notice of the filing of the report, any party may file a written objection thereto. After a contradictory hearing, the court may adopt the report, modify it, reject it in whole or in part, receive further evidence, or recommit it with instructions. If no timely objection is filed, the court shall adopt the report as submitted, unless clearly erroneous.

First, U Brothers’ statutory and due process rights were not violated by the trial court’s use of a special master because U Brothers had ample opportunity to participate in the procedure outlined by La. R.S. 13:4165. The record indicates that U Brothers consented to the use of a special master. After reviewing the special master’s preliminary report, U Brothers |4had an opportunity on December 30, 2009, to provide the special master with additional information and arguments. U Brothers also filed a written objection to the trial court’s adoption of the special master’s report. Finally, the trial court held a contradictory hearing on July 9, 2010, at which point U Brothers had an opportunity to object to the adoption of the special master’s findings and present any evidence contradictory to the report. Had U Brothers’ counsel attended the contradictory hearing, many of the questions presented on appeal may have been properly addressed with the trial court. Thus, the record does not reflect a violation of U Brothers’ due process or statutory rights.

Second, the effect of the trial court’s judgment adopting the special master’s report is not ambiguous. The law permits a court to appoint a special master with the power to regulate all proceedings and make findings of fact or conclusions of law. Here, the trial court explicitly instructed the special master to make legal conclusions as to “the validity of the liens, including the proper amount of the lien, and whether the lien is for a lienable claim, in whole or in part, and the proper amount of the claim, both secured and unsecured.” The trial court’s judgment adopting the report was equally explicit where it stated that the findings of the special master “are adopted as the Judgment of this Court, and any claims not recognized therein are set for trial on September 28-29, 2010.” The trial court’s judgment explicitly states that the legal conclusions within the special master’s report shall become the judgment of the trial court.

Third, the special master’s report concerning U Brothers’ claim and privilege is not ambiguous. The special master analyzed and discussed all ^parties asserting lessors’ liens together under the heading “Lessors of Equipment/Sellers of Movables 9:4802(A)(4) AND (3).” Within this section of the report, the special master individually analyzed the claims and privileges of each party with a lessor’s lien. The special master addressed three parties before addressing U Brothers’ claim and privilege, finding that each of the three parties failed to provide Hawk Field with a copy of their lease agreements as required by La. R.S. 9:4802(G)(1). In turn, the special master referenced these findings in its analysis of U Brothers’ claim and lien. This analysis stated, “in addition to the analyses above[,]” obviously indicating that not only did U Brothers not have a valid lessor’s lien for failure to provide a copy of its lease agreement as required by La. R.S. 9:4802(G)(1), but also for the additional reasons provided thereafter. -

For the above reasons, we find that trial court properly relied on the findings of the special master in dismissing U Brothers’ claim and lien, and the adoption of the special master’s report was not in error. Therefore, this assignment of error is without merit.

Validity of U Brothers’ Lien

In its second assignment of error, U Brothers argues that its failure to timely provide Hawk Field with a copy of its lease agreement with Rapid Pipeline should not invalidate U Brothers’ lien. Specifically, U Brothers claims that invalidating its lien for failure to timely , provide Hawk Field with a copy of the lease agreement runs contrary to the purpose of the PWA by allowing a mere technical infraction to leave a claimant unable to secure payment. U Brothers argues further that Hawk Field’s March 10, 2009, letter requesting more information from U Brothers, and the fact that U [ (¡Brothers’ name was visible on the heavy equipment used on the project, evidence Hawk Field’s actual notice of liability to U Brothers and thereby satisfies the notice requirement.

Louisiana R.S. 9:4802, governing which parties may enjoy the statutory privity granted by the PWA, states, in pertinent part:

A. The following persons havé-a claim against the owner and a claim against the contractor to secure payment of the following obligations arising out of the performance of work under the contract:
(4) Lessors, for the rent of movables used at the site of the immovable and leased to the contractor or a subcontractor by written contract.
******
G. (1) For the privilege under this Section to arise, the lessor of the movables shall deliver a copy of the lease to the owner and to the contractor not more than ten days after the movables are first placed at the site of the immovable for use in a work. (Emphasis added).

The PWA grants a claimant the right to recover the costs of labor and material from a party with whom there is no contract. That right is in derogation of common rights and must be strictly construed against those to whom the right is accorded. Metropolitan Erection Co., Inc. v. Landis Const. Co., Inc., 627 So.2d 144 (La.1993). Although the interpretation of the PWA is subject to strict construction, strict construction cannot be so interpreted as to permit purely technical objections to defeat the real intent of the statute. Ragsdale v. Hoover, 353 So.2d 1132 (La.App.2d Cir.12/22/77), writ denied, 355 So.2d 263 (La.1978).

Here, the trial court properly held that U Brothers’ failure to provide 17Hawk Field with a copy of its lease agreement invalidated U Brothers’ lien on the Hawk Field Pipeline. The statute makes clear that a lessor must provide the owner with a copy of the lease agreement in order for the privilege to arise. First, U Brothers’ invoices show that the rented equipment was used on the Hawk Field Pipeline from November 2008 to February 2009. U Brothers did not provide Hawk Field with a copy of the lease agreement until February 11, 2009 — well beyond the 10-day time limit set forth by La. R.S. 9:4802(G)(1). The purpose of providing the land owner a copy of the equipment lease is to ensure the land owner is aware that a party without direct contractual privity has a potential privilege on the owner’s land. Such a requirement is not a mere technicality.

Second, the March 10, 2009, letter from Hawk Field acknowledging U Brothers’ claim does not prove that Hawk Field had actual knowledge of U Brothers’ equipment on the work site within 10 days of the equipment’s arrival. The letter merely responds to U Brothers’ claim sent on February 11, 2009. Furthermore, U Brothers’ insistence that the labeling of its equipment provided Hawk Field with sufficient knowledge of its liability to U Brothers ignores the fact that under U Brothers’ rendition of the law, the presence of rented equipment on virtually any work site would render the requirement of La. R.S. 9:4802(G)(1) irrelevant. The record does not support a finding that Hawk Field had actual knowledge that circumvented the necessity for strict adherence to the law; therefore, the trial court properly determined that U Brothers’ lien was invalid for failure to adhere to La. R.S. 9:4802(G)(1).

Validity of U Brothers’ Claim

Is As its last assignment of error, U Brothers argues that even if it does not have a valid lien on the Hawk Field Pipeline, it still has a claim against Hawk Field. Specifically, U Brothers argues that because the language of La. R.S. 9:4802(G)(1) refers only to the privilege securing the owner’s personal liability, failure to satisfy this additional notice requirement should affect only the privilege granted by La. R.S. 9:4802(B) and not the claim granted by La. R.S. 9:4802(A). We agree.

The PWA affords two basic rights to a subcontractor. C & S Safety Systems, Inc. v. SSEM Corp., 2002-1780 (La.App.4th Cir.03/19/03), 843 So.2d 447. First, La.R.S. 9:4802(A)(4) grants a claim against the owner and a claim against the contractor to secure payment for the rent of movables used at the site of the immovable and leased to the contractor or a subcontractor by written contract. Second, La. R.S. 9:4802(B) grants a privilege on the immovable to secure the claim granted by La. R.S. 9:4802(A). The comments to La. R.S. 9:4802 make clear that “the privilege given under this section is accessory to and only secures the personal liability of the owner imposed by Subsection A.” (Emphasis added).

Louisiana R.S. 9:4823(A) governs the ex-tinguishment of claims and privileges and states, in pertinent part:

A privilege given by R.S. 9:4801, a claim against the owner and the privilege securing it granted by R.S. 9:4802, or a claim against the contractor granted by R.S. 9:4802 is extinguished if:
(1) The claimant or holder of the privilege does not preserve it as required by R.S. 9:4822; or
(2) The claimant or holder of the privilege does not institute an. action against the owner for the enforcement of the claim or privilege within one year after the expiration of the time given [ 9by R.S. 9:4822 for filing the statement of claim or privilege to preserve it[.] (Emphasis added).

Louisiana R.S. 9:4822 governs the preservation of claims and privileges and states, in pertinent part:

C. Those persons granted a claim and privilege by R.S. 9:4802 for work arising out of a general contract, notice of which is not filed, and other persons granted a privilege under R.S. 9:4801 or a claim and'privilege under R.S. 9:4802 shall file a statement of their respective claims and privileges within sixty days after:
(1) The filing of a notice of termination of the work[.]

A claimant who does not have a contract with the owner and who fails to file a lien or statement of claim within the time period provided by law cannot recover from the owner for services performed or materials supplied. Newt Brown v. Michael Builders, 569 So.2d 288 (La.App.2d Cir.10/31/90), writ denied, 572 So.2d 91 (La.1991).

Here, U Brothers timely filed a statement of its claim and lien as required by La. R.S. 9:4822, but failed to provide a copy of the lease agreement to Hawk Field as required by La. R.S. 9:4802(G)(1). While it is undisputed. that the requirement of La. R.S. 9:4822 applies to the preservation of both a claim and privilege, the language of La. R.S. 9:4802(G)(1) clearly indicates that its notice requirement is only necessary to give rise to the privilege securing the claim. Any effort to include the notice requirement of La. R.S. 9:4802(G)(1) within the filing requirement of La. R.S. 9:4822 would go beyond the language of the statute: Had the Louisiana Legislature intended La. R.S. 9:4802(G)(1) to apply to both the claim and privilege, it would have included the word “claim” just as it did for La. R.S. 9:4822. Furthermore, the comments' to La. R.S. 9:4802 indicate | ,na legislative desire for the preservation of a claim absent a lien by making abundantly clear that the privilege granted by La. R.S. 9:4802(B) “is accessory to and only secures the personal liability of the owner imposed by Subsection A.”

The special master cited Newt Brown as holding that a claim and lien are extinguished by failure to comply with La. R.S. 9:4802(G)(1); however, that case is distinguishable from the present case. In Newt Brown, the claimant failed to satisfy the notice requirement set forth by La. R.S. 9:4822(B). The court in Newt Brown, never considered the effect of a claimant’s failure to comply with La. R.S. 9:4802(G)(1). While we agree that both U Brothers’ claim and lien would be extinguished had it failed to file a statement of claim and lien within the time period required by La. R.S. 9:4822, here, it is undisputed that U Brothers filed its statement of claim and lien within the window set forth by La. R.S. 9:4822. Therefore, we find that the trial court erred in finding that U Brothers’ claim against Hawk Field was extinguished.

CONCLUSION

For the foregoing reasons, we affirm that part of the trial court’s judgment in favor of Hawk Field regarding the validity of U Brothers’ lien. As to the portion of the judgment regarding U Brothers’ claim, we reverse in favor of U Brothers and remand for a determination on the surviving claim. Each party will bear its own costs on appeal.

AFFIRMED IN PART AND REVERSED IN PART; REMANDED FOR FURTHER PROCEEDINGS.

SEXTON, J. Pro Tern., concurs in the result regarding U Brothers’ “lien” and agrees with opinion as to U Brothers’ “claim”.

APPLICATION FOR REHEARING

Before BROWN, STEWART, MOORE and LOLLEY, SEXTON (Pro Tempore), JJ.

|! Rehearing denied.

STEWART, J., dissents from the denial of rehearing and assigns reasons.

MOORE, J., dissents from the denial of rehearing for the reasons assigned by Judge STEWART.

STEWART, J.,

dissenting.

hi respectfully recommend this Court grant the rehearing and reverse the majority opinion.

Both U Brothers’ lien and claim are invalid under the Louisiana Private Works Act. La. R.S. 9:4802 and 9:4822, when read together, require a claimant to secure and preserve a privilege to recover under the PWA. U Brothers failed to secure the privilege, thus, there is no claim to preserve.

In the majority opinion, this Court asserts U Brothers failed to comply with the technical requirements of La. R.S. 9:4802 when it failed to timely provide Hawk Field with a copy of the lease. This failure to comply invalidated the lien, constituting a failure to secure the privilege. Although U Brothers’ privilege is invalid, this Court reasoned U Brothers complied with the technical requirements of La. R.S. 9:4822 and the claim is still valid. This is contrary to the law.

Although U Brothers did comply with the technical requirements of La. R.S. 9:4822, this statute cannot be read in isolation. La. R.S. 9:4822 limits the preservation of a privilege to “the person who a claim or privilege is granted by La. R.S. 9:4802.” Since U Brothers failed to secure the privilege under La. R.S. 9:4802, there is no claim to preserve under La. R.S. 9:4822. Without a claim to preserve, U Brothers’ claim is extinguished per La. R.S. 9:4823, which provides a claim is extinguished if a claimant fails to preserve the privilege granted by La. R.S. 9:4802. U Brothers’ lien is invalid and their claim extinguished.


author: LOLLEY, J.

text:
    CALDWELL PARISH SCHOOL BOARD, Caldwell Parish Police Jury, Caldwell Parish Hospital District # 1, Town of Columbia, Plaintiffs-Appellees v. LOUISIANA MACHINERY COMPANY, L.L.C., Defendant-Appellant. Caldwell Parish School Board, Caldwell Parish Police Jury, Caldwell Parish Hospital District # 1, Town of Columbia, Plaintiffs-Appellees v. Louisiana Machinery Rentals, L.L.C., Defendant-Appellant.
    Nos. 47,349-CA, 47,350-CA.
    Court of Appeal of Louisiana, Second Circuit.
    May 16, 2012.
    Rehearing Not Considered May 31, 2012.
    Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, by Jesse R. Adams, III, Andre B. Burvant, Kathryn S. Friel, Matthew A. Mantle, for Appellant.

      Rainer, Anding & McLindon, Baton Rouge, LA, by Robert R. Rainer, Drew M. Talbot, for Appellees.
    Before GASKINS, LOLLEY and SEXTON (Pro Tempore), JJ.
   LOLLEY, J.

11 Louisiana Machinery Company, LLC (“LMC”), and Louisiana Machinery Rentals, LLC (“LMR”), appeal the summary judgments rendered by the Thirty-Seventh Judicial District Court, for the Parish of Caldwell, State of Louisiana in favor of the Caldwell Parish School Board, the Caldwell Parish Police Jury, the Caldwell Parish Hospital District # 1, and the Town of Columbia, acting through the Concordia Parish School Board. These summary judgments made final and executory certain notices of assessment of unpaid sales tax to LMC and LMR. Because we find that genuine issues of material fact exist regarding the validity of the notices received by LMC and LMR from the Collector, we reverse the trial court’s judgments. Furthermore, as discussed herein, we sustain the exceptions of prescription filed by LMC and LMR. The matter is remanded to the trial court for further consideration.

Facts

This sales tax collection proceeding has been brought by the Caldwell Parish School Board, the Caldwell Parish Police Jury, the Caldwell Parish Hospital District # 1, and the Town of Columbia (collectively, “Plaintiffs”), all political subdivisions of the State of Louisiana, acting through the Concordia Parish School Board (the “Collector”), which, pursuant to the Louisiana Constitution, Article VII, § 3(B) is designated as the single collector for sales and use taxes levied by all taxing authorities within Caldwell Parish. According to the affidavit of Keith Harrison, controller of LMC, the company is a dealer of Caterpillar brand industrial and construction equipment for the State of Louisiana. In that capacity, LMC has been engaged in the sale, lease and service of that equipment throughout the |2state. LMR is a “related company” of LMC, and LMR was formed with “the intent to engage in the rental of industrial and construction equipment.”

The tax periods in question are from December 2000 through June BO, 2007. As alleged by the Plaintiffs, the Collector contracted with the private auditing firm, Broussard Partners & Associates (“Brous-sard”), to conduct an audit to determine sales and use tax compliance by LMC and LMR (collectively, the “Defendants” or the “companies”). According to the Plaintiffs, the companies were initially notified of the audit by letter dated May 17, 2007. In a second letter dated August 15, 2007, Broussard informed the Defendants of the records necessary to complete the tax compliance audit; the companies were given until October 15, 2007, to produce the documents. According to the Plaintiffs, the requested documents were not timely produced despite repeated requests by Broussard. Plaintiffs claim that ultimately Broussard determined that the Defendants were not in compliance and each owed a significant amount in tax, penalties, and interest.

As a result of Broussard’s determination of noncompliance by the companies, on November 24, 2009, the Collector issued A Notice of Intent to Assess to LMC and LMR, separately, in accordance with La. R.S. 47:337.48 B. According to the notices, for the tax periods from December 2000 through June 2007, the Defendants owed:

The notices of intent to assess instructed the Defendants that they had 30 days from the date of the notice to (1) pay the amount shown, or (2) file a written protest citing their objection and requesting a hearing.

On December 24, 2009, a Notice of Assessment was sent to LMC and LMR, separately. A date due of February 22, 2010, was stated on the notice. Those notices stated the same amount of tax due as the notices of intent to assess, and contained the additional following information:

NOTICE: As provided in La. R.S. 47:337.51 B, if you wish to protest, you have thirty (30) days from the date hereof to file with this office a written protest, signed by you or your duly authorized agent, which shall be under oath, fully disclosing the reasons therefor, and request a hearing.
If you do not timely file a written protest and request a hearing, you have sixty (60) calendar days from the date hereof to:
1) Pay the amount set forth herein above,
2) Pay the total amount set forth herein above under protest as provided in La. R.S. 47:337.63 and file suit for recovery within thirty (30) days of payment, or
3)Within thirty (30) days of receipt of the Notice of Assessment, file suit in any state court of competent jurisdiction contesting the final assessment, and in connection therewith, post a commercial bond or other security as provided in La. R.S. 47:337.64 in accordance with the procedures set forth therein.
Do not disregard this notice, failure to act within the time or manner provided will result in the assessment becoming final and enforceable by warrant for distraint. Additional penalties, interest and collection fees may be assessed at that time. (Emphasis original).

14 On February 22; 2010, the companies were each mailed a Notice of Assessment-Extension, which stated a date due of March 22, 2010. The total amount due was unchanged, and the same information regarding the companies’ remedies was provided as in the February 22 notices. According to the Plaintiffs, the Defendants did not respond as statutorily required, but did submit additional paperwork to Broussard in connection with the audit.

Finally, on April 26, 2010, each company received a Notice of Assessment-Extension, giving a due date of June 28, 2010. Although most of the information on the April 26 notice remained the same, notably the amounts due had been amended as follows:

Most importantly, the precise wording regarding the Defendants’ legal remedies was the same on these final notices. According to the Plaintiffs, neither entity responded to its April 26 notice, and Plaintiffs take the position that the respective notices became final on June 25, 2010, 60 days after being issued to each entity.

On September 24, 2010, the Plaintiffs brought separate lawsuits against the companies stating that neither had paid its sales and use taxes for the period from December 1, 2000 through June 30, 2007, and stated that LMC and LMR owed sales and use taxes, plus penalties, interest, and attorney fees for those tax periods. In response, the Defendants filed various exceptions, including peremptory exceptions of prescription, and the Plaintiffs filed motions for partial summary judgment against both LMC and |SLMR. Ultimately, the companies withdrew all of their exceptions, except those asserting prescription. Judgment was rendered in favor of the Plaintiffs, finding that the April 26, 2010, notices sent to the companies were final. The Judgment entered against LMC was in the total amount of $105,198.02, in tax, penalties and interest, plus additional interest accruing from January 28, 2012, until paid, along with reasonable attorney fees and audit costs. As to LMR, judgment was entered in the amount of $198,355.28, plus additional interest accruing from January 28, 2012, until paid, along with reasonable attorney fees and audit costs. Both judgments were designated as final judgments and certified for appeal.

The companies filed timely suspensive appeals of the judgments. We consolidated the two matters for purposes of appeal, and the Defendants filed a motion for special and preferential assignment, which was granted.

Discussion

On appeal, the Defendants raise the following assignments of error:

1) The trial court erred in failing to find that the notices of assessment did not comply with the strict requirements of La. R.S. 47:337.51(A), and thus, were invalid and void;
2) The trial court erred in failing to consider whether the Collector’s claims had prescribed before the notices of assessment were issued; and
3) The trial court erred in granting the Collector’s motions for partial summary judgment filed in a summary proceeding.

| (¡Initially, Plaintiffs argue that similar litigation involving LMC and LMR has been decided against the companies and in favor of the various collectors, and those opinions should be persuasive in this matter before this court. However, as further discussed herein, the decisions of those courts are not necessarily binding, nor do we find them particularly persuasive considering the precise issues we are called to determine at this time before this court.

Statutory Law

This matter is brought pursuant to the Uniform Local Sales Tax Code (the “ULSTC”), La. R.S. 47:337.1, et seq., which was enacted to promote uniformity in the assessment, collection, administration, and enforcement of the sales and use taxes imposed by taxing authorities and, by compiling them, making them readily available in one place in the revised statutes. La. R.S. 47:337.2(A)(l)(b). We defer to the thorough explanation of the ULSTC by the First Circuit in West Baton Rouge Parish Revenue Department, supra at pp. 3-5.

^Validity of the Notices

In their first assignment of error, the Defendants argue that the trial court erred in determining that the April 26, 2010, notices of assessment were final, because those notices did not comply strictly with the statutory requirements imposed by La. R.S. 47:337.51. The issue as to whether those notices were in strict compliance with the statute calls into question a material fact, arguably making summary judgment erroneous in this case. We agree.

As stated herein, the various notices of assessment sent to LMC and LMR all contained the precise instructions:

NOTICE (emphasis original): As provided in La. R.S. 47:337.51 B, if you wish to protest, you have thirty (30) days from the date hereof to file with this office a written protest, signed by you or your duly authorized agent, which shall be under oath, fully disclosing the reasons therefor, and request a hearing.

If you do not timely file a written protest and request a hearing, you have sixty (60) calendar days from the date hereof to:

1) Pay the amount set forth herein above.
2) Pay the total amount set forth herein above under protest as provided in La. R.S. 47:337.63 and file suit for recovery within thirty (30) days of payment, or
3) Within thirty (30) days of receipt of the Notice of Assessment, file suit in any state court of competent jurisdiction contesting the final assessment, and in connection therewith, post a commercial bond or other security as provided in La. R.S. 47:337.64 in accordance with the procedures set forth therein.
Do not disregard this notice, failure to act within the time or manner provided will result in the assessment becoming final and enforceable by warrant for distraint. Additional penalties, interest and collection fees may be assessed at that time. (Emphasis original).

LAt the time the notices were sent, La. R.S. 47:337.51 stated, in pertinent part, as follows:

A. Having assessed the amount determined to be due, the collector shall send a notice by certified mail to the taxpayer against whom the assessment is imposed at the address given in the last report filed by said taxpayer, or to any address obtainable from any private entity which will provide such address free of charge or from any federal, state, or local government entity, including but not limited to the United States Postal Service or from the United States Postal Service certified software. If no report has been timely filed, the collector shall send a notice by certified mail to the taxpayer against whom the assessment is imposed at any address obtainable from any private entity which will provide such address free of charge or from any federal, state, or local government entity, including but not limited to the United States Postal Service or from the United States Postal service certified software. This notice shall inform the taxpayer of the assessment and that he has sixty calendar days from the date of the notice to (a) pay. the amount of the assessment; (b) request a heariny with the collector or; (c) pay under protest in accordance with R.S. 47:337.63. (Emphasis added).
B. If any dealer shall be aggrieved by any findings or assessment of the collector, he may, within thirty days of the receipt of notice of the assessment or finding, file a protest with the collector in writing, signed by himself or his duly authorized agent, which shall be under oath and shall set forth the reason therefor, and may request a hearing. Thereafter, the collector shall grant a hearing to said dealer, if a hearing has been requested, and may make any order confirming, modifying or vacating any such finding or assessment. The filing of any such protest shall not abate any penalty for nonpayment, nor shall it stay the right of the taxing authority to collect the tax in any manner herein provided. Appeals from the decision of the collector shall be directed to any state, city or federal court of competent jurisdiction. This Section shall afford a legal remedy and right of action in any state, city or federal court having jurisdiction of the parties and subject matter for a full and complete adjudication of any and all questions arising in the enforcement of the local ordinance and this Chapter as to the legality of any tax accrued or accruing or the method of enforcement thereof.

In 2010, pursuant to La. R.S. 47:337.51(A) a notice of assessment to a taxpayer was required to inform it that it had 60 calendar days from the date 1nof the notice to do three things: (1) pay the amount of the assessment; (2) request a heariny with the collector; or, (3) pay the amount under protest in accordance with La. R.S. 47:337.63. The notices in question informed LMC and LMR that they had sixty calendar days from the date of the notice to do three things, but not the three things required by the statute. Clearly, the notices did not adhere to the strict requirements mandated by the statute. We consider the omission in this instance to be a material defect in the notice, to the point of rendering the notices null. The omission here was not immaterial, but obviously substantive. Moreover, the defect in question served to undermine the very purpose of the statutory notice requirement — that is, to inform a taxpayer what its legal remedies were once assessed for payment of taxes. These particular taxpayers never received complete and adequate notice of their remedies under the law.

As to the Plaintiffs’ reliance on the opinions of the First and Third Circuits and their position that those opinions address this very issue and are persuasive in their favor, we disagree. Those circuits did discuss the notice provisions required by La. R.S. 47:337.51. However, in each opinion, the courts observed that the notice provisions had explicitly been adhered to. In fact, the First Circuit noted in West Baton Rouge Parish Revenue Dept., supra at p. 6 that: “This notice informed LMC of the assessment and that it had 60 calendar days from the date of the notice to: (a) pay the amount of the assessment; (b) request a hearing with the collector; or (c) pay under protest in accordance with LSA-R.S. 47:337.63.” (Emphasis added). Although the 110precise wording of the notices sent to LMC in that case is not contained in the First Circuit opinion, that court clearly had before it a notice that complied strictly with the statute and contained the requisite information. We feel certain that had the statutory notice requirements not been met, the outcome may have been different in the other circuits.

Regarding the Collector’s argument that the companies were only entitled to receive notice as a “dealer” (i.e., notice under subsection B of the statute), we observe that the notices clearly attempted to provide the Defendants with notice pursuant with both subsections A (notice to a “taxpayer”) and B (notice to a “dealer”). As the notices pertain to the Defendants as “dealers” pursuant to subsection B, the notices were in compliance with the statute. Although the first paragraph of the notices informed the Defendants they had some right to request a hearing, that portion of the notice was in accordance with subsection B of the statute, and informed them, as a “dealer,” they each had 30 days to request a hearing. However, the notices also attempted to inform the company as a “taxpayer;” and as to that portion, the notices failed to comply with the strict mandate of subsection A of the statute regarding the request for a hearing.

Because the April 26, 2010, notices to LMC and LMR were clearly deficient in their required statutory content, the trial court erred in its factual finding that the notices were final. Clearly, the deficiency in the notices called into question a material fact in this matter — that being whether LMC and LMR received adequate notice of their legal remedies to respond to the | n Collector’s assessments. They did not. Advising the taxpayer it has 60 days to request a hearing is not immaterial. Failure to so inform the companies and strictly comply with the statute rendered the notices null, precluding summary judgment regarding the finality of the notices of assessment against the Defendants.

Prescription

The Defendants also contend that the trial court erred in failing to consider that some of the Collector’s claims had prescribed before the notices to assess were ever issued. Considering that the trial court erred in determining the notices of assessment to be final, it should have otherwise considered the exceptions of prescription filed by LMC and LMR, wherein the companies argued that any claim for unpaid sales and use tax and related amounts for the taxable periods 2000-2002 and 2001-2004, respectively, had prescribed. We agree.

Article VII, § 16 of the Louisiana Constitution provides that all taxes other than real property taxes prescribe in three years after December 31 in the year in which they are due; however, prescription can be suspended or interrupted as otherwise provided by law. This constitutional provision is also addressed in La. R.S. 47:S37.67(A), which provides that “sales and use taxes levied by any political subdivision shall prescribe as of three years from the thirty-first day of December of the year in which such taxes became due.” The prescriptive period can be interrupted in various ways, those being: (1) the action of the collector in assessing the amounts of such taxes in the manner provided by law; (2) the filing of a summary proceeding in court; (3) the filing of any pleading, either by the collector or the taxpayer, |12with any state or federal court; (4) the filing of a false or fraudulent return; or (5) the failure to file a return, with the intent to defraud. La. R.S. 47:337.67(B). Finally, subsection C of the statute allows that prescription can be suspended “by means of a written agreement between the taxpayer and the collector made prior to the lapse of such period.”

Here, the issuance of the first Notice of Assessment on December 24, 2009, to LMC and LMR served to interrupt prescription of those claims that had not otherwise prescribed. Prior to that, the Collector had attempted to suspend prescription under La. R.S. 47:337.67(0(1) by having the companies execute various agreements to suspend prescription. However, these agreements to suspend prescription are problematic, because some were agreed to by the parties after some of the tax periods had already prescribed. Once a claim has prescribed, it cannot be revived. Etienne v. National Auto. Ins. Co., 1999-2610 (La.04/25/00), 759 So.2d 51.

Prescription Claim of LMC

As to LMC, some of the various agreements to suspend prescription did have the intended effect, as did the December 24, 2009, Notice of Assessment. For the tax periods 2003, 2004, 2005, 2006, and 2007, the Collector’s claims were not prescribed pursuant to the agreement of the parties. However, for the periods 2000, 2001, and 2002, we note the following:

1) For the tax period 2000: There was never an agreement to suspend prescription; thus, any claim for 2000 sales tax prescribed on December 31, 2003;
2) For the tax period 2001: By the first agreement to suspend | ^prescription, the prescriptive period for the 2001 period was extended to 12/31/2005; however, no other agreement to suspend this period was signed by LMC prior to 12/31/2005 (a second agreement to suspend prescription was never signed by LMC). Thus, any claim for 2001 sales tax prescribed on December 31, 2005; and
3) For the tax period 2002: The statutory prescriptive date for this period was 12/31/05; however, the third agreement to suspend prescription was not executed until 12/07/06, after the claim had prescribed. Thus, any claim for 2002 sales tax prescribed on December 31, 2005.

Thus, regarding the periods 2003, 2004, 2005, 2006, and 2007 as to LMC, the third, fourth, and fifth agreements to suspend prescription as well as the Notice of Assessment dated December 24, 2009, served to validly suspend or interrupt prescription. The Collector’s claims for those periods have not prescribed and remain valid. However, for the tax periods 2000, 2001, and 2002, the Plaintiffs’ claims against LMC have prescribed on their face. The evidence produced by the Plaintiffs, i.e., the agreements to suspend prescription, did not serve to suspend prescription of the tax periods noted, and we sustain LMC’s exception as to those tax periods.

Prescription Claim of LMR

As to LMR, initially we note that there were four agreements which purported to suspend prescription which attempted to suspend prescription. For the tax periods 2007 and 2006, prescription was interrupted by the December 24, 2009, Notice to Assess pursuant to La. R.S. 47:337.67(B)(1). |14Regarding the tax period for 2005, the Collector’s claims did not prescribe due to the fourth agreement to suspend prescription, which extended the prescription deadline from December 31, 2008, until December 31, 2009 — then the Notice to Assess was filed, again interrupting prescription for this period. However, for the periods 2000, 2001, 2002, 2003, and 2004 we note the following:

1) For the tax period 2000: There was never an agreement to suspend prescription; thus, any claim for 2000 sales tax simply prescribed on December 31, 2003, pursuant to La. R.S. 47:337.67(A);
2) For the tax period 2001: This claim would have prescribed on 12/31/04, but LMR entered into the agreement to suspend prescription until 12/31/05. That date came and went, and the second agreement was not entered into until 1/6/06, after the claim for 2001 taxes had prescribed. Thus, any claim for 2001 sales tax prescribed on December 31, 2005;
3) For the tax period 2002: A claim for this tax period prescribed on 12/31/05, and the second agreement to suspend prescription was not executed until 01/06/06, after the claim had prescribed. Thus, any claim for 2002 sales tax prescribed on December 31, 2005;
4) For the tax period 2003: A claim for this tax period would have prescribed on 12/31/06, but LMR entered into the third agreement to suspend prescription until 12/31/07. Again, this date came and went, and the fourth agreement was not entered [ 1Binto until 10/15/08, after the claim for 2003 taxes had prescribed. Thus, any claim for 2003 sales tax prescribed on December 31, 2007; and
5)For the tax period 2004: A claim for this tax period would have prescribed on 12/31/07, the same date until which the third agreement suspended prescription. Again, this date came and went, and the fourth agreement to suspend prescription was executed after the prescriptive date, on 10/15/08; thus, any claim for 2004 sales tax prescribed on December 31, 2007.

Therefore, regarding the periods 2005, 2006, and 2007 as to LMR, the noted agreements to suspend prescription as well as the Notice of Assessment dated December 24, 2009, validly suspended or interrupted prescription, and the Collector’s claims for those periods remain viable. However, for the tax periods 2000, 2001, 2002, 2003, and 2004, we agree those claims have prescribed on their face, and the record contains no proof otherwise. Thus, we also sustain LMR’s exception as to those tax periods.

Finally, regarding the Defendants’ third assignment of error on the procedural errors of the summary judgment proceeding, this assignment is moot and any discussion is pretermitted.

Conclusion

So considering, because the respective notices of assessment sent to LMC and LMR were statutorily and substantially deficient, they were not final. Thus, the partial summary judgments in favor of the Plaintiffs against Louisiana Machinery Company, LLC and Louisiana Machinery Rentals, LLC were in error and are reversed. Additionally, as to the exceptions of 11f,prescription filed by the companies, they are sustained. We conclude that, as to LMC, the Collector’s claims for tax periods 2000, 2001, and 2002 have prescribed. As to LMR, the Collector’s claims for tax periods 2000, 2001, 2002, 2003, and 2004 have prescribed. Costs of this appeal in this matter in the amount of $244.00 are assessed to the Plaintiffs, pursuant to La. R.S. 13:5112. This matter is remanded to the trial court for further proceedings.

JUDGMENTS REVERSED; EXCEPTIONS OF PRESCRIPTION SUSTAINED; REMANDED FOR FURTHER PROCEEDINGS.

APPLICATION FOR REHEARING

Before BROWN, STEWART,

GASKINS, LOLLEY and SEXTON (Pro Tempore), JJ.

Rehearing not considered.

      . The Plaintiffs’ argument that the companies’ appeals were untimely is without merit. The Plaintiffs did not file a motion to dismiss the appeal; however, their argument was contained in brief. Our review indicates that the appeals clearly were timely.

      . Proceedings against LMC and LMR have taken place across the state. Recently, the Supreme Court denied the writ application regarding an opinion from the Third Circuit. See Jefferson Davis Parish School Board ex rel. Sales/Use Dept. v. La. Machinery Rentals, LLC, 2011-510 (La.App. 3rd Cir.10/05/11), 74 So.3d 1272, writ denied, 2011-2437 (La.01/13/12), 77 So.3d 972. The First Circuit has considered the matter as well in three separate opinions. See Ascension Parish Sales and Use Tax Authority v. Louisiana Machinery Rentals, Inc., 2011-1784 (La.App. 1st Cir.03/30/12), 92 So.3d 404; Ascension Parish Sales and Use Tax Authority v. Louisiana Machinery Co., L.L.C., 2011-1785 (La.App. 1st Cir.03/30/12), 92 So.3d 410; West Baton Rouge Parish Revenue Dept. v. Louisiana Machinery Rentals, L.L.C., 2011-0711, 2011-0712 (La.App. 1st Cir.03/09/12), 91 So.3d 1032.

      . The Third Circuit's opinion, Jefferson Davis Parish School Board, supra, refers to the current version of La. R.S. 47:337.51, not the version of the statute in effect at the time the notices were sent out.

      . We also observe that despite the Plaintiff's argument presented to this Court during oral arguments, the companies were “dealers” and not “taxpayers,” they assert in brief that the companies are "Clearly ... in the larger class of persons defined as ‘taxpayers’.” We agree with that assertion.


author: CARTER, C.J.

text:
    Joe W. MIDDLETON v. LIVINGSTON TIMBER, INC.
    No. 2011 CA 2215.
    Court of Appeal of Louisiana, First Circuit.
    June 8, 2012.

      Joe W. Middleton, Hammond, LA, Plaintiff/Appellant, Pro Se.
    Michael W. Whitehead, Livingston, LA, for Defendant/Appellee, Livingston Timber, Inc.
    Before CARTER, C.J., PARRO and HIGGINBOTHAM, JJ.
   CARTER, C.J.

| gPIaintiff/Appellant, Joe W. Middleton, appeals an Office of Workers’ Compensation (OWC) judgment sustaining the peremptory exception raising the objection of res judicata filed by Defendant/Appellee, Livingston Timber, Inc. For the following reasons, we affirm.

On May 12, 2005, plaintiff was working as a saw operator on a logging job when a skidder with a log attached went in reverse, causing the log to roll onto plaintiffs right leg and fracture his tibia. Plaintiff was treated and paid workers’ compensation indemnity and medical benefits relative to his leg injury through defendant’s workers’ compensation carrier.

In August 2006, plaintiff filed a disputed claim for compensation claiming, among other things, “defendant failed to pay or timely pay indemnity benefits at the proper rate, failed to pay/authorize or timely pay/authorize medical expenses, and failed to provide or timely provide a copy of the medical records after written request.” In the judgment, rendered June 1, 2009, the workers’ compensation judge found that plaintiff “failed to carry his burden of proof that defendant failed to timely pay all workers’ compensation benefits, indemnity and medical, due to claimant” and dismissed plaintiffs case with prejudice. No appeal was taken from that judgment.

In June 2009, plaintiff filed a second disputed claim for compensation against defendant claiming only that his wage benefits were terminated or reduced in July 2006. In response, defendant filed a peremptory exception raising the objection of res judicata, which was sustained by the workers’ compensation judge after a hearing. Plaintiff appealed that judgment. This court reversed and remanded because the record in the previous litigation was not in the appeal record and, therefore, there was no evidence to support the workers’ compensation | ¡judge's findings. On remand, defendant re-urged its peremptory exception raising the objection of res judicata, which was sustained by the workers’ compensation judge. Thereafter, this appeal was filed.

Louisiana Revised Statutes section 13:4231, which sets forth the factors for a court to apply in determining whether a subsequent claim is barred by res judica-ta, provides:

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 the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

Res judicata promotes judicial efficiency and final resolution of disputes. Avenue Plaza, LLC v. Falgoust, 96-0173 (La.7/2/96), 676 So.2d 1077, 1079. On the trial of the peremptory exception raising the objection of res judicata, the burden of proving facts essential to sustaining the objection is on the party pleading the objection. Union Planters Bank v. Commercial Capital Holding Corp., 04-0871 (La.App. 1 Cir. 3/24/05), 907 So.2d 129, 130. The doctrine of res judicata is stricti juris and should be rejected when doubt exists as to whether a party’s substantive rights have actually been previously addressed and finally resolved. Domingue ex rel. Domingue v. Allied Discount Tire and Brake, Inc., 02-1338 (La.App. 1 Cir. 5/9/03), 849 So.2d 690, 695, writ denied, 03-1605 (La.10/3/03), 855 So.2d 320. A final judgment has the authority of a thing adjudged only as to those issues presented in the pleadings and conclusively adjudicated by the court. K-Mart Corp. v. Malbrough, 04-2609 (La.App. 1 Cir. 12/22/05), 928 So.2d 133, 137. When a party raises the objection of res judicata, the court must examine not only the pleadings but also the entire record in the first suit to determine whether the second suit is barred by res judicata. Union Planters Bank, 907 So.2d at 130.

Upon our examination of the record of the first suit, we find no error in the judgment sustaining defendant’s exception of res judicata. Therefore, the judgment of the workers’ compensation judge is affirmed, and this opinion is issued in accordance with Uniform Rules-Courts of Appeal, Rule 2-16.2 A(6). Costs of this appeal are assessed to Plaintiff/Appellant, Joe W. Middleton.

AFFIRMED.

      . Middleton v. Livingston Timber, Inc., 10-1203 (La.App. 1 Cir. 2/11/11), 57 So.3d 590, 592-593.