author: WELCH, J.

text:
    PLANT PERFORMANCE SERVICES, LLC and CNA v. William Earl HARRISON
    William Earl Harrison v. Plant Performance Services
    2017 CA 1286, 2017 CA 1287
    Court of Appeal of Louisiana, First Circuit.
    APRIL 06, 2018
    Bruce C. Betzer, Jennifer S. Avallone, Metairie, LA, Attorneys for Appellant Claimant-William Earl Harrison
    Azelie Ziegler Shelby, Sarah K. Lunn, Adam W. Taylor, Baton Rouge, LA, Attorneys for Appellee Plant Performance Services, LLC and CNA
    BEFORE: McCLENDON, WELCH, AND THERIOT, JJ.
   WELCH, J.

Claimant/Appellant, William Earl Harrison, appeals from a grant of partial summary judgment by the Office of Workers' Compensation ("OWC") in favor of Plant Performance Services, L.L.C., and its workers' compensation insurer, CNA, (collectively, "P2S"), forfeiting his right to workers' compensation benefits under La. R.S. 23:1208, based upon a finding that he made false statements or representations in connection with his claim. For the following reasons, we affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On April 14, 2013, Mr. Harrison had a work-related accident while in the course and scope of his employment with P2S and sustained injuries as a result. Mr. Harrison filed a disputed claim for compensation in August 2013. Pursuant to a consent judgment signed September 9, 2014, P2S paid Mr. Harrison indemnity benefits, and the workers' compensation judge ("WCJ") dismissed Mr. Harrison's disputed claim for compensation, with prejudice.

Thereafter, P2S filed a disputed claim for compensation on June 25, 2015, informing the OWC that it had terminated Mr. Harrison's benefits for fraud, and alleging that Mr. Harrison willfully made false statements or representations regarding his injuries, physical condition, and ability to work to his healthcare providers for the purpose of obtaining workers' compensation benefits, in violation of La. R.S. 23:1208.

Mr. Harrison denied committing fraud via a notice of disagreement and filed a disputed claim for compensation against P2S on July 17, 2015, alleging P2S was using allegations of fraud to delay or terminate paying his workers' compensation benefits. The WCJ granted an unopposed motion to consolidate the two suits in an order signed on September 25, 2015.

On July 15, 2016, P2S filed a motion for summary judgment asserting that Mr. Harrison committed fraud for the purpose of obtaining workers' compensation benefits by willfully making false statements or representations, in violation of La. R.S. 23:1208. P2S alleged Mr. Harrison willfully made false statements that he was not working and that he was unable to work, when he was in fact able to work and had been working. Alternatively, P2S argued that Mr. Harrison could not prove that he was entitled to supplemental earnings benefits because he was capable of earning 90% of his pre-injury wages. P2S requested that the OWC dismiss Mr. Harrison's disputed claim for compensation.

On July 21, 2016, Mr. Harrison filed a motion for summary judgment alleging that P2S was in bad faith for arbitrarily and capriciously terminating his workers' compensation benefits. Mr. Harrison alleged P2S had no basis for the fraud claim brought against him in P2S's disputed claim for compensation. Mr. Harrison argued that he did not make any false statements or representations to his healthcare providers and that after learning from his healthcare providers that he did not misrepresent his injuries, P2S continued to prosecute the fraud claim. Mr. Harrison requested that P2S's fraud claim be dismissed and that P2S be adjudged in bad faith for terminating Mr. Harrison's workers' compensation benefits and be ordered to pay penalties and attorney's fees in accordance with La. R.S. 23:1201(C).

Ultimately, P2S's motion for summary judgment was withdrawn, and the WCJ denied Mr. Harrison's motion for summary judgment as untimely filed.

On October 3, 2016, P2S filed a second motion for summary judgment alleging that Mr. Harrison committed fraud for the purpose of obtaining workers' compensation benefits by willfully making false statements or representations, in violation of La. R.S. 23:1208. Alternatively, P2S argued that Mr. Harrison could not prove that he was entitled to supplemental earnings benefits because he was capable of earning 90% of his pre-injury wages. P2S averred that it had taken the deposition of Mr. Harrison four times. During the fourth deposition, on August 7, 2015, P2S alleged Mr. Harrison made numerous false statements related to his work status, physical capabilities, and limitations; specifically, Mr. Harrison testified that he was not working and could not work due to his physical limitations, and he denied leaving the State of Louisiana for any reason. P2S argued that at the time of the August 7, 2015 deposition, however, Mr. Harrison was working in West Virginia as a pipefitting foreman with Grand Isle Shipyard, Inc., in excess of 40 hours per week, more than 8 hours per day, and was paid $28.00 per hour. P2S further argued that since his OWC benefits were terminated in June 2015, Mr. Harrison worked for four companies earning more than his pre-injury wages.

On October 7, 2016, Mr. Harrison filed a second motion for summary judgment, alerting the OWC that P2S based its fraud claim on allegations that P2S had not alleged in its disputed claim for compensation filed on June 25, 2015. Mr. Harrison argued that his medical records and the depositions of his treating physicians showed there was no support for P2S's fraud claim. Mr. Harrison sought summary judgment alleging that P2S was in bad faith for arbitrarily and capriciously terminating his workers' compensation benefits and sought a dismissal of P2S's fraud claim.

Thereafter, on October 17, 2016, P2S filed an amended petition to supplement the disputed claim for compensation it had previously filed on June 25, 2015. In the amended petition, P2S alleged that Mr. Harrison willfully made false statements or representations regarding his physical ability to work full time, performing any work for wages, and traveling out of state. The WCJ granted P2S leave to file the amended petition.

On January 13, 2017, the WCJ held a hearing on the parties' cross-motions for summary judgment; at the conclusion of the hearing, the WCJ granted, in part, both motions for summary judgment. The WCJ granted summary judgment in favor of Mr. Harrison and against P2S, finding no genuine issue of material fact that P2S was arbitrary and capricious in terminating his workers' compensation benefits on June 25, 2015. The WCJ found Mr. Harrison entitled to reinstatement of indemnity benefits from June 25, 2015 to August 7, 2015, totaling $2,747.03, together with 4% interest from June 25, 2015 until paid. The WCJ ordered penalties to Mr. Harrison in the amount of $2,000.00 for the termination of his indemnity benefits, $2,000.00 for the termination of his medical benefits, and $6,000.00 in attorney's fees, plus the cost of any deposition taken by Mr. Harrison, together with 4% interest from the date of the award until paid.

The WCJ also granted summary judgment in favor of P2S and against Mr. Harrison, finding no genuine issue of material fact that Mr. Harrison committed fraud in violation of La. R.S. 23:1208 when he intentionally misrepresented his employment status and ability to work for the purpose of obtaining workers' compensation benefits in his deposition testimony given on August 7, 2015. The WCJ ordered Mr. Harrison's workers' compensation benefits forfeited from August 7, 2015 forward.

The WCJ signed a judgment on January 27, 2016 in accordance with is ruling. Mr. Harrison now appeals the January 27, 2016 judgment of the OWC, contending the WCJ erred in its determination that there was no genuine issue of material fact that he committed fraud in violation of La. R.S. 23:1208 and denying him workers' compensation benefits from August 7, 2015 forward. Mr. Harrison also argues the WCJ erred by allowing P2S to supplement their allegations of fraud to include statements made after P2S originally filed its disputed claim for compensation.

LAW AND DISCUSSION

Standard of Review-Motion for Summary Judgment

The determination of motions for summary judgment in workers' compensation cases is subject to the same standards utilized in ordinary civil actions. See Lilly v. Allied Health Care , 2007-0590 (La. App. 1st Cir. 6/6/08), 991 So.2d 1096, 1097-98, writ denied, 2008-2081 (La. 12/12/08), 996 So.2d 1117. After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(A)(3). The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions. La. C.C.P. art. 966(A)(4). In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that govern the OWC's determination of whether summary judgment is appropriate. A claim under La. R.S. 23:1208 is appropriate for resolution by way of summary judgment. La. C.C.P. art. 966(A)(2) ; La. R.S. 23:1317(A) ; Revere v. Dolgencorp, Inc., 2004-1758 (La. App. 1st Cir. 9/23/05), 923 So.2d 101, 103-104.

The burden of proof is on the moving party. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. See La. C.C.P. art. 966(D)(1). Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case. Revere, 923 So.2d at 104.

Forfeiture for Violation of La. R.S. 23:1208 (Assignments of Error Nos. 1 & 2)

Louisiana Revised Statutes 23:1208(A) provides that "[i]t shall be unlawful for any person, for the purpose of obtaining or defeating any benefit or payment under the provisions of this Chapter, either for himself or any other person, to willfully make a false statement or representation." Louisiana Revised Statutes 23:1208 applies to any false statement or misrepresentation. This broadly worded statute encompasses false statements or misrepresentations made to anyone, including the employer, physicians or insurers, when made willfully or deliberately for the purpose of obtaining benefits. Moreover, the statute contains no requirement that an employee be put on notice of the consequences of making such false statements or misrepresentation. Revere, 923 So.2d at 104. An employee violating La. R.S. 23:1208 shall, upon determination by a WCJ, forfeit any right to workers' compensation benefits. La. R.S. 23:1208(E). Forfeiture of workers' compensation benefits is effective from the time of the misrepresentation prospectively, rather than the time of the accident. Leonard v. James Indus. Constructors, 2003-0040 (La. App. 1st Cir. 5/14/04), 879 So.2d 724, 730, writ denied, 2004-1447 (La. 9/24/04), 882 So.2d 1139.

The three requirements for the forfeiture of the right to workers' compensation benefits under Section 1208 are: (1) there is a false statement or representation; (2) it is willfully made; and, (3) it is made for the purpose of obtaining or defeating any benefit or payment. Varnado v. Sanderson Farms, Inc., 2014-1305 (La. App. 1st Cir. 3/6/15), 166 So.3d 340, 343. The relationship between the false statement and the pending claim will be probative in determining whether the statement was made willfully for the purpose of obtaining benefits. A false statement that is inconsequential to the claim at issue may indicate that the statement was not willfully made for the purpose of obtaining benefits. An inadvertent and inconsequential false statement would not result in forfeiture of benefits. Newman v. Richard Price Const., 2002-0995 (La. App. 1st Cir. 8/8/03), 859 So.2d 136, 141.

Because forfeiture of benefits is a harsh remedy, statutory forfeiture must be strictly construed. An employer has the burden of proving each element within the statute, and the lack of any one of the elements is fatal to the employer's avoidance of liability. Varnado, 166 So.3d at 343. As the moving party on the issue of Mr. Harrison's fraud, P2S had the burden in this summary judgment proceeding to establish that no material facts were in dispute and that under the undisputed facts, Mr. Harrison willfully misrepresented his employment status and ability to work, as contemplated by La. R.S. 23:1208, thus entitling P2S to judgment as a matter of law.

Mr. Harrison contends the WCJ erred in finding that he committed fraud in violation of La. R.S. 23:1208 and erred in determining that he forfeited all workers' compensation benefits from August 7, 2015 forward. At the August 7, 2015 deposition, counsel for P2S questioned Mr. Harrison extensively regarding his employment status and ability to work. When asked, "[w]hat are the things that are preventing you from working now?" Mr. Harrison responded, "I have little strength in my arm. I have to protect it. Standing for a long time irritates it. Sitting still for a long time irritates it. That would seem to be enough there. I have one good arm and I have one bad arm." Mr. Harrison testified that his pain interfered with his quality of life because he "[c]an't work" and "would love to work" and "would love to be able to have money in [his] pocket besides waiting on a tiny little check every week."

When asked what specifically prevented him from doing any work at all, Mr. Harrison stated that he "would need a job similar as far as income that [he] had before" because he "was paid well as a pipefitter" but that now he "cannot do that work." Counsel for P2S inquired whether there was a job he could perform, to which Mr. Harrison responded, "[i]f there was one that met my restrictions that the doctors give me, I suppose I could." When questioned whether he could perform any job other than a pipefitter, such as operating a cash register, Mr. Harrison testified, "I don't know if I can stand there for eight hours or whatever it is they stand there and turn back and forth. There is a lot of shifting. I don't know if I can do that." Counsel for P2S asked whether Mr. Harrison could perform sedentary work, lift anything overhead, alternate between sitting and standing, and/or not have to lift more than five pounds. Mr. Harrison responded, "[i]f there's a job that fits my restrictions and the company will look at my history and see that I'm still under a doctor's care and they will hire me, I can probably do that job."

Counsel for P2S asked Mr. Harrison, "[a]re you working now?" to which he responded, "[n]o." Counsel for P2S then asked Mr. Harrison, "[a]re you doing anything that someone is paying you in kind, meaning with an exchange of services of some type?" to which he responded, "[n]o." Counsel for P2S also asked Mr. Harrison whether he had left the State of Louisiana "on any trips for one reason or another that you don't deem it to be a vacation," since his last deposition (taken July 24, 2014), to which Mr. Harrison responded, "[n]o."

In support of its motion for summary judgment, P2S submitted Mr. Harrison's employment records, which show that Mr. Harrison worked for Grand Isle Shipyard, Inc. in West Virginia from July until September 2015. Mr. Harrison applied to work for Grand Isle Shipyard on May 30, 2015, was hired on July 20, 2015, began work as a foreman on July 21, 2015, was paid $28.00 per hour, and worked there until September 23, 2015, when he voluntarily resigned. At the time of the August 7, 2015 deposition, Mr. Harrison had been an employee of Grand Isle Shipyard for sixteen days and had just returned to Louisiana from West Virginia after working a total of forty-four hours over five days. Mr. Harrison's employment records further show that he worked for Pala Interstate, L.L.C. as a pipefitter and foreman, for Pipe & Steel Industrial as a crew member, and for Performance Contractors for work on a specific project. This evidence clearly contradicts Mr. Harrison's deposition testimony regarding his employment status and ability to work.

Mr. Harrison argued in opposition that his testimony given during the August 7, 2015 deposition contained "inadvertent misstatements" regarding his employment status and ability to work. Mr. Harrison contends the "inadvertent misstatements" were not made willfully, were not spoken with the intent to gain benefits (because P2S had already terminated his workers' compensation benefits), and were not relevant to P2S's fraud claim, as the "inadvertent misstatements" involved matters that occurred after P2S terminated his workers' compensation benefits.

To cure the alleged "inadvertent misstatements" made during his deposition, Mr. Harrison executed an affidavit on October 31, 2016. Therein, Mr. Harrison testified "he did not willfully try to deceive or misrepresent his work status in an effort to obtain benefits" in his deposition testimony given on August 7, 2015. Mr. Harrison testified that at the time of the deposition, he was receiving job training at Grand Isle Shipyard and did not know whether he could physically perform the job as a pipefitting foreman. Specifically, Mr. Harrison testified "he applied for a job as a scheduler with Grand Isle Shipyard," and "when he traveled to begin the job as a scheduler, GIS informed Harrison there were no positions available as a scheduler but there was ability for a pipefitting foreman." Mr. Harrison testified that he "had to undergo on the job training as a pipefitting foreman as it was a job he had never performed and was subject to a thirty day trial period," and, he was "unsure if he could perform the physical duties of a pipefitting foreman or how long he would work in that capacity." Mr. Harrison then testified that "following [...] this on the job training, he returned to Louisiana and gave a deposition on August 7, 2015." Mr. Harrison testified that he then "sought employment with PALA Interstate and began working as a pipefitting foreman," and also found "employment with Performance Contractors." Mr. Harrison stated, "he was forced to work in pain." The crux of Mr. Harrison's affidavit is that he inadvertently misstated that he was not working, nor receiving a paycheck, at the time of the August 7, 2015 deposition because on that date, he testified that he was receiving job training and did not know if he could physically perform the job for which he was hired.

Inherent in the resolution of a La. R.S. 23:1208 case is the determination of whether a claimant's allegedly false misrepresentation is "willful." In making this determination and considering the exhibits filed in support of the motion, we are mindful that the WCJ (and the appellate court on appeal) cannot make credibility determinations on a motion for summary judgment. Revere, 923 So.2d at 107. In ruling on a motion for summary judgment, the court must generally accept an affiant's testimony or affidavit as true. State, Dep't of Transp. & Dev. v. Cecil, 42,433 (La. App. 2nd Cir. 9/19/07), 966 So.2d 131, 134, writ denied, 2007-2063 (La. 12/14/07), 970 So.2d 536. This court has held that a supplemental or subsequent affidavit in contradiction to prior deposition testimony is not sufficient to create an issue of fact precluding summary judgment without some explanation or support for the contrary statements. LeBlanc v. Dynamic Offshore Contractors, Inc ., 626 So.2d 16, 21 (La. App. 1st Cir. 1993) ; Douglas v. Hillhaven Rest Home, Inc., 97-0596 (La. App. 1st Cir. 4/8/98), 709 So.2d 1079, 1083, writ denied, 98-1793 (La. 10/30/98), 727 So.2d 1161 ; Terrebonne v. Floyd, 99-1036 (La. App. 1st Cir. 5/23/00), 767 So.2d 754, 757. When an affidavit merely supplements rather than contradicts prior deposition testimony, the court may consider the affidavit when evaluating genuine issues in a motion for summary judgment. Terrebonne, 767 So.2d at 757.

In the affidavit, Mr. Harrison testified that he traveled out of the State of Louisiana to undergo job training at Grand Isle Shipyard in West Virginia, which statement contradicts his prior deposition testimony wherein he testified that he had not traveled out of the State of Louisiana for any reason. In his affidavit, Mr. Harrison testified that he underwent "job training" at Grand Isle Shipyard, worked as a pipefitting foreman at PALA Interstate, and also worked at Performance Contractors. All of these statements contradict his prior deposition testimony wherein he stated that he was not working and not doing anything for which he was being paid. As presented by P2S in support of its motion for summary judgment, Mr. Harrison was in fact working as a foreman and paid by Grand Isle Shipyard for his work.

Mr. Harrison's affidavit clearly contradicts, rather than supplements, his deposition testimony given on August 7, 2015. The affidavit is not sufficient evidence to create a genuine issue of material fact. Given the records and exhibits herein, the principles which govern our de novo consideration, we find that the record undisputedly establishes that Mr. Harrison willfully made false statements or representations for the purpose of obtaining workers' compensation benefits in violation of La. R.S. 23:1208.

Amendment of Petition (Assignment of Error No. 3)

Mr. Harrison contends the WCJ erred in allowing P2S to amend its disputed claim for compensation, arguing P2S's "original claims were baseless, had no connexity to the original claims, and the claimant was given no opportunity for contradictory hearing prior to the amendment."

Louisiana Code of Civil Procedure article 1151 provides that a plaintiff may amend his petition after an answer has been filed by leave of court, and a defendant shall plead his response to an amended petition within ten days after service of the amended petition. Here, P2S filed its amended petition on October 17, 2016. Mr. Harrison filed a motion to strike the amended petition on October 24, 2016. The WCJ set the motion to strike for hearing on November 18, 2016. P2S filed a motion for leave of court to file the amended petition on November 7, 2016, which the trial court granted on November 9, 2017.

Amendments to pleadings should be allowed if (1) the movant is acting in good faith; (2) the amendment is not being used as a delaying tactic; (3) the opponent will not be unduly prejudiced; and, (4) the trial will not be unduly delayed. Rainey v. Entergy Gulf States, Inc., 2001-2414 (La. App. 1st Cir. 11/8/02), 840 So.2d 586, 589-590, on reh'g, 2001-2414 (La. App. 1st Cir. 6/25/04), 885 So.2d 1193. A trial judge has much discretion in granting amendments to pleadings after an answer has been filed; thus, a trial judge's ruling on granting an amendment to the pleadings will not be disturbed on appeal unless an abuse of discretion has occurred that indicates a possibility of resulting injustice. Rainey, 840 So.2d at 589.

There is no indication that P2S acted in bad faith in amending its petition. After Mr. Harrison testified on August 7, 2015 that he was not working and had not traveled outside of the State of Louisiana, P2S amended its petition to allege the false statements or representations made by Mr. Harrison. There is also no indication that the amendment was used as a delaying tactic-two days prior to granting P2S leave to amend its petition, the WCJ granted the parties' joint motion to continue trial to February 15, 2017. Finally, no prejudice resulted to Mr. Harrison based on the amended petition because he was permitted to answer, and did file an answer, to P2S's amended petition. Also, Mr. Harrison was on notice of the allegations contained in the amended petition because those claims formed the basis of P2S's second motion for summary judgment, filed on October 3, 2016. We cannot say the WCJ abused her discretion in granting P2S leave to amend its petition, nor is there a possibility of resulting injustice. See Rainey, 840 So.2d at 589.

DECREE

For the foregoing reasons, the January 27, 2016 judgment of the Office of Workers' Compensation is affirmed. Costs of this appeal are assessed to the claimant/appellant, William Earl Harrison.

AFFIRMED.

      See OWC case no. 15-04049, District 5, Parish of Livingston.

      See OWC case no. 15-04811, District 5, Parish of Livingston.

      The depositions were taken on February 20, 2014, July 24, 2014, April 22, 2015, and August 7, 2015.

      Mr. Harrison filed a motion to strike P2S's amended petition. The WCJ set the motion to strike for hearing on November 18, 2016; however, prior to the hearing, the WCJ granted P2S leave to file the amended petition.

      The January 27, 2016 judgment is a final judgment because it disposes of the entire case as to the parties. Accordingly, the WCJ made the express determination that "[t]his judgment is designated as a final judgment and dispositive of all issues." Therefore, our appellate jurisdiction extends to this appeal. See La. C.C.P. arts. 1841 and 2083.

      P2S filed a notice of a suspensive appeal, but subsequently and voluntarily dismissed that appeal.

      Mr. Harrison worked as a foreman at Pala from September 23, 2015 to October 5, 2015, when he was terminated. Pala rehired Mr. Harrison on October 9, 2015 as a pipefitter, promoted him to foreman on October 19, 2015, and terminated him on December 21, 2015.

      Mr. Harrison worked for Pipe & Steel Industrial as a crew member from March 11, 2016 to March 18, 2016.

      Mr. Harrison began work for Performance Contractors on May 12, 2016 and was subject to a reduction in force at the completion of the project unless he applied for and was reassigned to another job.


source: Caselaw Access Project

author: CHUTZ, J.

license: Public Domain

text:
    NU-LITE ELECTRICAL WHOLESALERS, LLC v. AXIS CONSTRUCTION GROUP, LLC d/b/a RSB Electric, Brunt Construction, Inc. and Mid-Continent Casualty Company
    2017 CA 1204
    Court of Appeal of Louisiana, First Circuit.
    DATE OF JUDGMENT: APRIL 09, 2018 Rehearing Denied April 18, 2018 Rehearing Denied May 9, 2018
    F. Victor Hastings, Kenner, Louisiana, Counsel for Plaintiff-Appellant Nu-lite Electrical Wholesalers, LLC
    Brian A. Gilbert, John I. Hulse IV, Stephen K. Conroy, Metairie, Louisiana, Counsel for Defendant-Appellee Brunt Construction, Inc. and Mid-Continent Casualty Company
    BEFORE: WHIPPLE, C.J., McDONALD, AND CHUTZ, JJ.
   CHUTZ, J.

Plaintiff-appellant, Nu-Lite Wholesalers, L.L.C (Nu-Lite), appeals the trial court's judgment, sustaining a peremptory exception of no right of action filed by defendants-appellees, Brunt Construction, Inc. (Brunt) and Mid-Continent Casualty Co. (MCC) and dismissing Nu-Lite's claims against them under the Louisiana Public Works Act (LPWA). We reverse and remand.

FACTUAL AND PROCEDURAL BACKGROUND

On July 21, 2009, the St. Tammany School Board (STPSB) entered into a contract for additions and renovations to Abita Springs Elementary School, a public work located in St. Tammany Parish, for which Brunt served as the general contractor. MCC wrote Brunt's mandatory bond for the project. Brunt subsequently subcontracted electrical work with Axis Construction Group, L.L.P. (Axis). Nu-Lite furnished electrical supplies to Axis and, when Axis failed to pay for those electrical supplies, on September 30, 2010, Nu-Lite sent notice to STPSB, Brunt, and MCC, by certified mail, advising of its intent to file a sworn statement of claim or privilege. The letter included a copy of the statement, which stated that a balance of $144,603.05 was outstanding from Axis and that the affidavit was made to secure Nu-Lite's privilege under the LPWA. On October 1, 2010, Nu-Lite had its statement of claim or privilege recorded in the mortgage records of St. Tammany Parish.

Nu-Lite filed this lawsuit on May 11, 2011, averring entitlement to relief under the LPWA. Nu-Lite named Brunt, the general contractor, MCC, the surety, and Axis, the subcontractor with whom it had contracted, as defendants. On June 24, 2011, Brunt and MCC filed an answer, generally denying Nu-Lite's claims and asserting various defenses. They also asserted a claim against Axis and a reconventional demand against Nu-Lite.

On May 22, 2012, MCC issued a bond to cover Nu-Lite's privilege claim, which was marked "CANCELED BY BOND" two days later, on May 24, by the St. Tammany Parish Clerk of Court's office. It is undisputed that on December 12, 2011, STPSB recorded a certificate of substantial completion, which constituted a notice of acceptance of work by the governing authority.

On October 13, 2016, Brunt and MCC filed a peremptory exception of no right of action, averring that because Nu-Lite had failed to comply with notice provisions under the LPWA, it had no right of action. Brunt and MCC contended they were entitled to have Nu-Lite's claims dismissed with prejudice.

A hearing was held on January 12, 2017, and on January 23, 2017, the trial court issued written reasons for judgment, finding that Nu-Lite had failed to comply with the LPWA and, therefore, had no right of action to enforce its claim against Brunt and MCC. Thus, on February 15, 2017, the trial court signed a judgment in conformity with its ruling, sustaining the exception of no right of action, dismissing Nu-Lite's claims against Brunt and MCC with prejudice, and ordering the release of the MCC bond posted by Brunt. On February 15, 2017, the trial court signed a judgment in conformity with its written ruling. Nu-Lite suspensively appeals.

DISCUSSION

An action can only be brought by a person having a real and actual interest which he asserts. La. C.C.P. art. 681. The function of the exception urging no right of action is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit. La. C.C.P. art. 927A(6). The focus in an exception of no right of action is on whether the particular plaintiff has a right to bring the suit; it assumes that the petition states a valid cause of action for some person and questions whether the plaintiff in the particular case is a member of the class that has a legal interest in the subject matter of the litigation. Jones v. Americas Ins. Co. , 2016-0904 (La. App. 1st Cir. 8/16/17), 226 So.3d 537, 540.

The exception does not raise the question of the plaintiff's ability to prevail on the merits or the question of whether the defendant may have a valid defense. Unlike the objection of no cause of action, evidence supporting or controverting an objection of no right of action is admissible on the trial of the exception for the purpose of showing that the plaintiff does not possess the right he claims or that the right does not exist. See La. C.C.P. art 931. The party raising a peremptory exception bears the burden of proof. To prevail on a peremptory exception pleading the objection of no right of action, the defendant must show that the plaintiff does not have an interest in the subject matter of the suit or legal capacity to proceed with the suit. Jones , 226 So.3d at 540-41.

Whether a plaintiff has a right of action is a question of law and is therefore reviewed de novo on appeal. Appellate review of questions of law is simply to determine whether the trial court was legally correct. On legal issues, an appellate court gives no special weight to the findings of the trial court but, instead, exercises its constitutional duty to review questions of law and render a judgment on the record. Id.

Discussing the LPWA, in Pierce Foundations, Inc. v. Jaroy Constr., Inc. , 2015-0785 (La. 5/3/16), 190 So.3d 298, 301, the Louisiana Supreme Court noted that in 1918, the legislature enacted Act 224, the precursor to the modem LPWA, to "protect those performing labor and furnishing materials for public works." The Court further explained that the LPWA laws do not grant beneficiaries a lien on the public work itself, but rather gives them "a privilege against the unexpended fund in the possession of the public entity with whom the original contract was entered into." Id. (citing Wilkin v. Dev Con Builders, Inc. , 561 So.2d 66, 70 (La. 1990)and quoting Pigeon-Thomas Iron Co. v. Drew Bros ., 162 La. 836, 111 So. 182, 183 (1926) ).

Under the LPWA, when a public entity enters into a contract in excess of $25,000.00 for the construction, alteration, or repair of any public works, the contractor is required to post a bond in a sum of not less than fifty percent of the contract price for the payment by the contractor or subcontractor to claimants as defined in La. R.S. 38:2242. La. R.S. 38:2241A(2); Pierce Foundations, Inc. , 190 So.3d at 301.

Any person to whom money is due pursuant to a contract with the owner or a contractor or subcontractor for furnishing materials or supplies for the construction, alteration, or repair of any public work is a claimant. La. R.S. 38:2242A. As the Pierce court pointed out, 190 So.3d at 301-302, one means for asserting a claim under the LPWA is set forth in La. R.S. 38:2242B, which provides:

Any claimant may after the maturity of his claim and within forty-five days after the recordation of acceptance of the work by the governing authority or of notice of default of the contractor or subcontractor, file a sworn statement of the amount due him with the governing authority having the work done and record it in the office of the recorder of mortgages for the parish in which the work is done.

La. R.S. 38:2247, also addresses notice, stating:

Nothing in this Part shall be construed to deprive any claimant, as defined in this Part and who has complied with the notice and recordation requirements of R.S. 38:2242(B), of his right of action on the bond furnished pursuant to this Part, provided that said action must be brought against the surety or the contractor or both within one year from the registry of acceptance of the work or of notice of default of the contractor;
except that before any claimant having a direct contractual relationship with a subcontractor but no contractual relationship with the contractor shall have a right of action against the contractor or the surety on the bond furnished by the contractor, he shall in addition to the notice and recordation required in R.S. 38:2242(B) give written notice to said contractor within forty-five days from the recordation of the notice of acceptance by the owner of the work or notice by the owner of default, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor or service was done or performed. Such notice shall be served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place he maintains an office in the state of Louisiana.

The Pierce court explained that the plain language of La. R.S. 38:2242B and La. R.S. 38:2247 conflict, because La. R.S. 38:2242B provides that a claimant "may" file a sworn statement, but La. R.S. 38:2247 refers to the recordation "requirements" of La. R.S. 38:2242B. Because of this ambiguity, the Court pursued statutory meaning in the context of the statute as a whole, with particular focus on the statute's purpose, and concluded that it was a fundamental error to render the permissive "may" in La. R.S. 38:2242(B) -"[a]ny claimant may ... file a sworn statement"-mandatory in La. R.S. 38:2247. Pierce , 190 So.3d at 304. Therefore, the Court determined that an interpretation of La. R.S. 38:2247 that essentially trumps the permissive language in La. R.S. 38:2242B overlooks that La. R.S. 38:2247 is first and foremost a prescription provision, providing an additional year to parties filing suit after the acceptance of work or default notice is filed. Id. , 190 So.3d at 305.

In this case, the trial court concluded that because Nu-Lite, who it is undisputed was a claimant under La. R.S. 38:2242A, recorded its claim on October 1, 2010, well before the December 12, 2011 date of STPSB's notice of acceptance of the work, Nu-Lite's claim was not filed within forty-five days of that notice of acceptance and, thus, was untimely filed and recorded under La. R.S. 38:2242B. Citing Gootee Constr., Inc. v. Atkins, 2015-0376 (La. App. 4th Cir. 11/4/15), 178 So.3d 629, the trial court determined that Nu-Lite had no right of action to enforce its claims against Brunt and MCC and dismissed its claims with prejudice.

The issue before the Gootee court was whether a subcontractor was entitled to mandamus relief seeking cancellation of an allegedly improperly recorded claim under the LPWA. A sub-subcontractor claimant had filed and recorded its statement of claim, and the subcontractor contended that the sub-subcontractor was not entitled to payment until the subcontractor had been paid by the general contractor. See Gootee Constr., Inc. , 178 So.3d at 631. The Gootee court concluded that because the governing authority had not yet recorded its notice of acceptance, the sub-subcontractor's statement of claim was premature. In so determining, however, the Gootee court held that the ruling in no way affected the sub-subcontractor's future ability to perfect a claim under the LPWA. Thus, the subcontractor was afforded the mandamus relief it sought. Gootee Constr., Inc. , 178 So.3d at 634.

On a writ application by the sub-subcontractor, the Louisiana Supreme Court remanded the matter for reconsideration in light of Pierce, 190 So.3d 298. Ruling on the remand, the Fourth Circuit again determined that the sub-subcontractor's statement of claim was prematurely filed and recorded under La. R.S. 38:2242B and reaffirmed its earlier determination. See Gootee Constr., Inc. v. Atkins , 2015-0376 (La. App. 4th Cir. 12/21/16), 207 So.3d 485, 487, writ denied, 2017-0138 (La. 3/31/17), 217 So.3d 360 ( Gootee II ). The Gootee II court reasoned that Pierce had focused on the issue of whether, under La. R.S. 38:2247, the notice and recordation requirements of La. R.S. 38:2242B were necessary conditions for a claimant's right of action against a bond furnished pursuant to La. R.S. 38:2241. Gootee II , 207 So.3d at 488. Because the Pierce court had not focused on the rights of a claimant to file a statement of claim in the mortgage records when there had been no acceptance of the work by the public authority, the Fourth Circuit concluded that Pierce did not alter its earlier decision. Gootee II, 207 So.3d at 489-90.

We find the trial court's reliance on Gootee misplaced. In Gootee, the subcontractor instituted its suit prior to the governing authority's acceptance of work, and the cancellation of the sub-contractor's claim in the public records was expressly recognized to have been without prejudice since the "ruling in no way affect[ed] [the sub-subcontractor's] future ability to perfect a claim under the [LPWA]." Gootee, 178 So.3d at 634. Here, by the time that Brunt and MCC asserted the exception of no right of action, STPSB had already filed its acceptance of work. Importantly, unlike the subcontractor in Gootee seeking to have a sub-subcontractor's prematurely filed and recorded claim cancelled, in this lawsuit, which was instituted by Nu-Lite to enforce its claim, Brunt and MCC answered the petition without raising the issue of prematurity. Instead, six years after having first been apprised of the claim, over five years after the commencement of litigation, and nearly five years after the acceptance of work by the governing authority, Brunt and MCC urged for the first time that Nu-Lite's premature filing and recording of the statement of claim was deficient as a matter of law, thereby failing to set forth a right of action and warranting the dismissal of Nu-Lite's claims against them with prejudice. We disagree.

Nu-Lite complied with La. R.S. 38:2242B by filing and recording its statement of claim or privilege in the St. Tammany mortgage records on October 1, 2010, after it sent notice of Axis' nonpayment to STPSB, Brunt, and MCC on September 30, 2010, which included a copy of the statement of claim or privilege. Although the statement was filed and notice was sent prior to STPSB's notice of acceptance, we do not find this detrimental to Nu-Lite's claim. La. R.S. 38:2242B only contemplates a situation in which the notice of acceptance is filed prior to the lien having been filed. See Pierce, 190 So.3d at 307, agreeing with " K" Constr., Inc. v. Burko Constr., Inc. , 629 So.2d 1370, 1374 (La. App. 4th Cir.1993), writ denied, 94-0149 (La. 3/11/94), 634 So.2d 391 ("Simply put, the Public Works Act does not appear to envision a situation where suit is filed before the notice of default [or acceptance of the work by the governing authority] is recorded"). Consequently, our task is to determine if what Nu-Lite did in this case was sufficient to notify Brunt and MCC of its claims. See " K" Constr., Inc. , 629 So.2d at 1374.

Nu-Lite sent a certified letter apprising Brunt and MCC of its intent to file the statement of claim or privilege with a copy of the statement. Nu-Lite then recorded the statement in the mortgage records, and the claim was subsequently canceled by MCC's bond. Additionally, Nu-Lite instituted this lawsuit to enforce its claim, and Brunt and MCC filed an answer and an amended answer before STPSB's acceptance of work without having raised the issue of the timing of Nu-Lite's filing and recordation of the statement of claim or privilege. Therefore, we conclude that because Brunt and MCC were sufficiently notified of the claim, the requirements of La. R.S. 38:2242B were satisfied. See " K" Constr., Inc., 629 So.2d at 1374 ; see also Gilchrist Const. Co., Inc. v. Terral Riverservice, Inc., 2001-1617 (La. App. 3d Cir. 5/1/02), 819 So.2d 362, 366, writ denied sub nom., Gilchrist Constr. Co., Inc. v. Terral River Serv., Inc., 2002-2121 (La. 11/8/02), 828 So.2d 1119 (where a supplier of material to a subcontractor filed the statement of amount due prior to the acceptance of the work by the Department of Transportation and Development (DOTD), notice to the general contractor was sufficient to comply with mandatorily required filing of a statement of the amount due in the mortgage records under La. R.S. 48:256.5B). We note that this interpretation best comports with the purpose of the LPWA which is to protect those performing labor and furnishing materials for public works rather than protecting sureties on the bond. See Pierce , 190 So.3d at 305 (citing Wilkin, 561 So.2d at 70 ).

Although Nu-Lite has a direct contractual relationship with Axis, it has no contractual relationship with Brunt or MCC. Thus, under La. R.S. 38:2247, Nu-Lite was required to give written notice to Brunt by certified mail within forty-five days of STPSB's recordation of notice of acceptance, i.e., December 12, 2011, of the amount claimed and the name of the party to whom the material was furnished.

The certified mail requirement of La. R.S. 38:2247 is to "assure actual receipt of written notice of the claim and to facilitate proof thereof." If a party denies having received written notice of the claim, then the burden is on the claimant to prove that notice was received. Bob McGaughey Lumber Sales, Inc. v. Lemoine Co., Inc., 590 So.2d 664, 666 (La. App. 3d Cir. 1991).

The record shows that the owner and CEO of Brunt, N. Hunt Ragusa, acknowledged in his September 30, 2016 affidavit that Nu-Lite notified both STPSB and Brunt of Axis' nonpayment in the September 30, 2010 correspondence, and that Nu-Lite recorded its statement of claim or privilege on October 1, 2010. Moreover, on June 24, 2011, well before STPSB's December 12, 2012 acceptance of work, Brunt and MCC answered Nu-Lite's May 11, 2011 petition, which set forth the outstanding balance due it from Axis. And Brunt and MCC twice amended their pleadings prior to STPSB's acceptance of work. The record clearly establishes that Brunt and MCC had actual notice of Nu-Lite's claim, the amount claimed, stated with substantial accuracy, and the name of the party to whom the material was furnished. Thus, they had actual notice of the claim within forty-five days of STPSB's notice of acceptance, and Nu-Lite satisfied the requirements of La. R.S. 38:2247. See Bob McGaughey Lumber Sales, Inc. , 590 So.2d at 667 ; see also Gilchrist Constr. Co., Inc. , 819 So.2d at 366 (finding that a supplier of material sustained its burden of proof with evidence of the subcontractor's actual notice of the claim as required under La. R.S. 48:256.12 ).

Because the record establishes that the notice provisions of both La. R.S. 38:2242B and 2247 were satisfied, the trial court erred in concluding that Nu-Lite did not have a right of action against Brunt and MCC under the LPWA. Accordingly, we reverse the trial court's action of sustaining the exception of no right of action and the order releasing the MCC bond posted by Brunt.

DECREE

For these reasons, the trial court's judgment sustaining the peremptory exception of no right of action and its order releasing the MCC bond posted by Brunt is reversed. The matter is remanded for further proceedings. Appeal costs are assessed against defendants-appellees, Brunt Construction, Inc. and Mid-Continent Casualty Co.

REVERSED AND REMANDED.

      See generally La. R.S. 38:2241. et seq.

      In their first supplemental answer, filed on September 14, 2011, Brunt and MCC redesignated as a cross claim against Axis a claim they had incorrectly designated as a third-party demand in their original answer. In the November 30, 2012 supplemental and amended pleadings, Brunt and MCC also added additional defenses against Nu-Lite and asserted a reconventional demand against Nu-Lite as well as third-party demands against Axis owner, Charles Bandi, and various Nu-Lite owners, directors, and employees in their individual capacities. According to the allegations by Brunt and MCC, the individual Nu-Lite representatives were liable for fraudulent and/or ultra vires acts because they had "repeatedly recommended [that] Axis be awarded [the] subcontract" even though they had actual knowledge of Bandi's pending voluntary petition for Chapter 7 Bankruptcy and a personal business debt of $58,294.45 that Bandi owed to Nu-Lite. On November 17, 2015, the trial court signed an order voluntarily dismissing MCC's claims against the Nu-Lite representatives without prejudice. Additionally, Brunt and MCC filed a third supplemental answer on July 20, 2015, in which they raised seven more defenses against Nu-Lite.

      Along with the exception of no right of action Brunt and MCC filed combined motions for partial summary judgment, maintaining that Nu-Lite had failed to preserve its privilege under the LPWA; and for a mandamus, seeking an order directed at the recorder of mortgages to cancel the statement of claim or privilege and to release the MCC bond since Nu-Lite had refused to have the statement of claim or privilege extinguished. Because the trial court had sustained the exception of no right of action, it determined that the motions were moot.

      On December 19, 2016, the trial court signed an order allowing Brunt and MCC to substitute their memorandum in support of their combined motions for partial summary judgment and mandamus relief and the exception of no right of action. In the motion to substitute, Brunt and MCC represented that overlooked documents had eliminated one basis for their claims for requested relief. Specifically, they removed their claim that Nu-Lite had failed to afford timely notice to Brunt and STPSB as required by La. R.S. 38:2242F. Despite the removal of these grounds, in its reasons for judgment, the trial court apparently inadvertently referenced Brunt and Nu-Lite's earlier memorandum and concluded that because Nu-Lite had failed to provide the requisite notice under La. R.S. 38:2242F, it failed to preserve its right to file a privilege for any material delivered before July 1, 2010. On appeal, Brunt and MCC agree that this was an incorrect basis to sustain the exception of no right of action and, therefore, the propriety of that ruling is not within the scope of our review.

      La. C.C.P. art. 931 provides in pertinent part, "On the trial of the peremptory exception pleaded at or prior to the trial of the case, evidence may be introduced to support or controvert any of the objections pleaded, when the grounds thereof do not appear from the petition."

      Given our de novo standard of review and mindful that the trial court pretermitted a determination of the motion for partial summary judgment, see La. C.C.P. art. 966F (limiting appellate review to those issues set forth in the motion under consideration by the court at that time), we find no merit in the assertion by Brunt and MCC that Nu-Lite is precluded on appeal from offering an argument it did not raise in its opposition memorandum at the trial court to support its right of action especially where, as here, it is challenging the basis for the trial court's dismissal of its claims. Brunt and MCC's reliance on La. U.R.C.A. Rule 1-3, providing that courts of appeal will review only issues which were submitted to the trial court, is inapposite since the issue of whether Nu-Lite had a right of action was clearly before the trial court.

      La. R.S. 48:256.5B provides:
      Any claimant shall, after the maturity of his claim and within forty-five days after the recordation of final acceptance of the work by the department or of notice of default of the contractor or subcontractor, record the original sworn statement of the amount due him in the office of the recorder of mortgages for the parish in which the work is done and file a certified copy of the recorded sworn statement of the amount due, showing the recordation data, with the undersecretary of the department.

      La. R.S. 48:256.12 states:
      Nothing in this Part shall be construed to deprive any claimant, as defined in this Part and who has complied with the notice and recordation requirements of R.S. 48:256.5(B), of his right of action on the bond furnished pursuant to this Part, provided that said action must be brought against the surety or the contractor or both within one year from the registry of acceptance of the work or of notice of default of the contractor; except that before any claimant having a direct contractual relationship with a subcontractor but no contractual relationship with the contractor shall have a right of action against the contractor or the surety on the bond furnished by the contractor, he shall in addition to the notice and recordation required in R.S. 48:256.5(B) give written notice to said contractor and surety within forty-five days from the recordation of the notice of final acceptance by the department of the work or notice by the department of default, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor or service was done or performed. Such notice shall be served by mailing the same by registered or certified mail, postage prepaid, in envelopes addressed separately to the contractor and surety at any place each maintains an office in the state of Louisiana.

      Since we have reversed the trial court's action of sustaining the exception of no right of action, we find moot the issue of whether the trial court should have allowed Nu-Lite to amend its petition to state a right of action and pretermit a discussion of whether Brunt and MCC waived their right to object to the prematurity of Nu-Lite's petition by failing to file a dilatory exception.


author: WHIPPLE, C.J.

text:
    LOUISIANA WORKERS' COMPENSATION CORPORATION v. B, B & C ASSOCIATES, LLC d/b/a Coleman Roofing & Repair LLC, Chris Yancy, and Pamela Yancy
    2017 CA 1342
    Court of Appeal of Louisiana, First Circuit.
    Judgment Rendered: APRIL 9, 2018
    Donnie L. Floyd, Kevon B. Howald, Prairieville, Louisiana, Counsel for Defendants/Appellants, BB & C Associates, LLC d/b/a Coleman, Roofing & Repair, LLC, Chris Yancy, and, Pamela Yancy
    Chad S. Berry, Paul-Michael Fryday, Baton Rouge, Louisiana, Counsel for Plaintiff/Appellee, Louisiana Workers' Compensation Corporation
    BEFORE: WHIPPLE, C.J., McDONALD, and CHUTZ, JJ.
   WHIPPLE, C.J.

This is an appeal from a grant of a motion for summary judgment in favor of plaintiff, Louisiana Workers' Compensation Corporation (LWCC), and against defendants, B, B & C Associates, L.L.C., d/b/a Coleman Roofing & Repair, L.L.C. (Coleman Roofing), Chris Yancy, and Pamela Yancy. For the following reasons, the judgment is reversed.

FACTS AND PROCEDURAL BACKGROUND

LWCC provided workers' compensation insurance to Coleman Roofing through a continuance annual policy bearing number 137760 with an effective date of October 22, 2010. The initial estimated premium amount was $59,027.00. However, the policy included a premium obligations endorsement, which provided that Coleman Roofing would allow LWCC to conduct an audit of its records related to the policy, and that the information developed by the audit would then be used to determine the final premium amount owed by Coleman Roofing to LWCC.

Accordingly, on November 21, 2011, LWCC audited the records of Coleman Roofing for purposes of determining the final premium amount owed. After the completion of LWCC's audit showed that an additional premium amount was purportedly owed, Coleman Roofing disputed and refused to pay in full the final premium amount as determined by LWCC's audit. Thereafter, on June 5, 2012, LWCC filed suit against Coleman Roofing, Chris Yancy, and Pamela Yancy for the final unpaid premium amount of $128,088.40, plus legal interest, costs, and reasonable attorney's fees.

Defendants filed an answer to the lawsuit, generally denying the allegations of the petition and disputing that additional premiums were owed to LWCC. Defendants specifically contended that LWCC's audit "mislabeled some of Coleman Roofing['s] subcontractors as performing roofing duties instead of their actual subcontracting duties" and that accordingly, LWCC had miscalculated the final premium.

On March 7, 2017, LWCC filed a motion for summary judgment, contending that its audit of Coleman Roofing's business records revealed that remunerations were paid by Coleman Roofing to subcontractors and/or employees that were not reported to LWCC, and that these remunerations were used in the calculation of the final premium, pursuant to the terms of the insurance contract. LWCC asserted that Coleman Roofing received the benefit of workers' compensation insurance coverage from LWCC for these subcontractors and/or employees, but failed to either pay the total premium owed for this coverage, or to provide certificates of insurance showing that these subcontractors and/or employees were covered by other workers' compensation insurance as required by the insurance contract. Accordingly, LWCC argued that no genuine issues of fact exist and defendants are liable to LWCC for the premium due for these subcontractors and/or employees in the amount of $128,088.40.

Defendants responded and objected to LWCC's motion for summary judgment, asserting, among other arguments, that Coleman Roofing never had any subcontractors, independent contractors, or employees other than those whose remunerations were previously reported to LWCC, and that LWCC cannot produce any evidence of unreported subcontractors and/or employees. Defendants also contended that the affidavits of two LWCC employees that were submitted by LWCC to support the motion for summary judgment should be disregarded as self-serving and lacking in evidence and veracity, as the affiants had no independent facts nor evidence to support the audit that they "verified" in their affidavits. Accordingly, defendants argued that summary judgment was inappropriate as material issues of fact exist as to whether or not Coleman Roofing had employees, subcontractors, or independent contractors other than those previously reported to LWCC, and for which Coleman Roofing had previously paid premiums.

Following argument, the trial court granted LWCC's motion for summary judgment, finding that defendants' argument and opposition evidence did not raise a "material issue." Accordingly, the trial court signed a written judgment on July 5, 2017, granting summary judgment in favor of LWCC for $128,088.40, plus legal interest, costs, and attorney's fees in the amount of twenty-five (25%) percent.

Defendants then filed the instant appeal from the July 5, 2017 judgment of the trial court, assigning the following as error:

(1) The trial court erred in granting summary judgment as genuine issues of material fact exist.
(2) The trial court erred in its determination of what constituted material facts.
(3) The trial court erred in granting summary judgment for the reason that it made credibility determinations as related to the truthfulness of the affidavits submitted by LWCC in support of the motion for summary judgment.

BURDEN OF PROOF

In determining whether summary judgment is appropriate, appellate courts review summary judgment de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Furthermore, an appellate court asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. Louisiana Workers' Compensation Corp. v. Landry, 2011-1973 (La. App. 1st Cir. 5/2/12), 92 So.3d 1018, 1021, writ denied, 2012-1179 (La. 9/14/12), 99 So.3d 34.

The summary judgment procedure is expressly favored in the law and is designed to secure the just, speedy, and inexpensive determination of non-domestic civil actions. LSA-C.C.P. art. 966(A)(2). The purpose of a motion for summary judgment is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial. Hines v. Garrett, 2004-0806 (La. 6/25/04), 876 So.2d 764, 769 (per curiam ). After an adequate opportunity for discovery, summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966(A)(3).

Despite the legislative mandate that summary judgments are now favored, factual inferences reasonably drawn from the evidence must be construed in favor of the party opposing the motion, and all doubt must be resolved in the opponent's favor. Willis v. Medders, 2000-2507 (La. 12/8/00), 775 So.2d 1049, 1050 (per curiam ).

On a motion for summary judgment, the burden of proof is on the mover. If, however, the mover will not bear the burden of proof at trial on the matter that is before the court on the motion, the mover's burden on the motion does not require that all essential elements of the adverse party's claim, action, or defense be negated. Instead, the mover must point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, the adverse party must produce factual evidence sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. LSA-C.C.P. art. 966(D)(1).

In the instant case, LWCC is the mover, and thus, LWCC bears the initial burden of proof on the motion for summary judgment. Moreover, LWCC is also the party who will bear the burden of proving at trial its entitlement to additional premiums pursuant to the terms of the insurance contract that it seeks to enforce. Farmers Insurance Exchange v. Shows, 2014-1248 (La. App. 1st Cir. 6/5/15), 2015 WL 3545624 at *2 (unpublished) (finding the burden of proof is on the party seeking to enforce an agreement, or claiming rights under it). Accordingly, if the supporting documents submitted by LWCC sufficiently resolve all material issues of fact, only then does the burden shift to defendants to present evidence showing that a material fact is still at issue. Neighbors Federal Credit Union v. Anderson, 2015-1020 (La. App. 1st Cir. 6/3/16), 196 So.3d 727, 734 (on a motion for summary judgment, it must first be determined that the documents presented by the moving party are sufficient to resolve all material issues of fact, and only if the documents are sufficient does the burden shift to the opposing party to present evidence showing that a material fact is still at issue; also, only at this point may the opposing party no longer rest on the allegations contained in his pleadings).

ANALYSIS

In support of the motion for summary judgment, LWCC submitted: (1) a certified copy of the insurance policy; (2) the premium obligations endorsement; (3) the policy summary statement; (4) affidavits of two LWCC employees; (5) LWCC's November 21, 2011 premium audit report of Coleman Roofing; and (7) the deposition transcript of William McKernan, an employee of Coleman Roofing.

The November 21, 2011 premium audit report of Coleman Roofing was conducted by Loretta Singleton, a LWCC auditor. Notably absent from the record, however, is an affidavit by Ms. Singleton setting forth her findings and the reliability or basis of such, or the records supporting her findings. In support of the motion for summary judgment, LWCC did not submit Ms. Singleton's affidavit; rather, LWCC submitted the affidavits of Ms. May field, the assistant vice president of accounting for LWCC, and Mr. Whitehead, a forensic and compliance auditor for LWCC. LWCC contends that these are sufficient because Ms. Mayfield's affidavit is an "audit of correctness of account" and Mr. Whitehead's affidavit "attests to the veracity of the audit." As such, LWCC contends that these affidavits establish the accuracy of the audit, and likewise, that the affidavits resolve any issues of fact concerning the final premium amount owed by defendants to LWCC, as determined by its audit. However, supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. LSA-C.C.P. art. 967. Ms. Mayfield and Mr. Whitehead do not attest anywhere in their respective affidavits that they reviewed the business records of Coleman Roofing that were reviewed by Ms. Singleton during her audit of Coleman Roofing, and their affidavits are not supported with any such records. Cf. Regions Bank v. Louisiana Pipe & Steel Fabricators, LLC, 2011-0839 (La. App. 1st Cir. 12/21/11), 80 So.3d 1209, 1213 (finding bank's vice president's summary judgment affidavit sufficient under LSA-C.C.P. art. 967, where he is familiar with the subject account and the bank's business records, he testified based on his personal knowledge of the subject account and review of the records, and his testimony was supported by the very documents about which he testified). E.g. Capital One Bank (USA), NA v. Sanches, 13-0003 (La. App. 4th Cir. 6/12/13), 119 So.3d 870, 875-76 ; Delcambre v. Price, 99-0223 (La. App. 4th Cir. 3/24/99), 738 So.2d 593, 595-96.

Further, in support of the motion for summary judgment, LWCC did not submit the Coleman Roofing business records that were reviewed during the audit. Specifically, LWCC did not submit records, or any other evidence, concerning the purported unreported remunerations allegedly paid by Coleman Roofing to subcontractors and/or employees who were not covered by another workers' compensation policy. Accordingly, we are unable to find that Ms. Mayfield's and Mr. Whitehead's affidavits, without more, are sufficient to establish the veracity and correctness of the audit such that LWCC would be entitled to judgment as a matter of law. Likewise, we are unable to find that these affidavits, and the audit to which they attest, resolve all issues of fact concerning whether or not the final premium amount alleged to be owed by Coleman Roofing to LWCC was correct.

As to the other documents submitted by LWCC in support of its motion for summary judgment, we likewise find that Mr. McKeman's deposition transcript does not resolve all material issues of fact. Specifically, Mr. McKernan testified that he did not know subcontractors Carlos Perez and Joel Pacheco, the two aforementioned subcontractors who are identified and "disputed" in the audit. LWCC also submitted the policy, the premium obligations endorsement, and the policy summary statement. However, these additional documents do not resolve the aforementioned material issues of fact. Accordingly, we conclude that LWCC did not meet its initial burden of proof on its motion for summary judgment

In sum, upon de novo review, we are unable to find that the motion, memorandum, and supporting documents, as submitted by LWCC, show that there is no remaining genuine issue of material fact or that LWCC is entitled to judgment as a matter of law. LSA-C.C.P, arts. 966(A)(3). Accordingly, we find that the trial court erred in granting summary judgment in favor of LWCC and in ruling that defendants owed the amount of $128,088.40, plus legal interest, costs, and attorney's fees, when there is no proper record basis for doing so,

CONCLUSION

Based on the above and foregoing reasons, the July 5, 2017 judgment of the trial court, granting summary judgment in favor of LWCC and against Coleman Roofing, Chris Yancy, and Pamela Yancy in the amount of $128,088.40, plus legal interests, costs, and twenty-five (25%) percent attorney's fees, is hereby reversed. Costs of this appeal are assessed to plaintiff/appellee, Louisiana Workers' Compensation Corporation.

REVERSED.

      Chris Yancy and Pamela Yancy personally guaranteed all amounts owed by Coleman Roofing to LWCC.

      The premium obligations endorsement provided that failure to pay the premium would constitute breach of the insurance contract and Coleman Roofing would pay damages associated with the breach, including reasonable attorney's fees (fixed at the greater of twenty-five (25%) of the unpaid premium or $500.00) and costs incurred in the collection of any unpaid premium amount.

      Part 5-Premium, Section C" of the insurance policy provides:
      Remuneration
      Premium for each work classification is determined by multiplying a rate times a premium basis. Remuneration is the most common premium basis. This premium basis includes payroll and all other remuneration paid or payable during the policy period for the services of:
      1. all your officers and employees engaged in work covered by this policy; and
      2. all other persons engaged in work that could make us liable under Part One (Workers Compensation Insurance) of this policy. If you do not have payroll records for these persons, the contract price for their services and materials may be used as the premium basis. This paragraph 2 will not apply if you give us proof that the employers of these persons lawfully secured their workers compensation obligations.

      Cf. Barfield v. Diamond Construction Incorporated, 51,291 (La. App. 2nd Cir 4/5/17), 217 So.3d 1211, 1217-18, writ denied, 2017-0751 (La. 9/15/17), 228 So.3d 1205 (after an audit and assessment by the Department of Revenue, the burden of proof shifted to the taxpayer pursuant to LSA-R.S. 13:5034, which specifically addresses the burden of proof in a case by the State against a taxpayer and provides that an affidavit by a tax collector shall be accepted as prima facie true and as constituting a prima facie case).

      Even assuming arguendo that the affidavits presented had been based upon personal knowledge of the audit's contents, the accuracy of the audit is called into question by the audit itself, which contains internal inconsistencies. In particular, the existence of issues of fact regarding Coleman Roofing's subcontractors is evidenced by the audit report itself, as the audit report states, "[Coleman Roofing] stated that subcontractors Carlos Perez and Joel Pacheco are employees of adequately insured subcontractors (Moreno Construction and J & L Remodeling) and are covered by their workers comp. policy. [However,] [b]oth subs have been included in this audit."

      The affidavits state that the audit report and premium amount are "true and correct" because "no information has been provided [to LWCC] evidencing the incorrectness." These statements are not sufficient to establish the veracity and correctness of the audit and premium amount. It is evident from the audit, on which the premium is based, that issues of fact existed at the time of the audit (see footnote 5). LWCC has the burden to prove that these issues of fact no longer exist and that the audit report and premium amount are correct. These conclusory statements in the affidavits attempted to switch the burden of proof to defendants.


author: THERIOT, J.

text:
    Norberto ZAVALA v. DOVER CONSTRUCTION USA, LLC, and Nadir Haoum
    NO. 2017 CA 0001
    Court of Appeal of Louisiana, First Circuit.
    Judgment Rendered: APRIL 11, 2018 Rehearing Denied May 30, 2018
    Paul A. Deas, Metairie, Louisiana, Counsel for Defendants/Appellants Dover Construction USA, LLC and Hadir Naoum
    C. Ray Murry, Shannon C. Lindsey, Ingrid C. Diaz, Amber E. Murry, Slidell, Louisiana, Counsel for Defendant/Appellee Norberto Zavala
    BEFORE: McCLENDON, WELCH, AND THERIOT, JJ.
   THERIOT, J.

The defendants-appellants, Dover Construction USA, LLC (Dover) and Hadir Naoum, appeal a default judgment rendered against them by the Office of Workers' Compensation (OWC), District 6, in favor of the plaintiff-appellee, Norberto Zavala. For the following reasons, we affirm the judgment of the OWC in part, vacate in part, and remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

On November 5, 2014, Norberto Zavala filed with the OWC a disputed claim for compensation, in which he alleged that on February 14, 2014 he suffered an injury to his lower back, hips, and buttocks while in the scope of his employment with Dover. He alleged that he was on stilts while sanding the roof of a private residence located at 4276 Folse Drive in Metairie, Louisiana, when he lost his balance and fell, resulting in the aforementioned injuries.

He reported this accident to the owner of Dover, who Mr. Zavala knew as "Thomas Naoum." Mr. Zavala claimed Dover refused to approve his disability status or to approve medical treatment, therefore, he alleged he was owed penalties and attorney fees. In naming Dover as a defendant in his disputed claim, Mr. Zavala also included "ATTN: Hadir Naoum," with the address of 4726 Folse Dr., Metairie, Louisiana ("the Metairie address").

Mr. Zavala's first attempt to serve Dover by certified mail was returned as unclaimed on February 3, 2015. On January 21, 2015, Mr. Zavala filed a motion to appoint a process server to serve Dover through "Hadir Naoum" at 5741 Crowder Blvd. B14, in New Orleans, Louisiana. The OWC granted the motion. The special process server issued an affidavit stating that on March 8, 2015, Dover was served through personal service on "Hadir Naoum" at the Metairie address.

On April 27, 2015, Mr. Zavala filed a motion for preliminary default, claiming that Dover had not filed an answer to the disputed claim. The OWC granted the motion. On November 9, 2015, Mr. Zavala filed a motion to amend the disputed claim to include "Nadir Haoum," located at the Metairie address, as an additional defendant. The OWC granted the motion. Dover was served with the amended petition by certified mail with attention to "Hadir Naoum" at the Metairie address. Although a signature appears on the receipt, there is no printed name. "Nadir Haoum" was served with the amended petition by certified mail, also at the Metairie address. The receipt includes a signature but no printed name. Both receipts were received by the OWC on November 30, 2015.

Confirmation of the default was heard on May 19, 2016 and July 13, 2016. Mr. Zavala was present, but neither a representative of Dover nor Mr. Naoum were present. Mr. Zavala testified before the OWC regarding his accident and injury. He presented several exhibits for evidence, including certified medical records of his treatment, his disputed claim, the motion to appoint a process server, the amendment to his disputed claim, confirmation of service on "Nadir Haoum," the motion for preliminary default, bills for medical service, and itemized attorney fees. The OWC concluded that Mr. Zavala made a prima facie case against Mr. Naoum, made findings as to benefits, penalties, and attorney's fees, and rendered judgment against Mr. Naoum for the total of the benefits, penalties, attorney fees, and court costs.

A notice of signing of final judgment was sent by the OWC to Dover, attention to "Hadir Naoum," and to "Nadir Haoum," both at the Metairie address. The certificate on the notice indicates it was mailed by certified mail on August 19, 2016. Both Dover and Mr. Naoum made their first appearance in the instant case on August 25, 2016 with a motion and order to enroll as counsel of record. On August 30, 2016, Dover and Mr. Naoum filed a motion to nullify the judgment, and in the alternative, motion for new trial. Among his numerous allegations in the motion, Mr. Naoum claimed that he was never an employer of Mr. Zavala or of the coworkers Mr. Zavala called as witnesses in the confirmation hearing and that Mr. Naoum never personally saw the amended complaint that included him as a defendant until he received the notice of judgment. The OWC denied the motion ex parte on August 31, 2016. Dover and Mr. Naoum now appeal the default judgment and the denial of the motion to nullify and new trial.

ASSIGNMENTS OF ERROR

Mr. Naoum has cited ten assignments of error, most of which involve the merits of the case. Appellate courts generally will not consider issues raised for the first time on appeal. Mosing v. Domas , 2002-0012 (La. 10/15/02), 830 So.2d 967, 975. The only issues before us are whether Mr. Zavala made a prima facie case in his prayer for a default judgment, whether Mr. Naoum's motion for new trial was properly denied, and whether the default judgment contains any vices of form under La. C.C.P. art. 2002.

STANDARD OF REVIEW

In reviewing default judgments, the appellate court is restricted to determining the sufficiency of the evidence offered in support of the judgment. This determination is a factual one governed by the manifest error standard of review. Arias v. Stolthaven New Orleans, L.L.C. , 2008-1111 (La. 5/5/09), 9 So.3d 815, 818. A judgment of default must be confirmed by proof of the demand to establish a prima facie case. La. C.C.P. art. 1702(A) ; NorthShore Regional Medical Center, L.L.C. v. Dill , 2012-0850 (La. App. 1 Cir. 3/22/13), 115 So.3d 475, 479, writ denied, 2013-0866 (La. 5/31/13), 118 So.3d 396.

In ruling on a motion for new trial, the applicable standard of review is whether the trial court abused its discretion. Martin v. Heritage Manor South Nursing Home , 2000-1023 (La. 4/3/01), 784 So.2d 627, 632. In reviewing a decision of the trial court on a petition for nullity, the issue for the reviewing court is not whether the trial court was right or wrong but whether the trial court's conclusions were reasonable. Belle Pass Terminal, Inc. v. Jolin, Inc. , 2001-0149 (La. 10/16/01), 800 So.2d 762, 766.

DISCUSSION

Default Judgment

Louisiana Code of Civil Procedure art. 1702(A) provides, in part, "[a] judgment of default must be confirmed by proof of the demand to establish a prima facie case." A prima facie case is established by evidence that provides the essential allegations of the petition as fully as if each allegation had been specifically denied. When reviewing a default judgment, the court of appeal is restricted to determining whether the record contains sufficient evidence to prove a prima facie case. Clary v. D'Agostino , 95-0447 (La. App. 1 Cir. 12/15/95), 665 So.2d 792, 793-94.

Mr. Zavala testified that he was employed by Hadir Naoum. When asked if Mr. Naoum owned a company, Mr. Zavala stated he did not know the company's name. However, Mr. Zavala testified that he had worked for Mr. Naoum for two years and was paid in cash. Mr. Zavala additionally testified that he was paid $750 weekly by Mr. Naoum. Mr. Zavala called coworkers as witnesses to corroborate that he was employed by Mr. Naoum and that Mr. Zavala was injured by falling from stilts during the course of that employment. Mr. Zavala further presented medical records and medical bills to corroborate his witnesses' testimony. We find the evidence established a prima facie case proving that Mr. Zavala was injured during the scope of his employment with Mr. Naoum, as the final judgment reflects. See Bruno v. Harbert Intern. Inc. , 593 So.2d 357, 361 (La. 1992) ; see also Winfield v. Jiffy Lube , 2001-0341 (La. App. 1 Cir. 3/28/01), 813 So.2d 428, 431.

Motion for New Trial

A motion for new trial shall set forth the grounds upon which it is based. La. C.C.P. art. 1975. Louisiana Code of Civil Procedure art. 1972 sets forth the peremptory grounds granting a new trial, which are: 1) When the verdict or judgment appears clearly contrary to the law and the evidence; 2) When the moving party has discovered, since the trial, evidence important to the cause, which he could not, with due diligence, have obtained before or during the trial; and 3) When the jury was bribed or has behaved improperly so that impartial justice has not been done. In addition, La. C.C.P. art. 1973 provides that a new trial may be granted in any case if there are good grounds.

The allegations set forth in Mr. Naoum's motion for nullity apply in the alternative to his motion for new trial. Since we find that the default judgment was properly rendered, we do not find it to be contrary to the law and to the evidence. Mr. Naoum has not alleged that he has discovered new evidence which he could not find before with due diligence. Finally, the third peremptory ground in La. C.C.P. art. 1972 is not applicable to the instant case. As Mr. Naoum does not make any allegations relating to the peremptory grounds for granting a new trial found in La. C.C.P. art. 1972, we find the OWC did not abuse its discretion when it denied Mr. Naoum's motion for new trial, nor does the record reveal any good grounds for granting a new trial pursuant to La. C.C.P. art. 1973.

Action of Nullity

Mr. Naoum filed a motion for nullity, a procedural device that does not exist under Louisiana law. Louisiana Code of Civil Procedure arts. 2001 - 2006 provide for an "action of nullity," allowing parties to file a direct action to nullify a prior incorrect judgment. Webster v. Boh Bros. Const. Co., Inc. , 603 So.2d 761, 763 (La. App. 4 Cir. 1992) However, it is well-settled that an absolutely null judgment may also be collaterally attacked by any procedural means short of a petition for nullity, such as a contradictory motion or rule. See Leonard v. Reeves , 2011-1009 (La. App, 1 Cir. 1/12/12), 82 So.3d 1250, 1260.

Louisiana Code of Civil Procedure art. 2002 provides that a final judgment shall be annulled if it is rendered against a defendant who has not been served with process as required by law and who has not waived objection to jurisdiction, or against whom a valid judgment by default has not been taken. In Mr. Naoum's motion, he asserted that the amended complaint named "Nadir Haoum," not "Hadir Naoum," as the employer of Mr. Zavala, and therefore he was never named or served as a defendant.

The OWC's sua sponte dismissal of the nullity action without a hearing is without authority under the law. See State v. Smith , 50,408 (La. App. 2 Cir. 4/13/16), 194 So.3d 29, 31-32. The record reflects that the OWC denied the action for nullity ex parte without affording Mr. Naoum the necessary process for an ordinary hearing, such as an evidentiary hearing. The issue of whether Mr. Naoum was served with process as required by law, and thus, whether a valid judgment by default was taken, was never adjudicated contradictorily with Mr. Naoum since the judgment was rendered by default. That question provides the basis for his action for nullity. The OWC's failure to hold an evidentiary hearing on the issue of nullity, and thus its failure to make any factual findings, precludes us from deciding whether the finding of the trial court was reasonable. Therefore, the OWC's dismissal of the nullity action is to be vacated and this matter is remanded to the OWC for a hearing on that issue. Id.

DECREE

The default judgment of the Office of Workers' Compensation, District 6, in favor of the appellee, Norberto Zavala, and against the appellant, Hadir Naoum, is affirmed. The OWC's denial of Hadir Naoum's motion for new trial is also affirmed. The order to deny the motion to nullify the judgment filed by Hadir Naoum is vacated and remanded for further proceedings in conformity with this opinion. Costs of this appeal are assessed equally between the parties.

AFFIRMED IN PART; VACATED IN PART AND REMANDED.

Welch, J. concurs without reasons.

McClendon, J. concurs.

      There are two different spellings of Mr. Naoum's name throughout the record. We deem the spelling taken from Mr. Naoum's own pleadings and affidavit to be correct; however, since Mr. Naoum considers the misspelling of his name a critical issue in the instant case, we will use both spellings to illustrate his reasons for filing his motion to annul the default judgment and motion for new trial.

      There is no issue on appeal as to whether there are any vices of substance pursuant to La. C.C.P. art. 2004.