Source: http://openjurist.org/439/f3d/212/whitaker-construction-company-inc-v
Timestamp: 2013-12-09 00:12:01
Document Index: 679706206

Matched Legal Cases: ['§ 9', '§ 303', '§ 9', '§ 94801', '§ 9', '§ 9', '§ 9', '§ 9']

439 F3d 212 Whitaker Construction Company Inc v. | OpenJurist
439 F. 3d 212 - Whitaker Construction Company Inc v.	Home439 f3d 212 whitaker construction company inc v.
439 F3d 212 Whitaker Construction Company Inc v. 439 F.3d 212
In the Matter of: WHITAKER CONSTRUCTION COMPANY, INC., Debtor.Fidelity & Deposit Company of Maryland, Appellee,v.FitzGerald Contractors, Inc., Appellant.In the Matter of: Whitaker Construction Company, Inc., Debtor.Fidelity & Deposit Company of Maryland, Appellant,v.FitzGerald Contractors, Inc., Appellee.
No. 04-30598.
No. 05-30074.
Eugene R. Preaus (argued), Mayra L. Scheuermann, Preaus, Roddy & Associates, New Orleans, LA, for Fid. & Deposit Co. of Md.
F. Drake Lee, Jr. (argued), Cook, Yancey, King & Galloway, Shreveport, LA, for FitzGerald Contractors, Inc.
This appeal is the consolidation of two actions, both of which involve FitzGerald Contractors, Inc. ("FitzGerald"), a subcontractor, seeking compensation under Louisiana's Private Works Act, LA.REV.STAT. ANN. §§ 9:4801-55 (West 1991 & Supp. 2005) ("PWA"), from Fidelity & Deposit Company of Maryland, Inc. ("F&D"), a surety, for work performed on construction projects in Louisiana. F&D seeks to avoid liability by asserting the defense of peremption under subsection 9:4813(E) of the PWA. Two questions are presented on appeal: (1) whether FitzGerald's filing of an involuntary bankruptcy petition against the general contractor constituted an "assert[ion of] claims or rights" under subsection 9:4813(E); and (2) whether the peremption period defined in section 9:4822 is triggered when notice of the construction contract is filed but notice of termination is not. Answering both questions in the negative, the district court found for F&D in the Biomedical Project matter and FitzGerald in the Lifeshare Project matter. For the reasons below, we AFFIRM.
Whitaker Construction Company, Inc. ("Whitaker"), as contractor, entered into a standard-form construction contract with the Biomedical Research Foundation of Northern Louisiana, as owner, to build a biotechnology manufacturing facility in Shreveport, Louisiana ("Biomedical Project"). The contract was entered into the Caddo Parish, Louisiana mortgage books on April 28, 2000. It required Whitaker to furnish surety bonds guaranteeing payment to subcontractors. F&D, as surety, issued bonds with a penal sum of $9,755,904.00 on April 25, 2000.
Whitaker, as contractor, also entered into a contract with Blood Center Properties, Inc., as owner, to build a facility for Lifeshare Blood Centers in Shreveport, Louisiana ("Lifeshare Project"). This contract was entered into the Caddo Parish mortgage books on July 27, 2000. It also required Whitaker to furnish a surety bond. F&D, again as surety, issued a bond in the amount of $3,541,953.00 on July 26, 2000. For both the Biomedical and Lifeshare projects, the contracts were recorded and the bonds issued pursuant to the PWA.
Effective August 24, 2000, Whitaker and FitzGerald executed two subcontracts, one relating to the Biomedical Project and one to the Lifeshare Project, in each of which FitzGerald agreed to perform work on the facility.
For the Biomedical Project, a Certificate of Substantial Completion was recorded on September 17, 2001 in the mortgage records for Caddo Parrish. For the Lifeshare Project, no official filing was made regarding completion, though other events occurred that suggest the project was completed: on June 29, 2001, the Estopinal Group, architect for the project, compiled a punchlist; minutes of the Lifeshare Project progress meetings indicate the facility was ready to be occupied between July 23 and 26; and, on July 25, the City of Shreveport issued a certificate of occupancy.
On August 9, 2002, FitzGerald and two other creditors filed an involuntary bankruptcy petition against Whitaker in bankruptcy court in the Western District of Louisiana. The standard Form B5 filing had the following information: (1) Whitaker's identity as debtor; (2) the nature of Whitaker's business as general contractor; (3) the amount FitzGerald was owed, $586,258.17, including liened amounts of $418,596.58 and un-liened amounts of $167,661.59; (4) that the petition was being filed under Chapter 7 of the Bankruptcy Code; and (5) an assertion of petitioners' eligibility to file under 11 U.S.C. § 303(b). It did not invoke the PWA nor mention specifically amounts owed under it.1
On August 19, 2002, F&D filed a notice of appearance in the Whitaker bankruptcy proceeding. On September 6, Whitaker filed an answer to the involuntary petition and a Motion to Convert Case to Chapter 11 Proceeding with a corresponding memorandum in support. On September 12, the bankruptcy court granted the Order of Relief for the involuntary petition and converted the matter to a voluntary Chapter 11 case. On January 9, 2003, FitzGerald filed its proof of claim for all of its claims, liened and un-liened, in the Chapter 11 bankruptcy proceeding.
Regarding the Biomedical Project, FitzGerald filed an adversary complaint in the bankruptcy court on April 16, 2003, naming F&D as defendant. In its complaint, FitzGerald alleged that F&D was liable as surety for payment of $82,473.89 plus interest for amounts Whitaker failed to pay FitzGerald for work it completed on the Biomedical Project. On May 16, F&D answered the complaint, denying FitzGerald's allegations and asserting the defense of peremption. On June 19, F&D moved for summary judgment; FitzGerald made a cross-motion for summary judgment or, alternatively, partial summary judgment. After hearing argument, the bankruptcy court granted FitzGerald's motion for summary judgment in part, and denied F&D's motion. It determined that the involuntary bankruptcy petition was a timely assertion of rights within the meaning of § 9:4813(E) and that the bankruptcy filing did not stay FitzGerald's rights under the PWA. The bankruptcy court entered judgment on September 2.
F&D appealed to the district court on September 3, 2003. The district court determined that the involuntary bankruptcy petition was not an assertion of rights for purposes of subsection 9:4813(E). It reversed the bankruptcy court's judgment with respect to this issue and affirmed its judgment with respect to finding that the bankruptcy filing did not stay FitzGerald's rights. The district court issued its final judgment on May 26, 2004. FitzGerald appealed on June 17, 2004, challenging the district court's determination regarding the involuntary bankruptcy petition in the Biomedical matter.
Regarding the Lifeshare Project, FitzGerald filed an adversary complaint in the bankruptcy court on July 16, 2003, naming F&D as defendant. In it, FitzGerald alleged that F&D was liable as surety for payment of $81,689.00 plus interest for amounts Whitaker failed to pay FitzGerald for work it completed on the Lifeshare Project. On August 6, F&D answered the complaint, denying FitzGerald's allegations and asserting the defense of peremption. On October 2, FitzGerald moved for summary judgment or, alternatively, partial summary judgment. On January 9, 2004, F&D filed a cross-motion for summary judgment. After hearing argument, the bankruptcy court granted FitzGerald's motion for summary judgment in part, and denied F&D's motion. As in the Biomedical matter, it determined that the involuntary bankruptcy petition was a timely assertion of rights within the meaning of the PWA. The bankruptcy court also held that, because no certificate of substantial completion was filed for the Lifeshare Project, subsection 9:4822(C) applied, establishing a peremption period of one year and sixty days. The bankruptcy court entered judgment on March 26.
F&D appealed to the district court, the same court as in the Biomedical matter, on March 29, 2003. The district court affirmed the bankruptcy court's result, but on different grounds. Because notice of the contract had been filed for the Lifeshare Project but notice of termination had not, the district court held that subsection 9:4822(A) applied and that the peremption period had not yet begun to run. It found that FitzGerald's July 2003 filing of the adversary proceeding was a timely assertion of its rights under the PWA. The district court issued its final judgment on December 10. F&D appealed the Lifeshare matter on December 27, 2004.
Both the Biomedical and the Lifeshare matters are consolidated on appeal.
We review the district court's decisions by the same standards it applied to the decisions of the bankruptcy court. Kennard v. MBank Waco, N.A. (Matter of Kennard), 970 F.2d 1455, 1457 (5th Cir. 1992); In re Sinclair, 417 F.3d 527, 529 (5th Cir.2005). For questions of law, the standard is de novo. Id. at 1458.
A. The Private Works Act
Both questions before us require interpretation of the Private Works Act, which regulates the rights and responsibilities of persons involved in the construction and improvement of immovables. See LA.REV. STAT. ANN. §§ 94801-55, Exposé des Motifs (West 1991). The PWA protects contractors, laborers, suppliers of material and others who contribute to construction projects by granting them a privilege on the immovable to secure the price of their work and obligating owners who use a general contractor to require that contractor to record his contract and secure a surety bond guaranteeing payment to contributors. Id. An owner who fails to comply may be personally liable, even to those with whom he is not in contractual privity; and a general contractor who fails to comply may lose his privilege in the immovable. Id.
The rights created by the PWA extinguish after a period of time, the length of which is defined by statute and depends on a variety of factors. The present case involves the liability of general contractor Whitaker's surety, F&D, to a subcontractor, FitzGerald. Subsection 9:4813(E) states that "[t]he surety's liability . . . is extinguished as to all persons who fail to institute an action asserting their claims or rights against the owner, the contractor, or the surety within one year after the expiration of the time specified in R.S. 9:4822 for claimants to file their statement of claim or privilege." § 9:4813(E). Timely institution of an action preserves the claim.
The first question is whether FitzGerald's filing of the involuntary petition for Whitaker's bankruptcy constitutes an action asserting its claim against F&D under subsection 9:4813(E). If it does constitute such an action, FitzGerald timely instituted its action and both of its claims are preserved.2 If it does not, FitzGerald's claim in the Biomedical matter is preempted. To decide whether the FitzGerald's Lifeshare claim is preempted as well, we must determine if the time period specified in section 9:4822 expired, or for that matter began to run. Under subsection 9:4813(E), if the period specified in section 9:4822 never ended, the one year period never ran and FitzGerald's July 2003 adversary proceeding in the Lifeshare matter was timely and its claim preserved.
B. The Involuntary Bankruptcy Petition
First, this Court must decide whether FitzGerald's participation in the August 9, 2002 involuntary bankruptcy petition against Whitaker preserved its claims against peremption under subsection 9:4813(E). That provision extinguishes the surety's liability to those who fail to "institute an action asserting their claims or rights" within a year after the period determined by § 9:4822. § 9:4813(E). Although the appropriate length of the peremption period for the Lifeshare project is disputed, the parties agree that, if the period did in fact run, the involuntary bankruptcy petition was timely in both matters. The question is whether the petition constituted an "action asserting [its] rights and claims" under § 9:4813(E).3
The involuntary bankruptcy petition identified Whitaker as debtor, its business and the amount it owed FitzGerald: $586,258.17, including liened amounts of $418,596.58 and un-liened amounts of $167,661.59. It did not mention the PWA or specify claims made under the Act. In both the Biomedical and Lifeshare matters, the bankruptcy court determined that this constituted an assertion of FitzGerald's claim or right. The district court in the Biomedical matter disagreed, determining that the involuntary bankruptcy petition did