Court Opinion

ID: 7636043
Source: CourtListenerOpinion
Date Created: 2022-07-29 20:06:34.938411+00
Date Added: 2024-06-11T16:25:19.996608
License: Public Domain

STATE OF LOUISIANA

                            COURT OF APPEAL

                              FIRST CIRCUIT

                               2021 CA 1256

                                DQSI, L.L.C.

                                 VERSUS

APC CONSTRUCTION, LLC AND AEGIS SECURITY INSURANCE
                                COMPANY

                            DATE OF JUDGMENT:
                                                       rJUL 2 g 2022

 ON APPEAL FROM THE TWENTY-SECOND JUDICIAL DISTRICT COURT
             PARISH OF ST. TAMMANY, STATE OF LOUISIANA
                        NUMBER 201714015, DIVISION H

               HONORABLE ALAN A. ZAUNBRECHER, JUDGE

John Anthony Cangelosi                  Counsel for Plaintiff A
                                                              - ppellant
Timothy Sean Madden                     DQSI, L.L.C.
Diana J. Master
New Orleans, Louisiana

Gerald A. Melchiode                     Counsel for Defendant -Appellee
Jeffery B. Struckhoff                   AEGIS Security Insurance Company
Benjamin M. Pri- Tal
New Orleans, Louisiana

John Anthony Cangelosi                  Counsel for Defendant -Appellee
Timothy Sean Madden                      Allied World Specialty Insurance
Diana J. Master                          Company Group
New Orleans, Louisiana

Gerald A. Melchiode                      Counsel for Defendant -Appellee
Jeffery Struckhoff                       APC Construction, LLC
Benjamin M. Pri- Tal
New Orleans, Louisiana
Wayne G. Zeringue, Jr.,            Counsel for Defendant -Appellee
Christopher K. Ulfers              Ponchartrain Materials Corporation
New Orleans, Louisiana

Daniel J. Hoerner                  Counsel for Defendant -Appellee
Andre Jean Mouledoux               Pine Bluff Sand and Gravel Company
Mark E. Hanna
Trevor M. Cutaiar
New Orleans, Louisiana

 Disposition- AFFIRMED.

                          C/
                               2
CHUTZ, J.

          Plaintiff-appellant, general contractor DQSI, L.L. C. ( DQSI), appeals the

trial court' s grant of summary judgment, dismissing all its claims against

defendant -appellee, Aegis Security Insurance Company ( Aegis),             the performance

bond surety for subcontractor APC Construction, LLC ( APC),                 arising out of a

subcontract for the construction of a rock dike. For the following reasons, we

affirm.

       On May 9, 2016, DQSI entered into a public contract with owner, Louisiana

Coastal Protection and Restoration Authority (CPRA),             to build a rock dike located

in Lafourche Parish.' DQSI entered into a subcontract with APC on August 12,

2016, for the purpose of performing the construction required to build the rock

dike. The subcontract incorporated into the agreement the terms of the May 9,

2016 contract between DQSI and CPRA and also required, among other things,

that APC obtain a bond securing its performance of the subcontract.?               On August

16, 2016, Aegis issued Bond 4 B10 029 188.

          DQSI filed this lawsuit on August 25,         2017, naming APC and Aegis as

defendants. Among its allegations, DQSI claimed that APC failed to perform its

work under the subcontract in a professional and workmanlike manner and did not

timely      complete   the    rock    dike   project.    Thus,     DQSI     sought    damages

 I The prime contract between CPRA as owner and DQSI as general contractor was entitled,
                                                                                               It
   Project No. BA -02/ GIWW to Clovelly Hydrologic Restoration 2015 Maintenance Project."
 is undisputed that the rock dike construction was located on Bay L' Ours -- Little Lake.

 2 in this appeal, DQSI does not contend it is entitled to recovery under the subcontractor labor
 and material payment bond that Aegis also issued.

                                                3
from both APC and Aegis as APCs performance bond surety. APC and Aegis

answered   the   lawsuit   on   November    20,   2017,   generally   denying   DQSI' s

allegations.   DQSI subsequently filed a supplemental and amended petition

averring that APC made multiple false representations concerning its performance

and committed other breaches of the subcontract. DQSI alleged that Aegis was

liable in solido with APC for resulting damages. Aegis answered the additional

claims, generally denying liability.

      After the trial court overruled Aegis' s peremptory exceptions of no right of

action and no cause of action, Aegis filed a motion for summary judgment, seeking

dismissal from DQSFs lawsuit. After a hearing on March 4, 2021,           the trial court

granted summary judgment and dismissed all claims               against   Aegis.   DQSI

devolutively appealed.

                                SUMMARY JUDGMENT

       A motion for summary judgment is a procedural device used to avoid a full-

scale trial when there is no genuine issue of material fact. Georgia- Pacific

Consumer Operations, LLC v. City of Baton Rouge, 2017- 1553 ( La. App. Ist Cir.

7/ 18/ 18), 255 So. 3d 16, 21, writ denied, 2018- 1397 ( La. 12/ 3/ 18), 257 So. 3d. 194.

The Code of Civil Procedure places the burden of proof on the party filing a

motion for summary judgment. See La. C. C.P. art. 966D( 1).       The mover can meet

its burden by filing supporting documentary evidence consisting of pleadings,

memoranda, affidavits, depositions, answers to interrogatories, certified medical

records,   written   stipulations,   and admissions with its motion for summary

judgment. La. C. C. P. art. 966A(4).

        Once the mover properly establishes by its supporting documents that

 genuine issue of material facts exists, the mover does not have to negate all of the

 essential elements of the adverse party' s claims, actions, or defenses if it will not

 bear the burden of proof at trial. La. C. C. P. art. 966D( 1). The moving party must

                                             in
only 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. La. C. C. P. art. 9661)(   1).

       The burden then shifts to the non- moving party to produce factual support,

through the use of proper documentary evidence attached to its opposition, which

establishes the existence of a genuine issue of material fact or that the mover is not

entitled to judgment as a matter of taw. La. C. C.P. art. 966D( 1). If the non-moving

party fails to produce sufficient factual support in its opposition which proves the

existence of a genuine issue of material fact, Article 9661)( 1)            mandates          the

granting of the motion for summary judgment. Babin v.             Winn-Dixie Louisiana,

Inc., 2000- 0078 ( La. 6/ 30/ 00), 764 So. 2d 37, 40.

       In reviewing the trial court' s decision on a motion for summary judgment,

this court applies a de novo standard of review using the same criteria applied by

the trial courts to determine whether summary judgment is appropriate. Jackson v.

Wise, 2017- 1062 (   La. App. 1st Cir. 4/ 13/ 18),      249 So. 3d 845, 850, writ denied,

2018- 0785 ( La. 9/ 21/ 18),    252 So. 3d 914. Factual inferences reasonably drawn

from the evidence must be construed in favor of the party opposing a motion for

summary judgment, and all doubt must be resolved in the opponent' s favor.

 Thompson v. Ctr. for Pediatric and Adolescent Medicine, L.L.C, 2017- 1088 ( La.

App. Ist Cir. 3/ 15/ 18),    244 So. 3d 441, 445, writ denied, 2018- 0583 ( La. 6/ 1/ 18),

243   So. 3d 1062. 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. Dyess v. American Nat' l Prop. and

 Cas. Co., 2003- 1971 (     La. App. I st Cir. 6/ 25/ 04), 886 So. 2d 448, 451, writ denied,

 2004- 1858 ( La. 10/ 29/ 04), 885 So. 2d 592.

                                        DISCUSSION

        The bond at issue is a performance bond,               which   guarantees that the

 contractor will perform the contract.        See Congregation of St. Peter' s Roman

                                                5
Catholic Church of Gueydan v. Simon, 497 So. 2d 409, 412 ( La. App. 3d Cir.

1986).   The conditions of a performance bond are determined by the terms of the

contract establishing it. See Congregation of St. Peter' s Roman Catholic Church

of Gueydan, 497 So. 2d at 412. See also L & A Contracting Co.,                   Inc. v. Ram

Indus. Coatings, Inc.,      99- 0354 ( La. App. 1st Cir. 6/ 23/ 00),   762 So. 2d 1223, 1236,

writ denied, 2000- 2232 ( La. 1. 1/ 13/ 00),   775 So. 2d 438 ( interpreting the language of

the contract for the performance bond to determine the scope of its coverage).

         In support of its motion for summary judgment, Aegis provided several

documents from AFC' s files.'       A copy of the August 12, 2016 subcontract that APC

entered into with DQSI to perform work on the rock dike project was attached to

the motion. According to the provisions of Task Order # 1          of the subcontract, APC

was to provide and install all items called for in the prime contract between DQSI

and CPRA. In Article 9 of the subcontract, the parties agreed that "[ APC] will be

given written notice from [ DQSI] notifying [ APC] of any deficiencies and [ APC]

will have 20 calendar days to correct stated deficiencies prior to [ APC' s] contract

being terminated."

         Additionally, the August 12, 2016 subcontract required that APC provide a

performance bond in favor of DQSI. A copy of the August 16, 2016 performance

bond, setting forth APC as principal, Aegis as surety, and DQSI as obligee, was

also attached to the motion for summary judgment.                      The   provisions   of the

performance bond state in pertinent part:

          APC] as Principal ...     and [ Aegis] as Surety ... are held and firmly
         bound unto [ DQSI] as Obligee ... in the amount of ... $ 1, 383, 800. 00
         for the payment whereof Principal [ APC] and Surety [ Aegis] bind
         themselves, their heirs, executors, administrators, successor and

         assigns, jointly and severally, firmly by these presents.

                WHEREAS, Principal [        APC] has by written agreement dated
         the 12th day of August, 2016, entered into a subcontract with Obligee

 3 The documents were attached to an affidavit of an APC representative who certified they were
 true and correct copies.

                                                 6
      DQSI] for [ the rock dike project] ...      which [ subcontract]     is by
     reference made a part hereof, and is hereinafter referred to as the
     subcontract.

           NOW,       THEREFORE,          THE     CONDITION          OF    THIS
     OBLIGATION is such that, if Principal [ APC] shall promptly and
     faithfully perform said subcontract, then this obligation shall be null
     and void; otherwise it shall remain in full force and effect.

            Whenever Principal [ APC] shall be, and be declared by Obligee
      DQSI] to be in default under the subcontract, the Obligee [ DQSI]

     having performed Obligees' s [ DQSI' s] obligations thereunder:

             I) Surety [ Aegis] may promptly remedy the default subject to
               the provisions of paragraph 3 herein, or;

             2) Obligee [ DQSI]     after reasonable notice to Surety [   Aegis]

               may,   or Surety [   Aegis] upon demand of Obligee [ DQSI]

               may arrange for the performance of Principal' s [          APC' s]
               obligation under the subcontract subject to the provisions of
               paragraph 3 herein;

             3) The balance of the subcontract price ...     shall be credited
               against the reasonable cost of completing the performance of
               the subcontract. If completed by the Obligee [        DQSI],   and

               the reasonable cost exceeds the balance of the subcontract
               price, the Surety [ Aegis] shall pay to the Obligee [ DQSI]
               such excess, but in no event shall the aggregate liability of
               the Surety [ Aegis] exceed the amount of this Bond. If the
               Surety [ Aegis] arranges completion or remedies the default,
               that portion of the balance of the subcontract price as may be
               required to complete the subcontract or remedy the default
               and to reimburse the Surety [ Aegis] for its outlays shall be
               paid to the Surety [ Aegis] at the times and in the manner as
                said sums would have been payable to Principal [ APC] had
               there been no default under the subcontract.

      Aegis also submitted a copy of the certificate filed by CPRA stating that the

rock dike project was substantially completed on May 12, 2017. The certificate

included a punch list setting forth eight items. According to the terms of the

certificate, the list of items to be completed or corrected was "    tentative,"    not all-

inclusive, and the omission of any items did not relieve DQSI of its responsibility

to complete all work as set forth in the prime contract. A recording page from the

Lafourche Parish Clerk of Court' s Office showed that the two-page substantial

completion certificate was filed for registry and recorded on June 27, 2017.

                                            7
        A letter dated October 11, 2017, from Stanley Consultants, Inc. ( SCI)                               who

served as the rock dike project engineer, stated that after an inspection of the

project area, SCI had determined that DQSI and APC had completed the items set

forth   in   the    punch       list.   SCI   further         elaborated, "     Visual       observations     by

representatives of CPRA, SCI, DQSI, and APC] ...                         confirmed that all items of the

punch list have been addressed." In the October 11, 2017 letter, SCI stated that

DQSI     had   submitted         a "    Contractor' s         Guarantee       Letter    on     behalf of [ its]

Subconsultant, APC." SCI advised CPRA that the letter constituted written notice

that the rock dike project had been satisfactorily completed and was recommending

final acceptance by CPRA. Attached to the letter was AFC' s written guarantee for

one year after final acceptance of the work it had performed. Aegis also -placed into

the record the public notice of acceptance of the rock dike project, accepted by

CPRA on October 2,               2017 and recorded for registry in Lafourche Parish on

November 22, 2017.

        In response to Aegis' s showing,                      DQSI      offered hundreds          of pages     of

documents.`        Among the salient documents DQSI offered in opposition to Aegis' s

motion for summary judgment were faxes and emails from DQSI to APC, with

copies sent to Aegis or its representative, dated between December 13, 2016 and

January 30, 2017, in which DQSI complained that APC was not performing in

accordance         with   the     specifications    set         forth    in    the     prime     contract.   Fax

correspondence to APC dated December 13, 2016, with a copy to Aegis, demanded

that APC fully comply with the contractual specifications within the 20 -day cure

period set forth in Article 9 of the subcontract and demanded that APC comply

 with the subcontract terms. DQSI stated, " If the matter is not rectified[,]                           we will

 4 The documents were certified as true and correct copies by DQSI representatives.

                                                        HO.
have no alternative but to seek all legal remedies including asserting a claim

against the bond."

       A letter from Aegis' s agent to DQSI, dated January 25, 2017, acknowledged

that in a phone call on January 23, 2017, DQSI stated that it " desired     to assert a

performance bond claim,"        which Aegis considered its first notice of a claim by

DQSI. The letter also stated " that DQSI was willing to ' stand down' on its claim, if

APC] provided DQSI with a sufficient plan to remedy the alleged default"         which

Aegis understood APC was prepared to do in a timely manner.

       An email from APL' s attorney to DQSI showed that on January 25, 2017,

APC submitted a revised work plan to DQSI. On January 26, 2017, DQSI advised

APC that even with the revised work plan, complained -of deficiencies and issues

remained. According to DQSI, the revised work plan was likely to be rejected by

SCI and CPRA and, therefore, not satisfactory. DQSI stated, " Should APC fall to

provide an acceptable plan to DQSI in a timely manner ...           APC will remain in

default."    It is undisputed that a copy of the email was sent to Aegis.

       On January 30, 2017, DQSI sent a letter to APC, with a copy to Aegis,

acknowledging that one of the complained -of deficiencies had been addressed but

that the others had not. DQSI stated, "[ T] his letter shall ..     serve as notice that

APC continues to ignore the contract documents and improperly perform work and

this is causing a situation that will require additional remedial work." Making

specific demands for APC' s performance, DQSI further elaborated, " If the matter

is   not   rectified[,]   we will have no alternative but to seek all legal remedies

 including asserting a claim against the bond."

           AFC' s performances apparently improved because the next communication

 between DQSI and APC contained in the record occurred after CPRA filed its

 certificate stating substantial completion had been accomplished on May 12, 2017

 into the registry on June 27, 2017. During the period between July 13, 2017 and
                                              9
July 26, 2017, DQSI and APC engaged in acrimonious email correspondence in

which APC requested payments from DQSI for APC' s performance under the

subcontract to which DQSI responded that nonconformity with the project

specifications as well as APC' s failure to provide as -built surveys precluded

processing of the payment requests. By July 31, 2017, DQSI and APC agreed on

APC' s application of the project specifications so as to permit processing of the

payment requests with an assurance by APC that the as -built surveys would be

provided by August 2017. On August 24, 2017, APC provided acceptable as -built

surveys to SCI. But on August 25, 2017, DQSI brought this lawsuit against APC

and Aegis.

       Also included among DQSI' s documents opposing the motion for summary

judgment was a letter, dated July 25,       2017, for which copies were provided to

Aegis' s agent and attorney. In the letter, DQSI advised APC that DQSI was issuing

the   subcontractor   a"   Formal Notice"   since,   despite its representations to the

contrary, APC had yet to complete the punch -list items excepted from the owner' s

substantial completion certification. DQSI explained to APC that on July 21, 2017,

DQSI had visited the rock dike project site and found that the punch -list items had

not been completed.        DQSI made a demand that APC fully comply with the

subcontract. Additionally, DQSI stated, "     If the matter isn' t rectified, DQSI will

have no alternative but to complete the project [ itselfl, at the expense of APC."

        The next correspondence occurred subsequent to DQSI' s filing of this

lawsuit against APC and Aegis. In emails from DQSI to APC, with copies to

Aegis' s representatives, between September 6 and 9,         2017, DQSI continued to

 request that APC complete the punch -list items. APC responded that it had

 completed the work and requested an immediate final inspection of the rock dike

 proj ect.

                                             H
      DQSI also placed into the record the October 2, 2017 site visit report,

prepared by SCI, at which representatives for DQSI, SCI, APC, and CPRA were

present, that had been attached to SCI' s October 11,      2017 letter recommending

final acceptance of the rock dike project by CPRA- According to the site visit

report' s meeting notes, the weather " was less than desirable with high tides due to

cool front and north winds." Although all parties observed the entire length of rock

dike project, a visual inspection of the execution of particular items was not

possible. The parties were able to get "   closer to the top of the rock dike"   without

encountering any problems and " APC stated that a smaller vessel was used" to

identify particular items APC had performed to complete the punch list.

      After CPRA filed public notice of its October 2, 2017 acceptance of the rock

dike project, in a letter dated February 6, 2018,      copies of which were sent to

Aegis' s agent and attorney, DQSI gave " Formal Notice" to APC under the

subcontract that APC had not completed the punch -list items. DQSI advised APC

to respond within two days with a schedule for completion of the work or " DQSI

will retain another subcontractor to complete APC' s work and seek recovery of all

related damages and expenses from APC."

       Aegis asserted that it should be dismissed from this lawsuit because DQSI

did not comply with the terms of the performance bond so as to support a claim

against the surety.      Pointing to the provisions of the bond,       which    state   that

  w] henever [ APC] shall be, and be declared by [ DQSI] to be in default under the

subcontract, [   DQSI] having performed [ DQSI' s]    obligations thereunder[,]"    Aegis

maintains that as a condition precedent to any obligation it may owe to DQSI

 under the performance bond: ( 1)       APC must have been in default under its

 subcontract with DQSI; ( 2) DQSI must have placed APC in default under the

 subcontract;    and (   3)   DQSI must have performed       its   obligation   under    the

 subcontract. Aegis suggested that the evidence offered in support and opposition to

                                            11
summary judgment establishes that APC was never declared to be in default under

the subcontract.

       Although the bond does not define the terms " declare" or " default,"         the term

 declared in default" is unambiguous. See L &        A Contracting Co. v. S. Concrete

Servs., Inc., 17 F. 3d 106, 110 ( 5th Cir. 1994). Before a declaration of default,

sureties face possible tort liability for meddling in the affairs of their principals.

After a declaration of default, the relationship changes dramatically, and the surety

owes immediate duties to the obligee. Sureties deprived of a clear rule for notices

of default would be reluctant to enter into otherwise profitable contracts. L & A

Contracting Co.,   17 F. 3d at 110- 11.

       A declaration of default sufficient to invoke the surety' s obligations under

the bond must be made in clear, direct, and unequivocal language. The declaration

must inform the surety that the principal has committed a material breach or series

of material breaches of the subcontract, that the obligee regards the subcontract as

terminated, and that the surety must immediately commence performing under the

terms of its bond. L &   A Contracting Co.,   17 F. 3d at 111.

       Based on the foregoing evidence, we agree with the trial court' s conclusion

that   summary judgment        was    appropriate.   Initially,   we   note   that    DQSI' s

documentary offering contains numerous complaints by DQSI about the timeliness

and quality of APC' s performance, which were communicated to Aegis or its

 agent, sufficient to support a finding by the trier of fact that DQSI informed Aegis

 in terms sufficiently clear, direct, and unequivocal that APC defaulted on its

 obligations under the subcontract. But DQSI neither alleged in its petition as

 amended nor offered evidence to allow a trier of fact to -find that DQSI clearly,

 directly, and unequivocally communicated to either APC or Aegis that DQSI

 regarded the subcontract with APC as terminated and informed Aegis that Aegis

 must immediately commence performing under the terms of the bond.
                                             12
      In the numerous communications from DQSI to APC for which Aegis and

its agents received copies,   every promise by DQSI indicating it intended to

terminate or dismiss APC from the subcontract, or that DQSI intended to perforin

APC' s obligations, was conditional. Thus, DQSI failed to unequivocally express to

either APC or Aegis that it regarded APC unable or unwilling to perform and,

therefore, was relieved from its obligations under the subcontract.

      Additionally, neither the evidence offered by the parties nor DQSI' s

allegations in its petition as amended advised Aegis that Aegis must immediately

commence performing under the terms of the bond. While the January 25, 2017

letter from Aegis' s agent to DQSI showed that Aegis acknowledged that DQSI

 desired to assert a performance bond claim," it also conditioned its claim stating it

was willing to " stand down" if APC undertook a remedial work plan, which the

record established APC did. Additionally, the documents DQSI submitted showed

that between January 30, 2017 and July 13,         2017, there were no complaints

between DQSI and APC. Moreover, the nature of DQSI' s complaints relative to

APC' s alleged material breaches after July 2017 changed. DQSI no longer had

issues with APC' s failure to comply with the specifications of the prime contract as

incorporated by the subcontract but instead complained that APC had failed to

complete the punch -list items. This established that the nature of the alleged

material breach was not the same as that made at the time of the January 25, 2017

 letter. Thus, the January 25,   2017 letter from Aegis to DQSI cannot support a

 finding that DQSI advised Aegis that Aegis must immediately commence

 performing under the terms of the bond.

       Although DQSI points to its filing of the lawsuit on August 25, 2017, prior

 to CPRA' s public notice of its October 2, 2017 acceptance of the rock dike project,

 as sufficient evidentiary support to establish the existence of material issues of fact

 as to whether Aegis was informed that DQSI regarded the subcontract as

                                           13
terminated and that Aegis must immediately commence performing under the

terms of its bond, such assertions are belied by DQSI' s February 6, 2018 letter,

transmitted well after the lawsuit was filed, giving " Formal Notice" to APC,

advising that APC had two days to respond to DQSI' s demand for completion of

the punch list or that DQSI would retain another subcontractor to complete APC' s

work. And DQSI offered nothing to show that after February 8, 2018, it advised

Aegis that APC was declared to be in default or terminated from the subcontract

and that Aegis must immediately commence performing under the terms of the

       DQSI included invoices in support of its own performance on October 12,

2017 and February 1, 2018 when it went to the rock dike project site to investigate

the status of the punch -list items that DQSI alleged was among APC' s obligations

to perform under the subcontract.        Additionally, DQSI provided invoices of a

subcontractor it hired to complete the punch -list items on March 13, 2018 that

DQSI averred were among APCs obligations to perform. But the record fails to

establish that any of the invoices were provided to Aegis contemporaneously with

execution of the work. Therefore, the invoices do not show that DQSI informed

Aegis that Aegis must immediately commence performing under the terms of its

       The record lacks any evidence demonstrating that Aegis was ever informed

that DQSI regarded the subcontract with APC terminated and that DQSI informed

Aegis that Aegis must immediately commence performing under the terms of its

  Although DQSI submitted with its opposition a June 2018 letter from Aegis acknowledging a
 May 15, 2018 claim by DQSI against the bond, nothing in the letter established that APC was
 declared in default by DQSI.

                                             14
bond. Accordingly, the trial court correctly dismissed Aegis from this litigation.'

       For these reasons, the trial court' s judgment is affirmed.' Appeal costs are

assessed to plaintiff-appellant, DQSI, L.L.C.

6 Because we find Aegis is entitled to dismissal under the terms of the bond, we pretermit a
discussion of whether Aegis is entitled to dismissal from this lawsuit as a matter of law since the
rock dike project was certified as substantially complete on May 12, 2017, before the lawsuit
was filed, and subsequently accepted by the owner on October 2, 2017, after litigation ensued.

7 Aegis filed an alternative motion for partial surninary judgment asking for the dismissal of
DQSI' s claims for liquidated damages and statutory penalties for alleged bad faith claims
adjustment under La. R.S. 22: 1892 and 1973. Because we conclude the trial court correctly
granted summary judgment dismissing Aegis from the lawsuit, whether the alternative motion
for summary judgment is viable in this appeal and the parties' contentions on the merits of
alternative motion are not before us.

                                                15
       DQSI, LLC                                                   STATE OF LOUISIANA

r/ i                                                               COURT OF APPEAL
  I    VERSUS
                                                                   FIRST CIRCUIT

       APC CONSTRUCTION, LLC AND                                   2021 CA 1256
       AEGIS SECURITY INSURANCE
       COMPANY

       HOLDRIDGE, J.,         dissenting.
                Louisiana Code of Civil Procedure article 966( A)(3)          provides, "   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."    Appellate courts review summary judgments de novo, using the same

       criteria that govern the trial court' s consideration of whether summary judgment is

       appropriate. A genuine issue is one as to which reasonable persons could disagree;

       if reasonable persons could reach only one conclusion, summary judgment is

       appropriate. A material fact is one that would matter at a trial on the merits. Collins

       v. Franciscan Missionaries of Our Lady Health System, Inc.,                2019- 0577 ( La.

       App.     1st Cir. 2/ 21/ 20), 298 So. 3d 191,    194- 95, writ denied, 2020- 00480 ( La.

       6/ 22/ 20), 297 So. 2d 773. A "genuine issue" is a " triable issue."   Smith v. Our Lady

       of the Lake Hosp.,     Inc., 93- 2512 ( La. 7/ 5/ 94),   639 So. 2d 730, 752. Any doubt as

       to a dispute regarding a material issue of fact must be resolved against granting the

       motion and in favor of trial on the merits. Collins, 298 So. 2d at 195.

                The performance bond here triggers Aegis' surety obligations upon DQSI' s

       declaration that APC is " in default" under the subcontract; the terms of the

       performance bond do not require a formal termination of the subcontract to trigger

       Aegis'    liability, as the majority concludes.      Louisiana Civil Code article 1991

       provides, in pertinent part, " An    obligee may put the obligor in default by a written
request   of performance, ...         or by filing suit for performance, or by a specific

provision of the contract."       Here, while APC' s failure to finish the scope of its work

timely under the terms of the subcontract is largely undisputed, the parties dispute

what precise steps were required of DSQI to put APC in default. The record

establishes that DQSI and Aegis used the terms " default"            and "   alleged default" in

their respective correspondences to each other beginning as early as January 2017,

months before the certificate of substantial completion was issued. The various

forms of correspondence between DQSI, APC, and Aegis show that DQSI

referenced the deficiencies of APC' s work and stated its desire to assert a

performance bond claim. Further, APC submitted a revised work plan and DQSI

complained of remaining deficiencies, while allowing APC to continue performing

remedial work. Based on those documents, reasonable minds could reach different

conclusions regarding whether DQSI actually placed APC in default, triggering

Aegis' liability. Thus, the trial court erred in finding that the supporting documents

presented by Aegis were sufficient to resolve all material factual issues and that

Aegis was entitled to summary judgment as a matter of law.'

        The majority relies on L & A Contracting Co. v. S. Concrete Servs.,                 Inc.,

17 F. 3d 106 ( 5th Cir. 1994), to support its conclusion that an express termination of

the subcontract is required to trigger the performance bond obligation. That case,

while clearly not binding authority, is additionally factually distinguishable from the

facts of the instant case. There, the court emphasized, " None of the letters [ the

general contractor] sent to [ the subcontractor] and [ the performance bond surety]

even contained the word " default", nor do we find an unequivocal declaration of

1 Furthermore, evidence of the parties' intent may be necessary in this case to determine whether
the actions and correspondence of DQSI placed Aegis in default. It appears the two parties may
have interpreted DQSI' s actions differently. Summary judgment is seldom appropriate for
determinations based on subjective facts when intent or motive is at issue. Berthelot v. Indovina,

2021- 1546 ( La. App. Ist Cir. 6/ 3/ 22),   So. 3d ,   2022 WL 1828333.

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default in the other items of correspondence [ the general contractor' s] brief calls to

our attention."      In the present case, Aegis referenced APC' s " alleged default" in a

January 25, 2017 letter that referenced DQSI' s stated desire to " assert a performance

bond claim."     DQSI' s January 26, 2017 email to APC, with a copy sent to Aegis,

stated, "
            Should APC fail to provide an acceptable plan to DQSI in a timely manner

    APC       will   remain in    default."   DQSI   also   referenced   the   complained -of

deficiencies in subsequent letters and emails, while requesting that APC complete

the work.

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