DQSI, L.L.C. v. APC Construction, LLC and Aegis Security Insurance Company ( 2022 )

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.
2
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.
3