Premier Tugs, LLC v. Caillou Island Towing Company, Inc. ( 2020 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NUMBER 2019 CA 1166
PREMIER TUGS, LLC
VERSUS
CAILLOU ISLAND TOWING COMPANY, INC.
JUN182fJ20,
Judgment Rendered: - - - - - - -
Appealed from the
Sixteenth Judicial District Court
In and for the Parish of St. Mary
State of Louisiana
Docket Number 131,113
Honorable Anthony Thibodeaux, Judge Presiding
*************
Allan L. Durand Counsel for Plaintiff/Appellee,
Lafayette, LA Premier Tugs, LLC
Christopher H. Riviere Counsel for Defendant/Appellant,
William N. Abel Caillou Island Towing, Inc.
Todd M. Magee
George M. Riviere
Thibodaux, LA
*************
BEFORE: WHIPPLE, C.J., GUIDRY, AND BURRIS, 1 JJ.
1 Honorable William J. Burris, retired, is serving as judge pro tempore by special
appointment of the Louisiana Supreme Court.
WHIPPLE, C.J.
This case is before us on appeal by defendant, Caillou Island Towing, Inc.,
from a judgment of the trial court rendered on an open account in favor of plaintiff,
Premier Tugs, LLC. For the reasons that follow, we affirm.
FACTS AND PROCEDURAL IDSTORY
The underlying facts giving rise to this litigation are not in dispute. The record
establishes that Caillou Island Towing Company, LLC, (Caillou) received requests
for tug services from two of its customers, Galveston Bay Energy and James
Whitson, Jr. Caillou did not have the necessary vessels available to complete the
job; thus, Caillou contacted Premier Tugs, LLC, (Premier); and, without informing
Premier who the customers were, Caillou requested that Premier complete the jobs
for them. In the towing industry, this arrangement is commonly referred to as
"brokering" the tugs, which is how both parties refer to the arrangement throughout
the litigation. Premier completed the jobs per Caillou's instructions and invoiced
Caillou for the jobs by Invoice #4442 in the amount of$6,355.00 and Invoices #4640
and #4641, in the amount of$32,250.00 each, for a total of$70,855.00. Caillou then
drew up invoices on its own letterhead, added a ten percent "brokerage fee" to the
invoices, and sent them to their customers for payment. At some point thereafter,
before paying the invoices, Galveston Bay Energy went bankrupt and James
Whitson, Jr. died.
While Premier and Caillou often entered into these "brokerage" agreements
with each other, no written agreement existed between the parties with regard to
payment for the work which gave rise to these invoices. 2 Although both parties
2 While a written brokerage agreement currently exists between the parties, they entered
into the agreement subsequent to the work at issue in this matter and it is silent as to payment for
work done when acting as a broker.
2
admit that this exact situation has never occurred between the parties, Caillou
contended that, per custom, it was not responsible for paying Premier for the work
done until Caillou was paid by the customers. 3
As a result of Caillou' s failure or refusal to pay the invoices, on May 15, 2017,
Premier filed suit against Caillou under Louisiana's open account statute, 4 seeking
to recover the amounts owed on the outstanding invoices, along with attorney's fees
as provided by statute. Caillou filed an answer and reconventional demand alleging,
among other things, that it was not responsible for paying the obligations of a third
party; discharge in bankruptcy by the obligor; discharge by death of the obligor; and
estoppel based upon custom in the industry and the agreement between the parties. 5
After conducting discovery and other pre-trial litigation, the case went to bench trial
on February 4, 2019. The evidence consisted of the testimony of several employees
and owners of both companies, emails between the parties, various invoices related
to the jobs at issue, Premier's demand letter to Caillou for payment, a listing of
attorney's fees allegedly owed to Premier, accounts payable reports, and Premier's
estimated costs of completing the jobs.
After considering all of the evidence submitted, the trial court found that
Caillou had requested that Premier complete the jobs at issue. Premier completed the
jobs and Caillou was then invoiced for the jobs. The court concluded that pursuant
to industry standard, Caillou became responsible for collecting the debts from the
ultimate customers. The trial court further found that, because Caillou did not tell
Premier who the ultimate customers were, and Premier did not have a relationship
3 Although Caillou repeatedly contended throughout the litigation that as per industry
custom, it was not required to pay Premier until paid by the customers, Caillou does not raise this
argument on appeal in its assignment of error. See Uniform Rules, Courts of Appeal, Rule l-3.
4
See LSA-R.S. 9:2781, et seq.
5
In its reconventional demand, Caillou alleged that Premier was indebted to it in the
amount of $10, 169.44. However, the parties later stipulated that the reconventional demand was
settled.
3
with the ultimate customers, Premier did not have the ability to collect on the debts.
Accordingly, on February 19, 2019, after finding that the substance of the agreement
between Premier and Caillou was the rental of Premier's services to Caillou, the trial
court rendered judgment in favor of Premier for $70,855.00 as well as $11,000.00 in
attorney's fees under the open accounts statute.
Caillou then filed the instant appeal, assigning the following as error:
l. The trial court erred in finding that a rental agreement existed between
the parties.
2. The trial court erred in finding that a contract existed between the
parties, instead of finding that the appellee, Premier was seeking to enforce an
unenforceable suretyship agreement.
3. The trial court erred in finding that an open account existed between the
parties.
4. Alternatively, if an open account did exist between the parties, the trial
court committed error by awarding attorney's fees to the appellee, Premier pursuant
to Louisiana's open account law.
DISCUSSION
Contractual Relationship
(Assignments of Error #1 and #2)
On appeal, Caillou contends that it was error for the trial court to find both that a
contract existed between the parties and that the substance of the contract was a
rental agreement, when in fact, the arrangement was an unenforceable suretyship
agreement.6
A contract is formed by consent of the parties established through offer and
acceptance. Unless the law prescribes a certain formality for the intended contract,
6 As these assignments of error are interrelated, we have considered them together.
4
offer and acceptance may be made orally, in writing, or by action or inaction that
under the circumstances clearly indicates consent. LSA-C.C. art. 1927; Casey v.
National Information Services, Inc., 2004-0207 (La. App. 1st Cir. 6/10/05), 906 So.
2d 710, 719, writ denied 2005-2210 (La. 3/24/06), 925 So. 2d 1235. When a writing
is not required by law, a contract not reduced to writing, for a price or value above
$500.00, must be proved by at least one witness and other corroborating
circumstances. LSA-C.C. art. 1846; Suire v. Lafayette City-Parish Consolidated
Government, 2004-1459 (La. 4/12/05), 907 So. 2d 37, 58. To meet the burden of
proving an oral contract by a witness and other corroborating circumstances, a party
may serve as his own witness and the "other corroborating circumstances'' may be
general and need not prove every detail of the plaintiffs case. The corroborating
evidence, however, must come from a source other than the plaintiff. Pennington
Construction, Inc. v. RA Eagle Corporation, 94-0575 (La. App. pt Cir. 3/3/95), 652
So. 2d 637, 639.
The existence of a contract is a question of fact. Townsend v. Urie, 20000730
(La. App. pt Cir. 5/11/01), 800 So. 2d 11, 15, writ denied, 2001-1678 (La. 9/21/01),
797 So. 2d 674. Further, whether there were corroborating circumstances sufficient
to establish an oral contract is also a question of fact. Pennington Construction, Inc.,
652 So. 2d 637, 639. It is well settled that a court of appeal may not set aside a trial
court's finding of fact in the absence of "manifest error" or unless it is "clearly
wrong," and where there is conflict in the testimony, reasonable evaluations of
credibility and reasonable inferences of fact should not be disturbed upon review,
even though the appellate court may feel that its own evaluations and inferences are
as reasonable. Rosell v. ESCO, 549 So. 2d 840, 844 (La. 1989). Under the manifest
error standard of review, a reviewing court may not merely decide if it would have
found the facts of the case differently. Hayes Fund for First United Methodist
Church of Welsh, LLC v. Kerr-McGee Rocky Mountain, LLC, 2014-2592 (La.
5
12/8/15), 193 So. 3d 1110, 1115. Rather, this court employs a two-part test for the
review of a factfinder's determinations. Stobart v. State through Dept. of Transp.
and Development, 617 So. 2d 880, 882 (La. 1993). To reverse a trial court's factual
conclusions, the appellate court must satisfy a two-step process based on the record
as a whole: there must be no reasonable factual basis for the trial court's conclusion,
and the finding must be clearly wrong. Walton v. State Farm Mut. Auto. Ins. Co.,
2018-1510 (La. App. pt Cir. 5/31/19), 277 So. 3d 1193, 1196.
This court's determination is not whether the factfinder was correct, but
whether the factfinder's conclusion was a reasonable one. Stobart, 617 So. 2d 880,
882. Even though an appellate court may feel its own evaluations and inferences are
more reasonable than the factfinder's, reasonable evaluations of credibility and
reasonable inferences of fact should not be disturbed upon review where conflict
exists in the testimony. Rosell, 549 So. 2d 840, 844. Thus, where there are two
permissible views of the evidence, the factfinder' s choice cannot be manifestly
erroneous or clearly wrong. Walton, 277 So. 3d 1193, 1196; Rosell, 549 So. 2d 840,
844.
Further, when findings are based on determinations regarding the credibility
of witnesses, the manifest error-clearly wrong standard demands great deference to
the trier of fact's findings, for only the fact finder can be aware of the variation in
demeanor and tone of voice that bear so heavily on the listener's understanding and
belief in what is said. Rosell, 549 So. 2d 840, 844. Indeed, where the fact finder's
determination is based on its decision to credit the testimony of one of two or more
witnesses, that finding can virtually never be manifestly erroneous. Martinez v.
Wilson, 2019-0017 (La. App. pt Cir. 9/27/19), 287 So. 3d 27, 31.
After considering all of the evidence, the trial court found that an oral contract
existed between Premier and Caillou for the rental of Premier's services. On the
record before us, we are unable to conclude that this factual finding is clearly wrong,
6
as the record amply supports the trial court's factual findings. The testimony was
consistent that the parties had a standing relationship wherein they could call each
other when they needed to complete a job, but did not have the necessary vessels to
do so. As to the specific instances at issue in this matter, both parties testified that
Caillou contacted Premier and offered Premier an opportunity to complete the jobs.
Premier accepted the jobs, and completed them as requested. Accordingly,
considering the evidence presented at trial, the trial court's detennination that there
was sufficient corroborating circumstances to prove a contract was not clearly
wrong.
As to the substance of the contract, Caillou contends on appeal that because it
was only acting as a broker and did not receive any benefit from the agreement,
Premier is seeking to enforce, at best, an unenforceable suretyship agreement. In
support of its argument, Caillou contends that it was acting merely as a "billing
medium" and could not be held responsible for the customers' failure to pay. Finally,
Caillou contends that, because it was only a broker or ''billing medium," a finding
that it was responsible for the outstanding debts would be tantamount to enforcing
an unenforceable implied or tacit suretyship.
Conversely, Premier's witnesses testified that while the arrangement is
commonly referred to in the boating industry as brokering, Premier considered the
nature of the business arrangement to be a rental of its services to allow Caillou to
complete a job. Moreover, Premier points out that at no point during the trial did
any witness testify that they believed it was a suretyship agreement, only that they
believed Caillou did not have to pay until Caillou was paid by the customers. Finally,
Premier contends that even if the contract was one in which Caillou did not have to
pay Premier until it was paid by the customer, such a contract would have been illegal
and unenforceable under prior decisions of this court governing payment to
subcontractors.
7
After considering the evidence the trial court found that this contract was not
a suretyship agreement, stating that the substance of the agreement was the rental of
Premier's services to Caillou in order to allow Caillou to complete the job for its
customer. This finding is supported by the testimony of Joan Cenac, the office
manager at Caillou, who stated, "if we don't have a boat available, [operations]
call[s] a broker boat company ... so we can do the job" for the customer. Ms. Cenac
further testified that they employ this procedure to complete the job because they
want the customer to call Caillou, not Premier, for any future jobs. This testimony
supports the trial court,s finding that the substance of the agreement was the rental
of Premier's services to allow Caillou to complete the job for its
customers.
Additionally, the Louisiana Supreme Court has found that pay-when-paid
provisions in a written contract between a contractor and a subcontractor "are not
suspensive conditions, but rather, terms for payment which only delay the execution
of the ... general contractors' obligations to make payment, and then only for a
reasonable period oftime." 7 Southern States Masonry, Inc. v. J.A. Jones Const. Co.,
507 So. 2d 198, 200 (La. 1987). In Southern States Masonry, the owner filed for
bankruptcy before fully paying the general contractors, one of whom filed a proof of
claim in the bankruptcy proceedings, but was unable to recover the funds. The
Supreme Court found that the parties to the contracts always presumed the owner
would pay the price due and did not contemplate a possible insolvency. Accordingly)
the Court found that the provisions did not create suspensive conditions, but "terms
for payment which at most retard the execution of the contractor's obligation for a
reasonable time." Southern States Masonry, 507 So. 2d 198, 202.
7 A suspensive condition is one in which the obligation may not be enforced until the
uncertain event occurs. LSA-CC. art. 1767.
8
While the relationship between Premier and Caillou is not that of a contractor-
subcontractor and the parties did not have a written contract, as they did in Southern
States Masonry, Caillou did contract with Premier to complete a job for Caillou's
customers. Moreover, Premier did not have a contract to complete the job with the
customers; in fact, each time Premier went out to complete the jobs, Premier
employees were not aware of the customer's identity. Similar to Southern States
Masonry, one of Caillou' s customers filed for bankruptcy and the other is now
deceased, preventing payment on Caillou' s invoices. 8 Thus, although Caillou claims
it is not responsible for paying the Premier invoices sent to Caillou, as in the
Southern States Masonry case, Caillou was responsible for collecting the outstanding
debts from the customers and then remitting payment to Premier. The fact that the
customers are no longer able to pay does not relieve Caillou of its obligation to remit
payment to Premier, who relied on Cail1ou to collect the sums owed in accordance
with their contractual relationship. As the trial court recognized, Premier had no
contractual relationship with the Caillou customers.
Accordingly, on the record before us, and particularly the nature of the
agreement between Premier and Caillou, we find no error by the trial court in its
finding that a contract existed between the parties and that the substance of the
agreement was that of the rental of Premier's services to Caillou.
Thus, these assignments of error lack merit.
Open Account Statute
(Assignments of Error #3 and #4)
Caillou further contends that it was error for the trial court to find that an open
account existed between the parties and, alternatively, that even if an open account
existed, Premier failed to prove its entitlement to attorney's fees under the statute.
8
Similarly, Caillou also filed a proof of claim in the bankruptcy proceeding ofits customer,
Galveston Bay Energy, as did the contractor in Southern States Masonry, 507 So. 2d 198, 200.
9
Louisiana Revised Statute 9:278l(D) provides that an open account "includes
any account for which a part or all of the balance is past due, whether or not the
account reflects one or more transactions and whether or not at the time of
contracting the parties expected future transactions." An open account necessarily
involves an underlying agreement between the parties on which the debt is based,
such that where there is no contractual relationship between the parties, there can be
no recovery on an open account basis. Bridges v. Citifinancial Auto Corp., 2018-
0734 (La. App. pt Cir. 1115/18), 266 So. 3d 939, 942; Accusess Environmental Inc.
v. Walker, 2015-0008 (La. App. l51 Cir. 12117/15), 185 So. 3d 69, 75. Moreover,
the mere creation of a debt owed to a party does not give rise to an action on an open
account. Inherent in the concept of an open account is that the account is for services
or goods rendered. Bridges, 266 So. 3d 939, 942.
In determining whether a contract falls under the open account statute, the
court must consider whether the total cost or price is left open or undetermined;
whether other business transactions between the parties existed; whether one party
extended a line of credit to another; whether there are running or current dealings;
and whether there are expectations of future dealings. However, the open account
statute does not require multiple transactions or for parties to anticipate future
transactions. Shamrock Management, LLC v. GOM Fabricators, LLC, 2018-0491,
p. 7 (La. App. pt Cir. 7/10/19) (unpublished), writ denied, 2019-01255 (La.
10/21/l9), 280 So. 3d 1171. The existence of a contract, and specifically an open
account, are questions of fact which are subject to the manifest error, clearly wrong
standard. Townsend v. Urie, 800 So. 2d 11, 15; Stobart, 617 So. 2d 880, 882.
Further, if a debtor "fails to pay an open account within thirty days after the
claimant sends written demand therefor correctly setting forth the amount owed,"
the debtor "shall be liable to the claimant for reasonable attorney fees ... when
judgment on the claim is rendered in favor of the claimant." LSA-R.S. 9:278l(A).
10
Caillou contends that this is not a suit on open account because Premier did
not extend a line of credit to Caillou, but to the customers. Further, Caillou contends
that it cannot be deemed liable for payment as the customers received the benefits of
Premier's services and Caillou did not receive any benefit from the work. Caillou
further contends that even if this is an open account, Premier failed to prove that its
entitlement to attorney's fees as provided in the statute because "[t]he record
contains no evidence of written demand on [Caillou] by Premier that would trigger
the thirty-day period." Conversely, Premier contends that even though Caillou did
not perform the services, Caillou was set to receive a benefit from this contract,
specifically ten percent of the invoices Caillou sent to its customers. Additionally,
Premier points out that its written demand letter was introduced at trial as Plaintiff's
Exhibit #1. This exhibit is a written demand letter, dated February 27, 2017, sent by
ce1tified mail with a return receipt, demanding payment of $70,855.00 under the
open account statute.
As addressed above, we conclude that an underlying contractual agreement
existed between the parties, namely, for the rental of Premier's services to Caillou.
The testimony indicates that Premier and Caillou have a standing relationship
wherein they often call each other in order to complete jobs for their customers when
they do not have the boats needed to complete the jobs themselves. 9 Once the work
was complete, Premier would issue an invoice to Caillou, not to the customer. Thus,
Premier clearly extended a line of credit to Caillou for the rental of Premier's
services and Caillou availed itself of such. Had,Caillou desired or contracted for a
9
Specifically, Chad Ronsonet, a co~owner of Premier, testified that Caillou rented a boat
from Premier ''[m]ore than a hundred times." Tim Ronsonet, also the co-owner of Premier,
testified that his testimony would be the same as Chad's, indicating he also agreed with Chad's
testimony as to the relationship between Premier and Caillou. Brooks Luke, a current employee
of Premier who used to work in operations at Caillou, testified that Caillou sent "more than
$300,000.00" of work to Premier in the year following the unpaid invoices. Finally, relying on
printouts of Caillou's accounts payable, Joan Cenac testified that in 2015, Caillou sent Premier
work totaling $935,853.81 and in 2016, Caillou sent Premier work totaling $382,454.83.
11
different relationship, Caillou could have informed Premier of the ultimate customer
and asked Premier to bill the customer, not Caillou. Instead, in order to protect
Caillou's relationship with its clients, Caillou expected to be billed by Premier, and
to be able to reap the benefit of the additional ten percent of the invoice. Thus,
Premier's rendering of services benefited Caillou's business and thus Caillou was
more than a mere conduit. Cf. Mega Transport, Inc. v. Kieffer, 526 So. 2d 460 (La.
App. 5th Cir. 1988).
Here, Caillou was set to receive money on the invoices and did not only act
as a conduit. While Caillou was going to transfer most of the money received from
the customers over to Premier, Caillou undisputedly was going to retain ten percent
of the funds as a "brokerage'' fee. Moreover, Premier's services to Caillou allowed
Caillou to complete the job for its customer without letting the customer know
someone else actually did the job, all of which was to ultimately benefit Caillou's
business and its relationship with its customers.
After hearing all of the testimony and reviewing all of the evidence, the trial
court found that an open account existed between the parties and that, because
Caillou did not issue payment after demand, it was liable to Premier for $70,855.00,
the balance of the invoices, as well as $11,00.00 in attorney's fees, which findings
are not manifestly erroneous. As the trial court recognized, the parties were
operating under an open account with a price scheme in place. Moreover, counsel
for Premier introduced Plaintiffs Exhibit #1 at trial, the written demand letter sent
to Caillou on February 27, 2017. The letter demanded the full amount owed, which
is also the amount that was recovered at trial. Further, the letter clearly stated that
all three outstanding invoices were attached to the letter. While the invoices do not
appear to be attached to the letter as it was introduced as Plaintiffs Exhibit #1, the
letter clearly indicates they were attached when the letter was sent to Caillou.
Moreover, Caillou did not object to the letter being admitted at trial as proof of
12
demand, nor did Caillou dispute the statement in the letter noting that the invoices
were attached at the time the letter was sent. Additionally, we note that Premier did
not institute suit in this matter until May 15, 2017, well beyond the thirty-day period
provided for in LSA-R.S. 9:2781(A). Accordingly, we find that the trial court did
not err in awarding attorney's fees to Premier as it clearly submitted proof of its
written demand in compliance with the statute.
Thus, these assignments of error also lack merit.
CONCLUSION
For the above and foregoing reasons, the trial court's February 19, 2019
judgment in favor of plaintiff/appellee, Premier Tugs, LLC, is hereby affirmed.
Costs of this appeal are assessed to the defendant/appellant, Caillou Island Towing
Company, LLC.
AFFIRMED.
13