84 Lumber Company v. F.H. Paschen, S.N. Nielsen, e

Case: 18-30170 Document: 00514808466 Page: 1 Date Filed: 01/24/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 18-30170 United States Court of Appeals
Fifth Circuit
FILED
January 24, 2019
84 LUMBER COMPANY,
Lyle W. Cayce
Plaintiff - Appellant Clerk
v.
CONTINENTAL CASUALTY COMPANY; SAFECO INSURANCE
COMPANY OF AMERICA; FIDELITY & DEPOSIT COMPANY OF
MARYLAND; F.H. PASCHEN, S.N. NIELSEN & ASSOCIATES, L.L.C.,
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
Before WIENER, SOUTHWICK, and COSTA, Circuit Judges.
WIENER, Circuit Judge:
Defendant-Appellee F.H. Paschen, S.N. Nielsen & Associates
(“Paschen”) was the general contractor on two contracts to build public schools
in Louisiana. Paschen subcontracted a portion of those projects to J & A
Construction Management Resources Company (“J & A”), which then sub-
subcontracted a portion of its work to Plaintiff-Appellant 84 Lumber Company.
84 Lumber filed two sworn statements of claim under the Louisiana Public
Works Act (“LPWA”), LA. REV. STAT. § 38.2242, alleging that Paschen and
J & A failed to pay for its work on those projects. 84 Lumber did not, however,
comply with the LPWA’s requirement that a subcontractor not in privity with
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a general contractor must send written notice of its claim by certified or
registered mail to the general contractor’s Louisiana office. 1 Instead of using
certified mail, 84 Lumber sent its notice by email. And instead of sending the
notice to Paschen’s Louisiana office, 84 Lumber sent it to Paschen’s lawyer.
The district court held that 84 Lumber’s notice did not comply with the
LPWA’s notice requirements in LA. REV. STAT. § 38:2247 (“§ 2247”). The district
court also concluded that the evidence established only that the notice was sent
but did not establish that it was received. We agree that the notice was
insufficient and affirm.
I.
We must first consider whether we have appellate jurisdiction. 2
84 Lumber appeals from a grant of partial summary judgment and a Rule 12(c)
judgment on the pleadings, both in favor of Paschen. Although no claims are
pending in the district court, Paschen, a defendant and third-party plaintiff,
voluntarily dismissed its third-party claim against J & A, the third-party
defendant, but did so without prejudice. The district court subsequently
entered a judgment that disposed of all the pending claims, but expressly
dismissed Paschen’s third-party claim against J & A without prejudice. In a
subsequent order denying 84 Lumber’s motion to amend or alter the judgment,
the court referred to the judgment as a “final judgment.” However, Paschen’s
third-party claim against J & A was not finally adjudicated because it had been
dismissed voluntarily without prejudice.
1 LA. REV. STAT. § 38:2247.
2 Castaneda v. Falcon, 166 F.3d 799, 801 (5th Cir. 1999) (“We must always be sure of
our appellate jurisdiction and, if there is a doubt, we must address it, sua sponte if
necessary.”).
2
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This court has jurisdiction over appeals from “final decisions of the
district courts.” 3 Under the Ryan rule, 4 “[a] voluntary dismissal of a case
without prejudice is not a final appealable decision.” 5 We have previously
summarized the basis for this rule and its “typical” operation:
[A] party cannot use voluntary dismissal without prejudice as an
end-run around the final judgment rule to convert an otherwise
non-final—and thus non-appealable—ruling into a final decision
appealable under § 1291.
Typically, the Ryan rule operates when a plaintiff has filed
multiple claims against a single party, or against multiple parties,
and the district court has dismissed some but not all of the claims.
Then, in an effort to preserve his remaining claims while
simultaneously appealing the adverse dismissal, the plaintiff
implores the district court to dismiss his remaining claims without
prejudice and enter a final judgment. Ryan eschews this practice
of manufacturing § 1291 appellate jurisdiction and disallows the
manipulative plaintiff from having his cake (the ability to refile
the claims voluntarily dismissed) and eating it too (getting an early
appellate bite at reversing the claims dismissed involuntarily).
This prohibition of quasi-interlocutory appeals applies equally to a
plaintiff’s attempt to use a Rule 41(a) voluntary dismissal to
construct the jurisdictional basis for appealing a district court’s
denial of a motion for remand. 6
We have not, however, addressed the instant situation in which the only claim
standing in the way of complete finality is a voluntarily dismissed third-party
claim.
3 28 U.S.C. § 1291.
4 This rule comes from Ryan v. Occidental Petroleum Corp., 577 F.2d 298 (5th Cir.
1978).
Griggs v. S.G.E. Mgmt. L.L.C., 905 F.3d 835, 840 (5th Cir. 2018).
5
Marshall v. Kansas City S. Ry. Co., 378 F.3d 495, 500 (5th Cir. 2004) (per curiam)
6
(citations omitted).
3
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In the only case we have found that addresses this issue, the Eleventh
Circuit held that the Ryan rule does not apply to third-party claims. 7 That
court reasoned that Ryan’s concern about manufactured jurisdiction is not
present for third-party claims. “Because the [plaintiff] appellant did not
participate in the voluntary dismissal of the remaining claims, there was no
collusion between it and the parties dismissing the remaining claim.” 8 The
court concluded that “[t]he voluntary dismissal, with or without prejudice, of a
defendant’s remaining third-party claim in an otherwise terminated lawsuit
does not bar the plaintiff’s right to appeal a judgment against it.” 9
The same is true here. The purpose of the Ryan rule is to prevent the
appealing party from manufacturing jurisdiction by using an “end-run around
the final judgment rule to convert an otherwise non-final—and thus non-
appealable—ruling into a final decision appealable under § 1291.” 10 But the
plaintiff, 84 Lumber, did not participate in Paschen’s dismissal of its remaining
third-party claim against J & A, so it did not manufacture appellate
jurisdiction. We agree with the Eleventh Circuit that the Ryan rule does not
apply to a voluntarily dismissed third-party claim.
We have jurisdiction.
II.
We next consider whether, under Louisiana law, notice of a claim
furnished by email to a party’s lawyer is sufficient to meet the LPWA’s notice
requirement. We hold that it does not.
7 CSX Transportation, Inc. v. City of Garden City, 235 F.3d 1325, 1328–29 (11th Cir.
2000).
8Id. at 1329.
9Id.; see also 15A WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 3914.9 (2d
ed. Supp. 2018) (describing CSX as appropriately “circumventing the occasional excesses that
result from the theory that a dismissal without prejudice does not establish finality”).
10 Marshall, 378 F.3d at 495.
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When “our subject matter jurisdiction is based on diversity,” we “apply
the substantive law of the forum state—here, Louisiana.” 11 “To determine the
forum state’s law, we look first to the final decisions of that state’s highest
court—here, the Louisiana Supreme Court. In the absence of a determinative
decision by that court on the issue of law before us, we must determine, in our
best judgment, how we believe that court would resolve the issue.” 12 “Under
Louisiana’s Civil Code, the only authoritative sources of law are legislation and
custom.” 13 “Unlike in common law systems, ‘[s]tare decisis is foreign to the
Civil Law, including Louisiana.’” 14 We are, however, “‘guided by decisions
rendered by the Louisiana appellate courts, particularly when numerous
decisions are in accord on a given issue’—i.e., jurisprudence constante—‘but we
are not strictly bound by them.’” 15
In Louisiana, legislation “is the solemn expression of the legislative will;
thus, the interpretation of legislation is primarily the search for the legislative
intent.” 16 “When a law is clear and unambiguous, and its application does not
lead to absurd consequences, it shall be applied as written, with no further
interpretation made in search of the legislative intent.” 17
The purpose of the LPWA “is to ‘protect those performing labor and
furnishing materials for public works’ rather than protecting the sureties on
the bond.” 18 The provisions of the Act “must be strictly construed.” 19
11 Boyett v. Redland Ins. Co., 741 F.3d 604, 607 (5th Cir. 2014) (citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938) and Holt v. State Farm Fire & Cas. Co., 627 F.3d 188 (5th Cir.
2010)).
12 Id. (citations omitted).
13 Id. (quoting Amer. Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254,
260 (5th Cir. 2003)).
14 Id. (citation omitted).
15 Id. at 607–08 (citations omitted).
16 Pierce Founds., Inc. v. Jaroy Const. Inc., 190 So. 3d 298, 303 (La. 2016).
17 Id. (citing LA. REV. STAT. ANN. § 1:4).
18 Id. at 305 (quoting Wilkin v. Dev Con Builders, Inc., 561 So. 2d 66, 70 (La. 1990))
19 Id. at 303.
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Claimants owed money for public works projects have two options for
relief under the LPWA. A claimant may either (a) file an action against the
general contractor and the sureties on the project’s statutory bond, or (b) seek
“the unexpended fund[s] in the possession of the public entity with whom the
original contract was entered into” by filing an action against the public
authority. 20 84 Lumber took the first option, proceeding against the project’s
statutory bond. Section 2247, which governs the notice requirements for
actions against a project’s statutory bond, requires a subcontractor to give
notice before it has a right of action on the bond:
[B]efore any claimant having a direct contractual relationship with
a subcontractor but no contractual relationship with the contractor
shall have a right of action against the contractor or the surety on
the bond furnished by the contractor, he shall . . . give written
notice to said contractor within forty-five days from the
recordation of the notice of acceptance by the owner of the work or
notice of the owner of the default, stating with substantial
accuracy the amount claimed and the name of the party to whom
the material was furnished or supplied or for whom the labor or
service was done or performed. Such notice shall be served by
mailing the same by registered or certified mail, postage prepaid,
in an envelope addressed to the contractor at any place he
maintains an office in the state of Louisiana. 21
84 Lumber had a contractual relationship with a subcontractor, J & A, but did
not have one with the general contractor, Paschen. 84 Lumber therefore had
to comply with § 2247’s requirements that the notice of claim be (1) served by
registered or certified mail (2) addressed to Paschen’s Louisiana office.
The parties do not dispute that 84 Lumber did not send notice of its
sworn statements of claim by registered or certified mail to Paschen’s
Louisiana office. 84 Lumber did neither. In an affidavit from its outside
20 Id. at 301 (quoting Wilkin, 561 So. 2d at 70).
21 LA. REV. STAT. § 38.2247.
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counsel’s legal secretary she stated that she personally (1) emailed copies of
the sworn statements of claim (2) to Paschen’s outside counsel. In the face of
this, 84 Lumber contends that Paschen’s receipt of actual notice satisfied
§ 2247’s notice requirements. 22
We conclude in our Erie guess that the plain language of § 2247
forecloses 84 Lumber’s contention. Section 2247 prescribes a specific, two-
prong method by which notice must be given: (1) by registered or certified mail
(2) to the general contractor’s Louisiana office. It says nothing about actual
notice, much less email to the general contractor’s lawyer. Because the LPWA
“must be strictly construed,” and the notice requirements are “clear and
unambiguous” and do not lead to absurd consequences, we must apply § 2247
as written. 23
Even if this straightforward statutory interpretation did not control,
there is no Louisiana Supreme Court decision or jurisprudence constante to
guide us. As the district court observed, no Louisiana appellate court has held
that actual notice alone satisfies § 2247’s requirements. Rather, the Louisiana
appellate decisions point in different directions.
Three cases point in 84 Lumber’s favor. In Bob McGaughey Lumber
Sales, Inc. v. Lemoine Co., Inc., a sub-subcontractor sent notice of its claim to
22 At the district court and on appeal, Paschen did not concede that it had actual notice
of the claim. The purported emails to its counsel are not in the record, and there is no record
evidence showing that Paschen’s counsel received the emails. The district court explained
that “[the legal secretary’s] affidavit establishes that she sent the email and its attachment,
but there is no evidence indicating that [Paschen’s counsel] received it, or that he brought it
to Paschen.” Like the district court, we find it “curious” that these emails are not in the
record. Perhaps the Louisiana legislature’s directive to use registered or certified mail—
which, unlike email, confirms receipt—was a conscientious attempt to avoid disputes like
these. See Bob McGaughey Lumber Sales, Inc. v. Lemoine Co., Inc., 590 So. 2d 664, 665 (La.
App. 3d Cir. 1991) (“[O]ne of the purposes of the certified mailing requirement is proof.”).
Instead of resolving the dispute about whether Paschen had actual notice, we assume,
arguendo, that it did and proceed to determine the legal issue.
23 Pierce Founds., 190 So. 3d at 303.
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the general contractor by regular mail instead of registered or certified mail. 24
The court held that § 2247’s notice requirements were satisfied “upon proof
that written notice . . . is actually served on the contractor within the statutory
delay and, if by mail, the service thereof is not rendered ineffective because the
notice is not by certified or registered mail.” 25
Similarly, in K Construction, Inc. v. Burko Construction, Inc., a sub-
subcontractor had made no effort to send the contractor written notice. 26 The
court reasoned that its task was “to determine if what the claimants did in this
case was sufficient to notify” the contractor, and held that the sub-
subcontractor could maintain its claim because its claim was included in the
subcontractor’s claim, “of which [the contractor] was notified.” 27
Most recently, in Nu-Lite Electric Wholesalers, LLC v. Axis Construction
Group, LLC, the court held that sending written notice, then suing, before
notice of acceptance or default did not undermine the claim. 28 It reasoned that
because the suit was ongoing when the public owner issued its notice of
acceptance, and the claimant had sent certified letters to the contractor
notifying it of its claims before it filed suit, the contractor had “actual notice of
the claim within forty-five days of [the] notice of acceptance.” 29 The actual
notice was sufficient even though the written notice was sent much earlier.
Pointing the other way, in Interstate School Supply Co. v. Guitreau’s
Construction & Consulting Co., Inc., a state court of appeal held that a
subcontractor could not maintain a cause of action because it sent its notice
24 590 So. 2d 664, 666 (La. App. 3d Cir. 1991) (“Receipt, however, is not at issue in the
case sub judice. The record contains a copy of the letters which show the date of receipt of
both letters. Further defendants admit timely receipt of McGaughey’s written notice . . . .”).
25 Id. at 667.
26 629 So. 2d 1370, 1374 (La. App. 4th Cir. 1993).
27 Id.28 249 So. 2d 10, 17 (La. App. 1st Cir. 2018).
29 Id.8
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one day late. 30 The court explained that the “specific language” of § 2247
“requires compliance with the notice requirements in order to proceed ‘on the
bond’” and that “clear language cannot be ignored.” 31 Although this decision
addressed the timeliness of the notice rather than its sufficiency, 32 it
nonetheless points toward a strict interpretation of the statute’s requirements.
No Louisiana court has held that an email to the contractor’s counsel is
sufficient to satisfy § 2247’s requirements. In all the foregoing cases, the
claimants came substantially closer to complying with § 2247 than did 84
Lumber. In those cases, unlike this one, the contractor’s actual notice of the
claim was undisputed: In Bob McGaughey, the claimant sent written notice by
regular mail rather than certified mail; in Burko, one claimant sent the
required statement of claim to the public owner, but it was deficient because it
was unsworn, and the other claimant’s claim was included within the first
claimant’s; and in Nu-Lite, the claimant followed § 2247’s notice requirements,
but did so too early.
Considering the clear text of the statute, the conflicting Louisiana
appellate decisions, and that in Louisiana, “[j]urisprudence, even when it rises
to the level of jurisprudence constante, is a secondary law source,” 33 we hold
that neither sending notice by email nor sending it to a general contractor’s
lawyer satisfies § 2247’s unambiguous requirements that (1) notice be sent by
registered or certified mail (2) to the general contractor at any place in
Louisiana that it maintains an office.
30 542 So. 2d 138, 139 (La. App. 1st Cir. 1989).
31 Id.32 Burko, 629 So. 2d at 1373.
33 In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (citation
omitted); see also Alvin B. Rubin, Hazards of a Civilian Venturer in Federal Court: Travel
and Travail on the Erie Railroad, 48 LA. L. REV. 1369 (1988).
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III.
84 Lumber also contends that its claims on the statutory bond are
“separate and distinct” from its claims on the release bonds executed by
Paschen. The district court dismissed the release-bond claims, concluding that
they were derivative of 84 Lumber’s statutory-bond claims. We agree. 84
Lumber was not in privity with Paschen, and the LPWA does not create a claim
on release bonds for subcontractors not in privity with the general contractor,
other than § 2247. 34 As we have explained, 84 Lumber did not satisfy § 2247’s
clear and unambiguous notice requirements. It therefore has no right of action
under the LPWA and may not recover on the release bonds related to those
claims.
IV.
We AFFIRM the district court’s judgment.
34See Wilkin, 561 So. 2d at 71 (“The effect of [the LPWA] is to give certain classes of
persons not enjoying privity of contract with the general contractor or with the governing
authority a claim nevertheless against the general contractor and his surety and in some
instances a claim against the governing authority itself.”).
10