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Date: 05-01-2020
Case Style:
L&G DRYWALL, INC. VERSUS THE GRAY INSURANCE COMPANY AS BONDING AGENT FOR INSITE NEW ORLEANS ONE, LLC
Case Number: 19-CA-441
Judge: Hans J. Liljeberg
Court: FIFTH CIRCUIT
COURT OF APPEAL
STATE OF LOUISIANA
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Plaintiff, L&G Drywall, Inc. (“L&G”), is in the business of drywall
installation. L&G asserts that it contracted with Thompson’s Drywall
(“Thompson”) to perform work on property owned by Insite New Orleans One,
L.L.C. (“Insite”) at 1300 Canal Street in New Orleans. According to L&G, its
employees supplied materials and performed work on Insite’s property in
November of 2017. L&G billed Thompson, as the general drywall contractor, for
its work in the amount of $43,776.00, but L&G did not receive any payment.
On or about December 11, 2017, pursuant to the Louisiana Private Works
Act, La. R.S. 9:4801, et seq., L&G filed a Statement of Claim and Privilege in the
amount of $43,776.00, against Insite’s property in the Orleans Parish Mortgage
Records. Shortly thereafter, on December 21, 2017, Insite, as principal, and the
Gray Casualty and Surety Company (“Gray Casualty and Surety”), as surety, filed
a Release of Lien Bond in the Orleans Parish Mortgage Records, requesting
cancellation of L&G’s Statement of Claim and Privilege pursuant to La. R.S.
9:4835.
On October 23, 2018, L&G filed this lawsuit against the Gray Insurance
Company (“Gray Insurance”), “as Bonding Agent for Insite New Orleans One,
L.L.C.” In its petition, L&G asserted that Gray Insurance was Insite’s surety on
the Release of Lien Bond and argued that “[p]ursuant to the contract of bond, the
Gray Insurance Company is justly and truly indebted to the plaintiff for the full
sum and amount of the lien and privilege.” In response, on January 18, 2019, Gray
19-CA-441 2
Insurance filed several peremptory exceptions, an answer, and affirmative defenses
to the petition. In its exception of no right of action, Gray Insurance asserted that
Gray Casualty and Surety, not Gray Insurance, issued the Release of Lien Bond
and thus, L&G has no right of action against it. It also argued that L&G has no
right of action because it failed to preserve its claim and privilege pursuant to La.
R.S. 9:4823(A). In its exception of peremption, Gray Insurance argued that L&G’s
claims under the Private Works Act are extinguished because it did not file suit
against the owner, Insite, before expiration of the one-year peremptive period
imposed by La. R.S. 9:4823(A). In its exception of no cause of action, Gray
Insurance argued that L&G did not have a cause of action against it because it is
not the entity that issued the Release of Lien Bond. Finally, in its exception of
nonjoinder, Gray Insurance argued that Thompson is an indispensable party and
should have been joined in this lawsuit.
On April 9, 2019, Gray Insurance’s exceptions came for hearing. At the
conclusion of the hearing, the trial court took the matter under advisement.
Thereafter, on April 29, 2019, the trial court rendered a judgment granting the
exception of no right of action, dismissing plaintiff’s claims with prejudice, and
finding the exceptions of peremption, no cause of action, and nonjoinder to be
moot. In its reasons for judgment, the trial court stated that L&G “has failed to
state a right of action” against Gray Insurance, because it did not name the proper
surety in connection with its Statement of Claim and Privilege. L&G appeals.
LAW AND DISCUSSION
On appeal, L&G argues that the trial court erred by granting Gray
Insurance’s exception of no right of action and dismissing its lawsuit. It claims
that although it filed suit against Gray Insurance, instead of Gray Casualty and
Surety as listed on the Release Lien Bond, these companies are “sister companies”
that share the same offices, the same attorneys, the same agents for service of
19-CA-441 3
process, and the same owners. It asserts that the factual allegations are identical
regardless of which company was sued, and it complains that the “coordinated
defense strategy of both companies is to prey on the confusion caused by their
names.” L&G also claims that it should be allowed to amend its petition to add
Gray Casualty and Surety as a defendant because it had notice of this lawsuit and
would not be prejudiced by the amendment.
Gray Insurance responds that the trial court correctly granted the exception
of no right of action, because Gray Insurance did not file the Release of Lien Bond
in this matter and thus, L&G filed suit against the wrong defendant. It contends
that L&G has no right against Gray Insurance under the Private Works Act or any
other provision of Louisiana law because Gray Insurance was not Insite’s surety.
It also argues that L&G has no right of action under the Private Works Act because
any such rights have been extinguished by L&G’s failure to sue Insite within one
year of the filing of its Statement of Claim and Privilege, as per La. R.S. 9:4823.
The determination of whether a plaintiff has a right of action is a question of
law, which an appellate court reviews de novo. Johnson v. Motiva Enterprises,
L.L.C., 13-305 (La. App. 5 Cir. 10/30/13), 128 So.3d 483, 488, writ denied, 13-
2791 (La. 2/14/14), 132 So.3d 966. The function of an exception of no right of
action is to determine whether the plaintiff belongs to the class of persons to whom
the law grants the cause of action asserted in the suit. Badeaux v. Southwest
Computer Bureau, Inc., 05-612, 05-719 (La. 3/17/06), 929 So.2d 1211, 1217. The
burden of proof of establishing the exception of no right of action is on the
exceptor. Roubion Shoring Company, L.L.C. v. Crescent Shoring, L.L.C., et al.,
16-540, 16-541 (La. App. 5 Cir. 5/17/17), 222 So.3d 921, 926.
The exception of no right of action assumes the petition states a valid cause
of action for some party and questions whether the plaintiff is a member of the
class that has a legal interest in the subject matter of the litigation. Marks v. Third
19-CA-441 4
Dist. Volunteer Fire Dept., 13-383 (La. App. 5 Cir. 12/30/13), 131 So.3d 1099,
1101, writ denied, 14-88 (La. 3/14/14), 135 So.3d 606; Lasalle v. G.E.C., Inc., 18-
564, 18-565, 18-566 (La. App. 5 Cir. 4/24/19), 271 So.3d 328, 333, writ denied,
19-859 (La. 9/17/19), 279 So.3d 378. An exception of no right of action does not
raise the question of the plaintiff’s ability to prevail on the merits or question
whether the defendant may have a valid defense. Cutitto v. Boyes, 97-63 (La. App.
5 Cir. 5/28/97), 695 So.2d 1080.
The Louisiana Private Works Act is designed to facilitate the construction of
improvements on immovable property by granting certain rights to enumerated
persons to assist in recovery of the costs of their work from an owner with whom
they lack privity of contract. Metropolitan Erection Co., Inc. v. Landis Const. Co.,
Inc., 627 So.2d 144, 148 (La. 1993); Simms Hardin Co., L.L.C. v. 3901 Ridgelake
Drive, L.L.C., et al., 12-469, 12-548, 12-607 (La. App. 5 Cir. 5/16/13), 119 So.3d
58, 65, writ denied, 13-1423 (La. 9/27/13), 123 So.3d 726. Because the Act is in
derogation of general contract law, it must be strictly construed. Simms Hardin
Co., L.L.C., 119 So.3d at 66. When interpreting the provisions of the Private
Works Act, care must be taken not to overlook the legislative intent and
fundamental aim of the act, which is to protect materialmen, laborers, and
subcontractors who engage in construction and repair projects. Id.; Morgan v.
Audubon Constr. Corp., 485 So.2d 529, 531 (La. App. 5 Cir. 1985).
La. R.S. 9:4802 of the Private Works Act provides, in pertinent part:
A. The following persons have a claim against the owner and a claim against
the contractor to secure payment of the following obligations arising out
of performance of work under the contract:
1) Subcontractors, for the price of their work.
In the present case, L&G was a subcontractor that performed work on
Insite’s property and was allegedly not paid by Thompson, the general drywall
contractor. As a subcontractor, L&G was in the class of persons granted a claim
19-CA-441 5
under the Private Works Act. Thus, L&G was a member of the class with a legal
interest in the subject matter of the litigation.
Gray Insurance argues that L&G does not have a right of action against it
since it was not the surety that issued the Release of Lien Bond. However, the
determination of whether a plaintiff has a right of action is not dependent on
whether or not the proper defendant was named in the petition.1
As previously
noted, an exception of no right of action does not question whether the named
defendant may have a valid defense. An exception of no right of action focuses on
whether this particular plaintiff has a real and actual interest in the action. Grubbs
v. Haven Custom Furnishings, L.L.C., 18-711 (La. App. 5 Cir. 5/29/19), 274 So.3d
844, 849.
In its exception of no right of action and on appeal, Gray Insurance also
argues that L&G’s claims are extinguished because it failed to file suit against
Insite within one year of filing its Statement of Claim and Privilege, pursuant to
La. R.S. 9:4823(A). L&G responds that the one-year peremptive period in La.
R.S. 9:4823(A) does not apply when the owner has posted a bond and the lien and
privilege have been released. It further claims that even if the one-year period
were to apply, filing suit against the surety is sufficient for compliance with La.
R.S. 9:4823(A). L&G argues that the trial court erred by holding that the one-year
period set forth in La. R.S. 9:4823(A) applies herein to establish that L&G does not
have a right of action.
Contrary to L&G’s assertion, the record does not show that the trial court
made a finding of whether or not the one-year period set forth in La. R.S.
9:4823(A) applies herein or whether or not L&G’s claims were extinguished due to
1 We note that the issue of whether the proper defendant was named may be raised in a motion for
summary judgment. A defendant’s motion for summary judgment may be filed at any time. La. C.C.P.
art. 966(A)(1).
19-CA-441 6
the lapse of time. Further, we note that resolution of these issues is also not proper
on an exception of no right of action.
The law clearly affords a remedy for this particular plaintiff under the
Private Works Act. Because L&G has an interest in the subject matter of this
litigation and the law affords it a remedy, we find that the trial court erred by
granting Gray Insurance’s exception of no right of action and dismissing L&G’s
lawsuit on these grounds. Accordingly, we reverse the trial court’s judgment.
2
L&G also argues that the trial court erred by dismissing its lawsuit rather
than allowing it time to amend its petition to name Gray Casualty and Surety as a
defendant. However, given our decision to reverse the trial court’s judgment
dismissing its claims, we pretermit discussion of whether or not L&G should have
been allowed to amend its pleadings.
Outcome: For the foregoing reasons, we reverse the trial court’s judgment granting
Gray Insurance’s exception of no right of action, and we remand for further
proceedings.
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Defendant's Experts:
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