Lemoine Co. v. Durr Heavy Construction, LLC
206 So. 3d 244
La. Ct. App.2016Background
- Lemoine was general contractor on a Covington, LA office/athletic club project; Ceco and Durr were subcontractors. The owner recorded the last certificate of substantial completion on June 26, 2009.
- Owner Cypress Bend sued Lemoine (and initiated arbitration) in 2014 for alleged construction defects. Lemoine then sued Ceco and Durr on April 2, 2015 seeking indemnity/contribution under the subcontracts.
- Lemoine moved to stay litigation and compel arbitration under subcontract arbitration clauses that incorporate the AAA Construction Industry Rules.
- Ceco and Durr responded with peremptory exceptions of peremption under La. R.S. 9:2772, arguing Lemoine’s claims were time-barred (filed more than five years after registry of acceptance).
- The district court denied Lemoine’s motion to compel arbitration, found peremption on the face of the pleadings, and dismissed Lemoine’s claims. Lemoine appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court should stay proceedings and compel arbitration | Arbitration clause (incorporating AAA rules) delegates arbitrability (including peremption) to arbitrator | Subcontract does not clearly and unmistakably delegate issues raised by Lemoine’s suit; no arbitration was initiated by defendants | Court refused to compel arbitration; arbitration provision did not clearly delegate peremption for claims filed by Lemoine against subcontractors |
| Whether peremption under La. R.S. 9:2772 applies | Lemoine contends subsection C might save its claims (argued below) and that arbitrator should decide arbitrability | Ceco/Durr: claims are perempted because suit filed >5 years after registry of acceptance (June 26, 2009) | Court held claims were perempted as a matter of law; Lemoine’s suit (filed April 2, 2015) was beyond five-year peremptive period |
| Who decides arbitrability when a construction contract may be extinguished by peremption | Lemoine: incorporation of AAA Rule 9 is clear and unmistakable delegation to arbitrator | Ceco/Durr: if contract-based arbitration right is extinguished by peremption, there is no arbitration agreement to enforce; courts must decide peremption first | Court held that when peremption extinguishes the cause of action/contract, the court must decide peremption first; no arbitration where claim is perempted |
| Burden of proof on peremption at preliminary stage | Lemoine: peremption not evident; facts could bring subsection C into play | Ceco/Durr: peremption evident on face of pleadings (recorded completion date) | Court found peremption evident on face of pleadings; burden shifted and Lemoine failed to show exception to peremption |
Key Cases Cited
- Arkel Constructors, Inc. v. Duplantier & Meric, Architects, L.L.C., 965 So.2d 455 (La. App. 1st Cir.) (standards for reviewing motion to compel arbitration)
- Collins v. Prudential Ins. Co. of Am., 752 So.2d 825 (La.) (threshold inquiry for arbitration: valid agreement and scope)
- AT&T Techs., Inc. v. Comm. Workers of Am., 475 U.S. 643 (U.S. 1986) (arbitrator authority derives from parties’ agreement)
- Howsam v. Dean Witter Reynolds Inc., 537 U.S. 79 (U.S. 2002) (arbitrability is for courts unless parties clearly and unmistakably provide otherwise)
- Breaux v. Stewart Enterprises Inc., 883 So.2d 983 (La.) (arbitrability principles)
- Jasper Contractors, Inc. v. E-Claim.com, LLC, 94 So.3d 123 (La. App. 1st Cir.) (incorporation of AAA rules can be clear and unmistakable delegation)
- Cohen v. Audubon Constr. Corp., 404 So.2d 528 (La. App. 4th Cir.) (contract prescription/peremption can defeat enforceability of arbitration clause)
- Parker v. St. Tammany Parish Hosp. Serv. Dist., 670 So.2d 531 (La. App. 1st Cir.) (court decides whether arbitration agreement exists when underlying contract is time-barred)
- Naghi v. Brener, 17 So.3d 919 (La.) (nature of peremption and non-suspension rules)
- Ebinger v. Venus Const. Corp., 65 So.3d 1279 (La.) (date registry of acceptance triggers peremptive period)
- Carter v. Haygood, 892 So.2d 1261 (La.) (burden of proof on peremptory exception of peremption)
- Rando v. Anco Insulations, Inc., 16 So.3d 1065 (La.) (when peremption is evident on face of pleading, burden shifts)
- Stobart v. State through DOTD, 617 So.2d 880 (La.) (manifest error standard for factual findings)
- Lasseigne v. Schouest & Sons, Builders, 563 So.2d 371 (La. App. 1st Cir.) (purpose of La. R.S. 9:2772 to limit long-term liability)