SWC Services, LLC v. Echelon Construction Services, LLCSWC Services, LLC v. Echelon Construction Services, LLC
| ¾A рayment bond insurer appeals a trial court judgment against it that awarded sanctions to a subcontractor’s previous counsel personally after settlement of the underlying dispute. For the following reasons, we vacate in part the judgment of the trial court.
FACTS AND PROCEDURAL HISTORY
On January 18, 2007, Chenier Property Partners, L.L.C. (Chenier), as owner, and Echelon Construction Services, L.L.C. (Echelon), as general contractor, entered into a contract for the construction of the project known as Chenier Apartments lo
On March 6, 2009, SWC filed the present lawsuit against Echelon, Chenier, and Travelers to collect the unpaid balance, alleging that SWC provided labor and equipment to the project and that Echelon failеd to pay SWC the $122,331.63 outstanding balance. In Paragraph 3 of its Petition, SWC alleged that “Travelers executed a Payment Bond, which is also recorded with the Contract and in which Travelers assumed the role as surety оf all claims for labor and material used or furnished in performance of the Contract.” On April 20, 2009, Echelon and Travelers, through their counsel, answered the petition, specifically denying the allegations оf Paragraph 3. Further, as an affirmative defense in Paragraph 16 of their Answer, Echelon and Travelers alleged that “[t]he claims of SWC against Travelers are barred by the applicable provisions of lathe payment bond.” When SWC, through discovery, in May of 2009, tried to ascertain what provisions of the payment bond allegedly barred SWC’s claims, Travelers objected to the request, responding that the document was thе best evidence of its contents. On May 28, 2009, counsel for Travelers withdrew.
Thereafter, on August 18, 2009, SWC filed a Motion for Partial Summary Judgment and for Sanctions, seeking to have the payment bond declared valid and to sanсtion Travelers for having wrongfully filed pleadings that it knew or should have known were false and only for delay purposes. Travelers opposed the motion claiming that it was improper in that it sought to compel discovery responses instead of a judgment and, further, that SWC was not entitled to judgment as a matter of law. Travelers also opposed the motion for sanctions contending that its responses were accurate and were made in good faith and upon reasonable belief or inquiry, not with the purpose to cause undue delay.
A hearing was held on September 29, 2009, after which the trial court orally ruled, granting SWC’s motion for summary judgment and awarding sanctions against Travelers’ certifying attorney in the amount of $1,500.00. However, because the certifying attorney was not given notice of the hearing, the matter was reset for November 3, 2009. Meanwhile, on October 5, 2009, SWC settled all claims with Travelers. Upon discovering that SWC and Travelers settled the matter, counsel for SWC withdrew as counsel for SWC on October 20, 2009. Subsequently, after learning that the settlement proceeds were going to be deposited into the registry of the court, SWC’s former counsel filed a petition for intervention, on October 23, 2009, urging the court to retain one-third of the settlement amount. 1
At thе November 3, 2009 hearing, there was lengthy discussion between the trial
Judgment was signed on November 30, 2009, granting SWC’s motion for summаry judgment and confirming that the Travelers bond was a valid and enforceable Private Works Act bond under
DISCUSSION
At the time that sanctions were imposed in this matter 4 , LSA-C.C.P. art. 863 provided, in pertinent part:
A. Every pleading of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated. A party who is not represented by an attorney shall sign his pleading and state his address.
B. Pleadings need not be verified or accompaniеd by affidavit or certificate, except as otherwise provided by law, but the signature of an attorney or party shall constitute a certification by him that he has read the pleading; that to the best of his knоwledge, information, and belief formed after reasonable inquiry it is well grounded in fact; that it is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
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D. If, upon motion of any party or upon its own motiоn, the court determines that a certification has been made in violation of the provisions of this Article, the court shall impose upon the person who made the certification or the reprеsented party, or both, an appropriate sanction which may include an order to pay to the other party or parties the amount of the reasonable expenses | ¿incurred becаuse of the filing of the pleading, including a reasonable attorney’s fee.
E. A sanction authorized in Paragraph D shall be imposed only after a hearing at which any party or his counsel may present any evidence or argument relevant to the issue of imposition of the sanction.
Article 863 is derived from
The comments to Federal
In its appeal, Travelers claims that LSA-C.C.P. art. 863 does not provide for sanctions to the “mover’s attorney.” It asserts that Article 863 is unambiguous and runs only to the benefit of the party and, because SWC settled all claims with Travelers on October 5, 2009, the award of sanctions to SWC’s | fiprevious counsel was inappropriate. Chenier
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argues, however, that because LSA-C.C.P. art. 863 D provides that an appropriate sanction “may include an order to pay to the other party or parties the amount of the reasonablе expenses incurred because of the filing of the pleading, including a reasonable attorney’s fee,” the language makes no restrictions on sanctions to be imposed, including to whom the sanctions mаy be awarded. (Emphasis added.) We disagree. Being penal in nature, Article 863 must be strictly construed. The language regarding appropriate sanctions simply addresses one of the possible sanctions thаt may be imposed upon a party or parties, not to whom they can be paid. A similar conclusion has been reached by our brethren on the fourth circuit in
Green v. Wal-Mart Store # 1163,
96-1124, p. 3 (La.App. 4 Cir. 10/17/96),
We thus conclude that it was еrror for the trial court to award $1,500.00 in sanctions to the “Mover’s Attorney” in its judgment of November 30, 2009. Further, SWC did not pursue the sanctions claim following its settlement with Travelers, despite the reservation of rights in the judgment of dismissal allоwing it to do so. Accordingly, that portion of the judgment awarding sanctions must be vacated. 7
CONCLUSION
Based on the above, that portion of the November 30, 2009 judgment of the trial court, awarding sanctions to the “Mover’s Attorney” is hereby vacated. Costs of this
JUDGMENT VACATED IN PART; MOTION TO STRIKE DENIED.
Notes
. Former counsel also asked for an increase in the amount of аttorney fees awarded as sanctions.
. We note however that the mere reservation of the right to pursue sanctions cannot confer a right that does not exist under the law.
. We do not address the prоpriety of the judgment confirming the validity of the bond, as this issue has not been raised by the parties, nor has it been assigned as error.
. Louisiana Code of Civil Procedure Article 863 was amended by Acts 2010, No. 540, § I.
. Although
. Travelers has filed a motion to strike the opposition of Chenier or, alternatively a reply brief. We deny said motion and treat it as a reply brief, and note that our decision is based solely on the record before us and not on argument of counsel.
. While there may well be merit in the sanctions imposed on Travelers, based on our opinion, that issue is pretermitted.