L&G Drywall, Inc. Versus The Gray Insurance Company as Bonding Agent for Insite New Orleans One, LLC

L&G DRYWALL, INC. NO. 19-CA-441

VERSUS FIFTH CIRCUIT

THE GRAY INSURANCE COMPANY COURT OF APPEAL
AS BONDING AGENT FOR INSITE
NEW ORLEANS ONE, LLC STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 788-842, DIVISION "N"
HONORABLE STEPHEN D. ENRIGHT, JR., JUDGE PRESIDING

March 18, 2020

HANS J. LILJEBERG
JUDGE

Panel composed of Judges Marc E. Johnson,
Robert A. Chaisson, and Hans J. Liljeberg

REVERSED AND REMANDED
HJL
MEJ
RAC

COUNSEL FOR PLAINTIFF/APPELLANT,
L&G DRYWALL, INC.
Carey R. Holliday

COUNSEL FOR DEFENDANT/APPELLEE,
THE GRAY INSURANCE COMPANY
Richard J. Tyler
P. Michael Boyd
Joseph J. Lowenthal, Jr.

LILJEBERG, J.

In this suit brought pursuant to the Louisiana Private Works Act, plaintiff

seeks review of the trial court’s judgment granting defendant’s exception of no

right of action and dismissing plaintiff’s claims. For the following reasons, we

reverse the trial court’s judgment and remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

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 1

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 2

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 3

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 4

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 5

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.

DECREE

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.

REVERSED AND REMANDED

2
The trial court found Gray Insurance’s remaining exceptions to be moot based on its ruling on the
exception of no right of action. Although these exceptions are no longer moot, we note that some
exceptions, such as the exception of peremption, cannot be addressed until the trial court determines,
pursuant to the proper procedural vehicle, whether Gray Insurance is a proper defendant.

19-CA-441 6

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

MARY E. LEGNON
FREDERICKA H. WICKER
CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON SUSAN BUCHHOLZ
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
HANS J. LILJEBERG
JOHN J. MOLAISON, JR. FIFTH CIRCUIT
MELISSA C. LEDET
JUDGES 101 DERBIGNY STREET (70053)
DIRECTOR OF CENTRAL STAFF
POST OFFICE BOX 489
GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX
www.fifthcircuit.org

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY
I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED
IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY
MARCH 18, 2020 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES
NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

19-CA-441
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE STEPHEN D. ENRIGHT, JR. (DISTRICT JUDGE)
CAREY R. HOLLIDAY (APPELLANT) RICHARD J. TYLER (APPELLEE) JOSEPH J. LOWENTHAL, JR. (APPELLEE)
P. MICHAEL BOYD (APPELLEE)

MAILED
NO ATTORNEYS WERE MAILED