SBL Construction, LLC v. Michael M. Eymard and Tram Investments, Inc.

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2018 CA 1691

Ir SBL CONSTRUCTION, LLC

VERSUS

MICHAEL M. EYMARD AND TRAM INVESTMENTS, INC.

DATE OF JUDGMENT. •
NOV 1 2, 2019

ON APPEAL FROM THE SEVENTEENTH JUDICIAL DISTRICT COURT
NUMBER 119854, DIVISION E, PARISH OF LAFOURCHE
STATE OF LOUISIANA

HONORABLE F. HUGH LAROSE, JUDGE

Christopher H. Riviere Counsel for Plaintiff - Appellee
Todd M. Magee SBL Construction, LLC
Thibodaux, Louisiana

Martin Stewart Bohman Counsel for Defendants - Appellants
Harry E. Morse Michael M. Eymard and Tram
New Orleans, Louisiana Investments, Inc.

Victor R. Loraso, III
Baton Rouge, Louisiana

BEFORE: McDONALD, THERIOT, AND CHUTZ, JJ.

Disposition: REVERSED IN PART; AFFIRMED IN PART.

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CHUTZ, J.

Appellants, Michael M. Eymard and Tram Investments, Inc. ( Tram), appeal

the trial court' s judgment against them, awarding $ 30, 000. 00 for the balance owed

on an open account in favor of appellee, SBL Construction, LLC ( SBL), and

denying relief on Tram' s reconventional demand against SBL. For the reasons that

follow, we reverse in part and affirm in part.

FACTUAL AND PROCEDURAL BACKGROUND

The evidence established that in September 2009, Eymard on behalf of Tram

a company that Eymard owns with his wife) and Frank Boura on behalf of SBL ( a

company that Boura owns) met at Eymard' s office to discuss the construction of a

bulkhead by SBL for Tram on Bayou Lafourche in Lafouche Parish. SBL utilized

one of its invoices to provide an estimate to Tram.' The cost of the construction of

the bulkhead was determined on a by -the -foot basis.

Boura provided two options for the bulkhead, with each option consisting of

different materials, and Tram selected the option that utilized thicker vinyl sheets

and bigger pilings. Although SBL was asked to provide a bid for a 280 -foot

bulkhead, Tram changed the design and requested additional footage. The parties

created no written documents to support the change. At the end of construction,

SBL submitted an invoice to Tram, dated August 3, 2010, requesting payment of

92, 244. 96, which reflected the construction of a bulkhead that was 336 feet.2

As of May 12, 2011, Tram had paid all but $ 30, 000. 00 of the amount SBL

invoiced. When SBL demanded final payment, Boura was advised by Tram that

the construction required remedial work because the bulkhead had bowed.

Although the invoice indicated the estimate was provided to " OMC," apparently denoting
Offshore Marine Contractors, another company owned by Eymard, it is undisputed that
ultimately, the bulkhead was constructed for Tram.

2 The per -foot charge for materials was $ 138. 00 and for labor was $ 202. 61. The invoice also
reflected undisputed charges of $2, 100. 00 for installation of some pilings outside the bulkhead
that were supplied by Eymard and $ 700. 00 to move the equipment to plant pilings, as well as a
credit of $25, 000. 00 for a deposit that Tram tendered before construction commenced.
2

Although Boura attributed the bowing to Tram' s backfilling with sand, because he

was advised by Tram that to collect the outstanding balance, he had to fix it and

since he wanted to straighten it out before leaving the construction site, SBL

undertook all the requests that Tram made. On August 16, 2011, and again on

October 17, 2011, SBL sent written demands for $30. 000. 00 to Tram after having

completed the remedial work, but the outstanding balance remained unpaid.

On March 22, 2012, SBL filed this lawsuit, naming Eymard and Tram as

defendants and alleging entitlement to the balance of $30, 000. 00. SBL specifically

averred the amount owed was due on an open account and sought reasonable

attorney' s fees. Tram answered the lawsuit and asserted a reconventional demand,

contending that SBL breached the parties' agreement by failing to perform in a

proper and workman -like manner and rendering a defective and substandard

performance. Tram alleged that its damages consisted of the cost of repair of the

bulkhead. Shortly thereafter, SBL voluntarily dismissed Eymard from the litigation

without prejudice.

The matter proceeded to a trial on the merits at which testimonial and

documentary evidence was adduced. On July 30, 2018, the trial court issued

written reasons for judgment, concluding that the parties' agreement was an open

account for which SBL was owed the balance due. The trial court also determined

that Eymard and Tram failed to prove that SBL' s construction of the bulkhead was

defective and, therefore, were not entitled to relief. On July 31, 2018, the trial court

signed a judgment that ordered Eymard and Tram to pay SBL the amount of

30, 000. 00 for the balance owed on the open account and denied Tram' s claims for

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relief on the reconventional demand. This appeal followed.'

LIABILITY OF EYMARD

Although the trial court cast Eymard in judgment, SBL does not dispute that

he had been dismissed from the lawsuit prior to the trial on the merits.

Accordingly, because SBL concedes that the portion of the judgment ordering

Eymard to pay $ 30, 000. 00 for the balance owed on the open account is erroneous,

that portion of the judgment is reversed.

TRAM' S LIABILITY FOR AN OPEN ACCOUNT

On appeal, without challenging the amount of liability imposed, Tram

asserts that the trial court erred in characterizing the parties' agreement as an open

account rather than a conventional obligation, noting that historically the courts

have not construed construction contracts as open accounts. Describing the

contract to construct the bulkhead as " a single transaction," Tram suggests that the

parties' agreement was for a specific price without the running of a line of credit or

expectations of future dealings between the parties. Thus, Tram avers the

agreement was not an open account and that the trial court' s conclusion to the

contrary was erroneous.

An open account " includes any account for which a part or all of the balance

is past due, whether or not the account reflects one or more transactions and

whether or not at the time of contracting the parties expected future transactions."

La. R.S. 9: 2781( D).

In R. L. Drywall, Inc. v. B & C Elec., Inc., 2013- 1592 ( La. App. 1st Cir.

5/ 2/ 14), 2014 WL 3559390, this court addressed whether an agreement to provide

drywall services in a warehouse building constituted an open account. The builder

3 The appealed judgment also decreed that Eymard and Tram show cause why they should not be
ordered to pay reasonable attorney' s fees to SBL. On September 12, 2019, the record was
supplemented with a judgment designating the appealed judgment as final for purposes of
immediate review, see La. C. C. P. art. 1915( B), pursuant to this court' s limited remand order of
August 30, 2019.

11

had provided a bid to the owners of the building for services and materials using an
invoice which estimated a total amount of $11, 012. 00. However, the project was

later expanded to include an additional ceiling and another room. In response to the

expansion, the builder provided a total bid of $12, 337. 00 for the modified project.

After completion of the job, the warehouse owners tendered a $ 5, 000. 00 check to

the builder as " a good -faith down payment" until the parties could sit down and

figure out the basis of the builder' s charges. The builder did not cash the check, but

instead filed suit. R. L. Drywall, Inc., 2014 WL 3559390, at * 1.

On appeal, the warehouse owners contended that the trial court had erred in

its conclusion that the agreement fell within the parameters of an open account

under La. R.S. 9: 2781 because the contract between the parties clearly

contemplated a single construction job rather than any on-going relationship and,

due to the failure of the builder to provide a reasonable explanation, the amount

owed was unclear. In addressing the owners' contentions, this court stated:

In Frey Plumbing Company, Inc. v. Foster, 2007- 1091 ( La.
2126108), 996 So. 2d 969 ( per curiam), a homeowner hired a plumbing

company to fix an underground pipe at her residence. The plumbing
company issued an invoice to the homeowner after the work was
performed. The bill remained unpaid for over six months. During that
time, the plumbing company sent written demands for payment to the
homeowner to no avail. The plumbing company filed suit to recover
payment and also sought an award of attorney' s fees under the open
account statute. The homeowner filed a motion for partial summary
judgment, arguing that the claim did not constitute a claim on open
account where the services were for a first and only transaction
between the parties, there was no line of credit, only one invoice was
submitted for a single -time payment, and no additional jobs were
anticipated. Frey Plumbing Company, Inc. v. Foster, 996 So -2d at
970. The trial court granted the [ motion for partial summary
judgment], finding the claim did not constitute a claim on an open
account. The court of appeal denied the plumbing company' s writ
application, finding no error in the trial court' s judgment. On review,
the Supreme Court determined that the trial court erred in finding that
a contract for open account could not exist between the parties merely
because there was only a single transaction between them and no
future transactions were contemplated. The Court noted that any
account which fits the definition of an open account, including but not
limited to an account for professional services, fits within the ambit of
the statute, reasoning that: " La. R. S. 9: 2781( D) must be applied as

5

written. Under a plain reading of the statute, there is no requirement
that there must be one or more transactions between the parties, nor is
there any requirement that the parties must anticipate future
transactions. To the extent the prior case law has imposed any
requirements which are inconsistent with the clear language of La.
R.S. 9: 2781( D), those cases are overruled."
Frey Plumbing
Company, Inc. v Foster, 996 So. 2d at 972.

Under Frey, which directs us to apply the language of [La.]
R.S. 9: 2781( D) as written ( i.e. , that an " open account" includes any
account for which a part or all of the balance is past due, whether or
not the account reflects one or more transactions and whether or not at

the time of contracting the parties expected future transactions), we
find the account herein fits the definition of an open account as pled
by plaintiff in his petition. The clear language of the statute states that
an open account " includes any account[,]" and nowhere in the statute

are construction accounts or contracts specifically excluded.

R. L. Drywall, Inc., 2014 WL 3559390, at * 5- 6.

In the case before us, the undisputed evidence showed that although the

parties clearly agreed to a by -the -foot price, the length of the bulkhead was not

determined prior to the time SBL undertook construction. Boura' s testimony

suggested that at some point during construction, Eymard indicated that Tram

wanted to extend the length of the bulkhead. Eymard stated that it was during their

initial discussions in September 2009, when SBL provided its bid, that he voiced

an interest in changing the design to include additional footage. According to

Eymard, Boura advised him that whatever additional bulkhead length Tram added

would come out by the foot." Eymard explained that Tram did an offset where the

south side of the bulkhead protruded a little further out than the north half of it.

Although Tram did not plead or advise SBL in writing, Eymard testified that on the

date of trial, the total length of the bulkhead was only 326 feet. He stated that he

had it measured twice the week before trial and that the 336 -foot length that SBL

claimed was " not the correct number."

Tram' s record of payments showing that Tram had an " Open Balance" of

30, 000. 00 due to SBL, as well as Boura' s testimony explaining the timing of

SBL' s receipt of payments, support the trial court' s determination that the

transaction between the parties was an open account. The parties negotiated an

agreement for construction that did not include a specific amount for the bulkhead

because the undisputed evidence showed that the total length was not contemplated

at the time they agreed to the per -foot price. SBL demanded payment of the

30, 000.00 outstanding balance as late as October 17, 2011, prior to filing suit.

That the account reflected only one transaction and that Tram did not intend to

engage SBL in future transactions are irrelevant to the characterization of the debt

as an open account under the plain language of La. R.S. 9: 2781( D). Accordingly,

we find no error in the trial court' s conclusion that Tram is liable to SBL for the

4
outstanding balance on the open account .

SBUS LIABILITY FOR A DEFECTIVE PERFORMANCE

Initially, we note that Tram attempted to have Howie Guidry admitted as an

expert witness in bulkhead construction and repair. Although Guidry had been

listed as a fact witness in conjunction with an estimate for repair of the bulkhead

that he had prepared for Tram, SBL objected to any expert testimony by him as to

causation of alleged defects in the bulkhead on the grounds that he had not been

disclosed as an expert witness prior to trial. The trial court sustained the objection

and limited Guidry' s testimony to the estimate he provided to Tram. Apparently,

since it is well settled that where a pre-trial order has not been complied with, it is

4 In determining whether a contract fell within the three-year prescription period for an open
account under La. C.C. art. 3494( 4), this court recently relied on Factor King, LLC v. Block
Builders, LLC, 193 F. Supp. 3d 651, 658- 59 ( M.D. La. 2016), to assist in its determination.
Shamrock Mgmt., LLC v. COM Fabricators, LLC, 2018- 0491 ( La. App. 1 st Cir. 7/ 10/ 19), 2019
WL 3025237, at * 4, writ denied, 2019- 01255 ( La. 10/ 21/ 19), --- So. 3d ----. Thus, focus was
given to whether the total cost or price was left open or undetermined; whether other business
transactions between the parties existed; whether one party extended a line of credit to another;
whether there are running or current dealings; and whether there are expectations of future
dealings, noting however, that the open account statute does not require multiple transactions or
for parties to anticipate future transactions. Id. Even if we were to apply these factors, we would
find no error by the trial court in its conclusion that Tram was liable to SBL for the balance of
30,000.00 owed on the open account. Unlike Shamrock Mgmt., here, based on the open and
undetermined price as a result of the unknown footage of the bulkhead, which was not
established in the parties' agreement prior to commencement of construction and, thus, resulted
in the running of a line of credit by SBL in favor of Tram, and given the statutory language
expressly allowing an open account " whether or not at the time of contracting the parties
expected future transactions," there is no error in the trial court' s determination that the parties'
transaction constituted an open account under La. R.S. 9: 2781( D).

7

within the trial court's discretion to disallow witnesses, expert or not, from

testifying, see Pittman v. Flanagan, 2019- 0038 ( La. App. 1st Cir. 9/ 27/ 19), ---

So. 3d ----, ----, 2019 wL 4729515, at * 5, on appeal Tram does not challenge the

trial court' s exclusion of Guidry' s expert testimony. Instead, Tram urges that it was

error for the trial court to require that it provide expert testimony to establish that

faulty materials or workmanship caused a defect in the bulkhead. Thus, Tram

claims the trial court committed legal error on the issue of whether SBL caused the

defect in the bulkhead. On appellate review, Tram maintains it is entitled to a

judgment finding that the bulkhead was inadequately built and awarding costs of

repair.

If an undertaker fails to do the work he has contracted to do, or if he does

not execute it in the manner and at the time he has agreed to do it, he shall be liable

in damages for the losses that may ensue from his non-compliance with his

contract. La. C. C. art. 2769. In order to recover damages from a contractor, the

owner must establish: ( 1) the defects exist, ( 2) that faulty materials or

workmanship caused the defects, and ( 3) the cost of repairing the defects. The

owner has the burden of proving each element of the claim by a preponderance of

the evidence. Matherne v. Barnum, 2011- 0827 ( La. App. 1st Cir. 3/ 19/ 12), 94

So. 3d 782, 789, writ denied, 2012- 0865 ( La. 6/ 1/ 12), 90 So. 3d 442. A trial court' s

factual findings will not be reversed unless manifestly erroneous or clearly wrong.

A reviewing court must determine whether the factfinder' s conclusions were

reasonable based upon the entire record. Stobart v. State, 617 So. 2d 880, 882- 83

La. 1993).

In rendering its judgment, the trial court stated the following:

This court was provided with evidence and testimony that the
bulkhead has bowed out into the bayou since its construction, but
because Mr. Guidry was not properly designated as an expert, he was
barred from giving his opinion as to the cause of any defect.
Therefore, without any proof that the construction of the bulkhead

N.

itself was defective, this court [ cannot] find that SBL is responsible
for any amount of repairs that may be needed on the bulkhead.

Thus, the trial court concluded that Tram failed to carry its burden of proving that

faulty materials or workmanship caused the bulkhead to bow.

The provisions of La. C. E. art. 702 provide that a witness who is qualified as

an expert by knowledge, skill, experience, training, or education may testify in the

form of an opinion. The criterion of admissibility of that testimony is whether the

particular specialized knowledge would " assist the trier of fact to understand the

evidence or to determine a fact in issue." See 1988 Comment ( a), La. C. E. art. 702.

In this case, the written reasons amount to an explanation by the trial court that it

needed an expert opinion to assist it in understanding the evidence relative to the

issue of whether any alleged defect was caused by faulty materials or workmanship

in SBL' s construction of the bulkhead. Because there was no abuse of discretion

by the trial court in excluding Guidry' s expert opinion, we disagree with Tram' s

characterization of the trial court' s perceived need for an expert opinion as legal

error.

Importantly, it is the judgment -- not the reasons for judgment -- that we

review on appeal. Judgments are often upheld on appeal for reasons different than

those assigned by a trial court. The written reasons for judgment are merely an

explication of the trial court' s determinations. They do not alter, amend, or affect

the final judgment being appealed. Walton v. State Farm Mut. Auto. Ins. Co.,

2018- 1510 ( La. App. 1st Cir. 5/ 31/ 19), 277 So. 3d 1193, 1199 ( citing Wooley v.

Lucksinger, 2009- 0571 ( La. 4/ 1/ 11), 61 So. 3d 507, 572). Thus, it is of no moment

that the trial court explained to Tram that it denied the relief requested in its

reconventional demand because it failed to provide expert testimony to assist in

drawing a correlation between SBL' s construction materials and workmanship and

any alleged defects. Whether we review the evidence to ascertain if the trial court

I

correctly determined that Tram failed its burden of proof as suggested in the

written reasons for judgment; or we attribute implicit findings based on the

evidence adduced at trial, there was no manifest error in the denial of relief on the

reconventional demand.

Tram maintains that Guidry' s testimony in relation with his explanation of

the repair estimate suggested that because larger and more pilings and larger and

more tie -backs would remedy a bowed -out bulkhead, " it must follow that the

bulkhead bowed out because of too -small pilings and too -small [ tie -backs]." But

the trial court was not manifestly erroneous in disregarding the inferences from

Guidry' s testimony to conclude that Tram failed to prove that the faulty materials

and workmanship by SBL' s construction was the cause of any bowing out of the

bulkhead.

Moreover, photographs which were admitted into evidence dated between

September 15, 2010 and March 10, 2011, along with Boura' s testimony,

established that at the time that SBL left the construction site, having concluded all

the remedial work that it undertook at Tram' s insistence, the bulkhead was straight.

And insofar as the condition of the bulkhead on the date of trial, Boura likewise

testified that it was " in straight condition." Indeed, Eymard admitted during his

testimony that the bulkhead was straight both on the date that SBL left the

construction site and the date of trial.

Additionally, Boura testified that it was the use of sand as backfill and

Tram' s placement of the sand that caused the bowing out of the bulkhead. Tram' s

witness and former employee, Wayne " Buck" Rogers, testified in conformity with

Boura on this point. Both Boura and Eymard agreed that the use of sand was not

within the estimate for construction and that it was Eymard who decided to use

sand as the backfill material despite Boura' s recommendation of oyster shells or

some other light weight material. This testimony and photographic evidence

10

constitute a reasonable evidentiary basis to support the trial court' s judgment

denying relief on the reconventional demand based on an allegedly bowed -out
bulkhead.

In addition to claiming that the bulkhead was defective because it was

bowed out, Tram asserted that the bulkhead had experienced erosion due to faulty

materials and workmanship in SBL' s construction of the bulkhead. Photographs

and the testimony of Tram' s witnesses, including Eymard, support this contention.

The trial court did not include any express findings regarding the erosion in its

written reasons for judgment. Although Tram submits that Guidry' s testimony that

he used " a fabric that would allow water but not sand or earth ... to pass through"

as a necessary material to prevent erosion and that " it stands to reason that its

absence caused the erosion," the trial court was free to disregard those inferences.

Its conclusion that Tram failed its burden of proving that faulty materials and

workmanship in SBL' s construction of the bulkhead was the cause of erosion was

not manifestly erroneous or clearly wrong.

Moreover, our review of the appealed judgment demonstrates that a

reasonable factual basis exists for an implicit conclusion by the trial court that

Tram failed to prove that the erosion experienced on the bulkhead was caused by

SBL' s faulty materials or workmanship. Insofar as the necessity of the fabric,

Boura testified that the vinyl sheeting used in construction of the bulkhead did not

mandate the use of such a fabric. Additionally, as with the bowed -out bulkhead,

Boura attributed the erosion on the bulkhead to Tram' s choice of sand, rather than

a lighter -weight material, as a backfill. It was within the trial court' s purview to

choose Boura' s explanation over inferences from Guidry' s recommendations for

repair of the bulkhead, and such a choice is neither manifestly erroneous nor

clearly wrong.

II

Accordingly, we cannot say that the trial court erred in denying Tram the

relief it requested in its reconventional demand. Because Tram failed its burden of

proving that that faulty materials or workmanship in SBL' s construction caused the

bulkhead to bow or erode, the trial court correctly denied Tram' s request for relief

asserted in its reconventional demand. And to the extent that the trial court credited

Boura' s version of the facts to conclude that it was the placement and use of sand

that created issues with the bowing out of the bulkhead and erosion, this too is a

permissible view of the evidence and supports the dismissal of the reconventional

demand.

DECREE

For all these reasons, the trial court' s judgment is reversed insofar as it

ordered Eymard to pay SBL the amount of $30, 000. 00 on the balance due on the

open account.' In all other respects, the judgment is affirmed. Appeal costs are

assessed against appellant, Tram Investments, Inc.

REVERSED IN PART; AFFIRMED IN PART.

Because we reversed the judgment against Eymard insofar as it ordered him to pay on an open
account and there is no other statutory or contractual basis alleged to support the imposition of
such an award against him, the trial court' s order directing him to show cause why he should not
pay attorney' s fees is likewise reversed. See Roofing Products & Bldg. Supply Co., LLC v
Mechwart, 2013- 1506 ( La. App. 1st Cir. 5/ 2/ 14), 2014 WL 2711793, at * 2 (" It is well settled
that an award of attorney fees is not allowed unless specifically authorized by statute or
contract."). See also La. R. S. 9: 2781( A) ( providing for reasonable attorney' s fees against a
person who fails to pay an open account within thirty days after the claimant sends written
demand therefor correctly setting forth the amount owed).

12

SBL CONSTUCTION, LLC STATE OF LOUISIANA

VERSUS COURT OF APPEAL

MICHAEL M. EYMARD AND TRAM FIRST CIRCUIT
INVESTMENTS, INC.
2018 CA 1691

McDonald, J. JAN 2 2 2020

While I agree with the majority, I write separately to lament the demise and

perhaps death of the regular contract, particular in construction matters. For many

years there has been a distinction between an open account and a contract for

services or construction. Frequently in a construction contract there are change

orders and changes to the original contract. That is the situation in the case before

us and I do not believe such changes should convert an ordinary contract into an

open account.

The classic open account is some sort of credit agreement, typically found with

credit cards. The merchant extends credit to the purchaser who pays either all or a

portion of the amount owed on a regular basis. An open account is analogous to a

credit account. Monsanto Company v. KT Farms Partnership through Aymond,

51, 740 ( La. App. 2 Cir. 11/ 15/ 17), 245 So. 3d 191, 201. KT Farms was a farming

operation that entered into a no -interest financing agreement with Monsanto to

purchase seed. When they failed to pay, Monsanto filed suit. The court of appeal

affirmed the trial court' s finding that the agreement was an open account.

This distinction between an open account and an account for services or

construction was found in Signlite, Inc. v. Northshore Service Center, Inc., 2005-

2444 ( La. App. 1 Cir. 2/ 9/ 07), 959 So. 2d 904. Signlite contracted to manufacture

and install a sign and awning at a convenience store operated by Northshore. A

deposit of half the contract price was paid by Northshore. After installation was

completed Northshore failed to pay the balance due and Signlite filed suit. The trial

court found the suit was on an open account. The contract provided that payment of

the balance was due upon completion of installation and provided for a service

charge of 1'/ 2 percent per month on past due amounts not paid within thirty days
from the date of invoice. Even so, the court of appeal reversed and remanded the

matter for other reasons. The appellate court found:

Certainly, an open account is a contract, but our jurisprudence has made a
distinction between open accounts and conventional obligations. A
contract is significantly different from an open account. A " contract" is

an agreement by two or more parties whereby obligations are created,
modified, or extinguished, thereby establishing a concurrence in
understanding the terms. An " open account," however, is an account in
which a line of credit is running and is open to future modification because
of expectations of prospective business dealings, and services are

recurrently granted over a period of time.

Signlite, 959 So. 2d at 907.

With the decision in Frey v. Foster, supra, the distinction between construction

contracts and open accounts has disappeared. What I find particularly troublesome

with Frey is that characterization of the contract (as an open account or not) is based

on whether payment is made timely, and not on the intent of the parties at the time

the contract was confected. The plumbing company agreed to perform the plumbing

services for a stated amount. There is no indication this amount was ever changed

or modified. After completion of the work, an invoice was sent to the homeowner

and the bill remained unpaid. The courts determined that the contract was an open

account because there was a balance due. This decision would transform any

contract into an open account simply because there was some dispute over the

amount owed.

I do not believe the case before us should be an open account, but feel the

majority is correct in light of Frey.

2