Bayou Construction Group, LLC v. City of New Orleans, Tktmj, Incorporated, Cp Grace & Associates, Incorporated, Travelers Casualty and Surety Company of America, Jane Doe, John Doe, Jane Smith & John Smith

BAYOU CONSTRUCTION * NO. 2022-CA-0249
GROUP, LLC
*
VERSUS COURT OF APPEAL
*
CITY OF NEW ORLEANS, FOURTH CIRCUIT
TKTMJ, INCORPORATED, CP *
GRACE & ASSOCIATES, STATE OF LOUISIANA
INCORPORATED, *******
TRAVELERS CASUALTY AND
SURETY COMPANY OF
AMERICA, JANE DOE, JOHN
DOE, JANE SMITH & JOHN
SMITH

APPEAL FROM
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2019-05079, DIVISION “N-8”
Honorable Ethel Simms Julien, Judge
******
Judge Daniel L. Dysart
******
(Court composed of Judge Edwin A. Lombard, Judge Daniel L. Dysart, Judge
Rachael D. Johnson)

Stephen M. Smith
STEPHEN M. SMITH & ASSOCIATES, LLC
1425 North Broad Street
Suite 201
New Orleans, LA 70119

COUNSEL FOR PLAINTIFF/APPELLANT

Scott Hedlund
TKTMJ, INC.
100 Harbor Circle
New Orleans, LA 70126

COUNSEL FOR DEFENDANT/APELLEE, TKTMJ, INC.

Melissa M. Lessell
Keith J. Bergeron
Blair E. Boyd
DEUTSCH KERRIGAN, L.L.P.
755 Magazine Street
New Orleans, LA 70130

COUNSEL FOR DEFENDANT/APELLEE, C.P. GRACE &
ASSOCIATES, INC.

Seth A. Schmeeckle
Mathew D. Fraser
LUGENBUHL WHEATON PECK RANKIN & HUBBARD
601 Poydras Street
Suite 2775
New Orleans, LA 70130

COUNSEL FOR DEFENDANT/APPELLEE, TRAVELERS CASUALTY
AND SURETY COMPANY OF AMERICA

AFFIRMED

NOVEMBER 23, 2022

DLD This case arises out of a dispute concerning a Louisiana Public Works
EAL
RDJ project, the plaintiff, Bayou Construction Group, LLC (“Bayou”), appeals a district

court judgment, which: (1) granted (a) the peremptory exceptions of prescription

filed by defendant TKTMJ, Inc. (“TKTMJ”) and defendant Travelers Casualty and

Surety Company of America (“Travelers”); (b) the peremptory exception of

peremption filed by defendant CP Grace & Associates, Inc. (“CP Grace”); (c) the

peremptory exception of no right of action filed by defendant Travelers; and (d) the

peremptory exception of res judicata filed by defendant TKTMJ; as well as (2)

dismissed all claims against the defendants with prejudice. For the reasons that

follow, we affirm.

FACTS AND PROCEDURAL HISTORY

In 2017, the City of New Orleans (“the City”) let out for public bid a project

to replace the existing docks of the Municipal Yacht Harbor and install a new state

of the art floating dock system and a new two-story comfort station. One of the

bidding requirements for this project was a bid bond, which guaranteed a bidding

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general contractor’s ability to secure a payment and performance bond for the

value of the project.

In preparation for submitting its bid on the project, TKTMJ entered into

discussions with several potential subcontractors and suppliers as well as its

bonding agent, CP Grace, to secure the necessary bid bonds. CP Grace, in turn,

contacted Travelers to confirm that Travelers would underwrite the payment and

performance bonds if TKTMJ was successful in its bid. It was determined that

Travelers would underwrite, provided that all major subcontractors would also

provide commensurate payment and performance bonds in favor of TKTMJ for

their subcontract work.

On October 3, 2017, TKTMJ submitted its bid on the project in accordance

with Louisiana Public Bid Law. Following the bid opening, TKTMJ was

identified as the second lowest bidder and it submitted additional information,

including the Disadvantaged Business Enterprise (“DBE”) Compliance Form-1.1

That form identifies the DBE’s which, at the time of bidding, the low bidders

anticipate entering into subcontracts with and what their possible contract value

would be in order to determine if the bidders intend to meet the City’s DBE

participation goal. On DBE Form-1, TKTMJ listed possible subcontractors as

Bayou, SSE Metal Fabrications and Louisiana Energy Solutions, LLC.

1 DBE participation in the project is a “goal” and not a requirement.
There is an alternative form,
DBE Form-2, that bidders can submit showing their “Good Faith Efforts” to reach the DBE
participation goal if they fail to actually meet that goal.

2

Ultimately, the project was awarded to TKTMJ in February of 2018.2

Throughout February and March of 2018, discussions took place between TKTMJ

and representatives of several prospective subcontractors about the scope of work

that would be included in a subcontract, what materials and equipment would be

necessary, how long the payment terms would likely be in dealing with a public

entity and the need for bonding.

On March 17, 2018, TKTMJ and Bayou met at TKTMJ’s office to review

the project and Bayou’s capabilities. At the meeting, Bayou revealed that it did not

have the equipment necessary to perform the work of the project but intended to

acquire the equipment before the start of work. There were also several items not

in Bayou’s original proposal, which would “cost the City more.” By March 23,

2018, TKTMJ was actively seeking to assist Bayou with obtaining the required

subcontractor bond by putting Bayou directly in touch with CP Grace.

On April 27, 2018, Bayou revealed to TKTMJ that it had made no progress

in preparing for the project since the March meeting. Bayou also informed

TKTMJ that it would not be able to secure the required bond.3 TKTMJ then

offered to accept some additional risk and allow Bayou to provide an irrevocable

line of credit in lieu of a bond. Bayou, however, suggested a different possible

solution: TKTMJ could contract with Bayou, but then allow Bayou to subcontract

2 On October 12, 2017, TKTMJ protested the suggested award of the project to another bidder

and subsequently filed a writ of mandamus in Orleans Parish Civil District Court. In February
2018, Judge Kern Reese issued a judgment directing the City to award the contract for the
project to TKTMJ. TKTMJ, Inc. v. City of New Orleans, CA No. 2017-12291 (L-6).
3 On May 3, 2018, TKTMJ also received a letter from CP Grace confirming that Bayou “did not

meet the underwriting criteria or guidelines for bonding” and “suggesting” that a different
subcontractor who could provide the required bond be engaged.

3

all of the work to Cycle Construction, a non-DBE entity. TKTMJ rejected this

proposal.

On or about May 4, 2018, TKTMJ made the decision to pursue negotiating a

subcontract with a different certified DBE, namely APC Construction Company,

LLC (“APC”).4 On May 7, 2018, at the direction of the City’s Office of Supplier

Diversity (“OSD”), TKTMJ submitted a DBE Form-4, which contained the

paperwork required to identify to the City a change in the entities working with

TKTMJ to meet the DBE participation goal. Also on May 7, 2018, in an email in

response to a letter from Bayou, TKTMJ informed Bayou that TKTMJ had

engaged other subcontractors to perform the scope of work previously discussed

with Bayou and made it clear that TKTMJ would not be entering into a contract

with Bayou. On June 22, 2018, TKTMJ received formal approval from the OSD

acknowledging TKTMJ’s decision to subcontract with APC instead of Bayou.

On May 13, 2019, Bayou filed two almost identical lawsuits against TKTMJ

and the City in Orleans Parish Civil District Court. One was assigned to Division

L and the other was assigned to Division N. In the case assigned to Division N, CP

Grace and Travelers were also named as defendants. In response to the petition for

damages filed in Division N, the defendants filed peremptory exceptions of

prescription, peremption, no cause of action, and no right of action.

A hearing on the exceptions took place before the district court in Division

N on October 30, 2019. At the hearing, the district court granted Travelers’

4 TKTMJ entered into a sub-contract with APC on May 25, 2018.

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exception of no cause of action, but granted Bayou 30 days to amend its petition to

properly articulate fraud claims. At the close of the hearing, the district court took

the other exceptions under advisement. Bayou filed a supplemental and amended

petition for damages on November 30, 2019. On December 20, 2019, the district

court issued a judgment in favor of the defendants and against the plaintiff. The

district court granted the exceptions of prescription filed on behalf of the City,

TKTMJ, and Travelers; the district court also dismissed Bayou’s claims against

these defendants with prejudice. The district court also granted CP Grace’s

exception of peremption and dismissed the plaintiff’s claims against CP Grace.

Bayou appealed the district court’s judgment on February 18, 2019.

In the case in the Division L, TKTMJ raised separate exceptions against

Bayou. Although Bayou was properly served, Bayou did not file any opposition to

the exceptions or even appear in court. As a result, all claims in the lawsuit against

TKTMJ in Division L were dismissed with prejudice on January 24, 2020. This

judgment was never appealed.

On May 12, 2021, this Court vacated Division N’s December 20, 2019

judgment on procedural grounds and remanded the matter to the district court

because Bayou’s amended petition filed on November 30, 2019 was not considered

by the district court. Bayou Construction Group, LLC v. City of New Orleans,

2020-0353 (La. App. 4 Cir. 5/12/21), 320 So.3d 1219. However, this Court also

noted that "the Amended Petition does not provide any additional particular facts

with respect to Bayou’s tort fraud claim against Defendants.” Id.

5

After the case was remanded, a hearing took place on December 10, 2021,

where the remaining defendants5, TKTMJ, Travelers, and CP Grace, re-urged their

previously granted peremptory exceptions, with TKTMJ adding an exception of res

judicata based upon the final judgment from Division L. On January 10, 2022, the

district court denied TKTMJ’s, Travelers’s, and CP Grace’s motions to dismiss

Bayou’s amended petition as untimely. However, the district court granted: (1)

Travelers’s exception of no right of action and dismissed with prejudice all of

Bayou’s contract claims against Travelers; (2) TKTMJ’s exceptions of res judicata

and prescription and dismissed with prejudice all of Bayou’s claims against

TKTMJ; (3) Travelers’s exception of prescription and dismissed with prejudice all

of Bayou’s tort claims against Travelers; and (4) CP Grace’s exception of

peremption and dismissed with prejudice all of Bayou’s claims against CP Grace.

In light of its other rulings, the district court found that Travelers’s exception of no

cause of action moot. Finally, the district court declared that its January 10, 2022

judgment was a final judgment.

DISCUSSION

On appeal, Bayou raises the following assignments of error: (1) the district

court erred in granting Travelers’ and TKTMJ’s exceptions of prescription as

Bayou’s tort claims against defendants were filed within the one-year liberative

prescriptive period which did not commence until Bayou’s right of action in tort

came into being when the OSD removed Bayou from the project on June 22, 2018;

5 The City of New Orleans had been dismissed from this lawsuit.

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(2) the district court erred in granting defendants’ exceptions of prescription as to

Bayou’s contractual claims which were filed within the ten-year prescriptive

period for personal actions; (3) the district court erred in granting CP Grace’s

exception of prescription as the one-year prescriptive period provided in La. R.S.

9:5606(A) does not apply in cases of fraud and as Bayou’s fraud claims against CP

Grace were filed within the one-year prescriptive period that only commenced

when the OSD removed Bayou from the project; (4) the district court erred in

granting CP Grace’s exception of peremption as Bayou’s claims against CP Grace

were filed within La. R.S. 9:5606(A)’s one-year preemptive period which

commenced upon Bayou’s discovery of CP Grace’s tortious conduct; (5) the

district court erred in granting TKTMJ’s exception of res judicata in light of the

exceptional procedural circumstances in this case; and (6) the district court erred in

granting Travelers’ exception of no right of action as Bayou, a tort victim, has a

right of action against Travelers, an alleged co-tortfeasor.

Assignment of Error No. 1

In its first assignment of error, Bayou contends that the district court erred in

granting Travelers’ and TKTMJ’s exceptions of prescription claiming that

Bayou’s tort claims against the defendants were filed within the one-year liberative

prescriptive period6, which did not commence until Bayou was removed from the

project by the OSD on June 22, 2018. We find that this assignment of error is

contrary to the evidence in the record before this Court. “When evidence is

6 La. C.C. art. 3492.

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received on the trial of the peremptory exception of prescription, the factual

conclusions of the trial court are reviewed by the appellate court under the manifest

error-clearly wrong standard as articulated in Stobart v. State through DOTD, 617

So.2d 880 (La. 1993).” Dent v. Dent, 2016-1010, p. 2 (La. App. 4 Cir. 5/31/17),

221 So.3d 194, 196.

In the instant case, Bayou was a potential subcontractor that the general

contractor, TKTMJ, communicated with about the possibility of working on the

project to redevelop the old municipal yacht harbor. The trial court found that

there was no evidence of a contractual relationship between Bayou and TKTMJ or

any of the other defendants. Bayou was simply unable to meet certain financial

criteria for the award of a subcontract. Bayou also could not be bonded. This

necessitated TKTMJ’S finding another DBE subcontractor to fill the position that

Bayou hoped to secure. As such, it was TKTMJ who “removed” Bayou from the

project and not OSD. OSD did not have the authority or the ability to remove a

subcontractor from the project. Furthermore, it was on May 7, 2018, when

TKTMJ informed Bayou that it was no longer being considered, however, Bayou

did not file its lawsuit until May 13, 2019. “Prescription begins to run against a

claimant when he obtains actual or constructive knowledge of facts indicating a

cause of action.” Barbe v. American Sugar Refining, Inc., 2011-0544, p. 12 (La.

App. 4 Cir. 12/14/11), 83 So.3d 75. In the instant case, not only is Bayou’s claim

for any tortious act prescribed on its face, Bayou also had actual knowledge

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indicating a cause of action on May 7, 2018. Accordingly, we find no merit in

Bayou’s first assignment of error.

Assignment of Error No. 2

In its second assignment of error, Bayou contends that the district court erred

in granting the defendants’ exceptions of prescription as to Bayou’s contractual

claims which were filed within the ten-year prescriptive period for personal

actions. As stated above, the trial court found no evidence of Bayou having a

contractual relationship with any of the named defendants. Our review of the

evidence in the record before this Court reveals the same. “The existence or non-

existence of a contract is a question of fact, and the trial court’s determination of

this issue will not be disturbed unless manifestly erroneous or clearly wrong.”

Read v. Willwoods Community, 2014-1475, p. 6 (La. App. 5 Cir. 3/17/15), 165

So.3d 883 citing DePodesta v. Beaux, 2012-1594, p. 6 (La. App. 4 Cir. 5/29/13),

116 So.3d 1017, 1021. Accordingly, we find no merit in Bayou’s second

assignment of error.

Assignment of Error No. 3

In its third assignment of error, Bayou contends that the district court erred

in granting CP Grace’s exception of peremption. Bayou asserts that the one-year

peremptive period provided in La. R.S. 9:5606(A) does not apply in cases of fraud

and that Bayou’s fraud claims against CP Grace were filed within the one-year

prescriptive period that commenced when the OSD removed Bayou from the

project.

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Louisiana Civil Code Article 3458 states: “Peremption is a period of time

fixed by law for the existence of a right.” The peremptory exception of peremption

is a procedural device by which a defendant may obtain dismissal of an action that

is time-barred. See La. C.C.P. art. 923. In general, the party raising the

peremptory exception of peremption bears the burden of proof. Spott v. Otis

Elevator Co., 601 So.2d 1355, 1361 (La. 1992). However, if peremption is evident

from the face of the pleadings, it is the plaintiff who bears the burden of showing

the action has not been perempted. Id., (citing Lake Providence Equipment Co. v.

Tallulah Production Credit Assoc., 241 So.2d 506 (La. 1970)). On the trial of the

peremptory exception of peremption, evidence may be introduced to support or

controvert any of the objections pleaded, when grounds thereof do not appear from

the petition. See La. C.P.P. art. 931. When evidence has been introduced, the

court is not authorized to accept the plaintiffs’ allegations in the petition as true.

Waldrop v. Hurd, 39,855 p.7 (La. App 2 Cir. 6/29/05), 907 So.2d 890, 894.

La. R.S. 9:5606 A, which sets forth the time limitations for bringing a claim

against an insurance agent, provides in pertinent part:

no action for damages against any insurance agent . . . whether based
upon tort, or breach of contract, or otherwise, . . . shall be brought
unless filed in a court of competent jurisdiction and proper venue
within one year from the date of the alleged act, omission, or neglect,
or within one year from the date that the alleged act, omission, or
neglect is discovered. However, even as to actions filed within one
year from the date of such discovery, in all events such actions shall
be filed at the latest within three years from the date of the alleged act,
omission, or neglect.

In the instant case, the district court found that all of Bayou’s claims against

CP Grace were perempted by La. R.S. 9:5606 A. The evidence presented at the

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original hearing on the exceptions and made part of the record in this case

establishes that by May 7, 2018, Bayou had both actual and constructive

knowledge of the bonding requirement, CP Grace’s involvement in trying to secure

a bond, and that it would not be performing any work on the project. Bayou is also

precluded from alleging fraud in this appeal. The argument regarding fraud was

never raised before the district court and accordingly is now waived. Therefore,

we find no merit in Bayou’s third assignment of error.

Assignment of Error No. 4

In its fourth assignment of error, Bayou contends that the district court erred

in granting CP Grace’s exception of peremption as Bayou’s claims were filed

within La. R.S. 9:5606(A)’s one-year peremptive period which commenced upon

Bayou’s discovery of CP Grace’s tortious conduct. However, the record

establishes that Bayou had actual notice of its bond requirement and that CP Grace

had denied Bayou’s bond request more than one year before Bayou filed its lawsuit

on May 13, 2019. Bayou also had actual knowledge that it would not be

performing any work in connection with the project more than one year before

bringing this action. Accordingly, Bayou’s claims against CP Grace were

perempted.

Assignment of Error No. 5

In its fifth assignment of error, Bayou contends that the district court erred in

granting TKTMJ’s exception of res judicata in light of the exceptional procedural

circumstances in this case.

Bayou filed two lawsuits in Orleans Parish Civil District Court against

TKTMJ that were identical as to that defendant (one in Division N and the other in

Division L). As such, TKTMJ was compelled to respond to both lawsuits and filed

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exceptions in each case. In Division N, Bayou’s claims were twice dismissed and

twice appealed. In Division L, Bayou did not oppose TKTMJ’s exceptions. As

such, the trial court in Division L granted the exceptions and dismissed Bayou’s

claims against TKTMJ with prejudice. The judgment from Division L was never

appealed and is now final. These are not exceptional procedural circumstances.

The claims raised against TKTMJ in the lawsuit in Division L were identical

to those raised by Bayou against TKTMJ in Division N. Accordingly, there is a res

judicata effect upon Bayou’s claims against TKTMJ now and we find no error in

the district court’s granting TKTMJ’s exception of res judicata.

Assignment of Error No. 6

In its sixth assignment of error, Bayou contends that the district court erred

in granting Travelers’ exception of no right of action as Bayou, a tort victim, has a

right of action against Travelers, an alleged co-tortfeasor.

Travelers’ exception of no right of action sought to establish that Bayou has

no contract-based claims against Travelers under the performance and payments

bonds. In fact, Bayou stipulated that it was not asserting such claims, and

conceded that Travelers’ no right of action exception was to be granted. As

discussed in more detail above Bayou’s purported tort claim against Travelers was

separately disposed of by way of the exception of prescription. Bayou cannot now

complain that the district court erred in granting Travelers’ exception of no right of

action when Bayou conceded at the hearing that the exception dismissing all

contract claims against Travelers was to be granted. As such, this assignment of

error is without merit.

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CONCLUSION

For the above and foregoing reasons, we affirm the judgment of the district

court granting the various exceptions in favor of the defendants in this case and the

dismissal of Bayou’s claims against them.

AFFIRMED

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