Metal Coatings, LLC v. Petroquip Energy Services, Lp

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

06-1118

METAL COATINGS, L.L.C., et al

VERSUS

PETROQUIP ENERGY SERVICES, L.P.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, DOCKET NO. 2005-0730
HONORABLE EDWIN D. RUBIN, DISTRICT JUDGE

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SYLVIA R. COOKS
JUDGE
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Court composed of Sylvia R. Cooks, Oswald A. Decuir, and Billy H. Ezell, Judges.

AFFIRMED, IN PART; AND REVERSED, IN PART.

R. Chadwick Edwards, Jr.
Edwards & Edwards
114 East Lafayette Street
Post Office Box 217
Abbeville, Louisiana 70511-0217
(337) 893-2884
COUNSEL FOR APPELLEE:
Metal Coating, L.L.C. and
Wade Rebardi

J. Lomax Jordan
Post Office Box 4321
1817 West University Avenue
Lafayette, Louisiana 70506
(337) 233-9984
COUNSEL FOR APPELLANT:
Petroquip Energy Services, L.P.

COOKS, Judge.

STATEMENT OF THE CASE

This is a suit on an open account. Metal Coatings, L.L.C. sued Petroquip

Energy Services, L.P. for the balance of $28,902 for metal coating services.

Petroquip answered the petition and asserted, in the form of a reconventional demand,

a claim for fraud and/or deceptive practices by Metal Coatings. Petroquip alleged

Metal Coatings overcharged it for painting services. Petroquip also asserted a third

party demand against Wade Rebardi, a part-owner in Metal Coatings and an employee

of Petroquip, alleging he breached his contract of employment. Metal Coating and

Rebardi filed a motion for summary judgment on the open account and a second

motion for summary judgment seeking the dismissal of the reconventional and third

party demand. The trial court granted the motion for summary judgment in favor of

Metal Coatings on the open account and rendered judgment in the amount of $28,902,

and $5,000 attorney fees. The trial court denied Metal Coatings’ motion for summary

judgment on the reconventional and third party demand. Both parties appealed. For

the reasons assigned below, we affirm the decision of the trial court granting the

motion for summary judgment in favor of Metal Coatings and reverse the decision of

the trial court denying Metal Coatings’ motion for summary judgment finding no

genuine dispute as to the issues raised in Petroquip’s reconventional and third party

demands.

STATEMENT OF THE FACTS

Petroquip Energy Services is an oil and gas service company engaged in the

manufacture of parts used in well completion. All parts manufactured by Petroquip

must be painted and baked prior to sale and delivery. The record indicates Petroquip

was experiencing some problems keeping qualified supervisory personnel. The

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testimony also establishes Petroquip had problems in the manufacturing department

and was experiencing trouble producing parts in a timely and cost efficient manner.

In December 2003, Bill Darnell, president of Petroquip, hired Wade Rebardi as the

Operations Manager. Darnell became aware Rebardi was part-owner of Metal

Coatings, a company engaged in providing coating services for manufactured parts.

At that time, Petroquip’s coating work was being done by Webco. Darnell was

dissatisfied with Webco pricing and he authorized Rebardi to contract with Metal

Coatings to provide coating services for the parts manufactured by Petroquip.

Metal Coatings provided coating services to Petroquip from January 2004 until

September 2004. Many of the Metal Coatings invoices generated during this time

period reflect the work to be performed for Petroquip was designated as “hot,”

meaning the coating had to be completed on an expedited schedule, sometimes

overnight. In fact, James Steen, co-owner of Metal Coatings, testified 98% of

Petroquip’s work was designated as “hot.” Rebardi testified Petroquip’s

manufacturing department did not produce the part timely and would be unable to

fulfill its contract for delivery of the part unless the coating work was done overnight.

The cost for expedited service is higher.

Sometime in September a conflict developed between Fred Wong, Petroquip’s

engineering manager, and Rebardi. Rebardi was terminated by Darnell but his salary

and benefits were paid until he obtained other employment. Rebardi’s replacement,

Ty Livingston, confirmed Petroquip parts were not being manufactured properly or

timely. He fired all manufacturing personnel and hired an all new staff. He then

examined the cost Petroquip was paying to Metal Coatings for coating services and

concluded it was too high. The payments on invoices ceased and suit was instituted

by Metal Coatings for the balance due on the account. Petroquip filed a

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reconventional demand against Metal Coatings for fraud and deceptive practices for

overcharging on invoices. Petroquip filed a third party demand against Rebardi for

breach of the contract of employment. Particularly, Petroquip contends Rebardi’s

contract requires its employees to “give his best efforts to promote advance in the

financial and technical side of the company.” Petroquip contends Rebardi was

responsible for approving invoices submitted by Metal Coatings, which charges were

higher than competitor prices for the same services. Metal Coatings and Rebardi

contend the work done for Petroquip was almost always “hot” or marked for

expedited delivery and the prices charged were in fact competitive with other

companies providing the same expedited services.

LAW AND DISCUSSION

Appellate courts review summary judgments de novo under the same criteria

that governed the trial court’s consideration of whether summary judgment is

appropriate. Chrysler Financial Company, L.L.C. v. Gene Ducote Automotive,

L.L.C., 04-1223 (La.App. 5 Cir. 3/1/05), 900 So.2d 119. A motion for summary

judgment is properly granted only if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with affidavits, if any, show that

there is no genuine issue as to material fact and that the mover is entitled to judgment

as a matter of law. La.Code Civ.P. art. 966. The statute governing an open account

is contained in La.R.S. 9:2781, which provides, in relevant part:

A. When any person fails to pay an open account within thirty
days after the claimant sends written demand therefor correctly setting
forth the amount owed, that person shall be liable to the claimant for
reasonable attorney fees for the prosecution and collection of such claim
when judgment on the claim is rendered in favor of the claimant.
Citation and service of a petition shall be deemed written demand for the
purpose of this Section. If the claimant and his attorney have expressly
agreed that the debtor shall be liable for the claimant’s attorney fees in
a fixed or determinable amount, the claimant is entitled to that amount
when judgment on the claim is rendered in favor of the claimant.

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Receipt of written demand by the person is not required.

B. If the demand is forwarded to the person by first class mail to
his last known address, a copy of the demand shall be introduced as
evidence of written demand on the debtor.

C. If the demand is made by citation and service of a petition, the
person shall be entitled to pay the account without attorney fees by
delivering payment to the claimant or the claimant’s attorney within ten
days after service of the petition in city court and fifteen days after
service of the petition in all other courts.

In order to prevail in a suit on an open account, the creditor must first prove the

account by showing that the record of the account was kept in the course of business

and by introducing evidence regarding its accuracy. Once a prima facie case has been

established by the creditor, the burden shifts to the debtor to prove the inaccuracy of

the account or to prove the debtor is entitled to certain credits. Jacobs Chiropractic

Clinic v. Holloway, 589 So.2d 31 (La.App. 1 Cir. 1991). Petroquip does not dispute

that Metal Coatings provided coating services on a credit account over a period of

months. Purchase orders in the amount of $51,165.19 are contained in the record.

Petroquip paid $22,263.19 of the total amount leaving a balance of $28,902.

Petroquip does not dispute the accuracy of the credit account, but asserts, as a

defense, that Metal Coating engaged in fraud and deceptive practices by overcharging

for coating services. Petroquip also alleges Rebardi, as both an employee of

Petroquip and co-owner of Metal Coatings, had an inherent conflict of interest when

he authorized the payment of the allegedly inflated invoices. Petroquip contends

Rebardi’s responsibility under his contract of employment was to further the financial

interest of Petroquip. Petroquip styled its defense to the suit on the open account as

a reconventional demand and third party claim. Metal Coatings then filed a motion

for summary judgment on the claims. The essential issue in this case is whether the

amount charged by Metal Coatings was fair reasonable and legally chargeable or

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whether Rebardi, as a co-owner of Metal Coatings, engaged in deception and fraud

in overcharging Petroquip at an unconscionable rate to further his own company’s

interest.

Under La.Code Civ.P. art. 966 the moving party on a summary judgment bears

the burden of proving that there are no genuine issues of material fact. Once the

mover makes a prima facie showing, the burden shifts to the nonmover to rebut the

showing made by the mover. Townley v. City of Iowa, 97-493 (La.App. 3 Cir.

10/29/97), 702 So.2d 323. In support of its motion for summary judgment, Metal

Coatings offered the deposition testimony of the two co-owners, Rebardi and James

Steen. Both Rebardi and Steen testified the amount charged by Metal Coatings was

in keeping with charges for expedited services. They testified Petroquip work orders

called for expedited delivery. In fact, Steen testified 98% of Petroquip’s work was

overnight. Sometimes the parts were delivered as late as 7:00 p.m. for completion by

the next morning. The parts received from Petroquip were just off the assembly line

and were often so hot they had to use insulated gloves. Steen testified Metal Coatings

would process Petroquip’s work with other customers in an effort to reduce costs.

Steen stated the price for expedited delivery was higher than for work done on a

normal delivery schedule. Rebardi testified Petroquip’s manufacturing process was

always behind schedule and the manufacturing equipment was always broken. Due

to manufacturing delays the parts had to be coated overnight in order to meet

Petroquip’s contract orders. The testimony of Ty Livingston confirmed that the

manufacturing department at Petroquip was always behind schedule. When he was

hired as Rebardi’s replacement, he fired all employees in the manufacturing

department and started with a whole new staff. It is undisputed the expedited services

rendered by Metal Coatings were requested by Petroquip and essential to Petroquip

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fulfilling its obligation to third party customers. Nevertheless, Petroquip submitted

price quotes from Webco, another coating company, apparently in an effort to show

Metal Coatings’ charges were unfair under the circumstances. While the Webco price

quotes reflected prices below Metal Coating, Petroquip did not produce any

documentary evidence or testimony that the Webco prices reflected service

comparable to Metal Coatings. When questioned regarding the Webco price quotes,

Ty Livingston admitted he has limited knowledge of the coating business, has not

done a market analysis of coating costs, cannot testify that Metal Coatings invoices

did not reflect expedited work and cannot testify that Metal Coatings charged more

than other companies for the same work. Further, Bill Darnell, president of

Petroquip, testified that he was aware when Rebardi was hired that he was a part-

owner of Metal Coatings. In fact, he advised Rebardi to use Metal Coatings. He has

no knowledge that Metal Coatings overcharged on invoices or whether the work was

designated for expedited service. We have reviewed the record and are satisfied

Petroquip will not be able to provide sufficient evidence to prevail on its

reconventional and third party demand, namely by proving the invoices charged by

Metal Coatings were not for expedited work and Rebardi and Metal Coatings engaged

in fraud and deceptive practices. Accordingly, we reverse the decision of the trial

court denying Metal Coatings’ motion for summary judgment. We affirm the

decision of the trial court granting Metal Coatings’ motion for summary judgment on

the open account.

The trial court awarded $5,000 in attorney fees. Louisiana Revised Statutes

9:2781 authorizes an award of reasonable attorney fees. The amount awarded is left

to the sound discretion of the trial court and should not be disturbed on appeal absent

a showing of abuse. Metropolitan Reporters, Inc. v. Avery, 95-504 (La.App. 5 Cir.

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11/28/95), 665 So.2d 547. There are several factors to be considered including the

ultimate result obtained, the nature of the case, the amount of time and skill involved

and the ability of the party liable to pay. Id. We find no abuse of discretion in the

trial court’s award of $5,000 in attorney fees.

DECREE

Based on the foregoing review of the record, we affirm the decision of the trial

court granting Metal Coatings’ motion for summary judgment on the open account.

We reverse the decision of the trial court denying Metal Coatings’ motion for

summary judgment on Petroquip’s reconventional and third party demand. We affirm

the award of attorney fees in the amount of $5,000. All costs of this appeal are

assessed to Petroquip Energy Services.

AFFIRMED, IN PART; AND REVERSED, IN PART.

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