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Alonso v. Westcoast Corp.

United States Court of Appeals, Fifth Circuit

April 8, 2019


          Appeal from the United States District Court for the Middle District of Louisiana

          Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges.


         After a jury trial, Westcoast Corporation was found liable for breaching a contract it entered with RCS Contractors, Inc. Among Westcoast's claims of error are the finding of a bad-faith breach, the language of the verdict form, and the award of attorney fees. We conclude there was one error, which was the amount of a penalty determined under the Louisiana Prompt Payment Act. We VACATE and REMAND for further proceedings as to the penalty. As a result of that reversal, we also VACATE and REMAND the award of attorney fees for reconsideration of the amount after the statutory penalty is reconsidered. In all other respects, we AFFIRM.


         This dispute arises out of the Army Corps of Engineers' West Roosevelt Street Sewer Force Main Relocation Project in Baton Rouge, Louisiana (the "project"). The Corps contracted with Garner, who is not a party to this suit. Garner in turn subcontracted the work to Westcoast, who then entered a subcontract with RCS. RCS was to "provide all labor, material, special equipment and supervision required to install and complete" the project according to the specifications provided by the Corps, and it was to be paid $496, 450. The parties expected the subcontract to be completed in 120 days.

         RCS began work in September 2010. Several interruptions slowed completion and increased the cost of the project. Several change orders documented increases in the subcontract price, which were primarily based on unanticipated costs.

         The first interruption began when it was discovered that certain existing physical joints on the sewer system would need to be bypassed and relocated. Work was put on hold in March 2011 pending a full redesign. Even after completion of the redesign, work could not be resumed until September 2011, when the flood stage of the Mississippi River fell to a safe level. The second period of interruption began in December 2011 and continued until January 2012 while a solution was developed to correct for leaking pipes.

         RCS stopped its work on the project in July 2012 without completing its final "punch list" work. In August 2013, RCS and its president, Roland Alonso, filed suit against Westcoast in the Middle District of Louisiana, claiming that Westcoast failed to submit change orders promptly, which prevented RCS from being compensated for the additional work it had performed on the project, and that Westcoast also failed to make prompt payments to RCS under the change orders it did submit. We will refer to the plaintiffs jointly as "RCS."

         After a jury trial and post-hearing motions, the district court entered an amended final judgment. It awarded the plaintiffs $304, 189 on the claim of a bad faith breach of contract, $66, 450 under the state Prompt Payment Act, $130, 517.60 in attorney fees, and $400 in costs.


         The ruling by the district court from which this appeal was taken was Westcoast's renewed motion for a judgment as a matter of law ("JMOL"). "We review de novo the district court's denial of a motion for judgment as a matter of law, applying the same standard as the district court." International Ins. Co. v. RSR Corp., 426 F.3d 281, 296 (5th Cir. 2005). A JMOL is appropriate when "a reasonable jury would not have a legally sufficient evidentiary basis to find for the [nonmoving party] on that issue." Fed.R.Civ.P. 50(a). "In resolving such challenges, we draw all reasonable inferences and resolve all credibility determinations in the light most favorable to the nonmoving party." Foradori v. Harris, 523 F.3d 477, 485 (5th Cir. 2008).

         The jury's "verdict should be affirmed 'unless the facts and inferences point so strongly and overwhelmingly in the movant's favor that reasonable jurors could not reach a contrary conclusion.'" EEOC v. EmCare, Inc., 857 F.3d 678, 683 (5th Cir. 2017) (citation omitted).

         Westcoast raises four issues, which we will discuss in the following order:

         I. Did the district court correctly enter judgment confirming the jury's verdict in favor of RCS on its bad faith breach of contract claim?

         II. Did the district court correctly decide not to ask on the verdict form whether RCS substantially breached the subcontract?

         III. Did the district court correctly grant judgment to RCS on their claim for a penalty payment under the Louisiana Prompt Payment Act?

         IV. Did the district court correctly grant attorney fees to RCS under the Prompt Payment Act?

         I. Bad Faith Breach of Contract by Westcoast

         Westcoast makes three arguments to support its claim that the district court erred in entering judgment on RCS's claim of a bad faith breach of contract: (A) RCS substantially breached the subcontract, and this constitutes an affirmative defense under Louisiana law; (B) the language of the subcontract specifically prohibits the assessment of delay damages; (C) it was entitled to back-charge RCS for the cost of flagmen fees and liquidated damages, because the subcontract assigned the cost of acquiring the flagmen to RCS and Westcoast was left to complete the work RCS left unfinished. We address each argument.

         (A) Substantial Breach

         Under Louisiana law, "one party's substantial breach, which would preclude his enforcement of the contract, is an affirmative defense that may be asserted by the other party." LAD Servs. of La., L.L.C. v. Superior Derrick Servs., L.L.C., 167 So.3d 746, 756 (La. Ct. App. 2014). Westcoast alleges that it presented "uncontroverted evidence" at trial that RCS substantially breached the subcontract, which it maintains supported an affirmative defense for its own breach. Specifically, Westcoast alleges that RCS's failure "to provide the as-built drawings, lien waivers, and certifications" as required under the subcontract constituted substantial breach. Westcoast relies on the testimony of Dr. Jerry Householder, an expert for RCS, to show that the president of RCS "abandoned the job" and "breached the contract by not providing final lien waivers."

         RCS responds with both a procedural and a substantive argument. First, it contends Westcoast waived any potential affirmative defense arising out of RCS's own breach because Westcoast never presented this argument to the district court. The principal failure is said to be in Westcoast's motion for JMOL, which challenged only the jury finding that Westcoast breached the subcontract. It did not argue that evidence of RCS's breach of the subcontract required a verdict in Westcoast's favor. Second, Westcoast's argument is said to fail on the merits because the ...

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