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Industrial & Crane Services, Inc. v. Geda USA Elevator and Material lift Co., LLC

United States District Court, S.D. Mississippi, Southern Division

December 9, 2019

INDUSTRIAL & CRANE SERVICES, INC. PLAINTIFF/COUNTER-DEFENDANT
v.
GEDA USA ELEVATOR AND MATERIAL LIFT COMPANY, LLC and JOHN DOES 1-10 DEFENDANT/COUNTER-CLAIMANT

          MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

         BEFORE THE COURT is the [27] Motion to Dismiss for Lack of Subject Matter Jurisdiction filed by Defendant/Counter-Claimant GEDA USA Elevator and Material Lift Company, LLC (“GEDA”). In the Motion, GEDA argues that the contracts at issue in this lawsuit are subject to the Louisiana Public Works Act (“LPWA” or “the Act”), La. R.S. § 38:2241, et seq., because the contracts involved public entities in the State of Louisiana, and therefore this dispute must instead be brought as a concursus proceeding in Louisiana state or federal court. Plaintiff/Counter-Defendant Industrial & Crane Services, Inc. (“ICS”) disagrees, at least insofar as its own claims are concerned. The Motion is fully briefed. Having considered the submissions of the parties, the record, and relevant law, the Court finds that GEDA's Motion to Dismiss should be denied at this time.

         I. BACKGROUND

         Plaintiff ICS is in the business of erecting, maintaining, and refurbishing industrial cranes. GEDA is a manufacturer and supplier of industrial and construction elevators and material lifts. In 2017, ICS won bids for two elevator-replacement projects in Louisiana - one at the Port of New Orleans and the other at the Port of Lake Charles. ICS acquired surety bonds for the projects as required by the LWPA. La. R.S. § 38:2241(A)(2). In forming its winning bids bids, ICS accepted quotes for services from GEDA. These quotes formed the basis for the subcontractor agreements allegedly breached in this case. Although both elevator projects were completed to the satisfaction of the port entities, neither ICS nor GEDA is satisfied with the other's performance under their subcontractor agreements. ICS claims it was forced to pay for modifications to the port facilities that proved to be necessary for the proper installation of the elevators, despite conclusions to the contrary in GEDA's quotes, and has accordingly withheld payments to GEDA. GEDA says it performed in full under the subcontractor agreements and is due the wrongly withheld payments from ICS.

         This case was removed from the Circuit Court of Jackson County, Mississippi on March 29, 2019. On October 10, 2019, GEDA filed the instant Motion to Dismiss for Lack of Subject Matter Jurisdiction, which asserts that, because “[b]oth contracts were with public entities in the State of Louisiana, ”[1] the LPWA mandates the parties' claims be tried in a concursus proceeding brought in the Louisiana state or federal courts local to the Port of New Orleans and the Port of Lake Charles, respectively. (Mem. Supp. Mot. Dismiss 2-4, ECF No. 28.) ICS responds that the subcontract agreements between itself and GEDA are not public contracts and therefore not subject to the jurisdictional limitations imposed by the LPWA.

         II. DISCUSSION

         A motion to dismiss pursuant to Rule 12(b)(1) should be granted “when the court lacks the statutory or constitutional power to adjudicate the case.” Hooks v. Landmark Indus., Inc., 797 F.3d 309, 312 (5th Cir. 2015) (quoting Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998)). “When ruling on the motion, the district court may rely on the complaint, undisputed facts in the record, and the court's resolution of disputed facts.” Morris v. Thompson, 852 F.3d 416, 419 (5th Cir. 2017) (citing Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)). The burden of proof rests on the party asserting the existence of jurisdiction. Id. (citing Ramming, 284 F.3d at 161).

         Neither ICS nor GEDA disputes the existence of diversity jurisdiction under 28 U.S.C. § 1332. ICS is a citizen of Mississippi, no member of GEDA is a citizen of Mississippi, and ICS seeks damages in excess of $280, 000. (See Not. Removal 1-2, ECF No. 1.) In fact, both parties invoke § 1332 as this Court's basis for hearing the their claims and counterclaims. (See id.; Answer & Countercl. 4-5, ECF No. 2.)

         However, “[t]here are many cases where right and remedy are so united that the right cannot be enforced except in the manner and before the tribunal designated by the act” that created the right or remedy. Tennessee Coal, Iron & R. Co. v. George, 233 U.S. 354, 359 (1914). The LPWA provides

a special, speedy, and summary remedy to enable the authorities letting the work, or, on their default, any creditor of the contractor, to bring all parties concerned and having an interest together before one court and in one proceeding, to the end that their respective rights as between themselves and against the contractor and his surety might be recognized and adjusted.

Seal v. Gano, 107 So. 473, 475 (La. 1926). Accordingly, the Act mandates that unpaid claims on statutorily-bonded, public contracts “shall be tried in concursus” in “the proper court of the parish where the work was done.” La. R.S. § 38:2243. Relying on the Louisiana Supreme Court's decision in Seal v. Gano, two federal district courts outside Louisiana have interpreted this requirement to be a jurisdictional limitation on the ability of other courts to hear suits by one or more claimants against the contractor and surety.[2] See Rockport Contracting, LLC v. Chain Elec. Co., No. CIV.A. H-11-1853, 2012 WL 112601 (S.D. Tex. Jan. 11, 2012); Pipe Sys., Inc. v. Am. Mfrs. Mut. Ins. Co., 609 F.Supp. 571 (E.D. Mo. 1985). The question before the Court is thus whether the claims and counterclaims in this case are of the type restricted by the LPWA to a particular Louisiana court.

         As an initial matter, the Court assumes for the moment that, because GEDA has already initiated concursus proceedings in Calcasieu and Orleans Parishes, GEDA has satisfied the statutory perquisites for making a claim in a LPWA concursus proceeding. See Apex Bldg. Techs. Grp., Inc. v. Catco Gen. Contractors, L.L.C., 15-729 (La.App. 5 Cir. 3/30/16), 189 So.3d 1209, 1213 (citing La. R.S. §§ 38:2242(B), 38:2247). Neither party has directly addressed this issue. If GEDA has, in fact, failed to timely provide notice of and record its claim and initiate concursus proceedings, it has failed to preserve its statutory claim under La. R.S. § 38:2243. See id.

         The LPWA concursus proceeding protects “the right of all creditors to share ratably and in proportion to the amount of their claims in the common fund, the obligation of the surety on the contractor's bond.” Seal, 107 So. at 474.

It is a special remedy afforded a certain class of creditors for the concurrent enforcement of their claims and to regulate their rights as between themselves and against a contractor doing public work, and the surety on his bond. It is a statutory concursus authorized to be instituted under certain conditions by the public authorities letting the contract for the public work, or by any person having a properly recorded claim against the contractor who performed the work or caused the same to be done, in the event the authorities failed or neglected to exercise the right.
The bond furnished by the contractor for the benefit of the authorities having the work done and for the benefit of claimants against the contractor represents the fund upon and against which the rights of the creditors of ...

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