Business Dispute

August 8, 2016

Arbitration Complexities Lead to Surprising Award in Louisiana Oil Dispute Arising Out of St. Charles and Jefferson Parishes

stone-judge-1219357-768x1024 Arbitration agreements are becoming more and more prevalent in modern business dealings. In theory, arbitration provides a means to quickly, quietly, and fairly remedy disputes between parties, especially when the dispute pertains to a niche field or complex issue. However, as a developing legal remedy, arbitration can still create unexpected outcomes for the parties involved. One such arbitration proceeding, regarding an owner/operator relationship at the Lake Salvador field in Jefferson and St. Charles Parishes, resulted in an award in excess of the original submission of audited damages.

Mack Energy had entered into a contract with ExPert Oil and Gas in order to exercise their mineral rights and drill for oil. Under their agreement, ExPert Oil was to act as an operator, which would oversee the drilling and production of oil while deducting the costs against Mack Energy’s revenue. After a dispute arose over the operations of the field, Mack Energy ordered an audit of ExPert Oil’s operations in which the auditor discovered approximately $1,400,000 dollars in unsubstantiated charges. Pursuant to their original contract, the two parties attempted to settle their dispute through mediation but could not agree on the proper resolution. See La. R.S. 9:4201. At the end of mediation, Mack Energy submitted an arbitration claim to ExPert which stated that fifty-two unsubstantiated charges remained open to dispute and these charges amounted to $977,598.44. In turn, ExPert acquiesced to the arbitration claim and the parties created a procedural agreement as to how the arbitration would be completed.The arbitrator, an accountant for the Council of Petroleum Accountants Societies, awarded Mack with $1,596,269 instead of the original amount in the arbitration claim. This amount was based on not only the original audit, but employment documents which had been requested fairly late in the arbitration process.

Because of the discrepancy between the amount in the claim and the amount for the award, ExPert sought to have the award vacated. ExPert claimed that the arbitrator had acted beyond his scope of power in considering the employment documents and, in doing so, awarded more than was allowed by his authority. In considering ExPert’s claims, the Supreme Court of Louisiana considered the procedural nature of the arbitration agreement and the amount of deference that should be given to arbitrators. See National Tea Co. v. Richmond, 548 So.2d 930, 932 (La. 1989).

August 7, 2016

Oral Loan Agreement Made During Romantic Relationship Survives Summary Judgment In Jefferson Parish

by Berniard Law Firm

for-the-love-of-money-1543612-1024x768 Love gone bad, broken promises and loans not written down come to a head in the following case in Jefferson Parish. In the case at hand, Mr. Palmisano and Ms. Nauman-Anderson had been romantically engaged for several months, during which time Mr. Palmisano allegedly credited Ms. Nauman-Anderson with nearly $26,000 dollars in loans. These loans were allegedly subject to an oral agreement at the time that they were advanced and no effort was made to memorialize the loans (put them in writing) until the romantic relationship between the parties had ended. Upon severing romantic ties, Mr. Palmisano provided Ms. Nauman-Anderson with a promissory note in order to commemorate their alleged agreement but Ms. Nauman-Anderson refused to sign the note, claiming that the loans were in fact gifts. In response, Mr. Palmisano brought suit for a breach of contract.

Following a summary judgment granted by the Twenty-Fourth trial court of Jefferson Parish the case was dismissed. In dismissing Mr. Palmisano’s suit, the trial court affirmed Ms. Nauman-Anderson’s theory that the Louisiana Credit Agreement Statute precluded claims against her. See Louisiana Credit Agreement Statute, La. R.S. 6:1122

Ms. Nauman-Anderson claimed that the Louisiana Credit Agreement Statute provided a complete defense because the promissory note was unsigned and the statute does not allow an action to be maintained based on an oral promise. Mr. Palmisano appealed the trial court’s decision to the Louisiana Fifth Circuit of Appeal.

August 6, 2016

Judgment in New Orleans Painting Auction Lawsuit Annulled

by Berniard Law Firm

ancient-painting-1550352-768x1024 When a person feels wronged, they tend to turn to the judicial system in hopes to find a solution. An important part of making sure an appropriate solution is reached, is that both parties have a chance to plead their case. In a matter involving the sale of a painting, the defendants did not respond to a lawsuit brought against them but were still successful in having a judgment rendered against them annulled.

Amanda Winstead, is the owner Amanda Winstead Fine Art (AWFA), a fine art appraiser, consultant, and a broker. She has been buying and selling paintings from collectors in the New Orleans area since 1996. Stephanie Kenyon, is the president of an auction house located in Maryland, Kenyon & Associates, and Sloans & Kenyon.

In February of 2013, Ms. Winstead purchased an oil painting on canvas after winning the bid she submitted by telephone at an auction held by Sloans & Kenyon. Ms. Winstead forwarded a check to Sloans & Kenyon for the total cost of $21,500.00 via U.S. Priority Mail. The painting was never delivered to Ms. Winstead, and Sloans & Kenyon claimed to have misplaced it somewhere in the auction house.

August 3, 2016

New Orleans Breach of Contract Between Subcontractors Centers on Contract Payment Provision “Pay if Paid” or “Pay when Paid”

by Berniard Law Firm

construction-workers-1215154-1024x738 Construction contracts can be confusing because contractors often use many subcontractors to carry out the terms of the contract. This is why when a dispute arises those involved in construction contracts need the best lawyer possible to untangle contractual provisions especially in the context of payment to subcontractors.

The Dryades Young Men’s Christian Association and Ellis Construction, Inc. entered into a contract for a project known as the Dryades YMCA Natatorium and Wellness Center in New Orleans, Louisiana. Ellis then entered into a subcontract with Rotolo Consultants, Inc. (RCI). RCI formed a contract with Tymeless; Tymeless was a subcontractor of the first subcontractor, RCI. After performing the terms of its subcontract, Tymeless invoiced RCI. Although RCI made a partial payment, RCI did not pay Tymeless completely. In its lawsuit, Tymeless claimed that RCI was liable to it for the full amount of the contract, plus interest, attorney’s fees, and costs. In response to Tymeless’ lawsuit, RCI filed a dilatory exception of prematurity, based on the payment provision in its subcontract with Tymeless: “Payments are to be made as follows: 90% of Sub-Contractorís approved invoices or pay request will be paid subject to the conditions following, after payment by the Owner for Sub-Contractor’s work. Retention of 10% will be released upon satisfactory completion of this contract and release of final payment by the Owner.” RCI argued that because of this provision, “unless and until” Ellis paid RCI, RCI could not pay Tymeless the amount Tymeless wanted. The district court in New Orleans found that the contract had a “pay-if-paid clause” and dismissed the lawsuit filed by Tymeless.

On appeal, the issue was whether the provision in the subcontract was a “pay-if-paid” clause or a “pay-when-paid” clause. Most courts now treat pay-when-paid clauses differently than pay-if-paid provisions. A “pay-when-paid” clause creates a window of time in which the general contract has to pay the subcontractor. The general contractor has to pay the subcontractor within a reasonable time, even if the general contractor does not receive payment from the owner. A “pay-when-paid” clause can be interpreted in two ways: setting a condition before payment, or fixing a specific point in time at which payment is due. Most states hold the view that “pay-when-paid” clauses function as time mechanisms, and not as a condition precedent. The more restrictive “pay-if-paid” clause indicates that the general contractor is only required to pay the subcontractor if and to the extent that the general contractor has received payment from the owner for the subcontractor’s work. In other words, the risk of nonpayment is transferred from the general contractor to the subcontractor. Louisiana law aligns with the national viewpoint of a “pay-when-paid” clause; under Louisiana law, such a payment clause sets a reasonable time for payment. Southern States Masonry, Inc v. J.A. Jones Constr. Co., 507 So. 2d 198 (La. 1987). On the other hand, “pay-if-paid” clauses create a condition precedent to the subcontractor’s payment. Imagine Constr., Inc. v. Centex Landis Constr. Co., Inc., 707 So. 2d 500 (La. App. 1998).

July 22, 2016

Limited Liability Protects Company Member in Allen Parish Products Liability Case

by Berniard Law Firm

build-4-1213636-768x1024 Some forms of business entities protect their members from certain liabilities and legal actions that might be taken against them. One of these forms is a limited liability company. The Louisiana Third Circuit Court of Appeals recently decided that the protection afforded under this form of company was enough to protect the defendant from going forward to full trial.

In a case out of Allen Parish, the Louisiana Court of Appeals for the Third Circuit affirmed the District Court’s order for summary judgment. Granting summary judgment is a decision by the court “designed to secure the just, speedy, and inexpensive determination of every action” allowed under the Code (La.Code Civ.P. art. 966). If a party to a case makes a motion for summary judgment the court can decide whether the case should go forward for a full trial on the merits of the case. If, given the material facts of the case, the court can determine that there is no genuine issue and the party moving for summary judgment is entitled to the judgement as a matter of law, the motion should be granted.

The plaintiffs, filed their action against Strong Built International, LLC, Ken Killen who was sole member/manager of Strong Built, and various other entities. The Plaintiffs claim that their father died from injuries resulting from a deer stand falling when the straps failed and they are seeking damages under the Louisiana Products Liability Act.

January 12, 2014

Personal Jurisdiction Reviewed in Case With International Implications

by Berniard Law Firm

The U.S. Court of Appeals for the Fifth Circuit affirmed a judge’s dismissal of the People’s Republic of China and a Chinese company, Xiamen, from litigation in the U.S. District Court for the Eastern District of Louisiana. The appeals court agreed with the trial court that the federal judiciary lacked personal jurisdiction and subject matter jurisdiction over the Chinese company and the PRC, respectively. The result was that the district court could not enforce an arbitral award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention.

The underlying issue is a contract dispute between Covington Marine Corporation and Xiamen Shipbuilding. Pursuant to their contract’s arbitration clause, the dispute went to arbitration under the rules of the London Maritime Arbitration Association. The tribunal found neither side liable, but issued a separate award requiring Covington to pay 40% of the costs and Xiamen 60%. Xiamen then filed a petition in a Chinese court to have the liability award recognized and enforced. Covington did the same with the costs award.

Meanwhile, Covington appealed to the English High Court. The High Court found Xiamen liable, ordered Xiamen to pay 100% of the costs to Covington, and sent back the case to the tribunal for modification of the award. The arbitral tribunal changed their ruling and Covington petitioned the Chinese court to recognize the new awards.

January 7, 2014

Louisiana Medical Malpractice Case Examines Federal Antidumping Laws

by Berniard Law Firm

A recent case arising from occurrences in West Carroll Hospital considers the Louisiana and federal antidumping laws. In addition, it also explains the requirements for a case under medical malpractice. Several hospitals were involved in the case, but only two were actually involved in the suit. A woman who had serious kidney and urinary problems was admitted to West Carroll Hospital; however, once the hospital realized that they did not have the specialized equipment to treat her, they desperately tried to find somewhere to transfer her that did have the ability to help her. After several days of miscommunications, the woman died because they could not transfer her fast enough to address her medical issues. Her six daughters then attempted to find some kind of remedy against the hospitals for the wrongful death of their mother.

In Louisiana, La. R.S. 40:2113.4-2113.6, the “antidumping law,” requires hospitals to take patients who need emergency services and live in the territorial area regardless of whether they are able to pay for their care or if they have insurance. Federal law has the same type of requirement under the Emergency Medical Treatment and Active Labor Act. The Emergency Medical Treatment and Active Labor Act even specifies that hospitals cannot turn away patients who have Medicare or Medicaid, and hospitals cannot discriminate based on race, religion, economic status, or national ancestry.

The Emergency Medical Treatment and Active Labor Act further defines “emergency” as a “physical condition which the person in imminent danger of death or permanent disability.” The definition of “emergency services,” then, is “those services which are available in the emergency room and surgical units in order to sustain the person’s life and prevent disablement until the person is in a condition to travel.” Louisiana law requires that the patient be stabilized before they are moved to another facility. However, the Louisiana antidumping law does not permit a private cause of action. That is, an individual cannot sue the hospital for a violation of this law. Even if they could, however, the first hospital, West Carroll, admitted her without incident, so there would be no claim under the antidumping law.

December 20, 2013

Employer-Employee Relationship Must Be Defined In Car Accident Lawsuits

by Berniard Law Firm

Under the respondeat superior legal theory, an employer can be held liable for his employees’ acts that occur within his scope of employment. This means that a truck company, for example, may be held responsible for an accident caused by one its drivers who was speeding or intoxicated while driving his route. This doctrine can be complicated when questions arise as to whether or not the employee was within the scope of his employment, or whether the person who caused the injurious accident was in fact an employee.

To determine scope of employment, one must look to what the employer pays the employee to do and what, exactly, the employee was doing when the accident occured. If a truck driver deviated from his route to go to a bar, for example, then it will likely be determined the driver was engaged in frolic for his own benefit and therefore was not within the scope of his employment. This means if an accident occurs while that truck driver is on his way to the bar, then the truck company will not be held liable. If, on the other hand, the truck driver had to deviate from his standard route because of a flooded road, then the detour is still considered to be to the employer’s benefit and within his scope of employment. An accident that occurs while on detour will still be imputed to the truck company.

A recently decided case by Court of Appeal for the First Circuit helps illustrate issues of determining the employee/employer relationship. The importance of this aspect is if the party responsible for the accident is found to be an independent contractor rather than an employee, liability cannot be placed on the employer. So, in the case heard on appeal by the First Circuit, a woman who was injured by the negligent driving of a delivery van driver sought to join the subcontracting broker and the delivery service that hired the individuals responsible for the accident. To determine whether an independent contractor relationship existed, the court looked to case law and the facts before it.

December 19, 2013

Injured Employee Limited to Workers’ Compensation Following Accident at Lena Power Plant

by Berniard Law Firm

Work-related injuries, especially in construction, are not uncommon. However, the outcomes in workers’ compensation cases vary because the contractual relationship between the parties is often not clear. Under Louisiana law, workers’ compensation is provided to an employee if they’re injured by an accident “arising out of” and “in the course of” his employment with a statutory employer. However, the issue centers on whether the defendant is a statutory employer thereby limiting the plaintiff to workers’ compensation as their sole remedy. If a valid, written contract recognizes the existence of a statutory employer relationship, it creates a rebuttable presumption; this requires careful interpretation of the terms of the contract.

On August 12, 2008, Louis Fox (hereinafter “plaintiff”), employee of Foster Wheeler North America Corp. (hereinafter “Foster”), was assisting with the installation of boiler units at the Rodemacher Power Station near Lena. While working inside a cyclone tower, the plaintiff alleged that he sustained an injury when an object fell from above striking his head and neck. The plaintiff sought damages beyond workers’ compensation against several defendants including CLECO Power (hereinafter “CLECO”), owner of the power station, and general contractor Shaw Constructors, Inc. (hereinafter “Shaw”).

The installation of the boiler units was the result of a written contract between CLECO Power, owner of the station, and Shaw Constructors, Inc. As general contractor, Shaw selected Stone and Webster, Inc. (hereinafter “Stone”) to take charge of engineering and procurement services. Stone then entered into a purchase order agreement with Foster for the sale and installation of the boiler units.

December 17, 2013

Summary Judgment Tripping Case from Baton Rouge Illustrates Court Complexities

by Berniard Law Firm

A recent case appealed from the Parish of East Baton Rouge provides a great example not only of the potential difficulties of recovering damages for negligence from a merchant, but also of summary judgment and how it works. In November 2006, the plaintiff entered the defendant’s store, tripped on what she claims was a ‘flipped-up’ doormat, and struck her head on some shelving. She was injured as a result and tried to recover damages from the merchant, claiming that she was injured as a result of the merchant’s negligence in maintaining the premises. The trial court granted summary judgment in the merchant’s favor, and the appellate court affirmed.

If someone is injured while lawfully on a merchant’s property and wishes to recover damages for negligence from that merchant, they must meet four requirements provided by Louisiana law. The claimant must show that their injury was the result of an unreasonably dangerous condition on the merchant’s property, that the danger presented by that condition was reasonably foreseeable, that the merchant knew or should have known of the danger prior to the claimant’s accident, and that the merchant did not take reasonable steps to correct the situation.

Summary judgment is rare and requires clearing some pretty high hurdles. A court must first find that there is no genuine contention as to any facts that might influence the outcome of the case. If the court so finds, then it will simply apply the law to the relevant facts and rule in a party’s favor as a matter of law, perhaps before there is even a chance for a trial. Where the party moving for summary judgment will not bear the burden of proof at trial, for instance if that party is a merchant defending against a negligence claim, then s/he need only show the opposition’s inability to prove or disprove one or more key elements of his/her action or defense. The opposing party must then answer somehow to prove that s/he will be able to prove the element(s) in question at trial, or lose on summary judgment.