Opinion
CIVIL ACTION NUMBER 02-2846, SECTION "L" (1).
June 6, 2003.
ORDER REASONS
Before the Court is a motion for summary judgment filed by Defendant Alliance Business Products, Inc. For the following reasons, the motion is DENIED.
I. BACKGROUND
This diversity case arises out of a breach of contract claim by the Plaintiff Barco Projection Systems ("Barco") against Defendant Alliance Business Products ("ABP"). According to the Plaintiff Barco, Defendant ABP contracted with it for the construction and installation of unique visual communications technologies in a new building for the United States Navy. The general contractor of the building project contracted with ABP who in turn subcontracted with Barco for the one time furnishing, construction, and installation of (1) an 8x2 ML video display wall for the operations main control room and (2) a 2x2 ML video display wall for the teleconference room. Plaintiff Barco alleges that the agreement between it and Defendant ABP required ABP to pay Barco $840,583.72 in exchange for Barco's services. Plaintiff claims that it provided all services required under the contract and received $500,000 in partial payment; however, Defendant has yet to pay the remaining balance of $340,583.72 despite amicable demand. Counsel for Plaintiff wrote a letter to ABP offering to compensate ABP up to $750.00 to review and produce any record of final payment of the remaining balance to Barco. However, Plaintiff claims that to date it has still not received payment or evidence of payment. Plaintiff alleges breach of contract and unjust enrichment under Louisiana law and seeks consequential damages under Louisiana Civil Code article 1997.
Defendant ABP filed the current motion for summary judgment arguing that this Court lacks subject matter jurisdiction. According to Defendant, a majority of the invoices that are the basis of this suit are prescribed, leaving only one invoice actionable which is not of sufficient value to meet the jurisdictional amount for diversity jurisdiction. Defendant explains that the invoices sent to it from Plaintiff were dated November 20, 1998, November 30, 1998, January 31, 1999, February 19, 1999, March 26, 1999 and March 28, 2000. Defendant asserts that the Plaintiff's suit to recover the unpaid invoices is a suit on an open account under Louisiana revised statute 9:2781 and, therefore, all of the invoices except for the last one dated March 28, 2000 are prescribed under the three year prescriptive period for open accounts because this suit was not filed until September 16, 2002. Since the only invoice that has not prescribed is for $6,800.00, Defendant asserts that this Court does not have jurisdiction over the case.
Under Louisiana revised statute 9:2781, when any person fails to pay an open account within thirty days after the claimant sends written demand for the amount due, that person is liable to the claimant for reasonable attorney's fees for prosecution and collection of the claim. La. R.S. 9:2781 (West 1991). Although Plaintiff's complaint does not specifically seek attorney's fees under Louisiana Revised Statute 9:2781, Defendant assumes that Plaintiff is invoking this statute as the basis of its claim for attorney's fees because the contract between the parties does not provide for the payment of attorney's fees.
The prescriptive period for an action on an open account is three years. La. Civ. Code art. 3494 (West 1994). The prescription commences to run from the day payment is exigible and it accrues as to past due payments even if there is a continuation of labor, supplies, or other services. La. Civ. Code art. 3495. (West 1994).
II. LAW AND ANALYSIS
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
In opposition to the motion for summary judgment, the Plaintiff argues that the contract between the parties is not an open account subject to a three year prescriptive period, but rather a contract subject to a ten year liberative prescriptive period for a personal action and, therefore, the invoices are not prescribed and the jurisdictional amount is satisfied such that this Court has subject matter jurisdiction.
This case is brought pursuant to the diversity jurisdiction of this Court. This Court is, therefore, bound to apply substantive law of Louisiana. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817 (1938). The issue this Court must resolve is whether an open account existed between the parties such that the majority of the invoices that are the subject of Plaintiff's suit are prescribed, resulting in this Court lacking subject matter jurisdiction.
Louisiana revised statute 9:2781 defines the term "open account" as including "any account for which a part or all of the balance is past due, whether or not the account reflects one or more transactions and whether or not at the time of contracting the parties expected future transactions." The statute further provides that "`open account' shall include debts incurred for professional services, including but not limited to legal and medical services." This expansive definition for the term open account was incorporated into the statute and made effective in 1983, when the legislature amended the statute to clarify that an open account could consist of a single transaction and did include debts for professional services.
Even after the effective date of this amendment, however, Louisiana courts continue to consider the following four factors when determining whether a course of dealings is an open account: (1) whether there were other business transactions between the parties; (2) whether a line of credit was extended by one party to the other; (3) whether there are running or current dealings; and (4) whether there are expectations of other dealings. Tyler v. Haynes, 760 So.2d 559, 563 (La.Ct.App. 3d Cir. 2000); Dixie Machine Welding Metal Works Inc. v. Gulf States Marine Technical Bureau, Inc., 692 So.2d 1167, 1170 (La.Ct.App. 5th Cir. 1997); Acme Window Cleaners, Inc. v. Natal Construction Co., 660 So.2d 926, 928 (La.Ct.App. 4th Cir. 1995). Historically, a construction contract has not been treated as an open account. Hill v. Leach, 734 So.2d 116 (La.Ct.App. 3d Cir. 1999); Petron, Inc. v. Magic-Mart, Inc., 643 So.2d 441 (La.Ct.App. 3d Cir. 1994); Bossier Marble v. Kelly's Truck Terminal, 530 So.2d 1198 (La.Ct.App. 2d Cir. 1988); A.A. Specialty Simply, Inc. v. Quinn, 411 So.2d 1165 (La.Ct.App. 1st Cir. 1982).
A review of the jurisprudence and consideration of the four factors listed above lead to the conclusion that the agreement between the Plaintiff and the Defendant did not constitute an open account, but rather was a construction contract. In cases involving agreements between subcontractors and general contractors for a particular job, the courts have held that the arrangement between the two was a contract and not an open account under Louisiana revised statute 9:2781. Kenner Industries, Inc. v. Sewell Plastics, Inc., 451 So.2d 557, 560 (La. 1984); Acme Window Cleaners, Inc., 660 So.2d at 928; Jenkins v. Dicon, Inc., 387 So.2d 649, 652 (La.Ct.App. 1st Cir. 1980). Specifically, the Louisiana Supreme Court was faced with a factually similar case in Kenner Industries, Inc., where a subcontractor agreed to provide the needed fill for the contractor's project to build an addition. After the work began, the subcontractor billed the general contractor monthly. The contractor paid the first invoice, but failed to pay subsequent invoices for the job. After all the work was completed, the general contractor refused to pay any remaining amounts due. The court held that the suit was not one on an open account, but rather was based on a one time construction contract. 451 So.2d at 560. The court explained that the parties did not agree to a course of dealings over a period of time, but agreed in accord with a particular contract to do a particular job. Id. Several other Louisiana courts have come to the same conclusions about construction contracts and held that such arrangements do not constitute open accounts under Louisiana law. Jenkins, 387 So.2d at 652 (holding arrangement between paving contractor and general contractor was one shot contract for paving with a relatively firm price agreed to in advance and, therefore, not an open account); Acme Window Cleaners, Inc., 660 So.2d at 928 (holding arrangement was a contract and not open account because job was for specific purpose of stripping and waxing floors of building, no other business dealings existed between the parties and the parties had no expectations of ongoing or future deals); Petron Inc., 643 So.2d at 443 (holding that agreement between owner and contractor for removal and installation of underground gasoline tanks was construction contract and not open account when parties agreed that contractor, in accordance with particular contract, would perform a particular job).
In this case, none of the four factors detailed above are present. There are no other business dealings between the parties other than the contract at issue in which Plaintiff Barco agreed to furnish, construct, and install a video display wall for the operations main control room and a video display wall for the teleconference room. This was a particular contract to perform a particular job. There is no evidence there was expectations of other dealings between these two parties. In addition, there are no current or running dealings between the parties. Finally, the Plaintiff did not extend a line of credit to the Defendant; rather, the Plaintiff billed the Defendant every month, evidenced by invoices with a term indicating that payment was due within thirty days. Plaintiff also submitted affidavits of employees familiar with the agreement between the two companies and the financial arrangement who attested that payment was expected monthly. Defendant has not produced any evidence to prove that payment was not expected until completion of the project. Because none of the factors are present in this case to classify the arrangement between the parties as an open account and, in light of the case law holding that construction contracts are not open accounts, this Court finds that the arrangement between Plaintiff and Defendant is simply a contract subject to a liberative prescriptive period of ten years pursuant to Louisiana Civil Code article 3492. Therefore, Plaintiff's claims based on breach of contract due to unpaid invoices are not prescribed and this Court does have subject matter jurisdiction because the amount on controversy exceeds $75,000.
III. CONCLUSION
For the foregoing reasons, the motion for summary judgment filed by Defendant is DENIED.