Opinion
No. 2010-CA-0089.
August 11, 2010. Rehearing Denied September 15, 2010.
Appeal from the District Court, Plaquemines Parish, No. 57-019, Division B, Joy Cossich Lobrano, J.
C. Lee Drake, Hannan, Drake Giusti L.L.P., Metairie, Louisiana, for PlaintifUAppellee.
Lloyd N. Shields, Jeffrey K. Prattini, Shields Mott Lund, LLP, New Orleans, Louisiana, for DefendanVAppellant, Harris Builders, L.L.C.
(Court composed of Judge JAMES F. McKAY III, Judge DAVID S. GORBATY, Judge EDWIN A. LOMBARD).
Harris Builders, LLC was awarded a Public Works contract with the State Division of Administration in February of 2008 to perform post-Katrina repair and renovation of the Pass-a-Loutre/Dennis Pass WMA. On March 11, 2008, French's Welding Maintenance Services, LLC executed a subcontract to perform a portion of the work under Harris Builders' contract. French's attorney, Marcus L. Giusti, reviewed this contract prior to its execution and advised his client that the arbitration clause should be deleted. However, Harris Builders insisted that the provision was required under the State's Public Works contract and thus could not be deleted. Based upon this representation as well as Mr. Giusti's review of what Harris Builders said was their contract with the State, French's signed the subcontract. Despite subsequent requests, French's did not receive a copy of the fully executed document signed by Harris Builders.
Work began pursuant to the contract and French's received periodic payments at least through July of 2008. Disputes concerning Harris Builders' delay in payments and/or French' performance subsequently arose, resulting in French's decision in October of 2008 to stop work on the' project and to record a lien against Harris Builders' proceeds under the State contract. After mediation failed, Harris Builders notified French's in January of 2009 that it was invoking the arbitration clause in their contract. During the discovery proceedings in preparation for arbitration, Mr. Giusti learned that the State had deleted the arbitration clause from its contract with Harris Builders and that Harris Builders had not executed the subcontract signed by French's.
On July 27, 2009, French's filed suit seeking damages as well as an injunction prohibiting arbitration of the parties' disputes under the March 11, 2008 subcontract. French's asserted that the arbitration agreement was not binding and was not enforceable because Harris Builders never signed the contract containing the arbitration provision. French's also contended that because Harris Builders misrepresented the necessity for retaining the arbitration clause and did not furnish a complete copy of its contract with the State, French's consent to arbitrate was vitiated. The trial court agreed with French's and issued a preliminary injunction on October 30, 2009. It is from this judgment that Harris Builders takes this appeal.
On appeal, Harris Builders raise seven assignments of error. However, the only issue before this Court is whether the trial court erred in granting French's petition for a preliminary injunction. The issuance of a preliminary injunction shall not be disturbed upon review unless a clear abuse of discretion has been shown. Concerned Citizens for Proper Planning v. Parish of Tangipahoa, 2004-0270 (La.App. 1 Cir. 3/24/05), 906 So.2d 660.
The defendant contends that the trial court erred by: 1) failing to deny injunctive relief and dismiss French's claim for permanent injunctive relief because (despite any vice of consent that may have vitiated French's agreement to arbitrate) French fully and voluntarily participated in the arbitration even after French became aware of the vice of consent, thus, by law, confirming French's agreement to arbitrate; 2) holding that Harris's actions after French executed the subcontract at issue vitiated French's prior consent to the arbitration clause in the subcontract; 3) failing to reject French's claims of error and fraud because subsequent to the alleged fraudulent acts, the parties eliminated the contract document that is the source and object of French's fraud and error claims from the subcontract; 4) failing to deny injunctive relief and dismiss French's claim for permanent injunctive relief because French did not establish an intent on the part of Harris to obtain an unjust advantage or cause inconvenience or loss to French, as required by law to establish fraud; 5) failing to deny injunctive relief and dismiss French's claim for permanent injunctive relief because French could have reasonably ascertained, and actually did ascertain, that the information on which it alleges it relied to establish fraud was incorrect; 6) holding that the absence of Harris's signature on the subcontract vitiated Harris's consent to arbitration; and 7) considering whether the absence of Harris's signature vitiated the subcontract because, by law, the court is prohibited, and that determination is expressly reserved for the arbitrator.
In its reasons for judgment, the trial court found that French's was "misled and coerced into agreeing to arbitration because the defendant misrepresented that arbitration was required under the state's contract, and failed to furnish the complete copy that showed the arbitration clause had, in fact, been deleted from the Public Works contract." The trial court found that an error of consent exited, and thus the arbitration agreement was invalid and unenforceable. The trial court also noted that because Harris Builders never signed the contract with French's, there was no clear mutual consent to submit all disputes to arbitration.
Not all arbitration provisions are valid under state law; rather, the application of arbitration law presupposes the existence of a written agreement not subject to any grounds at law or in equity for its revocation. Abshire v. Belmont Homes, Inc., 2004-1200 (La.App. 3 Cir. 3/2/05), 896 So.2d 277. In the instant case, we do not have a written agreement signed by all of the parties. French's also entered into its contract with Harris Builders based on error. Error vitiates consent. See La.C.C. art. 1948 and La.C.C. art. 1949. Accordingly, we find no abuse of discretion in the trial court's granting of the preliminary injunction in this matter.
For the foregoing reasons, we affirm the judgment of the trial court.
AFFIRMED.
LOMBARD, J., dissents.
The only issue in this case is the monetary compensation due to the plaintiff from the defendant for work and services rendered, i.e., the remaining outstanding principal ($547, 386.24) that the plaintiff claims is due for work and services pursuant to its subcontract with the defendant. Because an injunction may be issued only "where irreparable injury, loss, or damage may otherwise result to the applicant . . . ." and irreparable injury is an injury that "cannot be adequately measured or compensated by money," injunctive relief is inappropriate in this case.
La. Code Civ. Proc. art. 3609 (emphasis added).
Limousine Livery, Ltd. v. A Airport Limousine Service, L.L.C., 2007-1379, p. 8 (La.App. 4 Cir. 3/12/2008), 980 So.2d 780, 785 (citations and internal quotations omitted); see Historic Restoration, Inc. v. RSUI Indemnity Co., 2006-1178, p. 11 (La.App. 4 Cir. 3/21/07), 955 So.2d 200, 2008 (irreparable harm means that money damages cannot adequately compensate for the injuries suffered and that " injuries cannot be measured by pecuniary standards "); see also Desire Narcotics Rehabilitation Center, Inc. v. State of La., Dept. of Health Hospitals, 07-0390, p. 4 (La.App. 4 Cir. 10/17/07), 970 So.2d 17, 20 (to obtain injunctive relief, the petitioner must show that he will suffer irreparable injury in the absence of an injunction and that he is entitled to the relief sought).
Moreover, the likelihood of the plaintiff prevailing on the merits is questionable. Consent to a contract does not require signature on a written form but, rather, may be established by actions clearly indicative of consent. Consent may be vitiated by error, but "only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party. Although a contract is relatively null when a party did not give free consent at the time the contract was made, actions of the party may confirm a contract that is a relative nullity. In this case, the plaintiff does not dispute that (1) the subcontract it signed on March 11, 2008, contained the disputed arbitration provision; (2) it was only on March 19, 2008, that the subcontract was sent to attorney Marcus L. Giusti for review; (3) the plaintiff began work on the project on March 31, 2008, with the arbitration provision in place; (4) the plaintiff worked on and received payment for work performed through the summer; (5) after a dispute arose between the parties over work performance and payment arose, the plaintiff sought mediation as required by the subcontract; and (6) the plaintiff fully participated in arbitration proceedings between January and July 2009, including selection of the arbitrator on April 14, 2009, the initial arbitration conference on May 19, 2009, and compliance with the scheduling order in anticipation of the arbitration scheduled for September 2009. Moreover, according to the documents submitted by the plaintiff, on April 1, 2008, (after the plaintiff began work on the project) Ms. Bourgeois (executive assistant in plaintiffs employ) sent an email to Mr. Guidry (executive of the plaintiff company) stating that an employee of the defendant told her that taking out the section of the subcontract pertaining to arbitration and mediation would "defect their contract" and could not be taken out. Shortly thereafter, Mr. Guidry sent an email to Mr. Giusti stating, "You will probably need to talk to [defendant employee] to see if his K with the state is to be arbitrated and mediated." Mr. Giusti responded by email that the defendant's contract with the state "is a public contract and thus there is no arbitration agreement that I am aware of." The next day (April 2, 2008), Mr. Guidry sent an email to Mr. Giusti asking whether a "complete copy" of the primary state contract should be requested to see if it conflicted with the subcontract." On April 3, 2008, Mr. Giusti sent the following response:
See Hall v. Fertility Institute of New Orleans, 94-1135, p. 4 (La.App. 4 Cir. 12/15/94), 647 So.2d 1348 (to prevail on preliminary injunction, the plaintiff must establish by prima facie evidence that: (1) it will suffer irreparable injury, loss or damage is injunction denied; (2) it is entitled to relief sought; (3) it will likely prevail on the merits of the case).
La. Civ. Code art. 1927 ("offer and acceptance may be made orally, in writing, or by action or inaction that under the circumstances is clearly indicative of consent").
. . . . I believe that they have sent this and it is a standard public contract that has no mediation or arbitration provisions. Although it does reference outside specs and drawings which I have not seen, I believe it does not contain a like mediation and arbitration clause. I haven't researched the issue but I assume any such clause would be illegal and unenforceable against the State. The State would not want to subject itself to binding arbitration, (emphasis added)
Accordingly, the arbitration provision in the subcontract became a point of discussion only after the plaintiff signed the subcontract and began work under the terms of subcontract and, in any event, the plaintiff was advised by its own legal counsel that the state contract did not contain an arbitration clause. The plaintiffs suggestion that it was induced into agreeing to the arbitration provision by the defendant's representation in subcontract negotiations that its primary contract with the State required subcontracts to contain arbitration provision is refuted by the documents in the record. Specifically, the plaintiff alleges that it did not learn until February 2009 (when the State refused to participate in arbitration) that the arbitration clause in the primary contract had been deleted when the State refused to participate in arbitration proceedings on that basis. However, the February 2009 letter to Mr. Giusti from the State makes no reference to the primary contract with the defendant or an addendum to that contract, only notifying the plaintiff of its refusal to participate in arbitration for jurisprudential reasons. Similarly, the plaintiff provides only a reproduction of a standard form subcontract, not a copy of the actual contract it signed. Finally, the only copy of the state contract in the record does not contain an arbitration clause and there is no copy of the addendum which purportedly deletes the arbitration clause in the state contract. Thus, nothing support the plaintiffs contention that it agreed to the arbitration provision only because the defendant purposely misrepresented it as a requirement of the primary contract. Even if an employee of the defendant suggested to Mr. Guidry's secretary on April 1, 2008 (after the plaintiff signed the subcontract and began work on the project) that the arbitration provision in the subcontract was required by the primary contract, there is no basis for finding that the defendant purposely misrepresented the defendant's contract with the State. Moreover, even accepting arguendo that the plaintiffs are likely to succeed on their claim that their consent was vitiated, as previously noted this law-suit is about money owed for work performed and the requisite irreparable injury is not present.
To the extent that the defendant concedes that the primary contract was modified on May 22, 2008, such modifications clearly cannot be implicated in a misrepresentation that purportedly occurred during the time frame of the subcontract negotiations.
For the foregoing reasons, it was error for the trial judge to grant the plaintiffs motion for a preliminary injunction and I respectfully dissent.