Tradewinds Environmental Restoration, Inc. v. St. Tammany Park, LLC

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT United States Court of Appeals

Fifth Circuit

FILED

August 4, 2009

No. 08-30729 Charles R. Fulbruge III

Clerk

TRADEWINDS ENVIRONMENTAL RESTORATION, INC

Plaintiff - Appellant

v.

ST TAMMANY PARK LLC

Defendant - Appellee

COLONY INSURANCE COMPANY

Third Party Defendant-Appellee

Appeal from the United States District Court

for the Eastern District of Louisiana

Before WIENER, DENNIS, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Plaintiff-Appellant Tradewinds Environmental Restoration, Inc.

(“Tradewinds”) appeals the district court’s grant of summary judgment in favor

of Defendant-Appellee St. Tammany Park, LLC (“STP”). For the following

reasons, we affirm.

FACTS AND PROCEEDINGS

STP owned an apartment complex in Covington, Louisiana, that was

damaged by Hurricanes Katrina and Rita (the “Hurricanes”). STP was advised

by its insurer, Colony Insurance Company (“Colony”), to begin mold remediation

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immediately after the Hurricanes to avoid any additional damage. Following the

recommendation of one of its contractors, STP contacted Tradewinds. The

parties negotiated and executed an agreement dated September 8, 2005, by

which Tradewinds would provide emergency remediation and restoration. STP

paid Tradewinds a $20,000 deposit at the time the contract was signed.

STP alleges that Tradewinds provided to STP pricing lists for different

types of work and equipment, but that STP never accepted those quotes.

Nevertheless, Tradewinds completed the work contemplated by the contract by

September 15, 2005. For the most part, this work consisted of delivering,

installing, and operating industrial air dryers to extract moisture from the

complex. Tradewinds submitted three invoices to STP, for a total of

approximately $245,000, and STP paid an additional $70,000 on top of the

$20,000 deposit. However, STP refused to pay the remainder of the bill,

allegedly because Tradewinds failed to provide documentation justifying the

invoiced amount.

In February 2006, Tradewinds filed this action against STP and one of

STP’s principals, Brian Campbell,1 based on diversity jurisdiction, to recover the

balance due on the invoices. STP filed a counterclaim against Tradewinds and

a third-party complaint against its insurer Colony. STP moved for summary

judgment against Tradewinds, arguing that the requirements for the formation

of a contract were not met, the alleged contract lacked an agreement as to price,

and the contract was null because Tradewinds was not a licensed contractor in

Louisiana.

1

The claims against Brian Campbell were dismissed in a separate summary judgment

order and are not at issue in this appeal.

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The district court granted STP’s motion for summary judgment based on

the third ground, finding that Tradewinds provided mold remediation services

in violation of Louisiana’s licensing requirements. It held that the contract with

STP was absolutely null and Tradewinds could only recover the costs of the

materials, services, and labor provided. Following entry of the summary

judgment order, STP and Tradewinds stipulated that, subject to Tradewinds’s

appeal, the $90,000 already paid by STP covered Tradewinds’s costs in

performing the contract, and that Tradewinds owed no refund to STP.

Accordingly, the district court entered final judgment awarding no damages to

either party.2

Tradewinds now appeals the district court’s grant of summary judgment.

Also before this court is STP’s motion to strike certain portions of the record

excerpts submitted by Tradewinds that are otherwise not part of the record on

appeal.

STANDARD OF REVIEW

“This court reviews a district court’s grant of summary judgment de novo,

applying the same legal standards as the district court.” Condrey v. SunTrust

Bank of Ga., 429 F.3d 556, 562 (5th Cir. 2005). On review of a grant of summary

judgment, “[t]he evidence and inferences from the summary judgment record are

viewed in the light most favorable to the nonmovant.” Minter v. Great Am. Ins.

Co. of N.Y., 423 F.3d 460, 465 (5th Cir. 2005). Typically, “[s]ummary judgment

is proper when the pleadings and evidence demonstrate that no genuine issue

of material fact exists and the movant is entitled to judgment as a matter of

2

The district court awarded $30,000 to STP on its third-party claim against Colony, but

this award is not at issue in this appeal.

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law.” Condrey, 429 F.3d at 562 (quotation omitted); see also F ED. R. C IV. P. 56(c).

We also review de novo the district court’s interpretation of state law and give

no deference to its determinations of state law issues. See Salve Regina Coll. v.

Russell, 499 U.S. 225, 239–40 (1991).

DISCUSSION

The Louisiana legislature has enacted a broad licensing scheme for

contractors within the State, designed for “the protection of the health, safety,

and general welfare of all those persons dealing with persons engaged in the

contracting vocation, and the affording of such persons of an effective and

practical protection against the incompetent, inexperienced, unlawful, and

fraudulent acts of contractors with whom they contract.” L A. R EV. S TAT.

§ 37:2150. Pursuant to § 37:2160, it is “unlawful for any person to engage or to

continue in this state in the business of contracting, or to act as a contractor as

defined in this Chapter, unless he holds an active license as a contractor under

the provisions of this Chapter.” A contractor is defined broadly, as:

any person who undertakes to, attempts to, or submits a price or bid

or offers to construct, supervise, superintend, oversee, direct, or in

any manner assume charge of the construction, alteration, repair,

improvement, movement, demolition, putting up, tearing down, or

furnishing labor, or furnishing labor together with material or

equipment, or installing the same for any building . . . for which the

entire cost of same is fifty thousand dollars or more when such

property is to be used for commercial purposes . . . .

L A. R EV. S TAT. § 37:2150.1.

The Revised Statutes also contain specific licensing requirements for

individuals and entities that perform mold remediation. See L A. R EV. S TAT.

§§ 37:2181–2192. Section 37:2185 thus provides that “[b]eginning July 1, 2004,

no person shall engage in or conduct, or advertise or hold himself out as

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engaging in or conducting the business of, or acting in the capacity of a person

who conducts mold remediation unless such person holds a mold remediation

license as provided for in this Chapter.” The term “mold remediation” is defined

as the “removal, cleaning, sanitizing, demolition, or other treatment, including

preventive activities, of mold or mold-contaminated matter that was not

purposely grown at that location.” L A. R EV. S TAT. § 37:2182(4). Like the general

licensing provisions, the mold remediation requirements were expressly

designed to protect the public. See L A. R EV. S TAT. § 37:2181 (“The legislature

hereby declares that it is in the best interest of the citizens of the state to require

the licensure and regulation of those persons who perform mold remediation.”).

Under the Louisiana Civil Code, “[p]ersons may not by their juridical acts

derogate from laws enacted for the protection of the public interest. Any act in

derogation of such laws is an absolute nullity.” L A. C IV. C ODE art. 7; see also L A.

C IV. C ODE art. 2030 (“A contract is absolutely null when it violates a rule of

public order, as when the object of the contract is illicit or immoral.”). Louisiana

courts have long recognized that statutory licensing requirements “were enacted

to protect an interest vital to the public order,” and have relied on these Civil

Code articles to invalidate contracting agreements entered into with unlicensed

contractors. Hagberg v. John Bailey Contractor, 435 So.2d 580, 584–85 (La. App.

1983); see also W. Baton Rouge Parish Sch. Bd. v. T.R. Ray, Inc., 367 So.2d 332,

334 (La. 1979) (holding that a contract for architectural services was invalid

because the architectural firm had not secured a license to practice architecture

from the Louisiana Board of Architectural Examiners). Contrary to

Tradewinds’s contention, this rule of “absolute nullity” is not limited to public

works contracts, and has been equally applied to void agreements between

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private parties. See, e.g., Alonzo v. Chifici, 526 So.2d 237, 240-43 (La. App. 1988)

(nullifying a renovation agreement between a restaurant owner and an

unlicensed contractor); Touro Infirmary, Preferred Continuum Care-New

Orleans, LP v. Travelers Prop. Cas. Co. of Am., No. 06-3535, 2007 WL 496858,

at *2–5 (E.D. La. Feb. 13, 2007) (unpublished) (holding that a contract to repair

Katrina damage entered into between a hospital and an unlicensed contractor

is an absolute nullity and thus “deemed never to have existed”).

Tradewinds concedes that it applied for a Louisiana mold remediation

license on September 28, 2005 and that it did not receive the license until

February 16, 2006. It is therefore undisputed that Tradewinds was not licensed

as a contractor or a provider of mold remediation services at the times that it

executed and performed the agreement with STP. Nor does Tradewinds

properly challenge the district court’s finding that it performed mold remediation

services for STP.3 Accordingly, the district court correctly concluded that

Louisiana’s rule of absolute nullity for a contracting agreement entered into

without the benefit of a contractor’s license would typically limit STP’s recovery

to “the actual cost of materials, services and labor.” Alonzo, 526 So.2d at 243.

Tradewinds however contends that the decision of the Louisiana State

Licensing Board for Contractors (the “Licensing Board”) to loosen its

enforcement of the licensing statutes in the immediate aftermath of the

Hurricanes protects its agreement with STP from this general rule of absolute

3

In its opposition to summary judgment, Tradewinds unsuccessfully argued that the

work it performed for STP did not qualify as mold remediation. For the first time in its reply

brief, Tradewinds challenges the district court’s finding on this issue. The argument is waived

because it was not raised in Tradewinds’s opening brief, and thus we decline to consider it.

See Tex. Democratic Party v. Benkiser, 459 F.3d 582, 594 (5th Cir. 2006).

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nullity. Tradewinds relies on an affidavit by Charles E. Marceaux, the

Executive Director of the Licensing Board, that states that, for several months

following the Hurricanes, the Licensing Board decided to “delay active and

aggressive enforcement of licensure laws pertaining to demolition and debris

removal and stay aggressive enforcement of other licensure laws.” According to

Tradewinds, the district court’s holding of absolute nullity imposes on

Tradewinds “the harshest enforcement possible” of Louisiana licensing

requirements, in contravention of the Licensing Board’s decision.

The Licensing Board is responsible for the enforcement of the licensing

requirements for contractors and providers of mold remediation services. L A.

R EV. S TAT. § 37:2153. As one district court recently noted, an administrative

agency such as the Licensing Board has “broad discretion in deciding to what

extent to undertake enforcement.” Trade-Winds Envtl. Restoration, Inc. v.

Stewart, No. 06-3299, 2008 WL 236891, at *4 (E.D. La. Jan. 28, 2008) (citing

Massachusetts v. EPA, 549 U.S. 497, 527 (2007)). However, Tradewinds itself

acknowledges that the Licensing Board’s discretion in conducting licensing

enforcement does not give it authority to suspend the licensing requirements.

Indeed, in times of emergency or disaster, Louisiana law recognizes that

the Governor of Louisiana has the power to:

[s]uspend the provisions of any regulatory statute prescribing the

procedures for conduct of state business, or the orders, rules, or

regulations of any state agency, if strict compliance with the

provisions of any statute, order, rule, or regulation would in any

way prevent, hinder, or delay necessary action in coping with the

emergency.

L A. R EV. S TAT. § 29:724. It is undisputed that no executive order suspending

Louisiana licensing laws was executed in the aftermath of the Hurricanes. As

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the Marceaux affidavit recognizes, the Licensing Board’s decision to loosen

licensing enforcement was a “common sense approach” taken “in the absence of

Executive Orders from the Governor’s Office.” Further, the affidavit notes that

the suspension of enforcement was not absolute, since “the Board took such

action as it believed necessary if the facts appeared that the actions of a

contractor would be detrimental to the public.” The licensing laws at issue

therefore remained valid statutory requirements, the enforcement of which was

only temporarily relaxed. See Stewart, 2008 WL 236891, at *6 (concluding that

“the Board’s policy of lax enforcement, while likely a valid exercise of

administrative power, did not change the fact that the statutes in place still

represented the legal requirements for contractors in order to enter into valid

contracts”). Accordingly, we agree with the district court that the Licensing

Board’s decision to loosen its enforcement of licensing requirements in the

aftermath of the Hurricanes did not suspend the requirement that contractors

performing mold remediation in Louisiana be licensed in the State.4

4

Tradewinds attaches to its briefing copies of two Louisiana state court judgments from

the Civil District Court for the Parish of Orleans and the District Court for the Parish of

Jefferson—both of which deny summary judgment under similar circumstances, apparently

finding merit in the unlicensed contractor’s reliance on the Licensing Board’s decision to

suspend licensing enforcement. However, the unreported decisions of state trial courts are not

binding on this court. See, e.g., Roecker v. United States, 379 F.2d 400, 406 (5th Cir. 1967)

(noting that a federal court need not defer to state trial court decisions, particularly when they

are unpublished). In one of those state cases, the defendant filed a writ application with the

Louisiana Fourth Circuit Court of Appeal requesting review of the summary judgment denial,

which was denied. While this court generally seeks guidance from state appellate courts, we

need not treat denials of supervisory writs as precedents because they are not considered

precedential under Louisiana law. See In re Quirk, 705 So.2d 172, 182 n.17 (La. 1997) (“The

denial by the court of appeal of a writ application seeking to invoke that court’s supervisory

jurisdiction neither blesses nor adopts the lower court’s factual determination or expressions

of law.” (internal quotation omitted)). Thus, none of the state court judgments cited by

Tradewinds have any authoritative value.

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Tradewinds also invokes the “emergency reciprocity of licensing”

provisions of two interstate compacts. Specifically, the Interstate Emergency

Preparedness and Disaster Compact provides that:

Whenever any person holds a license, certificate, or other permit

issued by any state evidencing the meeting of qualifications for

professional, mechanical, or other skills, such person may render aid

involving such skill in any party state to meet an emergency or

disaster and such state shall give due recognition to such license,

certificate, or other permit as if issued in the state in which aid is

rendered.

L A. R EV. S TAT. § 29:733, art. 4. Similarly, under the Southern Regional

Homeland Security and Emergency Preparedness Management Assistance

Compact:

Whenever any person holds a license, certificate or other permit

issued by any party state to the compact evidencing the meeting of

qualifications for professional, mechanical, or other skills, and

when such assistance is requested by the receiving party state,

such person shall be deemed licensed, certified, or permitted by the

state requesting assistance to render aid involving such skill to

meet a declared emergency or disaster, subject to such limitations

and conditions as the governor of the requesting state may

prescribe by executive order or otherwise.

L A. R EV. S TAT. § 29:751, art. V. Thus, both statutes have the effect—under

certain conditions—of waiving Louisiana’s licensing requirements in times of

emergency for certain professionals licensed in other states.

Tradewinds may well be correct that those statutory provisions allowed it

to circumvent Louisiana’s strict licensing requirements in the aftermath of the

Hurricanes. However, this argument was never presented to the district court

and Tradewinds never mentioned the “emergency reciprocity of licensing”

provisions until this appeal. “Generally, this Court will not consider an issue

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that a party fails to raise in the district court absent extraordinary

circumstances.” Black v. N. Panola Sch. Dist., 461 F.3d 584, 593 (5th Cir. 2006)

(internal quotation omitted). “Extraordinary circumstances exist when the issue

involved is purely a legal one and failure to address it would result in a manifest

miscarriage of justice.” Id. The applicability of the “emergency reciprocity of

licensing” provisions is far from a “purely legal” issue, as it is premised on

Tradewinds’s proper licensing in another state—a factual question that the

district court has never addressed. In light of the factual determinations

necessary to resolve Tradewinds’s new argument, we decline to consider it.

Furthermore, Tradewinds’s licenses and qualifications in other states are

not part of the record on appeal. Tradewinds seeks to supplement the record by

attaching to its briefing copies of various licenses and other certifications, and

STP has moved to strike these exhibits. It is well-established that

[t]his court’s inquiry is limited to the summary judgment record

before the trial court: the parties cannot add exhibits, depositions,

or affidavits to support their positions on appeal, nor may the

parties advance new theories or raise new issues to secure reversal.

Facts not presented at trial cannot be asserted on appeal.

Topalian v. Ehrman, 954 F.2d 1125, 1131 n.10 (5th Cir. 1992) (internal citation

omitted). These exhibits therefore constitute an improper attempt to introduce

new evidence on appeal and are stricken from the record.5

CONCLUSION

5

STP’s motion to strike also covers the two Louisiana state court judgments issued

after the district court’s grant of summary judgment in this case and attached to Tradewinds’s

briefing on appeal. See supra note 4. We have found no authority supporting STP’s contention

that these exhibits should be stricken as well.

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For the foregoing reasons, the judgment of the district court is AFFIRMED

and STP’s motion to strike is GRANTED with respect to the materials submitted

by Tradewinds for the first time on appeal concerning its licenses and

certifications in other states.

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