Court Orders Specific Performance in Breach of Construction Joint Venture Agreement
Case: Archer W. Contractors, LLC v. McDonnel Grp., LLC, No. CV 22-5323, 2024 WL 2863376, at *1 (E.D. La. June 6, 2024).
Authors: Michael S. Blackwell and Jennifer Mura
In Archer v. McDonnel, the Eastern District applying Louisiana law granted summary judgment in part on a breach of contract claim and notably awards specific performance as a remedy. Archer Western Contractors, LLC (“AWC”) and The McDonnel Group, LLC (“TMG”) entered into a Joint Venture (“JV”) Agreement on May 2, 2011 for the purpose of entering into a construction contract with the State of Louisiana, Law Enforcement Division of Orleans Parish (the “Owner”). As part of the Joint Venture Agreement (the “JV Agreement”), each party was to share in the profits and losses according to their proportional share. Throughout the Project between 2015 and 2019, several disputes arose within the JV which stemmed from cash flow issues caused by the Owner’s failure to properly compensate the JV.
In April 2022, TMG separately entered into a settlement with the Owner for its portion of the work on the Project. TMG directly deposited the settlement funds into its own bank account and did not share any funds with the JV or AWC.
AWC filed suit against TMG for breach of contract, breach of fiduciary duty, and enrichment without cause. AWC moved for summary judgment, in part, on its breach of contract claim alleging that TMG entered into a settlement agreement with the Owner without consent in breach of the JV Agreement.
The Court first determined that AWC had standing to bring claims related to TMG’s settlement agreement as AWC demonstrated a financial injury as a result. Next, the Court analyzed the language of the JV Agreement and found that TMG breached several provisions by unilaterally negotiating a settlement with the Owner; settling portions of the JV’s claims without approval; withholding the settlement funds from the JV without consent; and failing to deposit the funds into the JV’s bank account.
Next, addressing damages, the Court noted AWC’s only requested remedy was for specific performance. AWC requested the Court order TMG to place the settlement funds into the JV’s bank account. TMG argued that AWC’s breach of contract claim failed because of the failure to seek money damages in addition to specific performance. The Court disagreed, stating that would conflict with Louisiana law.
Louisiana Civil Code art. 1986 recognizes specific performance as the default remedy in a breach of contract action but allows for money damages if demanded or if specific performance is impracticable.The Court found that a plain reading of Civil Code article 1986 allows specific performance to be ordered without any request for money damages. As TMG failed to show that specific performance was impractical or impossible in this matter, the Court found that specific performance was warranted.
The Court granted summary judgment in part, holding that TMG breached the provisions of the JV Agreement by settling with the Owner without approval and ordered TMG to place the funds into the JV’s bank account. AWC’s motion was denied as to all other claims.
Notably, although Louisiana law states that specific performance is the “preferred remedy” in a breach of contract action it is rarely ever sought as a remedy on its own without a request for money damages. The Court’s decision highlights that specific performance alone may be a more practical remedy when seeking summary judgment in a breach of contract action as an alternative to monetary damages.
