Let’s face it—no one likes getting sued. And, certainly, no one likes getting sued twice (or more) by the same person based on the same dispute. That is why Louisiana’s civil procedure rules offer protection to parties from having to defend multiple pending suits between the same parties about the same thing.
This doctrine is known as lis pendens and is codified in Article 531 of the Louisiana Code of Civil Procedure, which applies when two or more lawsuits are pending in the same or multiple Louisiana courts between the same parties in the same capacities on the same subject matter. Under those circumstances, the defendant can obtain dismissal of each lawsuit filed after the first suit by filing a declinatory exception of lis pendens. But the defendant can waive that right if it does not assert the exception of lis pendens in its initial response to each of the subsequent suits, which can then simultaneously proceed until a final judgment is rendered in any of the lawsuits. Thus, it is critical for defendants to raise an exception of lis pendens as early as possible to avoid incurring the expenses associated with defending multiple suits based on the same dispute.
Recently, the Louisiana Supreme Court issued a decision in Saulsbury Industries, Inc. v. Cabot Corp. and Cleco Power, LLC, clarifying how to determine which of the multiple suits between the same parties about the same subject matter is the “first suit” under Article 531.
The case before the court concerned two lawsuits between Cleco Power, Inc., Cabot Corporation, and Saulsbury Industries, Inc. involving the same underlying construction dispute. Cleco filed the first suit against Saulsbury in October 2018 in Rapides Parish seeking delay damages for Saulsbury’s alleged breach of its “material obligations” under the contract, claiming that Saulsbury failed to timely complete various milestones set forth in the project schedule. Cabot was not originally a party to Cleco’s suit.
In July 2019, Saulsbury filed the second suit concerning the construction project against Cleco and Cabot in St. Mary Parish. Thereafter, Cabot intervened in Cleco’s suit and filed a declinatory exception of lis pendens in Saulsbury’s suit, arguing that Saulsbury’s suit should be dismissed because it was between the same parties in the same capacities on the same subject matter as Cleco’s suit, which was filed first.
The district court agreed with Cabot and sustained its exception, dismissing Saulsbury’s suit. However, the court of appeal reversed the district court’s ruling, finding that Saulsbury’s suit was the first filed suit against Cabot, and Cabot was not yet a party to Cleco’s suit at that time. The Louisiana Supreme Court then granted Cabot’s application for supervisory writ, reversed the court of appeal’s judgment, and reinstated the district court’s judgment dismissing Saulsbury’s suit.
In reaching its decision, the court explained that “[o]nce the doctrine of lis pendens is applicable, the ‘first suit’ determination is simply a matter of confirming which suit was filed first, not which suit was the first to include the objecting party.” As such, the court found that the court of appeal’s interpretation of Article 531 improperly expanded the phrase “first suit” to add “in which the objecting defendant was first named as a party.” The court concluded that the first filed suit for purposes of Cabot’s exception of lis pendens was Cleco’s suit, even though Cabot did not become a party to that suit until after Saulsbury had already filed its suit against Cabot.
The court’s ruling in Saulsbury Industries makes it clear that when there are multiple pending suits between the same parties based on the same dispute, the determining factor of which suit was filed first is simply the date each suit was filed, regardless of whether all of the same people have been joined as parties to each suit yet. The court’s holding is particularly important in the context of high-stakes, multi-faceted commercial disputes involving numerous parties.
The bottom line—in the wake of a commercial dispute, businesses should carefully evaluate their potential exposure and monitor the dockets in every district court where a lawsuit could foreseeably be filed against them based on the dispute, even if they are not initially named as a party to the first resulting lawsuit. If, in that scenario, the unnamed party is later sued in another lawsuit based on the same commercial dispute as the first lawsuit, that party can rest easier knowing that the lis pendens defense is available to it if it is later brought into the first suit; potentially saving that party tens-to-hundreds of thousands of dollars in expenses. The Saulsbury decision reinforces Louisiana’s policy of guarding against a multiplicity of suits and promoting judicial efficiency.