Bond Claim Rights on Louisiana Public Projects

Bond Claim Rights on Louisiana Public Projects

Are you furnishing to a public project in Louisiana? Let this case be a lesson of the importance of strictly adhering to deadlines set forth by statute!

The Case

Non-Flood Protection Authority (“Owner”) is the owner of the public improvement, commonly known as James Wedell Hangar Project, at the New Orleans Lakefront Airport.

Owner hired general contractor, GM&R Construction Company (“GM&R”), who hired two subcontractors: M&M Concrete (“M&M”) and Tom Branighan (“Tom”).

The first date of importance is the date Owner filed the Certificate of Substantial Completion: May 28, 2014.

Why Does Substantial Completion Matter?

In Louisiana, unpaid parties must serve a sworn statement of amounts due upon the public entity and record it in the office of the recorder of mortgages for the parish in which the work is done. It must be recorded within 45 days after acceptance of the project or within 45 days  after a notice of default (whichever first occurs).

Back to the Case

Neither M&M nor Tom were paid in full with claim amounts of $56,572.00 and $49,729.20 respectively.

On August 18, 2014, M&M filed its statement of claim – 82 days after the filing of the Certificate of Substantial Completion. GM&R notified M&M that its claim was untimely and, subsequently, M&M sent a notification to Owner and GM&R advising that the claim would be cancelled, even though M&M hadn’t been paid in full.

On September 24, 2014 – 119 days after the filing of the Certificate of Substantial Completion – Tom served its statement of claim, but did not file it.

General Contractor Makes Bank

In early October 2014, GM&R went to the Orleans Parish Clerk of Court and obtained a “Lien and Privilege Certificate” to provide to Owner. This certificate confirmed there were no existing or prior liens. Upon receipt of this document, Owner promptly remitted final payment to GM&R.

GM&R is now paid in full.

If All Else Fails, Claim, Claim Again?

December 2014 rolled around and M&M and Tom were still unpaid even though both parties filed claims with the parish mortgage recorder. For those doing the math, we are now over 200 days from the date of substantial completion.

Fast forward to April 2015. Having not been paid, M&M and Tom filed suit against Owner to recover their monies. Owner disputed the subcontractors’ rights to file suit, based on the untimely filing of their claims.

“You’re Late!” The Court Agreed

According to the Order:

It is undisputed that M&M Concrete and Tom Branighan did not timely file their claims in accordance with subsection 2242(B). The Non-Flood Protection Authority recorded its acceptance of work, via its “Certificate of Substantial Completion,” in the mortgage records on May 28, 2014. At the earliest, M&M Concrete served the Non-Flood Protection Authority with a sworn statement of its claim on August, 18, 2104, nearly three months later. Tom Branighan did not serve the Authority with its claim until September 24. Because M&M Concrete and Tom Branighan failed to comply with the applicable deadline, the Court grants summary judgment on the cross-claim for their outstanding debts against the Non-Flood Protection Authority.”

The Lesson

Know the various statutory deadlines BEFORE you find yourself making late claims. Track deadlines diligently and don’t risk non-payment by delaying the filing of your claim. As always, seek legal guidance!

Bonus: Louisiana Public Projects (excluding DOT projects)

Here are the notice and claim requirements for public projects in Louisiana, courtesy of The National Lien Digest©.

Notices

Notice of Non-Payment: Serve notice of non-payment upon the owner and prime contractor within 75 days from the last day of the month for EACH month in which materials were furnished, but within the period in which a sworn statement must be filed. If the notice of non-payment is not given, the sworn statement will be limited to a claim under the payment bond and will not act as a lien on the funds being held by the public entity.

  • A notice of non-payment is not required:
    • when contracting directly with the prime contractor,
    • when providing labor and materials or only labor,
    • when the general contract has not been recorded, or
    • to protect your rights under the payment bond.

Lessor of equipment: Serve a copy of the lease upon the owner and prime contractor within 10 days after the equipment is first placed on the project site.

Bond Claim

Serve sworn statement of amounts due upon the public entity, and record it in the office of the recorder of mortgages for the parish in which the work is done, within 45 days after acceptance of the project or a notice of default (whichever first occurs). When contracting directly with a subcontractor, also serve a notice upon the prime contractor within 45 days after acceptance of the project or a notice of default. The sworn statement also acts as a lien against the funds being held by the public entity.

Need help serving your notice or bond claim? NCS can help!

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