By J. Eric Lockridge

A recent opinion from the United States Bankruptcy Court in Baton Rouge, Louisiana shows that even experienced lenders and developers may not always understand how Louisiana’s Private Works Act applies to their project, and how much leverage a properly filed notice of contract can provide to a general contractor.  Tuscany Reserve, LLC (“LLC”) was formed by sophisticated developers for the purpose of developing a new apartment complex in Baton Rouge. LLC obtained acquisition and construction financing from a bank (1st Bank), which properly recorded its mortgage on the project before work commenced. LLC hired “Contractor” to build the complex; Contractor recorded its notice of contract in the parish mortgage records.  As often happens, a dispute developed between LLC and Contractor regarding the work performed and lack of payment.  Contractor stopped work and filed a lien on the property under the Louisiana Private Works Act for $1.17 million.  Contractor eventually agreed to cancel its lien in exchange for a promissory note and guarantees from LLC’s principals and collateral provided by an LLC affiliate.  Once the lien was cancelled, 1st Bank funded two draw requests on the construction loan.  LLC needed more money for the project and turned to a new lender (2nd Bank) for additional financing.   2nd Bank secured its loan with a collateral mortgage on the immovable property for the project; there were no liens in the property records when 2nd Bank recorded its mortgage.  The relationship between LLC and Contractor soon soured, again, and Contractor filed two liens on the project, one for the original claim amount, plus interest, and another for $250,000.00.  Contractor sued LLC and its principals on the matured promissory note, and also sued LLC based on its rights under the recorded construction contract and the Louisiana Private Works Act. LLC eventually filed for chapter 11 bankruptcy in the Middle District of Louisiana.

Continue Reading Lenders and Developers Need to Understand How Louisiana’s Private Works Act Applies to Their Projects

By Casey E. Faucon

On March 17, 2010, Mississippi Governor Hayley Barbour signed into law an amendment to Mississippi’s public bid law, more specifically, to Mississippi’s resident “preference law.” Miss. Code Ann. § 31-3-21(3). Under this recent amendment, all non-Mississippi resident contractors who bid on Mississippi public works contracts must attach to their bid a

By David K. Nelson

In an arbitration, the parties agree to hire one or more neutral third parties to hear the dispute and issue a ruling.  The parties further agree to abide by that ruling.  If one party fails to do so, the ruling can be enforced by a court of law just as if an actual judgment had been entered.  Some suggest the process is less costly and more efficient than litigation; however, significant rights can be lost under the guise of so called legal efficiency.

Continue Reading Beware: Arbitration

By Kevin C. Curry

On September 30, 2010, the Internal Revenue Service issued guidance providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.  In particular, the IRS issued Revenue Procedure 2010-36 which enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a ”safe harbor” formula for determining the amount of the loss.

Continue Reading IRS Issues Safeharbor Relief for Those Impacted by “Chinese Drywall”

By Katie D. Bell

Electronic Discovery, or “E-Discovery”, is not considered the “novel issue” it once was. However, E-Discovery still presents problems that litigants and courts struggle with. Below is a summary of recent Louisiana Federal Court opinions dealing with the issues surrounding E-Discovery.

In Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. Jan. 22, 2007), the Western District of Louisiana granted the plaintiff’s motion to compel. In an unfair competition and trade secret theft action, the plaintiff claimed that the defendant, a former employee, had stolen various data files. Plaintiff had unsuccessfully requested production of defendant’s laptop and desktop. The Court granted the motion to compel the defendant to produce these two items because they were the most likely places that the data files would be located. The Court did institute protective measures so as to prevent the disclosure of any irrelevant or personal information.
 

Continue Reading Recent Developments in E-Discovery in Louisiana

By Mark D. Mese

Judges in East Baton Rouge and St. Tammany Parish have issued two of the earliest rulings on the impact of the Louisiana New Home Warranty Act on claims by homeowners against contractors for damages related to Chinese Drywall. Both state district court judges have found that the Louisiana New Home Warranty

A law passed by the Legislature and signed by Governor Bobby Jindal (Act 945) requires all bidders for public works contracts to certify that they have not entered a plea of either guilty or nolo contendre to certain crimes. Each bidder for public works contracts must certify in writing that they have not pleaded guilty or nolo contendre to: (1) public bribery (La. Rev. Stat. 14:118); (2) corrupt influencing (La. Rev. Stat. 14:120); (3) extortion (La. Rev. Stat. 14:66); or (4) money laundering (La. Rev. Stat. 14:230).

Continue Reading New Law Requires Public Works Contract Bidders to Certify They Have Not Pleaded Guilty to Certain Crimes

A new law (Act 868) passed by the Legislature and signed by Governor Bobby Jindal on July 2, 2010 requires contractors who are awarded no-bid contracts with state and local entities, or $10,000-plus bid contracts with local entities, to disclose all commissions and fees in writing.

Continue Reading New Law Requires Contractors to Disclose the Sharing of Contract Commission/Fees in No-Bid State and Local Government Contracts

A new Louisiana law requires non-resident/out-of-state contractors to provide additional information before a building permit can be issued. The new law, amending La. Rev. Stat. 37:2171.2 (Act No. 67), has been signed by the governor.

It requires a non-resident commercial, residential, or home improvement contractor to provide (1) its federal tax payer identification number to

Throughout 2004–2007 a housing boom along with a series of hurricanes in the Gulf of Mexico combined to create a shortage of drywall in the United States.  Needing drywall to build the homes that were much in demand, suppliers turned abroad. Chinese manufacturers stepped in, providing cheap and readily available material.  This influx of Chinese drywall was concentrated in Florida, Louisiana, and Mississippi; the states most affected by Hurricanes Wilma, Katrina, and Rita.  Since 2006, it has been estimated by some sources that more than 550 million pounds of drywall have been imported from China.  There are reports that some 100,000 homes could possibly be affected nationwide. 

Continue Reading What does the Transfer of Chinese Drywall Cases by the United States Judicial Panel on Multidistrict Litigation Mean?