Recent decision: Roy Anderson Corp. v. 225 Baronne Complex, L.L.C. (La. App. 4 Cir. 09/25/19)

In its recent opinion in Roy Anderson Corp. v. 225 Baronne Complex, L.L.C., the Louisiana Fourth Circuit decided four separate issues, each of which could arise in any Private Works Act (La. Rev. Stat. 9:4801, et seq.) project dispute.

Prior to this appeal, Roy Anderson, the general contractor, had recorded a statement of claim and privilege under La. Rev. Stat. 9:4822. A statement of claim and privilege allows a construction project participant who alleges it is owed money to make a claim against the owner and the property. 225 Baronne, the property owner, filed a petition via summary proceeding in Civil District Court for Orleans Parish to cancel the lien. The trial court ruled in 225 Baronne’s favor and ordered the lien to be canceled. However, the Louisiana Fourth Circuit Court of Appeal reversed and reinstated the statement of claim and privilege finding that the lien met the statutory requirements of the Private Works Act and was therefore valid. In the meantime, Roy Anderson then filed a petition via ordinary proceeding to enforce the lien. 225 Baronne filed a number of reconventional demands (civil law equivalent to counterclaims) as well as several exceptions (the civil law equivalent to motions to dismiss). The Fourth Circuit’s opinion ruled on four exceptions raised by 225 Baronne: prescription (civil law equivalent of statute of limitations), res judicata (or claim preclusion, which essentially prohibits the same parties to pursue a matter that has already decided or adjudicated by a court of competent jurisdicton), no cause of action, and no right of action.

The Fourth Circuit overruled the trial court with respect to the exceptions of prescription and res judicata and affirmed the trial court’s decision with respect to the exceptions of no cause of action under the payment bond and no right of action under the performance bond.

The Fourth Circuit ruled as follows. First, a prescriptive period (deadline to file) is interrupted by the filing of a lawsuit, even when that lawsuit fails to adequately state a claim. The interruption of the deadline to file includes resolution of all appeals. Second, there exists a "statutory scheme" exception to the defense of res judicata. In the construction context, a party has certain rights available to it via summary proceeding and others via ordinary proceeding. A party may split its claims. Third, owners are not granted a right of action under a payment bond, which is a statutory bond. A payment bond inures to the benefit of certain persons on a construction project that are not in privity with the owner, such as subcontractors and laborers. Fourth, a performance bond, unlike a payment bond, is a conventional bond. This means that the language of the bond itself controls. Therefore, a party must satisfy the stated requirements of the bond to make a claim against it.