Daniel Lund III | Phelps Dunbar
It’s not football, though. Rather, just when you thought it was safe in Louisiana to wait to file a garden-variety construction contract payment claim, an appellate court slams the door on it – applying a statute of “repose” to your claim.
“Personal actions” – such as an action on contract – are generally subject in Louisiana to a 10-year “liberative prescription,” the applicable statute of limitations pursuant to Louisiana Civil Code article 3499.
Like some other states, Louisiana has a statute of “repose” – imposing “peremption” rather than prescription for claims having to do with construction projects – limiting those claims (generally speaking) to five years post-completion. Like other statutes of “repose,” Louisiana Revised Statute 9:2772 provides that claims on construction projects may not be filed after five years, a duration which is not subject to interruption or extension.
Traditionally, the thought in Louisiana has been that the cited statute applied only to claims related to “deficiencies in design, planning, inspection, supervision or construction of improvements to immovable property or for property damage, personal injury or wrongful death arising from any such deficiency” – because that’s the exact reason the Louisiana legislature provided for enacting the statute in 1964. In theory, contractors and designers needed to have a certain cutoff to potential liability related to construction. Indeed, as discussed below, the heading of the statute reads: “Peremptive period for actions involving deficiencies in surveying, design, supervision, or construction of immovables or improvements thereon.”
Hence, a subcontractor bringing a pure nonpayment claim against a general contractor seven years after project completion was shocked when the trial court in Monroe, Louisiana, dismissed the claim based upon the construction peremption statute.
On appeal, the Louisiana appellate court determined that the statute was broader than the subcontractor believed. According to the intermediate court, language in the statute referring to actions “ex contractu… including but not limited to an action… to recover on a contract… or otherwise arising out of” a construction project covered all manner of construction-related contract claims.
According to the appellate court:
“The gravamen of [the subcontractor plaintiff’s] argument is that because the heading of La. R.S. 9:2772 includes the word ‘deficiencies,’ the otherwise clear language of the statute itself should be ignored and its application be limited to construction deficiencies. The heading, however, does not constitute part of the statute.
“The language of the statute is clear: actions arising from the construction of immovables are perempted upon the passage of five years after occupation of the improvement by the owner.”
Interestingly, this decision appears to be a case of first impression (at least in reported appellate decisions), notwithstanding the fact that the statute is nearly 60 years old.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.