The Construction Payment Blog welcomes Seth Smiley, who contributes this guest post about payment bond claims in Louisiana. Seth is a partner at Wolfe Law Group, and a contributor to that firm’s Construction Law Monitor blog. He frequently writes and litigates about construction law issues ranging from payment bond claims, workmanship disputes, construction delay matters and green building challenges. Seth is a licensed attorney in Louisiana and California.
Louisiana loves to be different. We have Mardi Gras, cajun food, Swamp People…and in the legal context, we’ve bucked the national trend and pledged allegiance to the Napoleonic Code. It should then be obvious that when legislating payment bond claims for state public works Louisiana wouldn’t just adopt the terms of the US Miller Act like so many other states. Oh no, Louisiana had to create is own special Public Works Act, and here is how it works.
Step 1: Is A Payment Bond Required?
The first thing to consider is whether a payment bond even exists on the state or parish construction project. If there’s no bond, there’s no ability to make a bond claim. In most circumstances in Louisiana, however, there is (or should be) a payment bond.
La RS § 38:2241(2) is the authority on this point. It requires a bond be placed for any “contract in excess of twenty-five thousand dollars per project.” The statute also requires the bond be recorded (along with the contract) in the recorder of mortgage’s office. This is a great provision for bond claimants, as they can get a copy of the prime contract and bond in this manner. Unfortunately, it’s not always recorded.
Step 2: Send Notice!
Louisiana is typically a non-notice state on state or private works. However, they are referred to as a non-notice state only because they do not have the traditional preliminary notice requirements, which I consider the notice furnished by subcontractors or suppliers within a certain number of days from first furnishing materials.
Louisiana does have nuance notice requirements, essentially picking on two industries: material suppliers and equipment lessors.
The most burdensome notice requirement in Louisiana falls upon equipment lessors or equipment rental companies. On public works, equipment lessors must furnish a “Notice of Lease” to the public entity commissioning the work and to the prime contractor within 10 days of first furnishing the equipment. See La R.S. § 48:256.6(C)(1).
The other notice requirement falls upon material suppliers, who must furnish a “Notice of Non-Payment” within seventy-five days of the last day of the month when last furnishing materials to the project. See La R.S. 38:2242(F).
Step 3: Deliver and Record Your Claim
Once unpaid on the project, the next step is to deliver and record your claim. Yes, that’s right, deliver and record. Scott previously posted on the ConstructionLienBlog’s State Bond Claim Series that payment bond claims rarely need to be recorded. This is true. But it’s not true in Louisiana.
In Louisiana, payment bond claims must be recorded with the parish recorder of mortgages office, exactly like a traditional mechanics lien claim. It must also be sworn to and notarized, which is actually unlike the private works lien claim that no longer requires notarization.
These claims must be filed within 45 days of “final acceptance” of the work by the department letting the contract.