Note: Louisiana’s lien and notice laws changed on January 1, 2020, so some information in this post might be outdated. You can learn what changed and what rules apply here: Louisiana Mechanics Lien FAQs and Louisiana Notice FAQs.
Last Year, Scott Wolfe Jr. wrote post criticizing a case decided wrongly by the Louisiana Second Circuit Court of Appeals: Louisiana 2nd Circuit Demotes Importance of Lessor’s Notice of Lease – But It’s Wrong!
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In that case, Hawk Field Services v. Mid America Underground, the court held that lessors who failed to send a Notice of Lease within 10 days of first furnishing rental equipment to a construction project were not entitled to “privilege” under the law but still were eligible for a “claim.”
Previously, lessors who overlooked sending the Notice were prevented from any recovery under both the Louisiana Private and Public Works Acts. Although, as Scott noted, this interpretation of the law is only binding on one of five Louisiana appeals districts (the Second Circuit includes parishes around Shreveport, but not, for example, New Orleans, Baton Rouge, or Lafayette), the decision is still troubling for property owners who are now at risk of a “claim” at any point.
Unfortunately, in late October of 2012, the Louisiana Supreme Court denied a writ of certiorari filed by one of the parties. In layman’s terms, this means the court refused to hear the appeal.
It is a grim but realistic truth that even when lower courts wrongly decide cases, limitations of time and resources prevent a higher court from correcting those mistakes. State supreme courts such as Louisiana’s only want to take the most urgent cases and, as evidenced by the writ denial, Hawk Field Services simply did not surpass that threshold.
There is good news, however, that the Louisiana Supreme Court may soon be reviewing the issue.
In a case before the Fourth Circuit Court of Appeals, Miccol Enterprises v. City of New Orleans, the court refused to extend the holding set forth in Hawk Field Services.
As Scott noted, one of the primary reasons the Louisiana Supreme Court probably denied the appeal was because there was no “circuit split” — in other words, there was no disagreement between the circuits yet. Of course, Miccol Enterprises changes these circumstances substantially.
Perhaps the losing party will file another writ to the Supreme Court and we will finally have a clear ruling on this issue that applies to the entire state. Until then, for property owners in the Second Circuit’s area, equipment lessors do not have to file Notices of Lease in order to preserve their right to a claim later. As Scott notes, it may still be a good idea to do so since although it hasn’t happened yet, Hawk Field Services is likely to be overturned.