L OUISIANA S ECURITY D EVICE S URVEY
Professor Trahan
Course Outline (cont’d): 33
Mo 30 Mar
11] To constructors (contractors, subcontractors, materialmen, workers) for the prices of their services and materials a] Background
1} Construction contract practice
2} Problems with this practice
3} The solution to the problem: privileges
4} Legislation a} Civil Code art. 3249(2)-(3) b} Private Works Act (R.S. 9:4801-4842)
1/ Basic rights of protected parties a/ A “claim” (right to sue) against the owner in favor of those constructors who are not in privity with him b/ A privilege on the immovable to secure payment of the price of work or materials
2/ Means whereby the owner can avoid claims and privileges a/ Filing of “notice of contract” b/ Procurement of a “construction bond” (and attachment of the evidence thereof to the notice of contract)
3/ Cancellation / erasure of claims and privileges a/ Claims / privileges that were improperly filed or are or have become ineffective b/ Claims / privileges that were properly filed and are still effective
4/ “Preservation” of PWA claims & privileges a/ What to file
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1 o Basic requirements
2 o Additional requirements for certain claimants a/ When to file
1 o The time period a o General rule b o Exceptions
2 o The trigger
5/ Moment of effectivity of PWA privileges a/ When the notice of contract is filed b/ When the work is begun
1 o What is “work”
2 o Proof of absence of work: the “nowork” affidavit
6/ Ranking of PWA privileges a/ In general b/ In particular
1 o Government liens
2 o Laborers’ privileges
3 o Prior perfected mortgages, vendors’ privileges & UCC Article 9 fixtures security interests
4 o Subcontractors, materialmen, lessors
5 o General contractor + any architects, surveyors, engineers hired by the owner
6 o All other mortgages and privileges
7/ Extinction of PWA privileges (and how to avoid it) a/ The action b/ The notice of lis pendens
. . .
. . .
Assignment (for Tu 31 Mar):
(1) Finish working the problem involving the Diazes (see installment # 32).
(2) Work the following problems:
2. Charles Osgood (“CO”) and Don Dauphin (“DD”) purchased an old two-bedroom apartment for
$40,000 as undivided co-owners, and they moved in the next day. Being the frugal type, CO was content to move right in and accept the relatively run-down look of his bedroom. DD, in contrast, wanted to project a “classier” image for his bedroom, so he hired a carpenter, a painting firm, a plumber, and an electrician to remodel his bedroom. The total charges for moving a wall, expanding a closet, repainting everything, and installing a wet bar and “mood lighting” in DD’s bedroom amounted to $25,000. When CO noticed envelopes marked “collections” from the carpenter, painter, plumber, and electrician, he confronted DD, who admitted that he had not yet paid the tradespeople for the job. In fact, DD admitted that the tradespeople had filed statements of their claims in the mortgage records and were threatening to foreclose on the apartment. Answer the following questions from CO:
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A. As undivided co-owner of the apartment, is CO personally liable to the tradespeople who improved his apartment, even though he did not contract with any of them to do the work?
B. DD is clearly liable to the tradespeople, as he contracted with them for the work, but are the tradespeople’s claims secured by any accessory real right in DD’s property?
C. Assuming the tradespeople’s claims are secured by a real right in DD’s undivided interest in the apartment, DD owes $25,000, but his interest is only “worth” about $20,000. Do the tradespeople’s real security right extend to any of CO’s interest in the property?
D. Assuming the tradespeople’s claims do not extend to CO’s interest, CO’s interest in the apartment is undivided, so are the tradespeople’s security rights in the apartment unenforceable
(since CO’s interest extends to every inch)? If they are enforceable, how?
3. You have just accepted a job in the legal department of The Shaw Group Inc., one of Louisiana’s most successful businesses. Shaw is primarily a major commercial construction company, and your first assignment is to prepare and file the proper paperwork for a planned casino project in Lafayette.
Your supervisor’s memo to you says that the construction contract between the casino company and
Shaw (attached to the memo) estimates the total cost of the project at $1.2 million, payable in stages over the course of the anticipated construction period of 24 months, beginning one month from today’s date. From the total contract price paid by the casino company, Shaw will hire and pay the subcontractors for steel, cement, lumber, electric, plumbing, etc., and it will coordinate and pay for the leasing of heavy machinery and the ordering and delivery of supplies to the jobsite. The memo instructs you to prepare “the notice and bond” for this project and to file them timely in the appropriate place.
A. Why has your supervisor requested that you do this? What is the point of preparing and filing a “notice and bond” for a construction project?
B. How much time do you have to prepare and file these documents; that is, when must the
“notice and bond” be filed to achieve the objectives you identified in Part “A”?
C. What is the “notice” and exactly what must it contain? In particular, if it must describe the property on which the casino is to be built, how accurate must the description be?
D. You learn that the bonding company charges more to issue larger bonds, so you would prefer to have the smallest bond possible. In order to achieve the objectives you identified in Part “A,” does the bond for the casino project have to be for a specific amount, and if so, exactly what is the minimum amount that the bonding company must promise to pay?
E. After you have prepared a proper notice and acquired the proper bond, exactly where must these documents be filed?
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