Posts Tagged ‘Tee It Up Golf Inc. v. Bayou State Construction LLC’

General Contractor Has Some Lien Rights When Contract Not Recorded

On March 18, 2010 Author By Scott Wolfe Jr        

La R.S. 9:4811 of the Louisiana Private Works Act requires general contractors to record its contract whenever a project amount is in excess of $25,000.   The contract must be recorded before any work begins on the project, and must reference a legal property description.

If the general contractor does not timely record the contract, the general contractor forfeits any rights to lien the project.

In 2003, however, the Louisiana 1st Circuit Court of Appeals made a tiny exception to this statutory requirement.   In Burdette v. Drushell, 837 So.2d 54 (La App 1st Cir 2003), the court allowed a general contractor who did not timely file the contract to file a mechanics lien under limited conditions.

The condition?  The GC could only lien for work it or its employees actually performed.

In the Burdette case, for example, the general contractor was allowed to lien for carpentry services he actually performed (and did not sub out), but not for services or materials that were furnished by subcontractors.

The work performed by the GC itself was fashioned by the court as creating an ordinary labor lien, which did not require the contract’s filing.

This case was cited and distinguished just last week by the Louisiana 3rd Circuit in Tee It Up Golf Inc v. Bayou State Construction LLC.   We wrote about this case in more detail at the Louisiana Construction Law blog here:  Details Matter When Filing Liens.

Insofar as the Burdette exception is concerned, however, the Tee It Up Golf case is important because it indicated a requirement for general contractors to displine themselves when filing liens on projects wehre it did not record a contract.

For example – If a GC is owed a total of $200,000 on a project, but only $25,000 of that amount relates to services or materials it actually provided, it must only file the lien for $25,000 to take advantage of the Burdette exception.    In the Tee It Up Golf case, the general contractor could not take advantage of the Burdette exception because it lien included labor performed by the GC itself, along with a host of other charges.

It takes a lot of discipline for a general contractor to roll back the amount due and lien for only the labor it actually furnished.   However, if the GC didn’t file the notice of contract and wants to lien the project, it is the only way to successfully do so.

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Construction Law Blog.

Posted in:     Filing Requirements, Louisiana  /  Tags: , , , , ,   /   Leave a comment

Details Matter When Filing Liens – As Recently Confirmed by Louisiana 3rd Circuit

On March 16, 2010 Author By Scott Wolfe Jr        

Previously on the Louisiana Construction Law Blog , and over at the Construction Lien Blog operated by our friends at Express Lien, it’s been mentioned that the lien statutes require attention to details.   In Louisiana, like elsewhere in the country, lien filings must meet strict statutory requirements.

A case decided just last week in the Louisiana 3rd Circuit Court of Appeals repeats this principal, and illustrates the dangers of improper lien filings.

In Tee It Up Golf, Inc. v. Bayou State Construction, LLC, the court affirmed a trial court decision finding a Louisiana lien improperly recorded because:

  • It didn’t have a legal property description
  • It didn’t itemize the unpaid work or materials
  • The general contractor didn’t record the notice of contract

The penalty for recording the lien improperly?    The contractor was charged $3,000.00 for attorneys fees for losing at the trial level, and another $3,000.00 in attorneys fees for losing the appeal.

Property Descriptions

In this 3rd Circuit case, the contractor filed a lien listing the municipal address for the property, which was considered insufficient.    The court pointed to La R.S. 9:4813(C) of the Private Works Act requiring:

Each filing….shall contain a description of the property sufficient to clearly and permanently identify the property.   A description which includes the lot and/or square and/or subdivision or township and range shall meet the requirements of this Subsection.  Naming the street or mailing address without more shall not be sufficient…

While a full “legal property description” may not always be required, the court here made clear – again – that the municpal address, without more, is insufficient.

Itemizing Work Performed and Materials Delivered

Next, the court held that the lien did not “reasonably itemize the elements” of the work and materials that gave rise to the filing.

How much itemization is required exactly?   The 3rd Circuit didn’t answer that question (and to my knowledge, Louisiana courts have never made this abundantly clear).   However, the 3rd circuit told us what wasn’t enough:

On [the lien]…the $180,762.59 figure is listed under the category “Materials Supplied.”  There is no attempt whatsoever to itemize the elements comprising this amount as required by statute.  Thus, the Statements of Claim filed by Bayou State were improper and the trial court did not err in ordering their cancellation.

Failure To File the Notice of Contract

General Contractors (those who contract with the owner) on projects with a contract price in excess of $25,000.00 must always record a notice of contract before the work begins.  If this is not recorded, the general contractor forfeits its right to file a mechanics lien in Louisiana.

That’s a rule provided in the Private Works Act in §9:4811(D), which states:

[a] general contractor shall not enjoy the privilege granted by R.S. 9:4801 if the price of the work stipulated or reasonably estimated in his contract exceeds twenty-five thousand dollars unless a notice of contract is timely [before any work began] filed

Bayou Construction didn’t file the notice, and therefore, the lien was improper.

The court did make note of an exception to this rule argued by Bayou Construction, which allows a general contractor who did not file a notice of contract to file a laborer’s lien as a “non-general or ordinary contractor”.   This was allowed in Burdette v. Drushell, 837 So.2d 54 (La App 1 Cir 2002).

In Burdette, the court explained as follows:

Even though plaintiff acted as ‘general contractor,’ he also occupied the status of an ordinary ‘contractor’ under La R.S. 9:4807(A) for his carpentry services and related labor and material costs.   Thus, as such, he is entitled to the privilege….for ‘the price of his work.’ … The trial curt correctly concluded the plaintiff is entitled to claim a privilege for his own labor and that of his employees.

Bayou’s lien, however, wasn’t filed to simply recover the costs of its and its employee’s labor.  It sought payment for the labor and materials provided by subcontractors, which meant the lien sought to claim a privilege for the work of the “general contractor,” and without a notice of contract it was not allowed.   This, of course, in addition to the other lien defects.

This article was originally posted on Wolfe Law Group’s topic-specific Louisiana Construction Law Blog.

Posted in:     Filing Requirements, Louisiana  /  Tags: , , , , , ,   /   1 Comment