May 15, 2025

Recent Changes and Important Decisions Concerning
Construction Law in Louisiana

In representing our clients, we occasionally call their attention to changes in particular areas of the law and recent decisions that may be of interest. As a courtesy, we have compiled some of those recent court decisions and legislative updates concerning construction law in Louisiana. 

Louisiana Public Works Act
 

Wallace C. Drennan, Inc. v. Kerner, 23-428, 2024 WL 5151083 (La. App. 5 Cir. 12/18/24)

Court Reverses Dismissal of Contractor’s Interest Claim in Public Works Dispute

In a significant ruling for contractors working on public projects, the Louisiana Court of Appeal reversed a trial court’s decision that dismissed a contractor’s claim for statutory interest on late payments due to res judicata. The case involved Wallace C. Drennan, Inc., a contractor, being awarded a public works contract for hurricane-related drainage improvements in the Town of Lafitte. After substantial completion of the project, payment disputes arose, leading Drennan to file multiple lawsuits, including two mandamus proceedings and an ordinary lawsuit seeking statutory interest under Louisiana’s Public Works Act. The trial court had ruled that Drennan’s claim for statutory interest was barred because it should have been included in an earlier mandamus proceeding. However, the appellate court found that res judicata did not apply, as Louisiana law allows separate proceedings for claims beyond the appropriated contract amount, including statutory interest. The court emphasized that mandamus actions are limited to compelling payment of already-appropriated funds, while statutory interest must be pursued in ordinary proceedings.  

This ruling reinforces a contractor’s right to seek interest on late payments separately and prevents public entities from avoiding financial accountability through procedural technicalities. The case now returns to the trial court for further proceedings, highlighting the importance of understanding statutory payment rights when working with public entities. 

Arbitration and Procedure
 

Se. Dirt, L.L.C. v. D.R. Horton, Inc. - Gulf Coast, 2024-0724, 2024 WL 5233172 (La. App. 1 Cir. 12/27/24)

Court Vacates Default Judgment in Construction Payment Dispute

In a recent decision that underscores the importance of procedural compliance in litigation, the First Circuit Court of Appeal vacated a default judgment awarded to Southeast Dirt, L.L.C. (“SE Dirt”) against D.R. Horton, Inc. - Gulf Coast (“DRH”), a major homebuilder, over unpaid construction work. SE Dirt initially sued DRH for payment on an open account, seeking over $240,000, plus attorney fees. The dispute became further entangled when DRH attempted to enforce an arbitration clause from an earlier independent contractor agreement, arguing that the claims should be resolved outside of court. However, the trial court ruled that arbitration was not mandatory under the contract terms and allowed the lawsuit to proceed. SE Dirt obtained a default judgment against DRH when it failed to formally answer the lawsuit, but DRH challenged the judgment, arguing that SE Dirt did not properly notify them of its intent to seek a default ruling. The appellate court agreed, finding that SE Dirt failed to provide adequate proof of notice under Louisiana law, rendering the default judgment an absolute nullity. While the court affirmed the trial court’s decision denying DRH’s request to compel arbitration, it vacated the default judgment and remanded the case for further proceedings. This ruling highlights the critical importance of following proper notification procedures before obtaining default judgments and clarifies contractual dispute resolution requirements in construction agreements.

Plaquemines Port, Harbor & Terminal Dist. v. Dep't of Transportation & Dev., 2024-0099, 2024 WL 4248929 (La. App. 1 Cir. 9/20/24). 

Court Dismisses Plaquemines Port’s Challenge to Belle Chasse Bridge Project as Moot

In a decisive ruling, the First Circuit Court of Appeal dismissed the Plaquemines Port, Harbor & Terminal District’s (“the Port”) appeal seeking to invalidate the public-private partnership contract for the Belle Chasse Bridge & Tunnel Replacement Project. The Port filed suit in 2023, arguing that the Louisiana Department of Transportation and Development (“DOTD”) violated state law by approving the project without obtaining the Port’s written consent. The DOTD and its private partner, Plenary Infrastructure Belle Chasse, LLC, responded by filing peremptory exceptions, arguing that the Port’s claims were time-barred and moot given the substantial completion of the bridge. The trial court agreed, ruling that the Port’s claims were prescribed under a one-year deadline and dismissing the case with prejudice. On appeal, the court declined to address the prescription issue, instead dismissing the case on mootness grounds, noting that the bridge was nearly complete and that issuing an injunction or declaring the contract null would serve no practical purpose. The ruling underscores the importance of timely legal challenges in public infrastructure projects and reaffirms that courts will not grant injunctive relief to undo projects that have already been substantially completed. 
 

Mary John Fam., L.L.C. v. Stevens Constr. & Design, LLC, 24-132 (La. App. 5 Cir. 10/30/24), 398 So.3d 1230

Court Upholds Dismissal of Construction Dispute Over Gas Station Renovation but Reverses Arbitration Ruling

The Louisiana Court of Appeal upheld the dismissal of a lawsuit filed by Mary John Family, L.L.C. (“MJF”) against Stevens Construction & Design, L.L.C. (“SC&D”) and its owner, Adam Stevens, over allegedly defective renovations to a Metairie gas station, but reversed the trial court’s confirmation of an arbitration award. The dispute stemmed from a contract that required an Initial Decision Maker (IDM) review, followed by mediation before litigation. After billing disputes and claims of mismanagement arose, MJF sued SC&D for breach of contract and negligence, but SC&D argued that MJF failed to follow the contractual dispute resolution process. The trial court agreed, dismissing MJF’s claims based on contractual waiver. On appeal, the court found that while MJF had selected litigation as the final dispute resolution method, it waived that right by failing to initiate mediation within the required timeframe. However, the court reversed the confirmation of an arbitration award, ruling that the construction contract did not contain a valid arbitration agreement. 

Chubb Cap. I Ltd. v. New Orleans City, No. CV 23-5806, 2024 WL 3457611 (E.D. La. July 18, 2024)

Court Stays Litigation in Airport Construction Dispute Pending Arbitration Outcome

In a significant ruling affecting insurance coverage and arbitration agreements, the U.S. District Court for the Eastern District of Louisiana has granted a stay in the case of Chubb Capital I Limited et al. v. New Orleans City, pausing litigation until the resolution of ongoing arbitration. The dispute arose from a $51 million claim by the New Orleans Aviation Board (NOAB) against the Crescent City Aviation Team (CCAT) and its subcontractors, Daly and Atkins, for alleged design and engineering errors in the construction of a new terminal at Louis Armstrong New Orleans International Airport. The case is further complicated by the involvement of multiple insurers who issued professional liability coverage to Daly and Atkins and are contesting NOAB’s demand for arbitration. The insurers initially secured a preliminary injunction preventing NOAB from forcing them into arbitration, arguing that they were not parties to the underlying contract. However, the court has now ruled that further litigation should be put on hold pending the outcome of arbitration between NOAB and CCAT, Daly, and Atkins, as the insurers’ potential obligation to indemnify hinges on that decision. This ruling underscores the complex interplay between arbitration clauses, insurance coverage disputes, and contractual obligations in large-scale construction projects. 

Bienville Par. Sch. Bd. v. Thrash Constr. Servs., LLC, 56,021 (La. App. 2 Cir. 12/18/24), 402 So.3d 696

Court Upholds Dismissal of School Board’s Claims Due to Expired Peremptive Period in Construction Dispute

In Bienville Parish School Board v. Thrash Construction Services LLC, the Second Circuit Court of Appeal affirmed the dismissal of the Bienville Parish School Board’s (BPSB) claims against Thrash Construction Services LLC and its surety, North American Specialty Insurance Company (NASIC), due to the expiration of a five-year peremptive period under the Louisiana Public Works Act. The case arose from a 2014 contract for the construction of an all-weather track at Gibsland-Coleman High School, which faced significant structural issues, including failing retaining walls. After terminating the contract in 2018, BPSB filed suit, alleging defective construction and design. However, the contract contained an arbitration clause requiring disputes to be resolved through arbitration within the applicable statutory deadline. Although the court initially stayed litigation pending arbitration, BPSB never initiated arbitration proceedings. Thrash and NASIC later filed exceptions of peremption, arguing that the five-year statutory deadline had lapsed without arbitration being commenced. The appellate court rejected BPSB’s argument that its original lawsuit preserved its rights, emphasizing that the contract’s arbitration requirement was binding and that peremption—unlike prescription—cannot be interrupted or extended. The ruling underscores the critical importance of adhering to contractual dispute resolution mechanisms and statutory deadlines, particularly in public works projects where peremptive periods strictly govern legal claims.

Anderson v. Schumacher Homes of Louisiana, Inc., 2024-0678, 2024 WL 5244352 (La. App. 1 Cir. 12/30/24) 

Court Affirms Vacating Arbitration Award in Home Construction Dispute 

In Anderson v. Schumacher Homes of Louisiana, Inc., the First Circuit Court of Appeal upheld a trial court’s decision to vacate an arbitration award in favor of Schumacher Homes due to the arbitrator’s failure to disclose prior involvement in cases involving the builder. The dispute stemmed from alleged construction defects in the Andersons’ home, which was built by Schumacher in 2022 under a contract requiring arbitration for disputes. During arbitration, the selected arbitrator, Gary Giepert, failed to disclose that he had presided over two prior arbitration cases involving Schumacher in 2015 and 2016. After learning of this omission post-arbitration, the Andersons successfully argued that Giepert’s failure to disclose constituted “evident partiality” under Louisiana arbitration law, thereby warranting vacatur of the award. Schumacher appealed, claiming that the Andersons failed to prove actual bias, did not exercise due diligence in investigating the arbitrator’s history, and improperly served their motion to vacate. However, the appellate court found that the arbitrator’s undisclosed history with Schumacher raised legitimate concerns of impartiality, emphasizing that arbitration requires full transparency to ensure fairness. Additionally, the court ruled that the Andersons properly served their motion within the statutory three-month deadline. As a result, the appellate court affirmed the trial court’s decision, voiding the arbitration award and allowing the Andersons to pursue further legal remedies. This case underscores the critical importance of disclosure in arbitration proceedings and reinforces protections for homeowners in construction disputes. 

Contractors and Subcontractors
 

Graphic Packaging Int'l, LLC v. ARCO Nat'l Constr. Co., LLC, 55,962 (La. App. 2 Cir. 11/20/24), 401 So.3d 940 

Court upholds Louisiana Supreme Court ruling allowing indemnity claims to be brought before a judicial finding of liability or loss and reverses trial court dismissal of indemnity demand as premature

In this matter, a project owner for a commercial construction project brought an action for negligence and breach of contract against the general contractor (“ARCO”), alleging design and construction defects in concrete work performed by certain subcontractors. ARCO answered and filed third-party demands asserting contractual indemnity claims against various subcontractors. The subcontractors filed exceptions of prematurity, which were granted by the trial court. ARCO appealed the trial court’s rulings in favor of the subcontractors.

The question presented to the Court of Appeal was whether a third-party demand for indemnity must be dismissed for prematurity if the indemnitee had not yet been cast in judgment. If answered in the affirmative, the unjust result would be that ARCO’s claims of indemnity would be perempted pursuant to La. R.S. 9:27721, before any of the subcontractors could be cast in judgment.

The Court of Appeal discussed Louisiana Supreme Court cases that examined indemnity actions brought as cross-claims. In Suire v. Lafayette City-Par. Consol. Gov’t, (La. 3/12/05), 907 So.2d 37, the Louisiana Supreme Court stated that such an indemnity claim was premature until the indemnitee was cast in judgment – but did not dismiss the indemnity action. Rather, the Suire Court, which also dealt with the implications of the peremptive period of La. R.S. 9:2772, stayed the indemnity demand until resolution of the primary action. Pertinent to the analysis before the court was La. R.S. 9:2772, which mandates a peremptive period of five years on all actions brought against building contractors that arise from certain construction projects.

However, the Court recently rejected its finding in Suire that an indemnity claim was premature until the indemnitee was cast in judgment. Instead, in Bennett v. DEMCO Energy Srvs., LLC, 23-01358 (La. 5/10/24), 386 So.3d 270, the Court said that “asserting a claim for indemnity, arising out of the same facts and circumstances, is not premature before a judicial finding of liability. The right to collect on an indemnity agreement is determined upon judgment or finding of liability or loss, but there is no prohibition on asserting a claim for indemnity in the same proceeding.” Id at 276.

The Second Circuit found the trial court committed an error of law in dismissing ARCO’s third-party demands and reversed the trial court’s granting of the subcontractors’ exceptions of prematurity. In reaffirming the ruling in Bennett, the Second Circuit Court of Appeal highlights Bennett’s important implications on the timing of assertions of defense and indemnity claims in the context of construction litigation and all other areas of law as well.

Terrebonne Par. Sch. Bd. v. Grp. Contractors, LLC, 2023-1339, 2025 WL 354359 (La. App. 1 Cir. 1/31/25) 

Court finds contract null and void, giving opportunity to a competing contractor  

A parish school board brought a declaratory judgment action against its roofing contractor, seeking a declaration as to the validity of the contract between the board and the contractor for replacement of a roof. The contractor’s competitor, which had submitted the next-lowest bid on the roof replacement contract, filed a petition for intervention, praying for a judgment declaring the contract null and void, and declaring that the competitor was the lowest responsible and responsive bidder. 

The Court of Appeal of Louisiana, First Circuit, affirmed the trial court’s judgment that the contract was null and void and ordered the competitor be given an opportunity to conform to the bidding instructions.  In its analysis, the First Circuit considered Louisiana Public Bid Law as set forth in La. R.S. 38:2211, et seq. A public entity’s bidding requirements and instructions in advertisements and bid forms may exceed what is required by the Public Bid Law, as long as the statutory requirements are also met and the instructions do not conflict with the statutory requirements. Here, the Court found that the bidding instructions did not conflict with Public Bid Law. In addition, the Court found that the contractor’s bid was not in compliance with Louisiana law. 

Crawford Elec. Supply Co., Inc. v. Loga Holdings LLC, 2024-0870, 2025 WL 572966 (La. App. 1 Cir. 2/21/25), reh'g denied (Mar. 14, 2025) 

Summary judgment reversed for electrical materials supplier pursuant to the Louisiana Private Works Act 

An electrical materials supplier for a construction project brought this action against a subcontractor, principal of subcontractor, surety, and general contractor under the Louisiana Private Works Act, seeking to recover costs of supplies provided to the subcontractor for the project. The contractor and surety answered and filed a cross-claim against the subcontractor and principal. The Court of Appeal of Louisiana, First Circuit, considered the supplier’s appeal of the trial court’s granting of the contractor and surety’s motion for summary judgment dismissing the supplier’s claims.  

Ultimately, the First Circuit held that the supplier’s statement of claim contained a reasonable itemization of elements comprising of the nature of the obligation giving rise to claim or privilege, as required for the supplier to bring a claim under the Private Works Act. Specifically, the court found the use of “electrical supplies” in the Statement of Claim provided a general description of the nature of the debt, and that description achieved the purpose of a Statement of Claim, which is to given notice to the owner, contractor, and any third parties that a privilege is claimed on the property. In addition, it satisfied the general purpose of the Private Works Act, which is to protect materialmen who engage in construction or repair projects. Thus, summary judgment was reversed in favor of the electrical materials supplier.  

J. Caldarera & Co. v. Stigler, 24-402, 2025 WL 619142 (La. App. 5 Cir. 2/26/25) 

Misapplication of payments statute does not create cause of action for third parties

A contractor that repaired a home brought this action against the mortgage borrower, who owned the home, and the mortgagee, alleging in part that the mortgagee facilitated the homeowner’s misuse of insurance proceeds owed to the contractor and violated the criminal misapplication of payments statute, La. R.S. 14:202. The work the contractor had agreed to perform involved home repairs after Hurricane Ida. At trial, the mortgagee argued that it had no contract with the contractor, and there could thus be no breach of contract. In addition, the mortgagee argued that it had no duty to the contractor to reserve the insurance money for its payment, and the homeowner owes the contractor the money. The trial court granted the mortgagee’s motion for summary judgment, finding that the criminal statute did not provide a civil cause of action in favor of the contractor. The contractor appealed on the single assignment of error that there is no cause of action in favor of the contractor under La. R.S. 14:202.  

The Court of Appeal of Louisiana, Fifth Circuit, agreed with the trial court. The mortgagee’s receipt of insurance proceeds arose solely from the homeowner’s agreement with the mortgagee to protect its interest by naming it in her homeowner's policy as an additional loss payee. The Fifth Circuit did not read La. R.S. 14:202 as establishing a civil duty on behalf of a mortgagee to third parties. 

Pinnacle Constr. Grp., L.L.C. v. Devere Swepco JV, L.L.C., 2024-00406 (La. 2/6/25), 400 So.3d 878 

Supreme Court finds case not abandoned  

This suit was brought by a subcontractor against a landowner, contractor, and its insured, as surety of the payment bond. In the suit, the subcontractor claimed that it was not paid for work it performed in development of the landowner’s subdivision. The contractor and insured answered and filed a reconventional demand against the subcontractor and a cross-claim against the landowner. After the confirmation of default against the landowner, the trial court granted the insurer’s ex parte motion to dismiss on the grounds of abandonment and denied the subcontractor’s motion to set aside the dismissal. The subcontractor appealed, and the Court of Appeal affirmed the trial court’s judgment. The Supreme Court of Louisiana granted the subcontractor’s petition for review.  

The Supreme Court held that the insurer’s post-abandonment action of filing a continuance due to counsel’s emergency surgery, requiring the hearing to be reset, constituted a “step” in its defense of the matter, which waived its right to assert abandonment. Thus, the Supreme Court reversed and remanded the decision of the Court of Appeal.  

Louisiana Anti-Indemnity Act 
 

The Louisiana Anti-Indemnity Act (LAIA), La. R.S. 9:2780.1, went into effect on January 1, 2011. The purpose of enacting the Act was that indemnity provisions over which an indemnitor has no control are contrary to the public policy of the state of Louisiana and are null, void, and unenforceable.  

Specifically, the LAIA limits contractual liability and additional insured agreements in construction contracts and motor carrier transportation contracts. The statute declares null, void, and unenforceable a contract that purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the indemnitee from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the indemnitee, an agent or employee of the indemnitee, or a third party over which the indemnitor has no control. In addition, LAIA declares null, void, and unenforceable a contract which purports to require an indemnitor to procure liability insurance covering the acts or omissions or both of the indemnitee, its employees or agents, or the acts or omissions of a third party over whom the indemnitor has no control.   

While indemnification agreements that require defense and indemnity by an indemnitor for the acts or negligence of an indemnitee are against public policy, there is an exception for additional insured agreements in construction contracts. If an indemnitor recovers the cost of the required insurance in the contract price, then the additional insured agreement is valid. 

Ladner v. Ochsner Baptist Med. Ctr., L.L.C., 2024-0543, 2024 WL 5054503 (La. App. 4 Cir. 12/10/24) 

No duty to defend under Louisiana Anti-Indemnity Act without determination of fault 

An employee of a roofing contractor and his spouse brought a personal-injury suit against the owner of a medical center and its related entity, and the roofing contractor’s commercial general liability (“CGL”) carrier, alleging that the employee was injured after falling to the bottom of an elevator shaft at the medical center where the contractor was engaged in roofing work. The medical center’s owner filed a third-party demand for indemnification against the roofing contractor, alleging that the contractor was contractually required to have CGL coverage and excess coverage naming the medical center’s owner as an additional insured. In addition, the entity related to the medical center filed cross-claims against the contractor’s insurer, alleging that it was an additional insured under the contractor’s policies and that the insurer’s denial of coverage was in bad faith. The trial court denied the insurer’s and contractor’s motions for summary judgment as to the applicability of the LAIA and granted partial summary judgment to the medical center’s related entity on its cross-claims for defense and indemnity and bad faith. The insurer and contractor applied for supervisory writs.  

The Court of Appeal of Louisiana, Fourth Circuit, found that the LAIA applied, and that the indemnification provision was only enforceable under the LAIA to the extent of negligence on the part of the contractor or its employees. In addition, the Fourth Circuit found that the requirement in the roofing contract that the entity related to the medical center be named as an additional insured was enforceable under the LAIA only to the extent of negligence on the part of the contractor or its employees. Genuine issues of material fact over possible negligence by the contractor or its employees barred summary judgment for the contractor on the medical center's owner's third-party indemnification claims against the contractor; barred summary judgment for the insurer on the related entity’s cross-claims for defense and indemnification; and barred summary judgment for the related entity on its cross-claims against the insurer for defense and indemnification.  

Importantly, the Fourth Circuit found that the insurer did not breach its insurance contract by failing to immediately take up the related entity’s defense and was not liable for bad-faith penalties. Without determination of fault, the insurer’s duties were not triggered.

Riggio v. Ports Am. Louisiana, L.L.C., 2024-0436, 2024 WL 4986530 (La. App. 4 Cir. 12/5/24) 

No statutory interpretation of LAIA necessary  

This case involved a personal injury suit brought by a tractor-trailer driver after a collision on port property between his truck and a port yard truck. The defendants were the port operator, the yard truck driver, the port’s board of commissions, and the insurer. The port operator filed a third-party demand against the tractor-trailer driver's employer, its insurer, and an insurer that had issued a commercial general liability (CGL) policy to the employer's predecessor, seeking defense, indemnification, and insurance coverage based on the tariff governing the port. The trial court granted summary judgment on the third-party claims against them to the tractor-trailer driver’s employer, its insurer, and employer’s predecessor’s insurer. The port operator appealed.  

On appeal, the Court of Appeal of Louisiana, Fourth Circuit, considered the Louisiana Anti- Indemnity Act (“LAIA”), as the third-party defendants argued that the tariff governing the port was a “motor vehicle transportation contract” covered by the Act. The third-party defendants contended that the port operator was demanding defense, indemnification, and insurance coverage for its own fault, which the LAIA prohibits. The Fourth Circuit reasoned that the trial court found that the tariff did not violate the LAIA, and the port operator did not dispute this finding. Thus, the Fourth Circuit found no further statutory interpretation of the LAIA was warranted.  

Greer v. Sauer Constr. LLC, No. 2:23-CV-01243, 2025 WL 420544 (W.D. La. Feb. 6, 2025) 

Anti-Indemnity Act applies in federal enclave 

This suit arises from the death of Logan Greer, following an accident that occurred on November 1, 2022, at Fort Johnson, Louisiana. Greer was employed by RRAC Contractors, Inc. (“RRAC”) and was performing a pressure test on heating and cooling water piping systems underneath a barrack pursuant to a subcontract between RRAC and general contractor Sauer Construction, LLC (“Sauer”). Greer’s surviving spouse filed suit on behalf of herself and her minor child, raising state law claims of wrongful death and survival action against Sauer. Sauer filed a third-party complaint against RRAC and its insurer for defense and indemnity allegedly owed under the subcontract. RRAC and its insurer maintained that the defense and indemnity provisions were unenforceable under La. R.S. 9:2780.1 

Sauer moved for summary judgment on its right to defense and indemnity, arguing that Louisiana law had no application on Fort Johnson as a federal enclave.  In the alternative, Sauer argued that (1) as to any alleged negligence of Sauer, Sauer triggered the exception to the statutory prohibition by paying for the required insurance as part of the contract price and (2) the Louisiana Anti-Indemnity Act does not invalidate the insurer’s and RRAC's defense and indemnity obligations due to RRAC's own negligence. 

Although Fort Johnson is a federal enclave, Congress has created a right of action for wrongful deaths on federal enclaves, but provided that state law will govern with respect to such actions. Thus, the United States District Court for the Western District of Louisiana found that Louisiana law both governed the rights of the parties and extended to indemnity claims. As to the applicability of the Anti-Indemnity Act, the Western District found there were questions of fact as to whether Sauer provided sufficient funds to cover the applicable additional insured requirements. In addition, there was a question of fact as to whether Sauer was negligent, so the Court was unable to grant summary judgment.

Insurance Coverage

Perrodin v. W. World Ins. Co., 2024-524, 2025 WL 911081 (La. App. 3 Cir. 3/26/25) 

Louisiana Commercial General Liability Policies Exclude Coverage for Insured’s own Defective Work 

In Perrodin v. Western World Insurance Co., the Louisiana Third Circuit Court of Appeal affirmed a trial court’s summary judgment in favor of Western World Insurance Company, dismissing all claims brought by the homeowner. After purchasing a newly constructed home built and sold by Anthony Stymest and Oak Alley Construction, the homeowner alleged major structural defects and sued under the New Home Warranty Act (“NHWA”), La. R.S. 9:3141, as well as for damages under general tort and contract principles.  

Western World, Oak Alley’s commercial general liability (CGL) insurer, successfully argued that coverage was barred under two standard exclusions in its policy: “Damage to Your Work” and “Damage to Your Product.” The court rejected the homeowner’s argument that the home, being immovable property, should fall outside the scope of the “Your Product” exclusion, aligning with Louisiana jurisprudence that treats entire homes as products when sold by the builder. The court also emphasized that the NHWA is intended to provide consumer protection through homeowners’ insurance, not CGL policies, and does not override valid policy exclusions. The court cited several precedents, including Atain Specialty Insurance Co. v. VIG II, LLC and Supreme Services v. Greer, confirming that CGL policies are not intended to guarantee workmanship. While one judge dissented—arguing genuine issues of material fact remained concerning the applicability of a policy exclusion —the majority found no such issues and reinforced the principle that Louisiana CGL policies exclude coverage for repairing the insured’s own defective construction work. This decision reinforces the narrow application of CGL coverage in residential construction cases and clarifies that the NHWA does not compel coverage under commercial liability policies. 

Small Constr. Grp., LLC v. Berkshire Hathaway Specialty Ins. Co., No. CV 23-6866, 2024 WL 4953543 (E.D. La. Dec. 3, 2024) 

Court Allows Contractor’s Claim Against Insurer to Proceed in Public Works Dispute 

In a recent ruling that highlights the complexities of public construction disputes, a federal court denied Berkshire Hathaway Specialty Insurance Company’s motion to dismiss a lawsuit filed by Small Construction Group, LLC (“Small Construction”). The case centers around a public works project for the construction of a high school in New Orleans, where Small Construction performed masonry work under a subcontract with general contractor Lemoine Company, LLC. Small Construction alleged that discrepancies in construction drawings led to incorrect material orders, requiring additional work and costs that Lemoine and the project architect expressly authorized but later refused to pay. The contractor filed a claim under the Louisiana Public Works Act (“LPWA”) against Berkshire Hathaway, which had issued a statutory payment bond for the project. The insurer sought dismissal, arguing that Small Construction failed to meet contractual requirements for change orders, including written approvals and timely notices. However, the court ruled that the allegations in the amended complaint were sufficient to state a claim under the LPWA, emphasizing that whether the subcontract was modified through conduct or implied agreement is a factual issue that cannot be resolved at the motion-to-dismiss stage.  

The ruling reinforces the LPWA’s purpose of protecting subcontractors and suppliers on public projects and ensures that contractors can pursue legitimate claims for unpaid work despite procedural defenses raised by insurers or general contractors. With the motion denied, Small Construction’s case will proceed, allowing discovery and further legal proceedings to determine the validity of its claim for payment. 

Conclusion

As our clients continue to navigate the ever-evolving landscape of Louisiana construction law, staying informed and proactive is key. The insights shared in this edition highlight challenges and opportunities, underscoring the importance of adaptability and strategic action. We look forward to providing you with additional construction law updates and perspectives in our next newsletter.
 

Sidney W. Degan, III

Managing Partner 
E-Mail: sdegan@degan.com

DEGAN, BLANCHARD & NASH 
A PROFESSIONAL LAW CORPORATION
NEW ORLEANS | BATON ROUGE | LAFAYETTE
WEBSITE: WWW.DEGAN.COM

 

DEGAN, BLANCHARD, & NASH CONSTRUCTION LITIGATION PRACTICE GROUP

Degan, Blanchard & Nash’s Construction Litigation Practice Group has handled construction cases involving both commercial and residential buildings and a wide variety of alleged defects.  Residential and commercial construction defect cases include, among many others, foundation subsidence, EIFS cladding system failures, structural integrity, mold, and improperly applied roofs.  We have handled these cases under both first and third-party policies.  This group also handles other professional liabilities involving architects, engineers, and other construction specialists.   

Our technical expertise, including the education and training of attorneys involved in the handling of construction defect litigation, can often be invaluable when dealing with issues arising from construction claims.  We have many years of experience and are familiar with the issues involved in handling construction claims.  We have handled cases in all areas of construction law, including contract litigation, redhibition (implied warranty of fitness for an intended purpose), defect claims litigation, delayed claim litigation, design defect litigation, material failure litigation, as well as architect and engineer liability.  The members of our firm have taken cases from inception through trial to conclusion.  We pride ourselves on the aggressive, proactive defense of claims, seeking to gain the best overall economic outcome for our clients. 

Not only have we handled construction cases for years, but we are also involved in numerous emerging issues arising in the area of mold, EIFS, Chinese Drywall, and CCA-treated wood litigation.  We are fully experienced in all areas of coverage, especially the coverage triggers, insurance contract language, duty to defend, duty to investigate damages, legal trends regarding coverage for the fairly new types of claims, and applicable exclusions which may apply. 

Our larger commercial construction defect cases include a boutique hotel renovation project.  The renovated hotel was alleged to suffer from water vapor and moisture intrusion due to faulty exterior masonry cladding, roof problems, and a defective HVAC system.  The hotel had a severe mold problem, which had been exacerbated by the use of vinyl wall covering in the interior.  Approximately 25 defendants were involved, and this case has an estimated judgment value of more than $50,000,000.  

We are also handling several multi-million dollar construction litigation cases involving defective parking lots at a truck stop, defective construction of a large apartment complex, defective construction of a nursing home facility, and an allegedly defective 18-building apartment complex, just to name a few, which are pending in various district courts across Louisiana. 

Our insurance clients in these cases have insured subcontractors, general contractors, and design professionals.  In defending these cases, we make extensive use of experts in the fields of structural engineering, mechanical engineering, architecture, and the construction trades.  We know, and regularly retain, the most effective experts in the Southeast to assist in our defense of these claims.  Due to Louisiana’s Direct-Action Statute, our insurer clients are usually named as defendants in the action filed against the design and construction companies.  We are knowledgeable of, and fully prepared to litigate, standard and nonstandard insurance coverage issues in the context of construction defect claims.  These coverage issues include lack of an occurrence, the expected or intended damage exclusion, the “work” and “product” exclusions (and the subcontractor exception to the exclusions), and date-of-loss issues, including trigger of coverage for property damage and bodily injury claims, loss in progress and the known loss doctrine.  We have litigated all of these issues in Louisiana courts.   

We are familiar with generally accepted construction project practices, including AIA contract documents and the standard division of responsibility among owners, architects, engineers, general contractors and subcontractors.  We are also very familiar with the Louisiana New Home Warranty Act, which governs some claims against developers and general contractors in new residential construction cases.  

The attorneys of DBN’s Construction Group who contributed to this update include: Sid Degan, Charles Long, Genevieve Jacques, Alina Pagani, Emma Dedman, Allison Colón, Jordan Amedee, Steve Schilling, Mandy Simon, Tanner Bryant, Jena Smith and Larry Mobley.
 

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