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Nugget Lake Charles, LLC v. W.G. Yates & Sons Constr. Co., No.
16-30496, 2017 WL 892407 (5th Cir. Mar. 6, 2017), the Fifth Circuit Court of
Appeals determined the 60-day period for general contractors to file a lien
against a project owner’s property under Louisiana Private Works Act §
9:4822(B) does not begin to run until the owner files either a Notice of Termination
or a Notice of Substantial Completion.
The Court rejected the owner’s interpretation of the statute that the
60-day period begins when the event of substantial completion occurs, not when
the Notice of Substantial Completion is filed.
W.G. Yates & Sons Construction Company entered into a contract with the
original owner of the Golden Nugget Lake Charles Hotel & Casino in Lake
Charles, Louisiana to complete a casino, hotel, and spa. A written notice of the contract was recorded
in July 2012. In 2013, Golden Nugget
Lake Charles, LLC purchased the Project.
Yates and Golden Nugget signed a Certificate of Substantial Completion
on December 1, 2014, but did not record the document as a Notice of Substantial
Completion, as required by the statute.
Nugget filed a complaint on November 25, 2015, alleging breach of contract,
breach of warranty and negligence in connection with the Project. Yates filed a counterclaim on December 21,
2015, alleging Golden Nugget was wrongfully refusing and delaying payment on
the Project. Two days later, Yates filed
a Statement of Lien and Privilege to secure payment for its work.
Nugget filed a Motion to Partially Dismiss Yates’ counterclaim, arguing Yates
did not file the lien within the statutory time period. The District Court determined the lien was untimely,
because, under the District Court’s interpretation of the statute, Yates failed
to file the lien within 60-days of substantial completion.
Circuit reversed the District Court’s judgment, holding the phrase “substantial
completion of the work” refers to a filed document, not an event. The Fifth Circuit interpreted Louisiana
Private Works Act § 9:4822(B) to place a burden on the project owner to take
affirmative action to cut off potential claims when a contract has been
recorded by either filing a Notice of Termination or a Notice of Substantial Completion. At the time either of these documents is
filed, the 60-day period for general contractors to file a lien begins to
run. The Fifth Circuit found that
because Golden Nugget failed take the affirmative action of filing the Notice
of Substantial Completion to start the 60-day time period and cut off potential
claims, Yates had a valid lien.
Circuit’s decision in this case affirms the importance of owners protecting themselves
and fulfilling all filing requests. The filing allows general contractors to distinctly
determine when the 60-day time period under Louisiana Private Works Act §
9:4822(B) begins to run. While we think
it is good practice for general contractors to file liens upon completion of a
project, they should be aware that an owner’s failure to comply with procedural
requirements may extend the lien period.