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October 2nd, 2017
architects and engineers
SUBSTANTIAL COMPLETION IS DETERMINABLE BY COURTS DESPITE ARCHITECT’S OPINION

In Parkcrest Builders, LLC v. Housing Authority of New Orleans, 2017 WL 3394033 (E.D. LA. 2017), the United States District Court for the Eastern District of Louisiana held the Court could determine whether substantial completion had been achieved, despite a contract provision assigning this determination to the Architect.

The Housing Authority of New Orleans (“HANO”) hired Parkcrest Builders, LLC (“Parkcrest”) to serve as the contractor for the construction of a housing development in New Orleans (the “Project”). The Project consisted of twenty-six separate buildings incorporating fifty-one residential homes and one management office. HANO subsequently contracted with Perez, APC (“Perez”) to serve as the architect on the Project. As the project architect, Perez was responsible for tracking the construction progress by signing off on all change orders and pay applications and was assigned responsibility for certifying the Project was substantially complete.

Parkcrest and Liberty Mutual Insurance Company, the Bond Company who took over the Project, informed HANO that it considered the project substantially complete in May 2016. In June 2016, Perez stated it was unable to certify substantial completion of the Project, citing numerous portions of construction yet to be finished by Parkcrest.

Parkcrest sued HANO alleging breach of contract for the failure to grant substantial completion and issue final payment. The Court sought to determine whether substantial completion was solely determinable by the Architect and whether that determination meant no remaining factual disputes existing on summary judgment was warranted. The Court noted whether substantial completion is reached is determined by the contract between the parties. In this matter, the contract clearly stated the Architect was to make the determination on whether the Project had reached substantial completion. Despite this finding, the Court cited Louisiana case law which supported the conclusion that a trial court can make a factual determination regarding substantial completion, even if that determination contradicted the Architect’s opinion.

Substantial completion is a critical determination in construction that affects everything from final payment to warranties being triggered.  In Louisiana, Courts will continue to hear arguments regarding whether substantial completion has been achieved, despite the determination by a project architect that substantial completion has not been reached. Architects and Engineers should be aware that their opinions regarding the date of substantial completion are not set in stone. The Court can override the design professional’s opinion about substantial completion and enter its own finding in Louisiana.

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