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• GO Zone Bonds Approved for Current Refundings By Angela W. Adolph The Gulf Opportunity Zone Act of 2005 (the “Act”) added several new sections to the Internal Revenue Code that provide certain tax benefits for affected hurricane disaster areas. Section 1400N(a) authorized the issuance of Qualified Private Activity Bonds (“Qualified Bonds”) to finance the construction and rehabilitation of residential and nonresidential property located in the Gulf Opportunity Zone (“GO Zone”). The Act gave private business owners and corporations the opportunity to borrow capital at favorable tax-exempt rates to acquire, construct, reconstruct or renovate qualified property in the GO Zone. The deadline for the issuance of GO Zone Bonds was extended through the end of 2011. However, the Act did not address the current refunding of Qualified Bonds after the applicable issuance deadline had passed.   In a refunding, an issuer sells bonds and uses the proceeds to redeem outstanding debt that typically has ....
• A Primer on Public-Private Partnerships By Angela W. Adolph In today’s political and economic environment, in which public resources available for infrastructure development and maintenance are increasingly scarce, Public-Private Partnerships (PPPs) offer a welcome alternative to traditional financing and operation models. A PPP is a contractual agreement between a public agency (federal, state or local) entity and a private sector entity to deliver a service or facility for public use. The Louisiana Supreme Court has recognized the public benefits of PPPs, finding that “public-private partnerships that take advantage of the special expertise of the private sector are among the most effective programs to encourage and maintain economic development, and that it is in the best interest of the State and its local governments to encourage, create, and support public-private partnerships.” See Board of Directors of Indus. Devel. Bd. of City of Gonzales, Louisiana, Inc. v. All Taxpayers, Property Owners, Citizens ....
• First Circuit Court of Appeals Issues Appellate Decision in Connection with the Louisiana New Home Warranty Act and its Application to Chinese Drywall Claims By Mark D. Mese The Louisiana First Circuit Court of Appeals has issued the first Appellate Court decision dealing with the Louisiana New Home Warranty Act and its application to Chinese Drywall claims in the case of Jennifer L. Caminita, wife of/and Frank L. Caminita v. Regina, wife of/and Barney Core, Smith and Core, Inc., et al., State of Louisiana Court of Appeals, First Circuit, 2010 CA 1961. The First Circuit has ruled that the periods of limitation set forth in the New Home Warranty Act provide the exclusive periods by which claims can be brought against home builders for alleged defects related to the installation of Chinese Drywall in new homes. In the Caminita case the First Circuit specifically found that the one year preemptive period provided by La.R.S. 9:3144A(1) was applicable to claims related to Chinese Drywall incorporated into new homes. Based on this finding, the court dismissed the action against the home builder. This ruling by the Louisiana First Circuit Court of ....
• Lenders and Developers Need to Understand How Louisiana's Private Works Act Applies to Their Projects By J. Eric Lockridge A recent opinion from the United States Bankruptcy Court in Baton Rouge, Louisiana shows that even experienced lenders and developers may not always understand how Louisiana’s Private Works Act applies to their project, and how much leverage a properly filed notice of contract can provide to a general contractor.  Tuscany Reserve, LLC (“LLC”) was formed by sophisticated developers for the purpose of developing a new apartment complex in Baton Rouge. LLC obtained acquisition and construction financing from a bank (1st Bank), which properly recorded its mortgage on the project before work commenced. LLC hired “Contractor” to build the complex; Contractor recorded its notice of contract in the parish mortgage records.  As often happens, a dispute developed between LLC and Contractor regarding the work performed and lack of payment.  Contractor stopped work and filed a lien on the property under the Louisiana Private Works ....
• Louisiana Contractors Doing Business in Mississippi Must Attach Louisiana's Resident Bidder Preference Laws or Risk Losing Public Bids By Casey E. Faucon On March 17, 2010, Mississippi Governor Hayley Barbour signed into law an amendment to Mississippi’s public bid law, more specifically, to Mississippi’s resident “preference law.” Miss. Code Ann. § 31-3-21(3). Under this recent amendment, all non-Mississippi resident contractors who bid on Mississippi public works contracts must attach to their bid a copy of their own state’s bidder preference laws. In other words, if a Louisiana resident contractor wants to bid on a Mississippi public works contract, that contractor must attach to his bid a copy of Louisiana’s resident bidder preference laws, or else the Mississippi public agency must reject the bid. Each state has different resident bidder preference laws. Some states require either that a non-resident’s bid amount be reduced by a certain percentage or that a resident’s bid be increased by a certain percentage if a non-resident bidder also bids on the project. ....
• Beware: Arbitration By David K. Nelson In an arbitration, the parties agree to hire one or more neutral third parties to hear the dispute and issue a ruling.  The parties further agree to abide by that ruling.  If one party fails to do so, the ruling can be enforced by a court of law just as if an actual judgment had been entered.  Some suggest the process is less costly and more efficient than litigation; however, significant rights can be lost under the guise of so called legal efficiency.For example, what happens when the arbitrator gets it totally wrong, misunderstands the facts, and totally ignores or misapplies the law?  If the matter had been tried in a court of law, the losing party would have had an absolute right to appeal the ruling to an appellate court.  However, in an arbitration, there is no right to appeal.  Both the Federal Arbitration Act and Louisiana’s arbitration statutes set forth very narrow and fact specific grounds for vacating or modifying an ....
• IRS Issues Safeharbor Relief for Those Impacted by "Chinese Drywall" By Kevin C. Curry On September 30, 2010, the Internal Revenue Service issued guidance providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.  In particular, the IRS issued Revenue Procedure 2010-36 which enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a ”safe harbor” formula for determining the amount of the loss.In numerous instances, homeowners with certain imported drywall have reported blackening or corrosion of copper electrical wiring and copper components of household appliances, as well as the presence of sulfur gas odors.  In November 2009, the Consumer Product Safety Commission (CPSC) reported that an indoor air study of a sample of 51 homes found a strong association between the problem drywall, levels of hydrogen sulfide in those homes and corrosion of metals in those homes. Revenue Procedure 2010-36 ....
• Recent Developments in E-Discovery in Louisiana By Katie D. Bell Electronic Discovery, or “E-Discovery”, is not considered the “novel issue” it once was. However, E-Discovery still presents problems that litigants and courts struggle with. Below is a summary of recent Louisiana Federal Court opinions dealing with the issues surrounding E-Discovery. In Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. Jan. 22, 2007), the Western District of Louisiana granted the plaintiff’s motion to compel. In an unfair competition and trade secret theft action, the plaintiff claimed that the defendant, a former employee, had stolen various data files. Plaintiff had unsuccessfully requested production of defendant’s laptop and desktop. The Court granted the motion to compel the defendant to produce these two items because they were the most likely places that the data files would be located. The Court did institute protective measures so as to prevent the disclosure of any irrelevant or personal information. ....
• Louisiana Courts Rule on New Home Warranty Act and Dismiss Chinese Drywall Claims Against Contractors By Mark D. Mese Judges in East Baton Rouge and St. Tammany Parish have issued two of the earliest rulings on the impact of the Louisiana New Home Warranty Act on claims by homeowners against contractors for damages related to Chinese Drywall. Both state district court judges have found that the Louisiana New Home Warranty Act is the exclusive remedy as between a builder and a homeowner for damages caused by Chinese Drywall. Both judges have also ruled that the Chinese Drywall incorporated into homes in Louisiana is not a structural component of the home and is thus subject to a one year warranty period. In both of the district court cases, the courts dismissed the plaintiff’s case because the suits against the contractors were brought more than one year after the homes were occupied by the original owners. The rulings by the district court judges should have no impact on homeowner claims against suppliers and manufacturers of Chinese Drywall as the Louisiana New Home Warranty Act ....
• New Law Requires Public Works Contract Bidders to Certify They Have Not Pleaded Guilty to Certain Crimes By Lisa A. Easterling A law passed by the Legislature and signed by Governor Bobby Jindal (Act 945) requires all bidders for public works contracts to certify that they have not entered a plea of either guilty or nolo contendre to certain crimes. Each bidder for public works contracts must certify in writing that they have not pleaded guilty or nolo contendre to: (1) public bribery (La. Rev. Stat. 14:118); (2) corrupt influencing (La. Rev. Stat. 14:120); (3) extortion (La. Rev. Stat. 14:66); or (4) money laundering (La. Rev. Stat. 14:230).Additionally, a conviction of or a plea of either guilty or nolo contendre to the following state crimes or their federal counterparts bars any person or bidding entity from bidding on public projects for 5 years from the date of conviction or the date they entered the guilty or nolo plea: theft; identity theft; theft of a business record; false accounting; issuing worthless checks; bank fraud; forgery; contractors/misapplication ....
• New Law Requires Contractors to Disclose the Sharing of Contract Commission/Fees in No-Bid State and Local Government Contracts By Lisa A. Easterling A new law (Act 868) passed by the Legislature and signed by Governor Bobby Jindal on July 2, 2010 requires contractors who are awarded no-bid contracts with state and local entities, or $10,000-plus bid contracts with local entities, to disclose all commissions and fees in writing.Contractors must provide a notarized affidavit of the fee disposition on a form approved by the Board of Ethics. The affidavit shall include: (1) the full value of the commission, fee or other consideration; (2) the names of all parties to receive dispositions, splits, or shares of the commission, fee or other consideration; and, (3) the signature of the party authorized to commit the entity receiving the commission, fee or consideration to the contract. If the fee sharing changes, a new affidavit reflecting the changes is required and must be recorded by the contractor in the public record. If the recorded affidavit is determined to be incorrect, then the contract becomes ....
• Building Permit Requirements Changed for Non-Resident Contractors By Lisa A. Easterling A new Louisiana law requires non-resident/out-of-state contractors to provide additional information before a building permit can be issued. The new law, amending La. Rev. Stat. 37:2171.2 (Act No. 67), has been signed by the governor. It requires a non-resident commercial, residential, or home improvement contractor to provide (1) its federal tax payer identification number to the local building permit official and (2) proof of registration to do business in Louisiana before a building permit can be issued.   ....
• What does the Transfer of Chinese Drywall Cases by the United States Judicial Panel on Multidistrict Litigation Mean? Throughout 2004–2007 a housing boom along with a series of hurricanes in the Gulf of Mexico combined to create a shortage of drywall in the United States.  Needing drywall to build the homes that were much in demand, suppliers turned abroad. Chinese manufacturers stepped in, providing cheap and readily available material.  This influx of Chinese drywall was concentrated in Florida, Louisiana, and Mississippi; the states most affected by Hurricanes Wilma, Katrina, and Rita.  Since 2006, it has been estimated by some sources that more than 550 million pounds of drywall have been imported from China.  There are reports that some 100,000 homes could possibly be affected nationwide. Reports of the damage caused by Chinese drywall to air conditioning units and appliances as well as health problems associated with it started to surface in 2006.  It has been reported that organic and chemical compounds in certain samples of drywall causes a ....
• Louisiana Legislature directs DHH, the Department of Insurance, and the Louisiana State Licensing Board for Contractors to Study the Effects of "defective Chinese Drywall" By G. Trippe Hawthorne The Louisiana Legislature has adopted House Concurrent Resolution No. 185, authored by Representative Tim Burns.  The resolution urges and requests that the Department of Health and Hospitals and the Deptartment of Insurance, in consultation with the Louisiana State Licensing Board for Contractors, investigate the health risks associated with living in homes that contain drywall imported from China, study the potential homeowners insurance coverage issues, including triggers, endorsements, and exclusions to policies that are related to drywall imported from China, and determine whether such material should be identified as a substandard, unsafe building material.  The resolution goes on to request a report of the findings and recommendations of this study to the legislature prior to the convening of the 2010 regular session. A copy of the enrolled version of the resolution can be seen here: Download file ....
• Three Things Every Contractor Should Know Before Signing That Construction Contract for Building Remediation by G. Trippe Hawthorne and Mark D. Mese In a perfect world, Contractors would only do business with owners, designers, subcontractors, and material suppliers that they know well and trust. No surprises, misunderstandings, or disasters. In this world, doing business is risky. The trick is to identify and analyze as many of the risks as you can, so that when you take a risk, you know what the risk is, and have some ideas about how to deal with it, should things go badly. Here are three risks that you always want to identify and analyze:  1. Who is paying for the work and what is the payment mechanism? In other words, if you are doing remediation, are you going to be paid by the property owner, the building tenant, their insurer, their bank? If the person you have contracted with can’t or won’t pay you, do you have a mechanism of getting funded from the funding source? 2. What is the history of the building where you are working? Are those asbestos tiles? Is that mold in ....
• Reminders About Louisiana's Contractor Licensing Law for Commercial Property Owners by G. Trippe Hawthorne As Insurance claims continue to be adjusted and paid out, Louisiana residential, commercial, and industrial property owners will begin the process of contracting with Contractors to repair hurricane damage. As you do so, be mindful of Louisiana’s Contractors’ Licensing law and its potential impact on you. First, know that the purpose of the licensing law is to protect Louisiana’s citizens by attempting to ensure that contractors have at least a minimal level of financial resources and insurance coverage, basic construction knowledge, and some accountability for their financial obligations. The benefit to citizens is the initial screening or weeding out of contractors that have absolutely no business in that business. It’s not foolproof, but it does help.  What the Licensing law will not do is effectively resolve any breach of contract type disputes. Assuming the contractor has met the minimum standards set out by the ....
• Using and Modifying Industry Form Construction Contracts by Linda Perez Clark and Jeffrey N. Boudreaux A number of construction industry trade groups or associations, such as the American Institute of Architects (AIA) and the Design-Build Institute of America (DBIA), among others, have developed a variety of “standard form” construction contracts that have been used in the industry for many years, and are periodically updated. When engaging an architect or contractor, many owners are requested to sign these standard form agreements.   The beauty of these standard forms is that they are “tried and true,” as they have been around for a number of years and have been the subject of extensive litigation interpreting their content. They are also very comprehensive and address the many contingencies that come up during the construction process. But owners should avoid signing the standard form agreement without modifying the more heavy-handed, contractor-friendly provisions to make them fairer to the ....
• Construction Law Litigation Strategies by David K. Nelson Much of the time of a construction lawyer is spent assisting clients in finding solutions to the many problems that befall the typical construction project. These problems range from simple contract preparation and negotiation to the more fact-intensive work of constructive defect litigation, surety claims, liens, and payment issues. Each construction project, no matter how complex or simple, involves the same basic issues: • What is the scope of work that the parties agreed to? • What documents or plans define the scope of work? • How is the contractor to be paid for his work? • How can the owner be assured that the contractor is doing the work properly? • What is to be done when there are issues or problems with respect to any of the above? The job of the construction attorney is to help chart a course through this minefield and ideally resolve issues without judicial intervention. See the rest of the article here. It is an article of ....
• What is the Gulf Opportunity Zone? Many C-Level executives and small business owners have heard of the Gulf Opportunity Zone (the GO Zone Act) and know that it does something for Louisiana businesses, but they do not know if or how the new law can help them and their employees. Kean Miller has prepared a comprehensive summary of the GO Zone Act and its sister law, the Katrina Emergency Tax Relief Act of 2005 ("KETRA"). This summary describes the key legislative provisions and explains how Louisiana-area businesses, both large and small, can maximize the GO Zone benefits available to them.In a nutshell, the new GO Zone legislation is the best business investment incentive program that the Gulf Coast has seen in recent memory, perhaps ever. Businesses that are considering expanding their Louisiana operations or relocating to an incentive-rich area should consider speeding up their plans quickly to take advantage of the GO Zone incentives before they expire. Download the full outline here. For more information, contact a ....
• Insurance Coverage for Defective Workmanship By G. Trippe Hawthorne A recent case out of Louisiana could be big news for general contractors, owners, and insurers. Louisiana's Second Circuit Court of Appeals agreed with a lower court's opinion that an upstream contractor was entitled to insurance coverage for the cost of repairing defective work performed by a subcontractor (Broadmoor Anderson v. National Union Fire Insurance of Louisiana).The Project was construction of the Hollywood Casino Hotel in Shreveport. The insurance policy at issue was a Commercial General Liability Policy, purchased by the project owner, and which named as additional insureds "all contractors" and "all tiers of subcontractors." After construction was completed, the owner began to notice problems with the ceramic tile shower stalls in many of the guest rooms. It was determined that the leaks were caused by defective workmanship in the installation of the shower pans, and the general contractor and subcontractor collaborated on a remediation of the ....