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• Louisiana Approved for SSBCI Funding By Angela W. Adolph Last week, the United States Department of the Treasury announced the approval of applications from Louisiana and a handful of other states for State Small Business Credit Initiative (“SSBCI”) funding. The SSBCI is an important component of the Small Business Jobs Act (“the Act”) that was signed into law last fall. This funding is intended to provide support to state-level programs, and is designed to generate billions in additional small-business lending and help create new private sector jobs. Under the Act, these states’ programs may receive a total of $360 million in SSBCI funds. Under the SSBCI, states must demonstrate a reasonable expectation that each $1 in federal funding will generate a minimum of $10 in new private lending. Accordingly, this $360 million allocation is expected to support more than $3.6 billion in new private lending. The states approved for SSBCI funding are: Alabama ($31.3 million), Florida ($97.7 million), ....
• 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 ....
• Preparing for a Tenant's Bankruptcy - the Landlord's Perspective by J. Eric Lockridge In today’s distressed retail market, the possibility of a tenant’s bankruptcy is a top concern for managers and owners of retail centers. Owners of commercial office buildings in many parts of the country are becoming increasingly concerned about tenant bankruptcies, too. Landlords need to know the options available when a tenant files for bankruptcy and should anticipate a tenant/debtor’s likely maneuvers in bankruptcy. This article provides a summary of relevant law and key strategic considerations to help landlords minimize losses and protect their interests when a tenant files bankruptcy. Leases & “Executory Contracts” Section 365 of the Bankruptcy Code allows a debtor (i.e., an entity that has filed for bankruptcy) to either assume or reject an executory contract or unexpired lease. This way, a debtor may decide to assume any valuable contracts and reject any burdensome ones. If a bankruptcy tenant decides to assume an ....
• The National Flood Insurance Program's S.F.I.P. Proof of Loss Requirement: A Trap for the Unwary By Clay Cosse In the aftermath of Hurricanes Gustav and Ike, homeowners filing flood insurance claims under the National Flood Insurance Program’s (“NFIP’s”) Standard Flood Insurance Policy (“SFIP”) should exercise extreme caution to avoid running afoul of the SFIP’s Proof of Loss requirement. SFIP policies require that insureds asserting a claim file a Proof of Loss within 60 days, subject to such extensions as FEMA may approve, listing “the actual cash value of each damaged item of insured property, the amount of damage sustained, and the amount claimed as due under the policy to cover the loss." Courts have consistently enforced this requirement in an extremely strict and severe manner, holding that failure to timely file a Proof of Loss complying with the regulatory requirements is a valid basis for denying an insured's claim. If the policyholder does not strictly comply with the Proof of Loss requirement, the policyholder may ....
• COMMERCIAL LEASES: EXCLUSIVE AND PROHIBITED USE CLAUSES by Brett N. Brinson Most commercial leases for multi-tenant properties contain clauses which regulate the tenants' use of the leased premises. Many tenants will require a landlord to grant the tenant the exclusive right to operate a certain business or sell a certain product to avoid competing with other tenants. These provisions are appropriately referred to as exclusive use clauses. For the landlord to satisfy its obligations under an exclusive use clause of one lease, the landlord is required to incorporate provisions in its other leases prohibiting the other tenants from using the leased premises for the restricted purpose. These clauses are commonly referred to as prohibited use clauses. A landlord may also include a prohibited use clause to prevent a tenant from using the leased premises in a manner which the landlord believes is a nuisance to the other tenants and reducing the overall value of the property. For example, a landlord may consider a ....
• 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 ....
• Withholding Consent to Assignment - What is Reasonable? By Linda Perez Clark Very often, contracts prohibit assignment without the other party's consent. If you think you might ever want to assign a contract (bearing in mind that a merger or sale of the business can trigger assignment), then this kind of provision should generally be modified by adding that the other party's consent cannot be unreasonably withheld, conditioned or delayed. Without this language, consent can generally be withheld as long as doing so does not rise to the level of "abuse of rights," a theory difficult to prove (i.e., proof of intent to harm or a violation of good faith is required). Adding the language recommended above will require the other party to demonstrate some legitimate reason for denying consent, such as the proposed assignee is financially inferior to the assignor; the assignor is in default; or the proposed assignee cannot comply with the existing terms of the subject agreement. In a recent case, the court found that a landlord withholding consent ....
• Wind Versus Flood Coverage and Hurricane Katrina By Mark D. Mese Reproduced with permission from Class Action Action Litigation Report, Vol. 6, No. 21, pp. 795-797 (Nov 11, 2005). Copyright 2005 by The Bureau of National Affairs, Inc. (800-372-1033). http://www.bna.com The damages caused by Hurricane Katrina in Louisiana, Mississippi, and Alabama constitute the largest natural disaster in U.S. history. Hurricane Katrina's impact on insurers and their policyholders have already set in motion what will probably be one of the largest legal and public policy storms to hit the United States in modern times. Nowhere will the storm be more evident than in disputes involving wind and water damage coverage. The eye of the coverage storm is already manifesting itself in coastal areas of Louisiana, Mississippi, and Alabama. Insurers providing property and homeowner coverage in Katrina affected areas are taking the position in many cases, that most if not all of a policyholder's damages resulted from rising water flooding, thus resulting damages ....
• Louisiana Contracts and the Doctrine of Impossibility By the Kean Miller Business Law Team Many businesses in Louisiana are now assessing how Hurricane Katrina and Hurricane Rita have affected and will continue to affect their contracts with clients, vendors, partners, and others. This article provides some general guidelines that businesses can use to determine if and how their contracts' terms or Louisiana's commercial law may affect contractual rights and obligations in light of the hurricanes. Always Read the Contract First! The first step in assessing how the rights and duties in a given contract may be affected by Hurricane Katrina is to review the contract itself. Does the contract contain a provision that states if and how the parties' obligations change in the event of a hurricane or flood? If the answer is yes, then a party should follow the terms provided in the contract. If a party is unable or unwilling to abide by the contract's terms, it should contact the other parties as soon as possible about amending the agreement to ....
• Louisiana Taxpayer Victory May Help Others Avoid Increased Assessments By Christopher J. Dicharry Assessors are charged with the duty of determining the fair market value of business and residential property in Louisiana so that annual ad valorem property taxes can be imposed. This duty to determine fair market value is modified by a duty to insure that assessments are uniform. That is, similar properties should have similar assessments. In order to balance these duties, assessors are required to reassess real estate at least every four years so as to bring all properties up to a uniform fair market value. (Movable property (i.e. personal property), including machinery and equipment, is reappraised based on schedules issued by the Louisiana Tax Commission on an annual basis). Over the years many assessors have increased the value of individual properties when they are sold. Thus, the new owner gets a higher assessment and higher taxes than the owners of similar properties that have not sold. In Club New Orleans, Inc. v. Board of Review, La. Tax Commission ....
• Louisiana In-House Counsel Rule Deadline Approaching By Lolly White In-house counsel who are employed in Louisiana but are not licensed to practice law here have until July 1, 2005 to file an application for limited licensure to practice under the Louisiana Supreme Court's new In-House Counsel Rule. Louisiana Supreme Court Rule XVII, Section 14, provides that a lawyer who is admitted and authorized to practice law in another state or territory may receive a limited license to practice law in this state when the lawyer is employed in Louisiana as a lawyer exclusively for a corporation, its subsidiaries or affiliates and/or a business which consists of activities other than the practice of law if the lawyer has filed an application for a limited license with the Committee on Bar Admissions. The Committee on Bar Admissions is comprised of 15 active members of the Louisiana State Bar Association who are appointed by the Louisiana Supreme Court. Click here for the application for Limited Licensure As In-House Counsel. This application, ....
• Tenant Improvements - Who Owns Them? By Brett N. Brinson Who owns the improvements constructed by a tenant is often a critical issue when a lease terminates. If a lease does not address the issue, the relevant Louisiana Civil Code Articles will apply. Effective January 1, 2005, Louisiana revised the Civil Code Articles regarding leases. The revised Articles specifically address improvements made by tenants and govern if the lease is silent on the issue. Civil Code Article 2695 now specifically addresses the removal of improvements made by tenants. The Article grants the tenant the right to remove any improvements the tenant has made even if the tenant made the improvements without the landlord's consent. If the tenant does not elect to remove the improvements and restore the leasehold premises to its prior condition, the landlord may: (1) keep the improvements and reimburse the tenant for the lesser of: (i) the enhanced value of the improvements, or (ii) the cost of the improvements; or (2) the landlord may demand that ....
• Understanding a Lease Obligation to Restore to "Original Condition" A lease usually imposes on the tenant an obligation to return the leased property in the same condition as when delivered, excepting ordinary wear and tear. Even in the absence of such a contractual clause, an obligation to so restore the leased property is imposed by law. This type of obligation may impose on a tenant more far-reaching consequences than anticipated. Download article and see page 2 ....