United States Court of Appeals

Fifth Circuit



## FILED

May 27, 2005

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 04-30344

IN THE MATTER OF: WHITAKER CONSTRUCTION COMPANY, INC.,

Debtor,

WHITAKER CONSTRUCTION COMPANY, INC.,

Appellant,

versus

BENTON & BROWN, INC.; LS DECKER, INC.;

MCNEER ELECTRICAL CONTRACTING, INC.;

MARTIN SPECIALTY COATINGS, INC.;

OAK CLIFF MIRROR & GLASS, INC.;

OVERHEAD DOOR COMPANY OF SHREVEPORT, INC.;

THOMPSON DRYWALL & INTERIORS, INC.,

Appellees.

Appeal from the United States District Court

for the Western District of Louisiana

Before GARZA, DeMOSS, and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Whi taker Construction Company, Inc. (“Whitaker”) appeals from the district court’s judgm ent

affirming the bankruptcy court’s grant of summary judgment for Benton & Brown, Inc., LS Decker,

Inc., McNeer Electrical Contracting, Inc., Oak Cliff Mirror & Glass, Inc., Overhead Door Company

of Shreveport, Inc., Thompson Drywall & Interiors, Inc. (collectively the “Claimants”). Whitaker2

argues t hat the bankruptcy court erred in holding that the Claimants timely filed their claim

statements. Whitaker contends that the bankruptcy court’s conclusion was based on an erroneous

interpretation of the Louisiana Public Works Act, L A

. R EV

. S TAT

. 38:2241 et seq

. For the following

reasons, we reverse the ruling of the district court and render judgment for Whitaker.

FACTUAL AND PROCEDURAL HISTORY

On July 19, 2000, Whitaker and the City of Shreveport (the “City”) entered into a standard

construction agreement. This construction agreement called for renovations to Independence

Stadium, a sports facilit

y owned and operated by the City. The renovations entailed the construction

of a “Sout h End Zone Shell Package,” which consisted of concession areas, bathrooms, and club

seating in the south end zone of the stadium. Alliance, Inc. (“Alliance”), a Shreveport architectural

firm, was designated the project architect. The agreement was recorded in the Caddo Parish public

records on July 26, 2000. Fidelity & Deposit Company of Maryland (“Fidelity”) issued a statutory

payment bond on behalf of Whitaker, pursuant to the Louisiana Public Works Act, L A

. R EV

. S TAT

.

38:2241 et seq , guaranteeing that those supplying labor and materials to the project would be paid.

The project was scheduled to be completed by July 31, 2001. By December 2001, the project

had not been completed, nonetheless, on December 27, 2001, the NCAA’ s Independence Bowl

football game was played in the stadium.

On January 8, 2002, an Alliance representative issued a certificate of substantial completion

for the project; representatives for Whitaker and the C it y signed the document on that same date.

The original date of issuance, January 8, 2002, was changed to read December 22, 2001. On January

10, 2002, the certification of substantial completion was filed in the Caddo Parish public records. The

City’s endorsement of the document stated that “[t]he Owner [City] accepts the work or designated3

porti on as substantially complete and will assume full possession at noon, 12 :00 p.m. (time) on

December 22, 2001 (date).” Whitaker’s endorsement stated that “[t]he Contractor [Whitaker] will

c o mplet e or correct the Work on the list of items attached hereto within thirty (30) days from the

above date of Substantial Completion.” However, work on the project continued for the next several

months, until at least April 25, 2002.

The Claimants were subcontractors and suppliers to Whitaker on the Independence Stadium

project. On June 21, 2002, the first in a series of claim statements were filed o n t he project by

various claimants, all invoking the Public Works Act. Later that year, Whitaker voluntarily petitioned

for bankruptcy. Whitaker sent demand letters to claimants requesting that they cancel their claims

because Whitaker argued that the claim statements were all untimely filed. Some claimants complied;

the Claimants currently before this court are those who refused to cancel their claims.

Whitaker filed this adversary proceeding in bankruptcy court agai nst the Claimants, requesting

a declaratory judgment that the Claimants’ claim statements were unt imely because they were not

filed in the public records within 45 days of the City’s recorded acceptance of the project on January

10, 2002. Whitaker and the Claimants each filed cro ss-mo tions for summary judgment on the

t imeliness issue; the motions centered on the interpretation of § 2241.1 of the Public Works Act. A

hearing on the issue took place on August 11, 2003.

On October 7, 2003, the bankruptcy court denied Whitaker’s motion and claim for attorney’s

fees, and granted summary judgment in favor of the Claimants. The bankruptcy court ruled that the

City’s recorded acceptance of the project was nullified because the project was not completed within

30 days after the purported substantial completion. The bankruptcy court interpreted § 2241.1 of the

Public Works Act to mean that acceptances cannot be recorded “unless either the job is complete or4

it is substantially complete and actual completion occurs within 30 day s .” The bankruptcy court

thereby held that the 45-day claim period under the Public Works Act had never begun to run because

of the City’s prematurely recorded ac cept ance. Whitaker appealed this decision to the Western

District of

Lo uisiana. The district court adopted the bankruptcy court’s findings and affirmed the

judgment. Whitaker timely appealed, claiming legal error in the bankruptcy court’s and the district

court’s interpretation of the Public Works Act.

STANDARD OF REVIEW

Rule 7056 of the Federal Rules of Bankruptcy Procedure governs summary judgment in an

adversary proceeding in bankruptcy court. Rule 7056 incorporates Rule 56 of the Federal Rules of

Civil Procedure. F E D

. R. B ANK

. P. 7056. Under Rule 56(c), summary judgment is appropriate only

"if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law." F ED

. R. C IV

. P. 56(c).

"Bankruptcy court rulings and decisions are reviewed by a court of appeals under the same

standards employed by the district court hearing the appeal from bankruptcy court; conclusions of

law are reviewed de novo

, findings of fact are reviewed for clear error, and mixed questions of fact

and law are reviewed de novo ." In re CPDC, Inc. , 337 F.3d 436, 441(5th Cir. 2003).

A district court's determination of state law is also reviewed de novo

. S alve Regina College

v. Russell

, 499 U.S. 225, 231 (1991). In the absence of a final decision by the state's highest court

on the issue at hand, it is the duty of the federal court to det ermine, in its best judgment, how the

highest court of the state would resolve the issue if presented with the same case. T ranscon. Gas Pipe

Line Corp. v. Transp. Ins. Co. , 953 F.2d 985, 988 (5th Cir. 1992).5 DISCUSSION

I. Interpretation of Louisiana’s Public Works Act

Under the Public Works Act, whenever a public entity enters into a contract for the

construction, alteration, or repair of any public work in excess of $25,000, the contractor is required

to obtain a bond with a surety. L A

. R EV

. S TAT

. 38:2441. The statute requires the bond for the

pu rpo se of protecting persons contributing to the construction or repair of public works; i.e.,

subcontractors, laborers and other persons not in direct privity with the public entity. J AMES S.

H OLLIDAY

, J R

. & H. B RUCE S HREVES

, L OUISIANA C ONSTRUCTION L AW M ANUAL 196 (1991).

In order for a subcontractor or laborer to protect their claim, they must file a sworn statement

of the amount due with the governing authority having the work done and record it in the office of

the recorder of mortgages for the parish in which the work is done. L A

. R EV

. S TAT . 38:2242. The

sworn statement must be filed after the maturity of his claim and within 45 days after the recordati on

of acceptance of the work. Id. § 2242.

The co nt ro versy at issue here centers on whether the Claimants timely filed their claim

statements. A certificate of substantial completion was signed by Whitaker and the City and filed in

Caddo Parish on January 10, 2002. The Claimants argue that the acceptance was premature, and

therefore a nullit y, and as a result the 45-day time period never expired because it never began to run.

Whitaker counters that the recordation of acceptance was valid, and therefore, the Claimants were

required to file their claims by February 24, 2002. Our resolution of the di spute depends on our

interpretation of the relevant statute defining the requirements for proper recordati on of acceptance.6

A. Parties’ Arguments

Section 2241.1 of the Public Works Act provides in relevant part that:

Whenever the public entity enters into a contract for the construction, alteration, or

repair of any public works

. . . the official representative of the public entity shall have

recorded in the office of the recorder of mortgages, in the parish where the work has

been done, an accept ance of said work or of any specified area thereof upon

substantial completion of the work. This acceptance shall no t be executed except

upon the recommendation of the architect or engineer of the publ ic entity whose

recommendation may

be made upon completion or substantial completion of said

public works within thirty days of completion of the project.

L A

. R EV

. S TAT

. 38:2241.1. Specifically at issue is what “within thirty days of completion of the

project” modifies. This latter phrase was added to the statute by a 1991 amendment. 1991 La. Sess.

Law Serv. 947 (West).

Whitaker co nt ends the grammatical structure of the revised sentence makes plain that the

purpose of the 1991 amendment was to place a deadline on the architect or engineer responsible for

recommending acceptance. Whitaker presents a hyper-technical analysis of the disputed sentence that

dissects its syntax and structure, illuminat ing the prepositional and subordinate phrases and seeking

to connect them to compound objects and adjective clauses. Whitaker’s main argument is that the

phrase “within thirty days” modifies “recommendation of the architect or engineer.” Whitaker asserts

that the result is the sentence should be read: “ac c eptance shall not be executed except upon the

recommendation of the architect or engineer of the public entity [ whose recommendat ion may be

made upon co mpletion or substantial completion of said public w orks ] within thirty days of

completion of the project.” In other words, the City’s designated architect may accept t he public

work either upon completion or substantial completion, but regardless, the architect or engineer must

accept the public work withi n t hirt y days of completion of the project. Whitaker asserts that the7

amendment was added to address the evil of slow architects and engineers delaying the recordati on

of acceptances.

The Claimants, unsurprisingly, disagree. The Claimants instead argue that t he legislature

added the 1991 amendment in order to address an inverse problem, namely, prematurely recorded

acceptances. Prior to the amendment, the Claimants argue that t he broad language of the statute

allowed contractors and public entities to abuse their discretion by recording acceptances significant ly

premature. The purpose of the amendment, they assert, is to prevent situations exactly like the one

at hand where certificates of substantial comple t ion are filed months before actual completion.

Furthermore, they assert that based on the plain language of the statute the sentence should be read:

“acceptance shall not be executed except upon the recommendation of the architect or engineer of

the public entity whose recommendation may be made upon [ completion ] or [ substantial completion

of said public works within thirty days of completion of the project ].” The Claimants are essentially

asserting that the City’s architect is given the option of accepting the public work upon completion

of the project or upon substantial completion of the project, but acceptance in the latter circumstance

is perfected only if completion follows within thirty days. The Claimants argue that if the architect

or engineer accep t s the project upon substantial completion but completion does not occur within

thirty days, then the previously recorded acceptance is null as premature. The Claimants’ arguments

were accepted by the bankruptcy court and upon appeal were adopted by the district court.

Whitaker rebuts the Claimants’ interpretation of the statute by asserting that it is counter to

the plain language of the sentence and inconsistent with the purpose of the Public Works Act. First,

Whitaker argues that the statute states that an acceptance “sh all” be recorded upon substantial

completion thereby making recordati on compulsory upon substantial completion. Substantial1 We recognize the arguments submitted by the Surety Association of America (SAA) in their

amicus brief filed on behalf of Whitaker Construction. SAA submit t ed documents from the scant

legislative history of the 1991 amendment, which it asserts demonstrate s that the purpose of the

amendment was to address situations where the public entity delayed making a recommendation for

acceptance upon substantial completion or completion. SAA contends that contractors successfully

lobbied the legislature to add the thirty-day time period to the statute so that the public entity would

promptly file the acceptance to st art the 45-day peri od and cl ose out the proj ect. To support thi s

assertion, the SAA points to the statements of two representatives made during conferences regarding

the 1991 amendment. The Claimants observe that the legislative history also contains the statement

that “there was concern over approval of jobs being sought prior to completion,” which they contend

supports their position. Moreover, they cite case law which counsels against relying on statements

from only two of the 100 plus members of the state legisla ture, to di vi ne the purpose of the

a mendment. Finally, they object to the introduction of the legislative history of the amendment

because it had not been raised as an issue in this case up to this point nor is it in the record. Indeed,

in the transcripts of the bankruptcy proceedings, counsel for Whitaker stated that he could find no

8 completion is defined “as the finishing of construction

. . . to the extent that the public entity can use

o r occupy the public work or use or occupy the specified area of the public works for t he use fo r

which it w as intended.” Id. § 2241.1. Here, it is undisputed that the City used and occupied the

stadium on December 27, 2001, for the Independence Bowl game. Thus, Whitaker argues that the

project was substantially complete and the City was therefore required to record the acceptance.

Additionally, Whitaker argues that the recording of acceptance is crucial to the operati on of

the statute because a number of other parties’ interests depend on their notice of the public entity’s

acceptance. Whitaker contends that recording the acceptance in the public record is crucial to secure

a certain date for notice so that other time periods defined in the statute can begin to run. Whitaker

asserts that the bankruptcy court’s construction of the statute denies other parties the abilit y to rely

on the recorded acceptance.

Finally, Whitaker argues that the bankruptcy court’s construction of the statute violates

principles of statutory interpretation by adopting the least restrictive interpretation and subjecting the

surety to open-ended liability. 1support or guidance in the legislative record for his position.

9 Whitaker relies on Honeywell, Inc. v. Jimmie B. Guinn, Inc. , to support its argument that

the performance of work more than 30 days after the notice of acceptance and substantial completion

is filed, does not render the acceptance premature. 462 So.2d 145 (La. 1985). In H oneywell

, the

subcontractor did not complete his work on the public works project until more than 45 days after

the public entity recorded its acceptance of the project in the public record. I d. at 147. The state

court did not expound upon that fact in its discussion and never considered whether the acceptance

was recorded prematurely. Ultimately, the court concluded that the subcontractor’s suit was time

barred. Id. at 149. However, as the Claimants note, the state court decided Honeywell before the

1991 amendment. In fact, the Claimants argue that H oneywell serves to further emphasize that prior

to the 1991 amendment, premature acceptances were a problem in public w orks projects, whi ch

contravened the purposes of the Public Works Act by divesting subcontractors and laborers of their

statutory rights.

The Claimants argue that Whitaker’s interpretation is the version that does damage to the

purposes of the statute. First, they note that the statute states that claimants are to file their claims

“ upon maturity of his claim a nd within forty-five days of recordati on of acceptance.” L A

. R EV

.

S TAT

. 38:2242 (e mphasis added). The Claimants argue that interpreting the statute to allow the

public entity to record an acceptance m o nt hs befo re actual completion would result in the 45 day

period expiring before some subcontractors’ or laborers’ claims have even matured becaus e those

potential claimants are still working on the project.

Furthermore, the Claimants argue that Whitaker’s interpretation of the st atute is faul ty

because of other absurd results. For example, if the 30 days referred to in the statutory provision is10

indeed a deadline before which the architect or engineer must record acceptance then it is possible

that the deadline could lapse without action and the 45-day period would never begin to run. The

Claimants argue that they would never be able to make a claim and receive protecti on from the Public

Works Act. The Claimants contend that by contrast under their interpretation an acceptance could

always be filed anyt ime after completion and therefore there is no possibility that a third party’s delay

could permanently divest the Claimants of their rights under the statute.

The relevant porti on s o f t he st atute are poorly drafted to be sure. The ambiguity in the

meaning and grammatical structure of the provision at issue makes both constructions of the statute

at least possible, when viewing the disputed sentence in isolation. However, after taking into

consideration the arguments of the parties, the relevant case law, and the Pu blic Works Act as a

whole, we find that § 2241.1 should be interpreted as requiring public work projects that are accepted

based on substantial completion to be completed within 30 days of purported substantial completion.

B. Analysis

The fundamental question in all cases of s t at ut o ry construction is legislative intent and the

reasons that prompted the legislature to enact the law. I n re Succession of Boyter

, 756 So.2d 1122,

1128 (La. 2000). When a law is susceptible to different meanings, “it must be interpreted as having

the meaning tha t best conform s to the purpose of the l aw.” L A

. C IV

. C ODE art. 10; SWAT 24

Shreveport Bossier, Inc. v. Bond

, 808 So.2d 294, 302 (La. 2001); Smith v. Tow n of Vinton , 25

So .2d 237, 239 (La. 1946) (stating that “in applying a statute to specific cases it is necessary to

determine the intent of the Legislature in enacting it,” so as to not interpret the statute in a manner

that the legislature never intended). Courts should give effect to all parts of a statute and should not

adopt a statutory construction that makes any part superfluous or meaningless, if that result can be11

avoided. B ond

, 808 So.2d at 302. Furthermore, “[c]ourts should avoid construct io ns which will

render legislation absurd. Rather, statutes must be interpreted in such a manner as to render their

meaning rational, sensible, and logical.” State Through Dept. of Public Safety and Corr., Office of

State , 655 So.2d 292, 302 (La. 1995).

T he purpose of the Public Works Act is to protect those not in direct privity with the

governing authority, namely the subcontractors and other parties who supply materials and labor to

the construction or repair of a public work. S lagle-Johnson Lumber Co., Inc. v. Landis Const. Co.,

Inc.

, 379 So.2d 479, 486 (La. 1979). “The purpose of the statute is evident from both its text and

the title indicative of its obj ect. The Public Works Act title, in pertinent part, provides that it was

enacted: ‘.

. . t o pro t ect persons doing work, performing labor or furnishing material for the

construction, erection, alteration or repair of public buildings, public roads or public works of any

character; . . .’” Slagle-Johnson , 379 So.2d at 486 n.** (quoting Act No. 224 of 1918).

The Louisiana legislature recognized that in contrast to privately owned property

,

subcontractors and laborers of public works could not secure payment for their work by placing a

privilege or lien against the property because the property has no private entity as an owner. J A MES

S. H OLLIDAY

, J R

. & H. B RUCE S HREVES

, L OUISIANA C ONSTRUCTION L AW M ANUAL 196-201

(1991). Claimants could preserve their interest by freezing the further distribution of payments under

the contract. Id. at 196. If funds are paid out in violation of the freeze, the governing authority is

personally liable for the claim. I d. The Public Works Act shifts the risk of loss from the governing

authority to the surety and contractor through contract and bond requirements. Id.

As previously noted, we must interpret the provision in a way that bes t comports wi th the

legislative intent of the statute. L A

. C IV

. C ODE art. 10. Here it is clear that the legislative intent in12

enacting the statute was to protect those who provide labor and materials to public works and to shift

the risk of loss that may result from claims by those parties to the contractor and the surety. The

Claimants’ construction of the statute is most consistent with the purpose of the statute. Moreover,

although the statute is unquestionably poorly drafted, resulting in more than one possible reading of

the disputed sentence, we conclude that the interpretation presented by the Claimants offers a less

constrained reading of the plain meaning of the provision at issue. For instance, Whitaker argues that

the language of the statute dictates that acceptance be reco rded immediately upon substantial

completion. However, that argument is inconsistent with Whitaker’s contention that the 30-day time

period applies to the architect or engineer’s recommendation for acceptance, i.e., that the 30 days is

essentially a deadline before which the architect or engineer must record acceptance. In other words,

it is inconsistent to say that the statute mandates that acc ept ance be filed i mmediately upon

substantial completion and then say that the very same provision gives the public entity the flexibilit y

of recording acceptance any time within 30 days after final completion of the project.

Most importantly, interpreting the statute to require that completion follow within 30 days

of substantial completion in order for the recorded acceptance to be valid, avoids absurd results

surely not intended by the legislature. As the Claimants observed, interpreting the statute to allow

the public entity to record acceptance significant ly before final completion actually occurs would

result in the 45-day period expiring before some subcontractors’ or labors’ claims have even matured

because those potential claimants are still working on the project. A subcontractor or laborer can not

know that he has a claim for the collection of withheld payments on a public works project until he

has at least stopped working on the project, had a chance to assess payment due and, if necessary,

make a demand of payment. At oral argument, counsel for the Claimants emphasized that some of2 At oral argument, Whitaker asserted that final completion should not be required to occur

30 days after substantial completion because construction frequently continues months after

substantial completion. First, we note that completion must occur 30 days after purported substantial

completion only if the acceptance is recorded based on substantial completion. Moreover, Whitaker’s

obse rvation further supports n ot adhering to Whitaker’s statutory interpretation. If Whitaker’s

assertion is correct then subcontractors may frequently be prevented from asserting claims on a public

works project because they were st ill working on the project months after acceptance based on

substantial completion

was filed. Considering the statute was enacted to p rotect subcontractors’

interests in collecting debts on a public works project, interpreting the statute to frequently prevent

just that objective would be contrary to the legislative purpose.

13 his clients in fact were still working on the Independence Stadium project well after the 45-day period

had expired. Indeed, it is undisputed that work continued until at least April 25, 2002, even though

the 45-day period to submit a claim s t at ement assessing the amount due expired on February 24,

2002. To require a subcontractor to file claim statements before they have finished working on the

project is not feasible because the subcontractor can not make a claim for an uncollected debt when

that debt has not even had time to accrue. 2

In addition, § 2242 mandates that a claimant file written claim statements “after the maturity

of his claims and within 45 days from the recordation of acceptance.” Therefore, not only would it

be absurd to interpret the st at ut e to allow the 45-day period to expire before work has been

completed, such an interpretation would conflict with the prescription in the statute that claim

statements be filed after the claims have matured.

We do not find, as Whitaker argues, that the Claimants’ statutory interpretation is inconsistent

with the plain language of the statute and would contravene the purposes of the statute. Instead, for

the reasons stated, we find that the Claimants’ interpretation of the statute best com ports with the

purpose of the statute and prevents absurd results. Accordingly, we find that the bankruptcy court,3 Under § 2241.1 of the Public Works Act, either the public entity or the contractor can file

the acceptance. L A

. R EV

. S TAT

. 38:2241.1 (“the official representative of the public entity shall have

recorded in the office of the recorder of mortgages, in the parish where the work has been done, an

acceptance of said work or of any specified area thereof upon substantial completion of the work.

Those public entities which do not file said recordation, shall require the contractor to have recorded

in the office of the recorder of mortgages, in the parish where the work has been done, an acceptance

of said work or of any specified area thereof upon substantial completion of the work.”).

14 and the district court, were correct in adopting the Claimants’ interpretation of the language in the

disputed provision.

Although the City recorded a certificate of substantial completion in the public record on

January 10th, it is undisputed that work continued well beyond 30 days from that date. Because the

recorded acceptance was based on substantial completion and substantial completion did not occur

within 30 days of purported completion, the City’s acceptance of the project was premature.

II. How to Cure a Premature Acceptance

The harder question to resolve is whether the premature filing of the certificate of substantial

completion renders the acceptance a nullit y. Upon determining that final completion must occur 30

days after substantial completion, if the p ro ject is accepted based on substantial completion, the

bankruptcy court held that the City’s premature acceptance was null and void. The bankruptcy court

opined that the only way to cure the prematurely recorded acceptance was to file another acceptance

that complies with the statute. The statute states that an acceptance should be filed in order to begin

the 45-day period. Because neither the City nor Whitaker 3 ever filed a subsequent acceptance that

complied with the statute, the bankruptcy court held that the 45-day period never began to run, and

therefore, the Claimants’ claims could not be untimely.

The bankruptcy court offered no authority for its finding that the premature acceptance should

be rendered a nullit y. The di stri ct court offered no authori ty to support the bankruptcy court’s15

conclusion when the district court adopted the bankruptcy court’s ruling. Before this court, the

Claimants assert that the bankruptcy court was correct in its decision, however, they also offer no

authority for the bankruptcy court’s conclusion. They simply assert that making the acceptance null,

and requiring Whitaker or the City to submit another acceptance, is the only cure that is “workable.”

Despite our best efforts, we have found n ot hing in the statute that supports the conclusion that a

premature acceptance is null or that supports requiring the C it y or Whitaker to file any number of

certificate s of substantial completion until an acceptance complies with the requirements of the

statute. We therefore reject the Claimants’ arguments. Instead, we find that the bankruptcy court

impermissibly expanded the scope of remedies available to the Claimants by declaring that Whitaker’s

acceptance was null.

The Public Works Act restricts contractors from entering into a contract with the state until

the contractor obtains a

payment bond. L A

. R EV

. S TAT

. 3 8:2241. Laws of limitation are to be

strictly construed if there are any ambiguities in the law. R uiz v. Oniate , 713 So.2d 442, 444-45 (La.

1998). The Public Works Act, like other lien statutes, is “ s ui generis and provides exclusive remedies

to parties in public construction work.” S tate Through Div. of Admin. v. McInnis Bros. Const.

, 701

So.2d 937, 944 (La. 1997) (citation omitted). “[P]ublic contract laws are to be strictly construed

such that the privileges granted are not extended beyond the statutes,” and the obligations of the bond

“must be limit

ed to the exact provisions of the statute.” I d. (emphasis added). The Public Works Act

is preemptive ra t her t han prescriptive, meaning the existence of the rights granted therein are

extinguished if not filed within the time period prescribed and the applicable time period can not be

suspended or interrupted. Id. at 948.16

In keeping with L o uisiana principles of statutory interpretation, the statute here must be

strictly construed so as to prevent extending the obligations of the surety or the privileges granted

to the subcontractors beyond that warranted by the statute. The bankruptcy court declared that filing

the certificate of substantial completion too early rendered the acceptance a nullit y and as a result the

45-day lien period never began to run. According to the bankruptcy court, because of the

pr emat urely filed acceptance, months after even final completion the surety could be subject to

liabilit y to claimants who had still not filed a claim statement. Under that scenario, today, almost 3

years from when construction finally ended, a claimant could file a suit against the surety to collect

on debts owed from the Inde p endence Stadium project because Whitaker never filed a corrected

acceptance. However, § 2241.1 states that sureties are only liable for claims filed within a 45-day

window. The Public Works Act was enacted for the purpose of protecting the interests of those who

supply materials and labor to public works contracts; but by limit ing the time in which a claimant can

enforce that right, the Public Works Act balances both the interests of the protected group and the

interests of the surety. By infinitely expanding the time that the surety may be subject to liability, and

the Claimants may be permitted to file suit, the bankruptcy court afforded the Claimants privileges

that are not gran ted by the statute. S ee id. at 946 (holding that the Public Works Act sets forth a

precise period of time to govern the filing of suits [in that case a suit by a state entity against a general

contractor or its surety] and to suspend or interrupt that period for any reason would render the time

limitations in the statute meaningless).

To determine a res o lut io n mo re consistent with the statute, and in the absence of cases

construing the Public Works Act under these circumstances, we turn to case law regarding the Private

Works Act for guidance because the state courts have addressed this identical issue, premature17

recording of acceptances, with regard to the Private Works Act. In L ig ht ing, Inc. v. Trans-Gulf

Const. Co., Inc. , the state district court granted judgment against a contractor and surety on a

contractor’s bond because formal acceptance by the owner was prematurely filed; the state court held

that as a result of the premature filing the statutory prescription period never began to run. 324 So.2d

454, 455 (La. 1975). The Louisiana Supreme Court reversed the judgment and dismissed the suit.

Id. Under the Louisiana Private Works Act, the subcontractor had to file his claim statement within

30 days of recordation of acceptance by the owner. Id. The owner could record an acceptance of

work upon either completion or “upon substantial completion of t he wo rk, or any specified area

thereof, upon the recommendation of the architect or engineer of the owner.” I d. The state district

court found that the work was not complete or substantially complete on the date of the registry of

acceptance so the acceptance was null. I d. at 456. In reversing the state district court, the Louisiana

Supreme Court held that a premature acceptance is not null but rather is inchoate and beco mes

operative when the building is complete or substantially complete. Id.

An acceptance is a notice of completion. It becomes operative when it conforms to

the facts of construction. We think the bet ter view is that prematurely recorded

acceptance is inchoate and becomes operative when the building is complete or

substantially complete. At that time, the two essential factors concur: recordati on and

completion. To hold otherw ise would mean that the misjudgment of the owner in

assessing substantial completion, though in good faith, would defeat the prescription

in favor of the surety contrary to the legislative purpose.

Id. The court observed that even assuming that the acceptance was filed prematurely, the

subcontractor’s suit was no t filed wit hin 30 days from the date the parties agreed the project was

substantially complete. Id. Therefore, the subcontractor’s suit was dismissed as untimely. Id.

Particularly in st ruct ive to us on the matter of nullity is the Louisiana Supreme Court’s

admonition in Lighting :4 It is axiomatic that as an Erie court we attempt to discern h o w Lo uisiana’s highest court

wo uld resolve the issue at hand. E rie R. Co. v. Tompkins

, 304 U.S. 64 (1938) (emphasizing th a t

federal courts can not make common law on matters reserved to the states). That doctrine is no less

applicable where, as here, we are addressing an unsettled area of Louisiana law. It is incumbent upon

us to avoid creating new rights and remedies in Louisiana state law where we lack express statutory

authority or clear directive from the Louisiana Supreme Court.

18 We find nothing in the statute which allows an owner's premature acceptance to wipe

out the one-year prescription in favor of the surety. To impose such a penalty on the

surety should require clear statutory authority.

Id.

Citing no case law, the bankruptcy court dismissed the argument that the prematurely filed

acc ept ance co uld be inchoate rather than null. The bankruptcy court in its oral rendering of

judgment, and the district court in adopting the bankruptcy court’s opinion, gave minimal attention

to Lighting

. The bankruptcy court opined that L ighting was not applicable because it was governed

by the Private Works Act, whereas this case is governed by the Public Works Act. Moreover, the

bankruptcy court noted that the Pri vate Works Act does not requi re pri vate owners to record an

acceptance in the public record while the Public Works Act does require a recordati on of acceptance.

We hasten to agree with the bankruptcy court’s observation and we thoroughly ap preciate that

Lighting is not controlling because the Private Works Act does not govern this case. However, we

sit as a Erie court who must divine what the Louisiana Supreme Court might do if faced with the

same facts as those before us. 4 Although t he Louisiana Supreme Court has not made a definite

pronouncement on this exact issue, Louisiana’s highest court has stated that where an acceptance is

not perfected as a matter of law, that acc ept ance is inochate. More importantly, the Louisiana

Supreme Court stated that declaring an acceptance a nullit y would be a penalty imposed upon the

surety, because of the miscalculation of a third-party, that can only be levied pursuant to express5 “Before any person having a direc t co ntractual relationship with a subcontractor but no

contractual relationship with the contractor shall have a right of action against the contractor or the

surety on the bond furnished by the contractor, he must record his claim as provided in R.S. 9:4802

19 statutory authority. The case before us is not governed by the Privat e Works Act and the Private

Works Act is distingu ishable from the Public Works Act in many respects; however, we find the

principle in Lighting

, that declaring an acceptance a nullit y requires express statutory authority, is a

principle in positive law that is very persuasive to us. The bankruptcy court did not–nor did the

district court or the Claimant s–o ffer any statutory authority for declaring an acceptance a nullity

under the Public Works Act, therefore, ipso facto

, we hold that we can not impose such a penalty

upon the surety here.

Moreover, we conclude that for our purposes, the relevant provisi o ns of the statutes are

substantially indistinguishable. The Private Works Act, like the Public Works Act, was enacted to

pro vide protection for subcontractors and other claimants and provide for a source for payments

should the general contractor fail to pay. M etropolitan Erection Co., Inc. v. Landis Const. Co., Inc.

,

627 So.2d 144, 148 (La. 1993). However, because the Private Works Act and the Public Works Act

are lien statutes that grant special privileges to claimants that are not provided for by contract, both

statutes also seek to protect the interests of the sureties who issue the bonds. I d. Therefore, as here,

the Louisiana Supreme Court in Lighting had to balance the dual purposes of the statute of protecting

the claimants as well as protecting the interests of the surety. In addition, in both Lighting and the

present case, t he parties were subject to a payment bond. The private owners in L ighting and the

public entity here both recorded an acceptance of the work in the public record based upon substantial

completion. See Lighting

, 324 So.2d at 455. Both subcontractors were required to submit a claim

statement within a specified period of time from the recordati on of acceptance. 5 Even the definitionsor give written notice to said contractor within t hirt y days from the recordation of the notice of

acceptance by the owner of the work or notice by the owner or default, s t at ing with substantial

accuracy the amount claimed and t he name o f t he party to whom the material was furnished or

supplied or for whom the labor or service was done or performed.

. . .” Lighting

, 324 So.2d at 455.

“Any claimant may after the maturity of his claim and within forty- f ive days after the

recordation of acceptance of the work by the governing authority or of notice of default o f t he

contractor or subcontractor, file a sworn statement of the amount due him with the governing

authority having the work done and record it in the office of the recorder of mortgages for the parish

in which the work is done.” L A

. R EV

. S TAT

. 38:2242.

6 “‘Subst ant ial co mpletion’ is defined for the purposes of the Chapter, as the finishing of

construction, in accordance with contract documents as modified by any change orders agreed to by

the parties, to the extent that the owner can use or occupy the works or use or occupy the specified

area of the works for the use for which it was intended.” Lighting , 324 So.2d at 455.

“‘Subs t antial completion’ is defined for the purpose of this Chapter, as the finishing of

construction, in accordance with the contract documents as modified by any change orders agreed

to by the parties, to the extent that the public entity can u se or occupy the public works or use or

occupy the specified area of the public works for the use for which it was intended.” L A

. R EV

. S TAT

. 38:2241.1.

20 of substantial completion are identical. 6 For all the reasons stated, we find the reasoning employed

in Lighting to be persuasive in resolving the issue currently before this court.

In order to d et ermine when the recorded acceptance became operative, the L ighting court

sought to ascertain when the project was substantially complete. Here, in order to determine when

the recorded acceptance bec ame operative we would have to determine if and when substantial

completion occurred within 30 days of completion, or when the project was complete. Even though

the Independence Bowl game was played on December 27, 2001, the parties dispute w h ether the

project was substantially complete at that time. Although, the stadium as a whole was sufficiently

useable to allow the game to be played, the project at issue only conce rned the constructi on of

concession areas, bathrooms, and club seating in the south end zone of the st adium. As to those

specific portions of the stadium, there was at least anecdotal evidence that the bathrooms were not7 In the bankruptcy proceedings, specifically in the hearing on the motion for summary

judgment, counsel for both Whitaker and the Claimants agreed that the construction project was

finally completed by April 25, 2002. Counsel also agreed that although a change order on the project

was recorded after that date, the change order regarded work that had already been done.

21 complete at the time of the game. Whitaker emphasizes that the certificate of substantial completion

filed in the public record stated that the project “has been reviewed and found, to the Architect’s best

knowledge, informat io n and belief, to be substantially complete.” The Claimants assert that the

certificate of substantial completion was signed by the architect not because the project was actually

substantially complete, but rather in order to pass title to the City in time for the Independence Bowl

game. Otherwise, Whitaker would have been liable for any accidents that occurred during the game.

That is why, the Claimants charge, the certificate of substantial completion was backdated to ensure

that the certificate reflected that the project was accepted before the date of the game. The Claimants

contend that whether the project was actually substantially complete at the time of recordati on was

not a fac t t hat was stipulated to in the bankruptcy court nor is there any evidence in the record to

support such a conclusion.

We need not make a definite determination of when substantial completion actually occurred

in accordance with the statute. The record reflects that the parties agreed that the project was finally

complete by April 25, 2002, 7 thus, the recorded acceptance became operative by that date. The first

claim was not filed until June 21, 2002. None of the claims were filed within 45 days of completion.

Although we may sympathize with the Claimants’ posi t ion as subcontractors who have not been

co mpensated for their work, unfortunately the claim statements filed by the Claimants were all

unt imely.

CONCLUSION22

For the aforementioned reasons, we REVERSE the district court’s ruling affirming the grant

of summary judgment for the Claimants on the t imeliness issue and we render judgment for Whitaker.

REVERSED and RENDERED.