Opinion ID: 40564
Heading Depth: 2
Heading Rank: 3

Heading: Triggering of the Peremptive Period

Text: 37 Because we hold that the involuntary bankruptcy petition could not preserve FitzGerald's claim, this Court must decide a second question regarding the Lifeshare matter: whether, when notice of a contract has been filed but notice of termination has not, the one-year extinguishment period in subsection 9:4813(E) is triggered; and, if so, when. Section 9:4822 provides, in pertinent part: 38 A. If a notice of a contract is properly and timely filed in the manner provided by R.S. 9:4811, the persons to whom a claim or privilege is granted by R.S. 9:4802 shall within thirty days after the filing of a notice of termination of the work: 39 (1) File a statement of their claims or privilege. 40 (2) Deliver to the owner a copy of the statement of claim or privilege. 41 . . . 42 C. Those persons granted a claim and privilege by R.S. 9:4802 for work arising out of a general contract, notice of which is not filed, and other persons granted a privilege under R.S. 9:4801 or a claim and privilege under R.S. 9:4802 shall file a statement of their respective claims and privileged within sixty days after: 43 (1) The filing of a notice of termination of the work; or 44 (2) The substantial completion or abandonment of the work; if a notice of termination is not filed. 45 LA.REV.STAT. ANN. § 9:4822(A), (C). 7 In the Lifeshare matter, while the construction contract was properly and timely recorded on July 25, 2000, no notice of termination was ever filed. Still, other evidence suggests the project was completed: on June 29, 2001, the Estopinal Group, architect for the Lifeshare Project, compiled a punchlist; minutes of the project's progress meetings indicate it was ready to be occupied between July 23 and 26; and, on July 25, the City of Shreveport issued a certificate of occupancy. 46 The courts below, as well as the parties, differ on the application of section 9:4822 to these facts. Ruling from the bench, the bankruptcy court determined that the specified period began to run sixty days after the issuance of the certificate of occupancy. 8 Whitaker Constr. Co. v. FitzGerald Contractors, Inc. (In re Whitaker Constr. Co. ), No. 02-12642 (Bankr.W.D.La. March 26, 2004). The district court disagreed, holding that because a notice of contract was filed but a notice of termination or certificate of substantial completion was not filed, the 30-day tolling period never began to run. Fid. & Deposit Co. of Maryland v. FitzGerald Contractors, Inc., No. 03-1757 c/w No. 04-0913 (W.D.La. Dec. 10, 2004). F&D argues that subsection 9:4822(C) applies when no notice of termination is filed, and that the peremptive period began to run sixty days after issuance of the certificate of occupancy. 9 FitzGerald contends that subsection 9:4822(A) governs all situations in which notice of the contract has been filed, and that its thirty day period does not begin to run until filing of a notice of termination. If the peremption period never began to run, FitzGerald's July 17, 2003 adversary complaint was timely. If it did run, the only timely filing was the involuntary bankruptcy petition, which does not suffice to preserve the claim for the reasons discussed in Section B, supra.
47 In interpreting a Louisiana statute, this Court must be mindful of the state's hybrid civil/common law tradition. In the civil law tradition, the Civil Code is the solemn expression of legislative will to which our Erie obligation applies. Songbyrd, Inc. v. Bearsville Records, Inc., 104 F.3d 773, 776 (5th Cir.1997) (quoting Shelp v. National Surety Corp., 333 F.2d 431, 439 (5th Cir.1964)); see also Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). We look to the statute as the primary source of law. In re Orso, 283 F.3d 686, 695 (5th Cir. 2002). If the statute is unambiguous, our inquiry ends, and we need go no further. Id. at 693. If it is ambiguous, we consult other sources of authority. 48 FitzGerald and the district court contend that the language of section 9:4822 supports the reading that subsection (A) applies to situations in which notice of a contract has been filed and subsection (C) to situations in which it has not. Subsection 9:4822(A) begins [i]f a notice of a contract is properly and timely filed in the manner provided by R.S. 9:4811,. . . . The use of the word if before a comma implies a sufficient condition for whatever follows the comma. Here, the condition is proper and timely filing of the notice of contract. On this reading of section 9:4822, when this condition is fulfilled, i.e., when notice of the contract is filed, subsection (A) applies. 49 Taken together, the prefatory clauses of the two subsections also support this reading. While (A) begins with a properly filed notice of contract, subsection (C) begins [t]hose persons granted a claim and privilege by R.S. 9:4802 for work arising out of a general contract, notice of which is not filed . . . § 9:4822(C). The language here does not imply a sufficient condition. Like the one immediately preceding it, 10 subsection (C) begins by defining the group of people to whom it applies. Since subsection (C) applies to those granted a claim for work arising out of a contract that is not filed, it applies when the contract is not filed. If each subsection is understood to apply exclusively to when a notice of contract has been filed and when it has not, subsection (A) should govern the present situation and the peremptive period in subsection 9:4813(E) is not triggered. 50 The bankruptcy court and F&D read section 9:4822 differently, limiting subsection (A) to those situations where both a notice of a contract and a notice of termination have been filed. Under their reading, subsection (C) operates as a catch-all category for all other situations. They offer two arguments to support this reading. First, the wording of subsection (A) does not provide explicitly for a situation in which notice of the contract has been filed but notice of termination has not. It provides that when a contract has been filed, the person granted rights must file and deliver a statement within thirty days of filing of the notice of termination. As the argument goes, because the subsection assumes the filing of the notice of termination, it cannot apply when that notice is not filed. 51 Second, other language in subsection (C) can be read as applying where notice of the contract has been filed but notice of termination has not. After identifying § 9:4802 claimants who work on contracts the notice of which is not filed, subsection (C) continues  and other persons granted a privilege under R.S. 9:4801 or a claim and privilege under R.S. 9:4802 . . . § 9:4822(C) (emphasis added). 11 The use of the conjunctive and and the words other persons suggests a different group than that identified in the initial clause of the subsection, in other words a group of people granted a claim or privilege on a contract notice of which is filed. The notice of which is not filed clause lies immediately after the first clause, suggesting it does not apply to the other persons mentioned later. 52 F&D argues that the words other persons in subsection (C) include those in FitzGerald's position. Certainly, other persons refers to those granted privileges under section 9:4801 other than general contractors, since subsection § 9:4822(B) provides a separate rule for general contractors. But other persons also includes a group of people with a claim and privilege under section 9:4802. F&D argues that this latter group includes all section 9:4802 claimants other than those in the situation to which, it claims, subsection 9:4822(A) applies exclusively—where notice of the contract and notice of termination have both been filed. 53 FitzGerald asserts that the other persons under section 9:4802 can be understood in contrast to the earlier mention of section 9:4802 claimants in the subsection. The earlier mention reads persons granted a claim and privilege by R.S. 9:4802 for work arising out of a general contract, whereas the other persons includes those with a claim and privilege under R.S. 9:4802. § 9:4822(C). The difference between the two is the work in which the former group participates. Section 9:4802 lists categories of construction participants and the sources of their claims. Subcontractors have a claim for the price of their work, and laborers or employees for the price of work performed. § 9:4802(A)(1), (2). Sellers', lessors' and professionals' claims are grounded not on work but on the price or rent of the goods and services they provide. § 9:4802(A)(3)-(5). FitzGerald argues that, since these last three categories have claims that are not for work arising out of a general contract, they are the other persons contemplated by subsection (C). 54 We are not persuaded by FitzGerald's artful textual construction of other persons. Subsection 9:4802(A)'s preface to all five categories reads as follows: [t]he following persons have a claim . . . to secure payment of the following obligations arising out of the performance of work under the contract. The prefatory clause in subsection 9:4822(C) maps this language closely, suggesting that all five categories are contemplated. Ultimately, ambiguity remains as to the identity of section 9:4822(C)'s other persons. 55 Ambiguity exists in the statute, so we must look to authority beyond the text.
56 To resolve textual ambiguity, we consult the interpretations given to the statute by Louisiana courts. Jesco Const. Corp. v. NationsBank Corp., 278 F.3d 444, 447 (5th Cir.2001). In looking at caselaw, we steer clear of the common law principle of stare decisis and . . . apply instead the distinctly Civilian doctrine of jurisprudence constante.  12 Songbyrd, 104 F.3d at 776. The decisions of Louisiana courts do not so much establish a rule we are bound to follow as interpretations invaluable to our understanding. Id. at 777; Orso, 283 F.3d at 695. Because the Louisiana Supreme Court has not addressed whether the peremption period begins to run when notice of the contract has been filed but notice of termination has not, we make an  Erie guess as to what its answer would be. Rogers, 42 F.3d at 295. 13 In examining the opinions of lower courts, we are mindful that `an intermediate appellate state court' . . . is datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise. Id. (quoting Comm'r. v. Estate of Borsch, 387 U.S. 456, 465, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967)). 57 In the situation at hand, lower Louisiana courts reach the conclusion that the peremption period does not trigger. In Bernard Lumber Co., Inc. v. Lake Forest Constr. Co., the Louisiana First Circuit Court of Appeal examined section 9:4822 and held: 58 The terms of the statute clearly establish that La.R.S. 9:4822(A) governs those situations in which a notice of contract has been filed, and La.R.S. 9:4822(C) governs those situations in which no notice of contract has been filed. Therefore, where an owner has neglected to file a notice of termination, the 30-day period provided for in La.R.S. 9:4822(A) never begins to run. 59 572 So.2d 178, 181 (La.Ct.App.1990). Bernard Lumber involved a subcontractor who sued the general contractor and the owner to recover for services and material supplied for the renovation of a restaurant. The court considered the legislative intent behind the Private Works Act, protecting materialmen, laborers and subcontractors, and determined that the legislature intended to place the onus for filing on the owner. Where the owner fails or neglects to take such affirmative action, the court wrote, he should be made to bear the consequences of his failure to file a notice of termination, not the claimant. Id. Likewise, although it reviewed an earlier version of section 9:4822, the Rowley Co. v. Southbend Contractors, Inc. court determined that the thirty-day period would not run without proper filing on the part of the owner. 517 So.2d 1260 (La.Ct. App.1987). In Rowley, a subcontractor sued the general contractor and its surety to recover labor costs. The Louisiana Fourth Circuit Court of Appeal determined that the notice of termination's pithy description-of the address of the project-was insufficient. Id. at 1261. While the court was primarily concerned with a different issue, its conclusion is consistent with the court in Bernard Lumber : the thirty-day period will not begin to run until the owner acts. 60 F&D argues that both Bernard Lumber and Rowley are inapplicable. It points to the fact that Bernard Lumber did not involve a suit against a surety; but this distinction is irrelevant as applied to section 9:4813. That provision, which creates the surety's liability, explicitly refers to section 9:4822, which the First Circuit interpreted in Bernard Lumber. Moreover, subsection (E) says that claims must be asserted against the owner, the contractor, or the surety § 9:4813(E)(emphasis added). Whether the defendant is the owner or the surety is irrelevant for purposes of the claim itself, and a case determining the time limit for a suit against an owner applies as well to a suit against a surety. F&D attempts to distinguish Rowley because that case dealt with the requirements for a valid notice of termination. But, again, the primary holding of Rowley is not relevant; the result reached by the court is: that the time period would not begin to run without a proper notice of termination. Rowley supports the proposition that the time period will not commence without affirmative action on the part of the owner. 61 The reading given section 9:4822 by Louisiana courts is bolstered by language in the official comments to section 9:4822. This language suggests that subsection (A), not subsection (C), applies to the present situation. If a notice of contract is filed, the commentary reads, a notice of termination is always required to commence the 30 day time for filing. Where no notice of contract is filed the owner may still file a notice of termination. § 9:4822 cmt. (a). If a notice of contract is filed but the notice of termination is not, the comments suggest that the thirty day period simply does not commence. 62 Finally, F&D argues that construing subsection 9:822(A) to mean the time period never triggered would create an openended lien period inconsistent with the general structure and policy underlying the PWA. First, it contends the Act is a unified scheme, and that all situations should fit snugly into the thirty-sixty day structure articulated in section 9:4822. According to this account, the broad language in subsection 9:4822(C) includes all situations other than that one explicitly outlined in subsection 9:4822(A), when notice of the contract and notice of termination have both been filed. This interpretation does not follow directly from the statutory language, and it is inconsistent with all of the aforementioned sources. F&D also asserts that the PWA seeks to balance new rights created in laborers, contractors and the like with the liability concerns of sureties. It points to strong peremption language in § 9:4813(E). This may well be true; but it is not our prerogative to dictate to the Louisiana legislature where to strike the balance between the rights of sureties and construction creditors. 63 A plain reading of subsection 9:4822(A), extant caselaw and official commentary all bolster our understanding of section 9:4822, that when notice of a contract has been filed but notice of termination is not, the time period for making claims is not triggered. Accordingly, we affirm the district court's determination that the peremptive period was not triggered. Because the period was not triggered, FitzGerald's adversary action in July 2003 was timely under the PWA; and its claim in the Lifeshare matter is not perempted.