Opinion ID: 38347
Heading Depth: 2
Heading Rank: 1

Heading: Interpretation of Louisiana's Public Works Act

Text: 12 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. La.Rev.Stat. 38:2441. The statute requires the bond for the purpose 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. James S. Holliday, Jr. & H. Bruce Shreves, Louisiana Construction Law Manual 196 (1991). 13 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. La.Rev.Stat. 38:2242. The sworn statement must be filed after the maturity of his claim and within 45 days after the recordation of acceptance of the work. Id. § 2242. 14 The controversy 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 nullity, 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 dispute depends on our interpretation of the relevant statute defining the requirements for proper recordation of acceptance.
15 Section 2241.1 of the Public Works Act provides in relevant part that: 16 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 acceptance of said work or of any specified area thereof upon substantial completion of the work. This 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. 17 La.Rev.Stat. 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). 18 Whitaker contends 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, illuminating 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: 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. In other words, the City's designated architect may accept the public work either upon completion or substantial completion, but regardless, the architect or engineer must accept the public work within thirty days of completion of the project. Whitaker asserts that the amendment was added to address the evil of slow architects and engineers delaying the recordation of acceptances. 19 The Claimants, unsurprisingly, disagree. The Claimants instead argue that the legislature added the 1991 amendment in order to address an inverse problem, namely, prematurely recorded acceptances. Prior to the amendment, the Claimants argue that the broad language of the statute allowed contractors and public entities to abuse their discretion by recording acceptances significantly premature. The purpose of the amendment, they assert, is to prevent situations exactly like the one at hand where certificates of substantial completion 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 accepts 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. 20 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 shall be recorded upon substantial completion thereby making recordation compulsory upon substantial completion. Substantial completion is defined as the finishing of construction... to the extent that the public entity can use or occupy the public work or use or occupy the specified area of the public works for the use for which it was 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. 21 Additionally, Whitaker argues that the recording of acceptance is crucial to the operation 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 ability to rely on the recorded acceptance. 22 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. 1 23 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 Honeywell , 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. Id. 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 Honeywell serves to further emphasize that prior to the 1991 amendment, premature acceptances were a problem in public works projects, which contravened the purposes of the Public Works Act by divesting subcontractors and laborers of their statutory rights. 24 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 and within forty-five days of recordation of acceptance. La.Rev.Stat. 38:2242 (emphasis added). The Claimants argue that interpreting the statute to allow the public entity to record an acceptance months before actual completion would result in the 45 day period expiring before some subcontractors' or laborers' claims have even matured because those potential claimants are still working on the project. 25 Furthermore, the Claimants argue that Whitaker's interpretation of the statute is faulty because of other absurd results. For example, if the 30 days referred to in the statutory provision is 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 protection from the Public Works Act. The Claimants contend that by contrast under their interpretation an acceptance could always be filed anytime 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. 26 The relevant portions of the statute 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 Public 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.
27 The fundamental question in all cases of statutory construction is legislative intent and the reasons that prompted the legislature to enact the law. In 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 that best conforms to the purpose of the law. La. Civ.Code art. 10; SWAT 24 Shreveport Bossier, Inc. v. Bond, 808 So.2d 294, 302 (La.2001); Smith v. Town of Vinton, 209 La. 587, 25 So.2d 237, 239 (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 be avoided. Bond, 808 So.2d at 302. Furthermore, [c]ourts should avoid constructions 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). 28 The 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. Slagle-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 object. The Public Works Act title, in pertinent part, provides that it was enacted: '... to protect 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). 29 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. JAMES S. HOLLIDAY, JR. & H. BRUCE SHREVES, LOUISIANA CONSTRUCTION LAW MANUAL 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. Id. The Public Works Act shifts the risk of loss from the governing authority to the surety and contractor through contract and bond requirements. Id. 30 As previously noted, we must interpret the provision in a way that best comports with the legislative intent of the statute. La. Civ.Code art. 10. Here it is clear that the legislative intent in 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 recorded 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 acceptance be filed immediately upon substantial completion and then say that the very same provision gives the public entity the flexibility of recording acceptance any time within 30 days after final completion of the project. 31 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 significantly 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 of 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 statement 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 32 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 statute 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. 33 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 comports with the purpose of the statute and prevents absurd results. Accordingly, we find that the bankruptcy court, and the district court, were correct in adopting the Claimants' interpretation of the language in the disputed provision. 34 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.