You’ve Got Mail: E-mail to Attorney Insufficient for Public Works Act Notice Requirement

You’ve Got Mail: E-mail to Attorney Insufficient for Public Works Act Notice Requirement[1]

84 Lumber Company v. Continental Casualty Company[2]

On January 24, 2019, the U.S. 5th Circuit ruled that a sub-subcontractor’s e-mail to a general contractor’s lawyer did not satisfy the plain language of the notice requirement under the Louisiana Public Works Act (“LPWA”).

The Issue

Laborers, suppliers and materialmen across the state inevitably experience working a construction project only to find a general contractor who avoids or refuses to pay.  In response, the Louisiana legislature passed the LWPA with the intent to protect laborers and materialmen involved in public works projects by offering them a vehicle by which they could recover amounts owed to them.[3]  The LPWA outlines a series of steps a claimant must take to successfully preserve their claim.  One notable procedure is the notice requirement, which provides that a subcontractor — not in privity with a general contractor — must give written notice to said contractor of his rights.[4]  Additionally, the notice must be served by either registered or certified mail to the contractor at its office in the state of Louisiana.[5]  Courts typically do not expand the interpretation of the LWPA because lien statutes are in derogation of natural or common rights; therefore, the LWPA should be strictly interpreted.[6]  As a result, the failure of a subcontractor to comply with statutory requirements will likely bar a claim for nonpayment.

Laborers, suppliers and materialmen across the state inevitably experience working a construction project only to find a general contractor who avoids or refuses to pay.  In response, the Louisiana legislature passed the LWPA with the intent to protect laborers and materialmen involved in public works projects by offering them a vehicle by which they could recover amounts owed to them.[3]  The LPWA outlines a series of steps a claimant must take to successfully preserve their claim.  One notable procedure is the notice requirement, which provides that a subcontractor — not in privity with a general contractor — must give written notice to said contractor of his rights.[4]  Additionally, the notice must be served by either registered or certified mail to the contractor at its office in the state of Louisiana.[5]  Courts typically do not expand the interpretation of the LWPA because lien statutes are in derogation of natural or common rights; therefore, the LWPA should be strictly interpreted.[6]  As a result, the failure of a subcontractor to comply with statutory requirements will likely bar a claim for nonpayment.

Recently however, Louisiana circuit courts focus more on the statute’s legislative intent — protecting laborers from nonpayment for work — as opposed to strict compliance with the notice requirement.[7]  With legislative intent the sole priority, contractors may not experience severe consequences for the failure to comply with all statutory requirements.  As a result, this notable shift poses an interesting question for the court to answer.  Is it fair to bar a subcontractor’s claim due to a noncompliant notice?  If yes, this may directly conflict with the legislative intent of the act itself, which is to protect subcontractors from the nonpayment for work performed on construction projects.  If no, this may undermine the procedural importance of the act, which streamlines the court’s analysis to decide LPWA cases.  84 Lumber Company v. Continental Casualty Company may answer this contentious question and whether the U.S. 5th Circuit encourages claimants to meticulously follow LPWA requirements to avoid pitfalls.

Background and Procedural History

Paschen, Nielsen & Associates (“Paschen”) served as the general contractor for two contracts to build public schools in Louisiana.  J&A Construction Management Resources Co. (“JA”) served as the subcontractor and 84 Lumber Company (“84 Lumber”) acted as a sub-subcontractor.  84 Lumber filed two statements of claim under the LPWA in which it alleged that Paschen and JA failed to pay for the work 84 Lumber performed on the projects.  However, 84 Lumber failed to send a written notice by certified or registered mail to Paschen.[8]  Additionally, 84 Lumber merely emailed its notice to Paschen’s lawyer.  The district court dismissed 84 Lumber’s case against Paschen and its surety, holding that 84 Lumber’s e-mail was insufficient to satisfy the statutory notice requirement of La. Rev. Stat. Ann. 38:2247 (“§ 2247”).  In response, 84 Lumber appealed the decision to the U.S. 5th Circuit.

U.S. 5th Circuit Opinion

 84 Lumber cited three cases to bolster its argument that the email to Paschen’s attorney satisfied the statutory notice requirement.  First, 84 Lumber cited Bob McGaughey Lumber Sales, Inc. v. Lemoine Co. Inc.  In McGaughey, the Louisiana Third Circuit held that a sub-subcontractor’s notice by regular mail (instead of certified or registered mail) satisfied § 2247 upon proof that written notice was served on the contractor.[9]   Second, 84 Lumber cited K Construction Inc. v. Burko Construction Inc. 

In Burko, the Louisiana Fourth Circuit reasoned that although the sub-subcontractor did not send the contractor written notice, its claim survived since the subcontractor placed the general contractor in default and included the claims of the sub-subcontractor in its notice to the general contractor.[10]  Finally, 84 Lumber relied upon Nu-Lite Electric Wholesalers LLC v. Axis Construction Group LLC, in which the Louisiana First Circuit ruled that sending notice and filing suit before the 45-day period triggered by the notice of acceptance or default did not undermine Nu-Lite’s claim.[11]

Although these cases seem to deviate from the plain language of the statute, the 5th Circuit rejected these arguments.  Since 84 Lumber did not have contractual privity with Paschen, § 2247 required 84 Lumber to issue a notice of claim served by registered or certified mail and addressed to Paschen’s office.  Paschen failed to do so.  Additionally, the court emphasized the importance of complying with the rules of the LWPA by referencing Interstate School Supply Co v. Guitreau’s Construction &Consulting Co. Inc. — where a subcontractor could not assert its action because it sent its notice one day after the statutory deadline.[12]  In response to 84 Lumber’s reliance on its cited cases, the court distinguished McGaughey, Burko, and Nu-Lite.  For example, the McGaughey claimant sent notice to the opposing party by regular mail.  In Burko, although the sub-subcontractor claimant did not send the general contractor a written notice of claim, the subcontractor’s claim against the general contractor included the claim of the sub-subcontractor; therefore, the general contractor was adequately put on notice.  Finally, the Nu-Lite claimant followed the requirements of § 2247, the claimant simply did so too early.  Therefore, these cases were distinguishable to 84 Lumber’s facts — who only sent an email instead of a written notice via certified or registered mail to Paschen and who emailed Paschen’s lawyer and not Paschen itself.  As a result, the U.S. 5th Circuit affirmed the lower court’s decision, dismissing 84 Lumber’s lien claim.

Conclusion

Although the Louisiana circuit courts allowed some claims to survive when claimants did not follow the requirements of the LPWA, these instances might be outlier decisions rather than the new norm.  As a result, claimants should continue to adhere to the instructions of the LPWA to protect their rights.  One interesting question concerning the holding of this case concerns the form of communication used in the notice.  Was 84 Lumber’s notice noncompliant due to the method of communication used (i.e. email) or to whom the communication was directed (i.e. the attorney instead of the actual party)?  With the steady advancement of technology, email to a party may satisfy the notice requirement in the future.

Email is undoubtedly a normal and arguably the most convenient way to communicate to parties; but currently, the U.S. 5th Circuit is not willing to expand the notice requirement to include emails. So for the time being, claimants should resist the urge to send notice via email (or worse, via text) and follow § 2447 to the letter of the law.  Additionally, § 2447 requires the notice to be sent to the opposing party — not its attorney — as clear and unambiguous laws must be applied as written, especially when required to be strictly construed.

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[2]   No. 18-30170, 2019 WL 311922, at *1 (5th Cir. Jan. 24, 2019).

[3]   U.S. Pollution Control, Inc. v. Nat’l Am. Ins. Co., 95-153 (La. App. 3 Cir. 8/30/95), 663 So.2d. 119, 121.

[4]   La. Rev. Stat. § 38:2247.

[5]   Id.

[6]   See Martin Marietta Materials of Louisiana, Inc. v. U.S. Fid. & Guar. Co., 41,280 (La. App. 2 Cir. 9/27/06), 940 So.2d. 152, 156.

[7]   Pierce Foundations, Inc. v. Jaroy Const., Inc., 2015-0785 (La. 5/3/16), 190 So.3d. 298, 306 (holding that subcontractor’s failure to comply with notice and recordation requirements did not affect subcontractor’s rights to proceed directly against general contractor and surety).

[8]   Under La. Rev. Stat. § 38:2247, a subcontractor not in privity with a general contractor must send written notice of its claim by certified or registered mail to the general contractor.

[9]   590 So.3d. 664, 666 (La. App. 3d. Cir. 1991).

[10]   629 So.2d. 1370, 1374 (La. App. 4th. Cir. 1993).  The failure of Laurent (sub-subcontractor) to notify general contractor Burko by certified letter pursuant to R.S. § 38:2247 was not fatal to his claim because Laurent’s claim was included in subcontractor “K” Construction’s claim — of which Burko was notified.  In essence, Burko received notice of Laurent’s rights through the notice given by K Construction, which ultimately satisfies LWPA requirement that a general contractor not in privity with a sub-subcontractor receive notice of the claim.

[11]   249 So.3d. 10, 17 (La. App. 1st Cir. 2018).

[12]   542 So.2d. 138, 139 (La. App. 1st Cir. 1989).