NEW ORLEANS - The Fifth Circuit Court of Appeals has found in favor of a construction company over Golden Nugget Lake Charles in a $18.7 million lien dispute.
In a decision handed down March 6, the appeals panel reversed a lower court decision that had dismissed claims of W.G. Yates & Sons Construction Co. which had sought to secure payment for its work by filing a a statutory lien.
The Western District of Louisiana court had found that Yates did not file a lien statement within the time required by statute and ruled for Golden Nugget.
"However, we find that because Golden Nugget never filed a notice of substantial completion, Yates’s lien statement was timely filed," wrote Fifth Circuit Judge Edward Prado. Judges Grady Jolly and Jerry Smith agreed.
According to background information in the appeals decision, in 2011, Yates had entered into a contract with the original owner to construct the casino, hotel and spa project.
Golden Nugget purchase ownership in 2013, and the following year Yates and Golden Nugget signed a certificate of substantial completion, which meant that the project was fit for occupancy, and which has been in use ever since.
Court documents say that Golden Nugget asserted that it paid nearly all amounts owed under the contract, but was withholding approximately $18.7 million to protect itself against estimated damages "caused by Yates' contractual and other breaches."
The businesses sued and counter-sued. First, Golden Nugget filed a complaint in federal court on Nov. 25, 2015, seeking damages and declaratory relief for breach of contract, breach of warranty and negligence. Yates counter-sued the following month alleging that Golden Nugget was wrongfully refusing and delaying payment on the project.
In its counterclaim filed Dec. 21, 2015, Yates indicated it would be filing a statement of lien to secure payment pursuant to the Louisiana Private Works Act (LPWA), which grants general contractors a "privilege" - or a lien — for its work. Two days later Yates filed a lien statement in the mortgage records which were located in Calcasieu Parish.
On Jan. 15, 2016, filed to partially dismiss Yates's counterclaim, arguing that it did not file the statement in time to preserve its lien under the LPWA.
Under the district court’s interpretation of the statute, it found that Yates's statement of lien was untimely and dismissed the lien with prejudice
The decision also notes that at Golden Nugget’s request, "Yates had the lien statement removed from the parish property records to prevent the lien from acting as a cloud on Golden Nugget’s title to the property."
Yates appealed in April 2016.
Prado wrote that the statute in question is predominantly about filing requirements, and that the LPWA places the burden on an owner to take affirmative action to cut off potential claims when a contract has been recorded, whether it is a general contractor or a subcontractor.
He further wrote that the weight of Louisiana law suggests that a 60-day period begins to run when either a notice of termination or a notice of substantial completion is filed.
"Because here the contract was recorded but no notice of termination or completion was ever filed, Yates has a valid lien and a right to file a lien statement," Prado wrote.