Appellate court reverses ruling in contract dispute over collapse of Canal Street building's wall

By Payton Kuhn | Apr 4, 2019

NEW ORLEANS – The Louisiana 4th Circuit Court of Appeals has granted the owner of a downtown New Orleans property an appeal, reversing and remanding a lower court's decision regarding a contract dispute between it and a construction company after a wall collapsed on the project.

Judge Dale N. Atkins, in an opinion published on Feb 27, reversed the Orleans Parish Civil District Court's April 2018 decision that granted summary judgment to Hamp's Construction, stating that "1031 Canal has offered sufficient evidence that genuine issues of material fact exist relative to whether a default occurred."

In April of last year, a judgment was ruled in favor of Hamp’s regarding nearly $120,000 in unpaid dues for a demolition project. The owner of the property, 1031 Canal LLC, asserted that Hamp’s role in a collapsed common wall between the site and neighboring company Rainbow Clothing absolves it of the unpaid portion of the contract.  

In 2015, 1031 Canal signed a contract with Hamp's Construction to perform a demolition on the historic Woolworth's building in preparation for a planned apartment and hotel complex. On May 28 of that year while the demolition was being performed, a wall between the property and Rainbow Clothing partially collapsed, causing damages to the wall and the Rainbow building. The ruling states the cause of the collapse is still in dispute.

The ruling states 1031 Canal claimed that the construction company had “triggered a setoff” under the contract in its role in the incident and refused to pay the remaining balance under the contract.

Hamp’s claimed that “the parties expressly excluded setoff for any claims the contractor might have against the subcontractor,” within the original contract, the ruling states, while 1031 Canal argued that its right to setoff is not based on legal compensation but on terms agreed upon within the contract, specifically the entitlement to withhold payments for damages caused by Hamp’s.

The ruling states 1031 Canal claimed that the collapsed wall was the fault of Hamp’s due to the demolition workers “'forcefully and violently' attempting to remove a subsurface structure with the use of a heavy equipment excavator." Hamp’s refuted this, stating that it was the poor condition of the wall and not the fault of its crew that led to the incident.

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