Lafourche Parish Water Dist. No. 1 v. Digco Util. Constr., L.P.

Citation: 275 So. 3d 20Docket: NUMBER 2018 CA 1112

Court: Louisiana Court of Appeal; March 13, 2019; Louisiana; State Appellate Court

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Lafourche Parish Water District No. 1 (LPWD) appeals a district court judgment that upheld Digco Utility Construction, LP's (Digco) exception of peremption, resulting in the dismissal of all LPWD's claims against Digco with prejudice. The case arose from a contract signed in 2006 for the construction of a water pipeline by Digco, which was substantially completed by January 31, 2007. On September 5, 2014, a subcontractor for Entergy, Auger Services, Inc., damaged the pipeline while driving steel caissons, prompting LPWD to seek damages for alleged improper installation by Digco.

LPWD filed its petition for damages on August 27, 2015, asserting that Digco laid the pipeline deeper than specified and failed to properly mark its location. Digco responded with an exception of peremption, citing a five-year peremptive period under Louisiana statutes. The district court ruled in favor of Digco, stating that LPWD's claims were perempted, and LPWD appealed, arguing that the court misinterpreted the law regarding peremptive versus prescriptive periods.

The discussion clarifies that peremption is a fixed period that extinguishes a right if not exercised, distinct from prescription, which can be interrupted or suspended. The burden of proof typically lies with the exceptor, but if a claim is perempted on its face, the burden shifts to the plaintiff to demonstrate otherwise.

Evidence can be presented regarding the exceptions of peremption and prescription under LSA-C.C.P. art. 931. Louisiana Revised Statute 38:2189 establishes a five-year peremptive period for actions against contractors or their sureties related to public works, starting from the substantial completion or acceptance of the work, or from the notice of default, unless specified otherwise. This statute specifically applies to actions by the state and its subdivisions against contractors. The Louisiana Supreme Court in State, ex rel. Division of Administration v. McInnis Brothers Construction concluded that this five-year time limitation is peremptive rather than prescriptive, a decision upheld consistently in subsequent appellate cases. LPWD argues that the five-year period should be considered prescriptive and asserts that prior jurisprudence misinterprets legislative intent. LPWD also claims it was unaware of deviations in the water transmission line's location due to misleading surface markers, suggesting that the prescriptive period should be suspended under the doctrine of contra non valentum until the incident on September 5, 2014. Despite LPWD's dissenting views, the appellate court recognizes its obligation to adhere to the Louisiana Supreme Court's ruling.

When a legal issue is not specifically addressed by statute, the definitive rulings of the Louisiana Supreme Court must be adhered to, as established in Oliver v. Magnolia Clinic and Cavalier v. State. If the Louisiana Supreme Court has interpreted a law and the legislature has not amended that law, it is assumed that the legislature accepts that interpretation, as noted in Matter of Carline Tank Services, Inc. and other cases. In this context, Digco presented evidence supporting its exception of peremption, arguing that LPWD's claims became invalid before the petition was filed on August 27, 2015, since the project was substantially completed on January 31, 2007. The court emphasized that the five-year peremptive period under LSA-R.S. 38:2189 applies to actions against contractors on public works projects. Since LPWD did not file its suit within five years of the project's substantial completion or acceptance, the district court's judgment maintaining Digco's exception of peremption was upheld. The court affirmed the May 15, 2018 judgment, assessing costs of the appeal to LPWD. The analysis also clarified that La. R.S. 38:2189 is peremptive, meaning it cannot be suspended or interrupted, aligning with public policy favoring certainty in legal claims related to public works.

Substantial completion and notice of acceptance are critical events defined in the Public Works Act, specifically La. R.S. 38:2241.1, which establish a definitive timeframe for state entities to file suits against general contractors or their sureties. The legislature intended for these terms to set a clear five-year period for claims, reinforcing the notion that legislation must be interpreted to have effect, rather than being rendered meaningless. If La. R.S. 38:2189 were deemed susceptible to suspension or interruption, it would nullify the statute's intended five-year prescription, undermining legislative purpose. Consequently, La. R.S. 38:2189 imposes a peremptive time limit on state claims arising from public works contracts, with no need for explicit language declaring its peremptory nature. The statute's plain language, legislative intent, and public policy considerations favor certainty and finality in such claims, affirming its status as a peremptory statute. Additionally, the doctrine of contra non valentem, which traditionally suspends prescription periods under specific conditions, does not apply to peremptive periods. The applicability of LSA-R.S. 9:2772 is deemed unnecessary for discussion given the finding that LPWD's claims against Digco were extinguished after the five-year period set by La. R.S. 38:2189.