The Louisiana Court of Appeal for the Fourth Circuit (“Fourth Circuit”) has ruled that “a public entity’s separate claims against a contractor are secondary to the contractor’s right to prompt payment.” Woodrow Wilson Constr., LLC v. Orleans Par. Sch. Bd., 2017-0936 (La.App. 4/18/18), 245 So.3d 1, 7-8. A contractor’s right to final payment, and progress payments (where same are withheld arbitrarily or without reasonable cause), under La. R.S. 38:2191, must take preference over a public entity’s separate claim for ordinary relied, such as for liquidated damages. The Court reasoned:
It is the protracted nature of ordinary proceedings that the legislature intended to avoid be amending La. R.S. 38:2191 to provide for mandamus relief. For this reason, a public entity’s separate claims against a contractor are secondary to the contractor’s right to prompt payment under La. R.S. 38:2191. This statutory interpretation is also supported when compared to the Louisiana Public Works Act. La. R.S. 38:2243(B) echoes the legislative intent of La. R.S. 38:2191 as it provides that the “claims of the claimants shall be paid in preference to the claims of the public entity.” Id. (emphasis added). Therefore, we find OPSB is barred from asserting a separate claim for ordinary relief to defeat a mandamus action.
The Court’s reasoning is based not only upon La. R.S. 38:2191, “prompt payment,” but also on the Louisiana Public Works Act, La. R.S. 38:2243(B), which further provides that claims of “claimants” are paid in preference to those of the public entity.
Thus to effectuate the public policy of the Public Works Act, claims asserted for payment by “claimants,” (contractors, subcontractors, suppliers, etc.) as defined by La. R.S. 38:2241, may proceed by summary proceeding; but the claims by the public owner against the contractor must only proceed as a separate ordinary proceeding.
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