Louisiana Arbitration Law

Over the past few months here at Wolfe Law Group, I’ve been involved in a number of disputes where where arbitration clauses were invoked and the matters traveled the path of arbitration rather than ordinary judicial proceeding. Mediation and Arbitration have been touted as the faster, cheaper and more efficient way to handle legal disputes. While this may be true due to the enormous built in delays and catastrophic costs of “going to trial” there are a number of ways that contractors can be disadvantaged by dealing with lawyers who are not experienced with this process.

First and foremost, there is no standard for the rules. This means that, unlike the slow judicial process, the rules by which each arbitration play by can be changed and altered based on the contracts between the parties and document that they incorporate. For example, the American Arbitration Association (AAA) is one of the leaders in construction arbitration. They publish a set of rules called “Construction Industry Arbitration Rules and Mediation Procedures.” These rules are the rules that govern the entire proceeding. What this means is that there is a completely different set of operations for an arbitration than there would be for a judicial proceeding. As all lawyers know and most laymen do not, procedural tactics and expertise can make or break a case, even before it gets to be heard on the merits.

The key to getting this set of rules to apply is by having a good unambiguous arbitration clause in your construction contract. The AAA even gives example clauses that a construction company can use in its construction contract:

“Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Construction Industry Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.” See AAA’s Guide to Drafting Dispute Resolution Clauses for Construction Contracts 

On of the more important aspects of the quote above it that it incorporates the AAA Construction Industry Arbitration Rules. The same can be said for just about any arbitration company, but the AAA tends to be the leader in the commercial and construction industry. Further, you can even go as far as having a local company such as ADR, Inc., host the arbitration and then the AAA rules will apply to that proceeding.

Another reason why this is important this that the law in Louisiana governing arbitration proceedings is relatively short and references other parts of the Civil Code and the Code of Civil Procedure. Louisiana Civil Code in its Revised Statutes §9:4201§9:4217 encompass Louisiana Arbitration Law. These statutory provisions are helpful in filling in the gaps where other rules fall short and that point to other areas of Louisiana law that govern arbitration proceedings.

Typically the process works like this: 1) first you look to the contract to see how the parties have agreed to have the matter arbitrated, such as a clause saying that arbitration is proper and which rules apply. 2) Then you see which rules apply (if any) and then that will be the governing set of rules for the proceeding. 3) In matters where the rules are silent, then parties are forced to look to the Louisiana Arbitration Law section of the Revised Statutes as gap filler. 4) Finally, if all areas are silent, then you seek a decision form the arbitrator for what to do or how to proceed based on public policy.

Knowing the rules is critical to the success of an arbitration or any type of legal proceeding. The term “the devil in the details” cannot be more applicable. Arbitration proceedings can save a company thousands of dollars and lots of time. The one negative is that the are final and cannot be appealed, save extreme circumstances.  Always consult with an attorney before deciding to insert an arbitration clause into your construction contract and if you decide to invoke it.

California Lien Law In For A Change…

Over the past few years the California Legislature has been tinkering with its construction lien laws, both public an private. There have been numerous write-ups with commentators chiming in on whether the changes are a good thing or a bad thing. Nevertheless, many have happened and more changes are set to come shortly.

As of July 1, 2012 the governing statutes will be assigned to new numbers and a new section of the California Civil Code. Jones Day did a very comprehensive article back in January of this year outlining the changes. Here is an excerpt from the article of how the code articles are going to be changed in numbering:

“Effective July 1, 2012, the existing Mechanics Lien Law (commencing with Section 3082 of the Civil Code) will be repealed and replaced with new provisions in three titles relating to: (i) works of improvement generally (commencing with Civil Code Section 8000); (ii) private works of improvement (commencing with Civil Code Section 8170); and (iii) public works of improvement (commencing with Civil Code Section 9100).” See the full article here.

This is a big deal for contractors, lawyers and document preparation companies because the entire landscape is changing. Even if the substance of the law is the same, lawyers will tell you that words and punctuation can be very costly when left up to new interpretation.

More recently another construction law blog gave a more brief version of the new changes that have gone into and will be going into effect. Mark Budwig of Government Contracts Advisor posted these in his March 2, 2012 post.

The key here is not to panic but to embrace the changes and be the savvy contractor who knows about the changes and does not get rattled. Another important factor is to outsource trivial knowledge like this to trusted sources like an attorney or a more efficient service such as Zlien.com.

Can Construction Estimating Software Help You Win Bids?

Here at ConstructionLawMonitor.com, I often get industry experts who would like my readers to hear their opinions or help spread the word on what is going on in the construction industry. Software Adviceis a company who helps those in selected industries choose the best software for the business. Statistics are always a great way to show if what you are doing is correct and who all it is affecting. Below is a write up from Derek Singleton at Software Advice regarding its Construction Estimating survey. The idea of estimating is to win bids at a price that will make money for the construction company. Software Advice surveyed the industry and their findings are indicated below:

Guest Post: Derek Singleton, ERP Analyst, Software Advice

“At Software Advice, we spend a lot of time reviewing construction software of every variety. While we’re well-versed in the promised benefits of various systems, we’re always interested to know whether those benefits are realized by companies. Toward that end, we decided to survey the construction estimating industry to find out whether estimating software actually helps companies win bids.

To get responses, we enlisted the help of everyone from construction bloggers to LinkedIn group admins and construction associations. Ultimately, we came up with a set of benchmark findings that will allow estimators to compare themselves against industry standards.

More than 100 companies responded to the survey and shared their thoughts on how to effectively estimate. The companies that responded to the survey represent a variety of trades and company sizes.

While the types and sizes of construction companies participating in the survey varied, there were a few commonalities between companies and how they estimated their jobs. For instance, while the jury is still out as to whether spreadsheets are a good method of estimating, a majority of companies that use an estimating system found that the software helped them perform better estimates.

Of course, as one participant noted, it’s possible that the people who use estimating software are more meticulous in their data entry by nature. However the strong correlation between estimating software and effectiveness suggests that having an automated system at hand improves your ability to estimate.

There were also some interesting findings about how accurate your estimating data is and the method used. As an example, participants that use an estimating program reported that they underbid projects only 5 percent of the time. Meanwhile, companies that rely on spreadsheets report that they underbid roughly 15 percent of the time.

If you’re interested in finding out more about the results of our survey, please visit our website where we are hosting the results at: 2012 ConstructionEstimatingBenchmarkReport.

It’d be great if you can share your thoughts on whether these findings match your own experience as well. Also, if you have a tip to offer others in the industry, please share that as well.”

Around the Web: New Orleans Receives $40 million FEMA Grant

Guest Post: Sarah Smith – legal assistant at Wolfe Law Group, LLC.

It’s been seven years since devastating Hurricane Katrina destructed the City of New Orleans, and in that time the city has joined together to move forward in a positive direction to help rebuild the historical attraction. The pride and persistence of the residents have kept the city alive, and their determination has not gone unnoticed. FEMA has granted New Orleans $40 million to continue its transformation to a restored city. The grant has been allocated towards roadways in New Orleans and surrounding areas, New Orleans Museum of Art, LSPCA, Youth City Center, LSU Health Sciences Center, and LSU School of Dentistry. The bulk of the grant will go towards the Morris F.X. Jeff Municipal Auditorium in which significant damage to the electrical and mechanical systems, floors, walls, and seats will be repaired.  This city has proven to stay confident and resilient through difficult times, and such a grant will add to the city’s positive focus. If you would like to find more information about the breakdown of allocations, check out Nola.com’s article.

Eviction – Get Out Of My Property!

Here in Louisiana as is the case in many states there is no “self-help” with regard to Landlords evicting an unworthy, lease breaching tenant. Evictions can be a prickly subject and even more difficult when you have a tenant who will simply not vacate the property. When it comes to commercial property and leases, there are very strict rules that must be followed in order to have a tenant kicked out.

Eviction proceedings are ones that are considered summary proceedings here in Louisiana. These are ones that can be conducted much faster than an ordinary proceeding. See La C.C.P. art. 2591. Unfortunately this is not always the case and the Judge may use his discretion to retard the progress of the action.

Depending on the type of lease that Landlord and Tenant will determine how the lease may be terminated and eviction proceeding started. Termination of a lease is governed by La C.C.P. art. 4701 et seq. A helpful aspect for a Landlord to put into his lease, is that La C.C.P. art. 4701 notice is waived, therefore the Landlord will be able to institute eviction proceedings immediately upon default or termination of the lease.

The law has specific definitions for all the parties involved with a lease and eviction. These definitions are spelled out in the code at La C.C.P. art 4704. Terms such as Lease, Lessee, Lessor, Occupant, Owner and Premises are literally spelled out by the code. This is helpful to determine who the parties are.

If the Landlord is awarded possession of the premises by a court, and the tenant does not remove itself from the premises, then a Warrant will be issued to have the sheriff remove the tenant from the premises. This is a very serious penalty. See La C.C.P. arts 4731 and 4733 for more on this procedure.

Landlord / Tenant relationships can be very frictional at times. Most of the time the parties get along and there are not issues. In the small majority of the time where there are disputes, the lease will control. Further, the eviction proceeding is where the parties will have their day in court. I have dealt with a number of lease disputes here recently, and none are easy by the time they get to me. Its important to have a good working lease and take into account the rules to get the tenant out.