The Clock's Ticking

By: Kelly E. Theard

In Louisiana, the legislature has the authority to create a right of action, and then stipulate the time frame (referred to as "delay") within which that right is to be exercised. Once that time frame expires, the right of action ceases to exist, and the plaintiff loses the right forever. The legal term for the running of the delay, and the losing of the right is known as peremption.

In July of 2003, the Louisiana legislature enacted La. R.S. 9:5607, which establishes the controlling peremptive period for a plaintiff to bring a cause of action against a design professional. La. R.S. 9:5607 provides that any and all causes of action against a design professional are perempted if such claims are not brought within five years from either the "date of registry in the mortgage office of acceptance of the work by the owner" or in the absence of such recorded acceptance, "the date the owner has occupied or taken possession of the improvement." Prior to the enactment of this statute, a cause of action against a design professional was governed by the same peremptive statute that governed a contractor (La. R.S. 9:2772), which has been amended over the years and been reduced from ten (10) years to five (5) years. By creating La. R.S. 9:5607, the Legislature eliminated the application of La. R.S. 9:2772 to design professionals.

In the legal world there has been much debate as to how this newly enacted statute would apply to projects which ended prior to its enactment in 2003. For example, what peremptive period would apply if the design professional's work on the Project ended on January 1, 2001?

Within the last couple of months, that question has been answered by two separate Louisiana Courts on the state and federal level. The answer is: it depends. In 2 separate cases, the 4th Circuit Court of Appeals and the United States District Court, Eastern District of Louisiana concluded that the five year peremptive period set forth in La. R.S. 9:5607 is to be applied retroactively, as long as the cause of action didn't accrue until after the five year period has expired. See, Patriot American Hospitality Partnership, LP v. Mississippi Land Holdings, Inc., et al., No.: 2006-CA-0601, appeal from Civil District Court of Orleans Parish, No.: 2004-13362 and In Re Katrina Canal Breaches Consolidated Litigation, Eastern District Court Docket No.: 05-4182, document no.: 2148.

In Louisiana, a cause of action for property damage "accrues" when the plaintiff has the property damage and acquires the knowledge that the defendant's conduct is a likely cause of the claimed damage. In order to determine if claim against a design professional is prescribed, you must determine when the Plaintiff suffered the property damage and when the Plaintiff became aware that it was the defendant's conduct that caused the property damage. Therefore, if the property damage from the above example was sustained any time after January 1, 2006, then the cause of action "accrued" after the five year peremptive period has expired, and the right to bring that claim against the design professional is lost forever.

The moral of these cases, and the application of this statute is that the clock is always ticking. Under La. R.S. 9:5607, once the clock strikes five years after the date of recording the acceptance or occupancy by the owner, and there has been no discovery of property damage by the owner, the design professional is home free.

Written for The Legal Blueprint, Issue 1.