Insight

Construction Law: The Limits of Anti-Indemnity in Louisiana

Published on: May 1, 2018

Louisiana’s anti-indemnity statute applicable to construction contracts, R.S. 9:2780.1, became law in 2011. The statute renders unenforceable any provision in, or collateral to, a construction contract that purports to indemnify or hold harmless a person from liability for its own negligence, or has the effect of doing so. Since the law's passage, few court decisions have interpreted its seemingly broad language and many questions remain as to the law's full impact.

The obvious intent of the anti-indemnity law is to avoid shifting liability away from a party at fault to another person. To this end, the language in the statute nullifies any agreement that has "the effect of holding the person at fault harmless.” But what about "limit of liability" provisions? Arguably, such provisions have the effect of holding harmless the party at fault. Does a limit of liability provision, otherwise valid and enforceable under Louisiana law, run afoul of the anti-indemnity statute? After all, those parties with superior bargaining power in construction contracts will seek to insulate themselves from liability to the fullest extent allowed by law, and will look for alternatives to the indemnity provisions that now expressly violate public policy.

One court recently held that R.S. 9:2780.1 does not prohibit a limit of liability provision in a construction contract. In Patriot Contracting, LLC v. Star Insurance Company, (E.D. La. 3/01/2018), the construction contract contained a provision that excluded liability of the architect for good faith decisions made during contract administration. The plaintiff/contractor alleged that the architect was negligent in its contract administration duties and caused it to suffer economic loss. The court dismissed the claim, rejecting the contractor’s argument that the provision violated the anti-indemnity law.

The Patriot court explained that the statute prohibits an indemnity agreement, i.e., where one party agrees to reimburse a second party for damages for which the second party becomes liable to a third party. However, the anti-indemnity law did not impact the provision that excluded the contractor’s right to recover from the architect. Thus, at at least according to one court, parties in construction contracts are still free to include limit of liability provisions.

Mary Anne Wolf is an engineer/attorney with a construction background who represents design professionals, contractors, and others in construction litigation. She also gives seminars on the subject. She enjoys travel, yoga, and encouraging her husband in his gardening and cooking endeavors.

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Mary Anne Wolf will present Construction Insurance at the LSU and LSBA Construction Law CLE Program.

Mary Anne Wolf will present Construction Insurance at the LSU and LSBA Construction Law CLE Program on September 20, 2024.

Insight

Pass-Through Claims and Prescription

In Couvillion Group, LLC v. Plaquemine Parish Government, the Louisiana Court of Appeals for the Fourth Circuit addressed whether the general contractor could recover “pass-through claims” against the owner where those claims would be time-barred if brought directly by the subcontractors. “Pass-through claims” have been described as damage claims that subcontractors “pass through” to the contractor to prosecute an action against the project owner to recover those damages.

In Couvillion, the contractor sued the Parish for delay damages. The trial court awarded $2,782,724 in delay damages, $300,000 of which was for delays incurred by two of the subcontractors.

On appeal, the Parish argued that the contractor could not recover the pass-through claims because any claims for delay that the subcontractors had against the contractor were prescribed (time-barred). The subcontractors sent demand letters after substantial completion in 2013 but did not file suit against the contractor. Under Louisiana law, contract claims are subject to a 10-year prescriptive period. The Parish asserted that by the time trial occurred in 2024, the subcontractor claims had prescribed.

The Fourth Circuit recognized that subcontractors often pass their claims through the contractor to prosecute against the owner to recover those damages. The contractor included those claims in the lawsuit filed against the owner in 2015. When several parties share a cause of action, suit by one party interrupts prescription as to all parties. As such, the court held that prescription was interrupted, and the contractor could recover the pass-through claims against the owner.

This case highlights the importance of identifying and properly preserving pass-through claims early in litigation.

References:

Couvillion Grp., LLC v. Plaquemines Par. Gov't, 2025-0356 (La. App. 4 Cir. 1/7/26), 430 So. 3d 1175, writ denied, 2026-00217 (La. 5/12/26), 430 So. 3d 1090.

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Insight

Insurance: “ACV,” Depreciation, or Both

In Louisiana, we are all too familiar with natural disasters. Every “hurricane season,” we hope the storm causes only minor inconvenience; but history teaches us to prepare for more. When these storms come, home and business owners inevitably make post-disaster insurance claims to repair the damage. While the specific amount owed for property damage is determined by the terms of the policy, the amount received may be affected by when (and if) the damage is repaired.

An insurer will work with you to identify the “actual cash value” or “ACV” of the damaged property when handling your claim. “ACV” is defined as the cost to repair/replace the damage, less depreciation. Jouve v. State Farm Fire and Cas. Co., 2010-1522 (La.App. 4 Cir. 8/17/11), 74 So.3d 220. Many policies provide that an insurer is not obligated to provide you with more than the “ACV” of the damage, unless and until you actually make repairs. Later, you can recover the depreciation amount once you submit proof that the repairs are complete. Courts have enforced such provisions in many cases, regardless of the type of loss.

So, what happens if you never make the repairs? Simply, the insurance company may never owe the depreciation. In Hackman v. EMC Ins. Co., 07-552 (La.App. 5 Cir. 3/25/08), 984 So.2d 139, the plaintiff’s property was damaged by a fire. The insurer paid the ACV of the loss but withheld depreciation pending repairs. The plaintiff never made the repairs and ultimately sold the property. The Court ruled the plaintiff was not entitled to recover the difference.

Similarly, in Jouve v. State Farm Fire & Cas. Co., supra, the plaintiffs’ home was damaged by wind during Hurricane Katrina. Their insurer paid the ACV of the loss. Thereafter, the plaintiffs sold the home “as is” and sought recovery for the depreciation. The court reviewed the policy and found the plaintiffs’ sale of the home without repairs limited their recovery to ACV.

As with any insurance claim, you should always read your policy before losses occur to ensure you understand its terms and conditions. Maybe add this as an unusual step to your hurricane checklist. As these cases show, your ultimate recovery can be affected by what you do, or do not do, following the loss.