The New Home Warranty Act: How Does It Work?

Louisiana law protects building contractors from liability for past projects that otherwise could extend for an indefinite period of time. La. R.S. 9:2772 prohibits any lawsuit against a contractor for damages arising from a construction project five years after: (1) the date project acceptance was filed into the public records; or, if no acceptance was filed, (2) the date of occupancy. This five-year period is referred to as the "peremptive" period.

This law is broad enough to bar untimely claims of breach of contract and negligence, as well as failure to warn of dangerous conditions. It also covers all conceivable building activities: design, construction, consultation, planning, evaluation, construction administration, and land surveying. It applies both to residential and commercial construction. It also covers claims of property damage, personal injury, and wrongful death brought by any person. The only noted exception is where a contractor’s fraud caused the damages.

The law is meant to establish a specific date to cut off the contractor’s liability. Under the law, nothing can interfere with the running of a peremptive period. After it expires, the claim no longer exists.

Construction litigation in this area often focuses on commencement of the peremptive period. For instance, in Celebration Church, Inc. v. Church Mutual Insurance Company, 16-245 (La.App. 5 Cir. 12/14/16), the owner of a shopping center sued its property insurer for roof damage related to Hurricane Isaac. The insurer prevailed in defending the claim based on defective roof repairs made following Hurricane Katrina. The owner then filed suit against the roofer who made the repairs after Hurricane Katrina. To avoid the peremptive defense, the owner argued that peremption did not begin to run until substantial completion of the entire shopping center. The court rejected this argument and held that the law is specific in defining the date of commencement of the peremptive period. It began to run when the tenants first occupied the space. By the time suit was filed, the owner’s claim no longer existed.

Because construction defects may not surface for years, a claim may be barred before the owner even discovers the problem.

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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As a general rule in Louisiana, a party involved in business dealings may keep silent, but exceptions exist. Sure, where information is volunteered that may influence the other party’s conduct, that information must be truthful, but is there a duty to disclose information harmful to your position? According to one recent decision, the answer may be “yes.”

In Parkcrest Builders, LLC v. Housing Authority of New Orleans, 2017 WL 193500 (E.D. La. 2017), the court highlighted a wrinkle in the general rule of silence. According to the Parkcrest court, a party to a proposed transaction may have a duty to disclose any information that an ethical person would disclose. This duty complicates matters for a party wishing to disclose as little as possible in order to protect its interests in an arms-length negotiation. It also raises a question: can a party be sued in fraud if they don’t divulge enough information to satisfy the other party?

“Fraud” is defined as a misrepresentation or suppression of a material fact, made with the intent to obtain an unjust advantage or to cause a loss or inconvenience to the other party. La. Civil Code article 1953. In order to prove fraud by silence, there must exist a duty to disclose.

Parkcrest involved a public project to construct new affordable housing units where the owner terminated its contract with the contractor and sued the contractor’s bond company. In the suit against the bond company, the owner alleged fraud and claimed that the bond company improperly concealed (1) its intent to rehire the defaulted contractor to complete the project, and (2) the nature of the bond company’s agreement with the contractor. According to Parkcrest, these allegations, if proven, were sufficient to prove fraud by silence.

Given that the law allows recovery of economic losses arising from a party’s reasonable reliance upon information provided by another, businesses need to be careful in what they say, and even in what they don’t say.