LOUISIANA: An Introduction to Litigation: General Commercial

Louisiana: Litigation: General Commercial

I. Overview 

Practice and procedure in the Louisiana state district courts generally will be more familiar to those with experience in common law jurisdictions than one might expect. A couple of features, however, deserve note. In Louisiana practice, many motions directed to the sufficiency of the complaint (referred to as the 'petition') are called 'exceptions'. The exceptions enumerated in the Louisiana Code of Civil Procedure are subdivided into three categories (peremptory, dilatory, declinatory). Thus, a motion to dismiss for failure to state a claim generally will be called a 'Peremptory Exception of No Cause of Action'. Oral argument is held on virtually all contested motions. District courts generally do not issue written opinions, but a litigant may obtain written reasons by request. In civil cases, there is a right to appeal a final judgment to the courts of appeal. Thereafter, consideration by the Supreme Court is discretionary upon application for writs. Interlocutory review is available at the courts’ discretion by writ application. Relative to many state court systems, and certainly relative to the federal courts of appeals, both the Louisiana Courts of Appeal and the Supreme Court grant interlocutory review of civil matters with some degree of frequency.

The state court system in Louisiana includes forty-two trial courts of general jurisdiction. The jurisdiction of many of these district courts corresponds directly with only one of the state’s sixty-four parishes, but some district courts cover several parishes. There are five intermediate courts of appeal, and the Supreme Court of Louisiana. Decisions of the district courts generally are not published. Decisions of the courts of appeal and the Supreme Court are published in the Southern reporter system. All state judges in Louisiana are elected. There are three federal district courts in Louisiana; decisions from those courts are appealable to the Fifth Circuit Court of Appeals, which is generally regarded as one of the more conservative Circuit Courts of Appeal.

II. Current Trends in Commercial Litigation in Louisiana 

A. Trials! Trials! 

After a one-year pause on jury trials in state and federal courts, jury trials resumed in state courts on April 1, 2021. Federal courts have also resumed jury trials, with the Eastern District being the last of the federal courts to resume (on June 7, 2021). Early reports have been that, with some modified procedures (e.g., enlarged jury boxes, requiring spectators to watch the trial in an alternate location via livestream, judge’s encouraging litigants to agree to a jury of 6 as opposed to 12), it’s business as usual. But commercial litigants should still be prepared to wait for their day in court. With the exception of Orleans Parish (which has separate civil and criminal courts), both federal and state courts have indicated that criminal trials will get priority in scheduling throughout 2021 due to a large backlog in criminal cases and constitutional speedy trial act concerns.

In-person motion hearings have also resumed, although many judges continue to allow remote participation. Most lawyers and judges predict that remote proceedings will still be used for some hearings and depositions because of the efficiency they offer, but it is likely that those will become the exception rather than the rule.

B. Construction Litigation Expected to Increase 

With $3.2 billion in COVID-19 aid allocated to Louisiana, and President Biden’s support for a $2 trillion nationwide infrastructure spending plan, it is expected that public and private construction activities in Louisiana will significantly increase. That will undoubtedly lead to an increase in construction litigation and arbitration, including private works act lien disputes, construction defect claims, breach of contract claims, and surety bond claims. In addition, volatility in the markets for building materials (from copper to PVC pipe to plywood) has resulted in litigation over who must bear the risk of unexpected price escalations and that is expected to continue throughout the next year.

C. Transition from Fossil Fuels to Clean Energy 

The continued move from fossil fuels to clean energy has resulted in an increase in litigation in Louisiana over issues relating to the close-out of oil fields in Louisiana that are no longer economically viable because of the price of oil and gas and decreased demand. Landowners are seeking to terminate old oil and gas leases and have oil wells and equipment removed from their property. There are thousands of abandoned oil wells in Louisiana. Unfortunately, many of the more recent operators are insolvent, which has caused a greater focus to be placed on oil majors who were the original lessees. The issue of removing old oil wells and related equipment has been reported on as the one component of the 'Green New Deal' proposed by the Biden administration that could receive bipartisan support. There are also large bio-fuel and carbon capture projects planned in Louisiana that could ultimately generate new forms of commercial litigation.

D. Bankruptcies Expected to Rise Once Pandemic Crisis Ends

Many Louisiana bankruptcy practitioners expected bankruptcies to soar because of the COVID-19 pandemic. Instead, there has been a decrease in both consumer and business bankruptcy filings. Across Louisiana, 7,675 total bankruptcies were filed in 2020—40.77% fewer than in 2019, when 12,958 were filed. Nationally, total commercial Chapter 11 filings in April 2021 dropped to 287—49% lower than the 567 commercial filings in April 2020. This continued decrease is due to a number of factors, but most notably, the various government stimulus packages. These stabilization efforts have provided relief to both individuals and businesses. The relief programs, however, will expire at some point. And when that happens, a surge in both consumer and business bankruptcies is expected.