Daniel Lund III | Phelps Dunbar
The Louisiana Fifth Circuit Court of Appeal was faced with a residential construction contract dispute concerning the construction of a new home. Pivotal to the dispute was an occupancy clause in the general contract, which declared: “Owner agrees not to occupy the Home until contractor is paid in full.” Yet, the owner moved into the home even though the work was alleged to be poor in certain aspects and the final payment had not been made to the general contractor.
Hence, when a dispute concerning the construction project arose, the contractor argued that the fact of the owner’s actual occupancy signaled total satisfied the contractor’s contractual obligations – as the occupancy clause implied acceptance of the work and completion of payment terms. Nonetheless, the lower court initially ruled in favor of the homeowner and against the general contractor, awarding her $23,211.25 for breach of contract, citing substandard workmanship and unpaid subcontractor liens. The general contractor – which had filed a counterclaim for unpaid amounts under the contract, a claim which was dismissed by the trial court – appealed.
On appeal, the court affirmed the award to the homeowner for poor workmanship and payment of a lien claimant but reversed the trial court’s dismissal of the general contractor’s counterclaim. The appellate court held that the homeowner had legally breached the construction contract by occupying the home without fulfilling the payment condition. Consequently, the court awarded the contractor the amount of the unpaid contract balance, to be offset against the amount owed to the homeowner.
Boudreaux v. Jackson, 24-440 (La. App. 5 Cir. 04/09/25); 2025 La. App. LEXIS 672
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