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Regular Session, 2012
SENATE BILL NO. 499
BY SENATOR RISER
BONDS. Prohibits the State Bond Commission from approving bonds, notes, or other
indebtedness of political subdivisions against whom there is an unpaid judgment issued by
a court of competent jurisdiction for amounts owed for services performed under contract.
(8/1/12)
AN ACT1
To enact R.S. 39:1405.5, relative to the issuance of debt by political subdivisions; to prohibit2
the State Bond Commission from approving the issuance of bonds, notes, or other3
evidences of indebtedness of political subdivisions against whom there is filed4
certain unpaid judgments; to provide for the filing of notices of certain unpaid5
eligible judgments with the State Bond Commission; to provide that eligible6
judgments shall include judgments owed for goods, services, or work performed7
under a contractual obligation; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 39:1405.5 is hereby enacted to read as follows: 10
ยง1405.5. Other outstanding indebtedness11
A. Bonds, notes, or other evidences of indebtedness of any political12
subdivision required by the constitution or laws of Louisiana to be sold or13
approved by the State Bond Commission, shall not be sold or approved by the14
State Bond Commission if the political subdivision has a notice of eligible15
judgment on file with the State Bond Commission, unless the political16
subdivision has obtained prior written approval from the judgment creditor17 SB NO. 499
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described in the notice or the notice is withdrawn as provided in Subsection C1
of this Section.2
B. As used in this Section, the following words shall have the meanings3
provided in this Subsection, unless the context clearly requires otherwise:4
(1) "Judgment creditor" means any person or entity who has obtained5
an eligible judgment against a political subdivision, or the judgment creditor's6
heirs, successors, or assignees.7
(2) "Eligible judgment" means a judgment issued by a court of8
competent jurisdiction after the effective date of this statute, against a political9
subdivision for amounts owed for goods, services, or work performed under a10
contractual obligation, which judgment is recorded in the mortgage records in11
the parish where the political subdivision is located, and which is not secured12
by a surety bond filed with the clerk of court in an amount sufficient to satisfy13
the requirements of Article 2124 of the Louisiana Code of Civil Procedure.14
(3) "Contractual obligation" means a voluntary written agreement15
between a political subdivision and any person or entity who contracts to16
provide goods, services, or work for, or on the behalf of, the political subdivision17
as an independent contractor, including, but not limited to, any professional18
service contract, consulting agreement, or procurement contract.19
C. The notice of eligible judgment filed with the State Bond Commission20
shall state the amount of the judgment indebtedness and shall include a copy of21
the recorded eligible judgment. The notice shall remain on file with the State22
Bond Commission until withdrawn. The notice shall be withdrawn by the23
judgment creditor promptly upon satisfaction of the judgment or by the State24
Bond Commission upon the petition of a political subdivision after a showing25
that the eligible judgment has been canceled by the recorder of mortgages in all26
applicable parishes or that the notice of judgment was improperly filed on a27
non-eligible judgment.28
D. The State Bond Commission shall not approve any bonds, notes, or29 SB NO. 499
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other evidences of indebtedness by any political subdivision, special district,1
public trust, or other entity seeking to issue on behalf of a political subdivision2
which has a notice of eligible judgment on file with the State Bond Commission,3
unless the political subdivision has obtained prior written approval from the4
judgment creditor described in the notice or the judgment is withdrawn as5
provided in Subsection C of this Section.6
E. Bonds, notes or certificates of indebtedness shall not be invalid7
because of any non-compliance with this Section and shall be incontestable in8
the hands of bona fide purchasers or holders for value.9
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Martha S. Hess.
DIGEST
Proposed law prohibits the State Bond Commission from selling or approving bonds, notes,
or other evidences of indebtedness of any political subdivision required by the Constitution
or laws to be sold or approved by the State Bond Commission, if the political subdivision
has a notice of eligible judgment on file with the State Bond Commission, unless the
political subdivision has obtained prior written approval from the judgment creditor or the
notice is withdrawn as provided in proposed law.
Proposed law defines "eligible judgment" to mean a judgment issued by a court of competent
jurisdiction after the effective date of proposed law, against a political subdivision for
amounts owed for work or services performed under a contractual obligation, which
judgment is recorded in the mortgage records in the parish where the political subdivision
is located, and which is not secured by an appeal bond filed with the clerk of court.
Proposed law defines "contractual obligation" to mean a voluntary written agreement
between a political subdivision and any person or entity who contracts to provide goods,
services, expertise, or work for, or on the behalf of, the political subdivision as an
independent contractor, including, but not limited to, any professional service contract,
consulting agreement, or procurement contract.
Proposed law provides that the notice of eligible judgment filed with the State Bond
Commission shall state the amount of the judgment indebtedness and shall include a copy
of the recorded eligible judgment. The notice shall remain on file with the State Bond
Commission until withdrawn. The notice shall be withdrawn by the judgment creditor
promptly upon satisfaction of the judgment or by the State Bond Commission upon the
petition of a political subdivision after a showing that the eligible judgment has been
canceled by the recorder of mortgages in all applicable parishes or that the notice of
judgment was improperly filed on a non-eligible judgment.
Proposed law prohibits the State Bond Commission from approving any bonds, notes, or
other evidences of indebtedness by any political subdivision, special district, public trust, or
other entity seeking to issue on behalf of a political subdivision which has a notice of eligible
judgment on file with the State Bond Commission, unless the proposed issuer has obtained
prior written approval from the judgment creditor described in the notice or the judgment
is withdrawn as provided in proposed law. SB NO. 499
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Proposed law provides that bonds, notes or certificates of indebtedness shall not be invalid
because of any non-compliance with proposed law and shall be incontestable in the hands
of bona fide purchasers or holders for value.
Effective August 1, 2012.
(Adds R.S. 39:1405.5)