Conerly Corporation contracted with Beechgrove Redevelopment Phase II, LLC for the renovation of certain apartment units in Westwego, Louisiana. Beechgrove obtained a secured loan from AmSouth Bank, predecessor to Regions Bank. A representative of AmSouth/Regions threatened to replace Conerly if work was not completed faster. The representative also allegedly promised that all of the work done for Beechgrove that was approved by the architect would be paid in full. Allegedly relying on the representative’s word that AmSouth/Regions would compensate Conerly for further construction, Conerly continued to work and incur expenses. Certain payments from Beechgrove and AmSouth/Regions were not forthcoming. Conerly was required to seek financial assistance from its bonding company, the Insurance Company of Pennsylvania, in order to meet its obligations to subcontractors and continue work on the Beechgrove project.

The financial arrangement between Conerly and the bonding company included an assignment which was part of a financing agreement entered into on October 12, 2004. Despite the bonding company’s financial assistance and Conerly’s continued work on the project, the representative of AmSouth/Regions in March 2007 allegedly informed Conerly that it would receive no further payments for work completed. Conerly and the bonding company then brought an action in federal district court against AmSouth/Regions and its representative. Following several motions and other events, the district court addressed the motion of AmSouth/Regions to dismiss Conerly’s claims, averring they were assigned to the surety.

The court found there was no impediment to Conerly’s assignment of its contractual right to collect payment for services. Since its claim for bad faith breach of contract for failure to pay for the services sounded in contract and not tort, that action arose from the contractual relationship and was assignable along with other contract rights. The question of whether it could assign its tort claims was more complicated. The court held in Louisiana a tort claim may be assigned only if it is specifically identified and is in existence at the time of the assignment. Since the assignment was made prior to the date the lawsuit was filed, the tort claims could not be assigned. Conerly Corporation v. Regions Bank, 668 F.Supp.2d 816 (E.D. La. 2009).