The bill enacts a new provision in the Louisiana Civil Code, specifically Article 1519.1, which addresses the enforceability of penalty clauses in juridical acts. It stipulates that any provision intended to penalize an individual for contesting an inter vivos or mortis causa donation, succession, or trust administration is unenforceable if, at the time of the challenge, there exists a factual basis that would lead a reasonable person to believe there is a substantial likelihood of success in the challenge. This legislative change aims to provide clarity and consistency in the application of penalty clauses, which have historically been inconsistently interpreted by Louisiana courts.
The bill reflects a modern approach to penalty clauses, aligning with practices in other jurisdictions and balancing the interests of donors in preventing frivolous lawsuits against the rights of donees to contest donations. It emphasizes that good faith actions, such as requests for accounting or challenges to fiduciary appointments, should not trigger penalty clauses. The new article does not replace existing laws regarding penalty clauses but rather supplements them, ensuring that no-contest clauses are strictly construed and that the courts maintain discretion in evaluating the nature of actions taken by donees.