Larkin Dev. N., L.L.C. v. City of Shreveport

297 So.3d 980

LARKIN DEVELOPMENT NORTH, L.L.C., Plaintiff-appellant

v.CITY OF SHREVEPORT, Defendant-appellee

Larkin Development At Railsback, L.L.C., Plaintiff-appellant

v.City of Shreveport, Defendant-appellee

53,374-CA

53,375-CA

53,374-CA

53,375-CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered March 4, 2020.

Rehearing Denied July 16, 2020

SINCLAIR LAW FIRM, L.L.C. By: Scott C. Sinclair, Counsel for Appellants

COOK, YANCEY, KING & GALLOWAY, APLC By: Elizabeth Mendell Carmody, James Ashby Davis, Jason Blance Nichols, Counsel for Appellee

Before STONE, COX, and McCALLUM, JJ.

McCALLUM, J.

Larkin Development North, L.L.C. ("LDNorth"), and Larkin Development at Railsback, L.L.C. ("LDRailsback"), filed inverse condemnation actions against the City of Shreveport ("Shreveport"). In response, Shreveport filed exceptions of no cause of action, lack of subject matter jurisdiction, and prematurity. The trial court granted the exceptions, compelling LDNorth and LDRailsback to file the instant appeal before us.

PROCEDURAL BACKGROUND

Since the trial court granted the exceptions at issue, it did not consider the merits of the case. Therefore, we will note the factual highlights of this case and review its procedural background.

Between July, 2006 and April, 2007, LDRailsback and LDNorth purchased adjacent property totaling 137 acres of land. In 2016, they filed applications for approval of plat designations with the Shreveport-Caddo Metropolitan Planning Commission ("MPC"). In February of 2017, MPC denied the applications. Upon subsequent review, the Shreveport City Council affirmed the MPC's denial of the plat applications.

LDRailsback and LDNorth then filed their inverse condemnation actions under Louisiana law against Shreveport. They alleged that by denying their plat applications Shreveport prevented their ability to develop the property into profitable residential lots. They sought just compensation for their losses caused by Shreveport's denial of the applications.

Thereafter, LDRailsback applied for additional plats with MPC. MPC denied the new applications and the Shreveport City Council affirmed the decision. LDRailsback then amended its petition to include that most recent plat application denial.

MPC's reason for denying the plat applications was that the land in question was in the pathway of the possible future extension of LA 3132. No party disputes that LDRailsback and LDNorth did not seek judicial review of the plat application denials. Alleging that Shreveport's denials prevented them from developing the property to its full extent, LDNorth and LDrailsback filed their inverse condemnation actions, seeking compensation under Louisiana law.

In response, Shreveport filed peremptory exceptions of no cause of action, and alternatively, declinatory exceptions of lack of subject matter jurisdiction and dilatory exceptions of prematurity. Shreveport argued that LDNorth and LDRailsback must first exhaust all administrative and judicial review options prior to bringing any actions for inverse condemnation. With the petitioners failing to exhaust such remedies, Shreveport alleged that they had no cause of action, that the trial court lacked subject matter jurisdiction, and that the actions were premature. LDNorth and LDRailsback countered that their damages and inverse condemnation actions arose at the time that MPC and Shreveport denied the plat applications.

The trial court granted the exceptions. Citing Louisiana Court of Appeal, First Circuit, jurisprudence, it ruled that LDNorth and LDRailsback must first exhaust their rights to direct appeal of the MPC and city council decisions. Essentially, before proceeding with their actions for inverse condemnation, the petitioners must first exhaust all administrative remedies. Without such remedies sought, the trial court found that the petitioners failed to show a cause of action and thus failed to show that the district court had subject matter jurisdiction over the matter. Furthermore, it found that that the issue of compensation was not ripe for judicial consideration.

STANDARD OF REVIEW

Whether a district court has subject matter jurisdiction over a case is subject to de novo review. Beasley v. Nezi, LLC , 2016-1080 (La. App. 1 Cir. 9/8/17), 227 So. 3d 308. The standard of review for an appeal of a no cause of action ruling is de novo . Acurio v. Cage , 52,309 (La. App. 2 Cir. 9/26/18), 257 So. 3d 824, writ denied , 2018-1762 (La. 1/8/19), 260 So. 3d 581. Appellate review of a prematurity exception ruling is typically manifest error ; however, when the ruling involves a question of law, it is reviewed de novo . Bayou Orthotic & Prosthetics Ctr., L.L.C. v. Morris Bart, L.L.C. , 2017-557 (La. App. 5 Cir. 3/28/18), 243 So. 3d 1276. Therefore, our review standard for all matters regarding this case is de novo .

DISCUSSION

JURISPRUDENTIAL CONFLICT

LDNorth and LDRailsback argue that the trial court erred in requiring that they first exhaust all administrative remedies. Shreveport counters that Louisiana law requires that LDNorth and LDRailsback first seek all administrative remedies before filing for compensation. In essence, one party argues that the right to compensation arose immediately upon the alleged taking. The other party argues that the exhaustion doctrine prevents claims for compensation from arising until all administrative remedies are pursued. Thus, no cause of action exists until all measures to prevent the damages from arising are exhausted. The trial court agreed with the latter.

In its decision, the trial court cited two cases for support of its judgment: Mercan, Inc. v. City of Baton Rouge , 2000-0660 (La. App. 1 Cir. 5/11/01), 797 So. 2d 722, writ denied , 2001-1685 (La. 9/21/01), 797 So. 2d 676 ; and Liberty Mutual Ins. Co. v. Louisiana Ins. Rating Comm'n , 1997-1043 (La. App. 1 Cir. 6/29/98), 713 So. 2d 1250, writ denied , 1998-2072 (La. 11/6/98), 728 So. 2d 396. Citing the above cases, the trial court ruled that because LDNorth and LDRailsback failed to directly appeal the plat application denials, they then had no causes of action for inverse condemnation. The trial court further found that it lacked subject matter jurisdiction and that any action for compensation was premature.

In Mercan , the Louisiana Court of Appeal, First Circuit, considered whether a party had a cause of action for damages. The City of Baton Rouge, through its Subdivision Review Committee, denied a subdivision application to Mercan, Inc. Mercan, Inc. v. City of Baton Rouge , supra . Although it alleged that the denial was arbitrary and capricious, Mercan did not appeal the city's decision to the district court. Id. Instead, Mercan sold the property at issue to the Baton Rouge Recreation and Parks Commission. Id. Mercan then filed an inverse condemnation action against Baton Rouge, seeking compensation for the difference between the value of the subdivision and the amount that Mercan received selling the property. Id.

Citing Liberty Mutual as authority, the court found that Mercan's failure to seek judicial review of the subdivision application denial prevented the courts an opportunity to rectify the alleged arbitrary and capricious or abusive conduct. Id. Therefore, because Mercan failed to seek judicial review to rectify the alleged injustice, and prevent damages, it no longer had a cause of action. Id.

In Liberty Mutual , the First Circuit considered the then novel issue of a taking and the exhaustion doctrine. Liberty Mutual sued the State of Louisiana through the Louisiana Department of Insurance, alleging that the State caused it injury by setting unreasonably low, mandatory insurance rates. Liberty Mutual Ins. Co. v. Louisiana Ins. Rating Comm'n , supra . Alleging a taking had occurred, Liberty Mutual filed an inverse condemnation action and sought compensation. Id.

The court reviewed the exhaustion doctrine with regard to administrative review and remedies. It further focused on the statutory scheme that gives express recourse with respect to insurance rate changes. It took note that Liberty Mutual had failed to seek any review of the rate changes and decided the following:

Applying these principles to our consideration of the allegations of the petition before us, we conclude that because Liberty Mutual failed to seek administrative and/or judicial review of the LIRC's denial of its rate requests, except with regard to the 1989 request, it cannot now assert a cause of action against LIRC for monetary damages for inverse condemnation based on those rulings.

Id. at 1254.

We note that the above cases are decisions of the Louisiana Court of Appeal, First Circuit. In this circuit, we have case law seemingly in conflict with those opinions, particularly Anderson v. Bossier Parish Police Jury, 45,639 (La. App. 2 Cir. 12/15/10), 56 So. 3d 275.

Anderson involves a Bossier Parish proposed and subsequently enacted ordinance that changed the elevation of a base flood plain zone. The petitioners alleged that the ordinance's enactment caused damage to their property value when their property was rezoned into the flood plain. Id. Noting that the injury to petitioners occurred at the time that the ordinance went into effect, this Court stated, "This event changed the status of the plaintiff's land and made its development more burdensome, if not impossible." Id. Thus, applying La. R.S. 13:15111, this Court held that prescription began to run from the date of discovery of the taking. Id. The date of taking was held to be the date when the Police Jury passed the ordinance and it became effective. Id.

At issue in the Anderson case was whether the inverse condemnation cause of action had prescribed. This Court found that both the cause of action to challenge the ordinance and compensation action had not yet prescribed. Id. We take particular note that prescription for both actions began to run at the same time, that time being the date of the passage and enactment of the ordinance. Id. Thus,...