Robert J. Caluda, APLC v. City of New Orleans

318 So.3d 1008

ROBERT J. CALUDA, APLC and New Orleans Private Patrol Service, Inc.

v.The CITY OF NEW ORLEANS, Linebarger Goggan, Blair & Sampson, L.L.P. and United Government Services of Louisiana, Inc.

NO. 2020-CA-0660

Court of Appeal of Louisiana, Fourth Circuit.

APRIL 28, 2021

Allain F. Hardin, FRANSEN & HARDIN, A.P.L.C., 807 Howard Avenue, New Orleans, LA 70113, COUNSEL FOR PLAINTIFFS/APPELLEES

Lawrence Blake Jones, BLAKE JONES LAW FIRM, LLC, 701 Poydras St., Suite 4100, New Orleans, LA 70139, -AND- Errol Barry Conley, LAW OFFICE OF ERROL B. CONLEY, 701 Poydras St., Suite 4100, New Orleans, LA 70139, COUNSEL FOR DEFENDANT/APPELLANT, THE CITY OF NEW ORLEANS

(Court composed of Judge Terri F. Love, Judge Edwin A. Lombard, Judge Rosemary Ledet )

Judge Edwin A. Lombard

On appeal from the judgment of August 18, 2020, wherein the district court granted the plaintiffs’ Motion to Certify a Class, the City of New Orleans ("the City") argues that the district court erred in granting the motion because the plaintiffs’ claim has prescribed. After review of the record in light of the arguments of the parties and applicable law, we affirm the district court judgment.

Relevant Facts and Procedural History

In March 1998, the New Orleans City Council adopted Ordinance No. 18637, which permitted the City to contract out collection of delinquent property taxes and impose a penalty for collection costs.¹ Fransen v. City of New Orleans, 2008-0076, p. 2 (La. 7/1/2008), 988 So. 2d 225, 228-29. Delinquent taxpayers² filed suit in the Civil District Court for the Parish of Orleans, arguing out that the ordinance was unconstitutional. See Fransen, supra. In 2008, the Louisiana Supreme Court agreed, finding that the ordinance (codified as the New Orleans Code of Ordinance, Chapter 150, art. II, §§ 150-46.1-150-46.6) went beyond the mandated tax sales provisions enunciated in the state constitution. Specifically, the Louisiana Supreme Court held that the state "constitutional provision relating to property taxation permits the governmental subdivision to impose only the taxes, interests and costs in proceeding to sell the property for delinquent ad valorem taxes" and, therefore, the City's action in authorizing delinquent ad valorem taxes on immovable property for collection with an attorney or agent and assessing a 30% penalty for costs is unconstitutional because the state constitution prohibits methods or proceedings other than tax sales to collect delinquent ad valorem property taxes. Fransen, 2008-0076, p.24-25, 988 So.2d at 242-243. The matter was remanded to the district court where, on January 18, 2019, the district court certified the Fransen class as one restricted to only those who paid real estate (immovable) ad valorem taxes from April 17, 2000 through March 5, 2002, implicitly excluding the personal property owner taxpayers who paid the delinquent taxes and collection costs on business personal (movable) property taxes during the same period.

Shortly thereafter, on February 15, 2019, the plaintiffs implicitly excluded from the Fransen class action, i.e., those who paid delinquent ad valorem property taxes pursuant to the ordinance on movable property, filed this separate class action petition against the City. The plaintiffs also named as defendants the two entities that collected the disputed taxes on the City's behalf: Linebarger, Goggan, Blair & Sampson, L.L.P. ("Linebarger") and United Governmental Services of Louisiana, Inc. (UGSL). On March 19, 2019, Linebarger and UGSL removed the matter to federal court. The federal district court granted a motion to sever the claims against the City from the claims against Linebarger and UGSL on July 22, 2019, and remanded the claims against the City back to state court. Robert J. Caluda v. City of New Orleans , 403 F.Supp.3d 522 (E.D. La. 2019).

On August 6, 2019, shortly after the remand back to the Civil District Court of Orleans Parish, the plaintiffs filed the motion to file the Motion for Class Certification that had been filed in the U.S. District Court into the state district court case. The district court granted the motion, allowing the plaintiffs’ Motion for Class Certification to be filed. After the hearing (held on March 20, 2020) and the filing of post-hearing memorandum by both parties, the district court granted the plaintiffs’ Motion for Class Certification on August 18, 2020. The class is defined as follows:

Those persons and/or entities or their heirs, successors, or assigns, who pursuant to New Orleans City Ordinance No. 18637 were assessed City penalties and collection/penalty fees by defendants and who paid these unconstitutional penalties and collection/penalty fees, from April 17, 2000 through March 5, 2002, for late pay of business personal ad valorem property taxes.

The City timely filed a motion for this devolutive appeal.

Sole Assignment of Error

The City assigns a singular error on appeal: "[t]he trial court erred when it denied the City's Exceptions of Prescription and No Cause of Action." However, although the motion for appeal filed by the City seeks to appeal the district court's judgment of August 18, 2020, that judgment does not deny the City's exceptions, it only grants the Plaintiffs’ Motion to Certify Class. Although the City contends that the district court mentioned the exceptions in the Reasons for Judgment, a "district court's oral or written reasons for judgment form no part of the judgment, and that appellate courts review judgments, not reasons for judgment." Bellard v. Am. Cent. Ins. Co. , 2007-1335, p. 25 (La. 4/18/08), 980 So. 2d 654, 671. Moreover, the district court states in its Reasons for Judgment that the City's exceptions were denied prior to the hearing on the Motion to Certify Class. Thus, because there is no judgment denying the exceptions contained in the record before us, the exceptions are not properly before us for review. Accordingly, we only review whether the district court abused its discretion by granting the Motion to Certify Class.

Standard of Review

"The standard of review for class certification is bifurcated: factual findings are reviewed under the manifest error/clearly wrong standard, but the trial court's judgment on whether to certify the class is reviewed under the abuse of discretion standard." Wallace v. Louisiana Citizens Prop. Ins. Corp., 10-0647, p. 4 (La. App. 4 Cir. 12/6/10), 53 So. 3d 514, 518 (citations omitted). "[E]rrors made in deciding class actions should be in favor of and not against the maintenance of a class action" because class certification may be modified or the class decertified if warranted by subsequent developments in the litigation. Id. (citation omitted); see also La. Code Civ. Proc. art. 592(A)(3)(c) (the court "may alter, amend, or recall its initial ruling on certification and may enlarge, restrict, or otherwise redefine the constituency of the class or the issues to be maintained in the class action")

Applicable Law

The purpose of a class action is "to adjudicate and obtain res judicata effect on all common issues applicable not only to the class representatives who bring the action, but to all others who are similarly situated." Wallace, 2010-0674, p. 5-6, 53 So.3d at 519 (citations omitted).

In accordance with Article 591 of the Louisiana Code Civil Procedure, a class action may be maintained if:

(1) The class is so numerous that joinder of all members is impracticable.

(2) There are questions of law or fact common to the class.

(3) The claims or defenses of the representative parties are typical of the claims or defenses of the class.

(4) The representative parties will fairly and adequately protect the interests of the class.

(5) The class is or may be defined objectively in terms of ascertainable criteria, such that the court may determine the constituency of the class for purposes of the conclusiveness of any judgment that may be rendered in the case. This prerequisite shall not be satisfied if it is necessary for the court to inquire into the merits of each potential class member's cause of action to determine whether an individual falls within the defined class.

La. Code. Civ. Proc. art. 591(A).

Once all of the above requirements are met, one of the following criteria must also be present:

(1) The prosecution of separate actions by or against individual members of the class would create a risk of:

(a) Inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or

(b) Adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(2) The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to these findings include:

(a) The interest of the members of the class in individually controlling the prosecution or defense of separate actions; (b) The extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

(c) The desirability or undesirability of concentrating the litigation in the particular forum;

(d) The difficulties likely to be encountered in the management of a class action;

(e) The practical ability of individual class members to pursue their claims without class certification;

(f) The extent to which the relief plausibly demanded on behalf of or against the

...