Jimmie J. Jackson, Simms Hardin & KSD Props., LLC v. City of New Orleans

• Citation: 144 So.3d 876
• Decision Date: 04 April 2014
• Docket Number: Nos. 2012–CA–2742,2012–CA–2743.,s. 2012–CA–2742
• Parties: Jimmie J. JACKSON, Simms Hardin and KSD Properties, LLC v. The CITY OF NEW ORLEANS and the Director of Finance for the City of New Orleans.
• Court: Supreme Court of Louisiana

144 So.3d 876

Jimmie J. JACKSON, Simms Hardin and KSD Properties, LLC

v.The CITY OF NEW ORLEANS and the Director of Finance for the City of New Orleans.

Nos. 2012–CA–2742, 2012–CA–2743.

Supreme Court of Louisiana.

Jan. 28, 2014.

Rehearing Denied April 4, 2014.

Scheuermann & Jones, LLC, Lawrence Blake Jones, Errol Barry Conley, Sher Garner Cahill Richter Klein & Hilbert, LLC, Peter L. Hilbert, Jr., Joshua Simon Force, Ryan Duane Adams, Paul R. Trapani, III, New Orleans, LA, for Appellant (No. 2012–CA–2742).

Fransen & Hardin, A. Remy Fransen, Jr., Allain Freret Hardin, New Orleans, LA, for Appellee (No. 2012–CA–2742).

Fransen & Hardin, A. Remy Fransen, Jr., Allain Freret Hardin, New Orleans, LA, for Appellant (No. 2012–CA–2743).

Scheuermann & Jones, LLC, Lawrence Blake Jones, Errol Barry Conley, Sher Garner Cahill Richter Klein & Hilbert, LLC, Peter L. Hilbert, Jr., Joshua Simon Force, Ryan Duane Adams, Paul R. Trapani, III, New Orleans, LA, for Appellee (No. 2012–CA–2743).

HUGHES, J.

This case involves a direct appeal from the Civil District Court for the Parish of Orleans, pursuant to LSA–Const. art. V, § 5(D), of a ruling that a city ordinance authorizing the imposition of a penalty and a “collection fee” against delinquent ad valorem taxpayers was unconstitutional, violating LSA–Const. art. VII, § 25(A)(1). For the reasons that follow, we affirm and remand.

FACTS AND PROCEDURAL HISTORY

The plaintiffs in this case, Jimmie Jackson, E. Simms Hardin, and KSD Properties, LLC (“KSD”), untimely paid ad valorem taxes to the City of New Orleans (“City”), on their respective Orleans Parish immovable properties, and were assessed penalties, fees, and interest thereon for various tax years between 2003 and 2009. In tendering its payment, KSD followed the payment-under-protest provisions set forth in the Ordinance Number 22207 of the City's Code of Ordinances (“Code”) for at least one of the disputed tax years, while Mr. Jackson and Mr. Hardin did not follow the payment-under-protest provisions.¹

On May 28, 2009 these plaintiffs filed a class action suit in the district court against the City, seeking a declaration that Ordinance Number 22207, and the collection of any penalties, fees, and interest collected thereunder, violates the statutes and constitution of Louisiana, particularly, LSA–Const. art. VII, § 25(A)(1), and that the application of Ordinance Number 22207 to this case violates U.S. Constitutional guarantees of due process and equal protection, as well as LSA–Const. art. I, §§ 2, 3, 5, 9, 19, and 22. The plaintiffs further sought the return of penalties, fees, and interest paid under the allegedly unconstitutional ordinance, that all past or future payments of penalties, fees, and interest be deemed to have been paid under protest, and that any pending such charges against themselves or any putative class member be stricken.

In response, the City defended the action by asserting a peremptory exception pleading the objections of no cause of action and prescription, based on the plaintiffs' alleged failure to follow the Code's payment-under-protest provisions, along with other defenses.

A motion for summary judgment was filed by the plaintiffs, urging the unconstitutionality of Ordinance Number 22207 and citing Fransen v. City of New Orleans, 2008–0076 (La.7/1/08), 988 So.2d 225, as controlling authority. ² On April 5, 2012 the district court issued rulings on the City's exceptions and on the plaintiffs' motion for summary judgment, which: granted the City's exception of no cause of action as to Mr. Jackson and Mr. Hardin, dismissing these plaintiffs for failing to comply with the city ordinance requiring payment under protest); denied the City's objections of no cause of action and prescription as to plaintiff KSD; and granted KSD's motion for summary judgment (upon a finding of unconstitutionality as to Ordinance Number 22207). The district court judge found:

Ordinance No. 22207 ... unconstitutional insofar as the provisions contain any language that permits the City to grant to an outside collector the authorization to collect delinquent ad valorem property taxes on immovables and/or any language authorizing the City to use any method beyond the constitutional limitation of a tax sale to collect such taxes. Further, to the extent that these provisions authorize the levying of penalties for delinquent ad valorem taxes upon immovable property, such is unconstitutional. The State constitution is clear that, upon delinquency for such taxes, a governmental subdivision is permitted only to sell the property for taxes, interest and costs.³

Both plaintiffs and the City filed motions for new trial. The City's motion for new trial was granted in part, to dismiss KSD's claims as to its 2008 tax penalty and fees for failure to state a cause of action and to amend the judgment accordingly (for KSD's failure to timely assert a protest as to the penalty and fees assessed for that year's delinquent tax payment); the motionsfor new trial were denied in all other respects. Both the plaintiffs and the City filed appeals from the district court judgment and the plaintiffs filed an answer to the City's appeal.⁴

On appeal, the City contends the district court erred in granting summary judgment declaring Ordinance Number 22207 unconstitutional because: (1) the authorization of a private entity to aid the City in conducting tax sales for the collection of delinquent ad valorem taxes is not prohibited by the Louisiana Constitution, and LSA–Const. art. VII, § 14(C) explicitly permits municipalities to engage in public-private cooperative endeavors for the performance of a public purpose; ⁵ (2) the holding of unconstitutionality regarding the City's use of “any method beyond the constitutional limitation of a tax sale to collect such taxes” is immaterial since the City only conducts tax sales to collect ad valorem taxes, and no evidence was presented to suggest that the City has utilized any procedure other than a tax sale to collect ad valorem taxes; (3) the sworn affidavit testimony of the City's finance director established that the ordinance's nine and one-half percent collection fee captures the costs incurred to satisfy the requirements of Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983), and Fransen v. City of New Orleans recognized that the City may recover unpaid taxes, interest, and costs through a tax sale; and (4) there are genuine issues of material fact regarding whether the nine and one-half percent collection fee authorized by Ordinance Number 22207 constitutes collection of recoverable costs incurred in conducting a tax sale.

Additionally, the City has filed, in this court, a motion to strike exhibits produced by the plaintiffs during the November 18, 2011 district court hearing of the matters at issue herein. The City contends the exhibits were not properly introduced into evidence and should not have been considered by the district court in rendering judgment in this case. The City's motion to strike was referred to the merits of this appeal for disposition, and we discuss the motion hereinafter.

The plaintiffs contend in their appeal that the district court erred: (1) in applying LSA–R.S. 47:2134 (prior LSA–R.S. 47:2110) (requiring payment under protest and the filing of suit within thirty days) to their claim of unconstitutionality because the law at issue was ultimately declared unconstitutional; (2) in failing to follow McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), which held that unconstitutionally-collected taxes (herein, penalties and collection fees) must be returned; (3) in failing to find that the City waived the application of, and/or is estopped from enforcing, any payment-under-protest provision because the City utilized an unpublicized discriminatory process to waive the imposition of delinquency penalties and collection fees for select taxpayers; and (4) in failing to find that the City's utilization of a payment-under-protest procedure was unconstitutional, as applied (on the basis of equal protection and due process considerations), because the City granted waivers to select taxpayers and did not make the waiver process available to the plaintiffs or to the public at large.

LAW AND ANALYSIS

Motion for Summary Judgment

This court applies a de novo standard of review in considering lower court rulings on summary judgment motions. Thus, we use the same criteria that govern the district court's consideration of whether summary judgment is appropriate. A court must grant a motion for summary judgment if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law, pursuant to LSA–C.C.P. art. 966(B). See Catahoula Parish School Board v. Louisiana Machinery Rentals, LLC, 2012–2504 (La.10/15/13), 124 So.3d 1065, 1071.

A fact is material if it potentially ensures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Smitko v. Gulf South Shrimp, Inc., 2011–2566 (La.7/2/12), 94 So.3d 750, 755.

Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is “material” for summary judgment purposes can be seen only in light of the substantive law applicable to the case. Richard v. Hall, 2003–1488 (La.4/23/04), 874 So.2d 131, 137. Therefore, our decision is premised in part on the proper interpretation of the tax law at issue. Such considerations are questions of law and are also reviewed by this court...