Arata v. Louisiana Stadium and Exposition Dist., 49803

• Decision Date: 27 June 1969
• Docket Number: No. 49803,49803
• Citation: Arata v. Louisiana Stadium and Exposition Dist., 225 So.2d 362, 254 La. 579 (La. 1969)
• Parties: George J. ARATA v. The LOUISIANA STADIUM AND EXPOSITION DISTRICT, and the Board of Commissionersthereof, Honorable John J. McKeithen, Governor of Louisiana, Honorable BernardF. Sliger, Commissioner of Administration, Mrs. Mary Evelyn Parker, Treasurerof theState of Louisiana, and the Louisiana State Bond Commission.
• Court: Louisiana Supreme Court

Page 362

225 So.2d 362

254 La. 579

George J. ARATA v. The LOUISIANA STADIUM AND EXPOSITION DISTRICT, and the Board of Commissionersthereof, Honorable John J. McKeithen Governor of Louisiana, Honorable BernardF. Sliger Commissioner of Administration, Mrs. Mary Evelyn Parker Treasurerof theState of Louisiana, and the Louisiana State Bond Commission.

No. 49803.

Supreme Court of Louisiana.

June 27, 1969.

Dissenting Opinion June 30, 1969.

Rehearing Denied July 21, 1969.

Lemle, Kelleher, Kohlmeyer, Matthews & Schumacher, Glen G. Magnuson, Jr., Harry B. Kelleher, Gerald P. Fedoroff, Foley, Judell, Beck, Morel & Bewley, Harold B. Judell, John E. Jackson, Jr., New Orleans, Wood, King, Dawson, Love & Sabatine, New York City, for appellants.

Sidney M. Bach, New Orleans, Alvin J. Liska, City Atty., Beuker F. Amann, Jackson P. McNeely, Asst. City Attys., for amicus curiae.

Blake G. Arata, Doyle, Smith, Doyle, Gordon, Arata & Watters, New Orleans, for plaintiff-appellee.

Paul O. H. Pigman, Phillip A. Wittmann, David Stone, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, J. Bennett Johnston, Jr., James J. Thornton, Jr., Johnston, Johnston & Thornton, Shreveport, for intervenors-appellees.

SUMMERS, Justice.

The question presented by this suit is whether the transactions executed to effectuate the planning, financing, construction, development, maintenance and operation of a domed stadium project are contrary to the constitutional amendment adopted in 1966 authorizing the project.

By Act 556 of 1966 the Legislature adopted by more than a two-thirds vote, a joint resolution proposing the constitutional amendment in question. The amendment was voted on throughout the State on November 8, 1966, and carried by an overwhelming vote. It became Section 47 of Article XIV of the Constitution.

The amendment created the Louisiana Stadium and Exposition District, as a body politic and political subdivision of the State, composed of all of the territory in the parishes of Orleans and Jefferson, to be governed by an appointed, eleven-man Board of Commissioners.

The amendment declares that the District is created to plan, finance, construct, develop, maintain and operate facilities in the District to accommodate the holding of sports events, athletic contests and other events of public interest. As an instrumentality of the State, exercising essential governmental functions for the benefit of the people and to increase their commerce and prosperity, the District is granted broad tax exemptions. Control and supervision of the District by regulating bodies or other subdivisions of the State is denied, except the District is made subject to State requirements of audits, listing employees, investing idle funds and the Code of Ethics.

Broad authority is conferred in the amendment for the District to plan, construct and maintain a complex suitable for all types of sports and recreation and to enter into contracts for events and programs with the State and public or private agencies or persons; 'to execute leases to the State,' its agencies or subdivisions for a term not exceeding forty (40) years at a 'fixed rental'; to borrow such sums as the Board determines to be necessary for the construction and improvement of the project; to incur debt and issue bonds in evidence of its indebtedness and agree that the loans shall be liquidated from rentals derived by the District for use of the facilities leased; to collect admissions, tolls, rentals and other charges or fees; to levy and collect hotel occupancy taxes, and pledge the proceeds thereof to the payment of bonds it issues; to mortgage the District's property and 'pledge any lease or leases and the rents, income and other advantages arising out of any lease or leases.'

Paragraph (E) of the amendment provides:

Any other provisions of the Constitution and laws of the State to the contrary notwithstanding and without compliance with any other constitutional or statutory provisions relative to leasing of public facilities the State of Louisiana or any of its various agencies, or any political subdivision thereof, or any combination of the foregoing Shall have the right and authority to lease the aforesaid Facilities of the District or any portion thereof And provide for the payment of the consideration therefor through the appropriation of funds or otherwise. The obligations of the lessee or lessees under any such lease shall constitute a charge against the revenues of such lessee or lessees to the extent and in the manner agreed upon by the parties thereto. In the event the State of Louisiana or any of its various agencies or any political subdivision thereof or any combination of the foregoing shall lease all or any portion of the aforesaid facilities of the District, then such entities shall have the right to sublease to any person or corporation, public or private, all or any portion of the facilities so leased upon such terms and conditions as they may determine. (Emphasis added.)

Paragraph (G) authorizes the District to enter into agreements with its bondholders as to the management of the facilities, the lease or rental thereof, and such other matters deemed proper to assure the marketability of the bonds. Paragraph (Q) authorizes the District to receive by gift, grant, donation or otherwise any sum of money, aid or assistance from private sources, the United States, the State of Louisiana, or others, and to pledge same to secure its bonds. Paragraph (S) stipulates that 'No bond issued under this amendment shall be secured by the faith and credit of the State.'

The amendment further sets forth that it is self-sufficient and self-executing.

Soon after its organization in June 1967, the District enacted the hotel occupancy tax contemplated by the amendment, and the levy has been in effect since August 1967. With funds derived from this source the District proceeded to accumulate the data, information, plans and studies which would form the basis for construction contract estimates and other costs involved in the execution of the plan.

When the required data were accumulated, acting upon the advice of financial experts, the District proceeded with the execution of the contracts required to implement the plan to build the stadium project in the Metropolitan New Orleans area. Each transaction formed an integral part of the total plan. All were dated February 1, 1969 for reference purposes. They included adoption of a resolution by the District authorizing the issuance of bonds, the execution of a contract whereby the District leased the facilities to be acquired in accordance with the plan to the State; and the State, in turn, entered into a management and operating agreement with the District involving the facilities the State had leased.

Suit was filed in Orleans Parish on February 21, 1969 by George J. Arata seeking an injunction to prevent the District from carrying out the provisions of the lease and the management and operating agreement, from issuing and selling any of the bonds in accordance with the bond resolution, and from expending any sums in the execution of the lease. Interventions were also filed seeking substantially the same relief.

After trial the judge declared the lease, the management and operating agreement and the bond resolution to be illegal and unconstitutional and, accordingly, granted an injunction prohibiting the District and the officers acting on behalf of the State, and all others, from carrying out the provisions of the lease, the management and operating agreement or the bond resolution. The judgment upheld the validity of Act 556 of 1966 but did not pass upon the validity of the hotel occupancy tax. This appeal followed.

Five principal grounds are advanced for the invalidity of the transactions in question.

I.

It is contended that the lease is not the type lease which is authorized by Section 47 of Article XIV of the Constitution because of the provisions of the lease agreement requiring the State as lessee to pay the costs of operation, maintenance and repairs to the facilities leased, plus taxes, assessments and income taxes derived from the operation of the facilities, debt service and management expense. Lessee's unconditional obligation to pay the rentals and the credit allowed the lessee based upon the revenues derived from the hotel occupancy tax together with the non-terminable clause are also advanced as stipulations which render the lease invalid.

These arguments fail to take into consideration that the amendment places no limitations upon the terms and conditions of the lease which it authorizes except the duration of the lease and the requirement of a fixed rental. Under the terms of paragraph (D) the District is authorized 'to execute leases to the State * * * for a Term not exceeding forty (40) years at a Fixed rental, or for a term not exceeding ninety-nine years * * *' (Emphasis added.) The requisite authority to enter into a lease is, therefore, explicit in paragraph (D). It is even more explicit and emphatic elsewhere in the amendment. Paragraph (E) expands upon and amplifies the authorization. By this latter provision the State may enter into the lease 'without compliance with any other constitutional or statutory provisions relative to leasing of public facilities * * *' Thereby the formalities ordinarily prescribed for public leasing are dispensed with. Paragraph (E) again sets forth that the State 'shall have the right and authority to lease the * * * facilities of the District.'

'Fixed Rental'

As part of the argument to support the contention that the lease is invalid, it is asserted that the lease does not provide for a 'fixed rental'. Article 2669 of the Civil Code defines a lease to be 'a synallagmatic contract, to which consent alone is sufficient, and by which one party gives to the other the enjoyment of a thing, or his labor, at a Fixed price.' (Emphasis added.) And 'The price should...