Caluda v. City of New Orleans

• Decision Date: 19 July 2019
• Docket Number: CIVIL ACTION NO. 19-2497
• Citation: 403 F.Supp.3d 522
• Parties: ROBERT J. CALUDA, APLC, et al., Plaintiffs v. CITY OF NEW ORLEANS, et al., Defendants
• Court: U.S. District Court — Eastern District of Louisiana

403 F.Supp.3d 522

ROBERT J. CALUDA, APLC, et al., Plaintiffs

v.CITY OF NEW ORLEANS, et al., Defendants

CIVIL ACTION NO. 19-2497

United States District Court, E.D. Louisiana.

Signed July 19, 2019

Filed July 22, 2019

Allain Freret Hardin, Fransen & Hardin, New Orleans, LA, for Plaintiffs.

James Alcee Brown, Errol Barry Conley, Law Office of Errol B. Conley, A'Dair Ragan Flynt, Shannon Skelton Holtzman, Liskow & Lewis, Lawrence Blake Jones, Blake Jones Law Firm, LLC New Orleans, LA, for Defendants.

SECTION: "E" (2)

ORDER AND REASONS

SUSIE MORGAN, UNITED STATES DISTRICT JUDGE

Before the Court are (1) a motion to sever and remand, filed by Defendant the City of New Orleans ("the City"),¹ and (2) a motion to remand, filed by Plaintiffs² Robert J. Caluda, APLC, and Robert J. Caluda and New Orleans Private Patrol Services, Inc. n/k/a Gurvich Corporation ("Plaintiffs").³ Defendants Linebarger, Goggan, Blair & Sampson, L.L.P. ("Linebarger") and United Governmental Services of Louisiana, Inc. ("UGSL") oppose.⁴

BACKGROUND

This case relates to ad valorem tax penalties on business personal taxes. Plaintiffs are taxpayers who paid business personal ad valorem tax penalties⁵ under an ordinance first imposed by the City in 1998.⁶ The ordinance imposed an initial 3% penalty on the day of delinquency (February 1) and added a 30% penalty if the tax was unpaid by April 1. If the tax remained unpaid after April 1, the City referred the debt to a collection agency.⁷ In order to challenge the penalties, taxpayers were required to file payment under protest by June 1 of the year the penalties were imposed.⁸ However, because of a drafting error that included no prescriptive period in the ordinance amended on April 17, 2000, the payment-under-protest requirement did not apply from April 17, 2000 through March 5, 2002.⁹

Delinquent taxpayers filed a class action suit against the City, Linebarger, and UGSL in the Civil District Court for the Parish of Orleans on April 1, 2002.¹⁰ That suit led to the Louisiana Supreme Court declaring unconstitutional the tax penalties the ordinance imposed.¹¹ The class action is still ongoing.¹² On January 18, 2019, the state trial court issued a judgment certifying a class of those who paid real estate ad valorem taxes from April 17, 2000 through March 5, 2002.¹³ The class does not include Plaintiffs in this case because it is defined as those who paid real estate (immovable) ad valorem taxes and does not include those who paid business personal (movable) property taxes. On May 8, 2019, the Louisiana Court of Appeal for the Fourth Circuit denied a writ seeking review of the judgment defining the class.¹⁴

On February 15, 2019, while the writ application was pending, Plaintiffs filed the instant putative class action petition against the City, Linebarger and UGSL in the Civil District Court for the Parish of Orleans.¹⁵ As to Linebarger and UGSL, Plaintiffs bring suit pursuant to " LSA-R.S. 9:3581 et seq. " and "applicable federal statutes."¹⁶ Plaintiffs allege Linebarger and UGSL acted as debt collectors for the City, but did not register as debt collectors. Plaintiffs argue Linebarger and UGSL were not authorized by law to collect the tax penalties.¹⁷ Plaintiffs claim Linebarger and UGSL "acted intentionally, knowingly and in concert in depriving plaintiffs of funds by devices and actions that the defendants knew or should have known were unethical and/or illegal, and were not valid because defendants performed little or no work to obtain those sums[ ]."¹⁸ Plaintiffs' claim against the City is based on the payment-under-protest provisions, "particularly LSA-R.S. 47:2110 and 47:2134 and City Code § 150-4," which Plaintiffs claim "are likewise unconstitutional under the Constitutions of the United States and Louisiana, including, but not limited to, those provisions applicable to due process and the taking of property."¹⁹ Plaintiffs seek certification of a class defined as anyone who paid business personal ad valorem tax penalties to the City during the applicable time period.²⁰

On March 19, 2019, Defendants Linebarger and UGSL removed this matter to this Court under 28 U.S.C. §§ 1441 and 1453.²¹ Linebarger and UGSL invoke this Court's jurisdiction under 28 U.S.C. § 1331, which governs federal question jurisdiction, and 28 U.S.C. § 1332(d), the Class Action Fairness Act ("CAFA").²² Furthermore, they allege this Court has supplemental jurisdiction over Plaintiffs' state law claims against them under 28 U.S.C. § 1367(a).²³

On April 10, 2019, the City filed a motion to sever Plaintiff's claims against the City from Plaintiff's claims against Linebarger and UGSL and to remand to state court only the claims against the City.²⁴ It argues the Court does not have jurisdiction over these claims under 28 U.S.C. § 1341, the Tax Injunction Act.²⁵

On April 16, 2019, Plaintiffs filed a motion to remand the entire case to state court.²⁶ The motion cites several exceptions that would make CAFA inapplicable and also argues the Tax Injunction Act precludes this Court from exercising jurisdiction over the claims against the City.²⁷

On April 23, 2019, Defendants Linebarger and UGSL filed their opposition and response to the instant motions.²⁸ Linebarger and UGSL do not oppose the City's request to sever and remand the claims against the City, so long as the claims against them are not remanded. They argue Plaintiffs have not proved any of the CAFA exceptions apply. Linebarger and UGSL also argue the Tax Injunction Act does not require this Court to remand claims against them.

LAW AND ANALYSIS

Federal courts are courts of limited jurisdiction and possess only the authority conferred upon them by the United States Constitution or by Congress.²⁹ "Jurisdictional facts are determined at the time of removal, not by subsequent events."³⁰

I. Under 28 U.S.C. § 1441(c), the Court must sever and remand Plaintiffs' claims against the City.

Plaintiffs request this entire action be remanded to state court.³¹ The City, Linebarger, and UGSL argue the claims against Linebarger and UGSL may remain in federal court, while the claims against the City must be remanded.³² 28 U.S.C. § 1441(c) provides for the result requested by Linebarger and UGSL under certain circumstances.³³ Section 1441(c) provides:

(1) If a civil action includes—

(A) a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title), and

(B) a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute,

the entire action may be removed if the action would be removable without the inclusion of the claim described in subparagraph (B).

(2) Upon removal of an action described in paragraph (1), the district court shall sever from the action all claims described in paragraph (1)(B) and shall remand the severed claims to the State court from which the action was removed. Only defendants against whom a claim described in paragraph (1)(A) has been asserted are required to join in or consent to the removal under paragraph (1).³⁴

The Court first addresses whether the instant action includes a claim arising under the Constitution, laws, or treaties of the United States under 28 U.S.C. § 1331. The Court then turns to whether the action includes a claim not within the original or supplemental jurisdiction of the district court or a claim that has been made nonremovable by statute. If both of these requirements are met, any claim that is not within the original or supplemental jurisdiction of the Court or that has been made nonremovable by statute must be remanded.

A. Plaintiffs' claims against Linebarger and UGSL are within the Court's jurisdiction under 28 U.S.C. § 1331.

In order for this Court to have original jurisdiction under 28 U.S.C. § 1331, a civil action must include a claim that arises under the Constitution, laws, or treaties of the United States.³⁵ The "well-pleaded complaint" standard determines whether a claim arises under federal law.³⁶ A suit arises under federal law "only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution."³⁷ Courts evaluate the appropriateness of removal by looking at the complaint at the time the notice of removal is filed.³⁸

Plaintiffs bring a claim against Linebarger and UGSL seeking money Plaintiffs paid to the City, and the City subsequently paid to Linebarger and UGSL.³⁹ Plaintiffs argue Linebarger and UGSL were not authorized by law to engage in collection activities because they did not register as debt collectors with the state.⁴⁰ Plaintiffs bring this claim against Linebarger and UGSL under LSA-R.S. § 9:3581 et seq. and "applicable federal statutes" existing at the time.⁴¹

In order to invoke federal question jurisdiction, a plaintiff need not reference the exact statute or legal theory under which he or she brings the claim.⁴² Factual allegations alone may be sufficient to bring the claim within the jurisdiction of the federal courts, if facts in the complaint clearly show the Plaintiffs allege a cause of action under federal law.⁴³ Moreover, the federal cause of action need not be one on which the plaintiffs may recover.⁴⁴ A determination that there is no proper cause of action is a judgment on the merits that cannot be issued until jurisdiction is deemed proper.⁴⁵

In this case, Plaintiffs unambiguously bring a claim under "applicable federal statutes."⁴⁶ The facts in the petition show Plaintiffs bring a claim against Linebarger and UGSL under the Fair Debt Collection Practices Act ("FDCPA"), which prohibits debt collectors from using "unfair or unconscionable means" to collect payment from debtors.⁴⁷ As a result, Plaintiffs bring a claim arising under federal law for purposes of § 1331.

Two exceptions may lead to a dismissal for lack of jurisdiction, even if the facts show a federal cause of action has been alleged.⁴⁸ First, jurisdiction may be...