Council of New Orleans v. All Taxpayers

Decision Date24 February 2003
Docket NumberNo. 2003-CA4189.,2003-CA4189.
Citation841 So.2d 72
PartiesThe COUNCIL OF The CITY OF NEW ORLEANS v. ALL TAXPAYERS, PROPERTY OWN-ERS, Citizens of the City of New Orleans and Non-Residents Owning Property or Subject to Taxation Therein, et al.
CourtCourt of Appeal of Louisiana — District of US

Albert A. Thibodeaux, Chief Deputy City Attorney and Harold B. Judell, Wayne J. Neveu, Meredith L. Hathorn, 0. Ray Cornelius, Foley & Judell, L.L.P., New Orleans, LA, and David E. Henderson, Foley & Judell, L.L.P., Baton Rouge, LA, for Plaintiff/Appellee.

Cameron C. Gamble, Cameron C. Gamble, A PLC, and Michael A. Duplantier, and Camille Jones Strachan, New Orleans, LA, for Defendants/Appellants.

Court composed of (Judge PATRICIA RIVET MURRAY, Judge MICHAEL E. KIRBY, Judge MAX N. TOBIAS, JR.).


Defendants, a group of taxpayers, property owners and residents of New Orleans, appeal the district court's granting of the motion for judgment filed by the Council of the City of New Orleans [hereinafter "the City Council"] pursuant to the "Bond Validation Act" (La. R.S. 13:5121 et seq.), which motion sought to have the court declare valid a proposed bond issue prior to the marketing of the bonds. For the reasons that follow, we affirm the judgment of the district court.


On November 25, 2002, the City Council filed its Motion for Judgment seeking a judicial declaration of the validity of the November 22, 2002, Bond Resolution authorizing the incurrence of debt and the issuance of a maximum of twenty million dollars of "Sales Tax Increment Revenue Bonds" ["the Bonds"] for the purpose of financing a proposed economic development project, as authorized by La. R.S. 33:9033.3 (part of the "Cooperative Economic Development Law," La. R.S. 33:9020, et seq.). In its motion, the City Council asserted that it had previously adopted Ordinance Calendar No. 24,036, which had established the boundaries of an economic development area known as the St. Thomas Development District ["the District"] and had declared the construction of a new mixed-income housing project ["the Project"]on the site of the former St. Thomas public housing project to be an "economic development project" within the meaning of La. R.S. 33:9033.3(M). Further, the City Council asserted that it had, by Ordinance Calendar No. 24,072, determined the sales tax increment to be used in financing the aforementioned Bonds to be the City's 2.5 percent share of the sales tax, as defined in R.S. 47:301 et seq., collected annually in the District. As asserted in the Motion, the Bonds are to be limited obligations of the City secured solely from this increment of the sales tax paid solely by the Wal-Mart store (or any replacement or successor retailer) expected to occupy the District. Terming the project a cooperative endeavor among the City, HANO (the Housing Authority of New Orleans) and HRI (Historic Restoration Incorporated for the Housing Authority of New Orleans St. Thomas Development), the City Council asserted that it had adopted, by Ordinance Calendar Nos. 24,465 and 24,480, the "Development Agreement" to further provide information relative to the use of the proceeds of the Bonds for the Project. Therefore, the City Council moved that the court establish the validity of the Bonds, the Bond Resolution, the aforementioned Ordinances, the Development Agreement, and certain related documents (the "Project Documents") according to the procedure set forth in the Bond Validation Act.

As prescribed in La. R.S. 13:5123-5124, the Motion for Judgment was served on all taxpayers, property owners and residents of the City by means of publication in the Times-Picayune. Defendants herein filed an Answer, Reconventional Demand, and Exceptions of prematurity, vagueness, and failure to state a cause of action.1 In accordance with the expedited procedure outlined in La. R.S. 13:5126, a hearing was held in the district court on January 2 and January 6, 2003. The court overruled the exceptions from the bench. At the conclusion of the hearing, the court expressed its intention to grant the City Council's Motion for Judgment and gave reasons. On January 8, 2003, the court rendered written judgment declaring valid and legal the Bonds (and all other related documents listed in the Motion) and decreeing, pursuant to La. R.S. 13:5129, that its judgment (in the absence of reversal on appeal) was conclusive and forever binding and constituted a permanent injunction against any future challenge to the validity of the Bonds.

From that judgment, defendants have taken an expedited appeal as provided in La. R.S. 13:5128. Defendants assert seven issues on appeal, which we address separately.


I. Whether the City Council produced sufficient evidence to meet its burden of proof

In this assignment of error, defendants argue that the City Council's failure to produce certain documents should have precluded the court from validating the Bonds. Specifically, defendants contend that the City Council failed to introduce Into evidence the "Supplemental Resolution" (referred to in the Bond Resolution), the Development Agreement, and the Project Documents.

The Bond Validation Act is silent as to what evidence or what type of evidence must be introduced by the governmental entity in order to meet its burden of proof; however, the Act does provide that

No court in which a proceeding to invalidate or sustain bonds is brought shall invalidate the bonds unless it find substantial defects, material errors and omissions in the incidents of such bond issue. Matters of form shall be disregarded.

La. R.S. 13:5130 (emphasis supplied).

Defendants argue that the absence of the aforementioned documents constitutes a material error or omission. This argument is neither accurate nor persuasive.

Contrary to defendants' assertion, the "Project Documents" and the "Development Agreement," as those terms are defined in the Motion for Judgment2, were attached as exhibits to the City Council's memorandum in support of its motion, and were therefore considered by the district court and are part of this court's record. In view of the nature of the hearing and the stipulation in La. R.S. 13:5130 that matters of form are to be disregarded, whether each of these documents was formally introduced into evidence is immaterial. Moreover, we agree with the trial court that the documents in the record sufficiently describe the project, the source of funds, and all other material issues relevant to the Bonds. The fact that subsidiary documents detailing certain aspects of the project have yet to be created should not preclude judicial validation of the Bonds at this time, considering that the purpose of the Bond Validation Act is "to provide a uniform, expeditious and equitable procedure ... for the judicial determination of the validity of bonds and related proceedings where material and substantial questions with regard thereto are involved or a judicial determination ... is necessary to insure the marketability of bonds in investment channels. La. R.S. 13: 5122 (emphasis supplied).

With regard to the "Supplemental Resolution," the district court correctly determined that its absence is of no consequence because it can only be executed upon the actual sale of the bonds. The contemplated supplemental resolution, referred to generally in the Bond Resolution, will be executed in the future to establish the "specific interest rates and principal maturities, etc." of the Bonds at the time of pricing and sale. One of the express purposes of the bond validation procedure is to allow the governmental entity to market the bonds to prospective bondholders by means of an offering circular or private placement memorandum which must contain no material misstatements or omissions; the judicial validation allows the bonds to be marketed without a cloud of uncertainty. Following their marketing, it is anticipated that the Bonds will be awarded to a purchaser pursuant to a supplemental resolution that fixes the final terms of the bonds within the parameters of the initial authorization. The absence of such a supplemental resolution at this point is therefore expected, and should not defeat the bond validation.

We therefore reject this assignment of error.

Whether the district court erred by denying defendants' request for discovery

Defendants contend that their constitutional right to procedural due process was denied when the district court refused to grant their motion for adjournment to permit further discovery. Defendants served the motion on the City Council on the morning of the hearing, accompanied by a Request for Admissions and Supplemental Interrogatories and Request for Production, which were proffered after the court refused to adjourn the hearing to allow time for the City Council to respond to the discovery request.

There is no constitutional right to discovery; discovery is a statutorily created privilege. See La.Code Civ. Pro. arts. 1421 and 1422. It is well established that trial courts in Louisiana have broad discretion in regulating pretrial discovery, which discretion will not be disturbed on appeal absent a clear showing of abuse. Moak v. Illinois Central Railroad Company, 93-0783 (La.1/14/94), 631 So.2d 401, 406. In the instant case, the district court had to balance the defendants' need for further discovery against the expedited nature and limited scope of the bond validation proceeding.

The record reflects that the district court judge made reasonable decisions with regard to discovery. The trial court was cognizant of the fact that some of the documents sought by the defendants through discovery did not yet exist, whereas other information could have been obtained by referring to the public records of the City Council's prior proceedings; none of the information sought, however, was essential to the bond...

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