Holly & Smith v. St. Helena Cong. Facility

• Decision Date: 29 November 2006
• Docket Number: No. 2006-C-0582.,2006-C-0582.
• Citation: 943 So.2d 1037
• Parties: HOLLY & SMITH ARCHITECTS, INC. v. ST. HELENA CONGREGATE FACILITY, INC. and St. Helena Parish Hospital.
• Court: Louisiana Supreme Court

943 So.2d 1037

HOLLY & SMITH ARCHITECTS, INC. v. ST. HELENA CONGREGATE FACILITY, INC. and St. Helena Parish Hospital.

No. 2006-C-0582.

Supreme Court of Louisiana.

November 29, 2006.

COPYRIGHT MATERIAL OMITTED

Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Maxwell G. Kees, Sr., Charles L. Patin, Jr., Baton Rouge, Scott M. Perrilloux, District Attorney, Clifton Thomas Speed, Assistant District Attorney, Sullivan, Stolier & Resor, Jack M. Stolier, New Orleans, Matthew K. Brown, for Applicant.

Macaluso & Jordan, Ronald S. Macaluso, for Respondent.

Paul A. Holmes, John A. Gallaher, Baton Rouge, for Amicus Curiae, Louisiana Municipal Association.

Patrick S. Ottinger, Lafayette, for Amicus Curiae, Lafayette City-Parish Police Jury.

John F. Weeks, New Orleans, for Amicus Curiae, Louisiana Sheriff's Association.

Roland J. Dartez, Dannie P. Garrett, III, Baton Rouge, for Amicus Curiae, Louisiana Police Jury Association.

Allen L. Smith, Jr., Lake Charles, for Amicus Curiae, Calcasieu Parish Police Jury.

Gwendolyn K. Brown, Larry D. Book, Baton Rouge, for Amicus Curiae, City of Baton Rouge and the Parish of Baton Rouge.

Tina V. Grant, for Amicus Curiae, State of Louisiana.

TRAYLOR, Justice.

We granted certiorari in this case in order to determine whether a judicial mortgage is effective as to third parties when that judicial mortgage purportedly encumbers the property of a political subdivision of the State. Plaintiff secured three separate judgments against Defendant, and further, Plaintiff filed these judgments in the mortgage records for the applicable parish. Defendant is a political subdivision of the State of Louisiana, and as such, Defendant argues that these recorded judgments should be erased from the mortgage records. Defendant maintains that a judicial mortgage cannot be effective against the State and/or its political subdivisions because certain constitutional and statutory provisions set forth the method by which these judgments must be paid. Plaintiff, however, suggests that these constitutional and statutory provisions do not proscribe the recordation of judgments against the State and/or its political subdivisions. Defendant argues that Plaintiff is trying to circumvent the constitutional and statutory mandates by securing judicial mortgages affecting potential third party purchasers, thereby prompting the State and/or political subdivisions to pay the judgments in an effort to keep the property unencumbered. For the reasons that follow, we affirm the ruling of the appellate court only as to its result.

FACTS AND PROCEDURAL HISTORY

Plaintiff Holly & Smith Architects, Inc. ("Holly & Smith") obtained three judgments against Defendants St. Helena Congregate Facility, Inc. and St. Helena Parish Hospital Service District No. 1 ("St. Helena Hospital"),¹ and each of these judgments was recorded in the mortgage records for St. Helena Parish.² Holly & Smith filed a motion to examine judgment debtor on June 10, 2004; however, on August 3, 2004, St. Helena Hospital filed a petition for writ of mandamus in hopes of securing an order directing the St. Helena Parish Clerk of Court to erase said judgments from the mortgage records. Further, St. Helena Hospital sought a declaration that the recorded judgments did not create liens and/or encumbrances against its property. Also on August 3, 2004, St. Helena Hospital filed a motion to quash or for protective order (with respect to Holly & Smith's intention to conduct a judgment debtor examination). Holly & Smith filed its petition for writ of mandamus on August 16, 2004, as Holly & Smith sought to have St. Helena Hospital immediately pay the three prior-recorded judgments. On August 18, 2004, Holly & Smith moved to have the above-mentioned actions consolidated. A hearing was conducted regarding these matters on September 3, 2004.

On September 3, 2004, the trial court allowed the consolidation of the above-referenced actions. The trial court granted St. Helena Hospital's motion to quash or for protective order regarding the judgment debtor examination, and the trial court denied Holly & Smith's petition for writ of mandamus. Further, the trial court denied St. Helena Hospital's petition for writ of mandamus. The trial court stated:

However, what I'm saying is is that I think you've got a right to record your judgment. As I appreciate it, the recordation of a judgment in the conveyance records constitutes a judicial mortgage or lien — whatever you want to call it. Beyond that, which is the execution part, I don't think the plaintiff can do. I don't think he can do that. So if you're asking me what does that mean, yes, I think it means there is a judicial mortgage on all of the property which cannot be executed upon. What effect does it have when it goes to third parties, as I appreciate that's the testimony here, I think it probably goes with the property, and it's something that's got to be dealt with. And I think that that is the — perhaps one area that the Legislature left open for possible collection or execution of judgments. (Emphasis added).

The trial court signed this judgment on October 29, 2004, and St. Helena Hospital appealed this decision to the First Circuit Court of Appeal.

On February 10, 2006, the First Circuit Court of Appeal majority affirmed the trial court's decision. In its opinion, the appellate court found:

Article XII, § 10 and LSA-R.S. 13:5109 B provide a method by which judgments rendered against the state or its political subdivisions may be paid. Foreman v. Vermilion Parish Police Jury, 336 So.2d 986, 989 (La.App. 3 Cir.), writ refused, 339 So.2d 846 (La.1976). Although the judgment against St. Helena Hospital is not exigible and payable without St. Helena Hospital first appropriating the funds, neither the constitution nor the statutory scheme prohibits the filing in the mortgage records of a judgment against a hospital service district such as St. Helena Hospital. Nor does the constitution or the statutory scheme entitle St. Helena Hospital to a declaration that the judicial mortgages on its property are without effect on third party purchasers.³ (Emphasis added).

From this decision, Judge Downing dissented and assigned reasons. Judge Downing stated:

"It is an axiom of the law that no one can do indirectly what he cannot do directly." Central Louisiana Elec. Co. v. Louisiana Public Service Commission, 253 La. 553, 563, 218 So.2d 592, 596 (La.1969). The majority's ruling allows a plaintiff to indirectly make judgments against the State's political subdivisions exigible and payable without the political subdivision first appropriating the funds. Here, the St. Helena Congregate Facility, Inc., and St. Helena Parish Hospital are undisputedly political subdivisions of the State. And to accomplish the sale of their immovable property, they will be forced to either pay the judgment liens or accept a price reduced to account for the value of the liens. Either way, while a seizure and sale of public property is not technically ordered here, the political subdivision effectively is required to pay off the liens. As such, the majority authorizes violation of La. Const. art. XII, § 10 C and La. R.S. 13:5109 B(2). This is beyond our authority.⁴

St. Helena Hospital sought supervisory writs with this Court, and its writ application was granted on May 26, 2006.⁵

LAW AND DISCUSSION

St. Helena Hospital avers that LA.CONST. art. XII, § 10(C) provides the exclusive method for the payment of judgments rendered against the State and/or its political subdivisions. LA. CONST. art. XII, § 10 states:

(A) No Immunity in Contract and Tort. Neither the state, a state agency, nor a political subdivision shall be immune from suit and liability in contract or for injury to person or property.

(B) Waiver in Other Suits. The legislature may authorize other suits against the state, a state agency, or a political subdivision. A measure authorizing suit shall waive immunity from suit and liability.

(C) Limitations; Procedure; Judgments. Notwithstanding Paragraph (A) or (B) or any other provision of this constitution, the legislature by law may limit or provide for the extent of liability of the state, a state agency, or a political subdivision in all cases, including the circumstances giving rise to liability and the kinds and amounts of recoverable damages. It shall provide a procedure for suits against the state, a state agency, or a political subdivision and provide for the effect of a judgment, but no public property or public funds shall be subject to seizure. The legislature may provide that such limitations, procedures, and effects of judgments shall be applicable to existing as well as future claims. No judgment against the state, a state agency, or a political subdivision shall be exigible, payable, or paid except from funds appropriated therefor by the legislature or by the political subdivision against which the judgment is rendered. (Emphasis added).

Further, St. Helena Hospital points out that the above-referenced constitutional provision is reiterated within LA.REV.STAT. § 13:5109(B)(2). LA.REV.STAT. § 13:5109(B)(2) provides:

Any judgment rendered in any suit filed against the state, a state agency, or a political subdivision, or any compromise reached in favor of the plaintiff or plaintiffs in any such suit shall be exigible, payable, and paid only out of funds appropriated for that purpose by the legislature, if the suit was filed against the state or a state agency, or out of funds appropriated for that purpose by the named political subdivision, if the suit was filed against a political subdivision. (Emphasis added).

St. Helena Hospital asserts that the above-referenced legislation is clear and unambiguous. Accordingly, St. Helena Hospital argues that the lower courts erred in failing to recognize that judicial mortgages cannot be maintained against political subdivisions of the State. St. Helena Hospital suggests that the...