UPDATE: Plaintiffs’ Dilemma: The Inability to Collect on Judgments Against Louisiana

A little over a year ago I wrote here about problems face trying to enforce judgments against the State of Louisiana or its political subdivisions (municipalities, towns, agencies, etc.).  In short, the Louisiana Constitution generally does not allow judgment holders to enforce their judgments against Louisiana governmental entities and to have courts order them to pay.  Instead, those individuals must wait until the State entity decides to allocate funds to pay the judgment, and that may take some time.

Last time I spoke, I discussed Ariyan, Inc. v. Sewerage & Water Bd. of New Orleans, 29 F.4th 226 (5th Cir. 2022), where homeowners sued the Sewerage & Water Board (represented by Gordon Arata) for property damage and “inverse condemnation,” a form of takings claim where the property is effectively “taken” due to damage.  The Fifth Circuit held that it could not force the Sewerage and Water Board to pay immediately, and the Supreme Court denied further review.  See Ariyan, Inc. v. Sewerage & Water Bd. of New Orleans, 143 S. Ct. 453 (2022).

After the U.S. Supreme Court denied certiorari, the plaintiffs promptly filed a collection action in State court, arguing that because their judgment resolved “inverse condemnation” claims it as not subject to the Louisiana Constitution’s severe limitations on enforcing money judgments against the State.  The trial court dismissed the plaintiffs’ claims, finding that they had no right of action.  Plaintiffs have appealed the matter to the Louisiana Fourth Circuit of Appeal; we anticipate a decision before the end of the year.

There are a host of situations that raise questions about the limits of State entities’ insulation from the effects of judgments.  For instance, my firm recently represented a developer who sued the Town of Abita Springs after it reneged on a development agreement authorizing development of a subdivision.  After a full trial on the merits, the trial court ruled in the developer’s favor and against Abita Springs, awarded nearly $5 million in damages, and ordered Abita Springs to strictly comply with the development agreement entitling the developer to construct the proposed development.  The trial court’s order was affirmed in full by the appellate courts.  Lonesome Dev., LLC v. Town of Abita Springs, 2021-1463 (La. App. 1 Cir. 06/29/22); 343 So. 3d 831, writ denied, 2022-01158 (La. 11/01/22); 349 So. 3d 3.

But when Lonesome Development sought to continue to build its development, Abita Springs was recalcitrant and argued that construction was “impossible” because, among other things, its sewer system could not handle the capacity.  The trial court has indicated that it will enforce the specific performance of its affirmed and final judgment, and Abita Springs has sought appellate review arguing that the trial court is powerless to do so.  Lonesome Development has argued that enforcing a judgment of specific performance is not the same as seizing State property or forcing it to allocate funds to pay a judgment, and therefore is not prohibited by the Louisiana Constitution.  The Louisiana First Circuit denied Abita Springs’ attempt out of hand, and Abita Springs has sought review once more from the Louisiana Supreme Court.  That request is still pending, and a decision is expected soon.

Although these two cases are very different, we are hopeful they will bring some more clarity to the metes and bounds of the Louisiana Constitution on the enforceability of judgments against Louisiana governmental entities.  Stay tuned.

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