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CFP New Orleans, LLC v. Orleans Parish Judicial District Court Building Commission

United States District Court, E.D. Louisiana

February 18, 2014

CFP NEW ORLEANS, LLC
v.
ORLEANS PARISH JUDICIAL DISTRICT COURT BUILDING COMMISSION, JUDGE KERN REESE, AND JUDGE CHRISTOPHER BRUNO

         SECTION “N”- KDE -JVM

          ORDER AND REASONS

          KURT D. ENGELHARDT UNITED STATES DISTRICT JUDGE

         Presently before the Court are motions to dismiss that were filed, pursuant to Rule 12(b)(6) of the Federal Rule of Civil Procedure 12(b)(6), by Defendant Judge Christopher Bruno (Rec. Doc. 6) and Defendant Judge Kern Reese (Rec. Doc. 7). Plaintiff CFP New Orleans, LLC (“CFP”) opposes the motions. Having carefully considered the parties' submissions, the record, and applicable law, IT IS ORDERED that the motions to dismiss (Rec. Docs. 6 and 7) are GRANTED. IT IS FURTHER ORDERED that Plaintiff CFP's claims against Defendants Bruno and Reese are DISMISSED WITH PREJUDICE.

         I. BACKGROUND

         In 2010, the Louisiana Legislature passed Act No. 900 of 2010, Louisiana Revised Statute 13:996.67 (hereinafter, the “Act”), which created the Orleans Parish Judicial District Court Building Commission (hereinafter, “JBC”) for the purposes of funding and constructing a new courthouse. See La. R.S. 13:996.97. Pursuant to the Act, “the Civil District Court for the parish of Orleans and the clerk of court of the Civil District Court for the parish of Orleans are hereby authorized to impose [specified] additional costs of court and service charges, ” which are:

dedicated to the design, planning, feasibility, acquisition, construction, equipping, operating, and maintaining a new facility to house the Civil District Court for the parish of Orleans, the offices of the clerk of court for Civil District Court for the parish of Orleans, the First City Court, the clerk of the First City Court, the constable of the First City Court, the office of the civil sheriff, the Orleans Parish Juvenile Court, the mortgage office, the conveyance office, the notarial archives, and such other courts and parochial offices as may be necessary.

Id.

As established by the Act, the JBC is “deemed to be a public commission” that is:
a public corporation with power to contract, administer the proceeds of the costs and charges authorized in this Section, lease, sublease, and otherwise provide for the construction, equipping, maintenance, and operation of a new courthouse for the Civil District Court for the parish of Orleans and to pledge and dedicate the receipts of the courthouse construction fund created hereby for the payment of any lease or sublease obligation, loan agreement, or other financing agreement relative thereto.

Id. at §996.67(C)(1). The judges, en banc, of the Civil District Court for the Parish of Orleans comprise the JBC Board of Commissioners (hereinafter, the “Board”). Id. The Act also provides for the JBC to elect a chairman and vice chairman. Id. at §996.67(C)(2). The secretary-treasurer is the judicial administrator for the Parish of Orleans. Id. Pursuant to the Act, the JBC was initially given until August 15, 2014, to let public bids to construct or lease a new facility or lose the authority to levy and collect the additional fees. That date has been extended until August 15, 2021.Id. at §996.67(D).

         According to the complaint: “Without the additional fees, it would be impossible to build a new courthouse.”[1] The complaint additionally provides, in pertinent part:[2]

[2]b. Judge Kern A. Reese is a judge of the Civil District Court for the Parish of Orleans and a permanent resident of the State of Louisiana, Parish of Orleans. At all times relevant to the matters set forth herein, Judge Reese was the Chairman of the JBC. In that capacity, he has always been engaged in purely administrative functions. Under Louisiana law, the traditional immunity of judges for liability for damages for acts committed in the exercise of their jurisdiction has no application to a contest questioning a judge's administrative actions. (Imbornone v. Early, 401 So.2d 953 (La. 1981)); and
[2]c. Judge Christopher Bruno is a judge of the Civil District Court for the Parish of Orleans and a permanent resident of the State of Louisiana, Parish of Orleans. At all times relevant to the matters set forth herein, Judge Bruno was a member of the Board of Commissioners of the JBC (hereinafter “Board”) and a member of the JBC Executive Committee. In that capacity, he has always been engaged in purely administrative functions. Under Louisiana law, the traditional immunity of judges for liability for damages for acts committed in the exercise of their jurisdiction has no application to a contest questioning a judge's administrative actions. (Imbornone v. Early, 401 So.2d 953 (La. 1981)).
* * *
5. The obligation to provide suitable courtrooms and offices for all of the various courts in the parish of Orleans, including the Civil District Court, resides with the city of New Orleans pursuant to Louisiana Revised Statutes, R.S. 33:3714.
* * *
9. [] Presently the following judges are members of the Board by virtue of being judges of the Civil District Court for the Parish of Orleans: Judge Tiffany G. Chase, Judge Regina Bartholomew Woods, Judge Sidney H. Cates IV, Judge Nakisha Ervin-Knott, Judge Clare Jupiter, Judge Christopher J. Bruno, Judge Robin M. Giarrusso, Judge Monique Barial, Judge Piper D. Griffin, Judge Paula A. Brown, Judge Bernadette D'Souza, Judge Kern A. Reese, Judge Paulette R. Irons, and Judge Ethel S. Julien.
10. By resolution of the Board of Commissioners, the judges of the First City Court of the City of New Orleans were appointed to the JBC. [] As the Board of Commissioners never passed any bylaws and as the Act did not authorize the appointment of the First City Court Judges to the JBC, the validity of the appointment of these judges is almost certainly in doubt. [] Their appointment, in addition to probably being unauthorized, made the governing process unwieldy and unpredictable because of the sheer size of the JBC and the diversity of experience and temperament that all eighteen judges that composed the Board of Commissioners brought to the process. The Judges of the First City Court [] actually performed as Board Members.
11. The JBC initially sought to build a new courthouse on a site in Duncan Plaza owned by the state. Their efforts were defeated when Mayor Mitchell J. Landrieu did not facilitate the donation of the site to the city by the state. []
12. The Mayor has made plain his desire to consolidate City Hall and the Civil District Court into a civic complex in the former Charity Hospital building, which has been vacant since the landfall of Hurricane Katrina. It has been estimated that repurposing the building would cost in excess of 400 million dollars. The city of New Orleans does not have the funds to accomplish this purpose. It, apparently, was looking to use the revenue stream generated by the JBC's additional fees collected from litigants. The JBC requested that the architectural firm of Tate Snyder Kimsey determine whether the old hospital building would be suitable for a courthouse. This architectural firm is world renowned as the designer of courthouse facilities throughout the world and is the recognized expert in the field. The architects opined, “[Charity] is totally incapable of being converted to function as a courthouse. I could not with good conscience recommend that New Orleans consider . . . Charity Hospital for use as a courthouse.”
13. In the fall of 2013, the JBC issued a Request for Qualification [“RFQ”] seeking a private developer to construct the new Courthouse to be located within the Central Business District on a site designated by the JBC. “The development team selected may be expected to provide turnkey services including: project finance, financial arranging, site acquisition, architectural design, construction, equipping, operating and maintaining.” Additionally, the JBC expressed in the RFQ its intention to lease the completed facility. It stated, “The JBC has the power to contract and administer the proceeds of the Fund for its intended purposes, including any lease, sublease or other financing agreement relating to the same.”
14. The Company responded to the JBC's RFQ, which was issued by the entire Commission. “The Civil District Court for the Parish of Orleans Judicial District Court Building Commission, a public commission of the State of Louisiana, (hereinafter "JBC") is soliciting statements of qualifications from interested parties to develop a new, freestanding Civil District Courthouse ("Project"). The Courthouse is to be located within the Central Business District of the City of New Orleans on a site designated by the JBC.” As stated by the RFQ, the JBC had preselected sites to be analyzed for their possible use in building a new courthouse. CFP included the Canal Street Site as one of the three site options that had been pre-selected by the JBC in its Interview Presentation. The Presentation also included a time line for “Site Acquisition.” So, the entire Commission had previously decided upon the Canal Street Site as a possible location for a courthouse before any selection of a developer was ever made. Further, it was informed of the timeline for Site Acquisition as anticipated by CFP and as required by the RFQ. By letter dated December 19, 2013, Mr. James Baker, Project Manager for the JBC, even specified that the JBC would provide a site plan for the courthouse. “A 3-D site plan will be provided by me via email.” Copies of the letter were sent to Judge Kern Reese, Judge Monique Morial and Traci Dias, the JBC's, then, Executive Committee. Copies of the letter were not sent to the entire Board. Prior to the selection of a developer, the JBC evidenced that it had constructive, if not actual, knowledge of the possible sites and the site plan; it also directed and was aware of the timeline for site acquisition. Further, Mr. Baker's letter created the appearance that the Executive Committee was authorized to act on behalf of the JBC. Therefore, it should not have come as a surprise that Judge Reese and the Executive Committee, immediately upon selection of the developer, directed that control of a site for the new facility was the JBC's first priority.
16. By letter dated February 18, 2014, CFP was informed that it was selected to provide development services on behalf of the JBC. The letter was signed by Judge Kern A. Reese, the Chairman of the JBC. When the JBC selected CFP, it was already aware of and approved the sites to be considered and the timeline for Site Acquisition. Its employee, James Baker, created the appearance that the Executive Committee had the authority to act on behalf of the JBC.
17. The deadline for letting a public bid or for entering into a lease before the JBC would lose its ability to continue to collect additional fees, by virtue of the legislation, was less than six months away [August 15, 2014]. The Company's representatives met with the Executive Committee of the JBC on March 11, 2014. Because of the impending deadline, they were directed to secure land for the JBC project as soon as possible. At that meeting, the Executive Committee composed of Judges Kern Reese and Monique Morial and Ms. Traci Dias, gave the Company's representatives the directive to approach owners of sites that had been preapproved by the JBC to begin negotiations to secure a site for the courthouse. Neither of the Judges or Ms. Dias ever expressed the need for the Executive Committee to obtain a corporate resolution from the Board before obtaining site control.
18. At a March 18, 2014 meeting with Judge Reese, the Company's representatives were again directed to secure site control. In attendance at that meeting were Rick Richter and Steve Klein, the JBC's legal counsel. At no time, in the meeting, did legal counsel ever express the need for Judge Reese to obtain a written corporate resolution from the entire Board to authorize him to act on behalf of the JBC in obtaining control of the land. Further, Judge Reese directed Mr. Richter to continue to secure a site as well. []
19. Upon information and belief, at no time in the process did Mr. Richter ever advise Judge Reese of the need for a written corporate resolution to empower either he or CFP to gain control of a real estate site. The knowledge of an attorney is imputed to his client. Stevision v. Charles St. Dizier, Ltd., 9 So.3d 978 (La.App. 3d Cir. 2009). Therefore, Messrs. Richter's and Klein's knowledge with regard to the legal requirements necessary to authorize an agent to gain control over real property is imputed to Judge Reese, to the Executive Committee and to the Board of Commissioners of the JBC. Likewise, their knowledge that Judge Reese was directing CFP and legal counsel to gain control over real property was imputed to the Executive Committee and the Board. Despite the knowledge of all of these parties, no one raised an issue with CFP regarding the directions issue by Judge Reese and the Executive Committee. CFP acted in reliance upon the directions of the Executive Committee and Judge Reese and the approval of the Agreement (as hereinafter defined) by the JBC. The JBC is estopped from denying the existence of the authority of either Judge Reese or the Executive Committee to direct the CFP to obtain site control over the Canal Street property. The reliance of CFP was reasonable because of the previous efforts of Mr. Richter that gave the appearance that a resolution was unnecessary and because of the provisions of the RFQ regarding the pre-selection of the very site about which Judge Reese sought site control. In addition, knowledge by CFP of the direction in the RFQ that the developer gain site acquisition and knowledge by the JBC of the timetable in the Interview Presentation that included a deadline for site acquisition made it reasonable for the Company to rely upon the appearance of authority created by the Board itself. The directions given by the Executive Committee to obtain site control and the failure of legal counsel to advise of the need for a corporate resolution made it reasonable to rely upon the appearance of authority in Judge Reese created by the JBC.
20. Further complicating the situation for CFP is the fact that the Board of Commissioners never passed any bylaws or issued any resolutions establishing the authority of the Chairman or of the Executive Committee. CFP had no resort to any governance documents to guide it in its dealings with the JBC. Messrs. Richter and Klein obviously never saw fit to advise its corporate client of the need for defining for itself and for others the powers of its officers or boards. Nor did they provide for the rules of order that would prevail in the operation of the Commission and the running of its meetings. Other actions, opinions and recommendations of the two possibly fell below the standard of care of a legal counsel.
21. Of the pre-selected sites by the JBC, attention became focused on the site on Canal Street that was owned by a company controlled by Mr. James Coleman. Judge Reese met with Mr. Coleman on several occasions in order to assure Mr. Coleman that he had authority to act on behalf of the JBC and that the JBC was serious about constructing a courthouse on his site. CFP representatives were present when Judge Reese made the representations to Mr. Coleman. They relied upon those representations when they obtained site control over the Canal Street property. In addition, CFP's representatives knew that the Canal Street was one of the sites that had been pre-selected by the JBC. They relied as well upon the JBC's pre-selection of this site, JBC's direction to engage in site control in the RFQ and JBC's knowledge of the timetable for site control set out in CFP's Interview Presentation when it moved forward on the directives of the Executive Committee and of Judge Reese.
22. On May 6, 2014, representatives of the Company made a presentation to the members of the Board of the JBC wherein their approval was sought to authorize the Company to obtain site control of the Canal Street property. The Board was informed that the Company had been directed to obtain site control over the Canal Street site by the Executive Committee and by Judge Reese. No issue was raised with the Company by any Board Member at any time relative to the need for the passage of a corporate resolution to give Judge Reese or anyone else written authorization to obtain site control over the land needed for the courthouse.
23. In a May 22, 2014 letter to Judge Reese, a Company representative recounted the efforts taken at the direction of Judge Reese and the Executive Committee to obtain site control. Specifically mentioned was the fact that, acting in reliance upon the directives of the Executive Committee and Judge Reese, a deposit had been placed with the owners of the Canal Street site to obtain site control and that the Company representatives were at risk if the JBC did not move to complete the purchase of the site. Copies of the letter were sent to the other members of the Executive Committee and to Judge Griffin, the Chairman of the Court's Finance Committee. Again, no concerns were raised with the Company by any of the recipients of the letter about the site control efforts.
24. On September 9, 2014, the Company's representatives were informed that the Board had met and had approved the Canal Street project. This meeting was four months after the initial site control and due diligence period was obtained by CFP. But for the Mayor's amendment of the Act to extend the deadline to August 15, 2015, the tardy action of the JBC would have resulted in a forfeiture of the enhanced fees because it occurred after the original deadline in the Act had passed. After this meeting and acting in reliance upon the approval by the Board, the owner of the Canal Street site was paid for an extension of the due diligence period through the end of the year. Additionally, the Company's representatives, in reliance upon the JBC's vote to approve the project on the Canal Street site, negotiated an extension of the due diligence period through August 15, 2015.
25. Ultimately, a Professional Services Agreement (hereinafter “Agreement” or “PSA”) was negotiated between the Company and the JBC. The Agreement was approved by the Executive Committee on November 19, 2014 and by the Board on December 8, 2014. Article XIII, Section 1 provides, “This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party.” Article XIII, Section 9 provides, “This Agreement is entered into for the exclusive benefit of the parties, and the parties expressly disclaim any intent to benefit anyone not a party hereto.” Therefore, only CFP has the right and power to enforce the provisions of this Agreement.
26. By this time, the Executive Committee was composed of Judges Reese, Morial, Bruno, and Cates and Ms. Traci Dias. Even though Judge Bruno was appointed to the Executive Committee, he never attended any of its meetings; he was not present at this meeting. Judge Cates, the other new Executive Committee member, was present at the November 19 meeting and was made aware of the site negotiations. Judge Cates never expressed any problems with the actions of CFP or the need for obtaining a written resolution to authorize himself and the other members of the Executive Committee to approve the site selection activities of CFP. The Agreement was signed by Judge Reese and by the Secretary of CFP on December 19, 2014. The Agreement was made effective retroactive to the 18th day of February 2014. The fourth “Whereas” clause of the Agreement stated, “JBC desires to acquire and to construct or cause to be constructed certain improvements on a portion of the Parent Tract (hereinafter the ‘Property') for use as a new facility (the ‘Facility') by the current occupants of the Orleans Parish Civil District Court complex.” The Property being referred to was the Canal Street property. The entire Agreement, and the “Whereas” clause in particular, was viewed by the Company and its representatives as an acknowledgement that Judge Reese was authorized to direct the expenditure of funds to obtain site control over the land needed for the Facility. Further, Article III, Section 3 of the Agreement provides, “During Phase 1, Company and JBC shall negotiate and enter into a definitive binding agreement for the purchase of the Property, on terms and conditions satisfactory to JBC in its sole discretion.” The retroactive nature of the Agreement serves to establish Judge Reese's and the Executive Committee's authorization retroactive to the first day that CFP began to provide services to the JBC. In effect, the Agreement serves as a ratification of the Judge's directions and the Company's efforts to obtain site control. All subsequent activities of the Company and its representatives were taken in direct reliance upon the actions of the Executive Committee and the Board in approving the site control efforts directed by Judge Reese.
27. In addition, the RFQ had specified that one of the duties of the entity selected to provide professional services was to include site acquisition. It stated, “The development team selected may be expected to provide turnkey services including: project finance, financial arranging, site acquisition, architectural design, construction, equipping, operating and maintaining.” Further, Article III, Section 2, Paragraph A, Subparagraph 3 of the Agreement specified that, “During Phase 1, Company and JBC shall negotiate and enter into a definitive binding agreement for the purchase of the Property, on terms and conditions satisfactory to JBC in its sole discretion.” Site control was essential for the accomplishment of the negotiation of a purchase agreement. The Company, therefore, was, acting in fulfillment of its obligation under the ...

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