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Canal/Claiborne, Ltd. v. Stonehedge Development, LLC

Supreme Court of Louisiana

December 9, 2014

CANAL/CLAIBORNE, LIMITED
v.
STONEHEDGE DEVELOPMENT, LLC

Page 628

[Copyrighted Material Omitted]

Page 629

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIFTH CIRCUIT, PARISH OF JEFFERSON.

For Applicant: Karen Curtis Yarbrough; Celia Marie Williams-Alexander, LA DEPT OF CHILDREN AND FAMILY SERVICES; Harry Joseph Philips, Jr., Amy Collier Lambert, Vincent V. Tumminello, III, TAYLOR, PORTER, BROOKS & PHILLIPS, LLP.

For Respondent: David J. Halpern, Kathleen Ann Manning, Michelle Miller Roy, Daniel Thomas Plunkett, MCGLINCHEY STAFFORD, PLLC.

GUIDRY, Justice. Weimer, J., concurring in part, dissenting in part.

OPINION

Page 630

[2014-0664 La. 1] GUIDRY, Justice

The Louisiana Constitution of 1974 provides for the waiver of sovereign immunity from suits in contract or tort against the state, a state agency, or a political subdivision. La. Const. art. XII, Sect. 10(A). In all " other suits against the state, a state agency, or a political subdivision," the legislature " may authorize" such suits by a " measure . . . waiv[ing] immunity from suit and liability." La. Const. art. XII, Sect. 10(B). Following Hurricane Katrina, the defendant state agency for a period of time failed to remove its partially damaged movable property from the premises of the plaintiff's building. During this time, the defendant state agency also failed to remit rental payments to plaintiff's lessee, who had in turn subleased the premises to the defendant state agency. The plaintiff sought remuneration for lost rental income. The issue presented in this case is whether the plaintiff's quasi-contractual claim of unjust enrichment, based on the lost rental income, falls within the scope of that waiver of sovereign immunity. For the reasons set forth below, we find the plaintiff's unjust enrichment claim does not fall within the scope of the waiver of sovereign immunity in contract or tort. We also find the plaintiff's suit asserting a claim of unjust enrichment has not [2014-0664 La. 2] been otherwise permitted by the legislature in a " measure authorizing ... immunity from suit and liability."

FACTS and PROCEDURAL HISTORY

Canal/Claiborne, Limited (hereinafter " Canal/Claiborne" ) is the owner of property located at 1661 Canal Street in New Orleans. In January 1995, Canal/Claiborne entered into a lease with Stonehedge Development, L.L.C. (hereinafter " Stonehedge" ). Stonehedge, in the business of leasing properties to governmental entities, entered into a sublease in June 1995 with the State of Louisiana, Department of Children and Family Services (hereinafter " Department" ). The Department occupied the premises, remitting monthly rent payments of about $53,000.00 to Stonehedge, which in turn remitted monthly payments of about $36,000.00 to Canal/Claiborne until Hurricane Katrina struck the city in 2005.

The premises were significantly damaged, rendering the building uninhabitable. Canal/Claiborne repaired the building and reopened it in November 2005, except those areas occupied by the Department, which had initially not allowed removal of its damaged furniture, supplies, and sensitive files. Canal/Claiborne continued to invoice Stonehedge for the monthly rentals as they accrued. By December 2005, the Department had authorized Canal/Claiborne to clean out the Department's property from the first floor, and by March 2006, the Department had removed a major portion of its property on the second floor. The Department made no rental payments from November 2005 until the middle of June 2006, when the Department entered into an emergency procurement lease directly with Canal/Claiborne and began remitting payments to Canal/Claiborne.

Canal/Claiborne filed a petition for sums due under the lease in January 2006, alleging

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Stonehedge was in default under the lease and that the Department, [2014-0664 La. 3] by not removing its property, was continuing to occupy the building. In July 2007, Stonehedge filed a third party demand against the Department, incorporating all of the allegations contained in the original petition. In June 2010, Canal/Claiborne amended and supplemented its original petition to add a direct claim against the Department, asserting the terms of the sublease between Stonehedge and the Department and seeking additional rentals or other damages without pleading a specific legal theory. The Department filed a dilatory exception of prematurity asserting Canal/Claiborne " failed to adhere to La. R.S. 39:1673 and acquire a decision from the chief procurement officer of the Department of Administration prior to the commencement of an action in court . . .." [1] The trial court overruled the exception on two grounds: Canal/Claiborne did not directly contract with the Department and the Department had effectively waived the administrative remedy when it voluntarily withdrew a previous dilatory exception against Stonehedge and by its ongoing participation in the litigation.

Eventually the matter proceeded to a bench trial in October 2012 against the Department only, Canal/Claiborne having settled with Stonehedge. In November 2012, the trial court entered judgment in favor of Canal/Claiborne and against the Department, awarding $188,066.24 in damages with legal interest from the date of judicial demand. The judgment did not expressly state a legal theory underlying the Department's liability, merely awarding " damages suffered . . . as a result of the . . . occupancy of 1661 Canal Street . . .."

The court of appeal affirmed the trial court's judgment, finding no error in the denial of the Department's exception of prematurity under La. Rev. Stat. 39:1673. The appellate court found no error in the trial court's conclusion that [2014-0664 La. 4] Canal/Claiborne was not a contractor with the Department and that Canal/Claiborne's suit " is for unjust enrichment or damages for trespass." Canal/Claiborne, Limited v. Stonehedge Development, LLC, 13-0641 (La.App. 5 Cir. 2/26/14), 136 So.3d 326, 328.

The Department applied for writs of review in this court and, at the same time, filed a declinatory exception of lack of subject matter jurisdiction and a peremptory exception of prescription. The Department has for the first time in any court raised the issue of subject matter jurisdiction, arguing that Canal/Claiborne has asserted a quasi-contractual unjust enrichment claim against the Department for storing items on Canal/Claiborne's property for a certain period of time. The Department asserts that, under La. Const. art. XII, Sect. 10(A), " [n]either the state, a state agency, nor a political subdivision shall be immune from suit and liability in contract or for injury to a person or property." Because sovereign immunity has not been waived as to suits asserting claims for unjust enrichment, and because Canal/Claiborne's claim is a quasi-contractual claim for unjust enrichment, the Department contends the judgment of the trial court is a nullity under La. Code Civ. Proc. art. 2002(A)(3) because the court lacked jurisdiction over the subject matter of the claim.

We granted the writ application to determine whether the plaintiff's unjust enrichment claim falls within the scope of the

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waiver of immunity " from suit and liability in contract" for purposes of La. Const. art. XII, Sect. 10. Canal/Claiborne, Limited v. Stonehedge Development, LLC, 14-0664 (La. 06/20/14), 141 So.3d 275.

ANALYSIS

Although not raised in the lower courts, we find the Department's exception of subject matter jurisdiction is properly raised in this court. Louisiana courts have [2014-0664 La. 5] recognized that such an exception may be raised at any stage of the proceedings, including at the appellate level. Piper v. Olinde Hardware & Supply Co., 288 So.2d 626 (La. 1974); Colacurcio v. Ledet, 94-1798 (La.App. 4 Cir. 9/28/95), 662 So.2d 65. The jurisdiction of a court over the subject matter of an action or proceeding cannot be conferred by consent of the parties. La. Code Civ. Proc. art. 3. Thus, a judgment rendered by a court with no jurisdiction over the subject matter of the action or proceeding is void. Id.

Turning to the merits of the exception, we must determine whether the plaintiff's alleged quasi-contractual claim of unjust enrichment falls within the scope of the waiver of immunity set forth in La. Const. art. XII, Sect. 10(A). For the reasons set forth below, we find that it does not.

The starting point in the interpretation of constitutional provisions is the language of the Constitution itself. Louisiana Mun. Ass'n v. State, 00-0374, p. 5 (La. 10/6/00), 773 So.2d 663, 667. When a constitutional provision is plain and unambiguous, and its application does not lead to absurd consequences, its language must be given effect. Id. at pp. 5-6, 773 So.2d at 667. The Louisiana Constitution of 1974 provides, in Article XII, Section 10(A): " 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." This court has recognized Section 10(A) as an " unequivocal, self-executing waiver of sovereign immunity as to suit and liability in contract and tort cases." Fulmer v. State, Dept. of Wildlife and Fisheries, 10-2779 (La. 7/1/11), 68 So.3d 499, 503 (quoting Jacobs v. City of Bunkie, 98-2510 (La.5/18/99), 737 So.2d 14, 22). This language is clear and unambiguous, and we need not rely on the constitutional debates to infer any qualifications in that waiver. See Chamberlain v. State of Louisiana, Dept. of Transp. and Dev't, 93-472 (La. 9/3/93), 624 So.2d 874.

[2014-0664 La. 6] In this case, the plaintiff's claim against the Department is in part, at least, one for enrichment without cause, see La. Civ. Code art. 2298, as there exists no contract between Canal/Claiborne and the Department. Both the trial court and the court of appeal concluded there was no contract between the parties, and Canal/Claiborne has conceded it was not a contractor with the Department and, thus, not bound by the administrative procedures set forth in La. Rev. Stat. 39:1673. In this case, the Department entered into a sublease with Stonehedge, the original lessee. A sublease is an agreement in which the original lessee leases to a third party, the sublessee, all or part of the property leased to the original lessee by the owner of the property. When Stonehedge and the Department entered into a sublease of the Canal Street property, a new contract came into existence that was separate and distinct from the original lease between the sublessor, Stonehedge, and the owner of the property, Canal/Claiborne. See Bourgeois, Dupuis, Wright & ...


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