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Fischer III, LLC v. Williams

Court of Appeal of Louisiana, Fourth Circuit

December 17, 2014


APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH. NO. 2013-01535, DIVISION " C" . Honorable Sidney H. Cates, Judge.

Thomas M. Beh, Yvonne Chalker, Gary J. Elkins, ELKINS, P.L.C., New Orleans, LA, COUNSEL FOR PLAINTIFF/APPELLANT.

John J. Weiler, Christian N. Weiler, Erin J. Benoit, WEILER & REES, LLC, New Orleans, LA, COUNSEL FOR DEFENDANT/APPELLEE.

(Court composed of Judge Max N. Tobias, Jr., Judge Edwin A. Lombard, Judge Joy Cossich Lobrano).


Page 1256

[2014-0492 La.App. 4 Cir. 1] Edwin A. Lombard, Judge.

The instant appeal involves a dispute over whether ad valorem taxes were properly assessed for the re-development of the former Fischer Public Housing Development (" the FPHD" ). The FPHD was a housing project located in Orleans Parish on land (" the Land" ) that was owned by the Housing Authority of New Orleans (" HANO" ). The FPHD was demolished by HANO, which subsequently joined with the Industrial Development Board of the City of New Orleans, Louisiana, Inc. (" the IDB" )[1], and later Fischer III, LLC (" Fischer" ), to build a mixed-income multi-family housing development on the Land. Fischer is a for-profit entity that was created to develop the Land and to operate and manage the housing development (" the Improvements" ) it built.

In order to finance a portion of constructing the Improvements, the IDB issued the IDB Capital Fund Program Revenue Bonds, Series A-1 of 2003, in the total amount of $14,360,328 (the " IDB Bonds" ) on December 30, 2003, initially [2014-0492 La.App. 4 Cir. 2] executed in favor of Fischer's predecessor Guste I, LLC. The IDB Bonds were purchased by J.P. Morgan Trust Company, National Association, and mature on December 1, 2023.

In connection with the development of the Land, HANO, the IDB and Fischer executed two documents, a Ground Lease and Sub-Lease, on January 20, 2005. Pursuant to the Ground Lease, HANO temporarily leased the Land on which Fischer built the Improvements to the IDB during the term of the IDB Bonds. Recital F of the Ground Lease provides that the Ground Lease is in effect as between HANO and the IDB only during the term of the IDB Bonds or will terminate earlier if the IDB Bonds are paid in full by Fischer. Once the IDB Bonds are paid in full, the Ground Lease terminates as between HANO and the IDB and the Ground Lease will be between HANO, as lessor, and Fischer, as lessee.

Page 1257

Pursuant to the Sub-Lease, wherein Fischer is referred to as the " Borrower," Fischer sub-leases the Land on which it was to build the Improvements from the IDB. Recital F of the Sub-Lease provides that the term of the Sub-Lease as between the IDB and Fischer will terminate when the IDB Bonds are paid in full. Once the IDB Bonds are paid in full and discharged, the IDB is no longer a party to the Sub-Lease and HANO replaces the IDB as the sub-lessor and Fischer remains the sub-lessee.

By the end of December 2011, Fischer constructed residential units on the Land consisting of the 103 mixed income housing units, plus supporting facilities (collectively referred to herein as " the Improvements" ).[2] Fischer was contractually obligated to build, pay for and manage the Improvements.

[2014-0492 La.App. 4 Cir. 3] Determining that the Improvements were owned by Fischer, Erroll G. Williams, in his capacity as Assessor, Parish of Orleans, State of Louisiana, (" the Assessor" ) placed the Improvements on the Orleans Parish assessment rolls for the 2012 and 2013 tax years. Fischer untimely paid the 2012 property taxes, totaling $222,336.15, under protest. Nevertheless, it timely paid its 2013 taxes, in the amount of $149,704.80, under protest.[3] The Land upon which the Improvements were built has not been taxed and therefore, is not at issue.

Procedural History

On February 19, 2013, Fischer filed a Petition for Judicial Review against the Assessor, Norman Foster, in his capacity as the Director of Finance for the City of New Orleans (" the Director" ), the Department of Finance, Bureau of the Treasury, for the City of New Orleans, the City of New Orleans and the Louisiana Tax Commission. In its petition, Fischer sought the following relief:

1) Refund of the 2013 tax paid under protest to the City, plus interest;
2) That the 2012 tax tender, plus interest be refunded and/or released to Fischer, and
3) That the Assessor be directed to amend the City's tax rolls to correct the assessment accordingly, and for other general and equitable relief as permitted by law.

In support of its petition, Fischer contemporaneously filed a " Motion to Deposit Funds into the Registry of the Court" seeking leave of the district court to deposit its 2012 ad valorem taxes into the registry of the Court to be held pending [2014-0492 La.App. 4 Cir. 4] the resolution of the issues presented in its petition. The district court granted the motion.

The Director and the City collectively filed an answer and therein raised five (5) affirmative defenses: 1) Fischer's petition failed to state a cause of action against them; 2) the petition fails to state a right of action against them; 3) Fischer lacked standing against them as a matter of law; 4) any and all actions taken by the defendants were reasonable under the circumstances; and 5) the defendants cannot be held liable for discretionary acts as alleged. Subsequently, the Assessor filed his answer and raised peremptory exceptions of prescription and no cause of action.

In November 2013, Fischer filed a motion for summary ...

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