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Red Sox Investments, LLC v. City of Shreveport

Court of Appeals of Louisiana, Second Circuit

February 28, 2018

RED SOX INVESTMENTS, LLC., ET AL., ON BEHALF OF ITSELF AND A CLASS OF SIMILARLY SITUATED PROPERTY OWNERS Plaintiffs-Appellants
v.
CITY OF SHREVEPORT, LOUISIANA, AND CADDO PARISH, LOUISIANA Defendants-Appellees

         Appealed from the First Judicial District Court for the Parish of Caddo, Louisiana Trial Court No. 576, 478 Honorable Michael A. Pitman, Judge

          RICHIE, RICHIE & OBERLE By: Byron A. Richie Counsel for Appellant Red Sox Investments

          SHUEY, SMITH, L.L.C. By: Richard E. Hiller MICHAEL H. WAINWRIGHT

          BRADLEY, MURCHISON, KELLY & SHEA, L.L.C. By: Leland Gray Horton Counsel for Appellee Caddo Parish, LA

          PETTIETTE, ARMAND, DUNKELMAN By: Edwin Henry Byrd, III Counsel for Appellee City of Shreveport

          WIENER, WEISS & MADISON By: John M. Madison, Jr. Counsel for Intervenor/ Appellee Sheriff Steve Prator

          ABRAMS & LAFARGUE, LLC By: Reginald W. Abrams Counsel for Intervenor/ Appellee Caddo Parish School Board

          Before MOORE, COX, and STEPHENS, JJ.

          MOORE, J.

         Red Sox Investments LLC ("Red Sox"), and its proposed class of similarly situated property owners, appeal a judgment that sustained exceptions of no cause of action filed by, and dismissed all claims against, Caddo Parish and the City of Shreveport. For the reasons expressed, we affirm.

         PROCEDURAL BACKGROUND

         Red Sox filed this suit in May 2014, in the First JDC, alleging that the Parish and City failed to follow the procedures set out in La. R.S. 47:2231-2234 for the lease of adjudicated property and the allocation of the rent payments generated. Prior to 2009, certain property owners had failed to pay their taxes: 39 individual lots of tracts were listed, but "500 properties more or less" were alleged to be affected. The Parish and City offered these lots at tax sales, but no one purchased them, so they were adjudicated to the Parish and City under La. R.S. 47:2196. Red Sox alleged that it acquired several of these lots by quitclaim deeds from the tax debtors, but admitted that it did not redeem any of them.

         In 2009, the Parish and City, acting through the State Mineral and Energy Board, executed mineral leases covering areas that included the adjudicated properties. These leases gave the lessees no right to use the surface, but granted the executive right to explore for and extract minerals from the lands encompassed in each lease. The lessees made a bonus payment and committed to future royalties, a portion of which was attributable to the adjudicated properties.

         Red Sox alleged that the Parish and City did all this without complying with Title 47, Chapter 5, Subpart C ("Political Subdivisions Acquiring Ownership"). R.S. 47:2231 says that after receiving an adjudication certificate, the political subdivision "may" file suit in district court "to obtain possession of the adjudicated property." R.S. 47:2232 says that upon presentation of a certified copy of the tax sale certificate, "after ten days' notice to the owner and proper hearing, " the judge shall issue an order of possession in favor of the political subdivision. R.S. 47:2233 says that after receiving the order of possession, the political subdivision then "may, without the necessity of public letting, lease the adjudicated property on commercially reasonable terms and collect rentals." The political subdivision shall apply the rentals first to court costs, and then "all rental income shall be applied against any taxes * * * due against the property." Further, "When all of the obligations have been paid in full, the political subdivision shall issue a proper certificate of redemption and surrender its possession of the property." In other words, the leasing of adjudicated property is intended to benefit the tax debtor and result in ultimate redemption to the owner.

         Red Sox alleged that the Parish and City did not file suit to obtain possession, did not give 10 days' notice to the owners, and, crucially, did not apply the signing bonus and royalty payments toward the unpaid taxes. In Red Sox's view, many of the adjudicated properties were small, and the signing bonus alone would have been sufficient to cover all back taxes and effect a redemption to the owners. It cited one specific tract (Lot 6, Happy Trails Subd.) that had been seized for nonpayment of 1990-'91 taxes, and was included in a mineral lease granted by the City in 2009. By Red ...


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