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Parkcrest Builders, LLC v. Housing Authority of New Orleans

United States District Court, E.D. Louisiana

November 30, 2018

PARKCREST BUILDERS, LLC
v.
HOUSING AUTHORITY OF NEW ORLEANS

         SECTION: "J"(4)

          ORDER AND REASONS

          CARL J. BARBIER UNITED STATES DISTRICT JUDGE.

         Before the Court are Petitions for Writs of Execution and Other Proceedings Supplemental to Judgment (Rec. Docs. 574, 577) filed by Liberty Mutual Insurance Company (“Liberty”) and Ted Hebert, LLC (“Hebert”), respectively.[1] The target of these Motions, the Housing Authority of New Orleans (“HANO”), has filed an opposition (Rec. Doc. 575) and upon order of this court, Liberty filed a supplemental memorandum. (Rec. Doc. 586). Following Liberty's motion, HANO filed its related Second Motion to Stay Execution of Judgment (Rec. Doc. 587). Liberty filed opposition (Rec. Doc. 594) to which HANO replied (Rec. Doc. 602). Having considered the Motions, the memoranda, the record, and the applicable law the Court finds the Motions should be DENIED.

         FACTS AND PROCEDURAL HISTORY

         This Court entered judgment in favor of Liberty, granting it $437, 851.60, plus costs and reasonable attorney's fees, on July 10, 2017. (Rec. Doc. 541). HANO then moved this Court to reconsider its decision to award attorney's fees and moved for a stay of execution of the judgment pending reconsideration. The Court denied both motions. (Rec. Docs. 545, 542). HANO then filed a Motion to stay proceedings without posting supersedeas bond, pending resolution of its appeal of the attorney's fees award. The Court also denied this petition for a stay because HANO had not satisfied its burden of demonstrating that Liberty's award for damages and fees was adequately secured. (Rec. Doc. 559). The Court noted that it could grant a stay without bond, if HANO could demonstrate that it would be willing and able to satisfy the judgment upon resolution of the appeal.

         Liberty then filed its petition for a writ of execution on August 17, 2018. Pursuant to its motion, Liberty asks this Court to “issue a writ of execution commanding the United States Marshall to seize the nonexempt portion of the property of HANO sufficient to satisfy the amount of the Judgment subject to this Petition--$437, 851.60.” (Rec. Doc. 574 at 3). Liberty also asks to engage in discovery pursuant to Fed.R.Civ.P. 69(a)(2) and for any other equitable relief this Court might give. HANO promptly filed an opposition. The Court ordered that Liberty file memoranda supporting its motion and Liberty did so. On October 7, 2018, HANO filed a second motion to stay execution of the Court's judgment. Liberty filed an opposition memorandum to which HANO replied.

         PARTIES' ARGUMENTS

         HANO argues a writ of execution should not be issued because the Federal Rules of Civil Procedure require the application of state law for application of judgments and the Louisiana Constitution and Louisiana statutory law prevent seizure of the property of a state entity such as the local housing authority. See Holly & Smith Architects, Inc. v. St. Helena Congregate Facility, Inc., 943 So.2d 1037, 1046 (La. 2006). Furthermore, HANO argues that this Court may not violate these anti-seizure provisions unless there is a federal interest in the remedy, which there is not in this diversity case. Freeman Decorating Co. v. Encuentro Las Americas Trade Corp., 352 Fed.Appx. 921, 923 (5th Cir. 2009) (per curiam). HANO also resists discovery of its assets, because it suggests this Court has held that the state law anti-seizure provisions “prevent Liberty from executing its judgment against HANO's assets.” (Rec. Doc. 575 at 8). To find that state law does not grant Liberty a judicial mortgage over HANO's property but allow Liberty post-judgment discovery “would be a travesty.”

         In support of its second motion to stay, HANO asserts that it is “committed to submitting a request to HANO's governing Board of commissioners for allocation of funds to fulfill the judgment, if affirmed after appeal.” (Rec. Doc. 587-1 at 2-3). HANO explains that it cannot offer a more definite promise than that because “HANO has no independent funding to pay a judgment.” HUD is the sole source of operation funds. (Rec. Doc. 602-2 at 2). According to federal regulations, HANO must receive approval from HUD of payment. Only upon HUD's approval, says HANO, can it request approval from its Board of Commissioners to pay the judgment.

         Liberty counters that the Louisiana Constitution does not prohibit seizure of state property because there is a federal interest in the enforcement of the judgment. Liberty argues a federal interest exists in this case because (1) courts have an interest in enforcing their judgments when recalcitrant state entities attempt to unfairly immunize themselves from paying and (2) HANO is supported entirely with federal funds. (Rec. Doc. 586 at 3-6). Liberty also suggests that even if there were no federal interest, Louisiana law allows for execution on funds where those funds have been appropriated for in a contract. (Rec. Doc. 586 at 6). Moreover, Liberty argues that HANO's motion to stay should be rejected because HANO has failed yet again to provide any assurance that it will pay the judgment. Liberty urges that HANO has promised nothing more than to seek permission to pay the judgment and points out that when HANO sought permission to fund a supersedeas bond, at a cost of 2% of the Court's judgment against HANO, the request was denied. (Rec. Doc. 594 at 2).

         LEGAL STANDARD AND DISCUSSION

         I.

         In a diversity action, the mechanics of execution are dictated by Federal Rule of Civil Procedure 69(a): “The procedure on execution-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.” Thus, the Court must look to state law for the procedure of execution against a state entity.

         The Louisiana Constitution provides the proper course of action: funds are to be appropriated by the state legislature or by the subdivision of the state that is the judgment debtor. La. Const. Ann. art. XII, § 10. That same constitutional provision explicitly prohibits seizure of public property. See Parkcrest Builders, LLC v. Hous. Auth. of New Orleans, No. CV 15-1533, 2018 WL 3743812, at *5 (E.D. La. Aug. 7, 2018) (citing La. Const. Ann. art. XII, ยง 10). Neither HANO nor the state legislature have ...


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