Opinion ID: 1908239
Heading Depth: 1
Heading Rank: 2

Heading: peremption/motion to strike

Text: La. Const. art. 6, § 35, relative to Contesting Political Subdivision Bonds, provides as follows: (A) Contesting Election; Time Limit. For sixty days after promulgation of the result of an election held to incur or assume debt, issue bonds, or levy a tax, any person in interest may contest the legality of the election, the bond issue provided for, or the tax authorized, for any cause. After that time no one shall have any cause or right of action to contest the regularity, formality, or legality of the election, tax provisions, or bond authorization, for any cause whatsoever. If the validity of any election, tax, debt assumption, or bond issue authorized or provided for is not raised within the sixty days, the authority to incur or assume debt, levy the tax, or issue the bonds, the legality thereof, and the taxes and other revenues necessary to pay the same shall be conclusively presumed to be valid, and no court shall have authority to inquire into such matters. (B) Contesting Ordinance or Resolution; Time Limit. Every ordinance or resolution authorizing the issuance of bonds or other debt obligation by a political subdivision shall be published at least once in the official journal of the political subdivision or, if there is none, in a newspaper having general circulation therein. For thirty days after the date of publication, any person in interest may contest the legality of the ordinance or resolution and of any provision therein made for the security and payment of the bonds. After that time, no one shall have any cause of action to test the regularity, formality, legality, or effectiveness of the ordinance or resolution, and provisions thereof for any cause whatever. Thereafter, it shall be conclusively presumed that every legal requirement for the issuance of the bonds or other debt obligation, including all things pertaining to the election, if any, at which the bonds or other debt obligation were authorized, has been complied with. No court shall have authority to inquire into any of these matters after the thirty days. (Emphasis added.) This constitutional provision establishes strict time limitations during which persons in interest are allowed to challenge an election or an ordinance authorizing a political subdivision to issue bonds. Pursuant to La. Const. art. 6, § 35( A ), when an election approving a bond referendum has been held, persons in interest are allowed  sixty days from the promulgation of the result of [the] election to contest the regularity, formality, or legality of the . . . bond authorization. (Emphasis added.) Pursuant to La. Const. art. 6, § 35( B ), when a political subdivision has adopted an  ordinance . . . authorizing the issuance of bonds, persons in interest are allowed  thirty days after the date of publication to contest the legality of the ordinance . . . and of any provision therein made for the security and payment of the bonds. (Emphasis added.) Under both subsections A and B of La. Const. art. 6, § 35, once the time period has passed, the validity of the bond election [§ 35(A)] or ordinance [§ 35(B)]is conclusively presumed valid and no court shall have authority to inquire into any of [the] matters that are the subject of the election or ordinance. Lafayette voters approved the bond proposition authorizing the issuance of the communications bonds at a special election held on July 15, 2005. The referendum approved by the voters on that date authorized Lafayette to issue twenty-five year revenue bonds not exceeding $125 million to provide capital funds for the communications system, then provided that the bonds issued would be payable first from the net income and revenues of the communications system and second, to the amount necessary, from a secondary or subordinate pledge of the revenues of the utilities system. (Emphasis added.) Although the date of promulgation of the result of the bond election is not clear from the record evidence in this case, the parties agree that no person in interest contested any provision of the bond election during the 60-day period following promulgation of the results of the election, as allowed by La. Const. art. 6, § 35(A). Bond Ordinance No. 0-053-2006, authorizing the issuance of the communications system bonds, was adopted by Lafayette on March 21, 2006. Three days later, on March 24, 2006, the ordinance was published in the Lafayette Daily Advertiser, the local newspaper, thus tolling the 30-day time period during which persons in interest could challenge the ordinance. La. Const. art. 6, § 35(B). On April 21, 2006, within the 30-day period, plaintiffs herein timely filed their Motion for Judgment Pursuant to La. R.S. 13:5125. [14] As required by the provisions of that statute, plaintiffs' petition was published in the Lafayette Daily Advertiser on May 2 and May 9, 2006. On April 23, 2006, the last day of the 30-day period for challenging the ordinance that began when the ordinance was published in the local newspaper on March 24, 2006, Bellsouth Telecommunications, Inc. and Louisiana Cable & Telecommunications Association (hereinafter referred to collectively as Bellsouth) filed by facsimile transmission an additional La. R.S. 13:5125 Motion for Judgment, in which Bellsouth recited certain issues and set forth its own arguments for declaring the ordinance invalid. However, according to testimony from the Lafayette Parish Clerk of Court, Bellsouth did not file either a hard copy of its motion or the filing fees, as required by La.Rev.Stat. 13:850, as a consequence of which the facsimile filing of the motion had no force or effect. La. Rev.Stat. 13:850(C). [15] Along with the motion for judgment that Bellsouth attempted to file by facsimile on the last day of the 30-day period for contesting Bond Ordinance No. 0-053-2006, Bellsouth had filed a Memorandum in Support of its motion. On May 9, 2006, some 16 days after the expiration of the 30-day constitutional peremption period for filing challenges to the 2006 bond ordinance, plaintiffs herein filed a Motion, Incorporated Memorandum and Order for Leave to file Plaintiffs' Supplemental Memorandum in Support of La. R.S. 13:5125 Motion for Judgment. Plaintiff's Supplemental Memorandum, which was attached to that motion, duplicated, that is, recited virtually word for word, the Memorandum in Support that had been filed by Bellsouth on April 23, 2006, with its motion for judgment. This is the motion that La.Rev.Stat. 13:850(C) directs-because Bellsouth failed to file an original signed document, or pay the filing fee and transmission fee within five days of its filing by facsimile-shall have no force or effect. In their motion to file the supplemental memorandum, plaintiffs asserted that they had had an opportunity to further research the issues presented in their motion for judgment, that the memorandum was submitted to assist the Court in analyzing the issues. Perhaps contemplating the very peremption argument later raised by Lafayette in its exception and motion to strike, plaintiffs further asserted that the supplemental memorandum did not raise new issues, but rather, further explains the plaintiffs' positions and arguments with regard to issues already raised in the motion. Lafayette responded to the plaintiff's supplemental memorandum by filing exceptions and a motion to strike, in which it asserted that plaintiffs in fact did raise new issues in their supplemental memorandum, and that the newly raised issues are perempted under La. Const. art. 6, § 35(B), because they were not asserted prior to the lapse of the constitutional period, they were not briefed in the plaintiffs' memorandum supporting its motion, and they were not contained in the May 2 and May 9, 2006, advertisements of plaintiffs' pleadings. According to Lafayette, La.Rev.Stat. 13:5125(B) requires that the advertisements give notice to the public of all the challenges to the bond ordinance, but the advertisements published by the plaintiffs did not give notice of the issues raised for the first time in the plaintiffs' supplemental memorandum. [16] Following a hearing on Lafayette's exceptions and motion to strike the portions of the plaintiffs' supplemental memorandum that raise new issues not raised in their timely-filed motion for judgment, the district court granted the exception to the extent that the Supplemental Memorandum expands the pleadings. The district court found that plaintiffs would be limited to the initial pleadings, . . . notwithstanding what's contained in the memorandum. The district court later denied plaintiffs' motion for judgment challenging Bond Ordinance No. 0-053-2006. At the court of appeal, plaintiffs assigned as error the district court's partial granting of Lafayette's motion to strike their supplemental memorandum, arguing that the memorandum was not perempted because it addressed the same issues set forth in the motion for judgment and did not expand its scope in any manner. Naquin, 06-0904, p. 6, 937 So.2d at 904. Plaintiffs also asserted that the district court's ruling on this issue should be reversed because the court ultimately allowed argument on the purportedly stricken issues. Id. The court of appeal found that, despite the strict peremptive provisions of La. Const. art. 6, § 35(B), district courts have discretion to accept legal memoranda after the 30-day period. Nevertheless, the court of appeal found no manifest error in the district court's decision partially granting Lafayette's exception of peremption and motion to strike. Thus, the court of appeal stated as follows: To the extent the supplemental memorandum asserted challenges to the Bond Ordinance that were not included in the motion for judgment, those new assertions were, however, perempted. Id. at 8, 937 So.2d at 906. The court of appeal later granted plaintiffs' motion and enjoined the issuance of the bonds authorized by the ordinance based on its finding that the bond ordinance violates the Fair Competition Act. In its briefs to this court, Lafayette claims that the court of appeal decision enjoining the issuance of the bonds should be reversed because the entire decision is based on the court of appeal's consideration of issues that Louisiana courts have no authority to consider because they were not raised within the constitutional peremption periods set forth in La. Const. art. 6, § 35. Lafayette's primary argument is that many of the plaintiffs' claims are perempted under La. Const. art. 6, § 35(B), which requires that challenges to bond ordinances be filed within 30 days of publication. According to Lafayette, the issues the court of appeal considered were raised for the first time, not in the plaintiff's timely-filed motion for judgment, but in the plaintiffs' supplemental memorandum filed after the expiration of the 30-day period. Both the district court and the court of appeal ruled that any issues raised for the first time in plaintiff's supplemental memorandum, and not in their timely motion for judgment, were not properly before the court because they are perempted. However, Lafayette asserts that, despite this correct ruling, the court of appeal improperly based its decision on issues raised for the first time in plaintiffs' supplemental memorandum. Alternatively, Lafayette has asserted in this court that some of the issues raised by plaintiffs are actually perempted by La. Const. art. 6, § 35(A), which requires that challenges to bond referendum elections be filed within 60 days of promulgation of the election. According to Lafayette, some of the plaintiffs' arguments attack provisions of the bond referendum itself. Those issues are perempted, Lafayette asserts, because no one filed a timely challenge to the referendum within the 60-day period, meaning that every provision of the referendum is conclusively presumed to be valid. La. Const. art. 6, § 35(A). Only one Louisiana case has addressed an issue similar to the one presented herein. In Lege v. Vermilion Parish School Board, qualified electors and taxpayers challenged the validity of a bond election by timely filing a petition via ordinaria that did not conform to the procedural requirements of La.Rev.Stat. 13:5121 et seq., relative to Suits to determine validity of government bonds. 360 So.2d 664 (La.App. 3 Cir.1978). The pertinent statutes require the timely filing of a motion for judgment, as the plaintiffs herein have done. The Lege court held that the petition via ordinaria did not state a cause of action. Id. at 667. More pertinent to the issue presented by this case, the court further found that a supplemental pleading that properly complied with the requirements for setting forth a challenge to the bond election that was filed by plaintiffs after the peremptive period did not relate back to the date of the filing of the original petition that did not state a cause of action. Id. Thus, the court dismissed the plaintiffs' challenge to the bond election in Lege. The decision in Lege is based, at least partially, on this court's statements in Andrieux v. East Baton Rogue Parish School Board, in which the court held that the constitutional time period for challenging bond elections and ordinances set forth in La. Const. art. 6, § 35, establishes a peremptive, not a prescriptive period. 254 La. 819, 227 So.2d 370 (1969). See also Denham Springs Economic Development Dist. v. All Taxpayers, Property Owners and Citizens of Denham Springs Economic Development Dist. 2005-2274, p. 20 (La.10/17/06), 945 So.2d 665, 679. In the Andrieux case, this court noted that it has strictly adhered to the view that the constitutional and statutory peremptive period operates as a complete extinguishment of the right to attack bond and tax elections. 227 So.2d at 371(emphasis added) and cases cited therein. This court has distinguished between peremptive periods and prescriptive periods as follows: Peremption differs from prescription in several respects. Although prescription prevents the enforcement of a right by legal action, it does not terminate the natural obligation; peremption, however, extinguishes or destroys the right (La. Civ.Code Art. 3458). Public policy requires that rights to which peremptive periods attach are to be extinguished after passage of a specified period. Accordingly, nothing may interfere with the running of a peremptive period. It may not be interrupted or suspended; nor is there provision for its renunciation. And exceptions such as contra non valentem are not applicable. As an inchoate right, prescription, on the other hand may be renounced, interrupted, or suspended; and contra non valentem applies an exception to the statutory prescription period where in fact and for good cause a plaintiff is unable to exercise his cause of action when it accrues. Hebert v. Doctors Memorial Hospital, 486 So.2d 717, 723 (La.1986) (emphasis added), quoted in State Bd. of Ethics v. Ourso, 02-1978, p. 4 (La.4/9/03), 842 So.2d 346, 349, and Reeder v. North, 97-0239, p. 12 (La.10/21/97), 701 So.2d 1291, 1298. On the basis of the above authorities, we find, as did the court of appeal, that the district court's decision to partially grant Lafayette's exception of peremption and motion to strike was not in error. In addition to the well-settled principles concerning peremptive periods that are quoted above, this conclusion is supported by the strict language of La. Const. art. 6, § 35, both subsections of which (A & B) specifically provide that Louisiana courts have no authority to inquire into matters related to bond referendum elections and ordinances unless a challenge is properly raised within the respective constitutional peremption periods. That provision further deprives persons in interest of any cause of action to test the regularity, formality, legality, or effectiveness of the ordinance or resolution, and provisions thereof for any cause whatever, after the passage of the time limitations. Id. Finally, La. Const. art. 6, § 35(A), provides that it shall be conclusively presumed that every legal requirement for the issuance of the bonds or other debt obligation, including all things pertaining to the election, if any, at which the bonds or other debt obligation were authorized, has been complied with. The intent of the framers of the Constitution to prohibit any challenge not raised within the constitutional time limitations is clear and unambiguous. Given the fact that this provision is clearly designed to govern the right of citizens to challenge bond elections and ordinances, we find that it is also intended to limit the rights of parties who have timely raised challenges to expand their pleadings to raise new issues after the passage of the constitutional peremptive period, even if the expansion is presented in the guise of supplemental argument. In the context of the facts of this case, this conclusion has at least two implications. First, regarding the bond referendum, because no challenge to the bond election itself was raised within the 60-day peremptive period established by La. Const. art. 6, § 35(A), all the provisions of the bond referendum, including Lafayette's right to pay the bonded indebtedness from a secondary or subordinate pledge of the revenues of the utilities system, are conclusively presumed valid and any right the plaintiffs herein may ever have had to contest the regularity, formality, or legality of the election, tax provisions, or bond authorization, for any cause whatsoever was extinguished when that 60-day period expired. See Denham Springs Economic Development Dist., 2005-2274, p. 20. Second, regarding provisions of the bond ordinance (as opposed to the bond referendum), once the 30-day period from publication of the ordinance in the local newspaper expired, no one had any cause of action to test the regularity, formality, legality, or effectiveness of the ordinance or resolution, and provisions thereof for any cause whatever, such that new challenges to the ordinance could not be raised after that period. La. Const. art. 6, § 35(B). Thus, neither this court nor the court of appeal has authority to inquire into any issue not timely raised in the plaintiffs' motion for judgment to the bond ordinance. In their motion for judgment, plaintiffs herein set forth a number of arguments that are summarized as follows: 1. The ordinance should be declared invalid because it seeks to pledge the residual revenues of Lafayette's utility system, despite the fact that those revenues are the subject of pending litigation between the plaintiffs and Lafayette. [Paragraphs 6 and 8] 2. The ordinance should be declared invalid because the pledge of the residual revenues is primary rather than secondary or subordinate since the Feasibility Study Report forecasts that the communications system will not generate sufficient revenues to meet the bond obligations until at least 2009. [Paragraph 7] 3. The ordinance should be declared invalid because it requires Lafayette to maintain and collect sufficient monies from the utilities system to pay amounts due on the communications system bonds, contrary to statements on the Lafayette Utility System website that funding for the communications system will be based on any utility rate increases. [Paragraph 8] 4. The ordinance should be declared invalid because it defines revenues of the communications system to include loans, while the bond proposition voted on by Lafayette citizens did not contemplate the use of loans to pay the bonded indebtedness. [Paragraph 9] 5. The ordinance should be declared invalid because it is in irreconcilable conflict with the bond proposition, in that the proposition refers to a pledge of revenues of the utility system, while the ordinance refers to the pledge of residual revenues. [Paragraph 10] 6. The ordinance should be declared invalid because it violates the prohibition against cross-subsidization established by the Fair Competition Act by providing for the payment of bonded indebtedness of the communications systems from the residual revenues of the utilities system. [Paragraphs 11 and 12] 7. The ordinance should be declared invalid because it violates the provision of the Fair Government Competition Act that requires the establishment and maintenance of a single enterprise fund to account for Lafayette's operation of the communications system by setting up multiple separate accounts, sub-account and funds within the accounting system of the communications system. [Paragraph 13] 8. The ordinance should be declared invalid because it illegally attempts to establish a payment-in-lieu-of tax scheme that would result in artificially inflated rates and fees charged to customers of the communications system services to generate monies for diversion to Lafayette's general fund. [Paragraph 14] On the other hand, the arguments set forth in plaintiffs' supplemental memorandum, duplicating the memorandum filed by Bellsouth in support of its motion for judgment that had no force or effect, may be summarized as follows: 1. The bond ordinance should be declared invalid because the provisions relative to the pledge of the residual revenues of the utilities system violate the Fair Competition Acts' prohibition against cross-subsidization, and actually create an assignment of the revenues, rather than a pledge, particularly because the credit event provisions create a false default. 2. The bond ordinance should be declared invalid because it improperly authorizes loans without restriction to be used for any purpose, including paying off bonded indebtedness, and without including an interest rate, as required by the Fair Competition Act. Although both of the lower courts partially granted Lafayette's exception of peremption and motion to strike the portions of the plaintiffs' supplemental memorandum that raised new issues not set forth in their original motion for judgment, neither court provided any analysis concerning which such issues were perempted. On the basis of our careful comparison of plaintiff's supplemental memorandum to their original motion for judgment, we find that, under no reasonable reading of plaintiffs' original motion for judgment, can it be considered to incorporate the first issue set forth in plaintiffs' supplemental memorandum and summarized above. Although the timely-filed motion for judgment did raise some issues relative to the pledge provisions in the ordinance, it did not raise the issue asserted in the supplemental memorandum. The only issues raised relative to the pledge of the utilities system revenues in the plaintiffs' original motion for judgment are (1) plaintiffs' claim that those revenues cannot be pledged to secure payment of the communications system bonds because these revenues are the subject of a previously-filed lawsuit, [17] and (2) plaintiffs' claim that the pledge of the revenues is primary, rather than secondary or subordinate, with the bond election only allowing a secondary or subordinate pledge of the revenues. In contrast, the gravamen of the plaintiff's argument concerning the pledge of the revenues of the utility system in their supplemental memorandum is that the provisions of Bond Ordinance No. 0-053-2006 actually create an assignment of the revenues, which, plaintiffs assert, is not a true pledge. Because none of plaintiffs' arguments in their original motion for judgment had to do with whether the bond ordinance provisions create a true pledge of the revenues of the utilities system, and because the arguments or issues to that effect contained in their supplemental memorandum were not timely raised, they are perempted. That the issue regarding pledge of revenues of the utilities system was not raised in the plaintiffs' only timely motion and was thus perempted is significant because, not only was the court of appeal decision enjoining issuance of the bonds based largely on that issue, but much of the parties' briefs and virtually all of the amici briefs presented in this court are focused on that issue. Because that issue is perempted, none of the arguments set forth in the multiple filings to this court will be further discussed herein. Regarding the second issue set forth in plaintiffs' supplemental memorandum and summarized above-i.e., whether Bond Ordinance No. 0-053-2006 allows Lafayette to use loans to pay bonded indebtedness in violation of the Fair Competition Act, we find that plaintiff's timely-filed motion for judgment did properly raise that issue and that the plaintiff's further arguments on the issue in their supplemental brief are therefore not perempted. Plaintiffs specifically alleged in Paragraph 9 of their motion for judgment that the bond ordinance improperly defines revenues of the communications system to include loans. The plaintiffs' allegations to that effect can reasonably be read to include the arguments set forth by plaintiffs' supplemental memorandum relative to the improper use of loans for payment of bonded indebtedness. Thus, plaintiffs' claim that the 2006 bond ordinance unlawfully allows Lafayette to use loan proceeds to pay bonded indebtedness is not perempted. The court of appeal rejected the claim of plaintiffs that the bond ordinance impermissibly allows the use of loans to pay bonded indebtedness. See Naquin, p. 17, 937 So.2d at 911. In fact, the court of appeal specifically found that none of the 2006 bond provisions are directed at Lafayette's being able to use loans for the purpose of paying bonded indebtedness. Id. In their opposition brief to this court, plaintiffs reassert their argument that Section 5.1 of Bond Ordinance No. 0-053 violates the Fair Competition Act because it improperly allows Lafayette to use loans without restriction, including to pay bonds. We have examined that section of the 2006 bond ordinance and find no merit in plaintiffs' arguments for three reasons. First, plaintiffs' claim that Bond Ordinance No. 0-053-2006, § 5.1, allows Lafayette to use loans without restriction has no merit. In fact, the 2006 bond ordinance specifically restricts Lafayette's right to use loans, by specifying that loans may only be used for purposes consistent with Applicable law. Second, regarding their more specific claim that the 2006 bond ordinance improperly allows Lafayette to use loans to pay bonded indebtedness, plaintiffs have not pointed to any provision of Bond Ordinance No. 0-053-2006 that allows the use of loans for that purpose. Third, plaintiffs' claim that the 2006 bond ordinance allows Lafayette to use loans to pay bonded indebtedness is intertwined with two of their other arguments, both of which we reject. Plaintiffs' allegation concerning the improper use of loans is part and parcel of their claim that the pledge provisions of the bond ordinance do not create a true pledge, and we do not address those arguments because they are perempted, since they were not included in plaintiffs' timely-filed motion for judgment. Their allegation that the 2006 bond ordinance allows Lafayette to use loans improperly is also intertwined with plaintiffs' claim that Bond Ordinance 0-053-2006 violates the Fair Competition's Act's prohibition against cross subsidization. That claim is rejected for the reasons discussed below in the section of this opinion regarding interpretation of the Fair Competition Act. Regarding plaintiffs' other claims for enjoining issuance of the bonds that were properly set forth in their original motion for judgment, none of which are perempted, the court of appeal did not address those arguments and plaintiffs have failed to pursue them here. [18] Further, to the extent that plaintiffs' opposition brief may be construed, however indirectly, to address any of those issues, we find plaintiffs' arguments unpersuasive. The only remaining issue that was both set forth in the plaintiffs' original motion for judgment and not rejected by the court of appeal is their argument in paragraphs 11 and 12 that Bond Ordinance No. 0-053-2006 violates the prohibition against cross subsidization set forth in the Fair Competition Act. The court of appeal decision enjoining the issuance of the bonds authorized by Bond Ordinance No. 0-053-2006 was based, at least in part, on its acceptance of the plaintiffs' argument on this issue, to which we now turn. We begin our discussion by outlining the pertinent statutory provisions of the Fair Competition Act and by addressing the proper interpretation to be given those provisions.