Court Opinion

ID: 6325215
Source: CourtListenerOpinion
Date Created: 2022-03-21 18:00:23.146103+00
Date Added: 2024-06-11T09:19:45.469901
License: Public Domain

Case: 21-30335    Document: 00516246287         Page: 1     Date Filed: 03/21/2022

           United States Court of Appeals
                for the Fifth Circuit
                                                                     United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                      March 21, 2022
                                 No. 21-30335                          Lyle W. Cayce
                                                                            Clerk

   Ariyan, Incorporated, doing business as Discount Corner; M.
   Langenstein & Sons, Incorporated; Prytania Liquor
   Store, Incorporated; West Prytania, Incorporated, doing
   business as Prytania Mail Service/Barbara West; British
   Antiques, L.L.C., Bennet Powell; Arlen Brunson;
   Kristina Dupre; Brett Dupre; Gail Marie Hatcher;
   Betty Price; Et Al.,

                                                          Plaintiffs—Appellants,

                                     versus

   Sewerage & Water Board of New Orleans; Ghassan
   Korban, In his Capacity as Executive Director of Sewerage & Water
   Board of New Orleans,

                                                      Defendants—Appellees.

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana
                           USDC No. 2:21-CV-534

   Before Barksdale, Stewart, and Dennis, Circuit Judges.
   James L. Dennis, Circuit Judge:
         Plaintiffs who succeed in winning a money judgment against a state
   governmental entity in state court in Louisiana often find themselves in a
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                                     No. 21-30335

   frustrating situation. Though they have obtained a favorable judgment, they
   lack the means to enforce it. The Louisiana Constitution bars the seizure of
   public funds or property to satisfy a judgment against the state or its political
   subdivisions. La. Const. art. XII, § 10(c). Instead, the Legislature or the
   political subdivision must make a specific appropriation in order to satisfy the
   judgment. Id.; La. R.S. 13:5109. And since Louisiana courts lack the power to
   force another branch of government to make an appropriation, the prevailing
   plaintiff has no judicial mechanism to compel the defendant to pay. See
   Newman Marchive P’ship, Inc. v. City of Shreveport, 979 So. 2d 1262, 1265 (La.
   2008). The “plaintiff who succeeds in an action against a governmental unit
   thus becomes a supplicant,” relying on the grace of the government to
   appropriate funds to satisfy her judgment. David W. Robertson, Tort Liability
   of Governmental Units in Louisiana, 64 Tul. L. Rev. 857, 881 (1990).
          Finding themselves in this position, the Plaintiffs in this case, like
   others before them, have turned to the federal courts to force payment on
   their state court judgment. They claim that the Defendants’ failure to timely
   satisfy a state court judgment violates the Takings Clause of the Fifth
   Amendment. The district court granted the Defendants’ motion to dismiss,
   applying long-standing precedent that there is no property right to timely
   payment on a judgment.
          We agree and AFFIRM.
                                          I.
          In 2013, the United States Army Corps of Engineers and the Sewerage
   and Water Board of New Orleans (the “SWB”) began construction on a
   massive flood control project across Uptown New Orleans as part of the
   Southeast Louisiana Urban Flood Control Program (“SELA”). The Uptown
   phase involved the construction of underground box culverts that run the
   length of several major thoroughfares. Plaintiffs are seventy landowners,

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   including both businesses and private homeowners, who suffered property
   damage and economic loss as the result of SELA construction. The Plaintiffs
   filed suit in state court and obtained final judgments against the SWB for a
   combined $10.5 million. Some of these judgments became final in early 2018
   and 2019, others as recently as fall 2020.
          As of January 2021, though, the Plaintiffs had not received any
   payment from the SWB. So, in March 2021 they filed a § 1983 suit in district
   court under the theory that the SWB’s failure to comply with the state court
   judgments “creates a secondary Constitutional violation of Plaintiffs’ Fifth
   Amendment rights,” more specifically a violation of their due process rights
   and their rights to just compensation for a taking. As relief, the Plaintiffs
   requested a writ of execution seizing the SWB’s property in order to satisfy
   the judgments. Separately, the Plaintiffs’ complaint sought a declaration that
   the SWB is contractually obligated to seek reimbursement from the Army
   Corps for the judgments via a procedure the two entities agreed to, called the
   “Damages SOP.”
          The SWB filed a motion to dismiss under Rule 12(b)(6) and the
   district court granted it. The court sympathized with the Plaintiffs’
   frustrations, but noted that there were “centuries of precedent” establishing
   that a state’s failure to timely pay a state court judgment did not violate any
   federal constitutional right. With no underlying constitutional right at issue,
   Plaintiffs’ § 1983 claim was “legally baseless.” The district court also
   declined to exercise jurisdiction over Plaintiffs’ request for declaratory relief
   as a standalone claim, citing the “particularly local nature of this dispute.”
   Finally, the court denied Plaintiffs’ generic request to amend their complaint
   should a failure to state a claim be found, holding that any amendment would
   be futile. Plaintiffs appealed.

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                                         II.
          We review dismissal of a case under Rule 12(b)(6) de novo, accepting
   all well-pleaded facts as true and viewing those facts in the light most
   favorable to the plaintiff. Allen v. Walmart Stores, L.L.C., 907 F.3d 170, 177
   (5th Cir. 2018). “In the context of a 12(b)(6) motion in a section 1983 suit,
   the focus should be whether the complaint properly sets forth a claim of a
   deprivation of rights, privileges, or immunities secured by the Constitution
   or laws of the United States caused by persons acting under color of state law.
   If there is no deprivation of any protected right the claim is properly
   dismissed.” S. Christian Leadership Conf. v. Supreme Ct. of State of La., 252
   F.3d 781, 786 (5th Cir. 2001) (internal citation omitted).
          Ordinarily a district court’s denial of a motion to amend a complaint
   is reviewed for abuse of discretion. Stripling v. Jordan Prod. Co., LLC, 234
   F.3d 863, 872 (5th Cir. 2000). However, when denial is based on the futility
   of amendment, we “apply the same standard of legal sufficiency as applies
   under Rule 12(b)(6).” Id. at 873 (citation omitted). If the complaint, as
   amended, would be subject to dismissal, then amendment is futile and the
   district court was within its discretion to deny leave to amend. Id.
                                         III.
                                         A.
          The Plaintiffs’ claim is fairly discrete. They “do not seek to re-litigate
   the legal or factual issues or compensation awards decided in the state
   courts.” Rather, their case “concerns an independent Takings Clause
   violation—the failure to timely pay just compensation once the
   compensation was determined and awarded.” This nonpayment is,

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   according to the Plaintiffs, a “second taking,” and the only one at issue in
   their case. 1
           More than a century ago, the Supreme Court decided the case of a pair
   of litigants in a similar situation as the Plaintiffs here. In Folsom v. City of New
   Orleans, 109 U.S. 285 (1883), two relators had obtained state court judgments
   against the City of New Orleans for property damage caused by riots in 1873.
   In 1879, a new state constitution limited the taxes New Orleans could levy to
   just enough to cover the City’s budget. Id. at 287. The effect was that the
   relators were prevented from collecting on their judgments. Id. The relators
   argued that this state constitutional change deprived them of property
   without due process of law in violation of the Fourteenth Amendment. Id.
   The Supreme Court rejected the argument, agreeing that the judgments were
   property, but holding that “the relators cannot be said to be deprived of them
   so long as they continue an existing liability against the city.” Id. at 289. In
   dissent, Justice Harlan wrote that an unenforceable judgment is no judgment
   at all. “Since the value of the judgment, as property, depends necessarily
   upon the remedies given for its enforcement, the withdrawal of all remedies
   for its enforcement, and compelling the owner to rely exclusively upon the
   generosity of the judgment debtor, is, I submit, to deprive the owner of his
   property.” Id. at 295.
           The Folsom majority’s notion of a judgment as an “existing liability,”
   conceptually distinct from its recovery, has only been reinforced in the
   intervening years. In Minton v. St. Bernard Parish School Board, this Court,

           1
             In their complaint, Plaintiffs asserted a separate due process violation “because
   Defendants have treated them differently than non-litigants merely because Plaintiffs have
   exercised their constitutional right to file suit.” Plaintiffs did not argue this claim in their
   briefs before the district court or in their briefs before this Court. It is therefore deemed
   abandoned. Yohey v. Collins, 985 F.2d 222, 224 (5th Cir. 1993).

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   citing Folsom, reiterated that “the property right created by a judgment
   against a government entity is not a right to payment at a particular time but
   merely the recognition of a continuing debt of that government entity.” 803
   F.2d 129, 132 (5th Cir. 1986). Based on that principle, we held that the
   government defendant’s “failure to appropriate funds to pay the debt to the
   Mintons does not constitute a taking in violation of the due process clause.”
   Id.
          Again, in Freeman Decorating Company v. Encuentro Las Americas
   Trade Corporation, our Court held that there was no Takings Clause violation
   where the City of New Orleans failed to make timely payment on a state court
   judgment because there had been no taking of any property. “[T]he only
   property right [the plaintiff] has is the recognition of City’s [sic] continuing
   debt.” 352 F. App’x 921, 924 (5th Cir. 2009); see also Guilbeau v. Par. of St.
   Landry, 341 F. App’x 974 (5th Cir. 2009); cf. Evans v. City of Chicago, 689
   F.2d 1286, 1297 n.13 (7th Cir. 1982) (distinguishing Folsom because Illinois
   Constitution created property right to immediate payment on a judgment).
   In short, “[a] party cannot be said to be deprived of his property in a
   judgment because at the time he is unable to collect it.” Folsom, 109 U.S. at
   289. Thus, Plaintiffs’ claim that their property has been taken by the SWB’s
   failure to timely pay must fail under Folsom.
          The Plaintiffs try to get around this precedent in two ways. First, they
   argue that Folsom and its progeny are distinguishable because the underlying
   judgments in those cases sounded in state tort and contract law, while the
   Plaintiffs’ judgments are based on violations of a federal constitutional right.
   But Plaintiffs’ underlying state court cases were not based on any asserted
   federal right. As the SWB pointed out in briefing, and as the record shows,
   Plaintiffs’ state court judgments were for violations of Louisiana law, not for
   violations of the Fifth Amendment Takings Clause as the Plaintiffs have
   asserted to this Court. But even if the underlying judgments were based on

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   violations of federal rights, we are not sure why that distinction would make
   a difference. After all, under Plaintiffs’ theory, the SWB’s failure to pay the
   judgments constitutes an “independent” or “second” Fifth Amendment
   taking of their property, namely the purported property right to be paid
   timely on a judgment. But since Folsom said there is no property right to
   timely payment on a judgment, there must be something special about a
   judgment based on federal constitutional rights that confers this additional
   property interest for the Plaintiffs’ argument to succeed. Plaintiffs do not
   explain why the legal right underlying a judgment would create this additional
   property right for some judgments and not others, and it remains unclear to
   us. It seems that a judgment compensating someone for a breach of contract
   should confer no less a property interest than a judgment compensating
   someone for the police’s excessive force.
          Vogt v. Board of Commissioners of Orleans Levee District, 294 F.3d 684
   (5th Cir. 2002), and Lafaye v. City of New Orleans, No. 2:20-CV-41, 2021 WL
   886118 (E.D. La. Mar. 9, 2021), also do not aid the Plaintiffs in escaping
   Folsom’s holding. In Vogt, the Court stated in dicta that the governmental
   defendant’s refusal to satisfy a judgment could constitute a taking. 294 F.3d
   at 697. But the judgment in that case was, in part, a declaratory judgment by
   the state courts that mineral royalties in the government defendant’s possession
   were the property of the plaintiff. Id. at 688. The government’s refusal to
   “pay over the retained royalties constitutes a taking because the
   governmental entity is withholding private property from its owners.” Id. at
   697. This situation, where the judgment debtor is in possession of property
   determined to belong to the creditor, is different from a judgment wherein
   the debtor owes compensation to the creditor. Lafaye turns on the exact same
   distinction. As the district court wrote in that case, “[b]oth Vogt and this case
   involve the government’s refusal to return private property to its rightful
   owner.” Lafaye, 2021 WL 886118, at *9. Plaintiffs’ judgments here are for

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   compensation and damages, not for the return of private property that “the
   government has forcibly appropriated . . . without a claim of right.” Vogt, 294
   F.3d at 697.
          Plaintiffs’ second argument is that two Supreme Court cases—
   Williamson County Regional Planning Commission v. Hamilton Bank of Johnson
   City, 473 U.S. 172 (1985) and Knick v. Township of Scott, Pennsylvania, 139 S.
   Ct. 2162 (2019)—provide a federal forum for their claim. Plaintiffs
   misunderstand those cases. They are right that Knick and Williamson County
   discuss when a plaintiff may file a Takings Clause claim in federal court, but
   the cases say nothing about whether failure to timely pay a state court
   judgment constitutes a taking or any other deprivation of a federal right
   actionable under § 1983. Whether a claim is ripe for federal adjudication, as
   Williamson County and Knick decided, is very different from whether certain
   facts state a claim at all. Amici’s citations to Supreme Court dicta that the
   Fifth Amendment is “self-executing” and that a property owner “acquires a
   right to compensation immediately upon an uncompensated taking” also fail
   to address the actual issue presented by Plaintiffs’ appeal, namely whether a
   government’s failure to timely pay a court judgment constitutes a taking in
   the first place. Neither Williamson County nor Knick speak to that question.
   Plaintiffs’ § 1983 claim remains foreclosed by Folsom.
                                         B.
          Plaintiffs invoked federal question jurisdiction, relying on their Fifth
   Amendment claim, to bring this suit. With that claim dismissed, the district
   court declined to exercise jurisdiction over Plaintiffs’ separate claim for a
   declaration of the parties’ rights and duties under the Damages SOP. The
   Declaratory Judgment Act “does not of itself confer jurisdiction on the
   federal courts.” Jolly v. United States, 488 F.2d 35, 36 (5th Cir. 1974).
   Without an underlying federal claim, or any other basis for jurisdiction

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   asserted by the Plaintiffs, the district court properly declined to hear
   Plaintiffs’ standalone claim to declaratory relief.
          As a final matter, the district court also properly declined to grant
   leave to Plaintiffs to amend their complaint. Though Rule 15(a)’s mandate
   that leave to amend must be “freely give[n] . . . when justice so requires”
   significantly limits a district court’s discretion, a district court still acts within
   its bounds when it denies leave because amendment would be futile. Fed.
   R. Civ. P. 15(a)(2). Futility here means “that the amended complaint
   would fail to state a claim upon which relief could be granted.” Stripling, 234
   F.3d at 873. The Plaintiffs did not specify what amendments they wished to
   make, or attach an amended pleading. Rather they simply asked for leave to
   amend “if their pleadings are found to be deficient in any manner.” This
   failure to specify how amendment would cure the fundamental deficiencies
   in their pleading, especially when the core of Plaintiffs’ claims is so clearly
   foreclosed by settled law, supports the district court’s determination that
   amendment would be futile. See Legate v. Livingston, 822 F.3d 207, 212 (5th
   Cir. 2016). We cannot say the court abused its discretion.
                                           IV.
          Like the district court, we understand the Plaintiffs’ frustration. They
   have succeeded in winning a money judgment. Without any judicial means to
   recover, they are compelled “to rely exclusively upon the generosity of the
   judgment debtor.” Folsom, 109 U.S. at 295 (Harlan, J., dissenting). But the
   Plaintiffs’ case before the district court turned entirely on a purported
   property interest not recognized in Fifth Amendment jurisprudence. They
   therefore failed to state a claim for relief, and the district court properly
   dismissed their case.
          We AFFIRM the district court’s judgment.

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