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Date: 04-26-2020
Case Style:
Larkin Development North, L.L.C. v. City of Shreveport consolidated with Larkin Development at Railsback, L.L.C. v. City of Shreveport
Case Number: No. 53,374-CA
No. 53,375-CA
(Consolidated Cases)
Judge:
Court: COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA
Plaintiff's Attorney:
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Since the trial court granted the exceptions at issue, it did not consider
the merits of the case. Therefore, we will note the factual highlights of this
case and review its procedural background.
Between July, 2006 and April, 2007, LDRailsback and LDNorth
purchased adjacent property totaling 137 acres of land. In 2016, they filed
applications for approval of plat designations with the Shreveport-Caddo
Metropolitan Planning Commission (“MPC”). In February of 2017, MPC
denied the applications. Upon subsequent review, the Shreveport City
Council affirmed the MPC’s denial of the plat applications.
LDRailsback and LDNorth then filed their inverse condemnation
actions under Louisiana law against Shreveport. They alleged that by
denying their plat applications Shreveport prevented their ability to develop
the property into profitable residential lots. They sought just compensation
for their losses caused by Shreveport’s denial of the applications.
Thereafter, LDRailsback applied for additional plats with MPC. MPC
denied the new applications and the Shreveport City Council affirmed the
decision. LDRailsback then amended its petition to include that most recent
plat application denial.
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MPC’s reason for denying the plat applications was that the land in
question was in the pathway of the possible future extension of LA 3132.
No party disputes that LDRailsback and LDNorth did not seek judicial
review of the plat application denials. Alleging that Shreveport’s denials
prevented them from developing the property to its full extent, LDNorth and
LDrailsback filed their inverse condemnation actions, seeking compensation
under Louisiana law.
In response, Shreveport filed peremptory exceptions of no cause of
action, and alternatively, declinatory exceptions of lack of subject matter
jurisdiction and dilatory exceptions of prematurity. Shreveport argued that
LDNorth and LDRailsback must first exhaust all administrative and judicial
review options prior to bringing any actions for inverse condemnation. With
the petitioners failing to exhaust such remedies, Shreveport alleged that they
had no cause of action, that the trial court lacked subject matter jurisdiction,
and that the actions were premature. LDNorth and LDRailsback countered
that their damages and inverse condemnation actions arose at the time that
MPC and Shreveport denied the plat applications.
The trial court granted the exceptions. Citing Louisiana Court of
Appeal, First Circuit, jurisprudence, it ruled that LDNorth and LDRailsback
must first exhaust their rights to direct appeal of the MPC and city council
decisions. Essentially, before proceeding with their actions for inverse
condemnation, the petitioners must first exhaust all administrative remedies.
Without such remedies sought, the trial court found that the petitioners failed
to show a cause of action and thus failed to show that the district court had
subject matter jurisdiction over the matter. Furthermore, it found that that
the issue of compensation was not ripe for judicial consideration.
3
STANDARD OF REVIEW
Whether a district court has subject matter jurisdiction over a case is
subject to de novo review. Beasley v. Nezi, LLC, 2016-1080 (La. App. 1 Cir.
9/8/17), 227 So. 3d 308. The standard of review for an appeal of a no cause
of action ruling is de novo. Acurio v. Cage, 52,309 (La. App. 2 Cir.
9/26/18), 257 So. 3d 824, writ denied, 2018-1762 (La. 1/8/19), 260 So. 3d
581. Appellate review of a prematurity exception ruling is typically
manifest error; however, when the ruling involves a question of law, it is
reviewed de novo. Bayou Orthotic & Prosthetics Ctr., L.L.C. v. Morris
Bart, L.L.C., 2017-557 (La. App. 5 Cir. 3/28/18), 243 So. 3d 1276.
Therefore, our review standard for all matters regarding this case is de novo.
DISCUSSION
JURISPRUDENTIAL CONFLICT
LDNorth and LDRailsback argue that the trial court erred in requiring
that they first exhaust all administrative remedies. Shreveport counters that
Louisiana law requires that LDNorth and LDRailsback first seek all
administrative remedies before filing for compensation. In essence, one
party argues that the right to compensation arose immediately upon the
alleged taking. The other party argues that the exhaustion doctrine prevents
claims for compensation from arising until all administrative remedies are
pursued. Thus, no cause of action exists until all measures to prevent the
damages from arising are exhausted. The trial court agreed with the latter.
In its decision, the trial court cited two cases for support of its
judgment: Mercan, Inc. v. City of Baton Rouge, 2000-0660 (La. App. 1 Cir.
5/11/2001), 797 So. 2d 722, writ denied, 2001-1685 (La. 9/21/01), 797 So.
2d 676; and Liberty Mutual Ins. Co. v. Louisiana Ins. Rating Comm’n, 1997-
4
1043 (La. App. 1 Cir. 6/29/98), 713 So. 2d 1250, writ denied, 1998-2072
(La. 11/6/98), 728 So. 2d 396. Citing the above cases, the trial court ruled
that because LDNorth and LDRailsback failed to directly appeal the plat
application denials, they then had no causes of action for inverse
condemnation. The trial court further found that it lacked subject matter
jurisdiction and that any action for compensation was premature.
In Mercan, the Louisiana Court of Appeal, First Circuit, considered
whether a party had a cause of action for damages. The City of Baton
Rouge, through its Subdivision Review Committee, denied a subdivision
application to Mercan, Inc. Mercan, Inc. v. City of Baton Rouge, supra.
Although it alleged that the denial was arbitrary and capricious, Mercan did
not appeal the city’s decision to the district court. Id. Instead, Mercan sold
the property at issue to the Baton Rouge Recreation and Parks Commission.
Id. Mercan then filed an inverse condemnation action against Baton Rouge,
seeking compensation for the difference between the value of the
subdivision and the amount that Mercan received selling the property. Id.
Citing Liberty Mutual as authority, the court found that Mercan’s
failure to seek judicial review of the subdivision application denial
prevented the courts an opportunity to rectify the alleged arbitrary and
capricious or abusive conduct. Id. Therefore, because Mercan failed to seek
judicial review to rectify the alleged injustice, and prevent damages, it no
longer had a cause of action. Id.
In Liberty Mutual, the First Circuit considered the then novel issue of
a taking and the exhaustion doctrine. Liberty Mutual sued the State of
Louisiana through the Louisiana Department of Insurance, alleging that the
State caused it injury by setting unreasonably low, mandatory insurance
5
rates. Liberty Mutual Ins. Co. v. Louisiana Ins. Rating Comm’n, supra.
Alleging a taking had occurred, Liberty Mutual filed an inverse
condemnation action and sought compensation. Id.
The court reviewed the exhaustion doctrine with regard to
administrative review and remedies. It further focused on the statutory
scheme that gives express recourse with respect to insurance rate changes. It
took note that Liberty Mutual had failed to seek any review of the rate
changes and decided the following:
Applying these principles to our consideration of the allegations
of the petition before us, we conclude that because Liberty
Mutual failed to seek administrative and/or judicial review of
the LIRC’s denial of its rate requests, except with regard to the
1989 request, it cannot now assert a cause of action against
LIRC for monetary damages for inverse condemnation based
on those rulings.
Id. at 1254.
We note that the above cases are decisions of the Louisiana Court of
Appeal, First Circuit. In this circuit, we have case law seemingly in conflict
with those opinions, particularly Anderson v. Bossier Parish Police Jury,
45,639 (La. App. 2 Cir. 12/15/10), 56 So. 3d 275.
Anderson involves a Bossier Parish proposed and subsequently
enacted ordinance that changed the elevation of a base flood plain zone. The
petitioners alleged that the ordinance’s enactment caused damage to their
property value when their property was rezoned into the flood plain. Id.
Noting that the injury to petitioners occurred at the time that the ordinance
went into effect, this Court stated, “This event changed the status of the
plaintiff’s land and made its development more burdensome, if not
impossible.” Id. Thus, applying La. R.S. 13:15111, this Court held that
prescription began to run from the date of discovery of the taking. Id. The
6
date of taking was held to be the date when the Police Jury passed the
ordinance and it became effective. Id.
At issue in the Anderson case was whether the inverse condemnation
cause of action had prescribed. This Court found that both the cause of
action to challenge the ordinance and compensation action had not yet
prescribed. Id. We take particular note that prescription for both actions
began to run at the same time, that time being the date of the passage and
enactment of the ordinance. Id. Thus, the delay for filing suit began to run
on the compensation action at the same time as the action to challenge the
enactment of the ordinance. Id. Aphoristically speaking, this Court decided
that a cause for compensation existed despite the lack of exhaustion of the
administrative remedy to challenge the ordinance. Furthermore, with regard
to the inverse condemnation action, it is axiomatic that a cause of action
cannot begin to prescribe before it comes into existence. Therefore,
Anderson would seem to imply that the trial court, in the case before us,
erred in granting the exception of no cause of action.
Furthermore, a recent Louisiana Supreme Court case, Crooks v.
Department of Natural Res., 2019-0160 (La. 1/29/20), 2020 WL 499233,
supports the finding that an action for inverse condemnation arises upon
injury. The Crooks Court considered an action for compensation for alleged
damages caused by federal and state construction projects. At issue was a
project that ultimately caused the flooding and loss of certain properties in
and around the Catahoula Basin. The Court determined that a taking had
occurred and that the three-year prescriptive period found in La. R.S. 13:511
applied. Id. The Court further explained, “Prescription begins to run when
7
the claimant is aware of those facts which give rise to a cause of action.” Id.
at 15.
LDNorth and LDRailsback assert that the damage caused by
Shreveport’s inverse condemnation occurred when the plat applications were
denied, before any direct appeal option came into existence. They argue that
Shreveport’s decision to deny their plat application, not the exhaustion of the
administrative direct appeal, gave rise to their action for compensation.
Therefore, they assert that the trial court erred in granting the exceptions.
The statute that provides the prescription delay for compensation
actions further indicates that the action arises at the time of injury. The last
sentence of La. R.S. 13:511(A) states, “Actions for compensation for
property taken by the state, a parish, municipality, or other political
subdivision or any one of their respective agencies shall prescribe three
years from the date of the taking.” (emphasis added). Therefore, both the
statutory framework and the jurisprudence of this Court appear to support
the argument by LDNorth and LDRailsback.
EXHAUSTION DOCTRINE
Shreveport has built its arguments upon an exhaustion doctrine
foundation. Since the trial court cited case law that invoked the doctrine in
order to deny compensation actions, we will review the doctrine and
consider its effects on the case before us.
Article 1, Section 22 of the Louisiana Constitution guarantees the
people of Louisiana access to the courts. Article 5, Section 16(A) grants
original jurisdiction of civil and criminal matters to the district courts of this
state. Exceptions do exist where a constitutional mandate or the legislature
may delegate limited, narrowly construed, judicial authority to
8
administrative agencies. For example, and pertinent to the case before us,
La. R.S. 33:101.1 et seq. provides for the administrative authority and
procedure of handling subdivision grants and plat applications. However,
“[a]n administrative agency has only the power and authority expressly
granted by the constitution or statutes.” Haygood v. Dies, 47,765 (La. App.
2 Cir. 5/15/13), 114 So. 3d 1206, 1214; Louisiana Horsemen’s Benev. &
Protective Ass’n 1993 Inc. v. Fair Grounds Corp., 1995-1702 (La. App. 1
Cir. 4/4/96), 672 So. 2d 340, writs denied, 1996-1163, 1996-1125 (La.
6/7/96), 674 So. 2d 968, 969.
“The function of the exhaustion doctrine is to give the body whose
decision is under attack an opportunity to review, supplement, and, if
necessary, correct its decision.” Haygood v. Dies, supra; Jones v. Crow, 633
So. 2d 247 (La. App. 1 Cir. 1993). However, “[i]n order to require a
petitioner to first exhaust his administrative remedies, the remedies must be
adequate.” Haygood v. Dies, supra. Thus, we must determine if the
agencies, the MPC and Shreveport City Council, can provide the adequate
remedies pursued in the inverse condemnation petitions filed by LDNorth
and LDRailsback.
The lack of direct appeal of the plat decisions to the district court
forms the crux of the exhaustion doctrine argument propounded by
Shreveport. However, we note that only the same, narrow remedies
authorized to the agencies, would be available on direct appellate review of
those decisions. In other words, if the agencies lack authority to provide a
remedy of compensation, then on direct appeal of their decision to deny the
plat applications, the district court would also be precluded from awarding
compensation.
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“The exhaustion doctrine applies only when exclusive jurisdiction
exists in an administrative agency and the courts have only appellate
jurisdiction as opposed to original jurisdiction to review the agency
determination.” Haygood v. Dies, supra; Capital House Preservation Co.,
L.L.C. v. Perryman Consultants, Inc., 2001-2524 (La. App. 1 Cir. 12/31/02),
836 So. 2d 680, writs denied, 2003-0323, 2003-0324 (La. 4/21/03), 841 So.
2d 794, 795. However, “[a]ctions for money damages are within the original
exclusive jurisdiction of Louisiana’s district courts.” Haygood v. Dies,
supra, Louisiana Horsemen’s Benev. & Protective Ass’n 1993 Inc. v. Fair
Grounds Corp., supra; Capital House Preservation Co., L.L.C. v. Perryman
Consultants, Inc., supra.
La. R.S. 33:101.1 et seq. do not provide authority or jurisdiction for
the administrative agencies to determine and award compensation for
damages due to inverse condemnation. Furthermore, the exhaustion doctrine
cannot apply to the case at hand because LDNorth and LDRailsback seek
only damages and compensation for the inverse condemnation of their
property. They do not seek any relief from or ask that the district court
overturn the denials of their plat applications. Therefore, it would seem that
the exclusive jurisdiction of the inverse condemnation actions in this case lie
with the district court.
SUBJECT MATTER JURISDICTION
“Subject matter jurisdiction is the legal power and authority of a
tribunal to adjudicate a particular matter involving the legal relations of the
parties and to grant the relief to which the parties are entitled.” See La. C.
C. P. arts. 1 and 2; Capital House Preservation Co., L.L.C. v. Perryman
Consultants, Inc., supra. As cited above, the Louisiana Constitution vests
10
district courts with original jurisdiction over civil and criminal matters,
unless other jurisdictional authorization can be found through constitutional
or legislative mandate. Furthermore, as stated above, money damages and
inverse condemnation actions are within the original, exclusive jurisdiction
of the district courts of the state.
LDNorth and LDRailsback have filed actions for inverse
condemnation, seeking only compensation for damages to their property
caused by MPC’s and the Shreveport City Council’s denials of their plat
applications. They do not challenge the denials of their plat applications as
such. Therefore, their actions are ones that are within the judicative
authority of the district courts. Since the district court does have subject
matter jurisdiction of the inverse condemnation actions, it erred in granting
the exception of subject matter jurisdiction.
NO CAUSE OF ACTION
“A peremptory exception of no cause of action questions whether the
law extends a remedy to anyone under the factual allegations of the
petition.” Villareal v. 6494 Homes, L.L.C., 48,302 (La. App. 2 Cir. 8/7/13),
121 So. 3d 1246; Rangel v. Denny, 47,381 (La. App. 2 Cir. 8/8/12), 104 So.
3d 68. “The purpose of the peremptory exception of no cause of action is to
determine the sufficiency in law of the petition. The burden of showing that
the plaintiff has stated no cause of action is upon the exceptor. The public
policy behind the burden is to afford the party his day in court to present his
evidence.” Villareal v. 6494 Homes, L.L.C, supra; City of New Orleans v.
Board of Dir. of La. State Museum, 1998-1170 (La. 3/2/99), 739 So. 2d 748.
The exception is triable on the face of the petition; the well-pleaded facts in
the petition and any annexed documents must be accepted as true; and all
11
reasonable inferences are made in favor of the nonmoving party. Villareal v.
6494 Homes, L.L.C., supra.
In their petition, LDNorth and LDRailsback allege that damages
began to accrue when MPC and the Shreveport City Council denied the plat
applications. We have already found that at the time that the city denied the
applications, the taking occurred. Furthermore, we have already discussed
that at the time the taking occurred, prescription began to run on the actions
for compensation. Again, it is axiomatic that a cause of action cannot begin
to prescribe before it comes into existence. Therefore, under the facts as
pleaded, we find that a cause of action does exist. Thus, the trial court erred
in granting the exception of no cause of action.
PREMATURITY
La. C.C.P. art. 926 provides the dilatory exception of prematurity.
“The exception of prematurity questions whether the cause of action has
matured to the point where it is ripe for judicial determination.” Haygood v.
Dies, supra; Williamson v. Hospital Service Dist. No. 1 of Jefferson, 2004-
0451 (La. 12/1/04), 888 So. 2d 782; Mineo v. Underwriters at Lloyds,
London, 2007-0514 (La. App. 4 Cir. 10/22/08), 997 So. 2d 187. “An action
will be deemed premature when it is brought before the right to enforce it
has accrued.” Haygood v. Dies, supra; LaCoste v. Pendleton Methodist
Hosp., L.L.C., 2007-0008, 2007-0016 (La. 9/5/07), 966 So. 2d 519.
“The exception of prematurity may be utilized in cases where the
applicable law has provided a procedure for a claimant to seek
administrative relief before resorting to judicial action.” Haygood v. Dies,
supra. “However, the pendency of a proceeding before an administrative
agency is not determinative of whether an action filed in court is premature.”
12
Id.; ANR Pipeline Co. v. Louisiana Tax Comm’n, 2002-1479 (La. 7/2/03),
851 So. 2d 1145. The excepting party bears the burden of proving
prematurity and, as discussed above, in order to require a petitioner to
exhaust administrative remedies, the remedies must be adequate. Haygood
v. Dies, supra.
No adequate remedies lie within the authority of Shreveport.
LDNorth and LDRailsback seek compensation for damages caused by the
city’s inverse condemnation of their property. They do not seek a review of
the denial of the plat applications. As discussed above, the statutes that give
authority to Shreveport to grant or deny plat applications, do not grant
Shreveport jurisdiction to decide and award the compensation for a taking.
Thus, judicial review of MPC’s and the Shreveport City Council’s decisions,
alleged as a requirement by Shreveport, would be narrowly restrained to a
review of the plat denials.
Furthermore, the damages alleged by LDNorth and LDRailsback
began to accrue at the time of the plat denials. We have already determined
that the taking occurred at the time that the city denied the applications.
Furthermore, we have already found that prescription began to run on the
actions for compensation at that time as well. Therefore, the actions are
ripe. The trial court erred in granting the exception of prematurity.
THE LOUISIANA CONSTITUTION AND TAKINGS
Our state constitution requires that the state pay just compensation, to
the full extent of the loss, when it takes property. As discussed below, this
mandate is required both when the state takes land through court
proceedings (expropriation) or damages land (inverse condemnation).
13
“In its most basic aspect, eminent domain is the power of a
government to compel its subjects to give up property interests in land or
things.” State Through Dept. of Transp. & Dev. v. Chambers Inv. Co., Inc.,
595 So. 2d 598, 601 (La. 3/2/92) (citing W. Stoebuck, Nontrespassory
Takings in Eminent Domain 4 (1977)).
There can be little doubt that one aim of Article I, § 4, of our
state constitution in requiring that the owner shall be
compensated for property “taken or damaged … to the full
extent of his loss” was to assure that the State and its
subdivisions compensate owners for any taking or damaging of
their rights with respect to things as well as for any taking or
damaging of the objects of those rights.
State Through Dept. of Transp. & Dev. v. Chambers Inv. Co., Inc., supra at
602.
Many differences exist between an expropriation proceeding and an
inverse condemnation proceeding. One stark difference is that the
legislature has expressly created and enacted statutes settling multiple issues
involved with a government entity’s ability to expropriate land. In contrast,
a long jurisprudential record has defined and resolved many issues with
regard to an inverse condemnation action. One thing that both actions do
have in common, however, is our state constitution. As noted above, both
actions derive their existence from Article I, Section 4 as follows:
(A) Every person has the right to acquire, own, control, use,
enjoy, protect, and dispose of private property. This right is
subject to reasonable statutory restrictions and the reasonable
exercise of the police power.
(B)(1) Property shall not be taken or damaged by the state or its
political subdivisions except for public purposes and with just
compensation paid to the owner or into court for his benefit.
In expropriation proceedings, the government entity wishing to take
land can look to specific statuary framework for authority and procedure.
14
For example, La. R.S. 48:441 gives the Department of Transportation and
Development authority to acquire land by expropriation. That statute falls
within Title 48, Chapter 1, Part XVIII, under the unambiguous heading of
“Expropriation by a Declaration of Taking.” From the statutory framework
of this Chapter alone, one can glean the reasons as to why expropriation
proceedings are required prior to a government taking. The legislature and
the people, through their state Constitution, wish to protect the fundamental
right of citizens to own and exploit property. It is clear then that before a
government entity can take land from a citizen, we, as a state, mandate a
judicial review of the matter. If a court confirms the expropriation, our state
constitution then mandates that just compensation be paid to the landowner.
Many benefits are derived from the judicial review of such actions.
First, the landowner is assured a due process right to have judicial review
prior to losing property to the state. Second, if the land is taken, it ensures
that a judicial hand fairly considers and justly compensates the landowner.
Third, in the event that a court denies the expropriation, it hopefully prevents
damage or injury to the landowner.
In contrast, an inverse condemnation action is a judicial creation that
ensures citizens have an action for compensation when the state damages
their property prior to or without a pending expropriation proceeding.
[O]ur constitution requires compensation even though the State
has not initiated expropriation proceedings in accordance with
the statutory scheme set up for that purpose. If there has been
any taking or damaging, the expropriating entity is bound to
make reparations according to Article I, § 4. Although the
legislature has not provided a procedure whereby an owner can
seek damages for an uncompensated taking or damaging, this
court has recognized the action for inverse condemnation arises
out of the self-executing nature of the constitutional command
to pay just compensation.
15
State Through Dept. of Transp. & Dev. v. Chambers Inv. Co., Inc., supra at
602.
Aside from the clear mandate by our state constitution that citizens be
compensated for takings, the legislature of this state, in at least some cases,
has clearly provided that compensation not be thwarted by a requirement to
exhaust all administrative remedies. For example, just as the legislature
authorizes the Department of Transportation and Development to
expropriate property, the same statutory framework further mandates that
compensation is not waived by a lack of administrative remedy. La. R.S.
48:447 provides that if a defendant wishes to contest the expropriation, he
may and must file a motion to contest its validity. However, it also states the
following: “Failure to file the motion within the time provided constitutes a
waiver of all defenses to the suit except claims for compensation.”
(Emphasis added).
The most striking difference between expropriation proceedings and
inverse condemnation is the time at which the damage occurs. Under typical
expropriation procedure, the injury (the taking) only occurs after court order.
In an inverse condemnation proceeding, the injury has already occurred prior
to court proceedings. Our state constitution mandates a right to
compensation at the time of the taking. As cited above, our legislature, in
expropriation proceedings, provides that a defendant’s failure to exhaust all
administrative remedies does not waive his right to compensation.
In light of that example, finding in favor of Shreveport would create
an incongruous outcome. Essentially, we would be deciding that one could
be proscribed his constitutionally mandated compensation in a case where
the damage to his property has already occurred because he failed to exhaust
16
all administrative remedies. Yet, a defendant, in a case where the damage
has yet to occur, would have statutory protections from waiving his same
constitutional right to compensation where he also failed to exhaust all
administrative remedies. Again, we note that the courts of this state have
held that both expropriation and inverse condemnation actions arise from the
same constitutional mandate of just compensation. Thus, both actions
should enjoy and inherit the same constitutional protections and rights
associated with such.
Furthermore, we have already cited that our constitution mandates that
actions for compensation arise at the time of the taking. With no
constitutional mandate to the contrary, we cannot find adequate authority
that the exhaustion doctrine can be employed to override or destroy the
constitutional right to compensation for a taking by the government.
Outcome: The judgment of the trial court is REVERSED. Pursuant to La. R.S.
13:5112, all costs of this appeal are assigned to the appellees in the amount
of $12,034.02
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