Freeman Decorating Co. v. Encuentro Las Americas Trade Corp.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 5, 2009
No. 08-31213 Charles R. Fulbruge III
Clerk
FREEMAN DECORATING COMPANY
Plaintiff-Appellant
v.
ENCUENTRO LAS AMERICAS TRADE CORPORATION; CITY OF NEW
ORLEANS, through the office of the Mayor; JULIO H GUICHARD, JR
Defendants-Appellees
Appeal from the United States District Court for the
Eastern District of Louisiana
2:02-CV-2103
Before GARWOOD, DAVIS, and DENNIS, Circuit Judges.
PER CURIAM:*
This case addresses whether a judgment creditor who obtains a judgment
in federal court on a diversity claim may seize public property from the judgment
debtor, the City of New Orleans, to satisfy the judgment. For the following
reasons, we AFFIRM the district court’s order denying the appellant’s motion to
execute on the judgment.
I.
*
Pursuant to 5TH CIR . R. 47.5, the Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-31213
Freeman Decorating Company (“Freeman”) contracted with the City of
New Orleans to provide services for the annual joint meetings of the Board of
Governors of the Inter-American Development Bank (“Bank”) and the Inter-
American Investment Corporation (“Investment Corp.”). Pursuant to the
contract between the City of New Orleans and Freeman, the City was obligated
to pay Freeman the contract price by April 30, 2000. The City did not fulfill that
obligation.
In July 2002, Freeman filed suit against the Bank, the Investment Corp.,
and the City of New Orleans. The district court dismissed the claims against the
Bank and the Investment Corp. In May 2006, the district court rendered a
judgment against the City in the amount of $203,070.27. Freeman then sought
to collect on its judgment against the City and filed a Motion for Order Directing
the Mayor of New Orleans to Satisfy Judgment and to Authorize Issuance of a
Writ of Fieri Facias. The district court denied Freeman’s motion. This appeal
followed.
II.
Under Federal Rule of Civil Procedure 69(a), state law governs the
execution of a judgment obtained in a diversity action. Article 12, § 10 of the
Louisiana Constitution permits suits against the State and its political
subdivisions, but subsection (C) states that “no public property or public funds
shall be subject to seizure.” The property and funds held by the City of New
Orleans are public property under Louisiana law. See L A. C IV. C ODE art. 450.
Therefore, under Louisiana’s anti-seizure law, the City’s property may not be
seized.
This court has held that when there is a federal interest in the remedy, we
may trump a state’s anti-seizure provision and enforce a money judgment
against a public entity. See Specialty Healthcare Mgmt., Inc. v. St. Mary Parish
Hosp., 220 F.3d 650, 653 (5th Cir. 2000). For example, this court has recognized
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that in a civil rights action, such as an action filed pursuant to 28 U.S.C. § 1988,
there is a federal interest in the remedy sufficient to trump a state’s anti-seizure
provision. E.g., Bowman v. City of New Orleans, 914 F.2d 711 (5th Cir. 1990);
Gates v. Collier, 616 F.2d 1268 (5th Cir. 1980); Gary W. v. Louisiana, 622 F.2d
804 (5th Cir. 1980). This court has also recognized a sufficient federal interest
when a state makes abundantly clear that it will never satisfy the judgment.
See Gates, 616 F.2d at 1271–72. When no federal interest in the remedy exists,
however, this court has refused to order the seizure of public property. See
Specialty Healthcare, 220 F.3d at 656.
Freeman argues there are four federal interests in this case. First,
Freeman asserts the federal jurisdictional statutes over the Bank and the
Investment Corp. provide the requisite federal interest. Second, Freeman avers
the City’s failure to fulfill its obligation constitutes a deprivation of property in
violation of the Fifth Amendment of the U.S. Constitution. Third, Freeman
alleges the method by which the City satisfies judgments violates the Equal
Protection Clause of the Fourteenth Amendment of the U.S. Constitution and
Article I, Sec. 3 of the Louisiana State Constitution. Fourth, Freeman asserts
that the City has made it abundantly clear that it will never satisfy the
judgment.
We find that none of Freeman’s alleged federal interests are sufficient to
trump state law. Freeman’s first argument fails because 22 U.S.C. §§ 283f,
283gg, the statutes granting federal jurisdiction over the Bank and the
Investment Corp., do not provide a sufficient federal interest in the remedy of
this case. As the district court articulated:
Both of the international defendants . . . were dismissed as parties
to the case prior to judgment. Under Specialty Healthcare, the
federal interest must be specifically focused on enforcing the
remedy. Since the two defendants who created the federal interest
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No. 08-31213
were dismissed prior to judgment, there is no federal interest in
enforcing the judgment that followed.
Freeman Decorating Co. v. Encuentro Las Americas Trade Corp., 2008 U.S. Dist.
LEXIS 96463 (E.D. La. 2008), at *7. We agree with the district court and find
that 22 U.S.C. §§ 283f, 283gg do not provide the federal interest required for this
court to trump state law.
Freeman’s second argument also fails. In order for there to be an
unconstitutional taking under the Fifth Amendment, the City must take
Freeman’s property without just compensation. There is no evidence that any
property right held by Freeman has been taken. The U.S. Supreme Court held
in Louisiana ex rel. Folsom v. Mayor & Adm’rs of New Orleans, 109 U.S. 285, 289
(1883), 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. See also Minton v. St. Bernard
Parish Sch. Bd., 803 F.2d 129, 132 (5th Cir. 1986) (citing Folsom for the
proposition that a school board’s delay in satisfying a judgment does not create
the deprivation of a property right). Based on Folsom, the only property right
Freeman has is the recognition of City’s continuing debt; Freeman does not have
a right to command satisfaction of the City’s judgment at a particular time. The
City asserts it will satisfy the judgment once the funds have been allocated by
the City Council, thereby recognizing the debt it owes Freeman.1 See Original
1
The City’s recognition of the debt distinguishes this case from Vogt v. Bd. of Comm’rs,
294 F.3d 684 (5th Cir. 2002). In Vogt, the Orleans Levee District levee board refused to satisfy
a $2.85 million judgment. The judgment creditors filed suit in federal court claiming that the
levee board’s refusal to satisfy the judgment constituted an unconstitutional taking. The
district court dismissed the case for lack of jurisdiction, finding that the levee board had
sovereign immunity under the Eleventh Amendment. The Fifth Circuit reversed the district
court’s order finding sovereign immunity and remanded the case. Though Vogt did not turn
on the judgment creditors’ takings claim, the court stated in dicta that the failure of a
governmental entity to satisfy a judgment could, in some circumstances, amount to a violation
of the Takings Clause. Id. at 697.
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Brief of Appellee, at 5. As such, Freeman’s property right has not been taken in
violation of the Fifth Amendment by the City.
Freeman’s third argument fails because Freeman points to no evidence
that the City has treated Freeman’s judgment differently than the judgments of
similarly situated judgment creditors. In order for Freeman to assert that the
City has violated the Equal Protection Clause of the U.S. Constitution or
Louisiana Constitution, Freeman must prove that the City has treated Freeman
differently than other similarly situated entities. See City of Cleburne v.
Cleburne Living Ctr., 473 U.S. 432, 439 (1985) (“The Equal Protection Clause of
the Fourteenth Amendment . . . is essentially a direction that all persons
similarly situated should be treated alike.”); City of New Orleans v. La.
Assessors’ Ret. & Relief Fund, 986 So. 2d 1, 26 (La. 2007) (“Generally, the state
constitutional guarantee of equal protection mandates that state laws affect
alike all persons and interests similarly situated.”). Because the evidence does
not support this claim, Freeman’s allegations of an equal protection violation
fail.2
Finally, Freeman’s fourth argument fails based on the lack of any evidence
indicating that the City has made it clear that it intends to never satisfy the
judgment. This court has stated that “‘[f]ederal courts are not reduced to issuing
We do not hold or imply . . . that every tort or breach of contract claim against
a governmental entity necessarily becomes a takings claim. Our holding
extends only to cases where . . . the government has forcibly appropriated
private property without a claim of right or of public or regulatory purpose.
Id. The Vogt dicta does not apply to the instant case because, unlike in Vogt, the New Orleans
City Council has not refused to satisfy the judgment. On the contrary, the City Council has
acknowledged the debt. Therefore, no taking has occurred.
2
In its brief, Freeman refers to a number of newspaper articles for the proposition that
the procedure used by the City of New Orleans to satisfy judgments violates the Equal
Protection Clause. None of these newspaper articles were submitted into evidence at trial,
thus this court will not consider them as evidence on appeal. Garcia v. American Marine
Corp., 432 F.2d 6, 8 (5th Cir. 1970).
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No. 08-31213
(judgments) against state officers and hoping for compliance.’” Gates, 616 F.2d
at 1271 (quoting Hutto v. Finney, 437 U.S. 678, 690 (1978)). However, we have
only found a sufficient federal interest in the remedy when the governmental
entity’s behavior indicates an obstinance to ever satisfying the judgment.
Freeman asserts that a letter that was sent by the City’s attorney on November
12, 2007 demonstrates the level of obstinance required for this court to trump
state law. The letter Freeman points to only indicates that the City does not
believe it must immediately satisfy the judgment; it does not indicate that the
City will never satisfy the judgment. If the City’s behavior reaches the level of
recalcitrance required under Gates, Freeman will be able to file a new Motion for
Order Directing the Mayor of New Orleans to Satisfy Judgment and to Authorize
Issuance of a Writ of Fieri Facias. At the present time, however, there is no
evidence in the record indicating that the City intends to never satisfy the
judgment.
CONCLUSION
Based on the forgoing reasons, we find that none of Freeman’s alleged
federal interests are sufficient to trump state law. As such, we AFFIRM the
judgment of the district court without prejudice to Freeman’s right to refile its
motion under the circumstances described above.
AFFIRMED.
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