author: CHEHARDY, C.J.

text:
    WOOD MATERIALS LLC, Wood Resources LLC v. CITY OF HARAHAN
    NO. 18-CA-391
    Court of Appeal of Louisiana, Fifth Circuit.
    December 19, 2018
    COUNSEL FOR DEFENDANT/APPELLANT, CITY OF HARAHAN, Gilbert R. Buras, Jr., New Orleans
    COUNSEL FOR PLAINTIFF/APPELLEE, WOOD MATERIALS LLC, WOOD RESOURCES LLC, L. Etienne Balart, Michael C. Drew, Remy J. Donnelly, Lauren C. Mastio, New Orleans
    Panel composed of Judges Susan M. Chehardy, Robert A. Chaisson, and John J. Molaison, Jr.
   CHEHARDY, C.J.

Plaintiff-appellant, the City of Harahan (the "City"), seeks review of the trial court's May 4, 2018 judgment maintaining the exception of prescription in favor of defendants-appellees, Wood Materials, L.L.C. and Wood Resources, L.L.C. (the "Wood Companies"), and dismissing the City's reconventional demand seeking to enforce an alleged "use violation" against the Wood Companies with prejudice. For the following reasons, we affirm the trial court's judgment.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This litigation involves the commercial composting activities of the Wood Companies, who operate a composting facility located in the Non-Urban Batture District (the "Batture"), which is situated within the City's corporate limits. The facts in this matter are not in dispute. Since the 1960's, the Wood Companies have been involved in various activities at their industrial materials facility located on the Batture of the Mississippi River. Specifically, between the hours of 6:00 p.m. to 6:00 a.m., the Wood Companies perform dredging, excavating and selling of sand, mooring, and towing out of its facility within the Batture. In particular, the Wood Companies have been engaged in composting activities on their property since 2010.

On December 19, 2011, the East Jefferson Levee District issued a construction permit to the Wood Companies for the construction of an "organic soil composting site" within the Batture. The operating permit, also issued on December 19, 2011 for the calendar year 2012, contained a "[d]escription of [p]ermitted [a]ctivity" that included "[c]onstruction and operation of sandpits and limestone stockpiles & organic soil composting." The operating permits subsequently issued to the Wood Companies for the calendar years 2013 through 2016 also describe composting activity as a permitted activity.

In August 2012, the Wood Companies were hired by the City to store, grind, and dispose of trees and other organic debris left behind in the City following Hurricane Isaac. In order to fulfill its obligations under the contract, the Wood Companies collected and composted the hurricane debris at its facilities located within the Batture. In October 2012, the City paid the Wood Companies $23,413.00 for the composting work they performed pursuant to the contract.

On June 9, 2016, the Wood Companies filed a declaratory judgment action against the City with regard to the validity of Proposed Ordinance No. 2016-3. The Proposed Ordinance would, among other things, amend section XV of the City Zoning Ordinance ("CZO") to remove "barge mooring and holding facilities" from the permitted uses for the Batture and impose an hours-of-operation restriction. Specifically, the Wood Companies sought a declaration that its composting operations within the Batture constituted a nonconforming use in accordance with La. R.S. 9:5625, and that any attempt to hold the Wood Companies in violation of the CZO is prescribed by La. R.S. 9:5625(C) and the grandfather provision found in La. R.S. 9:5625(B).

The City responded by filing a reconventional demand, which sought a declaration that the Wood Companies' operation of a composting facility within the Batture is prohibited by the CZO, and which sought injunctive relief enjoining the Wood Companies from continuing to operate the composting facility. In response to the City's reconventional demand, the Wood Companies raised the exception of prescription. Specifically, the Wood Companies argued that, based upon the City's concession that it had written notice of the Wood Companies' composting activities, that are now alleged to be violations of zoning and use regulations, no later than February 15, 2012, more than three years prior to filing suit on July 21, 2016, the City's right to enforce any alleged violation of the CZO regarding their composting operations had prescribed pursuant to La. R.S. 9:5625(C), which establishes a three-year prescriptive period for public instrumentalities within Jefferson Parish, including the City of Harahan.

In opposition, the City argued that La. R.S. 9:5625(A)(3) -not La. R.S. 9:5625(C) -was the applicable provision for actions challenging zoning use regulation violations. Pursuant to La. R.S. 9:5625(A)(3), all municipalities (except the Parish of Orleans, the City of New Orleans and East Baton Rouge Parish) have five years from the date on which the municipality was first actually notified in writing of such violation in which to bring an action. Consequently, the City averred that its action against the Wood Companies had not prescribed.

The Wood Companies' exception came for hearing on April 25, 2018. At the close of the hearing, the trial court took the matter under advisement. Thereafter, on May 4, 2018, the trial court issued judgment, with written reasons, maintaining the Wood Companies' exception and dismissing the City's reconventional demand against the Wood Companies with prejudice. The trial court determined that the City had actual notice in writing of the Wood Companies' alleged violation no later than October 2012, and, thus, under La. R.S. 9:5625(C), the City's suit brought more than three years later was prescribed.

It is from this judgment that the City timely filed the instant appeal.

ASSIGNMENTS OF ERROR

On appeal, the City avers that the trial court erred: (1) in its interpretation of La. R.S. 9:5625 in concluding that the enforcement provisions set forth in La. R.S. 9:5625(C) apply to the City of Harahan; and (2) in failing to find that the five-year prescriptive period found in La. R.S. 9:5625(A)(3) controls this action, which period commenced from the date upon which the City's zoning authority received actual notice in writing of the Wood Companies' violation of the CZO's use regulation.

LAW AND DISCUSSION

Standard of Review and Statutory Construction

The issues in this case turn on the proper interpretation of La. R.S. 9:5625. When the matter before the Court involves the interpretation of a statute, it is a question of law, and a de novo standard of review is applied. Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't. of Econ. Dev. , 10-0193 (La. 1/19/11), 56 So.3d 181, 187. Thus, we review the trial court's judgment under a de novo standard of review, without deference to the legal conclusions of the trial court below. Id. ; Benjamin v. Zeichner , 12-1763 (La. 4/5/13), 113 So.3d 197, 201.

In Benjamin , the Louisiana Supreme Court stated that "the function of statutory interpretation and the construction given to legislative acts rests with the judicial branch of the government." Id. The Court further explained the following regarding statutory interpretation:

The rules of statutory construction are designed to ascertain and enforce the intent of the Legislature. Legislation is the solemn expression of legislative will and, thus, the interpretation of legislation is primarily the search for the legislative intent. We have often noted the paramount consideration in statutory interpretation is ascertainment of the legislative intent and the reason or reasons which prompted the Legislature to enact the law. The starting point in the interpretation of any statute is the language of the statute itself. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the [L]egislature. However, when the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law. Moreover, when the words of a law are ambiguous, their meaning must be sought by examining the context in which they occur and the text of the law as a whole. Further, the legislature is presumed to act with full knowledge of well-settled principles of statutory construction. [Citations omitted.]

Id. at 202. The object of the court in construing a statute is to ascertain the legislative intent and, where a literal interpretation would produce absurd consequences, the letter must give way to the spirit of the law and the statute construed so as to produce a reasonable result. Richard v. Hall , 03-1488 (La. 4/23/04), 874 So.2d 131, 149 ; SWAT 24 Shreveport Bossier, Inc. v. Bond , 00-1695 (La. 6/29/01), 808 So.2d 294, 302. A statute must be applied and interpreted in a manner that is logical and consistent with the presumed purpose and intent of the Legislature. Succession of Boyter , 99-0761 (La. 1/7/00), 756 So.2d 1122, 1129.

Zoning is designed to foster improvements by confining certain classes of buildings and uses to certain localities without imposing undue hardship on property owners. City of New Orleans v. Elms , 566 So.2d 626, 628 (La. 1990). "The essence of zoning is territorial division in keeping with the character of the lands and structures and their peculiar suitability for particular uses, and the uniformity of use within the division. The traditional purpose of zoning is to reduce or eliminate the adverse effects of one type of land use on another by segregating different uses into different zoning districts." Id.

Our jurisprudence clearly states that zoning by its nature is a legislative function, the authority for which flows from the police power of governmental bodies. King v. Caddo Parish Com'n , 97-1873 (La. 10/20/98), 719 So.2d 410, 418. La Const. art. VI, § 17 expressly grants the power to enact zoning regulations to all local governments. St. Charles Gaming Co., Inc. v. Riverboat Gaming , 94-2697 (La. 1/17/95), 648 So.2d 1310, 1316.

La. R.S. 33:4721 provides, in part, that "[f]or the purpose of promoting health, safety, morals, or the general welfare of the community, the governing authority of all municipalities may regulate and restrict the height, number of stories, and size of structures, the percentage of lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of the buildings, structures, and land for trade, industry, residence, or other purposes." Additionally, La. R.S. 33:4723 indicates that zoning regulations shall, among other things, "be made with reasonable consideration of the character of the district and its peculiar suitability for particular uses, and with a view to conserving the values of buildings and encouraging the most appropriate use of land throughout the municipality."

With these legal precepts in mind, we examine the language of the statute, La. R.S. 9:5625, which provides:

5625. Violation of zoning restriction, building restriction, or subdivision regulation
A. (1) All actions civil or criminal, created by statute, ordinance, or otherwise, except those actions created for the purpose of amortization of nonconforming signs and billboards enacted in conformity with the provisions of R.S. 33:4722, which may be brought by parishes, municipalities, or their instrumentalities or by any person, firm, or corporation to require enforcement of and compliance with any zoning restriction, building restriction, or subdivision regulation, imposed by any parish, municipality, or an instrumentality thereof, and based upon the violation by any person, firm, or corporation of such restriction or regulation, must be brought within five years from the first act constituting the commission of the violation.
(2) Where a violation has existed for a period of two years prior to August 1, 1956, except those actions created for the purpose of amortization of nonconforming signs and billboards enacted in conformity with the provisions of R.S. 33:4722, the action must be brought within one year from and after August 1, 1956.
(3) With reference to violations of use regulations all such actions, civil or criminal, except those actions created for the purpose of amortization of nonconforming signs and billboards in conformity with the provisions of R.S. 33:4722, must be brought within five years from the date the parish, municipality, and the properly authorized instrumentality or agency thereof if such agency has been designated, first had been actually notified in writing of such violation.
(4) Except as relates to nonconforming signs and billboards, any prescription heretofore accrued by the passage of two years shall not be interrupted, disturbed, or lost by operation of the provisions of this Section.
B. In all cases where the prescription provided for herein has accrued, the particular property involved in the violation of the zoning restriction, building restriction or subdivision regulation shall enjoy the same legal status as land uses, construction features of buildings or subdivisions made nonconforming by the adoption of any zoning restriction, building restriction or subdivision regulation. However, the governing authority may provide for the removal of nonconforming signs and billboards in accord with the provisions of R.S. 33:4722.
C. Notwithstanding the provisions of Section A of this Section, the following provisions shall be applicable only to the parishes of East Baton Rouge and Jefferson or their instrumentalities. All actions, civil or criminal, created by statute, ordinance, or otherwise, except those actions created for the purpose of amortization of nonconforming signs and billboards enacted in conformity with the provisions of R.S. 33:4722, which may be brought by such parishes or their instrumentalities or by any person, firm, or corporation to require enforcement of and compliance with any zoning restriction, building restriction, or subdivision regulation, imposed by any such parish or their instrumentalities, and based upon the violation by any person, firm, or corporation of such restriction or regulation, must be brought within three years from the date such parish or its properly authorized instrumentality or agency, if such agency has been designated, received actual notice in writing of such violation, and except for violations of use regulations, all such actions, civil or criminal, must be brought within five years from the date of the first act constituting the commission of the violation. However, in the parish of East Baton Rouge, and municipalities included within such parish, all actions, civil or criminal, for violations of use regulations must be brought within five years from the date of the first act constituting the commission of the violation.
D. In the parishes of East Baton Rouge and Jefferson, in cases where the parish or its instrumentality, after receiving notification of a violation, institutes an investigation or other administrative or judicial proceeding in order to seek a cessation of the violation and during the course of such investigation or proceeding makes the determination that the violation has in fact ceased, prescription shall be interrupted and if any recurrence or new violation commences thereafter, prescription will begin to accrue anew upon the date the parish or its properly authorized instrumentality or agency, if such agency has been designated, receives actual notice in writing of such recurrence or new violation. Except for violations of use regulations, all such actions, civil or criminal, must be brought within five years from the date the recurrence or new act constituting the commission of the violation. However, in the parish of East Baton Rouge, and municipalities included within such parish, all actions, civil or criminal, for violations of use regulations must be brought within five years from the date of the first act constituting the commission of the violation.
E. The provisions of this Section shall supersede any other provisions of law inconsistent herewith.
F. The provisions of Subsections C and D of this section shall not apply in the parish of Orleans or the city of New Orleans.
G. (1) The provisions of this Section shall not apply to property or areas which have been identified as historic districts, historical preservations or landmarks by any historic preservation district commission, landmarks commission, or the planning or zoning commission of a governing authority; however, the prescriptive period within which to bring an action to enforce a zoning restriction or regulation or a violation thereof shall be ten years from the first act constituting the commission of the violation.
(2) The provisions of this Subsection shall apply only to zoning or planning restrictions made by a municipality or parish, or other municipal or parish entity responsible for zoning, planning, or building restrictions.
(3)(a) Notwithstanding the provisions of Paragraph (1) of this Subsection, the prescriptive period set forth therein regarding any action to enforce a zoning restriction or regulation or a violation thereof in the Vieux Carre section of the city of New Orleans shall begin to run on the date the properly authorized agency of the city actually receives written notice of the violation.
(b) The provisions of Subparagraph (a) of this Paragraph shall not divest a person of any right obtained as a result of prescription that accrued prior to August 15, 2007.

Interpretation and Proper Application of La. R.S. 9:5625

The City argues that the trial court committed legal error in applying the three-year prescriptive period set forth in subsection (C) of La. R.S. 9:5625 to the City's enforcement action against the Wood Companies for its violation of one of the City's use regulations. Specifically, the City argues that the five-year prescriptive period for the violation of a use regulation found in subsection (A)(3), governs the City's enforcement action against the Wood Companies, not subsection (C). The City further contends the record is devoid of any evidence that it had actual written notice of the Wood Companies' violation of the City's zoning ordinance use regulations at any time prior to July 25, 2011. Because this date is within five years of the date the City filed suit on July 25, 2016 to enjoin the composting activity, the City contends its action against the Wood Companies to enforce the alleged nonconforming use violation was timely, and therefore, not prescribed.

In contrast, the Wood Companies aver, and the trial court agreed, that with respect to enforcement actions challenging violations of a zoning restriction, building restriction, subdivision regulation or use regulation, all political subdivisions that are located within the Parish of Jefferson, including the City of Harahan, are subject to the prescriptive periods set forth in subsection (C), rather than the prescriptive period contained in subsection A(3). With respect to enforcement actions challenging the violation of a use regulation, in particular, the Wood Companies argue that subsection (C) provides a three-year prescriptive period, which commences upon receipt of actual notice in writing of the violation. Because the City conceded that it had actual notice in writing of the Wood Companies' composting activities no later than October 2012, the Wood Companies argue that the instant suit filed by the City against them in July 2016 is prescribed.

Based upon our reading of La. R.S. 9:5625 in its entirety, specifically when reading subsections (A)(3) and (C) together, we find that the language is susceptible of different meanings. Consequently, we turn to the statute's legislative history in order to ascertain the Legislature's intent and purpose in enacting these provisions. See Benjamin , 113 So.3d at 202.

Legislative History of La. R.S. 9:5625

Louisiana Revised Statute 9:5625 is contained within the Civil Code Ancillaries on Prescription, La. R.S. 9:5601 et seq. Within the statute, the Legislature provided particular prescriptive periods pertaining to enforcement actions that involve the violation of a zoning restriction, building restriction, subdivision regulation, and/or use regulation. As originally enacted, La. R.S. 9:5625 provided a single set of prescriptive periods that pertained to all parishes state-wide, as set forth currently in subsection (A) of the statute.

1. 1993 Amendments

The Legislature amended the statute in 1993, at which time it addressed the parishes, municipalities, or their instrumentalities within the state whose populations exceeded 325,000 and enacted specific prescriptive periods applicable only in those parishes. Specifically, House Bill 931 added subsections (C) through (F) to La. R.S. 9:5625. Subsection (C) as enacted in 1993 provided:

C. Notwithstanding the provisions of Subsection A, the following provisions shall be applicable only to any parish, municipality, or its instrumentality having a population over three hundred twenty-five thousand. All actions, civil or criminal, created by statute, ordinance, or otherwise, except those actions created for the purpose of amortization of nonconforming signs and billboards enacted in conformity with the provisions of R.S. 33:4722, which may be brought by such parishes, municipalities, or their instrumentalities or by any person, firm, or corporation to require enforcement of and compliance with any zoning restriction, building restriction, or subdivision regulations, imposed by any such parish, municipality, or their instrumentalities, and based upon the violation by any person, firm, or corporation of such restriction or regulation, must be brought within three years from the date such parish, municipality, or its properly authorized instrumentality or agency, if such agency has been designated, received actual notice in writing of such violation, and except for violations of use regulations, all such actions, civil or criminal, must be brought within five years from the date of the first act constituting the commission of the violation. However, in a parish having a population of over three-hundred twenty-five thousand but not more than four hundred thousand, and municipalities included within such parish, all actions, civil or criminal, for violations of use regulations must be brought within five years from the date of the first act constituting the commission of the violation.

1993 La. Acts 1025, 1993 La. HB 931.

Pursuant to the language of the statute, we find that the Legislature's 1993 amendment to add subsection (C) was intended solely to have a geographical effect and was meant to apply to all forms of government-i.e. , parishes, municipalities, or their instrumentalities-so long as they were situated within a parish whose population exceeded 325,000. In 1993, according to the latest U.S. census figures, the only parishes within the State whose populations exceeded 325,000 and, thus, were affected by the population threshold and subject to the amendment, were East Baton Rouge Parish and Jefferson Parish.

Consequently, following the effective date of the 1993 amendment, the prescriptive periods set forth in La. R.S. 9:5625(C) applied to any parish entity, any municipal entity, or their instrumentalities, located within Jefferson Parish, which included the City of Harahan .

Accordingly, following the 1993 amendment to La. R.S. 9:5625 enacting subsection (C), we find that any enforcement action that involved the violation of a zoning restriction, building restriction, or subdivision regulation occurring within the Parish of Jefferson, including the City of Harahan-whether the restriction and/or regulation violated was created by the City or the parish-at-large-had to be brought within three years from the date written notice of the violation was received and no later than five years "from the first act constituting the commission of the violation." And with respect to enforcement actions involving the violation of a use regulation, we find that La. R.S. 9:5625(C), as enacted in 1993, required the City, by virtue of its being located within a parish whose population exceeded 325,000, to institute such an action within three years from the date it received actual notice in writing of the violation.

2. 2011 Amendments

In 2011, following Hurricanes Katrina and Rita, and the resulting shift in populations occurring in particular areas of the State as reflected in the 2010 U.S. census, Senate Bill 9 was introduced into the Legislature to amend certain provisions within Title 9 of the Louisiana Revised Statutes (including subsections (C), (D) and (F) of La. R.S. 9:5625 ), which were "limited in applicability to certain political subdivisions or local areas based upon population classifications[.]" According to the preface of Senate Bill No. 9, the act, entitled "Census[,]" was intended "to specify applicability to one or more political subdivisions or local areas[ ]" and "to adjust population categories to retain applicability [.]" [Emphasis supplied.]

With respect to the Legislature's amendment to La. R.S. 9:5625(C), in particular, the 2011 amendment removed the statute's prior reference regarding its applicability based upon a population threshold of 325,000, and replaced the numerical reference with the particular parishes affected; namely, East Baton Rouge Parish and Jefferson Parish. The table attached to Senate Bill No. 9, Engrossed, suggests to us that the Legislature intended for La. R.S. 9:5625(C), as amended, to apply to the entirety of East Baton Rouge and Jefferson Parishes, as the two identified "affected locations[,]" including all political subdivisions located within those parishes, rather than solely to the parishes-at-large or specific governmental instrumentalities as posited by the City.

Our review of the legislative history for La. R.S. 9:5625(C) convinces us that the Legislature's intent in amending subsection (C) was to retain and/or continue the applicability of La. R.S. 9:5625(C) to all of Jefferson Parish, including the City of Harahan. We glean nothing in the statute's legislative history that supports the City's contention that the 2011 amendment sought to alter or impose a more restrictive prescriptive period applicable only to Jefferson Parish or its "instrumentalities," and a less restrictive prescriptive period applicable to the municipalities located within Jefferson Parish. In this regard, we agree with the Wood Companies that "it is simply not logical to interpret the amendment to reduce the applicability of [La. R.S.] 9:5625(C) contrary to the [L]egislature's stated intent to 'retain applicability.' That intent can only be to have [La. R.S.] 9:5625(C) apply throughout Jefferson and East Baton Rouge Parishes" as it did prior to the 2011 amendment. In short, we find that the Legislature did not intend to alter the scope of La. R.S. 9:5625 in 2011 when it amended the statute; rather, the Legislature merely intended to update the specified reach of La. R.S. 9:5625(C) by specifically naming the affected parishes and retaining applicability.

Applicability of La. R.S. 9:5625(C) to the City of Harahan

The City argues that pursuant to La. R.S. 9:5625, as amended in 2011, subsection (A)(3), not subsection (C), which applies to the Parish of Jefferson "or [its] instrumentalities," governs the applicable prescriptive period for its enforcement action against the Wood Companies because the City is an "instrumentality" of the State, not of Jefferson Parish. According to the City, subsection (C), as amended, applies only to zoning restriction violations enacted by the Jefferson Parish government and does not apply to zoning restriction violations enacted by the municipalities or other governmental entities situated within Jefferson Parish, which the City claims are governed by La. R.S. 9:5625(A)(3).

We find no merit to the City's argument. The language of La. R.S. 9:5625(C) states that its provisions "shall be applicable only to the Parishes of East Baton Rouge and Jefferson or their instrumentalities." [Emphasis supplied.] Clearly, the City of Harahan is located within Jefferson Parish and, as such, relying upon the statute's legislative history, we find subsection (C) applies to all political subdivisions within Jefferson Parish, including the City of Harahan. To apply a literal interpretation of the 2011 amendment to subsection (C) as the City urges (i.e. , to distinguish the larger political subdivision, Jefferson Parish, from the smaller political subdivisions located within it, including "municipalities," "agencies" and "instrumentalities"), would lead to an absurd result, and would be tantamount to concluding that the Legislature intended for the City, and other political subdivisions within Jefferson Parish, to enjoy a greater latitude in enforcing its restrictive zoning laws than the parish-at-large. This argument is simply not supported by the statute's legislative history, nor does the City cite any legal authority to support its position. In fact, the City's argument is actually contrary to the Legislature's stated intention "to retain applicability," not to restrict or expand it.

Accordingly, we find the trial court did not legally err in concluding that the City of Harahan is subject to the prescriptive periods governing enforcement actions as set forth in La. R.S. 9:5625(C), as amended.

Applicability of La. R.S. 9:5625(C) to "Use Violations" Occurring Within Jefferson Parish

Now that we have established that the City is subject to the enforcement provisions of La. R.S. 9:5625(C), we turn to the City's argument that La. R.S. 9:5625(C) does not apply at all to violations of use regulations, except for "use violations" occurring in East Baton Rouge Parish. According to the City, enforcement actions for use violations occurring in every other parish of the State, including Jefferson Parish, are subject solely to the provisions of La. R.S. 9:5625(A)(3). Specifically, the City posits that La. R.S. 9:5625 distinguishes those actions involving zoning restrictions, building restrictions, and subdivision regulations from those actions involving use regulations. In this regard, the City argues that La. R.S. 9:5625 mandates a five-year prescriptive period applicable to all use violations occurring in every parish throughout the State (except the Parish of Orleans and the City of New Orleans); the only distinction between use violations occurring in East Baton Rouge Parish and those occurring in all other parishes being the date upon which the five-year period begins to run. For use violations occurring in East Baton Rouge Parish, the five-year prescriptive period commences from the date of the "first act" constituting the use violation, whereas for use violations occurring in every other parish of the State (except the Parish of Orleans and the City of New Orleans), including the Parish of Jefferson, the five-year prescriptive period commences from the date upon which the parish first had actual notice of the use violation in writing.

Moreover, the City argues that the three-year prescriptive period found in La. R.S. 9:5625(C) applies only to actions seeking to enforce a "zoning restriction, building restriction, or subdivision regulation" where actual notice in writing of a violation is received, and not to enforcement actions for use violations. According to the City, the express language of subsection (C) excepts "use violations" from its effect. Specifically, the City posits that after establishing the three-year prescriptive period for actions involving actual notice in writing of a violation of a "zoning restriction, building restriction, or subdivision regulation," subsection (C) then provides that "... and except for violations of use regulations, all such actions ... must be brought within five years from the date of the first act constituting the commission of the violation." The City maintains that subsection (C)'s exception for actions involving use violations occurring in Jefferson Parish actually "conforms" subsection (C) to subsection (A)(3) such that, the five-year prescriptive period for violations of use regulations occurring in all parishes (except East Baton Rouge Parish, the Parish of Orleans and the City of New Orleans), commences to run from the date actual notice in writing of the violation is received. Because "actual notice" of a violation of a use regulation is what is required by La. R.S. 9:5625(A)(3), the City contends that use violations were excepted from the "three year actual notice/five year first act" rule established in subsection (C) for the Parishes of East Baton Rouge and Jefferson "so that there is no confusion." We disagree.

We find that the City's interpretation of La. R.S. 9:5625 -that enforcement actions for violations of use regulations are not covered at all by La. R.S.9:5625(C), except for use violations occurring within the Parish of East Baton Rouge (and the Parish of Orleans and the City of New Orleans)-is inaccurate; therefore, we reject it. As it relates to Jefferson Parish, our interpretation of the statute leads us to conclude that the second sentence of subsection (C), when read in its entirety, provides a three-year prescriptive period for all enforcement actions challenging zoning restrictions, building restrictions, subdivision regulations or use regulations commencing from the date of actual notice in writing, and a five-year peremptive period for these actions, except for violations of use regulations , commencing from the date of the first act constituting the violation. In short, we conclude that subsection (C) excepts enforcement actions for the violation of a use regulation occurring in Jefferson Parish from the scope of the five-year preemptive period, thereby maintaining both the three-year prescriptive period and the requirement for written notice for actions involving a use violation.

Further, we find that there would have been no reason for the Legislature to specifically include the exception for "use violations" within subsection (C) if it did not intend for subsection (C) to apply to use violations at all . In this regard, we find the City's interpretation, i.e. , that all use regulations are subject to the five-year prescriptive period found in subsection (A)(3) , renders the reference within subsection (C) excepting violations of use regulations meaningless. Moreover, had the Legislature intended for the excepted actions to be governed by the five-year prescriptive period in subsection (A)(3), and not the three-year prescriptive period in subsection (C), it could have stated as such directly within subsection (C). It did not do so. This omission leads us to conclude, therefore, that it was not the Legislature's intent for enforcement actions involving use violations occurring within Jefferson Parish, including the City of Harahan, to be governed by the prescriptive period found in subsection (A)(3) as the City contends, but rather, the Legislature intended for subsection (C) to govern these actions. This assignment of error is without merit.

In sum, based upon our review of the legislative history of La. R.S. 9:5625, we conclude the trial court correctly determined that La. R.S. 9:5625(C) governs this action. We find that the Legislature intended for the enforcement provisions set forth in subsection (C) to apply to all political subdivisions within Jefferson Parish, including municipalities such as the City of Harahan. Accordingly, we hold that any enforcement action by the City for the violation of a use regulation provided within its zoning ordinance and established through the authority granted to the City by the Legislature to enact zoning regulations, is governed by La. R.S. 9:5625(C) and, thus, subject to a three-year prescriptive period commencing on the date actual notice in writing of a use violation is received by the City.

The record confirms, and the City concedes, that the City had written notice of the Wood Companies' composting activities no later than October 2012, when the City paid them $23,413.00 for completing work under a contract they had with the City to store, grind, and dispose of trees and other organic debris following Hurricane Isaac. The City did not file suit to enjoin the Wood Companies' composting activities until July 25, 2016. Thus, the City's right to enforce the Wood Companies' alleged use violation at issue herein was prescribed prior to the City's filing of its reconventional demand.

CONCLUSION

For the foregoing reasons, we find the trial court properly maintained the exception of prescription brought by Wood Materials, L.L.C. and Wood Resources, L.L.C., and in dismissing the City of Harahan's reconventional demand filed against them, with prejudice. Accordingly, we affirm the trial court's judgment.

AFFIRMED.

DISSENTS.

JJM

MOLAISON, J., DISSENTS.

For the following reasons, I respectfully dissent from the majority's decision to affirm the trial court's judgment.

This Court has previously recognized in In re Declaratory Judgment For City of Harahan , 01-928 (La. App. 5 Cir. 1/15/02), 807 So.2d 997, that, pursuant to La. R.S. 33:321, et seq., "The City of Harahan (the City) is a Lawrason Act municipality and operates pursuant to a mayor-board of alderman form of government." Id., at 998. The term "municipality" is defined in La. Const. art. 6, § 44 (3) as "an incorporated city, town, or village." In addition, Harahan also qualifies as a "local governmental subdivision" and a "political subdivision."

The term "instrumentality" does not appear to have been assigned a formal legal definition in Louisiana. However, my review of jurisprudence and various statutes leads me to conclude that the City of Harahan is not an "instrumentality" of Jefferson Parish in the same sense in which the term is commonly used in other circumstances. For example, in Polk v. Edwards , 626 So.2d 1128 (La. 1993), the Louisiana Supreme Court set forth several considerations to determine whether an entity is an instrumentality of the state. These included: whether the entity was accountable to other branches of government "through a system of audits, reports, and legislative oversight, and through financial disclosure," whether it could enter into a contract over a certain amount without authorization, and whether it could promulgate its own rules or regulations without legislative authority and publication of notice. Importantly, the court observed in relevant part, "[p]olitical subdivisions, which include municipal and parish governments, are entrusted with the power of taxation and expropriation, and as mentioned above, are not instrumentalities of the state." Id. at 526.

I am also guided by the framework for analysis used by the Louisiana Supreme Court in Slowinski v. England Economic and Industrial Development District , 02-0189 (La. 10/15/02), 828 So.2d 520. In that case, the court considered several factors in making the determination of instrumentality, including answering the question of whether the entity was "an arm of the state" or if it was "sufficiently detached from the state that is more local and autonomous in nature, similar to a parish or municipal government." Id. , at 523. In Slowinski , supra , the Court took into account the legislature's own actions in expressly defining an entity as an "instrumentality" of the state in various statutes:

Because of the weighty consequences that arise when the legislature includes the term of art, "instrumentality of the state," i.e., an entity is required to participate in the state personnel management bureaucracy, it is unreasonable to assume our legislature overlooked it, when they made their intent proof positive in the statutes outlined above. See, e.g., Aultman v. Entergy Corp. , 98-2244 (La. App. 1 Cir. 11/5/99), 747 So.2d 1151, 1155 ("Had the legislature intended to adopt the requirements of the OWBPA, it would have unequivocally set forth those requirements as part of the state statute.").

Slowinski , at 527-28.

In this case, I believe a similar analysis should be used to determine whether the City of Harahan is an instrumentality of Jefferson Parish and conclude that it is not.

It is a basic principle of statutory construction that the Legislature is presumed to have intended every word and phrase included in a statute to have some meaning and that none was inserted by accident. ABL Mgmt., Inc. v. Board of Sup'rs of Southern Univ. , 00-0798 (La. 11/28/00), 773 So.2d 131, 135. Conversely, it is not presumed that the legislature inserted idle, meaningless or superfluous language in a statute or that it intended any part of the statute to be meaningless, redundant or useless. Id. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. La. C.C. art. 9. I believe that to be the case here.

Nevertheless, my review of La. R.S. 9:5625's legislative history also supports the basis for this dissent. The 2011 amendments deliberately struck references to "municipalities" in sections C, D, and F. However, the amended version of subsections C and D, specifically applied to municipalities located in "the parish of East Baton Rouge." I find that this example demonstrates legislative intent to specifically limit the cities to which portions of La. R.S. 9:5625 apply.

While the appellee suggests that the current language of La. R.S. 9:5625(C) is an inadvertent result of an oversight in legislative drafting, I disagree. To the extent that this particular law could be re-written to effect a different result in the future, I do not believe that it is within this Court's purview to undertake such a task. Under our constitution, it is not the function of a court to create legislation, but rather to interpret it. Unwired Telecom Corp. v. Parish of Calcasieu , 03-732 (La. 1/19/05), 903 So.2d 392. Any endeavor to change the law must originate from the legislature. Eads Operating Company, Inc. v. Thompson , 93-2155 (La. App. 1st Cir. 10/7/94), 646 So.2d 948, writ denied , 95-0226 (La. 4/7/95), 652 So.2d 1345.

In the instant case, La. R.S. 9:5625(C) and (D) state that their provisions "shall be applicable only to the parishes of East Baton Rouge and Jefferson or their instrumentalities." In accord with Polk , supra , and Slowinski , supra , I decline to extend the definition of "instrumentality" to include an autonomous municipality within a parish. Further, I do not find that the exclusion of the City of Harahan from La. R.S. 9:5625(C) produces an "absurd consequence" which requires an interpretation of legislative intent.

Moreover, the analysis of the legislative history of La. R.S. 9:5625 in the majority opinion begins with the 1993 amendments, which added the three-year prescriptive period in Subsection (C) as an exception to the five-year prescriptive period in Subsection (A)(3). The first sentence of Subsection (C), as enacted in 1993, stated:

Notwithstanding the provisions of Subsection A, the following provisions shall be applicable only to any parish, municipality, or its instrumentality having a population over three hundred twenty-five thousand.

As I read this language, the phrase "having a population over three hundred twenty-five thousand" modifies everything that comes before it, namely, "any parish, municipality, or its instrumentality." The population of the City of Harahan has never exceeded 325,000. Based on a plain reading of the statutory language, which is clear on its face and is not ambiguous, the three-year prescriptive period in Subsection (C), as enacted in 1993, did not apply to the City of Harahan.

The majority interprets the quoted portion of Subsection (C), as enacted in 1993, to mean that it was intended to apply to all forms of government, including municipalities, "so long as they were situated within a parish whose population exceeded 325,000." This interpretation, which is not consistent with the language used by the legislature, forms the basis for the majority's conclusions that the City of Harahan was included in Subsection (C), as enacted in 1993, because it was located in Jefferson Parish, which had a population of over 325,000, and that the City of Harahan is still subject to the three-year prescriptive period in Subsection (C), rather than the five-year prescriptive period in Subsection (A)(3), because the legislature did not intend to alter the scope of law when it amended Subsection (C) in 2011.

In my view, the City of Harahan did not meet the population threshold for placing it within the scope of Subsection (C), as enacted in 1993, and it was not brought within the scope of Subsection (C), as amended in 2011, because it is not an instrumentality of the parish. Accordingly, the prescriptive period of five years from the date the City had written notice of a use violation, as set forth in La. R.S. 9:5625(A)(3), should apply.

As noted by the majority, the underlying facts of this matter are not in dispute. Wood Companies' facility on the City of Harahan's river batture has been active since the 1960's, operating pursuant to the appropriate permits. The City concedes that it had written notice of the Wood Companies' composting activities no later than February 15, 2012. The City's original reconventional demand was subsequently filed on July 21, 2016. Here, because the City of Harahan is not an instrumentality of Jefferson Parish, La. R.S. 9:5625(A)(3) instead applies to impose a prescriptive period of five years from the date the City had written notice of the violation, as opposed to the shorter three-year prescriptive period found in La. R.S. 9:5625(C). Thus, the City of Harahan's cause of action had not prescribed at the time its reconventional demand was filed.

Accordingly, I would reverse the trial court's judgment in this matter.

      The Batture is comprised of certain land within the municipal boundaries of the City, but outside the protective levees that separate much of the City from the Mississippi River. The Batture is a zoned district of the City in accordance with section XV(A) of City Ordinance 1333 and La. R.S. 33:4271 et seq.

      The 1993 amendments to La. R.S.9:5625 made no changes or alterations to subsection A.

      While the City of New Orleans and Orleans Parish exceeded the population threshold, subsection (F) of the amended statute specifically provided that the Parish of Orleans and the City of New Orleans were excepted from the provisions of subsections (C) and (D), which applied only to the Parishes of East Baton Rouge and Jefferson.

      Even though the population of the City of Harahan itself did not exceed 325,000 in 1993, by virtue of the fact that the City was located within the geographical boundaries of Jefferson Parish, all enforcement actions brought by the City for the violation of a use regulation were subject to the prescriptive periods set forth in La. R.S. 9:5625(C).

      See 2011 La. Acts 30, 2011 SB 9, Engrossed.

      "The title of an act of the Legislature is of the nature of a label, the purpose of which is to give notice of the legislative intent and purpose to those interested in, or who may be affected by, the terms of the act, and to prevent surprise and fraud upon members of the Legislature." Cobb v. Louisiana Bd. of Institutions , 237 La. 315, 328-329, 111 So.2d 126,131 (1958).

      The 2011 amendments to La. R.S. 9:5625 did not address, alter or change any of the provisions set forth in subsection (A)(3).

      The City concedes that La. R.S. 9:5625(F) excepts the Parish of Orleans and the City of New Orleans from the five-year prescriptive period for instituting actions challenging violations of use regulations.

      The City erroneously relies upon the case of Parish of St. Charles ex rel. Dept. of Planning and Zoning v. Bordelon , 10-2552 (La. 1/28/11), 52 So.3d 875, to support its argument that all enforcement actions for violations of use regulations occurring in parishes throughout the State are subject to the five-year prescriptive period set forth in La. R.S. 9:5625(A)(3), except for those occurring in East Baton Rouge Parish, which are governed by La. R.S. 9:5625(C). In Bordelon , the Louisiana Supreme Court vacated a decision of this Court and held that a suit to enjoin a "use regulation" was prescribed under La. R.S. 9:5625(A)(3) because the enforcement action filed by St. Charles Parish was filed over five years from the date it received written notice of the use violation. Because the violation of the use regulation at issue occurred in St. Charles Parish-and not in East Baton Rouge Parish or Jefferson Parish, which are the only parishes subject to La. R.S 9:5625(C) -La. R.S. 9:5625(A)(3) applied to the suit filed by St. Charles Parish, whereas La. R.S. 9:5625(C) clearly did not. Consequently, the Supreme Court's decision in Bordelon is factually inapposite to the case sub judice and has no bearing upon this Court's interpretation of La. R.S. 9:5625(C).

      In those cases where actual notice in writing of a violation is not received, La. R.S. 9:5625(C) provides that "except for use violations, all such actions ... must be brought within five years from the date of the first act constituting the commission of the violation."

      La. Const. art. 6, § 44 (1) provides that "Local governmental subdivision" means "any parish or municipality."

      La. Const. art. 6, § 44 (2) states, " 'Political subdivision' means a parish, municipality, and any other unit of local government, including a school board and a special district, authorized by law to perform governmental functions."

      Examples referenced by the court included: "Louisiana Stadium and Exposition District (LA. CONST.1921, art. XIV, § 47, continued as a statute by LA. CONST. Art. XIV, § 16 (A)(10) )," "Red River Waterway District (LA.REV.STAT.ANN. § 34:2308 )," and "Iatt Lake Water Conservation District LA.REV.STAT.ANN. § 38:3085.4." Slowinski, at 527-28.


source: Caselaw Access Project

author: MOLAISON, J.

license: Public Domain

text:
    FIRST BANK AND TRUST v. Warren G. TREME
    NO. 18-CA-477
    Court of Appeal of Louisiana, Fifth Circuit.
    December 19, 2018
    COUNSEL FOR PLAINTIFF/APPELLEE, FIRST BANK AND TRUST AND FIRST BANK CDC, Patricia S. LeBlanc, Deborah A. Villio, James C. Raff
    COUNSEL FOR DEFENDANT/APPELLANT, WARREN G. TREME, Joseph R. Ward, Jr.
    Panel composed of Judges Susan M. Chehardy, Robert A. Chaisson, and John J. Molaison, Jr.
   MOLAISON, J.

Warren G. Treme ("Treme"), a building contractor and former customer of First Bank and Trust ("First Bank"), appeals a judgment dismissing his claims for damages against the bank and its subsidiary, First Bank and Trust Community Development Corporation ("First Bank CDC"), under the anti-tying provisions of the Bank Holding Company Act, 12 U.S.C. § 1972 et seq. (the "anti-tying claims"), with prejudice after a jury trial. Treme asserted these claims in response to the bank's lawsuit against him for sums due on promissory notes. The bank's claims were resolved by a consent judgment and are not at issue in this appeal.

At the trial of his anti-tying claims, Treme maintained that the bank violated federal law by requiring him to continue providing construction services to First Bank CDC on community development projects as a condition or requirement for obtaining loans from the bank. The jury found the evidence insufficient to prove that a tying arrangement existed. The trial court dismissed Treme's claims with prejudice based on the jury verdict.

On appeal, Treme seeks to have the judgment of dismissal reversed. He claims the trial court committed reversible error in its instructions to the jury and contends the jury was clearly wrong in finding that no tying arrangement existed. For the reasons that follow, we affirm.

PROCEDURAL HISTORY

This lawsuit originated in 2006 with First Bank's collection efforts against Treme by executory process and a petition for a deficiency judgment. Treme answered the petition and filed a reconventional demand against the bank and third party demands against First Bank CDC and Joseph C. Canizaro, the bank's chairman, asserting claims for breach of contract, fraud, fraudulent inducement, illegal tying, extortionate banking transactions, and breach of fiduciary duty. Canizaro was dismissed from the lawsuit by summary judgment, which this Court affirmed in First Bank and Trust v. Treme, 13-168 (La. App. 5 Cir. 10/30/13), 129 So.3d 605.

In a 2009 judgment on exceptions, the trial court sustained an exception of prescription as to some of Treme's illegal tying claims, which involved bank loans and construction contracts spanning the period 1996-2005. Noting that anti-tying claims must be brought within four years of when the alleged violation occurred, the trial court found that claims arising from contracts executed before July 28, 2002, were prescribed. 12 U.S.C. § 1277.

In August 2017, First Bank and Treme entered into a consent judgment in the bank's favor for over $2 million in principal, interest and attorney fees owed by Treme on promissory notes. The consent judgment recognized Treme's right to offset this indebtedness by any amount that may be awarded to him on his demands against First Bank and First Bank CDC.

By the time of the jury trial in 2017, Treme's only remaining claims against First Bank and First Bank CDC were the anti-tying claims. At trial, Treme limited his damage claims to contracts executed after July 28, 2002, in accordance with the trial court's ruling on the prescription exception. However, the court allowed the parties to introduce evidence of contracts executed before that date to provide a complete narrative to the jury about the relationships between the parties, which began with the earlier contracts, and to provide context for references to the earlier contracts in the evidence concerning non-prescribed claims.

ANTI-TYING LAW

Treme's claims against First Bank and its subsidiary, First Bank CDC, are founded on the following provisions in the Bank Holding Company Act, 12 U.S.C. § 1972(1)(C) and (1)(D) :

(1) A bank shall not in any manner extend credit, lease or sell property of any kind, or furnish any service, or fix or vary the consideration for any of the foregoing, on the condition or requirement-
(C) that the customer provide some additional credit, property, or service to such bank, other than those related to and usually provided in connection with a loan, discount, deposit, or trust service; [or]
(D) that the customer provide some additional credit, property, or service to a bank holding company of such bank, or to any other subsidiary of such bank holding company[.]

The trial court instructed the jury that the plaintiff in an anti-tying claim must prove three things: (1) that the bank extended credit or made a loan to a borrower with a requirement or condition that the borrower obtain or provide some service to the bank or its subsidiary; (2) that the arrangement is considered unusual; and (3) that the bank received a benefit from the arrangement.

Without objection, the jury was instructed as follows:

A claim made under the Bank Holding Company Act requires proof that the extension of credit was conditioned on the bank's customer obtaining some other product or service from the bank or one of its subsidiaries. The term "conditioned" or "required" means that something was demanded or required as a prerequisite to the loan. What is required here is proof that the bank conveyed its intention to withhold credit unless the borrower fulfilled a prerequisite of purchasing or furnishing some additional product or service other than repayment of the loan. Further, that additional product or service must be shown to be a tying arrangement which actually benefited the bank.

During its deliberations, the jury used a verdict form with questions concerning each element of proof in the case. By a vote of 9-3, the jury answered "No" to the first question: "Do you find by a preponderance of the evidence that a tying arrangement(s)

existed between Warren G. Treme and First Bank and Trust?" The jury did not answer the other questions in the verdict form.

FACTUAL BACKGROUND

First Bank CDC, a wholly owned subsidiary of First Bank and Trust, coordinated community development projects involving blighted homes in New Orleans by assisting property owners with hiring architects and contractors and obtaining financing to renovate their property. During the construction phase, funding came primarily from sales of tax credits to investors and from community development block grants. Once the renovations were completed, the owner could obtain a bank loan. The community development work of First Bank CDC was important to its parent company, First Bank, because federal law requires banks to do a certain amount of business in challenging areas.

Treme, a self-employed general contractor, began working on First Bank CDC projects in the late 1990s and entered into more than a dozen construction contracts involving First Bank CDC projects from 1996 until 2003. Initially, the properties were owned by various nonprofit organizations, with First Bank CDC serving as the developer. First Bank CDC was a for-profit organization and charged development fees on the projects. On three of the later projects, First Bank CDC was the property owner.

A fixed-price construction contract was signed for each project, meaning that Treme could not get paid any more than the stated contract price unless the property owner approved a change order for an additional payment. Whether serving as owner or as developer, First Bank CDC calculated the price to be paid to the contractor by considering the amount of financing that was available for a particular project, primarily from tax credits and grants, and did not solicit bids from contractors to determine what the proposed work would cost. The contract prices in Treme's contracts ranged from $47,000 to $1.2 million, depending on the number of properties involved in a project.

Treme was paid the full contract price on each contract but claimed that he lost money on every project he did for First Bank CDC because the contract price was never enough to cover the construction costs. He testified that all of the money he borrowed from First Bank was used to pay for cost overruns on First Bank CDC projects, but he did not produce any documents to substantiate that cost overruns occurred or the amount of any overruns. He acknowledged that his accounting was not what it should be and said all of his business and personal records were destroyed in Hurricane Katrina.

On direct examination, Treme identified several loan documents he signed from 2003-2005 and testified:

Q. So as late as March 2005, you were still getting extensions of credit at the bank and you were still working on bank, CDC property?
A. Yes.
...
Q. You understood that they are not going to give you this credit unless you keep working on the projects?
A. Yes.
...
Q. Did you understand that you had told the bank that they could get any profit - any profit would go to them to pay these notes, if they needed that?
A. Yes.

Treme testified that his relationship with First Bank CDC began when a loan officer at First Bank asked him to be part of a team the bank was putting together to revitalize inner city neighborhoods. Throughout his testimony, Treme said he considered himself to be part of the team. When asked why he continued working on unprofitable projects, Treme said the bank's owner, Joseph Canizaro, and its president, David Moore, told him to "keep going" on the projects, which they said were important to them, and assured him that the bank would cover the losses and that he would make money on future projects.

Treme testified that he did not read any of the construction contracts or loan documents he signed. He did not consult a lawyer about the contracts before he signed them, explaining that he signed some of the contracts in meetings he attended with bankers, architects, First Bank CDC representatives and lawyers present. Treme said he assumed the lawyers represented everyone on the team, including him.

When asked why he continued to sign the contracts, Treme said:

A. I was part of a team of these people. Whatever they told me to sign, I just signed. I wasn't paying attention to all of this stuff. I wanted to get into the bigger picture of these with Mr. Canizaro and Mr. David Moore and all these people that promised me.
...
Q. Why didn't you stick it to them? You had a deal?
A. The only way I can tell you is I was part of a team. I was part of --working with this bank to improve the inner city, so maybe I would get a better deal later.

At some point before the fall of 2000, Ashton Ryan became president of the bank. Treme described a meeting he had with Ryan and with First Bank CDC's president, Jamie Neville, shortly after Ryan took over as the bank's president:

I thought it would be the same exact thing as the other guy, look, keep on going, congratulations, y'all are doing a great job. Then basically he seemed like he was really mad and he says we are not doing business like this any more. I said, what are you talking about? He said, you [Treme] are borrowing money [--] and pointing to Jamie Neville [--] on your jobs. That's not going to happen. You still do the work, but we are going to make some profit. It was a very aggressive, hard meeting, but it was more to scream at it see[ms] at Jamie than it was me because he saw Jamie was taking advantage of me or making me or CDC borrow money for their projects. I wasn't an owner of the projects.

Treme said Ryan later told him about a conversation Ryan had with Canizaro about Treme outside of Treme's presence in which Ryan told Canizaro, "We are not doing business like this any more," and Canizaro replied, "Warren is a big boy; he knows what he is signing." According to Treme's account of the conversation, Ryan told Canizaro, "No, he doesn't. You didn't notify him what you actually are doing to him." Treme testified, "That's when we started to change [to] making profit. Then I didn't know this until later obviously because I would have said, okay, guys, it's time to go and do it right now."

At some point before the fall of 2000, Treme became interested in developing a residential subdivision in St. Charles Parish called Riverbend Estates. He asked Canizaro to invest in Riverbend with him and said that Canizaro initially agreed to do that but later changed his mind. Treme testified:

I was extremely disappointed. I worked with Mr. Canizaro ... and the bank and the CDC for years. Busted my tail on these projects that were going to nowhere, signing notes and I expressed my disappointment to Mr. Ryan about Mr. Canizaro. I thought I was part of this group and all of a sudden, I felt that I wasn't at that point.... I realize[d] then I was never even on a team.

After Canizaro withdrew from the Riverbend deal, Treme partnered with Ryan to develop Riverbend Estates and entered into four more construction contracts on First Bank CDC projects in 2001-2003, with the contract prices totaling more than $1 million.

By 2004, Treme owed the bank $1.1 million on promissory notes he had signed. The bank's records indicate that the loans were secured by collateral valued at $1.2 million, including a second mortgage on Treme's home, a mortgage on his vehicle, assignments of profits and receivables from several First Bank CDC projects, receivables related to the Riverbend project, management fees from the Riverbend project, and estimated profits from future sales of Riverbend lots.

On cross-examination, Treme testified that he did not have an opportunity to inspect the property involved in all of the First Bank CDC projects before he signed the contracts. He said he may have misspoken in his deposition when he said he did have the opportunity to do that. He initially testified that he did not recall whether he had ever taken legal action against anyone for failing to perform on a contract but acknowledged having filed two such lawsuits, in which he verified the accuracy of the allegations, in 2001.

At trial, Treme testified that his relationship with Ryan, who by then was no longer with First Bank, was good and that they successfully developed Riverbend subdivision and another subdivision in St. Tammany Parish.

Treme acknowledged that the Internal Revenue Service had filed tax liens against him for unpaid income taxes for the years 1988, 1989, 1993, 2005, 2006, 2007, 2009 and 2010. The amount of the unpaid assessment for 2005, the year closest in time to Treme's work on First Bank CDC projects, was $125,724. Treme testified that some of the tax liens had been paid off and he was on a payment plan with the IRS for the others. He said he was not denying that he had made money and he will pay the IRS whatever he owes them. Treme did not introduce any tax returns or other records showing which of his business endeavors generated the income that gave rise to his tax liability.

Clark Heebe, who was employed by First Bank CDC from 1998-2002, testified that he was present when Treme expressed his concerns to Jamie Neville, First Bank CDC's president, about the unprofitable construction contracts and was told to "do what you got to do; keep it moving; we're going to find some money." Heebe said, "We believed that to be true at the time," and said they occasionally did find some additional money but that they were under a lot of pressure to complete projects on time because the tax credit funding could be lost if they did not. According to Heebe, Treme "was very excited about moving on to the next project and, hopefully, getting a bigger and better project."

Jonah Dowling was First Bank CDC's project manager from 2002-2005. He testified that his boss, Jamie Neville, negotiated the construction contracts, which Dowling monitored. According to Dowling, Treme was one of four contractors used by First Bank CDC during that time, and they were all treated "more or less the same" from Dowling's standpoint. Dowling said there were no significant cost overruns on the projects he managed, but that most of those were for new construction, which tends to have fewer cost overruns than renovations of existing structures. Dowling confirmed that it was critical to meet construction deadlines on projects funded with tax credits and said that if Treme had refused to complete a project or to borrow more money to cover cost overruns, they would have had to find an alternative funding source.

Treme called his former loan officer, Brad Calloway, and a senior lender at the bank, Louis Ballero, as witnesses. Both testified that the items of collateral in the bank's records, including the receivables and profits from two First Bank CDC projects, were identified by Treme as sources of repayment for his loans. Calloway said, "The assumption was [that] he would continue to complete those projects."

When asked by Treme's counsel whether the extensions of credit by the bank to Treme were made on the condition or requirement that he continue to provide construction services to the bank's wholly owned subsidiary, First Bank CDC, Calloway testified:

A. No, that was not a requirement. Evidence of that would be we looked at the alternative cash flow sources that Mr. Treme had related to the Riverbend management fee, also the Riverbend ultimate profits that could have come and had he had other contracts with third parties, we certainly would have looked at those as a possible source of cash flow to repay loans.
...
Q. So he, obviously, agreed he would keep working [on First Bank CDC projects]. If he had said, no, I'm not working, take those off the table, you would have had to reconsider the whole what are we going to do?
A. Well, at that point we would have looked for what other new contracts he may have, whether they were with the bank or with a third party, to generate cash flows to determine our source of repayment.

Senior lender Louis Ballero gave similar testimony in response to questioning by Treme's counsel:

Q. [M]y question [is], when you approved this extension of credit, was it done with the condition or requirement, not necessarily put a gun to his head, but the condition or requirement that he continue working on these projects to make them a reliable source of income?
A. I don't know if that was a condition. I mean, some of these projects had been completed but were not profitable. Some needed additional work to create ... a little more value, and I think in this particular loan request and consolidation it was a new project he was getting ready to take underway that probably created a significant higher level of potential profitability and fee income for him that were unrelated to the two bank projects.
Q. ... [I]f my client, Mr. Treme, had said, unh-unh, I'm not going to do it, Brad, I don't care what Louis Ballero says, I'm not giving you this money from the CDC, would this thing get sailed through or would there have been a stop and a decision made, okay, we need to file suit now or we need to take other action?
A. Yeah, I mean if that would have been a call, then probably ... pause there and then refer this to probably the higher level of authority in the bank ....
Q. But that didn't happen because my client did agree to it and y'all approved the extension, correct?
A. Yes.
Q. Okay.... [I]n other words, the bank approved this loan. One of the conditions was him giving collateral to the bank. We make you a loan, you give us collateral, correct?
A. Yes, sir.
Q. And one of the collateral sources in this case was the CDC projects?
A. Yes, sir.
Q. Okay. So we can say with some confidence that the collateral sources involving the CDC was a condition of this loan being made, correct?
A. I think that was the anticipation. Looking at the Cornerstone project, there was about $67,000 left to be paid and available with $7,000 of costs to be completed by Mr. Treme. And I think the doubles project, which was, again, a bank-owned project, had the potential upon completion of another 70 or $80,000 of profitability.
Q. Okay. And in order for you to go ahead and approve this loan, it was conditioned upon him agreeing that y'all would get as payback the Cornerstone retention and the doubles project?
A. Yes, sir.

Treme's expert witness in banking and banking procedures, Wilmore Whitmore, agreed that on paper, it appeared that Treme had offered the assignments of receivables and profits from his First Bank CDC projects to the bank as security for the loan. However, after hearing Treme's trial testimony, Whitmore stated, "the way he described it, it was not an offer. It was a condition." Considering the size, structure and nature of the loan transactions, Whitmore opined that the bank's loans to Treme were not working capital loans, despite being labeled as such in the bank documents, and that the extensions of credit were tied to Treme providing a security agreement on the bank's own property.

Reginald Smith, the defendants' expert in banking and banking procedures, testified that a contractor will normally borrow 10-20 percent of the contract price at the beginning of a construction contract as working capital to pay for labor and other direct costs before the first payment under the contract is due.

Smith compared the dates, contract prices and loan amounts on a number of Treme's promissory notes and First Bank CDC construction contracts and opined that there was no temporal relationship between the contract work and the loans. For example, Treme signed a $745,000 construction contract in March 1999 but did not borrow any money from First Bank until about a year later. In April 2000, he signed another contract and a promissory note, but the contract price was $47,000 and he borrowed $259,000. In August 2000, he signed a contract for $840,000. The next note was for $44,000 in November.

Smith found no indication of any links between Treme's loans and his First Bank CDC projects other than the fact that the loans appeared to have been made to obtain working capital. He said there was no reference to a particular construction project in the notes.

Smith conducted an extensive review of documents relating to the anti-tying claim in preparation for trial. He testified that he found no evidence of a verifiable cost overrun on a First Bank CDC project. Smith searched the Secretary of State's records, which showed that Treme was involved in other business ventures during the years in question, including the two subdivision development projects with Ryan.

The expert witnesses expressed differing opinions as to whether Treme's dealings with the bank and First Bank CDC involved unusual banking practices, whether the bank received a benefit from those dealings, and what damages, if any, Treme suffered.

Ryan, Canizaro and Neville were not called as witnesses at trial.

JURY INSTRUCTIONS

As noted above, the trial court instructed the jury on the elements of proof for Treme's anti-tying claim without objection. During an in-chambers conference and on the record in the courtroom, Treme objected to two other portions of the jury instructions, one relating to contract law and the other relating to the fiduciary duty of a bank officer or employee to bank customers:

When the language of a contract is clear and unambiguous, it must be interpreted solely by reference to the four corners of that document. The law does not compel people to read or to inform themselves of the contents of an instrument which they may choose to sign, but it holds them to the consequences, in the same manner and to the same extent as though they had exercised those rights. Under Louisiana law the party who claims that a contract has been modified must establish that parties mutually consented to the agreement as modified.
No financial institution or officer or employee thereof shall be deemed or implied to be acting as a fiduciary or have a fiduciary obligation or responsibility to its customers or to third parties other than shareholders of the institution, unless there is a written agency or trust agreement under which the financial institution specifically agrees to act and perform in the capacity of a fiduciary. The fiduciary responsibility and liability of a financial institution or any officer or employee thereof shall be limited solely to performance under such a contract and shall not extend beyond the scope thereof.

Treme sought to have these instructions excluded because the claims being presented to the jury were founded solely on the federal anti-tying law and did not include any claims for breach of contract or breach of fiduciary duty. The trial court overruled Treme's objections.

The trial court found the instructions on contract law to be warranted based on the fact that a number of construction contracts and loan agreements were introduced in evidence and witnesses were questioned about the meaning of some of the contractual language.

With respect to the instructions on breach of fiduciary duty, the court stated:

I do understand your concerns about raising an issue that is not part of your claim at this point. You are making an anti-tying claim. There's been no claim of fiduciary duty.
However, it was raised by your client during the course of these proceedings on a number of occasions; his references to being part of [a] team; of thinking that he was part of a team; specifically references to meetings in which there were representatives from the bank and attorneys and architects around; signing documents that were simply put in front of him without him having a need to read them because he thought they were part of a team and he was part of that team.
Those types of things would imply a fiduciary relationship potentially and I think that the bank has the right to have that charge in there. So your objection is noted to that one.

JURY VERDICT

The verdict form used by the jury during its deliberations contained five questions. The first four questions asked whether the jury found, by a preponderance of the evidence:

(i) that a tying arrangement(s) existed between Treme and First Bank;
(ii) that the tying arrangement(s) constituted an unusual banking practice;
(iii) that one or both defendants benefited from the tying arrangement(s); and
(iv) that Treme suffered damages as a result of the tying arrangement(s).

The fifth question asked what amount of damages would reasonably and fairly compensate Treme for the damages suffered as a result of the tying arrangement(s).

As previously noted, the jury answered the first question in the negative and did not answer the other questions.

The trial court adopted the jury's verdict as the court's judgment and dismissed Treme's demands against First Bank and First Bank CDC with prejudice, including any claims of set-off reserved to him in the earlier consent judgment in the bank's favor.

ASSIGNMENTS OF ERROR

Treme seeks reversal of the judgment of dismissal based on two assignments of error:

(1) The trial court committed reversible error in instructing the jury on the law on contract interpretation and the law on the fiduciary duty of a bank officer or employee to its customers when the only issue before the jury was First Bank's alleged violation of the Bank Anti-Tying Act;

(2) Based on the evidence presented, the jury was clearly wrong in finding that no tying arrangement existed between First Bank and Treme.

Treme asks this court to either grant a new trial or, alternatively, to review the evidence de novo and render a judgment in his favor for all damages proven.

With respect to the first assignment of error, First Bank contends Treme did not adequately preserve his objections to the jury charges. Alternatively, the bank claims the instructions were appropriate in light of the evidence presented at trial. As to the second assignment of error, the bank contends the evidence clearly supports the jury's verdict.

LAW AND ANALYSIS

Jury Instructions

We find no merit to First Bank's contention that Treme did not adequately preserve his objections to the jury charges because his objections were not stated with the degree of specificity required by La. C.C.P. art. 1793. The record indicates that the parties initially informed the trial judge of their objections to the proposed jury charges in chambers and later reasserted them on the record. It is clear from the trial court's reasons for overruling the objections that the court understood the specific basis for Treme's objections.

Trial courts are given broad discretion in formulating jury instructions. A trial court judgment should not be reversed so long as the jury charge correctly states the substance of the law. In considering an allegedly erroneous jury instruction, the reviewing court must assess the alleged impropriety in light of the entire jury charge to determine if the charges adequately provide the correct principles of law as applied to the issues framed in the pleadings and the evidence and whether the charges adequately guided the jury in its deliberations. Adams v. Rhodia, Inc., 07-2110 (La. 5/21/08), 983 So.2d 798, 804-805 ; Willis v. Noble Drilling (US), Inc., 11-598 (La. App. 5 Cir. 11/13/12), 105 So.3d 828, 839.

On appellate review of a jury trial, the mere discovery of an error in the judge's instructions does not, in and of itself, justify the appellate court conducting the equivalent of a trial de novo, without first measuring the gravity or degree of error and considering the instructions as a whole and the circumstances of the case. Ultimately, the determinative question is whether the jury instructions misled the jury to the extent that it was prevented from dispensing justice. Id.

In this case, the jury instructions, taken as a whole, correctly stated the substance of the law and adequately informed the jury of the specific elements of proof required of Treme under the anti-tying law in order for him to prevail on his damage claims. The wording of the questions in the verdict form made it clear to the jury that each element of proof in the case was related to the anti-tying law. The trial court's reasons for overruling the objections before instructing the jury are supported by the record. Additionally, after deliberations began, the jury asked to see the judge's instructions and the binder of contracts. With the contracts being a key part of the evidence in the case, it was appropriate for the trial court to instruct the jury on a few basic points of contract law.

Under the circumstances presented, the trial court did not abuse its discretion in overruling Treme's objections to the two jury instructions. Assuming, without finding, that there was any error in either of those instructions, we cannot say that it would have misled the jury to the extent of preventing the jury from dispensing justice in the case. Accordingly, it would not constitute reversible error. Adams v. Rhodia, Inc., supra ; Willis v. Noble Drilling (US), Inc., supra.

Jury Verdict - Standard of Review

In all civil cases, the appropriate standard for appellate review of factual determinations is the manifest error - clearly wrong standard, which precludes the setting aside of a trial court's finding of fact unless that finding is clearly wrong in light of the record reviewed in its entirety. Cenac v. Public Access Water Rights Ass'n , 02-2660 (La. 6/27/03), 851 So.2d 1006, 1023 ; Rosell v. ESCO , 549 So.2d 840, 844 (La. 1989) ; Canter v. Koehring Co. , 283 So.2d 716, 724 (La. 1973).

The trier of fact is in a better position to evaluate the credibility of witnesses and make factual determinations than is a reviewing court. Parish Nat. Bank v. Ott , 02-1562 (La. 2/25/03), 841 So.2d 749, 753. Thus, a reviewing court may not merely decide if it would have found the facts of the case differently. Hall v. Folger Coffee Co., 03-1734 (La. 4/14/04), 874 So.2d 90, 98. Rather, before reversing a trial court's factual findings, the appellate court must satisfy a two-step process based on the record as a whole: there must be no reasonable factual basis for the trial court's conclusion, and the finding must be clearly wrong. Stobart v. State through Dept. of Transp. & Dev., 617 So.2d 880, 882 (La. 1993).

This test requires the reviewing court to do more than simply review the record for some evidence that supports or controverts the trial court's findings. The court must review the entire record to determine whether the trial court's findings were clearly wrong or manifestly erroneous. The issue to be resolved on review is not whether the judge or jury was right or wrong, but whether the judge's or jury's fact-finding conclusion was a reasonable one. Id.

Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel its own evaluations and inferences are as reasonable. Varmall v. Bankers Specialty Ins. Co. , 15-223 (La. App. 5 Cir. 10/28/15), 178 So.3d 181, 183-84citing Waguespack v. Sentry Select Ins. Co. , 12-280 (La. App. 5 Cir. 11/13/12), 105 So.3d 880, 884-85, writ denied , 12-2700 (La. 2/8/13), 108 So.3d 90. Moreover, where there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous. Id. , 178 So.3d at 184. It is only where the objective evidence so contradicts a witness' testimony, or the testimony itself is so internally inconsistent or implausible on its face that a reasonable fact finder would not credit it, that the court of appeal may find manifest error even in a finding purportedly based upon a credibility determination. Id.

When an appellate court finds that a reversible error of law or manifest error of material fact was made in the trial court, it is required, whenever possible, to re-determine the facts de novo from the entire record and render a judgment on the merits. Ferrell v. Fireman's Fund Ins. Co. , 94-1252 (La. 2/20/95), 650 So.2d 742, 745. While great deference should be accorded to the fact finder, appellate courts have a constitutional duty to review facts. To perform this constitutional duty properly, the appellate court must determine whether the lower court's conclusions were clearly wrong based on the evidence or are clearly without evidentiary support. Stewart v. State through Dept. of Transp. & Dev. , 08-0772 (La. App. 1 Cir. 3/20/09), 9 So.3d 957, 963, writ denied , 09-1228 (La. 9/18/09), 17 So.3d 968.

Jury Verdict - Analysis

Treme contends the jury was clearly wrong in finding the evidence insufficient to prove that a tying arrangement existed between First Bank and Treme. He claims the undisputed facts presented at trial indicate that the bank required him to continue creating revenue to secure the bank loans by performing construction work on the bank's construction projects.

The bank asserts that there was ample evidence to support the jury verdict. The bank contends there were numerous inconsistencies and deficiencies in Treme's case which called his credibility into question, and claims Treme did not present evidence to corroborate his allegations.

Considering the totality of the evidence presented at trial, we cannot say the jury was clearly wrong in finding insufficient proof that a tying arrangement existed between First Bank and Treme.

The jury heard conflicting evidence as to whether the loans to Treme were conditioned on a requirement that he continue working on First Bank CDC projects, from which he claimed he never made any money. Treme did not present any evidence to substantiate his contentions that he lost money on every First Bank CDC project due to cost overruns and that all of the money he borrowed from the bank was used to pay for those overruns. The jury heard evidence that Treme was involved in other business ventures at the time, including the development of Riverbend Estates subdivision, a major real estate development. Treme made enough money in 2005 to be assessed with more than $125,000 in federal income tax liability. He did not provide any documentary evidence to show which of his businesses were profitable and which were not. Treme testified that all of his business records were lost in Hurricane Katrina. However, his 2005 tax return was not due until the year after Katrina.

Treme testified that he initially continued to do business with First Bank CDC despite making no money because he considered himself to be part of the bank's community development team and he hoped to be part of bigger and better projects in the future. Even after realizing that he was not part of that team, however, Treme continued to sign contracts to work on First Bank CDC projects.

Although profits and receivables from a few First Bank CDC projects were included as collateral for loans to Treme in 2003 and 2004, they made up only a small portion of the total value of the collateral ($147,000 of $1.2 million). Most of the collateral came from sources unrelated to First Bank CDC projects.

Treme and his expert witness testified that the bank loans were conditioned on a requirement by the bank that Treme continue working on First Bank CDC projects. The bank's loan officers, Calloway and Ballero, both of whom were called as witnesses by Treme, said Treme's contracts on First Bank CDC projects were included as collateral for the loans because Treme identified them as repayment sources, along with other collateral. Calloway testified that the bank did not require Treme to continue working on First Bank CDC projects as a condition of the loans and said the bank would have considered other contracts, including contracts with third parties not affiliated with the bank, as possible repayment sources if Treme had stopped working on First Bank CDC projects. The defense expert found no evidence of a link between the loans and the contracts on First Bank CDC projects in his review of the bank's records and other documents.

The evidence in this case indicates that Treme, as a self-employed borrower, identified ongoing or completed First Bank CDC projects as one source of income available to him for repaying the money he borrowed from the bank and pledged the income he anticipated receiving from those contracts, along with a number of other assets unrelated to First Bank CDC projects, to secure repayment of the loans. Under such circumstances, the fact that the bank assumed or anticipated that he would continue working on those projects does not amount to proof that the bank tied the extensions of credit to a requirement that Treme furnish some additional service to the bank or its subsidiary other than repayment of the loan.

Treme's reliance on Dibidale of Louisiana, Inc. v. American Bank & Trust Company, New Orleans, 916 F.2d 300 (5th Cir. 1990) as support for his position is misplaced. In that case, the appellate court found that there were genuine issues of material fact as to whether a tying arrangement existed and reversed the district court's grant of summary judgment. In this case, the anti-tying claim is before us after a trial on the merits in which the jury was presented with two permissible views of the evidence and resolved the conflicts by concluding that Treme did not prove the existence of a tying arrangement by a preponderance of the evidence. On this record, we cannot say the jury was clearly wrong.

DECREE

The trial court judgment dismissing Treme's demands against First Bank and First Bank CDC with prejudice on the basis of the jury verdict is affirmed.

AFFIRMED

      State courts have concurrent jurisdiction with federal courts over claims arising under the anti-tying provisions of the Bank Holding Company Act. Cuervo Resources, Inc. v. Claydesta National Bank, 876 F.2d 436 (5th Cir. 1989) ; Lane v. Central Bank of Alabama, N.A., 756 F.2d 814 (11th Cir. 1985).

      For simplicity at trial and on appeal, Treme is referred to as the plaintiff; First Bank and First Bank CDC are referred to as the defendants.

      La. C.C.P. art. 1793(C) states in part: "A party may not assign as error the giving or the failure to give an instruction unless he objects thereto either before the jury retires to consider its verdict or immediately after the jury retires, stating specifically the matter to which he objects and the grounds of his objection."