Libertas Tax Fund I LLC Versus Daniel J. Mompoint, Marie Renee Rimpel Mompoint, United States of America, United States of America, Department of Treasury - Internal Revenue Service, State of Louisiana and State of Louisiana, Department of Revenue

• Court: Louisiana Court of Appeal
• Decided: October 5, 2020
• Docket: 20-CA-105
• Status: Unknown

Opinion

LIBERTAS TAX FUND I LLC NO. 20-CA-105

VERSUS FIFTH CIRCUIT

DANIEL J. MOMPOINT, MARIE RENEE COURT OF APPEAL RIMPEL MOMPOINT, UNITED STATES OF AMERICA, UNITED STATES OF AMERICA, STATE OF LOUISIANA DEPARTMENT OF TREASURY - INTERNAL REVENUE SERVICE, STATE OF LOUISIANA AND STATE OF LOUISIANA, DEPARTMENT OF REVENUE

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 796-182, DIVISION "D" HONORABLE SCOTT U. SCHLEGEL, JUDGE PRESIDING

October 05, 2020

MARC E. JOHNSON JUDGE

Panel composed of Judges Jude G. Gravois, Marc E. Johnson, and Hans J. Liljeberg

VACATED AND REMANDED MEJ JGG HJL COUNSEL FOR PLAINTIFF/APPELLEE, LIBERTAS TAX FUND I LLC Wesley M. Plaisance Laura S. Achord

COUNSEL FOR DEFENDANT/APPELLANT, DANIEL J. MOMPOINT AND MARIE RENEE RIMPEL MOMPOINT Christopher J. Davidson John A. E. Davidson JOHNSON, J.

Defendants/Appellants, Daniel J. Mompoint and Marie Renee Rimpel

Mompoint (hereinafter referred to as “the Mompoints”), appeal the trial court’s

default judgment concerning a quiet title action and a partition by licitation in favor

of Plaintiff/Appellee, Libertas Tax Fund I, LLC (hereinafter referred to as

“Libertas”), from the 24th Judicial District Court, Division “D”. For the following

reasons, we vacate the final default judgment confirming the quieting of the tax

sale title and partition by licitation, and we remand the matter to the trial court for

further proceedings.

FACTS AND PROCEDURAL HISTORY

According to the record in this matter, Libertas filed a petition against the

Mompoints, the United States of America, the United States of America,

Department of Treasury – Internal Revenue Service, the State of Louisiana, and the

State of Louisiana – Department of Revenue on June 12, 2019. In its petition,

Libertas sought a judgment from the trial court that would confirm its tax sale title

and 1% ownership of certain immovable property in Jefferson Parish—3660 Lake

Aspen Dr. W., Gretna, Louisiana—owned by the Mompoints, as well as the

partition by licitation of the same immovable property. Libertas alleged that the

three-year peremptive period to redeem its tax sale title to the property had

expired, and the tax sale title had not been annulled or redeemed by the Mompoints

or any other party. Libertas also sought a settlement of the accounts between the

co-owners. The petition was answered by the Louisiana Department of Revenue;

however, it was the only party to answer the petition.

Libertas filed a “Motion for Entry of Preliminary Default” on January 9,

2020. Due to the failure of the Mompoints to file responsive pleadings within the

time delay allowed by law, Libertas sought a preliminary default judgment against

20-CA-105 1 them.1 The trial court granted the motion on January 9, 2020. On January 22,

2020, Libertas filed its “Motion to Confirm Default Judgment.” In support of its

motion, Libertas submitted an affidavit from its manager, Keith Richard, attesting

to Libertas’ 1% ownership in the immovable property and its desire for a partition

of the property; a tax sale certificate for the immovable property; the original

purchase agreement for the property signed by the Mompoints in 1992; two notices

of federal tax liens on the property dated March 5, 2010 and March 14, 2012; and,

two notices of Louisiana state tax assessments and liens on the property dated

October 16, 2012 and February 20, 2014.

On January 27, 2020, the trial court granted Libertas’ motion for

confirmation, without a hearing in open court, and rendered a default judgment

against the Mompoints and the United States defendants. In its judgment, the trial

court declared Libertas as the 1% owner of the immovable property; enjoined the

defendants from claiming any rights to the portion owned by Libertas; reformed

the tax sale certificate to mirror the legal description of the property set forth in the

judgment; terminated the encumbrances on the property recorded in Jefferson

Parish; appointed the Sheriff for the Parish of Jefferson to partition the property at

a public auction; ordered the sale of the property on an all cash basis, without

appraisal and with no minimum price; ordered that Libertas be reimbursed taxes

and all other expenses, plus attorney’s fees and costs from the mass sale proceeds

and with the 1% proceeds paid directly to Libertas; and, designated the judgment

as final and appealable.

After the final judgment was rendered, Libertas and the Louisiana

Department of Revenue moved the court for a “Consent Partial Final Judgment,”

wherein the parties agreed to partially erase and cancel certain encumbrances on

1 Libertas also sought a preliminary default judgment against the United States of America and the United States of America – Department of Treasury.

20-CA-105 2 the property recorded in Jefferson Parish. The trial court granted the joint motion

and rendered a consent judgment on January 30, 2020. Subsequently, Libertas and

the United States defendants also moved the trial court for a “Consent Partial Final

Judgment,” wherein the parties agreed to partially erase and cancel certain

encumbrances on the property recorded in Jefferson Parish. That motion was

granted by the trial court, and the consent judgment was rendered on February 10,

2020. The judgment further ordered that the proceeds of the partition sale

belonging to the Mompoints be deposited in the registry of the court and the

encumbrances held by the United States defendants attach only to the Mompoints’

proceeds.

The instant suspensive appeal of the Mompoints followed.

ASSIGNMENTS OF ERROR

On appeal, the Mompoints allege: 1) the trial court erred in confirming the

preliminary default judgment without a hearing in open court; 2) the trial court

rendered an invalid default judgment because the judgment is not precise, definite,

or certain; 3) the trial court erred in finding in favor of Libertas because Libertas

failed to establish a prima facie case for confirming the preliminary default

judgment; and, 4) the trial court erred in allowing Libertas to demand a partition by

licitation before it is a true co-owner.

LAW AND ANALYSIS

General Precepts of Law

Generally, an appellate court’s review of a default judgment is governed by

the manifest error standard of review. ASI Fed. Credit Union v. Leotran Armored

Sec., LLC, 18-341 (La. App. 5 Cir. 11/7/18) 259 So.3d 1141, 1147-48, citing Arias

v. Stolthaven New Orleans, LLC, 08-1111 (La. 5/5/09); 9 So.3d 815, 818.

However, when the court of appeal “finds that a reversible legal error or manifest

error of material fact was made in the trial court, it is required to re-determine the

20-CA-105 3 facts de novo from the entire record and render a judgment on the merits.” Id. at

1148. Although a presumption exists that the record supports a default judgment,

the presumption does not exist when the record upon which the judgment is

rendered indicates otherwise. Id., citing Morice v. Alan Yedor Roofing, 16-532

(La. App. 5 Cir. 2/8/17); 216 So.3d 1072, 1079-80.

In reviewing default judgments, the appellate court is restricted to

determining the sufficiency of the evidence offered in support of the judgment.

Mount v. Hand Innovations, LLC, 12-326 (La. App. 5 Cir. 11/27/12); 105 So.3d

940, 943, citing Arias, supra. Confirmation of a default judgment is similar to a

trial. It requires, with admissible evidence, “proof of the demand sufficient to

establish a prima facie case.” Id., citing La. C.C.P. art. 1702(A). The elements of

a prima facie case are established with competent evidence, as fully as though each

of the allegations in the petition were denied by the defendant. Id., citing Sessions

& Fishman v. Liquid Air Corp., 616 So.2d 1254, 1258 (La. 1993).

Requirement of Hearing in Open Court

The Mompoints allege the trial court erroneously confirmed the preliminary

default judgment without a hearing in open court. They argue that Libertas failed

to supply sufficient information needed to proceed without a hearing in open court,

e.g., a certification that the suit was based on a conventional obligation or proof of

tax payments, attorney’s fees or expenses. They further argue that Libertas failed

follow the requirements set forth in La. C.C. art. 1702.1, by failing to introduce a

statement of the alleged account or an itemization of the claimed amounts into

evidence. Because no record was made in this matter, the Mompoints contend that

Libertas’ default judgment without any evidence admitted by the trial court on the

record is deficient.

Libertas maintains that the trial court was authorized to confirm the

preliminary default judgment in chambers. It contends that the instant matter is an

20-CA-105 4 action to confirm a tax sale title and partition, and the matter is not grounded in

contract or tort or based on an open account, promissory note, or other negotiable

instrument. Thus, Libertas argues that the specific evidentiary requirements set

forth in La. C.C.P. art. 1702(B) and documentation requirements of La. C.C.P. art.

1702.1 are not applicable. Libertas further contends the trial court judge

determined that a hearing was not necessary and rendered the judgment in

chambers.

According to La. C.C.P. 1702(A), a preliminary default must be confirmed

by proof of the demand that is sufficient to establish a prima facie case and that is

admitted on the record prior to the entry. The court may permit documentary

evidence to be filed in the record in any electronically stored format authorized by

the local rules of the district court or approved by the clerk of the district court for

receipt of evidence. If no answer or other pleading is filed timely, this

confirmation may be made after two days, exclusive of holidays, from the entry of

the preliminary default. Id. The Article further provides the requirements for

proving a prima facie case for specific types of demands. See, La. C.C.P. art. 1702

(B) and (C). La. C.C.P. art. 1702.1 establishes the procedure for plaintiffs seeking

to confirm a preliminary default without appearing for a hearing in open court

pursuant to La. C.C.P. art. 1702(B)(1) and (C).

In this matter, the trial court confirmed Libertas’ preliminary default

judgment without a hearing in open court. Libertas attached exhibits to its motion

to confirm the preliminary default judgment. However, none of the exhibits were

accepted into evidence by the trial court.

In Precept Credit Opportunities Fund, L.P. v. Brown, 20-114 (La. App. 4

Cir. 7/22/20); --- So.3d ---, 2020 WL 4199728, the Louisiana Fourth Circuit

reviewed a similar confirmation of a default judgment regarding the quieting of a

tax sale title. In that matter, the plaintiff claimed that it acquired sole ownership of

20-CA-105 5 tax sale property and sought a preliminary default against the defendants, which

was granted by the trial court. Four days after the trial court entered an order of

preliminary default, the plaintiff filed a motion to confirm the preliminary default

judgment. On the same day the motion was filed, the trial court rendered a final

default judgment without a hearing in open court, quieting the plaintiff’s tax sale

title to the property. Id. at p. 1.

On appeal, the Fourth Circuit found that the plaintiff failed to offer

competent evidence sufficient to support the confirmation of a final default

judgment. The court reasoned,

[T]he record does not reflect that the trial court held a hearing in open court, wherein evidence was formally introduced and admitted. Instead, Plaintiff submitted a motion and supporting memorandum to confirm default judgment. Plaintiff attached its affidavit that included three exhibits to its supporting memorandum. However, the record does not reflect any request to admit these exhibits or the entire record into evidence. Moreover, Plaintiff did not present live testimony or offer a certified copy of the tax deed into evidence. As a result, Plaintiff did not admit any evidence on the record by which it could prove the elements of its case as required by La. C.C.P. art. 1702(A).

Id. at p. 4.

When considering whether a hearing in open court was required for a

confirmation of a preliminary default judgment to quiet a tax sale title, the Fourth

Circuit explained,

As discussed, La. C.C.P. arts. 1702(B)(1) and (C) and 1702.1 do specify certain claims and situations wherein a plaintiff may confirm a default judgment using hearsay evidence without a hearing when mandatory itemizations and certifications of proof are present. However, Plaintiff’s claim to quiet title does not fall within one of the foregoing exceptions under La. C.C.P. art. 1702(B)(1) or (C) that would allow hearsay evidence by way of affidavit and exhibits, nor does its submission comply with the strict mandates of La. C.C.P. art. 1702.1, which is necessary to proceed to a final judgment without a hearing. Thus, a hearing with live testimony and evidence was required. Accordingly, the failing to conduct a hearing and obtain competent evidence sufficient to establish the elements of a prima facie case by which a final default judgment could be confirmed is a

20-CA-105 6 fatal procedural defect.

We agree with the Fourth Circuit’s rationale in Precept Credit Opportunities

Fund, L.P. Accordingly, we find that the trial court legally erred in failing to

conduct a hearing in open court and obtain competent evidence sufficient to

establish the elements of a prima facie case by which a final default judgment

could be confirmed in favor of Libertas, and those failures were fatal procedural

defects. As such, we find that Libertas’ claim to quiet tax title does not fall within

one of the exceptions under La. C.C.P. art. 1702(B)(1) or (C), and Libertas failed

to present sufficient proof of its demand to establish a prima facie case for

confirmation of the preliminary default judgment that was admitted on the record

prior to the entry final default judgment.2 Without a properly rendered final default

judgment that quiets the tax sale title in this matter, we find that the partition by

licitation was also erroneously rendered. Because of our finding on this

assignment of error, we pretermit discussion of the Mompoints’ remaining

assignments of error.

DECREE

For the foregoing reasons, we find the final default judgment rendered by the

trial court to be fatally flawed. Accordingly, we vacate the final default judgment

in favor of Libertas Tax Fund I, LLC, which confirmed Libertas’ quiet title action

and granted a partition by licitation, and we remand the matter to the trial court for

further proceedings. Libertas Tax Fund I, LLC is assessed the costs of this appeal.

VACATED AND REMANDED

2 Compare, Bridges v. Citifinancial Auto Corporation, 18-734 (La. App. 1 Cir. 11/5/18); 266 So.3d 939, 942, where the Louisiana First Circuit held that an alleged tax debt does not qualify under any of the circumstances specified in La. C.C.P. arts. 1702(C) and 1702.1 for confirming a default judgment without a hearing, and the trial court legally erred in confirming the default judgment against the defendant in the absence of a hearing.

20-CA-105 7 SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

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20-CA-105 E-NOTIFIED 24TH JUDICIAL DISTRICT COURT (CLERK) HON. SCOTT U. SCHLEGEL (DISTRICT JUDGE) WESLEY M. PLAISANCE (APPELLEE) CHRISTOPHER J. DAVIDSON (APPELLANT)

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