Two Canal Street Investors, Inc. v. New Orleans Building Corp.

202 So. 3d 1003, 2016 La.App. 4 Cir. 0825, 2016 La. App. LEXIS 1791
Louisiana Court of Appeal·Decided September 23, 2016·No. NO. 2016-CA-0825·Published·Cited by 11 cases

Opinion

Judge Max N. Tobias, Jr.

The ultimate issue in this lawsuit relates to the bidding process under Louisiana’s Public Lease Law, La. R.S. 41:1211, et seq. The plaintiff, Two Canal Street Investors, Inc. (“TCSI”), appeals the trial court’s judgment, dismissing as of non-suit its lawsuit for its failure to post security for costs pursuant to La. R.S. 13:1215. Finding that the trial court abused its discretion in ordering TCSI to post excessive security for costs and dismissing TCSI’s suit without holding a contradictory hearing, we vacate the ex parte order setting security for costs in the amount of $750,000.00; vacate the judgment of the trial court (a) dismissing TCSI’s suit as of non-suit, and (b) ordering the cancellation of the inscription of the Notice of Pendency of Action in the Orleans Parish mortgage records; and remand for a decision on the peremptory exception of no right of action and for further proceedings.

The New Orleans Building Corporation (“NOBC”), one of the three defendants, is a public benefit corporation that was formed by the City of New Orleans (“City”), through its chief executive officer. NOBC’s purpose is to own; lease, develop, and operate, inter alia, that certain Mississippi riverfront parcel of land and the structure thereon (a 33-story building) located at 2 Canal Street, New Orleans, commonly referred to as the World Trade Center of New Orleans. The City, a political subdivision of Louisiana, has consistently maintained a beneficial interest in NOBC.1 The City and Mary Kay Kleinpeter-Zamora, the City’s chief procurement officer of its purchasing bureau, are additional parties-defendant.

In September 2014, NOBC issued a request for proposals (specifically, Request [1007] for Proposal No. 8975-01775) as to what to do with the vacant 2 Canal Street property. Proposals were received. A committee2 established by NOBC reviewed the proposals, and after significant study, selected the proposal of the intervenors, Carpenter & Company, Inc., Woodward Interests, L.L.C., and Two Canal Owner LLC (collectively hereafter,. “Carpenter-Woodward”), rejecting the proposal of TCSI and that of other proposers. A contract was entered into between NOBC and Carpenter-Woodward for the redevelopment of 2 Canal Street into a multi-million dollar facility: a Four Seasons Hotel and condominiums. TCSI had proposed a multi-mil-lion dollar facility (but of a lesser amount than that of Carpenter-Woodward): redevelopment of 2 Canal Street into a Hotel Alessandra and apartments.

TCSI, dissatisfied with the decision of NOBC, filed suit on 23 April 2015 to block the granting of the contract to Carpenter-Woodward for the redevelopment of 2 Canal Street, maintaining that their proposal was more beneficial (financially and otherwise) to NOBC and the City than that of Carpenter-Woodward;3 it also asserted claims for declaratory relief, La. C.C.P. arts. 1871, et seq., asserting that the Public Lease Law applied and had not been followed. On 1 June 2015, TCSI also filed a Notice of Pendency of Action in the Orleans Parish mortgage records. TCSI did not sue Carpenter-Woodward; however, Carpenter-Woodward intervened in the lawsuit to protect its accepted proposal.4

Discovery thereafter commenced on TCSI’s suit.

While the suit was pending, the shares of stock of TCSI were transferred for ten dollars to Stuart C. “Neil” Fisher (“Mr. Fisher”), although TCSI asserts that other valuable consideration was given. Mr. Fisher became the sole shareholder, president, and sole director of TCSI. He has continued the prosecution of TCSI’s suit.5

[1008] La. R.S. 13:1215, which applies only to suits in the Civil District Court for the Parish of Orleans by virtue of its placement in the Louisiana Revised Statutes in Subpart C of Part II of Chapter 5 of Title 13 (relative to the Clerk-of the Civil District Court), states:

The defendant in any cause may require the plaintiff or party prosecuting the cause to give bond or other security, in such amount as may be fixed by the court, to secure the repayment on the final termination of the cause of all costs expended by the defendant therein. The order requiring such bond or security for costs shall issue ex-parte on the application of the party, without costs, and no further proceeding shall be had in the cause until such bond or security has been furnished. The court shall fix the delay within which such bond or security for costs shall be furnished, and the failure to furnish it, within such delay, shall operate a dismissal of the cause as in case of non-suit. In all cases the surety for costs shall be considered a party to the cause and shall-be condemned for the amount of costs recoverable in solido with the party cast in the final judgment in the cause. [Emphasis supplied.]

Although the failure to furnish security under the law would appear to be self-operating, absent an order or judgment formally dismissing the suit gives an appellate court nothing to review. An appellate court reviews written judgments, orders, and minute entries.

On 21 June 2016, pursuant to La. R.S. 13:1215,6 Carpenter-Woodward filed on behalf of themselves and the defendants an ex parte motion to set security for costs to require TCSI to furnish security in the amount of $800,000.00 for the repayment of all costs that would be expended by the [1009] City, NOBC, Ms. Kleinpeter-Zamora, and Carpenter-Woodward. A request for an ex parte order is a recognized procedure for a defendant to use La. R.S. 13:1215. TCSI was served with the motion; By order dated 24 June 2016, the trial court set ex parte the security for costs in the amount of $750,000.00 to be posted within ten days from the date of service of the order, in default of which TCSI’s suit would be dismissed as of non-suit. See La. C.C.P, art. 963.7 Service of the order was perfected by the sheriff on counsel for TCSI on 1 July 2016. TCSI did not post the security as ordered; neither did it file a motion to reduce the security nor seek review of the trial court’s interlocutory order by an application for supervisory review by this court. TCSI did, however, file a memorandum in opposition to the motion to dismiss for failure to post security on 13 July 2016.

The trial court formally dismissed TCSI’s suit as of non-suit and ordered the cancellation of the Notice of Pendency of Action in the Orleans Parish mortgage records (see La. C.C.P. art. 3753), commemorating its decision by a written judgment of 13 July 2016. (The record on appeal does not reflect that a hearing was had on the defendants’ and Carpenter-Woodward’s motion or on the trial court’s order to post security.) Presumably, the trial court reviewed TCSI’s memorandum in opposition before issuing its judgment.

This timely devolutive appeal fob lowed.8

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Two Canal Street Investors, Inc. v. New Orleans Building Corp., 202 So. 3d 1003, 2016 La.App. 4 Cir. 0825, 2016 La. App. LEXIS 1791 (La. Ct. App. 2016).

202 So. 3d 1003 (Two Canal Street Investors, Inc. v. New Orleans Building Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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