138 So. 3d 51
La. Ct. App.2014Background
- In 2003 Jefferson Parish Hospital District No. 1 (West Jeff) purchased a shopping-center property for $3,730,000; the deed expressly stated the purchase was "subject to" existing leases and West Jeff assumed the lessor’s obligations.
- A long-term Rite Aid lease (originally 1976, amended 1992) remained in effect, fixing rent at $3.35/sq ft plus a percentage of sales and granting renewal options through 2032.
- West Jeff had a formal appraisal and internal memoranda before purchase that (1) valued the property higher than the purchase price, (2) identified below-market long-term leases (including Rite Aid) and estimated leasehold interest, and (3) recommended purchase as a strategic investment.
- In 2012 West Jeff sued to nullify the Rite Aid lease, alleging the lease constituted an unlawful donation of public funds in violation of La. Const. art. VII, § 14(A) because rent was far below fair market value.
- Rite Aid moved for summary judgment; the trial court granted Rite Aid’s cross-motion and denied West Jeff’s motion. The court taxed appeal costs against West Jeff.
- Rite Aid then moved to tax costs in the trial court as the prevailing party; the trial court denied that motion based on West Jeff’s asserted immunity. Rite Aid appealed the denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether La. Const. art. VII, § 14(A) (anti-donation) invalidates a pre-existing private lease after the public entity purchased the property subject to that lease | West Jeff: The lease’s below-market rent renders it an unlawful donation of public funds and thus voidable against the public purchaser | Rite Aid: The lease is a valid contract between private parties; West Jeff bought the property subject to the lease with knowledge and appraisal analysis | Court: Anti-donation provision does not nullify the lease because West Jeff purchased the property subject to the pre-existing lease after conducting appraisal and knowingly assuming the lease obligations; summary judgment for Rite Aid affirmed |
| Whether a political subdivision (West Jeff) is immune from payment of the opposing party’s court costs under La. C.C.P. art. 1920 | West Jeff: As a political subdivision/state entity, it is immune from payment of court costs even when an unsuccessful plaintiff | Rite Aid: No statutory immunity bars assessing costs against an unsuccessful political subdivision; court may tax costs equitably under art. 1920 | Court: Political subdivisions are not immune from assessment of opposing party’s costs absent a statutory provision; trial court erred in denying motion to tax costs and case is remanded for discretionary cost determination |
Key Cases Cited
- Hines v. Garrett, 876 So.2d 764 (La. 2004) (standard of appellate review for summary judgment)
- Sharpless v. Louisiana Dep’t of Transp., 110 So.3d 1117 (La. App. 5 Cir. 2013) (summary judgment burden and procedure)
- Segura v. Louisiana Architects Selection Board, 362 So.2d 498 (La. 1978) (court costs are part of "liability" contemplated by constitution)
- LIGA v. Gegenheimer, 636 So.2d 209 (La. 1994) (interpreting statutory amendment re: deferment of costs and state immunity)
- Prejean v. Dixie Lloyds Ins. Co., 655 So.2d 303 (La. 1995) (state exempt from prepayment of costs; deferment until final judgment)
- State, Dep’t of Transp. & Dev. v. Lauricella Land Co., L.L.C., 106 So.3d 1124 (La. App. 5 Cir. 2012) (political subdivisions not immune from court costs absent statute)
- Denoux v. Vessel Mgmt. Servs., Inc., 983 So.2d 84 (La. 2008) (evidence must be properly offered to be considered)