Billy Brooks HUDSON, et al., Plaintiffs-Appellants, v. CITY OF BOSSIER, et al., Defendants-Appellees.
No. 33,620-CA
Court of Appeal of Louisiana, Second Circuit
August 25, 2000
766 So. 2d 738
Before NORRIS, BROWN and KOSTELKA, JJ.
James M. Bullers, District Attorney, Pugh, Pugh and Pugh by Robert G. Pugh, Shreveport, Counsel for Appellee, Bossier Parish Police Jury.
James D. Hall, Bossier City, Counsel for Appellee, City of Bossier City.
Hammonds & Sills by Robert L. Hammonds, Karen D. Murphy, Baton Rouge, Counsel for Appellee, Bossier Parish School Board.
Lunn, Irion, Johnson, Salley & Carlisle by Charles W. Salley, James A. Mijalis, Penny N. Nowell, Shreveport, Counsel for Appellee, Louisiana Riverboat Gaming Partnership d/b/a Isle of Capri Casino.
Piper & Associates by Robert E. Piper, Jr., Shreveport, Counsel for Appellee, Horseshoe Entertainment.
Klotz, Simmons & Reeks by David Klotz, Shreveport, Counsel for Appellee, Greater Bossier Economic Development Foundation.
Cook, Yancey, King & Galloway by Ed Blewer, Glenn L. Langley, Shreveport, Counsel for Appellee, Bossier Parish Sheriff‘s Office.
Booth, Lockard, Politz, Lesage & D‘Anna by Bennett Louis Politz, Shreveport, Counsel for Appellee, Johnny Gray Jones Youth Shelter.
BROWN, J.
Although authorized by the state legislature to levy a per person boarding tax/admission fee on casino boats within their jurisdiction, the City of Bossier City, Bossier Parish Police Jury and Bossier Parish School Board “contracted away” this right and any future grant of the power to tax in return for guaranteed annual payments from the boats.
A “Class Action Suit To Hold Contracts Invalid” was filed by four individuals seeking to represent a class of concerned citizens and taxpayers, naming as defendants various governmental, quasi-public and private defendants. Plaintiffs alleged that the agreements between the local governing authorities and the casino boats were invalid. There had been two previous actions involving the validity of the contracts,
Some of the defendants filed exceptions, including one of res judicata.2 The sole issue presented in this appeal is whether the trial court erred in ruling that the judgment in the prior School Board case precluded litigation of the issue of the viability of the contracts. Finding that there was neither full and fair consideration of the issues and claims now asserted by plaintiffs in the previous School Board case (as opposed to the Police Jury case), nor constitutionally adequate representation, we reverse and remand the matter to the trial court.
FACTS AND PROCEDURAL BACKGROUND
Authority to Tax Gambling Boats
In 1994, the legislature authorized the “local governing authority” of the parish or municipality where a gambling boat is berthed to impose an admission fee of up to $2.50 for each boarding passenger. In Bossier Parish,
In 1995, the legislature amended
The Contracts
Bossier City, the local governing authority where the gambling boats involved in the instant litigation are berthed, made a deal with the casinos not to assess a boarding tax/fee. Instead, in 1994, Riverboat Gaming Partnership d/b/a Isle of Capri Casino-Bossier City (“Isle of Capri“), Horseshoe Entertainment (“Horseshoe“), and Bossier City negotiated a fixed fee arrangement for a term of 10 years “in lieu of any future modifications ... (and) in complete satisfaction of any and all gaming revenues to be received ...” The Bossier Parish Police Jury as the operator of the
These agreements provided that Bossier City would collect from each boat specific sums to be disbursed as follows: $350,000 to the Bossier Parish Police Jury (of which $50,000 would go to the Youth Shelter); $300,000 to the Bossier Parish School Board; $200,000 to the Bossier Parish Sheriffs Department; $150,000 to the Greater Bossier Economic Development Foundation (an arm of the Chamber of Commerce); and $2,500,000 or 3.2 % of their annual gross gaming receipts, whichever was greater, to Bossier City.3 In accordance with their contracts, the Isle of Capri and Horseshoe made payments after commencing their operations. The evidence in Horseshoe Entertainment, supra, showed that 3.2% of the riverboats’ gross receipts has always been greater than the $2.5 million minimum payable to Bossier City. Thus, while the School Board, Youth Shelter and Police Jury received the same payment each year, Bossier City‘s revenues continually increased.4
Prior Lawsuits
Bossier Parish Police Jury
Following the 1995 amendment to
La. R.S. 4:522 (nowR.S. 27:93 ) allows for the collection of a specific boarding fee should the local governing authority choose to assess it. The local governing authority could not ‘contract away’ the taxing power delegated to it by the legislature,La. Const. art. VII, § 1 , and the clause in the 1994 agreement doing so is contrary to public policy and invalid. Thus, the local governing authority is free to impose a boarding fee in accordance with the statute at any time. Furthermore, the local governing authority may implement any changes or modifications in the taxing power delegated to it by the legislature, regardless of any agreement not to do so.
Bossier Parish School Board
In August 1997, the School Board filed suit against the riverboats and the City of
With that admission, defendants filed a motion for summary judgment. On June 4, 1998, a written judgment was signed by the trial court recognizing the validity of the contracts and granting defendants’ motion for summary judgment. One month prior to the judgment being signed, at its May 7, 1998 meeting, the School Board voted unanimously not to appeal.6 In fact, on April 30, 1998, Elton Pentecost, a school board member, filed a statement in the minutes of the School Board meeting, advising that he was voting not to pursue the litigation “in order to provide the citizens... their best opportunity to obtain their rightful share of the revenues (from the riverboats) ... (by) giving clearance to a proposed class action suit ... [T]his action (dropping the lawsuit by the Board) will reduce the hindrances which have continually plagued the School Board‘s effort and will give counsel carte blanche authority and access to all legal avenues in pleading the case.” (Emphasis added). Two other school board members noted for the record that they agreed with Mr. Pentecost‘s statement. The later June 4, 1998 judgment was not appealed and it became final even though this court‘s ruling in Horseshoe Entertainment, supra, was rendered within the time limits for an appeal.
Facts of the Instant Case
Several defendants in the instant matter filed exceptions of no cause/no right of action, vagueness and ambiguity, lack of procedural capacity and res judicata. After a hearing, the trial court sustained the exception of res judicata.7 The court found that although plaintiffs were not parties in the previous School Board action, their interests were adequately represented by the School Board. Plaintiffs’ action was accordingly dismissed. It is from this judgment that plaintiffs have appealed.8
DISCUSSION
Louisiana‘s doctrine of res judicata, now embodied in
The opportunity to be heard is an essential requisite of due process of law in judicial proceedings. Giving conclusive effect to a prior judgment against one who is neither a party nor in privity with the party therein contravenes due process. As a consequence, a judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings. Richards v. Jefferson County, 517 U.S. 793, 116 S. Ct. 1761, 135 L. Ed. 2d 76 (1996). Thus, without identity between the parties in the first and subsequent actions, an exception of res judicata will not be maintained. Tranchina v. State, 99-1332 (La.App. 4th Cir. 06/09/99), 740 So. 2d 713.
Identity of parties does not mean that the parties must be the same physical or material parties, but they must appear in the suit in the same quality or capacity. Sun Finance Co., Inc. v. Jackson, 525 So. 2d 532 (La. 1988); Welch v. Crown Zellerbach Corp., 359 So. 2d 154 (La. 1978). See also Duffy v. Si-Sifh, Corp., 98-1400 (La.App. 4th Cir.01/09/99), 726 So. 2d 438, writ denied, 99-0372 (La.04/30/99), 741 So. 2d 14; Arthur v. Zapata Haynie Corp., 95-956 (La.App. 3d Cir.01/22/97), 690 So. 2d 86, writ denied, 97-1031 (La.05/30/97), 694 So. 2d 252, cert. denied, 522 U.S. 860, 118 S. Ct. 162, 139 L. Ed. 2d 106 (1997); Morris v. Haas, 95-75 (La.App. 5th Cir.05/30/95), 659 So. 2d 804, writs denied, 95-2519, 95-2545 (La.12/15/95), 664 So. 2d 441.
As noted in Terrebonne Fuel & Lube, Inc., supra, Louisiana‘s res judicata law was broadened by the 1990 amendment and is now in line with federal provisions. Under federal law, the preclusive effect of a judgment binds the parties to the action and nonparties who are deemed the “privies” of the parties in these limited circumstances: (1) the nonparty is the successor in interest of a party; (2) the nonparty controlled the prior litigation; or (3) the nonparty‘s interests were adequately represented by a party to the action who may be considered the “virtual representative” of the nonparty because the interests of the party and the nonparty are so closely aligned. Gilbert v. Visone, 30,204 (La. App.2d Cir.02/25/98), 708 So. 2d 496; Condrey v. Howard, 28,442 (La.App.2d Cir.08/21/96), 679 So. 2d 563, writ denied, 96-2335 (La.11/22/96), 683 So. 2d 281, citing Meza v. General Battery Corp., 908 F.2d 1262 (5th Cir. 1990). The concepts of control and virtual representation are narrowly construed and are not satisfied merely by showing that the party and the nonparty have common or parallel interests in the factual and legal issues presented in the
While
(1) When exceptional circumstances justify relief from the res judicata effect of the judgment;
(2) When the judgment dismissed the first action without prejudice; or
(3) When the judgment reserved the right of the plaintiff to bring another action.
As stated in the official comment,
In the instant case, finding that plaintiffs’ interests were adequately represented by the School Board in the first suit such that it became the “virtual representative” of the plaintiffs, the trial court sustained the exception of res judicata and dismissed plaintiffs’ action. We cannot agree with the trial court‘s conclusion that plaintiffs’ interests were adequately represented by the previous litigant.
Notwithstanding a previously “considered” opinion from a different judge in the same judicial district that found the Police Jury‘s contracts against public policy and invalid, and notwithstanding this court‘s affirmation of that decision in Horseshoe Entertainment, supra, the School Board acquiesced to a contrary opinion by stipulating to the validity of the contracts and failing to appear at the motion for summary judgment or appeal therefrom. On this issue, there was no, or at best, cursory representation.
Although an equal protection claim was asserted by the Isle of Capri in the Police Jury case, constitutional claims were not addressed in the two previous lawsuits. The present litigation involves governmental bodies and public revenues, specifically the failure of the governing authorities to tap available revenues to the fullest extent at the expense of the citizens and taxpayers of Bossier Parish. Furthermore, the abrupt consent by the School Board to the validity of the contracts created a perception of a “friendly action.” We find inadequate representation and also that exceptional circumstances exist such that the doctrine of res judicata should not bar plaintiffs’ action.
Conclusion
Based upon our finding that the trial court erred in granting defendants’ exception of res judicata, we hereby reverse the judgment of the trial court and remand this matter for further proceedings. Costs, here and below, are assessed to appellees, Louisiana Riverboat Gaming Partnership d/b/a Isle of Capri Casino-Bossier City and Horseshoe Entertainment.
REVERSED AND REMANDED.