Orleans Parish School Board v. Smith

470 So. 2d 202 | La. Ct. App. | 1985

Lead Opinion

BARRY, Judge.

In this expropriation suit by the Orleans Parish School Board, Wandell Developments, Inc., holder of an unrecorded option to purchase the land, appeals the dismissal of its intervention and the denial of the owners’ exception of non-joinder.

Wandell’s option was with Mr. and Mrs. Lupo for six lots which the School Board originally offered to buy for $1,675,000. After the expropriation suit was filed, but before lis pendens was recorded, Wandell and the Lupos signed an agreement for a price of $1,850,000. Wandell sought to intervene in the expropriation suit and the Lupos filed an exception of non-joinder of an indispensable party (Wandell). The School Board filed exceptions of no right or no cause of action aimed at Wandell’s intervention. Prior to the court’s ruling on the exceptions, Wandell recorded its agreement to purchase.

The trial court maintained the School Board’s exception of no cause of action and dismissed the intervention. Wandell’s writ applications to this court (No. 84-C-3167 December 12, 1984) and the Supreme Court (No. 84-CC-2093 December 12, 1984), 462 So.2d 187, were denied.

Subsequently the School Board increased the fair market value of the property by judicial admission to $1,850,000. Wandell, acknowledging the Fourth Circuit’s writ denial, argued that its right as intervenor was a personal right and the trial court could grant its exception of failure to join without offending this court’s order.

The trial judge concluded that Wandell was not a necessary party¹ although there is no judgment in the record. Wandell states this appeal is from the November 21st (actually 20th) judgment dismissing the intervention and the December 13th denial of the Lupos’ failure to join exception.²

Wandell claims it has a real right in the property and should be allowed to intervene. That issue was decided in our writ denial which noted the longstanding principle that an unrecorded contract is void as to third parties under La.C.C. Art. 2266:³ “The school board therefore needs no judgment against realtor [Wandell], but only against the record owner, [the Lupos] and relator [Wandell] is not entitled to intervene as if the owner of some right in the property.” See Redmann, The Louisiana Law of Recordation: Some Principles and Some Problems 39 TUL.L.REV. 491 (1965).

Wandell relies on State Department of Highways v. Patout, 258 La. 1193, 249 So.2d 179 (La.1971) and State Department of Highways v. Vermilion Development Company, 258 La. 1159, 249 So.2d 167 (La.1971) cert. denied 404 U.S. 940, 92 S.Ct. 282, 30 L.Ed.2d 253 (1971), but those cases are inapposite since they involve contracts which had been recorded before expropriation.

Wandell also argues that denial of its intervention violates due process. See La.C.C.P. Art. 1091. The due process argument under La. Const. Art. I § 2, which states that no person shall be deprived of property except by due process of law, brings us back to the issue of a real right in the property. With no real right, Wan-dell cannot complain of a deprivation.

Wandell next contends that its position is not synonymous with that of the owners who want to receive compensation (purchase price plus incidental damages such as attorney’s fees and lost interest) and will acquiesce in the taking.⁴ However, counsel for the Lupos stated that Wandell would be welcome to argue the necessity of the taking, the fitness of the property for its intended purpose, and whether or not a public purpose existed. Therefore, the “presumable ordinary cooperativeness” in defending against the need for expropriation between the two contracting parties in an unrecorded land agreement appears to exist.

The trial court noted there was no perceivable difference between the intervention issue and Wandell’s posture as a necessary party (although the Lupos’ exception was Failure to Join an Indispensable Party). The court correctly declared that the School Board could exercise its right of expropriation based upon the public record (devoid of Wandell’s contracts with the Lupos). The owner of the land is the sole necessary party defendant. See City of Shreveport v. Kansas City, S. & G. Ry. Co., 181 La. 458, 159 So. 715 (1935). Since neither the option or agreement to purchase were recorded prior to the expropriation suit or the lis pendens, the court rightly held that under La.C.C. Art. 2266 the contracts had no effect upon the School Board. The trial court looked to Const. Art. I § 4,⁵ but found no statutory or constitutional protection and properly concluded Wandell was not a necessary party.

Wandell was not an indispensable party since it was established that a complete and equitable adjudication could be made in its absence. La.C.C.P. Art. 641; State Through Department of Highways v. Lamar Advertising Company of Louisiana, Inc., 279 So.2d 671 (La.1973). Wandell was not a necessary party since its joinder was not necessary for a complete adjudication of the controversy. La.C.C.P. Art. 642.

Michigan Wisconsin Pipe Line Company v. Fruge, 210 So.2d 375 (La.App. 3rd Cir.1968), appeal after remand, 227 So.2d 606 (La.App. 3rd Cir.1969), writ denied 255 La. 149, 229 So.2d 732 (La.1970), involved an expropriation of a servitude across certain property containing a tenant farmer’s rice crop, four-fifths of which belonged to the farmer pursuant to a lease reduced to writing and recorded eleven days after the filing of the expropriation suits. The overruling of the exception of non-joinder of the farmer was upheld by the Third Circuit as it related to the unrecorded lease at the time of the suit. Recordation was the key to the necessary party status. See Central Louisiana Electric Company v. Gamburg, 200 So.2d 733 (La.App. 3rd Cir.1967). However, the case was remanded to allow for the farmer’s joinder as a necessary party on the grounds of a grant to construct irrigation canals recorded prior to the filing of the expropriation suit.

In United Gas Pipe Line Company v. New Orleans Terminal Company, 156 So.2d 297 (La.App. 4th Cir.1963), writ refused 245 La. 567, 568, 159 So.2d 284 (1964), this court was confronted with an exception of non-joinder of an indispensable party, the unrecorded lessee of the property to be expropriated, and contentions that the lessee should be accorded an opportunity to be heard and present defenses. This court held that the plaintiff in an expropriation suit has an absolute right to place reliance upon the public records and need not name as a defendant a party with an unrecorded right.

The district court is affirmed.

AFFIRMED.

PRESTON H. HUFFT, J. Pro Tem., dissenting with reasons.

1 . After the ruling the proceedings were continued on motion of the School Board until Wan-dell’s rights were clarified.

2 . The motion for appeal lists judgments on November 21st and December 8th; the order for appeal lists only a November 21st judgment. The School Board points out that Wandell did not file the exception of failure to join an indispensable party and therefore should not be able to appeal that issue. However, the issues of intervention and failure to join are intertwined.

3 .This refers to the article prior to its redesig-nation by Acts 1984, No. 331 § 5. La.C.C. Art. 2266 provided: All sales, contracts and judgments affecting immovable property, which shall not be so recorded, shall be utterly null and void, except between the parties thereto. The recording may be made at any time, but shall only affect third persons from the time of the recording.

The recording shall have effect from the time when the act is deposited in the proper office, and indorsed by the proper officer.

4 . Counsel argued to the trial court zoning problems as well as the suitability of the property for the purpose expropriated and the School Board's choice of property.

5 . La. Const. Art. I § 4 provides in pertinent part: Property shall not be taken or damaged by the state or its political subdivisions except for public purposes and with just compensation paid to the owner or into court for his benefit. Property shall not be taken or damaged by any private entity authorized by law to expropriate, except for a public and necessary purpose and with just compensation paid to the owner; in such proceedings, whether the purpose is public and necessary shall be a judicial question.... Personal effects, other than contraband, shall never be taken.

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Dissenting Opinion

PRESTON H. HUFFT, Judge Pro Tem.,

dissenting with reasons.

I respectfully dissent. I would permit W.F. Wandell Developments, Inc. to intervene in the proceedings.

In January 1984, Wandell entered into negotiations with the Lupo interests to purchase six lots for the construction of a shopping center. At great cost, Wandell developed the marketability of the site as a shopping center and on June 25, 1984 for the consideration of $5,000.00 received an option to purchase the property in question for $1,850,000.00. The option was to remain open through July 6, 1984. On June 25, 1984, the Orleans Parish School Board passed a resolution instructing its attorney^ to file proceedings against Lupo to expropriate the same six lots as the negotiations between the School Board and Lupo for the purchase of the property had been unsuccessful. The purchase price offered by the School Board was $1,675,000.00.

On July 2,1984, the petition for expropriation was filed by the School Board. On July 6, 1984, Wandell exercised its option and signed a purchase agreement with Lupo for $1,850,000.00. Wandell gave Lupo a check for $87,500.00, which together with the $5,000.00 check for the option constituted the deposit in accordance with the purchase agreement. On July 6, 1984, but subsequent to the signing of the purchase agreement, Lupo was served with the expropriation petition. On July 9, 1984, the School Board filed a notice of lis pen-dens. Wandell did not record its option to purchase or its agreement to purchase until sometime after the July 9, 1984 filing of the notice of lis pendens. At no time during its negotiations with Lupo for the purchase of the property was Wandell aware of or had any knowledge of the interest of the School Board in the property.

Lupo filed an Exception of Non-Joinder of An Indispensible Party on the basis of its agreement to sell the property to Wan-dell for $1,850,000.00. Lupo averred that in view of the existence of the agreement to sell, a complete and equitable adjudication of the matter could not be made unless Wandell was joined in the proceedings. Wandell filed a Petition of Intervention, which was signed by a judge other than the judge to whom the case was allotted. The School Board filed Exceptions of No Cause or Right of Action to the Petition of Intervention on the basis of its reliance on the public records doctrine and the absence of a real right in the property on the part of Wandell. In its brief on the exceptions, the School Board, in view of the Wandell option and the exercise thereof in the agreement to purchase, made a judicial admission that the fair market value of the property was $1,850,000.00, the same figure as that provided in the agreement to purchase. Lupo’s exception of Non-Joinder of An In-dispensible Party was denied and the School Board’s exception to the Petition of Intervention was sustained. Lupo did not appeal but Wandell filed this appeal seeking recognition of its right to intervene to protect its personal interest in the agreement to purchase.

The filing of a notice of lis pendens merely serves as notice to third parties that if they enter into any transaction involving the property covered in the notice, they do so subject to the outcome of the litigation set forth in the notice. The filing of the notice of lis pendens does not affect the rights of the record owner and a third party under a contract to sell but merely makes the rights acquired by the third party subject to the outcome of the litigation set forth in the notice.

Wandell has a valid agreement to purchase. The existence of that agreement is recognized by both Lupo and Wandell. In fact, the mere existence of that agreement caused the School Board to raise the fair market value of the property at the time of taking from $1,675,000.00 to $1,850,000.00. If Lupo and Wandell carried out the provision of the agreement to purchase, Wandell would then have purchased all the rights, title and interest of Lupo in and to the property in question subject to the resolution of the expropriation proceeding. Under such circumstances, Wandell would stand in the place of Lupo and would be able to contest the necessity for the taking and assert any right it may have as to whether the $1,850,000.00 it paid for the property was the fair market value of the property at the time of the filing of the expropriation proceedings. This right was recognized in State of Louisiana, Through the Department of Highways v. Luling Industrial Park, Inc., et al., 443 So.2d 672 (La.App. 5 Cir.1983) at page 674:

“The right to demand a fair market value and severance damages in an expropriation suit remains with the owner of the property at the time of the taking unless there is a specific transfer or assignment of this personal right. While this right is personal and does not follow the land, the right can be sold, assigned or otherwise encumbered. See Rogers v. La. Power & Light Co., 391 So.(2d) 30 (La.App. 3rd Cir.1980) and the cases cited therein.”

“State of Louisiana, Through the Department of Highways v. Luting Industrial Park, Inc., supra was an expropriation proceeding filed against the record owner. Prior to the filing of the expropriation proceedings, the record owner mortgaged the property. The mortgagee intervened in the proceeding because the mortgage assigned to the mortgagee any and all awards the mortgagor may receive from an expropriation proceeding to be applied against the mortgage. The mortgagee foreclosed on the property in a separate action and bought the property at a sheriffs sale. The property was then sold and resold a number of times and the last purchaser was recognized as the proper party in the eventual determination of the fair market value and the severance damages to the property as of the date of the filing of the expropriation proceedings. Wandell stands in an analogous position. It has a valid agreement to purchase all of the rights, title and interests of the record owner of the property and the only thing standing in the way of the performance of that agreement is the expropriation proceeding itself.

Under C.C.P. Art. 1091 “a third person having an interest therein may intervene in a pending action to enforce a right related to or connected with the object of the pending action against one or more of the parties thereto.” The existence of “an interest therein” has been interpreted as follows:

“It has been held that the interest required to authorize intervention must be a direct one by which the intervenor is to obtain immediate gain or suffer immediate loss by the judgment which may be rendered between the original parties. The interest must be closely connected with the object in dispute and founded on some right, lien, or claim, either conventional or legal.” United Gas Pipe Line Company v. Louisiana Public Service Commission, 130 So.2d 652, 656, 657 (La.1961).

Wandell has a definite interest in the present proceedings. The judgment rendered herein will determine the necessity for the taking and the fair market value of the property as of the time of the taking. The judgment will determine whether Wan-dell will be able to construct a shopping center on the property and reap the rewards of its expenditure of time and money. The present proceeding is the only forum in which Wandell will have an opportunity to assert and protect its personal rights under the agreement to purchase. To deny Wandell access to these proceedings will, in effect, deny it the opportunity to have its personal rights under the purchase agreement judicially determined. Wandell has more at stake in the outcome of these proceedings than the record owner. Since the School Board raised its fair market price to $1,850,000.00, Lupo has nothing to be gained or lost as a result of the judgment herein — the property will either be expropriated by the School Board or sold to Wandell under the purchase agreement for the same price.

Allowing Wandell to intervene does not do violence to the reliance on the public records doctrine nor does it fly in the face of the effect of the filing of a notice of lis pendens. Unlike the parties who seek to intervene or become a proper party to an expropriation proceeding in order to enforce a prior unrecorded right, which is in addition to the demands of the record owner, Wandell merely seeks to be placed in the position of Lupo as of the filing of the expropriation proceedings and enforce any and all rights Lupo has in defense of the action all in accordance with the agreement' by Lupo to sell to Wandell all rights, title and interest in the property in question.

Since I would allow W.F. Wandell Improvements, Inc. to intervene and protect its personal interest in the agreement to purchase, I do not rule on Wandell’s contention that the failure to do so violates its rights under LSA-Const. Art. 1, § 4 and § 22.

AFFIRMED.