Holly & Smith Architects, Inc. v. St. Helena Congregate FacilIty, Inc.
Docket: Nos. 2005 CA 0175, 2005 CA 0176
Court: Louisiana Court of Appeal; February 9, 2006; Louisiana; State Appellate Court
Carter, C.J. ruled on an appeal by St. Helena Hospital, a public body, regarding a judgment that denied its petition for a writ of mandamus and a declaratory judgment. St. Helena Hospital sought to erase three recorded judgments in the St. Helena Parish mortgage records and to declare that these judgments had no effect on third-party purchasers. The three judgments, recorded between 1998 and 2003, created judicial mortgages in favor of Holly Smith Architects, Inc. against property held by St. Helena Hospital.
Holly Smith had previously filed a motion to examine St. Helena Hospital as a judgment debtor, prompting the hospital to seek a protective order and file its own petition for mandamus to cancel the mortgages. The proceedings were consolidated, and the trial court ultimately denied both parties' petitions and St. Helena Hospital’s request for a declaratory judgment concerning the judgments' effects on third-party purchasers.
St. Helena Hospital's appeal raised three critical issues: the constitutionality of judgment liens against hospital districts, the potential erasure of these judgments from the mortgage records, and whether third parties could acquire property from St. Helena Hospital subject to these recorded liens. The court affirmed the trial court’s decision, finding St. Helena Hospital’s arguments unconvincing. It noted that neither the state nor its subdivisions are immune from lawsuits regarding contracts or property damage, and the Louisiana Constitution requires legislative provisions for suits against state entities.
The Louisiana Constitution imposes two restrictions on the legislature regarding judgments: public property and funds cannot be seized, and judgments against the state or its subdivisions are payable only from legislatively appropriated funds. In light of Article XII.10C, the legislature enacted LSA-R.S. 13:5109B(2), which mandates that judgments against public entities be paid from designated appropriated funds. Notably, statutes governing hospital service districts, like St. Helena Hospital, do not prohibit judicial mortgages on their properties, unlike statutes for other public entities that explicitly prevent such liens. The absence of specific prohibitions on judicial mortgages implies they may be placed on public property unless stated otherwise. While Article XII.10C bars the seizure of public property due to a judicial mortgage, it does not limit the mortgage's impact on third-party purchasers. Consequently, while St. Helena Hospital must appropriate funds before a judgment can be paid, there is no statutory or constitutional barrier to filing a judgment against it in the mortgage records. The court affirmed the trial court's decision, assessing costs of $573.00 to St. Helena Hospital. In dissent, Judge Downing argued that the majority's ruling effectively allows judgment liens to influence the sale of public property without prior appropriation, contravening the constitutional and statutory framework, and thus, is beyond the court's authority. The dissent emphasizes that filing a judgment creates a judicial mortgage under LSA-C.C. art. 3300.
