For decades, New Orleans residents who sued the city for monetary damages due to devastating police accidents, contract disputes and other legal disputes faced daunting obstacles in collecting their debts.
A provision of the Louisiana Constitution essentially allowed the city to indefinitely delay meeting those court-ordered payments, resulting in City Hall making only sporadic offers to settle old judgments – often at a discount. By this year, the city had amassed tens of millions in unpaid judgments dating back to the 1990s.
On Thursday, the city council passed a package of new regulations aimed at finally getting these payments underway.
A unanimously passed ordinance requires the city to begin paying out the oldest judgments – those from the late 1990s through 2006 – almost immediately. The law requires the city to pay off all remaining judgments by 2027.
“This should add more transparency to the process,” said District A Councilman Joe Giarrusso, the bill’s lead author and chairman of the council’s budget committee.
Joe Giarrusso, New Orleans City Council member.
The new provisions are the most significant legislation New Orleans has passed in years to address the persistent problem of the city denying its citizens legally required compensation.
Those waiting to receive legal damages include both city contractors who have won billing disputes and families who have obtained wrongful death judgments for family members.
George White has been fighting for 21 years to get back more than a million dollars owed to his consulting firm. On Thursday, White’s lawyer appeared in the City Council chambers to argue for the new rules.
“It’s time for me to close this file,” said White’s attorney Shannon Holtzman. “These ordinances will make New Orleans a better place to live and work.”
The ordinance requires the city to send written offers of payment to anyone who still has a judgment outstanding by December 31, 2005. There’s a catch, though: These offers consist only of the original judgment amounts, without interest — which can be substantial after more than two decades. If they want to accept this offer, plaintiffs have 60 days to do so.
The new law also allows the city to settle a larger and more recent portion of judgments entered between January 1, 2006, and today by 2027.
In total, the city’s unpaid court debts total more than $30 million, according to an estimate from Giarrusso’s office.
A spokesman for Mayor LaToya Cantrell did not immediately respond when asked how many judgments are still on the city’s books and what the exact amount is.
A second ordinance passed on Thursday requires the city administration to submit an updated overview each August of how many new judgments have been made against the city.
For decades, court judgments against the city have been effectively equivalent to promissory notes. The provision in Louisiana’s constitution allows governments to default on judgments if there is not enough money to pay them. This means that a state court cannot force the city not to set aside and then hand over the money.
People like White have raised the issue with New Orleans authorities on several occasions, arguing that no other municipality in the state has such a poor record when it comes to paying compensation to plaintiffs.
With the legal protection of this constitutional provision, generations of New Orleans officials have been able to avoid the financial damage that would come with paying the bill in full. The city’s outstanding judgment amounts have been in the tens of millions of dollars for years. In 2021, records showed about 568 outstanding judgments and settlements totaling about $39 million in state and federal courts.
Several mayoral administrations and various city councils have sporadically put money into funds to pay off these judgments more quickly, but those efforts have made little difference to the millions of dollars in unpaid judgments that still sit on the city’s books.
Debt levels have risen rapidly over the past decade as judgments have outnumbered sporadic payment efforts.
Giarrusso said the city will pay the judgments with money from the general fund. New Orleans’ general fund has been bolstered in recent years by a one-time influx of money, including from the federal government’s COVID-19 pandemic relief efforts.
