Kitty Dunn v. Regional Transit Authority

KITTY DUNN, ET AL. * NO. 2022-CA-0506

VERSUS *
COURT OF APPEAL
REGIONAL TRANSIT *
AUTHORITY, ET AL. FOURTH CIRCUIT
*
STATE OF LOUISIANA
*******

APPEAL FROM
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2019-02843, DIVISION “C”
Honorable Sidney H. Cates, Judge
******
JUDGE KAREN K. HERMAN
******
(Court composed of Chief Judge Terri F. Love, Judge Joy Cossich Lobrano, Judge
Karen K. Herman)

LOBRANO, J., CONCURS IN THE RESULT

Roy A. Raspanti
ATTORNEY AT LAW
110 Veterans Memorial Boulevard, Suite 360
Metairie, Louisiana 70005-4930

COUNSEL FOR PLANTIFFS/APPELLANTS

Kriste T. Utley
Ross A. Ledet
BOYKIN & UTLEY
400 Poydras Street, Suite 1540
New Orleans, Louisiana 70130
-AND-
N. Sundiata Haley
HALEY LAW FIRM, LLC
650 Poydras Street, Suite 2015
New Orleans, Louisiana 70130

COUNSEL FOR DEFENDANTS/APPELLEES

AFFIRMED IN PART AND REVERSED IN PART
July 20, 2023

KKH
TFL
Plaintiffs in this action are former employees and retirees of New Orleans

Public Service Incorporated (“NOPSI”) and/or Transit Management of Southeast

Louisiana (“TMSEL”). On March 15, 2019, Plaintiffs sued the Regional Transit

Authority (“RTA”) and TMSEL (collectively “Defendants”), asserting that

Defendants had denied them benefits owed to them under their employees’ welfare

benefits plan.

On January 8, 2021, Defendants filed an exception contending that

Plaintiffs’ claims had prescribed. On February 14, 2022, the trial court sustained

that exception. Plaintiffs filed a timely appeal from that judgment. After an initial

review of the judgment of February 14, 2022 this Court remanded the matter to the

trial court on January 18, 2023, with instructions to amend its February 14, 2022,

judgment to make it final and appealable pursuant to La. C.C.P. art. 1918 by

including the appropriate and necessary decretal language. On March 17, 2023, the

trial court complied with those instructions, rendering a judgment sustaining the

exception of prescription and dismissing all of Plaintiffs’ claims. For the reasons

discussed below, we affirm that judgment as to all Plaintiffs except Doris Lloyd,

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Allen Santee, and Wardell Williams. For these individuals, the judgment is

reversed.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs’ petitions and the parties’ briefs set out the following pertinent

facts. NOPSI was a privately held company which, prior to 1983, operated the

public transit system in Orleans Parish. In June 1983, the RTA acquired the public

transit system from NOPSI, and TMSEL began operating and managing the

system. With that acquisition, NOPSI employees became TMSEL employees.

Prior to RTA’s acquisition, in 1978, NOPSI, the Amalgamated Transit

Union, and the City of New Orleans entered into an “Agreement Pursuant to

Section 13(c) of the Urban Mass Transportation Act of 1964” (the “13(c)

Agreement”). The purpose of this agreement was to provide various “fair and

equitable arrangements” for the workers of the New Orleans public transit system.

On March 17, 1983, in the months before the acquisition was finalized, the RTA

and TMSEL, as successors in interest to NOPSI, agreed to assume “the rights,

duties and responsibilities” contained in the 13(c) Agreement. Section 2 of that

agreement required that RTA and TMSEL preserve and continue the rights and

benefits of those individuals formerly employed by NOPSI.

Contemporaneous with the acquisition of the transit system, RTA, TMSEL,

and NOPSI entered into the “Employee and Retiree Pension and Welfare

Agreement” (“Retiree Welfare Benefit Agreement”), whereby RTA and TMSEL

agreed to provide future retirees the same coverage and benefit levels that NOPSI

had provided. Furthermore, the Retiree Welfare Benefit Agreement required RTA

and TMSEL to set up a funding structure in order to ensure the pension benefits

would be paid.

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From 1983 until March 2006, the Defendants administered the employee

welfare benefit plan as it had been administered by NOPSI. That changed in the

aftermath of Hurricane Katrina; because of the economic catastrophe wrought by

that storm, RTA suffered a revenue crisis. As one of the results, the Defendants

began charging medical insurance premiums to Plaintiffs (and their spouses and

dependents) and also stopped providing quarterly Medicare premium and

deductible reimbursements to Plaintiffs over the age of 65 years old.

This change in the administration of the benefits plan came to a head in early

2006. In a letter dated March 6, 2006, TMSEL General Manager William J.

Deville explained to the employees and retirees that Hurricane Katrina had

“decimated” their operation, and that TMSEL and the RTA did not have the

financial resources to continue operating the public transit system and pay the

benefits promised by the agreements. Mr. Deville closed his letter with the

following language:

Please be assured that we are doing everything in our power to acquire
resources, to rebuild, to restore systems and services and to reemploy
as many people displaced by disaster as possible. We will not ease-up
on this journey.

These are not usual times or usual decisions, but nonetheless, I wish
you all the best for the days ahead.

Plaintiffs assert that in these communications RTA and TMSEL led them to

believe that these changes were temporary and that full benefits would be

restored in the future.

The reduction of benefits continued for more than five years through

January of 2012, when Defendants further reduced the benefits by increasing

the portion of the medical insurance premiums Plaintiffs would have to pay.

In February 2012, three of the named Plaintiffs met with counsel for the

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RTA to discuss retiree welfare benefits. At that meeting, RTA and TMSEL

were asked to reinstate the various welfare benefits promised by NOPSI. In

response, Plaintiffs were told that RTA and TMSEL were unwilling to

reinstate the various welfare benefits. Further, they were advised that if

Plaintiffs were to initiate litigation against the RTA regarding the welfare

benefits, RTA would require Plaintiffs to pay 100% of medical insurance

premiums.

On October 8, 2012, a group of retirees made a formal written demand for

the reinstatement of their welfare benefits, as well as payment of damages resulting

from the violation of fiduciary duties by RTA and TMSEL. Defendants did not

respond in writing to that demand.

On December 31, 2012, 39 retirees filed suit against the RTA and TMSEL in

federal court, alleging federal claims under ERISA and state law claims. See Mary

Smith, et al v. Regional Transit Authority, et al. No. 12-3059, United States District

Court for the Eastern District of Louisiana (“Mary Smith”).1 The complaint

alleged various federal statutory violations as well as supplemental state law

claims. In a judgment dated October 23, 2015, the court granted a motion for

summary judgment filed by the Defendants and dismissed all claims with

prejudice. That judgment was affirmed on appeal by the U.S. Fifth Circuit Court of

Appeals. See Smith v. Regional Transit Authority, 827 F.3d 412 (5th Cir. 2016).

On March 15, 2019, Plaintiffs filed the instant suit. Plaintiffs filed several

amended petitions to add plaintiffs and allegations. The initial group of 164

plaintiffs grew to a total of 183 plaintiffs with the “Fourth Supplemental and

1 No plaintiff from the instant suit was a plaintiff in that federal action.

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Amended Petition.” In the various petitions, Plaintiffs alleged causes of action

grounded in several theories, which will be discussed below.

The Defendants initially responded to the petitions with a Dilatory

Exception of Vagueness in which they argued that Plaintiffs needed to include in

their allegations the dates they each retired and suffered the complained of

damages. That exception was granted on October 23, 2020. Plaintiffs were given

60 days to amend their petition and include all of the additional information.

Plaintiffs filed their “Third Supplemental and Amending Petition” supplying the

retirement dates on November 28, 2020.

On January 21, 2021, Defendants filed a Peremptory Exception of

Prescription maintaining that the Petition was prescribed on its face. On August 4,

2021, Plaintiffs filed their Sixth Supplemental and Amending Petition to counter

the assertion that their claims had prescribed. In that pleading, Plaintiffs cited the

Mary Smith suit against these same Defendants in U.S. District Court referred to

above. Plaintiffs claimed to be solidary co-obligees with the Mary Smith plaintiffs

and alleged that the Defendants were co-obligors to Plaintiffs in both suits.

Therefore, Plaintiffs alleged that pursuant to Louisiana law, the filing of the Mary

Smith suit had interrupted prescription.

The Exception of Prescription was argued before the trial court on

November 5, 2021, with no evidence offered by either side. As indicated above,

the trial court sustained the exception and dismissed Plaintiffs’ claims. In its

Reasons for Judgment dated February 14, 2022, the trial court applied the three-

year prescriptive period set out by La. C.C. art. 3494. The trial court also

concluded that “[P]rescription began to run from either the date of direct

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notification benefit reduction on March 6, 2006, or the date of retirement when the

Plaintiffs began actually receiving the reduced benefits from TMSEL.”

DISCUSSION

Standard of Review

In Boulmay v. Heebe, 2017-0638, pp. 3-4 (La. App. 4 Cir. 12/27/17), 238

So.3d 459, 462, this Court reiterated the standard of review relative to peremptory

exceptions of prescription as follows:

Ordinarily, a party asserting a peremptory exception of prescription
bears the burden of proof. Trust for Melba Margaret Schwegmann v.
Schwegmann, [20]09-968, p. 8 (La. App. 5 Cir. 9/14/10), 51 So.3d
737, 742. However, if prescription is evident from the face of the
pleadings, the plaintiff will bear the burden of showing an action has
not prescribed. Id. If evidence is introduced at the hearing on the
peremptory exception of prescription, the district court’s findings of
fact are reviewed under the manifest error-clearly wrong standard of
review. Rando v. Anco Insulations, Inc.,[20]08-1163, p. 20 (La.
5/22/09), 16 So.3d 1065, 1082. If there is [ ] an absence of evidence,
the exception of [ ] prescription must be decided upon the properly
pleaded material allegations of fact asserted in the petition, and those
alleged facts are accepted as true. Trust for Melba Margaret
Schwegmann, 51 So.3d at 742. Further, in reviewing a peremptory
exception of prescription, appellate courts strictly construe the statutes
against prescription and in favor of the claim. Id. Of the possible
constructions of a prescriptive or preemptive statute, the one that
maintains enforcement of the claim or action, rather than the one that
bars enforcement should be adopted. Rando, 16 So.3d at 1083.

quoting Ames v. Ohle, 2011-1540, pp. 5-6 (La. App. 4 Cir. 5/23/12), 97 So.3d 386,

390-91, decision clarified on reh’g (7/11/12).

Again, at the hearing on the exception of prescription, no evidence was

introduced, as the parties merely argued their positions. However, Plaintiffs did

attach as exhibits approximately 230 pages of various documents to their Sixth

Supplemental and Amending Petition and statements from Plaintiffs, both sworn

and unsworn, to the Seventh Supplemental and Amending Petition. In their brief,

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Plaintiffs maintain that these attachments are evidence, and therefore must be

considered as evidence of their contents in this Court’s review. We disagree.

Article 853 of the Code of Civil Procedure provides that “any written

instrument which is an exhibit to a pleading is a part thereof.” However, the

jurisprudence construing this provision makes clear that such an exhibit, not

formally introduced into evidence, is not evidence but instead is only a part of the

pleading, and pleadings are not evidence. In Andrews v. Marts, 2022-0576, p. 6

(La. App. 1 Cir. 11/15/22), 356 So.3d 1059, 1062-63, the First Circuit Court of

Appeal explained what effect reviewing courts are to give to attachments to

pleadings:

A copy of any written instrument that is an exhibit to a pleading is a
part thereof. [La. C.C.P.] art. 853. However, the documents are not
evidence; they are simply part of the pleadings. Jackson v. Gordon,
381 So.2d 520, 521 (La. App. 1 Cir. 1980). Pleadings are not
evidence. In re Melancon, 2005-1702 (La. 7/10/06), 935 So.2d 661,
666. An appellate court cannot review evidence that is not in the
record on appeal and cannot receive new evidence. Revelry Food
Group, LLC v. Nguyen Property Investment, LLC, 2021-0881 (La.
App. 1 Cir. 2/25/22), 340 So.3d 1151, 1155 n.2.

In summary, the evidence in question was not properly introduced and
admitted in the trial court and therefore may not be reviewed by this
court. See Denoux v. Vessel Management Services, Inc., 2007-2143
(La. 5/21/08), 983 So.2d 84, 88-89.

As Plaintiffs in the instant matter made no offer of evidence at the hearing

on the exception, we will not consider these attachments as evidence of their

contents. Thus, we must confine our review to the “properly pleaded material

allegations of fact asserted in the petition.” See Ames, 2011-1540 at p. 5, 97 So.3d

at 391.

The Character of Plaintiffs’ Action

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In Ames, this Court explained that “[t]he nature of a cause of action must be

determined before it can be decided which prescriptive term is applicable.” Ames,

2011-1540 at p. 6, 97 So.3d at 391 (citing dela Vergne v. dela Vergne, 1999-0364

(La. App. 4 Cir. 11/17/99), 745 So.2d 1271, 1275). “The character of an action

disclosed in the pleadings determines the prescriptive period applicable to that

action.” Id.

Indeed, Plaintiffs have made this precept a central part of their argument. In

their brief, they beseech this Court to consider this a claim for breach of contract

and point to the number of times the word “contract” appears in their petition and

amended petitions. During oral argument both before the trial court and this Court,

Plaintiffs have continued to insist that their claim is one based in breach of

contract. We agree; the nature of the cause of action here is breach of contract.

However, not all contract actions are subject to the same prescriptive period. In this

matter, the contract is one for deferred compensation.

A review of the Civil Code articles regarding prescriptive periods illustrates

this point. La. C. C. art. 3499 provides that “[u]nless otherwise provided by

legislation, a personal action is subject to a liberative prescription of ten years.”

La. C.C. art. 3499, Revision Comments (b) clarifies that the general rule for a

personal action is ten years, “in the absence of a legislative provision that either

establishes a shorter or longer period, or declares the action to be imprescriptible.

Shorter prescriptive periods are established in revised C.C. Arts. 3492 through

3498. . . .”

In La. C.C. art. 3494, the Legislature provided that the prescriptive period

would be three years when the action is one for the breach of five different types of

contracts:

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(1) An action for the recovery of compensation for services rendered,
including payment of salaries, wages, commissions, professional fees,
fees and emoluments of public officials, freight, passage, money,
lodging, and board;

(2) An action for arrearages of rent and annuities;

(3) An action on money lent;

(4) An action on an open account; and

(5) An action to recover underpayments or overpayments of royalties
from the production of minerals, provided that nothing herein applies
to any payments, rent, or royalties derived from state-owned
properties.

All five of these actions contemplate a contract or agreement between the parties;

however, it is apparent that the Legislature chose to apply a three-year prescriptive

period to these kinds of contracts rather than the ten-year general prescriptive

period set out in La. C.C. art. 3499. Because the contract between Plaintiffs and

Defendants here is one for the recovery of compensation that is contemplated by

La. C.C. art. 3499(1), we conclude that the applicable prescriptive period is three

years.

Commencement of Prescription

La. C.C. art. 3495 provides that the three-year prescriptive period

‘commences to run from the day payment is exigible.” Again, the comment

following this provision clarifies that “prescription commences to run from the day

a cause of action arises and its judicial enforcement is possible.” La. C.C. art.

3495, Revision Comments (b). In their trial court pleadings, briefs to this Court

and oral arguments, Plaintiffs maintain that prescription did not begin to run until

the February 2012 meeting, when the Defendants made clear that there would be

no resumption of the payment of benefits as promised by NOPSI prior to the

transfer to TMSEL. Thus, Plaintiffs argue that the trial court erred in concluding

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that prescription began to run in 2006 or on the respective retirement date for each

Plaintiff. We disagree.

In its Reasons for Judgment dated February 14, 2022, the trial court

explained that in deciding the appropriate prescriptive period and the time of

commencement it was relying on the Louisiana Supreme Court’s holding in Born

v. City of Slidell, 2015-0136 (La. 10/14/15), 180 So.3d 1227. We find that holding

applicable as well.

In Born, the plaintiff was employed by the City of Slidell from 1984 until he

retired on August 1, 2008, when he was sixty-years old. He began drawing

retirement benefits from the City’s Municipal Employee’s Retirement System.

Pursuant to the City’s Code of Ordinances, health insurance premiums were paid

for City employees and retired City employees and officials. The applicable

Ordinance was amended with an effective date of August 26, 2008, to require City

retirees reaching the age of sixty-five to apply for Medicare, and the City would

pay Medicare Advantage at no cost to the retiree.

On May 1, 2013, Born received correspondence from the City “informing

him that because of his impending sixty-fifth birthday on July 1, 2013, he would

no longer be eligible for the City’s health insurance, as ‘[a]ll retirees and spouses

65 and older with Medicare Parts A and B must enroll in Humana Group

Medicare.’” Born, 2015-0136 at p. 3, 180 So.3d at 1229. The City further advised

Born that if he was not eligible for Medicare, “he must present the City with

adequate documentation to that effect.” Id.

In response, Born wrote to the City and indicated his objections and desire to

remain on the City’s health plan, but was unsuccessful. Thereafter, on July 25,

2013, Born filed a petition for declaratory judgment, temporary restraining order,

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preliminary injunction and permanent injunction, alleging that he met the

requirements listed in the Ordinances in effect at the time of his retirement on

August 1, 2008, and should be able to continue participation in the City’s health

insurance plan wherein the City paid one hundred percent of the family coverage

cost. Born “argued he had a vested right to the benefit promised by the City of

Slidell in [the ordinance], and the City was intending to breach its contract with

[him], thereby depriving him of his vested right to the promised benefit.”

Consequently, Born “requested a declaration of his right to continue participating

in the plan and an injunction prohibiting the City from removing plaintiff from his

desired health insurance plan with the City of Slidell.” Id.

The City filed an exception of prescription, contending that Born’s suit was

subject to the three-year prescriptive period and was prescribed because it was

filed on July 25, 2013, five years after the passage of the ordinance effective

August 26, 2008. The trial court denied the exception of prescription, finding that

prescription would begin to run at the time the City removed Born from the City’s

health insurance plan. Therefore, Born’s suit was timely filed just after his sixty-

fifth birthday. The trial court also granted Born’s request for a declaratory

judgment that he and his family were entitled to continue participation in the City’s

health care plan where the City paid one hundred percent of the premium. The

court of appeal affirmed.

The Louisiana Supreme Court also affirmed, rejecting the City’s argument

that Born’s claim against the City became exigible when the Ordinance was

effective on August 26, 2008. The Supreme Court relied upon La. C.C. arts. 3494

and 3495. Pursuant to La. C.C. art. 3495, “prescription commences to run from the

day payment is exigible.” The Supreme Court found that if Born had attempted to

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file suit to remain on the City’s healthcare plan before his sixty-fifth birthday, “his

claim would likely have been dismissed as premature under La. C.C.P. art. 423”

because his claim for coverage after his sixty-fifth birthday became exigible on his

sixty-fifth birthday. Id. at p. 10, 180 So.3d at 1233. Thus, Born’s suit filed just

after his sixty-fifth birthday “was timely filed and in no way prescribed.” Id. at p.

11, 180 So.3d at 1234.

We agree with the trial court’s application of Born, both as to the three-year

prescriptive period and the date Plaintiffs’ claims became exigible. Both in their

briefs and in oral argument, Plaintiffs have been unable to distinguish their cause

of action from that asserted by the plaintiff in Born, or otherwise explain why this

Court is not constrained by that holding.

Plaintiffs’ Alternative Theories of Recovery

We likewise find no error in the trial court’s conclusion that Plaintiffs’

claims under alternate theories of recovery have prescribed. As discussed above,

the character of the claims made by Plaintiffs in the instant case are claims for

deferred compensation. We find Plaintiffs’ efforts to repackage their claims for

deferred compensation under labels such as “stipulation pour autri,” “breach of

fiduciary duty” or “unjust enrichment” to be disingenuous and meritless. No matter

what label Plaintiffs’ apply, their claims are for breach of the type of agreement

governed by La. C.C. art. 3494 and therefore prescribed.

Continuing Tort

Likewise, we reject Plaintiffs’ argument that prescription began to run anew

each year and, therefore, the claims have “never prescribed.” This same argument

was raised and rejected by the U. S. Fifth Circuit Court of Appeals in Smith v.

Regional Transit Authority, 827 F.3d 412, 422 (5th Cir. 2016). As noted in that

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opinion, the change in the benefit plan was a single violation followed by

continuous consequences. The theory of a continuing tort requires that the

“operating cause of injury be a continuous one which results in continuous

damages.” See Crump v. Sabine River Authority, 98-2326, p. 7 (La. 6/29/99), 737

So.2d 720, 726. We agree with that analysis.

Prescription Was Interrupted by Mary Smith Suit

Finally, we find no error with the trial court’s finding that the lawsuit filed

by Ms. Smith and her co-plaintiffs did not act to suspend the running of

prescription vis-à-vis these Plaintiffs. In the Reasons for Judgment dated February

14, 2022, the trial court stated:

Pursuant to La. C.C. Art. 1787, when an obligor owes a separate
performance to each obligee, the obligation is several. As a result,
prescription runs independently on each separate obligation, and
Plaintiffs in this case cannot rely on the previously filed Mary Smith
litigation to interrupt prescription. (Emphasis added.)

We agree. La. C.C. art. 1787 provides “[w]hen one obligor owes a separate

performance to each of different obligees, the obligation is several for the

obligees.” In the instant case, Defendants owed each Plaintiff a benefit amount

based on numerous factors including, length of service and date of retirement.

Naturally, these benefit amounts would differ. Similarly, the benefits owed to each

Plaintiff would have been payable at different times based on their respective

retirement dates. Because these factors support the trial court’s finding that the

obligations were several in nature, prescription would run independently on each

separate obligation. That being the case, Plaintiffs’ argument that prescription was

interrupted by the filing of the Mary Smith suit is without merit.

Claims of Doris Lloyd, Allen Santee, and Wardell Williams

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Again, the trial court correctly held that the prescriptive period applicable to

Plaintiffs’ claims was three years. Likewise, the trial court’s conclusion that

prescription commenced to run either from March 6, 2006 or the date of each

Plaintiff’s retirement was correct. Per the allegations contained in the Plaintiffs’

Second and Third Supplemental and Amending Petitions, Plaintiff Doris Lloyd

retired on August 1, 2018, Plaintiff Allen Santee retired on January 1, 2019, and

Plaintiff Wardell Williams retired on May 1, 2016. The original Petition was filed

on March 15, 2019. Accordingly, on the face of the pleadings, the claims of Doris

Lloyd, Allen Santee, and Wardell Williams are not prescribed.2 Therefore, the

judgment is reversed as to these individuals.

CONCLUSION

For the above reasons, the trial court’s March 17, 2023 judgment is affirmed

in part and reversed in part.

AFFIRMED IN PART AND REVERSED IN PART

2 We note that Defendants concede in their Appellee Brief that “Doris Lloyd [], Wardell

Williams [], and Allen Santee [] are the only Appellants alleged to have retired after March 15,
2016.”

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