'Insulting and disrespectful': city officials understate debt as unpaid judgment list keeps growing

Tragedy unfolded in 2011, when a New Orleans Police officer pursued a fleeing drug suspect going the wrong direction down a one-way street. The suspect crashed into a car full of bystanders, killing 18-year-old Mariah Woods and injuring two others.

The officer was fired for an improper pursuit and for lying to superiors, and the following year the city agreed to pay a $375,000 settlement to Woods’s family. Nearly a decade later, the city hasn't paid a dime.

“The family was torn up beyond what any family should have to go through,” said the Woods family's attorney, Robert Martell. “In their mind, this case never goes away. Mariah is never put to rest.”

The Woods family is not alone in getting stiffed by the City of New Orleans. A list provided by the city’s law department shows 568 outstanding judgments and settlements in state and federal courts, with some dating back 25 years.

Earlier this month, Mayor LaToya Cantrell’s administration became the latest to promise additional funds towards paying old judgments. The city said it will spend $5.9 million to tackle the growing pile of outstanding liabilities. On Nov. 18 the City Council approved $4 million to a dedicated fund for paying old judgments, though it wasn't clear if that was a portion of the earlier announcement or in addition to it.

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The month’s appropriation doubles what had been put into the fund over the last two years. Yet it remains a pittance compared to the $39.2 million that the city says is currently outstanding. And the city’s official number vastly understates its potential liability, because it omits a class-action judgment related to the city's red-light cameras during the administration of former Mayor Ray Nagin.

The Louisiana Supreme Court in 2019 declined to reconsider an appellate court ruling requiring the city to pay $25.6 million in undue red light fines. Together with the other settlements, the city currently owes close to $65 million, which is about 10% of the city's general fund budget.

Court judgments against the city are functionally equivalent to IOUs, thanks to a provision in the Louisiana Constitution that allows governmental entities to skip out on judgments when funds are not appropriated to pay them. With that legal shield in place, generations of city officials have ponied up little more than lip service to judgment holders.

The Cantrell administration declined to make anyone available for an interview, and did not respond when asked why the list of outstanding judgments excludes the traffic-camera decision.

“We will continue making offers of settlement until the current appropriation has been exhausted. The administration will continue to explore all available options for viable solutions,” the administration said in a statement sent by spokesperson Beau Tidwell.

Fighting in federal court

The oldest settlement on the list dates from 1996, and the debt has steepened over the last decade as new judgments outpace stop-and-start efforts to pay. In 2016, former Mayor Mitch Landrieu put $10 million in his proposed budget for judgements and settlements, but the funds ended up being re-routed toward a $75 million settlement with firefighters.

Other administrations, often drawing on borrowed funds, have offered deals for claimants willing to take a haircut on what they are owed. Cantrell offers judgment holders two payment options: 10% of their outstanding claim, plus interest and the promise of future payments, or 50 cents on the dollar as a final settlement. Nagin offered 75 cents on the dollar.

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But because of the traffic-camera settlement, Cantrell’s administration is facing a much larger potential payout.

The red-light camera plaintiffs are now suing in federal court in an attempt to force payment.  But either way, the state court judgment is final. In fact, the city’s defense in the federal suit relies on that finality: plaintiffs have no right to sue in federal court, the city argues, because the Louisiana Supreme Court has already closed the case.

U.S. District Judge Susie Morgan sided with the plaintiffs in March. The city’s appeal is scheduled to be heard in the 5th Circuit Court of Appeal on Jan. 4.

Knowing the city’s deadbeat reputation, plaintiffs attorney Joseph McMahon said his clients always intended to pursue the federal claim once the state judgment became final.

“We knew what our path was going to be and we shared it with the city. They still refused to even engage in any type of settlement discussions, or do anything to try to resolve this issue,” McMahon said.

Empty promises

One judgement holder is George White, who has battled for nearly two decades to recover more than $1 million owed to his consulting firm. He took Cantrell’s 10% plus interest offer three years ago, but says city officials misled him into believing that taking the smaller amount would not bump him to the end of the line. Now, he says he can’t get a response from the city.

“It becomes more punitive than anything to get on this list,” White said.

The administration did not answer when asked what happens to judgment holders who accept 10% payments. In the statement from Tidwell, the city said judgments are paid in “sequential order” as money becomes available, leaving open the question of whether the oldest judgment holders are paid first.

White’s Houston-based consulting firm, Municipal Administrative Services, helped former Mayor Marc Morial’s administration recover $5.5 million in royalties from BellSouth in the late 1990s. The money was paid out to the city over five years, and White’s firm was supposed to get a 20% contingency fee for the amount the city recovered. But when it came time to pay, the Morial administration had a different idea.

“After they signed the agreement with BellSouth, and everything was done, two or three months later we get a notice that the city is suing us to invalidate our contract,” White said.

White said it is not uncommon for cheapskate government agencies around the country to use the courts to get out of paying contracts. The jig is usually up with the rendering of judgments, he said. But in New Orleans, the favorable outcome in court marked the beginning of his Sisyphean struggle to get paid for services performed years prior. 

For years, White has raised the issue before City Council and to officials in multiple administrations, garnering empty promises and incoherent explanations in return.

“When you look at other major market cities the size of New Orleans, you don’t see this kind of arcane judgment list,” White said. “For the city to do that, I just think that’s insulting and disrespectful.”

White felt hopeful after an October 2019 budget hearing.

District A Council member Joseph Giarrusso floated the idea of leveraging the judgment fund for a new loan to wipe the slate clean, at least partially. Then-Council President Jason Williams called the state constitution provision “a very immoral law,” and even suggested that White ought to be treated separately from the other judgment holders and paid in full.

“There is no reason for Mr. White to take pennies on the dollar when we contracted with him to do work for us to recoup money, and that’s exactly what he did,” Williams said.

Williams was elected district attorney the next year. Asked what happened to the idea of borrowing against the judgment fund, Giarrusso said it had been tabled when the pandemic wreaked havoc on city coffers. The city has "a moral obligation" to pay judgment holders, Giarrusso added. 

White has heard it all before.

“Of course, City Council persons from time to time will take it up, but the council changes. So there is no focus on it,” White said. “They call us ‘the list,’ but they don’t recognize that we are people.”

The family of Mariah Woods can relate. Nearly a decade after the city agreed to pay restitution for her death, the family never imagined they would still be waiting, said Martell, the family's attorney. 

“The city doesn’t tell you it’s going to be forever,” he said.