“Show me the Money” – Recent Changes to the City of New Orleans Judgment Payout Process
Authors – Jonathan S. Forester and Olivia Maynard
The City of New Orleans (“the City”) recently enacted an ordinance requiring the City to begin issuing payments for years of unpaid legal judgments. For decades, the City has been able to ignore paying judgments due to a provision in the Louisiana Constitution which renders its assets immune from seizure in most cases. Because of this provision, thousands of New Orleanians who have won cash judgments in suits against the City for auto accidents, contract disputes, or any other cause of action could not collect the full amount owed.
According to an estimate by City Council, the City’s unpaid judgments amount to more than $30 million, some of which date back to 1996. To pay these judgments out, the City Council approved a new ordinance which allocates $11 million to the City’s Judgment Fund and requires the City to pay off all outstanding judgments dated on or before December 31, 2005, by 2027. Effective September 7, 2024, the new ordinance outlines and mandates the City’s next steps on remitting payment.
Pursuant to the ordinance, by October 8, 2024, the City was required to develop a procedure on how to process paying unpaid judgments and identify which documents are required to process payment. Also, by October 8, 2024, the City was required to make written offers to all persons and entities with unpaid judgments dating on or before December 31, 2005. These offers will be based in chronological order corresponding to the date of the judgment. However, while the City is required to make offers in the full amount of the outstanding judgment, the offer will only consist of the original judgment amount without judicial interest. This may be a sticking point for some, as judicial interest after more than two decades will likely be substantial for most judgments. However, the offeree is not required to accept full payment without judicial interest, and they can decline the offer by not providing written acceptance of those terms to the City. judgment holders will have sixty (60) days from the date of receiving the offer letter to accept.
If the judgment holder accepts the offer, they must do so in writing. Upon receipt of their written acceptance, the City then has thirty (30) days to issue payment for the full amount of the offer. From there, the City will remove funds from its Judgment Fund to remit payment. Only until all unpaid judgments dated on or before December 31, 2005 are either paid or rejected, will the City consider paying unpaid judgments dating on or after January 1, 2006. However, this remittance is contingent on whether any balance remains in the Judgment Fund to pay those later judgments.
The optimistic perspective is that all judgements dating on or before December 31, 2005 will be paid off by 2027. However, this ordinance has not been the first attempt to increase funds to pay off unpaid judgments and will hopefully not be the last.
