ADMINISTRATOR SMALL BUSINESS ADMINISTRATION v. WOODS (2022)

Helen Mart Woods appeals the September 24, 2021 judgment of the trial court that sustained an exception of lack of subject matter jurisdiction, dismissed her reconventional demand, and vacated a temporary restraining order (TRO) previously entered in her favor against the Administrator of the United States Small Business Association (SBA). Ms. Woods has also filed an exception of nonjoinder of necessary parties with this court. We overrule the exception and affirm the judgment of the trial court.

FACTS

According to the petition it filed in this matter, the SBA purchased immovable property in Terrebonne Parish at a sheriff's sale in 2017. A subsequent survey revealed that a house on the SBA property encroached onto adjacent property owned by Ms. Woods by approximately 7.9 feet by 35 feet. The SBA instituted this suit against Ms. Woods, seeking a judgment declaring the SBA the owner of the encroached upon property by virtue of acquisitive prescription or, alternatively, a judgment recognizing that a predial servitude was established on Ms. Woods’ property.

Ms. Woods answered the petition and asserted a reconventional demand against the SBA, which she combined with third party demands against the SBA's immediate predecessor in title and her own predecessors in title. Ms. Woods alleged that the encroachment caused her damage, including depreciation of property value, mental anguish, and the inability to use the disputed property for her own enjoyment. Thus, Ms. Woods requested issuance of a TRO against the SBA, ordering the immediate removal of that portion of the house encroaching on her property, and a preliminary injunction in the form and substance of the TRO. She further prayed for judgment against the SBA and its predecessor in title declaring her rights of ownership and possession to the disputed property and awarding her damages. Based on Ms. Woods’ allegations, the trial court issued a TRO directed to the SBA, “prohibiting its agents, employees or assigns, from maintaining that portion of its house encroaching on 7.9 feet by 35 feet of the western boundary of [Ms. Woods’] property by removing same, at its own costs, from [Ms. Woods’] property, pending a Hearing on the Merits.”

In response, the SBA filed exceptions of lack of subject matter jurisdiction, insufficiency of service of process, prematurity, and no cause of action. The SBA argued that state courts lack jurisdiction to hear tort claims against the United States, that the United States has not consented to suit in state court in this matter, that federal law prohibits any order for destruction of the encroaching portion of the house, and that federal law prohibits issuance of a preliminary injunction against the SBA. Ms. Woods argued in opposition that any immunity raised by the SBA had been waived. After a contradictory hearing, the trial court sustained the exception of lack of subject matter jurisdiction, dismissed Ms. Woods’ reconventional demand against the SBA, and vacated the TRO previously issued. The SBA's remaining exceptions were deemed moot.

Ms. Woods now appeals. She has additionally filed an exception of nonjoinder of necessary parties with this court, contending that the trial court's judgment was improperly rendered in the absence of her own and the SBA's predecessors in title.

DISCUSSION

Under the doctrine of sovereign immunity, the United States, its departments, and its employees in their official capacities as agents of the United States, are immune from suit except as the United States has expressly consented to being sued. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980); Williamson v. United States Department of Agriculture, 815 F.2d 368, 373 (5th Cir. 1987). The SBA is an agency of the United States. See 15 U.S.C. § 633. Unless Congress has waived the United States’ sovereign immunity with regard to Ms. Woods’ claims against the SBA, the courts of this state lack jurisdiction over her counterclaim. See Mitchell, 100 S.Ct. at 1351. As the party suing the SBA, Ms. Woods has the burden of showing Congress's unequivocal waiver of sovereign immunity. See St. Tammany Parish, ex rel. Davis v. Federal Emergency Management Agency, 556 F.3d 307, 315 (5th Cir. 2009).

In her reconventional demand, Ms. Woods specifically asserted claims against the SBA for damages based in tort, including depreciation in the value of her property, mental anguish, and the inability to enjoy her property. Through the Federal Tort Claims Act (FTCA), Congress waived the sovereign immunity of the United States for certain tort suits against the government. See 28 U.S.C. §§ 1346(b) and 2674; Brownback v. King, ––– U.S. ––––, 141 S.Ct. 740, 745, 209 L.Ed.2d 33 (2021). However, under the FTCA, the jurisdiction over civil actions against the government for tort claims including claims for money damages arising from injury or loss to property is vested exclusively in the federal courts. 28 U.S.C. § 1346(b)(1). Thus, state courts lack jurisdiction to hear such claims. See A.L.T. Corporation v. Small Business Administration, 801 F.2d 1451, 1462 (5th Cir. 1986).

Ms. Woods maintains that since the SBA filed this suit in state court it has waived sovereign immunity as to her claims. In 15 U.S.C. § 634(b)(l), Congress authorized the Administrator of the SBA to sue and be sued. However, that “sue and be sued” authority does not authorize a reconventional demand against the SBA in state court for claims cognizable under the FTCA. See 15 U.S.C. § 634(b)(l); A.L.T. Corporation, 801 F.2d at 1462-63; see also Northridge Bank v. Community Eye Care Center, Inc., 655 F.2d 832, 835 (7th Cir. 1981). The FTCA specifies that “[t]he authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under [the FTCA.]” 28 U.S.C. § 2679(a). Considering this authority, we are constrained to agree with the trial court that the courts of this state lack jurisdiction over the tort claims asserted against the SBA in Ms. Woods’ reconventional demand.¹

Ms. Woods additionally challenges the trial court's dismissal of the TRO without a hearing. In authorizing the SBA to sue and be sued, Congress specifically prohibited any injunction or similar process against the SBA Administrator or his property. See 15 U.S.C. § 634(b)(1). Consequently, the trial court correctly vacated the TRO entered against SBA without the necessity of a hearing.

Lastly, Ms. Woods filed an exception of nonjoinder of necessary parties with this court, contending it was error for the trial court to render judgment in the absence of the SBA's and her own predecessors in title.² A person shall be joined as a party in an action when: (1) in his absence complete relief cannot be accorded among those already parties; or (2) he claims an interest relating to the subject matter of the action and is so situated that the adjudication of the action in his absence may, as a practical matter, impair or impede his ability to protect that interest, or leave any of the persons already parties subject to a substantial risk of incurring multiple or inconsistent obligations. La. Code Civ. P. art. 641. The previous property owners are not necessary to the determination of sovereign immunity with regard to the claims against the SBA. Therefore, the exception is overruled.³

CONCLUSION

For the foregoing reasons, the exception of nonjoinder of necessary parties filed by Ms. Woods is overruled, and the September 24, 2021 judgment of the trial court is affirmed. Costs of this appeal are assessed to Helen Mart Woods.

EXCEPTION OVERRULED; JUDGMENT AFFIRMED.

FOOTNOTES

1.   We find no merit to Ms. Woods’ assertion that the trial court's judgment was unsupported by the hearing transcript. An exception of lack of subject matter jurisdiction raises a question of law that appellate courts review de novo to determine the correctness of the trial court's judgment. In re Medical Review Panel of Henrietta Houck v. Baton Rouge General Medical Center, 2019-1154 (La. App. 1st Cir. 7/6/20), 2020 WL 3638159, *3 (unpublished). Further, since the defect of lack of jurisdiction due to sovereign immunity cannot be cured, we find no merit to Ms. Woods’ contention that she should have been given an opportunity to cure the defect.In her appellate brief Ms. Woods advances arguments challenging the exceptions of insufficiency of service of process and no cause of action that the SBA asserted in response to her counterclaim. However, those exceptions were rendered moot by the trial court's ruling on the exception of subject matter jurisdiction and are not at issue in this appeal. We note that in arguing the exception of no cause of action, Ms. Woods contends that there must be a legal remedy for having real property taken by a governmental entity without compensation. We reiterate that this appeal is limited to the dismissal of the tort claims asserted in her reconventional demand, which did not include a governmental takings claim.

2.   The exception of nonjoinder may be pleaded for the first time in the appellate court before submission of the case for decision if proof of the ground of the exception appears of record. See La. Code Civ. P. arts. 927 and 2163.

3.   We likewise reject Ms. Woods’ argument that the trial court's judgment was erroneous because these necessary parties were not joined. We reiterate that our decision herein is limited to the state court's jurisdiction over Ms. Woods’ tort claims against the SBA and does not affect the claims she asserted against these other parties, which appear to remain outstanding.

WOLFE, J.