Two New Orleans Suits Go After Collection Penalties

Two class-action lawsuits filed in federal court in New Orleans on two weeks ago seek return of $32 million in fees that thousands of New Orleans residents and businesses have been charged during the past seven years for late payment of their property taxes.

The first case asks the court to make a Texas law firm, called Linebarger, Goggan, Blair & Sampson, refund $28 million in fees and interest it pocketed in the past seven years under a contract to collect overdue property taxes for the city. The contract, entered into during the administration of Mayor Marc Morial, was voided by Mayor Ray Nagin on March 31.

The suit claims that Linebarger did little work in exchange for fees that amounted to 30 percent of delinquent tax bills plus penalties. What Linebarger was paid, the suit contends, were unearned — and therefore illegal — attorney fees disguised as collection penalties.

According to the suit, most of the overdue property taxes collected during Linebarger’s tenure came in through efforts by banks, title companies and other institutions involved in financing property.

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