Fifth Circuit poised to remand New Orleans short-term rental case

(CN) — A panel of judges at the Fifth Circuit Court of Appeals appeared skeptical of its jurisdiction in a case involving short-term rentals in the city of New Orleans Thursday, pressing parties on whether a lower court judge rendered a final appealable judgment.

The core issue of the dispute revolves around “legal nonconforming use” after the city denied a renewal application for an STR permit that expired, citing updated zoning ordinances. The property owner, Tina Marquardt, initially argued her use predated the changes and sought “legal nonconforming” status under the city’s Comprehensive Zoning Ordinance. The city said her nonconforming right died with the permit. Marquardt sued, claiming violations of zoning laws, case law and the Louisiana Constitution.

U.S. Circuit Judge Don R. Willett, a Donald Trump appointee, repeatedly asked the plaintiff’s attorney, Edward R. Washington III, if the lower court judge ever provided his client “any concrete, enforceable relief.” Washington suggested U.S. District Judge Ivan L.R. Lemelle declared a temporary “taking” in an August 2023 order, then issued an injunction that let Marquardt keep operating until February 2024.

But Washington struggled to point to language that resolved the permanent injunction request once and for all.

“I think what we’re getting at is the practical finality exception to the final order doctrine,” he argued. “Where there cannot be and will not be any further proceedings in the district court as part of the same action, the district court’s determination is a final judgment.”

Washington further suggested Lamelle resolved the permanent injunction request by denying it.

“[Lamelle] said, ‘I’m lifting the injunction, I do not recognize that your land-use [right] is ongoing,’ and that was finality to my case,” Washington said.

Representing the city, attorney Sherri L. Hutton agreed the jurisdictional issue was vague but suggested the lower court’s judgment was not final, as the case was never fully briefed and Lamelle left several issues unresolved. Both sides eventually agreed on a limited remand to clarify that everything not granted was denied.

The actual merits of the case received comparatively little airtime, but Washington argued the grandfathered/nonconforming use claim is sound.

“Legal nonconforming use is basically forever unless abandoned or amortized,” he said. “Tying it to the expiration of a one-year permit destroys the entire doctrine and is unconstitutional.”

But the city’s position is that short-term rental permits have always been time-limited privileges, not vested rights.

Hutton pointed to a part of the zoning ordinance that states no provision “shall be construed to authorize the continued use … in the event the City modifies its short-term rental permitting regulations.”

“[Marquardt] went into the lottery like everyone else and lost,” Hutton said, citing a new rule allowing just “one permit per residential block.”

U.S. Circuit Court Judge Priscilla Richman, a George W. Bush appointee, seemed troubled by the city’s argument that even a decades-long preexisting short-term rental use could be wiped out instantly with no amortization or process.

“What law do you have to follow to terminate nonconforming use?” she asked Hutton.

“The city is allowed to make rules about the use of people’s property for commercial use,” Hutton replied. “It’s not a residential use of property. It’s a commercial use of property where you’re renting it out to somebody else.”

Chief U.S. Circuit Judge Jennifer W. Elrod, also a Bush appointee, asked pointedly whether an illegal or unpermitted use could ever ripen into nonconforming status, but Hutton insisted it could not. No judge sounded eager to create a rule that every old short-term rental permit in New Orleans is grandfathered in perpetuity.

In rebuttal, Washington clarified that all claims except fees were resolved, while he also pressed the grandfathering/constitutional argument about preexisting use, and pushed back on possible retroactivity of new ordinances against his client.

“In 2017, the city passed ordinances allowing short-term rentals by right,” he said. “And then in March of 2023, they took that right away. That makes her grandfathered.”

Short-term rentals, such as those listed on Airbnb and VRBO, have become a significant part of New Orleans’ tourism-driven economy, but their growth has become tightly regulated by new zoning laws. According to local media, the city has issued around 2,500 licenses as of February 2025, with about 1,350 in residential areas. Earlier 2023 estimates suggested 1,260 permits in circulation, while platforms like Airbnb had 5,710 listings — indicating a large gap of unpermitted operations.

While the appellate panel did not offer a timeline, it suggested the case would be remanded to settle the jurisdiction questions before it would return to consider the merits.

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