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Red River Parish Tax Agency v. Swepi, LP

Court of Appeals of Louisiana, Second Circuit

March 29, 2017

RED RIVER PARISH TAX AGENCY AND ELAINE MOORE IN HER CAPACITY AS TAX ADMINISTRATOR OF RED RIVER PARISH TAX AGENCY Plaintiff-Appellant
v.
SWEPI, LP Defendant-Appellee

         Appealed from the Thirty-Ninth Judicial District Court for the Parish of Red River, Louisiana Lower Court Case No. 36432 Honorable Dee A. U. Hawthorne, Ad Hoc Judge

          Jonathan D. Stokes JONES WALKER, LLP Counsel for Appellee By: Jesse R. Adams, III SWEPI, LP

          TAYLOR, PORTER, BROOKS & Counsel for Appellee PHILLIPS, L.L.P. Halliburton Energy By: Jonathan A. Moore Services, Inc.

          Before DREW, MOORE, and STONE, JJ.

          STONE, J.

         Appellants, Red River Parish Tax Agency and Elaine Moore, in her capacity as tax administrator for Red River Parish Tax Agency ("the Collector"), filed a petition for declaratory judgment seeking a declaration that Appellee, SWEPI, LP ("SWEPI"), is not entitled to a sales tax refund. The district court granted SWEPI's exceptions of no cause of action, no right of action, and lack of subject matter jurisdiction. For the following reasons, we affirm.

         FACTS AND PROCEDURAL BACKGROUND

         SWEPI is an oil and gas exploration company that owns and operates natural gas wells in Red River Parish. In the course and scope of its operations, SWEPI contracted for hydraulic fracturing services ("fracking services") with Halliburton Energy Services, Inc. ("Halliburton"). During the taxable periods between January 2012 and August 2012, SWEPI alleged it erroneously paid Halliburton $880, 312.12 in sales tax on certain proppant materials used by Halliburton in performance of its fracking services. SWEPI filed a request for a refund ("Claim for Refund") asserting its payment of the sales tax constituted an "overpayment, " pursuant to La. R.S. 47:337.77. However, the Collector denied the request.

         On April 28, 2015, SWEPI appealed the denial of its Claim for Refund to the Louisiana Board of Tax Appeals ("BTA"), pursuant to La. R.S. 47:337.81.[1] SWEPI sought a redetermination from the BTA that it is entitled to a refund of the sales tax it paid to Halliburton.

         Approximately a week later, the Collector disregarded the appeal pending before the BTA, and filed a petition for declaratory judgment with the 39th Judicial District Court. The Collector sought a declaration that SWEPI is not entitled to a refund, and alternatively, that it is not liable to SWEPI for the refund. In response, SWEPI filed peremptory exceptions of no cause and no right of action, and a declinatory exception of lack of subject matter jurisdiction. SWEPI argued the district court lacked jurisdiction to hear the matter because the BTA is vested with exclusive original jurisdiction over local tax refund disputes.

         While awaiting a ruling on the exceptions, the Collector filed a motion with the BTA to transfer SWEPI's appeal to district court. According to the Collector, La. Acts 2014, No. 640 ("Act 640"), which expanded the BTA's jurisdiction to include local sales and use tax refunds, unconstitutionally revoked district courts of the original jurisdiction vested in them by La. Const. art. V, § 16. The Collector argued the transfer of SWEPI's appeal to district court was mandated by La. R.S. 47:1432(B)(1) ("the transfer statute") in order for the Collector to challenge the constitutionality of Act 640.[2] After a hearing, the BTA denied the motion, finding the transfer statute did not defeat its jurisdiction over local tax refund disputes.[3]

         On May 24, 2016, the district court granted SWEPI's exceptions and dismissed the Collector's petition for declaratory judgment. The district court found the legislature vested the BTA with exclusive original jurisdiction over local tax refund disputes. Consequently, the district court concluded it lacked subject matter jurisdiction to consider the merits of the Collector's petition for declaratory judgment, and incidentally, the Collector had no cause or right of action in district court. The Collector now appeals.

         DISCUSSION

         Subject ...


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