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Bannister Properties, Inc. v. State

Court of Appeals of Louisiana, First Circuit

November 2, 2018

BANNISTER PROPERTIES, INC.
v.
STATE OF LOUISIANA SOUTHOLD PROPERTIES INC.
v.
STATE OF LOUISIANA SOUTHOLD PROPERTIES INC.
v.
STATE OF LOUISIANA BANNISTER PROPERTIES, INC.
v.
STATE OF LOUISIANA

          Appealed from the Board of Tax Appeals, State of Louisiana Docket Nos. 7389 c/w 7390 c/w 7584 c/w 7585 Anthony J. "Tony" Graphia, Chairman; Cade R. Cole; and Francis J. "Jay" Lobrano Presiding Board of Tax Appeals Members

          William M. Backstrom, Jr. Matthew A. Mantle New Orleans, Louisiana Attorneys for Appellees, Plaintiffs - Bannister Properties, Inc. and Southold Properties, Inc.

          Antonio Charles Ferachi Brandea P. Averett Baton Rouge, Louisiana Attorneys for Appellant, Defendant - Secretary, Department of Revenue, State of Louisiana.

          Drew M. Talbot Baton Rouge, Louisiana Attorney for Amicus Curiae Applicant, Rainer, Anding & Talbot, on behalf of The Louisiana Association of Tax Administrators.

          BEFORE: PETTIGREW, WELCH, AND CHUTZ, JJ.

          Welch, J.

         The Louisiana Department of Revenue, through its Secretary, Kimberly L. Robinson ("Department"), appeals a judgment of the Board of Tax Appeals ("BTA") that denied its exceptions of lack of subject matter jurisdiction, no right of action, and its motion for summary judgment; granted summary judgment in favor of Bannister Properties, Inc. and Southold Properties, Inc. ("taxpayers"); and, ordered the Department to refund the taxpayers $500, 713.00 and $164, 287.00 respectively, plus interest, on the basis that the taxpayers were not subject to the Louisiana corporation franchise tax for the pertinent tax periods. For the following reasons, we affirm the denial of the Department's exceptions; we reverse the summary judgment granted in favor of the taxpayers and the ordered refund; we reverse the denial of the Department's motion; and, we render judgment granting the Department's motion for summary judgment denying the taxpayers' Overpayment Refund Claims.

         Facts and Procedural History

         The facts forming the basis of this appeal are not disputed by the parties. The taxpayers are foreign corporations, organized under the laws of Delaware, and conducted no business in Louisiana during the pertinent tax periods beginning January 1, 2008, January 1, 2009, January 1, 2010, and January 1, 2011 ("tax periods").[1] The taxpayers filed Louisiana Corporation Income and Corporation Franchise Tax Returns (Form CIFT-620) for the tax periods. Bannister remitted $636, 651.00 in franchise taxes, and Southold remitted $189, 924.00 in franchise taxes. Thereafter, the taxpayers filed amended returns for each of the tax periods, claiming they were not subject to the Louisiana corporate franchise tax, La. R.S. 47:601. The taxpayers sought refunds of the overpayment of franchise taxes that were paid for the tax periods. The taxpayers claimed they were not subject to the franchise taxes based on the decision of UTELCOM, Inc. v. Bridges, 2010-0654 (La.App. 1st Cir. 9/12/11), 77 So.3d 39, 48-50, writ denied, 2011-2632 (La. 3/2/12), 83 So.3d 1046, which held that the franchise tax regulation LAC 61:1.301(D) was promulgated based on a mistake of law due to the Department's misinterpretation of the corporate franchise tax law, La. R.S. 47:601, and declared the regulation invalid.[2]

         By letters dated April 4, 2012, the Department denied the taxpayers' Overpayment Refund Claims, asserting that the amounts paid by the taxpayers were not refundable under any provision of Louisiana law. The Department indicated to the taxpayers that they could file written petitions in the BTA regarding the denial of their refund claims, in accordance with La. R.S. 47:1625.

         In response to the Department's denials, the taxpayers filed petitions in the BTA to recover money erroneously paid into the State Treasury, pursuant to the Claims Against the State Procedure, La. R.S. 47:1481-1486 (BTA Docket Nos. 7389 and 7390). The taxpayers also filed petitions in the BTA appealing the denials of their Overpayment Refund Claims pursuant to the Overpayment Refund Procedure, La. R.S. 47:1621-1627. (BTA Docket Nos. 7584 and 7585). The BTA consolidated the matters.

         While the taxpayers' Claims Against the State and Overpayment Refund Claims were pending in the BTA, the taxpayers and the Department entered into written settlement agreements as to the Claims Against the State. Therein, the parties stipulated that the taxpayers had made overpayments, as defined in La. R.S. 47:1621(A), of franchise taxes for the tax periods in the amounts of $550, 713.00 (Bannister) and $164, 287.00 (Southold). The BTA issued recommendations that the Legislature, at the next session, appropriate funds to pay the taxpayers the overpayment amounts at the earliest possible dates, thereby settling the taxpayers' Claims Against the State.[3]

         The parties then filed joint motions to stay the Overpayment Refund Claims pending timely receipt by the taxpayers of the overpayment amounts in the Claims Against the State cases. The BTA ordered the Overpayment Refund Claims stayed. In the joint motions to stay, the taxpayers explicitly reserved their rights to pursue the Overpayment Refund Claims if the Legislature failed to appropriate funds to pay the overpayment amounts in the Claims Against the State cases.[4] As of this appeal, the Legislature has not appropriated the funds to refund the taxpayers the overpayment amounts as recommended by the BTA in the Claims Against the State cases, nor have the taxpayers availed themselves of La. R.S. 47:1484(C)(1).[5]

         Thereafter, the Department filed a motion for summary judgment, as well as exceptions of lack of subject matter jurisdiction and no right of action relative to the taxpayers' Overpayment Refund Claims. The Department argued that La. R.S. 47:1621 (F) precluded the issuance of a refund to the taxpayers. Louisiana Revised Statutes 47:1621(F) states that "[t]his Section shall not be construed to authorize any refund of tax overpaid through a mistake of law arising from the misinterpretation by the secretary of the provisions of any law or of the rules and regulations promulgated thereunder." Section 1621(F) further provides that if a taxpayer believes the Department has misinterpreted the law, his remedy is to pay the tax under protest and file suit to recover or appeal to the BTA in instances where such appeals lie. The Department argued that since there had been a determination in UTELCOM that the Department misinterpreted the corporate franchise tax law, La. R.S. 47:601 through the promulgation of LAC 61:1.301, and the taxpayers' overpayments were based upon that misinterpretation of law, La. R.S. 47:1621(F) applies to prohibit the issuance of a refund. Regarding the exceptions, the Department argued that because La. R.S. 47:1621(F) prohibits the Department from issuing a refund, the taxpayers have no right of action to assert Overpayment Refund Claims. Further, the Department contended that the BTA lacked jurisdiction to hear the Overpayment Refund Claims and order the Department to issue a refund.

         The taxpayers opposed the Department's exceptions and motion for summary judgment and filed a cross-motion for summary judgment, seeking a judgment ordering the Department to refund the overpayment amounts, together with interest, in accordance with the Overpayment Refund Procedure, La. R.S. 47:1621-1627. The Department opposed the taxpayers' cross motion for summary judgment.

         Following a hearing, the BTA rendered judgment on September 12, 2017, denying the Department's exceptions; denying the Department's motion for summary judgment; granting the taxpayers' motion for summary judgment; awarding Bannister Properties, Inc. a refund in the amount of $550, 713.00, plus interest; and, awarding Southold Properties, Inc. a refund in the amount of $164, 287.00, plus interest. The BTA issued written reasons for its judgment. The Department has appealed the September 12, 2017 judgment of the BTA.[6]

         Assignments of Error[7]

         The Department raises seven assignments of error:

1. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, as the law is clear and unambiguous that La. R.S. 47:1621(F) prohibits the issuance of a refund because Southold and Bannister overpaid taxes through a mistake of law arising from the misinterpretation by the Department of the provisions of law and/or rules and regulations promulgated thereunder.
2. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the BTA's Judgment ignores the secondary rules of statutory construction that require that a specific provision of law-the first sentence of La. R.S. 47:1621(F)-controls the more general and/or any alleged contrary provision of the law-the second sentence of La. R.S. 47:1621(F).
3. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the Judgment renders the first sentence of La. R.S. 47:1621(F) meaningless and sursplusage [sic], and is contrary to the secondary rules of statutory construction that courts are bound to give effect to all parts of a statute and to construe no sentence, clause, or words as meaningless and surplusage if a construction giving force to and preserving all words can legitimately be found.
4. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the Judgment ignores established Louisiana Supreme Court and court of appeal jurisprudence, and the public policy recognized therein against the allowance of an administrative claim for refund based on a mistake of law arising from the misinterpretation by the Department of the provisions of any law or rules and regulations promulgated thereunder.
5. The BTA erroneously denied the Department's Exception of No Right of Action to award an administrative claim for refund when Southold's and Bannister's refund claims are barred by the absolute prohibition to such refund imposed by La. R.S. 47:1621(F).
6. The BTA erred when it denied the Department's Exception of Lack of Subject Matter Jurisdiction challenging the BTA's jurisdiction to award an administrative claim for refund when the absolute prohibition imposed by La. R.S. 47:1621(F) applies to Southold's and Bannister's refund claim.

         Law and Discussion

         Jurisdiction for judicial review of decisions of the BTA is vested solely with the appellate courts. The Department's appeal to this court is authorized by La. R.S. 47:1435, La. R.S. 47:1436, and La. C.C.P. art. 2083. Our review of a decision of the BTA is rendered on the record made before the BTA and is limited to facts on the record and questions of law. Quest Diagnostics Clinical Labs., Inc. v. Barfield, 2015-0926 (La.App. 1st Cir. 9/9/16), 2016 WL 4719894, at *5 (unpublished). With regard to questions of law, the judgment of the BTA should be affirmed if it has correctly applied the law and adhered to the proper procedural standards. However, if the BTA's judgment is not in accordance with law, it may be reversed or modified, with or without remanding the case. Id.

         Subject Matter Jurisdiction

         Subject matter jurisdiction may be challenged through the declinatory exception of lack of subject matter jurisdiction. See La. C.C.P. art. 925(A)(6). Where the lack of subject matter jurisdiction is not apparent on the face of the petition, the burden is on the defendant to offer evidence in support of the exception. See La. C.C.P. art. 930; Barringer v. Robertson, 2015-0698 (La.App. 1st Cir. 12/2/15), 216 So.3d 919, 924, writ denied, 2016-0010 (La. 2/26/16), 187 So.3d 1004. If, as in the present case, no evidence is introduced, the court must accept the allegations of the petition as true for the purpose of ruling on the exception. See State v. Illinois Central Railroad Company, 2004-1789 (La.App. 1st Cir. 12/22/05), 928 So.2d 60, 68; Banks v. Carl Ott Poles & Piling, Inc., 440 So.2d 803, 805 (La.App. 1st Cir. 1983), writ denied, 444 So.2d 1244 (La. 1984). The determination of whether a court has subject matter jurisdiction over a case is subject to de novo review. In re D.C.M., 2013-0085 (La.App. 1st Cir. 6/11/13), 170 So.3d 165, 169, writ denied, 2013-1669 (La. 7/17/13), 118 So.3d 1102.

         The Legislature created the BTA to act as an appeal board to hear and decide questions of law and fact arising from disputes or controversies between taxpayers and the Department "in the enforcement of any tax, excise, license, permit or any other tax law administered by the collector." See La. R.S. 47:1401. The statutes establishing and governing the BTA are contained in Chapter 17 of Title 47 of the Louisiana Revised Statutes. Louisiana Revised Statutes 47:1407(1) further provides that jurisdiction of the BTA shall extend to "[a] 11 matters relating to appeals ... for the determination of overpayments ... as provided in R.S. 47:1431 through 1438 [which form Part II of Chapter 17 of Title 47, entitled 'Appeals for Redetermination of Assessment or for Determination of Overpayment']." Additionally, La. R.S. 47:1625 provides for appeals from the Department's denial of a refund claim and vests the BTA with jurisdiction to "determine the correct amount of tax for the period in controversy and to render judgment ordering the refunding or crediting or any overpayment or the payment of any additional tax, interest...." La. R.S. 47:1625(C). Thus, jurisdiction to resolve tax-related disputes is constitutionally and statutorily granted to the BTA, which is authorized to hear and decide such disputes and render judgments. St. Martin v. State, 2009-0935 (La. 12/1/09), 25 So.3d 736, 741.

         The taxpayers appealed to the BTA for a redetermination of the Department's denials of their requested overpayment refunds. Under La. R.S. 47:1431 and La. R.S. 47:1625, those actions are within the scope of the BTA's jurisdiction. Accordingly, based on our de novo review, we find that the BTA had subject matter jurisdiction over the taxpayers' Overpayment Refund Claims. The BTA properly overruled the Department's exception of lack of subject matter jurisdiction.[8]

         Right ...


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