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Sarah Gross Individually and on Behalf of Class v. State

Court of Appeals of Louisiana, First Circuit

February 28, 2019

SARAH GROSS INDIVIDUALLY AND ON BEHALF OF THE CLASS
v.
STATE OF LOUISIANA THROUGH THE LOUISIANA DEPARTMENT OF REVENUE AND KIMBERLY L. ROBINSON, SECRETARY, LOUISIANA DEPARTMENT OF REVENUE

          On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Docket No. C651, 320 Honorable Wilson E. Fields, Judge Presiding

          R. Ray Orrill, Jr. Jeffrey L. Oakes Alex L. M. Ducros New Orleans, Louisiana And G. Brice Jones Slidell, Louisiana Counsel for Plaintiff/Appellee Sarah Gross, Individually and on behalf of the Class

          Christopher K. Jones Nancy B. Gilbert Brent J. Cobb John N. Grinton Antonio C. Ferachi Brandea Averett Baton Rouge, Louisiana Counsel for Defendants/Appellants State of Louisiana, through the Louisiana Department of Revenue and Kimberly Robinson, Secretary for the Louisiana Department of Revenue

          BEFORE: WHIPPLE, CJ, MCCLENDON, AND HIGGINBOTHAM, JJ.

          MCCLENDON, J.

         The Louisiana Department of Revenue ("LDR") and Kimberly Robertson, Secretary of LDR, seek review of the trial court's judgments certifying a class action and denying their exceptions raising the objections of lack of procedural capacity and improper use of class action procedure. For the reasons that follow, we deny the writ seeking review of the exceptions, vacate the certification of the class as currently compromised, and remand the matter for further proceedings.

         FACTS AND PROCEDURAL HISTORY

         Plaintiff in this matter, Sarah Gross, contracted with a solar panel company to purchase and install a solar energy system ("System") at a price of $25, 000.00 in March of 2015. According to Gross, she was incentivized by the solar energy systems tax credit afforded in LSA-R.S. 47:6030, which was in effect at the time she installed her System. At the time Gross installed her System, LSA-R.S. 47:6030(B)(1) allowed a tax credit for the purchase of a System equal to fifty percent (50%) of the first $25, 000.00 of the cost of a System provided the System was purchased and installed between January 1, 2008, and January 1, 2018.

         In the 2015 Regular Session, the Legislature amended LSA-R.S. 47:6030, effective June 29, 2015, placing caps on the total amount of tax credits awarded as follows: (1) a maximum of $10 million for credits claimed on tax returns filed on or after July 1, 2015, and before July 1, 2016; (2) a maximum of $10 million for credits claimed on tax returns filed on or after July 1, 2016, and before July 1, 2017; and (3) a maximum of $5 million for credits claimed on tax returns filed on or after July 1, 2017. The amended statute further provided that the grant of credits was to be done on a first-come, first-served basis.[1]

         In early 2016, Gross submitted her 2015 tax return seeking her tax credit for the System. On July 1, 2016, LDR announced that it had exceeded the $10 million cap on System credits for the fiscal year 2015-2016 by $14 million. On July 18, 2016, LDR notified Gross that the cap limits were met for both the 2015-2016 and 2016-2017 fiscal years prior to the receipt of her application for the System credit. Gross was further notified that her credit was being reviewed for the 2017-2018 fiscal year, which had a cap of $5 million for credits. On August 25, 2016, Gross was notified that her claim had priority status for the 2017-2018 fiscal year and that her 2015 tax return would be processed without the application of the tax credit. Further, LDR informed Gross that the 2017-2018 fiscal year credit would be applied to her account and any resulting refund would be issued between August 15, 2017, and September 30, 2017.

         On September 12, 2016, Gross filed a "Class Action Petition" naming the Louisiana Department of Revenue and Kimberly Robinson, Secretary for the Louisiana Department of Revenue, (hereinafter collectively referred to as "LDR"), as defendants. Gross alleged that under the version of LSA-R.S. 47:6030 applicable at the time her System was purchased and installed, she obtained a vested right to the tax credit up to $12, 500.00. Gross alleged that the amended statute, which was made effective on June 19, 2015, was a substantive law modifying and destroying Gross' vested right to a tax credit for the System she purchased and installed. Gross, alleging that this legislative action is unconstitutional and in violation of her due process rights under the state and federal constitutions, sought a declaration that the retroactive application of the statute, as amended and made effective on June 19, 2015, is unconstitutional. Gross sought recovery of the full amount of her tax credit of $12, 500.00, plus interest, consequential damages due to the delay and/or denial of the credit, and attorney's fees and costs.

         Gross, on behalf of a purported class, also made the following allegations: (1) there were over 1, 500 affected taxpayers who purchased and installed Systems prior to the effective date of the amendment to LSA-R.S. 47:6030; (2) there were common issues of law and fact; (3) the claims of Gross are typical of the claims of the purported class; (4) she would fairly and adequately represent the class; and (5) that a class action procedure was the superior method for the fair and efficient adjudication of the claims asserted.

         On the same day Gross filed the "Class Action Petition," she also filed a motion for class certification and propounded discovery. In her motion for class certification, Gross defined the proposed class as follows:

All persons who purchased and installed a solar electric system at a Louisiana residence in compliance with all of the requirements set forth in La. R.S. 47:6030 prior to June 19, 2015 (the "Purchase"), the effective date of the Louisiana Legislature's passage of Act 131 during the 2015 Regular Session amending La. R.S. 47:6030, who thereby obtained a vested right to a solar energy system tax credit as a result of said Purchase and who: (a) filed a tax return, otherwise complied with the tax credit application requirements set forth in La. R.S. 47:6030, and had any portion of their Purchase-related tax credit(s) withheld or denied; or (b) who timely file[d] a tax return after the filing of this petition and otherwise complied with the tax credit application requirements set forth in La. R.S. 47:6030, and who have any portion of their Purchase-related tax credit(s) withheld or denied.

         On October 19, 2016, LDR filed multiple exceptions which are not at issue herein.[2] Thereafter, on February 14, 2017, LDR answered the "Class Action Petition" and filed the dilatory exception raising the objection of lack of procedural capacity and the peremptory ...


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