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Ulrich v. Robinson

Supreme Court of Louisiana

March 26, 2019



          GUIDRY, J.

         This is a direct appeal from the district court's judgment declaring unconstitutional 2015 La. Acts, No. 131, § 1, which amended La. Rev. Stat. 47:6030 by placing a cap on the total amount of solar electric system income tax credits available to Louisiana taxpayers, because it retroactively deprived the plaintiffs of a vested property right and substantially impaired the obligations of private contracts. The district court also implicitly found the plaintiffs had standing to bring the constitutional claim and that a justiciable controversy existed because the constitutional issue was not moot. For the reasons set forth below, we find the district court erred in overruling the Department of Revenue's peremptory exception of mootness.


         In May and June of 2015, Justin and Gwen Ulrich and Raymond and Pam Alleman (hereinafter "plaintiffs") purchased and installed residential solar systems with the expectation of receiving an income tax credit of up to $12, 500 pursuant to La. Rev. Stat. 47:6030(B)(1).[1] In 2016, when the plaintiffs filed their Louisiana income tax returns for the 2015 tax year, asserting entitlement to the solar electric system tax credits under La. Rev. Stat. 47:6030, the tax credits were denied or reduced by the Department of Revenue, citing Acts 2015, No. 131, which limited the maximum amount of solar tax credits to be granted by the Department of Revenue to $25, 000, 000. In letters sent by the Department of Revenue to the plaintiffs in August of 2016, they were informed that Act 131 of the 2015 Regular Session had amended La. Rev. Stat. 47:6030 "to establish the maximum amount of solar tax credits that may be granted;" that "[f]or fiscal years 2015-2016 and 2016-2017, the cap limit was $10, 000, 000 per year;" that "[t]he credits are required to be granted based on a first-come, first served basis;" and that the "cap limits were met prior to [their] claim being filed."[2]

         Essentially then, prior to the 2015 amendment, a residential solar tax credit of $12, 500 was available on a $25, 000 solar electric system purchased and installed before January 1, 2018. After the 2015 amendment, the tax credit, though still available to some extent, would be granted only on a first-come, first-served basis, and would be limited to an aggregate amount of $25, 000, 000, which limitation was to be applied on a staggered basis.

         The plaintiffs filed separate appeals to the Board of Tax Appeals pursuant to La. Rev. Stat. 47:1625, which appeals remain pending, and made both appeals individually and "on behalf of all others similarly situated."[3] On the same day, the plaintiffs jointly filed the instant class action suit against Kimberly Robinson, in her capacity as Secretary of the Louisiana Department of Revenue, seeking a declaration that Act 131 is unconstitutional pursuant to La. Const. art. I, § 2 to the extent that it deprived the plaintiffs of a vested property right.

         In response to the class action filed in the district court, the Department of Revenue filed declinatory exceptions of lack of subject matter jurisdiction and lis pendens, dilatory exceptions of prematurity and lack of procedural capacity, and peremptory exceptions of improper use of class action procedure. The district court overruled these exceptions, and the Department of Revenue's application for writs from the court of appeal was ultimately denied. Ulrich v. Robinson, 17-1119 (La.App. 1 Cir. 11/1/18), __So.3d__, 2018 WL 5732837. However, in its March 27, 2017 judgment overruling the Department of Revenue's exceptions, the district court's judgment stated: "At the [January 23, 2017] hearing, the parties agreed that the named putative class representatives ... have standing to contest the constitutionality of 2015 La. Act 131. The parties also agreed that the only relief that [the plaintiffs] are seeking in this captioned matter is for this Court to declare 2015 La. Act 131 unconstitutional."

         The plaintiffs' motion to certify the class was subsequently granted by the district court, which defined the class as consisting of "Louisiana taxpayers that qualified for the La. R.S. 47:6030 Solar Credit between January 1, 2013[, ] and June 18, 2015[, ] and were denied the Solar Credit due to 2015 La. Act 131." The Department of Revenue appealed that ruling to the First Circuit Court of Appeal, which reversed the district court's decision to certify the class and remanded for further proceedings. See Ulrich v. Robinson, 17-1119, p. 12 (La.App. 1 Cir. 11/1/18), __So.3d at__, 2018 WL 5732837 at *6.[4]

         The plaintiffs also filed a motion for summary judgment on the basis of their original allegations of unconstitutionality as to Act 131, and additionally pleading that Act 131 violates their due process rights, citing La. Const. art. I, § 2, and impairs the obligations of contracts, citing La. Const. art. I, §§ 1 and 23. The district court denied the motion, and a case management schedule was entered for a bench trial to be conducted on November 29, 2017.

         In the meantime, the Louisiana Legislature enacted 2017 La. Acts, No. 413, eff. June 27, 2017, to provide additional funding for solar tax credits. The Department of Revenue issued letters to the plaintiffs in July 2017 stating in part that Act 413 was intended to "provide additional funding for certain solar energy credit claims," that the plaintiffs' claims were verified or approved for payment or would be reviewed for qualification for additional funding under Act 413, and that there was no "need to file a new claim or submit any additional documentation" unless requested. The letter explained Act 413 provided that all eligible taxpayers would be paid in three equal installments over three fiscal years, commencing with fiscal year 2017-2018 and ending with fiscal year 2019-2020, but limited funding to $5, 000, 000 per fiscal year.[5]

         The Department of Revenue thereafter filed peremptory exceptions of no right of action and mootness, contending that, under Act 413, the plaintiffs will obtain the exact relief they are seeking through the instant constitutional challenge in that they would "receive their entire tax credit, with an initial payment to occur as early as December 2017." The exceptions were referred to the trial on the merits.

         The matter proceeded to a bench trial on the issues of constitutionality, as well as the Department of Revenue's peremptory exceptions of no right of action and mootness. The district court granted the plaintiffs' petition for declaratory judgment and declared 2015 La. Act 131 unconstitutional, adopting the plaintiffs' pretrial and post-trial briefs as its reasons for judgment. According to those briefs, the district court found as follows: (1) Act 131 is unconstitutional under U.S. Const. Amend. V and XIV, § 1, and La. Const. art. I, § 2, because La. Rev. Stat. 47:6030 provides the plaintiffs with a vested property right to the tax credit, and Act 131 applied retroactively to deprive them of the vested right. (2) Act 131 is unconstitutional under U.S. Const. Art. I, § 10 and La. Const. art. I, § 23, because it is a substantial impairment of three contracts: (a) the contract between the State and the taxpayer; (b) the taxpayer's contract for the purchase of the solar energy system; and (c) the taxpayer's financing contract, for which there is no significant legitimate justification and its impact on taxpayers is neither reasonable nor appropriate. (3) Act 413 did not moot the constitutionality of Act 131 because Act 413 does not place the parties in the same position as prior to Act 131 and thus ignores the "time value of money." Although there is no express ruling in the district court's judgment with regard to the Department of Revenue's exceptions, denial of these exceptions is clearly implied in both the adopted reasons of the court, as noted above, and its oral reasons for judgment, in which the court observed that Act 413 was an attempt to give "some type of relief for the plaintiffs to refund them their monies for the same tax credit," but which the court found, given that payment was to be made by installments over a period of years, is "not the same as [as payment] when the individuals installed the solar panels."

         The Department of Revenue has appealed the district court's declaration of unconstitutionality to this court under our appellate jurisdiction under La. Const. art. V, § 5(D), which provides in part that a case shall be appealable to this court "if a law or ordinance has been declared unconstitutional…." In its assignments of error, the Department of Revenue asserts the district court erred in finding Act 131 unconstitutional because: (1) the plaintiffs lack standing and no justiciable controversy was presented to the court, in light of the remedial effect of 2017 La. Acts, No. 413, § 1; (2) Act 131 does not apply retroactively, so it was unnecessary to reach the constitutional substantive due process issue; (3) the plaintiffs did not submit clear and convincing proof that Act 131 is unconstitutional; (4) La. Rev. Stat. 47:6030 does not provide taxpayers with a vested property right to the tax credit on the purchase and installation of a solar energy system; (5) any retroactive effect of Act 131 is constitutionally permissible because it is supported by a legitimate legislative purpose and furthered by rational means; (6) La. Rev. Stat. 47:6030 does not constitute a contract between the State and the plaintiffs; and (7) tax legislation affects only incidentally the obligations of private contracts and does not destroy or impair the means or remedy for their enforcement. For the reasons set forth below, we find no justiciable controversy exists because Act 413 intended to, and did in fact, remediate the allegedly unconstitutional aspect of Act 131, i.e., the plaintiffs' claim that imposition of a $25, 000, 000 aggregate cap eliminated their right to receive a solar tax credit by providing for full repayment of the tax credit albeit over a three or four-year period. Accordingly, we pretermit review of the Department of Revenue's remaining assignments of error.

         LAW and ANALYSIS

         This court conducts a de novo review of a judgment that declares a statute unconstitutional. City of New Orleans v. Louisiana Assessors' Retirement & Relief Fund, 05-2548, p. 11 (La. 10/1/07), 986 So.2d 1, 12. However, before doing so, this court must address the threshold issue of whether the case presents a justiciable controversy or whether 2017 La. Acts, No. 413 rendered this case moot.

         In Louisiana, courts will not decide abstract, hypothetical, or moot controversies, or render advisory opinions with respect to such controversies. SeeCat's Meow, Inc. v. City of New Orleans Through Dept. of Finance, 98-0601, p. 8 (La. 10/20/98), 720 So.2d 1186, 1193. To avoid deciding abstract, hypothetical or moot questions, our courts require cases submitted for adjudication to be justiciable, ripe for decision, and not brought prematurely. Id., citing St. Charles Parish Sch. Bd. v. GAF Corp., 512 So.2d 1165 (La. 1987). In relation to declaratory relief, "[a] 'justiciable controversy' connotes, in the present sense, an existing actual and substantial dispute, as distinguished from one that is merely hypothetical or abstract, and a dispute which involves the legal relations of the parties who have real adverse interests, and upon which the judgment of the court may effectively operate through a decree of a conclusive character." Id., quoting Abbott v. Parker, 259 La. 279, 249 So.2d 908 (La. 1971). This court has ...

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