FROM THIRTY-FIRST JUDICIAL DISTRICT COURT, PARISH OF
JEFFERSON DAVIS, NO. C-1-16; C-619-16; C-181-17 HONORABLE
STEVE GUNNELL, DISTRICT JUDGE.
A. Eddington Attorney for Appellant, Donald Kratzer,
Jefferson Davis Parish Assessor
Phyllis D. Sims Linda S. Akehin Angela Adolph Kean Miller LLP
Phyllis D. Sims Linda S. Akehin Angela Adolph Kean Miller LLP
Attorneys for Appellee, D90 Energy, LLC
Terrence D. McCay Kean Miller LLP Kyle P. Polozola Kean
Miller LLP Attorney for Appellee, D90 Energy, LLC
composed of Sylvia R. Cooks, Billy H. Ezell, and John E.
R. COOKS JUDGE.
AND PROCEDURAL HISTORY
Energy, LLC (D90) acquired three oil wells and one saltwater
disposal well in Jefferson Davis Parish in October 2012.
D90's tax representative, Cochran & Company
(Cochran), submitted a letter to Jefferson Davis Tax
Assessor, Donald Kratzer (Kratzer), in March of 2013, with a
copy of a document identified as an "Assignment,
Conveyance and Bill of Sale" (Bill of Sale) along with a
copy of a cancelled check in the amount of $100, 000. On the
basis of these documents Cochran asserted its client D90 had
purchased the three wells in Jefferson Davis Parish from
Goldking Resources for the sum of $100, 000, despite the
written representation in the Bill of Sale that the wells
were purchased "for and in consideration of Ten and
No/100 ($10) and other good and valuable consideration."
No other documentation was provided to Kratzer by D90 or
anyone on its behalf. Based on its letter and attached
documentation, Cochran asserted D90's wells should be
valued by Kratzer at $100, 000 for tax assessment purposes.
D90 submitted these same documents for subsequent tax years
including 2014 and 2015, asserting each time these wells
should be valued at $100, 000 for tax assessment purposes.
For tax year 2016, D90 informed Kratzer that the wells were
all shut in but provided no supporting documentation. Based
upon that representation D90 asserted the property should now
be valued at $10, 000. Kratzer found public information from
the State of Louisiana indicating the wells were shut in as
of June 2, 2017.
did not consider the information submitted by D90 sufficient
to make a determination of the value for assessing ad valorem
property taxes on these wells. Additionally, Kratzer did not
use D90's suggested sales price valuation approach as the
sole method to establish fair market value, but, instead,
used valuation tables promulgated by the Louisiana Tax
Commission (Commission) which resulted in a valuation of $3,
347, 240 for tax year 2013 and $3, 347, 240 for tax year
2014. The method used for valuation was based on the
"age of the well; the depth of the well; the type of
well; and the production." The Jefferson Davis Parish
Board of Review (the Board) determined the values to be the
same as those of Assessor Kratzer. D90 appealed that decision
to the Louisiana Tax Commission (Commission). The
Commission's Assistant Director, Celeste Moss, calculated
the value for tax year 2013 at $3, 344, 584, according to her
application of the Commission's Rules and Regulations.
The Commission, using documentary evidence and testimony
presented at the hearing before it, determined that the
correct fair market value of the property for 2013 and 2014
was $235, 000. The Commission arrived at this valuation
accepting D90's evidence of a purchase price of $100, 000
and D90's evidence submitted to the Commission that it
had a plug-and-abandon liability cost of $135, 000 for each
of the three wells. Assessor Kratzer, having been provided
the same information by D90 for tax year 2015 as for the
previous years assessed the wells at $3, 140, 372 for tax
year 2015. D90 suggested to Kratzer that the actual value,
based on the alleged sale price, should be $100, 000. The
Board upheld the assessor's valuation. The Commission set
a fair market value for tax year 2015 at the same $235, 000
as for the previous tax years on the same basis. For tax year
2016, Kratzer valued the property at $1, 821, 213. D90
maintained the value for tax year 2016 should be lowered to
$10, 000 based on its assertion that the wells were shut in
as of December 2016. The Board again upheld Kratzer's
valuation. The Commission set the fair market value for tax
year 2016 at $145, 000.
paid its tax obligation for 2013 and 2014 under protest but
it did not pay any tax, under protest or otherwise, for tax
years 2015 and 2016. D90 objected to all four years of
assessments and filed protests with the Jefferson Davis Board
of Review. The Board denied all of D90's protests and
upheld Kratzer's assessments for 2013, 2014, 2015 and
2016. D90 appealed those rulings to the Louisiana Tax
Commission. Kratzer filed exceptions challenging D90's
right to attack the assessments for 2015 and 2016 because D90
had not paid those taxes under protest or otherwise.
hearing before the Tax Commission D90 introduced new evidence
and testimony in addition to the documents it originally
provided to Kratzer. As to the information regarding each tax
year submitted to the Commission in support of D90's
position it is admitted that all such information regarding a
given tax year was available to D90 at the time it or its
agent submitted the original limited information to Kratzer.
The Commission rendered a decision in which it determined the
fair market value of the wells as recited above. It did not
rule on Kratzer's exceptions concerning tax years 2015
and 2016, stating:
The Commission rules allow for properly documented sales to
be considered by the Assessor as evidence of Fair Market
Value. Based on testimony and the evidence provided at [sic]
hearing, we find the Fair Market Value of the wells in
questions [sic] to be $100, 000, plus the cost of plugging
and abandonment. The Taxpayer stated that the prior owner was
beginning the process to plug and abandon and, therefore,
discounted the wells by an equal amount, which was reflected
in the sales price.
Therefore, the total Fair Market Value for each of years 2013
and 2014 of the wells in question should be $235, 000
considering the $100, 000 purchase price and the plug and
abandon liability cost of $135, 000 for the three wells.
D90's admission at the hearing that it had not paid any
amount of its 2015 or 2016 tax obligation, the Commission
reached the same decision regarding tax years 2015 and 2016
without mentioning Kratzer's exceptions. Kratzer appealed
the Commission's rulings to the district court. The cases
were consolidated and after a hearing on the consolidated
matters the district court affirmed the Commission's
rulings and ordered all taxes paid under protest be refunded
to D90. The trial court stated its reasons for ruling orally:
I have to look at it from the viewpoint that the tax
commissioners listened to the testimony. It viewed the
witnesses. I do that all the time. It goes up on appeal,
okay. The one thing I don't want the Court of Appeals to
do is to put themselves as a fact finder instead of myself.
And I'm not going to do that. The tax commissioner [sic]
I don't see abused the discretion because there was-there
was evidence presented at the hearing in front of them to
justify their decision, all right.
appeals the judgment of the district court asserting five
assignments of error:
1. The District Court applied an incorrect standard of
2. The District Court erred in failing to review the
correctness of Assessor Kratzer's assessment and whether
Assessor Kratzer's determination that D90 failed to
submit adequate documentation of sales price constituted an
abuse of discretion;
3. The District Court erred in failing to recognize that
valuation of the wells owned by D90 based on a purported
sales price violated the uniformity requirements of Art. VII,
§18 of the Louisiana Constitution;
4. The District Court erred when it failed to dismiss
D90's protests for tax years 2015 and 2016 for failure to
pay the taxes due for those years;
5. The District Court erred in affirming and upholding he Tax
Commission's determination of value.
the Louisiana State Constitution, Article VII,
§18, the Parish Tax Assessor is given the
exclusive right to determine the fair market value of
property subject to ad valorem taxation within its
jurisdiction. Fair market value is defined in La.R.S. 47:2321
Fair market value is the price for property which would be
agreed upon between a willing and informed buyer and a
willing and informed seller under usual and ordinary
circumstances; it shall be the highest price estimated in
terms of money which property will bring if exposed for sale
on the open market with reasonable time allowed to find a
purchaser who is buying with knowledge of all the uses and
purposes to which the property is best adapted and for which
it can be legally used.
The criteria for determining Fair Market Value is provided in
A. The criteria for determining fair market value shall apply
uniformly throughout the state. Uniform guidelines,
procedures and rules and regulations as are necessary to
implement said criteria shall be adopted by the Louisiana Tax
Commission only after public hearings held pursuant to the
Administrative Procedure Act.
B. Each assessor shall follow the uniform guidelines,
procedures, and rules and regulations in determining the fair
market value of all property subject to taxation within his
respective parish or district. Any manual or manuals used by
an assessor shall be subject to approval by the Louisiana Tax
Commission or its successor agency.
The fair market value of real and personal property shall be
determined by the following generally recognized appraisal
procedures: the market approach, the cost approach, and/or
the income approach.
(1) In utilizing the market approach, the assessor shall use
an appraisal technique in which the market value estimate is
predicated upon prices paid in actual market transactions and
(2) In utilizing the cost approach, the assessor shall use a
method in which the value of a property is derived by
estimating the replacement or reproduction cost of the
improvements; deducting therefrom the estimated depreciation;
and then adding the market value of the land, if any.
(3) In utilizing the income approach, the assessor shall use
an appraisal technique in which the anticipated net income is
capitalized to indicate the capital amount of the investment
which produces the net income.
review of administrative matters is set forth in the
Administrative Procedures Act, La.R.S. 49:964:
A. (1) Except as provided in R.S. 15:1171 through 1177, a
person who is aggrieved by a final decision or order in an
adjudication proceeding is entitled to judicial review under
this Chapter whether or not he has applied to the agency for
rehearing, without limiting, however, utilization of or the
scope of judicial review available under other means of
review, redress, relief, or trial de novo provided by law. A
preliminary, procedural, or intermediate agency action or
ruling is immediately reviewable if review of the final
agency decision would not provide an adequate remedy and
would inflict irreparable injury.
(2)(a) No agency or official thereof or other person acting
on behalf of an agency or official thereof shall be entitled
to judicial review under this Chapter.
(b) The provisions of Subparagraph (a) of this Paragraph
shall not apply to the Department of Children and Family
Services or an official thereof or other person acting on
behalf of the department or official in appeals brought
pursuant to Children's Code Article 616.1.1.
B. Proceedings for review may be instituted by filing a
petition in the district court of the parish in which the
agency is located within thirty days after the transmittal of
notice of the final decision by the agency or, if a rehearing
is requested, within thirty days after the decision thereon.
Copies of the petition shall be served upon the agency and
all parties of record.
C. The filing of the petition does not itself stay
enforcement of the agency decision. The agency may grant, or
the reviewing court may order, a stay ex parte upon
appropriate terms, except as otherwise provided by Title 37
of the Louisiana Revised Statutes of 1950, relative to
professions and occupations. The court may require that the
stay be granted in accordance with the local rules of the
reviewing court pertaining to injunctive relief and the
issuance of temporary restraining orders.
D. Within thirty days after the service of the petition, or
within further time allowed by the court, the agency shall
transmit to the reviewing court the original or a certified
copy of the entire record of the proceeding under review. By
stipulation of all parties to the review proceedings, the
record may be shortened. A party unreasonably refusing to
stipulate to limit the record may be taxed by the court for
the additional costs. The court may require or permit
subsequent corrections or additions to the record.
E. If, before the date set for hearing, application is made
to the court for leave to present additional evidence, and it
is shown to the satisfaction of the court that the additional
evidence is material and that there were good reasons for
failure to present it in the proceeding before the agency,
the court may order that the additional evidence be taken
before the agency upon conditions determined by the court.
The agency may modify its findings and decision by reason of
the additional evidence and shall file that evidence and any
modifications, new findings, or decisions with the reviewing
F. The review shall be conducted by the court without a jury
and shall be confined to the record. In cases of alleged
irregularities in procedure before the agency, not shown in
the record, proof thereon may be taken in the court. The
court, upon request, shall hear oral argument and receive
G. The court may affirm the decision of the agency or remand
the case for further proceedings. The court may reverse or
modify the decision if substantial rights of the appellant
have been prejudiced because the administrative findings,
inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion; or
(6) Not supported and sustainable by a preponderance of
evidence as determined by the reviewing court. In the
application of this rule, the court shall make its own
determination and conclusions of fact by a preponderance of
evidence based upon its own evaluation of the record reviewed
in its entirety upon judicial review. In the application of
the rule, where the agency has the opportunity to judge the
credibility of witnesses by first-hand observation of
demeanor on the witness stand and the reviewing court does
not, due regard shall be given to the agency's
determination of credibility issues.
we review the ruling of the district court in this matter, we
first find that both the Commission and the district court
erred as a matter of law in failing to grant Kratzer's
exception concerning the taxpayer's right to proceed for
tax years 2015 and 2016. Kratzer asserted below, and
maintains here, that D90's failure to pay its taxes for
2015 and 2016, either under protest or otherwise, preclude it
from attacking those assessments. The district court was
silent regarding Kratzer's exception and such silence
leaves this court with the presumption that the exception was
representative, Daniel Silverman, owner and president of the
two-man operation, testified at the Commission hearing
regarding tax years 2015 and 2016:
Q. Did D90 pay the taxes on the wells it is contesting?
A. No, sir.
Q. You did not pay taxes?
Q. Paid them under protest?
Q. Just didn't pay them at all?
. . . ...