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Zelia, LLC v. Robinson

Court of Appeals of Louisiana, Fifth Circuit

December 30, 2019

ZELIA, LLC
v.
KIMBERLY ROBINSON, SECRETARY, LOUISIANA DEPARTMENT OF REVENUE, ET AL

          ON APPEAL FROM THE BOARD OF TAX APPEALS STATE OF LOUISIANA NO. 10430D STEPHEN J. WINDHORST JUDGE

          COUNSEL FOR PLAINTIFF/APPELLANT, ZELIA, LLC Cloyd F. Van Hook

          COUNSEL FOR DEFENDANT/APPELLEE, KIMBERLY ROBINSON, SECRETARY, STATE OF LOUISIANA, DEPARTMENT OF REVENUE Miranda Y. Scroggins Antonio C. Ferachi Debra D. Morris Brian C. DeJean

          Panel composed of Judges Jude G. Gravois, Marc E. Johnson, and Stephen J. Windhorst

          WINDHORST, J.

         Appellant, Zelia, LLC, seeks review of the Louisiana Board of Tax Appeals April 10, 2019 judgment granting the motion for summary judgment filed by appellee, Kimberly Robinson, Secretary, Department of Revenue & Taxation, State of Louisiana, and denying the cross-motion for summary judgment filed by appellant.[1] For the reasons that follow, we affirm.

         PROCEDURAL HISTORY AND FACTS

         Appellant entered into Enterprise Zone Contract No. 20111066-EZ ("the contract") with the Louisiana Board of Commerce and Industry ("BCI") with an effective date of October 18, 2011. The Enterprise Zone Program is administered by the Louisiana Department of Economic Development ("LED"). Because of the contract, appellant received a refundable investment tax credit in the amount of $233, 159.78. The terms of the contract required appellant to hire one new employee or to create one net new job within the first twelve months of the contract period.

         On April 25, 2015, LED notified appellant that it was in violation of its net new job obligation under the contract. The contract was presented to BCI for cancellation at its June 23, 2015 and October 27, 2015 meetings, but no action was taken. LED again brought the contract to BCI for cancellation at its December 8, 2015 meeting, at which time BCI voted to cancel the contract. By letter dated December 15, 2015, LED advised appellant that BCI cancelled the contract and for appellant to contact the Audit Division of LDR to make arrangements for repayment of the investment tax credit. LED also notified LDR via email on December 16, 2015 that the contract was cancelled and that all benefits previously received by appellant should be recovered.

         On February 25, 2016, appellant filed an administrative appeal of the cancellation of the contract. The administrative review was based on a contractual dispute between appellant and LED wherein the parties disagreed on the correct formula for calculating the number of net new jobs appellant was required to create within the first twelve months of the contract. On September 12, 2016, BCI denied the administrative appeal, upholding the cancellation of the contract. LED notified LDR that the administrative appeal was denied and that LDR needed to recover the investment tax credit. In response, LDR notified appellant that it needed to repay the investment tax credit with interest and that it was due immediately. Appellant did not repay the investment tax credit.

         On December 1, 2016, LDR issued appellant a "Notice of Proposed Tax Due" and "Notice of Assessment and Notice of Right to Appeal to the Louisiana Board of Tax Appeals" assessing Louisiana corporation income and franchise tax in the amount of $223, 159.78 and interest in the amount of $40, 276.73 for the 2013 tax year ("the assessment"). In issuing the assessment, LDR sought to recover the investment tax credit that appellant received from the contract. On January 20, 2017, appellant appealed the assessment by filing a petition for redetermination of the assessment with the Louisiana Board of Tax Appeals ("BTA"). In the petition, appellant contended that LED's method for determining the number of net new jobs created did not comply with the language of the statute, that BCI breached appellant's contract when it cancelled it despite appellant complying with the contract, and LDR's assessment should be rescinded as it was improperly issued based on erroneous information from LED.

         In response, LDR, LED, and BCI filed joint exceptions of lack of subject matter jurisdiction, no right of action, and no cause of action. LDR, LED, and BCI argued that the BTA did not have jurisdiction over LED or BCI and therefore, it had no jurisdiction to determine the merits of the contract between appellant and BCI. They also asserted that appellant did not have a right of action because the law did not afford it a remedy from LDR's assessment. They further claimed that because of the BTA's lack of jurisdiction over the underlying contract between appellant and BCI, appellant did not have a cause of action. On November 7, 2017, the BTA sustained in part the exceptions as to the prayer requesting the BTA to order LED and BCI to reinstate the contract. In all other respects, the BTA overruled the exceptions. LED and BCI filed for supervisory review of the BTA's November 7, 2017 judgment overruling their exceptions with the Louisiana First Circuit Court of Appeal ("the First Circuit"). LDR also filed for supervisory review of the BTA's November 7, 2017 judgment overruling its exceptions with the First Circuit.

         On May 14, 2018, the First Circuit denied LDR's writ application. On the same day, the First Circuit granted LED and BCI's writ application, sustaining LED and BCI's exception of lack of subject matter jurisdiction, and dismissing the claims asserted by appellant against LED and BCI. In granting LED and BCI's exception, the First Circuit found that:

The BTA's jurisdiction, as provided in La. R.S. 47:1407, does not extend to permit the BTA to determine the merits of the contract dispute between Zelia, LLC and Relators, particularly considering the tax assessment issued by the Louisiana Department of Revenue is a ...

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