Court Opinion

ID: 9896329
Source: CourtListenerOpinion
Date Created: 2023-11-09 21:09:24.021354+00
Date Added: 2024-06-11T09:14:45.377558
License: Public Domain

STATE OF LOUISIANA

                            COURT OF APPEAL

                              FIRST CIRCUIT

                              NO. 2023 CA 0548

                                  VCS, LLC

                                   VERSUS

             STATE OF LOUISIANA, LOUISIANA DEPARTMENT
       OF ECONOMIC DEVELOPMENT, STATE OF LOUISIANA,
              THE BOARD OF COMMERCE AND INDUSTRY
                   FOR THE STATE OF LOUISIANA, AND
              THE LOUISIANA DEPARTMENT OF REVENUE

                                          Judgment Rendered:
                                                                NOV 0 9 2023

                              Appealed from the
                          19th Judicial District Court
                   In and for the Parish of East Baton Rouge
                              State of Louisiana
                              Case No. 0722999

              The Honorable Donald R. Johnson, Judge Presiding

Scott J. Sonnier                    Counsel for Plaintiff/Appellant
Brett Lala                          VCS, LLC
New Orleans, Louisiana

Debra Dauzat Morris                 Counsel for Defendant/Appellee
Antonio Ferachi                     Kevin Richard, Secretary of Louisiana
Miranda Y. Scroggins                Department of Revenue
Robyn Davis
Angelique Boyd
Baton Rouge, Louisiana

Drew M. Talbot                      Counsel for Defendants/ Appellees
Baton Rouge, Louisiana              Louisiana      Department    of   Economic
                                    Development      through    Secretary,   Don
                                    Pierson,   and Board   of Commerce and
                                     Industry for the State of Louisiana

             BEFORE: GUIDRY, C.J., CHUTZ, AND LANIER, JJ.
LANIER, J.

        In this appeal, plaintiff, VCS, LLC (" VCS"),           challenges the trial court's

judgment that granted several exceptions filed by the Louisiana Department of

Revenue (" the Department"),        dismissing the Department from the matter.      For the

reasons that follow, we affirm.

                          FACTS AND PROCEDURAL HISTORY

        VCS and the Board of Commerce and Industry for the State of Louisiana

 Board of Commerce") entered an Enterprise Zone contract (" the contract") in

March 2012. The contract was part of the Enterprise Zone Program, administered

by the State of Louisiana, Department of Economic Development ("                     LED")

pursuant to La. R.S. 51: 1781, et seq., and LED regulations ( La. Admin. Code tit.

13,   pt.   I, Ch. 7).    Businesses who participate in the program are entitled to a

refundable investment credit, and other incentives, for creating a minimum number

of jobs within a specified period of time.         See La. R. S. 51: 1787.   If the business

fails to meet this requirement, all benefits received in accordance with the contract

must be returned, with interest,        to the governmental entity from which those

benefits were obtained.

        In 2014, VCS applied for and was granted an investment credit refund of

 125, 959. 17      from    the   Louisiana   Department    of   Revenue ("   Department")

However, after reviewing the annual Employee Certificate Reports filed by VCS,

as required by the Enterprise Zone Program, it was determined that VCS had not

created the required number of jobs and, therefore, failed to satisfy the contract and

program requirements.        In August 2015, Joyce Metoyer, Program Administrator of

the Enterprise Zone Program, informed VCS of these findings and that, as a result

of its failure to create the required number of jobs, all rebates and credits were due

back to the State of Louisiana, with interest.        The Board of Commerce cancelled

the contract with VCS in December 2015.

                                               2
      In November 2016, the Department issued a " Notice of Assessment and

Notice of Right to Appeal to the Louisiana Board of Tax Appeals" to VCS to

recoup   the    credit   amount   of $ 125, 959. 17,    plus   interest   in   the   amount   of

 14, 954. 40, for a total due of $140, 913. 57.        After an unsuccessful appeal to the

Department, VSC filed a Petition for Redetermination of Assessment with the

Board of Tax Appeals (" BTA") in January 2017, naming as defendants LED, the

Board of Commerce, and the Department.            VCS claimed LED used an incorrect

method to determine whether it created the minimum required number of new jobs.

According to VCS, the method employed by LED, as set forth in its regulations

La. Admin. Code tit. 13, pt. I, § 703),       was contrary to La. R.S. 51: 1787, which

established the minimum new job requirements.               VCS sought rescission of the

Department' s assessment,      arguing it was based on erroneous information from

LED. VCS further prayed that ( 1)      the BTA try the case and find no deficiencies in

Louisiana      corporation   income   tax,   including    interest,   for the    filing period

December 31, 2013; ( 2) the BTA rule that the procedure LED used to determine

the number of net new jobs created during the contract period does not comply

with the plain language of La. R. S. 51: 1787; ( 3) the BTA rule that the Board of

Commerce erred in finding VCS did not meet the hiring requirement of La. R.S.

51.: 1787 and breached the contract by cancelling it without justification; and ( 4) the

BTA order the Board of Commerce to reverse the cancellation of the Contract.

      In response to VCS's petition, LED, the Board of Commerce, and the

Department filed joint exceptions raising the objections of no right of action, no

cause of action, and lack of subject matter jurisdiction. The parties argued that the

BTA did not have jurisdiction to reach the merits of VCS' s claim that LED failed

to comply with La. R.S. 51: 1787 in determining whether it satisfied the new job

                                              3
creation requirement or to render judgment on VCS' s breach of contract claims.

They further asserted that the assessment was not the result of any decision made

by the Department, which would put this matter under the purview of the BTA.

Instead, the Department was simply following the statutory mandate that the state

must be reimbursed for all rebates and credits received by the taxpayer if it fails to

meet the requirements of the contract and Enterprise Zone Program. See La. R.S.

51: 1787( I).    After considering the arguments,   the BTA overruled all        of the

exceptions as to the Department and also overruled the exceptions raising the

objection of no cause of action and lack of subject matter jurisdiction as to the

Board of Commerce and LED. However, the BTA sustained, in part, the exception

raising the objection of no right of action as to the Board of Commerce and LED,

dismissing, without prejudice, VCS' s prayer that the BTA order the Board of

Commerce to reinstate the contract.

       The Board of Commerce and LED sought supervisory review with this

court, which was granted as follows:

                WRIT GRANTED.         The November 7, 2017, judgment of the
       Board of Tax Appeals ( BTA) is reversed.     The BTA erred in denying
       the exception of lack of subject matter jurisdiction filed by [ LED] and
       the [ Board of Commerce].   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 VCS, LLC and Relators,
       particularly considering the tax assessment issued by the [ Department]
       is a secondary issue contingent upon resolution of the contract
       dispute. See Article V, Sec. 16 of Louisiana Constitution and La. R.S.
       13: 5104.
               Therefore, the exception [ raising] the objection of lack of
       subject        jurisdiction filed by [ LED] and the [ Board of
                   matter
       Commerce] is granted, and the claims asserted by VCS, LLC against
       these defendants are dismissed without prejudice.

VCS, LLC v. Robinson, 2018- 0012 ( La. App. 1 Cir. 5/ 14/ 18), 2018 WL 2202320.

       In April 2022, the Department filed a motion for summary judgment in the

BTA matter, which was opposed by VCS. On September 1,             2022, VCS filed a

petition for breach of contract in the 19th Judicial District Court, naming the

                                           4
Department, LED, and the Board of Commerce.'                      VCS sought a ruling from the

trial court that ( 1)   VCS was in compliance with the contract; ( 2) the Board of

Commerce and LED had breached the contract by canceling it; ( 3) no refundable

Investment Tax Credit was due back to the Department; ( 4) the Department should

cancel the assessment of taxes or return any funds collected on the assessment; and

 5)   the Board of Commerce and LED should pay all legal fees and expenses

incurred by VCS as a result of the breach of contract. On the same date, VCS filed

an ex parte motion to stay the proceedings with the BTA pending the outcome of

the breach of contract claim.         In response to the breach of contract claim, the

Department filed exceptions raising the objections of lack of subject matter

jurisdiction and lis pendens.         On December 26, 2022, the trial court signed a

judgment, sustaining the Department's exceptions and dismissing the Department
                                                                        Z
from this matter. From this judgment, VCS has appealed.

                        SUBJECT MATTER JURISDICTION

        Subject matter jurisdiction is a threshold issue insofar as a judgment

rendered by a court that has no jurisdiction over the subject matter of the action or

proceeding is void. See La. Code Civ. P. art. 3; Citizens Against Multi -Chem v.

Louisiana Dept. of Environmental Quality, 2013- 1416 ( La. App. 1 Cir. 5122114),

145 So. 3d 471,      474, writ denied, 2014- 1464 ( La.              10110114),    151   So. 3d 586.

 According to the Department, a hearing on the motion for summary judgment was held before
the BTA in August 2022, and the decision on the motion was pending when VCS filed its
petition for breach of contract in the 19th Judicial District Court.        However, we are unable to
confirm this from the record before us.

a We note some discrepancy in the record concerning the exceptions filed by the Department in
response to the petition for breach of contract.       Although the pleading filed by the Department
only references the objections of lack of subject matter jurisdiction and lis pendens, as does
VCS' s brief on appeal, both the minutes and the transcript of the hearing on the matter indicate
that the court also considered an objection of no right of action.     Moreover, while the judgment
that forms the basis of this appeal sustains the exceptions filed by the Department, including the
exception raising the objection no right of action, the trial court' s written reasons for judgment
make no mention of an exception raising the objection of no right of action.             Nonetheless,

because we find the trial court was correct in sustaining the Department's exception raising the
objection of lack of subject matter jurisdiction, our analysis ends there, and we pretermit
discussion of the lis pendens issue and any discussion of whether the objection of no right of
action was properly before the trial court in this matter.

                                                   5
Jurisdiction over the subject matter is the legal power and authority of a court to

hear and determine a particular class of actions or proceedings based upon the

object of the demand, the amount in dispute, or the value of the right asserted. La.

Code Civ. P. art. 2.     Subject matter jurisdiction cannot be waived or conferred by

consent of the parties, and the lack thereof can be recognized by the court at any

time, with or without formal exception.               See La. Code Civ. P. arts. 3, 927( A)(8)

and ( B); 3 Gross v. State through Louisiana Department of Revenue, 2023- 0142

 La. App. 1 Cir. 9115123), ---     So. 3d ---, ---,   2023 VVL 6014144, * 4. The trial court' s

determination of whether it has subject matter jurisdiction over a case is subject to

de novo review.      Louisiana Environmental Action Network, Inc. v. Louisiana

Department of Environmental Quality, 2019- 1551 ( La. App. 1 Cir. 9123120),

314 So. 3d 841, 848.

         The district courts have exclusive original jurisdiction over most matters,

and concurrent original jurisdiction with trial courts of limited jurisdiction.                See

La. Const. art. V. § 16.       Article VII, § 1 of the Louisiana Constitution vests the

power of taxation in the legislature, and article VII, §3( A) mandates the legislature

to "   provide a complete and adequate remedy for the prompt recovery of an illegal

tax paid by a taxpayer." To fulfill its latter obligation, the legislature has provided

three remedies: ( 1)    the Claims Against the State procedure, La. R.S. 47: 1481,               et

seq.; ( 2)   the Payment Under Protest procedure, La. R.S. 47: 1576, et seq.; and ( 3)

the Overpayment Refund procedure, La. R.S. 47: 1621, et .seq.                    The legislature

created the BTA to act as an appeal board to hear and decide disputes between a

taxpayer and the collector of revenue.            La. R. S. 47: 1401.   Moreover, pursuant to

3 With the passage of 2023 La. Acts, No. 5, §§ 1 and 3 (" the Act"), the legislature has deleted the
objection of lack of subject matter jurisdiction from the objections raised through a declinatory
exception and added it to the list of peremptory exceptions found in La. Code Civ. P. art. 927.
See La. Code Civ. P. art. 925, Official Revision Comments — 2023.        The Act further amended
and reenacted Article 927 to provide as follows: "       Once the objection of the lack of subject

matter jurisdiction is raised by the parties or noticed by the court on its own motion, the court
shall address the objection before ruling on any other matter." See La. Code Civ. P. art. 927( B).

                                                  L
La. Const. art. V, § 35, the BTA's jurisdiction may be extended " by a law enacted

by a two- thirds vote of the elected members of each house of the legislature, to

matters concerning the constitutionality of taxes, fees, or other matters related to its

jurisdiction      which jurisdiction        may     be   concurrent     with     the   district    courts

concerning such matters."

        Pursuant to La. R.S. 47: 1407, as amended,' the jurisdiction of the BTA is

outlined as follows:

         1)     All   matters  relating to appeals for the redetermination of
        assessments,       the determination of overpayments, payment under
        protest petitions, or other matters within its jurisdiction, as provided in
        R.S. 47: 1431 through 1438 or other applicable law.

         2) All matters relating to the waiver of penalties, as provided in R.S.
        47: 1451.

         3)( a) All matters related to state or local taxes or fees.
         b) All other jurisdiction otherwise provided by law, including
       jurisdiction concerning ad valorem taxes pursuant to Subtitle III of
       this Title, rules to cease business, ordinary collection suits, summary
       tax proceedings, rules to seek uniformity of interpretation of common
        sales and use tax law or local sales and use tax law, as provided in
        R.S.     47: 337. 101( A)(2),    and petitions concerning the validity of a
        collector' s rules, regulations, or private letter rulings, as provided in
        R.S. 47: 337. 102.

         4) All matters relating to claims against the state, as provided in R.S.
        47: 1481 through 1486.

         5)     Incidental demands authorized by law in any action pending
        before the board in the same manner as in a district court pursuant to
        Code of Civil Procedure Article 1031.

         6)     All   matters    relating    to   appeals    of   administrative       hearings,

        assessments, and refund denials by the Louisiana Sales and Use Tax
        Commission for Remote Sellers.

         7) A petition for declaratory judgment or other action relating to any
        state or local tax or fee, concerning taxing districts and related
        proceeds, or relating to contracts related to tax matters; and including
        disputes related to the constitutionality of a law or ordinance or
        validity of a regulation concerning any related matter or concerning
        any state or local tax or fee.

4 See La. R.S. 47: 1407, as amended by Acts 2019, No. 365, § l, eff. Nov. 18, 2019; Acts 2020,
No. 278, § 1,   eff. July 1, 2020; Acts 2021, No. 343, § 1, eff. Jan. 1, 2022.

                                                     7
Thus, as provided by the statute, the BTA is granted jurisdiction over "[ a] 11 matters

related to state or local taxes or fees"       and " petition[ s] for declaratory judgment or

other action[ s] relating to any state or local tax or fee ...                 or relating to contracts

related to tax matters."

      As previously indicated,            VCS     filed        a petition     for   redetermination    of

assessment with the BTA against the Department, the Board of Commerce, and

LED in January 2017, seeking a ruling that the Board of Commerce erred in

finding that VCS breached the contract and an order that the Board of Commerce

reverse the cancellation of the contract.             At that time, La. R. S. 47: 1407 provided

that the jurisdiction of the BTA extended to the following:

        1)   All   matters
                               relating   to   appeals         for    the   redetermination     of

       assessments,    or for the determination of overpayments, or payment
       under protest petitions, as provided in R. S. 47: 1431 through 1438.

        2) All matters relating to the waiver of penalties, as provided in R.S.
       47: 1451.

        3) All matters related to other jurisdiction otherwise provided by law,
       including rules to seek uniformity of interpretation of common sales
       and use tax law or local sales and use tax law, as provided in R.S.
       47: 337. 101( A)( 2).

        4) All matters relating to claims against the state, as provided in R.S.
       47: 1481 through 47: 1486.

        5)   Incidental demands authorized by law in any action pending
       before the board in the same manner as in a district court pursuant to
       Code of Civil Procedure Article 1031.

Thus, in 2017, the BTA' s jurisdiction did not extend to the merits of the contract

dispute at issue herein. See VCS, LLC v. Robinson, et al., 2018- 0012 ( La. App. 1

Cir. 5114118),     2018    WL 2202320          at *       1.   However, La. R. S.          47: 1407 was

subsequently amended to vest subject matter jurisdiction with the BTA over "[ a] ll

matters related to state or local taxes or fees"                     and " petition[ s]   for declaratory

judgment or other action[ s] relating to any state or local tax or fee ... or relating to

contracts related to tax matters."

                                                      8
        Because this court has previously stated that laws determining jurisdiction

are   procedural,   we find the amendments to La. R.S. 47: 1407 are procedural in

nature and must be afforded retroactive application.             See Ransome v. Ransome,

99- 1291 ( La.   App.   1   Cir.   1/ 21100),   791   So. 2d   120,   122 n.2.   Additionally,

jurisdictional provisions apply from the date of their promulgation, to all lawsuits,

even those that bear upon facts of a prior date and to pending lawsuits.                      A

American Waste and Pollution Control Company v. State, Department of

Environmental Quality, 597 So. 2d 1125,               1128- 1129 ( La.    App.   1 Cir.),   writs

denied, 604 So. 2d 1309, 1318 ( 1992). The amended statute vests exclusive subject

matter jurisdiction for matters such as those brought by VCS with the BTA.                   See

Gross, 2023 WL 6014144 at * 6.

                                           DECREE

        For the reasons set forth herein, the trial court's December 26, 2022

judgment is affirmed.       All costs associated with this appeal are assessed against

plaintiff/appellant, VCS, LLC.

AFFIRMED.

                                                 I