Kerr-Mcgee Corp. v. McNamara

• Citation: 826 So.2d 1
• Decision Date: 22 June 2001
• Docket Number: No. 2000 CA 0770.,2000 CA 0770.
• Parties: KERR-MCGEE CORPORATION v. Shirley MCNAMARA, Secretary of Revenue and Taxation, State of Louisiana.
• Court: Court of Appeal of Louisiana (US)

Page 1

826 So.2d 1

KERR-MCGEE CORPORATION v. Shirley MCNAMARA, Secretary of Revenue and Taxation, State of Louisiana.

No. 2000 CA 0770.

Court of Appeal of Louisiana, First Circuit.

June 22, 2001.

William M. Backstrom, Jr., New Orleans, LA, for plaintiff/appellee, Kerr-McGee Corporation.

Frederick Mulhearn, Geneva Landrum, Baton Rouge, LA, for defendant/appellant, Brett Crawford, Secretary, Department of Revenue, State of Louisiana.

BEFORE: WHIPPLE, KUHN and DOWNING, JJ.

WHIPPLE, J.

The Louisiana Department of Revenue and Taxation appeals from a judgment of the trial court, granting the motion for summary judgment filed by Kerr-McGee Corporation ("Kerr-McGee") and awarding Kerr-McGee reimbursement in the amount of $292,499.00 for sales taxes paid under protest. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Kerr-McGee instituted this action for reimbursement of sales taxes it paid under protest for the taxable period beginning on April 1, 1987, and ending April 30, 1987. In its petition, Kerr-McGee alleged that it conducted oil and gas exploration and production operations in waters in the Gulf of Mexico beyond territorial limits of the state of Louisiana. It further alleged that while conducting these operations, Kerr-McGee purchased materials, equipment and supplies that were either: immediately loaded upon offshore supply vessels and delivered to the offshore drilling and productions platforms it owned or operated, for consumption and use exclusively on those platforms; loaded upon the offshore supply vessels and used or consumed in the maintenance and operation of those vessels while they were operating exclusively in foreign or interstate commerce; or stored temporarily in Louisiana for exclusive use on the offshore platforms.

Kerr-McGee contended that no Louisiana sales or use taxes were due on these transactions, because the goods were not used or consumed in Louisiana, but, instead, were used or consumed beyond the territorial limits of the state of Louisiana. During the pendency of this matter, Kerr-McGee continued to pay under protest sales taxes on the purchase of goods as described above through June of 1989, the period during which certain tax exemptions were suspended by the Legislature. The total amount of taxes paid under protest was $292,449.00.

The Department of Revenue and Taxation ("the Department") filed a motion for judgment on the pleadings, contending that even accepting the allegations of Kerr-McGee's petition as true, Kerr-McGee was not entitled to any relief, and the Department was entitled to judgment in its favor¹ The Department contended that while there were statutory exemptions governing the purchase of materials to be used or consumed in foreign or interstate coastwise commerce or exclusively beyond the territorial limits of Louisiana, those exemptions were either inapplicable to the transactions at issue or had been suspended by the Legislature during the period at issue. The Department further contended that while Kerr-McGee may have been engaged in interstate commerce, the purchases at issue were not part of interstate commerce. Thus, these purchases were not exempt from taxation.

Kerr-McGee then filed a motion for summary judgment, contending that: there were no material facts in dispute; the goods in question were used or consumed exclusively outside the territorial limits of Louisiana in interstate and foreign commerce: and therefore it was entitled to judgment in its favor as a matter of law, finding that these purchases were excluded from taxation pursuant to LSA-R.S. 47:305(E). In support of its motion, Kerr-McGee submitted the affidavit of' L.E. Cox, the manager of domestic accounting for Kerr-McGee, who attested to the activities of Kerr-McGee in the Gulf of Mexico outside the territorial limits of Louisiana. He explained that in connection with its oil and gas exploration and production operations Kerr-McGee chartered various vessels to transport materials, equipment and supplies to its offshore platforms. He further stated that these supplies were delivered by vendors to points in Louisiana and immediately loaded onto these vessels or temporarily stored before they were loaded onto one of the vessels for transport to the offshore platforms. Cox attested that these materials, equipment and supplies were consumed either in the maintenance and operation of the transport vessels or on the offshore platforms.

After a hearing on both motions, the trial court denied the Department's motion and granted Kerr-McGee's motion, finding that the goods were used or consumed exclusively outside the territorial limits of Louisiana and were "in no way used in intrastate commerce." From this judgment, the Department appeals, contending that the trial court erred in denying its motion and granting Kerr-McGee's motion when the undisputed facts show that Kerr-McGee made purchases in Louisiana such that the taxation was not exempted under law.

At oral arguments before this court, held on May 10, 2001, counsel for the Department indicated for the first time that the Department contemplated filing exceptions in this matter and attempted to argue the merits of the exceptions. Thereafter, on May 18, 2001, the Department filed a declinatory exception raising the objection of lack of subject matter jurisdiction and peremptory exceptions raising the objections of prescription and no right of action. We address these exceptions first.

EXCEPTIONS RAISED BY THE DEPARTMENT ON APPEAL

Peremptory Exceptions of Prescription and No Right of Action

In its exception of prescription, the Department contends that Kerr-McGee did not comply with the time limitations imposed by LSA-R.S. 47:1576, which requires that the taxpayer file suit to recover a tax paid under protest within thirty days of the payment.² The Department argues that, according to the petition, it paid the protested tax for April of 1987 with the filing of its tax return for that period. According to the Department, the sales tax return for April of 1987 would have been due on May 20, 1987, as provided in LSA-R.S. 47:306(A). Thus, it contends that Kerr-McGee would have had thirty days from May 20, 1987, within which to file suit, which would have been June 19, 1987. Because the instant suit was not filed by Kerr-McGee until June 22, 1987, the Department contends that this action is barred by prescription. Additionally, the Department contends that because Kerr-McGee has failed to follow the requisites of the statute to which it claims entitlement, it had no right of action herein.

Kerr-McGee, on the other hand, contends that these exceptions should be rejected as untimely. We agree. Louisiana Code of Civil Procedure article 2163 provides as follows:

The appellate court may consider the peremptory exception filed for the first time in that court, if pleaded prior to a submission of the ease for a decision, and if proof of the ground of the exception appears of record.

If the ground for the peremptory exception pleaded in the appellate court is prescription, the plaintiff may demand that the case be remanded to the trial court for trial of the exception.

Thus, while peremptory exceptions raising the objections of prescription and no right of action may be raised for the first time in the appellate court, Blanchard v. Southern Pacific Transportation Company, 93-1155, p. 4 (La.App. 1st Cir. 4/8/94), 635 So.2d 742, 744, Lambert v. Donald G. Lambert. Construction Co., 370 So.2d 1254, 1255 (La.1979), the peremptory exception should be pleaded prior to submission of the ease for a decision LSA-C.C.P. art. 2168; Firmin, Inc. v. Denham Springs Floor Covering, Inc., 595 So.2d 1164, 1172 (La.App. 1st Cir.1991) (on application for rehearing); see also Scott v. Scott, 92-2378, p. 2 n. 2 (La.App. 1st Cir. 6/24/94), 638 So.2d 1206, 1207 n. 2.

In the instant case, the Department did not file its peremptory exceptions until after this appeal had been fully argued both in briefs and orally and had, thus, been submitted for decision (and almost fourteen years after suit was filed herein). Although a time period was specified for the filing of any exceptions, as all counsel were informed, the matter was deemed submitted on the record existing at the conclusion of the arguments, unless a valid objection to jurisdiction existed. Accordingly, we conclude that these exceptions are not properly before us on appeal. See Scott, 92-2378 at p. 2 n. 2, 638 So.2d at 1207 n. 2; see also Dawes v. Kinnett, 99-3157, 99-3158, 99-3159 at p. 6 n. 1, (La. App.4th Cir. 1/17/01), 779 So.2d 978, 982 n. 1.

Declinatory Exception Raising the Objection of Lack of Subject Matter Jurisdiction

The Department also filed a declinatory exception raising the objection of lack of subject matter jurisdiction, contending that, at the time this lawsuit was instituted. suit filed in district court to recover a payment under protest as provided in LSA-R.S. 47:1576, was not the appropriate remedy available to a taxpayer seeking to recoup tax paid in connection with the filing of a tax return. Rather, the Department contends, subject matter jurisdiction for a refund of tax paid with the filing of a return is vested in the Board of Tax Appeals.

An appellate court has discretion to consider an exception of lack of subject matter jurisdiction filed in the appellate court, because the exception goes to the core of the validity of a judgment and is not subject to the waiver provisions generally affecting declinatory exceptions. Har bour v. Harbour, 95-2168, p. 3 n. 2 (La. App. 1st Cir. 6/28/96), 677 So.2d 700, 702 n. 2. Subject matter jurisdiction is the legal power and authority of a tribunal to hear and determine a particular class of actions or proceedings, based upon the object of demand, the amount in dispute, or the value of the right asserted. LSA-C.C.P. art. 2. A judgment rendered by a tribunal which has no jurisdiction over the subject matter of the...