Bannister Props., Inc. v. State

• Court: Court of Appeal of Louisiana
• Writing for the Court: Welch, J.
• Citation: Bannister Props., Inc. v. State, 265 So.3d 778 (La. App. 2018)
• Decision Date: 02 November 2018
• Docket Number: 2018 CA 0030, 2018 CA 0031, 2018 CA 0032, 2018 CA 0033
• Parties: BANNISTER PROPERTIES, INC. v. STATE of Louisiana Southold Properties Inc. v. State of Louisiana Southold Properties Inc. v. State of Louisiana Bannister Properties, Inc. v. State of Louisiana

265 So.3d 778

BANNISTER PROPERTIES, INC.

v.STATE of Louisiana

Southold Properties Inc.

v.State of Louisiana

Southold Properties Inc.

v.State of Louisiana

Bannister Properties, Inc.

v.State of Louisiana

2018 CA 0030, 2018 CA 0031, 2018 CA 0032, 2018 CA 0033

Court of Appeal of Louisiana, First Circuit.

JUDGMENT RENDERED: NOVEMBER 2, 2018

Rehearing Denied December 7, 2018

William M. Backstrom, Jr., Matthew A. Mantle, New Orleans, Louisiana, Attorneys for Appellees, Plaintiffs - Bannister Properties, Inc. and Southold Properties, Inc.

Antonio Charles Ferachi, Brandea P. Averett, Baton Rouge, Louisiana, Attorneys for Appellant, Defendant - Secretary, Department of Revenue, State of Louisiana

Drew M. Talbot, Baton Rouge, Louisiana, Attorney for Amicus Curiae Applicant, Rainer, Anding & Talbot, on behalf of The Louisiana Association of Tax Administrators

Before: Pettigrew, Welch, and Chutz, JJ.

Welch, J.

The Louisiana Department of Revenue, through its Secretary, Kimberly L. Robinson ("Department"), appeals a judgment of the Board of Tax Appeals ("BTA") that denied its exceptions of lack of subject matter jurisdiction, no right of action, and its motion for summary judgment; granted summary judgment in favor of Bannister Properties, Inc. and Southold Properties, Inc. ("taxpayers"); and, ordered the Department to refund the taxpayers $500,713.00 and $164,287.00 respectively, plus interest, on the basis that the taxpayers were not subject to the Louisiana corporation franchise tax for the pertinent tax periods. For the following reasons, we affirm the denial of the Department's exceptions; we reverse the summary judgment granted in favor of the taxpayers and the ordered refund; we reverse the denial of the Department's motion; and, we render judgment granting the Department's motion for summary judgment denying the taxpayers' Overpayment Refund Claims.

FACTS AND PROCEDURAL HISTORY

The facts forming the basis of this appeal are not disputed by the parties. The taxpayers are foreign corporations, organized under the laws of Delaware, and conducted no business in Louisiana during the pertinent tax periods beginning January 1, 2008, January 1, 2009, January 1, 2010, and January 1, 2011 ("tax periods").¹

The taxpayers filed Louisiana Corporation Income and Corporation Franchise Tax Returns (Form CIFT-620) for the tax periods. Bannister remitted $636,651.00 in franchise taxes, and Southold remitted $189,924.00 in franchise taxes. Thereafter, the taxpayers filed amended returns for each of the tax periods, claiming they were not subject to the Louisiana corporate franchise tax, La. R.S. 47:601. The taxpayers sought refunds of the overpayment of franchise taxes that were paid for the tax periods. The taxpayers claimed they were not subject to the franchise taxes based on the decision of UTELCOM, Inc. v. Bridges , 2010-0654 (La. App. 1st Cir. 9/12/11), 77 So.3d 39, 48-50, writ denied, 2011-2632 (La. 3/2/12), 83 So.3d 1046, which held that the franchise tax regulation LAC 61:I.301(D) was promulgated based on a mistake of law due to the Department's misinterpretation of the corporate franchise tax law, La. R.S. 47:601, and declared the regulation invalid.²

By letters dated April 4, 2012, the Department denied the taxpayers' Overpayment Refund Claims, asserting that the amounts paid by the taxpayers were not refundable under any provision of Louisiana law. The Department indicated to the taxpayers that they could file written petitions in the BTA regarding the denial of their refund claims, in accordance with La. R.S. 47:1625.

In response to the Department's denials, the taxpayers filed petitions in the BTA to recover money erroneously paid into the State Treasury, pursuant to the Claims Against the State Procedure, La. R.S. 47:1481 -1486 (BTA Docket Nos. 7389 and 7390). The taxpayers also filed petitions in the BTA appealing the denials of their Overpayment Refund Claims pursuant to the Overpayment Refund Procedure, La. R.S. 47:1621 -1627. (BTA Docket Nos. 7584 and 7585). The BTA consolidated the matters.

While the taxpayers' Claims Against the State and Overpayment Refund Claims were pending in the BTA, the taxpayers and the Department entered into written settlement agreements as to the Claims Against the State. Therein, the parties stipulated that the taxpayers had made overpayments, as defined in La. R.S. 47:1621(A), of franchise taxes for the tax periods in the amounts of $550,713.00 (Bannister) and $164,287.00 (Southold). The BTA issued recommendations that the Legislature, at the next session, appropriate funds to pay the taxpayers the overpayment amounts at the earliest possible dates, thereby settling the taxpayers' Claims Against the State.³

The parties then filed joint motions to stay the Overpayment Refund Claims pending timely receipt by the taxpayers of the overpayment amounts in the Claims Against the State cases. The BTA ordered the Overpayment Refund Claims stayed. In the joint motions to stay, the taxpayers explicitly reserved their rights to pursue the Overpayment Refund Claims if the Legislature failed to appropriate funds to pay the overpayment amounts in the Claims Against the State cases.⁴ As of this appeal, the Legislature has not appropriated the funds to refund the taxpayers the overpayment amounts as recommended by the BTA in the Claims Against the State cases, nor have the taxpayers availed themselves of La. R.S. 47:1484(C)(1).⁵

Thereafter, the Department filed a motion for summary judgment, as well as exceptions of lack of subject matter jurisdiction and no right of action relative to the taxpayers' Overpayment Refund Claims. The Department argued that La. R.S. 47:1621(F) precluded the issuance of a refund to the taxpayers. Louisiana Revised Statutes 47:1621(F) states that "[t]his Section shall not be construed to authorize any refund of tax overpaid through a mistake of law arising from the misinterpretation by the secretary of the provisions of any law or of the rules and regulations promulgated thereunder." Section 1621(F) further provides that if a taxpayer believes the Department has misinterpreted the law, his remedy is to pay the tax under protest and file suit to recover or appeal to the BTA in instances where such appeals lie. The Department argued that since there had been a determination in UTELCOM that the Department misinterpreted the corporate franchise tax law, La. R.S. 47:601 through the promulgation of LAC 61:1.301, and the taxpayers' overpayments were based upon that misinterpretation of law, La. R.S. 47:1621(F) applies to prohibit the issuance of a refund. Regarding the exceptions, the Department argued that because La. R.S. 47:1621(F) prohibits the Department from issuing a refund, the taxpayers have no right of action to assert Overpayment Refund Claims. Further, the Department contended that the BTA lacked jurisdiction to hear the Overpayment Refund Claims and order the Department to issue a refund.

The taxpayers opposed the Department's exceptions and motion for summary judgment and filed a cross-motion for summary judgment, seeking a judgment ordering the Department to refund the overpayment amounts, together with interest, in accordance with the Overpayment Refund Procedure, La. R.S. 47:1621 -1627. The Department opposed the taxpayers' cross motion for summary judgment.

Following a hearing, the BTA rendered judgment on September 12, 2017, denying the Department's exceptions; denying the Department's motion for summary judgment; granting the taxpayers' motion for summary judgment; awarding Bannister Properties, Inc. a refund in the amount of $550,713.00, plus interest; and, awarding Southold Properties, Inc. a refund in the amount of $164,287.00, plus interest. The BTA issued written reasons for its judgment. The Department has appealed the September 12, 2017 judgment of the BTA.⁶

ASSIGNMENTS OF ERROR ⁷

The Department raises seven assignments of error:

1. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, as the law is clear and unambiguous that La. R.S. 47:1621(F) prohibits the issuance of a refund because Southold and Bannister overpaid taxes through a mistake of law arising from the misinterpretation by the Department of the provisions of law and/or rules and regulations promulgated thereunder.

2. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the BTA's Judgment ignores the secondary rules of statutory construction that require that a specific provision of law—the first sentence of La. R.S. 47:1621(F) —controls the more general and/or any alleged contrary provision of the law—the second sentence of La. R.S. 47:1621(F).

3. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the Judgment renders the first sentence of La. R.S. 47:1621(F) meaningless and sursplusage [sic ], and is contrary to the secondary rules of statutory construction that courts are bound to give effect to all parts of a statute and to construe no sentence, clause, or words as meaningless and surplusage if a construction giving force to and preserving all words can legitimately be found.

4. The BTA erroneously denied the Department's Motion for Summary Judgment, and granted Southold's and Bannister's Motion for Summary Judgment to award an administrative claim for refund, because if La. R.S. 47:1621(F) is not clear and unambiguous, which is denied, the Judgment ignores established Louisiana Supreme Court and court of appeal jurisprudence, and the public policy recognized

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