Catahoula Parish School Bd. v. La. Machinery Rentals, LLC

• Citation: 124 So.3d 1065
• Decision Date: 15 October 2013
• Docket Number: No. 2012–C–2504.,2012–C–2504.
• Parties: CATAHOULA PARISH SCHOOL BOARD, Catahoula Parish Police Jury v. LOUISIANA MACHINERY RENTALS, LLC. Catahoula Parish School Board, Catahoula Parish Police Jury v. Louisiana Machinery Company, LLC.
• Court: Supreme Court of Louisiana

124 So.3d 1065

CATAHOULA PARISH SCHOOL BOARD, Catahoula Parish Police Jury
v.
LOUISIANA MACHINERY RENTALS, LLC.
Catahoula Parish School Board, Catahoula Parish Police Jury
v.
Louisiana Machinery Company, LLC.

No. 2012–C–2504.

Supreme Court of Louisiana.

Oct. 15, 2013.

[124 So.3d 1066]

Rainer, Anding, McLindon & Talbot, Robert R. Rainer, Baton Rouge, Drew Michael Talbot, for Applicant.

Jones Walker Waechter Poitevent Carrere & Denegre, LLP, Jesse R. Adams, III, Andre Brian Burvant, Kathryn Scioneaux Friel, Matthew Andrew Mantle, New Orleans, for Respondent.

JOHNSON, Chief Justice.

[2012-2504 (La. 1]Louisiana Machinery Company, L.L.C. and Louisiana Machinery Rentals, L.L.C. (collectively “the Companies”), Louisiana's exclusive Caterpillar franchise dealers, sold, leased, and/or repaired Caterpillar equipment and machinery in parishes throughout Louisiana. Following a multi-parish audit, the taxing authorities from numerous parishes began tax collection proceedings against the Companies, alleging they incorrectly failed to charge and collect sales and use taxes from their customers on their taxable sales, leases, and/or repairs for certain tax periods, and that the Companies were liable for these taxes, penalties, and interest under the provisions of the Uniform Local Sales Tax Code (“ULSTC”).¹

In these cases, the tax collector for Catahoula Parish obtained partial summary [2012-2504 (La. 2]judgments in the district court, declaring that the tax assessments it issued to the

[124 So.3d 1067]

Companies are final and the executory judgments of the court and could not be challenged by the Companies. The Companies appealed to the Third Circuit, which reversed the grants of partial summary judgment based on the deficiency of the notices of assessment and the lack of sufficient evidence to support the summary judgments.²

From this adverse ruling, the tax collector applied for supervisory review to this court.³ We granted the tax collector's writ application and consolidated the cases for argument with nearly identical cases emanating from the First Circuit, wherein that court affirmed the district court's grants of summary judgment.⁴ We granted certiorari to resolve this split in the circuits.⁵ For the reasons set forth below, we affirm the ruling of the court of appeal in this case.

FACTS AND PROCEDURAL HISTORY

The Concordia Parish School Board (“Collector”) is the designated tax collector for the Catahoula Parish School Board and the Catahoula Parish Police Jury. A tax audit of the Companies revealed deficiencies for the period December 1, 2000, through June 30, 2007. On November 24, 2009, the Collector began the collection process by sending each of the Companies a notice of intent to assess additional taxes, penalties, and interest in accordance with La. R.S. 47:337.48(B).⁶ The [2012-2504 (La. 3]Companies did not protest this notice, as provided for by La. R.S. 47:337.49.⁷

The Collector then formally assessed the taxes and issued each of the Companies a formal Notice of Assessment on December 24, 2009, pursuant to La. R.S. 47:337.51.⁸ The Companies did not formally respond

[124 So.3d 1068]

to the assessments, but instead provided additional tax records to the auditors. The Collector reviewed the [2012-2504 (La. 4]additional audit documentation and subsequently affirmed its findings. On February 22, 2010, the Collector issued a second formal Notice of Assessment–Extension (“first revised notices of assessments”) to the Companies pursuant to La. R.S. 47:337.51. The first revised notices of assessments gave the Companies additional time to formally respond, but the Companies did not do so. The Companies again submitted additional records to the auditors. After the auditors reviewed this newly supplied information, the assessments were substantially reduced. On April 26, 2010, the Collector issued a third formal Notice of Assessment–Extension (“second revised notices of assessments”) to each of the Companies. The notices provided, in relevant part (emphasis in original):

NOTICE: As provided in LA R.S. 47:337.51 B, if you wish to protest, you have thirty (30) days from the date hereof to file with this office a written protest, signed by you or your duly authorized agent, which shall be under oath, fully disclosing the reasons therefor, and request a hearing.

If you do not timely file a written protest and request a hearing, you have sixty (60) calendar days from the date hereof to:

1) Pay the amount set forth herein above,

2) Pay the total amount set forth herein above under protest as provided in LA R.S. 47:337.63 and file suit for recovery within thirty (30) days of payment, or

3) Within thirty (30) days of receipt of this Notice of Assessment, file suit in any state court of competent jurisdiction contesting the final assessment, and in connection therewith, post a commercial bond or other security as provided in LA R.S. 47:337.64 in accordance with the procedures set forth therein.

Do not disregard this notice, failure to act within the time or manner provided will result in the assessment becoming final and enforceable by warrant for distraint. Additional penalties, interest and collection fees may be assessed at that time.

* * *

[124 So.3d 1069]

IMPORTANT: The collector may, in his discretion, proceed to enforce the collection of any taxes due by means of any of the following [2012-2504 (La. 5]remedies or procedures: (1) Assessment and distraint, as provided by R.S. 47:337.48 through 337.60, (2) Summary court proceeding, as provided in R.S. 47:337.61, (3) Ordinary suit under provisions of the general laws regulating actions for the enforcement of obligations, (4) Rule to cease business as provided in R.S. 47:337.33. The Collector by issuing this Notice does not waive the right to assert such other remedies.

The Companies did not respond to the second revised notices of assessments. On September 27, 2010, the Collector filed in the district court a Rule for Payment of Sales Tax against each Company as summary proceedings pursuant to local ordinances. The petitions asserted the Companies had failed to pay certain taxes and the Collector was entitled to payment of taxes, penalties, interest, and attorney fees. In response, the Companies filed exceptions, affirmative defenses, and answers. On October 4, 2011, the Collector filed a Supplemental and Amending Petition for Rule to Show Cause in Summary Sales and Use Tax Proceeding against each of the Companies. The Collector amended its original petitions to allege the proceedings were also brought under the provisions of La. R.S. 47:337.33⁹ and La. R.S. 47:337.61. ¹⁰ The Collector alleged in detail the assessment procedures it followed, specifically asserting that the second revised notices of assessments were issued in accordance with all statutory requirements and because the Companies did not timely respond, the assessments were now final and an established liability equivalent to [2012-2504 (La. 6]judgments against the Companies. In addition to claiming the taxes due plus interest, the Collector sought injunctions pursuant to La. R.S. 47:337.33, enjoining the Companies from conducting business in the parish until payment was made in full, and further sought recognition of liens and privileges on the Companies' property pursuant to La. R.S. 47:337.65.¹¹ The Companies filed exceptions,

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defenses, and answers to the supplemental and amending petitions, specifically asserting the notices of assessments did not comply with the requirements of La. R.S. 47:337.51(A), and were therefore not final and enforceable.

The Collector subsequently filed motions for partial summary judgment, seeking a declaration that the second revised notices of assessments are final and the executory judgments of the court. Supported by the affidavit of Thomas H. O'Neal, Sales Tax Director for the Collector, the Collector argued that the uncontested material facts set forth in its supplemental and amending petitions entitled it to partial summary judgments. The Companies opposed the motions, arguing there were numerous disputed facts that precluded the entry of summary judgments. The Companies asserted the audits and subsequent assessments were fraught with errors and the Collector's petitions were inadequate. The Companies further challenged the adequacy of Mr. O'Neal's affidavit which was made “to the best of his knowledge and belief” pursuant to La. R.S. 47:337.61(4),¹² rather than following the more [2012-2504 (La. 7]stringent requirements for affidavits in summary judgment procedures pursuant to La. C.C.P. art. 966, et seq.¹³

On January 5, 2012, the district court held a hearing on the motions for partial summary judgment. Based upon its determination that the second revised notices of assessments were sufficient, the district court granted partial summary judgment against each Company declaring the second revised notices of assessment final and the executory judgments of the court. The district court held the Companies were precluded from attacking the notices and ruled the Companies' exceptions were moot. The Companies appealed.

The Third Circuit reversed. The court found the notices of assessments were deficient and the assessments invalid due to the failure of the notices to state that the Companies had sixty days from the date of the notices to request a hearing, as required by La. R.S. 47:337.51(A). Because the court found the written notices did not comply with La. R.S. 47:337.51(A), the court held they did not have the preclusive and legal effect of denying the Companies the right to present their defenses in response to the Collector's claims, even in a summary proceeding.

The court went on to note that despite the invalid notices and invalid assessments, the Collector was still entitled to pursue summary proceedings in accordance with La. R.S. 47:337.61. However, the court held the Collector's alternative attempt to proceed with summary proceedings under La. R.S....