Elevating Boats, Inc. v. St. Bernard Parish

• Decision Date: 05 September 2001
• Docket Number: No. 2000-C-3518.,2000-C-3518.
• Citation: 795 So.2d 1153
• Parties: ELEVATING BOATS, INC., v. ST. BERNARD PARISH, et al.
• Court: Louisiana Supreme Court

795 So.2d 1153

ELEVATING BOATS, INC., v. ST. BERNARD PARISH, et al.

No. 2000-C-3518.

Supreme Court of Louisiana.

September 5, 2001.

Mary A. Hand, Salvador E. Gutierrez, Jr., Gutierrez & Hand, Chalmette, Counsel for Applicant.

Albert J. Derbes, III, Albert J. Derbes, IV, Eric J. Derbes, Metairie, Counsel for Respondent.

CALOGERO, Chief Justice.¹

The two petitions for refund of taxes paid under protest at issue in this case arise out of a Rule for Taxes and an assessment by Sheriff Jack A. Stephens, on behalf of St. Bernard Parish, on December 30, 1994 and June 13, 1995 against Elevating Boats, Inc. for unpaid sales and use taxes from January 1, 1984 to August 31, 1994, unpaid occupational license taxes for the same period of time, interest, and penalties. The trial court, finding that Elevating Boats had intentionally defrauded the people of St. Bernard Parish of tax revenue for that time period, ruled in favor of the Parish and found that Elevating Boats owed the Parish a total of $1,459,586.50 in taxes, interest, and attorney fees. The court further denied Elevating Boats's request for a credit for taxes paid to Plaquemines Parish for certain years of this time period. A divided court of appeal reversed the district court in part, affirmed in part, and remanded for further proceedings, reasoning that a portion of the sales and use taxes was prescribed, a lower amount of occupational license tax was owed, and that an inter-parish credit was due Elevating Boats. We granted the writ application of the Sheriff of St. Bernard Parish to examine the court of appeal's reversal of the district court judgment, to address the significant issues of law and fact raised in this case, and to provide guidance to the lower courts in the interpretation and application of La.Rev. Stat. § 33:2718.4.

Facts and Procedural History

On July 29, 1994, JoAnn Lane, Director of the Occupational License Division of the St. Bernard Parish Sheriffs Office, wrote a letter to Elevating Boats, Inc. advising that the company did not hold an occupational license although it was required by law to do so. The letter further advised Elevating Boats that it should apply for the license and pay the appropriate occupational license tax. On August 31, 1994, Nettie Dean, office manager of Elevating Boats, replied with an application for a license identifying the company as a retailer and indicating that $836,000 in gross sales by the company had taken place in the year 1993. At that time, Director Lane forwarded this information to the Sheriffs Sales and Use Tax Department which compared the $836,000 figure to the sales and use tax returns filed by Elevating Boats in St. Bernard Parish for 1993. The returns on file represented that no sales were made during that year; thus, Elevating Boats had paid no St. Bernard sales taxes at all in 1993. St. Bernard Parish Sheriff Jack A. Stephens, Ex-Officio Tax Collector for the Parish, initiated an audit of Elevating Boats's financial records for the tax years 1991 to 1994 and, as part of the audit, commissioned a survey to determine whether or not Elevating Boats was located within St. Bernard Parish. The survey revealed that all of the operational buildings of the company were within the Parish's boundaries.²

On December 30, 1994, Sheriff Stephens filed a Rule for Taxes against Elevating Boats. In that Rule, Sheriff Stephens alleged that the company had failed and refused to pay the proper sales and use taxes due the Parish from January 1, 1991 to August 31, 1994.³ Specifically, he alleged that $610,494.00 in past due sales and use tax was owed, including interest, penalties, and attorney fees. Further, he alleged that Elevating Boats had not properly paid occupational license taxes in the amount of $37,977.00 including interest, penalties, and attorney fees for that same period of time.

On March 1, 1995, Elevating Boats paid under protest $648,471.00 in past due taxes, penalties, interest, and attorney fees representing the full amount sought in the Rule. The next day the company filed a "Petition for Refund of Taxes, Interest, and Penalty Paid Under Protest" seeking return of the monies paid the day before. Discovery in that lawsuit commenced with the deposition of officers of Elevating Boats. At those depositions, officers of the company admitted to having been aware of the location of the St. Bernard-Plaquemines Parish boundary line in relation to the Elevating Boats plant as far back as the 1960s. Consequently, Sheriff Stephens sought an audit of the financial records of Elevating Boats for an additional seven prior years. Elevating Boats refused to permit that audit.

On June 13, 1995, Sheriff Stephens formally assessed against Elevating Boats taxes due for the years 1984 to 1990. Specifically, the Sheriff estimated that Elevating Boats owed the Parish $1,189,395.00 in sales and use taxes for the seven years, including interest, penalties, and attorney fees.⁴ Further, the Sheriff estimated that Elevating Boats owed $118,939.00 in past due occupational license taxes, including interest, penalties, and attorney fees. On June 20, 1995, Elevating Boats paid under protest $1,308,334.00 in past due taxes, penalties, interest, and attorney fees representing the full amount of the assessment. Three days later, the company filed a separate "Petition for Refund of Taxes Paid Under Protest" seeking return of the $1,308,334.00.⁵ The two separate suits were consolidated on October 13, 1997. Elevating Boats, Inc. was first organized by Lynn B. Dean in 1955 and was the product of a merger of several smaller business enterprises. The company designs elevating boats, builds hydraulic cranes, rents elevating boats, maintains and repairs elevating boats, and machines parts for boats. Elevating Boats originally operated in a building solely within Plaquemines Parish along the western shore of the Caernarvon Canal, which runs north to south solely within Plaquemines Parish, near the Mississippi River. The Caernarvon Canal runs parallel to the St. Bernard-Plaquemines parish line approximately one hundred feet to the east of the line.

In 1967, as business began to expand, Elevating Boats built a new facility adjacent to, and west of, the prior plant, but solely within St. Bernard Parish. Other facilities have since been constructed within St. Bernard and the original building, located in Plaquemines, has been removed altogether. Along with this expansion, Elevating Boats constructed a small canal on its property that links the Caernarvon Canal in Plaquemines Parish with the operational buildings in St. Bernard Parish. Thus, the plot of land that the company currently owns lies on the parish boundary partially in Plaquemines Parish and partially in St. Bernard Parish. Almost all operational activities of the business (managerial, sales, manufacturing, etc.) occur at the plant within St. Bernard Parish while the company's elevating boats are docked in the canal in Plaquemines Parish.

Elevating Boats was incorporated by Lynn Dean on February 7, 1964, and it lists the registered office of the corporation as within St. Bernard Parish. Specifically, the corporate address is listed as: "Route 1, Box 217, Caernarvon, Braithwaite, LA 70040, in the Parish of St. Bernard."⁶ At trial, Lynn Dean testified that as early as 1961, he knew where the parish line was located. In fact, the building permit for the new construction in 1967 to expand Elevating Boats's operations was obtained from St. Bernard Parish. Further, Lynn Dean testified in a former lawsuit that the facility was located in St. Bernard, and he has filed and verified two separate lawsuits on behalf of Elevating Boats that allege it to be a corporation with a principal place of business in St. Bernard Parish or as a corporation doing business within the Parish.

Lynn Dean further testified that in 1987, while serving as Chairman of the Budget Committee and elected member of the St. Bernard Parish School Board, he was unaware of the existence of a use tax in St. Bernard or even what a use tax consisted of.⁷ However, he admits that while he was an elected member of the School Board, not only did he know of St. Bernard Parish's sales taxes, but he knew that it was the primary source of funding for the Board. Further, on cross examination, he admitted knowing that Elevating Boats was paying taxes to the wrong jurisdiction:

Q: Did you know you were not paying sales taxes?

A: I knew I was paying sales taxes, but I was just paying it to the wrong firm.

Q: The wrong what?

A: The wrong parish. I knew that. We were paying tax there all that time.

Testimony of Lynn Dean, June 15, 1998, Vol. IV of VII, p. 68. Nevertheless, Dean attributes any errors in tax payments to Marvin Acosta, a subordinate and the manager of Elevating Boats from 1984 to 1990.

Marvin Acosta began working at Elevating Boats in 1965. Over time, his authority increased, and he was supervisor of the preparation of tax returns for the company at one time. He testified that he was aware of the location of the parish line and the firm's location within St. Bernard Parish during his time at Elevating Boats, but that the company consistently paid all sales and use taxes to Plaquemines Parish.⁸ Further, he was aware that occupational license taxes were due to St. Bernard Parish and that they were not being paid. When he questioned Lynn Dean about paying taxes to the wrong parish, Acosta stated that Lynn Dean instructed him to pay only the Plaquemines sales taxes because they were lower than those in St. Bernard. Lynn Dean denied making such a statement. In 1990, Doug Dean, Lynn Dean's son, assumed management of the business. At that time, he cut Marvin Acosta's pay significantly and, in 1995, terminated him "due to operating philosophy of Doug Dean."

At trial, Doug Dean testified that he has worked at Elevating Boats for over thirty years. He has been manager of the company since 1990 and currently...