State Of La. v. La. Land & Exploration Co.

• Decision Date: 29 March 2010
• Docket Number: Civil Action No. 09-5781,Civil Action No. 09-3540,Civil Action No. 09-5803,Civil Action No. 09-5795,Civil Action No. 09-5789,Civil Action No. 09-5783,Civil Action No. 09-5790,Civil Action No. 09-5793,Civil Action No. 09-5787,Civil Action No. 09-5802,Civil Action No. 09-5782,Civil Action No. 09-3541,Civil Action No. 09-5784
• Parties: Gene P. BONVILLAIN, in his capacity as Assessor for the Parish of Terrebonne, State of Louisiana v. LOUISIANA LAND & EXPLORATION CO., et al.
• Court: U.S. District Court — Eastern District of Louisiana

702 F.Supp.2d 667

Gene P. BONVILLAIN, in his capacity as Assessor for the Parish of Terrebonne, State of Louisiana

v.LOUISIANA LAND & EXPLORATION CO., et al.

Civil Action Nos. 09-3540, 09-3541, 09-5781, 09-5782, 09-5783, 09-5784, 09-5787, 09-5789, 09-5790, 09-5793, 09-5795, 09-5802, 09-5803.

United States District Court,E.D. Louisiana.

March 29, 2010.

COPYRIGHT MATERIAL OMITTED.

Don M. Richard, Julian R. Murray, Jr., Chehardy, Sherman, Ellis, Murray, Recile, Griffith, Stakelum & Hayes, Michael Hudson Ellis, Michael H. Ellis, Attorney at Law, Metairie, LA, Kenneth Watkins, Watkins, Walker & Eroche, Houma, LA, for Gene P. Bonvillain, in his capacity as Assessor for the Parish of Terrebonne, State of Louisiana.

James C. Exnicios, Cheryl Mollere Kornick, Kelly Brechtel Becker, Robert Sebastian Angelico, Emma J. Hinnigan, Joe B. Norman, Kenneth Todd Wallace, Jonathan A. Hunter, Liskow & Lewis, Pauline Hardin, Jesse R. Adams, III, William M. Backstrom, Jr., Jones Walker, Stephen J. Haedicke, Law Offices of Stephen J. Haedicke, LLC, James K. Irvin, Hilton S. Bell, Milling

Benson Woodward, LLP, John Mason McCollam, Aimee Williams Hebert, C. Peck Hayne, Jr., Sara E. Mouledoux, Gordon, Arata, McCollam, Duplantis & Eagan, Roy Clifton Cheatwood, Adam Bennett Zuckerman, Baker Donelson Bearman Caldwell & Berkowitz, Thomas G. O'Brien, Gregory Fortier Rouchell, Adams & Reese, LLP, New Orleans, LA, John Jay Fletcher, Lawrence Paul Simon, Jr., George H. Robinson, Jr., Jason P. Bergeron, Vanessa W. Anseman, Liskow & Lewis, Robert Louis Cabes, Milling Benson Woodward, LLP, Douglas Conrad Longman, Jr., Jones Walker, Matthew David Lane, Jr., Matthew J. Randazzo, III, Samuel Edgar Masur, Gordon, Arata, McCollam, Duplantis & Eagan, Lafayette, LA, for Louisiana Land & Exploration Co., et al.

ORDER AND REASONS ¹

HELEN G. BERRIGAN, District Judge.

Before the Court are motions to dismiss filed by the defendants in Case Nos. 09-3540; 09-3541, 09-5781; 09-5782; 09-5783; 09-5784; 09-5787; 09-5789; 09-5790; 09-5793; 09-5795; 09-5802; and 09-5803 (“Defendants”), requesting the Court to dismiss the claims brought by plaintiff Gene P. Bonvillain (“Bonvillain” or “Plaintiff”) pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. Having considered the record, the memoranda of counsel and the law, the Court has determined that the motions filed by the Defendants are GRANTED, PARTIALLY GRANTED or PARTIALLY DISMISSED WITHOUT PREJUDICE for the following reasons.

I. BACKGROUND

These consolidated cases involve allegedly underreported and underpaid ad valorem taxes in Terrebonne Parish, Louisiana. The plaintiff, Bonvillain, sues in his capacity as Assessor for Terrebonne Parish. Count I alleges that the corporate Defendants violated La.Rev.Stat. § 47:2330, and Bonvillain seeks recovery of delinquent taxes. ² Count II alleges violations of the Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961- 1968, by the individual Defendants. Count III alleges that Defendants committed state-law fraud.

In his official capacity, Bonvillain is responsible for the assessment of ad valorem taxes, including taxes on movable property owned by oil and gas companies operating inshore and offshore in the Gulf of Mexico within the jurisdiction of Terrebonne Parish. Assessment of ad valorem taxes is premised on the market value of the property being assessed. The Louisiana Tax Commission allows self-reporting of ad valorem taxes on such oil and gas property. The complaints in these consolidated matters derive from a study conducted by Visual Lease Services, Inc. (“VLS”) during 2008 and 2009 commissioned by Bonvillain to challenge the results of the self-reporting. The claims are based on discrepancies between the results of that study and the tax liabilities actually reported by the Defendants.

The Defendants include several oil and gas companies ³ , their chief executive officers (“CEOs”), and two accountants, Donna K. Lawrence ⁴ and Nancy DePaul, who reside in Texas. For present purposes, the complaints filed in each case are identical in all relevant respects. In these motions, the Defendants seek dismissal of the complaints on three common grounds: the plaintiff's standing, the sufficiency of the complaints with regard to allegations of fraud and/or RICO under Fed.R.Civ.P. 8 & 9, and personal jurisdiction. ⁵

II. LAW AND ANALYSIS

A. STANDING

In certain of these motions, the Defendants argue that because the sheriffs are exclusively authorized to collect taxes under Louisiana law, Bonvillain is not a proper party plaintiff. Pursuant to both Louisiana Constitution and law, Defendants assert, the sheriffs have the sole right to collect state ad valorem taxes. Furthermore, Defendants argue that La.Rev.Stat. § 47:1998(C) only allows the parish assessors to bring suit to challenge tax assessments. The section does not, Defendants contend, offer the assessors broad authority to bring suit to pursue delinquent taxes. They further assert that Bonvillain failed to exhaust the only remedy available for assessors-the supplemental assessment under La.Rev.Stat. § 47:1966-to correct assessments of prior years.

Bonvillain admits in the complaints that “[t]he collection of taxes is vested in the office of the sheriff of the Parish of Terrebonne.” Case No. 09-3540, Rec. Doc. 1, ¶ 16. However, he raises several arguments in the opposition to the motions. Bonvillain contends that La.Rev.Stat. § 47:1998(C) should not be read in such a restrictive way as suggested by the Defendants. Bonvillain argues that he is the proper party to assert these claims because his constitutional authority is to assess property taxes and he seeks to redeem the integrity of the assessment process that has been infected by the alleged fraud. Bonvillain also claims that La.Rev.Stat. § 47:2330 confers upon him the authority to impose penalties against the Defendants who made false tax reports. Therefore, he argues, he has standing to sue under Section 2330. In the alternative, Bonvillain contends that a standing defect is not fatal to the complaint because the sheriff will bring suit on the same grounds if the Court dismiss the cases at bar.

Moreover, Bonvillain submits that even assuming that Section 1966 is the only remedy under state law, the Court nevertheless should exercise jurisdiction under RICO. Since state remedial procedure cannot limit federal jurisdiction, Bonvillain argues, the failure to follow the supplemental assessment procedure does not deprive him of standing to bring these lawsuits. Moreover, he contends that dismissal is inappropriate because there is no state law proceeding parallel to that under RICO. Thus, even if the Court dismisses Count I for lack of standing, Bonvillain maintains it should exercise jurisdiction over the suits with regard to Counts II and III.

Defendants reply that whether the plaintiff has the property interest to bring a RICO suit is determined according to state law. According to Louisiana law, Defendants assert, Bonvillain does not have property interest and thus lacks RICO standing. Defendants also point out that cases cited by Bonvillain to support his position were all filed by agencies charged with the authority to collect taxes made subject of those suits. They indicate that the cases cited by Bonvillain are not directly relevant to the issue of whether an assessor has RICO standing to bring a representative action when he lacks statutory authorization.

1. Standing for State Law Claims

The capacity of a governmental entity or an individual in a representative capacity to sue or to be sued is determined by the law of the state in which the district court is located. Fed.R.Civ.P. 17(b)(3). In Louisiana, a plaintiff must have a real and actual interest in the action asserted. La.Code Civ. P. art. 681; Cox Cable New Orleans, Inc. v. City of New Orleans, 624 So.2d 890, 895 (La.1993). An action brought by a plaintiff who is not in the class of persons granted a remedy by law is subject to dismissal. Cosey v. Cosey, 376 So.2d 486, 489 (La.1979).

Under Article V, Section 27 of the Louisiana Constitution, a sheriff “shall be the collector of state and parish ad valorem taxes and such other taxes and license fees as provided by law.” La. Const. art. V, § 27. The Supreme Court of Louisiana has construed this section as “grant[ing] the sheriffs the sole right to collect state and parish ad valorem taxes.” St. Landry Parish Police Jury v. Zerangue, 664 So.2d 388, 390 (La.1995) (emphasis added). Moreover, La.Rev.Stat. § 47:5 provides that:

Each official of the State of Louisiana and of each political subdivision of this state, who is charged by law with the duty of collecting a tax, shall be the proper party to bring suits in his official capacity for the collection of such taxes.

By La.Rev.Stat. § 47:5, the Louisiana legislature exclusively confers the authority to bring an action to collect a tax to the officers who have power to collect such tax.

In contrast, a tax assessor's constitutional authority does not include tax collection. See La. Const. art. VII, § 18(D) ⁶ ; see also La.Rev.Stat. § 47:1903. ⁷ An assessor is responsible for assessing property for purposes of ad valorem taxes. La.Rev.Stat. § 47:1957(A). He also has the duty and authority to identify and assess any omitted or erroneously assessed property. La.Rev.Stat. § 47:1957F. The Louisiana Constitution requires that “[t]he correctness of assessment by the assessor shall be subject to review first by the parish governing authority, then by the Louisiana Tax Commission or its successor, and finally by the courts, all in accordance with procedures established by law.” La. Const. art. VII, § 18(E). To satisfy the constitutional mandate, the Louisiana statute provides that after the assessor has prepared the list and assessed the value of property, the list must be exposed for inspection by taxpayers.

La.Rev.Stat. § 47:1992A. After the exposure period...