Unwired Telecom v. Parish of Calcasieu

• Citation: 838 So.2d 854
• Decision Date: 05 February 2003
• Docket Number: No. 02-839.,02-839.
• Parties: UNWIRED TELECOM CORP. v. PARISH OF CALCASIEU, School Board & Police Jury.
• Court: Court of Appeal of Louisiana (US)

838 So.2d 854

UNWIRED TELECOM CORP. v. PARISH OF CALCASIEU, School Board & Police Jury.

No. 02-839.

Court of Appeal of Louisiana, Third Circuit.

February 5, 2003.

Richard Phillip Ieyoub, Attorney General, Tina Vicari Grant, Louisiana Dept. of Justice, Baton Rouge, LA, for State of Louisiana.

William M. Backstrom Jr., Coleman Douglas Ridley, Jones, Walker, et al., New Orleans, LA, for Plaintiff/Appellant, Unwired Telecom Corp.

Mark James Jeansonne, Attorney at Law, New Orleans, LA, for Amicus Curiae, Alltel Communications, Inc., AT&T Wireless Services.

Russell Joseph Stutes Jr., Toni Lewis Petrofes, Scofield, Gerard, Veron, et al., Lake Charles, LA, for Defendants Appellees/Appellants, Calcasieu Parish Police Jury, Calcasieu Parish School Board.

Court composed of ULYSSES GENE THIBODEAUX, MICHAEL G. SULLIVAN, and BILLY HOWARD EZELL, Judges.

EZELL, J.

This case follows in the footsteps of a previous opinion by this court in Mercury Cellular Telephone Co. v. Calcasieu Parish of La., 00-318 (La.App. 3 Cir. 12/13/00), 773 So.2d 914, writ denied, 01-126 (La.3/16/01), 787 So.2d 314. This court found that Mercury, a telecommunications services provider, owed use taxes for telephones that it certified were purchased for resale, thereby avoiding sales tax, but in reality furnished the phones for a nominal amount or gratuitously with a cellular service contract and not collecting sales taxes. Another issue presented to this court is whether Elevating Boats, Inc. v. St. Bernard Parish, 00-3518 (La.9/5/01), 795 So.2d 1153, should apply limiting a parish's combined interest, penalties, and attorney's fees under the sales and use tax ordinance to 15%.

FACTS

As was observed by this court in Mercury, these wireless communication businesses purchase these phones and present a "resale certificate" certifying that they intend to resell the phones and collect sales tax from the customers. As a result the company is not accessed sales tax on items it purchases for resale, thereby avoiding double taxation. Mercury, 773 So.2d 914. However, in reality, the companies use the phones as an enticement to lure customers to choose its wireless service. These phones are not sold to customers, but are offered to customers for free, at a nominal charge, or at a discount. None of these facts have been denied.

Unwired Telecom Corp., formerly known as U.S. Unwired, Inc., and successor in interest by merger to Mercury Cellular Telephone Company, filed a petition for recovery of taxes paid under protest on April 20, 2001. The Calcasieu Parish School Board assessed Unwired with sales and use taxes and interest and penalties in the amount of $1,108,794.47 for the taxable period that began on January 1, 1996, and ended on December 31, 1999. Just as in Mercury, Unwired argued that the taxes were based on the retail sales price paid by the customer from sales of wireless telecommunications equipment. Unwired argued that it properly collected and remitted taxes on the sales of the wireless telecommunications equipment during the taxable periods in question. In the alternative, Unwired argued that the School Board improperly computed the taxes based on the wholesale price paid by it for the equipment instead of the "cost price." Unwired also argued that the maximum amount of interest, penalties, and attorney's fees that could be assessed against it was 15%, citing Elevating Boats, Inc., 795 So.2d 1153.

The School Board filed a motion for summary judgment arguing that it is clear that Mercury applies to the facts of this case and the assessment was proper. A hearing was held on February 15, 2002. The trial court agreed that Mercury applied, but also found that Elevating Boats applied. It, therefore, granted the School Board's motion for summary judgment and ordered Unwired to pay all taxes assessed against it. However, the trial court dismissed the School Board's assessment of penalties and denied its request for attorney's fees and ordered a refund in the amount of $162,696.94. Both parties appealed the judgment.

After the parties appealed, the Louisiana Legislature passed Act 85 in the 2002 session enacting La.R.S. 47:301(10)(v), (13)(g) and (h), and (18)(i), relative to sales and use taxes. Declaring that these sections were "all new law," Act 85 provided for the definitions of "retail sale" or "sale at retail," "sales price," and "use." It also established a new method for calculating the sales price for imposition of sales and use tax.

Contrary to the opinion of this court expressed in Mercury, the legislature expressed its opinion that providers of cellular, PCS, or wireless communication devices are exempt from sales and use tax in Section 3 as follows and that the new law is interpretative:

The provisions of Section 1 of this Act are interpretative of H.S. 47:301(10) (13), and (18) for all taxable periods that ended prior to January 1, 2001, and are intended to explain and clarify their original intent, notwithstanding the contrary interpretation given in "Calcasieu Parish School Board v. Mercury Cellular Telephone Company" [Mercury Cellular Telephone Company v. Calcasieu Parish School Board], 2000-0318 (La.App. 3 Cir. 12/13/00), 773 So.2d 914, writ denied, 2001-0126 (La.3/16/01), 787 So.2d 314, and all cases consistent therewith. Therefore, the provisions of Section 1 of this Act shall be applicable to all claims existing or actions pending for any taxable period prior to January 1, 2001, and to all claims arising or actions filed on and after its effective date ... .

The legislature then enacted several new sections in which it clarified the intent of the law. Louisiana Revised Statute 47:301(10)(v) provides that a "retail sale" or "sale at retail" includes the:

sale or any other disposition of such cellular, PCS, or wireless telephone, any electronic accessories that are physically connected with such telephones and personal communication devices by the dealer to the purchaser, but shall not mean or include the withdrawal, use, distribution, consumption, storage, donation, or any other disposition of any such cellular, PCS, or wireless telephone, any electronic accessories that are physically connected with such telephones and personal communication devices by the dealer.

Louisiana Revised Statute 47:301(13)(g) provides that "sales price" is:

only the amount of money, if any, actually received by the dealer from the purchaser for each such cellular, PCS, or wireless telephone and any electronic accessories that or [sic] physically connected with such telephones and personal communication devices, but shall not include (i) any amount received by the dealer from the purchaser for providing mobile telecommunications services, or (ii) any commissions, fees, rebates, or other amounts received by the dealer from any source other than the purchaser as a result of or in connection with the sale of the cellular, PCS, or wireless telephone, any electronic accessories that are physically connected with such telephones and personal communication devices.

The term "use" is defined in La.R.S. 47:301(18)(i) as not including "the withdrawal, use, distribution, consumption, storage, donation, or any other disposition of any such cellular, PCS, or wireless telephone, any electronic accessories that are physically connected with such telephones and personal communications devices by the dealer."

There is no doubt, but for the passage of Act 85, this court would find that summary judgment in favor of the School Board was appropriate based on Mercury. The issue is whether the legislature acted properly in declaring that Act 85 is interpretative and should be applied retroactively while specifically overruling this court's interpretation of the law as it existed.

The School Board argues that Act 85 cannot produce a different result in this case for several reasons. It argues three constitutional violations: (1) it impermissibly relieves Unwired's obligation to Calcasieu Parish in violation of La. Const. art. 7, § 15; (2) it impermissibly abbreviates the prescriptive period to less than three years in violation of La. Const. art. 7, § 16; and (3) it creates nonuniform sales tax exclusions in violation of La. Const. art. 6, § 29(D).

It is widely recognized in Louisiana that constitutional attacks must be raised in the trial court, not the appellate court and the constitutional challenge must be specially pleaded and the grounds for the claim particularized. Vallo v. Gayle Oil Co., Inc. 94-1238 (La.11/30/94), 646 So.2d 859. However, there is a recognized exception "when the statute applicable to the specific case becomes effective after the appeal is lodged in the higher court." Mosing v. Domas, 02-12 p. 11, (La.10/15/02), 830 So.2d 967, 975, fn. 2. Therefore, we will address the constitutionality of Act 85 on appeal.

"Statutory interpretation and the construction to be given to legislative acts is a matter of law and rests with the judicial branch of the government." Bourgeois v. A. P. Green, Indus., Inc., 00-1528, p. 11(La.4/3/01), 783 So.2d 1251, 1260. "[W]hen this court interprets legislative acts, it is giving meaning in particular cases to what the legislature has enacted as law; it is saying what the law is." Id. The supreme court also recognized and quoted Justice Dennis' compelling logic in St. Paul Fire & Marine Ins. Co. v. Smith, 609 So.2d 809, 822 (La.1992):

Under our system of government with limited powers, "[i]t is emphatically the province and duty of the judicial department to say what the law is." Marbury v. Madison, 1 Cranch 175[5 U.S. 1371, 177, 2 L.Ed. 60 (1803) (Marshall, C.J.). Within the judicial department, this court is the final arbiter of the meaning of the state constitution and laws. Therefore, after this court has said what a law means, legislative action adopting a different meaning necessarily effects a change and not an interpretation of that law.

. . . Planiol also cautions against the lawmaker...