VCS, LLC v. State of Louisiana, Louisiana Department of Economic Development, State of Louisiana, The Board of Commerce and Industry for the State of Louisiana and the Louisiana Department of Revenue ( 2023 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NO. 2023 CA 0548
VCS, LLC
VERSUS
STATE OF LOUISIANA, LOUISIANA DEPARTMENT
OF ECONOMIC DEVELOPMENT, STATE OF LOUISIANA,
THE BOARD OF COMMERCE AND INDUSTRY
FOR THE STATE OF LOUISIANA, AND
THE LOUISIANA DEPARTMENT OF REVENUE
Judgment Rendered:
NOV 0 9 2023
Appealed from the
19th Judicial District Court
In and for the Parish of East Baton Rouge
State of Louisiana
Case No. 0722999
The Honorable Donald R. Johnson, Judge Presiding
Scott J. Sonnier Counsel for Plaintiff/Appellant
Brett Lala VCS, LLC
New Orleans, Louisiana
Debra Dauzat Morris Counsel for Defendant/Appellee
Antonio Ferachi Kevin Richard, Secretary of Louisiana
Miranda Y. Scroggins Department of Revenue
Robyn Davis
Angelique Boyd
Baton Rouge, Louisiana
Drew M. Talbot Counsel for Defendants/ Appellees
Baton Rouge, Louisiana Louisiana Department of Economic
Development through Secretary, Don
Pierson, and Board of Commerce and
Industry for the State of Louisiana
BEFORE: GUIDRY, C.J., CHUTZ, AND LANIER, JJ.
LANIER, J.
In this appeal, plaintiff, VCS, LLC (" VCS"), challenges the trial court's
judgment that granted several exceptions filed by the Louisiana Department of
Revenue (" the Department"), dismissing the Department from the matter. For the
reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
VCS and the Board of Commerce and Industry for the State of Louisiana
Board of Commerce") entered an Enterprise Zone contract (" the contract") in
March 2012. The contract was part of the Enterprise Zone Program, administered
by the State of Louisiana, Department of Economic Development (" LED")
pursuant to La. R.S. 51: 1781, et seq., and LED regulations ( La. Admin. Code tit.
13, pt. I, Ch. 7). Businesses who participate in the program are entitled to a
refundable investment credit, and other incentives, for creating a minimum number
of jobs within a specified period of time. See La. R. S. 51: 1787. If the business
fails to meet this requirement, all benefits received in accordance with the contract
must be returned, with interest, to the governmental entity from which those
benefits were obtained.
In 2014, VCS applied for and was granted an investment credit refund of
125, 959. 17 from the Louisiana Department of Revenue (" Department")
However, after reviewing the annual Employee Certificate Reports filed by VCS,
as required by the Enterprise Zone Program, it was determined that VCS had not
created the required number of jobs and, therefore, failed to satisfy the contract and
program requirements. In August 2015, Joyce Metoyer, Program Administrator of
the Enterprise Zone Program, informed VCS of these findings and that, as a result
of its failure to create the required number of jobs, all rebates and credits were due
back to the State of Louisiana, with interest. The Board of Commerce cancelled
the contract with VCS in December 2015.
2
In November 2016, the Department issued a " Notice of Assessment and
Notice of Right to Appeal to the Louisiana Board of Tax Appeals" to VCS to
recoup the credit amount of $ 125, 959. 17, plus interest in the amount of
14, 954. 40, for a total due of $140, 913. 57. After an unsuccessful appeal to the
Department, VSC filed a Petition for Redetermination of Assessment with the
Board of Tax Appeals (" BTA") in January 2017, naming as defendants LED, the
Board of Commerce, and the Department. VCS claimed LED used an incorrect
method to determine whether it created the minimum required number of new jobs.
According to VCS, the method employed by LED, as set forth in its regulations
La. Admin. Code tit. 13, pt. I, § 703), was contrary to La. R.S. 51: 1787, which
established the minimum new job requirements. VCS sought rescission of the
Department' s assessment, arguing it was based on erroneous information from
LED. VCS further prayed that ( 1) the BTA try the case and find no deficiencies in
Louisiana corporation income tax, including interest, for the filing period
December 31, 2013; ( 2) the BTA rule that the procedure LED used to determine
the number of net new jobs created during the contract period does not comply
with the plain language of La. R. S. 51: 1787; ( 3) the BTA rule that the Board of
Commerce erred in finding VCS did not meet the hiring requirement of La. R.S.
51.: 1787 and breached the contract by cancelling it without justification; and ( 4) the
BTA order the Board of Commerce to reverse the cancellation of the Contract.
In response to VCS's petition, LED, the Board of Commerce, and the
Department filed joint exceptions raising the objections of no right of action, no
cause of action, and lack of subject matter jurisdiction. The parties argued that the
BTA did not have jurisdiction to reach the merits of VCS' s claim that LED failed
to comply with La. R.S. 51: 1787 in determining whether it satisfied the new job
3
creation requirement or to render judgment on VCS' s breach of contract claims.
They further asserted that the assessment was not the result of any decision made
by the Department, which would put this matter under the purview of the BTA.
Instead, the Department was simply following the statutory mandate that the state
must be reimbursed for all rebates and credits received by the taxpayer if it fails to
meet the requirements of the contract and Enterprise Zone Program. See La. R.S.
51: 1787( I). After considering the arguments, the BTA overruled all of the
exceptions as to the Department and also overruled the exceptions raising the
objection of no cause of action and lack of subject matter jurisdiction as to the
Board of Commerce and LED. However, the BTA sustained, in part, the exception
raising the objection of no right of action as to the Board of Commerce and LED,
dismissing, without prejudice, VCS' s prayer that the BTA order the Board of
Commerce to reinstate the contract.
The Board of Commerce and LED sought supervisory review with this
court, which was granted as follows:
WRIT GRANTED. The November 7, 2017, judgment of the
Board of Tax Appeals ( BTA) is reversed. The BTA erred in denying
the exception of lack of subject matter jurisdiction filed by [ LED] and
the [ Board of Commerce]. The BTA' s jurisdiction, as provided in La.
R.S. 47: 1407, does not extend to permit the BTA to determine the
merits of the contract dispute between VCS, LLC and Relators,
particularly considering the tax assessment issued by the [ Department]
is a secondary issue contingent upon resolution of the contract
dispute. See Article V, Sec. 16 of Louisiana Constitution and La. R.S.
13: 5104.
Therefore, the exception [ raising] the objection of lack of
subject jurisdiction filed by [ LED] and the [ Board of
matter
Commerce] is granted, and the claims asserted by VCS, LLC against
these defendants are dismissed without prejudice.
VCS, LLC v. Robinson, 2018- 0012 ( La. App. 1 Cir. 5/ 14/ 18), 2018 WL 2202320.
In April 2022, the Department filed a motion for summary judgment in the
BTA matter, which was opposed by VCS. On September 1, 2022, VCS filed a
petition for breach of contract in the 19th Judicial District Court, naming the
4
Department, LED, and the Board of Commerce.' VCS sought a ruling from the
trial court that ( 1) VCS was in compliance with the contract; ( 2) the Board of
Commerce and LED had breached the contract by canceling it; ( 3) no refundable
Investment Tax Credit was due back to the Department; ( 4) the Department should
cancel the assessment of taxes or return any funds collected on the assessment; and
5) the Board of Commerce and LED should pay all legal fees and expenses
incurred by VCS as a result of the breach of contract. On the same date, VCS filed
an ex parte motion to stay the proceedings with the BTA pending the outcome of
the breach of contract claim. In response to the breach of contract claim, the
Department filed exceptions raising the objections of lack of subject matter
jurisdiction and lis pendens. On December 26, 2022, the trial court signed a
judgment, sustaining the Department's exceptions and dismissing the Department
Z
from this matter. From this judgment, VCS has appealed.
SUBJECT MATTER JURISDICTION
Subject matter jurisdiction is a threshold issue insofar as a judgment
rendered by a court that has no jurisdiction over the subject matter of the action or
proceeding is void. See La. Code Civ. P. art. 3; Citizens Against Multi -Chem v.
Louisiana Dept. of Environmental Quality, 2013- 1416 ( La. App. 1 Cir. 5122114),
145 So. 3d 471, 474, writ denied, 2014- 1464 ( La. 10110114), 151 So. 3d 586.
According to the Department, a hearing on the motion for summary judgment was held before
the BTA in August 2022, and the decision on the motion was pending when VCS filed its
petition for breach of contract in the 19th Judicial District Court. However, we are unable to
confirm this from the record before us.
a We note some discrepancy in the record concerning the exceptions filed by the Department in
response to the petition for breach of contract. Although the pleading filed by the Department
only references the objections of lack of subject matter jurisdiction and lis pendens, as does
VCS' s brief on appeal, both the minutes and the transcript of the hearing on the matter indicate
that the court also considered an objection of no right of action. Moreover, while the judgment
that forms the basis of this appeal sustains the exceptions filed by the Department, including the
exception raising the objection no right of action, the trial court' s written reasons for judgment
make no mention of an exception raising the objection of no right of action. Nonetheless,
because we find the trial court was correct in sustaining the Department's exception raising the
objection of lack of subject matter jurisdiction, our analysis ends there, and we pretermit
discussion of the lis pendens issue and any discussion of whether the objection of no right of
action was properly before the trial court in this matter.
5
Jurisdiction over the subject matter is the legal power and authority of a court to
hear and determine a particular class of actions or proceedings based upon the
object of the demand, the amount in dispute, or the value of the right asserted. La.
Code Civ. P. art. 2. Subject matter jurisdiction cannot be waived or conferred by
consent of the parties, and the lack thereof can be recognized by the court at any
time, with or without formal exception. See La. Code Civ. P. arts. 3, 927( A)(8)
and ( B); 3 Gross v. State through Louisiana Department of Revenue, 2023- 0142
La. App. 1 Cir. 9115123), --- So. 3d ---, ---, 2023 VVL 6014144, * 4. The trial court' s
determination of whether it has subject matter jurisdiction over a case is subject to
de novo review. Louisiana Environmental Action Network, Inc. v. Louisiana
Department of Environmental Quality, 2019- 1551 ( La. App. 1 Cir. 9123120),
314 So. 3d 841, 848.
The district courts have exclusive original jurisdiction over most matters,
and concurrent original jurisdiction with trial courts of limited jurisdiction. See
La. Const. art. V. § 16. Article VII, § 1 of the Louisiana Constitution vests the
power of taxation in the legislature, and article VII, §3( A) mandates the legislature
to " provide a complete and adequate remedy for the prompt recovery of an illegal
tax paid by a taxpayer." To fulfill its latter obligation, the legislature has provided
three remedies: ( 1) the Claims Against the State procedure, La. R.S. 47: 1481, et
seq.; ( 2) the Payment Under Protest procedure, La. R.S. 47: 1576, et seq.; and ( 3)
the Overpayment Refund procedure, La. R.S. 47: 1621, et .seq. The legislature
created the BTA to act as an appeal board to hear and decide disputes between a
taxpayer and the collector of revenue. La. R. S. 47: 1401. Moreover, pursuant to
3 With the passage of 2023 La. Acts, No. 5, §§ 1 and 3 (" the Act"), the legislature has deleted the
objection of lack of subject matter jurisdiction from the objections raised through a declinatory
exception and added it to the list of peremptory exceptions found in La. Code Civ. P. art. 927.
See La. Code Civ. P. art. 925, Official Revision Comments — 2023. The Act further amended
and reenacted Article 927 to provide as follows: " Once the objection of the lack of subject
matter jurisdiction is raised by the parties or noticed by the court on its own motion, the court
shall address the objection before ruling on any other matter." See La. Code Civ. P. art. 927( B).
L
La. Const. art. V, § 35, the BTA's jurisdiction may be extended " by a law enacted
by a two- thirds vote of the elected members of each house of the legislature, to
matters concerning the constitutionality of taxes, fees, or other matters related to its
jurisdiction which jurisdiction may be concurrent with the district courts
concerning such matters."
Pursuant to La. R.S. 47: 1407, as amended,' the jurisdiction of the BTA is
outlined as follows:
1) All matters relating to appeals for the redetermination of
assessments, the determination of overpayments, payment under
protest petitions, or other matters within its jurisdiction, as provided in
R.S. 47: 1431 through 1438 or other applicable law.
2) All matters relating to the waiver of penalties, as provided in R.S.
47: 1451.
3)( a) All matters related to state or local taxes or fees.
b) All other jurisdiction otherwise provided by law, including
jurisdiction concerning ad valorem taxes pursuant to Subtitle III of
this Title, rules to cease business, ordinary collection suits, summary
tax proceedings, rules to seek uniformity of interpretation of common
sales and use tax law or local sales and use tax law, as provided in
R.S. 47: 337. 101( A)(2), and petitions concerning the validity of a
collector' s rules, regulations, or private letter rulings, as provided in
R.S. 47: 337. 102.
4) All matters relating to claims against the state, as provided in R.S.
47: 1481 through 1486.
5) Incidental demands authorized by law in any action pending
before the board in the same manner as in a district court pursuant to
Code of Civil Procedure Article 1031.
6) All matters relating to appeals of administrative hearings,
assessments, and refund denials by the Louisiana Sales and Use Tax
Commission for Remote Sellers.
7) A petition for declaratory judgment or other action relating to any
state or local tax or fee, concerning taxing districts and related
proceeds, or relating to contracts related to tax matters; and including
disputes related to the constitutionality of a law or ordinance or
validity of a regulation concerning any related matter or concerning
any state or local tax or fee.
4 See La. R.S. 47: 1407, as amended by Acts 2019, No. 365, § l, eff. Nov. 18, 2019; Acts 2020,
No. 278, § 1, eff. July 1, 2020; Acts 2021, No. 343, § 1, eff. Jan. 1, 2022.
7
Thus, as provided by the statute, the BTA is granted jurisdiction over "[ a] 11 matters
related to state or local taxes or fees" and " petition[ s] for declaratory judgment or
other action[ s] relating to any state or local tax or fee ... or relating to contracts
related to tax matters."
As previously indicated, VCS filed a petition for redetermination of
assessment with the BTA against the Department, the Board of Commerce, and
LED in January 2017, seeking a ruling that the Board of Commerce erred in
finding that VCS breached the contract and an order that the Board of Commerce
reverse the cancellation of the contract. At that time, La. R. S. 47: 1407 provided
that the jurisdiction of the BTA extended to the following:
1) All matters
relating to appeals for the redetermination of
assessments, or for the determination of overpayments, or payment
under protest petitions, as provided in R. S. 47: 1431 through 1438.
2) All matters relating to the waiver of penalties, as provided in R.S.
47: 1451.
3) All matters related to other jurisdiction otherwise provided by law,
including rules to seek uniformity of interpretation of common sales
and use tax law or local sales and use tax law, as provided in R.S.
47: 337. 101( A)( 2).
4) All matters relating to claims against the state, as provided in R.S.
47: 1481 through 47: 1486.
5) Incidental demands authorized by law in any action pending
before the board in the same manner as in a district court pursuant to
Code of Civil Procedure Article 1031.
Thus, in 2017, the BTA' s jurisdiction did not extend to the merits of the contract
dispute at issue herein. See VCS, LLC v. Robinson, et al., 2018- 0012 ( La. App. 1
Cir. 5114118), 2018 WL 2202320 at * 1. However, La. R. S. 47: 1407 was
subsequently amended to vest subject matter jurisdiction with the BTA over "[ a] ll
matters related to state or local taxes or fees" and " petition[ s] for declaratory
judgment or other action[ s] relating to any state or local tax or fee ... or relating to
contracts related to tax matters."
8
Because this court has previously stated that laws determining jurisdiction
are procedural, we find the amendments to La. R.S. 47: 1407 are procedural in
nature and must be afforded retroactive application. See Ransome v. Ransome,
99- 1291 ( La. App. 1 Cir. 1/ 21100), 791 So. 2d 120, 122 n.2. Additionally,
jurisdictional provisions apply from the date of their promulgation, to all lawsuits,
even those that bear upon facts of a prior date and to pending lawsuits. A
American Waste and Pollution Control Company v. State, Department of
Environmental Quality, 597 So. 2d 1125, 1128- 1129 ( La. App. 1 Cir.), writs
denied, 604 So. 2d 1309, 1318 ( 1992). The amended statute vests exclusive subject
matter jurisdiction for matters such as those brought by VCS with the BTA. See
Gross, 2023 WL 6014144 at * 6.
DECREE
For the reasons set forth herein, the trial court's December 26, 2022
judgment is affirmed. All costs associated with this appeal are assessed against
plaintiff/appellant, VCS, LLC.
AFFIRMED.
I