Blakewood, L.L.C. v. Marsha Hanlon, Director of Finance, City of Baton Rouge, Parish of East Baton Rouge, James LeBlanc, Secretary, Louisiana Department of Motor Vehicles

NOT DESIGNATED FOR PUBLICATION
STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
2019 CA 0156
BLAKEWOOD, L.L.C.
VERSUS
MARSHA HANLON, DIRECTOR OF FINANCE CITY OF BATON
ROUGE, PARISH OF EAST BATON ROUGE; JAMES LEBLANC,
SECRETARY LOUISIANA DEPARTMENT PUBLIC SAFETY AND
CORRECTIONS, OFFICE OF MOTOR VEHICLES
CONSOLIDATED WITH
2019 CA 0157
BLAKEWOOD, L.L.C.
VERSUS
KIMBERLY ROBINSON, SECRETARY, LOUISIANA
DEPARTMENT OF REVENUE, JAMES LEBLANC, SECRETARY,
LOUISIANA DEPARTMENT OF PUBLIC SAFETY AND
CORRECTIONS, OFFICE OF MOTOR VEHICLES
DATE OFJUDGMENT., '
NOV 15 201
ON APPEAL FROM THE LOUISIANA BOARD OF TAX APPEALS
NUMBER L428 and 10881C
STATE OF LOUISIANA
CADE R. COLE, LOCAL JUDGE FOR THE BOARD OF TAX APPEALS
Nicole Gould Frey Counsel for Plaintiff A
- ppellant
David R. Cassidy Blakewood, L.L.C.
Baton Rouge, Louisiana
Anderson O. " Andy" Dotson, III Counsel for Defendant -Appellee
Interim Parish Attorney Marsha Hanlon, Director of Finance
Jeffrey Greer Rice City of Baton Rouge/Parish of East
Assistant Parish Attorney Baton Rouge
Baton Rouge, Louisiana
Aaron B. Long Counsel for Defendant -Appellee
Antonio Ferachi Kimberly Robinson, Secretary of the
Adrienne D. Quillen Louisiana Department of Revenue
Baton Rouge, Louisiana
BEFORE: MCDONALD, THERIOT, AND CHUTZ, JJ.
Disposition: AFFIRMED.
2
CHUTZ, J.
Taxpayer -appellant, Blakewood, L.L.C., appeals the summary judgment of
the Board of Tax Appeals ( BTA) dismissing the Taxpayer' s claims for the refund
of taxes paid under protest against Tax Collectors -Appellees, the City of Baton
Rouge and Parish of East Baton Rouge through its director of finance, Marsha
Hanlon ( City/Parish) and Kimberly Robinson in her official capacity as the
secretary of the Department of Revenue for the State of Louisiana ( Department).
We affirm.
BACKGROUND
The following facts are established by the record. The Taxpayer purchases
residential mobile homes and leases them with a corresponding land lease at its
Old Hammond Highway site in Baton Rouge, Louisiana. As of December 2017,
the Taxpayer had purchased 41 mobile homes with the intention of acquiring a
total of 77 mobile homes for its leasing inventory. The lienholder financing the
purchases of the mobile homes required the title registration for notice to third
parties of its interests. The Taxpayer submitted its exemption certificate with an
application to register the title to each home together with an offer to pay the taxes
and registration fees in an amount the Taxpayer considered undisputed. The
Louisiana Department of Public Safety and Corrections, Office of Motor Vehicle
OMV) would not accept the exemption certificate and charged the Taxpayer state
and local taxes, as well as penalties, interest, and fees for the homes. The Taxpayer
paid the amounts of sales taxes under protest!
On September 1, 2017, the Taxpayer filed a petition seeking refund of the
taxes it had paid under protest against the City/Parish and a similar petition against
1 The Taxpayer alleged that the total amount paid under protest as of December 2017 was
85, 184. 50 and subsequently amended its petition to include additional amounts of $21, 451. 70
through March 2018 and $ 24, 725. 80 through May 2018.
3
the Department seeking a refund of the payments it had made to the State.' The
two matters were consolidated.
The Taxpayer filed a motion for summary judgment against each tax
collector, averring entitlement to a judgment ordering refunds of all amounts of
sales taxes it had paid under protest against the City/Parish and the Department.
Cross- motions for summary judgment were subsequently filed by the City/Parish
and the Department. After a hearing, the BTA issued a judgment on June 20, 2018,
granting the cross- motions for summary judgment and dismissing the Taxpayer' s
claims for refund of payments made under protest. The Taxpayer suspensively
appealed.'
DISCUSSION
A motion for summary judgment is a procedural device used to avoid a full-
scale trial when there is no genuine issue of material fact. Bannister Properties,
Inc. v. State, 2018- 0030 ( La. App. 1st Cir. 11/ 2/ 18), 265 So. 3d 778, 787- 88, writ
denied, 2019- 0025 ( La. 3/ 6/ 19), 266 So. 3d 902. After an opportunity for adequate
discovery, a motion for summary judgment shall be granted if the motion,
memorandum, and supporting documents show that there is no genuine issue as to
material fact and that the mover is entitled to judgment as a matter of law. La.
C. C. P. art. 966( A)(3).
The burden of proof rests with the mover. Nevertheless, if the mover will not
bear the burden of proof at trial on the issue that is before the adjudicating tribunal
on the motion for summary judgment, the mover' s burden on the motion does not
2 The Taxpayer also named OMV as a defendant in each lawsuit " because it collects the state and
local sales taxes on the purchase of mobile homes on behalf of the City/Parish and the
Department. Although the BTA overruled a declinatory exception of lack ofjurisdiction over the
person and a peremptory exception of no cause of action, requiring OMV to remain in the
lawsuit, OMV, who did not file a brief in this court, has not appealed those determinations.
3 The courts of appeal shall have exclusive jurisdiction to review the decisions or judgments of
the BTA, and the judgment of any such court shall be subject to further review in accordance
with the law relating to civil matters. La. R.S. 47: 1435( A). And under La. R.S. 47: 1436, it is
undisputed that this court is the correct appellate court for review of this judgment.
M
require him to negate all essential claims of the adverse party' s claim, action, or
defense, but rather to point out to the court the absence of factual support for one
or more elements essential to the adverse party' s claim, action, or defense. The
burden is on the adverse party to produce factual support sufficient to establish the
existence of a genuine issue of material fact or that the mover is not entitled to
judgment as a matter of law. La. C. C. P. art. 966( D)( 1).
The interpretation of a statute is a question of law that may be decided by
summary judgment. When addressing legal issues, the appellate court gives no
special weight to the findings of the BTA, but exercises its constitutional duty to
review questions of law de novo. Bannister Properties, Inc., 265 So. 3d at 788.
On appeal, the Taxpayer raises the same issues it asserted before the BTA.
Specifically, it complains that the BTA erred in concluding that it was a consumer
for purposes of finding it owed sales taxes for its purchases of the mobile homes it
placed on its Old Hammond Highway site for lease. The City/Parish and the
Department maintain that under the applicable statutory provisions, the BTA
correctly determined that the Taxpayer, as the consumer of the mobile homes it
purchased to lease to tenants, owed to each collector the sales taxes paid by the
Taxpayer under protest.
As noted by the BTA in its written reasons for judgment:
Under Louisiana law, sales taxes are imposed on the sale, use,
consumption, distribution, and storage for use or consumption in
Louisiana of tangible personal property. [ La.] R.S. 47: 302( A). Factory
built homes are not included in the definition of tangible personal
property except as provided in [ La.] R. S. 47: 301( 16)( g)[( iv)]. That
subparagraph provides that factory built homes are considered
tangible personal property for the purposes of sales and use taxes for
the initial sale of a new factory built home from dealer to consumer,
but only to [ the] extent of forty-six percent of the retail sales price. It
is undisputed that the mobile homes at issue here are factory built
homes purchased new from a dealer. The only dispute is whether the
Taxpayer is the " consumer" of the mobile homes.
The term " consumer" is not defined under the Louisiana law for
the purposes of sales tax. Looking to the common usage of the term,
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the [ BTA] notes that Merriam Webster' s Collegiate Dictionary
defines consumer as: " one that consumes ... one that utilizes
economic goods MERRIAM WEBSTER' S COLLEGIATE
DICTIONARY 268 ( 11th ed. 2003). " Consume" is similarly defined
as "to do away with completely ... use up ... to enjoy avidly ... to
engage fully ... to utilize as a customer ... to waste or burn away ...
to utilize economic goods ...." Id. The Supreme Court has defined the
term consumer as an individual who purchases, uses, maintains, and
disposes of products and services. Cleco Evangeline, LLC v.
Louisiana Tax Comm' n, 2001- 2162 ( La. 4/ 3/ 02), 813 So. 2d 351, 354-
55 ( quoting BLACK' S LAW DICTIONARY 316 ( 6th ed. 1990)).
The Taxpayer contends that its tenants are the consumers of the
mobile homes. The Taxpayer supports its contention with the affidavit
of its managing officer Joseph Hayes Brian and an attached sample
Lease Agreement. The Lease Agreement states that the tenants are
responsible for, among other things, paying utilities, changing light
bulbs, interior pest control, and maintenance issues under $ 100. The
Lease Agreement provides that the tenant is also responsible for
damage done to the mobile home by the tenant' s family, guests, and
invitees, including " broken doors, windows, tiles, granite, scratches to
floors, holes in sheetrock, tears in paint, etc." According to the Lease
Agreement, if the " Dwelling Unit or Premises should suffer serious
damage or destruction during the Term of the Lease Agreement,
Tenant shall seek other accommodations until the repairs are made
and will not be responsible for Rent during that time." The Lease
Agreement also grants the tenant the option to purchase their dwelling
unit after renting the unit for at least 12 years for $ 1000 or the
appraised value of the mobile home at the time the tenant exercised
the option to purchase. The Lease Agreement gives the sole and
exclusive discretion to decide which price to charge for the purchase
of the mobile home to the Taxpayer. In addition, any sale of the
mobile home to the tenant must permit the Taxpayer a right to match
any offer to purchase the mobile home from a subsequent prospective
buyer. Finally, the Lease Agreement affords the Taxpayer the right to
sell the mobile home during the term of the lease and, if the Taxpayer
decides to sell the mobile home, to " terminate this Lease Agreement
at the end of the term of this Lease Agreement or earlier." ...
Based on the evidence submitted, the [ BTA] finds that the Taxpayer' s
tenants enjoy some use of the mobile homes....
However, the Taxpayer also utilizes the mobile homes. The
Taxpayer used the homes by utilizing them as rental properties. The
Taxpayer is responsible for maintenance of the mobile homes with
respect to repairs of $100 or more. In addition, the Taxpayer retained
the right to sell the mobile homes during the term of the lease, and
thus could dispose of the property. Based on these facts, the [ BTA]
concludes that the Taxpayer used, maintained, and could dispose of
the mobile homes.
An exclusionary provision is one which removes a certain
transaction from the scope of the transaction ab initio. Harrah' s
Gel
Bossier City Inv. Co. v. Bridges, 2009- 1916 ( La. 5111110), 41 So. 3d
438, [ 448]. According to [ La.] R.S. 47: 301( 16)( g)( i), a mobile home is
not tangible personal property. Therefore, the sale of a mobile home
would not normally be subject to sales tax. Thus, the [ BTA] agrees
with the Taxpayer that [ La.] R.S. 47: 301( 16)( g)( i) removes mobile
homes from the scope of taxation ab initio and is an exclusion.
However, the salient statutory provision here is contained in
La.] R.S. 47: 301( 16)( g)( iv). That provision has the effect of bringing
mobile homes back within the scope of taxation. Thus, the relevant
provision is an imposition statute....
T] here is nothing that requires the term " consumer" to mean
resident[.]" [ T] he [ T] axpayer ... is a user of this " tangible personal
property," and therefore the transactions at issue are subject to tax.
We find no error in the BTA' s interpretation and, hence, its application of the
provisions of La. R.S. 47: 301( 16)( g). And having rejected the Taxpayer' s
contention that it was not a consumer and thus owed no sales taxes on the mobile
homes the dealer sold it, the BTA correctly granted summary judgment in favor of
the City/Parish and the Department on this basis.
On appeal, the Taxpayer asserts, in the alternative, that if the mobile home
constituted tangible personal property at the time of the purchase, the purchase was
not a " sale at retail," such that the full amount of sales taxes collected was not
owed under La. R.S. 47: 302( 10)( a)( iii).4 We initially point out that at the hearing
before the BTA, the Taxpayer appeared to have conceded that this contention was
without merit. Therefore, the BTA did not consider or expressly rule in its detailed
reasons for judgment on this alternative basis asserted by the Taxpayer in support
of summary judgment. Under the provisions of La. C. C. P. art. 966( F), " A summary
judgment may be rendered or affirmed only as to those issues set forth in the
motion under consideration by the court at that time." Having withdrawn its
contention at the hearing, we question whether the purchase of a mobile home by
the Taxpayer excluded from the definition of "sale at retail" was an issue under
4 It is undisputed that under the provisions of La. R.S. 47: 301( 10)( a)( iii), the application of the
sale -for -lease exclusion to a taxpayer reduces its sales tax liability from the rate of 5% to 2%
and, for later transactions, that no sales tax is owed.
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consideration at the time of the hearing. But even if we were to consider the merits
of the issue, the Taxpayer' s alternative contention is without merit.
According to the relevant provisions of La. R.S. 47: 301( 10)( a)( iii), "``Retail
sale' or `` sale at retail' for purposes of sales and use taxes imposed by the [ S] tate on
transactions involving ... the lease ... of tangible personal property other than
automobiles ... means a sale to a consumer or to any other person for any purpose
other than ... for lease ... in an arm' s length transaction in the form of tangible
personal property." As already noted, the provisions of La. R.S. 47: 301( 16)( g)( i)
provide " the term `` tangible personal property' shall not include factory built
homes." Although the initial sale of a mobile home from the dealer to the Taxpayer
constituted tangible personal property to the extent of forty-six percent of the retail
sales price under Subsection ( 16)( g)( iv), the subsequent lease of a mobile home
from the Taxpayer to a tenant cannot constitute a " lease ... in the form of tangible
personal property" under Subsection ( 16)( g)( i) as required under Subsection
10)( a)( iii) to fall within the ambit of the exclusionary language contained in the
definition of a retail sale or a sale at retail. Thus, the Taxpayer' s alternative
contention does not warrant a reversal of the summary judgment in favor of the
City/Parish and the Department.
DECREE
For these reasons, the BTA' s judgment is affirmed. Appeal costs are
assessed against Taxpayer -appellant, Blakewood, L.L. C.
AFFIRMED.
n.