In these consolidated sales and use tax cases, Defendants, Louisiana Machinery Rentals, LLC, and Louisiana Machinery Company, LLC (collectively the Companies), appeal partial summary judgments enforcing the assessment of the taxing authorities, Plaintiffs, Catahoula Parish School Board and the Catahoula Parish Police Jury. Plaintiffs have answered the appeals, seeking sanctions against the Companies for filing frivolous appeals. For the reasons that follow, we reverse the trial court's grant of the partial summary judgments; we deny the claims for damages for frivolous appeals; and, we remand
FACTS AND PROCEDURAL HISTORY
The Companies, Louisiana's exclusive Caterpillar franchise dealers, sold, leased, and repaired Caterpillar equipment and machinery in Catahoula Parish. The Catahoula Parish School Board and the Catahoula Parish Police Jury designated the Concordia Parish School Board (the Collector) as their sales and use tax collector.
The Collector commissioned a private auditing firm to perform an audit of the Companies which revealed deficiencies for the period December 1, 2000, through June 30, 2007. The Collector, thereafter, initiated the collection process on November 24, 2009, by sending each of the Companies a Notice of Intent to Assess additional taxes, penalties, and interest in accordance with La.R.S. 47:337.48.
The Collector then issued each of the Companies a formal Notice of Assessment (also referred to as the Original Assessments) on December 24, 2009, allegedly in accordance with La.R.S. 47:337.51 in effect in 2009 before the 2010 amendment to subsections A and B.
The Collector reviewed the additional audit documentation and subsequently affirmed its findings. On February 22, 2010, the Collector reissued a second formal Notice of Assessment-Extension (sometimes referred to as the First Revised Assessments) to the Companies in accordance with La.R.S. 47:337.51. The First Revised Assessments extended additional time to the Companies to raise either factual or legal objections. They did not do so.
After receiving the First Revised Assessments, the Companies again submitted additional records to the auditors. After the auditors reviewed this newly supplied information, the assessments were substantially reduced. The Collector then issued a third formal Notice of Assessment-Extension (sometimes referred to as the Second Revised Assessments) to the Companies on April 26, 2010. The Companies did not respond to the Second Revised Assessments. Consequently, on September 27, 2010, the Collector instituted the present proceedings by filing a Rule for Payment of Sales Tax against each of the Companies for payment of taxes, penalties, interest, and attorney fees pursuant to La. R.S. 47:337.61.
On January 5, 2012, the trial court held a hearing only on the motions for partial summary judgment. Based upon its determination that the April 26, 2010 Second Revised Assessments were final, the trial court granted partial summary judgments against each Company in favor of the Collector. The Companies appealed their respective judgments, and the Collector answered the appeals, seeking sanctions for frivolous appeals. These matters were consolidated by this court on appeal.
ASSIGNMENTS OF ERROR
On appeal, the Companies assign four errors by the trial court. They first assert that the trial court erred in failing to find that the Notice of Assessment-Extensions did not comply with La.R.S. 47:337.51(A), thereby making said notices invalid and void. The Companies next assert that the trial court erred in concluding that the requirements of La.R.S. 47:337.51(A) need not have been specifically enumerated in these cases since the taxpayers were large companies. The Companies further assert that the trial court erred in failing to find that the claims for taxes had prescribed prior to the issuance of the Notice of Assessment-Extensions. Finally, they contend that the trial court erred in granting the motions for partial summary judgment because the affidavits filed in support thereof were not based on personal knowledge and that genuine issues of material fact as to the amount of taxes owed by the Companies remain in dispute.
Jagneaux v. Frohn, 11-461, p. 2 (La.App. 3 Cir. 10/5/11), 74 So.3d 309, 310.
ASSIGNMENTS OF ERROR NUMBERS ONE & TWO
Louisiana Revised Statutes 47:337.5 — Notice
In these combined assignments of error, the Companies essentially allege that the trial court erred in finding that the Collector's notices (in globo) failed to comply with La.R.S. 47:337.51(A) and were, therefore, invalid and void. The notice in question is as follows:
Our brethren in the second circuit squarely addressed the issue of the validity of the same Notice and Assessment(s) pursuant to La.R.S. 47:337.51 in the case of Caldwell Parish School Board v. Louisiana Machinery Co., LLC, 47,349, 47,350 (La.App. 2 Cir. 5/16/12), 94 So.3d 144.
We are, however, mindful of the fact that there are a number of other tax cases involving Louisiana Machinery Rentals, LLC and/or Louisiana Machinery Company, LLC in a number of parishes and judicial districts concerning La.R.S. 47:337.51 (Sec. 51) and La.R.S. 47:337.61 (Sec. 61). Some of these cases have been decided in favor of the tax collector; some have been decided in favor of the taxpayer; and, several are presently before our supreme court on supervisory writs.
Of particular interest, we note this court's recent decision in Jefferson Davis Parish School Board, ex rel. Sales/Use Tax Dep't v. Louisiana Machinery Rentals, LLC, 11-510, 11-512 (La.App. 3 Cir. 10/5/11), 74 So.3d 1272, writ denied, 11-2437 (La.1/13/12), 77 So.3d 972, wherein we held that the Jefferson Davis Parish School Board properly followed the procedure outlined in Sec. 51; however, the issue of proper notice was neither argued nor assigned as error in the Jefferson Davis case. Therefore, that case is readily distinguishable and neither persuasive nor controlling.
Louisiana Revised Statutes 47:337.51(A)(prior to January 1, 2011)(emphasis added) specifically states that, "This notice shall inform the taxpayer of the assessment and that he has
The notice in the instant case does not state that the taxpayer has sixty days to request a hearing. The notice states that the taxpayer has sixty days to pay the amount set forth therein, pay the amount therein under protest, or file suit within thirty days of receipt of the notice. It does not state anywhere in the notice, as mandated by the statute, that the taxpayer has sixty days to request a hearing.
After thoroughly reviewing the facts in the instant case, and considering the jurisprudence pertaining to the notice requirements of La.R.S. 47:337.51(A) prior to January 1, 2011, we find the notice in the instant case to be deficient and the assessment invalid due to its failure to state that the taxpayer has sixty days from the date of the notice to request a hearing as mandated by the statute. As such, the written notice given in the instant case does not comply with La.R.S. 47:337.51(A) and does not have the preclusive and legal effect of denying the Companies the right to present their defenses in response to the Collector's claims, even in a summary proceeding.
Louisiana Revised Statutes 47:337.61
The fact that we find the notice deficient and the assessment invalid under Sec. 51 does not conclude this matter. The Collector still has the option to proceed with summary proceedings in accordance with Sec. 61, which it did.
The Uniform Local Sales Tax Code (ULSTC), La.R.S. 47:337.1, et seq., is the law which governs the local collection and enforcement of sales and use taxes. Louisiana Revised Statutes 47:337.45
In the instant case, the Collector began its sales and use tax collection proceedings by assessment and distraint in accordance with Sec. 51, which requires a valid notice as previously discussed. Later on in the proceedings, the Collector filed supplemental and amending pleadings in order to pursue its claims in a summary proceeding in accordance with Sec. 61, which it was legally entitled to do. Thereafter, the Collector filed motions for partial summary judgment within the summary proceedings and attached its supporting documentation and affidavits in accordance with the provisions of Sec. 61.
Louisiana Revised Statutes 47:337.61(2) specifically allows for defenses to be presented in the summary proceedings. It is undisputed that the Companies presented defenses, including its exception of prescription, which were disallowed by the trial court. In fact, the trial court specifically stated in its ruling "that each of these assessments are final and that the defendant's [sic] [are] precluded from attacking them." The trial court erred in ruling that the Companies could not attack the assessments and present defenses, which is contrary to the provisions of Sec. 61(2). In Tensas Parish School Board v. Louisiana Machinery Co., LLC, 47,516, 47,517 (La.App. 2 Cir. 6/29/12), 94 So.3d 1039,
In summary, Sec. 51 and Sec. 61 are two separate and distinct remedies available to the Collector in pursuit of its collection of sales and use taxes under La.R.S. 47:337.1, et seq. Either may be implemented.
In the instant case, the Collector began in Sec. 51 and ended in Sec. 61. Had this court not held the Collector's Sec. 51 Notice of Assessment to have been defective in its failure to apprise the Companies of their right to request a hearing within sixty days of the notice, the assessment would have been valid and final after that sixty day period, since no action was taken during that time period, and the Companies
The Collector's alternative attempt to proceed with summary proceedings under Sec. 61, though legally permissible, is tainted and thwarted by the trial court's refusal to allow the Companies to present its defenses to the Collector's claims, which the statute specifically permits. Consequently, the trial court's grant of the Collector's motions for partial summary judgment must be reversed and the matter remanded for further proceedings consistent herewith.
ASSIGNMENT OF ERROR NUMBER THREE
In this assignment of error, the Companies allege that the trial court erred in not finding the Collector's claim for taxes to have been prescribed. Whether the Collector's claim for taxes had prescribed was neither addressed nor ruled upon by the trial court. The trial court did not consider this issue since it disallowed any and all defenses, including the exception of prescription, presented by the Companies. Having reversed the trial court's ruling that the Collector's Notice of Assessment under Sec. 51 was valid and having found that the Companies are legally permitted under Sec. 61 to assert defenses to the Collector's claims, we remand this matter to the trial court for consideration and ruling upon the defenses, including the exception of prescription, asserted by the Companies.
ASSIGNMENT OF ERROR NUMBER FOUR
The Companies allege that the trial court erred in granting the Collector's motions for partial summary judgment in that the supporting affidavits were not based on personal knowledge and that genuine issues of material fact existed as to the amount of tax owed by them. We agree.
In order to respond to this assignment of error, we must first differentiate between a summary judgment proceeding and summary proceedings. They are not one and the same.
In the instant case, the Collector filed motions for partial summary judgment within the summary proceedings provided for in Sec. 61. However, the rules for summary judgment are different from the rules set forth in the summary proceedings allowed in Sec. 61. Specifically, the evidentiary rules in a summary judgment proceeding are strict and definitive. Only certain evidentiary matters may be considered in a summary judgment proceeding, e.g., pleadings, depositions, answers to interrogatories, admissions, and affidavits. La.Code Civ.P. art. 966(B). No testimony is allowed. Additionally, in a summary judgment proceeding, "[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." La.Code Civ.P. art. 967(A).
This is contrary to the admissibility of affidavits permissible in summary proceedings allowed under Sec. 61. An affidavit in accordance with Sec. 61(4) only requires "that the facts as alleged are true to the best of the affiant's knowledge or belief," not that the affiant must have personal knowledge of the matters stated therein as
Furthermore, a summary judgment proceeding is only a type of summary proceedings. Summary proceedings are defined as "those which are conducted with rapidity, within the delays allowed by the court, and without citation and the observance of all the formalities required in ordinary proceedings." La.Code Civ.P. art. 2592. Summary proceedings may be used for trial or disposition of those matters specifically set forth in La.Code Civ.P. art. 2592. Louisiana Code of Civil Procedure Article 2592(12) states that summary proceedings are allowed in "[a]ll other matters in which the law permits summary proceedings to be used." Sec. 61 provides for the use of summary proceedings for the hearing and determination of all claims by or on behalf of the taxing authority or tax collector by preference in all courts. The summary proceedings in Sec. 61 allow for defenses to be presented and testimony to be had. This is contrary to a summary judgment proceeding which has strict evidentiary requirements and does not permit testimony.
Considering this disparity, a motion for summary judgment is problematic and inappropriate in Sec. 61 summary proceedings unless the legal requirements for all pertinent statutes are met. The affidavits by Mr. Thomas H. O'Neal, the Sales Tax Director for the Concordia Parish School Board, in the Sec. 61 proceedings, were valid, but those same affidavits are invalid in a summary judgment proceeding because they were not based on requisite personal knowledge. The matter comes before us in a summary judgment proceeding; therefore, the affidavits, which were not based on personal knowledge, were inadmissible, and the grant of the partial summary judgments improvident. This in no way precludes the use of Sec. 61 affidavits in summary proceedings in Sec. 61 hearings; however, should a summary judgment proceeding be implemented in summary proceedings under Sec. 61, the strict evidentiary requirements of a summary judgment proceeding must be followed.
Even assuming, arguendo, that the notice herein is determined to be satisfactory, the grant of summary judgment must be and is reversed, as it was based on legally deficient affidavits and incompetent evidence.
ANSWER TO APPEAL
Finally, we must consider the Collector's request for sanctions against the Companies for frivolous appeals. When considering allegations of a frivolous appeal, this court has stated:
Succession of Brown, 10-1394, p. 10 (La. App. 3 Cir. 6/29/11), 69 So.3d 1211, 1217.
In the instant matter, we have found the Companies' appeals to be meritorious; therefore, the appeals are not frivolous.
For the reasons expressed herein, the trial court's grant of the partial summary judgments in favor of the Catahoula Parish School Board and Catahoula Parish Police Jury, and against Louisiana Machinery Rentals, LLC, and Louisiana Machinery Company, LLC, are reversed. Additionally, this matter is remanded to the trial court for further proceedings consistent herewith. Costs of this appeal are assessed to the Catahoula Parish School Board and Catahoula Parish Police Jury in the amount of $4,362.45 pursuant to La. R.S. 13:5112.