Opinion
NO. 2017 CA 0424
11-01-2017
ACADIAN PROPERTIES NORTHSHORE, L.L.C. v. Louis FITZMORRIS, in his Capacity as St. Tammany Parish Assessor, Rodney J. Strain Jr., in his Capacity as Ex–Officio Tax Collector, and the Louisiana Tax Commission
Robert S. Reich, Lawrence R. Plunkett Jr., Metairie, Louisiana, Attorneys for Plaintiff/Appellant, Acadian Properties Northshore, L.L.C. Patrick J. Berrigan, Slidell, Louisiana, Attorney for Defendant/Appellee, Louis Fitzmorris, in his capacity as St. Tammany Parish Assessor Charles M. Hughes Jr., Mandeville, Louisiana, Attorney for Defendant/Appellee, Rodney J. Strain Jr., in his capacity as Ex–Officio Tax Collector Robert D. Hoffman Jr., Covington, Louisiana Attorney for Defendant/Appellee, Louisiana Tax Commission
Robert S. Reich, Lawrence R. Plunkett Jr., Metairie, Louisiana, Attorneys for Plaintiff/Appellant, Acadian Properties Northshore, L.L.C.
Patrick J. Berrigan, Slidell, Louisiana, Attorney for Defendant/Appellee, Louis Fitzmorris, in his capacity as St. Tammany Parish Assessor
Charles M. Hughes Jr., Mandeville, Louisiana, Attorney for Defendant/Appellee, Rodney J. Strain Jr., in his capacity as Ex–Officio Tax Collector
Robert D. Hoffman Jr., Covington, Louisiana Attorney for Defendant/Appellee, Louisiana Tax Commission
BEFORE: GUIDRY, PETTIGREW, AND CRAIN, JJ.
CRAIN, J.
This case involves a challenge to an ad valorem property tax assessment. The plaintiff appeals a summary judgment dismissing its petition with prejudice. Finding a procedural error, we vacate the summary judgment and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
Acadian Properties Northshore, L.L.C., owns an eight-acre parcel of land in St. Tammany Parish. Beginning in 2008, the property was assessed as "bona fide timberland," which meant its assessed valuation was determined based on the parcel's use value instead of its fair market value. See La. Const. art. VII, § 18 ; La. R.S. 47:2301 –09. In 2015, citing Acadian's efforts to develop the property for a shopping center, the St. Tammany Parish Assessor's Office notified Acadian the property did not meet the requirements for "timberland"; therefore, it was not eligible for the use value assessment. As a consequence, the Assessor sought additional taxes and penalties for several prior years in question, including 2012 and 2014.Acadian responded by suing Louis Fitzmorris, in his capacity as St. Tammany Parish Assessor; Rodney J. Strain, Jr., in his capacity as the St. Tammany Parish Tax Collector; and the Louisiana Tax Commission. Acadian's petition focused on two claims: (1) for the 2012 assessment, the Assessor could not retroactively change the use value as qualified timberland and assess additional taxes for that tax year; and (2) for the 2014 assessment, the Assessor ignored the proper classification of the property as bona fide timberland. Acadian paid the 2014 taxes under protest and sought a refund of those taxes.
After the defendants answered, Acadian filed a motion for partial summary judgment challenging the validity of the "retroactive" 2012 assessment. The motion was set for hearing on November 21, 2016. Twelve days before the hearing, the Assessor filed an opposition to Acadian's motion and a "cross-motion for summary judgment," seeking dismissal of all of Acadian's claims. Relying on several alternative arguments, the Assessor maintained Acadian did not exhaust its administrative remedies, the property did not qualify for a use value assessment, and Acadian was statutorily barred from challenging the assessed value of the property due to its failure to timely contest the assessments.
The district court ordered Acadian to appear and show cause on December 20, 2016, why the Assessor's motion for summary judgment should not be granted. The order, which was apparently filed with the Assessor's motion, contained a type-written hearing date of November 21, 2016, but the signed order replaced that date with a hand-written date of December 20, 2016.
At the November 21, 2016 hearing on Acadian's motion for partial summary judgment, Acadian's attorney objected to the timeliness of the Assessor's opposition and requested that the opposition be stricken and opposing counsel be prohibited from presenting oral argument. Acadian's attorney noted, "[The Assessor] also filed something which is entitled a [cross] motion for summary judgment. It was not properly filed, it was not properly noticed, [and] it is not set for hearing today."
The district court denied Acadian's partial summary judgment motion and granted the Assessor's cross-motion. When Acadian's attorney objected that the Assessor's motion was not before the court, the district court said it would "suspend the rule of the Court and allow them to file late." A judgment was signed on December 14, 2016, denying summary judgment for Acadian, granting the Assessor's motion, and dismissing Acadian's petition with prejudice. Acadian appeals, arguing, in relevant part, the district court erred by granting summary judgment in favor of the Assessor.
DISCUSSION
Subject Matter Jurisdiction
The Assessor argues the district court lacked subject matter jurisdiction to hear this dispute. Consequently, before addressing the merits of Acadian's appeal, we must determine whether the district court had subject matter jurisdiction. If it did not, then this court likewise lacks jurisdiction, except to vacate the district court's judgment to correct the error in entertaining the suit. See Metro Riverboat Associates, Inc. v. Louisiana Gaming Control Board , 01-0185 (La. 10/16/01), 797 So.2d 656, 663 ; see also Motorola, Inc. v. Associated Indemnity Corporation, 02-0716 (La. App. 1 Cir. 4/30/03), 867 So.2d 715, 717 (en banc).
Generally, suits contesting ad valorem assessments fall into one of two categories: (1) a "correctness" challenge, which must first be submitted to a board of review, then to the Louisiana Tax Commission and, after exhaustion of those remedies, the district court has appellate jurisdiction; and (2) a "legality" challenge, which is within the original jurisdiction of the district court. See La. Const. art. VII, §§ 3 (A) and 18 (E); La. R.S. 47:1992B(1), 1998A(1)(a), and 2134C(1); Gisclair v. Louisiana Tax Commission, 09-0007 (La. 6/26/09), 16 So.3d 1132, 1135 ; Triangle Marine, Inc. v. Savoie, 95-2873 (La. 10/15/96), 681 So.2d 937, 939. Therefore, the nature of a challenge to an ad valorem assessment determines which tribunal has original jurisdiction over the proceeding. See Gisclair , 16 So.3d at 1135.
In the absence of evidence introduced at a hearing, the allegations in the petition, considered in light of the applicable jurisprudence, determines whether the claim is a correctness challenge or a legality challenge. See Gisclair, 16 So.3d at 1138. Where the appeal record contains no reviewable evidence relative to jurisdiction, the factual allegations of the petition must be accepted as true. See Beasley v. Nezi, LLC, 16-1080 (La. App. 1 Cir. 9/8/17), 227 So.3d 308, 315 (2017 WL 3947889) ; State v. Illinois Central Railroad Company, 04-1789 (La. App. 1 Cir. 12/22/05), 928 So.2d 60, 68. The jurisdiction question presented is whether the petition challenges the correctness of the assessment, or its legality. See Gisclair, 16 So.3d at 1138.
Although exhibits were submitted in support of the Assessor's motion for summary judgment, as explained later herein, the Assessor's motion was not properly before the district court for hearing. Therefore, the exhibits submitted with that motion are not reviewable in connection with our resolution of the jurisdiction issue.
Acadian's allegations regarding the 2012 and 2014 assessments rely on the characterization of the property as "timberland." Specifically, the petition alleges:
The [p]roperty is and has at all pertinent times hereto been in full compliance with the bona fide timberland requirements of La. R.S. 47:2302. On or about November or December of 2012 trees on the property were cut for timber. On or about January of 2014, trees were replanted on the property, within the three year period required under the statute, maintaining its true status as bona fide timberland.
Specific to the 2012 assessment, Acadian alleges the Assessor sent a tax bill in April 2015 for the tax year 2012 that "does not reflect an assessment of the property as timberland which use it previously had been assessed." The petition further states:
V.
The tax assessor had no authority to retroactively change the Use Value of the property three years after the subject property was assessed as timberland. Such a retroactive change is in direct violation of La. R.S. 47:1966 and such retroactive taxation was and is illegal.
VI.
The property was assessed for use value as timberland in 2010, 2011, and 2012 and the tax bills were paid by Acadian. The assessor of St. Tammany Parish amended these bills and a penalty was erroneously added together with the deletion of use value. This is in direct violation of La. R.S. 47:2301 et seq.
For the 2014 tax assessment, Acadian alleges:
In addition to the improper 2012 retroactive tax assessed against the [p]roperty, [the] tax assessor's 2014 assessment of the property improperly denied the land use valuation that had been in
place on the property for the previous seven years. The 2014 assessment ignores the proper classification of the [p]roperty as bona fide timber land pursuant to La. R.S. 47:2302... in violation of the statute.
Article VII, Section 18 of the Louisiana Constitution mandates that property subject to ad valorem taxation be listed on the assessment rolls at its "assessed valuation." In most instances, the assessed valuation is a stated percentage of the "fair market value" of the property. See La. Const. art. VII, § 18 (A). However, Section 18 provides an exception for "bona fide ... timber lands," which are assessed at "ten percent of use value rather than fair market value." See La. Const. art. VII, § 18 (C) (emphasis added). Section 18 more fully provides:
(C) Use Value. Bona fide agricultural, horticultural, marsh, and timber lands, as defined by general law, shall be assessed for tax purposes at ten percent of use value rather than fair market value. The legislature may provide by law similarly for buildings of historic architectural importance.
(D) Valuation. Each assessor shall determine the fair market value of all property subject to taxation within his respective parish or district except public service properties, which shall be valued at fair market value by the Louisiana Tax Commission or its successor. Each assessor shall determine the use value of property which is to be so assessed under the provisions of Paragraph (C). Fair market value and use value of property shall be determined in accordance with criteria which shall be established by law and which shall apply uniformly throughout the state. [Italics added.]
Section 18 is supplemented by numerous statutes and regulations, including Louisiana Revised Statute 47:2302D, which defines "[b]ona fide timberland" as
land stocked by forest trees of any size and specie, or formerly having such tree cover within the last three years and not currently developed or being used for nonforest purposes, and devoted to the production, in reasonable commercial quantities, of timber and timber products.
The "use value" of bona fide timberland means "the highest value of such land when used by a prudent ... timber operator for the sole purpose of continuing the operation." La. R.S 47:2301. The use value is determined through detailed formulas that, among other factors, consider the property's projected net income and apply a capitalization rate based on tables developed by the Louisiana Tax Commission. See La. R.S. 47:2307C; see also La. Admin. Code Title 61, Part V, Chapter 27. Consistent with the constitutional mandate in Subsection 18(C) of Article VII, Louisiana Revised Statute 47:2301 provides:
Use value of such land shall be so established without reference to any other criteria of value particularly, but not as a limitation, without reference to fair market value or value to the public in general. [Emphasis added.]
Acadian alleged the subject property "is and has at all pertinent times hereto been in full compliance with the bona fide timberland requirements" of Section 47:2302. According to the petition, timber was cut and replanted on the property within the three year period required by the statute. Based on these allegations, which for purposes of our jurisdiction analysis must be accepted as true, the assessed valuation would be ten percent of the use value of the property, not fair market value. See La. Const. art. VII, § 18 (C); La. R.S. 47:2307C. Acadian contends the Assessor disregarded the property's qualified status as timberland and imposed an illegal assessment.
In PBGS, L.L.C. v. Duplechain, 13-278 (La. App. 3 Cir. 12/18/13), 130 So.3d 45, writ denied, 14-0114 (La. 4/4/14), 135 So.3d 641, the issue presented was whether an assessor properly classified property under Subsection 18(B) of Article VII. PBGS, L.L.C. , 130 So.3d at 47. The assessor determined that salt caverns were "other property," which under Subsection 18(B) would be assessed at 15% of fair market value, while the landowner alleged the caverns were "land," which would be assessed at 10% of fair market value.
The property owners pursued relief before the Louisiana Tax Commission, but also filed suit in district court while the administrative proceeding was pending. PBGS, L.L.C., 130 So.3d at 47–48. The assessor filed a motion for summary judgment in the district court proceeding, asserting the salt caverns were properly classified as "other property." The plaintiffs argued their claim was a "correctness challenge," and that the district court lacked jurisdiction. PBGS, L.L.C., 130 So.3d at 48. The district court recognized its jurisdiction and granted the assessor's motion for summary judgment. Id.
The court of appeal agreed, concluding the plaintiffs' allegations were a legality challenge, stating:
In successive paragraphs [of their petition], the plaintiffs make repeated claims of illegality in the imposition and enforcement of the 2011 assessment and the "misclassif[ication]" of the salt caverns as "other property" contrary to La. Const. art. 7, § 18 (B). The plaintiffs further assert that "controlling Louisiana tax law" and "the Louisiana Civil Code" dictate the classification of the salt caverns as "land" rather than "other property."
In this light, it is difficult to see how the plaintiffs' claim does not pose a legality challenge. Rather, the plaintiffs lodged a direct challenge to the constitutionality and legality of the tax, as assessed. Further, the petition makes a separate and specific claim as to the "method of enforcement of these illegal taxes."
* * *
[T]he essential claim of the plaintiffs' petition is that La. Const. art. 7, § 18 (B) ensures that the plaintiffs' property is to be classified as "land" and subject to taxation at a rate of 10% of fair market value. The plaintiffs [assert] that, contrary to that constitutional provision, the Assessor classified their property as "other property" and subjected it to a taxation rate of 15% of fair market value. That classification, it must follow, was unconstitutional as applied to them.
PBGS, L.L.C., 130 So.3d at 52–53 ; see also Bass Partnership v. Gravolet , 12-0024 (La. App. 4 Cir. 11/21/12), 105 So.3d 224, 227, writ denied, 12-2741 (La. 3/1/13), 108 So.3d 1176 (a suit contesting an assessor's determination that a piece of property was subject to a supplemental assessment, and seeking to invalidate the supplemental assessment, was a legality challenge).
Acadian claims bona fide timberland is constitutionally and statutorily required to be assessed at use value rather than fair market value. According to Acadian's petition, the Assessor failed to follow that mandate. Unlike Gisclair , the plaintiff does not question the method used to arrive at fair market or use value, which determinations may involve some degree of discretion and judgment by an assessor. Rather, Acadian alleges the Assessor failed to assess the property as required by law—on its use value. If, as Acadian alleges, the property is qualified timberland, the Assessor has no discretion, and the assessment must be on use value. See La. Const. art. VII, § 18 (C); La. R.S. 47:2307C. Otherwise, the assessment violates the law. Therefore, we find Acadian's claim is a legality challenge and within the district court's original jurisdiction. See La. Const. art. VII, § 3 (A); PBGS, L.L.C., 130 So.3d at 53.
In finding jurisdiction, we express no opinion on the merits of Acadian's allegations that the subject property is, in fact, qualified timberland.
Motion for Summary Judgment
Acadian argues the district court erred by granting the Assessor's motion for summary judgment when the motion was not before the court. To uphold a summary judgment on appeal, the record must reflect the mover secured the judgment in accordance with the procedure mandated by Louisiana Code of Civil Procedure article 966. See Las sere v. State, Department of Health & Hospitals , 00-0306 (La. App. 1 Cir. 3/28/01), 808 So.2d 513, 516 ; Macaluso v. Macaluso, 99-0935 (La. App. 1 Cir. 5/12/00), 762 So.2d 180, 183. The relative strength or weakness of a party's case on the merits does not limit or otherwise affect the procedural protections afforded him for opposing a motion for summary judgment. See Lassere, 808 So.2d at 518.
The required notice for a hearing on a motion for summary judgment is governed by Article 966C. In pertinent part, Article 966C mandates that the hearing "shall be set not less than thirty days after the filing" of the motion, and notice of the hearing "shall be served on all parties in accordance with Article 1313(C) or 1314 not less than thirty days prior to the hearing." See La. Code Civ. Pro. art. 966C(1)(a) and (b). The thirty-day notice is mandatory and is designed to give fair notice of the evidentiary and legal bases for the motion. See Lassere , 808 So.2d at 516 (applying former version of article providing for ten-day notice). The adverse party then has time to respond with evidentiary documentation of his own, either in the form of affidavits or discovery devices, and to prepare to meet the legal argument of the moving party. Id. Moreover, procedural due process requires an opportunity to be heard, in addition to notice of the pendency of an action, and in conjunction therewith, adequate notice of the hearing is fundamental. Id.
Under Article 966C, the Assessor's motion for summary judgment was filed too late to be heard on November 21, 2016. In fact, the Assessor's motion was set for hearing on December 20, 2016. Although the Assessor says Acadian agreed to waive any objection to the Assessor's motion being heard at the November 21 hearing, the record does not reflect such an agreement. When the hearing started, Acadian's attorney stated the Assessor's motion was not before the court that day. Acadian's attorney repeated this statement after the district court granted the Assessor's motion, prompting the court to "suspend the rule" and allow the Assessor "to file late." The district court cannot unilaterally dispense with the pre-hearing notice required by Article 966C. Absent a waiver, if the required notice is not provided, the district court is procedurally barred from acting on the motion for summary judgment. See La. Code Civ. Pro. art. 966C; Lassere, 808 So.2d at 518. Here, the summary judgment was rendered without the thirty-day notice required by Article 966C(1). For that reason, the judgment is vacated.
CONCLUSION
The December 14, 2016 judgment is vacated to the extent it granted the Assessor's motion for summary judgment and dismissed Acadian's petition. The case is remanded for further proceedings. The assessment of costs in this matter shall await a final disposition.