Lafayette Parish School Board, Sales Tax Division v. State ex rel. Department of Revenue & Taxation
Docket: No. 97-519
Court: Louisiana Court of Appeal; October 28, 1997; Louisiana; State Appellate Court
The case involves the applicability of Louisiana Act 719 regarding the use tax calculation for measurement-while-drilling (MWD) systems. Baker Hughes Inteq appeals a summary judgment that determined Act 719 applies prospectively from its effective date, July 1, 1990, and is classified as substantive law. Baker Hughes argues that the trial court made several errors: it ruled that La. R.S. 47:301(3)(d) applies only prospectively, did not interpret the act favorably toward taxpayers, overlooked legislative intent, and incorrectly categorized the law as substantive rather than procedural or interpretive. The court reviewed these points and affirmed the trial court’s judgment. Act 719 allows taxpayers to select a "First Month" for cost price determination of interchangeable components, with specific requirements for notification and irrevocability of the election for sixty months. It defines "interchangeable component" and "measurement-while-drilling instruments" and clarifies that this method applies to local and school board taxes.
Section two of Act 719 states that it became effective on July 1, 1990. Prior to Section 301(3)(d), taxpayers using MWD systems were liable for immediate use tax upon utilizing or storing components in Louisiana. Section 301(3)(d) allows taxpayers to elect an alternative payment method, spreading use tax payments over the five-year lifespan of the MWD system. Teleco chose May 1, 1985, as its 'First Month' for this election, which was rejected by Carl Meche of the Sales Tax Division, stating it must be after July 1, 1990. Subsequently, the Sales Tax Division sued the State of Louisiana, arguing that Act 719 should only apply prospectively, as retroactive application would violate constitutional protections of bondholders' contract rights. Teleco intervened in the lawsuit. The Sales Tax Division sought summary judgment, claiming no material factual disputes existed regarding the prospective application of Act 719. Baker Hughes Inteq, Teleco's successor, opposed this motion and filed its own for summary judgment, providing legislative documents and committee discussions. A hearing on the Sales Tax Division’s motion took place on September 30, 1996, while Baker Hughes Inteq’s motion was not addressed. The trial court concluded that the intent of the legislature did not support retroactive application, determining that the statute is prospective and substantive in nature, thus granting the Sales Tax Division’s motion for summary judgment.
Appellate review of summary judgment is conducted de novo, applying the same legal standards as the trial court. Summary judgment is granted when there is no genuine issue of material fact, and the mover is entitled to judgment as a matter of law, as per La.Code Civ. P. art. 966(B). The procedure is favored to ensure a just, speedy, and inexpensive resolution of actions, except where disallowed by Article 969.
The mover bears the burden of proof after adequate discovery, but if they do not carry that burden at trial, they need only demonstrate the absence of factual support for one or more essential elements of the adverse party's claim. If the adverse party fails to provide sufficient factual support, no genuine issue of material fact exists. This framework was clarified by Act 483.1 of 1997, which aimed to rectify prior inconsistencies in summary judgment law, particularly as highlighted in Hayes v. Autin.
Changes included equal scrutiny of both parties' documentation and the removal of the presumption favoring trials on the merits, thereby aligning Louisiana's summary judgment law more closely with Federal Rule of Civil Procedure 56(c). For a summary judgment to be affirmed, it must be established that reasonable minds would conclude that the mover is entitled to judgment based on applicable law and facts.
The specific legal issue in the case involves the prospective or retroactive application of La.R.S. 47:301(3)(d). According to La.Civ. Code art. 6, substantive laws apply prospectively unless stated otherwise, while procedural and interpretative laws can apply both ways unless there is a legislative indication to the contrary. La.R.S. 1:2 also stipulates that no statute is retroactive unless expressly stated. The classifications of laws, as defined by the Supreme Court in Segura v. Frank, distinguish substantive laws that create or modify rights and duties.
Procedural laws provide methods for enforcing substantive rights and govern the form of legal proceedings. Interpretive laws clarify the meaning of statutes as enacted. The Louisiana Supreme Court in St. Paul Fire & Marine Ins. Co. v. Smith addressed the distinction between substantive and procedural laws, noting that the general rule against retrospective application applies only to substantive laws. The court established a two-step analysis for determining legislative intent regarding retroactivity: first, ascertain if the legislature explicitly indicated retroactive or prospective application; second, classify the law as substantive, procedural, or interpretive if no intent is expressed. In Smith, the court interpreted an effective date of January 1, 1990, as indicating some intent for prospective application but ultimately found no clear legislative intent regarding retroactive or prospective application. Similarly, Act 719, with an effective date of July 1, 1990, does not clearly express legislative intent on this matter. The claim by Baker Hughes Inteq to consult pre-passage documents for intent was rejected, as the inquiry is limited to the act's specific language. Finally, it remains to classify Act 719 as substantive, procedural, or interpretive law, while noting that prior to its enactment, taxpayers were liable for a tax of 2% on the cost price of tangible personal property used or stored in Louisiana.
'Cost price' is defined under Section 301(3)(a) and (c) as the actual cost of tangible personal property, excluding certain deductions related to materials, labor, and service costs, unless those costs are separately billed at installation. For property that acquires a Louisiana tax situs and is repaired out of state, the cost price includes the actual cost of parts and materials used for repairs, with labor charges presumed to be the total invoice amount if not separately stated. Furthermore, installation costs for board roads to oil field operators are excluded from 'cost price' if billed separately.
Prior to Section 301(3)(d), taxpayers paid a two percent use tax on the property's 'cost price' upon use or storage in Louisiana. After July 1, 1990, the rate remains two percent, but taxpayers with interchangeable components can elect to determine 'cost price' under Section 301(3)(d). This requires designating a 'First Month' and allows for tax payment based on one-sixtieth of the aggregate cost price of components generating revenue in Louisiana that month. To qualify as 'interchangeable components,' at least eighty percent of annual revenue must come from out-of-state use. Taxpayers opting for this method are liable only for components used in Louisiana that month, thus providing financial benefits over a sixty-month period compared to a lump-sum payment.
The act does not apply retroactively, meaning Baker Hughes Inteq must select a 'First Month' after July 1, 1990, for calculating costs and use tax. The trial court's summary judgment in favor of the Lafayette Parish School Board against Baker Hughes Inteq is affirmed, with all appeal costs assigned to Baker Hughes Inteq.
