Cynthia Bridges, Dept. of Rev., State of La. v. Clark L. White

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 07-408

CYNTHIA BRIDGES, DEPT. OF REV., STATE OF LA.

VERSUS

CLARK L. WHITE

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 20056428
HONORABLE JOHN DAMIAN TRAHAN, DISTRICT JUDGE

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JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Jimmie C. Peters, and Glenn B. Gremillion,
Judges.

REVERSED IN PART, AFFIRMED IN PART, REMANDED.

Daivd M. Hamsen
Monica Doss Washington
Elroy A. James
Joseph F. Stevenson
Louisiana Department of Revenue, Legal Department
P. O. Box 4064
Baton Rouge, LA 70821-4064
(225) 219-2080
Counsel for Plaintiff/Appellant:
Cynthia Bridges, Department of Revenue

William Christian Gambel
Milling, Benson, Woodward, L.L.P.
909 Poydras, Suite 2300
New Orleans, LA 70112-1010
(504) 569-7000
Counsel for Defendants/Appellees:
Clark L. White
Estate of Lisa White

SAUNDERS, Judge.

This is an income tax case. The Louisiana Department of Revenue conducted

an audit of two taxpayers for the years 1997 through 2001. The taxpayers agreed to

pay the taxes according to the audit for the years 1999-2001, but did not agree to pay

the audited taxes for the years 1997-1998.

The Department filed suit against the taxpayers to collect the taxes from 1997-

1998. In response, the taxpayers filed exceptions of prematurity and vagueness. The

trial court overruled the taxpayers’ exception of vagueness, sustained their exception

of prematurity, and dismissed the Department’s petition.

The Department and the taxpayers have both appealed. We affirm the trial

court’s ruling on the exception of vagueness, reverse the trial court’s ruling on the

exception of prematurity, and remand the case for further proceedings.

FACTS AND PROCEDURAL HISTORY:

The Louisiana Department of Revenue (hereinafter “the Department”) audited

the tax returns filed by Clark and Lisa White (hereinafter “the taxpayers”), a husband

and wife, for the years 1997 through 2001. Prior to 1997 the taxpayers filed Louisiana

Resident Returns. For the years 1997 through 2001, the taxpayers filed Louisiana

Non-Resident Returns. The issue in the audit was whether the taxpayers were

residents of Louisiana during the years 1997 through 2001. The taxpayers claimed

that they were residents of Florida for the years in question.

The taxpayers agreed to pay the taxes found due for the years 1999-2001.

However, the taxpayers did not agree with the audit for the 1997-1998 years. As a

result, the Department filed suit to collect the taxes for those unpaid years.

The taxpayers responded to the suit by filing Dilatory Exceptions of

Prematurity and Vagueness. On August 3, 2006, the trial court sustained the

taxpayers’ exception of prematurity and dismissed the Department’s petition. Further,

the trial court overruled the taxpayers’ exception of vagueness.

The Department has appealed the ruling of the trial court regarding the

taxpayers’ exception of prematurity. In response, the taxpayers appealed the trial

court’s ruling regarding their exception of vagueness. We affirm the trial court’s

overruling of the taxpayers’ exception of vagueness. We reverse the trial court’s

finding that the Department’s petition was premature and remand the case for further

proceedings not inconsistent with this opinion.

DEPARTMENT’S APPEAL:

The Department alleges that the trial court erred by sustaining the taxpayers’

Dilatory Exception of Prematurity and dismissing its petition. We agree.

The issue before us is a question of law which seeks the correct interpretation

of La.R.S. 47:1561 and its relation to La.R.S. 47:15(12) and (14) of the Taxpayer’s

Bill of Rights.

Louisiana Revised Statute 47:1561 states:

In addition to following any of the special remedies provided in
the various chapters of this subtitle, the collector may, in his discretion,
proceed to enforce the collection of any taxes due under this subtitle by
means of any of the following alternative remedies or procedures:

(1) Assessment and distraint, as provided in R.S. 47:1562 through
47:1573.

(2) Summary court proceeding, as provided in R.S. 47:1574.

(3) Ordinary suit under the provisions of the general laws
regulating actions for the enforcement of obligations.

The collector may choose which of these procedures he will
pursue in each case, and the counter-remedies and delays to which the
taxpayer will be entitled will be only those which are not inconsistent
with the proceed initiated by the collector, provided that in every case
the taxpayer shall be entitled to proceeding under R.S. 47:1576 except

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(a) after he has filed a petition with the board of tax appeals for a
redetermination of the assessment, or (b) when an assessment for the tax
in question has become final or (c)when a suit involving the same tax
obligation is pending against him; and provided further, that the fact that
the collector has initiated proceedings under the assessment and distraint
procedure will not preclude him from thereafter proceeding by summary
or ordinary court proceedings for the enforcement of the same tax
obligation.(Emphasis added.)

La.R.S. 47:15, in pertinent part, states:

There is hereby established a Taxpayer’s Bill of Rights to
guarantee that the rights, privacy, and property of Louisiana taxpayers
are safeguarded and protected during tax assessment, collection, and
enforcement processes administered under the tax laws of this state. This
Taxpayer’s Bill of Rights consists of a statement, in nontechnical terms,
of the rights and obligations of the Department of Revenue and
taxpayers. The rights afforded taxpayers to assure that their privacy and
property are safeguarded and protected during tax assessment and
collection are available only insofar as they are implemented in
accordance with the Constitution of Louisiana and Louisiana Revised
Statutes of 1950 or the administrative rules of the Department of
Revenue. The rights assured Louisiana taxpayers are:
...
(12) The right to request that any assessment of taxes due,
including penalty and interest, be reviewed at the management level of
the Department of Revenue in accordance with R.S. 47:1563.
...
(14) the right to hearing in order to dispute an assessment of
taxes, interest, and penalties by timely filing an appeal with the Board
of Tax Appeals in accordance with R.S. 47:1414, 1431, and 1481. A
taxpayer shall not be required to pay the disputed tax, interest, and
penalties in order to exercise this right.
...
(Emphasis added.)

Absent clear evidence of a legislative intent to the contrary, a statute should

first be interpreted according to its plain language. Cleco Evangeline, L.L.C. v. La.

Tax Comm’n, 01-2162 (La. 4/3/02), 813 So.2d 351. “When a law is clear and

unambiguous and its application does not lead to absurd consequences, the law shall

be applied as written and no further interpretation may be made in search of the intent

of the legislature.” La.Civ.Code. art. 9. This principle of statutory interpretation

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applies to tax statutes. Tarver v. E.I. Du Pont De Nemours and Co., 93-1005 (La.

3/24/94), 634 So.2d 356.

In interpreting the language of La.R.S. 47:1561 it is clear to this court that the

collector of taxes, has the discretion to file an ordinary suit to collect taxes as was

done in the case before us. It is only if the collector chooses to make a tax assessment

that the rights numbered (12) and (14) in the Taxpayer’s Bill of Rights can be

asserted. Here, no such assessment was made; therefore, the rights cited by the

taxpayers cannot be invoked by them.

The First Circuit Court of Appeal has addressed a similar issue in the case of

Bridges v. Smith, 01-2166 (La.App 1 Cir. 9/27/02), 832 So.2d 307, writ denied, 02-

2951 (La. 2/14/03), 836 So.2d 121. The Smith court looked to legislative history and

found that La.R.S. 47:15 was not enacted with the intention to create any new rights

or change the existing laws. Rather, the Taxpayer’s Bill of Rights was an attempt to

codify all rights a taxpayer had under Louisiana Law in one place.

We agree with the First Circuit’s assessment of the Taxpayer’s Bill of Rights.

It does not create any new rights and does not conflict with or add to the existing

rights in the tax assessment and collection procedure found at La.R.S. 47:1561, et.

seq.

Accordingly, we find that the trial court erred in sustaining the taxpayers’

Dilatory Exception of Prematurity and erred in dismissing the Department of

Revenue’s petition. As such, we reverse the trial court’s ruling and remand the case

for further proceedings.

TAXPAYERS’ APPEAL:

The taxpayers have also appealed from a ruling made by the trial court. The

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taxpayers contend that the trial court erred in overruling their Dilatory Exception of

Vagueness. We disagree.

This court recently addressed the Dilatory Exception of Vagueness in Smart

v. Gold, Weems, Bruser, Sues & Rundell, 06-1414, p. 5 (La.App. 3 Cir. 4/4/07), 955

So.2d 263, 267:

The purpose of the dilatory exception of vagueness, which is
provided for by La.Code Civ.P. art. 926, is to place a defendant on
notice of the nature of the facts sought to be established and, thus,
enable him or her to identify the cause of action and prevent its future
re-litigation after a judgment is obtained. Snoddy v. City of Marksville,
97-327 (La.App. 3 Cir. 10/8/97), 702 So.2d 890. See also Thomas v.
Sonic, 06-0014 (La.App. 1 Cir. 11/3/06), 950 So.2d 822. However, the
exception does not permit the defendant to demand exactitude and detail
beyond what is necessary for the above purposes. Snoddy, 702 So.2d
890. An exception of vagueness will be denied if the petition fairly
informs the defendants of the nature of the cause of action and includes
sufficient particulars for the defendant to be able to prepare his or her
defense. Id.

The Department’s petition clearly meets the requirements to overcome an

exception of vagueness. The petition to collect taxes filed by the Department states

the cause of action (to collect unpaid Louisiana income taxes), from which tax years

(1997-1998), why those taxes are sought (taxpayers filed Louisiana Non-Resident tax

returns rather than Louisiana Resident tax returns), on what basis those taxes are

sought (an audit of the 1997-1998 years revealed to the Department that the taxpayers

were actually Louisiana residents under its tax laws), and, finally, how much was

being sought in unpaid taxes, plus interest and penalties ($254,245.00 in unpaid

taxes, $272,335.13 in interest, and $127,122.50 in penalties).

The taxpayers contend that a petition must plead facts which at least suggest

that the suit was brought within the time provided by law. This contention lacks merit

as there is no such legal requirement. The petition filed by the Department states the

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years for which it is seeking that Louisiana resident taxes be paid by the taxpayers.

This places the taxpayers on notice of the contested time frame and allows them to

assert or plead prescription if they feel it is warranted. The law does not require that

the petition filed by a plaintiff negate the affirmative defense of prescription. Nor is

the question of whether a suit is brought timely properly addressed with an exception

of vagueness. Accordingly, we affirm the trial court’s overruling of the taxpayers’

exception of vagueness.

CONCLUSION:

The Department raised one assignment of error, contending that the trial court

erred in granting the taxpayers’ Dilatory Exception of Prematurity and dismissing its

petition. We reverse the trial court’s finding and remand the case for further

proceedings not inconsistent with this opinion. The taxpayers also raised one

assignment of error, contending that the trial court erred in overruling their exception

of vagueness. We affirm the trial court’s ruling on this issue. All costs of this appeal

are to be paid by the taxpayers.

REVERSED IN PART, AFFIRMED IN PART, REMANDED.

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