Nelson Industrial Steam Co. v. Calcasieu Parish School System Sales and Use Tax Dept

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

17-981

CYNTHIA BRIDGES, SECRETARY, DEPARTMENT OF REVENUE,
STATE OF LOUISIANA

VERSUS

NELSON INDUSTRIAL STEAM COMPANY

CONSOLIDATED WITH

17-982

CYNTHIA BRIDGES, SECRETARY, DEPARTMENT OF REVENUE,
STATE OF LOUISIANA

VERSUS

NELSON INDUSTRIAL STEAM COMPANY

CONSOLIDATED WITH

17-983

NELSON INDUSTRIAL STEAM COMPANY

VERSUS

CALCASIEU PARISH SCHOOL BOARD SALES AND
USE TAX DEPARTMENT, ET AL.

CONSOLIDATED WITH

17-984

NELSON INDUSTRIAL STEAM COMPANY

VERSUS

CALCASIEU PARISH SCHOOL BOARD SALES AND
USE TAX DEPARTMENT, ET AL.

**********

APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU,
CONSOLIDATED CASE NOS.
2008-6375, 2010-5853; 2010-3564, AND 2013-2661
HONORABLE RONALD F. WARE, DISTRICT JUDGE

**********

PHYLLIS M. KEATY
JUDGE

**********

Court composed of Shannon J. Gremillion, Phyllis M. Keaty, and D. Kent Savoie,
Judges.

AFFIRMED.

Linda S. Akchin
Angela W. Adolph
Jason R. Brown
Kean Miller LLP
400 Convention Street, Suite 700
Baton Rouge, Louisiana 70802
(225) 387-0999
Counsel for Defendant/Appellant:
Nelson Industrial Steam Company

H. Alan McCall
Stockwell, Sievert, Viccellio, Clements & Shaddock
Post Office Box 2900
Lake Charles, Louisiana 70602-2900
(337) 436-9491
Counsel for Defendant/Appellant:
Nelson Industrial Steam Company

Russell J. Stutes, Jr.
Stutes & Lavergne, LLC
600 Broad Street
Lake Charles, Louisiana 70601
(337) 433-0022
Counsel for Defendant/Appellee:
Calcasieu Parish School System Sales and Use Tax Department

KEATY, Judge.

The taxpayer, Nelson Industrial Steam Company (NISCO), appeals a

judgment rendered in its favor in these consolidated tax cases, granting its

exceptions of lack of subject matter jurisdiction and improper cumulation to an

Amended Answer and Reconventional Demand (AA&RD) filed by the Calcasieu

Parish School System Sales and Use Tax Department (CPSS), and dismissing the

foregoing pleading without prejudice. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

This matter involves four consolidated tax cases. Two are suits by Cynthia

Bridges, Secretary, Louisiana Department of Revenue, State of Louisiana (LDR)

against NISCO to collect taxes and two are suits by NISCO against CPSS for the

refund of taxes paid under protest. NISCO is in the business of generating electric

power in Lake Charles, Louisiana. NISCO sells steam, electricity and ash.

Limestone is bought and used for the dual purpose of inhibiting sulfur in the

production of electricity and producing ash. NISCO contends that its purchase of

limestone, with respect to its production of ash, is subject to the “further processing

exclusion” of La.R.S. 47:301(10)(c)(i)(aa), which narrows the scope of taxable

sales.

These cases have been before this court twice before. In Bridges v. Nelson

Industrial Steam Co., 14-1250, pp. 2-3 (La.App. 3 Cir. 6/24/15), 169 So.3d 711,

713, we stated:

The trial court initially heard cross-motions for summary
judgment on the further processing issue and granted summary
judgments in favor of the State and the Parish in the first three suits.
On appeal, this court affirmed. Bridges v. Nelson Industrial Steam
Co., 12-477 (La.App. 3 Cir. 11/7/12), 106 So.3d 147. The Louisiana
Supreme Court granted NISCO’s writ application and vacated the
summary judgment rulings, finding that genuine issues of material
fact precluded summary judgment. Bridges v. Nelson Industrial
Steam Co., 13-171 (La.3/8/13), 108 So.3d 1168. On remand,

following a trial on the merits which included the fourth suit, the trial
court rendered judgments again in favor of the State and the Parish,
signing four separate judgments, one for each of the consolidated
cases.

This court affirmed the trial court’s rulings. Id. Upon NISCO’s application for

writ of certiorari, the supreme court granted writs, reversed, and remanded “to the

trial court to fix the amount of the judgment in a manner consistent with [its]

opinion.” Bridges v. Nelson Indus. Steam Co., 15-1439, p. 17 (La. 5/3/16), 190

So.3d 276, 287. Thereafter, NISCO submitted proposed judgment to LDR and

CPSS; however, when the parties were unable to agree on who would pay costs,

NISCO filed a Motion for Entry of Judgment and Rule for Taxation for costs,

which LDR opposed. Following a December 12, 2016 contradictory hearing,

NISCO circulated judgments to the parties for signature, and the trial court signed

a Judgment After Remand on January 11, 2017.

In the interim, CPSS filed an ex-parte Motion and Order for Leave to File

Amended Answer and Reconventional Demand on December 29, 2016, which the

trial court signed. Soon after it was served with that pleading, NISCO filed

declinatory exceptions of lack of subject matter jurisdiction and insufficiency of

citation and service of process; a dilatory exception of improper cumulation; a

motion to vacate the order granting CPSS leave to file the AA&RD; and a motion

to strike the AA&RD. CPSS opposed the exceptions and motions. The exceptions

and motions came before the trial court for contradictory hearing in March 2017.

After hearing argument from counsel, the trial court ruled that it would “dismiss

the reconventional demand without prejudice.” CPSS then filed a separate suit

against NISCO in the Fourteenth Judicial District Court asserting facts identical to

2

those contained in the AA&RD, which, it concedes, was improperly filed in this

matter.1

The parties appeared before the trial court again in June 2017 for a hearing

on a Motion for Entry of Judgment filed by NISCO after they were unable to agree

on the wording for the judgment granting NISCO’s exceptions and motions. While

there were initially three issues in dispute, the parties worked out two of those

issues before the hearing began. After listening to argument from counsel, the trial

court chose the exact wording it wanted in the judgment, which it ordered counsel

for CPSS to prepare for signature. The resulting judgment was signed on June 29,

2017.2 NISCO now appeals, asserting that:

1. The district court erred in not granting NISCO’s Motion to Vacate
the Ex Parte Order granting leave to file CPSS’s “Amended Answer
and Reconventional Demand” and not striking the “Amended Answer
and Reconventional Demand” from the record.

2. The district court erred in including incorrect and misleading
language in the judgment indicating that it was granting NISCO’s
exception of lack of jurisdiction over the principle actions in the
captioned matter, when the basis of NISCO’s exception, and the
court’s ruling in open court, was that the court lacked subject matter
jurisdiction over CPSS’s reconventional demand.

DISCUSSION

Appellate courts review questions of law de novo, determining whether the

trial court’s ruling was correct. Gladney v. Anglo-Dutch Energy, L.L.C., 16-468

(La.App. 3 Cir. 12/21/16), 210 So.3d 903, writ denied, 17-365 (La. 4/13/17), 218

So.3d 120.

1
Coincidentally, that matter was randomly allotted to the trial judge who presided over
this suit.
2
We note that the judgment did not state the year in which it was signed.
3

Louisiana Code of Civil Procedure Article 1031, titled “Incidental demands

allowed,” provides in pertinent part: “A. A demand incidental to the principal

demand may be instituted against an adverse party.”

In its exceptions to the AA&RD filed by CCPS’s, NISCO asserted:

1.

Pursuant to La. C.C.P. art. 925(A)(6), NISCO raises the
declinatory exception of lack of subject matter jurisdiction, on the
ground that this court was divested of jurisdiction by entry of orders
of suspensive appeal on June 30, 2014.

2.

The remedy for granting of the declinatory exception of lack of
subject matter jurisdiction is dismissal. See La. C.C.P. art. 932(B).[3]
The School Board must file the claims asserted in its “Reconventional
Demand” as an Original Petition, and submit said Original Petition to
the Clerk of Court for random allotment.

....

5.

Pursuant to La. C.C.P. art. 926(A)(7), NISCO raises the dilatory
exception of improper cumulation, on grounds that the Court lacks
subject matter jurisdiction over the “Reconventional Demand”
because it has been divested of jurisdiction over the principle actions.
See La. C.C.P. art. 462. Pursuant to La. C.C.P. art. 464,[ 4 ] the
appropriate remedy for granting of this exception is dismissal of the
“Reconventional Demand.”

In the prayer for relief contained in its exceptions, NISCO asked that CPSS’s

AA&RD be “dismissed for lack of subject matter jurisdiction.” Alternatively,

NISCO asked the trial court to vacate its order granting CPSS leave to file the

AA&RD, to strike the AA&RD from the record, and to dismiss the claims asserted

in the AA&RD.

3
“If the grounds of the objection cannot be so removed, or if the plaintiff fails to comply
with an order requiring such removal, the action, claim, demand, issue, or theory subject to the
exception shall be dismissed. . . .” La.Code Civ.P. art 932(B).
4
“When the court lacks jurisdiction of, or when the venue is improper as to, one of the
actions cumulated, that action shall be dismissed.” La.Code Civ.P. art. 464.
4

At the March 2017 hearing, after hearing argument from counsel in support

of and in opposition to NISCO’s exceptions and motions, the trial court remarked:

Okay. I find that the remand to this Court was very specific
and limited, and the Court has complied with what it was remanded --
what the remand required and ordered. And I think this is a brand
new action under new laws, new facts, new tax years and there is a
concern for judicial economy. I certainly understand that. Unless or
if the case is re-filed as an ordinary proceeding after today and then
randomly allotted and comes to me, then that’s one thing. But if it
goes to someone else then there is an argument for judicial economy,
but I don’t think that trumps this Court’s finding that the case that we
tried is over. And it was over prior to the supplemental answer and
reconventional demand. The case had been tried and all of the issues
were -- were litigated and decided and concluded, and that concluded
the case. So there was nothing to attach or reconvene with respect to
a principle demand because the principle demand had been resolved.
I think this reconventional demand and the answer in reconventional
demand is an improper accumulation[sic]. I guess the [La.Code Civ.P.
art.] 1155 argument that it required a contradictory hearing is now
moot because we are here contradictorily. I think there has to be
allotment of the new pleading.

As mentioned previously, the parties failed to come to an agreement

regarding the language that should be contained in the judgment to reflect the

rulings the trial court made at the March 2017 hearing. NISCO circulated a

proposed judgment that provided in relevant part: “Accordingly, IT IS HEREBY

ORDERED, ADJUDGED AND DECREED that NISCO’s Declinatory Exception

of Lack of Subject Matter Jurisdiction is GRANTED.” CPSS, on the other hand,

preferred that this portion of the judgment state: “Accordingly, IT IS HEREBY

ORDERED, ADJUDGED AND DECREED that NISCO’s Declinatory Exception

of Lack of Subject Matter Jurisdiction over the above-captioned consolidated

matters is GRANTED.”

In the argument presented at the June 2017 hearing concerning the wording

of the judgment, counsel for both parties quite candidly admitted that their

concerns about the wording of the judgment stemmed from their anticipation that

5

NISCO would later assert that the claims brought by CPSS in its AA&RD are

prescribed. After hearing what essentially amounted to a rehashing of the merits of

NISCO’s exceptions, the trial court stated:

I’m going to keep that language in there. Because at that time I
did lack subject matter jurisdiction over the captioned matters, except
to the extent that I had to comply with the remand. And I couldn’t do
anything else. And that’s consistent with what I did then. I set aside
the reconventional demand because I was without authority to act as it
applied -- as it was attempted -- as the filing was a reconventional
filing.

The judgment that was ultimately signed and which NISCO now appeals reads:

[T]he Court finds as follows:

The Court’s subject matter jurisdiction in the above
captioned consolidated natters is limited by the Supreme
Court’s order of May 3, 2016, in Bridges v. Nelson Indus.
Steam Co., 2015-1439 (La. 5/3/16), 190 So.3d 276,
providing: “We remand this matter to the trial court to
fix the amount of the judgment in a manner consistent
with this opinion,” and the Court has complied with that
mandate.

Because the above captioned consolidated matters were
fully adjudicated to the merits, CPSS’s “Answer and
Reconventional Demand” has no pending Petition to
respond to or reconvene against.

CPSS’s “Amended Answer and Reconventional
Demand” is a new action improperly cumulated with the
above-referenced actions;

CPSS’s “Reconventional Demand” for collection of tax
for the period from January 1, 2013 through December
31, 2015 must be dismissed, without prejudice, re-filed as
a new action and randomly allotted.

Accordingly, IT IS HEREBY ORDERED, ADJUDGED AND
DECREED that NISCO’s Declinatory Exception of Lack of Subject
Matter Jurisdiction over the above captioned consolidated matters is
GRANTED;

IT IS FURTHER ORDERED, ADJUDGED AND DECREED
that NISCO’s Dilatory Exception of Improper Cumulation is
GRANTED;

6

IT IS FURTHER ORDERED, ADJUDGED AND DECREED
that CPSS’s pleading entitled “Amended Answer and Reconventional
Demand” BE AND IS HEREBY DISMISSED WITHOUT
PREJUDICE;

IT IS FURTHER ORDERED, ADJUDGED AND DECREED
that in light of the foregoing orders, NISCO’s Declinatory Exception
of Insufficiency of Citation and Service of Process, NISCO’s
Exception of Improper Use of Incidental Action, NISCO’s Motion to
Vacate Order Granting CPSS Leave to file “Amended Answer and
Reconventional Demand” and NISCO’s Motion to Strike CPSS’s
“Amended Answer and Reconventional Demand[”] are mooted.

On appeal, NISCO insists that the judgment’s inclusion of the phrase “over

the above captioned consolidated matters” amounts to a “gross mischaracterization

of its declinatory exception.” It admits that the trial court obviously had

jurisdiction of the consolidated matters and that it filed its exception of lack of

subject matter jurisdiction “in response to and aimed at the reconventional

demand” filed by CPSS.

NISCO’s Motion to Vacate the Ex Parte Order granting leave to file CPSS’s
“Amended Answer and Reconventional Demand”

In its first assigned error, NISCO asserts error in the trial court’s failure to

grant its Motion to Vacate the Ex Parte Order granting CPSS leave to file its

AA&RD and its failure to strike the AA&RD from the record.

We have performed a de novo review of the record in this matter. The

primary relief sought in its exceptions and motions was to have the trial court

dismiss CPSS’s AA&RD. That ruling was in conformity with the dictates of

La.Code Civ.P. art 932(B). Upon its dismissal of the AA&RD, the trial court did

not have to rule on NISCO’s Motion to Vacate its order granting CPSS’s motion to

file that pleading. We conclude that under the circumstances, NISCO was not

entitled to a judgment vacating the order granting CPSS leave to file its AA&RD.

NISCO’s first assignment of error lacks merit.

7

The Language of the Judgment

In its second assigned error, NISCO asserts that the trial court “erred in

including incorrect and misleading language in the judgment.” NISCO submits

that the basis of its exception was that the trial court lacked subject matter

jurisdiction over CPSS’s reconventional demand. According to NISCO, the trial

court agreed at the March 2017 hearing that it lacked subject matter jurisdiction

over CPSS’s reconventional demand; however, the judgment that the trial court

signed wrongly indicated “that it was granting NISCO’s exception of lack of

jurisdiction over the principle actions in the captioned matter.” In its appellant

brief, NISCO admits that the judgment “correctly states” that CPSS’s AA&RD is

dismissed without prejudice. It further asserts therein that “[t]he effect of a

dismissal without prejudice is as if the action were never filed, thus preserving for

NISCO[] any prescription defense available to it in the subsequent re-filing of the

action.”

In the exceptions and motions that NISCO filed in response to CPSS’s

AA&RD, it asserted that the trial court was divested of jurisdiction when it signed

an order on June 30, 2014, allowing NISCO to suspensively appeal the final

judgments rendered in these consolidated cases on June 2, 2014. Thereafter, citing

La.Code Civ.P. art. 932(B), NISCO correctly stated that “[t]he remedy for granting

of the declinatory exception of lack of subject matter jurisdiction is dismissal.” As

we stated in response to NISCO’s first assigned error, the trial court found merit to

NISCO’s arguments and it dismissed CPSS’s AA&RD. Again, NISCO received

the relief it sought in the trial court. Moreover, we conclude that dismissal of

CCSS’s AA&RD was the relief to which NISCO was entitled under the Louisiana

Code of Civil Procedure. There is no merit to NISCO’s second assignment of error.

8

DECREE

For the foregoing reasons, the judgment rendered in favor of Nelson

Industrial Steam Company, granting its exceptions of lack of subject matter

jurisdiction and improper cumulation to the Amended Answer and Reconventional

Demand filed by the Calcasieu Parish School System Sales and Use Tax

Department and dismissing the foregoing pleading without prejudice is affirmed.

All costs of this appeal are assessed against Nelson Industrial Steam Company.

AFFIRMED.

9