D90 Energy, LLC v. Jefferson Davis Parish Board of Review

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

19-243 c/w 19-244 c/w 19-245

D90 ENERGY, LLC

VERSUS

JEFFERSON DAVIS PARISH BOARD OF REVIEW

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APPEAL FROM
THIRTY-FIRST JUDICIAL DISTRICT COURT,
PARISH OF JEFFERSON DAVIS, NO. C-1-16; C-619-16; C-181-17
HONORABLE STEVE GUNNELL, DISTRICT JUDGE

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SYLVIA R. COOKS
JUDGE
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Court composed of Sylvia R. Cooks, Billy H. Ezell, and John E. Conery, Judges.

REVERSED, JUDGMENT VACATED;
JEFFERSON DAVIS BOARD OF REVIEW
DECISION REINSTATED.

Brian A. Eddington
3060 Valley Creek Drive, Suite A
Baton Rouge, LA 70808
(225) 924-4066
Attorney for Appellant, Donald Kratzer,
Jefferson Davis Parish Assessor

Phyllis D. Sims
Linda S. Akehin
Angela Adolph
Kean Miller LLP
400 Convention Street, Suite 700
Baton Rouge, LA 70802
(225) 387-0999
Attorneys for Appellee, D90 Energy, LLC

Terrence D. McCay
Kean Miller LLP
One Lakeshore Drive, Suite 1150
Lake Charles, LA 70629

(337) 430-0350
Kyle P. Polozola
Kean Miller LLP
2020 W. Pinhook Road, Suite 303
Lafayette, LA 70508
(337) 235-2232
Attorney for Appellee, D90 Energy, LLC

COOKS, Judge.

FACTS AND PROCEDURAL HISTORY

D90 Energy, LLC (D90) acquired three oil wells and one saltwater disposal

well in Jefferson Davis Parish in October 2012. D90’s tax representative, Cochran

& Company (Cochran), submitted a letter to Jefferson Davis Tax Assessor, Donald

Kratzer (Kratzer), in March of 2013, with a copy of a document identified as an

“Assignment, Conveyance and Bill of Sale” (Bill of Sale) along with a copy of a

cancelled check in the amount of $100,000. On the basis of these documents

Cochran asserted its client D90 had purchased the three wells in Jefferson Davis

Parish from Goldking Resources for the sum of $100,000, despite the written

representation in the Bill of Sale that the wells were purchased “for and in

consideration of Ten and No/100 ($10) and other good and valuable consideration.”

No other documentation was provided to Kratzer by D90 or anyone on its behalf.

Based on its letter and attached documentation, Cochran asserted D90’s wells should

be valued by Kratzer at $100,000 for tax assessment purposes. D90 submitted these

same documents for subsequent tax years including 2014 and 2015, asserting each

time these wells should be valued at $100,000 for tax assessment purposes. For tax

year 2016, D90 informed Kratzer that the wells were all shut in but provided no

supporting documentation. Based upon that representation D90 asserted the

property should now be valued at $10,000. Kratzer found public information from

the State of Louisiana indicating the wells were shut in as of June 2, 2017.

Kratzer did not consider the information submitted by D90 sufficient to make

a determination of the value for assessing ad valorem property taxes on these wells.

Additionally, Kratzer did not use D90’s suggested sales price valuation approach as

the sole method to establish fair market value, but, instead, used valuation tables

promulgated by the Louisiana Tax Commission (Commission) which resulted in a

valuation of $3,347,240 for tax year 2013 and $3,347,240 for tax year 2014. The

method used for valuation was based on the “age of the well; the depth of the well;

the type of well; and the production.” The Jefferson Davis Parish Board of Review

(the Board) determined the values to be the same as those of Assessor Kratzer. D90

appealed that decision to the Louisiana Tax Commission (Commission). The

Commission’s Assistant Director, Celeste Moss, calculated the value for tax year

2013 at $3,344,584, according to her application of the Commission’s Rules and

Regulations. The Commission, using documentary evidence and testimony

presented at the hearing before it, determined that the correct fair market value of

the property for 2013 and 2014 was $235,000. The Commission arrived at this

valuation accepting D90’s evidence of a purchase price of $100,000 and D90’s

evidence submitted to the Commission that it had a plug-and-abandon liability cost

of $135,000 for each of the three wells. Assessor Kratzer, having been provided the

same information by D90 for tax year 2015 as for the previous years assessed the

wells at $3,140,372 for tax year 2015. D90 suggested to Kratzer that the actual

value, based on the alleged sale price, should be $100,000. The Board upheld the

assessor’s valuation. The Commission set a fair market value for tax year 2015 at

the same $235,000 as for the previous tax years on the same basis. For tax year

2016, Kratzer valued the property at $1,821,213. D90 maintained the value for tax

year 2016 should be lowered to $10,000 based on its assertion that the wells were

shut in as of December 2016. The Board again upheld Kratzer’s valuation. The

Commission set the fair market value for tax year 2016 at $145,000.

D90 paid its tax obligation for 2013 and 2014 under protest but it did not pay

any tax, under protest or otherwise, for tax years 2015 and 2016. D90 objected to

all four years of assessments and filed protests with the Jefferson Davis Board of

Review. The Board denied all of D90’s protests and upheld Kratzer’s assessments

for 2013, 2014, 2015 and 2016. D90 appealed those rulings to the Louisiana Tax

Commission. Kratzer filed exceptions challenging D90’s right to attack the

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assessments for 2015 and 2016 because D90 had not paid those taxes under protest

or otherwise.

At the hearing before the Tax Commission D90 introduced new evidence and

testimony in addition to the documents it originally provided to Kratzer. As to the

information regarding each tax year submitted to the Commission in support of

D90’s position it is admitted that all such information regarding a given tax year was

available to D90 at the time it or its agent submitted the original limited information

to Kratzer. The Commission rendered a decision in which it determined the fair

market value of the wells as recited above. It did not rule on Kratzer’s exceptions

concerning tax years 2015 and 2016, stating:

The Commission rules allow for properly documented sales to be
considered by the Assessor as evidence of Fair Market Value. Based
on testimony and the evidence provided at [sic] hearing, we find the
Fair Market Value of the wells in questions [sic] to be $100,000, plus
the cost of plugging and abandonment. The Taxpayer stated that the
prior owner was beginning the process to plug and abandon and,
therefore, discounted the wells by an equal amount, which was reflected
in the sales price.

Therefore, the total Fair Market Value for each of years 2013 and 2014
of the wells in question should be $235,000 considering the $100,000
purchase price and the plug and abandon liability cost of $135,000 for
the three wells.

Despite D90’s admission at the hearing that it had not paid any amount of its

2015 or 2016 tax obligation, the Commission reached the same decision regarding

tax years 2015 and 2016 without mentioning Kratzer’s exceptions. Kratzer appealed

the Commission’s rulings to the district court. The cases were consolidated and after

a hearing on the consolidated matters the district court affirmed the Commission’s

rulings and ordered all taxes paid under protest be refunded to D90. The trial court

stated its reasons for ruling orally:

I have to look at it from the viewpoint that the tax commissioners
listened to the testimony. It viewed the witnesses. I do that all the time.
It goes up on appeal, okay. The one thing I don’t want the Court of
Appeals to do is to put themselves as a fact finder instead of myself.
And I’m not going to do that. The tax commissioner [sic] I don’t see

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abused the discretion because there was—there was evidence presented
at the hearing in front of them to justify their decision, all right.

Kratzer appeals the judgment of the district court asserting five assignments

of error:

1. The District Court applied an incorrect standard of review;

2. The District Court erred in failing to review the correctness of
Assessor Kratzer’s assessment and whether Assessor Kratzer’s
determination that D90 failed to submit adequate documentation of
sales price constituted an abuse of discretion;

3. The District Court erred in failing to recognize that valuation of the
wells owned by D90 based on a purported sales price violated the
uniformity requirements of Art. VII, §18 of the Louisiana
Constitution;

4. The District Court erred when it failed to dismiss D90’s protests for
tax years 2015 and 2016 for failure to pay the taxes due for those
years;

5. The District Court erred in affirming and upholding he Tax
Commission’s determination of value.

LEGAL ANALYSIS

Under the Louisiana State Constitution, Article VII, §181, the Parish Tax

Assessor is given the exclusive right to determine the fair market value of property

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Section 18. (A) Assessments. Property subject to ad valorem taxation shall
be listed on the assessment rolls at its assessed valuation, which, except as provided
in Paragraphs (C), (F), and (G), shall be a percentage of its fair market value. The
percentage of fair market value shall be uniform throughout the state upon the same
class of property.

(B) Classification. The classifications of property subject to ad valorem
taxation and the percentage of fair market value applicable to each classification
for the purpose of determining assessed valuation are as follows:

Classifications

Percentages

1. Land 10%

2. Improvements for residential purposes 10%

3. Electric cooperative properties, excluding land 15%

4. Public service properties, excluding land 25%

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subject to ad valorem taxation within its jurisdiction. Fair market value is defined

in La.R.S. 47:2321 as follows:

Fair market value is the price for property which would be agreed
upon between a willing and informed buyer and a willing and informed
seller under usual and ordinary circumstances; it shall be the highest
price estimated in terms of money which property will bring if exposed
for sale on the open market with reasonable time allowed to find a
purchaser who is buying with knowledge of all the uses and purposes
to which the property is best adapted and for which it can be legally
used.

The criteria for determining Fair Market Value is provided in La.R.S. 47:2323

(footnote omitted):

A. The criteria for determining fair market value shall apply uniformly
throughout the state. Uniform guidelines, procedures and rules and
regulations as are necessary to implement said criteria shall be
adopted by the Louisiana Tax Commission only after public
hearings held pursuant to the Administrative Procedure Act.

B. Each assessor shall follow the uniform guidelines, procedures, and
rules and regulations in determining the fair market value of all
property subject to taxation within his respective parish or district.
Any manual or manuals used by an assessor shall be subject to
approval by the Louisiana Tax Commission or its successor agency.

5. Other property 15%

The legislature may enact laws defining electric cooperative properties and public
service properties.

(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.

(E) Review. The correctness of assessments by the assessor shall be subject to
review first by the parish governing authority, then by the Louisiana Tax
Commission or its successor, and finally by the courts, all in accordance with
procedures established by law.

La. Const. Art. VII, § 18 (1974) (emphasis added).

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C. Criteria.

The fair market value of real and personal property shall be determined
by the following generally recognized appraisal procedures: the market
approach, the cost approach, and/or the income approach.

(1) In utilizing the market approach, the assessor shall use an appraisal
technique in which the market value estimate is predicated upon
prices paid in actual market transactions and current listings.

(2) In utilizing the cost approach, the assessor shall use a method in
which the value of a property is derived by estimating the
replacement or reproduction cost of the improvements; deducting
therefrom the estimated depreciation; and then adding the market
value of the land, if any.

(3) In utilizing the income approach, the assessor shall use an appraisal
technique in which the anticipated net income is capitalized to
indicate the capital amount of the investment which produces the
net income.

Judicial review of administrative matters is set forth in the Administrative

Procedures Act, La.R.S. 49:964:

A. (1) Except as provided in R.S. 15:1171 through 1177, a person who is
aggrieved by a final decision or order in an adjudication proceeding is
entitled to judicial review under this Chapter whether or not he has
applied to the agency for rehearing, without limiting, however,
utilization of or the scope of judicial review available under other
means of review, redress, relief, or trial de novo provided by law. A
preliminary, procedural, or intermediate agency action or ruling is
immediately reviewable if review of the final agency decision would
not provide an adequate remedy and would inflict irreparable injury.

(2)(a) No agency or official thereof or other person acting on behalf of
an agency or official thereof shall be entitled to judicial review under
this Chapter.

(b) The provisions of Subparagraph (a) of this Paragraph shall not apply
to the Department of Children and Family Services or an official thereof
or other person acting on behalf of the department or official in appeals
brought pursuant to Children’s Code Article 616.1.1.

B. Proceedings for review may be instituted by filing a petition in the
district court of the parish in which the agency is located within thirty
days after the transmittal of notice of the final decision by the agency
or, if a rehearing is requested, within thirty days after the decision
thereon. Copies of the petition shall be served upon the agency and all
parties of record.

C. The filing of the petition does not itself stay enforcement of the agency
decision. The agency may grant, or the reviewing court may order, a

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stay ex parte upon appropriate terms, except as otherwise provided by
Title 37 of the Louisiana Revised Statutes of 1950, relative to
professions and occupations. The court may require that the stay be
granted in accordance with the local rules of the reviewing court
pertaining to injunctive relief and the issuance of temporary restraining
orders.

D. Within thirty days after the service of the petition, or within further time
allowed by the court, the agency shall transmit to the reviewing court
the original or a certified copy of the entire record of the proceeding
under review. By stipulation of all parties to the review proceedings,
the record may be shortened. A party unreasonably refusing to stipulate
to limit the record may be taxed by the court for the additional costs.
The court may require or permit subsequent corrections or additions to
the record.

E. If, before the date set for hearing, application is made to the court for
leave to present additional evidence, and it is shown to the satisfaction
of the court that the additional evidence is material and that there were
good reasons for failure to present it in the proceeding before the
agency, the court may order that the additional evidence be taken before
the agency upon conditions determined by the court. The agency may
modify its findings and decision by reason of the additional evidence
and shall file that evidence and any modifications, new findings, or
decisions with the reviewing court.

F. The review shall be conducted by the court without a jury and shall be
confined to the record. In cases of alleged irregularities in procedure
before the agency, not shown in the record, proof thereon may be taken
in the court. The court, upon request, shall hear oral argument and
receive written briefs.

G. The court may affirm the decision of the agency or remand the case for
further proceedings. The court may reverse or modify the decision if
substantial rights of the appellant have been prejudiced because the
administrative findings, inferences, conclusions, or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion; or

(6) Not supported and sustainable by a preponderance of evidence as
determined by the reviewing court. In the application of this rule, the
court shall make its own determination and conclusions of fact by a
preponderance of evidence based upon its own evaluation of the record
reviewed in its entirety upon judicial review. In the application of the

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rule, where the agency has the opportunity to judge the credibility of
witnesses by first-hand observation of demeanor on the witness stand
and the reviewing court does not, due regard shall be given to the
agency's determination of credibility issues.

Before we review the ruling of the district court in this matter, we first find

that both the Commission and the district court erred as a matter of law in failing to

grant Kratzer’s exception concerning the taxpayer’s right to proceed for tax years

2015 and 2016. Kratzer asserted below, and maintains here, that D90’s failure to

pay its taxes for 2015 and 2016, either under protest or otherwise, preclude it from

attacking those assessments. The district court was silent regarding Kratzer’s

exception and such silence leaves this court with the presumption that the exception

was overruled.

D90’s representative, Daniel Silverman, owner and president of the two-man

operation, testified at the Commission hearing regarding tax years 2015 and 2016:

Q. Did D90 pay the taxes on the wells it is contesting?

A. No, sir.

Q. You did not pay taxes?

A. No.

Q. Paid them under protest?

A. No.

Q. Just didn’t pay them at all?

A. No.

....

Q. Is it uneconomic for you to continue to make payments under protest
in connection with these wells?

A. Yes; and I understand the law says that you have to file your taxes
under protest, and we’ve reached the point, after putting over $110,000,
for a small company like ours, I simply cannot pay these taxes, and
continue to pay these taxes under protest, even though this Court—of
this Commission—has ruled in our favor two times.

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I’ve had no—I need relief; I cannot continue to pay these taxes
under protest; so, yes; I understand that the taxes were due under
protest; but we are unable to; it’s a burden that we cannot meet with
$110,000 of our money sitting with the Parish right now, even though
we’ve prevailed both times.

In Whitten Foundation v. Wilson, 04-2454 p. 4 (La.App. 1 Cir. 5/19/06), 938

So.2d 100, 102, writ denied, 06-1563 (La. 10/27/06), 939 So.2d 1278, the first

circuit held (emphasis added):

In Capital Drilling Company v. Graves, 496 So.2d 487, 491–92
(La.App. 1 Cir.1986), this Court construed LSA–R.S. 47:2110 and
47:2101A in pari materia and concluded that payment under protest
must be made in the calendar year in which the assessment is made
in order to preserve the right to litigate the validity of the tax. The
Capital Drilling case has been followed in this circuit by Comm–Care
Corporation v. Louisiana Tax Commission, 96–0039 (La.App. 1 Cir.
9/27/96), 681 So.2d 1001, aff’d on other grounds, 96–1711
(La.1/21/98), 706 So.2d 425 (on rehearing), and Louisiana Employers–
Managed Insurance Company v. Litchfield, 01–0123 (La.App. 1 Cir.
12/28/01), 805 So.2d 386.

The Louisiana State Supreme Court also held in Church Point Wholesale

Beverage Co. v. Tarver, 614 So.2d 697, 703–04 (La.1993) (footnote omitted):

The Payment under Protest Procedure provided in
LA.Rev.Stat. 47:1576 has not changed in substance since its origin. It
provides that if a taxpayer protests the payment of any tax or
enforcement of any tax law, he must pay the amount due and at that
time give notice of intention to file suit for recovery of the tax. The
amount paid is then placed in escrow for 30 days. If suit is filed within
that period, the funds will be further held pending outcome of the suit.
If suit is not timely filed, courts have held the taxpayer no longer has a
right to proceed in district court for the recovery of taxes. Bagneris v.
City of New Orleans, 130 So.2d 421, 424 (La.App. 4th Cir.1961).

In Capital Drilling, 496 So.2d at 492, the first circuit further explained (bold

emphasis added) (alterations in original) (footnote mitted):

The evident public policy behind Louisiana’s constitutional and
statutory scheme for the payment and collection of ad
valorem taxes contemplates timely payment, whether under protest or
not. Only timely payment preserves the right to litigate
the validity of the tax in court. Thus, if the plaintiff-appellant had
chosen to contest the correctness of the assessment pursuant to the
procedure required by La. Const. of 1974, art. VII, § 18(E), it,
nevertheless, would have been required to pay the taxes under protest.
La.R.S. 47:1998(A). To adopt the plaintiff-appellant’s argument would

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be to give litigants suing under La.R.S. 47:2110 a substantial advantage
over those pursuing a correctness claim under La.R.S. 47:1998.

Finally, La.R.S. 47:2110 specifically provides that any person
resisting the payment of a tax found due may reserve his right to
judicially litigate its validity by paying the amount found due.
Pursuant to La.R.S. 47:2101(A)(1) “taxes assessed in each year shall
be due in that calendar year....” [Emphasis added.] La. Const. of 1974,
art. VII, § 25(A) provides for the sale of property for taxes “at the
expiration of the year in which the taxes are due.” [Emphasis added.]
La.R.S. 47:2171 provides that the delinquency notice sent by the
assessor to the errant taxpayer shall set forth, in pertinent part, that
the taxes “fell due and should have been paid in full on or before
December 31.” [Emphasis added]. Ad valorem taxes are due during the
year in which they are assessed and are delinquent thereafter. La.R.S.
47:2110 provides for payment under protest of taxes that are due, not
those that are delinquent.

Louisiana Revised Statutes 47:2108., 2108.1 and 2110 were repealed in 2009

and replaced with La.R.S. 47:2132 and 21342. The comments to La.R.S. 47:2132

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A. No court of this state shall issue any process to restrain, or render any decision
that has the effect of impeding, the collection of an ad valorem tax imposed by
any political subdivision, under authority granted to it by the legislature or by
the constitution.

B. (1) A taxpayer challenging the correctness of an assessment under R.S.
47:1856, 1857, or 1998 shall timely pay the disputed amount of tax due under
protest to the officer or officers designated by law for the collection of this tax.
The portion of the taxes that is paid by the taxpayer to the collecting officer or
officers that is neither in dispute nor the subject of a suit contesting the
correctness of the assessment shall not be made subject to the protest. The
taxpayer shall submit separate payments for the disputed amount of tax due and
the amount that is not in dispute and not subject to the protest.

(2)(a) If at the time of the payment of the disputed taxes under protest the taxpayer
has previously filed a correctness challenge suit under the provisions of R.S.
47:1856, 1857, or 1998, such taxpayer shall give notice of the suit to the collecting
officer or officers in the parish or parishes in which the property is located. This
notice shall be sufficient to cause the collecting officer or officers to further hold
the amount paid under protest segregated pending the outcome of the suit.

(b) If at the time of the payment of the protested tax, a correctness challenge suit is
not already pending under the provisions of R.S. 47:1856, 1857, or 1998, then a
suit seeking recovery of the protested payment need not be filed until thirty days
from the date a final decision is rendered by the Louisiana Tax Commission under
either R.S. 47:1856, 1857, or 1998. The taxpayer making the payment under protest
under these circumstances must advise the collecting officer or officers in the parish
or parishes in which the property is located at the time of the protest payment that
the protest payment is in connection with a correctness challenge and must
promptly notify the collecting officer or officers when a final decision is rendered
by the Louisiana Tax Commission under either R.S. 47:1856, 1857, or 1998. The
collecting officer or officers shall continue to segregate and hold the protested
amount in escrow until a timely correctness challenge suit is filed.

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(c) If a suit is timely filed contesting the correctness of the assessment pursuant to
R.S. 47:1856, 1857, or 1998 and seeking the recovery of the tax paid under protest,
then that portion of the taxes paid that are in dispute shall be deemed as paid under
protest, and that amount shall be segregated and shall be further held pending the
outcome of the suit.

(3) In a correctness challenge suit under either R.S. 47:1856, 1857, or 1998 the
officer or officers designated for the collection of taxes in the parish or parishes in
which the property is located, the assessor or assessors for the parish or district, or
parishes or districts, in which the property is located, and the Louisiana Tax
Commission shall be the sole necessary and proper party defendants in any such
suit.

(4) If the taxpayer prevails, the collecting officer or officers shall refund the amount
to the taxpayer with interest at the actual rate earned on the money paid under
protest in the escrow account during the period from the date such funds were
received by the collecting officer or officers to the date of the refund. If the taxpayer
does not prevail, the taxpayer shall be liable for the additional taxes together with
interest at the rate set forth above during the period from the date the notice of
intention to file suit for recovery of taxes was given to the officer until the date the
taxes are paid.

C. (1) A person resisting the payment of an amount of ad valorem tax due or the
enforcement of a provision of the ad valorem tax law and thereby intending to
maintain a legality challenge shall timely pay the disputed amount due under
protest to the officer or officers designated by law for the collection of the tax
and shall give such officer or officers, notice at the time of payment of his
intention to file suit for the recovery of the protested tax. The portion of the
taxes that is paid by the taxpayer to the collecting officer or officers that is
neither in dispute nor the subject of a suit contesting the legality of the
assessment shall not be made subject to the protest. The taxpayer shall submit
separate payments for the disputed amount of tax due and the amount that is not
in dispute and not subject to the protest. Upon receipt of a notice, the protested
amount shall be segregated and held by the collecting officer for a period of
thirty days.

(2) A legality challenge suit must be filed within thirty days from the date of the
protested payment. If a suit is timely filed contesting the legality of the tax or the
enforcement of a provision of the tax law and seeking recovery of the tax, then that
portion of the taxes paid that are in dispute shall be further deemed as paid under
protest, and that amount shall be segregated and shall be further held pending the
outcome of the suit. The portion of the taxes that is paid by the taxpayer to the
collecting officer or officers that is neither in dispute nor the subject of a suit
contesting the legality of the tax shall not be made subject to the protest.

(3) In any such legality challenge suit, service of process upon the officer or officers
responsible for collecting the tax, the assessor or assessors for the parish or district,
or parishes or districts in which the property is located, and the Louisiana Tax
Commission shall be sufficient service, and these parties shall be the sole necessary
and proper party defendants in any such suit.

(4) If the taxpayer prevails, the collecting officer or officers shall refund such
amount to the taxpayer with interest at the actual rate earned on the money paid
under protest in the escrow account during the period from the date such funds were
received by the collecting officer or officers to the date of the refund. If the taxpayer
does not prevail, the taxpayer shall be liable for the additional taxes together with
interest at the rate set forth above during the period from the date the notice of
intention to file suit for recovery of taxes was given to the officer until the date the
taxes are paid.

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and 2134 state that these statutes are “not intended to change the law.” See,

Comments to La.R.S. 47:2132 and 2134.

The Louisiana State Supreme Court has explained that there are two types of

challenges to ad valorem tax assessments. See, Gisclair v. Louisiana Tax Comm’n,

9-7 (La. 6/26/09), 16 So.3d 1132. These are denominated as a correctness challenge

and a legality challenge. In New Orleans Riverwalk Marketplace, LLC v. La. Tax

Comm’n, 17-968, pgs. 7-12, (La. App. 4 Cir. 4/30/18), 243 So.3d 1070, 1075–

78, writ denied, 18-889 (La. 9/28/18), 252 So.3d 925 (alterations in original), the

D. The right to sue for recovery of a tax paid under protest as provided in this
Section shall afford a legal remedy and right of action in any state or federal
court having jurisdiction of the parties and subject matter for a full and complete
adjudication of all questions arising in connection with a correctness challenge
or the enforcement of the rights respecting the legality of any tax accrued or
accruing or the method of enforcement thereof. The right to sue for recovery of
a tax paid under protest as provided in this Section shall afford a legal remedy
and right of action at law in the state or federal courts where any tax or the
collection thereof is claimed to be an unlawful burden upon interstate
commerce, or in violation of any act of the Congress of the United States, the
Constitution of the United States, or the constitution of the state. The portion of
the taxes which is paid by the taxpayer to the collecting officer or officers that
is neither in dispute nor the subject of such suit shall not be made subject to the
protest.

E. (1) Upon request of a taxpayer and upon proper showing by the taxpayer that
the principle of law involved in an additional assessment is already pending
before the courts for judicial determination, the taxpayer, upon agreement to
abide by the pending decision of the courts, may pay the additional assessment
under protest but need not file an additional suit. In such cases, the tax so paid
under protest shall be segregated and held by the collecting officer or officers
until the question of law involved has been determined by the courts and shall
then be disposed of as provided in the decision of the court.

(2) If the taxpayer prevails, the officer or officers shall refund such amount to the
taxpayer with interest at the actual rate earned on the money paid under protest in
the escrow account during the period from the date such funds were received by the
officer or officers to the date of the refund. If the taxpayer does not prevail, the
taxpayer shall be liable for the additional taxes together with interest at the rate set
forth above during the period from the date the notice of intention to file suit for
recovery of taxes was given to the officer until the date the taxes are paid.

COMMENT—2008

This Section reproduces the substance of former R.S. 47:2110. It is not
intended to change the law.

La.R.S. 47:2134 (emphasis added).

12

fourth circuit recounted the development of the jurisprudence explaining the two

types of challenge:

[T]he Louisiana Supreme Court has made clear that there are two
challenges which may be made to property tax assessments. “One track
encompasses challenges to the ‘correctness of assessments’ by the
assessor, while the other track covers challenges to the legality of the
tax levied.” Gisclair v. Louisiana Tax Comm’n, 09-7, p. 5 (La. 6/26/09),
16 So.3d 1132, 1135, citing Triangle Marine, Inc. v. Savoie, 95-2873,
p. 3 (La. 10/15/96), 681 So.2d 937, 939. The Gisclair Court explained
that “correctness challenges are directed at issues of regularity or
correctness of the assessment, such as over-valuation and
misdescription, while legality challenges are directed at issues
involving claims that the assessment is void for radical defects that
bring into question the existence of any valid assessment.” Id., 09–7,
16 So.3d at 1136, citing Morgan’s Louisiana & T.R. & S.S. Co. v.
Pecot, 50 La. Ann. 737, 742–43, 23 So. 948, 950–51 (1898).

Thus, “under our jurisprudence, challenges to ad valorem
property tax assessments are categorized as either challenges to the
‘correctness of assessments’ or challenges to the ‘legality of
assessments.’” Bass P’ship v. Gravolet, 12-0024, p. 16 (La. App. 4 Cir.
11/21/12), 105 So.3d 224, 234, writ denied, 12-2741 (La. 3/1/13), 108
So.3d 1176, quoting ANR Pipeline Co. v. Louisiana Tax Comm’n, 02-
1479, p. 5 (La. 7/2/03), 851 So.2d 1145, 1148–1149.

As we recognized in Bass P’ship:

The nature of the challenge dictates the body in
which our constitution grants jurisdiction to hear and
resolve these disputes. Gisclair v. Louisiana Tax Comm’n,
09-0007, p. 5 (La. 6/26/09), 16 So.3d 1132, 1135.

The provision establishing the assessment
correctness challenge is found in the Louisiana
Constitution at Art. 7, § 18 E, which provides: “The
correctness of assessments by the assessor shall be subject
to review first by the parish governing authority, then by
the Louisiana Tax Commission or its successor, and
finally by the courts, all in accordance with procedures
established by law.” Under this provision, district courts
in correctness challenges are merely granted appellate
jurisdiction. ANR Pipeline, 02–4179, p. 6, 851 So.2d at
1149. However, pursuant to La. Const. Art. 7, § 3 and the
interpreting jurisprudence, legality challenges are to be
filed directly in the district court. Gisclair, 09–0007, p. 5,
16 So.3d at 1136; Triangle Marine, 95–2873, p. 4, 681
So.2d at 939; ANR Pipeline, 02–1479, p. 5, 851 So.2d at
1149.

Id., 12–24, pp. 16–17, 105 So.3d at 234.

13

A correctness challenge, accordingly, seeks “to correct a value,
no matter how erroneous that value may allegedly be, but does not seek
to annul the assessment in toto” or one that “seeks to correct some
aspect of the assessment.” Id., 12–0024, pp. 18–19, 105 So.3d at 234.

Conversely, “[a] challenge to the validity of a tax on exempt
property is a challenge to the legality, not the correctness, of the
tax.” Triangle Marine, 95–2873, p. 6, 681 So.2d at 940. In Triangle
Marine, vessel owners challenged the imposition of a tax on vessels on
the basis that the tax was “illegal because their vessels enjoy a
constitutional tax exemption.” Id., 95–2873, p. 5, 681 So.2d at 940
(emphasis supplied). The Court noted that the suit had properly been
instituted “directly in district court pursuant to LSA–R.S. 47:2110
[which is] is the appropriate method for challenging a tax levy on
exempt property.” Id., 95–2873, p. 6, 681 So.2d at 941. In reversing the
lower courts’ findings that the vessel owners had to first exhaust their
administrative remedies under La. Const. art. 7, § 18(E) before seeking
a review in the district court (and later, the court of appeal), the Triangle
Marine Court found that “[p]laintiffs properly proceeded in district
court under LSA–R.S. 47:2110 to contest these taxes because a tax
assessment on exempt property is illegal.” Id., 95–2873, p. 7, 681 So.2d
at 941.

Importantly, in Triangle Marine, the Supreme Court noted that
the vessel owners “properly instituted suit under LSA–R.S.
47:2110 after tax payment under protest.” (emphasis added).

In this matter, while La. R.S. 47:2132 deals with the refund of
taxes erroneously paid, and is the statute under which Riverwalk
ostensibly filed this lawsuit, it is clear that the object of Riverwalk’s
action is not the refund of taxes erroneously paid, but a challenge to
the validity of a tax on exempt property. As such, it is a legality
challenge and Riverwalk improperly sought review of this assessment
with the Tax Commission. The Tax Commission does not have
jurisdiction to consider legality challenges; as noted, “[t]he correctness
of assessments by the assessor shall be subject to review first by the
parish governing authority, then by the Louisiana Tax Commission or
its successor, and finally by the courts, all in accordance with
procedures established by law.” La. Const. art. 7, § 18 (E).

La. R.S. 47:2134, on the other hand, entitled “Suits to recover
taxes paid under protest,” recognizes the two distinct categories of
challenges to ad valorem taxes. Subpart B concerns challenges to “the
correctness of an assessment.” Subpart C, however, concerns
challenges to the legality of an assessment. It provides, in pertinent part,
as follows:

C. (1) A person resisting the payment of an amount of ad
valorem tax due or the enforcement of a provision of the
ad valorem tax law and thereby intending to maintain a
legality challenge shall timely pay the disputed amount
due under protest to the officer or officers designated by
law for the collection of the tax and shall give such officer

14

or officers, notice at the time of payment of his intention
to file suit for the recovery of the protested tax. The portion
of the taxes that is paid by the taxpayer to the collecting
officer or officers that is neither in dispute nor the subject
of a suit contesting the legality of the assessment shall not
be made subject to the protest. The taxpayer shall submit
separate payments for the disputed amount of tax due and
the amount that is not in dispute and not subject to the
protest. Upon receipt of a notice, the protested amount
shall be segregated and held by the collecting officer for a
period of thirty days.

(2) A legality challenge suit must be filed within thirty
days from the date of the protested payment. If a suit is
timely filed contesting the legality of the tax or the
enforcement of a provision of the tax law and seeking
recovery of the tax, then that portion of the taxes paid that
are in dispute shall be further deemed as paid under
protest, and that amount shall be segregated and shall be
further held pending the outcome of the suit. The portion
of the taxes that is paid by the taxpayer to the
collecting officer or officers that is neither in dispute nor
the subject of a suit contesting the legality of the tax shall
not be made subject to the protest.

La. R.S. 47:2134 (C)(emphasis added).

It is clear that Riverwalk initially challenged the valuation of the
2012 assessment and then withdrew that challenge, expressly accepting
“the 2012 valuation of the assessment contained in tax bill number
103100121.” It then sought a refund of the taxes it paid, claiming to
have paid those taxes in error. While the record does not contain a dated
copy of its request for a refund, in its Petition, Riverwalk indicates that
the claim for a refund was made on October 20, 2014. Riverwalk
maintains that the request for a refund was “timely.” Indeed, a claim for
taxes erroneously paid under La. R.S. 47:2132 (A) may be made “to the
Louisiana Tax Commission within three years of the date of the
payment.” There is no jurisprudence defining the term “taxes
erroneously paid. However, as we have found, this is not simply a case
of an erroneous payment, but rather, a challenge as to the legality of the
tax assessment.

Under La. R.S. 47:2134 C, a challenge to the legality of an ad
valorem tax must pay the tax under protest and then file suit within
thirty days of the date of the payment. The record contains no evidence
that Riverwalk paid the tax at issue herein under protest. Moreover, it
paid the tax in January, 2012 and its request for a refund was admittedly
first made in October, 2014. Clearly, Riverwalk did not file its suit
(after paying the tax under protest) within thirty days of its payment.
Our decision is consistent with our limited jurisprudence on this issue.
In Side by Side Redevelopment, Inc. v. Marshall, 09-1430, p. 3 (La.
App. 4 Cir. 6/30/10), 43 So.3d 1059, 1061, a suit seeking a
determination that a charitable organization should not owe taxes on its

15

property, this Court recognized that “[t]o challenge the validity of a tax
imposed by the City of New Orleans, the taxpayer must first pay the tax
under protest .... Only the timely payment of the contested tax preserves
the right to litigate the validity of the tax in court.” The Court then found
that the organization’s “failure ... to timely pay the tax under protest
prohibited the district court from hearing a challenge to the validity of
that tax.” Id. See also, Wright v. Cingular Real Estate Holdings of La.,
L.L.C., 09-1825 (La. App. 1 Cir. 7/1/10), 2010 WL 2637907 at (“if
Cingular believed the 2003 tax assessment was erroneous, it could have
paid the assessed amount ‘under protest’ and sought recovery of the
payment”).

Under the provisions of La.R.S. 47:2132(3 a taxpayer who has paid its tax to

the local tax collector which it believes is not properly owed may present its

3

A. Any person who has a claim against a political subdivision for ad valorem taxes
erroneously paid into the funds of that political subdivision may present the claim
to the Louisiana Tax Commission within three years of the date of the payment, in
such form and together with such proof as the tax commission may require by its
rules and regulations; however, if a person is claiming a previously unclaimed
homestead exemption, it may be presented to the tax commission within five years
of the date of payment. The tax commission shall consult with the assessor of the
parish in which the property which is the subject of the claim is located, and after
that assessor advises the tax commission that a refund is due the claimant, the tax
commission shall duly examine the merits and correctness of each claim presented
to it and shall make a determination thereon within thirty days after receipt of the
claim.

B. If the claim is approved, the tax commission shall authorize and direct the collector,
when applicable, to correct the assessment on the roll on file in his office and shall
authorize and direct, when applicable, the recorder of mortgages to change the
inscription of the tax roll. The tax commission shall also authorize and direct the
refund and repayment of those taxes found to be erroneously paid as provided in
this Section. Provided that when the claim accrues to more than one person, as for
example, the heirs and legatees of another, and the claim is determined by the tax
commission to be properly due and owed, payment thereof to the party or parties
asserting the same shall not be denied because of the failure or refusal of others to
join in and assert the claim, but in such event only the portion due such claimant or
claimants shall be paid.

C. The collector of ad valorem taxes in each political subdivision, upon receipt of
written notice from the tax commission that a particular refund or repayment is
owed, shall do one of the following:

(1) If the claim is made for taxes erroneously paid on property which is or could be
homestead exempt or otherwise exempt, the collector shall immediately notify the
affected tax recipient bodies to remit to him within thirty days their pro rata share
of the refund or repayment. Upon receipt of those funds from the tax-recipient
bodies, the collector shall have an additional thirty days to remit the payment in full
to the tax debtor. Failure by any tax recipient body or the collector to timely remit
such monies shall cause interest at the legal rate to accrue in favor of the tax debtor
to be paid by the political subdivision or tax collector failing to so timely remit.

(2) If the claim is made for taxes erroneously paid on property which would not qualify
for a homestead or other exemption, the collector shall note and record the amount
of the refund or repayment owed and shall have full responsibility to ensure that
16

correctness claim to the Commission for it to make a determination of whether the

tax paid, either under protest or not under protest, was based on an erroneous

assessment such as an overvaluation of the subject property. There is no provision

allowing a taxpayer to seek review from the Commission when it has not paid its tax

owed.

Likewise, under the provisions of La.R.S. 47:2134, a legality challenge can

be made either based on the provisions of La.R.S. 47:1856, 1857 or 1998. La.R.S.

47:1856 and 1857 refer to challenges of assessments affecting public service

properties and thus are not relevant to this case. Louisiana Revised Statutes 47:19984

such amount shall operate as a credit against future ad valorem tax liability of that
property. No ad valorem taxes shall be due or collected on such property until such
time as the collector certifies that a sufficient amount of taxes assessed have been
waived to satisfy the refund or repayment ordered by the tax commission. No
interest shall accrue or be due on any such refund or repayment.

(3) If the claim is made in a political subdivision which has established an alternative
procedure for providing for refunds of ad valorem taxes erroneously paid as
authorized by this Section, and if that alternative procedure has been submitted to
and approved by the tax commission, such procedure may be utilized in lieu of the
provisions of Paragraphs (1) and (2) of this Subsection.

D. An action of the assessor or of the tax commission rejecting or refusing to approve
any claim made under the provisions of this Section may be appealed by means of
ordinary proceedings to the district court having jurisdiction where the property
which is the subject of the claim is located.
4

A. (1)(a) Any taxpayer or bona fide representative of an affected tax-recipient body
in the state dissatisfied with the final determination of the Louisiana Tax
Commission under the provisions of R.S. 47:1989 shall have the right to
institute suit within thirty days of the entry of any final decision of the Louisiana
Tax Commission in the district court for the parish where the Louisiana Tax
Commission is domiciled or the district court of the parish where the property
is located contesting the correctness of assessment.

....

(2) Any taxpayer who has filed suit under this provision and whose taxes have
become due shall pay such taxes under protest and shall cause to issue notice to
the officer designated by law for the collection of such tax under the provisions of
R.S. 47:2134(B), and shall cause service of process to be made on the Louisiana
Tax Commission as the officer designated by law to assess the property as provided
for in R.S. 47:2134(B). However, the portion of taxes that is not in dispute shall
be paid without being made subject to the protest.

B. (1) Any taxpayer or bona fide representative of an affected tax-recipient body
in the state shall have the right to institute suit in either the district court for the
parish where the tax commission is domiciled or the district court of the parish
where the property is located, for the purpose of contesting the correctness or
17

expressly requires that any taxpayer challenging the Commission’s ruling on the

legality of an assessment must also pay the disputed tax under protest and must pay

the undisputed portion without protest before proceeding to challenge the tax in court

if at the time of the Commission’s ruling the tax has become due. This provision is

included here to address the situation in which an assessment is challenged by a

taxpayer well before it is due. But that is not the situation here and thus this

provision is not operative in this case. D90 asserts that this provision is not operative

in this case because the taxpayer did not challenge the Commission’s ruling which

was in its favor. It is true that it is the Assessor who is challenging the ruling of the

Commission, but this argument misapprehends the import of the statute. This statute

does not mean, as D90 asserts, that the taxpayer was not required to pay its tax when

it became due. It was required to do so under La.R.S. 47:2132(A) in order to bring

a correctness challenge, and if it were disputing the legality of the assessment it

would also have been required under La.R.S. 47:2134 to either pay the total assessed

amount under protest or to pay the part of the tax it agrees it owed not under protest

and pay the part in dispute under protest. Regardless of how D90’s challenge to

Kratazer’s assessment is characterized it was a necessary prerequisite that D90 pay

its tax, either under protest or otherwise, in order to preserve its right to pursue a

correctness challenge as it did here. But D90 admits it did not do so for tax years

legality of any change in assessment made against the property under written
instructions of the tax commission, pursuant to R.S. 47:1990 which suits must
be instituted within thirty days after the date of the written instructions of the
tax commission ordering the change.

....

(3) Any taxpayer in the state who has filed suit under these provisions and whose
taxes have become due shall pay said taxes under protest and shall cause to issue a
notice to the officer designated by law for the collection of such tax under the
provisions of R.S. 47:2134(B), and shall cause service of process to be made on the
Louisiana Tax Commission as provided for in R.S. 47:2134(B). However, the
portion of taxes that is not in dispute shall be paid without being made subject to
the protest.

La.R.S. 47:1998(A)(1)(a), (2), and (B)(1) and (3) (emphasis added).

18

2015 and 2016. Therefore, we find Kratzer’s exception raised in both the

Commission hearing and the district court should have been granted. Having failed

to pay any of the taxes assessed for 2015 and 2016, D90 did not enjoy a cause of

action or right of action to attack the assessments for those years. D90’s owner

acknowledged that he understood the requirement to pay under protest but admitted

he failed to do so. We reverse the district court’s implied ruling in this regard and

reinstate the Jefferson Davis Board of Review’s finding which upheld the taxes

assessed for 2015 and 2016. Even if this were not so, we would reverse the district

court’s judgment regarding those two tax years for the same reasons we reverse its

ruling for tax years 2013 and 2014 as discussed more fully below.

We turn now to our review of the district court’s ruling that upheld the

Commission’s ruling. In TBM-WC Sabine, LLC v. Sabine Parish Board. of Review,

17-1189 pp. 8-10 (La.App. 3 Cir. 7/18/18), 250 So.3d 1075, 1081–82 (emphasis

added) (footnote omitted) (alterations in original) we set forth the standard for

appellate review of administrative rulings:

The standard of review in this case for both the district court
sitting as an appellate court, and this appellate court reviewing the
decision of the district court, is set forth in the Administrative
Procedures Act, La.R.S. 49:964(G). In ANR Pipeline, this court relied
on the second circuit’s reasoning in Jones v. Southern Natural Gas
Company, 46,347, 46,348, 46,351 (La.App. 2 Cir. 4/13/11), 63 So.3d
1080, 1088, writ not considered, 11-1242 (La. 9/23/11), 70 So.3d 800,
and writ not considered, 11-1242 (La. 11/4/11), 75 So.3d 911, to affirm
the district court judgment reversing the LTC’s ruling and reinstating
the parish tax assessors’ assessments. The second circuit in Jones set
forth an appellate court’s standard of review succinctly:

On review of the district court’s judgment, the court
of appeal owes no deference to the factual findings or legal
conclusions of the district court. Smith v. State, 39,368
(La.App. 2 Cir. 3/2/05), 895 So.2d 735, writ denied, 05–
1103 [ ( ]La.6/17/05), 904 So.2d 701, and citations
therein; Bailey v. EnerVest, [45,553 (La.App. 2 Cir.
6/30/10), 43 So.3d 1046].

Under the Administrative Procedure Act, La. R.S. 49:964(G), the
district court and court of appeal may reverse or modify the agency’s
determination if the substantial rights of the party seeking review have

19

been prejudiced because the administrative findings, inferences,
conclusions or decisions are (1) in violation of constitutional or
statutory provisions, (2) in excess of the agency’s statutory authority,
(3) made upon unlawful procedure, (4) affected by other error of law,
(5) arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion, or (6) manifestly erroneous
in view of the reliable, probative and substantial evidence in the
record. Smith v. State, supra; Bailey v. EnerVest, supra.

Id. at 1088.

In this case, the district court, functioning as an appellate court,
reversed the decision of LTC and reinstated Assessor Manasco’s
assessment finding LTC’s determination “was neither supported nor
sustainable by a preponderance of the evidence and exceeded the
authority of the Tax Commission, which is expressly limited by the
Louisiana Constitution to review and not assess.” We review
the decision of the district court de novo. TBM’s assignments of error
focus on the district court’s review of LTC’s rulings and whether or not
the district court employed the proper standard of review or applied the
provisions of La. Const. art. 7, § 18(E) properly. But the proper focus
of this court’s review is to determine whether TBM has shown
that Assessor Manasco abused her great discretion in finding TBM’s
submissions insufficient to substantiate its requested reduction in fair
market value for economic obsolescence of the pipeline. In reviewing
LTC’s decision we must determine “whether the commission manifestly
erred when it determined that [the assessor] abused [her] discretion in
determining that the [taxpayer] failed to sufficiently substantiate [its]
claims of economic obsolescence.” ANR Pipeline, 73 So.3d at 403. In
this regard we agree with the district court’s conclusion that TBM fails
to show Assessor Manasco abused her discretion in awarding a 12%
reduction in fair market value rather than TBM’s requested 85%
reduction.

Likewise, in this case, as Kratzer asserts, the Commission and the district

court failed to apply the proper standard of review. The district court, as we quoted

above, based its decision on a determination of whether the Commission abused its

discretion in evaluating the evidence and testimony before it, rather than determining

on the record before it whether Kratzer abused his much discretion in arriving at a

fair market value to assess the subject property based on the information provided

him by D90. The Commission received evidence and testimony from D90 in support

of its asserted valuation but much of that information was not provided to Assessor

Kratzer. It was D90’s obligation to provide that information to Kratzer. The

reasonableness of Kratzer’s valuation must be gauged in light of the information he

20

was provided, and his application of the Rules and Regulations promulgated by the

Commission in accordance with statutory requirements which set forth the

guidelines he must follow.

Our de novo review of the record leads us to conclude that Kratzer did not

abuse his much discretion in reaching his valuation given the scant information

provided by D90. We cannot say Kratzer abused his discretion in determining that

it was not proper to base his valuation solely on an alleged sale price, when he was

not provided sufficient information to determine the actual amount of the price paid

and whether this was a true arms-length transaction.

Silverman testified that he employed Cochran to do his tax work for him

because he is “no ad valorem tax expert.” Silverman stated that Cochran “fills—he

makes sure the forms are filled out correctly, and timely, and so he is the one who

provided the tax forms for the three years that we’ve owned the property.” Cochran

provided very little information to Kratzer to support his conclusory representations

that the wells were purchased for an amount far greater than the ten dollars recited

in the “Bill of Sale” document provided.5 Kratzer found the information provided

by D90 did not provide a sufficient basis to determine the fair market value based

solely on the alleged sales price. Moreover, Kratzer maintained that the rules

promulgated by the Commission prohibit the use of sales price as the sole

determining factor for valuation.

A. All property within the State of Louisiana shall be assessed at a
percentage of Fair Market Value or Use Value, as the law provides, and
either placed on the regular tax rolls, exempt rolls, or adjudicated tax
rolls.

B. Assessors shall value property at 100% Fair Market Value and then
assessed valuations shall be based upon the percentage classification
requirements of the Louisiana Constitution, Article VII, Section 18(B).

5
We note in passing that D90 provided very little documentation to support its contention
that the wells were shut in as of December 2016. We point out as well, we are no longer concerned
with any factors affecting the 2015 or 2016 assessments.
21

C. . . . .

D. “Sales chasing” and “sales listing chasing” is expressly prohibited.
“Sales chasing” is the procedure by which an individual property
assessment is based upon the price the property sold for. “Sales
listing chasing” is the procedure by which an individual property
assessment is based upon listed sales price of the property. . .

La. Admin Code tit. 61, Pt. V, §213 (bold emphasis added).

E. If a taxpayer appeals the Board of Review’s decision on the basis that
the assessor appraised his or her property on the basis of a sale or sales
listing, evidence establishing that the property was reappraised at the
value of, or based solely upon, the sale or sales listing shall constitute
prima facie evidence of sales/listing chasing and shall create a
rebuttable presumption against the assessment.

La. Amin Code tit. 61, Pt. V, § 3103.

Kratzer’s employee, Deputy Assessor Wanda Adams, who was in charge of

assessing these wells, testified at the hearing and explained the method she used to

assess the property in accordance with the guidelines promulgated by the

Commission:

Q. Actually, I had a bunch of questions; but Mr. Silverman has
already acknowledged that they didn’t provide anything to you,
other than a verbal representation regarding the purchase price.
Let’s start with that.

How did you determine the value of these three wells; again, two
gas wells, and a saltwater disposal well?

A. Well, the values are according to the age of the well; the
depth of the well; the type of well; and the production.

Q. And you calculated those using the tables promulgated by the
Louisiana Tax Commission?

A. Yes, sir.

Q. And you, also, testified you value all other oil and gas wells
in Jefferson Davis parish?

A. Yes, sir, I do.

Q. Do you value all other wells uniformly; in the same manner?

A. Yes, sir.

22

Q. And, more to the point, do you value any wells in Jefferson
Davis Parish on the basis of a sales price?

A. No, sir.

....

Q. Are you familiar with the fact that the regulations mandate
that the sales price be at least considered by the Assessor?

A. Yes; we do take that into consideration.

Q. Were you aware of the sale for $100,000 made by D90; or
purchased by D90?

A. From prior years.

Q. So you had that information when you were assessing—when
you were dealing with the property?

A. From prior years.

....

Q. So there would be no added obsolescence that you have given
to these wells?

A. No, there was none.

Examination by Commissioner Vercher:

Q. Ms. Adams, to follow up on Cahirman Chehardy’s question.
There are no occasions that you use the sales price of a well in
determining value?

A. No, sir.

Q. In no case?

A. No case.

Examination by Mr. Eddrington

Q. Have you ever been asked, other than this property, to use a
sales price—

A. No; I haven’t.

Q. –to value a well?

....

Examination by Commissioner Wood:

23

Q. Were you aware that you could?

A. Hmm, I don’t want to say no, because—

Commissioner Wood:

Okay.

Our de novo review of the record does not reveal any evidence put forward at

the Commission hearing that points to any abuse of discretion by Kratzer or his

subordinate in applying the rules and regulations promulgated by the Commission

in calculating the fair market value of these wells for the purpose of determining the

assessment. D90 contends it is Kratzer’s responsibility to ask for or search for

information necessary to make his determination of assessed value. Moreover, D90

suggests that the scant “documentation” its agent provided Kratzer, along with its

own representation as to what the purchase price actually paid was, is all that was

needed to make the determination of value. We rejected this argument in TBM-WC

Sabine, 250 So.3d 1075, and ANR Pipeline v. ANR Pipeline Co., 11-379 (La.App. 3

Cir. 8/10/11), 73 So.3d 398, and we reject it here. It is simply not the law. The

simple question we must answer here is did Assessor Kratzer abuse his much

discretion in refusing to base his valuation of these wells solely on the scant

information concerning the alleged sale price provided by the taxpayer and its own

self-serving representations. We find no evidence to support the contention that

Kratzer abused his much discretion in finding the information submitted by D90

through its agent insufficient to assess the value of these wells based solely on sale

price. The district court’s notion that the Commission did not abuse its discretion

when it made its determination based on witness testimony before it and evidence

submitted in the hearing is misplaced. The Commission was to review Assessor

Kratzer’s assessment under an abuse of discretion standard of review. It was not the

Commission’s role to assess the property but rather to determine whether Assessor

24

Kratzer abused his discretion in arriving at the assessed value of the property based

on what was provided him by the taxpayer requesting a lower valuation than that

arrived at by Kratzer applying the rules and regulations promulgated by the state for

valuing these properties. In ANR Pipeline this court rejected the notion that the

burden is on the assessor rather than the taxpayer:

The companies’ second assignment of error urges that the
commission and the trial court placed the burden of proof of
obsolescence on them rather than the assessor. They cite La. R.S.
47:2324, which provides, in pertinent part (emphasis theirs),
“Each assessor shall gather all data necessary to properly determine the
fair market value of all property subject to taxation within his respective
parish or district.” They also contend that the commission’s regulations
regarding the forms taxpayers must file, specifically the LAT 14 form,
require the assessor to return insufficient forms for further compliance.
La.Admin.Code 61:V.1303(B). Lastly, the companies cite our decision
in Warren Energy Resources, Inc. v. Louisiana Tax Commission, 02–
115 (La.App. 3 Cir. 8/28/02), 825 So.2d 572, writ denied, 02–2450
(La.12/13/02), 831 So.2d 985, for the proposition that La.R.S. 47:2324
requires the assessor to be more than a passive analyst of the
sufficiency of the documentation submitted by the taxpayer.

The companies, though, ignore §2324’s express approval of
an assessor’s use of self-reporting forms to secure the data he needs
in order to determine the FMV of property. And our courts have
long held that the party seeking obsolescence bears the burden of
producing sufficient evidence to the assessor. Dow Chemical Co. v.
Pitre, 468 So.2d 747 (La.App. 1 Cir.1985), writ denied, 474 So.2d
1308 (1985); Bailey v. Enervest Operating Co., LLC, 45,553 (La.App.
2 Cir. 6/30/10), 43 So.3d 1046.

ANR Pipeline Co., 73 So.3d at 402-03 (bold emphasis added).

We also said in ANR Pipeline:

Parish tax assessors appraise the value of property within their
parishes. It is incumbent upon taxpayers positioned to claim a
reduction of their ad valorem tax liability to prove they are entitled to
that reduction. The value of property owned by a taxpayer in one parish
will have a different value in another parish, even assuming properties
of the same size. Property in one parish will prove economically more
beneficial than property in another parish. Property in one parish will
see more use than property in another parish. Thus, in claiming
economic obsolescence before a parish assessor, one must demonstrate
that obsolescence particular to the parish in question. The determination
of whether the information provided is satisfactory rests within the
sound discretion of the assessor, subject to review at several levels.

ANR Pipeline, 73 So.3d at 405 (emphasis added).

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For the reasons stated we find no abuse of discretion by Assessor Kratzer in

his assessments for 2013 and 2014 based on the information provided by D90. We

further find the district court erred as a matter of law in failing to apply the proper

standard of review and we reverse its judgment upholding the Tax Commission’s

findings. We reinstate the decision of the Jefferson Davis Board of Review finding

no abuse of discretion in Assessor Kratzer’s assessed values for 2013 and 2014. We

also expressly find that D90 is not entitled to any refund of its taxes paid under

protest for 2013 and 2014. We note, too, that because D90 did not make any

payment concerning its taxes for 2015 and 2016, the Tax Commission’s order for

reimbursement of taxes paid had no application to those tax years. D90 is obligated

to pay its taxes on the subject property for 2015 and 2016 in accordance with the

law.

All costs of this appeal are assessed against D90 Energy, LLC.

REVERSED, JUDGMENT VACATED;
JEFFERSON DAVIS BOARD OF REVIEW
DECISION REINSTATED.

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