Enerfin Field Servs., LLC v. Vernon Parish Bd. of Review

368 So.3d 275

ENERFIN FIELD SERVICES, LLC v. VERNON PARISH BOARD OF REVIEW

22-740

Court of Appeal of Louisiana, Third Circuit.

June 28, 2023

Brian Andrew Eddington, Attorney at Law, 3060 Valley Creek Dr., Suite A, Baton Rouge, LA 70808, (225) 924-4066, COUNSEL FOR APPELLANT/CROSS-APPELLEE: Michael Bealer, Assessor for Vernon Parish

Cheryl M. Kornick, Liskow & Lewis, APLC, One Shell Square, Suite 5000, New Orleans, LA 70139-5001, (504) 581-7979, COUNSEL FOR PLAINTIFF/APPELLEE/CROSS-APPELLANT: Enerfin Field Services, LLC

Franklin "Drew" Hoffman, Jordan S. Varnado, Faircloth, Melton, Sobel & Bash, LLC, 9026 Jefferson Highway, Suite 200, Baton Rouge, LA 70809, (225) 343-9535, COUNSEL FOR DEFENDANT/APPELLEE: The Louisiana Tax Commission

Court composed of Shannon J. Gremillion, Jonathan W. Perry, and Gary J. Ortego, Judges.

ORTEGO, Judge.

This is a tax assessment case wherein the assessments of the Vernon Parish Tax Assessor of certain property, with a pipeline present, for the years of 2017 and 2018 were challenged by the property owner, first to the parish board of review, then to the Louisiana Tax Commission. The property owner, Enerfin Field Services, LLC, claimed that the value of pipelines on the property should have been assessed with a reduction for obsolescence. The Louisiana Tax Commission reversed the assessor's assessments and granted the property owner's request for a reduction based on its finding that the assessor was arbitrary and capricious in denying any reduction for obsolescence.

The assessor appealed the Louisiana Tax Commission's findings to the Thirtieth Judicial District Court and filed an exception to the Louisiana Tax Commission's intervention into this matter. The district court denied the assessor's exception but reinstated the assessments, finding that the Louisiana Tax Commission improperly reversed the assessor. For the following reasons, we affirm the district court's judgment regarding the exception, and reverse the district court's judgment reinstating the assessor's original assessments.

FACTS AND PROCEDURAL HISTORY

This case arises out of two property tax matters and two decisions from the Louisiana Tax Commission ("LTC") from years 2017 and 2018. In both 2017 and 2018, Enerfin Field Services, LLC ("Enerfin") requested that Vernon Parish Tax Assessor, Michael Bealer ("the Assessor"), grant a reduction for obsolescence as to the assessment of the value of property owned by Enerfin that contains a pipeline.

By law, the LTC provides tables for assessors to use in valuing pipelines. Those tables are essentially based on the value of "replacement cost new" minus depreciation. One such depreciation is that of obsolescence.

In both 2017 and 2018, Enerfin submitted spreadsheets and an appraisal in support of its requested reduction of the value of the pipelines due to obsolescence. The Assessor denied both of those requests. Enerfin then appealed to the Vernon Parish Board of Review which upheld the Assessor's findings. Next, as required by law, Enerfin appealed the assessments to the LTC.

January 10, 2017 LTC hearing

Enerfin submitted to the LTC spreadsheets and an appraisal in support of its requested reduction of the value of the pipelines due to obsolescence. The Assessor failed to testify or submit any evidence at the January 10, 2017 hearing. The LTC found that the Assessor's denial of Enerfin's request for at least some reduction of the 2017 assessment for obsolescence was arbitrary and capricious, and as such, the LTC reversed the Assessor's ruling. After performing an evaluation of the evaluating the spreadsheets and appraisal submitted by Enerfin, the LTC found that Enerfin was entitled to a reduction for obsolescence in an amount less than Enerfin requested. The Assessor then filed an appeal of the LTC findings to the Thirtieth Judicial District Court in Vernon Parish.

October 16, 2019 LTC hearing

While that appeal was pending, Enerfin also sought a reduction of its assessment on the same property for the 2018 tax year. Again, the Assessor denied its request, the Vernon Parish Board of Review upheld the Assessor, and Enerfin appealed to the LTC. On October 16, 2019, the LTC heard the matter. Enerfin again submitted to the LTC spreadsheets and an appraisal in support of its requested reduction of the value of the pipelines due to obsolescence. However, at this hearing, the Assessor testified. His testimony detailed why he denied Enerfin's requested reduction, and that while he had offered Enerfin at least some reduction for obsolescence in 2017, he testified that he did not in 2018. The LTC found that the Assessor's denial of Enerfin's request for at least some reduction of the 2018 assessment for obsolescence was arbitrary and capricious, and as such, the LTC reversed the Assessor's ruling. After evaluating the spreadsheets and appraisal submitted by Enerfin, the LTC found that Enerfin was entitled to a reduction for obsolescence again in an amount less than Enerfin requested.

The Assessor then amended and supplemented his pending appeal to the Thirtieth Judicial District Court adding and consolidating the ruling from the LTC for the 2018 assessment. Enerfin answered and opposed both appeals. The LTC then filed an intervention into the proceedings before the Thirtieth Judicial District Court. The Assessor filed an exception to LTC's intervention, which the court denied.

Thereafter, the district court, based on its review of the administrative records before the LTC, found that the LTC's rulings were neither supported nor sustainable by a preponderance of the evidence and exceeded the LTC's authority. As such, the district court reinstated the Assessor's assessments from both 2017 and 2018. The present appeal followed with both the Assessor and Enerfin alleging assignments of error.

ASSIGNMENT OF ERROR – ASSESSOR

1. The district court erred in denying the exception of no right of action[.]

ASSIGNMENTS OF ERROR – ENERFIN

1. The district court failed to follow the Louisiana Supreme Court decision in D90 Energy in three ways:

• In reversing the Tax Commission decision, the district court failed to base its determination on the Record adduced at the Tax Commission.

• In reversing the Tax Commission decision, the district court gave deference to the decision of

the Assessor, rather than the decision of the Tax Commission.

• In reversing the Tax Commission decision, the district court failed to apply the standards of the Administrative Procedure Act, La. R.S. 49:964, directing that courts uphold the decision of the Tax Commission unless it was arbitrary and capricious.

2. The Record demonstrates that the decisions of the Tax Commission were not arbitrary and capricious and were based on the Appraisal provided to the Assessor, and therefore should have been affirmed by the district court.

3. Even applying the "abuse of discretion" standard, it was an abuse of the Assessor's discretion, after being provided with the Appraisal, to refuse to grant any obsolescence, as the Tax Commission found.

LAW AND DISCUSSION

I. Standard of Review

The standard of review applicable to the district court's denial of the Assessor's peremptory exception of no right of action and intervention by LTC is de novo because it presents an issue of law. Midland Funding, LLC v. Giles , 21-304, 21-305 (La.App. 3 Cir. 12/15/21), 332 So.3d 744.

In reviewing the findings of an administrative body, the Louisiana Supreme Court, in D90 Energy, LLC v. Jefferson Davis Parish Board of Review , 20-200, p. 10 (La. 10/1/20), 341 So.3d 492, 499-500, stated the following:

A reviewing court should afford considerable weight to an administrative agency's construction and interpretation of its rules and regulations adopted under a statutory scheme the agency is entrusted to administer, and its construction and interpretation

should control unless found to be arbitrary, capricious, or manifestly contrary to its rules and regulations. Forbes v. Cockerham , 2008-0762 (La. 1/21/09), 5 So. 3d 839, 859.

II. Exception of No Right of Action

The Assessor's sole assigned error is that the trial court erred in denying the exception of no right of action filed in response to the LTC's petition for intervention. Louisiana Revised Statutes 47:1998(I) states, "The Louisiana Tax Commission shall receive a copy of every filing in a suit under this Section and may intervene in accordance with the applicable provisions of the Code of Civil Procedure."

The Assessor argues that La.R.S. 47:1998(I) does not expressly authorize intervention by the LTC. The statute merely allows the LTC to intervene "in accordance with the applicable provisions of the Code of Civil Procedure" , which provides that "[a] third person having an interest therein may intervene in a pending action to enforce a right related to or connected with the object of the pending action." La.Code Civ.P. art. 1091.

The LTC counters that its interest in these proceedings is to protect its authority to review and correct assessments made by parish assessors and to ensure that its decisions are subjected to judicial review rather than the decisions of parish assessors. The LTC points out that it is often a named party in similar proceedings and has even been ordered by courts to be added as an indispensable party.

Louisiana Constitutional Article 7, § 18(E) entitled Review, states, "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."

We find that this language by the Legislature plainly permits the LTC to intervene in judicial review proceedings. The LTC has an interest in how it is to perform its functions under the law as interpreted by the courts. Under the Assessor's view, the LTC's decision is afforded no weight and is merely advisory. The supreme court has...