Songy v. Bayou Bridge Pipeline, LLC

320 So.3d 434

Edward A. SONGY, Jr., Chief Administrator of the Sales and Use Tax Department of the Iberville Parish Council

v.BAYOU BRIDGE PIPELINE, LLC; and Riley Berthelot, Jr., in His Capacity of Parish President of West Baton Rouge Parish, and Department of Revenue & Taxation, West Baton Rouge Parish

NO. 2020 CA 0860

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: FEBRUARY 19, 2021

Russell J. Stutes, Jr., Russell J. Stutes, III, Lake Charles, LA, Edward A. Songy, Jr., Plaquemine, LA, Attorneys for Plaintiff-Appellee, Edward A. Songy, Jr., Chief Administrator of the Sales and Use Tax Department of the Iberville, Parish Council

Patrick M. Amedee, Catherine Masterson, Thibodaux, LA, Attorneys for Defendant-Appellant, Riley Berthelot, Jr., In his Capacity as Parish President of West Baton Rouge, and Department of Revenue and Taxation, West Baton Rouge Parish

Tedrick K. Knightshead, Sr. Special Assistant Parish Attorney, Jeffrey G. Rice, Special Assistant Parish Attorney, Baton Rouge, LA, Attorneys for Defendant-Appellee, Marsha Hanlon, In her Official Capacity as the Director of Finance for the City of Baton Rouge and Parish of East Baton Rouge

BEFORE: THERIOT, WOLFE, AND HESTER, JJ.

HESTER, J.

This tax case involves competing motions for summary judgment to determine the proper taxing authority between West Baton Rouge Parish and Iberville Parish for sales and use tax on pipe where the sale and storage of the pipe occurred in West Baton Rouge, and the pipe was used in Iberville. For the following reasons, we reverse the summary judgment granted by the trial court in favor of Iberville and grant summary judgment in favor of West Baton Rouge.

FACTS AND PROCEDURAL HISTORY

Beginning in January 2015, Bayou Bridge Pipeline, LLC, ("Bayou Bridge’) was involved in the construction and installation of a 161.56-mile pipeline beginning in St. James Parish and ending in Nederland, Texas. In connection with the construction of the pipeline, Bayou Bridge purchased pipe from Stupp Corporation ("Stupp"), a pipe manufacturer located in East Baton Rouge Parish. A portion of the pipe Bayou Bridge purchased from Stupp required concrete weight coating, and Stupp transported that pipe to a facility located in West Baton Rouge. After Stupp completed the concrete overcoat, Bayou Bridge was billed for the pipe, acquired title to the pipe and took possession of the pipe from Stupp in West Baton Rouge. The amount Stupp billed Bayou Bridge for the pipe included a portion of the state of Louisiana's sales tax, but did not include any West Baton Rouge sales tax. Thereafter, Bayou Bridge accrued and remitted the sales tax directly to West Baton Rouge.

As part of the construction of the pipeline, Bayou Bridge installed from March 2018 through December 2018, approximately 86,076.95 feet of pipe in Iberville including 70,660.25 feet of pipe from a facility located in West Baton Rouge and 15,403.75 feet of pipe from a facility located in East Baton Rouge. Pipe was not installed in West Baton Rouge or East Baton Rouge.

On November 13, 2018, Mr. Edward A. Songy, Jr., the chief administrator of the Sales and Use Tax Department of Iberville Parish filed a "Sales Tax Rule, Petition to Adjudicate Assessment Executory, and Petition for Refund" naming as defendants, Bayou Bridge; Mr. Riley Berthelot, Jr. in his official capacity as parish president of West Baton Rouge; and the Department of Revenue and Taxation of West Baton Rouge.¹ Iberville alleged that Bayou Bridge was doing business in Iberville and failed to remit sales and/or use tax on the pipe that was used and installed in Iberville. Iberville made West Baton Rouge a defendant to obtain a refund for any amount of sales and/or use tax erroneously paid to West Baton Rouge by Bayou Bridge for pipe installed in Iberville. Iberville contended that under LAC 72:1:503 and Scientific Drilling Int'l., Inc. v. Meche, 2009-1120 (La. App. 3rd Cir. 2/3/10), 29 So.3d 1283, writ denied, 2010-511 (La. 4/30/10), 34 So.3d 298, property imported into a taxing jurisdiction for storage purposes only is excluded from use tax by that taxing jurisdiction.

Bayou Bridge answered Iberville's suit and asserted a cross claim against West Baton Rouge asserting that if it erroneously paid sales and/or use taxes to West Baton Rouge that should have been paid to Iberville, then the erroneously paid sales and/or use taxes should be remitted by West Baton Rouge to Iberville.²

West Baton Rouge also answered Iberville's suit contending that the sales and/or use taxes were properly paid to West Baton Rouge as title and possession of the tangible personal property passed in West Baton Rouge and the sale was consummated in West Baton Rouge.

On October 18, 2019, Bayou Bridge filed an unopposed motion for summary judgment contending that there was no evidence that Bayou Bridge acted in bad faith in connection with its payment of sales and/or use taxes in East Baton Rouge and West Baton Rouge. Accordingly, Bayou Bridge sought a credit in the amount of taxes paid to East Baton Rouge and West Baton Rouge against any use tax assessment by Iberville against Bayou Bridge.

On that same day, Iberville filed a motion for summary judgment contending that West Baton Rouge was liable to Iberville for taxes that West Baton Rouge collected on the pipe exclusively used in Iberville. In support of its motion for summary judgment, Iberville attached, among other documents, the La. Code Civ. P. art 1442 deposition of Bayou Bridge wherein a representative of Bayou Bridge, Mr. Aaron Perry, acknowledged that no pipe was installed in West Baton Rouge. Mr. Perry said that Stupp did not charge parish sales tax to Bayou Bridge, and Bayou Bridge voluntarily accrued and remitted taxes on the pipe purchased in West Baton Rouge to West Baton Rouge. In the deposition, Mr. Carey Farber, also a representative of Bayou Bridge, stated that Stupp worked on the pipe in West Baton Rouge, but Bayou Bridge did no additional work on the pipe in West Baton Rouge. Iberville also cited to West Baton Rouge Ordinance Sec. 78-86 titled "Exemptions and exclusions" arguing that the ordinance expressly excludes sales taxes for the sale of tangible personal property in West Baton Rouge to be used exclusively outside of West Baton Rouge's jurisdiction.

West Baton Rouge opposed Iberville's motion for summary judgment and filed a competing motion for summary judgment contending that since the situs of the sale of the pipe was in West Baton Rouge and title and possession of the products transferred from Stupp to Bayou Bridge in West Baton Rouge, the taxable moment occurred in West Baton Rouge. In support of its motion for summary judgment, West Baton Rouge attached the affidavit of William Davis, the comptroller for Stupp who stated that some of the pipe required a concrete overcoat and was transferred to a "lay down yard" in West Baton Rouge and "[o]nce the concrete overcoat was inspected and accepted, Stupp Corp billed Bayou Bridge for the pipe, transportation and ... coating, at which time title and possession transferred to Bayou Bridge." West Baton Rouge also introduced the 1442 deposition of Bayou Bridge wherein Mr. Perry stated that Bayou Bridge took the risk of loss at the point title and possession of the pipe transferred to Bayou Bridge, which occurred in West Baton Rouge. Mr. Perry said that he believed that the sale occurred in West Baton Rouge. He pointed out that Bayou Bridge paid Stupp for storage of the pipe while awaiting issuance of permits because the title for the pipe had transferred to Bayou Bridge and the pipe was being stored in Stupp's laydown yard in West Baton Rouge. In the 1442 deposition of Bayou Bridge, Mr. Farber surmised that the pipe remained in West Baton Rouge for one year while awaiting permits.

Iberville opposed West Baton Rouge's motion for summary judgment. However, Iberville did not oppose Bayou Bridge's motion for summary judgment acknowledging that there was no evidence of bad faith by Bayou Bridge in paying taxes to West Baton Rouge. Bayou Bridge's motion for summary judgment was granted pursuant to La. R.S. 47:337.15(A)(3) and 47:337.86(A).³ Bayou Bridge was granted "a credit for sales and/or use taxes paid" to East Baton Rouge and West Baton Rouge for pipe installed in Iberville Parish and the petition filed by Iberville against Bayou Bridge was dismissed with prejudice.⁴ Thus, the issue remaining for the trial court to determine, based on the competing motions for summary judgment was whether Iberville or West Baton Rouge was the proper taxing authority for taxes owed by Bayou Bridge.

After a hearing on Iberville and West Baton Rouge's competing motions for summary judgment, the trial court signed a judgment on December 6, 2019, granting Iberville's motion for summary judgment, denying West Baton Rouge's motion for summary judgment and ordering that "West Baton Rouge Parish is liable unto Iberville Parish in the amount of $234,304.75 taxes erroneously paid by Bayou Bridge to West Baton Rouge Parish." In its written reasons for judgment, the trial court relied on section 78-86 in the West Baton Rouge Ordinances⁵ to conclude that Bayou Bridge was exempt from paying taxes to West Baton Rouge.

West Baton Rouge filed a Motion for New Trial contending that the award rendered by the trial court in the amount of $234,304.75 included taxes paid by Bayou Bridge to both East Baton Rouge and West Baton Rouge.⁶ After the motion for new trial was filed, Iberville and West Baton Rouge filed a Joint Stipulation on January 21, 2020, acknowledging that the original judgment included taxes paid by Bayou Bridge to East Baton Rouge, and that West Baton Rouge received $192,368.84 from Bayou Bridge, which is the amount subject to the trial court's ruling. Thereafter, in a judgment signed on April 22, 2020, the trial court denied West Baton Rouge's motion for new trial. It is from the December 6, 2019 and April 22, 2020 judgments that West Baton Rouge...