RECENT Developments - Louisiana State Bar Association
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RECENT
Developments
BANKRUPTCY TO TAXATION
both contained cross-collateralization collateral securing the Camry loan, i.e.,
provisions such that each car served as both cars, to the U.S. 5th Circuit Court
collateral for both loans. Evolve filed of Appeals.
Bankruptcy two proofs of claim in the debtor’s case The 5th Circuit looked to 11 U.S.C.
Law in connection with the two loans. § 1325(a) for requirements for confirm-
In connection with the Evolve loans, ing a Chapter 13 plan. Citing to the U.S.
the debtor’s Chapter 13 plan proposed to Supreme Court, the court noted that a
(1) retain the Sierra and cram down the plan’s proposed treatment of secured
5th Circuit Clarifies Sierra loan to the value of the Sierra, and claims can be confirmed if: (1) the se-
(2) surrender the Camry in connection cured creditor accepts the plan, (2) the
Issues on Cross with the Camry loan. Evolve objected debtor surrenders the property securing
Collateralization to the debtor’s plan on the basis that the the creditor’s claim, or (3) the debtor
cross-collateralization language prevent- invokes cram-down, which allows the
Evolve Fed. Credit Union v.Barragan- ed the debtor from surrendering one car debtor to keep the collateral over a credi-
Flores (In re Barragan-Flores), 984 while retaining the other. The bankruptcy tor’s objection as long as payments over
F.3d 471 (5 Cir. 2021). court confirmed the plan over Evolve’s the life of the plan will total the present
At the time of the debtor’s Chapter objection. Evolve filed a motion for new value of the collateral.
13 bankruptcy filing, he had outstanding trial, which was denied, and then ap- The debtor argued that Section 1325(a)
balances on two car loans with Evolve pealed the confirmation order and the or- (5) allows him to select an option for each
Federal Credit Union (Evolve). The pro- der denying the motion for new trial. The secured claim, thereby allowing him to se-
ceeds from the first loan were used to district court reversed the bankruptcy lect a different option for each of the two
purchase a GMC Sierra (the Sierra loan) court’s order confirming the plan and re- cars regardless of the cross-collateraliza-
and the proceeds from the second loan manded the case for further proceedings. tion provision. In contrast, Evolve argued
were used to purchase a Toyota Camry The debtor then appealed the district that the debtor must select one of the three
(the Camry loan). The documents evi- court’s order, which required the debtor options for each claim, rather than each
dencing the Sierra loan and Camry loan to either cram down or surrender all the piece of collateral that secures one claim.
Louisiana Bar Journal April / May 2021 430 Vol. 68, No. 6 www.lsba.org
Agreeing with the district court, the 5th The Parish was later dismissed from served with the 2006 suit. According
Circuit acknowledged that while Section the suit without prejudice, however, and to La. R.S. 13:5107, political subdivi-
1325(a)(5) does allow the debtor to pro- plaintiff died of malignant mesothelio- sions of the state may be served through
pose different options for each allowed ma in 2007. their designated agents, or if no such
secured claim, a debtor cannot select dif- In 2013, the children of the decedent agent is designated, through the district
ferent options for two pieces of collateral instituted a survivorship/wrongful death attorney, parish attorney, city attorney
securing the same claim. The court cited to action against Jefferson Parish, this time or other proper officer. Here, service
its previous decision in Williams v. Tower in the 24th Judicial District Court for had been made on the Jefferson Parish
Loan of Mississippi (In re Williams), 168 Jefferson Parish. Jefferson Parish re- District Attorney, but a contemporary
F.3d 845 (5 Cir. 1999), where it held that a sponded with an exception of prescrip- Parish ordinance and evidence in the
debtor must select the same option under tion, based on the fact that the delictual record showed that the Parish had des-
Section 1325(a)(5) for all collateral secur- action had been filed more than seven ignated its Parish Attorney as its agent
ing a single claim. In light of that prior years after Calamia’s death. Plaintiffs for service at that point. Because the
ruling and the facts before it, the court af- appealed the trial court’s sustaining the Parish Attorney had been so designated,
firmed the judgment of the district court, exception of prescription. service on the District Attorney was im-
finding that the debtor’s plan must select Plaintiffs asserted that the previous proper and, therefore, did not interrupt
the same option for both items of collat- suit in Orleans Parish against Jefferson’s prescription under article 3462.
eral securing the Camry loan in order to alleged joint tortfeasors interrupted pre- Having failed to file suit against
meet the requirement of Section 1325(a) scription, pursuant to La. Civ.C. art. Jefferson Parish in the proper venue and
(5). In doing so, the court noted that its 2324(C). However, the Parish raised is- serve its designated agent with process,
ruling merely restricts a debtor’s ability sues of venue and service as preventing the plaintiffs’ inherited cause of action
to select different options under Section interruption from ever occurring. against Jefferson Parish was never inter-
1325(a)(5) for different pieces of collat- The court first analyzed whether rupted and so had prescribed by 2013.
eral that secure the same loan. venue was proper as to Jefferson Parish The 5th Circuit affirmed the trial court’s
in the 2006 suit. La. R.S. 13:5104 states judgment sustaining the Parish’s excep-
—Heather LaSalle Alexis that suits against political subdivisions tion.
Secretary-Treasurer, of the state generally must be brought
LSBA Bankruptcy Law Section in the judicial district encompassing —Lawrence J. Centola
Hinshaw & Culbertson, L.L.P. that political subdivision. For that rea- Member, LSBA Civil Law and
900 Camp St., 3rd Flr. son, venue was improper as to Jefferson Litigation Section
New Orleans, LA 70130 Parish in the 2006 Orleans Parish suit. Martzell, Bickford & Centola
Their analysis could not stop there, 338 Lafayette St.
though, as La. Civ.C. art. 3462 states New Orleans, LA 70130
that prescription may still be interrupted and
despite improper venue, so long as a Ashton M. Robinson
Civil Law party is properly served. Beevers & Beevers, L.L.P.
and The court turned to the question of 210 Huey P. Long Ave.
Litigation whether Jefferson had been properly Gretna, LA 70053
5th Circuit Reviews
Rules for Suits Against Work Hard! Play Hard!
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Calamia v. Parish of Jefferson, 20-
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Plaintiff filed suit in 2006 against Darlene Rebowe
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his suit in Orleans Parish Civil District
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Louisiana Bar Journal April / May 2021 431 Vol. 68, No. 6 www.lsba.org
(Fla. Member) and one a Delaware cor- Architect’s representative testified that,
poration. at the direction of the principals of the
Pursuant to the Contract, certain ar- Developer, Architect continued to pro-
Corporate and chitectural services were to be provided vide services for the Original Project
Business Law for a fixed fee described in the Contract, between 2008 and 2012, and at no time
while other services to be agreed in the during such period did the principals
future would be provided at hourly rates of the Developer or its members ad-
set forth in the Contract. The facts were vise the Architect that the members had
Piercing the Company largely not in dispute. The Architect ceased funding the Developer or that the
provided the services described in Developer entity had ceased function-
Veil of an LLC and the Contract between 2007 and 2012. ing. In addition, no one affiliated with
Choice of Law Although Architect made multiple de- the Developer informed the Architect
mands for payment between 2008 and that the Developer entity had abandoned
Mathes Brierre Architects v. Karlton/ 2012, the vast majority of the amounts the Original Project.
ISG Enters., LLC, 19-0357 (La. App. owed to Architect by Developer un- Architect initiated arbitration pro-
4 Cir. 12/3/20), ____ So.3d ____, 2020 der the Contract were not paid. ceedings against the Developer in July
WL 7066428. Unbeknownst to Architect, near the end 2013 to collect amounts due Architect
In February 2007, a Louisiana-based of 2007, the members of the Developer under the Contract. The arbitration pro-
architectural firm (Architect) signed an ceased making capital contributions to ceedings were later dismissed due to
architectural services contract with a the Developer and the Developer en- the Developer’s failure to pay its share
Florida limited liability company (the tity ceased operations. However, during of the arbitrator’s fees. Architect then
Developer) in respect of a real estate the period between 2009 and 2012, the filed suit against the Developer and its
development proposed to be devel- members of the Developer indepen- two members, asserting claims for un-
oped (Original Project) in Algiers, La. dently retained and paid for services paid invoices and breach of contract;
Developer was owned by two members, provided by other service providers ren- Architect also sought to “pierce the veil”
one a Florida limited liability company dering assistance to the Original Project. of the Developer, alleging that the two
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Louisiana Bar Journal April / May 2021 432 Vol. 68, No. 6 www.lsba.org
members were liable for the Developer’s According to the court, a “false conflict” Environmental Quality (LDEQ) for the fa-
obligations under an alter ego theory. The exists when the governing law of each cility were insufficiently supported by ade-
trial court rendered judgment in favor of jurisdiction is identical, or so similar that quate, reliable evidence. An environmental
Architect for $944,669.23, plus interest, the same result would be reached under group, joined by a local resident intervenor,
holding the members of the Developer either law. Given that the 4th Circuit de- sued LDEQ challenging the adequacy of
solidarily liable with the Developer for termined that a false conflict existed in the air-permitting process. At a November
all amounts awarded. The 4th Circuit the subject case, the 4th Circuit applied hearing, the intervenor asked the court to
Court of Appeal affirmed the trial court’s Louisiana law and Louisiana’s veil- take judicial notice of “EJScreen” data,
findings in all respects. The 4th Circuit piercing standards. which is pollution and health-risk data
found no legal error in the trial court’s compiled by the EPA and, further, to take
analysis of the alter ego issue and, there- —Dean P. Cazenave judicial notice that the LDEQ did not con-
fore, applied the manifest error standard Member, LSBA Corporate and sider this available data before granting
of review. Business Law Section Formosa its air permits. The court deferred
The 4th Circuit found the following Kean Miller LLP ruling on the intervenor’s motion but in-
testimony persuasive: (1) the principals Ste. 700, 400 Convention St. stead “recogniz[ed] the need for adequate
of the Fla. Member formed a new entity Baton Rouge, LA 70802 environmental justice analysis . . . and the
and negotiated new agreements with the fact that LDEQ has no procedure for con-
landowners of land that is part of the same ducting an environmental justice analysis
series of riverfront tracts which were to in connection with a permitting decision .
be part of the Original Development, and . . .” The court ordered LDEQ to conduct
as part of those new agreements, released an environmental-justice analysis that in-
Environmental
assets previously held by the Developer cudes consideration of the EJScreen data
entity as required by the landowners (and
Law that intervenor had raised, and specifically
for the benefit of the new entity); (2) an ordered LDEQ to “publicly notice and re-
improper tax treatment of the Developer ceive public comment on pollution and
by its members and principals; (3) the health risks from the people of Louisiana
Developer entity failed to maintain its in-
Air Permit Dispute in its reconsideration of the environmental
dependent existence due to the actions of Sent Back to LDEQ for justice analysis.” The court also ordered
its members and their principals, which Further Public Input on the agency to evaluate the information re-
misled Architect, and other creditors, to ceived in those public comments and then
their detriment; and (4) the members of Environmental Justice supplement its basis for decision that origi-
the Developer failed to conduct business nally granted the air permits.
on a separate footing to such an extent Rise St. James v. La. Dep’t of Envtl. Both LDEQ and Formosa Plastics
that the company became indistinguish- Quality, No. 694,0239, Sec. 27, 19th have filed supervisory writs, so this ruling
able from its members. JDC, Judgment (Dec. 14, 2020). may not hold, but it demonstrates that at
The court noted that, although the In one of several lawsuits pertaining to least one state court has found that LDEQ
Louisiana Supreme Court has previous- the development of a large plant in St. James should more thoroughly consider pollution
ly observed that piercing the corporate/ Parish by Formosa Plastics, Judge Trudy and health-risk data to surrounding com-
LLC veil is governed by the law of the White in the 19th Judicial District Court munities when making permit decisions, as
states where the entity at issue is orga- heard arguments as to whether air permits well as better document that process.
nized (which would mean in this case the issued by the Louisiana Department of
laws of the State of Florida would have
governed the piercing the veil issue as
relates to the Developer), the Louisiana
Supreme Court also observed that if the
state in which the foreign LLC is orga-
nized has a standard for piercing the LLC
veil of such entity that differs from the
veil-piercing standards under Louisiana
law, the rules of the foreign jurisdiction
will apply. The Court examined Florida Christopher M. Moody
law and found that Florida’s veil-pierc- SELA Mediation Partner
ing standards are substantially similar to 985-602-3019
Louisiana law and, therefore, invoked c.moody@selaresolution.com
seladisputeresolution.com
the “false conflict” doctrine previously
recognized by the 4th Circuit in 2015.
Louisiana Bar Journal April / May 2021 433 Vol. 68, No. 6 www.lsba.org5th Circuit Has er venue was proper. The Sierra Club, and pointed that the Clean Air Act pro-
which had originally filed in the D.C. vides that a state must designate an area
Jurisdiction to Hear Circuit, argued that because the new as nonattainment if it “does not meet” the
EPA CAA Challenge; designations were part of a nationally NAAQS, which implied the use of cur-
applicable regulation, venue was exclu- rent, actual data rather than future projec-
Defers to Agency sive to the D.C. Circuit. The 5th Circuit tions: “Even with the best available mod-
Decision on Attainment disagreed and held that the case involved eling data, Texas could not be certain of
a locally or regionally applicable action, future events and future attainment.”
Texas v. U.S. EPA, 983 F.3d 826 (5 Cir. which meant it could be heard locally Regarding the Sierra Club’s argument
2020). and that EPA had the direction to select that neighboring counties contributed
In 2015, the EPA decreased its the venue for judicial review (either the to Bexar Country’s ozone load and thus
National Ambient Air Quality Standards local venue or the D.C. Circuit). should also be designated nonattainment,
for ozone to 0.07 ppm. The Clean Air The court then turned to Texas’s chal- the court similarly upheld the EPA’s de-
Act requires states to monitor air quality lenge to EPA’s designation of Bexar cision. The Sierra Club argued that the
and designate counties as in compliance County as a nonattainment county. EPA had previously considered counties
with that standard or not (“attainment” The EPA argued that it could change a to be in nonattainment if they contributed
or “nonattainment”). Texas initially des- county’s status from attainment to non- one percent or more to their neighbor’s
ignated Bexar County as nonattainment, attainment at its own discretion, and its air pollutants. The court found that the
then later asked the EPA in 2018 to redes- conclusion about the nonattainment sta- Clean Air Act did not mandate a one-
ignate the county as in attainment, since tus was correct. Texas argued that such percent rule and, moreover, that the EPA
modeling suggested it would be at 0.07 a change in status was unnecessary and conducted a data-intensive, technical and
ppm of ozone by 2020. The EPA refused should not have been made. It contended complex analysis when making its at-
and promulgated a final decision desig- that because Bexar County would have tainment decisions. Thus, the agency was
nating Bexar County as “marginal nonat- complied with the new NAAQS by 2020, neither arbitrary nor capricious in declar-
tainment” based on data from 2015-2017. the county should have been designated ing Bexar County’s three neighboring
The Sierra Club and the State of Texas as attainment, and the EPA’s failure to counties to be in attainment.
both sued; the Sierra Club wanted addi- consider the state’s modeling data was
tional counties surrounding Bexar to also arbitrary and capricious. —Lauren E. Godshall
be designated as nonattainment, based on The 5th Circuit agreed with the EPA, Member, LSBA Environmental
that 2015-2017 data, while Texas wanted applying the Chevron deference standard Law Section
the EPA to consider the modeling trend of review to EPA’s interpretation of the Tulane Environmental Law Clinic
that showed Bexar County eventually re- Clean Air Act. The court determined that 6329 Freret St.
ducing its ozone emissions. EPA’s own construction of the Clean Air New Orleans, LA 70118
The 5th Circuit first addressed wheth- Act language in question was permissible
Ronald E. Corkern, Jr. Brian E. Crawford Steven D. Crews Herschel E. Richard Joseph Payne Williams J. Chris Guillet
Panel experience in personal injury, insurance,
medical malpractice, construction law,
commercial litigation, real estate litigation
and workers’ compensation.
To schedule a mediation with Brian Crawford, please call Faye McMichael at 318-325-3200 or email Faye at Faye@bcrawfordlaw.com.
For other panelists, please call Kathy Owsley at the Natchitoches location (318-352-2302 ext. 116) or email Kathy at kmowsley@ccglawfirm.com.
Louisiana Bar Journal April / May 2021 434 Vol. 68, No. 6 www.lsba.orgactions demonstrated her intent prior to Nullity
her discharge from the hospital.
Anderson v. Anderson, 20-0186 (La.
Family Hearing Officers App. 5 Cir. 12/23/20), ____ So.3d ____,
Law 2020 WL 7639094.
Fairbanks v. Beninate, 20-0206 (La. Mr. Anderson filed a petition to annul
App. 5 Cir. 12/23/20), ____ So.3d ____, a child and spousal support judgment and
2020 WL 7637948. a judgment partitioning the parties’ com-
Divorce After a hearing officer recommended munity property. The trial court denied
that Mr. Fairbanks receive sole custody his petition, and the court of appeal af-
Nixon v. Nixon, 20-0694 (La. App. 1 of the parties’ minor child, and that Ms. firmed. Although he had not been served
Cir. 12/30/20), ____ So.3d ____, 2020 Beninate should have supervised visita- with the original motion to set the trial on
WL 7770881. tion, she objected to the recommenda- the community property partition, he was
The trial court granted Mr. Nixon’s tions. She then also filed a motion to served with the motion to reset the hear-
exception of prescription/peremption to have La. R.S. 46:236.5.C declared un- ing and had the opportunity to appear.
Ms. Nixon’s claim for permanent spou- constitutional on the ground of lack of Regarding the support judgment, he was
sal support. She initially filed her claim due process because parents can lose served with the trial date. He did not ap-
in her petition for divorce and then twice custody of their children without a mean- pear, but claimed that he did not receive
later in 2015 and 2019. The appellate ingful hearing. The trial court denied the the hearing officer’s recommendations,
court found that because she took no motion, and she appealed. The appellate thus preventing him from filing an objec-
steps to prosecute her rule for more than court found that while the “findings of tion. However, the clerk of court did mail
three years between 2015 and 2019, she fact” and “conclusions” of domestic him a notice of the judgment. Rather than
abandoned her claim under La. C.C.P. art. hearing officers are recommendations, appealing the judgment, he attempted to
561. Further, under La. Civ.C. art. 117, they are not final judgments, and that attack it by a petition for nullity, which
her claim was also perempted as, under the trial court must hear the evidence was improper, and the court found that it
abandonment, “the assertion of the claim and review the hearing officer’s recom- lacked jurisdiction to consider his appeal.
is considered never to have occurred.” mendations before accepting, reject-
ing or modifying them. Moreover, the Custody of Embryos
Dunn v. Dunn, 53,665 (La. App. 2 Cir. burden of proof before the trial court
1/13/21), ____ So.3d ____, 2021 WL remains on the moving spouse who Loeb v. Vergara, 20-0261 (La. App. 4
115925. originally had the burden of proof. The Cir. 1/27/21), ____ So.3d ____, 2021
Ms. Dunn filed an exception of no court found that as parties have the right WL 343415.
right of action to Mr. Dunn’s petition to hearings, the procedures in the stat- This case involved numerous proce-
for divorce under La. Civ.C. art. 103(1), ute are not unconstitutional. Here, too, dural issues as to Mr. Loeb’s suit against
claiming that the alleged date of separa- the trial court held a hearing, at which Ms. Vergara regarding two frozen embry-
tion was not correct. The trial court denied it took evidence, so the statute was not os created by them, which were stored in
her exception and granted the divorce, unconstitutionally applied to her. a reproductive facility in California. Ms.
and she appealed. Due to serious medical The appellate court also found that Vergara filed numerous exceptions, all of
issues, Ms. Dunn was hospitalized, and the court’s award of sole custody to him which were sustained by the trial court,
the dispute was over the date that she ex- and supervised visitation to her was sup- and also by the court of appeal, although
pressed her intention to live separate and ported by the evidence. The appellate with some amendments. The case is more
apart from him, and the date of his un- court also affirmed the trial court’s find- than 40 pages long, with a wealth of proce-
derstanding of her intent. She argued that ing her in contempt and ordering her to dural analysis.
she did not intend to separate from him pay his attorney’s fees and court costs. The court of appeal reversed the trial
until she was advised by her doctor that It also found that because there was in- court’s ruling regarding the sealing of the
she needed to remain near the hospital sufficient evidence to support the child record. After a thorough review of the law
after her discharge because of her condi- support award to him, and because re- regarding the sealing of records, the court
tion. He, on the other hand, argued that quired documents were not introduced of appeal found that the record could not
she had made it clear to him once she left into evidence, it could not determine be sealed. However, it allowed those por-
for the hospital that she was not going to whether the trial court erred in calcu- tions of the record that had previously been
return to the matrimonial domicile. She lating the child support award; thus, it redacted to remain redacted. The court also
had asked that he bring her automobile vacated the child support judgment and addressed the claim of privilege between
and personal items to her sister’s home, remanded to the trial court to take the Mr. Loeb and his accountant and found
where she intended to go before and after required evidence. that the exception to accountant/client
the surgery. The court of appeal affirmed
privilege applied as Mr. Loeb was alleging
the trial court, finding that her words and
the matter was a “domestic” and “custody
Louisiana Bar Journal April / May 2021 435 Vol. 68, No. 6 www.lsba.orgmatter.” La. C.E. art. 515.(C)(10). The court also affirmed that Louisiana
Because a prior matter on the same sub- lacked both general and specific personal
ject had been filed in the State of California jurisdiction over Ms. Vergara. Further, the Fidelity,
by Ms. Vergara, the court found that the reproductive facility had not been joined Surety and
petition was lis pendens to the present and should have been made a party. Thus, Construction
petition in Louisiana. However, the trial the court found that the matter could be Law
court was not authorized to dismiss the dismissed, without prejudice, as Mr. Loeb
Louisiana suit, but only to stay it under La. had an adequate remedy in the California
Civ.C. art. 532. The court of appeal also suit. The court also affirmed the denial of No Contractor’s
found that the matter was filed in an im- Mr. Loeb’s motion for discovery, as his dis-
proper venue, as neither party was domi- covery went beyond the limited venue and
License is an Absolute
ciled in the State of Louisiana. Particularly, jurisdiction issues before the court. He had Nullity, Even with
the court found that Mr. Loeb’s claims that attempted to issue discovery on the merits, Respect to Indemnity
he was domiciled in Louisiana were false. which the trial court denied. The court did
Further, Mr. Loeb had testified that he not address Mr. Loeb’s exceptions of no Maroulis v. Entergy La., LLC, 20-0241
filed in Louisiana only because Louisiana right of action, no cause of action and lack (La. App. 5 Cir. 2/10/21), ____ So.3d
recognized embryos as persons, whereas of procedural capacity because its other ____, 2021 WL 484326.
California did not. The appellate court also rulings rendered them moot. Hotel Investors entered into construc-
found that Louisiana lacked subject matter tion contracts with Sigur Construction,
jurisdiction under the UCCJEA, after read- —David M. Prados LLC, and Castleman, Donlea and
ing it in pari materia with the Louisiana Member, LSBA Family Law Section Associates, LLC, by which both parties
Human Embryo Statutes and delving into Lowe, Stein, Hoffman, Allweiss agreed to operate as general contractors
the Legislature’s intent in passing both of & Hauver, L.L.P. on a local hotel-renovation project. In con-
those statutes. The court found that the Ste. 3600, 701 Poydras St. nection with the work to be performed,
frozen embryos could not be classified as New Orleans, LA 70139-7735 Castleman hired Sunbelt Rentals Scaffold
children. Services, LLC, as a subcontractor on the
project. While working on the hotel, a
Sunbelt employee was injured when a
piece of scaffolding equipment contacted
an overhead power line.
The injured Sunbelt employee sued
Hotel Investors and various other defen-
dants under negligence theory. In turn,
Hotel Investors filed a third-party demand
against Castleman and its insurer, alleging
breach of the construction contract and
seeking indemnity per the contract with
Castleman as well as coverage under the
insurer’s policy.
In response to this third-party demand,
Castleman raised the affirmative defense
of an illegal contract. Castleman, a Texas-
based company, was not a licensed con-
tractor in Louisiana. Castleman pointed
to La. R.S. 37:2150, which requires con-
struction projects of $50,000 or more to
be performed by a contractor licensed in
Louisiana. Because Castleman did not
have this license, it argued that the contract
with Hotel Investors was absolutely null.
However, the trial court was not persuad-
ed by this argument, and Castleman filed
a writ application with the Louisiana 5th
Circuit seeking review of that decision.
The 5th Circuit examined several argu-
Louisiana Bar Journal April / May 2021 436 Vol. 68, No. 6 www.lsba.orgments raised by Hotel Investors that the to respond with his own concurring opin-
contract was not null or that Castleman ion.
still owed indemnity. First, Hotel Investors Labor and Just over three weeks after this article
argued that all the work performed on the Employment was initially submitted for publication,
project was lawfully performed because Law on March 9, 2021, the 5th Circuit ordered
Sigur, a properly licensed Louisiana con- that the case be reheard en banc. Hewitt
tractor, had what was styled by the 5th v. Helix Energy Sols. Grp., No. 19-20023,
Circuit as a “joint venture-like endeavor” 2021 U.S. App. LEXIS 6848 (5 Cir. March
with Castleman. The 5th Circuit rejected Overtime Requirements 9, 2021). Thus, the entire 5th Circuit will
this argument, finding that it is well estab- of the Fair Labor now review the opinions of the majority,
lished under Louisiana law that all mem- Judge Wiener’s dissent and Judge Ho’s
bers of a joint venture must be properly
Standards Act concurrence, and the en banc court will
licensed for the venture as a whole to meet have the final say as to the line of reason-
Hewitt v. Helix Energy Sols. Grp. Inc.,
the licensing requirement. ing that should be adopted for “day-rate”
983 F.3d 789 (5 Cir. 2020), vacating
The other major argument advanced cases such as this one.
Hewitt v. Helix Energy Sols. Grp., Inc.,
by Hotel Investors was the “clean hands”
956 F.3d 341 (5 Cir. 2020).
doctrine. Hotel Investors argued that The Majority Opinion
The 5th Circuit recently held that cer-
Castleman should not be allowed to in- The majority first determined that,
tain employees paid on a “day-rate” basis
voke nullity to avoid obligations it know- while a worker paid by the day can be ex-
are not exempt from the overtime require-
ingly undertook and paid for. However, the empt from overtime under the FLSA, two
ments of the Fair Labor Standards Act
5th Circuit noted that there was a distinc- conditions must be satisfied to meet the
(FLSA). The plaintiff, Michael Hewitt,
tion between this case and the typical ap- salary-basis requirement: (1) the arrange-
worked as a tool pusher for an oil and gas
plication of this doctrine. The 5th Circuit ment must include a “guarantee of at least
company and was paid $963 per day with-
noted that the typical case in this context the minimum weekly required amount
out any guaranteed salary. In other words,
involves an unlicensed contractor who paid on a salary basis [currently $684/
he would not be paid at all unless he
performs work, and then the owner re- week] regardless of the number of hours,
worked at least one day during the week.
fuses to pay for the work on the basis of days or shifts worked,” and (2) there must
Thus, the issue presented was whether
contract nullity. In those circumstances, be a “reasonable relationship . . . between
Hewitt, under this day-rate compensation
the 5th Circuit noted that Louisiana courts the guaranteed amount and the amount ac-
system, was paid “on a salary basis” under
have found the contractor is still entitled to tually earned.”
29 C.F.R. § 541.604(b).
recover costs for labor, services and mate- The majority then held that the defen-
One notable aspect of the decision was
rials under unjust-enrichment theory, pre- dant could not satisfy the first requirement
that the same three-judge panel issued a
venting and estopping the owner from tak- of the salary-basis test because it paid a
decision in April 2020 unanimously hold-
ing full advantage of the contract nullity. daily rate without any weekly guarantee
ing that Hewitt was non-exempt, but the
However, in this case, the performance that was paid “regardless of the number
later opinion (discussed in this article)
sought by Hotel Investors was contractual of hours, days or shifts worked.” As the
had a divided panel. While Judges Ho
indemnity, an obligation that arose only majority explained, the weekly guarantee
and Higginson stuck with the panel’s ini-
by virtue of the contract — which was de- requirement “sets a floor for how much the
tial reasoning, Judge Weiner changed his
clared absolutely null and void ab initio. employee can expect to earn,” no matter
view and wrote a dissenting opinion ex-
As such, the 5th Circuit found that Hotel how much he works. And when an em-
plaining why, which prompted Judge Ho
Investors could not enforce the terms of a ployee is paid a day rate and does not re-
null and void contract and that Castleman
was not required to provide indemnity.
However, the 5th Circuit did note that the
injured worker could potentially bring a
claim against Castleman for negligence.
Hotel Investors, on the other hand, was not
so fortunate.
—Joshua D. Ecuyer
Member, LSBA Fidelity, Surety &
Construction Law Section
Simon, Peragine, Smith
& Redfearn, LLP
1100 Poydras St., 30th Flr.
New Orleans, LA 70163
Louisiana Bar Journal April / May 2021 437 Vol. 68, No. 6 www.lsba.orgceive a guaranteed amount of at least $684/ Judge Weiner’s Dissent sated employee” under § 541.601 of the
week, such an arrangement is “the very op- After initially siding with the major- FLSA’s regulations. Thus, Judge Wiener
posite of an amount that is paid ‘regardless ity, Judge Wiener changed his view and concluded that the reasonable-relationship
of the number of . . . days . . . worked.’” concluded that (1) Hewitt’s day-rate com- test set forth in § 541.604(b) was irrele-
As to the “reasonable relationship” re- pensation satisfied the salary-basis test, vant because the highly compensated em-
quirement, the FLSA’s regulations provide and (2) the “reasonable-relationship” test ployee regulation includes no reference
that it is satisfied so long as “the weekly did not apply to Hewitt because he was whatsoever to a reasonable-relationship
guarantee is roughly equivalent to the em- a “highly compensated employee” under condition.
ployee’s usual earnings at the assigned the FLSA. Judge Weiner’s dissent also empha-
hourly, daily or shift rate for the employ- As to the salary-basis requirement, sized that Hewitt was a “highly skilled
ee’s normal scheduled workweek.” 29 Judge Weiner determined that Hewitt’s supervisor” who earned “a staggering
C.F.R. § 541.604(b). Applying this regula- day-rate compensation satisfied this con- $200,000 or more per year.” According
tory text to the day-rate compensation ar- dition because if he “performed any work to Judge Weiner, the FLSA was intended
rangement, the majority found that it did — even for just one hour — he was paid to protect low-wage laborers and, there-
not satisfy the reasonable relationship test his full daily rate” and, therefore, “[h]e fore, should not be “interpreted to protect
because Hewitt was paid “orders of mag- was thus paid at least $963 for each and workers making high five-figure or six-
nitude greater than the minimum weekly every week he worked . . . without regard figure incomes.” Finally, the dissent con-
guaranteed amount theorized by [the de- to the number of days or hours worked.” cluded that the majority opinion would
fendant] — namely, Hewitt’s daily rate.” Judge Weiner believed that the plaintiff have devastating effects on energy sector
In other words, even assuming the $963 was paid on a salary basis because he re- employers in the 5th Circuit by putting
day rate was a guaranteed weekly amount, ceived a guaranteed amount of $963, his “the region, and the industry, at a signifi-
it did not have a reasonable relationship to daily rate of pay, for any week in which cant disadvantage to other exploration
the amount Hewitt would earn for a full he performed any work at all, even if just operations elsewhere in the country and
week of work (which would total $4,815/ an hour. the world.” For all these reasons, Judge
week for five days of work based on the Judge Wiener also found that the rea- Weiner urged the 5th Circuit to grant re-
$963/day rate). sonable-relationship test was inapplicable hearing en banc.
because Hewitt was a “highly compen-
Judge Ho’s Concurrence
Judge Ho’s concurrence focused on
the dissent’s determination that the rea-
sonable-relationship test did not apply to
DORÉ-SIMMONS Hewitt because he was a highly compen-
sated employee. According to Judge Ho,
the dissent’s legal reasoning would ren-
der the reasonable-relationship condition
With a combination of over 85 years of practice litigating, negotiating
meaningless because none of the FLSA
and resolving disputes, judicial and non-judicial, Jim and Gracella have exemption regulations — whether the
shared experience in personal injury, commercial, insurance defense, highly compensated, executive, adminis-
insurance litigation, attorney professional liability, contract litigation, trative or professional exemptions — ex-
environmental litigation, medical malpractice, oil and gas legacy plicitly reference the requirement. Thus,
litigation, and claims and disputes. the dissent’s interpretation would alto-
gether eliminate the reasonable-relation-
ship requirement for all FLSA exemptions
and render it “a dead letter — contrary to
the canon against surplusage.” Judge Ho
JAMES P. DORÉ also believed that the dissent erred by rely-
GRACELLA SIMMONS ing on the policy contentions advanced by
an “armada of oil industry amici,” viz, that
Mediation & Arbitration energy companies in the 5th Circuit would
be at a significant economic disadvantage
to their competitors if the majority’s deci-
sion were allowed to stand. In Judge Ho’s
D R S LO U I S I A N A . C O M view, a true textualist should not buy into
Jim Doré • 225.937.4825 • jim.dore@drslouisiana.com the “‘bad for business’ theory of statutory
Gracella Simmons • 225.937.8061 • gracella.simmons@drslouisiana.com interpretation offered by the dissent under
the purported flag of textualism”
Louisiana Bar Journal April / May 2021 438 Vol. 68, No. 6 www.lsba.orgConclusion through 524. The district court granted the
The majority’s holding established a motion, and the Hills appealed.
bright-line rule that a worker paid a daily The Hills noted that, under La. Civ.C.
rate, “with no minimum weekly guaran- Mineral art. 2452, “The sale of a thing belonging
tee,” is not paid on a salary basis under Law to another does not convey ownership.”
“the plain language of the salary basis Further, although the Civil Code applies
test.” It also held that the reasonable- to mineral disputes if the “[Mineral] Code
relationship test must be satisfied for the does not expressly or impliedly provide
highly compensated employee exemption Company Purchasing for a particular situation,” the Mineral
— and all other FLSA exemptions — to Code “prevails” to the extent that it pro-
Oil from Operator vides for a particular situation. La. R.S.
remove an employee from the statute’s
overtime protections. that Committed 31:2. The Hills argued that the Mineral
The back-and-forth between Judge Trespass Could Invoke Code provides a rule that applies to their
Weiner’s dissent and Judge Ho’s concur- dispute with Sunoco. Thus, the Mineral
rence also was noteworthy. Both judges Louisiana’s Good Faith Code prevails over the Civil Code’s good
claimed that their legal analyses were Purchaser Defense faith purchaser defense, and that defense
rooted in textualism, yet they reached dia- does not apply.
metrically opposite conclusions as to (1) Hill v. TMR Expl., Inc., 20-0667 (La. In particular, the Hills relied on Mineral
how the salary-basis test can be satisfied, App. 1 Cir. 1/27/21), ____ So.3d ____, Code article 210. This article provides
and (2) whether the reasonable relation- 2021 WL 267916. protection to “[a] purchaser of minerals
ship condition applied to high-earning in- The Hills brought a subsurface tres- produced from a recorded lease granted
dividuals like Hewitt. pass action against TMR Exploration, by the last record owner holding under an
Now that the 5th Circuit has decided to Inc., Park Exploration, Inc. and Vitol instrument translative of title to the land or
rehear the Hewitt decision en banc, its out- Resources, Inc., seeking to recover the mineral rights leased . . . unless and until a
come is now in flux and it is an open ques- value of minerals that were produced from suit is filed testing title to the land or min-
tion as to whose interpretation will carry the Hills’ land without authority. The Hills eral rights embraced in the lease and the
the day. Regardless, given the importance alleged that TMR drilled a well from the purchaser receives notification of it by reg-
of the decision on “day-rate” overtime surface of a neighboring tract that TMR istered mail.” However, the “purchaser is
cases, there is no question that FLSA had under lease, but the well was bot- not entitled to this protection unless he has
lawyers on both sides of the aisle will be tomed beneath the Hills’ land. The Hills filed for registry in the conveyance records
keeping a close eye on how the case plays had not granted a lease or consented to the of the parish in which the land subject to
out before the full 5th Circuit. well, and the Hills’ land was not part of a the lease is located notice that the minerals
drilling unit. TMR produced oil from the produced have been and will be purchased
—Christopher L. Williams well for a time, then assigned its interest by him.” Because Sunoco did not file a no-
Member, LSBA Labor and to Park, which subsequently assigned its tice in the conveyance records, the Hills ar-
Employment Law Section interest to Vitol. gued Sunoco was not entitled to protection
Williams Litigation, L.L.C. The Hills also sued certain Sunoco under Mineral Code article 210.
Ste. 1850, 639 Loyola Ave. entities (collectively, Sunoco) that had Sunoco argued, however, that Mineral
New Orleans, LA 70113 purchased oil produced from the well. Code article 210 did not apply, and the
Sunoco filed a motion for summary judg- Louisiana 1st Circuit Court of Appeal
ment to dismiss the claims against it based agreed. The 1st Circuit stated: “The pur-
on the good-faith-purchaser defense set pose and intent of La. R.S. 31:210 is to
forth in Louisiana Civil Code articles 521 address rental and royalty payments due
Become a
to the LSBA Statement of Diversity Principles
For more information or to view the statement online, visit
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Louisiana Bar Journal April / May 2021 439 Vol. 68, No. 6 www.lsba.orgto parties holding an interest in the ‘leased pass for the value of the oil produced by and expense experience.” Increased costs
property’ when a dispute or defect in the those defendant operators. of PCF coverage motivate healthcare
title exists.” But here, the Hills’ claims providers to “avoid unreasonably danger-
were based on a trespass beneath their un- —Keith B. Hall ous conduct.” As applied to the facts in
leased land, and these claims were “sepa- Member, LSBA Mineral Law Section Thomassie, the Court decided that the col-
rate and distinct from the ‘recorded lease’ Director, Mineral Law Institute lateral source rule did act as a deterrent.
over the land of [the Hills’ neighbor.]” For LSU Law Center The second issue was whether the
this reason, Mineral Code article 210 did 1 E. Campus Dr. plaintiff paid for the coverage benefits or
not apply. Baton Rouge, LA 70803-1000 whether he received an actual windfall or
Because Mineral Code article 210 did and double recovery. The Court found that Mr.
not apply, it would not prevail over oth- Lauren Brink Adams Thomassie made payments to TRICARE
erwise applicable Civil Code provisions. Member, LSBA Mineral Law Section for insurance coverage; thus, he did expe-
Moreover, the 1st Circuit concluded that Baker, Donelson, Bearman, rience “some diminution in his patrimony
Sunoco qualified for the Civil Code’s Caldwell & Berkowitz, P.C. so no actual windfall or double recovery
good faith purchaser defense. Under La. Ste. 3600, 201 St. Charles Ave. result[ed].” The case was remanded.
Civ.C. art. 522, “A transferee of a corpo- New Orleans, LA 70170-3600
real movable in good faith and for fair Daubert Motion
value retains the ownership of the thing
even though the title of the transferor is Davis v. Ghali, 20-1260 (La. 2/9/21), ____
annulled on account of a vice of consent.”
Further, under article 524, “[t]he owner
Professional So.3d ____, 2021 WL 457192.
Liability The plaintiff contended that the de-
of a lost or stolen movable may recover fendant doctor breached the standard of
it from a possessor who bought it in good care during the performance of a robot-
faith . . . from a merchant customarily ic-assisted, sleep-apnea tongue surgery
selling similar things,” but only after the (UPPP). The defendants filed a Daubert
owner reimburses the possessor for “the Collateral Source motion, challenging the qualifications of
purchase price.” Article 523 specifies: the plaintiff’s expert because he had never
“An acquirer of a corporeal movable is in Thomassie v. Amedisys La Acquisitions,
performed a robotic UPPP. The trial court
good faith for purposes of this Chapter un- LLC, 20-1229 (La. 1/20/21), ____ So.3d
granted the motion, ruling that the otolar-
less he knows, or should have known, that ____, 2021 WL 193832.
yngologist would be permitted to testify
the transferor was not the owner.” Here, The court of appeal ruled that
as an expert in his specialty “but cannot
the Hills did not produce any evidence to TRICARE was a government-funded pro-
testify as to the performance of [r]obotic
challenge Sunoco’s status as a good faith gram that did not involve a contract be-
surgery.”
purchaser. Therefore, Sunoco was entitled tween an insurer and insured, and it was
The appellate court denied the plain-
to summary judgment. therefore not a collateral source because
tiff’s request for a reversal, following
Further, the court noted another aspect only the United States held the right to
which the plaintiff filed a writ application
of Louisiana law that might defeat the recover medical expenses it paid in this
to the Supreme Court.
Hills’ claim. In particular, the Hills’ claim medical malpractice case (see LBJ Vol.
The plaintiff showed that the expert
against Sunoco was based on a premise 68, No. 4, pages 385-286). The Louisiana
in question had numerous peer-reviewed
that the Hills were owners of the oil. But Supreme Court reversed.
publications, had been admitted as an ex-
under Louisiana law, no one owns oil or In a per curiam opinion, the Court
pert witness in several states and had per-
gas naturally in place in the subsurface. examined the two factors that are deter-
formed more than 15,000 otolaryngologi-
La. R.S. 31:6. A landowner generally has minative of whether payment of medical
cal surgeries, but he had never performed
the exclusive right to drill and produce oil, expenses by a third-party is a collateral
a robotic UPPP. He had retired from pri-
gas or other fugitive minerals from the source.
vate practice but remained on the teaching
land, “and to reduce them to possession The first issue was whether application
staff of a medical center, where he taught
and ownership,” but his or her ownership of the rule would “further the primary goal
robotic and non-robotic otolaryngologic
of these fugitive minerals does not begin of tort deterrence,” which it said, “has been
surgery. The plaintiff also argued that ro-
until the landowner reduces them to pos- an inherent, inseparable aspect of the col-
botic surgery was not the only surgical pro-
session. Here, the Hills never possessed lateral source rule since its inception over
cedure used for this condition but instead
the oil sold to Sunoco. one hundred years ago.” The Court rea-
was “merely a choice made by the sur-
Accordingly, the court found the Hills soned that the PCF’s capital comes from
geon.” The Court reversed the trial court’s
lacked any claim against Sunoco based on surcharges paid by healthcare providers
grant of the Daubert motion to prevent the
ownership of the oil, although the Hills and that the amounts of the charges are
physician from testifying as to the standard
might have trespass claims against TMR, based on studies that consider “the health-
of care applicable to this case.
Park and Vitol based on subsurface tres- care provider’s past and prospective loss
Louisiana Bar Journal April / May 2021 440 Vol. 68, No. 6 www.lsba.orgDefault Judgment in the [Central Business District] (CBD)
and French Quarter.” The 1st Circuit held
Kimble v. Curahealth New Orleans, that the trial court correctly concluded that
LLC, 20-0286 (La. App. 4 Cir. 7/8/20), Taxation “room taxes” referenced all taxes levied
302 So.3d 579, writ denied, 20-0981 (La. by the State and the City of New Orleans
11/4/20), 303 So.3d 651. on the furnishing of sleeping rooms. The
The defendant failed to answer the 1st Circuit found nothing in the plain
plaintiff’s petition for damages or other- language of Subsection (e) of La. R.S.
wise make an appearance despite receiv- Discounted and 27:243(C)(1)(i)(2) that either limited its
application to lodging physically connect-
ing valid service through its agent for ser- Complimentary Hotel ed to the official gaming establishment or
vice of process. A motion for a preliminary
default was granted 50 days after service.
Rooms Are Still Taxable excluded third-party hotels from its provi-
The defendant did not respond to the mo- sions. Room taxes are required to be paid
Jazz Casino Co., LLC v. Bridges, 20- by Harrah’s as the casino-gaming opera-
tion or answer the petition. Months later,
1145 (La. 2/9/21), ____ So.3d ____, tor on all discounted and complimentary
the plaintiff moved to confirm the default.
2021 WL 457113. rooms at the applicable tax rates based on
The defendant was served through its
Jazz Casino Company, LLC, and JCC the average seasonal rates for the preced-
agent and again did not respond. The de-
Fulton Development, LLC (collectively ing year of hotels in the CBD and French
fault confirmation hearing was scheduled
Harrah’s) sought a writ to the Louisiana Quarter.
for September, but the plaintiff requested
Supreme Court to seek review of the Mindful that businesses generally
a special hearing for presenting live ex-
Louisiana 1st Circuit Court of Appeal’s do not give their assets away, the 1st
pert testimony and other evidence. A new
decision to affirm a trial court judg- Circuit held the trial court correctly de-
hearing was scheduled for December. The
ment, granting a motion for partial sum- termined that a consideration was present
defendant was not served with the order
mary judgment filed by the Louisiana in Harrah’s furnishing of discounted and
resetting the confirmation hearing. During
Department of Revenue (Department). complimentary hotel rooms to its patrons
the December hearing, plaintiff established
The trial court judgment declared that in exchange for the patron’s participation
a prima facia case for negligence and dam-
Harrah’s owed state sales tax, as well in gaming activities at Harrah’s such that
ages, and a monetary judgment was issued.
as Louisiana Stadium and Exposition Harrah’s owed room taxes as set forth in
The defendant’s first appearance in the
District and New Orleans Exhibition Hall Subsection (e). The court noted the expert
case was in the form of a motion for a new
Authority tax (collectively occupancy testimony of the Department’s witness
trial, in which it contended that the judg-
taxes), on all discounted and complimen- that said Harrah’s provided their patrons
ment was null because of a lack of service.
tary hotel rooms furnished to patrons at discounted or complimentary hotel rooms
The plaintiff countered that the defendant’s
Harrah’s New Orleans hotel as well as in exchange for a statistically calculated
motion “improperly combined an insuffi-
certain third-party hotels during the tax return or a theoretical win that Harrah’s
ciency of evidence claim with a nullity
periods at issue. anticipated receiving.
claim.” Id. at 581. The trial court ruled that
The 1st Circuit held that Harrah’s, as Judge Theriot of the 1st Circuit dissent-
the default judgment was null for lack of
the casino gaming operator, is mandated ed in part. He opined that, under La. R.S.
service and granted the motion for a new
to pay room taxes “on all discounted and 27:243(C)(1)(i)(2)(e), a gaming casino
trial, deciding that the plaintiff should have
complimentary rooms . . . at the appli- operator does not own or operate lodging
served the defendant with the motion to re-
cable tax rates based on the average sea- when providing complimentary rooms to a
set the September hearing.
sonal rates for the preceding year of hotels casino patron at third-party hotels. He stat-
The appellate court reversed the trial
court’s ruling and found valid the initial
default judgment. The court acknowl-
edged that the defendant had not been
advised of the new hearing date, but, as it
had admitted receiving personal service of
the original petition, it [i]ndisputably had
adequate notice of the proceedings against Kirk A. Guidry
it through verified service, and yet allowed SELA Mediation Panelist
nearly ten months to pass without taking 985-602-3019
k.guidry@selaresolution.com
any action.” Id. at 585. seladisputeresolution.com
Mediation Practice Areas:
—Robert J. David - Personal Injury - Maritime Cases
Gainsburgh, Benjamin, David, - Products Liability
Meunier & Warshauer, L.L.C.
Ste. 2800, 1100 Poydras St.
New Orleans, LA 70163-2800
Louisiana Bar Journal April / May 2021 441 Vol. 68, No. 6 www.lsba.orged that the Department was not entitled to ment factor includes “net sales made in Due Process Clause of the U.S. Constitution.
room taxes at the average seasonal rate for the regular course of business and other Robinson v. Jeopardy Productions, Inc.,
the third-party hotels comped by Harrah’s. gross apportionable income attributable 19-1095 (La. App. 1 Cir. 10/21/20), ____
He signed onto the rest of the opinion. to [Louisiana]” in the numerator and “to- So.3d ____, 2020 WL 6162836, writ de-
The Louisiana Supreme Court issued a tal net sales made in the regular course of nied, 20-1343 (La. 1/20/21), ____ So.3d
per curiam opinion that granted Harrah’s business and other gross apportionable in- ____, 2021 WL 193855. The 1st Circuit
writ application in part and reversed judg- come of the taxpayer” in the denominator. had held that a California company did not
ment in part. The Court held that, for the The Department interpreted this provision have due-process nexus with Louisiana for
reasons assigned by Judge Theriot, the as specifically excluding “sales not made corporate-income-tax purposes based solely
writ was granted in part to reverse the low- in the regular course of business” from on indirectly licensing intangibles into the
er courts’ grant of summary judgment in the numerator and the denominator of the state. The Court did not provide any written
favor of the Department only as it relates sales ratio of the apportionment factor. reason for declining to hear the case.
to room taxes on third party-hotel rooms The court held that the Department’s In analyzing the due-process require-
that Harrah’s neither owns nor operates; regulation excluding sales not made in the ments, the 1st Circuit found that the tax-
otherwise, the writ was denied. The Court regular course of business from the sales payer had not intentionally or directly en-
affirmed the majority of the 1st Circuit’s factor was contrary to the clear wording gaged in activities within Louisiana. The
ruling in favor of the Department. The of La. R.S. 47:287.95(F), as well as the court determined that the taxpayer’s contact
Court only modified the lower court rul- legislative history excluding similar lan- with Louisiana was random, fortuitous and
ing in part by holding that Harrah’s does guage from the statute. Thus, the taxpayer attenuated, and was initiated by the inde-
not have to pay tax on the “average sea- correctly included its gain from the sale pendent activities of third parties. As there
sonal rate” when it provides a complimen- of an LLC interest in the denominator, was no direct and intentional contact with
tary room at a third-party hotel. Instead, but not the numerator, of the sales ratio as Louisiana, the court determined that the tax-
Harrah’s would have to pay tax only at “other gross apportionable income.” The payer did not have sufficient minimum con-
the discounted amount actually charged to Department has elected not to appeal the tacts with the state to satisfy the Due Process
Harrah’s by the third-party hotel. decision; thus, the judgment is now final. Clause and upheld the trial court’s judgment
sustaining the taxpayer’s exception for lack
—Antonio Charles Ferachi Supreme Court Declines of personal jurisdiction and dismissing the
Member, LSBA Taxation Section Department’s petition to collect taxes.
Director of Litigation-General Counsel to Hear Due Process
Louisiana Department of Revenue Nexus Case —Michael McLoughlin
617 North Third St. Member, LSBA Taxation Section
Baton Rouge, LA 70821 The Louisiana Supreme Court rejected Kean Miller LLP
the Department’s appeal in a case addressing Ste. 3600, 909 Poydras St.
1st Circuit Strikes Down the extent of the state’s jurisdiction under the New Orleans, LA 70112
Tax Regulation that
Conflicts with State Law Solo, Small Firm
The Louisiana 1st Circuit Court of
Appeal in Davis-Lynch Holding Co.,
Inc. v. Robinson, 19-1574 (La. App. 1
virtual conference
Cir. 12/30/20), ____ So.3d ____, 2020
WL 7766314, held that the Louisiana SAVE $50
Department of Revenue’s corporate-in- EARLY BIRD
come-tax-apportionment regulation (LAC APRIL ‘TIL APRIL 1
61:I.1134(D)) incorrectly excluded sales 2021
not made in the regular course of busi-
ness from the sales ratio of the corporate-
income-tax-apportionment formula. The
court found that the clear language of the
statute, and the legislative history behind
it, indicated that there was no intention by
the Legislature to impose such a narrow
reading of the sales ratio as is found in the
regulation. 14 TH
ANNUAL
La. R.S. 47:287.95(F)(1)(c) provides
that the sales ratio of the apportion- www.lsba.org/goto/soloconference2021
Louisiana Bar Journal April / May 2021 442 Vol. 68, No. 6 www.lsba.orgYou can also read
