author: | .DOWNING, J.

text:
    Charles WOPARA v. STATE EMPLOYEES’ GROUP BENEFITS PROGRAM.
    No. 2002 CA 2641.
    Court of Appeal of Louisiana, First Circuit.
    July 2, 2003.

      Dele A. Adebamiji, Baton Rouge, Counsel for Plaintiff/Appellant Charles Wopara.
    William A. Norfolk, Baton Rouge, Counsel for Defendant/Appellee State Employees’ Group Benefits Program.
    Robert R. Boland, Jr., Baton Rouge, Counsel for Allen H. Reynolds, Director, Department of State Civil Service.
    Before: KUHN, DOWNING and GAIDRY, JJ.
   | .DOWNING, J.

Charles Wopara, a permanent-status civil service employee with the Office of Group Benefits (OGB), appeals the dismissal of his appeal to the Louisiana State Civil Service Commission (Commission). For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Charles Wopara is employed with OGB as a Group Benefit Specialist 2. On December 5, 2001, OGB advised Wopara that it was considering taking disciplinary action against him, in the form of a suspension without pay for up to and including five days, for failure to report a potential conflict of interest as required by OGB Policy 28.

Wopara responded, denying the OGB charges. After considering his response, the OGB advised on December 19, 2001, that it had determined to go forward with disciplinary action in the form of a reduction in pay equivalent to a five-day suspension without pay. As a consequence, Wop-ara’s pay was reduced from $1,365 to $1,138 bi-weekly for a period of six weeks.

On January 11, 2002, Wopara appealed the disciplinary action to the State Civil Service Commission. The Referee appointed by the Commission held a public hearing on April 25, 2002, to determine the merits of Wopara’s appeal. After considering the testimony and exhibits introduced by OGB and Wopara, the Referee rendered a decision on June 18, 2002, finding that OGB had cause to discipline Wop-ara, and specifically concluding that Wop-ara’s ownership interest in several entities constituted a potential conflict of interest or the appearance of same, such that he should have reported his financial interest in those entities in compliance with OGB policies and procedures. Wopara applied for a review of the Referee’s | .decision, which was denied on September 16, 2002. Accordingly, the decision of the Referee became the decision of the Commission.

Wopara now appeals to this court, raising a single assignment of error, as follows:

The action of the Commission was contrary to the law and evidence and the Commission erred in finding that Charles Wopara failed to disclose his financial interests in New Era Electronic Medical Claims Processing, Inc. and Faith, LLC DBA Capital City Rehabilitation Services.

APPLICABLE LAW

Article X of the Louisiana Constitution of 1974 establishes the State Civil Service and governs the State Civil Service Commission. Article X, § 12 places exclusive original jurisdiction to adjudicate removal and disciplinary cases in the Commission, with the attendant power to appoint referees to hear and decide cases. Further, that Section allows the classified employee the right to an administrative appeal from the Commission-appointed referee’s decision to the Commission itself, with the right to judicial review in the circuit courts of appeal. Article X, § 8 prohibits disciplinary action against classified employees, except for cause, prohibits discrimination against a classified employee, grants to employees the right to bring an appeal concerning such actions to the Commission, and sets out the burden of proof for each type of action. Louisiana Department of Agriculture and Forestry v. Sumrall, 98-1587, pp. 1-2 (La.3/2/99), 728 So.2d 1254, 1256-57.

Legal cause sufficient to justify disciplining an employee has been defined as conduct that impairs the efficiency of the public service and bears a real and substantial relation to efficient and orderly operation of the public service in which the employee is engaged. Thornton v. DHHR, 394 So.2d 1269, 1271 (La.App. 1 Cir.1981). The burden of proof, which is on the appointing authority, requires that the appointing authority show by a preponderance of the evidence that the employee’s conduct did, in fact, impair the efficiency and operation of the public service. A preponderance of the evidence means evidence which is of greater weight than that which is offered in opposition thereto. And, proof is sufficient to constitute a preponderance when, taken as a whole, it shows the fact of causation sought to be proved as more probable than not. See generally La. Const. art. X, § 8(A); Civil Service Rule 13.19(c). Thornton, 394 So.2d at 1271.

In Bannister v. Department of Streets, 95-0404 (La.1/16/96), 666 So.2d 641, the Louisiana Supreme Court set forth the standard of review in civil service disciplinary cases, as follows:

In civil service disciplinary cases, an appellate court is presented with a multifaceted review function. First, as in other civil matters, deference will be given to the factual conclusions of the Commission. Hence, in deciding whether to affirm the Commission’s factual findings, a reviewing court should apply the clearly wrong or manifest error rule prescribed generally for appellate review. ...
Second, in evaluating the Commission’s determination as to whether the disciplinary action is both based on legal cause and commensurate with the infraction, the court should not modify the Commission’s order unless it is arbitrary, capricious, or characterized by abuse of discretion. “Arbitrary or capricious” means the absence of a rational basis for the action taken.
Employees with permanent status in the classified civil service may be disciplined only for cause expressed in writing. “Cause” for the dismissal of such a person includes conduct prejudicial to the public service involved or detrimental to its efficient operation. Stated differently, disciplinary action against a civil service employee will be deemed arbitrary and capricious unless there is a real and substantial relationship between the improper conduct and the “efficient operation” of the public service. (Citations omitted.)

Bannister, 95-0404 at p. 8, 666 So.2d at 647.

| sThe two-part test for the appellate review of facts is: 1) whether there is a reasonable factual basis in the record for the finding of the trial court, and 2) whether the record establishes that the finding is not manifestly erroneous. Mart v. Hill, 505 So.2d 1120, 1127 (La.1987). An appellate court may not set aside a trial court’s factual finding unless, after reviewing the record in its entirety, it determines the trial court’s finding was clearly wrong. Stobart v. State, Department of Transportation and Development, 617 So.2d 880, 882 (La.1993). Even though an appellate court may feel its own evaluations and inferences are more reasonable than the factfinder’s, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony. Stobart, 617 So.2d at 882. Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be manifestly erroneous or clearly wrong. In evaluating whether the Commission’s determination that disciplinary action taken by the Department was based on legal cause and commensurate with the infraction, the reviewing court should not modify the Commission’s order unless it was arbitrary, capricious, or characterized by abuse of discretion. Bannister, 95-0404 at p. 8, 666 So.2d at 647.

Measured by these standards, we find no error in the factual findings of the Referee adopted by the Commission. Moreover, for the reasons that follow, we find no abuse of discretion or capriciousness in the Commission’s determination that the disciplinary action imposed was appi-opriate and commensurate with the infraction.

| .FACTUAL FINDINGS OF THE COMMISSION

The Referee made the following findings of fact, as stated in her decision, filed June 18, 2002:

1. OGB processes claims ' and pays health care providers for services rendered to its members. Part of Mr. Wopara’s duties is to process and pay claims sent to OGB by the providers.
2. On February 14, 2000, OGB instituted Permanent Policy Number 28, requiring OGB employees to report conflicts of interest and potential conflicts of interest. Mr. Wopara signed a Policy Receipt Acknowledgment on April 14, 2000, indicating that he had received and read Policy 28 and agreed to comply with the procedures and guidelines.
3. Policy 28 defines a conflict of interest as a situation in which financial or other personal considerations may compromise, involve the potential for compromising, or may have the appearance of compromising an elected official or public employee’s objectivity in meeting duties or responsibilities.
4. In furtherance of the policy, OGB requires that its employees provide financial disclosure statements and fill out a State Employees Group Benefits Program (“SEGBP”) (footnote omitted) Certificate of Assurance. The certificate gives the employee three options: 1 No conflict or appearance of conflict exists; 2 A conflict exists or may exist; 3 An appearance of conflict exists or may exist. The employee is required to indicate on the certificate which option is applicable.
5. Policy 28 provides that the Internal Audit Division (“IAD”) will review the employee disclosures. IAD then makes a determination whether the financial interest could directly affect the employee in the performance of his/her duties. If a conflict appears to exist, the Internal Audit Director notifies the employee and the Chief Executive Officer or Chief Operating Officer. The Audit Director, with appropriate consultation, designs and administers oversight or other mechanisms appropriate to manage the specific conflict.
6. On June 7, 2000, Mr. Wopara signed a Certificate of Assurance form indicating that: “No conflict or appearance of conflict exists.”
7. On June 8, 2001, Mr. Wopara signed a Financial Disclosure Report. Part I of this form directed Mr. Wopara to: “Report for you, your spouse, and dependent [7children, any relationship, financial or otherwise, existing or occurring during the period of July 1, 1999, through June 30, 2000, that may compromise, have potential for compromise, or may have the appearance of compromising your objectivity in the performance of yours [sic] duties and responsibilities for SEGBP.” In all sections pertaining to this directive, Mr. Wopara wrote “N/A.”
8. On June 25, 2001, and July 13, 2001, Mr. Wopara signed a Certificate of Assurance form indicating “No conflict or appearance of conflict exists.”
9. On July 13, 2001, Mr. Wopara signed a Financial Disclosure Report. Part 1.2(A) of this form required Mr. Wopara to describe any relationship and/or conflict. In this section: “None that will compromise my objectivity.” In response to the other sections, Mr. Wopara wrote “N/A.”
10. On October 1, 2001, Mr. Wopara signed a financial Disclosure Report. He indicated on the form that he had interests in Faith, LLC DBA as Capitol City Rehabilitation Service, New ERA Electronic Medical Claims Processing, Inc., Five Point Entertainment Group, Inc. and that he is part owner of Capitol City Rehabilitation Service.
11. Mr. Wopara and his wife have been joint owners of New ERA Electronic Medical Claims Processing, Inc. since December 18, 1995. The company provides electronic medical billing services for eleven health care providers, seven of whom have EPO and/or PPO contracts with the Office of Group Benefits. Mr. Wopara did not disclose his or his wife’s financial interest in this company until October 1, 2001.
12. Mr. Wopara has been part owner and part time employee of Faith, LLC DBA Capitol City Rehabilitation Service since June 30, 2001. On August 1, 2001, he filed a W-9 form with the Internal Revenue Service requesting an identification number and certification for Faith, LLC DBA Capitol City Rehabilitation Service.
13. Faith, LLC DBA Capitol City Rehabilitation Service represents Occupational and Physical Therapists and both are providers in the EPO/ PPO network of OGB. Mr. Wopara did not disclose his financial interest in this company until October 1, 2001.
14. Five Point Entertainment Group does not represent any health care providers. His interest in this enterprise was not a conflict of interest.
|s15. Mr. Wopara’s companies never submitted any claims to OGB for payment for any medical provider that his companies represented.

DISCUSSION

On appeal, Wopara does not dispute that he signed the documents referred to in the Referee’s findings of fact. The only fact finding with which Wopara quarrels is that he had a financial interest in Faith, LLC doing business as Capital City Rehabilitation Services (“Faith”). Wopara testified that he had only an oral offer by the owner of the business to become an owner, and he signed OGB forms indicating an ownership interest because he anticipated acquiring an interest. He testified that this transfer never occurred and he never acquired an interest in Faith. According to Wopara, his only connection with Faith is that he prepared its tax returns and requested IRS documentation for it in that capacity.

It is clear from the Referee’s findings of fact that she rejected Wopara’s self-serving denial of an ownership interest in Faith, which denial contradicted the Financial Disclosure Report Wopara signed in October 2001. The Referee had the opportunity to hear Wopara’s testimony and observe his demeanor. We will not disturb a finding of fact based on an evaluation of the credibility of a witness where it is not manifestly erroneous. Where there are two permissible views of the evidence, the factfinder’s choice between them cannot be manifestly erroneous or clearly wrong. Samuel v. Baton Rouge General Medical Center, 99-1148, p. 5 (La.App. 1 Cir. 10/2/00), 798 So.2d 126, 130. We have read the testimony of the witnesses at the hearing and have reviewed the documentary evidence submitted. We conclude there was evidentiary support for the challenged finding of the Referee and, based on the entire record, that finding was not clearly wrong.

19Moreover, even if we were to accept Wopara’s contention that he had no ownership interest in Faith, it is undisputed that he and his wife were co-owners of New ERA Electronic Medical Claims Processing, Inc. (“New ERA.”) Wopara filed OGB forms indicating that he had no real or apparent conflict of interest to disclose despite his ownership interest in New ERA. He also failed to disclose his interest in New ERA when he filed Financial Disclosure Forms. Thus, the record supports the disciplinary action taken based on his ownership interest in New ERA alone.

Wopara further contends that the Referee erred in determining that his failure to disclose his interest in new ERA justified disciplinary action. He insists that the OGB did not bear its burden of proving that he had either a real or potential conflict of interest or that his financial interests gave the appearance of a conflict of interest, such that there was cause for the disciplinary action. We do not agree.

Although Wopara may never have adjusted claims of entities that New ERA did billing for, several of his company’s clients were on the OGB provider list and had submitted claims to OGB. Roslyn Johnson, the OGB Internal Audit Director, in discussing the relationship of Wopara, New ERA, and the health care providers serviced by New ERA, explained:

Because these are medical providers and they are submitting claims and Charles is the claims examiner that could possibly receive one of those claims or processes, that could compromise his objectivity in processing that claim. That is why I consider that to be a conflict.

Wopara insisted that there was no conflict of interest because New ERA only does Medicare and Medicaid electronic billing, and that kind of billing is not adjusted by OGB. Based on the OGB definition of conflict of interest, we conclude this view of what constitutes a conflict of interest or the appearance of a conflict of interest is too narrow. Ms. Johnson explained |inthat even though the Medicare and Medicaid billing New ERA does for its clients may not be submitted to OGB, other bills generated for those same clients (albeit not generated by New ERA) may be submitted to OGB. The fact that New ERA receives compensation from providers who submit claims to OGB, even though their claims might be submitted by an unrelated company, still has the potential or the appearance of potential to compromise Wopara’s objectivity. Prior to discovering Wopara’s interest in New ERA, it was possible that Wopara could be assigned to adjust a claim for a provider that New ERA services. Subsequent to discovering this, OGB has devised a system whereby Wopara must report the names of all clients serviced by New ERA. A computer-generated program insures that no claims submitted on behalf of these clients will be adjusted by Wopara, whether or not the bills are generated by New ERA. This shields the OGB from criticism that its claims processors are adjusting claims for providers with which they have outside financial interests. Ms. Johnson further explained:

Well, the claim — when you are processing a claim, you have to consider Medicaid and Medicare on some ,of them. So — but, that is not why this is questioned. This is questioned because Charles could possibly pick up one of those claims. It doesn’t matter whether he bills for Medicaid or Medicare. If that provider is on our network, Charles has the possibility of picking up a claim for one of those providers. I mean, he has no— he can’t make a decision on what provider claims he processes.... That is why he has to disclose it and the managers are supposed to monitor this. If he had disclosed this, his manager could have been told that there was a possible conflict and they could have monitored it where they would be sure he did not get a claim from one of those providers. It is not up to Charles to monitor the process. It is up to management to monitor the process.

After her investigation, Ms. Johnson informed the Deputy Undersecretary of OGB, Hubert Linceum, that she considered Wopara’s relationship with New ERA as a definite conflict of interest that should have lubeen timely disclosed. Wopara’s responsibility was to disclose any interest he had, whether or not the companies ever presented a claim.

Moreover, Ms. Johnson pointed out that although New ERA may not bill for providers submitting claims to OGB at the present time, without disclosure of his interest in New ERA and the providers it does business with, OGB has no way of knowing which bills New ERA might generate and which clients it has a relationship with in order to manage the appearance of conflict. It is undisputed that Wopara did not follow the OGB policy requiring employees to disclose their interests in companies that service health care providers who look to OGB for payment of their bills. He apparently made his own decision that if New ERA did not actually submit bills on behalf of its clients to OGB, there was no conflict. If New ERA received compensation from a hospital or physician, Wopara’s objectivity in adjusting bills for that provider might be affected, even though his company did not prepare the bill being adjusted. In her written opinion, the Referee noted:

Mr. Wopara does business with providers that do business with OGB. Therefore, even if no real or potential conflict of interest exists, there is an appearance of a conflict of interest. OGB Permanent Policy 28 required Mr. Wopara to report his financial interest in these companies as a potential or perceived conflict of interest.

We find no error in this conclusion of the Referee. We also agree that violation of this legitimate agency policy is sufficient cause for the imposition of discipline. See, e.g., Allen v. DHHR, Ruston State School, 426 So.2d 234, 237 (La.App. 1 Cir.1983).

After a thorough review of the record, we find that the Referee did not err in concluding that the disciplinary action taken in this case was based on | ^lawful cause and that the failure of Wopara to follow the OGB policy directive bore a real and substantial relation to the efficient and orderly operation of the public service in which he was engaged. We further consider the penalty of loss of the equivalent of five days pay to be commensurate with the infraction at issue. We find no manifest error in the factual determinations made by the Referee and conclude that the decision to uphold the disciplinary action imposed was not arbitrary, capricious, or characterized by an abuse of discretion.

DECREE

For the foregoing reasons, the decision of the Commission upholding the finding of fact and conclusions of law of the Referee is affirmed. All costs of this appeal are assessed to Charles Wopara.

AFFIRMED.

KUHN, J., concurs.

      . Plaintiff has not attacked the substance of OGB Policy No. 28 or the OGB’s right to adopt that policy.


source: Caselaw Access Project

author: KLINE, J.

license: Public Domain

text:
    ENTERGY LOUISIANA, INC. v. John Neely KENNEDY, Secretary, Department of Revenue, State of Louisiana.
    No. 2003 CA 0166.
    Court of Appeal of Louisiana, First Circuit.
    July 2, 2003.
    Writ Denied Nov. 14, 2003.

      Cheryl M. Kornick, Baton Rouge, Counsel for Appellee Entergy Louisiana, Inc.
    Robert 6. Pugh, Shreveport, Counsel for Appellant Secretary, Department of Revenue, State of Louisiana.
    Before: FOIL, McCLENDON, and KLINE
      , JJ.

      . Hon. William F. Kline, Jr., retired, is serving as judge pro tempore by special appointment of the Louisiana Supreme Court.

   KLINE, J.

Defendant, the Louisiana Department of Revenue (“Department”), appeals the trial court’s grant of summary judgment in favor of plaintiff, Entergy Louisiana, Inc. (formerly known as “Louisiana Power & Light” and hereinafter referred to as “En-tergy”), determining that its lease obligations, under various leases, did not constitute “borrowed capital” for Louisiana corporate franchise tax purposes. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

The Department conducted an audit of Entergy’s books and records for the tax years ending in December of 1989, 1990, 1991, 1992, 1993, and 1994, to determine whether Entergy had paid the appropriate amount of corporate franchise taxes during those years. As a result of the audit, the Department asserted that Entergy had underpaid its corporate franchise taxes for the years of 1990 through 1994.

The Department based its assertion on the existence of three transactions that Entergy had entered into in 1989 for the sale and leaseback of three undivided portions (the aggregate being approximately equivalent to 9%) of its 100% ownership interest in the Waterford 3 nuclear electric generating facility located in Taft, Louisiana. The aggregate sales price for the property was $353,600,000.00 and was sold by Entergy to an unrelated Owner Trustee under three separate, but nearly identical, trust agreements with an Owner Participant. The funds used to satisfy the purchase price of the sale were obtained through the sale of bonds by the Owner Trustee/lessor in the amount of $309,997,000.00 with the balance of the purchase price, $43,603,000.00, purportedly being contributed to the Owner Trustee/lessor by the Owner Participant. Pursuant to the sale and leaseback agreements, Entergy, as lessee, then agreed to leaseback from the Owner Trustee the portion of the property it had sold.

According to the Department, Entergy’s lease obligations under these transactions constituted “borrowed capital” pursuant to Louisiana’s corporate franchise tax provisions and thus should have been included in Entergy’s franchise tax base. Because it was improperly excluded, the Department |Rmaintained that Entergy had underpaid its corporate franchise taxes for the years of 1990 through 1994.

On December 10 and 15, 1998, Entergy made payments under protest of the total amount allegedly owed and filed suit to recover the same on January 8, 1999. On September 12, 2002, Entergy filed a motion for summary judgment arguing that the pertinent lease obligations did not constitute borrowed capital under Louisiana’s corporate franchise tax provisions. Argument on the motion was heard on November 18, 2002, and its oral reasons for judgment, the trial court stated:

In this matter, the Court believes that the Gulf Coast Aluminum case is the prevailing guidance. The Court feels that this is not a disguised credit sale. It is a long term lease. It is not borrowed capital.

Accordingly, summary judgment was rendered in favor of Entergy on December 20, 2002. The Department appeals from this judgment asserting the following assignments of error:

1. The Honorable Court below erred when [it] relied on Gulf Coast Aluminum, as the prevailing guidance in a Louisiana Corporate Franchise Tax case.
2. The Honorable Court below erred in holding that a long term lease may not include borrowed capital.
3. The Honorable Court below erred in ruling that the long-term indebtedness of Entergy ... should not be included as “borrowed capital” in the franchise tax base of Entergy ... pursuant to the Louisiana Tax Statutes [La. R.S. 47:601, et seq.].
4. The Honorable Court below erred in effectively granting Entergy ... an exemption from the “borrowed capital” provisions of the Louisiana Franchise Tax Statutes [La. R.S. 47:601, et seq.].

STANDARD OF REVIEW

On appeal, summary judgments are reviewed de novo under the same criteria that govern the district court’s consideration of whether summary judgment is appropriate. Brumfield v. Gafford, 99-1712, p. 3 (La.App. 1 Cir.9/22/00), 768 So.2d 223, 225. An appellate court thus asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the Rmover is entitled to judgment as a matter of law. Ferguson v. Plummer’s Towing & Recovery Inc., 98-2894, pp. 3-4 (La.App. 1 Cir.2/18/00), 753 So.2d 398, 400.

A motion for summary judgment. is a procedural device used to avoid a full-scale trial when there is no genuine factual dispute. The motion should be granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, show that there is no genuine issue as to material fact and that the mover is entitled to judgment' as a matter of law. Naquin v. Louisiana Power & Light Company, 98-2270, p. 4 (La.App. 1 Cir. 3/31/00), 768 So.2d 605, 607, writ denied, 2000-1741 (La.9/15/00), 769 So.2d 546. In the present case, the facts are undisputed, thus we need only make a determination as to whether Entergy is entitled to judgment as a matter of law.

RELEVANT LAW

In making this determination, we must look to the Louisiana corporate franchise tax statutes set forth in La. R.S. 47:601 et seq. Louisiana Revised Statute 47:601 specifically provides, in pertinent part:

A. Every domestic corporation and every foreign corporation, exercising its charter, or qualified to do business or actually doing business in this state, or owning or using any part or all of its capital, plant, or any other property in this state, subject to compliance with all other provisions of law, except as otherwise provided for in this Chapter shall pay an annual tax at the rate of $3.00 for each $1,000.00, or major fraction thereof on the amount of its capital stock, surplus, undivided profits, and borrowed capital, determined as hereinafter provided[.] (Emphasis added.)

Further, La. R.S. 47:602 A, states:

A. Taxable capital. Every corporation taxed under this chapter shall determine the amount of its issued and outstanding capital stock, surplus, undivided profits and borrowed capital as the basis for computing the franchise tax levied under this chapter and determining the extent of the use of its franchise in this state. (Emphasis added.)

The term “borrowed capital” is defined in La. R.S. 47:603 as “all indebtedness of a corporation, subject to the provisions of this Chapter, maturing more than one year from the date incurred, or which is not paid within one year from the date incurred regardless of maturity date.”

[.DISCUSSION

The issue before us is a question of law which requires a determination of whether Entergy’s obligations pursuant to various sale and leaseback agreements constitute “borrowed capital” under the aforementioned laws. In making this determination, we are mindful that tax statutes are to be interpreted liberally in favor of the taxpayer. Goudchaux/Maison Blanche, Inc. v. Broussard, 590 So.2d 1159, 1161 (La.1991). If the statute can reasonably be interpreted more than one way, the interpretation less onerous to the taxpayer is to be adopted. Id.

More specifically, words defining a thing to be taxed should not be extended beyond their clear import. Cleco Evangeline, LLC v. Louisiana Tax Commission, 2001-2162, p. 6 (La.4/3/02), 813 So.2d 351, 355. Absent evidence to the contrary, the language of the statute itself must clearly and unambiguously express the intent to apply to the property in question. Unless the words imposing the tax are expressly in the statute, the tax cannot be imposed. Id., 2001-2162 at p. 7, 813 So.2d at 355.

With the precepts in mind, we proceed to address the Department’s alleged assignments of error.

Assignments of Error Nos. 1, 2, and 3

In its first three assignments of error, the Department essentially argues that the trial court mistakenly relied upon Traigle v. Gulf Coast Aluminum Corp., 422 So.2d 1190 (La.App. 1 Cir.1982), writ denied, 429 So.2d 143 (La.1983), and, as a result, erroneously concluded that Entergy’s obligations pursuant to the pertinent leases did not constitute “borrowed capital” for Louisiana corporate franchise tax purposes.

In Traigle v. Gulf Coast Aluminum Corp., the Parish of Calcasieu and Gulf Coast Aluminum (“GCA”) entered into agreements, pursuant to the provisions of La. R.S. 39:991, et seq. (Louisiana’s Industrial Inducement Statute), whereby the Parish would issue Industrial Development Bonds, the proceeds of which would be and were used to construct a manufacturing facility to be leased |fito GCA. The lease payments made by GCA would be used to pay the principal of and interest on the bonds as they came due.

In that case, the Collector of Revenue argued, among other things, that the bond proceeds constituted “borrowed capital” by GCA for franchise tax purposes. This Court specifically rejected that argument. In doing so, we adopted, as our own, the trial court’s written reasons for judgment, which provided at 422 So.2d at 1193, in part, as follows:

The Collector has taken the position that the municipal bonds issued in connection with the construction of GCA’s Calcasieu Plant are in reality borrowed capital of GCA within the meaning of the corporate franchise tax Statute. Such a position requires this Court to treat GCA as the owner of the new facility and dismiss the Parish as a mere interposed party. The Court is being asked to treat La.R.S. 39:991 et seq. as if those statutes created a mere fiction rather than the actual financing arrangement entered into by GCA and the Parish of Calcasieu. In view of the testimony and evidence, and the intent of the legislature in creating the industrial inducement program, this Court cannot accept the Collector’s argument.
The Collector relies heavily on HEP Development Corporation v. Mouton, 256 So.2d 744 (La.App. 1st Cir.1971), wherein the Court held that the corporate franchise tax “must be interpreted to accord it full legislative intent, and that indulgence in technicalities will not be permitted to defeat the purpose of the law.” The financing arrangement between GCA and the Parish, however, can hardly be characterized as a “technicality.” Rather, the financing arrangement, and particularly GCA’s status as a lessee, is specifically sanctioned by La.R.S. 39:991. In any event, HEP Development is readily distinguished because in this case the Parish, not GCA is the owner of the property....

(Emphasis added.)

We agree with Entergy, that the holding in Traigle had two underpinnings: 1) the Louisiana Industrial Inducement provisions set forth in La. R.S. 39:991, et seq.; and 2) the fact that the Parish was the owner of the plant and GCA was simply a lessee. Although the present case is distinguishable from Traigle in that it does not reference the Louisiana Industrial Inducement provisions, we find that it is still determinative under the facts of this case.

In both Traigle and the case at hand, the taxpayer was the lessee under a long-term lease. In both cases, the lessor/owner issued bonds to finance its ownership of the property. And in both cases, the Department effectively asked the court to treat the lessee as the owner of the leased property, to treat the bonds as if they were the debt of the lessee, and to dismiss the actual owner as |7a mere interposed party. However, here, as in Traigle, the lessee is not the owner of the property.

In Traigle, the court found that the pertinent statutory provisions provided for the creation of a “genuine lease,” thus mandating a finding that a disguised credit sale had not occurred and the Parish was indeed the owner/lessor of the property and GCA was merely the lessee. In the case sub judice, we also find that a “genuine” or “true” lease was created. Entergy sold the property for the valid consideration of $353,600,000.00 and ownership was transferred accordingly. Entergy then leased the property back from the new owner. Although, under the terms of the contracts, Entergy has the option to repurchase the property at certain intervals and at the termination of the agreements, it can only do so by paying the property’s fair market value price. Consequently, we see no indicia that the agreements are disguised credit sales or anything other than genuine leases. Therefore, following the dictates of the court in Traigle, we should find that Entergy’s obligations under the pertinent agreements do not constitute borrowed capital for Louisiana corporate franchise tax purposes.

However, the Department counters such a proposed finding by contending that the pertinent sales by Entergy must be presumed to be simulations pursuant to La. C.C. art. 2480, because Entergy remained in corporeal possession of the property after the sales thus rendering Entergy the actual owner of the property. We find the Department’s contention to be untenable. Were such a presumption to apply, we find that it was adequately rebutted.

Louisiana Civil Code article 2480 provides:

When the thing sold remains in the corporeal possession of the seller the sale is presumed to be a simulation, and, where the interest of heirs and creditors of the seller is concerned, the parties must show that their contract is not a simulation.

| «The burden of proof is ordinarily placed upon the party who attacks a sale as a simulation, but when the legal presumption of simulation is applicable, the burden of proof shifts to party to the sale to establish that it was authentic and not merely a simulation. To rebut the presumption, the party to the purported sale must establish a good-faith transaction resulting in a true alienation of ownership for consideration. Wilson v. Progressive State Bank & Trust Co., 446 So.2d 867, 869 (La.App. 2 Cir.1984). Hence, a transaction will not be set aside as a simulation if any consideration supports the transaction; the reality of the transference is thus established. Peacock v. Peacock, 28,324, p. 7 (La.App. 2 Cir. 5/8/96), 674 So.2d 1030, 1034. Moreover, where the vendor remains in possession of the property the presumption may be rebutted by evidence sexwing to explain the possession of the vendor. Chatman v. Bundy, 130 La. 158, 161, 57 So. 786 (1912).

As previously mentioned herein, it is undisputed that Entergy sold the property for the valid consideration of $353,600,000.00, thus supporting the reality of the transaction. In the same agreements accomplishing the sale, Entergy also obtained leases of the sold property, which clearly explains Entergy’s continued corporeal possession of the property. As a result, we find the Department’s argument that the sales in question were actually simulations to be without substance.

Finally, The Department contends that Entei-gy incurred “unconditional and irrevocable” obligations under the agreements “to pay regardless of the happening of subsequent events” thus constituting borrowed capital as that term is defined in La. R.S. 47:603. We must respectfully disagree.

The Department bases its assertion on the presence of so-called “hell or high water” clauses contained within the pertinent agreements. Despite the existence of these clauses, we do not conclude that Entergy had any absolute, unconditional obligations to pay. In addition to the various contractual provisions contained within the agreements, which would abrogate En-tergy’s obligations to pay under certain conditions, there is also legal basis for this conclusion.

In Angelle v. Energy Builders Company, 496 So.2d 509, 513 (La.App. 1 Cir. 1986), this court, citing Willenzik, Personal Property Leases in Louisiana, 44 La. L.Rev. 755, 780 (1984), recognized the following observations by a doctrinal writer:

It is also common for personal property leases to contain so-called “hell or high water” covenants under which the lessee unconditionally agrees to make lease payments to the lessor notwithstanding any foreseeable or unforeseeable circumstances. While such “hell or high water” covenants are generally enforceable in Louisiana, arguably they may not be enforced in situations in which a lessee lawfully withholds rental payments as a result of the lessor’s failure to provide the lessee with peaceable possession of the leased equipment over the lease term. The right of peaceable possession guaranteed by Civil Code article 2692(3) as a matter of public policy may not be waived.

Thus, a “true” or “genuine” lease, by its very nature, is never an unconditional obligation to pay because a lease is a bilateral, or synallagmatic, contract whereby the lessee and the lessor obligate themselves reciprocally, so that the obligation of each party is correlative to the obligation of the other. La. C.C. art.1908. Louisiana Civil Code article 2692 establishes that, among other duties, a lessor is bound to cause the lessee to be in peaceable possession of the property during the term of the lease. The duties of a lessee are set forth in La. C.C. arts. 2710, 2719, and 2720 and include the obligation to pay the rent at the terms agreed on. As previously noted, the lessee’s right to peaceable possession is a matter of public policy that cannot be waived. Therefore, should the lessor fail to provide the lessee with peaceable possession, the lessee’s obligation to pay rent ceases, and no “hell or high water” clause can be relied upon to resurrect that obligation.

Accordingly, we find the Department’s first three assignments of error to be to be without merit.

Assignment of Error No. 4

In its final assignment of error, the Department contends that the trial court’s summary judgment “effectively” granted Entergy an “exemption” from the “borrowed capital” provisions of the franchise tax statutes. In brief to this court, the Department maintains that:

[i]f Entergy is correct in its interpretation that sales and leaseback transactions are not covered by the statutory provisions applicable 110to borrowed capital ... then Entergy necessarily is contending that Entergy’s payment obligations are exempt, thereby placing the burden of proof, which was not met below, directly upon Entergy to establish the manner in which the statutory provision concerning borrowed capital is not applicable to Entergy.

We find that such an argument puts the cart before the horse. An exemption implies a release from some burden, duty, or obligation. State v. Exxon Corporation, 95-2501, p. 6 (La.App. 1 Cir. 6/28/96), 676 So.2d 783, 786. Therefore, properly speaking, an obligation to pay a tax must necessarily exist and apply before an exemption can effectively relieve one of the duty to pay it. There has been no “exemption” in the present case because we have already determined that the particular tax provisions regarding borrowed capital do not encompass Entergy’s lease obligations. Accordingly, we also find this assignment of error to be without merit.

CONCLUSION

For the foregoing reasons, the trial court’s grant of summary judgment in favor of Entergy Louisiana, Inc. is affirmed. The Louisiana Department of Revenue is cast with the costs of this appeal in the amount of $416.55.

AFFIRMED.

      . Subsequent to the formation of the agreements in question, the Louisiana Legislature, by Acts 2001, No. 866, § 1, enacted La. R.S. 9:3371, which provides:
      Sale/lease-back commercial transactions involving immovable or movable property with a fair market value in excess of twenty-five thousand dollars and located within this state are hereby declared to be valid and enforceable. Such transaction shall produce and result in the legal consequences described in the written sale/leaseback agreement between the parties and shall not be presumed to be a simulation.


author: UKUHN, J. 11 GAIDRY, J.,

text:
    Dewey RICHARDSON v. Pam RICHARDSON
    No. 2002 CA 2415.
    Court of Appeal of Louisiana, First Circuit.
    July 9, 2003.

      Marcus T. Foote, Baton Rouge, Counsel for Plaintiff/Appellant Dewey Richardson.
    Karen D. Downs, Baton Rouge, Counsel for Defendant/Appellee Pamela Perkins Richardson.
    Before: KUHN, DOWNING and GAIDRY, JJ.
   UKUHN, J.

Plaintiff-appellant, Rodney Dewey Richardson, appeals a judgment dismissing his rule for modification of child support on the trial court’s motion raising the peremptory exception of no cause of action. We reverse and remand for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

On October 23, 2000, appellant was divorced from appellee, Pam Richardson. On that same date, the parties entered into a consent judgment and joint implementation plan, which purported to resolve all the parties’ disputes. Among thé express provisions the parties agreed to were the following stipulations addressing appellant’s obligation of child support for the parties’ only child, Joshua:

[Appellant] shall pay unto [appellee] the sum of [$1,000.00] per month as child support for the minor child, said sum due and payable in semi-monthly installments of [$500.00] on the first and fifteenth of each month[.]
Further, [appellant] shall establish an IRA for' the minor child and deposit [$100.00] per month into the minor child’s IRA.
The foregoing sums shall not be subject to a reduction and the foregoing obligations will terminate when the minor child reaches the age of [18] or no later than [19] if the minor child is still in secondary education. (Emphasis added.)

On April 10, 2002, appellant filed a rule to modify child support. His allegations include:

There have been significant changes in circumstances between the time of the previous [October 23, 2000 consent] judgment and the time this motion for increase is being filed, more particularly detailed as follows:
a. Mover has changed jobs and no longer makes the income he made in Year 2000.
b. Mover was self employed and now is seeking employment through other means.
|3c. The judgment of October 23, 2000, was not based on guideline calculations and needs to be modified due to mover’s inability to maintain such payments.

Appellee filed a peremptory exception raising the objection of res judicata to appellant’s rule for modification. A hearing on both appellant’s rule for modification and appellee’s exception of res judica-ta was held, and on its own motion, the trial court concluded that appellant’s pleading failed to state a cause of action. Subsequently, the trial court signed a judgment sustaining an exception of no cause of action and dismissing appellant’s rule to modify child support from which appellant appeals.

On appeal, appellant maintains the trial court erred in dismissing his rule to modify child support, challenging the propriety of an implicit application of the doctrine of res judicata. He also asserts that the trial court’s action in sustaining an objection of no cause of action was erroneous.

APPLICATION OP RES JUDICATA

At the hearing, in support of her exception raising the objection of res judicata, appellee directed the trial court to the October 23, 2000, consent judgment noting appellant’s stipulation of child support in the sums of $1,000.00 per month and an additional $100.00 monthly deposit into Joshua’s IRA account. Appellee maintained to the trial court — and now on appeal — that the stipulated sums of child support coupled with appellant’s express agreement that “[t]he foregoing sums shall not be subject to a reduction” until Joshua attained the age of 18 (or in the event of continued secondary education, the age of 19) constituted a valid transaction and compromise. Thus, appellee reasons that the terms of the consent judgment [ constitute res judicata on the issue of appellant’s entitlement to a reduction of child support and urges application of the doctrine of res judicata is warranted.

A “consent judgment” is, in effect, a bilateral contract between the parties which gets its binding force from the consent the parties gave, rather than from adjudication by the courts. Palgrave v. Gros, 2002-249, p. 5 (La.App. 5th Cir.9/30/02), 829 So.2d 579, 582. Interpretation of a consent judgment, i.e., a contract between parties, is a determination of the common intent of the parties; each provision in the contract is interpreted in light of other provisions so that each is given meaning suggested by the contract as a whole, and when the words of the contract are clear and explicit and lead to no absurd consequences, the intent of the parties is to be determined by the words of the contract. Nungesser v. Nungesser, 95-2298, pp. 3-4 (La.App. 1st Cir.6/28/96), 694 So.2d 312, 314. A valid compromise agreement can form the basis of a plea of res judicata. Atwell v. National Safety Consultants, Inc., 97-1561, p. 4 (La.App. 3d Cir.4/1/98), 713 So.2d 495, 497, writ denied, 98-1866 (La.10/30/98), 727 So.2d 1164. And while a plea of a valid compromise or transaction is technically an affirmative defense under La. C.C.P. art. 1005, generally the proper procedural mechanism for interposing this defense is the peremptory exception of res judicata. See Brown v. Drillers, Inc., 93-1019, p. 6 (La.1/14/94), 630 So.2d 741, 747.

Louisiana Revised Statute 13:4232, however, sets forth exceptions to general rules of res judicata. In particular, La. R.S. 13:4232 provides that in actions for matters incidental to divorce, the judgment has the effect of res judicata “only as to causes of action actually adjudicated.” (Emphasis added.) Because child support is a matter incidental to divorce, see La. C.C. art. RIOS, when a party raises new allegations pertaining to changes in circumstances affecting a child’s best interest, the La. R.S. 134232B limitation to the general res judicata rules applies. See La. C.C. art. 142 and La. R.S. 9:311.

DEFERENCE TO STIPULATED JUDGMENTS

Louisiana Revised Statute 9:315.1D provides a two-step process for the trial court to follow in initially approving stipulated child support judgments. First, upon presentation, it may review and approve or categorically reject stipulated provisions relating to child support. Stogner v. Stogner, 98-3044, p. 8 (La.1999), 739 So.2d 762, 767. Second, if it does not reject the stipulation in favor of the child support guidelines, the trial court must “ ‘consider the guidelines ... to review the adequacy of the stipulated amount.’ ” Id.

Notwithstanding the freedom of the parties to enter into stipulations relating to child support, parties must remember that their agreements may not “derogate from laws enacted for the protection of the public interest.” La. C.C. art. 7. It is clear that the stipulated child support recognized in the judgment must conform to the public policy codified in the child support guidelines with its concomitant best interest presumption and mandated adequacy review provisions. Stogner, 98-3044 at p. 10, 739 So.2d at 768.

Thus, enforcement of the obligor-par-ent’s waiver of a reduction of a stipulated child support obligation may at times not conform to public policy or be in the best interest of the child. As a graphic example involving private education, this court warned: “[Jjustice would not be served by requiring a disabled father to go ‘on the dole,’ or grandparents to overextend their retirement benefits, to underwrite a private school education.” Sobers v. Sobers, 98-0006, p. 2 (La.App. 1st Cir.12/28/98), 724 So.2d 278, 279. |fiAnd it can be seen that a parent’s bankruptcy or disability may make enforcement of a stipulated support amount contrary to a child’s best interest. See La. C.C. art. 7.

Because appellant did not introduce any evidence at the hearing, reviewing only the allegations of the rule to modify, he should be permitted an opportunity to attempt to establish, by competent evidence, that enforcement of the October 23, 2000, consent judgment’s waiver of the right to seek a reduction (of the $1,000.00 per month and the additional $100.00 monthly deposit into his son’s IRA account) to which he agreed would not be in the best interest of Joshua. At that hearing, the evidence appellant submits must demonstrate that enforcement of the waiver is in derogation of public order before a stipulated waiver of reduction in child support, which has been accepted by the trial court, will not be enforced.

NO CAUSE OF ACTION

The trial court did not expressly rule on appellee’s exception of res judicata; instead the trial court converted the exception to an objection of no cause of action, which it sustained.

The function of the peremptory exception of no cause of action is to question whether the law extends a remedy against the defendant to anyone under the factual allegations of the motion. Industrial Companies, Inc. v. Durbin, 02-0665, p. 6 (La.1/28/03), 837 So.2d 1207, 1213. The peremptory exception of no cause of action is designed to test the legal sufficiency of the petition by determining whether the particular plaintiff is afforded a remedy in law based on the facts alleged in the pleading. Id. The exception is triable on the face of the pleading and, for the purpose of determining the issues raised by the exception, the well-pleaded facts in the pleading must be accepted as true. Id. In reviewing a trial court’s ruling sustaining anj 7 exception of no cause of action, the court of appeal should subject the case to de novo review because the exception raises a question of law, and the trial court’s decision is based only on the sufficiency of the petition. Id., 2002-0665 at p. 7, 837 So.2d at 1213. Simply stated, a petition should not be dismissed for failure to state a cause of action unless it appears beyond doubt that the plaintiff can prove no set of facts in support of any claim which would entitle him to relief. Id. Every reasonable interpretation must be accorded the language of the petition in favor of maintaining its sufficiency and affording the plaintiff the opportunity of presenting evidence at trial. Id.

An award of child support may be modified if the circumstances of the child or of either parent materially change and shall be terminated upon proof that it has become unnecessary. La. C.C. art. 142. See also La. R.S. 9:311.

Thus, assuming as true those facts appellant averred in his motion: that he has changed jobs, no longer makes the same income, is no longer self-employed, and has not had a support determination within the ambit of the Child Support Guidelines, the allegations of appellant’s rule to modify clearly state a cause of action. And the trial court erred in sustaining an objection based on the failure of appellant’s motion to state a cause of action and in dismissing appellant’s rule to modify on that basis.

It is obvious that the trial court attempted to address the issue appellee raised in her exception of res judicata, i.e., whether enforcement of a waiver by the obligor-parent of his right to seek reduction of the amount of child support in a consent judgment is in derogation of public order under La. C.C. art. 7, when the allegations of his rule to modify fail to allege that such an enforcement is not in the best interest of the child. But in its attempt to dispose of the matter via an exception of no cause of action, the trial court |Rconsidered evidence, which it is not permitted to do. Therefore, because the trial court erroneously considered evidence in its determination of whether the rule to modify child support stated a cause of action, that portion of the judgment which sustains the objection of no cause of action is reversed.

DECREE

Having concluded that neither the exception of res judicata raised by appellee nor the objection of no cause of action, raised on the trial court’s own motion, warrants dismissal of appellant’s rule to modify at this stage of the proceedings, we reverse that portion of the judgment that dismisses appellant’s rule to modify. This matter is remanded for further proceedings consistent with this opinion. Appeal costs are assessed equally between the parties/parents.

REVERSED AND REMANDED.

GAIDRY, J., concurs and assigns reasons.

11 GAIDRY, J.,

concurring with reasons.

I agree with the result reached by the majority, insofar as it reverses the judgment of the family court and remands the case for the purpose of granting Mr. Richardson a hearing on his motion to modify child support. I disagree with the reasoning employed by the majority on both the procedural and substantive grounds, however, as explained more fully below.

Mr. Richardson’s motion to modify child support and the peremptory exception filed in response to it were assigned for hearing on the same date. The exception was appropriately considered first. After hearing argument of counsel on the exception, the family court on its own initiative converted the objection of res judicata asserted in the peremptory exception to that of “no cause of action or right of action [sic],” and sustained the exception, dismissing Mr. Richardson’s motion. The majority suggests that Mr. Richardson “did not introduce any evidence at the hearing ... of the rule to modify.” There was no hearing on that motion, due to the family court’s sustaining of the exception and dismissal of the motion on that basis. And I fail to see how any further evidence would be necessary to the determination of the objection of res judicata originally raised. Mr. Richardson has never pdenied in his pleadings or otherwise that he agreed to the nonmodification provision which is the basis of the objection.

NO CAUSE OF ACTION

A “cause of action,” as used in the context of the peremptory exception, means the operative facts which give rise to the plaintiffs right to judicially assert the action against the defendant. Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234, 1238 (La.1993). The basic elements of a cause of action for modification of child support are set forth in La. C.C. art. 142 and La. R.S. 9:311(A). Louisiana Civil Code article 142 provides that “[a]n award of child support may be modified if the circumstances of the child or of either parent materially change.” Under La. R.S. 9:311(A), the party seeking the modification must demonstrate “a material change in circumstances of one of the parties between the time of the previous award and the time of the motion for modification of the award.” To be “material,” the change in circumstances must have “real importance or great consequences for the needs of the child or the ability to pay of either party.” La. R.S. 9:311, Comment (a) — 2001 (my emphasis).

The present motion was filed on April 10, 2002, some seventeen months after the consent judgment. Specifically, Mr. Richardson alleged that in the interim, there had been “significant changes in circumstances,” including allegations that he had changed jobs, no longer was self-employed, |3was seeking other means of employment, and no longer earned the same income as in the year 2000. He further alleged that his income and “actual resources” were insufficient to enable him to pay the child support established in the consent judgment.

Mr. Richardson’s motion clearly was sufficient to set forth a cause of action for modification of child support. From a proper procedural standpoint, the nonmo-dification provision or waiver asserted by Ms. Richardson does not bar Mr. Richardson from asserting a cause of action for modification of child support; to the extent it may have any effect, it constitutes an affirmative defense. See, e.g., Fibrebond Corporation v. Aetna Casualty & Surety Company, 583 So.2d 848, 851 (La.App. 1st Cir.1991). Thus, the family court clearly .erred in treating the peremptory exception as raising the objection of no cause of action, as opposed to the objection of res judicata, as originally asserted. And the majority here unfortunately does not remedy that error by its dictum that it was necessary for Mr. Richardson to allege in his motion that enforcement of the nonmo-dification provision was not “in the best interest of the child.” That dictum would engraft an additional requirement for modification of child support which the legislature did not impose, and thereby appears to cross the line between statutory interpretation and judicial legislation.

RES JUDICATA AND NONMODIFICATION PROVISION

Although the judgment at issue could be disposed of on the foregoing procedural basis alone, considerations of justice and judicial economy warrant the consideration of the substance of the exception as originally pled. Courts are obligated to construe every pleading so as to do substantial justice. La. C.C.P. art. 865. A pleading’s nature is determined by its substance; thus, the family court’s ex proprio motu designation of Ms. | ¿Richardson’s exception as raising the objections of no cause and no right of action does not prevent the consideration of the merits of the defense of res judicata. Considerations of judicial economy warrant such consideration by this court, rather than remand to the district court. Thus, another hearing and another possible appeal on a new exception raising the defense of res judicata would be obviated.

An analysis should begin with the fundamental premise that there are two factors to be considered in every determination of child support: (1) the needs of the child, and (2) the ability of the parents to provide support. La. C.C. art. 141; La. R.S. 9:315.1, et seq.

In Patrick v. Patrick, 496 So.2d 521, 524 (La.App. 1st Cir.1986), this court plainly held that “[ajgreements and judgments involving child support are always subject to modifications in accordance with the circumstances, regardless of language to the contrary.” (My emphasis.) Citing Patrick, the Third Circuit in Kleiser v. Kleiser, 619 So.2d 178, 179 (La.App. 3rd Cir. 1993), explained that because “judgments awarding custody and child support are always subject to modification and are thus never final,” the doctrine of res judicata cannot apply. See also Hansel v. Hansel, 00-1914, p. 12 (La.App. 4th Cir. 11/21/01), 802 So.2d 875, 883; Richardson v. Richardson, 427 So.2d 518, 520-21 (La.App. 3rd Cir.1983).

The general rule of res judicata in our state is set forth in La. R.S. 13:4231. Louisiana Revised Statutes 13:4232 establishes limited 1 ^exceptions to the general rule of res judicata, and Section B expressly provides that in most domestic matters, including “an action for determination of incidental matters under Civil Code Article 105” (which include “custody, visitation, or support of a minor child”), res judicata applies only to causes of action “actually litigated.”

From a conceptual standpoint, a parent’s cause of action to modify an award of child support cannot be said to exist at the time of that award, since its existence by definition may only occur “between the time of the previous award and the time of the motion for modification of the award.” La. R.S. 9:311(A). Thus, the cause of action for modification cannot be extinguished by the prior judgment, simply because it was not “existing” at the time of the judgment incorporating the previous award. See La. R.S. 13:4231(1), (2). Likewise, the factual issues upon which a cause of action for modification is based simply cannot have been “actually litigated” by the parties in the prior adjudication, since the facts had not yet come into being.

In a different context, that of workers’ compensation, it has unequivocally been held that “[wjhere the legislature has expressly provided that an award or judgment can be subject to a claim of modification, res judicata does not apply.” Madere v. Western Southern Life Insurance Company, 03-110, p. 4 (La.App. 5th Cir.4/29/03), 845 So.2d 1222, 1225, citing Falgout v. Dealers Truck Equipment Company, 98-3150 (La.10/19/99), 748 So.2d 399, and Jackson v. Iberia Parish Government, 98-1810 (La.4/16/99), 732 So.2d 517. In the latter case, the Louisiana Supreme Court noted that “inherent in the concept of res judicata is the principle that a party had the opportunity to raise a claim in the first adjudication, but failed to do so.” Jackson, 98-1810 at p. 9, 732 So.2d at 524. With regard to the worker’s cause of action to modify compensation under La. R.S. 23:1310.8(B), the court first acknowledged that the original judgment fixed the duration of his disability as of the time of trial, and was res judicata “as to that time.” Jackson, 98-1810 at p. 10, 732 So.2d at 524. But it then observed:

However, the cause of action for modification of the prior award requires litigation of Jackson’s present disability status and its relation to the prior work-related injury, and that cause of action did not exist at the time of the first adjudication. Consequently, since the issue of Jackson’s present disability neither existed nor was litigated in the original trial, Jackson’s petition for modification cannot be barred by res judica-ta. (Emphasis in original.)

Id. This well-reasoned conceptual analysis should be equally applicable in the arena of child support litigation by analogy, as La. C.C. art. 142 and La. R.S. 9:311(A), like La. R.S. 23:1310.8(B), constitute “affirmative [legislative] steps to provide ... a cause of action to modify a prior award ... due to an alleged change in condition.” Jackson, 98-1810 at p. 10, 732 So.2d at 525.

The case of Megison v. Megison, 94-152 (La.App. 5th Cir.9/14/94), 642 So.2d 885, is the only reported case which directly addresses the issue of whether a nonmodifi-cation provision relating to child support in a consent judgment is enforceable against a party seeking to reduce child support. 17There, the consent judgment provided for an in globo award of both spousal alimony and child support, and provided that the award could be modified or terminated only upon the wife’s death, remarriage, or open concubinage. Although citing with approval prior jurisprudence authorizing nonmodification provisions as to spousal alimony, the Megison court made the following observations as to similar provisions relating to child support:

However, the law in the area of child support awards is to the contrary. Each parent owes an obligation to support, maintain and educate his/her children. La. C.C. art. 227. That obligation may not be renounced or set aside. [Citation omitted.] ... Thus, regardless of language in a consent agreement to the contrary, child support judgments are always reviewable where a substantial change of circumstances has been shown. [Citation omitted.] Thus, an exception of no cause of action or res judicata in response to a rule to reduce child support or set child support, where a substantial change in circumstances has been pled, cannot be properly maintained. (My emphasis.)

Megison, 94-152 at pp. 4-5, 642 So.2d at 888. I agree.

In the case of Stogner v. Stogner, 98-3044 (La.7/7/99), 739 So.2d 762, the Louisiana Supreme Court reviewed the enactment of the Guidelines for Determination of Child Support, La. R.S. 9:315, et seq., particularly La. R.S. 9:315.1(D). There, the Louisiana Supreme Court observed that the guidelines envisioned the continuing validity of stipulated (consent) decrees of child support. However, it squarely held that “although the parents may present a stipulation for consideration, the trial court is not bound to follow it and may choose to use the guidelines instead.” Stogner, 98-3044 at 8, 739 So.2d at 767. It further held that the responsibility of the trial court relating to consent judgments of child support was nondiscretionary, and explained:

Such an approach underscores the integral role of the trial court as gatek eeper in this area of paramount importance. If properly performed in accordance with the guidelines, this judicial review will further assure the adequacy and consistency of child support awards, foster evenhanded settlements, and preserve a record for the evaluation of later proceedings to \tfnodify initially stipulated child support awards. (My emphasis.)
This analysis is not to be viewed as an abrogation of that body of law which has recognized that a consent (stipulated) judgment is by its nature a bilateral agreement between the parties wherein the parties adjust their differences by mutual consent and thereby put an end to a lawsuit with each party balancing the hope of gain against the fear of loss. [Citations omitted.] Notwithstanding the freedom of the parties to so agree, parties must remember that their agreements may not “derogate from laws enacted for the protection of the public interest.” La. Civ.Code art. 7. In the present instance, it is clear that the stipulated child support recognized in the judgment must conform with the public policy codified in the child support guidelines with its concomitant best interest presumption and mandated adequacy review provisions. (My emphasis.)

Stogner, 98-3044 at pp. 10-13, 739 So.2d at 769-770.

I consider La. C.C. art. 142, La. R.S. 9:311, and La. R.S. 9:315.1(D) to be such laws “enacted for the protection of the public interest.” Parents may not by agreement or consent judgment divest a trial court of its inherent authority to adjust child support where appropriate, and the mere addition of a nonmodification provision or clause cannot alter this governing principle of our law. Any agreement providing for child support in excess of the amount specified by the Guidelines should be considered deferentially by the court, and any attempt to modify a judgment incorporating it should be viewed with suspicion. But ultimately, a parental child support agreement is not binding on the court’s authority to review it or to later modify a consent judgment in the event of material change of circumstances.

The case of Dubroc v. Dubroc, 388 So.2d 377 (La.1980), countenanced the enforcement of an agreement to temporarily suspend the right of the domiciliary parent to advance support payments from the other, while the child resided temporarily with the latter parent. Initially, we note |flthat Dubroc antedates the adoption of the statutory Guidelines, La. R.S. 9:315, et seq., and the Stogner decision. In Dubroc, the Supreme Court analogized the situation to that authorized by La. C.C. art. 232, and held that such an arrangement could be established consensually and enforced, as long as it was set forth in a valid conventional obligation and did not operate to the detriment of the child. The nonmodification provision here goes well beyond those limited circumstances in its scope and duration. Likewise, the holding in Seifert v. Seifert, 374 So.2d 157 (La.App. 1st Cir. 1979), antedates the Guidelines and is clearly limited to its facts. There, this court held that a conventional waiver of monthly child support by the domiciliary parent in favor of the children’s father was not contra bonos mores, where there was no testimony contradicting that of the father that the purpose was to assist him in securing credit approval to purchase a residence, and there was no evidence that the waiver operated to the children’s detriment.

In the case of Leger v. Leger, 00-0505, p. 8 (La.App. 1st Cir.5/11/01), 808 So.2d 632, 639, this court again affirmed the principle that “the trial court is not bound by a stipulation of the parties” in determining child support. In doing so, we also observed:

Children cannot live on light and air; they need and are entitled to not only love and affection, but also the financial support of their parents. This financial support obligation is based on the needs of the children and the ability of the parents to provide support. (My emphasis.)

Leger, 00-0505 at p. 6, 808 So.2d at 637-38.

Certainly, in weighing the factors of the child’s needs and the parent’s financial ability, I would concede that the former should be given the benefit of any doubt. But it is not now and has never been the policy of our legal system to impoverish one person without compelling reason in order to benefit another, and it must be presumed that it is not in a child’s best 11 ninterest to sentence a parent to monetary servitude, bankruptcy, or financial distress because of fortuitous circumstances. . Likewise, considerations of what may be in a child’s best material interest must be balanced with considerations of basic fairness and equity. I find no merit in Ms. Richardson’s argument that enforcement of a nonmodification provision to prevent reduction of a monetary child support award is presumptively in a child’s best interest or in the public interest, while invalidation of such a provision as to an increase is required as against public policy. Such an interpretation is logically inconsistent and would impermissibly preempt the “integral role of the trial court as gatekeeper in this area of paramount importance.”

Equally without merit is Ms. Richardson’s argument that the issues of the parties’ community property settlement were intertwined with the issue of child support, and that Mr. Richardson should be es-topped from seeking to reduce the monthly child support awarded. Child support should not be loused as a “bargaining chip” by either parent for purposes of apportioning parents’ community property or negotiating spousal support issues; it is not theirs to bargain with in the first place. Child support should be viewed as rightfully owed to and the property of the children in whose interest it is imposed. See La. C.C. art. 141, Revision Comment (g)—1993; Dolhonde v. Dolhonde, 357 So.2d 810, 813 (La.App. 1st Cir.1978).

In concurring in the reversal of the family court’s judgment sustaining the peremptory exception, I express no opinion as to the merits of the modification sought by Mr. Richardson. This court should simply have held that the family court erred in sustaining the exception, whether based upon the objection of no cause of action, no right of action, or res judicata, and that Mr. Richardson is not barred from seeking modification of child support by virtue of the nonmodification provision of the consent judgment and from presenting evidence in support of his contentions. I can confidently predict, with the earnest hope that my learned colleagues will agree, that the majority’s opinion in this case will not be the last word on this subject.

I respectfully concur.

      . Despite the express request for an increase and, more generally, for a modification (as otherwise set forth in his pleading), by this rule appellant in fact seeks a reduction of the amount of child support he agreed to pay to his former wife for Joshua in the October 23, 2000, consent judgment.

      . See generally La. R.S. 13:4231.

      . Acts 2001, No. 1082, § 2 added the adverb “materially” modifying the verb "change” in La. C.C. art. 142, and § 1 of the same act added the adjective “material” modifying "circumstances” in La. R.S. 9:311(A). These amendments legislatively overruled the holding in Stogner v. Stogner, 98-3044, pp. 10-13 (La.7/7/99), 739 So.2d 762, 769-770, that any change in circumstances is sufficient to justify modification of child support. La. C.C. art. 142, Comment — 2001; La. R.S. 9:311, Comment (a) — 2001. The amendments implicitly restored the validity of the prior appellate jurisprudence requiring that a change in circumstances justifying modification of child support be "substantial.” The latter term used in the pre-Stogner jurisprudence should therefore for all practical purposes be considered synonymous with the term "material” in the statute. Apart from the holding legislatively overruled, the other holdings in the Stogner decision remain valid. See pp. 90-91 of this concurrence, infra.

        . Both La. C.C. art. 142 and La. R.S. 9:311(A) use the disjunctive "or” in establishing alternative grounds for modification. Thus, if there is either a material change in the child's needs or the ability of either parent to provide support, modification may be warranted.

      . Louisiana Revised Statutes 13:4231 provides:
      Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
      (1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
      (2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
      (3)A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

      . See n. 1, infra.

      . See also La. C.C. arts. 232, 233, and 234.

      . For example, a court is authorized to deviate from the statutory child support guidelines “if their application would not be in the best interest of the child or would be inequitable to the parties." La. R.S. 9:315.1(B). (My emphasis.) See also La. R.S. 9:315.1(C)(8).

      . The inherent authority of our courts to safeguard the interests of our state’s most valuable resource, its children, is a consistent theme in our civil law. Indeed, the role of our courts in protecting the interests of children is not limited to the financial support of children of divorce. See, e.g., La. C.C.P. arts. 4265, et seq., relating to compromise of a minor’s cause of action and administration of a minor’s property rights.

      . Her argument is based upon the inclusion of the following language as Paragraph 2 of Section L, “Support,” of the consent judgment:
      RODNEY DEWEY RICHARDSON, JR. shall transfer all right, title and interest in the community residence unto PAMELA PERKINS RICHARDSON and if RODNEY DEWEY RICHARDSON, JR. makes $500,000.00 gross profit from the sale of the product “Pee Willie Wick” Scent Dispenser, he will agree within ten (10) days to pay off the balance on the mortgage on the house, PAMELA PERKINS RICHARDSON’S car and pay her $25,000.00 cash. This is contingent upon the sale of the foregoing product before January 1, 2001 and PAMELA PERKINS RICHARDSON has no recourse to RODNEY DEWEY RICHARDSON'S business or future business dealings.
      There is no logical connexity or interrelationship between Paragraph 2’s language and that of Paragraph 1, dealing with the monthly child support amount, the child’s individual retirement account, and the nonmodification provision. There is nothing suggesting a quid pro quo agreement between the parties in Paragraph 2 relating to the amount of child support, whereby Ms. Richardson sacrificed any rights relating to spousal support or community property to secure an advantage to the child. In fact, Paragraph 2 may have been intended to constitute a separate section of the consent judgment, as evidenced by the omission of a Section M following Section L. Further, contrary to the family court's oral reasons, there is absolutely nothing demonstrating that Mr. Richardson received "appropriate consideration” from Ms. Richardson for his agreement to deviate from the support amount established by the guidelines and to waive any right to seek modification of monthly child support.

      . The result proposed herein is even supported by additional language in the parties' own agreement, also incorporated in the consent judgment. ■ Section N, entitled "Conflicts Between the Parties,” immediately follows Section L, "Support.” It appears to address the issue of conflicts between the parties on all issues which might arise, and provides:
      The parties shall attempt to resolve any conflicts regarding the terms of this plan between themselves. In the event of a dispute either party may seek judicial review. (My emphasis.)
      Accordingly, the parties themselves contemplated that either would have general recourse to the courts to determine their rights under the consent judgment.