text:
    Shirley Elaine Foster HOOPER, et al. v. Jack L. HODNETT, et al.
    No. 13-1026.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 12, 2014.

      Koby D. Boyett, Attorney at Law, Alexandria, LA, for Plaintiffs/Appellants, Edward W. Hooper, Jr., Gregory W. Hooper, Shirley Elaine Foster Hooper.
    Charles S. Weems, Jonathan D. Stokes, Gold, Weems, Bruser, Sues & Rundell, Alexandria, LA, for Defendants/Appellees, Jack L. Hodnett, Larry Wayne Prestridge, Nola Jane McFalls, PTQ Enterprises, Inc.
    Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, and JOHN D. SAUNDERS and JIMMIE C. PETERS, Judges.
   PETERS, J.

[rThe plaintiffs in this litigation, Shirley Elaine Foster Hooper, Edward W. Hooper, Jr., and Gregory Walter Hooper (hereinafter sometimes collectively referred to as “the Hooper plaintiffs”), appeal the trial court’s grant of a summary judgment dismissing their claims against one of the defendants, PTQ Enterprises, Inc. (PTQ). For the following reasons, we affirm the trial court judgment in all respects.

DISCUSSION OF THE RECORD

This litigation began on April 17, 2012, as a petition filed by the Hooper plaintiffs as a shareholders’ derivative action to recover damages for the alleged breach of fiduciary duties by certain officers and directors of PTQ; and as a petition to enforce dissenters’ rights pursuant to La. R.S. 12:131. The Hooper plaintiffs named Jack L. Hodnett, Larry Wayne Prestridge, and Nola Jane McFalls as the officer/director defendants, and named PTQ as a “nominal defendant.”

After a July 30, 2012 hearing, the trial court initially resolved the issues arising from the derivative action portion of the litigation by granting the defendants’ peremptory exception of no right of action and dismissing, without prejudice, all claims asserted against Jack L. Hodnett, Larry Wayne Prestridge, and Nola Jane McFalls. The trial court executed a judgment to this effect on August 28, 2012. The matter now before us involves the dissenters’ rights issue.

PTQ responded to this claim by filing, among other pleadings, a motion for summary judgment, the basis of which is found in the first paragraph of the motion:

Plaintiffs, Shirley Elaine Foster Hooper, Edward W. Hooper, Jr., and Gregory Walter Hooper, have no rights under the dissenters’ rights statute, La. R.S. [ ] 12:181, and cannot prove all of the essential elements of a dissenter’s rights claim against Defendant, PTQ Enterprises, Inc., as (1) the corporate transaction in question was not a 12sale of all the corporate assets, (2) the corporate transaction was an excepted transaction under La. R.S. [ ] 12:131(B)(2), and (3) no notice was given of a completed transaction to which the dissenter’s rights would apply.

PTQ attached ten exhibits to its motion and an eleventh exhibit to its reply memorandum:

Exhibit D-l Affidavit of Graves Theus
Exhibit D-2 Action by Written Instrument of the Shareholders
Exhibit D-3 Notice of Special Meeting of Shareholders
Exhibit D^l Minutes of January 17, 2012 Shareholders’ Meeting
Exhibit D-5 Action by Written Instrument dated January 18, 2012
Exhibit D-6 January 18, 2012 Letter from PTQ Counsel Theus
Exhibit D-7 Asset Purchase Agreement dated January 20, 2012
Exhibit D-8 February 6, 2012 Letter from Hooper counsel Boyett
Exhibit D-9 February 17, 2012 Letter from PTQ Counsel Theus
Exhibit D-10 Affidavit of Jack Hodnett
Exhibit D-ll Copy of PTQ’s Articles of Incorporation

The Hooper plaintiffs attached seventeen exhibits to their opposition memorandum:

Exhibit Opp-1 Document entitled “Action by Written Instrument of the Shareholders of PTQ ENTERPRISES, INC.”, dated January 5, 2012
Exhibit Opp-2 Notice of Special Meeting of the Shareholders of PTQ Enterprises, Inc., dated January 5, 2012
Exhibit Opp-3 Agenda for Special Meeting of Shareholders
Exhibit Opp-4 Bill of Sale
Exhibit Opp-5 Asset Purchase Agreement
Exhibit Opp-6 Audio recording of that certain special meeting of shareholders of PTQ Enterprises, Inc., held on January 17, 2012; with written transcript thereof
| ..¡Exhibit Opp-7 Minutes of the Special Meeting of Shareholders of PTQ Enterprises, Inc., January 17, 2010
Exhibit Opp-8 Letter dated January 18, 2012 from J. Graves Theus, Jr, to Petitioners
Exhibit Opp-9 Document entitled “Action by Written Instrument of the Shareholders and Directors of PTQ Enterprises, Inc.” dated January 18, 2012
Exhibit Opp-10 Letter dated February 17, 2012 from J. Graves Theus, Jr. to Koby D. Boyett
Exhibit Opp-11 Letter dated May 7, 2012, from Charles S. Weems, III to Koby D. Boyett
Exhibit Opp-12 E-mail correspondence of February 23, 2012 from Graves Theus to Koby D. Boyett
Exhibit Opp-13 Affidavit of Shirley Elaine Foster Hooper dated March 21, 2013
Exhibit Opp-14 Affidavit of Edward W. Hooper, Jr. dated March 21, 2013
Exhibit Opp-15 Affidavit of Gregory Walter Hooper dated March 21, 2013
Exhibit Opp-16 Document entitled “Shareholders Notice of Dissent and Objection to Proposed Corporate Action of PTQ Enterprises, Inc.” dated January 17, 2012
Exhibit Opp-17 Letter dated February 6, 2012 from Koby D. Boyett to PTQ Enterprises, Inc.

The trial court heard the motion on April 1, 2013. At the beginning of 'the hearing, counsel for PTQ offered its eleven exhibits and the trial court ordered them admitted. After counsel for PTQ completed his argument, he offered all of PTQ’s exhibits and “the entire record of this matter by reference.” Thus, the plaintiffs’ exhibits were introduced/admitted, as well.

Upon completion of the evidence, the trial court took the matter under advisement. On May 21, 2013, the trial court .issued written reasons for granting the motion for summary judgment, stating in pertinent part:

|4The underlying purpose of the dissenters’ rights statute is to ensure the fair treatment of minority shareholders. Although the original notice to shareholders described a transaction which' would have given rise to dissenter’s rights, the directors and majority shareholders of PTQ ultimately voted to approve the cash sale of only certain assets, and then with the reservation that PTQ must distribute the net proceeds of the sale to shareholders within one year, thereby ensuring the fair and equal treatment of the Hooper shareholders. The sale was consummated exactly that way, and the corporation did in fact distribute the net proceeds of that sale to all shareholders within one year.
The Hooper shareholders have no dissenter’s [sic] rights. First the sale was not for all, or even substantially all, the PTQ assets. Secondly, the sale was only made after the directors and more than two-thirds of the shareholders resolved that the sale would be for cash and that net proceeds of the sale would be distributed to the shareholders in accord with their interests within one year.
There are no genuine issues of fact in this case, material or otherwise in this dissenter’s rights case. The motion for summary judgment filed by PTQ is granted as to the dissenters’ rights claims.

The trial court executed a judgment to this effect on May 28, 2013, certified it as an immediately appealable judgment, and thereafter, the Hooper plaintiffs perfected this appeal.

In their appeal, the Hooper shareholders assert three assignments of error:

Assignment of Error 1: The trial court erred in failing to specify that dissenters rights existed for the benefit of SHIRLEY ELAINE FOSTER HOOPER, EDWARD W. HOOPER, JR., and GREGORY WALTER HOOPER.
Assignment of Error 2: The trial court erred in determining that the sale of corporate assets only applied to certain limited assets, less than all or substantially all of the corporate assets of PTQ ENTERPRISES, INC., such that cash alone is an asset sufficient to defeat the intent and purpose of LSA-R.S. 12:131, And,
Assignment of Error 3: The trial court erred in determining that the post hoc actions of Defendants were sufficient to transform the sale of corporate assets to a sale on terms for cash to be distributed within a year of the sale date, such that the sale was an excepted transaction to dissenters rights pursuant to LSA-R.S. 12:131(B)(2).

| .OPINION

Louisiana Code of Civil Procedure Article 966, which governs summary judgment proceedings, has been significantly amended in both the 2012 and 2013 legislative sessions. While the procedure is still favored, and while the goal set forth in La. Code Civ.P.. art. 966(A)(2) remains the “just, speedy, and inexpensive determination of every action except those disallowed by Article. 969,” the requirements of proof have significantly changed. Prior to August 1, 2012, the evidentiary burden in summary judgment matters was set forth in La.Code Civ.P. art. 966(B)(emphasis added), as follows:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.

However, by 2012 La. Acts No. 257, § 1, the Louisiana - Legislature significantly changed La. Code Civ.P. art. 966, and one of those changes included amending and restructuring La.Code CivJP. art. 966(B). The language cited above was moved to a new subparagraph designated as La.Code CivJP. art. 966(B)(2), but without the words “on file.” To emphasize the significance of the deletion of these two words, the legislature added a subparagraph designated as La.Code Civ.P. art. 966(E)(2)(emphasis added), which provided that “[o]nly evidence admitted for purposes of the motion for summary judgment shall be considered by the court in its ruling on the motion.” Still, the 2012 amendment did not change the burden of proof applicable to a motion for summary judgment.

The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant’s | fiburden on the motion does not require him to negate all essential elements of the adverse party’s claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party’s claim action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material of fact.

La.Code Civ.P. art. 966(C)(2).

It is well-settled that “[ajppellate review of the granting of a motion for summary judgment is de novo, using the identical criteria that govern the trial court’s consideration of whether summary judgment is appropriate.” Smitko v. Gulf S. Shrimp, Inc., 11-2566, p. 7 (La.7/2/12), 94 So.3d 750, 755 (citations omitted). In this matter, both litigants offered, and had admitted, the evidence they considered pertinent to the trial court’s decision on this matter. Thus, they recognized, and complied with the evidentiary changes in La. Code Civ.P. art. 966.

The procedure for authorizing the sale of all or substantially all of the assets of a corporation is set forth in La.R.S. 12:121(B), which provides:

If the corporation is not insolvent, such authorization may be given only by the shareholders, by vote of at least two-thirds of the voting power present (or by such greater or lesser proportion, not less than a majority, of the voting power present or of the total voting power, as the articles may require). The notice of the meeting of shareholders at which such authorization is considered shall state such consideration as a purpose of the meeting, and shall also contain, if applicable the following statement: “Dissenting shareholders who comply with the procedural requirements of the Business Corporation Law of Louisiana will be entitled to receive payment of the fair cash value of their shares if the transaction to be considered is effected upon approval by less than eighty per cent of the corporation’s total voting power.” If the corporation is insolvent, such authorization may be given by vote of two-thirds of the entire board of directors.

Louisiana Revised Statutes 12:131 sets forth the rights of the shareholders who choose to dissent from any action taken by the majority shareholders pursuant to La. R.S. 12:121 (B), and although it contains eight sections, some with multiple ^subsections, with regard to the matter before us, only La.R.S. 12:131(A) and (B)(2)(emphasis added) are pertinent:

A. Except as provided in subsection B of this section, if a corporation has, by vote of its shareholders, authorized a sale, lease or exchange of all of its assets, or has, by vote of its shareholders, become a party to a merger or consolidation, then, unless such authorization or action shall have been given or approved by at least eighty per cent of the total voting power, a shareholder who voted against such corporate action shall have the right to dissent_
B. The right to dissent provided by this Section shall not exist in the case of:
(2) A sale for cash on terms requiring distribution of all or substantially all of the net proceeds to the shareholders in accordance with their respective interests within one year after the date of the sale.

Thus, while a vote of two-thirds of the shareholders present at a meeting called to authorize the sale of all or substantially all of the assets of a corporation is sufficient to effect the action, a vote of eighty percent of all of the shareholders of a corporation is required to effect a sale of all the corporate assets without making dissenter rights available to those shareholders voting against the action. However, even if the authorization is not carried by a vote of eighty percent of all the shareholders, dissenter shareholder rights are not allowed if the sale is cash and the proceeds are distributed to all shareholders -within one year of the date of the sale.

The pleadings, depositions, answers to interrogatories, admissions and affidavits admitted into evidence in this matter establish that PTQ was incorporated on September 8, 1986, with the original incorpo-rators being Mr. Hodnett and Edward W. Hooper. At some point before the death of Edward W. Hooper on March 8, 1995, Mr. Prestridge and Ms. McFalls acquired ownership of shares of stock of PTQ; animosity arose between Edward W. Hooper and the other | ^shareholders; and the relationship between the parties deteriorated to the point that Edward W. Hooper ceased any involvement with PTQ other than as a shareholder. By the time the current dispute arose in January of 2011, Mr. Hodnett and Mr. Prestridge each owned 1,000 shares of PTQ stock; Ms. McFalls owned 180 shares; and Mrs. Hooper owned an undivided one-half interest in 1,000 shares as well as the usufruct over the other one-half interest, with her two children owning the naked ownership of that one-half interest.

On January 5, 2012, thé defendant shareholders executed a document entitled ACTION BY WRITTEN INSTRUMENT OF THE SHAREHOLDERS OF PTQ ENTERPRISES, INC. asserting that they had held a meeting wherein they elected themselves Directors of PTQ; ratified and adopted bylaws for PTQ; and authorized Mr. Hodnett, as President, to call a special meeting of the shareholders for January 17, £012, “[t]o consider and act upon the question of the sale of all or substantially all of the assets of the Company, including goodwill, franchise and other rights to T-Tex Industries, L.L.C., a Texas limited liability company.” The record contains no evidence that the Hooper plaintiffs received any notice of the January 5 meeting, and none of them attended. Mr. Hodnett, in his capacity as President of PTQ, issued the special meeting notice that same day. In addition to stating the purpose of the special meeting, the notice contained verbatim the dissenting shareholder rights statement found in La.R.S. 12:121 (B).

|flMuch of the discussion by those present at the January 17, 2012 shareholders’ meeting related to the personal animosity existing between the Hooper plaintiffs and the shareholder defendants, but it does establish certain specifics concerning the status of the corporation itself. It is clear that while PTQ enjoyed corporate status, it seldom functioned as a corporation in that the officers and directors regularly failed to comply with the annual shareholder meetings requirements, and did very little to keep the Hooper plaintiffs informed of corporate activity both before and after Mr. Hooper’s death. The discussion also establishes that PTQ had nothing to sell but the physical equipment used in its business and that it was a corporation which was about to exist in name only.

Mr. Hodnett and the other two defendant shareholders made it clear to the Hooper plaintiffs at the January 17, 2012 meeting that even if the sale to T-Tex Industries, L.L.C. (T-Tex) did not occur, the corporation would cease to function. In fact, Mr. Hodnett informed the Hooper plaintiffs that all • employees were being laid off that day; he intended to cease working in any capacity on his birthday in March of 2012; and because the building where the corporation manufactured its product belonged to him, he intended to use the building to “park [his] motorcycle in it.” With regard to the goodwill of the business and customer lists of importance, the defendant shareholders acknowledged that T-Tex was the corporation’s main, and as a practical matter, only customer. When the Hooper plaintiffs sought time to review the corporate financial records, they were told that time was of the essence in the transaction in that it had to be consummated immediately or T-Tex | inwould withdraw its offer. In fact, Mr. Prestridge commented that he really did not understand why T-Tex was making the offer in the first place.

The only formal action taken at the shareholders’ January 17, 2012 meeting was the passage of two motions, both being made by Mr. Prestridge and seconded by Ms. McFalls. The first motion was that the corporation sell “all or substantially all the assets of the corporation” to T-Tex for the sum of $150,000.00; and that Mr. Hodnett be given the authority to determine the specific terms and conditions of the transaction. The second motion authorized Mr. Hodnett, in his capacity as President, to execute all necessary documents to effect the sale. The two Hooper brothers, having their mother’s proxy, cast the only votes against both motions. Immediately after the vote was recorded, counsel for the Hooper plaintiffs gave the corporation a document entitled SHAREHOLDER NOTICE OF DISSENT AND OBJECTION TO PROPOSED CORPORATE ACTION OF PTQ ENTERPRISES, INC. The notice read in pertinent part:

NOTICE IS HEREBY GIVEN THAT SHIRLEY ELAINE FOSTER HOOPER IS EXPRESSLY OPPOSED TO THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF PTQ ENTERPRISES, INC., INCLUDING GOODWILL, FRANCHISE AND OTHER RIGHTS TO T-TEX INDUSTRIES, LLC, AS SET FORTH IN THAT CERTAIN “Notice of Special Meeting of [ ] Shareholders PTQ Enterprises, Inc.” dated January 5, 2012, AND ACCORDINGLY DOES VOTE HER SHARES AGAINST SUCH ACTION.

The next day, the defendant shareholders called another special meeting not attended by any representative of the Hooper plaintiffs and approved a resolution which addressed the disposition of the funds to be received by the corporation from the T-Tex transaction. The resolution recognized the receipt of Mrs. Hooper’s dissent from the previous action; noted that her vote caused the prior motions to |1Treceive less than an eighty percent margin; and noted that La.R.S. 12:131(B)(2) “provides that no dissenters rights shall exist where ‘a sale for cash on terms requiring distribution of all or substantially all of the net proceeds of the sale to the shareholders in accordance with their respective interests within one year after the date of the sale.’ ” To take advantage of the language of La.R.S. 12:131(B)(2), the defendant shareholders adopted the following resolutions:

RESOLVED that the net proceeds of the sale of assets to T-Tex Industries, L.L.C. shall be distributed to all shareholders in accordance with their respective interests within one (1) year after the date of the sale.
RESOLVED that Jack L. Hodnett, in his capacity as President, duly authorized pursuant to a resolution of the shareholders at a special meeting on January 17, 2012, hereby approves the distribution of the net proceeds of the sale of assets to T-Tex Industries, L.L.C. to the shareholders in accordance with their respective interests within one (1) year of the sale as a term and condition of the sale.

PTQ and T-Tex completed the contemplated transfer of assets on January 20, 2012. The written Asset Purchase Agreement attests to a cash payment of $150,000.00 and provides that PTQ sold T-Tex certain assets listed on an exhibit attached to the agreement. The attached exhibit identifies fourteen categories of equipment as the subject of the transfer.

On February 6, 2012, counsel for the Hooper plaintiffs forwarded counsel for PTQ a written demand for the payment of the fair market value of their shares of stock pursuant to the authority of La.R.S. 12:131(0(2). Specifically, the demand requested the payment of $250,000.00 as payment. Attached to the demand was a written acknowledgment from the manager of Argent Trust Company to the effect that the Hooper plaintiffs had placed the two 500 share stock certificates in the trust company’s custody subject to the condition that they be “delivered to PTQ Enterprises, Inc. upon payment of the value of the shares determined in accordance with the provisions of LSA-R.S. 12:131(C).” By a letter |12dated February 17, 2012, counsel for PTQ gave the Hooper plaintiffs written notice of the corporation’s objection to the filing of the written demand for the fair cash value of the shares. The letter based the objection on the provision of La.R.S. 12:131(B)(2) recognized in the defendant shareholders’ resolution of January 18, 2012, concluding that because the net proceeds of the sale would be distributed within one year, there was no need for an immediate establishment of the fair market value of the shares.

In his January 10, 2013 affidavit, Mr. Hodnett asserted that on January 8, 2013, PTQ distributed to all shareholders the net proceeds from the $150,000.00 sale to T-Tex. The net proceeds tendered to the Hooper plaintiffs was $34,685.07. He also asserted that, assuming the assets sold to T-Tex were worth $150,000.00, the total tangible assets of the corporation immediately before the transaction would have been valued at $395,000.00. The $245,000.00 difference, according to Mr. Hodnett’s affidavit, was comprised of cash on deposit at the time of the transaction.

In its reasons for judgment, the trial court concluded both that the sale to T-Tex was not a sale of all or substantially all of the corporate assets and that the sale fell within the exemption of La.R.S. 12:131(B)(2). In their three assignments of error, the Hooper plaintiffs assert that the trial court erred in both of these factual findings, and that it should have recognized their dissenter shareholder rights.

With regard to whether the corporation sold all of its assets, we note that at the January 17, 2012 meeting, the defendant shareholders clearly asserted that, while the corporation itself was not being sold, all of the assets were, and the corporation was ceasing business activities. Both motions passed at that meeting reflected the same intent, as did the resolution passed the next day. The transfer document lists the equipment transferred, and nothing in the record suggests that |13the - corporation is left with anything other than the $245,000.00 referred to in Mr. Hodnett’s affidavit.

PTQ argues that the $245,000.00 on deposit was an asset of the corporation and, therefore, the sale was not for all of the corporate assets. In support of this argument, it directs this court to La.R.S. 12:1 which sets forth the definitions of general terms used in the Louisiana Business Corporation Law, and particularly to La.R.S. 12:1(D) which defines a corporation’s assets as “all a corporation’s property and rights of every kind” except treasury shares. While we recognize the accuracy of that language, we also note that the first sentence of the statute preceding all definitions states: “As used in this Chapter, unless the context requires otherwise,” the following definitions should be applied. La.R.S 12:1 (emphasis added).

We reject PTQ’s argument that the $245,000.00 on deposit constitutes an asset contemplated under La.R.S. 12:121. Such an interpretation would lead to the absurd conclusion that a cash purchase for all of the assets of PTQ would have required T-Tex to tender payment of $895,000.00 and immediately receive $245,000.00 of its payment back, such that all but $150,000.00 of the transaction was a wash. We find that La.R.S. 12:121 is one of those situations where the context of statute requires a different definition of asset than they set forth in La.R.S. 12:1(D). While the cash on hand is a corporate asset for the purposes of determining a shareholder’s interest, we do not interpret La.R.S. 12:131 to require inclusion of that value in determining whether all of the corporate assets are being sold.

Although we find that the sale was of all of the assets of PTQ, we also find that La.R.S. 12:131 (B)(2) applies to preclude dissenter shareholder rights from applying in this case. It is not disputed that the defendant shareholders voted to 114provide for the one-year distribution recognized in La.R.S. 12:131(B)(2); the ultimate transaction was for cash, and the net proceeds were distributed to the shareholders within the year window of time.

DISPOSITION

For the foregoing reasons, we affirm the trial court’s grant of summary judgment dismissing the claims of Shirley Elaine Foster Hooper, Edward W. Hooper, Jr., and Gregory Walter Hooper against PTQ Enterprises, Inc. We assess all costs of this appeal to Shirley Elaine Foster Hooper, Edward W. Hooper, Jr., and Gregory Walter Hooper.

AFFIRMED.

      . On February 19, 2013, the Hooper plaintiffs reinstated their shareholders' derivative action against Mr. Hodnett, Mr. Prestridge, and Ms. McFalls, asserting new claims for recovery.

      . We note that the Louisiana Legislature's amendment to La.Code Civ.P. art. 966 by 2013 La. Acts No. 391, § 1, again affected the burden of proof elements of the Article. However, the 2012 version of La.Code Civ.P. art. 966 was in effect from August 1, 2012 through July 31, 2013; thus it governs the summary judgment hearing in April 2013.

      . Edward W. Hooper is the husband of Shirley Elaine Foster Hooper, and the father of Edward W. Hooper, Jr. and Gregory Walter Hooper.

      . Article VI of PTQ's articles of incorporation as amended provide that "[w]henever the affirmative vote of shareholders is required to authorize and constitute corporate action, the consent in writing to such corporate action signed by the shareholders having that proportion of the total voting power which would be required to authorize or constitute such action at a meeting of the shareholders shall be sufficient for the purpose, without the necessity for a meeting of shareholders. Such consent shall be filed in the corporate minute book and if the consent is signed by fewer than all of the shareholders having voting power, prompt notice shall be given to all of the shareholders of the action taken pursuant to such written consent.” Such a procedure is authorized by La.R.S. 12:76.

      . In addition to the defendant shareholders, Edward W. Hooper, Jr., and Gregory Walter Hooper, legal counsel for both sides of this litigation attended and participated in the meeting.

      . Mr. Hodnett initially stated that the only salaried employee was a secretary, but subsequently referred to laying off "the girls.”

      . This meeting was also apparently called pursuant to the authority provided in Article VI of PTQ’s articles of incorporation as amended. None of the Hooper plaintiffs received notice of the calling of this meeting.


source: Caselaw Access Project

author: PAINTER, Judge.

license: Public Domain

text:
    Marcus MILLER v. Harold THIBEAUX, Lafayette Parish School Board and American Alternative Insurance Corporation.
    Nos. 13-541, 13-1029.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 12, 2014.
    Rehearing En Banc Denied May 7, 2014.

      Dawn L. Morris, Lafayette, LA, for Defendants/Appellants Lafayette Parish School Board and Harold Thibeaux.
    Robert I. Siegel, Christopher R. Teske, Tara E. Clement, New Orleans, LA, for Defendant-Appellant/Cross Appellee American Alternative Insurance Corporation.
    Derriel C. McCorvey, S. Marie Johnson, Lafayette, LA, for Plaintiff-Appellee Marcus Miller.
    Court composed of BILLY HOWARD EZELL, J. DAVID PAINTER, and SHANNON J. GREMILLION, Judges.
   PAINTER, Judge.

| defendants, Harold Thibeaux, the Lafayette Parish School Board (LPSB), and American Alternative Insurance Corporation (AAIC), appeal the judgment of the trial court denying their exception of no right of action and granting Plaintiff, Marcus Miller’s, motion for partial summary judgment. For the following reasons, we reverse and render judgment dismissing Plaintiffs suit.

FACTS

La’Derion Miller, a six year old, was attempting to board a school bus driven by Harold Thibeaux and owned by the LPSB, when the driver, who was distracted by two other children, closed the door on his arm. The bus drove away dragging La’Derion about eighty-one feet before he was released from the door and fell under the wheels of the bus. He died about 40 minutes later. Separate suits were filed by the child’s mother, Heather Jagneaux, who witnessed the accident from her front yard, and Marcus Miller, who alleged that he was La’Derion’s father.

Defendants filed a motion for summary judgment regarding damage caps. Miller' twice amended his petition. Defendants filed exceptions of no cause and no right of action regarding Miller’s paternity. Miller filed a motion for summary judgment regarding Thibeaux’s insured status as well as an “Amended Motion and Order for Judgment of Paternity.” A hearing was held on the various motions and the exception. The trial court granted the motion for summary judgment filed by Miller, denied that filed by 12AAIC, denied the exceptions of no right of action filed by Defendants, and granted the motion for judgment of paternity. Defendants appeal.

DISCUSSION

Exception of No Right of Action — Paternity

The supreme court explained the appellate review of a ruling on an exception of no right of action in Eagle Pipe & Supply, Inc. v. Amerada Hess Corp., 10-2267, 10-2272, 10-2275, 10-2279, 202289, pp. 6-7 (La.10/25/11), 79 So.3d 246, 255-56:
“The function of the exception of no right of action is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the suit.” Hood v. Cotter, 2008-0215, p. 17 (La.12/2/08), 5 So.3d 819, 829. An appellate court reviewing a lower court’s ruling on an exception of no right of action should focus on whether the particular plaintiff has a right to bring the suit and is a member of the class of persons that has a legal interest in the subject matter of the litigation, assuming the petition states a valid cause of action for some person. Id.
Whether a person has a right to bring an action raises a question of law. Id. “A question of law requires a de novo review.” Id. at 256.

Charles v. Towing and Recovery Professionals of Louisiana, 12-824. p. 3 (La.App. 3 Cir. 4/24/13), 156 So.3d 84, 2013 WL 2250988.

In their exception, Defendants argue that Miller did not timely file an avowal action and, as a result, had no right to pursue an action for wrongful death and/or survival damages. They argue that because the child’s mother had full custody and there were no child support or visitation orders in place at the time of the child’s death, there is no presumption of paternity.

The Louisiana Supreme court, in Udomeh v. Joseph, 11-2839,, pp. 4-5 (La.10/26/12), 103 So.3d 343, 346, explained the requirements with regard to paternal filiation in personal injury suits as follows:

| ¡¡To recover under a claim for wrongful death and survival, a plaintiff must fall within the class of persons designated as a beneficiary under La. Civ.Code arts. 2315.1 and 2315.2. Turner v. Busby, 03-3444, p. 4 (La.9/9/04); 883 So.2d 412, 416. When the decedent leaves no surviving spouse or child, the decedent’s surviving father and mother are the proper beneficiaries to bring a wrongful death and survival action. La.Civ.Code arts. 2315.1; 2315.2.
Filiation is the legal relationship between a child arid his parent. La.Civ. Code art. 178. Filiation is established by proof of maternity, paternity, or adoption.

Louisiana Civil Code Article 198 (emphasis added) provides that:

A man may institute an action to establish his paternity of a child at any time except as provided in this Article. The action is strictly personal.
If the child is presumed to be the child of another man, the action shall be instituted within one year from the day of the birth of the child. Nevertheless, if the mother in bad faith deceived the father of the child regarding his paternity, the action shall be instituted within one year from the day the father knew or should have known of his paternity, or within ten years from the day of the birth of the child, whichever first occurs.
In all cases, the action shall be instituted no later than one year from the day of the death of the child.
The time periods in this Article are peremptive.
The court in Udomeh further noted: [Ujnder this Court’s jurisprudence, a party bringing a wrongful death and survival claim must establish filiation in accordance with the requirements and temporal limitations of the Civil Code.
Further, the revision comments to La Civ.Code art. 198 indicate a putative father must timely file an avowal action pursuant to Article 198 in order to bring a wrongful death and survival action. One purpose of the temporal restrictions of Article 198 is “that a father who failed during a child’s life to assume his parental responsibilities should not be permitted unlimited time to institute an action to benefit from the child’s death.” La. Civ.Code art. 198, Official Revision Comments (d).
14Accordingly, we conclude the filiation provisions of La. Civ.Code art. 198 apply to actions under La. Civ.Code arts. 2315.1 and 2315.2. A putative father must file a timely avowal action in order to maintain a 'wrongful death and survival action for the death of his illegitimate child.

Id. at 347-348.

In Udomeh, as here, the plaintiff did not amend his petition to state an avowal action within the one-year period required by La.Civ.Code art. 198. However, in Udomeh, the court found that the plaintiff’s petition in the wrongful death action pled sufficient facts to state an avowal action and to give notice to defendants of the issue of Udomeh’s paternity. The court noted that the plaintiff alleged not only biological filiation but acknowledgement and support of the child.

Therefore, under Udomeh, if Plaintiffs petition alleges sufficient facts to petition to state an avowal action and provide notice to defendants of the issue of his paternity, and the action was filed within one year of the child’s death, a timely action for filiation has been commenced.

The original and first amended petitions herein were filed within a year of the child’s death. However, after reviewing the allegations of both, we conclude that neither contains sufficient allegations of fact to state a cause of action for filiation, as each contains only the bare allegation that Miller was the biological father of La’Derion. The second amended petition does not mention paternity. Miller’s motion for judgment of paternity was not filed until December 2012, more than a year after the child’s death and was thus untimely.

Accordingly, we conclude that Defendants have carried their burden of showing that Plaintiff has no right to pursue an action for the wrongful, death of La’Derion Miller.

|fiHaving so found, we need not consider the remaining assignments of error.

CONCLUSION

For these reasons, the judgment of the trial court denying Defendants’ exception of no right of action is reversed. Judgment is rendered dismissing Plaintiffs action for wrongful death and survival damages with prejudice. Costs of this appeal are assessed to Plaintiff, Marcus Miller.

REVERSED AND RENDERED.

      . Jagneaux and Miller were never married and did not live together at the time of the child’s death.


author: THIBODEAUX, Chief Judge.

text:
    Cynthia BRIDGES, Sec., LA Dept. of Revenue v. CEPOLK CORPORATION.
    No. 13-1051.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 12, 2014.
    Rehearing Denied April 2, 2014.

      Robert R. Rainer, Rainer, Anding, Ta-bot & Mulhearn, Baton Rouge, LA, for Plaintiff/Appellant-Cynthia Bridges, Sec., LA Dept, of Revenue.
    Gregory Brian Upton, Jonathan D. Stokes, Gold, Weems, Bruser, Sues & Rundell, Alexandria, LA, for Defendant/Appellee-Cepolk Corporation.

      Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.
   THIBODEAUX, Chief Judge.

|,The plaintiff, Cynthia Bridges as Secretary of the Louisiana Department of Revenue (“the Department”), appeals the trial court judgment denying its motion for summary judgment, and granting the cross-motion for summary judgment filed by the defendant taxpayer, Cepolk Corporation (“Cepolk”). Finding that the Department proved that the movable items purchased by Cepolk were subject to sales and use tax, and that Cepolk did not meet its burden of proving an exemption to the taxes, we reverse the judgment in favor of Cepolk and grant summary judgment to the Department.

I.

ISSUES

We must decide whether the trial court erred:

(1) in finding that Cepolk acted as the Government’s agent in purchasing materials installed in the Fort Polk housing; and
(2) in finding that Cepolk purchased the materials for resale to the Government prior to their incorporation into the final product.

II.

FACTS AND PROCEDURAL HISTORY

Cepolk is a non-resident, Nevada corporation with contracts to modify or replace the heating, ventilation, and air conditioning (HVAC) systems at the Fort Polk family housing complex in Louisiana. Cepolk asserted that the construction phase of its work was completed in 1994 and that it continued to provide bi-annual maintenance on the water heaters, air conditioning filters, florescent lights, and ad hoc system maintenance when requested. The Department 12conducted a sales and use tax audit of Cepolk for the period of March 1, 2006, through December 31, 2008. The audit revealed that Cepolk had failed to pay the sales tax on approximately $4,000,000.00 in purchases of materials and supplies from vendors such as Lowes, The Home Depot, Sherwin-Williams, Solar Supply, Inc., and various ■ other electrical, plumbing, and heating and air conditioning supply companies.

The purchases included small and large items such as lumber, nails, miscellaneous tools, gypsum, duct tape, wire strippers, water heaters, nuts, bolts, batteries, saw kits, sinks, refrigerators, and numerous other items used by the company in fulfilling its contracts. They also included monthly rentals on equipment paid to a financial entity, as well as payments to Home Depot Credit Services.

The Department filed suit to collect $160,573.87 in tax, plus interest of $46,145.60 as of August 20, 2010, and penalties of $4,779.00, for a total of $211,498.47, plus additional interest under La.R.S. 47:1601. Cepolk asserted that it had fulfilled any tax obligations to the State and that the purchases at issue were made by Cepolk as an agent for the United States Government (“Government” or “federal Government”).

The Department filed a motion and supplemental motion for summary judgment, attaching four contracts to which Cepolk was a party, and asserting that Cepolk was not a purchasing agent for the Government and was not exempt from the tax under the applicable Louisiana statutes and jurisprudence. Cepolk filed a cross-motion for summary judgment, attaching various contracts and asserting that it was unable to obtain certain others that were incorporated by reference.

lsThe motions were heard on March 4, 2013. The trial court granted summary judgment in favor of Cepolk and dismissed the Department’s suit to collect the taxes. For the reasons below, we reverse and render.

III.

STANDARD OF REVIEW

The grant or denial of a motion for summary judgment is reviewed de novo, “using the same criteria that govern the trial court’s determination of whether summary judgment is appropriate; i.e. whether there is any genuine issue of material fact, and whether the movant is entitled to judgment as a matter of law.” Samaha v. Rau 07-1726, pp. 3-4 (La.2/26/08), 977 So.2d 880, 882-83 (citations omitted); La. Code Civ.P. art. 966.

IV.

LAW AND DISCUSSION

Evidence

As a threshold matter, the contracts entered into evidence at the summary judgment hearing in March of 2013 were the exhibits of the Department, which specifically moved to have all of its exhibits admitted into evidence. Cepolk did not move to have its exhibits entered into evidence at any time during the hearing. We, therefore, cannot consider the exhibits merely attached to Cepolk’s cross-motion for summary judgment. Accordingly, our legal analysis will address the four contracts properly admitted into evidence, which are:

|4(1) AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT, referred to as the “U.S. Army Contract” by the Department, and as the “ESPC” (energy savings performance contract) by Cepolk, effective May 22, 1994, between the Director of Contracting-Fort Polk, and the Co-Energy Group. It is undisputed that this contract was assigned to Cepolk. We will refer to it as the “Army Contract.”
(2) MASTER SUBCONTRACT AGREEMENT, dated July 15, 2005, between Picerne Construction/FP, LLC as Contractor and Cepolk as Subcontractor. We will refer to this contract as the “Master Subcontract I.”
(3) SUBCONTRACT, dated January 1, 2006, between Picerne Military Housing as Manager and Cepolk as Subcontractor. We will refer to it as the “Subcontract.”
(4) MASTER SUBCONTRACT AGREEMENT, dated April 24, 2008, between Picerne Construction/FP, LLC as Contractor and Cepolk as Subcontractor. We will refer to this contract as the “Master Subcontract II.”

Applicable Law

Louisiana Revised Statutes 47:302(A) imposes a tax upon the retail sale and the use, consumption, distribution, and storage of tangible personal | ¿property, unless the purchases are specifically excluded or exempt from taxation. “Exemptions from taxation are to be strictly construed against the person claiming the exemption[,] and they must be clearly and affirmatively established.” Bill Roberts, Inc. v. McNamara, 539 So.2d 1226, 1229 (La.1989). Items of tangible personal property, such as construction materials, are considered corporeal movables, as used in the Louisiana Civil Code, until they are incorporated into an immovable and become a component part of the immovable building or construction. City of New Orleans v. Baumer Foods, Inc., 532 So.2d 1381 (La.1988); See La.Civ.Code arts. 471, 472.

Items of tangible personal property that are purchased for resale as items of tangible personal property, for example by dealers, are not taxed upon the original purchase. See La.R.S. 47:301(10)(a)(i). However, the dealer must ultimately pay the sales tax when he resells the items. Louisiana Revised Statutes La.R.S 47:314 establishes a presumption that tangible personal property held by a dealer is to be taxed:

Failure to pay any tax due as provided in this Chapter shall ipso facto, without demand or putting in default, cause the tax, interest, penalties, and costs to become immediately delinquent, and the collector has the authority, on motion in a court of competent jurisdiction, |„to take a rule on the dealer.... For the purpose of the enforcement of this Chapter and the collection of the tax levied hereunder, it is presumed that all tangible personal property imported or held in this state by any dealer is to be sold at retail, used or consumed, or stored for use or consumption in this state, or leased or rented within this state, and is subject to the tax herein levied; this presumption shall be prima facie only, and subject to proof furnished to the collector.

On the other hand, contractors who install the items they purchase and provide services and labor, rather than studying the markets for resale of the items, are not considered dealers:

A contractor who buys building material is not one who buys and sells — a trader. He is not a ‘dealer,’ or one who habitually and constantly, as a business, deals in and sells any given commodity. He does not sell lime and cement and nails and lumber.
His undertaking is to deliver to his obligee some work or edifice or structure, the construction of which requires the application of skill and labor to these materials so that, when he finishes his task, the materials purchased are no longer to be distinguished, but something different has been wrought from their use and union. The contractor has not resold but has consumed the materials.

State v. J. Watts Kearny & Sons, 181 La. 554,160 So. 77, 78-79 (La.1934).

In Claiborne Sales Co. v. Collector of Revenue, 233 La. 1061, 99 So.2d 345 (La.1957), the Louisiana Supreme Court found that tile sold to tile contractors, for use in performing tile installation contracts on immovable property, were taxable as retail sales upon purchase by the tile contractors. This is so even though the sales were made in wholesale quantities, sufficient to complete one job or for the tile contractors to keep in stock for future jobs.

In Bill Roberts, Inc., 539 So.2d 1226, the supreme court cited the above cases finding the contractor to be the ultimate consumer of the materials he |7installs, and held the contractor performing electrical contracting services for various governmental agencies liable for the sales tax on the contractor’s purchases of materials and equipment. The equipment and supplies purchased by the contractor were tangible personal property under La.R.S. 47:301. Id.

Similarly, in Amberg Trucking, Inc. v. Tarver, 626 So.2d 511 (La.App. 3 Cir.1993), we held the road contractor who purchased supplies for use on construction contracts with governmental agencies liable for the sales tax on the items.

Since tangible personal property has been judicially defined as movable property, the sale to the owner of the immovable is not taxable. American Sign & Ind. Corp. v. City of Lake Charles, 320 So.2d 234 (La.App. 3d Cir.1975).
Therefore, the contractor is the purchaser and consumer of the building materials used in construction and owes a tax on the purchases. St. John the Baptist P.S.B. v. Marbury-Pattillo C. Co., 259 La. 1133, 254 So.2d 607 ([La.]1971).

Concordia Parish School Bd. v. Russ, 491 So.2d 1368, 1372-73 (La.App. 3 Cir.), writ denied, 496 So.2d 350 (La.1986) (emphasis added).

|9If the purchaser can show that it is a designated purchasing agent for an exempt entity, and that title to the items passed to the exempt entity at the time of purchase, the purchaser is also exempt from the levy of sales and use taxes. F. Miller & Sons, Inc. v. Calcasieu Parish School Bd., 02-1680 (La.2/25/03), 838 So.2d 1269; La.Admin.Code 61:1.4301. Under La. R.S. 47:301(10)(g) (emphasis added), a government contractor can be exempt from sales tax if it can show that its purchases of corporeal movable property were “intended for future sale to the United States government or its agencies, when title to such property is transferred to the United States government or its agencies prior to the incorporation of that property into a final produet.”

Contentions of the Parties

Here, Cepolk asserted that it was exempt from taxation because it purchased all materials on behalf of the Government, and that it resold the movables to the U.S. Army prior to their incorporation into the immovable housing units under La.R.S. 47:301(10)(g). Therefore, the contracts were contracts of sale and not construction contracts subject to the traditional view of contractors.

In its reasons for judgment, the trial court found in the affirmative on all three contentions of Cepolk. In its judgment, the trial court stated that, as a matter of law, the Department did not prove all essential elements of its claims against Cep-olk, and, as a matter of law, the Department did not prove that the Louisiana sales and use taxes applied to the purchases at issue. Only the Department appealed, asserting that the trial court erred in each of its findings. Cepolk filed a response, reasserting its motion for summary judgment contentions.

LqAs a threshold matter, the essence of the trial court’s ruling “as a matter of law” is based upon its interpretation of the contracts and the applicable statutes and jurisprudence in this case. The trial judge, however, did not address any factual issues raised in the cross-motions for summary judgment. We review a grant or a denial of a motion for summary judgment de novo. Bonin v. Westport Ins. Corp., 05-886 (La.5/17/06), 930 So.2d 906. That is, there is no deference to the trial judge’s legal findings, and we make an independent review of the evidence in determining whether there is no genuine issue of material fact and whether the mover is entitled to judgment as a matter of law under La.Code Civ.P. art. 966. See Marigny v. Allstate Ins. Co., 95-952 (La.App. 4 Cir. 1/31/96), 667 So.2d 1229, writ denied, 96-693 (La.4/26/96), 672 So.2d 910. Because this case involves cross-motions for summary judgment, our task is to determine whether either party has established that there are no genuine issues of material fact and whether either party is entitled to judgment as a matter of law. Duncan v. U.S.A.A. Ins. Co., 06-363 (La.11/29/06), 950 So.2d 544.

The parties in this case have vehemently disputed the burden of proof, so much so that Cepolk has filed a motion to strike the Department’s arguments on the burden of proof in the Department’s reply brief filed in this court. We deny the motion to strike because it is a moot issue. Under our de novo review, we will apply the burden of proof analysis under summary judgment article, La.Code Civ.P. art. 966(C)(2), as explained in Gray v. American Nat’l Property & Cas. Co., 07-1670 (La.2/26/08), 977 So.2d 839. We will first discuss agency.

| T1 Whether Cepolk Was A Purchasing Agent For The Government

The Department asserts that there is nothing in the record to suggest that Cepolk was a purchasing agent for the U.S. Government. We agree. In F. Miller & Sons, Inc., 838 So.2d 1269, the contractor claimed an agency relationship with the Port of Lake Charles, a tax exempt entity under La.R.S. 47:301(8)(c). The court discussed the Department’s promulgation of amendments to the Louisiana Administrative Code to provide the criteria for a government contractor seeking to prove an agency relationship with an exempt government entity. Since 2002, Louisiana Administrative Code 61:1.4301 (emphasis added) provides in pertinent part:

e. The following elements establish an immovable property contractor’s purchases as the legal equivalent of a R.S. 47:301(8) entity’s purchases so as to exclude the transactions from sales and use tax. Additionally, due to the federal government’s immunity from state taxation under The Supremacy Clause, U.S. Const. Art. VI, § 2, federal contractors satisfying the following criteria are also entitled to the exclusion from the definition of person. The following criteria assume that the R.S. 47:301(8) entity is an immovable property contractor with an agency agreement with a government department or agency.
| |j>i. The government department or agency must acquire title to the property at the time of purchase. Except as otherwise provided in the contract between the parties, the risk of loss must be with the governmental entity.
ii. There must be a signed agreement authorizing the contractor to act as purchasing agent for the entity. The department’s form, Designation of Construction Contractor as Agent of a Governmental Entity, may be used for this purpose, or a custom agreement may be substituted if it includes all terms and conditions listed in the form prepared by the department. The form is available at any department office and through the department’s web site at: www.rev. state.la.us. Copies of the signed agreement must be made available to tax authorities and vendors upon request. Purchases by the designated agent will be recognized as those of the government entity if all parties to the contract strictly follow the terms of the agreement.

Accordingly, La.Admin.Code 61:1.4301, promulgated in accordance with La.R.S. 47:301 and La.R.S. 47:1511, and amended by the Department of Revenue in February 2002, requires a signed agreement of agency and proof that title to the materials passed to governmental agency at the time of purchase.

The Louisiana Supreme Court in F. Miller & Sons, Inc. discussed the contractor as the ultimate consumer of construction materials and quoted extensively from Bill Roberts, Inc. Ultimately, the court found, “if Miller can prove that it was the Port’s agent for purchasing supplies and equipment used on this public works Project,, then it will be exempt from local sales tax under La.R.S. 47:301(8).” F. Miller & Sons, Inc., 838 So.2d at 1274. F. Miller & Sons, Inc. was able to prove that it was an agent and mandatory under La.Civ.Code art. 2989 and La.Admin.Code 61:1.4301 because its contract with the Port contained the following provisions:

| ial.39 Supplementary Conditions-The part of the Contract Documents which amends or supplements these General Conditions
SC 6.15-Taxes
Contractor shall not pay any state or local sales or state or local use taxes on materials and equipment which are affixed and made a part of the real estate of the project or work or which is permanently incorporated into the project or work (hereinafter referred to as “applicable materials and equipment”). All purchases of applicable materials or equipment shall be made by the contractor on behalf of and as the agent of the Lake Charles Harbor & Terminal District (Owner), a political subdivision of the State of Louisiana. No state and local sales and use taxes are owed on applicable materials and equipment under the provisions of Act 1029 of the 1991 Regular Session-Louisiana Revised Statute 47:308(8)(c). Owner will furnish contractor a certificate on a form supplied by the Louisiana Department of Revenue and Taxation and/or local taxing authorities which certified that Owner is not required to pay such state or local sales and use taxes and contractor shall furnish a copy of such certificates to all vendors or suppliers of the applicable materials and equipment. The Owner agrees to indemnify contractor against the payment of any state or local sales taxes which are required to be paid regarding the work or the project or any materials or equipment supplied or purchased by the contractor for the work under the contract. The contractor is referred to Exhibit F — “Addendum to Mutual Settlement Agreement and Release of All Claims” for further information.”

F. Miller & Sons, Inc., 838 So.2d at 1270 (emphasis added).

Conversely, Rere, the contracts call for Cepolk to pay the vendors, pay federal, state and local taxes, and they require Cepolk to indemnify the Owner against Cepolk’s nonpayment of the taxes. There was no provision proving an | |4agency or mandatory relationship between Cepolk and the Army and no signed agreement of any kind meeting the requirements of La.Admin.Code Title 61:1.4301. Further, the only certificate in evidence had nothing to do with agency or mandate. It instead implicated Cepolk as a liable “dealer” under La.R.S. 47:304 and 47:301(4).

.Annette Kotynia, the tax auditor who performed the audit of Cepolk through affidavit, states that she personally reviewed each and every purchase invoice provided to her by Cepolk for its own use in performing two contracts, one with the United States Army, and one as a subcontractor for Picerne Construction/FP, L.L.C. None of the invoices show the Army or the Government as a purchaser of the materials; all invoices show Cepolk as the purchaser. Ms. Kotynia’s affidavit attached her schedules showing the value and nature of each invoice. Her schedules were broken down into monthly totals for each month during the audit period. Overall, the purchases total approximately $3,938,000.00 for the audit period.

|1BMs. Kotynia’s affidavit states that the only exemption certificate that Cepolk provided to the vendors, to avoid paying the sales tax upon purchase, was Form LGST-9, entitled “Blanket Exemption Certificate for Purchases by Registered Wholesalers for Resale or Further Processing Under the Louisiana General Sales Tax Act.” The Blanket Exemption Certificate (emphasis added) states that the purchaser certifies that the described types of materials and services “are to be used for resale or further processing for resale as tangible personal property by the undersigned registered wholesale dealer and are therefore exempt from the advance tax provisions of Revised Statute 47:306B,” which has been repealed. The form does not provide an unqualified exemption as it holds the dealer fully liable if the sale is later determined to be subject to tax; nor does it concern in any way an exemption for Cep-olk as a purchasing agent for the U.S. Government. In fact, the Blanket Exemption provides a “dealer” registration number indicating that Cepolk must show that it collects and remits the sales tax on the items it resells, pursuant to La.R.S. 47:304 and 47:301(4). Cepolk does not address or defend the Blanket Exemption Certificate, which is the only evidence of an exemption certificate in the record. Further, Cepolk provides no documentation |1fito show that it collected and remitted any sales tax as a dealer on the materials at issue, even if Cepolk could be considered a dealer instead of a contractor.

Ms. Kotynia’s affidavit attached a copy of the appropriate Department Form R-1020, entitled “Designation of Construction Contractor as Agent of a Government Entity and Exemption Certifícate.” It requires the legal name of the governmental entity designating the named contractor “as its agent for the purpose of making sales tax exempt purchases on behalf of the governmental body.” It requires the name of the construction project for which the “purchases of component construction materials, taxable services and leases and rentals of tangible personal property” are exempt. It provides that materials purchased by the designated agent “shall immediately, upon delivery to the agent, become the property of the government entity.” The government assumes “direct liability to the vendor for the payment of any property, services, leases, or rentals made by this designated agent.” It also requires the signature of a Department of Revenue representative. As previously indicated in F. Miller & Sons, Ine. and La.Admin.Code 61:1.4301, while Form R-1020 is not required, a signed agreement containing the substance of the form is required.

In addition to the absence of a signed agency agreement exempting the tax, the contracts at issue show that Cepolk is a contractor under Bill Roberts, Inc. and its cited cases. Title to the materials did not pass to the government at the time of purchase as required by F. Miller & Sons, Inc. and La.Admin.Code 61:1.4301, or at any time prior to their incorporation into the finished product.

Where Cepolk and the Government failed to execute Form R-1020, or any manner of custom agreement including “all terms and conditions listed in the form prepared by the Department,” and where all of the contracts are silent with 117regard to agency, we find that Cepolk did not have the status of Government agent or mandatory. Moreover, there is no evidence that title to the property purchased by Cepolk passed to the Government at the time of purchase. The agency status of a Government contractor is not assumed; it must be affirmatively established by contract. See Standard Oil Co. of Louisiana v. Fontenot, 198 La. 644, 4 So.2d 634 (1941). “The question of whether or not a contractor under the law is an independent one or an agent depends upon the intention of the parties as expressed in the contract.” Id. at 643. We find no language in the subject contracts to suggest that there was any intention on the part of the Government to name Cepolk as its purchasing agent; nor has Cepolk pointed to such language.

In Bill Roberts, Inc., 539 So.2d at 1229, the contractor contended that it was acting as an agent for governmental agencies in purchasing materials and supplies pursuant to its contracts. The Louisiana Supreme Court articulated as follows:

As agent for the owners, the corporation [Bill Roberts, Inc.] would be exempt from paying sales tax. The board agreed that if the corporation could establish an agency relationship on behalf of the governmental entities, then the corporation would be exempt from taxation. Exemptions from taxation are to be strictly construed against the person claiming the exemption and they must be clearly and affirmatively established. Cajun Electric Power Cooperative, Inc. v. McNamara, 452 So.2d 212 (La.App. 1st Cir.), writ denied, 458 So.2d 123 (La.1984). In the instant case, the corporation relied solely upon the bid forms and purchase orders to establish an agency relationship between the corporation and the various agencies. The board found the evidence insufficient but left the record open to allow the corporation an opportunity to prove an agency relationship; however, no evidence was ever presented to supplement the record. Accordingly, we agree with the board, as affirmed by the courts below, that the corporation did not prove that its purchases were made as agent for the tax exempt entities.

|18We find under Gray, 977 So.2d 839, and under La.Code Civ.P. art. 966(C)(2), that once the Department factually pointed out that Cepolk could not prove its defense of agency, the burden shifted to Cepolk to provide factual support of its agency relationship, which Cepolk failed to do. Accordingly, the Department is entitled to summary judgment on the issue of agency.

Whether The Purchases Were Made For Future Sale To The Government Before They Were Incorporated Into The Final Product

Cepolk asserts that the nature of the contract determines the identity of the ultimate consumer, and that the Government is the ultimate consumer, not Cepolk, because Cepolk resold the items to the Government. In particular, Cepolk argues that La.R.S. 47:301(10)(g) exempts it from taxation because the Army Contract transferred title in the items to the Government in their movable form before Cepolk incorporated them into its final product. We disagree. The contracts in evidence are construction contracts, not contracts for sale, and they show that title in the materials and equipment transferred to the Government after the items were installed and incorporated into the housing units.

The Army Contract states in Section C, paragraph 1.1:

It is the intention of this contract to engage a contractor who will provide equipment and services at the Ft. Polk, Louisiana family housing complex that will modify or replace the heating, ventilation, and air conditioning (HVAC) systems to reduce energy consumption and cost.

The 1994 Army Contract had a term of twenty years, with the design and construction phases to be accomplished in the first thirty-nine months, followed by maintenance and repair. Cepolk argues that because the construction phase was over, the contract was no longer a “construction” contract, but became a | ^contract for sale of the materials. In this contract and the other three contracts, the work and the materials are inextricable from each other, and there is no evidence that Cepolk was selling the uninstalled materials to the Army. Fulfillment of the contracts required the skill and labor of the contractors and subcontractors, and all contracts are contracts for the completion of “work” which includes labor and materials. Further, all four contracts provide that payments for completed work or completed portions of work signal the transfer of ownership of the work and materials to the Government.

In the Army Contract, “system” refers to the HVAC system, and “equipment” is included in all other items required to operate and maintain the system. The contract repeatedly provides that the Contractor has full ownership responsibilities for the system and equipment he furnishes and that title passes to the government “upon completion of the term.” Page C-18 Paragraph 10.1 states: “The facilities, equipment, software,- and all other items used by the contractor or that is [sic] required to operate and maintain the systems for installations which are provided, and installed under this contract shall become the property of the government at the end of the contract term at no additional cost to the government.” If the Government terminates the contract, Cep-olk must, at that time, “transfer title and deliver to the Government (1) the fabricated or unfabricated parts, work in progress, completed work, supplies, and other material produced or acquired for the- work terminated.” Pages 1-103-104, paragraph 1.2(b)(6).

Master Subcontract I, dated July 15, 2005, provides under article 2, “Scope of Work,” paragraph 2.1, that Picerne Construction will issue directives in the form of Work Orders to Cepolk, and Cepolk will furnish “all of the labor, ^materials, supervision, tools, storage, transportation, implements, equipment, fees, utilities, etc., to complete all of the work identified in each Work Order.” Paragraph 4.2 provides for Cepolk to submit monthly payment applications on provided forms, to Picerne Construction for the work it has completed in the previous month, including labor, equipment and materials incorporated into the work. In paragraph 4.4, Cep-olk is to be paid for the price of completed, and approved work-in-place. Paragraph 4.4.1 provides that the risk of loss for stored materials remains with Cepolk until the materials are incorporated into the work. Pursuant to paragraph 4.25, the materials and work become the property of Picerne Construction or the Owner/Polk Communities, LLC once Cepolk is paid for the materials and work. Cepolk, however, retains sole responsibility for all materials and work until final acceptance, and Cep-olk assumes the risk of loss for stored materials or equipment. Master Subcontract II essentially tracks the language of Master Subcontract I.

The Subcontract, dated January 1, 2006, is between Picerne Military Housing as Manager and Cepolk as Subcontractor. Paragraph 3 states that the “Work” that Cepolk contracted to perform “includes all labor, materials, equipment and services” necessary for performance. The contract provides in exhibit “A” for monthly payment applications to include waivers from suppliers and purchase orders to support the value of the work if requested by the Manager. All payments are based upon completed work. Once that is done, then title passes to the Manager or Owner.

Once the Department pointed out to the court that Cepolk could not prove that it sold the unincorporated movables to the Government, the burden shifted to Cepolk to provide factual support to clearly and affirmatively establish |21that it was entitled to the exemptions claimed. See Gray v. American Nat’l Property & Cas. Co., 977 So.2d 839; La.Code Civ.P. art. 966(C)(2); See also Bill Roberts, Inc., 539 So.2d 1226. Cepolk provided no documentation showing that it sold any or all of the items to the Government before their incorporation into the housing units. It provided no invoices showing sales to the Government at any time, even though the contracts attached numerous required forms to be used for a multitude of contingencies. There was no inventory documentation or other evidence that the audited items were actually delivered to the site. The only document purporting a sale to the Government was the affidavit of Cepolk’s president, which was objected to' by the Department and never entered into evidence by Cepolk at the hearing as required by La.Code Civ.P. art. 966(B)(2).

Accordingly, we find that the Department has met its burden of proving that Cepolk owed the tax and did not pay the tax, and that Cepolk has not met its burden of proving that it is entitled to any of the exemptions asserted.

V.

CONCLUSION

Based upon the foregoing, we find that there is no genuine issue of material fact and that the Department is entitled to summary judgment as a matter of law. We reverse the grant of summary judg-merit to Cepolk and grant summary judgment to the Department of Revenue. Costs of this appeal are assessed to Cepolk Corporation.

REVERSED AND RENDERED.

      . Prior to August 1, 2012, La.Code Civ.P. art. 966(B) (emphasis added) provided as follows:
      B. The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law.
      However, via 2012 La. Acts No. 257, § 1, the Louisiana Legislature amended and restructured Article 966, deleting the words "on file " from the above language and redesignat-ing subsection B as La.Code Civ.P. art. 966(B)(2). To emphasize the significance of the deletion of the words “on file," the legislature added a subparagraph, designated as E(2), which provided: "Only evidence admitted for purposes of the motion for summary judgment shall be considered by the court in its ruling on the motion.” La.Code Civ.P. art. 966(E)(2) (emphasis added). We note that the four contracts properly admitted into evidence by the Department appear to be the only contracts to which Cepolk was a party.

      . "There is hereby levied a tax upon the sale at retail, the use, the consumption, the distribution, and the storage for use or consumption in this state, of each item or article of tangible personal propertyf.]" La.R.S. 47:302(A).

      . " ‘[R]etail sale' or 'sale at retail’ means a sale to a consumer or to any other person for any purpose other than for resale as tangible personal property [.]" La.R.S. 47:301(10)(a)(i) (emphasis added).

      . " ‘[U]se’ means and includes the exercise of any right or power over tangible personal property incident to the ownership thereof, except that it shall not include the further processing of tangible personal property into articles of tangible personal property for sale.” La.R.S. 47:301(16)(d)(i).

      . " ‘Tangible personal property’ means and includes personal property which may be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the senses.” La.R.S. 47:301(16)(a).

      . "Corporeal movables are things, whether animate or inanimate, that normally move or can be moved from one place to another.” La.Civ.Code art. 471.

      . "Materials gathered for the erection of a new building or other, construction, even though deriving from the demolition of an old one, are movables until their incorporation into the new building or after construction.” La.Civ.Code art. 472. "If the materials are entirely new, there should be no question as to their status[.]” Revision Comment (b) of article 472.

      . Based upon the preceding cases, in August 2012, the Department promulgated La.Admin. Code 61:1.4372, entitled, “Payment of Sales and Use Taxes by Persons Constructing, Altering, or Repairing Immovable Property." The Rule was promulgated pursuant to La. R.S. 47:1511, giving it the full force and effect of law. The introductory comments above the Rule provide in pertinent part:
      There is a long line of jurisprudence in Louisiana which holds that contractors are users and consumers of tangible personal property, rather than re-sellers. The Louisiana Supreme Court has issued several decisions so holding, including State v. J. Watts Kearny & Sons, 181 La. 554, 160 So. 77 (La.1935); State v. Owin, 191 La. 617, 186 So. 46 (La.1938); Claiborne Sales Co. v. Collector of Revenue, 42981 (La. 11/27/57), 233 La. 1061, 99 So.2d 345; Chicago Bridge & Iron Co. v. Cocreham, 55769 (La.6/23/75), 317 So.2d 605; and Bill Roberts, Inc. v. McNamara, 88-1776 (La.3/13/89), 539 So.2d 1226.
      The payment of sales or use taxes on materials purchased or imported for use on immovable property contracts is routine for most contractors.... In a minority of cases, however, mostly on transactions for the repair or alteration of immovable property, some service providers and contractors have engaged in the practice of invoicing customers separately for materials used in providing the service, and collecting and remitting sales taxes on the separate materials charges. In such cases, the service providers have not themselves paid sales or use taxes on their acquisitions of the materials for their use on the real property repair or alteration projects, but have instead treated the materials as purchases of tangible personal property for resale.
      In some cases, contractors invoicing sales taxes on materials used on immovable property contracts have not reflected the true nature of the transactions. Customers have submitted claims to the department and to local sales tax administrators for refund of sales taxes that they have remitted to their service providers pursuant to those invoices. The filing of these claims has placed tax authorities in the position of having to determine, very often, without the benefit of written contracts, the nature of the transactions that occurred between two parties. Tax authorities’ payment of such claims has resulted in no sales or use taxes being paid on the materials used in the projects, either as tax paid by the service providers on their purchases or as tax collected and remitted by the service providers. Tax authorities believe that having a presumption concerning the tax liability is necessary in order to protect the public fisc and to provide guidance to service providers and contractors as to the proper methods for the payment of sales and use taxes. Since this Rule imposes a rebuttable presumption, it does not interfere with the parties’ freedom to contract in cases where tangible personal property is actually sold to the customer, and not just used in pro-. viding a service. The presumption may be overcome by evidence as to the nature of the transaction.
      The actual Louisiana Administrative Code Rule, 61:1.4372 (emphasis added), provides as follows:
      A.General. The purpose of this Section is'to help clarify which party to the transaction is liable for the payment of sales and use taxes on the purchase, use, consumption, distribution, or storage for use or consumption of tangible personal property in this state when such property is used in the construction, alteration, or repair of an immovable property, and such tangible personal property is transferred from the contractor to its customer in an immovable state.
      B. Definition. For the purposes of this Section, the term contractor means any dealer, as defined in this Chapter, who contracts or undertakes to construct, manage, or supervise the construction, alteration, or repair of any immovable property, such as buildings, houses, roads, levees, pipelines, oil and gas wells (downhole), and industrial facilities. It also includes subcontractors. The term contractor shall not include a dealer who fabricates or constructs property that is sold to another person as tangible personal property, provided that the fabricator or constructor of the tangible personal property does not affix that tangible personal property to the buyer's immovable property.
      C. Sales of tangible personal property, including materials, supplies, and equipment, made to contractors, or their contractors, subcontractors, or agents, for use in the construction, alteration, or repair of immovable property are presumed to be sales to consumers or users, not sales for resale, and therefore the contractor is liable for the taxes imposed by this Chapter on their purchases or importations of such tangible personal property. This presumption may be rebutted by a showing of credible evidence, such as a writing signed by the contractor's customer stating that title and/or possession of itemized articles of tangible personal property were transferred to the customer prior to their being made immovable.

      . The burden of proof remains with the mov-ant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
      La.Code Civ.P. art. 966(C)(2).

      . In Gray, 977 So.2d 839, where the parties filed cross-motions for summary judgment, the Louisiana Supreme Court found that once the plaintiffs successfully pointed out the absence of proof of an essential element of the insurer’s defense, a valid UM rejection form, the burden shifted to the insurer to produce factual support sufficient to establish that the insurer would be able to satisfy its evidentiary burden of proof at trial. The court found that if the insurer failed to produce a valid rejection form, there was no genuine issue of material fact, and the plaintiffs would be entitled to summary judgment in their favor, pursuant to La.Code of Civ. Proc. art. 966(C)(2). On the other hand, if the insurer carried its burden of documenting a valid rejection of coverage, then the insurer would be entitled to summary judgment in its favor.

      . "A mandate is a contract by which a person, the principal, confers authority on another person, the mandatory, , to transact one or more affairs for the principal.” La.Civ.Code art. 2989.

      . The Army Contract provides on page H-9, paragraph H.20: "Contractor shall retain ownership responsibility for all systems, equipment, and accessories throughout the term of the contract[;]” he is responsible for the loss, and, "All taxes and other charges in connection therewith ... shall be the responsibility of the Contractor.” Page H-ll, paragraph H.25, provides that title to the system and equipment vests in the government "upon completion of the term." Page 1-70, paragraph (b) states that the contract price "includes all applicable Federal, State and Local taxes and duties.” In paragraph (h) (emphasis added) the Government agrees to "furnish evidence appropriate to establish exemption from any Federal, State or Local tax when the Contractor requests such evidence and a reasonable basis exists to sustain the exemption." However, no such evidence was requested or furnished. Page 1-97 requires Cepolk to warrant the materials it furnishes.
      Master Subcontract I and Master Subcontract II provide in paragraph 2.5 that Cepolk chooses its own vendors, and in paragraph 4.11 that Cepolk is to pay for all labor and materials promptly. Paragraph 4.5 requires Cepolk to provide releases with its monthly payment applications of all claims or liens for suppliers and anyone providing labor and materials. The Master Subcontracts, paragraph 2.3, make Cepolk responsible for all federal, state, and local licensing, registration, and qualification requirements; require Cepolk to warrant and give proof to Picerne Construction and Polk Communities, LLC, that Cepolk has complied with any Department of Revenue requirements and local conditions and taxing requirements that affect the cost of the project; and require Cepolk to indemnify Contractor and Owner against any loss resulting from Cepolk's breach of these contract provisions.
      The Subcontract provides in paragraph 13 that Cepolk is to pay all taxes in connection with the work. Paragraph 14 requires Cepolk to warrant clear title to all material, equipment, and services. It says nothing about title to such materials passing from Cepolk’s vendors to the Government.

      . The Blanket Exemption attached to the auditor’s affidavit had an effective date of May 3, 2005, to May 3, 2010. Subsection B of R.S. 47:306 was repealed in its entirety by Section 3 of Acts 2007, No. 393, effective January 2009. It had previously provided for the collection by wholesalers of an advance sales tax of “a per centum of the sales price.” Former La.R.S. 47:306(B)(l)(a). Prior to January 2008, R.S. 47:306(B)(1 l)(a) authorized the Department to issue an exemption to dealers "whose sales of tangible personal property for a consecutive twelve-month period, exclusive of the tax due on purchases by the dealer, was three million dollars or more, and who timely filed his returns for the period and timely remitted the tax shown due on the returns.” Effective January 1, 2008, until its repeal in 2009, Section 1 of Acts 2007, No. 393, rewrote B(ll)(a) to reduce the threshold to $500,000.00. However, the exemption carried specific reporting requirements and had nothing to do with establishing a dealer as an agent of the federal Government. Currently, La.R.S. 47:306(A)(l)(a) provides for mandatory monthly or quarterly filings by a dealer, and (A)(6) provides a deduction and credit or refund for “dealers who paid advance sales tax on purchases of tangible personal property for resale during periods when R.S. 47:306(B) was effective."


author: PETERS, J.

text:
    Peggy EDWARDS v. PLANT WORKS, et al.
    No. 13-1112.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 12, 2014.
    Jeffrey J. Warrens, Amanda H. Carmon, Johnson, Rahman, & Thomas, Baton Rouge, LA, for Defendants/Appellants: Plant Works, Louisiana Workers’ Compensation Corporation.
    Jennifer B. Valois, Barber Law Firm, Lafayette, LA, for Plaintiff/Appellee: Peggy Edwards.
    Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.
   PETERS, J.

11The defendants, Plant Works and Louisiana Workers’ Compensation Corporation (LWCC), appeal from the judgment of the workers’ compensation judge (WCJ) ordering an independent medical examination of the plaintiff, Peggy Edwards. For the following reasons, we affirm the WCJ judgment ordering the independent medical examination.

DISCUSSION OF THE RECORD

In 2001, Ms. Edwards had undergone a corpectomy at C6, with anterior fixation and fusion at C5 through C7. Sometime thereafter, she became employed by Plant Works, a Scott, Louisiana business, as a plant-care technician. On November 8, 2005, she sustained work-related injuries when the company vehicle she was driving was hit by another vehicle. Following the accident, she was treated for neck and low-back pain by numerous doctors, with treatments including physical therapy and psychological evaluations.

On November 26, 2018, she was seen by Dr. Jason Cormier, a Lafayette, Louisiana neurosurgeon, at the request of her doctor, Dr. Joseph Bozzelle, Jr., a Lafayette, Louisiana physician specializing in pain medicine. After updating Ms. Edwards’ lumbar and cervical MRIs, Dr. Cormier noted disc herniations at L3^4 and L5-S1, for which he recommended conservative treatment. However, in regards to her cervical spine, Dr. Cormier’s January 31, 2013 notes reflected that:

[S]he has evidence of cervical spondylo-sis and post-operative changes. At C3-4 there is a small protruding disc fragment measuring 3 to 4 mm. At C4-5 there is moderate anterior spurring and a central broad based disc bulge. At C5-6 postoperative change indicates evidence of an anterior cervical fusion and there is a great deal of artifact within this region. At C6-7 there is evidence of attempted fusion. Some parts appear to be solid. However, there appears to be lysis of the bone surrounding the compression plates, screws, and stabilization device. There is concern of hardware subsidence in addition to){¡evidence of spinal canal stenosis due to the loss of curvature of lordotic posture of her cervical spine. I do believe she will require both anterior and posterior surgery for her neck to stabilize this circumstance.

On February 26, 2013, Dr. Cormier requested approval from LWCC to perform a C3-T2 posterior fixation and fusion on Ms. Edwards. Via utilization review, LWCC denied Dr. Cormier’s request for the following reasons:

1.There is no evidence of any neuropa-thy that needs to be addressed by repeat spinal surgery. What physical examination information is provided is normal.
2. The imaging studies indicate that the previous 3 level fusion is solid at all 3 levels, so repeat surgery is not necessary or appropriate.
3. The proposed surgery would freeze the patient’s entire cervical spine. This would decrease not increase function.
4. Review of our records indicate that the patient has had various treatment with multiple physicians. There is no indication that the patient has had active functional rehabilitation, or any conservative treatment in the last 6 months. The Guidelines state that “Mere passage of time with poorly guided treatment is not considered an active treatment program.” (Citations omitted.)
5. The patient also complains of back pain. This is likely to be made worse by freezing the entire cervical spine. All rotation of the head, neck or body would have to be done at the lumbar spine.
6. The guidelines state that “The effectiveness of three-level cervical fusion for non-radicular pain has not been established.” (Citation omitted.)
7. The Guidelines state that surgery for non-radicular pain is only indicated if the pathology is limited to 2 levels. (Citation omitted).
8. There is no evidence that the patient has had a complete psychological evaluation including testing as required by the Guidelines before this surgery is considered.

lain response to this denial, Dr. Cormier resubmitted his request with additional documentation on February 26, 2013. On March 19, 2013, LWCC again denied approval for the surgery, stating, “There is no evidence that shows any substantive change in the treatment or the patient’s condition that warrants reconsideration of the previous denial.” Dr. Cormier appealed this denial on March 22, 2013, by filing a Form 1009 Disputed Claim for Medical Treatment with the Office of Workers’ Compensation, Medical Services Director. On March 25, 2018, counsel for Ms. Edwards supplemented Dr. Cormier’s disputed claim with a copy of a psychological evaluation by Dr. Michael Berard, a Lafayette, Louisiana Clinical/Medical Psychologist, based on his October 5 and December 17, 2012 evaluations of Ms. Edwards. The Medical Director denied Dr. Cormier’s disputed claim on April 2, 2013, for the following reasons:

All records submitted were reviewed. (56 pages). The documentation does not support the approval of the requested services per the Louisiana Medical Treatment Guidelines (MTG) noted below.
The clinical records note no findings for myelopathy, progressive neurologic deficit, normal motor strength, no radi-culopathy on examination. Psychological evaluation from 2008 were submitted, which did not note patient’s response to surgery. Imaging findings were reviewed in the provider’s notes, but no imaging reports were submitted. An electro-diagnostic report was for the lower extremities, and was normal.
The clinical records submitted do not meet the indications for surgery. Fusion level is for 6 segments; specific pain generators are not identified; imaging reports were not submitted; psychosocial evaluation is over 5 years old and does not address potential response to surgery.

(Emphasis in original.)

On April 12, 2013, Ms. Edwards filed a disputed claim for compensation appealing the Medical Director’s denial of Dr. Cormier’s request for surgery. In|4her disputed claim, she pointed to the Medical Director’s statement that “psychosocial evaluation is over 5 years old and does not address potential response to surgery” as evidence that the Medical Director failed to even consider Dr. Berard’s report, which is certainly less than five years old and specifically addresses responses to surgery at page fourteen of the evaluation. Ms. Edwards asserted to the WCJ that based on his failure to consider this evidence, the Medical Director applied the wrong standard and failed to comment on the underlying issue or treatment.

During the May 16, 2013 hearing on the motion, Ms. Edwards’ counsel stated, and Plant Works’ counsel agreed, that Dr. Cormier has resubmitted his request twice subsequent to him filing the disputed claim for medical treatment, and that LWCC has rejected both requests. Both parties further agreed that Ms. Edwards has submitted all medical records, including records for a recent hospitalization, to LWCC’s medical director for consideration. Based on the argument presented, the WCJ orally denied Ms. Edwards’ appeal of the Medical Director’s denial of Dr. Cormier’s disputed claim for medical treatment. However, the WCJ further ordered, based on the new medical records, that Ms. Edwards submit to an independent medical examination (IME) by a neurosurgeon for evaluation purposes regarding the requested surgery. The WCJ executed a final judgment to this effect on June 28, 2013, and, thereafter, Plant Works and LWCC perfected the appeal now before us.

OPINION

On appeal, Plant Works and LWCC (referred to collectively as Plant Works) argue that the WCJ legally erred in ordering the IME because “LSA-R.S. 23:1203.1 places authority for medical necessity determinations with the Office of 1SWorkers’ Compensation Medical Director rather than with an Independent Medical Examiner.” This assignment of error raises a question of law. Therefore, we will review this issue in order to determine whether the WCJ was legally correct in her ruling. Orr v. Acad. La. Co., L.L.C., 12-1411 (La.App. 3 Cir. 5/1/13), 157 So.3d 44, 2013 WL 1809878.

Based on this court’s recent en banc opinion in Romero v. Garan’s, Inc., 13-482 (La.App. 3 Cir. 12/26/13), 130 So.3d 451, which held that the provisions of La.R.S. 23:1203.1 were substantive in nature and, thus, applied prospectively only, we find that the WCJ was bound to follow the law in effect on November 8, 2005, the date of Ms. Edwards’ accident, in determining workers’ compensation matters pertaining to her. In Romero, we specifically overruled our previous opinion in Cook v. Family Care Services, Inc., 13-108 (La.App. 3 Cir. 8/28/13), 121 So.3d 1274, which opinion Plant Works relies on in support of its argument.

Furthermore, as pointed out by Ms. Edwards, the WCJ has two avenues for appointing an IME: La.R.S. 23:1123 and La. R.S. 23:1124.1. Louisiana Revised Statutes 23:1123, as it read in 2005, provided:

If any dispute arises as to the condition of the employee, the director, upon application of any party, shall order an examination of the employee to be made by a medical practitioner selected and appointed by the director. The medical examiner shall report his conclusions from the examination to the director and to the parties and such report shall be prima facie evidence of the facts therein stated in any subsequent proceedings under this Chapter.

Louisiana Revised Statutes 23:1124.1- further provides:

Neither the claimant nor the respondent in hearing before the workers’ compensation judge shall be permitted to introduce the testimony of more than two physicians where the evidence of any additional physician would be cumulative testimony. However, the workers’ compensation judge, on his own motion, may order that any claimant appearing before it be examined by other physicians.

| fiBased on these two provisions, we find that the WCJ acted within her discretion in appointing an IME to examine Ms. Edwards with regard to the necessity for further surgery.

DISPOSITION

For the foregoing reasons, we affirm the judgment of the workers’ compensation judge in ordering that Peggy Edwards submit to an independent medical examination. We assess all costs of this appeal to Plant Works and Louisiana Workers’ Compensation Corporation.

AFFIRMED.


text:
    Jennifer CHAVIS, et al. v. Dr. John Scott SIBILLE, et al.
    Nos. 13-1016, 13-1015.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 12, 2014.

      Terry L. Rowe, Terry L. Rowe & Associates, Lafayette, LA, for Defendants/Ap-pellees — State Farm Fire & Casualty Company, Dr. John Scott Sibille, and Paulette Sibille.
    H. Edward Sherman, H. Edward Sherman, APLC, New Orleans, LA, for Plaintiffs/Appellants-Ronald Brooks, Jennifer Chavis, Jonas Chavis, Jamesha Wilson, and Jaliyah Wilson.
    Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, and JIMMIE C. PETERS, Judges.
   THIBODEAUX, Chief Judge.

| jFor the foregoing reasons discussed in the consolidated case of Ronald Brooks v. Dr. John Scott Sibille, et al., 13-1015 (La.App. 3 Cir. 2/12/14), 153 So.3d 1121, 2014 WL 551562, the judgment of the trial court is affirmed. Costs of the appeal are assessed to the appellants, Robert Brooks and Jennifer Chavis.

AFFIRMED.