266 So. 3d 939
La. Ct. App.2018Background
- Louisiana Department of Revenue (LDR) audited Citifinancial Auto Corporation and assessed deficient corporate income and franchise taxes for various years (2003–2006), issuing notices on Feb. 25, 2009.
- Citifinancial did not respond or pay; LDR filed a Petition to Collect Tax on Dec. 10, 2009, serving CT Corporation System as registered agent.
- LDR obtained a preliminary default on Nov. 4, 2011, for Citifinancial’s failure to answer.
- On Apr. 24, 2014, LDR moved to confirm the preliminary default without an in-court hearing and without the Article 1702.1 certificate; the district court confirmed the default and entered judgment on May 2, 2014.
- Notice of that default judgment was not issued until Jan. 19, 2018; Citifinancial timely appealed after receiving notice.
- The principal legal question was whether the district court could confirm the default without an open‑court hearing or the statutory certificate when the claim sought to collect taxes (i.e., whether the case qualified as an "open account" under La. Code Civ. Proc. arts. 1702/1702.1).
Issues
| Issue | Plaintiff's Argument (LDR) | Defendant's Argument (Citifinancial) | Held |
|---|---|---|---|
| Whether the court could confirm a preliminary default without an open‑court hearing | The petition is a suit on an "open account" under La. R.S. 9:2781, so art. 1702/1702.1 allow confirmation without a hearing | Tax liability is not an "open account" because no contractual relationship or goods/services underlie the debt; thus a hearing was required | Court held confirmation without a hearing was legally erroneous and vacated the judgment |
| Whether failure to file the Article 1702.1 certificate was fatal | LDR contends the tax collection fits within the statutory/open‑account framework, so the certificate requirement is satisfied in substance | Citifinancial points to absence of the certificate and that the record lacks the basis needed to avoid a hearing | Court relied on classification (not certificate form): because tax claim is not an open account, the lack of certificate could not validate the no‑hearing confirmation |
Key Cases Cited
- Sessions & Fishman v. Liquid Air Corp., 616 So.2d 1254 (La. 1993) (discusses when no hearing is required under art. 1702)
- Carter v. Amite City Ford, Inc., 885 So.2d 1190 (La. App. 1st Cir. 2004) (confirming requirement of hearing or compliance with art. 1702.1 for non‑hearing confirmations)
- Accusess Environmental, Inc. v. Walker, 185 So.3d 69 (La. App. 1st Cir. 2015) (an open account requires an underlying contractual/transactional relationship)
- In re P.K. Smith Motors, Inc., 188 So.3d 324 (La. App. 2d Cir. 2016) (debt for services/goods is inherent to open account concept)
- Double‑Eight Oil & Gas, L.L.C. v. Caruthurs Producing Co., Inc., 942 So.2d 1279 (La. App. 2d Cir. 2006) (open account requires services/goods or similar transactional basis)
- Sun Coast Contracting Servs., Inc. v. Dien's Auto Salvage, Inc., 148 So.3d 964 (La. App. 3d Cir. 2014) (failure to include art. 1702.1 certificate not fatal if record otherwise establishes right to recover)
- Weber Prop. Group, LLC v. Sunburst Media‑Louisiana, LLC, 115 So.3d 40 (La. App. 5th Cir. 2013) (same point on certificate not being necessarily fatal)