255 So. 3d 16
La. Ct. App.2018Background
- Georgia-Pacific (GP) operated a Port Hudson paper mill and purchased sodium chlorate, hydrogen peroxide, and oxygen ("bleaching chemicals") for use in its bleaching process during 2003–2008. GP paid local sales/use taxes on those purchases and sought refunds totaling roughly $3.27 million plus interest.
- In 1984 GP and the City/Parish executed a compromise agreement classifying those bleaching chemicals as taxable under the manufacturing process in use then (a chlorine-based process).
- In the mid-1990s GP changed its bleaching process to a non-chlorine industry-standard process that GP and International Paper used, during which the chemicals became identifiable, beneficial, and incorporated into the final paper product.
- The Louisiana Supreme Court decided in International Paper, Inc. v. Bridges that those same bleaching chemicals qualified for the "further processing" sales-tax exclusion (materials further processed into tangible personal property for sale at retail).
- GP moved for summary judgment seeking refunds under the further-processing exclusion; the City/Parish relied solely on the 1984 Agreement as barring relief. The trial court granted GP summary judgment; the City/Parish appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GP's purchases of bleaching chemicals during 2003–2008 are exempt under the "further processing" exclusion | GP: Chemicals were further processed into the final paper (recognizable, beneficial, and purchased for inclusion) and thus exempt under La. R.S. 47:301(10)(c)(i)(aa) and International Paper | City/Parish: Despite International Paper, the 1984 Agreement expressly makes these chemicals taxable and binds GP | Court: GP proved the exclusion elements; summary judgment for GP — purchases are non-taxable under further-processing exclusion |
| Whether the 1984 compromise agreement bars GP's refund claim | GP: The 1984 Agreement applied only to the manufacturing process in use in 1984 and cannot be extended to a materially different later process | City/Parish: The agreement is clear and governs future purchases; it precludes GP's refund claim | Court: The agreement settles only what parties clearly intended; City/Parish produced no evidence that the 1984 Agreement was meant to cover the later, materially different process — agreement not a bar |
| Whether factual issues about parties' intent under the 1984 Agreement preclude summary judgment | GP: Intent is clear from the agreement's scope and supporting affidavits; no genuine dispute exists | City/Parish: Motive/intent present genuine issues of material fact requiring trial | Court: No genuine issue of material fact about intent; summary judgment appropriate because reasonable persons could reach only one conclusion |
| Whether precedent (International Paper) controls despite the existence of a prior settlement | GP: International Paper controls the taxability analysis for materially similar processes | City/Parish: Prior settlement should override or distinguish International Paper | Court: International Paper's analysis applies; prior settlement was irrelevant absent proof it covered the materially different later process |
Key Cases Cited
- International Paper, Inc. v. Bridges, 972 So.2d 1121 (La. 2008) (establishes "further processing" exclusion applies where chemicals become recognizable, beneficial, and incorporated into end product)
- Crosstex Energy Servs., LP v. Texas Brine Co., LLC, 240 So.3d 932 (La. App. 1 Cir. 2017) (summary judgment standard and appellate de novo review)
- Brown v. Drillers, Inc., 630 So.2d 741 (La. 1994) (compromise settles only those differences parties clearly intended; scope cannot be extended by implication)
- Carter v. BRMAP, 591 So.2d 1184 (La. App. 1 Cir. 1991) (summary judgment appropriate where no genuine issue of material fact on intent)
- Jackson v. City of New Orleans, 144 So.3d 876 (La. 2014) (definition of genuine issue of material fact for summary judgment)