Bridges v. Mosaic Global Holdings, Inc.Bridges v. Mosaic Global Holdings, Inc.
|2Plaintiff, Cynthia Bridges, in her capacity as Secretary of the Department of Revenue for the State of Louisiana (“the Department”), appeals the trial court’s October 22, 2007 judgment, which sustained defendant Mosaic Global Holdings, Inc.’s (“Mosaic”) peremptory exception raising the objection of prescription and dismissed plaintiffs suit to collect corporate income taxes. Mosaic filed an answer to the Department’s appeal, asserting that the trial court’s May 26, 2006 judgment, which overruled its declinatory exceptions raising the objections of lack of personal jurisdiction and improper venue, should be reversed.
We find the Department’s suit is not prescribed and reverse the trial court’s October 22, 2007 judgment. Further, because we find the trial court had personal jurisdiction over Mosaic pursuant to the long-arm statute,
I. PROCEDURAL AND FACTUAL BACKGROUND
Freeport-McMoran Inc. (“Freeport”), a Delaware corporation, engaged in business in Louisiana in 1997. During that year, Freeport was acquired by and merged into IMC Global Inc. (“IMC”), a Delaware corporation not qualified to transact business in Louisiana. In 2004, IMC changed its name to Mosaic, a | (¡corporation also not qualified to transact business in Louisiana. The parties do not dispute that Mosaic was formerly known as IMC and that Mosaic is by merger the successor-in-interest to Freeport as of December 22,1997.
On January 3, 2006, the Department filed suit against Mosaic in East Baton Rouge Parish, seeking to recover corporate income taxes allegedly due by Free-port for the tax period ending December 22, 1997. The Department alleged it had conducted an audit of Mosaic’s books and records and those of its parents, affiliates and/or subsidiaries for that tax period.
Mosaic responded by filing declinatory exceptions that raised the objections of lack of personal jurisdiction and improper venue.
^Thereafter, Mosaic filed a peremptory exception urging the objection of prescription. During the hearing regarding this exception, Mosaic introduced into evidence: 1) Freеport’s Louisiana Corporation Income Tax Return for the fiscal year beginning on January 1, 1997 and ending on December 22, 1997, which was dated November 17,1998; 2) four “Agreement[s] to Suspend Prescription of Louisiana Corporation Income Tax,” each signed by a representative of IMC or Mosaic and a Department representative; and 8) a September 27, 2001 letter from a Department representative referring to the “Agreement to Suspend Prescription” for Free-port’s Louisiana income tax and franchise tax as “waivers of prescription.”
The trial court sustained Mosaic’s exception and signed an October 22, 2007 judgment in favor of Mosaic and against the Department, ordering the dismissal of the Department’s action with prejudice. The Department has appealed, asserting the trial court erred in finding that the “Agreement^] to Suspend Prescription” did not suspend prescription until April 6, 2006. Mosaic has also answered the appeal, challenging the trial court’s denial of its exceptions.
II. ANALYSIS
A. Prescription
If evidence is introduced at the hearing on the peremptory exception of prescription, the trial court’s findings of fact are reviewed under the manifest error-Jdearly5 wrong standard of review. Carter v. Haygood, 04-0646, p. 9 (La.1/19/05),
The tax return for the 1997 fiscal year at issue was due on April 15, 1998. Freeport filed its return on November 17, 1998, presumably after filing for and being granted an extension. See
Louisiana Revised Statutes 47:1580 provides the following regarding suspension of prescription:
A. The prescription running against any state tax, license, excise, interest, penalty, or other charge shall be suspended by any of the following:
(1) The secretary’s action in assessing any such amounts in the manner provided by law.
(3) The filing of any pleading, either by the secretary or by a taxpayer, with the board of tax appeals or any state or federal court.
B. The running of such prescription shall also be suspended prior to the lapse of the prescriptive period set out in the Constitution of Louisiana as hereinafter provided:
(1) For any period by means of a written agreement between the taxpayer and the secretary of the Department of Revenue[.]
Louisiana Civil Code article 3472 also provides, “The period of suspension is not counted toward accrual of prescription. Prescription commences to run again upon the termination of the period of suspension.”
|7In the present case, no evidence was introduced to establish that the secretary had made any assessments pertinent to this matter. In September 2001, however, Freeport and the Department executed a standardized form entitled “Agreement to
WHEREAS, both the taxpayer and the [Department] desire to have additional time within which to discuss the legal questions and facts involved, it is hereby agreed that the [Department] shall not finally assess nor bring suit for collection of such taxes prior to FEBRUARY 01, 2002, and the taxpayer agrees that the running of the period of prescription against the assessment or collection of any such tax due and owing to or refund from the State of Louisiana for the years covered by this agreement is hereby suspended for a period of ONE YEAR from December 31, 2001, and that any such tax may be assessed or suit instituted for the collection or refund from thereof at any time between the dates of FEBRUARY 01, 2002 through DECEMBER 31, 2002, and that the taxpayer will never plead prescription to any claim for taxes which are the subject of the agreement for the period stated above if such taxes are assessed or suit brought fоr the collection thereof before the expiration of the time set out herein.
In August 2002, IMC and the Department executed another “Agreement to Suspend Prescription” that likewise provided that “the running of the period of prescription” was “suspended for a period of ONE YEAR from December 31, 2002.” IMC and the Department executed another agreement in October 2003, which provided that “the running of the period of prescription” was “suspended for a period of one year from December 31, 2003.”
| sIn November 2004, Mosaic and the Department signed the last of the “Agreements to Suspend Prescription,” which provided in pertinent part as follows:
Wherеas, the [Department] desires to verify the amount of Louisiana Corporation Income Tax owed by or refund owed to MOSAIC GLOBAL HOLDINGS INC. (F/K/A IMC GLOBAL INC.) SUCCESSOR BY MERGER TO FREEPORT-MCMORAN INC., the taxpayer, for the period of January 1, 1997 through December 22, 1997; and
Whereas, both the taxpayer and [the Department] desire to have additional time within which to discuss the legal questions and facts involved, it is hereby agreed that the Secretary of Revenue shall not finally assess nor bring suit for collection of such taxes prior to February 1, 2005, and the taxpayer agrees that the running of the period of prescription against the assessment or collection of any such tax due to the State of Louisiana for the period сovered by this agreement is hereby suspended for a period of one year from December 31, 2004, and that any such tax may be assessed or suit instituted for the collection thereof at any time between the dates of February 1, 2005 through December 31, 2005, and that the taxpayer will never plead prescription to any claim for taxes which are the subject of this agreement for the period stated above, if such taxes are assessed or suit brought for the collection thereof before the expiration of the time set out herein. The [Department] agrees that the period of prescription for refunding or crediting overpayments that may be due to the taxpayer shall be extended in accordance with the terms of this agreement.
In the instant suit, the facts are not in dispute; the issue presented herein is a legal one, i.e., did the four “Agreements] to Suspend Prescription” effect a | (¡suspension of the three-year prescriptive period set out in
Prescription is suspended for as long as the cause of suspension continues. See La. C.C. art. 3472. After the cause for the suspension ends, the prescriptive time begins running and the “time which precede[d] the suspension is added to the time which follows it to compose the necessary period; only the period of the suspension is deducted.” LeBreton v. Rabito, 97-2221, p. 6 (La.7/8/98),
The Department argues that prescription was halted or slumbered on September 26, 2001, when both it and Mosaic had signed the initial “Agreement to Suspend Prescription.” In brief, the Department contends:
The suspending, halting or slumbering of the liberative prescriptive period as provided under [La. Const. Art. VII, § 16 ] continued with each subsequent execution of the suspension of prescription agreements in 2002, 2003 and 200[4].... Under the suspension agreement, prescription slumbered or halted from September 26, 2001, when the first agreement was signed through December 31, 2005, when the suspension agreement no longer existed.
1inThus, the Department asserts that when the period of suspension ended on December 31, 2005, it had 96 days remaining in the three-year prescriptive period (or until April 6, 2006) within which to file suit, and its filing on January 3, 2006, was timely.
Mosaic argues that “the contract is not one which ‘suspends’ the running of prescription,” but that the contracts are more accurately categorized as “agreements by the taxpayer to waive the plea of prescription .... ” Mosaic asserts the agreements effected a “waiver of the prescription defense by the taxpayer up to, but no later than, December 31 of the applicable year.” To bolster its “waiver” argument, Mosaic introduced a September 27, 2001 cover letter, signed by Lambrini C. Piskioulis, Administrative Secretary for the Department, which was addressed to Freeport, wherein she referenced enclosed “executed waivers of prescription agreement ... extending the statute of limitations ...” thаt pertained to Freeport’s 1997 Louisiana income tax liability.
The interpretation of a contract is the determination of the common intent of the parties. La. C.C. art.2045. When the
The “Agreement[s] to Suspend Prescription” are clearly worded to provide for a period of suspension and do not use the term “waiver.” Each agreement provided a specific time period during which the “running of the period of prescription against the assessment or collection of any such tax due” was “suspended for a period of one year.” Because the agreements are unambiguous, there is no basis for considering the terminology used by the Department in a cover letter.
Based on the terms of the last “Agreement to Suspend Prescription,” the Department agreed not to “finally assess or bring suit for collection of such taxes prior to February 1, 2005.” The Department could institute suit between February 1, 2005, and December 31, 2005, but if the Department did so, Mosaic agreed that as “taxpayer,” it would not plead the defense of prescription during this period of time. Although Mosaic tries to infer such a waiver, the terms of the agreement do not provide that the Department waived its right to file suit after December 31, 2005.
The agreements clearly do not preclude Mosaic from pleading the defense of prescription to any claim for taxes filed after December 31, 2005. While | ^Mosaic is entitled to plead the prescription defense, the merit of the defense is to be determined by the applicable prescriptive period and La. C.C. art. 3472. There is no conflict between the terms of the contract and La. C.C. art. 3472.
The Department was entitled to file suit before the three-year prescriptive period ran; it did not waive this right by executing the “Agreement^ to Suspend.” The original agreement executed in September 2001 clearly states that “the running of the pеriod of prescription ... is hereby suspended for a period of ONE YEAR from December 31, 2001.” (Emphasis added.) With the parties expressly providing for commencement of the suspension from December 31, 2001,
Accordingly, the Department of Revenue’s January 3, 2006 filing was timely under the terms of the Hurricane Katrina legislation. See
B. Personal Jurisdiction
In reviewing a judgment on an exception of lack of personal jurisdiction, the factual findings underlying the judgment are reviewed for manifest error. The application of established rules of law to the facts, however, is a legal question, and thus, the legal issue of personal jurisdiction over a nonresident by a Louisiana court is subject to de novo review. Southeast Wireless Network, Inc. v. U.S. Telemetry Corp., 06-1736, p. 6 (La.4/11/07),
The Louisiana long-arm statute,
A. A court may exercise personal jurisdiсtion over a nonresident, who acts directly or by an agent, as to a cause of action arising from any one of the following activities performed by the nonresident:
(1) Transacting any business in this state.
B. In addition to the provisions of Subsection A, a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and of the Constitution of the United States.
Based on the language of Subsection B, the sole inquiry is whether the exercise of jurisdiction comports with constitutional due process. See Alonso v. Line, 02-2644, p. 6 (La.5/20/03),
The due process test, which was first enunciated in Int’l Shoe Co. v. State of Washington,
The second part of the due process test centers around the fairness of the assertion of jurisdiction. Once minimum contacts are established, these contacts may be considered in light of оther factors to determine whether the assertion of personal jurisdiction would comport with “fair play and substantial justice.” Burger King Corp.,
In its answer filed with this court, Mosaic urges that the Department cannot “bootstrap” onto Freeport’s contacts in Louisiana to justify the assertion of personal jurisdiction over Mosaic. Although it does not dispute that Freeport transacted business in this state, Mosaic asserts it is neither licensed nor registered with the Secretary of State to conduct business in Louisiana. Mosaic further contends in brief:
The only allegation against Mosaic is that it is legally respоnsible for the debts of [Freeport] under a statute [La. R.S. 12:115 ] relating to “successor liability” upon the merger of corporations. There is no allegation that Mosaic ... ever had any involvement with the specific business transactions which created the alleged tax liability on the part of [Freeport]....
The mere imposition, by statute, of successor liability is not sufficient to make Mosaic amenable to jurisdiction in personam. The Court must not confuse substantive law and the law relating to personal jurisdiction. The existence of a claim for successor liability does not equate to jurisdiction in personam. ...
The Department’s jurisdictional claim is based on the long-arm statute,
Upon the еffectiveness of the merger or consolidation, the effect thereof shall be that:
A.The several parties to the joint agreement shall be one business, nonprofit or foreign corporation, which shall be
(1) In the case of merger, that one of the constituent business, [17nonprofit or foreign corporations into which it has been agreed that the others shall be merged, and which shall survive the merger for that purpose,
B. The separate existence of the constituent business, nonprofit and foreign corporations shall cease, except that of the surviving business, nonprofit or foreign corporation in the case of merger.
C. The surviving or new business, nonprofit or foreign corporation shall possess all the rights, privileges and franchises possessed by each of the former business, nonprofit and foreign corporations so merged or consolidated, except that a surviving or new business corporation shall not thereby acquire authority to engage in any business or exercise any right, or to engage in or to exercise any function or object for which a corporation may not be formed under this Chapter.
D. All of the property and assets of whatsoever kind or description of each of the constituent business, nonprofit or foreign corporations, and all debts due on whаtever account to any of them, including subscriptions for shares and other choses in action belonging to any of them, shall be taken and be deemed to be transferred to, and vested in, the surviving or new business, nonprofit or foreign corporation without further act or deed.
E. The surviving or new business, nonprofit or foreign corporation shall be responsible for all of the liabilities and obligations of each of the business, nonprofit and foreign corporations merged or consolidated, in the same manner as if such surviving or new corporation had itself incurred such liabilities or obligations; but the liabilities of such constituent corporations or of their shareholders, members, directors or officers shall not be affected, nor shall the rights of the creditors thereof, or of any persons dealing with such corporations, be impaired by such merger or consolidation; and any claim existing, or action or proceeding pending, by or against any of such constituent corporations may be prosecuted to judgment as if such merger or consolidation had not taken place, or the surviving or new corporation may be proceeded against, or substituted, in place of such constituent corporation. (Emphasis added.)
118Thus, the issue presented is whether, for the purpose of satisfying Louisiana’s long-arm statute “minimum contacts” requirement, the undisputed significant forum contacts of the predecessor corporation, Freeport, can be imputed to the successor corporation, Mosaic (formerly IMC), by merger.
Numerous courts have held that a corporation may be subject to personal jurisdiction in a foreign forum if the contacts of its predecessors are constitutionally sufficient. These courts have asserted jurisdiction over successor corporations where the forum law would hold the successor corporation liable for the predecessor’s conduct in the forum state. See State of Idaho v. M.A. Hanna Co.,
Thus, based on these considerations and because
At this point, the burden shifted to Mosaic to establish that jurisdiction would be so unreasonable in light of traditional notions of fair play and substantial justice as to overcome the presumption of reasonableness created by the defendant’s minimum contacts with the forum. See de Reyes,
Accordingly, since we find that constitutional due process requirements have been met to support the exercise of personal jurisdiction over Mosaic, wе find that the trial court properly denied Mosaic’s exception raising the objection of lack of personal jurisdiction.
C. Venue
Louisiana Revised Statutes 13:3203 provides, “A suit on a cause of action described in [La.] R.S. 13:3201 may be instituted in the parish where the plaintiff is domiciled, or in any parish of proper venue.” The domicile of the Department is in Baton Rouge.
The parties do not dispute any of the facts pertaining to venue. Thus, whether East Baton Rouge Parish is a proper venue for this action presents a
In its answer to the appeal, Mosaic urges the trial court erred in denying its declinatory exception of improper venue. In its apрellate brief, Mosaic contends, |2i“Venue is not conferred by
We find no merit in Mosaic’s contention that East Baton Rouge Parish is not a proper venue for this suit. Without reaching the issue of whether the venue provision of
III. CONCLUSION
For these reasons, we find the Department’s suit is not prescribed, and we reverse the trial court’s October 22, 2007 judgment. Because we find the trial court had personal jurisdiction over Mosaic pursuant to the long-arm statute,
MAY 26, 2006 JUDGMENT AFFIRMED; OCTOBER 22, 2007 JUDGMENT REVERSED; REMANDED.
DOWNING, J., concurs.
Notes
. In its answer, Mosaic also asserted that the trial cоurt erred in overruling its dilatory exception raising the objection of vagueness. Mosaic's appellee brief does not brief this issue, however. According to the Uniform Rules-Louisiana Courts of Appeal, Rules 2-12.4 and 2-12.5, issues not briefed on appeal are deemed abandoned. Worthen v. DeLong, 99-1149, p. 4 n. 1 (La.App. 1st Cir.6/23/00),
. The Department asserted that its audit revealed that Mosaic owed $3,186,903.00, plus interest in the amount of $3,685,941.80 calculated through December 31, 2005, plus any
. Although Mosaic also initially raised the objection of the insufficiency of service of process, the May 26, 2006 judgment ordered that this objection was "hereby deemed WITHDRAWN.” This objection is not at issue in this appeal.
. After the trial court overruled Mosaic’s dec-linatory exception raising the objection of improper venue, Mosaic filed an application for supervisory writs, which this court denied. Bridges v. Mosaic Global Holdings, Inc., 06-1076 (La.App. 1st Cir.7/24/06) (unpublished writ action).
.When an unrestricted appeal is taken from a final judgment, the appellant is entitled to seek review of all adverse interlocutory rulings prejudicial to him or her, in addition to review of the final judgment. Rao v. Rao, 05-0059, p. 6 (La.App. 1st Cir. 11/4/05),
. The Louisiana Secretary of State’s records indicate that the merger occurred on February 6, 1998, but was "effective in home state on December 22, 1997
. Concerning the time and place for filing returns,
Corporation income tax returns. Returns for corporations on the basis of the calendar year shall be made and filed with the secretary at Baton Rouge, Louisiana, on or before the fifteenth day of April, following the close of the calendar year. Returns for corporations made on the basis of a fiscal year shall be made and filed with the secretary at Baton Rouge, Louisiana, on or before the fifteenth day of the fourth month following the close of the fiscal year.
.Regarding time of payment,
The total amount of tax on a calendar or fiscal year income tax return shall be paid on the date the return is required by law to be filed determined without regard to any extension of time for filing the return.
. An IMC representative signed the agreement on September 11, 2001, and the Department representative signed it on September 26, 2001. Each of the four " Agreements] to Suspend Prescription” was signed by the IMC or Mosaic representative outside the state of Louisiana.
. The effect of an interruption of prescription differs from a suspension of prescription, in that when the interruption ceases, the time that had run before the interruption is not counted, whereas time that had accrued before the suspension is counted, and prescription commences to run again upon the termination of the periоd of suspension. See La. C.C. arts. 3466 and 3472. In re Smithson, 07-2262, p. 5 n. 2 (La.App. 1st Cir.6/6/08),
. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. C.C. art.2046.
. See La. C.C. arts. 3454 and 3472.
. La. C.C. art. 3471.
. Concerning the suspension and extension of prescription,
All prescriptions, including liberative, acquisitive, and the prescription of nonuse, and all peremptive periods shall be subject to a limited suspension and/or extension during the time period of August 26, 2005, through January 3, 2006; however, the suspension and/or extension of these periods shall be limited and shall apply only if these periods would have otherwise lapsed during the time period of August 26, 2005, through January 3, 2006. This limited suspension and/or extension shall terminate on January 3, 2006, and any right, claim, or action which would have expired during the time period of August 26, 2005, through January 3, 2006, shall lapse on January 4, 2006.