WESTLAWN CEMETERIES, L.L.C. VS. THE LOUISIANA CEMETERY BOARD (Parish of Jefferson)
2021-CA-01414
Supreme Court of Louisiana
March 25, 2022
NEWS RELEASE #013
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 25th day of March, 2022 are as follows:
BY McCallum, J.:
2021-CA-01414 WESTLAWN CEMETERIES, L.L.C. VS. THE LOUISIANA CEMETERY BOARD (Parish of Jefferson)
AFFIRMED. SEE OPINION.
No. 2021-CA-01414
WESTLAWN CEMETERIES, L.L.C.
VS.
THE LOUISIANA CEMETERY BOARD
On Appeal from the 24th Judicial District Court, Parish of Jefferson
McCallum, J.
The Louisiana Cemetery Board (LCB) challenges the district court‘s judgment finding
Our jurisprudence is clear as to the scope of this Court‘s appellate jurisdiction under
We recognized in Benelli that the appellate jurisdiction of the Court is narrowly limited by the constitution. This limitation is not arbitrary. It serves the purpose of restricting appeals of right to those instances where the legislative act of a governing authority, a body which exercises the legislative functions of a political subdivision, has been declared unconstitutional. Id. at p. 1294. This, we found, was consistent with the intent of the legislature as reflected in the convention debates leading to the enactment of
The provision at issue was not enacted by the Louisiana legislature; rather, it is a rule promulgated by the LCB, an administrative agency. The LCB is not a governing body and does not exercise legislative functions. Its rules and regulations, therefore, are not laws for which appellate jurisdiction would lie in this Court. Although the district court declared the Rule to be unconstitutional, because its judgment concerned an administrative rule, this Court does not have appellate jurisdiction. The proper forum for an appeal concerning the LCB‘s rules and regulations is the court of appeal. See
While we cannot exercise appellate jurisdiction in this case at this time, this Court has the authority to exercise supervisory jurisdiction under
In the present matter, we find that the exercise of our supervisory jurisdiction serves both purposes – it avoids further delay and is in the interest of judicial economy. The latter is particularly significant under the circumstances of this case because, as will be discussed more fully herein, we find that the trial court properly found
We do not intend our decision to exercise supervisory jurisdiction in this case to have the effect of converting an administrative rule or regulation to a law or ordinance for the purposes of
We now turn to the merits of this case.
FACTUAL AND PROCEDURAL BACKGROUND
Westlawn owns and operates a perpetual or endowed care cemetery located in Gretna, Louisiana. This type of cemetery is defined as a cemetery wherein lots and other interment spaces are sold or transferred under the representation that the cemetery will receive perpetual or endowed care.
Cemeteries in general, and perpetual or endowed care cemeteries, in particular, are governed by Title 8 as amended and reenacted in 1974 by Act 417 of the Louisiana Legislature. In conjunction with the reenactment of Title 8, the legislature created the LCB for the purpose of enforce[ing] and administer[ing] [its] provisions.
Before any corporation may operate as a perpetual or endowed care cemetery, it must first establish a trust fund in the amount of $50,000.00 for that care.
Use of a perpetual or endowed care trust fund is limited, as is explicitly set forth in
The principal of the trust fund shall remain permanently intact and only the income therefrom shall be expended. The income shall be used solely for the care of those portions of the cemetery in which interment spaces have been sold with a provision for perpetual or endowed care. It is the intent of this Section that the income of said fund shall be used solely for the care of interment spaces sold with a provision for perpetual or endowed care and for the care of other portions of the cemetery immediately surrounding said spaces as may be necessary to preserve the beauty and dignity of the spaces sold. The fund or its income shall never be used for the development, improvement, or embellishment of unsold portions of the cemetery so as to relieve the cemetery authority5 of the ordinary cost incurred in preparing such property for sale.
(Footnote added). In furtherance of this statutory provision,
All perpetual or endowed care cemeteries are required by
(a) All receipts and disbursements of cash, all receipts and deliveries of other trust property during the regular
(b) A statement showing the total amount of the endowment and perpetual care trust funds invested in each of the investments authorized by law, and the amount of cash on hand not invested.
The LCB is required to examine the endowment care funds of each cemetery when deemed necessary but no less than once every three years, when it finds that a cemetery or trustee has failed to file the required reports, or when petitioned by no less than twenty-five interment owners who allege that the funds are not in compliance with Title 8.
Over the years, the LCB has adopted rules for the cemetery industry which are codified in the Louisiana Administrative Code. See
The rule at issue in this matter,
A. The principal of the trust fund shall remain permanently intact and only the income shall be expended.
B. The net income, after the deduction of costs associated with the operation of the trust, may be remitted to the cemetery for care and maintenance of the cemetery as provided for by title 8. A cemetery or cemetery authority may not charge the trust for administrative costs for the operation of the cemetery or trust funds.
C. All income received by the trustees of cemetery care funds, which is not remitted to the cemetery authority within 120 days after the end of the latest tax reporting year of the cemetery authority, owning or operating a cemetery for which the trust fund is maintained, shall become, for all purposes, part of and added to the corpus or principal of the trust, and may not be withdrawn or distributed.
It is subpart C that is the focus of this appeal.
According to the allegations in this lawsuit, in January, 2019, the LCB issued a formal notice to Westlawn to appear at an informal proceeding with the LCB‘s director and its attorney to discuss Westlawn‘s alleged failure to comply with the Rule. The LCB maintained that the Trustees had disbursed $392,657.30 of trust income to Westlawn more than 120 days after the close of Westlawn‘s tax reporting years between 2002 and 2017 in violation of the Rule. The LCB sought the return of this sum to the principal of the Trust.
Westlawn then filed a Petition for Declaratory Judgment (Petition), seeking a determination that the Rule is unconstitutional because it exceeds LCB‘s statutory
Westlawn and the LCB filed motions for (partial) summary judgment concerning the constitutionality of the Rule, with the LCB taking the position that the Rule is constitutional as a properly promulgated, valid and reasonable implementation of statutory law that does not exceed the LCB‘s delegated authority.9 Before the district court considered the motions, the parties engaged in extensive litigation concerning whether the matter was required to first proceed to an administrative hearing.10 When the district court ultimately considered the motions, it found that
Westlawn then filed a motion for new trial, arguing that the district court‘s ruling was contrary to the law and evidence. After a hearing, the district court agreed with Westlawn, found its prior ruling to be clearly contrary to the law and evidence, and entered judgment declaring
In reality, [the Rule] does not enforce any provisions of Title 8. It merely penalizes a trustee for violating what appears to be an arbitrary time line adopted by the [LCB] for remitting trust income to the cemetery authority. Other than requiring an annual report from the cemetery authority and the trustee, Title 8 does not promulgate any deadlines for the disbursement of trust income to a cemetery authority. Again,
La. R.S. § 8:465 grants the trustee the discretion to handle the permanent disposition of the funds.12
(Footnote added). From this judgment, the LCB applied to this Court, seeking a reversal of the district court‘s judgment. Westlawn answered the appeal, seeking to have the Rule declared unconstitutional both facially and as applied because, Westlawn contends, the Rule violates substantive due process rights, is void for vagueness under the due process clause of the Fourteenth Amendment and Article 1, § 2 of the Louisiana Constitution and is an improper exercise of primary legislative authority. The answer to appeal further seeks a determination that subparts A and B of
DISCUSSION
The only error assigned by the LCB concerns the district court‘s determination that the Rule is unconstitutional. Therefore, the sole issue before this Court is the
Louisiana Supreme Court Rule VII § 4(3) requires an appellant‘s brief to contain a specification of the alleged errors complained of. Because the issue of administrative review was not raised as an assignment of error, nor briefed, it is not properly before this Court. See, e.g., Bonnette v. Conoco, Inc., 2001-2767, p. 10 (La. 1/28/03), 837 So. 2d 1219, 1227; State v. Smith, 418 So. 2d 515, 524 (La. 1982).
The LCB further maintains that there is no factual record in this case, and that [o]nly through that mandatory process can any adjudicatory body meaningfully and properly analyze the [parties‘] allegations, including any allegation of unconstitutionality. Although we disagree with the LCB that a more detailed factual record is necessary in this case for the determination of the Rule‘s constitutionality,14 we do not address this issue, as it was neither included nor briefed by the LCB as an assignment of error.
Standard of review
This case comes before the Court on the grant of a motion for new trial, which granted, in part, Westlawn‘s Petition.15 Under
In addition to granting the new trial motion, the judgment also granted the petition for declaratory judgment, in part. The declaratory judgment action provides a method by which a court may declare rights, status, and other legal relations whether or not further relief is or could be claimed.
Like a ruling on a motion for new trial, the decision to grant or deny declaratory relief is left to the wide discretion of the district court. See Louisiana Supreme Ct. Comm. on Bar Admissions ex rel. Webb v. Roberts, 2000-2517, p. 3 (La. 2/21/01), 779 So. 2d 726, 728; Succession of Robinson, 52,718 (La. App. 2 Cir. 6/26/19), 277 So. 3d 454, 458, writ denied, 2019-1195 (La. 10/15/19), 280 So. 3d 613. Although this decision is subject to an abuse of discretion standard of review, the judgment itself is still reviewed under the appropriate standard of review. Fondel v. Fondel, 2020-221, p. 4 (La. App. 3 Cir. 3/10/21), 312 So. 3d 1180, 1183, writ denied, 2021-0655 (La. 9/27/21), 324 So. 3d 93; Martin v. Martin, 52,401, p. 6 (La.
Constitutionality principles, generally
All statutory enactments are presumed constitutional. Carver v. Louisiana Dep‘t of Pub. Safety, 2017-1340, p. 5 (La. 1/30/18), 239 So. 3d 226, 230; see also, Calcasieu Par. Sch. Bd. Sales & Use Dep‘t v. Nelson Indus. Steam Co., 2021-00552 (La. 10/10/21), --- So. 3d ----, ----, 2021 WL 5860861 at *6; State v. Hatton, 2007-2377, p. 13 (La. 7/1/08), 985 So. 2d 709, 719. This presumption is based on the premise that legislators are presumed to have weighed the relevant constitutional considerations in enacting legislation. Carver, 2017-1340, p. 5, 239 So. 3d at 230; Greater New Orleans Expressway Comm‘n v. Olivier, 2004-2147, p. 4 (La. 1/19/05), 892 So. 2d 570, 573 (Because legislators owe the same duty to obey and uphold the constitution as do judges, legislators are presumed to have weighed the relevant constitutional considerations in enacting legislation.).
The presumption of constitutionality applies equally to ordinances. Fransen v. City of New Orleans, 2008-0076, p. 10 (La. 7/1/08), 988 So. 2d 225, 233; Plaquemines Par. Civ. Serv. Comm‘n v. Plaquemines Par. Council, 2017-0449, p. 6 (La. App. 4 Cir. 2/14/18), 241 So. 3d 1040, 1045; Harris v. Jefferson Par. President & Par. Council, 2012-715, p. 10 (La. App. 5 Cir. 5/23/13), 119 So. 3d 603, 608. Like a statute enacted by the legislature, an ordinance is understood to mean a legislative act of a municipality. Chapman v. Bordelon, 138 So. 2d 1, 5 (La. 1962).
The presumption of constitutionality is significant; [b]ecause of the presumption . . ., in determining the validity of a constitutional challenge, a Court must construe a statute so as to preserve its constitutionality when it is reasonable to do so. Carver, 2017-1340, 239 So. 3d at 230; M.J. Farms, Ltd. v. Exxon Mobil Corp., 2007-2371, p. 22, 998 So. 2d 16, 31. Additionally, [b]ecause statutes are presumed constitutional, the party challenging the statute bears the burden of proving its unconstitutionality. Fransen, 2008-0076, p. 11, 988 So. 2d at 234; see also, State in Int. of D.T., 2019-01445 (La. 4/3/20), --- So. 3d ----, ----, 2020 WL 1670730 at *3 (internal citations omitted)(Statutes are presumed to be valid, and the constitutionality of a statute should be upheld wherever possible. . . . When a statute is challenged as being unconstitutional on its face, . . . the moving party bears an especially heavy burden to establish that there is no other interpretation or circumstance under which the law would be constitutional.)
Administrative agencies do not perform legislative functions and are not made up of elected officials who owe a duty to uphold the constitution. Unlike an elected legislature, an administrative agency is not presumed to have weighed principles of constitutionality in promulgating its rules and regulations. Therefore, we decline to adopt a rule that administrative rules and regulations are presumed constitutional. We do, however, find it proper to place the burden of proving unconstitutionality on the party challenging the administrative rule, as is clearly the case with statutes or ordinances. Placing the burden of proof on the party challenging a rule is consistent with other situations whereby the moving party has the burden of proof (e.g., summary judgment motions and exceptions).
The powers of the state‘s government are divided by the Louisiana Constitution into three separate branches: legislative, executive, and judicial.
There is a well-recognized exception to this principle. [T]he legislative branch has the authority to delegate to administrative boards and agencies of the State the power to ascertain and determine the facts upon which the laws are to be applied and enforced. Krielow, 2013-1106, p. 5, 125 So. 3d at 388. That is, as the district court in this case noted, the legislature may confer upon administrative officers in the executive branch the power to fill up the details by prescribing administrative rules and regulations. Alfonso, 99-1546, p. 7, 753 So. 2d at 161. Accordingly, administrative and ministerial functions may, by statute, be delegated to an agency in the executive branch. Id., 99-1546 p. 6, 753 So. 2d at 160. These principles recognize that the delegation of certain administrative functions is necessary because of the vast amount of governmental functions that are vested in the legislative branch, which cannot possibly enact and re-enact detailed laws to cover every situation during rapidly changing times. Krielow, 2013-1106, pp. 5-6, 125 So. 3d at 388-89 (quoting Alfonso, 99-1546, p. 6, 753 So. 2d at 160).
To establish that a statute, or as here, an administrative rule, is facially unconstitutional,17 the party challenging it must establish that no set of circumstances exists under which [it] would be valid, that is, that the law is unconstitutional in all its applications. LaPointe v. Vermilion Par. Sch. Bd., 2015-
Constitutionality of the Rule (LAC 46:XIII.1503 C )
As noted, the Rule was promulgated by the LCB under the authority provided to it by
It is the LCB‘s position, generally, that the Rule is a constitutional and valid promulgation pursuant to a legislative grant of authority, because under Schwegmann, it neither determines what the law shall be nor involves the exercise of primary or independent discretion. To the contrary, the LCB maintains, the Rule merely determines facts upon which the detailed provisions of
In support of its position in this case, the LCB maintains that the Rule was promulgated to protect perpetual trust income. The Rule‘s 120-day deadline, it argues, is strictly for the remittance of the income to the cemetery by the trustee. That income never belong[ed] to the cemetery operator but is held in trust for the benefit of the consumers who paid into the trust. Any amounts not remitted, the LCB maintains, are not lost but are used to enhance the trust, and, thus, the Rule serves the purpose of protecting trust income and maximizing the long-term viability of perpetual care trusts. That is, the larger the trust, the more income it generates for the maintenance of a cemetery. Furthermore, the LCB submits, the Rule assists the trustees by ensuring that the trustee can invest unused income rather than letting it languish and it helps the trustee fulfill the duties of protecting, maximizing, and accounting for the trust funds.
The LCB takes the further position that, inasmuch as the income must to be used to maintain a cemetery in a reasonable condition, and the legislature provided a non-limited list of ways by which this is to be accomplished,18 the Rule‘s requirement that income be distributed for that purpose within a set timeframe is reasonable . . . as it accomplishes the legislative goal of regular maintenance.
We agree with the LCB that the legislature made clear that the interest from a perpetual care trust fund must be used for the care and maintenance of a perpetual care cemetery; the principal is to remain intact. We disagree with the LCB, however, that the Rule merely determines facts upon which the provisions of
In promulgating the Rule, however, the LCB created a restriction as to how trust fund income is to be used. Rather than allotting certain income (that income not timely remitted by a trustee) to a cemetery‘s care and maintenance, the Rule requires that it become part of the principal of the trust. As such, it does not serve to advance the express mandate of
To the contrary, the LCB clearly acted in a legislative capacity and exercised primary and independent discretion in violation of the separation of powers doctrine when it promulgated the Rule. See Alfonso, 99-1546, p. 11, 753 So. 2d at 163 (where administrative agency improperly exceeded its statutory authority in promulgating an administrative regulation, [t]he . . . regulation is . . . unconstitutional.). There is no indication that the legislature intended to provide
Our finding that the Rule‘s promulgation impermissibly exceeded the authority granted to the LCB by the legislature is consistent with other decisions of this Court. In Arrant v. Wayne Acree PLS, Inc., 2015-0905 (La. 1/27/16), 187 So. 3d 417, 423, for example, this Court considered whether an administrative rule shortening the prescriptive period for appealing the denial of a request for medical treatment by a medical director of the Office of Workers’ Compensation in a workers’ compensation matter exceeded the authority granted by the legislature. The lower courts found that the director acted within his authority in promulgating the rule, holding that a disputed claim for compensation was prescribed.
In reversing the lower court decisions, this Court reiterated the principle that the Legislature, after fixing a primary standard, may confer upon administrative officers in the executive branch the power to fill up the details by prescribing administrative rules and regulations. Id., 2015-0905, p. 7, 187 So. 3d at 421. Although the director of the Office of Workers’ Compensation had been given broad general authority to promulgate rules and regulations concerning the medical treatment schedule, the legislature had already established prescriptive periods for claims for medical benefits. Thus, the director, in promulgating the rule, exceeded the authority delegated by the legislature. The Court stated:
Because all of the director‘s power comes from the enabling statute and no statute explicitly or implicitly delegates to the director the power to alter the prescriptive period plainly provided in
La.Rev.Stat. 23:1209(C) for [a]ll claims for medical benefits payable pursuant toR.S. 23:1203 , the 15–day [shortened] period set out in Title 40, Part I, Chapter 27, Section 2715(B)(3)(f) of the Louisiana Administrative Code cannot provide a legitimate basis for sustaining an exception of prescription under the facts of this case.
We reached the same conclusion in Alfonso. At issue was an administrative rule adopted by the Wildlife and Fisheries Commission which made criminal the failure of fishermen to report the number of mullet caught during the mullet fishing season. The Commission adopted the rule pursuant to the authority delegated to it by the legislature to adopt rules to regulate the taking of mullet, expressly stating that such regulations shall provide for zones, permits, fees, and other provisions necessary to implement this Section. Alfonso, 99-1546, p. 9, 753 So. 2d at 162. The Court noted that the legislature had already imposed a comprehensive statutory reporting requirement that included the requirement that commercial fishermen file a monthly report indicating the quantity of each kind of fish sold. Id., 99-1546, p. 5, 753 So. 2d at 160. Thus, because the legislature only authorized the Commission to develop rules concerning the taking of mullet, and not the reporting of mullet, the rule unconstitutionally exceeded the authority granted to the Commission.
Similarly, in the instant matter, while the LCB had general authority to promulgate rules and regulations to administer and enforce Title 8, the legislature had already restricted the use of income from perpetual trust funds to cemetery care and maintenance. The LCB‘s authority did not include the power to alter the use of that income for any other purpose, including its conversion into principal. Accordingly, the LCB, in promulgating the Rule, exceeded the authority granted to it by the legislature.
We further find that the Rule clearly conflicts with the legislative intent for perpetual care trust funds in two ways. First, the Rule essentially grants the trustees of perpetual care trust funds the power of determining what happens to trust fund income. Title 8 does not delineate when income is to be disbursed to a cemetery authority or set forth any specific requirements about its disbursement. Subpart B
Second, the Rule‘s requirement that the income become, for all purposes, part of and added to the corpus or principal of the trust if not timely remitted, necessarily amounts to the use of income – the conversion of the income into principal – for purposes other than the care of a cemetery. Although the LCB may establish rules to administer or enforce Title 8, there is nothing in Title 8 which authorizes the LCB to require income to be converted into principal. To the contrary, because there is only one legislative mandate for the use of trust fund income, the Rule violates
After our de novo review of the record, we find that the district court correctly found
DECREE
For the foregoing reasons, we find that, in promulgating
AFFIRMED