Louisiana Public Service Commission and In Their Capacities as Commissioners Lambert C. Boissiere, III; James M. Field, Foster L. Campbell, Eric Skrmetta and Clyde C. Holloway VS Louisiana State Legislature

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STATE OF LOUISIANA RTOF APP COL AL FIRST CIRC 7IT NU1yIBER 2012 A 03s3 LOUISIANA PLBLIC S CQMMISSION RVICE AND IN THEIR CAPACITIES AS OMPvzISSIO NERS LAMBERT C BOISSIERE III JAlVYES M FIELD FOSTER L CA1vIPBELL ERIC SK1ZvIETTA AND CLYDE C HOLL AY VERSUS LOUISIANA STATE LEGISLATURE Judgment Rendered v v G 1 cJ APR 2 6 2013 Appealed from the 19 Judicial District Court In and for the Parish ofEast Baton Rouge Lauisiana Trial Court Number 592 231 Honorable Hilary J Crain Judge Pro Tempore Dennis C Weber Attorneys for Appellants Amanda H Smith aintiffs ana P Louis Public Service Stephen Baton Commission Department of Public Service and in their official capacities G Kabel Rouge J L as Commissioners Lambert C Boissiere III James M Field Foster L Campbell Eric F Skrmetta and Clyde C Holloway Patricia H G Wilton Asst A G Michael J Vallan Asst A Alfred W Speer Attorneys far Appellee Defendant Louisiana State Legislature Mary F Quaid Baton Rouge LA BEFORE WffiPPLE C PARRO KLTHN GUIDRY PETTIGREW J McDONALD McCLENDON WELCH HIGGINBOTHAM THERIOT AND KLINE JJ 1 Hon William F K1ine Jr retired is serving as judge ad hoc by special appointment of the Louisiana Supreme Court y t O Cf 2 i Q it G u J GLV WELCH J Plaintiffs the Louisiana Public Service Commission LPSC and its commissioners in their official capacities Lambert C Boissiere III James M Field Foster L Campbell Eric F Skrmetta and Clyde C Holloway appeal a judgment sustaining a peremptory exception rais the objection of no cause of ng action in favor of defendant the L State Legislature Legislature and ouisiana dismissing their petition challenging the constitutionality of two legislarive acts with prejudice We reverse and remand BACKGROUND On July 1 2010 the LPSC filed this lawsuit in the Nineteenth Judicial District Court against the Legislature seeking a declaration that Act 226 of the 2009 regular session unconstitutional and Act 633 of the 2010 regular session were Specifically the LPSC contended that the challenged acts transferred and redirected monies held in three funds dedicated by statute to fund the operation of the LPSC into the state general fund in violation of Article III s Section 2 Article VII Secrion 2 and Article VII Sections 7 and 10 of the Louisiana Constitution The LPSC also asserted that the acts violated constitutional guarantees of equal protection and due process In the petition the LPSC the pled fotlowing facts The LPSC is a constitutionally created agency within the executive department and has the constitutional duty to manage the rates of public utilities and common carriers and to protect the interests of its jurisdictional ratepayers throughout Louisiana All of the LPSC operations are funded with fees held in dedicated funds collected from s its jurisdictional entities which in turn recuperate those amounts from their ratepayers The LPSC does not receive any monies from the state general fund revenues Instead the Legislature appropriates the entirety of the LPSC funding s from three source funds created by statute 1 the Utility and Carrier Inspection 2 and Supervision Fund established by La R 45 2 the Telephonic S 1177 Solicitation Relief Fund established by La R 45 and 3 the S 844 a 4 A 14 Motor Carrier Regulation Fund established by La R 45 S 1691 1 A sometimes collectively referred to as trie dedicated source funds The fees collected and maintained in these funds vere dedacated for the limited and specific purpose of funding the operations of the LPSC as it discharges its constitutionally mandated duties The LPSC asserted that if any fee monies remain in the funds at the end of the fiscal year those fee monies shall be retained in their respective accounts and cannot revert to the state general fund s The LPSC petition further pled the following On July 10 2009 pursuant s to Act 226 the State Treasurer transfened 4 dedicated fees from 00 537 000 of the three dedicated source funds into the state general fund On June 25 2010 s Act 633 was signed into law and directed the State Treasurer to transfer a total of 00 931 507 4 from the dedicated source funds into the state general fund The s LPSC asserted that Act 226 and 633 sweep of fee monies from the dedicated s funds into the state general fund to be used as revenue as if from a tax s constituted an unconstitutional conversion of fee dollars into tax dollars and imposed an unconstitutional tax on the LPSC juxisdictional ratepayers The LPSC alleged that because the effect of Acts 226 and 633 was to impose a tax the enactment of those provisions was governed by Article III Section 2 and Article VII Section 2 of the Louisiana Constitution which prohibit the Legislature from introducing and enacting measures creating or increasing an existing tax during even year regular sessions and require that legislation increasing numbered a tax or levying a new tax be enacted by two of the elected members of each thirds house of the state legislature Alternatively it claimed that the complete redirection of the fee monies for a different purpose created a fee which new necessitated the same constitutional prerequisites for 3 enactment The LPSC alleged that Act 633 which was sigrsed into law on June 25 2010 was not introduced or enacted in an even year and was passed with less than the numbered requisite two vote of the House of Representatives thus violating the thirds constitutional procedural requirements that must be observed befare a new tax or a new fee may be enacted The LPSC fiuther asserted in its petition that the sweeps of its dedicated source funds violated the equal protection guarantees of the United States and Louisiana Constitutions by seizing dedicated fees paid by a specific class of jurisdictional ratepayers that purchase services from LPSC regulated entities and redirecting those fee monies to be used as revenue for the benefit of non jurisdictional ratepayers even though they contributed nothing to the dedicated funds It also claimed that the sweeps violated the due process rights of the jurisdictional ratepayers because they were made retroactively on dedicated funds without the Legislature having taken a prospective action that would give notice to the Commission utilities common carriers and jurisdictional ratepayers as to the purpose for which the fees would be used In response the Legislature filed peremptory exceptions raising the objections of no right of action and no cause of action and a dilatory exception raising the objection of vagueness In support of its exception of no right of action the Legislature contended that the LPSC lacked standing to sue the Legislature on the grounds that its constitutional duties have been impaired by the challenged legislation ar to assert third property rights or liberty interests allegedly party belonging to the jurisdictional ratepayers and utilities In support of its exception of no cause of action the Legislature urged that the LPSC failed to allege facts which if proven would entitle it to declaratory or any other relief under the constitution and the laws of the state of Louisiana It submitted that because statutes are presumed to be constitutional the LPSC bore the burden of 4 demonstrating a constitutional prohibition against the transfer of money from the three statutorily created funds and urged that the LPSC could not meet this burden The Legislature insisted that the LPSC could not show either a constitutional or statutory prohibition against the 2009 and 2010 transfers authorized by the challenged acts nor could it show a constitutional or statut limitation on the ry s Legislature exclusive authority t appropriate fiznds including surplus statutory u dedications and to determine how the branches of government shall be funded from the public fisc It further clainned that the LPSC failed to identify any constitutional statutory or jurisprudential autharity for its legal conclusion that the 2009 and 2010 transfers converted the dedicated fees into taxes and insisted that Acts 226 and 633 do not raise revenue as alleged by the LPSC nor do they impose a new charge or fee or create any new assessments Thereafter the LPSC filed a motion to amend its petition to name as additional plaintiffs the Department of Public Service and three LPSC commissioners James Field Foster Campbell and Clyde Holloway in their individual capacities as ratepayers alleging that the commissioners were ratepayers of one or more common caniers or public utilities regulated by the LPSC The trial court signed an order allowing the amendment In the amended petition the LPSC claimed that the Legisiature sweep of the dedicated funds s violated Article VII Section 1Q of the Louisiana Constitution which prohibits the reduction of appropriated funds by more than five percent In support of this claim the LPSC alleged that at the end of each fiscal year any surplus monies remaining in the dedicated source funds rolled over and became appropriated funds on the first day following the end of the fiscal year Therefore the LPSC asserted that the funds swept by the Legislature were in fact appropriated funds and that both the transfers authorized by Acts 226 and 633 exceeded five percent of the LPSC total appropriation far fiscal years 2009 and 2010 In s 2010 2011 5 support of its Article VII Section 10 constitutionafl challenge the LPSC pled specific facts regarding the amounts appropriated fo reach fiscal year the balances remaining in the accounts the total fund that rolled over into the new balances fiscal year and the amounrs taken bw tYie egislature from the funds Additionally the LPSC alleged that t6 nd 633 alsu violated Article VII of ts i the Louisiana Constitution because they itnposed a sales and use tax on natural gas electricity and water sold directlq to the consumer for residential use The LPSC asked the court to declare Acts 226 and 633 unconstitutional either on their face or as applied The Legislature filed an amended peremptory exception of no right of action contesting the plaintiffs standing to bring this declaratory action and an amended exception of no cause of action In support of the amended exception of no cause of action the Legislature asserted that surplus funds from one fiscal year do not rollover to become appropriated funds of the next fiscal year and therefore there could not possibly have been an unc excess reduction of nstrtutional appropriated funds as alleged by the I PSC A hearing on the exceptions was held on November 8 2010 There is no transcript of the hearing in the record and the record indicates that no evidence was filed in the trial court Following the hearing the trial court issued written reasons in which it found that the LPSC failed to etate a cause of action in the petitions against the Legislature for which relief c be granted by the court ould The court concluded that the LPSC could not show any constitutional or statutory limitation on the Legislature exclusive authority to appropriate public funds and s had cited no autharity limiting the power of the Legislature to appropriate by statute surplus Consequently monies the court from held a statutorily Acts 226 created and 633 and are dedicated not fund themselves unconstitutional The court observed that a separate question may be raised as to 6 whether those acts had the effect of convazting the statutes that created the dedicated funds from fee statutes into iaxing statutes and whether constitutional implications may arise from that conversion However the court noted the LPSC did not question the constitutionality ffhose statutes as a result of the 2009 and 2010 Acts In light of its ruling on Y1 xcepfton i no cause of action the court e held that all other xceptions we moot e On March 31 2011 the trial court signed a judgment sustaining the sexception of no cause of action decreeing the other exceptions moot Legislature and giving the LPSC fifteen days from the mailing of the notice of the judgment to amend its petition The LPSC appeaied this judgment On July 18 20ll the trial court signed an amended judgment giving the LPSC f fteen days to amend its petition and decreeing that ifthe LPSC chose not to do so the judgment was a final judgment Another panel of this court dismissed the LPSC appeal on its own s motion on November 9 2011 finding that both judgments lacked decretal language and were uncertain because it was impossible to tell the date on which the judgments became final from the face of ithe judgments Louisiana Public Service Commission v Louisiana State Legislature 201 0943 La App lst Cir 11 9 unpublished 11 On December 8 2o11 the trial court signed a final judgment sustaining the s Legislature exception of no cause of actian and amended exception of no cause of action decreeing that all other exceptions were moot and dismissing the s LPSC claims From this judgment the LPSC appealed DISCUSSION On appeal the LPSC contends that the trial court ened in failing to find 1 that Acts 226 and 633 violate the due process clauses of the federal and state constitutions by retroactively converting fees paid to fund a regulatory program into taxes designed to raise revenue for general purposes 2 the acts violate the 7 equal protection guarantees of both constitutions ry subjecting LPSGjurisdictional ratepayers to a tax not assessed upon similarly situated citizens and 3 the acts violate the constitutional requirements for the creation of a taat In opposition the Legislature contends that I j the LPSG f to meet its burden of showing that ailed the Legislature lacked the requisite authority to enact Acts 226 and 633 2 the mere transfer and redirection of surplus monies xemaining in a siiatutorily dedicated fund does not create a new tax and 3 the LPSC does not have standing to assert due process equal protection or any other alleged constitutional violations The exception of no cause of action tests the legal sufficiency of the petition by determining whether the law affords a remedy to the plaintiff on the facts alleged in the petition The exception is triable on the face of the pleadings and all pleaded well facts in the petition must be accepted as true See Pierrotti v 1317 Johnson 2011 La App l Cir 3 91 So3d 1056 1062 12 19 An exception of no cause of action is likely to be granted only in the unusual case in which the plaintiff includes allegations that show on the face of the petition that there is some insurmountable bar to relief Thus dismissal is justified only when the allegations of the petition itself clearly show that the plaintiff does not have a cause of action or when its allegations show the existence of an affirmative defense that appears clearly on the face of the pleadings Id When it can reasonably do so a court should maintain a petition against an exception of no cause of action to afford a litigant an opporturiity to present his evidence Walters v Rubicon Inc 2294 96 La App l Cir 12 706 So 503 506 97 29 2d If a petition states a cause of action on any ground or portion ofthe demand the objection of no cause of action must be overruled Bruneau v Edwards 517 2d So 818 823 La App 1 Cir 1987 The burden of demonstrating that a 51 z Entergy Gulf States Louisiana L and Entergy Louisiana LLC filed an amicus curiae C brief in support of reversing the judgment of the trial court 8 petition fails to state a cause of action is on the mover Pierrotti 91 So3d at 1062 Because the exception raises a question of law and the trial court decision s is based only on the sufficiency of the petirion a judgment sustaining an exception of no cause of action is reviewed by an appellate court de novo Id In sustaining the Legislature sexception of ne caase of action the trial court concluded that Acts 226 and 633 were not themselves unconstitutional We find that the trial court erred in determining the merits of the LPSC constitutional s challenges to Acts 226 and 633 on an exception of no cause of action The purpose of the exception of no cause of action is not to determine whether the plaintiff will ultimately prevail at trial but to only ascertain if a cause of action exists See Walters v Rubicon Inc 706 Sa2d at 506 Accepting the well facts pleaded contained in the petitions as true we are convinced that the LPSC has stated a cause of action to challenge the validity of the Legislature sweep of the monies s dedicated by statute to fund the LPSC into the state general fund The LPSC has s alleged in its petitions that Acts 226 and 633 effectively enacted levied ar authorized a new tax or fee and that the constituti prescribed procedures far onally measuring levying or authorizing a new tax or fee were not followed rendering the acts unconstitutional The LPSC further alleged that the acts in question improperly reduced appropriations to the LPSC beyond the constitutionally proscribed limit of five percent Whether Acts 226 and 633 in fact had the effect of imposing a tax or new fee or took appropriated funds from the LPSC are eshold tlu issues which must be adjudicated on the merits before the constitutional implications arising therefrom can be determin ed For these reasons the judgment sustaining the Legislature sexception of no cause of action is reversed Because the trial court sustained the exception of no cause of action it did not rule on the Legislature sremaining exceptions including the exception of no right of action Although the Legislature seeks a ruling on this 9 exception from this court we find that the exception of no right of action is not properly before this court at this time Accor we remand this matter to the ingly trial court to rule on the Legislature sremaining exceptions CONCLUSION For the foregoing reasons the judgtrrent sustaining the Louisiana State s Legislature peremptory exception raising the objection of no cause of action is hereby reversed The case is remanded to the trial court for proceedings consistent with this opinion Costs in the amount of 972 are assessed to appellee the 00 Louisiana State Legislature REVERSED AND REMANDED 10

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