Utelcom Inc. V. Bridges, 2010 Ca 0654 Decision Appeal (la. App. Sept. 12, 2011)

Transcript

STATE OF LOUISIANA COURT OF APPEAL 1 X 211 to I Zelltil go lv n UTELCOM INC AND UCOM INC VERSUS CYNTHIA BRIDGES IN HER CAPACITY AS SECRETARY OF n THE DEPARTMENT OF REVENUE STATE OF LOUISIANA On Appeal from the 19th Judicial District Court Parish of East Baton Rouge Louisiana Docket No 535 Division D 407 Honorable Janice G Clark Judge Presiding William M Backstrom Jr Edward D Wegmann Kathryn S Friel Jones Walker Waechter Poitevent Carrere Attorneys for Plaintiffs AppellantsAppellees UTELCOM Inc and UCOM Inc Denegre L P New Orleans LA and Christopher D Martin Jones Walker Waechter Poitevent Carrere Denegre L P Baton Rouge LA John J Weiler Attorneys for Christian N Weiler Weiler Rees L C New Orleans LA Defendant AppelleeAppellant Cynthia Bridges Secretary of the Department of Revenue State of Louisiana J Grant Coleman Amicus Curiae Robert J Burvant Polychim Inc King Krebs Jurgens P C L New Orleans LA BEFORE PARRO GUIDRY AND HUGHES JJ Judgment rendered SEP 1 2011 PARRO J Plaintiffs UTELCOM Inc and UCOM Inc collectively the companies have appealed a judgment of the trial court granting a motion for partial summary judgment in favor of Cynthia Bridges in her capacity as Secretary of the Louisiana Department of Revenue the Department finding that the companies were subject to the Louisiana corporation franchise tax for the taxable periods ending on December 31 2001 December 31 2002 and December 31 2003 the relevant periods that follow we affirm in part reverse in part and render FACTUAL BACKGROUND AND PROCEDURAL HISTORY For the reasons UTELCOM and UCOM are foreign corporations organized under the laws of Kansas and Missouri respectively The companies are part of an affiliated group of Neither UTELCOM nor corporations whose parent corporation was Sprint Corporation UCOM was registered or qualified to do business in Louisiana during the relevant periods and each company maintained its only commercial domicile exclusively outside of Louisiana The companies owned limited partnership interests in three Delaware limited partnerships 1 Sprint Communications Company LP Sprint Communications LP which is a long distance telecommunications company 2 Sprint Enterprises LP Enterprises LP which handles wireless communications and 3 SprintCom Equipment Company LP Equipment LP which owns telecommunications equipment that is leased to other Sprint affiliates Sprint Communications LP was registered in Louisiana as a foreign limited partnership and conducted business in Louisiana It is owned by UCOM and UTELCOM as limited partners and by US Telecom Inc US Telecom as a general 1 The commercial domicile of a corporation exists where the principal place of business is located and from which the corporation activities function and are managed United Gas Corporation v Fonteno s 241 La 488 509 129 So 748 756 1961 2d 2 It is undisputed that the companies were not registered or qualified to do business in Louisiana admitted the allegation in its answer 3 however the Department contends that the companies actually did conduct business in Louisiana through the actions of other entities As for the issue of commercial domicile the companies alleged in their petition that their commercial domiciles were located outside of Louisiana and the Department Enterprises LP and Equipment LP were owned by UCOM as the limited partner and by US Telecom Neither partnership was registered as a foreign limited partnership in Inc as the general partner relevant to the issues in this matter Louisiana nor did they own any property or conduct any business in Louisiana Therefore they are not 2 partner The companies initially filed Louisiana Corporation Income Franchise Tax Returns for each of the relevant periods and paid both income and franchise taxes for those periods Thereafter the Department conducted an audit of the returns and issued notices of proposed taxes due alleging that the companies owed additional franchise taxes and interest for the relevant periods In response to these notices the companies paid under protest a total of 276 in additional franchise taxes and 40 518 related interest to the Department pursuant to LSA R 47 On August 11 2005 S 1576 the companies filed a petition for recovery of the franchise taxes and interest paid under protest denying that they were subject to the franchise tax and seeking a refund of the entire amount paid under protest plus statutory interest In addition to claiming that the Department had improperly applied the Louisiana statutes pertaining to the imposition of the franchise tax to them the companies further contended that the proposed assessment of the franchise tax by the Department violated the privileges immunities and protections afforded them by the Commerce Clause of the United States Constitution and the Due Process and Equal Protection Clauses of the United States and Louisiana Constitutions The companies and the Department filed cross motions for summary judgment concerning the companies claim for recovery of the monies paid under protest The s Department motion sought a partial summary judgment in its favor finding that as a matter of law the proposed franchise tax assessment 1 fully complied with the Louisiana franchise tax laws and 2 was not in violation of the Commerce Clause of the United States Constitution or the Due Process or Equal Protection Clauses of the United States and Louisiana Constitutions The companies motion sought a summary judgment in their favor finding that 1 none of the incidents of taxation specified in 4 Sprint Communications LP apparently had an additional limited partner Sprint International Communications Corp however this corporation is not involved in this matter 5 The petition filed by the companies sought only the recovery of the franchise tax amounts and related interest paid under protest According to the brief filed by the companies in this court the companies intend to file amended franchise tax returns and seek refunds of the franchise taxes they had paid prior to the audit by the Department Those taxes are not at issue in this matter 3 LSAR 47 601 were present during the relevant periods 2 LAC 61 S Dthe 301 I regulation relied on by the Department to purportedly interpret LSAR 47 was S 601 invalid as it was beyond the scope of the statute and 3 the Department sattempt to impose the franchise tax on the companies violated the protections afforded them by the Due Process and Commerce Clauses of the United States Constitution In support of these respective motions the Department filed the affidavits of Mike Pearson and Anthony Caruso and the companies filed two affidavits from Mark Beshears Thereafter the Department filed a motion for attorney fees pursuant to LSAR S 1512 47 and motions to strike the affidavits of Mark Beshears The companies also filed motions to strike the affidavits of Anthony Caruso and Mike Pearson After a hearing the trial court rendered a judgment granting the Department s motion for partial summary judgment finding that the companies owed the additional Louisiana corporate franchise tax and related interest for the relevant periods The trial court further found that the proposed assessment of franchise tax fully complied with s Louisiana franchise tax laws and did not violate the relevant Louisiana and United States constitutional provisions companies was denied The motion for summary judgment filed by the The judgment further ordered the companies to pay the s Department attorney fees in the amount of 10 of the additional corporation franchise tax and related interest awarded in accordance with the provisions of LSA R S 1512 47 In addition the judgment ordered that the affidavits of Anthony Caruso and Mike Pearson which had been submitted by the Department be stricken in their entirety Finally the judgment ordered that the original affidavit of Mark Beshears dated October 2 2009 be stricken as to paragraphs 7 8 9 14 19 21 22 and 23 and that the affidavit of Mark Beshears dated October 15 2009 be stricken as to paragraphs 5 6 7 8 9 10 11 12 and 13 6 The affidavit of Anthony Caruso was filed by the Department in opposition to the companies motion for summary judgment The parties also relied on the pleadings and answers to interrogatories in the record GI It is from this judgment that the companies have appealed The Department has answered the appeal with regard to the trial court ruling concerning the affidavits s of Anthony Caruso and Mike Pearson In its answer the Department has also requested that the companies be required to pay all costs of court in both the trial and appellate courts and that it be awarded additional attorney fees on appeal SUMMARY JUDGMENT An appellate court review of a summary judgment is a de novo review based s on the evidence presented to the trial court using the same criteria used by the trial court in deciding whether a summary judgment should be granted s Buck Run Enterprises Inc v Mapp Inc 99 3054 La App 1st Cir 2 808 So Const 01 16 2d 428 431 A motion for summary judgment should be granted only if all the pleadings depositions answers to interrogatories admissions and any affidavits submitted to the trial court show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law LSAC art 966 If the issue before the P C 6 court on the motion for summary judgment is one on which the party bringing the motion will bear the burden of proof at trial the burden of showing that there is no genuine issue of material fact is on the party bringing the motion 2 C 966 RELEVANT LAW See LSA C art P The Louisiana corporate franchise tax is imposed pursuant to LSA R 47 S 601 which during the relevant periods provided A Every domestic corporation and every foreign corporation exercising its charter or qualified to do business or actually doing business in this state or owning or using any part or all of its capital plant or any other property in this state subject to compliance with all other provisions of judgment of the Department had been granted and that the motion for summary judgment of the companies had been denied After this court issued a rule to show cause to the parties noting that the judgment failed to identify the specific relief awarded the trial court signed an amended judgment more clearly setting forth the relief granted 8 The original judgment signed by the trial court only stated that the motion for partial summary 9 The Department originally filed a motion for partial summary judgment believing that the issue of the taxes The Department then filed its motion for attorney fees stating that all issues were before the court Under these circumstances we conclude that all issues in this matter are reviewable under this amount of the taxes was still at issue however the companies did not challenge the amount of the appeal therefore the companies appeal of the denial of its motion for summary judgment is properly before this court 5 law except as otherwise provided for in this Chapter shall pay an annual tax at the rate of 3 for each 1 or major fraction thereof on 00 00 000 the amount of its capital stock surplus undivided profits and borrowed capital determined as hereinafter provided the minimum tax shall not be less than 10 per year in any case The tax levied herein is due and 00 payable on any one or all of the following alternative incidents 1 The qualification to carry on or do business in this state or the actual doing of business within this state in a corporate form The term doing business as used herein shall mean and include each and every act power right privilege or immunity exercised or enjoyed in this state as an incident to or by virtue of the powers and privileges acquired by the nature of such organizations as well as the buying selling or procuring of services or property 2 The exercising of a corporation charter or the continuance of its s charter within this state 3 The owning or using any part or all of its capital plant or other property in this state in a corporate capacity B It is the purpose of this Section to require the payment of this tax to the state of Louisiana by domestic corporations for the right granted by the laws of this state to exist as such an organization and by both domestic and foreign corporations for the enjoyment under the protection of the laws of this state of the powers rights privileges and immunities derived by reason of the corporate form of existence and operation The tax hereby imposed shall be in addition to all other taxes levied by any other statute C 1 As used herein the term domestic corporation shall mean and include all corporations joint stock companies or associations or other business organizations organized under the laws of this state which have privileges powers rights or immunities not possessed by individuals or partnerships 2 The term foreign corporation shall mean and include all such business organizations as hereinbefore described in this Paragraph which are organized under the laws of any other state territory or district or foreign country D The increase in the tax imposed by this Section from one dollar and fifty cents to three dollars for each one thousand dollars or major fraction thereof of capital stock surplus undivided profits and borrowed capital shall not be applicable to the first three hundred thousand dollars of capital stock surplus undivided profits and borrowed capital of each corporation Taxing statutes are to be interpreted liberally in favor of the taxpayer and against the taxing authority See GoudchauxMaison Blanche Inc v Broussard 590 2d So 1159 1161 La 1991 If the statute can reasonably be interpreted more than one way the interpretation less onerous to the taxpayer is to be adopted Louisiana Inc v Kenned Entergy 03 0166 La App 1st Cir 7 859 So 74 79 writ 03 2 2d 6 denied 03 2201 La 11 858 So 430 see also United Gas Corporation v 03 14 2d Fontenot 241 La 564 579 129 So 776 781 1961 2d Furthermore words defining a thing to be taxed should not be extended beyond their clear import Cleco Evangeline LLC v Louisiana Tax Com 01 2162 La 4 n 02 3 813 So 351 355 Absent evidence to the contrary the language of the statute itself 2d must clearly and unambiguously express the intent to apply to the property in question Unless the words imposing the tax are expressly in the statute the tax cannot be imposed Id DISCUSSION On appeal the companies contend that the trial court erred in granting the s Department motion for partial summary judgment finding that the companies were subject to the franchise tax for the relevant periods The companies note that LSA R S Aauthorizes the imposition of the franchise tax o on a corporation and gLly 601 47 l if the corporation undertakes one or more of the enumerated incidents of taxation in Louisiana and does so in a corporate capacity The companies contend that they were not subject to the franchise tax for the relevant periods because they were non resident corporations whose only contacts with Louisiana were through their passive ownership interests as limited partners in Sprint Communications LP a limited partnership that owned property and conducted business in Louisiana The companies insist that this connection is insufficient to impose the franchise tax on them as a matter of law According to the statement of uncontested facts submitted by the companies in support of their motion for summary judgment as well as the pleadings and answers to interrogatories in the record neither company was registered or qualified to do business in Louisiana or engaged in any business activities in Louisiana during the relevant periods Furthermore during the relevant periods neither company 1 rendered any services to or for any affiliate or to or for any other party in Louisiana 2 had any employees independent contractors agents or other representatives in rA Louisiana 3 bought sold or procured any services or property in Louisiana or 4 maintained any bank accounts in Louisiana Finally each company maintained its office and only commercial domicile outside Louisiana where the companies maintained their respective corporate books and records and where all management decisions regarding their respective limited partnership interests in Sprint Communications LP were made and implemented The Department does not appear to dispute any of these facts Instead the Department contends that the companies are subject to the franchise tax based on the actions of other entities The Department emphasizes the fact that the companies are whollyowned subsidiaries of Sprint Corporation and that the companies along with US Telecom Sprint Communications LP general partner acted in unison and with a s common purpose controlled by their common parent According to the Department it is significant for franchise tax purposes that Sprint Corporation chose to carry out its telecommunications business in Louisiana through Sprint Communications LP and that it chose to direct that partnership through the companies and US Telecom which were whollyowned subsidiaries The Department does not provide any examples of how Sprint Corporation directed the activities of Sprint Communications LP or of the companies other than to suggest that they were united in their purpose However unity of purpose does not appear anywhere as an incident of taxation in LSAR 47 Furthermore Sprint S 601 A Corporation US Telecom Sprint Communications LP and the companies are all separate juridical entities under the law 41 12 See LSAC arts 24 and 2801 LSAR C S The Department has provided no Louisiana codal statutory or jurisprudential authority to explain how the actions of these other entities are to be attributed to the companies and nothing in LSA R 47 authorizes any such attribution S 601 The Department also contends that the actions of US Telecom as the general partner for Sprint Communications LP should be attributable to the companies because 10 It is undisputed that any employees provided to Sprint Communications LP were provided by SprintUnited Management Company a whollyowned subsidiary of Sprint Corporation and not by the companies 8 US Telecom carried out its actions on behalf of all partners Thus it appears that the Department is contending that US Telecom has acted as the agent for the companies This argument has no basis in the law As the only general partner US Telecom has the authority to bind the partnership but it has no authority to act as the agent for the limited partners namely the companies See LSAC art 2843 C Accordingly the Department argument that US Telecom actions can be attributed to the s s companies is without merit The Department smain argument in support of its position that the companies are subject to the franchise tax is based primarily on D 301 I 61 which provides its own regulation LAC Thus the mere ownership of property within this state or an interest in property within this state including but not limited to mineral interests and oil payments dependent upon production within Louisiana whether owned directly or by or through a partnership or joint venture or otherwise renders the corporation subject to franchise tax in Louisiana since a portion of its capital is employed in this state Emphasis added It is true that the Secretary of the Department has the authority to prescribe rules and regulations to carry out the purposes of Title 47 of the Louisiana Revised Statutes and such rules and regulations will have the full force and effect of law if promulgated pursuant to the Administrative Procedure Act See LSA R 47 S 1511 However it is wellsettled law in Louisiana that a tax regulation cannot extend the taxing jurisdiction of the statute as taxes are imposed by the legislature not the Department See Chicago Bride Iron Co v Cocreham 317 So 605 612 La 2d 1975 cert denied 424 U 953 96 S 1427 47 L 359 1976 Pensacola S Ct 2d Ed 11 The Department suggests that because Sprint Communications LP is a Delaware partnership Louisiana partnership law is inapplicable to this matter However during the relevant periods Sprint Communications LP was registered to do business in Louisiana therefore it enjoyed the rights privileges and juridical status of a Louisiana partnership in accordance with LSAR 9 S 3422 1 A Delaware law applied only to the organization internal affairs and liability of Sprint Communications LP See LSA R 9 S 3425 Z LSAC arts 2843 and 2844 establish the limits of liability and authority on the limited partners C partners in commendam in limited partnerships Such limited partners like the companies do not participate in the control of the business and do not have the authority to bind the partnership Furthermore the Sprint Communications LP partnership agreement specifically provides that the companies shall have no right or power to take part in the management or control of the partnership or its business and affairs or to act for or bind the partnership in any way 4 Const Co v McNamara 558 So 231 233 34 La 1990 Dow Chemical Co v 2d Traigle 336 So 285 288 La App 1st Cir cert denied 339 So 845 La 1976 2d 2d In light of the above it appears the salient issue is whether this regulation was a reasonable interpretation of the relevant statutory authority setting forth the bases for the imposition of Louisiana corporate franchise tax or was a prohibited expansion of s the scope of the statute See LSAR 47 Under the facts of this case there S 601 A can be no dispute that the incidents of taxation specified in LSAR 47 601 and S 1 A 2 were not present with respect to the companies during the relevant periods Therefore our analysis will focus on the incident of taxation set forth in LSA R S 3 A 601 47 Under the provisions of LSA R 47 the franchise tax is imposed only S 601 3 A on a corporation owning or using any part or all of its capital plant or other property in Louisiana in a corporate capacity No mention is made of the use of capital Indeed LSA R 47 S 601 6 through a partnership or in any other indirect capacity states that the purpose of the franchise tax is to require the payment of the tax by both foreign and domestic corporations for the enjoyment under the protection of the laws of this state of the powers rights privileges and immunities derived by reason of the corporate form of existence and operation Emphasis added Furthermore in interpreting LSA R 47 the Louisiana Supreme Court has stated S 601 The thrust of the statute is to tax not the interstate business done in Louisiana by a foreign corporation but the doing of business in Louisiana in a corporate form Colonial Pipeline Co v A erton 289 So 93 97 La 1974 aff 421 U 100 95 2d d S Ct S 1538 44 L 1 1975 Yet the Department regulation has ignored the clear 2d Ed s wording of the statute and the interpretation of the supreme court and seeks to expand the scope of the specific incident of taxation at issue i LSA R 47 e S 601 3 A Instead of a corporation being subject to the franchise tax simply for owning or using any part or all of its capital plant or other property in this state in a corporate capacity as provided in LSA R 47 the above regulation attempts to S 601 3 A subject a foreign corporation to the franchise tax for the additional incident of owning 10 or using a part of its capital in this state not in a corporate capacity but indirectly through a limited partnership statutory language 13 This is clearly an impermissible expansion of the It is undisputed that the companies as limited partners made various capital contributions to Sprint Communications LP as required by the partnership agreement See also LSA C art 2840 However once those contributions were made the capital belonged to Sprint Communications LP and not to the companies because Sprint Communications LP as a partnership is a separate juridical person distinct from its partners See LSA C art 2801 Therefore the capital that had been owned by the companies was now owned and being used by Sprint Communications LP in Louisiana The companies as limited partners maintained an ownership interest in Sprint Communications LP 14 but the capital itself was no longer owned or used by them thus Under the incident of taxation set forth in LSAR 47 was not applicable S 601 3 A the plain wording of the statute there was no statutory incident of taxation on which to impose the franchise tax and any attempt by the Department to administratively expand the scope of the statute beyond its clear meaning is not permissible 15 See Cleco Evangeline LLC 813 So at 355 Accordingly the trial court erred in granting 2d partial summary judgment in favor of the Department and that portion of the judgment is reversed Moreover we grant summary judgment in favor of the companies The companies have also challenged that portion of the trial court judgment s that found that the assessment of franchise taxes on them was not in violation of the Commerce Clause of the United States Constitution or the Equal Protection or Due restricted to the protection of his interest See LSAC art 2843 Revision Comment 1980 It would C seem illogical to impose a franchise tax on a foreign corporation whose sole contact with Louisiana is 13 In essence the role of a limited partner is that of a passive contributor whose powers are generally through the passive ownership as a limited partner of an interest in a partnership which owns property and does business in Louisiana when the partnership itself is not subject to a franchise tax 14 See LSA C art 473 15 The Department has contended that the companies have improperly challenged the regulation by not that statute merely states that the validity or applicability of a rule may be determined in an action for bringing the challenge in an action for declaratory judgment pursuant to LSAR 49 however S 963 A declaratory judgment in the district court of the parish in which the agency is located As provided by LSA R 1 the word may is permissive not mandatory S 3 11 Process Clauses of the United States and Louisiana Constitutions 16 Courts should not pass on the constitutionality of legislation unless it is essential to the decision of the case or controversy Moreover courts should avoid constitutional rulings when the case can be decided on the basis of nonconstitutional issues Blanchard v State Through Because Parks and Recreation Com 960053 La 5 673 So 1000 1002 n 96 21 2d we have already determined that assessment of the franchise tax on the companies is improper under the language of the statute itself the question of constitutionality is not essential to the determination of the issues before this court Accordingly the issues of constitutionality are pretermitted Nevertheless we will briefly address three cases which the Department has contended are dispositive of the constitutional issues in this matter The three cases are Bridges v Autozone Properties Inc 040814 La 3 900 So 784 05 24 2d Secretary Dept of Revenue State of La v GAP Apparel 040263 La App 1st Inc Cir 6 886 So 459 and Bridges Secretary of Dept of Revenue State v 04 25 2d Geoffrey Inc 071063 La App 1st Cir 2 984 So 115 writ denied 080547 08 8 2d La 4 978 So 370 08 25 2d In Autozone the issue was whether Louisiana had taxing jurisdiction over the dividend income of a nonresident beneficiary based on its investment in a company that did business in Louisiana and received the benefits opportunities and protections that arose as a result thereof Autozone 900 So at 800 2d The supreme court ultimately determined that Louisiana had jurisdiction to tax the dividend income however the court did not discuss the issue of jurisdiction with respect to the franchise tax Therefore the case is inapplicable to the matter before this court The same is true of this court decision in Geoffrey s While the trial court addressed the issue of the franchise tax finding that the Department had established its entitlement to the franchise tax the taxpayer did not assign that ruling as error or 16 The companies properly challenged the constitutionality of LSAR 47 in their petition However S 601 P C art 1880 Vallo v Gayle Oil Co Inc 941238 La 11 646 So 859 864 94 30 2d because they did not seek declaratory relief service of the attorney general was not required See LSA 17 The issuehaveconstitutionality issue was not essential to the trial court ruling therefore the trial court of addressed the also s should not 12 attack the validity of the statute Therefore this court decision addressed only the s issues surrounding the assessment of the corporate income tax and it provides no guidance as to the applicability of the franchise tax in this matter Geoffrey 984 So 2d at 119 n 5 Finally in Gap A are this court addressed a corporate structure in which The Gap Inc had created developed and registered various trademarks trade names and service marks the marks that were used in its various retail stores throughout the United States including those in Louisiana At some point through various transactions The Gap transferred these marks to Gap Apparel which was a wholly owned subsidiary of one of The Gap other subsidiaries Gap Apparel 886 So at s 2d 461 After the marks were transferred Gap Apparel and The Gap entered into an agreement whereby Gap Apparel granted a license to The Gap authorizing The Gap and its affiliates the licensees to use the marks in connection with the manufacture advertising marketing distribution and sale of their products in the United States its states territories andor possessions For the use of the marks the licensees paid Gap Apparel a royalty based on the net sales of the licensed products throughout the area in which they were used The Department contended that Gap Apparel received approximately 11 million from the licensees during the relevant tax periods as 9 royalties for the use of the marks calculated as a percentage of sales in Louisiana Goa Apparel 886 So at 461 62 2d This court ultimately determined that the marks licensed by Gap Apparel had been used in Louisiana in such a way as to become an integral part of the licensees businesses in this state such that the marks had acquired a business situs in this state Thus the court concluded that they were subject to taxation in Louisiana A arel Ga 886 So at 462 2d the franchise tax in any capacity in Geoffrey those facts are not set forth here 13 18 This factual pattern is similar to that found in Geoffrey however because this court did not address These facts are distinguishable from those of the matter currently before this court however In Gap Apparel the marks continued to be owned by Gap Apparel Gap Apparel retained even though they had been licensed for use by others ownership of the marks and received income for their use by others for which it sought to avoid paying taxes Furthermore Gap Apparel itself owned property that was See LSAR 47 In the instant case the S 601 3 A taxes on being used in the state companies are paying income the income they derive from Sprint Communications LP business in this state however unlike Gap Apparel the property s that Sprint Communications LP is using in this state belongs to it alone not to the companies In conclusion these three cases would not be relevant to the matter before the court if the question of constitutionality were at issue The companies have also challenged that part of the trial court judgment s finding that they are required to pay the Department attorney fees pursuant to LSA s S 1512 R 47 However as we have determined that the companies were not required to pay franchise taxes under a clear reading of the statute it follows that the companies are not required to pay attorney fees under the penal provisions of LSA R S 47 1512 Therefore that portion of the judgment of the trial court is reversed In their final assignment of error the companies contend that the trial court erred in striking certain paragraphs of the original affidavit of Mark Beshears dated October 2 2009 Mr Beshears was the Senior Counsel State and Local Tax of Sprint State and Local Tax of Nextel Corporation and he had served as the Vice President the companies during the relevant periods As such he was familiar with the business activities of the companies The trial court first ordered that paragraph 7 of the original affidavit which provided that d the Relevant Periods each Petitioner maintained its only uring commercial domicile exclusively outside of Louisiana be stricken Although the trial court did not provide a reason for striking this paragraph it is presumed that it was stricken because the trial court found it to be a legal conclusion However the issue of commercial domicile was settled as a result of the pleadings when the companies 14 alleged in their petition that they had each maintained their only commercial domicile outside the state of Louisiana and the Department admitted the allegation in its answer The Department never amended its answer therefore the 19 issue of commercial domicile was considered resolved by judicial admission and Mr Beshears statement was no longer a legal conclusion but a statement of fact Thus paragraph 7 of the affidavit should not have been stricken The companies also challenge the trial court ruling regarding paragraphs 9 14 s and 19 of Mr Beshears original affidavit In these paragraphs Mr Beshears asserts that the companies 1 did not own or use any part of their capital plant or other property in Louisiana during the relevant periods 2 did not exercise or continue their respective charters in Louisiana during the relevant periods and 3 did not purposely direct any of their activities toward or into Louisiana during the relevant periods The trial court struck these paragraphs apparently finding that they were impermissible legal conclusions However in his capacity as Vice President State and Local Tax of the companies during the relevant periods Mr Beshears was certainly competent to testify from his personal knowledge of the companies activities 967 See LSAC art P C Clearly as someone involved in the daily operation of the companies Mr Beshears would have personal knowledge of whether the companies directed any of the above activities toward Louisiana during the relevant periods Furthermore the mere fact that Mr Beshears assertions in the affidavit track the incidents of taxation listed in LSAR 47 does not render them impermissible legal conclusions as the S 601 A Department contends rather the statements are simply factual statements based on Mr Beshears personal knowledge and experience Therefore the trial court improperly struck paragraphs 9 14 and 19 from the affidavit The companies contend that the filing of the second Beshears affidavit has rendered the argument in favor of striking paragraphs 22 and 23 of the original 19 See LSA art 1853 C 20 makes no reference to this paragraph Accordingly we will not address this paragraph 15 Although the companies challenge the court ruling regarding paragraph 24 the actual judgment s Beshears affidavit moot Those paragraphs provided information concerning the contents of the Sprint Communications LP partnership agreement and were stricken as hearsay because the actual partnership agreement was not attached However in the second affidavit the partnership agreement was attached and the partnership agreement itself was admitted into the record Therefore the companies contend that there is no longer any need to exclude these paragraphs In fact the Department had challenged paragraphs 22 and 23 even after the attachment of the partnership agreement to the second affidavit on the ground that the partnership agreement itself was the best evidence of its contents agreed and we find no error in this conclusion The trial court The trial court also ordered that the two affidavits filed by the Department be stricken from the record The Department has answered the appeal to challenge the rulings on these affidavits The first affidavit was that of Michael Pearson and was filed by the Department in support of its partial motion for summary judgment At the time he signed the affidavit Mr Pearson was the director of the policy services division of the Department He had held that position for almost two years after being the senior policy consultant for income and franchise taxes in the policy services division for the previous seven years in which there had been no director According to Mr Pearson s affidavit he was very knowledgeable on the issue of the Louisiana corporation franchise tax and he had testified over the years in the Nineteenth Judicial District Court and the Louisiana State Board of Tax Appeals on the issue of the Louisiana corporate income and franchise taxes He does not however make any allegations that he is a lawyer in the affidavit The remainder of his affidavit provides a myriad of legal conclusions allegedly based on Louisiana statutory law and jurisprudence as well as Department policy which legal conclusions support the Department premise that the companies s are subject to the franchise tax Mr Pearson affidavit does not qualify him as an expert and the trial court s 2 The companies have not challenged any portion of the trial court judgment striking various s paragraphs in the second Beshears affidavit Therefore we do not address that affidavit 16 certainly did not accept him as one qualified to render a legal opinion Nothing in his affidavit demonstrates that he is Furthermore as a lay witness Mr Pearson is not qualified to offer an opinion of the kind he attempted to offer in his affidavit See LSA F C art 701 It is also well settled in Louisiana that witnesses may not provide opinions regarding domestic law The testimony of an expert with the attendant right to express opinions and conclusions is proper for the purpose of assisting the court only in those fields in which the court lacks sufficient knowledge to enable it to come to a proper conclusion without such assistance Wilson v Wilson 542 So 568 573 La 2d App 1st Cir 1989 Clesi Inc v Quaglino 137 So 500 503 La App 4th Cir 2d 1962 The domestic law testimony of an expert is not proper as distinguished from foreign law testimony on the theory that the court itself is the expert on domestic law Wilson 542 So at 573 2d Furthermore nothing in Mr Pearson affidavit appears to be based on personal s knowledge as required by LSAC art 967 and the affidavit appears to contain P C A nothing other than his opinions relating to issues of ultimate fact and conclusions of law which are reserved for the trial court determination Accordingly we find that s the trial court was correct in striking this affidavit The final affidavit is that of Anthony Caruso who at the time he signed his affidavit was employed by the Department as a senior revenue agent The affidavit had been submitted by the Department in opposition to the companies motion for summary judgment Mr Caruso claims that the statements in his affidavit are based on the personal knowledge he obtained after conducting an audit of the companies In paragraph 3 of the affidavit Mr Caruso stated that the companies were required to file Louisiana corporate franchise tax returns for the relevant periods In paragraph 14 Mr Caruso stated that the companies through their contributions of capital to Sprint Communications LP which clearly conducted business in Louisiana have engaged in business exercised their respective charters and employed capital in Louisiana In paragraph 15 of the affidavit Mr Caruso stated that the companies are 17 subject to the franchise tax Obviously these statements relate to issues of ultimate fact and conclusions of law which are reserved for the trial court determination and s the trial court was correct in striking paragraphs 3 14 and 15 of the affidavit The remainder of the affidavit contains factual statements such as the amounts of capital contributions the companies made to Sprint Communications LP and other information that Mr Caruso could have obtained in performing his audit based on This information was his personal knowledge and was properly contained in the affidavit Therefore paragraphs 1 2 4 5 6 7 8 9 10 11 12 and 13 should not have been stricken and the trial court erred in this regard Finally in its answer to the appeal the Department has also requested that it be awarded additional attorney fees on appeal However as we have determined that the companies were not required to pay a franchise tax under the facts of this case no attorney fees should have been assessed against them pursuant to LSAR 47 S 1512 and no additional attorney fees are owed on appeal CONCLUSION For the foregoing reasons we reverse that portion of the trial court judgment that granted the partial summary judgment in favor of Cynthia Bridges Secretary of the Louisiana Department of Revenue and render summary judgment in favor of UTELCOM Inc and UCOM Inc finding that they are not subject to the Louisiana corporation franchise tax for the taxable periods ending December 31 2001 December 31 2002 and December 31 2003 UTELCOM Inc and UCOM Inc are further entitled to a refund of the amount paid under protest 276 plus statutory interest We 40 518 further reverse that portion of the judgment ordering UTELCOM Inc and UCOM Inc to pay attorney fees pursuant to LSA R 47 1512 S We affirm that portion of the judgment striking paragraphs 22 and 23 of the original affidavit of Mark Beshears However we reverse that portion of the trial court judgment striking paragraphs 7 9 s 14 and 19 of the original affidavit of Mark Beshears We further affirm that portion of the trial court judgment striking the affidavit of Mark Pearson in its s entirety Finally we affirm that portion of the trial court judgment striking paragraphs 3 14 and 15 of s 18 the affidavit of Anthony Caruso however we reverse that portion of the judgment striking paragraphs 1 2 4 5 6 7 8 9 10 11 12 and 13 In all other respects the judgment of the trial court is affirmed All costs of this appeal in the amount of 82 529 2 are assessed to Cynthia Bridges in her capacity as Secretary of the Louisiana Department of Revenue AFFIRMED IN PART REVERSED IN PART AND RENDERED 19