United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT February 16, 2005
Charles R. Fulbruge III
Clerk
No. 04-60296
In the Matter of: SUPERIOR BOAT WORKS INC.
Debtor
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SUPERIOR BOAT WORKS INC.,
Appellant,
versus
MISSISSIPPI STATE TAX COMMISSION,
Appellee.
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Appeal from the United States District Court
for the Northern District of Mississippi
(4:02-CV-120)
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Before WIENER, BARKSDALE, AND DENNIS, Circuit Judges.
PER CURIAM:*
Appellant Superior Boat Works, Inc. (“Superior”) appeals the
district court’s reversal of the bankruptcy court’s holding that
the transaction between Superior and a third party, Lady Luck
Mississippi, Inc. (“Lady Luck”), was, in effect, non-taxable. As
we disagree with the district court’s reversal of the bankruptcy
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
court’s order, we reverse the ruling of the district court and
reinstate the judgment of the bankruptcy court.
I. Facts and Proceedings
Lady Luck and Superior entered into a contract in which
Superior agreed to perform repair and construction work in
Greenville, Mississippi on a barge owned at all times by Lady Luck.
The contract required Superior to transform the barge into a
floating gaming vessel, the LADY LUCK I. After Superior delivered
the LADY LUCK I to Lady Luck in Natchez, Mississippi, Superior
filed for relief under Chapter 11 of the United States Bankruptcy
Code. Appellee Mississippi State Tax Commission (“MSTC”) filed a
proof of claim for taxes due on the transaction between Superior
and Lady Luck. The MSTC asserted that Superior owed either (1)
retail sales tax under Mississippi Code Annotated § 27-65-17,1 or
(2) contractor’s sales tax under Mississippi Code Annotated § 27-
65-21.2
1
Section 27-65-17 provides:
Upon every person engaging or continuing in this state
in the business of selling any tangible personal
property whatsoever there is hereby levied, assessed
and shall be collected a tax equal to seven percent
(7%) of the gross proceeds of the retail sales of the
business, except as otherwise provided herein.
MISS. CODE. ANN. § 27-65-17.
2
Section 27-65-21 provides:
Upon every person engaging or continuing in this state
in the business of contracting or performing a contract
or engaging in any of the activities, or similar
activities, listed below for a price, commission, fee
or wage, there is hereby levied, assessed and shall be
collected a tax equal to three and one-half percent (3-
2
The bankruptcy court held that Section 27-65-21, the
contractor’s tax provision, did not apply to the transaction
between Superior and Lady Luck because the LADY LUCK I remained
tangible personal property, specifically, a floating gaming vessel,
at the time that Superior re-delivered it to Lady Luck. The
bankruptcy court further held that, even though the transaction was
taxable under Section 27-65-17, the retail sales tax provision, the
transaction was exempt under Section 27-65-101(1)(c) from any
retail sales tax.3 In effect, the bankruptcy court ruled that the
transaction between Superior and Lady Luck was exempt from either
tax.
The MSTC appealed the bankruptcy court’s order to the district
court. The district court reversed the bankruptcy court’s
1/2 %) of the total contract price or compensation
received, including all charges related to the contract
such as finance charges and late charges, from
constructing, building, erecting, repairing, grading,
excavating, drilling, exploring, testing or adding to
any building, . . . any other improvement or structure
or any part thereof when the compensation received
exceeds . . . $10,000. Such activities shall not
include constructing, repairing or adding to property
which retains its identity as personal property.
MISS. CODE ANN. § 27-65-21(a)(i) (emphasis added).
3
This exemption provides:
The tax levied by this chapter shall not apply to the
following:
. . .
The gross proceeds of sales of dry docks, offshore
drilling equipment for use in oil exploitation or
production, vessels or barges of fifty (50) tons
displacement and over, when sold by the manufacturer or
builder thereof.
MISS. CODE ANN. § 27-65-101(1)(c).
3
determination that the LADY LUCK I remained tangible personal
property. Accordingly, it held that Section 27-65-21’s
contractor’s sales tax provision applied to the transaction. The
district court based its conclusion on the following: (1) The
contract between the parties required delivery of a “permanently
moored vessel;” (2) Superior or its agents moored the LADY LUCK I
to the bank of the Mississippi River; and (3) when Superior moored
the LADY LUCK I, it became an extension of the land. The district
court expressed agreement, however, with the bankruptcy court’s
ruling that, if Section 27-65-17’s retail sales tax provision had
applied, the exemption in Section 27-65-101(1)(c) would have
exempted the transaction from retail sales tax. Superior appeals
the judgment of the district court to the extent that it reversed
the bankruptcy court.4
II. Analysis
We review the decision of a district court, sitting as an
appellate court, by applying the same standards of review to the
bankruptcy court's findings of fact and conclusions of law as
4
The MSTC does not cross-appeal the district court’s and
the bankruptcy court’s holdings that Section 27-65-101(1)(c)
exempts this transaction from the retail sales tax provision in
Section 27-65-17. The MSTC has thus waived its right to contest
this ruling. See, e.g., Marts v. Hines, 117 F.3d 1504, 1508-09
(5th Cir. 1997) (en banc) (“In the absence of a cross-appeal, an
appellee cannot attack a [district court’s] decree with a view
either to enlarging his own rights thereunder or of lessening the
rights of his adversary.” (quoting Morley Constr. Co. v. Maryland
Cas. Co., 300 U.S. 185, 192 (1937) (quotations omitted)).
4
applied by the district court.5 A bankruptcy court’s findings of
facts are reviewed for clear error and its conclusions of law de
novo.6 Under the clearly erroneous standard, we will reverse only
if, on the entire record, we are left with the definite and firm
conviction that a mistake has been made.7 When a factual finding
is premised on an improper legal standard or a misapplication of a
proper legal standard, we review such a finding de novo.8
In all three courts, the parties have heatedly disputed the
facts surrounding the mooring of the LADY LUCK I and its identity
as a vessel.9 The parties’ focus on these disputes is misplaced
and does not detract from the undeniable legal conclusion that,
irrespective of (1) whether the LADY LUCK I was a vessel, (2) who
5
See Carrieri v. Jobs.com Inc., 393 F.3d 508, 517 (5th Cir.
2004) (citing United States Dep’t of Educ. v. Gerhardt (In re
Gerhardt), 348 F.3d 89, 91 (5th Cir. 2003)).
6
Id. (citing Williams v. Int’l Bhd. of Elec. Workers, Local
520 (In re Williams), 337 F.3d 504, 508 (5th Cir. 2003)).
7
Id. (quoting Walker v. Cadle Co. (In re Walker), 51 F.3d
562, 565 (5th Cir. 1995)) (quotations omitted).
8
Id. (citing In re Missionary Baptist Found. of Am., Inc.,
712 F.2d 206, 209 (5th Cir. 1983)).
9
We need not and do not reach these arguments because we
hold that the LADY LUCK I has remained tangible personal property
at all pertinent times. In any event, these arguments miss the
mark. The parties’ reliance on cases such as Pavone v.
Mississippi Riverboat Amusement Corp., 52 F.3d 560 (5th Cir.
1995), and King v. Grand Casinoe of Mississippi, Inc., 697 So. 2d
439, 442 (Miss. 1997), is misplaced. In Pavone and King, for
example, the courts treated whether a floating gaming casino was
a vessel for purposes of the Jones Act and the general maritime
law, not for purposes of Mississippi state tax law or any other
purpose.
5
moored it to the bank, or (3) when it was moored, the LADY LUCK I
never lost its identity as tangible personal property.
Consequently, the transaction between Superior and Lady Luck is not
taxable under Section 27-65-21, the contractor’s tax provision.
Whether we apply Mississippi state law on fixtures or improvements10
or the Mississippi courts’ judicial construction of the terms “real
property” and “personal property,”11 we inevitably reach the
ultimate conclusion that nothing in the record demonstrates that
the LADY LUCK I has ever lost its identity as tangible personal
property.
The parties do not dispute that the LADY LUCK I began as
tangible personal property. The LADY LUCK I is not land; neither
is an ownership interest in her an interest in land: The river
flows between the LADY LUCK I and the bank; the gangways are the
only means of ingress and egress to and from the bank; it rises and
falls with the river; the utility lines, mooring lines, and anchors
are easily detachable from the bank; it can be unhooked from the
bank, moved elsewhere, and re-hooked without any damage to itself
10
See, e.g., Motorola Communications & Elecs., Inc. v.
Dale, 655 F.2d 771, 773 (5th Cir. 1982) (citing Richardson v.
Borden, 42 Miss. 71, 75-76 (Miss. 1868)) (describing Mississippi
law on fixtures); Bondafoam v. Cook Constr. Co., Inc., 539 So. 2d
655, 658 (Miss. 1988) (same); Ziller v. Atkins Motel Co., 244 So.
2d 409, 411 (Miss. 1971) (same).
11
See Watson v. Caffery, 109 So. 2d 862, 866 (Miss. 1959)
(holding that “[t]he term ‘personal property’ in its broadest
legal signification includes everything the subject of ownership
not being land or any interest in land . . . .”).
6
or the land. The bankruptcy court correctly classified the LADY
LUCK I as tangible personal property, and the district court erred
when it reversed that court.
III. Conclusion
We hold as a matter of law that at all pertinent times, the
LADY LUCK I was tangible personal property for purposes of taxation
under Mississippi law. As such, it was not subject to the
contractor’s sales tax, but was subject only to the retail sales
tax, from which the transaction between Superior and Lady Luck was
exempt under the provisions of Mississippi Code Annotated § 27-65-
101(1)(c). We therefore reverse the district court and reinstate
the judgment of the bankruptcy court.12
REVERSED; BANKRUPTCY JUDGMENT REINSTATED.
12
We also note that this issue will not arise again. The
Mississippi legislature has enacted Section 27-65-18, which
provides for a three and a half per cent tax on the gross
proceeds of sales and construction of floating structures. See
MISS. CODE ANN. § 27-65-18.
7