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Inc. v. City of Northport

Alabama Court of Civil Appeals

May 12, 2017

84 Lumber Company, Inc.
v.
City of Northport 84 Lumber Company, Inc.
v.
Tuscaloosa County Special Tax Board 84 Lumber Company, Inc.
v.
City of Northport and City of Tuscaloosa 84 Lumber Company, Inc.
v.
City of Northport and City of Tuscaloosa 84 Lumber Company, Inc.
v.
City of Tuscaloosa and Tuscaloosa County Special Tax Board

         Appeal from Tuscaloosa Circuit Court (CV-07-1122), (CV-08-900078), (CV-08-900285), (CV-09-900384), (CV-13-900351)

          MOORE, Judge.

         In these consolidated appeals, 84 Lumber Company, Inc., appeals from a summary judgment entered by the Tuscaloosa Circuit Court in favor of the City of Northport, the Tuscaloosa County Special Tax Board, and the City of Tuscaloosa (hereinafter referred to collectively as "the taxing authorities") in five separate circuit-court actions. We dismiss appeal number 2150876 and appeal number 2150878. We also dismiss the City of Northport as a party to appeal number 2150879. We reverse the circuit court's judgment in appeal numbers 2150877, 2150879, and 2150880.

         Procedural Background

         Between 2008 and 2013, 84 Lumber filed five separate circuit-court actions, styled as appeals, from assessments of taxes, interest, and penalties entered by the taxing authorities. In the first action (case number CV-07-1122), 84 Lumber alleged that the City of Northport had improperly denied a petition for a full refund of sales taxes that 84 Lumber had erroneously remitted to the City of Northport and that the City of Northport owed interest on the refund amount it had paid to 84 Lumber more than 60 days after its petition had been filed. In the other four actions (case numbers CV-08-900078, CV-08-900285, CV-09-900384, and CV-13-900351), 84 Lumber maintained that the taxing authorities had entered a series of tax assessments against 84 Lumber based on an improper "sampling" method by which the taxing authorities had audited three months of 84 Lumber's sales invoices and extrapolated from those months the sales taxes due for each assessment period. 84 Lumber further maintained that the taxing authorities had also improperly assessed interest and penalties against 84 Lumber in the same assessments.

         The circuit court consolidated the actions for purposes of discovery. On August 26, 2015, the taxing authorities filed a joint motion for a summary judgment, along with evidentiary materials in support thereof. On October 29, 2015, 84 Lumber filed a response to the summary-judgment motion, along with evidentiary materials in support thereof. After a hearing, the circuit court entered a summary judgment on February 16, 2016, in favor of the taxing authorities. On March 16, 2016, 84 Lumber filed a postjudgment motion, which was denied by operation of law on June 14, 2016. See Rule 59.1, Ala. R. Civ. P. On July 7, 2016, 84 Lumber filed its notices of appeal to the Alabama Supreme Court; that court subsequently transferred the appeals to this court. See Ala. Code 1975, § 12-2-7. This court consolidated the appeals ex mero motu and held oral argument on March 14, 2017.

         Factual Background

         The parties presented the following evidence in support of, and in opposition to, the joint motion for a summary judgment. The taxing authorities have established a 5% sales tax on goods sold within Tuscaloosa County, which is divided among the county and municipalities within the county depending upon the point of delivery of the goods. If the goods are delivered to a customer within the corporate limits of either the City of Northport or the City of Tuscaloosa, the seller should remit a 2% sales tax to the appropriate municipality and a 3% sales tax to the Tuscaloosa County Special Tax Board, which collects taxes for the county. See Act No. 56, Local Acts 1953. If the goods are delivered within the police jurisdiction of the City of Northport or the City of Tuscaloosa but outside the city's limits, the seller should remit a 1% sales tax to the appropriate municipality and a 4% sales tax to the Tuscaloosa County Special Tax Board. If the goods are delivered outside any corporate limits and outside any municipal police jurisdiction, the seller should remit the entire 5% sales tax to the Tuscaloosa County Special Tax Board.[1]

         84 Lumber operates a lumber store within the corporate limits of the City of Northport. 84 Lumber routinely delivers goods sold in its store to various job sites in Tuscaloosa County, some within the corporate limits or police jurisdictions of the City of Northport and the City of Tuscaloosa and some outside those areas. 84 Lumber records the delivery address on its sales invoices; however, the invoices do not identify the taxing jurisdiction and do not specifically state whether the delivery occurred within or outside the corporate limits or police jurisdictions of the City of Northport or the City of Tuscaloosa. 84 Lumber has historically remitted taxes to the taxing authorities based on the zip code ("the zip code method") of the delivery address.

          The taxing authorities have audited 84 Lumber at least three times since the late 1990s. On each occasion, the taxing authorities discovered that, by using the zip code method, 84 Lumber had remitted sales taxes to the incorrect taxing authority. The taxing authorities explained that their taxing jurisdictions do not correspond to zip code areas. The taxing authorities offered assistance to 84 Lumber to enable 84 Lumber to identify the correct taxing jurisdiction for each sale. 84 Lumber had attempted to correct the problem, but, during the periods at issue, it had not successfully implemented a system to assure that it remitted taxes to the correct taxing authority.

         In regard to the sales-tax assessments at issue in the five civil actions before the circuit court, the taxing authorities determined the amounts due to each of the taxing authorities by a sampling method. The taxing authorities randomly selected three months out of each audit period, excluding winter months, reviewed the invoices for that sample period, determined the point of delivery for each sale within the sample period, ascertained the proper taxing jurisdiction, established the percentage of the sales applicable to each taxing jurisdiction, and extrapolated from that information the sales taxes owed to each taxing authority for the entire audit period. The audits generally indicated that 84 Lumber had paid the correct amount of sales taxes but that 84 Lumber had overpaid the City of Northport and had underpaid the City of Tuscaloosa and the Tuscaloosa County Special Tax Board. The City of Tuscaloosa and the Tuscaloosa County Special Tax Board assessed interest and penalties against 84 Lumber as a result of the claimed underpayments.

         Discussion

          I. Appeal Number 2150876

         In the summary judgment, the circuit court determined that the City of Northport had properly limited its refund of sales taxes to 36 months, but the circuit court did not address 84 Lumber's claim that the City of Northport owed interest on the refund amount. The record shows that the City of Northport did not move for a summary judgment on that claim.

"'[I]t is well settled that this Court may consider, ex mero motu, whether a judgment or order is sufficiently final to support an appeal.' Natures Way Marine, LLC v. Dunhill Entities, LP, 63 So.3d 615, 618 (Ala. 2010).
"'"Ordinarily, an appeal can be brought only from a final judgment. Ala. Code 1975, § 12-22-2. If a case involves multiple claims or multiple parties, an order is generally not final unless it disposes of all claims as to all parties. Rule 54(b), Ala. R. Civ. P. However, when an action contains more than one claim for relief, Rule 54(b) allows the court to direct the entry of a final judgment as to one or more of the claims, if it makes the express determination that there is no just reason for delay."'
"North Alabama Elec. Coop. v. New Hope Tel. Coop., 7 So.3d 342, 344-45 (Ala. 2008) (quoting Grantham v. Vanderzyl, 802 So.2d 1077, 1079-80 (Ala. 2001))."

Patterson v. Jai Maatadee, Inc., 131 So.3d 607, 609 (Ala. 2013). The circuit court did not dispose of 84 Lumber's claim for interest, so it did not conclusively adjudicate all the claims in case number CV-07-1122, from which appeal number 2150876 arises. Therefore, we dismiss appeal number 2150876 because it does not lie from a final judgment.[2]

          II. Appeal Number 2150878

         Appeal number 2150878 arises from 84 Lumber's appeal of a tax assessment entered by the City of Tuscaloosa in September 2007, designated as case number CV-08-900285. Although 84 Lumber alleged that the assessment was a final assessment, it is undisputed that the City of Tuscaloosa made only a preliminary assessment. Section 40-2A-7(b)(5)b.1., Ala. Code 1975, a part of the Alabama Taxpayers' Bill of Rights, Ala. Code 1975, § 40-2A-1 et seq., which applies to tax assessments and tax-collection efforts by local taxing authorities pursuant to the Local Tax Simplification Act of 1998, Act No. 98-192, Ala. Acts 1998, provides a taxpayer with the right to appeal only from a final assessment. Because 84 Lumber did not have a right to appeal the preliminary assessment, the circuit court did not acquire subject-matter jurisdiction over the appeal and its orders relating to that appeal, which included an order adding the City of Northport as a party to the appeal, are void. See generally Alabama Dep't of Revenue v. Morton, 892 So.2d 940 (Ala. Civ. App. 2004). A void judgment will not support an appeal, so we dismiss appeal number 2150878, albeit with instructions to the circuit court to vacate its orders in case number CV-08-900285. Id.

         III. Appeal Numbers 2150877, 2150879, and 2150880

         The remaining appeals arise out of the same summary judgment, which was also entered by the circuit court in case numbers CV-08-900078, CV-09-900384, and CV-13-900351, respectively. In that summary judgment, the circuit court determined in those three civil actions that the taxing authorities had properly used the sampling method to correctly assess the sales taxes due and had properly assessed interest and penalties against 84 Lumber for incorrectly remitting the sales taxes. 84 Lumber argues that the circuit court erred in both respects.

         Before proceeding to discuss the merits of the appeals, we first dismiss the City of Northport as a party to appeal number 2150879. The City of Northport was never joined as a party in case number CV-09-900384 from which appeal number 2150879 arises, and 84 Lumber admits that the City of Northport was added as an appellee in appeal number 2150879 by mistake. We, therefore, grant the City of Northport's motion to dismiss appeal number 2150879 as to the City of ...


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