Justia Tax Law Opinion Summaries

Two petitions for a writ of mandamus came before the Supreme Court. Both sought review of orders that found plaintiffs lacked of standing and, in turn, found the trial courts lacked subject-matter jurisdiction. In case no. 1111567, U.S. Bank National Association ("U.S. Bank"), sought a writ to require the Walker Circuit Court to dismiss an action filed by Walker County. In case no. 1111370, MERSCORP, Inc. ("MERSCORP"), and Mortgage Electronic Registration Systems, Inc. ("MERS") sought a writ to require the Barbour Circuit Court to dismiss an action filed by Barbour Probate Judge Nancy Robertson. Upon careful consideration of the underlying trial court cases, the Supreme Court concluded that these cases did not fall within the subject-matter-jurisdiction exception to the general rule that the Supreme Court would not engage in mandamus review of a trial court's denial of a motion to dismiss. The Court therefore denied the request for mandamus relief in both of the cases. View "Robertson v. MERSCORP, Inc." on Justia Law

Ann Whitty, Tratillia McCall, and other class-action plaintiffs filed suit against Montgomery County and Janet Buskey (in her capacity as Montgomery County Revenue Commissioner. Plaintiffs appealed the dismissal of their case by the Montgomery Circuit Court. Whitty and McCall, on behalf of themselves and a purported class of similarly situated property owners, filed suit seeking class certification of Montgomery County property owners whose properties were sold because of delinquent ad valorem taxes, where the sales produced an excess over the taxes, interest, penalties and costs due. Following discovery, a question of standing arose with regard to the class representatives. The County and the revenue commissioner moved to dismiss and/or to strike amended complaints, arguing that Whitty and McCall lacked "standing" to pursue the claims in their original complaint and, therefore, that the trial court lacked subject-matter jurisdiction over the action at its outset. Upon review, the Supreme Court affirmed the trial court's dismissal of the complaint insofar as it related to the claims alleged by Whitty and McCall. However the Court reversed the trial court's judgment insofar as it included a dismissal of the claims of the additional plaintiffs added by amendments to the original complaint. The trial court was not without subject-matter jurisdiction over claims originally alleged by McCall; therefore, the various amendments to the complaint adding additional plaintiffs were viable. View "Whitty et al. v. Montgomery County et al. " on Justia Law

Cocina Superior, LLC owned a restaurant in Birmingham that sold alcoholic beverages to the public. Cocina appealed two final assessments of the Jefferson County Department of Revenue. The assessments reflected that, for the years 2008-2010, Cocina owed money pursuant to the "Alabama Liquor Tax." The parties filed cross-motions for a summary judgment at the circuit court, agreeing that there were no disputed issues of fact and that the issue to be resolved was a question of law. Cocina argued that the applicable legislation called for the imposition of a tax on the gross receipts derived from the sale of "alcoholic beverages," but, it said, the Department's assessments were erroneously based upon the taxpayer's gross sales of mixed drinks that were composed of both alcoholic beverages and nonalcoholic mixing agents such as colas, sodas, and juices. Cocina asserted that its internal policy and procedure dictated that each mixed drink contain 1.25 ounces of alcohol, and, it maintained, the taxes were due only on the alcohol portion of the mixed drinks, exclusive of any nonalcoholic mixing agent. Cocina also argued that the Department's assessments denied it due process and equal protection of the law because its restaurant was a more upscale establishment with higher overhead expenses than many other facilities that sell alcoholic beverages and was therefore required to charge higher prices and, consequently, pay more taxes for the mixed drinks it sold. Upon review, the Supreme Court concluded that the circuit court correctly held that the plain meaning of "alcoholic beverage" was a beverage containing alcohol, and that the Department's assessments did not violate the restaurant's right to due process or equal protection of the law. View "Cocina Superior, LLC v. Jefferson County Dept. of Revenue " on Justia Law

One petition for the writ of mandamus and three appeals were brought before the Supreme Court to challenge a judgment of the Montgomery Circuit Court awarding Hugh McInnish $196,625 in attorney fees and costs in his action against: (1) the Governor of the State of Alabama, (2) the State finance director, (3) the State comptroller, and (4) the State treasurer, all in their official capacities. The underlying case involved a challenge to the constitutionality of the community-services grant-making process set forth in Ala. Code 1975, section 29-2-123. There, the Court held that "section 29-2-123, which authorizes a permanent joint legislative committee to award community-services grants, [as well as that portion of the annual education-appropriations act] by which those grants are funded," violated the separation-of-powers provisions of the Alabama Constitution of 1901, 925 So. 2d at 188, and the Court reversed the trial court's judgment and remanded the case. Subsequently, McInnish filed a series of motions in the trial court, seeking "an award of attorney fees, reasonable expenses, and costs against the [State officials]." He also sought an order declaring that he was "a prevailing party, that this litigation provided a common benefit to all taxpayers of the state of Alabama, and that the amount that was prohibited from being disbursed illegally was in an amount of approximately $13.4 million." The State officials opposed McInnish's motions, arguing that "[t]he clear holding in Ex parte Town of Lowndesboro[, 950 So. 2d 1203 (Ala. 2006),] is that section 14 of the Alabama Constitution prohibits the awarding of attorney fees and expenses in any state court action against the State of Alabama or against state officials in their official capacities." The trial court entered a judgment awarding "counsel for Plaintiff McInnish a judgment for attorney's fees and costs in the amount of $196,625.00 to be paid by the [State officials]." Upon review, the Supreme Court held that section 14 bars an award of attorney fees and costs even if a plaintiff has prevailed on a claim against State officials in their official capacities for a violation of the State constitution that results in preservation of significant funds in the State treasury. The trial court lacked authority to award such attorney fees and costs. Consequently, the judgment was reversed. View "McInnish v. Bentley " on Justia Law

Appellants in this case were nine Alabama municipalities and the Birmingham-Jefferson Civic Center Authority appealed the grant of summary judgment entered in favor of Appellees, sixteen online travel service companies and related entities (the "OTCs"). The issue was whether the OTCs were liable for paying the municipalities a lodgings tax under the local lodgings-tax ordinances of the respective municipal plaintiffs. After considering the record in this case, the briefs of the parties, and the trial court's order, the Supreme Court agreed with the trial court's reasoning in its summary judgment order, and therefore affirmed the judgment in favor of the OTCs. View "City of Birmingham v. Orbitz, LLC." on Justia Law

Tellabs Operations, Inc. appealed an administrative agency's decision in its taxpayer's refund action from the circuit court. Tellabs unsuccessfully petitioned for a refund of allegedly overpaid sales taxes to the City of Bessemer. The case was originally filed in Montgomery Circuit Court. Bessemer filed a motion to dismiss, or in the alternative, to change venue to Jefferson Circuit Court. Without holding a hearing on the motion, the circuit court transferred the appeal to Jefferson Circuit Court. In its motion for reconsideration, Tellabs argued the Montgomery Court erred in transferring the appeal. The court responded that it had lost jurisdiction, and Tellabs' only remedy was to petition the Supreme Court. Upon review of the circuit court records, the Supreme Court concluded that the Montgomery Circuit Court erred in transferring the appeal to the Jefferson Court. The Supreme Court vacated the transfer order and remanded the case for further proceedings in Montgomery Circuit Court.

First Union National Bank of Florida (First Union) appealed a judgment in favor of the Lee County Commission (Commission) and Philip Summers. Mr. Summers executed a mortgage on property he owned within the County on which he built a summer home. The home was ultimately subject to a tax sale by the County. The trustee for Mid-State Trust IV sued the Commission and Mr. Summers in 2009 seeking the excess redemption proceeds from the tax sale of the Summers property. The trustee later filed a motion to substitute First Union as the real party in interest. The trial court eventually entered a judgment finding that Mr. Summers was entitled to the excess funds from the tax sale because he was the last "owner" as defined by state law against whom the taxes were assessed. Upon careful consideration of the trial court’s record and the applicable legal authority, the Supreme Court affirmed the lower court’s decision.