Aeg Processing Ctr. No. 58, Inc. v. S.D. Dep't of Revenue & Regulation

• Decision Date: 16 October 2013
• Docket Number: No. 26597.,26597.
• Citation: 2013 S.D. 75,838 N.W.2d 843
• Parties: AEG PROCESSING CENTER NO. 58, INC., Appellant, v. SOUTH DAKOTA DEPARTMENT OF REVENUE AND REGULATION, Appellee.
• Court: South Dakota Supreme Court

838 N.W.2d 843

2013 S.D. 75

AEG PROCESSING CENTER NO. 58, INC., Appellant,

v.SOUTH DAKOTA DEPARTMENT OF REVENUE AND REGULATION, Appellee.

No. 26597.

Supreme Court of South Dakota.

Considered on Briefs Aug. 27, 2013.

Decided Oct. 16, 2013.

Michael D. Bornitz, Joseph M. Dylla of Cutler & Donahoe, LLP, Sioux Falls, South Dakota, Jeffrey A. Silver of AEG Processing Center No. 58, Inc., Omaha, Nebraska, Attorneys for appellant.

Rosa Yaeger of South Dakota Department of Revenue and Regulation, Pierre, South Dakota, Attorneys for appellee.

KONENKAMP, Justice.

[¶ 1.] We review a circuit court's dismissal of tax assessment appeal for lack of jurisdiction under SDCL 10–59–9 and SDCL 1–26–31.

Background

[¶ 2.] On September 10, 2010, the South Dakota Department of Revenue and Regulation issued AEG Processing Center No. 58, Inc. a jeopardy assessment alleging unpaid sales tax, a penalty, and interest due for the reporting period of September 2007 through June 2010. AEG requested an administrative appeal under SDCL 10–59–9, and the parties submitted the matter to a hearing examiner on stipulated facts.

[¶ 3.] On September 5, 2012, the hearing examiner entered findings of fact, conclusions of law, and a proposed decision finding AEG liable for a jeopardy assessment of $84,618.12. The Secretary of Revenue adopted the proposed decision. AEG was served with notice of entry of final decision on September 17, 2012.

[¶ 4.] AEG appealed the Secretary's final decision to the Sixth Judicial Circuit on October 12, 2012. SDCL 1–26–31. The notice of appeal was filed on October 15, 2012. AEG did not file a bond or pay the amounts affirmed by the Secretary before commencing the appeal or within the thirty-day window for filing an appeal. AEG posted a bond in the amount of the assessment on October 26, 2012, but it admits that the bond was filed after the notice of appeal and outside the thirty-day window for filing a notice of appeal.

[¶ 5.] On October 12, 2012, the same day AEG appealed the Secretary's final decision, AEG contacted the Department to discuss stipulating to remand the case to the office of hearing examiners to take additional evidence under SDCL 1–26–34.¹ The Department indicated it would consider the request. On October 22, 2012, AEG again contacted the Department, but the Department indicated that it would not stipulate to a remand. The next day, the Department informed AEG that it would be filing a motion to dismiss under SDCL 10–59–9.

[¶ 6.] The Department moved to dismiss for lack of appellate jurisdiction arguing that AEG's failure to pay the amounts affirmed by the Secretary or file a bond before commencing its judicial appeal violated the condition precedent required by SDCL 10–59–9, and therefore, resulted in the failure to preserve jurisdiction in the circuit court. Agreeing, the circuit court dismissed.

[¶ 7.] On appeal, we address the following three issues: (1) whether AEG's failure either to pay the amounts affirmed by the Secretary or obtain an appeal bond required by SDCL 10–59–9, within the thirty-day time period for filing its appeal set out in SDCL 1–26–31 is jurisdictionally fatal to its appeal; (2) whether AEG substantially complied with SDCL 10–59–9 when it posted its bond nine days after the expiration of the thirty-day time period for filing its appeal; and (3) whether the doctrine of equitable tolling should apply to the ten-day time frame when AEG was awaiting the Department's reply on whether it would stipulate to a remand.²

Analysis and Decision

1. Failure to pay ordered amount or file bond.

[¶ 8.] In administrative appeals, a circuit court's appellate jurisdiction depends on compliance with statutory conditions precedent. Schreifels v. Kottke Trucking, 2001 S.D. 90, ¶ 9, 631 N.W.2d 186, 188 (quoting Claggett v. Dep't of Revenue, State of S.D., 464 N.W.2d 212, 214 (S.D.1990)). A failure to comply with such conditions precedent deprives the circuit court of appellate jurisdiction. Id. (citing Claggett, 464 N.W.2d at 214).

[¶ 9.] When the Secretary accepts the hearing examiner's proposed decision, an appeal must be taken within thirty days from notice of the Secretary's final decision. SDCL 10–59–9; ³SDCL 1–26–31.⁴ Further, the appeal cannot be taken unless the amount ordered to be paid by the Secretary is either paid or a bond is filed to insure payment of the ordered amount. SDCL 10–59–9.

[¶ 10.] We addressed the condition precedent in SDCL 10–59–9 under similar facts in Claggett. There, the taxpayer appealed the Department's decision to the circuit court within thirty days of the Department's notice of final decision. 464 N.W.2d at 213. But the taxpayer failed to pay the amount assessed or post a bond. More than seventy days after the Department's final decision, the taxpayer paid the tax deficiency. The Department moved to dismiss, but the circuit court denied the motion. We reversed and held that “the circuit court's failure to dismiss [the taxpayer's] appeal for lack of compliance with SDCL 10–59–9 was error.” Id. at 214. We wrote that “only the payment of the tax or the posting of a bond prior to commencing judicial appeal within the thirty-day window after the Department's notice of final decision as provided in SDCL 1–26–31 could have preserved the appellate jurisdiction of the circuit court.” Id.

[¶ 11.] AEG acted similarly to the taxpayer in Claggett. AEG did not pay the amount assessed nor did it post a bond before commencing its appeal as required by SDCL 10–59–9. Although AEG, like the taxpayer in Claggett, remedied its failure to pay, its failure to do so within the thirty-day window is fatal to its appeal.

[¶ 12.] Further, the Legislature has not changed the condition precedent language of SDCL 10–59–9 since Claggettwas decided in 1990. “We presume the Legislature acts with knowledge of our judicial decisions.” Sanford v. Sanford, 2005 S.D. 34, ¶ 19, 694 N.W.2d 283, 289 (citation omitted). In fact, on three separate occasions since Claggett, the Legislature has made other amendments to SDCL 10–59–9 without addressing this condition precedent. See 1992 S.D. Sess. Laws 161 (allowing amended statement of facts and errors of law to be made prior to the hearing and mandating additional service requirements); 2001 S.D. Sess. Laws 112–13 (adding requirement that Secretary must accept hearing examiner's decision before payment of assessment or bond is required and adding that no payment of assessment or bond is required if Secretary rejects or modifies hearing examiner's decision); 2008 S.D. Sess. Laws 192 (changing the amount of time a taxpayer has to file a request for hearing in response to an assessment from thirty days to sixty days). Adherence to the condition precedent language in SDCL 10–59–9 suggests that the Legislature agrees with our interpretation. And Claggett has never been overruled. Therefore, Claggett and its interpretation of SDCL 10–59–9 remain solid precedent.

[¶ 13.] AEG notes that while a failure to timely file a notice of appeal is jurisdictionally fatal, it argues that the lesser omission of failing to file a bond within the statutory period does not deprive the court of appellate jurisdiction. AEG primarily relies on Vitek v. Bon Homme County Board of Commissioners, 2002 S.D. 100, 650 N.W.2d 513, and Bison Township v. Perkins County, 2002 S.D. 22, 640 N.W.2d 503, to advance this argument. These cases are not helpful to AEG.

[¶ 14.] In Vitek, the taxpayer timely appealed to the circuit court when the County Board granted a variance for a hog confinement facility. 2002 S.D. 100, ¶ 2, 650 N.W.2d at 514–15. But the taxpayer did not file the requisite $250 cash bond within the twenty-day window for serving a notice of appeal. Id. ¶ 5. In interpreting SDCL 7–8–29,⁵ we reasoned that the “; and” separating the two clauses indicated that the clauses should be read in the disjunctive. Id. ¶¶ 17–18. “Accordingly, the construction of the statute indicates the Legislature's intent to apply the [twenty]-day time limit only to the service of a notice of appeal.” Id. ¶ 18. Therefore, the circuit court retained jurisdiction.

[¶ 15.] In Bison Township, an appeal was taken to the circuit court in response to the County's property tax assessments. 2002 S.D. 22, ¶¶ 3–4, 640 N.W.2d at 504–05. Just as in Vitek, the $250 cash bond was not filed as required by SDCL 7–8–29 within the twenty-day time limit for serving a notice of appeal. Id. ¶¶ 4–6. We held that the failure to file the bond within the statutory period did not deprive the court of jurisdiction. Id. ¶ 13.

[¶ 16.] In Vitek, we distinguished the Claggett ruling from both Vitek and Bison Township. We wrote,

Claggett, however, differs markedly from both Bison Township and the case at bar for one very important reason: Claggett dealt with SDCL 10–59–9, which specifically prohibits the initiation of an appeal without payment of the tax assessment or [posting] of a bond. Clearly, no such statute was at issue in Bison Township. Nor is one at issue here. Thus, Claggett is not determinative of the outcome in this case.

Vitek, 2002 S.D. 100, ¶ 21, 650 N.W.2d at 519. AEG argues that the rationale distinguishing the cases is a distinction without a difference. Yet the cases AEG cites do not address appeals from state agencies involving both SDCL 10–59–9 and SDCL 1–26–31, but rather address appeals from counties, which are governed by a different chapter within our statutes.⁶ While failing to file a bond is not always jurisdictionally fatal, the only time we have considered SDCL 10–59–9 and SDCL 1–26–31 we determined that failure to pay the tax assessment or file a bond within the thirty-day window for appeal is jurisdictionally fatal.

[¶ 17.] AEG also contends that SDCL 10–59–9 is ambiguous on when the payment or bond should be filed (i.e. whether at the time of filing, before filing, or any time before the thirty days to file expires) and therefore the late payment should not be jurisdictionally fatal to its appeal. “We...