Alltel Communications, Inc. v. South Carolina Dept. of Revenue

Decision Date07 April 2010
Docket Number2010-UP-232
CourtSouth Carolina Court of Appeals
PartiesAlltel Communications, Inc., Respondent, v. South Carolina Department of Revenue, Appellant. Alltel Mobile Communications of the Carolinas, Inc., Respondent, v. South Carolina Department of Revenue, Appellant New York Newco Subsidiary, Inc., Respondent, v. South Carolina Department of Revenue, Appellant Telespectrum, Inc., Respondent, v. South Carolina Department of Revenue, Appellant 360 Communications Co. of S.C. No. 1, Respondent, v. South Carolina Department of Revenue, Appellant 360 Communications Co. of S.C. No. 2, Respondent, v. South Carolina Department of Revenue, Appellant

UNPUBLISHED OPINION

Heard February 9, 2010

Harry A. Hancock, of Columbia, for Appellant.

John M.S. Hoefer and Tracey C. Green, of Columbia, for Respondents.

PER CURIAM

In this appeal of an order granting summary judgment to Respondents the South Carolina Department of Revenue (Department) challenges the Administrative Law Court's (ALC's) determination that Respondents were not telephone companies and thus did not owe any license fees pursuant to section 12-20-100 of the South Carolina Code (2000). The Department also contends that the ALC failed to give proper consideration to other issues raised by the parties in their summary judgment motions. We reverse and remand.

FACTUAL/PROCEDURAL BACKGROUND

Respondents are Alltel Communications, Inc., Alltel Mobile Communications of the Carolinas, Inc., New York Newco Subsidiary, Inc Telespectrum, Inc., 360 Communications Co. of S.C. No. 1, and 360 Communications Co. of S.C. No. 2. [1] During the tax years ending December 31, 1999 through December 31, 2003 (Tax Years), Respondents were either directly engaged, or owned interests in partnerships that were engaged, in the business of providing wireless voice and data communications service via radio within South Carolina.

In 2004, the Department initiated an audit of Respondents. At the conclusion of the audit, the Department notified Respondents that it had determined that a deficiency existed in the license fees paid by Respondents for the Tax Years. The Department proposed to assess Respondents $4,709,671 in additional license fees, interest, and penalties.

The basis for the proposed assessment was the Department's determination that Respondents had erroneously used section 12-20-50 of the South Carolina Code (2000) to calculate their license fees. The Department concluded that each Respondent was a "telephone company" and thus was required to pay license fees in accordance with section 12-20-100, rather than section 12-20-50.

Respondents each timely filed with the Department a protest of the proposed assessment. The Department issued a final agency determination denying the protests on May 30, 2007. Thereafter, each Respondent timely filed a request for a contested case hearing with the ALC.

The ALC consolidated the six cases. After filing joint stipulations of facts, the parties filed cross-motions for summary judgment. In their summary judgment motion, Respondents contended that section 12-20-100 did not apply to them because they were not telephone companies. Alternatively Respondents argued that, if they were telephone companies, the Department did not properly calculate the license fee owed by Respondents under section 12-20-100. Specifically, Respondents claimed that the Department erred by determining that they derived gross receipts from "services rendered from regulated business" as contemplated by section 12-20-100(A)(2)(a). Additionally, Respondents contended that section 12-20-100 did not apply to partnerships and that the Department therefore erred by including in its assessment the assets and gross receipts attributable to Respondents' partnership interests. Furthermore, Respondents claimed that the Department should not have imposed a "substantial understatement" penalty under section 12-54-155 of the South Carolina Code (2000) because Respondents' position with respect to their liability under section 12-20-100 was supported by substantial authority. Lastly, Respondents argued that the Department made certain calculation errors with respect to the amounts owed by Alltel Mobile Communications of the Carolinas, Inc. and New York Newco Subsidiary, Inc.

On April 22, 2008, the ALC granted Respondents' motion for summary judgment and denied the Department's motion. The ALC determined that Respondents were not telephone companies for the purposes of section 12-20-100 and thus were not required to pay license fees under that statute. This appeal followed.

ISSUES ON APPEAL

1. Did the ALC err by granting summary judgment to Respondents?
2. Did the ALC fail to give proper consideration to other issues raised by the parties in their summary judgment motions?

STANDARD OF REVIEW

When reviewing the grant of summary judgment, an appellate court applies the same standard that governed the trial court. Wogan v. Kunze, 379 S.C. 581, 585, 666 S.E.2d 901, 903 (2008). As in civil matters, summary judgment is appropriate in an administrative matter when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. See Rule 56(c), SCRCP (setting forth the standard for granting summary judgment in civil matters); South Carolina Administrative Practice and Procedure 175 (Randolph R. Lowell ed., 2d ed. 2008) (stating that the standard for granting summary judgment in an administrative matter is the same as in a civil matter).

Because summary judgment is a drastic remedy, it should be cautiously invoked to ensure that a litigant is not improperly deprived of a trial on disputed factual issues. Mulherin-Howell v. Cobb, 362 S.C. 588, 597, 608 S.E.2d 587, 592 (Ct. App. 2005). Where further inquiry into the facts of the case is desirable to clarify the application of the law, summary judgment is not appropriate. Brockbank v. Best Capital Corp., 341 S.C. 372, 378, 534 S.E.2d 688, 692 (2000). Moreover, "[s]ummary judgment should not be granted even when there is no dispute as to evidentiary facts if there is dispute as to the conclusion to be drawn from those facts." Id.

LAW/ANALYSIS
I. Section 12-20-100

The Department argues that the ALC erred by granting summary judgment to Respondents on the ground that Respondents did not constitute telephone companies for the purposes of section 12-20-100. Because we conclude that further inquiry into the facts is necessary to resolve this issue, we agree.

Section 12-20-100(A) provides in pertinent part:

In the place of the license fee imposed by Section 12-20-50, every express company, street railway company, navigation company, waterworks company, power company, electric cooperative, light company, gas company, telegraph company, and telephone company shall file an annual report with the department and pay a license fee as follows:
(1) one dollar for each thousand dollars, or fraction of a thousand dollars, of fair market value of property owned and used within this State in the conduct of business as determined by the department for property tax purposes for the preceding taxable year; and
(2)(a) three dollars for each thousand dollars, or fraction of a thousand dollars, of gross receipts derived from services rendered from regulated business within this State during the preceding taxable year, except that with regard to electric cooperatives, only distribution electric cooperatives are subject to the gross receipts portion of the license fee under this subitem (2)(a).

S.C. Code Ann. § 12-20-100(A) (2000) (emphasis added). [2]

The term "telephone company" is not defined in section 12-20-100 or in the definitional section of chapter 20 of title 12. [3] "Where a word is not defined in a statute, our appellate courts have looked to the usual dictionary meaning to supply its meaning." Berkeley County Sch. Dist. v. S.C. Dep't of Revenue, 383 S.C. 334, 345, 679 S.E.2d 913, 919 (2009) (quoting Lee v. Thermal Eng'g Corp., 352 S.C. 81, 91-92, 572 S.E.2d 298, 303 (Ct. App. 2002)). In addition to utilizing dictionaries, our courts have reviewed other state statutes, as well as state appellate decisions, to ascertain the meaning of an undefined statutory term. See Sonoco Products Co. v. S.C. Dep't of Revenue, 378 S.C. 385, 662 S.E.2d 599 (2008) (where the term "contiguous" was not defined in the applicable statute, the court reviewed dictionaries, state statutes, and state appellate decisions that dealt with the concept of contiguity in order to glean the appropriate definition).

Here, the ALC concluded that "based on the plain language of the statute," none of the Respondents constituted a telephone company for the purposes of section 12-20-100 because "the services they provide relate to the provision of wireless communications via radio, not communications via telephone." The ALC's decision does not cite a dictionary definition of either "telephone" or "telephone company," nor does it cite a South Carolina appellate court decision construing those terms. Rather, it appears that, In reaching its result, the ALC relied primarily upon the parties' stipulation that "[t]elephones and telephone companies transmit intelligence over a vast network of wires located in public rights of way and in easements over private property." (emphasis added). [4]

At first blush, the parties' stipulation seems to provide significant support for the ALC's conclusion. However upon further reflection, we conclude that the stipulation is not dispositive of this case. The question of what the legislature...

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