American Drug Store, Inc. v. City and County of Denver, 91SA1
| Citation | 831 P.2d 465 |
| Decision Date | 01 June 1992 |
| Docket Number | No. 91SA1,91SA1 |
| Parties | AMERICAN DRUG STORE, INC., d/b/a Osco Drug, an Illinois corporation, Plaintiff-Appellee, v. CITY AND COUNTY OF DENVER, a municipal corporation, and Alan N. Charnes, Manager of Revenue of the City and County of Denver, State of Colorado, Defendants-Appellants. |
| Court | Supreme Court of Colorado |
Eiberger, Stacy, Smith & Martin, Roy A. Adkins, Kay-Dawn Allen, Denver, for plaintiff-appellee.
Daniel E. Muse, City Atty., Robert F. Strenski, Maria Kayser, Asst. City Attys., Denver, for defendants-appellants.
Appellant, the City and County of Denver (the City), 1 appeals from a district court order in American Drug Stores, Inc., d/b/a Osco Drug v. City and County of Denver, No. 90CV2083 (Aug. 2, 1990). The district court granted summary judgment in favor of appellee, American Drug Stores (Osco). We reverse and remand with directions.
On December 15, 1989, the Manager of Revenue of the City and County of Denver (Manager of Revenue) mailed to Osco a Notice of Final Determination, Assessment and Demand for Payment of use taxes (notice of assessment) pursuant to article III of chapter 53 of the Revised Municipal Code for the City and County of Denver (DRMC). The use taxes, in the amount of $177,811.74, were assessed on preprinted advertising inserts circulated from December 1, 1985, to June 30, 1988. The notice of assessment stated that it would become final and due twenty days from the date of the mailing of the notice unless Osco filed a petition for review with the Manager of Revenue within that twenty-day period. 2
On January 5, 1990, twenty-one days after the notice of assessment was mailed, Osco filed a Petition for Cancellation of Assessment with the Manager of Revenue by hand-delivery. On January 22, 1990, an audit supervisor contacted Osco and informed Osco that its petition was not timely filed pursuant to DRMC sections 53-49 and 53-117. The audit supervisor also informed Osco that it could contest the facts regarding the petition deadline by filing a motion with a hearing officer.
On February 14, 1990, Osco filed such a motion. Osco contended in both the January 5 petition and the February 14 motion that the notice of assessment it received was defective because it did not comply with section 29-2-106.1, 12A C.R.S. (1986). 3
Section 29-2-106.1 provides, in pertinent part:
(2)(a) When a local government asserts that sales or use taxes are due in an amount greater than the amount paid by the taxpayer, such local government shall mail a deficiency notice to the taxpayer.... The deficiency notice shall contain notification, in clear and conspicuous type, that the taxpayer has the right to elect a hearing on the deficiency pursuant to subsection (3) of this section.
....
(c) ... The taxpayer shall have no right to such hearing [pursuant to subsection (3)(a) ] if he has not exhausted local remedies or if he fails to request such hearing within the time period provided for in this subsection....
....
(3)(a) If a taxpayer has exhausted his local remedies as provided in paragraph (c) of subsection (2) of this section, the taxpayer may request the executive director of the department of revenue to conduct a hearing on such deficiency notice or claim ... as set forth in section 39-21-103, C.R.S.
Osco thus argued that the notice of assessment it received was defective, not because it failed to inform Osco of its immediate right to administrative review of the assessment, but because it did not inform Osco of its options regarding appeals of administrative determinations.
The hearing officer noted that Osco's motion did not contest the facts regarding the filing deadline, but instead requested a new assessment informing Osco of its right of appeal to the executive director of the department of revenue. The hearing officer concluded that the lack of notice did not prevent Osco from timely filing a petition with the Manager of Revenue and that Osco failed to present any grounds for relief in the motion.
On February 21, 1990, Osco filed a complaint for a declaratory judgment in district court. Osco sought a declaration that the Notice of Final Determination, Assessment and Demand for Payment is insufficient as a matter of law because it does not comply with section 29-2-106.1. Osco later filed a motion for summary judgment, contending, among other things, that the notice of assessment was deficient as a matter of law. Without opinion, the district court granted Osco's motion for summary judgment. The City appeals.
The City challenges both the requirement of exhaustion of remedies and the content of the notice of assessment. 4 We do not reach these issues because they are moot.
The City contends that the issuance of a notice of sales and use tax assessment is purely a matter of local concern and is thus not subject to the requirements of section 29-2-106.1. 5
Section 29-2-106.1 states that its appeal procedures are only triggered after an aggrieved taxpayer has exhausted local remedies. Local remedies under section 29-2-106.1(2)(c)(I), 12A C.R.S. (1986), are deemed exhausted when a "taxpayer has timely requested in writing a hearing before the local government, and such local government has held such hearing and issued a final decision thereon." In the present case, Osco received a Notice of Final Determination, Assessment and Demand for Payment of use taxes which informed Osco that if it did not contest the notice of assessment within twenty days of the date of mailing, the assessment would become due and final.
We decline to consider the sufficiency of the notice of assessment against the backdrop of section 29-2-106.1 because the issue is moot in this case. Since Osco failed to timely petition the Manager of Revenue for a hearing in order to contest the validity of the assessment, it became final and due as to Osco.
Additionally, Osco cannot seek appellate review of the assessment under either section 29-2-106.1 or under the local procedures provided in the DRMC. Under section 29-2-106.1, appellate review before the executive director of the department of revenue is only available when a party has exhausted its administrative remedies by timely filing a petition with the Manager of Revenue. Under section 53-124 of the DRMC, appellate review is only available to taxpayers who have sought timely review of assessments by the Manager of Revenue. Since Osco failed to timely file its petition, it was precluded from seeking review by the Manager of Revenue.
Appellate courts will not render opinions on the merits of appeals when issues presented in litigation become moot because of subsequent events. Van Schaack Holdings, Ltd. v. Fulenwider, 798 P.2d 424, 426-27 (Colo.1990); Zoning Bd. of Adjustment v. DeVilbiss, 729 P.2d 353 (Colo.1986). "A case is moot when a judgment, if rendered, would have no practical legal effect upon the existing controversy." Van Schaack, 798 P.2d at 426 (citing Barnes v. District Court, 199 Colo. 310, 607 P.2d 1008 (1980)). 6
Any determination that the content of the notice did not meet the requirements of section 29-2-106.1 would not have any practical legal effect on this case because there is no existing controversy between Osco and the City regarding the assessment of use taxes owed. 7
The City contends that Osco failed to exhaust its administrative remedies because it failed to timely file a petition contesting the assessment with the Manager of Revenue. 8 According to the City, Osco's failure to timely file a petition divested the district court of jurisdiction over Osco's action.
Where a party to an administrative proceeding wishes to challenge the constitutionality of a statute or ordinance that the agency enforces, that party may bring an action for declaratory judgment in district court. Arapahoe Roofing and Sheet Metal, Inc. v. City and County of Denver, 831 P.2d 451, 454 (Colo.1992) ().
We do not consider, however, whether Osco was required to exhaust its administrative remedies before instituting an action in district court to raise its constitutional challenges. Any such determination would have no practical legal effect since there is no existing legal controversy between Osco and the City.
We reverse the summary judgment of the district court and remand to that court with directions to dismiss the complaint for declaratory judgment.
1 For purposes of this proceeding, we refer to both the City and County of Denver, and the Manager...
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