Big Al's Towing & Recovery v. State

• Decision Date: 15 November 2022
• Docket Number: S-22-0074
• Parties: BIG AL'S TOWING AND RECOVERY, Appellant (Respondent), v. STATE OF WYOMING, DEPARTMENT OF REVENUE, Appellee (Petitioner).
• Court: Wyoming Supreme Court

2022 WY 145

BIG AL'S TOWING AND RECOVERY, Appellant (Respondent), v. STATE OF WYOMING, DEPARTMENT OF REVENUE, Appellee (Petitioner).

No. S-22-0074

Supreme Court of Wyoming

November 15, 2022

Appeal from the District Court of Laramie County The Honorable Peter H. Froelicher, Judge

James O. Bardwell, Christopher M. Brennan, and Gay Woodhouse Woodhouse Roden Ames & Brennan, LLC, Cheyenne, Wyoming. Argument by Mr. Brennan.

Bridget L. Hill, Attorney General; Brandi Lee Monger, Deputy Attorney General; Karl D. Anderson, Senior Assistant Attorney General; Douglas Brodbeck, Assistant Attorney General. Argument by Mr. Brodbeck.

Before FOX, C.J., KAUTZ, BOOMGAARDEN, GRAY, and FENN, JJ.

BOOMGAARDEN, Justice.

[¶1] Wyo. Stat. Ann. § 39-15-103(a)(i)(J) (LexisNexis 2021) levies an excise tax on "[t]he sales price paid for services performed for the repair, alteration or improvement of tangible personal property[.]" This appeal concerns whether three roadside services offered by Big Al's Towing and Recovery (Big Al's)-jump-starting a vehicle unlocking a vehicle, and replacing a flat tire with the spare tire-are taxable under that statute. Interpreting the statutory language de novo and applying it to the undisputed facts, we affirm the Wyoming Board of Equalization's (Board's) decision that the roadside services are not taxable under § 39-15-103(a)(i)(J), and reverse the district court's decision to the contrary.

ISSUE

[¶2] We rephrase the issue:

Is the Board's decision that Big Al's roadside services are not taxable under Wyo. Stat. Ann. § 39-15-103(a)(i)(J) in accordance with law?

FACTS

[¶3] The undisputed evidence presented to the Board reflects the following. Big Al's provides towing services, sells car batteries, and provides roadside services to drivers in Wyoming. Much of its work is obtained through contracts with motor clubs such as the American Automobile Association (AAA). Pursuant to its contract with AAA, for example, AAA pays Big Al's $60 per call for jump-starting a vehicle unlocking a vehicle, and replacing a flat tire with the spare tire. Big Al's has never collected sales tax on these roadside services.

[¶4] Following an audit, the Wyoming Department of Revenue (DOR) determined Big Al's owed taxes and interest on roadside assistance revenue it collected from October 2016 to September 2019. Big Al's appealed the approximate $12,000 tax and interest assessment to the Board.

[¶5] The Board held a contested case hearing where two witnesses testified: Terri Lucero, the Administrator of the DOR Excise Tax Division, and Big Al's owner, David Rose. The Board admitted a handful of documents related to the audit, as well as prior guidance the DOR provided towing companies about services it considered taxable under § 39-15-103(a)(i)(J).^[1] [¶6] Mr. Rose and Ms. Lucero described the roadside services and opined whether they qualified as repairs, alterations, or improvements. Beginning with Big Al's jump-start service, Mr. Rose testified there were various reasons why a driver might need their vehicle jump-started.

A. . . . [M]aybe the dome light has been left on or a door's ajar and the little lights -- courtesy lights stay on.

Q. So there was a load on the battery that ran the battery out of electricity?

A. Or heat and cold really affect the batteries, if it's a cold day, it will run 20 or 30 jump starts. If it's a hot day in the middle of summer, those cause batteries to fail also. Batteries are only good for three to five years in this climate, and, you know, by eight years they're done. And they don't just go out a little at a time. It's like all the sudden, your vehicle don't start.

To start the vehicle, Big Al's used a different battery to "conduct[] electricity into the ignition." Big Al's did not fix any underlying problem with the battery. The jump-start allowed the driver to "continue on their way."

[¶7] Turning to Big Al's lockout service, Mr. Rose and Ms. Lucero testified there were several reasons a driver might need their vehicle unlocked: they accidentally locked their keys in the car, their key fob stopped working, or the lock malfunctioned. According to Mr. Rose, Big Al's "manipulate[d] the car" to unlock it. According to Ms. Lucero, Big Al's used a tool to open the car or "push[ed] the window away" to reach the lock mechanism. Unlocking the car allowed the driver to access the inside of the vehicle. If there was an underlying problem with the lock, Big Al's did not fix it.

[¶8] Finally, Big Al's tire service consisted of replacing the vehicle's flat tire with the vehicle's spare tire. Mr. Rose noted "[a] lot of times people don't know how to change the tire. They're physically incapable, or maybe they're on their way to something fancy, they're dressed up, so they use their roadside assistance off their AAA." He confirmed driving on a flat tire could damage the rims or suspension. Putting the spare tire on the vehicle allowed the driver to go home or to a repair shop for a new tire.

[¶9] In Mr. Rose's opinion, none of the roadside services repaired, altered, or improved a vehicle; they did not make a vehicle more valuable; and there was no tangible difference in a vehicle after the tire change service. Ms. Lucero conceded none of the services repaired a vehicle, but maintained they all altered and improved a vehicle. She opined that unlocking a vehicle is an alteration "because that vehicle is now unlocked and the owner can now access the vehicle"; jump-starting a vehicle "alter[s] the vehicle from a vehicle that didn't start to a vehicle that did"; and changing a tire is an alteration "because the inflated tire is now on that vehicle, and the vehicle driver can now drive it." Ms. Lucero further opined that jump-starting a car improves the quality and value of the vehicle by allowing it to start. Big Al's lockout service improves the vehicle "because a person can now get in their vehicle because it's unlocked, and they couldn't unlock it themselves." And Big Al's tire change service improves the vehicle by allowing it to be driven.

[¶10] In its decision, the Board found § 39-15-103(a)(i)(J) unambiguous and, because the legislature did not define "alter" or "improve," it examined common definitions of those words to determine their meaning. The Board concluded, in relevant part, that "alter" means "to make different without changing into something else[.]" And "an increase in value is a hallmark of improvement; otherwise, 'improvement' would merely mean any change for the better, which is just a subset of 'alteration.'"

[¶11] In reversing the DOR's decision, the Board concluded none of those terms, as commonly defined, applied to the roadside services.

Neither the language of the statute, nor the [DOR's] rules promulgated to enforce the statute, can stretch as far as the [DOR] wants them to. We believe the [DOR's] interpretations of "alteration" and "improvement" run afoul of the judicial injunction against expanding statutes "beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out." []

In short, we have dueling opinion testimony from Mr. Rose, an expert on automobiles, and Ms. Lucero, an expert on taxation. At best for the [DOR], it's a draw. As such, the [DOR] didn't bear its burden of proof by a preponderance of the evidence. We believe the [DOR] simply asks too much of the words "alteration" and "improvement," as evidenced by Ms. Lucero's testimony that there is an alteration every time someone starts a car. []

Thus, in applying its plain language interpretation of § 39-15-103(a)(i)(J) to reverse the DOR's decision, the Board also recognized that the DOR has the ultimate burden to show the roadside services at issue constitute a taxable event.^[2]

[¶12] The district court agreed with the Board that the statute is unambiguous. However, it adopted the DOR's preferred definitions of "alter" and "improvement" and, like the DOR, concluded those terms describe, or apply, to Big Al's roadside services.

This court concludes Big Al's roadside services . . ., as the services were described by Mr. Rose, make the vehicles different without changing the vehicles into something else and make the vehicles better. In other words, each of the disputed services alters and/or improves the vehicle.

Accordingly, the district court held the roadside services are taxable under Wyo. Stat. Ann. § 39-15-103(a)(i)(J). Big Al's timely appealed.

STANDARD OF REVIEW

[¶13] We review the Board's decision pursuant to the Wyoming Administrative Procedure Act, affording no deference to the district court's decision. Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2021); Solvay Chemicals, Inc. v. Wyo. Dep't of Revenue, 2022 WY 122, ¶ 7, 517 P.3d 1123, 1127 (Wyo. 2022) (citations omitted). Ordinarily, we would review the Board's findings of fact for substantial evidence. Solvay, ¶ 7, 517 P.3d at 1127 (citation omitted). In this case, however, the facts are not disputed. Instead, the parties dispute whether the Board applied the statute to the undisputed facts in accordance with law. "We review an agency's conclusions of law de novo and affirm when they are in accordance with the law." Id. (citation omitted). See also Wyo. Stat. Ann. § 16-3-114(c)(ii)(A) ("The reviewing court shall . . . [h]old unlawful and set aside agency action, findings and conclusions found to be . . . [a]rbitrary, capricious, an abuse of discretion or otherwise not in accordance with law[.]") (emphasis added); Delcon Partners LLC v. Wyo. Dep't of Revenue, 2019 WY 106, ¶ 7, 450 P.3d 682, 684 (Wyo. 2019) ("Statutory interpretation is a question of law subject to de novo review." (citation omitted)).

DISCUSSION

[¶14] To determine whether the Board's decision that the...