City of Belmont v. Miss. State Tax Comm'n

• Decision Date: 27 March 2003
• Docket Number: No. 2001-CA-00729-SCT.,2001-CA-00729-SCT.
• Citation: City of Belmont v. Miss. State Tax Comm'n, 860 So.2d 289 (Miss. 2003)
• Parties: CITY OF BELMONT, City of Calhoun City, City of Canton, City of Corinth, City of Greenville, City of Grenada, City of Gulfport, City of Houston, City of Indianola, City of Jackson, City of Kosciusko, City of Newton, City of Ocean Springs, City of Pearl, and City of Waynesboro v. MISSISSIPPI STATE TAX COMMISSION and Edward H. Buelow, Jr., Chairman.
• Court: Mississippi Supreme Court

860 So.2d 289

CITY OF BELMONT, City of Calhoun City, City of Canton, City of Corinth, City of Greenville, City of Grenada, City of Gulfport, City of Houston, City of Indianola, City of Jackson, City of Kosciusko, City of Newton, City of Ocean Springs, City of Pearl, and City of Waynesboro v. MISSISSIPPI STATE TAX COMMISSION and Edward H. Buelow, Jr., Chairman.

No. 2001-CA-00729-SCT.

Supreme Court of Mississippi.

March 27, 2003.

Rehearing Denied December 11, 2003.

James Ray Mozingo, James A. Peden, Jackson, attorneys for appellants.

Samuel D. Habeeb, Gary Wood Stringer, Jackson, attorneys for appellees.

EN BANC.

CARLSON, J., for the Court.

¶ 1. Several municipalities sued the Mississippi State Tax Commission and its chairman ("MSTC") seeking declaratory and injunctive relief to require the MSTC to comply with state law in its diversion of state sales tax funds to the municipalities.¹ On a Rule 12(b)(6) motion to dismiss² filed by the MSTC, the circuit court dismissed this suit pursuant to Miss.Code Ann. §§ 11-46-9(1)(b), (d) & (i), Miss.Code Ann. §§ 27-65-75 and 27-3-57, and House Bill 987, 2000 Miss. Laws ch. 304 (H.B.987). Some of these municipalities appeal the ruling of the circuit court citing numerous errors. Finding the MSTC's motion to dismiss was properly granted, this Court affirms the judgment of the circuit court.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 2. In 1968 the Legislature repealed the City Sales Tax Law, which had allowed Mississippi municipalities to levy and collect their own sales taxes, and replaced this source of revenue by disbursing to the municipalities a portion of the state sales tax pursuant to Miss.Code Ann. § 27-65-75. The MSTC is the department of state government charged with properly and accurately reporting to the State Treasurer and the State Auditor the amount of sales tax diversions due each municipality each month. Miss.Code Ann. § 27-3-1 et seq. (1999) and § 27-65-1 et seq. Pursuant to § 27-65-75(1), on the fifteenth day of each month, eighteen and one-half percent (18½%) of the total sales tax revenue collected during the proceeding month on "business activities within a municipal corporation shall be allocated for distribution to such municipality and paid to each municipality." There are certain types of sales tax revenues which the MSTC is not required to divert to municipalities. See Miss.Code Ann. §§ 27-65-15, 27-65-19(3), 27-65-21 & 27-65-75.

¶ 3. According to Miss.Code Ann. § 27-3-57, it is the duty of the MSTC to determine the amount of funds owed to each municipality, while it is the duty of the State Treasurer to disburse the funds to the municipalities.

¶ 4. At no time since the inception of municipal sales tax diversions in 1968 has the MSTC made a determination that sales tax disbursements should be made to the municipalities on sales taxes collected from direct pay permit holders,³ penalties and interests collected on sales taxes and sales taxes collected from out-of-state businesses having Mississippi locations, i.e., "083 Accounts."

¶ 5. On November 16, 1999, the Cities of Amory, Belmont, Booneville, Calhoun City, Canton, Corinth, Greenville, Grenada, Gulfport, Houston, Indianola, Jackson, Kosciusko, Newton, Ocean Springs, Pearl, Pontotoc, Ridgeland, Starkville and Waynesboro, each a Mississippi municipal corporation (hereinafter collectively the "Municipalities"), filed a complaint against the Mississippi State Tax Commission and Edward H. Buelow, Jr., in his official capacity as Chairman of the MSTC, seeking declaratory and injunctive relief to require the MSTC and its Chairman to comply with state law concerning the diversion of state sales tax to the Municipalities.⁴ On December 16, 1999, the MSTC filed a motion to dismiss stating that: (1) the Municipalities were barred from filing the suit by the doctrine of sovereign immunity and the Mississippi Tort Claims Act; (2) the Municipalities were preempted from filing the suit because the right of such action was only granted to the state auditor; and, (3) the Municipalities failed to state a claim upon which relief could be granted. The MSTC's main basis for these assertions was that the State Treasurer, not the MSTC, was the party responsible for disbursing the funds. On February 2, 2000, the Municipalities amended their first complaint to restate their demand for permanent relief to include that the MSTC be directed to perform all acts as required under Miss.Code Ann. § 27-65-1 et seq. (2000) and § 27-3-57 (1999), and on February 16, 2000, the MSTC filed a motion to dismiss the amended complaint.

¶ 6. On March 7, 2000, the Legislature passed House Bill 987 which was signed by the Governor on the same day. 2000 Miss. Laws ch. 304. House Bill 987 states:

SECTION 1. The method employed by the State Tax Commission to calculate all payments made to municipalities under the provisions of Section 27-65-75, Mississippi Code of 1972, prior to the effective date of this act, is hereby ratified, approved and confirmed as being the proper method of calculating payments due to all municipalities under the provisions of Section 27-65-75, Mississippi Code of 1972, for all periods prior to the effective date of this act.

SECTION 2. From and after the effective date of this act, the method of computing payments due to municipalities under the provisions of Section 27-65-75, Mississippi Code of 1972, shall be the same as that utilized by the State Tax Commission prior to the effective date of this act unless the method is changed by legislative act.

SECTION 3. Any suit brought by a municipality to recover additional payments under Section 27-65-75, Mississippi Code of 1972, in excess of the amounts authorized in this act is hereby abated.

SECTION 4. This act shall take effect and be in force from and after its passage.⁵

¶ 7. On April 13, 2000, the MSTC amended its motion to dismiss to include the provisions of H.B. 987 as an additional basis for dismissal. A hearing was held on May 22, 2000, and on November 14, 2000, the trial judge issued a three-page memorandum wherein he stated, inter alia, that he was granting the MSTC's motion to dismiss. Although the trial judge's memorandum stated only that the Municipalities did not have standing to sue and that H.B. 987 required dismissal, the judge in essence adopted the MSTC's proposed opinion which contained rulings on thirteen separate defenses.⁶

¶ 8. By way of this decision, the trial judge granted the MSTC's motion to dismiss finding, that as creatures of the state, the Municipalities lacked standing to bring suit; the Municipalities were barred from bringing suit by the Mississippi Tort Claims Act, see Miss.Code Ann. §§ 11-46-9(1)(b), (d) & (i) (Rev.2002); the Municipalities had no authority to bring suit because exclusive authority was vested with the State Auditor, see Miss.Code Ann. §§ 27-65-75 & 27-3-57; the Municipalities failed to state a claim upon which relief could be granted because the State Treasurer, who is in charge of disbursing funds, was the proper party to this suit, see Miss.Code Ann. § 27-3-57; and by passage of House Bill 987, the Municipalities' suit was abated, see 2000 Miss. Laws ch. 304.

¶ 9. After this January 5, 2001, ruling of the trial judge, the Municipalities, on January 16, 2001, filed a motion to alter or amend the judgment challenging alleged unsupported factual findings and erroneous legal conclusions based thereon; however, the motion to amend was denied. The judge did amend the original judgment to dismiss the complaint with prejudice to hold that the State Auditor would not be precluded from bringing suit on the same subject matter. The Municipalities timely filed their appeal before this Court and raise the following seventeen issues:

1. Whether the circuit court erred in granting the MSTC's Motion to Dismiss.

2. Whether the circuit court's granting of the MSTC's Motion to Dismiss is contrary to the applicable law in this case.

3. Whether the circuit erred by basing its decision to grant the MSTC's Motion to Dismiss on findings of fact and on mixed findings of law and fact which are not supported by the record and which are contrary to the record.

4. Whether the circuit court erred in dismissing the Amended Complaint with prejudice.

5. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the ground that the Municipalities lacked the standing to bring the claims set forth in the Amended Complaint.

6. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the ground that the relief requested was not authorized by law.

7. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the ground that the Amended Complaint was a suit for money damages against the State of Mississippi and was thus barred.

8. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the basis of House Bill 987 passed by the 2000 Mississippi Legislature.

9. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint with prejudice, thereby denying the Municipalities any recourse or redress in the Courts of the State of Mississippi for open and ongoing violations of State law by the Tax Commission of which State law the Municipalities are direct and primary beneficiaries.

10. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the ground it is barred by statutory and common law sovereign immunity.

11. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint on the ground that the State Auditor has the sole and exclusive authority to challenge determinations of the Tax Commission.

12. Whether the circuit court erred in dismissing the Municipalities' Amended Complaint with prejudice on the ground that it failed to state a claim against the Tax Commission as opposed to the State Auditor.

13. Whether the circuit court erred in

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