Comcast v. Board of Supervisors

• Decision Date: 27 February 2009
• Docket Number: Record No. 080946.
• Citation: 672 S.E.2d 870,277 Va. 293
• Parties: COMCAST OF CHESTERFIELD COUNTY, INC. v. BOARD OF SUPERVISORS OF CHESTERFIELD COUNTY.
• Court: Virginia Supreme Court

672 S.E.2d 870

277 Va. 293

COMCAST OF CHESTERFIELD COUNTY, INC. v. BOARD OF SUPERVISORS OF CHESTERFIELD COUNTY.

Record No. 080946.

Supreme Court of Virginia.

February 27, 2009.

Virginia W. Hoptman (James S. Kurz; Womble, Carlyle, Sandridge & Rice on briefs), Tysons Corner, for appellant.

Jeffrey L. Mincks, Deputy County Attorney (Steven L. Micas, County Attorney, on brief), for appellee.

Amici Curiae: Local Government Attorneys of Virginia, Inc.; City of Hampton; Commissioners of the Revenue Association of Virginia (Mark A. Short; Daniel F. Basnight; Kaufman & Canoles, on brief), in support of appellee.

Present: All the Justices.

OPINION BY Justice CYNTHIA D. KINSER.

This appeal involves a dispute between the Board of Supervisors of Chesterfield County (County) and Comcast of Chesterfield County, Inc. (Comcast) concerning the County's classification of certain personal property used by Comcast in its cable television business as tangible personal property pursuant to Code § 58.1-1101(A)(2a). The issue before the circuit court was whether the contested property falls under the "machines and tools" exception to the statutory classification of personal property used in cable television businesses as intangible, and is thereby taxable by the County.

The County, however, asks this Court to dismiss the appeal as improvidently granted because the circuit court's order from which Comcast noted its appeal is not a final order and, thus, is not an appealable order. Because we agree with the County, we conclude the Court does not have jurisdiction to decide the merits of the appeal. Thus, we will dismiss the appeal without prejudice as improvidently granted.

I. MATERIAL FACTS AND PROCEEDINGS

The County's Office of the Commissioner of the Revenue (Commissioner) conducted an audit to determine which items of Comcast's personal property used in its cable television business is taxable by the County. Upon completion of the audit, the Commissioner sent Comcast supplemental tax assessments for tax years 2003 through 2006. In a letter dated May 2, 2006 accompanying the supplemental tax assessments, a Deputy Commissioner explained, "[t]he property that is not taxable and has been identified as intangible personal property and exempt from local taxation is tuners, converters, amplifiers, power supplies, and radios."¹

Comcast paid the supplemental personal property taxes but requested the Commissioner to classify electronics and modems as intangible personal property. In response, the Commissioner decided "electronics, modems, and converters are machines or equipment that is taxable as tangible personal property [and] have not been statutorily defined as intangible personal property." As a result of the Commissioner's determination, the County issued a second supplemental assessment for personal property taxes on Comcast's converters. Comcast also paid these additional taxes.

Pursuant to Code § 58.1-3984, Comcast filed a "Complaint For Correction Of Erroneous Assessments" for tax years 2003 through 2006, alleging: (1) the County had no legal authority to tax Comcast's "plant electronics" and "customer premises equipment"² because they are classified as intangible personal property under Code § 58.1-1101(A)(2a), thereby rendering the assessments "illegal and invalid" (Counts 1 through 8); and (2) the taxes assessed on certain property had already been paid (Counts 9 and 10).³ In its complaint, Comcast did not challenge the County's methodology in determining the value of the contested personal property or the actual valuation placed on the property.

Instead, Comcast challenged the legal authority of the County to tax the contested business personal property and requested a refund of the amounts paid by Comcast for the County's assessment of its "plant electronics" and "customer premises equipment." The County in large part denied Comcast's allegations.

As the case proceeded, the County served interrogatories and requests for production of documents asking Comcast, among other things, to "separately identify [for the tax years 2003 through 2006] each and every individual component or item of tangible personal or business property owned by Comcast with situs in Chesterfield County" that falls within Comcast's categories of property referred to in its complaint. Because the County believed Comcast did not adequately respond to its discovery requests, the County filed a motion to compel under Rule 4:12, requesting the circuit court to order Comcast "to produce the records and information it is required to produce pursuant to ... Code §§ 58.1-3518 and -3983.1(K) and the County's discovery requests."

At a hearing on its motion to compel, the County argued that the motion should be granted because in every erroneous tax assessment case filed under Code § 58.1-3984, the provisions of Code § 58.1-3987 require the circuit court to determine the correct assessed value of the property. Continuing, the County argued that the information sought in its discovery requests is necessary for the circuit court to make that determination and the motion therefore should be granted.

Comcast took the position that, since it did not challenge the County's valuation of the contested property, the circuit court was limited to the issue presented in its complaint concerning the authority of the County to tax the contested property. Comcast conceded the valuation placed upon the contested property by the County was correct; therefore, Comcast argued, the issue of valuation, and thus the information requested, was irrelevant.

At the conclusion of this hearing, the circuit court took the motion to compel under advisement and "bifurcated" the proceeding into the classification issue and the valuation issue, which included the motion to compel and the relevancy of the information requested in the County's discovery requests. The circuit court recognized that if it decided the contested property was not taxable by the County, then the valuation issue would be irrelevant and any information demanded in the motion to compel would likewise be irrelevant.

At a subsequent hearing before the circuit court on the classification issue, the question whether Comcast's "plant electronics" and "customer premises equipment" are taxable by the County under Code § 58.1-1101(A)(2a) turned on the definition of the term "machines" under the "machines and tools" exception contained in the statute. The County urged the circuit court to define "machines" as "[m]echanically, electrically, or electronically-operated device[s] for performing a task," or "any system or device, such as an electronic computer, that performs or assists in the performance of a human task." The County argued that the definition of "machines" should be ascertained with reference to the provisions of Code § 58.1-1101(A)(2a) since the statute refers to personal property used in the cable television business.

In response, Comcast argued that Code § 58.1-1101(A)(2a) must be narrowly construed in favor of the taxpayer and that the broad definition urged by the County "would leave virtually none of Comcast's property outside of the exception." Accordingly, Comcast argued that the definition of "machines" should include only "device[s] consisting of fixed and moving parts that modifies mechanical energy and transmits it in a more useable form."

In a letter opinion, the circuit court concluded the business personal property at issue is subject to taxation by the County. In an order dated February 15, 2008, the circuit court ruled that

the items of property at issue are "machines" under the plain meaning of that word and are, therefore, items of property properly classified as business tangible personal property under [Code § 58.1-1101(A)(2a)].

At a hearing before the circuit court to discuss the language of the above order, the parties returned to the motion to compel that the court had previously taken under advisement. The County asserted that based on the circuit court's decision regarding the classification issue, the court should grant the motion to compel so that the question of valuation could be decided. Comcast argued, as it had previously, that the information sought by the County in its discovery requests was irrelevant and the February 15, 2008 order resolved all of the issues raised in Comcast's complaint.

The circuit court again took the motion to compel under advisement and requested the parties to submit briefs on the question whether it was still necessary for the court to determine the assessed value of the contested property. On February 25, 2008, Comcast filed a notice of appeal from the circuit court's order of February 15, 2008. In the notice, Comcast stated the circuit court's order, "which construes [Code § 58.1-1101(A)(2a)] as imposing taxes on certain Comcast property, may be immediately appealed pursuant to ... Code §§ 8.01-670(1)(f) and (g)."

II. ANALYSIS

The County challenges the Court's jurisdiction to hear this appeal and moves to dismiss the appeal as improvidently granted. "[T]he question of jurisdiction is one for the determination of the appellate court only. Before the merits of this case can be considered, this [C]ourt must determine whether it has jurisdiction." Madison v. Kroger Grocery & Bakery Co., 160 Va. 303, 306, 168 S.E. 353, 354 (1933); see also Todd v. Gallego Mills Mfg. Co., 84 Va. 586, 598, 5 S.E. 676, 681 (1888).

"While by statute an appeal may be taken from certain interlocutory orders as well as from final decrees, a writ of error does not lie except where there has been a final order or judgment in the cause." Hatke v. Globe Indem. Co., 167 Va. 184, 188, 188 S.E. 164, 166 (1936) (internal quotation marks omitted). See also Johnston v. Johnston, 181 Va. 357, 359, 25 S.E.2d 274, 275 (1943) ("Appellate jurisdiction presupposes either a final decree or an adjudication of the principles of a cause. The latter may be interlocutory.... Until a...