Coors Brewing Co. v. City of Golden
| Decision Date | 06 June 2013 |
| Docket Number | No. 12CA1813,12CA1813 |
| Citation | 411 P.3d 767 |
| Parties | COORS BREWING COMPANY; Rocky Mountain Metal Container, LLC ; and MillerCoors, LLC,Plaintiffs–Appellees and Cross–Appellants, v. CITY OF GOLDEN, COLORADO ; and Jeff Hansen, in his official capacity as Finance Director for the City of Golden, Colorado, Defendants–Appellants and Cross–Appellees. |
| Court | Colorado Court of Appeals |
Silverstein & Pomerantz LLP, Neil I. Pomerantz, Mark E. Medina, Michelle Bush, Denver, Colorado, for Plaintiffs–Appellees and Cross–Appellants
Berg Hill Greenleaf & Ruscitti LLP, Thomas E. Merrigan, Heidi C. Potter, Risa N. Borowick, Boulder, Colorado, for Defendants–Appellants and Cross–Appellees
Opinion by JUDGE BERNARD
¶ 1 This appeal involves a municipal tax on the use, storage, or consumption of personal property. We must decide, under the facts here, whether the scrap generated during the use of aluminum sheets by a manufacturer is purchased
?at wholesale, and therefore exempt from the use tax; or
?at retail, and therefore taxable under the use tax.
One important fact that governs our analysis is that, when the aluminum is purchased, the manufacturer intends to resell the scrap generated by the manufacturing process, and then does so.
¶ 2 To resolve this issue, we apply the "primary purpose" test, which was announced in A.B. Hirschfeld Press, Inc. v. City & County of Denver, 806 P.2d 917, 918–26 (Colo.1991). As a result, we conclude that the record supports the trial court's determinations that (1) the aluminum sheets were purchased with the purpose and understanding that the scrap generated by the manufacturing process would be resold; and (2) the purchases of the aluminum that became scrap were wholesale and exempt from the use tax. We affirm the trial court's grant of summary judgment on that issue.
¶ 3 We are also called upon to decide whether a district court has authority to toll the accruing of post judgment interest when a judgment debtor satisfies a judgment by depositing funds in the court's registry after it has filed a notice of appeal. To decide this issue, we first conclude that the trial court had jurisdiction to accept the deposit of funds into the court's registry from the judgment debtor. Then, we further conclude that the trial court's decision to toll the accruing of post judgment interest once the money was deposited in the registry (1) was not prohibited by the language of the post judgment interest statute; and (2) was consistent with the purposes of that statute.
¶ 5 The manufacturer owns and operates a factory in the City of Golden that makes the ends and tabs of beer cans. To make these ends and tabs, the manufacturer purchases rolled sheets of aluminum in large coils. In a method analogous to a baker using a cookie-cutter, a machine punches the ends and tabs out of the sheets. But, like a baker using a cookie-cutter, not all of the aluminum is used in this process. Approximately twenty percent of the aluminum is scrap because it remains on the sheet after the ends and tabs are punched out.
¶ 6 The manufacturer then follows a process to collect this scrap for resale. First, the sheets are cut into smaller pieces. Then, large vacuums collect these pieces. They are delivered to machines that compress them into square, forty-pound briquettes. These briquettes are then stacked together and sold to aluminum companies.
¶ 7 The city issued a use tax assessment for the scrap, asserting that the scrap that was resold was "used" by the manufacturer in its manufacturing process. The city did not assess tax on the parts of the aluminum sheets that were incorporated into the ends and tabs.
¶ 8 The assessment covered the period between 1999 and 2008, and the city claimed that it was owed roughly $5 million. The manufacturer objected, and the city held an informal hearing. After this hearing, the city's finance director upheld the assessment and ordered the manufacturer to pay about $5.3 million, an amount that included interest.
¶ 9 In order to stop interest from accruing, the manufacturer paid the city the full amount under protest. See § 39–21–105(4)(b), C.R.S.2012. The manufacturer also filed an action in the district court challenging the assessment and requesting a trial de novo. § 39–21–105(2)(b), C.R.S.2012.
¶ 10 The city and the manufacturer agreed that there were no issues of material fact, and they both filed motions for summary judgment. The trial court concluded that the manufacturer's primary purpose in purchasing the parts of the aluminum sheets that became scrap in the course of the manufacturing process was to resell them. Therefore, the trial court held that the purchases of the parts of the aluminum sheets that became scrap were wholesale and exempt from the use tax. The court then entered judgment in favor of the manufacturer, and ordered the city to repay the manufacturer the amount that it had assessed under the use tax on the scrap, plus six percent interest.
¶ 11 It was the city's turn to seek to avoid interest from accruing. Clearly reserving its right to appeal the trial court's summary judgment order, the city tendered a check for over $5.5 million to the manufacturer. This amount consisted of the judgment and all interest that had accrued up to that point.
¶ 12 The manufacturer refused to accept the city's check. The city then filed a motion that (1) requested the trial court's permission, under C.R.C.P. 67(a), to deposit the entire amount of the check in the registry of the court; and (2) asked the court to toll the accruing of the post judgment six percent interest. The trial court granted both parts of this motion. It is our understanding that this money remains in the court's registry, and that the manufacturer may withdraw it at any time.
¶ 13 Both parties filed notices of appeal. The city appealed, arguing that the trial court should not have granted summary judgment because the manufacturer "used" the scrap. Therefore, the city argued, the scrap should be subject to the use tax.
¶ 14 The manufacturer initially filed an appeal that contended that the trial court had chosen the wrong interest rate for the judgment. It then added a cross-appeal after the court granted the city's C.R.C.P. 67(a) motion. The manufacturer has abandoned the first issue, and it now alleges only that (1) the decision to grant the C.R.C.P. 67(a) motion is void; and (2) the trial court erred when it ordered that the city's deposit of the check in the registry of the court tolled post judgment interest from accruing on the judgment.
¶ 15 We begin by recognizing that the use tax does not apply to the parts of the aluminum sheets that are incorporated into the ends and tabs for beer cans. This incorporated aluminum falls under an exemption to the use tax—the "processing clause"—that is not at issue here. The only issue we are called upon to decide is whether the use tax applies to the scrap.
¶ 16 We review de novo both a district court's grant of summary judgment and its interpretation of a municipal code. City of Golden v. Aramark Educational Services, LLC , 2013 COA 45, ¶10, 310 P.3d 609, 2013 WL 1240891 (citing BallAerospace & Techs. Corp. v. City of Boulder, 2012 COA 153, ¶8, 304 P.3d 262, 2012 WL 4021425 ).
¶ 17 Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ball Aerospace, ¶ 8. Here, the manufacturer and the city agreed in the trial court that there were no disputed issues of material fact.
¶ 18 Generally, when interpreting tax provisions—including the municipal provision here—we resolve doubts in favor of the taxpayer. Aramark, ¶ 11 (citing Noble Energy, Inc. v. Colo. Dep't of Revenue, 232 P.3d 293, 296 (Colo.App.2010) ). "However, this presumption is reversed when the taxpayer claims a statutory exemption from taxation." Id. We presume that taxation is the rule, resolving any reasonable doubts against the exemption. Id. at ¶ 12 (citing Catholic Health Initiatives Colo. v. City of Pueblo, 207 P.3d 812, 818 (Colo.2009) ).
¶ 20 The city's municipal code also exempts tangible personal property from the use tax when it is incorporated into a manufactured product. This exemption, which is called the "processing clause," states:
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