DeBlois v. Clark, 98-336-M.P.

• Citation: 764 A.2d 727
• Decision Date: 19 January 2001
• Docket Number: No. 98-336-M.P.,98-336-M.P.
• Parties: Arthur J. DeBLOIS, Jr., et al. v. R. Gary CLARK, in his capacity as Tax Administrator.
• Court: United States State Supreme Court of Rhode Island

764 A.2d 727

Arthur J. DeBLOIS, Jr., et al. v. R. Gary CLARK, in his capacity as Tax Administrator.

No. 98-336-M.P.

Supreme Court of Rhode Island.

January 19, 2001.

Present WEISBERGER, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.

Lauren E. Jones, Andrew M. Gilstein, Shawn R. Donahue, Providence, for plaintiff.

James Cambio, Marcia McGair Ippolito, Bernard J. Lemos, Providence, for defendant.

OPINION

LEDERBERG, Justice.

The petitioners, Arthur and Eleanor DeBlois, like many Rhode Islanders in search of a warmer climate during the winter months, began spending significant time in Florida after retirement. After they filed nonresident income tax returns for the years 1991, 1992 and 1993, years for which they claimed to be Florida domiciliaries, the Division of Taxation (tax division or respondent) took the position that the petitioners were Rhode Island domiciliaries and assessed resident income taxes for those years. The signal issue in this case is whether, for state income tax purposes, domicile must be established by clear and convincing evidence or by a preponderance of the evidence. It is our conclusion that domicile is established by a preponderance of the evidence pursuant to the unambiguous burden of proof established by G.L. 1956 § 8-8-28, and we conclude that the petitioners were Florida domiciliaries during the years in question.

Facts and Procedural History

In 1986, after their children were grown and settled, petitioners sold their family home in Pawtucket, Rhode Island, and purchased a waterfront condominium in Warren. In 1988, Arthur DeBlois stepped down as chief executive officer of DeBlois Oil, the family business at which he had worked for more than forty years before retiring two years later on December 30, 1990. Also in 1988, the petitioners purchased a condominium in Vero Beach, Florida, a community they had begun visiting in 1983, and in 1993, they bought a new condominium in Vero Beach. The parties have stipulated that during the tax years in question, 1991 to 1993, petitioners generally spent the months of January through early May and mid-October through late November in Florida, and spent the months of May through early October, along with Thanksgiving through the Christmas season, in Rhode Island. During their Rhode Island stays, petitioners resided at their condominium in Warren, which their children — who were not Rhode Island residents — used as a waterfront "getaway" when their parents were in Florida.

The petitioners filed nonresident Rhode Island income tax returns for tax years 1991, 1992, and 1993. The tax division mailed three "Notice[s] of R.I. Income Tax Due" to petitioners in 1994, one for each of the tax years 1991 to 1993. Each notice stated that the balance was "payable" and "due" ten days from the date of the notice. In total, the tax division sought $59,720.58 in taxes and $15,155.18 in interest and penalties, for a total of $74,875.76. This assessment was based on the tax division's position that petitioners were residents of Rhode Island, not Florida, for the tax years 1991 to 1993, and therefore they should have filed Rhode Island resident income tax statements for the years in question.¹

The petitioners sought review of the alleged tax liability by the tax administrator and challenged the determination that they were Rhode Island residents. After a hearing on the 1993 and 1992 tax years and a review based on stipulated facts pertaining to the 1991 tax year, the administrative hearing officer ruled against petitioners. The tax administrator affirmed the hearing officer's decision, and petitioners appealed to the District Court pursuant to § 8-8-24. The claims for the three tax years were consolidated.

The District Court addressed the issues of whether petitioners were domiciliaries of Rhode Island or Florida and whether the notices sent to petitioners were statutorily and constitutionally adequate. After a hearing on March 16, 1998, the District Court judge issued a decision in favor of the tax administrator, and on the basis of their contacts with Rhode Island, found that petitioners were domiciliaries of Rhode Island. In making this determination, the District Court judge stated that "the party seeking to establish a change in domicile, here Mr. and Mrs. DeBlois, must do so by clear and convincing evidence," (emphasis added), citing as support Margani v. Sanders, 453 A.2d 501, 503 (Me.1982), and Kartiganer v. Koenig, 194 A.D.2d 879, 599 N.Y.S.2d 312, 314 (A.D. 1993). The District Court judge also held that any defects in the tax-due notices were de minimis. The petitioners filed a petition for certiorari, and this Court issued the writ.

Standard of Review

Our review on certiorari is limited to questions of law. Hometown Properties, Inc. v. Rhode Island Department of Environmental Management, 592 A.2d 841, 843 (R.I.1991). "`We do not weigh the evidence presented * * * but rather [we] inspect the record to determine if any legally competent evidence exists therein to support the findings made by the trial justice.'" Gregson v. Packings & Insulations Corp., 708 A.2d 533, 535 (R.I.1998).

Burden of Proof

The determination of the proper burden of proof by which domicile must be proven in a tax case is governed by § 8-8-28, entitled "Burden of proof in tax cases."² The statute states "Burden of proof in tax cases. — In all tax cases before the court, and upon appeal therefrom, a preponderance of the evidence shall suffice to sustain the burden of proof. The burden of proof shall fall upon the party seeking affirmative relief and the burden of going forward with the evidence shall shift as in other civil litigation. In any proceedings in which the division of taxation alleges fraud or an exception to the normal statute of limitations on assessment, the burden of proof in respect of that issue shall be upon the division of taxation. Tobe sustained on the issue of fraud, the division of taxation must sustain a burden of clear and convincing proof." (Emphases added.)

In interpreting a legislative enactment, we must determine and effectuate the Legislature's intent and attribute to the statute the meaning most consistent with its policies or obvious purposes. Dias v. Cinquegrana, 727 A.2d 198, 199-200 (R.I.1999). Section 8-8-28 clearly directs that the quantum of evidence sufficient to sustain the burden of proof in factual issues in tax cases is a preponderance of the evidence. Thus, petitioners needed only to demonstrate a change of domicile to Florida by a preponderance of the evidence, not by clear and convincing evidence.

The tax division argued that the second sentence of § 8-8-28, which states that "[t]he burden of proof shall fall upon the party seeking affirmative relief and the burden of going forward with the evidence shall shift as in other civil litigation," should be interpreted to mean that "once issues have been joined and some evidence presented thereon, the burdens of both production and persuasion on specific issues can shift and vary as a tax appeal progresses." (Emphases added.) In Dart Industries, Inc. v. Clark, 696 A.2d 306, 310 (R.I.1997), we interpreted the clause "[t]he burden of proof shall fall upon the party seeking affirmative relief" in § 8-8-28 to mean that both the burden of production and persuasion fall on the party seeking affirmative relief. In § 8-8-28, the phrase "shall shift as in other civil litigation" modifies "the burden of going forward with the evidence" — that is, the burden of production — not the burden of proof.³ Hence, the intent of the Legislature in stating that the "burden of going forward with the evidence shall shift as in other civil litigation" merely codifies that in tax cases, theburden of production shifts as it does in civil cases generally, but the burden of persuasion or burden of proof on factual issues does not vary from issue to issue.

The respondent cited Seibert v. Clark, 619 A.2d 1108 (R.I.1993) to support its proposition that a standard of proof other than a preponderance of the evidence may be applied to the issue of domicile in a tax case. In Seibert we held that "[t]he burden falls on [the taxpayer] to prove that the decal fee was unconstitutional beyond a reasonable doubt." Id. at 1113.⁴ (Emphasis added.) Seibert, however, challenged the constitutionality of a tax statute under the Commerce Clause and the Privileges and Immunities Clause of the United States Constitution; unlike this case, it did not address the burden of proof for establishing the domicile of a resident.

In cases of fraud, however, § 8-8-28 directs that "the division of taxation must sustain a burden of clear and convincing proof." We interpret the specification that fraud be proven by clear and convincing evidence as supporting our conclusion that the Legislature intended that a preponderance of the evidence will suffice in determining all other factual issues in a tax case. Consequently, we hold that the trial judge erred by failing to adopt the preponderance of the evidence standard required by § 8-8-28.

Resolution

In this case, the evidence before the District Court consisted in relevant part of a list of stipulated exhibits and petitioners' trial testimony that primarily discussed their contacts and activities inFlorida and Rhode Island during the relevant period.⁵ The petitioners' testimony on these issues was uncontroverted. Because the issues and facts in this case have been fully developed by the parties, a remand would not provide additional information necessary for our decision. See Easton's Point Association, Inc. v. Coastal Resources Management Council, 559 A.2d 633, 636 (R.I.1989) (holding that because "the facts and issues have been fully developed and clarified, further remand would not provide decisive new information"). Therefore, we proceed to decide the domicile of the petitioners.

This case can be resolved by applying § 8-8-28 to uncontradicted facts, and hence, we face...