Evans & Sutherland Computer Corp. v. Utah State Tax Commission, 960009

• Decision Date: 07 October 1997
• Docket Number: No. 960009,960009
• Citation: 953 P.2d 435
• Court: Utah Supreme Court
• Parties: 327 Utah Adv. Rep. 38 EVANS & SUTHERLAND COMPUTER CORP., Plaintiff and Appellant, v. UTAH STATE TAX COMMISSION and County Board of Equalization of Salt Lake County, State of Utah, Defendants and Appellees.

Page 435

953 P.2d 435

327 Utah Adv. Rep. 38

EVANS & SUTHERLAND COMPUTER CORP., Plaintiff and Appellant, v. UTAH STATE TAX COMMISSION and County Board of Equalization of Salt Lake County, State of Utah, Defendants and Appellees.

No. 960009.

Supreme Court of Utah.

Oct. 7, 1997.

Rehearing Denied Feb. 23, 1998.

Ken P. Jones, Salt Lake City, for plaintiff and appellant.

Jan Graham, Atty. Gen., Michelle Bush, Asst. Atty. Gen., Salt Lake City, for Tax Commission.

Mary Ellen Sloan, Douglas R. Short, Salt Lake City, for Board of Equalization.

ZIMMERMAN, Chief Justice:

This is an appeal from the Third District Court's dismissal of Evans & Sutherland Computer Corporation's ("Evans & Sutherland") petition seeking review by trial de novo of the decision of the Utah State Tax Commission ("the Commission") concerning a real property tax dispute with the Salt Lake County Board of Equalization ("the Board"). The district court ruled that the statute granting that court jurisdiction to review the Commission's decision, section 59-1-601 of the Utah Code, did not apply retroactively and, as a consequence, the court did not have jurisdiction to hear Evans & Sutherland's case. We have jurisdiction over this matter under section 78-2-2(3)(j) of the Utah Code. We reverse the district court's ruling that section 59-1-601 does not apply retroactively to this dispute, but we affirm the dismissal of the action because we find that section 59-1-601 violates article XIII, section 11 and article V, section 1 of the Utah Constitution.

We first set forth the facts of the dispute. In March of 1992, Evans & Sutherland filed an appeal from the Board with the Commission for the tax year 1991. ¹ Evans & Sutherland contested the value set by the Board on six of its buildings for property tax purposes and on the parcels of land on which the buildings are located for privilege tax purposes. On June 3, 1993, the Commission initiated a formal hearing on the valuation issues. The Commission issued its "Findings of Fact, Conclusions of Law, and Final Decision" on February 2, 1994. Evans & Sutherland timely filed a request for reconsideration of the Commission's decision concerning the valuation of the six buildings for property tax purposes. ² See Utah Code Ann. § 63-46b-13(1)(a) (providing twenty days within which to file written request for reconsideration of agency orders). Because the Commission did not act on the request within twenty days after it was filed, the request for reconsideration was deemed denied on March 15, 1994, pursuant to section 63-46b-13(3)(b) of the Utah Code. Instead of acting on the request for reconsideration within the twenty-day period, the Commission sought to extend indefinitely its period of time for considering and acting on the request in order to give the parties time to brief the issues raised in the request and to give the Commission sufficient time to consider the request. Evans & Sutherland filed a protective petition for review with this court on April 12, 1994. ³ See Utah Code Ann. § 63-46b-14(3)(a) (directing parties to file "petition for judicial review of final agency action within 30 days after the date that the order constituting the final agency action is issued or is considered to have been issued under Subsection 63-46b-13(3)(b)"). We stayed the petition for review until after the issuance of the Commission's order on the request for reconsideration and the expiration of time for filing any appeals pursuant thereto. The Commission did not issue an order on Evans & Sutherland's request until January 27, 1995, when the Commission denied the request.

Thereafter, Evans & Sutherland petitioned for review with the Third District Court, seeking review by trial de novo of the Commission's decision. ⁴ In 1993, the legislature had amended section 59-1-601 of the Code to permit district court review by trial de novo of Commission decisions resulting from formal hearings. Taxpayers Appeal from Administrative Rulings Act, ch. 248, sec. 2, § 59-1-601, 1993 Utah Laws 1255, 1255. Prior to the passage of that statute, review was in this court only and the standard of review, governed by section 59-1-610, was more restrictive. See Utah Code Ann. § 63-46b-16(1); id. § 78-2-2(3)(e)(ii); see also id. § 59-1-610. As amended, section 59-1-601 provides that "beginning July 1, 1994, the district court shall have jurisdiction to review by trial de novo all decisions by the [tax] commission resulting from formal adjudicative proceedings." Id. § 59-1-601(1) (1996). The Board moved to dismiss Evans & Sutherland's petition on the grounds that section 59-1-601 does not apply retroactively and is unconstitutional. The district court granted the Board's motion to dismiss, concluding that the amended section 59-1-601 effected a substantive change in the law, making retroactive application impermissible. The district court did not address the constitutional question. Evans & Sutherland appealed the dismissal to this court.

We first consider whether section 59-1-601 applies retroactively to matters pending before the Commission prior to the effective date of the statute. Whether a statute operates retroactively is a question of law, which we review for correctness without deference to the district court. See Madsen v. Borthick, 769 P.2d 245, 252-53 (Utah 1988). Two rules of statutory construction are relevant to our assessment. One is the "long-standing rule of statutory construction that a legislative enactment which alters the substantive law ... will not be read to operate retrospectively unless the legislature has clearly expressed that intention." Id. at 253 (citations omitted); see also Utah Code Ann. § 68-3-3. The intent to have a statute operate retroactively may be indicated by explicit statements that the statute should be applied retroactively, see, e.g., Utah Code Ann. § 19-6-302.5(3); id. § 19-6-402.5(3); id. § 77-18-17; see also id. § 57-15-2, or by clear and unavoidable implication that the statute operates on events already past. See 82 C.J.S. Statutes § 414 (1953). The second relevant rule of statutory construction, which is often referred to as an exception to the first, permits retroactive application " 'where a statute changes only procedural law by providing a different mode or form of procedure for enforcing substantive rights' " without enlarging or eliminating vested rights. Roark v. Crabtree, 893 P.2d 1058, 1062 (Utah 1995) (quoting Pilcher v. State, 663 P.2d 450, 455 (Utah 1983)) (additional citations omitted).

Traditionally, we have begun our analysis by applying the first rule of statutory construction: Only when we conclude that retroactive application is not permitted under that rule do we consider whether the second rule of construction permits retroactive operation. See, e.g., id. at 1061-62. However, the terms of the first rule of statutory construction indicate that it applies only when a statute alters the substantive law. Consequently, where, as here, a statute does not contain an express retroactivity provision, the better approach is to first determine whether a statute is substantive or procedural and then apply the applicable rule of statutory construction.

We begin with the language of section 59-1-601 to determine whether that section is substantive or procedural. At the time of Evans & Sutherland's appeal to the district court, section 59-1-601 provided in relevant part, "In addition to the jurisdiction granted in Section 63-46b-15, beginning July 1, 1994, the district court shall have jurisdiction to review by trial de novo all decisions by the commission resulting from formal adjudicative proceedings." Utah Code Ann. § 59-1-601(1) (1996). ⁵ Before the enactment of this section, the district court did not have jurisdiction to review Commission decisions resulting from formal adjudicative proceedings. The only avenue for challenging such decisions was to file a petition for review with this court. See id. § 63-46b-16(1); id. § 78-2-2(3)(e)(ii). Section 59-1-601 grants parties the choice of seeking review in the district court by trial de novo or in this court by the standard of review set forth in section 59-1-610. ⁶ See id. § 59-1-602(1)(a).

We conclude that these changes are procedural in nature. Section 59-1-601 controls the mode and form of procedure for enforcing the underlying substantive rights in the valuation dispute between the Board and Evans & Sutherland. The substantive law pertinent to this dispute has not been changed; instead, section 59-1-601 merely affects the judicial machinery available for determining the substantive rights. See Salt Lake Child & Family Therapy Clinic v. Frederick, 890 P.2d 1017, 1020 n. 3 (Utah 1995); see also National Parks & Conservation Ass'n v. Board of State Lands, 869 P.2d 909, 912 (Utah 1993) (permitting retroactive application of amendments to procedural statutes "if the amendments merely regulate the procedures for presenting and resolving a case and do not adversely affect vested rights" (emphasis added)); State v. Burgess, 870 P.2d 276, 280 n. 6 (Utah Ct.App.1994). It is true that a different standard of review applies in cases before the district court, and we assume this was done with a purpose, but that fact does not make section 59-1-601 substantive. See Board of Equalization v. State Tax Comm'n ex rel. Benchmark, Inc., 864 P.2d 882, 884 (Utah 1993) (ruling that section 59-1-610, which changed standard of review on appeals from Commission, applied retroactively).

In light of the foregoing, the procedural enactment at issue here may operate retroactively so long as it does not enlarge or eliminate vested rights. The Board argues that section 59-1-601 should not be applied retroactively for two reasons. First, such an application will deprive the Board of a final decision rendered in its favor; second, permitting de novo review in the district court will expose the Board to substantial additional costs of litigation...