Frantz v. Palmer

• Citation: 211 W.Va. 188,564 S.E.2d 398
• Decision Date: 29 October 2001
• Docket Number: No. 29178.,29178.
• Court: Supreme Court of West Virginia
• Parties: Gary W. FRANTZ, d/b/a Frantz Lumber Company, Gary W. Frantz, d/b/a Tri-State Logging and Tri-State Logging, Inc. Petitioner Below, Appellant, v. Joseph M. PALMER, State Tax Commissioner of the State of West Virginia Respondent Below, Appellee.

564 S.E.2d 398

211 W.Va. 188

Gary W. FRANTZ, d/b/a Frantz Lumber Company, Gary W. Frantz, d/b/a Tri-State Logging and Tri-State Logging, Inc. Petitioner Below, Appellant, v. Joseph M. PALMER, State Tax Commissioner of the State of West Virginia Respondent Below, Appellee.

No. 29178.

Supreme Court of Appeals of West Virginia.

Submitted September 18, 2001.

Decided October 29, 2001.

Dissenting Opinion of Justice Davis November 14, 2001.

Thomas A. Vorbach, Paul L. Hicks, Ancil G. Ramey, Steptoe & Johnson, Morgantown, for the Appellant.

Darrell V. McGraw, Jr., Attorney General, Stephen Stockton, Senior Assistant Attorney General, Charleston, for the Appellee. ALBRIGHT, Justice.

Appellant Gary W. Frantz, d/b/a Frantz Lumber Company, Tri-State Logging, and Tri-State Logging, Inc. (hereinafter "Taxpayer"), challenges the July 26, 1999, order of the Circuit Court of Kanawha County dismissing his appeal from an administrative ruling of Appellee Joseph M. Palmer, the State Tax Commissioner (hereinafter "Tax Commissioner"). As grounds for the appeal, Taxpayer challenges the constitutionality of West Virginia Code § 11-10-10(d) (1986) (Repl.Vol.1999) insofar as that statutory provision reposes sole discretion in the Tax Commissioner with regard to issuance of a certification of adequate assets sufficient to secure performance in lieu of the appeal bond otherwise required by the statute. Upon careful examination of the statutory provisions, we find that West Virginia Code § 11-10-10(d) violates our constitutional guarantee of open access to the courts¹ by omitting any provision for judicial review of the Tax Commissioner's discretion concerning the issuance of a certificate of adequate assets. Accordingly, we reverse and remand for further proceedings consistent with this opinion.

I. Factual and Procedural Background

In 1990, the Tax Commissioner assessed Taxpayer, a Maryland resident who is in the timber business, for certain unpaid business and occupation,² severance, and franchise taxes covering the period of 1986 through 1989. The amount of the assessment was $17,362.23 with additions of $4,338,78 and interest of $2,636.83 for a total amount owing of $24,337.84. Taxpayer timely filed a petition seeking a reassessment of the taxes and an administrative hearing was held on August 20, 1991. The ruling relative to this administrative proceeding was issued on August 26, 1998—more than seven years after the hearing.³ In issuing its ruling, the Tax Commissioner affirmed the tax liabilities assessed but waived in full all the additions to the tax including the interest figure.

On October 22, 1998, Taxpayer timely filed an appeal from the Tax Commissioner's decision in accordance with the provisions of West Virginia Code § 11-10-10.⁴ As part of the provisions governing the appeal, Taxpayer was required within ninety days of the filing of the petition to file a cash or corporate surety bond or, alternatively, to seek a certificate from the Tax Commissioner dispensing with such bonds based on sufficient proof of assets. See W.Va.Code § 11-10-10(d). While Taxpayer undertook efforts to obtain a corporate surety bond,⁵ the surety company contacted was unwilling to issue a bond based on the fact that Taxpayer's business records for the relevant time period had been destroyed due to the flooding of his Maryland residence in 1995.

Following the passage of the ninety-day period for filing the appeal bond, the Tax Commissioner filed a motion to dismiss⁶ the appeal, citing lack of jurisdiction for Taxpayer's failure to obtain the requisite appeal bond.⁷ On April 15, 1999, Taxpayer filed a motion for leave to proceed without bond or alternatively, with a reduced bond. As exhibits to this motion, Taxpayer filed an affidavit setting forth in detail his unsuccessful efforts regarding securing a surety bond, as well as a financial statement offered to demonstrate the availability of personal assets sufficient to cover the amount of the tax assessment. The circuit court, upon its consideration of the various filings of the parties, ruled that Taxpayer's failure to file an appeal bond within the statutory requirements of West Virginia Code § 11-10-10(d) prevented it from hearing the appeal on jurisdictional grounds. Seeking to obtain an appeal on the merits of his case, Taxpayer asks this Court to reverse the lower court's ruling.

II. Standard of Review

Our review of this matter is de novo consistent with our holding in syllabus point one of Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995), that "[w]here the issue on appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Plenary review is required in this case as issues of statutory interpretation as well as the constitutionality of West Virginia Code § 11-10-10(d) are presented.

III. Discussion

A. Undue Delay

While we find it unnecessary to resolve this case on grounds of delay, we wish to comment nonetheless on the lengthy period of time that ensued between the administrative hearing and the issuance of the Tax Commissioner's ruling. More than seven years transpired between the August 1991 administrative hearing and the Tax Commissioner's ruling in late August 1998. Tax decisions are governed by the requirement set forth in West Virginia Code § 11-10-9 (1978) (Repl.Vol.1999) that the tax commissioner's decision "shall" be provided in writing "within a reasonable time" after the administrative hearing takes place. Id. Rather than offering any explanation for the protracted delay that occurred in this case,⁸ the Tax Commissioner chose instead to criticize Taxpayer for failing to initiate a writ of mandamus to prompt the issuance of a ruling. See, e.g., Syl. Pt. 2, in part, Kanawha Valley Transp. Co. v. Public Serv. Comm'n, 159 W.Va. 88, 219 S.E.2d 332 (1975) ("If a decision is unduly delayed, a proceeding in mandamus may be instituted to compel a decision...."). Among the list of guarantees set forth in article III, section 17 of our state constitution is the laudatory mandate that "justice shall be administered without ... delay." W.Va. Const. art. III, § 17. Just as circuit court judges "have an affirmative duty to render timely decisions on matters properly submitted within a reasonable time following their submission," Syl. Pt. 1, in part, State ex rel. Patterson v. Aldredge, 173 W.Va. 446, 317 S.E.2d 805 (1984), the obligation to act in a timely fashion is similarly imposed upon administrative bodies, as we recognized in syllabus point seven of Allen v. State Human Rights Commission, 174 W.Va. 139, 324 S.E.2d 99 (1984): "[A]dministrative agencies performing quasi-judicial functions have an affirmative duty to dispose promptly of matters properly submitted."

When a litigant asserts constitutional violations predicated on decisional delay, the inquiry becomes one of whether the litigant can establish that his ability to prepare or defend his case has been substantially prejudiced as a result of the delay. See Allen, 174 W.Va. at 157 n. 22,

324 S.E.2d at 117 n. 22 (discussing correlation between administrative promptness and procedural due process); New York State NOW v. Cuomo, 14 F.Supp.2d 424, 431 (S.D.N.Y.1998) (holding that administrative delay may rise to level of constitutional violation if substantive constitutional rights are violated), order vacated on other grounds, 261 F.3d 156 (2nd Cir.2001); O'Keefe v. Murphy, 38 N.Y.2d 563, 381 N.Y.S.2d 821, 345 N.E.2d 292, 294 (1976) ("[W]henever a delay in an administrative adjudication significantly or deliberately interferes with a party's capacity to prepare or to present his case, the right to due process has been violated"); see generally 2 Am. Jur.2d Admin. Law § 379 (1994). Taxpayer asserts that, due to the decisional delay, his ability to defend his position with regard to challenging the tax assessment has been prejudiced by the staleness of the evidence and the intervening flood-related destruction of his business records. Rather than addressing the effects of the delay on Taxpayer's appeal,⁹ the Tax Commissioner observes only that Taxpayer has benefitted from the delay because he enjoyed the benefits of an interest-free loan of money otherwise owed.¹⁰

"Time limitations," as we recognized in Allen, "are frequently imposed by the Legislature in recognition of the need for expeditiousness." 174 W.Va. at 158, 324 S.E.2d at 119. In this case, the within a "reasonable time" period prescribed by the Legislature for the issuance of tax decisions was clearly exceeded by the Tax Commissioner. We would be hard pressed to find the existence of good cause with regard to the seven-year delay between the administrative hearing and the issuance of the decision at issue here. We admonish the Tax Commissioner to comply with the legislatively-selected time period for the issuance of tax decisions. See W.Va.Code § 11-10-9. Despite the availability of extraordinary relief as a means of seeking the issuance of delayed decisions, taxpayers should not have to resort to the judicial system to obtain a timely tax ruling.

B. Constitutional Defects

To determine whether West Virginia Code § 11-10-10(d) violates the West Virginia Constitution, we examine the pertinent statutory provisions which require as follows:

within ninety days after the petition for appeal is filed, or sooner if ordered by the circuit court, the taxpayer shall file with the clerk of the circuit court a cash bond or a corporate surety bond approved by the clerk. The surety must be qualified to do business in this state. These bonds shall be conditioned that the taxpayer shall perform the orders of the court. The penalty of this bond shall be not less than the total amount of tax, additions to tax, penalties and interest for which the taxpayer was found liable in the administrative decision of the tax commissioner. Notwithstanding the aforegoing and in lieu of

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