Frymier-Halloran v. Paige

• Decision Date: 18 May 1995
• Docket Number: FRYMIER-HALLORAN,No. 22734,22734
• Court: West Virginia Supreme Court
• Parties: Teresa, an Individual, and Officer of Four P., Inc., dba Sunlite Seafoods, Appellant, v. James H. PAIGE II, as Tax Commissioner of the State of West Virginia, Appellee.

Page 780

458 S.E.2d 780

193 W.Va. 687

Teresa FRYMIER-HALLORAN, an Individual, and Officer of Four

P., Inc., dba Sunlite Seafoods, Appellant, v. James H. PAIGE II, as Tax Commissioner of the State of West

Virginia, Appellee.

No. 22734.

Supreme Court of Appeals of

West Virginia.

Submitted May 2, 1995.

Decided May 18, 1995.

[193 W.Va. 688] Syllabus by the Court

1. W.Va.Code, 11-15-17 (1978), explicitly provides that an officer of a corporation shall be personally liable for any consumers sales and service tax along with any additions, penalties, and interest thereon owed by the corporation.

2. It is not a defense to individual liability for one who acts as an officer of a corporation to assert that he was not properly elected as an officer.

3. The same standard set out in the State Administrative Procedures Act, W.Va.Code, 29A-1-1, et seq., is the standard of review applicable to review of the Tax Commissioner's decisions under W.Va.Code, 11-10-10(e) (1986). Thus, the focal point for judicial review should be the administrative 4. The circuit court may inquire outside the administrative record when necessary to explain the Tax Commissioner's action. When a failure to explain the action effectively frustrates judicial review, the circuit court may obtain from the agency, either through affidavits or testimony, such additional information for the reasons for the Tax Commissioner's decision as may prove necessary. The circuit court's inquiry outside the record is limited to determining whether the Tax Commissioner considered all relevant factors or explained the course of conduct or grounds of the decision.

[193 W.Va. 689] record already in existence, not some new record made initially in the reviewing court.

5. Once a full record is developed, both the circuit court and this Court will review the findings and conclusions of the Tax Commissioner under a clearly erroneous and abuse of discretion standard unless the incorrect legal standard was applied.

Teresa Frymier-Halloran, pro se.

Stephen B. Stockton, Asst. Atty. Gen., Charleston, for appellee.

CLECKLEY, Justice:

This appeal is brought pro se by the appellant, Teresa Frymier-Halloran, who requests this Court to reverse the final order of the Circuit Court of Kanawha County, dated June 13, 1994, which affirmed and adopted the findings of fact and conclusions of law of an administrative decision, dated December 23, 1992, made by the Office of Hearings and Appeals of the State Tax Department of West Virginia. The circuit court specifically found that "[a]fter a thorough consideration and review of the record and all assignments of error, ... the [administrative] decision ... is not plainly wrong with respect to the facts of this case and that the questions of law presented were decided correctly." The administrative decision determined that the appellant was personally liable as a corporate officer of Four P., Inc., dba and hereinafter referred to as Sunlite Seafoods, for unpaid consumers sales and service tax in an amount totaling $13,512.13 and a penalty in the amount of $586.62.

The appellant argues the circuit court erred by affirming the administrative decision because the evidence demonstrates she was not a corporate officer of Sunlite Seafoods and, therefore, cannot be held personally liable for its tax liability. In the alternative, she alleges three reasons why we should remand this case for her to present further evidence that she should not be liable for the tax assessment. These three reasons include: The hearing examiner and the circuit court considered only a portion of her prior testimony which she gave on September 3, 1986, at a Hearing on the Assessments against the corporation; she was denied full discovery in the case; and the hearing examiner erred by denying her motion for a continuance. Finally, the appellant alleges the circuit court erred by issuing its final order without holding a hearing and before she filed a brief with the circuit court.

I. FACTS AND PROCEDURAL BACKGROUND

On August 19, 1991, James E. Dixon, the Director of the Compliance Division of the Department of Tax and Revenue, issued two tax assessments against the appellant, an individual, as an officer of Sunlite Seafoods. One of the assessments was issued pursuant to W.Va.Code, 11-15-17 (1986), for unpaid consumers sales and service tax of the corporation, with additions and interest, for the period from April, 1993, through December, 1985, in the amount of $13,512.13. The other assessment was a "MONEY PENALTY, in the amount of withholding tax not accounted for and paid over by the corporation," for the same time period in the amount of $586.62. The appellant timely filed with the Office of Hearings and Appeals for each assessment to be reassessed. A hearing was held on October 14, 1992, at which the appellant appeared pro se and testified.

Based upon the evidence presented and submitted at the hearing before the Office of Hearings and Appeals, the hearing examiner ¹ When counsel for Department of Tax and Revenue attempted to submit the transcribed portion of the appellant's statements from the 1986 hearing at the 1992 hearing, the appellant requested the hearing examiner grant a continuance. In essence, the appellant claims she did not know those statements would be used against her and was not prepared to defend against them. The appellant also complains that only portions of her statements were transcribed and she was not provided a copy of those statements prior to the hearing. Thus, she states she was denied proper discovery.

¹ [193 W.Va. 690] made a number of findings of fact and conclusions of law in the December 23, 1992, order. Among the findings of fact, the hearing examiner cited portions of the appellant's previous testimony that she gave at an administrative hearing before the State Tax Commissioner, held on September 3, 1986, for a Hearing on the Assessment of the tax owed by Sunlite Seafoods. The hearing examiner determined that at the 1986 hearing the appellant made certain claims that support a finding she acted as an officer of the corporation. For instance, the hearing examiner found the appellant testified on behalf of the corporation at the 1986 hearing and said she was the Secretary of Sunlite Seafoods; "she was personally responsible for state tax compliance"; both she and the President of Sunlite Seafoods, Wayne Patterson, invested money in the business; and, "due to personal and computer problems, she had failed to file several state tax returns and to remit all of the tax due."

The hearing examiner found the appellant "was not prejudicially 'surprised' by her own testimony ... and otherwise did not demonstrate that the hearing in this case should have been continued once she was confronted with that testimony." The hearing examiner further found the appellant "very quickly attempted to show that the former testimony was given 'under duress' of wanting to protect Mr. Patterson[.]" In addition, the hearing examiner determined that in spite of this evidence, "there is ample other evidence on the whole record in this case to support the finding ... that the [appellant] was a responsible officer of the corporation."

In its brief, the State also argues the appellant admitted at the 1992 hearing that she was provided a copy of the previous administrative decision which, inter alia, identifies her as a "Secretary of the Corporation" and finds the appellant admitted to being "responsible for tax compliance, and that the failure to file was based on her own personal problems." The appellant also admitted at the 1992 hearing that she was aware that counsel for the Department of Tax and Revenue had a recording of her prior statements given at the 1986 hearing.

After the hearing in 1986, the State Tax Commissioner issued an administrative decision modifying the assessed value of the consumers sales and service tax due by Sunlite Seafoods. However, the corporation had insufficient assets to pay its state tax liability. Therefore, the State Tax Commissioner attempted to collect the amount due individually from Mr. Patterson who served as the corporation's President. Mr. Patterson made some installment payments on the amount due, but he did not pay the entire assessed liability. Consequently, the Tax Commissioner sought to collect the balance of the tax due from the appellant, which gave rise to the August 19, 1991, assessments against her. The only issue before the Office of Hearings and Appeals at the 1992 hearing was whether the appellant could be considered a corporate officer or otherwise be held personally responsible for paying the balance of the tax due.

II. CORPORATE OFFICER LIABILITY

Our initial inquiry is whether the evidence contained in the record is insufficient as a matter of law to establish the tax liability of the appellant. If it is insufficient as a matter of law, the appellant is entitled to have this litigation brought to an end in her favor. The appellant contends the evidence she submitted In support of her position, the appellant submitted into evidence the corporation's articles of incorporation as amended in November, 1980, that identify Mr. Patterson as President but that do not have anyone listed as the corporation's Secretary. Moreover, the appellant said she held no stock in the corporation nor received any income from the corporation. The appellant also testified that she attended the 1986 hearing before the Tax Commissioner under duress. She stated she was in a severely physically and an emotionally abusive relationship with Mr. Patterson over a period of years and lied when she said she was an officer of the corporation at the 1986 hearing in order to protect Mr. Patterson.

[193 W.Va. 691] and testimony she gave at the 1992 hearing demonstrates that she was not an officer, specifically the Secretary, of Sunlite Seafoods. Instead, she states she was a "secretary" only in the sense of being a personal...