Mann v. North Dakota Tax Com'R

• Citation: 736 N.W.2d 464,2007 ND 119
• Decision Date: 25 July 2007
• Docket Number: No. 20060366.,20060366.
• Parties: Joan MANN, Ken Danks d/b/a TEK Industries, Tracy Wilkie, Christa Monette, and other persons similarly situated, Plaintiffs and Appellants v. NORTH DAKOTA TAX COMMISSIONER, Cory Fong, Defendant and Appellee and North Dakota Treasurer, Kelly Schmidt, Defendant.
• Court: North Dakota Supreme Court

736 N.W.2d 464

2007 ND 119

Joan MANN, Ken Danks d/b/a TEK Industries, Tracy Wilkie, Christa Monette, and other persons similarly situated, Plaintiffs and Appellants v. NORTH DAKOTA TAX COMMISSIONER, Cory Fong, Defendant and Appellee and North Dakota Treasurer, Kelly Schmidt, Defendant.

No. 20060366.

Supreme Court of North Dakota.

July 25, 2007.

Vance Gillette (argued), Minot, ND, for plaintiffs and appellants.

Daniel Lucian Rouse (argued) and Donnita Ann Wald (appeared), Special Assistant Attorneys General, Tax Department, Bismarck, ND; and Robert W. Wirtz (on brief), Special Assistant Attorney General, Bismarck, ND, for defendants and appellee.

VANDE WALLE, Chief Justice.

[¶ 1] Joan Mann, Ken Danks, doing business as TEK Industries, Tracy Wilkie, and Christa Monette ("plaintiffs") appealed from an order denying reconsideration, and from an underlying judgment denying their motion to declare the state fuel tax refund process unlawful, denying their request for class certification, and granting their motion for summary judgment to the extent the court found a six year statute of limitations applies. We conclude the statutory refund process is not unlawful, the district court did not abuse its discretion in denying class certification, and the court did not abuse its discretion in denying the plaintiffs' request for attorney's fees. We modify the statute of limitations look-back period for the plaintiffs' refund claims, and we affirm the judgment as modified.

I

[¶ 2] The plaintiffs are Native Americans. Mann is a member of the Three Affiliated Tribes, owns Mann Enterprises, and lives on the Fort Berthold Indian Reservation. Danks is also a member of the Three Affiliated Tribes, owns TEK Industries, and lives on the Fort Berthold Indian Reservation. Wilkie and Monette are members of the Turtle Mountain Band of Chippewa Indians and reside on the Turtle Mountain Indian Reservation.

[¶ 3] In August 2003, the plaintiffs sued the State under federal and state law, seeking a declaration that it is illegal for the State to impose a motor vehicle fuel tax under N.D.C.C. ch. 57-43.1 on fuel they purchased on their respective reservations and seeking a refund of the taxes they already paid. They also requested the district court certify the action as a class action. The plaintiffs sought declaratory and injunctive relief, requesting a permanent injunction barring imposition of the motor vehicle fuels tax on their reservations. The State moved to dismiss, arguing the fuels tax could lawfully be imposed and collected on the reservations under the Hayden-Cartwright Act, 4 U.S.C. § 104.

[¶ 4] In January 2004, the district court rejected the State's argument and declared the fuels tax imposed under N.D.C.C. § 57-43.1-02 was illegally imposed on Native Americans who reside on North Dakota Indian reservations and purchase motor vehicle fuel on reservation lands. The court granted a permanent injunction prohibiting the collection of the illegal fuels tax. The district court dismissed the plaintiffs' federal claims and dismissed, without prejudice, all of the plaintiffs from the action except Danks because he had claimed a refund of taxes paid from the State and had complied with N.D.C.C. § 32-12-03. The court reserved the questions on certification and refunds until a later date.

[¶ 5] The State asked the court to reconsider the order and also sought a stay of the order pending appeal. The plaintiffs also moved for reconsideration challenging the dismissal of the federal claims and the dismissal of all the plaintiffs except Danks. The plaintiffs reinstituted their claims for refunds and for certification of a class action. In April 2004, the district court denied the State's motion for reconsideration, but granted the motion for a stay pending appeal. The court also denied the plaintiffs' motion for reconsideration and postponed determination of refunds and class certification. The court consolidated its rulings into "findings of fact, conclusions of law and order for judgment," but a judgment was not entered.

[¶ 6] The plaintiffs appealed and the State cross-appealed from the various orders. In February 2005, we dismissed the appeals concluding that in the absence of a final judgment we did not have jurisdiction. Mann v. North Dakota Tax Comm'r, 2005 ND 36, ¶¶ 13, 19, 692 N.W.2d 490. We also declined to exercise our supervisory authority. Id. at ¶ 24. But we said:

The district court's ruling that the Hayden-Cartwright Act does not authorize imposition of the state motor vehicle fuels tax on Indian reservations is in accord with every federal and state court decision that has addressed the issue. The risk that the district court committed error in its construction of the Hayden-Cartwight (sic) Act is negligible.

The plaintiffs have conceded that the injunction prohibits collection of the motor vehicle fuels tax only from enrolled Native Americans on their own respective Indian reservations. Although the feasibility of enforcing the injunction prohibiting collection of the motor vehicle fuels tax from Native Americans on their own reservations is questionable, the plaintiffs have indicated they would be satisfied if a refund procedure similar to the procedure provided in N.D.C.C. ch. 57-43.1 were made available to them. We urge the Legislature to address this problem.

Id. at ¶¶ 22-23 (citations omitted).

[¶ 7] During the 2005 legislative session, the legislature enacted N.D.C.C. § 57-43.1-03.2, a refund provision, which provides:

1. A native American may file a claim with the tax commissioner for a refund of motor vehicle fuel taxes paid by that person under this chapter or special fuel taxes paid under chapter 57-43.2 if the motor vehicle fuel or special fuel was purchased from a retail fuel dealer located on the Indian reservation where the native American is an enrolled member and the fuel was delivered to the native American on that reservation. The refund provisions of this chapter apply to refund claims made under this section. 2. A fuels tax refund reserve fund is created as a special fund in the state treasury. The tax commissioner shall deposit in that fund such amounts from motor vehicle fuel tax and special fuel tax collections as the attorney general determines necessary to be expended for refunds to which native American government entities may be entitled under qualifying circumstances and conditions determined by the attorney general. There is appropriated as a continuing appropriation out of funds set aside under this subsection so much of the funds as the attorney general determines is necessary to meet the expenditures authorized under this subsection and such funds may be expended for that purpose.

2005 N.D. Sess. Laws ch. 40, § 13. Section 57-43.1-03.2, N.D.C.C., by its terms, specifically applies to all qualifying fuel purchases made after December 31, 2004. 2005 N.D. Sess. Laws ch. 40, § 16. The legislature also included a statement of its intent regarding the interpretation of the statute:

A new section to Senate Bill No. 2012, as approved by the fifty-ninth legislative assembly, is created and enacted as follows: "LEGISLATIVE INTENT REGARDING INTERPRETATION. Sections 13[, § 57-43.1-03.2,] and 16[, providing for an effective date,] of this Act may not be construed to preclude claims for motor vehicle and special fuel tax refunds by tribal members or tribal entities for taxes on purchases made before January 1, 2005."

2005 N.D. Sess. Laws ch. 15, § 39.

[¶ 8] In June 2005, the plaintiffs filed an amended motion for summary judgment and class action, questioning whether and how far back the State could be held liable for fuel tax refunds, requesting class certification, and requesting attorney's fees. The plaintiffs also moved to declare the refund process unlawful claiming it violates equal protection and due process.

[¶ 9] The district court denied the plaintiffs' claim that the N.D.C.C. ch. 57-43.1 refund process is unlawful, concluding the process does not violate due process and equal protection because the refund process provides claimants with a meaningful opportunity to secure relief for taxes already paid. The court granted the plaintiffs' motion for summary judgment to the extent the court found a six-year statute of limitations applies to retrospective applications for refunds and to the extent the court found interest was payable on refunds. The court denied the plaintiffs' request for class certification after deciding a class action was not necessary to ensure a fair and efficient adjudication of the controversy. The court did not take any action on the plaintiffs' request for attorney's fees. The plaintiffs moved for reconsideration arguing the statutory refund process could not be applied retroactively and claiming they were entitled to attorney's fees. The court denied the plaintiffs' motion for reconsideration and the plaintiffs' request for attorney's fees and a final judgment was entered.

II

[¶ 10] The plaintiffs argue the statutory fuel tax refund process contained in N.D.C.C. ch. 57-43.1 violates due process because the refund process does not allow a claimant to request a hearing to challenge a denial. They also argue the refund process is imposed on Native American claimants in a manner that violates equal protection by denying a refund claim unless the claimant provides original receipts with fuel tax listed as a separate item and requiring claims to be for fuel purchased for use in non-licensed equipment.

[¶ 11] The Due Process Clause of the Fourteenth Amendment to the United States Constitution provides, "nor shall any State deprive any person of life, liberty, or property, without due process of law." Payment of a tax constitutes a deprivation of property, and therefore the state must provide either predeprivation or postdeprivation procedural safeguards to satisfy the requirements of the Due Process Clause. McKesson Corp. v. Division of Alcoholic...