Millard County v. Utah State Tax Com'n ex rel. Intermountain Power Agency, s. 890100

• Decision Date: 16 December 1991
• Docket Number: 900285,Nos. 890100,s. 890100
• Citation: 823 P.2d 459
• Parties: MILLARD COUNTY, a legal and political subdivision, Petitioner, v. UTAH STATE TAX COMMISSION ex rel. INTERMOUNTAIN POWER AGENCY, Respondent. MILLARD COUNTY, a legal and political subdivision, Petitioner, v. UTAH STATE TAX COMMISSION ex rel. INTERMOUNTAIN POWER AGENCY, Respondent.
• Court: Utah Supreme Court

Page 459

823 P.2d 459

MILLARD COUNTY, a legal and political subdivision, Petitioner, v. UTAH STATE TAX COMMISSION ex rel. INTERMOUNTAIN POWER

AGENCY, Respondent.

MILLARD COUNTY, a legal and political subdivision, Petitioner, v. UTAH STATE TAX COMMISSION ex rel. INTERMOUNTAIN POWER

AGENCY, Respondent.

Nos. 890100, 900285.

Supreme Court of Utah.

Dec. 16, 1991.

R. Paul Van Dam, Leon A. Dever, Salt Lake City, for Utah State Tax Com'n.

Mark K. Buchi, Richie D. Haddock, Richard G. Wilkins, Salt Lake City, for Intermountain Power Agency.

LeRay G. Jackson, Fillmore, Bill Thomas Peters, Salt Lake City, and Warren H. Peterson, Delta, for Millard County.

STEWART, Justice:

Millard County seeks a writ of review of an order of the Utah State Tax Commission (1) denying the County's motion to intervene in a proceeding before the Commission to redetermine the sales tax liability of Intermountain Power Agency ("IPA"), and (2) denying the County's request to review certain Commission records concerning IPA. Millard County also seeks review of the Commission's final order fixing IPA's sales tax liability. These cases have been consolidated.

Utah's Local Sales and Use Tax Act allows any county, city, or town to impose a local option sales and use tax, or "piggyback" tax, up to 3/4 of 1% on all sales subject to the state sales tax within the jurisdiction of the local governmental entity. Utah Code Ann. §§ 59-12-201 to -208 (1987 & Supp.1991); see also Salt Lake City v. Tax Comm'n, 813 P.2d 1174, 1175 (Utah 1991). Although the tax is imposed only at the option of local government, the state collects the local option tax along with the state sales tax and remits the proceeds of the local tax to the governmental entity imposing it. Millard County elected to impose a local option sales and use tax.

IPA pays substantial sales taxes on transactions that occur in Millard County. In May 1988, IPA filed a petition with the Commission for a redetermination of its sales and use tax liability. In June 1988, the County filed a motion to intervene in the redetermination proceeding and to review certain records pertaining to IPA's tax liability. In August 1988, the Commission and IPA stipulated to the amount of IPA's tax liability, and in February 1989, the Commission denied the County's motion to intervene and its request to review records.

In this Court, the County argues that it was entitled to review the tax records because of a contractual provision between the County and the Commission. The terms of the contract are statutorily mandated. The contract provides in part: "The Commission agrees to permit authorized personnel of the Political Subdivision to examine the records and procedures of the Commission concerning the local tax law, the ordinance and the records of taxpayers subject thereto." The Commission responds that Utah Code Ann. § 59-1-403(1) (1987) requires that sales tax returns be kept confidential and, therefore, the County is not entitled to review the records.

We turn first to that issue. Utah Code Ann. § 59-1-403(3)(b) provides that the Commission may by rule share information gathered from returns with a political subdivision of the state if the political subdivision grants substantially similar privileges to the state. This Court recently held that contractual provisions that are almost identical to the instant provisions accorded Salt Lake County the right of access to relevant records concerning the local tax law. See Salt Lake City v. Tax Comm'n, 813 P.2d 1174 (Utah 1991). Since the instant case is not distinguishable, Salt Lake City is controlling. We hold that the Commission erred in denying Millard County's request to review the records.

Millard County next asserts that the Commission erred in denying the motion to intervene. We first note that an order denying a motion to intervene is a final disposition of the claims asserted by the applicant for intervention and is appealable. See Tracy v. University of Utah Hosp., 619 P.2d 340, 342 (Utah 1980); Commercial Block Realty Co. v. United States Fidelity & Guaranty Co., 83 Utah 414, 28 P.2d 1081, 1082 (1934). We have previously held that counties have standing to challenge determinations by the Commission which directly affect the counties' budgeting and taxing functions. See Kennecott Corp. v. Salt Lake County, 702 P.2d 451, 454 (Utah 1985). It follows that Millard County has standing to intervene based on its direct interest in the proceeds of the local option sales tax that the Commission collected on the County's behalf.

Before we reach the question of the County's entitlement to intervene, we address the argument advanced by the Commission and IPA that their stipulated resolution of IPA's tax liability renders the County's petition to intervene moot. The general rule under the rules of civil procedure is that final settlement of all issues by all parties to a controversy renders a permissive intervenor's motion to intervene moot. See 13A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3533.2, at 236 (2d ed.1984); Horn v. Eltra Corp., 686 F.2d 439, 440-42 (6th Cir.1982). The rule is different, however, with respect to a motion to intervene as of right. The settlement of a controversy by the parties before a motion to intervene as of right has been adjudicated does not constitute a final settlement and does not render moot either the motion or an appeal from a denial of that motion. In Federal Deposit Ins. Corp. v. Jennings, 816 F.2d 1488, 1491 (10th Cir.1987), the court stated: "To allow a settlement between parties to moot an extant appeal concerning intervention of right might well provide incentives for settlement that would run contrary to the interests of justice." ¹ These principles governing mootness with respect to intervention also appropriately apply where intervention is governed by statute.

To permit the settlement of a controversy by stipulation to moot an extant motion to intervene under a statute or to moot an appeal from an order denying a motion to intervene could destroy the legal right on which the motion to intervene is based and, in this case, allow procedural strategies to defeat the statutory policy allowing for intervention. Furthermore, an appeal from a denial of motion to intervene of right is not mooted just because no party to the case takes an appeal from the final judgment or order in the case in which the putative intervenor sought to intervene. Sam Fox Publishing Co. v. United States, 366 U.S. 683, 688, 81 S.Ct. 1309, 1312, 6 L.Ed.2d 604 (1961). The same rule applies even when one of the parties to the litigation is a governmental agency and the putative intervenor is a governmental entity.

The County's motion to intervene was filed before the Commission and IPA reached a settlement. The Commission denied the motion six months after the settlement of the tax liability issue. Here, the Commission was both the agency responsible for ruling on the motion to intervene and a party to the settlement. Were we to hold the County's motion to intervene moot, we would enable the Commission to circumvent the statutory right of intervention. The Commission cannot deal with such motions in a fashion that undermines the purpose of the statutory scheme for intervention.

In sum, the Commission's settlement with IPA did not moot either the motion to intervene or the County's appeal from the order denying the motion to intervene.

We turn now to the merits of the County's motion to intervene. Utah Code Ann. § 63-46b-9(2) provides that a petition for intervention "shall be granted," first, if a petitioner's legal interest may be "substantially affected" and, second, if the "interests of justice and the orderly and prompt conduct" of the proceedings will not be materially impaired. ²

Thus, although § 63-46b-9(2) does not grant an absolute right to intervene, it does establish a conditional right to intervene if the requisite legal interest is present. That right is subject only to the condition that the interests of justice and orderly conduct of the administrative proceedings will not be impaired.

As to the first part of the statutory standard, it is clear that the County has a legitimate legal interest in IPA's sales tax liability, and consequently in the Commission's settlement of the controversy, because the County's legal interest in the proceeds of the local option tax could have been "substantially affected" by the resolution of the issues in the final settlement.

With respect to the second part of the statutory standard, the Commission cannot simply deny a motion to intervene on the ground that its discretion is unlimited and therefore unreviewable. The Commission's discretion is limited, and to deny a motion to intervene, the Commission must rely on substantial reasons.

In its denial of...