Qwest Corp. v. Colo. Div. of Prop. Taxation

• Decision Date: 24 June 2013
• Docket Number: Supreme Court Case No. 11SC669
• Citation: 2013 CO 39
• Parties: Petitioner: Qwest Corporation, v. Respondent: Colorado Division of Property Taxation, Department of Local Affairs, State of Colorado.
• Court: Colorado Supreme Court

2013 CO 39

Petitioner: Qwest Corporation,

v. Respondent: Colorado Division of Property Taxation, Department of Local Affairs, State of Colorado.

Supreme Court Case No. 11SC669

Supreme Court of the State of Colorado

June 24, 2013

Certiorari to the Colorado Court of Appeals

Court of Appeals Case Number 10CA1320

Judgment Affirmed

en banc

Attorneys for Petitioner:

Gibson, Dunn & Crutcher

Gregory J. Kerwin

M. Scott Campbell

Denver, Colorado

Garlin Driscoll Howard, LLC

David J. Driscoll

Sarah A. Croog

Louisville, Colorado

Hawley, Troxell

Richard G. Smith

Boise, Idaho

Qwest Corporation

Roy Adkins

Denver, Colorado

Attorneys for Respondent:

John W. Suthers, Attorney General

Robert H. Dodd, Jr., Senior Assistant Attorney General

Denver, Colorado

JUSTICE RICE delivered the Opinion of the Court.

JUSTICE EID dissents, and JUSTICE BOATRIGHT joins in the dissent. JUSTICE COATS does not participate.

¶1 We granted certiorari to determine whether the court of appeals erred in holding that Respondent Colorado Division of Property Taxation, Department of Local Affairs, State of Colorado ("DPT") correctly declined to extend the intangible property exemption in section 39-3-118, C.R.S. (2012), and the cost cap valuation method in section 39-1-103(13), C.R.S. (2012), to Petitioner Qwest Corporation's property. We affirm the court of appeals' affirmation of DPT's interpretation of those provisions and hold that Qwest, as a public utility, is valued centrally in accordance with section 39-4- 102, C.R.S. (2012), and is therefore not entitled to the intangible property exemption or the cost cap valuation method.

¶2 Given our understanding of the relevant statutes, we also consider whether DPT's valuation method for Qwest's property violates Qwest's constitutional guarantee under the Equal Protection Clause or violates Qwest's rights under the UniformTaxation Clause of the Colorado Constitution. We hold that DPT's interpretation does not violate Qwest's constitutional rightsand accordingly affirm the court of appeals.

I. Facts and Procedural History

¶3 Qwest is a public utility. See§ 39-4-101(3)(a), C.R.S. (2012). As such, its property is centrally assessed by the DPT administrator. See§ 39-4-102(1). When a public utility's propertyis centrally assessed, the property's value is determined at the state level by the DPT administrator and then apportioned to the counties for the collection of the local property tax. See§ 39-4-106(2)(d), C.R.S. (2012).

¶4 Qwest competes with various cable companies for telephone service customers. Qwest believes it is competitively disadvantaged because these companies, for the most part, are not taxed in the same way. Rather, property owned by cable companies is locally assessed. And, relevant to this appeal, only property which is locally assessed is subject to the intangible property exemption and the cost cap valuation method. Since Qwest's property is centrally assessed, it is not entitled to the intangible property tax exemption or the cost cap valuation method.

¶5 Seeking to remedy the perceived competitive disadvantage resulting from its valuation as a public utility, Qwest filed a protest with DPT in which it sought to obtain equalization between itself and similarly situated cable companies. Qwest requested that DPT apply the intangible property exemption and the cost cap valuation method to Qwest's property. On August 1, 2009, DPT issued its final valuation of Qwest and refused to extend the intangible property exemption or the cost cap valuation method to Qwest's property. Having failed to receive a favorable tax assessment, Qwest brought suit for tax equalization against DPT in Denver district court.

¶6 As detailed in Qwest's complaint,¹ Qwest alleges "that the benefits of the ‘cap' on taxable value and the exemption of intangibles, pursuant to [sections 39-1-103(13) and 39-3-118,] respectively, are enjoyed by cable companies," and thus put Qwest at an illegal disadvantage. According to Qwest, "the incremental equipment used by cable companies to provide [telecommunication] services is apparently being reported to [DPT] to be taxed as ‘telephone company' property within [DPT's] assessment jurisdiction. However . . . the cable company infrastructure that is used by [cable] companies to complete the telecommunications services connection is reported and valued locally by the county assessor as cable television property. [Therefore,] . . . less than 10% of cable company property is being centrally assessed." Thus, Qwest claims that cable companies underreport their telecommunication property and accordingly pay less than Qwest in property taxes.

¶7 In short, Qwest alleged that DPT improperly assessed its property by failing to apply the intangible property exemption and the cost cap valuation method. It further asserted that DPT's failure to do so violated Qwest's constitutional right to equal protection and its guarantee to uniform taxation.

¶8 DPT moved to dismiss Qwest's complaint. DPT contended that the intangible property exemption and the cost cap valuation method only apply to locally assessed companies, and also maintained that this interpretation did not violate Qwest's guarantee to equal protection or uniform taxation. The trial court granted DPT's motion and held that Qwest failed to state a valid claim as a matter of law.

¶9 Qwest appealed and a unanimous division of the court of appeals affirmed. Qwest Corp. v. Colo. Div. of Prop. Taxation,No. 10CA1320 slip op. at 1 (Colo. App. Aug. 4, 2011) (selected for official publication). The court of appeals upheld DPT's interpretation of the tax statutes, and concluded that Qwest was not entitled to either the intangible property exemption or the cost cap valuation method. Id. at 6-16. The court of appeals agreed with the trial court that taxing Qwest centrally and cable companies locally does not violate Qwest's constitutional guarantee to equal protection. Id.at 31. The court of appeals also held that DPT's interpretation of the tax statutes does not violate the Uniform Taxation Clause of the Colorado Constitution. Id. at 34.

¶10 Qwest petitioned this Court for certiorari review of the court of appeals' decision. We granted certiorari to address three issues: (1) Whether the court of appeals erred in holding that the intangible property exemption and the cost cap valuation method do not apply to Qwest, a public utility; (2) whether the court of appeals erred in rejecting Qwest's equal protection claim; and (3) whether the court of appeals erred in dismissing Qwest's claim underthe Uniform Taxation Clause of Colorado's Constitution.

II. Standard of Review

¶11 For purposes of this case, we review the relevant tax provisions de novo. See MDC Holdings, Inc. v. Town of Parker,223 P.3d 710, 717 (Colo. 2010). As for the constitutional questions presented, this Court interprets and applies constitutional provisions de novo. Washington Cnty. Bd. of Equalization v. Petron Dev. Co., 109 P.3d 146, 149 (Colo. 2005).

¶12 This appeal turns on the merits of DPT's motion to dismiss. A motion under C.R.C.P. 12(b)(5) "to dismiss [a complaint] for failure to state a claim upon which relief can be granted serves as a test of the formal sufficiency of a plaintiff's complaint." Pub. Serv. Co. v. Van Wyk,27 P.3d 377, 385 (Colo. 2001) (citation omitted). Trial courts do not view motions to dismiss favorably and grant them only where "it appears beyond a doubt that a plaintiff can prove no set of facts in support of her claim which would entitle her to relief." Id.at 385-86 (citation and emphasis omitted). Accordingly, when reviewing a trial court's order granting a C.R.C.P. 12(b)(5) motion, we take all of the non-moving party's, here Qwest's, material factual averments as true. Dorman v. Petrol Aspen, Inc.,914 P.2d 909, 911 (Colo. 1996).

III. Analysis

¶13 We first interpret section 39-3-118, the intangible property exemption, and section 39-1-103(13), the cost cap valuation method, in light of section 39-4-102, which provides the valuation method for public utilities. After determining that Qwest, as a public utility, is not entitled to the intangible property exemption or the cost cap valuation method, we address Qwest's constitutional arguments.

¶14 We hold that Qwest cannot state an equal protection claim because even if its cable company competitors are taxed differently, the distinction has a sound basis in policy. Finally, we hold that Qwest cannot state a claim under Colorado's Uniform Taxation Clause because the plain language of that provision anticipates disparate tax treatment between territorial authorities levying tax.

A. Statutory Interpretation

¶15 We hold that, as a public utility, Qwest is not entitled to either the intangible property exemption or the cost cap valuation method in the tax code.

¶16 This Court interprets statutes by considering the provisions' plain language to properly construe the General Assembly's intent. Jefferson Cnty. Bd. of Equalization v. Gerganoff,241 P.3d 932, 935 (Colo. 2010). In considering Colorado's tax statutes, it is particularly important "not [to read the statutes] in isolation[,] but [rather] together with all other statutes relating to the same subject or having the same general purpose, to the end that [the statutes'] intent may be ascertained and absurd consequences avoided." Huddleston v. Bd. of Equalization,31 P.3d 155, 159 (Colo. 2001) (citation omitted). We therefore "construe [the] entire statutory scheme in a manner that gives consistent, harmonious, and sensible effect to all of its parts." Climax Molybdenum Co. v. Walter,812 P.2d 1168, 1174 (Colo. 1991). And we strive to interpret statutes in a manner that avoids rendering any provision superfluous. Welby Gardens v. Adams Cnty. Bd. of Equalization,71 P.3d 992, 995 (Colo. 2003) (citation omitted).

¶17 Qwest is a public utility and does not contend otherwise. See§ 39-4-101(3)(a). Section 39-1-103(3) provides that the "value for property tax purposes of the...