Reagan v. Ala. Alcoholic Beverage Control Bd.
| Decision Date | 14 May 2021 |
| Docket Number | 1200213 |
| Citation | 339 So.3d 211 |
| Parties | Cary REAGAN, Jr. v. ALABAMA ALCOHOLIC BEVERAGE CONTROL BOARD; H. Mac Gipson, individually and in his official capacity as administrator for the Alabama Alcoholic Beverage Control Board; Robert W. Lee, individually and in his official capacity as chairman of the Alabama Alcoholic Beverage Control Board; Samuetta H. Drew, individually and in her official capacity as a member of the Alabama Alcoholic Beverage Control Board; Michael Ingram, M.D., individually and in his official capacity as a member of the Alabama Alcoholic Beverage Control Board; Alabama Department of Revenue ; and City of Tuscaloosa |
| Court | Alabama Supreme Court |
Jim L. Debardelaben, Wetumpka, for appellant.
Randy A. Dempsey of Dempsey Steed Stewart Ritchey & Gaché, LLP, Birmingham; and Robert L. Martin, Alabama Alcoholic Beverage Control Board, Montgomery, for appellees Alabama Alcoholic Beverage Control Board; H. Mac Gipson, individually and in his official capacity as administrator for the Alabama Alcoholic Beverage Control Board; Robert W. Lee, individually and in his official capacity as chairman of the Alabama Alcoholic Beverage Control Board; Samuetta H. Drew, individually and in her official capacity as a member of the Alabama Alcoholic Beverage Control Board; Michael Ingram, M.D., individually and in his official capacity as a member of the Alabama Alcoholic Beverage Control Board members.
Craig Banks, chief counsel, State of Alabama Department of Revenue, for appellee State of Alabama Department of Revenue; and Wilson F. Green, Tuscaloosa, for appellee City of Tuscaloosa.
Cary Reagan, Jr., appeals from a judgment of the Montgomery Circuit Court dismissing his action against the Alabama Department of Revenue ("the Department"); the Alabama Alcoholic Beverage Control Board ("the Board"); the members of the Board, including its chairman; the administrator of the Board; and the City of Tuscaloosa.1 The defendants’ motions to dismiss were based principally on the doctrine of sovereign or State immunity. We affirm the trial court's judgment.
Reagan claims that the Board and the Department have been improperly calculating and collecting sales taxes from customers of retail liquor stores operated by the Board. He asked the trial court to certify a class consisting of himself and other customers of the Board's stores and to direct the defendants to deposit the allegedly overpaid taxes into a court-approved account for the benefit of the class members, to be administered by the trial court and from which attorney fees presumably would be paid.
Multiple tax statutes apply to the Board's sale of spirituous and vinous liquors. Sections 28-3-200 through 28-3-205, Ala. Code 1975, impose taxes in the total amount of 56% of "the selling price" of such liquors ("the state liquor taxes"). In addition, § 40-23-2(1), Ala. Code 1975, Alabama's general sales-tax statute, applies to retail sales of tangible personal property in Alabama (including sales by the Board), and imposes a 4% tax on "the gross proceeds of sales." Finally, § 28-3-280, Ala. Code 1975, imposes "an additional state sales tax in the amount of two percent of the retail price, excluding taxes, on the sales of alcoholic beverages sold at retail" by the Board.
Reagan asserts that the Board and the Department have been improperly calculating the amount owed under the 2% tax imposed by § 28-3-280 and the 4% tax imposed by § 40-23-2(1). Specifically, Reagan asserts that the Board and the Department calculate the amounts owed pursuant to those statutes by adding a total of 6% to an amount customers are charged that already includes the 56% state liquor taxes imposed under §§ 28-3-200 through 28-3-205. According to Reagan, the 4% tax and the 2% tax should be calculated using a tax base that excludes the state liquor taxes. In other words, he asserts that the Board should collect from customers a total of 6% of only the amount the Board pays to purchase a product from its suppliers plus the retail markup added by the Board.2
In his complaint, Reagan sought a judgment declaring that the sales taxes in question have been, and are being, improperly calculated. He also asserted causes of action alleging fraud and "misfeasance, malfeasance and nonfeasance of duty" on the part of the individual defendants. He asked the trial court to direct the defendants to deposit the allegedly excessive taxes they have collected into a court-approved account "until such funds are returned to [Reagan] and class members." He also asked the trial court to "[e]stablish a procedure by which purchasers ... from [Board] retail stores can make a request for the monies illegally, improperly and wrongfully collected." Finally, he sought an award of attorney fees.
The defendants filed motions to dismiss, which the trial court granted. Reagan appealed. The applicable standard of review requires us to view the allegations of Reagan's complaint most strongly in his favor and to determine whether, based on those allegations, Reagan can prove any set of circumstances that would entitle him to relief. Birmingham Broad. (WVTM-TV) LLC v. Hill, 303 So. 3d 1148, 1155 (Ala. 2020) ; Lyons v. River Road Constr., Inc., 858 So. 2d 257, 260 (Ala. 2003).
Initially, we note that Reagan argues on appeal that the operative complaint in this case is an amended complaint he filed in the trial court, in which he added a claim asserting that the defendants had violated the Alabama Administrative Procedure Act, Ala. Code 1975, § 41-22-1 et seq. The amended complaint was filed nearly a year and a half after this action was commenced and after the parties had submitted substantial briefing and had provided oral arguments in support of, and opposition to, the defendants’ motions to dismiss the original complaint. Rule 15(a), Ala. R. Civ. P., provides that a pleading may be amended without leave of court "at any time more than forty-two (42) days before the first setting of the case for trial." After that window closes, "a party may amend a pleading only by leave of court, and leave shall be given only upon a showing of good cause." Id. The first trial date set in this action was August 26, 2019. Reagan attempted to amend his complaint in April 2020, obviously well after expiration of the deadline set out in Rule 15(a).
Reagan requested leave of the trial court to amend his complaint; however, the trial court dismissed the action without ruling on Reagan's motion for leave to amend, thus effectively denying it. Reagan made no attempt to establish good cause for his delay or to otherwise establish good cause for allowing the amendment. He has not demonstrated on appeal that the trial court erred in refusing to grant him leave to amend. See generally Ex parte Liberty Nat'l Life Ins. Co., 858 So. 2d 950, 953 (Ala. 2003) (); Blackmon v. Nexity Fin. Corp., 953 So. 2d 1180, 1189 (Ala. 2006) (). Accordingly, we consider only Reagan's original complaint in evaluating the propriety of the trial court's order granting the defendants’ motions to dismiss.
In support of their motions, the defendants argued principally that this action is barred by sovereign immunity. They relied primarily on this Court's decision in Patterson v. Gladwin Corp., 835 So. 2d 137 (Ala. 2002). In Patterson, the plaintiffs sought to represent a class of foreign corporations that had paid Alabama franchise taxes under what were eventually determined to be unconstitutional tax statutes. They sought tax refunds from the Department of up to $1 billion. The trial court in Patterson certified the requested class, and the commissioner of the Department appealed, arguing that the action was barred by sovereign immunity.
As the Court in Patterson noted art. I, § 14 Ala. Const. 1901 (Off. Recomp.), provides that " ‘the State of Alabama shall never be made a defendant in any court of law or equity.’ " 835 So. 2d at 142. For purposes of § 14, "[a]n action is one against the state when a favorable result for the plaintiff would directly affect a contract or property right of the State, or would result in the plaintiff's recovery of money from the state."
Shoals Cmty. Coll. v. Colagross, 674 So. 2d 1311, 1314 (Ala. Civ. App. 1995). "The wall of immunity erected by § 14 is nearly impregnable." Patterson, 835 So. 2d at 142. That wall cannot be bypassed indirectly by " ‘suing [the state's] officers or agents in their official capacity, when a result favorable to [the] plaintiff would be directly to affect the financial status of the state treasury.’ " Id. (quoting State Docks Comm'n v. Barnes, 225 Ala. 403, 405, 143 So. 581, 582 (1932) ). An action against the State within the meaning of § 14 "presents a question of subject-matter jurisdiction, which cannot be waived or conferred by consent." Patterson, 835 So. 2d at 142-43.
The Court in Patterson concluded that "a judgment in favor of the class, which seeks tax refunds totaling approximately $1 billion, would ‘affect the financial status of the state treasury.’ " 835 So. 2d at 143 (quoting State Docks Comm'n, 225 Ala. at 405, 143 So. at 582 )). Thus, the Court held, the plaintiffs’ claims in Patterson were barred by sovereign immunity and the trial court therefore never acquired subject-matter jurisdiction over the action. 835 So. 2d at 154 ( ...
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