South Cent. Bell Telephone Co. v. State
| Decision Date | 20 March 1998 |
| Citation | 711 So.2d 1005 |
| Parties | SOUTH CENTRAL BELL TELEPHONE COMPANY, et al. v. STATE of Alabama and State Department of Revenue. 1960591. |
| Court | Alabama Supreme Court |
Walter R. Byars of Steiner, Crum & Baker, Montgomery; and Walter Hellerstein, Athens, GA, for appellant.
Bill Pryor, atty. gen.; Ron Bowden, counsel, Department of Revenue, and asst. atty. gen.; and Dan E. Schmaeling, asst. counsel, Department of Revenue, and asst. atty. gen., for appellee.
AFFIRMED. NO OPINION.
See Rule 53(a)(1) and (a)(2)(F), Ala. R.App. P., and White v. Reynolds Metals Co., 558 So.2d 373 (Ala.1989), cert. denied, Reynolds Metals Co. v. Sizemore, 496 U.S. 912, 110 S.Ct. 2602, 110 L.Ed.2d 282 (1990).
Although I agree that the judgment of the trial court is due to be affirmed, I write separately to explain why I have reached that conclusion, especially in view of the arguments raised by the taxpayers.
This case originated as a challenge by South Central Bell Telephone Company ("Bell") of an assessment of franchise tax liability against it by the Alabama Department of Revenue. On December 15, 1989, Bell filed in the Montgomery County Circuit Court a notice of appeal and a complaint and petition for judicial review of the assessment. On November 29, 1990, Judge William R. Gordon ordered that the Bell case be consolidated with similar actions that had been filed recently by several of Bell's sister corporations. 1 Both before and after this consolidation, all the plaintiffs were represented by the same attorney. 2
On December 13, 1990, CSX Transportation, Inc., filed several actions challenging assessments of franchise tax liability, on essentially the same grounds that had been raised by Bell. CSX was represented in each of those actions by the same attorney representing Bell and its sister corporations. On May 28, 1992, upon motion by all the plaintiffs, Judge Gordon ordered the consolidation of the Bell and CSX actions.
At the trial level, the State contended, as it does here, that Bell and CSX should be estopped from litigating this case, because of the preclusive effect of this Court's decision in White v. Reynolds Metals Co., 558 So.2d 373 (Ala.1989). In Reynolds Metals, this Court, with an opinion concurred in by every member of the Court as it was constituted at that time, concluded that the franchise tax, as applied to foreign corporations, did not violate the United States Constitution. Subsequently, the United States Supreme Court denied certiorari review of this Court's decision. Reynolds Metals Co. v. Sizemore, 496 U.S. 912, 110 S.Ct. 2602, 110 L.Ed.2d 282 (1990). Consequently, the final decision in Reynolds Metals was adverse to the taxpayer in Reynolds Metals and was adverse to the taxpayers in this case. The State claims that the decision of this Court in the Reynolds Metals case, and the refusal of the Supreme Court of the United States to review it, preclude both Bell and CSX from claiming that a different result should be reached in this case.
Because the proceedings in Reynolds Metals and the early stages of this litigation occurred during the same period, and because that chronological interrelatedness partially informs my conclusions regarding this case, I set out some of that chronology. The Reynolds Metals case was filed before Judge Gordon several months before Bell filed its action, and on July 7, 1989, Judge Gordon entered an order holding that Alabama's franchise tax, as applied to foreign corporations, violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Shortly thereafter, on November 28, 1989, the Court of Civil Appeals affirmed the judgment of the trial court. See White v. Reynolds Metals Co., 558 So.2d 367 (Ala.Civ.App.1989). Approximately three weeks later, Bell filed the action, later consolidated with actions by both CSX and the related BellSouth companies, that is now before this Court.
On January 19, 1990, approximately one month after filing its notice of appeal, Bell, through its attorney, Walter R. Byars, asked the trial court to place its case on the "administrative docket" pending the outcome of the Reynolds Metals action. Mr. Byars wrote:
Judge Gordon subsequently placed the case on his administrative docket. It appears to me, from this letter, that both parties advised Judge Gordon that they were going to be bound by the final decision in the Reynolds Metals case, and that either party could proceed further only with the permission of the trial court. In short, it appears to me that the parties agreed that the final decision in Reynolds Metals would be controlling.
To clarify the relationship of these cases, I set out the following brief timeline:
7/7/89 Judge Gordon, in the Reynolds Metals case, enters an order holding that Alabama's foreign franchise tax was unconstitutional.
11/28/89 The Court of Civil Appeals affirms the trial court's Reynolds Metals judgment.
12/15/89 South Central Bell files its notice of appeal in Bell.
12/21/89 This Court reverses the judgments of the trial court and the Court of Civil Appeals in Reynolds Metals. 1/12/90 This Court denies rehearing in Reynolds Metals.
1/19/90 Bell and the State Department of Revenue file a joint request with the trial court to place Bell on its administrative docket, pending the final resolution of Reynolds Metals.
1/23/90 Judge Gordon places Bell on his administrative docket.
6/4/90 The United States Supreme Court denies certiorari review in Reynolds Metals.
8/?/90 Complaint is filed by BellSouth Corporation; BellSouth Services, Inc.; BellSouth Financial Services Corporation; BellSouth Advertising & Publishing Company; BellSouth Resources, Inc.; Alabama Cellular Services, Inc.; Sunlink, Inc.; and TechSouth, Inc. (collectively, "BellSouth"). This complaint was filed by the same lawyer representing Bell.
11/29/90 Judge Gordon orders consolidation, upon motion of the plaintiffs, of the Bell and BellSouth cases (hereinafter those cases are called "Bell ").
12/13/90 Several notices of appeal and complaints are filed in the Montgomery County Circuit Court by CSX, challenging foreign franchise tax assessments for various tax years. (Same lawyer as in Bell.)
05/28/92 Judge Gordon orders consolidation of Bell with the CSX cases. (Hereinafter those cases are called "Bell ").
The taxpayers contend that they are not precluded from litigating this action now. They rely on State v. Delaney's, Inc., 668 So.2d 768 (Ala.Civ.App.1995) (). I am not unaware of the taxpayers' arguments that neither claim preclusion nor issue preclusion can apply in this case. While I do not necessarily disagree with the reasoning of Delaney's and the precedents upon which it is based, I believe this present case presents an exception to the principles of law set out in that case.
In this case it appears to me that the actions of the taxpayers show that each of them was aware of the Reynolds Metals litigation and that each realized that its claims were dependent on the final resolution of Reynolds Metals. Although I realize that the United States Supreme Court's denial of certiorari review does not necessarily mean that the Court agrees with the conclusion reached by a lower Court, 3 and although I realize that the Supreme Court has released some opinions that could be interpreted as indicating a change in that Court's view of the constitutionality of state taxes such as that at issue in this case, the fact remains that the Supreme Court refused to review this Court's decision in Reynolds Metals, and that, as of today, Reynolds Metals remains the law.
In my consideration of the trial court's disposition of this case, I find no reversible error. All the cases that were eventually consolidated were pending before Judge Gordon, and they all involved the same counsel and the same issues. Further, Bell specifically requested that its case be held in abeyance until Reynolds Metals was decided. In light of these facts, Judge Gordon concluded that the taxpayers were estopped from arguing that Reynolds Metals did not govern this matter. I cannot hold that his conclusion amounted to reversible error. I also do not believe that the trial court's holding that the taxpayers are estopped to assert their rights violates their rights under the Due Process Clause of the Fourteenth Amendment to the Federal Constitution, in view of the holding in Richards v. Jefferson County, 517 U.S. 793, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996). The operative facts of this case relating to the Due Process Clause argument are, in my opinion, wholly different.
In concluding that the trial court did not err in holding that the decision in Reynolds Metals precluded the claims of these particular taxpayers, I do not address the taxpayers' argument that cases decided by the United States Supreme Court since Reynolds Metals require a holding that the tax violates the Equal Protection and Commerce Clauses of the United States Constitution.
I respectfully dissent from the majority's no-opinion affirmance of the trial court's dismissal of this tax case. In my view, the...
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