United Parcel Service of America, Inc. v. Huddleston

• Decision Date: 29 April 1999
• Docket Number: No. 98CA0286,98CA0286
• Parties: 1999 CJ C.A.R. 2394 UNITED PARCEL SERVICE OF AMERICA, INC.; United Parcel Service, Inc.; and United Parcel Service Co., Petitioners-Appellees, v. Mary HUDDLESTON, Property Tax Administrator, State of Colorado, Respondent-Appellant, and Colorado State Board of Assessment Appeals, Appellee. . V
• Court: Colorado Court of Appeals

Page 223

981 P.2d 223

1999 CJ C.A.R. 2394

UNITED PARCEL SERVICE OF AMERICA, INC.; United Parcel Service, Inc.; and United Parcel Service Co. Petitioners-Appellees, v. Mary HUDDLESTON, Property Tax Administrator, State of Colorado, Respondent-Appellant and Colorado State Board of Assessment Appeals, Appellee.

No. 98CA0286.

Colorado Court of Appeals Div. V.

April 29, 1999.

As Modified on Denial of Rehearing

June 17, 1999.

Holme Roberts & Owen LLP, Stephanie M. Tuthill, David B. Wilson, Michelle M. Rose-Hughes, Denver, Colorado, for Petitioners-Appellees.

Gale A. Norton, Attorney General, Martha Phillips Allbright, Chief Deputy Attorney General, Richard A. Westfall, Solicitor General, Larry A. Williams, First Assistant Attorney General, Denver, Colorado, for Respondent-Appellant.

No Appearance for Appellee.

Opinion by Judge DAVIDSON.

Respondent, the Property Tax Administrator (PTA), appeals from a final order of the Board of Assessment Appeals (BAA) determining that the PTA exceeded her authority in valuing the property of petitioners, United Parcel Service of America, Inc. (UPS America), United Parcel Service, Inc., and United Parcel Service Company (UPS Co.) under § 39-4-101, et seq., C.R.S.1998. We reverse in part and remand for further proceedings.

Prior to tax year 1995, the PTA had valued UPS Co. as an airline company and a public utility under § 39-4-102, C.R.S.1998, and determined such value based only on UPS Co.'s operating property and plant. However, for tax year 1995, the PTA, after determining that UPS Co., as a wholly-owned subsidiary of UPS America, was a highly integrated part of a unitary package delivery business, declared her intent to value UPS Co. so as to include the total value of UPS America and all its subsidiaries.

On August 1, 1995, the PTA issued a final notice of valuation which placed a value on UPS Co. based on her valuation of UPS America and all its subsidiaries. A second notice of valuation was issued approximately two weeks later reflecting an amended value.

UPS Co. petitioned the BAA to review the valuation decision, arguing that the PTA had exceeded her jurisdiction by centrally assessing UPS America and its subsidiaries because they are not public utilities and that the valuations in the notices were wrong.

The PTA asserted that, because UPS Co. is a wholly-owned subsidiary of UPS America and a fully integrated part of a unitary business, she was authorized to value the operating property and plant of UPS Co. as a unit under § 39-4-102(1), C.R.S.1998, and that such unit was comprised of UPS America and its subsidiaries.

After receiving stipulated facts and hearing argument from both parties, the BAA entered its order determining that the PTA, under § 39-4-102(1), was authorized to value and assess as a unit only the operating property and plant of UPS Co.

Although the issues before the BAA were the PTA's scope of authority under § 39-4-102(1) to value UPS Co. as a unit and the actual valuation, the BAA certified as final its decision concerning the PTA's authority. Neither party challenges the finality of the order. Moreover, the pleadings and proceedings show that the parties treated this action as one for declaratory judgment to determine the rights of the PTA to assess UPS Co. under § 39-4-102(1), and therefore, so do we. See Atchison v. City of Englewood, 180 Colo. 407, 506 P.2d 140 (1973) (declaratory judgment is conclusive as to questions raised by parties).

I.

The sole issue on appeal is whether the PTA, in determining the value of the public utility UPS Co. as a unit, has the authority under § 39-4-102(1) to value as a unit the operating properties and plant of UPS America and all of its wholly-owned subsidiaries. The PTA contends that UPS Co.'s airline service is a part of the larger function of package delivery in which UPS America and its subsidiaries, including UPS Co., are engaged. Therefore, she argues, the value of UPS Co. as a unit should be determined by the value of UPS America and all its subsidiaries. The UPS companies contend, to the contrary, that the plain language of the statute limits the PTA's valuation and assessment of UPS Co. as a unit to the operating property and plant of UPS Co. alone because it, as the airline company, is the public utility. We agree with the BAA and the UPS companies that § 39-4-102 requires the PTA to determine the value of UPS Co. in its capacity as a public utility. We further agree that the PTA is not authorized to assess the total value of UPS America and its subsidiaries in determining UPS Co.'s value.

However, inasmuch as we read the BAA's order as limiting the PTA's authority under § 39-4-102(1) to determine the value of UPS Co. by evaluating only its operating plant and property without considering the direct contribution of UPS America and its other subsidiaries to UPS Co.'s operation as an airline company, we reverse that part of the order.

A.

Under § 39-4-102(1), the property tax administrator is to determine the "actual value of the operating property and plant of each public utility as a unit."

Included in the listing of those entities considered public utilities under § 39-4-101(3), C.R.S.1998, is:

every sole proprietorship, firm, limited liability company, partnership, association, company, or corporation, and the trustees or receivers thereof, whether elected or appointed, which does business in this state as a[n] ... airline company.

An airline company is defined under § 39-4-101(2), C.R.S.1998, as:

any operator who engages in the carriage by aircraft of persons or property as a common carrier for compensation or hire, or the carriage of mail, or any aircraft operator who operates regularly between two or more points and publishes a flight schedule. 'Airline company' shall not include operators whose aircraft are all certified for a gross takeoff weight of twelve thousand five hundred pounds or less and who do not engage in scheduled or mail carriage service.

The plain language of the statute requires the property tax administrator to determine the value of each public utility doing business within this state. Here, it is undisputed that UPS Co. is an airline company that owns and operates personal property located in Colorado and, therefore, could be valued as a public utility. It is the extent of the property to be valued which is at question here.

The PTA argues that the operating property and plant to be valued and assessed as a unit include the value of the parent company if the subsidiary which is the public utility is a fully integrated part of the larger business in which the company is engaged. The UPS companies argue that the unit to be valued under § 39-4-102(1) is comprised only of the property belonging to the company that qualifies as a public utility.

We conclude that the operating property and plant valued as a unit is the public utility's property and plant that is used in carrying on its business. However, contrary to the BAA's determination, such value includes intangible rights derived from other UPS property and plant even if owned by the parent company or other of its subsidiaries if such contribute directly to the operation of UPS Co. as an ongoing concern.

B.

In reviewing an agency's action, a court must determine all questions of law, interpret the statutory provisions, and apply such interpretation to the facts as found or established. Section 24-4-106(7), C.R.S.1998; Transponder Corp. of Denver, Inc. v. Property Tax Administrator, 681 P.2d 499 (Colo.1984).

If, as here, the underlying facts are undisputed, the issue presented is one of law, and we are not bound by the BAA's determination. Thus, interpretation of § 39-4-102(1) in determining the PTA's authority to value UPS Co. as a unit is an issue of law that we review de novo. See Johnson v. Regional Transportation District, 916 P.2d 619 (Colo.App.1995).

When interpreting statutes, full effect must be given to the intent of the General Assembly. Charnes v. Boom, 766 P.2d 665 (Colo.1988). To give effect to that intent, we look to the words used, reading them in context and according them their plain and ordinary meaning. Bertrand v. Board of County Commissioners, 872 P.2d 223 (Colo.1994).

Tax statutes are not to be extended beyond the clear import of the language used, nor should their operation be extended by analogy. Transponder Corp. of Denver, Inc. v. Property Tax Administrator, supra.

A public utility is a "business or service which is engaged in regularly supplying the public with some commodity or service which is of public consequence and need." Black's Law Dictionary 1395 (rev. 4th ed.1968); cf. Ephraim Freightways, Inc. v. Public Utilities Commission, 151 Colo. 596, 380 P.2d 228 (1963) (common carrier seeking certificate must make showing of public convenience and necessity).

Under § 39-4-101(3), an entity listed as one of the businesses that may be defined as a public utility also must be doing business in Colorado in order for its operating property and plant to be valued as such. See United States Transmission Systems, Inc. v. Board of Assessment Appeals, 715 P.2d 1249 (Colo.1986) (whether company is a public utility depends on whether it is operating as a public utility within the state as defined under § 39-4-102).

Section 39-4-102 requires that the operating property and plant of a public utility are to be assessed as a unit. Because the service provided may involve ownership or operation of property interests that extend through several taxing districts, a method for fairly determining the value of the property and allocating it to the districts is set forth under § 39-4-102. Centrally assessing the public utility as a unit allows for fair apportionment of the value to each taxing district. See United States Transmission Systems, Inc. v. Board of Assessment Appeals, supra; American Telephone & Telegraph Co. v. State Department of Assessments & Taxation, 345 Md. 596, 693 A.2d...