Van Dorn Retail Management, Inc. v. City & County of Denver

• Court: Colorado Court of Appeals
• Citation: Van Dorn Retail Management, Inc. v. City & County of Denver, 902 P.2d 383 (Colo. App. 1994)
• Decision Date: 17 November 1994
• Docket Number: 93CA1966
• Parties: VAN DORN RETAIL MANAGEMENT, INC., a New York corporation, Plaintiff-Appellant, v. CITY & COUNTY OF DENVER, a municipal corporation; Patricia Schwartzberg, Manager of Revenue, City and County of Denver; Executive Director, Colorado Department of Revenue; and State of Colorado, Defendants-Appellees. . IV

Page 383

902 P.2d 383

VAN DORN RETAIL MANAGEMENT, INC., a New York corporation Plaintiff-Appellant, v. CITY & COUNTY OF DENVER, a municipal corporation; Patricia Schwartzberg, Manager of Revenue, City and County of Denver Executive Director, Colorado Department of Revenue; and State of Colorado, Defendants-Appellees.

No. 93CA1966.

Colorado Court of Appeals,

Div. IV.

Nov. 17, 1994.

Rehearing Denied Dec. 22, 1994.

Certiorari Denied Aug. 28, 1995.

Baker & Hostetler, Michael G. Martin, Stephen D. Gurr, Denver, Baker & Hostetler, Leonard C. Greenebaum, Shelby F. Mitchell, Washington, DC, for plaintiff-appellant.

Daniel E. Muse, City Atty., Maria Kayser, Asst. City Atty., Denver, for defendants-appellees City & County of Denver and Patricia Schwartzberg.

Gale A. Norton, Atty. Gen., Stephen K. ErkenBrack, Chief Deputy Atty. Gen., Timothy M. Tymkovich, Sol. Gen., Robert C. Ripple, Asst. Atty. Gen., Denver, for defendants-appellees Executive Director, Colorado Dept. of Revenue and State of Colo.

Opinion by Judge ROTHENBERG.

In this action for declaratory and injunctive relief, the plaintiff, Van Dorn Retail Management, Inc., appeals from the summary judgment entered in favor of defendants, the City and County of Denver and the State of Colorado, thereby rejecting Van Dorn's contention that certain tax lien provisions of Denver and the state are unconstitutional. We affirm.

The relevant facts are not in dispute. Van Dorn is a New York corporation that furnishes men's clothing on consignment to retailers nationwide. In November 1991, Van Dorn entered into a Consulting and Consignment Agreement with a Colorado corporation, Wisa, Inc., d/b/a Concord Custom Clothiers. Concord operated a men's retail clothing store in Denver, and pursuant to the agreement, Van Dorn provided Concord with certain goods on consignment for sale by Concord. Van Dorn also provided consulting services to Concord.

Concord was responsible for collecting and remitting Denver taxes, including sales tax and business and employee occupational privilege tax. Concord was also subject to personal property taxes assessed pursuant to state statute and collected by individual counties. In July 1992, Concord owed the City and County of Denver $7,360.96 in delinquent sales, occupational, and personal property taxes.

Pursuant to the Denver Revised Municipal Code § 53-63, the Denver Department of Revenue executed a Declaration of Jeopardy for unpaid taxes in July 1992. Denver also issued and executed a distraint warrant mandating that all property of, or used in, the business of Concord be seized in order to satisfy Concord's delinquent taxes. On August 5, 1992, the Colorado Department of Revenue similarly issued distraint warrants against Concord for unpaid state sales tax and state wage withholding tax and it served those warrants on the City and County of Denver.

Van Dorn requested an administrative hearing before the Director of Tax Compliance for the Denver Department of Revenue to determine whether that Department acted lawfully in seizing and holding goods consigned by Van Dorn. Following the hearing, the Director upheld the seizure of Van Dorn's consigned goods.

Van Dorn then filed this action, asserting that its goods had been unlawfully seized. Van Dorn argued, inter alia, that Denver Revised Municipal Code §§ 53-59 and 53-63 and §§ 39-26-117(1)(b) and 39-22-604(7)(a), C.R.S. (1994 Repl.Vol. 16B) are unconstitutional.

In response to cross-motions for summary judgment, the district court granted the motions of Denver and the state, concluding that the challenged ordinances and statutes are constitutional, both on their face and as applied to Van Dorn.

I.

Denver and the state have similar statutory schemes for the collection of delinquent sales and withholding taxes. Denver Revised Municipal Code § 53-59(a) provides:

The tax imposed by this article, together with the interest and penalties herein provided and the costs of collection which may be incurred, shall be and, until paid, remain a first and prior lien superior to all other liens upon goods, merchandise, furniture, and fixtures, tools and equipment of any retailer or used by any retailer in conducting his retail business under lease, title retaining contract or other contract arrangement, within the city and shall take precedence on all such property over other liens or claims of whatsoever kind or nature and may be foreclosed by seizing under distraint warrant and selling so much of said merchandise, furniture and fixtures, tools and equipment as may be necessary to discharge said lien.

Denver Revised Municipal Code § 53-59(b) sets forth a procedure by which the owner of real or personal property who has made a bona fide lease to a retailer may exempt the leased property from the City's lien. Specifically, it provides in relevant part:

The real or personal property of an owner who has made a bona fide lease to a retailer shall be exempt from the lien created in this section (1) if such property can reasonably be identified from the lease description and (2) if the lessee is given no right to become the owner of the property leased.

As to the state's similar statutory scheme, § 39-26-117(1)(a) C.R.S. (1994 Repl.Vol. 16B) provides that:

Except as provided in paragraph (b) of this subsection (1), the tax imposed by this part 1 shall be a first and prior lien upon the goods and business fixtures of or used by any retailer under lease, title retaining contract, or other contract arrangement, excepting stock of goods sold or for sale in the ordinary course of business, and shall take precedence on all such property over other liens or claims whatsoever kind or nature.

Section 39-26-117(1)(b), C.R.S. (1994 Repl.Vol. 16B) provides that:

The real or personal property of an owner who has made a bona fide lease to a retailer shall be exempt from the lien created in paragraph (a) of this subsection (1) if such property can reasonably be identified from the lease description or if the lessee is given an option to purchase in such lease and has not exercised such option to become the owner of the property leased.

Similarly, § 39-22-604(7)(a), C.R.S. (1994 Repl.Vol. 16B) imposes a priority tax lien on all property used in a business to ensure that all wage withholding taxes owed by the business will be paid over to the state. However, the state statute, unlike the Denver ordinance, also provides an exemption for the property of an owner, conditional vendor, or mortgagee when such person or entity provides alternate security for the taxes withheld:

The owner, conditional vendor, or mortgagee of any property, real or personal, or any stock in trade, business fixtures, or equipment owned or used by an employer subject to the lien provided by this subsection (7) may exempt such property from the lien granted in this section to the state of Colorado and the department by requiring the employer to procure a certificate from the department certifying that such employer has posted with the department security for the payment of the amounts withheld under the provisions of this section.

Section 39-22-604(7)(b), C.R.S. (1994 Repl.Vol. 16B).

Section 39-22-604(7)(c), C.R.S. (1994 Repl.Vol. 16B) further provides, in pertinent part, that:

The real or personal property of an owner who has made a bona fide lease to an employer shall be exempt from the lien created in paragraph (a) of the subsection (7) if such property can reasonably be identified from the lease description or if the lessee is given an option to purchase in such lease and has not exercised such option to become the owner of the property leased.

II.

Van Dorn contends that Denver Revised Municipal Code §§ 53-59 and 53-63 and §§ 39-22-604(7)(a) and 39-26-117(1)(a) authorizing the liens and seizure of Van Dorn's consigned goods, violate guarantees of equal protection established by the Fourteenth Amendment and Colo. Const. art. II, § 25, by treating similarly situated persons differently. More specifically, Van Dorn argues that the Denver ordinance and state statutes create an illogical and impermissible classification between owners of leased property who may exempt their property from Denver and state tax liens, and owners of consigned property like Van Dorn who have no such exemption.

Van Dorn also argues that Denver and the state have violated its right to substantive and procedural due process of law in failing to provide any means by which Van Dorn can exempt its consigned goods from the liens and in failing to provide clear enforcement standards under the relevant statutory provision. We reject these arguments.

A.

EQUAL PROTECTION

Although the Colorado Constitution contains no direct corollary to the Equal Protection Clause of the Fourteenth Amendment, Colorado citizens are guaranteed equal protection of the law by the due process clause of Colo. Const. art. II, § 25. See Central Colorado Water Conservancy District v. Simpson, 877 P.2d 335 (Colo.1994); Scholz v. Metropolitan Pathologists, P.C., 851 P.2d 901 (Colo.1993) (fn. 7); Austin v. Litvak, 682 P.2d 41 (Colo.1984).

Statutes enacted by the General Assembly are presumed constitutional. A party claiming that a particular statute is unconstitutional has the burden of establishing such assertion beyond a reasonable doubt. Mayo v. National Farmers Union Property & Casualty Co., 833 P.2d 54 (Colo.1992).

Equal protection of the laws generally requires that the government accord similar treatment to all persons similarly situated. Mayo v. National Farmers Union Property and Casualty Co., supra. The Colorado courts have applied the same standards of strict scrutiny, intermediate scrutiny, and rational basis developed by the United States Supreme Court in analyzing equal protection issues arising under the federal constitution. See Central Colorado Water Conservancy District v. Simpson, supra.

Here, no party claims that the statutes and ordinance in question infringe on a...