Wash. Cnty. v. Bd. of Trs. of the Univ. of Ark.

• Decision Date: 04 February 2016
• Docket Number: No. CV–15–357,CV–15–357
• Citation: 480 S.W.3d 173
• Parties: Washington County; Jeff Williams, Washington County Tax Assessor ; David Ruff, Washington County Tax Collector; and Fayetteville School District No. 1, Appellants v. Board of Trustees of the University of Arkansas, Appellee
• Court: Arkansas Supreme Court

480 S.W.3d 173

Washington County; Jeff Williams, Washington County Tax Assessor ; David Ruff, Washington County Tax Collector; and Fayetteville School District No. 1, Appellants
v.
Board of Trustees of the University of Arkansas, Appellee

No. CV–15–357

Supreme Court of Arkansas.

Opinion Delivered February 04, 2016
Rehearing Denied March 10, 2016

480 S.W.3d 174

Steven S. Zega, Washington County Attorney, for appellants Washington County; Russell Hill, elected successor to Jeff Williams, Washington County Assessor; and David Ruff, Washington County Tax Collector.

Davis, Clark, Butt, Carithers & Taylor, PLC, Fayetteville, by: Constance G. Clark and William Jackson Butt II, for appellant Fayetteville School District No. 1.

Fred Harrison, General Counsel, by: T. Scott Varady, William R. Kincaid, and Matthew McCoy, Associate General Counsel, for appellee.

Leslie Rutledge, Att'y Gen., by: Bourgon B. Reynolds, Ass't Att'y Gen., amicus curiae in support of appellee.

KAREN R. BAKER, Associate Justice

This appeal stems from the ad valorem taxation of certain parcels of property owned by the appellee, Board of Trustees of the University of Arkansas ("the University"). In 2011, 2012, and 2013, the University submitted applications to the appellant, Washington County Tax Assessor,¹ seeking immunity from taxation, or alternatively, exemption from taxation for tax years 2010, 2011, and 2012.² Thereafter, litigation ensued, and the cases were consolidated on the joint motion of the parties. The procedural history of this matter is as follows. The Washington County Tax Assessor denied the University's applications. The University appealed the denial to the Washington County Board of Equalization, which affirmed the assessor's decision. Under protest, the University paid the assessed taxes and appealed the Board of Equalization's decision to Washington County Court. The Washington County Court affirmed the Board of Equalization's decision. On December 19, 2012, the University appealed to the circuit court. On January 18, 2013, the University filed its complaint in the circuit court and filed its amended complaint on May 13, 2014. The Fayetteville School District intervened in the case, asserting that the greatest portion of the taxes assessed and collected by Washington County are distributed to the school district, giving the school district an interest related to the property and taxes at issue. Washington County and the University did not object to the school district's intervention. The appellants will hereinafter be collectively referred to as "Fayetteville."

Once litigation proceeded in the circuit court, competing summary judgment motions were filed by both parties. On October 28, 2014, the circuit court held a hearing. On December 31, 2014, the circuit court announced its ruling from the bench, granting the University's motion for summary judgment and denying Fayetteville's and entered an order to that effect that same day. On January 12, 2015, Fayetteville filed a motion pursuant to Arkansas Rule of Civil Procedure 52(b) for amended findings of facts and for additional findings, including a Rule 54(b) certificate. On January 29, 2015, Fayetteville filed its notice of appeal. On February 2, 2015, the

480 S.W.3d 175

circuit court entered a final order. On February 3, 2015, Fayetteville filed its second notice of appeal.

The parties timely filed their respective briefs, and with permission of the court, the Attorney General of the State of Arkansas filed an amicus curiae brief in support of the University. From the circuit court's order granting the University summary judgment, Fayetteville timely appeals and presents one issue: whether the circuit court erred in holding that the University is entitled to sovereign immunity from ad valorem taxation.

I. Standard of Review

Moving to our standard of review, "summary judgment may be granted only when there are no genuine issues of material fact to be litigated, and the moving party is entitled to judgment as a matter of law." Cannady v. St. Vincent Infirmary Med. Ctr., 2012 Ark. 369, 423 S.W.3d 548. "Ordinarily, upon reviewing a circuit court's decision on a summary-judgment motion, we would examine the record to determine if genuine issues of material fact exist." May v. Akers–Lang, 2012 Ark. 7, 386 S.W.3d 378. However, in a case where the parties agree on the facts, we simply determine whether the appellee was entitled to judgment as a matter of law. Hobbs v. Jones, 2012 Ark. 293, 412 S.W.3d 844. "When parties file cross-motions for summary judgment, as was done in this case, they essentially agree that there are no material facts remaining, and summary judgment is an appropriate means of resolving the case. As to issues of law presented, our review is de novo." State v. Cassell, 2013 Ark. 221, 4–5, 427 S.W.3d 663, 666 (citations omitted). "De novo review means that the entire case is open for review." Certain Underwriters at Lloyd's, London v. Bass, 2015 Ark. 178, at 9, 461 S.W.3d 317, 323 (citations omitted).

Also on review, "[t]his court reviews a circuit court's interpretation of a constitutional provision de novo. We are not bound by a circuit court's decision, but in the absence of a showing that the [circuit] court erred in its interpretation of the law, that interpretation will be accepted on appeal. Language of a constitutional provision that is plain and unambiguous must be given its obvious and common meaning. Neither rules of construction nor rules of interpretation may be used to defeat the clear and certain meaning of a constitutional provision. Furthermore, when engaging in constitutional construction and interpretation, this court looks to the history of the constitutional provision. The Arkansas Constitution must be considered as whole, and every provision must be read in light of other provisions relating to the same subject matter." Gatzke v. Weiss, 375 Ark. 207, 211, 289 S.W.3d 455, 458 (2008) (citations omitted).

With these standards in mind, we turn now to the issue on appeal.

II. Sovereign Immunity from Ad Valorem Taxation

At issue is the circuit court's February 2, 2015, order which granted the University's motion for summary judgment and held that the University was immune from ad valorem taxation based on sovereign immunity:

For the reasons stated by the Honorable William Storey in a proceeding held on December 31, 2014, the Court finds, as a matter of law, that the University is an instrumentality of the State of Arkansas and that it possesses sovereign immunity from ad valorem taxation. A copy of the written Order and the transcript of the proceeding held on December 31, 2014 are respectively attached hereto as

480 S.W.3d 176

Exhibits 1 and 2 and incorporated herein by reference.^{[3 ]} Judge Storey specifically held that the Board of Trustees of the University of Arkansas is an instrumentality of the State of Arkansas and cited Arkansas v. Texas, 346 U.S. 368 [74 S.Ct. 109, 98 L.Ed. 80] (1953), in support of his determination. Judge Storey then held that the University, as an instrumentality of the State of Arkansas, possesses sovereign immunity from ad valorem taxation under the Arkansas Constitution. Judge Storey cited Arkansas State Highway Commission v. Sub–District No. 3 Grassy Lake, 237 Ark. 614 [376 S.W.2d 259] (1964), and generally referenced other cases cited by the University's brief in reaching the Court's ruling.

As determined and announced by Judge Storey in open court on December 31, 2014, and as entered into the record in a written Order on the same day, this Court finds and holds, as a matter of law, that the Motion for Partial Summary Judgment filed by the Intervenor was denied. In open court and in the Order entered on December 31, 2014, this Court finds and holds, as a matter of law, that the Motion for Partial Summary Judgment, as adopted by Washington County, the Washington County Tax Assessor, and the Washington County Tax Collector in their Statement of Concurrence and Adoption by Reference, was denied as well. This Court incorporates by reference and adopts Judge Storey's bench ruling and written Order entered for the record on December 31, 2014, as its own in this Judgment. For the avoidance of all doubt, the Court FINDS and ORDERS:

A. Intervenor's Motion for Partial Summary Judgment is hereby DENIED;

B. Washington County's Motion for Partial Summary Judgment is hereby DENIED; and

C. The University's Motion for Summary Judgment is hereby GRANTED. These rulings on the parties' respective motions are intended to be and are declared to be consistent with Judge Storey's original ruling and Order dated December 31, 2014.

Accordingly, the narrow issue in this case is whether the University is immune from ad valorem taxation as to the specific parcels involved in this case.

A. Sovereignty

We turn to the genesis of the sovereign state. Sovereignty is the "the supreme, absolute, and uncontrollable power by which an independent state is governed and from which all specific political powers are derived; the intentional independence of a state, combined with the right and power of regulating its internal affairs without foreign interference. Sovereignty is the power of a state to do everything necessary to govern itself, such as making, executing, and applying laws;...