Western Telepage, Inc. v. City of Tacoma

• Decision Date: 16 April 1999
• Docket Number: No. 23082-8-II,23082-8-II
• Citation: 974 P.2d 1270,95 Wn.App. 140
• Court: Washington Court of Appeals
• Parties: WESTERN TELEPAGE, INC., d/b/a AT & T Wireless Services, Appellant, v. CITY OF TACOMA, a municipal corporation, Respondent.

Page 140

95 Wn.App. 140

974 P.2d 1270

WESTERN TELEPAGE, INC., d/b/a AT & T Wireless Services, Appellant, v. CITY OF TACOMA, a municipal corporation, Respondent.

No. 23082-8-II.

Court of Appeals of Washington,

Division 2.

April 16, 1999.

Dirk Jay Giseburt, Davis Wright & Jones, Seattle, for Appellant

Robin Jenkison, City Attorney and Harding Thomas Roe, Asst. City Atty., Tacoma, for Respondent.

HOUGHTON, J.

Western Telepage, Inc. sought a tax refund and a declaratory judgment that Tacoma City Ordinance No. 25680, TMC 6.67.030, which imposes a six percent tax on paging services, is contrary to state law and unenforceable. Western Telepage appeals from the trial court order granting summary judgment dismissing its claims. We affirm.

FACTS

Western Telepage, Inc., a Washington corporation (Telepage), provides one-way paging services in the City of An alpha-numeric message can be initiated by computer modem, dictated to a live operator, or on the Internet. The message is sent via telephone line to the paging terminal, and via telephone line, microwave, or satellite from the paging terminal to a radio transmitter. The radio transmitters broadcast the messages via microwave signals. The broadcast messages are encoded so that only the intended recipient's pager will receive the message. The pager cannot be used to respond to or initiate messages. ¹

Tacoma (City) and elsewhere in Washington. Telepage's services involve the one-way transmission of numeric and alpha-numeric messages. A numeric message is initiated by a telephone call made to a pager number. The call is transmitted by a telephone company to Telepage's paging terminal, then the paging terminal prompts the caller to type in a return telephone number. The message is then sent to Telepage's radio transmitters.

Telepage currently pays taxes to the State under the "other business or service activities" section of the Business and Occupation (B & O) Tax classification. RCW 82.04.290. This classification includes "any type of service which does not constitute a 'sale at retail.' " RCW 82.04.290. Retail sales include the providing of telephone services. RCW 82.04.050(5). The State Department of Revenue interprets the statutory definition of "telephone business" as excluding paging services.

The City is permitted to tax paging and telephone services within certain statutory limits. The City must adhere to the statutory definition of "telephone business" contained in RCW 82.04.065. RCW 35.21.714. Also, the City may not increase B & O taxes within a tax classification in excess of two percent per year. ² RCW 35.21.710.

Until 1995, Telepage paid taxes to the City under the service and other activities classification at a rate of forty-eight one-hundredths of one percent (.0048) percent of gross income. ³ TMC 6.68.220(I). The City taxes telephone services at a rate of six percent of gross income. TMC 6.66.020-.030. In March 1995, the City passed an ordinance imposing a six percent tax on cellular telephone and paging services. Tacoma City Ordinance No. 25680 (codified at TMC 6.67.010-.140). The City notified Telepage that as of July 1, 1995 it would owe tax at the six percent rather than .0048 percent rate.

Telepage paid the new tax under protest and requested a refund at the end of the year. The City denied the refund request, and Telepage appealed to the Office of the Hearing Examiner. The hearing examiner considered only whether Telepage's services fit the definition of "pager service" set forth in TMC 6.67.020. ⁴ In May 1997, the examiner entered findings of fact, conclusions of law, and a decision upholding the denial of Telepage's refund request.

Telepage appealed the ruling to the superior court and also challenged the City's ordinance as contrary to state law. Telepage moved for partial summary judgment on the issues of whether the City's ordinance unlawfully increased Telepage's tax rate in excess of two percent and conflicted with the statutory definition of telephone business. The court denied the motion. The City then moved for summary judgment, which the court granted. The court found that the statutory definition is plain on its face and includes paging services. Telepage appeals.

ANALYSIS

A. Standard of Review

Summary judgment is appropriate if there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. CR 56(c). The appellate court reviews the trial court's decision de novo. Reid v. Pierce County, 136 Wash.2d 195, 201, 961 P.2d 333 (1998). The court must construe the facts most favorably toward the nonmoving party. Babcock v. State, 116 Wash.2d 596, 599, 809 P.2d 143 (1991).

B. Definition of Telephone Business

The sole issue is whether the statutory definition of "telephone business" includes paging services. Telepage argues that it does not, and therefore, the City's ordinance is contrary to state law and unlawfully imposes a tax increase greater than the statutory maximum. The City counters that paging services have always been within the statutory definition, and its ordinance merely clarifies the proper tax classification for such services. The statutory definition provides: " 'Telephone business' means the business of providing network telephone service...."

RCW 82.04.065(4) (1996).

"Network telephone service" means the providing by any person of access to a local telephone network, local telephone network switching service, toll service, or coin telephone services, or the providing of telephonic, video, data, or similar communication or transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. ... "Network telephone service" does not include the providing of competitive telephone service,[ ⁵]the [ ⁵]the providing of cable television service, the providing of broadcast services by radio or television stations, nor the provision of internet service....

RCW 82.04.065(2) (emphasis added).

The interpretation of a statute is a question of law reviewed de novo. Monroe v. Soliz, 132 Wash.2d 414, 418, 939 P.2d 205 (1997); American Legion Post No. 32 v. City of Walla Walla, 116 Wash.2d 1, 5, 802 P.2d 784 (1991). If a statuteis plain and unambiguous, its meaning must be derived from the language of the statute itself. Harmon v. Department of Soc. and Health Servs., 134 Wash.2d 523, 529-30, 951 P.2d 770 (1998) (citing State v. Mollichi, 132 Wash.2d 80, 87, 936 P.2d 408 (1997); Marquis v. City of Spokane, 130 Wash.2d 97, 107, 922 P.2d 43 (1996)). A statute is ambiguous if it is susceptible of two or more reasonable interpretations. State v. Van Woerden, 93 Wash.App. 110, 116, 967 P.2d 14, 17 (1998) (citing State v. Sunich, 76 Wash.App. 202, 206, 884 P.2d 1 (1994)).

Telepage contends that the statute is ambiguous and that the Legislature did not intend to include paging services within its scope. Telepage offers an affidavit by the statute's drafter and a Department of Revenue interpretation to that effect.

The affidavit and Department of Revenue statement are not relevant to our analysis. The intent of the Legislature should be derived from the context and subject matter of the legislation itself. ⁶ State v. Joswick, 71 Wash.App. 311, 315, 858 P.2d 280 (1993) (citing Hatzenbuhler v. Harrison, 49 Wash.2d 691, 306 P.2d 745 (1957)). The Legislature's intent in passing a particular bill cannot be shown by the affidavit of a legislator. ⁷ City of Yakima v. International Ass'n of Fire Fighters, AFL-CIO, Local 469, 117 Wash.2d 655, 677, 818 P.2d 1076 (1991) (citing Woodson v. State, 95 Wash.2d 257, 264, 623 P.2d 683 (1980); Pannell v. Thompson, 91 Wash.2d 591, 598, 589 P.2d 1235 (1979)).

Although courts give deference to interpretative administrative regulations, Ortega v. Employment Sec. Dep't, 90 Wash.App. 617, 622, 953 P.2d 827, review granted, 136 Wash.2d 1028, 972 P.2d 464 (1998), the materials provided by Telepage are not an official agency interpretation. Telepage relies upon an article published by the Department of Revenue in its newsletter, Tax Topics, not upon an agency regulation, ruling, or determination. The article states:

A pager does not provide an ability to establish a two-way contact or communication. Consequently, paging services are not classified as telephone services. Income from providing paging services is subject to B & O tax under the service and other activities classification.

Distinguishing Telecommunications Services: Paging Service Charges vs. Cellular Phone Airtime Charges, Tax Topics, Apr.-June, 1995, at 2.

But nothing in the wording of the statutory definition of telephone business indicates that the ability to establish two-way contact is required. ⁸ See RCW 82.04.065. An administrative determination will not be accorded deference if the agency's interpretation conflicts with the relevant statute. Simpson Inv. Co. v. Department of Revenue, 92 Wash.App. 905, 913, 965 P.2d 654 (1998) (citing Senate Republican Campaign Comm. v. Public Disclosure Comm'n 133 Wash.2d 229, 241, 943 P.2d 1358 (1997)); see also Federal Election Comm'n v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 37, 102 S.Ct. 38, 70 L.Ed.2d 23 (1981) (thoroughness, validity, and consistency of agency's reasoning are factors that bear upon amount of deference to be given an agency's ruling) (citing Adamo Wrecking Co. v. United States, 434 U.S. 275, 287 n. 5, 98 S.Ct. 566, 54 L.Ed.2d 538 (1978); Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)). Courts are not to read into statutes matters that are not there, or modify statutes by construction. King County v. City of Seattle, 70 Wash.2d 988, 991, 425 P.2d 887 (1967).

Furthermore, courts defer to agency interpretations only when statutory language is ambiguous. Simpson, 92 Wash.App. at 913, 965 P.2d 654 (citing Waste Management of Seattle, Inc. v. Utilities & Transp. Comm'n, 123 Wash.2d 621, 627-28, 869 P.2d 1034 (19...