Yeargin v. AUDITING DIV. OF STATE TAX
| Decision Date | 06 February 2001 |
| Docket Number | No. 990364.,990364. |
| Citation | 20 P.3d 287,2001 UT 11 |
| Parties | YEARGIN, INC., Petitioner, v. AUDITING DIVISION OF THE UTAH STATE TAX COMMISSION, Respondent. |
| Court | Utah Supreme Court |
Robert A. Peterson, John H. Bogart, Salt Lake City, for petitioner.
Mark Shurtleff, Att'y Gen., Gale K. Francis, Asst. Att'y Gen., Salt Lake City, for respondent.
INTRODUCTION
¶ 1 Petitioner Yeargin, Inc. seeks certiorari review of the court of appeals's decision upholding the Utah State Tax Commission's denial of Yeargin's sales tax refund claim. Yeargin, Inc. v. Tax Comm'n, 1999 UT App 094, 977 P.2d 527.
¶ 2 In 1988, an ammonium perchlorate (AP) manufacturing facility owned by Pacific Engineering and Production Co. of Nevada (PEPCON) exploded and was destroyed. PEPCON Production Inc. (PPI), an affiliate of PEPCON, received financing to rebuild a similar facility near Cedar City, Utah, under the condition that PPI form Western Electrochemical Company (WECCO) to complete the construction of and subsequently operate the new facility. Upon formation, WECCO became the owner of the new facility, which began production of AP in August 1989.
¶ 4 In or around May 1991, the Auditing Division of the Utah State Tax Commission (Division) conducted an audit of Yeargin, reviewing purchase orders, purchase order status reports, checks, ledgers, and sales tax returns for items purchased in connection with the AP project from October 1, 1988, through December 31, 1989. In September 1992, the Division sent Yeargin a statutory notice claiming it owed $67,827.86 sales and use tax.1 Yeargin promptly paid the claimed tax amount to avoid further penalty and shortly thereafter filed a refund claim.
¶ 5 In April 1994, two years after Yeargin had paid the tax and filed a refund claim, and three years after the audit had commenced, the Division entered into a joint stipulation of fact2 with Yeargin and other entities involved in construction of the AP facility.3 Paragraph twelve of the stipulation reads as follows:
During the course of construction of the facility PPI and WECCO entered into an agreement with United Engineers and Constructors, Inc., and its affiliate, Yeargin, for the purpose of providing assistance in the engineering, design and procurement for the construction of the AP manufacturing facility. United Engineers assisted WECCO in purchasing materials for use in the construction of the facility and located suppliers, obtained price quotations and arranged for WECCO to make purchases of materials. Title to all materials purchased for use at the WECCO facility passed directly to WECCO from the suppliers.
¶ 6 After the Division denied Yeargin's refund claim, Yeargin filed a petition for redetermination with the Utah State Tax Commission (Commission), which heard the petition in a formal hearing in March 1997. Prior to the hearing, Yeargin submitted a filing entitled "Memorandum of Points and Authorities in Support of Motion in Limine," in which it asked the Commission to dismiss the matter and award its requested refund. Yeargin reasoned in the motion that because the parties stipulated that title to all goods passed to WECCO directly from the suppliers (as per paragraph twelve of the stipulation), Yeargin "never purchased for [its] own account materials nor held title to such materials," and thus could not be liable for the sales tax. Yeargin claimed to have relied upon the stipulation and argued that it "cannot now be simply abandoned as inconvenient by the Auditing Division."
¶ 7 In its "Memorandum in Opposition to Petitioner's Motion in Limine," the Division asserted that the Commission should, in the interest of justice, relieve the parties from the binding effect of the stipulation. The Commission implicitly denied the motion in limine when it received evidence offered by the Division that Yeargin paid for certain materials used in the construction of the AP facility.
¶ 8 In its findings of fact, conclusions of law, and final decision, the Commission concluded, "based upon the evidence and testimony presented at the hearing," that Yeargin was indeed liable for the sales tax pursuant to section 59-12-103 of the Utah Code and rule 865-19S-58 of the Utah Administrative Code as a purchaser or consumer of personal property. In particular, the Commission found:
During the course of construction of the facility, . . . WECCO entered into an agreement with . . . Yeargin, for purpose [sic] of providing assistance in the engineering, design and procurement for the construction of the AP manufacturing facility. .. . . . In addition to assisting WECCO,. . . Yeargin actually purchased some of the materials which were invoiced and billed to Yeargin and were paid for by checks from Yeargin. Yeargin ultimately installed those materials into the real property at the WECCO facility or consumed the materials in the construction process. The contract provides that title to all materials purchased for use at the WECCO facility would pass directly from suppliers to WECCO, but the invoices and checks indicate that some of the materials came to rest in the hands of Yeargin.
The Commission found paragraph twelve of the parties' stipulation to be ambiguous, and thus received evidence that the parties intended for Yeargin to purchase some materials itself and not just assist in WECCO's purchasing.
¶ 9 The court of appeals concluded that the Commission was not arbitrary or unreasonable in finding that Yeargin, as a real property contractor, had installed or consumed the items for which the tax was due. The court also concluded that there was substantial evidence to support the Commission's finding that Yeargin was the final consumer of the materials and was thus liable for the sales tax pursuant to rule 865-19S-58 of the Utah Administrative Code and section 59-12-103 of the Utah Code. See Yeargin, 1999 UT App 094 ¶¶ 15, 21-23,
977 P.2d 527. The court of appeals addressed paragraph twelve of the parties' stipulation in a footnote, finding that it applied only to the transactions in which Yeargin assisted WECCO in purchasing materials, not to the transactions "for which Yeargin issued purchase orders, received invoices, and issued checks." Id. at n. 7.
¶ 10 Yeargin seeks review of the court of appeals's decision, contending that the court erred in failing to address whether the Commission was bound by the facts agreed to by the parties in the stipulation, and if bound, whether the Commission erred in denying Yeargin's petition for redetermination.
¶ 11 "On certiorari, we review the court of appeals'[s] decision for correctness." County Bd. of Equalization v. Stichting Mayflower Recreational Fonds, 2000 UT 57, ¶ 9, 6 P.3d 559. The court of appeals's decision is correct only if it accurately reviewed the Commission's decision under the appropriate standard of review. See Newspaper Agency Corp. v. Auditing Div., 938 P.2d 266, 267-68 (Utah 1997)
. Because the court of appeals was reviewing a formal adjudicative proceeding commenced before the Commission, the standard of review set out in section 59-1-610 of the Utah Code applies. The court must review the Commission's findings of fact under a "substantial evidence" standard. See Utah Code Ann. § 59-1-610(1)(a) (1996). In other words, the court of appeals must uphold those findings of fact that are supported by substantial evidence, or "that quantum and quality of relevant evidence which is adequate to convince a reasonable mind to support a conclusion." Schmidt v. Utah State Tax Comm'n, 1999 UT 48, ¶ 7, 980 P.2d 690 (citations omitted). The court of appeals must review the Commission's conclusions of law for correctness. See § 59-1-610(1)(b).
¶ 12 Before reaching the merits of this review, we address a jurisdictional issue raised by the Division.
¶ 13 The Commission issued its final decision on April 14, 1997. On May 7, 1997, Yeargin filed a petition for review by trial de novo in the third district court pursuant to section 59-1-601 of the Utah Code, which the legislature had amended in 1993 to provide that "beginning July 1, 1994, the district court shall have jurisdiction to review by trial de novo all decisions by the [tax] commission resulting from formal adjudicative proceedings." Utah Code Ann. § 59-1-601(1) (1996).4
¶ 14 While the case was pending in district court, we issued our decision in Evans & Sutherland in which we held that section 59-1-601 violated article XIII, section 11, of the Utah Constitution because it purported to confer upon the district courts a power expressly reserved in article XIII to the Commission.5 See Evans & Sutherland, 953 P.2d at 436. ¶ 15 As a result of this decision, the district court was divested of jurisdiction over Yeargin's petition, and Yeargin therefore filed a petition for review with this court on November 6, 1997. We transferred the case to the court of appeals, which determined that the petition for review, though filed over six months after the filing...
To continue reading
Request your trial
-
State v. Rigby
...a court ... is conclusive of all matters necessarily included in the stipulation." Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm'n, 2001 UT 11, ¶ 20, 20 P.3d 287(citation and internal quotation marks omitted); see also Prinsburg State Bank v. Abundo, 2012 UT 94, ¶ 14, 296 P.3d 709("......
-
Utah Office of Consumer Servs. v. Pub. Serv. Comm'n of Utah
...and is conclusive of all matters necessarily included in the stipulation .’ " (emphasis added) (quoting Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm’n , 2001 UT 11, ¶ 20, 20 P.3d 287 sell a specified amount of natural gas at a specific price within a specific timeframe in exchange ......
-
Uintah Basin Medical Center v. Hardy
...to the parties at the time they entered the [contract].'" Nielsen, 2003 UT 37 at ¶ 7, 78 P.3d 600 (quoting Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm'n, 2001 UT 11, ¶ 39, 20 P.3d 287) (second alteration in original). Generally, "[a] contract provision is ambiguous if it is capabl......
-
Flying J Inc. v. Comdata Network, Inc.
...the facts known to the parties at the time they entered the [contract])" (brackets in original) (quoting Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm'n, 20 P.3d 287 (Utah 2001)), Peterson, 48 P.3d at 918 ("In determining whether a contract is ambiguous the court is not bound to con......