Lightner v. Hampton Hall Club, Inc.
419 S.C. 357
| S.C. | 2017Background
- Plaintiff Brad Lightner, a Hampton Hall Club member, sued Hampton Hall, the State, the South Carolina Department of Revenue (SCDOR), Beaufort County, and unnamed nonprofits alleging unlawful collection/retention of admissions taxes on members' dues in violation of S.C. Code § 12-21-2420(4).
- Complaint sought quantum meruit damages, declaratory relief, injunctive relief, and (against club/John Doe) breach of fiduciary duty; plaintiff moved for class certification.
- Petitioners (State and SCDOR) moved to dismiss/strike, arguing the South Carolina Revenue Procedures Act (the Act) requires exhaustion of administrative remedies, bars class actions for tax refunds, and precludes injunctive relief; they also sought dismissal of the State as a party.
- The circuit court held the Act applies only to property tax disputes with the SCDOR (so exhaustion was not required) but nonetheless dismissed the class action allegations relying on Drummond v. State.
- On review, the South Carolina Supreme Court held the Act is not limited to property-tax-with-SCDOR disputes, reversed the circuit court on exhaustion (requiring dismissal without prejudice so administrative remedies can be pursued), and held class actions for tax refunds are barred by § 12-60-80(C).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Act is limited to disputes with SCDOR concerning property taxes | Lightner: Act is limited to property tax disputes so it does not apply here | State/SCDOR: Act applies to disputes with the Department and to disputes concerning property taxes — not limited | Held: Act is not limited; it covers disputes with the Department and disputes concerning property taxes as distinct categories (circuit court erred) |
| Whether plaintiff must exhaust administrative remedies under the Act | Lightner: No exhaustion required because Act inapplicable | State/SCDOR: Exhaustion required; Act provides exclusive remedies for wrongful tax collection | Held: Exhaustion required; action challenging wrongful collection of tax is subject to Act and circuit court must dismiss without prejudice for administrative exhaustion |
| Whether plaintiff may proceed as a class action against the SCDOR/State for tax refunds | Lightner: Class action permissible (Act inapplicable) | State/SCDOR: § 12-60-80(C) bars class actions for tax refund claims and forbids naming department/ subdivisions in other class actions | Held: § 12-60-80(C) prohibits class actions for tax refunds and bars naming the department/ political subdivisions in class actions; plaintiff cannot pursue a class refund action against Petitioners |
| Whether the State is a proper party and whether injunctive relief is barred | Lightner: State remains a proper party; injunctive relief seeks to stop unlawful collection | State/SCDOR: SCDOR administers tax law and the Act limits injunctive relief; State should be dismissed | Held: Court did not fully adopt dismissal of State on that basis here; however, Act limits remedies and injunctive/class remedies against department/State are constrained per Act provisions (court declined to reach other arguments) |
Key Cases Cited
- Drummond v. State, 378 S.C. 362 (2008) (addressed applicability of Act to facial challenges and noted § 12-60-80(C) bars class certification in tax cases)
- Mitchell v. City of Greenville, 411 S.C. 632 (2015) (stated rule that court must effectuate legislative intent in statutory interpretation)
- Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598 (1999) (explains court need not reach remaining issues when resolution of a prior issue is dispositive)