Bob Hook Chevrolet Isuzu, Inc. v. Commonwealth, Transportation Cabinet
983 S.W.2d 488
Ky.
1998
Check Treatment

BOB HOOK CHEVROLET ISUZU, INC., Appellant, v. COMMONWEALTH of Kentucky, TRANSPORTATION CABINET, Appellee.

No. 97-SC-776-DG

Supreme Court of Kentucky.

Nov. 19, 1998.

Rehearing Denied Feb. 18, 1999.

argues that the trial judge improperly permitted opinion testimony about the reputation and abilities of trial counsel, and that the judge then improperly considered trial counsel‘s good reputation and wealth of experience in criminal matters when it found counsel rendered effective assistance to Appellant.

A review of the RCr 11.42 hearing reflects the trial judge was concerned not with the witnesses’ opinions about trial counsel‘s reputation, but with the specific facts regarding counsel‘s representation of Appellant at trial. Furthermore, although the court, at the outset of its opinion denying the RCr 11.42 and CR 60.02 motions, specifically noted that Appellant‘s trial attorneys were experienced lawyers and that one of the attorneys was well known for his experience in death penalty cases, the court later stated that its purpose in noting counsel‘s reputation was to mitigate any skepticism about ineffectiveness claims against counsel. Contrary tо Appellant‘s contention, we believe the trial judge fairly weighed each of Appellant‘s allegations of ineffective assistance, and did not allow his awareness of counsel‘s reputation to influence his ultimate decision.

Appellant also argues the trial judge applied the wrong legal standard in deciding the RCr 11.42 motion, in that hе concluded counsel‘s errors did not “cause the jury‘s verdict.” The proper standard, under , is that “The defendant must show that there is a reasonable probability that, but for counsel‘s unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidencе in the outcome.” . Although the court indeed concluded its opinion by stating that counsel‘s errors did not cause the jury‘s verdict, after reviewing the opinion as a whole, we believe the judge adhered to the standard of review mandated in . In any event, even if we were to conclude the trial judge applied the wrong standard, it is our opinion, аs evidenced by our discussion above, that application of the correct standard would have led to the same result. Appellant‘s allegations of ineffectiveness have in no way undermined our confidence in the outcome of his trial.

Lastly, Appellant argues the trial court erred in denying his motion for a new trial pursuant to RCr 10.02 and CR 60.02 beсause the newly discovered evidence introduced at the hearing compels a finding that Blair committed the crime for which Appellant was framed and wrongfully convicted. The “new” evidence which Appellant insists compels such a finding consists of three witnesses who claim to have heard Blair confess, either directly or obliquely, to the murder of Mr. Harris. At trial, Appellant presented seven witnesses who testified they had heard Blair make similar confessions. Because the testimony of these newly discovered witnesses is merely cumulative and adds nothing new to the body of fact which was before the jury which convicted Appellant, it fails to establish an appropriate basis for granting a new trial. ; .

Accordingly, for the reasons set forth above, the denial of Appellant‘s RCr 11.42 and CR 60.02 motions is affirmed.

All concur.

David H. Vance, Dandridge F. Walton, Walton & Vance, Frankfort, for Appellant.

Thomas G. Karageorge, Borowitz & Goldsmith, PLC, Louisville, for Appellee.

Timothy J. Eifler, Thomas M. Williams, Ogden Newell & Welch, Louisville, for Amicus Curiae, Greater Louisville Auto Dealers Association, Inc.

OPINION OF THE COURT

This Court granted discretionary review and upon due consideration of the briefs filed herein and after having heard oral argument, has determined that the Opinion of the Court of Appeals rendered on July 18, 1997, adequately represents our view. Accordingly, we hereby adopt the Opinion of the Court of Appeals and reproduce it in full herein:

BEFORE: HUDDLESTON, JOHNSON and KNOPF, Judges.

HUDDLESTON, JUDGE. Bob Hook Chevrolet Isuzu, Inc. (Hook Chevrolet) appeals a Franklin Circuit Court judgment which upheld a ruling of ‍​​​‌‌‌‌‌​​​​​‌​‌​​​‌‌​‌‌​​​​‌​‌​​​‌​​‌‌‌‌‌​​‌‌‌‌‍the Kentucky Board of Tax Appeals (Tax Board) that the Commonwealth of Kentucky, Transportation Cabinet (Cabinet) correctly assessed taxes owing by Hook Chevrolet for various motor vehicles and other transactions it contends were covered by a “U-drive-it” permit. Ky.Rev.Stat. (KRS) 281.014(4).1

The Cabinet conducted an audit of Hook Chevrolet covering the period from January 1, 1987 through March 30, 1990, concerning its practices under a “U-drive-it” permit. As a result of the investigation, the Cabinet assessed $19,753.39 in taxes and interest2 due to the Commonwealth.

The facts and issues in the dispute between Hook Chevrolet and the Cabinet are not in question. Hook Chevrolet has designated 25 vehicles for use as customer courtesy vehicles. Hook Chevrolet insists that this practice is valid under its “U-drive-it” permit. The Cаbinet argues otherwise.

The second issue involves the Cabinet‘s power to assess a tax for missing records under the “U-drive-it” permit. Hook Chevrolet argues that no tax should have been levied because it explained that these records most likely represented transactions that had been voided for some reason or another.

The final issue concerns the propriety of the Cabinet‘s assessment of usage tax for lease payments either not reported by Hook Chevrolet or payments which were misreported. Hook Chevrolet asserts that it paid the usage tax on all amounts that it actually received from its customers and that, under the applicablе statutes, this is the amount from which the tax is correctly determined.

As an initial matter, we note that the standard of review of decisions from the Tax Board, previously set forth in KRS 131.370(4), is now found in KRS Chapter 13B. KRS 131.370(1). KRS 13B .150(1) limits a court to reviewing the record from the administrative agency unless there is an allegation of fraud or misconduct involving a party. The standard of review appears in KRS 13B.150(2):

The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the final order or it may reverse the final order, in whole or in part, and remand the case for further proceedings if it finds the agency‘s final order is:

(a) In violation of constitutional or statutory provisions;

(b) In excess of the statutory authority of the agency;

(c) Without support of substantial evidence on the whole record;

(d) Arbitrary, capricious, or characterized by abuse of discretion;

(e) Based on an ex parte communication which substantially prejudiced the rights of any party and likely affected the outcome of the hearing;

(f) Prejudiced by a failure of the person conducting a proceeding to be disqualified pursuant to KRS 13B.040(2); or

(g) Deficient as otherwise provided by law.

This section of the statute codifies in one location the varying grounds for review of an administrative decision already recognized in Kentucky jurisprudence. See Ky. Const. § 2; ; ; ; ; .

In the present case the questions to be answered deal with the interpretation of statutes. The construction and aрplication of statutes is a matter ‍​​​‌‌‌‌‌​​​​​‌​‌​​​‌‌​‌‌​​​​‌​‌​​​‌​​‌‌‌‌‌​​‌‌‌‌‍of law and may be reviewed de novo. The essential thrust of Hook Chevrolet‘s arguments on appeal is that the Tax Board misapplied the law to the facts. This has been recognized as a matter which is reviewed de novo. ; .

Our starting point is the term “U-drive-it.” KRS 281.014(4) defines this term as meaning one who:

[L]eases or rents a motor vehicle for a consideration to bе used for the transportation of persons or property, but for which no driver is furnished, and the use of which motor vehicle is not for the transportation of persons or property for hire by the lessee or rentee.3

As the holder of a “U-drive-it” permit, Hook Chevrolet has the option of paying one of two taxes. KRS 138.463(1) provides that the permittee “may pay a usage tax of five percent (5%) levied upon the amount of the gross rental or lease charges paid by a customer or lessee renting or leasing a motor vehicle from such holder of the permit.” 4 Gross rental charges are defined in KRS 138.462(4) as the amount paid by a customer for time and mileage only. The statute also defines a lease аs a contract supported by consideration. The Supreme Court has held that there is no ambiguity in assessing the usage tax upon gross rental and lease charges. . It also held that gross lease charge means any charge to the customer contained in the lease.

The other option for Hook Chevrolet is to pay tax on vеhicles registered under the permit in accordance with KRS 138.460(1), which provides for a tax on the retail price of the automobile at the rate of five percent (5%).5 Retail price is defined in KRS 138.450(4) as dependent upon whether the vehicle is new or used. If it is a new automobile, the retail price is ninety percent (90%) of the manufacturer‘s suggested retail price. KRS 138.350(4)(a). If the vehicle is used, the retail price is determined by reference to the “blue book” value. KRS 138.350(4)(b).6

Hook Chevrolet opted to pay its tax according to the provisions of KRS 138.463(1) for those vehicles registered under its “U-drive-it” permit. Twenty-five of the vehicles registered under the permit were not used for leasing or rental purposes. Instead, these vehicles were utilized as customer courtesy cars or loaners or for various other business purposes. The Cabinet determined that these automobiles had been converted to a business use and, therefore, were not eligible for the alternative tax treatment in KRS 138.463(1).7

Hook Chevrolet does not deny it used the vehicles for purposes other than leasing or renting. Rather, it contends that the Cabinet, the Tax Board, and the circuit court erred in interpreting KRS 138.463. Specifically, Hook Chevrolet argues that the only requirement it must meet to claim alternative tax treatment is contained in KRS 138.463(3).8 That section of the statute states, “[a] holder of a [“U-drive-it“] ‍​​​‌‌‌‌‌​​​​​‌​‌​​​‌‌​‌‌​​​​‌​‌​​​‌​​‌‌‌‌‌​​‌‌‌‌‍permit shall pay the usage tax as provided in KRS 138.460 unless he shows to the satisfaction of the cabinet that he is regularly engaged in the renting or leasing of motor vehicles to retail customers as a part of an established business.”

Hook Chevrolet asserts that because it has been stipulated that it regularly engages in renting or leasing vehicles to retail customers as а part of an established business it is entitled to utilize the alternative tax treatment of KRS 138.463(1). We disagree.

KRS 138.463(1) conditions the ability of Hook Chevrolet to claim alternative tax treatment on compliance with its remaining provisions. One of those provisions requires that every transaction involving vehicles registered under the “U-drive-it” permit must represent “a bona fide arm‘s length transaction” and requires sufficient consideration to support the transaction. KRS 138.463(9).9

A statute should be construed, if possible, so as to effectuate the plain meaning and unambiguous intent expressed in the law. . A corresponding rule of construction is that a statute should be construed, if possible, so that no part of its provisions arе rendered meaningless. .

To interpret KRS 138.463(1) in the manner proposed by Hook Chevrolet would vitiate the clear intent expressed in subsection 9 of that statute—that transactions involving “U-drive-it” vehicles be supported by consideration. In addition, the statute itself requires that holders of “U-drive-it” permits comply with all its sections in order to obtain alternative tax treatment. KRS 138.463(1). The twenty-five vehicles Hook Chevrolet utilized for business purposes clearly do not fall within the parameters of the transactions meant to be covered by the “U-drive-it” permit. There were no charges for use of the vehicles and no rental or lease agreements upon which any bona-fide transaction can be based. The assessment of tax under KRS 138.460 was appropriate.

Hook Chevrolet next argues that the tax assessed by the Cabinet for missing records of its lease and rental agreements is in error. Hook Chevrolet keeps sequentially numbered records of its lease and rental records. Among those records audited, fifty-six cannot be located. In the absence of these records, the Cabinet averaged the amount charged by Hook Chevrolet in a lease or rental, attributed this amount to each missing record, and assessed the appropriate tax under KRS 138.463(1).

Hook Chevrolet takes issue with the Cabinet‘s assessment of tax for those missing records because it argues that representatives of the dealеrship testified that the records involve transactions which were voided for one or another reason such as a customer‘s change of heart. The Cabinet argues that KRS 138.4631(1) 10 justifies its actions.

KRS 138.4631(1) provides:

If any holder of a permit under KRS 138.463(2) fails or refuses to file a return or furnish any information requested in writing, the cabinet may, from any information in its possession, make an estimate of the permit holder‘s gross rental or lease charges and issue an assessment against such permit holder based on the estimated gross rental or lease charges and add a penalty of ten percent (10%) of the amount of the assessment so determined. This penalty shall be in addition to all other applicable penalties provided by law.

This section clearly gives the Cabinet the authority to levy a tax when relevant records cannot be located.

Hook Chevrolet‘s evidence, offered through testimony that the records are something other than taxable transactions, is an alternative explanation of what the records truly represented. While this testimony is evidence, it is not dispоsitive. . That evidence must be afforded its proper weight along with all the other evidence. The Tax Board, as the finder of fact, is entitled to believe the Cabinet‘s explanation over Hook Chevrolet‘s. On appeal, we will not substitute our judgment for the factfinder‘s. KRS 13B.150(2); .

The final argument advanced by Hook Chevrolet for reversal is that the Cabinеt incorrectly assessed taxes for certain lease and rental transactions based upon the amount in the rental or lease agreement rather than the amount actually paid by the customer. Hook ‍​​​‌‌‌‌‌​​​​​‌​‌​​​‌‌​‌‌​​​​‌​‌​​​‌​​‌‌‌‌‌​​‌‌‌‌‍Chevrolet reported and paid taxes in accordance with the amounts that it actually received under these аgreements. It contends that the amount a customer actually paid is the amount from which its tax liability under its “U-drive-it” permit should be assessed.

Hook Chevrolet‘s assertion is incorrect. The Supreme Court has held that gross rentals and gross lease charges referred to in KRS 138.463(1) mean those amounts contained in contracts with the customers of the pеrmit holder “without deductions.” . Therefore, Hook Chevrolet cannot deduct for amounts it did not receive from its customers. The alternative tax in KRS 138.463 is based upon amounts charged in the lease or rental agreement, not upon amounts that the taxpayer asserts (without documentation) it actually received.

The judgment is affirmed.

All Concur.

The opinion of the court of Appeals is affirmed.

LAMBERT, C.J., and COOPER, STEPHENS, STUMBO and WINTERSHEIMER, JJ., concur.

JOHNSTONE, J., files a sеparate opinion concurring in part and dissenting in part in which GRAVES, J., joins.

JOHNSTONE, Justice, Concurring in Part, Dissenting in Part.

Respectfully, I dissent, concerning one limited aspect of the opinion. The majority opinion implies that a rental company would be responsible for usage tax on charges due, even if the rental company is unable to collect the fees owed to it. This interpretation would be an overextension of the holding in , in which the issue was whether the tax was to be assessed on all charges in the rental transaction, not whether the rental agency would owe usage tax if the company is not paid by its customer. The pertinent statute (at issue in the case now before us) provides that tax assessments are to be made on gross charges paid by a customer. KRS 138.463(1). This does not include charges owed, but uncollectible. With this exception, I concur in the opinion in all other respects.

GRAVES, J., joins.

KENTUCKY INDUSTRIAL UTILITY CUSTOMERS, INC. and Lexington-Fayette Urban-County Government, Appellants, v. KENTUCKY UTILITIES COMPANY; Commonwealth of Kentucky, ex rel. A.B. Chandler, III; Attorney General; Jefferson County, Kentucky, ex rel. Michаel E. Conliffe, Jefferson County Attorney; Metro Human Needs Alliance; People Organized and Working for Energy Reform and Kentucky Public Service Commission, Appellees.

Commonwealth of Kentucky, ex rel. A.B. Chandler, III, Attorney General, Appellant, v. Kentucky Public Service Commission; Kentucky Utilities Company; Kentucky Industrial Utility Customers, Inc.; Jefferson County, Kentucky ex rel. Miсhael E. Conliffe, County Attorney; Lexington-Fayette Urban County Government; Metro Human Needs Alliance Association; and People Organized and Working for Energy Resources, Appellees.

Nos. 97-SC-1091-DG, 97-SC-1095-DG.

Supreme Court of Kentucky.

Dec. 17, 1998.

Notes

1
Now Ky.Rev.Stat. (KRS) 281.014(3). References to statutes in this opinion will be to those in effect for the time period covered by the Cabinet‘s audit of Hook Chevrolet.
2
Penalties werе originally assessed as well, but waived when Hook Chevrolet protested.
3
KRS 281.014(3), the section currently in effect, is identical.
4
The current version of this section provides for a usage tax rate of six percent (6%).
5
KRS 138.460(1) now provides for a tax rate of six percent (6%).
6
KRS 138.450(4) is now KRS 138.450(9) and is essentially the same.
7
Hook Chevrolet paid no usage taxes on these vehicles ‍​​​‌‌‌‌‌​​​​​‌​‌​​​‌‌​‌‌​​​​‌​‌​​​‌​​‌‌‌‌‌​​‌‌‌‌‍during the period covered by the audit.
8
The version of KRS 138.463(3) currently in effect is identical.
9
The current version of KRS 138.463(9) provides: “The usage tax reported and paid on every rental or lеase of a vehicle registered pursuant to this section shall be based on the fair market rental or lease value of the vehicle.... However, the tax reported and paid to the Transportation Cabinet shall not be less than the amount due based on the actual terms of a rental or lease agreement. The burden of proving that the consideration charged by the holder satisfies this subsection is on the holder.”
10
The current version of KRS 138.4631(1) is identical.