MARSHALL COUNTY, OKLAHOMA, County Commissioners ex rel. Marshall County, Oklahoma, Plaintiff/Appellee, v. HOMESALES, INC., JPMorgan Chase Bank, N.A., and Jason L. Howell, Defendants/Appellants.
Nos. 111,786, 111,870
Supreme Court of Oklahoma
Oct. 28, 2014
2014 OK 88
Brian J. Rayment, Kivell, Rayment & Francis, P.C., Tulsa, Oklahoma, for Defendant/Appellant Jason L. Howell.
Darryl F. Roberts and Jason D. May, Ardmore, Oklahoma, for Plaintiff/Appellee.
FISCHER, S.J.
¶ 1 The issue in this litigation is whether class treatment is appropriate for damage claims by Oklahoma counties for unpaid documentary taxes allegedly due on hundreds of real property transactions in real estate foreclosure proceedings. We hold that it is not because a county does not have standing to sue to collect unpaid documentary taxes.
FACTS
¶ 2 Marshall County filed this case to prosecute an alleged violation of the Documentary Stamp Tax Act (DSTA), (
¶ 3 On October 1, 2007, JPMorgan obtained a judgment in a real estate mortgage foreclosure action filed in Marshall County, Oklahoma, case number CJ-2004-217. A sale of the mortgaged property was conducted by the Sheriff of Marshall County and JPMorgan was the successful bidder at that sale. At the hearing to confirm the sale, JPMorgan assigned its interest to Homesales, the Sheriff‘s Deed was granted to Homesales and recorded with the Marshall County Clerk. Although we do not have the benefit of a more developed evidentiary record at this stage of these proceedings, the transaction described in the County‘s petition is similar to those evident from the summary judgment record in Murray Cnty. v. Homesales, Inc., 2014 OK 52, 330 P.3d 519. The district court‘s order granting summary judgment in Murray County describing these transactions in more detail is included in the record on appeal in this case. An undisputed fact in Murray County is that Homesales is a wholly owned subsidiary of JPMorgan. No documentary tax was paid by Homesales when it recorded the Sheriff‘s Deed in this case. The deed recited that no documentary stamps were due citing
¶ 4 Chase filed a motion to dismiss, arguing the County did not have standing to enforce the DSTA. The district court denied that motion on April 19, 2013. The County then moved to have the case certified as a class action pursuant to
¶ 5 The County‘s class certification motion and supporting brief asserts, based on these facts, that it had satisfied all four of the
The Court, having considered the matters set forth in
Title 12 Okl.St.Ann. § 2023(B)(3) finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
The order concludes that the case “shall be maintained as a class action pursuant to
STANDARD OF REVIEW
¶ 6 When Oklahoma‘s class action statute was originally enacted, class certification orders were reviewed pursuant to an abuse-of-discretion standard. Shores v. First City Bank Corp., 1984 OK 67, ¶ 4, 689 P.2d 299, 301. In 2009, the Legislature replaced the abuse-of-discretion standard with de novo appellate review for any class certification order entered after November 1, 2009.
¶ 7 However, de novo review has historically been confined to review of legal rulings. In re Estate of Bell-Levine, 2012 OK 112, ¶ 5, 293 P.3d 964, 966 (de novo review requires a plenary, independent, and non-deferential examination of the trial court‘s rulings of law). In contrast, a trial court‘s factual determinations in an equitable proceeding have traditionally been accorded deferential treatment. Krumme v. Moody, 1995 OK 140, 910 P.2d 993 (appellate court examines the record, weighs the evidence and accepts the trial court‘s findings of fact unless they are against the clear weight of the evidence). The tradition in equitable proceedings is an appropriate reference because class action procedure was initially developed from equity practice. Mattoon v. City of Norman, 1981 OK 92, ¶ 9, 633 P.2d 735, 737.
¶ 8 To decide a class certification motion the district court is required to determine whether the prerequisites for a class action have been satisfied. That determination of-6ten requires analysis of the elements of the claim or cause of action to determine the “core liability issues” the class will have to prove in order to prevail and the nature of the evidence purportedly available to do so. Scoufos v. State Farm Fire & Cas. Co., 2001 OK 113, ¶ 1, 41 P.3d 366, 367. Accord General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 160-61, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982) (court must conduct a “rigorous analysis” to determine if requirements for class certification have been met). And, when necessary to decide a class certification motion, courts must resolve factual disputes raised by the parties to determine whether the movant has satisfied the statutory prerequisites for a class action, even if those disputes involve the merits of the plaintiff‘s claim. Masquat v. DaimlerChrysler Corp., 2008 OK 67, ¶ 10, 195 P.3d 48, 52-53 (citing Steven S. Gensler, Civil Procedure: Class Certification and the Predominance Requirement Under Oklahoma Section 2023(B)(3), 56 Okla. L.Rev. 289, 316 (2003)) (Oklahoma follows the “modern view” that consideration of the merits of the classes’ claim is appropriate to the extent necessary to determine what individual issues might have to be litigated). However, just as a class certification order is “conditional, and may be altered or amended before the decision on the merits,”
ANALYSIS
¶ 9 Chase filed this appeal raising two issues: (1) whether the County has standing to prosecute this action, and (2) whether the district court erred in certifying this case as a class action.7 We have jurisdiction to hear the appeal of the class certification order pursuant to
I. The Standing Issue
¶ 10 Chase moved to dismiss the County‘s petition, arguing the County did not have standing. The district court‘s April 2013 order denying that motion is attached to Chase‘s petition in error and is one of the two orders Chase seeks to have reviewed in this appeal. That order is not appealable as a matter of right.
[A]ny order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the final judgment, decree, or final order adjudicating all the claims and the rights and liabilities of all the parties is filed with the court clerk.
II. The Class Certification Issue
¶ 11 Chase also appeals the district court‘s May 2013 Journal Entry granting the County‘s motion and certifying a class of plaintiffs consisting of all seventy-seven counties in Oklahoma. A party may represent those not named in the litigation only if:
- The class is so numerous that joinder of all members is impracticable;
- There are questions of law or fact common to the class;
- The claims or defenses of the representative parties are typical of the claims or defenses of the class; and
- The representative parties will fairly and adequately protect the interests of the class.
A. 2023(B)(3) Certification
¶ 12 The County alleges in its petition that the monetary damages in this case exceed $75,000 but not $5,000,000. Its class certification motion asserts: “Plaintiffs seek class certification under
B. 2023(B)(2) Certification
¶ 13 Even though the district court based its certification order on
¶ 15 Pursuant to this Court‘s holding in Murray County, the taxability of these conveyances depends, in the first instance, on proof that consideration in excess of the statutory minimum was exchanged, and that proof requires individual evidence of each and every transaction challenged by the County and the putative class. The DSTA does not assess a tax on every deed recorded with a county clerk. Documentary tax is only assessed on a “deed, instrument, or writing by which any lands, tenements, or other realty [is] sold ... [and] the consideration or value of the interest or property conveyed ... exceeds One Hundred Dollars ($100.00).”
¶ 16 The same problem is evident from this record. It is true, as the County argues, that most of the facts regarding these transactions have similar elements. The majority of the facts are established by the public record; they are not in dispute and it is unlikely they would be contested at trial. However, proof of the facts asserted by the County to be “common” does not advance the determination of the “core liability issues.” Scoufos, 2001 OK 113, ¶ 1, 41 P.3d at 367. The asserted common issues must make some difference in the case. The initial core liability issue in this case is whether taxable consideration was exchanged between JPMorgan and Homesales. Murray County, 2014 OK 52, ¶ 27, 330 P.3d at 531-32. Therefore, to successfully prosecute its class certification motion, the County is required to “affirmatively demonstrate” compliance with the class action statute by being prepared to prove, at least, that commonality as to taxability does “in fact” exist. Wal-Mart, 131 S.Ct. at 2551. The deeds relied on by the County do not satisfy the required showing.
¶ 17 As a result, the record is not sufficiently developed for this Court to be able to determine whether class treatment is appropriate pursuant to
CONCLUSION
¶ 18 Although the County has standing, its standing is limited to the pursuit of equitable relief. The order certifying a class of Okla
DISTRICT COURT ORDER VACATED; REMANDED WITH INSTRUCTIONS.
¶ 19 REIF, V.C.J., WATT, EDMONDSON, GURICH, JJ., and FISCHER, S.J., concur.
¶ 20 KAUGER, J., concurs in part; dissents in part.
¶ 21 WINCHESTER, TAYLOR, and COMBS (by separate writing), JJ., dissent.
¶ 22 COLBERT, C.J., recused.
COMBS, J., with whom WINCHESTER and TAYLOR, JJ., join, dissenting:
¶ 1 For reasons expressed originally in my dissenting opinion in Murray County v. Homesales, Inc., 2014 OK 52, 330 P.3d 519, I must respectfully dissent. In this cause, Appellants assert that 1) Appellee lacks standing to bring this action; and 2) the district court erred by certifying this cause as a class action. Relying on this Court‘s decision in Murray County, the majority determines that even though Appellee lacks standing to sue to enforce the Documentary Stamp Tax Act (DSTA),
¶ 2 The majority also determines that certification of the class pursuant to
¶ 3 Because I do not believe Appellee possesses standing to sue in this cause—either to enforce the DSTA or to pursue equitable relief—the question of standing is dispositive and reaching the issue of the class certification order is unnecessary. Toxic Waste Impact Group, Inc. v. Leavitt, 1994 OK 148, ¶ 9, 890 P.2d 906 (“Only if standing exists must the case proceed to the merits for the reason only one whose substantial rights are injuriously affected may appeal from a decision, however erroneous.“) (Internal citations omitted). Essentially, Appellee is unable to meet one of the three central requirements this Court has set out for standing: a likelihood, as opposed to mere speculation, that the injury will be redressed by a favorable court decision. Murray County, 2014 OK 52, ¶ 2, 330 P.3d 519 (Combs, J., dissenting); J.P. Morgan Chase Bank, Nat‘l Assoc. v. Eldridge, 2012 OK 24, ¶ 7, 273 P.3d 62. Neither a declaratory judgment nor an injunction will result in Appellee obtaining the lost revenue they claim that they are due under the DSTA. A declaratory judgment that the DSTA was violated is nothing more than a stepping stone to eventual enforcement of the DSTA, which this Court has already declared plaintiffs in Appellee‘s position cannot do.
¶ 4 Appellee‘s attempts to secure equitable relief represent nothing more than an attempt to circumvent their lack of standing to sue to directly enforce the provisions of the DSTA. As I previously emphasized in Murray County, 2014 OK 52, ¶ 13, 330 P.3d 519 (Combs, J., dissenting):
[t]his Court has long relied upon the axiom that what may not be done directly should not be allowed to be done indirectly. In Re Oklahoma Capitol Imp. Authority, 2012 OK 99, ¶ 12, 289 P.3d 1277; Large v. Acme Engineering and Mfg. Corp., 1990 OK 34, ¶ 18, 790 P.2d 1086; Reherman v. Oklahoma Water Resources Bd., 1984 OK 12, ¶ 15, 679 P.2d 1296. A determination by this Court that the plaintiffs can seek a
declaratory judgment that documentary stamp taxes are due from the defendants pursuant to 68 O.S. § 3201 and that the exemptions claimed by the defendants were unlawful is nothing more than an end-run around the basic determination that the plaintiffs are not permitted to sue to enforce the DSTA. Having determined that the plaintiffs cannot enforce the DSTA, it does not make sense to allow them to seek declaratory relief that could lead to nothing else but subsequent action by the plaintiffs to enforce the DSTA.
¶ 5 Appellee is not the proper party to seek adjudication of the asserted issues. Leavitt, 1994 OK 148, ¶ 9, 890 P.2d 906. The proper party is the Oklahoma Tax Commission, which unlike Appellee, possesses authority to enforce the provisions of the DSTA. Murray County, 2014 OK 52, ¶¶ 9-15, 330 P.3d 519. Because Appellee lacks standing, consideration of the class certification order is unnecessary. For these reasons, I respectfully dissent.
Notes
A. PREREQUISITES TO A CLASS ACTION. One or more members of a class may sue or be sued as representative parties on behalf of all only if:
- The class is so numerous that joinder of all members is impracticable;
- There are questions of law or fact common to the class;
- The claims or defenses of the representative parties are typical of the claims or defenses of the class; and
- The representative parties will fairly and adequately protect the interests of the class.
B. CLASS ACTIONS MAINTAINABLE. An action may be maintained as a class action if the prerequisites of subsection A of this section are satisfied, if the petition in the class action contains factual allegations sufficient to demonstrate a plausible claim for relief and:
- The prosecution of separate actions by or against individual members of the class would create a risk of:
- inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
- adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or
- The party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
- The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include:
- the interest of members of the class in individually controlling the prosecution or defense of separate actions,
- the extent and nature of any litigation concerning the controversy already commenced by or against members of the class,
- the desirability or undesirability of concentrating the litigation of the claims in the particular forum, and
- the difficulties likely to be encountered in the management of a class action.