Telsat, Inc. v. Micro Ctr., Inc.Telsat, Inc. v. Micro Ctr., Inc.
Rendered on November 18, 2010
Law Offices of Steven M. Weiss, and Steven M. Weiss; George Sintsirmas, Esq. LLC, and George Sintsirmas, for Telsat, Inc.
Richard Cordray, Attorney General, and Ryan P. O‘Rourke, for Tax Commissioner of Ohio.
APPEAL from the Franklin County Court of Common Pleas.
BRYANT, J.
{¶1} Plaintiff-appellant and cross-appellee, Telsat, Inc., appeals from a judgment of the Franklin County Court of Common Pleas denying plaintiff‘s summary judgment
I. Facts and Procedural History
{¶2} On October 23, 2007, plaintiff filed a complaint in the Cuyahoga County Court of Common Pleas; Micro Center, Inc. was the named defendant. According to the complaint, plaintiff purchased a flat screen television with a retail price of $1,799.99 on April 28, 2006 from Micro Center. Plaintiff subsequently redeemed two rebates totaling $300.00 related to the purchase. Plaintiff‘s complaint alleged Micro Center “wrongfully charged plaintiff sales tax on the full retail price” of the television, rather than on the price as reduced following the rebates. (Complaint, ¶11-12.) Plaintiff also sought to certify a class of individuals described as “[a]ll purchasers from Micro Center who received a rebate/discount from Micro Center which was not reimbursed by a third party and who paid Ohio sales tax on the prе-rebate/discount price.” (Complaint, ¶17.) Plaintiff sought a judgment on behalf of plaintiff and the class not to exceed five million dollars.
{¶3} On December 10, 2007, plaintiff filed an amended complaint. Because
{¶4} On the Tax Commissioner‘s motion, the case was transferred to the Franklin County Court of Common Pleas. Although the Tax Commissioner also filed a motion to dismiss following transfer, the common рleas court denied the motion. The parties subsequently filed cross-motions for summary judgment.
{¶5} In a February 12, 2010 decision and entry, the common pleas court granted the Tax Commissioner‘s summary judgment motion and denied plaintiff‘s summary judgment motion. The common pleas court rejected the Tax Commissioner‘s argument that the common pleas court lacks subject matter jurisdiction due to plaintiff‘s failure to pursue the administrative remedies in
{¶6} Adopting the Tax Commissioner‘s interpretation of
II. Assignments of Error
{¶7} Plaintiff timely appeals, assigning the following errors:
The trial court erred in granting summary judgment to defendant Richard A. Levin, Tax Commissioner of the State of Ohio. - The trial court erred in denying plaintiff‘s motion for summary judgment.
- The trial court erred in failing to declare that under
R.C. 5739.01(H)(1)(c)(i) , post-sale rebates are discounts which reduce the taxable price of a sale. - The trial court erred in failing to declare that plaintiff and the putative class do not have to adjudicate their claims using the administrative procedure established by
R.C. 5739.07 .
The Tax Commissioner timely cross-apрeals, assigning the following errors:
- The trial court erred in not holding that Telsat‘s action in equity was barred because it had an adequate statutory remedy at law under
R.C. 5739.07 andR.C. Chapter 2723 . - The trial court erred in not holding that Telsat‘s action was barred under
R.C. 2723.01 because it failed to commence this action within one (1) year of the collection and assessment of the illegal or erroneous tax. - The trial court erred in not holding that Telsat‘s action was barred under
R.C. 2723.03 because it failed to notify the Department of Taxation of its intention to sue and failed to notify the Department that it paid the tax under protest. - The trial court erred in not holding that Telsat‘s action was barred because it seeks to bypass a special statutory scheme (
R.C. 5739.07 ) for sales tax refunds. - The trial court erred in not holding that Telsat‘s action was bаrred because it failed to exhaust its administrative remedies.
- The trial court erred in not holding that Telsat‘s action was barred because it did not challenge the constitutionality of
R.C. 5739.07 .
III. Standard of Review
{¶8} An appellate court reviews summary judgment under a de novo standard. Coventry Twp. v. Ecker (1995), 101 Ohio App.3d 38, 41; Koos v. Cent. Ohio Cellular, Inc. (1994), 94 Ohio App.3d 579, 588. Summary judgment is appropriate only when the moving party demonstrates: (1) no genuine issue of material fact exists, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds could come to but one conclusion and the conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidеnce most strongly construed in its favor.
IV. Plaintiff‘s Fourth Assignment of Error and the Tax Commissioner‘s First, Fourth, and Fifth Cross-Assignments of Error – Adequacy of Procedure Under R.C. 5739.07
{¶9} The Tax Commissioner‘s first, fourth, and fifth assignments of error all address whether the common pleas court properly could consider the merits of plaintiff‘s complaint when plaintiff did not first pursue the administrative remedies set forth in
{¶10} According to the statute, a consumer who believes sales tax was collected illegally or erroneously may file an application for refund; in response, the Tax Commissioner must determine the amount of refund, if any, to which the applicant is entitled.
A. The Tax Commissioner‘s Argument
{¶11} The Tax Commissioner‘s motion to dismiss in the common pleas court asserted, among other things, lack of subject matter jurisdiction. See Zupancic v. Wilkins, 10th Dist. No. 08AP-472, 2009-Ohio-3688, ¶6, citing Groza-Vance v. Vance, 162 Ohio App.3d 510, 2005-Ohio-3815, ¶13 (noting a motion to dismiss for lack of subject matter jurisdiction raises questions of law which we review de novo). The Tax Commissioner argued that, to the extent plaintiff sought monetary relief,
{¶12} To the extent plaintiff‘s complaint also seeks declaratory and equitable relief, the Tax Commissioner asserted actions for declaratory judgment and equitable
{¶13} The Tax Commissioner thus argues the common pleas court erred in exercising subject matter jurisdiction over plaintiff‘s complaint when plaintiff‘s proper course was to pursue the special statutory proceeding outlined in
B. Plaintiff‘s Response
{¶14} Plaintiff responds that its failure to pursue a refund under
{¶15} Initially, we need not resolve whether the statutory scheme presents an exclusive remedy as the Tax Commissioner argues or an exhaustion issue as plaintiff contends. Pursuаnt to the exhaustion doctrine, a person must exhaust administrative remedies before seeking redress from the judicial system. Jain v. Ohio State Med. Bd., 10th Dist. No. 09AP-1180, 2010-Ohio-2855, ¶10, citing Basic Distrib. Corp. v. Ohio Dept. of Taxation, 94 Ohio St.3d 287, 290, 2002-Ohio-794, citing Noernberg v. Brook Park (1980), 63 Ohio St.2d 26. “The purpose of the doctrine is to allow an administrative agency to apply its expertise in developing a factual record without premature judicial intervention in administrative processes.” Id., citing Nemazee v. Mt. Sinai Med. Ctr. (1990), 56 Ohio St.3d 109, 111; Prairie Twp. Bd. of Trustees v. Hay, 10th Dist. No. 01AP-1198, 2002-Ohio-4765, ¶26.
{¶16} “The failure to exhaust administrative remedies is not a jurisdictional defect, but is rather an affirmative defense if timely asserted and maintained.” Jain, citing Jones v. Chagrin Falls (1997), 77 Ohio St.3d 456, syllabus. Not timely asserting the affirmative defense of failure to exhaust administrative remedies will waive the affirmative defense. The Salvation Army v. Blue Cross & Blue Shield of N. Ohio (1993), 92 Ohio App.3d 571, 577, citing Gannon v. Perk (1976), 46 Ohio St.2d 301, 309-10. In general, an affirmative defense is deemed waived if it is not asserted in an answer or amended answer. See
{¶17} In its answer, the Tax Commissioner asserted multiple defenses. Among them, the Tax Commissioner asserted both that plaintiff‘s action was barred for failure to exhaust administrative remedies and that
{¶18} As a result, whether we construe the procedure available in
{¶19} Plaintiff first argues
{¶20} Plaintiff thus at various times in its amended complaint refers to the tax it seeks to rеcover as “unlawfully retained,” “wrongfully appropriated,” and “wrongfully collected and retained.” Plaintiff fails to explain how it alleges something other than the illegal or erroneous collection of sales tax when it used the terms “unlawful” or “wrongful.” See Weaver v. Edwin Shaw Hosp., 104 Ohio St.3d 390, 2004-Ohio-6549, ¶12, citing Carter v. Youngstown Div. of Water (1946), 146 Ohio St. 203, paragraph one of the syllabus (stating that in the construction of a statute, “all of the terms used should be given their usual and ordinary meaning and signification“).
{¶21} To the extent plaintiff‘s argument suggests the statutory procedure does not apply absent language employing the specific words “illegal” or “erroneous,” nothing in
{¶22} In a variation of its first argument, plaintiff next suggests the statutory provisions do not apply because plaintiff concedes the tax was lawful when Micro Center initially collected it; plaintiff contends Micro Center only acted wrongfully in retaining what plaintiff characterizes as excess sales tax following the rebates. The statute, however, does not draw such a distinction.
{¶23} Plaintiff lastly asserts that, even if plaintiff falls within the statutory ambit,
{¶24} Information in the record refutes plaintiff‘s suggestion that individual claimants will not pursue refunds due to the small value of each individual claim. The supervisоr of the sales and use tax refund unit of the Ohio Department of Taxation, Vickie Atkinson, averred in her affidavit that in the past ten years she has reviewed and processed 1,656 refund applications pursuant to
{¶25} Moreover, plaintiff‘s argument is unpersuasive insofar as it contends the information required to pursue a refund under
{¶26} Finally, plaintiff‘s assertion that the Tax Commissioner will deny all refunds sought through
{¶27} Without question, the costs of pursuing a small sales tax claim to the BTA and the Supreme Court well may dwarf the amount to be refunded. The General Assembly, however, was aware that sales tax issues typically involve small amounts but nonetheless prescribed the process set forth in
{¶28} In the final analysis, plaintiff‘s request for a sales tax refund falls within the statutory provisions set forth in
V. Disposition
{¶29} Accordingly, we reverse the judgment of the Franklin County Court of Common Pleas and remand with instructions to dismiss plaintiff‘s complaint. The parties’ motions regarding appellate briefs are denied.
Judgment reversed;
motions denied.
TYACK, P.J., and BROWN, J., concur.
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