WAKE COUNTY, PLAINTIFF v. HOTELS.COM, L.P., ET AL., DEFENDANTS
No. COA13-594
IN THE COURT OF APPEALS OF NORTH CAROLINA
Filed 19 August 2014
[235 N.C. App. 633 (2014)]
AFFIRMED.
Judges HUNTER, JR., ROBERT N., and ERVIN concur.
WAKE COUNTY, PLAINTIFF v. HOTELS.COM, L.P., ET AL., DEFENDANTS
BUNCOMBE COUNTY, PLAINTIFF v. HOTELS.COM, L.P., ET AL., DEFENDANTS
DARE COUNTY, PLAINTIFF v. HOTELS.COM, L.P., ET AL., DEFENDANTS
MECKLENBURG COUNTY, PLAINTIFF v. HOTELS.COM, L.P., ET AL., DEFENDANTS
No. COA13-594
Filed 19 August 2014
1. Taxation—occupancy tax—gross receipts from rentals—online travel companies not operators of hotels
The trial court did not err by determining that defendant online travel companies had no liability under the respective ordinances of Wake, Dare, Buncombe, and Mecklenburg Counties for failure to collect and remit an occupancy tax on the sale price defendants imposed on consumers. Defendants were not operators of hotels, motels, tourist homes, or tourist camps within the meaning of
The trial court did not err by dismissing plaintiff counties’ claim that defendant online travel companies were contractually obligated to collect and remit an occupancy tax. There was insufficient notice of a contractual obligation claim. Further, plaintiffs raised this claim for the first time in a motion for summary judgment and on appeal.
3. Taxation—failure to remit—failure to show legal duty
The trial court did not err by dismissing plaintiff counties’ claim that defendants collected but failed to remit taxes charged on the sales price paid by consumers. Plaintiffs failed to provide any authority that defendants had a legal duty to collect taxes.
4. Accountants and Accounting—occupancy tax—no legal obligation to remit
The trial court did not err by dismissing plaintiff counties’ claim for accounting. As plaintiffs could not establish that defendants were under a legal obligation based on their individual occupancy tax resolutions to collect and remit taxes to the respective county, plaintiffs could not prevail on their demands for accounting.
5. Conversion—taxes—not a specific amount—category
The trial court did not err by dismissing plaintiff Mecklenburg County‘s claim for conversion. The claim was not one for a specific amount of taxes alleged due, much less particular bills and coins, but instead was for a category of monies allegedly owed which was taxes.
6. Trusts—constructive trust—summary judgment
The trial court did not err by dismissing plaintiff counties’ claim for a constructive trust. Plaintiffs were unable to establish any genuine issue of material fact as to whether defendants had retained monies collected from the rental of accommodations in the respective counties which were acquired through fraud, breach of duty or some other circumstance making it inequitable for defendants to retain it.
Appeal by plaintiffs from Order and Opinion filed on 19 December 2012 by Judge Calvin E. Murphy in Special Superior Court for Complex Business Cases. Heard in the Court of Appeals 19 November 2013.
Williams Mullen, by Charles B. Neely, Jr., Christopher G. Browning, Jr., Nancy S. Rendleman, Robert W. Shaw; Kelly Hart & Hallman, LLP, by Brian S. Stagner, pro hac vice, and Marcus G. Mungioli, pro hac vice; Skadden, Arps, Slate, Meagher & Flom LLP, by Darrel J. Hieber, pro hac vice, and Randolph K. Herndon, pro hac vice, for defendant-appellees.
BRYANT, Judge.
Where the trial court did not err in concluding that defendants are not subject to plaintiffs’ occupancy tax and where the trial court did not err in concluding that defendants were not required to collect and remit an occupancy tax, we affirm the trial court‘s grant of summary judgment in favor of defendants. Where the trial court dismissed plaintiffs’ claim seeking recovery for collected but not remitted taxes on the basis of a contractual obligation because of plaintiffs’ failure to provide sufficient notice of the claim in their pleadings, we affirm the dismissal. Lastly, where the trial court granted summary judgment in favor of defendants on plaintiffs’ claims for an accounting, conversion, and seeking to impose a constructive trust, we affirm.
Defendants are approximately eleven online travel companies (OTC) that operate websites which allow consumers to select and pay for hotel rooms directly online using a credit card. Consumers can make reservations with airlines, car rental companies, and cruise lines in addition to hotels. Defendants negotiate and contract with hotels to obtain rooms at discount rates, these rooms are then sold to customers at a rate the hotel is obligated to honor. Consumers who take advantage of this offer never pay the hotel directly, only the OTC.
Plaintiffs are four counties—Wake, Dare, Buncombe, and Mecklenburg—who are required by North Carolina statutes and local ordinances to collect and remit an occupancy tax based on a percentage of the receipts derived from the rental of hotel rooms in their respective counties. Plaintiffs claim that defendants charge consumers a rate higher than the discount rate negotiated with the hotel yet only remit to plaintiffs a tax amount based on the reduced rate. Plaintiffs contend defendants are liable for substantial unremitted tax amounts.
We discuss the procedural history for the lawsuits initially brought by each county.
Wake County
In Wake County Superior Court on 2 November 2006, Wake County filed a verified complaint and action for declaratory judgment against defendants Hotels.com, LP; Hotwire, Inc.; Trip Network, Inc. (d/b/a Cheap Tickets.com); Expedia, Inc.; Internetwork Publishing Corp. (D/B/A Lodging.com); Lowestfare.com, Inc.; Maupin-Tour Holding, LLC1; Travelport, Inc. (f/k/a Cendant Travel Distribution Services Group, Inc.)2; Orbitz, LLC; Priceline.com, Inc.; Site59.com, LLC; Travelocity.com, LP; Travelweb LLC; and Travelnow.com, Inc.3 Wake County asserted that the action was to collect occupancy taxes and penalties due Wake County from gross receipts defendants derived from the rental of rooms, lodging, and other accommodations furnished by hotels, motels, and similar places located in Wake County. By county ordinance, Wake County imposed a six percent “room occupancy tax” on the gross proceeds derived from the rental of hotel rooms and other accommodations within the county.4 Wake County sought a declaratory judgment and injunction declaring that defendants’ actions subjected defendants to payment of the occupancy tax. Wake asserted the following: violation of the room occupancy tax ordinance; conversion; imposition of a constructive trust; a demand for accounting; unfair and deceptive trade practices; agency; and claim for statutory penalties pursuant to Wake County ordinances. Wake County alleged damages in excess of $1,000,000.00 annually.
In Dare County Superior Court, on 26 January 2007, Dare County filed a verified complaint and action for Declaratory Judgment against the identical entities named in the Wake County complaint.5,6,7 Dare County, like Wake County, asserted that the action was to collect occupancy taxes and penalties due Dare County from gross receipts defendants derived from the rental of rooms, lodging, and other accommodations furnished by hotels, motels, and similar places located in Dare County. Dare County imposed a five percent “room occupancy tax” on the gross proceeds from the rental of hotel rooms and other accommodations within the county.8 Like Wake County, Dare County sought a declaratory judgment and injunction declaring that defendants’ actions subjected defendants to payment of the occupancy tax. Dare asserted the following: violation of the room occupancy tax ordinance; conversion; imposition of a constructive trust; a demand for accounting; unfair and deceptive trade practices; agency; and claim for statutory penalties pursuant to enabling legislation for the Dare County ordinance enacted by the North Carolina General Assembly. Dare County alleged damages in excess of $1,000,000.00 annually.
In Buncombe County Superior Court on 1 February 2007, Buncombe County filed a declaratory judgment action against Hotels.com9; Hotels.com, LP10; Hotels.com GP, LLC; Hotwire, Inc.; Trip Network, Inc., d/b/a Cheaptickets.com; Travelport, Inc., (f/k/a Cendant Travel Distribution Services Group, Inc.)11; Expedia, Inc.; Internetwork Publishing Corp., d/b/a Lodging.com; Lowestfare.com, Inc.; Orbitz, Inc.; Orbitz, LLC; Priceline.com, Inc.; Priceline.com LLC; Site59.com, LLC; Travelweb, Inc.; Travelnow.com, Inc.; Cheap Tickets, Inc.; and Sabre, Inc. Buncombe County sought “a declaratory judgment concerning its power, privilege, and right to audit and collect from [] defendants the North Carolina Occupancy Tax,
Mecklenburg County
In Mecklenburg County Superior Court on 14 January 2008, Mecklenburg County filed a verified complaint and action for declaratory judgment against the same entities named in the Wake County complaint with the exception of Maupin-Taylor Holding, LLC, and Travelnow.com, LLC.13
All defendants filed motions to have their respective actions designated as complex business cases. Thereafter, Chief Justice Sarah Parker issued orders designating each action as a complex business case.
On 4 April 2007, Special Superior Court Judge Albert Diaz of the North Carolina Business Court was appointed to preside over the designated complex business cases and granted defendants’ motions to consolidate the actions filed in Buncombe County, Dare County, and Wake County for pretrial matters. Thereafter, Mecklenburg County‘s complaint was consolidated and joined with the other actions.
On 1 November 2010, all parties filed motions for summary judgment under seal; plaintiffs filed a consolidated motion as did defendants.
On appeal, plaintiffs raise the following questions: (I) whether the trial court erred in concluding that defendants have no liability under the ordinances; (II) concluding that defendants are not contractually obligated to collect and remit the occupancy tax; (III) concluding that there was no legal support for plaintiffs’ collected but not remitted claim; and (IV) dismissing plaintiffs’ claims for accounting, conversion, and constructive trust.
Standard of Review
“We review a trial court‘s order granting summary judgment de novo, viewing the evidence in the light most favorable to the nonmoving party. We are to determine whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law.” Adkins v. Stanly Cnty. Bd. of Educ., 203 N.C. App. 642, 644-45, 692 S.E.2d 470, 472 (2010) (citation and quotations omitted).
I
[1] Plaintiffs first argue that the trial court erred in determining defendants have no liability under the respective ordinances of Wake, Dare, Buncombe, and Mecklenburg Counties for failure to collect and remit an occupancy tax on the sale price defendants impose on consumers. We disagree.
The respective ordinances of Wake, Dare, Buncombe, and Mecklenburg Counties impose a tax on the gross receipts derived from the rental of any room, lodging or accommodation furnished by a hotel, motel, inn, tourist camp, or “similar place” that is subject to the State sales tax imposed under General Statutes, section 105-164.4(a)(3).
In its 19 December 2012 order, the trial court reasoned that “[t]o determine whether the Defendants are obligated to pay the Occupancy Tax under the counties’ ordinances or resolutions, the Court must decide ‘what’ and ‘who’ is taxed.” The court reasoned that as to the “who” is taxed, Mecklenburg and Wake counties impose the responsibility of
Plaintiffs contend the trial court violated the principle of statutory construction that all parts of a statute must be given effect and thereby rendered critical sections of the ordinances meaningless. Specifically, plaintiffs contend that as to “who” is taxed, the ordinances and enabling legislation make clear that the tax is levied against the occupant of the room. As to “what” is taxed, the ordinances establish that the levy is applied to the gross receipts derived from the rental of the accommodation.
When construing legislative provisions, this Court looks first to the plain meaning of the words of the statute itself:
When the language of a statute is clear and without ambiguity, it is the duty of this Court to give effect to the plain meaning of the statute, and judicial construction of legislative intent is not required. However, when the language of a statute is ambiguous, this Court will determine the purpose of the statute and the intent of the legislature in its enactment.
State v. Ward, 364 N.C. 157, 160, 694 S.E.2d 729, 731 (2010) (quoting Diaz v. Div. of Soc. Servs., 360 N.C. 384, 387, 628 S.E.2d 1, 3 (2006)).
“A county may impose taxes only as specifically authorized by act of the General Assembly.”
Section 105-164.4 (“Tax imposed on retailers“) of the North Carolina General Statutes, in pertinent part, states the following:
(a)... A privilege tax is imposed on a retailer [on] the retailer‘s net taxable sales or gross receipts, as appropriate.
...
(3) Operators of hotels, motels, tourist homes, tourist camps, and similar type businesses are considered retailers under this Article. A tax at the general rate of tax is levied on the gross receipts derived by these retailers from the rental of any rooms, lodgings, or accommodations furnished to transients for a consideration.
Whether the gross receipts derived from the rentals in which defendants engage are subject to the occupancy tax hinges on whether defendants are “retailers” within the meaning of section 105-164.4(a)(3). See id. (“A privilege tax is imposed on ... the retailer‘s net taxable sales
The trial court found that plaintiffs did not contend defendants were operators of hotels, motels, tourist homes, or tourist camps. Therefore, the court considered only whether defendants were operators of “similar type businesses.“.
In addressing this issue, we note with favor the reasoning of the Fourth Circuit Court of Appeals in Pitt Cnty. v. Hotels.com, GP, LLC, 553 F.3d 308 (4th Cir. 2009), considering “whether the phrase ‘operators of hotels, motels, tourist homes, tourist camps, and similar type businesses’ in § 105-164.4(a)(3) in the North Carolina sales tax statute applies to online travel companies.” Id. at 313. In considering whether OTC and hotels operated “similar type businesses,” the Court found applicable the principle of ejusdem generis, the canon of statutory construction standing for the proposition that “where general words follow a designation of particular subjects or things, the meaning of the general words will ordinarily be presumed to be, and construed as, restricted by the particular designations and as including only things of the same kind, character and nature as those specifically enumerated.” Id. (citing Smith v. Smith, 314 N.C. 80, 331 S.E.2d 682, 686-87 (1985)); see also State ex rel. Utilities Comm‘n v. Envtl. Def. Fund, 214 N.C. App. 364, 368, 716 S.E.2d 370, 373 (2011) (“North Carolina courts have followed this explanation of how the doctrine of ejusdem generis should be applied by employing the doctrine when a list of specific terms is followed by a general term. See Liborio v. King, 150 N.C. App. 531, 536-37, 564 S.E.2d 272, 276 (2002) (interpreting the term “misrepresentation” to be limited to knowing and intentional behavior, where the term followed the words fraud and deception); [Smith, 314 N.C. at 87, 331 S.E.2d at 687] (interpreting a provision allowing the court to consider “any other factor which the court finds to be just and proper” to be limited to economic factors, where the provision followed eleven other provisions having to do with the economy of the marriage); [State v. Lee, 277 N.C. 242, 244, 176 S.E.2d 772, 774 (1970)] (interpreting the phrase “or other like weapons” to be limited to automatic or semiautomatic weapons, where the phrase followed a specific list of automatic and semiautomatic weapons).“)).
In section 105-164.4(a)(3), the phrase “similar type businesses” follows the list: “hotels, motels, tourist homes, [and] tourist camps[.]”
Plaintiffs do not contend that defendants are owners or managers of the establishments providing accommodations; rather, plaintiffs argue that this Court should interpret the word “business” broadly. However, such an analysis would ignore the requirements of section 105-164.4(a)(3), that defendants be operators of “similar type businesses.” We hold that defendants are not operators of hotels, motels, tourist homes, or tourist camps within the meaning of section 105-164.4(a)(3). This holding is consistent with the reasoning of the trial court and the Pitt Court. See Pitt Cnty., 553 F.3d at 313 (hotels, motels, tourist homes, and tourist camps - “all provide physical establishments... where guests can stay. A business that arranges for the rental of hotel rooms over the internet, but that does not physically provide the rooms, is not a business that is of a similar type to a hotel, motel, or tourist home or camp.“). Defendants are neither operators nor retailers within the meaning of section 105-164.4(a)(3). See
II
[2] Plaintiffs next argue that the trial court erred in determining that defendants are not contractually obligated to collect and remit the occupancy tax. We disagree.
“The grant of a motion to dismiss is reviewed de novo on appeal.” Hayes v. Peters, 184 N.C. App. 285, 287, 645 S.E.2d 846, 847 (2007) (citation omitted).
Pursuant to General Statutes, section 1A-1, Rule 8,
[a] pleading which sets forth a claim for relief . . . shall contain
(1) A short and plain statement of the claim sufficiently particular to give the court and the parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved showing that the pleader is entitled to relief and
(2) A demand for judgment for the relief to which he deems himself entitled.
In their brief to this Court, plaintiffs combine and point to five allegations scattered throughout the complaint filed by Mecklenburg County and argue the allegations are sufficient to provide defendants with notice of plaintiffs’ contractual obligation theory.
Mecklenburg County‘s Complaint alleges that: (1) Defendants contract with local hotels for rooms at negotiated discounted rates and “charge and collect the Tax from occupants at the time of the sale based on the marked up room rates“; (2) Defendants were “authorized to act on behalf of the hotels“; (3) Defendants, as “agents” for the hotels, “were required to collect the Tax from the consumers of the rooms“; (4) Defendants, as agents for the hotels, have collected the Tax but failed to pay the full amount due to Plaintiffs; and (5) Plaintiffs are entitled to a declaratory judgment that Defendants are agents for taxable establishments and “as such, are required to collect the County‘s full tax from the consumers of the rooms.”
The referenced allegations were found in separate sections of the complaint including: in assertions of underlying fact; in a request for a declaratory judgment; in a claim for recovery based on a theory of agency; and in plaintiff Mecklenburg County‘s prayer for relief. However, even reading these statements together, we cannot interpret them as providing notice of a cognizable claim. Plaintiffs attempt to seek recovery for breach of contract based on a contractual obligation to collect the occupancy tax on the gross receipts defendants derived from the rental of accommodations. On this record, we cannot find that plaintiffs’ contract theory has been sufficiently pled and therefore, find no error in the trial court‘s ruling granting defendants’ motion to dismiss this claim. Though not specifically argued, plaintiffs reference statements in the complaints of Wake County, Buncombe County, and Dare County. A review of these complaints reveals a repetition of some portions of the allegations made in the Mecklenburg County complaint, but they are likewise insufficient to provide notice of a cognizable claim. Thus, we find insufficient notice of a contractual obligation claim as to the complaints of Buncombe, Dare, and Wake Counties.
Plaintiffs further contend that a claim raised during summary judgment may provide sufficient notice to the opposing party where the
Where language in a complaint is ambiguous, the Sixth Circuit employs a “course of the proceedings test” to determine whether defendants have received notice of the plaintiff‘s claims, analyzing the adequacy of notice on a case-by-case basis. Accord Moore v. City of Harriman, 272 F.3d 769, 772, 774 (6th Cir.2001) (en banc) (plurality opinion) (“Subsequent filings in a case may rectify deficiencies in the initial pleadings.” (citations omitted)). A plaintiff may sufficiently notify a defendant of an argument by raising it in a response to summary judgment, provided that the party does not disavow its intent to use the argument earlier in the proceedings.
Copeland v. Regent Elec., Inc., 499 F. App‘x 425, 435 (6th Cir. 2012) (unpublished) (citations and quotations omitted).
Interpreting our Rules of Civil Procedure as to notice pleading, our Supreme Court has held that “notice pleading is made possible by the liberal opportunity for discovery and the other pretrial procedures established by the Rules to disclose more precisely the basis of both claim and defense and to define more narrowly the disputed facts and issues.” Pyco Supply Co., Inc. v. Am. Centennial Ins. Co., 321 N.C. at 442-43, 364 S.E.2d at 384. Plaintiffs raised a claim for the first time in a motion for summary judgment and on appeal, provide no authority from our General Statutes or North Carolina jurisprudence to support their argument to do so. We affirm the trial court‘s dismissal of plaintiff‘s claim that defendants are contractually obligated to collect and remit the occupancy tax.
III
[3] Plaintiffs argue the trial court erred by dismissing their claim that defendants collected but failed to remit taxes charged on the sales price paid by consumers. Specifically, plaintiffs contend Judge Murphy impermissibly overruled the prior holding of another superior court judge, Judge Diaz. We disagree.
“Litigants and superior court judges must remain mindful that the power of one judge of the superior court is equal to and coordinate with that of another.” Adkins v. Stanly Cnty. Bd. of Educ., 203 N.C. App. 642, 651, 692 S.E.2d 470, 476 (2010) (citation and quotations omitted).
The well established rule in North Carolina is that no appeal lies from one Superior Court judge to another; that one Superior Court judge may not correct another‘s errors of law; and that ordinarily one judge may not modify, overrule, or change the judgment of another Superior Court judge previously made in the same action.
Calloway v. Motor Co., 281 N.C. 496, 501, 189 S.E.2d 484, 488 (1972) (citation omitted).
Here, Judge Diaz was presented with a challenge to plaintiffs’ claim for collected but not remitted taxes in the form of defendants’ Rule 12(b)(6) motion to dismiss. When the motion was denied, defendants subsequently challenged the same claim in the form of a motion for summary judgment before Judge Murphy.
The test [for a] Rule 12(b)(6) [motion] is whether the pleading is legally sufficient. The test on a motion for summary judgment made under Rule 56 and supported by matters outside the pleadings is whether on the basis of the materials presented to the courts there is any genuine issue as to any material fact and whether the movant is entitled to judgment as a matter of law. Therefore, the denial of a motion to dismiss made under Rule 12(b)(6) does not prevent the court, whether in the person of the same or a different superior court judge, from thereafter allowing a subsequent motion for summary judgment made and supported as provided in Rule 56.
Barbour v. Little, 37 N.C. App. 686, 692, 247 S.E.2d 252, 256 (1978). “[T]he Rule 12(b)(6) motion is addressed solely to the sufficiency of the complaint....” Indus., Inc. v. Constr. Co., 42 N.C. App. 259, 263, 257 S.E.2d 50, 53 (1979) (citation omitted).
In his 19 November 2007 order addressing defendants’ motion to dismiss plaintiffs’ claim for failure to remit taxes, Judge Diaz gave the following summary as to plaintiffs’ allegations:
(71) The Complaints in these cases allege (either directly or by implication) that Defendants are in fact charging and collecting the Occupancy Tax from consumers, but not remitting to Plaintiffs the full amount collected. In fact, Plaintiffs allege Defendants are charging and collecting the tax on the higher retail rate charged to consumers, but only remitting to Plaintiffs an amount
of tax based on the lower wholesale rate paid to hotel owners, thereby pocketing the difference. Plaintiffs also allege Defendants are not filing occupancy returns, as required by law. . . .
Based on these allegations, Judge Diaz concluded that “Defendants have not complied with the plain language of the Occupancy Tax (and the corresponding enabling acts) requiring them to account for and remit all such taxes.” Thus, “[a]t this stage . . . the Court need only look to Plaintiffs’ pleadings to conclude that dismissal of the principal claims is not appropriate.” Judge Diaz, therefore, denied defendants’ motion to dismiss pursuant to Rule 12(b)(6).
On 4 February 2011, Judge Murphy heard arguments from plaintiffs and defendants on cross motions for summary judgment. Based on their briefs and arguments before the trial court, Judge Murphy granted summary judgment in favor of defendants, dismissing plaintiffs’ claim for collected but not remitted taxes.
In his order, Judge Murphy discussed three cases presented by plaintiffs in support of their motion: ”City of Rome v. Hotels.com, No.4:05-CV-249-HLM, 2006 U.S. Dist. LEXIS 56369 (N.C. May 8, 2006)“; ”Expedia, Inc. v. City of Columbus, 681 S.E.2d 122 (Ga. Sup. Ct. 2009)“; and ”City of Gallup v. Hotels.com, L.P., No.06-0549-JC, 2007 U.S. Dist. LEXIS 86720 (January 30, 2007).” Each case dealt with similar questions of tax liability and OTCs in other jurisdictions. Judge Murphy observed that where an OTC had been held responsible for remitting a tax, the conclusion was predicated upon a statutory requirement or contractual provision imposing upon the OTC the responsibility for collecting the tax. By comparison, Judge Murphy noted that our North Carolina General Statutes did not impose the same duty upon defendants, and plaintiffs provided no authority supporting a recovery predicated on a theory of contractual undertaking. Accordingly, Judge Murphy concluded that “Plaintiffs’ [sic] have been unable to direct this Court to any binding legal precedent to support a ‘collected-but-not-remitted’ theory of recovery” and on this basis, granted defendants’ motion to dismiss the claim.
Judge Diaz and Judge Murphy addressed motions in this case at different stages in the action and based on different rules. Judge Diaz concluded pursuant to Rule 12(b)(6) that the factual allegations in plaintiffs’ complaints were legally sufficient so as to not preclude their claims for recovery of taxes. See Barbour, 37 N.C. App. at 692, 247 S.E.2d at 256 (“The test [for a] Rule 12(b)(6) [motion] is whether the pleading is legally sufficient.“). Thereafter, Judge Murphy concluded pursuant to
IV
Lastly, plaintiffs argue that the trial court erred in dismissing their claims for accounting, conversion, and constructive trust. We disagree.
Again, “[w]e review a trial court‘s order granting summary judgment de novo....” Stanly Cnty. Bd. of Educ., 203 N.C. App. at 644, 692 S.E.2d at 472 (citation omitted).
Accounting
[4] In the complaints filed by Dare County, Mecklenburg County, and Wake County, each county‘s demand for an accounting was predicated upon the assertion that defendants were under a legal obligation based on their respective Occupancy Tax resolution or ordinance to collect and remit taxes to the County on the gross receipts derived by them as compensation or consideration for renting rooms in the county. Buncombe County‘s declaratory judgment action sought a ruling declaring “its affirmative rights to audit and collect occupancy tax obligations owed by these Defendants to [] Plaintiff.”
In Issue I, we held that the enabling legislation enacted by our General Assembly as to Buncombe, Dare, Mecklenburg, and Wake counties allowing the counties to impose an occupancy tax by resolution did not encompass the transactions wherein consumers rented lodging accommodations through defendants’ websites. Therefore, as plaintiffs cannot establish that defendants were under a legal obligation based on their individual occupancy tax resolutions to collect and remit taxes to the respective county, plaintiffs cannot prevail on their demands for accounting. Accordingly, we overrule plaintiffs’ argument and affirm the trial court‘s ruling dismissing plaintiffs’ demand for accounting.
Conversion
[5] First, we note that while claims of conversion were asserted in the complaints of Dare County, Mecklenburg County, and Wake County,
On 19 November 2007, the trial court granted defendants’ 12(b)(6) motion to dismiss the conversion claims brought by plaintiffs Buncombe County, Dare County, and Wake County. No appeal was taken by Buncombe County, Dare County, and Wake County from these dismissals.
On 14 January 2008, Mecklenburg County filed its complaint asserting a claim for conversion. In its complaint, Mecklenburg County alleged the following:
Defendants, upon information and belief, keep the difference between the amount of Tax charged to the public and the amount of Tax remitted to the hotel, motel, or inn, which then remits this lower tax amount to the County. At all times herein mentioned, Defendants wrongfully possessed and/or controlled the monies which constitute this difference between the amount of Tax charged to the public and the amount of Tax remitted to the County. Defendants have converted or taken these Tax monies for their own use and benefit, thereby permanently depriving the County of the use and benefit thereof.
Following the assignment of Mecklenburg County‘s complaint to the business court and the consolidation of these actions, both plaintiffs and defendants filed motions for summary judgment. The trial court addressed only Mecklenburg County‘s claim for conversion in its summary judgment order and dismissed the claim.
“In North Carolina, conversion is defined as an unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of an owner‘s rights.” Myers v. Catoe Constr. Co., 80 N.C. App. 692, 695, 343 S.E.2d 281, 283 (1986) (citation omitted).
The general rule is that there is no conversion until some act is done which is a denial or violation of the plaintiff‘s dominion over or rights in the property. Therefore, two essential elements are necessary in a claim for conversion: (1) ownership in the plaintiff, and (2) a wrongful conversion by the defendant.
Bartlett Milling Co. v. Walnut Grove Auction & Realty Co., 192 N.C. App. 74, 86, 665 S.E.2d 478, 489 (2008) (citation and quotations omitted).
The requirement that there be earmarked money or specific money capable of identification before there can be a conversion has been complicated as a result of the evolution of our economic system. Recognizing this reality, numerous courts around the country have adopted rules requiring the specific identification of a sum of money, rather than identification of particular bills or coins.
Id. at 528-29, 723 S.E.2d at 750 (citations and quotations omitted). “In the context of this conversion claim, we conclude that funds transferred electronically may be sufficiently identified through evidence of the specific source, specific amount, and specific destination of the funds in question.” Id. at 529, 723 S.E.2d at 750-51 (addressing a claim involving transfers of funds in specific dollar amounts totaling approximately $888,000.00).
Here, Mecklenburg County‘s conversion claim is not one for a specific amount of taxes alleged due, much less particular bills and coins; rather, Mecklenburg County‘s claim is for a category of monies allegedly owed, taxes. Even reading Variety Wholesalers, Inc., broadly to presume that in the context of any conversion claim where funds are transferred electronically the establishment of the funds’ specific source, specific amount, and specific destination is sufficient to connote identification, Mecklenburg County‘s complaint fails to allege such requirements. See id.; see also State ex rel. Pilard v. Berninger, 154 N.C. App. 45, 57, 571 S.E.2d 836, 844 (2002) (holding the evidence supported the conversion claim where the spouse of the decedent, acting as an administratix, failed to properly distribute the decedent‘s share of three $75,000.00 certificates of deposit as a portion of his estate). Therefore, we see no error in the trial court‘s dismissal of Mecklenburg County‘s conversion claim.
Constructive Trust
[6]
A constructive trust is a duty, or relationship, imposed by courts of equity to prevent the unjust enrichment of the holder of title to, or of an interest in, property which such holder acquired through fraud, breach of duty or some other circumstance making it inequitable for him to retain it against the claim of the beneficiary of the constructive trust.
Here, plaintiffs have been unable to establish any genuine issue of material fact as to whether defendants have retained monies collected from the rental of accommodations in the respective counties which were “acquired through fraud, breach of duty or some other circumstance making it inequitable for [defendants] to retain it[.]” Id. As such, summary judgment was appropriate. Accordingly, we affirm the trial court‘s dismissal of plaintiffs’ claims seeking imposition of a constructive trust.
Affirmed.
Judges MCGEE and STROUD concur.
Notes
“There is hereby levied within Dare County a room occupancy and tourism development tax of one per cent [sic] (1%) of the gross receipts derived from the rental of any room, lodging, or similar accommodation subject to sales tax under G.S. 105-164.4(a)(3). ...” DARE COUNTY, N.C., Resolution 91-9-27 § 1 (1992).
“Whereas, the General Assembly of North Carolina . . . has authorized the Dare County Board of Commissioners to levy a supplemental room occupancy tax of 1% of the gross receipts derived from the rental of any room, lodging, or similar accommodations subject to sales tax under G.S. 105-164.4(a)(3) . . . located in Dare County . . . the Dare County Board of Commissioners desires to levy the said 1% supplemental occupancy tax. . . .” DARE COUNTY, N.C., Resolution implementing supplemental occupancy tax (Dec. 3, 2001).
“Mecklenburg County hereby levies a room occupancy tax of two percent (2%) of receipts, net of any taxes or discounts, derived from the rental of any room, lodging, or accommodation furnished by a hotel, motel, inn, tourist camp, or similar place within Mecklenburg County that is subject to sales tax imposed by the State of North Carolina under Section 105-164.4(a)(3) of the North Carolina General Statutes. This room occupancy tax is... in addition to the six percent (6%) Room Occupancy Tax previously levied by the Mecklenburg County Board of Commissioners which is in effect and remains in full force and effect.” MECKLENBURG COUNTY, N.C., Mecklenburg ordinance to impose and levy a two percent room occupancy tax (Hall of Fame Complex Tax) (March 21, 2006).
2009 N.C. Sess. Laws ch. 2010-31, § 31.6(a).Gross receipts derived from the rental of an accommodation include the sales price of the rental of the accommodation.. The sales price of the rental of an accommodation marketed by a facilitator includes charges designated as facilitation fees and any other charges necessary to complete the rental.
A person who provides an accommodation that is offered for rent is considered a retailer under this Article. A facilitator must report to the retailer with whom it has a contract the sales price a consumer pays to the facilitator for an accommodation rental marketed by the facilitator. A retailer must notify a facilitator when an accommodation rental marketed by the facilitator is completed and, within three business days of receiving the notice, the facilitator must send the retailer the portion of the sales price the facilitator owes the retailer and the tax due on the sales price.
The following definitions apply in this subdivision:
b. Facilitator. - A person who is not a rental agent and who contracts with a provider of an accommodation to market the accommodation and to accept payment from the consumer for the accommodation.