Case Title: Southern California Edison v. Dist. Ct.

Citation: 127 Nev. Adv. Op. No. 22

Docket Number: 55228

State: nevada

Court: Nevada Supreme Court

Date: 2011-05-26T00:00:00Z

Document:
4127 Nev,, Advance Opinion 22
IN THE SUPREME COURT OF THE STATE OF NEVADA

SOUTHERN CALIFORNIA EDISON,
Petitioner,

vs.
‘THE FIRST JUDICIAL DISTRICT.
COURT OF THE STATE OF NEVADA,
IN AND FOR CARSON CITY, AND THE
HONORABLE JAMES TODD RUSSELL,

No, 55228

FILED

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Respondents, | way 26 20H
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DISTRICT JUDGE,

and ce uno,
‘THE STATE OF NEVADA, puree Cae
DEPARTMENT OF TAXATION, “SSeeeata—

Real Party in Interest.
a

Original petition for a writ of mandamus challenging a district
court order determining that a use tax refund matter should proceed as a
petition for judicial review under NRS Chapter 233B, rather than as an
independent action.

Petition granted,
Norman J. Azevedo, Carson City; O'Melveny & Myers LLP and Charles C.
Read, Christopher W. Campbell, and Ryan M. Austin, Los Angeles,

California,
for Petitioner.

Catherine Cortez Masto, Attorney General, and Gina C. Session, Chief
Deputy Attorney General, Carson City,
for Real Party in Interest.

David J. Roger, District Attorney, and Paul D. Johnson, Deputy District
Attorney, Clark County,
for Amicus Curiae Clark County.

 

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eae eneneceectereneenen reincarnation
Legislative Counsel Bureau Legal Division and Brenda J. Erdoes,
Legislative Counsel, and William L. Keane, Senior Principal Deputy
Legislative Counsel, Carson City,

for Amicus Curiae Legislature of the State of Nevada.

McDonald Carano Wilson LLP and Debbie Leonard and Jeffrey A.
Silvestri, Las Vegas,

for Amici Curiae Nevada Taxpayers Association, Nevada Manufacturers
Association, and Council on State Taxation.

 

BEFORE THE COURT EN BANC.

By the Court, DOUGLAS, C.J.:

In this writ proceeding, we are asked to clarify the proper
method of challenging the refund claim decisions of the Nevada Tax
Commission. Specifically, the parties dispute whether such challenges
should be through an independent civil action in which the district court's
review is de novo, or through a petition for judicial review, which provides
for a more deferential review of the Commission's decision. While we
conclude that a petition for judicial review is the proper vehicle for
challenging the Commission's decisions on claims for sales and use tax
refunds, the Nevada Department of Taxation is judicially estopped from
requesting that the claimant here proceed in such a manner, and thus,
mandamus relief is appropriate.

In this case, after the Nevada Tax Commission denied
petitioner Southern California Edison's claims for refunds of use taxes,
Edison filed a complaint in district court, seeking relief under NRS
872.680. The district court ordered that the matter would proceed on the
administrative record as a petition for judicial review pursuant to the

 
 

Administrative Procedures Act (APA), codified in NRS Chapter 233B.
Edison thus has filed the instant writ petition, asking this court to
determine that the APA does not apply because NRS 372.680 allows for
trial de novo, Edison requests that this court issue a writ of mandamus
ordering the district court to treat Edison’s complaint as an independent
civil action or provide other appropriate relief.

We conclude that the APA applies to sales and use tax refund
claims. Although NRS 372.680 allows claimants to “bring an action” in
the district court and our prior decisions, including Saveway v. Cafferata,
104 Nev. 402, 760 P.2d 127 (1988), suggested that claimants receive a trial
de novo there, the APA and general tax statutes were subsequently
amended in a manner demonstrating that judicial review under the APA
is now the exclusive means of proceeding with a refund claim. Therefore,
when taxpayers challenge the Commission's decision on sales and use tax
refund claims, the matter is subject to judicial review pursuant to the
APA. NRS 372.680 permits a taxpayer to challenge the Commission's
decision by filing an action; pursuant to NRS 233B.130, that action must
be a petition for judicial review. However, in this case, real party in
interest, the Nevada Department of Taxation, is judicially estopped from
asserting that a petition for judicial review is the sole remedy because it
specifically told Edison that trial de novo would be available if Edison was
unhappy with the Commission’s decision. Therefore, although we hold
that the APA applies to sales and use tax refund claims, in this instance,
we conclude that the district court erred when it ordered the action to

proceed as a petition for judicial review, and we grant Edison's petition for

a writ of mandamus.

 
00

  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
   
    

PROCEDURAL HISTORY AND FACTS

Edison filed with the Department several claims for refunds of
use taxes it paid between March 1998 and December 2000, The
Department denied those claims, and Edison appealed to the Commission.
The claims were consolidated, and an administrative law judge upheld the
Department's denial of Edison's requested refunds. Edison then appealed
the administrative law judge's decision to the Commission.

Ultimately, the Commission voted to deny Edison's claims and
later issued @ written decision doing so! Edison filed a complaint in
district court seeking trial de novo for its refund claim. The Department
filed a motion to dismiss, arguing that Edison should have filed a petition
for judicial review under the APA, not a complaint. Following a hearing
and subsequent briefing on whether the APA applied, the district court
ordered that, even though Edison had filed a complaint rather than a
petition for judicial review, the matter would proceed under the APA’s
judicial review standards. The district court concluded that “NRS Chapter
233B applies to all administrative agencies within the state unless
exempt. The [Department] and the [Commission] are not exempt from the
provisions of NRS Chapter 233B. NRS 233B.039. All decisions by the
Commission are therefore subject to NRS 233B.130(6).”

*The Commission originally granted Edison’s tax refund claims
during a closed session. This court reversed the Commission's decision
because the Commission had violated Nevada's Open Meeting Law.
Attorney General v. Nevada Tax Comm'n, 124 Nev. 232, 244-45, 181 P.3d
675, 683 (2008). The Commission subsequently conducted new hearings
in open session, which led to the decision denying the claims.

   

 
‘The district court stayed the proceedings pending resolution of
the instant petition for a writ of mandamus challenging the district court’s
decision.

DISCUSSION

Edison argues that NRS 372.680 applies to its tax refund
claim and that the proper proceeding under that statute is a civil action in
district court, proceeding as trial de novo. Edison argues that the judicial
review standard in the APA is inapplicable and petitions this court to
issue a writ of mandamus compelling the district court to treat its
complaint as an independent civil action.

“This court may issue a writ of mandamus to compel the
performance of an act which the law requires as a duty resulting from an
office or where discretion has been manifestly abused or exercised
arbitrarily or capriciously.” Redeker v. Dist, Ct., 122 Nev. 164, 167, 127
P.3d 520, 522 (2006); see also NRS 34.160. “The writ does not issue where
the petitioner has a plain, speedy, and adequate remedy in the ordinary
course of law.” Redeker, 122 Nev. at 167, 127 P.3d at 522; see also NRS
34.170. A writ of mandamus is an extraordinary remedy; therefore, a
court's decision to entertain a petition for a writ of mandamus is
discretionary. Hickey v. District Court, 105 Nev. 729, 731, 782 P.2d 1336,
1388 (1989). In determining whether writ relief is available and
appropriate, we will consider, among other things, whether the petition
raises an important issue of law that requires clarification. Redeker, 122
Nev. at 167, 127 P.3d at 522. It is the petitioner's burden to demonstrate
that such relief is warranted. American Home Assurance Co. v. Dist. Ct.
122 Nev. 1229, 1234, 147 P.3d 1120, 1124 (2006). Furthermore, we review

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questions of law de novo. Saylor v. Arcotta, 126 Nev. ,
225 P.3d 1276, 1278 (2010); State, Div. of Insurance v, State Farm, 116
Nev. 290, 298, 995 P.2d 482, 484 (2000).

Edison argues that the nature of the judicial remedy available
in a tax refund action is an important issue of law requiring clarification.
Edison argues that the Department has taken inconsistent positions from
one case to the next, and that this court should ensure that all taxpayers
are treated with uniformity and consistency, According to Edison, there
are multiple cases that are working their way through the administrative
appeals process and that have been filed in district court that will require
district courts throughout the state to determine the appropriate standard
of review and procedural posture for refund cases. Edison argues that we
should definitively clarify the law so that all of those cases are treated
equally.

It appears that the Department has adopted a new poliey for
refund cases. The Department and the Attorney General's office admitted
at oral argument that, in the past, they had advised some taxpayers who
contested the denial of a refund that trial de novo before the district court
would be available. They also admitted that there was no consistent
position taken regarding whether a taxpayer is entitled to trial de novo or
a petition for judicial review. In one case, an administrative law judge
stated in a letter that: “[iJn the event that this matter is appealed to
district court, it will be reviewed de novo and additional discovery will
likely be allowed at that time.” However, in its answer to the writ
petition, the Department states that “going forward, [it] is challenging

refund actions filed as civil actions in district court after an administrative

proceeding.”

 

 

 
Given this change in the Department's approach to refund
actions, and the resulting confusion and potential disparate application of
the law, we take this opportunity to clarify the proper procedure when a
taxpayer challenges a Commission decision in a refund action

file a co trict court or i to
\icial review wl a decisi mission

In an action for refund, there appears to be two applicable
statutes governing the nature of the action: NRS 372.680 and NRS
Chapter 233B, specifically NRS 233B.130 and 233B.135. These statutes
seem to require different types of proceedings. In Saveway, we held that a
statute similar to NRS 372,680 provided for trial de novo. 104 Nev. at
404-05, 760 P.2d at 128-29. NRS Chapter 233B, however, provides for a
more deferential standard of review for the commission's decision. NRS
233B.135.

As currently drafted, NRS 372.680 establishes a right of action
against the Department for the recovery of a disallowed refund claim and
reads:

1. Within 90 days after a final decision upon
a claim filed pursuant to this chapter is rendered
by the Nevada Tax Commission, the claimant may
bring an action against the Department on the
grounds set forth in the claim in a court of
competent jurisdiction in Carson City, the county
of this State where the claimant resides or
maintains his or her principal place of business or
a county in which any relevant proceedings were

 

‘e note that during oral argument, the parties indicated that there
seems to be confusion at the district court level as to whether NRS
Chapter 233B applies or whether NRS 372.680 applies.

 

 
on

 

conducted by the Department, for the recovery of

the whole or any part of the amount with respect

to which the claim has been disallowed.

2. Failure to bring an action within the time

specified constitutes a waiver of any demand

against the State on account of alleged

overpayments.
NRS 372.680, however, does not define the nature of the action to be
brought against the department.

In Saveway, this court recognized that prior caselaw regarding
a statutory refund claim “certainly implies that the burden is not that of
showing a lack of substantial evidence, rather, it is to support the
elements of an independent action for restitution.” 104 Nev. at 404, 760
P.2d at 128 (emphases added). However, NRS Chapter 233B and NRS
372.680 have both been amended since this court decided Saveway, and
we reconsider the nature of the action for a refund claim.

NRS 233B.130 provides for judicial review of an agency's
decision. Additionally, included in the APA is a statement of legislative
intent, which reads:

1. By this chapter, the Legislature intends
to establish minimum procedural requirements for
the regulation-making and adjudication procedure
of all agencies of the Executive Department of the
State Government and for judicial review of both
functions, except those agencies expressly
exempted pursuant to the provisions of this
chapter. This chapter confers no additional
regulation-making authority upon any agency
except to the extent provided in subsection 1 of
NRS 283.050.

2. The provisions of this chapter are
intended to supplement statutes applicable to
specific agencies. This chapter does not abrogate
or limit additional requirements imposed on such

8

 
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agencies by statute or otherwise recognized by
law.

NRS 233B.020.

NRS 233B.039 sets out which agencies are completely exempt
from the application of NRS Chapter 238B. It also specifically enumerates
the statutory provisions that prevail over the provisions of NRS Chapter
233B. The Department of Taxation and the Tax Commission are not
included in NRS 223B.039's exemption provision and none of the statutory
provisions listed as prevailing over NRS Chapter 233B apply.

In 1989, after the Saveway decision, the Legislature removed
language from NRS 233B.130(1) that stated the APA “does not limit
utilization of trial de novo to review a final decision [of the agency] where
provided by statute, but this chapter provides an alternative means of
review in those cases.” 1989 Nev. Stat., ch. 716, § 6, at 1651. The
Legislature also added NRS 233B.130(6), which provides

 

: *[t}he provisions
of this chapter are the exclusive means of judicial review of, or judicial
action concerning, a final decision in a contested case involving an agency
to which this chapter applies.” Id. at 1652.

Richard Campbell, the chairman of the state bar's
administrative law committee explained the rationale for the changes:

[Campbell] indicated one problem —_ with
administrative law is that each agency has its own
judicial review provision but it is incomplete and
contains no provision for procedures before the
courts. [Campbell] also pointed out it is not clear
whether NRS 233[B] or the agency’s law applies
thereby creating general confusion among
practitioners and the courts. [Campbell] indicated
he spoke with several judges who urged the
Administrative Law Committee to clarify such
procedures.

 
own Be

Hearing on A.B. 884 Before the Assembly Governmental Affairs Comm.,
65th Leg., (Nev., June 6, 1989).

‘Thereafter, in 1997, the Legislature also added the following
language to NRS 360.245:° “A decision of the Nevada Tax Commission is a
final decision for the purposes of judicial review. The Executive Director

or any other employee or representative of the Department shall not seek

 

judicial review of such a decision.” (Emphasis added.) Thus, when NRS
360.245(6) is read together with NRS 233B.180(6), it indicates that it was
the intent of the Legislature that all final decisions by the Commission be
subject to the provisions of NRS Chapter 233B.

Senate Bill (S.B.) 362 amended the language of NRS 372.680
to reflect the need for a final decision from the Nevada Tax Commission
before seeking judicial relief:

1. Within 90 days after {the-mailing-of the

- a final
decision upon a claim filed pursuant to this
chapter {} is rendered by the Nevada tax
commission, the claimant may bring an action
against the department on the grounds set forth in,
the claim in a court of competent jurisdiction in
Carson City, the county of this state where the
claimant resides or maintains his principal
place of business or a county in which any
relevant proceedings were conducted by the
department, for the recovery of the whole or any.

°NRS Chapter 360 contains general provisions pertaining to
Nevada's revenue and taxation statutes. When the quoted language was
added, it was designated as NRS 360.245(4), 1997 Nev. Stat., ch. 547, § 4,
at 255. 'The language is now designated as NRS 360.245(6), and we will
refer to it as such in this opinion. See 1999 Nev. Stat., ch. 484, § 4, at
2481.

 

 
one

part of the amount with respect to which the claim
has been disallowed.

2. Failure to bring an action within the
time specified constitutes a waiver of any demand
against the state on account of alleged
overpayments.

1999 Nev. Stat., ch. 484, § 33, at 2495 (bold indicates language added and
strikethrough indicates language removed). A staff summary, prepared by
a staff member of the committee, considered by the Assembly Committee
on Taxation explained that the amendments to NRS 372.680 “[plrovidel ]
that an action for judicial review of a claim for refund of sales tax follows a
decision of the [Commission], not the [Department], and that such action
may be brought in a court in Clark County as well as Carson City.”
Hearing on §.B. 362 Before the Assembly Taxation Comm., 70th Leg.
(Nev., May 6, 1999), Exhibit G. $.B. 362 was approved by the Assembly
and Senate without any specific remarks,

In a memorandum to the Assembly Judiciary Committee
Chairman regarding $.B, 362, the Office of the Attorney General stated:

Prior to S.B. 362, refund claims had not been
subject to the requirements of chapter 233B of the
Nevada Revised Statutes....In the event that
8.B. 362 becomes law, .. . after a Tax Commission
decision, the taxpayer may file a petition with a
district court in a judicial review proceeding. It is
this filing of a petition for judicial review which is
the subject of the venue provisions in S.B. 362.
‘Thus, S.B. 362 contemplates a change from past
practice where refund claims upon passage of S.B.
362 will now be subject to the requirements of
Chapter 2338 of the Nevada Revised Statutes.

Memorandum dated May 7, 1999, to Assemblyman Bernie Anderson,
Chairman, Assembly Committee on Judiciary, from Norm Azevedo, Senior
Deputy Attorney General

un

 
‘The deputy attorney general who wrote the memorandum also
gave testimony to the Senate Committee on Taxation:

[He] said this particular provision was addressed
in NRS chapter 23[3]B and he did not see a
problem with it being brought to other courts in
the state. He explained the purpose of this bill
and what it would achieve. He said the
amendments clarified the language with great
specificity so that in almost every instance the
sequence would be a hearing officer, the tax
commission, and, if it went to court, it would be
pursuant to NRS chapter 233B in the form of a
petition for judicial review. He said NRS chapter
233B would address most sales- and use-tax
statutes that go to the commission.

Hearing on 8.B, 362 Before the Senate Taxation Comm., 70th Leg. (Nev.
March 23, 1999), Based on this testimony, every legislator at that
committee meeting was made aware that the amendment to NRS 372.680
would be interpreted by the Attorney General's office and the Department
to include a judicial review standard for appealing a decision of the
Commission and approved it.

It is clear from NRS 372.680, S.B. 362, and the larger
statutory schemes that the intent of NRS 372.680, as amended, was to
provide for judicial review of the Commission's final decisions. The
legislative history indicates that the Legislature intended for the judicial
remedies contemplated in NRS 372.680 to proceed under the standards set
forth in NRS Chapter 233B, Based on the legislative history of S.B. 362,

“The court is aware that Mr. Azevedo now represents Edison in this
matter. However, his comments to the Legislature were made in his
capacity as a deputy attorney general.

 

 
 

the statutory intent was clearly expressed in the memorandum and
testimony that resulted in overwhelming approval of the bill. Appeals
from decisions of the Commission should be by way of judicial review and
not trial de novo,

Therefore, we conclude that NRS 372.680 now contemplates
judicial review, in accordance with NRS Chapter 233B, and a petition for
judicial review under those statutes is the sole remedy after a final
decision by the Commission in regard to a sales and use tax refund
matter.

Judicial estoppel

Although the proper means of secking review of the
Commission's decision is by means of a petition for judicial review, we
conclude that, in this instance, Edison’s refund claims should nevertheless
proceed as a trial de novo. The Department is judicially estopped from
ascerting that the only remedy available to Edison is judicial review.

Judicial estoppel applies to protect the judiciary’s integrity
and prevents a party ftom taking inconsistent positions by “intentional
wrongdoing or an attempt to obtain an unfair advantage.” NOLM, LLC v.
County of Clark, 120 Nev. 736, 743, 100 P.3d 658, 663 (2004) (quoting
Kitty-Anne Music Co. v. Swan, 4 Cal. Rptr. 84 796, 800 (Ct. App. 2003).
‘This court may invoke the doctrine at its discretion. Id. Judicial estoppel,
however, does not preclude a change in position that is not intended to
sabotage the judicial process. Id, Judicial estoppel may apply when

“() the same party has taken two positions; (2)
the positions were taken in judicial or quasi-
judicial administrative proceedings; (3) the party
was successful in asserting the first,
position ...;(4) the two positions are totally
inconsistent; and (6) the first position was not
taken as a result of ignorance, fraud, or mistake.”

 

 
Id, (quoting Furia v, Helm, 4 Cal. Rptr. 8d 357, 368 (Ct. App. 2003)).
Both now and in the past, the Department has taken totally

 

inconsistent positions in quasi-judicial administrative proceedings
regarding the proper procedure for a taxpayer who wishes to challenge the
Department's denial of a refund claim. The Department took the position
in its brief to the Commission that

[ilf Edison believes, following the Commission's

review of this matter, that the administrative

record is deficient in some respect, it may exercise

its right to file a law suit against the Department

under NRS 372.680. Unlike NRS 361.420, which

addresses appeals from decisions of the State

Board of Equalization, NRS 372.680 in [no] way

purports to limit the district court's review to the

administrative record on appeal. Consequently

Edison would have an opportunity before the

district court to more fully develop the facts, if

appropriate.

‘This position is further maintained by an administrative law
judge from the Department stated in a letter to the parties’ counsel that,
“filn the event that this matter is appealed to district court, it will be
reviewed de novo and additional discovery will likely be allowed at that
time.” There is nothing in the record to suggest that the Department's
original position was due to ignorance, fraud, or mistake.

Furthermore, it would be highly inequitable to now allow the
Department to change its position with respect to this taxpayer.
Therefore, although tax refund claims typically must proceed in the
district court under the APA, we conclude that the district court erred

when it allowed the Department to assert a position contrary to the one it

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took earlier in this case when it stated that Edison would be allowed a
trial de novo in the district court.

Accordingly, we grant the petition and direct the clerk of this
court to issue a writ of mandamus directing the district court to vacate its
order that provides that the matter will proceed as an NRS Chapter 233B
petition for judicial review and to instead allow the matter to proceed as

filed, an independent action.

 

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Hardesty . Parraguirre

For the same reason, the Department's argument that res judiciata,
or claim preclusion, bars Edison from seeking a refund in a district court
trial de novo fails. If, as the Department indicated before, NRS 372.680
provided for a trial de novo, then claim preclusion could not be used to
contravene the Legislature's policy decision. In any event, claim
preclusion will not be applied when the party seeking its benefit has
actively encouraged the actions of the party against whom it would be
invoked. See Campbell v. State, Dep't of Taxation, 108 Nev. 215, 219, 827
P.2d 833, 836 (1992) (refusing to apply claim preclusion when the
taxpayers lost any opportunity to reclaim taxes paid by following the Tax
Department's incomplete advice).

 

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