Case Title: Ex parte City of Mobile. PETITION FOR WRIT OF CERTIORARI TO THE COURT OF CIVIL APPEALS (In re: Dickson Campers, Inc. v. City of Mobile)

Citation: 

Docket Number: 1061581

State: alabama

Court: Alabama Supreme Court

Date: 2009-09-04T00:00:00Z

Document:
REL: 09/04/2009
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2009
____________________
1061581
____________________
Ex parte City of Mobile
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CIVIL APPEALS
(In re: Dickson Campers, Inc.
v.
City of Mobile)
(Mobile Circuit Court, CV-03-205;
Court of Civil Appeals, 2050875)
MURDOCK, Justice.
Dickson Campers, Inc. ("Dickson Campers"), filed a class-
action complaint on January 17, 2003, against the City of
1061581
2
Mobile ("the City"), alleging that it was representative of a
class of approximately 200 businesses operating in the City's
police jurisdiction whose members, for the preceding two
years, had paid both the City's annual business-license tax
and the City's monthly gross-receipts privilege or license
tax.  Dickson Campers sought: (1) a judgment declaring void
the license taxes levied on businesses in the City's police
jurisdiction pursuant to § 11-51-91, Ala. Code 1975; (2) an
injunction against further collection of the taxes; (3) a
refund of taxes paid; and (4) other relief, including costs
and attorney fees.  
Following discovery and an evidentiary hearing on class
certification, the trial court granted Dickson Campers' motion
for class certification with respect to those entities that
had paid the annual business-license tax, but it denied
Dickson Campers class certification with respect to entities
that had paid the monthly privilege or license tax.  Dickson
Campers filed a motion to reconsider the trial court's partial
denial of class certification, but the trial court never ruled
on the motion. 
1061581
In the hearing, counsel for Dickson Campers made it clear
1
that Dickson Campers would consider a ruling in favor of the
City on the motions for a summary judgment to be an effective
denial of its motion to reconsider the trial court's denial of
class certification with respect to the monthly gross-receipts
tax.  
3
The parties then filed cross-motions for a summary
judgment.  Following a hearing on the summary-judgment
motions, the trial court denied Dickson Campers' motion,
granted the City's motion, and entered a summary judgment in
favor of the City without specifying the basis for its
decision.   
1
Dickson Campers appealed to this Court, asserting that
the trial court erred in denying its request for class
certification as to its claims regarding the monthly gross-
receipts tax and that it erred in granting the City's motion
for a summary judgment as to Dickson Campers' individual and
class claims regarding the annual business-license tax.  This
Court transferred the case to the Court of Civil Appeals.  
The Court of Civil Appeals reversed the trial court's
judgment in its entirety.  See Dickson Campers, Inc. v. City
of Mobile, [Ms. 2050875, May 25, 2007] ___ So. 3d ___ (Ala.
Civ. App. 2007).  The City petitioned this Court for a writ of
certiorari.  We denied the petition as to the issue whether
1061581
In our order granting certiorari review, we also directed
2
the parties to address whether the trial court had disposed of
Dickson Campers' individual claim regarding the monthly gross-
receipts tax and whether any finality-of-judgment issues were
presented in this regard.  Based on our review of the City's
motion for a summary judgment and the trial court's order
granting that motion, we conclude that the trial court did, in
fact, enter a judgment against Dickson Campers on its
individual claim regarding the monthly gross-receipts tax when
it ruled on the City's motion for a summary judgment. 
4
Dickson Campers should be certified as a class representative
for entities that paid the monthly gross-receipts tax.  We
granted the petition as to the issue whether the City's
ordinance imposing the annual business-license tax was valid
according to the standard for cases arising under § 11-51-91
announced in State Department of Revenue v. Reynolds Metals
Co., 541 So. 2d 524 (Ala. 1988).  
2
I.  Standard of Review
Because we are reviewing the Court of Civil Appeals'
reversal of a summary judgment, our review is de novo.  "On
certiorari review, this Court accords no presumption of
correctness to the legal conclusions of the intermediate
appellate court.  Therefore, we must apply de novo the
standard of review that was applicable in the Court of Civil
Appeals."  Ex parte Toyota Motor Corp., 684 So. 2d 132, 135
(Ala. 1996).  "The law is well established that a de novo
1061581
5
standard applies to appellate review of a trial court's
summary judgment."  Ex parte Patel, 988 So. 2d 957, 959 (Ala.
2007) (citing Ex parte Fort James Operating Co., 895 So. 2d
294 (Ala. 2004)).
II.  Analysis
Before April 29, 1986, § 11-51-91 provided, in pertinent
part:
"Any city or town within the state of Alabama
may fix and collect licenses for any business, trade
or profession done within the police jurisdiction of
such city or town but outside the corporate limits
thereof; provided, that the amount of such licenses
shall not be more than one half the amount charged
and collected as a license for like business, trade
or profession done within the corporate limits of
such city or town, fees and penalties excluded;
provided further, that when the place at which any
such business, trade or profession is done or
carried on is within the police jurisdiction of two
or more municipalities which levy the licenses
thereon authorized by this section, such licenses
shall be paid to and collected by that municipality
only whose boundary measured to the nearest point
thereof is closest to such business, trade or
profession; and provided further, that this section
shall not have the effect of repealing or modifying
the limitations in this division relating to
railroad, express companies, sleeping car companies,
telegraph companies, telephone companies and public
utilities and insurance companies and their agents."
Effective April 29, 1986, following this Court's decision in
Ex parte City of Leeds, 473 So. 2d 1060 (Ala. 1985), which is
1061581
Section 11-51-91 was further amended in 2006; the 2006
3
amendments are not pertinent to this case, and all quotations
from the statute are from the statute as it read before the
2006 amendments.
6
discussed in more detail below, the legislature amended § 11-
51-91 to read as follows:
"Any city or town within the state of Alabama
may fix and collect licenses for any business, trade
or profession done within the police jurisdiction of
such city or town but outside the corporate limits
thereof; provided, that the amount of such licenses
shall not be more than one half the amount charged
and collected as a license for like business, trade
or profession done within the corporate limits of
such city or town, fees and penalties excluded; and
provided further, that the total amount of such
licenses shall not be in an amount greater than the
cost of services provided by the city or town within
the police jurisdiction; and provided further, no
calculation is required to be made by the municipal
officials for the cost of services to any particular
business or classification of businesses within the
police jurisdiction so long as the total amount of
such licenses collected in the police jurisdiction
shall not be in an amount greater than the cost of
services provided by the city or town to the police
jurisdiction ...." 
(Emphasis added.)  
3
Thus, § 11-51-91 authorizes a municipality to collect
license fees or taxes from businesses located within its
police jurisdiction in order to defray the costs of providing
municipal services within the police jurisdiction.  Our case-
law has consistently held that the section prohibits the
1061581
7
imposition of such taxes for purposes of raising general
revenue.  See, e.g., Hawkins v. City of Prichard, 249 Ala.
234, 238,  30 So. 2d 659, 662 (1947).  Instead, the amount
collected 
must 
reflect reasonable compensation to the
municipality for the expense of providing municipal services
in the police jurisdiction.  See State Dep't of Revenue v.
Reynolds Metals Co., 541 So. 2d 524 (Ala. 1988). 
In 1997, the City enacted an ordinance imposing an annual
business-license tax -- equal to one-half the annual business-
license tax paid by similar businesses located within the
City's corporate limits -- on every business in its police
jurisdiction.  Dixon Campers began paying the annual business-
license tax in 2001. 
In 
Reynolds 
Metals, 
Reynolds 
Metals 
Company, 
a
corporation doing business within the police jurisdiction of
Muscle Shoals, challenged Muscle Shoals' imposition of a
business-license tax upon it on the ground that Muscle Shoals
had failed to reasonably relate the amount of the license tax
imposed upon Reynolds Metals Company to the services rendered
by Muscle Shoals in the past to Reynolds Metals Company.  On
the basis of this Court's decision in Ex parte City of Leeds,
1061581
Those cases included:  City of Hueytown v. Burge, 342 So.
4
2d 339 (Ala. 1977); Atlantic Oil Co. v. Town of Steele, 283
Ala. 56, 214 So. 2d 331 (1968); Franks v. City of Jasper, 259
Ala. 641, 68 So. 2d 306 (1953); Hawkins v. City of Prichard,
249 Ala. 234, 30 So. 2d 659 (1947); State v. Sanderson Equip.
Co., 380 So. 2d 298 (Ala. Civ. App. 1979), cert. denied, 380
So. 2d 298 (Ala. 1980); and Town of Newville v. Price, 372 So.
2d 1314 (Ala. Civ. App. 1979).
8
supra, the trial court entered a summary judgment in favor of
Reynolds Metals Company.  The Court of Civil Appeals affirmed
the trial court's judgment, also citing Ex parte Leeds as its
basis for doing so.  
This Court in Reynolds Metals reversed the judgment of
the Court of Civil Appeals.  In its analysis, this Court
acknowledged that Ex parte Leeds and several other cases4
endorsed the idea that municipalities must relate the
business-license tax levied on particular businesses in a
municipality's police jurisdiction to the municipal services
rendered to that particular business in the past.  The Court
noted, however, that in response to Ex parte Leeds, the
legislature had amended § 11-51-91 to provide that 
"'no calculation is required to be made by the
municipal officials for the cost of services to any
particular business or classification of businesses
within the police jurisdiction so long as the total
amount of such licenses collected in the police
jurisdiction shall not be in an amount greater than
1061581
9
the cost of services provided by the city or town to
the police jurisdiction.'"
541 So. 2d at 526.
Even 
though 
the 
amendment 
took 
effect 
after 
the
assessment of the business-license tax at issue in Reynolds
Metals, this Court concluded that the legislature's action
merited a reexamination of Ex parte Leeds and other cases
endorsing similar ideas with regard to license taxes imposed
on businesses in the police jurisdictions of Alabama
municipalities.  Following an in-depth examination of this
Court's decisions in this area, the Reynolds Metals Court
concluded that the mandate in Ex parte Leeds and similar
restrictions 
placed 
on 
municipalities 
in 
other 
cases
represented 
"an undue judicial limitation upon the power of the
Legislature, not required by, and perhaps repugnant
to, the fundamental law of the United States or of
the State of Alabama; and an unreasonable judicially
imposed burden that was not required by duly enacted
legislation or the fundamental law of the United
States or the State of Alabama, upon municipalities
...."  
541 So. 2d at 532.  Accordingly, the Court explicitly
overruled Ex parte Leeds and the portions of other cases to
the same effect that required a municipality to relate the
1061581
10
license tax levied on a particular business in its police
jurisdiction to the services rendered by the municipality to
that particular business in the past. 
In a further effort to "clarify the current state of the
law," the Reynolds Metals Court announced "[t]he standard to
be applied to cases arising before or after the April 29,
1986, amendment to Code 1975, § 11-51-91" to be as follows:
"A 
municipality 
must 
estimate 
the 
amount
reasonably necessary to provide for the protection
of the lives, health, and property of businesses and
residents, and for the maintenance of good order and
the preservation of public morals within its entire
police jurisdiction.  The municipality may then, by
a properly adopted ordinance or resolution, set a
license fee for businesses within its police
jurisdiction, but outside its city limits, so that
the total receipts from all such licenses do not
exceed the amounts estimated to be reasonably
necessary to provide these services to the police
jurisdiction.  No license fee charged to any
business within the police jurisdiction, but outside
the city limits, shall be more than one-half of the
license fee charged to a similar business within the
city limits.  Such ordinances shall be presumed to
be reasonable and the burden shall be upon the
business challenging the license fee charged to it
to prove that such license fee is unreasonable or
that the ordinance was illegally adopted or is
violative of the statutory or fundamental law of the
United States or the State of Alabama."
541 So. 2d at 532.
1061581
11
In the present case, the mayor of the City at the time
the ordinance was adopted, Michael C. Dow, testified by
deposition that there were no line items in the City's budget
indicating what the City projected it would spend in providing
municipal services in the City's police jurisdiction despite
the fact that the City knew at all times exactly how much
revenue the City was receiving from the police jurisdiction.
Mayor Dow also acknowledged that he had been aware that state
law required a municipality to see that "service levels" in
the police jurisdiction were "up to" the revenue received from
the police jurisdiction.  Mayor Dow testified that in 1991 the
State conducted an audit of City operations and determined
that the City had spent more that year to provide municipal
services in the police jurisdiction than it had received in
revenue from the businesses in the police jurisdiction.  Based
on that assessment, Mayor Dow stated that he determined that
if the City "kept putting more, percentage-wise" each year
into municipal services in the police jurisdiction, the City
would be "in line" with the formula approved by the State
auditor.  Mayor Dow stated that since 1991 the City had
allocated more revenue each year for police-jurisdiction
1061581
For 2001, Dr. Thompson estimated the costs for services
5
to be $19,740,685 while the total revenue from the police
jurisdiction was $17,685,761.  For 2002, the estimated costs
were $21,055,311 and the total revenue was $21,264,402.  For
2003, the estimated costs were $20,618,981 and the total
revenue was $20,970,887. 
12
services in order to maintain a proper ratio between the
amount of the business-license taxes imposed upon businesses
in the police jurisdiction and the services provided in the
police jurisdiction.  
For purposes of the litigation, the City hired Dr. G.
Richard Thompson, a Clemson University economics professor, to
make an after-the-fact assessment of what the City had spent
in providing municipal services to the police jurisdiction
from 2001 through 2003.  Dr. Thompson used the City's annual
financial reports and population and service statistics and
principles of cost accounting to arrive at the amount the City
had spent providing municipal services in the police
jurisdiction, but he acknowledged that his methods were
inexact.  The results of Dr. Thompson's calculations showed
that in the three-year period (2001, 2002, and 2003) the City
had spent roughly as much on the cost of services in the
police jurisdiction as it had received in total revenue from
the police jurisdiction.   Dr. Thompson testified that it was
5
1061581
13
virtually impossible for the City to estimate the cost of many
of the municipal services it provided in the police
jurisdiction.  For fire and police protection, for example,
the City would have no idea from day to day how many calls
would 
be 
for 
a 
resident 
or 
business 
in 
the 
police
jurisdiction.  He stated, "So how do you estimate this in the
future?  You can only do what I did and estimate [the future
expenses based on what] the past [expenses have been]." 
As noted, the trial court held that the City's ordinance
imposing an annual business-license tax on businesses in the
City's police jurisdiction was consistent with the provisions
of § 11-51-91.  Citing Reynolds Metals, however, the Court of
Civil Appeals reversed the trial court's judgment.  The Court
of Civil Appeals concluded that, since the 1991 State audit,
the City had not properly determined what it spent on services
for the police jurisdiction each year, though the population
in the police jurisdiction had greatly increased since that
time.  The Court of Civil Appeals stated that, although it
could not "say that the City of Mobile made no effort to
relate the taxes charged to the cost of services provided[,]
... neither can we say that the effort the City did make was
1061581
14
adequate under the circumstances."  Dickson Campers, ___ So.
3d at ___.  The Court of Civil Appeals thus concluded that the
City's approach did not satisfy the standard set out in
Reynolds Metals, reasoning:
"A fair reading of Reynolds Metals indicates that
our supreme court did not mandate any specific
formal steps that a municipality had to undertake in
the budgeting process before it could levy a tax in
the police jurisdiction.  That said, however, it is
reasonable to believe that our supreme court
recognized that the term 'estimate' would have
different meanings in different contexts –- that a
process of estimation that would be appropriate for
one municipality might be wholly inadequate for
another.  For example, a municipality whose police
jurisdiction extends over an area of one square
mile, contains four businesses, and has experienced
no appreciable growth in recent years will be able
to estimate fairly easily and quickly the likely
cost of the municipal services it will provide in
the police jurisdiction for the coming year.  On the
other hand, a major metropolis with a sprawling
police 
jurisdiction whose population has been
burgeoning in recent years and includes dozens of
new residential subdivisions and hundreds, if not
thousands, of businesses may not be able to estimate
the cost of the services it will be called upon to
render in the police jurisdiction without a more
extensive analysis."
___ So. 3d at ___.
The City argues that the conclusion of the Court of Civil
Appeals in Dickson Campers that the City did not perform an
"estimate" that was "adequate under the circumstances" for
1061581
15
meeting the standard imposed in Reynolds Metals imposes "an
undue judicial limitation" on the City that is not required by
the language of either § 11-51-91 or Reynolds Metals.  The
City notes that § 11-51-91 does not state that a municipality
must perform an "estimate" of any kind before imposing a
license tax on businesses in its police jurisdiction.  It
merely requires that "the total amount of such licenses shall
not be in an amount greater than the cost of services provided
by 
the 
municipality 
within 
the 
police 
jurisdiction."
§-11-51-91 (emphasis added). 
The City notes that the Court of Civil Appeals itself
described the requirement in Reynolds Metals as "only the most
general of guidelines."  Dickson Campers, ___ So. 3d at ___.
The City argues that it could not have been expected to know,
based upon the general guidance provided in Reynolds Metals,
that, before enacting an ordinance imposing the annual
business-license tax on businesses in the police jurisdiction,
it needed to perform an exact accounting of the costs of the
municipal services provided in the police jurisdiction in the
prior years.  
1061581
16
Mayor Dow testified that the City learned from an audit
conducted in 1991 that the City had spent more that year to
provide services in its police jurisdiction than it had
received 
in 
revenue 
from 
businesses 
in 
that 
police
jurisdiction.  Thereafter, according to Mayor Dow's testimony,
the City continued to dedicate more funds each year to provide
municipal services in the police jurisdiction, thereby
ensuring that expenditures on municipal services in the police
jurisdiction would continue to outpace the revenue generated
by license taxes imposed on businesses in the police
jurisdiction.  Moreover, the City argues that the numbers
provided by Dr. Thompson in his assessment of the three-year
period during which Dickson Campers paid the annual business-
license tax confirm that the City did in fact comply with the
statutory requirement that it spend as much or more on
municipal services in the police jurisdiction than it
collected in license taxes.  Thus, the City contends that the
ordinance is in compliance with § 11-51-91 and that it
fulfilled the purpose of that statute, which it says is to
prevent municipalities from taxing businesses in police
jurisdictions to raise general revenue for a municipality.  
1061581
17
Dickson Campers responds by arguing that the City's
position is contrary to the Court's opinion in Reynolds
Metals.  Dickson Campers relies upon the statement in Reynolds
Metals that provided that "[a] municipality must estimate the
amount reasonably necessary" to provide for services in the
police jurisdiction and that "the total receipts from all such
licenses" must not "exceed the amounts estimated to be
reasonably necessary to provide these services to the police
jurisdiction."  541 So. 2d at 532.  Dickson Campers contends
that these statements are clear and unequivocal in commanding
municipalities to determine, based on past expenses, a general
amount that it will cost the municipality to provide services
in the police jurisdiction before a municipality enacts a
business-license tax on businesses in the police jurisdiction.
It argues that the City completely failed to follow the
standard set out in Reynolds Metals because the only time the
City actually estimated the cost of providing future services
in the police jurisdiction based on past expenses was after
the 1991 State audit -- a full six years before the City
enacted the ordinance at issue.  
1061581
Indeed, the Reynolds Metals standard was not even
6
necessary to the outcome of that case.  See, e.g., Ex parte
Williams, 838 So. 2d 1028, 1031 (Ala. 2002) (stating that
"obiter dictum is, by definition, not essential to the
judgment of the court which states the dictum, [and therefore]
it is not the law of the case established by that judgment").
18
The Court of Civil Appeals and Dickson Campers read too
much into the standard provided in Reynolds Metals for
municipal compliance with § 11-51-91.  It is clear that the
Reynolds Metals Court intended to clarify the law in
articulating its standard, but, as the Court of Civil Appeals
observed, the Reynolds Metals Court simply provided a general
guideline.   The standard was not intended to add more
6
restrictions upon municipalities than are imposed in § 11-51-
91.  In fact, "this Court is not at liberty to rewrite [a]
statute or to substitute its judgment for that of the
legislature."  Gowens v. Tys. S., 948 So. 2d 513, 522 n. 1
(Ala. 2006).  If anything, the intention of the Court's
opinion in Reynolds Metals was to remove "undue judicial
limitations upon the power of the Legislature" that are not
required by the law.  541 So. 2d at 532.  
The City is correct in its argument that § 11-51-91
simply states that "the total amount of [business] licenses
1061581
19
[in the police jurisdiction] shall not be in an amount greater
than the cost of services provided by the city or town within
the police jurisdiction."  (Emphasis added.)  When this Court
stated in Reynolds Metals that "[a] municipality must estimate
the amount reasonably necessary to provide for" services, its
purpose was to explain, as it expressly stated, that a
municipality should do this in the aggregate for "its entire
police jurisdiction," rather than on a licensee-by-licensee
basis.  Nor do we read  Reynolds Metals as purporting to add
to the otherwise clear standard expressed by the legislature
in § 11-51-91 a mechanical order of actions that, if not
performed by a municipality in a prescribed sequence, would
invalidate a business-license-tax ordinance.  Instead, the
Court was merely pointing out the practical reality that, in
order that a municipality might maintain a statutorily
compliant revenue-to-expense ratio, it generally will be
necessary for the municipality to have a reliable idea of the
cost 
of 
providing 
municipal 
services 
in 
its 
police
jurisdiction as a whole.
Nor did the Reynolds Metals Court presume to tell
municipalities how they must obtain the information upon which
1061581
20
they rely in setting the amount of business-license taxes, nor
the degree of detail required in such information before
municipalities may impose business-license taxes based on that
information.  Accordingly, the Court of Civil Appeal erred in
this case in reversing the judgment of the trial court on the
ground that a city such as Mobile -- "a major metropolis with
a sprawling police jurisdiction" -- necessarily must do "a
more extensive analysis" if it is to comply with § 11-51-91.
Whether the particular manner in which the City arrived
at the business-license taxes at issue in the present case was
the most professional or prudent way of doing so is not a
question that is before us.  If the legislature wishes to
require something more in this regard, it might be presumed
that it could do so.  It has not already done so in § 11-51-
91, however, and neither did this Court presume to do so in
Reynolds Metals.  Accordingly, the Court of Civil Appeals
erred in reversing the trial court's summary judgment in favor
of the City as to this issue.  The judgment of the Court of
Civil Appeals is reversed and the cause remanded to that court
for the entry of a judgment consistent with this opinion.
1061581
21
REVERSED AND REMANDED.
Cobb, C.J., and Lyons, Woodall, Stuart, Smith, Bolin,
Parker, and Shaw, JJ., concur.