Case Title: Wyoming Dept. of Employment, Div. of Unemployment Ins. v. Wyoming Restaurant Associates, Inc.

Citation: 

Docket Number: 92-129

State: wyoming

Court: Wyoming Supreme Court

Date: 1993-09-24T00:00:00Z

Document:
Wyoming Dept. of Employment, Div. of Unemployment Ins. v. Wyoming Restaurant Associates, Inc.1993 WY 121859 P.2d 1281Case Number: 92-129Decided: 09/24/1993Supreme Court of Wyoming

 
WYOMING 
DEPARTMENT OF EMPLOYMENT, DIVISION OF UNEMPLOYMENT INSURANCE, 
Appellant 
(Respondent),

v.

WYOMING 
RESTAURANT ASSOCIATES, INC., 

Appellee 
(Petitioner).

Appeal 
from The District Court, Teton County, Larry L. Lehman, 
J.

Joe 
Scott, Sr. Asst. Atty. Gen., for appellant.

No 
appearance by appellee.

Before 
MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, 
JJ.

CARDINE, 
Justice.

[¶1]      After exhausting 
the administrative process without success, an employer successfully argued to a 
district court that the Division of Unemployment Insurance (division) was 
estopped from assigning it the delinquency rate for unemployment insurance 
contributions. On appeal to this court, the division asserts that the district 
court erred in applying estoppel, that the employer's protests were untimely, 
and that the employer is precluded from obtaining judicial review without first 
paying delinquent contributions under protest.

[¶2]      We reverse in 
part and affirm in part.

I. 
ISSUES

[¶3]      Appellant, the 
division, raises the following issues:

A.

Whether 
the Unemployment Insurance Commission's decision that the facts of the case show 
the division staff is not estopped from collecting the full amount of tax it 
claims and assigning the penalty rate for 1991 to Wyoming Restaurant Associates, 
Inc., even if estoppel lies against the state, is supported by substantial 
evidence and is in conformity with law?

B.

Whether 
the Unemployment Insurance Commission's decision that estoppel does not lie 
against the division staff to prevent it from collecting the 1991 tax at the 
penalty rate is in conformity with law?

C.

Whether 
the Unemployment Insurance Commission's decision dismissing Wyoming Restaurant 
Associates, Inc.'s, appeal from its 1988, 1989, and 1991 [sic] tax rate notices, 
as not filed within the statutory thirty-day time limit, is supported by 
substantial evidence and is in conformity with law?

D.

Whether 
Wyoming Restaurant Associates, Inc.'s petition for judicial review should have 
been dismissed because it failed to pay its tax under protest as required by 
W.S. § 27-3-514?

[¶4]      Appellee, Wyoming 
Restaurant Associates, Inc., did not file a brief nor did they appear at oral 
argument.

II. 
FACTS

[¶5]      In 1985, the Pub 
Corporation (Pub) owned and operated the Steak Pub Restaurant, Pub Tavern, and 
Pub Wine and Liquor (Steak Pub), all located about three miles south of Jackson, 
Wyoming. Pub was registered with the Secretary of State as a Wyoming corporation 
and was registered as an employer with the Unemployment Security Commission. At 
that time, Pub was duly paying its unemployment taxes.

[¶6]      Between January 
of 1987 and July of 1987, the United States Small Business Administration (SBA) 
foreclosed on a note and mortgage it held on the Steak Pub property. The SBA 
purchased the Steak Pub Property at the foreclosure sale. During the redemption 
period and during the brief period in which the SBA owned it, Pub continued 
operating the Steak Pub but failed to pay its unemployment taxes for part of 
1987 and the first quarter of 1988, thus creating a 
delinquency.

[¶7]      In December of 
1987, the SBA sold the Steak Pub to appellee, Wyoming Restaurant Associates, 
Inc. (WRA), a registered Wyoming corporation, whose principal officers were 
Anthony Nicoli and Hans Caviezal. Then, in January of 1988, WRA conveyed the 
Steak Pub property and assets to Nicoli Enterprises Limited Partnership, who in 
turn leased the Steak Pub premises back to WRA for a ten-year period. During the 
first quarter of 1988, after it had purchased the Steak Pub, WRA hired another 
entity, Western USA Investments (Western), to manage the operations at the Steak 
Pub. Western was registered with the Unemployment Insurance Commission as an 
employer and contributed unemployment taxes for all the Steak Pub employees for 
the first quarter of 1988; however, the division did not know that Western was 
paying the Steak Pub's unemployment taxes.

[¶8]      In April of 1988, 
Brec Cooke (Cooke) bought WRA and, as WRA, began operating and managing the 
Steak Pub. As of this date, Pub no longer existed but owed $7,669.77 in 
unemployment taxes, while Western, unbeknownst to the division, was still 
registered and paying unemployment taxes for the Steak Pub 
employees.

[¶9]      In September of 
1988, WRA, now owned by Cooke, submitted an unemployment tax quarterly 
contribution report for the second quarter of 1988, which had the name Pub 
Corporation crossed out and replaced with WRA, as well as the contribution rate 
of 9.75 percent crossed out and replaced with 2.81 percent. WRA also forwarded 
payment of its taxes based on the 2.81 percent rate. In October 1988, WRA sent a 
report for the third quarter of 1988 with the exact same deletions and 
replacements, and another check based on the lower rate.

[¶10]   During the summer of 1988, the 
division investigated the relationship of Pub, WRA and Western. As a result, the 
division determined that WRA was a successor corporation of Pub, as defined 
under W.S. 27-3-507 (1991), and assigned WRA the unemployment tax delinquency 
rate of 9.75 percent, as provided in W.S. 27-3-503 (1991). On October 21, 1988, 
the division notified WRA, in writing, that its contribution rate was 9.75 
percent rather than 2.81 percent and, because of the difference in rates, that 
it was delinquent for 1988 in the amount of $4,586.03. This notice was mailed to 
P.O. Box 20313 in Jackson, the address which WRA had given the division when it 
registered as an employer in November of 1987. WRA, at the time the notice was 
sent, was receiving mail at P.O. Box 2547 in Jackson. Therefore, because WRA 
failed to inform the division of its change in address, WRA did not receive the 
notice and did not appeal its 1988 contribution rate.

[¶11]   In December of 1988, WRA officially 
notified the division that it had changed its address. In that same month, the 
division sent notice to WRA, at the old address, that its 1989 unemployment 
contribution rate would be the 9.75 percent delinquent rate. In February of 
1989, after WRA had been notified by the post office of a bundle of mail at the 
old address, WRA's attorney wrote the division objecting to the 9.75 percent 
delinquency rate assessed WRA. In response, on March 30, 1989, the division 
wrote WRA informing them that they could not protest the 1988 or 1989 rates 
because the statutory time for appeal had run.

[¶12]   In the Spring of 1989, the division 
discovered that it had miscalculated rates for 1989 for a number of employers; 
and therefore, it sent out new notices to all employers. Thus, in a separate 
correspondence, sent on March 27, 1989, the division re-notified WRA that its 
rate was 9.75 percent for 1989. This notice was sent to WRA's new address but 
was not appealed.

[¶13]   Cooke, the owner of WRA, also owned 
the Stagecoach Bar and Grill, located in Wilson, Wyoming, which was held and 
operated under two separate corporations, First Stage, Inc. and Stagecoach 
Enterprises, Inc. During the first quarter of 1989, WRA and the division staff 
attempted to solve the contribution rate issue and the delinquencies WRA had 
accrued. In this process, WRA informed the division that it would be reporting 
all four of Cooke's entities - WRA, Western, First Stage, and Stagecoach 
Enterprises - under one federal IRS tax identification number. Based on this 
information, the division staff informed WRA that it could combine the accounts 
of all of Cooke's entities - and pay one tax rate - because the Wyoming 
unemployment tax system requires businesses to use the same number of 
identification numbers as used for the federal filing. In addition, the division 
staff told WRA that accounts can be combined where there is a managing agreement 
between the non-reporting entities and the one reporting entity. Thus, as of 
January 1, 1989, WRA and First Stage contracted Stagecoach Enterprises to employ 
and pay all of WRA's, First Stage's, and Stagecoach Enterprise's employees, and 
all three entities began filing unemployment tax under one identification 
number, that of Stagecoach Enterprises. WRA benefitted from this because it 
could then pay taxes at Stagecoach Enterprise's lower 
rate.

[¶14]   Also, as part of these discussions 
between the division and WRA, an accord was reached in May of 1989, where it was 
agreed that WRA would make installment payments to the division for the 
delinquencies accrued in 1988 due to WRA's failure to pay according to the 9.75 
percent rate.

[¶15]   In the summer of 1989, the division 
staff met with WRA's attorney and determined that the combining was improper and 
thus gave the entities three separate unemployment tax identification numbers. 
After separating, it was determined that WRA, because it had filed under 
Stagecoach Enterprise's substantially lower tax rate instead of the 9.75 percent 
delinquency rate, was delinquent in the amount of $5,064.20 for the first two 
quarters of 1989. In order to pay off this delinquency, WRA agreed orally to 
continue the installments, which it was already paying for the 1988 delinquency, 
until the 1989 delinquency was also satisfied. WRA made installment payments 
until October of 1990.

[¶16]   In December 1989, the division 
notified WRA that its 1990 unemployment contribution rate would be the 9.75 
percent delinquency rate. WRA did not appeal. In December of 1990, the division 
notified WRA that its 1991 unemployment contribution rate would again be the 
delinquency rate, which was now 9.26 percent. WRA's attorney protested the 1991 
rate and then submitted an application for adjustment of back taxes under W.S. 
27-3-515 (1991). WRA's last contribution to unemployment insurance was July 31, 
1990.

[¶17]   In June 1991, before a hearing 
examiner, WRA challenged its 1991 contribution rate and argued for adjustment of 
its rates, interest and penalties for 1988-90. The hearing examiner, on July 31, 
1991, rejected WRA's challenge and issued an injunction enjoining WRA from 
conducting business. On August 12, 1991, WRA appealed the hearing examiner's 
decision to the Unemployment Insurance Commission (Commission), which held a 
hearing on August 29, 1991, and issued a decision on October 4, 
1991.

[¶18]   In its decision, the Commission 
held: (1) estoppel did not apply under these facts to prevent the division from 
assessing WRA the delinquent contribution rate; (2) WRA failed to timely appeal 
the notices of the 1988-90 contribution rates; (3) WRA did timely appeal the 
1991 contribution rate notice, but the rate imposed was reasonable under the 
statutes; (4) W.S. 27-3-515 did not provide WRA relief in the form of adjustment 
of past rates; and (5) the hearing examiner's injunction enjoining WRA from 
conducting business was affirmed. On October 28, 1991, WRA appealed the 
Commission's decision to the district court.

[¶19]   On May 22, 1992, the district court 
issued an order which: (1) affirmed the 1988 contribution rate and assessment; 
(2) held that the 1989 and 1990 contribution rate notices were not timely 
appealed by WRA; (3) reversed the Commission's conclusion and instead held that 
estoppel did apply against the division; and (4) directed the division to 
recompute WRA's tax liability for 1988, 1989, 1990, 1991 and 1992. It is from 
this order of the district court which the division now 
appeals.

III. 
DISCUSSION

A. 
STANDARD OF REVIEW

[¶20]   When reviewing agency decisions, we 
affirm an agency's findings of fact if they are supported by substantial 
evidence from the record. Aanenson v. State ex. rel. Worker's Compensation Div., 
842 P.2d 1077, 1079 (Wyo. 1992). Substantial evidence is defined as "relevant 
evidence which a reasonable mind might accept in support of the conclusions of 
the agency." Id. We defer to the agency's expertise in weighing the evidence and 
will not substitute our judgment for that of the agency; however, this deference 
as to the findings of fact goes to the finder of fact, the Commission here. 
Employment Sec. Comm'n v. Western Gas Processors, Ltd., 786 P.2d 866, 870-71 
(Wyo. 1990). We affirm agency conclusions of law if they are in accordance with 
law. Id., at 871.

B. 
JUDICIAL REVIEW

[¶21]   We address the division's last 
argument first because if it is correct, then we are without jurisdiction to 
review the Commission's decision and need not reach the merits of the other 
arguments. The division argues that WRA is precluded from obtaining judicial 
review because they have not yet paid their delinquent taxes under protest, 
which, they argue, is required by W.S. 27-3-514 (1991).

[¶22]   Wyoming Statute 27-3-514 
provides:

An 
employer paying contributions under protest may within six (6) months after 
payment initiate action for recovery against the department in a court of 
competent jurisdiction. The protest shall be verified and filed at the time 
payment is made and shall state the grounds for objection. Failure to initiate 
action within six (6) months is a waiver of recovery under this subsection. 
Review by the court is limited to the objections stated in the protest. If 
judgment is for the employer, the amount shall be credited to his account for 
contributions and interest due under this act. Any remaining balance shall be 
refunded to the employer from the clearing account.

The 
division claims that the language, "an employer paying contributions under 
protest may * * * initiate action for recovery against the department," 
required WRA to pay its delinquent taxes under protest before it could obtain 
judicial review of the Commission's decision. The division argues that their 
interpretation is consistent with W.S. 16-3-114 (1990) of the Wyoming 
Administrative Procedure Act (WAPA), which provides:

(a) 
Subject to the requirement that the administrative remedies be exhausted and in 
the absence of any statutory or common law provision precluding or limiting 
judicial review, any person aggrieved or adversely affected in fact by a 
final decision of an agency in a contested case, or by other agency action or 
inaction, or any person affected in fact by rule adopted by an agency, is 
entitled to judicial review * * *.

The 
division asserts that WRA is not "aggrieved or adversely affected in 
fact" until it pays its delinquent taxes under protest and thus their 
construction of W.S. 27-3-514 is consistent with the WAPA.

[¶23]   The language used in W.S. 27-3-514 
does not require that an employer, appealing its tax rate determination, pay its 
delinquent taxes under protest before it can obtain judicial review. Instead, it 
simply provides a cause of action to an employer, who is paying taxes under 
protest, to seek recovery of those taxes. The appeal process for an employer who 
objects to their assigned contribution rate is governed by W.S. 27-3-506 (1991), 
which provides:

     (a) The department 
shall notify an employer of his contribution rate determined pursuant to this 
article and of total benefit charges to his account within a reasonable time 
after the close of each experience period. A base period employer shall be 
notified of the filing of all initial claims which may be charged to his 
account. Except as otherwise provided by the legislature and on or before 
January 1 of each year, the department shall notify each employer of his 
projected contributions payable under W.S. 27-3-503 and 27-3-505 for the ensuing 
calendar year. Notice under this section shall be by mail to the last known 
address of record.

     (b) A determination of 
contribution rates by the department for any calendar year is binding upon the 
employer unless within thirty (30) days after notice is mailed, he files an 
application for review and redetermination in accordance with this 
section.

* 
* * * * *

     (d) An employer may 
apply to the department for review of a decision or determination involving 
contribution liability, contribution rates or the charging of benefit payments 
under W.S. 27-3-509. The application shall be in writing and shall state the 
reasons for review. The department, on behalf of the commission, shall notify 
the employer of its acceptance or denial of the application for review or of a 
redetermination by the commission. If the commission grants review, the employer 
shall be given opportunity for a hearing in accordance with W.S. 27-3-401 
through W.S. 27-3-409. * * * A denial or redetermination is final unless within 
thirty (30) days after notice is mailed a petition for judicial review is filed 
in accordance with W.S. 27-3-407.

Wyoming 
Statute 27-3-407 (1991) provides for judicial review based upon the requirements 
of the WAPA - aggrieved or adversely affected - but does not specifically 
require payment under protest before obtaining judicial 
review.

[¶24]   When WRA initiated this action, it 
was appealing its 1991 contribution rate determination under W.S. 27-3-506 and 
was applying for an adjustment of past contribution rates under W.S. 27-3-515. 
It was not "initiating an action for recovery of payments under protest" as 
described in W.S. 27-3-514. Neither W.S. 27-3-506 (rate determinations) nor W.S. 
27-3-515 (past tax adjustments) requires that an employer make all delinquent 
payments in order to seek judicial review. If the legislature intends to 
restrict the statutory right to judicial review, it must do so in a clear 
manner. Holding's Little America v. Bd. of County Comm'rs, 670 P.2d 699, 702 
(Wyo. 1983). If the intent of the legislature in passing W.S. 27-3-514 was to 
limit an employer's right to judicial review, that intent is not clear from the 
language. Therefore, the district court's decision not to dismiss WRA's petition 
for judicial review was in accordance with law.

C. 
TIMELINESS OF 1988, 1989 & 1990 APPEALS

[¶25]   An employer is bound by the yearly 
unemployment tax rate assigned he or she under W.S. 27-3-506(a) "unless within 
thirty days after notice is mailed, he files an application for review and 
redetermination * * *." W.S. 27-3-506(b). In construing a similar time 
limitation for filing appeals of an employee benefit claim determination under 
W.S. 27-3-404, we held that timely filing is "mandatory and jurisdictional." 
Employment Sec. Comm'n v. Young, 713 P.2d 198, 201 (Wyo. 1986). Timely filing 
under W.S. 27-3-506(b) of employer rate determinations is just as "mandatory and 
jurisdictional" as the statute in Young. Thus, failure to timely file bars 
review.

[¶26]   It is undisputed that WRA failed to 
timely file for review of its 1988, 1989, and 1990 contribution rate 
determinations. In October of 1988, the division notified WRA, at its registered 
address, that its 1988 rate was 9.75 percent, as required under W.S. 
27-3-506(a). In December of 1988 and March of 1989, the division notified WRA 
that its 1989 rate would also be the 9.75 percent rate, again at its registered 
address. In December of 1989, the division notified WRA that its 1990 rate would 
again be the 9.75 percent rate. WRA did not apply for review of these 
determinations within thirty days of the mailing of each 
notice.

[¶27]   We conclude, as the Commission 
concluded, that review of WRA's 1988-90 contribution rate determinations was 
precluded because WRA failed to timely file.

D. 
ESTOPPEL

[¶28]   WRA timely filed for review of its 
1991 unemployment contribution rate, which was set at the delinquency rate of 
9.26 percent. In its appeal, WRA asserted that the division was estopped from 
applying this rate because the division had misinformed WRA about filing which, 
in turn, caused it to become delinquent. The Commission rejected WRA's estoppel 
argument because it was not a "rare and unusual circumstance" requiring 
estoppel. On review, the district court held for WRA, stating, "[t]hat the 
requirements of morals and justice demand that agencies should be accountable 
for mistakes and that detrimental reliance on misrepresentations or mere 
unconscientiousness should create an estoppel * * *."

[¶29]   Concerning equitable estoppel, this 
court has stated:

Equitable 
estoppel is not applicable unless the person relied and had a right to rely on 
the representation or conduct. The representation or conduct must induce and 
be the immediate or proximate cause of the act which is complained of. One 
must show that the change of position has not been performed or completed before 
the time of reliance. [citations omitted and emphasis 
added]

Roth 
v. First Sec. Bank, 684 P.2d 93, 96 (Wyo. 1984). WRA is asserting that the 
division should be estopped from assigning it the delinquency contribution rate 
because its reliance on the division's erroneous advice caused it to become 
delinquent and thus to be assigned the delinquency rate. The record reveals, 
however, that WRA would have been assigned the delinquency rate even if the 
alleged erroneous advice had not been given.

[¶30]   WRA would have been assigned the 
delinquency rate even without the alleged erroneous advice for two reasons. 
First, WRA was a successor employer who took over for a delinquent employer. 
Second, WRA had an outstanding delinquency stemming from its payment at a lower 
rate from the second and third quarters of 1988.

[¶31]   Wyoming Statute 27-3-507 
provides:

An 
employing unit acquiring the trade, organization, business or substantially all 
the assets of an employer subject to this act shall assume the employer's 
account, benefit experience and contribution rate. If the acquiring 
employing unit is an employer subject to this act, the employer shall contribute 
at the rate in effect prior to acquisition on all wages payable for employment 
after acquisition until the end of the current calendar year. The department 
shall consolidate the separate accounts and benefit experiences and shall 
determine the contribution rate of the acquiring employer in accordance with 
this article for the calendar year following the year in which the employer 
notifies the department of the acquisition. [emphasis 
added]

Thus 
in 1988, when WRA acquired the Steak Pub, this statute required the division to 
assign to it Pub's contribution rate. Pub's contribution rate was 9.75 percent 
because it failed to pay unemployment taxes in the last quarter of 1987 and the 
first quarter of 1988 when it operated the business for the SBA. Thus, WRA's 
1988 rate was 9.75 percent because it acquired Pub's contribution rate not 
because of the division's alleged erroneous advice.

[¶32]   WRA's 1989, 1990 and 1991 
delinquency rates were also caused by the acquisition of Pub's rate. Wyoming 
Statute 27-3-503(b) provides, in part:

[A] 
contributing employer failing to pay all contributions, interest and penalties 
or to submit all quarterly contribution reports due on his account or any 
account assumed under W.S. 27-3-507 on or before September 30 preceding the 
effective date of his assigned rate shall be assigned a delinquent rate * * *. 
[emphasis added]

WRA 
has, thus far, failed to pay all the contributions due on Pub's account which it 
assumed under W.S. 27-3-507. Therefore, the division was required to assign WRA 
the delinquent rate until Pub's delinquency was paid.

[¶33]   In 1988, WRA filed contribution 
reports for two quarters but paid its taxes based on a rate of 2.81 percent 
instead of 9.75 percent. This created a delinquency by WRA, which WRA agreed to 
pay through installments beginning in May of 1989. WRA paid a portion of this 
delinquency but has never paid it in full. Hence, WRA is an "employer failing to 
pay all contributions, interest and penalties" before September 30 of 1988, 
1989, 1990, and 1991 under W.S. 27-3-503(b), and the division must assign it the 
delinquency rate.

[¶34]   The division imposed the delinquent 
rate on WRA because WRA was a successor to Pub, a delinquent employer, and 
because WRA was delinquent on its unemployment taxes, before any alleged 
erroneous advice. Therefore, the alleged erroneous advice did not cause WRA to 
be charged the delinquent rate and estoppel does not apply because "[t]he 
representation [erroneous advice] [did not] induce * * * or proximate[ly] cause 
the act which is complained of." Roth, 684 P.2d  at 96. The Commission's 
conclusion that estoppel does not apply was, therefore, in accordance with 
law.

IV. 
DISPOSITION

[¶35]   Because we find that the 
Commission's decision is in accordance with law and supported by substantial 
evidence, we reverse and vacate the district court's order insofar as it partly 
reverses the Commission's decision, the effect being that we affirm the decision 
of the Commission in toto.