Title: Patterson v. Gladwin Corp.
Citation: 835 So. 2d 137
Docket Number: 1001747
State: Alabama
Issuer: Alabama Supreme Court
Date: May 17, 2002

835 So. 2d 137 (2002)
Michael L. PATTERSON, in his official capacity as Commissioner of the Department of Revenue
v.
GLADWIN CORPORATION et al.
1001747.

Supreme Court of Alabama.
May 17, 2002.
*139 Bill Pryor, atty. gen.; Pamela B. Slate and Susan E. Kennedy, dep. attys. gen., of Slate Kennedy, L.L.C., Montgomery; and Joe Espy III and James E. Williams, dep. attys. gen., of Melton, Espy, Williams &amp; Hayes, P.C., Montgomery, for appellant.
Roger W. Kirby, Richard L. Stone, and Andrea Bierstein of Kirby, McInerney &amp; Squire, L.L.P., New York, New York; Michael R. Pennington, Bruce P. Ely, Joseph B. Mays, Jr., and Thomas N. Carruthers of Bradley Arant Rose &amp; White, L.L.P., Birmingham; Russell Jackson Drake of Whatley Drake, L.L.C., Birmingham; William J. Baxley and Charles A. Daughin of Baxley, Dillard, Dauphin &amp; McKnight, Birmingham; *140 and D.W. Wilson and Blake A. Madison of Tanner &amp; Guin, L.L.C., Tuscaloosa, for appellees.
WOODALL, Justice.
This is a direct action against the State of Alabama seeking refunds of previously paid corporate franchise taxes. We dismiss the action for lack of subject-matter jurisdiction.
This case is another chapter in long-running litigation over corporate franchise taxes collected pursuant to Ala.Code 1975, §§ 40-14-40, and -41, repealed by Act No. 665, 1999 Ala. Acts 131, Second Special Session. For the history of this litigation, see South Central Bell Telephone Co. v. Alabama, 526 U.S. 160, 119 S. Ct. 1180, 143 L. Ed. 2d 258 (1999) (holding Alabama's franchise-tax statutes unconstitutional); on remand, South Central Bell Telephone Co. v. State, 789 So. 2d 133 (Ala.1999) ("First Interim Order"), and 789 So. 2d 147 (Ala.2000) ("Second Interim Order"); Ex parte Monroe, 723 So. 2d 15 (Ala.1998); White v. Reynolds Metals Co., 558 So. 2d 373 (Ala.1989) (upholding the franchise-tax statutes against a constitutional challenge), cert. denied sub nom., Reynolds Metals Co. v. Sizemore, 496 U.S. 912, 110 S. Ct. 2602, 110 L. Ed. 2d 282 (1990). The initial complaint in this action was filed as a class action on May 24, 1996, while South Central Bell was pending, by Gladwin Corporation ("Gladwin") "on behalf of itself and all other corporations similarly situated." Ex parte Monroe, 723 So. 2d 15, 17 (Ala. 1998) (an appeal from an interlocutory order in the case now before us). Gladwin sought a refund initially in the circuit court; it invoked none of the administrative procedures for relief set forth in the Taxpayers' Bill of Rights and Uniform Revenue Procedures Act, Ala.Code 1975, § 40-2A-1 et seq. ("the TBOR"). This case was placed on the administrative docket in the Montgomery Circuit Court, pending resolution of the issues in South Central Bell.
On remand of South Central Bell from the United States Supreme Court, this Court ordered the parties in that case to marshal evidence and present arguments that would be useful to this Court in fashioning a remedy consistent with the United States "Constitution and the holdings of the United States Supreme Court." 789 So. 2d  at 151. Instead, however, the parties settled the dispute, and South Central Bell was dismissed. Subsequently, this case proceeded.
The complaint as last amended on November 1, 2000, added Arizona Chemical Company ("ACC") as a class representative. Before joining this action, ACC had petitioned the Department of Revenue ("the Department") for a refund of franchise taxes it had paid from 1995 to 1999. The Department failed to respond to the petition within six months, and it was deemed denied by operation of law. § 40-2A-7(c)(3). Subsequently, ACC appealed, pursuant to § 40-2A-7(c)(5), to the administrative law division of the Department. While that appeal was pending, however, ACC asserted its claims in the amended class-action complaint.
Gladwin and ACC (hereinafter collectively referred to as "the Taxpayers") seek to represent a class of foreign corporations that have paid, or that have been assessed, franchise taxes under the invalid tax scheme. They seek "refunds with interest of the sums that Alabama already has collected, pursuant to its foreign franchise tax ... for tax years prior to 2000." On June 13, 2001, the trial judge certified, pursuant to Ala. R. Civ. P. 23(b)(3), an opt-out class consisting of approximately 18,000 *141 class members and placing approximately $1 billion in controversy.
Cynthia Underwood, in her official capacity as Commissioner of the Department of Revenue ("the Commissioner"),[1] appeals from the class-certification order. On appeal, she contends that this action is due to be dismissed, on the ground that the Taxpayers have not invoked the trial court's jurisdiction. This is so, she argues, because the Taxpayers have not availed themselves of the refund procedures provided in the TBOR. She cites § 40-2A-7(c)(5), which states:
(Emphasis added.) She also cites Ala. Code 1975, § 40-2A-9(g)(1), which similarly states:
(Emphasis added.) It is undisputed that the Taxpayers are not proceeding under the TBOR, but, instead, are attempting to prosecute a direct action in the circuit court. Thus, the Commissioner contends, the trial court lacks subject-matter jurisdiction of the Taxpayers' claims.
The Taxpayers, however, define the issue, not in terms of subject-matter jurisdiction, but in terms of "exhaustion of remedies." In fact, they rely on certain exceptions to that doctrine as authority for bypassing the TBOR. The right to commence a direct action in the circuit court, they insist, turns "on what sort of challenge is being made to the tax." Taxpayers' Brief, at 26 (emphasis added). More specifically, they argue that a taxpayer seeking a refund from the State treasury "need not exhaust administrative remedies when challenging the overall validity or constitutionality of a tax." Id. We disagree with this contention.
To be sure, Alabama recognizes the doctrine of exhaustion of administrative remedies. City of Huntsville v. Smartt, 409 So. 2d 1353, 1357 (Ala.1982). "This doctrine `requires that where a controversy is to be initially determined by an administrative body, the courts will decline relief until those remedies have been explored and, in most instances, exhausted.'" Id. (quoting Fraternal Order of Police, Strawberry Lodge No. 40 v. Entrekin, 294 Ala. 201, 209, 314 So. 2d 663, 670 (1975)). Also, we recognize exceptions to the doctrine, *142 such as where "[q]uestions of law and of statutory and constitutional construction preponderate over questions of fact." Mingledorff v. Vaughan Regional Med. Ctr., Inc., 682 So. 2d 415, 416 (Ala. 1996). In Alabama, however, the exhaustion-of-remedies doctrine "is a judicially imposed prudential limitation, not an issue of subject-matter jurisdiction." Budget Inn of Daphne, Inc. v. City of Daphne, 789 So. 2d 154, 157 (Ala.2000) (emphasis added).
The Commissioner's positionindeed, the centerpiece of her subject-matter jurisdiction argumentis that a direct action in the circuit court seeking a tax refund from the State treasury is barred by the principle of sovereign immunity, as that principle is expressed in Ala. Const.1901, § 14. Section 14 provides: "That the State of Alabama shall never be made a defendant in any court of law or equity."
The wall of immunity erected by § 14 is nearly impregnable. Sanders Lead Co. v. Levine, 370 F. Supp. 1115, 1117 (M.D.Ala.1973); Taylor v. Troy State Univ., 437 So. 2d 472, 474 (Ala.1983); Hutchinson v. Board of Trustees of Univ. of Alabama, 288 Ala. 20, 24, 256 So. 2d 281, 284 (1971). This immunity may not be waived. Larkins v. Department of Mental Health &amp; Mental Retardation, 806 So. 2d 358, 363 (Ala.2001) ("The State is immune from suit, and its immunity cannot be waived by the Legislature or by any other State authority."); Druid City Hosp. Bd. v. Epperson, 378 So. 2d 696 (Ala.1979) (same); Opinion of the Justices No. 69, 247 Ala. 195, 23 So. 2d 505 (1945) (same); see also Dunn Constr. Co. v. State Bd. of Adjustment, 234 Ala. 372, 175 So. 383 (1937). "This means not only that the state itself may not be sued, but that this cannot be indirectly accomplished by suing its officers or agents in their official capacity, when a result favorable to plaintiff would be directly to affect the financial status of the state treasury." State Docks Comm'n v. Barnes, 225 Ala. 403, 405, 143 So. 581, 582 (1932) (emphasis added); see also Southall v. Stricos Corp., 275 Ala. 156, 153 So. 2d 234 (1963).
This Court has recognized several species of action that are not "against the State" for § 14 purposes. They include:
Aland v. Graham, 287 Ala. 226, 229-30, 250 So. 2d 677, 679 (1971). "In determining whether an action against a state officer is barred by § 14, the Court considers the nature of the suit or the relief demanded, not the character of the office of the person against whom the suit is brought." Ex parte Carter, 395 So. 2d 65, 67-68 (Ala.1980) (emphasis added).
Thus, if an action seeking tax refunds is an action against the State within the meaning of § 14, then neither the doctrine of exhaustion of remedies nor the exceptions thereto apply. Such a case presents a question of subject-matter jurisdiction, which cannot be waived or conferred *143 by consent. Sustainable Forests, L.L.C. v. Alabama Power Co., 805 So. 2d 681 (Ala.2001); Stringfellow v. State Farm Life Ins. Co., 743 So. 2d 439 (Ala.1999); Equity Res. Mgmt., Inc. v. Vinson, 723 So. 2d 634 (Ala.1998).
A direct action for a refund of taxes paid to the State is essentially "a common law action of indebitatus assumpsit against the State." J.R. Raible Co. v. State Tax Comm'n, 239 Ala. 41, 44, 194 So. 560, 561 (1939). Clearly, a judgment in favor of the class, which seeks tax refunds totaling approximately $1 billion, would "affect the financial status of the state treasury." State Docks Comm'n v. Barnes, 225 Ala. at 405, 143 So.  at 582 (emphasis added). See also Williams v. Hank's Ambulance Serv., Inc., 699 So. 2d 1230, 1232 (Ala.1997) (a judgment in favor of medical providers requiring reimbursement from the State for services, which payment had been withheld under the State's erroneous interpretation of federal statutes, would "`directly affect a ... property right of the State,'" and, therefore, was barred by § 14); Ex parte Sizemore, 611 So. 2d 1069, 1070 (Ala.1993) (an action seeking a refund of income taxes paid on military retirement benefits was an unconstitutional "action against the state, seeking as a remedy funds from the state treasury") (Houston, J., dissenting from quashing the writ of certiorari). Consequently, the question is one of subject-matter jurisdiction, not exhaustion of remedies.
The Taxpayers argue that "[t]he United States Constitution precludes Alabama from withdrawing a remedy that the average taxpayer reasonably believed was available." Taxpayers' Brief, at 33. They insist that taxpayers interpreting "45 years" of Alabama law would not have concluded that a direct action seeking franchise-tax refunds would be barred by § 14. More specifically, they state: "Whether or not Alabama is required to offer taxpayers a direct action for refunds of unconstitutional taxes, the State cannot hold out the existence of such a remedy as it has done these past 45 yearsonly to withdraw that remedy after the fact." Taxpayers' Brief, at 33. For this proposition, they cite Reich v. Collins, 513 U.S. 106, 115 S. Ct. 547, 130 L. Ed. 2d 454 (1994), which some courts have dubbed "a `bait-and-switch' case." Stone Container Corp. v. United States, 229 F.3d 1345, 1351 (Fed. Cir.2000), cert. denied sub nom., Smurfit-Stone Container Corp. v. United States, 532 U.S. 971, 121 S. Ct. 1601, 149 L. Ed. 2d 468 (2001).
Reich involved an action for a tax refund, pursuant to Ga.Code Ann. § 48-2-35(a). Section 48-2-35(a) provided: "`A taxpayer shall be refunded any and all taxes or fees which are determined to have been erroneously or illegally assessed and collected from him under the laws of this state, whether paid voluntarily or involuntarily...."` 513 U.S.  at 109, 115 S. Ct. 547. After the United States Supreme Court decided Davis v. Michigan Department of Treasury, 489 U.S. 803, 109 S. Ct. 1500, 103 L. Ed. 2d 891 (1989), in which the Court invalidated state statutory schemes that "exempted from state personal income tax retirement benefits paid by the State, but not retirement benefits paid by the Federal Government (or any other employer)," 513 U.S.  at 108, 115 S. Ct. 547, a Georgia taxpayer sought, pursuant to § 48-2-35(a), a refund of taxes he had paid under Georgia's version of the unconstitutional scheme. The Georgia Supreme Court denied the refund, holding that Georgia law provided "ample prede privation remedies," Reich v. Collins, 263 Ga. 602, 604, 437 S.E.2d 320, 322 (1993) (emphasis added), *144 rev'd, 513 U.S. 106, 115 S. Ct. 547, 130 L. Ed. 2d 454 (1994), that is, opportunities to challenge tax assessments while withholding payment. Because the taxpayer had not availed himself of those predeprivation provisions, that court concluded, he could, consistent with due process, be denied the right to proceed under § 48-2-35(a).
The United States Supreme Court disagreed, and it reversed the judgment of the Georgia Supreme Court. In doing so, the Court explained:
513 U.S.  at 110-11, 115 S. Ct. 547.
The Court also noted that the construction placed on the statute by the Georgia Supreme Court before the Reich litigation was "entirely consistent with that language's apparent breadth." 513 U.S.  at 112, 115 S. Ct. 547. In short, it concluded that the taxpayer was entitled to proceed under § 48-2-35(a), notwithstanding his failure to invoke any of the available predeprivation procedures.
The Taxpayers contend that an opinion in this case holding that the TBOR is jurisdictional, thus providing the exclusive means to a franchise-tax refund, would represent an unconstitutional "bait-and-switch." The ultimate question, therefore, is whether the reasonable taxpayer could have construed Alabama law as providing a right to prosecute an original action in the circuit court for a refund of franchise taxes assessed and paid under a statutory scheme ultimately held to be unconstitutional. Otherwise stated in the words of Reich, the question is whether the "reasonable taxpayer would have thought that [the TBOR] represented ... the exclusive remedy for unlawful [franchise] taxes." *145 513 U.S.  at 111, 115 S. Ct. 547. We answer the question in the affirmative.
`"It is well settled that the right to reclaim money voluntarily paid to the state or the counties thereof, as taxes, is a creature of legislative grace Board of Revenue &amp; Road Comm'rs of Mobile County v. Jones, 236 Ala. 244, 245, 181 So. 908, 909 (1938) (quoting Lee v. Cunningham, 234 Ala. 639, 642, 176 So. 477, 480 (1937)). "In the absence of statute a refund of monies paid into the state treasury under color of the revenue laws of the state were not subject to refund." Curry v. Johnston, 242 Ala. 319, 320, 6 So. 2d 397, 397 (1942).
For taxpayers seeking refunds of taxes paid to the State, the Legislature, over the years, has provided a number of procedural remedies. One such procedural remedy allowed the taxpayer to pay the tax "under protest" and then to commence an action to litigate the merits of the claim. A second procedure consisted of an appeal from a final assessment. Finally, where the tax was paid "through mistake or error," a taxpayer was entitled to a writ of mandamus to compel a refund. Because this Court has never addressed the TBOR in the context of § 14, we shall briefly discuss each of the procedures provided by its statutory predecessors, as those procedures would have been understood by the "reasonable taxpayer."
In 1935, the Legislature passed Act No. 194, §§ 379-80, 1935 Ala. Acts 256, codified at Ala.Code 1940, Tit. 51, §§ 890-91; Ala. Code 1958 (Recompiled); Ala.Code 1975, §§ 40-1-11 to -12; repealed, Act No. 92-186, 1992 Ala. Acts 349, codified at Ala. Code 1975, § 40-2A-1 et seq.[2] Three years later, on August 2, 1938, J.R. Raible Company ("Raible") commenced an action against the "State Tax Commission of Alabama." J.R. Raible Co. v. State Tax Comm'n, 29 Ala.App. 184, 185, 194 So. 556, 557 (Ct.App.), rev'd, 239 Ala. 41, 194 So. 560 (1939). The two-count complaint sought refunds for license and sales taxes paid "under protest." 29 Ala.App. at 186, 194 So.  at 557. The action was commenced pursuant to §§ 379-80 of Act No. 194, which provided:
(Emphasis added.)
After a nonjury trial, the court entered a judgment for the commission, and Raible appealed. The Court of Appeals reversed that judgment, and the commission sought certiorari review in this Court. On certiorari review, this Court reversed the judgment of the Court of Appeals. In doing so, it stated: "To all intents and purposes, this is a common law action of indebitatus assumpsit against the State, and the circuit court was without jurisdiction to entertain it." 239 Ala. at 44, 194 So.  at 561. It further held that §§ 379 and 380, to the extent they purported to authorize an action in the circuit court for a tax refund, "patently violat[ed] § 14 of the Constitution, and any such judgment so rendered would be void." 239 Ala. at 44, 194 So.  at 562 (opinion on rehearing).
Four years after Raible was decided, the Legislature passed Act No. 402, 1943 Ala. Acts 369, which amended Tit. 51, §§ 379 and 380. Act No. 402 provided:
(Emphasis added.) Thus, Act No. 402 amended the former law by requiring the establishment of an escrow account, in which the disputed taxes were to be held pending a determination of their proper disposition.
The constitutionality of the amended sections was challengedand upheld only two years later. Glass v. Prudential Ins. Co. of America, 246 Ala. 579, 22 So. 2d 13 (1945) (superseded by statute on other grounds as recognized by Mooney v. Weaver, 262 Ala. 392, 79 So. 2d 3 (1955)). Glass involved a "bill in equity" filed by Prudential Insurance Company ("Prudential"), a foreign corporation, "against Brooks Glass, superintendent of Insurance of the State of Alabama" ("the superintendent"). 246 Ala. at 580, 22 So. 2d  at 14. The complaint sought a judgment declaring that "a privilege or license tax" imposed upon it violated the Commerce Clause, and enjoining the superintendent from cancelling Prudential's business license for nonpayment of the tax. 246 Ala. at 581-82, 22 So. 2d  at 14. The trial court issued a temporary injunction, and the superintendent appealed. 246 Ala. at 582, 22 So. 2d  at 14.
The issue was whether Prudential had an adequate remedy at law. The resolution of that issue turned on whether the 1943 amendments had cured the constitutional deficiency found to exist in Raible. This Court held that they had. Accompanying the holding was an extended discussion of the effect of the amendments on the Raible holding:
246 Ala. at 582-86, 22 So. 2d  at 15-18 (emphasis added).
The holdings and rationales of Raible and Glass material to this case may be summarized as follows: First, § 14 barred a direct action against the State for a tax refund. Second, an action to determine the disposition of funds held in escrow was in the nature of a declaratory judgment, and, therefore, was not a direct action against the State. Compliance with the statutory procedure for obtaining a refund of payments made pursuant to an illegal tax was, therefore, necessary and jurisdictional.
Raible has never been overruled or limited. In fact, it was cited by this Court twice last year. Larkins v. Department of Mental Health &amp; Mental Retardation, 806 So. 2d 358, 364 (Ala.2001); Alabama State Docks Terminal Ry. v. Lyles, 797 So. 2d 432, 435 (Ala.2001).
Act No. 194 also provided for a refund in the event of a successful "appeal from any final assessment made by the [department of revenue] under any assessment required by law to be made by the [department of revenue]." Act No. 194, § 103, 1935 Ala. Acts 256, codified as amended at Ala.Code 1940, Tit. 51, § 140; Ala.Code 1975, § 40-2-22; repealed, Act No. 92-186, 1992 Ala. Acts 349, codified at Ala.Code 1975, § 40-2A-1 et seq. Section 40-2-22 provided, in pertinent part:
(Emphasis added.)
"The right of appeal [was] clearly statutory and [could only] be exercised in the mode and within the prescribed time." Sparks v. Brock &amp; Blevins, Inc., 274 Ala. 147, 149, 145 So. 2d 844, 846 (1962). "[A] final assessment of the Department of Revenue unappealed from [was] as conclusive as a judgment of a circuit court of Alabama, and [could] be impeached only by a direct proceeding not being subject to collateral attack." 274 Ala. at 149, 145 So. 2d  at 846. "Section 40-2-22 [was] jurisdictional; a failure to comply with its requirements [prevented] the circuit court from having jurisdiction to entertain the appeal." State Dep't of Revenue v. Estate of Hill, 505 So. 2d 1240, 1240 (Ala.Civ.App. 1987); see also Dowda v. State, 274 Ala. 124, 145 So. 2d 830 (1962). This was true even where the taxpayer challenged the constitutionality of the tax. Radue v. Bradshaw, 289 Ala. 481, 484, 268 So. 2d 760, 762 (1972); Moore v. State Dep't of Revenue, 447 So. 2d 744 (Ala.Civ.App.1983). Neither § 40-2-22 nor the caselaw construing it contemplated a direct action against the State for a refund.
Additionally, in two former Code sections the Legislature provided an avenue of relief where the taxpayer had not received a final assessment. See Ala.Code 1975, § 40-1-34, repealed and superseded, Act No. 92-186, 1992 Ala. Acts 349, codified at Ala.Code 1975, § 40-2A-1 et seq.; and Ala.Code 1975, § 40-18-43, repealed and superseded, Act. No. 92-186, 1992 Ala. Acts 349, codified at Ala.Code 1975, 40-2A-1 et seq. Section 40-1-34 provided:
(Emphasis added.)
Section 40-18-43, which provided for a refund of income tax paid "through mistake or error," defined the duties of the Department and the comptroller in a manner and with specificity similar to the description in § 40-1-34. Section 40-18-43 also specifically provided:
(Emphasis added.)
The duties imposed on the Department, the comptroller, and the treasurer by §§ 40-1-34 and 40-18-43 were ministerial in nature. See Sparks v. Louisville &amp; Nashville R.R., 277 Ala. 25, 28, 166 So. 2d 865, 868 (1964). However, the right of taxpayers to invoke those statutes depended on the filing of refund petitions within three years of the payment of the challenged taxes. Southern Natural Gas Co. v. State, 261 Ala. 222, 228, 73 So. 2d 731, 736-37 (1953); see also Curry v. Johnston, 242 Ala. 319, 6 So. 2d 397 (1942). Thus, for relief by a writ of mandamus, compliance with these sections was mandatory.
In short, nothing in the refund statutes discussed above, or in this Court's caselaw construing those statutes, suggests to the reasonable taxpayer that anything less than strict statutory compliance is sufficient to support a right to a tax refund from the State. This refund scheme was held to provide taxpayers a "plain, speedy and efficient remedy," within the context of the Tax Injunction Act, 28 U.S.C.A. § 1341. Melof v. Hunt, 718 F. Supp. 877 (M.D.Ala.1989).
In apparent reliance on the rationale of Sparks, the Taxpayers contend that this action merely seeks the performance of a ministerial act, a species of relief not barred by § 14. See Aland supra. A "duty is ministerial, when the law, exacting its discharge, prescribes and defines the time, mode and occasion of its performance, with such certainty that nothing remains for judgment or discretion." Grider v. Tally, 77 Ala. 422, 425 (1884) (emphasis added). "Official action, the result of performing a certain and specific duty arising from fixed and designated facts, is a ministerial act." Id.
During oral argument, counsel for the Taxpayers stated:
At first glance, this argument seems plausible. Closer scrutiny, however, reveals its inherent weakness, namely, the Taxpayers' determination to ignore the TBOR and proceed outside the statutory scheme. To be sure, refunding taxes paid through a mistake or error isin some contextsa ministerial act, but it is so only because the statutes make it so. It is ministerial because of the specificity with which the Legislature defined the duties of the taxing officials.
The Taxpayers cannot have it both ways. They cannot bring themselves within the statutory framework for one purpose and exclude themselves for other purposes. If they would reap the benefits of the TBOR, they must likewise bear its burdens. Thus, the Taxpayers' reliance on the ministerial-act exception to sovereign immunity is misplaced.
The cases the Taxpayers cite are not contrary to these principles. Specifically, they cite Mingledorff v. Vaughan Regional Medical Center, Inc., 682 So. 2d 415 (Ala.1996); White v. Sims, 470 So. 2d 1191 (Ala.1985); Eagerton v. Williams, 433 So. 2d 436 (Ala.1983); and Thorn v. Jefferson County, 375 So. 2d 780 (Ala.1979). Those cases are distinguishable, because they all involved disputes with counties over ad valorem taxes. However, counties do not enjoy immunity under § 14. Ex parte Sizemore, 611 So. 2d 1069, 1070 (Ala. 1993) (Houston, J., dissenting from quashing writ of certiorari to the Court of Civil Appeals).
They also cite Graves v. McDonough, 264 Ala. 407, 88 So. 2d 371 (1956). Graves, however, was a declaratory-judgment action arising out of a taxpayer's claim for a refund "of taxes paid ... on an erroneous escape assessment made by the tax assessor on certain improvements to" real estate owned by the taxpayer. 264 Ala. at 408, 88 So. 2d  at 372. Moreover, the Court particularly noted: "[The attorney general] is not insisting that this is a suit against the state in violation of section 14 of the Constitution." 264 Ala. at 409, 88 So. 2d  at 373 (emphasis added).
The Taxpayers also rely on two recent opinions of the Court of Civil Appeals. Monroe v. Valhalla Cemetery Co., 749 So. 2d 470 (Ala.Civ.App.1999), cert. denied, 529 U.S. 1022, 120 S. Ct. 1426, 146 L. Ed. 2d 317 (2000); and Sizemore v. Rinehart, 611 So. 2d 1064 (Ala.Civ.App.1992), writ quashed, 611 So. 2d 1069 (Ala.1993). Monroe and Rinehart were direct class actions seeking refunds from the State.
In Monroe, the Court of Civil Appeals reached the merits of a challenge to the constitutionality of Act No. 97-301, 1997 Ala. Acts 522, which retroactively barred taxpayers' rights to refunds of use taxes "paid on goods purchased from out-of-state vendors and delivered into Alabama," 749 So. 2d  at 473, over the Commissioner's objection that that court lacked jurisdiction because the taxpayer had failed to comply with the Act. The court stated:
749 So. 2d  at 473 (emphasis added). The Commissioner did not challenge that holding, because the court held in favor of the Department on the merits. Nevertheless, she contends that the jurisdictional issue in Monroe was wrongly decided.
The plaintiff class in Rinehart was comprised of "all former members of the United States Armed Forces or their survivors, who were subject to payment of Alabama state income tax on their military retirement benefits and survivor benefits, or who had previously paid [such tax]." 611 So. 2d  at 1065. The action challenged the constitutionality of State statutes taxing the benefits received by the class differently than "retirement benefits" received by individuals "due to their state employment." Id.
The trial court held that the statutory scheme was "void and illegal as a violation of the constitutional doctrine of intergovernmental tax immunity." 611 So. 2d  at 1066. It ordered refunds "of all [such] taxes paid within three years prior to the date that the class filed its complaint." Id. The Court of Civil Appeals affirmed.
This Court initially granted the Commissioner's petition for certiorari review. Subsequently, however, over the strenuous dissent of Justice Houston, the Court quashed the writ as improvidently granted. Ex parte Sizemore, 611 So. 2d  at 1070 (Houston, J., dissenting). Justice Houston reasoned that an action seeking a refund of income taxes paid on retirement benefits was an impermissible "action against the state, seeking as a remedy funds from the state treasury." Id. at 1070.
It is a familiar principle of law that "[a] denial of certiorari should never be considered as an expression by the reviewing court on the merits of the controversy." Ex parte Jefferson County Dep't of Human Res., 555 So. 2d 1077, 1077 (Ala.1990); Ex parte Buse, 549 So. 2d 1344, 1344 (Ala.1989); Ex parte Ford, 514 So. 2d 1060, 1060 (Ala.1987); Ex parte Glasco, 513 So. 2d 61, 61 (Ala.1987); Ex parte McDaniel, 418 So. 2d 934, 935 (Ala.1982); Causey v. State, 374 So. 2d 413, 414 (Ala. 1979). See also Hamilton-Brown Shoe Co. v. Wolf Bros., 240 U.S. 251, 36 S. Ct. 269, 60 L. Ed. 629 (1916). Litigants who rely on opinions of intermediate appellate courts that conflict with opinions of the jurisdiction's highest court do so at their own risk. Cf. Brinkerhoff-Faris Trust &amp; Sav. Co. v. Hill, 281 U.S. 673, 682 n. 9, 50 S. Ct. 451, 74 L. Ed. 1107 (1930); Stone Container Corp. v. United States, 229 F.3d 1345, 1351 (Fed.Cir.2000), cert. denied sub nom., Smurfit-Stone Container Corp. v. United States, 532 U.S. 971, 121 S. Ct. 1601, 149 L. Ed. 2d 468 (2001).
Moreover, Monroe was decided in 1999. Thus, it could provide no basis for an action commenced in 1996, as this one was. We hold that compliance with the TBOR is the exclusive means to a franchise-tax refund, and we hereby overrule Monroe and Rinehart to the extent that they are inconsistent with this holding. Our holding is compelled by our sovereign-immunity jurisprudence and does not constitute a Reich "bait-and-switch." The reasonable taxpayer contemplating a forum for franchise-tax refunds had no reason to believe that a direct action against the State was permitted under Alabama law. The TBOR is jurisdictional on its face. See § 40-2A-7(c)(5)c.; § 40-2A-9(g)(1).
In this connection, the Commissioner asserts that approximately 2,500 foreign corporationsincluding the plaintiffs in South Central Bell Telephone Co. v. Alabama, 526 U.S. 160, 119 S. Ct. 1180, 143 L.Ed.2d *154 258 (1999)have properly invoked the TBOR in their quest for refunds. For all that appears, ACC may still prosecute its individual claim for refunds in the proceeding it commenced under the TBOR before it joined this action. What the Taxpayers may not do is prosecute this action.
Federal due process does not require Alabama to permit a direct action against the State for a tax refund. South Cent. Bell Tel. Co. v. State, 789 So. 2d 147, 149 (Ala.2000) (under McKesson Corp. v. Division of Alcoholic Beverages &amp; Tobacco, 496 U.S. 18, 110 S. Ct. 2238, 110 L. Ed. 2d 17 (1990), it is not a violation of due process for a State to "bar[] a refund to a taxpayer that did not follow a state procedural law in seeking the refund"). Cf. Waldron v. Collins, 788 F.2d 736 (11th Cir.1986) (Tax Injunction Act does not require states to provide taxpayer relief through a class action); Melof v. Hunt, 718 F. Supp. 877, 884 (M.D.Ala.1989) (same).
For the foregoing reasons, we hold that the Taxpayers' class action seeking a refund of franchise taxes paid pursuant to Alabama's invalid statutory scheme is an action against the State as that concept is expressed in § 14. If, "at any stage of the proceedings," the trial court, or this Court, "becomes convinced that [the action] is a suit against the State and contrary to Sec. 14 of the Constitution," it must dismiss the action. Aland v. Graham, 287 Ala. 226, 229, 250 So. 2d 677, 678 (1971). Because the circuit court was without jurisdiction to entertain this action, we vacate the trial court's class-certification order and dismiss the action.[3]
ORDER VACATED; ACTION DISMISSED.
MOORE, C.J., and HOUSTON, LYONS, BROWN, JOHNSTONE, HARWOOD, and STUART, JJ., concur.
SEE, J., recuses himself.
[1]  Underwood is the current Commissioner, and has been substituted for Michael L. Patterson, her predecessor, in this action, pursuant to Ala. R. Civ. P. 25.
[2]  Act No. 194, entitled "An Act to Provide for the General Revenue of the State of Alabama," was "not only a general revenue act, but also adopted a revenue code that was the source of most of the `Revenue and Taxation' title, title 40, of the 1975 Code of Alabama." Childree v. Hubbert, 524 So. 2d 336, 339 (Ala. 1988). Its refund sections were scattered throughout the 1940 Code, the 1958 Code (Recompiled), and the 1975 Code. The TBOR, which repealed those sections, purported to "provide equitable and uniform procedures for the operation of the department and for all taxpayers when dealing with the department." Ala.Code 1975, § 40-2A-2.
[3]  In Ex parte Monroe, 723 So. 2d 15 (Ala. 1998). the first appeal of this action, this Court was not apprised of Gladwin's failure to proceed under the TBOR. Thus, the Court had no reason to suspect the absence of subject-matter jurisdiction.