Title: GEN. MOTORS ACCEP. CORP. v. City of Red Bay
Citation: 894 So. 2d 650
Docket Number: 1021294
State: Alabama
Issuer: Alabama Supreme Court
Date: June 25, 2004

894 So. 2d 650 (2004)
GENERAL MOTORS ACCEPTANCE CORPORATION
v.
CITY OF RED BAY et al.
1021294.

Supreme Court of Alabama.
June 25, 2004.
*651 David E. Rains and D.W. Wilson of Tanner &amp; Guin, LLC, Tuscaloosa; and Bruce P. Ely of Bradley Arant Rose &amp; White, L.L.P., Birmingham, for appellant.
Brian W. Warwick and Janet R. Varnell of Varnell &amp; Warwick, P.A., The Villages, Florida; and Jeffrey L. Bowling and Robert I. Rogers, Jr., of Bedford, Rogers &amp; Bowling, Russellville, for appellees.
Mary Ellen Wyatt Harrison, Montgomery, for amicus curiae Alabama League of Municipalities, in support of the appellees.
S. Dagnal Rowe of Wilmer &amp; Lee, P.A., Huntsville; and Stephen J. Harburg and Charles E. Borden of O'Melveny &amp; Myers, LLP, Washington, D.C., for amici curiae Alliance of Automobile Manufacturers, Association of International Automobile Manufacturers, American Financial Services Association, Council on State Taxation, and American Automotive Leasing Association, in support of the appellant.
Robert A. Huffaker and R. Austin Huffaker, Jr., of Rushton, Stakely, Johnston &amp; Garrett, P.A., Montgomery, for amici curiae Automobile Dealers Association of Alabama, Inc., and Business Council of Alabama, Inc., in support of the appellant.
William H. Pryor, Jr., atty. gen., and Henry C. Chappell, chief counsel and deputy atty. gen., Department of Revenue, for amici curiae State of Alabama and Alabama Department of Revenue, in support of the appellant.
LYONS, Justice.
General Motors Acceptance Corporation ("GMAC"), the defendant in an action pending in the Franklin Circuit Court, appeals from a class-certification order obtained by the named plaintiffs in this case, the City of Red Bay and Franklin County. We vacate the class-certification order and remand.
This is the second class-certification order the trial court has entered in this case. We vacated the first order and remanded the cause for further proceedings. General Motors Acceptance Corp. v. City of Red Bay, 825 So. 2d 746 (Ala.2002). In that opinion we summarized the following facts and procedural history of the case:
825 So. 2d  at 747-48.
We concluded that the trial court had not conducted the rigorous analysis required by § 6-5-641(e), Ala.Code 1975, to determine whether the City and the County had met their burden of proving that the requirements of Rule 23, Ala. R. Civ. P., had been satisfied. We therefore vacated the class-certification order and remanded the case for the trial court to conduct the required rigorous analysis. After further proceedings, the trial court again entered a class-certification order certifying the following classes:
The dispositive issue on GMAC's appeal from this class-certification order is whether the failure of the City and the County to *653 comply with the provisions of the Alabama Taxpayers' Bill of Rights and Uniform Revenue Procedures Act, § 40-2A-1 et seq., Ala.Code 1975 ("the TBOR"), deprived the trial court of jurisdiction to consider the class action filed by the City and the County.
The TBOR prescribes uniform procedures that must be followed in assessing and collecting taxes. § 40-2A-1 and -2. Pursuant to the TBOR, the State Department of Revenue ("the Department") is required to provide a taxpayer with notice of any planned audit of the taxpayer's books and records; with a statement of the taxpayer's procedural rights, including the right to an administrative review of a preliminary assessment; and with a written description of the grounds for any claimed underpayment or nonpayment of a tax. § 40-2A-4. A taxpayer has the right to the entry of a preliminary assessment stating the specific amount of taxes the Department claims the taxpayer owes, which must be either mailed or personally delivered to the taxpayer. § 40-2A-7. The taxpayer is then entitled to dispute the preliminary assessment by filing a petition for review with the Department. If the parties are unable to resolve their differences and the Department determines that the assessment is valid, it must enter a final assessment. The taxpayer may then appeal the assessment to the administrative law division of the Department (or to a similar administrative agency in the event the dispute involves local taxes levied by a municipality or county not administered by the Department) or to the circuit court in the county where the taxpayer resides. § 40-2A-7.
GMAC argues that the City and the County are subject to the TBOR. Therefore, it argues, before the City and the County can seek to collect the sales and rental taxes they claim GMAC owes them, they must first comply with the TBOR by providing a written statement to GMAC of its procedural rights, including the right to administrative review of a preliminary assessment; by providing a written description of the basis for their claim to the taxes owed; and by issuing a preliminary and a final assessment. It is undisputed that the City and the County have not taken any action required by the TBOR.
The City and the County argue that the TBOR does not apply to local taxing jurisdictions. We disagree.
The requirements of the TBOR were directed initially to the Department. However, the Local Tax Simplification Act of 1998, Act No. 98-192, Ala. Acts 1988 ("the LTSA"), made the TBOR equally applicable to tax assessments and tax-collection procedures by local taxing authorities such as the City and the County. As to municipalities, the LTSA amended § 11-51-201, Ala.Code 1975, to provide:
As to counties, the LTSA amended § 11-3-11.2, Ala.Code 1975, to provide:
The Alabama Administrative Code (Department of Revenue), implementing the TBOR, sets forth the following regulations:
Ala. Admin. Code (Department of Revenue) r. 810-14-1-.01 (emphasis added).
The City and the County ask us to restrict the Department's embrace of the TBOR as applicable to counties and municipalities, arguing that if the Legislature had intended for the TBOR to apply to all counties and municipalities, it could have so specified. In their brief to this Court, the City and the County contend that "only the `direct pay permit and drive-out certificate procedures, statutes of limitations, penalties, fines, punishments, and deductions' of § 40-2A-7 of the TBOR are applicable to municipalities under § 11-51-201 as a result of the [LTSA]. Because the administrative remedies contained within § 40-2A-7 are not specifically listed, they do not apply." They further contend that § 11-3-11.2 "merely clarifies that `[a]ny rules and regulations adopted or utilized by the county or its designee shall be consistent with the rules and regulations adopted through the provisions of the Alabama Administrative Procedures Act [§ 41-22-1 et seq., Ala.Code 1975].' Nothing in this section requires that a county must undergo administrative remedies prior to filing suit."
We do not read the language of the TBOR, the LTSA, and the regulations adopted by the Department so narrowly. The statutes amended by the LTSA clearly adopt the administrative rules and regulations promulgated by the Department to implement the TBOR, thus making municipalities and counties subject to the statutory mandates applicable to both taxing authorities and taxpayers alike when enforcing the State's tax laws.
GMAC also points to § 40-2A-13(a) of the TBOR, which further provides:
They contend that § 11-3-11.2, § 11-51-201, and § 40-2A-13(a) combine to obligate municipalities and counties to follow the Department's tax-collection procedures *655 and to comply with the TBOR in the same manner as the Department must.
In response to this contention, the City and the County argue that § 40-2A-13(a) of the TBOR deals exclusively with examining a taxpayer's books and records and does not make the provisions of the TBOR applicable to cities and counties. The fact that the Legislature specifically listed municipalities and counties in § 40-2A-13(a), they argue, indicates that the Legislature intended that only certain sections of the TBOR apply to local taxing entities. Again, we find this argument a narrow and strained interpretation of the TBOR and the LTSA. It ignores the fact that the LTSA was passed at the very same session of the Legislature as, and became effective on the same day as, the act codified as § 40-2A-13. We decline to read one section of the statutory scheme in isolation. When we consider both the TBOR and the LTSA in their entirety, we can only conclude that the TBOR applies not only to the Department and taxpayers, but also to municipalities and counties.
Furthermore, local laws pertaining to the City and the County also indicate that they are obligated to comply with the same statutory provisions as those that regulate the Department, including the TBOR. The City's Ordinance No. 87-1-5 provides:
Act No. 441, Ala. Acts 1969, applicable to the County, provides:
The City and the County also argue that compliance with the TBOR is not jurisdictional and that they were not required to exhaust the administrative remedies of the TBOR because of the exception to the exhaustion-of-remedies doctrine that applies when questions of law and statutory construction predominate over questions of fact. Again, we disagree.
This Court addressed the TBOR in Patterson v. Gladwin Corp., 835 So. 2d 137 (Ala.2002). In Patterson, a corporate taxpayer brought a class action against the Department seeking refunds of corporate franchise taxes. The taxpayer attempted to rely on exceptions to the exhaustion-of-remedies doctrine as authority for bypassing the requirements of the TBOR. Although the Court noted that Alabama recognizes the doctrine of exhaustion of administrative remedies and that that doctrine "`is a judicially imposed prudential limitation, not an issue *656 of subject-matter jurisdiction,'" 835 So. 2d  at 142, the Court did not accept the taxpayer's argument that it need not exhaust administrative remedies when seeking a refund of taxes from the Department. The Court held that compliance with the TBOR is the exclusive means for obtaining a franchise-tax refund, and explicitly stated that "[t]he TBOR is jurisdictional on its face. See § 40-2A-7(c)(5)c; § 40-2A-9(g)(1)." 835 So. 2d  at 153. See also State v. Amerada Hess Corp., 788 So. 2d 179 (Ala.Civ.App.2000), in which the Court of Civil Appeals dismissed an action by the Department to recover severance taxes on the basis that the trial court lacked jurisdiction over the action because the Department had failed to follow the TBOR.
Because the failure of the City and the County to comply with the provisions of the TBOR before filing their complaint deprived the trial court of jurisdiction, we vacate the class-certification order and remand the cause for the trial court to enter an order of dismissal. Because we conclude that the class-certification order must be vacated, we need not address the other issues raised by GMAC.
ORDER VACATED; CAUSE REMANDED.
HOUSTON, SEE, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART,[*] JJ., concur.
[*]  Although Justice Stuart was not present for oral argument, she has viewed the videotape of oral argument.