Opinion ID: 6350437
Heading Depth: 2
Heading Rank: 2

Heading: the district court erred when it dismissed the

Text: COVE’S SECOND CAUSE OF ACTION ¶49 The district court granted the Service District’s motion to dismiss the Cove’s second cause of action requesting a refund of the monies paid to the Service District. By way of reminder, the Cove asserts that the monies its members pay to the Service District are best characterized as a service fee. The Service District argued in its motion to dismiss that the assessment was a tax. That matters because, as the Service District argues, if the assessment is a tax, it must be challenged under the Utah Tax Act. That is something the Cove did not do. The district court granted the motion because it concluded that this court had considered this precise question and determined that the levy is a tax in Mawhinney v. City of Draper, 2014 UT 54, 342 P.3d 262.6 ¶50 The Cove argues that this was error because the part of Mawhinney the district court relied on is dicta. According to the Cove, this court simply took it as a given that the levy was a tax because that is what the parties called it and the tax/fee question was not at issue in that case. The Cove contends that as a result, this court never analyzed whether the monies paid to the Service District were a tax or a service fee. We agree. ¶51 In Mawhinney, a number of Draper residents, upset that the Draper City Council had imposed the levy, gathered enough signatures to refer the question of whether the City should collect the levy to the voters. Id. ¶ 4. Draper City refused to put the issue on the ballot, reasoning that the imposition of the fee was a non-referable administrative action. Id. The residents filed a petition for extraordinary relief. Id. ¶¶ 4–6. ¶52 The referendum proponents appeared pro se in front of this court. Id. ¶ 1. In their briefing and arguments, the proponents characterized the levy as a tax, and argued that the City had wielded legislative power when it voted on the resolution approving that tax. Id. ¶¶ 7, 15. Draper City also called the levy a tax but argued that the levy was nothing more than the administration of an already approved tax. Id. ¶ 2. Draper City argued that because administrative actions are not the proper subject of referenda, the _____________________________________________________________ 6 To the extent it is not clear, we underscore that the funding mechanism Mawhinney considered is the same funding mechanism at issue in this matter. 15 THE COVE AT LITTLE VALLEY v. TRAVERSE RIDGE SPECIAL SERVICE DISTRICT Opinion of the Court citizens had no right or ability to place the issue to the voters. Id. We ultimately held that the resolution approving the levy was the product of legislative power and subject to referendum. Id. ¶ 15. ¶53 The district court read this and concluded that we had definitively determined that the assessment was a tax. But we did not. A careful read of Mawhinney reveals that we never questioned the way the parties had characterized the levy. Nor did we need to because the distinction between a tax and a fee was not necessary to the outcome of the case. This means that our use of the word “tax” was dicta and does not control the outcome of the Cove’s motion to dismiss. ¶54 The distinction between a holding and dictum depends on “whether the solution of the particular point was more or less necessary to determining the issues involved in the case.” BRYAN A. GARNER ET AL., THE LAW OF JUDICIAL PRECEDENT 51 (2016). ¶55 The issue presented in Mawhinney centered on whether the funding mechanism—whatever label we might put on it—was legislative or administrative. The answer to that question would not have been impacted by whether Draper City called it a tax or a service fee. The parties never asked us to consider whether the funds were generated by taxes or fees. We simply followed the parties’ lead in calling it a tax and the district court, quite understandably, followed ours. Unfortunately, that resulted in the district court erring here when it concluded that the Service District is funded by a tax as a matter of law.7 ¶56 We have not yet had the opportunity to consider whether the Service District is funded by taxes or fees. It is therefore an open _____________________________________________________________ 7 We note that the district court also suggested that its conclusion that “the levy is, in fact, a tax is further supported or confirmed by the language in section 4 of [Resolution 03-05], which makes clear that the territory annexed by the resolution shall be subject to taxation [for] purposes of the Special Service District.” However, nothing in the district court’s order or its language at the hearing on the motion to dismiss suggests that this was an independent reason for finding that the Service District was funded by a tax. Instead, it was merely presented as a fact that reaffirmed the district court’s reading of Mawhinney. We offer no opinion on the district court’s reading of Resolution 03-05. 16 Cite as: 2022 UT 23 Opinion of the Court question that the Cove is entitled to litigate before the district court. We therefore reverse and remand.