Opinion ID: 1242046
Heading Depth: 2
Heading Rank: 3

Heading: Dismissal of Claim Against Glacier State

Text: The superior court also granted a Rule 12(b)(6) motion to dismiss the action against Glacier State, for failure to state a claim upon which relief can be granted. If we were to review the ruling as a proper Rule 12(b)(6) dismissal, considering only the pleadings themselves, we might agree with the Douglases that the superior court erred in granting the motion. The Douglas complaint states: Plaintiff is informed and believes that [Glacier State] may have collected certain money as sales tax which should have been paid to the Borough but ... through either inadvertence or improper accounting, not all money collected for sales taxes was remitted which should have been collected and spent for school purposes. As we have discussed with regard to the equal protection claim against the Borough, Glacier State is liable to the Borough under the terms of the tax ordinance for failing to collect or remit any tax money due on sales of services it has rendered. It was therefore not improper for the Douglases to join Glacier State as a defendant, since relief would ultimately be granted against them should the claim prevail. The record shows, however, that Glacier State submitted evidentiary material outside the pleadings along with this motion to dismiss. Thus, under the rationale enunciated in Martin v. Mears, 602 P.2d 421 (Alaska 1979), discussed above, we have decided to review the grant of the motion as an entry of summary judgment against the Douglases on the question of whether Glacier State has failed to properly collect or remit all tax money properly due under the ordinance. We hold that the superior court was correct in granting the motion, for the reasons discussed below. Central to our decision is whether the Douglases were given reasonable opportunity to present evidentiary material pertinent to a summary judgment motion, as required by Civil Rule 12(b). [26] The Douglases objected to the inclusion of the evidence submitted by Glacier State along with its motion, so it may be assumed that they expected the motion to be treated as a proper Rule 12(b)(6) motion. At the time the motion was heard, however, it appears from the record that the Douglases had marshalled no evidence tending to show that Glacier State had failed to collect or remit any taxes due to the Borough, despite the passage of over a year since it became clear that this would be the only claim for relief possible against Glacier State. [27] Therefore it is appropriate to consider whether the Douglases could have availed themselves of the opportunity to present evidence to oppose Glacier State's motion if the superior court had expressly invited them to do so. [28] Central to this question are various discovery motions denied to the Douglases which they allege impaired their ability to obtain evidence concerning the collection of taxes by Glacier State. One of these motions, an application to depose the Borough auditor, was filed one and a half months after the motion to dismiss Glacier State was granted. We therefore cannot say the superior court abused its discretion in denying it. Another motion was to compel production of a contractual document describing the division of long-distance call revenues between Glacier State and R.C.A.-Alascom, the long-distance line carrier. Appellants contend this document was relevant to showing that Glacier State should have collected taxes from R.C.A. for local switching and billing services it sells to R.C.A. as its part of long-distance services to phone customers. Regardless of the mechanics of the division of revenue between Glacier State and R.C.A., we find no merit whatsoever in the contention that a tax defined in the Borough ordinance as a consumer sales tax, validly assessed under the terms of the ordinance against the customers of Glacier State based on the gross charge for the service rendered to them, should also be applied against one of the providers of that service. [29] Discovery rules are to be liberally construed. [30] Normally, protection of information about business relations should not be permitted to thwart that objective. [31] But the superior court has discretion whether or not to order discovery, and discovery related to an insubstantial claim may be refused. [32] Thus we cannot say the superior court abused its discretion in denying discovery of the document. Another motion concerned allegedly inadequate answers to interrogatories submitted to Glacier State by the Douglases. Most of the interrogatories concerned the division of long-distance call revenues between Glacier State and R.C.A., and thus suffer the same defect discussed with respect to the contractual agreement above. One interrogatory asked for the total sum collected by Glacier State and paid over to the Borough for sales taxes on long-distance calls from customers in the Borough. The Douglases desired this information primarily for the purpose of determining how much refund should be due if the tax was determined to be invalid as applied to interborough and interstate calls, a relevant purpose. The information could also be relevant to determining if Glacier State properly remitted all tax monies to the Borough. However, to provide the exact information requested would have involved great expense in recompilation of records by Glacier State, since the company compiled the sales tax on the total monthly billings to customers, which included local as well as long-distance services. It is the total amount of tax collected and remitted which is directly relevant to the Douglases' claim, and which is much more easily obtained. Thus we conclude that denial of discovery was within the superior court's discretion and that no abuse of discretion occurred in this instance. The superior court also denied a request for inspection and copying of all of Glacier State's records pertaining to its collection of sales taxes. These documents are relevant to ascertaining whether Glacier State has properly remitted all sales taxes it has collected from its customers on behalf of the Borough. But the record shows that the Douglases, prior to the granting of the motion to dismiss, had no basis whatsoever beyond their own bare suspicions that Glacier State had failed to remit any tax money, other than the defective claim of failure to collect taxes from R.C.A. [33] When a claim is grounded upon nothing more than conjecture, a trial court can within its discretion deny the kind of wide-ranging, cumbersome discovery sought in the Douglases' motion. Spier v. Home Insurance Co., 404 F.2d 896 (7th Cir.1968). The superior court's denial of discovery seems especially appropriate here, where the motion followed a period of months during which the Douglases failed to depose any officials of the Borough or Glacier State on the subject or otherwise seek information which would develop a factual basis for their claim. It thus appears the Douglases would have failed to meet their burden of demonstrating a genuine issue of fact had they been given an express opportunity to do so at the time the 12(b)(6) motion was granted to Glacier State, and that their ability to do so was not inappropriately impaired by limitations on discovery efforts. Treating the 12(b)(6) motion as one for summary judgment, we conclude the superior court did not err in granting the motion.