Court Opinion

ID: 1033219
Source: CourtListenerOpinion
Date Created: 2013-07-09 19:53:11.554036+00
Date Added: 2024-06-11T12:01:29.214415
License: Public Domain

129 Nev., Advance Opinion IA
       IN THE SUPREME COURT OF THE STATE OF NEVADA

THE STATE OF NEVADA,                                No. 58714
DEPARTMENT OF TAXATION,
Appellant,
vs.
                                                             FILED
CHRYSLER GROUP LLC,                                           MAY 0 2 2013
Respondent.
                                                         CLEh   (A SUPREME  cAlFL
                                                             TRACIE K. LINDEMAN

                                                        BY   M•   Inanu
                                                                    p
                                                                DEPUTY CLERK

           Appeal from a district court order granting a petition for
judicial review in a tax action. Eighth Judicial District Court, Clark
County; David B. Barker, Judge.
           Reversed.

Catherine Cortez Masto, Attorney General, Deonne E. Contine, Senior
Deputy Attorney General, and Jedediah R. Bodger, Deputy Attorney
General, Carson City,
for Appellant.

Kolesar & Leatham and Kenneth A. Burns, Las Vegas; Akerman
Senterfitt and Peter 0. Larsen, Jacksonville, Florida,
for Respondent.

BEFORE HARDESTY, PARRAGUIRRE and CHERRY, JJ.

                                  OPINION

By the Court, HARDESTY, J.:
           Respondent Chrysler Group, LLC, a motor vehicle
manufacturer, reimbursed two buyers of defective vehicles the full
purchase price, including sales tax, pursuant to Nevada's lemon law.

                                                                13 -- 1N))
                Chrysler subsequently sought from appellant Department of Taxation
                refunds of the sales taxes that the vehicles' retailers had collected and
                remitted when they originally sold the vehicles to the buyers. Although
                the Department had previously refunded lemon law sales tax
                reimbursements to manufacturers, it denied Chrysler's refund requests
                because the Nevada Attorney General's Office advised the Department
                that there is no statutory authority for such refunds. In this appeal, we
                are asked to determine whether Chrysler is entitled to a sales tax refund
                under NRS 597.630, Nevada's lemon law; NRS 372.630, Nevada's sales
                and use tax refund statute; and NRS 372.025, Nevada's statute governing
                gross receipts for retailers, or if Chrysler is otherwise entitled to a refund
                because the Department previously granted such refunds. Because
                Nevada law does not allow for such a refund and because the Department
                is not required to adhere to its prior erroneous interpretation of the law,
                we conclude that Chrysler is not entitled to a refund.
                                  FACTS AND PROCEDURAL HISTORY
                            Chrysler's requests for refunds were based on a prior written
                Department policy in effect since at least 2005 to refund to manufacturers
                the sales taxes reimbursed under the lemon law. The Department
                changed this policy in 2009 after being informed by the Nevada Attorney
                General's Office that refunding the sales tax was not appropriate under
                Nevada's statutory scheme. Thus, Department auditors denied Chrysler's
                refund requests because the Department's legal counsel advised the
                auditors that there was no statutory authority in Nevada permitting the
                Department to issue the requested sales tax refunds.
                            Chrysler appealed these decisions to the Department's
                hearings division, where they were considered together and reversed by an
                administrative law judge. The administrative law judge found that the
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                tax was an overpayment to the Department because reimbursement of the
                full purchase price to the buyer resulted in a statutory rescission of the
                underlying sales contract. As such, the administrative law judge found
                that Chrysler was entitled to a refund of the sales tax because Chrysler
                had borne the economic burden of the tax by being required to refund it
                pursuant to the lemon law.
                            The Department appealed this decision to the Nevada Tax
                Commission (NTC), which reversed the hearing division's decision because
                it concluded that neither the lemon law nor Nevada's tax statutes
                expressly authorized reimbursing vehicle manufacturers for any taxes
                repaid to buyers under the lemon law. Chrysler then filed a petition for
                judicial review of the NTC's decision in the district court. The district
                court granted the petition for judicial review, concluding that Chrysler
                was entitled to a refund because, when Chrysler repaid the sales taxes to
                the buyers, its repayment statutorily rescinded the underlying sales
                transactions and rendered the sales tax an overpayment to the
                Department. This appeal followed.
                                              DISCUSSION
                            The Department contends that the district court erred in
                overturning the NTC's decision because there is no statutory authority
                permitting it to provide vehicle manufacturers a refund of sales taxes they
                reimburse to buyers under Nevada's lemon law. Chrysler asserts that it is
                entitled to a refund based on taxes it reimbursed to buyers under NRS
                597.630, Nevada's lemon law; NRS 372.630, Nevada's sales and use tax
                refund statute; and NRS 372.025, Nevada's statute governing gross
                receipts for retailers. Chrysler further argues that it is entitled to a
                refund given the Department's prior policy of granting such refunds. We
                disagree with both of Chrysler's contentions.
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            "Statutory interpretation is a question of law that we review
de novo." Consipio Holding, BV v. Carlberg, 128 Nev. „ 282 P.3d
751, 756 (2012). "It is well established that the court must interpret
statutes consistent with the intent of the [L]egislature."        Steward v.
Steward, 111 Nev. 295, 302, 890 P.2d 777, 781 (1995). Thus, when a
statute's language is plain and unambiguous, we give that language its
ordinary meaning. Consipio Holding, 128 Nev. at , 282 P.3d at 756.
            Under NRS 579.630, Nevada's lemon law, a vehicle
manufacturer must replace or repurchase any vehicle that fails to conform
to the manufacturer's warranties "after a reasonable number of [repair]
attempts," when the vehicle has an irreparable defect that "substantially
impairs the use and value of the motor vehicle." NRS 597.630(1). If it
elects to repurchase the vehicle, a manufacturer must refund the full
purchase price, less a reasonable amount to account for the buyer's use.
NRS 597.630(1)(b). The full purchase price includes "all sales taxes,
license fees, registration fees and other similar governmental charges."
Id. NRS 597.630 is silent as to whether a vehicle manufacturer is entitled
to a refund for the amount of sales tax it reimburses to a buyer.'
Accordingly, no refund is directly provided for within that statute.

      'Other state lemon laws expressly address this issue. These states
either provide for such a refund, see, e.g., Ariz. Rev. Stat. Ann. § 44-
1263(D) (2012) (West); Cal. Civ. Code § 1793.25(a) (West 2013), or require
only that manufacturers provide notice or forms to a buyer that assist the
buyer in seeking reimbursement of sales taxes from the appropriate tax
authority. See, e.g., Md. Code Ann., Corn. Law § 14-1503(c) (LexisNexis
2005) (the manufacturer must instruct the consumer to seek a refund from
the appropriate agency); N.Y. Gen. Bus. Law § 198-a(c)(2) (McKinney
2012) (same).

                                      4
                            Notwithstanding the lemon law's silence on the matter,
                Chrysler argues that it is entitled to a tax refund pursuant to NRS
                372.630, Nevada's sales and use tax refund statute. NRS 372.630(1)
                requires the Department to refund any amount of taxes that were "paid
                more than once or. . . erroneously or illegally collected," and that "the
                excess amount collected or paid must. . . be refunded to the person [who
                overpaid the tax]." Thus, under the plain language of NRS 372.630, the
                only party who can receive a tax refund is the party that paid the tax.
                Similarly, NRS 372.700 states that only a person who paid the tax may
                seek a tax refund from the Department. In State v. Obexer & Son, we
                recognized the standing requirement set forth in these statutes when we
                stated that Nevada's tax refund statutes "permit recovery only where the
                taxpayer himself has borne the financial burden of the tax," and that "[i]f
                the taxpayer making the claim has collected the tax from his customers,
                he has suffered no loss or injury, and is not entitled to a credit or refund."
                99 Nev. 233, 238, 660 P.2d 981, 984 (1983).
                            Here, Chrysler did not remit the sales tax that it reimbursed
                to buyers to the Department of Taxation. Furthermore, Chrysler's
                obligation to reimburse sales tax to buyers is a statutory obligation
                imposed by NRS Chapter 597, which is wholly separate from a taxpayer's
                rights and obligations under NRS Chapter 372. Because Chrysler did not
                remit the sales taxes to the state, Chrysler lacks standing to seek a sales
                tax refund under NRS 372.630.
                            Alternatively, Chrysler argues that a full reimbursement
                pursuant to the lemon law statute is analogous to a full returned
                merchandise refund in a retail transaction, for which no sales tax is due.
                Specifically, Chrysler argues that when buyers return vehicles to Chrysler

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                   and Chrysler reimburses them for the full purchase price and sales tax,
                   the original sales taxes are no longer considered taxable gross receipts
                   under NRS 372.025 and became refundable overpayments to the
                   Department.
                               By its own terms, NRS 372.025 only applies to retailers, not
                   manufacturers. The amount of sales tax imposed on a retailer is
                   determined by the "[dross receipts'. . . of the retail sales of retailers."
                   NRS 372.025(1) (emphasis added); see also NRS 372.105. A "retailer" is
                   defined as: le] very seller who makes any retail sale or sales of tangible
                   personal property. . ."; "[e]very person engaged in the business of making
                   sales for storage, use or other consumption. . . of tangible personal
                   property. ."; or lelvery person making more than two retail sales of
                   tangible personal property during any 12-month period." NRS
                   372.055(1)(a)-(c). As Chrysler admits, it is not a retailer, and thus, we
                   conclude that Chrysler cannot rely on NRS 372.025 in conjunction with
                   Nevada's lemon law statute to claim a refund of the sales taxes.
                   Accordingly, we conclude that neither NRS 597.630, nor NRS 372.630, nor
                   NRS 372.025 entitles a vehicle manufacturer that reimburses a buyer
                   with the full purchase price of a vehicle, including sales tax, to a sales tax
                   refund.
                               Our conclusion is consistent with the approach taken by the
                   Connecticut Supreme Court. Connecticut has a lemon law statute, Conn.
                   Gen. Stat. § 42-179 (1998), containing language similar to Nevada's, which
                   also does not provide manufacturers with refunds of reimbursed sales
                   taxes. In interpreting that statute, the Connecticut Supreme Court held
                   that manufacturers were not entitled to sales tax refunds because its
                   lemon law contains "no express indication that the legislature intended to

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                permit the manufacturer to recover any of the. . . sales tax required to be
                refunded to the consumer." DaimlerChrysler Corp. v. Law, 937 A.2d 675,
                686 (Conn. 2007). The Connecticut court reasoned that refunding the
                sales tax to manufacturers does not advance its lemon law's "concerns of
                consumer protection," but instead "undermine [s] the incentive to provide
                nondefective products to consumers." Id. at 685.
                            We agree with the approach taken by Connecticut and note
                that the legislative intent behind Nevada's lemon law was to protect
                buyers who purchase defective new vehicles.        See Hearing on A.B. 59
                Before the Assembly Comm. on Commerce, 62d Leg. (Nev., February 16,
                1983); see also Milicevic v. Mercedes-Benz USA, LLC,      256 F. Supp. 2d
                1168, 1175 (D. Nev. 2003) (noting that Nevada's lemon "law was designed
                to protect" buyers of defective vehicles). Refunding a vehicle manufacturer
                for reimbursed sales taxes will not create an incentive for the vehicle
                manufacturer to manufacture nondefective vehicles. The Legislature has
                not included this remedy in Nevada's lemon law, and Chrysler provides no
                evidence that the Legislature intended to refund manufacturers for
                reimbursed sales tax. Accordingly, we decline to read this remedy into the
                statute, and we conclude that vehicle manufacturers are not entitled to a
                refund of reimbursed sales tax. 2

                      2 Because denial of the sales tax refund is consistent with the
                remedial purpose of the statute, we reject Chrysler's argument that this
                improperly transforms the lemon law into a punitive statute. We further
                reject Chrysler's argument that construing the lemon law to deny
                manufacturers a refund violates the Separation of Powers Clause of the
                Nevada Constitution. See Nev. Const. art. 3, § 1. By denying such
                refunds, the Department is not taking any affirmative action under the
                lemon law, and thus, it is not improperly performing legislative duties.
                See id.

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             Chrysler also argues, apparently in an attempt to estop the
Department from arguing that no refund is due, that the Department
violated the Nevada Administrative Procedure Act (APA), NRS Chapter
233B, when it changed its prior policy allowing sales tax refunds for lemon
law payments to its current policy denying such refunds. 3 An agency
violates the APA if it engages in rulemaking without following the APA's
procedural requirements.     Labor Comm'r v. Littlefield, 123 Nev. 35, 39,
153 P.3d 26, 29 (2007). Rulemaking occurs when an agency "promulgates,
amends, or repeals Uri agency rule, standard, directive[,] or statement of
general applicability which effectuates or interprets law or policy." Id. at
39-40, 153 P.3d at 29 (alteration in original) (quoting NRS 233B.038(1)(a)).
Generally, before an agency can engage in rulemaking, it must provide
notice to interested parties and give those parties an opportunity to oppose
the proposed rule. NRS 233B.060(1)(a); NRS 233B.061(1).
             A statement of general applicability is a policy or rule that
applies to multiple parties in a similar manner. See Public Serv. Comm'n
v. Southwest Gas, 99 Nev. 268, 273, 662 P.2d 624, 627 (1983) (holding that
an administrative order directed at one utility company had "general
applicability" because it affected "other gas utilities and their customers").
Here, because the Department's change in policy affects all vehicle

      3 1naddition, Chrysler argues that it is entitled to a refund because
an administrative law judgment granted one upon similar facts in the past
and, because the statutes have not since been amended, there is no legal
basis for a different decision. We reject this argument because
"administrative agencies are not bound by stare decisis." Motor Cargo v.
Public Service Comm'n, 108 Nev. 335, 337, 830 P.2d 1328, 1330 (1992); see
also Desert Irrigation, Ltd. v. State of Nevada, 113 Nev. 1049, 1058, 944
P.2d 835, 841 (1997) ("[N]o binding effect is given to prior administrative
determinations.").
                manufacturers whose vehicles are sold in Nevada, it is a statement of
                general applicability. However, we have previously held that "Where is no
                reason to require the formalities of rulemaking whenever an agency
                undertakes to enforce or implement the necessary requirements of an
                existing statute." K-Mart Corporation v. SIIS, 101 Nev. 12, 17, 693 P.2d
                562, 565 (1985).
                            Additionally, other jurisdictions do not require an agency to
                use the formal rulemaking process when correcting a policy that is based
                on an erroneous interpretation of the law.    See, e.g., Amerada Hess Corp.
                v. State ex rel. Tax, 704 N.W.2d 8, 18 (N.D. 2005) ("[A]n administrative
                agency need not use the rulemaking process to correct an erroneous
                interpretation of a statute."); Firearms Import/Export Roundtable Trade
                Group v. Jones, 854 F. Supp. 2d 1, 13 (D.D.C. 2012) (holding that an "Open
                Letter" correcting prior policy that did not conform with a statute merely
                "corrected a prior misapprehension of the statute rather than [assert] new
                law promulgated pursuant to the agency's rulemaking authority");
                Schlapp v. Colo. Dep't of Health Care and Policy, 284 P.3d 177, 179-80,
                185 (Colo. App. 2012) (holding that the agency did not violate the APA
                when it corrected its interpretation of eligibility requirements for Medicaid
                to conform with the applicable state and federal statutes). These
                jurisdictions reason that requiring administrative agencies to comply with
                the formal "rulemaking requirements of the APA . . . would lock an agency
                into an erroneous interpretation of its regulations and governing statutes."
                Schlapp, 284 P.3d at 185.
                            As we have concluded today, neither Nevada's lemon law nor
                the tax statutes provide for sales tax refunds to vehicle manufacturers
                upon reimbursing a buyer pursuant to the lemon law. Because an agency

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                has no authority to act absent statutory authority, see Stock meier v. State,
                Bd. of Parole Comm'rs, 127 Nev. „ 255 P.3d 209, 212 (2011), the
                Department must deny these refunds. Thus, the Department's prior
                policy of allowing sales tax refunds to vehicle manufacturers was an
                erroneous interpretation of the law. Upon obtaining an opinion from the
                Attorney General, the Department noted its erroneous interpretation in a
                July 2009 newsletter and stated that its policy change sought to bring the
                policy into conformity with Nevada's lemon law. In doing so, the
                Department did not amend any existing regulations or create a new rule
                to implement an existing statute. Rather, it sought only to correctly
                implement the existing statute. Since the Department's current tax
                refund policy is consistent with NRS 597.630 and the applicable provisions
                of NRS Chapter 372, we conclude that the Department did not violate the
                APA because it was not required to undertake the formal rulemaking
                process to correct its prior erroneous policy. 4

                      4 Chrysler further argues that denial of the sales tax refunds (1) is an
                unconstitutional taking and (2) results in the Department being unjustly
                enriched. We reject Chrysler's takings argument because Chrysler has no
                property right in a future tax refund. See McCarran Int'l Airport v.
                Sisolak, 122 Nev. 645, 658, 137 P.3d 1110, 1119 (2006) ("An individual
                must have a property interest in order to support a takings claim.");
                United States v. Dow, 357 U.S. 17, 20 (1958) ("Accordingly, [the claimant]
                can prevail only if the 'taking' occurred while he was the owner."); see also
                United States v. Carlton, 512 U.S. 26, 33 (1994) ("Tax legislation is not a
                promise, and a taxpayer has no vested right in the Internal Revenue
                Code."). We also reject Chrysler's unjust enrichment argument because
                the sales tax paid to the State never belonged to Chrysler. See Mainor v.
                Nault, 120 Nev. 750, 763, 101 P.3d 308, 317 (2004) ("[U]njust enrichment
                occurs whenever a person has and retains a benefit which in equity and
                good conscience belongs to another." (alteration in original) (internal
                quotations omitted)).

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                              Accordingly, for the reasons set forth above, we reverse the
                district court's order.

                                                          Ac,                     J.
                                                    Hardesty

                Parraguirre

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