Court Opinion

ID: 2729404
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:41:30.2576+00
Date Added: 2024-06-11T09:54:30.877454
License: Public Domain

NO. COA13-673

                      NORTH CAROLINA COURT OF APPEALS

                          Filed: 7 January 2014

THOMAS E. GUST,

     Plaintiff,
                                       Cleveland County
     v.                                No. 12 CVS 1393

THE NORTH CAROLINA
DEPARTMENT OF REVENUE,

     Defendant.

    Appeal by plaintiff from the order entered 18 December 2012

by Judge Robert T. Sumner in Cleveland County Superior Court.

Heard in the Court of Appeals 6 November 2013.

    Attorney General Roy Cooper, by Assistant Attorney General
    Perry J. Pelaez, for The North Carolina Department of Revenue.

    Thomas E. Gust, pro se.

    ELMORE, Judge.

    Plaintiff appeals from the 18 December 2012 judgment and order

dismissing his complaint and petition for declaratory judgment

rendered during the 10 December 2012 Civil Session of Cleveland

County Superior Court.     After careful consideration, we dismiss

plaintiff’s appeal.

                              I.   Background
                                    -2-
     The dispute before us initiated when the North Carolina

Department of Revenue (the Department) issued a tax assessment

against    Thomas   E.   Gust   (plaintiff)   for   his   failure   to   pay

individual income taxes for the 2003, 2004, 2005, and 2006 tax

years.    To contest the tax assessment, plaintiff filed a contested

case petition with the Office of Administrative Hearings (OAH) on

8 November 2011.     Before OAH issued its determination, plaintiff

filed an action for declaratory judgment against the Department in

Cleveland County Superior Court on 25 July 2012.            The purported

purpose of the action for declaratory judgment was to compel the

Department to answer the following question: “Which North Carolina

General Statute requires a person to file an income tax return

with the Department for the same year(s) he is not required to

file an income tax return with the Internal Revenue Service?”            The

trial court dismissed the declaratory action on 18 December 2012

pursuant to Rule 12(b)(1), Rule 12(b)(2), and Rule 12(b)(6) and on

the basis that the action was barred by the doctrine of sovereign

immunity.     It is from the entry of this order that plaintiff

appeals.

     In an attempt to resolve plaintiff’s OAH case, the Department

served him with its first set of interrogatories and request for

production of documents on 22 March 2012.           When plaintiff failed
                                          -3-
to respond, the Department filed a motion to compel discovery.

Plaintiff again refused to provide the requested discovery. As

such, the Department filed a motion to dismiss the contested case

as a sanction against plaintiff.                 On 15 August 2012, OAH granted

the Department’s motion and dismissed plaintiff’s action with

prejudice as a sanction for his noncompliance with the order

compelling his response to discovery.

       Plaintiff appealed OAH’s dismissal to Wake County Superior

Court pursuant to N.C. Gen. Stat. § 105-241.16.                   On 23 May 2013,

Judge    Donald    W.    Stephens       dismissed     plaintiff’s       action     with

prejudice for want of subject matter jurisdiction.                     Judge Stephens

found that plaintiff had not paid the tax, penalties, and interest

due as required by N.C. Gen. Stat. § 105-241.16.

                                II.    Declaratory Judgment

       Plaintiff argues that the trial court erred in dismissing his

action    for     declaratory         judgment     based   on    the    Department’s

sovereign immunity defense.             We are unable to reach the merits of

this issue and therefore dismiss it.

       Plaintiff avers that under the Uniform Declaratory Judgment

Act,    N.C.    Gen.    Stat.    §    2-153   et   seq.,   the   trial     court    had

jurisdiction      to    hear    his    declaratory     judgment    action.         This

contention is unsupported by law.                Our Supreme Court has held that
                                  -4-
the   “declaratory     judgment   statutes   themselves    are    not

jurisdictional and they do not create or grant jurisdiction where

it does not otherwise exist, nor do they enlarge or extend the

jurisdiction of the courts over the subject matter or the parties.”

State ex rel. Edmisten v. Tucker, 312 N.C. 326, 348, 323 S.E.2d

294, 308 (1984) (citation omitted). In the instant case, the trial

court lacked jurisdiction to hear plaintiff’s declaratory judgment

action for the reasons set fourth below.

      A taxpayer may challenge his tax liability pursuant to the

procedures laid out in Chapter 105 of our general statutes.      Under

N.C. Gen. Stat. § 105-241.15 (2011), a taxpayer who disagrees with

a notice of final determination issued by the Department may file

a contested case hearing with OAH in accordance with Article 3 of

Chapter 150B.   A taxpayer aggrieved by OAH’s determination may

seek judicial review of the decision pursuant to N.C. Gen. Stat.

§ 105-241.16 (2011):

          A taxpayer aggrieved by the final decision in
          a contested case commenced at the Office of
          Administrative Hearings may seek judicial
          review of the decision in accordance with
          Article 4 of Chapter 150B of the General
          Statutes. Notwithstanding G.S. 150B-45, a
          petition for judicial review must be filed in
          the Superior Court of Wake County and in
          accordance with the procedures for a mandatory
          business case set forth in G.S. 7A-45.4(b)
          through (f). Before filing a petition for
          judicial review, a taxpayer must pay the
                                   -5-
          amount of tax, penalties, and interest the
          final decision states is due. A taxpayer may
          appeal a decision of the Business Court to the
          appellate division in accordance with G.S.
          150B-52.

       Notably, N.C. Gen. Stat. § 105-241.19 provides:

          The remedies in G.S. 105-241.11 through G.S.
          105-241.18 set out the exclusive remedies for
          disputing the denial of a requested refund, a
          taxpayer’s liability for a tax, or the
          constitutionality of a tax statute. Any other
          action is barred. Neither an action for
          declaratory judgment, an action for an
          injunction to prevent the collection of a tax,
          nor any other action is allowed.

N.C. Gen. Stat. § 105-241.19 (2011) (emphasis added).

     Here, plaintiff has appealed the trial court’s dismissal of

his action for declaratory judgment.       However, the plain language

of N.C. Gen. Stat. § 105-241.19 is clear and unambiguous.               It

specifically    prohibits   a   taxpayer   from   filing   a   declaratory

judgment action to contest his tax liability. Instead, it provides

that a taxpayer may challenge the Department’s tax assessment only

by exhausting the statutory remedies set forth in N.C. Gen. Stat.

§§ 105-241.11 through 105-241.18.          Accordingly, plaintiff was

statutorily     barred   from   filing   the   action   for    declaratory

judgment, and    we are unable to rule on the merits of his appeal.

For this reason, plaintiff’s appeal is dismissed.
                         -6-
Dismissed.

Judges McCULLOUGH and DAVIS concur.