Court Opinion

ID: 5177751
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:13:35.336359+00
Date Added: 2024-06-11T08:26:25.441466
License: Public Domain

J. JONES, J.,
dissenting.
129 This case concerns three actors: the City of Thornton, which claims to be owed taxes from Qwest Corporation; the City of Northglenn, which received taxes from Q@west that it had no legal right to receive; and Qwest, which erroneously (over)paid Northglenn taxes it owed Thornton. The majority construes sections 29-2-106.1 and 39-26-210, C.R.S. 2018, to deprive Qwest of its statutory defense to Thornton's action to collect taxes, simply because Thornton's statutory right to recover the taxes Northglenn received from Qwest may be impaired by a statute of limitations. I do not believe such a result is justified by the texts of the relevant statutes, and therefore I respectfully dissent.
T30 The General Assembly has enacted a statute to deal with the situation presented in this case-section 20-2-106.1. That statute creates a dispute resolution process that applies when a tax dispute affects "persons and entities across the jurisdictional boundaries of taxing jurisdictions...." § 209-2-106.1(1). Under the statute, the process proceeds, as relevant here, as follows:
1. A local government asserting that a taxpayer owes taxes thereto sends a "notice of deficiency" (which must contain specified information) to the taxpayer. § 29-2-106.1(2)(a).
2. The taxpayer may then file a protest with the local government and request a hearing before the executive director of the Department of Revenue "after exhaustion of local remedies." § 29-2-106.1(2)(b), (8).1
3. If the matter remains unresolved after the taxpayer exhausts local remedies, and the taxpayer timely and properly requests a hearing before the executive director, the hearing shall be conducted, and the taxpayer, the local government claiming a deficiency, and any local government to which the taxpayer claims to have paid the taxes allegedly owed to the local government claiming a deficiency shall be made parties. § 29-2-106.1(8)(a), (5).
4. Any party bound by the executive director's decision may appeal that decision to district court in accordance with section 89-21-105, C.R.S.2018. § 29-2-106.1(7).
{81 Subsection (5) of section 29-2-106.1 allows a taxpayer claiming that it has paid the taxes allegedly owed to the local government claiming a deficiency to another local government to assert that payment as a complete defense to the deficiency claim. It provides in full as follows:
*511If the taxpayer asserts that all or part of a sales or use tax which is the subject of the hearing has been paid to or is due to another local government, then such other local government shall be joined as a party to the hearing. The taxpayer need not file a claim for refund in order to pursue the remedy provided by this subsection (5). If the executive director determines that the disputed tax was paid, but to the wrong local government, then the taxpayer shall be relieved of the tax due up to the amount paid together with an abatement of interest thereon and all penalties.
Because subsection (5) provides a defense not merely to the claim of deficiency, but to any claim of interest or penalties on the taxes allegedly owed, it essentially treats a taxpayer as if it paid the taxes to the proper entity from the time of payment.
182 Subsection (6) provides that in the event the taxpayer is successful in asserting the defense provided in subsection (5), "[) local government which is found to have erroneously received payment from the taxpayer shall forward such payment to the appropriate local government...."
133 It is apparently undisputed that Qwest paid taxes to Northglenn that it should have paid to Thornton. It is also undisputed that Qwest and Thornton entered into a series of tolling agreements. From Thornton's standpoint, these tolling agreements were necessary to toll the statute of limitations applicable to any "action to collect" taxes, section 89-26-210.
4 34 Thornton, however, did not enter into any similar tolling agreement with North-glenn. Nevertheless, Thornton contends that its right to receive a transfer of the taxes paid by Qwest to Northglenn under section 29-2-106.1(6) is barred by the three-year statute of limitations in section 89-26-210, and that this alleged bar effectively extinguishes Qwest's statutory defense under section 29-2-106.1(5), despite its tolling agreements with Qwest. The majority agrees with this contention, but I cannot.
185 I do agree with the majority that in interpreting a statute we must read all of its provisions together, harmonizing them so that none is rendered meaningless, We must also consider the entire relevant statutory scheme. Krol v. CF & I Steel, 2013 COA 32, ¶ 15, 307 P.3d 1116. But in doing this we must be careful not to rewrite the statute, add to it something it plainly does not say, or create an absurd result. See Larrieu v. Best Buy Stores, L.P., 2013 CO 38, ¶ 19, 303 P.3d 558; In re Marriage of Joel & Roohi, 2012 COA 128, ¶ 19, — P.3d —; Rost v. Atkinson, 2012 COA 74, ¶ 22, 292 P.3d 1041.
186 In effect, the majority applies the statute of limitations in section 39-26-210 to Qwest's statutory defense. But that statute expressly applies only to efforts to assess taxes, the filing of notices of tax liens, and suits and other actions to collect taxes. By asserting its statutory defense, Qwest is not doing any of those things. And I' am not aware of any legal authority holding that a statute of limitations applies to a defense, as opposed to a claim for relief.
'I 37 Faced with this dearth of legal author'ity, the majority simply denies that section 29-2-106.1 provides a taxpayer with a defense, asserting, without analysis or citation to authority, that it provides such a taxpayer with a remedy-the transfer of funds from one local government to another. In so doing, the majority disregards the legal meanings of "defense" and "remedy," as well as the statutory scheme.
38 'A defense is " 'that which is put forward to diminish plaintiff's cause of action or defeat recovery."" Bank of Am. v. Kosovich, 878 P.2d 65, 67 (Colo.App.1994) (quoting Black's Low Dictionary 377 (5th ed.1979)); see also Dinosaur Park Invs., L.L.C. v. Tello, 192 P.3d 513, 516 (Colo.App.2008) ("An affirmative defense is 'a legal argument that a defendant ... may assert to require the dismissal of a 'claim or to prevail at trial.'" (quoting State v. Nieto, 993 P.2d 493, 507 (Colo.2000))); Black's Law Dictionary 482 (9th ed.2009) (a defense is "'that which is alleged by a party proceeded against in an action or suit, as a reason why the plaintiff should not recover....'" (quoting Edwin E. Bryant, The Law of Pleading Under the Codes of Civil Procedure 240 (2d ed. 1899))). A remedy, in contrast, is the means by which *512a party asserting a claim may enforce its right,. See Chelentis v. Luckenbach S.S. Co., 247 U.S. 372, 384, 38 S.Ct. 501, 62 L.Ed. 1171 (1918) ("A right is a well founded or acknowledged claim; a remedy is the means employed to enforce a right or redress an injury."); Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 147 n. 50 (2d Cir.2010) ("Remedies refer to 'precisely what the plaintiff may recover after resorting to the law. Whether a plaintiff is entitled to money damages, declaratory relief, an injunction, or specific performance are all questions of remedy." (citation omitted; emphasis omitted)), aff'd, — U.S. —, 133 S.Ct., 1659, 185 L.Ed.2d 671 (2013); see also 1 Dan B. Dobbs, Dobbs Law of Remedies § 1. 1, at 1 (2d ed. 1993) ("The law of judicial remedies determines the nature and seope of relief to be given to a plaintiff onee that plaintiff has established a substantive right by appropriate in-court procedures."); Black's Law Dictionary 1407 (a remedy is "[the means of enforcing a right or preventing or redressing a wrong").
T89 Under section 29-2-106.1, only the local government elaiming a right to payment of taxes from a taxpayer asserts a claim or right to relief. The taxpayer can avoid liability on the local government's claim-that is, successfully assert a defense to the claim-by establishing that it paid the taxes to another local government. § 29-2-106.1(5).2 The local government's remedy, then, is to receive a transfer from the local government to which the taxpayer paid the taxes. § 29-2-106.1(6). That remedy is not the taxpayer's because the taxpayer does not assert a claim or seek to enforce a right.3
€ 40 Thus, here, the claimant is Thornton. It is asserting a claim or right to relief. Qwest is not a claimant; rather, it is seeking to avoid liability on Thornton's elaim. It follows that the statute provides Qwest with a defense and Thornton with a remedy against Northglenn.
1 41 Further, by making Thornton's ability to collect from Northglenn a condition to Qwest's right to assert its statutory defense, the majority effectively would require a taxpayer which has erroneously paid taxes to the wrong local jurisdiction to discover its mistake within the statute of limitations and then institute some type of legal action, presumably involving the local government which the taxpayer erroneously paid.. There is no textual support for such a requirement. It is contrary to section 29-2-106.1(5), which says that "[t] he taxpayer need not file a claim for refund in order to pursue the remedy provided by this subsection (5)." And it fails to account for the fact that proceedings required by section 29-2-106.1 are triggered not by any action to be taken by the taxpayer, but by a local government's mailing of a deficiency notice to the taxpayer. § 20-2-106.1(2)(a). A taxpayer obviously has no control over if or when a local government will mail it a notice of deficiency. It is therefore clear to me that the taxpayer need not take any affirmative action to protect its right to assert the statutory defense provided by section 29-26-106.1(5), other than asserting it at the hearing before the executive director.4
4 42 The majority's analysis assumes that a transfer from Northglenn to Thornton would be time-barred by virtue of section 89-26-210. Perhaps.5 But if that is so, the loss should fall on Thornton, not Qwest. The *513defense provided in subsection (5) belongs to the taxpayer-Qwest. The right to the transfer belongs to the local government asserting the deficiency-Thornton. It is Thornton, therefore, that should be responsible for protecting its statutory right to such a transfer. Instead, the majority places the burden on Qwest, and, because Qwest did not act to protect Thornton's right, requires Qwest to pay the taxes twice. I do not see how this result can be squared with section 29-2-106.1(5).6
1 43 I also note that the majority's analysis fails to give full or fair effect to the tolling agreements between Thornton and Qwest. The majority allows Thornton to assert its claim against Qwest outside the statute of limitations because of the tolling agreements, but denies Qwest the right to assert a statutorily authorized defense to that claim because any effort by Thornton to obtain a transfer from Northglenn would be too late. Such unequal treatment is clearly inequitable.
T44 For these reasons, I respectfully dissent.

. "Exhaustion of local remedies" is defined in section 29-2-106.1(2)(c). It is undisputed that Qwest exhausted local remedies and timely requested a hearing before the executive director.

. Because the taxpayer logically has the burden of proving that it paid the taxes to another local government, this defense is in the nature of an affirmative defense. See W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1057 (Colo.1992).

. I recognize that section 29-2-106.1(5) refers to the "remedy" that it provides. But it is clear to me that term is not used in its legal sense. I also note that in referring to that "remedy," subsection (5) does not refer to subsection (6).

. The majority notes that Qwest was aware of the computer error in 2002, and then leaps from that fact to the conclusion that it thereby became obligated to proceed against Northglenn. But that conclusion is contrary to the express language of section 29-2-106.1(5). And I note that it is undisputed that Thornton was also aware of the error in 2002. Therefore, Thornton was in position to protect its rights under section 29-2-106.1 in 2002. '

. It is not clear to me that the statute of limitations in section 39-26-210 would apply to such a transfer because Thornton would not thereby impose a tax on Northglenn or seek to collect a tax from Northglenn, and Northglenn is not a "taxpayer."

. The majority cites the principle that taxation is the rule and exemption is the rare exception. See Colo. Dep't of Revenue v. Woodmen of the World, 919 P.2d 806, 810 (Colo.1996). But Qwest does not claim an exemption from paying the tax-that is, it does not contend that its activities are not subject to the tax. See, eg., id. at 809; Howard Elec. & Mech., Inc. v. Dep't of Revenue, 771 P.2d 475, 480 (Colo.1989); See. Life & Accident Co. v. Heckers, 177 Colo. 455, 457-58, 495 P.2d 225, 226 (1972). It has paid the tax and merely objects to being required to pay it twice.