Court Opinion

ID: 9368217
Source: CourtListenerOpinion
Date Created: 2023-02-03 15:03:26.624556+00
Date Added: 2024-06-11T17:16:06.441141
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

250 EXECUTIVE, LLC,                        )
                                           )
      Petitioner,                          )
                                           )
            v.                             )
                                           ) C.A. No. N22C-03-190 FWW
CHRISTINA SCHOOL DISTRICT                  )
and CHRISTINA SCHOOL                       )
DISTRICT BOARD OF EDUCATION,               )
                                           )
      Respondents.                         )

                      Submitted: December 1, 2022
                       Decided: January 30, 2023
                       Corrected: February 1, 2023

   Upon Petitioner 250 Executive, LLC’s Motion for Summary Judgment
                              GRANTED.

 Upon Respondents Christina School District and Christina School District
          Board of Education’s Motion for Summary Judgment
                              DENIED.

                 MEMORANDUM OPINION AND ORDER

Daniel F. McAllister, Esquire, MCALLISTER FIRM LLC, 800 North King
Street, Suite 203, Wilmington, Delaware 19801, Attorney for Petitioner 250
Executive, LLC.

James H. McMackin, III, Esquire and Michelle G. Bounds, Esquire, MORRIS
JAMES LLP, 500 Delaware Avenue, Suite 1500, Wilmington, Delaware
19801, Attorneys for Defendants Christina School District and Christina
School District Board of Education.

WHARTON, J.
                          I.    INTRODUCTION

      Petitioner 250 Executive, LLC (“250 Executive”) brings this action

against Christina School District and Christina School District Board of

Education (collectively “the District”). 250 Executive alleges that the District

impermissibly kept its erroneously overpaid taxes and seeks a refund for its

nearly $70,000 in overpayment.

      Before the Court are the parties’ Cross Motions for Summary Judgment

and all associated briefings. For the reasons set forth below, 250 Executive’s

Motion for Summary Judgment is GRANTED and the District’s is DENIED.

The matter is REMANDED to the Christina School District Board of

Education for submission of 250 Executive’s refund request to the receiver of

taxes in accordance with this Opinion.

             II.    FACTS AND PROCEDURAL HISTORY

      250 Executive owns property within the District.1 Several years ago,

New Castle County (“the County”) mismeasured the property, wrongly

inflating its value.2 Due to the inflated assessment, 250 Executive overpaid

its property taxes from 2006 to 2019.3 It overpaid a total of $69,244.52 to the

1
  Pet.’s Am. Compl., at ¶ 5, D.I. 5.
2
  Id. at ¶ 6–7; see Joint Stipulation of Facts, at ¶ 2, D.I. 9.
3
  Am. Compl., at ¶ 8–9, D.I. 5; see Joint Stipulation of Facts, at ¶ 2, D.I. 9.
Taxes are based on a property’s assessed value. Since 250 Executive’s

                                       1
District, $5,112.10 to New Castle County Vocational-Technical School

District (“Vo-Tech”), and $24,016.03 to the County.4 In 2019, 250 Executive

discovered the error, had the property remeasured, and the building’s

valuation was appropriately reduced.5

      In May 2020, in an effort to comply with the requirements of 14 Del.

C. § 1921 (local county school taxes; “the Refund Statute”) and 9 Del. C. §

8618 (county government refund), 250 Executive sent all three entities refund

requests.6 In July 2020, the District responded that it would schedule a

hearing on the request once it received the County’s determination letter.7

      On January 12, 2021, the County adopted Resolution 21-004 (“the

Resolution”) which recognized that 250 Executive overpaid its county

property taxes “in error.”8 The Resolution stated that “despite the error, the

property owner, 250 Executive, LLC, paid the overstated New Castle County

property taxes (and local school taxes) in good faith, on time, and in full, as

billed by New Castle County[.]”9

property was assessed at a higher value, it had to pay more than what it
actually owed. Am. Compl. ¶ 8, Resolution No. 21-004, Ex. C, D.I. 5.
4
  Am. Compl., at ¶ 9, D.I. 5; see Joint Stipulation of Facts, at ¶ 2, D.I. 9.
5
  Am. Compl., at ¶ 6–7, D.I. 5.
6
  Id. at ¶ 10, Ex. A, Ex. B.
7
  Id. at ¶ 14, Ex. E; Joint Stipulation of Facts, at ¶ 3, D.I. 9.
8
  Resolution No. 21-004, Ex. C, D.I. 5.
9
  Id.

                                        2
      250 Executive forwarded the Resolution to Vo-Tech10 and the

District.11 Vo-Tech “exercised its discretion (see, 14 Del. C. § 1921) to

approve the request and apply a credit of $5,112.10 to [250 Executive].”12

Despite showing that it overpaid its taxes in error, the District did not approve

250 Executive’s refund request.13 Instead, the District placed the matter on

its April 13, 2021 board meeting agenda.14 Like all other requests for refunds

of allegedly overpaid taxes, the board voted to reject 250 Executive’s refund

request.15

      Details about the board meeting are scant. 250 Executive claims that

the District “asked no questions” and that after rendering its decision “did not

state their reasons on the record for their vote or their decision.”16 The District

did not clarify in any of its written submissions or during oral argument what,

if any, criteria were used to evaluate the merits of the refund request. Instead,

it simply wrote, without specification, in answer to 250 Executive’s Amended

Complaint, that “[a]ny characterization of the hearing is denied as stated.”17

10
   Am. Compl., Ex. D, D.I. 5.
11
   Id. at Ex. F.
12
    Id. at Ex. D. Based on the Resolution, the County also refunded the
overpayment. Id. at ¶ 11.
13
   See Joint Stipulation of Facts, at ¶ 5–7, D.I. 9.
14
   Joint Stipulation of Facts, at ¶ 3, 5–6, D.I. 9
15
   Id. at ¶ 7–8.
16
   Am. Compl., at ¶ 17, D.I. 5.
17
   Ans. to Am. Compl., at ¶17, D.I. 6.

                                        3
       After the denial, 250 Executive filed suit in the Court of Chancery

seeking a declaratory judgment declaring that the District violated the Refund

Statute and a permanent injunction requiring the District comply with the

statute.18   The District moved for dismissal for lack of subject matter

jurisdiction.19 The Court of Chancery agreed and dismissed the case, holding

that 250 Executive had an adequate remedy at law.20 250 Executive then

exercised its right to transfer the case to this Court.21

       250 Executive filed the current Complaint on March 24, 2022,22 and its

Amended Complaint on April 4, 2022.23 It alleges that the District failed to

follow Delaware law when it did not, as required by the Refund Statute,

forward its refund request to the receiver of taxes and implored the Court to

compel it to do so.24 The District countered that “[t]he refund provisions at

18
   250 Exec., LLC v. Christina Sch. Dist., 2022 WL 588078, at *1 (Del. Ch.
Feb. 28, 2022).
19
   Id.
20
   Id. (“This decision grants the motion to dismiss under Rule 12(b)(1) for lack
of subject matter jurisdiction. It does not reach [250 Executive’s cross-motion
for judgment on the pleadings or, alternatively for summary judgment.]”) Id.
at *3.
21
   Id. at *7 (citing 10 Del. C. § 1902).
22
   Compl., D.I. 1.
23
    Am. Compl., D.I. 5. 250 Executive is seeking declaratory judgment,
monetary damages, and for reimbursement pursuant to unjust enrichment. Id.
at ¶21–34.
24
   Id. at ¶ 18–34.

                                         4
issue are permissive, not mandatory, and inapplicable in this instance.”25 It

argues, inter alia, that its decision to refuse the refund request was “a valid

exercise of [its] discretion.”26

       On June 10, 2022, 250 Executive and the District filed their respective

Motions for Summary Judgment27 and supporting Opening Briefs.28 Briefing

was complete on July 15, 202229 and oral argument was held on December 1,

2022.30

                      III.   THE PARTIES’ CONTENTIONS

       The parties disagree how the Refund Statute should be interpreted. The

statute states:

              Local county school taxes paid through error or by
              mistake may be refunded by the school district to
              which the taxes were paid as follows:
              (1) The person claiming a refund of taxes shall file
              with the board of the school district a request for
              refund under oath or affirmation stating the
              payment of the taxes, the person, firm, corporation,
              or association by whom the taxes were paid, and the
              date of payment and stating why it is believed the
              taxes were paid in error;

25
   Resps.’ Ans. to Pet.’s Am. Compl., at 11:3, D.I. 6.
26
   Id. at 12:4. The District lists several other reasons why the Complaint is
barred, including that the taxes were not paid in error and a failure to mitigate.
Id. at ¶ 5–10.
27
   Pet.’s Mot. for Summ. J., D.I. 11; Resps.’ Mot. for Summ. J., D.I. 16.
28
   Pet.’s Op. Br., D.I. 13; Resps.’ Op. Br., D.I. 17.
29
   See Pet.’s Reply Br., D.I. 27.
30
   D.I. 30.

                                        5
             (2) The school board shall submit the request for
             refund to the receiver of taxes of the county for the
             receiver's approval of the payment of the refund and
             shall make no refund unless the receiver of taxes
             approves the refund in writing, except that
             capitation taxes may be refunded without such
             approval;
             (3) The school board and the receiver of taxes shall
             keep a record of all refunds for at least 3 years,
             which record shall be open for public inspection
             during regular business hours.31

250 Executive argues that the statute, as indicated by its multiple uses of the

term “shall,” requires the District forward all refund requests to the county

receiver of taxes.32 250 Executive also claims that the District’s failure to

comply with the Refund Statute “improperly blocked [its] only legal remedy

to recover the money overpaid in taxes.”33 The District responds that the use

of “may” indicates that the statute gives schools the discretion to make these

determinations.34 Further, someone needs to bear the consequences of this

overpayment and since 250 Executive failed to recognize its property’s

31
   14 Del. C. § 1921.
32
   Pet.’s Op. Br., passim, D.I. 13.
33
   Pet.’s Ans. Br., at 10, D.I. 22.
34
   Resps.’ Op. Br., passim, D.I. 17; Resps.’ Ans. Br., passim, D.I. 20. The
District argues that only funds currently possessed by the District are
refundable. It claims that since it has long-spent 250 Executive’s
contributions and cannot disentangle it from other funds, that no
reimbursement is owed. The facts of this case, plus the fungibility of money,
make these arguments unconvincing. See Resps.’ Op. Br. 5, at 7–9, D.I. 17.

                                      6
mistaken assessment for over a decade, the District claims that 250 Executive

should be the entity that bears that burden.35

      The parties also sparred over whether McGinnes v. Dep’t of Finance’s36

or CSDCPC 920 French v. Christina Sch. Dist.’s (“920 French II”)37

interpretation of the statute governs. McGinnes is a Court of Chancery case

that interpreted the Refund Statute in the context of school tax rates.38 920

French focused on determining whether the Refund Statute itself is lawful and

constitutional.39 250 Executive characterizes 920 French as “bad law” and

contends the Court there “did not correctly interpret McGinnes or § 1921.”40

The District replies that 920 French remains on-point precedent that

establishes that the Refund Statute is discretionary in nature.41

                     IV.    STANDARD OF REVIEW

      When reviewing a Motion for Summary Judgment, the movant bears

the initial burden of showing that the undisputed facts support its claims or

defenses.42 If that burden is met, the burden shifts to the non-movant to show

35
   Resps.’ Rep. Br., at 6–7, D.I. 25.
36
   377 A.2d 16 (Del. Ch. 1977).
37
   2019 WL 6170851 (Del. Super. Ct. Nov. 19, 2019).
38
   McGinnes, 377 A.2d at 16.
39
   2019 WL 6170851.
40
   Pet. Op. Br., at 12–13, D.I. 13.
41
   Resps.’ Ans. Br., at 5–8, D.I. 20.
42
   Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1979).

                                       7
that “there is a genuine issue for trial.”43 Summary judgment is appropriate

when, after reviewing the evidence “in the light most favorable to the non-

moving party,” the Court finds that there is no issue of material fact.44

Summary judgment is inappropriate when “there is a dispute as to a material

fact or the inferences to be drawn therefrom.”45

      The above standard also applies to determinations of summary

judgment on a request for declaratory judgment46 and to cross-motions.47

When, as here, cross-motions are filed and neither party claims there to be a

genuine issue of material fact, “the Court shall deem the motions to be the

equivalent of a stipulation for decision on the merits based on the record

submitted with the motions.”48

43
   Del. Super. Ct. Civ. R. 56(e); see, e.g., Moore, 405 A.2d 680–81. When
deciding whether there is a genuine issue of material fact, the Court must
“identify disputed factual issues whose resolution is necessary to decide the
case, but not […] decide such issues.” Merrill v. Crothall-Am., Inc., 606 A.2d
96, 99 (Del. 1992) (citing U.S. v. Diebold, Inc. 369 U.S. 654 (1962)).
44
   Brzoska v. Olson, 668 A.2d 1355, 1364 (Del. 1995) (citations omitted).
45
   Vanaman v. Milford Mem’l Hosp., Inc., 272 A.2d 718, 720 (Del. 1970).
46
   “The standard for granting summary judgment on a request for a declaratory
judgment is the same as for any other type of relief.” Cloverland-Green
Spring Dairies, Inc. v. Pennsylvania Milk Mktg. Bd., 298 F.3d 201, n. 12 (3d
Cir. 2002) (citing Fed. R. Civ. P. 57; Simler v. Conner, 372 U.S. 221, 222
(1963)).
47
   IDT Corp. v. U.S. Specialty Ins. Co., 2019 WL 413692, at *5 (Del. Super.
Ct. Jan. 31, 2019).
48
    Del. Super. Civ. R. 56(h). See also United Vanguard Fund, Inc. v.
TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997) (“[T]he existence of cross

                                      8
                                  V.   DISCUSSION

      At argument in the Court of Chancery, the Vice Chancellor observed

concerning the District’s refusal to submit 250 Executive’s refund request to

the receiver of taxes that:

             …this situation just seems so bizarre to me. I mean,
             it’s like I went into a store and accidentally paid,
             you know, twice the price. And I’ve got all the
             documentation. And I go back in and the store says
             to me, “Well, no, you handed over twice the price,
             and we’ve got other reasons why we really need the
             money. Our other businesses haven’t been doing so
             well. And so we’re just keeping your overpayment.

                              *           *          *

             I don’t get this one. It seems so clear cut that they
             were just using the wrong valuation. How the
             school gets to essentially say or the district gets to
             essentially say, “Yeah, we overcharged you, but
             we’re keeping it,” just help me understand that.49

Just so. The District’s decision to keep the overpayment is in derogation of

the Refund Statute. If its interpretation of the statute were correct and it were

able to retain a taxpayer’s erroneous overpayment in its sole, unrestrained

motions for summary judgment does not act per se as a concession that there
is an absence of factual issues”) (internal citations omitted)).
49
    Tr. Hrg. (Feb. 14, 2022), at 24:21-25:5; 25:9-13, 250 Exec., LLC v.
Christina Sch. Dist, C.A. No. 2021-0411-JTL. To be clear, the Vice-
Chancellor’s comment was merely an observation, not controlling authority.

                                         9
discretion, without regard to the legitimacy of the request for repayment, and

do so in all cases, simply because it perceived it needed the money more than

the taxpayer, then the statute would become meaningless and taxpayers would

be left without recourse.     In practice, indeed, the statute has become

meaningless and taxpayers are without recourse because, by denying every

single request, the District has effectively repealed § 1921 in the Christina

School District. Here, the District was never entitled to the money and it

cannot keep it.50

     The Court turns to the timing of 250 Executive’s request. In several

other jurisdictions, a refund request of a decade’s old overpayment would be

time barred.51 The Refund Statute has no time-limiting language. Moreover,

250 Executive did not delay once it discovered the County’s mistake in

50
   Where, as here, a school district receives funds paid a tax payment “under
the erroneous or mistaken belief that it was owing, and it refuses to refund,”
the Court of Chancery found “it would be a travesty upon justice to deny the
one justly entitled thereto the right to recover.” McGinnes, 377 A.2d at 20
(quoting Lincoln Nat. Life Ins. Co. v. Fischer, 17 N.W. 2d 273 (Iowa 1944)).
51
   E.g., ARK. CODE ANN. §26-35-901(a)(2) (West 2017) (filing must be done
within three years of payment); COLO. REV. STAT. ANN. § 39-10-
114(1)(a)(I)(A)(West 2021) (“a petition for abatement or refund [must be]
filed within two years after January 1 of the year following the year in which
the taxes were levied”); OHIO REV. CODE ANN. § 2723.01 (West 1953)
(recovery action must be brought within a year of taxation or collection of
assessments).

                                     10
assessing its property. So, all of 250 Executive’s $69,244.52 overpayment is

potentially refundable.

       While the legislative intent of the statute is clear – to provide

reimbursement to taxpayers who erroneously or mistakenly overpay their

school taxes – the process for obtaining that reimbursement arguably is less

so. First, the statute declares that erroneously or mistakenly paid school taxes

“may” be refunded by the recipient school district.52 Then, it sets out what

the requesting taxpayer must file and with whom – the refund request “shall”

be filed with the school board under oath or affirmation stating the payment

of taxes, by whom the taxes were paid, the date, the date of payment, and why

the taxpayer believes the taxes were paid in error.53 The school board then

“shall” submit the request for refund to the receiver of taxes for the receiver’s

“approval.”54 The school board “shall” make no refund unless the receiver of

taxes “approves” the refund in writing.55

       For 250 Executive, the issue before the Court, as set out in its motion

for summary judgment, is whether the Refund Statute required the District to

submit its refund request to the receiver of taxes.56 The District posits two

52
   14 Del. C. § 1921.
53
   14 Del. C. § 1921(1).
54
   14 Del. C. § 1921(2).
55
   Id.
56
   Pet.’s Op. Br. at 6, D.I. 13.

                                       11
issues in its summary judgment motion – whether it complied with the Refund

Statute by exercising its discretion in denying 250 Executive’s refund request

and whether that denial was justified.57

      Integral to the resolution of the issues raised by the parties is the

question of who decides whether to approve or deny the request. Citing the

mandatory “shall” language of §§ 1921(1) and (2) and McGinnes, 250

Executive argues it is the receiver of taxes. Citing the permissive “may” in

the opening sentence of § 1921 and 920 French, the District argues it is the

District. Unfortunately, neither McGinnes, nor 920 French directly answer

that question.

      In McGinnes, the plaintiff, a citizen, and taxpayer owning property in

the Conrad School District brought suit alleging that the Conrad School Board

had established a tax rate that exceeded that permitted by law.58 McGinnes

relied on the Refund Statute to argue that the Conrad School District must

refund the excess amount he had paid above the legal amount. 59           The

defendants contended that the taxes McGinnes sought to recover were not paid

“through error or mistake.”60 Thus, the Court of Chancery assessed the

57
   Resps.’ Op. Br., at 4, D.I. 17.
58
   McGinnes, 377 A.2d at 18.
59
   Id. at 19.
60
   Id.

                                      12
meaning of those terms, found them to have their ordinary meaning, found

them applicable to actions taken by both the taxpayer and the school board,

and concluded that McGinnes could seek relief under the Refund Statute.61

On reargument, the Chancellor concluded that, under § 1921(2), “the fact that

approval of the receiver of taxes must be granted to a taxpayer’s request,

insofar as the former is in possession of funds of the taxpayer in an amount in

excess of that authorized by the applicable statute, does not bar a taxpayer

from use of the statute.”62 The court in McGinnes was not asked to decide

whether the school board or the receiver of taxes determines if a refund should

be made.

      In 920 French I, the plaintiff, a tax exempt charitable organization,

submitted a request to the Christina School District for a refund of school

taxes it had paid while litigating its exempt status with New Castle County.63

Ultimately the County granted 920 French an exemption.64 When 920 French

sought a refund from the school district, the school board considered the

request in closed executive session after limiting 920 French’s lawyer to two

61
   Id. at 19-21.
62
   Id. at 21-22.
63
   CSDCPC 920 French, LLC v. Christina Sch. Dist., et al., 2019 WL
183518 (Del. Super. Ct. Jan. 14, 2019). (“920 French I”)
64
   Id. at *1.

                                      13
minutes of oral presentation.65 The school board unanimously voted to deny

the request in open session, without stating its reasons either orally or in

writing.66 The school district argued in 920 French I that the taxes were paid

voluntarily and, thus, there was no “error” or “mistake” that would entitle 920

French to a refund.67 The court remanded the matter to the school district for

a determination of 920’s entitlement to a refund.68

      The matter was back before the court on remand in 920 French II after

the school district again denied 920 French’s request for a refund.69 When the

matter was returned to it, the school board conducted a hearing on 920

French’s refund request.70 The school board had before it a memorandum

prepared by the board’s chief financial officer which provided background

information on 920 French and its application, together with an overview of

how taxes generally are distributed to the school district and incorporated into

its budget.71 The memorandum explained that it was impossible to trace how

920 French’s tax dollars were used by the district.72 It also informed the

65
   Id.
66
   Id.
67
   Id.
68
   Id.
69
   CSDCPC 920 French, LLC v. Christiana School District, et al., 2019 WL
6170851 (Del. Super. Ct. Nov. 19, 2019). (“920 French II”).
70
   Id. at *2.
71
   Id.
72
   Id.

                                      14
school board that it previously had denied a refund to every other applicant.73

The hearing was public and on the record, lasting 34 minutes, with the

transcript showing active participation by the school board members. 74 Two

days after the hearing, the school board’s secretary sent 920 French’s attorney

a letter explaining that the school board discussed the request in executive

session and reconvened in public to deny the application by a vote of 4-2.75

      On remand 920 French argued that the Refund Statute itself and the

school board’s denial of its refund request were unconstitutional. It set out

three reasons: (1) the school board committed an unlawful taking pursuant to

Article I, Section 8 of the Delaware Constitution76 and the Fifth Amendment

of the United States Constitution; (2) the Refund Statute violates Article VIII,

Sections 1, 10(a), and 11(a) of the Delaware Constitution;77 and (3) the school

board deprived 920 French of its due process rights in violation of the United

States Constitution.78

      Only the third argument addressed the procedural requirements of the

Refund Statute, but in the context of a constitutional due process violation

73
   Id.
74
   Id.
75
   Id.
76
   Article VIII of the Delaware Constitution requires that “[a]ll taxes shall be
uniform upon the same class of subjects…”
77
   Id.
78
   920 French II, at *3.

                                      15
claim.79 Nevertheless, the arguments on that point mirror the arguments here.

920 French contended that the Refund Statute mandated that the school board

submit the request to the receiver of taxes while the school board maintained

that the Refund Statute required the school board submit the request only if it

first approved the refund.80 The court determined that the school board was

not required to submit the request to the receiver of taxes because, citing

McGinnes, in 920 French’s case, “the receiver of taxes was not in possession

of any funds of the taxpayer in excess of that authorized by the applicable

statute.”81 Ultimately, it concluded, “The Section 1921 procedure appears

79
   Id. at *4.
80
   Id.
81
   Id. The court quoted McGinnes as follows: ‘“[T]he approval of the receiver
of taxes must be granted to a taxpayer’s request, insofar as the [receiver] is in
possession of funds of the taxpayer in an amount in excess of that authorized
by the applicable statute.”’ Id. (quoting McGinnes at 21-22). The full
statement in McGinnes from which the foregoing is taken reads: “I conclude
that the fact that the approval of the receiver of taxes must be granted to a
taxpayer’s request, insofar as the former is in possession of funds of the
taxpayer in an amount in excess of that authorized by the applicable statute,
does not bar a taxpayer from use of the statute. Included within the purview
of such statute are not only amounts paid as a result of an error or mistake of
a taxpayer but also as a result of an assessment error on the part of the taxing
authority.” McGinnes, at 21-22. This conclusion was in response to the
defendants’ argument that “…it is clear that Sec. 1921 is intended to apply
only to mistakes of fact as to which only the receiver of taxes is qualified to
examine and approve and not to cases in which judicial interpretation of the
tax statute is necessary.” Id. at 21. Thus, the Court concludes that the quoted
language from McGinnes was not intended to set out a condition precedent
for submission of requests to the receiver of taxes that the receiver be in
possession of the taxpayer’s funds, but rather to establish that the requirement

                                       16
unfair and arbitrary on its face and in actual practice. Nevertheless, there is

no basis for the Court to find on this record that it is either unlawful or

unconstitutional.”82

        Having considered all of the foregoing, the Court finds that the Refund

Statute, while imperfectly constructed to be sure, at least implicitly vests the

District with some discretion to approve or reject refund requests. That

authority is not found in the permissive “may” in the first sentence, however.

That language merely makes any refund to be paid by the District conditional

upon it being approved. It does not identify the approving authority. Rather,

the fact that refunds are to be paid by the District and detailed sworn requests

are to be submitted to the district justifying the refund implicitly confers the

District with some approval authority. It would make little sense for the

District to serve as a mere pass-through for requests to the receiver of taxes.

In that event, it would be simpler to eliminate the District entirely from the

process and require requests to be submitted directly to the receiver of taxes.

to submit requests to the receiver of taxes was not a bar to taxpayer relief. In
any event, the language in McGinnes relied upon by the court in 920 French
II – “insofar as [the receiver of taxes] is in possession of funds of the taxpayer
in excess of that authorized by the applicable statute” – is not found in the
Refund Statute itself. Moreover, given that tax proceeds are fungible, it is not
reasonable to require the receiver of taxes to be in actual possession of the
same funds remitted by the taxpayer.
82
   Id. at 5.

                                       17
      While the Court holds that the Refund Statute imbues the District with

the discretion to grant or reject refund requests, the manner in which the

District purported to exercise its discretion reflects a misunderstanding of its

role and contravenes the purpose of the statute. The Refund Statute was

enacted to give taxpayers a viable avenue to seek justice by obtaining

reimbursement for erroneous tax overpayments. The District’s unabashed

100% denial rate as well as the absence of anything in the record indicating

that the District considered the individual merits of 250 Executive’s request

are inconsistent with this purpose.83      The District voted to deny 250

Executive’s request even after the County unequivocally found that it

erroneously overpaid its taxes, a finding that the District does not dispute in

any serious way.84

      If the District is vested with discretion, that discretion necessarily is

circumscribed by a requirement that it be exercised reasonably by evaluating

requests in good faith and making decisions based on their merits.85

83
   See Pet.’s Ans. Brief at 10, D.I. 22 (explaining how the District “improperly
blocked Petitioner’s only legal remedy to recover the money overpaid in
taxes.”) Id.
84
   Resolution No. 21-004, Ex. C, D.I. 5.
85
   See, Wilmington Leasing, Inc. v. Parrish Leasing Co., L.P., 1996 WL
560190 (Del. Ch. Sept. 25, 1996) (citing Desert Equities, Inc. v. Morgan
Stanley Leveraged Equity Fund, II, at 5, n. 1, Del. Ch. No. 12449, Chandler,
V.C. (July 28, 1992), rev’d and remanded on other grounds, (“‘…the
interpretation of the General Partner’s “discretion” to mean its reasonable

                                      18
“Discretion as applied to public officers means the power or right to act in an

official capacity in a manner which appears to be just and proper under the

circumstances.”86 The District abuses its discretion when its decision ‘“is

based on clearly unreasonable or capricious grounds’ or the decision ‘exceeds

the bounds of reason in view of the circumstances and had ignored recognized

rules of law or practice so as to produce injustice.’”87 Here the District denied

an application in the proper form that clearly established that 250 Executive

paid taxes mistakenly or erroneously. It did so without justification or

explanation. The District cannot claim to be exercising discretion when it

arbitrarily denies every request for a refund regardless of whether the taxes

were paid mistakenly or erroneously, or whether the request was properly

submitted.    The Court finds that the District’s decision to deny 250

Executive’s refund request was “clearly unreasonable,” “exceeds the bounds

of reason in view of the circumstances,” and “ignored recognized rules of law

or practice so as to produce injustice.”

discretion is consistent with the requirement that a person act in good faith
when given the right to exercise discretion to determine whether a condition
has occurred.’ (citation omitted).”
86
   Caras v. Delaware Liquor Com’n, 90 A.2d 492, 494 (Del. Super. Ct
1952).
87
   Tesla, Inc. v. Delaware Division of Motor Vehicles, 2022 WL 4482222, at
*6 (Del. Super. Ct. Sept, 23, 2022) (quoting K-Mart, Inc. v. Bowles, 1995
WL 269872, at *2 (Del. Super. Ct. Mar. 23, 1995)).

                                       19
      The Court holds that the District’s discretionary role under the Refund

Statute is limited to determining if the refund request contains all of the

statutorily required information and if the taxpayer paid the taxes erroneously

or mistakenly in the amount of the requested refund.88 Once the District

determines that the request is complete and the taxes were paid in error, then

it is mandated by the Refund Statute to submit the request to the receiver of

taxes for the receiver’s approval.

      Here, once the County issued the Resolution, it was obvious that 250

Executive satisfied its burden of establishing an erroneous overpayment.89

The District had no legitimate basis to deny the refund request.90 As a result,

the District improperly failed to submit 250 Executive’s request to the receiver

of taxes for approval.

88
   The Court fully expects there to be situations, unlike here, where there is an
issue as to whether the taxes were paid erroneously or mistakenly. Other
situations might arise where the taxpayer has failed to file a request for refund
properly. The Court does not intend to preclude the District from exercising
its discretion in making factual determinations in those situations.
89
   Whether 250 Executive’s request met the statutory submission requirements
is not at issue.
90
   Further support 250 Executive’s request, to the extent such support is
necessary, comes from Vo-Tech, another school district that benefitted from
the overpayment. 250 Executive sent both districts similar same letters with
the Resolution attached. Vo-Tech rightfully refunded 250 Executive’s
overpayment. The fact that Vo-Tech received significantly less than the
District does not change the fact that the money was not owed and should have
been refunded.

                                       20
       In its opinion, the court in 920 French II acknowledged the public

policy concerns that case presented.91 Specifically, that court noted the

unfairness when a taxpayer makes a good faith payment, is later deemed to

have never owed the taxes, and is denied a refund.92 It also noted the chronic

underfunding of the school district.93      The District offers public policy

arguments in support of its efforts to justify its retention of the funds here as

well: “It is not ‘unreasonable’ for that loss to be borne by the party who failed

to recognize a mistaken assessment of its own property for thirteen years (250

Executive) rather than the party who spent those funds educating children and

could not have prevented the payment of the disputed taxes.” 94

      Ultimately, the Court is unpersuaded that it should base its decision on

public policy considerations. While the 920 French court noted the public

policy concerns that case presented, those concerns were not the basis for its

ruling. More importantly, though, the competing interests of taxpayers and

school districts are better balanced legislatively. The Court is ill equipped to

weigh those interests, especially on the limited record before it here.95 Finally,

91
   Id.
92
   Id.
93
   Id.
94
   Resps.’ Reply Br., at 6, D.I. 25. Id.
95
   The Court has not been presented with evidence of the relative burdens the
parties would bear if required to sustain the loss. The District argues that it
“has spent those funds educating children.” To the extent that statement is

                                       21
the District’s public policy arguments cannot overcome the fact that “[a]ny

disruptive effect of the judgment[] … on defendant[’s] financial affairs is

irrelevant.”96 The District benefited from funds to which it was not entitled,

so “returning money mistakenly paid is not a loss.”97 For those reasons, the

Court bases its decision on the language and purpose of the Refund Statute,

not public policy considerations.

                            VI.     CONCLUSION

      The Court finds that the Refund Statute gives the District the discretion

to determine the merits of 250 Executive’s refund request, but it does not give

the District discretion to reject a properly filed, meritorious request. Because

250 Executive’s refund request was properly filed and meritorious, it follows

that the District improperly exercised its discretion in denying the request.

The District further acted improperly when it failed to submit the application

to the receiver of taxes.

true, it is true in every case. The Court assumes that the District has a budget
of multiple millions of dollars. The Court also assumes that there are a
number of budget line items that include discretionary spending. There is no
evidence before the Court as to how the claimed refund of nearly $70,000
might be allocated across those line items so as to minimize any effect on
“educating children.” Similarly, the Court has no information about how
burdensome the loss is to 250 Executive.
96
   McGinnes, 377 A.2d at 22.
97
   Pet.’s Rep. Br., at 5, D.I. 27.

                                      22
          The Court considered remanding the matter to allow the District to

reconsider its original denial of 250 Executive’s request, but it rejects that

option. The record clearly establishes that 250 Executive mistakenly or

erroneously paid the taxes and followed the proper procedures for requesting

a refund. Moreover, the District has offered no substantive evidence or

argument to the contrary. Therefore, remanding the matter for the purpose of

determining the merits of the request would serve no purpose.

         In addition to asking the Court to issue a declaratory judgment requiring

the District to submit its refund request to the receiver of taxes, 250 Executive

asks the Court to award it damages plus pre-and post-judgment interest and

attorney fees and costs.98 The Court declines the latter request at this time.

Instead, it believes the preferable course is to allow the entire process the

Refund Statute contemplates to occur before entering a Final Order of

Judgment.

         THEREFORE, 250 Executive, LLC’s Motion for Summary Judgment

is GRANTED. The Cross Motion for Summary Judgment of Christina

School District and Christina School District Board of Education is DENIED.

The matter is REMANDED to the Christina School District Board of

98
     Pet.’s Op. Br., at 18-19, D.I. 13.

                                          23
Education for submission of 250 Executive, LLC’s refund request to the

receiver of taxes in accordance with this Opinion.

      In the event the receiver of taxes approves the refund request, 250

Executive, LLC may submit a proposed Final Order of Judgment.

IT IS SO ORDERED.

                                                     /s/ Ferris W. Wharton
                                                      Ferris W. Wharton, J.

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