Marsicovetere v. Dept. of Motor Vehicles

Marsicovetere v. Dept. of Motor Vehicles (99-477); 172 Vt. 562; 772 A.2d 540

[Filed 12-Apr-2001]


                                 ENTRY ORDER

                      SUPREME COURT DOCKET NO. 1999-477

                             JANUARY TERM, 2001


Brian R. Marsicovetere 	               }	APPEALED FROM:
                                       }
                                       }
     v.	                               }	Washington Superior Court
                                       }	
Department of Motor Vehicles	       }
                                       }	DOCKET NO. 720-12-98 Wncv

                                                Trial Judge: David Jenkins

             In the above-entitled cause, the Clerk will enter:


       Appellant Brian Marsicovertere appeals a denial of a refund of the
  motor vehicle purchase and  use tax he paid under 32 V.S.A. § 8903(b).  The
  denial was made because his request for a refund  came after the statute of
  limitations had tolled under 12 V.S.A. § 517.  The superior court granted
  the  State's summary judgment motion, concluding that 12 V.S.A. § 517 did
  apply and barred the refund  at the time appellant had made his request. 
  Appellant argues the statute does not apply to  administrative proceedings
  conducted by the Department of Motor Vehicles (DMV) and, even if it  did,
  the statute of limitations should be applied prospectively. We affirm. 

       On August 5, 1997, appellant registered his vehicle at the DMV in
  Vermont.  He paid $631.75  purchase and use tax pursuant to 32 V.S.A. §
  8903(b).  On September 23, 1998, appellant requested  a refund because
  sales tax on the vehicle had been previously paid to a state other than
  Vermont.  A  taxpayer may recoup any sales tax paid to Vermont, provided
  the taxpayer can show adequate proof  that he has already paid sales tax to
  another state that is equal to or greater than that paid in Vermont.  Id. §
  8914; see also id. § 8911(9).  Appellant requested the refund one year, one
  month and eighteen  days after the vehicle was registered.  The DMV denied
  the refund on September 25, 1998 because  the appellant did not provide
  enough information to determine how much out-of-state sales tax had  been
  paid.  Appellant appealed the decision and a hearing was conducted on
  October 27, 1998.   Although appellant submitted the correct information at
  the hearing, showing he had paid $1,468.46  in sales tax to New York, the
  hearing examiner denied the refund of $631.75.  The basis for the  second
  denial was that the request was outside the one year statute of limitations
  period provided for  under 12 V.S.A. § 517.

       Appellant appealed to the superior court, which heard his case in
  September 1999.  The court  concluded that 12 V.S.A. § 517 did apply to the
  vehicle purchase and use tax. Section 517 states:  "[a]n action to recover
  money paid under protest for taxes shall be commenced within one year after 

 

  the cause of action accrues, and not after."  The court found that § 517
  governed administrative  proceedings by the Agency of Transportation that
  arise when a taxpayer has paid a tax under protest.  The court noted that
  provisions of a general statute of limitations may apply to administrative 
  proceedings.  Further, the court agreed with the hearing examiner's finding
  that the statute of  limitations began to run once the taxpayer had the
  right to bring an action, which in this case  followed the payment of the
  tax on August 5, 1997.    

       Appellant argues that the one year statute of limitation under 12
  V.S.A. § 517 should not be  applied to the purchase and use sales tax
  refund statute, 32 V.S.A. § 8914.  He points out that the  language of the
  refund statute does not refer to a statute of limitations.  It states that,
  "[a]ny  overpayment of [the motor vehicle purchase and use] tax as
  determined by the commissioner shall be  refunded."  32 V.S.A. § 8914.  In
  the absence of a specifically designated period, appellant claims, it  is
  unfair to apply § 517 because taxpayers have not been given adequate notice
  that their claims to a  refund are time-barred.  Appellant supports his
  argument by pointing to other statutes that designate  specific periods
  after which a refund is precluded, e.g., 32 V.S.A. § 9245 (meals and rooms
  tax; three  year period); id. § 7488(a) (estate and gift taxes; three year
  period); id. § 5292(a) (assessment and  collection; 2 month period from
  specific date).  He contends that because these statutes have time  limits
  embodied in the language of the statutes, and § 8914 omits such language,
  the legislature,  therefore, did not intend the refund statute to contain a
  specific limit. 

       We cannot agree with this analysis.  As the State argues in response,
  the presence of specific  limitations in selected statutes compared to the
  omission of one in the refund statute, § 8914, does  not demonstrate an
  affirmative decision by the Legislature to make purchase and use refunds 
  available at any time.  The State cites several tax statutes that similarly
  do not include specific  statutes of limitation on refunds or claims.  See,
  e.g., 32 V.S.A. § 7819 (cigarettes and tobacco  products); id. § 8101 (tax
  imposed on property, business or corporate franchises of railroad, 
  steamboat, car companies, etc.); 30 V.S.A. §  22 (public service taxes). 
  It argues that the legislature  understood that the limitations period in §
  517 is the general rule, applicable to tax statutes unless a  more or less
  restrictive time frame was made specifically applicable.  

       We find this reasoning compelling based on the legislative goal to
  curtail delayed requests for  refunds beyond a reasonable period.  This is
  especially true for the application of § 517 to refund  claims from the
  purchase and use tax, 32 V.S.A. § 8903(b).  Otherwise, the Legislature
  would not  have mentioned § 517 when it passed remedial legislation
  providing for refunds under Act 223 of  1994. (FN1)  The 1993-94
  Legislature purposely exempted refunds between August 31, 1980 and 
  December 31, 1995 from § 517, stating "Notwithstanding the provisions of 12
  V.S.A. § 517, any tax  collected under 32 V.S.A. Chapter 219. . . shall be
  refunded by the commissioner of motor vehicles."  1993, No. 223 (Adj.
  Sess.), § 3.  The direct reference to § 517 demonstrates that the
  legislature was  aware of the potential bar to refund claims posed by § 517
  during the period of 1980-1995.  Thus,

 

  it acted to prevent the application of § 517 to that specific time period. 
  It is reasonable to conclude  that the Legislature was aware that claims
  filed after 1995 would be subject to the general statute of  limitation in
  § 517.

       Appellant next argues that if § 517 applies, then the use of the term
  "action" in the statute  indicates that the commencement of a court action
  is required to toll the one year statute and not an  administrative
  proceeding by the DMV.  We find that where § 517 states "[a]n action to
  recover  money paid under protest for taxes," the term "action" applies
  equally to DMV administrative  proceedings and court actions.  Under the
  laws relating to motor vehicles, an aggrieved taxpayer may  not bring an
  action directly to the superior court because it does not have jurisdiction
  over the claim  at that point.  23 V.S.A. § 105(b).  As a condition
  precedent, a taxpayer must exhaust all remedies  before appealing to the
  superior court to have a DMV decision reviewed.  See Weinberger v. Salfi, 
  422 U.S. 749, 765 (1975) ("Exhaustion [of administrative remedies] is
  generally required as a matter  of preventing premature interference with
  agency processes, so that the agency may function  efficiently and so that
  it may have an opportunity to correct its own errors, to afford the parties
  and  the courts the benefit of its experience and expertise, and to compile
  a record which is adequate for  judicial review."); In re D.A. Assocs., 150
  Vt. 18, 20, 547 A.2d 1325, 1326 (1988) ("when an  administrative remedy is
  established by statute or regulation, relief must not only be sought in 
  accordance therewith, but must first be exhausted before recourse to the
  courts is available").   Further, this Court has held that the terms
  "action" and "suit" "connote the demand of a right in a  court of justice,
  or in some tribunal as a condition precedent to giving a court jurisdiction
  of the  subject matter."  Mayo v. State, 138 Vt. 419, 420, 415 A.2d 1061,
  1062 (1980).  We therefore hold  that the term 'action' does apply to
  administrative proceedings, including a hearing before the DMV.   In this
  case, the first opportunity appellant had to initiate "[a]n action to
  recover money" was  immediately following the payment of the tax bill on
  August 5, 1997.  That right expired one year  later on August 5, 1998.

       Finally appellant urges the Court to apply the one year statute of
  limitation under § 517   prospectively to his case because the DMV has not
  adequately informed taxpayers that claims are  time-barred.  The general
  rule is that judicial decisions are applied retrospectively.  American 
  Trucking Ass'ns, Inc. v. Conway, 152 Vt. 363, 378, 566 A.2d 1323, 1332
  (1989). (FN2)  "In civil  cases, we will apply a ruling prospectively only
  if (1) we overrule past precedent or decide an issue  of first impression
  whose resolution was not clearly foreshadowed, and (2) retroactive
  application  would be inequitable."  Vermont Accident Ins. Co. v. Howland,
  160 Vt. 611, 612, 648 A.2d 819, 820  (1993) (mem.) (internal quotations
  omitted).  We decline to apply our holding prospectively here 

 

  because the effect would be too broad.  Section 517 has been in effect
  since 1884 and, as the State  rightly forewarns, a prospective ruling would
  effectively overrule its legislative purpose.  Statutes of  limitation
  provide practical utility as we described in Investment Properties, Inc. v.
  Lyttle, 169 Vt.  487, 492, 739 A.2d 1222, 1226-27 (1999): "The time limits
  represent a balance, affording the  opportunity to plaintiffs to develop
  and present a claim while protecting the legitimate interests of 
  defendants in timely assertion of that claim."  A prospective ruling on
  these facts would set a  precedent under which virtually every initial
  challenge to a statute of limitations would be eligible  for prospective
  application.

       In addition, while we recognize that a financial loss represents a
  hardship, the amount in  dispute in this case is relatively small. 
  Balanced against the availability of remedies through the  DMV's
  administrative proceedings and the fact that a refund can be requested up
  to one year from  the payment of the tax, retroactive application of § 517
  is appropriate.  Such application will not  result in substantially
  inequitable treatment.  Paradoxically, as the State has conceded, the
  appellant  might have received a refund when he first requested it on
  September 23, 1998, had he provided the  DMV with proper information
  regarding the sales tax.  Unfortunately for the appellant, upon the 
  request for an administrative hearing, a more searching review ascertained
  that § 517 provided a one  year limitation to refund requests.  Because we
  find that § 517 properly applies to refund requests  under 32 V.S.A. §
  8914, we conclude that appellant's request fell outside the statute of
  limitations.


       Affirmed.



                                       BY THE COURT:


                                       _______________________________________
                                       Jeffrey L. Amestoy, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       James L. Morse, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice



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                                  Footnotes


FN1.  This act was passed in response to this Court's holding in Williams v.
  State, 156 Vt. 42, 53-55,  589 A.2d 840, 847 (1991), which concerned the
  application of 32 V.S.A. § 8903(b) and § 8914.

FN2.  Our decision in American Trucking was based on the United States
  Supreme Court decision in  Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07
  (1971).  The analysis of retroactivity in Chevron has  since been
  abandoned, in part, by Harper v. Virginia Dep't of Taxation, 509 U.S. 86,
  97-99 (1993),  which held that retroactivity should not depend on the
  particular equities of individual claims.   Eliminating the hardship
  analysis, however, only strengthens our decision here that prospective 
  application of § 517 is inappropriate.  See LaFaso v. Patrissi, 161 Vt. 46,
  57-59, 633 A.2d 695, 701-2  (1993).