Alltel Communications v. SC Department of Revenue

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR. THE STATE OF SOUTH CAROLINA In The Court of Appeals Case No.: 2007-ALJ-17-0299 Alltel Communications, Inc., Respondent, v. South Carolina Department of Revenue, Appellant. Case No.: 2007-ALJ-17-0300 Alltel Mobile Communications of the Carolinas, Inc., Respondent, v. South Carolina Department of Revenue, Appellant. Case No.: 2007-ALJ-17-0301 New York Newco Subsidiary, Inc., Respondent, v. South Carolina Department of Revenue, Appellant. Case No.: 2007-ALJ-17-0302 Telespectrum, Inc., Respondent, v. South Carolina Department of Revenue, Appellant. Case No.: 2007-ALJ-17-0303 360 Communications Co. of SC No. 1, Respondent, v. South Carolina Department of Revenue, Appellant. Case No.: 2007-ALJ-17-0304 360 Communications Co. of SC No. 2, Respondent, v. South Carolina Department of Revenue, Appellant. Appeal From Richland County Marvin F. Kittrell, Administrative Law Court Judge Unpublished Opinion No. 2010-UP-232 Heard February 9, 2010 – Filed April 7, 2010 REVERSED AND REMANDED Harry A. Hancock, of Columbia, for Appellant. John M.S. Hoefer and Tracey C. Green, of Columbia, for Respondents. PER CURIAM: In this appeal of an order granting summary judgment to Respondents, the South Carolina Department of Revenue (Department) challenges the Administrative Law Court's (ALC's) determination that Respondents were not telephone companies and thus did not owe any license fees pursuant to section 12-20-100 of the South Carolina Code (2000). The Department also contends that the ALC failed to give proper consideration to other issues raised by the parties in their summary judgment motions. We reverse and remand. FACTUAL/PROCEDURAL BACKGROUND Respondents are Alltel Communications, Inc., Alltel Mobile Communications of the Carolinas, Inc., New York Newco Subsidiary, Inc., Telespectrum, Inc., 360 Communications Co. of SC No. 1, and 360 Communications Co. of SC No. 2.[1] During the tax years ending December 31, 1999 through December 31, 2003 (Tax Years), Respondents were either directly engaged, or owned interests in partnerships that were engaged, in the business of providing wireless voice and data communications service via radio within South Carolina. In 2004, the Department initiated an audit of Respondents. At the conclusion of the audit, the Department notified Respondents that it had determined that a deficiency existed in the license fees paid by Respondents for the Tax Years. The Department proposed to assess Respondents $4,709,671 in additional license fees, interest, and penalties. The basis for the proposed assessment was the Department's determination that Respondents had erroneously used section 12-20-50 of the South Carolina Code (2000) to calculate their license fees. The Department concluded that each Respondent was a "telephone company" and thus was required to pay license fees in accordance with section 12-20-100, rather than section 12-20-50. Respondents each timely filed with the Department a protest of the proposed assessment. The Department issued a final agency determination denying the protests on May 30, 2007. Thereafter, each Respondent timely filed a request for a contested case hearing with the ALC. The ALC consolidated the six cases. After filing joint stipulations of facts, the parties filed cross-motions for summary judgment. In their summary judgment motion, Respondents contended that section 12-20-100 did not apply to them because they were not telephone companies. Alternatively, Respondents argued that, if they were telephone companies, the Department did not properly calculate the license fee owed by Respondents under section 12-20-100. Specifically, Respondents claimed that the Department erred by determining that they derived gross receipts from "services rendered from regulated business" as contemplated by section 12-20-100(A)(2)(a). Additionally, Respondents contended that section 12-20-100 did not apply to partnerships and that the Department therefore erred by including in its assessment the assets and gross receipts attributable to Respondents' partnership interests. Furthermore, Respondents claimed that the Department should not have imposed a "substantial understatement" penalty under section 12-54-155 of the South Carolina Code (2000) because Respondents' position with respect to their liability under section 12-20-100 was supported by substantial authority. Lastly, Respondents argued that the Department made certain calculation errors with respect to the amounts owed by Alltel Mobile Communications of the Carolinas, Inc. and New York Newco Subsidiary, Inc. On April 22, 2008, the ALC granted Respondents' motion for summary judgment and denied the Department's motion. The ALC determined that Respondents were not telephone companies for the purposes of section 12-20-100 and thus were not required to pay license fees under that statute. This appeal followed. ISSUES ON APPEAL 1. Did the ALC err by granting summary judgment to Respondents? 2. Did the ALC fail to give proper consideration to other issues raised by the parties in their summary judgment motions? STANDARD OF REVIEW When reviewing the grant of summary judgment, an appellate court applies the same standard that governed the trial court. Wogan v. Kunze, 379 S.C. 581, 585, 666 S.E.2d 901, 903 (2008). As in civil matters, summary judgment is appropriate in an administrative matter when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. See Rule 56(c), SCRCP (setting forth the standard for granting summary judgment in civil matters); South Carolina Administrative Practice and Procedure 175 (Randolph R. Lowell ed., 2d ed. 2008) (stating that the standard for granting summary judgment in an administrative matter is the same as in a civil matter). Because summary judgment is a drastic remedy, it should be cautiously invoked to ensure that a litigant is not improperly deprived of a trial on disputed factual issues. Mulherin-Howell v. Cobb, 362 S.C. 588, 597, 608 S.E.2d 587, 592 (Ct. App. 2005). Where further inquiry into the facts of the case is desirable to clarify the application of the law, summary judgment is not appropriate. Brockbank v. Best Capital Corp., 341 S.C. 372, 378, 534 S.E.2d 688, 692 (2000). Moreover, "[s]ummary judgment should not be granted even when there is no dispute as to evidentiary facts if there is dispute as to the conclusion to be drawn from those facts." Id. LAW/ANALYSIS I. Section 12-20-100 The Department argues that the ALC erred by granting summary judgment to Respondents on the ground that Respondents did not constitute telephone companies for the purposes of section 12-20-100. Because we conclude that further inquiry into the facts is necessary to resolve this issue, we agree. Section 12-20-100(A) provides in pertinent part: In the place of the license fee imposed by Section 12-20-50, every express company, street railway company, navigation company, waterworks company, power company, electric cooperative, light company, gas company, telegraph company, and telephone company shall file an annual report with the department and pay a license fee as follows: (1) one dollar for each thousand dollars, or fraction of a thousand dollars, of fair market value of property owned and used within this State in the conduct of business as determined by the department for property tax purposes for the preceding taxable year; and (2)(a) three dollars for each thousand dollars, or fraction of a thousand dollars, of gross receipts derived from services rendered from regulated business within this State during the preceding taxable year, except that with regard to electric cooperatives, only distribution electric cooperatives are subject to the gross receipts portion of the license fee under this subitem (2)(a). S.C. Code Ann. § 12-20-100(A) (2000) (emphasis added).[2] The term "telephone company" is not defined in section 12-20-100 or in the definitional section of chapter 20 of title 12.[3] "Where a word is not defined in a statute, our appellate courts have looked to the usual dictionary meaning to supply its meaning." Berkeley County Sch. Dist. v. S.C. Dep't of Revenue, 383 S.C. 334, 345, 679 S.E.2d 913, 919 (2009) (quoting Lee v. Thermal Eng'g Corp., 352 S.C. 81, 91-92, 572 S.E.2d 298, 303 (Ct. App. 2002)). In addition to utilizing dictionaries, our courts have reviewed other state statutes, as well as state appellate decisions, to ascertain the meaning of an undefined statutory term. See Sonoco Products Co. v. S.C. Dep't of Revenue, 378 S.C. 385, 662 S.E.2d 599 (2008) (where the term "contiguous" was not defined in the applicable statute, the court reviewed dictionaries, state statutes, and state appellate decisions that dealt with the concept of contiguity in order to glean the appropriate definition). Here, the ALC concluded that "based on the plain language of the statute," none of the Respondents constituted a telephone company for the purposes of section 12-20-100 because "the services they provide relate to the provision of wireless communications via radio, not communications via telephone." The ALC's decision does not cite a dictionary definition of either "telephone" or "telephone company," nor does it cite a South Carolina appellate court decision construing those terms. Rather, it appears that, in reaching its result, the ALC relied primarily upon the parties' stipulation that "[t]elephones and telephone companies transmit intelligence over a vast network of wires located in public rights of way and in easements over private property." (emphasis added).[4] At first blush, the parties' stipulation seems to provide significant support for the ALC's conclusion. However, upon further reflection, we conclude that the stipulation is not dispositive of this case. The question of what the legislature intended for the term "telephone company" to mean for the purposes of section 12-20-100 is a question of law. See Charleston County Parks & Recreation Comm'n v. Somers, 319 S.C. 65, 67, 459 S.E.2d 841, 843 (1995) ("The determination of legislative intent is a matter of law."); Bryant v. State, 384 S.C. 525, 529, 683 S.E.2d 280, 282 (2009) ("As this case involves statutory interpretation, we are presented with a question of law."); Catawba Indian Tribe of S.C. v. State, 372 S.C. 519, 524, 642 S.E.2d 751, 753 (2007) ("The issue of interpretation of a statute is a question of law for the court."). Importantly, courts are generally not bound by stipulations regarding questions of law. See Greenville County Fair Ass'n v. Christenberry, 198 S.C. 338, 345, 17 S.E.2d 857, 859 (1941) (holding that a "stipulation as to the law" is generally not binding upon the courts); McDuffie v. McDuffie, 308 S.C. 401, 409-10, 418 S.E.2d 331, 336 (Ct. App. 1992) (holding that stipulations involving questions of law are not binding on the court); 83 C.J.S. Stipulations § 30 (2000) (stating that courts are not bound by stipulations regarding questions of law, such as the intent of a lawmaking body or the construction of a statute). Moreover, we note that stipulations must be "construed like a contract, to effect the intent of the parties." Webster v. Holly Hill Lumber Co., 268 S.C. 416, 421, 234 S.E.2d 232, 234 (1977). Here, we do not believe that it was the Department's intent to, in essence, forfeit its entire case by stipulation. Regardless, we conclude that the parties were not competent to stipulate as to the intent of the legislature regarding its use of the term "telephone company" in Section 12-20-100. Because we find that the parties' stipulation as to the meaning of the term "telephone company" was not dispositive of this case, we must look to the remaining portions of the record to determine whether Respondents fell within the terms of section 12-20-100. Based upon our careful review of the record, we conclude that additional development of the facts is necessary to clarify the application of section 12-20-100 as to Respondents. See Brockbank, 341 S.C. at 378, 534 S.E.2d at 692 (holding that summary judgment is not appropriate when additional development of the facts is desirable to clarify the application of the law). For instance, further inquiry into the nature of the services provided by Respondents is essential. Although the parties have made some stipulations regarding Respondents' services, we do not believe that those stipulations are sufficient to determine whether Respondents constitute telephone companies for the purposes of section 12-20-100. We find support for our conclusion in Shea v. State Dep't of Mental Retardation.[5] In that case, we held that the trial court erred by granting summary judgment on the issue of whether the Department of Mental Retardation's Midlands Center constituted a "hospital or other facility" within the meaning of section 44-7-50 of the South Carolina Code (1976). We concluded that further inquiry into the facts was warranted, specifically noting that the record was "not clear" as to the nature of the Midlands Center. Shea, 279 S.C. at 611, 310 S.E.2d at 823. In reaching our decision, we stated: The question of the construction of this statute as applied to a mental retardation facility is an important question of novel impression. If the statute's application is not absolutely clear as a matter of law, this question should not be decided without fully developing the facts by means of trial. Id. at 611, 310 S.E.2d at 822. Here, the construction of section 12-20-100 as applied to wireless communications service providers is an important question of novel impression. No appellate court in this State has construed the term "telephone company" for the purposes of section 12-20-100. Moreover, the application of section 12-20-100 is not "absolutely clear." As noted above, the term "telephone company" is not defined in section 12-20-100 or in the applicable definitional section. Additionally, an examination of other South Carolina statutes and regulations reveals that while wireless communications service providers are treated differently from landline telephone companies for regulatory purposes,[6] their services are treated the same with respect to the sales and use tax.[7] Furthermore, courts from other jurisdictions that have addressed issues similar to the one presented here have not reached consistent results. Compare Bell Atl. Mobile of Mass. Corp., Ltd. v. Comm'r of Revenue, 884 N.E.2d 978 (Mass. 2008) (holding that a cell phone service provider was not a "telephone company" for the purposes of a statute providing for the central valuation of the "machinery, poles, wires and underground conduits, wires and pipes of all telephone and telegraph companies"), and In re Appeal of Topeka SMSA Ltd. P'ship, 917 P.2d 827 (Kan. 1996) (holding that companies providing two-way cellular radio telecommunications service did not transmit "telephonic messages" and thus could not be taxed as public utilities), with City of Jefferson City v. Cingular Wireless, LLC, 531 F.3d 595 (8th Cir. 2008) (holding that local tax ordinance imposing a tax on businesses supplying telephones and telephonic service applied to a cell phone service provider), cert. denied, 129 S. Ct. 739 (2008), Airtouch Commc'ns, Inc. v. Dep't of Revenue, 76 P.3d 342 (Wyo. 2003) (finding that cellular service providers were telephone companies for the purposes of a property assessment statute), Southwestern Bell Mobile Sys., Inc. v. Arkansas Pub. Serv. Comm'n, 40 S.W.3d 838 (Ark. Ct. App. 2001) (finding that commercial mobile radio service providers fell within terms of a property assessment statute that applied to "telephone . . . or other similar companies"), City of Sunset Hills v. Southwestern Bell Mobile Sys., Inc., 14 S.W.3d 54 (Mo. Ct. App. 1999) (concluding that wireless communications service provider was a telephone company and that City therefore had statutory authority to impose a business license fee on it), and Cent. Ky. Cellular Tel. Co. v. Commonwealth, 897 S.W.2d 601 (Ky. Ct. App. 1995) (holding that cellular phone companies constituted telephone companies for the purposes of a property tax statute). Because we find that further development of the facts is necessary to ascertain whether Respondents constitute telephone companies for the purposes of section 12-20-100, we hold that the ALC erred by granting summary judgment on that issue. Accordingly, we reverse the ALC's grant of summary judgment and remand for further proceedings as to the applicability of section 12-20-100 to Respondents. II. ALC's Failure to Properly Rule on Certain Issues The Department also contends that the ALC failed to give proper consideration to other issues raised by the parties in their summary judgment motions. Specifically, the Department refers to the following portion of the ALC's decision: The Alltel Entities further contend that DOR improperly calculated "gross receipts from regulated business" in its computation of the § 12-20-100 license fee due to the absence of a regulated business; that it improperly included the assets and gross receipts from partnerships in the computation of the § 12-20-100 license fee because the corporate license fee applies only to corporations; and, that it improperly asserted a substantial understatement penalty against the Alltel Entities under § 12-54-155 (2000) because there is substantial authority for the calculation of the license fee on the original license fee returns. Because the Court finds that § 12-20-100 does not apply to the Alltel Entities, it is unnecessary to reach these further assertions. If the Court were to reach these issues, however, it would find for the Alltel Entities on each of these issues for the reasons set forth above. (footnotes omitted). "An administrative body must make findings which are sufficiently detailed to enable this Court to determine whether the findings are supported by the evidence and whether the law has been applied properly to those findings." Hamm v. S.C. Pub. Serv. Comm'n, 309 S.C. 295, 300, 422 S.E.2d 118, 121 (1992). An appellate court "will not accept an administrative agency's decision at face value without requiring the agency to explain its reasoning." Kiawah Prop. Owners Group v. Pub. Serv. Comm'n of S.C., 338 S.C. 92, 96, 525 S.E.2d 863, 865 (1999). When an administrative agency's order fails to set forth the basis for its determination, the proper course of action is to remand the matter to the administrative agency. Id. at 97, 525 S.E.2d at 865. Here, it is questionable whether the ALC actually ruled on the issues mentioned in the above-referenced portion of its decision. The text of the decision states that "[i]f the Court were to reach these issues, . . . it would find for the Alltel Entities on each of these issues for the reasons set forth above." (emphases added). This statement indicates that it was not the ALC's intent to rule on these issues.[8] Nonetheless, to the extent that the ALC did rule on any of these issues, we find that the rulings were not sufficiently detailed to enable proper review. Accordingly, we reverse the above-referenced portion of the ALC's decision and remand the issues discussed therein to the ALC. CONCLUSION For the foregoing reasons, the ALC's order granting summary judgment to Respondents is REVERSED AND REMANDED. PIEPER and GEATHERS, JJ., and CURETON, A.J., concur. [1] The names of a few of the Respondents are not spelled consistently throughout the record. We defer to the spellings set forth in the text of Respondents' brief and the text of the ALC's order, and we order that the case caption be amended accordingly. [2] Companies that do not fall within section 12-20-100 may nevertheless be required to pay an annual license fee in accordance with section 12-20-50 of the South Carolina Code (2000 & Supp. 2009). That section provides in part: "Except as provided in Section 12-20-100, every corporation required to file an annual report shall pay an annual license fee of fifteen dollars plus one dollar for each thousand dollars, or fraction of a thousand dollars, of capital stock and paid-in or capital surplus of the corporation as shown by the records of the corporation on the first day of the taxable year in which the report is filed." S.C. Code Ann. § 12-20-50(A) (2000). [3] The definitions for chapter 20 of title 12 are set forth in section 12-20-10 of the South Carolina Code (2000). [4] Although the ALC did not rely exclusively upon the parties' stipulation, the stipulation was clearly a key factor in the court's decision. For instance, in a footnote, the ALC stated that the stipulation "would seem to resolve the issue in favor of the Alltel Entities." [5] 279 S.C. 604, 310 S.E.2d 819 (Ct. App. 1983), overruled on other grounds by McCall v. Batson, 285 S.C. 243, 329 S.E.2d 741 (1985). [6] SeeS.C. Code Ann. § 58-11-10(f) (1976) (excluding telephone utilities from the definition of "radio common carrier"). [7] See27 S.C. Code Ann. Regs. 117-329.4 (Supp. 2009) ("The following are examples of communication services that are subject to the sales and use tax . . . : (a) Telephone services, including telephone services provided via . . . a wireless transmission system . . .") (emphasis added). [8] Although the footnotes accompanying this portion of the ALC's decision purport to contain "alternative" findings, the explanation given for most of the findings is simply "for the reasons set forth above." This fact suggests that the findings were not based on independent grounds, but rather on the ALC's conclusion that Respondents did not constitute telephone companies for the purposes of section 12-20-100.