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New Cingular Wireless PCS, LLC v. City of Clyde Hill

Court of Appeals of Washington, Division 1

April 20, 2015

NEW CINGULAR WIRELESS PCS, LLC, a Delaware limited liability company, Appellant,

Becker, J.

A complaint for declaratory judgment invokes the superior court's trial jurisdiction, while a petition for certiorari invokes the superior court's appellate jurisdiction. Either avenue is available as a means of contesting the legality of a municipal fine in superior court, so long as any administrative remedy is first exhausted.

In this appeal, the party contesting the legality of a municipal fine is appellant New Cingular Wireless PCS LLC. For years, New Cingular paid a utility tax to the City of Clyde Hill on wireless data services provided to Clyde Hill residents. New Cingular was eventually named as a defendant in a nation-wide class action lawsuit alleging that such taxes are preempted by federal law and wireless companies were improperly billing their customers for them. As part of a settlement agreement, New Cingular agreed to seek recovery of the disputed customer charges from the local taxing jurisdictions. Accordingly, New Cingular filed a claim with Clyde Hill in November 2010, asking the city to refund $22, 053.38 in utility taxes.[1]

This appeal is not about whether Clyde Hill is obligated to refund the utility tax payments. This appeal concerns a municipal fine of $293, 121 that Clyde Hill imposed on New Cingular on July 6, 2012. According to the notice of violation issued by Clyde Hill, New Cingular violated the municipal code by making "false" statements or misrepresentations in utility tax returns.[2] The notice of violation asserted that the company's tax returns were false because they did not inform the city that the tax payments were for services that should not have been taxed:

By its own admission, New Cingular as far back as November, 2005, unilaterally decided to collect monies from its customers that it was not entitled to collect under federal law nor required to collect by any order or demand of the City. New Cingular included such monies in the amount of utility tax it reported was due the City without identifying to the City that the amount reported on its returns included monies billed its customers through September 7, 2010, for tax payments on services exempt from taxation under federal law. . . . New Cingular by its conduct seeks in bad faith to transfer the financial consequences of its illegal actions upon the City and other local jurisdictions unaware of New Cingular's illegal collections and reporting by seeking refunds of its tax payments, interest and attorney fees and costs from the City.

Notice of Violation (July 6, 2012). Clyde Hill notified New Cingular that it would also be liable for the city's attorney fees and costs.

Clyde Hill's municipal code provides that a fine may be protested by an appeal to the mayor. CHMC 1.08.030. New Cingular filed a timely written protest, asserting that the fine could not be imposed absent evidence that the tax returns were intentionally misleading. The city administrator offered New Cingular the choice of an "informal hearing" or a decision based on its written protest alone. New Cingular requested an informal hearing.

In advance of the hearing, New Cingular received a letter from the city attorney for Clyde Hill offering to cancel the fine if New Cingular withdrew its refund claim. New Cingular did not accept this offer.

The hearing consisted of a five-minute telephone call between New Cingular's attorney and Clyde Hill Mayor George Martin. Mayor Martin issued a written "Final Decision" on January 22, 2013, denying and dismissing New Cingular's protest.

New Cingular filed this lawsuit in superior court on April 10, 2013, requesting a declaratory judgment that the fine was invalid. Clyde Hill answered and counterclaimed, seeking judgment on the fine plus interest and attorney fees. Clyde Hill then moved for summary judgment on the ground that New Cingular had 30 days to file a "judicial appeal" of the mayor's decision and had missed that deadline:

New Cingular had 30 days in which to file a judicial appeal of the Mayor's Final Decision by application for a statutory writ of review pursuant to Ch. 7.17 RCW. New Cingular did not timely appeal. Thus, the Mayor's Final Decision is final and binding, and the superior court is without jurisdiction to entertain either (1) an untimely judicial appeal of the Mayor's Final Decision, or (2) an "original trial action" challenging the validity of the Notice of Violation and attempting to collaterally attack the Mayor's Final Decision affirming the Notice of Violation.

Clyde Hill thus took the position that New Cingular's only avenue of relief from the fine was a statutory writ of review of the mayor's decision.

The superior court agreed that New Cingular "should have sought review by petition for a writ of review." The court dismissed New Cingular's complaint without ruling on New Cingular's motion, granted summary judgment to Clyde Hill, and awarded Clyde Hill its attorney fees incurred in enforcing the fine. New Cingular appeals.

Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). When reviewing an order for summary judgment, an appellate court engages in the same inquiry as the trial court. Denaxas v. ...

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