Wednesday, April 18, 2007

Harford County v. Saks Fifth Avenue Distribution Company (Ct. of Appeals)

Files April 17, 2007. Opinion by Chief Judge Robert M. Bell.

From the official headnote:
When taxpayer overpaid its personal property taxes, it was entitled to a refund of those monies, as to which both the interest on the refunded taxes and pre-judgment interest on that interest are also payable.
On appeal from a decision of the Court of Special Appeals reversing the decision below denying interest on the refund of personal property taxes mistakenly overpaid by the taxpayer ("Saks") and remanding for consideration whether pre-judgment interest is due on the amount of refund interest due, the Court of Appeals AFFIRMED the Court of Special Appeals' decision as to reimbursement of interest, and REVERSED as to the need for remand, instead ordering pre-judgment interest at the legal rate to be paid on the refund interest.

In a case with distinctly limited general applicability, since the statute being interpreted had been changed even prior to consideration of this case to eliminate the right to interest on refunds of overpaid personal property taxes, the Court found that the statute then in effect entitled Saks to interest on the amounts it had overpaid in personal property taxes. That overpayment occurred when Saks mistakenly included the value of personal property it leased in its own personal property return for several years, when taxes on the same property had been paid by the lessor and the lessor reimbursed by Saks. When Saks filed amended returns, the taxing authorities ("the County") agreed to and did pay the requested refund amounts, but Saks' claim for interest.

Saks filed suit, and the trial court dismissed for failure to state a claim. On appeal, the Court of Special Appeals reversed the judgment below, finding that interest was in fact due, but remanded the case to the trial court for a determination whether pre-judgment interest would be due on the refund interest. The Court of Appeals then granted a writ of certiorari.

Reviewing the statutory language, Court found no ambiguity in the provisions providing for interest on overpaid personal property taxes at the same rate that would have been collected had the amounts been un- or underpaid. It also had little difficulty finding that the filing of amended returns by Saks constituted an "appeal" under the statute, and Saks' failure to file an appeal of the favorable ruling below (that it was due a refund) did not result in administrative finality precluding the issue from being raised in this case.

The final issue was whether pre-judgment interest was due on the interest held due but unpaid on the refunded amounts. Although it is the exception rather than the rule, the Court found that the necessary criteria for pre-judgment interest had been met here, since the obligation to pay interest on any refund was established by the statute, the amount of interest due on the refund amounts was certain, definite and liquidated on the date the refund was made to Saks, and the withholding of that interest deprived Saks of the use of those amounts. The Court therefore overruled the remand ordered by the Court of Special Appeals and awarded pre-judgment interest at the "legal rate" of 6% per annum as a matter of law.

The opinion is available in PDF format.

No comments: