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HomeMy WebLinkAbout07-08-2021 - HEX Tracfone Decision Upon Reconsideration TracFone Appeal – Decision Upon Reconsideration PAGE 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 THE HEARING EXAMINER OF THE CITY OF RENTON RE: TracFone Wireless, Inc. Administrative Appeal DECISION UPON RECONSIDERATION OVERVIEW Upon reconsideration, the Final Decision for the above-captioned matter is corrected to entitled TracFone to a refund of $50,588.81 (corrected from $66,513.50) and per diem interest accrual of $3.96 (corrected from $5.20). By motion dated June 18, 2021, the City has requested reconsideration of the final tax assessment made under the Final Decision of the above-captioned matter. The final tax assessment was based upon an agreed upon tax schedule between the City and TracFone. Subsequent to entry of the Final Decision, the City discovered that it had agreed to the final tax assessment in error. The error is manifest from the City’s motion for reconsideration and uncontested by TracFone. Upon reconsideration, the tax assessment presented in the City’s reconsideration motion is found to be accurate and the Final Decision is corrected to impose the amounts advocated in the City’s reconsideration motion. TracFone has not contested the accuracy of the City’s revisions. Rather, it has argued that there is no right of reconsideration for the City’s administrative tax appeal decisions. TracFone also asserts that the City’s TracFone Appeal – Decision Upon Reconsideration PAGE 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 motion is based upon new evidence. TracFone asserts that new evidence should not be admitted for reconsideration requests. The City’s administrative tax review process creates an implied right for reconsideration. City regulations do not address whether or not administrative tax decisions are subject to reconsideration. Case law on whether there is implied authority for such action is unresolved in Washington State. However, the case law that touches on the issue strongly suggests there is reconsideration authority. Public policy and legislative intent also support an implied authority for reconsideration if exercised in a prompt and fair manner. The City did not base its reconsideration motion on new evidence. The City based its argument upon data that was already in the record. The City’s assertion of error was limited to identifying an adding error1 in Exhibit H2. The City included a declaration from its tax and license manager to explain its error. The declaration could arguably qualify as new evidence and for that reason is stricken to eliminate the new evidence issue. The revised Exhibit H2 appended to the Malone declaration is allowed into the record, as it merely serves to show the adding error identified in the City’s reconsideration motion. Background/Materials Considered The Final Decision for the above-captioned matter was issued June 9, 2021. The Final Decision required a refund of $66,513.50 with per diem interest of $5.20. These amounts were arrived at by mutual agreement of the parties, with TracFone reserving objection over the summary judgment rulings upon which these figures were based. The City filed a motion for reconsideration of the Final Decision on June 18, 2021. On that same day, the Examiner emailed the parties setting a June 25, 2021 day for response from TracFone and a June 28, 2021 deadline for reply from the City. TracFone submitted a response brief on June 25, 2021 and the City submitted a reply brief on June 28, 2021. TracFone’s response brief asserts the examiner has no authority to consider the reconsideration request. The response does not dispute the error alleged by the City. By email dated July 4, 2021 the examiner asked TracFone if it wanted to have an opportunity to dispute the error if the examiner found he had authority to consider reconsideration. TracFone responded by email on July 7, 2021 that the examiner had no such authority. The examiner responded that he construed TracFone’s response as waving opportunity to contest the error. TracFone made no further comment. 1 References to “adding error” in this Decision are referring to an unintended omission of data. Specifically, the City asserts that Exhibit H2 erroneously fails to include late payment interest for several years of the audit period in its addition for total accrued late payment interest. TracFone Appeal – Decision Upon Reconsideration PAGE 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 The materials considered for the City’s reconsideration motion are composed of the motion and briefing described above. The City’s motion included a declaration from Nate Malone. That declaration is stricken except for its appended Exhibit B. City’s Reconsideration Request Doesn’t Include New Evidence The City’s reconsideration motion doesn’t involve any material new evidence. In its response to the City’s motion, TracFone asserts that the City’s motion contains new evidence. The City’s motion is not found to contain any material new evidence. The material points made by the City are entirely based upon data that has already been admitted into the record. The City’s entire assertion of error was an adding error, using data already contained in Exhibit H2. As previously noted, the tax liability imposed by the Final Decision was based upon mutual agreement of TracFone and the City. This mutually agreed upon tax liability is detailed in Exhibit H2. Exhibit H2 is a tax schedule that identifies accrued tax liability, interest and penalties for each year between 2008 and 2019. In its motion for reconsideration, the City identifies that accrued interest was only included for the last three years of the audit period, 2010-2013. The City asserts that accrued interest should apply to the entire audit period, 2007-2013. Under Exhibit H2, the total accrued interest was computed as $12,085.01, representing interest for 2010-2013. The City presented a revised Exhibit H2, (Ex. B to the Malone Dec.) where the total accrued interest was computed as $27,245.60. As shown in the revised Exhibit H2, the resulting increase in total accrued interest reduced the refund amount due to the City and that in turn reduced the daily per diem rate. As is evident from the preceding discussion, the error alleged by the City was an adding error that was completely self-evident from Exhibit H2 itself. Exhibit H2 only added the interest identified in the exhibit for 2011, 2012 and 2013. The City’s revised Exhibit H2 added the interest shown in Exhibit H2 for 2007, 2008 and 2009 to the total for 2011, 2012 and 2013. The interest for each of those years was separately shown in Exhibit H2. The City added no new information to Exhibit H2 in identifying the error. The revisions to Exhibit H2 were presented as Exhibit B to the Malone reconsideration declaration. It is recognized that technically his new sworn statements could be considered new evidence. However, his statements are not materially significant and unnecessary to support the City’s assertion of error. The alternative addition shown in Malone’s Ex. B is simply argument as to how the data that already exists in the record should be computed to assess tax liability. To eliminate any issue regarding new evidence, Mr. Malone’s declaration is simply stricken and in its entirety except for his TracFone Appeal – Decision Upon Reconsideration PAGE 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Exhibit B. The error shown in Exhibit B is easily recognizable from the adding error described in Ms. Sands’ reconsideration motion. RMC Doesn’t Address Reconsideration for Administrative Tax Decisions The City cites to RMC 4-8-100 as authority for reconsideration of administrative tax decisions. This section only expressly applies to administrative land use decisions, not tax decisions. The context and plain language of RMC 4-8-100 reveal that it was written to apply to the regulation and review of land use activity. RMC 4-8-100 is a section within Title IV of the RMC, entitled “Development Regulations.” RMC 4-1-020, which defines the purpose of Title IV, identifies that Title IV is designed to implement the City’s comprehensive plan (which plans out how the City is to develop) as well as implementing the Growth Management Act (a state law that regulates local development planning and local development regulations) and the Regulatory Reform Act (which regulates local development permit procedures). RMC 4-8-100 regulates the development process from the initial preapplication meeting for development projects (RMC 4-8-100A), application review procedures for development permit applications (RMC 4-8-100B and C) and so on. RMC 4-8-100I, which addresses reconsideration, references Chapter 36.70B RCW as guidance for admission of new evidence. Chapter 36.70B RCW only applies to development applications. In point of fact, the City’s review of TracFone’s appeal doesn’t conform to most of the requirements of RMC 4-8- 100, because those requirements clearly pertain to development permit applications and not to tax appeals. Given this context, RMC 4-8-100 does not expressly apply to administrative tax decisions. Examiner Has Implied Authority to Reconsider Although there is no express authority for reconsideration in this proceeding, that authority likely is implied. There is no Washington case that definitively resolves whether local agencies have implied authority to reconsider quasi-judicial decisions. However, case law strongly suggests that such authority does exist. The only case that directly addresses the issue is Lejeune v. Clallam County, 64 Wn. App. 257 (Wash. Ct. App. 1992). LeJeune addressed the authority of the Clallam County Commissioners to reconsider a preliminary plat application it had denied three years earlier. The Commissioners had not adopted any express rule or regulation authorizing reconsideration. The court ruled that the Commissioners had no implied right to reconsider a three year old decision, but strongly suggested that such authority could exist if exercised in a more timely fashion. Footnote 12 to the Lejeune case assessed existing case law of the time on implied right to reconsideration, identifying several Washington cases “that suggest the existence of implied power to reconsider in certain limited circumstances.” The footnote placed TracFone Appeal – Decision Upon Reconsideration PAGE 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 particular emphasis upon Hall v. Seattle, 24 Wn. App. 357 (1979), which provided in pertinent part: As important as maintaining the integrity of civil service systems is, it will ill serve the public interest to deny an agency the right to correct its own obvious mistakes when that can be done promptly and fairly. Other courts, which have held to the same effect as the State Supreme Court has in Worsham and Hearty, have recognized that in such limited circumstances, there is an exception to the general rule that an agency does not have the authority to re open and reconsider a final decision in the absence of a specific statute, charter or ordinance authorizing it. See Comment Note: Power of administrative agency to reopen and reconsider final decision as affected by lack of specific statutory authority, Annot., 73 A.L.R.2d 933, 951-52 (1960); 2 Am.Jur.2d Administrative Law § 524, at 336 (1962). 24 Wn. App. at 362. The only reason the LeJeune court didn’t find the Hall case to determinatively resolve the reconsideration issue was because the Hall court framed the right to reconsideration as inherent as opposed to implied. The LeJeune court, however, took the position that administrative agencies have implied power but not inherent power. The Hall court did not distinguish between inherent and implied power so the LeJeune court was uncertain if Hall ultimately should be construed as granting implied authority for reconsideration. Id. at FN 12. The Hall court’s emphasis upon giving agencies an opportunity to correct its mistakes is consistent with the policy underlying requiring exhaustion of administrative remedies in administrative quasi-judicial tax cases. As identified in one administrative appeal tax case, one of the reasons for requiring exhaustion of administrative remedies is to protect the administrative agencies autonomy by allowing it to correct its own errors. Cost Mgmt. Servs., Inc. v. City of Lakewood, 178 Wash. 2d 635 (2013). The policy of enabling one final opportunity to correct errors is consistent with legislative intent. It is ludicrous to believe that any local legislative body would intend that mistakes discoverable within a week or two after issuance of a final decision would have to be resolved in a judicial appeal. As demonstrated in Cost Mgmt., the courts recognize the benefit of correcting mistakes before such expense and time loss is wasted in a judicial appeal. Local legislative bodies should be presumed to have the same wisdom. As a final matter, it is also worth noting that although the Renton Hearing Examiner has no express authority to issue summary judgment rulings, both TracFone and the City had no trouble making summary judgment motions and relying upon CR 56 to guidance for standards on how to resolve such motions. Local, municipal quasi-judicial proceedings are by design informal so that they remain accessible and understandable to the public without the need for lawyers to interpret complicated evidentiary and procedural rules. Although the tax liability for this appeal are significant, small business owners in Renton may find themselves needing to contest tax liability that only involves a few hundred dollars. See, e.g., RMC 5-25-4C, imposing TracFone Appeal – Decision Upon Reconsideration PAGE 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 a 0.00085% tax upon businesses making more than $500,00 per year. Adopting procedural rules that address every conceivable exercise of authority necessary for a fair and feasible review process would render local proceedings as complex as judicial proceedings, shutting the door to local businesses who don’t have the money to hire lawyers to navigate them2. The necessity for implied CR 56 authority is as clear and compelling as that for reconsideration authority – judicial economy is severely compromised without both forms of authority. Further, there is no prejudice to either party in this case in considering the City’s reconsideration motion, since it was filed promptly and without need to consider new evidence. For all these reasons, the hearing examiner has implied authority to consider the City’s motion. Implied Reconsideration Authority Should be Consistent with RMC 4-8-100 Although RMC 4-8-100 does not expressly apply to administrative tax appeals, its provisions serve as a good source of objective standards for regulating motions for reconsideration. Most significantly, RMC 4-8-100I sets a 14 day time limit for reconsideration motions, which was met in this case. Given that the City’s motion was filed within 14 days of the Final Decision in this matter and that it doesn’t involve any new evidence, it is found to have been properly presented for hearing examiner review. As noted in Lejeune FN No. 12, reconsideration as an implied right is in the public interest if “done promptly and fairly.” As previously noted, the parties to this appeal both relied upon CR 56 as a source of authority for regulating the procedures and standards for summary judgment review. The same factors that compel use of CR 56 for a guide to summary judgment procedures compel the use of RMC 4-8-100I as a guide for reconsideration review. More specifically, RMC 4-8-100I is the closest directly applicable and objective guidance on how to process reconsideration requests. It represents a legislative determination of what the Renton City Council considers to be a fair process for reconsidering a land use proceeding. The most important policy objectives in assessing whether to grant reconsideration rights are finality and judicial economy. There is no material difference in the balancing of those objectives between tax and land use decisions. In the absence of any more directly applicable reconsideration standards, RMC 4-8-100I serves as the clearest source of authority as to what reconsideration procedures would be consistent with legislative intent. RMC 4-8-100I requires the filing of a reconsideration motion within 14 calendar days of the issuance of a final decision. The final decision in this case was is sued on June 9, 2021 and the City filed its reconsideration motion on June 18, 2021. The City’s request for reconsideration 2 It is recognized that RMC 4-8-100 addresses reconsideration without creating overly complex procedural rules. However, RMC 4-8-100 does not adopt any specific rules for numerous other procedural issues that would typically arise in a land use proceeding, such as motions for summary judgment, right to exclude irrelevant evidence or right to require cross-examination. RMC 4-8-100 adopts general rules that can be interpreted to cover those specific acts of authority, see, e.g. RMC 4-8- 100(3)(c), but those general rules would unquestionably be construed as proper exercises of implied authority in any event. In the absence of adopting procedures and evidentiary rules as detailed as the CRs and ERs, local jurisdictions should not and cannot be expected to adopt rules that cover every exercise of implied authority. TracFone Appeal – Decision Upon Reconsideration PAGE 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 was timely filed. There being no other inconsistencies with RMC 4-8-100I to the extent that it applies to tax appeals, the City’s motion for reconsideration is found to be properly filed and within the examiner’s jurisdiction for consideration. Agreed Upon Tax Liability Was in Error Exhibit H2, which set the agreed upon total tax liability for TracFone, was erroneous as alleged in the City’s motion for reconsideration. Exhibit H2 failed to properly include all accrued late payment interest for the entire audit period under appeal. TracFone does not contest the adding error. As determined in the Final Decision, the audit period under appeal was from 2007 through 2013. Consequently, interest for all the years 2007 through 2013 should have been included in the total interest owed to the City. Exhibit H2 was in error for failing to include the interest for 2007 through 2010 . The revised exhibit presented as Exhibit B to the Malone declaration corrects the error and accurately integrates the correct interest amount into total tax liability and per diem interest rate as is self-evident from the revised exhibit itself. RMC 4-8-100G3ex Does not Preclude Reconsideration under RMC 48-100I TracFone asserts that RMC 4-8-100G3ex prohibits reconsideration of final decisions. Since this Decision Upon Reconsideration concludes that RMC 4-8-100I serves as a guide for reconsideration procedures, TracFone’s argument must be addressed. Ultimately, RMC 4-8- 100G3ex is not found to preclude reconsideration of final decisions. RMC 4-8-100G3ex provides as follows: The jurisdiction of the Hearing Examiner ends when the Hearing Examiner issues a final decision or recommendation in the matter and the time limit for all appeals has been exhausted. All prehearing orders and non-final decisions and recommendations of the Hearing Examiner are subject to reconsideration and correction. TracFone asserts that RMC 4-8-100G3ex precludes reconsideration for final decisions because it only expressly grants a reconsideration right to “prehearing orders and nonfinal decisions” without including final decisions. However, RMC 4-8-100I is easily construed as granting that right of reconsideration to final decisions as well. RMC 4-8-100I authorizes reconsideration if filed “before the appeal period has expired.” Only final decisions are subject to appeal periods under RMC 4-8-100I. See RMC 4-8-110, 4-8-080G and RCW 36.70C.030 and 36.70C.020(2). In addition, by its own terms RMC 4-8-100G3ex retains hearing examiner jurisdiction until the appeal period has expired. As identified in RMC 4-8-100I, the timely filing of a motion for reconsideration tolls the appeals period. Finally, the format of RMC 4-8-100 clearly establishes that RMC 4-8-100I was intended to apply to final decisions. RMC 4-8-100 lays out permit processing procedures chronologically from preapplication meeting to permit expiration. RMC 4-8-100I is situated right after RMC 4-8-100H, which addresses issuance of a final decision. TracFone Appeal – Decision Upon Reconsideration PAGE 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 DECISION UPON RECONSIDERATION Upon reconsideration, the Final Decision for the above-captioned matter is corrected to entitle TracFone to a refund of $50,588.81 (corrected from $66,513.50) and per diem interest accrual of $3.96 (corrected from $5.20). Exhibit B to the Declaration of Nate Malone in support of the City’s reconsideration motion replaces Exhibit H2 as the proper calculation of TracFone’s tax liability. The Final Decision of this matter issued on June 8, 2021 is corrected to the extent it conflicts with the Malone Exhibit B. All other portions of the Final Decision remain as issued. DATED this 8th day of July 2021. City of Renton Hearing Examiner RMC 5-26-19: JUDICIAL REVIEW OF HEARING EXAMINER DECISION The decision of the hearing examiner is final, subject to review by either party under the provision of RCW 7.16.040, so long as the appealing party files and serves up on all necessary parties the petition for granting a writ of review within twenty (20) days of the date of issuance of the hearing examiner’s decision.