Justia Construction Law Opinion Summaries

Articles Posted in Tax Law
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Plaintiff filed suit against Fresno Unified and the Contractor, alleging that they violated California's competitive bidding requirements, the statutory and common law rules governing conflicts of interest, and Education Code sections 17406 and 17417. Based on the Court of Appeal's review of the four corners of the construction agreements and resolution of Fresno Unified’s board, the court concluded that plaintiff properly alleged three grounds for why Education Code section 17406's exception to competitive bidding did not apply to the purported lease-leaseback contracts. The court also concluded that California's statutory and common law rules governing conflicts of interest extended to corporate consultants and plaintiff alleged facts showing Contractor participated in creating the terms and specifications of the purported lease-leaseback contracts and then became a party to those contracts. After remand, the further proceedings included defendants' motion for judgment on the pleadings, which argued the lawsuit had become moot because the construction was finished and the contracts terminated. The trial court agreed.The Court of Appeal reversed, holding that defendants and the trial court erroneously interpreted plaintiff's lawsuit as exclusively an in rem reverse validation action. Rather, plaintiff is pursuing both a validation action and a taxpayer action. In this case, plaintiff asserts violations of California's competitive bidding laws and Education Code sections 17406 and 17417 along with conflicts of interest prohibited by Government Code section 1090 and common law principles. The remedy of disgorgement is available under these counts asserted in plaintiff's taxpayer's action even though the Construction Contracts are fully performed. Therefore, the counts in plaintiff's taxpayer's action seeking disgorgement are not moot. The panel remanded for further proceedings. View "Davis v. Fresno Unified School District" on Justia Law

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The Supreme Court affirmed the order of the district court finding that the production of aggregate by Ash Grove Cement Company qualified as "processing" under the Nebraska Advantage Act (NAA), Neb. Rev. Stat. 77-5701 to 77-5735, and finding that Ash Grove's aggregate production did not qualify as "manufacturing" under the NAA, holding that the appeals in this case were without merit.Because Lyman-Richey, which sold aggregate products used for things like manufacturing concrete, was wholly owned by Ash Grove, Ash Grove was eligible to include Lyman-Richey in its application for NAA tax incentives. At issue in this case was whether the district court erred in (1) finding that aggregate production locations were not engaged in "manufacturing" under the NAA; (2) denying Lyman-Richey's claims for overpayment of sales and use tax based on the manufacturing machinery or equipment exemption; and (3) finding the aggregate production locations were engaged in "processing" under the NAA. The Supreme Court affirmed, holding (1) although Ash Grove did not engage in "manufacturing" when it produced aggregate without crushing, it did engage in the qualified business of "processing" under the NAA; and (2) Lyman-Richey failed to prove entitlement to overpayment of sales and use tax based on the manufacturing machinery and equipment exemption. View "Ash Grove Cement Co. v. Nebraska Department of Revenue" on Justia Law

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In 2012, the Campbell Union School District (CUSD) Governing Board enacted a fee on new residential development under Education Code section 17620. The fee, $2.24 per square foot on new residential construction, was based on a study that projected that “it will cost the District an average of $22,039 to house each additional student in new facilities.” This figure was based on a projected $12.8 million cost to build a new 600-student elementary school and a projected $24.4 million cost to build a new 1,000-student middle school. SummerHill owns a 110-unit residential development project in Santa Clara, within CUSD’s boundaries. In 2012 and 2013, SummerHill tendered to CUSD under protest development fees of $499,976.96. The trial court invalidated the fee and ordered a refund of SummerHill’s fees. The court of appeal affirmed, holding that the fee study did not contain the data required to properly calculate a development fee; it failed to quantify the expected amount of new development or the number of new students it would generate, did not identify the type of facilities that would be necessary to accommodate those new students, and failed to assess the costs associated with those facilities. View "SummerHill Winchester LLC v. Campbell Union School District" on Justia Law

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Charges that constitute compensation for the use of government property are not subject to Proposition 218’s voter approval requirements. To constitute compensation for a property interest, however, the amount of the charge must bear a reasonable relationship to the value of the property interest, and to the extent the charge exceeds any reasonable value of the interest, it is a tax and requires voter approval.Plaintiffs contended that a one percent charge that was separately stated on electricity bills issued by Southern California Edison (SCE) was not compensation for the privilege of using property owned by the City of Santa Barbara but was instead a tax imposed without voter approval, in violation of Proposition 218. The City argued that this separate charge was the fee paid by SCE to the City for the privilege of using City property in connection with the delivery of electricity. The Supreme Court held that the complaint and stipulated facts adequately alleged the basis for a claim that the surcharge bore no reasonable relationship to the value of the property interest and was therefore a tax requiring voter approval under Proposition 218. The court remanded the case for further proceedings. View "Jacks v. City of Santa Barbara" on Justia Law

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In 2012, the South Dakota Department of Revenue (Department) commenced an audit of Taxpayer’s excise tax and sales tax licenses for tax period 2009 through 2012. At issue in this case was whether Taxpayer’s construction management at-risk services provided to public and non-profit entities were subject to a contractor’s excise tax under S.D. Codified Laws 10-46A-1. Taxpayer did not remit excise tax on the gross receipts it received from its construction management at-risk services provided to public and non-profit entities. As a result of the audit, the Department issued Taxpayer a certificate of assessment for $43,020, which included excise tax and interest. The circuit court reversed the Department’s certificate of assessment, ruling that Taxpayer’s services were not subject to a contractor’s excise tax under section 10-46A-1. The Supreme Court reversed, holding that Taxpayer’s act of entering into a contract with a public entity to guarantee a satisfactorily completed public improvement project by a specific date for a specific cost was subject to excise tax under section 10-46A-1. View "Puetz Corp. v. S.D. Dep’t of Revenue" on Justia Law

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A certified question of law from the U.S. District Court for the District of Idaho was presented to the Idaho Supreme Court. Karen White and her development company, Elkhorn, LLC, sought to recover $166,496 paid to Valley County for "capital investments for roads in the vicinity of [their] White Cloud development." Phase I of White Cloud was completed and it was undisputed by the parties that the tax monies paid for Phase I were used by the County to complete capital investments for roads in the vicinity of the White Cloud development. The County conceded that it did not adopt an impact fee ordinance or administrative procedures for the impact fee process as required by the Idaho Development Impact Fees Act (IDIFA). The County also conceded it did not enact an IDIFA-compliant ordinance, because, at the time, the County believed in good faith that none was required. Plaintiff filed suit against the County claiming that the road development fee imposed by the County as a condition for approval of the White Cloud project violated Idaho state law and deprived Plaintiff of due process under both the federal and Idaho constitutions. In her Second Amended Complaint, Plaintiff raised two claims for relief. The first claim for relief alleged that “Valley County’s practice of requiring developers to enter into a Road Development Agreement ("RDA," or any similar written agreement) solely for the purpose of forcing developers to pay money for its proportionate share of road improvement costs attributable to traffic generated by their development is a disguised impact fee, is illegal and therefore should be enjoined." The first claim for relief also alleged that, because the County failed to enact an impact fee ordinance under IDIFA, the imposition of the road development fees constituted an unauthorized tax. Plaintiff’s second claim for relief alleged that the County’s imposition of the road development fee constituted a taking under the federal and Idaho constitutions. The County argued Plaintiff voluntarily agreed to pay the RDA monies. Plaintiff denies that the payment was voluntary since it was required to obtain the final plat approval. The issue the federal district court presented to the Idaho Supreme Court centered on when the limitations period commences for statutory remedies made available under Idaho law to obtain a refund of an illegal county tax. The Court answered that the limitations period for statutory remedies made available under Idaho law to obtain a refund of an illegal county tax commences upon payment of the tax. View "White v. Valley County" on Justia Law

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Robert Mesteller brought suit to challenge Gwinnett County and its Board of Commissioners' (County) Solid Waste Ordinance. He appealed a superior court's grant of summary judgment in favor of the County. Relying upon the Home Rule provision of the Georgia Constitution (among others), the County adopted the Solid Waste Collection and Disposal Ordinance of 2010. Under the Ordinance, the County was divided into five zones, each to be serviced by a private waste management company. The County collected fees for the waste collection services through annual tax assessment notices, which it then remits to the five service providers, minus the service fee. Mesteller received a property tax bill that showed a fee for solid waste collection services. Acting pro se, he sued the County and the members of its Board of Commissioners, individually and as members of the Board, alleging the assessment and collection of the fee violated the Georgia Constitution. After notice and a hearing, the superior court granted the County's motion for summary judgment. Mesteller contended on appeal that the County was without authority to use the annual property tax bill to assess or collect fees for solid waste services because by contracting with private waste management companies to collect solid waste, the County was not, in fact, "provid[ing] solid waste collection services" within the meaning of OCGA 12-8-39.3 (a), and therefore not authorized to place the collection fee on the tax bill of a property owner or to enforce the collection of the fee as set forth in the statute. The Supreme Court concluded that Mestellar's argument "reveal[ed] a misunderstanding of the precedents of [the] Court." As such, the Court affirmed the superior court's grant of summary judgment in favor of the County. View "Mestellar v. Gwinnett County" on Justia Law

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After Claimant's attempt to obtain a refund of sales tax on building materials used in the construction of an ethanol production plant was administratively denied in part, Claimant sought judicial review. This appeal turned on a statutory limitation of the exemption for manufacturing machinery and equipment and the limited statutory authority for appointment of a purchasing agent. The Supreme Court affirmed, holding (1) the statute limited the exemption to purchases by the manufacturer; and (2) a contractual provision purporting to entitle the manufacturer to all tax credits for taxes paid by a construction contractor was not effective as a purchasing agent appointment. View "Bridgeport Ethanol v. Neb. Dep't of Revenue" on Justia Law

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Ivory Homes purchased various concrete products from a company that, when it delivered the products, provided an invoice that charged a single sales price without indicating separate delivery charges. Ivory Homes then discovered if it structured its transactions with the company differently and bargained for separate and independent delivery charges, the charges would not be taxable. Subsequently, Ivory Homes filed a refund request with the Utah Taxpayer Services Division for sales tax it paid for several years on expenses associated with the concrete products. The Division denied the refund. The Utah State Tax Commission also denied the refund request. The Supreme Court affirmed the Tax Commission's decision that it did not erroneously receive any tax and that Ivory Homes was not entitled to a tax refund where (1) under a substantial evidence standard of review, the Commission correctly made findings of fact that the parties did not intend delivery charges in their original transactions; and (2) alternatively, a plain language interpretation of the Refund Statute requires that the Tax Commission commit some error in its receipt of taxes before a taxpayer is entitled to a refund. View "Ivory Homes, Ltd. v. Utah Tax Comm'n " on Justia Law