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Desoto Gathering Company, LLC v. Hill

Supreme Court of Arkansas

March 29, 2018



          Accordingly, I dissent. Elias, Books, Brown & Nelson, P.C., by: William K. Elias and Wyatt D. Swinford, for appellants.

          David Hogue; and Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, for appellees.

          COURTNEY HUDSON GOODSON, Associate Justice.

         Appellant DeSoto Gathering Company, LLC ("DeSoto") appeals from the Faulkner County Circuit Court's order granting the motion to dismiss filed by appellees Angela Hill, in her official capacity as Faulkner County Assessor; the Faulkner County Board of Equalization, Faulkner County, Arkansas; the Faulkner County Treasurer; and the Faulkner County Tax Collector (collectively, "Hill"). For reversal, DeSoto argues (1) that the circuit court erred in dismissing DeSoto's refund claim pursuant to Arkansas Rule of Civil Procedure 12(b)(8) (2017) and (2) that the circuit court also erred by finding that DeSoto's claim for a refund was barred by the doctrine of res judicata. We reverse and remand.

         DeSoto owns gas compressors, gas-gathering systems, and related equipment that are subject to ad valorem property tax in Faulkner County, Arkansas. In 2012, after receiving the Faulkner County Assessor's valuation of its personal property, DeSoto challenged the assessments before the Faulkner County Board of Equalization. The board affirmed the assessments, and DeSoto appealed to the Faulkner County Court. After the county court upheld the assessments, DeSoto then appealed to the Faulkner County Circuit Court in January 2013. In this "valuation appeal, " DeSoto alleged that the assessor's method of estimating the fair market value of its property was defective in several respects.

         On November 5, 2015, Hill filed a motion to dismiss DeSoto's valuation appeal, arguing that DeSoto had committed the unauthorized practice of law because a nonattorney had signed the petition for appeal. Hill asserted that the petition was therefore null and void and that DeSoto had failed to perfect a valid appeal to the county court. Furthermore, Hill contended that because the county court never had jurisdiction of the ad valorem appeal, the circuit court did not acquire jurisdiction to hear the appeal. On August 16, 2016, the circuit court dismissed the valuation appeal for lack of subject-matter jurisdiction.

         During the discovery process in the valuation appeal, DeSoto learned that its Cove Creek property was actually located in Conway County, even though the property had been included in the 2012 ad valorem assessment in Faulkner County. In addition, DeSoto discovered a list of intangible property that it claimed had been erroneously assessed by Hill. DeSoto met with Hill in September 2013 to discuss these errors. Hill agreed to correct the erroneous assessments for the 2013 and 2014 tax years but refused to remove them from the 2012 assessment. DeSoto then paid its 2012 taxes in October 2013 pursuant to an agreed escrow order in the valuation appeal.

         On December 1, 2015, DeSoto filed a claim in the Faulkner County Court for a refund of its 2012 ad valorem taxes under Arkansas Code Annotated section 26-35-901 (Repl. 2012). The refund claim was based on the erroneous assessment of DeSoto's Cove Creek personal property that was located in Conway County and on the taxation of its exempt intangible property. Hill filed a motion to dismiss the claim due to the pendency of the 2012 valuation appeal in the Faulkner County Circuit Court. Hill argued that the county court had no choice but to dismiss the refund action under Arkansas Rule of Civil Procedure 12(b)(8) because the earlier case involved the same parties and arose out of the same occurrence. The county court agreed and dismissed the refund action on May 31, 2016.

         Desoto appealed to the circuit court, and on August 24, 2016, Hill again filed a motion to dismiss. She continued to assert that the refund action should be dismissed under Rule 12(b)(8) due to the 2012 valuation case. Although that case had recently been dismissed on August 16, 2016, for lack of subject-matter jurisdiction, Hill argued that the dismissal could still be appealed by DeSoto. In addition, Hill contended that the refund claim was barred by the doctrine of res judicata because it could have been brought in the valuation case.

         A hearing on the motion to dismiss was held on February 13, 2017. On March 2, 2017, the circuit court entered an order granting Hill's motion and dismissing DeSoto's refund action. The court stated that both the refund action and the 2012 valuation appeal stemmed from the same transaction or occurrence, which was the 2012 ad valorem tax assessment. Thus, the circuit court found that the refund claims were precluded by res judicata because they could have been raised in the previously filed and dismissed valuation case. Further, the court ruled that it was required to dismiss the refund matter pursuant to Rule 12(b)(8) because the valuation case was still pending on appeal before this court.[1]DeSoto filed a timely notice of appeal from the circuit court's order of dismissal.

         On appeal, DeSoto first argues that the circuit court erred by dismissing its refund claim under Arkansas Rule of Civil Procedure 12(b)(8). We generally review a circuit court's decision on a motion to dismiss under an abuse-of-discretion standard. Ballard Group, Inc. v. BP Lubricants USA, Inc., 2014 Ark. 276, 436 S.W.3d 445; Jonesboro Healthcare Ctr., LLC v. Eaton-Moery Envtl. Servs., Inc., 2011 Ark. 501, 385 S.W.3d 797. However, the construction of a court rule is a question of law, which we review de novo. Jonesboro, supra.

         Pursuant to Rule 12(b)(8), the "pendency of another action between the same parties arising out of the same transaction or occurrence" can be raised as a defense to a complaint filed by a plaintiff. The Reporter's Note to Rule 12 indicates that this provision is based on an earlier statute, Arkansas Statutes Annotated section 27-1115(3) (Repl. 1962), which listed as one of the grounds for a demurrer, "[t]hat there is another action pending between the same parties for the same cause[.]" We have consistently interpreted that statute, as well as Rule 12(b)(8), as applying only to prohibit identical actions from proceeding between identical parties in two different courts of this state. Potter v. City of Tontitown, 371 Ark. 200, 264 S.W.3d 473 (2007); Patterson v. Isom, 338 Ark. 234, 992 S.W.2d 792 (1999); Nat'l Bank of Commerce v. Dow Chem. Co., 327 Ark. 504, 938 S.W.2d 847 (1997); Tortorich v. Tortorich, 324 Ark. 128, 919 S.W.2d 213 (1996). We have indicated that the matter is one of venue; thus, Rule 12(b)(8) is not implicated when one of the actions is in a different jurisdiction, such as federal court. Potter, supra; Dow Chem., supra. In Mark Twain Life Insurance Corp. v. Cory, we stated that the rule is intended to discourage a multiplicity of suits and to protect the defendant from "double vexation from the same cause." 283 Ark. 55, 59, 670 S.W.2d 809, 812 (1984). We have also noted that under our common law, when the same action is pending in different courts with concurrent jurisdiction, the first court to exercise jurisdiction rightfully acquires control. Patterson, supra; Tortorich, supra. This prevents two different judgments with respect to the same issues, which would lead to confusion and "calamitous results." Patterson, 338 Ark. at 240, 992 S.W.2d at 796.

         DeSoto contends that Rule 12(b)(8) did not apply to bar its refund action because its claim for a refund was a separate and distinct claim from that raised in its valuation case. According to DeSoto, the first action sought to adjust the valuation of its properly taxable property pursuant to the statutory procedure set forth in Arkansas Code Annotated sections 26-27-317 and 26-27-318 (Repl. 2012), while its subsequent refund action sought a return of taxes paid on nontaxable property as is authorized under Arkansas Code Annotated section 26-35-901 (Repl. 2012). Thus, DeSoto argues that even though the ...

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