Rules of Appellate Procedure

We are submitting this comment on the November 16, 2009 version of proposed Utah Rule of Appellate Procedure 15 (“November Rule”) from our perspective as state tax attorneys who often represent taxpayers before the Utah district court (“Tax Court”) and Utah Supreme Court. We request that the Supreme Court reject the November Rule, and adopt the version of Rule 15 published in July, 2009, with the clarifications proposed earlier in the rule-making process by the Attorney General’s Office and Counties, as outlined at the bottom of this comment (“July Rule”).
Both the November Rule and July Rule provide that, absent compelling/exceptional circumstances, where there are dual-track appeals of the same case before the Tax Court and Supreme Court through a direct appeal, the direct appeal will be stayed pending the outcome of the Tax Court appeal. The difference between the two versions is that the July Rule provides for a dismissal of the direct appeal upon the issuance of the appealable Tax Court decision, while the November Rule is silent as to procedure following the issuance of the Tax Court decision, presumably leaving such procedure to be addressed in each case.
The July Rule presumptively requiring dismissal is superior to, and will serve the judiciary and bar more fairly and efficiently than the November Rule for the following three reasons:
1. The November Rule Effectively Nullifies the Tax Court in Certain Situations.
Presumptively allowing a direct appeal to proceed after the tax court decision is issued will effectively nullify the Tax Court in that situation. By authorizing and creating a de novo Tax Court in Utah Constitution Article XIII, § 6, and Utah Code § 59-1-601, the people of Utah and the Utah Legislature have granted taxpayers and counties (1) an opportunity to present their factual and legal issues to an impartial tribunal that is not charged with collecting revenue for the state, and (2) a second opportunity to build a new record for an appeal to the Supreme Court. The Tax Court was created to (1) provide an impartial tribunal to hear tax cases in a trial do novo at the party’s option, (2) publish decisions to provide guidance to taxpayers and governmental entities, and (3) develop tax expertise on the bench to be brought to bear on tax cases. See Id. and Utah R. of Judicial Administration Rule 6-103.
In situations covered by the November Rule, the rule effectively sets aside the people’s and the legislature’s desires by functionally ignoring the Tax Court option. Once a Tax Court decision is entered, the Commission decision is not “the” decision anymore. It has been supplanted by the Tax Court decision. This is manifested by the fact that the people of Utah granted the Legislature authority to authorize the Tax Court to “adjudicate, review, reconsider or redetermine any matter decided by the State Tax Commission relating to revenue and taxation,” (Utah Const. Art XIII, § 6(4)), and the Legislature in turn authorized the Tax Court to “review” and “affirm, reverse, modify, or remand any order of the commission,” and to “grant other relief, invoke such other remedies, and issue such orders, in accordance with its decisions, as appropriate.” Utah Code § 59-1-601(1), -604. The Legislature also specified that the “commission shall certify a record of its proceedings to the district court,” (Utah Code § 59-1-601(3)), meaning the Commission proceeding is incorporated into the Tax Court proceeding, but did not require the Tax Court to pay any deference to that record. Rather, the Legislature specified that the Tax Court would conduct a “trial de novo,” meaning “an original, independent proceeding,” which “does not mean a trial de novo on the record.” Utah Code § 59-1-601(1), (2). These express statutory provisions clearly suggest that that the Commission record would be replaced by the new record and decision before the Tax Court.
If the record, decision and standard of review from the Tax Commission remain viable on their own in a direct appeal, then the effort of establishing a new record and decision at the Tax Court is essentially nullified. Any decision of the Tax Court effectively lacks substance if the Commission decision is still a “live” decision on appeal. While the Supreme Court may dismiss the direct appeal on a case-by-case basis under the November Rule, taxpayers and local entities may be reticent to proceed in Tax Court if there is a reasonable chance a direct appeal will be allowed to co-exist alongside the Tax Court decision. Absent compelling circumstances, the Commission decision is not and cannot be the decision under review after a Tax Court decision is entered. Absent compelling circumstances, the Tax Court decision should be the only decision under review at that stage.
Presumptively keeping the Commission decision alive is analogous to the Supreme Court pouring over a case to the Court of Appeals while simultaneously conducting the original appeal, then moving forward with both appeals upon granting certiorari on an appeal of the Court of Appeals decision. This is cumbersome, confusing and effectively nullifies the Court of Appeals case. In that situation and the instant situation, there is only one case and controversy. When the Court of Appeals or the Tax Court issue their decision, the prior appeal becomes moot. At the end of the day, there can be but one decision for a single case and controversy.
On a similar, but broader scale, the November Rule effectively upends our traditional legal system where litigants first exhaust administrative remedies, then district court remedies, then appeal these lower tribunal decisions to the appellate courts. Rule 4 of the Utah Rules of Appellate Procedure provides that appeals should be made only from “final judgments.” This “final judgment rule” exists because “piecemeal appeals are oppressive and costly,” and “optimal appellate review is achieved by allowing appeals only after the entire action is resolved in the trial court.” 4 Am Jur 2d APPELLATE REVIEW § 86. The final judgment rule is to “encourage consolidation in one appeal of all errors a litigant feels transpired during trial.” Id. Presumptively allowing both appeals to proceed, as the November rule does, is contrary to this final judgment concept.
Where the people of Utah and the legislature have so clearly expressed an intent to allow tax cases to be appealed to an impartial de novo Tax Court, where a new record is created for potential review on appeal, the viability of the Tax Court should be upheld by presumptively dismissing a direct appeal once a Tax Court decision is entered.
2. The November Rule will create Confusion and Waste Judicial Resources.
Presumptively presenting dual decisions affecting the same audit period, lien date, or taxable moment for the same taxpayer with substantially different standards of review, records, and decisions is unworkable, confusing and expensive. Arguing over and addressing the Tax Commission standard of review, record and decision in each case will also waste judicial and party resources because the Commission standard of review, record and decision are supplanted by the Tax Court decision.
The standards of review in the two appeals are different. In the direct appeal, the Supreme Court is required to grant the Tax Commission’s findings deference, applying a “substantial evidence” standard. See Utah Code Ann. § 59-1-610(1)(a). Conversely, in the appeal from the Tax Court, the appealing party must “marshal the evidence in support of the findings and then demonstrate that despite this evidence, the trial court’s findings are so lacking in support as to be against the clear weight of the evidence, thus making them clearly erroneous.” Utah Med. Prods. v. Searcy, 958 P.2d 228, 232 (Utah 1998) (citations omitted).
The records in the two appeals are different. In the appeal from the Tax Court, a full Tax Court record exists, often with new witnesses and evidence, that does not exist in the direct appeal.
The decisions in the two appeals are different. The Tax Commission decision in the direct appeal is often substantially different than, and is often over-ruled by, the Tax Court decision.
Applying two separate standards of review against two separate records and two separate decisions is confusing, and is simply unnecessary. It is also burdensome. Briefing and arguing exclusively about the validity or meaning of the Tax Commission standard of review, record, and decision is a superfluous exercise and a waste of judicial and party resources because a new standard of review, record and decision are created in the Tax Court. The more efficient and clear procedure is to presumptively dismiss the direct appeal, and to allow the appeal of the Tax Court case to proceed. Doing so by rule rather than in each case promotes consistency and predictability and preserves judicial and party resources.
3. The July Rule Is Flexible Enough To Allow For Special Cases.
One potential concern with the July Rule dismissal approach is that there may arise a case where one issue in a case is appealed through a direct appeal, and an unrelated issue in the same case is appealed to the Tax Court. In this circumstance, the July Rule allows a party to show that the direct appeal should proceed independently because of an exceptional circumstance (the November Rule changed “exceptional circumstance” to “compelling” circumstance, a change we support.) Because of this flexibility, the July Rule is just and fair.
4. Conclusion and Recommendation.
All in all, the July Rule is best because it (1) carries out the Constitutional amendment and the Tax Court’s express statutory purpose by protecting the viability of the Tax Court, and the integrity of the judicial system, (2) avoids confusion and undue expense to taxpayers and the government and preserves judicial resources, and (3) is flexible enough to address special cases. Additionally, the July Rule was not opposed. The Attorney General’s Office and Counties requested clarifications, but no one opposed the rule. We thus respectfully request the Court to reject the November Rule, and to adopt the July Rule with the clarifications requested by the government, which in our interpretation reads as follows:
(a) If a petition for judicial review of a State Tax Commission decision is filed pursuant to Utah Code Ann. § 59-1-602 by one party in the district court, and by another party in the Supreme Court through a direct appeal, the direct appeal shall be, absent compelling circumstances, (1) stayed pending the resolution of the proceeding before the district court, and (2) dismissed upon the issuance of a final appealable order by the district court.
(b) Assuming an absence of compelling circumstances under subsection (a), all issues appealed in the direct appeal may be raised by any party in the district court proceeding, and if not raised in the district court proceeding, the direct appeal issues will be waived and subject to dismissal with the direct appeal upon the issuance of a final appealable order by the district court.
(c) A party may not appeal pursuant to Utah Code Ann. § 59-1-602 to both the district court and to the Supreme Court through a direct appeal. However, a party who has appealed to either the district court or the Supreme Court may join an appeal filed by another party in the separate court through filing a cross-appeal at the Supreme Court or by intervening in the district court appeal.
Mark K. Buchi
Steven P. Young
Holme Roberts & Owen LLP