Deja Vu Showgirls v. State, Dep't of Tax. , 2014 NV 72 ( 2014 )

130 Nev., Advance Opinion 72.
IN THE SUPREME COURT OF THE STATE OF NEVADA
DEJA VU SHOWGIRLS OF LAS No. 59752
VEGAS, LLC, A NEVADA LIMITED
LIABILITY COMPANY, D/B/A DEJA VU
SHOWGIRLS; LITTLE DARLINGS OF
LAS VEGAS, D/B/A LITTLE FILED
DARLINGS; K-KEL, INC., D/B/A
SPEARMINT RHINO GENTLEMEN'S SEP 18 2014
CLUB; OLYMPUS GARDEN, INC., RAC E K. I. INDEMAN
rte 0 9ABtrART
D/B/A OLYMPUS GARDEN; SHAC, BY
HiS oPu:ryttlRK
LLC, D/B/A SAPPHIRE; THE POWER
COMPANY, INC., D/B/A CRAZY HORSE
TOO GENTLEMEN'S CLUB; AND D. K
WESTWOOD, INC., D/B/A
TREASURES,
Appellants,
vs.
NEVADA DEPARTMENT OF
TAXATION; NEVADA TAX
COMMISSION; AND THE STATE OF
NEVADA BOARD OF EXAMINERS,
Respondents.
Appeal from a district court order dismissing a tax action for
failure to properly follow administrative procedures by filing a petition for
judicial review in the district court. Eighth Judicial District Court, Clark
County; Elizabeth Goff Gonzalez, Judge.
Affirmed.
Greenberg Traurig, LLP, and Mark E. Ferrario and Brandon E. Roos, Las
Vegas,
for Appellant SHAC, LLC.
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Lambrose Brown and William H. Brown, Las Vegas; Shafer and
Associates and Bradley J. Shafer, Lansing, Michigan,
for Appellants Deja Vu Showgirls of Las Vegas, LLC; Little Darlings of
Las Vegas; K-Kel, Inc.; Olympus Garden, Inc.; The Power Company, Inc.;
and D. Westwood, Inc.
Catherine Cortez Masto, Attorney General, David J. Pope and Blake A.
Doerr, Senior Deputy Attorneys General, and Vivienne Rakowsky, Deputy
Attorney General, Carson City,
for Respondents.
BEFORE THE COURT EN BANC.
OPINION
By the Court, DOUGLAS, J.:
In this opinion, we address whether the district court erred by
concluding that, after exhausting their administrative remedies for
seeking a refund under Nevada's Live Entertainment Tax (NLET),
appellants were limited to a petition for judicial review, rather than a de
novo action. We also consider whether the district court committed error
by refusing to invoke judicial estoppel in lieu of granting respondents'
motion to dismiss the underlying de novo action for lack of subject matter
jurisdiction. We conclude that the district court properly limited
appellants to a petition for judicial review and was correct in refusing to
invoke judicial estoppel. Accordingly, we affirm the district court's
decision.
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BACKGROUND
This appeal involves the same parties as the appeal in Deja Vu
Showgirls v. State, Department of Taxation, 130 Nev. , P.3d
(Adv. Op. No. 73, September 18, 2014) (hereinafter Deja Vu II). However,
unlike Deja Vu II, which primarily addresses whether NLET violates the
First Amendment to the United States Constitution, this appeal focuses
on the procedural processes available to a claimant challenging an
unfavorable decision regarding his or her tax refund request.
On April 18, 2006, appellants filed suit in the United States
District Court for the District of Nevada seeking a declaration that NLET
is facially unconstitutional, an injunction against its enforcement, and a
refund for all taxes paid under the statute. The federal court dismissed
that suit because appellants failed to show that Nevada's court and
administrative systems deprived them of a plain, speedy, and efficient
remedy.'
On December 19,2006, following the dismissal of their federal
case, appellants filed a de novo action (Case 1) in the Eighth Judicial
District Court seeking similar remedies to those sought in federal court,
including declaratory and injunctive relief, damages, attorney fees, and
costs. Appellants later amended their Case 1 complaint to include an as-
applied constitutional challenge to NLET. While Case 1 was pending in
district court, appellants K-Kel, Olympus Garden, SHAC, The Power
'The United States Court of Appeals for the Ninth Circuit later
affirmed that dismissal.
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Company, and D. Westwood filed individual tax refund requests with the
Nevada Department of Taxation (the Department), arguing that NLET is
facially unconstitutional for violating the First Amendment. The
Department denied those refund requests on April 3, 2007, and the
Nevada Tax Commission (the Commission) affirmed the Department's
decision by written order on October 12, 2007.
On January 9, 2008, appellants filed a second de novo action
in the Eighth Judicial District Court challenging the administrative
denials of their refund requests. In this new action (Case 2), appellants
sought declaratory and injunctive relief, the refund of taxes paid, and
damages based on NLET's alleged facial unconstitutionality. Appellants
later amended their Case 2 complaint to include an as-applied
constitutional challenge to NLET—that issue having never been raised
during their administrative proceedings. Because of their similarities, the
district court consolidated the declaratory relief claims in Cases 1 and 2,
and coordinated the remaining issues in those cases.
Thereafter, on respondents' motion for partial summary
judgment, the district court limited Case 1 to appellants' facial
constitutional challenge to NLET and permanent injunction request, and
dismissed appellants' remaining Case 1 claims, including their as-applied
challenge. In that same order, the district court dismissed the entirety of
Case 2 for lack of subject matter jurisdiction because appellants failed to
follow proper procedure when they filed a de novo action in the district
court after the completion of their administrative proceedings, rather than
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filing a petition for judicial review as required by NRS 233B.130. This
appeal challenging the district court's dismissal of Case 2 followed. 2
DISCUSSION
Nevada law required appellants to file a petition for judicial review
On appeal, appellants argue that the district court erred by
dismissing their case for failure to file a petition for judicial review in line
with the Nevada Administrative Procedure Act (APA) found in NRS
Chapter 233B because their de novo action was properly brought in
district court per NRS 368A.290. Respondents disagree, asserting that,
when read together, the APA and NRS 368A.290 required appellants to
challenge the denial of their refund request through a petition for judicial
review and not the de novo action initiated below.
Whether a party must file a petition for judicial review when
challenging a decision by the Commission that denies a refund-of-taxes-
paid request under NLET is a question of statutory construction that we
review de novo, see PERS v. Reno Newspapers, Inc., 129 Nev. „ 313
P.3d 221, 223 (2013), and requires us to consider how the APA and NRS
368A.290 relate.
2 Following their Case 2 appeal, the district court resolved all of
appellants' remaining Case 1 claims, and appellants subsequently
appealed from that determination. Appellants' challenge to the resolution
of their Case 1 claims is addressed in the companion case. Deja Vu II, 130
Nev. , P.3d (Adv. Op. No. 73, September 18, 2014).
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In enacting the APA, the Legislature stated that the chapter's
purpose is "to establish minimum procedural requirements for the
regulation-making and adjudication procedure of all agencies. . . and for
judicial review of both functions, except those agencies expressly exempted
pursuant to the provisions of this chapter." NRS 233B.020(1). Neither the
Department nor the Commission is exempted from the APA's purview.
NRS 233B.039. In line with its purpose, the APA provides that a party
aggrieved by a final agency decision in a contested case who is identified
as a party of record by an agency in an administrative proceeding is
entitled to review of that decision by filing a petition for judicial review in
the appropriate court. See NRS 233B.130(1)-(2). Moreover, the APA
states that its provisions "are the exclusive means of judicial review of, or
judicial action concerning, a final decision in a contested case involving an
agency to which [NRS Chapter 233B] applies." NRS 233B.130(6).
It is undisputed that appellants are parties of record aggrieved
by a final agency decision in a contested case, and that "fal decision of the
Nevada Tax Commission is a final decision for the purposes of judicial
review." NRS 360.245(5). Furthermore, we have construed NRS
360.245(5) and NRS 233B.130(6) as meaning "that all final decisions by
the Commission be subject to the provisions of NRS Chapter 233B." S.
Cal. Edison v. First Judicial Dist. Court, 127 Nev. „ 255 P.3d 231,
235-36 (2011) (holding that a petition for judicial review is the sole remedy
after a final decision by the Commission). Accordingly, absent explicit
legislative direction to the contrary, the APA's procedures, including the
requirement to file a petition for judicial review, apply to all final
Commission decisions, including those addressing refund requests under
NLET. See id.; NRS 233B.020; NRS 233B.130(6).
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Recognizing that a party aggrieved by a final Commission
decision is limited to a petition for judicial review, we now consider
whether the Legislature provided an exception to that rule in NLET's
relevant provision. NRS 368A.290 provides:
1. Within 90 days after a final decision upon
a claim filed pursuant to this chapter is rendered
by:
(b) The Nevada Tax Commission, the
claimant may bring an action against the [Nevada
Tax] Department on the grounds set forth in the
claim.
2. An action brought pursuant to subsection
1 must be brought in a court of competent
jurisdiction in Carson City, the county of this
State where the claimant resides or maintains his
or her principal place of business or a county in
which any relevant proceedings were conducted by
the Board or the Department, for the recovery of
the whole or any part of the amount with respect
to which the claim has been disallowed.
A review of NRS 368A.290 makes clear that nothing in that
statute provides an exception to the express statutory requirement
identified in Edison that a tax claimant can seek review of a final
Commission decision only by filing a petition for judicial review under
NRS 233B.130. Edison, 127 Nev. at , 255 P.3d at 237. And contrary to
appellants' position, nothing in NRS 368A.290 indicates that the
Legislature intended to allow taxpayers seeking refunds under NLET to
file a de novo action, rather than a petition for judicial review.
Accordingly, the sole remedy for a taxpayer aggrieved by a
final decision from the Commission concerning a tax refund request under
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NRS Chapter 368A is to file a petition for judicial review pursuant to NRS
233B.130. Based on this determination, we conclude that the district
court did not err by determining that it lacked subject matter jurisdiction
to consider the de novo challenge below because NRS 368A.290 required
appellants to file a petition for judicial review. 3 See Edison, 127 Nev. at
, 255 P.3d at 233, 237; see also Kame v. Emp't Sec. Dep't, 105 Nev. 22,
25, 769 P.2d 66, 68 (1989) (stating that noncompliance with statutory
requirements for judicial review of an administrative decision divests a
court of jurisdiction and is grounds for dismissal). 4 Having made this
determination, we now consider whether judicial estoppel barred the
district court from dismissing appellants' action despite their failure to file
a petition for judicial review.
3Appellants' contention that Edison cannot be applied to their de
novo action because the underlying case was active at the time this court
decided Edison lacks merit. See Leavitt v. Siems, 130 Nev. „ 330
P.3d 1, 5 (2014) (rejecting an argument that a decision issued after the
close of trial could not be applied to a party's case because "retroactivity is
the default rule in civil cases").
4With regard to appellants Deja Vu and Little Darlings, the record
demonstrates that these parties failed to exhaust their administrative
remedies before filing the underlying de novo action. Thus, the district
court lacked subject matter jurisdiction over their claims and we
necessarily affirm the dismissal of these parties, albeit for reasons other
than those relied on by the district court. See Malecon Tobacco, L.L.C. v.
State ex. rel. Dep't of Taxation, 118 Nev. 837, 839, 59 P.3d 474, 475-76
(2002); see also Bongiovi v. Sullivan, 122 Nev. 556, 575 n.44, 138 P.3d 433,
447 n.44 (2006). Accordingly, we need not address arguments presented
by Deja Vu and Little Darlings.
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The district court correctly declined to apply judicial estoppel
Judicial estoppel is an equitable doctrine used to protect the
judiciary's integrity and is invoked by a court at its discretion. See NOLM,
L.L.C. v. Cnty. of Clark, 120 Nev. 736, 743, 100 P.3d 658, 663 (2004).
Whether judicial estoppel applies is a question of law that we review de
novo. Id.
We have explained that judicial estoppel "should be applied
only when a party's inconsistent position [arises] from intentional
wrongdoing or an attempt to obtain an unfair advantage." Id. (alteration
in original) (internal quotation omitted); see also Edison, 127 Nev. at ,
255 P.3d at 237. Notably, judicial estoppel "does not preclude a change in
position that is not intended to sabotage the judicial process." Edison, 127
Nev. at , 255 P.3d at 237; NOLM, L.L.C., 120 Nev. at 743, 100 P.3d at
663. Moreover, we have stated that
ffiudicial estoppel may apply when (1) the same
party has taken two positions; (2) the positions
were taken in judicial or quasi-judicial
administrative proceedings; (3) the party was
successful in asserting the first position . . . ; (4)
the two positions are totally inconsistent; and (5)
the first position was not taken as a result of
ignorance, fraud, or mistake.
Edison, 127 Nev. at , 255 P.3d at 237 (second alteration in original)
(internal quotation omitted).
In Edison, despite concluding that a petition for judicial
review constituted the taxpayer's sole remedy for challenging the denial of
its refund request, we ordered the district court to permit a de novo action
because judicial estoppel barred the Department from changing its
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position with respect to the taxpayer. Id. at , 255 P.3d at 237-38. In
that case, we recognized that the Department, both in the present and
past, took inconsistent positions in quasi-judicial proceedings regarding
the means of review available to a taxpayer wanting to challenge a refund
denial. Id. at , 255 P.3d at 237. Notably, in Edison, the Department
stated in its brief to the Commission that the taxpayer could file a de novo
action against the Department under NRS 372.680. Id. Additionally, an
administrative law judge from the Department told the parties' counsel
that "Mn the event that this matter is appealed to district court, it will be
reviewed de novo and additional discovery will likely be allowed at that
time" Id. (alteration in original) (internal quotation omitted). Yet, in the
proceedings before this court, the Department reversed its position and
asserted that de novo review was unavailable to challenge the
Commission's denial of a refund request. Id. at , 255 P.3d at 234.
Based on those facts, we concluded that judicial estoppel applied because
"it would be highly inequitable to. . . allow the Department to change its
position," and therefore, ordered the court to grant the taxpayer a trial de
novo in district court. Id. at , 255 P.3d at 237-38.
Here, appellants contend that, under Edison, the district court
was required to apply judicial estoppel and preclude dismissal for failure
to file a petition for judicial review because respondents engaged in
inconsistent actions both generally as a department and specifically in this
case. In reply, respondents assert that appellants' case is distinguishable
from Edison on this issue because respondents never intentionally misled
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appellants into believing that their remedy was a trial de novo. We agree
with respondents' position.
Unlike the taxpayer in Edison, appellants have failed to show
that respondents made any statement during a judicial or quasi-judicial
proceeding promising or providing for a reasonable probability that de
novo review would be available to appellants. Instead, the record shows
that as early as their federal district court case in 2006, respondents
identified that a petition for judicial review was the appropriate remedy,
citing to the APA. Appellants correctly note that respondents did not
directly reference the APA in their answering brief to the Ninth Circuit,
but said that a taxpayer may bring an action in court within 90 days of a
refund denial by the Commission. While there is arguably some
ambiguity as to the nature of the action that could be brought in court, i.e. ,
whether it is a trial de novo or a petition for judicial review, respondents'
representations do not amount to a misleading statement similar to those
made in Edison. Moreover, any confusion caused by that ambiguity in
these circumstances cannot be characterized as "intentional wrongdoing or
an attempt to obtain an unfair advantage." NOLM, L.L. C., 120 Nev. at
743, 100 P.3d at 663 (internal quotation omitted). Accordingly, we
conclude that the district court committed no error by refusing to invoke
judicial estoppel.
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Based on the foregoing analysis, we affirm the district court's
decision to dismiss this case for lack of subject matter jurisdiction. 5
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5Appellants
also challenge the district court's dismissal of their as-
applied challenge to NLET in Case 2. Although the district court did not
explain why appellants' as-applied challenge was dismissed, the dismissal
was nonetheless proper because the district court lacked subject matter
jurisdiction over that challenge as appellants failed to raise this issue
during their administrative proceedings. See Deja Vu II, 130 Nev. ,
P.3d (Adv. Op. No. 73, September 18, 2014). We have considered all of
appellants' other arguments and conclude that they lack merit.
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