general-motors-corporation-v-carole-keeton-rylander-comptroller-of-public ( 2000 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

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NO. 03-00-00247-CV

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General Motors Corporation, Appellant

v.

Carole Keeton Rylander, Comptroller of Public Accounts of the State of Texas; and John Cornyn,

Attorney General of the State of Texas, Appellees

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FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT NO. 97-12350, HONORABLE CHARLES F. CAMPBELL, JUDGE PRESIDING

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Appellant General Motors Corporation ("GM") brought suit against appellees, the Comptroller of Public Accounts and the Attorney General of Texas, seeking a refund of franchise taxes. Both parties moved for summary judgment. The trial court granted summary judgment in favor of the Comptroller and denied GM's motion for summary judgment. We will affirm the trial court's judgment.

BACKGROUND In addition to compensating its employees by paying them wages and salaries, GM also compensates its employees in the form of pension and other post-retirement benefits. Conforming to the Comptroller's view that the amount of a taxpayer's obligation to pay such benefits should be included in taxable surplus when calculating the taxpayer's franchise tax liability, GM paid its franchise tax liability, including in surplus its pension and post-retirement obligations. GM thereafter filed tax refund claims for report years 1991 through 1994. After the Comptroller denied GM's request for the refund, GM brought suit in district court seeking a refund of certain portions of its franchise tax payments. GM argued in district court, and argues now on appeal, that the amount of its pension and post-retirement liabilities should be deducted from its surplus, and that the refusal to deduct such amount violates the preemption provision of the federal Employment Retirement Income Security Act ("ERISA"). See 29 U.S.C. § 1144 (1994). GM consequently moved for summary judgment on the basis that sections 171.109(a) and 171.109(j)(1) of the Franchise Tax Act violate ERISA's preemption provision. See Tex. Tax Code Ann. §§ 171.109(a), (j)(1) (West Supp. 2000). In response, the Comptroller and the Attorney General (collectively, "the Comptroller") moved for summary judgment on the basis that (1) ERISA does not preempt the Franchise Tax Act, and (2) GM has no evidence that would change the opinion of this Court or the Texas Supreme Court's denial of writ of error in Sharp v. Caterpillar, Inc., 932 S.W.2d 230 (Tex. App.--Austin 1996, writ denied), or persuade the United States Supreme Court to grant a petition for writ of certiorari. The district court granted the Comptroller's motion for summary judgment and denied GM's motion. GM now appeals. Because we maintain that ERISA does not preempt the sections of the Texas Franchise Tax Act at issue, we affirm the trial court's judgment.

DISCUSSION When, as in this case, the trial court's order granting summary judgment for one movant and denying summary judgment for the other does not specify the grounds upon which it rests, we may affirm the trial court's judgment if any of the grounds raised in the prevailing movant's motion are meritorious. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).

Texas law imposes a franchise tax on corporations for the privilege of doing business in Texas. Tex. Tax Code Ann. § 171.109 (West Supp. 2000). The franchise tax is computed by applying the applicable tax rate to a corporation's taxable capital, which consists of the corporation's stated capital plus the corporation's surplus. Id. § 171.101(a) (West 1992). At issue in this appeal are sections 171.109(a) and 171.109(j)(1) of the Franchise Tax Act. Section 171.109(a) defines the components of the franchise tax base, including "surplus," while section 171.109(j)(1) details those liabilities a corporation may not exclude from its surplus calculation. Id. § 171.109(a), (j)(1).

In Sharp v. Caterpillar, this Court, faced with facts and arguments virtually indistinguishable from those GM here advances, held that Caterpillar's liability for certain post-retirement employee benefits did not qualify as debt and therefore could not be deducted from the company's taxable surplus. Caterpillar, 932 S.W.2d at 234-35. We considered in detail both Caterpillar's argument that sections 171.109(a) and 171.109(j)(1) of the Franchise Tax Act should be interpreted to allow a deduction for the company's future benefits liability as well as their argument that ERISA preempted these provisions. Id. at 234-39. After thorough analysis of the sections at issue, we explained that the legislature added section 171.109 to the Tax Code in 1987 to provide a general definition of surplus, and subsequently added subsection (j) to that section in 1991 "to clarify how the general definition of surplus in subsection (a)(1) of the 1987 Act should be applied in the context of employee benefits." Id. at 233-34. Based on the plain language of the statute and the legislature's intent in enacting it, we sustained the Comptroller's argument that Caterpillar's future liabilities for the employee benefits at issue could not be excluded from, and therefore had to be included in, surplus. Id. at 234-35.

Having determined that Caterpillar was required to include in surplus the amount of its future liabilities for the employee benefits at issue, we next turned to the Comptroller's contention that ERISA did not preempt the relevant provisions of the Franchise Tax Act. The ERISA preemption provision states that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to an employee benefit plan" covered by the Act. 29 U.S.C. § 1144. The United States Supreme Court has held that a law "relates to" an employee benefit plan if it has a "connection with" or "reference to" such plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). In Caterpillar, we did not affirmatively decide the issue of whether section 171.109(j), which clarifies one particular application of the general rule in section 171.109(a)(1), was preempted by ERISA because Caterpillar's liabilities, like GM's liabilities in the present case, would nevertheless be included in surplus under section 171.109(a)(1). We concluded that ERISA did not preempt the relevant sections of the Franchise Tax Act because that statute "is part of a generally applicable tax scheme that incidentally raises the costs of doing business for some ERISA plans; therefore, the statute's connection to ERISA plans is too tenuous, remote, and ephemeral to warrant preemption." Caterpillar, 932 S.W.2d at 239.

GM in no way distinguishes the facts of this case from those present in Caterpillar. GM instead disagrees with our holding in Caterpillar and argues that we wrongfully decided the issue because "[e]ven though the statute makes no reference to ERISA plans, nor even to liabilities for employee compensation benefits, it is plain that the statute was targeted at including liabilities under employee benefits plans in surplus." (Emphasis added.) GM's sole basis for its argument rests upon its contention that in the earlier case, Caterpillar failed to illuminate for us evidence showing that the legislature targeted obligations arising from ERISA benefit plans when it enacted section 171.109. GM, however, merely urges an argument that we have previously addressed. In determining that ERISA did not preempt the sections of the Franchise Tax Act at issue, we stated:

[The Franchise Tax Act] clearly does not conflict with ERISA's substantive provisions; ERISA does not impose any form of tax and does not address state tax treatment of covered plans. Nor was section 171.109(a)(1) specifically targeted at ERISA plans. The statute was intended to be generally applicable to all types of contingent and estimated liabilities.

Id. at 236 (emphasis added). There is no evidence in the Tax Code that the Franchise Tax Act singles out ERISA plans by limiting franchise tax deductions. We maintain, as we did in Caterpillar, that "Tax Code section 171.109(a)(1) is a generally applicable statute that catches ERISA plans in its broad sweep; therefore, the statute was not specifically targeted at ERISA benefits . . . ." Id. at 237.

Furthermore, we decline the invitation to overrule Caterpillar because our decision is in accord with United States Supreme Court case law dealing with preemption. In New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (1995), the Court recognized that the text of ERISA is clearly expansive, but warned that the text should not be read too broadly: "If 'relate to' were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes preemption would never run its course, for 'really, universally, relations stop nowhere.'" Travelers, 514 U.S. at 655 (internal citation omitted); accord De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 813 (1997). Preemption does not occur "if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability." Travelers, 514 U.S. at 661 (citing District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n.1 (1992)).

GM presents no arguments other than those considered in Caterpillar, nor does it persuasively demonstrate that Caterpillar was wrongly decided. In short, GM offers no compelling reason why we should effectively overrule our prior decision. We adhere to our precedents for reasons of efficiency, fairness, and legitimacy. Weiner v. Wasson, 900 S.W.2d 316, 320 (Tex. 1995). As the Weiner dissent advises, we should "not succumb to a temptation to continually revisit prior decisions as new fact situations arise." Id. at 332 (Owen, J., dissenting, joined by Phillips, C.J., and Hecht, J.). "If we [do] not follow our own decisions, no issue could ever be considered resolved." Id. at 320. Because we have already considered the arguments that GM now presents, and because we have previously held that ERISA does not preempt sections 171.109(a) and (j)(i) of the Franchise Tax Act, we decline to revisit the issue or overrule our prior decision. We accordingly overrule GM's issue on appeal. We affirm the trial court's judgment.

Marilyn Aboussie, Chief Justice

Before Chief Justice Aboussie, Justices B. A. Smith and Patterson

Affirmed

Filed: December 7, 2000

Do Not Publish

in section 171.109(a)(1), was preempted by ERISA because Caterpillar's liabilities, like GM's liabilities in the present case, would nevertheless be included in surplus under section 171.109(a)(1). We concluded that ERISA did not preempt the relevant sections of the Franchise Tax Act because that statute "is part of a generally applicable tax scheme that incidentally raises the costs of doing business for some ERISA plans; therefore, the statute's connection to ERISA plans is too tenuous, remote, and ephemeral to warrant preemption." Caterpillar, 932 S.W.2d at 239.

GM in no way distinguishes the facts of this case from those present in Caterpillar. GM instead disagrees with our holding in Caterpillar and argues that we wrongfully decided the issue because "[e]ven though the statute makes no reference to ERISA plans, nor even to liabilities for employee compensation benefits, it is plain that the statute was targeted at including liabilities under employee benefits plans in surplus." (Emphasis added.) GM's sole basis for its argument rests upon its contention that in the earlier case, Caterpillar failed to illuminate for us evidence showing that the legislature targeted obligations arising from ERISA benefit plans when it enacted section 171.109. GM, however, merely urges an argument that we have previously addressed. In determining that ERISA did not preempt the sections of the Franchise Tax Act at issue, we stated:

[The Franchise Tax Act] clearly does not conflict with ERISA's substantive provisions; ERISA does not impose any form of tax and does not address state tax treatment of covered plans. Nor was section 171.109(a)(1) specifically targeted at ERISA plans. The statute was intended to be generally applicable to all types of contingent and estimated liabilities.

Id. at 236 (emphasis added). There is no evidence in the Tax Code that the Franchise Tax Act singles out ERISA plans by limiting franchise tax deductions. We maintain, as we did in Caterpillar, that "Tax Code section 171.109(a)(1) is a generally applicable statute that catches ERISA plans in its broad sweep; therefore, the statute was not specifically targeted at ERISA benefits . . . ." Id. at 237.

Furthermore, we decline the invitation to overrule Caterpillar because our decision is in accord with United States Supreme Court case law dealing with preemption. In New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (199