City and County of Denver v. Expedia, Inc

Opinions of the Colorado Supreme Court are available to the
public and can be accessed through the Judicial Branch’s homepage at
http://www.courts.state.co.us. Opinions are also posted on the
Colorado Bar Association’s homepage at http://www.cobar.org.
ADVANCE SHEET HEADNOTE
April 24, 2017
2017 CO 32No. 14SC634, City & Cty. of Denver v. Expedia, Inc.—Statutory Construction—Local
Tax Ordinances.
Denver petitioned for review of the court of appeals opinion reversing the
judgment of the district court and remanding with directions to vacate the subject tax
assessments against Expedia and the other respondent online travel companies
(“OTCs”). See Expedia, Inc. v. City & Cty. of Denver, 2014 COA 87, ___ P.3d ___. The
district court had largely upheld a Denver hearing officer’s denial of protests by
Expedia and the other OTCs to Denver’s claim for unpaid taxes, interest, and penalties,
assertedly due according to Denver’s ordinance imposing a lodger’s tax. Unlike the
hearing officer and district court, the court of appeals concluded that the city lodger’s
tax article was at least ambiguous with regard to both the purchase price paid or
charged for lodging, upon which the tax is to be levied, and the status of the OTCs as
vendors, upon which the ordinance imposes the responsibility to collect the tax and
remit it to the city; and the intermediate appellate court considered itself obligated to
resolve all ambiguities in the lodger’s tax article, being a tax statute, in favor of the
OTCs.
The supreme court reversed the judgment of the court of appeals. A majority of
the court agreed that Denver’s lodger’s tax article imposes a duty on the OTCs to collect
and remit the prescribed tax on the purchase price of any lodging they sell, to include
not only the amount they have contracted with the hotel to charge and return but also
the amount of their markup.
The Supreme Court of the State of Colorado
2 East 14th Avenue • Denver, Colorado 80203
2017 CO 32Supreme Court Case No. 14SC634
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 13CA779
Petitioners:
City and County of Denver, Colorado; Brendan Hanlon in his official capacity as the Chief
Financial Officer of the City and County of Denver; and Bill Speckman, in his official
capacity as Hearing Officer designated by the Chief Financial Officer,
v.
Respondents:
Expedia, Inc.; Hotels.com, L.P.; Hotwire, Inc.; Orbitz, LLC; Priceline.com, Incorporated;
Site59.com, LLC; Travel Webb LLC; Travelocity.com LP; and Trip Network, Inc. d/b/a
Cheaptickets.com.
Judgment Reversed
en banc
April 24, 2017
Attorneys for Petitioners:
Lewis Roca Rothgerber Christie LLP
Michael D. Plachy
Thomas M. Rogers
Denver, Colorado
Hagens Berman Sobol Shapiro LLP
Andrew M. Volk
Christopher A. O’Hara
Seattle, Washington
City Attorney for the City and County of Denver
Charles T. Solomon, Assistant City Attorney
Denver, Colorado
Attorneys for Respondents:
Zonies Law LLC
Sean Connelly
Denver, Colorado
Davis Graham & Stubbs
Jason M. Lynch
Denver, Colorado
Attorneys for Amici Curiae Colorado Municipal League and Colorado Association of
Ski Towns:
Colorado Municipal League
Geoffrey T. Wilson
Denver, Colorado
Attorneys for Amici Curiae Visit Denver and Colorado Hotel and Lodging
Association:
Brownstein Hyatt Farber & Schreck, LLP
Richard B. Benenson
Denver, Colorado
Attorneys for Amicus Curiae American Society of Travel Agents, Inc.:
Blain Myhre LLC
Blain Myhre
Englewood, Colorado
JUSTICE COATS announced the judgment of the Court and delivered an opinion, in
which JUSTICE MÁRQUEZ and JUSTICE BOATRIGHT join.
JUSTICE HOOD concurs in the judgment.
JUSTICE GABRIEL dissents, and CHIEF JUSTICE RICE and JUSTICE EID join in the
dissent.
2
¶1 Denver petitioned for review of the court of appeals opinion reversing the
judgment of the district court and remanding with directions to vacate the subject tax
assessments against Expedia and the other respondent online travel companies
(“OTCs”). See Expedia, Inc. v. City & Cty. of Denver, 2014 COA 87, ___ P.3d ___. The
district court had largely upheld a Denver hearing officer’s denial of protests by
Expedia and the other OTCs to Denver’s claim for unpaid taxes, interest, and penalties,
assertedly due according to Denver’s ordinance imposing a lodger’s tax. Unlike the
hearing officer and district court, the court of appeals concluded that the city lodger’s
tax article was at least ambiguous with regard to both the purchase price paid or
charged for lodging, upon which the tax is to be levied, and the status of the OTCs as
vendors, upon which the ordinance imposes the responsibility to collect the tax and
remit it to the city; and the intermediate appellate court considered itself obligated to
resolve all ambiguities in the lodger’s tax article, being a tax statute, in favor of the
OTCs.
¶2 The application of well-accepted aids to statutory construction leads to the
conclusion that the fair and reasonable interpretation of Denver’s lodger’s tax article is
that it imposes a duty on the OTCs to collect and remit the prescribed tax on the
purchase price of any lodging they sell, to include not only the amount they have
contracted with the hotel to charge and return but also the amount of their markup.
The judgment of the court of appeals is therefore reversed, and the matter is remanded
for consideration of the remaining issues raised on appeal by the parties.
3
I.
¶3 In July 2010, the City and County of Denver issued nine Notices of Final
Determination, Assessment and Demand for Payment against various online travel
companies: Expedia, Inc.; Hotels.com LP; Hotwire, Inc.; Orbitz, LLC; Trip Network,
Inc.; Priceline.com Incorporated; Travelweb, LLC; Site59.com, LLC; and Travelocity.com
LP. The Notices claimed unpaid taxes, penalties, and interest due according to the city
lodger’s tax article, Denver Revised Municipal Code (“D.R.M.C.”) §§ 53-166 to -236, for
the period from January 2001 through April 2010, totaling over $40 million.1 These
online companies filed nearly identical protests, requesting hearings before a Denver
Department of Finance hearing officer, and the protests were consolidated by
stipulation.
¶4 Based on the stipulated evidence, including depositions and other materials from
litigation in other jurisdictions and internal materials of the OTCs themselves
explaining their operational methods and practices, the hearing officer found, and the
parties do not dispute, that the OTCs operate under two basic business models. Under
what they describe as the “agency model,” he found that the OTCs refer customers to
hotels. Lodgers then transact directly with the hotels, and the OTCs receive
commissions in separate transactions. Under what they describe as the “merchant
model,” by contrast, the OTCs operate in the transaction somewhere between lodgers
1 Denver estimated the liabilities based on incomplete information. After discovery
during the administrative proceedings, the parties stipulated to the amount of liability
under various scenarios, depending upon the hearing officer’s determinations.
Pursuant to that stipulation, the websites faced potential liabilities totaling, at most,
$7,573,506 (with interest computed through the date of the stipulation).
4
and hotels. Lodgers transact with the OTCs, prepaying for reservations, and the OTCs
later pass part of those payments along to the hotels. The OTCs, not the hotels, appear
as the merchant of record on lodgers’ credit card statements—hence the term “merchant
model.” These two models have different pricing structures, about which again the
parties do not disagree. In the agency model, the hotels maintain exclusive control over
the purchase price paid by lodgers. In the merchant model, by contrast, the hotels set a
rate they will accept, which the OTCs refer to as a “net rate,” but the hotels grant the
OTCs discretion, within designated limits, to set the price ultimately to be paid by the
lodger. The OTCs then sell reservations to lodgers at that price, pass the amount of the
so-called “net rate” plus a tax surcharge along to the hotels, and retain the difference as
their own compensation.
¶5 For agency-model transactions, the hotels collect and remit lodger’s taxes, just as
they do for all other traditional bookings.2 For merchant-model transactions, the hotels,
as a matter of practice, have also been claiming the transactions on their own lodger’s
tax returns, but because the hotels do not transact directly with the lodgers, and because
the hotels typically do not receive payment at the time of the transaction with the
lodger, the process of collecting and remitting the lodgers’ tax to the city is, in current
practice, somewhat more convoluted. In practice, the OTCs typically collect a
“surcharge” from the lodger at the time the lodger initially pays for a reservation. The
OTCs then transmit that tax surcharge to the hotel along with the so-called “net rate,”
which transmission ordinarily occurs after the lodger checks out. Finally, the hotel
2 Denver does not dispute the tax treatment of the OTCs’ agency-model transactions.
5
remits the surcharged amount to the city, along with its other lodger’s tax receipts for
the month.
¶6 When booking reservations, the OTCs typically disclose two charges to lodgers.
The first amount is the room rate, which is presented to the lodger as a single per-night
rate that includes both the discounted rate to be returned to the hotel and the OTC’s
markup on that rate. The second amount is a taxes-and-fees charge, which is presented
to the lodger as a single per-transaction amount but which actually has two
components: what the OTCs refer to as a “service fee” and a surcharge for taxes.3
Typically, the parties agree, the tax surcharge is computed on the “net rate,” while the
service fees are computed on the price charged to the lodger plus taxes.
¶7 To illustrate, Denver relied on the following example during administrative
proceedings, using hypothetical numbers from the deposition of Expedia, Inc.’s
corporate representative. Assume a website sells a reservation for $100, of which $75
will be paid to the hotel as the net rate and $25 will be retained by the OTC as its
markup. If the applicable lodger’s tax is 10%, it will be applied to the $75 net rate and
the tax surcharge will therefore be $7.50. If the OTC’s service charge is 5.5%, it will be
applied to the so-called “retail price” plus taxes—i.e., to $107.50—and the service fee
will therefore be $5.91. The lodger will see a room rate of $100 and a taxes-and-fees
charge of $13.41, and will pay a total of $113.41. The OTC will retain both the markup
3 The OTCs assert—and Denver does not dispute—that the service fees and taxes are
bundled together into one line item in order to keep the hotels’ net rates confidential,
per contractual obligations. If the tax surcharges were displayed separately, a hotel’s
competitors could compute the hotel’s net rate by dividing the applicable tax rate into
the tax surcharge.
6
and the service fee ($25 plus $5.91, totaling $30.91)4 and will eventually remit to the
hotel the “net rate” and tax surcharge ($75 plus $7.50, totaling $82.50). The hotel then
will remit the tax receipts ($7.50) on its next monthly lodger’s tax return.
¶8 The hearing officer held that this practice for merchant-model transactions does
not comport with the mandates of the city lodger’s tax article for two reasons. First, he
concluded that the OTCs’ markups and service fees are “directly connected with”
furnishing lodging, as contemplated by section 53-171(c) of the D.R.M.C., and therefore
must be included within the tax base. Second, he concluded that the OTCs are
“vendors,” within the contemplation of section 53-170(8), and are therefore responsible
for collecting and remitting taxes directly to the city. The hearing officer therefore
upheld Denver’s Notices.5
¶9 The OTCs sought judicial review as permitted by C.R.C.P. 106(a)(4). The district
court rejected Denver’s position regarding the applicable statute of limitations, holding
instead that Denver could assert liabilities for only the preceding three years, but
otherwise it upheld the hearing officer’s determinations. On cross-appeals by the
parties, the court of appeals concluded that the city lodger’s tax article is at least
4 The parties agree that, although the service fees roughly approximate the OTCs’
transaction costs for credit-card vendor fees and the like, there is no substantive
difference between the OTCs’ markup and the service fees. Both types of receipts are
booked as gross receipts, without a distinction from any accounting or tax perspective.
Although the OTCs argued during administrative proceedings that the markups and
service fees might be treated differently under Denver’s ordinance, they have since
abandoned that argument.
5 The hearing officer voided Denver’s asserted fraud penalties—which are no longer at
issue in this case—and recomputed the liabilities based on the parties’ stipulations, but
otherwise upheld the Notices in full.
7
ambiguous as to both the question whether the OTCs are “vendors,” with
collect-and-remit obligations, and the question whether the tax base includes the OTCs’
markups and service fees. Relying on its understanding that tax statutes must be
construed strictly, the intermediate appellate court construed both provisions against
the promulgating authority and ordered the case remanded with directions to vacate
Denver’s Notices.6
¶10 Denver petitioned this court for a writ of certiorari.
II.
¶11 By ordinance, the City and County of Denver imposes a tax on the privilege of
purchasing lodging in the city, and the tax thus imposed is to be paid by the person
exercising the privilege. D.R.M.C. § 53-171(a). The amount of the tax is to be calculated
as a percentage of the purchase price paid or charged for purchasing the lodging,
§ 53-171(b), and obligations are imposed on the vendor to add the amount of this tax to
the purchase price or charge for lodging and pay to the city, on a monthly basis, an
amount equivalent to the tax on all gross taxable sales, § 53-174(a).
¶12 The term “purchase or sale” is used as a term of art in the lodger’s tax article to
mean the acquisition or furnishing of lodging within the city for consideration. See
§ 53-170(4). Similarly, the term “lodging” is used as a term of art in the article to refer to
rooms or accommodations for overnight use furnished to someone who has for
consideration acquired the right to use, possess, or occupy any such room or
6 The court of appeals did not reach Denver’s cross-appeal as to the statute of
limitations, and it is therefore not before this court.
8
accommodation in either a hotel or another of the enumerated similar establishments,
under a concession, permit, lease, contract, license to use, or other similar arrangement.
§ 53-170(2). Finally, the term “vendor,” as it is used in the lodger’s tax article, refers
specifically to a person making sales of lodging, or furnishing lodging, to a purchaser in
the city. § 53-170(8).
¶13 No claim that the city’s lodging tax article is unconstitutional, is preempted by
statute, or is otherwise inoperable was implicated by the court of appeals judgment
below. Therefore the questions pending before this court, concerning whether the
OTCs are vendors and, if so, whether the purchase price upon which the lodging tax is
to be calculated includes the OTCs’ markup, turn entirely on the interpretation of the
Denver lodger’s tax article.
¶14 Like state statutes, city ordinances are a form of legislation and therefore have
meaning according to the intent of the enacting body, as that intent is expressed in the
language the enacting body has chosen for the particular ordinance itself. Dep’t of
Transp. v. Gypsum Ranch Co., 244 P.3d 127, 131 (Colo. 2010); City of Colorado Springs
v. Securcare Self Storage, Inc., 10 P.3d 1244, 1248 (Colo. 2000). If an ordinance or statute
is clear and unambiguous, and is not in conflict with another ordinance or statute, it
must simply be applied as written. Holcomb v. Jan-Pro Cleaning Sys. of S. Colo., 172
P.3d 888, 890 (Colo. 2007). However, if the language in which legislation is written is
susceptible of more than one reasonable interpretation, and is therefore considered
ambiguous, a substantial body of interpretative aids, either provided by the legislative
body itself to explain its own drafting conventions and preferences for avoiding or
9
resolving conflict, see, e.g., D.R.M.C. §§ 1-3 to -12, or developed by courts over
centuries, see generally Norman J. Singer & J.D. Shambie Singer, Sutherland Statutes &
Statutory Construction (7th ed. 2007), is available to help determine which of these
reasonable interpretations actually embodies the legislative intent. People v. Jones, 2015
CO 20, ¶ 10, 346 P.3d 44, 48.
¶15 These interpretative aids, or canons of construction, may take a number of
different forms. As we have noted in the past, many reflect little more than
grammatical or syntactical conventions; others largely reflect conventions followed in
the process of legislative drafting; and still others purport to draw reasonable inferences
from the relationship between legislative enactments and external events, or actually
seek to reconstruct the purpose of drafters, sponsors, or even individual supporters
with regard to legislative enactments. See Union Pac. R.R. v. Martin, 209 P.3d 185, 188
(Colo. 2009). Noteworthy for understanding the meaning of the tax provisions at issue
here, a number of court-developed aids, or rules of construction, also express
presumptions, or preferences, favoring, in the absence of adequate indication to the
contrary, one over another class of litigants affected by the specific type of legislation at
issue.
¶16 Included in this last group are policy preferences concerning the construction of
statutes imposing burdens on property or liberty. In this jurisdiction, we have long
accepted the proposition that statutes imposing a tax burden on the citizenry should be
construed strictly, resolving doubts concerning their meanings in favor of the persons
against whom an attempt is made to exact the tax. Gomer v. Chaffee, 6 Colo. 314, 317
10
(1882) (“It is a settled rule in the interpretation of revenue laws, that in case of doubt or
ambiguity the construction must be in favor of the public.” (citing Thomas M. Cooley,
Law of Taxation 197–208 (1876, reprinted 1881)). Much like the closely related policy
favoring lenity in the construction of criminal statutes, see Commissioner v. Acker, 361
U.S. 87, 91 (1959) (applying rule of lenity to civil tax penalties), however, this policy
preference regarding tax burdens was never intended to displace other canons designed
to help resolve doubts, or ambiguity. See, e.g., Douglas Cty. Bd. of Equalization v. Fid.
Castle Pines, Ltd., 890 P.2d 119, 125–30 (Colo. 1995) (stating that “[g]enerally, we
interpret ambiguous tax statutes in favor of the taxpayer,” but also applying several
other canons of construction and surveying legislative history); Stanley v. Little
Pittsburg Min. Co., 6 Colo. 415, 419 (1882) (citing Cooley, supra, for the proposition that
the presumption exists to maintain fidelity to legislative intent); cf. White v. United
States, 305 U.S. 281, 292 (1938) (“It is the function and duty of courts to resolve doubts.
We know of no reason why that function should be abdicated in a tax case . . . . Here
doubts which may arise upon a cursory examination of §§ 101 and 115 disappear when
they are read, as they must be, with every other material part of the statute, and in the
light of their legislative history.” (citation omitted)).
¶17 Rather, such policy preferences have often been characterized as rules of last
resort, applicable only if, after utilizing the other relevant aids to statutory construction,
the enacting body’s intent remains obscured. See, e.g., People v. Thoro Prods. Co., 70
P.3d 1188, 1198 (Colo. 2003) (quoting from Muscarello v. United States, 524 U.S. 125, 138
(1998), to the effect that the “rule of lenity applies only if, after seizing everything from
11
which aid can be derived, . . . we can make no more than a guess as to what Congress
intended,” and from United States v. Wilson, 10 F.3d 734, 736 (10th Cir. 1993), to the
effect that the “rule of lenity is a rule of last resort, to be invoked only after traditional
means of interpreting the statute have been exhausted”); BP Am. Prod. Co. v. Patterson,
185 P.3d 811, 814 (Colo. 2008) (holding that rule favoring longer, rather than shorter, of
two arguably applicable statutes of limitation, like analogous rules of choice applicable
to statutes or contractual provisions generally, is a rule of last resort); cf. Lee R. Russ &
Thomas F. Segalla, Couch on Insurance § 22:16 (3d ed. 1995) (characterizing the familiar
principle that ambiguity in insurance contracts must be construed in favor of insured as
a rule of last resort).7
7 While Colorado retains, as a last resort, these rules of construction favoring one over
another class of litigants affected by the specific type of legislation at issue, many
commentators actually argue that these presumptions have been, or should be,
discontinued altogether. E.g., Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 359–63 (2012) (“Like any other governmental intrusion on
property or personal freedom, a tax statute should be given its fair meaning, and this
includes a fair interpretation of any exceptions it contains. . . . . [As to all such
presumptions,] [t]he expressions to the contrary find their source either in a judicial
proclivity to make difficult interpretive questions easy, or else in an inappropriate
judicial antagonism to limitations on favored legislation.”); see also Jasper L.
Cummings, Jr., The Supreme Court’s Federal Tax Jurisprudence, Ch. II.B. (2nd ed. 2016)
(tracing history of presumptions in federal tax statutes, and concluding, “the tilt toward
taxpayers in construing the federal tax statutes did not long survive the enactment of
the income tax”); Singer & Singer, Sutherland Statutes & Statutory Construction, §§ 66:1
–:2 (listing as many applications of exceptions and contrary presumptions as
applications of the original presumption against the government); Cooley, supra, at 205
(“There may and doubtless should be a distinction taken in construction of those
provisions of revenue laws which points out the subjects to be taxed, and indicate the
time, circumstances and manner of assessment and collection, and those which impose
penalties for obstructions and evasions. There is no reason for peculiar strictness in
construing the former. Neither is there reason for liberality.”).
12
¶18 It is also widely accepted that where the body enacting particular legislation has
not expressly defined a term or otherwise limited its meaning, that term must be given
its ordinary meaning. See Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560, ___, 132 S.
Ct. 1997, 2002 (2012); Marquez v. People, 2013 CO 58, ¶ 8, 311 P.3d 265, 268. Because,
however, terms frequently have more than one ordinary meaning, or at least more than
one shading or nuance of meaning, and because even a dictionary definition broad
enough to encompass a particular sense of a word does not establish that the term is
ordinarily understood in that sense, Taniguchi, 566 U.S. at ___, 132 S. Ct. at 2003, the
precise meaning intended by an undefined term often must be determined by reference
to other considerations, like the context in which it is used and the apparent purpose for
its use, Marquez, ¶ 8, 311 P.3d at 268; see also Curious Theater Co. v. Colo. Dep’t of
Pub. Health & Env’t, 220 P.3d 544, 549 (Colo. 2009). In particular, we have often held
that in the absence of some express indication to the contrary, a term or provision that is
part of a greater statutory scheme should be interpreted, to the extent possible,
harmoniously with the other provisions and purpose of that scheme. Gypsum Ranch
Co., 244 P.3d at 131; Frank M. Hall & Co. v. Newsom, 125 P.3d 444, 448 (Colo. 2005). In
this regard, a tax statute is no different from any other statute. Welby Gardens v.
Adams Cty. Bd. of Equalization, 71 P.3d 992, 995 (Colo. 2003); see also Walgreen Co. v.
Charnes, 819 P.2d 1039, 1043 & n.6 (Colo. 1991) (requiring that particular Denver sales
tax ordinance be construed in pari materia with entire scheme to effectuate the
legislative intent).
13
¶19 The two issues resolved by the court of appeals by construing the lodger’s tax
article, or better, by declining to fully construe the lodger’s tax article and instead
resolving any perceived ambiguity in favor of the taxpayer, analytically involve one
substantive question, concerning tax liability, and a separate administrative question,
concerning the responsibility to collect whatever tax is due and remit it to the city.
While it might appear that the more logical sequence for dealing with these two
questions would be to address the existence and extent of any tax liability before
assigning responsibility for its collection and remittance, perhaps because only
assessments against the OTCs are at issue in this litigation and therefore a
determination that they are not responsible to collect or remit any lodging tax should
end the matter, the parties and the intermediate appellate court have not addressed the
issues in that sequence. For that reason, and because we believe the purchase price of
lodging, or tax base, to be integrally related to the sale, and therefore the seller, or
“vendor,” of that lodging, we will follow suit and address the administrative question
first.
A.
¶20 Although the tax is imposed on the purchaser, the obligation to collect it and
remit it to the city falls on the vendor, and for that reason, the court of appeals
appropriately concerned itself with the definition of “vendor” in the article. It
determined that according to the article’s definition, the term “vendor” refers to a
person who furnishes lodging, and since the lodger’s tax article itself nowhere defines
the term “furnish,” the court turned to dictionary definitions of that term and case law
14
in other contexts to determine its ordinary meaning. Further finding that the OTCs’
primary contention—that the person who furnishes lodging is the one who actually
provides access to a specific room—was at least a reasonable interpretation of the
article, the intermediate appellate court considered itself bound to accept that
interpretation.
¶21 While the article somewhat unusually defines “purchase or sale” as a single
term, there appears to be no dispute that it can only be understood to intend that
“purchase” refers to the acquisition of lodging within the city by any person for
consideration, and that “sale” refers to the furnishing of lodging within the city by any
person for consideration. See § 53-170(4). That being the case, the court of appeals was
undoubtedly right in concluding that the word “or” in the definition of “vendor” was
not used in its disjunctive implication but rather to introduce a synonymous phrase.
See People v. Swain, 959 P.2d 426, 430 n.12 (Colo. 1998) (“Generally, the word ‘or’ is a
disjunctive particle that denotes an alternative; however, the word ‘or’ may also be
utilized as a ‘coordinate conjunction introducing a synonymous word or phrase or it
may join different terms expressing the same idea or thing.’” (quoting State v. Ramsey,
430 S.E.2d 511, 514 (S.C. 1993))). As the definition of “sale” makes clear, furnishing
lodging to a purchaser is simply the equivalent of, or another way of saying, making a
sale of lodging. By concluding, however, that a “vendor” is therefore one who merely
“furnishes lodging,” the court of appeals too narrowly circumscribed the equivalent
definitions and thereby mistakenly considered itself free to look to the “ordinary
meaning” of the term “furnish.”
15
¶22 Read together, the definitions of “purchase or sale” and “vendor” unmistakably
lead to the conclusion that the term “vendor” does not refer simply to someone who
furnishes lodging, as the court of appeals reasoned, but rather to someone who
furnishes lodging for consideration, and further, only to someone who furnishes
lodging for consideration to a person who acquires that lodging for that consideration.
See § 53-170(4), (8). Making a sale of lodging, or furnishing it for consideration, on the
one hand, and purchasing that lodging, or acquiring it for consideration, on the other,
are defined as opposite but corresponding aspects, or what could be characterized as
flip-sides, of the same transaction. While the term “furnish” may not be separately
defined in the article, as the court of appeals and OTCs correctly point out, the phrase
“furnishing lodging to a purchaser,” appearing in the definition of “vendor,” is made
synonymous with “making sales” of lodging, as the court of appeals also explains.
“Furnishing lodging,” as used in the definition of “vendor” therefore cannot mean
simply providing a room, in the sense of controlling physical access to it, but can only
mean making a sale of lodging.
¶23 By contrast with the term “furnish,” the term “lodging” is expressly defined as a
term of art, and that definition similarly makes clear that furnishing lodging refers to
selling, or providing for consideration, “the right to use, possess, or occupy qualifying
accommodations.” While the definition might have been phrased more felicitously in
terms of the overnight use of certain rooms or accommodations, rather than as “rooms
or accommodations for overnight use,” when the definition is read as whole and in
context, the choice of subject and placement of a modifying prepositional phrase creates
16
no ambiguity. There can be no serious question that “lodging” does not refer to a room,
as a commodity, or even title or a right of ownership of a room, but rather to the right of
overnight use of rooms meeting all of the specifications of the definition. Because only
the right to overnight use of rooms can be furnished and acquired for consideration
without removing the transaction from the definition of “lodging” altogether,
furnishing lodging for consideration necessarily refers to selling, or providing for
consideration, the right to overnight use of rooms or accommodations in the
enumerated hotel-like facilities.
¶24 Although the OTCs maintain that even in merchant-model transactions they do
not sell, or furnish for consideration, a right to occupy or use the hotel rooms in
question, no matter what terminology they may choose to use in describing their
transactions, as a functional matter that is precisely what they do. See Apollo Stereo
Music Co. v. City of Aurora, 871 P.2d 1206, 1211–12 (Colo. 1994) (holding that vending-
machine owners, rather than owners of stores in which vending machines sit, are the
vendors for purposes of sales taxes in light of the control they actually exercised over
the machines, and especially over the access to and distribution of the moneys
deposited in the machines); People v. Becker, 413 P.2d 185, 186 (Colo. 1966) (“It is a
familiar and well documented rule of law that taxation is concerned with realities and
that, in considering tax matters, substance and not form should govern.”).
¶25 However characterized, virtually every aspect of the merchant-model transaction
objectively places an OTC in the role of “vendor.” The OTC deals directly in the
transaction with the consumer-purchaser. The OTC sets the price, or consideration,
17
without the payment of which, the OTC will not sell the consumer the right to use the
room; the OTC collects the amount of that purchase price directly from the consumer;
and the OTC adds to the purchase price an amount it determines to be sufficient for the
lodger’s tax. Whether or not a particular room is specified at that point, in accepting the
purchase price the OTC sells a reservation for a room of particular specifications to a
consumer, and by its arrangement with the hotel, the hotel becomes contractually
obligated to the OTC to provide the consumer with a room meeting those specifications.
¶26 Although the OTCs may choose to characterize themselves as mere
intermediaries in a transaction between the hotels and the consumers, their relationship
with the hotels is clearly not one remotely resembling an agency relationship. The
OTCs are not employed by the hotels nor are they paid a fee, or commission, by the
hotels for arranging reservations, as in the traditional agency model. The obligations of
the OTCs and hotels to each other are purely contractual in nature, and to the extent the
purchaser of lodging acquires rights from the hotel, it is at most as a third-party
beneficiary of the contractual arrangement between the hotel and OTC. Whoever may
actually hand the purchaser the key, the lodger is the purchaser in a transaction of sale
with the OTC.
¶27 By the same token, however, although the OTCs pay an amount that is set by the
hotels to them for each room reservation the OTCs make, and contractually retain the
right to charge more in their subsequent sales to lodger-purchasers, neither are their
arrangements with the hotels in the nature of wholesale purchases. The OTCs’ separate
transactions, first with the hotels and then with lodgers, are not in the nature of
18
wholesale and retail sales for the simple reason that the OTCs never acquire the right to
occupy or use the rooms in question. They merely contract for the authority to sell to
consumers, or lodgers, the right to occupy or use rooms, in agreed upon numbers or as
available, at a price largely of their own choosing, in exchange for an agreement to
return a specified amount to the hotels for each reservation not timely cancelled. If the
OTCs actually purchased the right to occupy or use the rooms at a wholesale rate and
resold that right at a retail rate, in the absence of some other provision in the tax code as
provided for various commodity sales, the first sale would itself be a taxable event, with
a second sale resulting in at least partial double taxation.8
¶28 The lodger-purchaser in the transaction is in privity of contract with the OTC,
not the hotel. By virtually all objective criteria, the contract for sale of the right to use a
hotel accommodation is entered into by the OTC and purchaser, at the time of the
OTC’s acceptance by receiving payment of the amount it charges for the reservation.
There is of course nothing improper in attempting to structure transactions to the
advantage of one’s clients, and within ethical limits, that is precisely what lawyers are
typically retained to do. But labelling alone is insufficient to alter the structure of a
transaction. Apollo Stereo Music Co., 871 P.2d at 1211–12; Becker, 413 P.2d at 186. If tax
obligations are imposed on the basis of function, then objective criteria establishing the
functional relationships involved in any particular transaction must be determinative of
the relative tax obligations. Any fair and reasonable interpretation of the city lodger’s
8At this point, Denver does not claim from the OTCs tax arrearages on the full amount
of the purchase price paid or charged but only past due lodger’s tax on the OTCs’
markup, which has not already been remitted by the hotels.
19
tax article categorizes the OTC in a merchant-model transaction, according to the
objective criteria of the article’s definitions, as the vendor, with the obligation to collect
and remit a lodger’s tax to the city.
B.
¶29 Not only is the lodger’s tax imposed on the person actually purchasing lodging
in the city, but the amount of the tax thus imposed is expressed as a percentage “of the
price paid or charged” for the purchase in question. § 53-171(a), (b). For the obvious
reasons that a single money transaction may involve the purchase and sale of more than
lodging alone and that a vendor may attempt to differentiate the cost of lodging and the
cost of related goods or services for tax purposes, despite their inseparability from the
purchase and sale of the lodging itself, the article further specifies that “the price paid
by the purchaser for any goods, services or commodities other than those directly
connected with, and included in the price of, the furnishing of rooms or
accommodations” is not to be included as part of “the purchase price” from which the
lodger’s tax is to be calculated. § 53-171(c). The court of appeals focused on the
meaning of the phrase “directly connected with” in the ordinance, and because it had
already found it reasonable to conclude that the OTCs do not furnish lodging at all, it
similarly considered it reasonable to conclude that the OTCs’ markups, which they
characterize as compensation for providing travel-related information and online
facilitation services, are not directly connected with furnishing lodging.
¶30 Because we reach a different conclusion with regard to the meaning of
“furnishing” and therefore the OTCs’ role in furnishing lodging, we must similarly find
20
the intermediate appellate court’s resolution of the tax base question, based on its
understanding of the meaning of “furnishing,” to be unsupported by the text of the
article. The appellate court was, however, undoubtedly correct in inferring from the
context a relationship between the purchase price charged for lodging and the vendor
charging that price. If, as we now make clear, the OTC is actually the vendor in a
merchant-model transaction, making sales of lodging by exchanging the right to use or
occupy a room for the purchaser’s payment of the price the OTC has decided to charge
for the use of that room, it would not be unnatural for the tax scheme to intend by the
“purchase price paid or charged,” the price assessed by the OTC, without the payment
of which the OTC would not sell, and the purchaser could not acquire, the room
reservation in question.
¶31 In emphasizing that certain “goods, services or commodities” are not to be
considered part of the “purchase price paid or charged for lodging,” for lodger’s tax
purposes, the article circumscribes the exempted “goods, services or commodities” with
the limiting phrase, “other than those directly connected with, and included in the price
of, the furnishing of rooms or accommodations.” There is no dispute that the cost of
goods, services, and commodities other than those specifically excluded according to
this formula are instead to be taxed as part of the purchase price paid or charged for the
lodging. Beeghly v. Mack, 20 P.3d 610, 613 (Colo. 2001) (“Under the rule of
interpretation expressio unius exclusio alterius, the inclusion of certain items implies
the exclusion of others.”). While the word “and” is typically, and perhaps even
presumptively, used as a coordinating conjunction, joining two elements of identical
21
construction and equal grammatical rank, it is also a word long acknowledged to serve
a wide-range of different functions, depending upon syntax and context. See, e.g.,
Clyncke v. Waneka, 157 P.3d 1072, 1079 (Colo. 2007) (Coats, J., concurring) (quoting
Peacock v. Lubbock Compress Co., 252 F.2d 892, 893 (5th Cir. 1958), to the effect that
“and” is a word having no “single meaning, for chameleonlike, it takes its color from its
surroundings”); see generally 2 Corpus Juris 1337 (1915) (stating, in definition of “and,”
that “[w]hile the word is generally used in a conjunctive sense, this is not its invariable
use; it is often employed to indicate a connection of what follows with what has gone
before in the way of narration or description”).
¶32 As the Denver ordinances themselves expressly contemplate, the words “and”
and “or” may be functionally interchangeable, depending upon context and usage in a
given sentence. See D.R.M.C. § 1-2(10) (“‘Or’ may be read ‘and,’ and ‘and’ may be read
‘or,’ if the sense requires it.”). More subtly, however, even when a conjunctive, rather
than disjunctive, meaning is clearly intended, a number of different relationships may
be intended between the conjoined elements. The conjoined elements may be
completely independent or synonymous, but often their meanings overlap with one, or
both, serving to further define or clarify the sense in which the other is being used. See
Arthur v. Cumming, 91 U.S. 362, 364, 23 L. Ed. 328 (1875) (noting “many instances in
which two phrases with the like conjunction between them have been used to designate
the same thing,” a construction “obviously done to make clear and certain the meaning
of the legislature, and to leave no room for doubt upon the subject”).
22
¶33 While the use of commas to set off the second conjoined phrase—“and included
in the price of”—suggests that it was intended to operate in apposition to, or as the
functional equivalent of, the first phrase—“directly connected with”—the meaning of
both phrases is ultimately dictated by context and their use specifically in reference to
the “furnishing of rooms or accommodations.” See United States v. Ron Pair Enters.,
Inc., 489 U.S. 235, 251 (1989) (“Although punctuation is not controlling, it can provide
useful confirmation of conclusions drawn from the words of a statute.”). For the
reasons we have already articulated, the term “furnishing” in this context means
making sales of, or selling, the right of overnight use of rooms or accommodations
constituting lodging. There can therefore at least be little doubt that the purchase price
of services directly connected with and included in the price for which the lodging in
question is sold is to be included in the tax base.
¶34 Whether or not the conjoined conditions of being directly connected with and
being included in the selling price of the lodging are precisely synonymous, they are
clearly attempts to describe a determinable amount that is neither based on the fortuity
of being included in a single payment by the purchaser nor subject to manipulation by
the labelling choices of the vendor. Cf. Apollo Stereo Music Co., 871 P.2d at 1211–12;
Becker, 413 P.2d at 186. Functionally, the selling, and therefore purchase, price of
lodging is the amount without the payment of which the lodging will not be furnished
by sale, and therefore cannot be acquired by purchase. However this amount is broken
out, or characterized, in the billing process, if the purchaser has no option but to pay it
23
to the vendor as part of the purchase of the lodging in question, it is necessarily both
included in and directly connected with the price for which that lodging is sold.
¶35 In the typical merchant-model transaction, as described for purposes of these
proceedings, the OTC’s markup is not distinguished in the billing process from the
amount to be returned to the hotel at all, much less charged as a separate fee for
informational and online services. However, whether or not such a fee could be
objectively justified in terms of the service provided, because the purchaser has no
option to decline it in making his purchase of lodging from the OTC, and it is therefore
inseparable from the selling price of the lodging, it is directly connected with, in the
sense that it is necessarily included in, that selling price. When the related provisions
and interlocking definitions of the lodger’s tax article are considered as a harmonious
whole, the conclusion that the OTC’s markup must be included in the purchase price
paid or charged for lodging is not only one reasonable construction of the article; it is
sufficiently apparent that it is the fair and reasonable construction embodying the
legislative intent.
III.
¶36 Because the application of well-accepted aids to statutory construction leads to
the conclusion that the fair and reasonable interpretation of Denver’s lodger’s tax article
is that it imposes a duty on the OTCs to collect and remit the prescribed tax on the
purchase price of any lodging they sell, to include not only the amount they have
contracted with the hotel to charge and return but also the amount of their markup, the
24
judgment of the court of appeals is reversed, and the matter is remanded for
consideration of the remaining issues raised on appeal by the parties.
JUSTICE HOOD concurs in the judgment.
JUSTICE GABRIEL dissents, and CHIEF JUSTICE RICE and JUSTICE EID join in the
dissent.
25
JUSTICE HOOD, concurring in the judgment.
¶37 I agree with the plurality that under Denver’s lodging tax ordinance (“the
ordinance”), Denver, Colo., Revised Municipal Code §§ 53-166 to -236 (2016), the OTCs
are vendors who must collect and remit the prescribed tax on the entire purchase price
of the lodging they sell. However, I disagree with the plurality’s rationale for reaching
this result. Rather than viewing this outcome as a “fair and reasonable interpretation”
of the ordinance, pl. op. ¶ 2, I believe the ordinance is unambiguous regarding the
OTCs’ obligation to collect lodging tax on the entire purchase price. I therefore concur
in the judgment only.1
¶38 The primary goal of statutory interpretation is to effectuate the enacting body’s
legislative intent. BP Am. Prod. Co. v. Colo. Dep’t of Revenue, 2016 CO 23, ¶ 15,
369 P.3d 281, 285. This requires first looking to the plain language of the ordinance,
construing words and phrases according to their ordinary meaning. Id. “A tax statute
is no different than any other statute; it must be construed as a whole in order to give
consistent, harmonious, and sensible effect to all of its parts.” Welby Gardens v. Adams
Cty. Bd. of Equalization, 71 P.3d 992, 995 (Colo. 2003). If the language is clear and
unambiguous, our analysis is complete: we look no further, and we apply the ordinance
1 I am particularly concerned by and specifically decline to join in the plurality’s
discussion of certain interpretive aids it characterizes as “policy preferences concerning
the construction of statutes imposing burdens on property or liberty.” Pl. op. ¶ 16. The
plurality weakens the force of these interpretive aids, referring to them as “rules of last
resort” and claiming that “many commentators actually argue that these presumptions
have been, or should be, discontinued altogether.” Id. at ¶ 17 & n.7. Because I consider
the ordinance unambiguous, I do not believe there is any need to reach the applicability
of interpretive aids to construction, or to call their value into question.
1
as written. Jefferson Cty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo.
2010). But if the language is susceptible to multiple interpretations, and therefore
ambiguous, we may resort to various aids to statutory construction. Id.¶39 The court of appeals began its interpretive inquiry with the definition of
“vendor,” because the ordinance requires only “vendors” to collect and remit the tax.
Because the ordinance defines “vendor” as “a person making sales of or furnishing
lodging,” § 53-170(8), and further defines “sale” as “furnishing for consideration,” see
§ 53-170(4), the court of appeals concluded that a “vendor” under the ordinance “refers
only to one who actually furnishes lodging,” Expedia, Inc. v. City & Cty. of Denver,
2014 COA 87, ¶ 38, __ P.3d __. Because the ordinance does not define “furnish,” the
court of appeals looked to the ordinary meaning of that word, which the court
determined was “to equip; to provide or supply with something that is necessary,
useful, or desired.” Id. at ¶ 39 (quoting Broadmoor Hotel, Inc. v. Dep’t of Revenue,
773 P.2d 627, 629 (Colo. App. 1989)). The court of appeals then accepted the OTCs’
argument that they merely facilitate hotel reservations rather than equip, provide, or
supply rooms, and therefore that they are not vendors. The court concluded that the
OTCs had articulated a reasonable interpretation of the ordinance, demonstrating that
the ordinance was at least ambiguous and should be construed in the OTCs’ favor. See
City of Boulder v. Leanin’ Tree, Inc., 72 P.3d 361, 367 (Colo. 2003) (explaining that
doubts in tax statutes should be resolved against the government and in favor of the
taxpayer).
2
¶40 In my view, the court of appeals inappropriately focused on the meaning of
“vendor” to the exclusion of other provisions in the ordinance, and it thereby neglected
to follow the well-established principle of statutory interpretation that a tax statute, like
any other statute, “must be construed as a whole in order to give consistent,
harmonious, and sensible effect to all of its parts.” Welby Gardens, 71 P.3d at 995; see
also Colo. Dep’t of Revenue v. Cray Comput. Corp., 18 P.3d 1277, 1282 (Colo. 2001)
(determining scope of tax exemption based on unambiguous language of statute after
construing statute as a whole and defining integral term according to common usage);
Mesa Verde Co. v. Montezuma Cty. Bd. of Equalization, 898 P.2d 1, 5 (Colo. 1995)
(determining disputed issue based on plain language of statute and noting that “[t]his
interpretation is consistent with the statute read as a whole”).
¶41 The ordinance levies the tax on “every person exercising the taxable privilege of
purchasing lodging.” § 53-171(a). “Purchase” and “sale,” though defined as one term
in the ordinance, mean the acquisition and furnishing, respectively, of lodging for
consideration. See § 53-170(4). Vendors are made responsible for collecting the tax at
the time they make a sale. § 53-173(a). A “vendor,” as discussed above, is “a person
making sales of or furnishing lodging to a purchaser in the city.” § 53-170(8).
¶42 What, then, is “lodging,” for purposes of the ordinance? “Lodging” is defined as
“rooms or accommodations for overnight use furnished by any person . . . to any person
who for consideration uses, possesses, occupies or has the right to use, possess or
occupy any such room.” § 53-170(2). Using the ordinary meaning of “furnish,” as
identified by the court of appeals, lodging must mean rooms provided or supplied to
3
any person who for consideration uses or has the right to use such rooms. Nothing in
the definition of “furnish”—or elsewhere in the ordinance—limits that term to the
physical provision of a hotel room.
¶43 When a customer uses an OTC’s website to purchase a room, the OTC charges
the customer’s credit card at the time of the booking and is the merchant of record for
the transaction. The customer receives a hotel confirmation number, but even this
comes by way of the OTC, and the customer’s entire transactional relationship is with
the OTC, not the hotel. Thus, the OTCs provide or supply rooms to customers who pay
consideration to the OTCs in exchange for rooms or the right to use rooms. The OTCs
are vendors furnishing lodging within the plain meaning of the ordinance.
¶44 This is the only interpretation that harmonizes all parts of the ordinance and
effectuates its stated intent. Characterizing the OTCs as mere intermediaries
responsible solely for facilitating the booking of reservations would ignore that
purchasers acquire rooms by providing consideration to the OTCs, not to hotels. And it
would render ineffective the ordinance provision governing the collection of the tax,
which states: “Every vendor making sales to a purchaser . . . at the time of making such
sales is required to collect the tax imposed by [the ordinance] from the purchaser.”
§ 53-173(a). In a merchant-model transaction, only the OTC, and not the hotel, collects
payment from the purchaser.2 Finally, exempting the OTCs from the definition of
2 Because the OTC, and not the hotel, collects payment from the purchaser, under the
current state of affairs, the OTC also collects the lodging tax levied on the underlying
room rate charged by the hotel. See pl. op. ¶ 7 (using hypothetical to illustrate
merchant-model transaction). The OTC later remits both the underlying room rate and
4
“vendor” would leave a portion of the price paid for lodging untaxed, thereby
frustrating rather than effectuating the city council’s clear intent to tax that purchase.
¶45 For these reasons, under the plain language of the ordinance, the OTCs are
vendors and must collect and remit the prescribed tax on the entire purchase price of
any lodging they sell. Because I believe the ordinance to be unambiguous in requiring
this result, I do not see a need to resort to the use of interpretive aids. I therefore
respectfully concur in the judgment only.
the tax surcharge to the hotel. See id. In my view, this practice amounts to implicit
acknowledgment by the OTCs that they are vendors, because they are the ones
collecting the lodging tax from the purchasers at the time of sale. See § 53-173(a)
(setting forth provisions governing collection of lodging tax). And, as Denver
emphasized in its briefs, the OTCs repeatedly presented themselves as “providers” and
“resellers” of lodging in SEC filings pre-dating this litigation, which further suggests
that they perceive themselves, at least in a functional sense, as vendors.
5
JUSTICE GABRIEL, dissenting.
¶46 The plurality concludes that the respondent online travel companies (“OTCs”)
furnished lodging within the meaning of the Denver Revised Municipal Code (the
“Code”) because they sold or provided to customers for consideration the right to the
overnight use of rooms or accommodations. See pl. op. ¶¶ 23–24. The plurality thus
concludes that the OTCs are “vendors” subject to Denver’s lodging tax. See id. at ¶¶ 25,
28. The plurality further concludes that the fees charged by the OTCs for their services
were directly connected with furnishing rooms. See id. at ¶¶ 29–30, 33–35.
Accordingly, the plurality concludes that these fees were part of the cost of lodging and
were also subject to Denver’s lodging tax. See id.
¶47 Because I do not believe that Denver’s ordinances support these conclusions, I
respectfully dissent.
I. Analysis
¶48 I first address the applicable standard of review and principles of construction of
municipal ordinances such as those at issue here. I proceed to address whether the
OTCs furnished lodging, which would render them “vendors” subject to Denver’s
lodging tax. I conclude by considering whether the fees charged by the OTCs to their
customers were directly connected with the furnishing of rooms or accommodations
and thus subject to Denver’s lodging tax.
1
A. Standard of Review and Principles of Construction
¶49 When reviewing a municipal ordinance or code, we construe it using the same
rules that we use when we interpret statutes. See Town of Erie v. Eason, 18 P.3d 1271,
1275 (Colo. 2001).
¶50 We review de novo questions of law concerning statutory construction. City of
Littleton v. Indus. Claim Appeals Office, 2016 CO 25, ¶ 27, 370 P.3d 157, 165.
¶51 Our purpose in interpreting a statute or ordinance is to give effect to the intent of
the legislature or city council. See id. at ¶ 27, 370 P.3d at 165–66. To discern this intent,
we look first to the language of the statute or ordinance. See id. at ¶ 27, 370 P.3d at 166.
We construe the statute or ordinance as a whole to give effect and meaning to all of its
parts, and we avoid interpretations that render provisions either superfluous or absurd.
Id.; Concerned Parents of Pueblo, Inc. v. Gilmore, 47 P.3d 311, 313 (Colo. 2002).
¶52 If the applicable language is clear and unambiguous, we do not resort to
legislative history or other rules of construction. City of Littleton, ¶ 27, 370 P.3d at 166.
Rather, we give the words used their plain and ordinary meanings. See Concerned
Parents, 47 P.3d at 313.
¶53 If, however, the language of the statute or ordinance is ambiguous, then we may
examine the legislative intent, the circumstances surrounding the adoption of the
statute or ordinance, and the possible consequences of various interpretations to
determine the proper construction of that statute or ordinance. Coffman v. Williamson,
2015 CO 35, ¶ 23, 348 P.3d 929, 936. A statute or ordinance is ambiguous if it is
reasonably susceptible of multiple interpretations. Id.2
¶54 Finally, I note that “[i]t is a longstanding rule of construction in this jurisdiction
that tax statutes ‘will not be extended beyond the clear import of the language used, nor
will their operation be extended by analogy. . . . All doubts will be construed against
the government and in favor of the taxpayer.’” City of Boulder v. Leanin’ Tree, Inc.,
72 P.3d 361, 367 (Colo. 2003) (quoting Transponder Corp. v. Prop. Tax Admin., 681 P.2d
499, 504 (Colo. 1984)). In this regard, I disagree with the plurality’s assertion that the
foregoing “longstanding rule” is akin to the rule of lenity in criminal law and thus is to
be applied only as a rule of last resort. See pl. op. ¶¶ 16–17. None of the parties made
any such argument in this case, the plurality cites no case so holding, nor have I seen
one. Accordingly, although I understand the plurality’s desire to avoid the settled rule
that ambiguous tax provisions will be construed against the taxing authority,11 I do not
believe that it can properly do so here.
B. Furnishing Lodging
¶55 Section 53-167(b) of the Code provides, in pertinent part, “[E]very vendor who
shall make a sale of lodging to a purchaser in the city shall collect the tax imposed by
this article to the total purchase price charged for such lodging furnished at any one (1)
time by or to every customer or buyer.” Denver, Colo., Revised Municipal Code
§ 53-167(b) (2016).
11To reach its conclusions, the plurality must strain against the text of the municipal
ordinances at issue and ignore reasonable interpretations thereof that differ from its
own.
3
¶56 The Code defines “vendor” as “a person making sales of or furnishing lodging to
a purchaser in the city.” § 53-170(8).
¶57 “Sale,” in turn, is defined as the “furnishing for consideration by any person of
lodging within the city.” § 53-170(4).
¶58 The question presented here is, thus, whether the OTCs furnished lodging within
the meaning of the Code, thereby rendering them “vendors” subject to Denver’s
lodging tax.
¶59 Under the Code,
[l]odging shall mean rooms or accommodations for overnight use
furnished by any person or the representative of any person to any person
who for consideration uses, possesses, occupies or has the right to use,
possess or occupy any such room or accommodation in a hotel, apartment
hotel, lodging house, motel, motor hotel, guest house, guest ranch, resort,
mobile home, mobile home park, auto court, inn, trailer court, trailer park
or hotel, under any concession, permit, lease, contract, license to use or
other similar arrangement.
§ 53-170(2).
¶60 Accordingly, “lodging” is a room or accommodation for overnight use; it is not
the right to use a room, as the plurality states. See pl. op. ¶ 23. Because it is undisputed
that the OTCs have not provided either rooms or accommodations, in my view, they
have not furnished “lodging” within the meaning of the Code. As a result, they are not
“vendors” subject to Denver’s lodging tax.
¶61 In reaching this conclusion, I acknowledge that section 53-170(2)’s definition of
“lodging” refers to the right to use a room or accommodation. As I read that portion of
the definition, however, the phrase “right to use, possess, or occupy any such room or
4
accommodation” modifies “any person” who has that right. § 53-170(2). Thus, in my
view, the section plainly means that lodging is a room or accommodation furnished to
any person who has the right to use, possess, or occupy that room or accommodation.
Id. To construe this provision to define “lodging” simply as the right to use a room or
accommodation would read words out of the ordinance, and we cannot do that. See
City of Littleton, ¶ 27, 370 P.3d at 166.
¶62 Even if the language of the ordinance could reasonably be construed to define
lodging as the right to use a room or lodging, however, any such reading would be one
of multiple reasonable constructions. Accordingly, at best, this provision is ambiguous,
and therefore, we must construe it against the city and in favor of the OTCs. See City of
Boulder, 72 P.3d at 367.
¶63 For these reasons, I would conclude that the OTCs have not furnished lodging to
customers and, thus, are not “vendors” subject to Denver’s lodging tax.
C. Fees Charged By The OTCs
¶64 With respect to the fees charged by the OTCs, section 53-171(c) of the Code
provides, “The purchase price paid or charged for lodging shall exclude the price paid
by the purchaser for any goods, services or commodities other than those directly
connected with, and included in the price of, the furnishing of rooms or
accommodations.” Thus, the purchase price that a customer pays to an OTC includes
any fees “directly connected with” the furnishing of rooms or accommodations. See
§ 53-171(c).
5
¶65 The question presented here thus becomes whether the fees charged by the OTCs
to their customers were directly connected with or part of the purchase price for
furnishing rooms or accommodations, so as to render them subject to Denver’s lodging
tax.
¶66 As noted above, under my reading of the pertinent provisions of the Code, the
OTCs did not furnish rooms or accommodations to their customers. Thus, by
definition, the fees that the OTCs charged were not directly connected with or part of
the purchase price for furnishing rooms or accommodations, and therefore, they were
not subject to Denver’s lodging tax.
II. Conclusion
¶67 For these reasons, I respectfully dissent.
I am authorized to state that CHIEF JUSTICE RICE and JUSTICE EID join in this
dissent.
6