Town of Breckenridge v. Egencia, LLC

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
January 25, 2018
2018COA8
No. 16CA1901, Town of Breckenridge v. Egencia, LLC —
Taxation — Municipalities — Home Rule Cities —
Accommodation Tax
A division of the court of appeals concludes that online travel
companies are not required to remit to the Town of Breckenridge
accommodation taxes because they are not lessors or renters of
hotel rooms and therefore have no possessory interest in those
rooms, for purposes of Breckenridge’s hotel accommodation tax
ordinance. In its analysis, the division distinguishes Breckenridge’s
accommodation tax from Denver’s lodging tax, which was imposed
on the online travel companies in City & County of Denver v.
Expedia, Inc., 2017 CO 32.
The division also considers and rejects Breckenridge’s
contentions that the district court erred in applying the summary
judgment standard, that its sales tax claim was improperly
dismissed for lack of subject matter jurisdiction, that its motion for
class action certification should have been granted because
common questions predominated the class, and that the district
court erred in dismissing Breckenridge’s common law claims.
Accordingly, the division affirms the holding of the district
court.
COLORADO COURT OF APPEALS 2018COA8
Court of Appeals No. 16CA1901
Summit County District Court No. 11CV420
Honorable Karen A. Romeo, Judge
Town of Breckenridge, Colorado,
Plaintiff-Appellant,
v.
Egencia, LLC; Expedia, Inc.; Hotels.com, L.P.; Hotels.com, GP, LLC; Hotwire,
Inc.; Internetwork Publishing Corporation, d/b/a Lodging.com;
Lowestfare.com, Inc.; Orbitz, Inc.; Orbitz, LLC; Priceline.com, Incorporated;
Site59.com, LLC; TravelNow.com, LP; Travelport, Inc., f/k/a Cendant Travel
Distribution Services Group, Inc.; Travelscape, LLC; Travelweb, LLC; Trip
Network, Inc., d/b/a Cheaptickets.com,
Defendants-Appellees.
JUDGMENT AFFIRMED
Division III
Opinion by JUDGE GRAHAM
Webb, J., concurs
Terry, J., specially concurs
Announced January 25, 2018
Lewis Roca Rothgerber Christie LLP, Michael D. Plachy, Thomas M. Rogers III,
Joy Allen Woller, Denver, Colorado, for Plaintiff-Appellant
Connelly Law LLC, Sean Connelly, Denver, Colorado; Davis Graham Stubbs
LLP, Jason M. Lynch, Denver, Colorado, for Defendants-Appellees
¶1 We are asked to determine whether online travel companies
(OTCs) are required to collect and remit accommodation and sales
taxes to the Town of Breckenridge, Colorado, on hotel rooms they
book through their respective internet websites. We conclude that
they need not collect and remit such taxes.
¶2 Breckenridge, the plaintiff, seeks to collect accommodation
and sales taxes from sixteen OTCs, the defendants: Egencia, LLC;
Expedia, Inc.; Hotels.com, L.P.; Hotels.com, GP, LLC; Hotwire, Inc.;
Internetwork Publishing Corporation d/b/a Lodging.com;
Lowestfare.com, Inc.; Orbitz, Inc.; Orbitz, LLC; Priceline.com,
Incorporated; Site59.com, LLC; TravelNow.com, LP; Travelport Inc.
f/k/a Cendant Travel Distribution Services Group, Inc.;
Travelscape, LLC; Travelweb, LLC; Trip Network, Inc. d/b/a
Cheaptickets.com; and yet unidentified companies, Does 1 through
1000.
¶3 On appeal, Breckenridge makes five contentions. First, it
contends that the district court erred in determining that the OTCs
were not “renters” or “lessors” for purposes of Breckenridge’s
accommodation tax ordinance, relying on the Colorado Supreme
Court’s decision in City & County of Denver v. Expedia, Inc., 2017
1
CO 32 (plurality opinion). Second, it contends that the district
court misapplied the summary judgment standard by resolving
material issues of fact. Third, it contends that its sales tax claim
should not have been dismissed for lack of subject matter
jurisdiction. Fourth, it contends that its motion for class action
certification should have been granted because common questions
predominate and class action was the superior method of relief.
Fifth, it contends that its common law claims were improperly
dismissed. We consider and reject each contention.
I. Background
A. Overview of OTCs
¶4 The OTCs maintain websites through which travelers may
book reservations for hotel accommodations and other travel-
related services. The OTCs transact their online businesses in two
ways. The first is known as the “agency model,” which describes
transactions where the OTC is the actual agent of a hotel. The
second is the “merchant model,” which was used here.
¶5 Under the merchant model, an OTC first contracts with a
hotel. These contracts offer rooms to an OTC at a discounted rate
— a fixed percentage of the price the hotel would charge travelers
2
directly for the rooms. The OTC describes the hotel and its facilities
on its website and allows customers logging onto its website to book
reservations for that hotel.
¶6 When facilitating reservations, an OTC neither purchases nor
reserves rooms in advance. Rather, the OTC coordinates
information between travelers and hotels. Only hotels can issue
reservations. When a purchaser requests a hotel room, the chosen
OTC’s computer system communicates with a hotel’s central
reservation system to find a specific room at a specified rate. If
available, the purchaser must agree to the hotel’s cancellation
policy and terms of occupancy before the hotel will accept the
reservation. If the hotel accepts the reservation, it will provide a
confirmation number in the customer’s name and supply this
number to the OTC. The OTC forwards the confirmation number
then collects and processes the customer’s payment.
¶7 When a customer arrives at the hotel, the hotel registers the
customer as a guest before assigning a room. Assignments are
made only when a room is available and the customer meets the
hotel’s terms and conditions for occupancy. After the customer
3
concludes his stay, the OTC transfers payment to the hotel. The
hotel then remits the collected taxes to Breckenridge.
¶8 As relevant here, Breckenridge imposes an accommodation tax
“of three and four-tenths percent (3.4%) on the price paid for the
leasing or rental of any hotel room, motel room, or other
accommodation located in the town.” Breckenridge Town Code § 3-
4-3 (B.T.C.). In addition to the accommodation tax, Breckenridge
collects a 2.5% sales tax. B.T.C. § 3-1-5. Unlike the
accommodation tax, the sales tax ordinance requires Breckenridge
to seek administrative review before petitioning the district court for
relief to collect allegedly unpaid sales taxes. B.T.C. §§ 3-1-35, 3-1-
36.
B. Procedural History
¶9 Breckenridge instituted this action to recover from the OTCs
unpaid accommodation and sales taxes. In its initial complaint,
Breckenridge alleged that the OTCs were responsible for collecting
and remitting taxes associated with hotel reservations.
Breckenridge asserted five causes of action: declaratory judgment,
violations of municipal ordinances, conversion, civil conspiracy, and
unjust enrichment.
4
¶ 10 The OTCs then filed a motion to dismiss, which was partially
granted. The district court agreed that no cause of action existed in
respect to the sales tax claim because Breckenridge had failed to
exhaust its administrative remedies and none of the exceptions to
exhaustion applied. Consequently, the court determined that it
lacked subject matter jurisdiction to decide that claim. But, the
district court refused to dismiss the accommodation tax claim,
explaining that Breckenridge had sufficiently asserted a claim in
regard to the accommodation tax.
¶ 11 Breckenridge then sought class certification for fifty-five home
rule cities that also levy a lodger’s or accommodation tax, seeking to
impose taxes, interest, and penalties on the OTCs in favor of the
putative class. The district court denied class certification on
multiple grounds. First, the court concluded that certification
under C.R.C.P. 23(b)(2) was inappropriate because Breckenridge
was primarily seeking monetary damages. Second, the court
determined that common questions did not predominate over
questions affecting only individual members of the putative class,
so class certification was not superior to other available remedies
and, therefore, C.R.C.P. 23(b)(3) certification was unavailable.
5
Third, the court held that certification was inappropriate because at
least nine of the unnamed class members had failed to exhaust
their own administrative remedies.
¶ 12 Thereafter, the parties filed cross-motions for summary
judgment. Resolving those motions in favor of the OTCs, the
district court analyzed the plain language of the accommodation tax
ordinance, in addition to the OTCs’ role in the reservation process.
Specifically, the court determined that it was beyond dispute that
OTCs do not maintain hotel room inventories, any customer service
the OTCs provide is related only to the facilitation of reservations
and not the actual rental or service of accommodations, and the
hotels — not the OTCs — are primarily involved in a customer’s
reservation process. Based on those undisputed facts and the plain
language of the ordinance, the court concluded that the OTCs were
not renters or lessors and, therefore, not required to collect and
remit the accommodation tax.
II. The District Court Properly Determined that the OTCs are not
Subject to Breckenridge’s Accommodation Tax
¶ 13 Breckenridge contends that the district court erred in
concluding that OTCs are neither “lessors” nor “renters” of hotel
6
rooms. Additionally, Breckenridge asserts that the district court
erred when it relied on Expedia, Inc. v. City & County of Denver,
2014 COA 87 (Expedia I), which was reversed by the Colorado
Supreme Court in a plurality decision. City & Cty. of Denver v.
Expedia, Inc., 2017 CO 32 (Expedia II). We disagree.
¶ 14 Who is responsible for collecting and remitting accommodation
taxes under the B.T.C.? This question hinges on the meaning of
“lessor,” “renter,” and “furnish,” as used in sections 3-4-1, 3-4-3,
and 3-4-4 of that code.
¶ 15 Breckenridge contends that the OTCs are renters or lessors
under the code because they sell the legal right to use hotel rooms
in exchange for consideration. Because the accommodation tax
does not require a person to have physical possession of the right
sold, Breckenridge asserts that the OTCs are capable of leasing or
renting even without physical possession of the hotel rooms.
¶ 16 The OTCs respond that they are not lessors or renters because
they do not own, possess, or have any interest in hotel rooms;
therefore, they have no power to convey use or occupancy — in
other words, to lease hotel rooms — to others. See City of
Philadelphia v. City of Philadelphia Tax Review Bd., 37 A.3d 15, 20
7
(Pa. Commw. Ct. 2012) (no rental occurs until a customer checks in
at the hotel and receives the right to a room). Rather, they contend
that OTCs are technology companies that act as intermediaries
between purchasers and hotels.
¶ 17 The district court agreed with the OTCs that they are not
lessors or renters subject to the accommodation tax and, instead,
are intermediaries. Relying on dictionary definitions, the court
found that a “lessor” or “renter” is a “person or business that
conveys via a contract the right to use, possess, or occupy
accommodations for consideration.” Because OTCs act merely as
intermediaries and, therefore, lack a possessory interest in the
lodging, the district court found that they are not subject to
Breckenridge’s accommodation tax.
A. Standard of Review
¶ 18 We review a district court’s grant of summary judgment and
issues of statutory interpretation de novo. Robinson v. Legro, 2014
CO 40, ¶ 10; Bd. of Cty. Comm’rs v. ExxonMobil Oil Corp., 192 P.3d
582, 585 (Colo. App. 2008), aff’d, 222 P.3d 303 (Colo. 2009). When
reviewing a municipal ordinance, our primary task is to give effect
to the intent of the drafters, which we attempt to discern by looking
8
first to the ordinance’s plain language. Jackson & Co. v. Town of
Avon, 166 P.3d 297, 299 (Colo. App. 2007). If we can give effect to
the ordinary meaning of the words used by the drafter, the
ordinance should be construed as written. Id. But if the ordinance
is ambiguous and therefore susceptible of multiple interpretations,
we may resort to various aids of statutory construction in
determining intent. Jefferson Cty. Bd. of Equalization v. Gerganoff,
241 P.3d 932, 935 (Colo. 2010). We must also refrain from
rendering a judgment that would be inconsistent with the
municipal body’s legislative intent and must avoid any
interpretation that would produce an illogical or absurd result. Id.;
Waste Mgmt. of Colo., Inc. v. City of Commerce City, 250 P.3d 722,
725 (Colo. App. 2010).
¶ 19 Interpreting a tax code requires a similar analysis. Welby
Gardens v. Adams Cty. Bd. of Equalization, 71 P.3d 992, 995 (Colo.
2003). We must construe it as a whole to give consistent,
harmonious, and sensible effect to all its parts. Id. Additionally,
however, we adhere to Colorado’s longstanding rule of construction
that “tax provisions like those at issue here will not be extended
beyond the clear import of the language used, nor will their
9
operation be extended by analogy.” Waste Mgmt., 250 P.3d at 725
(citing City of Boulder v. Leanin’ Tree, Inc., 72 P.3d 361, 367 (Colo.
2003)). We construe all doubts against the government and in favor
of the taxpayer. Id.B. The Accommodation Tax Ordinance’s Language
¶ 20 B.T.C. section 3-4-1 (the preamble) states, in part, as follows:
[The] legislative intent of the town council in
enacting this chapter is that every person who,
for consideration, leases or rents any hotel
room, motel room, or other accommodation
located in the town shall pay and every person
who furnishes for lease or rental any such
accommodation shall collect the tax imposed
by this chapter.
¶ 21 An implementing provision provides that “an excise tax of
three and four-tenths percent (3.4%) [shall be assessed] on the price
paid for the leasing or rental of any hotel room, motel room, or
other accommodation located in the town.” B.T.C. § 3-4-3.
¶ 22 The code also imposes liability for unpaid taxes on “any lessee
or renter of a hotel room, motel room, or other accommodation
located in the town” who fails to pay or “any lessor or renter of such
accommodation” who fails to collect the accommodation tax. B.T.C.
§ 3-4-4(A).
10
¶ 23 The B.T.C. does not define the terms “leasing,” “renting,”
“lessor,” or “renter.” Nor does the code define the operative term
used in its preamble, “furnishes for lease or rental.”
¶ 24 When a statute fails to define an integral term, we may refer to
a dictionary to determine the common usage of the term. See
Roalstad v. City of Lafayette, 2015 COA 146, ¶ 34 (If a “statute does
not define a term, the word at issue is a term of common usage, and
people of ordinary intelligence need not guess at its meaning, we
may refer to dictionary definitions in determining the plain and
ordinary meaning.” (quoting Mendoza v. Pioneer Gen. Ins. Co., 2014
COA 29, ¶ 24)). Thus, we look to dictionary definitions of the terms
“lessor,” “renter,” “lease,” “rent,” and “furnish” to ascertain their
plain and ordinary meanings.
¶ 25 Black’s Law Dictionary defines those terms as follows:
 “lessor” (n.) is “[s]omeone who conveys real or personal
property by lease; esp[ecially], landlord”;
 “lease” (n.) is a “contract by which a rightful possessor of
real property conveys the right to use and occupy the
property in exchange for consideration,” and (v.) is “[t]o
grant the possession and use of (land, buildings, rooms,
11
movable property, etc.) to another in return for rent or
other consideration”; and
 “rent” (n.) is “[c]onsideration paid, usu[ally] periodically,
for the use or occupancy of property.”
Black Law’s Dictionary 1024, 1026, 1043, 1488 (10th ed. 2014).
¶ 26 Similarly, Webster’s Third New International Dictionary
defines the terms as follows:
 “lessor” (n.) is “one that surrenders possession of real
estate under a lease”;
 “lease” (n.) is a “a contract by which one conveys lands,
tenements, or hereditaments for life, for a term of years,
or at will or for any less interest than that of the lessor,
usu[ally] for a specified rent or compensation,” and (v.) is
“to grant or convey to another by lease”;
 “rent” (n.) is “income from a property,” and “a piece of
property that the owner allows another to use in
exchange for a payment in services, kind, or money”;
 “renter” (n.) is “one that rents: as . . . the lessee or tenant
of lands, tenements, or other property”; and
12
 “furnish” means “to provide or supply with what is
needed.”
Webster’s Third New International Dictionary 923, 1286, 1297,
1923 (2002).
¶ 27 These definitions clarify that a person who rents or leases or
furnishes for rent to another is one who has a possessory interest in
the property and has the legal ability to supply the property.
¶ 28 Here, the OTCs are not the “rightful possessor[s]” of hotel
rooms. Black’s Law Dictionary 1024 (10th ed. 2014) (defining
lease). The district court found that OTCs cannot pledge, assign, or
use hotel properties. Instead, hotels, as property owners, maintain
possession of the hotel rooms throughout the transaction.
¶ 29 Breckenridge argued before the district court that the OTCs
acquire inventory. However, the court found that numerous
operating agreements explicitly state that the OTCs have no right or
obligation to acquire an inventory of rooms. Further, the court
found that inventory belongs to the hotel and is only purchased by
the OTC immediately before being passed along to the consumer.
¶ 30 Breckenridge also contends that the code does not impose any
requirement that a person who leases or rents lodging have physical
13
possession of that room. Therefore, Breckenridge asserts that the
OTCs need not have physical possession of the hotel rooms to
qualify as renters or lessors. However, the physical possession
requirement is inherent in the plain and ordinary meaning of
renting and leasing. Because the hotels maintain possession of the
rooms and are the sole grantors of the right of occupancy, hotels
are lessors or renters and OTCs are essentially brokers.
¶ 31 A broker is an “agent who acts as an intermediary or
negotiator, esp[ecially] between prospective buyers and sellers.”
Black’s Law Dictionary 232 (10th ed. 2014). Notably, a “broker
usu[ally] does not have possession of the property” at issue. Id.Here, the OTCs, like traditional brokers, do not possess the hotel
rooms during the entirety of the transaction. They may only
acquire the right to use a room, which is immediately passed along
to the purchaser when the hotel issues a confirmation number in
the purchaser’s name.
¶ 32 They also cannot “grant the possession and use of” hotel
rooms because they are not the rightful possessors. OTCs do not
issue or furnish reservations; they facilitate them, at times and
rates set by a hotel pursuant to their contracts. Ultimately, a hotel,
14
not an OTC, grants a right of occupancy to guests upon check-in.
Consequently, an OTC is more akin to a broker.
¶ 33 Moreover, reading the accommodation tax statute as a whole
indicates that the accommodation tax applies only to those who
have a possessory interest in the accommodation being taxed.
Turning to B.T.C. section 3-4-2, the code defines hotel room, motel
room, or other accommodation as “[a]ny room or other
accommodation in any hotel . . . or any such similar place to any
person who, for consideration, uses, possesses, or has the right to
use or possess such room or other accommodation for a total
continuous duration of less than one month.” (emphasis added.) A
hotel guest does not have the right to use or possess a hotel room
until she is registered at the hotel. An OTC cannot grant this right.
¶ 34 In Village of Bedford Park v. Expedia, Inc., 876 F.3d 296 (7th
Cir. 2017), the court was presented with facts similar to those here.
Thirteen Illinois municipalities sought to impose taxes on the OTCs.
Applying an analysis like that of the district court here, the court
determined that renting implies ownership and granting possession
of property. Id. at 305. Since the OTCs had no possessory interest
and were not engaged in the business of owning, operating, or
15
leasing, and could not independently grant customers access to
rooms, they could not be liable for collecting and remitting taxes.
Id. The various ordinances applied by the Illinois municipalities
used language like that adopted by Breckenridge. Also, in City of
San Antonio v. Hotels.com, L.P., 876 F.3d 717 (5th Cir. 2017), the
Fifth Circuit determined that OTCs do not have an inventory of
rooms for occupancy. Persuaded by the analysis in Bedford Park,
we conclude that, under the Breckenridge ordinance, an OTC does
not have an interest that would allow it to furnish for rent any hotel
room. On the contrary, it appears that the OTCs only “furnish”
purchasers the opportunity to rent rooms from hotels.
¶ 35 Therefore, construing the statute as a whole and according to
its plain meaning, we conclude that the OTCs are not subject to
Breckenridge’s accommodation tax.1
C. Expedia II is not Dispositive
¶ 36 In addition to arguing that the OTCs qualify as renters and
lessors of hotel rooms, Breckenridge contends that Expedia II,
1As an additional argument, Breckenridge contends that OTCs
should pay taxes on the room rate charged plus services fees.
Because we determine that the OTCs are not liable for
accommodation taxes, we need not address this contention.
16
which concluded that OTCs are liable under Denver’s lodger’s tax,
is dispositive for two reasons. First, Breckenridge asserts that
Denver’s lodger’s tax is substantially similar to Breckenridge’s
accommodation tax. Second, Breckenridge argues that we should
reverse the district court’s decision because it relied on Expedia I,
which was ultimately overturned. We are not persuaded.
¶ 37 In Expedia II, ¶ 11, the City and County of Denver sought to
impose its lodger’s tax on the OTCs, which requires “vendors” to
collect and remit the prescribed tax on the purchase price of any
furnished lodging. The Denver ordinance defines “vendor” as a
“person making sales of or furnishing lodging,” and defines “sale” as
“furnishing for consideration.” Id. at ¶ 39 (quoting Denver Revised
Municipal Code § 53-170(4), (8) (D.R.M.C.)). The plurality
determined that “furnishing lodging for consideration . . . refers to
selling, or providing for consideration, the right to overnight use of
rooms or accommodations in the enumerated hotel-like facilities.”
Id. at ¶ 23. But, “‘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 . . . .” Id. The opinion rendered by
Justice Coats, Justice Márquez, and Justice Boatright held that
17
OTCs are vendors, for purposes of the lodger’s tax, because they
furnish lodging for consideration. Id. at ¶ 22.
¶ 38 However, Breckenridge’s reliance on Justice Coat’s plurality
decision in Expedia II is misplaced. “When a fragmented [c]ourt
decides a case and no single rationale explaining the result enjoys
the assent” of a majority of justices, Marks v. United States, 430
U.S. 188, 193 (1977), “the holding of the [c]ourt may be viewed as
that position taken by those Members who concurred in the
judgments on the narrowest grounds.” Id. (quoting Gregg v.
Georgia, 428 U.S. 153, 169 n.15 (1976) (plurality opinion)).
Accordingly, Justice Hood’s concurrence in Expedia II is instructive.
¶ 39 Although the concurrence agreed that OTCs are liable under
the lodger’s tax, the concurrence reached this decision without
using interpretive aids. Instead, the concurrence concluded that
the plain language of the ordinance makes sufficiently clear that the
OTCs qualify as vendors.
¶ 40 In its analysis, the concurrence defined “to furnish” as
providing or supplying rooms to “any person who for consideration
uses or has the right to use such rooms.” Expedia II, ¶ 42 (Hood,
J., concurring in the judgment). It also noted that nothing in the
18
definition of furnish, nor in the ordinance, limits the term to the
physical provision of a hotel room. Id. Therefore, because a
customer’s entire transactional relationship is with the OTC, the
OTCs clearly “provide or supply rooms to customers who pay
consideration to the OTCs in exchange for rooms or the right to use
rooms.” Id. at ¶ 43.
¶ 41 Breckenridge argues that we should extend the reasoning of
Expedia II to the instant case and conclude that the OTCs are
subject to the accommodation tax because they furnish lodging for
consideration. While this argument has some appeal, it overlooks
the different contexts surrounding the term “furnish,” as used in
the Denver and Breckenridge codes. In Expedia II, the concurrence
explained that the duty to collect Denver’s lodging tax is imposed on
vendors who “make[] sales of or furnish[] lodging to a purchaser in
the city.” Expedia II, ¶ 41 (quoting D.R.M.C. § 53-170(8)). For
purposes of the Denver lodging tax, furnishing is defined as
“provid[ing] or suppl[ying] to any person who for consideration uses
or has the right to use such rooms.” Id. at ¶ 42.
¶ 42 Under B.T.C. section 3-4-1, the duty to collect the
accommodation tax is imposed on those who “furnish[] [lodging] for
19
lease or rental.” The use of “furnish” in this context is
distinguishable from that in Denver’s ordinance. Under Denver’s
lodging tax, “furnishing lodging” indicates making hotel rooms
available to purchasers. On the other hand, the Breckenridge code
imposes liability only on those who furnish property for leasing or
renting. And only those with a possessory interest can furnish
property for leasing or renting. Accordingly, OTCs only furnish the
opportunity to rent hotel rooms from hotels.
¶ 43 Furthermore, Breckenridge’s argument ignores the different
terms used to describe the liable parties in the Denver and
Breckenridge codes. Unlike the term “vendor,” (which is used in the
Denver code and encompasses all parties that provide or supply
rooms for consideration) the plain meaning of “renter” or “lessor,”
restricts liability to only those who have a possessory interest in the
property.
¶ 44 Additionally, even if we were to overlook the words “lease” and
“rental,” the concept of furnishing is contained in the preamble to
the B.T.C. We are not persuaded that the concept of furnishing as
used in the context of a vendor, as in Expedia II, should inform our
decision here simply because the preamble uses the term
20
“furnishes.” But, a term used in the preamble to a statute cannot
be used to contradict the operative terms of the statute. A
“preamble can neither restrain nor extend the meaning of an
unambiguous statute.” 2A Norman Singer, Sutherland on Statutory
Construction § 47.04, at 295 (7th ed. 2007); cf. Dist. Landowners Tr.
v. Adams Cty., 104 Colo. 146, 150, 89 P.2d 251, 253 (1939) (where
it was asserted that a preamble had been violated, the preamble
could “not be invoked apart from specific provisions” of the statute).
¶ 45 We are also not persuaded that we must overturn the district
court’s decision because it relied on Expedia I. The district court
conducted a thorough analysis of the language of the ordinance and
its application to the OTCs. It was not until after the district court
concluded that the accommodation tax did not apply to the instant
case that the court discussed Expedia I. And in doing so, the court
observed that its holding was consistent with the division’s ruling in
Expedia I. Therefore, we cannot determine that the court relied
upon Expedia I in making its decision.
21
III. The District Court Properly Granted Summary Judgment for
Breckenridge’s Accommodation Tax Claim
¶ 46 Next, Breckenridge contends that the court erred in granting
summary judgment because genuine issues of material fact exist as
to (1) whether OTCs acquire inventory; (2) whether OTCs provide
customer service; and (3) the extent to which the hotels are involved
in merchant model transactions. We disagree.
A. Standard of Review
¶ 47 We review a court’s grant of summary judgment de novo.
Williams v. State Farm Mut. Auto. Ins. Co., 195 P.3d 1158, 1160
(Colo. App. 2008). Summary judgment is appropriate if the
pleadings, depositions, answers to interrogatories, and admissions,
together with any affidavits, establish that there is no genuine issue
of a material fact, and the moving party is entitled to judgment as a
matter of law. C.R.C.P. 56(c); City of Longmont v. Colo. Oil & Gas
Ass’n, 2016 CO 29, ¶ 9. A triable issue of fact is one in which
reasonable people could reach different conclusions about the
evidence. People in Interest of S.N., 2014 COA 116, ¶ 24.
¶ 48 The moving party has the burden of establishing the absence
of a genuine issue of material fact. Gibbons v. Ludlow, 2013 CO 49,
22
¶ 11. The moving party “need only identify those portions of the
record and affidavits which demonstrate an absence of a genuine
issue of material fact.” Id. If the nonmoving party cannot produce
sufficient evidence to establish a triable issue, the moving party is
entitled to summary judgment as a matter of law. Id. A genuine
issue of fact cannot be raised simply by means of argument. People
in Interest of J.M.A., 803 P.2d 187, 193 (Colo. 1990).
B. There is No Genuine Issue of Material Fact
¶ 49 Breckenridge failed to meet its burden of producing sufficient
evidence to establish that a genuine issue of fact exists as to
whether OTCs acquire inventory, whether the OTCs provide
customer service, and the extent of the hotels’ involvement in
merchant model transactions.
¶ 50 First, Breckenridge argues that the court improperly resolved
the issue as to whether OTCs acquire inventory, which could
support the contention that they are lessors or renters.
Breckenridge asserts that it provided evidence contrary to the OTCs’
argument that they do not acquire inventory because they merely
act as intermediaries. Specifically, Breckenridge points to the
annual Securities and Exchange Commission (SEC) reports where
23
the OTCs allegedly admit to acquiring some inventory. But, after
analyzing the SEC reports, the court found, and we agree, that the
SEC filings refer primarily to the hotel’s inventory. And, any
mention of the OTCs’ inventory concerns the inventory needed to
facilitate a reservation. Moreover, OTCs enter into non-exclusive
operating agreements in which OTCs agree to display information
about a hotel, but make clear that OTCs have no right or ability to
issue reservations themselves. Therefore, none of the record
evidence marshalled by Breckenridge contradicts the numerous
SEC reports and agreements between the parties indicating that
hotels, not the OTCs, possess inventory. Consequently,
Breckenridge failed to establish a triable issue of fact.
¶ 51 Second, Breckenridge argues that the court improperly
resolved whether and to what extent the OTCs provide customer
service. Specifically, Breckenridge contends that the taxable
transaction arises when the OTCs accept a customer’s payment in
exchange for the right to use the accommodation. However, the
OTCs’ involvement in customer service relating to room reservations
is immaterial because it does not indicate possessory interest.
24
Because no genuine issue of material fact was presented, summary
judgment was appropriate.
¶ 52 Third, Breckenridge argues that the court improperly
determined the degree to which hotels are involved in merchant
model transactions. It says that it presented evidence that a
consumer’s entire transaction is with the OTC, compensation is
paid to the OTC, and no additional compensation is paid to the
hotel after the purchaser becomes a guest. Breckenridge contends
that the court ignored its evidence. But, none of these facts
advance Breckenridge’s arguments because they do not indicate a
possessory interest. Therefore, these facts are immaterial. See
Peterson v. Halsted, 829 P.2d 373, 375 (Colo. 1992) (“A material fact
is simply a fact that will affect the outcome of the case.”).
¶ 53 Because reasonable people could not reach different
conclusions on the three issues presented, we conclude that the
court’s entry of summary judgment was proper.
IV. The District Court Lacked Subject Matter Jurisdiction to
Address the Sales Tax Claim
¶ 54 Breckenridge contends that the district court erred in
concluding that it lacked subject matter jurisdiction over its sales
25
tax claim because Breckenridge failed to exhaust administrative
remedies. We discern no error.
¶ 55 In reviewing a district court’s ruling on a jurisdictional issue,
we will uphold its factual findings unless they are clearly erroneous,
and we evaluate all legal conclusion de novo. Tidwell v. City & Cty.
of Denver, 83 P.3d 75, 81 (Colo. 2003).
¶ 56 There is a “general jurisdictional requirement that a party
exhaust available administrative remedies before seeking relief in a
district court.” City & Cty. of Denver v. United Air Lines, Inc., 8 P.3d
1206, 1212 (Colo. 2000). When “complete, adequate, and speedy
administrative remedies are available, a party must pursue these
remedies before filing suit in district court.” Id. Absent an
exhaustion of administrative remedies, judicial review has been
particularly disfavored in tax cases. Davison v. Bd. of Cty. Comm’rs,
41 Colo. App. 344, 348, 585 P.2d 315, 348 (1978). The exhaustion
requirement is subject to exceptions.
¶ 57 First, exhaustion is not required when it is clear beyond a
reasonable doubt that administrative review would be futile because
the agency will not provide the relief requested. United Air Lines, 8
P.3d at 1213. Second, a party can circumvent exhaustion
26
requirements when the issue presents a matter of law that the
agency lacks the authority or capacity to determine. Id.
Breckenridge argues that it was not required to exhaust its own
administrative remedies because doing so would be futile and the
question of whether OTCs are subject to the sales tax was a
question of law not subject to exhaustion requirements. We are not
convinced.
¶ 58 The B.T.C. explicitly provides that the administrative authority
has jurisdiction over the enforcement and collection of
Breckenridge’s sales tax. The code states, in relevant part, that in
the event “any person neglects or refuses to make a return in
payment of the sales tax or to pay any sales tax as required,” the
“finance director shall make an estimate . . . of the amount of taxes
due . . . .” B.T.C. § 3-1-32(B)(1). Following the finance director’s
review, a person can challenge the final decision by “proceed[ing] to
have [the finance director’s final decision] reviewed by the district
court.” B.T.C. § 3-1-36.
¶ 59 It is evident from the code that a party’s first step in seeking
relief for unpaid sales taxes is to petition for administrative review
from the finance director. And, only after undergoing
27
administrative review can Breckenridge petition for relief from the
district court.
¶ 60 Breckenridge circumvented its own procedural requirements
by first appealing to the district court for review. In its defense,
Breckenridge argues that it was not required to seek administrative
review because exceptions to the exhaustion requirement apply —
any administrative relief would be futile, the issue presented a
question of law that was not appropriate for administrative review,
and exhaustion is not required under these circumstances because
the interests underlying the exhaustion requirement are not
implicated. We disagree.
¶ 61 Breckenridge asserts that it need not exhaust administrative
remedies because the available procedures would not provide
adequate relief. But, the code provides for the precise relief
Breckenridge seeks. When determining the liability of a nonpaying
party, like an OTC, the finance director has exclusive jurisdiction to
assess unpaid taxes, interest, and penalties. B.T.C. § 3-1-32.
When a party fails to pay outstanding taxes, the finance director is
responsible for determining the amount owed. Id. The
administrator can then initiate action to collect the amount due.
28
He may issue liens and warrants for the seizing and selling of real
and personal property to satisfy the unpaid amount. B.T.C. § 3-1-
32(C) (1), (2).
¶ 62 If Breckenridge was disappointed with the finance director’s
decision, it could have petitioned for an administrative hearing to
contest the finance director’s determination. B.T.C. § 3-1-35. Only
after the finance director conducts a hearing may Breckenridge
petition for district court review. B.T.C. § 3-1-36. Assuming the
finance director determined the OTCs were liable for unpaid taxes,
Breckenridge would have been awarded adequate relief had it
exhausted the administrative requirements.
¶ 63 Breckenridge further argues that exhausting administrative
procedures would have been futile because the OTCs publicly
declared that they were unwilling to pay Breckenridge’s sales tax.
In support, Breckenridge points to two cases where the
administrator publicly announced its position on the issue;
therefore, the court found exhaustion would have been futile. See
Kuhn v. State Dep’t of Revenue, 817 P.2d 101, 104 (Colo. 1991)
(there was no need to exhaust when the agency publicly stated it
would not rule on any claim filed until the court had decided the
29
issue); Anderson v. Bd. of Adjustment for Zoning Appeals, 931 P.2d
517, 521 (Colo. App. 1996) (exhaustion would have been futile as
the parties had notice of the zoning administrator’s interpretation of
the pertinent law).
¶ 64 Here, the finance director made no public declaration on the
liability of the OTCs for unpaid sales taxes. Further, a
disagreement between parties in which one party publicly disclaims
liability is insufficient grounds to determine that administrative
remedies are futile. Accordingly, we are unable to determine that
administrative remedies would have been futile.
¶ 65 Second, Breckenridge contends exhaustion was inappropriate
because the controversy involves a matter of law that the finance
director did not have the authority or capacity to determine.
However, this exception is limited and applies only to issues, such
as constitutional matters, that “the agency lacks the necessary
expertise to address” and those that “fall squarely in the province of
the courts.” United Air Lines, 8 P.3d at 1213. Here, the issue of
determining a nonpaying party’s tax liability falls squarely within
the finance director’s jurisdiction as it is the administrator’s
responsibility to determine tax liability, impose penalties and
30
interest, and initiate action to collect the debt due. See B.T.C. § 3-
1-29. Undoubtedly, the finance director had the authority and
expert capacity to determine the OTCs’ sales tax liability.
¶ 66 Breckenridge also contends that exhaustion was not required
as courts “will excuse a party’s failure to exhaust available
administrative remedies” in situations that “do not implicate the
interests underlying the exhaustion requirement.” United Air Lines,
8 P.3d at 1213. Breckenridge argues that the OTCs’ offensive use
of the exhaustion doctrine as a merits defense fails to promote the
policy reasons justifying exhaustion.
¶ 67 However, a party’s motive in raising another party’s failure to
exhaust does not undermine the policy interests justifying the
exhaustion requirement. Exhausting administrative procedures in
this case would have served a number of significant interests. For
instance, the finance director would have had an opportunity to
apply his expertise and may have arrived at a satisfactory
determination — therefore ultimately conserving judicial resources.
Even if the issue had later been appealed, prior administrative
review would have helped to develop a factual record for the district
court’s review. See id. (developing a factual record, preventing the
31
interruption of the administrative process, preserving the autonomy
of the agency, and conserving judicial resources are important
policy interests of the exhaustion doctrine). Regardless of the OTCs’
reasons for raising the issue of exhaustion, we determine that
utilizing administrative procedures would have furthered a number
of important interests underpinning the exhaustion requirement.
¶ 68 For these reasons, we conclude that the district court lacked
subject matter jurisdiction to address Breckenridge’s unpaid sales
tax claim. Instead, Breckenridge must exhaust its own
administrative procedures before seeking judicial review.
V. The District Court Properly Denied Breckenridge’s Motion for
Class Certification
¶ 69 Breckenridge also contends that the district court abused its
discretion by denying Breckenridge’s request for class certification
of fifty-five Colorado home rule cities that also have ordinances
levying a lodger’s or accommodation tax for the purpose of imposing
taxes, interest, and penalties on nonpaying parties.2
2 Breckenridge also sought class certification for its sales tax claim,
but the court dismissed it for failure to exhaust administrative
remedies. We do not reach the question of whether a home rule
32
¶ 70 The district court denied Breckenridge’s petition on multiple
grounds. The court concluded that class certification was not
appropriate pursuant to C.R.C.P. 23(b)(2) as Breckenridge was
primarily seeking monetary damages. Additionally, Breckenridge
failed to meet the requirements for C.R.C.P. 23(b)(3) certification
because there was no predominance of common questions nor was
class action the superior remedy.
¶ 71 Breckenridge argues that, contrary to the district court’s
finding, it satisfied class certification requirements under C.R.C.P.
23(b)(2), or alternatively under C.R.C.P. 23(b)(3). We are not
persuaded.
A. Standard of Review
¶ 72 When determining whether the district court erred in denying
class certification, we review a district court’s decision for an abuse
of discretion. Jackson v. Unocal Corp., 262 P.3d 874, 879 (Colo.
2011). An abuse of discretion occurs if the decision is manifestly
arbitrary, unreasonable, or unfair, or when the district court
applies the incorrect legal standards. Id. A district court retains “a
municipality may be represented in a class action without a vote of
its citizens.
33
great deal of discretion in determining whether to certify a class
action” under C.R.C.P. 23. Id. at 880 (quoting Goebel v. Colo. Dep’t
of Insts., 764 P.2d 785, 794 (Colo. 1988)); accord Garcia v. Medved
Chevrolet, Inc., 263 P.3d 92, 97 (Colo. 2011).
B. Relevant Law
¶ 73 We turn first to the prerequisites of class certification. To
obtain certification, a party must allege that (1) the class is so
numerous that joinder of all its members is impractical; (2)
questions of law or fact are common among the class members; (3)
the claims or defenses of the class representative are typical of the
class; and (4) the class representative is capable of fairly and
adequately protecting the interests of the class. C.R.C.P. 23(a);
Garcia v. Medved Chevrolet, Inc., 240 P.3d 371, 377 (Colo. App.
2009), aff’d, 263 P.3d 92 (Colo. 2011). “[S]o long as the trial court
rigorously analyzes the evidence, it retains discretion to find to its
satisfaction whether the evidence supports each C.R.C.P. 23
requirement.” Garcia, 263 P.3d at 97 (quoting Jackson, 262 P.3d at
884).
¶ 74 After establishing the requirements above, a party must satisfy
one of the three subsections of C.R.C.P. 23(b). As pertinent here,
34
C.R.C.P. 23(b)(2) certification “is appropriate for classes seeking
predominantly injunctive or declaratory relief.” State v. Buckley
Powder Co., 945 P.2d 841, 845 (Colo. 1997). But, certification is
not prohibited where damages are sought in addition to injunctive
and declaratory relief, so long as the damages are incidental to the
other relief sought. Id. Even so, C.R.C.P. 23(b)(2) certification is
not appropriate in cases where the final relief relates exclusively or
predominantly to money damages. Id.¶ 75 In contrast, C.R.C.P. 23(b)(3) is the appropriate avenue for
parties seeking primarily monetary damages. Id. C.R.C.P. 23(b)(3)
requires a petitioning party to demonstrate that (1) common
questions of law or fact predominate over any questions affecting
only individual members and (2) a class action is superior to other
available remedies. Garcia, 240 P.3d at 377. When determining
C.R.C.P. 23(b)(3) claims, a district court is afforded broad discretion
in assessing whether a class action is the superior method to
resolve the case. Buckley, 945 P.2d at 845.
C. C.R.C.P. 23(b)(2) Certification
¶ 76 In the instant case, the district court engaged in extensive
factfinding in its determination as to whether Breckenridge satisfied
35
the four prerequisites to class certification — numerosity,
commonality, typicality, and adequacy of representation — and
found that Breckenridge satisfied C.R.C.P. 23(a)’s threshold
requirements. However, the court was unwilling to grant class
certification under C.R.C.P. 23(b)(2) because Breckenridge was
seeking primarily monetary damages.
¶ 77 While Breckenridge may have satisfied the four prerequisites
to certification, we agree with the district court that Breckenridge
primarily sought monetary damages. Breckenridge’s argument that
any potential monetary damages are only incidental to the
declaratory relief it seeks is unavailing. Four of Breckenridge’s five
claims for relief expressly request relief in the form of monetary
damages.
¶ 78 The fifth, although labeled as a request for declaratory
judgment under C.R.C.P. 57, also predominantly seeks monetary
relief. Scrutiny of Breckenridge’s specific declarations reveals that
each relates to the recovery of unpaid taxes:
i. whether Defendants have a duty, under
law, to collect Excise Taxes and/or Sales
Taxes . . . ;
36
ii. whether the Excise Taxes and/or Sales
Taxes are based on the Retail Rate;
iii. whether Defendants have a duty to remit
these taxes to Plaintiff and the Class;
iv. whether Defendants have failed to fulfill
their duty under law to remit these taxes to
Plaintiff and the Class; and
v. whether, under the appropriate ordinance
and/or rule, the amount of tax due and owing
to Plaintiff and the Class is to be calculated as
a percentage of the Retail Rate, without regard
to service fees, operation expenses and other
amounts currently deducted by Defendants.
Because the relief sought predominantly relates to money damages,
we cannot determine that the district court abused its discretion in
denying class certification under C.R.C.P. 23(b)(2).
D. C.R.C.P. 23(b)(3) Certification
¶ 79 Alternatively, Breckenridge argues that class certification is
appropriate under C.R.C.P. 23(b)(3). But, the district court found,
and we agree, that Breckenridge failed to satisfy C.R.C.P. 23(b)(3)’s
predominance and superiority requirements.
¶ 80 When reviewing a court’s decision regarding whether C.R.C.P.
23(b)(3)’s requirements are satisfied, we will uphold a district
court’s determination, absent an abuse of discretion, so long as the
court “rigorously analyze[d] the evidence presented.” State Farm
37
Mut. Auto. Ins. Co. v. Reyher, 266 P.3d 383, 387 (Colo. 2011).
Accordingly, we must determine whether the court sufficiently
examined the evidence presented.
¶ 81 The court first found that Breckenridge failed to advance a
classwide method of proving the OTCs’ liability for unpaid taxes. To
satisfy C.R.C.P. 23(b)(3)’s predominance requirement, a party must
demonstrate that legal or factual questions common to the class
predominate over questions affecting individual members. This
inquiry often turns on whether a “plaintiff advances a theory by
which to prove or disprove ‘an element on a simultaneous, class-
wide basis, since such proof obviates the need to examine each
class member’s individual position.’” Farmers Ins. Exch. v. Benzing,
206 P.3d 812, 820 (Colo. 2009) (quoting Lockwood Motors, Inc. v.
Gen. Motors Corp., 162 F.R.D. 569, 580 (D. Minn. 1995)).
¶ 82 Breckenridge argues that the common question affecting all
class members is whether merchant model transactions are subject
to tax liability. Because OTCs predominantly utilize the same
merchant model throughout the state, Breckenridge contends that
class certification is appropriate for fifty-five municipalities with
similar accommodation and sales tax provisions. However, what
38
Breckenridge fails to consider, and what the district court notes, is
the varying language used throughout the ordinances.
¶ 83 The district court explained that “one of the chief
responsibilities in adjudicating this action will be to interpret
applicable municipal accommodation tax statutes and then apply
the prevailing factual circumstance to determine whether the plain
language creates a tax responsibility flowing from [the OTCs] to [the
class member].” This is especially problematic when the ordinances
are not identical, or even significantly similar. In its analysis, the
court noted at least six material differences amongst the ordinances
regarding the taxable amount.3 Additionally, the district court
determined that the “ordinances utilize at least 20 different
standards to determine who is obligated to collect and remit
accommodation tax.”4 Consequently, the court was tasked with
conducting “an exhaustive analysis of all 55 municipal statutes.”
3 For example, Burlington requires taxing the “entire amount
charged for furnishing rooms or accommodations,” whereas
Larkspur taxes “the gross rental price of the lodging unit.”
Burlington Code of Ordinances § 3.28.010; Larkspur Mun. Code
§ 4-4-20.
4 The court noted that if it were to determine who is obligated to
collect and remit accommodation tax, it would have to decide what
39
¶ 84 Further, the district court examined a number of federal cases
certifying class action that Breckenridge asserted involved similar
actions against OTCs. See City of Rome v. Hotels.com, L.P., Civ. A.
No. 4:05-CV-249-HLM, 2007 WL 6887932 (N.D. Ga. May 10, 2011);
City of Goodlettsville v. Priceline.com, Inc., 267 F.R.D. 523, 527 (M.D.
Tenn. 2010); County of Monroe v. Priceline.com, Inc., 265 F.R.D. 659,
663 (S.D. Fla. 2010); City of Gallup v. Hotels.com, L.P., No. 07-CV-
00644 JEC/RLP, 2009 WL 9056102 (D.N.M. July 7, 2009); City of
San Antonio v. Hotels.com, Civ. No. SA-06-CA-381-OG, 2008 WL
2486043 (W.D. Tex. May 27, 2008).
¶ 85 But, the court made clear that this particular situation is
distinguishable from those because the fifty-five ordinances were
not modeled after a common source, like a uniform enabling act.
Consequently, unlike the federal cases where the court could utilize
a single test to determine liability, the district court would have had
to look to the plain language of each ordinance to determine the
the controlling standard would be. Would it be “whether
Defendants are ‘the lodging services vendor from whom the
accommodations are rented,’ as required by Rifle?” Rifle Charter &
Mun. Code § 4-6-10. Or, “in Commerce City, the relevant question
would be whether Defendants are a ‘vendor or provider of hotel . . .
services.” Commerce City Code of Ordinances § 20-246.
40
OTCs’ liability. See Transponder Corp. of Denver v. Prop. Tax Adm’r,
681 P.2d 499, 504 (Colo. 1984) (There is a “‘long-standing rule of
statutory construction’ in Colorado . . . that tax statutes ‘will not be
extended beyond the clear import of the language used, nor will
their operation be extended by analogy . . . .’” (quoting Associated
Dry Goods v. City of Arvada, 197 Colo. 491, 496, 593 P.2d 1375,
1378 (1979))). Because the district court correctly analyzed the
evidence presented, it did not abuse its discretion in finding that
common questions do not predominate over questions affecting only
individual members.
¶ 86 In addition, because it is likely Breckenridge would have to
provide evidence and arguments on fifty-five separate theories to
demonstrate the OTCs’ alleged liability for unpaid taxes, a class
action is not the superior available method for the fair and efficient
resolution of this issue.5
5 Breckenridge also argues that class certification is appropriate for
unnamed members who failed to exhaust administrative remedies.
See State v. Golden’s Concrete Co., 962 P.2d 919, 924 (Colo. 1998)
(“[U]nnamed class members need not exhaust administrative
remedies so long as the named class plaintiff does so.”). Because
we have determined that class certification is not available under
41
VI. Breckenridge’s Civil Common Law Claims Are Conclusory and
We Will Not Address Them
¶ 87 Lastly, Breckenridge, asserting without factual detail and
specificity, contends that the OTCs converted tax dollars and
conspired to do so. Because we have concluded that the
accommodation tax does not apply to OTCs, there is no liability
under these theories either. Moreover, Breckenridge fails to provide
any reasons to support its bald assertions. These arguments are
underdeveloped and are not properly presented for our review. See
People v. Wallin, 167 P.3d 183, 187 (Colo. App. 2007) (declining to
review the issues that were presented in the appeal “in a
perfunctory or conclusory manner”).
VII. Conclusion
¶ 88 The judgment of the district court is affirmed.
JUDGE WEBB concurs.
JUDGE TERRY specially concurs.
C.R.C.P. 23(b)(2) or C.R.C.P. 23(b)(3), we need not address this
argument.
42
JUDGE TERRY, specially concurring.
¶ 89 Though my reasoning differs from that of the majority, I
concur in the result of Part III of the majority opinion, concluding
that the district court did not err in granting summary judgment for
the online travel companies (OTCs). I also concur in Part IV,
concluding that the Town of Breckenridge failed to exhaust
administrative remedies; Part V, concluding that the district court
did not err in denying class certification; and Part VI, declining to
address Breckenridge’s common law claims.
¶ 90 And, because I conclude — based on an analysis somewhat
different from the majority’s in Part II of the opinion — that the
Breckenridge tax ordinance does not unambiguously apply to the
markup charged by the OTCs, I concur in the overall result.
¶ 91 The majority concludes that the City & County of Denver v.
Expedia, Inc., 2017 CO 32 (Expedia II), is not dispositive in this
case, because of differences in the Denver and Breckenridge taxing
ordinances, as well as factual differences in the two cases. I agree.
¶ 92 The result in Expedia II was driven by the language of Denver’s
tax code. Both the plurality opinion and Justice Hood’s concurring
opinion in that case relied on the language of the Denver code to
43
conclude that the OTCs are liable for the tax because they “furnish”
lodging.
¶ 93 The Denver tax code at issue in Expedia II clearly imposes a
tax on those furnishing lodging. Section 53-171(a) of the Denver
Revised Municipal Code imposes a tax on the purchase of “lodging.”
“Tax” is defined in section 53-170(6) to include “taxes due from a
vendor.” “Vendor” is defined in section 53-170(8) to include a
person “furnishing lodging to a purchaser in the city” (emphasis
added). The tax is levied in section 53-171(b) on the purchase price
paid or charged for “purchasing such lodging.” “Purchase or sale”
is defined in section 53-170(4) to include “furnishing for
consideration by any person of lodging within the city” (emphasis
added).
¶ 94 Because both the plurality, Expedia II, ¶ 24, and Justice Hood,
id. at ¶ 43, concluded that the OTCs furnish lodging (including
rooms and accommodations), these portions of the Denver code
clearly dictate that the OTCs are liable for the Denver tax. See id.
at ¶ 44 (Hood, J., concurring in the judgment) (“[E]xempting the
OTCs from the definition of ‘vendor’ would leave a portion of the
44
price paid for lodging untaxed, thereby frustrating rather than
effectuating the city council’s clear intent to tax that purchase.”).
¶ 95 But Breckenridge’s tax code differs in substantial respects
from Denver’s. Breckenridge’s code does not clearly impose the tax
on the “furnishing” of rooms or accommodations. The only clear
duty imposed on those who “furnish” lodging in the Breckenridge
Town Code is to collect tax, as required by section 3-4-1, which
says:
[The] legislative intent of the town council in
enacting this chapter is that every person who,
for consideration, leases or rents any hotel
room, motel room, or other accommodation
located in the town shall pay and every person
who furnishes for lease or rental any such
accommodation shall collect the tax imposed by
this chapter.
(emphasis added.)
¶ 96 It is undisputed that the OTCs collected tax. What is disputed
is whether any portion of the OTCs’ markup is to be included in the
amount subject to the tax. Cf. Expedia II, ¶¶ 35, 36 (concluding
that OTCs’ markup was taxable under Denver tax code); id. at ¶ 45
(Hood, J., concurring in the judgment) (indicating that Denver’s tax
45
code imposes “tax on the entire purchase price of any lodging” sold
by vendors, including the OTCs).
¶ 97 Unlike Denver’s code, Breckenridge’s code does not impose a
tax on the furnishing of lodging. As I understand the plurality
opinion and Justice Hood’s concurring opinion in Expedia II, the
absence of such a provision in the Breckenridge code is a potential
impediment to Breckenridge’s ability to impose a tax on that
markup.
¶ 98 Also unlike Breckenridge’s code, Denver’s code imposes a tax
on the “purchase price paid or charged for purchasing such lodging.”
Denver Rev. Mun. Code § 53-171(b) (emphasis added). The Expedia
II plurality opinion concluded that the OTCs’ markup is part of that
purchase price paid or charged. Expedia II, ¶ 35. Justice Hood’s
separate concurrence appears to agree with the concept that the
markup is part of that purchase price. Id. at ¶ 45 (reasoning that
Denver’s tax is imposed “on the entire purchase price of any
lodging”).
¶ 99 In contrast, section 3-4-3 of the Breckenridge code imposes a
tax on the “price paid for the leasing or rental” of a room. The
majority concludes that the term “leasing or rental” in the
46
Breckenridge code has significance implicating possessory rights on
the part of the entity making the rental. See supra ¶ 42 (concluding
that “only those with a possessory interest can furnish property for
leasing or renting”). The majority may be correct in concluding that
this is a distinguishing factor between the two ordinances. But in
any event, it is not patent that the OTCs’ markup is part of the
price paid for “leasing or rental,” as distinct from the price paid for
lodging.
¶ 100 We are required to construe tax provisions narrowly as
imposing tax only on those items clearly enumerated in the tax
code, and ambiguities should be resolved against the government
and in favor of the taxpayer. City of Boulder v. Leanin’ Tree, Inc., 72
P.3d 361, 367 (Colo. 2003).
¶ 101 I am therefore compelled to conclude that because the
Breckenridge code does not explicitly impose a tax on the OTCs’
markup, summary judgment was properly granted in favor of the
OTCs.
47