DaimlerChrysler Corp. v. Levin

Moyer, C.J.,

dissenting.

{¶ 24} In Gen. Motors Corp. v. Wilkins, 102 Ohio St.3d 33, 2004-Ohio-1869, 806 N.E.2d 517, we held that another car manufacturer was the “consumer” for use-tax purposes with respect to warranty and special-policy repairs that it paid on behalf of car owners. The majority attempts to distinguish Gen. Motors from this case by describing Gen. Motors as addressing only the situation in which the manufacturer has a contractual obligation to pay for the repairs. I disagree, and I would affirm the Board of Tax Appeals (“BTA”) in this case on the basis of Gen. Motors.

{¶ 25} First, Gen. Motors did not address only warranty repairs; it addressed special-policy repairs as well. The manufacturer in Gen. Motors had no more contractual obligation to perform special-policy repairs than DaimlerChrysler Corporation had to perform the goodwill repairs at issue in this case. Therefore, I find that Gen. Motors directly dictates that DaimlerChrysler is the consumer in this case.

{¶ 26} Second, the majority attempts to distinguish Gen. Motors by finding that the car buyers in this case paid a “charge” to cover the cost of the repairs. Because a warranty gives a customer the right to demand that the manufacturer pay for covered repairs, the amount that car buyers pay for the warranty is consideration for the purchase of the warranty, not consideration for the purchase of the repairs. The majority recognizes this principle, but then erroneously concludes that in this case, where no warranties are at issue, the portion of the sale price that the car buyers pay to cover the cost of goodwill repairs somehow constitutes a charge for those repairs. The logic of Gen. Motors dictates the contrary conclusion. Namely, the payment made to purchase a car is consideration for the purchase of the car, not for the purchase of repairs performed long after the purchase of the car.

{¶ 27} The mere fact that a manufacturer builds its overhead costs into the price of a car does not mean the car purchaser is purchasing the overhead items. For example, DaimlerChrysler probably built the cost of advertising into the price of its cars; that does not mean that car purchasers are purchasing the advertising when they purchase a car. Nor are car buyers purchasing the machinery and equipment or the labor used to manufacture the car; they are purchasing a car, and nothing else.

{¶ 28} Finally, the majority finds support in the Michigan Supreme Court’s decision in Gen. Motors Corp. v. Dept. of Treasury, Revenue Div. (2002), 466 Mich. 231, 644 N.W.2d 734. That case is inapposite for several reasons. Most significant is the fact that, in the Michigan case, the tax administrator had conceded that “parts provided under [a warranty] are not subject to use tax because the customers paid for the right to replacement parts under [the warranty] at the time of the retail sale.” Id. at 233-234, 644 N.W.2d 734. By contrast, in Ohio, the Tax Commissioner vigorously contends against the theory that paying for a warranty, or paying for a car, constitutes payment for repairs performed later. We have already held that the manufacturer is liable for use tax with respect to — at a minimum — warranty repairs. Gen. Motors. Thus, the Michigan case simply does not constitute persuasive authority on the issue that we confront in this case.

{¶ 29} For all these reasons, I respectfully dissent and would affirm the BTA.

Cupp, J., concurs in the foregoing opinion.