DocketNumber： 03-14-00397-CV
Filed Date： 3/10/2015
Status： Precedential
Modified Date： 9/29/2016
ACCEPTED
03-14-00397-CV
4435411
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/10/2015 11:14:24 AM
JEFFREY D. KYLE
CLERK
No. 03-14-00397-CV
_______________________________________________
FILED IN
3rd COURT OF APPEALS
In the Court of Appeals AUSTIN, TEXAS
For the Third Judicial District 3/10/2015 11:14:24 AM
Austin, Texas JEFFREY D. KYLE
Clerk
_______________________________________________
AMERICAN MULTI-CINEMA, INC.
Appellant & Cross-Appellee,
v.
GLENN HEGAR, COMPTROLLER OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS, AND KEN PAXTON, ATTORNEY
GENERAL OF THE STATE OF TEXAS
Appellees & Cross-Appellants.
_______________________________________________
ON APPEAL FROM THE 200TH DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-12-003831
_______________________________________________
APPELLANT & CROSS APPELLEE’S
ORAL ARGUMENT HANDOUTS
_______________________________________________
Mark W. Eidman RYAN LAW FIRM, LLP
Texas Bar No. 06496500 100 Congress Avenue, Suite 950
Mark.Eidman@RyanLawLLP.com Austin, Texas 78701
512.459.6600 Telephone
Doug Sigel 512.459.6601 Facsimile
Texas Bar No. 18347650
Doug.Sigel@RyanLawLLP.com Counsel for Appellant &
Cross-Appellee
Olga Goldberg
Texas Bar No. 24083081
Olga.Goldberg@RyanLawLLP.com
March 10, 2015
No. 03-14-00397-CV
_______________________________________________
In the Court of Appeals
For the Third Judicial District
Austin, Texas
_______________________________________________
AMERICAN MULTI-CINEMA, INC.
Appellant & Cross-Appellee,
v.
GLENN HEGAR, COMPTROLLER OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS, AND KEN PAXTON, ATTORNEY
GENERAL OF THE STATE OF TEXAS
Appellees & Cross-Appellants.
_______________________________________________
ON APPEAL FROM THE 200TH DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-12-003831
_______________________________________________
APPELLANT & CROSS APPELLEE’S
ORAL ARGUMENT HANDOUTS
_______________________________________________
FINDINGS OF FACT FOR PHASE ONE &
ORDER ON PHASE ONE OF BENCH TRIAL ...................................................... TAB 1
FINDINGS OF FACT FOR PHASE TWO, AND MAY 16, 2014 LETTER
FROM JUDGE NARANJO .............................................................................. TAB 2
“INTANGIBLE PROPERTY” DEFINED.............................................................. TAB 3
KEY LANGUAGE OF TEX. TAX CODE § 171.1012 ............................................ TAB 4
CLARIFICATION IN (t) ..................................................................................TAB 5
Respectfully submitted,
/s/ Doug Sigel
Doug Sigel
Texas Bar No. 18347650
Doug.Sigel@RyanLawLLP.com
RYAN LAW FIRM, LLP
100 Congress Avenue, Suite 950
Austin, Texas 78701
Telephone: (512) 459-6600
Facsimile: (512) 459-6601
Attorney for Appellant & Cross-Appellee
Certificate of Service
I certify that a copy of the Appellant & Cross Appellee’s Oral Argument
Handouts was served on Appellees & Cross-Appellants, Glenn Hegar and Ken
Paxton, through counsel of record Charles Eldred, Office of the Attorney
General, Financial Litigation, Tax and Charitable Trusts Division, P.O. Box
12548, Austin, Texas, 78711, Charles.Eldred@texasattorneygeneral.gov, by
electronic mail on March 10, 2015.
/s/ Doug Sigel
Doug Sigel
Notice sent: Final Interlocutory None DC BK14178 PG1280
t-iled in The Dist1iet Cotlrt
Olsp Parties:_ _ _ _ _ _ _....,.-../..:; of Travis County, Texas
;;;>"
ES JUN 23 2014
~::r CAUSE NO. D-1-GN-12-003831 At 9 ~L/-a . M.
Amalia Rodrigu``rk
American Multi-Cinema, Inc., IN THE DISTRICT COURT OF
Plaintiff,
v.
Susan Combs, Comptroller of Public TRAVIS COUNTY, TEXAS
Accounts of the State of Texas, and
Greg Abbott, Attorney General of the
State of Texas,
Defendants. 200th JUDICIAL DISTRICT
n ij i!d Findings of Fact for Phase One
D'ef~f
1. Plaintiff American Multi-Cinema, Inc. ('"AMC") is a corporation engaged in the movie
theater business.
2. AMC timely brought suit under Section 112 and 171 of the Texas Tax Code to recover
franchise tax paid in protest for Report Years 2008 and 2009.
3. AMC exhibits movies and other content (such as live sporting events and theatre) to pay-
ing customers at its movie theaters.
4. When AMC exhibits movies and other content to its paying customers, it produces per-
sonal property that can be seen, weighed, measw·ed, felt,.. or touched or that is perceptible
to the senses in any other manner for sale in its ordinary course of business.
tll fi/;"* Conclusions of Law for Phase One
1. The Court has jurisdiction over this case.
2. When AMC exhibits movies and other content to its paying customers, AMC produces
goods for sale in ordinary course of business under Section 171. I 012, and may therefore
include the costs of exhibiting movies and other content to its paying customers in its
cost-of-goods-sold deduction under Section 171.1012 of the Texas Tax Code.
3. Section 10(b) ofH.B. 500 does not apply to this case.
Signed on June 20,2014.
Darlene Byrne \ -===
Judge, !26th District Court
Travis County, Texas L.
30
DC BK13263 PG1548
CAUSE NO. D-1-GN-12-003831
AMERICAN MULTI-CINEMA, INC., § IN THE DISTRICT COURTS
Pb~tiff §
§
vs. § OF TRAVIS COUNTY, TEXAS
§
SUSAN COMBS, COMPTROLLER OF §
111
PUBLIC ACCOUNTS OF THE STATE § 200 JUDICIAL DISTRICT
OF TEXAS, and GREG ABBOTT, §
ATTORNEY GENERAL OF THE STATE §
OFTEXAS, §
Defendants §
tax paid under protest was tried to the Court. The trial was bifurcated. Plaintiff, American
Multi-Cinema, Inc. (" AMC") appeared through counsel and announced ready for trial.
Defendants Susan Combs, Comptroller of Public Accounts of the State of Texas, and Greg
Abbott, Attorney General of the State of Texas ("Comptroller"), appeared through counsel and
announced ready for trial. The Court has jurisdiction over the parties and the claims presented to
the Court. After hearing the evidence and considering the applicable law and arguments of
counsel, the Court finds that Section 10 (b) of H.B. 500 does not apply to this case in that it is not
effective until September I, 2013 , which is after the timeframe of the controversy in this case
and the Court further finds in favor of AMC and against the Comptroller.
The Court orders that AMC is entitled to include the costs to exhibit films to its
customers in its Cost of Goods Sold subtraction under Section 171.1012 of the Tax Code.
The parties are ordered to schedule a date with the Court for a phase two of this trial to
determine the refund an1ount, which can be set before any Judge.
JUDGE DARLENE BYRNE
126TH District Court
Travis County, Texas
197
Notice sent. Find! lnteiloet:Jtol") ``eRe
DC BK14178 PG1281
Disp Parttes:_ _ _ _-:;;:;:;-.......:::::::;;..._--
Filed in The District Court
of Travis County, Texas
Dlsp code: cv
Red gs:_ _ _ _ _ _ __ ES JUN 20 2014
Judge Q Lk\ Clerk f2-::J CAUSE NO. D-1-GN-12-003831 At 3'~1'f M.
Amalia Rodriguez-Mendoza, Clerk
American Multi-Cinema, Inc., IN THE DISTRICT COURT OF
Plaintiff,
v.
Susan Combs, Comptroller of Public TRAVIS COUNTY, TEXAS
Accounts of the State of Texas, and
Greg Abbott, Attorney General of the
State of Texas,
Defendants. 200th JUDICIAL DISTRICT
Findings of Fact for Phase Two
1. Plaintiff American Multi-Cinema, Inc. ("AMC") is a corporation engaged in the movie
theater business.
2. AMC timely brought suit under Section 112 and 171 of the Texas Tax Code to recover
franchise tax paid in protest for Report Years 2008 and 2009.
3. AMC exhibits movies and other content (such as live sporting events and theatre) to pay-
ing customers.
4. The parties stipulated that Joint Exhibit l lists all of the costs that are includable either in
(1) AMC's non-exhibition cost-of-goods-sold or (2) AMC's exhibition costs.
5. The parties stipulated that I 00% of the costs shown in regular type in Joint Exhibit 1 are
includable either in AMC's non-exhibition cost-of-goods-sold or in AMC's exhibition
costs.
6. The parties stipulated that some, but not all, of the costs shown in bold type in Joint Ex-
hibit 1 are includable in AMC's exhibition costs ("Disputed Costs" ). All of the Disputed
Costs are costs associated with AMC's theatres.
7. 13.42% of the Disputed Costs are exhibition costs. This includes 75% of the costs associ-
ated with the square footage used to sell concessions, which the parties stipulate is 2.19%
of the Disputed Costs. This also includes I 00% of the costs associated with the square
footage used to project to movies and alternative content into the auditorium, which the
parties stipulate is 9.67% of the Disputed Costs. Finally, this includes I 00% of the costs
associated with the square footage of AMC's auditoriums housing the speakers and
screens, which the parties stipulate is 1.56% of the Disputed Costs. This adds up to
13.42% of the Disputed Costs.
28
DC BK141 78 PG1282
8. The costs associated with the square footage for the auditoriums, other than the square
footage housing the speakers and screens, are not exhibition costs.
9. Based on 13.42% of the AMC' s cost-of-goods-sold for Report Year 2008 is
$1,091 ,269,621. AMC ' s refund for Report Year 2008 is $229,709, plus assessed interest,
penalty, and statutory interest.
10. AMC's cost-of-goods-sold for Report Year 2009 is $1,108,701,467. AMC's refund for
Report Year 2009 is $269,959, plus assessed interest, penalty, and statutory interest.
Conclusions of Law for Phase Two
1. The Court has jurisdiction over this case.
2. Pursuant to Judge Byrne's order in Phase One of this trial, AMC may include the costs of
exhibiting movies and other content to its paying customers in its cost-of-goods-sold de-
duction under Section 171.1012 of the Texas Tax Code.
3. Interpretations given to statutes by state agencies are entitled to deference when, as here,
a tax arguably applied and the court is weighing competing interpretations of the amount
owed. The Comptroller' s interpretation of the amount owed in the present case is rea-
sonable under the plain language of Section 171.1012, Tax Code.
4. Under Judge Byrne's ruli ng and Section 171.1012 of the Tax Code, 13.42% of the Dis-
puted Costs are includable in AMC's cost-of-goods-sold deduction. AMC is entitled to a
refund of$258,417 for Report Year 2008 and $289,815 fo r Report Year 2009, plus statu-
tory interest.
Date:
``~Judge, 419th District Cow-t
Travis County, Texas
29
a
T~£NT HlGHTOWER
ORLINDA NARANJO Staff Attorney
(512) 854-4029
Judge
(512) 854-4023
``-=.--- DORA CANZZALES
Offidul Court RcportHr
DIANA CAPUCHINO 419TH DISTRICT COURT (512) 854-9329
C(!urt Operations Offit:cr
(512) 854-402."1
HEMAN MARTON SWEAD' THAVIS COUNTY COURTHOUSE
P. 0. 130X 1748 STEPHANIE WJI.LIAMS
AUSTIN, TEXAS 78767 Court Clerk
(5'12) 854-5854
FAX: (512) 854-2224
May 16,2014
Via Facsimile (5121477-2348 Via Facsimile (512) 459-6601
Charles K. Eldred Doug Sigel
Office of the Attorney General Ray ley & Bowick, LLP
P.O. Box 12548 The Ryan Law Firm
Austin, Texas, 78711 100 Congress Ave., Suite 950
Austin: Texas, 78701
Re: Cause No. D-1-GN-12-003831; American Multi-Cinema, Inc. v. Susan Combs,
Comptroller of Public Accounts of the State of Texas, and Gt·eg Abbott, Attorney General
of the State of Texas; In the 200th Judicial District, Travis County, Texas
Dear Counsel:
Enclosed is a file-stamped Final Judgment in the above-referenced matter granting the
Comptroller's proposed refund amount. Though not required, the Court thought it would be helpful
to the parties to explain the basis of its ruling. In reachjng its decision the Coutt relied on Tracfone
Wireless. Inc.. et al v. Comm 'non State Emergency Communications, 397 S.W.3d 173, 183 (Tex. 2012), which states that the interpretations given to statutes by state age.n cies are entitled to deference when, as here, "a tax unarguably applies and the court is weighing competing interpretations of the amount owed." The Comptroller's interpretation of the amount owed in the present case is reasonable under the plain language of Section 171.1012, Tax Code. If you have any questi311 S.W.3d 610 , 620 n.7 (Tex. App.—Austin 2010, no pet.) “if it can be gathered from a subsequent statute, in pari materia, what meaning the Legislature attached to the words of a former statute, this will amount to a legislative declaration of its meaning and will govern the construction of the first statute.” Cannon’s Adm’r v. Vaughan,12 Tex. 399(1854) “While we think the plain language of Section 5 before its amendment made it mandatory that all petitioners attend the adoption hearing in person, if there could have been any doubt thereof it was removed by the amendment and its emergency clause, wherein the legislature clearly interpreted said Section as being mandatory.” Johnson v. Combs,256 S.W.2d 207, 207-08 (Tex. App.—Eastland 1953, no writ) “The legislature specifically noted [in the bill] that it intended subsection (j)(1) to be considered as a clarification of the existing law, not as a substantive change.” Sharp v. Caterpillar, Inc.,932 S.W.2d 230, 233-34 (Tex. App.—Austin 1996, no writ) § 171.012(t) Harlingen Caterpillar Years at issue RY 2008-2009 2007 RY 1988-1994 Clarification effective 9/1/2013 6/19/2009 9/1/1991 H.B. 500, Section 10(b) “Section 171.1012(t), Tax Code, as added by this section, is a clarification of existing law”