COURT OF APPEALS
DECISION
DATED AND FILED
September 25, 2008
David R. Schanker
Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT I
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Independence Corrugated,
LLC,
Plaintiff-Appellant,
v.
City of Oak Creek,
Defendant-Respondent.
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APPEAL
from a judgment of the circuit court for Milwaukee County: christopher
r. foley, Judge. Affirmed.
Before Dykman, Vergeront and Lundsten, JJ.
¶1 LUNDSTEN, J. This is an equitable
estoppel case presenting the question whether Independence Corrugated
reasonably relied to its detriment on conduct by the City of Oak Creek.
Specifically, Independence argues that it
lost out on a significant state tax benefit because it relied both on an
incorrect tax form provided by the City and on the City mayor’s assurances that
he was working to correct the problem and that Independence should be “optimistic.” We agree with the City and the circuit court
that, as a matter of law, Independence
cannot show that its reliance on the City’s conduct was reasonable. Accordingly, we affirm the circuit court’s
judgment dismissing Independence’s
claims against the City.
Background
¶2 Independence
manufactures “corrugate.” Most of Independence’s equipment
is directly related to manufacturing. In
2004, Independence located its facility in Wisconsin, in
significant part, because its manufacturing assets would be exempt from
personal property tax pursuant to Wis.
Stat. § 70.11(27) (2005-06).
¶3 In early 2005, a city employee provided Independence
with a tax form for companies that may not take advantage of the manufacturing
exemption, even though “the City of Oak Creek knew”
that Independence
was a manufacturing company. The summary
judgment materials do not tell us who the employee who provided the form was. Independence
relied on this action by the City and submitted the incorrect form. As a result, over $11 million in Independence assets were
incorrectly subject to personal property tax for 2005, resulting in a tax
overpayment of approximately $207,000.
¶4 Independence
learned in July 2005 that the City provided the incorrect form. Independence
notified the City of its mistake and asked the City to assist in having the
2005 tax adjusted.
¶5 The City did not dispute that it provided Independence with the incorrect form. Additionally, the City’s mayor provided Independence with assurances that he was working on the
situation and that Independence
should be “optimistic” about an adjustment.
Independence
relied on the mayor’s assurances. In
February 2006, however, the mayor informed Independence
that he would not assist Independence.
¶6 Although the City collected the tax at issue, the parties
agree that the State of Wisconsin Department of Revenue is the taxing authority
that decides whether to assess property as exempt manufacturing property. They further agree that Independence could have appealed the
incorrect assessment of its manufacturing property to the state board of
assessors under Wis. Stat. § 70.995(8).
¶7 Independence sued the City
for, among other relief, a judgment to cover the amount that Independence overpaid in 2005 taxes. The City moved for summary judgment, and asserted
that Independence
was responsible for submitting the correct form and could have timely appealed
the State’s decision but failed to do so.
The City argued that Independence
should have made its own inquiry into the proper procedures. Independence
countered that its reliance on the City’s actions was reasonable and that the
City should, therefore, be equitably estopped from asserting that Independence was
responsible for missing any deadlines.
¶8 The circuit court concluded that it was ultimately Independence’s duty to
file the proper tax forms and to comply with all tax laws. The court also concluded that it was not
reasonable as a matter of law for Independence
to rely on the incorrect form provided by the City. The court concluded, in the alternative, that
Independence
could not assert equitable estoppel against the City based on the incorrect
form because equitable estoppel can be asserted against a government entity only
if the government conduct is so egregious as to be “tantamount to fraud.” Finally, the court concluded that
Independence’s estoppel theory failed with respect to the mayor’s assurances
because, so far as the parties’ summary judgment materials and oral arguments
revealed, any assurances made by the mayor occurred after the deadline for
Independence to challenge the 2005 tax.
¶9 Accordingly, the circuit court granted the City’s motion for
summary judgment, and dismissed Independence’s
action against the City. Independence
appealed.
Discussion
¶10 Initially, we note that the parties dispute whether
Independence is attempting to use equitable estoppel improperly, as the basis for a claim as opposed to a defense to a claim. See,
e.g., Murray v. City of Milwaukee, 2002 WI App 62, ¶15, 252 Wis. 2d
613, 642 N.W.2d 541 (“[E]quitable estoppel (estoppel in pais) is a bar to the assertion of what would otherwise be a
right; it does not of itself create a right.” (footnote omitted)). We do not resolve that dispute. Rather, we will assume that equitable
estoppel is available to Independence, and we
will examine whether Independence
otherwise meets the requirements of equitable estoppel.
¶11 We review summary judgment de
novo, applying the same standards as the circuit court. Green Spring Farms v. Kersten, 136 Wis. 2d 304, 314-15, 401
N.W.2d 816 (1987). Suffice it to say
here that summary judgment is appropriate when there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Germanotta v. National Indem. Co.,
119 Wis.
2d 293, 296, 349 N.W.2d 733 (Ct. App. 1984). We view the facts in the light most favorable
to the nonmoving party. State
Bank of La Crosse v. Elsen, 128 Wis. 2d 508, 512, 383
N.W.2d 916 (Ct. App. 1986).
¶12 The parties dispute, as they did in the circuit court, whether
the City should be equitably estopped from asserting that Independence,
not the City, was responsible for Independence’s
failure to file the correct form or to timely appeal the determination of the
2005 tax. The parties’ arguments make it
apparent that they view the equitable estoppel issue as dispositive.
¶13 The basic elements of equitable estoppel are:
“The defense of equitable
estoppel consists of action or non-action which, on the part of one against
whom estoppel is asserted, induces reliance thereon by the other, either in
action or non-action, which is to his detriment. It is elementary, however, that the reliance
on the words or conduct of the other must be reasonable and justifiable.”
State v. City of Green Bay, 96 Wis. 2d 195, 202, 291 N.W.2d 508 (1980) (citations
omitted). The party asserting equitable
estoppel must prove it by “clear, satisfactory, and convincing” evidence. Nugent v. Slaght, 2001 WI App
282, ¶29, 249 Wis.
2d 220, 638 N.W.2d 594.
¶14 Independence argues that there
are genuine issues of material fact for the fact finder regarding whether Independence reasonably
relied on the City’s conduct. We
disagree. There are no disputes that
prevent summary judgment. For purposes
of summary judgment, we have assumed that all factual disputes will be resolved
in favor of Independence. Even so, we conclude that Independence is unable to establish that its
reliance on the City’s conduct was reasonable.
See Milas v. Labor Ass’n of Wis.,
Inc., 214 Wis.
2d 1, 8, 571 N.W.2d 656 (1997) (“When the facts and reasonable inferences
therefrom are not disputed, it is a question of law whether equitable estoppel
has been established.”).
City’s Provision
Of Incorrect Form
¶15 Independence
argues that it reasonably relied on the City’s provision of the incorrect tax
form. Independence
asserts that it was “a newly created business” with “no experience with the
personal property tax process in Wisconsin.” As such, Independence argues, it was reasonably
justified in assuming that the City knew which type of form to provide. The City responds that it was unreasonable
for Independence
to place reliance on the City instead of conducting its own independent inquiry
into the proper procedures for obtaining a tax exemption. We agree with the City.
¶16 Independence’s affidavit in
response to the City’s motion for summary judgment shows that Independence’s assets totaled more than $11.3
million. And, the affidavit further states:
Independence
is a closely-held limited liability company owned by nine corrugated box
companies, three of which are based in the State of Wisconsin.
Independence
was created in 2004 to acquire and operate a business to manufacture corrugate
for sale and conversion by its owners.
One of the major factors in Independence’s decision to locate its facility in Wisconsin is that its manufacturing assets would be
exempt from personal property tax pursuant to Wis. Stat. § 70.11(27). Because the vast majority of Independence’s
equipment is directly related to manufacturing, this exemption is extremely
useful to Independence.
¶17 What these facts show is that Independence is a company with
significant assets and that it is owned by nine corporate entities, three of
which are existing Wisconsin companies. Independence was
sufficiently sophisticated to form a special-purpose entity to further those
companies’ common business goals. The
amount of tax at stake in 2005 was over $200,000. Perhaps most importantly, Independence
or its owners chose to locate Independence in Wisconsin to take
advantage of the state tax exemption for manufacturing property. As Independence
states in its affidavit, Independence
would have paid only $4,700 in personal property tax in 2005—instead of almost
$212,000—if its manufacturing property had been assessed properly.
¶18 We cannot reconcile these facts with Independence’s argument that it reasonably
relied on the form sent to it by an unidentified city employee. Although that employee’s mistake was sloppy
at best, neither Independence nor any similarly situated company could have
reasonably relied on a form provided by a city employee with unknown expertise
to ensure that the company reaped a significant tax benefit that drove its
decision to locate in Wisconsin, especially since the City is not the
government entity that determines the benefit. Given the stakes, and Independence’s
nature and size, Independence
should have independently verified that it had the correct form. Independence
has not argued that it took any such independent steps, and we conclude as a
matter of law that its reliance was not reasonable.
¶19 Independence
points to cases in which a taxpayer has been successful in using equitable
estoppel against a taxing authority. See DOR v. Family Hosp., Inc., 105 Wis. 2d
250, 253, 257, 313 N.W.2d 828 (1982); DOR v. Moebius Printing Co., 89 Wis.
2d 610, 632-33, 636-37, 641-42, 279 N.W.2d 213 (1979); Libby, McNeill & Libby v. Department
of Taxation, 260 Wis. 551, 554-60, 51 N.W.2d 796 (1952); Amtronix
Indus., Ltd. v. LIRC, 115 Wis. 2d 108, 110, 116-17, 339 N.W.2d 802 (Ct.
App. 1983). All of these cases, however,
are readily distinguishable.
¶20 In Amtronix, the taxpayer relied on an individualized audit and
“compliance report” by the taxing authority.
Amtronix, 115 Wis.
2d at 110 & n.1, 113, 117.
Similarly, in Moebius Printing, the taxpayer
relied on an individualized field audit and follow-up letter from an agent of
the taxing authority. Moebius
Printing, 89 Wis.
2d at 617, 628-29, 632-33, 636-37. In Family Hospital, the taxpayer
relied on the taxing authority’s “Technical Information Memorandum,” which was
an “official interpretation of the statutes for the purpose of aiding the
taxpayer in his compliance with the tax laws.”
Family Hospital, 105 Wis. 2d at 252, 255, 259. Finally, in Libby, the taxpayer
relied on a supreme court decision and the taxing authority’s acquiescence to
that decision. Libby, 260 Wis. at 554, 556, 560-61.
¶21 We think it self-evident that the provision of a form by a city
employee who was not employed by the taxing authority with the power to grant
the exemption Independence sought is materially different
than the individualized determinations and legal authorities relied on by the
taxpayers in Amtronix, Moebius Printing, Family Hospital, and Libby.
¶22 Independence asserts that the
City knew Independence
was a “manufacturer.” Moreover, it can
reasonably be inferred from Independence’s
affidavit that the City knew it was important to Independence
to obtain the manufacturing exemption, and we agree with Independence that taxpayers are entitled to
“fair play” from government officials. See Moebius
Printing, 89 Wis. 2d at 640. None of this means, however, that it was
reasonable for a company like Independence to
rely on an unidentified city employee to ensure that Independence obtained a significant tax
benefit from the State. See Monahan v. Department of Taxation,
22 Wis. 2d
164, 168, 125 N.W.2d 331 (1963) (“Generally the right to assert estoppel in pais does not arise unless the party
asserting it has acted with due diligence.”).
Mayor’s Assurances
¶23 Independence argues that it
reasonably relied on the mayor’s assurances that he was working on solving the
problem and on the mayor’s statement that Independence
should be “optimistic” about an adjustment.
Independence
argues that it did not timely appeal the tax amount for 2005 under Wis. Stat. § 70.995(8) because it
relied on the mayor’s assurances. We
reject this argument for the reasons that follow.
¶24 Initially, we observe that Independence fails to address the
circuit court’s conclusion that, so far as the parties’ summary judgment
materials and oral arguments revealed, any assurances by the mayor occurred after the deadline for Independence to
appeal. Obviously, Independence could not have reasonably relied
on the mayor’s assurances as a reason for failing to timely appeal if those
assurances occurred after the appeal deadline.
Independence
fails to tell us in its appellate briefing when the appeal deadline passed or
precisely when the mayor made his assurances.
This omission is fatal to Independence’s
argument. “The ultimate burden … of
demonstrating that there is sufficient evidence … to go to trial at all (in the
case of a motion for summary judgment) is on the party that has the burden of
proof on the issue that is the object of the motion.” Transportation Ins. Co. v. Hunzinger Const.
Co., 179 Wis.
2d 281, 290, 507 N.W.2d 136 (Ct. App. 1993).
Moreover, as the appellant, Independence
bears the responsibility to demonstrate that the circuit court erred in
concluding, in effect, that the record showed no genuine issue of material fact
as to the timing of the mayor’s assurances.
Thus, we affirm the circuit court on this basis. See
Truttschel
v. Martin, 208 Wis.
2d 361, 369, 560 N.W.2d 315 (Ct. App. 1997) (“[W]e do not decide issues that
are not adequately developed by the parties in their briefs.”); see also Tam v. Luk, 154 Wis. 2d 282, 291 n.5,
453 N.W.2d 158 (Ct. App. 1990) (court of appeals has neither duty nor resources
to “sift and glean” the record for facts supporting a party’s argument).
¶25 Moreover, even if we were to assume that the mayor made the
assurances Independence describes at some point before the expiration of
Independence’s time to appeal, we would nonetheless conclude that
Independence’s assertion of estoppel fails on its merits. In reaching this conclusion, we take into
account the same facts about Independence that
we considered in rejecting Independence’s
argument regarding the incorrect form and, in addition, consider that the
mayor’s assurances fell far short of a promise.
Furthermore, even if the mayor promised results, Independence does not suggest any reason why
it could justifiably believe that the mayor possessed the power to deliver on
such a promise. Under the circumstances,
it was not reasonable for Independence
to forgo appeal rights based on the mayor’s assurances. Regardless of any promise from the mayor, it
was simply not reasonable for Independence to
forgo filing a timely appeal to the governmental entity empowered to grant the
benefit Independence
desired.
Conclusion
¶26 In sum, we conclude that, even if we assume that all factual
disputes are resolved in favor of Independence, Independence cannot
establish that its reliance on the City’s actions was reasonable. Because we agree with the circuit court that
equitable estoppel does not apply as a matter of law and that the City was
entitled to summary judgment, we affirm the circuit court’s judgment dismissing
Independence’s
claims against the City.
By the Court.—Judgment affirmed.
Not
recommended for publication in the official reports.