Dan Nelson, Automotive, Inc. v. Viken

2005 SD 109, 706 N.W.2d 239, 2005 S.D. LEXIS 171, 2005 WL 2901707
CourtSouth Dakota Supreme Court
DecidedNovember 2, 2005
Docket23363
StatusPublished
Cited by20 cases

This text of 2005 SD 109 (Dan Nelson, Automotive, Inc. v. Viken) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dan Nelson, Automotive, Inc. v. Viken, 2005 SD 109, 706 N.W.2d 239, 2005 S.D. LEXIS 171, 2005 WL 2901707 (S.D. 2005).

Opinions

ZINTER, Justice.

[¶ 1.] Dan Nelson Automotive Inc. (Nelson) and the South Dakota Acceptance [241]*241Corporation (CNAC) brought an action for declaratory relief against the Secretary of the Department of Revenue and Regulation in his individual and official capacities. Nelson requested the circuit court to interpret certain statutes that impose an excise tax on the sale of automobiles and to declare the parties’ respective rights under those statutes. The circuit court dismissed the action on procedural grounds. The circuit court concluded that (1) Nelson had not exhausted all of its administrative remedies; (2) the State had not been joined as an indispensable party; and (3) even if the State had been joined, it could not be sued for declaratory relief. We reverse and remand.

Facts and Procedural History

[¶ 2.] Nelson and CNAC (collectively referred to as Nelson) are South Dakota corporations. Nelson sells motor vehicles, some on installment contracts. CNAC finances Nelson’s installment sales. The statutes at issue impose a three-percent excise tax on these vehicle sales. This dispute involves the tax on motor vehicles that are repossessed or returned before the initial installment buyer has paid the full contract price of the vehicle.

[¶ 3.] The excise tax is imposed on the “purchase price” of motor vehicles purchased or acquired for use on the streets and highways of this State. SDCL 32-5B-I.1 The purchase price, for computation of the tax, is defined as “total consideration whether received in money or otherwise.” SDCL 32-5B-4(l) (emphasis added). Nelson contends that when vehicles are returned or repossessed and then resold, it should not be required to pay all of the excise tax on the initial purchase price because Nelson never received the full purchase price from the first installment buyer.2 Nelson ultimately seeks a declaratory ruling that the excise tax may not be lawfully imposed on that portion of the initial price that Nelson does not actually receive from the initial defaulting buyer.3

[¶ 4.] Nelson brought this action under SDCL Ch. 21-24, South Dakota’s version of the Uniform Declaratory Judgment Act. Nelson did not seek a refund of taxes previously paid. Rather, Nelson only sought prospective declaratory relief “concerning the construction of [these] tax statutes and [the parties’] corresponding rights and obligations pursuant to SDCL Ch. 32-5B.”

[¶ 5.] The circuit court dismissed the action on procedural grounds without construing the statutes. That ruling raises the following issues on appeal:

(1) Whether administrative remedies must have been exhausted before the circuit court could entertain this action to interpret a tax statute un[242]*242der the Uniform Declaratory Judgment Act;
(2) Whether the State was joined as an indispensable party; and
(3) Whether the Uniform Declaratory Judgment Act or sovereign immunity precluded declaratory relief against the State.

Decision

[¶ 6.] This Court “reviews the trial court’s grant or denial of a motion to dismiss by determining whether the pleader was entitled to judgment as a matter of law.” Springer v. Black, 520 N.W.2d 77, 78 (S.D.1994). See also Estate of Billings v. Deadwood Congregation of Jehovah Witnesses, 506 N.W.2d 138,140 (S.D.1993); In re P.A.M., 505 N.W.2d 395, 396 (S.D. 1993). Questions of law are reviewed de novo. Rusch v. Kauker, 479 N.W.2d 496, 499 (S.D.1991) (citing Permann v. Department of Labor, Unemployment Ins. Div., 411 N.W.2d 113,117 (S.D.1987)).

Exhaustion of Administrative Remedies

[¶ 7.] Two well-established doctrines are implicated when the issue of administrative exhaustion' is raised. The first “doctrine is primarily concerned with the timing of the judicial review of administrative action.” Mordhorst v. Egert, 88 S.D. 527, 531, 223 N.W.2d 501, 504 (1974) (emphasis added). Because administrative action has occurred, this doctrine simply determines when courts may review the administrative agency’s decision. However, this doctrine must “be distinguished from the doctrine of primary jurisdiction.” Id. Primary jurisdiction questions arise when both an administrative agency and a court have authority to hear an initial dispute. Id. at 531-32, 223 N.W.2d at 504. When both entities have authority to hear the initial dispute, the doctrine of primary jurisdiction “determines whether the court or the agency should make the initial determination.” Id. (citation omitted). Thus, the first doctrine considers when a court may appropriately review an administrative decision that has been made, while the second considers which entity, an administrative agency or a court, should hear the initial dispute.

[¶ 8.] In this case, there was no administrative decision to review, and both the Department and the circuit court had jurisdiction to interpret the excise tax statutes. Therefore, this case involves a question of primary jurisdiction. The question is who had jurisdiction to hear this case first. Must the Department have interpreted the excise tax statutes and determined the rights of the parties before the circuit court was authorized to do so? We conclude that the answer is no because the Department did not have exclusive jurisdiction to interpret tax statutes, and absent a request for a tax refund, the administrative remedies were not mandated.

[¶ 9.] We begin the exhaustion analysis by noting that South Dakota’s Declaratory Judgment Act “permits [circuit courts to make a] declaration of legal rights or relations before an actual injury occurs.” Boever v. South Dakota Bd. of Accountancy, 526 N.W.2d 747, 749 (S.D.1995). And, as it relates to the question of primary jurisdiction, SDCL 15-6-57 specifically provides that “[t]he existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate.” Therefore, as we stated in an earlier tax dispute, “[a] request for declaratory relief [to interpret taxation statutes] may be allowed even when another adequate remedy exists.” Agar School Dist. v. McGee, 527 N.W.2d 282, 287 (S.D.1995) [243]*243(Agar 7).4

[¶ 10.] The Department, however, contends that two specific provisions of the Administrative Procedures Act require administrative review before allowing declaratory relief in circuit court. The Department first relies on the first sentence of SDCL 1-26-30, an administrative appeal statute.

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Nelson v. Viken
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Dan Nelson, Automotive, Inc. v. Viken
2005 SD 109 (South Dakota Supreme Court, 2005)

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Bluebook (online)
2005 SD 109, 706 N.W.2d 239, 2005 S.D. LEXIS 171, 2005 WL 2901707, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dan-nelson-automotive-inc-v-viken-sd-2005.