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City of Chandler v. Whitewing II, LLC

Court of Appeals of Arizona, First Division, Department T

October 22, 2013

CITY OF CHANDLER, a municipal corporation, Plaintiff/Counterdefendant/ Appellee,
v.
WHITEWING II, LLC, Defendant/Counterclaimant/ Appellant.

Not for Publication -Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. TX2010-000828 The Honorable Dean M. Fink, Judge

The Newmark Law Firm, P.L.L.C., Stephen C. Newmark Attorneys for Defendant/Counterclaimant/Appellant

Mary Wade, Chandler City Attorney, Sandra Karen McGee, Assistant City Attorney Attorneys for Plaintiff/Counterdefendant/Appellee

MEMORANDUM DECISION

LAWRENCE F. WINTHROP, Judge

¶1 This is a transaction privilege tax case. Whitewing II, L.L.C. ("Taxpayer") appeals from a summary judgment upholding a municipal tax assessment by the City of Chandler ("the City") under Chandler City Code ("City Code") § 62-416(a). Based on the following reasoning, we affirm the ruling, but remand for further consideration of an issue.[1]

BACKGROUND[2]

¶2 Taxpayer purchased real property in Chandler in 2000 to develop as a residential community. Taxpayer cleared and graded the property, which had previously been used for hog farming, and subdivided it into two parcels, self-denominated as "Community Land" and "Residential Land."[3] The Community Land was intended to be commonly used by the residents, and the Residential Land, which was divided into lots for sale, was designed so that purchasers would build homes on their lots. Between November 15, 2001, and November 5, 2004, Taxpayer sold one hundred lots.

¶3 Taxpayer's transaction privilege tax payments from February 2000 to November 2004 were audited. In August 2009, Taxpayer was assessed $103, 722.39 in taxes, along with interest, fees, and penalties because the City considered Taxpayer a speculative builder with sales subject to the City's transaction privilege tax.

¶4 Taxpayer protested the assessment and pursued its administrative remedies. After a hearing before a municipal tax hearing officer and a determination that the assessment needed to be adjusted, the City issued an adjusted assessment.

¶5 The City then filed a complaint in the tax court, alleging the hearing officer's determination was erroneous as a matter of law and seeking to recover the original assessment along with interest and penalties. See Ariz. Rev. Stat. ("A.R.S.") § 9-491(A) (West 2013).[4] Taxpayer filed an answer and counterclaim, asserting the hearing officer's decision was wrong because Taxpayer did not owe any transaction privilege taxes.

¶6 The parties filed cross-motions for summary judgment based on the applicability of City Code § 62-416(a) (2)(B) and (D). After oral argument, the tax court granted the City's motion and denied Taxpayer's cross-motion, thereby upholding the City's assessment.[5] Taxpayer filed a timely notice of appeal from the signed judgment filed June 11, 2012. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

ANALYSIS

¶7 Taxpayer challenges the grant of summary judgment, arguing that it did not sell "improved real property" as a speculative builder under City ...


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