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South Point Energy Center, LLC v. Arizona Department of Revenue

Court of Appeals of Arizona, First Division

November 3, 2016

SOUTH POINT ENERGY CENTER, LLC, Plaintiff/Appellant,
v.
ARIZONA DEPARTMENT OF REVENUE, an agency of the State of Arizona; and MOHAVE COUNTY, a political subdivision of the State of Arizona, Defendants/Appellees.

         Appeal from the Arizona Tax Court Nos. TX2013-000522, TX2014-000451 The Honorable Christopher T. Whitten, Judge

          Steptoe & Johnson, LLP, Phoenix By Pat Derdenger, Bennett Evan Cooper, Shannon E. Trebbe Counsel for Plaintiff/Appellant

          Arizona Attorney General's Office, Phoenix By Kenneth J. Love, Kimberly Cygan Counsel for Defendants/Appellees

          Judge Peter B. Swann delivered the opinion of the court, in which Presiding Judge Patricia A. Orozco and Judge Andrew W. Gould joined.

          OPINION

          SWANN, Judge

         ¶1 South Point Energy Center, LLC ("South Point") appeals the tax court's entry of summary judgment in favor of the Arizona Department of Revenue and Mohave County (collectively, "Defendants") on South Point's actions challenging the assessment of property taxes. The tax court concluded that South Point was collaterally estopped from challenging the legality of the taxes and that relief was not available under the error-correction statutes. We disagree. First, issue preclusion did not apply because South Point's challenges were based on an issue not raised in previous litigation. Second, the alleged error falls within the broad category of mistakes for which relief is available under the error-correction statutes.

         ¶2 We vacate the judgments entered in favor of Defendants, and remand for further proceedings.

         FACTS AND PROCEDURAL HISTORY

         ¶3 South Point operates a power plant ("the Plant") on the Fort Mojave Indian Reservation. The Plant is located on land leased from the Fort Mojave Indian Tribe ("the Tribe"). The United States Department of the Interior holds the land in trust for the benefit of the Tribe.

         ¶4 South Point filed two actions in tax court, contesting Defendants' assessment of property taxes against the Plant for tax years 2010 and 2011 under A.R.S. § 42-16254(G) (which permits challenges to erroneously assessed taxes), and for tax years 2012 and 2013 under A.R.S. § 42-11005 (which permits recovery of illegally collected taxes). In both actions, South Point alleged that federal law preempts state and local taxation of the Plant.

         ¶5 Defendants moved to dismiss South Point's complaints, arguing that South Point was collaterally estopped from litigating the legality of the taxes based on the result of an earlier case decided against the former Plant owner, Calpine Construction Finance Company ("Calpine"), for earlier tax years. For tax years 2010 and 2011, Defendants alternatively moved to dismiss on the basis that South Point was not entitled to relief under the error-correction statutes, A.R.S. §§ 42-16251 to -16259.

         ¶6 Treating Defendants' motions as motions for summary judgment, the tax court held in favor of Defendants on both grounds. First, the court concluded that South Point's preemption challenges were precluded because the Calpine litigation determined taxability and "Calpine had a full and fair opportunity to raise [the preemption argument], but for whatever reason did not." Second, the court held that relief under the error-correction statutes was not available because based on the disposition in the Calpine litigation, there was no error.

         ¶7 The tax court denied South Point's motions for reconsideration. South Point filed timely notices of appeal from the final judgments entered ...


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