June 19, 2019

Archives for September 18, 2012

Colorado Court of Appeals: Taxation Appropriate on Download of Computer Software Even Without Transfer of Ownership of Software

The Colorado Court of Appeals issued its opinion in Ball Aerospace & Technologies Corp. v. City of Boulder on September 13, 2012.

Use Tax—Downloaded Software—Online Data Services.

In this use tax assessment dispute, the City of Boulder (City) appealed the trial court’s summary judgment for plaintiff, Ball Aerospace & Technologies Corporation (Ball), reversing a hearing officer’s determination that Ball owed use tax on its acquisition of downloaded computer software and access to online data services. The judgment was reversed and the case was remanded.

The City conducted an audit of Ball and assessed use tax on both downloaded software and online data services. Ball paid the amount owing under the assessment, but protested the City’s application of its use tax to these items. The hearing officer upheld the assessment as to the downloaded software and online data services, and the trial court reversed that decision.

The City argued that the trial court misconstrued the City Code and erred in concluding that neither the downloaded software nor the online data services are subject to City’s use tax. Use tax is levied on the privilege of storing, using, or consuming tangible personal property purchased at retail. The City Code defines “use” as “the exercise, for any length of time, by any person within the City of any right, power, dominion, or control over . . . taxable services when leased or purchased at retail from any person inside or outside the City.” By its plain language the City Code levies the use tax on computer software (1) leased or purchased at retail; (2) contained on an enumerated form or other machine-readable or human-readable form; and (3) over which the buyer has any right, power, dominion, or control. Further, the City Code does not require the transfer of ownership before the use of software is taxable. By paying to access the online data services, Ball purchased the right to use, from a remote location, the computer software contained on the service providers’ servers; therefore, the trial court erred in holding that downloaded software and remote access to the online service providers’ software are not taxable use of computer software under the City Code.

Summary and full case available here.

Colorado Court of Appeals: Criminal Defendant Entitled to Preliminary Hearing Even If Plea Has Already Been Entered

The Colorado Court of Appeals issued its opinion in People v. Simpson on September 13, 2012.

Preliminary Hearing—Theft—Class 3 Felony—Plea.

The People appealed from a pretrial order dismissing some of the charges they filed against Timothy Wayne Simpson. The order was affirmed.

Simpson was charged with several offenses, including theft and theft by receiving. These two theft counts were charged as class 3 felonies because Simpson was accused of taking property worth $20,000 or more. Following plea negotiations, the parties appeared in court for entry of a plea. Instead of pleading guilty, however, he pleaded not guilty and requested a preliminary hearing on the two theft charges, which the court scheduled. When the parties appeared for the preliminary hearing, the People announced that they would not present evidence of the two thefts, and the court dismissed those charges.

The People contended that the court lacked authority to hold a preliminary hearing on the two theft counts. Contrary to the People’s argument, a defendant is entitled to a preliminary hearing whenever he is charged, by information or complaint, with a class 1, 2, or 3 felony. It does not matter whether the value of the property taken is an element or an enhancer in a prosecution for theft or theft by receiving. What matters is that (1) Simpson was charged with class 3 felonies, and (2) he can be convicted of those class 3 felonies only if the prosecution proves beyond a reasonable doubt that the property taken was worth $20,000 or more. Therefore, Simpson was entitled to a preliminary hearing. Furthermore, under the governing procedural rules, preliminary hearings typically occur before the defendant enters a plea. However, the rules do not suggest that the court loses authority to conduct a preliminary hearing once the plea is entered; on the contrary, they contemplate that the court may order a preliminary hearing afterward. Therefore, Simpson did not waive his right to a preliminary hearing by entering his plea first, and the court did not err in holding such hearing.

Summary and full case available here.

Colorado Court of Appeals: Workers’ Compensation Insurer Not Entitled to Subrogate Against Interest on Claimant’s Annuities from Third-Party Lawsuits

The Colorado Court of Appeals issued its opinion in Hertz Corp. v. Industrial Claim Appeals Office on September 13, 2012.

Workers’ Compensation—Subrogation—Malpractice—Interest—Economic Damages.

In this workers’ compensation proceeding, the Colorado Insurance Guaranty Association (CIGA) appealed from the final order issued by the Industrial Claim Appeals Office (Panel), which disallowed it from taking a credit or offset against interest earned on the multiple third-party recoveries obtained by claimant. The order was affirmed.

Claimant received a workers’ compensation award of ongoing medical benefits and permanent total disability (PTD) benefits. He also received third-party recoveries for malpractice. The interest earned by claimant included both the investment income generated by the several lump-sum malpractice settlements and the interest component embedded in a statutorily required, court-ordered annuity investment. Claimant later moved for an order compelling CIGA to begin payments for PTD and medical benefits on a continuing basis and to pay past-due benefits without offsetting any of the interest earned or any interest contained in the annuitized payments for loss of future earnings and medical costs.

CIGA contended that the Panel erred in interpreting CRS § 8-41-203(1) to preclude a credit or offset against the interest component earned on the judgments against the hospital and physicians who caused claimant’s damages. CRS § 8-41-203(1) provides the workers’ compensation insurance carrier with a subrogation right to the proceeds received by the claimant for economic damages awarded in a third-party lawsuit against the tortfeasor. Here, purchase of the annuities essentially constitutes an investment of claimant’s previous judgment, and the interest earned on the annuity is funded by the original investment, not by the third-party tortfeasor’s liability obligation. Thus, the interest earned on the annuity is not the equivalent of the economic and medical benefits recovered from the tortfeasor or owed by the workers’ compensation provider. Rather, the interest component compensates claimant for the loss of use of funds during the accrual period. Further, CIGA was not entitled to any interest earned on claimant’s lump sum payments from the physicians. If CIGA received a credit or offset for the interest earned on these amounts, it would be permitted to recover a sum in excess of the amount of compensation for which it would be liable, in contravention of the statute. Therefore, the Panel properly determined that CIGA’s subrogation rights did not extend to that part of the periodic payments.

Summary and full case available here.

Colorado Court of Appeals: Property Taxation Based on Possessory Interest of Tax-Exempt Property Not Unconstitutional

The Colorado Court of Appeals issued its opinion in Cantina Grill, JV v. City & County of Denver County Board of Equalization on September 13, 2012.

 Ad Valorem Property Tax—Possessory Interests—CRS § 39-1-103—Constitutionality—Valuation.

In this property tax case, plaintiffs, food and beverage concessionaires at Denver International Airport (DIA) and holders of possessory interests in real property owned by the City and County of Denver (City), appealed the trial court’s judgment affirming the valuation of those possessory interests as assessed by defendants, the City and County of Denver County Board of Equalization (Board) and the County Assessor. The judgment was affirmed.

Plaintiffs serve food and beverages to the traveling public at DIA. The City is the owner of the real estate and improvements at DIA and operates the airport through its Department of Aviation. In May 2010, plaintiffs received notices of valuation for ad valorem property tax purposes for their respective spaces. Plaintiffs contested the valuations by unsuccessfully petitioning the Board. Plaintiffs then sought review in the trial court, which rejected their claims. Plaintiffs appealed that judgment.

Plaintiffs contended that CRS § 39-1-103(17)(a)(II)(A) and (B) is unconstitutional both on its face and as applied to them, because the Colorado Constitution, not the statute, imposes the tax. The statute merely creates a methodology for valuing a taxable possessory interest in tax exempt property—for ad valorem tax purposes—by the use of the rents and fees paid by the occupier to the owner; therefore, the statute is not facially unconstitutional. Further, plaintiffs’ possessory interests are made taxable by the Colorado Constitution under the test announced by the Colorado Supreme Court in Board of County Commissioners v. Vail Associates, Inc., 19 P.3d 1263 (Colo. 2001). Therefore, the statute, a set of procedures for tax valuation, was not applied to plaintiffs’ properly taxable possessory interests in an unconstitutional manner. Additionally, because the statute’s tax valuation provisions do not infringe on any constitutionally protected right, the statute is not unconstitutionally overbroad.

Plaintiffs also contended that the trial court abused its discretion in concluding that their possessory interests are taxable under the first two prongs of the Vail Associates analysis. To be taxable, the possessory interest must be such that (1) it provides a revenue-generating capability to the private possessor independent of the government property owner; (2) the private owner is able to exclude others from making the same use of the interest; and (3) the private ownership is of sufficient duration to realize a private benefit. Although the City has imposed operational restrictions on plaintiffs relating to the price of their products, hours of operation, and menus, and requires that employees be cleared by security, the record is clear that all, or virtually all, of plaintiffs’ revenue is generated from the traveling public. Thus, the trial court did not abuse its discretion in concluding that plaintiffs’ possessory interests are capable of generating revenue independent of the City. Further, although competition is permissible pursuant to their contract, others may not make the same physical use of the possessory interest as that of plaintiffs. Therefore, the second prong is satisfied.

Plaintiffs further contended that the trial court erred in approving the City’s valuation of their possessory interests. Pursuant to the agreement, plaintiffs must pay to the City rents and fees that are the greater of either a minimum monthly guaranteed rent or a percentage of their monthly gross revenues. The minimum monthly guaranteed rent is the minimum rent for the premises occupied by the plaintiffs, which, presumably, benefits the plaintiff. The trial court properly accepted the City’s valuation of the plaintiffs’ possessory interests, which was the minimum monthly guaranteed rent, reduced for the value of the use of the common area for those plaintiffs with such use, as the reasonably estimated future annual rents or fees.

Summary and full case available here.

Tenth Circuit: “Knowing” in 18 U.S.C. § 924(a)(2) Does Not Apply to Felony Status in § 922(g)(1)

The Tenth Circuit Court of Appeals published its opinion in United States v. Games-Perez on Monday, September 17, 2012.

The Tenth Circuit denied Games-Perez’s petition for rehearing en banc. He made a conditional guilty plea to being a felon on possession of a firearm in violation of 18 U.S.C. § 922(g)(1), but reserved the right to appeal the court’s denial of his motion in limine that sought a pre-trial ruling that the government was required to prove that he actually knew he was a felon.

The penalty for violation of § 922(g)(1) is found in 18 U.S.C. § 924(a)(2), which requires a knowing violation. In his initial appeal, he argued mistake of fact. At the time of his arrest for possessing the firearm, he was on a deferred judgment of a felony for attempted robbery.

The Tenth Circuit in United States v. Capps, 77 F.3d 350, 352 (10th Cir. 1996), as well as all other circuits to rule on the issue, held that knowledge of felony status is not an element of § 922(g)(1); that “knowing” applies only to possession of the firearm. In Games-Perez’s petition for rehearing en banc, he argued for the first time that Capps was wrongly decided and that the plain language of § 924(a)(2) requires the government to prove knowledge of felony status.

Because the defendant did not preserve the plain language issue in his conditional plea or make a plain error argument, and given the importance of stare decisis and a lack of split in the circuits, rehearing en banc was not proper. The concurring opinion addresses the lengthy dissent, which argued Capps was wrongly decided.

Tenth Circuit: Unpublished Opinions, 9/17/12

On Monday, September 17, 2012, the Tenth Circuit Court of Appeals issued one published opinion and one unpublished opinion.

Fisher v. Trammell

No case summaries are provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: First Amendment Protections Apply at Sentencing but Beliefs can be Considered for Relevant Purposes

The Tenth Circuit Court of Appeals published its opinion in United States v. DeChristopher on Friday, September 14, 2012.

The defendant, Tim DeChristopher, bid on oil and gas leases at a Bureau of Land Management (BLM) auction. His purpose in bidding was to disrupt the auction because of the harmful effect drilling on the leased land would have on the environment. DeChristoher won several bids and the auction was eventually canceled before its completion. DeChristopher was unable to pay the money required by his successful bids. He was convicted of making a false statement in violation of 18 U.S.C. § 1001 (Count 2) and of “organizing or participating in a scheme, arrangement, plan, or agreement to circumvent or defeat the provisions of the Federal Onshore Oil and Gas Leasing Reform Act in violation of 30 U.S.C. § 195(a)(1)” (Count 1).

DeChristopher appealed on several grounds. The first was that the evidence was insufficient to convict on Count 1 because 30 U.S.C. § 195(a)(1) requires more than one person. The court reviewed for plain error and in a 2-1 decision, after parsing the language of the statute, found none. The defendant also argued that because a violation of 30 U.S.C. § 195(a)(1) must be knowing, a conviction required he know which specific statutory or regulatory provision he was violating. The court held that knowledge of a specific statute was not required; it was enough that DeChristopher knew his actions would circumvent or defeat statutes and regulations governing oil and gas leases.

DeChristopher argued that there was insufficient evidence of his intent to bid in bad faith so his conviction for making a false statement on the bidder registration form should be overturned. Because he had no intent to bid at all when he signed the form, he could not have knowingly made a false statement. The court found a reasonable jury could have concluded he intended to bid when he signed the form because that was consistent with an intent to bid.

The Tenth Circuit ruled against the defendant’s Confrontation Clause argument as the excluded evidence of the BLM’s failure to comply with environmental laws in the leasing process was irrelevant to the charged offenses. The court ruled against his necessity defense argument because he had the legal alternative of joining a lawsuit filed by other groups to enjoin the leases. Despite defendant being the only person ever prosecuted for a violation of 30 U.S.C. § 195(a)(1), the court found proper the trial court’s denial of the defendant’s motion for discovery on selective prosecution as he had not proved discriminatory effect.

Finally, the Tenth Circuit rejected the defendant’s argument that the sentence he received was in retaliation for exercising his First Amendment rights to free speech. The trial judge made statements at sentencing regarding the defendant’s speech, such as “If this hadn’t been a continuing trail of statements by Mr. DeChristopher about his advocacy, as he calls it civil disobedience, and that he will continue to fight, and I am prepared to go to prison, then others are going to have to be prepared to go with me, that causes me to feel under the sentencing laws before me that a term of imprisonment is required.”

First Amendment protections apply at sentencing, but the court can consider a defendant’s beliefs for relevant purposes. Here, the district court did not violate the first Amendment because “far from punishing Defendant for the content of his public statements, simply relied on those statements to determine the sentence necessary to deter Defendant from future violations and to promote respect for the law.”