[No. 79909-1. En Banc.]
Argued May 15, 2007. Decided August 30, 2007.
[1] Judgment Summary Judgment Review Standard of Review. A trial court's grant of a summary judgment is reviewed de novo under the summary judgment standard of CR 56(c). A summary judgment is proper if reasonable persons could reach only one conclusion from the facts submitted. The facts and reasonable inferences therefrom are construed in favor of the nonmoving party. [2] Telecommunications Regulation Commission Authority Determination Question of Law or Fact. The issue of whether the Federal Communications Commission or the Washington Utilities and Transportation Commission has jurisdiction over a telecommunications network access charge (i.e., whether the charge is for access to an interstate or intrastate service) is decided as a question of law. Resolution of the issue does not depend on a factual analysis of the use a customer makes of the connection. [3] Municipal Corporations Telecommunications Taxation Business and Occupation Tax Communication Services Exemptions Interstate Services Scope In General. That portion of RCW 35A.82.060 stating that code cities "shall not impose [a license] fee or tax on that portion of network telephone service which represents . . . access to, or charges for, interstate services" is expansive and exempts from taxation all interstate network telephone services. [4] Municipal Corporations Telecommunications Taxation Business and Occupation Tax Communication Services Exemptions Interstate Services Federal Tariff Effect. A telecommunications network access charge that is the subject of a federal tariff necessarily is a charge for interstate services that may not be taxed by a code city under RCW 35A.82.060(1). [5] Statutes Construction Legislative Intent In General. A court's fundamental objective in construing a statute is to ascertain and carry out the legislature's intent. Review begins with the plain meaning of the statute. [6] Statutes Construction Legislative Intent Legislative History Ambiguous Statute. To discern the legislative intent of an ambiguous statute, a court may look to the statute's legislative history and the circumstances surrounding the statute's enactment. [7] Taxation Statutes Construction Tax Enactments Ambiguities Resolution in Favor of Taxpayer. An ambiguity in a tax statute is construed most strongly against the government and in favor of the taxpayer. [8] Municipal Corporations Telecommunications Taxation Business and Occupation Tax Communication Services Exemptions Interstate Services Charges To Another Telecommunications Company Necessity. The RCW 35A.82.060(1) prohibition on code cities imposing a tax on charges for interstate telecommunications network services is not limited to charges by a service provider to another telecommunications company. The statute prohibits taxation of all charges for interstate telecommunications network services. (Language in Community Telecable v. City of Seattle, 136 Wn. App. 169 (2006), suggesting otherwise is disapproved.) [9] Judgment Summary Judgment Continuance Review Standard of Review. A trial court's denial of a motion for a continuance of a summary judgment proceeding to allow further discovery is reviewed for an abuse of discretion. A trial court abuses its discretion if such discretion is exercised on untenable grounds or for untenable reasons or if the discretionary decision is manifestly unreasonable. [10] Judgment Summary Judgment Continuance Denial Grounds. A CR 56(f) motion for the continuance of a summary judgment proceeding to allow further discovery may be denied if (1) the requesting party does not provide a good reason for the delay in obtaining the desired evidence, (2) the requesting party does not indicate what evidence will be established by further discovery, or (3) the new evidence will not raise a genuine issue of material fact. [11] Dismissal and Nonsuit Review Standard of Review. A trial court's denial of a motion to dismiss an action is reviewed for an abuse of discretion. A trial court abuses its discretion if such discretion is exercised on untenable grounds or for untenable reasons or if the discretionary decision is manifestly unreasonable. [12] Taxation Taxpayer's Suit Exhaustion of Administrative Remedies Necessity. A party aggrieved by the imposition of a tax is not required to exhaust administrative remedies before invoking the original jurisdiction of the superior court under the Uniform Declaratory Judgments Act (chapter 7.24 RCW), Const. art. IV, § 6, and RCW 2.08.010 for a judicial determination of the validity of the tax. [13] Administrative Law Judicial Review Exhaustion of Administrative Remedies Necessity Issue Subject to Original Jurisdiction of Court. The administrative exhaustion requirement does not apply to a dispute over which a court has original jurisdiction. [14] Statutes Construction Judicial Authority Reference to Administrative Agency Necessity. An issue of statutory interpretation need not be referred to an administrative agency before a court may rule on the issue. [15] Administrative Law Judicial Review Exhaustion of Administrative Remedies Necessity Issue of Broad Public Import Prompt and Ultimate Determination. A party may not be required to exhaust administrative remedies before seeking a judicial ruling on an issue if the issue is one of broad public import requiring prompt and ultimate determination. Nature of Action: A company that provides interstate and intrastate network telephone services sought a declaration that a city did not have the authority to assess a utility occupation tax on various network access charges that the company alleged were interstate in character and beyond the reach of the city's power to tax. Superior Court: The Superior Court for King County, No. 05-2-33667-6, Douglass A. North, J., on May 1, 2006, entered a summary judgment in favor of the plaintiff. Supreme Court: Holding that the disputed charges were for interstate services because they were subject to federal tariffs, that the city could not tax the charges, that the trial court properly denied a continuance of the summary judgment proceedings, and that the plaintiff was not required to exhaust administrative remedies, the court affirms the judgment. Lori M. Riordan-, City Attorney, and Cheryl A. Zakrzewski-, Assistant (Kenneth Brunetti- of Miller & Van Eaton, LLP, of counsel), for appellant. David M. Jacobson- (of Dorsey & Whitney, LLP), for respondent. En Banc Ά1 SANDERS, J. The city of Bellevue (City) challenges a summary judgment order prohibiting the City from assessing a utility occupation tax FACTS Ά2 Qwest provides interstate Ά3 In November 2004 Qwest learned the City planned to conduct an audit review of the UOT and business and occupation tax Qwest owed. During the course of the audit, a dispute arose as to whether the City could levy UOTs on certain telecommunications service charges. On October 11, 2005, prior to the City's issuance of its tax assessment, Qwest filed a complaint in King County Superior Court challenging the imposition of the City's UOT on CALCs and other access charges. Ά4 On October 28, 2005, the City issued its tax assessment against Qwest. The assessment stated Qwest owed the City a total of $5,809,517.09 in taxes, penalties, and interest. On November 23, 2005, Qwest filed a notice of appeal with the Bellevue hearing examiner pursuant to Bellevue City Code (BCC) section 4.03.140, challenging the assessment. Qwest's notice of appeal addressed, among other things, several issues raised in its complaint, including the City's erroneous inclusion of CALCs and other interstate access charges in Qwest's taxable base. Ά5 On December 9, 2005, the City filed a motion to dismiss in superior court, arguing Qwest had failed to exhaust its administrative remedies through its administrative appeal to the hearing examiner. Qwest filed an opposition to the City's motion to dismiss and cross-moved for summary judgment. In response, the City filed a Civil Rule (CR) 56(f) motion for continuance, asking for 120 days to conduct discovery. The trial court denied the City's motion for continuance. In March 2006 the court granted Qwest's cross motion for summary judgment and denied the City's motion to dismiss. The City filed a motion for reconsideration on April 7, 2006, which the court denied. Final judgment for Qwest was entered on June 1, 2006. The City appealed. Division One of the Court of Appeals certified the case to this court pursuant to RCW 2.06.030(d), STANDARD OF REVIEW Ά7 A trial court's grant or denial of a motion for continuance is reviewed for abuse of discretion, State v. Hurd, 127 Wn.2d 592, 594, 902 P.2d 651 (1995), as is review of a trial court's denial of a motion to dismiss, State v. Goodchild, 146 Wash. 81, 261 P. 786 (1927). Statutory interpretation is a question of law and review is de novo. State v. Ammons, 136 Wn.2d 453, 456, 963 P.2d 812 (1998). ANALYSIS I. Whether CALCs and Private Line, Frame Relay, and ATM Access Charges Are Charges for Access to Interstate Service Is a Question of Law Ά8 The FCC has exclusive jurisdiction over and regulates Qwest's interstate telecommunications activity. 47 U.S.C. § 152. The WUTC has exclusive jurisdiction over and regulates Qwest's intrastate telecommunications activity in Washington. RCW 80.36.100. It is undisputed that under state law, the City may tax Qwest's charges for and its provision of access to intrastate services. See RCW 35A.82.060(1) ("Any code city . . . may impose the fee or tax, if it desires, on one hundred percent of the total gross revenue derived from intrastate toll telephone services . . . ."). And in their initial briefs, both Qwest and the City agreed the City could not tax Qwest on charges for interstate services. See RCW 35A.82.060(1) (precluding cities from taxing charges "for access to, or charges for, interstate services"). Ά9 The City disputes the trial court's ruling to the extent it holds CALCs, private line, frame relay, ATM charges, and other federally tariffed charges are necessarily charges for interstate services (or charges for access to interstate service). The City believes a court cannot make this determination without "conducting any factual analysis as to the true nature of the charges." Reply Br. of Appellant at 3; see also id. at 11 ("[J]ust because a charge is federally tariffed does not mean that it is being imposed for access to or for interstate service as a matter of law."). The City explains it "seeks [only] to tax charges for service . . . that is wholly intrastate in nature." Ά10 The City states it used its own records to "determine that certain of the dedicated line connections the City purchased from Qwest (using frame relay technology) were used to connect City offices with each other and with other regional offices located entirely within the State of Washington." Br. of Appellant at 25-26. The City's evidence consists of four invoices for frame relay connections between the City and other local agencies. The actual use of the circuits is entirely for intrastate communications. However, evidently when the City signed up for the frame relay services, it indicated it would use such services for interstate communicationshence, Qwest labeled the account as interstate. Ά11 According to Qwest, the City incorrectly assumes one determines the interstate or intrastate nature of a service charge by looking to the customer's use of the service. Qwest explains that according to the FCC, certain services are labeled "interstate" or "intrastate" depending upon the customer's initial indication of how they plan to use the service and not how the service is subsequently used. Thus, the trial court's order "did not depend on whether the services upon which CALCs and other federal access charges are imposed occur between Washington and some other state" because "access charges imposed pursuant to federal tariff are by law charges imposed on access to interstate service." Qwest Resp. Br. at 34. Ά13 To summarize, whether the FCC or the WUTC has jurisdiction over certain charges (i.e., whether the charges are for access to interstate or intrastate service) is not determined by looking to the customer's use of the connections. Instead, whether charges are charges for access to interstate (as opposed to intrastate) service is a question of law, and the City's contention that a court must conduct factual analysis to determine the interstate or intrastate nature of the charges is erroneous. II. Access Charges Imposed Pursuant to Federal Tariff Are by Law Charges Imposed on Access to Interstate Service Ά15 Former RCW 35A.82.060 (1983) provided, [T]he city shall not impose the fee or tax on that portion of network telephone service . . . which represents access to, or charges for, interstate services for which rates are contained in tariffs filed with the federal communications commission. LAWS OF 1983, 2d Ex. Sess., ch. 3, § 38 (emphasis added). The legislature subsequently struck the italicized language from the statute, and the City takes this omission as an indication that the statute's test is not the existence of FCC tariffs but whether the service in question is, in fact, interstate. Ά16 First, while the City regards the legislature's omission as a limitation, the omission is more properly read as an expansion on the taxation exemption. That is, under the amended version of the statute, all interstate services are exempt from taxation, not simply those for which rates are contained in tariffs filed with the FCC. Second, as mentioned above, we agree with Qwest's position that "access charges imposed pursuant to federal tariff are by law charges imposed on access to interstate service." Qwest Resp. Br. at 34 (emphasis added). Ά17 47 U.S.C. section 154 vests the FCC with the power to regulate interstate telecommunications, and 47 U.S.C. section 203 requires common telecommunication carriers to file their rates, or tariffs, with the FCC. Accordingly, tariffs properly filed with the FCC consist of charges that are necessarily charges for interstate telecommunications services, as 47 U.S.C. section 152 applies "to all interstate and foreign communication" and such interstate service charges are exempt from municipal taxation under RCW 35A.82.060(1). Moreover, the FCC lacks jurisdiction with regard to intrastate communication services. See 47 U.S.C. § 152 ("[N]othing in this chapter shall be construed to apply or to give the Commission jurisdiction with respect to . . . charges . . . for or in connection with intrastate communication service . . . ." (emphasis added)). Ά18 As such, we agree with Qwest that tariffs properly filed with the FCC include charges that are necessarily interstate in nature and affirm the trial court's order precluding the City from taxing Qwest's federally tariffed charges. III. RCW 35A.82.060(1) Forbids City Taxation on Interstate Services Ά20 A court's "fundamental objective in construing a statute is to ascertain and carry out the legislature's intent." Arborwood Idaho, LLC v. City of Kennewick, 151 Wn.2d 359, 367, 89 P.3d 217 (2004). Review begins with the plain meaning of the statute. Lacey Nursing Ctr., Inc. v. Dep't of Revenue, 128 Wn.2d 40, 53, 905 P.2d 338 (1995). If a statute is ambiguous, we may look to the legislative history and the circumstances surrounding the statute's enactment to discern legislative intent. Rest. Dev., Inc. v. Cananwill, Inc., 150 Wn.2d 674, 682, 80 P.3d 598 (2003). "Ambiguities in taxing statutes are construed 'most strongly against the government and in favor of the taxpayer.' " Estate of Hemphill v. Dep't of Revenue, 153 Wn.2d 544, 552, 105 P.3d 391 (2005) (quoting Dep't of Revenue v. Hoppe, 82 Wn.2d 549, 552, 512 P.2d 1094 (1973)). Ά21 Because the Court of Appeals' interpretation of RCW 35A.82.060(1) conflicts with the initial reading of both parties, we turn to the legislative history for guidance. Ά22 The version of RCW 35A.82.060(1) relevant to this action reads, Any code city which imposes a license fee or tax upon the business activity of engaging in the telephone business which is measured by gross receipts or gross income may impose the fee or tax, if it desires, on one hundred percent of the total gross revenue derived from intrastate toll telephone services subject to the fee or tax: PROVIDED, That the city shall not impose the fee or tax on that portion of network telephone service which represents charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services, or charges for network telephone service that is purchased for the purpose of resale, or charges for mobile telecommunications services provided to customers whose place of primary use is not within the city. LAWS OF 2002, ch. 67, § 10. Because it is undisputed the City may impose UOT on Qwest's revenue derived from charges for intrastate services, only the language following the word "PROVIDED" is necessary for resolution of this case. Ά23 In Community Telecable, 136 Wn. App. at 181, Comcast argued a Seattle tax on telephone business was "illegal because RCW 35.21.714 prohibits cities from imposing their telephone utility taxes on interstate service." (Emphasis added.) The Court of Appeals disagreed, holding that the statute merely "requires cities to give a deduction for the portion of network telephone service that represents a charge to another telecommunications company for interstate services." Id. at 182 (emphasis added). In short, the court read charges for "access to, or charges for, interstate services" as a subset of charges to another telecommunications company. The Court of Appeals concluded, "Comcast has not shown, or even alleged, that it charges another telecommunications company for interstate services." Id. Ά24 After Community Telecable was published, the City filed a statement of additional authority. Ά25 Qwest maintains its position that the plain language of RCW 35A.82.060(1) and RCW 35.21.714(1) prohibits code cities and cities from taxing any charges for interstate services or for access to interstate services, not just charges to other telecommunications companies for interstate services. Qwest urges us to ignore Community Telecable's interpretation of RCW 35.21.714(1), arguing, "(1) the panel's interpretation of RCW 35.21.714(1) is manifestly erroneous; (2) the interpretation is not identified as a holding in the case; Ά26 The original statute, passed in 1981, read, Any code city which imposes a license fee or tax upon the business activity of engaging in the telephone business, as defined in RCW 82.16.010, which is measured by gross receipts or gross income may impose the fee or tax, if it desires, on one hundred percent of the total gross revenue derived from toll telephone services subject to the fee or tax. LAWS OF 1981, ch. 144, § 11. Thus, the 1981 version of the statute made no distinction between interstate and intrastate services and simply allowed municipalities to tax "the total gross revenue derived from toll telephone services." Id. Ά27 In 1983 the statute was amended to read, Any code city which imposes a license fee or tax upon the business activity of engaging in the telephone business, as defined in section 24 of this 1983 act, which is measured by gross receipts or gross income may impose the fee or tax, if it desires, on one hundred percent of the total gross revenue derived from intrastate toll telephone services subject to the fee or tax: PROVIDED, That the city shall not impose the fee or tax on that portion of network telephone service, as defined in section 24 of this 1983 act, which represents access to, or charges for, interstate services for which rates are contained in tariffs filed with the federal communications commission. LAWS OF 1983, 2d Ex. Sess., ch. 3, § 38. The legislature clarified cities may tax 100 percent of revenue derived from intrastate telephone services and added a limitation on cities' taxing powernamely, cities may not tax the portion of telephone service "which represents access to, or charges for, interstate services" for which rates are filed with the FCC. Id. Ά28 In 1986 the statute was amended to include the exemption regarding telecommunications companies. The 1986 version provides, Any code city which imposes a license fee or tax upon the business activity of engaging in the telephone business, as defined in RCW 82.04.065, which is measured by gross receipts or gross income may impose the fee or tax, if it desires, on one hundred percent of the total gross revenue derived from intrastate toll telephone services subject to the fee or tax: PROVIDED, That the city shall not impose the fee or tax on that portion of network telephone service, as defined in RCW 82.04.065, which represents charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services. LAWS OF 1986, ch. 70, § 4. Ά29 The statute's legislative history, however, persuades us that the 1986 amendment affected only intrastate charges and left "access to, or charges for, interstate services" as a separate exemption. The impetus for the 1986 amendment was the breakup of AT&T. Since the breakup of AT&T, monthly phone bills issue[d] by Pacific Northwest Bell (PNB) are comprised of charges from two separate companies, PNB and a long distance carrier. Cities collect taxes on intrastate long distance revenue. Since the divestive, according to PNB, cities are collecting taxes on intrastate long distance from both the long distance companies themselves and from PNB who incorporates these charges into their total bill to consumers. Hence the double taxation. Id. (emphasis added). Importantly, the final bill report reads, "[I]nterstate services continue to be exempt from taxation by cities." Final Bill Report on Substitute H.B. 1892, 49th Leg., Reg. Sess. (Wash. 1986), "Limiting the taxation of telecommunications services by cities . . . As Passed Legislature." (emphasis added). Qwest contends, and we agree, this clarification confirms "[t]he 1986 amendment cannot be construed as allowing cities to tax revenue derived from access to interstate services or interstate services." Qwest Suppl. Br. at 8. Ά30 We disapprove of the Court of Appeals' interpretation of RCW 35A.82.060(1), as the statute's legislative history supports the conclusion that RCW 35A.82.060(1) precludes city taxation of charges for interstate service regardless of whether those charges are to another telecommunications company. IV. The Trial Court's Denial of the City's Motion for Continuance Was Not an Abuse of Discretion Ά32 The City sought a continuation of 120 days in order to conduct discovery "into whether or not charges Qwest identifies as CALCs and charges for certain other services provided by Qwest, including ATM service, frame relay service, and private line service, were interstate or intrastate in nature." Br. of Appellant at 32. Qwest argued because its complaint raised purely legal issues, fact discovery was irrelevant to the determination of the case. Qwest's position is correct. (1) the requesting party does not have a good reason for the delay in obtaining the evidence, (2) the requesting party does not indicate what evidence would be established by further discovery, or (3) the new evidence would not raise a genuine issue of fact. Butler v. Joy, 116 Wn. App. 291, 299, 65 P.3d 671 (2003). Under this test, the City fails prongs 1 and 2 because whether a charge is for interstate or intrastate service is a matter of law, and therefore an investigation into the "true nature" of Qwest's service charges is unnecessary and irrelevant. Br. of Appellant at 7. Ά34 Further, the superior court's holding was not dependent upon whether or not Qwest accurately labeled its service charges. Ά35 Accordingly, it was not an abuse of discretion for the trial court to deny the City's motion for a continuance. V. The Trial Court's Denial of the City's Motion To Dismiss Was Not an Abuse of Discretion Ά37 The City argued Qwest's lawsuit was "premature" and "the superior court should have given the Hearing Examiner the chance to complete its administrative review before permitting Qwest to proceed with its lawsuit." Br. of Appellant at 36. The City contends, "under Washington law, a party must exhaust it[s] administrative remedies before challenging an administrative action in court." Br. of Appellant at 36-37. Ά39 Qwest also correctly notes that this case involves an issue of statutory interpretation, and courts have held that questions of statutory interpretation need not be referred to administrative agencies. See State ex rel. Graham v. Northshore Sch. Dist. No. 417, 99 Wn.2d 232, 242, 662 P.2d 38 (1983). The City concedes this point. Further, as recognized by a panel of the Court of Appeals, the case at bar "involves issues of broad public import which require prompt and ultimate determination." See Wash. State Court of Appeals Order of Certification, Qwest Corp. v. City of Bellevue, No. 58154-6-I (Mar. 9, 2007) (citing RCW 2.06.030(d)). As such, the trial court did not abuse its discretion in denying the City's motion to dismiss. CONCLUSION Ά40 RCW 35A.82.060(1) precludes city taxation on revenue derived from charges for interstate service or for access to interstate service. Because this case involved no genuine issue of material fact and because Qwest is entitled to judgment as a matter of law, the trial court's grant of summary judgment is affirmed. We also affirm the trial court's denial of the City's motion for reconsideration. ALEXANDER, C.J., and C. JOHNSON, MADSEN, BRIDGE, CHAMBERS, OWENS, FAIRHURST, and J.M. JOHNSON, JJ., concur.