Supreme Court upholds Kanawha tax ruling against Bayer

By Kelly Holleran | Nov 6, 2008


CHARLESTON -- The state Supreme Court has upheld a Kanawha County Circuit Court ruling that denied Bayer Corp. more than $450,000 it sought after finding mistakes on its taxes.

Bayer claimed it was due a tax reduction of $456,747 because of tax errors it made during 2001, 2002 and 2003.

The Kanawha County Commission was right when it voted 2-1 to grant Bayer the relief it requested, the company claimed.

But the circuit court reversed the commission's decision after Prosecuting Attorney Stephen Revercomb stepped in and filed a writ of certiorari.

After the circuit court issued its findings denying Bayer the reduction on April 20, 2007, the company filed its appeal.

Bayer argued in its appeal that the prosecutor did have authority to file the writ of certiorari because he is not the real party in interest.

However, Bayer's point was invalid, according to a Supreme Court opinion delivered by Justice Robin Davis.

"Our reading of the language of Rule 17 (a) is that it plainly indicates that its analysis applies only to claimants," the opinion states. "In the instant proceeding, the Prosecutor has not asserted a claim against Bayer. The Prosecutor is challenging a ruling by the Commission that granted a claim asserted by Bayer."

In addition, Bayer failed to notify the prosecutor of its request for relief until after the matter was heard, a violation of West Virginia code.

Because the prosecutor was not given the opportunity to defend the case, he should be allowed to file the writ of certiorari, according to the opinion.

Another issue Bayer raised was that the circuit court was wrong when it applied a de novo standard to the case, allowing it to start the case over.

The Supreme Court again disagreed with Bayer, saying the standard of review for a writ of certiorari is de novo.

"This standard is based upon the fact that a circuit court is permitted to consider evidence that was not submitted to a lower tribunal," the opinion states. "In the instant proceeding the record reveals that Bayer attached to its pre- and post- reversal memoranda of law exhibits and affidavits that were not submitted into the record before the Commission."

Finally, Bayer argued the circuit court erred when it reversed the Commission's ruling.

The Supreme Court disagreed, saying relief should not be granted because Bayer could not prove with clear and convincing evidence that it did not breach its duty of care when it erroneously filed its taxes.

In order for a taxpayer to receive relief, it must prove that a mistake occurred because of an "unintentional or inadvertent act," not because of negligence, according to West Virginia code.

"The circuit court found that each of the errors in question resulted from negligence and not due to a mistake that was attributable to an unintentional or inadvertent act," the opinion states. "We agree."

In its final conclusion, the Supreme Court looked to witnesses Bayer called before the commission and before the circuit court.

"Insofar as Bayer failed to provide any witness testimony on the critical issue of what measures it took to prevent the taxing errors in question, Bayer failed to prove by clear and convincing evidence that the errors were caused by a mistake that was attributable to an unintentional or inadvertent act," the suit states. "On the contrary, the record supports finding that the errors were caused by Bayer's breach of its duty of care in collecting and reporting its tax data."

Carper, who was the sole county commissioner to vote against giving Bayer a refund, said he applauds the Supreme Court's opinion.

"It's really a tax payer's bill of rights," he said. "It is the absolute clear setting of guidelines."

Bayer has filed a number of lawsuits where it uses out-of-state experts, but it did not work for them this time, Carper said.

"In this case, the state tax department took a dive on the appeal," he said. "They went MIA."

The case is a landmark precedent-setting case, Carper said.

"It's an excellent opinion that was issued by the Supreme Court and Justice Robin Davis," he said.

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