      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

NEW CINGULAR WIRELESS PCS                       NO. 70810-4-1
LLC, a Delaware limited liability
company,                                        DIVISION ONE


                        Respondent,                                            C3        .—IC

                                                UNPUBLISHED OPINION
       v.

                                                                                rv-'

THE CITY OF BOTHELL,
WASHINGTON,
                                                FILED: August 25, 2014
                        Petitioner,                                                 en



CITIES 1 through 100+,

                        Defendants.



       Leach, J. — On discretionary review, we must decide if the trial court

applied equitable tolling properly to New Cingular Wireless PCS LLC's claim for a

tax refund from the city of Bothell (City).1 The trial court concluded that New

Cingular's filing of an administrative tax refund claim with the City tolled the

statute of limitations for separate claims asserted in a lawsuit New Cingular filed



      1 New Cingular initially sued more than 100 cities in this action. On March
14, 2013, the trial court granted various defendants' motion for misjoinder and
dismissed without prejudice all defendant cities except Bothell. Including each
name in the caption of this opinion would take several pages. In the interest of
publishing economy, we order the abbreviation of the caption to that set forth
above for purposes of this opinion and any postopinion pleadings filed in an
appellate court only.
NO. 70810-4-1/2




later in superior court. Because New Cingular failed to exhaust its administrative

remedies before filing its superior court action, we reverse and remand.



                                     FACTS


      New Cingular provides telecommunications services and sells wireless

data plans. The data plans allow customers to access the Internet on personal

electronic devices. New Cingular paid to the City utility taxes on revenues from

its provision of these Internet services.      New Cingular billed for and collected

from its customers these tax payments.

       In 2010, New Cingular's customers in Washington sued AT&T in federal

court, alleging that AT&T unlawfully charged them for utility taxes on Internet

services.2    The   United   States Judicial      Panel   on   Multidistrict   Litigation

consolidated this action with 27 other lawsuits from around the country.3 AT&T

settled these lawsuits, agreeing to seek refunds on the Internet taxes that it paid

to the various taxing jurisdictions, including the City, and to return any refunded

taxes to the class members.4




     2 Vickerv v. AT&T Mobility LLC, No. 2:10-CV-0257 (W.D. Wash. 2010).
New Cingular is an affiliate of AT&T.
      3 In re AT&T Mobility Wireless Data Servs. Sales Tax Litiq., 789 F. Supp.
2d 935, 939 (N.D. 111.2011).
      4 AT&T, 789 F. Supp. 2d at 940-41.
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       In November 2010, New Cingular filed with the City a refund request for

$416,802.28 in alleged overpayment of utility taxes for the period November 1,

2005, through September 30, 2010.        On January 13, 2012, New Cingular, by

letter, asked the City about the status of its tax refund claim. On April 16, 2012,

the City sent a letter to New Cingular denying its refund claim.

       On June 15, 2012, New Cingular wrote a letter to the City stating, "[l]n the

months since that process was undertaken, the company has identified certain

tax amounts that should not be included in the amount sought in the Refund

Claim." Accordingly, New Cingular proposed reductions in the requested refund

amounts.


       Earlier, on April 25, 2012, New Cingular sued the City in King County

Superior Court seeking "a declaration that Defendants have an obligation to

refund the erroneously collected tax on Internet access." It also sought recovery

of its tax payments on theories of unjust enrichment and violation of the due

process clauses of the Fourteenth Amendment to the United States Constitution

and the Washington State Constitution.5 On July 5, 2013, the City moved for

partial summary judgment, seeking a decision that "the doctrine of equitable

tolling does not apply to this action" and that the statute of limitations barred New

Cingular's claims for recovery of taxes paid before April 25, 2009, three years


       5 New Cingular amended its complaint on August 21, 2012.
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NO. 70810-4-1/4




before New Cingular filed this lawsuit. In response, New Cingular argued, "[T]he

refund application should toll the statute of limitations because Bothell acted in

bad faith by failing to timely process the refund claim, despite its code provisions

which require 'prompt' review, while New Cingular diligently pursued its claim."

       The trial court denied the City's motion and, without any motion requesting

this relief, granted partial summary judgment in favor of New Cingular. The

court's order states, "The doctrine of equitable tolling applies under the

circumstances of this case, commencing upon the filing of the tax refund claim

with the City of Bothell in November 2010. Denial of the refund claim was not

necessary for accrual of the cause of action for unjust enrichment." The court

also stated, "The court acknowledges that its decision is an extension of the

current Washington case law on equitable tolling."

       On August 22, 2013, the trial court certified under RAP 2.3(b)(4) "that the

order denying summary judgment entered on August 2, 2013 involves a

controlling question of law as to which there is substantial ground for a difference

of opinion and that immediate review of the order may materially advance the

ultimate termination of the litigation."

       The City sought discretionary review, which this court granted.




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NO. 70810-4-1/5




                             STANDARD OF REVIEW


       We review de novo a trial court's summary judgment decision.6 In this

review, we construe all facts and reasonable inferences from those facts in the

light most favorable to the losing party.7 The prevailing party bears the burden of

showing that no material issue of fact exists.8 A fact is material if the outcome of

the litigation depends upon it.9

                                    ANALYSIS


       Washington courts apply a three-year statute of limitations to tax refund

claims.10 "The limitation period commences when a cause of action accrues and

tolls when a complaint is filed or a summons is served."11 An action for a tax

refund accrues when the plaintiff pays the challenged taxes.12

       The doctrine of equitable tolling "permits a court to allow an action to

proceed when justice requires it, even though a statutory time period has


       6 Young v. Savidqe. 155 Wn. App. 806, 814, 230 P.3d 222 (2010) (citing
Aba Sheikh v. Choe, 156 Wn.2d 441, 447, 128 P.3d 574 (2006)).
       7 Savidqe. 155 Wn. App. at 814 (citing Hertoq v. City of Seattle, 138
Wn.2d 265, 275, 979 P.2d 400 (1999)).
       8 Savidqe, 155 Wn. App. at 814 (citing Young v. Key Pharm., Inc., 112
Wn.2d 216, 225, 770 P.2d 182 (1989)).
       9 Savidqe, 155 Wn. App. at 814 (citing Balise v. Underwood, 62 Wn.2d
195, 199,381 P.2d 966 (1963)).
     10 RCW 4.16.080(3); Cost Mqmt. Servs.. Inc. v. City of Lakewood, 178
Wn.2d 635, 651, 310 P.3d 804 (2013); Hart v. Clark County, 52 Wn. App. 113,
116, 758 P.2d 515 (1988).
      11 U.S. Oil & Refining Co. v. Dep't of Ecology, 96 Wn.2d 85, 91, 633 P.2d
1329(1981).
       12 Hart, 52Wn.App. at 117.
                                        -5-
NO. 70810-4-1/6




elapsed."13   Justice generally requires equitable tolling in cases involving a

defendant's bad faith, deception, or false assurances and the plaintiff's exercise

of diligence.14 The party asserting equitable tolling bears the burden of proof.15

       Courts apply equitable tolling sparingly.16 "In Washington equitable tolling

is appropriate when consistent with both the purpose of the statute providing the

cause of action and the purpose of the statute of limitations."17

       Bothell Municipal Code (BMC) 5.08.110 states,

       If, upon application by a taxpayer for a refund or for an audit of his
       records, or upon an examination of the returns or records of any
       taxpayer, it is determined by the treasurer that within the two years
       immediately preceding the receipt by the city of the application by
       the taxpayer for a refund or for an audit, or, in the absence of such
       an application, within the two years immediately preceding the
       commencement by the city treasurer of such examination, a tax has
       been paid in excess of that properly due, the excess amount paid
       within such period of two years shall be credited to the taxpayer's
       account or shall be refunded to the taxpayer, at his option. No
       refund or credit shall be allowed with respect to any payments
       made to the city more than two years before the date of such
       application or examination.

       BMC 5.08.210 states,



       13 In re Pers. Restraint of Bonds, 165 Wn.2d 135, 141, 196 P.3d 672
(2008) (citing In re Pers. Restraint of Carlstad, 150 Wn.2d 583, 593, 80 P.3d 587
(2003)).
       14 Millavv.Cam, 135 Wn.2d 193, 206, 955 P.2d 791 (1998).
       15 City of Bellevue v. Benvaminov, 144 Wn. App. 755, 767, 183 P.3d 1127
(2008).
       16 Graham Neigh. Ass'n v. F.G. Assoc, 162 Wn. App. 98, 119, 252 P.3d
898 (2011) (citing Nikum v. City of Bainbridqe Island, 153 Wn. App. 366, 378,
223P.3d 1172(2009)).
       17 Millav, 135Wn.2dat206.
                                         -6-
NO. 70810-4-1/7



       Any person having paid any tax, original assessment, additional
       assessment, or corrected assessment of any tax may apply to the
       treasurer within the time limitation for refund provided in this
       chapter by petition in writing for a correction of the amount paid and
       a conference for examination and review of the tax liability, in which
       petition he shall set forth the reasons why the conference should be
       granted, and the amount in which the tax, interest, or penalty
       should be refunded. The treasurer shall promptly consider the
       petition, and may grant or deny it. If denied, the petitioner shall be
       notified by mail thereof forthwith. If a conference is granted, the
       treasurer shall notify the petitioner by mail of the time and place
       fixed therefor. After the hearing, the treasurer may make such
       determination as may appear to him just and lawful, and shall mail
       a copy of his determination to the petitioner.

BMC 5.08.240(A) states,

       The city treasurer or his duly authorized agent may examine any
       books, papers, records, or other data bearing upon the amount of
       any tax payable or upon the correctness of any return, or for the
       purpose of making a return where none has been made, or in order
       to ascertain whether a return should be made. The city manager
       may require the attendance of any person at a time and place fixed
       in a notice served by any person in the same manner as a
       subpoena is served in a civil case.

       The treasurer's decision is final unless the petitioner timely appeals to the

city council.18 If the city council orders a public hearing on this appeal, it votes to

affirm, modify, or reverse the treasurer's decision.19 The city council's decision is

final unless the petitioner files an action in superior court "for a trial de novo on

the matter at issue."20




       18 BMC 5.08.220.
       19 BMC 5.08.220.
       20 BMC 5.08.230.
NO. 70810-4-1/8




       New Cingular claims that equitable tolling applies. It alleges that the City

acted in bad faith with its "delay in processing the claim" and "by its failure to

describe how the detailed claim that New Cingular submitted was supposedly

insufficient, its failure to ask for more information, and its lack of contact with New

Cingular in any way prior to Bothell's summary, generic denial." New Cingular

also alleges that the City provided false assurances:

             Bothell's Municipal Code provided false assurances in two
       ways: first, by providing that Bothell would "promptly" process the
       claim, BMC 5.08.210, and, second, by representing any
       overpayment in taxes "shall be refunded" to the taxpayer. BMC
       5.08.110. New Cingular relied on both representations when it
       pursued its administrative claim. Waiting 17 months to respond is
       not prompt, and Bothell has flouted its obligation to repay the funds
       it wrongfully possesses.

New Cingular asserts that it "diligently pursued its claim by seeking redress

through the administrative process and then filing suit promptly after Bothell sent

its summary denial."

       New Cingular claims that our Supreme Court's decision in Qwest Corp. v.

City of Bellevue21 supports its argument: "Because the trial court shared original

jurisdiction with Bothell over the tax refund claim, the trial court did not operate in

an appellate capacity, and administrative exhaustion requirements did not apply."

We disagree and distinguish Qwest.




       21 161 Wn.2d 353, 166 P.3d 667 (2007).
                                         -8-
NO. 70810-4-1/9




          In Qwest, a telephone service provider challenged Bellevue's imposition of

a utility occupation tax.22 Qwest filed a superior court action before Bellevue

assessed its tax against Qwest.23 After Bellevue issued its tax assessment,

Qwest challenged it under the Bellevue Municipal Code with the city's hearing

examiner.24 Bellevue appealed the trial court's denial of its motion to dismiss the

lawsuit on the grounds that Qwest had failed to exhaust its administrative

remedies. Our Supreme Court affirmed the trial court, concluding that a party is

not required to exhaust administrative remedies where the superior court has

original jurisdiction and the party seeks to invoke the court's original, rather than

appellate, jurisdiction.25       The court also noted that "questions of statutory

interpretation need not be referred to administrative agencies."26            And it

explained that the case involved "issues of broad public import which require

prompt and ultimate determination."27

          Here, New Cingular first filed a refund application with the City and then

abandoned the administrative process before filing a separate superior court

action.    This case does not involve an issue of statutory interpretation.     New




          22 Qwest, 161 Wn.2dat356.
          23 Qwest, 161 Wn.2dat357.
          24 Qwest,   161   Wn.2dat357.
          25 Qwest,   161   Wn.2dat371.
          26 Qwest,   161   Wn.2dat371.
          27 Qwest,   161   Wn.2dat371.
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NO. 70810-4-1/10




Cingular does not challenge the City's authority to impose a tax but argues that it

"inadvertently" paid the taxes at issue. Qwest is not applicable here.

       New Cingular fails to show that justice requires equitable tolling. In Cost

Management Services. Inc. v. City of Lakewood,28 decided after the trial court in

this case denied the City's motion for summary judgment, our Supreme Court

held, "A superior court's original jurisdiction over a claim does not relieve it of its

responsibility to consider whether exhaustion should apply to the particular claim
before the court." In Cost Management Services, a natural gas purchasing agent

sought a refund from Lakewood of taxes allegedly paid in error.29                 Cost
Management Services stopped paying the taxes and requested a refund.30 After
Lakewood failed to respond to its request, Cost Management Services filed a

lawsuit in superior court.31 The superior court concluded that the three-year

statute of limitations limited Cost Management Services' recovery to payments

made within three years of the date when it filed its lawsuit.32 Cost Management

Services then filed a separate superior court action seeking a writ of mandamus

compelling Lakewood to respond to its original refund request filed with the




       28 178 Wn.2d 635, 648, 310 P.3d 804 (2013).
       29   CostMomt-Servs.,    178 Wn.2d   at 639.
       30   CostMgmt.Servs.,    178 Wn.2d   at 639.
       31   CostMgmt.Servs.,    178 Wn.2d   at 639.
       32   CostMgmt. Servs.,   178 Wn.2d   at 640.
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NO. 70810-4-1/11




City.33 The court consolidated these actions, granted the writ, and entered a

judgment in favor of Cost Management Services.34

       Our Supreme Court began its review by explaining, "This court has long

applied 'the general rule that when an adequate administrative remedy is

provided, it must be exhausted before the courts will intervene.'"35 The court

recognized, "The primary question in exhaustion cases ... is whether the relief

sought can be obtained through an available administrative remedy; if so, the

party seeking relief must first seek relief through the administrative process."36

The court held, "[E]ven if original jurisdiction in a case lies with the superior court,

exhaustion of administrative remedies is still required."37

       In Cost Management Services, the court also declined to base the running

of the statute of limitations for Cost Management Services' superior court claims

upon the time that it filed its administrative action.38      The court stated, "CMS

seeks mandamus for the express purpose of reaching back beyond the legal


       33 Cost Mgmt. Servs., 178 Wn.2d at 640.
       34 CostMgmt. Servs., 178 Wn.2d at 640.
       35 Cost Mgmt. Servs., 178 Wn.2d at 641 (quoting Wright v. Woodard, 83
Wn.2d 378, 381, 518 P.2d 718 (1974)).
       36 Cost Mgmt. Servs.. 178 Wn.2d at 642.
       37 Cost Mgmt. Servs.. 178 Wn.2d at 646. The Supreme Court, however,
held that Cost Management Services was not required to exhaust administrative
remedies "because none were available." 178 Wn.2d at 652. Cost Management
Services filed a claim with the city for a refund, but the city did not respond. The
court concluded that "the administrative process available to CMS could not have
provided an adequate remedy." 178 Wn.2d at 645.
       38 CostMgmt.Servs., 178 Wn.2d at 651.
                                         -11-
NO. 70810-4-1/12




statute of limitations."39   It determined, "In essence, CMS seeks to use the

administrative process to revive a claim otherwise barred by the three year

statute of limitations."40 Accordingly, the court concluded, "We do not think the

statute of limitations can be overcome by such a use of the administrative

process."41

       Similarly, here, New Cingular cannot use the administrative process,

which it chose to abandon, to avoid the statute of limitations bar in its superior

court action. New Cingular does not show an inability to obtain the requested

relief through the administrative process.          New Cingular provides a single

explanation for abandoning the City's administrative process—a claim that the

process was "hostile" and "demonstratively slow and futile." But the City's denial

of New Cingular's application at the first stage of the administrative process did

not mean that New Cingular could not have obtained the relief sought by

completing this process, which included the opportunity for a trial de novo.42
Because New Cingular failed to exhaust administrative remedies, the trial court

should not have applied equitable tolling to allow it to "revive a claim otherwise

barred by the three year statute of limitations."



       39 CostMgmt.Servs., 178 Wn.2d at 652.
       40 CostMgmt.Servs., 178 Wn.2d at 651.
       41 Cost Mgmt. Servs., 178 Wn.2d at 652.
       42 BMC 5.08.230.
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NO. 70810-4-1/13




                                 CONCLUSION


      Because New Cingular failed to exhaust its administrative remedies before

filing its superior court action, equitable tolling does not apply to the claims it

asserted in superior court.    The statute of limitations bars recovery of all

payments made more than three years before the filing of this lawsuit. We

reverse and remand for proceedings consistent with this opinion.



                                                      f 4.«-e.'*\.. /rf
WE CONCUR:




                                                          IztX.J




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