                                STATE OF MINNESOTA

                                   IN SUPREME COURT

                                         A15-1920

Tax Court                                                                    Anderson, J.

Commissioner of Revenue,

                     Relator,

vs.                                                                Filed: August 31, 2016
                                                                Office of Appellate Courts
Dahmes Stainless, Inc.,

                     Respondent.

                                ______________________

Lori Swanson, Attorney General, Sara L. Bruggeman, Assistant Attorney General, Saint
Paul, Minnesota, for relator.

Mark A. Pridgeon, Edina, Minnesota, for respondent.

                                ______________________

                                     SYLLABUS

       1.     Respondent’s application for attorney fees was timely filed.

       2.     The tax court did not abuse its discretion by awarding attorney fees to

respondent because relator’s position was not substantially justified.

       Affirmed.




                                             1
                                      OPINION

ANDERSON, Justice.

       Relator Commissioner of Revenue challenges the tax court’s award of attorney fees

to respondent Dahmes Stainless, Inc. (Dahmes) under the Minnesota Equal Access to

Justice Act (MEAJA). Minn. Stat. §§ 15.471-.474 (2014). The two issues presented are

whether Dahmes’s MEAJA application for attorney fees was timely filed under Minn. Stat.

§ 15.472(b) and whether the tax court abused its discretion by awarding attorney fees to

Dahmes based on its determination that the Commissioner’s position was not “substantially

justified” under Minn. Stat. § 15.472(a). We affirm the tax court’s award of attorney fees.

                                            I.

       Dahmes is a Minnesota corporation that manufactures, sells, and installs industrial

equipment, the majority of which are “drying systems,” such as spray dryers and fluid-bed

dryers, in addition to heat recovery and evaporation systems, and other equipment

(collectively products). Dahmes’s products are generally used for dehydrating some type

of liquid or liquid-bound commodity. The products are generally installed and enclosed

within a customer’s building. Sometimes the products are left free-standing; other times

they are installed to an anchored framework or fastened directly to a building floor. None

of Dahmes’s products provides structural support, protection from the elements, insulation,

temperature-control functions, or any other type of support for the building housing the

products. Dahmes’s products may be relocated or removed without substantial damage to

the building.




                                            2
       In this case, although Dahmes properly collected sales tax from its customers on the

retail sales of its manufactured products, see Minn. Stat. § 297A.61, subd. 4(a)(1) (2014),

the Commissioner assessed additional use taxes and interest, totaling approximately

$364,856, on the components that Dahmes purchased to manufacture its products (such as

fans, pumps, burners, and motors), under Minn. Stat. § 297A.61, subd. 4(d) (2014). Under

subdivision 4(d), a taxable “retail sale” is defined as a “sale of building materials, supplies,

and equipment to owners, contractors, subcontractors, or builders for the erection of

buildings or the alteration, repair, or improvement of real property.” The Commissioner

determined that, rather than tangible personal property, Dahmes’s products constituted

improvements to real property because they are common law “fixtures.” Therefore, the

Commissioner concluded, Dahmes’s purchases of the components used to manufacture its

products were taxable “retail sales” subject to use taxes under subdivision 4(d) because

they were sales of building materials, supplies, or equipment for the “improvement of real

property.”1

       The tax court disagreed, determining that Dahmes’s products are tangible personal

property and not improvements to real property. The tax court concluded, therefore, that

the Commissioner erred by assessing use taxes because Dahmes’s component purchases




1
       We do not address whether the product components meet the definition of “building
materials, supplies, and equipment” under Minn. R. 8130.1200, subp. 1(A) (2015). The
tax court declined to reach this issue because it was unnecessary to do so based on its other
conclusions.



                                               3
were not taxable retail sales of building materials, supplies, or equipment for the

“improvement of real property.” See Minn. Stat. § 297A.61, subd. 4(d).

       After the tax court issued its order, Dahmes filed a MEAJA application for attorney

fees. See Minn. Stat. § 15.472.2 The tax court held that the Commissioner’s position was

not “substantially justified” by a “reasonable basis in law and fact,” Minn. Stat. §§ 15.471-

.472, and therefore awarded Dahmes $38,677.50 in attorney fees, Dahmes Stainless, Inc.

v. Comm’r of Revenue, No. 8228-R, 2015 WL 5793705, at *4-5 (Minn. T.C. Oct. 1, 2015).

The Commissioner now appeals the order awarding attorney fees.3 The Commissioner

argues that (1) Dahmes’s application for attorney fees was untimely filed, Minn. Stat.

§ 15.472(b), and (2) the tax court abused its discretion by determining that the

Commissioner’s position was not “substantially justified,” Minn. Stat. § 15.472(a).

                                             II.

       We first address whether Dahmes’s application for attorney fees was timely under

Minn. Stat. § 15.472(b). The Commissioner argues that the application was untimely, and

therefore the tax court lacked jurisdiction4 for two reasons: (1) the application was not


2
      Dahmes also moved for an award of $2,565 in costs and disbursements, Minn. Stat.
§ 271.19 (2014); Minn. R. 8610.0150 (2015), which the tax court granted. The
Commissioner did not appeal the award of costs and disbursements.
3
       The Commissioner did not appeal the tax court’s order that reversed the
Commissioner’s assessment of additional use taxes. Rather, the Commissioner is
appealing only the tax court’s order of October 1, 2015, which awarded attorney fees to
Dahmes.
4
      In the context of a filing deadline for tax appeals, we have stated: “[T]he courts and
administrative agencies have no power to extend or modify the periods of limitation



                                             4
timely filed “within 30 days of [the] final judgment” of the tax court, Minn. Stat.

§ 15.472(b), and (2) even under the tax court’s interpretation of the “final judgment” date,

the initial application did not contain a sufficient itemization of attorney fees, and the

supplementary filing of an itemized statement was untimely. We address each in turn.

                                            A.

       A party seeking an award of attorney fees and expenses must apply “within 30 days

of final judgment in the action.” Minn. Stat. § 15.472(b). On April 7, 2015, the tax court

filed an order reversing in part the Commissioner’s tax assessment, which required the

Commissioner to file a corrected tax assessment. On May 13, 2015, the tax court filed its

order for judgment affirming the Commissioner’s corrected tax assessment “in the amount

of $3,324.55, plus interest of $742.33” and directing that “entry of judgment [be] stayed

for 15 days” to allow for posttrial motions. No posttrial motions were filed, and judgment

was entered 15 days later, on May 28, 2015. Dahmes’s MEAJA application was filed on

June 23, 2015.

       The Commissioner argues that the June 23 filing of Dahmes’s MEAJA application

was untimely because it was not filed within 30 days of final judgment, based on the May

13 filing of the tax court’s order for judgment. According to the Commissioner, the time

for filing a MEAJA application began to run on the date the tax court filed its order, not

when it entered judgment. The tax court disagreed, reasoning that May 13 was not the date




prescribed by statute. The legislature has set the filing deadline for tax appeals, and when
the deadline expires, the tax court no longer has jurisdiction over the claim.” Langer v.
Comm’r of Revenue, 773 N.W.2d 77, 81 (Minn. 2009) (citations omitted).


                                             5
of “final judgment” because the entry of judgment was explicitly “stayed for 15 days” to

allow posttrial motions and was not completed until May 28. The tax court further reasoned

that “the statutory scheme,” Minn. Stat. § 271.08 (2014), “clearly calls for two distinct

actions: the filing of a written order, followed by the entry of judgment with respect to that

order,” see id., subds. 1 (providing that the tax court must “determine every appeal by

written order containing findings of fact and the decision of the tax court”), 2 (providing

that upon the filing of such written order, “judgment shall be entered thereon in the same

manner as in the case of an order of the district court”). According to the tax court, it is

only the second of those two actions, the entry of final judgment, which allows the clock

to run on the filing of a MEAJA application.

       No Minnesota cases have directly addressed whether the 30-day time period in

section 15.472(b) begins to run on the date that an order for judgment is filed, or on the

date the judgment is entered. The plain language of the statute states that the 30-day time

period begins with “final judgment in the action.” Minn. Stat. § 15.472(b) (emphasis

added). The term “final judgment” is not defined in this statute.5 Because the tax court’s


5
        The Commissioner points to Express Scripts, Inc. v. Comm’r of Revenue, No. A12-
1966, Order (Minn. filed Jan. 18, 2013), a tax case involving the appealability of a “final
order.” The applicable statute provides that a party may appeal a “final order” of the tax
court “[w]ithin 60 days after notice of the making and filing of the order.” Minn. Stat.
§ 271.10, subd. 2 (2014). The tax court in Express Scripts filed its order but stayed the
order for 15 days to allow the parties to consider whether to file posttrial motions. We held
that “the stay cannot extend the statutory appeal period beyond 60 days.” Express Scripts,
No. A12-1966, Order at 3 (citation omitted). That case is distinguishable because the
applicable statute provided that the 60-day time period would begin to run at the “making
and filing of the order,” Minn. Stat. § 271.10, subd. 2 (emphasis added); whereas here, the
time period under Minn. Stat. § 15.472(b) began to run at “final judgment.” It is significant



                                              6
order for judgment directed that the entry of judgment be stayed for 15 days, that stayed

“judgment” was not “final.” Thus, there was no “final judgment” when the order for

judgment was filed but stayed on May 13, 2015.6 Rather, judgment became final 15 days

later when the stay expired and judgment was entered.7 Therefore, Dahmes’s MEAJA

application was timely under section 15.472(b) because it was filed on June 23, 2015,

which is within the 30-day time limit after the entry of judgment on May 28, 2015.

                                             B.

       The Commissioner also argues that, even if the date of “final judgment” is May 28,

2015 (the date of entry of judgment), Dahmes’s MEAJA application is still untimely

because Dahmes’s initial application did not contain a sufficiently itemized statement of

attorney fees, as required by Minn. Stat. § 15.472(b), and Dahmes’s supplemental affidavit,

with additional itemization, was filed on July 16, 2015, which was after the 30-day period




that the Legislature chose the language “final judgment,” rather than the “filing” of an
“order” as in Minn. Stat. § 271.10, particularly in light of a statutory scheme that calls for
two distinct actions: the filing of the written order and the entry of judgment on that order.
See Minn. Stat. § 271.08, subds. 1, 2.
6
        The Commissioner also argues that the date of “final judgment” was the date the
order for judgment was filed, May 13, because, under Minn. Stat. § 271.12 (2014), “every
order of . . . the Tax Court shall take effect immediately upon the filing thereof.” We
disagree. The order was immediately “effective” because the 15-day stay directed by that
order began to run immediately on filing. Section 271.12 is about effectiveness, not
finality.
7
       The tax court ordered the 15-day stay of entry of judgment on its order to allow the
parties to file posttrial motions. As a practical matter, the Commissioner’s argument that
we should ignore the 15-day stay is in tension with one of the basic premises of a stay. At
least one reason for a stay is to give the parties an opportunity to bring errors that need
correction to the attention of the tax court before the entry of a final judgment is made.


                                              7
had expired. An application must “includ[e] an itemized statement from any attorney or

expert witness representing or appearing on behalf of the party stating the actual time

expended and the rate at which fees and other expenses were computed.” Minn. Stat.

§ 15.472(b).

      Dahmes’s application included an affidavit by its attorney, showing how fees and

other expenses were computed.       The affidavit stated the actual time expended, the

attorney’s hourly rate, and a list of costs. The affidavit also included a table of monthly

attorney fees from the years 2010 through 2015. At the tax court, the Commissioner argued

that this statement of fees was not sufficiently “itemized” under section 15.472(b). In

response, Dahmes submitted a supplemental affidavit by its attorney on July 16, 2015,

which contained additional itemization from invoices. At the tax court hearing, the

Commissioner argued that this supplemental filing should not be allowed and that the

failure to include sufficient itemization within the 30-day deadline was a “bar to relief.”

On appeal, the Commissioner argues that this supplemental affidavit is another reason why

Dahmes’s attorney-fees application was untimely filed.

      The tax court allowed Dahmes to file the supplemental affidavit, concluding that the

Commissioner’s objection to supplementation was “without merit.”8 No Minnesota cases


8
       The tax court relied on a prior tax court decision that allowed a procedural
requirement of section 15.472(b) to be met based on a supplemental affidavit, which was
apparently filed more than 30 days after the applicable final judgment. See Midwest
Brokers Inc. v. Comm’r of Revenue, No. 7237-R, 2001 WL 1007804, at *1-2 (Minn. T.C.
Aug. 28, 2001). The Midwest Brokers court stated that the appellant’s MEAJA motion
under Minn. Stat. § 15.472 was “timely” but did not directly address any timeliness issues
related to the supplemental affidavit. 2001 WL 1007804, at *1.



                                            8
have directly addressed the timeliness question of supplemental filings made after the 30-

day deadline in Minn. Stat. § 15.472(b), in the context of a claim of insufficient itemization.

The determination here is fact-dependent and should include some deference to the tax

court’s discretion to allow supplementation after filing deadlines, as in other contexts.9

Under section 15.472(b), an application for attorney fees requires the submission of an

“itemized statement” of fees. The statute does not define what “itemized statement” means,

other than requiring that the statement show “the actual time expended and the rate at which

fees . . . were computed.” Minn. Stat. § 15.472(b). Here, Dahmes’s initial affidavit showed

the actual time expended, the attorney’s hourly rate, a list of costs, and a table of monthly

fees charged over a 5-year period. On the other hand, it is questionable whether the initial

affidavit, which showed total hours at a monthly level, conveyed enough information to

satisfy the section 15.472(b) requirement of an “itemized statement.” Beyond monthly

hours incurred, the initial affidavit did not provide task-level itemization, i.e., the hours

incurred for each task performed and descriptions for each task. But in this case, we need

not analyze or decide the meaning of “itemized statement,” nor whether the initial affidavit

was sufficiently “itemized” under section 15.472(b). Even assuming the initial affidavit

was not sufficiently itemized, we hold that the tax court did not abuse its discretion by



9
        As an analogous example, under Rule 15.01 of the Minnesota Rules of Civil
Procedure, a court has the discretion to allow amendments to pleadings, even after the
deadline of “20 days” following service, “by leave of [the] court . . . when justice so
requires.” Minn. R. Civ. P. 15.01; see, e.g., Marlow Timberland, LLC v. Cty. of Lake, 800
N.W.2d 637, 640 (Minn. 2011) (“[W]e see no prejudice to Lake County and no reason why
justice would not be served by allowing Marlow Timberland to amend its petition . . . .”).



                                              9
allowing Dahmes to submit a supplemental affidavit with additional itemization after the

30-day deadline in section 15.472(b) had expired.10

                                             III.

       We next address whether the tax court abused its discretion by determining that the

Commissioner’s position in the tax litigation was not “substantially justified.” Minn. Stat.

§ 15.472(a). We apply an abuse-of-discretion standard to review a tax court’s award of

attorney fees, including the determination of substantial justification. See Wilson v.

Comm’r of Revenue, 707 N.W.2d 695, 698 (Minn. 2006). The tax court abuses its

discretion when its decision is based on an erroneous view of the law, when its decision is

against facts in the record, or when it exercises its discretion in an arbitrary or capricious

manner. See City of N. Oaks v. Sarpal, 797 N.W.2d 18, 24 (Minn. 2011) (citing Almor

Corp. v. Cty. of Hennepin, 566 N.W.2d 696, 701 (Minn. 1997)).

       Under the MEAJA, the prevailing party (other than the state) in a civil case

involving the state may submit an application for an award of attorney fees and expenses.

See Minn. Stat. § 15.472.         If the MEAJA application meets certain procedural

requirements, see Minn. Stat. § 15.472(b), the court must grant the award of fees and

expenses when the prevailing party “shows that the position of the state was not

substantially justified . . . unless special circumstances make an award unjust,” Minn. Stat.


10
       The parties do not dispute on appeal that the supplemental affidavit satisfies the
“itemized statement” requirement of section 15.472(b). The Commissioner argued before
the tax court that both the initial and supplemental affidavits provided insufficient
itemization. But the Commissioner has not raised the same argument here. On appeal, the
Commissioner argues only that the initial affidavit was insufficiently itemized and that the
submission of the supplemental affidavit was untimely.


                                             10
§ 15.472(a). The MEAJA defines “substantially justified” to mean that “the state’s position

had a reasonable basis in law and fact, based on the totality of the circumstances before

and during the litigation or contested case proceeding.” Minn. Stat. § 15.471, subd. 8.

       Although the Commissioner did not challenge the tax court’s April 7, 2015 order

reversing the tax assessment, we must turn to the merits of the litigation before the tax court

to determine whether the Commissioner’s position was “substantially justified” by a

“reasonable basis n law and fact.” Id. We examine each in turn.

                                               A.

        In this case, the Commissioner assessed use taxes totaling $364,856 on certain

components (such as fans, pumps, burners, and motors) that Dahmes purchased to

manufacture its products.

       The definition of a taxable “retail sale,” which the Commissioner relied on to assess

the additional use taxes, is a “sale of building materials, supplies, and equipment to owners,

contractors, subcontractors, or builders for the erection of buildings or the alteration, repair,

or improvement of real property.” Minn. Stat. § 297A.61, subd. 4(d) (emphasis added).

The Commissioner determined that, once manufactured and installed, Dahmes’s products

are improvements to real property, rather than tangible personal property, because they are

common law “fixtures.” Therefore, the Commissioner concluded, Dahmes’s purchases of

the components that it used to manufacture its products were taxable “retail sales” under

subdivision 4(d) because they were purchases of building materials, supplies, or equipment

for the “improvement of real property.”




                                               11
       Thus, this case turns on whether Dahmes’s products are considered improvements

to real property, as the Commissioner argues, or tangible personal property, as Dahmes

argues, which determines whether the component purchases for those products are taxable

retail sales under Minn. Stat. § 297A.61, subd. 4(d).

       Under chapter 297A, “tangible personal property” is defined in part as “personal

property that can be seen, weighed, measured, felt, or touched, or that is in any other

manner perceptible to the senses.” Minn. Stat. § 297A.61, subd. 10(a). Chapter 297A does

not provide a definition of “real property.” However, a negative inference of “real

property” is provided by Minn. Stat. § 297A.61, subd. 10(b)(1), which states that “tangible

personal property” does not include “large ponderous machinery and equipment used in a

business or production activity which at common law would be considered to be real

property.” The parties do not dispute that Dahmes’s products are “large ponderous

machinery and equipment” that are “used in a business or production activity.” Minn. Stat.

§ 297A.61, subd. 10(b)(1). Rather, the dispute under this statute is whether Dahmes’s

products “at common law would be considered to be real property.” Id.

                                             1.

       The Commissioner argues that Dahmes’s products would be considered real

property at common law because they are “fixtures” actually attached to the realty and are

intended to be a nontemporary addition. Dahmes argues, and the tax court agreed, that

Dahmes’s products would not be considered “real property” at common law under the

common-law doctrine of trade fixtures. Under this doctrine, a fixture is considered tangible

personal property, rather than real property, when it is used for trade purposes and if


                                            12
removal does not result in material and permanent damage to the real estate. See, e.g.,

Cent. Chrysler Plymouth, Inc. v. Holt, 266 N.W.2d 177, 179-80 (Minn. 1978); Moffat v.

White, 203 Minn. 47, 51-55, 279 N.W. 732, 734-36 (1938); Behrens v. Kruse, 121 Minn.

479, 483-87, 140 N.W. 114, 116-18 (1913). As the tax court correctly observed, we

presume that the Legislature acts with full knowledge of existing law, including the

common law. Goodyear Tire & Rubber Co. v. Dynamic Air, Inc., 702 N.W.2d 237, 244

(Minn. 2005). Thus, based on the 1985 amendment to the definition of “tangible personal

property,” Act of May 8, 1985, ch. 83, § 1, 1985 Minn. Laws. 196, 196, which excludes

what “at common law would be considered to be real property,” we presume that the

Legislature knew that at common law, trade fixtures were not considered real property.

       In response, relying on Abex Corp. v. Commissioner of Taxation, 295 Minn. 445,

458-59, 207 N.W.2d 37, 45 (1973), the Commissioner argued that the trade-fixtures

doctrine is not applicable to tax cases11 but rather applies only to buyer-seller or landlord-

tenant relationships,. In Abex, we described the (now-repealed) statute defining “real

property,” Minn. Stat. § 272.03, as providing that “fixtures are real property for purposes

of taxation, and there is no differentiation between trade fixtures and other fixtures.” 295

Minn. at 459, 207 N.W.2d at 45. And the Abex court also observed that “the trade-fixtures

doctrine applies only in a landlord-tenant relationship.” Id. at 458, 207 N.W.2d at 45. The

Commissioner’s reliance on Abex here is misplaced for the following three reasons.



11
       The parties do not dispute that Dahmes’s products would constitute trade fixtures at
common law. Rather, the primary dispute is whether the trade-fixtures doctrine is
applicable to tax cases.


                                             13
       First, Abex’s analysis regarding section 272.03 and the applicability of the trade-

fixtures doctrine was superseded by a 1973 statutory amendment, enacted shortly after

Abex was decided. See Act of May 24, 1973, ch. 650, art. XXIV, § 2, 1973 Minn. Laws

1606, 1687. Thus, Abex is not applicable in this context, as two of our decisions after the

statutory amendment have recognized. Zimpro, Inc. v. Comm’r of Revenue, 339 N.W.2d

736, 739-40 (Minn. 1983) (referring to the “inapplicability of Abex” and stating that “Abex,

however, does not control the instant case” because the property-tax statute, Minn. Stat.

§ 272.03, subd. 1(c), “has been amended since the Abex decision”); KDAL, Inc. v. St. Louis

Cty., 308 Minn. 101, 104, 240 N.W.2d 560, 561 (1976) (recognizing the parties’ agreement

that “the exemption in question,” Minn. Stat. § 272.03, subd. 1(c), “was enacted to change

the law following our decision in Abex”).12 In combination with the statutory amendment,

our Zimpro decision abrogated the holding in Abex that the property-tax statute does not

“differentiat[e] between trade fixtures and other fixtures” and that “the trade-fixtures

doctrine applies only in a landlord-tenant relationship.” Abex, 295 Minn. at 458-59, 207

N.W.2d at 45. Indeed, the Zimpro decision established the opposite—that the newly

amended definition of “real property” differentiates between trade and nontrade fixtures,

as discussed further below. See Zimpro, 339 N.W.2d at 739 n.5.

       Second, in Zimpro, we recognized that the trade-fixtures doctrine is relevant in tax

cases. Our Zimpro decision interpreted the property-tax statute, Minn. Stat. § 272.03,



12
       In her brief to both the tax court and our court, the Commissioner conceded that
Abex (the decision upon which she relied to argue that the trade-fixtures doctrine is not
applicable to tax cases) was subsequently “disregarded” by this court in Zimpro.


                                            14
subd. 1(c) (2014) (defining “real property”), as incorporating the trade-fixtures doctrine

and as including only nontrade fixtures within the definition of “real property.” See

Zimpro, 339 N.W.2d at 739 n.5. We explained that under the prior, superseded version of

the property-tax statute (construed in Abex, 295 Minn. at 452, 207 N.W.2d at 42), the

definition of “real property” included “fixtures” generally. However, Zimpro explained,

the “present property tax statute . . . includes fixtures generally in its definition of real

property but excludes trade fixtures.” Zimpro, 339 N.W.2d at 739 n.5 (emphasis added)

(citing Minn. Stat. § 272.03, subd. 1(c) (providing that “real property” does not include

“tools, implements, machinery, and equipment attached to or installed in real property for

use in the business or production activity conducted thereon, regardless of size, weight or

method of attachment”)).13

       Third, the Commissioner argued incorrectly that Zimpro was superseded by the

1985 statutory amendment to the definition of “tangible personal property” in chapter

297A. Act of May 8, 1985, ch. 83, § 1, 1985 Minn. Laws. 196, 196. This amendment

changed the definition of “tangible personal property” to its present language, which

excludes “large ponderous machinery and equipment used in a business or production

activity which at common law would be considered to be real property.” Minn. Stat.

§ 297A.61, subd. 10(b)(1). Under the prior statute, which we discussed in Zimpro, the

statute defined “tangible personal property” as “corporeal personal property of any kind



13
        This interpretation by the Zimpro court—that the definition of “real property”
excludes “trade fixtures” under Minn. Stat. § 272.03, subd. 1(c)—remains good law today
as that statutory provision has not been amended since Zimpro was decided.


                                             15
whatsoever, including property which is to become a fixture or which is to lose its identity

by incorporation in or attachment to real property.” Minn. Stat. § 297A.01, subd. 11

(1982). The tax court disagreed that Zimpro was superseded, reasoning essentially that the

language of the 1985 amendment did not reflect an intention to supersede Zimpro, but

rather only a limited factual situation from another decision:

              We think it unlikely that the legislature’s amendment of the definition
       of tangible personal property was meant to overrule Zimpro. The only
       information concerning the nature of the municipal sewage treatment
       equipment at issue in Zimpro . . . hardly describe[s] “large ponderous
       machinery and equipment used in a business or production activity.”

               Rather, it is almost certain that the legislature’s amendment of the
       definition of tangible personal property to create an exception for “large
       ponderous machinery and equipment” was meant to overrule our decision in
       West Publishing Co. v. Commissioner of Revenue, Docket No. 2822, 1981
       WL 1510 (Minn. T.C. Dec. 1, 1981), in which we held that a 30-ton binding
       machine—specifically described in our decision as “a huge and ponderous
       machine”—was personal property whose purchase was subject to sales and
       use tax.

Dahmes Stainless, 2015 WL 5793705, at *5 n.8.

       Although this factual distinction is somewhat persuasive, there is another reason

that Zimpro applies. An entire decision is not necessarily “superseded” simply because a

statute relied upon in the decision has been amended. Rather, specific points of law may

be superseded while other points remain good law. Here, the relevant point of law is that

the trade-fixtures doctrine is applicable to tax cases, based on our interpretation of the

definition of “real property,” Minn. Stat. § 272.03, subd. 1(c), as excluding “trade fixtures,”

Zimpro, 339 N.W.2d at 739 n.5. This point remains good law because section 272.03,

subdivision 1(c), has not been amended since Zimpro. And the 1985 amendment to a



                                              16
separate statute, which is now codified at Minn. Stat. § 297A.61, subd. 10(b)(1), providing

that “tangible personal property” does not include “large ponderous machinery and

equipment used in a business or production activity which at common law would be

considered to be real property,” does not supersede our interpretation in Zimpro. To the

contrary, it fortifies our interpretation because the amendment to section 297A.61,

subdivision 10(b)(1), explicitly and broadly incorporates the “common law,” which

includes the common-law doctrine of trade fixtures.

                                             2.

      In addition to chapter 297A, the parties also refer to Minn. Stat. §§ 272.01-.71

(2014), which address real property taxes. Unlike chapter 297A, chapter 272 provides

definitions of “real property,” which include the following relevant language:

   (a) For the purposes of taxation, “real property” includes the land itself, rails,
       ties, and other track materials annexed to the land, and all buildings,
       structures, and improvements or other fixtures on it . . . .

   (b) A building or structure shall include the building or structure itself, together
       with all improvements or fixtures annexed to the building or structure, which
       are integrated with and of permanent benefit to the building or structure,
       regardless of the present use of the building, and which cannot be removed
       without substantial damage to itself or to the building or structure.

   (c) (i) Real property does not include tools, implements, machinery, and
       equipment attached to or installed in real property for use in the business or
       production activity conducted thereon, regardless of size, weight or method
       of attachment . . . .

Minn. Stat. § 272.03, subd. 1(a)-(c)(i) (emphasis added).

      The Commissioner argued before the tax court that chapter 272’s definitions of “real

property” are applicable only to real property taxation, not to sales-tax or use-tax cases



                                             17
under chapter 297A.14 This argument is contrary to our precedent. The tax court correctly

rejected this argument because we have recognized that chapter 272’s definitions of “real

property” are helpful and applicable in sales-tax and use-tax cases. See Zimpro, Inc. v.

Comm’r of Revenue, 339 N.W.2d 736, 739-40 (Minn. 1983). In Zimpro, an appeal

involving sales taxes, the appellant argued that the sales-tax statute (chapter 297A) and the

property-tax statute (chapter 272) should not be “construed consistently” and that it would

be unwise to “intermingl[e]” those statutes. 339 N.W.2d at 739. We disagreed, stating that

“reference to Minnesota Statutes chapter 272, the general provisions of the property

taxation scheme, is helpful” in construing the sales-tax and use-tax provisions under

chapter 297A, and that “use of chapter 272 definitions for sales and use tax purposes

promotes certainty and consistency.” Id. at 739-40.

       Zimpro then referred to an exclusionary definition of “real property” under Minn.

Stat. § 272.03, subd. 1(c), one of the same definitions that Dahmes relies on here. We

concluded that “[j]uxtaposing this exclusion [from the definition of ‘real property’] with

the definition of tangible personal property contained in section 297A.01, subdivision 11,

provides a consistent scheme of taxation.” Id. at 740. Zimpro further observed that




14
       On appeal, the Commissioner has apparently dropped this argument; her briefs do
not explicitly argue that chapter 272 is applicable only to real property taxes and
inapplicable to sales and use taxes, as the Commissioner argued before the tax court.
Nonetheless, this argument remains relevant to analyze whether the Commissioner’s
position before the tax court was “substantially justified” under Minn. Stat. § 15.472(a).
Moreover, the Commissioner’s appellate briefs argue more generally that the tax court
erroneously used the definition of “real property” in chapter 272, without fully explaining
why it was erroneous.


                                             18
“[c]learly, the legislature did not intend to exclude property from both the property tax

statute and the sales tax statute.” Id.

       Our conclusion in Zimpro is similar to and supportive of Dahmes’s core argument

here: the definitions of “real property” in Minn. Stat. § 272.03, subd. 1(a)-(c)(i), combined

with the definition of “tangible personal property” (and negative inference of “real

property”) in Minn. Stat. § 297A.61, subd. 10(b)(1), consistently provide that Dahmes’s

products are tangible personal property, not real property. Therefore, the purchases of

components for those products are not subject to use taxes under Minn. Stat. § 297A.61,

subd. 4(d) (providing that a taxable “retail sale” includes purchases of “building materials

. . . for the . . . improvement of real property”).

       In addition, the Commissioner relied on Minn. R. 8130.1200 (2015), which provides

guidance on what the term “real property” means in Minn. Stat. § 297A.61, subd. 4(d).

Under this administrative rule, the term “real property” includes “structures that are

permanently affixed to real estate, such as buildings, fixtures, machinery, fences, railroad

tracks, grain elevators, bridges, storage bins, silos, outdoor advertising signs, and

billboards.” Minn. R. 8130.1200, subp. 1(B). Dahmes and the tax court did not refer to

this rule. But the statutory language and our interpretation of those statutes control over

an administrative rule. See Billion v. Comm’r of Revenue, 827 N.W.2d 773, 781 (Minn.

2013). Even if we considered the merits of the rule, as argued by the Commissioner, it

would not alter our conclusion that Dahmes’s products are not “real property” under the

statutes and case law analyzed above. Rule 8130.1200 must be interpreted in harmony

with the language in Minn. Stat. § 297A.61, subd. 10(b)(1), and Minn. Stat. § 272.03, subd.


                                               19
1(a)-(c)(i), and the case law interpreting those statutes, as analyzed above. Accordingly,

the Rule’s inclusion of “fixtures” must refer only to nontrade fixtures. This interpretation

is further supported by the Rule’s requirement that a “fixture” be “permanently affixed” to

constitute “real property.” Minn. R. 8130.1200, subp. 1(B) (emphasis added). A trade

fixture is excluded from this definition because a trade fixture must be removable without

causing substantial damage.

                                              B.

       In summary, the tax court correctly determined that Dahmes’s products are

“tangible personal property” and would not be considered “real property” at common law,

Minn. Stat. § 297A.61, subd. 10(a), (b)(1), and moreover, that the products do not meet the

definition of “real property” in Minn. Stat. § 272.03, subd. 1. Therefore, the tax court

reversed the Commissioner’s assessment of use taxes because Dahmes’s purchases of

components were not taxable under Minn. Stat. § 297A.61, subd. 4(d) (providing that a

taxable “retail sale” includes purchases of “building materials . . . for the . . . improvement

of real property”). After Dahmes filed its application for attorney fees, the tax court

concluded that the Commissioner’s position in the litigation was not “substantially

justified” by a reasonable basis in law and fact, Minn. Stat. § 15.471(a), and therefore

awarded Dahmes $38,677.50 in attorney fees.

       The Commissioner argues that the application of section 297A.61, subdivision 4(d),

to building-material purchases is an inherently complex area of tax law, which requires a

difficult differentiation between tangible personal property and improvements to real

property. Based on this complexity, the various statutory amendments and superseded case


                                              20
law, the arguable incongruities between chapter 297A and chapter 272, and the lack of

recent guidance from our court on section 297A.61, subdivision 4(d), the Commissioner

argues that her interpretation of the law was not unreasonable. But on appeal, we are not

reviewing this question de novo, i.e., whether we agree with the tax court that the

Commissioner’s position was unreasonable. Rather, we must perform a more deferential

review of whether the tax court abused its discretion by determining that the

Commissioner’s position was unreasonable. Wilson v. Comm’r of Revenue, 707 N.W.2d

695, 698 (Minn. 2006).15 Under this standard of review, and based on our analysis of

applicable tax law and the Commissioner’s position, we cannot say that the tax court

abused its discretion.

       Because the tax court did not abuse its discretion by determining that the

Commissioner’s position was not “substantially justified,” Minn. Stat. § 15.472(a), we

affirm the tax court’s award of attorney fees to Dahmes. Our holding is based primarily

on two incorrect arguments made by the Commissioner. First, the Commissioner argued

incorrectly that the trade-fixtures doctrine is not applicable to tax cases. Second, the


15
        In Pierce v. Underwood, 487 U.S. 552 (1988), an appeal of an attorney-fees award
under the federal Equal Access to Justice Act, the Court provided a helpful explanation of
why an abuse-of-discretion standard should apply. The Court stated that the issue of
substantial justification is “multifarious,” “little susceptible . . . of useful generalization,”
and “likely to profit from the experience that an abuse-of-discretion rule will permit to
develop.” 487 U.S. at 560-61. The Court further reasoned that “because the number of
possible situations is large, we are reluctant either to fix or sanction narrow guidelines” and
that a deferential review is appropriate for “needed flexibility” and to support the goal that
a “request for attorney’s fees should not result in a second major litigation.” Id. (citations
omitted) (internal quotation marks omitted).




                                               21
Commissioner argued incorrectly that chapter 272’s definition of “real property,” Minn.

Stat. § 272.03, subd. 1, is applicable only to property-tax cases and is not applicable to

sales-tax or use-tax cases under chapter 297A. These incorrect arguments resulted from

(a) an incorrect reliance on several points of law from Abex that were superseded by statute

and abrogated by Zimpro; (b) an incorrect determination that Zimpro was superseded by

statute; and (c) a misreading or oversight of relevant points of law from Zimpro.16 A

position that misreads or overlooks statutes and relevant precedent by our court is not

“substantially justified” by a “reasonable basis in law and fact.” Minn. Stat. § 15.472(a);

Minn. Stat. § 15.471, subd. 8. Therefore, the Commissioner is not entitled to relief.

       Affirmed.




16
       The Commissioner argued only that her position was “substantially justified” under
section 15.472(a). We observe that, although an attorney is also permitted to make a
nonfrivolous, good-faith argument for the extension, modification, or reversal of existing
law, see Minn. Stat. § 549.211, subd. 2(2) (2014); Minn. R. Prof. Conduct 3.1, the
Commissioner did not do so here.


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