Case Summary for March 11, 2009

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Case Summary for March 11, 2009

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

9:30 a.m. Wednesday, March 11, 2009

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SC89547
Music City Centre Management, LLC v. Director of Revenue
Cole and Taney counties
Interpretation of revenue laws
Listen to the oral argument:

The director of revenue was represented during argument by Solicitor General James R. Layton of the attorney general's office in Jefferson City, Mo., and Music City was represented by Kenneth N. Hall of Reece Moore Pendergraft LLP of Fayetteville, Ark.

Music City Centre Management LLC produces and promotes live entertainment at its theater in Branson. It markets tickets through contractual arrangements with Branson-based businesses. The businesses purchase tickets from Music City for resale and determine the amount the ultimate purchasers pay for the tickets. Music City reported the amounts it received from the businesses for the tickets as gross taxable amounts and remitted the sales tax due on the amounts. It sought a refund for sales tax paid from April 2003 through December 2005 on the basis that transactions with the businesses did not constitute retail sales. The director of revenue denied the refund because, pursuant to section 144.020.1(2), RSMo, fees paid for amusement or entertainment are subject to sales tax. Music City sought review from the administrative hearing commission, which held that, pursuant to the "resale" exclusion of sales tax, Music City's tickets were excluded from sales tax and that Music City was entitled to a refund of more than $83,000, plus interest. The director appeals.

The director argues Music City is not entitled to a resale exclusion from tax on amounts the businesses paid for tickets. The director contends the sale price of tickets to a theater is an amount paid to place of amusement, entertainment or recreation at retail pursuant to section 144.020.1(2). The director asserts that the statute deems the sale of tickets to distributors to be a sale at retail, not resale.

Music City responds that its sales of tickets to the businesses are not made at retail. It contends the sale of tickets to businesses is made for the purpose of resale, which is excluded by section 144.010.1(10) from application of the Missouri sales tax.

SC89559
ICC Management, Inc. v. Director of Revenue
Cole and Johnson counties
Constitutional validity of Missouri sales and use tax
Listen to the oral argument:

ICC was represented during argument by John W. Simpson of Shook, Hardy & Bacon, L.L.P., of Kansas City, and the director was represented by Gary L. Gardner of the attorney general's office in Jefferson City.

ICC Management Inc. operates a private jail facility near Holden. It contracts with other municipalities to hold the inmates there, and ICC provides meals, clothing and other consumable items like soap, shampoo and medical supplies to the inmates. The municipalities pay ICC between $32.50 and $50, per inmate per day, for these goods, but ICC does not collect sales tax from the municipalities for these goods. ICC contends it purchases the goods it sells to the municipalities for resale and, therefore, the purchases are not subject to the Missouri sales or use tax pursuant to section 144.030.1, RSMo. The director of revenue conducted a sales tax audit of ICC for January 2002 to December 2005. The auditor determined that ICC was liable for Missouri sales and use tax on items it purchased and sold to the municipalities and that, as a result, ICC owed more than $14,000 in sales tax and more than $5,400 in use tax, plus interest. ICC sought review from the administrative hearing commission, which, in August 2008, determined a sale does not qualify for the resale exclusion if the ultimate purchase is exempt from the sales and use tax. It held that, because, the "resales" to municipalities were not subject to tax, ICC's initial purchases were subject to the Missouri sales tax and use tax. ICC appeals.

ICC argues the goods it purchased for the inmates were not subject to the Missouri sales and use tax because the purchases qualified for the resale exclusion. It contends that any purchase of an item "for resale" is not subject to the Missouri sales tax. ICC asserts the commission's conclusion that a taxpayer cannot qualify for the resale exclusion if the taxpayer subsequently sells the purchased item in a transaction that is exempt from the sales and use tax, is not supported by the Missouri statutes or this Court's decisions in Aladdin's Castle, Inc. v. Director of Revenue, 916 S.W.2d 196 (Mo. banc 1996); McDonnell Douglas Corporation v. Director of Revenue, 945 S.W.2d 437 (Mo. banc 1997); and Westwood Country Club v. Director of Revenue, 6 S.W.3d 885 (Mo. banc 1999).

The director responds that ICC is not entitled to exclusion from sales and use tax on its purchase of goods it provides to the inmates at the municipalities because ICC is providing non-taxable detention services, not transferring tangible personal property. The director contends that the inmates and the municipalities ate the food, wore clothes and used soap but that goods always remained under the control of ICC as a detention facility. The director asserts that, if ICC is just transferring property, there is no sale at retail of that property to municipalities.

SC89614
State ex rel. Pansy Henley v. The Honorable James R. Bickel
Dade County
Negligence case against husband and wife
Listen to the oral argument:

Henley was represented during argument by John D. Hammons Jr. of Springfield, and the Graveses were represented by Michelle O'Neal of Joplin.

Pansy Henley was the passenger in the vehicle her husband was driving when they were in an automobile accident in November 2006. James and Connie Graves, the occupants of the other vehicle, sued the husband for damages alleging negligence. The Graveses subsequently amended their petition to add Henley as a defendant under the theory of joint venture or respondeat superior (when a "master" is responsible for his or her "servant" or an employer is responsible for its employee). They alleged Henley was liable because she was a joint owner of the vehicle and because the Henleys, together, were moving their belongings from Jericho Springs to Joplin when the accident occurred. The Graveses argued that the Henleys moved their belongings themselves instead of hiring a professional moving company and that Henley could not have done the moving without the help of her husband, or vice versa. In June 2008, Henley sought to be dismissed as a defendant, contending there is no basis for her liability. The circuit court overruled her motion. Henley seeks a writ of prohibition from this Court.

Henley argues the circuit court lacks jurisdiction to proceed against her in the suit against her husband. She contends the Graveses' petition fails to state a cause of action against her because it does not allege that she had a right of control over the operation of the vehicle, because she and her husband moving their personal belongings is not an activity recognized in Missouri law as a "venture" for the purposes of a "joint venture liability," and because the petition does not allege a master-servant relationship between Henley and her husband, which she asserts is necessary to allege respondeat superior liability.

The Graveses respond that Henley is liable jointly and severally for her husband's negligence. They contend their petition pleads all elements establishing a joint venture or joint enterprise between Henley and her husband by pleading that both Henleys were moving their belongings from one home to another to avoid the cost of hiring professional movers and by pleading that Henley had an equal right of control in the move. The Graveses argue there was an inference of a principle-agent relationship between Henley and her husband because Henley would have had a right of control in the move had the Henleys hired movers and because the law does not require that Henley have the right to control her husband's physical movements to have a principal-agent relationship with him.

SC89704
State ex rel. The Kansas City Southern Railway Company v. The Honorable W. Stephen Nixon
Jackson and St. Louis counties
Proper venue
Listen to the oral argument:

The railway was represented during argument by James M. Yeretsky of Yeretsky & Maher, L.L.C, of Kansas City, and Cockrell and the McFarlands were represented by Mark E. Parrish of Nash & Franciskato Law Firm of Kansas City.

Following a June 2005 collision in the state of Louisiana between an automobile and a train owned by The Kansas City Southern Railway Company, Clifford and Kimberly McFarland and Lauren Rachel Cockrell sued the railway in Jackson County. Cockrell alleges she suffered personal injuries because of the accident, and the McFarlands allege their daughter died from injuries she sustained in the collision. In August 2008, the railway moved to transfer venue in the case to St. Louis County, where it maintains its registered agent. In September 2008, Cockrell and the McFarlands moved for leave to amend their petition to add a defendant. In October 2008, the Jackson County circuit court overruled the railway's motion to transfer venue and granted the plaintiffs 10 days to add a new defendant. The additional defendant, one of the railway's employees, lived in Jackson County and would cause venue to be proper in Jackson County. The railway seeks this Court's writ to prohibit the circuit court from taking any further action except to transfer the case to St. Louis County.

The railway argues that the circuit court exceeded its jurisdiction in overruling the motion to transfer and in giving the plaintiffs 10 days to amend their petition. It contends that, pursuant to section 508.010.5(1), RSMo, venue in this tort action is proper only in St. Louis County, where the railway's registered agent is located, because the plaintiffs were injured outside the state of Missouri and none of the plaintiffs resided in Missouri on the date of the accident.

Cockrell and the McFarlands respond that the Jackson County circuit court did not exceed its jurisdiction because, once they filed an amended petition naming a Jackson County resident as a defendant, venue was proper in Jackson County pursuant to section 508.010.5(2). They argue the railway's brief does not include any argument disputing venue in Jackson County if McIntosh is added properly as a defendant. They assert this Court must decide only whether a statute or rule prohibited the circuit court from granting the motion to amend their petition before ruling on the railway's motion to transfer. They contend the 2005 amendment to section 508.010 and the adoption of section 508.012 shows a clear legislative intent that the addition or removal of any plaintiff or defendant affect the determination of venue.