Case Summary for September 16, 2003

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Case Summary for September 16, 2003

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

Tuesday, September 16, 2003
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SC85179
TSI Holding Company v. Director of Revenue
Apportionment of franchise tax

Headquartered in Missouri, TSI Holding Company is an investment holding company that holds cash and invests in municipal bonds, mutual funds and subsidiaries, some of which are not located in Missouri, do not have assets in Missouri and do no business in Missouri. TSI files franchise tax returns and remits franchise tax in Missouri. TSI filed amended franchise tax returns for 1993 through 1994 with the secretary of state. In these amended returns, TSI included only those assets that were located in Missouri and not its investment subsidiaries outside Missouri, and it computed Missouri apportionment percentages accordingly. After multiple discussions, the secretary of state in January 1996 authorized Missouri to issue franchise tax refunds to TSI based on the tax liabilities reflected in the amended returns. The secretary of state also accepted TSI's 1995 Missouri franchise tax return, in which TSI used the same allocation methodology as in the amended returns. TSI subsequently filed its Missouri franchise tax returns for 1996 through 1998 using the same methodology. In April 1999, an auditor working for the director of revenue and secretary of state examined TSI's 1996-1998 franchise tax returns and did not accept TSI's apportionment of assets. In June 1999, TSI's accountant explained to the auditor that the secretary of state had accepted its allocation methodology in the earlier returns, but the auditor did not accept this position. In September 1999, the secretary of state sent TSI an assessment notifying the company that it owed nearly $87,485 in Missouri franchise tax, interest and penalties for 1996 through 1998. TSI protested, and in October 2001, the director upheld the proposed assessment for 1996 through 1998 but abated the penalties. TSI sought review from the administrative hearing commission, which in March 2003 upheld the director's decision.

TSI appeals, arguing the commission's decision is not authorized by law or supported by competent and substantial evidence. TSI contends the director cannot impose Missouri franchise tax on its property and assets outside Missouri. It asserts that section 147.010, RSMo, and this Court's decision in Union Electric Company v. Morris, 222 S.W.2d 767 (Mo. 1949), require TSI to apportion its Missouri franchise tax base because it uses part of its assets in business outside Missouri. TSI argues that the director's interpretation of the statute would result in double taxation on municipal bonds and mutual funds. TSI contends its alternative apportionment method fairly reflects its assets used in business outside Missouri and previously was approved by the secretary of state. TSI asserts that, because it had no Missouri accounts receivable, inventories, land or fixed assets, the apportionment method set forth in the regulation then known as 15 CSR 30-150.170 does not fairly apportion all its assets and property.
The director responds that the commission properly applied the law in affirming the director's assessment of franchise tax under section 147.010, RSMo. She argues this statute does not require TSI to apportion its Missouri franchise tax base because TSI merely owns, and does not employ, assets outside the state. The director contends Union Electric is not on point and does not authorize TSI to apportion its out-of-state investments. She asserts that her construction of section 147.010 will not result in multiple taxation of the same assets and notes that there is no evidence in the record that the mutual funds or municipal bonds in which TSI invests are subject to franchise taxation in other states. The director responds that the method of apportionment set out in 15 CSR 30-150.170 is fair in its calculations and as applied to TSI because the company's investments in out-of-state business entities are intertwined with its business as a Missouri investment holding company. She argues the secretary of state assessed franchise tax against TSI for the years 1996 through 1998 in a timely manner and that the secretary of state's acceptance of TSI's alternative apportionment method for 1993 through 1995 does not constitute approval, tacit or otherwise, for future years.

SC85180
Tubular Steel Industries, Inc. v. Director of Revenue
Apportionment of franchise tax

This case is substantially the same as its companion case, SC85179, and its procedure and arguments follow the same path as in the companion case, summarized above.

SC85181
T-3, Inc. v. Director of Revenue
Apportionment of franchise tax

This case is substantially the same as its companion case, SC85179, and its procedure and arguments follow the same path as in the companion case, summarized above.

SC85386
Thomas Pierson v. Treasurer of the State of Missouri as Custodian of the Second Injury Fund
St. Louis County
Effect of preexisting condition on second injury fund liability

Thomas Pierson works full-time as an aircraft assembler and mechanic at Boeing in St. Louis County. His job requires him to stand, bend and contort frequently and to pay great attention to detail and minute measurements. In December 1999, when he was working full-time with frequent mandatory overtime, he injured his neck and right shoulder at work. His treatment eventually resulted in a neck fusion. Long prior to his injury, Pierson was diagnosed with strabismic amblyopia in his left eye, which prevents him from seeing much more than light and movement, although his vision in his right eye can be corrected to 20/20 with glasses. When Pierson was hired, Boeing (then McDonnell Douglas) knew about this condition. Pierson filed a worker's compensation suit, and he ultimately settled his case against Boeing for 35-percent permanent partial disability. The administrative law judge (ALJ) found that Pierson suffered from 110-percent permanent partial disability of one eye due to the preexisting condition and awarded an additional 14 weeks of disability for a "loss of use premium" pursuant to section 287.190.2, RSMo. The ALJ found that the disabilities from the neck injury and preexisting eye condition combined for a significantly greater disability than that resulting from each disability when considered separately. The ALJ then determined that the second injury fund was liable for about 88 weeks of permanent partial disability for a total of about $27,725. The fund sought review, and the labor and industrial relations commission affirmed.

The second injury fund appeals, arguing the commission erred in finding it liable for the combination of Pierson's primary neck injury and his preexisting eye injury. It contends Pierson does not have a preexisting permanent partial disability that is compensable from the fund under section 287.220.1, RSMo 1994, because the eye does not constitute either a body as a whole injury nor an injury to a major extremity. The fund asserts that the commission erred in finding that Pierson was entitled to a "loss of use premium" for his eye. It argues this premium is not applicable to the fund because the plain language of sections 287.190.2 and 287.220.1 does not extend the "loss of use premium" to the fund.

Pierson responds that the commission properly held the fund partially liable for compensation under the second injury fund statute. He argues the plain meaning of the 1993 amendment to the statute, applied in the context of the entire worker's compensation act, is that a disability other than a major extremity must be categorized as a "body as a whole" injury. In the alternative, he argues the plain meaning of the statute should be construed not to impose thresholds on preexisting vision and hearing disabilities. He contends that to find otherwise would exclude preexisting vision and hearing disabilities from consideration. Pierson responds that the commission properly calculated the fund's liability by including the loss of use premium under section 287.190. He asserts that this statute acts as a measure of all preexisting disabilities for fund liability and is not limited to determining only employers' liability.

SC84987
Earl Ringo, Jr. v. State of Missouri
Boone and Cape Girardeau counties
Post-conviction relief in a death penalty case

Earl Ringo was charged with two counts of first-degree murder for the shooting deaths of a delivery driver and a manager at a Columbia, Missouri, restaurant in July 1998. The case was moved from Boone County to Cape Girardeau County, where the jury convicted Ringo of both murder counts and recommended that he be sentenced to death. This Court affirmed his convictions and death sentences, State v. Ringo, 30 S.W.3d 811 (Mo. banc 2000), and he subsequently filed a 15-claim motion for post-conviction relief. His attorney amended the motion to five claims. The motion court denied three of those claims without a hearing, and Ringo's attorney presented no evidence on one of the two remaining claims. The motion court denied relief, and Ringo appeals.

Ringo argues the motion court clearly erred. He contends his trial counsel failed to adequately investigate and present expert testimony that he had mental disabilities that diminished his capacity to deliberate at the time of the crime. He asserts that his counsel failed to adequately investigate and present mitigating expert testimony regarding abuse he suffered as a child and his subsequent development. Ringo argues his counsel prejudiced him in agreeing to move his trial to Cape Girardeau County, which he contends historically underrepresents African-Americans in jury pools. He asserts that, as an African-American, he should not have been tried there before an all-white jury for the deaths of two white victims. Ringo argues that when the trial court responded to a jury question regarding life and death, his counsel should have objected to the response as being inaccurate and misleading. He contends the motion court erroneously ruled that it could not review whether counsel was ineffective in failing to object because Ringo, on direct appeal, raised a plain error challenge regarding the trial court's response. He asserts that his trial counsel also should have objected to improper comments and gestures by the prosecutor. Ringo argues the court should have considered his pro se claims rather than the amended claims his attorney filed. He contends that his counsel failed to include all the claims known to him, as required by Rule 29.15(e) and that he notified the motion court that he wanted it to hear all his claims.

The state responds that the motion court was not clearly erroneous. It argues Ringo's counsel was not ineffective in not calling a psychologist to testify that Ringo had mental disabilities that prevented him from deliberating because this testimony contradicted conclusions of other experts retained by the defense, was not credible and would not have affected the trial's outcome. The state contends Ringo's counsel strategically decided not to call a child development expert to present mitigating testimony that would have contradicted that of Ringo's mother. It asserts that counsel hired a different psychologist than one Ringo preferred and that counsel was not required to shop for a more favorable expert. It argues there is no reasonable probability that any of this testimony would have changed the penalty phase's outcome. The state responds that Ringo failed to plead sufficient facts to establish that Cape Girardeau County violated the fair cross-section requirement in drawing its jury pool or that any of the jurors were biased against him. The state argues that this Court found, on direct appeal, that the trial court did not err in telling the jury it could not answer its question about how sentencing would be carried out and that Ringo's counsel, therefore, was not ineffective in not objecting to the trial court's response. The state contends that the prosecutor's alleged behavior would not have affected either Ringo or the verdict negatively. The state asserts that the motion court could not have reviewed Ringo's pro se claims because the amended motion superceded his earlier pro se motion and that there is no Sixth Amendment guarantee of effective assistance of counsel in post-conviction proceedings.