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Dtwc Corporation v. Susan Combs

April 11, 2013



The opinion of the court was delivered by: Jeff Rose, Justice


DTWC Corporation brought this tax-refund suit against the Comptroller of Public Accounts seeking to recoup sales taxes it paid on items such as soap, shampoo, conditioner, mouthwash, shower caps, pens, and notepads that it put in its hotel rooms for its hotel guests. On cross motions for summary judgment, the district court determined that the hotel consumables were not exempt from sales tax under the tax code's sale-for-resale exemption. We disagree and reverse the district court's judgment.


The facts are undisputed, having been established below in a stipulation of facts. Appellant DTWC Corporation is the successor-in-interest to Red Lion Hotels, Inc., which operated a hotel in Austin, Texas during the tax period at issue in this case. Red Lion charged each of its hotel guests a set fee for overnight lodging. The overnight-lodging fee, which was subject to state and local hotel-occupancy taxes, was based on factors such as the date of occupancy, the quality of the hotel property, the level of service provided, and the amenities available at the hotel. In exchange for the overnight-lodging fee, a Red Lion guest was given use of a hotel room and access to hotel facilities such as a pool or exercise room.

Red Lion stocked its hotel rooms with soaps, shampoos, conditioners, mouthwashes, shower caps, pens, notepads, and other similar non-reusable, consumable items ("hotel consumables") for use by its hotel guests. Before putting these items in the guest rooms, Red Lion stored the hotel consumables in a locked area on its hotel property. The hotel guests were free to use the hotel consumables in their rooms as they saw fit, including using the items, not using the items, or taking the items with them when they left the hotel. Guests who did not want or use the hotel consumables were not offered and did not receive a reduced rate for foregoing the use of those consumables.*fn1 After a guest checked out of the hotel, Red Lion would replace for the next guest those hotel consumables that had been taken or used by the prior guest.

DTWC sought a refund of the $17,485.53 in sales tax it paid on the hotel consumables it bought during the period December 1, 1998 through March 31, 2002, arguing that the hotel consumables were exempt under the tax code's sale-for-resale exemption. The Comptroller disputed that the exemption applied. In the district court, the parties filed cross motions for summary judgment on the issue of whether the sale-for-resale exemption applies to hotel consumables. The district court granted the Comptroller's summary-judgment motion and denied DTWC's. It is from this judgment that DTWC now appeals, asserting as its sole issue on appeal that it is entitled to a refund of the sales tax it paid on the purchases of the hotel consumables under a proper construction of the tax code's sale-for-resale exemption.


Summary judgment is proper if the movant establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See Tex. R. Civ. P. 166a(c); Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). In our de novo review of a summary judgment, we indulge every reasonable inference and resolve any doubts in the non-movant's favor. Id. When both parties move for summary judgment and the district court grants one motion and denies the other, we review the summary-judgment evidence presented by both sides, determine all questions presented, and render the judgment that the trial court should have rendered. Texas Workers' Comp. Comm'n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex. 2004).


Because the basic facts of this case are not in dispute, our decision turns on the interplay of various provisions found in chapter 151 of the tax code.

* Sales tax: Section 151.051(a) imposes a sales tax "on each sale of a taxable item in this state." Tex. Tax Code Ann. § 151.051(a) (West 2008). "'Taxable item' means tangible personal property and taxable services." Id. § 151.010 (West 2008). The hotel consumables are "tangible personal property," a term that captures "personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses in any other manner." See id. § 151.009 (West 2008).

* Sale-for-resale exemption: Provisions found in subchapter H set out numerous exemptions to the sales and use taxes imposed by chapter 151. Section 151.302(a) states: "The sale for resale of a taxable item is exempted from the taxes imposed by this chapter." Id. § 151.302(a). A "sale for resale" includes a sale of "tangible personal . . . property to a purchaser who acquires the property . . . for the purpose of reselling it . . . in the normal course of business in the form or condition in which it is acquired." Id. § 151.006(a)(1) (West Supp. 2012). "Sale" and "purchase" are defined as, among other things, "a transfer of title or possession of tangible personal property" when "done or performed for consideration." See id. § 151.005(1) (West 2008).

Statutory construction is a question of law that we review de novo. See State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006). Our primary objective in construing statutes is to give effect to the Legislature's intent and, ordinarily, the truest manifestation of what lawmakers intended is what they enacted. See First Am. Title Inc. Co. v. Combs, 258 S.W.3d 627, 632 (Tex. 2008). The language emerging from the legislative process "constitutes the law, and when a statute's words are unambiguous and yield but one interpretation, 'the judge's inquiry is at an end.'" Combs v. Roark Amusement & Vending, L.P., __S.W.3d__, No. 11-0261, 2013 WL 855737, at *2 (Tex. Mar. 8, 2013) (quoting Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651--52 (Tex. 2006)). We give such unambiguous statutes their plain meaning without resorting to rules of construction or extrinsic aids. Id. (citing Texas Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635, 637 (Tex. 2010) (branding such reliance "improper," because "[w]hen a statute's language is clear and unambiguous, it is inappropriate to resort to rules of construction or extrinsic aids to construe the language" (citing City of Rockwall v. Hughes, 246 S.W.3d 621, ...

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