Commissioner of Revenue of the State of Minnesota v. Nelson CA2/6

Filed 1/6/15 Commissioner of Revenue of the State of Minnesota v. Nelson CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

COMMISSIONER OF REVENUE OF 2d Civil No. B251215 THE STATE OF MINNESOTA, (Super. Ct. No. 1415616) (Santa Barbara County) Plaintiff and Respondent,

v.

BRUCE NELSON,

Defendant and Appellant.

Bruce Nelson challenged several personal liability assessments that the Minnesota Commissioner of Revenue ("the Commissioner") made against him and Scott Stevens. The assessments were for unpaid petroleum and sales taxes. The amount of the unpaid taxes exceeds $4 million. Nelson does not dispute his personal liability for the taxes under Minnesota law but asserts the tax court erred in granting summary judgment to the Commissioner by denying his request for additional discovery to explore an estoppel defense. Nelson's appeal to the Minnesota Supreme Court was unsuccessful. In 2013, the resulting judgment was certified and registered in California. Nelson moved to vacate the California judgment based on the contention that the tax court's discovery

ruling denied him due process of law. The trial court in California denied the motion to vacate and Nelson appealed the ruling. We affirm. I. FACTUAL AND PROCEDURAL HISTORY Relevant Entities and Persons Avanti and Twin Cities Stores, Inc. ("T.C. Stores") were wholly-owned subsidiaries of RM Group, Inc., a Delaware corporation. Nelson owned an 85 percent interest in RM Group. Avanti and T.C. Stores owned or operated various retail convenience stores that sold sundries and gasoline. Scott Stevens was Avanti's president. Unpaid Tax Liability Avanti purchased all of the petroleum products sold by both Avanti and T.C. Stores. In 2008 and 2009, Avanti failed to pay to the Department of Revenue ("the Department") petroleum and sales taxes for petroleum products sold by Avanti and T.C. Stores. Because Avanti made all petroleum purchases and filed all petroleum tax returns for the combined companies, the Department filed tax liens against Avanti alone. Because T.C. Stores sold some of the gasoline, it may also have been liable for failing to pay taxes on the petroleum products sold at its facilities. (See Minn. Stat. § 296A.10 (2010).) In 2009, Avanti submitted a proposal for the payment of the taxes that the Department rejected. Avanti's request for reconsideration explained that Avanti and T.C. Stores acted as a single economic unit and thus Avanti alone should not be entirely responsible for the unpaid taxes. Avanti also pointed out that any plan to pay the tax arrearages had to include the cash flow and assets of T.C. Stores in order for the payment plan to be viable. Nevertheless, the Department rejected a revised proposal for payment of the taxes. At Nelson's specific request, and because some of the petroleum products were sold by T.C. Stores outlets, the Department also filed tax liens against T.C. Stores. Avanti and T.C. Stores filed petitions under Chapter 11 of the Bankruptcy Code and sought joint administration of the bankruptcies. The companies' joint plan of reorganization proposed selling one of the T.C. Stores locations, paying $750,000 of the