Omimex Canada, Ltd. v. Dept. of Revenue

Omimex Canada, Ltd. v. Dept. of Revenue, 2015 MT 102 (April 14, 2015) (McKinnon, J.) (5-0, rev’d)

Issue: Whether the district court properly applied the doctrine of issue preclusion to preclude Omimex from litigating the issue of whether it operates a single and continuous property.

Short Answer: No.

Reversed & remanded

Facts: Omimex is a Montana oil and gas exploration and production company that contests DOR’s central assessment of its property for tax year 2011. Property can be centrally or locally assessed. Central assessment applies to “property owned by a corporation or other person operating a single and continuous property operated in more than one county or more than one state.” § 15-23-101(2), MCA. Centrally assessed property may be classified class nine, which is taxed at 12% of market value. Oil and gas production equipment is otherwise class eight property, subject to a tax rate of 1.5%-3% of market value.

DOR centrally assessed Omimex’s property in 2004 and classified it as class nine. Omimex contested the central assessment. After a bench trial, Judge Sherlock found that although Omimex’s properties were not physically connected, they operated as a single and continuous property and entered judgment for DOR. On appeal, the Court held that the tax rate class is determined by the physical attributes of Omimex’s properties, and that class nine property included “centrally assessed natural gas companies having a major distribution system,” which Omimex did not have. Omimex I, 2008 MT 403, ¶ 20. The Court held that Omimex’s property was not subject to class nine classification regardless of whether it was centrally assessed, and reversed and remanded for entry of judgment classifying Omimex’s property as class eight. Id. ¶ 27.

The 2009 Legislature amended § 15-6-141, MCA, deleting the phrase “companies having a major distribution system in this state,” and included common carrier pipelines and pipeline carriers in class nine. Section 15-23-101, MCA, was also amended to include common carrier pipelines and pipeline carriers among the types of property subject to central assessment.

DOR centrally assessed Omimex’s property in 2011 and classified it as class nine. Omimex filed for declaratory judgment that it did not operate a common carrier pipeline or a pipeline carrier, and did not meet the foundational requirements for central assessment.

Procedural Posture & Holding: DOR moved for partial summary judgment, arguing Omimex could not relitigate the issue of whether it operated a single and continuous property. Omimex argued there was no final judgment on the merits, as Judge Sherlock’s judgment was vacated on remand, and the Supreme Court did not reach the issue of central assessment in Omimex I. Omimex also included an affidavit from one of its officers describing changes to the company’s personal property since tax year 2004. The district court granted partial summary judgment to DOR, and Omimex appeals. The Supreme Court reverses.

Reasoning: When the earlier judgment was reversed, the findings and conclusions upon which it relied were necessarily vacated and cannot serve as the basis for res judicata or collateral estoppel. Moreover, Omimex appealed the 2007 judgment, which held that its property was single and continuous. The Court declined to review that issue because it reversed on other grounds. Finally, Omimex’s property has changed, which means the issue in this litigation is not identical to the issue in the earlier litigation.