Video Gaming Techs., Inc. v. Rogers Cnty. Bd. of Tax Roll Corr.

475 P.3d 824

VIDEO GAMING TECHNOLOGIES, INC., Plaintiff/Appellant,

v.ROGERS COUNTY BOARD OF TAX ROLL CORRECTIONS, a Political Subdivision; Cathy Pinkerton Baker, Rogers County Treasurer, in Her Official Capacity; and Scott Marsh, Rogers County Assessor, in His Official Capacity, Defendants/Appellees.

No. 117,491

Supreme Court of Oklahoma.

FILED December 17, 2019

Elizabeth A. Price and Kurt M. Rupert, Hartzog Conger Cason & Neville, and Kevin B. Ratliff, Ratliff Law Firm, Oklahoma City, OK, for Appellant.

Matthew J. Ballard, District Attorney, Rogers County District Attorney's Office, Claremore, OK, for Appellee.

DARBY, V.C.J.,

¶1 On appeal, Video Gaming Technologies, Inc. ("VGT"), Plaintiff/Appellant, contends that the district court improperly granted summary judgment to Rogers County Board of Tax Roll Collections ("Board"), the Rogers County Treasurer, and the Rogers County Assessor, Defendants/Appellees (together "County"). The questions before this Court are whether the district court properly denied VGT's motion for summary judgment and properly granted County's counter-motion for summary judgment. We answer both in the negative.

I. STANDARD OF REVIEW

¶2 Summary judgment settles only questions of law, therefore, we review de novo the grant thereof. Am. Biomedical Grp. v. Techtrol, Inc. , 2016 OK 55, ¶ 2, 374 P.3d 820, 822. "Summary judgment will be affirmed only if the appellate court determines that there is no dispute as to any material fact and that the moving party is entitled to judgment as a matter of law." Horton v. Hamilton , 2015 OK 6, ¶ 8, 345 P.3d 357, 360 ; see also 12 O.S.2011, § 2056(C). Under this standard, we confine our review to the limited, undisputed, material facts. Techtrol , 2016 OK 55, ¶ 3, 374 P.3d at 823. We do not consider County's factual allegations included in its paperwork that County failed to designate as disputed or undisputed material facts or support with evidentiary materials in the district court. See id. ; see also Frey v. Independence Fire and Cas. Co. , 1985 OK 25, ¶ 6, 698 P.2d 17, 20

II. PROCEDURAL HISTORY

¶3 In December 2012, VGT filed a complaint with Board protesting the 2011 and 2012 assessment of ad valorem taxes. VGT claimed the electronic gaming equipment it leased exclusively to Cherokee Nation (Nation) for gaming was preempted from taxation under federal law. At that time, VGT submitted a copy of Mashantucket Pequot Tribe v. Town of Ledyard (Mashantucket I ), No. 3:06CV1212(WWE), 2012 WL 1069342 (D. Conn. Mar. 27, 2012) (finding preemption of imposition of ad valorem tax on gaming equipment), rev'd , 722 F.3d 457 (2d Cir. 2013). In December 2013, VGT timely filed a complaint with Board protesting the 2013 ad valorem tax assessments for the same reason. In April 2014, Board denied VGT's complaints by letter.

¶4 VGT timely appealed Board's decision, filing a petition for review in Rogers County District Court. VGT sought summary judgment claiming federal preemption of ad valorem taxes under the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701 - 2721 (2018), Indian Trader Statutes, and federal case law. VGT set forth a list of undisputed material facts which it supported with declarations¹ from VGT's Assistant General Counsel and an attorney for Nation; it also attached copies of its 2012 and 2013 complaints and Board's 2014 denial letter.

¶5 County filed a response and counter-motion for summary judgment, urging that ad valorem taxation of the property was not preempted or barred. County declared that "the relevant facts in this case are not in dispute," making summary judgment appropriate. County then set out its own statement of undisputed material facts. Later in its counter-motion for summary judgment and response, County argued:

VGT has not alleged or provided evidence that it actually passes off the costs of its taxes onto the Tribe, but merely asserts a vague notion that its lease agreements are "based upon a variety of competing economic factors" and include costs that are "balanced to arrive at the lease terms." This bald assertion supposedly supports VGT's contention that the economic burden caused by the taxes would ultimately fall on the Tribe, but VGT has advanced no evidence that this is actually the case.

Def't's Resp. to VGT's Mot. for S.J., Counter-Mot. for S.J., and Br. in Supp. , filed May 31, 2018, at 10. County, however, failed to support this assertion with any evidence to dispute the evidence put forth by VGT. County attached a copy of Mashantucket Pequot Tribe v. Town of Ledyard (Mashantucket II ), 722 F.3d 457 (2d Cir. Jul. 15, 2013) (reversing Mashantucket I and finding no preemption), an affidavit from the Rogers County Assessor, copies of the complaints and denial, and a statement of the taxes currently assessed against VGT.

¶6 On September 27, 2018, the district court denied VGT's motion and sustained County's counter-motion for summary judgment. The district court found the rationale in Mashantucket II persuasive and held that the "State of Oklahoma's ad valorem tax statutes are not preempted or barred by the Indian Trader Statutes, the Indian Gaming Regulatory Act, or pursuant to the balancing test set forth by the United States Supreme Court in White Mountain Apache Tribe v. Bracker ," 448 U.S. 136, 100 S. Ct. 2578, 65 L. Ed. 2d 665 (1980). VGT timely appealed under Oklahoma Supreme Court Rule 1.36 and filed a motion that we retain the appeal, which we granted. On appeal, VGT argues that the district court erred in (1) relying on Mashantucket II to grant County's counter-motion for summary judgment and (2) failing to grant VGT's motion for summary judgment because imposition of ad valorem taxes is preempted by IGRA and the Bracker balancing test.

III. UNDISPUTED MATERIAL FACTS

¶7 VGT is a non-Indian Tennessee corporation authorized to do business in Oklahoma. VGT owns and leases electronic gaming equipment to Cherokee Nation Entertainment, LLC (CNE), a business entity of Nation. Nation is a federally-recognized Indian tribe headquartered in Tahlequah, Oklahoma. CNE owns and operates ten gaming facilities on behalf of Nation.

¶8 CNE and VGT negotiated and executed their initial lease agreement, and all subsequent amendments, on tribal trust land. The lease agreements are based on a variety of competing economic factors and include consideration of several costs that are balanced to arrive at the lease terms. The equipment lease agreement states that VGT supplies the gaming equipment, software, and related services to CNE. The gaming equipment that VGT leases to CNE is located on tribal trust land in Rogers County and is essential to Nation's gaming operations.

¶9 The Rogers County Assessor assesses ad valorem tax on business personal property located in the county on the first of the year, pursuant to title 68, section 2831 of the Oklahoma Statutes.² In 2011, 2012, and 2013, County assessed ad valorem taxes on the gaming equipment owned by VGT.³ County based its assessment on the value of the property and did not take into consideration use, possession, or specific location of the property.

¶10 Tax revenue from ad valorem assessments, like those imposed on VGT's gaming equipment, help fund the operation of Rogers County government, schools, law enforcement, health services, roads, and other government services within Rogers County. The economic burden caused by the assessment of ad valorem taxes, however, would ultimately fall on Nation because it would impact the overall costs of providing the gaming machines to Nation and therefore the price for which VGT would agree to lease them.

IV. ANALYSIS

¶11 VGT argues that taxation of its gaming equipment is preempted by IGRA and Bracker because the property is located on tribal trust land under a lease to Nation for use in its gaming operations.

A. Federal Preemption of Taxation of Non-Indians on Indian Land

¶12 The location of property on tribal trust land is not a per se bar to taxation because the legal incidence of the ad valorem tax falls on the non-Indian lessor, not on Nation. Okla. Tax Comm'n v. Chickasaw Nation , 515 U.S. 450, 453, 459, 115 S. Ct. 2214, 132 L. Ed. 2d 400 (1995) ; State ex rel. Edmondson v. Native Wholesale Supply , 2010 OK 58, ¶ 39, 237 P.3d 199, 212-213. When a state or county seeks to impose a nondiscriminatory tax on non-Indians on tribal land, there is no rigid preemption rule, rather we must apply a flexible analysis to determine if taxation is proper. See Bracker , 448 U.S. 136, 100 S.Ct. 2578 ; see also Ramah Navajo Sch. Bd. v. Bureau of Revenue of N.M. , 458 U.S. 832, 102 S. Ct. 3394, 73 L. Ed. 2d 1174 (1982) ; see also Cotton Petroleum Corp. v. New Mexico , 490 U.S. 163, 109 S. Ct. 1698, 104 L. Ed. 2d 209 (1989). Courts must perform a "particularized examination of the relevant state, federal, and tribal interests" which is not controlled by standards of preemption from other areas of law. Ramah Navajo School Bd. , 458 U.S. at 838, 102 S.Ct. 3394 ; see also Bracker , 448 U.S. at 142, 144-45, 100 S.Ct. 2578.

¶13 In examining federal treaties and statutes, we must look to congressional intent to preempt state taxation of non-Indians on tribal land, while considering the broad underlying policies and history of tribal sovereignty as a "backdrop." Cotton Petroleum , 490 U.S. at 176, 109 S.Ct. 1698 ; see also Bracker , 448 U.S. at 142, 144-45, 100 S.Ct. 2578. Preemption is not limited to cases in which Congress has expressly preempted the state tax. Cotton Petroleum , 490 U.S. at 176-77, 109 S.Ct. 1698. The county seeking to impose a tax on non-Indians on tribal land must be able to identify regulatory functions or services the county performs to justify the assessment—interest in raising revenues is not enough. Bracker , 448 U.S. at 148-49, 150, 100 S.Ct. 2578. Courts must follow the guiding principle to construe "federal statutes and regulations relating to tribes and tribal activities" generously in order to comport with "traditional notions of...