From Herb Semmel, National Senior Citizens Law Center
A unanimous Supreme Court held that the Full Faith and Credit Clause does not require Nevada Courts to apply a California statute giving absolute immunity to the California Franchise Tax Board. Franchise Tax Board of California v. Hyatt, No. 02-42, 2003 U.S. LEXIS 3244, 2003 WL 1916238 (Apr. 23, 2003).
A long-term California resident moved to Nevada (where there is no income tax) and sued the California Franchise Tax Board for damages for negligent and intentional torts arising from the Boards attempts to collect California income taxes from plaintiff. Nevada has waived sovereign immunity for intentional torts but not for all negligent torts. California has granted blanket immunity to the Tax Board.
The Nevada Supreme Court held that, since California and Nevada law are consistent on the subject of negligent torts, it would dismiss the negligence claim as a matter of comity. As to the intentional torts, the Nevada court, citing Nevada v. Hall, 440 U.S. 416 (1979), held that California is not entitled to sovereign immunity in a suit in Nevada courts. In addition, the Full Faith and Credit Clause does not require Nevada to apply California law in violation of its own legitimate public policy of protecting its citizens against intentional torts and bad faith acts committed by sister states government employees.
Before the U.S. Supreme Court, the respondent did not challenge the application of Nevada v. Hall and the Court declined to reach the issue. Rather, the opinion considered only the Full Faith and Credit Clause argument. California argued that its immunity statute must be applied to avoid interference with its sovereign responsibility of enforcing its tax laws. Applying past precedents, the Court declined to engage in a balancing test of state competing sovereignty interests. It also found no principled distinction between Nevadas interest in tort claims arising from automobile accidents and Californias claim arising out of tax collection.
What happens if Hyatt wins and obtains a judgment in Nevada? The question may well prove to be academic in this case. But an interesting query appears in then Justice Rehnquists dissenting opinion in Nevada v. Hall:
Assuming Nevada has no seizable assets in California, can the plaintiff obtain enforcement of Californias judgment in Nevada courts? Can Nevada refuse to give the California judgment full faith and credit because it is against state policy? Can Nevada challenge the seizure of its assets by California in this Court? If not, are the States relegated to the choice between the gamesmanship and test of strength that characterize international disputes, on the one hand, and the midnight seizure of assets associated with private debt collection on the other? 440 U.S. at 443 (Rehnquist, J., dissenting).
Will the Supreme Court save us from Civil War II? Will Hyatt foreclose against the California Governors Mansion? Stay Tuned.
From Herb Semmel, National Senior Citizens Law Center
A unanimous Supreme Court held that the Full Faith and Credit Clause does not require Nevada Courts to apply a California statute giving absolute immunity to the California Franchise Tax Board. Franchise Tax Board of California v. Hyatt, No. 02-42, 2003 U.S. LEXIS 3244, 2003 WL 1916238 (Apr. 23, 2003).
A long-term California resident moved to Nevada (where there is no income tax) and sued the California Franchise Tax Board for damages for negligent and intentional torts arising from the Boards attempts to collect California income taxes from plaintiff. Nevada has waived sovereign immunity for intentional torts but not for all negligent torts. California has granted blanket immunity to the Tax Board.
The Nevada Supreme Court held that, since California and Nevada law are consistent on the subject of negligent torts, it would dismiss the negligence claim as a matter of comity. As to the intentional torts, the Nevada court, citing Nevada v. Hall, 440 U.S. 416 (1979), held that California is not entitled to sovereign immunity in a suit in Nevada courts. In addition, the Full Faith and Credit Clause does not require Nevada to apply California law in violation of its own legitimate public policy of protecting its citizens against intentional torts and bad faith acts committed by sister states government employees.
Before the U.S. Supreme Court, the respondent did not challenge the application of Nevada v. Hall and the Court declined to reach the issue. Rather, the opinion considered only the Full Faith and Credit Clause argument. California argued that its immunity statute must be applied to avoid interference with its sovereign responsibility of enforcing its tax laws. Applying past precedents, the Court declined to engage in a balancing test of state competing sovereignty interests. It also found no principled distinction between Nevadas interest in tort claims arising from automobile accidents and Californias claim arising out of tax collection.
What happens if Hyatt wins and obtains a judgment in Nevada? The question may well prove to be academic in this case. But an interesting query appears in then Justice Rehnquists dissenting opinion in Nevada v. Hall:
Assuming Nevada has no seizable assets in California, can the plaintiff obtain enforcement of Californias judgment in Nevada courts? Can Nevada refuse to give the California judgment full faith and credit because it is against state policy? Can Nevada challenge the seizure of its assets by California in this Court? If not, are the States relegated to the choice between the gamesmanship and test of strength that characterize international disputes, on the one hand, and the midnight seizure of assets associated with private debt collection on the other? 440 U.S. at 443 (Rehnquist, J., dissenting).
Will the Supreme Court save us from Civil War II? Will Hyatt foreclose against the California Governors Mansion? Stay Tuned.
