State, Comptroller of Maryland v. Shipe

HOTTEN, J. Appellant, the Comptroller of Maryland (“the State”), appeals from a judgment entered by the Circuit Court for Montgomery County, granting appellee’s, Kenneth R. Shipe’s, motion to release a tax judgment lien held by the State for unpaid income taxes regarding the 1997 and 1998 tax years. The State noted an appeal and presents a single question for our review: ⁴²⁷ Did the circuit court err in holding that a properly recorded tax lien in favor of the [S]tate with respect to an undisputed, unsatisfied tax obligation is subject to the statute of limitations applicable to “specialties” in § 5-102 of the Courts and Judicial Proceedings Article where that statute expressly provides that it “does not apply to a specialty taken for the use of the State” and where the State has not waived its sovereign immunity? For the following reasons, we shall reverse the judgment of the circuit court. FACTUAL AND PROCEDURAL HISTORY On April 26, 2001, the State issued a “Notice of Lien of Judgment for Unpaid Tax” to appellee because of his failure to pay $2,111.70 in income taxes for the period of January 1,1997 through December 31, 1998. 1 On May 8, 2001, the notice of lien of judgment was recorded, indexed, and entered in the docket by the Circuit Court for Montgomery County.

On June 19, 2013, appellee filed a “Motion to Release Judgment/Tax Lien” with the Circuit Court for Montgomery County. 2 Citing § 5 — 102(a)(3) of the Courts and Judicial Proceedings Article, appellee argued that the judgment/tax lien was subject to renewal and therefore, “became unenforceable by reason of lapse of time on May 8, 2013.” In response, the State cited § 5-102(c) of the Courts and Judicial Proceedings Article and contended that “the twelve-year limitation section ‘[did] not apply to a specialty taken for the use of the State.’ ” On August 27, 2013, a hearing was held to address appellee’s motion. Following oral argument, the circuit court requested additional information, took the motion under advisement and requested that the parties submit memoranda within fourteen days. The circuit court issued an order on December ⁴²⁸ 2, 2013, “finding] that a plain reading of the statutes and cases cited clearly demonstrates the intent of the General Assembly to impose time limits on the Comptroller to enforce a tax hen once filed,” thereby, releasing the State’s tax lien. On December 13, 2013, the State filed a motion for reconsideration, which the circuit court denied on February 3, 2014.

Thereafter, the State noted a timely appeal. Additional facts shall be provided, infra, to the extent they prove relevant in addressing the issues presented. STANDARD OF REVIEW The issue before this Court is one of statutory construction. Upon review, our primary goal in statutory interpretation is “to ascertain and effectuate the intent of the legislature.” Rossville Vending Mach.

Corp. v. Comptroller of the Treasury, 114 Md.App. 346, 351 , 689 A.2d 1295 (1997) (citation omitted). We start our analysis by “begin[ning] with the plain language of the statute, and ordinary, popular understanding of the English language dictates interpretation of its terminology.” Bowen v. City of Annapolis, 402 Md. 587, 613 , 937 A.2d 242 (2007) (quoting Kushell v. Dep’t of Natural Res., 385 Md. 563, 576 , 870 A.2d 186 (2005)). “This plain meaning should be construed to carry out and effectuate, or aid in, the general purposes and policies of the statute being interpreted. When reading the statute, we apply ‘a common sense perspective’ of how the statutory language is generally understood.” Maryland Econ. Dev.

Corp. v. Montgomery County, 431 Md. 189, 199 , 64 A.3d 478 (2013) (internal quotation marks and citations omitted). Additionally, the Court of Appeals discussed the basic concepts governing statutory construction, noting: If the language of the statute is clear and unambiguous, we need not look beyond the statute’s provisions and our analysis ends. If however, the language is subject to more than one interpretation, it is ambiguous, and we resolve that ambiguity by looking to the statute’s legislative history, case law, and statutory purpose. ⁴²⁹ Barbre v. Pope, 402 Md. 157, 173 , 935 A.2d 699 (2007) (citations omitted). Further, “laws enacted for the collection of general taxes must be interpreted with very great liberality; consequently, construction should not be undertaken with an eye to defeating the legislation, but with both eyes focused on giving it force, if reasonably possible.” Surratts Associates v. Prince George’s Cty., 286 Md. 555, 566 , 408 A.2d 1323 (1979).

DISCUSSION We have before us an issue of first impression regarding whether the statute of limitations applies to a tax/judgment lien held by the State of Maryland. Maryland Code (1988 Repl.Vol.2010), § 13-805 of the Tax-General Article [hereinafter “Tax-Gen.”] states: Unpaid Tax. (a) In general. — Unpaid tax, interest, and penalties constitute a lien, in favor of the State, extending to all property and rights to property belonging to: (1) the person required to pay the tax.... Pursuant to Maryland Code (1988 Repl.Vol.2010), § 13-808 of the Tax-General Article: From the date on which a tax lien is filed under § 13-807 3 of this subtitle, the lien has the full force and effect of a judgment lien.

The State avers that Maryland Code (1974 Repl.Vol.2013), § 5-102(a) of the Courts & Judicial Proceedings Article [hereinafter “Cts. & Jud. Proc.”] is the sole statutory support for ⁴³⁰ the application of a statute of limitations to a judgment lien. Cts. & Jud. Proc. § 5-102(a) states: (a) Twelve-year limitation. — An action on one of the following specialties shall be filed within 12 years after the cause of action accrues, or within 12 years from the date of the death of the last to die of the principal debtor or creditor, whichever is sooner: (1) Promissory note or other instrument under seal; (2) Bond except a public officer’s bond; (3) Judgment; (4) Recognizance; (5) Contract under seal; or (6) Any other specialty.

In contrast, appellee contends that the life of a tax lien is defined by Maryland Code (1988 Repl.Vol.2010), § 13-1103 of the Tax-General Article, which states: (a) 7 year limit. — Except as otherwise provided in this section, a tax imposed under this article may not be collected after 7 years from the date the tax is due. (b) 2 year extension for appointment of receiver or trustee. — If a tax collector fails to collect a tax and a receiver or trustee is appointed within the period specified in subsection (a) of this section to complete the tax collection, the period for collecting the tax extends for 2 years from the date that the trustee or receiver is appointed. (c) Collection action after timely assessment. — If the assessment of any tax has been made within the period of limitations applicable to the assessment, a tax may not be collected after 7 years from the date of the assessment. Any judgment entered may be enforced or renewed as any other judgment.

We agree with the State that Tax-Gen. § 13-1103 would not apply to the circumstances of this case. We provided an analysis to support this conclusion in Rossville Vending Mach. Corp. v. Comptroller of the Treasury, 114 Md.App. 346 , 689 ⁴³¹ A.2d 1295 (1997). In Rossville, as a case of first impression, we determined the “period of limitations applicable to enforcement of a recorded tax lien.” Id. at 347, 689 A.2d 1295 .

We discussed how Maryland Code (1988 Repl.Yol.2010), § 13-806 of the Tax-General Article, which governs the duration of liens, does not reference Tax-Gen. § 13-1103. Id. at 352, 689 A.2d 1295 . Tax-Gen. § 13-806, states: (a) In general. — Unless another date is specified by law and except for a lien under subsection (b) of this section, a lien arises on the date of notice that the tax is due and continues to the date on which the lien is: (1) satisfied; or (2) released by the tax collector because the lien is: (i) unenforceable by reason of lapse of time; or (ii) uncollectible. (b) Inheritance tax lien. — (1) Except as otherwise provided in this subsection, a lien for unpaid inheritance tax: (i) arises on the date of distribution; and (ii) continues for 4 years.

(2) If the property is subject to a special valuation under § 7-211 of this article, a lien: (i) arises on the date on which the interest in the property vests in possession; and (ii) continues for 4 years. (3) If the unpaid inheritance tax is attributable to the disqualification of property that was qualified for special valuation or exemption under § 7-211 of this article, the lien: (i) arises on the date on which the decedent died; and (ii) continues for 20 years. In rejecting the taxpayer’s contentions that “ § 13-808 only gives tax liens the same priority as judgment liens and does not vitiate the statute of limitations set forth in § 13-1103[,]” we stated: ⁴³² [I]t provides a four year statute of limitations for inheritance tax liens and, with respect to all other tax liens, provides that the lien shall continue until it is satisfied or released by the tax collector because it is unenforceable by reason of lapse of time or uncollectible. Our reading of §§ 13-806, 13-808, and 13-1103 persuades us that the limitations provision of § 13-1103 applies only to actions to collect tax instituted under § 13-816 and not to enforcement of liens recorded in accordance with § 13-807.

As indicated by the Comptroller, § 13-1103(c) expressly exempts enforcement of judgments from the seven year statute of limitations. Specifically, it provides that “[a]ny judgment entered may be enforced or renewed as any other judgment.” Further, we read § 13-808 to give recorded State tax liens the same effect as judgment liens for all purposes, including enforcement purposes. Section 13-808 provides that properly recorded State tax liens are to be enforced in the same manner as any judgment lien in favor of the State. Id. at 350, 352-53, 689 A.2d 1295 .

Thereafter, we provided the legislative history of Tax-Gen. §§ 13-808 and 13-1103 to support our conclusion. Id. at 353-56, 689 A.2d 1295 . Tax-Gen. § 13-808 was originally enacted in 1947 as § 278(b) of Article 81 and, stated: The tax, and all increases, interests and penalties thereon shall be a lien upon the property of any person liable to pay the same to the State for a period of four (4) years from and after the time when such tax becomes due and payable as provided herein. Id. at 354, 689 A.2d 1295 (quoting Art. 81, § 278, Md.Code Ann. (1947)).

In 1949, the General Assembly amended § 278, removed the four year statute of limitations and added additional language including, “[t]he lien provided for in this section shall have the full force and effect of a lien of judgment,” and “[ujnless another date is specified by law, the lien arising at the date of non-payment as in this section specified and provided for, shall continue with the same force and effect ⁴³³ as a judgment lien.” 4 Id. Section 278 was later recodified as § 342 of Article 81, with no substantive changes, and subsequently, was recodified again as Tax-Gen. § 13-808. Id. at 354, 689 A.2d 1295 . The predecessor to Tax-Gen. § 13-1103 is former Art. 81, § 212, Md.Code Ann. (1980 Repl.Vol., 1986 Supp.) Id. at 355-56, 689 A.2d 1295 .

The taxpayer contended that this section “treated actions at law or suits in equity in the same manner as enforcement of liens.” Id. at 355 , 689 A.2d 1295 . The pertinent section, the taxpayer was referring to, stated: All State, county or city taxes of every kind for which no other period of limitation is prescribed by this article shall be collected within four years after they shall become due, ... provided ... (b) that any action at law or suit in equity for collection of such taxes or for sale of property to pay the same or for the enforcement of any lien therefor, may, if instituted within the period hereinabove prescribed[,] be prosecuted as if this section had never been passed, and any judgment or decree therein may be enforced or renewed as other judgments or decrees.... Id. at 356 , 689 A.2d 1295 (quoting Art. 81, § 212, Md.Code Ann. (1980 RepLVoL, 186 Supp.)) The taxpayer maintained that this subsection applied the four year statute of limitations to enforcement of all liens, including those stated in former ⁴³⁴ § 342(b).

Rossville, 114 Md.App. at 356 , 689 A.2d 1295 . We rejected the taxpayers’ argument, concluding: The problem with taxpayer’s interpretation of former subsection 212(b) is that it does not attempt to reconcile that subsection with those other portions of the Code governing tax liens. Taxpayer’s reading of former subsection 212(b) puts that subsection at odds with the sections of the former Code, e.g., §§ 342(b) ... that gave recorded State tax liens the duration of judgment liens. A better reading of former § 212(b) is that it was intended as a catchall to include any action that may otherwise be perceived to be precluded by § 212, including an action to enforce an unrecorded lien.

In any event, former § 212(b) was not carried forward into § 13-1103. The one vestige of § 212(b) that does continue to survive in the current Tax-General Article is the provision that an action instituted under § 13-816 may be prosecuted if instituted within the appropriate limitations periods set forth in Subtitle 11. Id. (citation omitted).

Thus, our previous assessment of Tax-Gen. §§ 13-808 and 13-1103 supports our conclusion that the limitations provision of Tax-Gen. § 13-1103 does not apply to enforcement of liens recorded in accordance with § 13-807. Further, properly recorded tax liens shall be enforced in the same manner as any judgment lien held in favor of the State. The State contends that our recent decision in State Central Collection Unit v. Buckingham, 214 Md.App. 672 , 78 A.3d 909 (2013), is analogous to the case at bar. The case involved a judgment in the form of a “notice of lien” entered in the Baltimore County Circuit Court, in favor of the State of Maryland and against Russell Frost Buckingham, Jr. for failure to report to the State