Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 05CS01443
ROBIE, J.
In this tax refund case, two commercial trucking companies -- plaintiffs Covenant Transport, Inc., and U.S. Xpress Leasing, Inc., -- contend they are entitled to refunds of the trailer registration fees they paid to the Department of Motor Vehicles for the year 2001. Their theory is this: (1) California was (and is) a member of the International Registration Plan (the Plan), an interstate compact that prohibited the State from assessing separate registration fees for trailers after the year 2000; (2) the terms of the Plan constitute federal law, which governs over contrary state law; (3) therefore, California was prohibited by federal law from assessing trailer registration fees for the year 2001, and the trucking companies are entitled to a refund of the fees they paid because those fees were not legally due. (See Veh. Code, § 42231 [person who pays Vehicle Code fee “not legally due” may seek refund].)
We will refer to the two companies individually as Covenant and U.S. Xpress and jointly as the trucking companies.
The defendants in this action are the Department of Motor Vehicles and the State of California. We will refer to them jointly as the State.
In a bifurcated proceeding on an agreed-upon question of law to determine the trucking companies’ right to a refund, the trial court rejected the trucking companies’ theory of recovery based on the conclusion that the terms of the Plan are not federal law. On appeal from the resulting judgment, we conclude the trial court reached the right result, but for a different reason. We conclude that even if the terms of the Plan constitute federal law, the trucking companies have failed to show the trailer registration fees they paid for the year 2001 were not legally due. Because the trial court correctly resolved this matter in favor of the State, we will affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The Plan
We begin with pertinent background on the Plan. The Plan is a “registration reciprocity agreement among states of the United States and provinces of Canada” that was developed by the American Association of Motor Vehicle Administrators (Association). (See 49 U.S.C. § 31701(4).) The purpose of the Plan is “to facilitate registration of interstate truck fleets. Under the [Plan], a fleet owner selects a base jurisdiction in which to register the fleet. The base jurisdiction issues license plates, tags, and vehicle registrations, calculates the fees owed to each state and province, collects the fees, and disburses them. Fees are apportioned according to the miles traveled in each participating state and province as a percentage of total miles. Trucks registered under the [Plan] do not have to be separately registered in other participating states or pay trip permit fees for travel in other states, as would trucks registered in the traditional manner.” (American President Lines, Ltd. v. Zolin (1995) 38 Cal.App.4th 910, 916.) “The percentage of each vehicle’s total registration fee that is allocated to each [Plan] State... is determined by dividing the total number of miles the vehicle traveled within the [Plan] State during the preceding year by its total mileage. The total fee payable to each State is the product of each State’s total fee for full registration of each vehicle and that State’s percentage share of the vehicle’s mileage.” (American Trucking Assns. v. Scheiner (1987) 483 U.S. 266, 272 [97 L.Ed.2d 226, 235].)
As of 2001, the 48 contiguous states, the District of Columbia, and all 10 provinces of Canada were members of the Plan.
A vehicle on which registration fees are allocated under the Plan as described above is known as an “apportion able vehicle.” (Plan, § 204(a).)
The Plan is administered by a Board of Directors (the Board), and a corporation known as the International Registration Plan, Inc. (IRP, Inc.) serves as the official repository of the Plan and has the obligation to keep all member jurisdictions apprised of the current status of the Plan. (Plan, §§ 2100, 2116, 2120.)
To resolve “[s]ubstantive issues of Plan administration or compliance, matters involving Plan procedures, questions of Plan interpretation, or instances of a member jurisdiction failing to pay Plan repository fees,” the Plan provides a dispute resolution process. (Plan, §§ 2300-2310.) Under this process, an issue “may be raised before the Board by any member jurisdiction, any [Plan] registrant, or the IRP repository staff.” The Plan recognizes four classes of disputes: (1) Class 1 disputes involve “[a] member jurisdiction’s noncompliance with the Plan which results in a monetary loss”; (2) Class 2 disputes involve “[a] member jurisdiction’s noncompliance with the [P]lan which does not result in a monetary loss”; (3) Class 3 disputes involve “[f]ailure to pay IRP repository dues”; and (4) Class 4 disputes involve “[q]uestions of interpretation of the Plan and the policies, procedures, and guidelines issued thereunder.”
Under a charter adopted in 1995, the Board delegated its authority to resolve issues under the dispute resolution process to a dispute resolution committee (the Committee).
Pursuant to the trucking companies’ unopposed request, we take judicial notice of the International Registration Plan, Inc., Dispute Resolution Committee Charter, which evidences the Board’s delegation of its dispute resolution authority to the Committee. Respondents have also filed an unopposed request for judicial notice of certain material; however, because consideration of that material is unnecessary to our decision, we deny that request.
California’s Participation In The Plan
California joined the Plan in 1985, but did so subject to an exception relating to the registration of trailers. At the time the Plan was created, the Association had a policy “encouraging the adoption by all jurisdictions of a license or registration fee system in which the major portion of the fee would be on the power unit,” i.e., on the tractor in a tractor-trailer combination. For those jurisdictions that used this so-called “power unit licensing system,” the registration fees imposed on trailers (if any) were not subject to apportionment under the Plan and were paid only to the member jurisdiction where the trailer was registered. A jurisdiction that employed “a true ‘split fee’ registration system wherein the method of fee determination for non-power units [i.e., trailers] [wa]s the same as or substantially similar to the method applicable to power units [i.e., tractors]” could, when applying for membership in the Plan, file an exception that would allow the jurisdiction to treat trailers as apportion able vehicles and thereby impose separate, apportion able registration fees on trailers pursuant to the Plan. When California joined the Plan in 1985, it did so subject to an exception providing that the State “requires the registration of full trailers, semi-trailers and auxiliary axles.” Under this exception, California was permitted to treat trailers as apportion able vehicles separate from the tractors that pulled them and thereby collect separate apportioned registration fees under the Plan on trailers registered in other member jurisdictions.
Ballot 1.7.203
In 1998, Illinois and Indiana sponsored a ballot (Ballot 1.7.203) to amend the provisions of the Plan relating to exceptions like California’s. The intent of the amendments proposed in Ballot 1.7.203 was “to authorize review of existing exceptions and to provide a mechanism for the careful elimination of such exceptions to achieve greater uniformity among the member jurisdictions.”
At the time of the proposed amendments, former section 1904 of the Plan specified that a member jurisdiction could withdraw or cancel its exceptions to the Plan by “filing due notice of such action with IRP, Inc.” The withdrawal or cancellation would become effective once all member jurisdictions were notified.
Ballot 1.7.203 proposed to create a new section 1902 of the Plan requiring periodic review of exceptions to the Plan, under which the extension of any exception would require approval of 80 percent of the member jurisdictions every two years. The ballot also proposed to renumber former section 1904 of the Plan as new section 1906 of the Plan and to add a sentence to that section requiring that all exceptions to the Plan in effect as of July 1, 1998, that had an impact on other member jurisdictions or affected a carrier’s ability to operate under a Plan registration “shall be withdrawn or canceled prior to January 1, 2001.” This proposed amendment did not change the method already provided for a jurisdiction to withdraw or cancel its exceptions.
The ballot also noted that the elimination of exceptions to the Plan would require the incorporation of “language addressing trailers, semi-trailers and auxiliary axles.” Accordingly, the ballot included a proposal to eliminate the language in former section 404 of the Plan relating to exceptions for the registration of trailers as apportioned vehicles and to substitute in its place language providing that trailers properly registered in any member jurisdiction would be “granted full and free reciprocity.” Under the proposed new language of section 404 of the Plan, “When registration fees are paid on apportion able vehicles, full and free reciprocity shall be granted to all trailers, semitrailers or auxiliary axles used in the combination.” “This reciprocity shall be deemed registration of such vehicles under the Plan....” Thus, a trucking company that registered a tractor-trailer combination would not have to pay a separate, apportioned registration fee to another jurisdiction for the trailer. In essence, this proposal recognized that with the eventual elimination of exceptions to the Plan, all member jurisdictions would move to a power unit licensing system (see above).
California’s Response To The Plan Amendments
Ballot 1.7.203 was approved in 1999 by a vote of 41 to 8 and was to take effect on October 1, 2000. (California was one of the eight member jurisdictions to vote against the ballot.) Before the effective date, California submitted four questions relating to the ballot to the Committee: “1) whether or not [Plan] jurisdictions must continue to collect and transmit trailer fees to California until 2001, 2) whether [Plan] rules prevail over jurisdiction laws, 3) whether the [Plan] can change its rules without consent of the contracting parties affected as to exceptions granted at the time of joining [the Plan], and 4) whether the... Committee may delay the removal of the Exception for California for the collection of trailer fees for a two-year period.” At a Committee meeting in November 1999, representatives of California advised the Committee the State was making a good faith effort to pass legislation to remove the exception and stop requiring the separate registration of trailers, but implementation of the legislation would take some time. They sought a delay in the implementation of the Plan amendments for two years and also questioned the legality of Ballot 1.7.203 on the theory that other member jurisdictions did not have the power to amend the Plan in such a way as to take away California’s exception.
The details of the proceedings before the Committee were first placed before the trial court in a declaration the State filed in opposition to an unsuccessful motion for summary adjudication the trucking companies filed before the court agreed to determine the trucking companies’ entitlement to a refund as a bifurcated question of law. (See below.) Based on this fact, in their reply brief the trucking companies assert that “the factual assertions set forth in [the d]eclaration are not properly before this Court for review” because the State did not resubmit the declaration to the trial court for consideration in connection with the bifurcated question of law. That may be true; however, the details we relate regarding the proceedings before the Committee are drawn from the minutes of the pertinent Committee meeting that were appended to the declaration, and not from the declaration itself, and the trucking companies themselves submitted those same minutes to the trial court in support of their brief on the bifurcated question. Thus, their objection that the details of the proceedings before the Committee are not properly before us is without merit.
One Committee member expressed the view that until California was out of compliance and another jurisdiction raised the issue as a dispute, there was no basis for the Committee to make a decision. A representative of the California Trucking Association expressed his view that the Committee did not have the power to delay the ballot from taking effect.
Upon the Committee’s determination that Plan jurisdictions had to continue to collect and transmit trailer fees to California until January 1, 2001 (instead of stopping on the effective date of the Plan amendments in October 2000), California withdrew its second and third questions. Thus, no decision was rendered on whether Ballot 1.7.203 was a legal ballot. The Committee did determine, however, that it did not have the power to delay the removal of California’s exception for the collection of trailer fees for a two-year period.
In March 2000, a pending California Senate Bill was amended to propose the enactment of the Commercial Vehicle Registration Act of 2000, the purpose of which was to eliminate California’s requirement for the separate registration of trailers. (Sen. Bill No. 2084 (1999-2000 Reg. Sess.) as amended Mar. 27, 2000.) At that time, the new registration program was proposed to begin on January 1, 2001. (Id., § 12.) In August 2000, however, the name of the proposed act was changed to Commercial Vehicle Registration Act of 2001, and the proposed start date was changed to December 31, 2001. (Sen. Bill No. 2084 (1999-2000 Reg. Sess.) as amended Aug. 7, 2000, §§ 1, 12.)
At a Board meeting later that month, a representative from California advised the Board of the pending legislation and of the estimate that California would withdraw its exception by January 1, 2002. The Board determined there were sufficient ambiguities in the language of Ballot 1.7.203 with respect to the legality of the forced removal of exceptions that the ballot might need clarification. For this reason, the Board advised all member jurisdictions to continue to honor all current exceptions through December 31, 2001, including California’s collection of trailer registration fees. The Board noted that its recommendation was not binding and that each jurisdiction would need to make its own determination regarding the matter.
Senate Bill No. 2084 was passed by the Legislature on August 31, 2000, and signed by the Governor on September 28, 2000. (Sen. Bill No. 2084 (1999-2000 Reg. Sess.) as chaptered Sept. 29, 2000.) Thereafter, the various member jurisdictions continued to collect apportioned trailer registration fees for California through the end of the year 2001, when California finally switched to its new registration system. There is nothing in the record to indicate California ever formally withdrew or canceled its exception to the Plan in conformity with the provisions of section 1906 of the Plan. There is also nothing in the record to indicate that the IRP repository staff, any member jurisdiction, or any Plan registrant attempted to bring California’s failure to withdraw or cancel its exception before the Board under the dispute resolution process provided for in the Plan.
According to the allegations of the petition and complaint in this matter, in 2003 and 2004 the trucking companies sought refunds of the trailer fees they paid for the period after December 31, 2000. Those refund claims were rejected.
In October 2005, Covenant, U.S. Xpress, and a number of other commercial trucking companies commenced this action to seek “a refund of the full amount of apportion able trailer fees paid to California for registration periods after December 31, 2000.” In their second amended petition and complaint, filed in May 2006, the trucking companies alleged that by passing a statute in 1992 that imposed consequences on states not participating in the Plan, Congress had “elevated the [Plan] to the level of an interstate compact under Article I section 10 of the United States Constitution” (the Compact Clause) and thereby the Plan “became the supreme law of the land under the Supremacy Clause of Article VI of the United States Constitution.” The trucking companies further alleged that “[t]he collection of trailer fees is specifically prohibited by [Plan] section 404” and “under [Plan] section 1906, DMV’s right to collect any trailer fees by virtue of a previously existing California ‘exception’ to the [Plan] expired no later than January 1, 2001.” Thus, the trucking companies alleged the California statutes that required the payment of trailer fees were preempted by the Plan after the end of 2000, and they sought refunds of the trailer registration fees they paid under those statutes after that date.
The statute in question was first enacted as subdivision (f) of section 4008 of the Inter modal Surface Transportation Efficiency Act of 1991 (Pub. L. No. 102-240 (Dec. 18, 1991) 105 Stat. 1914). In 1994, Congress codified the statute as section 31704 of Title 49 of the United States Code. (Pub. L. No. 103-272 (July 5, 1994) 108 Stat. 745.) Like the parties, we will refer to the statute as section 31704.
In September 2006, the trucking companies filed a motion for summary adjudication of liability, asserting there was no triable issue of fact as to their cause of action for declaratory relief. The trial court ultimately denied that motion on the grounds the cause of action for declaratory relief was “not sufficiently clear” and the second amended petition and complaint did “not clearly indicate an actual controversy.” The court also denied the trucking companies’ request to treat the motion “as a bifurcated trial of certain legal issues.” Nonetheless, the court suggested the parties “meet and confer to see if they c[ould] arrive at a stipulation as to how to proceed to place the issues before the court.”
In January 2007, the parties and the court agreed to bifurcate the issue of whether plaintiffs were “entitled to refunds for fees as alleged in the second amended complaint, apart from the amount, if any, of the refunds, or the defense that the refunds are barred by failure to exhaust administrative remedies.”
In March 2007, following briefing and argument, the trial court resolved the bifurcated question against the trucking companies and in favor of the State. The court concluded that because section 31704 “only imposes limits on ‘a State that is not participating in the International Registration Plan,’” and “California... was at all times relevant here participating in the [Plan],” “section 31704 does not apply” and “did not make the terms of the [Plan] federal law.” The court also concluded the Plan was not an interstate compact within the meaning of the Compact Clause because its subject matter was not appropriate for congressional legislation.
In October 2007, the parties stipulated to the entry of judgment because the court’s order on the bifurcated question resolved the legal issues in the case so that the trucking companies could not succeed. The court thereafter entered judgment against the trucking companies, and Covenant and U.S. Xpress filed a timely notice of appeal. The other commercial trucking companies involved in the action in the trial court did not appeal.
DISCUSSION
The trucking companies’ claim for a refund of the trailer registration fees they paid after the year 2000 rests on this chain of reasoning: (1) Before 2001, California had the right to assess trailer registration fees pursuant to the exception to the Plan under which California joined the Plan; (2) that exception was canceled prior to January 1, 2001, by the amendment to section 1906 of the Plan; (3) because of the cancellation of California’s exception, “California’s authority to collect... trailer registration fees under the [Plan] had come to a final end”; and (4) because the terms of the Plan constitute federal law, California was precluded by federal law from collecting trailer registration fees after the year 2000 and thus the trailer registration fees California collected from the trucking companies after that time were not legally due.
The trial court rejected the trucking companies’ claim by rejecting their argument that the terms of the Plan constitute federal law. For our purposes, we will assume the trial court erred in this conclusion. Nevertheless, even assuming the terms of the Plan are federal law, we conclude the trucking companies’ claim for a refund still fails because another link in their chain of reasoning fails -- the link relating to the legal effect of the amendment of section 1906 of the Plan.
Following its amendment as a result of Ballot 1.7.203, section 1906 of the Plan provides in its entirety as follows: “The withdrawal or cancellation of an exception shall be accomplished by filing due notice of such action with IRP, Inc., and becomes effective upon notification to all members jurisdictions using the procedures contained in Article XXI. The withdrawal or cancellation of an exception shall not require approval by the member jurisdictions. All exceptions to this Agreement in effect as of July 1, 1998, except those not having an impact on other member jurisdictions or those not affecting a carrier’s ability to operate under [a Plan] registration, shall be withdrawn or canceled prior to January 1, 2001.”
Section 2120 of the Plan, which is included in Article XXI, provides that “IRP, Inc. shall keep all jurisdictions apprised of the current status of the agreement in the manner determined by the Repository to best accomplish this purpose.”
The trucking companies contend “[s]ection 1906... could not be more plain in its meaning: All exceptions except ‘those affecting a carrier’s ability to operate under [a Plan] registration,’ were ‘withdrawn or canceled prior to January 1, 2001.’” (Underlining omitted.) In the view of the trucking companies, because California’s exception was no longer in place after the end of the year 2000, California no longer had the right to assess trailer registration fees under the Plan after that time.
The problem with the trucking companies’ argument is that it is inconsistent with the plain language of the provision on which they rely. Under the plain language of section 1906 of the Plan, the withdrawal or cancellation of an exception is not something that happens automatically, as the trucking companies would have it. Rather, withdrawal or cancellation of an exception requires an affirmative act by the member jurisdiction to withdraw or cancel the exception.
Section 1906 of the Plan provides that withdrawal or cancellation of an exception is “accomplished by filing due notice of such action with IRP, Inc.” (Italics added.) Thus, a member jurisdiction seeking to withdraw or cancel an exception must take some action to withdraw or cancel the exception, then file notice of its action with IRP, Inc. Once that notice is filed, IRP, Inc. then must notify all member jurisdictions of the action that has been taken, at which time the withdrawal or cancellation becomes effective.
It is true “[a]ll exceptions... in effect as of July 1, 1998” (with certain exceptions not applicable here) were to “be withdrawn or canceled prior to January 1, 2001.” But this is not the same as saying, as the trucking companies do, that all such exceptions “were ‘withdrawn or canceled prior to January 1, 2001.’” (Underlining omitted, italics added.) This part of section 1906 of the Plan must be construed in harmony with the preceding part of the section, which, as we have explained, requires some affirmative action by the member jurisdiction to withdraw or cancel an exception. If withdrawal or cancellation of all the exceptions covered by this final provision of section 1906 of the Plan were something that was to happen automatically at the end of the year 2000, without any action by the member jurisdictions operating under those exceptions, then the section could have been written to provide that all such exceptions “are” or “shall be deemed” withdrawn or canceled as of that time. That was not how the section was written, however. Instead, the section provides that all such exceptions “shall be withdrawn or canceled prior to January 1, 2001.” Read in conjunction with the earlier part of the section, which requires an action on the part of the member jurisdiction, this provision operates as a directive to the member jurisdictions, commanding them to take the necessary action to withdraw or cancel their exceptions before the beginning of 2001.
Relying as they do on the erroneous assertion that section 1906 of the Plan resulted in the automatic withdrawal or cancellation of California’s exception to the Plan prior to January 1, 2001, the trucking companies point to no evidence that California ever took action to withdraw or cancel its exception. What happened (as we have noted) was that California stopped requiring the separate registration of trailers a year later, in 2002. The California exception appears to have disappeared from the text of the Plan in January 2003, but there is no evidence it was ever formally withdrawn or canceled pursuant to the terms of section 1906 of the Plan.
In light of the foregoing, one of the essential links in the chain of reasoning offered in support of the trucking companies’ refund claim fails -- California’s exception to the Plan was not canceled or withdrawn prior to January 1, 2001. Although California may not have been in compliance with the provision in section 1906 of the Plan that required the state to withdraw or cancel its exception, the trucking companies fail to explain the effect, if any, of that noncompliance, because the trucking companies rest their argument on the false assertion that the exception was withdrawn or canceled automatically, without any action by California.
Because the trucking companies do not address this point, we are directed to nothing in the Plan indicating that an exception like California’s was to be deemed ineffective simply because the member jurisdiction did not withdraw or cancel it as the Plan purported to require. Thus, it appears that during the year 2001, California was operating under an exception it had been directed to withdraw or cancel but had not withdrawn or canceled. This apparent noncompliance with the Plan could have provided a basis for another jurisdiction or a Plan registrant (like the trucking companies) to invoke the dispute resolution procedures of the Plan and seek a determination by the Committee that California was not complying with the Plan and, if so, an appropriate remedy for that noncompliance. There is no indication, however, that anyone did so. Indeed, the State asserts, without dispute, that “California was never cited or sanctioned in any way for failing to withdraw its exception.”
Thus, the question comes down to this: Where California continued to have an exception, which it should have withdrawn or canceled but did not, that allowed it to assess separate registration fees for trailers, and no interested party availed itself of the dispute resolution procedures within the Plan to challenge California’s failure to withdraw or cancel its exception, were the registration fees California assessed and collected under its exception “legally due”? We conclude they were. Certainly the trucking companies have not shown otherwise, inasmuch as their argument rests on the assertion, which we have rejected, that California did not have an withdrawnness and uncanceled exception relating to trailer registration fees after the end of the year 2000.
To accept the trucking companies’ position in this case, we would have to determine that the failure of California to withdraw or cancel its exception prior to January 1, 2001, resulted in the automatic withdrawal or cancellation of that exception, when there is nothing in the language of the Plan to support that result, when the Board that administers the Plan had sufficient doubt about the meaning and validity of Ballot 1.7.203 that it advised the various member jurisdictions to continue collecting California’s trailer fees through the end of 2001, and when no member jurisdiction or registrant ever challenged California’s failure to withdraw or cancel its exception through the dispute resolution process available under the Plan. We decline to do so. As long as California law provided for the assessment of trailer registration fees, and as long as California had an unwithdrawn and uncanceled exception to the Plan allowing it to collect apportioned trailer fees, those fees were legally due, notwithstanding California’s failure to comply with the directive to withdraw or cancel its exception to the Plan. For this reason, we conclude the trial court correctly determined the trucking companies were not entitled to a refund of those fees.
DISPOSITION
The judgment is affirmed. The Department of Motor Vehicles and the State of California shall recover their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
We concur: BLEASE, Acting P. J. HULL, J.