How did the Richmond Circuit Court resolve the consolidated DiBelardino and Dutton tax-assessment cases?

Subject

Court Case: DiBelardino and Dutton v. Virginia Department of Taxation

Plain-English summary

The Richmond Circuit Court upheld one Virginia tax assessment but rejected another in two consolidated cases based on different constitutional contacts with the Commonwealth.

Ezio and Stephanie DiBelardino lost. The court found their Virginia property interests supplied enough minimum contact to satisfy due process, so it entered judgment for the Department and upheld their assessment.

David Dutton won. The court found no evidence of comparable minimum contact for due process and no Virginia nexus for Commerce Clause purposes, so it entered judgment against the Department as to him.

The final order says the detailed reasoning appeared in a June 22, 2007 letter opinion, but that opinion is not part of the published text. The order does not identify the underlying income or transactions, assessment amounts, or a more detailed constitutional test.

What this means for you

• Constitutional nexus depends on the contacts shown for each taxpayer.
• Virginia property interests were enough for the DiBelardinos in this record.
• The absence of proven minimum contacts and Commerce Clause nexus defeated Dutton's assessment.
• The omitted letter opinion limits how broadly the final order can be read.

Common questions

Who won the consolidated cases?

The Department won against the DiBelardinos; Dutton won against the Department.

Why were the results different?

The order identifies Virginia property contacts for the DiBelardinos and no comparable contacts or nexus for Dutton.

Is this a Tax Commissioner ruling?

No. It is a Richmond Circuit Court final judgment order republished in the P.D. library.

Citations and references

• Ezio C. and Stephanie M. DiBelardino v. Commonwealth of Virginia Department of Taxation, Case No. 06-5696-1.
• David M.M. Dutton v. Commonwealth of Virginia Department of Taxation, Case No. 06-6291-1.

Source

• Landing page: Virginia Laws, Rules & Decisions
• Ruling: P.D. 10-15

Original ruling text

VIRGINIA:

IN THE CIRCUIT COURT FOR THE CITY OF RICHMOND

EZIO C. DiBELARDINO and )

STEPHANIE M. DiBELARDINO, )

)

Plaintiffs, )

v. ) Case No.: 06-5696-1

)

COMMONWEALTH OF VIRGINIA )

DEPARTMENT OF TAXATION, )

)

Defendant, )

)

and ) )

DAVID M. M. DUTTON )

)

Plaintiff, ) Case No.: 06-6291-1

)

)

COMMONWEALTH OF VIRGINIA )

DEPARTMENT OF TAXATION, )

)

Defendant, )

)

FINAL JUDGMENT ORDER

On March 21, 2007, the parties to these consolidated actions, Ezio C. and Stephanie M. DiBelardino (the "DiBelardinos"), David M.M. Dutton ("Dutton"), and the Commonwealth of Virginia Department of Taxation ("Department of Taxation"), by counsel, appeared for trial upon the pleadings filed herein. The parties presented evidence to the Honorable Melvin R. Hughes, Jr. for decision. After hearing the parties' stipulations, the plaintiffs' evidence, and the arguments of counsel, the Court took the matter under advisement.

On June 22, 2007, by letter opinion, the Court entered judgment in favor of the

Department of Taxation against the DiBelardinos on the grounds that there was evidence of minimum contact between Virginia and the DiBelardinos through their Virginia property interests sufficient to satisfy the due process clause. In the same letter opinion, the Court entered judgment in favor of Dutton against the Department of Taxation on tie grounds that there was no evidence of similar minimum contact between Dutton and Virginia for due process purposes, nor was there nexus between Dutton and Virginia for purposes of the commerce clause either. Thus, the court upheld the Department of Taxation's assessment as to the DiBelardinos, but not as to Dutton.

All objections and exceptions to the Court's ruling on matters raised in the trial of this matter are hereby noted for the reasons and on the grounds set forth in the trial transcript. All objections and exceptions of the parties to this Final Judgment Order are noted.

Nothing further remaining to be done herein, this case is stricken from the docket, to be indexed among the ended actions at law.

The Clerk of the Court is hereby ORDERED to certify a copy of this Order to all counsel of record.

ENTER: 7/20/07

A copy

Teste: Bevill M. Dean, Clerk _____

By: Johnson D.C. The Honorable Melvin R. Hughes, Jr.

WE ASK FOR THIS AS TO DUTTON WE ASK FOR THIS AS TO THE

AND OBJECT AS TO THE DIBELARDINOS AND OBJECT

DIBELARDINOS: AS TO DUTTON:

Monica McCarroll (VSB No. 45622) Flora T. Hezel (VSB No. 47482)

Samuel T. Towell (VSB No. 71512) Assistant Attorney General

WILLIAMS MULLEN Office of the Virginia Attorney General

A Professional Corporation Commerce & Financial Law Section

Two James Center 900 East Main Street

1021 East Cary Street Richmond, VA 23219

P.O. Box 1320 Tel.: 804-786-8816

Richmond, VA 23218-1320 Fax: 804-786-1904

Tel.: 804-643-1991 Counsel for the Commonwealth of

Fax: 804-783-6507 Virginia Department of Taxation

Michael J. Bowen (VSB No. 65288)

WILLIAMS MULLEN

A Professional Corporation

222 Central Park Avenue, Suite 1700

Virginia Beach, VA 23462-3035

Tel: 757-499-8800

Fax: 757-473-0395

Counsel for Ezio C. and Stephanie M.

DiBelardino and David M.M. Dutton