The Arizona Court of Appeals has denied the appeals of two members of the Ladewig tax refund case.

The refund is a settlement between the state and an estimated 650,000 Arizona taxpayers who paid income taxes on certain corporate dividends from 1986 to 1989. At that time the state didn’t tax dividends on corporations that earned more than half their income in Arizona, but did tax dividends on companies that earned more of their income outside the state. The state has since repealed the exemption on dividends from in-state companies, which means all corporate dividends are now taxed the same, regardless of where companies earn their income.

Arizona resident Helen Ladewig contended that the differing treatment of dividends violated the U.S. Constitution, which limits the degree to which states can regulate interstate commerce. Mrs. Ladewig died during the course of the litigation, which ultimately became a class action that led to the $350 million settlement in December 2002.

Appeal Said Form Should Be In Spanish

More recently, Mercedes Valenzuela had sought an appeal on the basis that certain documents related to the class-action settlement were not printed in Spanish. Peggy Bacon sought an appeal that the claim form required to be filled out and filed by Jan. 30, 2003, by certain class members was “overly burdensome and had too short of a filing deadline and therefore rendered the … settlement unfair and unreasonable.”

Appeals Court Presiding Judge Donn Kessler signed an order Jan. 23 dismissing the appeals of both Ms. Valenzuela and Ms. Bacon. The two-page order stated that Ms. Valenzuela on Jan. 15, 2003, filed a motion for reconsideration of the tax court’s final order (signed Dec. 19, 2002) and simultaneously appealed the decision. Ms. Valenzuela “thereby deprived the tax court of jurisdiction to consider her motion,” Judge Kessler wrote.

“Likewise, we have no appellate jurisdiction of Peggy Bacon’s appeal,” Judge Kessler’s order states. “Bacon complains about the protective claim for procedure, yet the record reflects that she and the estates she represents are exempt from its requirements and the requested relief is already available. Because she has not been burdened or deprived of personal or property rights, Bacon is not a person aggrieved” who has standing to bring an appeal.

Although the appeals of Ms. Valenzuela and Ms. Bacon were denied, they remain members of the class-action settlement, attorneys said.

Another appellant’s case remains – that of tax attorney Bob Kamman, who is appealing on the basis that the $350 million settlement in the Ladewig case constitutes and unconstitutional “giveaway” of state money. Judge Kessler’s order denied a motion from the attorneys of the Ladewig estate and the Arizona Department of Revenue seeking to have Kamman’s appeal dismissed.

Oral argument in that aspect of the appeal (1 CA-TX 03-0003) will be heard at 11 a.m. Feb. 25 in Courtroom 2 of the State Courts Building, 1501 W. Washington St., Phoenix. —