{ "id": 4362346, "name": "IMT, INC., DBA THE INTERNET BUSINESS CENTER, Plaintiff v. CITY OF LUMBERTON, Defendant CITY OF LUMBERTON, Plaintiff v. G&M COMPANY, LLC, DBA INTERNET CAF\u00c9 SWEEPSTAKES AND WINNERS CHOICE, Defendant CITY OF LUMBERTON, Plaintiff v. DANIEL PAUL STORIE d/b/a SWEEP-NET INTERNET BUSINESS CENTER, Defendant EZ ACCESS OF N.C., LLC, Plaintiff v. CITY OF LUMBERTON, Defendant", "name_abbreviation": "IMT, Inc. v. City of Lumberton", "decision_date": "2012-02-21", "docket_number": "No. COA11-813", "first_page": "36", "last_page": "49", "citations": [ { "type": "official", "cite": "219 N.C. App. 36" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "617 S.E.2d 346", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12633717 ], "year": 2005, "pin_cites": [ { "page": "351" } ], "opinion_index": 0, "case_paths": [ "/se2d/617/0346-01" ] }, { "cite": "643 S.E.2d 904", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12638283 ], "year": 2007, "pin_cites": [ { "page": "907" } ], "opinion_index": 0, "case_paths": [ "/se2d/643/0904-01" ] }, { "cite": "649 S.E.2d 920", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12639305 ], "year": 2007, "pin_cites": [ { "page": "923" } ], "opinion_index": 0, "case_paths": [ "/se2d/649/0920-01" ] }, { "cite": "652 S.E.2d 302", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12639686 ], "year": 2007, "pin_cites": [ { "page": "304" } ], "opinion_index": 0, "case_paths": [ "/se2d/652/0302-01" ] }, { "cite": "66 S.E. 301", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 4, "year": 1909, "pin_cites": [ { "page": "303", "parenthetical": "holding that \"in the absence of positive evidence to the contrary, [privilege license taxes] are presumed to be reasonable\"" } ], "opinion_index": 0 }, { "cite": "151 N.C. 718", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8656052 ], "year": 1909, "pin_cites": [ { "page": "722", "parenthetical": "holding that \"in the absence of positive evidence to the contrary, [privilege license taxes] are presumed to be reasonable\"" } ], "opinion_index": 0, "case_paths": [ "/nc/151/0718-01" ] }, { "cite": "429 U.S. 252", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6951 ], "weight": 2, "year": 1977, "pin_cites": [ { "page": "265" }, { "page": "464-65" } ], "opinion_index": 0, "case_paths": [ "/us/429/0252-01" ] }, { "cite": "150 S.E. 190", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1929, "pin_cites": [ { "page": "192" } ], "opinion_index": 0 }, { "cite": "197 N.C. 604", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8630594 ], "year": 1929, "pin_cites": [ { "page": "607" } ], "opinion_index": 0, "case_paths": [ "/nc/197/0604-01" ] }, { "cite": "41 S.E.2d 646", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1947, "pin_cites": [ { "page": "650" } ], "opinion_index": 0 }, { "cite": "227 N.C. 174", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8622572 ], "year": 1947, "pin_cites": [ { "page": "180" } ], "opinion_index": 0, "case_paths": [ "/nc/227/0174-01" ] }, { "cite": "103 S.E. 67", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 4, "year": 1920, "pin_cites": [ { "page": "68" }, { "page": "68", "parenthetical": "where our Supreme Court could not hold that a $400 tax on a business in 1920 was prohibitive \"in the absence of evidence to that effect\"" }, { "page": "69", "parenthetical": "citation omitted" }, { "page": "69" } ], "opinion_index": 0 }, { "cite": "179 N.C. 708", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8658191 ], "weight": 4, "year": 1920, "pin_cites": [ { "page": "710" }, { "page": "711" }, { "page": "711" }, { "page": "711" } ], "opinion_index": 0, "case_paths": [ "/nc/179/0708-01" ] }, { "cite": "17 U.S. 316", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 4702 ], "weight": 2, "year": 1819, "pin_cites": [ { "page": "431" }, { "page": "607" } ], "opinion_index": 0, "case_paths": [ "/us/17/0316-01" ] }, { "cite": "7 S.E.2d 542", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1940, "pin_cites": [ { "page": "543", "parenthetical": "citation omitted" }, { "page": "544" } ], "opinion_index": 0 }, { "cite": "217 N.C. 269", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8604439 ], "year": 1940, "pin_cites": [ { "page": "272", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/217/0269-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 14-290", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2011, "pin_cites": [ { "parenthetical": "prohibiting lotteries except for the state endorsed lottery under Chapter 18C of the General Statutes" } ], "opinion_index": 0 }, { "cite": "341 S.E.2d 98", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1986, "pin_cites": [ { "page": "99", "parenthetical": "citation omitted" }, { "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "80 N.C. App. 232", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522949 ], "year": 1986, "pin_cites": [ { "page": "234", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/80/0232-01" ] }, { "cite": "178 S.E.2d 481", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1971, "pin_cites": [ { "page": "487", "parenthetical": "citation omitted" }, { "page": "567" }, { "page": "486" } ], "opinion_index": 0 }, { "cite": "277 N.C. 560", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8566828 ], "year": 1971, "pin_cites": [ { "page": "569", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/277/0560-01" ] }, { "cite": "76 S.E. 480", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1912, "pin_cites": [ { "page": "481", "parenthetical": "upholding the municipality's privilege license fee for each soda fountain operated by a business" } ], "opinion_index": 0 }, { "cite": "160 N.C. 571", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11272342 ], "year": 1912, "pin_cites": [ { "page": "573", "parenthetical": "upholding the municipality's privilege license fee for each soda fountain operated by a business" } ], "opinion_index": 0, "case_paths": [ "/nc/160/0571-01" ] }, { "cite": "35 S.E. 231", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1900, "pin_cites": [ { "page": "232", "parenthetical": "holding that \"[t]he privilege tax levied by the town was not a tax on the goods, but a tax on the privilege of manufacturing guano within the corporate limits of the town\"" } ], "opinion_index": 0 }, { "cite": "126 N.C. 68", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8657993 ], "year": 1900, "pin_cites": [ { "page": "71", "parenthetical": "holding that \"[t]he privilege tax levied by the town was not a tax on the goods, but a tax on the privilege of manufacturing guano within the corporate limits of the town\"" } ], "opinion_index": 0, "case_paths": [ "/nc/126/0068-01" ] }, { "cite": "120 S.E. 475", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1923, "pin_cites": [ { "page": "478", "parenthetical": "upholding Charlotte's tax for the privilege of having a delivery service company, which taxed such companies $75 per business and $25 per motor vehicle used to carry on the business" } ], "opinion_index": 0 }, { "cite": "186 N.C. 668", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8654412 ], "year": 1923, "pin_cites": [ { "page": "674", "parenthetical": "upholding Charlotte's tax for the privilege of having a delivery service company, which taxed such companies $75 per business and $25 per motor vehicle used to carry on the business" } ], "opinion_index": 0, "case_paths": [ "/nc/186/0668-01" ] }, { "cite": "137 S.E. 819", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1927, "pin_cites": [ { "page": "820", "parenthetical": "upholding a tax on gasoline dealers for the privilege of dealing gasoline, which taxed such dealers for each tank wagon operated on the streets" } ], "opinion_index": 0 }, { "cite": "193 N.C. 847", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2217761, 2217894 ], "year": 1927, "pin_cites": [ { "page": "847", "parenthetical": "upholding a tax on gasoline dealers for the privilege of dealing gasoline, which taxed such dealers for each tank wagon operated on the streets" } ], "opinion_index": 0, "case_paths": [ "/nc/193/0847-02", "/nc/193/0847-01" ] }, { "cite": "173 N.C. App. 170", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8353107 ], "year": 2005, "pin_cites": [ { "page": "178" } ], "opinion_index": 0, "case_paths": [ "/nc-app/173/0170-01" ] }, { "cite": "361 N.C. 318", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 3740769 ], "year": 2007, "pin_cites": [ { "page": "322" } ], "opinion_index": 0, "case_paths": [ "/nc/361/0318-01" ] }, { "cite": "186 N.C. App. 17", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8154366 ], "year": 2007, "pin_cites": [ { "page": "20" } ], "opinion_index": 0, "case_paths": [ "/nc-app/186/0017-01" ] }, { "cite": "271 S.E.2d 399", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "pin_cites": [ { "page": "401" } ], "opinion_index": 0 }, { "cite": "49 N.C. App. 311", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8521088 ], "year": 1980, "pin_cites": [ { "page": "314" } ], "opinion_index": 0, "case_paths": [ "/nc-app/49/0311-01" ] }, { "cite": "186 N.C. App. 624", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8159238 ], "year": 2007, "pin_cites": [ { "page": "626" } ], "opinion_index": 0, "case_paths": [ "/nc-app/186/0624-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 105-109", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "page": "(e)" } ], "opinion_index": 0 }, { "cite": "263 S.E.2d 319", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "pin_cites": [ { "page": "322" } ], "opinion_index": 1 }, { "cite": "45 N.C. App. 432", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8549174 ], "year": 1980, "pin_cites": [ { "page": "437" } ], "opinion_index": 1, "case_paths": [ "/nc-app/45/0432-01" ] }, { "cite": "683 S.E.2d 707", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2009, "pin_cites": [ { "page": "711" } ], "opinion_index": 1 }, { "cite": "198 N.C. App. 472", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 4168794 ], "year": 2009, "pin_cites": [ { "page": "477" } ], "opinion_index": 1, "case_paths": [ "/nc-app/198/0472-01" ] }, { "cite": "278 S.E.2d 897", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "903-04", "parenthetical": "citation and quotation marks omitted" } ], "opinion_index": 1 }, { "cite": "52 N.C. App. 428", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 12170346 ], "year": 1981, "pin_cites": [ { "page": "437", "parenthetical": "citation and quotation marks omitted" } ], "opinion_index": 1, "case_paths": [ "/nc-app/52/0428-01" ] }, { "cite": "103 S.E. 67", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 6, "year": 1920, "pin_cites": [ { "page": "68" }, { "page": "68" }, { "page": "69", "parenthetical": "citation and quotation marks omitted" }, { "page": "69", "parenthetical": "citation omitted" } ], "opinion_index": 1 }, { "cite": "179 N.C. 708", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8658191 ], "weight": 3, "year": 1920, "pin_cites": [ { "page": "710" }, { "page": "711" }, { "page": "711" } ], "opinion_index": 1, "case_paths": [ "/nc/179/0708-01" ] } ], "analysis": { "cardinality": 1221, "char_count": 34883, "ocr_confidence": 0.759, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.14874110421109493 }, "sha256": "b324353672acaa843eb719fe9a4f2a510015662275c852f8e24f694a1b33880c", "simhash": "1:1bdff44c26b2a151", "word_count": 5557 }, "last_updated": "2023-07-14T22:16:59.313771+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judge GEER concurs.", "Judge HUNTER, Robert C., dissents in a separate opinion." ], "parties": [ "IMT, INC., DBA THE INTERNET BUSINESS CENTER, Plaintiff v. CITY OF LUMBERTON, Defendant CITY OF LUMBERTON, Plaintiff v. G&M COMPANY, LLC, DBA INTERNET CAF\u00c9 SWEEPSTAKES AND WINNERS CHOICE, Defendant CITY OF LUMBERTON, Plaintiff v. DANIEL PAUL STORIE d/b/a SWEEP-NET INTERNET BUSINESS CENTER, Defendant EZ ACCESS OF N.C., LLC, Plaintiff v. CITY OF LUMBERTON, Defendant" ], "opinions": [ { "text": "HUNTER, JR., Robert N., Judge.\nThis appeal is the result of four separate cases that were appealed and have been consolidated pursuant to Rule 11(d) of the Rules of Appellate Procedure. Appellants argue (1) the trial court erred by granting summary judgment in favor of the City of Lumberton (the \u201cCity\u2019) (\u201cAppellee\u201d) and denying Appellants\u2019 summary judgment motion and (2) the ordinance at issue is unenforceable against Appellants for various reasons. We disagree and affirm the judgment of the trial court.\nI. Factual & Procedural Background\nAppellants operate businesses within the municipal limits of the City where they sell blocks of internet usage time at competitive rates to customers. When a customer purchases time, the customer receives a free sweepstakes entry. The sweepstakes entry has a predetermined prize, which can be revealed by using computers on Appellants\u2019 business premises. However, the customer is not required to redeem or reveal the predetermined cash value of the free sweepstakes entry. Customers can also receive a sweepstakes entry without purchasing anything by mailing a request to an address displayed in Appellants\u2019 businesses. Customers opting for the \u201cno purchase necessary\u201d mail-off entry get the same free, predetermined opportunity to win as offered to Appellants\u2019 customers who purchase internet usage time.\nThe City is entitled to create and annually collect privilege license taxes pursuant to N.C. Gen. Stat. \u00a7 160A-211 and N.C. Gen. Stat. \u00a7 105-109(e), respectively. For the fiscal year of 2009 to 2010, the City imposed a municipal privilege tax upon Appellants of $12.50. On 1 July 2010, the City enacted an ordinance instituting a privilege license tax applying to, in pertinent part, \u201c[a]ny for-profit business or enterprise, whether as a principal or accessory use, where persons utilize electronic machines ... to conduct games of chance, including . . . sweepstakes\u201d (the \u201cOrdinance\u201d). The Ordinance taxes such enterprises in the amount of $5,000 per business location and $2,500 per gaming or computer terminal within the business. Under the Ordinance, the City is entitled to collect the tax in a civil proceeding, free of any claim for homestead or personal property exemption. The City is also entitled to collect a five percent penalty per month (up to a maximum of 25 percent) for failure to pay privilege license taxes, free of any claim for homestead or personal property exemption.\nEach Appellant opened its business before the effective date of the Ordinance. Since opening, IMT has had 55 computer terminals at one location; G&M has had 28 computer terminals at one location; Storie has had 40 computer terminals at one location; and E.Z. has had at least one computer terminal at one location. The City mailed each Appellant notice regarding the new privilege tax.\nAppellant IMT\u2019s privilege license taxes for 2010 to 2011 amounted to $137,525. IMT\u2019s failure to pay the entire tax on time resulted in late payment penalties. After 1 December 2010, IMT made a $133,581.61 payment under protest, leaving a balance due of $6,323.75. On 17 November 2010, IMT filed a complaint against the City regarding the privilege license tax. The City filed its counterclaim on 17 December 2010. Both parties filed motions for summary judgment and consented to consideration of those motions out of district, session, and term. Judge Floyd, Jr., by clerical error, granted summary judgment in favor of IMT, denying the City\u2019s summary judgment motion. Upon a consent motion to correct the judgment, Judge Floyd, Jr. issued a corrective judgment entered 6 June 2011, granting summary judgment for the City and denying the same for IMT. IMT entered timely notice of appeal on 14 June 2011.\nAppellant G&M also failed to pay part or all of the privilege license tax to the City and had a balance of $90,000 on 1 November 2010, including principal in the amount of $75,000 and penalties in the amount of $15,000. On 17 November 2010, the City filed a complaint against G&M for failure to pay the privilege license tax. G&M filed its counterclaims on 3 January 2011. Both parties filed for summary judgment on 14 January 2011 and consented to consideration of those motions out of district, session, and term. Judge Floyd, Jr. entered judgment 10 May 2011 granting summary judgment for the City and denying the same for G&M. G&M entered timely notice of appeal on 1 June 2011.\nAppellant Storie also failed to pay part or all of the privilege license tax to the City and had a balance of $126,000 on 1 November 2010, including principal in the amount of $105,000 and $21,000 in penalties. On 17 November 2010, the City filed a complaint against Storie for failure to pay the privilege license tax. Storie filed his counterclaims on 21 January 2011. Both parties filed for summary judgment and consented to consideration of those motions out of district, session, and term. Judge Floyd, Jr. entered judgment 10 May 2011 granting summary judgment for the City and denying the same for Storie. Storie entered timely notice of appeal on 1 June 2011.\nAppellant E.Z. paid the amount owed on the privilege tax of $110,000 under protest. On 4 January 2011, E.Z. filed a complaint against the City regarding the privilege license tax. Both parties filed motions for summary judgment on 14 January 2011 and consented to consideration of those motions out of district, session, and term. Judge Floyd, Jr., by clerical error, granted summary judgment in favor of E.Z., denying the City\u2019s summary judgment motion. Upon a consent motion to correct the judgment, Judge Floyd, Jr. issued a corrective judgment entered 6 June 2011, granting summary judgment for the City and denying the same for E.Z. E.Z. entered timely notice of appeal on 14 June 2011.\nII. Jurisdiction & Standard of Review\nAppellants appeal from the final judgments of a superior court and appeal therefore lies with this Court pursuant to N.C. Gen. Stat. \u00a7 7A-27(b) (2011).\nThis Court\u2019s standard of review of a trial court\u2019s summary judgment order is de novo. Sturgill v. Ashe Mem\u2019l Hosp., Inc., 186 N.C. App. 624, 626, 652 S.E.2d 302, 304 (2007). The reviewing court must determine whether there is a genuine issue of material fact and whether the moving party was entitled to judgment as a matter of law. Oliver v. Roberts, 49 N.C. App. 311, 314, 271 S.E.2d 399, 401 (1980). Where, as here, the parties have cross motions for summary judgment, and there is no dispute as to any material fact, the sole issue on appeal is whether the trial court properly concluded that one party was entitled to judgment as a matter of law or if judgment should have been entered in favor of the opposing party. See McDowell v. Randolph Cty., 186 N.C. App. 17, 20, 649 S.E.2d 920, 923 (2007).\nIII. Analysis\nAppellants contend the trial court erred in granting summary judgment for the City and denying the same for Appellants because the Ordinance in question is unenforceable under several distinct legal theories. We disagree that the statute is unenforceable under Appellants\u2019 contentions and affirm the judgments of the trial court.\nAppellants first argue the Ordinance does not apply to them because they do not operate \u201cgames of chance\u201d as required under the Ordinance. We disagree. Where a statute is clear and unambiguous, the plain meaning of the words will be applied without judicial construction. Wiggs v. Edgecombe Cty., 361 N.C. 318, 322, 643 S.E.2d 904, 907 (2007). Here, the Ordinance clearly imposes the privilege license tax on electronic machines that conduct \u201cgames of chance,\u201d including \u201csweepstakes.\u201d Appellants admit they conduct sweepstakes but argue that their games are not \u201cgames of chance\u201d because their prizes are predetermined. However, the Ordinance clearly states that the tax applies regardless of whether \u201cthe value of such distribution is determined by electronic games played or by predetermined odds.\u201d Appellants nevertheless claim that American Treasures, Inc. v. State, 173 N.C. App. 170, 178, 617 S.E.2d 346, 351 (2005), holds that where something of inherent value is sold, a sweepstakes entry revealing a predetermined outcome is an ancillary benefit to the sale and is not a \u201cgame of chance.\u201d We disagree with Appellants\u2019 interpretation of American Treasures. However, we do not expound upon this point as we find American Treasures to be inapplicable to the case sub judice because it concerns construing \u201cgames of chance\u201d in a criminal statute found in Chapter 14, Article 37 of the North Carolina General Statutes. Unlike American Treasures, this case deals with a local municipal ordinance that on its face defines \u201cgames of chance\u201d to include sweepstakes, whether or not the resulting prize is predetermined. Therefore, under the clear and unambiguous language of the Ordinance, we hold the Ordinance applies to Appellants because they conduct games of chance.\nAppellants also argue the Ordinance does not apply to Appellants because their games do not \u201crequire payment\u201d as the Ordinance requires. Appellants correctly assert that payment is a component of the definition of a cyber-gambling establishment under the Ordinance. However, Appellants incorrectly assert that the offering of a free entry to the sweepstakes somehow negates the applicability of the tax. The plain and unambiguous language of the Ordinance states it applies to cyber-gambling\nbusinesses or enterprises [that] have as a part of [their] operation the running of one or more games or processes with any of the following characteristics: (1) payment, directly or as an intended addition to the purchase of a product, whereby the customer receives one or more electronic sweepstakes tickets, cards, tokens or similar items entitling or empowering the customer to enter a sweepstakes, and without which item the customer would be unable to enter the sweepstakes; or (2) payment, directly or as an intended addition to the purchase of a product, whereby the customer can request a no purchase necessary free entry of one or more sweepstakes tickets or other item entitling the customer to enter a sweepstakes. (Emphasis added.)\nNowhere does the Ordinance require payment for every sweepstakes entry; the plain and unambiguous language of the Ordinance simply requires that such an establishment \u201chave as a part of its operation\u201d games requiring payment. Therefore, we hold the Ordinance applies to Appellants because they accept payment in exchange for customers\u2019 use of computers that conduct games of chance.\nAppellants next make a series of arguments regarding the constitutionality of the Ordinance. Appellants first argue the Ordinance is unconstitutional because it unlawfully classifies property for taxation, a power specifically reserved for the General Assembly. Appellants argue the privilege license tax is problematic because it taxes each \u201ccomputer terminal\u201d within each cyber-gambling business $2,500 per terminal, thus creating classifications of personal property and taxing them differently. We disagree.\nUnder N.C. Gen. Stat. \u00a7 160A-211, the City has the authority to levy privilege license fees, imposed for the privilege of carrying on a certain business. N.C. Gen. Stat. \u00a7 160A-211 (2011). Property is often used to carry on a certain business, and when the privilege of carrying on that business is taxed, the tax may also be levied on the property used to carry on that particular trade, profession, or business. See, e.g., State v. Hughes, 193 N.C. 847, 847, 137 S.E. 819, 820 (1927) (upholding a tax on gasoline dealers for the privilege of dealing gasoline, which taxed such dealers for each tank wagon operated on the streets); Southeastern Express Co. v. City of Charlotte, 186 N.C. 668, 674, 120 S.E. 475, 478 (1923) (upholding Charlotte\u2019s tax for the privilege of having a delivery service company, which taxed such companies $75 per business and $25 per motor vehicle used to carry on the business). Such a tax on the property is not considered a separate property tax but is incidental to the tax on the privilege of conducting a certain business. See F. S. Royster Guano Co. v. Town of Tarboro, 126 N.C. 68, 71, 35 S.E. 231, 232 (1900) (holding that \u201c[t]he privilege tax levied by the town was not a tax on the goods, but a tax on the privilege of manufacturing guano within the corporate limits of the town\u201d). Basing a privilege license tax on the units of property a business has is common and will not invalidate a privilege license fee ordinance. See Lenoir Drug Co. v. Town of Lenoir, 160 N.C. 571, 573, 76 S.E. 480, 481 (1912) (upholding the municipality\u2019s privilege license fee for each soda fountain operated by a business). Here, the City is not taxing individual computer terminals for the sake of taxing computers. The City is taxing businesses for the privilege of carrying out cyber-gambling through the use of computer terminals, and we hold such a tax is authorized by N.C. Gen. Stat. \u00a7. 160A-211.\nAppellants next argue the Ordinance violates the rule of uniformity by taxing similarly situated taxpayers differently. Appellants argue that the City is taxing only a specific type of computer terminal that conducts \u201cgames of chance\u201d while excluding all other computer terminals located in other businesses from taxation, and this violates the rule of uniformity. We disagree.\nArticle V, Section 2 of the North Carolina Constitution provides \u201c[n]o class of property shall be taxed except by uniform rule, and every classification shall be made by general law uniformly applicable in every county, city and town, and other unit of local government.\u201d N.C. Const. Art. V, \u00a7 2(2). \u201c \u2018[A] tax is \u2018uniform\u2019 when it operates with equal force and effect in every place where the subject of it is found . . . and with reference to classification it is \u2018uniform\u2019 when it operates without distinction or discrimination upon all persons composing the described class.\u2019 \u201d Hajoca Corp. v. Clayton, 277 N.C. 560, 569, 178 S.E.2d 481, 487 (1971) (citation omitted) (alteration in original). This uniformity standard applies to license taxes. Id. at 567, 178 S.E.2d at 486. Here, the City is taxing the business activity of cyber-gambling that uses computer or gaming terminals to carry on the business. Any tax on the computer terminals is incidental to the main purpose of the privilege license fee: to tax the privilege of conducting the particular business of cyber-gambling. With this understanding, we hold the tax to be uniform, as it applies to every single cyber-gambling establishment that utilizes computer or gaming terminals to carry on its business.\nAppellants further argue the Ordinance does not apply uniformly because it unlawfully exempts certain property from taxation. Appellants argue the Ordinance unlawfully exempts from taxation lotteries endorsed by this state that also conduct \u201cgames of chance.\u201d However, there is no requirement that the City levy a privilege license tax on all particular trades; it may levy the tax based on classifications within a particular class of the trade. See State v. Rippy, 80 N.C. App. 232, 234, 341 S.E.2d 98, 99 (1986) (citation omitted). \u201c As long as a classification is not arbitrary or capricious, but rather [is] founded upon a rational basis, the distinction will be upheld by the Court.\u2019 \u201d Id. (citation omitted) (alteration in original). The North Carolina lotteries are distinct businesses that would not be legal without the state\u2019s endorsement. See N.C. Gen. Stat. \u00a7 14-290 (2011) (prohibiting lotteries except for the state endorsed lottery under Chapter 18C of the General Statutes). The only lotteries endorsed by the state are those whose net revenues are transferred to the state\u2019s Education Lottery Fund. N.C. Gen. Stat. \u00a7 18C-164 (2011). Appellants\u2019 games of chance do not provide net revenues to this fund. Therefore, the state endorsed lotteries reasonably constitute a separate classification from Appellants\u2019 unendorsed legal businesses, and the City\u2019s privilege license tax need not be imposed upon them. Appellants also argue the Ordinance violates the rule of uniformity by taxing Appellants\u2019 electronic gaming operations but \u201cexcluding] from taxation the electronic machines used in the operation of promotional sweepstakes promulgated by third parties such as Food Lion, McDonald\u2019s, Subway and others.\u201d However, Appellants provide no support or evidence for this contention, and thus, we need not address it.\nAppellants next contend that assuming arguendo the City had the authority to enact a taxing scheme that classifies, exempts and imposes disparate tax treatment upon businesses like Appellants\u2019 businesses, there is no rational basis for such a discriminatory tax, and, as such, it is unconstitutional. \u201c \u2018License taxes must bear equally and uniformly upon all persons engaged in the same class of business or occupation or exercising the same privileges.\u2019 \u201d C.D. Kenny Co. v. Town of Brevard, 217 N.C. 269, 272, 7 S.E.2d 542, 543 (1940) (citation omitted). Where there is no rational basis for the distinction between merchants, the tax is not uniform and violates this State\u2019s Constitution. Id. at 272, 7 S.E.2d at 544. Appellants refer to the list of other businesses subjected to a privilege license tax by the City and note that they are assessed fees of $500 or less, while cyber-gambling establishments are charged $5,000 per location and an additional $2,500 per gaming terminal within the location. Appellants argue that the Ordinance disparately imposes a tax on cyber-gambling establishments in an amount \u201cfar and above the amount assessed against any other municipal taxpayer.\u201d However, this argument misses the mark completely. As discussed supra, we hold the City\u2019s privilege license tax on cyber-gambling establishments uniformly applies to all persons engaged in the cyber-gambling business. The 43 other businesses being taxed lesser amounts for privilege license purposes are different classes of business and include, inter alia, businesses selling knives, movie theaters, pawnbrokers, beer and wine wholesalers, automobile dealerships, bowling alleys and even a circus. To compare the privilege license tax amount Appellants are subjected to with the amounts incredibly distinct businesses are subjected to and to claim disparate tax treatment requiring a rational basis is an invalid and misleading argument that we reject.\nAppellants next argue the Ordinance is unconstitutional because it imposes an unjust and inequitable taxation scheme. \u201c[T]he power to tax involves the power to destroy.\u201d M\u2019Culloch v. State, 17 U.S. 316, 431, 4 L. Ed. 579, 607 (1819). Article V, Section 2(1) of our Constitution provides, \u201cThe power of taxation shall be exercised in a just and equitable manner.\u201d N.C. Const. Art. V, \u00a7 2(1). To be just and equitable, a privilege license tax must not be so high as to amount to a prohibition of the particular business. State v. Razook, 179 N.C. 708, 710, 103 S.E. 67, 68 (1920). The privilege license tax should reasonably relate to the profits of the business. Nesbitt v. Gill, 227 N.C. 174, 180, 41 S.E.2d 646, 650 (1947). The fee may be higher for more profitable businesses. Clark v. Maxwell, 197 N.C. 604, 607, 150 S.E. 190, 192 (1929). Here, Appellants claim the Ordinance \u201cimposes a tax that is between 6000 and 11000 times higher than the previous year\u2019s tax and far exceeds the amount levied against any other municipal taxpayer.\u201d Appellants further argue, \u201cIt is not hard to project that the tax scheme will completely deprive Appellants of all profit associated with their lawful business.\u201d Besides these widespread assertions, however, Appellants provide no evidence that the City\u2019s privilege license tax would completely deprive Appellants of all profit associated with their businesses. See Razook, 179 N.C. at 711, 103 S.E. at 68 (where our Supreme Court could not hold that a $400 tax on a business in 1920 was prohibitive \u201cin the absence of evidence to that effect\u201d). There does not appear to be a sufficient record of proof to show governmental action was taken to deprive Appellants of a constitutional right.\nRarely can it be said that a legislature or administrative body operating under a broad mandate made a decision motivated solely by a single concern, or even that a particular purpose was the \u201cdominant\u201d or \u201cprimary\u201d one. In fact, it is because legislators and administrators are properly concerned with balancing numerous competing considerations that courts refrain from reviewing the merits of their decisions, absent a showing of arbitrariness or irrationality.\nVillage of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 265, 50 L. Ed. 2d 450, 464-65 (1977).\n\u201cIf, however, it be conceded that the courts have power to declare a municipal ordinance levying a license tax on business invalid on the ground that the tax imposed is so oppressive and unreasonable as to amount to confiscation, rather than taxation, they will not determine the question by mere inspection of the amount of the tax imposed. All presumptions and intendments are in favor of the validity of the tax; * * * in other words, the mere amount of the tax does not prove its invalidity.\u201d\nRazook, 179 N.C. at 711, 103 S.E. at 69 (citation omitted); see State v. Danenberg, 151 N.C. 718, 722, 66 S.E. 301, 303 (1909) (holding that \u201cin the absence of positive evidence to the contrary, [privilege license taxes] are presumed to be reasonable\u201d). InDannenberg, our Supreme Court noted that in determining whether an ordinance imposing a privilege license tax is reasonable, evidence regarding the effect on the business of complying with the ordinance is typically unhelpful because negligence, incompetence, or other considerations could play into the success of the licensee\u2019s business. Id. Instead, in fixing a proper license tax, the Court suggested presenting evidence on revenue, regulation, and cost thereof. Id. Additionally,\n[t]he territory and population to be supplied is an important consideration in estimating the value of the right conferred. It is worth a great deal more to be permitted to conduct a business of this kind in a large city than in a small town, and a license tax that would be within the bounds of reason when imposed in [a big city] might be unreasonable and prohibitive if imposed in a small place. Other considerations that may properly enter into the matter are the cost of police surveillance and the propriety of reducing the number of [businesses] in order that such surveillance and supervision may be more effective and less costly.\nId.\nHere, the record is devoid of evidence of the profits, net revenues, regulation, and cost thereof for Appellants\u2019 businesses before and after the privilege license tax was instituted. Nor was any evidence presented regarding the territory and target population of Appellants\u2019 businesses. The only evidence Appellants presented is the new amount of the privilege license tax on Appellants\u2019 businesses in comparison to the privilege license tax on Appellants\u2019 businesses in previous years as well as in comparison to the privilege license tax on other businesses. As stated in Razook, such evidence does not prove the tax\u2019s invalidity. See Razook, 179 N.C. at 711, 103 S.E. at 69. Because Appellants presented no additional evidence that the privilege license tax was prohibitive on their particular businesses, Appellants\u2019 argument is dismissed. We emphasize that this opinion does not stand for the proposition that a taxing mechanism similarly punitive to the one at bar would pass constitutional muster if evidence of the prohibitive intent of the tax was shown. We find the City\u2019s privilege license tax here constitutional only because factual elements are missing to prove the City\u2019s privilege license tax is prohibitive.\nAppellants finally contend the Ordinance is unconstitutional because, as it applies to businesses engaged in promotional activity using the internet, it is preempted by the Internet Tax Freedom Act. Appellants argue the Ordinance constitutes discriminatory treatment in violation of the Act, which provides: \u201cNo state or political subdivision thereof shall impose any of the following taxes during the period beginning November 1, 2003 and ending November 1, 2014: (1) taxes on internet access. (2) multiple discriminatory taxes on electronic commerce.\u201d ITFA \u00a7 1101(a), 47 U.S.C.A..\u00a7 151 (2007). First, the tax at issue here is not a tax on internet access. The tax is a fee a business must pay for providing games of chance through the use of a gaming terminal. In this case, the gaming terminals happen to be computers that provide access to the internet. Not once does the Ordinance describing the tax even mention internet access; it is just happenstance that Appellants\u2019 gaming terminals providing games of chance also provide access to the internet. Other cyber-gambling establishments are subject to the privilege license tax even if their gaming terminals do not provide access to the internet. Thus, the privilege license tax is not a tax on internet access. Next, the Ordinance does not impose multiple discriminatory taxes on electronic commerce. Appellants claim the Ordinance \u201ctaxes only internet-based sweepstakes, not similar sweepstakes offered by traditional means.\u201d This contention is false. The Ordinance never mentions \u201cinternet-based\u201d sweepstakes or makes a distinction regarding electronic commerce; it only imposes the tax for cyber-gambling establishments that use a computer or gaming terminal in provision of games of chance. Thus, we hold the privilege license tax enacted by the Ordinance does not violate the ITFA.\nIV. Conclusion\nFor the foregoing reasons, we hold the trial court did not err in granting summary judgment for the City. Therefore, the judgments of the trial court are\nAffirmed.\nJudge GEER concurs.\nJudge HUNTER, Robert C., dissents in a separate opinion.\n. \u201cAppellants\u201d include: IMT, G&M, Storie, and E.Z.\n. We again note the City\u2019s tax is a privilege license tax and not a property tax. Since there is no taxation of property, there can be no improper exemption. However, in that the Ordinance incidentally taxes property, we address this argument.", "type": "majority", "author": "HUNTER, JR., Robert N., Judge." }, { "text": "HUNTER, Robert C., Judge,\ndissenting.\nThe majority dismisses appellants\u2019 claims that the license tax imposed by the City of Lumberton (the \u201cCity\u201d) pursuant to Lumberton City Code section 12-60.1 (the \u201cOrdinance\u201d) is invalid as it is an unjust and inequitable taxation scheme. I conclude these claims should survive summary judgment and I must respectfully dissent.\nAs the majority notes, to be \u201cjust and equitable,\u201d as required by Art. V, \u00a7 2(1) of our state constitution, a license tax must not be \u201cso high as to amount to a prohibition of the particular business.\u201d State v. Razook, 179 N.C. 708, 710, 103 S.E. 67, 68 (1920). The Razook Court recognized that while a municipality may have the legislative authority to levy a license tax on a class of business, it may not do so for the purpose of prohibiting the business altogether. 179 N.C. at 711, 103 S.E. at 68. Consequently, our courts may \u201cdeclare a municipal ordinance levying a license tax on business invalid on the ground that the tax imposed is so oppressive and unreasonable as to amount to confiscation, rather than taxation.\u201d Id. at 711, 103 S.E. at 69 (citation and quotation marks omitted). The defendant in Razook alleged that a municipal ordinance imposing a license tax on his business was unreasonable and excessive, and thus invalid. Id. In rejecting his argument, our Supreme Court noted that defendant provided no evidence at trial that the tax was intended to prohibit his business. Id.\nUnlike Razook, the present case is not an appeal from the entry of judgment following a trial. We review the trial courts\u2019 entry of summary judgment. The parties\u2019 motions for summary judgment required they produce only a \u201cpreview\u201d or \u201cforecast\u201d of their evidence. Loy v. Lorm Corp., 52 N.C. App. 428, 437, 278 S.E.2d 897, 903-04 (1981) (citation and quotation marks omitted). Appellants submitted verified pleadings that the trial courts could treat as affidavits in support of their motions for summary judgment. Wein II, LLC v. Porter, 198 N.C. App. 472, 477, 683 S.E.2d 707, 711 (2009). When \u201cdifferent material conclusions can be drawn from the evidence, summary judgment should be denied.\u201d Spector United Emp. Credit Union v. Smith, 45 N.C. App. 432, 437, 263 S.E.2d 319, 322 (1980).\nHere, the license tax imposed by the City upon appellants for fiscal year 2009-2010 was $12.50 per business. For fiscal year 2010-2011, the Ordinance taxes appellants in the amount of $5,000.00 per business location and $2,500.00 per gaming or computer terminal. Appellants\u2019 verified pleadings stated that the resulting license taxes levied for 2010-2011 were $75,000.00 against appellant G&M, $105,000.00 against appellant Storie, $110,000.00 against appellant E.Z., and $137,525.00 against appellant IMT. Thus, the Ordinance imposes a license tax that is between 6,000 and 11,000 times higher than the tax imposed on appellants in the previous year. This is in stark contrast to the modest annual license tax imposed on any other business, such as: campgrounds and trailer parks, $12.50; bicycle dealers, $25.00; restaurants, $0.50 per customer seat with a minimum tax of $25.00; pinball machines or \u201csimilar amusements,\u201d $25.00; bowling alleys, $10.00 per alley; movie theaters, $200.00 per room.\nGranted, \u201c \u2018the mere amount of the tax does not prove its invalidity.\u2019 \u201d Razook, 179 N.C. at 711, 103 S.E. at 69 (citation omitted). However, the discrepancy between the tax imposed by the Ordinance upon Cyber Gambling establishments and all other businesses, while not conclusive evidence of the inequity of the tax, makes summary judgment improper.\nPursuant to our standard of review of the trial courts\u2019 summary judgment orders, I conclude appellants\u2019 evidence of the grossly dissimilar tax rates creates a genuine issue of material fact as to whether the license tax is unjust and inequitable. Accordingly, I would reverse the trial courts\u2019 orders and remand for trial.", "type": "dissent", "author": "HUNTER, Robert C., Judge," } ], "attorneys": [ "The Law Offices of Lonnie M. Player, Jr., PLLG, by Lonnie M. Player, Jr., for Appellants.", "James C. Bryan for Appellee." ], "corrections": "", "head_matter": "IMT, INC., DBA THE INTERNET BUSINESS CENTER, Plaintiff v. CITY OF LUMBERTON, Defendant CITY OF LUMBERTON, Plaintiff v. G&M COMPANY, LLC, DBA INTERNET CAF\u00c9 SWEEPSTAKES AND WINNERS CHOICE, Defendant CITY OF LUMBERTON, Plaintiff v. DANIEL PAUL STORIE d/b/a SWEEP-NET INTERNET BUSINESS CENTER, Defendant EZ ACCESS OF N.C., LLC, Plaintiff v. CITY OF LUMBERTON, Defendant\nNo. COA11-813\n(Filed 21 February 2012)\n1. Gambling\u2014privilege license tax\u2014games of chance\u2014 sweepstakes\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended they did not operate \u201cgames of chance\u201d as required under the pertinent local municipal ordinance instituting a privilege license tax applicable to for-profit businesses where persons utilized electronic machines to conduct games of chance. The ordinance imposed a privilege tax on electronic machines that conducted \u201cgames of chance\u201d including sweepstakes.\n2. Gambling\u2014games\u2014no payment requirement\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended their games did not require payment as the local municipal ordinance required. The ordinance applied to appellants because they accepted payment in exchange for customers\u2019 use of computers that conducted games of chance.\n3. Taxation\u2014privilege license tax\u2014cyber-gambling\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended the local municipal ordinance instituting a privilege license tax was unconstitutional. The City properly taxed businesses for the privilege of carrying out cyber-gambling through the use of computer terminals as authorized by N.C.G.S. \u00a7 160A-211.\n4. Taxation\u2014rule of uniformity\u2014cyber-gambling establishments\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended the local municipal ordinance violated the rule of uniformity by taxing similarly situated taxpayers differently. The tax was applied to every single cyber-gambling establishment that utilized computer or gaming terminations to carry on its business. Further, the state endorsed lotteries reasonably constituted a separate classification from appellants\u2019 unendorsed legal businesses, and the City\u2019s privilege license tax did not need to be imposed upon them.\n5. Constitutional Law\u2014discriminatory tax\u2014rational basis\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended there was no rational basis for a discriminatory tax. The other businesses being taxed lesser amounts for privilege license purposes were different classes of business.\n6. Taxation\u2014privilege license tax\u2014constitutionality\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended the local municipal ordinance was unconstitutional because it imposed an unjust and inequitable taxation scheme. Appellants provided no evidence that the City\u2019s privilege license tax would completely deprive appellants of all profit associated with their businesses. Further, factual elements were missing to prove the City\u2019s privilege license tax was prohibitive.\n7. Gambling\u2014cyber-gambling\u2014Internet Tax Freedom Act\nThe trial court did not err by granting summary judgment in favor of the City and denying the same for appellants even though appellants contended the local municipal ordinance was preempted by the Internet Tax Freedom Act since it applied to businesses engaged in promotional activity using the internet. The ordinance never mentioned internet-based sweepstakes or made a distinction regarding electronic commerce, but instead imposed the tax for cyber-gambling establishments that used a computer or gaming terminal in provision of games of chance.\nJudge HUNTER, Robert C., dissenting.\nAppeal by Plaintiff IMT, Inc. d/b/a The Internet Center (\u201cIMT\u201d) from judgment entered 6 June 2011. Appeal by Defendant G&M Company, Inc. d/b/a Internet Caf\u00e9 Sweepstakes and Winner\u2019s Choice (\u201cG&M\u201d) from judgment entered 10 May 2011. Appeal by Defendant Daniel Paul Storie d/b/a Sweep-Net Internet Business Center (\u201cStorie\u201d) from judgment entered 10 May 2011. Appeal by Plaintiff E.Z. Access of N.C., LLC (\u201cE.Z.\u201d) from judgment entered 6 June 2011. All judgments were entered by Judge Robert Frank Floyd, Jr. in Robeson County Superior Court. Heard in the Court of Appeals 16 November 2011.\nThe Law Offices of Lonnie M. Player, Jr., PLLG, by Lonnie M. Player, Jr., for Appellants.\nJames C. Bryan for Appellee." }, "file_name": "0036-01", "first_page_order": 46, "last_page_order": 59 }