County District Court No. 11CV420 Honorable Karen A. Romeo,
Roca Rothgerber Christie LLP, Michael D. Plachy, Thomas M.
Rogers III, Joy Allen Woller, Denver, Colorado, for
Connelly Law LLC, Sean Connelly, Denver, Colorado; Davis
Graham Stubbs LLP, Jason M. Lynch, Denver, Colorado, for
1 We are asked to determine whether online travel companies
(OTCs) are required to collect and remit accommodation and
sales taxes to the Town of Breckenridge, Colorado, on hotel
rooms they book through their respective internet websites.
We conclude that they need not collect and remit such taxes.
2 Breckenridge, the plaintiff, seeks to collect accommodation
and sales taxes from sixteen OTCs, the defendants: Egencia,
LLC; Expedia, Inc.; Hotels.com, L.P.; Hotels.com, GP, LLC;
Hotwire, Inc.; Internetwork Publishing Corporation d/b/a
Lodging.com; Lowestfare.com, Inc.; Orbitz, Inc.; Orbitz, LLC;
Priceline.com, Incorporated; Site59.com, LLC; TravelNow.com,
LP; Travelport Inc. f/k/a Cendant Travel Distribution
Services Group, Inc.; Travelscape, LLC; Travelweb, LLC; Trip
Network, Inc. d/b/a Cheaptickets.com; and yet unidentified
companies, Does 1 through 1000.
3 On appeal, Breckenridge makes five contentions. First, it
contends that the district court erred in determining that
the OTCs were not "renters" or "lessors"
for purposes of Breckenridge's accommodation tax
ordinance, relying on the Colorado Supreme Court's
decision in City & County of Denver v. Expedia,
Inc., 2017 CO 32 (plurality opinion). Second, it
contends that the district court misapplied the summary
judgment standard by resolving material issues of fact.
Third, it contends that its sales tax claim should not have
been dismissed for lack of subject matter jurisdiction.
Fourth, it contends that its motion for class action
certification should have been granted because common
questions predominate and class action was the superior
method of relief. Fifth, it contends that its common law
claims were improperly dismissed. We consider and reject each
Overview of OTCs
4 The OTCs maintain websites through which travelers may book
reservations for hotel accommodations and other
travel-related services. The OTCs transact their online
businesses in two ways. The first is known as the
"agency model, " which describes transactions where
the OTC is the actual agent of a hotel. The second is the
"merchant model, " which was used here.
5 Under the merchant model, an OTC first contracts with a
hotel. These contracts offer rooms to an OTC at a discounted
rate - a fixed percentage of the price the hotel would charge
travelers directly for the rooms. The OTC describes the hotel
and its facilities on its website and allows customers
logging onto its website to book reservations for that hotel.
6 When facilitating reservations, an OTC neither purchases
nor reserves rooms in advance. Rather, the OTC coordinates
information between travelers and hotels. Only hotels can
issue reservations. When a purchaser requests a hotel room,
the chosen OTC's computer system communicates with a
hotel's central reservation system to find a specific
room at a specified rate. If available, the purchaser must
agree to the hotel's cancellation policy and terms of
occupancy before the hotel will accept the reservation. If
the hotel accepts the reservation, it will provide a
confirmation number in the customer's name and supply
this number to the OTC. The OTC forwards the confirmation
number then collects and processes the customer's
7 When a customer arrives at the hotel, the hotel registers
the customer as a guest before assigning a room. Assignments
are made only when a room is available and the customer meets
the hotel's terms and conditions for occupancy. After the
customer concludes his stay, the OTC transfers payment to the
hotel. The hotel then remits the collected taxes to
8 As relevant here, Breckenridge imposes an accommodation tax
"of three and four-tenths percent (3.4%) on the price
paid for the leasing or rental of any hotel room, motel room,
or other accommodation located in the town."
Breckenridge Town Code § 3-4-3 (B.T.C.). In addition to
the accommodation tax, Breckenridge collects a 2.5% sales
tax. B.T.C. § 3-1-5. Unlike the accommodation tax, the
sales tax ordinance requires Breckenridge to seek
administrative review before petitioning the district court
for relief to collect allegedly unpaid sales taxes. B.T.C.
§§ 3-1-35, 3-1-36.
9 Breckenridge instituted this action to recover from the
OTCs unpaid accommodation and sales taxes. In its initial
complaint, Breckenridge alleged that the OTCs were
responsible for collecting and remitting taxes associated
with hotel reservations. Breckenridge asserted five causes of
action: declaratory judgment, violations of municipal
ordinances, conversion, civil conspiracy, and unjust
10 The OTCs then filed a motion to dismiss, which was
partially granted. The district court agreed that no cause of
action existed in respect to the sales tax claim because
Breckenridge had failed to exhaust its administrative
remedies and none of the exceptions to exhaustion applied.
Consequently, the court determined that it lacked subject
matter jurisdiction to decide that claim. But, the district
court refused to dismiss the accommodation tax claim,
explaining that Breckenridge had sufficiently asserted a
claim in regard to the accommodation tax.
11 Breckenridge then sought class certification for
fifty-five home rule cities that also levy a lodger's or
accommodation tax, seeking to impose taxes, interest, and
penalties on the OTCs in favor of the putative class. The
district court denied class certification on multiple
grounds. First, the court concluded that certification under
C.R.C.P. 23(b)(2) was inappropriate because Breckenridge was
primarily seeking monetary damages. Second, the court
determined that common questions did not predominate over
questions affecting only individual members of the putative
class, so class certification was not superior to other
available remedies and, therefore, C.R.C.P. 23(b)(3)
certification was unavailable.Third, the court held that
certification was inappropriate because at least nine of the
unnamed class members had failed to exhaust their own
12 Thereafter, the parties filed cross-motions for summary
judgment. Resolving those motions in favor of the OTCs, the
district court analyzed the plain language of the
accommodation tax ordinance, in addition to the OTCs'
role in the reservation process. Specifically, the court
determined that it was beyond dispute that OTCs do not
maintain hotel room inventories, any customer service the
OTCs provide is related only to the facilitation of
reservations and not the actual rental or service of
accommodations, and the hotels - not the OTCs - are primarily
involved in a customer's reservation process. Based on
those undisputed facts and the plain language of the
ordinance, the court concluded that the OTCs were not renters
or lessors and, therefore, not required to collect and remit
the accommodation tax.
District Court Properly Determined that the OTCs are not
Subject to Breckenridge's Accommodation Tax
13 Breckenridge contends that the district court erred in
concluding that OTCs are neither "lessors" nor
"renters" of hotel rooms. Additionally,
Breckenridge asserts that the district court erred when it
relied on Expedia, Inc. v. City & County of
Denver, 2014 COA 87 (Expedia I), which was
reversed by the Colorado Supreme Court in a plurality
decision. City & Cty. of Denver v. Expedia,
Inc., 2017 CO 32 (Expedia II). We disagree.
14 Who is responsible for collecting and remitting
accommodation taxes under the B.T.C.? This question hinges on
the meaning of "lessor, " "renter, " and
"furnish, " as used in sections 3-4-1, 3-4-3, and
3-4-4 of that code.
15 Breckenridge contends that the OTCs are renters or lessors
under the code because they sell the legal right to use hotel
rooms in exchange for consideration. Because the
accommodation tax does not require a person to have physical
possession of the right sold, Breckenridge asserts that the
OTCs are capable of leasing or renting even without physical
possession of the hotel rooms.
16 The OTCs respond that they are not lessors or renters
because they do not own, possess, or have any interest in
hotel rooms; therefore, they have no power to convey use or
occupancy - in other words, to lease hotel rooms - to others.
See City of Philadelphia v. City of Philadelphia Tax
Review Bd., 37 A.3d 15, 20 (Pa. Commw. Ct. 2012) (no
rental occurs until a customer checks in at the hotel and
receives the right to a room). Rather, they contend that OTCs
are technology companies that act as intermediaries between
purchasers and hotels.
17 The district court agreed with the OTCs that they are not
lessors or renters subject to the accommodation tax and,
instead, are intermediaries. Relying on dictionary
definitions, the court found that a "lessor" or
"renter" is a "person or business that conveys
via a contract the right to use, possess, or occupy
accommodations for consideration." Because OTCs act
merely as intermediaries and, therefore, lack a possessory
interest in the lodging, the district court found that they
are not subject to Breckenridge's accommodation tax.
Standard of Review
18 We review a district court's grant of summary judgment
and issues of statutory interpretation de novo. Robinson
v. Legro, 2014 CO 40, ¶ 10; Bd. of Cty.
Comm'rs v. ExxonMobil Oil Corp., 192 P.3d 582, 585
(Colo.App. 2008), aff'd, 222 P.3d 303 (Colo.
2009). When reviewing a municipal ordinance, our primary task
is to give effect to the intent of the drafters, which we
attempt to discern by looking first to the ordinance's
plain language. Jackson & Co. v. Town of Avon,
166 P.3d 297, 299 (Colo.App. 2007). If we can give effect to
the ordinary meaning of the words used by the drafter, the
ordinance should be construed as written. Id. But if
the ordinance is ambiguous and therefore susceptible of
multiple interpretations, we may resort to various aids of
statutory construction in determining intent. Jefferson
Cty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935
(Colo. 2010). We must also refrain from rendering a judgment
that would be inconsistent with the municipal body's
legislative intent and must avoid any interpretation that
would produce an illogical or absurd result. Id.;
Waste Mgmt. of Colo., Inc. v. City of Commerce City,
250 P.3d 722, 725 (Colo.App. 2010).
19 Interpreting a tax code requires a similar analysis.
Welby Gardens v. Adams Cty. Bd. of Equalization, 71
P.3d 992, 995 (Colo. 2003). We must construe it as a whole to
give consistent, harmonious, and sensible effect to all its
parts. Id. Additionally, however, we adhere to
Colorado's longstanding rule of construction that
"tax provisions like those at issue here will not be
extended beyond the clear import of the language used, nor
will their operation be extended by analogy." Waste
Mgmt., 250 P.3d at 725 (citing City of Boulder v.
Leanin' Tree, Inc., 72 P.3d 361, 367 (Colo. 2003)).
We construe all doubts against the government and in favor of
the taxpayer. Id.
Accommodation Tax Ordinance's Language
20 B.T.C. section 3-4-1 (the preamble) states, in part, as
[The] legislative intent of the town council in enacting this
chapter is that every person who, for consideration, leases
or rents any hotel room, motel room, or other accommodation
located in the town shall pay and every person who furnishes
for lease or rental any such accommodation shall collect the
tax imposed by this chapter.
21 An implementing provision provides that "an excise
tax of three and four-tenths percent (3.4%) [shall be
assessed] on the price paid for the leasing or rental of any
hotel room, motel room, or other accommodation located in the
town." B.T.C. § 3-4-3.
22 The code also imposes liability for unpaid taxes on
"any lessee or renter of a hotel room, motel room, or
other accommodation located in the town" who fails to
pay or "any lessor or renter of such accommodation"
who fails to collect the accommodation tax. B.T.C. §
23 The B.T.C. does not define the terms "leasing, "
"renting, " "lessor, " or
"renter." Nor does the code define the operative
term used in its preamble, "furnishes for lease or
24 When a statute fails to define an integral term, we may
refer to a dictionary to determine the common usage of the
term. See Roalstad v. City of Lafayette, 2015 COA
146, ¶ 34 (If a "statute does not define a term,
the word at issue is a term of common usage, and people of
ordinary intelligence need not guess at its meaning, we may
refer to dictionary definitions in determining the plain and
ordinary meaning." (quoting Mendoza v. Pioneer Gen.
Ins. Co., 2014 COA 29, ¶ 24)). Thus, we look to
dictionary definitions of the terms "lessor, "
"renter, " "lease, " "rent, "
and "furnish" to ascertain their plain and ordinary
25 Black's Law Dictionary defines those terms as follows:
. "lessor" (n.) is "[s]omeone
who conveys real or personal property by lease; especially],
. "lease" (n.) is a "contract
by which a rightful possessor of real property conveys the
right to use and occupy the property in exchange for
consideration, " and (v.) is "[t]o grant the
possession and use of (land, buildings, rooms, movable
property, etc.) to another in return for rent or other
. "rent" (n.) is
"[consideration paid, usu[ally] periodically, for the
use or occupancy of property."
Law's Dictionary 1024, 1026, 1043, 1488 (10th ed. 2014).
26 Similarly, Webster's Third New International
Dictionary defines the terms as follows:
. "lessor" (n.) is "one that
surrenders possession of real estate under a lease";
. "lease" (n.) is a "a
contract by which one conveys lands, tenements, or
hereditaments for life, for a term of years, or at will or
for any less interest than that of the lessor, usu[ally] for
a specified rent or compensation, " and (v.) is "to
grant or convey to another by lease";
. "rent" (n.) is "income from
a property, " and "a piece of property that the
owner allows another to use in exchange for a payment in
services, kind, or money";
. "renter" (n.) is "one that
rents: as . . . the lessee or tenant of lands, tenements, or
other property"; ...