American Multi-Cinema, Inc., as successor-in-interest to AMC Showplace Theatres, Inc., d/b/a Arapahoe Crossing 16 and Southland Stadium 16, Plaintiff-Appellant,
v.
City of Aurora, Defendant-Appellee.
Arapahoe County District Court No. 14CV30822 Honorable Kurt
A. Horton, Judge.
Holland & Hart LLP, Christina F. Gomez, Jonathan S.
Bender, Kyriaki Council, Denver, Colorado, for
Plaintiff-Appellant
Kissinger & Fellman, P.C., Paul D. Godec, Denver,
Colorado; Timothy Joyce, Assistant City Attorney, Aurora,
Colorado, for Defendant-Appellee
Bryan
Cave Leighton Paisner LLP, Stephen D. Rynerson, Denver,
Colorado; Jacqueline E. Brenneman, North Hollywood,
California, for Amicus Curiae National Association of Theatre
Owners
Michael J. Axelrad, Senior Assistant City Attorney, Greeley,
Colorado, for Amicus Curiae Colorado Municipal League, City
of Fort Collins, City of Littleton, City of Longmont, City of
Montrose, and City of Westminster
Philip
J. Weiser, Attorney General, Noah C. Patterson, Assistant
Solicitor General, Anne Mangiardi, Assistant Attorney
General, Annie Lawson, Assistant Attorney General, Denver,
Colorado, for Amicus Curiae Colorado Department of Revenue.
OPINION
FOX
JUDGE.
¶
1 Plaintiff, American Multi-Cinema, Inc. (AMC), appeals the
district court's judgment finding that defendant, City of
Aurora, properly levied a use tax on AMC's master
licensing agreements (MLAs) with motion picture distributors.
We affirm.
I.
Background
¶
2 AMC generates revenue by exhibiting motion pictures and
selling admission tickets to the public. AMC's MLAs
authorize it to exhibit motion pictures for a licensing fee,
and AMC then pays distributors a percentage of its admission
sales. AMC has paid the City a use tax - levied on tangible
property used, stored, distributed, or consumed in the City -
on its MLA fees since it began operation. AMC previously
received motion pictures from distributors in the form of
35-millimeter film reels but later replaced the celluloid
film technology with digital equipment and now receives
motion pictures via digital files on portable hard drives.
(Image
Omitted.)
¶
3 On November 1, 2012, AMC filed two refund claims with the
City, seeking a $191, 634.06 refund from use taxes paid on
licensing fees from May 27, 2010, through September 27, 2012.
During this timeframe, AMC used digital files to exhibit
motion pictures at its two Aurora theatres. Arguing that the
digital files were not tangible personal property in the
district court - on appeal, AMC no longer disputes that the
digital files are tangible personal property - AMC claimed
that its MLA fees could no longer be subjected to the
City's use tax. The City denied AMC's refund claims
in full, and AMC appealed to the City's Finance Director,
who also rejected AMC's claims.
¶
4 On March 26, 2014, AMC appealed to the district court.
After a bench trial, the district court upheld the City's
use tax, finding that (1) the data files were tangible
personal property under the City's code; (2) the true
object of the MLAs was to acquire the data files rather than
to obtain the intangible right to exhibit; and (3) the MLAs
were not exempt from the use tax as a purchase for resale.
AMC appealed.
II. Use
Tax
¶
5 AMC argues that the district court erred by concluding that
(1) the "true object" of the MLAs was to obtain
tangible personal property and (2) AMC was not exempt from
the use tax because the MLAs were not a wholesale
transaction. We ...