MEMORANDUM AND ORDER

RICHARD G. KOPF, District Judge.

The plaintiff, City of Lincoln, Nebraska ("City"), commenced this action on January 13, 2010, in the District Court of Lancaster County, Nebraska, to collect occupation taxes from the defendant, Windstream Nebraska, Inc. ("Windstream"). The action was removed to this court on February 12, 2010, based on diversity jurisdiction. See 28 U.S.C. §§ 1332 and 1446(a). The City claims that Windstream and its predecessor, Alltel Nebraska, Inc., underreported their gross receipts and underpaid occupation taxes since January 1, 2001.

The parties have filed cross-motions for partial summary judgment.1 Their motions include two common issues: (1) whether a statute of limitations precludes the City from collecting unpaid occupation taxes that accrued prior to August 1, 2005;2 and (2) the date from which the City is entitled to collect compound interest on unpaid occupation taxes.3 Windstream also argues that only "telecommunications service," as defined by the Nebraska Telecommunications Regulation Act, Neb.Rev.Stat. § 86-121 ("the offering of telecommunications for a fee"), is subject to being assessed occupation tax by the City, and it seeks determinations that (1) to the extent the City's ordinances in effect prior to October 1, 2010, assessed occupation tax on items other than telecommunications service, the ordinances are unenforceable and violate Neb.Rev.Stat. §§ 86-704, 15-202, and 15-203, and (2) certain provisions must be stricken from the City's current tax ordinances, which became effective on October 1, 2010, because their provisions exceed the scope of the City's power to regulate telecommunication companies and assess occupation tax.

For the reasons discussed below, (1) on issue of the statute of limitations, I will grant in part Windstream's motion and deny the City's motion, (2) on the issue of compound interest, I will grant in part the City's motion and deny Windstream's motion, and (3) on the remaining issues raised by Windstream, I will deny its motion.

DISCUSSION

"A party may move for summary judgment, identifying each claim or defense— or the part of each claim or defense—on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In ruling on a motion for summary judgment, the court must view the evidence in the light most favorable to the non-moving party, giving that party the benefit of all inferences that may be reasonably drawn from the evidence. See Dancy v. Hyster Co., 127 F.3d 649, 652-53 (8th Cir.1997). It is not the court's function to weigh evidence in the summary judgment record to determine the truth of any factual issue; the court merely determines whether there is evidence creating a genuine issue for trial. See Bell v. Conopco, Inc., 186 F.3d 1099, 1101 (8th Cir.1999). The moving party bears the burden of showing there are no genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986.)

1. Statute of Limitations

Windstream maintains that the applicable statute of limitations is Neb.Rev.Stat. § 25-206, which provides, in part, that "an action upon a liability created by statute, other than a forfeiture or penalty, can only be brought within four years." Windstream argues that the City's occupation tax is "a liability created by statute" within the meaning of section 25-206 because Neb.Rev.Stat. § 86-704(4)(a)(i) provides that "[a] municipality shall not levy a tax, fee, or charge for any right or privilege of engaging in a telecommunications business... other than ... [a]n occupation tax authorized under section 14-109, 15-202, 15-203, 16-205, or 17-525 [.]" Sections 15-202 and 15-203 apply to a city of the primary class, such as the City of Lincoln, and authorize the municipality "to levy an occupation tax on public service property or corporations in such amounts as may be proper and necessary," Neb.Rev.Stat. § 15-202, and "to raise revenue by levying and collecting a license or occupation tax on any person, partnership, limited liability company, corporation, or business within the limits of the city and regulate the same by ordinance[.]" Neb.Rev.Stat. § 15-203. The City counters that the occupation tax was created by ordinance, not by statute, and contends that the ordinance was enacted pursuant to authority granted by the City's home rule charter, not by statute.

In Millard Rural Fire Protection Dist. No. 1 v. City of Omaha, 226 Neb. 50, 409 N.W.2d 574 (1987), a fire protection district brought an action against the City of Omaha for a determination of the rights, duties, and responsibilities of the district and the city with respect to areas annexed by the city between 1968 and 1984. The district court found that Neb.Rev.Stat. §§ 25-206, 25-207, and 25-212 were applicable and each barred any claim of the district arising prior to 1980. The Nebraska Supreme Court affirmed, stating:

409 N.W.2d at 578-79.

So, too, in the present case, if the City's occupation tax is not considered "a liability created by statute" within the meaning of section 25-206, the action is still subject to the general 4-year statute of limitations contained in sections 25-207(3) and 25-212. The City, however, claims immunity from any statute of limitations enacted by the Nebraska Legislature. It offers two reasons.

First, the City claims that it is not time-limited when suing to collect unpaid occupation taxes because it operates under a home rule charter.7 It states that neither the charter nor the Lincoln Municipal Code impose a limitations period.

"It is well established that under a home rule charter, a city's power must be consistent with and subject to the constitution and laws of this state, except as to local matters of strictly municipal concern." Home Builders Ass'n of Lincoln v. City of Lincoln, 271 Neb. 353, 711 N.W.2d 871, 877 (2006). "The constitutional limitation that a home rule charter must be consistent with and subject to the laws of the state simply means that on matters of such general concern to the people of the state as to involve a public need or policy, the charter must yield to state legislation. But until the superior authority of the state has been asserted by a general statutory enactment, the municipality may properly act under its charter." Id. at 878 (citations omitted).

The City contends that the occupation tax is a matter of strictly local concern, while Windstream takes the position that it clearly involves a matter of statewide concern because it relates to telecommunications service that is regulated by the state. Both parties' arguments miss the mark. The issue here is not the City's taxing authority or the state's regulation of telecommunications companies; rather, the relevant issue is the City's ability to bring suit on stale claims.

In Thompson v. City of Omaha, 235 Neb. 346, 455 N.W.2d 538 (1990), municipal employees brought an action against the City of Omaha seeking to recover unpaid overtime wages. The city defended against the action by asserting it was barred by claims statutes, applicable to cities of the metropolitan class, which required the employees to file claims with the city comptroller within 18 months. The Nebraska Supreme Court affirmed the dismissal of the action on this basis even though the city operated under a home rule charter. It stated:

Id. at 541.

Neb.Rev.Stat. §§ 25-206, 25-207(3), and 25-212 likewise affect access to the state courts and the state law remedies. "A purpose of a statute of limitations is to prevent recovery on stale claims. The mischief which a statute of limitations is intended to remedy is general inconvenience resulting from delay in assertion of a legal right which it is practicable to assert." Anonymous v. St. John Lutheran Church of Seward, 14 Neb.App. 42, 703 N.W.2d 918, 925 (2005) (citations omitted). One or more of these statutes of limitations will apply to the present action regardless of whether the City's occupation tax on telecommunications service is a matter of strictly local concern or is a matter of statewide concern.

Second, the City argues that it has immunity from the statutes of limitations because it acted in a governmental capacity when imposing the occupation tax. This argument does not find any support under Nebraska law.

"The maxim nullum tempus occurrit regi [lapse of time does not bar the right of the crown] only applies in favor of the sovereign power, and has no application to municipal corporations deriving their powers from the sovereign, although their powers, in a limited sense, are governmental. Thus the statute [of limitations] runs for or against towns and cities in the same manner as it does for or against individuals." May v. School Dist. No. 22, 22 Neb. 205, 34 N.W. 377 (1887.) See also Chaffee v. City of Omaha, 145 Neb. 418, 16 N.W.2d 852, 854 (1944) ("As a general rule, statutes of limitations run in favor of, as well as against, municipalities."); In re Ernst's Guardianship, 158 Neb. 15, 62 N.W.2d 110, 111 (1954) ("[I]mmunity from a general statute of limitation is accorded only to the sovereign power, the state, and does not extend to subdivisions of the state unless the Legislature specifically so provides.").

I therefore find that a 4-year limitations period, as provided by Neb.Rev. Stat. §§ 25-206, 25-207(3), or 25-212, applies to this action. Windstream asserts that "[a]ny claim by the City that relates to amounts the City claims were underreported by [Windstream] on any monthly statement due and owing prior August 1, 2005, are subject to the statute of limitations." (Filing 72 at 9.) It also states that "[g]iven the payment and reporting structure established by the City, the first claim that could have accrued on or after August 1, 2005, would be for occupation taxes relating to July 2005. Therefore, any amounts claimed by the City that relate to months prior to July 2005 are barred as a matter of law." (Filing 72 at 11.) The City does not refute these statements, except to note that it "intends to offer, if necessary, [arguments and evidence] regarding issues of deception and concealment by Windstream's employees regarding information requested by City, and City's detrimental reliance on assurances given by Defendant's employees." (Filing 77 at 14.)

2. Compound Interest

In its motion for partial summary judgment, Windstream requests a ruling that "[t]he City's claim for compound interest on amounts that accrued prior to October 1, 2010, is without merit and should be dismissed." (Filing 71.) Windstream argues in its supporting brief that "it was only after this litigation had been filed that the City amended its ordinances to allow for interest on past due amounts to be compounded on a quarterly basis. Lincoln Municipal Code § 3.24.090. Further, that change only became effective as of October 1, 2010." (Filing 72 at 12.)

In its motion for partial summary judgment, the City requests a ruling that it "is entitled to compound interest and penalties on telecommunication occupation taxes as of August 3, 2010 and after that date." (Filing 75.) The City argues:

(Filing 77 at 15.)

Windstream concedes in its reply brief that the effective date of the compound interest provision is not October 1, 2010, but it argues the effective date actually is August 6, 2010, because the City did not publish the ordinance until July 30, 2010. Article V, Section 2 of the City's Charter states that "ordinances fixing a penalty of forfeiture for the violation thereof shall not take effect until fifteen days after passage, and in no case before one week after the publication thereof in the manner above prescribed," absent an emergency. (Filing 76-4 at 4.)

The City, in its reply brief, "recognizes that the parties are quarreling over a matter of three days of compound interest," but states that it "does believe the date on which compound interest applies is a matter that the Court can definitively decide on summary judgment." (Filing 86 at 8.) Later in the same brief, however, the City urges that "[a]s a matter of law, the Court should conclude that City is entitled under L.M.C. § 3.24.090, as amended, to assess compound interest on telecommunication occupation taxes as of and after August 3, 2010." (Filing 86 at 10.)

"Forfeiture" has been defined by the Nebraska Supreme Court as "a penalty by which one loses his rights and interest in property." Arthur v. Trindel, 168 Neb. 429, 96 N.W.2d 208, 215 (1959). It is evident that the City's collection of compound interest does not result in the imposition of a "penalty of forfeiture." The effective date of the compound interest provision therefore was August 3, 2010.

Windstream appears to take the position that compound interest cannot be charged on any taxes that became due prior to the effective date of the ordinance amendment, while the City appears to claim that it can charge compound interest on the total amount of taxes owing from and after that date. The parties, however, have not discussed this apparent dispute in their briefs, nor have they cited any legal authority in support of their respective positions. As a result, at this time I will only decide the question of the ordinance's effective date; if there is a dispute regarding the computation of compound interest, the issue can be taken up at the time of trial.

3. Occupation Tax

Finally, Windstream contends that "as a matter of law, only revenue sources directly attributable to `telecommunications service' as defined by the Nebraska Revised Statutes are subject to being assessed occupation tax by the City." (Filing 72 at 12.) In particular, Windstream objects to the City assessing occupation tax on revenue derived from equipment sales, installation, and maintenance.

Pointing to definitions found in the Communications Act of 1934, 47 U.S.C. § 153, and the Nebraska Telecommunications Regulation Act, Windstream insists that "telecommunications service" is a standard industry term which does not include equipment. To the extent that defining "telecommunications service" is material to the City's claim for unpaid occupation taxes,8 I find there is a genuine dispute as to the meaning of such term.9

Windstream next notes that the Nebraska Telecommunications Regulation Act ("NTRA") "preempt[s] and prohibit[s] any regulation of a telecommunications company by counties, cities, villages, townships, or any other local governmental entity." Neb.Rev.Stat. § 86-123(3). As previously discussed, another statute provides that "[a] municipality shall not levy a tax, fee, or charge for any right or privilege of engaging in a telecommunications business... other than ... [a]n occupation tax" as authorized by law. Neb.Rev.Stat. § 86-704(4)(a)(i). Municipal occupation taxes must be "uniform in respect to the class upon which they are imposed," Neb.Rev. Stat. §§ 15-202, 15-203, and, in the case of telecommunications businesses, "competitively neutral." Neb.Rev.Stat. § 86-704(4)(b). The NTRA provides that "[w]henever any municipality or any other local governmental entity imposes upon a telecommunications company any tax or fee as described in section 86-704, such tax or fee shall, insofar as practicable, be billed pro rata to the telecommunications company's customers receiving telecommunications service within the territorial limits of such municipality or other local governmental entity." Neb.Rev.Stat. § 86-157. The Act defines "telecommunications company" to mean "any person, firm, partnership, limited liability company, corporation, association, or governmental entity offering telecommunications service in Nebraska intrastate commerce." Neb.Rev. Stat. § 86-119. The term "telecommunications business," as used in section 86-704 (which is not part of the NTRA), is not defined in statute.

Windstream infers from the foregoing statutory provisions that "the entities allowed to be assessed the occupation tax are ones that provide telecommunications service and the customers who are supposed to be the final payors of the occupation tax are those whom receive telecommunications service within the municipality that assessed the tax. Any further regulation of a telecommunications company by counties, cities, villages, townships, or any other local governmental entity is prohibited and preempted by the NTRA. Thus, as a matter of law, this Court should conclude that the only items to which telecommunication occupation tax is allowed to be assessed by the City of Lincoln are to those items that are properly classified as telecommunications service under the Nebraska statutes." (Filing 72 at 20 (emphasis in original).)

"It is not within the province of a court to read a meaning into a statute that is not warranted by the legislative language; neither is it within the province of a court to read anything plain, direct, and unambiguous out of a statute." State ex rel. Douglas v. Herrington, 206 Neb. 516, 294 N.W.2d 330, 334 (1980). Windstream is asking me to read limitations into the statutes that do not exist.

In fact, section 86-704(4)(a) was amended during the most recent legislative session to provide that "[b]eginning January 1, 2013, ... [t]he occupation tax shall be imposed only on the receipts from the sale of telecommunications service as defined in subdivision (7)(aa) of section 77-2703.04[.]"10 2011 Nebraska Laws, L.B. 165. Until such date, I find no statutory prohibition against a municipality assessing occupation tax on revenue that a telecommunications company earns from the sale, installation, or maintenance of equipment, for example. It is generally presumed that the Nebraska Legislature, in adopting an amendment, intended to make some change in the existing law. See Underhill v. Hobelman, 279 Neb. 30, 776 N.W.2d 786, 788 (2009.)

A separate question is whether the City of Lincoln's occupation tax actually extends to such items. However, this question is beyond the scope of Windstream's motion. Windstream deemed it "premature to reference specific line items of the City's deficiency assessment in the motion for summary judgment.11 Rather, the purpose of [Windstream's] summary judgment motion on this point is to request judgment as a matter of law that only revenue sources directly attributable to "telecommunications service" as defined by the Nebraska Revised Statutes are subject to being assessed occupation tax by the City." (Filing 79 at 12.) Windstream's request is denied.

CONCLUSION

A 4-year limitations period, as provided by Neb.Rev.Stat. §§ 25-206, 25-207(3), or 25-212, applies to this action, and bars any claims that accrued prior to August 1, 2005. The effective date of the amendment to Section 3.24.090 of the Lincoln Municipal Code was August 3, 2010. Before that date the City could not collect compound interest. In levying occupation tax against Windstream, the City is not limited to assessing a percentage of Windstream's gross receipts that are directly attributable to "telecommunications service" as defined by the Nebraska Revised Statutes. The meaning of the Section 3.24.080 of the Lincoln Municipal Code, including the meaning of the term "telecommunication services" as used in such section prior to October 1, 2010, will be determined at trial.

IT IS ORDERED:

ADDENDUM

Prior to being amended by Ordinance No. 19269, which was passed by the City on August 24, 2009, Section 3.24.080 of the Lincoln Municipal Code provided:

(Filing 73-2.) The tax rate was increased to 6% effective January 1, 2010. See Ordinance No. 19269 (filing 73-3).

Amendments adopted by Ordinance No. 19410 (filing 73-4), which as passed on July 19, 2010, provide, among other things, that "telecommunication services and charges" and "sale[s] of telecommunication equipment" are subject to the occupation tax. The terms "telecommunication services" and "telecommunication equipment" are also defined. Thus, Section 3.24.080 now reads:

(Filing 73-6.)