California Franchise Tax Board v. Hyatt
The California Franchise Tax Board (the Board) audited Hyatt, a former California resident who moved to Nevada, to determine whether Hyatt underpaid California state income taxes. Hyatt sued the Board in Nevada state court for several intentional torts and one negligent act allegedly committed during the audit. The Board moved for summary judgment or dismissal, arguing that the Nevada state court lacked subject matter jurisdiction because principles of sovereign immunity, full faith and credit, choice of law, comity and administrative exhaustion all required the application of California law, under which the Board is immune from tort liability. The state court denied the motion. The Nevada Supreme Court affirmed in part, holding that the state court had subject matter jurisdiction and that, under the doctrine of comity, the court should have refrained from exercising its jurisdiction over the negligence claims but that it properly exercised jurisdiction over the intentional tort claims.
Question Presented:
Did the Nevada Supreme Court impermissibly interfere with California's capacity to fulfill its sovereign responsibilities, in derogation of Article IV, sec. 1 of the U.S. Constitution, by refusing
to give full faith and credit to California law (Government Code section 860.2) in a suit brought against California for the torts of invasion of privacy, outrage, abuse of process, and fraud
alleged to have occurred in the course of California's administrative efforts to determine a former resident's liability for California personal income tax?
