FTB scores big win in Hyatt case after 20 years - Spidell

FTB scores big win in Hyatt case after 20 years

After hearing the Hyatt v. FTB case for the third time, the U.S. Supreme Court has ruled that the FTB was immune from being sued in Nevada courts. (FTB v. Hyatt (May 13, 2019) U.S. Supreme Court, Case No. 17-1299) Hyatt had sued the FTB for damages after it conducted an extremely aggressive residency audit when Hyatt moved to Nevada right before he received millions of dollars in patent royalties.

In holding that a private citizen cannot sue a state agency in another state’s courts, the U.S. Supreme Court overruled its 1979 decision in which it had held that private citizens could sue a state agency in another state’s court as long as the other state court provided the same immunity to the out-of-state agency as was granted to state agencies located in the court’s state. (Nevada v. Hall (1979) 440 U.S. 410)

The Court also acknowledged that, “Because of our decision to overrule Hall, Hyatt unfortunately will suffer the loss of two decades of litigation expenses and a final judgment against the Board for its egregious conduct.”

Note: Although the FTB may have won the damages issue, last year Hyatt won most of his residency case before the BOE. (Appeal of Hyatt (August 29, 2017) Cal. St. Bd. of Equal., Case Nos. 435770, 447509)

Subscribe to Spidell’s California Taxletter and get more information on Hyatt and other court cases. Click here for details.