Board of Equalization v. Cool Fuel, Inc.

MEMORANDUM *

The California State Board of Equalization (“The Board”) appeals the dismissal on summary judgment of its claim against Cool Fuel, Inc., a licensed fuel wholesaler, for unpaid use taxes and pre-petition interest on diesel fuel sold during 1993. We have jurisdiction under 28 U.S.C. § 158 (d), and we reverse the bankruptcy court’s order of summary judgment in favor of Cool Fuel and remand this case to the bankruptcy court with instructions to enter summary judgment in favor of the Board.

Background

The material facts of this case are undisputed. 1 In 1993, Bruce Hill, a vice presi *515 dent and salesman for Cool Fuel, sold 11 million gallons of diesel fuel to retailers. Under California Revenue & Taxation Code § 8736 (repealed by Stats.1994, ch. 912, § 8, effective September 27, 1994, operative July 1, 1995), a sale of diesel fuel was a taxable “use” of the fuel that was due and payable upon the delivery of a wholesaler’s fuel to a retailer. Hill led Cool Fuel to believe he was selling the fuel to Sunshine Western, a licensed wholesaler, in tax-free transactions, but instead sold the fuel under the name of High Desert, a shell corporation operated by himself and…