Eden Prairie Mall Llc v. County of Hennepin
| Decision Date | 11 May 2011 |
| Docket Number | No. A09–2229.,A09–2229. |
| Citation | 797 N.W.2d 186 |
| Parties | EDEN PRAIRIE MALL, LLC, Relator,v.COUNTY OF HENNEPIN, Respondent. |
| Court | Minnesota Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court
1. The automatic stay provision of the United States Bankruptcy Code, 11 U.S.C. § 362(a)(1) (2006), does not apply to relator's petition challenging the County's tax assessments.
2. The tax court is not precluded from arriving at a value determination that is lower or higher than the appraisal testimony presented at trial, provided that the court adequately explains its reasoning and its determination is supported by the record. If the court fails to do so, it runs the risk of having its determination overturned or remanded for further proceedings.
3. The tax court's valuation of the mall was not reasonably supported by the evidence as a whole.
Thomas R. Wilhelmy, Judy S. Engel, Fredrikson & Byron, P.A., Minneapolis, Minnesota, for relator.Michael O. Freeman, Hennepin County Attorney, Lisa C. Hahn–Cordes, Beth A. Stack, Assistant County Attorneys, for respondent.Mark D. Savin, John F. Beukema, Faegre & Benson LLP, Minneapolis, Minnesota, for amicus curiae Minnesota Shopping Center Association.
Pursuant to Minn.Stat. § 278.01 (2010), relator Eden Prairie Mall (EPM) seeks certiorari review of the assessed value determinations by the Minnesota Tax Court for the Eden Prairie Mall and one of the mall's anchor tenants—the Von Maur department store—for the assessment dates of January 2, 2005, and January 2, 2006. The tax court concluded that the market values of both parcels should be increased to amounts higher than either respondent Hennepin County's (the County) assessed values or the valuation opinions presented by either of the parties' appraisers at trial. EPM argues that the tax court's value determinations were excessive and not supported by the record. EPM, which filed for bankruptcy during the tax court proceedings, also argues that by entering judgment that increased its property taxes, the tax court violated the automatic stay provisions of the Bankruptcy Code, 11 U.S.C. § 362(a)(1) (2006). We affirm the tax court's determination that the automatic stay provision of the Bankruptcy Code does not apply to EPM's tax petitions, but remand the court's market value determinations for further proceedings.
Relator EPM owns and operates the Eden Prairie Mall, a super-regional shopping mall located in Eden Prairie, Minnesota, that includes five anchor tenants and an entertainment wing with an AMC movie theater complex. One of the anchor tenants, the Von Maur department store, is located on a separate parcel leased from EPM. The County Assessor's estimated market value as of January 2, 2005, for the mall parcel was $90,000,000, and for the Von Maur parcel was $8,913,000. The County Assessor's estimated market value as of January 2, 2006, for the mall parcel was $100,000,000 and for the Von Maur parcel was $9,408,000. EPM challenged these valuations by a timely petition to the district court under Minn.Stat. § 278.01, subd. 1 (2010), claiming that the mall and Von Maur parcels had been assessed at values greater than their actual market values and had been unfairly and unequally assessed.
At trial, EPM introduced the expert appraisal testimony of David C. Lennhoff, MAI (Member of the Appraisal Institute), CRE (member of the Counselors of Real Estate), SRPA (Senior Real Property Appraiser). EPM appraiser Lennhoff testified that as of January 2, 2005, the value of the mall was $68,750,000 and the value of the Von Maur parcel was $3,950,000. Additionally, EPM appraiser Lennhoff testified that as of January 2, 2006, the value of the mall was $60,550,000 and the value of the Von Maur parcel was $4,750,000.
The County introduced the expert testimony of Jason Messner, MAI, and the appraisal review testimony of Mark T. Kenney, MAI, SRPA. County appraiser Messner determined that as of January 2, 2005, the value of the mall was $110,000,000 and the value of the Von Maur parcel was $10,000,000. Messner further determined that as of January 2, 2006, the value of the mall was $115,000,000 and the value of the Von Maur parcel was $10,500,000.
The Assessor's estimated market values and the final value opinions of the appraisal experts given at trial were therefore as follows:
In its post-trial brief, the County argued that the EPM appraiser's revenue and expense assumptions and value determinations were not supported by the record. The County presented a proposed valuation that “recalculated” the EPM appraiser's value determinations using different revenue and expense assumptions. The effect of the different assumptions was, among other things, to substantially increase the County's calculation of EPM's net operating income for the mall for both assessment years: from $7,117,082 to $10,489,410 for 2005 and from $6,433,577 to $9,926,670 for 2006. Applying the same capitalization rates used by the County's appraiser to these increased net operating incomes, the County argued that the EPM appraiser's value determination of the mall should therefore be increased from $68,750,000 to $122,876,142 for 2005 and from $60,550,000 to $120,142,410 for 2006. The tax court adopted the County's “recalculated” value determinations almost verbatim; 1 as a result, the court increased the value of the mall by an average of 28.3% over the County's original assessed values and by an average of 8.1% over the appraisal testimony of the County's expert.
After trial, but before the tax court rendered its decision, EPM and its parent company, General Growth, filed Chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the Southern District of New York. EPM then sought to stay the tax court proceedings, arguing that they were subject to the automatic stay provision of 11 U.S.C. § 362(a)(1) (2006). The tax court rejected EPM's argument. After the parties submitted post-trial briefs, the tax court issued its findings of fact, conclusions of law, and order for judgment, assessing the mall and Von Maur at the aforementioned values, which were higher than the values proposed by either party's appraisal experts.
On appeal, EPM challenges the tax court's failure to apply the automatic stay provision of 11 U.S.C. § 362(a)(1) and the tax court's conclusions as to the January 2, 2005, and January 2, 2006, estimated market values of the mall and Von Maur parcels. Generally, we review a tax court decision to determine whether the court lacked jurisdiction, whether the court's decision is supported by the evidence and is in conformity with the law, and whether the court committed any other error of law. Jefferson v. Comm'r of Revenue, 631 N.W.2d 391, 394 (Minn.2001). We exercise de novo review of the court's legal conclusions. F–D Oil Co. v. Comm'r of Revenue, 560 N.W.2d 701, 704 (Minn.1997). But we overturn the court's factual findings if they are clearly erroneous. Equitable Life Assurance Soc'y of the U.S. v. Cnty. of Ramsey, 530 N.W.2d 544, 552 (Minn.1995).
We first address EPM's argument that the tax court's decision violates the automatic stay imposed by 11 U.S.C. § 362(a)(1) of the U.S. Bankruptcy Code. In interpreting federal statutes, we “give effect to the plain meaning of [the] statute when the language is clear.” Martin ex rel. Hoff v. City of Rochester, 642 N.W.2d 1, 11 (Minn.2002). We will not disregard the letter of the law when the words of a statute are clear and free from ambiguity. Id.
The automatic stay provision of the U.S. Bankruptcy Code, 11 U.S.C. § 362(a)(1), provides that the filing of a petition for bankruptcy
[operates as a stay, applicable to all entities, of] the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. (Emphasis added.) Subparagraph (a)(1) of section 362 thus stays the continuation of any “action or proceeding against” a debtor—in this case, EPM—when the debtor has filed a bankruptcy petition. Carson Pirie Scott & Co. (Southdale) v. Cnty. of Hennepin, 508 N.W.2d 200, 202 (Minn.1993) (hereinafter Carson Pirie Southdale ).
The precise question before us is whether a petition filed by a taxpayer under Minn.Stat. ch. 278 (2010) challenging a property tax assessment is an “action or proceeding against the debtor.” To determine “whether a proceeding is against a debtor, the proceeding is to be viewed at its inception.” Carson Pirie Southdale, 508 N.W.2d at 202 (internal quotation marks omitted).
In Carson Pirie Southdale, we addressed whether the automatic stay provision precluded dismissal of a debtor's challenge to certain real property assessments. Id. at 201. In May 1991, Carson filed a petition challenging the 1990 estimated market value of its property. Id. In August 1991—three months after Carson's petition—Carson filed for Chapter 11 bankruptcy and paid the first half of taxes due May 15, 1991. Id. Carson filed another petition in 1992 challenging the 1991 estimated market value of its property...
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