Armstrong-Trotwood, LLC v. State Tax Comm'n of Mo., SC 96126

• Decision Date: 16 May 2017
• Docket Number: No. SC 96126,SC 96126
• Citation: 516 S.W.3d 830
• Court: Missouri Supreme Court
• Parties: ARMSTRONG-TROTWOOD, LLC, Armstrong-Brittany, LLC, Armstrong-Arbor Village, LLC, Robert S. Rothschild, Jr., Susan H. Rothschild, Geiger Real Estate, Inc., and Josh & Elaine, LLC, Appellants, v. STATE TAX COMMISSION of Missouri, Bruce E. Davis, Randy B. Holman, Victor Callahan, St. Louis County, and Jake Zimmerman, Respondents.

516 S.W.3d 830

ARMSTRONG-TROTWOOD, LLC, Armstrong-Brittany, LLC, Armstrong-Arbor Village, LLC, Robert S. Rothschild, Jr., Susan H. Rothschild, Geiger Real Estate, Inc., and Josh & Elaine, LLC, Appellants,

v.STATE TAX COMMISSION of Missouri, Bruce E. Davis, Randy B. Holman, Victor Callahan, St. Louis County, and Jake Zimmerman, Respondents.

No. SC 96126

Supreme Court of Missouri, en banc .

Opinion issued May 16, 2017

The landowners were represented by Bruce A. Morrison of The Morrison Law Firm in St. Louis, (314) 231-4181.

The commission was represented by Emily A. Dodge of the attorney general's office in Jefferson City, (573) 751-3321; and St. Louis County and its assessor were represented by Edward W. Corrigan of the St. Louis County counselor's office in Clayton, (314) 615-7042.

Mary R. Russell, Judge

Appellants (Landowners) are taxpayers that own residential property located entirely in St. Louis County. They claim their property assessments are discriminatory and non-uniform in violation of article X, section 3 of the Missouri Constitution. In support of their claim, Landowners argue Jefferson and Franklin counties systematically undervalued property in those counties, allegedly causing Landowners to bear a "disproportionate share of the cost of operating" multi-county taxing districts. Landowners concede, however, their property valuations were accurate and uniform within St. Louis County. This Court affirms the dismissal of Landowners' administrative claims for review and their claim for declaratory relief.

Factual Background

Landowners pay taxes on residential property located entirely in St. Louis County. Their properties also fall within several multi-county taxing jurisdictions that levy tax rates on properties in St. Louis, Jefferson, and Franklin Counties.¹

Landowners appealed their 2011-12 property tax assessments to the St. Louis County Board of Equalization (County Board) claiming their assessments were discriminatory. Although Landowners conceded the property valuations were accurate and uniform within St. Louis County, they claimed the assessments were discriminatory because properties situated in Jefferson and Franklin Counties were allegedly systematically undervalued, causing Landowners to bear a "disproportionate share of the cost of operating" the multi-county taxing districts.

The County Board upheld the assessments, and Landowners appealed their assessments to the State Tax Commission (Commission). The hearing officer dismissed the appeals. After reviewing the hearing officer's decision, the Commission affirmed the dismissal of Landowners' claims, reasoning that its authority is derivative of the County Board, which did not have authority over inter-county claims.

Landowners filed a petition in the Circuit Court of St. Louis County seeking review of a contested case pursuant to section 536.100, RSMo Supp. 2013,² or, alternatively, of a non-contested case pursuant to section 536.150, RSMo 2000. The petition also sought a declaratory judgment that Landowners' assessments were discriminatory and that the Commission failed to carry out its duty to equalize property assessments as between counties.³ See MO. CONST. art. X, sec. 14. The circuit court dismissed the petition with prejudice for failing to state a claim upon which relief can be granted.

Landowners appealed and, after opinion, the court of appeals transferred the case to this Court pursuant to article V, sections 10 and 11 of the Missouri Constitution,⁴ concluding the appeal presents matters of general interest and importance and raises issues within this Court's exclusive appellate jurisdiction. See MO. CONST . art. V, sec. 3.

Analysis

I. This Court Does Not Have Exclusive Appellate Jurisdiction of This Case

The court of appeals transferred this case after concluding it lacked jurisdiction to decide the merits. It reasoned that the case involved the construction of revenue laws of the state, including: (1) article X, section 3 of the Missouri Constitution, which provides that taxes "shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax"; (2) article X, section 14, which establishes the Commission "to equalize assessments as between counties" and "to hear appeals from local boards"; and (3) certain statutes in Chapter 138 of the Missouri Revised Statutes outlining the duties and authority of the Commission.

This Court, it is true, has exclusive jurisdiction of questions regarding the construction of revenue laws of the state. MO. CONST. art. V, sec. 3. And although construction of the provisions at issue here presents important matters with statewide ramifications, none of the provisions is a "revenue law of this state" as this Court has interpreted that phrase.

A case involves the "construction of the revenue laws of this state" if it satisfies three separate elements: "(1) construction (2) of revenue laws (3) of this state." Alumax Foils, Inc. v. City of St. Louis , 939 S.W.2d 907, 910 (Mo. banc 1997). A "revenue law" is one that imposes, amends, or abolishes a tax or fee. Id. In other words, the law must "directly create[ ] or alter[ ] an income stream to the government." Id. Article X, section 3 imposes limitations and restrictions on how taxes may be levied by political subdivisions of the state. Article X, section 14 provides for the creation of the Commission and specifies its general powers and duties. Provisions in Chapter 138 provide the framework for the creation of the Commission and specifically define its duties. But the constitutional and statutory provisions at issue here do not impose, amend, or abolish a tax or fee.

Moreover, this case does not concern revenue laws "of this state." In Alumax Foils , this Court held that its exclusive appellate jurisdiction extends only to the construction of laws affecting taxes deposited to the state treasury. Id. "A law that raises revenue only within a single political subdivision for the benefit of that political subdivision ... is not a revenue law ‘of the state.’ " Id. at 911. None of the taxes at issue here are paid to the state treasury, but, instead, are paid to a multi-county taxing district.

As this case does not involve the construction of revenue laws of the state, it does not come within the exclusive appellate jurisdiction of this Court. However, this Court can take transfer of a case before its disposition by the court of appeals if it presents a question of general interest or importance. SeeBreitenfeld v. Sch. Dist. of Clayton , 399 S.W.3d 816, 820 n.3 (Mo. banc 2013). This case presents important questions regarding the application of article X, sections 3 and 14 to claims of a lack of uniformity of tax assessments among counties in a multi-county taxing district. Accordingly, this Court transfers this case on its own motion under Missouri Constitution article V, section 10. See id.

II. Standard of Review

With regard to Landowners' claims for judicial review of the Commission's dismissal of their claims, this Court reviews the Commission's decision, not the judgment of the circuit court. Bateman v. Rinehart , 391 S.W.3d 441, 444 (Mo. banc 2013). This Court must decide whether the Commission's decision: (1) violates constitutional provisions; (2) exceeds its statutory authority or jurisdiction; (3) is not supported by competent and substantial evidence on the whole record; (4) is unauthorized by law for any other reason; (5) was rendered by means of unlawful procedures or without a fair trial; (6) is arbitrary, capricious, or unreasonable; or (7) constitutes an abuse of discretion. Id. at 444-45. While the Court defers to the Commission's judgment regarding factual matters, it reviews de novo matters of statutory or constitutional interpretation. Id. at 445.

Landowners also appeal the circuit court's dismissal of their claim for declaratory judgment. This Court reviews de novo the grant of a motion to dismiss for failure to state a claim and determines whether the facts alleged in the petition meet the elements of a recognized cause of action. Anderson v. Union Elec. Co. , 463 S.W.3d 783, 786 (Mo. banc 2015). The judgment of the circuit court will be affirmed if the dismissal is justified on any ground alleged in the motion. Id.

III. The Commission and the Circuit Court Correctly Dismissed Landowners' Claims

A. Landowners' claim of a lack of uniformity in tax assessments across counties fails to state a claim upon which relief can be granted

Landowners argue the Commission and the circuit court erred in dismissing their claims because systematic undervaluation of properties in Jefferson and Franklin Counties results in an unconstitutional and discriminatory lack of uniformity in the multi-county taxing districts that levy taxes on Landowners' properties. Because this argument is at the heart of each of Landowners' points on appeal, this Court will address all of Landowners' points together.

The uniformity clause of article X, section 3 of the Missouri Constitution provides that taxes shall be "uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax." Landowners contend the relevant "authorit[ies] levying the tax[es]" for purposes of the uniformity clause in this case are the multi-county taxing districts. Landowners claim that because other counties in the taxing districts allegedly undervalue properties, St. Louis County should lower its admittedly accurate assessments of Landowners' properties for purposes of taxes imposed by the multi-county taxing districts. According to Landowners, this reduction is needed to rectify what they call a non-uniform and discriminatory taxing scheme that imposes a disproportionate and unfair burden on their properties.

The requirements of the uniformity clause are met when taxes are: (1) "uniform;" (2) "upon the same class or subclass of subjects;" (3) "within the territorial limits;" (4) "of the authority levying the...