Bayer Materialscience v. State Tax Com'R

• Decision Date: 19 November 2008
• Docket Number: No. 33881.,No. 33880.,No. 33378.,33378.,33880.,33881.
• Citation: 672 S.E.2d 174
• Court: West Virginia Supreme Court
• Parties: BAYER MATERIALSCIENCE, LLC, and Bayer Cropscience, USA, LP, Petitioners Below, Appellants, v. STATE TAX COMMISSIONER and the Honorable Phyllis Gatson, Assessor of Kanawha County, and the County Commission of Kanawha County, and the Prosecuting Attorney of Kanawha County, Respondents Below, Appellees.

672 S.E.2d 174

BAYER MATERIALSCIENCE, LLC, and Bayer Cropscience, USA, LP, Petitioners Below, Appellants, v. STATE TAX COMMISSIONER and the Honorable Phyllis Gatson, Assessor of Kanawha County, and the County Commission of Kanawha County, and the Prosecuting Attorney of Kanawha County, Respondents Below, Appellees.

No. 33378.

No. 33880.

No. 33881.

Supreme Court of Appeals of West Virginia.

Submitted September 3, 2008.

Decided November 19, 2008.

Dissenting Opinion of Justice Benjamin January 9, 2009.

Syllabus by the Court

1. "Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review." Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995).

2. "`"When the constitutionality of a statute is questioned every reasonable construction of the statute must be resorted to by a court in order to sustain constitutionality, and any doubt must be resolved in favor of the constitutionality of the legislative enactment." Point 3, Syllabus, Willis v. O'Brien, 151 W.Va. 628[, 153 S.E.2d 178 (1967)].' Syllabus Point 1, State ex rel. Haden v. Calco Awning & Window Corp., 153 W.Va. 524, 170 S.E.2d 362 (1969)." Syllabus point 1, U.S. Steel Mining Co., LLC v. Helton, 219 W.Va. 1, 631 S.E.2d 559 (2005), cert. denied, 547 U.S. 1179, 126 S.Ct. 2355, 165 L.Ed.2d 279 (2006).

3. "`"`An assessment made by a board of review and equalization and approved by the circuit court will not be reversed when supported by substantial evidence unless plainly wrong' Syl. pt. 1, West Penn Power Co. v. Board of Review and Equalization [of Brooke County], 112 W.Va. 442, 164 S.E. 862 (1932)." Syl. pt. 3, Western Pocahontas Properties, Ltd. v. County Comm'n of Wetzel County, 189 W.Va. 322, 431 S.E.2d 661 (1993).' Syl. pt. 4, In re Petition of Maple Meadow Mining Co. for Relief from Real Prop. Assessment For the Tax Year 1992, 191 W.Va. 519, 446 S.E.2d 912 (1994)." Syllabus point 3, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008).

4. "W. Va.Code § 11-3-24 (1979) (Repl. Vol.2008), which establishes the procedure by which a county commission sits as a board of equalization and review and decides taxpayers' challenges to their property tax assessments, is facially constitutional." Syllabus point 4, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008).

5. "A taxpayer challenging an assessor's tax assessment must prove by clear and convincing evidence that such tax assessment is erroneous...." Syllabus point 5, in part, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008).

6. "Requiring a taxpayer challenging a property tax assessment in accordance with W. Va.Code § 11-3-24 (1979) (Repl.Vol.2008) to prove by clear and convincing evidence that the assessor's assessment is erroneous does not violate the constitutional due process protections provided by section one of the Fourteenth Amendment to the United States Constitution or by section ten of Article III of the West Virginia Constitution." Syllabus point 6, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008).

7. "`Title 110, Series 1P of the West Virginia Code of State Rules confers upon the State Tax Commissioner discretion in choosing and applying the most accurate method of appraising commercial and industrial properties. The exercise of such discretion will not be disturbed upon judicial review absent a showing of abuse of discretion.' Syllabus point 5, In re Tax Assessment Against American Bituminous Power Partners, L.P., 208 W.Va. 250, 539 S.E.2d 757 (2000)." Syllabus point 7, In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008).

8. "As a general rule, there is a presumption that valuations for taxation purposes fixed by an assessor are correct.... The burden is on the taxpayer challenging the assessment to demonstrate by clear and convincing evidence that the tax assessment is erroneous." Syllabus point 2, in part, Western Pocahontas Properties, Ltd. v. County Commission of Wetzel County, 189 W.Va. 322, 431 S.E.2d 661 (1993).

Herschel H. Rose, III, Steven R. Broadwater, Rose Law Office, Charleston, for the Appellants, Bayer MaterialScience, LLC, and Bayer Cropscience USA, LP.

Ancil G. Ramey, Hannah B. Curry, Steptoe & Johnson, PLLC, Charleston, for the Appellees, Assessor of Kanawha County, County Commission of Kanawha County, and Prosecuting Attorney of Kanawha County.

Darrell V. McGraw, Jr., Attorney General, L. Wayne Williams, Assistant Attorney General, Charleston, for the Appellee, Virgil T. Helton, State Tax Commissioner.

Michael E. Caryl, Heather G. Harlan, Bowles Rice McDavid Graff & Love, LLP, Charleston, for Amicus Curiae, The West Virginia Manufacturers Association.

PER CURIAM:¹

In this companion case to In re Tax Assessment of Foster Foundation's Woodlands Retirement Community, ___ W. Va. ___, 672 S.E.2d 150, 2008 WL 4868290 (2008), the appellants herein and petitioners below, Bayer MaterialScience, LLC and Bayer CropScience USA, LP (hereinafter collectively referred to as "Bayer"),² appeal from three orders entered by the Circuit Court of Kanawha County on June 28, 2006; October 2, 2007; and October 23, 2007. By those orders, the circuit court affirmed orders entered February 23, 2006, and February 15, 2007, by an appellee herein and respondent below, the Kanawha County Commission (hereinafter referred to as "the Commission")³ sitting as the Board of Equalization and Review (hereinafter referred to as "the Board"), which orders had rejected Bayer's challenges to its tax assessments. Before this Court, Bayer's appeals have been consolidated because each of the three appeals assigns identical errors, which errors also were raised in the Foster case, namely (1) the procedure for hearing taxpayers' challenges to allegedly erroneous tax assessments is not impartial and denies taxpayers of due process; (2) requiring taxpayers to prove the incorrectness of their tax assessments by clear and convincing evidence denies taxpayers of due process; and (3) the tax assessments of Bayer's property are erroneous. Upon a review of the parties' arguments, the record designated for appellate consideration, and the pertinent authorities we affirm each of the circuit court's three orders.

I. FACTUAL AND PROCEDURAL HISTORY

The appellants in this case, Bayer MaterialScience, LLC and Bayer Cropscience USA, LP, describe themselves as "out-of-state corporation[s] operating in West Virginia." Appellant's Br. at p. 2. The production facility for Bayer MaterialScience is located in South Charleston, West Virginia,⁴ while the production facility for Bayer CropScience is located in Institute, West Virginia.⁵ In tax year 2006, and again in tax year 2007, one of the appellees herein and respondents below, the State Tax Commissioner (hereinafter referred to as "the Tax Commissioner"), appraised the industrial and real property of the two Bayer companies for purposes of determining the amount of the companies' (1) industrial and personal property taxes and (2) real property taxes. Another of the appellees herein and respondents below, the Assessor of Kanawha County (hereinafter referred to as "the Assessor"), communicated these appraisals to the Bayer companies and used these appraised values in assessing the amount of taxes owed by each of them. The Bayer companies challenged these appraisals, and the tax assessments resulting therefrom, for both tax years.

A. Tax Year 2006 (Case Numbers 33378 and 33880)

In tax year 2006, Bayer MaterialScience and Bayer CropScience filed separate challenges of their respective tax assessments with the Kanawha County Commission sitting as the Board of Equalization and Review.

1. Bayer MaterialScience (Case Number 33378). By "Notice of Appraised Value" dated January 31, 2006, the Assessor notified Bayer MaterialScience that the Tax Commissioner had determined the appraised value of its industrial personal property, specifically its equipment and machinery, to be $42,320,542.⁶ Bayer MaterialScience challenged this property valuation before the Kanawha County Commission sitting as the Board of Equalization and Review.

Bayer MaterialScience argued that the Tax Commissioner's appraisal of its equipment and machinery did not account for the property's economic obsolescence⁷ due to inutility⁸ or excess operating costs. In this regard, Bayer MaterialScience first contended that inutility economic obsolescence should have been calculated at 8.7% of the property's appraised value of $42,320,542, thereby reducing such valuation by $3,681,887. Bayer MaterialScience also asserted that an additional deduction in the amount of $17,400,000 should have been given for economic obsolescence due to excess operating costs. Thus, the revised value of its industrial personal property proposed by Bayer MaterialScience was $21,238,655. Following a hearing on this matter, the Board upheld the Tax Commissioner's appraisals and resulting tax assessments by order entered February 23, 2006.

Following the Board's adverse ruling, Bayer MaterialScience appealed to the Circuit Court of Kanawha County. In summary, Bayer MaterialScience complained that the procedure for challenging tax appeals denied appealing taxpayers of due process because the County Commission sitting as the Board served a dual role and was not impartial. Bayer MaterialScience additionally challenged the correctness of its tax assessments and the appraisals upon which they were based. Following a hearing, the circuit court, by order entered June 28, 2006, affirmed the decision of the Board and denied the...