Bd. of Equalization v. Amalgamated Sugar

• Decision Date: 05 June 2006
• Docket Number: No. 31063.,31063.
• Citation: 143 Idaho 58,137 P.3d 445
• Parties: CANYON COUNTY BOARD OF EQUALIZATION and Twin Falls County Board of Equalization, Petitioners-Respondents, v. The AMALGAMATED SUGAR COMPANY, LLC, Respondent-Appellant.
• Court: Idaho Supreme Court

Page 445

137 P.3d 445

143 Idaho 58

CANYON COUNTY BOARD OF EQUALIZATION and Twin Falls County Board of Equalization, Petitioners-Respondents, v. The AMALGAMATED SUGAR COMPANY, LLC, Respondent-Appellant.

No. 31063.

Supreme Court of Idaho, Boise, March 2006 Term.

June 5, 2006.

Moffatt, Thomas, Barrett, Rock & Fields, Chtd., Boise, for appellant. Robert B. Burns argued.

Cantrill, Skinner, Sullivan & King, L.L.P., Boise, for respondents. Robert D. Lewis argued.

TROUT, Justice.

This is an appeal from a district court order concerning the assessed valuation of industrial property owned by appellant The Amalgamated Sugar Company, LLC (Amalgamated, or subsequently known as TASCO) as calculated by respondents Canyon County Board of Equalization and Twin Falls County Board of Equalization (Counties). After conducting a trial de novo, the district court reversed the decision of the Board of Tax Appeals (BTA) and adopted the Counties' assessed valuation of TASCO's property. We uphold the decision of the district court, but we remand the matter for a determination of the amount of principal and/or interest owed TASCO due to its overpayment of certain property taxes.

I. FACTUAL AND PROCEDURAL BACKGROUND

For decades, Amalgamated operated four sugar beet processing facilities. Of the three located in Idaho, one is in Minidoka County, another is in Canyon County, and a third is in Twin Falls County (the three counties). In 1992, the individual county assessor offices took over the assessment process that had previously been performed by the Idaho State Tax Commission. In assessing the Amalgamated property, all three counties relied on information provided by Amalgamated, including a somewhat hybrid "income-like" valuation approach that was not recognized by Idaho statute.

In 1997, Amalgamated had its stock purchased by TASCO, which was comprised of a beet grower's association and another entity. An appraisal ordered in connection with the transfer of assets to TASCO revealed that the property was worth significantly more than what Amalgamated had been telling the three counties. Nevertheless, it was not until 2002 that each of the three counties finally decided to modify the valuation model presented by TASCO. Due to these changes, the 2002 assessed value for TASCO's Idaho plants was estimated at over $167 million, tripling the $55 million value calculated under the previously utilized model in 2001.

TASCO appealed the 2002 assessed value to the respective equalization boards for each of the three counties, but the tax assessment was affirmed. Those decisions were then appealed to the BTA. At that hearing, TASCO presented an appraisal employing all three legislatively authorized appraisal approaches to market value (sales comparison, cost and income) set forth in I.C. § 63-205 and IDAPA 35.01.03.217.02 (Rule 217). TASCO thus dropped its reliance on the model it had earlier recommended to the three counties, though it did not show its new appraisal to them until one business day before the BTA hearing commenced. The three counties submitted an appraisal containing only a modified version of the "income-like" approach to the valuation of TASCO's property. The BTA, in a written decision, chastised the three counties for not following the approved statutory approaches, but also was critical of TASCO because the BTA found significant flaws in the appraisal presented by TASCO. Nevertheless, because the BTA considered TASCO's appraisal to be more reliable than that of the three counties, it adopted TASCO's significantly lower valuation amounts. Also, as TASCO had already paid its 2002 property taxes, the BTA ordered a tax refund for the amounts overpaid by TASCO.

All three counties appealed the BTA's decision to the district court; however, Minidoka County's appeal was dismissed as untimely. The district court conducted a de novo trial pursuant to I.C. § 63-3812(c). The court, over TASCO's objection, allowed the Counties to produce evidence on the three approved approaches to value and submit a new appraisal. TASCO used a slightly modified version of the appraisal it had used before the BTA. After reviewing both appraisals, the district court overturned the BTA's decision because the court found the Counties' appraisal more reliable. Thus, the district court adopted the Counties' assessed values of the sugar plants. The district court's judgment established the total value of the Idaho plants, including property located in Minidoka County, at $121 million, with the Canyon County plant worth $42 million and the Twin Falls plant valued at over $35 million. The value of the Canyon County plant adopted by the district court was approximately $19 million less than the assessed value originally presented to TASCO and upon which TASCO paid taxes. Based on its decision, the district court did not award TASCO attorney fees. TASCO timely appealed.

II. STANDARD OF REVIEW

Where the district court conducts a trial de novo in an appeal of a BTA decision, this Court defers to the district court's findings of fact that are supported by substantial evidence, but exercises free review over the district court's conclusions of law. Idaho Power Co. v. Idaho State Tax Com'n, 141 Idaho 316, 321, 109 P.3d 170, 175 (2005); see also Ada County Bd. of Equalization v. Highlands, Inc., 141 Idaho 202, 205, 108 P.3d 349, 352 (2005). The construction and application of a statute are pure questions of law over which this Court exercises free review. Ada County Bd. of Equalization, 141 Idaho at 206, 108 P.3d at 353. Likewise, the interpretation of the Idaho Rules of Civil Procedure is a matter of law freely reviewed by this Court. Goldman v. Graham, 139 Idaho 945, 947, 88 P.3d 764, 766 (2004).

III. DISCUSSION

The principal issues on appeal are (1) whether the Counties were entitled to present to the district court evidence on the three approaches to value, when the Counties did not present such evidence to the BTA; (2) whether the district court erred in entering judgment on the valuation of all three properties, when Minidoka County's appeal had already been dismissed; and (3) whether TASCO is entitled to a refund of the excess taxes TASCO paid, including interest.

A. Evidence on three approaches to value

Rule 84 of the Idaho Rules of Civil Procedure governs the judicial review of state agency actions. Under Rule 84(e)(2), the "scope of judicial review on petition from an agency to the district court shall be as provided by statute." I.R.C.P. 84(e)(2). Subsection (e)(1) of Rule 84 directs that "[w]hen the statute provides that review is de novo, the appeal shall be tried in the district court on any and all issues, on a new record." I.R.C.P. 84(e)(1). Idaho Code § 63-3812 applies when a party who appeared before the BTA is aggrieved by a BTA decision and appeals to the district court. I.C. § 63-3812. That statute states the appeal shall be taken and perfected according to Rule 84, and addresses the scope of review as follows:

Appeals may be based upon any issue presented by the appellant to the board of tax appeals and shall be heard and determined by the court without a jury in a trial de novo on the issues in the same manner as though it were an original proceeding in that court. The burden of proof shall fall upon the party seeking affirmative relief to establish that the decision made by the board of tax appeals is erroneous.

I.C. § 63-3812(c) (emphasis added). This Court has interpreted I.C. § 63-3812(c) to mean "[t]he issues before the district court are those raised below." Senator, Inc. v. Ada County, Bd. of Equalization, 138 Idaho 566, 569, 67 P.3d 45, 48 (2003). Trial de novo, this Court has explained, means "a trying of the matter anew — the same as if it had never been heard before." Gilbert v. Moore, 108 Idaho 165, 168, 697 P.2d 1179, 1182 (1985).

TASCO asserts that as the Counties failed to present evidence to the BTA on the sales comparison and cost approaches and also on a certain calculation used in the income approach, the Counties were precluded from offering such evidence to the district court. To aid in understanding TASCO's argument regarding what "issues" under I.C. § 63-3812 were before the BTA — and therefore appealable to the district court — a brief review of the procedures involved in assessing property for taxation purposes follows:

Generally, all real property subject to property taxation must be assessed annually at market value as of 12:01 a.m. on the first day of January in the year in which such property taxes are levied. I.C. § 63-205(1) (2000). Market value is to be determined according to the requirements of Title 63, Idaho Code, and rules promulgated by the Tax Commission. Id. Idaho Code § 63-201(10) (2000) defines market value as follows:

"Market value" means the amount of United States dollars or equivalent for which, in all probability, a property would exchange hands between a willing seller, under no compulsion to sell, and an informed, capable buyer, with a reasonable time allowed to consummate the sale, substantiated by a reasonable down or full cash payment.

Rule 217 of the Property Tax Administrative Rules adopted by the Tax Commission provides that when assessing real property, the assessor shall consider the sales comparison approach, the cost approach, and the income approach. IDAPA 35.01.03.217.02.

Senator, Inc. v. Ada County, Bd. of Equalization, 138 Idaho 566, 569, 67 P.3d 45, 48 (2003).

TASCO frames its argument as follows: because each individual approach to value is to be considered an "issue," and because the Counties did not present appraisals containing all three approaches to the BTA, any evidence on those approaches was outside the district court's scope of review. We are not persuaded. The issue before the BTA clearly was the market value of TASCO's sugar beet processing plants, an inquiry that includes a discussion of the three allowable approaches under I.C. § 63-205 and Rule...