Eop-Nicollet v. County of Hennepin, No. A06-96.

• Decision Date: 02 November 2006
• Docket Number: No. A06-96.
• Parties: EOP-NICOLLET MALL, L.L.C., Relator, v. COUNTY OF HENNEPIN, Respondent.
• Court: Minnesota Supreme Court

723 N.W.2d 270

EOP-NICOLLET MALL, L.L.C., Relator, v. COUNTY OF HENNEPIN, Respondent.

No. A06-96.

Supreme Court of Minnesota.

November 2, 2006.

COPYRIGHT MATERIAL OMITTED

Thomas R. Wilhelmy, Judy S. Engel, Edward T. Matthews, Fredrikson & Byron, P.A., Minneapolis, MN, for Relator.

Robert T. Rudy, Lisa Hahn-Cordes, Hennepin County Attorney's Office, Minneapolis, MN, for Respondent.

Myron Lee Frans, Faegre & Benson LLP, Minneapolis, MN, for Amicus.

Heard, considered, and decided by the court en banc.

OPINION

GILDEA, Justice.

After a 12-day trial, the tax court determined the value for property tax purposes of relator's property in downtown Minneapolis. Relator appeals to this court, claiming that the tax court made numerous errors that require remand for a new trial. We affirm.

Relator EOP-Nicollet Mall, L.L.C. (EOP) contested the January 2, 2000, and January 2, 2001, assessed values of EOP's office building (subject property) located at 800 Nicollet Mall in Minneapolis. The subject property, also known as the U.S. Bancorp Center, is a multi-tenant 30-story office building located diagonally across the street from the IDS Center in downtown Minneapolis. Construction on the subject property began in 1999 and was approximately 78% complete as of January 2, 2000, and 90% complete as of January 2, 2001.

During discovery, EOP sought to compel the production of any information in respondent County of Hennepin's files relating to at least 20 different third-party properties located in downtown Minneapolis.¹ The county objected to EOP's discovery requests on the basis that the third-party information was protected from disclosure by the Minnesota Government Data Practices Act (MGDPA), Minn. Stat. ch. 13 (2004). Many of the third-party owners petitioned to intervene to protect the confidentiality of their information, and the tax court granted the third-party petitions.

The third-party intervenors described the information that EOP requested about their properties as "extremely sensitive" and "the core information of their business." The intervenors stated that they had reached agreements with the county to protect the confidentiality of the information and asserted that all of the intervenors had provided "this sensitive data * * * with the assurance that the information will not be available to competitors, unless used by the assessor at trial, as permitted by law." The intervenors also argued that the assessment process would become more cumbersome, less uniform, and require much more court involvement if their nonpublic information was disclosed to EOP.

In describing the harm to their businesses from the disclosure of the requested information, the intervenors asserted "that despite the best efforts of all parties, the data would eventually become public." This public disclosure would lead to competitors having "an unfair advantage" in attracting customers from the intervenors. Additionally, the lessor intervenors asserted that the disclosure would violate confidentiality agreements that the intervenors had with their lessees, even if the disclosure was limited to EOP's counsel and appraiser.

After two hearings, the tax court denied EOP's motion to compel. The tax court determined that the information sought by EOP was private or nonpublic data under section 13.51 of the MGDPA, Minn.Stat. § 13.51 (2004). The tax court applied the balancing test set forth in Minn.Stat. § 13.03, subd. 6 (2004), and determined that under the first prong of the test, the requested information was not privileged and was discoverable because it was relevant. The tax court then determined that under the second prong of the test, the harm to the third parties and the county from disclosing the data outweighed the benefit to EOP in receiving the data, even if the data was subject to a protective order.

EOP later amended and restated its motion to compel, and the tax court again heard arguments. EOP argued that some of the third-party information requested for years prior to 2001 was no longer private or nonpublic information under the MGDPA and therefore was no longer subject to the balancing test.² The tax court determined that the information was nonpublic because it was classified as trade secret data under Minn.Stat. § 13.37, subd. 2 (2004).³ The tax court then referenced the balancing test of section 13.03, subd. 6, which it had previously applied in denying the first motion to compel, and on the basis of this balancing, denied EOP's second motion to compel.

EOP next filed a motion seeking to prevent the county's expert appraiser from using, either in her appraisal report or at trial, any of the information that the tax court did not allow EOP to discover. The tax court denied EOP's motion but ordered that any information relied on by the county's expert in her appraisal or at trial be disclosed to EOP's counsel and appraiser under a strict protective order. In concluding that the information on which the county's expert relied should be disclosed, the tax court once again applied the balancing test of section 13.03, subd. 6. The tax court determined that because the county's expert was relying on some of the information in formulating her opinion, the benefit to EOP to have that information for the purpose of cross-examining the county's expert outweighed the harm to third parties and the county from the disclosure of the data.⁴

Trial commenced on July 20, 2004, and concluded on August 6, 2004. At the time of assessment, the county placed an estimated market value of $114,800,000 on the subject property for January 2, 2000, and $132,600,000 for January 2, 2001. EOP's expert appraiser, R.S., opined that the market value of the subject property was $86,300,000 as of the 2000 valuation date and $105,600,000 as of the 2001 valuation date. The county's expert appraiser, V.T., opined that the market value of the subject property was $113,300,000 as of the 2000 valuation date and $119,200,000 as of the 2001 valuation date.

The tax court and the expert appraisers considered the sales, income, and cost approaches to valuation.⁵ The tax court ultimately concluded that the cost approach was "more reliable than the others" and valued the subject property on both dates solely based on the cost approach. After calculating a "value range of $114,000,000 to $117,000,000," the tax court determined that the subject property's value as of January 2, 2000, was $114,000,000. After calculating a "value range of $127,000,000 to $129,000,000," the tax court determined that the subject property's value as of January 2, 2001, was $127,000,000.

I.

We first determine whether the tax court abused its discretion either in denying EOP's discovery motions, or in denying EOP's motion to prohibit the county from using information at trial which the tax court earlier had determined the county did not have to produce under the MGDPA.

A trial court has "considerable discretion" in ruling on discovery related motions, such as those at issue here. Montgomery Ward & Co. v. County of Hennepin (Ward), 450 N.W.2d 299, 305 (Minn.1990). We review such rulings under an abuse of discretion standard, and "a matter will not be disturbed on appeal unless the trial court abused its discretion, exercised its discretion in an arbitrary or capricious manner, or based its ruling on an erroneous view of the law." Id. at 305-06.

EOP's motions to compel production of private/nonpublic data

There is no dispute that the data at issue in EOP's motions were properly characterized as private or nonpublic under the MGDPA, and that the county properly objected to producing the data on that basis. Under these circumstances, Minn.Stat. § 13.03, subd. 6 (2004), provides for the trial court, in response to a motion to compel production of the data, to apply a two-part test to determine whether to compel disclosure of the data. Under the statute,

[1] The presiding officer shall first decide whether the data are discoverable or releasable pursuant to the rules of evidence and of criminal, civil, or administrative procedure appropriate to the action.

[2] If the data are discoverable the presiding officer shall decide whether the benefit to the party seeking access to the data outweighs any harm to the confidentiality interests of the agency maintaining the data, or of any person who has provided the data or who is the subject of the data, or to the privacy interest of an individual identified in the data.

Id. The tax court applied this two-part test in the two orders it issued in response to EOP's motions to compel. In its orders, the tax court ruled that the harm to the county and third parties from disclosure of the data outweighed the benefit to EOP of receiving this data.

EOP argues that the tax court's denial of the motions to compel conflicts with the law set forth by this court in Ward. According to EOP, Ward stands for the proposition that "a taxpayer's constitutional right to due process requires access to the relevant valuation data in the government assessor's files under an appropriate confidentiality order." Because the tax court did not order the county to turn over all of the information EOP requested under the confines of a protective order, EOP argues the tax court erred under Ward. EOP misreads Ward.

In Ward, we determined that the county's appraiser relied on information from a prior tax court case (Eden Prairie Donaldson's)⁶ which the county had not produced either in initial discovery or in compliance with the tax court's order "to exchange all the information [either party] intended to introduce into evidence." Ward, 450 N.W.2d at 304-05. We concluded that the tax court abused its discretion when it denied Montgomery Ward's motion to compel discovery without conducting the "mandatory" balancing analysis under the MGDPA. Ward, 450 N.W.2d at 308. We then conducted the two-part balancing test. We focused first on whether "the evidence introduced in Eden...