Fairbanks N. Star Borough v. Victory Ministries of Alaska, Inc.

• Decision Date: 12 August 2022
• Docket Number: Supreme Court No. S-17982
• Citation: 515 P.3d 111
• Parties: FAIRBANKS NORTH STAR BOROUGH, Appellant, v. VICTORY MINISTRIES OF ALASKA, INC. and Camp Li-Wa Inc., Appellees.
• Court: Alaska Supreme Court

515 P.3d 111

FAIRBANKS NORTH STAR BOROUGH, Appellant,

v.VICTORY MINISTRIES OF ALASKA, INC. and Camp Li-Wa Inc., Appellees.

Supreme Court No. S-17982

Supreme Court of Alaska.

August 12, 2022

Ehren D. Lohse, Assistant Borough Attorney, and Jill S. Dolan, Borough Attorney, Fairbanks, for Appellant.

F. Steven Mahoney and Janella Kamai, Manley & Brautigam P.C., Anchorage, for Appellees.

Before: Winfree, Chief Justice, Maassen, Carney, Borghesan, and Henderson, Justices.

OPINION

MAASSEN, Justice.

I. INTRODUCTION

The Fairbanks North Star Borough partially revoked a local ministry's charitable property tax exemption after learning that the ministry was renting lodging to the general public. The ministry appealed the Borough's decision to the superior court. The court remanded the issue to the Borough's assessor for more detailed findings, instructed the ministry that any appeal following remand should be made to the Board of Equalization rather than superior court, and closed the case. The assessor issued new findings justifying the partial revocation of the tax exemption, and the ministry appealed to both the Board and the superior court (in a different case). The ministry also filed a motion in the first appeal asking the superior court to enforce its order instructing that appeals be made to the Board.

The superior court issued a sua sponte order granting the ministry's first appeal on the merits, finding "that the assessor [did not] rely on sufficient evidence to revoke [the ministry's] tax exempt status." The Borough appeals. We conclude that following remand, supplemental Board findings, and a new appeal from those findings, the superior court lacked the subject matter jurisdiction to decide the ministry's first appeal on the merits. We therefore vacate its decision granting Victory's appeal.

II. FACTS AND PROCEEDINGS

A. Facts

Victory Ministries of Alaska, Inc. is a 501(c)(3) nonprofit organization founded in 1992. It has two campuses, one of which is Camp Li-Wa near Fairbanks. Victory describes the camp as "currently one of the finest retreat locations in the Interior of Alaska," where "[b]usiness, community, military and religious groups hold retreats and conferences in [a] serene setting nearly every week out of the year." The camp has more than 35 structures, including residential duplexes, lodges, an equestrian center, stables, a dining and conference center, heated dry cabins, an office, a maintenance shop, and summer cabins. Victory is largely supported by contributions and donations from benefactors and since 1985 has received a property tax exemption based on charitable use.¹

In 2018 the Fairbanks North Star Borough learned that Victory had been leasing portions of Camp Li-Wa to the public through commercial websites. In May 2018 the Borough sent Victory a letter stating its intent to investigate whether Victory remained eligible for a charitable tax exemption. The letter informed Victory that it should submit evidence demonstrating its eligibility within 30 days, and that as part of its investigation the Borough would require "an onsite review of the property as well as an inventory of all buildings/improvements, what each is used for, and whether each is owned by anyone other than the entity within 30 days."

The Borough performed its on-site inspection of Camp Li-Wa in September 2018. Borough staff noted that two buildings were rented year-round, two were currently occupied, and one was being rented by a group of hunters. Online research confirmed that Victory was marketing various buildings on the property to the general public as "vacation rentals." In October, having received no evidence from Victory, the Borough's deputy assessor again requested a "description and use of each building on the property" as well as "the name and/or function of the occupants for each of the residential properties on site." After another week with no response, the deputy assessor forwarded his request to another Victory representative; the request again went unanswered.

In December 2018, having still received no information from Victory, the Borough assessor revoked the charitable tax exemption for a portion of Victory's property.

B. Proceedings

Victory appealed the exemption revocation to the superior court, arguing that its entire property was exempt from taxation. The parties thoroughly briefed their positions. In December 2019 the court issued a decision. It ruled that the Board of Equalization, not the superior court, was the appropriate forum to resolve the appeal and dismissed the case without prejudice.

The Borough moved for reconsideration, arguing that it had discretion to interpret its own code provision, Fairbanks North Star Borough Code (FNSBC) 08.16.040, as requiring that the assessor's exemption determinations be appealed directly to the superior court.² In a January 2020 order the court ruled "that instead of dismissing the appeal this court more appropriately should have remanded for findings." It ordered:

1. The matter is remanded to [the] assessor. Victory Ministries is required and directed to appeal the matter to the Board of Equalization if they seek relief from the assessor's decisions. The time for any such appeal commences from the distribution date of this order.

2. The court does not retain jurisdiction over this matter and this action is now closed.

3. Either party may pursue appellate review of [the Board's] findings in the normal course of business.

A few months later Victory and the Borough entered into a settlement agreement "[t]o alleviate further confusion and mitigate costs in further understanding of the" court's reconsideration order. The Borough agreed (1) not to appeal the reconsideration order; (2) to accept additional evidence from Victory, including documents it had earlier objected to as untimely; and (3) to "issue detailed findings of fact and conclusions of law regarding Victory's entitlement to a real property tax exemption." The parties agreed "that they remain free to litigate the appropriate venue (Board of Equalization or Superior Court) for any appeal from the Borough Assessor's decision."

In August 2020 the Borough assessor sent Victory a set of much more detailed findings of fact and conclusions of law to support the December 2018 decision partially revoking the exemption. The findings and conclusions included a notice to Victory that it had "the right to appeal the Assessor's determination regarding tax-exempt status to the Superior Court within 30 days." Victory filed appeals with both the superior court and the Board; the Borough rejected the Board appeal as contrary to its interpretation of the Borough Code.³ The superior court appeal was given a new case number but was assigned to the same judge who had heard the first appeal. Around the same time, Victory filed a motion under the first appeal's case number asking the court to enforce its December 2019 order instructing Victory to appeal to the Board rather than the superior court.

The court did not rule on Victory's motion to enforce but rather, in December 2020, issued an order granting Victory's first appeal on the merits. The order provides:

The court sua sponte reconsidered its remand order and, after reviewing the record,^[4] cannot find that the assessor relied on sufficient evidence to revoke Victory's tax exempt status. The record does not establish that the for-profit use of the facilities at Camp Li-Wa were more than de minimus.

Accordingly, the court GRANTS Victory Ministries’ 2019 appeal of the FNSB revocation of religious tax exemption, nunc pro tunc.

The Borough appeals.

III. STANDARD OF REVIEW

"We review questions of law, including questions of subject matter jurisdiction, de novo."⁵ Under the de novo standard of review, "we will ‘adopt the rule of law that is most persuasive in light of precedent, reason, and policy.’ "⁶

IV. DISCUSSION

The Superior Court Did Not Have Subject Matter Jurisdiction To Decide Victory's First Appeal Following Remand, A New Administrative Decision, And A Second Appeal From The New Decision.

"Subject matter jurisdiction is ‘the legal authority of a court to hear and decide a particular type of case.’ "⁷ "The doctrine of subject matter jurisdiction applies to judicial and quasi-judicial bodies to ensure that they do not overreach their adjudicative powers."⁸ "As a court which does not have subject matter jurisdiction is without power to decide a case, this issue cannot be waived, and can be raised at any point during the litigation."⁹

The superior court by statute has jurisdiction over administrative appeals involving the question whether property qualifies for a charitable tax exemption.¹⁰ But having acquired that jurisdiction, the court does not retain it in perpetuity; unless an order provides otherwise, jurisdiction over a case transfers back to the lower court or tribunal after the appellate court enters its judgment.¹¹ The superior court in this case decided Victory's 2019 appeal in January 2020 by (1) remanding the matter to the assessor for further findings of fact, (2) directing that any new appeal should be made to the Board rather than the court, and (3) concluding that "[t]he court does not retain jurisdiction over this matter and this action is now closed." As directed, the assessor made further findings, and Victory filed an appeal from these more robust findings with both the Board and the superior court. That superior court appeal has not yet been decided; instead, the court purported to decide the closed 2019 appeal on its merits sua sponte.

The question before us is whether the superior court had the subject matter jurisdiction to decide an appeal in a closed case when another appeal from supplemental findings and conclusions was pending and had yet to be briefed and argued. Stating the question suggests its answer: the superior court lacked the necessary jurisdiction.

Victory relies on Alaska Rule of Appellate Procedure 520(c) for the proposition that "[a]fter reacquiring...