Falotico v. Grant Cty. Bd. of Equal.

• Citation: 262 Neb. 292,631 N.W.2d 492
• Decision Date: 27 July 2001
• Docket Number: No. S-00-713.,S-00-713.
• Parties: Anne L. FALOTICO et al., Appellants, v. GRANT COUNTY BOARD OF EQUALIZATION and Nebraska Tax Equalization and Review Commission, Appellees.
• Court: Supreme Court of Nebraska

631 N.W.2d 492

262 Neb. 292

Anne L. FALOTICO et al., Appellants, v. GRANT COUNTY BOARD OF EQUALIZATION and Nebraska Tax Equalization and Review Commission, Appellees.

No. S-00-713.

Supreme Court of Nebraska.

July 27, 2001.

Michael Creighton Falotico, and George G. Vinton, North Platte, and John Falotico, Woodland Hills, CA, for appellants.

A. James Moravek, Alliance, of Curtiss, Moravek, Curtiss & Margheim, for appellee Nebraska Tax Equalization and Review Commission.

Don Stenberg, Attorney General, and L. Jay Bartel for amicus curiae State of Nebraska.

HENDRY, C.J., and WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

McCORMACK, Justice.

NATURE OF CASE

Anne L. Falotico, Lynch Circle Ranch, and the Estate of Frank Lynch (collectively the taxpayers) brought property valuation protests to the Grant County Board of Equalization (the Board). The Board denied the protests, and the taxpayers appealed to the Tax Equalization and Review Commission (TERC). TERC affirmed the Board's determination. The taxpayers sought review in the Nebraska Court of Appeals, and we moved the case to our docket pursuant to our power to regulate the caseloads of this court and the Court of Appeals.

BACKGROUND

The taxpayers own a cattle ranch consisting of several parcels of land in Grant County. The Grant County assessor assessed higher valuations for the subject properties for purposes of taxation as of January 1, 1999. The proposed valuations were based on a sample size of only five sales concerning four properties (one property was sold twice over a 3-year period). The taxpayers filed protests to the proposed valuations, claiming that the valuations (1) violated Neb.Rev.Stat. §§ 77-112 and 77-1371 (Cum.Supp.1998), (2) were arbitrary and capricious and thus violated their rights under the Nebraska and U.S. Constitutions, and (3) violated their rights of equal protection in that other similarly situated taxpayers in other counties are not subject to arbitrary and capricious valuations. The taxpayers requested that the assessed values be returned to the 1998 assessed values.

The Board denied the taxpayers' protests, making its decision on July 23, 1999. The county clerk, though required under Neb.Rev.Stat. § 77-1502 (Cum.Supp. 2000) to send the taxpayers notice of the Board's decision within 7 days of that decision, did not send the notices until August 19. The taxpayers received the notices on August 21, which fell on a Saturday. The deadline under Neb.Rev.Stat. § 77-1510 (Cum.Supp.2000) for filing an appeal with TERC was Tuesday, August 24. Thus, the taxpayers had only 2 business days within which to prepare and file their appeals. Moreover, the forms TERC provided to the taxpayers stated that the deadline was August 25, 1 day later than the statutory deadline. The taxpayers mailed their appeal forms to TERC on August 25, and TERC received and filed them on August 26.

TERC held a hearing to determine whether it had jurisdiction to hear the cases and then issued an order declaring that it could properly do so. In its order, TERC found that while it only possesses the powers specifically conferred upon it by law and while the statutes require appeals to be filed on or before August 24, TERC nevertheless hears appeals in equity under Neb.Rev.Stat. § 77-1511 (Reissue 1996). It therefore concluded that it should not dismiss the taxpayers' appeals on jurisdictional grounds because to do so would "violate the principal of equity, and would further deny [the taxpayers] due process of the law," namely the process required by §§ 77-1502 (notification within 7 days of Board's decision) and 77-1510 (30 days within which to appeal).

TERC later consolidated the appeals and held a hearing on the merits. At that hearing, the taxpayers called a professor of statistics, who testified that a sample size of four properties is too small to be statistically valid and that it is not possible to determine whether the values contained in the sample are representative of similar parcels in the county. She testified that making a valuation determination based on such a small sample is not statistically sound because of the risk that biases of various sorts may infect the data.

TERC granted the Board's motion to dismiss largely because the taxpayers had not produced any evidence regarding the actual values of the properties. Because they offered no such evidence, TERC found that the taxpayers had not shown that the Board's valuations were grossly excessive and had thus not rebutted the presumption favoring the Board's action. In addition, TERC found that it lacked jurisdiction to determine whether the Board used professionally accepted mass appraisal methods because the taxpayers' argument amounted to a collateral attack. TERC also found that the Board was neither unreasonable nor arbitrary in relying on a small sample.

ASSIGNMENTS OF ERROR

The taxpayers assign that TERC erred in (1) finding that it lacked jurisdiction to determine whether the Board used "professionally accepted mass appraisal methods" because the taxpayers' argument was a collateral attack, (2) holding that the Board was neither unreasonable nor arbitrary in relying on a sample of only five land sales relating to four parcels of land to reassess the values of the taxpayers' properties, (3) holding that the Board acted in conformity with § 77-112 because the Board did not use professionally accepted mass appraisal methods to derive the actual values of the taxpayers' real estate for property tax assessment purposes, (4) holding that the Board had jurisdiction to make reassessments when the Board had not conformed with the statute giving it such authority, and (5) relying on an unconstitutional statute as applied to the taxpayers.

STANDARD OF REVIEW

Appellate review of a Tax Equalization and Review Commission decision shall be conducted for error on the record. Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., 260 Neb. 905, 620 N.W.2d 90 (2000); Mid City Bank v. Douglas Cty. Bd. of Equal., 260 Neb. 282, 616 N.W.2d 341 (2000). The meaning of a statute is a question of law, and a reviewing court is obligated to reach its conclusions independent of the determination made by the Tax Equalization and Review Commission. Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., supra.

See State v. Hernandez, 259 Neb. 948, 613 N.W.2d 455 (2000).

ANALYSIS

The threshold issue is whether TERC had subject matter jurisdiction over the case. Subject matter jurisdiction is the power of a tribunal to hear and determine a case of the general class or category to which the proceedings in question belong and to deal with the general subject matter involved. Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., supra.

To acquire jurisdiction over the subject matter of the action, there must be strict compliance with the time requirements of the statute granting the appeal. Id.

Section 77-1510 provides in part:

Appeals may be taken from any action of the county board of equalization to the Tax Equalization and Review Commission in accordance with the Tax Equalization and Review Commission Act. The appeal shall be filed within thirty days after adjournment of the board which, for actions taken pursuant to section 77-1502, shall be deemed to be July 25 of the year in which the action is taken.

Thirty days past July 25, 1999, is August 24. Here, the taxpayers postmarked their appeals on August 25, and they were actually received and filed by TERC on August 26. Thus, the taxpayers' appeals were filed after the expiration of the statutory 30-day period. The reasons for the delay were threefold. First, the county clerk, who is charged under § 77-1502 with the duty to notify the taxpayers within 7 days of the Board's decision, did not do so. In fact, the taxpayers effectively had only 2 business days within which to prepare and file their appeals. Second, the appeal forms provided to the taxpayers incorrectly stated that the filing deadline was August 25. Third, the taxpayers relied on TERC's "mailbox rule," which we have since declared invalid. See Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., supra.

As stated above, TERC, in its order following a jurisdictional hearing, recognized the mandatory and jurisdictional nature of statutory time periods, but nonetheless found that it would be inequitable and would violate the taxpayers' due process rights to dismiss their appeals on jurisdictional grounds, given that the tardiness of the appeals resulted not from the taxpayers' own inaction, but from the county clerk's violation of a statutory duty to notify the taxpayers and from the erroneous statement on a form provided to the taxpayers. TERC relied on its purported power to hear cases in equity and applied equitable principles in finding that it had jurisdiction to hear the case.

TERC's decision on this issue came before our decision in Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., 260 Neb. 905, 620 N.W.2d 90 (2000). In Creighton, the taxpayers had similarly been given an appeal form containing an incorrect statement of the appeal deadline. Also,...