Gale v. County of Hennepin

• Decision Date: 11 May 2000
• Docket Number: No. C5-99-1349.,C5-99-1349.
• Citation: 609 N.W.2d 887
• Parties: Stuart E. GALE and Sandra W. Gale, petitioners, Stringer, J. and Lancaster, J. Relators, v. COUNTY OF HENNEPIN, Respondent.
• Court: Minnesota Supreme Court

609 N.W.2d 887

Stuart E. GALE and Sandra W. Gale, petitioners, Stringer, J. and Lancaster, J. Relators, v. COUNTY OF HENNEPIN, Respondent.

No. C5-99-1349.

Supreme Court of Minnesota.

May 11, 2000.

Stuart E. Gale, Bloomington, for appellant.

Amy Klobuchar, Hennepin County Attorney, Paul R. Jennings, Assistant County Attorney, Minneapolis, for respondent.

Considered and decided by the court en banc without oral argument.

OPINION

GILBERT, Justice.

This matter comes before us on a writ of certiorari from a decision of the Minnesota Tax Court concerning the valuation of a certain parcel of real property in Crystal, Minnesota owned by Petitioners Stuart and Sandra Gale. The Gales petitioned the tax court, challenging a January 2, 1997 assessment of the subject property. The Gales objected to the market value increase from $20,000 for taxes payable in 1997 to $65,000 for taxes payable in 1998 as being greater than the actual market value of the property, incorrectly classifying the property, unequally assessing the property, and as violating Minn.Stat. § 273.11, subd. 1a (1998).

Both in a motion in limine and at trial, the Gales objected to the admission of a final review appraisal and the testimony of the county's sole witness, Thomas Scherer, of the Hennepin County Assessor's office. The Gales argued that the admission of Scherer's appraisal and testimony was prejudicial because they were not permitted to review the appraisal prior to trial. The tax court denied the Gales' motion and admitted the appraisal and Scherer's testimony. Based on Scherer's valuation, the tax court set the 1997 market value of the property at $134,000. On appeal to this court, the Gales make several arguments, including that the increase in the assessed market value of their property violated Minnesota's Limited Market Value law (Minn.Stat. § 273.11, subd. 1(a)(1998)), that the evidence presented at the hearing was insufficient to support the tax court's decision and that the tax court abused its discretion in admitting the appraisal. Because we reverse on the final argument, whether the tax court abused its discretion in admitting the appraisal, we do not address the remaining arguments.

In 1962, the Gales purchased a parcel of real estate in Crystal, Minnesota. This parcel encompasses approximately 81,372 square feet with 134.5 feet fronting Douglas Drive and 605 feet fronting 32nd Avenue (approximately 1.868 acres). When the Gales purchased the parcel it had a residential structure on it, which was taken down in 1964. The parcel is currently vacant. In 1996 and 1997, fill dirt was removed from the lot for a road project. Some of the trees on the lot were also removed. The fill dirt was replaced with clay and the lot was graded.

On January 2, 1997, the county assessor placed the parcel's market value at $65,000, effective for taxes payable in 1998. Approximately eighty percent of the property was classified as Non-Homestead Residential and the remainder as Community Commercial. The valuation of the property was clarified at trial, indicating that prior to 1997 the commercial part of the property was valued at $20,000 and the residential part was assessed as having no value. In 1997, the county assessed the entire lot at $65,000, $30,000 of which was attributed to the residential part of the Gales' property.

In March 1998, the Gales petitioned the tax court, challenging the 1997 assessment. The county responded to the Gales' requests for information by claiming that it had no information to provide. Then, 7 days prior to trial, the county informed the Gales that it had prepared a final review appraisal that it would present at trial. When the Gales requested permission to come down to the county offices to review the appraisal, the county attorney stated that he would not permit the Gales to view it until trial. Prior to trial, the Gales brought a motion in limine objecting to the admission of the final review appraisal. The Gales argued that the county had not provided any information regarding the basis of this new appraisal prior to trial. The Gales submitted an affidavit to the court stating that the parties had agreed to an informal information exchange and that they had provided the county relevant valuation information they intended to present at the hearing.

Immediately prior to trial, the tax court heard arguments on the Gales' motion in limine to exclude the final review appraisal as evidence. The Gales produced letters and, in an affidavit, relayed to the tax court a history of their dealings with the county attorney that indicated that the parties had agreed on an informal discovery process. While the county attorney never explicitly agreed that this was the case, he did not deny it or offer any evidence to the contrary. The tax court ruled from the bench, denying the Gales' motion. In a subsequent written order and memorandum, the court stated that Minn.Stat. § 278.05, subd. 6 (1998) only required that appraisals of income-producing property be provided prior to trial. Because the Gales' property was not income producing, the tax court concluded that the county was not required to provide the appraisal to the Gales.

At trial, the Gales presented two witnesses, petitioner Sandra Gale and a building contractor, Brian Zubert. Both witnesses testified to the condition of the property, the removal of fill dirt and grading in 1996 and 1997, and the potential difficulties soil conditions would present to any development. Although Sandra Gale testified that the current estimate to remove certain concrete fill on the property was $29,000, the Gales presented no direct evidence as to the current market value of the property. The county presented one witness, Thomas Scherer, an assessor with the Hennepin County Assessor's office. Scherer testified to the market analysis he used to conduct the final review appraisal of the Gales' property. Based on this analysis, which took into account the $29,000 for concrete fill removal, he determined a current market value for the Gales' property of between $134,000 and $144,000.

The tax court found the fair market value of the property to be $134,000. The court commented in its supporting memorandum that it did not find the Gales' witnesses credible and that the testimony of the current market value by the county assessor was uncontroverted.

The Gales ask us to review the tax court determination of the market value of their property. Because property assessment is an inexact and fact dependent determination, we generally defer to the findings of the tax court and will not reverse absent a showing that the findings are clearly erroneous. See Hansen v. County of Hennepin, 527 N.W.2d 89, 93 (Minn.1995)

. However, we review tax court rulings on the admissibility of evidence for legal error or abuse of discretion. See Marquette Bank Nat'l Ass'n v. County of Hennepin, 589 N.W.2d 301, 307 (Minn.1999). Our review is also guided by the rule that property tax assessments are presumed valid and the burden is on the party challenging the assessment to show that it does not reflect the true market value of the property. See Minn.Stat. § 272.06 (1998).

The Gales argue that the tax court abused its discretion when it denied their motion in limine to exclude Scherer's review appraisal and related testimony and that they were prejudiced by not being permitted to review the appraisal prior to the trial. The county argues that the tax court properly admitted Scherer's testimony and that the Gales failed to follow the specific rules of discovery or, alternatively, that the Gales did not file a motion for a new trial and therefore cannot ask this court for relief.

In concluding that the review appraisal was admissible without first being provided to the Gales, the tax court relied on Minn.Stat. § 278.05, subd. 6. However, simply because Minn.Stat. § 278.05, subd. 6 requires the county assessor to furnish an appraisal in one circumstance, it does support the conclusion that in all other circumstances an appraisal is not discoverable. The statutes governing the conduct of tax court trials and our Rules of Civil Procedure concerning discovery indicate otherwise. Minnesota Statutes § 271.06 (1998) governs petitions for the appeal of tax assessments, and in subdivision 7 states that our Rules of Civil Procedure and Evidence will govern tax court trials "where practicable." The tax court is authorized to adopt by administrative rules, procedures for the conduct of its trials. See id.; see also Minn. R. § 8610.0010.0150 (1999) (Minnesota Tax Court Rules of Procedure). A review of Minnesota Tax Court Rules of Procedure does not reveal any special rules adopted by the tax court governing discovery or the admission of expert testimony. In this case, the tax court treated Scherer's testimony as expert testimony. Therefore, our Rules of Civil Procedure concerning discovery of expert testimony provide guidance as to what disclosures were required by the county in this case.

The Minnesota Rules of Civil Procedure provide for pretrial discovery in civil matters. See generally Minn. R. Civ. P. 26. The opinions and basis for expert testimony that a party intends to use at trial are discoverable. See Minn. R. Civ. P. 26.02(d). The statute governing the conduct of tax court trials also makes it clear that the assessor's records, including market data, are discoverable. See Minn.Stat. § 278.05, subd. 3 (1998). A variety of sanctions are available to a court to enforce these rules and to prevent prejudice to a party or the proceeding by the failure of a party to comply with discovery requirements. See generally Minn. R. Civ. P. 37. These sanctions include denying the noncomplying party the ability to introduce the requested information at trial. See Minn. R. Civ. P. 37.02(b)(2).

The objective of our rules of discovery is to encourage the exchange of relevant information by the parties prior to trial and to...